Published April 16, 2009

AGM WATCH
Parkway, RMG shareholders focus on dividends

Former worried about its sizeable debt; latter ask for higher payout

By CHEN HUIFEN
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DIVIDENDS were a common concern for shareholders at the annual general meetings (AGMs) of Parkway Holdings and Raffles Medical Group yesterday.

Dr Lim: Local outpatient and day-surgery cases have grown by double-digits

Shareholders of Parkway, which held its AGM and EGM at Gleneagles Hospital, are worried that the group's substantial debt could eat into its cash, leaving a smaller pool for distribution.

'They were concerned about the debt - how we are going to service that - because the more interest you pay, of course, the less dividend you give them,' group president and CEO Lim Cheok Peng told BT after the meeting. 'Obviously, this is something we have to be mindful of.'

Parkway's total dividend payout of 3.21 cents a share for FY2008 is significantly lower than 24.5 cents, including special dividend, in FY2007 and the three years before that.

According to its annual report, the group had net debt of $681 million and a net debt-to-equity ratio of 0.53 at end-December. Repayment of bank loans came to $5.8 million last year, while interest paid rose to $39.6 million, from $21.8 million in FY2007.

'In the course of business, of course there will be some debt, but we'll try to see how we can modify that and improve the situation,' Dr Lim said.

In an update on the flow of foreign patients, he said the numbers have remained stable since Q4 last year. 'We thought it could have been worse, after having slipped about 10 per cent in the last quarter. But I believe that at this present time it has sort of plateaued out. We are not dropping further, so that's a good sign. But we don't know what the second quarter is going to be.'

Another positive sign is a solid increase in local patients. Outpatient and day-surgery cases have grown by double-digits, but Dr Lim hesitates to say this increase will make up for flat foreign patient numbers.

None of the more than 100 shareholders present asked about the impending departure of COO Daniel Snyder, whose contract expires in June. Dr Lim said no decision has been made on whether the post will be filled or an internal reshuffle will be carried out.

Over at Raffles Medical, shareholders tried to coax management to raise the dividend payout, which remained flat at 2.5 cents a share for FY2008.

Minority shareholder Albert Chia said a good showing last year meant that the hospital is 'in good time', while 'we (individual shareholders) are in bad time'.

Much to the laughter of the crowd, he said that except for David Lawrence, who is stepping down as independent director, many board members still have black hair, while his own is turning grey and thinning. He suggested that vitamins D and E be included as door gifts, on top of the vitamin C tablets given out, since most of the AGM attendants are senior citizens and it looks like vitamin M (more money) is impossible to obtain.

'I thought today there won't be a lot of shareholders (turning up), because we need vitamin C, D and E to walk here,' he joked.

Executive chairman Loo Choon Yong took the cajoling in good faith and explained that the group needs about $20 million of cash for working capital needs and opportunities.

'We can't be going to the bank in the middle of the night,' said Dr Loo. 'And we also do not want to keep so much cash that we are not efficient in the deployment of capital. So you have my assurance that it's not my intention to have a big cash box. We need a small war chest, and then extra earnings that we will continue to make, we would like to pay out to the shareholders.'