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166 KPJ Healthcare Berhad

(Company No. 247079 M)

Annual Report 2010

notes to the

financial statements

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 (cont’d)

35 RESERVES

Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Non-distributable reserves:

Share premium 43,759 36,391 38,737 31,369 Merger reserve (3,367) (3,367) 0 0 Exchange reserve (1,295) (235) 0 0 Revaluation reserve 56,110 50,456 0 0 Fair value reserve 172 0 0 0

95,379 83,245 38,737 31,369 Distributable reserve:

Retained earnings 393,337 337,715 459 26,495

488,716 420,960 39,196 57,864

Under the single-tier tax system which came into effect from the year of assessment 2009, companies are not required to have tax credits under Section 108 of the Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders.

Companies with Section 108 credits as at 31 December 2010 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provisions of the Finance Act, 2009. As at 31 December 2010, subject to agreement with the tax authorities, the Company has suffcient Section 108 tax credits and tax exempt income to pay in full the retained earnings of the Company as franked dividends.

The revaluation reserve includes surplus from the revaluation of Group’s land and buildings and unrealised revaluation reserves retained in the Group’s interest in Al-‘Aqar KPJ REIT. This reserve is not distributable by way of cash dividends.

Revaluation reserve (non-distributable)

Group 2010 2009 RM’000 RM’000

At 1 January 50,456 42,622 Transfer to retained earnings on disposal of property, plant and equipment

to Al-‘Aqar KPJ REIT net of minority interest 0 (3,108) Revaluation surplus, net of tax 5,654 12,508 Realisation of revaluation reserves due to impairment of asset 0 (1,566)

5,654 7,834

At 31 December 56,110 50,456