Qualitas Medical Group Limited - · PDF filethis circular is important as it contains the recommendation of the independent directors of qualitas medical group limited and the advice

THIS CIRCULAR IS IMPORTANT AS IT CONTAINS THE RECOMMENDATION OF THE INDEPENDENT DIRECTORS OF QUALITAS MEDICAL GROUP LIMITED AND THE ADVICE OF COLLINS STEWART PTE. LIMITED, THE INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT DIRECTORS OF THE COMPANY. THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY.

This Circular is issued by Qualitas Medical Group Limited ( “QMGL” or the “Company”). If you are in any doubt in relation to this or as to the action you should take, you should consult your stockbroker, bank manager, accountant, solicitor, tax adviser or other professional adviser immediately.

If you have sold or transferred all your shares in the capital of the Company, you should immediately forward this Circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

This Circular has been prepared by the Company and its contents have been reviewed by the Company’s sponsor, United Overseas Bank Limited (the “Sponsor”), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”) . The Sponsor has not independently verified its contents.

The Circular has not been examined or approved by the SGX-ST. The SGX-ST and the Sponsor assume no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this Circular.

The contact person for the Sponsor is Mr Khong Choun Mun, Managing Director, Corporate Finance, at 80 Raffles Place, #03-03, UOB Plaza 1, Singapore 048624 or telephone number: (65) 6539 4288.

Qualitas Medical Group Limited(Company Registration No.: 200717959H)

(Incorporated in the Republic of Singapore on 28 September 2007)

CIRCULAR TO SHAREHOLDERS

in relation to the

VOLUNTARY CONDITIONAL OFFER

by

CIMB BANK BERHAD, SINGAPORE BRANCH

for and on behalf of

QUALITAS HEALTHCARE HOLDINGS LIMITED(Company Registration No. 201023874W)

(Incorporated in the Republic of Singapore)

to acquire all the issued and paid-up ordinary shares in the capital of the Company other than those Shares (as defined herein) held, directly or indirectly, by the Offeror (as defined herein)

Independent Financial Adviser to the Independent Directors of the Company

COLLINS STEWART PTE. LIMITED(Company Registration No. 200713620D)


SHAREHOLDERS SHOULD NOTE THAT THE OFFEROR, THROUGH AN ANNOUNCEMENT MADE ON 11 APRIL 2011, HAS EXTENDED THE CLOSING DATE UNTIL 5.30 P.M. (SINGAPORE TIME) ON 18 MAY 2011 (THE “CLOSING DATE”). ACCORDINGLY, SHAREHOLDERS WHO WISH TO ACCEPT THE OFFER MUST DO SO BY 5.30 P.M. ON THE CLOSING DATE.

CIRCULAR DATED 19 APRIL 2011

PAGE

DEFINITIONS ....................................................................................................................................... 2

CAUTIONARY NOTE ........................................................................................................................... 6

INDICATIVE TIMETABLE ..................................................................................................................... 7

LETTER TO SHAREHOLDERS ........................................................................................................... 8

1. INTRODUCTION ........................................................................................................................ 8

2 THE OFFER ............................................................................................................................... 9

3. IRREVOCABLE UNDERTAKINGS ............................................................................................. 12

4. INFORMATION ON THE OFFEROR AND ARRANGEMENTS WITH CONSORTIUM SHAREHOLDERS ...................................................................................................................... 14

5. RATIONALE FOR THE OFFER AND OFFEROR’S INTENTIONS FOR THE COMPANY ........ 20

6. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION ............................................ 22

7. ADVICE AND RECOMMENDATION .......................................................................................... 22

8. ACTION TO BE TAKEN BY SHAREHOLDERS ......................................................................... 25

9. OVERSEAS SHAREHOLDERS ................................................................................................. 26

10. DIRECTORS’ RESPONSIBILITY STATEMENT ......................................................................... 27

APPENDIX 1: LETTER FROM COLLINS STEWART PTE. LIMITED TO THE INDEPENDENT DIRECTORS OF QUALITAS MEDICAL GROUP LIMITED ......................................... 28

APPENDIX 2: ADDITIONAL GENERAL INFORMATION ON THE COMPANY .................................. 55

APPENDIX 3: EXTRACTS FROM THE ARTICLES OF ASSOCIATION OF THE COMPANY ........... 62

APPENDIX 4: AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR FY2010 ...................... 82

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TABLE OF CONTENTS

For the purpose of this Circular, the following definitions apply throughout unless the context otherwise requires or unless otherwise stated:

Acceptance Threshold : Shall have the meaning ascribed to it in section 2.4 of this Circular

Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time

Articles : The Articles of Association of the Company

Catalist : The sponsor-supervised listing platform of the SGX-ST

Catalist Rules : Section B of the Listing Manual dealing with the rules of Catalist

CAV : Commerce Asset Ventures Sdn Bhd, a Shareholder which holds directly an aggregate of 21,737,670 Shares constituting 15.36% of the Shares

CDP : The Central Depository (Pte) Limited

CIMB : CIMB Bank Berhad

Circular : This Circular issued to Shareholders dated 19 April 2011 in relation to the Offer

CKPF : Commerce-KPF Ventures Sdn Bhd, a Shareholder which holds directly an aggregate of 14,024,303 Shares constituting 9.91% of the Shares

Closing Date : 5.30 p.m. (Singapore time) on 18 May 2011 or such other later date(s) as may be announced from time to time by or on behalf of the Offeror

Code : The Singapore Code on Take-overs and Mergers

Company or QMGL : Qualitas Medical Group Limited

Concert Parties : Parties acting in concert with the Offeror for the purposes of the Offer

Directors : The directors of the Company as at the Latest Practicable Date

DMC : Dr Marcus Cooney

DMCA : Dr Marcus Cooney & Associates Pte Ltd

DMCA Acquisition : The acquisition by QHI of a 75 per cent. equity interest in DMCA from the DMCA Vendor

DMCA Consideration Shares : The new Shares allotted and issued by QMGL on 29 March 2011 to DMC as the authorised nominee of the DMCA Vendor pursuant to the terms of the DMCA SPA

DMCA SPA : The sale and purchase agreement dated 24 December 2009 entered into between QHI, DMC, the DMCA Vendor and DMCA in relation to the DMCA Acquisition

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DEFINITIONS

DMCA Vendor : Ms Angela Alice Cooney

Dr Ameen : Dr Noorul Ameen Bin Mohamed Ishack, the Chairman and Managing Director of QMGL and a Shareholder who holds directly an aggregate of 18,686,762 Shares constituting 13.20% of the Shares

FAA : Form of Acceptance and Authorisation for the Offer Shares which forms part of the Offer Document and which is issued to Shareholders whose Shares are deposited with CDP

FAT : Form of Acceptance and Transfer for the Offer Shares which forms part of the Offer Document and which is issued to Shareholders whose Shares are not deposited with CDP

FY : Financial year ended or, as the case may be, ending 31 December

Group or QMGL Group : The Company, its subsidiaries and associated companies

HQ : Healing Quest

IFA or CSPL : Collins Stewart Pte. Limited

IFA Letter : The letter from CSPL to the Independent Directors dated 19 April 2011 , as set out in Appendix 1 to this Circular

Independent Directors : The Directors who are independent for the purpose of making recommendation to the Shareholders in respect of the Offer, namely, Messrs Chaw Chong Foo and Dato’ Dr Samsudin Bin Hussain

Latest Practicable Date : The latest practicable date prior to the printing of this Circular, being 12 April 2011

Level of Acceptances Announcement

: Shall have the meaning ascribed to it in section 3.2 of this Circular

Listing Manual : The listing manual of the SGX-ST in force as at the Latest Practicable Date

Market Day : A day on which the SGX-ST is open for trading of securities

Mr Karim : Karim Tajdin Mohamed Ali Dhala, the Executive Director of QMGL and a Shareholder who holds directly an aggregate of 813,767 Shares in the Company constituting 0.57% of the Shares

New Offeror Shares : New ordinary Shares in the capital of the Offeror to be issued pursuant to the Offer

Offer : The voluntary conditional offer by CIMB, for and on behalf of the Offeror, to acquire all the Offer Shares on the terms and subject to the conditions set out in the Offer Document, the FAA and the FAT

Offer Announcement : Announcement dated 15 March 2011 issued by CIMB, for and on behalf of the Offeror, in relation to the Offer

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DEFINITIONS

Offer Announcement Date : 15 March 2011, being the date of the Offer Announcement

Offer Document : The offer document dated 5 April 2011 issued by CIMB, for and on behalf of the Offeror, in respect of the Offer, including the FAA and the FAT, and any other document which may be issued by or on behalf of the Offeror to amend, revise, supplement, or update such offer document from time to time

Offer Consideration : S$0.35 in cash for each Offer Share or New Offeror Shares or a combination of both cash and New Offeror Shares as set out in paragraph 2.1 of the Offer Document

Offer Shares : All the Shares in issue other than those Shares held, directly or indirectly, by the Offeror as at the date of the Offer

: Shall have the meaning ascribed to it in section 2.4 of this Circular

Offeror : Qualitas Healthcare Holdings Limited

Offeror Shares : Shall have the meaning ascribed to it in section 4 of this Circular

Overseas Shareholders : Shareholders whose addresses are outside Singapore, as shown in the register of members of the Company or, as the case may be, in the records of the CDP, and “Overseas Shareholder” means any one of them

per cent or % : Per centum or percentage

QHI : Qualitas Healthcare International Sdn Bhd

S$ and cents : Singapore dollars and cents, respectively

SGX-ST : Singapore Exchange Securities Trading Limited

Shareholders : Holders of Shares, including persons whose Shares are deposited with CDP or who have purchased Shares on the SGX-ST

Shares : Issued and paid-up ordinary shares in the capital of the Company

SIC : Securities Industry Council of Singapore

Subscription : Shall have the meaning ascribed to it in section 4 of this Circular

Subscription Agreement : The subscription agreement dated 14 March 2011 entered into between Dr Ameen, Mr Karim, HQ and the Offeror in connection with the Offer

Undertaking Shareholders : Comprises CAV, CKPF, Dr Ameen, Mr Karim, DMC and Key Undertaking Shareholders

The expression acting in concert shall have the meaning ascribed to it in the Code. The term Depositor shall have the meaning ascribed to it in Section 130A of the Act.

Offer Unconditional Announcement

4

DEFINITIONS

Words importing the singular shall, where applicable, include the plural and vice versa and words importing one gender shall include the other gender. References to persons shall, where applicable, include corporations.

The headings in this Circular are inserted for convenience only and shall be disregarded in construing thisCircular.

Any discrepancies in figures included in this Circular between the amounts shown and the total thereof are due to rounding. Accordingly, figures shown as totals in this Circular may not be arithmetic aggregation of the figures that precede them.

References to you, your and yours in this Circular are, as the context so determines, to the Shareholders (including persons whose Offer Shares are deposited with CDP or who have purchased Offer Shares on the SGX-ST).

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined in the Act, the Listing Manual or the Code or any statutory modification thereof and used in this Circular shall, where applicable, have the meaning assigned to it under the Act, the Listing Manual or the Code or any statutory modification thereof, as the case may be, unless the context otherwise requires.

The terms subsidiary and related corporation shall have the meanings ascribed to them respectively in Section 5 and Section 6 of the Act.

Any reference to a time of day and date in this Circular is made by reference to Singapore time and date, unless otherwise stated.

In this Circular, reference to total issued Shares of the Company is, unless otherwise stated, to 141,559,396 Shares as at the Latest Practicable Date.

In this Circular, where parts of the Offer Document are reproduced, references to the Latest Practicable Date shall mean 31 March 2011, being the latest practicable date prior to the printing of the Offer Document. Extracts reproduced in their entirety from the Offer Document are set out in italics and quotation marks.

Terms not defined in this Circular are as stated in the Offer Document.

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DEFINITIONS

All statements other than statements of historical facts included in this Circular are or may be forward- looking statements. Forward-looking statements include but are not limited to those using words such as “seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “may” and “might”. These statements reflect the Company’s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward- looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders should not place undue reliance on such forward-looking statements, and the Company assumes no obligation to update publicly or revise any forward-looking statements.

6

CAUTIONARY NOTES

Date of despatch of Offer Document : 5 April 2011

Date of despatch of Offeree Circular : 19 April 2011

Closing Date : 5.30 p.m. on 18 May 2011

Date of settlement of consideration on :the Offer

(i) in respect of acceptances of the Offer which are complete and valid in all respects and are received on or before the date on which the Offer becomes or is declared to be unconditional in all respects, within 10 days of that date; or

(ii) in respect of acceptances which are complete and valid in all respects and are received after the Offer becomes or is declared to be unconditional in all respects, but before the Offer closes, within 10 days of the date of such receipt.

7

INDICATIVE TIME TABLE

QUALITAS MEDICAL GROUP LIMITED(Company Reg. No. 200717959H)


Directors Registered Office

Dato’ Dr Noorul Ameen Bin Mohamed Ishack 19 Keppel Road(Chairman and Managing Director) #03-10 Jit Poh Building Karim Tajdin Mohamed Ali Dhala (Executive Director) Singapore 089058Chaw Chong Foo (Lead Independent Director)Raja Noorma Binti Raja Othman (Non-Independent Non-Executive Director) Muhammad Azraini Bin Abdul Hamid (Non Independent Non-Executive Director)Dato’ Dr Samsudin Bin Hussain (Independent Director)

19 April 2011

To: The Shareholders of Qualitas Medical Group Limited

Dear Sir/Madam

VOLUNTARY CONDITIONAL OFFER BY CIMB, FOR AND ON BEHALF OF THE OFFEROR, FOR ALL THE OFFER SHARES

1. INTRODUCTION

1.1 Offer Announcement

The Company refers to its earlier announcement of 15 March 2011. On the Offer Announcement Date, CIMB announced, for and on behalf of the Offeror, that the Offeror intends to make a voluntary conditional offer for all the Shares in the capital of the Company, other than those Shares held, directly and indirectly, by the Offeror as at the date of the Offer.

A copy of the Offer Announcement is available on the website of the SGX-ST at www.sgx.com.

1.2 Offer Document

Shareholders should have by now received a copy of the Offer Document, despatched on 5 April 2011, setting out, inter alia, the terms and conditions of the Offer. The principal terms and conditions of the Offer are set out in paragraph 7 and Appendix 2 of the Offer Document. Shareholders are advised to read the terms and conditions of the Offer set out in the Offer Document carefully.

1.3 Purpose of this Circular

The purpose of this Circular is to provide relevant information to the Shareholders pertaining to the Offer and to set out the recommendation of the Independent Directors and the advice of the IFA to the Independent Directors in relation to the Offer.

Shareholders should read the Offer Document, this Circular and the Letter from Collins Stewart Pte. Limited, the IFA to the Independent Directors, set out in Appendix 1 to this Circular and consider carefully the recommendation of the Independent Directors and the advice of the IFA before deciding whether or not to accept the Offer.

If you are in any doubt about the Offer, you should consult your stockbroker, bank manager, accountant, solicitor, tax adviser or other professional adviser immediately.

8

LETTER TO SHAREHOLDERS

2. THE OFFER

Based on the information set out in the Offer Document, CIMB has, for and on behalf of the Offeror, made the Offer to acquire the Offer Shares on the terms and subject to the conditions set out in the Offer Document, the FAA and FAT on the following basis:

2.1 Offer Consideration

The consideration for the Offer (the “Offer Consideration”) will be either in cash or New Offeror Shares or a combination of both cash and New Offeror Shares in the following proportions:

(i) S$0.35 in cash for each Offer Share (the “Cash Consideration”); OR

(ii) 50 per cent. in the form of cash at the Cash Consideration and 50 per cent. in the form of the Securities Consideration, with fractions of each New Offeror Share to be disregarded and the cash to be rounded down to the nearest cent (the “Combination 50/50 Cash and Securities Consideration”); OR

(iii) 25 per cent. in the form of cash at the Cash Consideration and 75 per cent. in the form of the Securities Consideration, with fractions of each New Offeror Share to be disregarded and the cash to be rounded down to the nearest cent (the “Combination 25/75 Cash and Securities Consideration”); OR

(iv) one New Offeror Share for each Offer Share (the “Securities Consideration”).

Fractions of a New Offeror Share will be disregarded and will not be issued to any holder of Offer Shares who accepts the Offer.

The New Offeror Shares are not listed on any securities exchange.

Accordingly, Shareholders who accept the Offer may elect to receive all cash or all New Offeror Shares or a combination thereof as specified in paragraphs 2.1(i) to 2.1(iv) above as the Offer Consideration for their Offer Shares. The issue price for each New Offeror Share issued pursuant to (i) the Combination 50/50 Cash and Securities Consideration; (ii) the Combination 25/75 Cash and Securities Consideration; and (iii) all Securities Consideration, as specified in paragraphs 2.1(ii), 2.1(iii) and 2.1(iv) above is S$0.35. The New Offeror Shares will rank pari passu with the existing ordinary shares in the capital of the Offeror.

For the avoidance of doubt, Shareholders may (in respect of each acceptance of the Offer) elect ONLY ONE of the four forms of the Offer Consideration set out in this Section 2.1 and not a combination thereof in respect of their Offer Shares.

Shareholders should refer to the Offer Document, especially Appendix 5 of the Offer Document in relation to risks involved in investing in the Offeror Shares.

The Offeror does not intend to revise the Offer Consideration, save that the Offeror reserves its right to revise the Offer Consideration in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer arises.

2.2 No Encumbrances

The Offer Shares are to be acquired (a) fully-paid ; (b) free from any mortgage, debenture, lien, charge, pledge, title retention, right to acquire security interest, option, pre-emptive or similar right, right of first refusal and any other encumbrance or condition whatsoever; and (c) together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by QMGL on or after the Offer Announcement Date, save for the FY2010 Final Dividend.

For the avoidance of doubt, irrespective of the form of Offer Consideration that Shareholders elect to receive, Shareholders will be entitled to retain the FY2010 Final Dividend.

9


2.3 Offer Shares

The Offer is extended, on the same terms and conditions, to all the issued Shares owned, controlled or agreed to be acquired by the Concert Parties, including without limitation, those Shares held by the Undertaking Shareholders.

2.4 Offer Condition

The Offer is subject to the Offeror having received, by the close of the Offer, valid acceptances in respect of more than 50% of the Offer Shares (Acceptance Threshold).

Accordingly, the Offer will not become or be capable of being declared unconditional as to acceptances until the close of the Offer, unless at any time prior to the close of the Offer, the Offeror has received valid acceptances in respect of such number of Offer Shares which will result in the Acceptance Threshold being met.

According to the Offer Document, based on 141,559,396 Shares in issue as at 31 March 2011, being the latest practicable date prior to the despatch of the Offer Document, and assuming no new Shares are issued between that date and the close of the Offer, the Offeror must have received, by the close of the Offer, valid acceptances in respect of at least 70,779,699 Offer Shares for the Acceptance Threshold to be met and the Offer to become unconditional in all respects.

The Offer is unconditional in all other respects.

On 11 April 2011, CIMB announced (Offer Unconditional Announcement), for and on behalf of the Offeror, that the Offeror had, on 8 April 2011, received valid acceptances of the Offer resulting in the Offeror, and parties acting in concert with it, holding such number of Shares carrying more than 50% of the Offer Shares. Accordingly, the Offer became unconditional as to acceptances and was thereby declared unconditional in all respects on 8 April 2011.

By a further announcement made by the Offeror, as at 5.00 p.m. (Singapore time) on 12 April 2011, the Offeror and parties acting in concert with it owned, controlled, acquired or have agreed to acquire (including by way of valid acceptances of the Offer), an aggregate of 116,589,194 Offer Shares, representing approximately 82.36 per cent. of the Shares in issue as at the date of this Announcement.

2.5 Warranty

Acceptance of the Offer will be deemed to constitute an unconditional and irrevocable warranty by each accepting Shareholder that each Offer Share tendered in acceptance of the Offer is sold by the accepting Shareholder, as or on behalf of the beneficial owner(s) thereof, (i) fully paid; (ii) free from any mortgage, debenture, lien, charge, pledge, title retention, right to acquire, security interest, option, pre-emptive or similar right, right of first refusal and any other encumbrance or condition whatsoever; and (iii) together with all rights, benefits, entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by QMGL on or after the Offer Announcement Date, save for the FY2010 Final Dividend.

2.6 Duration of the Offer

(a) Closing Date

Except insofar as the Offer may be withdrawn with the consent of the SIC and every person released from any obligation incurred thereunder, the Offer will remain open for acceptances by Shareholders for a period of at least 28 days from the date of posting of the Offer Document, i.e. until 3 May 2011.

By an announcement made on 11 April 2011, the Offeror has extended the Closing Date until 5.30 p.m. on 18 May 2011 or such other date(s) as may be announced from time to time by or on behalf of the Offeror.

10


If there is an extension of the Offer, pursuant to Rule 22.4 of the Code, any announcement of an extension of the Offer will state the next closing date or if the Offer is unconditional as to acceptances, a statement may be made that the Offer will remain open until further notice. In the latter case, those Shareholders who have not accepted the Offer will be notified in writing at least 14 days before the Offer is closed.

(b) Offer to Remain Open for 14 days after Being Declared Unconditional as to Acceptances

Pursuant to Rule 22.6 of the Code, if the Offer becomes or is declared to be unconditional as to acceptances, the Offer will remain open for acceptance for not less than 14 days after the date on which it would otherwise have closed, in order to give those Shareholders who have not accepted the Offer the opportunity to do so. This requirement does not apply if, before the Offer becomes or is declared to be unconditional as to acceptances, the Offeror has given notice in writing (“Shut-Off Notice”) to the Shareholders at least 14 days before 5.30 p.m. on the specified Closing Date that the Offer will not be open for acceptance beyond that date, provided that (i) the Offeror may not give a Shut-Off Notice in a competitive situation; and (ii) the Offeror may not enforce a Shut-Off Notice, if already given, in a competitive situation.

As set out in Appendix 2 to the Offer Document, in the event the Offer Consideration is revised in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer arises, the Offer will remain open for acceptance for at least 14 days from the date of despatch of the written notification of the revision to Shareholders.

(c) Final Day Rule

Pursuant to Rule 22.9 of the Code, the Offer (whether revised or not) will not be capable of becoming or being declared to be unconditional as to acceptances after 5.30 p.m. on the 60th day after the date of posting of the Offer Document or of being kept open after the expiry of such period, unless it has previously become or been declared to be unconditional as to acceptances, except with the prior consent of the SIC. The SIC will consider granting such permission in circumstances including but not limited to where a competing offer has been announced.

(d) Revision

Although the Offeror does not intend to revise the Offer Consideration, save that the Offeror reserves its right to revise the Offer Consideration in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer arises, pursuant to Rule 20.1 of the Code, the Offer, if revised, will remain open for acceptance for a period of at least 14 days from the date of despatch of the written notification of the revision to Shareholders. In any case, where the terms are revised, the benefit of the Offer (as so revised) will be made available to each of the Shareholders, including those who have previously accepted the Offer.

(e) Time for Fulfilment of Other Conditions

Except with the consent of the SIC, all conditions of the Offer must be fulfilled or the Offer must lapse within 21 days of the first Closing Date or the date the Offer becomes or is declared unconditional as to acceptances, whichever is the later. The only condition to this Offer is set out in section 2.4 above.

2.7 Details of the Offer

The Offer is made in accordance with the principal terms and conditions as set out in the Offer Document. Further details on (a) the settlement of the consideration for the Offer, (b) the requirements of withdrawal of relating to the announcement of the level of acceptances of the Offer, and (c) the right acceptances of the Offer are set out in Appendix 2 to the Offer Document.

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2.8 Procedures for Acceptance

The procedures for acceptance of the Offer are set out in Appendix 3 to the Offer Document. A copy of the Offer Document is available on the website of the SGX-ST at www.sgx.com.

3. IRREVOCABLE UNDERTAKINGS

3.1 The information on the Irrevocable Undertakings has been extracted from paragraph 6 of the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below should have the same meaning as those defined in the Offer Document.

“6. IRREVOCABLE UNDERTAKINGS

6.1 Major Shareholder Irrevocable Undertakings. As at the Offer Announcement Date, the Offeror has obtained irrevocable undertakings (the “Major Shareholder Irrevocable Undertakings”) from each of the Major Undertaking Shareholders to (i) accept the Offer in respect of (a) the Shares held, directly or indirectly, by each of them from the date of execution of their respective Major Shareholder Irrevocable Undertakings as set out below and (b) any Shares which such Major Undertaking Shareholder may acquire on or after the date of their respective Major Shareholder Irrevocable Undertakings; and (ii) elect to receive either the Cash Consideration or the Securities Consideration as set out below. The Major Shareholder Irrevocable Undertakings will terminate, inter alia, on the close, lapse or withdrawal of the Offer. The Major Shareholder Irrevocable Undertakings relate to an aggregate of 55,262,502 Offer Shares, representing approximately 39.04 per cent. of the Shares in issue as at the Latest Practicable Date.

Name of Major Undertaking Shareholder

Date of Major Shareholder Irrevocable

Undertaking

Number of Offer Shares

held

Percentage of issued Shares

(%)Offer

Consideration

CAV(1) 11 March 2011 21,737,670 15.36 CashConsideration

CKPF(1) 11 March 2011 14,024,303 9.91 CashConsideration

Dr Ameen 14 March 2011 18,686,762 13.20 SecuritiesConsideration

Mr Karim 14 March 2011 813,767 0.57 SecuritiesConsideration

Total 55,262,502 39.04

Note:

(1) CAV and CKPF are subsidiaries of CIMB Group Holdings, a company listed on Bursa Malaysia. CIMB Group Holdings is also the parent company of CIMB.

Pursuant to the terms of each of the Major Shareholder Irrevocable Undertakings, each Major Undertaking Shareholder has also agreed, during the period commencing on the date of execution of its/his Major Shareholder Irrevocable Undertaking and ending on the date on which its/his Major Shareholder Irrevocable Undertaking terminates, not to, and not to permit or authorise any of its/his officers, employees, subsidiaries, affiliates, agents or advisers, where applicable, (collectively, the “Major Undertaking Shareholder Representatives”), directly or indirectly, to (1) encourage any proposals or offers or engage in negotiations with any person other than the Offeror, relating to the possible acquisition of the Shares (an “Opposing Proposal”); (2) furnish any information regarding QMGL in connection with

12


an Opposing Proposal; (3) engage in discussions with respect to any Opposing Proposal; (4) approve, endorse, recommend, vote or agree to vote for any Opposing Proposal; (5) enter into any agreement, arrangement or understanding relating to any Opposing Proposal; or (6) take any actions which could reasonably be expected to frustrate the Offer. Each Major Undertaking Shareholder has also agreed, and will cause their respective Major Undertaking Shareholder Representatives, to immediately cease any existing discussions with persons other than the Offeror that relate to any Opposing Proposal.

6.2 DMC Irrevocable Undertaking. On 24 December 2009, QMGL announced the DMCA Acquisition. The DMCA Acquisition was completed by QMGL on 1 January 2010. On 14 March 2011, QMGL announced in the DMCA SPA Election Announcement that pursuant to the terms of the DMCA SPA, DMC had elected to accept, as the authorised nominee of the DMCA Vendor, the maximum number of DMCA Consideration Shares, i.e. 6,875,175 Shares, as part of the second tranche consideration under the DMCA SPA. On 29 March 2011, QMGL announced the allotment and issue of the 6,875,175 DMCA Consideration Shares to DMC. The DMCA Consideration Shares rank pari passu in all respects with the Shares, save that the DMCA Consideration Shares will not rank for any dividends to be paid in respect of FY2010 (such as the FY2010 Final Dividend).

Copies of the announcements made by QMGL in relation to the DMCA Acquisition, the DMCA SPA Election Announcement and the announcement made by QMGL in relation to the allotment and issue of the DMCA Consideration Shares are available on the website of the SGX-ST at www.sgx.com.

As at the Offer Announcement Date, the Offeror has obtained an irrevocable undertaking dated 14 March 2011 from DMC (the “DMC Irrevocable Undertaking”), that in the event he elects to accept DMCA Consideration Shares as part of the consideration under the DMCA SPA, he irrevocably undertakes to (i) accept the Offer in respect of (a) all the DMCA Consideration Shares to be issued to and held by him pursuant to the DMCA SPA and (b) any Shares which he may acquire on or after 14 March 2011, and (ii) elect to receive the Offer Consideration in respect of all such Shares in the form of the Combination 50/50 Cash and Securities Consideration.

Following the election by DMC to receive, as the authorised nominee of the DMCA Vendor, the maximum number of DMCA Consideration Shares, the DMC Irrevocable Undertaking therefore applies to all 6,875,175 Offer Shares, representing approximately 4.86 per cent. of the Shares in issue as at the Latest Practicable Date, allotted and issued by QMGL to DMC on 29 March 2011 in accordance with the terms of the DMCA SPA.

Pursuant to the terms of the DMC Irrevocable Undertaking, DMC has also agreed, during the period commencing on 14 March 2011, being the date of the DMC Irrevocable Undertaking and ending on the date on which the DMC Irrevocable Undertaking terminates, not to, and not to permit or authorise any of his agents or advisers (collectively, the “DMC Representatives”), directly or indirectly, to (1) encourage any Opposing Proposal; (2) furnish any information regarding QMGL in connection with an Opposing Proposal; (3) engage in discussions with respect to any Opposing Proposal; (4) approve, endorse, recommend, vote or agree to vote for any Opposing Proposal; (5) enter into any agreement, arrangement or understanding relating to any Opposing Proposal; or (6) take any actions which could reasonably be expected to frustrate the Offer. DMC has also agreed, and will cause the DMC Representatives, to immediately cease any existing discussions with persons other than the Offeror that relate to any Opposing Proposal. The DMC Irrevocable Undertaking will terminate, inter alia, on the close, lapse or withdrawal of the Offer.

