Bumrungrad Hospital Public : Management Discussion and Analysis Quarter 1 Ending 31 Mar 2018

Ref: SET 61/08

25 April 2018

Subject: Management Discussion and Analysis for the first quarter 2018 results

To: Directors and Manager The Stock Exchange of Thailand

Bumrungrad Hospital PCL.

Management Discussion and Analysis for Consolidated 1Q18 results

25 April 2018

Summary

The Company reported Total revenues in 1Q18 of Baht 4,694 million, a 5.9% improvement from 1Q17 revenues of Baht 4,434 million. Net profit for 1Q18 grew 7.3% to Baht 1,079 million from Baht 1,005 million in 1Q17, with Net profit margin at 23.0% in 1Q18 compared to 22.7% in 1Q17.

Details of the management discussion and analysis follow:

Income statements

Quarterly Operational Performance

The Company reported Revenues from hospital operations of Baht 4,621 million, a 5.7% improvement year-over-year from Baht 4,374 million in 1Q17. This was mostly due to the increase in revenues from Thai and non-Thai patients by 7.0% and 4.7%, respectively. As a result, the revenue contribution from Thai patients in 1Q18 was 34.5% and from non-Thai patients was 65.5%, compared with 34.0% and 66.0%, respectively, for 1Q17.

The Company reported Cost of hospital operations (including Depreciation and amortization) of Baht 2,553 million for 1Q18, or 4.0% more year-over-year from Baht 2,454 million in 1Q17. This represents a favorable change when compared to the 5.7% growth in Revenues from hospital operations, and contributed to a reduction in the percentage of cost to Revenues from hospital operations to 55.2% in 1Q18 compared with 56.1% in 1Q17. Administrative expenses (including Depreciation and amortization) were Baht 767 million in 1Q18, or 6.6% more year-over-year from Baht 720 million in 1Q17. EBITDA increased by 6.8% year-over-year to Baht 1,640 million in 1Q18 from Baht 1,535 million in 1Q17, with an EBITDA margin of 35.2% in 1Q18 compared to 34.8% in 1Q17.

Ongoing capital spending contributed to higher 1Q18 Depreciation and amortization of Baht 302 million from Baht 296 million in 1Q17.

Corporate income tax of Baht 248 million in 1Q18 was higher than Baht 220 million in 1Q17. The variance is mostly due to the increase in taxable operating profit.

Basic EPS for 1Q18 of Baht 1.48 was 7.3% more than Baht 1.38 in 1Q17, while 1Q18 Diluted EPS increased at the same rate to Baht 1.24 from Baht 1.16 in 1Q17.

As at 31 March 2018, the Company reported Total current assets of Baht 12,214 million, an increase from Baht 10,550 million as at 31 December 2017. The variance is mostly due to a net increase of Baht 1,374 million in Cash, Cash equivalents, and Short-term investments, due to Baht 1,523 million increase in cash from operations.

Total non-current assets increased to Baht 12,989 million as at 31 March 2018 from Baht 12,934 million as at 31 December 2017, mostly due to Baht 213 million increase in Intangible assets associated with new IT software, offset with Baht 160 million decrease in Property, plant and equipment as a result of Depreciation and amortization exceeding CAPEX addition in 1Q18.

Total current liabilities were Baht 4,293 million as at 31 March 2018, an increase from Baht 3,647 million as at 31 December 2017. The variance was mostly due to Baht 387 million more in Trade and other payables and Baht 246 million additional Corporate Income tax payable associated with 1Q18 taxable operating profit.

Non-current liabilities were Baht 3,150 million as at 31 March 2018, an increase from Baht 3,132 million as at 31 December 2017.

The Company's Interest coverage ratio improved to 37.7x in 1Q18 from 35.3x in 1Q17, due to higher EBITDA in 1Q18 compared to 1Q17. Interest expense decreased by Baht 5 million and Baht 4 million in 1Q18 and 1Q17, respectively, for capitalized interest associated with the campus expansion project.

Total shareholders' equity grew to Baht 17,760 million as at 31 March 2018 from Baht 16,705 million as at 31 December 2017. This increase resulted mostly from the Company's 1Q18 Net profit of Baht 1,079 million. Average return on assets (ROA) increased to 17.7% in 1Q18 from 17.6% in 2017. Average return on equity (ROE) was 25.0% in both 1Q18 and 2017.

* After adding back the 1Q18 and 1Q17 capitalized interest expenses related to the campus expansion.

Cash flow statements

The Company's Net cash flows from operating activities in 1Q18 were Baht 1,523 million, compared to Baht 1,693 million in 1Q17. This decrease was mainly due to Baht 290 million less in working capital, mostly related to Baht 370 million more in Trade and other receivables and Baht 241 million more in Inventories, offset with Baht 252 million more in Trade and other payables and Baht 119 million additional cash from operations. Net cash flows from investment activities were Baht 232 million in 1Q18, compared to net cash flows used in investment activities of Baht 2,488 million in 1Q17. This variance was mainly due to Baht 2,657 million change between Short-term investments and Cash and cash equivalents. The Company reported Net cash flows used in financing activities of Baht 16 million in both 1Q18 and 1Q17. As a result of the above, Cash and cash equivalents was Baht 4,209 million as at 31 March 2018, compared to Baht 4,344 million as at 31 March 2017.

The Company's Liquidity ratio as at 31 March 2018 was 2.8x compared to 2.9x as at 31 December 2017, while the Quick ratio as at 31 March 2018 increased to 1.4x from 1.2x as at 31 December 2017.

(Dr. Chanvit Tanphiphat, MD)

Chairman of the Board