Contents 2 4 6 7 9 11 13 22 24 26 30 31 35 41
Message from the Board of Directors Company Information Financial Information Nature of Business Revenue Structure Financial Developments Management Board of Directors Organization Chart Project Map Marketing and Competition Property Development Business Trend in 2009 Other Information
46 Management and Authorized Person of the Company 50 Details of directors 52 Executives’ Remuneration 54 Corporate governance 60 reference 61 Connected Transactions with Related Persons 65 Risk Factors 68 Explanation and Analysis of Financial and Operating Results 79 Report of Independent Auditor 80 Balance Sheets 88 Note to Consolidated Financial Statements 119 The Board of Directors’ responsibilities forfinancial reports 120 Audit Committee Report 2008 122 Auditor Fee Accuracy Sanctification Form
Message from the company’s Board of Directors
The US financial contagion spreading the crisis around the world and no end in sight when it will bottom out lead to the world economic recession, which lower prices of crude oil and other commodity, and building materials rapidly. The collapse in the world economy sent Thailand in 2008 reeling in the crisis while local political conflict, which significantly hurt consumer confidence, exacerbated the situation. For the real estate sector, it takes advantage from the real estate stimulus measures comprising reduction of mortgage registration fee, ownership transfer fee and specific business tax for one year starting from 28 March 2008. The measures apparently boost demand in residences. Given the measures, the downward interest trend and adjustment of property developers to offer products which meet customer demand, large-sized property developers’ earnings were in good shape as witnessed by the fact that sales and revenue of a number of property developers, listed companies in particular, surged dramatically. Sales, revenue and net profit of some leading property developers as of the end of 2008 hit the records. In 2008, Property Perfect Public Company Limited and subsidiaries recorded Bt5,420.14 million in sales revenue from sales of land and houses, representing 71.90% of total sales revenue, and Bt2,109.46 million in sales of condominium units, accounting for 27.98% of total sales revenue. The remaining sales revenue of the company and its subsidiaries came from sales of land. The consolidated sales revenue in 2008 rose 20.31% year
Annual Report 2008
on-year, thanks to products which satisfy customer demand in homes near electric trains. Declined costs of sales of the company and subsidiaries resulted from cut in specific business tax and ownership transfer fee was attributed to a 94.98% jump in the consolidated net profit from Bt411.61 million in 2007 to Bt802.57 million in 2008. Its earning per share also rose from Bt0.52 in 2007 to Bt1.02 in 2008. The company’s Board of Directors proposed shareholders to approve the annual dividend payment of Bt0.36 per share for the 2008’s earnings, up from Bt0.24 per share for the previous year earnings. The company’s new brand project “The Metro Rama 9”, a 3storey townhome project, received warm welcome from consumers after it was launched in August due to its best location near Airport Link and product’s type. The company has planned to unveil “The Metro Sathorn” in 2009 as it expects that townhome project near electric trains would continuously gain popularity. Townhome’s price tags which close to condominium units’ and locations near electric trains are the rational behind the popularity in townhomes. Moreover, the company has shifted its focus to townhome projects located along with electric trains as the projects can realize revenue within this year while condominium projects take longer time for sales revenue recognition. The company has still paid attention to environment as seen by the fact that it won the best environment project awards for
three straight years. It in 2008 received 7 Energy Conservation Home awards for home designs and another 3 awards for projects from Department of Alternative Energy Development and Efficiency, the Ministry of Energy. In addition, the company has used environment-friendly building materials from Siam Cement Group. 2009 is seemed to be the good chance year of home buyers on the back of the real estate stimulus measures in terms of tax allowance for principle and interest payments of new homes, investment policy in mass transit system and the falling interest rate. The declining construction costs would be another force in stimulating home purchase. The company has already prepared to meet recovery of customer demand. However, the company would be prudent in operating business by strengthening its financial position, though the company’s debt to equity ratio (D/E) as of the end of 2008 remained low at a mere 0.93 times. The company has planned to raise fund to support its liquidity by issuing around Bt1,000 million debentures this year. Proceeds arising from the planned debenture issuance are also regarded as one source of funding to finance business expansion in the future. Fund mobilization through the debenture issuance can replace borrowing from financial institutions, which carries higher interest rate, and help the company to maintain its D/E at below 1 times. For construction
process, the company has used production system which can shorten building period and allows the company to manage inventory more efficiently. Besides, the company has planned to bring down its selling and administrative expenses to the average level of the industry to beef up competitiveness. The plan would help the company to deliver growth and solid earnings. The Company’s Board of Directors expresses sincere gratitude to shareholders, financial institutions and trade partners for confidence in the company. Even though the company in 2009 will operate business prudently, the company hopes to receive continuous support from you all. For staff, the company still recognizes their importance though labor crisis is seen in many industries. We do hope that all employees would dedicate and put effort to help the company overcome any obstacle. Tawatchai Nakata Chainid Ngow-sirimanee Chief Executive Director Chief Executive Officer
Property Perfect Public Company Limited
Company Information Name Head Office Type of Business No. of Paid-up Share Par Value Paid-up Capital
Annual Report 2008
: : : : : :
Property Perfect Public Company Limited 17th Flr. Vorasombat Bldg., 100/1 Rama IX Road, Huaykwang, Bangkok 10310 Tel. 0 2245 6640-7 Fax. 0 2247 3328 Real Estate Development 787,721,620 Share Baht 6 Baht 4,726,329,720
Investment in Other Companies
Name and Address Krungthep Land Plc. 21th Flr. Vorasombat Bldg., 100/1 Rama IX Road, Huaykwang, Bangkok Tel. 0 2645-0960-3 Fax. 0 2645-0380 Estate Perfect Co., Ltd. 17th Flr. Vorasombat Bldg., 100/1 Rama IX Road, Huaykwang, Bangkok Tel. 0 2245-6640-7 Fax. 0 2645-1976 Real Service Co., Ltd. 100/9 Soi Ta-it, Rattanathibet Road, Nonthaburi Tel. 0 2594-4001-5 Fax. 0 2594-4021
Registered Capital (MB)
Paid-up Capital (MB)
2,230
1,780
20.22%
Real Estate Development
1,000
1,000
100.00%
Real Estate Development
40
40
19.00%
Home Service
1
1
99.94%
Manage Fitness and Clubhouse
17th Flr. Vorasombat Bldg.
1
1
99.94%
Real Estate Development
Center Point Shopping Mall Co., Ltd.
1
1
60.00%
Real Estate
Perfect Satellite Services Co., Ltd. 19th Flr. Vongvanich B Bldg.
100/52 Rama IX Road, Huaykwang Bangkok Tel. 0 2645-1406-8 Fax. 0 2645-1409
Bright Development Bangkok Co., Ltd.
100/1 Rama IX Road, Huaykwang Bangkok Tel. 0 2245-6640-7 Fax. 0 2645-1976
3rd Zuellig House Bldg., 1-7 Silom Rd., Silom, Bangrak, Bangkok
Percentage Type of Business of Investment
Property Perfect Public Company Limited
Financial Information
Financial Position
Total Assets Project Development Cost and Land for Development Total Liabilities Shareholders’ Equity
Sales Total Revenue Gross Margin Net Income
Operation Results
Financial Ratio
Return on Total Revenue Return on Equity Return on Total Assets Current Ratio Quick Ratio Per Share Data Net Income per share Dividend Book Value
Annual Report 2008
Consolidated 2008
The Company Only 2007 2006 Unit : Million Baht 11,951 12,127 9,405 9,574 6,233 6,777 5,718 5,349
2008
12,933 10,792 6,230 6,703
11,525 8,670 5,203 6,322
7,538 7,618 31.42% 803
6,834 6,935 31.09% 798
5,713 5,778 29.57% 369
3,815 3,877 30.55% (10)
10.54% 12.55% 6.21% 3.86 0.20
11.51% 13.26% 6.80% 4.19 0.25
6.38% 6.66% 3.06% 2.56 0.24
(0.26%) (0.18%) (0.08%) 3.10 0.14
1.02 0.36 8.03
1.01 0.36 8.51
0.47 0.24 7.26
Unit : Baht (0.01) - 6.84
Nature of Business The company and subsidiaries mainly develop residential units for sale, offering single houses, Duplex house, townhouses and condominium units in Bangkok and neighboring provinces. The company and subsidiaries have subcontracted the construction works to contractors, and closely supervised the construction by a team of engineers and architects who also control raw material quality to ensure the construction process in line with standards in offering the best quality. The company and subsidiaries always carry out researches to learn real demand of consumers in each project location, target groups, housing types and the appropriate prices. The company and subsidiaries take the researches into consider for project development. All of the company’s projects must pass the prudent consideration from related teams by doing the feasibility study. Besides, the company and subsidiaries set up housing design team to monitor innovative development to improve designs to meet demand and lifestyle of targeted customers. With the concept, the company’s three designs then won Thailand Energy Awards in the category of Energy Conservation House from the Department of Alternative Energy Development and Efficiency, the Ministry of Energy in 2007. The company’s seven housing designs won as much as 10 Thailand Energy Awards in
the category of Energy Conservation House in 2008. The designs create unique to make consumers feel perfect changes in each project to meet consumer demand in terms of budget and family size based on worthiness at the appropriate price. The company and subsidiaries have determined to develop products to meet demand and competition environment. The company has paid attention to determinants of consumers’ purchasing decision as follows : Location - Most of the company’s projects are located in potential areas near electric rail routes or important main roads. The company’s projects are distributed around Bangkok and Greater Bangkok, and those who live in the projects then can conveniently commune to the center of city. Quality - The company has focused on quality of products starting from selecting quality materials such as products under Siam Cement Group (SCG), hiring experienced subcontractors and adopting new construction technology. To assure quality of products, the company has conducted quality control inspection during construction and before transfer or sales to customers by the company ‘s engineers and quality control team.
Property Perfect Public Company Limited
Product types Due to the various customer demand, we then
offer variety of product types to meet consumer demand as follows : 1) Single-detached house 2) Duplex house 3) Townhouse/townhome 4) condominium Design – The company has concentrated on home designs, which are beautiful and fit well with Thailand’s weather, and utility to meet target group’s demand and lifestyle such as garden home, garden in home, city home and new concept home with energy conservation. In 2008, the company has develop a new innovative product so called Green Room to increase green area in
Total revenue structure from sales by product type
The company’s main revenue derives from sales of land and houses, most of which are single-detached houses. The company’s revenue structure over the past three years were as follows: (See the table below)
Consolidated financial statements 2008 2007 2006 Million Baht % Million Baht % Million Baht % Revenue from sales of land and houses 5,420.1 Revenue from sales of condominium units 2,109.5 Revenue from sales of land held for development 8.6 Other revenues Receivable interest 1.6 Revenue from deposits 14.5 Reversal of allowance for loss on diminution in value of projects - Others 63.3 Total revenue 7,617.6
the house. The company in 2007 won three Thailand Energy Awards in the category of Energy Conservation House and its seven home designs in 2008 won 10 Thailand Energy Awards in the same category. The company’s and subsidiaries’ three housing options available for sales are as follows : 1) Pre-built home - The company completes building houses before sales. Customers then can transfer and move into the houses within one month. 2) Semi-pre-built home - The company analyzes customer demand to choose housing designs that meet their needs ahead of construction. This housing type is appropriate for
customers who need longer time for down payment or ready-tomove in houses in coming months. 3) Built-to-order home - The company in 2007 designed Perfect Customization program, a new innovative software for residential search, to widen alternatives for customers in terms of housing designs, number of rooms, housing styles (Euro Metro Nature), colors, wallpaper designs and etc.
Annual Report 2008
71.2% 27.7% 0.1% - 0.2%
4,697.1 1,469.5 99.3 1.4 11.6
74.3% 23.2% 1.6% - 0.2%
4,477.3 - - 5.0 7.8
98.7% - -
- 0.8% 100.0%
- 42.6 6,321.5
- 0.7% 100.0%
- 43.7 4,533.8
- 1.0% 100.0%
0.1% 0.2%
The company’s revenue from sales of land and houses in the consolidated financial statements represented 98.7% of total sales in 2006, 74.3% in 2007 and 71.2% in 2008 while its revenue from sales of condominium units accounted for 23.2% of total sales in 2007 and 27.7% in 2008. In addition, the company, in income statements, recorded profit (loss) sharing from investments in associates shown next to financial expenses and realized loss of Bt23 million in 2006 and profit of Bt12 million and Bt8 million in 2007 and 2008. Revenue from sales of land and houses, and condominium units classified by product were as follows :
Land and Houses Sales Revenue Structure by Product Type
Project
Brand Masterpiece
Product Type
2007 MB %
2006 MB %
- - 412 407
76 101 845 147
2% 2% 18% 3%
333 33 833 -
7% 1% 19% -
Maneeya Masterpiece Maneeya Masterpiece Exclusive Zone Perfect Masterpiece Ekamai-RamIndra Perfect Masterpiece Rattanathibet- Rachapruek
Perfect Place Rattanathibet SDH/Land Perfect Place Rattanathibet- Rachapruek SDH Perfect Place Ramkhamhaeng (Phase 1-3) SDH/Land Perfect Place Ramkhamhaengi (The Lakeside Home) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (Colonial Zone) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (Garden Zone) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (The Private Zone) SDH Perfect Place RamaV - Rachapruek SDH Perfect Place Sukhumvit 77-Suvarnabhumi** SDH
- - 22 504 9.3% 292 - - 8 9 0.2% - 224 4.1% - - - 26 612 11.3% 223 486 9.0% 461 638 11.8% 553
0% 6% 0% - - 1% 5% 10% 12%
162 214 8 - 119 110 328 419 662
4% 5% 0% - 3% 2% 7% 9% 15%
Maneerin Lake & Park Rachapruek - Tiwanon Maneerin Exclusive Rangsit Maneerin Lake & Lagoon Maneerin Park Rangsit Maneerin Park Rattanathibet Maneerin Park 2 Rangsit Perfect Park Rattanathibet- Rachapruek Perfect Park Ramkhamhaeng-Suvarnabhumi Perfect Park Rama V- Bangyai Perfect Park Suvarnabhumi**
300 5.5% 4 0.1% - - 6 0.1% 10 0.2% 145 2.7% - - 146 2.7% 684 12.6% 67 1.2%
377 - - 93 51 135 158 243 462 -
8% - - 2% 1% 3% 3% 5% 10% -
323 4 5 203 104 - 341 272 - -
7% 0% 0% 5% 2% - 8% 6% - -
-
-
4
Brand Perfect Place
Brand Maneerin and Brand Perfect Park
Other
Nantana Garden Rangsit
SDH SDH SDH SDH
2008 MB %
SDH/Land SDH SDH/ Land SDH SDH SDH SDH SDH SDH SDH
TH
- - 7.6% 7.5%
3
0.1%
0%
Brand The Villa and Brand The Metro
As shown in the balance sheet, Property Perfect chalked up Bt 4,715 million in sales revenue in2008 and Bt4,144 million in 2007 Bt3,815 million in 2006. In the same period, subsidiaries’
revenue is Bt705million , Bt553million and Bt 662million, respectively.
The Villa Rattanathibet- Rachapruek TH 590 10.9% 424 9% - - The Metro RamaIX TH 173 3.2% - - - - Total Revenue from the Sale of land and houses 5,420 100% 4,697 100% 4,477 100% Remark : SDH = Single Detached House, TH = Townhouse, Land = Land ** Developed by 100%-owned subsidiary Estate Perfect Co., Ltd .
Property Perfect Public Company Limited
Sales of Condominium Units Revenue Structure by Product Type Brand Metro Park
Project
Product Type
Metro Park Sathorn CONDO Total Revenue from the Sale off Condominium Units
2008 MB %
2007 MB %
2,109 100% 1,470 100% 2,109 100% 1,470 100%
2006 MB % - -
- -
Revenue from sales of condominium units presented in the consolidated financial statements came from total revenue from projects developed by Property Perfect Public Company Limited with the amount of Bt2,109 million in 2008 and Bt1,470 million in 2007.
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Annual Report 2008
Financial Developments Like other developers, the company plunged into business problems after the 1997 financial crisis. On 19 February 2001, the Central Bankruptcy Court ordered us to fall through business rehabilitation. On 2 October 2001, the court approved the rehabilitation plan, with Asian International Partner Co., Ltd. as the planner and plan administrator. The company had followed through the plan and fully restructured the loans. The company consequently exited the plan on the court order on 12 April 2004, and the management power has been returned to the old management team since then. The company has continuously serviced debts as required by business rehabilitation plan. The outstanding debts now amounts to a mere Bt127 million, which is under the process to pay off the debts to creditors.
The Important Development
Development during 2004-2006 • The company issued and offered three traches of secured debentures with name-registered and debenture holders’ representative totally amounting to Bt1,550 million to public and financial institutions in 2004 and another Bt450 million debentures issued in 2006. The debenture issuances were aimed at finance acquisition of land held for development and the company’s business expansion. The company proceeded in accordance with the resolution of the shareholders meeting in issuing debentures and practiced in line with terms and conditions. The company fully redeemed the debentures in accordance with debenture redemption conditions. • The company invested further in Estate Perfect Co., Ltd by subscribing to Estate’s 5 million capital increased shares at a par value of Bt10 with the total amount of Bt50 million to retain its shareholding in accordance with the company’s Board of Directors’ Meeting No 2/2548. • On 25 November 2005, the company issued and offered 200,000 units of unsubordinated convertible debentures at a face value of USD100 totally USD20 million to an overseas company in accordance with the resolution of Extraordinary General Meeting of Shareholders on 19 September 2005 (see details in Notes to Financial Statement No.23).
2007 : At the 1/2007 Board of Directors’ meeting on 18 January 2007, resolutions were as follows : • The company fully exercised right to subscribe to Krungthep Land Public Company Limited’s newly issued shares to retain its shareholding • The meeting resolved the company to set up a subsidiary, Bright Development Bangkok Co., Ltd., and unanimously approved the company’s directors to proceed debenture issuance to finance land acquisition in the amount of not exceeding Bt426,150,000. : At the 7/2007 Board of Directors’ meeting on 14 August 2007, resolutions were as follows : • The meeting had unanimously resolved a formation of a property fund, to which the company’s assets not less than Bt500 million will be sold. The company was allowed to jointly invest in the property fund with amount not exceeding the SEC’s requirement and enter into an asset management contract with the property fund. : At the 8/2007 Board of Directors’ meeting on 24 September 2007, resolutions were as follows : • The meeting had unanimously approved the company to jointly invest with local or foreign companies to set up “Centre Point Shopping Mall” to engage in shopping centre on land with the leasehold right. : At the 9/2007 Board of Directors’ meeting on 14 November 2007, resolutions were as follows : • The meeting acknowledged a resolution in the meeting of Krungthep Land Public Company Limited (associate) to issue not exceeding 623,250 units of 5-year, name-registered, to specific investors and/or investors under the Securities and Exchange Commission (SEC)’s announcement only. In 2008 : At the company’s Board of Directors’ Meeting No 1/2551 on 22 January 2008, resolutions were as follows : • On 3 January 2008, The company, on behalf of a major shareholder of Krungthep Land Public Company Limited, along with another two major shareholders entered into the Shareholders Undertaking Agreement stipulated major shareholders to admit representatives from the debenture
Property Perfect Public Company Limited
11
holders to seat in Krungthep Land’s Board of Directors after they bought the debentures.
• The meeting acknowledged a resolution in Extraordinary General Meeting of Shareholders No 1/2008 on 14 January 2008 of Krungthep Land Public Company Limited (associate) to amend a resolution about convertible debenture issuance in Extraordinary General Meeting No 1/2007 from the bahtdenominated to USD-denominated debentures with exchange rate based on the issue date. • The meeting approved the company to pledge 9,994 ordinary shares of Bright Development Bangkok Co., Ltd. as collateral for not exceeding Bt462,150,000 Bright’s debentures at a financial institution acting on behalf of the debenture holders’ representative. • The meeting resolved the company to jointly invest with a local or a foreign company to develop a shopping center on land with leasehold right on Ratchadapisek at holding not exceeding 60% of the joint-venture firm’s registered capital. : At the 2008 Annual General Meeting of Shareholders on 30 April 2008, resolutions were as follows : • The meeting resolved the company to allocate Bt18,500,000 from the 2007 net profit as legal reserve. • The meeting approved the annual dividend payment at Bt0.24 per share or a total Bt189,044,404.80 to shareholders whose names appeared in the share register book closed on 12 May 2008 for its 2007’s operating results. The dividend was payable within 30 May 2008. • The meeting resolved the company to issue and offer debentures with amount not exceeding Bt2,000 million (see details in Notes to Financial Statements No 21) with aims as follows : 1. to purchase land for development 2. To refinance its high financial cost debts 3. To reserve as working capital : At the 3/2008 Board of Directors’ Meeting on 14 May 2008, resolutions were as follows : • The meeting unanimously resolved the company to jointly
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Annual Report 2008
invest in a property fund (Quality Hospitality Leasehold Property Fund) with the amount of Bt20 million.
: At the 2008 Extraordinary General Meeting of Shareholders on 20 June 2008, resolution were as follows : • The meeting resolved to cancel issuing and offering the unissued convertible debentures amounting USD15 million due to overdue issuance period. As for the SEC’s announcement, a company must issue debentures within one year from the SEC’s approval date. The convertible debenture issuance was approved by the 1/2005 Extraordinary General Meeting of Shareholders on 19 September 2005. • The meeting resolved to cancel issuance and allocation of 39,000,000 ordinary shares reserved for right exercise of the company’s warrants offered to the company’s directors and employees . It also approved to cancel issuance and allocation of 65,000,000 ordinary shares reserved for right exercise of convertible debentures and resolved the company to decrease its registered capital from Bt6,213,565,176 to Bt5,589,565,176 or 931,594,196 ordinary shares with a par value of Bt6 by cancelling 104,000,000 unissued shares with a par value of Bt6 totalling Bt624,000,000. • The meeting resolved the company to issue and offer convertible debentures with amount not exceeding USD30 million or Bt1,000 million in the Thai baht equivalent. The debentures will carry a coupon rate of not exceeding 5% per annum and the converted price has been set at not less than 110% of the average closing price but not lower than Bt6.50 each. • The meeting resolved the company to raise its registered capital from Bt5,589,176 to Bt6,552,000,000or 1,092,000,000 ordinary shares by issuing 160,405,804 ordinary shares with a par value of Bt6 reserved for conversion of convertible debentures into ordinary shares.
Management Management structure The company’s management structure contains one board of directors and five subcommittees. They are Board of Directors, Audit Committee, Director Selection Committee, Remuneration and Human Resources Committee, Executive Board and Risk Management Committee. Details are as follows : (A) Board of Directors (B) Audit Committee (C) Director Selection Committee (D) Remuneration and Human Resources Committee. (E) Executive Board (F) Risk Management Committee Each board’s authority and scope of responsibility as follows : A. The Board of Directors As of December 31, 2008, the board consists of : No. Name Title 1 Dr. Tawatchai Nakhata Chairman 2 Mr. Chainid Ngow-Sirimanee Chief Executive officer 3 Dr. Theerachon Manomaiphibul** Chief Operation Officer 4 Mr. Phairat Senachack Deputy Chief Operation Officer 5 Mr. Vidhya Nativivat Director 6 Mr. David Bryce Van Oppen Director 7 Mr. Ooi Boon Aun * Director 8 Miss Sirirat Wongwattana * Assistant Chief Business Deployment Officer 9 Mr. Virayuk Puntupetch Director / Independent Director and Chairman of the Audit Committee 10 Mr. Somsak Toruksa Director / Independent Director and Auditing Director 11 Dr. Thamnoon Ananthothai Director / Independent Director and Auditing Director With Mr. Pramote Rermyindee as secretary of the board Note: * appointed in accordance with a resolution of the company general shareholders’ meeting on 30 April 2008. ** Resigned on 18 January 2009 to take office as Deputy Bangkok Governor and the Board of Directors resolved an appointment of Mrs. Nuanual Swasdikula Na Auydhya as a new director on January 2009. Authorised directors Authorised signatory directors are 1) Dr.Tawatchai Nakhata and Mr. Chainid Ngow-Sirimanee are duly authorised to sign documents and affix the company’s seal. 2) Any one of the following directors - Dr.Tawatchai Nakhata or Mr. Chainid Ngow-Sirimanee - is authorised to co-sign documents with one the these directors - Dr. Theerachon Manomaiphibul or Mr. Phairat Senachack or Miss Sirirat Wongwattana – and affix the company’s seal. Board of Directors’ authority and scope of responsibility The Board of Directors is authorised to make decisions and ensure that the company’s operations follow the objectives, regulations, shareholders’ resolutions and legal conditions. Its authority does not cover the decisions which must be approved by shareholders as prescribed by the Securities and Exchange Commission and the Stock Exchange of Thailand. Under the company’s regulations, the Board of Directors is authorized to appoint the executive board which will monitor the daily operations of the company under the guidelines and budget approved by the Board of Directors and handle other tasks bestowed by the Property Perfect Public Company Limited
13
Board of Directors. The executive board can approve the decisions within its power granted by the Board of Directors or have to propose the issues beyond its power for the Board of Directors’ consideration. The regulations also empower the Board of Directors to appoint other officers or other working committees to assist the executive board.