6.3 Key Shareholder Irrevocable Undertakings. As at the Offer Announcement Date, and from the Offer Announcement Date to the Latest Practicable Date, the Offeror has obtained irrevocable undertakings (the “Key Shareholder Irrevocable Undertakings”) from each of the Key Undertaking Shareholders to (i) accept the Offer in respect of (a) all the Shares held by each of them as at the date of execution of their respective Key Shareholder Irrevocable Undertakings, and (b) any Shares which such Key Undertaking Shareholder may directly

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or indirectly acquire on or after the date of execution of their respective Key Shareholder Irrevocable Undertakings (collectively the “Relevant Shares”), and (ii) elect to receive one form of the Offer Consideration as set out in Appendix 1 to this Offer Document. The Key Shareholder Irrevocable Undertakings will terminate, inter alia, on the close, lapse or withdrawal of the Offer. The Key Shareholder Irrevocable Undertakings relate to an aggregate of 32,019,464 Offer Shares, representing approximately 22.62 per cent. of the Shares in issue as at the Latest Practicable Date.

Pursuant to the terms of each of the Key Shareholder Irrevocable Undertakings, each Key Undertaking Shareholder has also agreed, during the period commencing on the date of execution of his Key Shareholder Irrevocable Undertaking and ending on the date on which his Key Shareholder Irrevocable Undertaking terminates, not to, directly or indirectly, (1) offer, (2) sell, transfer, give or otherwise dispose of, (3) grant any option, right or warrant to purchase in respect of, (4) charge, mortgage, pledge or otherwise encumber, (5) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the legal, beneficial or economic consequences of ownership of, all or any of the Relevant Shares or any interest therein, or (6) enter into any agreement with a view to effecting any of the foregoing, and to not take any action or omit to do any action which would cause the Key Undertaking Shareholder to breach his obligations under his Key Shareholder Irrevocable Undertaking or conflict with or diminish his obligations under his Key Shareholder Irrevocable Undertaking.

6.4 Aggregate Acceptance and Shareholding. In the event that all the Major Undertaking Shareholders, DMC and all the Key Undertaking Shareholders accept the Offer in accordance with the Irrevocable Undertakings, the Offeror would obtain acceptances in relation to an aggregate of 94,157,141 Offer Shares, representing approximately 66.51 per cent. of the Shares in issue as at the Latest Practicable Date.

6.5 No Other Undertakings. Save as disclosed in this Offer Document, as at the Latest Practicable Date, neither the Offeror nor any other party acting or deemed to be acting in concert with it has received any irrevocable undertaking from any party to accept or reject the Offer.”

3.2 As announced by CIMB on 11 April 2011 (Level of Acceptances Announcement), for and on behalf of the Offeror, as at 5.00 p.m. on 8 April 2011, the Offeror had received valid acceptances amounting to 64,494,703 Offer Shares, representing approximately 45.56% of the total issued Shares. This included the acceptances received from Dr Ameen and Mr Karim, being persons acting in concert with the Offeror, in respect of an aggregate of 19,500,529 Offer Shares, representing approximately 13.78% of the Shares in issue as at 11 April 2011. Accordingly, as at 5.00 p.m. (Singapore time) on 8 April 2011, the Offeror and parties acting in concert with it owned, controlled, acquired or have agreed to acquire (including by way of valid acceptances of the Offer), an aggregate of 77,817,791 Offer Shares (including 13,323,088 Offer Shares held by QH Sdn Bhd, being a party acting in concert with the Offeror), representing approximately 54.97% of the Shares in issue as at 8 April 2011, being the date of the announcement, upon which the Acceptance Threshold will be met and the Offer will become unconditional in all respects.

3.3 Accordingly, on 8 April 2011, as stated in the Offer Unconditional Announcement, the Offer became unconditional as to acceptances and was declared unconditional in all respects.

4. INFORMATION ON THE OFFEROR AND ARRANGEMENTS WITH CONSORTIUM

Information on the Offeror and on certain arrangements entered into between the Offeror and Consortium is set out in paragraph 9 of the Offer Document and reproduced in italics below. Unless otherwise defined, all terms and expressions used in the extract below should have the same meaning as those defined in the Offer Document.

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“9. INFORMATION ON THE OFFEROR AND CONSORTIUM

9.1 Offeror. The Offeror is an investment holding company incorporated in Singapore on 9 November 2010. The Offeror has not carried on any business since its incorporation except to enter into certain agreements relating to the formation of the Consortium (as defined in Section 9.3 below) and in connection with the Offer. As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of S$7,980,037, consisting of 102 Offeror Shares and 22,800,000 Offeror CPS convertible into 22,800,000 new Offeror Shares, of which:

(i) the HQ Offeror Shares are held by HQ, a wholly-owned subsidiary of MAFII;

(ii) the Ameen Offeror Shares are held by Dr Ameen; and

(iii) the Karim Offeror Shares are held by Mr Karim.

The directors of the Offeror are Dr Ameen, Mr Karim, Mr Kenneth Tan Jhu Hwa and Mr Wong Chin Toh. Dr Ameen is also the Chairman of the Offeror Board. Mr Kenneth Tan Jhu Hwa is a Partner and Mr Wong Chin Toh is a Director, Investments, of Southern Capital Group, which manages the Mulberry Asia group of funds, including MAFII.

Appendix 4 to this Offer Document sets out certain additional information on the Offeror.

9.2 Southern Capital Group, MAFII and HQ. Southern Capital Group is a private equity firm which focuses on control buy-outs of middle market businesses in South-East Asia and China and manages the Mulberry Asia group of funds, including MAFII. HQ is an investment holding company incorporated in Mauritius on 21 February 2011, and has, as at the Latest Practicable Date, an issued and paid-up share capital of US$1.00, consisting of one ordinary share of par value US$1.00, which is held by MAFII.

9.3 Consortium Arrangements. HQ, the Offeror, Dr Ameen and Mr Karim have formed a consortium (the “Consortium”) to undertake the Offer. The arrangements comprised in the Consortium are set out in the Subscription Agreement and include the following:

(i) First Tranche Subscription. The Consortium Parties entered into the Subscription Agreement pursuant to which on 14 March 2011:

(a) Mr Wong Chin Toh transferred the two Offeror Shares held by him to HQ for the consideration amount of S$0.35 for each Offeror Share and HQ subscribed for, and was allotted and issued by the Offeror, the HQ Offeror Shares at the Issue Price for each HQ Offeror Share and all the Offeror CPS at the Offeror CPS Issue Price for each Offeror CPS;

(b) Dr Ameen subscribed for, and was allotted and issued by the Offeror, the Ameen Offeror Shares at the Issue Price for each Ameen Offeror Share; and

(c) Mr Karim subscribed for, and was allotted and issued by the Offeror, the Karim Offeror Shares at the Issue Price for each Karim Offeror Share, (collectively, the “First Tranche Subscription”).

(ii) HQ Offeror CPS Conversion. Pursuant to the terms of the Subscription Agreement, upon Dr Ameen and Mr Karim tendering their acceptances and electing to receive the Securities Consideration in relation to their aggregate shareholding of 19,500,529 Offer Shares pursuant to their respective Major Shareholder Irrevocable Undertakings, HQ will convert 19,500,529 Offeror CPS into an equivalent number of Offeror Shares.

(iii) HQ Second Subscription and Further Subscription. Under the terms of the Subscription Agreement, within a period of up to 30 days from the Closing Date, HQ will subscribe for such number of additional Offeror Shares and/or Offeror CPS at the Issue Price and the Offeror CPS Issue Price respectively (the “Second Subscription”)

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such that it will hold an aggregate number of Offeror Shares equivalent to 50 per cent. of the enlarged issued ordinary share capital of the Offeror and two Offeror Shares following completion of the Second Subscription.

The terms of the Subscription Agreement also provide that HQ has the right, but not the obligation, subject to Dr Ameen’s and Mr Karim’s approval and contingent upon HQ holding at least 50 per cent. of the enlarged issued ordinary share capital of the Offeror and two Offeror Shares, to subscribe at the Issue Price and on such other terms to be agreed between the Consortium Parties for an additional number of Offeror Shares (the “Further Subscription”), such that the aggregate number of Offeror Shares held by HQ following completion of the Further Subscription shall amount to not more than 75 per cent. of the enlarged issued ordinary share capital of the Offeror.

(iv) Moratorium on Transfers by HQ and Issuance of Offeror Shares and Offeror CPS. The Consortium Parties have agreed that during the period commencing on the date of completion of the First Tranche Subscription and ending on the date of completion of the Second Subscription, (a) the Offeror will not, and HQ, Dr Ameen and Mr Karim will procure that the Offeror will not, issue Offeror Shares or Offeror CPS other than pursuant to the Subscription Agreement and/or in connection with the Offer, and (b) HQ will not transfer any of its Offeror Shares or Offeror CPS to any affiliate or third party without the consent of Dr Ameen and Mr Karim.

(v) Ameen and Karim Irrevocable Undertakings. As set out in Section 6.1 above, Dr Ameen and Mr Karim have each given irrevocable undertakings in favour of the Offeror to (a) accept the Offer in respect of an aggregate 19,500,529 Offer Shares, representing approximately 13.78 per cent. of the Shares in issue as the Latest Practicable Date, and (b) to elect to receive the Securities Consideration in respect of all such Offer Shares.

(vi) Offeror Board Composition and Management. Pursuant to the terms of the Subscription Agreement, the Consortium Parties have agreed that the Offeror Board shall consist of no more than seven members, initially comprising Dr Ameen (with Dr Ameen appointed as Chairman), Mr Karim and two persons appointed by HQ, being Mr Kenneth Tan Jhu Hwa and Mr Wong Chin Toh. Following completion of the Offer, HQ shall be entitled to appoint up to two more nominees to the Offeror Board, while Dr Ameen shall have the right to appoint to the Offeror Board a representative from amongst the doctors employed by the QMGL Group. The terms of the Subscription Agreement also provide for rights of appointment and removal of directors of the Offeror and provisions relating to, inter alia, proceedings of meetings of directors and shareholders of the Offeror which are also set out in the Offeror M&AA. The Consortium Parties have also acknowledged and agreed, inter alia, that Dr Ameen and Mr Karim shall be primarily responsible for the operations and day-to-day management of the business of the Offeror and its subsidiaries (including, following the close of the Offer, the QMGL Group).

(vii) Moratorium and Non-Compete. Pursuant to the terms of the Subscription Agreement, each of Dr Ameen and Mr Karim has undertaken that he will not, without the prior written consent of HQ:

(a) transfer all or any part of his Offeror Shares (including any New Offeror Shares received pursuant to his acceptance of the Offer) to any other person for as long as he is employed by QMGL or any of the subsidiaries of QMGL; and

(b) for as long as he holds any Offeror Shares (including any New Offeror Shares received pursuant to his acceptance of the Offer) and for a period of two years from the date of transfer of all his Offeror Shares:

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(1) engage, be employed or be interested directly or indirectly in any business within the Restricted Territories which is similar or competing with the business of the Offeror, QMGL and their respective subsidiaries (“Competing Business”) (other than as a holder of not more than five per cent. of the issued shares or debentures of any company listed on any stock exchange);

(2) carry on for his own account either alone or in partnership or be concerned as a director of any company engaged or about to be engaged in any Competing Business within the Restricted Territories;

(3) assist with any technical advice to any person, firm or company engaged or about to be engaged in any Competing Business within the Restricted Territories; or

(4) solicit in the Restricted Territories in competition with the business of the Offeror, QMGL and their respective subsidiaries the custom of any person, firm or company, who, at any time during the period he held Offeror Shares, was a customer of any of the Offeror, QMGL or their respective subsidiaries.

For this purpose, “Restricted Territories” means Singapore, Malaysia, India, Australia and New Zealand.

(viii) Copy for Inspection. A copy of the Subscription Agreement is available for inspection at the office of CIMB at 50 Raffles Place, #35-00 Singapore Land Tower, Singapore 048623 during normal business hours for the period which the Offer remains open for acceptance.

9.4 Resultant Shareholding Position. Pursuant to the Consortium arrangements, it is therefore contemplated that following the Closing Date:

(i) All Cash Consideration. If all Shareholders (save for the Major Undertaking Shareholders (including Dr Ameen and Mr Karim), DMC and the Key Undertaking Shareholders) accept the Offer and elect to receive the Cash Consideration as the Offer Consideration for all their Offer Shares, and assuming that:

(a) the Major Undertaking Shareholders (including Dr Ameen and Mr Karim), DMC and the Key Undertaking Shareholders accept the Offer in accordance with their respective Irrevocable Undertakings; and

(b) HQ holds such number of Offeror Shares representing 50 per cent. of the enlarged issued ordinary share capital of Offeror and two Offeror Shares,

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the resultant ordinary shareholdings of the Offeror will be as follows:

Percentage of issuedName of Offeror Shareholder Offeror Shares (%)(1)

HQ 50.00Dr Ameen 23.31Mr Karim 1.01DMC 4.29Key Undertaking Shareholders 21.39

Total 100.00

Note:

(1) Also assuming that all 22,800,000 Offeror CPS are converted into Offeror Shares by HQ and HQ undertakes the Second Subscription.

If the Further Subscription proceeds and HQ subscribes for such number of Offeror Shares such that on completion of the Further Subscription, the aggregate number of Offeror Shares held by HQ amounts to 75 per cent. of the enlarged issued ordinary share capital of the Offeror, the resultant ordinary shareholdings of the Offeror will be as follows:

Name of Offeror ShareholderPercentage of issued Offeror Shares (%)(1)

HQ 75.00Dr Ameen 11.66Mr Karim 0.51DMC 2.14Key Undertaking Shareholders 10.69

Total 100.00

Note:

(1) Also assuming that all 22,800,000 Offeror CPS are converted into Offeror Shares by HQ and HQ undertakes the Second Subscription and the Further Subscription.

(ii) All Securities Consideration. If all Shareholders (save for the Major Undertaking Shareholders (including Dr Ameen and Mr Karim), DMC and the Key Undertaking Shareholders) accept the Offer and elect to receive the Securities Consideration as the Offer Consideration for all their Offer Shares, and assuming that:

(a) the Major Undertaking Shareholders (including Dr Ameen and Mr Karim), DMC and the Key Undertaking Shareholders accept the Offer in accordance with their respective Irrevocable Undertakings; and

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(b) HQ holds such number of Offeror Shares representing 50 per cent. of the enlarged issued ordinary share capital of Offeror and two Offeror Shares, the resultant ordinary shareholdings of the Offeror will be as follows:


HQ 50.00Dr Ameen 10.68Mr Karim 0.47DMC 1.96Key Undertaking Shareholders 9.80Other Shareholders 27.09

Total 100.00

Note:

(1) Also assuming that all 22,800,000 Offeror CPS are converted into Offeror Shares by HQ and HQ undertakes the Second Subscription.

If the Further Subscription proceeds and HQ subscribes for such number of Offeror Shares such that on completion of the Further Subscription, the aggregate number of Offeror Shares held by HQ amounts to 75 per cent. of the enlarged issued ordinary share capital of the Offeror, the resultant ordinary shareholdings of the Offeror will be as follows:


HQ 75.00Dr Ameen 5.34Mr Karim 0.23DMC 0.98Key Undertaking Shareholders 4.90Other Shareholders 13.55

Total 100.00

Note:

(1) Also assuming that all 22,800,000 Offeror CPS are converted into Offeror Shares by HQ and HQ undertakes the Second Subscription and the Further Subscription.

9.5 Post-Offer Arrangements. It is currently contemplated that following completion of the Offer, HQ, Dr Ameen, Mr Karim and the Offeror will enter into a shareholders’ agreement to regulate their relationship as the majority shareholders of the Offeror. As at the Latest Practicable Date, the terms of such shareholders’ agreement have not been finalised and remain subject to further negotiations and discussions between the Consortium Parties. The Consortium Parties envisage that the key parameters of any such shareholders’ agreement may include the following:

(i) the composition of the Offeror Board;

(ii) the constitution of an investment committee, which will be delegated the responsibility to consider and decide on the acquisitions and/or disposals of any assets, businesses or properties, and the issuance of any securities, of the Offeror and its subsidiaries (including the QMGL Group);

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(iii) provisions in relation to the conduct and management of the business of the Offeror and its subsidiaries (including the QMGL Group), including provisions for Dr Ameen and Mr Karim to have primary responsibility for the operation and day-to-day management of the business of the Offeror and its subsidiaries (including the QMGL Group);

(iv) certain reserved matters which may not be undertaken by the Offeror save with the consent of HQ, Dr Ameen and Mr Karim. Such reserved matters are likely to include any change in the current business carried out by the Offeror and its subsidiaries (including the QMGL Group), any change in the Offeror’s name and constitutive documents, the making of any loans or incurring of bank borrowings above a specified amount and the winding up or dissolution of the Offeror and/or any of the Offeror’s subsidiaries (including the QMGL Group);

(v) financing obligations and sources of financing;

(vi) qualified exit events;

(vii) the entry by each of Dr Ameen and Mr Karim into new service agreements. The terms of such new service agreements (if any) are expected to be based upon, and in line with, the terms of the existing employment contracts of each of Dr Ameen and Mr Karim with the QMGL Group; and

(viii) the establishment of a management incentive scheme on terms to be determined by the Offeror Board.”

5. RATIONALE FOR THE OFFER AND OFFEROR’S INTENTIONS FOR THE COMPANY

The rationale for the Offer and Offeror’s intentions in relation to the Company are set out in paragraphs 11 and 12 of the Offer Document which is reproduced in italics below. Unless otherwise defined, all terms and expressions used in the extract below should have the same meaning as those defined in the Offer Document.

“11. RATIONALE FOR THE OFFER

11.1 Intention to Delist and Privatise QMGL. As set out in Section 12.3 below, the Offeror is making the Offer with a view to delisting QMGL from the SGX Catalist and depending on the outcome of the Offer, the Offeror intends to exercise its rights of compulsory acquisition under the Companies Act.

11.2 Greater Management Flexibility. The Consortium Parties believe that privatising QMGL and delisting it from the SGX Catalist will give more flexibility in managing the business of the QMGL Group and optimising the use of its management and capital resources.

11.3 Opportunity to Realise Investment. The Consortium Parties are of the view that the historical trading liquidity of the Shares on the SGX Catalist has been generally low. As such, the Cash Consideration represents an opportunity for Shareholders to realise their investment in the Shares at an attractive premium over the historical market prices of the Shares for cash without incurring brokerage and other trading costs.

11.4 Opportunity to Re-invest. As many of the Shareholders are currently practising doctors and employees within the QMGL Group, the Consortium Parties believe that offering Offeror Shares as a form of consideration will provide such employees of the QMGL Group with the opportunity (as an alternative to receiving solely the Cash Consideration) to re-invest in the QMGL Group through the Offeror and to participate in the future financial performance of the Offeror and its subsidiaries (including the QMGL Group).

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12. OFFEROR’S INTENTIONS IN RELATION TO QMGL

12.1 Future Plans. The Offeror intends for the QMGL Group to continue its existing business activities and does not intend to make any changes to the QMGL Group’s leadership and management. The existing management team led by Dr Ameen and Mr Karim will continue to drive strategy and business of the QMGL Group. The Offeror therefore has no current plans to (i) introduce any major changes to the business of the QMGL Group or its operations, (ii) re-deploy any of the fixed assets of the QMGL Group or (iii) discontinue the employment of any of the existing employees of the QMGL Group, other than in the ordinary course of business.

12.2 Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offeror receives valid acceptances of the Offer or acquires Offer Shares from the Despatch Date otherwise than through valid acceptances of the Offer, in respect of not less than 90 per cent. of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Despatch Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of the Shareholders who have not accepted the Offer (“Dissenting Shareholders”).

In such event, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer at the Cash Consideration of S$0.35 for each Offer Share. The Offeror will then proceed to delist the Company from the SGX Catalist.

Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice.

12.3 Listing Status of QMGL. Under Rule 1104 of the SGX Catalist Listing Rules, where a takeover offer is made for the securities of QMGL, upon the announcement by the Offeror that acceptances have been received by it, and parties acting in concert with it, to above 90 per cent. of the total number of issued Shares, the SGX-ST may suspend the listing of the Shares until it is satisfied that at least 10 per cent. of the issued Shares are held by at least 200 Shareholders who are members of the public.

In addition, under Rule 724 of the SGX Catalist Listing Rules, if the percentage of the issued Shares held in public hands falls below 10 per cent., QMGL must, as soon as practicable, notify its sponsor of, and announce, that fact. The SGX-ST may suspend trading of all the Shares on the SGX-ST. Rule 725 of the SGX Catalist Listing Rules provides that the SGX-ST may allow QMGL a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of securities held in public hands to at least 10 per cent., failing which QMGL may be delisted from the SGX-ST.

It is the intention of the Offeror to make QMGL its wholly-owned subsidiary. It is therefore not the intention of the Offeror to preserve the listing status of QMGL and the Offeror does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10 per cent. of the issued Shares (excluding treasury shares) are held in public hands.”

Shareholders are advised to read section 5 above carefully and note the Offeror’s future plans for the Company.

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6. EXEMPTION RELATING TO DIRECTORS’ RECOMMENDATION

The SIC, via its letter dated 12 April 2011, has confirmed that Dr Ameen, Mr Karim, Raja Noorma Binti Raja Othman (“Puan Raja Noorma”) and Muhammad Azraini Bin Abdul Hamid (“Mr Azraini”) (together, the “Relevant Directors”) are exempted from the requirement to make a recommendation on the Offer to the Shareholders as they face irreconcilable conflict of interest being parties acting in concert with the Offeror based on the following representations made to SIC:

(a) in connection with the Offer, each of Dr Ameen and Mr Karim has given an irrevocable undertaking in favour of the Offeror to, inter alia, accept the Offer in respect of the Offer Shares held by Dr Ameen and Mr Karim respectively;

(b) Puan Raja Noorma and Mr Azraini are nominee directors of Commerce Asset Ventures Sdn Bhd (“CAV”) and Commerce-KPF Ventures Sdn Bhd (“CKPF”) respectively. CAV is a wholly owned subsidiary of CIMB Group Sdn Bhd (“CIMB Group”), a financial services group which in turn is a wholly owned subsidiary of CIMB Group Holdings Berhad (“CGHB”), a listed company on Bursa Malaysia. CIMB Group and CGHB are the sole shareholders in CAV and CIMB Group respectively and are deemed to be interested in the direct and indirect interests of CAV in the Company. CKPF is a joint fund held fifty one per cent. by CAV and forty nine per cent. by Koperasi Permodalan Felda Berhad (“KPF”). The Offeror, CAV and CKPF are ultimately controlled by the same entity ie. CIMB Group;

(c) Dr Ameen and Mr Karim have entered into the Subscription Agreement with the Offeror, inter alia, to subscribe for Offeror Shares following the close of the Offer and have also provided irrevocable undertakings in relation thereto. Details of this arrangement are set out in section 4 above.

Even though the Relevant Directors have been exempted by the SIC from the requirement to make a recommendation on the Offer to Shareholders, they are still required to accept responsibility for the accuracy of facts stated or opinions expressed in documents and advertisements issued by, or on behalf of, the Company in connection with the Offer.

7. ADVICE AND RECOMMENDATION

7.1 Appointment of IFA

The IFA has been appointed to advise the Independent Directors in respect of the Offer.

7.2 Independent Directors

The Directors who are considered independent for the purposes of making the recommendation to Shareholders in relation to the Offer are Messrs Chaw Chong Foo and Dato’ Dr Samsudin Bin Hussain.

Shareholders should read and consider carefully the advice of the IFA to the Independent Directors on the Offer contained in the IFA Letter and the recommendation of the Independent Directors set out in section 7.5 below before deciding on whether to accept or reject the Offer.

7.3 Evaluation of the Offer by the IFA

The key factors taken into consideration by the IFA in arriving at its recommendation in respect of the Offer are set out in paragraph 10 of the IFA Letter which is reproduced in italics below.

“10. SUMMARY OF ANALYSIS

In arriving at our recommendation in respect of the Offer, we have taken into consideration, inter alia, the following factors summarised below. The factors set out herein should be considered in the context of the entirety of this IFA Letter and the Circular:-

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Financial assessment of the Offer

(a) the Cash Consideration represents a premium of 102.3% to the VWAP of the Shares for the period from the Listing Date and up to and including the Last Market Day and 94.4%, 75.0%, 72.4%, 50.9% and 28.2% to the VWAPs of the Shares 24-month, 12-month, 6-month, 3-month, and one-month periods prior to and including the Last Market Day;

(b) the Cash Consideration represents a premium of 25.0% to the last traded price of the Shares for the Last Market Day ;

(c) during the period after the Offer Announcement Date and up to the Latest Practicable Date, the closing price of the Shares ranged between S$0.345 and S$0.350, and the Cash Consideration represents a premium of 0. 3% to the VWAP of the Shares of S$0.34 9 for the same period;

(d) the Cash Consideration is equivalent to the closing price of the Shares of S$0.350 as at the Latest Practicable Date;

(e) the average daily trad ed volume of the Shares from the Listing Date and up to the Offer Announcement Date was 0. 08% of the Free Float and that of the 24-month, 12-month, 6-month, 3-month, and 1-month periods prior to the Offer Announcement Date were 0. 08%, 0. 08%, 0. 09%, 0.1 0% and 0. 11% of the Free Float respectively;

(f) since Listing Date and up to the Offer Announcement Date, the Shares were traded on 138 Market Days out of the 637 Market Days (or 21.7% of the total number of Market Days during the corresponding period) with an average trading volume of 50,188 Shares, representing approximately 0.08% of the Free Float. Since Listing Date and up to the Offer Announcement Date, the total number of Shares traded was 6,926,000;

(g) since Listing Date, the Shares have generally underperformed the FSSTI and FSTHC in relative terms;

(h) the trailing PE multiple implied by the Cash Consideration of 12.8 times is (a) within the range, and (b) above the mean and median of the trailing PE multiples of the Shares since Listing Date till the Offer Announcement Date;

(i) the Cash Consideration represents a premium of approximately 79.5% to the Adjusted NAV per Share as at 31 December 2010;

(j) the PE ratio of the Company implied by the Cash Consideration is below the range, and lower than the average and median of the respective ratios of the Comparable Companies;

(k) the P/NAV and EV/EBITDA ratios of the Company implied by the Cash Consideration is within the ranges, but lower than the average and median of the respective ratios of the Comparable Companies;

( l) the premium of 28.2% implied by the Cash Consideration against the 1-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; but (ii) lower than the average and median premium of the Precedent Transactions;

( m) the premium of 50.9% implied by the Cash Consideration against the 3-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; (ii) lower than the average but (iii) higher than the median premium of the Precedent Transactions;

(n) the P/NAV per share implied by the Cash Consideration of 1.8 times is (i) within the range; and (ii) lower than the average and median P/NAV per share ratios of the Precedent Transactions;

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( o) the PE, P/NAV and EV/EBITDA ratios and the premium to the last transacted price prior to the Offer Announcement Date implied by the Cash Consideration are lower than the respective statistics as indicated in the Healthcare Sector Precedent Transactions; and

( p) the implied dividend yield of the Company of 6.3% is (a) within the range and (b) higher than the average and median of the implied dividend yields of the Comparable Companies.

Other considerations

(a) Shareholders who accept the Offer and elect to receive the Securities Consideration will be issued New Offeror Shares. Such Shareholders will however not enjoy the same level of corporate governance, protection, transparency and accountability compared to that of a listed company;

(b) as the Offer has been declared unconditional, the Offeror will obtain statutory control of the Company and statutory control will enable the Offeror and parties acting in concert with it to be able to pass all ordinary resolutions on matters in which the Offeror and parties acting in concert with it do not have an interest and which are tabled for shareholders’ approval at a general meeting;

(c) the Offeror has stated in the Offer Document that it intends to make the Company its wholly-owned subsidiary and does not intend to preserve the listing status of the Company on the Catalist. Accordingly, the Offeror when entitled, may exercise any rights of compulsory acquisition that it may have in connection with the Offer and does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10% of the Shares are held in public hands; and

(d) as the Latest Practicable Date, apart from the Offer proposed by the Offeror, there is no publicly available evidence of an alternative offer from any third party. Further, the Directors have also confirmed that, as at the Latest Practicable Date, apart from the Offer, they have not received any other offer from any other party.”

7.4 The IFA’s advice to the Independent Directors on the Offer

The advice and conclusion of the IFA in respect of the Offer have been extracted from paragraph 11 of the IFA Letter and are set out in italics (bold) below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meaning as those defined in the IFA Letter. Shareholders should read the following extract in conjunction with, and in the context of the full text of the IFA Letter.

“11. ADVICE TO INDEPENDENT DIRECTORS

Having regard to the considerations set forth in this IFA Letter and the information available as at the Latest Practicable Date, we are of the opinion that the Cash Consideration is fair and reasonable from a financial point of view.

