Expansion Decision Raffles Medical Group

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Circumstances that lead to the expansion decision: Raffles Medical Group (RMG) has achieved strong earnings growth over the past few years due to its efficiency in operation, high patients load and acuity up as well as the recruitment of more specialist consultants and a wider range of medical specialties. The strong earnings growth is contribute to the well liquidity position to RMG and this lead to RMG has sufficient cash to use as expansion purpose, that is expand its flagship hospital. In addition, RMG is successful tender for a seven-storey freehold podium/commercial block which cost S$92.08m. The successful in tendering has give RMG extra capacity to expand its flagship hospital which allow RMG to hire more specialist in order to provide a better services and treatments, bringing more advance technology to increase the quality of healthcare services and maintain competitiveness, and also boost the space by extra 50% to enable the hospital meet the demand for high quality private healthcare services which is continuous increasing. Reason of expansion RMG has a strong operating cash flow which enables it to do investment in the expansion of flagship hospital. This is because of the arising of profit from operating activities by 12.30%, which is from S$53.0 million to S$59.5 million from 2010 to 2011. At the year ended of 2010, the Group shows healthy cash position of S$50 million after declared cash dividends of S$8.7 million. Therefore the Group has sufficient funds to invest in the expansion project. The Group is expected to earn more profits which are increase of 50% in revenue from the expansion in the city-state by 2014. The expansion will boost the hospital space by 50% from which is from 300,000 squares to 450,000 square, the operation will be more efficiency as more specialist will be recruit and wider services will be available, more facilities will

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