B. Audit Committee As of 31 December 2008, the Audit Committee consists of 3 independent directors. No. Name Title 1 Mr. Virayuk Puntupetch* Chairman of the Audit Committee 2 Mr. Somsak Toruksa Auditing Director 3 Dr. Thamnoon Ananthothai Auditing Director With Ms. Doungporn Rermyindee as the secretary Audit Committee’s authority and scope of responsibility 1. Supervise the company’s operations to ensure honesty, transparency, and responsibility to shareholders. 2. Ensure that the executive board and executives handle their responsibilities in an accurate, complete and standard manner. 3. Ensure the accuracy, sufficiency, and credibility of the financial results, as well ensure the accurate and sufficient disclosure through coordination with external auditors and executives who take responsible for preparing quarterly and yearly financial statements as requested by the company’s board of directors and/or the executive board. 4. Ensure appropriate and effective internal control, through the coordination with the internal auditors and auditors. 5. Appoint the auditor and set the auditor fee, which must be approved by the shareholders and based on reliability and adequacy of human resources, audit job volume made by the audit firm and experience of staffs who are in charge of the company’s accounting audit.
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Annual Report 2008
6.
Make sure that the company follows the legal conditions set by the Securities and Exchange Commission, the Stock Exchange of Thailand and other related agencies. 7. Prevent conflicts of interest through the inspection of the transactions of the company with connected parties and through coordination with the auditor as well as consider disclosing accurate and adequate information for connected transactions and any transactions that might cause conflicts of interest. 8. Prepare the audit committee’s report and disclose the report in the annual report, which includes at least following issues. • Opinion related to prepare the company’s financial reports and accurate and reliable information disclosure. • Opinion concerning to sufficiency of the company’s internal control system. • Reasons that the company’s auditor is appropriate for another term appointment. • Opinion to comply with the Securities and Exchange Act, the Stock Exchange of Thailand’s rules and laws relevant to the company’s business. • Other reports that should be acknowledged by shareholders and investors under scope of duty and responsibility assigned by the company’s directors. 9. Review the internal control’s reports. 10. Review the internal control’s findings. If finding or suspecting of any misconduct, or the insufficiency of the internal control, they must ask for the Board of Directors’ judgment. 11. Review the internal control’s inspection and the auditor’s recommendations, and follow through the improvements. 12. Authorise to examine, audit, call executive directors, executives, advisors, and accounting auditors to attend meeting to acknowledge information and seek independent opinions from other professional advisors if necessary to achieve in tasks under responsibility. 13. Perform other tasks assigned by the company’s board such as review of financial and risk management policy, and business ethics conducted by executives. The audit committee has a three-year term and it will be elected by the company’s board when their terms are ended by rotation.
Property Perfect Public Company Limited
15
Independent Directors’ qualifications Independent directors must meet qualifications set by the Securities and Exchange Commission’s announcement at Kor Jor.12/2000 governing asking for permission and approving newly issued share offering, and audit committee qualifications required by the Stock Exchange of Thailand’s regulations. On 14 December 2008, the SEC’s Board of Directors meeting resolved to revise rules governing independent directors and audit committee of newly listed companies, effective from the 2009 Annual General Meeting of Shareholders. The company’s executives then amended qualification of independent directors in compliance with the SEC’s Board of Director revised rules to create good governance. C. The Director Selection Committee. The Director Selection Committee consisted of 3 persons as of 31 December 2008. No Name Position 1 Dr. Thamnoon Ananthothai Chairman of the committee 2 Mr. Somsak Toruksa Selection committee member 3 Mr. Vidhya Nativivat Selection committee member Selection Committee’s scope of authority and responsibility 1. Review the individuals who are fit to be the company’s directors and nominate the list to the board of directors and/or present the list to shareholders for official appointment. 2. In reviewing the individuals’ qualifications, the committee must consider their expertise, knowledge, ability and relevant experiences to ensure that the individuals’ qualifications would be useful for the company’s operations. Besides, the committee must consider that the nominations follow the legal framework particularly when it involves the nominations for independent directors and the audit committee members. 3. In selecting independent directors and the audit committee members, the committee must take into account; (A) The nominated individuals must hold no more than 1% of the paid-up capital of the company, affiliates or subsidiaries. The percentage is inclusive of the shareholding of related individuals - their spouses and underage children. (B) The nominated persons must not be related to the company’s executives or major shareholders. (C) The appointed persons must not have conflicts of interest, directly or indirectly, in terms of finances or management of the company and affiliates. They must not be the company’s major shareholders.
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Annual Report 2008
4.
(D) The nominated persons must have no any relationship with the company and associates in ways of vested interest, or financial or management benefit at present and over the past two years before appointed as independent directors. Such relations include • Being directors who take part in the company’s management, employees, staff members, advisers who receives a regular salary, or control authorities. • Being professional service providers such as auditors, legal Consultants, financial advisors or price appraisers. • Having business relationship such as buy/sell goods, provide asset buy or sell service, give or receive financial assistance etc. (E) In case that the nominated persons serve as independent directors of other companies in the group, they must disclose such information and remuneration received from those companies. (F) The nominated persons must not seat as any director in other listed companies in the group. (G) Listed companies must immediately inform the Stock Exchange of Thailand once any audit committee resigns or is sacked before term ends. The appointed persons must be able to work and present their views with independence, free from the control from executives or major shareholders as well as their relatives.
Director Selection Committee’s authority, duty and responsibility could not be transferred to others in a way that those who are authorized by the committee can approve transactions that might lead to conflicts of interest (as defined in the Securities and Exchange Commission’s announcement) with the company or subsidiaries, or he/she has vested interest with exception that those transactions are regarded as normal course of business with the clear scope. To present the selected persons to the board of directors, the Selection Committee must nominate only those who will fill the available director seats. Except when the committee members could not reach an agreement, they are allowed to present all the nominated names to the board for their consideration.
(D) The Remuneration and Human Resources Committee The Remuneration and Human Resources Committee consisted of 3 persons as of 31 December 2008. No. Name Position 1 Dr.Tawatchai Nakhata Chairman of the remuneration committee 2 Mr.Vidhya Nativivat the remuneration committee 3 Mr.Somsak Toruksa the remuneration committee The Remuneration and Human Resources Committee’s scope of authority and responsibility 1. Consider the company’s policies and criteria in paying the Chief Operation Officer, directors, and the company’s advisors. 2. Consider the annual salary, annual pay increase, and the interim pay increase, as well as other benefits to award all employees. 3. Consider the employment terms, regulations, and penal clauses which should be appropriate and fair. 4. The committee will report directly to the board of directors, to whom they will explain and answer all questions regarding the pays for employees at all levels. Remuneration and Human Resources Committee’s authority, duty and responsibility could not be transferred to others in a way that those who are authorized by the committee can approve transactions that might lead to conflicts of interest (as defined in the Securities and Exchange Commission’s announcement) with the company or subsidiaries, or he/she has vested interest with exception that those transactions are regarded as normal course of business with the clear scope.
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(E) Executive Board Executive Board contains 5 individuals, as of 31 December 2008. No. Name Title 1 Dr.Tawatchai Nakhata * Chairman of the committee 2 Mr.Chainid Ngow-Sirimanee Deputy Chairman of the committee 3 Dr.Theerachon Manomaiphibul** Executive Director 4 Mr.Phairat Senachack Executive Director 5 Miss Sirirat Wongwattana * Executive Director and secretary of the board Note: * Appointed in accordance with a resolution of the Board of Directors’ Meeting on 14 May 2008. ** Resigned on 18 January 2009 to serve as Deputy Bangkok Governor. Executive Committee’s authority and scope of responsibility 1. Run the company’s daily operations under the guidelines set by the Board of Directors and within the scope of rules and regulations, as well as the company’s objectives and regulations. 2. Appoint high-ranking executives to manage the company. 3. Set the annual budget for the Board of Directors’ approval. 4. Appointed Management Board, advisor and other directors to give advices concerning the company’s management. 5. Consider and approve borrowings and the financing of normal transactions such as the investment, land purchases or others with the maximum amount of Bt100,000,000 or Bt100 million. 6. Prepare, recommend and set business strategies for the Board of Directors. 7 Consider and approve the corporate marketing and public relations plans. 8. Evaluate the company’s performance in terms of asset management and financial management to ensure efficiency and effectiveness. 9. Conduct other tasks assigned by the Board of Directors. Notably, the executive board has no authority in handing its power to any member or others to approve a connected transaction (as prescribed by the Securities and Exchange Commission) or a transaction which could pose conflicts of interest with the company or subsidiaries with exception of approval for normal course of business transactions as policy and criteria resolved by the board of directors under the Securities and Exchange Act, and the Stock Exchange of Thailand’s regulations, announcements and instructions or rules. Chief Executive Officer Chief Executive Officer is the highest authority in the company’s management, perform duties and report operating performance to the Executive Committee, Board of Directors and shareholders as follows : 1. Set policies, direction, and strategies for the company’s business operation. 2. Set business planning, budget and authority of the company’s internal units which up to management department to seek the board’s approval. 3. Manage normal course of business activities under policies set by the company’s board, laws, conditions, regulations, memorandum of association, and the company’s rules. 4. Appointed Management Board, advisor and other directors to give advices concerning the company’s management. 5. Perform other tasks assigned by the company’s board.
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Managing director’s authority, duty and responsibility could not be transferred to others in a way that those who are authorised by managing director can approve transactions that might lead to conflicts of interest (as defined in the Securities and Exchange Commission’s announcement) with the company or the subsidiaries and affiliates, or he/she has vested interest with exception that those transactions are regarded as normal course of business as policies and principles set by the company’s board in compliance with laws governing securities and stock exchange, regulations, announcements, instructions or rules of the Stock Exchange of Thailand.
(F) Risk Management Committee The company’s Board of Directors set Risk Management Committee’s scope of authority and responsibility on 14 November 2008. At present, Risk Management Committee contains 4 members as follows No. Name Title 1. Mr. Boonliam Luangnakthongdee Chairman of Risk Management Committee 2. Ms. Supee Reodacha Risk Management Committee 3. Mr. Surasak Vacharapongpreecha Risk Management Committee 4. Dr. Theerathorn Tharachai Risk Management Committee and Secretary Note : Risk Management Committee was appointed in accordance with a resolution of the company’s Board of Directors on 19 January 2008. Risk Management Committee’s scope of authority and responsibility (1) Review and present risk management policy and acceptable risk to the company’s board for approval. (2) Supervise development and practice throughout organization to comply with risk management framework. (3) Review risk management reports to monitor important risks and proceed to ensure that the organisation has sufficient and appropriate risk management. (4) Present risk of the company in overall picture, and sufficiency of internal control system to manage risk in all important aspects to the company’s board. (5) Provide suggestion about risk management to the company and revise any information concerning risk management system development. (6) Authorise to appoint the company’s risk evaluation and monitoring working group. (7) Perform other tasks about risk management assigned by the company’s board
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Company’s secretary The Securities and Exchange Act (the fourth issue)’s article 89/15 on 2008 prescribed that the company’s board must appoint the company’s secretary to act on behalf of the company or the company’s board. Meeting of the company’s board on 11 August 2007 approved to appoint Mr. Pramote Reumyindee as the secretary. Secretary’s scope of authority and responsibility 1) Prepare and collect documents as follows (A) Director registration (B) Board meeting notice, minutes of board meeting and the company’s annual report. (C) Shareholders’ meeting notice and minutes of shareholders’ meeting. 2) Collect vested interest reports informed by directors or executives and submit copy of the reports to Chairman of Board of Directors and Chairman of Audit Committee within 7 days after the company received such reports. 3) Prepare storage system for documents and evidences related to information presentation as stated below and handle collecting such documents and evidences accurately and completely to allow examination to track back to at least 5 years after document or information preparation date. Storage of documents and evidences mentioned above includes storage with computer and other systems, which can read without change in wording. (1) Information presented to seek an approval from shareholders’ meeting. (2) Financial statements and reports regarding financial position and the company’s operating performance or other reports required to be disclosed in pursuant to the Securities and Exchange Act’s articles 56, 57, 58 and 199. (3) Opinion of the company when tender offeror proposes to buy the company’s shares from shareholders. (4) Information or other reports regarding to business arranged by the company to publicise to shareholders or public as required by the Capital Market Development Committee. 4) Perform other tasks as required by announcement of the Capital Market Development Committee. 5) Perform duty with responsibility, carefulness, integrity and in compliance with laws, objectives, the company’s regulations and resolutions of shareholders’ meeting. Don’t do any thing in a manner of significant conflict of interest with the company. 6) Perform duty with responsibility and carefulness in a way that operators in the industry will do under the same situation. (1) Decision made in good faith and deemed appropriate that it is done for the company’s optimal interests. (2) Decision made in good-faith that it is based on sufficient information and (3) Decision made by those who directly and indirectly have not had vested interest with the decided issues. In case that the secretary’s seat is vacant, the company’s board is authorised to appoint a new one within 90 days. Miss Sirirat Wongwattana is assigned to perform duty during the vacancy. Nomination of board and executives The company’s Director Selection Committee shall nominate the names of board members by selecting the nominated candidates who are appropriate for the positions and proposing to the company’s Board of Directors meeting and/or shareholders’ meeting to approve the appointment later. The Board of Directors shall consider the qualification and competence and related experience of the nominated persons. The nomination shall partly benefit the company’s operation (see details in Director Selection Committee’s scope of authority and responsibility).
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Annual Report 2008
Structure and appointment of the company’s Board of Directors The company’s Board of Directors contains at least 5 members of which shall be directors under three categories. 1. Independent director The number of independent directors must not less than one-third of the board or not less than 3. 2. Executive director 3. Non-executive director At least a half of the board members must reside in the Kingdom. In voting at the shareholders meeting, one share is entitled to one vote. Each shareholder must cast the entire votes to each nominated person or many but the votes must be equally divided. Majority vote standard is applied to the election of board members. In case of equal votes, Chairman of the meeting determines. One-third of directors, or the number nearest to but not exceeding one-third, must retire at each Annual General Meeting of Shareholders. Directors are prohibited from doing the same business which can be competitor to the company or hold shares in ordinary partnership or being shareholders with unlimited liability in limited partnership or servicing in the director seat of any other corporate entity with the similar business nature with the company and can be the company’s business competitor, except for the case where the general shareholders’ meeting has been informed prior to the appointment resolution. Directors shall immediately inform the company if they have vested interest in any contract signed with the company or their holding in securities or debentures issued by the company or associates has been changed.
Property Perfect Public Company Limited
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Board of Directors
Dr.Tawatchai Nakhata
Mr.Chainid Ngow-Sirimanee
Mr. Phairat Senachack
Mrs.Nuanual Swasdikula- Na-Ayadhya
Mr. David Bryce Van Oppen
Mr.Ooi Bun Aun
Chairman Chief Executive Director Chairman of the remuneration committee Authorized signatory directors
Director
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Annual Report 2008
Chief Executive Officer Deputy Chief Executive Director Authorized signatory directors
Director
Director Executive Director Assistant Chief Operating Officer Authorized signatory directors
Non Executive Director
Mr.Virayuk Puntupetch
Dr. Thamnoon Ananthothai
Mr. Vidhya Nativivat
Mr. Somsak Toruksa
Ms Sirirat Wongwattana
Mr. Pramote Rermyinde
Director Independent Director Chairman of the Audit Committee
Director Independent Director Audit Committee Selection committee.
Director Independent Director Audit Committee Chairman of Selection committee Remuneration committee
Director/ Asst. Chief Business Development officer Executive Director & Secretary of Executive Director committee Authorized signatory directors
Non Executive Director Selection Selection committee
Company Secretary
Property Perfect Public Company Limited
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Organization Chart
Chief Advisor to the Board of Directors
Board Of Directors
Nominating committee
Executive Committee
Audit Committee
Chief Executive Officer (CEO)
Internal Audit
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Chief Financial Officer (CFO)
Chief Business Development Officer (CBO)
Deputy Chief Financial Officer (Dep.-CFO)
Deputy Chief Business Development Officer (Dep.-CBO)
Assistant Chief Financial Officer (Asst.-CFO)
Assistant Chief Business Development Officer (Asst.-CBO)
Finance & Treasury Division
Investor Relation & Information System Division
Accounting Division
Property Business Development Division
Budgeting Office
Public Relations Division
Annual Report 2008
Research & Business Development Division Project Planning Division
Advertising Division
Remuneration Committee Company Secretary Legal Human Resources Division Office of the Chief Executive Officer
Chief Operating Officer (COO) Deputy Chief Operating Officer (Dep.-COO) Assistant Chief Operating Officer (Asst.-COO) Design & project Development Division General Administration Division Legal Procedure & Ownership Transfer Division Sales Management Division Customer Service Division Construction Managemnet Division
Product Development & Quality Control Division Project Management Division Zone I Project Management Division Zone II Project Management Division Zone III Project Management Division Zone IV Project Management Division Zone V Property Perfect Public Company Limited
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Project Property Perfect Plc. And Subsidiary’s Project 1. Perfect Masterpiece Rattanathibet Phase 1-2 Time to Develop 2007-2010 Product SDH Total Units 144 Total project Value 1,434 MB. Remaining Units 86 Remaining Project Value 860 MB. 2. Perfect Masterpiece Ekamai-Ram-intra Time to Develop 2004-2009 Product SDH Total Units 231 Total project Value 3,445 MB. Remaining Units 32 Remaining Project Value 414 MB. 3. Perfect Place Rattanathibet Time to Develop 2005-2009 Product SDH Total Units 395 Total project Value 1,708 MB. Remaining Units 143 Remaining Project Value 632 MB. 4. Perfect place RamaV-Ratchapruek Time to Develop 2005-2009 Product SDH Total Units 306 Total project Value 1,777 MB. Remaining Units 7 Remaining Project Value 39 MB. 5. Perfect place Ramkhamhaeng-Suvarnabhimi (private Zone) Time to Develop 2005-2009 Product SDH Total Units 302 Total project Value 1,659 MB. Remaining Units 57 Remaining Project Value 268 MB. 6. Perfect Park Ramkhamhaeng-Suvarnabhimi Time to Develop 2005-2009 Product SDH Total Units 198 Total project Value 777 MB. Remaining Units 3 Remaining Project Value 13 MB. 26
Annual Report 2008
7. Perfect Park RamaV-Bangyai Phase1-4 Time to Develop 2006-2011 Product SDH,DH Total Units 1,198 Total project Value 3,642 MB. Remaining Units 791 Remaining Project Value 2,389 MB. 8. Maneerin Lake&Park Ratchpruek-Tiwanon Time to Develop 2001-2009 Product SDH Total Units 702 Total project Value 3,012 MB. Remaining Units 190 Remaining Project Value 806 MB. 9. Maneerin Park Rangsit phase2 Time to Develop 2007-2009 Product SDH Total Units 98 Total project Value 297 MB. Remaining Units 5 Remaining Project Value 14 MB 10. The Villa Rattanathibet. Time to Develop 2006-2011 Product TH,DH Total Units 1,427 Total project Value 3,295 MB. Remaining Units 906 Remaining Project Value 2,220 MB. 11. Metro Park Sathorn Phase1-3 Time to Develop 2005-2012 Product CD Total Units 4,625 Total project Value 8,778 MB. Remaining Units 2,201 Remaining Project Value 4,414 MB. 12. Perfect Place Sukhumvit77-Suvarnabhumiv (Phase1-4)* Time to Develop 2004-2011 Product SDH Total Units 1,069 Total project Value 5,825 MB. Remaining Units 568 Remaining Project Value 2,925 MB.
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13. Perfect Park Suvarnabhumi* Time to Develop 2007-2010 Product SDH Total Units 194 Total project Value 826 MB. Remaining Units 171 Remaining Project Value 723 MB. 14. Perfect Masterpiece Ramkhamhaeng phase1/1 Time to Develop 2008-2009 Product SDH Total Units 6 Total project Value 152 MB. Remaining Units 6 Remaining Project Value 152 MB. 15. The Metro RamaIX Time to Develop 2008-2011 Product TH Total Units 562 Total project Value 2,050 MB. Remaining Units 472 Remaining Project Value 1,700 MB. 16. Metro Sky Ratchada phase 1** Time to Develop 2009-2010 Product CD Total Units 441 Total project Value 1,111 MB. Remaining Units 367 Remaining Project Value 911 MB. 17. Metro Sky Sukhumvit Phase1 Time to Develop 2009-2011 Product CD Total Units 588 Total project Value 1,637 MB. Remaining Units 570 Remaining Project Value 1,593 MB.
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Annual Report 2008
New Projects in 2009
1. Perfect Place Rachapruek Phase1 Time to Develop Q4/2008-2011 Product SDH Total Units 402 Total project Value 1,964 MB. Remaining Units 402 Remaining Project Value 1,964 MB 2. The Metro Sathorn Time to Develop Q1/2009-2010 Product TH Total Units 321 Total project Value 1,272 MB. Remaining Units 321 Remaining Project Value 1,272 MB 3. Perfect Masterpiece RamaIX Time to Develop Q3/2008-2014 Product SDH Total Units 319 Total project Value 3,270 MB. Remaining Units 319 Remaining Project Value 3,270 MB 4. Perfect Place Ramkhamhaeng-Suvarnabhumi (The Lake Zone) Time to Develop Q4/2008-2009 Product SDH Total Units 114 Total project Value 820 MB. Remaining Units 114 Remaining Project Value 820 MB Note: Project’s remaining value after deducted transfer and pending transfer sales value as 31 December 2008 * Subsidiary’s Project ( Estate Perfect6 Co., Ltd) ** Subsidiary’s Project (Bright Development Bangkok Co., Ltd.) SDH = Single Detached House TH = Town House DH = Duplex House CD = Condominium
Property Perfect Public Company Limited
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Project’s Map
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Annual Report 2008
Marketing and Competition Marketing
Marketing Strategy The company sets marketing strategies in line with competition, as well as economic and social conditions. 1. Products. The company concentrates on developing the products that respond to market demand and competition. Factors that send impacts to competition are as follows: • Location: Most of the company’s projects are located in good and potential areas near electric rail routes or important main roads. The company’s residential projects are distributed around Bangkok and Greater Bangkok, to facilitate those who live in the projects to conveniently commune to the center of city such as. • Projects in western zone, located near electric train’s purple line (Bangyai-Bangsue) and red line (Bangsue-Taling Chan), Ratchapruek Road, Chaiyapruek Road (links Ratchapruek Road to Chaeng Wattana Road). • Projects in Suvarnabhumi Airport zone, located near Airport Rail Link, Ramkhamhaeng Road (Sukhapiban 3), Sukhumvit 77 and Outer Ring Road. • Projects in city center zone or in radiation of not exceeding 10 kilometers from the city center. Almost all of them are condominium projects located near Mass Rapid Transit (MRT) stations, electric train’s green line stations (BTS-extension) and blue line stations (BangsueTha Phra). • Quality : The company has focused on quality of products starting from selecting quality materials such as products under Siam Cement Group (SCG), hiring experienced subcontractors and adopting new construction technology. To assure quality of products, the company has conducted quality control inspection during construction and before transfer or sales to customers by the company‘s engineers and quality control team. • Product types : Due to the various customer demand, we then offer variety of product types to meet consumer demand as follows : 1) Single-detached house 2) Duplex house 3) Townhouse/townhome 4) Condominium Variety of product types can better meet different demand of customers.
• Design : The company has concentrated on beautiful home designs, exterior of which must be not only beauty but also appropriateness with Thailand’s climate, and usable space designs, which fit well and serve demand and lifestyle of target customers. With the concept, the company’s three home designs in 2007 won three Thailand Energy Awards in the category of Energy Conservation House and its seven home designs and three projects in 2008 won 10 Thailand Energy Awards in the same category. The award-winning home designs are as follows. • Carina Euro home design in Perfect Place Rattanathibet-Ratchapruek project won the best practice award in the category of small-sized single-detach house with usable space not exceeding 200 square meters. • Patio Nature home design in Perfect Place Rattanathibet project won the good practice award in the category of small-sized single-detached house with usable space not exceeding 200 square meters. • Polar home design in Perfect Place Rattanathibet project won the good practice award in the category of small-sized single-detached house with usable space not exceeding 200 square meters. • Eak-Amphorn home design in Perfect Masterpiece Rattanathibe project won the best practice award in the category of medium-size single-detached house with usable space of 200-300 square meters. • Eak-Indra home design in Perfect Masterpiece Rattanathibet project won the good practice award in the category of medium-sized single-detached house with usable space of 200-300 square meters. • Metro home design in the Villa Rattanathibet project won the honorable award in the category of townhouse with usable space not exceeding 120 square meters. • Euro home design in the Metro Rama 9 project won the honorable award in the category of townhouse with usable space over 120 square meters.
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• Maneerin Park 2 Rangsit won the best practice award in the category of small residential project with not exceeding 99 title deeds. • Perfect Masterpiece Ekamai-Ramindra project won the good practice award for medium residential project with 100-299 title deeds. • Perfect Place Sukhumvit 77-Suvarnabhumi won the good practice award for large residential project with over 300 title deeds.