We advise the Independent Directors to recommend the Shareholders to ACCEPT the Offer. Whilst we make no recommendation as to how Shareholders elect to receive any Offer Consideration, we wish to highlight the following factors to Shareholders in electing for the Securities Consideration or in part combination thereof:-

(a) Being unlisted, there is limited information relating to the financial position of the Offeror being available to Shareholders;

(b) Shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies as a result of lack of marketability;

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(c) It is likely to be difficult to sell the Offeror Shares in the absence of a public market as there is no arrangement for holders of Offeror Shares to exit. Shareholders should also note the provision in the Offeror’s Memorandum and Articles of Association in respect of the Pre-emptive Right and the Drag-along Right; and

(d) Holders of the Offeror Shares will not enjoy the same level of corporate governance, protection, transparency and accountability as compared to that of a listed company.

Shareholders should note that the future price performance of the Shares (assuming that the Company is to remain listed) would depend on, amongst others, the performance and prospects of the QMGL Group as well as the prevailing economic conditions and general sentiments on the stock market. We also wish to highlight that the price performance of the Shares used in our analysis of this IFA Letter may not be reflective of investors’ response to the QMGL Group’s future financial performance in FY2011 after the Latest Practicable Date.

In rendering the above advice, CSPL has not had regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise that any individual Shareholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional advisers immediately.

Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of QMGL Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, the advice by CSPL on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of CSPL’s review and also, such advice, if given, would not fall within CSPL’ s terms of reference in connection with the Offer.”

7.5 Recommendation of the Independent Directors

In reaching the recommendation set out below, the Independent Directors have considered carefully, amongst other things, the terms of the Offer and the advice given by CSPL in the IFA Letter.

Having taken all of the above matters into consideration, the Independent Directors concur with the recommendation of CSPL in respect of the Offer.

Accordingly, the Independent Directors adopt the recommendation in respect of the Offer as set out in section 7.4 above.

In rendering the above opinion and giving the above recommendation, CSPL and the Independent Directors have not had regard to the specific investment objectives, financial situation, tax position, risk profiles and/or unique needs and constraints of any Shareholder. As different Shareholders would have different investment objectives, the Independent Directors would recommend that any individual Shareholder who may require specific advice in relation to his Shares consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser.

SHAREHOLDERS ARE ADVISED TO READ THE TERMS AND CONDITIONS OF THE OFFER AS SET OUT IN THE OFFER DOCUMENT CAREFULLY. SHAREHOLDERS ARE ALSO ADVISED TO READ THE IFA LETTER SET OUT IN APPENDIX 1 TO THIS CIRCULAR CAREFULLY BEFORE DECIDING WHETHER TO ACCEPT OR REJECT THE OFFER. SHAREHOLDERS SHOULD NOTE THAT THE ADVICE AND RECOMMENDATION OF THE IFA SHOULD NOT BE RELIED UPON BY ANY SHAREHOLDER AS THE SOLE BASIS FOR DECIDING WHETHER OR NOT TO ACCEPT THE OFFER.

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8. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders wishing to accept the Offer must do so not later than 5.30 p.m. on 18 May 2011 and should take note of the “Procedures for Acceptance” as set out in Appendix 3 to the Offer Document.

Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document and the FAA and/or FAT which have been sent to them.

9. OVERSEAS SHAREHOLDERS

9.1 Overseas Shareholders

As stated in paragraph 17 of the Offer Document, the making of the Offer to Overseas Shareholders may be affected by the laws of the relevant overseas jurisdictions. Accordingly, any Overseas Shareholder should inform himself about and observe any applicable legal requirements. Where there are potential restrictions on sending the Offer Document, the FAAs and/or the FATs to any overseas jurisdiction, the Offeror and CIMB reserve the right not to send these documents to Shareholders in such overseas jurisdictions. For the avoidance of doubt, the Offer is open to all Shareholders, including those to whom the Offer Document, the FAAs and/or the FATs have not been, or may not be, sent.

Overseas Shareholders may, nonetheless, obtain copies of the Offer Document, the FAAs, the FATs and/or any related documents, during normal business hours and up to 5.30 p.m. on the Closing Date, from the Offeror through its receiving agent, M & C Services Private Limited at its office located at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, or CDP at its office located at 4 Shenton Way, #02-01, SGX Centre 2, Singapore 068807, as the case may be. Alternatively, an Overseas Shareholder may write to the Offeror through M & C Services Private Limited at the address listed above to request for the Offer Document, the FAAs, the FATs and any/or related documents to be sent to an address in Singapore by ordinary post at the Overseas Shareholder’s own risk, up to three (3) Market Days prior to the Closing Date.

It is also stated in the Offer Document that it is the responsibility of any Overseas Shareholder who wishes to (a) request for the Offer Document, the FAAs, the FATs and/or any related documents, or (b) accept the Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdictions in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholders shall be liable for any such taxes, imposts, duties or other requisite payments payable and the Offeror and any person acting on its behalf (including CIMB) shall be fully indemnified and held harmless by such Overseas Shareholder for any such taxes, imposts, duties or other requisite payments as the Offeror and/or any person acting on its behalf (including CIMB) may be required to pay. In (i) requesting for the Offer Document, the FAAs, the FATs and/or any related documents and/or (ii) accepting the Offer, each of the Overseas Shareholder represents and warrants to the Offeror and CIMB that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities or legal requirements.

Any Overseas Shareholder who is in doubt about his position should consult his professional adviser in the relevant jurisdiction.

The Offeror and CIMB each reserves the right to notify any matter, including the fact that the Offer has been made, to any or all Overseas Shareholders by announcement to the SGX-ST and if necessary, paid advertisement in a daily newspaper published or circulated in Singapore, in which case, such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement, notice or advertisement.

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9.2 Copies of Circular

This Circular and any related documents may not be sent to certain Overseas Shareholders due to potential restrictions on sending such documents to overseas jurisdictions. Any affected Overseas Shareholder may, nonetheless, obtain copies of the Circular during normal business hours and up to the Closing Date, from the office of the Share Registrar, M & C Services Private Limited, at 138 Robinson Road, #17-00 The Corporate Office, Singapore 068906. Alternatively, any Overseas Shareholder may write to M & C Services Private Limited at the aforementioned address to request for the Circular and any related documents to be sent to an address in Singapore by ordinary post at his own risk (the last date for despatch in respect of such request shall be a date falling three (3) Market Days prior to the Closing Date).

10. DIRECTORS’ RESPONSIBILITY STATEMENT

Save for the opinions expressed by the IFA as set out in this Circular as set out in Appendix 1 to this Circular, the Directors (including those who have delegated detailed supervision of this Circular) collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm that, after having made all reasonable enquiries and to the best of their knowledge and belief, the facts stated and opinions expressed in this Circular are fair and accurate in all material respects and there are no material facts the omission of which would make any statement in this Circular misleading in any material respect.

Where information has been extracted from published or otherwise publicly available sources or obtained from the Offeror, the sole responsibility of the Directors for such information has been to ensure that it has been accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this Circular.

Yours faithfullyFor and on behalf of Board of Directors ofQUALITAS MEDICAL GROUP LIMITED

Dato’ Dr Noorul Ameen Bin Mohamed IshackChairman and Managing Director

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Collins Stewart Pte. Limited(Incorporated in the Republic of Singapore)Company Registration Number: 200713620D

19 April 2011

The Independent DirectorsQualitas Medical Group Limited19 Keppel Road#03-10 Jit Poh BuildingSingapore 089058

VOLUNTARY CONDITIONAL OFFER BY CIMB BANK BERHAD (SINGAPORE BRANCH) FOR AND ON BEHALF OF QUALITAS HEALTHCARE HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE SHARE CAPITAL OF QUALITAS MEDICAL GROUP LIMITED

Unless otherwise defined or the context otherwise requires, all terms used in this IFA Letter shall have the same meanings as defined in the Circular or the Offer Document as the case may be.

1. INTRODUCTION

1.1 Offer Announcement

We refer to the Company’s announcement of 15 March 2011. On the Offer Announcement Date, CIMB announced, for and on behalf of the Offeror, that the Offeror intends to make a voluntary conditional offer for all the Shares in the capital of the Company, other than those Shares held, directly and indirectly, by the Offeror as at the date of the Offer.

1.2 Offer Consideration

The consideration for the Offer (the “Offer Consideration”) will be either in cash or New Offeror Shares or a combination of both cash and New Offeror Shares in the following proportions:-

(i) S$0.35 in cash for each Offer Share (the “Cash Consideration”); OR

(ii) 50 per cent. in the form of cash at the Cash Consideration and 50 per cent. in the form of the Securities Consideration, with fractions of each New Offeror Share to be disregarded and the cash to be rounded down to the nearest cent (the “Combination 50/50 Cash and Securities Consideration”); OR

(iii) 25 per cent. in the form of cash at the Cash Consideration and 75 per cent. in the form of the Securities Consideration, with fractions of each New Offeror Share to be disregarded and the cash to be rounded down to the nearest cent (the “Combination 25/75 Cash and Securities Consideration”); OR

(iv) one New Offeror Share for each Offer Share (the “Securities Consideration”).

Fractions of a New Offeror Share will be disregarded and will not be issued to any holder of Offer Shares who accepts the Offer.

The New Offeror Shares are not listed on any securities exchange.

Accordingly, Shareholders who accept the Offer may elect to receive all cash or all New Offeror Shares or a combination thereof as specified in Sections 2.1(i) to 2.1(iv) of the Circular as the Offer Consideration for their Offer Shares. The issue price for each New Offeror Share issued pursuant to (i) the Combination 50/50 Cash and Securities Consideration; (ii) the Combination 25/75 Cash

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APPENDIX 1: LETTER FROM COLLINS STEWART PTE. LIMITEDTO THE INDEPENDENT DIRECTORS OF QUALITAS MEDICAL GROUP LIMITED

and Securities Consideration; and (iii) all Securities Consideration, as specified in Sections 2.1 (ii), 2.1(iii) and 2.1(iv) of the Circular is S$0.35. The New Offeror Shares will rank pari passu with the existing ordinary shares in the capital of the Offeror.

For the avoidance of doubt, Shareholders may (in respect of each acceptance of the Offer) elect ONLY ONE of the four forms of the Offer Consideration set out in Section 2.1 of the Circular and not a combination thereof in respect of their Offer Shares.

Shareholders should refer to the Offer Document, especially Appendix 5 of the Offer Document in relation to risks involved in investing in the Offeror Shares.

The Offeror does not intend to revise the Offer Consideration, save that the Offeror reserves its right to revise the Offer Consideration in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer arises.

The Company has appointed Collins Stewart Pte Limited (“CSPL”) as the independent financial adviser to the Directors who are independent in relation to the Offer (the “Independent Directors”) to express an opinion on whether the financial terms of the Offer are fair and reasonable. This letter, which sets out, inter alia, our evaluation and advice, has been prepared for the use of the Independent Directors in connection with their consideration of the Offer and their recommendation to Shareholders arising thereof.

2. TERMS OF REFERENCE

CSPL has been appointed as independent financial adviser to the Independent Directors to provide an assessment of the financial terms of the Offer in order to advise the Independent Directors in respect of their recommendation to Shareholders in relation to the Offer in compliance with the provisions of the Code. We have confined our evaluation on the bases set out therein to the financial terms of the Offer.

Our terms of reference do not require us to evaluate or comment on the rationale, legal and commercial risks and/or merits (if any) of the Offer or on the future financial performance or prospects of the Company and its subsidiaries (collectively known as the “QMGL Group”) and we have not made such evaluations or comments. Such evaluations or comments shall remain the sole responsibility of the Directors and management of the QMGL Group although we may draw upon their views or make such comments in respect thereof (to the extent deemed necessary or appropriate by us) in arriving at our recommendations as set out in this IFA Letter.

We were also not requested, instructed or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to any other proposals for transactions similar to or in lieu of the Offer. In this regard, we are not addressing the relative merits of the Offer as compared to any alternative transaction previously considered by the Company or which otherwise may have been available to the Company currently or in the future, and such comparison and consideration remain the responsibility of the Directors.

In the course of our evaluation of the financial terms of the Offer, we have held discussions with the Directors and Executive Officers of the Company and have examined publicly available information collated by us as well as information, both written and verbal, provided to us by the Directors of the Company. We have relied on, and assumed without independent verification, the accuracy and completeness of such information, whether written or verbal, and accordingly cannot and do not make any warranty or representation, express or implied, in respect of, and do not accept any responsibility for the accuracy, completeness or adequacy of, such information.

We have relied upon the assurances from the Directors (including those who may have delegated supervision of the Circular), who have accepted full responsibility for the accuracy and completeness of the information provided to us, that, to the best of their knowledge and belief, they have taken reasonable care to ensure that the facts stated and opinions expressed by them

29


or the Company in the Circular in respect of the Offer is fair and accurate in all material aspects. The Directors confirmed to us that, to the best of their knowledge and belief, there is no other information or fact, the omission of which would cause any statement in the Circular in respect of the Offer to be inaccurate, incomplete or misleading in any material respect. Whilst care has been exercised in reviewing the information upon which we have relied, we have not independently verified such information but nevertheless have made such enquiry and judgement as we have deemed necessary and have found no reason to doubt the accuracy of the information.

In addition, we have not made any independent evaluation or appraisal of the assets and liabilities (including without limitation, property, plant and equipment) of the Company or the QMGL Group and we have not been furnished with any such evaluation or appraisal.

Our recommendations are based upon market, economic, industry and other conditions prevailing as at the Latest Practicable Date, and information made available to us as at the Latest Practicable Date. Such conditions and information may change significantly over a short period of time. We assume no responsibility to update, revise or reaffirm our recommendations in light of any subsequent developments after the Latest Practicable Date that may affect our recommendations contained therein. Shareholders should further take note of any announcements relevant to their consideration of the Offer, which may be released after the Latest Practicable Date.

In rendering our advice and providing our recommendation, we did not have regard to the specific investment objectives, financial situation, tax position, risk profiles or unique needs and constraints of any Shareholder. We recommend that any Shareholder who may require specific advice in relation to his or their investment objective(s) or portfolio(s) should consult his or their legal, financial, tax or other professional advisers immediately.

The Company has been advised by its own legal advisers in the preparation of the Circular (other than this IFA Letter). We have had no role or involvement and have not provided any advice (financial or otherwise) whatsoever in the preparation, review and verification of the Circular (other than this IFA Letter) and our responsibility is as set out above in relation to this IFA Letter. Accordingly, we take no responsibility for, and express no views, whether expressed or implied, on the contents of the Circular (except for this IFA Letter).

We have prepared this IFA Letter for the use by the Independent Directors in connection with their consideration of the Offer and their advice and recommendation to the Shareholders in respect thereof. The recommendations made to the Shareholders in relation to the Offer remain the responsibility of the Independent Directors.

Other than for this intended purpose, this IFA Letter should not be used for any other purposes and/or by other persons, save for the use of the Independent Directors in connection with their consideration of the Offer, without the prior consent of CSPL. Therefore our recommendation in relation to the Offer, as set out in Appendix I of the Circular, should be considered in the context of the entirety of our advice as set out in this IFA Letter.

3. INFORMATION ON THE OFFEROR AND ARRANGEMENTS WITH CONSORTIUM

The information on the Offeror and on certain arrangements entered into between the Offeror and Consortium is set out in Section 4 of the Circular, an extract of certain sections is reproduced below:-

“The Offeror is an investment holding company incorporated in Singapore on 9 November 2010. The Offeror has not carried on any business since its incorporation except to enter into certain agreements relating to the formation of the Consortium (as defined in Section 9.3 below) and in connection with the Offer. As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of S$7,980,037, consisting of 102 Offeror Shares and 22,800,000 Offeror CPS convertible into 22,800,000 new Offeror Shares, of which:

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(i) the HQ Offeror Shares are held by HQ, a wholly-owned subsidiary of MAFII;

(ii) the Ameen Offeror Shares are held by Dr Ameen; and

(iii) the Karim Offeror Shares are held by Mr Karim.

The directors of the Offeror are Dr Ameen, Mr Karim, Mr Kenneth Tan Jhu Hwa and Mr Wong Chin Toh. Dr Ameen is also the Chairman of the Offeror Board. Mr Kenneth Tan Jhu Hwa is a Partner and Mr Wong Chin Toh is a Director, Investments, of Southern Capital Group, which manages the Mulberry Asia group of funds, including MAFII.”

“Southern Capital Group, MAFII and HQ. Southern Capital Group is a private equity firm which focuses on control buy-outs of middle market businesses in South-East Asia and China and manages the Mulberry Asia group of funds, including MAFII. HQ is an investment holding company incorporated in Mauritius on 21 February 2011, and has, as at the Latest Practicable Date, an issued and paid-up share capital of US$1.00, consisting of one ordinary share of par value US$1.00, which is held by MAFII.”

Please refer to Section 4 of the Circular, and Section 9 and Appendix 4 of the Offer Document for more information on the Offeror and the Consortium.

4. INFORMATION ON QMGL

QMGL is a public company incorporated in Singapore on 28 September 2007 and listed on the Catalist on 1 September 2008. The QMGL Group is a provider of primary healthcare services in Malaysia, Singapore and other countries in the region. As at the Latest Practicable Date, QMGL has an issued and paid-up share capital of S$28,555,524 comprising 141,559,396 Shares.

Please refer to Appendix 6 of the Offer Document for certain additional information on QMGL.

5. RATIONALE FOR THE OFFER

The Offeror’s rationale for the Offer is set out in Section 5 of the Circular , which is reproduced below. All terms and expressions used in the extract below shall have the same meaning as those detailed in the Circular, unless otherwise stated.

“Intention to Delist and Privatise QMGL. As set out in Section 12.3 below, the Offeror is making the Offer with a view to delisting QMGL from the SGX Catalist and depending on the outcome of the Offer, the Offeror intends to exercise its rights of compulsory acquisition under the Companies Act.

Greater Management Flexibility. The Consortium Parties believe that privatising QMGL and delisting it from the SGX Catalist will give more flexibility in managing the business of the QMGL Group and optimis ing the use of its management and capital resources.

Opportunity to Realise Investment. The Consortium Parties are of the view that the historical trading liquidity of the Shares on the SGX Catalist has been generally low. As such, the Cash Consideration represents an opportunity for Shareholders to realise their investment in the Shares at an attractive premium over the historical market prices of the Shares for cash without incurring brokerage and other trading costs.

Opportunity to Re-invest. As many of the Shareholders are currently practising doctors and employees within the QMGL Group, the Consortium Parties believe that offering Offeror Shares as a form of consideration will provide such employees of the QMGL Group with the opportunity (as an alternative to receiving solely the Cash Consideration) to re-invest in the QMGL Group through the Offeror and to participate in the future financial performance of the Offeror and its subsidiaries (including the QMGL Group).”

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6. THE OFFEROR’S INTENTIONS RELATING TO QMGL GROUP, COMPULSORY ACQUISITION AND LISTING STATUS

The Offeror’s intentions are set out under Section 5 of the Circular, which is reproduced below. All terms and expressions used in the extract below shall have the same meaning as those detailed in the Circular, unless otherwise stated.

“Future Plans. The Offeror intends for the QMGL Group to continue its existing business activities and does not intend to make any changes to the QMGL Group’s leadership and management. The existing management team led by Dr Ameen and Mr Karim will continue to drive strategy and business of the QMGL Group. The Offeror therefore has no current plans to (i) introduce any major changes to the business of the QMGL Group or its operations, (ii) re-deploy any of the fixed assets of the QMGL Group or (iii) discontinue the employment of any of the existing employees of the QMGL Group, other than in the ordinary course of business.

Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offeror receives valid acceptances of the Offer or acquires Offer Shares from the Despatch Date otherwise than through valid acceptances of the Offer in respect of not less than 90 per cent. of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Despatch Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of the Shareholders who have not accepted the Offer (“Dissenting Shareholders”).

In such event, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer at the Cash Consideration of S$0.35 for each Offer Share. The Offeror will then proceed to delist the Company from the SGX Catalist.

Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice.

Listing Status of QMGL. Under Rule 1104 of the SGX Catalist Listing Rules, where a takeover offer is made for the securities of QMGL, upon the announcement by the Offeror that acceptances have been received by it, and parties acting in concert with it, to above 90 per cent. of the total number of issued Shares, the SGX-ST may suspend the listing of the Shares until it is satisfied that at least 10 per cent. of the issued Shares are held by at least 200 Shareholders who are members of the public.

In addition, under Rule 724 of the SGX Catalist Listing Rules, if the percentage of the issued Shares held in public hands falls below 10 per cent., QMGL must, as soon as practicable, notify its sponsor of, and announce, that fact. The SGX-ST may suspend trading of all the Shares on the SGX-ST. Rule 725 of the SGX Catalist Listing Rules provides that the SGX-ST may allow QMGL a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of securities in public hands to at least 10 per cent., failing which QMGL may be delisted from the SGX-ST.

It is the intention of the Offeror to make QMGL its wholly-owned subsidiary. It is therefore not the intention of the Offeror to preserve the listing status of QMGL and the Offeror does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10 per cent. of the issued Shares (excluding treasury shares) are held in public hands.”

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7. ASSESSMENT OF THE FINANCIAL TERMS OF THE OFFER

In assessing the financial terms of the Offer, we have taken into account the following factors which we consider to have a significant bearing on our assessment:-

(1) Market quotation and trading liquidity of the Shares;

(2) Historical PE multiple of the Shares;

(3) Asset-based valuation of the QMGL Group;

(4) Comparison with the valuation statistics of selected companies broadly comparable to the QMGL Group;

(5) Comparison with precedent transactions in Singapore;

(6) Dividend analysis of the QMGL Group;

(7) Historical financial performance and position of the QMGL Group;

(8) Assessment of the Securities Consideration; and

(9) Other relevant considerations.

General bases and assumptions

In the course of our analysis, we have relied on the following bases and assumptions:-

(1) The issued share capital of the Company as at the Latest Practicable Date is S$28,555,524 comprising 141,559,396 Shares;

(2) As at the Latest Practicable Date, there are no outstanding convertible securities (including options) in relation to the capital of the Company;

(3) The first Market Day on which the Shares were traded was 1 September 2008;

(4) The last Market Day where there were trades in the Shares prior to the Latest Practicable Date, was 1 1 April 2011; and

(5) The information used in our financial assessment has been extracted, where available and/or applicable, from financial statements and/or announcements through SGX website www.sgx.com, Bloomberg L.P., the Offer Document and/or the Circular. We make no representations or warranties, express or implied, as to the accuracy or completeness of such information.

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7.1 Market Quotation and Trading Liquidity of the Shares

7.1.1 Share price performance and trading liquidity

The share price and trading volume chart for the Shares for the period since the listing of the Company on the Catalist on 1 September 2008 (“Listing Date”) and up to the Latest Practicable Date is set out below:-

Share Price and Trading Volume from the Listing Date and up to the Latest Practicable Date

Source: Bloomberg L.P.

The selected corporate announcements of the Group since Listing Date till the Latest Practicable Date were as follows:-

12 September 2008: The Company announced the Group’s unaudited half year financial statement and dividend announcement for the six months ended 30 June 2008.

17 December 2008: The Company announced its training collaboration agreement between Qualitas Medical Group Sdn Bhd and Masterskill (M) Sdn Bhd.

26 February 2009: The Company announced the Group’s unaudited full year financial statement and dividend announcement for the full year ended 31 December 2008.

3 June 2009: The Company announced the acquisition of 48% of the equity interest in the capital of Peak Primary Limited.

29 June 2009: The Company announced the disposal of its 51% interest in a subsidiary, Doctorslab Medical Services Private Limited.

1 July 2009: The Company announced the acquisition of 40% of the equity interest in the capital of V. V. Dentistree India Private Limited.

4 August 2009: The Company announced its unaudited half year financial statement and dividend announcement for the six months ended 30 June 2009.

3 September 2009: The Company announced a supplemental loan agreement to the loan agreement entered and announced on 1 July 2009 in relation to the acquisition of 40% of the equity interest in the capital of V. V. Dentistree India Private Limited.

24 December 2009: The Company announced the acquisition of 75.0% of the equity interest in the capital of Dr Marcus Cooney & Associates Pte Ltd

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12 February 2010: The Company announced the settlement of the outstanding legal proceedings in relation to the civil suit by Qualitas Medical Group Sdn Bhd and New West Management Sdn Bhd (“NWM”) against Ng Ah Kow and Lee Siew Vin and NWM against Hope Holdings Sdn Bhd


7 April 2010: The Company announced the books closure date of 4 May 2010 for the payment of a first and final dividend of 1.10 Singapore cents per ordinary share one-tier tax exempt for the financial year ended 31 December 2009.

13 May 2010: The Company announced that Company’s subsidiary, Qualitas Medical Group Sdn Bhd (“QMG”) and QMG’s subsidiary, Q-Medical Care Sdn Bhd (“QMC”) together with two of the Group’s present employees, namely Dr. Sakina Ali Abul Hassan and Mr. Ramesh Menon (collectively the “Defendants”) have been served on 10 May 2010 with a Writ of Summons filed in the Shah Alam High Court, Malaysia by Dr. Premadevi A/P Gopala Krishnan (the “Plaintiff”).

12 August 2010: The Company announced the Group’s unaudited half year financial statement and dividend announcement for the six months ended 30 June 2010.

14 October 2010: The Company announced the acquisition of 75.0% of the equity interest in the capital of GPA Dental Group (Singapore) Pte. Ltd.


14 March 2011: The Company announced the determination of the second tranche consideration for the second tranche payment pertaining to the acquisition of 75.0% of the equity interest in the capital of Dr Marcus Cooney & Associates Pte Ltd.

15 March 2011: The Company announced that the Offeror issued the Offer Announcement .

22 March 2011: CIMB announced that the Offeror has received additional Irrevocable Undertakings amounting to 2.96% of the issued share capital of the Company to accept the Offer.

11 April 2011: The Offer was declared unconditional in all respects.

12 April 2011: CIMB announced that the Offeror has received acceptances amounting to 82.36% shareholding in the Company.

Trading statistics of the Shares from Listing Date and up to the Latest Practicable Date

The trading statistics of the Shares from Listing Date and up to the Latest Practicable Date are set out below:-

Lowest closing price(S$)

Highest closing price(S$)

VWAP(S$)

Premium of Cash

Consideration to VWAP

(%)

Average daily

trad ed volume(1)

(Shares)

Total volume traded

(Shares)

Average daily trading volume as a

percentage of the Free Float(2)

(%)

Periods prior to the Offer Announcement

Since Listing Date 0.070 0.300 0.173 102.3 50,188 6,926,000 0.08

Last 24 months 0.100 0.300 0.180 94.4 51,280 6,051,000 0.08

Last 12 months 0.150 0.300 0.200 75.0 53,250 4,047,000 0.08

Last 6 months 0.160 0.300 0.203 72.4 60,276 3,496,000 0.09

Last 3 months 0.180 0.300 0.232 50.9 64,067 1,922,000 0.10

Last 1 month 0.240 0.300 0.273 28.2 68,769 894,000 0.11

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Lowest closing price(S$)

Highest closing price(S$)

VWAP(S$)

Premium of Cash

Consideration to VWAP

(%)

Average daily

trad ed volume(1)

(Shares)

Total volume traded

(Shares)

Average daily trading volume as a

percentage of the Free Float(2)

(%)

Last market day prior to Offer Announcement Date(3)

(“Last Market Day”)

0.280 0.280 0.280 25.0 30,000 30,000 0.05

Period after the Offer Announcement and up to the Latest Practicable Date

After the Offer Announcement and up to the Latest Practicable Date

0.345 0.350 0.349 0.3 171,786 2,405,000 0.26

Latest Practicable Date

0.350 0.350 0.350 0.0 5,000 5,000 0.01


Notes:-

(1) The average daily trad ed volume of the Shares is calculated based on the total volume of Shares traded divided by the number of Market Days when there were trades.

(2) Free Float refers to the number of Shares other than those held by the Directors, substantial Shareholders and their associates (as defined under the Catalist Rules). The Free Float of the Company amounts to approximately 65,448,631 Shares or equivalent to approximately 48.59% of the total issued share capital of the Company as at the Latest Practicable Date (excluding the 6,875,175 Shares issued and allotted pursuant to the DMC Second Tranche Payment (as defined herein) on 29 March 2011).

(3) Being 14 March 2011 as trading in the Shares was halted prior to the release of the Offer Announcement on 15 March 2011.

We note the following with regard to the Share prices:-

(a) Since Listing Date till the Offer Announcement Date, the closing price of the Shares ranged between a low of S$0.070 and a high of S$0.300;

(b) Since Listing Date till the Offer Announcement Date, the Shares have not traded at or above the Cash Consideration;

(c) The Cash Consideration represents a premium of approximately 102.3% over the VWAP for the period since the Listing Date and up to and including the Last Market Day.

(d) The Cash Consideration represents premiums of approximately 94.4%, 75.0%, 72. 4%, 50.9% and 28.2% to the VWAPs for the 24-month, 12-month, 6-month, 3-month and 1-month periods prior to and including the Last Market Day, respectively;

(e) The Cash Consideration represents a premium of approximately 25.0% to the last traded price of the Shares of S$0.280 for the Last Market Day;

(f) The Cash Consideration represents a premium of 0. 3% to the VWAP of S$0.34 9 for the period from the Market Day immediately after the Offer Announcement Date to the Latest Practicable Date; and

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(g) The Cash Consideration is equivalent to the last traded price of S$0.350 on the Latest Practicable Date.