• Project Landscape & environment Aside from the houses, the company also emphasises home design and the focus on the environmental management in the projects, security system, and after-sale services to ensure a perfect community for all clients to add value to residents in projects. With the focus, the company won EIA Monitoring Award from the Natural Resources and Environment Ministry for three consecutive years between 2005 and 2007. The three projects received the awards were Perfect Place Rattanathibet, Perfect Place Ramkhamhaeng phase1 and Perfect Place Ramkhamhaeng phase 2. In addition, the company provides public gardens, lakes, large and perfect club houses and shops in the club house areas to
The table described residence prices by brand Pricing (MB.) 1.0-2.0 2.1-3.0 SDH TH CD
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Annual Report 2008
facilitate customers. The company has teamed up with business partners to open their shops in the club house areas such as Black Canyon, KPN Music Academic School, Clark Hatch, V Shop, and Dokya bookstore to make difference, which is beyond competitors, and offer the projects’ customers better living than others. The company has focused on brand building through product strategy with concentration on good experience of customers to the company’s home, projects and services to sustain positive image and to create word of mouth. 2. Pricing The company has policy to set prices based on the economic condition, market demand and competition. These factors are jointly considered with costs, locations, project types and market conditions when compared with competitors. There are several guidelines for price setting such as setting higher price than rivals but better designs, and environmental and convenient facilities. The company has explored new markets, in which no property developers offer products to serve demand, and this helped improve the company’s operating results. The company has offered various project types and prices starting from aBt1.5 million to the luxurious projects with prices in a range of Bt7 million-Bt20 million to serve different demand as follows
3.1-4.0
4.1-5.0
5.1-7.0
7.1 up
3. Distribution channels Although customers can seek information from various media, project visit to see sample houses, locations and project patterns is still crucial for customers in comparatively considering before making decision. Therefore, office of project sales remains the main channel. However, home is a high value product that customers must consider before purchase and some customers might ask opinion from friends or relatives, so customers’ satisfaction on the company’s houses and projects can create word of mouth. To express gratitude to customers who recommend friends to buy homes from the company and to widen channel efficiently accessible to customers, the company launches Perfect Friend Club. In 2008, the program received warm welcome from the company’s customers. 4. Advertising and sales promotion 4.1 Advertising Customer behavior at present has been changed and more complicated, and level of their information received and sought are different. Therefore, the company has used integrated media, analyzing, and carrying out customer behavior research to maximize efficiency and effectiveness. Besides, the company has used media to build image and brand, and create awareness of project patterns among target group as follow 1) Perfect Masterpiece Single-detached house projects with units priced above Bt 7 million and targeted at high-end clients. 2) Perfect Place Single-detached house project with price in a range of Bt3.5-7 million targeted at middle income earners. 3) Perfect Park Single-detached house and new concept duplex house projects with price between Bt2.5-Bt5 million. The project targets new family and customers who want bigger houses.
4) The Villa Townhouse and new concept duplex house projects with units priced between Bt1.7-Bt3 million for new family. 5) The Metro The three-storey townhome projects located near city, electric train. The project, with units priced between Bt3-Bt5 million, concentrates on quality of design and higher standard materials. 6) Metro Park Condominium projects with the convenient electric tarin transport network at units priced of Bt1.2-Bt3 million. It, nestled with garden, targets those who work or live in city areas. 7) Metro Sky Condominium projects located in the center of city and near electric train’s stations. It, with unit price of Bt2-Bt5 million, targets those who want condominium in the center of city and to live near electric train’s stations. 4.2 Sales promotion The company has employed appropriate promotions to serve target customers who have various demands with the aim to stimulate their decision making. For example, the company has joined hand with financial institutions to offer more special interest and installment rates than available in the market. The company along with leading furniture manufacturers jointly offer design and furniture decoration at a special price to reduce the company’s burden in seeking interior designers to decorate homes and facilitate customers. 5. Service Service is the important factor for customers in making decision. The company has set up a unit to help customers in seeking loans and special interest from financial institutions. The company’s after sales service unit is available to provide after sales service so called Perfect Service. Moreover, the company’s project management team provides services, security, utility facilities, and club houses, and holds activities in projects to create good relationships among those who live in the projects and build quality society, to which the company has paid attention.
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Competition Real estate market last year slowed down due to many factors as follows 1) Political uncertainty, 2008 is the year of escalated political conflicts. 2) Spike in oil price pushed up construction costs. 3) Declined consumer confidence was stemmed from political problem, economic condition, higher costs of living and concerns over impact from the US and European countries on the country’s economy. However, home is one of the four necessities for living and real estate business has impact to the economy, so the government has issued measures to boost the real estate sector as part of its economic stimulus measures. The real estate stimulus measures are as follows: 1) Reduction of ownership right transfer fee from 2% to 0.01% 2) Reduction of mortgage registration fee from 1% to 0.01% 3) Reduction of specific business tax from 3.3% to 0.1%. Property developers must have ability to adjust themselves to prepare for changes and ability to manage business. To survive, they also should be professional, have ability to forecast market demand correctly and precisely, and have strong financial position and ability to manage construction cost. In 2008, even though the number of property developers declined, the company was still able to continuously expand as it adjusted itself to prepare for the changes. Residential projects (single-detached house, duplex house and townhouse) Consumer behavior in purchasing homes has become more complicated. They seek more information and consider in deeper details before making decision. Therefore, projects offering products satisfied their demand including location, type, facilities and environment can sharpen developers’ competitiveness. Given concerns over the economic condition, home buyers then always
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Annual Report 2008
select projects developed by well-known operators and pre-built houses to lower risk if those property developers have financial problem and to be on time with the government’s real estate stimulus measures. The company is committed to construct quality houses in terms of design and construction. In addition, it has focused on developing projects equipped with facilities and having good environment suitable for living. That’s why the company’s projects won Environment Impact Assessment (EIA) award from the Ministry of Natural Resources and Environment for three consecutive years in 2005, 2006 and 2007. The winning projects were Perfect Place Rattanathibet and Perfect Place Ramkhamhaeng phase 1, phase 2 and phase 3. In 2008, Perfect Place Ramkhamhaeng Phase 2 won the excellent award and Thailand Energy Awards in the category of Energy Conservation House from Department of Alternative Energy Development and Efficiency, the Ministry of Energy. These awards highlight the company’s commitment to build good houses and projects to customers. • Condominium project Condominium had strong demand especially at the time when oil prices surged last year. Condominium is the choice of those who want to live or work in city to save expenses and travelling time. In 2005, the company unveiled Metro Park Sathorn project with units priced in a range of Bt1-Bt3 million. Those who live in the project can commune electric train’s green line (extension) and the project received good response from consumers. Location of the company’s condominium projects is convenient for travel and near electric train’s stations and this serves lifestyle of metropolitans. In addition, the company’s business practice to focus on good project environment and greenery was rational behind the good response from consumers. Metro Park Phase 3, which has swimming pool and large-sized lake, also received warm welcome from consumers. Therefore, project’s landscape focused on good environment is the company’s competition strategy, in addition to good products and locations.
Property Development Business Trend in 2009 Year 2009 is the year Thailand took the hardest blow from the global financial crisis. Thailand, however, in 2009 already got through local political crisis and this allows the government mechanism including spending and investment to jump start. Resumption of the government function is expected to play a pivotal role in helping Thailand better able to ride out the global financial storm, thanks to consumers’ and private sector’s
purchase houses particularly in areas planned to have the transportation system in the future. Moreover, it is the right timing to buy real estate for being assets or investment. However, the economic slowdown has deteriorated security of consumer income, resulting in loan rejection and delay to buy home. Residential projects with target groups directly struggling from the crisis also feel the pinch.
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Chart 1 GDP in 2008 expected to grow 3% only while GDP in 2009 expected to grow at a slower pace of a mere zero to 2%. The government spending and investment would be the main engine driving the country’s economic growth while exports, accounting for high proportion in GDP, would shrink sharply. Source : the Fiscal Policy as of December 2008
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increasing confidence. The real estate stimulus measures and the come as government’s policy to embarkonmass transit system a boon to 85the real estate sector. Besides, the downward trend in interest83rate would increase consumers’ appetite in housing. 81 Therefore,79 maintaining strong financial position, correctly 77.0 75.7 analysing77 what consumers need and improving production and 74.7 management ability will play the vital role amid the weak demand 75 75.2 eroded by 73 the economic condition. On the supply side, it would 74.8 74.2 also fall71as property developers face with risks from financial 66.8 liquidity 69 and seeking source of funding. 66.3 67 65.4 Important factors to boost demand in 2009 are the possible 65 improving consumer confidence following7 the7 higher stability 7of 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 9 6 06 6 6 6 6 6 6 6 07 7 07 7 0 0 r-0 ay- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 b -0 ar- pr-0 ay- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 b -0 ar- pr-0 ay- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 p o u e u a e e J J Auto Se O No De Ja Fe M A M Ju J Au Se O No De Ja political situation, the real estate stimulus measures, and A M J O N D J F M A M Jupolicy A S accelerate investment in mega infrastructure projects. Tamesituation CCI CCI for the current CCI for the future outlook inflation and the downward interest trend might bolster the economy and purchasing power, and create motivation to
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200,000
Property Perfect Public Company Limited
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240.
Coup
Constitution referendum
General election
Samak Government
The government house occupied by PAD.
Chart 2 Consumer confidence on rise after the political situation was improved Source : The Economic and Business Forecasting Center, University of the Thai Chamber of Commerce
However, demand in housing remains intact, driven by migration and neolocal family. Home purchase behavior has been changed to be appropriate for purchasing power and consumer lifestyle at that time. The changes in home purchase behavior include reduction of budget for residential purchase to match with the falling purchasing power, smaller family size, late marriage and need in convenient transportation. These factors increase demand in small-sized residences including condominium, duplex houses and townhouses. Given that single-detached house is an ideal home for most of people and it is a perfect residence for family, demand in singledetached houses continues to sustain, though their locations are normally far from small-sized residence’s locations. Singledetached house projects are mainly developed along with extension of transportation routes while the soften oil price would somewhat give a blessing to single-detached houses in Greater Bangkok. Purchasing residences for investment purpose, propelled by soften inflation, downward interest trend, tax incentive, fee reduction and decline in housing price, is another force increasing demand in pre-built homes this year. However, the overall demand would keep falling as economic factors would dwindle purchasing power or delay home purchase. According to data, the number of housing registration in 2008 increased slightly from 2007. The number of condominium projects, construction of which were completed, rose significantly 36
Annual Report 2008
67
65.4
65 6 06 6 6 6 6 6 6 6 7 07 7 07 7 7 7 7 7 7 7 8 08 8 08 8 8 8 8 8 8 8 9 7 8 r-0 y- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 b -0 ar- r-0 y- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 b -0 ar- r-0 y- n-0 ul-0 g-0 p-0 ct-0 v-0 c-0 n-0 Ap Ma Ju J Au Se O No De Ja Fe M Ap Ma Ju J Au Se O No De Ja Fe M Ap Ma Ju J Au Se O No De Ja
CCI
CCI for the current situation
CCI for the future outlook
200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 SDH. Duplex H. TH&Shop H. Condo New Housing
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
11M-08
48,909
44,877
41,305
23,985
17,469
23,128
24,041
24,973
34,592
44,248
46,643
42,764
38,599
30,165
1,089
791
1,009
196
178
539
227
80
1,144
945
678
965
1,556
2,139
61,944
60,373
43,480
11,895
2,319
2,728
5,062
7,011
12,950
15,418
13,858
17,421
17,837
12,975
66,911
70,575
62,837
30,978
9,063
6,679
4,650
5,118
7,399
8,439
10,893
16,966
16,229
27,871
67,054
29,029
33,074
33,980
37,182
56,085
69,050
72,072
78,116
74,221
73,150
178,853 176,616 148,631
Chart 3 The rising number of new housing registration in Bangkok and Vicinity 1995-the first 11 months of 2008 (classified by type of housing) Source : Real Estate Information Center, the Government Housing Bank
while that of low-rise residences dropped. Earnings of a several large-sized property developers in 2008 were apparently improved, though Thailand at that time was surrounded by many turbulences. This reflects business advantage of large-sized developers in terms of financial stability, ability to adjust business to be in line with change in consumer demand and competition, and higher faith of consumers in them than smaller developers. The trend will be seen clearer in 2009. For supply side in 2008, sales of condominium units declined by 30% following the sharp increase in condominium projects available for sales over the past few years due to the higher construction cost as the weak purchasing power from the fast increase in prices and the economic condition. Supply then rose considerably from new projects and re-sales of a part of projects, construction of which completed. With oversupply, the number of new units to be put on sales in 2009 tend to shrink while competition remains intensified. Besides, development of new condominium projects would be difficult as land prices in Bangkok have been increased. Like condominium, development of townhouse projects would be tougher and its price tends to surpass single-detached houses in outskirt areas. With these factors coupled with the falling oil price, the higher number of single-detached house and townhouse projects located in vicinity would be developed. Development of single-detached house projects targeted at high end customers and located in convenient transportation areas would increase due Property Perfect Public Company Limited
37
90,000
20.0%
90,000 80,000 90,000
20.0% 20.0% 10.0%
13.1%
80,000 70,000 80,000 70,000 60,000 70,000
2.8%
60,000 50,000 60,000
2.8% 2.8%
10.0% 10.0% 0.0%
13.1% 13.1% -16.4%
50,000 40,000 50,000
-16.4% -16.4% -30.0%
40,000 30,000 40,000
-40.5%
10,000 20,000 20,000
-40.5% -40.5%
10,000 10,000 -2007 2008 2007 2007 G% 2008 2008
-10.0% -10.0% -20.0% -20.0% -20.0% -30.0%
-30.0% -30.0%
30,000 20,000 30,000
0.0% 0.0% -10.0%
-30.0% -30.0% -40.0% -40.0% -40.0% -50.0%
SDH
Duplex House
Town House
Condo
Total
11,384 SDH SDH 11,707 11,384 11,384 2.8% 11,707 11,707 2.8% 2.8%
5,634 Duplex DuplexHouse House 3,354 5,634 5,634 -40.5% 3,354 3,354
17,902 Town TownHouse House 20,243 17,902 17,902 13.1% 20,243 20,243
44,750 Condo Condo 31,322 44,750 44,750 -30.0% 31,322 31,322 -30.0% -30.0%
79,670 Total Total 66,626 79,670 79,670 -16.4% 66,626 66,626 -16.4% -16.4%
-50.0% -50.0%
13.1% G% -40.5% 13.1% G% Chart 4 Comparative number of -40.5% newly launched units by category between 2007 and 2008 Source : Agency for Real Estate Affairs
35,000
77.0 75.7 77.0 74.777.0 75.7 75.7 75.2 74.7 74.7 74.8 74.2 75.2 75.2 74.8 74.8 66.8 74.2 74.2 66.3 65.4 66.8 66.8 66.3 66.3 65.4 08 08 0865.4 09
100%
84.5%
35,000 35,000 30,000 30,000 30,000 25,000
100% 100% 80%
84.5% 84.5%
63.6%
80% 80% 60%
63.6% 63.6%
60% 60% 40%
25,000 25,000 20,000 20,000 20,000 15,000 15,000 15,000 10,000
0.5%
40% 40% 20%
-3.3% -3.3%
0.5% 0.5%
20% 20% 0%
-25.4% -44.6%
10,000 10,000 5,000
0% -20%
-25.4% -25.4%
-46.4%
-44.6% -44.6%
5,000 5,000 0 2007 00 2008
0 8 tv- c- nc O N o D e Ja 8 88 8 8 8 9 -0t-0ct-0 -0 v-0 -08c-0 -09n-0 v o c e na c O ONo N De D Ja J
-3.3%
G% 2007 2007 2008 2008
-46.4%
0.500-1.000
1.001-2.000
2.001-3.000
3.001-5.000
5.001-10.000
10.001-20.000
>20.000
16,807
29,878
15,935
13,046
3,347
517
140
9,315 0.500-1.000 0.500-1.000 -45% 16,807 16,807
22,278 1.001-2.000 1.001-2.000 -25% 29,878 29,878
15,410 2.001-3.000 2.001-3.000 -3% 15,935 15,935
13,117 3.001-5.000 3.001-5.000 1% 13,046 13,046
5,477 5.001-10.000 5.001-10.000 64% 3,347 3,347
9,315 9,315 -45% -45%
G% G%
22,278 22,278 -25% -25%
15,410 15,410 -3% -3%
13,117 13,117 1% 1%
954 10.001-20.000 10.001-20.000 85% 517 517
5,477 5,477 64% 64%
954 954 85% 85%
75 >20.000 >20.000 -46% 140 140
-20% -20% -40% -40% -60% -40% -60% -60%
75 75 -46% -46%
Chart 5 Comparative number of newly launched units by price between 2007 and 2008 Source : Agency for Real Estate Affairs
240.0
246.5
246.5 246.5
220.0 240.0 240.0 200.0 220.0 220.0 180.0 200.0 200.0 160.0 180.0 180.0
168.9 168.9 163.8
140.0 160.0 160.0 120.0 140.0 140.0
6
2007
11M-08
64
38,599
30,165
1,556 2,139 2007 11M-08 2007 11M-08 21 64 17,837 38,599 12,975 30,165 38,599 30,165 66 16,229 5 1,556 27,871 2,139 1,556 2,139 16 21 74,221 17,837 73,150 12,975 17,837 12,975 66 16,229 27,871 16,229 27,871 16 74,221 73,150 74,221 73,150
06
100.0 120.0 120.0
100.0
100.0
2000 2000
127.9 124.3 112.7 112.8 127.9 108.2 105.6 106.3 104.8 127.9 106.9 124.3 105.4 124.3 112.7 112.8 105.4 110.5 112.7 112.8 104.9 108.2 106.0 105.6 106.3 106.9 104.8 108.2 103.9 106.3 105.6 94.3 106.9 104.8 110.5 104.9 103.7 105.7 110.5 106.0 2005 99.1 2006 103.7 104.9 105.7 2001 2002 2003 2004 106.0 2007 103.9 94.3 99.1 103.9 94.3 2001 2001
CMI
Cement 2003
CMI CMI
Cement Cement
2002 2002
2003
Iron Productc 2005
Concrete Ingredient 2006 2007
Iron Productc Iron Productc
Concrete Ingredient Concrete Ingredient
2004 2004
Chart 6 Construction Material Price Index on decline Source : The Ministry of Commerce
38
Annual Report 2008
178.1 161.5 178.1
135.2 128.9 161.5 161.5 163.8124.3 163.8 116.5 135.2 115.0 135.2 128.9 110.8 128.9 124.3 124.3 116.5 115.0 116.5 110.8 103.7 115.0 105.7 110.8 99.1
105.4
80.0 100.0 100.0 100.0 2000
80.0 80.0
178.1
168.9
2005
2006
2007
158.4
158.4 158.4 121.7
121.7 121.7 113.2 113.2 113.2 2008
2008 2008
166.8
166.8 166.8 137.5 137.5 117.2 137.5 117.2 112.7 117.2 112.7 112.7
Jan.09
Jan.09 Jan.09
to low supply and buyers gaining the highest tax benefit than other groups. Price competition in market is expected to continue but it tends to alleviate after large-scaled property developers can keep supply at the appropriate level. Developers eventually would shift to compete in design, production quality, cost control to deliver
optimal efficiency, customer demand satisfaction, image creation and selling points of projects as well as image creation of developers to get an edge over rivals and maintain profitability. The falling construction cost trend and the tax incentive would help property developers to deliver relatively high profit margin, though prices could not increase due to weak purchasing power.
Property Perfect Public Company Limited
39
Other Information Financial structure
1. The company’s securities (1) Common shares As of 31 December 2008, the company had Bt 6,552,000,000 in registered capital, or 1,092,000,000 common shares at the par value of Bt6 each. A paid-up capital of Bt 4,726,329,720 or 787,721,620 common shares were paid up. These are changes of registered capital during the past 3 years. Accounting year 2008 2007 2006 2005 Registered capital • Value (Bt) 6,552,000,000 6,213,565,176 6,213,565,176 6,213,565,176 • No. of shares 1,092,000,000 1,035,594,196 1,035,594,196 1,035,594,196 Paid-up capital • Value (Bt) 4,726,329,720 4,724,947,164 4,695,334,290 4,695,210,150 • No. of shares 787,721,620 787,491,194 782,555,715 782,535,025 Note : On 7 April 2005, shareholders annual meeting at the 2005 ordinary meeting approved the registered capital reduction from Bt7,200,000,000 to Bt4,779,565,176, by canceling 403,405,804 unallocated shares of which value stood at Bt2,420,434,824. The new shares were reserved for warrants which were not allocated and reserved for the conversion of unsecured debts. The shareholders also approved the capital increase from Bt4,779,565,176 to Bt5,013,565,176, or by Bt234,000,000 A number of 39,000,000 shares were issued, reserved for the exercise of warrants which would be issued to directors and/or employees under the ESOP program. Shareholders at the Extraordinary General Meeting at 1/2005 on 19 September 2005 approved the capital increase from Bt5,013,565,176 (835,594,196 shares at the par value of Bt6 each) to Bt6,213,565,176 (1,035,594,196 shares at the value of Bt6 each) for the conversion of debentures. The company registered the new capital with the Commerce Ministry on 7 October 2005. As of 31 December 2005, the company’s paid-up capital stood at Bt4,695,210,150 (782,535,025 shares at the par value of Bt6 each) due to the exercise of warrants worth Bt13,047,486 (2,174,581 shares at the par value of Bt6 each) in December 2004 and June 2005. The company registered the new capital with the Commerce Ministry on 12 January and 7 July, respectively. The company’s paid-up capital as of 31 December 2006 was raised by Bt4,695,334,290 (782,555,715 common shares at the par value of Bt6 each) due to the exercise of warrants worth totally Bt124,140 (20,690 common shares at a Bt6par value) in June 2006. The company registered the new paid-up capital with the Commerce Ministry on 7 July 2006. As of 31 December 2007, the company’s paid-up capital was increased to Bt4,724,947,164 (787,491,194 common shares at the par value of Bt6 each) due to the exercise of warrants worth Bt29,612,874 in December 2006 and June 2007 (4,935,479 shares at the par value of Bt6 each). The company registered the new increase with the Commerce Ministry for the exercise of warrants on 11 January 2007 and 11 July 2007, respectively. Shareholders at the Extraordinary General Meeting No. 1/2008 on 20 June 2008 resolved the company’s registered capital decrease to Bt5,589,565,176 (931,594,195 shares at the par value of Bt6) by canceling 104,000,000 unissued shares at the par value of Bt6 with the total amount of Bt 624 million .
Property Perfect Public Company Limited
41
The shares were reserved for the company’s warrants with rights to convert into 39,000,000 ordinary shares and convertible debentures with rights to convert into 65,000,000 ordinary shares and the meeting later resolved to revoke the issuance. The company registered the capital reduction with the Ministry of Commerce on 1 July 2008. The meeting approved the registered capital increase to Bt6,552,000,000 (1,092,000,000 ordinary shares at the par value of Bt6) to reserve for conversion of warrants into common shares as stated in Note to Financial Statements No. 23 (B). The company registered the recapitalization with the Ministry of Commerce on 12 July 2008. As of 31 December 2008, the company’s paid-up capital was raised to Bt4,726,329,720 (787,721,620 ordinary shares at the par value of Bt6). The increase in the registered capital resulted from warrant exercise in December 2007 and June 2008 with the total amount of Bt1,382,556 (230,426 ordinary shares at the par value of Bt6).The company registered the capital increase with the Ministry of Commerce for the exercise of warrant rights on 8 January 2008 and 8 July 2008. (2) Warrants Under the rehabilitation plan, the company must issue warrants to unsecured creditors, at the ratio of Bt1,000 of debt for 7 free warrants. Each warrant can be exercised for 1 common share, at the price of Bt0.01. The Securities and Exchange Commission approved the issuance of 53 million warrants, of which maturity is 10 years from 7 November 2002. The exercise period was set at the last day of Quarter 2 and Quarter 4 of each year, starting from the fourth quarter of 2002. The outstanding unconverted warrants as of 31 December 2007 numbered 8,909,176 units, 36,600 units of which were exercised in 2008. The outstanding unconverted warrants as of 31 December 2008 then were 8,872,576 units. In December 2007 and June 2008, the company received advance for the exercise of warrants into 230,426 common shares at a price of Bt0.01 totally Bt2,304. The company registered the capital increase from the warrant exercise with the amount of Bt1,382,556 with the Ministry of Commerce on 8 January 2009 and 8 July 2009 and its discount on shares then increased to Bt44,093,444. On 20 June 2008, Shareholders at the Extraordinary General Meeting No. 1/2008 approved to cancel 39,000,000 units of warrants planned to issue to the company’s board and/or staff (Employee Stock Option Program). (3.) Debentures As of 31 December 2008, outstanding debentures are as follows; (Unit: Thousand Baht) 2008 2/2004 secured debentures, set 3 - 1/2006 secured debentures 450,000 Total 450,000 Less : debentures with maturity within 1 year (450,000)* Debentures – Net of debentures with maturity within 1 year - *Full amount paid on redemption date on 8 February 2008
42
Annual Report 2008
(4. ) Unsubordinated convertible debentures 1/2005 Issue Issue date : 25 November 2005 Type : unsecured holder-bearing convertible debentures, without trustee Offered to : Foreign institutions through a private placement, in US dollar, fully hedged at all cost by investors No. of units: : 200,000 Price : US$100 Maturity : 5 years from issue date (25 November 2005) Interest rate : fixed 3.50% Coupon rate payment : on 25 February, 25 May, 25 August and 25 November every year until maturity. The first interest payment was made on 25 February Principal payment: Principal payment : The unconverted debentures will be redeemed in US dollar, with 31.60% premium from the issue price. The redemption is fixed with the foreign exchange rate as of the issuance date. Conversion price : Bt6.25 Conversion period : 18 months after offering, until the redemption date with the minimum conversion of US$1 million Conversion conditions : The company withholds the right to call holders to convert 1 third of the original number of debentures when 1. Over 10 million shares are traded on average during the 45 days before the company would exercise the right, and 2. The company’s average share closing price during the 60-day period and the closing of the 5 days before the company would exercise the right accounts for - 130% of conversion price in Year 1-2 - 150% of conversion price in Year 3 - 175% of conversion price in Year 4-5 Then, the company can ask the bearers to convert one third of the original number of debentures under these conditions. 1. The bearers who were forced to convert the debentures sold out all the common shares, or 2. The company can exercise the right again at least 60 days after the first right exercise. Under this condition, the number of shares traded and the average share closing must fit the earlier conditions. Bearers’ conditions : The company would hold a meeting to appoint an individual, nominated by any foreign institutional investor who bought and paid US$20 million upwards for the debentures, a director. The company recorded the provisions for debentures, which are not converted over the life of debenture (Note to Financial Statement No. 25)
Property Perfect Public Company Limited
43
2.
Major shareholders The first 10 largest shareholders as of 31 December 2007 are; Rank Name No. of shares % 1 Thailand Securities Depository Co., Ltd. For Depositor 496,593,489 63.04 84,776,944 10.76 2 Japan Asia Group Co., Ltd./1 3 Thailand Securities Depository Co., Ltd. For Depositor 46,898,002 5.95 /2 45,910,827 5.83 4 MJL Intertrade Co., Ltd. 37,018,928 4.70 5 Natee International Law Office Co.,Ltd./3 6 Japan Asia Group Limited 12,467,224 1.58 7 Mr.Pramote Rermyindee 11,385,000 1.45 8 Ms.Sumalee Wangprakorbsuk 11,385,000 1.45 9 Mr. Vidhya Netivivat 10,580,000 1.34 10 Krungthep Land Plc. 9,200,000 1.17 Data from Thailand Securities Depository Co,. Ltd. Note : /1 Japan Asia Group Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. /2 MJL Intertrade Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. /3 Natee International Law Office became a shareholder as it, as the lawyer of a creditor in the rehabilitation plan who converted debts to equity Foreign shareholders who hold the company’s shares through Thai NVDR Co., Ltd. are entitled to the same returns as other shareholders, but not the voting right (except in the voting to revoke the company’s listing status in the Stock Exchange of Thailand). To trace the number of shares issued in the form of NVDR, investors should check the SET’s website, www.set.or.th.
Holdings by nationalities as of 31 December 2008 Corporate Individuals Shareholders No. Shares % No. Shares % No. Shares % Thai 229 620,974,296 78.84 14 572,033,687 72.62 215 48,940,609 6.22 Foreign 8 166,710,724 21.16 3 165,162,920 20.97 5 1,547,804 0.19 Total 237 787,685,020 100.00 17 737,196,607 93.59 220 50,488,413 6.41 Note: from Thailand Securities Depository Co., Ltd. 3. Dividend policy of the company and subsidiaries Meeting of the company’s Board of Director No. 5/2008 resolved to amend the company’s dividend payout ratio from at 50% of net profit after deducting corporate income tax and the dividend payment was subject to shareholders’ meeting to not less than 50%of net unconsolidated profit after deducting legal reserve.
44
Annual Report 2008
Financial position, liquidity, business expansion and other factors related to the company’s management are also taken into dividend payment consideration. The amendment came after the company changed record method of investment in subsidiaries from cost to equity method. The company’s subsidiaries have dividend payout policy of at least 50% of unconsolidated net profit after deducting legal reserve. Besides, financial position, liquidity, business expansion and other factors related to the company’s management are also taken into dividend payment consideration. .
Property Perfect Public Company Limited
45
Management and Authorized Person of the Company Name - Tltle
Age
1 Dr.Tawatchai Nakhata Chairman Chief Executive Director Chairman of the remuneration committee Authorized signatory directors
62
Acedemic Qualifications
Equity Holding
Career experience within the pass 5 years Relationship
• Ph.D. University of Illinois 0.00096 % • Audit Committee Program (ACP) 13/2006 ; Director Accreditation Program (DAP) 52/2006 ; Thai Institute of Directors; IOD
Timing
• Bachelor of Laws Chulalongkorn University • Thai Barrister-at-Law Thai Bar Association
3 Mr.Virayuk Puntupetch 63 Director / Independent Director / Chairman of the Audit Committee
• • • • •
0.850%
46
Annual Report 2008
Master of Science Bachelor of Arts (Political Science), Certificate in Financial Policy Analysis Program International Monetary Fund, Washington DC, USA. Certificate in Stock Market Development Program Securities and Exchange Commission, Washington DC, USA Certificate in Executive Program, Harvard University, USA .
Company / Business Type
1992 - Present 2006 - Present 1995 - Present 1995 - Present 1984 - 1995 1978 - 1984
Chairman /Chief Executive Director / / Chairman of the remuneration / committee Chairman Managing Director Fellow Member Consultant Engineer/ Managing Director Head of Construction Resource Section
Property Perfect Public Company Limited Ceda Co., Ltd. Ceda Co., Ltd. The Engineering Institute of Thailand Ceda Co., Ltd. Public Works Department, Ministry of the Interior
1985 - Present 2002 – Present 1999 – Present 1995- Present
Chief Executive Officer / Deputy Chief Executive Director Director Director Director
Property Perfect Public Company Limited Krungthep Land Public Company Limited / Real Estate Estate Perfect Company Limited / Real Estate Thai Property Public Company Limited / Real Estate (Formerly known as “Rattana Real Estate Public Company Limited”)
2007-Present Present 2005-2006 2004 2000-2004 1998--2000 1996-1998 1994-1998 1994 1989 1986 1979-1980 1972
Director / Independent Director / Chairman Audit Committee Retired Government Officer Advisor to the Prime Minister Head of advisor to the Prime Minister Inspectors-General / Director Deputy Director / Director Director Specialist Expert for Debt Management Director Director Director Assistant to Country Executive Director of SEA Group Second-class specialist/ Division Chief
Property Perfect Public Company Limited The Secretariat of the Prime Minister Office government officials in charge of international trade affairs The office of Thai Trade Representative Office of the Civil Service Commission Ministry of Finance / Vayupak Fund Fiscal Policy Office / Office of General Administration for 33rd Annual Meeting of the Board of Governors of Asian Development Bank Office of the Neighboring Countries Economic Development Cooperation Fund Fiscal Policy Office Saving & Investment Policy Division, Fiscal Policy Office Capital Market Development Policy Division, Fiscal Policy Office Financial and Financial Institution Policy Division, Fiscal Policy Office World Bank Washington DC, USA. Bureau of Tax Policy, the Fiscal Policy Office
2 Mr.Chainid Ngow-Sirimanee 55 Chief Executive Officer/ Deputy Chief Executive Director Authorized signatory directors
Designation
Name - Tltle
4 Mr. Somsak Toruksa Director Independent Director Audit Committee Selection committee
58
5 Mr. Vidhya Nativivat Non Executive Director Selection committee Remuneration committee
55
6 Mr. David Bryce Van Oppen Non Executive Director
43
7 Dr. Thamnoon 51 Ananthothai Director Independent Director Audit Committee /Chairman of Selection committee / Remuneration committee
Acedemic Qualifications
Age
Equity Holding
Career experience within the pass 5 years Relationship
Timing
Company / Business Type
Designation
• Master of Laws 0.0000 % Ramkhamhaeng University • Audit Committee Program (ACP) 13/2006 ; Director Accreditation Program (DAP) 52/2006 ; Thai Institute of Directors(IOD)
1998-Present 1993 - Present
• • •
Master of Laws The George Washington University, USA Bachelor of Laws Thammasat University Director Accreditation program(DAP)77/2005; Thai Institute of Directors(IOD)
1.352 %
2004-Present 1986 - Present
Non Executive Director / Selection committee and Remuneration committee Managing Director
Property Perfect Public Company Limited Bunchong and Vidhya Law Office Co., Ltd./ Law
• •
M.A. International Economics and Asian Studies The Johns Hopkins University, U.S.A., Bachelor Degree in Arts (International Relations), Pomona College, U.S.A.
0.000 %
2007-Present 1998-Present 1995-1998 1993-1995 1988-1991
Non Executive Director Director Chairman / Investment Manager Senior Financial Analyst Manager
Property Perfect Public Company Limited General Enterprise Management Services Ltd., Hong Kong Lazard Asia Ltd., HongKong Lazard Asia Investment Management Ltd., HongKong. Smith Barney, Inc., Hong Kong. Sunmar Shipping, Inc., U.S.A.
• • • • • • • •
Ph.D., International 0.000 % Management, Walden University, Naples, Florida USA. A.C.A. Certificate, American Accreditation Council for Accountancy, USA. M.B.A., Management, The University of Sarasota-Sarasota, Florida, USA. B.A., Accountancy & Management, Eckerd College-St. Petersburg, USA. Audit Committee Program(ACP) 10/2005, Director Accreditation Program(DAP) 48/2005, Director Certification Program (RCP) 14/2006, Understanding the Fundamental of Financial Statement (UFS) 7/2007; Thai Institute of Directors
2005-Present 2008-Present 2007-Present 2007-Present 2006-Present 2005-Present 2004-Present 2001-Present 2001-Present 1997-Present 2002-2003 1998-2002
Director / Independent Director Audit Committee / Chairman of Selection committee / Remuneration committee Director / Audit Committee Vice Chairman / Chairman of the Audit Committee Director / Chairman of the Audit Committee Director / Chairman of the Audit Committee Director / Audit Committee Executive Director Executive Board Member / Sub-Committee Member Committee of the Investment Management / Sub-Committee Director in Economic Sector Committee Dean of College of Business Administration Managing Director/ Chief Executive Officer
Property Perfect Public Company Limited Bangkok University , Bangkok, Thailand Better World Green Public Company Limited IFS-Capital (Thailand) Public Company Limited Eastern Printing Public Company Limited Ua WIthaya Public Company Limited Merchant Partners Securities Limited Clearing House of The Agricultural FuturesExchange of Thailand The National Social Security Fund. The Federation of Thai Industries. Dhurakij Pundit University / University DBS Thai Danu Securities Limited / Securities
Director / Independent Director Audit Committee / Selection Committee Managing Director
Property Perfect Public Company Limited Somsak Toruksa Law Office Co., Ltd./ Law
Property Perfect Public Company Limited
47
Name - Tltle
Acedemic Qualifications
Age
Equity Holding
Career experience within the pass 5 years Relationship
Designation
Company / Business Type
8 Mr. Phairat Senachack 60 Director Executive Director Assistant Chief Operating Officer Authorized signatory directors
• • • •
Mini MBA Thammasat University Bachelor of Business Administration Assumption University Director Certification Program (DCP)74/2006, Director Accreditation Program (DAP)30/2004; Thai Institute of Directors(IOD)
9 Dr.Theerachon Manomaiphibul Director Executive Director Chief Operating Officer
47
• • •
Ph.D. Engineering The Ohio 0.019 % State University, USA Director Certification Program (DCP) 74/2006, Director Accreditation Program(DAP) 30/2004 ; Thai Institute of Directors (IOD)
2002 – Present 2000 – 2002 2000 – 2002 2000 – 2002 2000 – 2002
Director / Executive Director / Chief Operating Officer Executive Director Managing Director Managing Director Managing Director
Property Perfect Public Company Limited Bangkok Rubber Public Company Limited / Footwear Manufacturer Saharattananakorn Co., Ltd / Industrial Estate Jaruphon Patana Co.,Ltd. / Entertainment Maikiew Chabadaeng Co.,Ltd. / Entertainment
10 Ms Sirirat 48 Wongwattana Director/ Asst. Chief Business Development officer Executive Director& Secretary of Executive Director committee Authorized signatory directors
• •
M.A. of Science- Finance , 0.000 % university of Houston – Clear lake, Texas , USA. B.A. of Science , Economics& Business Administration- Finance, Kasetsart University
2003-Present 2000-2003 1999-2000 1998-1999 Aug.-Oct.1998 Jan.-Feb.1998 1992-1997 1992-1997
Director/ Asst. Chief Business Development officer Executive Director& Secretary of Executive Director committee Head of Research Sub- Marketing Director Asst. Vice President Special Manager Contact Consultant Senior Vice President Senior Manager
Property Perfect Public Company Limited Research Dept. / BFIT Securities Limited / Securities Marketing Dept./ BOA Asset Management company limited Provident Fund Management Dept./ BOA Plc. Thanasin Finance company limited Sinn Bua Lung Plc. Research and development Department / SCF Finance and Securities Plc. Securities Analysis Dept./ National Finance and Securities Plc.
51 • B.A.Business Administration 0.000 % National University of Singapore
2008-Present 2007-Present 2004-2007 2003-2004 1998-2003 1989-1998
Non Executive Director Financial & Management Consultancy Managing Director Executive Director Group Vice Chairman / President Executive Director Chief Executive Officer
Property Perfect Public Company Limited East Alliance Assets Limited (“EAAL”) Depfa Investment Bank Ltd., Standard Bank Group and the Group Subsidiary Standard Bank Asia Ltd., TCC Group of companies London Forfaiting Company PLC (“LFC”) LFC’s Asian operation
0.000 %
Timing
11 Mr.Ooi Bun Aun Non Executive Director
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Annual Report 2008
1996 - Present
Director / Executive Director Property Perfect Public Company Assistant Chief Operating Limited Officer
Name - Tltle
Equity Holding
Acedemic Qualifications
Age
Career experience within the pass 5 years Relationship
Timing
Designation
Company / Business Type
12 Mr. Vichai Singvicha Executive Director Chief Business Development Officer
54
• • • •
MBA Kasetsat University 0.026 % Bachelor of Laws Chulalongkorn University Direct Certificate Program (DCP) 74/2006, Direct Accreditation Program (DAP) 54/2006 ; Thai Institute of Directors(IOD)
1988 – Present
Chief Business Development Property Perfect Public Company Officer Limited
13 Mrs. Wanida Waiyawajamai Deputy Chief Operating Officer
55
• •
Bachelor of Accountancy 0.026 % Chulalongkorn University Director Accreditation Program (DAP) 50/2006 ; Thai Institute of Directors (IOD)
1988 – Present 1985 – 1988
Deputy Chief Operating Officer Chief of Accounting Division / Internal Audit and Planning Manager
Property Perfect Public Company Limited Dhananan Finance and Securities Co., Ltd./ Finance
14 Mr. Pramote Rermyinde 55 Company Secretary
• • • • •
Bachelor of Laws 1.454 % Chulalongkorn University Thai Barrister-at-Law Graduate Diploma in Business Law Thammasat University Director Certification Program(DCP) 69/2006 Director Accreditation Program (DAP) 43/2005 Finance for Non-Finance Director ; Thai Institute of Directors (IOD)
1998 – Present 1992 – Present 1994 – 1997 1993
Company Secretary Management Partnership Executive Director Executive Director
Property Perfect Public Company Limited Thammatit Law Office Group of Persons/ Law Supthamrong Finance House Co., Ltd./ Finance Credit Fancier Srinakorn Co.,Ltd. / Finance
15 Ms. Supee Reodacha Asst. Chief Financial Officer Risk Management Director
50
16 Mr.Surasak Vacharapongpreecha Accounting Division Director / Risk Management Director
45
• MBA Roosevelt University, USA
0.000 %
2002 – Present 1996 – 2000
Asst. Chief Financial Officer Risk Management Director Business Development Manager
Property Perfect Public Company Limited Chai Talay Co.,Ltd / Hotel
• • •
0.126 %
1993 - Present
Division Director / Risk Management Director Assistant Director, Estate Perfect Project Senior Manager, Financial Management Dept., Treasury Division Senior Manager, Financial Management Dept., Accounting Division
Property Perfect Public Company Limited
MBA Thammasat University Bachelor of Accountancy Thammasat University Certified Public Accountant
Note - No.1 Dr.Tawatchai Nakhata - No.10 Miss Sirirat Wongwattana - No.11 Mr.Ooi Bun Aun - No.14 Mr. Pramote Rermyinde
Appointed as Chairman of Executive Board on 14 May 2008 Appointed as an Executive Director and the secretary of Executive Board in accordance with a resolution of the Annual General Meeting of Shareholders on 30 April 2008 Appointed as an Executive Director and the Secretary of Executive Board on 14 May 2008 Appointed as a resolution of the Annual General Meeting of Shareholders on 30 April 2008 Appointed as the company secretary in accordance with a resolution of the Meeting of Executive Board on 11 August 2008
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Details of directors Executive directors and directors of Property Perfect Plc., subsidiary company and affiliates as of 31 December 2008 Name Company Subsidiary Company
PF
PSS
ESTPF
Bright
Center Point
Associated Other Company KL
REAL
1. Dr.Tawatchai Nakhata X, XX 2. Mr.Chainid Ngow-Sirimanee /, // / / / / / 3. Mr.Virayuk Puntupetch *, / 4. Dr.Theerachon Manomaiphibul /, // / 5. Mr.Phairat Senachack /, // 6. Mr.Somsak Toruksa *, / 7. Dr.Thamnoon Ananthothai *, / 8. Mr.Vidhya Nativivat / 9. Mr.David Bryce Van Oppen / 10. Ms.Sirirat Wongwattana /, // 11. Mr.Ooi Boon Aun / 12. Mr.Pramote Rermyindee @ / 13. Ms.Rassamee Metavikul / 14. Ms.Sureeporn Pipatwattanapong / 15. Mr.Tongchai Peyasantiwong / 16. Mrs.Tanida Surathamrong / 17. Ms.Kanyarat Kritsanatevint / 18. Dr.Bhichit Rattakul X 19. Mrs.Uraiwan Bhatarakarnt /, // 20. Mr.Thongchai Kunakornporamut /, // 21. Ms.Wilawan Leongnarktongdee /, // 22. Mr.Prasong Wararattakul *, / 23. Mr.Keangkai Jiwanant / 24..Mr.Seang Fuke Seng / 25. Mr.Goh Yong Chian / 26. Mr.Lim EE Seng / 27. Mr.Chan Kin Fai / 28. Mr.Attapong Pornthiti / 29. Mrs.Unchalee Chawanitch / 30. Mr.Purit Prapawadee / 31. Mr.Chainarong Ngernsopha /
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Annual Report 2008
Remark : 1. 2. 3..
PF PSS ESTPF KL REAL Bright Center Point
= = = = = = =
Property Perfect Public Company Limited Perfect Satellite Services Company Limited Estate Perfect Company Limited Krungthep Land Public Company Limited Real Service Company Limited Bright Development Bangkok Company Limited Center Point Shopping Mall Company Limited
X XX * / // @
= Chairman & Chief Executive Director = Deputy Chief Executive Director = Independent Director = Director = Executive Director = Company Secretary
REAL cease operations
Property Perfect Public Company Limited
51
Executives’ remuneration Cash remuneration The company in 2008 paid remuneration in way of meeting allowances to 11 directors with a combined amount of Bt2,700,000, 3 Audit Committees paid Bt710,000, 2 Remuneration Committees paid Bt90,000 and pension at Bt10,000,000. (Note: Aside from meeting allowances, directors are received salaries as executives and executive directors). Remuneration in forms of meeting allowances and pension of the company’s board. Remuneration Committee and Audit Committee in 2008. 2007 Name Audit Committee Board of Remuneration Pension Total Directors Directors Number Amount Number Amount Number Amount Amount Number Amount of of of of Meeting Meeting Meeting Meeting
Dr.Tawatchai Mr. Somsak Dr.Thamnoon Mr.Chainid Mrs.Wanida Mr.Vichai Dr.Theerachon Mrs.Paneepan Mr.Phairat Mr.Pramote Mr.Vidhya Mr.Virayuk Miss Sirirat Mr.David Mr. Ooi Note :
52
Nakhata** 5 500,000 1 50,000 937,500 6 1,487,500 Toruksa* 8 180,000 5 250,000 937,500 13 1,367,500 Ananthothai *,** 8 180,000 5 250,000 1 20,000 937,500 14 1,387,500 Ngow-Sirimanee 5 250,000 937,500 5 1,187,500 Waiyawajamai *** 729,167 729,167 Singvicha*** 729,167 729,167 Manomaiphibul 5 250,000 937,500 5 1,187,500 Tisapong*** 520,833 520,833 Senachak 5 250,000 937,500 5 1,187,500 Rermyindee**** 312,500 312,500 Nativivat** 5 250,000 1 20,000 937,500 6 1,207,500 Puntupetch* 8 350,000 5 250,000 625,000 13 1,225,000 Wongwattana # 3 150,000 3 150,000 Bryce Van Oppen 3 150,000 520,833 3 670,833 Boon Aun 3 150,000 3 150,000 Total 710,000 2,700,000 90,000 10,000,000 13,500,000
* ** *** **** #
Annual Report 2008
Audit Committee, Independent Director Remuneration and Human Resources Committee Resigned directors Retired by rotation and not seek re-election Appointed in accordance with a resolution approved in shareholders’ meeting on 30 April 2008
The remunerations for the executive board and executives, comprising 10 persons, totaled Bt 39.59 million in 2008. Details are as follows: No. of persons Amount (Bt million) Salary 10 29.29 Others 10 10.30 Total 10 39.59 Expenses on employees in 2008 are: Types of expenses Amount (Bt million) Salary 237.05 Others 68.20 Total 305.25 The number of employees as of 31 December 2008 totaled 481 persons. Executives 10 persons Back office 218 persons Marketing and project management 253 persons Total 481 persons
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Corporate governance The company has regarded corporate governance as an essential system to practice transparently, sharpen competitiveness, add long-term value to shareholders under ethics, and raise the company concern about other stakeholders and the overall society. The company has pursued the 5 good corporate governance principles set by the Stock Exchange of Thailand. Details are as follows : 1. Shareholders rights • Shareholders’ meeting arrangement , The company will convene the meeting at place located in convenient transportation areas to provide shareholders with an easy to access. Before every shareholders’ meeting, shareholders will receive invitation to the meeting together with agendas at least 14 days in advance of the meeting date. Each agenda is accompanied by the opinions of the Board of Directors to allow shareholders to have on time and sufficient information in making decisions for casting vote in the meeting. Moreover, the company disseminates information about shareholders’ meeting schedule and agendas through the company’s website 30 days ahead of the meeting to open up opportunity for shareholders or investors to send questions before the meeting date. Rights to attend the meeting, The company’s Board of Directors fully facilitates convenience to shareholders in attending the meeting and voting, refrains from doing any action that limits opportunity of shareholders in attending the meeting, and open up opportunity for shareholders to raise questions and express opinions in the meeting independently. Voting form will be available at every agenda of the meeting. The company, election of director agenda in particular, will allow shareholders to cast vote for each nominated person. To provide convenience to shareholders and to be fast, the company adopts Barcode system for shareholders’ registration and/or vote count. After the meeting date, the company will inform the meeting’s resolutions and prepare important minutes of meeting to allow shareholders to examine later. The meeting report will be disseminated to shareholders at the appropriate time and the company will report resolutions of the shareholders’ meeting via the SET’s news system on the following day as the latest. Information must contain name of directors and executives who attend the meeting, resolution, voting result for each agenda, and record issues that shareholders raise questions and summarize the company’s clarification. The minutes of meeting will be reported to the SET and publicised on the company’s website within 14 days after the meeting date. In 2009, shareholders receive invitation to the meeting and agendas at least 14 days before the meeting. Besides, the company reported the shareholders’ meeting schedule and agendas to the SET President and Board of Governors on 30 April 2009 as appeared in the company’s news on the SET’s and the company’s website 30 days ahead of the meeting to open up opportunity for shareholders or investors to contact the company. 2. Equitable treatment to shareholders • All shareholders are eligible to attend the meeting and vote equally under the company’s provisions. The company has offered an alternative for shareholders by preparing proxy forms to authorise other people or independent director to attend the shareholders’ meeting on behalf of shareholders who could not attend. These shareholders can state which agendas they would like to vote support or against and grant the proxy to vote at their desire. The minutes of the meeting are recorded accurately and completely to allow shareholders to examine. • The company has policy to hold meeting transparently and give equal opportunity and adequate time to all shareholders to express opinions and raise questions in the meeting. The company’s directors including independent directors and related executives are required to attend the shareholders’ meeting to answer questions in the meeting. In addition, the company records the important questions and suggestions in the minutes of the meeting to allow shareholders to examine later.