We note the following with regard to the trading liquidity of the Shares:-

(a) the average daily trad ed volume of the Shares since Listing Date and up to the Offer Announcement Date was 0. 08% of the Free Float and that of the 24-month, 12-month, 6-month, 3-month and 1-month periods prior to the Offer Announcement Date represents 0. 08%, 0. 08%, 0. 09%, 0.1 0% and 0.1 1% of the Free Float respectively;

(b) during the period from the Listing Date and up to the Offer Announcement Date, the Shares were traded on 138 Market Days out of the 637 Market Days (or 2 1.7% of the total number of Market Days) with an average trad ed volume of 50,188 Shares per Market Day, representing approximately 0. 08% of the Free Float. Since Listing Date and up to the Offer Announcement Date, the total number of Shares traded was 6,926,000; and

(c) during the period after the Offer Announcement Date and up to the Latest Practicable Date, the Shares were traded on 14 Market Days out of the 20 Market Days (or 70.0% of the total number of Market Days) with an average trad ed volume of 171,786 Shares, representing approximately 0. 26% of the Free Float.

Shareholders should note that the past trading performance of the Shares is no assurance of its future trading performance.

7.1.2 Relative performance of the Shares verses the market index

To gauge the market price performance of the Shares relative to the general share price performance of the stock market and of healthcare companies listed on the SGX-ST, we set out below the normalized market price movement of the Shares against the FTSE Straits Times Index (“FSSTI”) and the FTSE Healthcare Sector Index (“ FSTHC”) for the period between the Listing Date and up to the Latest Practicable Date:-

Market movement of the Shares against the FSSTI and FSTHC


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We note that over the aforementioned period, the Shares have generally underperformed the FSTHC and the FSSTI in relative terms.

Shareholders should note that the past trading performance of the Shares should not, in any way, be relied upon as an indication or a promise of its future trading performance.

7.2 Historical PE multiple of the Shares

We have compared the PE multiple of the Shares implied by the Cash Consideration (based on the Group’s net profit for FY2010) against the trailing PE multiples of the Shares (based on the Group’s trailing 12-month net earnings for the applicable time periods) in the period between the Listing Date and the Offer Announcement Date (both dates inclusive).

Historical Trailing PE multiple of the Shares in the period between the Listing Date and the Offer Announcement Date (both dates inclusive)

Source: Bloomberg L.P. and the Company’s results announcements

Note:-

(1) The trailing PE multiple of the Shares at any point is based on the Group’s aggregate net profit over the preceding 12 months since announcement of the relevant financial results and 134,684,221 Shares. The PE multiple implied by the Cash Consideration is based on the Group’s consolidated net earnings per Share for FY2010.

We set out below the average, highest and lowest trailing PE multiple of the Shares in the period between the Listing Date and the Offer Announcement Date (both dates inclusive).

Trailing PE multiple (times)

Average 8.5Median 8.6Maximum 14.0(1)

Minimum 4.0

Implied by the Cash Consideration 12.8

Source: Bloomberg L.P. and the Company’s results announcements

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Note:-

(1) The PE of 14.0 times was derived based on the last traded price of S$0.280 recorded on both of 21 February 2011 and 24 February 2011 and the prevailing trailing EPS of 4.68 sen (approximately 2.00 S$ cents).

We note that the trailing PE multiple implied by the Cash Consideration of 12.8 times is (a) within the range, and (b) above the mean and median of the trailing PE multiples of the Shares in the aforementioned period.

7.3 Asset-based valuation of the QMGL Group

The net-asset-based valuation approach provides an estimate of the value of a company assuming the hypothetical sale of all its assets over a reasonable period of time, and is meaningful in so far as it shows the extent to which the value of each share is backed by assets. This method would be more relevant for asset-based companies which do not carry on any business operations of a commercial nature. This method is also particularly appropriate when applied in circumstances where (i) an entity carries on a business which incurs losses or generates insufficient return on the assets employed, (ii) the entity’s business is to cease operations, and/or (iii) the entity intends to convert the uses of all or most of its assets. This method may ignore the ability of the asset base of the entity to generate future earnings and sustain an earnings-based valuation.

In this regard, we note that the Offeror intends for the QMGL Group to continue its existing business activities and does not intend to make any changes to the QMGL Group’s leadership and management. The existing management team led by Dr Ameen and Mr Karim will continue to drive strategy and business of the QMGL Group. The Offeror therefore has no plans to (i) introduce any major changes to the business of the QMGL Group or its operations, (ii) re-deploy any of the fixed assets of the QMGL Group or (iii) discontinue the employment of any of the existing employees of the QMGL Group, other than in the ordinary course of business.

We also wish to highlight that while the asset base of the QMGL Group can be a basis for valuation, such a valuation does not necessarily imply a realisable value as the market value of the assets and liabilities may vary depending on prevailing market and economic conditions.

Given the above, we have deemed that the following asset-based analyses would not be a material consideration in our overall evaluation of the Offer, and should be regarded for illustrative purposes only.

7.3.1 Audited NAV of the Group as at 31 December 2010

Based on the Company’s audited consolidated financial statements as at 31 December 2010, the NAV of the QMGL Group stood at RM62.2 million (approximately S$26.1 million based on an exchange rate of RM1:S$0.4189 as at 31 December 2010) or RM0.462 per Share (approximately S$0.194 per Share).

We note that the Cash Consideration represents a premium of approximately 80.4% to the NAV per Share as at 31 December 2010 or a P/NAV ratio of 1.8 times. We also note that the assets as at 31 December 2010 comprised mainly property, plant and equipment (RM13.8 million, representing 12.3% of total assets), intangible assets (RM52.3 million, representing 46.9% of total assets), trade and other receivables (RM23.5 million, representing 21.0% of total assets) and cash and cash equivalents (RM11.3 million, representing 10.2% of total assets), while the liabilities comprised mainly trade and other payables (RM25.3 million, representing 53.5% of total liabilities), loans and borrowings (RM10.4 million, representing 22.0% of total liabilities) and other financial liabilities (RM9.8 million, representing 20.8% of total liabilities).

In our evaluation of the financial terms of the Offer, we have considered whether there are any factors which have not been otherwise disclosed in the financial statements of the QMGL Group that are likely to adversely affect the NAV of the QMGL Group as at 31 December 2010. Save as disclosed in the financial statements of the QMGL Group as at 31 December

39


2010, the Directors have confirmed that, to the best of their knowledge, there are no contingent liabilities which are likely to have a material impact on the NAV of the QMGL Group as at the Latest Practicable Date. The Directors have also confirmed that, to the best of their knowledge, there are no other intangible assets which ought to have been disclosed in the balance sheet of the QMGL Group in accordance with the Singapore Financial Reporting Standards and which have not been disclosed and where such intangible assets would have had a material impact on the overall financial position of the QMGL Group as at the Latest Practicable Date.

7.3.2 Adjusted NAV of the QMGL Group as at 31 December 2010

In our evaluation of the financial terms of the Offer, we have considered whether there are any material events that impact the audited balance sheet of the QMGL Group from 31 December 2010 to the Latest Practicable Date to determine whether adjustments are required to be made to the NAV per Share as at 31 December 2010.

We note that the Company announced on 14 March 2011 that the second tranche payment pertaining to the acquisition of 75.0% of the equity interest in the capital of Dr Marcus Cooney & Associates Pte Ltd has been determined at S$2,677,905, to be made partly in 6,875,175 Shares at an issue price of S$0.225 per Share and a cash payment of S$1,130,991 (“DMC Second Tranche Payment”). Pursuant to the DMC Second Tranche Payment, 6,875,175 Shares has been issued and alloted on 29 March 2011. The NAV of the QMGL Group as at 31 December 2010 after adjustment for the DMC Second Tranche Payment would be as follows:-

NAV of QMGL Group(in S$ million)

As at 31 December 2010 26.1

Add: Aggregate value of Shares issued in consideration of the DMC Second Tranche Payment (which is 6,875,175 Shares at $0.225 per Share)

1.5

As at 31 December 2010 (after adjustment for the DMC Second Tranche Payment)

27.6

Adjusted NAV per Share (S$) 0.195

Premium of Cash Consideration over Adjusted NAV per Share 79.5%

We note that the Cash Consideration represents a 79.5% premium to the Adjusted NAV per Share as at 31 December 2010 (after adjustment for the DMC Second Tranche Payment). Save as disclosed in this letter, the Directors have confirmed to us that, as at the Latest Practicable Date, to the best of their knowledge, they are of the opinion that there is no material event, including any acquisitions and/or disposals of assets by the QMGL Group, which has or will materially impact the audited balance sheet of the QMGL Group since 31 December 2010. The Directors also confirm that there are no material differences between the realizable value of the QMGL Group’s assets and their respective book values as at 31 December 2010 which would have a material impact on the NAV of the QMGL Group.

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7.3 Comparison with the valuation statistics of selected companies broadly comparable to the QMGL Group

For the purpose of assessing the financial terms of the Offer, we have referred to the current valuation statistics of selected companies listed, which business operations we consider to be broadly comparable to the QMGL Group (“Comparable Companies”).

A brief description of the Comparable Companies is as follows:-

Companies Exchange Key Activities

Asiamedic Limited (“Asiamedic”)

SGX-ST Asiamedic provides ambulatory healthcare services in radiology and diagnostic imaging, ophthalmology, plastic surgery . Asiamedic also provides an integrated healthcare delivery system, designs and provides mechanical components and moulds.

Raffles Medical Group Limited (“RMG”)

SGX-ST RMG is a health care provide r. RMG operates medical clinics, imaging centres, and medical laboratories. RMG provides general and specialised medical, medical evacuation, medical advisory and dental treatment services.

Healthway Medical Corp. Ltd (“HMC”)

SGX-ST HMC provides outpatient medical services in Singapore. HMC offers care in the areas of family medicine, specialists care, dental and oral care and medical aesthetics.

Q&M Dental Group Singapore Pte Ltd (“QMDG”)

SGX-ST QMDG operates dental clinics. QMDG offers aesthetics, children’s and general dentistry; fit crowns, dentures and braces; and offers bleeding gum treatment, gum surgery and oral surgery; and treats snoring and teeth grinding.

Health Management International Limited (“HMI”)

SGX-ST HMI provides integrated medical and healthcare facilities and services for primary, secondary and tertiary healthcare. HMI provides healthcare education and training, ancillary health services, hospital management, project management, technical services and business advisory services.

Pacific Healthcare Holdings Ltd (“PHH”)

SGX-ST PHH offers health care services and operates health care facilities. PHH offers specialist medical care, general practice medicine, dentistry, health screening and wellness services, and operates nursing homes, a day surgery centre, and a hospital.

Singapore Medical Group Limited (“SMG”)

SGX-ST SMG operates medical clinics throughout Singapore. SMG’s principal activities lie in the provision of multi-disclipinary specialist healthcare services across the fields of ophthalmology, sports medicine, aesthetic medicine and oncology.

KPJ Healthcare Bhd (“KPJ”)

Bursa Securities Malaysia Berhad

KPJ is an investment holding company. Through its subsidiaries, KPJ operates specialist medical centres and also provides pathology and laboratory services, hospital management services, drug and medical distribution along with operating a nursing college.

TMC Life Sciences Bhd (“TMC”)

Bursa Securities Malaysia Berhad

TMC provides health care services and offers human infertility consulting and treatment services.

Source: Bloomberg

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Shareholders should note that there is no company listed on any relevant stock exchange which may be considered identical to the QMGL Group in terms of market capitalisation, gearing, composition of business activities, scale of operations, asset base, risk profile, geographical spread of activities, track record, future prospects and other relevant criteria. As such, any comparison merely serves as an illustrative guide to Shareholders and the conclusions drawn from the comparison may not necessarily reflect the perceived market valuation of the Shares as at the Latest Practicable Date.

In addition, we wish to highlight that there may be significant differences between valuations that investors may accord to companies trading on the SGX-ST vis-à-vis Bursa Securities Malaysia Berhad. Such cross border valuation statistics are subject to differing macroeconomic variables and hence may not be directly comparable to the QMGL Group.

We have used the following valuation measures in our analysis:-

Valuation Measure Description

Price-to-Earnings(“PE”)

PE ratio or earnings multiple is the ratio of a company’s market capitalisation divided by the historical consolidated net profit attributable to shareholders.

The PE ratio is an earnings-based valuation methodology and is calculated based on the net earnings attributable to shareholders after interest, taxation, depreciation and amortisation expenses.

The PE ratio illustrates the ratio of the market capitalisation of an entity in relation to the historical net profit attributable to its shareholders.

As such, it is affected by the capital structure of a company, its tax position as well as its accounting policies relating to depreciation and intangible assets.

Price-to-Net Asset Value(“P/NAV”)

NAV refers to consolidated net assets, which is the total assets of a company less total liabilities.

P/NAV refers to the ratio of a company’s share price divided by NAV per share.

The P/NAV ratio represents an asset-based relative valuation which takes into consideration the book value or NAV backing of a company.

The NAV of a company provides an estimate of its value assuming a hypothetical sale of all its assets and repayment of its liabilities and obligations, with the balance being available for distribution to its shareholders. It is an asset-based valuation methodology and this approach is meaningful to the extent that it measures the value of each share that is attached to the net assets of the company.

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Valuation Measure Description

Enterprise Value-to-Earningsbefore Interests, Taxes,Depreciation and Amortisation(“EV/EBITDA”)

EV refers to enterprise value which is the sum of a company’s market capitalisation, preferred equity, minority interests, short-term and long-term debts (inclusive of finance leases), less its cash and cash equivalents.

EBITDA refers to the historical consolidated earnings before interests, taxes, depreciation and amortisation.

The EV/EBITDA ratio illustrates the ratio of the market value of an entity’s business in relation to its historical pre-tax operating cashflow performance. The EV/EBITDA multiple is an earnings-based valuation methodology. The difference between EV/EBITDA and the PE ratio (described above) is that it does not take into account the capital structure of a company as well as its interest, taxation, depreciation and amortisation charges.

The valuation measures of the Comparable Companies set out below are based on their respective last transacted share prices as at the Latest Practicable Date.

Comparable CompaniesMarket capitalisation

(S$ million)

Historical

PE(times)

P/NAV(times)

EV/EBITDA (times)

Asiamedic 15.09 603.6(1) 1. 0 5.3

RMG 1,153.63 25.4 4. 0 17.8

HMC 251.61 88.8 1.3 44.1

QMDG 180.27 44.7 7. 0 31.9

HMI 69.27 N.A.(2) 2. 4 17.9

PHH 55.06 N.A.(2) 1.5 N.A.(2)

SMG 33.52 13. 3 6. 4 5. 8

KPJ 956.14 17.7 3.0 10. 3

TMC 126.07 N.A.(2) 4. 3 N.A.(2)

High 603.6 7. 0 44.1

Low 13. 3 1. 0 5. 3

Average 132.3 3.4 19. 0

Median 35.1 3.0 17.8

Company (implied by the Cash Consideration)

49.55 12.8 1.8 7. 6

Notes:-

(1) The PE of Asiamedic was computed based on the market capitalisation of S$ 15.09 million as at the Latest Practicable Date and the net profit after tax of S$25,000 for the financial year ended 31 December 2010.

(2) N.A. denotes not applicable.

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Comparison of PE ratios

We note that, as at the Latest Practicable Date, the range of PE ratios among the Comparable Companies is between 13. 3 times and 603.6 times, with the average PE ratio of the Comparable Companies being 132.3 times and median PE ratio being 35.1 times. We note that the PE ratio of the Company implied by the Cash Consideration of 12.8 times is below the range of the PE ratios of the Comparable Companies, and is lower than the average and median PE ratios of the Comparable Companies.

Comparison of P/NAV ratios

We note that, as at the Latest Practicable Date, the range of P/NAV ratios among the Comparable Companies is between 1. 0 times and 7. 0 times, with the average P/NAV ratio of the Comparable Companies being 3.4 times and median P/NAV ratio being 3.0 times. We note that the P/NAV ratio of the Company implied by the Cash Consideration of 1.8 times is within the range of the P/NAV ratios of the Comparable Companies, and is lower than the average and median P/NAV ratios of the Comparable Companies.

Comparison of EV/EBITDA ratios

We note that, as at the Latest Practicable Date, the range of EV/EBITDA ratios among the Comparable Companies is between 5. 3 times and 44.1 times, with the average EV/EBITDA ratio of the Comparable Companies being 19. 0 times and median EV/EBITDA ratio being 17.8 times.

We note that the EV/EBITDA ratio of the Company implied by the Cash Consideration of 7. 6 times is within the range of the EV/EBITDA ratios of the Comparable Companies, and is lower than the average and median EV/EBITDA ratios of the Comparable Companies.

7.4 Comparison with precedent transactions in Singapore

We note that the Offeror is making the Offer with a view to delisting the Company from the Catalist and depending on the outcome of the Offer, the Offeror intends to exercise its rights of compulsory acquisition under the Companies Act.

In this regard, and for the purpose of providing an illustrative guide as to whether the financial terms of the Offer are attractive relative to other takeovers, we have compared the financial terms of the Offer with those in recent successful takeovers of companies listed on the SGX-ST in the last 24 months which were subsequently privatized and delisted (“Precedent Transactions”).

We wish to highlight that the premium that an offeror pays in any particular takeover depends on various factors such as the potential synergy that the offeror can gain by acquiring the target, the presence of competing bids for the target, prevailing market conditions and sentiments, attractiveness and profile of the target’s business and assets, size of consideration and existing and desired level of control in the target. The comparison below is made without taking into consideration the underlying liquidity of the shares and the performance of the shares of the relevant companies below. Further, the list of target companies involved in the Precedent Transactions set out in the analysis below are not directly comparable with the Company in terms of size of operations, market capitalization, business activities, asset base, geographical spread, track record, accounting policy, financial performance, operating and financial leverage, future prospects and other relevant criteria. Hence, the comparison of the Offer with the Precedent Transactions set out above is for illustration purpose only. Conclusion drawn from the comparisons made may not reflect any perceived market valuation of the Company.

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A summary of the relevant financial terms of the Precedent Transactions is set out below.

Premium / (Discount) of offer price to offer announcement

date(1)

Company nameDate of

announcement

Last Transacted

Price(%)

1-month VWAP

(%)

3-month VWAP

(%)P /NAV

(times) (2)

Sihuan Pharmaceutical Holdings Group Ltd

24 August 2009 27.5 24.4 33.2 3.1

Furama Ltd 15 December 2009 37.0 38.2 42.6 1.4

China Video Surveillance Limited 2 February 2010 140.9 132.9 91.9 0.8

Jurong Cement Limited 25 January 2010 95.3 97.5 119.3 1.4

Parkway Holdings Limited 27 May 2010 25.2 15.2 17.8 3.5

Eng Kong Holdings Limited 2 June 2010 37.2 20.9 19.1 1.2

RSH Limited 23 July 2010 41.7 N.A. (1) N.A. (1) 1.9

Pine Agritech Limited 16 August 2010 11.1 7.1 18.6 1.9

Thomson Medical Centre Limited 29 October 2010 62.0 71.7 90.2 3.6

High 140.9 132.9 119.3 3.6Low 11.1 7.1 17.8 0.8Average 53.1 51.0 54.1 2.1Median 37.2 31.3 37.9 1.9

Company 15 March 2011 25.0 28.2 50.9 1.8

Sources: SGX-ST announcements and circulars to shareholders in relation to the respective Precedent Transactions

Note:-

(1) N.A. denotes not applicable.

Based on the above table, we note the following:-

(a) the premium of 25.0% implied by the Cash Consideration against the last transacted price of the Shares prior to the Offer Announcement Date is (i) within the range; but (ii) lower than the average and median premiums of the Precedent Transactions;

(b) the premium of 28.2% implied by the Cash Consideration against the 1-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; but (ii) lower than the average and median premiums of the Precedent Transactions;

(c) the premium of 50.9% implied by the Cash Consideration against the 3-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; (ii) lower than the average premiums but (iii) higher than the median premiums of the Precedent Transactions; and

45


(d) the P/NAV per share implied by the Cash Consideration of 1.8 times is (i) within the range; and (ii) lower than the average and median P/NAV per share ratios of the Precedent Transactions.

We note that amongst the Precedent Transactions as highlighted above, Parkway Holdings Limited (“PHL”) and Thomson Medical Centre Limited (“TMCL”) are also engaged in the provision of healthcare services at the point of their respective offer announcements (“Healthcare Sector Precedent Transactions”). In this regard, we present below a comparison of the market capitalisation, revenue, net profit and the PE, P/NAV and EV/EBITDA ratios and premium of offer price to the pre-announcement share price as represented by their respective offers:-

Company

Market Capitalisation

(S$ million)Revenue

(S$ million)Net profit

(S$ million)PE

(times)P/NAV(times)

EV/EBITDA(times)

Premium of offer price

to pre-announcement

share price(%)

PHL 4,280.0 979.2 118.9 35.6 3.5 26.0 25.2TMCL 513.2 81.7 15.9 32.2 3.6 20.5 62.0

QMGL 49.5 39.1 3. 9 12.8 1.8 7.6 25.0

Source: SGX-ST announcements and circulars to shareholders in relation to the respective Healthcare Sector Precedent Transactions.

We note that the PE, P/NAV and EV/EBITDA ratios and the premium to the last transacted price prior to the Offer Announcement Date implied by the Cash Consideration are lower than the respective statistics as indicated in the Healthcare Sector Precedent Transactions.

We wish to highlight that the Company is not directly comparable to PHL and TMCL for the following reasons:-

1) PHL owns and operates a network of multidisciplinary hospitals across various parts of Asia including Singapore, Malaysia, Brunei, India, China and the Middle East. TMCL owns and operates 1 specialised hospital focused on obstetrics, gynaecology and paediatrics services. QMGL Group is primarily engaged in the operation of a network of primary care clinics and other related healthcare services with operations mainly based in Malaysia;

2) The operations of PHL and TMCL are on a much larger scale than that of QMGL, and accordingly higher premiums are reasonably justifiable; and

3) There were two competitive bids for PHL.

Accordingly, any comparison made is necessarily limited and serves only as an illustrative guide.

7.5 Dividend Analysis of QMGL Group

The Company had declared the following ordinary dividends in respect of each financial year since its listing. For the avoidance of doubt, irrespective of the form of Offer Consideration that Shareholders elect to receive, Shareholders will be entitled to retain the FY2010 Final Dividend.

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FY2009 FY2010

Net ordinary dividend per Share (S$) 0.011 0.011Share price (1) (S$) 0.134 0.174Implied dividend yield (%) 8.2 6.3

Note:-

(1) Based on the VWAP of the Shares for the period 1 January to 31 December for each financial year.

We note that the Company does not have a formal dividend policy. The Company has maintained its dividend payout at S$0.011 per Share for both FY2009 and FY2010, The dividend yield declined from 8.2% in FY2009 to 6.3% in FY2010 due to the increase in the VWAPs of the Shares from $0.134 in FY2009 to S$0.174 in FY2010. Based on the Cash Consideration of S$0.35, the implied dividend yield would be approximately 3.1%.

7.5.1 Implied dividend yields of Comparable Companies

We set out below the implied dividend yields of the Comparable Companies:-

Comparable CompaniesImplied dividend

yield (%)

Asiamedic N.A.(1)

RMG 1.9HMC N.A.(1)

QMDG 2.2HMI N.A.(1)

PHH N.A.(1)

SMG 7.5KPJ 3. 7TMC N.A.(1)

Average 3. 8Median 3.0Low 1.9High 7.5

Company 6.3

Source: Respective companies’ annual reports and results announcement

Note:-

(1) N.A. denotes not applicable as the company did not declare any dividend for the latest applicable financial year.

We note that the implied dividend yield of the Company of 6.3% is (a) within the range and (b) higher than the average and median of the implied dividend yields of the Comparable Companies.

The Directors have confirmed to us that the Company does not have a formal dividend policy. As such, the quantum of dividends paid by the Company in any period would depend on various factors including but not limited to the financial performance of the QMGL Group, its working capital and capital expenditure needs as well as other considerations.

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7.6 Historical Financial Performance and Position of the QMGL Group

A summary of the financial results of the QMGL Group between FY2008 to FY2010 is set out below:-

FY2008(RM’000)

FY2009(RM’000)

FY2010(RM’000)

Financial results Revenue 62,172 66,689 92,434EBITDA 10,344 9,975 15,295Profit for the year 6,069 5,368 9,154EBITDA margin (%) 16.6 15.0 16.5Net profit margin (%) 9.8 8.0 9.9

Financial positionTotal assets 77,997 82,913 111,555Total borrowings 4,447 3,423 10,414Net current assets 32,770 29,673 5,884NAV 64,684 61,124 62,246

Financial ratiosReturn on equity (%) 9.4 8.0 14.7Return on assets (%) 7.8 6.5 8.2Debt-equity ratio (times) 0.07 0.05 0.17

We note that the financial performance of the QMGL Group improved in FY2010 vis-à-vis FY2009. NAV as at 31 December 2010 (vis-à-vis 31 December 2009) decreased as the put options held by the non-controlling shareholders in the QMGL Group’s newly acquired subsidiaries namely Dr Marcus Cooney & Associates Pte Ltd and GPA Dental Group (Singapore) Pte. Ltd are recognised as financial liabilities at fair value and correspondingly have resulted in the reduction in the reserves attributable to owners of the Company.

We also set out below the outlook of QMGL Group as disclosed in the Chairman’s statement in QMGL Group’s annual report for FY2010:-

“Looking ahead, I am optimistic about the future for Qualitas. The general improved economic climate in 2010 has proved to be a stepping stone for the development of our business and barring any unforeseen circumstances is expected to continue through 2011. In Malaysia, backed by the GDP growth for 2011 which is forecasted to be at between 5% to 6%, our Group will continue to enlarge our network primarily through affiliate and associate arrangements as well as clinic acquisitions so as to provide better coverage for our corporate and self paying patients. During 2010, our Group increased its affiliate network from 9 affiliate clinics and 59 associate clinics at the beginning of 2010 to 17 affiliate clinics and 79 associate clinics at the end of 2010. We expect this trend to continue in 2011 which would inevitably result in an increased network coverage and corporate client base. The Group will also continue its expansion through acquisition of clinics in strategic areas as well as through fostering other exclusive arrangement with corporate clients and other clinics.

On the regional front, our Group’s foray into the dentistry sector in Singapore has yielded positive contributions to our Group due to the demand of such services in Singapore. In India, our losses from our associate V.V. Dentistree India Pvt Limited is expected to be lower in FY2011 as compared to FY2010 due to the contribution from the new branch that was set up in the second half of 2010 and the establishment of affiliate network of dental clinic. We would continue to expand our network

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of dental centres in South India and identify potential diagnostics centre for strategic alliances. In the Australasia region, our investment in New Zealand recorded losses in FY2010 as the company is in the growth phase. We expect their performance to improve in FY2011.

We anticipate our business to have a steady growth and our Company would be able to face the future with confidence. This is attainable given the continuous demand for healthcare services across the region.”

8 ASSESSMENT OF THE SECURITIES CONSIDERATION

As the Offer has been declared unconditional in all respects as at the Latest Practicable Date, Shareholders who accept the Securities Consideration will own shares in the Offeror which is an unlisted company. As at the Latest Practicable Date, the Undertaking Shareholders have elected for the Securities Consideration amounting to 28.31% shareholding in the Company.

8. 1 Effective Shareholding Interests in the Offeror

In accordance with the Irrevocable Undertakings, the Offeror would obtain acceptances in relation to an aggregate of 94,157,141 Offer Shares, representing approximately 66.51 per cent. of the Shares in issue as at 31 March 2011, being the latest practicable date prior to the despatch of the Offer Document.

Please refer to Section 4 of the Circular for information on the shareholding interests in the Offeror. We note that assuming that the Shareholders (excluding the Undertaking Shareholders) with a 33.49% shareholding in the Company accept the Offer and elect to receive the Securities Consideration, these Shareholders will collectively hold a 27.09% shareholding in the Offeror upon the completion of the Offer. Their shareholdings in the Offeror may be diluted to 13.55% in the event that the Further Subscription proceeds and HQ subscribes for such number of Offeror Shares such that on completion of the Further Subscription, the aggregate number of Offeror Shares held by HQ amounts to 75 per cent. of the enlarged issued ordinary share capital of the Offeror.

We would to like to draw attention to Section 9, Appendix 4 and Appendix 5 of the Offer Document which set out information on the Offeror and risk factors with respect to the ownership in the New Offeror Shares.

In considering the Securities Consideration, we wish to highlight the following:-

(i) Being unlisted, there is limited information on the Offeror available to investors for due diligence. According to the Offer Document, as the Offeror was only recently incorporated on 9 November 2010, no audited financial statements of the Offeror have been prepared since the date of its incorporation.

(ii) The Offer Document states that as at 31 March 2011, being the latest practicable date prior to the despatch of the Offer Document, the Offeror estimates that the transactional expenses to be borne by the Offeror as a result of making and financing the Offer will be approximately S$3,000,000. Save as disclosed in the Offer Document and save as a result of making and financing the Offeror, there have been no known material changes in the financial position of the Offeror since its incorporation.

(iii) The Offeror is subject to risks associated with debt financing, including the term loan facility of up to S$37.6 million contemplated in respect of the Offer.

(iv) Shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies as a result of lack of marketability.

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(v) It is likely to be difficult to sell the Offeror Shares in the absence of a public market as there is no arrangement for holders of Offeror Shares to exit. In addition, the Offeror Shares are not freely transferable and the potential returns on the Offeror Shares may be limited.