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Annual Report 2008
• Shareholders who also serve as executives must not add agendas, particularly in important ones that shareholders need time to study information before making any decision, without inform in advance. • The company sets policies and procedures in approval of transactions which might have conflict of interests or connected transactions to be compliance with the SET’s announcement governing connected transactions strictly to offer equal benefits to shareholders. Moreover, the Audit Committee has duty to report the Board of Directors to acknowledge connected and conflict of interest transactions, which are considered prudently as appropriate, and comply with the SET’s principles. 3. Stakeholders’ role The company is aware of the importance of the rights of stakeholders including customers, competitors, creditors, product distributors or contractors, community and society, state agencies, and the company’s staff. The company has strived to implement policy to create fairness and appropriateness with all groups of stakeholders as follows : Shareholders The company is concerned about transparency in important information disclosure to all shareholders accurately, completely and timely through channels including the SET’s electronic media, the company’s website, announcement in newspapers, press releases and written notices. Customers The company has determined to not only quality construction but also code of conducts by taking care and responsible for customers, offering quality and standard services, and solving customer complaints or providing advices as the earliest. The company’s staff The company has appointed the remuneration committee to perform duties in considering proper salary to employees and preparing manual for all staff to inform them about welfare policies clearly with respect to their interests, establishing provident funds, and promoting them with appropriate procedure to create fairness for all parties. Creditors Product distributors - The company has a clear period for placing invoice and check payment after handing over/ inspecting works, informs contractors before they are hired and proceed payment to be in line with regulations strictly to ensure confidence of creditors. Contractors - The company has a criteria for contractor selection to have efficient contractors and offer them equal opportunity. The company has set fair price as the reference. Even though prices of some items are greater than agreed prices, the company can maintain the average price on par with the market price. Occasionally, the company has taken degree of difficulty of working condition into account for pricing and authorised each hiring sub-committee to consider the matter properly based on objectives and success in transparent procurement. To ensure contractors’ confidence and let them growth along with the company, the company has stated the clear construction progress and fair construction payment installment, inspection, and invoice placing in agreements with contractors for equal treatment, and set payment period in compliance with the company’s regulations.
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Competitors The company has adhered to good competition rules and avoided dishonest practices to destroy competitors. Society and environment The company is aware of quality of life and living in society, Thai culture, and environment as substantial matters for the company’s land development. Designs for all projects not only comply with the Land Appropriation Act and regulations of related agencies but also are concerned about living quality in society after the project development. This fact is highlighted from greater space for the public areas than required by law to make project perfect with lush trees, place of exercise, and sport field for residents. To take responsibility for society, the company participated in activities to enhance local development by paving tar (partly) on Prachauthit Road to allow better flow of traffic in the community, granting scholarship to students, building bus shelters to communities and jointly holding activities related to donations of stationery, sport equipment and others to students in provincial areas. The company has determined to public service activities and participated in these activities as deemed as appropriate. 4. Information disclosure and transparency • The company has paid attention to disclosure of information which might effect investors’ and stakeholders’ decision making about accuracy, transparency, reliably, timely and thoroughly. Such information includes financial data, annual report (form 56-1), filing, and general and important information. The company discloses information to investors, analysts and interested persons through the SET’s channels for disseminating information www.set.or.th and the Securities and Exchange Commission (SEC)’s website www.sec.or.th as required by the SEC. In addition, information publicised is available at the company’s website www.pf.co.th always updated to allow users to receive up-to-date information and the optimal benefits, and conveniently access information. The company established an Investor Relations Office to take responsible in publicizing the company’s information and providing information services. Please contact Mr. Santirak Bullayalert by telephone at 0-2247-7500, by fax at 0-2247-7399, by e-mail at santirak@pf.co.th or through website http://www.pf.co.th/ir. • The company’s Board of Directors and management have so far prudently considered avoiding conflict of interests with integrity, reasonably and independently under ethical framework mainly for the sakes of the company’s interests. The company requires those who have been authroized, on duty and taken responsibility refrain from approving any transactions that themselves might have conflict of interests or interests. • The company has pursued the Stock Exchange of Thailand’s rules and regulations governing connected transactions or acquisition and disposal of assets of listed companies, whichever is the case. Besides the company has set policies and guidelines to prohibit executives and related persons from using inside information for their own interests. • The company has regarded an importance of efficient internal control system for both executives and operational levels. Practices of operational staff and executives are determined and clearly written. The company has set up an internal audit office to exclusively take responsible for efficient operational examination. The internal audit reports the result directly to the Audit Committee. • The company already informed scope of authority and responsibility of Board of Directors and subcommittees in heading management and disclosed remuneration policy for directors in heading remuneration of directors and management.
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Annual Report 2008
5. Board of Director’s Responsibility Board of directors’ structure • The company has required at least 3 independent directors in the Board of directors. At present, the company’s Board of Directors contains 11 experienced, knowledgeable and competent members as follows : - Executive director 5 persons - Non-executive director 3 persons - Independent director 3 persons Note : As of 19 January 2009, executive directors numbered 4 and independent directors were 4 as some executive directors resigned and the company’s Board of Directors resolved an appointment of new directors and independent directors to fill the vacant seats. • Chairman and chief executive officer is not the same person to separate authority in setting supervisory policy from regular management. • Each director has fully freedom to express opinions. The company has regarded an importance of independent directors’ opinions. In case that they have suggestions or disagree with any matter, the issue must be reviewed to find out the clear and transparent conclusion. • The company has set independent director’s qualifications in compatible with the minimum requirements by the SEC or the SET as follows 1. Holding shares not exceeding 1% of the entire voting rights of the company, associates, or being persons who might have any conflict of interests (related persons under article 258 of the securities law inclusive) 2. No participation in the management of the company, He or she shall not be an employee, a staff member or an advisor who receives a regular salary, or any person having control over the company and associates or might any conflict. He or she shall not have any interests or vested interest in such manner. 3. No business relationship, interests or vested interests, direct or indirectly, in terms of financial and management of the company, affiliates, associates, or persons who might have conflict in characteristic that they might not be independent. 4. Not being relative of management or major shareholders of the company, affiliates, associates or persons who might have conflict, and not being appointed as representative to protect interests of directors and major shareholders. Subcommittees The company has appointed subcommittees to assist the company’s supervision and increase efficiency in operation. Five subcommittees, which have clear scope of duty, comprise 1. Audit Committee 2. Executive Board 3. Director Selection Committee 4. Remuneration and Human Resources 5. Risk Management Committee To comply with good corporate governance, each subcommittee is committed to perform duty transparently. Board of Directors’ role authority and responsibility • The company’s Board of Directors has taken part in determine vision, mission, strategy, business goal and the company’s budget to authorize management to follow specified policy and plan efficiently and effectively.
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•
The company’s Board of Directors has specified corporate governance policy and reviewed it at least once a year.
• To encourage good corporate governance, the company has set Code of Conduct to be practical guidelines for employees. • The company’s Board of Directors has determined measure to eliminate conflict of interests by appointing subcommittees to clearly separate authority. The Board of Directors has set policies, rules, and procedures for approval of transaction which might have conflict of interests to be guidelines for management, staff and related persons to follow. The guidelines include transaction approval criteria, connected transactions, use of inside information and information disclosure. • The company’s Board of Directors has required management to evaluation the company’s risk, set preventive measures and risk management, and regularly report to the Board of Directors. This includes risk that have influences over the company’s operation as stated in part 2 in risk factors.
Board of Directors meeting The Board of Directors has scheduled to hold meeting on quarterly basis or as required by Chairman to consider quarterly operating performance and monitor progress of the operation. Chairman and Chief Executive Officer jointly considered important matters included as minutes in the meeting. Each director was independent to propose agendas in the meeting. Board of Directors’ self assessment Executive directors conduct a quarterly evaluation to assess performance in part of their responsibility and the performance evaluation is presented to the company’s Board of Directors to compare with performance in the past. Remuneration The company has appointed the Remuneration and Human Resource Committee to consider remuneration principles and policies for Chief Executive Officer, directors and advisors and determine bonus, salary adjustment annually and during the year, and other benefits to staff in each level. Remuneration determination is based on experience, duty and scope of responsibility, and compare with other companies in the same industry (see details in heading remuneration of directors and management). Directors and Management improvement The company is concerned about the importance of Directors and Management improvement for management succession in the future. The company is aware of the importance of human resources in management level by organizing training “Real Estate Business Management”, contents of which include real estate knowledge, law, finance, accounting and good corporate governance to prepare the company’s high-level executives for being directors in the future. For the company’s directors, they participated in trainings held by Thai Institute of Directors and aimed to develop and support directors to take practices of good corporate governance in organization. Surveillance on use of inside information The company has policy to prohibit directors and management from directly and indirectly using inside information for their own benefits. Directors, management and employees who learn about the company’s financial information must not exploit the information one month before announcement of such information to the public. The company informs directors, management and staff mentioned above to avoid trading the company’s securities before the financial statements are disclosed to the public. It also explains directors and management about duties in reporting their holding and change in holding in the company’s securities to the SEC as stipulated in article 59 and punishment in article 275 of the Securities and Exchange Act B.E 2535. The company has also stipulated discipline penalty for the company’s staff who breach the company’s rules and regulations or announcement as stated in rules and regulations governing staff’s operating practices.
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Annual Report 2008
Human Resources Number of staffs The company’s employees are classified by business line as follows Department Number of staffs Number of staffs 31-Dec-07 31-Dec-08 1 Directors and Consultant 9 10 2 Office of the Chief Executive Officer 10 11 3 Project Planning Division 19 16 4 Design & project Development Division 16 17 5 Construction Management Division 15 15 6 Product Development & Quality Control Division 6 9 7 Advertising Division 12 13 8 Public Relations Division 6 5 9 Accounting Division 11 14 10 Internal Audit 3 3 11 Legal Procedure & Ownership Transfer Division 43 45 12 Sales Management Division 1 7 13 Finance & Treasury Division 14 16 14 Budgeting Office 5 5 15 Investor Relation & Information System Division 9 8 16 Product Development & Quality Control Division 0 1 17 Research & Business Development Division 3 5 18 Human Resources Division 6 6 19 General Administration Division 21 21 20 Customer Service Division 12 20 21 Project Management Division Zone 1 - 5 217 234 Total 438 481 The company over the past 3 years did not have any legal case about labor dispute. Remuneration of staffs Total remuneration of the company’s staffs (excluding management) comprises salary, bonus, welfare, allowances and provident fund contribution totally Bt253.41 million and Bt305.25 million in 2007 and 2008, respectively. Human resource development policy The company is concerned about the importance of human resource development, so human resource development policy is a commitment of the company to pay attention on human resources. Guidelines for knowledge management in organisation are available to enhance and reinforce competency development of employees to allow them perform efficiently to pave the way for creating the company’s product quality later.
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Reference Rehabilitation Plan Administrator Auditors Legal Advisor Share Registrar
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Annual Report 2008
Asian International Planners Limited 195 Empire Tower, 19th Floor, South Sathorn Rd., Kwaeng Yannawa, Sathorn, Bangkok 10120 Tel. 0-2670-1144 Fax. 0-2670-1152 Mr.Narong Puntawong Mr.Sophon Permsirivallop Mr.Supachai Phanyawattano MissSiriporn Aueanankul Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road, Bangkok 10110 Tel. 0-2264-0777, 0-2661-6190 Fax. 0-2264-0790, 0-2661-9192 Banchong and Vidhya Law Office 33/35, 33/39-40 Wallstreet Tower 9th Flr. Surawong Road, Kwaeng Suriyawongse, Bangrak, Bangkok Tel. 0 2236-2334 Fax. 0 2236-3916 Thailand Securities Depository Co., Ltd. 4, 6-7th Flr. The Stock Exchange of Thailand Bldg., 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110 Tel. 0-2359-1200-1 Fax. 0-2359-1259
Connected Transactions with Related Persons 1. Connected transactions with Estate Perfect Co., Ltd (“Estate”) Relationship - Property Perfect is major shareholder of Estate, holding 100% stake. - Property Perfect and Estate share 1 director – Mr.Chainid Ngow-Sirimanee. - Property Perfect ‘s executive- Mr.Pramote Rermyindee is a Estate’s director Details of transactions Description 2008 Note Million Baht Property Perfect loaned to Estate with promissory Loan Debtor 298.71 notes represented for partial loan disbursement. The 24.54 Interest income 3.27 loan carried 1.5% on top of Property Perfect’s Accrued interest weighted average financial cost. On 19 January 2009, the audit committee’s meeting resolved Property Perfect to provide additional credit line of Bt190 million to Estate to purchase land and develop project. The loan carried 1% on top of Property Perfect’s weighted average financial cost. Guarantee Credit line 843 Property Perfect entered into a guarantee contract for loans borrowed from a financial institution to Estate without premium. The guarantee’s details are as follows : Loan for Romklao project with credit line of Bt377million, Loan for Perfect Place project with credit line of Bt422million. Cash flow loan amounted to Bt44 million. Pledged-asset mortgage Property Perfect pledged 23-21 rai of land for development as collaterals for Estate’s borrowing from financial institutions. If the collaterals are redeemed as the land is sold, it is seemed that Property Perfect repay the debts on behalf of Estate. On 27 February 2009, the audit committee’s meeting resolved the company to mortgage 66 land title deeds with a combined area of 3-2-7.1 rai of vacant land as collaterals for Estate’s borrowing from financial institutions. Audit Committee’s Opinion The loan is the necessary financial assistance for Estate’s project development and expansion as planned. In addition, Property Perfect needed to provide the guarantee as it owns a 100% stake in Estate.
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2. Connected transactions with Bright Development Bangkok Co., Ltd. (Bright) Relationship - Property Perfect is the major shareholder of Bright, holding a 99.94% stake. - Property Perfect and Bright share 1directors – Mr. Chainid Ngow- Sirimanee Details of transactions Description 2008 Note Million Baht Property Perfect transferred advance for purchases Loan and Debtor 100.29 of land and expenses related to Ratchadapisek project 4.61 advance payment Interest income to Bright to comply with conditions required by financial 4.61 Accrued interest 1.50 institutions which loaned to Property Perfect in Advance payment establishment of Bright to develop the project. Therefore, Bright was a debtor of Property Perfect. Property Perfect loaned to Bright for further project development with promissory notes represented for partial loan disbursement. The loan carried 1.5% on top of Property Perfect’s weighted average financial cost. On 19 January 2009, the audit committee’s meeting resolved Bright to borrow Bt110 million for project development and expansion as planned. The loan carried 1% on top of Property Perfect’s weighted average financial cost. Down payment Creditor 2.89 Property Perfect acting on behalf of Bright received down payment paid by credit cards as Bright could not open a deposit account for such transaction. Guarantee Credit line 462 Property Perfect entered into a guarantee contract without premium for debentures issued by Bright to financial institution. Pledged-asset mortgage 924 Property Perfect mortgaged 85-2-70.6 rai of land (with construction) held for development as collaterals for Bright’s debentures. Audit Committee’s Opinion The loan is the necessary financial assistance for Bright’s project development and expansion as planned. Moreover, Property Perfect needed to provide the guarantee as it owns a 99.94% stake in Bright.
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Annual Report 2008
3 Connected transaction with Perfect Satellite Services Co., Ltd. (“Satellite) Relationship - Property Perfect is the major shareholder of Satellite, holding a 99.94% stake. - Property Perfect’s 4 executives – MissRasamee Metavikul, Mr.Thongchai Piyasantiwong, MissSureeporn Pipatwattanapong and Mrs.Thanida Surathamrong – are Satellite’s directors. Details of transactions Description 2008 Note Million Baht Hire to manage Expenses 10.46 Property Perfect hired Satellite to manage club club houses houses and golf courses in the company’s projects as follows :
Creditor
1.07
• Club house management fee was charged at Bt120,000/project from January-June 2008 and the fee was raised to Bt138,000/project begun from July 2008. • Golf course management fee was collected at Bt50,000/project starting from July 2008 and Satellite charged service fee on providing service staff at the actual expenses.
Audit Committee’s Opinion The transaction is a normal course of business transaction whereby both companies jointly set the price. 4. Connected transactions between Centre Point Shopping Center Co., Ltd. (Centre Point) Relationship: - Property Perfect is the major shareholder of Centre Point, holding a 59.95% stake. - Property Perfect and Centre Point share 1 director – Mr.Chainid Ngow-Sirimanee. Details of transactions Description 2008 Note Million Baht Other creditors Deposit receive 80 Property Perfect entered into a leasehold right transfer contract for 7-3-62.1 rai of land with Centre Point in the amount of Bt200 million, Bt80 million of which was deposited. Property Perfect lent Centre Point at an interest Loan Debtor 5.10 rate of 1.5% on top of its weighted average financial 0.06 Interest income 0.06 cost. Accrued interest Audit Committee’s Opinion The transaction is a normal course of business transaction whereby both companies jointly set the price but not less than appraisal price set by two independent appraisers. In addition, the loan is the necessary financial assistance for Centre Point’s project development and expansion as planned.
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5. Connected transactions with Krungthep Land Public Company Limited (“KLand”) Relationship - Property Perfect is the one of major shareholder of Kland, holding a 20% stake. - Property Perfect and KLand share a direct – Mr.Chainid Ngow-Sirimanee. No Details of transactions 6. Connected transactions with Real Service Public Company Limited (“Real Service”) Relationship - Property Perfect is a major shareholder of Real Service, holding a 19% stake. - An employee of Property Perfect – Mr.chainarong Ngernsopha – is Real Service’s director. - Property Perfect’s executives – Mr.Pornsawat Ketchulasriroj, Mr.Surasak Watcharapongpreecha, Mr.Thiti Inklinphan and Mr.Somkid Chidtrakul – own a combined stake of 38% in Real Service. - KLand’s executive – Mr.Thosaporn Jirakiatdeekul – holds a 5% stake in Real Service. No Details of transactions
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Risk factors Risk factors which might lead to investors’ investment risk or send impact to securities issuers are as follows. 1.1 Risks from maintaining appropriate working capital from building pre-built homes. In the aftermath of the US financial and economic crises spreading to other regions in the world, consumer confidence in income security and property developers has been undermined, resulting in a delay in home purchase and these trends are expected to continue over the next 1-2 years. The company then still uses pre-built home strategy to create confidence and meet demand of customers who need homes to be transferred to them as promised. To keep the appropriate working capital, the company has closely monitored weighted-average sales (Moving Average) to maintain volume of controlled construction and manage safety stocks at the appropriate level with sales and cancel. In addition, the company has increased proportion in building homes with the prefabricated load bearing wall system and rigid frame or skeleton to shorten construction period. This improves the company’s cash cycle and increases efficiency of financial and inventory management. For new residential projects, the company has still implemented pre-sales policy, which can reduce risk of financial institutions. Pre-sales allows the company to service debts more rapid, lower the company’s costs, and avoid debt repayment problem. Given the company’s working capital deriving from sales of land and houses - each project of them is developed and sold in different period, the pre-built strategy then allows the company to manage working capital. Moreover, the company prevents financial crunch problem by seeking credit line from financial institutions to be additional source to support working capital. 1.2 Risk from debt guarantee to subsidiaries and associates Estate Perfect Co., Ltd. (subsidiary) (“Estate”) The company in 2008 guaranteed credit line of Bt799 million (see details in connected transactions) and a working capital loan worth Bt44 million. The guarantee is the necessary financial assistance for Estate’s project development and expansion as planned. Property Perfect needed to provide the guarantee as it owns a 100% stake in Estate. Perfect Place Sukhumvit 77 and Romklao projects are under development. Perfect Place Sukhumvit 77’s outstanding project value in 2008 was Bt1,690 million and Romklao project phase 1 valued Bt730 million. Romklao project was put on sales in the second quarter of 2008 and it is expected to receive good response from consumers due to the project’s product, price and potential location near Suvarnabhumi Airport. Bright Development Bangkok Co., Ltd (subsidiary) (“Bright”) The company in 2008 guaranteed credit line worth Bt462 million (see details in connected transactions). The guarantee is the necessary financial assistance for Bright’s project development and expansion as planned. Property Perfect needed to provide the guarantee as it owns a 99.94% stake in Bright. Bright’s project is under development. 1.3 Risk from competition in the residential market amid the economic slowdown. The residential market has been contracted since the US sub-prime crisis erupted in late 2008. The sub-prime crisis in late 2008 has escalated into severe financial crisis and in early 2009 sent the ripple effect to Europe and Asia including Thailand. Local political conflict prevails and its impact would continue at least over the next 1-2 years. Thailand’s economic growth in 2009 is expected to contract and this might hurt consumer confidence. Under the circumstance, competition in the industry is intensified
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as high product inventory has forced property developers to accelerate selling homes to keep their liquidity and control financial costs, despite higher construction cost in the past from the record oil price in the middle of 2008. The fierce competition would continue in 2009 until small- and large-sized property developers can maintain their home inventory in appropriate level.
Since late 2007, the company adjusted product strategy to comply with the economic condition. The company has classified products by brand to allow consumers to select products as demanded. All of projects are located near operating and future public transportation systems to meet consumer demand in every segment and location. The company has still concentrated on environment in the company’s projects to create greenery atmosphere, community and harmonious living environment in style of Thai society through activities to provide recreation and opportunity for residents to know one another for being one society family under the project. In addition, the government has clearly signaled to stimulate economy through real estate sector by launching the real estate stimulus measures including reduction of the specific business tax and the mortgage registration fee, and approval of 2009 tax allowance for new homes to be bought and transferred in 2009. These measures can stimulate making decision of consumers. The company believes that preparation, and excellent quality and service improvement done continuously would make the company better weather the crisis. 1.4 Risk from the government plans to implement Escrow Account law. Escrow Account Act was enacted and implemented from 21 May 2008. The act has impact property developers’ working capital as they can not use down payment of customers as working capital until construction is completed and agency supervising contract partner’s benefits gets a nod. The company obtains the entire installments paid by customers at once when construction is completed, so working capital risk might be happened in case that the company opts to pursue the law. As the company has implemented policy to sell pre-built house and house under construction since 2006, the company’s working capital contributing from down payment is relatively low compared with other sources of the working capital such as short-term loans and long-term loans in terms of project financing. The company has also used financial instruments to manage financial costs, and construction volume control to be in line with the company’s cash flow, sales volume and inventory of normal course of business. The company realises necessary to maintain liquidity for operation. 1.5 Risk from laws governing environment of land allocation Office of Natural Resources and Environmental Policy and Planning, Ministry of Science and Technology in 2009 issued new measures to tighten controlling project environment. It stipulates property developers who develop residential or commercial projects with greater than 250 sub-plots (previous at more than 500 sub-plots) or over 100 rai of land must carry out the environmental analysis reports to seek approval from specialist committees before development every times. The new measures lead to higher costs and longer time for property developers who develop projects on land more than 250 sub-plots. Moreover, they must comply with other related rules and laws.
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The company’s project development process starting from project planning and design are strictly pursued to Land Allocation Act, laws governing environment and other related laws. The company always asks for an approval for land development and conducts environmental analysis report to propose the specialist committee for consideration before starting project development every times. With policy implementation and co-ordination in practice strictly, the company’s current projects has yet to feel impact from the stringent policy but it might cause delay and higher costs of the company’s projects in the future. The company has prepared working measures to lessen the impact, however.
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Explanation and Analysis of Financial and Operating Results Property Perfect Public Company Limited’s consolidated financial and operating results for year 2006-2008 were as follows : The change in accounting policy for investments in subsidiary and affiliated companies in the separate financial statements In 2007, the company changed accounting policy for investments in subsidiary and affiliated companies from equity method to cost method in compliance with Accounting Standard No. 44 (amended in 2007), regarding to consolidated and separate financial statements, under which investments in subsidiaries, jointly controlled entities and affiliates are to be presented in the separate financial statements under the cost method. In this regard, the company restated the previous period’s separate financial statements as though the investments in the subsidiaries and affiliate companies had originally been recorded using the cost method. The change had the effect of decreasing net income in the separate income statements for the year ended 31 December 2007 and 2006 by Bt42.8 million (Bt 0.05 per share) and Bt 21.9 million (Bt 0.03 per share), respectively. The cumulative effect of the change in accounting policy has been presented under the heading of “Cumulative effect of the change in accounting policy for recording investments in subsidiary and associated companies” in the separate statements of changes in shareholders’ equity. Such change in the accounting policy affects only the accounts related to investments in subsidiary and affiliate companies in the separate financial statements, but does not affect the consolidated financial statements. Establishment of subsidiaries In 2007, the company set up Bright Development Bangkok Co., Ltd. with registered capital of Bt1 million to develop Metro Park Sky Ratchada project. At present, the company owns a 99.94% stake of Bright’s registered and paid-up capital. In addition, the company teamed up with Timberline Investments Pte., Ltd. of Singapore to establish a joint venture company with registered capital of Bt1 million. The company holds 59.95% of the joint venture firm’s registered and paid-up capital. The joint venture company was established with an aim to develop shopping centers and commercial buildings such as shopping centers and office buildings. Overall operating performance The company’s operating performance in 2006 fell year-on-year before recovering in 2007. The company and subsidiaries in 2006 unveiled three projects to meet consumer demand. One of the three was developed as a townhouse project. In 2007, two new projects and new phases of three existing projects were launched. In 2008, 4 new projects comprising single-detached house and townhouse project each and two condominium projects were put on sales. Moreover, new phases of two single detached house projects under brand of Perfect Masterpiece were launched. The company and subsidiaries now have 17operating projects. Consolidated Operating Results • Sales revenue The company realizes sales of land and house and condominium units as revenues in statements of income when ownership rights are transferred to buyers. Consolidated sales revenue in 2006 contributed from land and house sales fell 9.22% from Bt4,931.89 million in 2004 to Bt4,477.29 million, given the slowdown economy triggered by the higher interest rates and oil price, political uncertainty and the company’s strategy change from pre-built to built-to-order houses in some projects resulting in longer period of right transfer. These projects are Perfect Park Rama 5-Bangyai and the Villa Rattanathibet-Rachapruek. In 2007, consolidated sales revenue generated from land and houses sales amounted to Bt4,697.13 million, up Bt219.85 million from 2006. The company in the year had sales revenue from condominium units of Metro Park Sathorn in the tune of Bt1,469.49 million. The condominium project’s sales were available in late 2005 and its units have been transferred to customers from the first quarter of 2007.