Pursuant to the Pre-Emptive Right, the Memorandum and Articles of Association of the Offeror provide that no shares in the capital of the Offeror may be transferred by any person without first offering such shares to HQ, Dr Ameen and Mr Karim. For the avoidance of doubt, none of HQ, Dr Ameen or Mr Karim shall be obliged to accept any such offer.

In addition, in the event HQ decides to sell all (and not part only) of its Offeror Shares, it has the right (but not the obligation) to require the other shareholders of the Offeror to sell to the proposed purchaser, on the same terms, such number of shares in excess of the number of Offeror Shares to be acquired from HQ which the proposed purchaser wishes to purchase pro-rated according to the respective shareholding percentages of the other shareholders of the Offeror (“Drag-along Right”).

Accordingly, Shareholders should note that in the event that HQ decides to exercise its Drag-along Right, they may be required to sell all or part of their Offeror Shares on the same terms as HQ, which may or may not be at a price more than the issue price of the Offeror Shares, being S$0.35.

(vi) Although the Offeror intends to declare dividends on the Offeror Shares going forward, there is no assurance that the Offeror will have such ability and/or maintain the historical amount of dividend payment or dividend payout ratio.

(vii) Pursuant to completion of the Offer, the Offeror will be primarily controlled by the Consortium Parties, namely, HQ, Dr Ameen and Mr Karim, whose interests may differ from that of the other shareholders. Such concentration of ownership may limit the ability of other shareholders to influence the outcome of decisions requiring the approval of shareholders.

(viii) Holders of the Offeror Shares will not enjoy the same level of corporate governance, protection, transparency and accountability compared to that of a listed company.

8. 2 Offeror’s future plans for the Company

The Offer Document states that the Offeror intends for the QMGL Group to continue its existing business activities and does not intend to make any changes to the QMGL Group’s leadership and management. The existing management team led by Dr Ameen and Mr Karim will continue to drive strategy and business of the QMGL Group. The Offeror therefore has no current plans to (i) introduce any major changes to the business of the QMGL Group or its operations, (ii) re-deploy any of the fixed assets of the QMGL Group or (iii) discontinue the employment of any of the existing employees of the QMGL Group, other than in the ordinary course of business.

We wish to highlight that as at the Latest Practicable Date, the Offer has been declared unconditional in all respects and the Offer will obtain statutory control of the Company. The Offeror is in turn controlled by HQ, Dr Ameen and Mr Karim. Dr Ameen and Mr Karim are currently Executive Directors of QMGL.

Shareholders should note that the Offeror has not disclosed in the Offer Document any specific future plans by HQ in respect of their investment in the QMGL Group. Such plans, whether they can be successfully implemented, how they are to be implemented as well as the resultant financial impact or potential valuation enhancement (if any) on the QMGL Group cannot be readily ascertained at this point in time.

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9. OTHER CONSIDERATIONS

9.1 Offer being unconditional

As the Offer has been declared unconditional in all respects as at the Latest Practicable Date, the Offeror and parties acting in concert with it would collectively have a controlling interest in the Company and would be in a position to exercise statutory control of the Company. Statutory control will enable the Offeror and parties acting in concert with it to be able to pass all ordinary resolutions on matters in which the Offeror and parties acting in concert with it do not have an interest and which are tabled for Shareholders’ approval at a general meeting. In addition, upon the Offer being unconditional, Shareholders who accept the Offer will be assured of receiving the Offer Consideration in respect of all their acceptances of the Offer with no transaction costs involved.

9.2 Compulsory acquisition and listing status of the Company

The Offeror has stated in the Offer Document that it intends to make the Company its wholly- owned subsidiary and does not intend to preserve the listing status of the Company on the Catalist. Accordingly, the Offeror when entitled, may exercise any rights of compulsory acquisition that it may have in connection with the Offer and does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10% of the Shares are held in public hands. In addition, the Offeror also reserves the right to seek a voluntary delisting of the Company from the SGX-ST pursuant to Rules 1307 and 130 8 of the Catalist Rules.

Shareholders who do not accept the Offer should note the following implications or consequences which may arise as a result of any suspension in, and/or delisting of the Shares:-

(i) Shares of unquoted companies are generally valued at a discount to the shares of comparable listed companies as a result of lack of marketability.

(ii) It is likely to be difficult for Shareholders to sell their Shares in the absence of a public market for the Shares as there is no arrangement for such Shareholders to exit. If the Company is delisted, even if such Shareholders were able to sell their Shares, they may receive a lower price compared with the Cash Consideration.

(iii) If the Company is delisted from the Catalist, it will no longer be obliged to comply with the requirements as set out in the Catalist Rules and Shareholders will no longer enjoy the same level of corporate governance, protection, transparency and accountability afforded and imposed on the Company by the Catalist Rules (including the requirement to have independent directors).

9.3 Limitation on subsequent offers

As the Offer has been declared unconditional in all respects as at the Latest Practicable Date, Shareholders should note that under Rule 33.2 of the Code, neither the Offeror nor any person acting in concert with it may (except with the consent of the SIC), within 6 months of the Closing Date, make a second offer to, or acquire any Shares from, any Shareholder on terms better than those made available under the Offer.

Shareholders should also note that the Offeror and its concert parties will be free to increase their shareholding in the Company after the close of the Offer without incurring a take-over obligation under Rule 14 of the Code if their aggregate voting rights in the Company remain at above 49% in the 6 months prior to any such subsequent acquisition of Shares.

9.4 Unutilised tax losses or unabsorbed capital allowances

The Directors have confirmed to us that as at the Latest Practicable Date, the Company, its subsidiaries and its associated companies do not have any material unutilised tax losses or unabsorbed capital allowances.

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9.5 Impact of change in shareholdings on contractual arrangements

The Directors have confirmed to us that to the best of their knowledge and belief and based on reasonable enquiries, the resultant change in the shareholding structure of the Company pursuant to the Offer is not expected to have a material impact on the QMGL Group’s business operations and contractual arrangements (including, inter alia, any long-term contracts, loan agreements, lease agreements, business licenses, grants, business incentives and employment contracts).

9.6 Alternative take-over offers from third parties

As the Latest Practicable Date, apart from the Offer proposed by the Offeror, there is no publicly available evidence of an alternative offer from any third party. Further, the Directors have also confirmed that, as at the Latest Practicable Date, apart from the Offer, they have not received any other offer from any other party.

We wish to highlight that the Offeror has stated that it does not intend to revise the Offer Consideration, save that the Offeror reserves its rights to revise the Offer Consideration in accordance with the Code if an offer which is, or is deemed under the Code to be, competitive to the Offer arises.

10. SUMMARY OF ANALYSIS

In arriving at our recommendation in respect of the Offer, we have taken into consideration, inter alia, the following factors summarised below. The factors set out herein should be considered in the context of the entirety of this IFA Letter and the Circular:-

Financial assessment of the Offer

(a) the Cash Consideration represents a premium of 102.3% to the VWAP of the Shares for the period from the Listing Date and up to and including the Last Market Day and 94.4%, 75.0%, 72.4%, 50.9% and 28.2% to the VWAPs of the Shares 24-month, 12-month, 6-month, 3-month, and one-month periods prior to and including the Last Market Day;

(b) the Cash Consideration represents a premium of 25.0% to the last traded price of the Shares for the Last Market Day ;

(c) during the period after the Offer Announcement Date and up to the Latest Practicable Date, the closing price of the Shares ranged between S$0.345 and S$0.350, and the Cash Consideration represents a premium of 0. 3% to the VWAP of the Shares of S$0.34 9 for the same period;

(d) the Cash Consideration is equivalent to the closing price of the Shares of S$0.350 as at the Latest Practicable Date;

(e) the average daily trad ed volume of the Shares from the Listing Date and up to the Offer Announcement Date was 0. 08% of the Free Float and that of the 24-month, 12-month, 6-month, 3-month, and 1-month periods prior to the Offer Announcement Date were 0. 08%, 0. 08%, 0. 09%, 0.1 0% and 0. 11% of the Free Float respectively;

(f) since Listing Date and up to the Offer Announcement Date, the Shares were traded on 138 Market Days out of the 637 Market Days (or 21.7% of the total number of Market Days during the corresponding period) with an average trading volume of 50,188 Shares, representing approximately 0.08% of the Free Float. Since Listing Date and up to the Offer Announcement Date, the total number of Shares traded was 6,926,000;

(g) since Listing Date, the Shares have generally underperformed the FSSTI and FSTHC in relative terms;

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(h) the trailing PE multiple implied by the Cash Consideration of 12.8 times is (a) within the range, and (b) above the mean and median of the trailing PE multiples of the Shares since Listing Date till the Offer Announcement Date;

(i) the Cash Consideration represents a premium of approximately 79.5% to the Adjusted NAV per Share as at 31 December 2010;

(j) the PE ratio of the Company implied by the Cash Consideration is below the range, and lower than the average and median of the respective ratios of the Comparable Companies;

(k) the P/NAV and EV/EBITDA ratios of the Company implied by the Cash Consideration is within the ranges, but lower than the average and median of the respective ratios of the Comparable Companies;

( l) the premium of 28.2% implied by the Cash Consideration against the 1-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; but (ii) lower than the average and median premium of the Precedent Transactions;

( m) the premium of 50.9% implied by the Cash Consideration against the 3-month VWAP of the Shares prior to the Offer Announcement Date is (i) within the range; (ii) lower than the average but (iii) higher than the median premium of the Precedent Transactions;

(n) the P/NAV per share implied by the Cash Consideration of 1.8 times is (i) within the range; and (ii) lower than the average and median P/NAV per share ratios of the Precedent Transactions;

( o) the PE, P/NAV and EV/EBITDA ratios and the premium to the last transacted price prior to the Offer Announcement Date implied by the Cash Consideration are lower than the respective statistics as indicated in the Healthcare Sector Precedent Transactions; and

( p) the implied dividend yield of the Company of 6.3% is (a) within the range and (b) higher than the average and median of the implied dividend yields of the Comparable Companies.

Other considerations

(a) Shareholders who accept the Offer and elect to receive the Securities Consideration will be issued New Offeror Shares. Such Shareholders will however not enjoy the same level of corporate governance, protection, transparency and accountability compared to that of a listed company;

(b) as the Offer has been declared unconditional, the Offeror will obtain statutory control of the Company and statutory control will enable the Offeror and parties acting in concert with it to be able to pass all ordinary resolutions on matters in which the Offeror and parties acting in concert with it do not have an interest and which are tabled for shareholders’ approval at a general meeting;

(c) the Offeror has stated in the Offer Document that it intends to make the Company its wholly-owned subsidiary and does not intend to preserve the listing status of the Company on the Catalist. Accordingly, the Offeror when entitled, may exercise any rights of compulsory acquisition that it may have in connection with the Offer and does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10% of the Shares are held in public hands; and

(d) as the Latest Practicable Date, apart from the Offer proposed by the Offeror, there is no publicly available evidence of an alternative offer from any third party. Further, the Directors have also confirmed that, as at the Latest Practicable Date, apart from the Offer, they have not received any other offer from any other party.

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11. ADVICE TO INDEPENDENT DIRECTORS

Having regard to the considerations set forth in this IFA Letter and the information available as at the Latest Practicable Date, we are of the opinion that the Cash Consideration is fair and reasonable from a financial point of view.

We advise the Independent Directors to recommend the Shareholders to ACCEPT the Offer. Whilst we make no recommendation as to how Shareholders elect to receive any Offer Consideration, we wish to highlight the following factors to Shareholders in electing for the Securities Consideration or in part combination thereof:-

(a) Being unlisted, there is limited information relating to the financial position of the Offeror being available to Shareholders;

(b) Shares of unlisted companies are generally valued at a discount to the shares of comparable listed companies as a result of lack of marketability;

(c) It is likely to be difficult to sell the Offeror Shares in the absence of a public market as there is no arrangement for holders of Offeror Shares to exit. Shareholders should also note the provision in the Offeror’s Memorandum and Articles of Association in respect of the Pre-emptive Right and the Drag-along Right; and

(d) Holders of the Offeror Shares will not enjoy the same level of corporate governance, protection, transparency and accountability as compared to that of a listed company.

Shareholders should note that the future price performance of the Shares (assuming that the Company is to remain listed) would depend on, amongst others, the performance and prospects of the QMGL Group as well as the prevailing economic conditions and general sentiments on the stock market. We also wish to highlight that the price performance of the Shares used in our analysis of this IFA Letter may not be reflective of investors’ response to the QMGL Group’s future financial performance in FY2011 after the Latest Practicable Date.

In rendering the above advice, CSPL has not had regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise that any individual Shareholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional advisers immediately.

Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of QMGL Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, the advice by CSPL on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of CSPL’s review and also, such advice, if given, would not fall within CSPL’ s terms of reference in connection with the Offer.

Yours faithfullyFor and on behalf ofCOLLINS STEWART PTE LIMITED

ALEX TAN KAREN SOHMANAGING DIRECTOR DEPUTY MANAGING DIRECTORCORPORATE FINANCE CORPORATE FINANCE

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1. DIRECTORS

The names, addresses and designations of the Directors as at the Latest Practicable Date are set out below:

Name

Dr Noorul Ameen Bin Mohamed Ishack

Address

No. 3 Lorong 5/21A 46200 Petaling Jaya Selangor Darul EhsanMalaysia

Designation

Chairman and Managing Director

Karim Tajdin Mohamed Ali Dhala

42 Taman Hijau, Ukay Heights 68000 Ampang Selangor Darul Ehsan Malaysia

Executive Director

Chaw Chong Foo 56, Jalan KhairuddinSingapore 457521

Lead Independent Director

Raja Noorma Binti Raja Othman

B405 University Tower28 Jalan University46200 Petaling JayaSelangor Darul Ehsan Malaysia

Non-Independent Non-Executive Director

Muhammad Azraini Bin Abdul Hamid

No. 16, Lorong Taban 2Lucky Garden Bangsar 59100 Kuala LumpurMalaysia

Non-Independent Non-Executive Director

Dato’ Dr Samsudin Bin Hussain

No. 4, Jalan Ketiau 3/1040000 Shah Alam Selangor Darul Ehsan Malaysia

Independent Director

2. HISTORY AND BUSINESS

QMGL is a public company incorporated in Singapore on 28 September 2007 and listed on the SGX Catalist on 1 September 2008. The QMGL Group is primarily involved in the provision of medical and related services and provision of management services. As at the Latest Practicable Date, QMGL has an issued and paid-up share capital of S$28,555,524.00 comprising 141,559,396 Shares.

3. SHARE CAPITAL

3.1 Issued share capital

The Company has only one class of ordinary shares. The issued and fully paid share capital of the Company as at the Latest Practicable Date is S$28,555,524.00 comprising 141,559,396 Shares.

As at the Latest Practicable Date, there were no outstanding instruments convertible into, rights to subscribe for, and options in respect of securities of the Company.

3.2 Capital, dividends and voting rights

The rights of Shareholders in respect of capital, dividends and voting are contained in the Articles. The provisions in the Articles relating to the rights of Shareholders in respect of capital, dividends and voting have been extracted from the Articles and reproduced in Appendix 3.

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APPENDIX 2: ADDITIONAL GENERAL INFORMATION ON THE COMPANY

3.3 Number of shares issued since the end of the last financial year

Save for the allotment and issue of 6,875,175 ordinary shares in the capital of the Company on 29 March 2011, being the allotment of consideration shares for the second tranche payment pertaining to the acquisition of 75.0% of the equity interest in the capital of DMCA by the Group, as announced by the Company on 29 March 2011, no other new Shares have been issued since the end of FY2010.

4. DISCLOSURE OF INTERESTS

4.1 Interests of Company in Offeror Shares

Neither the Company nor any of its subsidiaries has any direct or indirect interests in the shares or convertible securities of the Offeror as at the Latest Practicable Date.

4.2 Dealings in Offeror Shares by Company

Neither the Company nor any of its subsidiaries has dealt for value in the shares or convertible securities of the Offeror during the period commencing six (6) months prior to the Offer Announcement Date, and ending on the Latest Practicable Date.

4.3 Interests of Directors in Offeror Shares

4.3.1 Save as disclosed in the Offer Document and/or this Circular, none of the Directors has any direct or indirect interests in the shares or convertible securities of the Offeror as at the Latest Practicable Date.

4.3.2 The interests of the Directors of the Company in the shares of the Offeror as at 31 March 2011, being the latest practicable date prior to the printing of the Offer Document are set out below:

Direct Interest Deemed InterestNo. of No. of

Name Offeror Shares % Offeror Shares %

Dr Ameen 25 24.51 – –Mr Karim 25 24.51 – –

4.4 Dealings in Offeror Shares by Directors

Save as disclosed above in paragraph 4.3.2, none of the Directors has dealt in shares in the capital of the Offeror during the period commencing six (6) months prior to the Offer Announcement Date, and ending on the Latest Practicable Date.

4.5 Interests of Directors in Shares(1)

Prior to the acceptance of the Offer and save as disclosed below, none of the Directors has an interest, direct or indirect, in the Shares( 1), debentures, warrants or share options of the Company or of related corporations.

Name

Direct Interest Deemed Interest

No. of Shares % No. of Shares %

Dr Ameen( 2) 18,686,762 13.20 13,323,088 9.41Mr Karim( 3) 813,767 0.57 13,323,088 9.41Dato’ Dr Samsudin Bin Hussain 250,000 0.18 – –Chaw Chong Foo 400,000 0.28 – –

Notes:

(1) Based on 141,559,396 Shares as at the Latest Practicable Date.

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( 2) Dr Ameen is the Chairman of the Offeror Board. Dr Ameen legally and beneficially holds 57.80 per cent. of the ordinary shares in the capital of QH Sdn Bhd and is deemed to be interested in the Shares held by QH Sdn Bhd.

( 3) Mr Karim is a director of the Offeror. Mr Karim legally and beneficially holds 42.20 per cent. of the ordinary shares in the capital of QH Sdn Bhd and is deemed to be interested in the Shares held by QHSB.

4.6 Acceptance of Offer by Directors

As at the Latest Practicable Date the following Directors have accepted the Offer in relation to their respective Shares:

NameNo. of Shares in respect of

which Offer accepted %

Dr Ameen(1) 18,686,762 13.20(3)

Mr Karim(2) 813,767 0.57(3)

Dato’ Dr Samsudin Bin Hussain 250,000 0.18(3)

Notes:

(1) Dr Ameen is the Chairman of the Offeror Board. Dr Ameen legally and beneficially holds 57.80 per cent. of the ordinary shares in the capital of QH Sdn Bhd and is deemed to be interested in the Shares held by QH Sdn Bhd. QH Sdn Bhd legally and beneficially holds 13,323,088 Shares and it has accepted the Offer in relation to all its Shares.

(2) Mr Karim is a director of the Offeror. Mr Karim legally and beneficially holds 42.20 per cent. of the ordinary shares in the capital of QH Sdn Bhd and is deemed to be interested in the Shares held by QH Sdn Bhd. QH Sdn Bhd legally and beneficially holds 13,323,088 Shares and it has accepted the Offer in relation to all its Shares.

(3) Based on 141,559,396 Shares as at the Latest Practicable Date.

4.7 Interests of Directors in Shares (taking into account acceptances of Offer as at the Latest Practicable Date)

Save as disclosed below and taking into account the acceptances, as at the Latest Practicable Date, of the Offer by the Directors in relation to their respective Shares, none of the Directors has an interest, direct or indirect, in the Shares, debentures, warrants or share options of the Company or of related corporations.

Name

Direct Interest Deemed Interest

No. of Shares % No. of Shares %

Chaw Chong Foo(1) 400,000 0.28 – –

Notes:

(1) Chaw Chong Foo has informed the Company that he will be accepting the Offer in relation to his Shares.

4. 8 Dealings in Shares by Directors

Save for the acceptance of the Offer by Dr Ameen, Mr Karim and Dato’ Dr Samsudin Bin Hussain, none of the Directors has dealt for value in the Shares during the period commencing six (6) months prior to the Offer Announcement Date, and ending on the Latest Practicable Date.

4. 9 Interests of the IFA in Shares

None of the IFA, its related corporations or any of the funds whose investments are managed by the IFA on a discretionary basis owns or controls any shares or convertible securities of the Offeror or of the Company as at the Latest Practicable Date.

4. 10 Dealings in Shares by the IFA

None of the IFA, its related corporations or any of the funds whose investments are managed by the IFA on a discretionary basis has dealt for value in the shares or convertible securities of the Offeror or of the Company during the period commencing six (6) months prior to the Announcement Date, and ending on the Latest Practicable Date.

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5. OTHER DISCLOSURES

5.1 Directors’ service contracts

As at the Latest Practicable Date:

(a) there are no service contracts between any of the Directors or proposed directors with the Company or any of its subsidiaries which have more than twelve (12) months to run and which are not terminable by the employing company within the next twelve (12) months without paying any compensation; and

(b) there are no such contracts entered into or amended during the period commencing six (6) months prior to the Offer Announcement Date, and the Latest Practicable Date.

5.2 Arrangements affecting Directors

(a) Pursuant to a deed of undertaking dated 11 March 2011 given by each of Dr Ameen and Mr Karim in favour of the Offeror and the Subscription Agreement, each of Dr Ameen and Mr Karim has given an irrevocable undertaking to accept the Offer in respect of the Offer Shares held by it no later than 5.00 p.m. on the date falling three (3) Market Days after the date on which an announcement is released by the Offeror (or such later date as may be agreed to by the Offeror) confirming that it has received valid acceptances in respect of the Offer of such number of Offer Shares which, when aggregated together with the Offer Shares held by each of CAV and CKPF, would result in the Offer becoming or being declared unconditional in all respects and to subscribe for ordinary shares in the share capital of the Offeror. Immediately following the close of the Offer and completion of the Subscription, based on the assumption that all Shareholders (save for the Major Undertaking Shareholders (including Dr Ameen and Mr Karim), DMC and the Key Undertaking Shareholders) accept the offer and elect to receive the Cash Consideration as the Offer Consideration for all their Offer Shares, Dr Ameen will have a maximum of approximately 23.31% shareholding interest in the Offeror and Mr Karim will have a maximum of approximately 1.01% shareholding interest in the Offeror.

(b) Pursuant to a deed of undertaking dated 11 March 2011 given by each of CAV and CKPF in favour of the Offeror, each of CAV and CKPF have given an irrevocable undertaking to accept the Offer in respect of the Offer Shares held by it no later than 5.00 p.m. on the date falling three (3) Market Days after the date on which an announcement is released by the Offeror (or such later date as may be agreed to by the Offeror) confirming that it has received valid acceptances in respect of the Offer of such number of Offer Shares which, when aggregated together with the Offer Shares held by each of CAV and CKPF, would result in the Offer becoming or being declared unconditional in all respects.

(c) Save as disclosed in paragraphs 5.2(a) and (b) above, as at the Latest Practicable Date:

(i) it is not proposed that any payment or other benefit shall be made or given to any Director or director of any other corporation which is by virtue of Section 6 of the Act deemed to be related to the Company, as compensation for loss of office or otherwise in connection with the Offer;

(ii) save for the Subscription Agreement, there are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Offer; and

(iii) none of the Directors has a material personal interest, whether direct or indirect, in any material contract entered into by the Offeror.

6. MATERIAL CONTRACTS WITH INTERESTED PERSONS

There were no transactions with interested persons during the financial years ended 31 December 2008, 31 December 2009 and 31 December 2010 that exceeded the stipulated threshold as specified in Rule 907 of the Catalist Rules of the SGX-ST as disclosed in the annual reports of the

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Company for FY2008, FY2009 and FY2010. Neither the Company nor any of its subsidiaries has entered into material contracts (other than those entered into in the ordinary course of business) with persons who are interested persons(1) during the period beginning three (3) years before the Offer Announcement Date and ending on the Latest Practicable Date.

Note:

(1) An interested person, as defined in the Note on Rule 24.6 read with the Note on Rule 23.12 of the Code, is:

(i) a director, chief executive officer, or substantial shareholder of the Company;

(ii) the immediate family of a director, the chief executive officer, or a substantial shareholder (being an individual) of the Company;

(iii) the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive officer or a substantial shareholder (being an individual) and his immediate family is a beneficiary;

(iv) any company in which a director, the chief executive officer or a substantial shareholder (being an individual) together and his immediate family together (directly or indirectly) have an interest of 30% or more;

(v) any company that is the subsidiary, holding company or fellow subsidiary of the substantial shareholder (being a company); or

(vi) any company in which a substantial shareholder (being a company) and any of the companies listed in (v) above together (directly or indirectly) have an interest of 30% or more.

7. MATERIAL LITIGATION

7.1 Save as disclosed below in paragraph 7.2, neither the Company nor any of its subsidiaries is engaged in any material litigation, either as plaintiff or defendant, which might materially and adversely affect the financial position of the Group as a whole. Save as disclosed in paragraph 7.2 below, the Directors are not aware of any litigation, claims or proceedings pending or threatened against the Group or any facts likely to give rise to any litigation, claims or proceedings which might materially and adversely affect the financial position of the Company or the Group, taken as a whole.

7.2 Particulars of Material Litigation

7.2.1 Johor Bahru Sessions Court Summons No. S5-52-2062-2009 by Teoh Ka Hooi

On 14 November 2005, the Company’s subsidiary, Poliklinik Puteri Dan Surgeri Sdn Bhd received a letter of demand from one Teoh Ka Hooi (the “Claimant”) claiming a sum of RM80,000.00 for alleged medical negligence. Poliklinik Puteri Dan Surgeri Sdn Bhd has informed their insurer QBE Insurance (Malaysia) Bhd. of the potential claim and a firm of solicitors has been appointed to act for Poliklinik Puteri Dan Surgeri Sdn Bhd. The Plaintiff’s solicitors entered an interlocutory judgment against the second defendant, Dr. Basmullah Bin Yusof for failing to enter appearance and for failing to file a Statement of Defence. Dr Basmullah has since appointed a solicitor to represent him and an application to set aside the interlocutory judgment was filed. The court allowed the application, hence the interlocutory judgment has been set aside. The court has now set the main case for hearing on 7 July 2011.

7.2.2 Shah Alam High Court Writ Summons by Dr. Premadevi A/P Gopala Krishnan

The Company’s subsidiary, Qualitas Medical Group Sdn Bhd (“QMG”) and QMG’s subsidiary, Q-Medical Care Sdn Bhd (“QMC”) together with one of the Group’s present employee, namely Mr. Ramesh Menon, and another former Group’s employee, namely Dr. Sakina Ali Abul Hassan and (collectively the “Defendants”) have been served on 10 May 2010 with a Writ of Summons filed in the Shah Alam High Court, Malaysia by Dr. Premadevi A/P Gopala Krishnan (the “Plaintiff”).

The Plaintiff, a former doctor employee of QMC has instituted a civil suit against the Defendants and claim under the tort of defamation. The Plaintiff is seeking, inter alia, claims for general damages amounting to RM5,000,000.00 and compensation amounting to RM19,500.00 (the “Claim”).

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The Company has through its solicitors entered an appearance to the suit. The submissions and relevant cause papers to the striking out application have been duly filed. The Plaintiff served their outline submission in opposition to the striking out application in Court. The Company intends to file a submission in reply thereto. In the interim, the Court has fixed the hearing date for the striking out application to 3 May 2011.

8. FINANCIAL INFORMATION

8.1 Financial Information of the Group

A summary of the financial information of the Group for FY2008, FY2009 and FY2010 is set out below.

Audited Audited AuditedFY2008 FY2009 FY2010RM’000 RM’000 RM’000

Revenue 62,172 66,689 92,434Profit before income tax 8,699 8,388 12,926Profit for the year 6,069 5,368 9,154Non-controlling interests (109) (20) 695Profit attributable to owners of the Company 6,178 5,388 8,459Basic earnings per share (cents) 5.15 4.00 6.28Diluted earnings per share (cents) 5.15 4.00 5.98Net divided per share $0.010 $0.011 $0.011

The summary financial information above should be read together with the audited financial statements of the Group for the relevant financial periods and the related notes thereto as set out in the Company’s annual reports (copies of which are available for inspection at the registered office of the Company at 19 Keppel Road #03-10 Jit Poh Building, Singapore 089058).

The audited financial statements of the Group for FY2010 (including the statements of the assets and liabilities of the Group as at 31 December 2010) are also set out in Appendix 4 to this Circular.

8.2 Accounting policies

The significant accounting policies of the Group which are disclosed in note 3 to the audited financial statements of the Group for FY2010 are reproduced in Appendix 4 to this Circular.

As at the Latest Practicable Date, there is no change in the accounting policy of the Group which will cause the figures disclosed in this Circular not to be comparable to a material extent.

8.3 Material changes in financial position

Save as disclosed in the audited financial statements of the Group for the financial year ended 31 December 2010 as set out in Appendix 4 to this Circular, as well as any other information on the Group which is publicly available (including without limitation, the announcements released by the Company on the SGX-ST), there have been no material changes to the financial position of the Company since 31 December 2010, being the date of the last published audited accounts of the Group.

9. GENERAL

9.1 Costs and Expenses

All expenses and costs incurred by the Company in relation to the Offer will be borne by the Company.

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9.2 Consent s

9.2.1 Consent of the IFA

The IFA has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of the IFA Letter and its name, and all references to them in the form and context in which they appear in this Circular and to act in such capacity in relation to this Circular.

9.2.2 Consent of the Sponsor

The Sponsor has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name and all references to its name in the form and context in which they appear in this Circular .

9.3 Documents Available for Inspection

Copies of the following documents are available for inspection at the registered office of the Company at 19 Keppel Road #03-10 Jit Poh Building, Singapore 089058) during normal business hours for the period which the Offer remains open for acceptance:

(a) the Memorandum of Association and Articles of Association of the Company;

(b) the annual reports of the Company for FY2008, FY2009 and FY2010;

(c) the IFA Letter; and

(d) the letters of consent referred to in paragraph 9.2 of this Appendix 2.

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The provisions in the Articles of Association of the Company relating to the rights of Shareholders in respect of capital, voting and dividends are extracted and reproduced in italics below:

SHARES

Company’s shares as security

6. Save to the extent permitted by the Act, none of the funds or assets of the Company or of any subsidiary thereof shall be directly or indirectly employed in the purchase or subscription of or in loans upon the security of the Company’s shares (or its holding company, if any) and the Company shall not, except as permitted by law, give any financial assistance for the purpose of or in connection with any purchase of shares in the Company (or its holding company, if any).

Issue of New Shares

7. (1) Subject to the Act and these Articles, no shares may be issued by the Directors without the prior approval of the Company in General Meeting but subject thereto and to Article 51, and to any special rights attached to any shares for the time being issued, the Directors may issue, allot, grant options over or otherwise deal with or dispose of the same to such persons on such terms and conditions and at such time and subject or not to the payment of any part of the amount thereof in cash as the Directors may think fit, and any shares may be issued in such denominations or with such preferential, deferred, qualified or special rights, privileges or conditions as the Directors may think fit, and preference shares may be issued which are or at the option of the Company are liable to be redeemed, the terms and manner of redemption being determined by the Directors, provided always that:-

(i) the total number of issued preference shares shall not exceed the total number of issued ordinary shares issued at any time, and all other restrictions or limitations in respect of the issue of preference shares as may be imposed by law or required by the listing rules of the Exchange (as so modified, amended or supplemented from time to time) shall be complied with;

(ii) no shares shall be issued which results in a transfer of a controlling interest in the Company without the prior approval of the Members in a General Meeting;

(iii) the rights attaching to shares of a class other than ordinary shares shall be expressed in the resolution creating the same; and

(iv) subject to any direction to the contrary which may be given by the Company in General Meeting, any issue of shares for cash to Members holding shares of any class shall be offered to such Members in proportion as nearly as may be to the number of shares of such class then held by them and the second sentence of Article 51(1) with such adaptations as are necessary shall apply.

(2) Notwithstanding Article 51, the Company may by Ordinary Resolution in General Meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the Ordinary Resolution, to:

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

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including without limitation, the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares; and

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APPENDIX 3: EXTRACTS FROM THE ARTICLES OF ASSOCIATION OF THE COMPANY

(b) (notwithstanding the authority conferred by the Ordinary Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the Ordinary Resolution was in force,

provided that:

(aa) the aggregate number of shares to be issued pursuant to the Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution) shall be subject to such limits and manner of calculation as may be prescribed by the Exchange;

(bb) in exercising the authority conferred by the Ordinary Resolution, the Company shall comply with the provisions of the listing rules of the Exchange for the time being in force (unless such compliance is waived by the Exchange) and these Articles;

(cc) (unless revoked or varied by the Company in General Meeting) the authority conferred by the Ordinary Resolution shall not continue in force beyond the conclusion of the Annual General Meeting of the Company next following the passing of the Ordinary Resolution, or the date by which such Annual General Meeting of the Company is required by law to be held, or the expiration of such other period as may be prescribed by the Act (whichever is the earliest); and

(dd) any other issue of shares, the aggregate of which would exceed the limits of the authority conferred by the Ordinary Resolution as referred to in this Article, shall be subject to the approval of the Company in general meeting.

Rights attached to Preference shares

8. (1) Preference shares may be issued subject to such limitation thereof as may be prescribed by any stock exchange upon which shares in the Company may be listed. Preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balance sheets and attending General Meetings of the Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital or winding up or sanctioning a sale of the undertaking of the Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six months in arrears.

(2) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares from time to time already issued or about to be issued.

Treasury Shares

9. The Company shall not exercise any right in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may hold and/or deal with its treasury shares in any manner authorised or prescribed by the Act.

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Variationof rights

10. (3) If at any time the share capital is divided into different classes, the special rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of the Act, whether or not the Company is being wound up, only be made, varied or abrogated with the sanction of a Special Resolution passed at a separate General Meeting of the holders of shares of the class and to every such Special Resolution the provisions of Section 184 of the Act shall, with such adaptations as are necessary, apply. To every such separate General Meeting the provisions of these Articles relating to General Meetings shall mutatis mutandis apply; but so that the necessary quorum shall be two persons at least holding or representing by proxy or by attorney one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy or by attorney may demand a poll whereupon any holder of such shares, present in present or by proxy, shall be entitled to one vote for each share of the class in respect of which he is a holder of such shares. If at any adjourned meeting of such holders such quorum as aforesaid is not present, any two holders of such shares of the class who are personally present shall be a quorum. Provided always that where the necessary majority for the aforesaid Special Resolution is not obtained at the Meeting, consent in writing if obtained from the holders of three-fourths of the issued shares of the class concerned within two months of the Meeting shall be as valid and effectual as a Special Resolution carried at the Meeting. The directors shall comply with the provisions of Section 186 of the Act as to forwarding a copy of any such consent or resolution to the Accounting and Corporate Regulatory Authority. Where all the issued shares of the class are held by one person, the necessary quorum shall be one person.

Variation of rights of Preference Shareholders

(4) The repayment of preference capital other than redeemable preference capital or any other alteration of preference shareholder rights, may only be made pursuant to a Special Resolution of the preference shareholders concerned. PROVIDED ALWAYS that where the necessary majority for such a Special Resolution is not obtained at the Meeting, consent in writing if obtained from the holders of three-fourths of the preference shares concerned within two months of the Meeting, shall be as valid and effectual as a Special Resolution carried at the Meeting.

Creation or issue of further shares with special rights

11. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the shares of that class or by these Articles as are in force at the time of such issue, be deemed to be varied by the creation or issue of further shares ranking equally therewith.

Power to pay commission and brokerage

12. The Company may pay such commissions or brokerage as may be lawful on any issue of shares at such rate or amount and in such manner as the Directors may deem fit. Such commission or brokerage may be satisfied by the payment of cash or the allotment of fully or partly paid shares, or partly in one way and partly in the other.

Power to charge interest on capital

13. If any shares of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the Company may, subject to the conditions and restrictions mentioned in the Act, pay interest on so much of the share capital as is for the time being paid up and may charge the same to capital as part of the cost of the construction or provision.

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No trust recognised

14. Except as required by law, no person other than the Depository shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share, except an absolute right to the entirety thereof in the person (other than the Depository) entered in the Register of Members as the registered holder thereof or (where the person entered in the Register of Members as the registered holder of a share is the Depository) the person whose name is entered in the Depository Register in respect of that share. Nothing contained herein in this Article relating to the Depository or the Depositors or in any depository agreement made by the Company with any common depository for shares or in any notification of substantial shareholding to the Company or in response to a notice pursuant to Section 92 of the Act or any note made by the Company of any particulars in such notification or response shall derogate or limit or restrict or qualify these provisions; and any proxy or instructions on any matter whatsoever given by the Depository or Depositors to the Company or the Directors shall not constitute any notification of trust and the acceptance of such proxies and the acceptance of or compliance with such instructions by the Company or the Directors shall not constitute the taking of any notice of trust.

Joint holders 15. (5) The Company and the Depository shall not be bound to register more than three persons as the joint holders of any share except in the case of executors, administrators or trustees of the estate of a deceased Member.

(6) If two or more persons are registered as joint holders of any share any one of such person may give effectual receipts for any dividends, bonuses or other moneys payable in respect of such share and the joint holders of a share shall, subject to the provisions of the Act, be severally as well as jointly liable for the payment of all instalments and calls and interest due in respect of such shares.

(7) Only the person whose name stands first in the Register of Members as one of the joint holders of any share shall be entitled to delivery of the certificate relating to such share or to receive notices from the Company and any notice given to such person shall be deemed notice to all the joint holders. Only the person whose name stands first in the Depository Register shall be entitled to receive notices from the Company and any notice given to such person shall be deemed notice to all the joint holders.

Fractional part of a share

16. No person shall be recognised by the Company as having title to a fractional part of a share otherwise than as the sole or a joint holder of the entirety of such share.

Payment of instalments

17. If by the conditions of allotment of any shares the whole or any part of the amount of the issue price thereof shall be payable by instalments every such instalment shall, when due, be paid to the Company by the person who for the time being shall be the registered holder of the share or his personal representatives, but this provision shall not affect the liability of any allottee who may have agreed to pay the same.

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Share certificates

18. The certificate of title to shares or debentures in the capital of the Company shall be issued under the Seal in such form as the Directors shall from time to time prescribe and may bear the autographic or facsimile signatures of at least two Directors, or by one Director and the Secretary or some other person appointed by the Directors in place of the Secretary for the purpose, and shall specify the number and class of shares to which it relates and the amount paid and the amount unpaid (if any) thereon. The facsimile signatures may be reproduced by mechanical or other means provided the method or system of reproducing signatures has first been approved by the Auditors of the Company. No certificate shall be issued representing shares of more than one class.

Entitlement to certificate

19. (8) Shares must be allotted and certificates despatched within 10 Market Days (or such other period as may be prescribed or approved by the Exchange from time to time) of the final closing date for an issue of shares unless the Exchange shall agree to an extension of time in respect of that particular issue. The Depository must despatch statements to successful investor applicants confirming the number of shares held under their Securities Accounts. Persons entered in the Register of Members as registered holders of shares shall be entitled to certificates within 10 Market Days (or such other period as may be prescribed or approved by the Exchange from time to time) after lodgement of any transfer. Every registered shareholder shall be entitled to receive share certificates in reasonable denominations for his holding and where a charge is made for certificates, such charge shall not exceed S$2 (or such other sum as may be prescribed or approved by the Exchange from time to time). Where a registered shareholder transfers part only of the shares comprised in a certificate or where a registered shareholder requires the Company to cancel any certificate or certificates and issue new certificates for the purpose of subdividing his holding in a different manner the old certificate or certificates shall be cancelled and a new certificate or certificates for the balance of such shares issued in lieu thereof and the registered shareholder shall pay a fee not exceeding S$2 (or such other sum as may be prescribed or approved by the Exchange from time to time) for each such new certificate as the Directors may determine. Where the member is a Depositor the delivery by the Company to the Depository of provisional allotments or share certificates in respect of the aggregate entitlements of Depositors to new shares offered by way of rights issue or other preferential offering or bonus issue shall to the extent of the delivery discharge the Company from any further liability to each such Depositor in respect of his individual entitlement.

Retention of certificate

(9) The retention by the Directors of any unclaimed share certificates (or stock certificates as the case may be) shall not constitute the Company a trustee in respect thereof. Any share certificate (or stock certificate as the case may be) unclaimed after a period of six years from the date of issue of such share certificate (or stock certificate as the case may be) may be forfeited and if so shall be dealt with in accordance with Articles 40, 44, 48 and 49, mutatis mutandis.

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Issue of replacement certificates

20. (10) Subject to the provisions of the Act, if any share certificate shall be defaced, worn out, destroyed, lost or stolen, it may be replaced on such evidence being produced and a letter of indemnity (if required) being given by the shareholder, transferee, person entitled thereto, purchaser, member firm or member company of the Exchange or on behalf of its or their client or clients as the Directors of the Company shall require, and (in case of defacement or wearing out) on delivery up of the old certificate and in any case on payment of such sum not exceeding S$2 (or such other sum as may be prescribed or approved by the Exchange from time to time) as the Directors may from time to time require. In the case of destruction, loss or theft, a shareholder or person entitled to whom such replaced certificate is given shall also bear the loss and pay to the Company all expenses incidental to the investigations by the Company of the evidence of such destruction, loss or theft.

New certificate in place of one not surrendered

(11) When any shares under the powers in these Articles herein contained are sold by the Directors and the certificate thereof has not been delivered up to the Company by the former holder of the said shares, the Directors may issue a new certificate for such shares distinguishing it in such manner as they may think fit from the certificate not so delivered up.

TRANSFER OF SHARES

Form of transfer of shares

21. Subject to the restrictions of these Articles and any restrictions imposed by law or the Exchange or the Depository, any Member may transfer all or any of his shares, but every transfer by any Member must either be by means of:-

(a) an instrument in the form approved by the Exchange, which must be left at the Office or such other place or places as the Directors may appoint from time to time for registration and accompanied by the certificates of the shares to be transferred, and such other evidence (if any) as the Directors may require to prove the title of the intending transferor or his right to transfer the shares (“a registered transfer”). Shares of different classes shall not be comprised in the same instrument of transfer; or

(b) book-entry in the Depository Register in accordance with the Act.

Execution 22. The instrument of transfer of a share which is the subject of a registered transfer shall be signed by or on behalf of the transferor and the transferee and be witnessed and the transferor shall be deemed to remain the holder of the share concerned until the name of the transferee is entered in the Register of Members in respect thereof. The Depository may transfer any share in respect of which its name is entered in the Register of Members by means of a registered transfer. The Depository shall not be required as transferee to sign any form of transfer for the transfer of shares to it. The Directors may dispense with the execution of the instrument of transfer by the transferee and the requirement that the instrument of transfer be witnessed in any case in which they think fit in their discretion to do so. Shares of different classes shall not be comprised in the same instrument of transfer. This Article 22 shall not apply to any transfer of shares by way of book-entry in compliance with the Act.

Person under disability

23. No share shall in any circumstances be transferred to any infant, bankrupt or person of unsound mind but nothing herein contained shall be construed as imposing on the Company any liability in respect of the registration of such transfer if the Company has no actual knowledge of the same.

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Directors’ power to decline to register

24. (12) Subject to these Articles, the Act or as required by the Exchange, there shall be no restriction on the transfer of fully paid up shares (except where required by law or the rules, bye-laws or listing rules of the Exchange or of any other stock exchange upon which the shares in the Company may be listed) but the Directors may in their discretion decline to register any transfer of shares upon which the Company has a lien and in the case of shares not fully paid up may refuse to register a transfer to a transferee of whom they do not approve. If the Directors shall decline to register any such transfer of shares, they shall give to both the transferor and the transferee written notice of their refusal to register as required by the Act.

Terms of registration of transfers

(13) The Directors may decline to register any instrument of transfer unless:-

(i) in the case of registered transfers, such fee not exceeding S$2 (or such other sum as may be prescribed or approved by the Exchange from time to time) as the Directors may from time to time require, is paid to the Company for the registration of each transfer (except that the Depository shall not be liable to pay any fee in respect of the registration of a transfer);

(ii) the amount of proper duty (if any) with which each instrument of transfer is chargeable under any law for the time being in force relating to stamps is paid;

(iii) the instrument of transfer, duly stamped in accordance with any law for the time being in force relating to stamp duty, is deposited at the Office or at such other place (if any) as the Directors appoint accompanied by the certificates of the shares to which it relates, and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do; and

(iv) the instrument of transfer is in respect of only one class of shares.

Retention of transfers

25. (14) In the case of registered transfers, all instruments of transfer which are registered may be retained by the Company, but any instrument of transfer which the Directors may decline to register shall (except in the case of fraud) be returned to the person depositing the same.

(15) Subject to any legal requirements to the contrary, the Company shall be entitled to destroy all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof and all dividend mandates and notifications of change of address at any time after the expiration of six years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof and it shall be conclusively presumed in the favour of the Company that every entry in the Register of Members purporting to have been made on the basis of an instrument of transfer or other documents so destroyed was duly and properly made and every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and every share certificate so destroyed was a valid and effective certificate duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company. PROVIDED that:-

(i) the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant;

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(ii) nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any circumstances which would not attach to the Company in the absence of this Article; and

(iii) references herein to the destruction of any document include references to the disposal thereof in any manner.

Closing of Register

26. The Register of Members and the Depository Register may be closed at such times and for such period as the Directors may from time to time determine, provided always that the Registers shall not be closed for more than thirty days in the aggregate in any year. Provided Always that the Company shall give prior notice of such closure as may be required to the Exchange, stating the period and purpose or purposes for which the closure is made.

Renunciation of allotment

27. (16) Nothing in these Articles shall preclude the Directors from recognising a renunciation of the allotment of any share by the allottee in favour of some other person.

Indemnity againstwrongful transfer

(17) Neither the Company nor its Directors nor any of its Officers shall incur any liability for registering or acting upon a transfer of shares apparently made by sufficient parties, although the same may, by reason of any fraud or other cause not known to the Company or its Directors or other Officers, be legally inoperative or insufficient to pass the property in the shares proposed or professed to be transferred, and although the transfer may, as between the transferor and transferee, be liable to be set aside, and notwithstanding that the Company may have notice that such instrument of transfer was signed or executed and delivered by the transferor in blank as to the name of the transferee or the particulars of the shares transferred, or otherwise in defective manner. In every such case, the person registered as transferee, his executors, administrators and assigns, alone shall be entitled to be recognised as the holder of such shares and the previous holder shall, so far as the Company is concerned, be deemed to have transferred his whole title thereto.

TRANSMISSION OF SHARES

Transmission on death

28. (18) In case of the death of a registered shareholder, the survivor or survivors, where the deceased was a joint holder, and the legal representatives of the deceased, where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing herein shall release the estate of a deceased registered shareholder (whether sole or joint) from any liability in respect of any share held by him.

(19) In the case of the death of a Depositor, the survivor or survivors, where the deceased was a joint holder, and the legal personal representatives of the deceased, where he was a sole holder and where such legal representatives are entered in the Depository Register in respect of any shares of the deceased, shall be the only persons recognised by the Company as having any title to his interests in the share; but nothing herein contained shall release the estate of a deceased Depositor (whether sole or joint) from any liability in respect of any share held by him.

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Persons becoming entitled on death or bankruptcy of Member may be registered

29. (20) Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member or by virtue of a vesting order by a court of competent jurisdiction and recognised by the Company as having any title to that share may, upon producing such evidence of title as the Directors shall require, be registered himself as holder of the share upon giving to the Company notice in writing or transfer such share to some other person. If the person so becoming entitled shall elect to be registered himself, he shall send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have another person registered he shall testify his election by executing to that person a transfer of the share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer executed by such Member. The Directors shall have, in respect of a transfer so executed, the same power of refusing registration as if the event upon which the transmission took place had not occurred, and the transfer were a transfer executed by the person from whom the title by transmission is derived.

Notice to unregistered executors and trustees

(21) The Directors may at any time give notice requiring any such person to elect whether to be registered himself as a Member in the Register of Members or (as the case may be), entered in the Depository Register in respect of the share or to transfer the share and if the notice is not complied with within 60 days the Directors may thereafter withhold payment of all dividends or other moneys payable in respect of the share until the requirements of the notice have been complied with.

(3) In the case of any person becoming entitled to the interest of a Depositor in respect of a share in consequences of the death of the Depositor, Section 130K(1) of the Act shall apply.

Rights of unregistered executors and trustees

30. A person entitled to a share by transmission shall be entitled to receive, and may give a discharge for, any dividends or other moneys payable in respect of the share, but he shall not be entitled in respect of it to receive notices of, or to attend or vote at meetings of the Company, or, save as aforesaid, to exercise any of the rights or privileges of a Member, unless and until he shall become registered as a shareholder or have his name entered in the Depository Register as a Depositor in respect of the share.

Fee for registration of probate, etc.

31. There shall be paid to the Company in respect of the registration of any probate, letters of administration, certificate of marriage or death, power of attorney or other document relating to or affecting the title to any share, such fee not exceeding S$2 (or such other sum as may be prescribed or approved by the Exchange from time to time) as the Directors may from time to time require or prescribe.

CALL ON SHARES

Calls on shares

32. The Directors may from time to time make such calls as they think fit upon the Members in respect of any money unpaid on their shares and not by the terms of the issue thereof made payable at fixed times, and each Member shall (subject to receiving at least fourteen days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. A call may be revoked or postponed as the Directors may determine.

Time when made

33. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments.

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Interest on calls

34. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum due from the day appointed for payment thereof to the time of actual payment at such rate not exceeding ten per cent per annum as the Directors may determine, and shall also pay all costs, charges and expenses which the Company may have incurred or become liable for in order to recover payment of or in consequence of non-payment of such call but the Directors shall be at liberty to waive payment of such interest, costs, charges and expenses wholly or in part.

Sum due to allotment

35. Any sum which by the terms of issue and allotment of a share becomes payable upon allotment or at any fixed date shall for all purposes of these Articles be deemed to be a call duly made and payable on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of the Articles as to payment of interest, costs, charges and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

Power to differentiate

36. The Directors may on the issue of shares differentiate between the holders as to the amount of calls to be paid and the times of payments.

Payment in advance of calls

37. The Directors may, if they think fit, receive from any Member willing to advance the same all or any part of the money uncalled and unpaid upon the shares held by him and such payments in advance of calls shall extinguish (so far as the same shall extend) the liability upon the shares in respect of which it is made, and upon the money so received or so much thereof as from time to time exceeds the amount of the calls then made upon the shares concerned, the Company may pay interest at such rate not exceeding without the sanction of the Company in General Meeting ten per cent per annum as the Member paying such sum and the Directors agree upon. Capital paid on shares in advance of calls shall not whilst carrying interest confer a right to participate in profits and until appropriated towards satisfaction of any call shall be treated as a loan to the Company and not as part of its capital and shall be repayable at any time if the Directors so decide.

FORFEITURE AND LIEN

Notice requiring payment of calls

38. If any Member fails to pay in full any call or instalment of a call on or before the day appointed for payment thereof, the Directors may at any time thereafter serve a notice on such Member requiring payment of so much of the call or instalment as is unpaid together with any interest and expense which may have accrued by reason of such non-payment.

Notice to state time and place

39. The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call was made will be liable to be forfeited.

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Forfeiture on non-compliance with notice

40. If the requirements of any such notice as aforesaid are not complied with any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before the forfeiture. The forfeiture or surrender of a share shall involve the extinction at the time of forfeiture or surrender of all interest in and all claims and demands against the Company in respect of the share, and all other rights and liabilities incidental to the share as between the Member whose share is forfeited or surrendered and the Company, except only such of those rights and liabilities as are by these Articles expressly saved, or as are by the Act given or imposed in the case of past Members. The Directors may accept a surrender of any share liable to be forfeited hereunder.

Notice of forfeiture to be given and entered

41. When any share has been forfeited in accordance with these Articles, notice of the forfeiture shall forthwith be given to the holder of the share or to the person entitled to the share by transmission, as the case may be, and an entry of such notice having been given, and of the forfeiture with the date thereof, shall forthwith be made in the Register of Members or in the Depository Register (as the case may be) opposite to the share; but the provisions of this Article are directory only, and no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.

Directors may allow forfeited share to be redeemed

42. Notwithstanding any such forfeiture as aforesaid, the Directors may, at any time before the forfeited share has been otherwise disposed of, annul the forfeiture, upon the terms of payment of all calls and interest due thereon and all expenses incurred in respect of the share and upon such further terms (if any) as they shall see fit.

Sale of shares forfeited

43. A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person, upon such terms and in such manner as the Directors shall think fit, and at any time before a sale, re-allotment or disposition the forfeiture or surrender may be cancelled on such terms as the Directors think fit. To give effect to any such sale, the Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such person as aforesaid.

Rights and liabilities of Members whose shares have been forfeited or surrendered

44. A Member whose shares have been forfeited or surrendered shall cease to be a Member in respect of the shares, but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were payable by him to the Company in respect of the shares with interest thereon at ten per cent per annum (or such lower rate as the Directors may approve) from the date of forfeiture or surrender until payment, but such liability shall cease if and when the Company receives payment in full of all such money in respect of the shares and the Directors may waive payment of such interest either wholly or in part.

Company’s lien

45. The Company shall have a first and paramount lien and charge on every share (not being a fully paid share) in the name of each Member (whether solely or jointly with others) and on the dividends declared or payable in respect thereof for all unpaid calls and nstalments due on any such share and interest and expenses thereon but such lien shall only be upon the specific shares in respect of which such calls or instalments are due and unpaid and to such amounts as the Company may be called upon by law to pay in respect of the shares of the Member or deceased Member.

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Member not entitled to privileges until all calls paid

46. No Member shall be entitled to receive any dividend or to exercise any privileges as a Member until he shall have paid all calls for the time being due and payable on every share held by him, whether solely or jointly with any other person, together with interest and expenses (if any).

Sale of shares subject to lien

47. The Directors may sell in such manner as the Directors think fit any share on which the Company has a lien but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of seven days after notice in writing stating and demanding payment of the sum payable and giving notice of intention to sell in default, shall have been given to the Member for the time being in relation to the share or the person entitled thereto by reason of his death or bankruptcy. To give effect to any such sale, the Directors may authorise some person to transfer the shares sold to the purchaser thereof.

Application of proceeds of such sale

48. The net proceeds of sale, whether of a share forfeited by the Company or of a share over which the Company has a lien, after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the unpaid call and accrued interest and expenses and the residue (if any) paid to the Member entitled to the share at the time of sale or his executors, administrators or assigns or as he may direct.

Title to shares forfeited or surrendered or sold to satisfy a lien

49. A statutory declaration in writing by a Director of the Company that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts stated therein as against all persons claiming to be entitled to the share, and such declaration and the receipt of the Company for the consideration (if any) given for the share on the sale, re-allotment or disposal thereof, together with the certificate under Seal for the share delivered to a purchaser or allottee thereof, shall (subject to the execution of a transfer if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall be entered in the Register of Members as the holder of the share or (as the case may be) in the Depository Register in respect of the share and shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the forfeiture, surrender, sale, re-allotment or disposal of the share.

ALTERATION OF CAPITAL

Rights and privileges of new shares

50. Subject to any special rights for the time being attached to any existing class of shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine; subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company or otherwise.

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Issue of new shares to Members

51. (22) Subject to any direction to the contrary that may be given by the Company in General Meeting or except as permitted under the Exchange’s listing rules, all new shares shall before issue be offered to the Members in proportion, as nearly as the circumstances admit, to the number of the existing shares to which they are entitled or hold. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most beneficial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered under this Article.

(2) Notwithstanding Article 51(1) above but subject to the Act, the Directors shall not be required to offer any new shares to members to whom by reason of foreign securities laws such offers may not be made without registration of the shares or a prospectus or other document, but to sell the entitlements to the new shares on behalf of such Members in such manner as they think most beneficial to the Company.

New shares otherwise subject to provisions of Articles

52. Except so far as otherwise provided by the conditions of issue or by these Articles, any capital raised by the creation of new shares shall be considered part of the original ordinary capital of the Company and shall be subject to the provisions of these Articles with reference to allotments, payment of calls, lien, transfer, transmission, forfeiture and otherwise.

Power to consolidate, cancel and subdivide shares

53. (1) The Company may by Ordinary Resolution:-

(ii) consolidate and/or divide all or any of its share capital;

(iii) subdivide its shares or any of them (subject, nevertheless, to the provisions of the Act), provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and

(iii) subject to the provisions of these Articles and the Act, convert any class of shares into any other class of shares.

Power to purchase or acquire its issued shares

(2) Subject to and in accordance with the provisions of the Act, the listing rules of the Exchange, and other written law, the Company may purchase or otherwise acquire ordinary shares, stocks, preference shares, options, debentures, debenture stocks, bonds, obligations, securities, and all other equity, derivative, debt and financial instruments issued by it on such terms as the Company may think fit and in the manner prescribed by the Act. Any shares so purchased by the Company shall, unless held by the Company as treasury shares in accordance with the Act, be deemed to be cancelled immediately on purchase or acquisition by the Company. On the cancellation of any share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may hold and/or deal with any such share which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Act.

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Power to reduce capital

54. The Company may by Special Resolution reduce its share capital or any other undistributable reserve in any manner and subject to any incident authorised and consent required by law. Without prejudice to the generality of the foregoing, upon the cancellation of any share purchased or otherwise acquired by the Company pursuant to these Articles or the Act, the number of issued shares of the Company shall be diminished by the number of shares so cancelled, and where any such cancelled share was purchased or acquired out of the capital of the Company, the amount of share capital of the Company shall be reduced accordingly.

Voting rights of Members

75. (1) Subject and without prejudice to any special privileges or restrictions as to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company and to Article 9, each Member entitled to vote may vote in person or by proxy or attorney, and (in the case of a corporation) by a representative. On a show of hands every Member who is present in person or by proxy or attorney, or in the case of a corporation by a representative, shall have one vote provided that if a Member is represented by two proxies, only one of the two proxies as determined by their appointor shall vote on a show of hands and in the absence of such determination, only one of the two proxies as determined by the Chairman (or by a person authorised by him) shall vote on a show of hands and on a poll, every Member who is present in person or by proxy, attorney or representative shall have one vote for each share which he holds or represents Provided Always That notwithstanding anything contained in these Articles, a Depositor shall not be entitled to attend any General Meeting and to speak and vote thereat unless his name is certified by the Depository to the Company as appearing on the Depository Register not earlier than 48 hours before that General Meeting (the “cut-off time”) as a Depositor on whose behalf the Depository holds shares in the Company. For the purpose of determining the number of votes which a Depositor or his proxy may cast on a poll, the Depositor or his proxy shall be deemed to hold or represent that number of shares entered in the Depositor’s Securities Account at the cut-off time as certified by the Depository to the Company, or where a Depositor has apportioned the balance standing to his Securities Account as at the cut-off time between two proxies, to apportion the said number of shares between the two proxies in the same proportion as specified by the Depositor in appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the number of shares standing to the credit of that Depositor’s Securities Account as at the cut-off time, and the true balance standing to the Securities Account of a Depositor as at the time of the relevant General Meeting, if the instrument is dealt with in such manner as aforesaid.