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Besides, the company sold land amounted to Bt99.31 million, accounting for 1.58% of the total sales revenue at Bt6,265.93 million – an increase of Bt1,788.64 million or 39.95% year-on-year. In 2008, consolidated sales revenue contributed from land and houses sales was Bt5,420.14 million, an increase of Bt723.01 million from 2007. The stunning sales revenue was attributable to the sales of 74 units of land and houses with a combined value of Bt510 million to Property Perfect Fund and a Bt639.97 million year-on-year increase in sales revenue of Metro Park Sathorn’s condominium units after the company started transferring condominium units of Metro Park Sathorn Phase 2 in late 2007. Consolidated sales revenue between 2005 and 2007 by project is presented in table of sales revenue structure (in Nature of business No 2.3). • Cost of sales and gross margin Calculation of costs of land and house sales and condominium units, which is the company’s and subsidiaries’ main cost, takes into account all project development costs that estimated to arise proportionately to land sold (and also actual costs) and the costs of sales are realized after the company books revenue from the sale of a particular unit. The above project development costs are presented at net cost from provision of losses from a write-down in project value. The cost covers the price of land, designs, infrastructure, construction and related interest. Consolidated cost of sales in 2006 was Bt3,093.99 million, down Bt133.83 million or 4.15% from the previous year. Sale cost accounted for 69.10%, higher than 65.45% in the previous year. Consolidated costs in 2007 were as follows: • Cost of land and houses sales rose by Bt203.31 million or 6.57% to Bt3,297.30 million. The cost of sales represented 70.20% of the sales revenue, up from 69.10% in the previous year. • Cost of condominium unit sales were Bt1,041.59 million. The cost of sales accounted for 70.88% of the sales revenue. • Cost of land sales stood at Bt56.58 million. The cost represented 56.97% of the sales revenue. For 2008, consolidated cost of sales were as follows : • Cost of land and houses sales amounted to Bt3,767.92 million, up Bt470.62 million or 14.27%. Cost of sales accounted for 69.52% of the sales revenue, below 70.20% in 2007. • Cost of condominium unit sales totalled Bt1,395.41 million, rising by Bt353.82 million from the previous year or 33.97%. Cost of sales represented 66.15% of the sales revenue, down from 70.88% in 2007. • The higher cost of sales of both land and houses and condominium units resulted from higher revenue while cost of sales to sales revenue ratio fell from the previous year due to price hikes in early 2008. • Cost of land sales dropped by Bt49.99 million from the previous year to Bt6.59 million. Cost of sales accounted for 76.24% of the sales revenue, up from 56.97% in the previous year. Consolidated gross margin from land and houses sales in 2006 stood at 30.90%, down from 34.55% in 2005, due to the intensified competition, and impact from the reversal of allowance for loss on diminution in value of projects and the reversal of allowance for loss on depreciation for land held for development in 2005. In 2007, the company’s and subsidiaries’ gross margin from land and houses sales was 29.80%, down from 30.90% in 2006, as costs increased but the company still maintained the price tags. Gross margin from condominium unit sales was 29.12%. In 2008, consolidated gross margin rose, thanks to higher consolidated gross margin from land and houses and condominium units sales representing 30.48% and 33.85% respectively. The increase in consolidated gross margin could be attributed to the increase in price tags of housing in early 2008 and condominium phase 2 in late 2007.
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• Other revenues Other revenues of the company’s and subsidiaries were Bt56.52 million in 2006, Bt55.56 million in 2007 and Bt79.37 million in 2008. Utility facilities expenses of projects, club house management, and forfeit of down payment were major contributors for other revenues. • Selling and administrative expenses Selling and administrative expenses in 2006 were Bt1,087.76 million, up by Bt44.37 million or 4.25% from the previous year, as the company in late 2005 issued the Bt823-million unsubordinated convertible debentures with a condition that the company will redeem unconverted debentures according to face value plus premium of 31.60% of the face value. The company booked provision for the unconverted debentures according to maturity and recorded it in a separate item in the balance sheets. The item was recorded as selling and administrative expenses in the income statements. In 2007, consolidated selling and administrative expenses rose by Bt198.57 million or 18.26% to Bt1,286.33 million as an increase of Bt1,788.64 million or 39.95% in sales revenue to Bt6,265.93 million pushed up expenses for specific business tax and ownership right transfer fee. The company’s and subsidiaries’ selling and administrative expenses in 2008 increased by Bt12.83 million or 1.04% only to Bt1,244.10 million due to the government’s real estate stimulus measures that cut the specific business tax from 3.3% to 0.11% and the transfer fee from 2% to 0.01%. Note : Selling and administrative expenses in 2007 presented in comparative financial statements for 2008 fell from the previous ones by Bt55.06 million as the 2008 financial statements presented expenses on provision for the unconverted debentures by maturity of the unsubordinated debentures. Write-off premium on debentures (Bt50.48 million in 2007 and Bt55.25 million in 2008) and finance charges are presented in an item of financial expenses. • Other expenses The company in 2008 sold 74 units of land and houses with a combined value of Bt510 million to Property Perfect Fund. Under the agreement, the Company agrees to guarantee the minimum revenue of the fund (rental and service revenues before deducting expenses) at Bt55 million for a period of five years, ending 31 December 2012. However, the amount of guaranteed revenue depends on the ratio of the value of the outstanding properties to the value of the properties in which the Fund initially invested, as determined by an appraisal company for the purpose of the initial investment. The company has estimated provision for loss from such guarantee at the present value of the cash flows which it expects to pay to the fund with a total of Bt73.8 million, and recorded it as a separate item under the heading of “loss arising from minimum revenue guarantee” in the income statements for the current period ended 31 December 2008. • Financial expenses It comprises interest expenses, expenses for provision for unconverted debentures according to maturity of the unsubordinated debentures, write-off premium on debentures and financial charges. Interest expenses during 2006 to 2008 amounted to Bt293.23 million, Bt225.44 million and Bt192.29 million, respectively. Expenses for provision for unconverted debentures according to maturity of the unsubordinated debentures and write-off premium on debentures between 2007 and 2008 were Bt50.48 million and Bt55.25 million, respectively (in 2006 was Bt46.12 million shown as selling and administrative expenses).
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Financial charges during 2007 to 2008 were Bt4.59 million and Bt24.50 million, respectively (in 2006 was Bt6.86 million shown as selling and administrative expenses). •
Net profit The consolidated net profit during 2006-2008 were
(Unit : Million Baht) 2006 11.99
2008 2007 Net profit 802.57 411.61 In 2006, the consolidated net profit slumped Bt1,080.64 million or 98.90% from the previous year to Bt11.99 million, given declines in sales revenue and other revenue. With the absence of items related reversal of provisions as stated above, net profit in 2005 totalled Bt437.45 million compared with the 2006 net profit, a Bt425.46 million fall yearon-year, due to sale revenues decline and the intensified competition decreased gross profit margin. In 2007, the consolidated net profit was Bt411.61 million, up Bt399.61 million or 3,332.34%, due to higher land and houses sales. It realized revenue from transfer condominium units and land sales. Gross profit from land and houses sales fell slightly from 30.90% to 29.80%. In 2008, the consolidated net profit shot up Bt390.96 million or 94.99% year-on-year to Bt802.57 million on higher land and houses and condominium units sales revenue and gross margin. Benefits from the government’s real estate stimulus measures which cut the special business tax from 3.3% to 0.11% and the transfer fee from 2% to 0.01%, and the declined interest rate in the second half of 2008 also gave a boost to the consolidated net profit. Financial Status • Overall Picture of Financial Status Table presented consolidated financial status (Unit :Million Baht) Assets Liabilities Shareholders’ equity As of 31 December 2008 12,932.87 6,229.64 6,703.23 As of 31 December 2007 12,911.03 6,823.84 6,087.19 As of 31 December 2006 13,176.13 7,500.54 5,675.59 • Assets The company and subsidiaries had total assets of Bt13,176.13 million, Bt12,911.03 million and Bt12,932.87 million in 2006, 2007 and 2008, respectively. The consolidated assets in 2006 fell 2.01% or Bt265.10 million from transfer project development costs to costs of sales. In 2008, the consolidated assets rose marginally by Bt21.84 million. Based on asset structure as of 31 December 2008, project development costs accounted for the largest portion at Bt8,931.08 million or 69.06% of total assets. Land held for development was the second at Bt1,860.37 million representing 14.38% of total assets. Advances for purchases of land and investments in associates were the third and the fourth with Bt476.16 million and Bt416.74 million representing 3.68% and 3.22%, respectively. The structure was in line with the company’s and associate’s nature of business. Details are as follows:
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Project development costs
Company – unconsolidated Subsidiaries Total*
2007 6,425.48 80.40% 1,566.37 19.60% 7,991.85 100.00%
Note * Project development cost in consolidated financial statements as of 31 December 2006 and 2008 • The company’s project development costs (unconsolidated) changed slightly between 2006 and 2007, given the correlation between values of project development and transfer. The costs increased Bt659.67 million in 2008 as the company developed and expanded 4 projects. Project development costs in 2008 amounted to Bt7,085.15 million, Bt75.54 million of which was net allowance for loss on diminution in value of projects booked as required by accounting standard when accounting cost exceeds independent appraisers’ evaluation price. • Project development costs of the company’s subsidiaries were as follows: • Estate Perfect Co., Ltd. had two projects under development. The costs in 2008 were Bt1,333.99 million, Bt9.106 million were net allowance for loss on diminution in value of projects. • Bright Development Bangkok Co., Ltd. had 1 project under development. The costs in 2008 amounted to Bt510.39 million. • Centrepoint Shopping Mall Co., Ltd had project development costs of Bt1.55 million in 2008.
Net land bank
Company – unconsolidated Subsidiaries Total *
2008 1,585.30 85.21% 275.07 14.79 1,860.37 100.00%
2007 2,979.84 100.00% - - 2,979.84 100.00%
(Unit : Million Baht) 2006 3,042.35 100.00% - - 3,042.35 100.00%
Note * Net land bank mentioned in financial statements at 31 December 2006 and 208 •
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2008 7,085.15 79.33% 1,845.93 20.67% 8,931.08 100.00%
(Unit : Million Baht) 2006 6,531.99 81.48% 1,484.20 18.52% 8,016.19 100.00%
Annual Report 2008
The company’s and subsidiaries’ net land held for development at the end of 2006, 2007 and 2008 had value of Bt3,042.35 million, Bt2,979.84 million and Bt1,860.37 million, respectively. The costs incorporated land costs, land development costs, construction costs, capitalized interest, less transferred to costs of sales, land transferred to settle debts under rehabilitation plan and allowance for loss on depreciation of land held for development. The company and subsidiaries recorded allowance for loss on depreciation of land held for development amounting to Bt127.35 million during 2006 to 2007 and Bt103.99 million in 2008. Starting from 2007, value of land held for development has been fallen as the company develops projects on the land and reduces purchases of new land plots. The company and subsidiaries will consider reverting land bank to book as project development cost only when the development starts - for example, when the land is being cleared or when development plan is plotted.
Advances for purchases of land
(unit : million baht) 2006 629.12 86.17% 100.96 13.83% 730.08 100.00%
2008 2007 Company – Unconsolidated 388.90 81.67% 22.00 14.53% Subsidiaries 87.26 18.33% 129.46 85.47% Total* 476.16 100.00% 151.46 100.00% Advances for purchases of land means deposits paid in advance to landlords or agents in acquiring land. The item will be transferred to project development costs or land held for development when land ownership is completely transferred. The company’s and subsidiaries’ advances for purchases of land as of 31 December 2008 totalled Bt476.16 million. Details are as follows: • The company and its subsidiaries paid Bt459.5 million in advance to several landowners under agreements to purchase and to sell land already signed with the landowners by agents acting on behalf of the company and its subsidiaries. The company’s advances were Bt373.7 million and subsidiaries’ were Bt85.8 million. • Advances were paid to agents in acquiring land and agreements to purchase and to sell land under the signing process with landowners in the amount of Bt16.7 million, Bt15.2 million of which were paid by the company and Bt1.5 million paid by subsidiaries. The company’s and subsidiaries’ advances for purchases of land comprise advances to landowners and agents in acquiring land. Agreements to purchase and to sell land of the company and subsidiaries as of 31 December 2006-2008 were Bt1,285.9 million, Bt637 million and Bt1,699.6 million, respectively. Investments in associates The company recorded profit sharing from investment in associates following profit adjustment of associates as the difference in accounting policy on sales revenue recognition of condominium units. Investments worth Bt300 million in Krungthep Land Public Company Limited represented a 20% stake in Krungthep Land Plc. (as of 31 December 2005, Krungthep Land’s paid-up capital was Bt1,500 million) and the Board of Directors’ meeting on 18 January 2007 approved the company to subscribe to Krungthep Land’s 6,000,000 capital increased shares at the par value of Bt10 each totaling Bt60 million to retain its shareholding ratio. On 16 November 2007, Krungthep Land’s 1/2007 extraordinary shareholders meeting resolved to decrease the registered capital from Bt2,100,000 million to Bt1,780,000,000 by canceling 32,000,000 unissued shares at the par value of Bt10 each for Bt320,000,000. The meeting also approved the recapitalization of Bt450,000,000 from Bt1,780,000 to Bt2,230,000,000 by issuing 45,000,000 capital increased shares at the par value of Bt10 each to reserve for exercise of convertible debentures . On 31 January 2008, Krungthep Land issued 188,806 units of 5-year, name-registered, unsecured convertible debentures with a face value of USD 100 or total value of USD 18,880,600, to an overseas company. In accordance with the conditions of the convertible debentures resolved by Krungthep Land’s Extraordinary General Meetingof shareholders No.1/2551 on 14 January 2008, Krungthep Land is to pay interest semi-annually at a rate of not exceeding 3% per annum or a dividend yield (whichever is higher) only in years in which Krungthep Land declares a dividend based on the conditions of the convertible debentures and mature on 31 January 2013. They are convertible upon the listing of Krungthep Land’s shares on the Stock Exchange of Thailand (SET) or the Market for Alternative Investment (MAI), or one year from the issue date (whichever is earlier), at a conversion price of Bt13.85 per a common share, on quarterly basis. In case that no interest is paid until the maturity date, Krungthep Land is to redeem the outstanding convertible debentures at a price equal to 1.311651 times in the baht equivalent of the face value. Such redemption is subject to change dependent upon the interest payment made during the life of the debentures.
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According to the consolidated financial statements, the company recorded profit (loss) sharing under the equity method and realized loss of Bt22.37 million in 2006, profit of Bt11.75 million in 2007 and Bt7.82 million in 2008 as revenue (expenses) in the income statements. Investments in associates under the equity method were Bt326.69 million in 2006, Bt401.45 million in 2007 and Bt416.74 million in 2008. Other guarantee obligations The company has guaranteed obligations to its subsidiaries, Estate Perfect Co., Ltd. worth Bt842.74 million and Bright Development Co., Ltd. worth Bt462.15 million with financial institutions. The company is no need to honour the obligations as the subsidiaries have not yet defaulted on the loans. Asset quality The company and subsidiaries have policy to realize revenue from sales of land and houses, land, and condominium units only when ownership rights are transferred to buyers. Thus, the company and subsidiaries record down payment and installments as liabilities in the item of deposits and clients’ advance payment. The overdue installments are booked in the item of trade debtors. Though the company focuses on selling pre-built houses, some clients prefer to buy houses under construction. The company then sold such houses to customers who are required to pay downpayment in installments. The installments are included in trade debtors. Mostly, the debts in this item is cleared in less than a year. In 2008, consolidated trade debtors receivables totaled Bt44.09million and consolidated allowance for doubtful debts for debtors who unpaid for over 12 months worth Bt10.29million. Thus, net consolidated trade debtors totaled Bt33.80 million. The company believes that the allowances are sufficient for the current situation. Consolidated trade debtors can be broken down into 2 groups. • Customers with overdue installments Customers with overdue installments are those who failed to pay installments for houses under construction. They had overdue installments of Bt29.01million or 65.79% of total overdue loans. • Customers with overdue transfer fee Customers with overdue transfer fee are those who did not pay all debts on the transaction date, accounting for 34.21%. However, the overdue loan worth Bt15.08 million representing 0.12% of total assets, an insignificant ratio. The company also made allowance worth Bt10.29 million. For clients who fail to pay the debts for 6 months or longer, the company has contacted them to pay their obligations and some cases have been brought to court. The company believes that the allowance for doubtful debts is sufficient under the present circumstances. • Liquidity Statements of cash flow between 2006 and 2008 were as follows : (Unit: Million Baht) Item 2008 2007 2006 Cash flow from operating activities 1,328.99 1,265.06 1,024.20 Cash flow from investment activities (412.87) (333.62) (314.47) Cash flow from financing activities (885.13) (820.13) (899.79) Net cash flow increase (decrease) 30.99 111.31 (190.06)
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The company and subsidiaries in 2006 had a net negative cash flow of Bt190.06 million, though they had a positive cash flow from operating activities due to debenture redemption and dividend payment. For 2007, the company and subsidiaries had a net positive cash flow of Bt111.31 million due to a positive cash flow from operating activities of Bt1,265.06 million. Cash flow from investment activities has been in the negative area, totaling Bt314.47million, Bt333.62 million and Bt412.87million during 2006-2008, due to the company’s land bank purchases to prepare for the company’s projects.. In 2006, the company’s advance payments for land purchases and the land bank purchases amounted to Bt243.10 million. In 2007, advance payments for land purchases and land bank acquisition were Bt45.26million, deposits pledged as collateral amounted to Bt225.28 million. The company in 2007 also invested additional Bt60 million in Krungthep Land to retain its shareholding ratio. In 2008, the company’s and subsidiaries’ cash flow from investment activities came from advances for purchases of land and acquisition of land for development with a combined amount of Bt502.88 million. The company and subsidiaries invested in Property Perfect Fund amounting to Bt32.5 million or 6.24% of its registered capital and Quality Hospitality Leasehold Property Fund with the amount of Bt20 million or 1.1% of its registered capital. Besides, bank deposit with guaranteed obligations decreased to Bt217.27 million. Cash flow from financing activities in 2006 derived from repayments of net debts and dividend worth Bt625.90 million and Bt273.89 million, respectively. In 2007, cash flow from financing activities comprised repayments of net debts worth Bt475.42 million and redemption of debentures worth Bt350 million. Cash flow from financing activities in 2008 contained repayments of net debts and dividend worth Bt696.12 million and Bt189.01 million, respectively. The company paid dividend of Bt0.24 per share in 2007, totaling Bt189.01million, on 30 May 2008. Sources of fund Liabilities The consolidated liabilities in 2008 were Bt6,229.64 million (comprising the company’s liabilities with the amount of Bt5,203.20 million and subsidiaries with the amount of Bt1,026.44 million), a decrease of Bt594.20 million from 2007. The increase in the consolidated liabilities was stemmed from a Bt382.78 million debt repayments under debt rehabilitation plan, a Bt325.48 million repayments of net borrowing, a Bt53 million increase in trade debtors, a Bt106 million advance paid by customers, a Bt51.98 million provision for unconverted debentures according to maturity of unsubordinated debentures and a Bt40.42 million allowance for loss on the minimum guarantee revenue. According to consolidated liabilities structure in 2008, long-term loans accounted for 47.43%of total liabilities, overdraft and short-term loans were 8.98%, unsubordinated convertible debentures represented 12.99%, debenture creditors were 7.42% and creditors in the rehabilitation plan accounted for 4.26%. Details are as follows: • Long-term loans In 2008, long-term loans amounted to Bt2,954.44 million, of which Bt2,564.97million were borrowed by the company (Bt228.88 million is due within one year) and Bt 389.47 million were borrowed by subsidiaries. (Bt4.22 million is due within one year). The loans were to finance project development and land purchases for future project development. The loan details are: (Unit : Million Baht) 31 December 2008 31 December 2007 The Company Subsidiaries Total The Company Subsidiaries Total Only Only Long-term loans 2,564.97 389.47 2,954.44 3,006.96 500.59 3,507.55 Less : loans due within 1 years 228.88 4.22 233.10 458.13 4.87 463.00 Long-term loans (net) 2,336.09 385.25 2,721.34 2,548.83 495.72 3,044.55 In addition, the company guaranteed loans extended by financial institutions to subsidiaries with a combined amount of Bt1,304.9 million.
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• Overdraft and short-term loans In 2008, the company’s overdraft and short-term loans were Bt559.27million. Of the total, Bt508.00million were borrowed by the company and Bt51.27 million by its subsidiaries. Promissory notes and short-term loans lent by financial institutions amounted to Bt528.27 million, overdraft loans were Bt30 million and borrowing from others were Bt31 million. • Secured debentures The outstanding amount of secured debentures with a condition of all principle repayment on the maturity date as of 31 December 2008 was Bt462.15 million. The secured debentures, issued by Bright Development Bangkok Co., Ltd was aimed at financing acquisition of land on Ratchapisek Road (Suthisarn-Huay Kwang). The debentures details were as follows : Value Issue Datte Maturity Date Conditions (Million Baht) Secured debentures 462.15 18 August 2008 28 November 2008 • The ratio of unconverted debentures to collaterals must not exceed 65%. Total 462.15 • Guarantors (the company) must maintain total liabilities to shareholders’ equity at below 2 times. On 18 August 2008, Bright Development Bangkok Co., Ltd (“Bright”), the company’s subsidiary, issued and offered 462,150 units of secured debentures with a face value of Bt1,000 or total value of Bt462,150,000 to a financial institution in accordance with a resolution of Bright’s Extraordinary General Meeting of Shareholders on 15 May 2007. The debentures’ maturity date was slated on 28 November 2008. The debentures carried a coupon rate of 5.55256% per annum on top of Thai Baht Interest Rate Fixing (THBFIX). It was guaranteed by the company, mortgaged by partial land and construction of the company’s and Bright’s projects, and pledged by Bright’s shares held by the company. On 26 February 2009, Bright entered into an agreement to amend details of the debentures with the financial institution. Under the amended agreement, redemption and interest payment is made on installment, repayment must be done within May 2009 and it has a coupon rate of 8.55256% per annum on top of THBFIX. • Unsubordinated convertible debentures The issuance objective was to refinance loans and reserve as working. Debentures details are: Issue Value Issue date Maturity date Condition (Million Baht) Unsubordinated convertible 823.00 25 November 2005 25 November 2010 • Conversion ratio of 1 debenture to Debentures (200,000 units 658.4 common shares or at Bt6.25 at face value of US$ 100) per share Unconverted debentures will be redeemed at US$131.60 per unit at the exchange rate of Bt41.15/US$ • One individual nominated by foreign investors must be appointed a director.
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Annual Report 2008
•
The 1/2005 unsubordinated convertible debentures (only liabilities part) as at 31 December 2008 valued Bt809.15 million (On 25 November 2005, the company issued US$20 million convertible debentures for sales). Booking convertible debentures in balance sheets will be divided into two parts – liabilities and equity – as follows : • Convertible debentures- liabilities component is computed from cash flow of principal and interest rate to be paid in future less the current market interest rate • Convertible debentures-equity component is calculated from outstanding convertible debentures less liabilities. The difference between the liabilities’ book value and convertible debentures’ face value will be amortised based on convertible debentures’ maturity Creditors in business rehabilitation plan After the company’ s exit of the rehabilitation plan in 2007, creditors in the Business rehabilitation plan had outstanding loans of Bt648.41 million comprising of Bt132 million by creditors with collaterals, Bt516 million by creditors without collaterals, Bt0.1 million by land and house buyers. The principal and interest repayment terms are as follows: Type Outstanding Principal repayment Interest rate (Million Baht) Year % Creditors with collaterals 132 - From cash flow exceeds Bt250 million 2004-2005 3% at the end of each quarter From 2006 MLR but below 10% Creditors without collaterals 516 - From cash flow exceeds Bt250 million 2004-2005 1% at the end of each quarter From 2006 MLR but below 10% Land and house buyers 0.01 - Fully repaid but some buyers have not - - yet received the payments Total 648.41 As stated in the business rehabilitation plan, the company is required to pay the debts within October 2008 In 2008, the company repaid Bt383 million to settle debts to creditors under rehabilitation plan. On 27 February 2008, the company repaid another Bt138 million to creditors. The company is under the process to repay the remaining debts worth Bt127 million to creditors. Shareholders’ equity Consolidated shareholders’ equity in 2008 totaled Bt6,703.23 million, increase Bt 616.03 million from 2007. resulted from the entire net profit in 2008. Shareholders’ equity structure incorporates Bt4,726.33 million paid-up capital at Bt6 par value, Bt44.09million discount on share, unsubordinated convertible debentures’ equity component worth Bt31.01million (issued by the company worth Bt23.54 million and by associates worth Bt7.47 million), Bt1,381.43 million accumulated profits and equity attributed to minority shareholders of subsidiaries (Bt1.58 million). In 2008, outstanding unconverted warrants issued to creditors without collaterals were 8.87 million units. Each warrant is entitled to a 1 common share conversion at the price of Bt0.01 per share. The 10-year warrants can be exercised on the last day of the second and fourth quarter, starting from the fourth quarter of 2002.
Property Perfect Public Company Limited
77
Debt to equity ratio Debt to equity ratio in 2006 stood at 1.32 times and fell to 1.12 times in 2007 and to 0.93 times in 2008 as total liabilities decreased and shareholders’ equity increased. Future projects The company and subsidiaries have planned to launch 4 new projects, in addition to property development projects as mentioned in the ongoing projects. The new projects worth totally Bt7,326 million are as follows : Project’s name Location Product type Project value Development Area Number of Value period (rai) (Unit) (Million Baht) 1 Perfect Place Rachapruek Ratchapruek SDH 86 402 1,964 Q4/2008-2011 Phase1 2 The Metro Sathorn Kalapapruek Rd. TH 30 321 1,272 Q1/2009-2010 (New Sathorn Rd.) 3 Perfect Masterpiece RamaIX Pattanakarn- SDH 148 319 3,270 Q3/2008-2014 Motorway Rd. 4 Perfect Place Ramkhamhaeng – Ramkhamhaeng SDH 38 114 820 Q4/2008-2009 Suvarnabhumi (The Lake Zine) Total 1,156 7,326 Remark : SDH = Single Detached House, TH = Townhouse Key factors and influences which may effect future operation or finance Revenue : Real estate is a business which is directly sensitive to the country’s economic condition. If the country’s economic slows down, the real estate business will immediately shrink. The company and its subsidiaries then always adjust sales strategies to maintain their edges over competitors in the market and keep sales and transfer growth at the higher rate than the industry average. Costs : Real estate business’s costs comprise land, construction and utility facilities. To allow the company and its subsidiaries to carry lower costs than competitors, they carefully consider about the appropriate investment in land and utility facilities, and improve home construction to always raise efficiency while slim down costs. Investment and working capital : The company’s and subsidiaries’ business operations need high investment from the initial process of land procurement, land development, procedures to seek permissions for allocation and environment, building process, to completion. The company’s inventory turnover averages at 757.72 days. With nature of this business which needs high investment in developing land and building houses before realising revenue, the company needs short-and long-term working capital from financial institutions and uses financial instruments to save financial costs and these will significantly drive the company’s growth, in addition to investment in part of shareholders’ equity. The joint venture partners are also necessary. The company is committed to maintain its debt to equity ratio at the lower level than the industry average. The government’s policy : Despite the weak consumer confidence last year, the tax measures could stimulate sales in the real estate industry and help developers to survive. The tax renewal measure implemented in 2009 and the additional measures including tax allowance for principal payment have played a significant role in helping the industry to overcome the crisis in 2009 again. Local political conflict : Impact from local political conflicts in the past years undermined foreign investor confidence, investment and business expansion of private sector then was delayed inevitably and hurt earnings of all industries.
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Annual Report 2008
Report of Independent Auditor To the Shareholders of Property Perfect Public Company Limited (หน่ วย: Baht) บาท) (Unit: I have audited the accompanying consolidated balance sheet of Property Perfect Public Company Limited and its งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial consolidated statements of income, in shareholders’ equity subsidiaries as at 31 December 2008, the related หมายเหตุ 2551 2550 changes2008 2551 2520 Note 2008 2007 2007 and cash flows for the year then ended, and the separate financial statements of Property Perfect Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Property Perfect Public Company Limited and its subsidiaries, and the separate financial statements of Property Perfect Public Company Limited as at 31 December 2007 and for the year then ended were audited by another auditor of our firm who expressed an unqualified opinion on those statements but drew attention to the change in accounting policy for recording investments in subsidiaries and associate in the separate financial statements from the equity method to the cost method, under his report dated 28 February 2008. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Property Perfect Public Company Limited and its subsidiaries and of Property Perfect Public Company Limited as at 31 December 2008, the results of their operations, and cash flows for the year then ended, in accordance with generally accepted accounting principles. Siraporn Ouaanunkun Certified Public Accountant (Thailand) No.3844 Ernst & Young Office Limited Bangkok: 27 February 2009
Property Perfect Public Company Limited
79
Property Perfect Public Company Limited and its subsidiaries
Balance sheets
As at 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Assets Current assets Cash and cash equivalents 455,045,559 424,055,579 428,606,931 397,595,597 Trade accounts receivable, net 7 33,803,010 33,452,438 30,188,260 32,530,838 Account receivable - land 8 35,358,000 - 35,358,000 - Project development costs, net 9 8,931,082,106 7,991,847,276 7,085,145,739 6,425,477,543 Leasehold rights awaiting sale, net 18 60,717,672 60,717,672 60,717,672 60,717,672 Other current assets Advances to contractors, net 44,745,733 32,916,874 42,216,371 32,916,874 Prepaid expenses 14,679,752 5,440,132 14,679,752 5,440,132 Others 15,683,741 14,448,799 12,105,102 11,387,981 Total current assets 9,591,115,573 8,562,878,770 7,709,017,827 6,966,066,637 Non-current assets Restricted deposits 10 8,857,942 226,123,159 8,857,942 226,123,159 Advances to related company 6 - - 1,500,000 81,500,000 Loans to related companies and interest receivable 6 - - 412,052,946 247,074,412 Account receivable - land 8 - 35,358,000 - 35,358,000 Investments in subsidiaries 11 - - 541,057,356 541,057,356 Investment in associate 12 416,738,479 401,445,870 359,999,240 359,999,240 Other long-term investments, net 13 51,695,442 4,985,944 51,695,442 4,985,944 Land held for development, net 14 1,860,368,585 2,979,837,101 1,585,301,544 2,979,837,101 Advances for purchases of land 15 476,159,648 151,462,635 388,904,213 22,000,000 Property, plant and equipment, net 16 400,586,425 400,999,621 347,716,575 346,394,876 Leasehold rights, net 17 58,849,072 60,630,512 58,849,072 60,630,512 Other non-current assets Withholding tax deducted at source 40,932,044 61,287,159 36,715,792 57,329,685 Others 27,569,334 26,025,297 23,379,946 22,151,078 Total non-current assets 3,341,756,971 4,348,155,298 3,816,030,068 4,984,441,363 Total assets 12,932,872,544 12,911,034,068 11,525,047,895 11,950,508,000
The accompanying notes are an integral part of the financial statements.
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Annual Report 2008
Property Perfect Public Company Limited and its subsidiaries
Balance sheets (Continued) As at 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Liabilities and shareholders’ equity Current liabilities Bank overdrafts and short-term loans from financial institutions 19 528,268,062 321,640,578 508,000,000 306,640,578 Trade accounts payable 472,883,812 420,035,595 402,828,046 374,910,923 Loans from other company/individual 20 31,000,000 10,000,000 - - Debentures 21 462,150,000 450,000,000 - 450,000,000 Creditors per rehabilitation plan 22 265,633,156 648,410,232 265,633,156 648,410,232 Current portion of long-term loans 24 233,096,097 462,996,251 228,880,399 458,126,231 Amounts due to related companies 6 - - 83,954,452 80,977,279 Advance from director 6 80,000,000 80,000,000 - - Deposits and cash received in advance 7 112,235,496 218,593,293 103,684,414 216,462,138 Short-term provision 25 26,483,178 - 26,483,178 - Other current liabilities Accrued interest 22,933,411 33,716,874 17,406,514 33,145,704 Accrued expenses 193,251,857 116,819,145 150,017,814 104,665,102 Others 53,720,080 56,244,344 53,568,664 49,522,972 Total current liabilities 2,481,655,149 2,818,456,312 1,840,456,637 2,722,861,159 Non-current liabilities Unsubordinated convertible debentures - liability component 23 809,153,899 805,881,396 809,153,899 805,881,396 Long-term loans, net of current portion 24 2,721,339,526 3,044,557,322 2,336,094,030 2,548,833,016 Deposits and cash received in advance 57,712,083 61,076,419 57,712,083 61,076,419 for sublease agreement Long-term provisions 25 159,782,083 93,864,720 159,782,083 93,864,720 Total non-current liabilities 3,747,987,591 4,005,379,857 3,362,742,095 3,509,655,551 Total liabilities 6,229,642,740 6,823,836,169 5,203,198,732 6,232,516,710
The accompanying notes are an integral part of the financial statements.
Property Perfect Public Company Limited
81
Property Perfect Public Company Limited and its subsidiaries
Balance sheets (Continued) As at 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Shareholders’ equity Share capital 26 Registered 1,092,000,000 ordinary shares of Baht 6 each (2007: 1,035,594,196 ordinary shares of Baht 6 each) 6,552,000,000 6,213,565,176 6,552,000,000 6,213,565,176 Issued and fully paid 787,721,620 ordinary shares of Baht 6 each (2007: 787,491,194 ordinary shares of Baht 6 each) 4,726,329,720 4,724,947,164 4,726,329,720 4,724,947,164 Share discount 27 (44,093,444) (42,713,192) (44,093,444) (42,713,192) Share subscriptions received in advance 27 - 1,938 - 1,938 Unsubordinated convertible debentures - equity component 23 31,011,986 23,535,270 23,535,270 23,535,270 Unrealised loss Revaluation deficit on changes in value of investments (5,396,570) - (5,396,570) - Retained earnings Appropriated - statutory reserve 28 159,100,000 119,100,000 159,100,000 119,100,000 Unappropriated 1,837,858,815 1,262,326,719 1,462,374,187 893,120,110 Equity attributable to the Company’s shareholders 6,704,810,507 6,087,197,899 6,321,849,163 5,717,991,290 Minority interest - equity attributable to minority shareholders of subsidiaries (1,580,703) - - - Total shareholders’ equity 6,703,229,804 6,087,197,899 6,321,849,163 5,717,991,290 Total liabilities and shareholders’ equity 12,932,872,544 12,911,034,068 11,525,047,895 11,950,508,000
The accompanying notes are an integral part of the financial statements.
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Annual Report 2008
Property Perfect Public Company Limited and its subsidiaries
Income statements
For the years ended 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Revenues Revenues from sales of land and houses 5,420,143,581 4,697,134,755 4,715,701,794 4,144,223,090 Revenues from sales of residential condominium units 2,109,457,909 1,469,487,994 2,109,457,909 1,469,487,994 Revenue from sale of land 8,644,000 99,307,500 8,644,000 99,307,500 Other income Interest income 1,578,989 1,416,397 30,730,466 14,422,223 Revenues from forfeiture of down payments 14,535,519 11,569,861 13,554,546 10,831,098 Others 63,252,281 42,574,214 56,410,041 39,840,560 Total revenues 7,617,612,279 6,321,490,721 6,934,498,756 5,778,112,465 Expenses Cost of sales of land and houses 3,767,924,462 3,297,303,001 3,307,202,035 2,925,647,867 Cost of sales of residential condominium units 1,395,411,661 1,041,594,307 1,395,411,661 1,041,594,307 Cost of sale of land 6,589,828 56,578,584 6,589,828 56,578,584 Selling expenses 398,904,663 570,777,162 363,181,650 523,420,043 Administrative expenses 845,193,454 660,488,223 727,134,029 589,473,384 Loss arising from minimum revenue guarantee 13 73,800,000 - 73,800,000 - Total expenses 6,487,824,068 5,626,741,277 5,873,319,203 5,136,714,185 Income before finance cost and corporate income tax 1,129,788,211 694,749,444 1,061,179,553 641,398,280 Finance cost (272,035,651) (280,506,277) (231,064,340) (272,617,535) Share of income from investment in associate 7,815,893 11,751,068 - - Income before corporate income tax 865,568,453 425,994,235 830,115,213 368,780,745 Corporate income tax 30 (63,002,412) (14,387,416) (31,846,488) - Net income for the year 802,566,041 411,606,819 798,268,725 368,780,745 Net income (loss) attributable to: Equity holders of the parent 804,546,744 411,606,819 798,268,725 368,780,745 Minority interests of the subsidiaries (1,980,703) - 802,566,041 411,606,819 Earnings per share 31 Basic earnings per share Net income attributable to equity holders of the parent 1.02 0.52 1.01 0.47 Diluted earnings per share Net income attributable to equity holders of the parent 0.96 0.52 0.95 0.46 The accompanying notes are an integral part of the financial statements.
Property Perfect Public Company Limited
83
Property Perfect Public Company Limited and its subsidiaries
Cash flow statements
For the years ended 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Cash flows from operating activities Net income before tax 865,568,453 425,994,235 830,115,213 368,780,745 Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Share of income from investment in associate (7,815,893) (11,751,068) - - Depreciation and amortisation 67,761,368 48,074,143 58,976,422 45,000,227 Amortisation of prepaid expenses 30,791,634 15,439,378 14,924,392 14,988,262 Amortisation of premium on debentures 3,272,503 3,145,608 3,272,503 3,145,608 Provision for unconverted debentures 51,976,915 47,331,977 51,976,915 47,331,977 Rental received in advance recognition (4,334,204) (3,431,112) (4,334,204) (3,431,112) Allowance for loss on impairment of investments (reversal) 352,082 (183,920) 352,082 (183,920) Loss arising from minimum revenue guarantee 73,800,000 - 73,800,000 - Loss on impairment of asset - 4,080,000 - 4,080,000 Loss on sales of property, plant and equipment 6,630,452 6,707,888 6,630,452 6,618,373 Allowance for doubtful accounts - 1,803,299 - 1,803,299 Interest income (1,578,989) (1,416,397) (30,730,466) (14,422,223) Interest expenses 192,290,335 225,442,622 171,712,724 217,553,880 Income from operating activities before changes in operating assets and liabilities 1,278,714,656 761,236,653 1,176,696,033 691,265,116 Decrease (increase) in operating assets Trade accounts receivable (350,572) (1,475,880) 2,342,578 (2,411,036) Account receivable - land - (35,358,000) - (35,358,000) Project development costs 524,638,582 888,078,762 970,895,636 870,062,063 Advances to contractors (11,828,859) 37,476,326 (9,299,497) 37,476,326 Prepaid expenses (40,031,254) (11,634,846) (24,164,012) (11,183,729) Other current assets (1,234,942) (4,761,024) (717,120) (5,710,727) Other non-current assets (1,544,035) (3,333,040) (1,228,869) 101,323 Increase (decrease) in operating liabilities Trade accounts payable 52,848,217 129,906,847 27,917,124 129,915,380 Amounts due to related companies - - 2,977,174 79,238,899 Deposits and cash received in advance (106,357,797) (62,041,551) (112,777,724) (49,537,664) Provision for loss arising from minimum revenue guarantee (13,568,415) - (13,568,415) - Other current liabilities 51,604,496 44,537,714 28,711,110 41,934,013 Cash from operating activities 1,732,890,077 1,742,631,961 2,047,784,018 1,745,791,964 Cash paid for interest expenses (365,347,351) (433,678,576) (320,856,507) (389,820,080) Cash paid for corporate income tax (97,461,068) (83,565,525) (68,562,280) (57,331,130) Cash received for interest income 1,578,989 1,416,397 1,529,626 889,081 Return of withholding tax 57,329,685 38,251,058 57,329,685 38,251,058 Net cash from operating activities 1,328,990,332 1,265,055,315 1,717,224,542 1,337,780,893 The accompanying notes are an integral part of the financial statements. 84
Annual Report 2008
Property Perfect Public Company Limited and its subsidiaries
Cash flow statements (continued) For the years ended 31 December 2008 and 2007
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
Cash flows from investing activities Decrease (increase) in restricted deposits 217,265,217 (225,282,500) 217,265,217 (225,282,500) Decrease (increase) in advances to related company - - 51,620,271 (41,500,000) Decrease (increase) in loans to related companies - 58,389,320 (129,911,998) (93,049,970) Cash received for interest income - 8,908,052 22,522,811 25,385,194 Increase in investments in subsidiaries - - - (1,598,900) Increase in investment in associate - (59,999,940) - (59,999,940) Increase in other long-term investments (52,458,150) - (52,458,150) - Decrease (increase) in land held for development (88,787,146) 17,241,121 (88,787,146) 17,241,121 Increase in advances for purchases of land (414,089,013) (62,500,000) (376,296,213) (10,000,000) Increase in property, plant and equipment (74,848,070) (71,578,306) (67,799,879) (38,410,396) Proceeds from sales of property, plant and equipment 49,000 1,204,487 49,000 1,204,487 Net cash used in investing activities (412,868,162) (333,617,766) (423,796,087) (426,010,904) Cash flows from financing activities Increase (decrease) in bank overdrafts and short-term loans from financial institutions 206,627,484 (208,764,970) 201,359,422 (223,764,970) Increase in loans from other company/individual 21,000,000 10,000,000 - - Increase in advance from director - 80,000,000 - - Decrease in long-term loans (553,117,950) (351,359,938) (441,984,819) (211,529,411) Decrease in debentures (450,000,000) (350,000,000) (450,000,000) (350,000,000) Issuance of debentures by subsidiary 462,150,000 - - - Decrease in creditors per rehabilitation plan (382,777,076) - (382,777,076) - Dividend paid (189,014,648) - (189,014,648) - Net cash used in financing activities (885,132,190) (820,124,908) (1,262,417,121) (785,294,381) Net increase in cash and cash equivalents 30,989,980 111,312,641 31,011,334 126,475,608 Cash and cash equivalents at beginning of period 424,055,579 312,742,938 397,595,597 271,119,989 Cash and cash equivalents at end of period 455,045,559 424,055,579 428,606,931 397,595,597 Supplemental cash flow information Non-cash transactions Transfer advances for purchases of land to project development costs and land held for development 89,392,000 637,038,935 9,392,000 573,038,935 Transfer land held for development to project development costs 1,212,647,661 89,718,461 1,487,714,703 89,718,461 Transfer project development costs to property, plant and equipment - 17,967,472 - 17,967,472 Transfer advances for purchases of land to advances to related company - 40,000,000 - 40,000,000 Transfer advances to related company to loans to related companies - - 28,379,729 - The accompanying notes are an integral part of the financial statements. Property Perfect Public Company Limited
85
86
Annual Report 2008 - 2,730 (49,355) 1,938 1,938 - - - - - - (1,938) - - -
- - (29,563,519) (42,713,192) (42,713,192) - - - - - - (1,380,252) - - (44,093,444)
48,563 -
(13,149,673) -
The accompanying notes are an integral part of the financial statements.
Balance - as at 31 December 2006 4,695,334,290 Net income for the year - Unappropriated retained earnings transferred to statutory reserve - Share subscriptions received in advance - Additional ordinary shares as a result of exercised warrants 29,612,874 Balance - as at 31 December 2007 4,724,947,164 Balance - as at 31 December 2007 4,724,947,164 Expenses recognised directly in equity: Investments in available-for-sale securities Loss recognized in shareholders’ equity - Net expenses recognised directly in equity - Net income (loss) for the year - Total income and expenses for the year - Dividend paid (Note 34) - Unappropriated retained earnings transferred to statutory reserve - Additional ordinary shares as a result of exercised warrants 1,382,556 Increase in unsubordinated convertible debentures - equity component - Minority interest - equity attributable to minority shareholders of subsidiaries - Balance - as at 31 December 2008 4,726,329,720
- 31,011,986
7,476,716
- -
- - - 23,535,270 23,535,270 - - - - -
23,535,270 -
- (5,396,570)
-
- -
- - - - - (5,396,570) (5,396,570) - (5,396,570) -
- -
- 159,100,000
-
40,000,000 -
18,500,000 - - 119,100,000 119,100,000 - - - - -
100,600,000 -
- 1,837,858,815
-
(40,000,000) -
(18,500,000) - - 1,262,326,719 1,262,326,719 - - 804,546,744 804,546,744 (189,014,648)
869,219,900 411,606,819
- 6,704,810,507
7,476,716
- 366
- 2,730 - 6,087,197,899 6,087,197,899 (5,396,570) (5,396,570) 804,546,744 799,150,174 (189,014,648)
5,675,588,350 411,606,819
7,476,716
- 366
- 2,730 - 6,087,197,899 6,087,197,899 (5,396,570) (5,396,570) 802,566,041 797,169,471 (189,014,648)
400,000 400,000 (1,580,703) 6,703,229,804
-
- -
- - - - - - - (1,980,703) (1,980,703) -
- 5,675,588,350 - 411,606,819
(Unit: Baht) Consolidated financial statements Equity attributable to the parent’s shareholders Minority interest - Unsubordinated Total equity attributable Issued and Share subscriptions convertible Revaluation deficit equity attributable to to minority fully paid received debentures - on changes in Retained earnings the parent’s shareholders share capital Share discount in advance equity component value of investments Statutory reserve Unappropriated shareholders of subsidiaries Total
For the years ended 31 December 2008 and 2007
Statements of changes in shareholders’ equity
Property Perfect Public Company Limited and its subsidiaries (หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
542,839,365 368,780,745 (18,500,000) - - 893,120,110
(Unit: Baht)
4,695,334,290 - - - 29,612,874 4,724,947,164 4,724,947,164 - - - - - - 1,382,556 4,726,329,720
The accompanying notes are an integral part of the financial statements.
Balance - as at 31 December 2006 Net income for the year Unappropriated retained earnings transferred to statutory reserve Share subscriptions received in advance Additional ordinary shares as a result of exercised warrants Balance - as at 31 December 2007 Balance - as at 31 December 2007 Expenses recognised directly in equity: Investments in available-for-sale securities Loss recognized in shareholders’ equity Net expenses recognised directly in equity Net income for the year Total income and expenses for the year Dividend paid (Note 34) Unappropriated retained earnings transferred to statutory reserve Additional ordinary shares as a result of exercised warrants Balance - as at 31 December 2008
(13,149,673) - - - (29,563,519) (42,713,192) (42,713,192) - - - - - - (1,380,252) (44,093,444)
48,563 - - 2,730 (49,355) 1,938 1,938 - - - - - - (1,938) -
23,535,270 - - - - 23,535,270 23,535,270 - - - - - - - 23,535,270
- - - - - - - (5,396,570) (5,396,570) - (5,396,570) - - - (5,396,570)
100,600,000 - 18,500,000 - - 119,100,000 119,100,000 - - - - - 40,000,000 - 159,100,000
- 5,717,991,290 893,120,110 - - 798,268,725 798,268,725 (189,014,648) (40,000,000) - 1,462,374,187
- 2,730
5,349,207,815 368,780,745
Separate financial statements Unsubordinated Revaluation Issued and Share subscriptions convertible deficit on changes fully paid received debentures - in value Retained earnings share capital Share discount in advance equity component of investments Statutory reserve Unappropriated Total
For the years ended 31 December 2008 and 2007
Statements of changes in shareholders’ equity (Continued)
Property Perfect Public Company Limited and its subsidiaries
366 6,321,849,163
-
(5,396,570) (5,396,570) 798,268,725 792,872,155 (189,014,648)
5,717,991,290
(หน่ วย: Baht) บาท) (Unit: งบการเงิ นรวม statements Separate งบการเงิ นเฉพาะกิstatements จการ Consolidated financial financial หมายเหตุ 2551 2550 2551 2520 Note 2008 2007 2008 2007
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Property Perfect Public Company Limited and its subsidiaries
Notes to consolidated financial statements For the years ended 31 December 2008 and 2007
1. General information
1.1 Corporate information Property Perfect Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the property development and its registered address is 100/1 Vorasombat Building, 17th Floor, Rama 9 Road, Huaykwang, Bangkok. 1.2 Economic crisis The financial crisis experienced by the United States of America over the past year has had a far reaching adverse effect on the global economy as evidenced by sharp falls in share prices worldwide, a tight squeeze on credit including interbank lending, failures of large financial institutions and reduced consumer confidence. The crisis has substantially affected the business and financial plans of Thailand enterprises and asset value. Despite efforts made by governments of many countries to contain the crisis, it remains uncertain as to when the global economy will return to normalcy. These financial statements have been prepared on the bases of facts currently known to the Company, and on estimates and assumptions currently considered appropriate. However, they could be adversely affected by an array of future events.
2. Basis of preparation
The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from such financial statements in Thai language. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies. 2.2 Basis of consolidation a) The consolidated financial statements include the financial statements of the Company (“the Company”) and the following subsidiary companies (“the subsidiaries”): Nature of Country of Percentage of Company’s name business incorporation shareholding 2008 2007 Percent Percent Estate Perfect Company Limited Property development Thailand 100.00 100.00 Perfect Satellite Services Company Limited Clubhouse management Thailand 99.94 99.94 Bright Development Bangkok Company Limited Property development Thailand 99.94 99.94 Centrepoint Shopping Mall Company Limited Property development Thailand 59.95 59.95 2.1
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Assets as Revenues as a percentage a percentage to to the consolidated total the consolidated total assets revenues for the years Company’s name as at 31 December ended 31 December 2008 2007 2008 2007 Percent Percent Percent Percent Estate Perfect Company Limited 13.74 13.08 9.34 8.78 Perfect Satellite Services Company Limited 0.05 0.04 - 0.01 Bright Development Bangkok Company Limited 4.06 0.73 - - Centrepoint Shopping Mall Company Limited 0.02 - - - b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. c) The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent significant accounting policies. d) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. e) Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet. 2.3 The separate financial statements, which present investments in subsidiaries and associate presented under the cost method, have been prepared solely for the benefit of the public.