Voting in respect of shares of different monetary denominations

(2) Where the capital of the Company consists of shares of different monetary denominations, voting rights may, at the discretion of the Board of Directors, be prescribed in such manner that a unit of capital in each class, when reduced to a common denominator, shall carry the same voting power when such right is exercisable.

Voting rights of joint holders

76. Where there are joint holders of any share any one of such persons may vote and be reckoned in a quorum at any Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative as if he were solely entitled thereto but if more than one of such joint holders is so present at any meeting then the person present whose name stands first in the Register of Members or the Depository Register (as the case may be) in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof.

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Voting rights of Members of unsound mind

77. If a Member be a lunatic, idiot or non-compos mentis, he may vote whether on a show of hands or on a poll by his committee, curator bonis or such other person as properly has the management of his estate and any such committee, curator bonis or other person may vote by proxy or attorney, provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Office not less than forty-eight hours before the time appointed for holding the Meeting.

Right to vote 78. Subject to the provisions of these Articles, every Member either personally or by attorney or in the case of a corporation by a representative and every proxy shall be entitled to be present and to vote at any General Meeting and to be reckoned in the quorum thereat in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid.

Objections 79. No objection shall be raised to the qualification of any voter except at the Meeting or adjourned Meeting at which the vote objected to is given or tendered and every vote not disallowed at such Meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the Meeting whose decision shall be final and conclusive.

Votes on a poll

80. On a poll votes may be given either personally or by proxy or by attorney or in the case of a corporation by its representative and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

Appointment of proxies

81. (23) A Member may appoint not more than two proxies to attend and vote at the same General Meeting.

(24) If the Member is a Depositor, the Company shall be entitled:-

(iv) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered in its Securities Account as at the cut-off time as certified by the Depository to the Company; and

(v) to accept as validly cast by the proxy or proxies appointed by the Depositor on a poll that number of votes which corresponds to or is less than the aggregate number of shares entered in its Securities Account of that Depositor as at the cut-off time as certified by the Depository to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor.

(25) Where a Member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. If no such proportion or number is specified the first named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the first named.

(26) Voting right(s) attached to any shares in respect of which a Member has not appointed a proxy may only be exercised at the relevant General Meeting by the Member personally or by his attorney, or in the case of a corporation by its representative.

(27) Where a Member appoints a proxy in respect of more shares than the shares standing to his name in the Register of Members, or in the case of a Depositor, standing to the credit of that Depositor’s Securities Account, such proxy may not exercise any of the votes or rights of the shares not registered to the name of that Member in the Register of Members or standing to the credit of that Depositor’s Securities Account as at the cut-off time, as the case may be.

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Proxy need not be a Member

82. A proxy or attorney need not be a Member, and shall be entitled to vote on a show of hands on any question at any General Meeting.

Instrument appointing a proxy

83. Any instrument appointing a proxy shall be in writing in the common form approved by the Directors under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, under seal or under the hand of its attorney duly authorised and the Company shall accept as valid in all respects the form of proxy approved by the Directors for use at the date relevant to the General Meeting in question.

To be left at Company’s office

84. The instrument appointing a proxy, together with the power of attorney or other authority, if any, under which the instrument of proxy is signed or a duly certified copy of that power of attorney or other authority (failing previous registration with the Company) shall be attached to the instrument of proxy and must be left at the Office or such other place (if any) as is specified for the purpose in the notice convening the Meeting not less than forty-eight hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which it is to be used failing which the instrument may be treated as invalid. An instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the Meeting as for the Meeting to which it relates Provided that an instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not be required again to be delivered for the purposes of any subsequent meeting to which it relates. An instrument of proxy shall be deemed to include the power to demand or concur in demanding a poll on behalf of the appointor to move any resolution or amendment thereto and to speak at the Meeting. Unless otherwise instructed, a proxy shall vote as he thinks fit. The signature on an instrument appointing a proxy need not be witnessed.

Intervening death or insanity of principal not to revoke proxy

85. A vote given in accordance with the terms of an instrument of proxy (which for the purposes of these Articles shall also include a power of attorney) shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy, or of the authority under which the proxy was executed or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Office (or such other place as may be specified for the deposit of instruments appointing proxies) before the commencement of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the proxy is used.

Corporations acting by representatives

86. Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any Meeting of the Company or of any class of Members and the persons so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual Member of the Company and such corporation shall for the purpose of these Articles and subject to the Act, be deemed to be present in person at any such Meeting if a person so authorised is present thereat. The Company shall be entitled to treat a certificate under the seal of the corporation as conclusive evidence of the appointment or revocation of appointment of a representative under this Article.

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DIVIDENDS

Payment of dividends

128. The Directors may, with the sanction of the Company, by Ordinary Resolution declare dividends but (without prejudice to the powers of the Company to pay interest on share capital as hereinbefore provided) no dividend shall be payable except out of the profits of the Company. No dividend shall exceed the amount recommended by the Directors and a declaration by the Directors as to the amount of profits at any time available for dividends shall be conclusive.

Apportionment of dividends

129. Subject to the rights of holders of shares with special rights as to dividend (if any) and except as otherwise permitted under the Act, all dividends in respect of shares shall be declared and paid in proportion to the number of shares held by a Member but where shares are partly paid, all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid up shares. For the purposes of this Article only, no amount paid or credited as paid on a share in advance of calls shall be treated as paid on the share. All dividends shall be apportioned and paid pro rata according to the amount paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing that it shall rank for dividend as from a particular date such shares shall rank for dividend accordingly.

Payment of preference and interim dividends

130. Notwithstanding Article 129, if, and so far as in the opinion of the Directors, the profits of the Company justify such payments, the Directors may pay fixed preferential dividends on any express class of shares carrying a fixed preferential dividend expressed to be payable on a fixed date on the half-yearly or other dates (if any) prescribed for the payment thereof by the terms of issue of the shares, and subject thereto may also from time to time pay to the holders of any other class of shares interim dividends thereon of such amounts and on such dates as they may think fit.

Dividends not to bear interest

131. No dividend or other moneys payable on or in respect of a share shall bear interest against the Company.

Deduction from dividend

132. The Directors may deduct from any dividend or other moneys payable to any Member on or in respect of a share all sums of money (if any) presently payable by him to the Company on account of calls or in connection therewith, or any other account which the Company is required by law to withhold or deduct.

Retention of dividends on shares subject to lien

133. The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

Retention of dividends on shares pending transmission

134. The Directors may retain the dividends payable on shares in respect of which any person is under these Articles, as to the transmission of shares, entitled to become a Member, or which any person under these Articles is entitled to transfer, until such person shall become a Member in respect of such shares or shall duly transfer the same.

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Unclaimed dividends

135. The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends unclaimed after being declared may be invested or otherwise made use of by the Directors for the benefit of the Company and any dividend unclaimed after a period of six years from the date of declaration of such dividend may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person entitled thereto prior to the forfeiture. For the avoidance of doubt no Member shall be entitled to any interest, share of revenue or other benefit arising from any unclaimed dividends, howsoever and whatsoever.

Payment of dividend in specie

136. The Company may, upon the recommendation of the Directors, by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets and in particular of paid up shares or debentures of the Company or of any other company or in any one or more of such ways, and the Directors shall give effect to such Resolution, and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Directors.

Dividends payable by cheque or warrant

137. Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto or, if several persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and such address as such persons may by writing direct Provided that where the Member is a Depositor, the payment by the Company to the Depository of any dividend payable to a Depositor shall to the extent of the payment discharge the Company from any further liability in respect of the payment. Every such cheque and warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque if purporting to be endorsed or the receipt of any such person shall be a good discharge to the Company. Every such cheque and warrant shall be sent at the risk of the person entitled to the money represented thereby.

Effect of transfer

138. A transfer of shares shall not pass the right to any dividend declared on such shares before the registration of the transfer.

RESERVES

Power to carry profit to reserve

139. The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for meeting contingencies or for the gradual liquidation of any debt or liability of the Company or for repairing or maintaining the works, plant and machinery of the Company or for special dividends or bonuses or for equalising dividends or for any other purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund, any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also, without placing the same to reserve, carry forward any profits which they may think it not prudent to divide.

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BONUS ISSUE ANDCAPITALISATION OF PROFITS AND RESERVES

onus issue and power to capitalise profits and reserves

140. (1) The Directors may, with the sanction of the Company by way of an Ordinary Resolution, including any Ordinary Resolution passed pursuant to Article 7:-

(a) issue bonus shares for which no consideration is payable to the Company to the persons registered as holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on:

(i) the date of the Ordinary Resolution (or such other date as may be specified therein or determined as therein provided); or

(ii) (in the case of an Ordinary Resolution passed pursuant to Article 7) such other date as may be determined by the Directors,

in proportion to their then holdings of shares; and

(b) capitalise any sum for the time being standing to the credit of any of the Company’s reserve accounts or other undistributable reserve or any sum standing to the credit of the profit and loss account by appropriating such sum to the persons registered as holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on:

(i) the date of the Ordinary Resolution (or such other date as may be specified therein or determined as therein provided); or

(ii) (in the case of an Ordinary Resolution passed pursuant to Article 7) such other date as may be determined by the Directors,

in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid.

(2) The Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue or capitalisation under Article 140(1), with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the Members concerned). The Directors may authorise any person to enter, on behalf of all the Members interested, into an agreement with the Company providing for any such bonus issue or capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.

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(3) In addition and without prejudice to the powers provided for by Articles 140(1) and 140(2), the Directors shall have the power to issue shares for which no consideration is payable and to capitalise any undivided profits or other moneys of the Company not required for the payment or provision of any dividend on any shares entitled to cumulative or non-cumulative preferential dividends (including profits or other moneys carried and standing to any reserve or reserves) and to apply such profits or other moneys in paying up in full unissued shares, in each case on terms that such shares shall, upon issue, be held by or for the benefit of participants of any share incentive or option scheme or plan implemented by the Company and approved by shareholders in General Meeting in such manner and on such terms as the Directors shall think fit.

WINDING UP

Distribution of assets in specie

161. If the Company is wound up (whether the liquidation is voluntary, under supervision or by the Court) the Liquidator may, with the authority of a Special Resolution, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds and may for such purpose set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The Liquidator may, with the like authority, vest the whole or any part of the assets in trustees upon such trusts for the benefit of Members as the Liquidator with the like authority thinks fit, and the liquidation of the Company may be closed and the Company dissolved, but no Member shall be compelled to accept any shares or other securities in respect of which there is a liability.

81


The audited financial statements of the Group for FY2010 set out below have been reproduced from the Company’s annual report for FY2010. The page numbers of the audited financial statements of the Group for FY2010 included in this Appendix 4 have been changed to conform to the pagination of this Circular.

82

APPENDIX 4: AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR FY2010

Group CompanyNote 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000AssetsProperty, plant and equipment 4 13,777 9,727 - -Intangible assets 5 52,344 24,531 - -Investment in subsidiaries 6 - - 59,575 59,595Investment in associates 7 5,976 6,536 - -Deferred tax assets 8 228 105 - -Non-current assets 72,325 40,899 59,575 59,595

Pharmaceutical inventories, at cost 4,170 3,441 - -Trade and other receivables 9 23,452 23,299 5,583 4,852Tax recoverables 280 441 - -Cash and cash equivalents 10 11,328 14,833 182 557Current assets 39,230 42,014 5,765 5,409Total assets 111,555 82,913 65,340 65,004

EquityShare capital 11 60,332 60,332 60,332 60,332Reserves 12 1,914 6,792 4,555 4,289Equity attributable to owners of the Company 62,246 67,124 64,887 64,621Non-controlling interests 2,018 73 - -Total equity 64,264 67,197 64,887 64,621

LiabilitiesDeferred tax liabilities 8 319 250 - -Loans and borrowings 13 3,806 3,125 - -Other financial liabilities 14 9,820 - - -Non-current liabilities 13,945 3,375 - -

Trade and other payables 15 25,312 11,199 453 383Loans and borrowings 13 6,608 298 - -Current tax payable 1,426 844 - -Current liabilities 33,346 12,341 453 383Total liabilities 47,291 15,716 453 383Total equity and liabilities 111,555 82,913 65,340 65,004

The accompanying notes form an integral part of these financial statements.

Statements of Financial PositionAs at 31 December 2010

83


Note 2010 2009RM’000 RM’000

Revenue 16 92,434 66,689Cost of sales (44,983) (32,693)Gross profit 47,451 33,996

Other income 557 867Administrative expenses (31,362) (23,997)Other operating expenses (3,050) (1,853)Results from operating activities 13,596 9,013

Finance income 134 309Finance costs (244) (238)Net finance costs (110) 71

Share of associates’ losses (net of income tax) (560) (696)Profit before income tax 17 12,926 8,388Income tax expense 18 (3,772) (3,020)Profit for the year 9,154 5,368

Other comprehensive incomeTranslation differences relating to financial statements of foreign operations 68 284Other comprehensive income for the year, net of income tax 68 284Total comprehensive income for the year 9,222 5,652

Profit attributable to:Owners of the Company 8,459 5,388Non-controlling interests 695 (20)Profit for the year 9,154 5,368

Total comprehensive income attributable to:Owners of the Company 8,527 5,672Non-controlling interests 695 (20)Total comprehensive income for the year 9,222 5,652

Earnings per share (in cents) 19Basic earnings per share 6.28 4.00Diluted earnings per share 5.98 4.00


Consolidated Statement of Comprehensive IncomeYear ended 31 December 2010

84


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Consolidated Statement of Changes in Equity (Cont’d)Year ended 31 December 2010

86


Note 2010 2009RM’000 RM’000

Cash flows from operating activitiesProfit before income tax 12,926 8,388Adjustments for:Depreciation of property, plant and equipment 2,162 1,563Amortisation of software 97 95Finance expenses 244 238Interest income (134) (309)(Gain)/Loss on disposal of property, plant and equipment (16) 110Gain on disposal of a subsidiary - (190)Impairment loss in intangible asset 185 -Loss on unrealised foreign exchange differences - 24Property, plant and equipment written off 30 47Share of losses of associates 560 696

16,054 10,662Changes in working capital:Pharmaceutical inventories (255) (229)Trade and other receivables (3,705) (9,782)Trade and other payables 3,370 1,239Cash generated from operations 15,464 1,890Interest paid (244) (238)Income taxes paid (3,392) (2,417)Net cash from/(used in) operating activities 11,828 (765)

Cash flows from investing activitiesAcquisition of property, plant and equipment (1,810) (1,327)Acquisition of software - (83)Acquisition of businesses and subsidiaries, net of cash acquired 21 (8,053) (140)Investment in associates (3,122) (3,539)Loans to associates (3,027) -Payment of final consideration for acquisition of equity interests in subsidiaries (119) (967)Interest received 134 309Disposal of subsidiary, net cash disposed 22 - (260)Proceeds from disposal of property, plant and equipment 303 222Net cash used in investing activities (15,694) (5,785)

Cash flows from financing activitiesRepayment of hire purchase liabilities (125) (52)Repayment of term loan (962) (325)Capital contribution from non-controlling interests 410 -Decrease/(Increase) in fixed deposit pledged 500 (71)Dividends paid (3,627) (3,232)Net cash used in financing activities (3,804) (3,680)

Net decrease in cash and cash equivalents (7,670) (10,230)Cash and cash equivalents at 1 January 13,762 23,676Effect of exchange rate changes on balances held in foreign currencies (55) 316Cash and cash equivalents at 31 December 10 6,037 13,762


Consolidated Statement of Cash FlowsYear ended 31 December 2010

87


Notes to the Financial StatementsYear ended 31 December 2010

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 4 April 2011.

1 Domicile and activities

Qualitas Medical Group Limited (the “Company”) is a company incorporated in the Republic of Singapore. The address of the Company’s registered office is No. 19, Keppel Road, #03-10 Jit Poh Building, Singapore 089058.

The financial statements of the Company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates.

The Group is primarily involved in the provision of medical and related services and provision of management services.

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 Ringgit Malaysia (RM) which is the Company’s functional currency. All financial information presented in Ringgit Malaysia has been rounded to the nearest thousand, unless otherwise stated.

2.4 Use of estimates and judgements

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

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

Information about assumption and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

• Note 21 – Valuation of contingent consideration in a business combination

• Note 23 – Measurement of fair value of other financial liabilities

• Note 23 – Assumptions of recoverable amounts relating of goodwill impairment

• Note 23 – Measurement of impairment losses on trade receivables

88



2 Basis of preparation (continued)

2.5 Changes in accounting policies

Accounting for business combinations

From 1 January 2010, the Group has applied FRS 103 Business Combinations (2009) in accounting for business combinations. Business combinations are now accounted for using the acquisition method as at the acquisition date (see note 3.1).

Previously, business combinations were accounted for under the purchase method. The cost of an acquisition was measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition was credited to profit or loss in the period of the acquisition. For business acquisitions that were achieved in stages, any existing equity interests in the acquiree were not re-measured to their fair value. Contingent consideration was recognised as an adjustment to the cost of acquisition only when it was probable and can be measured reliably.

The 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 earnings per share.

Accounting for acquisitions of non-controlling interests

From 1 January 2010, the Group has applied FRS 27 Consolidated and Separate Financial Statements (2009) in accounting for acquisitions of non-controlling interests. See note 3.1 for the new accounting policy.

Previously, goodwill was recognised on the acquisition of non-controlling interests in a subsidiary, which represented the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of the transaction.

The change in accounting policy has been applied prospectively and has no impact on 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 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 profit or loss.

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 profit or loss.

89



3 Significant accounting policies (continued)

3.1 Basis of consolidation (continued)

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of the 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 interest even if doing so causes the non-controlling interest to have a deficit balance.

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 profit or loss. 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 their 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 no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries and associates

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

90




3.2 Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the 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 period, 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 on which the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction.

Foreign exchange differences arising on retranslation are recognised in the profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Ringgit Malaysia at exchange rates at the end of reporting period. The income and expenses of foreign operations are translated to Ringgit Malaysia at exchange rates at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisitions were used.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the 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, significant influence is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss 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 profit or loss.

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 and are recognised in other comprehensive income, and are presented within equity in the translation reserve in equity.

3.3 Financial instruments

Non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

91




3.3 Financial instruments (continued)

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 relate to 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 trade and other receivables, tax recoverables and cash and cash equivalents.

Cash and cash equivalents comprise cash balances and bank deposits.

Non-derivative financial liabilities

The Group initially recognises financial liabilities on the trade date at which 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.

The Group classifies non-derivative financial liabilities into other financial liabilities category.

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.

Other financial liabilities comprise loans and borrowings, trade and other payables, other financial liabilities with non-controlling interests.

Share capital

Ordinary shares

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

92




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. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. 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 is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income/other expenses in profit or loss.

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 component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated.

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

Leasehold land and buildings - 50 yearsFurniture, fittings and office equipment - 5 – 12½ yearsMedical equipment - 6½ – 10 yearsRenovations - 10 – 12½ yearsMotor vehicles - 5 years Computers - 3 – 5 years

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

93




3.5 Intangible assets

Goodwill

Goodwill represents the excess of:

• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• 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 profit or loss.

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 include customised computer software that is not integral to the functionality of the related equipment, are measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation is calculated based on the cost of the asset, less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over their estimated useful life of 5 years, from the date on which they are available for use.

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

3.6 Leased assets

Leases in 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 the leased assets are not recognised in the Group’s statement of financial position.

3.7 Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

94




3.8 Impairment

Financial assets (including receivables)

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 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.

Loans and receivables

The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

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 profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

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, 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 is tested 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.

95




3.8 Impairment (continued)

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.

Impairment losses are recognised in profit or loss. 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 recognised 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 an 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 profit or loss 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 Revenue recognition

Service rendered and goods sold

Revenue is recognised upon consultation services being rendered and drugs being supplied, based on invoiced amounts.

Dividend income

Dividend income is recognised in profit or loss on the date that the Company’s right to receive payment is established.

96




3.11 Finance income and finance costs

Finance income comprises interest income which is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings and finance leases that are recognised in the profit or loss using the 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 net gain or net loss position.

3.12 Lease payment

Payments made under operating leases are recognised in profit or loss 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.

3.13 Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss 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 or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to 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:

• 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;

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

• 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 the 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.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, 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.

97




3.14 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.

3.15 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. All operating segments’ operating results are reviewed regularly by the Group’s Managing Director (MD) 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 MD include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income tax assets and liabilities.

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

3.16 New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective for annual periods beginning after 1 January 2010, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Group.

98



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100



4 Property, plant and equipment (continued)

Included in the carrying amount of property, plant and equipment of the Group at 31 December are the following:

2010 2009RM’000 RM’000

Acquisitions under hire purchases: Motor vehicles 73 153Medical equipment 1,233 -

Assets pledged as security:Leasehold land and building (Note 13) 4,271 4,345

5 Intangible assets

Note Goodwill Software TotalGroup RM’000 RM’000 RM’000

CostAt 1 January 2009 24,123 400 24,523Acquisition through business combination 21 183 - 183Disposal of a subsidiary 22 (3) - (3)Additions - 83 83At 31 December 2009 24,303 483 24,786Acquisition through business combination 21 28,095 - 28,095At 31 December 2010 52,398 483 52,881

Accumulated amortisation and impairment lossesAt 1 January 2009 - 160 160Amortisation charge for the year - 95 95At 31 December 2009 - 255 255Amortisation charge for the year - 97 97Impairment loss 185 - 185At 31 December 2010 185 352 537

Carrying amountsAt 1 January 2009 24,123 240 24,363At 31 December 2009 24,303 228 24,531At 31 December 2010 52,213 131 52,344

The amortisation charge and impairment loss are recognised in other operating expenses in the profit or loss.

Detailed key assumptions relating to impairment testing of goodwill are set out in Note 23.

101



6 Investment in subsidiaries

Company2010 2009

RM’000 RM’000

Unquoted equity investments at cost 31,330 31,330Loans to subsidiaries 28,245 28,265

59,575 59,595

The loans to subsidiaries form part of the Company’s net investments in the subsidiaries. The loans are unsecured and interest-free, and settlements are neither planned nor likely to occur in the foreseeable future. As the amounts are, in substance, a part of the Company’s net investment in the entities, they are stated at cost less accumulated impairment losses.

Details of subsidiaries are as follows:

Name of subsidiaryCountry of

incorporation Effective equity interest

held by the Group2010 2009

% %

Qualitas Healthcare Corporation Sdn. Bhd. * Malaysia 100 100

Held by Qualitas Healthcare Corporation Sdn. Bhd. Qualitas Healthcare International Sdn. Bhd. * Malaysia 100 100 Qualitas Medical Group Sdn. Bhd. * Malaysia 100 100 QMM Services Sdn. Bhd. * Malaysia 100 100

Held by Qualitas Healthcare International Sdn. Bhd. Qualitas Medical Group Private Limited ^ India 76 76 PT Qualitas Healthcare Indonesia ^ Indonesia 85 85 Visamed International Sdn. Bhd. Malaysia 100 100 Dr Marcus Cooney & Associates Pte Ltd ** Singapore 75 - GPA Dental Group (Singapore) Pte Ltd ^ Singapore 70 - Qualitas Australia Pty Ltd ^ Australia 90 -

Held by Qualitas Medical Group Private Limited Osler Diagnostics Services Private Limited ^ India 76 76

Held by Qualitas Medical Group Sdn. Bhd. Kumpulan Medic (K.L.) Sdn. Bhd. * Malaysia 100 100 Kumpulan Medic (Selangor) Sdn. Bhd. * Malaysia 100 100 Klinik Anis Sdn. Bhd. * Malaysia 100 100 Qualitas Pharma Sdn. Bhd. * Malaysia 100 100 Klinik Salak Sdn. Bhd. * Malaysia 100 100 Yantra Holdings Sdn. Bhd. * Malaysia 100 100

102



6 Investment in subsidiaries (continued)

Name of subsidiaryCountry of

incorporation Effective equity interest

held by the Group2010 2009

% %Held by Qualitas Medical Group Sdn. Bhd. (cont’d) Daya X-Ray Centre Sdn. Bhd. * Malaysia 100 100 Reddy Clinic Sdn. Bhd. * Malaysia 100 100 New-West Management Sdn. Bhd. * Malaysia 100 100 Klinik Ludher Sdn. Bhd. * Malaysia 100 100 Poliklinik Central & Surgeri Sdn. Bhd. * Malaysia 100 100 Lambaian Adiwarna Sdn. Bhd. * Malaysia 100 100 Vertical Score Sdn. Bhd. * Malaysia 100 100 Towards Growth Sdn. Bhd. * Malaysia 100 100 Klinik JJ (Johor) Sdn. Bhd. * Malaysia 100 100 Klinik Thomas Sdn. Bhd. * Malaysia 100 100 Poliklinik Puteri dan Surgeri Sdn. Bhd. * Malaysia 100 100 Klinik Dhas Sdn. Bhd. * Malaysia 100 100 Klinik Lee Medik Sdn. Bhd. * Malaysia 100 100 Klinik Daiman Sdn. Bhd. * Malaysia 100 100 Surplus Mode Sdn. Bhd. * Malaysia 100 100 Klinik Catterall, Khoo and Raja Malek Sdn. Bhd. * Malaysia 100 100 Poliklinik Simpang Pulai Sdn. Bhd. Malaysia 100 100 Klinik Syed Alwi dan Chandran (Penang) Sdn. Bhd. * Malaysia 100 100 Apex Support Sdn. Bhd. * Malaysia 100 100 Klinik Qualitas Sdn. Bhd. * Malaysia 100 100 Klinik Pantai Sdn. Bhd. * Malaysia 100 100 Q-Medical Care Sdn. Bhd. * Malaysia 100 100 Klinik Port Dickson Sdn. Bhd. * Malaysia 100 100 Klinik Dr Nur Ainita Sdn. Bhd. * Malaysia 100 100 First Rewards Sdn. Bhd. * Malaysia 100 100 Professional Omega Sdn. Bhd. * Malaysia 50 50 Golden Primary Sdn. Bhd* Malaysia 51 51

Held by Klinik Salak Sdn. Bhd. Klinik Salak (Selangor) Sdn. Bhd. * Malaysia 100 100

Held by Poliklinik Puteri dan Surgeri Sdn. Bhd. Generous Rewards Sdn. Bhd. * Malaysia 100 100

* Audited by KPMG Malaysia** Audited by KPMG LLP, Singapore^ The subsidiaries, which are not significant, are audited by local certified public accounting firms in the

respective country of incorporation. For this purpose, a subsidiary is considered significant as defined under the Singapore Exchange Limited Listing Manual if its net tangible assets represent 20% or more of the Group’s consolidated net tangible assets; or if its pre-tax profits account for 20% or more of the Group’s consolidated pre-tax profits.

103



7 Investment in associates

Group2010 2009

RM’000 RM’000At cost: Unquoted shares 7,232 7,232 Share of post-acquisition reserves (1,256) (696)

5,976 6,536

Summary financial information for associates, not adjusted for the percentage ownership held by the Group:

Name of associateCountry of

incorporation

Effective ownership

interest Revenue LossTotal

assetsTotal

liabilities% RM’000 RM’000 RM’000 RM’000

2010Peak Primary Ltd ^ New Zealand 48 34,097 (859) 21,083 12,185V.V. Dentistree Pvt Ltd ^ India 40 1,725 (369) 2,242 1,410

35,822 (1,228) 23,325 13,595

2009Peak Primary Ltd ^ New Zealand 48 9,704 (954) 11,011 4,780V.V. Dentistree Pvt Ltd ^ India 40 815 (596) 2,293 889

10,519 (1,550) 13,304 5,669

^ The associates, which are not significant, are audited by local certified public accounting firms in the respective country of incorporation. For this purpose, an associated company is considered significant as defined under the Singapore Exchange Limited Manual if the Group’s share of its net tangible assets represent 20% or more of the Group’s consolidated net tangible assets; or if the Group’s share of its pre-tax profits account for 20% or more of the Group’s consolidated pre-tax profits.

None of the Group’s associates are public listed entities and consequentially do not have published price quotations.

8 Deferred tax

Movements in temporary differences during the year:

At 1 January

2009

Recognised in profit or

loss(Note 18)

At 31 December

2009

Recognised in profit or loss

(Note 18)

Acquisition through business

combination(Note 21)

Translation differences

At 31 December

2010RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupProperty, plant

and equipment (401) 10 (391) 70 (164) 10 (475)Unutilised tax losses 145 101 246 138 - - 384

(256) 111 (145) 208 (164) 10 (91)

104



8 Deferred tax (continued)

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 taxation authority. The amounts determined after appropriate offsetting are included in the statement of financial position as follows:

Group2010 2009

RM’000 RM’000

Deferred tax assets 228 105Deferred tax liabilities 319 250

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

Group2010 2009

RM’000 RM’000

Unabsorbed capital allowances 825 784Unutilised tax losses 11,926 11,961

12,751 12,745

The capital allowances and tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which the subsidiaries operate. Deferred tax assets have not been recognised in respect of the above in accordance with the Group’s accounting policy as set out in Note 3.13.

9 Trade and other receivables

Group Company2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Trade receivables 13,954 12,523 - -Allowance for doubtful debts (491) (281) - -

13,463 12,242 - -Other receivables 3,349 1,715 - -Amount due from associates (non-trade) 3,524 422 - -Deposits 2,546 1,040 - -Dividends due from a subsidiary - - 5,572 4,685Loans and receivables 22,882 15,419 5,572 4,685Prepayments 570 7,880 11 167

23,452 23,299 5,583 4,852

The non-trade amounts due from the associates are unsecured, no fixed terms of repayment and interest-free.

The Group and the Company’s exposure to credit and currency risks, and impairment losses related to loans and receivables, are disclosed in Note 24.

105



10 Cash and cash equivalents

Group CompanyNote 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Fixed deposits 719 5,292 - -Cash and bank balances 10,609 9,541 182 557Cash and cash equivalents 11,328 14,833 182 557Bank overdraft used for cash management

purposes 13 (4,720) - - -Fixed deposits pledged (571) (1,071) - -Cash and cash equivalents in the statement

of cash flows 6,037 13,762 182 557

Fixed deposits are pledged to bank for facilities extended by the bank to the subsidiary (see Note 13).

11 Share capital

Group and Company2010 2009

No. of shares (‘000) RM’000

No. of shares (‘000) RM’000

Fully paid ordinary shares, with no par value:

At 1 January and 31 December 134,684 60,332 134,684 60,332

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.

12 Reserves

Group Company2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Currency translation reserve (353) (421) - -Capital reserve 1,606 1,606 - -Merger deficit (1,831) (1,831) - -Other reserve (9,820) - - -Accumulated profits 12,312 7,438 4,555 4,289

1,914 6,792 4,555 4,289

Currency translation reserve

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

Capital reserve

The capital reserve represents the gain arising from the dilution of the Group’s interest in a subsidiary upon issuance of new equity shares by the subsidiary to non-controlling interests.

106



12 Reserves (continued)

Merger deficit

The merger deficit arose pursuant to the Group restructuring exercise in 2008 prior to the listing of the Company’s shares on SGX-ST Catalist which involved related parties under common control. The amount represents the excess of the consideration given over the accumulated value of the share capitals of the combining entities, net of payments of dividends to non-controlling interests prior to the merger.

Other reserve

The other reserve represents the fair value of written put and call option with the non-controlling shareholders in the existing subsidiaries to acquire additional interests in those subsidiaries.

13 Loans and borrowings

GroupNote 2010 2009

RM’000 RM’000Non-current liabilitiesHire purchase liabilities 305 52Bank loans – unsecured 579 -Term loan – secured 2,922 3,073

3,806 3,125Current liabilitiesHire purchase liabilities 704 52Bank loans – unsecured 847 -Term loan – secured 337 246Bank overdrafts 10 4,720 -

6,608 298

Total loans and borrowings 10,414 3,423

Hire purchase liabilities

At 31 December, the Group has obligations under hire purchases that are repayable as follows:

Future minimum

lease payments Interest Principal

RM’000 RM’000 RM’0002010Within 1 year 744 40 704After 1 year but within 5 years 309 4 305

1,053 44 1,0092009Within 1 year 58 6 52After 1 year but within 5 years 59 7 52

117 13 104

Term loan

The Group’s term loan is secured by way of a fixed charge over the Group’s leasehold land and building.

107



13 Loan and borrowings (continued)

Bank overdrafts

Bank overdrafts are secured with fixed deposits pledged to the bank of RM571,000 (2009: RM1,071,000).

Terms and debt repayment schedule

Terms and conditions of outstanding loans and borrowings of the Group are as follows:

CurrencyNominal

interest rateYear of maturity

Face value

Carrying amount

% RM’000 RM’0002010Hire purchase liabilities RM 2.48 – 5.92 2011 – 2012 1,009 1,009Bank loans – unsecured RM 5.00 – 7.00 2011 – 2012 1,426 1,426Term loan – secured RM 4.60 – 5.50 2011 – 2028 3,259 3,259Bank overdrafts RM 6.55 – 7.80 2011 4,720 4,720

10,414 10,414

2009Hire purchase liabilities RM 2.48 2011 104 104Term loan – secured RM 3.85 – 4.75 2017 – 2028 3,319 3,319

3,423 3,423

The Group’s exposure to interest rate, currency and liquidity risk, and a sensitivity analysis for financial assets and liabilities are disclosed in Note 24.

14 Other financial liabilities

Group2010 2009

RM’000 RM’000

Fair value of written put and call options with non-controlling shareholders 9,820 -

The written put and call options are created to enable the non-controlling interests to sell their interests in the subsidiaries acquired to the Group. The written put and call options are exercisable between the periods from 1 April 2015 to 31 May 2019.

15 Trade and other payables

Group Company2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Trade payables 5,017 2,841 - -Other payables 15,563 5,376 - -Accrued expenses 4,732 2,982 354 363Amount due to a subsidiary - - 99 20

25,312 11,199 453 383

108



15 Trade and other payables (continued)

Included in other payables of the Group is an amount of RM12,489,000 (2009: RM3,798,000) being the balance of purchase considerations payable to various vendors for acquisitions of subsidiaries (RM12,489,000) (2009: RM70,000) and associate (RM nil) (2009: RM3,728,000). These balances are expected to be paid in cash.

The Group and the Company’s exposure to currency and liquidity risk related to trade and other payable is disclosed in Note 24.

16 Revenue

Group2010 2009

RM’000 RM’000

Medical consultation fees and sale of drugs 91,964 66,034Others 470 655

92,434 66,689

17 Profit before income tax

The following items have been included in arriving at profit before income tax:

Group2010 2009

RM’000 RM’000Other incomeInterest income 134 309Rental income 114 68

Staff costsWages, salaries and others 37,573 24,259Contributions to defined contribution plans 2,251 2,020

39,824 26,279Staff costs are included in:- Cost of sales 22,161 12,903- Administrative expenses 17,663 13,376

39,824 26,279Administrative and other expensesAllowance for doubtful trade receivables 261 92Amortisation of software 97 95Bad debts written off 74 123Depreciation of property, plant and equipment 2,162 1,563Foreign exchange gain, net (215) (196)Gain on disposal of a subsidiary - (190)(Gain)/Loss on disposal of property, plant and equipment (16) 110Impairment losses on intangible asset 185 -Non-audit fees paid to auditors of the Company 28 45Property, plant and equipment written off 30 47Rental of equipment 23 17Rental of premises 4,791 3,250

109



17 Profit before income tax (continued)

Key management personnel remuneration

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 directors and executive officers are considered as key management personnel of the Group.

Key management personnel remuneration recognised in the profit or loss is as follows:

Group2010 2009

RM’000 RM’000Directors of the Company- fees 240 240- short-term employee benefits 874 780

1,114 1,020Key management personnel- short-term employee benefits 459 512

1,573 1,532

18 Income tax expense

GroupNote 2010 2009

RM’000 RM’000Current taxCurrent year 3,964 2,864Underprovision in prior years 16 267

3,980 3,131Deferred tax Origination and reversal of temporary differences (178) 44Overprovision in prior years (30) (155)

8 (208) (111)Total income tax expense 3,772 3,020

Reconciliation of effective tax rate

Profit before income tax 12,926 8,388

Income tax using the Singapore tax rate of 17% 2,197 1,426Effect of different tax rates in foreign jurisdictions 1,245 808Non-deductible expenses 504 541Deferred tax assets not recognised 71 193Tax exempt income (39) (79)Utilisation of deferred tax assets not recognised previously (70) (58)(Over)/Underprovision in prior years (14) 112Others (122) 77

3,772 3,020

110



19 Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 December 2010 was based on the profit attributable to ordinary shareholders of RM8,459,000 (2009: RM5,388,000), and a weighted average number of ordinary shares outstanding of 134,684,221 (2009: 134,684,221), calculated as follows:

Group2010 2009

Basic earnings per share is based on:Net profit attributable to ordinary shareholders (RM’000) 8,459 5,388

Number of shares at the beginning of the year and end of the year (‘000) 134,684 134,684

There are no new shares issued in the financial year ended 31 December 2010 and 2009.

Diluted earnings per share

The calculation of diluted earnings per share at 31 December 2010 was based on profit attributable to ordinary shareholders of RM8,459,000 (2009: RM5,388,000), and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 141,559,396 (2009: 134,684,221), calculated as follows:

Group2010 2009(‘000) (‘000)

Weighted average number of ordinary shares (basic) 134,684 134,684Effect of potential issuance of new ordinary shares 6,875 -Weighted average number of ordinary shares (diluted) 141,559 134,684

20 Operating segments

The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different medical services, and are managed separately because they require different marketing strategies. For each of the strategic units, the Group’s MD (the chief operating decision maker) reviews internal management reports at least on a monthly basis. The following summary describes the operations in each of the Group’s reportable segments:

• Primary Care Clinics. Includes central buyer of pharmaceuticals and medical supplies for the Group.

• Dental.

• Others. Includes imaging, laboratory and screening centres.

In 2010, the Group acquired two new subsidiaries operating in the dental practice. As a result, this operating segment became a reportable segment in the financial year ended 31 December 2010. The prior year comparative figure is restated to reflect the newly reportable segment as a separate segment.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Group’s MD. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm’s length basis.

111



20

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112



20 Operating segments (continued)

Reconciliations of reportable segment revenues, profit, assets and liabilities

2010 2009RM’000 RM’000

RevenuesTotal revenue for reportable segments 106,126 80,788Other revenue 469 655Elimination of inter-segment revenue (14,161) (14,754)Consolidated revenue 92,434 66,689

Profit or lossTotal profit for reportable segments 14,104 9,363Elimination of inter-segment profit (307) (233)Interest income 107 278Finance cost (186) (203)Depreciation and amortisation (426) (436)Other unallocated expenses (366) (381)Profit before income tax 12,926 8,388

AssetsTotal assets for reportable segments 91,936 65,248Investment in associates 5,976 6,536Other unallocated amount 13,643 11,129Consolidated total assets 111,555 82,913

LiabilitiesTotal liabilities for reportable segments 34,423 7,467Other unallocated amount 12,868 8,249Consolidated total liabilities 47,291 15,716

Geographical segments

The Primary Care Clinics, Dental and Others segments are managed on a worldwide basis, but operate in three principal geographical areas, Malaysia, Singapore and Others.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

Geographical information 31 December 2010

External Revenues

Non-current assets

RM’000 RM’000

Malaysia 69,069 32,580Singapore 20,078 27,510Others 3,287 6,031

92,434 66,121

113



20 Operating segments (continued)

31 December 2009External

revenuesNon-current

assetsRM’000 RM’000

Malaysia 65,510 33,042Singapore - -Others 1,179 1,216

66,689 34,258

Major customer

Revenues from one customer of the Group’s Primary Care Clinics and Others segments represents approximately RM5,925,000 (2009: RM5,230,000) of the Group’s total revenues.

21 Acquisitions of subsidiaries

(A) Acquisition of subsidiaries and businesses in the financial year 2010

(i) Dr Marcus Cooney & Associates Pte Ltd

On 1 January 2010, the Group via its subsidiary, Qualitas Healthcare International Sdn. Bhd., acquired 75% interest of Dr Marcus Cooney and Associates Pte Ltd (“DMCA”) for RM14,478,000 will be satisfied in cash and equity instruments of the Company.

The acquisition of DMCA has provided an opportunity to expand the Group’s presence in Singapore and in the business of dentistry.

From 1 January 2010 to 31 December 2010, DMCA contributed revenue of RM18,609,000 and profit after tax of RM2,276,000 to the Group’s results.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration transferredRM’000

Cash 7,595Consideration satisfied by way of issuance of equity instruments issued

(6,875,175 ordinary shares) 3,798Contingent consideration 3,085

14,478

Equity instruments issued

The fair value of the ordinary shares issued was based on the share price of the Company of 22.5 Singapore cents per share.

Contingent consideration

The Group has provided RM3,085,000 being the remaining balance of the consideration transferred, computed based on a multiple of the estimated profit after tax from 1 January 2010 to 31 December 2010.

114



21 Acquisitions of subsidiaries (continued)

Identifiable assets acquired and liabilities assumed

Note RM’000

Property, plant and equipment 4 1,841Inventories 201Trade and other receivables 500Cash and cash equivalents 1,580Trade and other payables (1,440)Loans and borrowings (865)Current tax liabilities (152)Deferred tax liabilities 8 (164)Total identifiable net assets 1,501

Goodwill

Goodwill was recognised as a result of the acquisition as follows:

Note RM’000

Total consideration transferred 14,478Non-controlling interests, based on their proportionate interest in the recognised

amounts of assets and liabilities of the acquiree 375Fair value of identifiable net assets (1,501)Goodwill 5 13,352

(ii) GPA Dental Group (Singapore) Pte Ltd and its subsidiaries

On 1 December 2010, the Group via its subsidiaries, Qualitas Healthcare International Sdn. Bhd. and Dr Marcus Cooney & Associates Pte Ltd, acquired 55% and 20% respectively, interest of GPA Dental Group (Singapore) Pte Ltd (“GPA”). The effective interest of GPA acquired by the Group is 70% for RM10,926,000 will be satisfied in cash.

This acquisition is in tandem with the Group’s business strategy to expand the dentistry business in Singapore and it expects to derive synergy with DMCA in terms of economies of scale in supplies and marketing effort.

From 1 December 2010 to 31 December 2010, GPA contributed a profit after tax of RM184,000. Had the acquisition occurred on 1 January 2010, GPA would have contributed revenue and profit after tax of RM16,496,000 and RM1,822,000 respectively to the Group’s results.


Consideration transferredRM’000

Cash 6,334Contingent consideration 4,592

10,926

115




(ii) GPA Dental Group (Singapore) Pte Ltd and its subsidiaries (continued)


The Group has provided RM4,592,000 being the remaining balance of the consideration transferred, computed based on a multiple of the estimated profit after tax from 1 December 2010 to 30 November 2011.


Note RM’000

Property, plant and equipment 4 2,930Inventories 280Trade and other receivables 723Cash and cash equivalents 757Trade and other payables (477)Loans and borrowings (2,524)Total identifiable net assets 1,689

Goodwill


Note RM’000

Total consideration transferred 10,926Non-controlling interests, based on their proportionate interest in the recognised

amounts of assets and liabilities of the acquiree 507Fair value of identifiable net assets (1,689)Goodwill 5 9,744

(iii) Dee Why Medical Centre and Frenchs Forest Medical Centre

On 1 September 2010, the Group via its subsidiary, Qualitas Australia Pty Ltd, acquired the businesses of Dee Why Medical Centre (“Dee Why”) and Frenchs Forest Medical Centre (“Frenchs Forest”) in Australia for RM5,071,000 will be satisfied in cash and equity instruments of a subsidiary.

The acquisitions of Dee Why and Frenchs Forest enable the Group to expand its presence in Australia. The acquisition is part of the Group’s overseas expansion plan.

From 1 September 2010 to 31 December 2010, Dee Why and Frenchs Forest contributed a profit after tax of RM325,000. Had the acquisition occurred on 1 January 2010, Dee Why and Frenchs Forest would have contributed revenue and profit after tax of RM5,900,000 and RM975,000 respectively to the Group’s results.


Consideration transferred

RM’000

Cash 4,057Contingent consideration satisfied by way of issuance of ordinary shares of a subsidiary 1,014

5,071

116




(iii) Dee Why Medical Centre and Frenchs Forest Medical Centre (continued)


The Group has provided RM1,014,000 being the remaining balance of the consideration transferred, computed based on a multiple of the estimated profit after tax from 1 September 2010 to 31 August 2011. The remaining balance will be satisfied by way of issuance of ordinary shares of a subsidiary, Qualitas Australia Pty Ltd.


Note RM’000

Property, plant and equipment representing total fair value of net identifiable assets 4 121

Goodwill


Note RM’000

Total consideration transferred 5,071Fair value of identifiable net assets (121)Goodwill 5 4,950

The goodwill recognised on the above acquisitions is attributable mainly to the long standing presence of the acquired subsidiaries and businesses in its industry and the expected future contribution to the Group.

(B) Acquisition of subsidiaries and businesses in the financial year 2009

The Group via its subsidiary, Qualitas Medical Group Sdn. Bhd. entered into a Sale of Business Agreement on 26 April 2009, to acquire 51% equity interest in Golden Primary Sdn. Bhd. for RM210,000 satisfied in cash.

From 1 May 2009 to 31 December 2009, the subsidiaries contributed profit after tax of RM85,981. Had the acquisition occurred on 1 January 2009, contribution from Golden Primary Sdn. Bhd. would not have resulted in the Group’s revenue and profit after tax for the financial year ended 31 December 2009 to be significantly different.


Consideration transferred

RM’000

Cash 210


Note RM’000

Property, plant and equipment 4 24Inventories 29Total fair value of net identifiable assets 53

117




Goodwill

Note RM’000

Total consideration transferred 4 210Non-controlling interests, based on their proportionate interest in the recognised

amounts of assets and liabilities of the acquiree 26Fair value of identifiable net assets (53)Goodwill 5 183

In 2010, pursuant to the terms and conditions of the Sale and Purchase of Share Agreement entered into in prior year for the acquisition of interests in subsidiary, the Group incurred additional net cost of investment of RM49,000 in relation to the acquisition of Golden Primary Sdn. Bhd.

The adjustments to the costs of investments are accounted for by adjusting the goodwill amount on consolidation.

22 Disposal of subsidiary

Disposal of subsidiary in financial year 2009

On 10 June 2009, the Group via its subsidiary, Qualitas Medical Group Pvt Ltd, entered into a Share Purchase Agreement to dispose its 51% interest in Doctorslab Medical Services Private Limited for a consideration of INR51,000 (RM3,643). The disposed subsidiary previously contributed net loss of RM4,000 for the year ended 31 December 2008 and RM3,000 from 1 January 2009 to the date of disposal.

The effects of the disposal of a subsidiary are as follows:

Note 2009RM’000

Plant and equipment 4 1,675Goodwill on acquisition 5 3Trade and other receivables 19Inventories 2Translation reserve (22)Cash and cash equivalents 264Trade and other payables (1,480)Borrowings (647)Total fair value of identifiable net assets disposed (186)Gain on disposal 190Cash consideration received, satisfied in cash 4Cash of subsidiary disposed (264)Cash outflow from disposal, net of cash disposed (260)

118



23 Accounting estimates and judgement

Estimates, assumptions and judgements, used in the preparation of the financial statements, are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under circumstances.

Management discussed with the Board of Directors on the development, selection and disclosure of the Group’s critical accounting policies and estimates, and the application of these policies and estimates.

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These operating divisions (or cash-generating units) are represented by individual clinic or group of clinics located predominantly in Malaysia and Singapore.

The aggregate carrying amounts of goodwill are allocated to respective clinics or subsidiaries. The recoverable amounts of the cash-generating units were based on their values-in-use. Based on the assessment of values-in-use, the carrying amounts of the units were determined to be lower than their recoverable amounts and accordingly, impairment loss of RM185,000 (2009: Nil) was recognised in profit or loss.

The value-in-use was determined by discounting the future cash flows generated from the continuing use of the cash-generating units derived from the most recent financial budgets approved by management for the next year and was based on the following key assumptions:

• Earnings before interest, taxes, depreciation, amortisation and management fees represent net cash flows and are discounted using the weighted average cost of capital of 10.55%.

• Gross profit margins from CGUs remain consistent at rates ranging from 35% to 69% and there will be no significant capital expenditure in the future.

• The estimated growth rate for the 5 years from the financial years ending 2011 to 2015 are based on actual revenue growth rate of each cash-generating unit in 2010, except for the following:

• If CGU recorded growth rate of more than 5%, the estimated growth rate is assumed at 5%;

• If CGU recorded growth rate is less than 5%, the growth rate is maintained at current growth rate; and

• If CGU recorded negative growth rate in 2010, zero growth rate is assumed for the next 5 years.

• The CGU will continue their operations indefinitely and thus a projection beyond 5 years is used with assumption of an average growth rate of 2% for year 6 onwards to obtain the terminal projections.

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

Management believes that any reasonably possible change in the above key assumptions is not likely to cause the recoverable amounts of the individual CGUs to be materially lower than its carrying amounts.

Allowances for doubtful trade receivables

Management evaluates whether there is any objective evidence that loans and receivables are impaired, and determines the amount of impairment loss as a result of the inability of the customers to make required payments. Management determines the estimates based on the ageing of the loans and receivables balance, credit-worthiness and historical write-off experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than estimated.

119



24 Financial risk management

Overview

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

• credit risk• liquidity risk• foreign currency risk• interest rate 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 risk, and the Group’s management of capital.

Risk management framework

Exposure to credit, interest rate, liquidity and currency risk arises in the normal course of the Group’s business. The Board of Directors of the Company and subsidiaries review and agree policies for managing each of these risks and they are summarised below.

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. In addition, collections and credit limits of customers are centrally monitored by the Group. Short term deposits are placed only with licenced banks.

At balance sheet date, there was no significant concentration of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset.

The maximum exposure to credit risk for trade receivables at the reporting date by type of customer is:

Group2010 2009

RM’000 RM’000

Corporate customers 10,273 9,417Managed Care Organisations 3,190 2,825

13,463 12,242

Impairment losses

The ageing of loans and receivables of the Group at the reporting date is:

GrossImpairment

losses GrossImpairment

losses2010 2010 2009 2009

RM’000 RM’000 RM’000 RM’000

Not past due 13,870 - 7,007 -Past due 1 – 30 days 3,775 - 3,030 -Past due 31 – 60 days 2,681 - 2,073 -Past due 61 – 90 days 1,039 - 974 -More than 91 days 2,008 (491) 2,616 (281)

23,373 (491) 15,700 (281)

120



24 Financial risk management (continued)

The change in impairment losses in respect of loans and receivables of the Group during the year is as follows:

2010 2009RM’000 RM’000

At 1 January 281 302Impairment losses- recognised 261 92- utilised (51) (113)At 31 December 491 281

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of loans and receivables not past due and past due up to 90 days. These receivables are arising by customers that have a good payment record with the Group.

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 monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.

The following are the expected contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the impact of netting agreements:

Cash flowsCarrying amount

Contractual cash flows

Within 1 year

Within 1 to 5 years

More than 5 years

RM’000 RM’000 RM’000 RM’000 RM’000Group2010Non-derivative financial liabilitiesHire purchase liabilities 1,009 (1,046) (737) (309) -Bank loans - unsecured 1,426 (1,501) (907) (594) -Term loans - secured 3,259 (4,526) (496) (1,437) (2,593)Bank overdrafts 4,720 (4,720) (4,720) - -Trade and other payables 25,312 (25,312) (25,312) - -Other financial liabilities 9,820 (10,898) - (5,228) (5,670)

45,546 (48,003) (32,172) (7,568) (8,263)

2009Non-derivative financial liabilitiesHire purchase liabilities 104 (117) (58) (59) -Term loans - secured 3,319 (4,397) (355) (1,568) (2,474)Trade and other payables 11,199 (11,199) (11,199) - -

14,622 (15,713) (11,612) (1,627) (2,474)

121




Liquidity risk (continued)

Cash flowsCarrying amount

Contractual cash flows

Within 1 year

RM’000 RM’000 RM’000Company2010Non-derivative financial liabilitiesTrade and other payables 453 (453) (453)

2009Non-derivative financial liabilitiesTrade and other payables 383 (383) (383)

Foreign currency risk

The Group incurs foreign currency risk on sales and purchases that are denominated in currencies other than the Company’s functional currency. The currencies giving rise to this risk are primarily Indian Rupee, Indonesian Rupiah and New Zealand Dollars.

The Group does not hedge its foreign currency exposure and management monitors these exposures on an ongoing basis.

The Group’s exposures to foreign currency risk were as follows based on notional amounts:

31 December 2010 31 December 2009Indian Rupee

Indonesian Rupiah

New Zealand Dollar

Indian Rupee

Indonesian Rupiah

New Zealand Dollar

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trade and other receivables - - 3,027 730 223 -

Cash and cash equivalents - - - - - 2,485

Trade and other payables - - - (41) (315) (3,728)

- - 3,027 689 (92) (1,243)

The Company’s exposures to foreign currency risk was restricted to bank balances of RM182,000 (2009: RM557,000) denominated in Singapore Dollars as at year end.

122




Sensitivity analysis

A 10% strengthening of Ringgit Malaysia against the following currencies at the reporting date would increase (decrease) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Group2010 2009

Profit or (loss) Profit or (loss)RM’000 RM’000

Indian Rupee - (69)Indonesian Rupiah - 9New Zealand Dollar (303) 124

(303) 64

Company2010 2009

Profit or (loss) Profit or (loss)RM’000 RM’000

Singapore Dollar (18) (56)

A 10% weakening of Ringgit Malaysia against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest rate risk

The Group’s exposure to interest rate is minimal. Interest-earning financial assets are mainly fixed deposits placed with licensed bank that attract interest income. Variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. However, the fluctuation in interest rate is not expected to have a material impact on the result of the Group. Short term receivables and payables are not significantly exposed to interest rate risk.

The Group does not hedge its interest rate exposure and the management monitors these exposures on an ongoing basis.

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a sound credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity excluding non-controlling interest. The Board also monitors the level of dividends to ordinary shareholders.

There were no changes in the Group’s approach to capital management during the year. The Company and its subsidiaries are not subject to externally imposed capital requirements.

123




Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-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.

Fair value of other financial liabilities

The fair value of put and call option is calculated using the income approach based on the expected settlement amount and discounted to present value.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, 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. For finance leases, the market rate of interest is determined by reference to similar lease agreements.

Other financial assets and liabilities

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

Interest rates used in determining fair values

The interest rates used to discount estimated cash flows, when applicable, are as follows:

Group2010 2009

Hire purchase liabilities 6.51% 3.25%Loans and borrowings 6.50% -Other financial liabilities 3.00% -

Fair value

The aggregate net fair value of recognised financial liabilities which are not carried at fair value in the statement of financial position as at 31 December are represented in the following table:

2010 2009Carrying amount

Fair value

Carrying amount

Fair value

RM’000 RM’000 RM’000 RM’000GroupNon-derivative financial liabilitiesHire purchase liabilities 1,009 941 104 111Fixed rate bank loans - unsecured 1,426 1,477 - -Fixed rate term loans - secured 155 147 - -

124




Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 TotalRM’000 RM’000 RM’000 RM’000

Group31 December 2010Contingent consideration - - 8,691 8,691Other financial liabilities - - 9,820 9,820

- - 18,511 18,511

There are no transfers between Level 1 and Level 2 in 2010.

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurement in Level 3 of the fair value hierarchy:

GroupContingent

considerationOther financial

liabilitiesRM’000 RM’000

At 31 December 2010At 1 January 2010 - -Arising from business combination 8,691 -Change in fair value - 9,820At 31 December 2010 8,691 9,820

See Note 21 for information relating to the contingent consideration liability arising from the business combination.

See Note 14 for information relating to the other financial liabilities.

25 Capital commitments

Group2010 2009

RM’000 RM’000

Capital expenditure commitmentsContracted but not provided for and payable within one year 336 69

125



26 Operating leases

Non-cancellable operating lease rentals are payable as follows:

Group2010 2009

RM’000 RM’000

Within one year 4,715 1,225Between one and five years 3,595 788

8,310 2,013

The Group leases a number of premises under operating leases. The leases typically run for a period of 2 to 6 years, with an option to renew the lease after that date.

27 Contingencies

During the year, two subsidiaries have been served with a Writ of Summons by a former doctor employee (“Plaintiff”). The Plaintiff is instituting claims for general damages and compensation amounting to RM5,019,000. Based on the legal advice, the Directors do not expect the outcome of the action to have a material effect on the Group’s financial position.

Apart from the above, the Group faces, in the course of its business, actions and claims instituted by third parties, and obtain insurance cover for such risks. The directors are of the opinion that such actions and claims are adequately insured.

28 Corporate guarantees

Group2010 2009

RM’000 RM’000

Corporate guarantees given by a subsidiary to a third party for trade credit lines granted to another subsidiary 2,500 2,500

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29 Dividends

The following exempt (one-tier) dividends were declared and paid by the Group and Company:


RM’000 RM’000

For the year ended 31 DecemberRM0.027 (S$0.011) per qualifying ordinary share (2009: RM0.024) 3,585 3,232

After the respective reporting dates, the following exempt (one-tier) dividends were proposed by the directors. These dividends have not been provided for.


RM’000 RM’000

RM0.026 (S$0.011) per qualifying ordinary share (2009: RM0.027) 3,556 3,585

30 Significant related party transactions

Significant related party transactions, other than those disclosed elsewhere in the financial statements, are as follows:

Group2010 2009

RM’000 RM’000

Service fee payable to the non-controlling interest of a subsidiary company 410 -

The above transaction has been entered into in the normal course of business and has been established under negotiated terms.

31 Subsequent events

(i) On 15 March 2011, the Company announced that Qualitas Healthcare Holdings Limited intends to make a voluntary conditional offer to acquire all the issued ordinary shares in the capital of the Company.

(ii) The Company has finalised the acquisition of Dr Marcus Cooney & Associates Pte Ltd and the final tranche of purchase consideration amounted to RM6,400,000 (S$2,678,000). This was satisfied via the allotment of 6,875,175 shares on 29 March 2011 and the remaining in cash amounting to RM2,703,000 (S$1,131,000).

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