3. Adoption of new accounting standards
3.1 Accounting standards which are effective for the current year The Federation of Accounting Professions has issued Notification No. 9/2550, 38/2550 and 62/2550 mandating the use of new accounting standards as follows. TAS 25 (revised 2007) Cash Flow Statements TAS 29 (revised 2007) Leases TAS 31 (revised 2007) Inventories TAS 33 (revised 2007) Borrowing Costs TAS 35 (revised 2007) Presentation of Financial Statements TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors TAS 41 (revised 2007) Interim Financial Reporting TAS 43 (revised 2007) Business Combinations TAS 49 (revised 2007) Construction Contracts TAS 51 Intangible Assets These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these standards and believes that TAS 43 and TAS 49 are not relevant to the business of the Company, while TAS 25, TAS 29, TAS 31, TAS 33, TAS 35, TAS 39, TAS 41 and TAS 51 do not have any significant impact on the financial statements for the current year. 3.2 Accounting standards which are not effective for the current year The Federation of Accounting Professions has also issued Notification No. 86/2551 mandating the use of new accounting standards as follows.
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TAS 36 (revised 2007) Impairment of Assets TAS 54 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations These accounting standards will become effective for the financial statements for fiscal years beginning on or after
1 January 2009. The management has assessed the effect of these accounting standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied.
4. Significant accounting policies
4.1 Revenues recognition Revenues from sales of land and houses / residential condominium units / land Revenues from sales of land and houses / residential condominium units / land are recognised as revenues when the ownership has been transferred to the buyer. Interest income Interest income is recognised on an accrual basis based on the effective interest rate. 4.2 Cost of sales of land and houses / residential condominium units / land In determining the cost of sales of land and houses / residential condominium units / land, the anticipated total development costs (after recognizing the costs incurred to date) are attributed to units already sold on the basis of the salable area and then recognised as costs in the income statement. 4.3 Cash and cash equivalents Cash and cash equivalents consist of cash in hands, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 4.4 Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging. 4.5 Project development costs Project development costs are stated at cost less allowance for loss on diminution in value of projects. Project development costs consist of the costs of land, land development, construction and related interest. 4.6 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.7 Advances for purchases of land Advances for purchases of land will be recognised as part of land costs when the title to the related land is transferred to the Company and its subsidiaries. 4.8 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any).
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Depreciation of plant and equipment is calculated by reference to their costs on the straight-line basis over the estimated useful lives: Office buildings and clubhouses 10 and 20 years Furniture and equipment for offices and clubhouses 5 years Motor vehicles 5 years Others 5 years Depreciation is included in determining income. No depreciation has been provided on land and construction in progress. 4.9 Leasehold rights and amortisation / Leasehold rights awaiting sale Leasehold right is stated at cost less accumulated amortisation. Amortisation of leasehold right is calculated by reference to its cost on a straight-line basis over the leasehold period. Amortisation is included in determining income. Leasehold rights awaiting sale is stated at the lower of cost and net realisable value. 4.10 Investments a) Investment in associate is accounted for in the consolidated financial statements using the equity method. b) Investments in subsidiaries and associate are accounted for in the separate financial statements using the cost method. c) Investments in available-for-sale securities are stated at fair value. Changes in the carrying amounts of securities are recorded as separate items in shareholders’ equity until the securities are sold, when the changes are then included in determining income. d) Investments in non-marketable equity securities, which the Company classified as other investments, are stated at cost net of allowance for loss on impairment (if any). 4.11 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associate and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Company’s operations. 4.12 Unsubordinated convertible debentures Unsubordinated convertible debentures are classified into liability and equity components and these are presented separately in the balance sheets. In separately presenting such components, the Company determines the liability component by discounting the stream of future payments of principal and interest at the prevailing market rate, while the carrying amount of the equity component is determined by deducting the liability component from the total face value of the unsubordinated convertible debentures and amortising the difference over the life of the debentures. 4.13 Impairment of assets At each reporting date, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining 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. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company and its subsidiaries could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in the income statement.
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4.14 Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. 4.15 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, they are probable that outflow of resources embodying economic benefits will be required to settle the obligation, and reliable estimate can be made of the amount of the obligation. 4.16 Income Tax Income tax is provided in the accounts based on taxable profits determined in accordance with tax legislation.
5. Significant accounting judgments and estimates
The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant judgments and estimates are as follows: Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Fair value of financial instruments In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercise judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longer-term volatility of financial instruments. Impairment of equity investments The Company treats available-for-sale investments and other investments as impaired when the management judges that there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment.
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Property plant and equipment/Depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the Company’s and its subsidiaries’ plant and equipment and to review estimate useful lives and salvage values when there are any changes. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Project development costs estimation In recognising revenue from real estate sales, the Company and its subsidiaries need to estimate all project development costs, including land costs, land improvement costs, design costs, construction costs, and borrowing costs for construction. The management estimates these costs based on their business experience and revisit the estimation on a periodical basis or when the actual costs incurred significantly vary from the estimation. Provision for unconverted debentures In recording provision for unconverted debentures, the management projects the exercise of the rights to convert the debentures to ordinary shares based on the tenor of the debentures, the Company’s market share price and current economic conditions. The estimation is reviewed whenever circumstances change. Provision for loss arising from minimum revenue guarantee In recording provision for loss arising from minimum revenue guarantees, the management estimates the cost of the expenses expected to be incurred as a result of providing minimum revenue guarantees based on the present value of the cash flows to be paid to the Fund, calculated on the basis of assumptions that are appropriate to the current operating results and circumstances of the Fund. The estimate is reviewed whenever circumstances changes.
6. Related party transactions
During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. (Unit: Million Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Transfer pricing policy Transactions with subsidiaries (Eliminated from the consolidated financial statements) Interest income - - 29.2 13.1 8.34 to 9.00% per annum Clubhouse management expenses - - 10.5 8.4 Contract price
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The balances of the accounts as at 31 December 2008 and 2007 between the Company and those related companies are as follows: (Unit: Thousand Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Advances to related company Bright Development Bangkok Company Limited - - 1,500 81,500 Advances to related company - - 1,500 81,500 Loans to related companies and interest receivable Loans to subsidiaries Estate Perfect Company Limited - - 298,713 241,453 Bright Development Bangkok Company Limited - - 100,294 4,362 Centrepoint Shopping Mall Company Limited - - 5,100 - - - 404,107 245,815 Interest receivable Estate Perfect Company Limited - - 3,271 1,250 Bright Development Bangkok Company Limited - - 4,616 9 Centrepoint Shopping Mall Company Limited - - 59 - - - 7,946 1,259 Loans to related companies and interest receivable, net - - 412,053 247,074 Amounts due to related companies Perfect Satellite Services Company Limited - - 1,065 977 Centrepoint Shopping Mall Company Limited - - 80,000 80,000 Bright Development Bangkok Company Limited - - 2,889 - Amounts due to related companies - - 83,954 80,977 Advance from director Director 80,000 80,000 - - Advance from director 80,000 80,000 - - During the year 2008, movements of loans to related companies were as follow: (Unit: Thousand Baht) Balance as at During the year Balance as at 1 January 2008 Increase Decrease 31 December 2008 Subsidiaries Estate Perfect Company Limited 241,453 159,737 (102,477) 298,713 Bright Development Bangkok Company Limited 4,362 95,932 - 100,294 Centrepoint Shopping Mall Company Limited - 5,100 - 5,100
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Directors’ and management’s remuneration In 2008 the Company and its subsidiaries paid salaries, bonuses, meeting allowances and gratuities to their directors and management totaling Baht 66.9 million (Separate financial statements: Baht 53.1 million) (2007: Baht 54.5 million (Separate financial statements: Baht 42.5 million)). Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 35.4 a) to the financial statements.
7. Trade accounts receivable / deposits and cash received in advance
Trade accounts receivable balances as at 31 December 2008 and 2007 are detailed below.
(Unit: Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Total value of contracts signed 49,187,840,012 43,029,830,434 45,984,494,128 40,745,527,612 Percentage of total project sale value 65.60 75.94 68.11 78.47 Installments due 47,195,229,327 39,763,341,634 44,283,972,772 37,562,946,793 Less: Cash received (47,151,133,018) (39,720,095,897) (44,243,491,213) (37,520,622,656) Installments receivable 44,096,309 43,245,737 40,481,559 42,324,137 Less: Allowance for doubtful debts (10,293,299) (9,793,299) (10,293,299) (9,793,299) Installments receivable, net 33,803,010 33,452,438 30,188,260 32,530,838 Deposits and cash received in advance as at 31 December 2008 and 2007 are detailed below. (Unit: Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Installments due 47,195,229,327 39,763,341,634 44,283,972,772 37,562,946,793 Less: Accumulated sale recognition (47,082,993,831) (39,544,748,341) (44,180,288,358) (37,346,484,655) Deposits and cash received in advance 112,235,496 218,593,293 103,684,414 216,462,138 As at 31 December 2008 and 2007, trade accounts receivable were classified by aging as follows. (Unit: Baht) Consolidated financial statements As at 31 December 2008 Less than 3 - 6 6 -12 Over 3 months months months 12 months Total Accounts receivable - installments 15,035,892 5,369,818 6,108,500 2,496,200 29,010,410 Accounts receivable at transfer date 3,740,000 50,000 50,000 11,245,899 15,085,899 Total 18,775,892 5,419,818 6,158,500 13,742,099 44,096,309 Less: Allowance for doubtful debts - - - (10,293,299) (10,293,299) Trade accounts receivable, net 18,775,892 5,419,818 6,158,500 3,448,800 33,803,010
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Consolidated financial statements As at 31 December 2007 Less than 3 - 6 6 -12 Over 3 months months months 12 months Accounts receivable - installments 14,295,874 2,785,974 6,632,500 1,706,200 Accounts receivable at transfer date 250,000 3,306,250 900,000 13,368,939 Total 14,545,874 6,092,224 7,532,500 15,075,139 Less: Allowance for doubtful debts - - - (9,793,299) Trade accounts receivable, net 14,545,874 6,092,224 7,532,500 5,281,840 Separate financial statements As at 31 December 2008 Less than 3 - 6 6 -12 Over 3 months months months 12 months Accounts receivable - installments 12,341,142 5,249,818 6,108,500 2,496,200 Accounts receivable at transfer date 3,040,000 - - 11,245,899 Total 15,381,142 5,249,818 6,108,500 13,742,099 Less: Allowance for doubtful debts - - - (10,293,299) Trade accounts receivable, net 15,381,142 5,249,818 6,108,500 3,448,800 Separate financial statements As at 31 December 2007 Less than 3 - 6 6 -12 Over 3 months months months 12 months Accounts receivable - installments 13,574,274 2,585,974 6,632,500 1,706,200 Accounts receivable at transfer date 250,000 3,306,250 900,000 13,368,939 Total 13,824,274 5,892,224 7,532,500 15,075,139 Less: Allowance for doubtful debts - - - (9,793,299) Trade accounts receivable, net 13,824,274 5,892,224 7,532,500 5,281,840
8. Account receivable - land
(Unit: Baht)
Total 25,420,548 17,825,189 43,245,737 (9,793,299) 33,452,438 (Unit: Baht)
Total 26,195,660 14,285,899 40,481,559 (10,293,299) 30,188,260 (Unit: Baht)
Total 24,498,948 17,825,189 42,324,137 (9,793,299) 32,530,838
During the year 2007, the Company sold land to a company, at a value of Baht 88.4 million, and received the payment for only Baht 53.0 million. The remaining is to be paid in installments and is due in full within December 2009.
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9. Project development costs
(Unit: Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Land costs 14,217,301,525 12,234,645,693 12,635,861,583 10,876,038,709 Development costs 6,960,773,362 6,039,730,810 6,343,427,661 5,546,654,222 Construction costs 18,832,022,136 15,707,542,608 17,529,694,014 14,771,007,345 Capitalised interest 4,351,344,294 4,049,126,282 4,068,788,471 3,794,964,591 Total 44,361,441,317 38,031,045,393 40,577,771,729 34,987,664,867 Less: Transferred to cost of sales (33,821,534,282) (28,444,569,946) (31,892,897,573) (26,977,416,877) Transferred to settle debt under rehabilitation plan (1,524,192,396) (1,524,192,396) (1,524,192,396) (1,524,192,396) 9,015,714,639 8,062,283,051 7,160,681,760 6,486,055,594 Less: Allowance for loss on diminution in value of projects (84,632,533) (70,435,775) (75,536,021) (60,578,051) Project development costs, net 8,931,082,106 7,991,847,276 7,085,145,739 6,425,477,543 The Company’s and its subsidiaries’ project land and construction thereon with a net book value of Baht 8,352.7 million as at 31 December 2008 (2007: Baht 6,537.8 million), have been mortgaged with financial institutions as collateral for short-term loans, long-term loans and debentures and as guarantees for public utilities. During the current year, the Company and its subsidiary transferred land held for development to project development costs amounting to Baht 1,212.6 million (Separate financial statements: Baht 1,487.7 million). During the current year, the Company and its subsidiary included borrowing costs of Baht 162.3 million as cost of “Project development costs” (Separate financial statements: Baht 133.9 million) (2007: Baht 155.8 million (Separate financial statements: Baht 119.6 million)). Interest is charged at rate of 5.8 - 7.8% per annum (2007: 5.9 - 8.3% per annum).
10. Restricted deposits
These represent fixed deposits pledged with the banks to secure credit facilities.
11. Investments in subsidiaries
Details of investments in subsidiaries as presented in separate financial statements are as follows:
(Unit: Baht) Separate financial statements Company’s name Paid-up capital Cost 2008 2007 2008 2007 Million Million Estate Perfect Company Limited 1,000 1,000 538,459,056 538,459,056 Perfect Satellite Services Company Limited 1 1 999,400 999,400 Bright Development Bangkok Company Limited 1 1 999,400 999,400 Centrepoint Shopping Mall Company Limited 1 1 599,500 599,500 Total 541,057,356 541,057,356 The ordinary shares of Bright Development Bangkok Company Limited have been pledged with a financial institution as collateral for debentures.
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12. Investment in associate
12.1 Details of associate:
((Unit: Baht)
Consolidated financial statements Company’s name Nature of Country of Shareholding Carrying amounts based Share of income business incorporation percentage on equity method from investment in associate during the year 2008 2007 2008 2007 2008 2007 (%) (%) Krungthep Land Public Property Thailand 20.22 20.22 416,738,479 401,445,870 7,815,893 11,751,068 Company Limited development Total 416,738,479 401,445,870 7,815,893 11,751,068
((Unit: Baht)
Separate financial statements Company’s name Nature of Country of Shareholding Cost business incorporation percentage 2008 2007 2008 2007 (%) (%) Krungthep Land Public Property development Thailand 20.22 20.22 359,999,240 359,999,240 Company Limited Total 359,999,240 359,999,240
12.2 Summarised financial information of associate Financial information of the associated company is summarised below: Company’s name
Paid-up capital as at 31 December 2008 2007
Total assets as at 31 December 2008 2007
(Unit: Million Baht)
Total liabilities Total revenues Net income for as at for the years ended the years ended 31 December 31 December 31 December 2008 2007 2008 2007 2008 2007
Krungthep Land Public 1,780 1,780 6,496 5,415 3,847 3,074 1,974 1,704 123 119 Company Limited The Company recorded share of income from investment in associate after adjusting the associate’s income, since there are differences in accounting policies in relation to the recognition of revenue from residential condominium units. On 18 January 2007, a meeting of the Company’s Board of Directors passed a resolution to approve the purchase of additional ordinary shares of the associate amounting to Baht 60 million (6,000,000 ordinary shares with a par value of Baht 10 each). On 16 November 2007, the Extraordinary General Meeting of Shareholders of Krungthep Land Public Company Limited (“Krungthep Land”) approved a reduction in the associate’s registered capital through the cancellation of 32,000,000 authorised but unissued shares, with a par value of Baht 10 per share, or Baht 320,000,000, reducing the existing registered capital of Baht 2,100,000,000 to Baht 1,780,000,000. In addition, the meeting approved a Baht 450,000,000 increase in Krungthep Land’s registered capital comprising 45,000,000 ordinary shares with a par value of Baht 10 each, to raise registered capital from Baht 1,780,000,000 to Baht 2,230,000,000. The new ordinary shares are to be reserved for conversion of convertible debentures.
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In accordance with a resolution of the Extraordinary General Meeting of Shareholders No. 1/2008 held on 14 January 2008, on 31 January 2008, Krungthep Land issued and offered 188,806 units of 5-year, name-registered, unsecured convertible debentures with a face value of USD 100 or a total value of USD 18,880,600, to the overseas company. In accordance with the conditions of the convertible debentures, Krungthep Land is to pay interest semi-annually at a rate of not exceeding 3% per annum or a dividend yield (whichever is higher) only in years in which Krungthep Land declares a dividend based on the conditions of the convertible debentures and mature on 31 January 2013. They are convertible upon the listing of Krungthep Land’s shares on the Stock Exchange of Thailand or MAI, or one year from the issue date (whichever is earlier), at a conversion price of Baht 13.85 per ordinary share, on a quarterly basis. If no interest payment is made until the maturity date, Krungthep Land is to redeem the outstanding convertible debentures at a price equal to 1.311651 times the baht equivalent of the face value, with such redemption subject to change dependent upon the interest payment made during the life of the debentures.
13. Other long-term investments
(Unit: Baht) Consolidated and separate financial statements 2008 2007 Available-for-sale securities Investments in property funds 52,458,150 - Less: Allowance for change in value (5,396,570) - 47,061,580 - Trading securities Domestic marketable equity securities 1,800,000 1,800,000 Less: Allowance for change in value (1,441,138) (1,089,056) 358,862 710,944 Other investment Domestic non-marketable equity security 4,275,000 4,275,000 4,275,000 4,275,000 Other long-term investments - net 51,695,442 4,985,944 On 28 February 2008, the Company entered into an agreement to transfer the Company’s properties to Property Perfect Property Fund (“the Fund”), for a total consideration of Baht 510 million. The Company invested Baht 32.5 million in the Fund (3,242,200 units at an average price of Baht 10.01 each), representing 6.24% of its registered capital, and classified it as investments in available-for-sale securities. Under the agreement, the Company agrees to guarantee minimum annual revenue for the Fund (rental and service revenues before deducting expenses) of Baht 55 million for a period of five years, expiring on 31 December 2012. The guaranteed payment is due within 31 January and 31 July of each year in accordance with conditions as stipulated in the agreement. However, the amount of guaranteed revenue depends on the ratio of the value of the outstanding properties to the value of the properties in which the Fund initially invested, as determined by an appraisal company for the purpose of the initial investment. The Company has estimated provision for loss from such guarantee at the present value of the cash flows which it expects to pay to the Fund, a total of Baht 73.8 million, and recorded it as a separate item under the heading of “Loss arising from minimum revenue guarantee” in the income statements for the year ended 31 December 2008. During the current year, the Company invested approximately Baht 20.0 million (2,105,200 units at a price of Baht 9.50 each) in Quality Hospitality Leasehold Property Fund, representing 1.1% of its registered capital and classified it as investments in available-for-sale securities.
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14. Land held for development
(Unit: Baht) Separate financial statements 2008 2007 3,128,920,723 4,520,242,787 98,123,248 182,667,940 17,472,528 17,449,523 487,540,431 627,467,380 3,732,056,930 5,347,827,630 (350,701,624) (548,576,325) (1,540,946,166) (1,540,946,166) (151,117,368) (151,117,368) 1,689,291,772 3,107,187,771 (103,990,228) (127,350,670) 1,585,301,544 2,979,837,101
Consolidated financial statements 2008 2007 Land costs 3,403,987,764 4,520,242,787 Development costs 98,123,248 182,667,940 Construction costs 17,472,528 17,449,523 Capitalised interest 487,540,431 627,467,380 Total 4,007,123,971 5,347,827,630 Less: Transferred to cost of sales (350,701,624) (548,576,325) Transferred to restructure debt (1,540,946,166) (1,540,946,166) Transferred to settle debt under rehabilitation plan (151,117,368) (151,117,368) 1,964,358,813 3,107,187,771 Less: Allowance for loss on impairment (103,990,228) (127,350,670) Land held for development, net 1,860,368,585 2,979,837,101 The land held for development with a net book value of Baht 680.8 million as at 31 December 2008 (2007: Baht 2,057.9 million), has been mortgaged with financial institutions as collateral for short-term loans, long-term loans and as guarantees for public utilities. During the current year, the Company and its subsidiary transferred land held for development to project development costs amounting to Baht 1,212.6 million (Separate financial statements: Baht 1,487.7 million).
15. Advances for purchases of land
(Unit: Baht) Separate financial statements 2008 2007 22,000,000 629,118,935 376,296,213 10,000,000 (9,392,000) (573,038,935) 388,904,213 66,080,000 - (4,080,000) 388,904,213 62,000,000 - (40,000,000) 388,904,213 22,000,000
Consolidated financial statements 2008 2007 Balance as at 31 December 2007 151,462,635 730,081,570 Increase during the year 414,089,013 62,500,000 Title of plots of land transferred during the year (89,392,000) (637,038,935) 476,159,648 155,542,635 Less: Forfeiture of advance - (4,080,000) 476,159,648 151,462,635 Adjust to advances to subsidiary - - Balance as at 31 December 2008 476,159,648 151,462,635 As at 31 December 2008, the Company and its subsidiaries were contracted to purchase and to sell land amounting to Baht 1,699.6 million (Separate financial statements: Baht 1,286.6 million). Approximately Baht 459.5 million (Separate financial statements: Baht 373.7 million) of the above balance represented advances paid to landowners by the Company and its subsidiaries under agreements to purchase and to sell land already signed with the landowners by agents, the Company and its subsidiary. The remaining advances, amounting to approximately Baht 16.7 million (Separate financial statements: Baht 15.2 million), have been paid to agents in acquiring land and agreements to purchase and to sell land are still in the process of being signed with the landowners.
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Annual Report 2008
Consolidated financial statements Office Furniture and buildings equipment and for offices and Motor Construction Land clubhouses clubhouses vehicles in progress Others Total Cost 31 December 2007 65,058,827 264,804,228 132,124,756 32,986,151 24,813,237 41,309,279 561,096,478 Additions - 5,411,806 23,941,330 1,510,978 42,542,752 1,441,204 74,848,070 Transfer to project development costs (3,952,198) - - - (40,000) - (3,992,198) Disposals - (5,661,762) (635,742) - - (3,573,430) (9,870,934) Transfer in (out) - - 10,878,897 - (10,878,897) - - 31 December 2008 61,106,629 264,554,272 166,309,241 34,497,129 56,437,092 39,177,053 622,081,416 Accumulated depreciation 31 December 2007 - 36,923,783 72,756,283 21,553,052 - 28,863,739 160,096,857 Depreciation for the year - 28,563,035 25,545,982 5,716,201 - 4,806,258 64,631,476 Depreciation on disposals - (956,175) (347,510) - - (1,929,657) (3,233,342) 31 December 2008 - 64,530,643 97,954,755 27,269,253 - 31,740,340 221,494,991 Net book value 31 December 2007 65,058,827 227,880,445 59,368,473 11,433,099 24,813,237 12,445,540 400,999,621 31 December 2008 61,106,629 200,023,629 68,354,486 7,227,876 56,437,092 7,436,713 400,586,425 Depreciation for the years as included in administrative expenses 2007 44,863,049 2008 64,631,476
(Unit: Baht)
16. Property, plant and equipment
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Annual Report 2008
Separate financial statements Office Furniture and buildings equipment and for offices and Motor Construction Land clubhouses clubhouses vehicles in progress Others Total Cost 31 December 2007 65,058,827 223,279,175 116,406,155 31,561,951 22,169,336 33,522,195 491,997,639 Additions - 4,584,634 20,312,825 1,501,990 39,883,328 1,517,102 67,799,879 Transfer to project development costs (3,952,198) - - - - - (3,952,198) Disposals - (5,661,761) (450,003) - - (3,669,378) (9,781,142) Transfer in (out) - - 5,615,574 - (5,615,574) - - 31 December 2008 61,106,629 222,202,048 141,884,551 33,063,941 56,437,090 31,369,919 546,064,178 Accumulated depreciation 31 December 2007 - 34,632,629 68,371,314 20,934,950 - 21,663,870 145,602,763 Depreciation for the year - 24,652,992 21,513,436 5,430,988 - 4,249,114 55,846,530 Depreciation on disposals - (956,174) (215,859) - - (1,929,657) (3,101,690) 31 December 2008 - 58,329,447 89,668,891 26,365,938 - 23,983,327 198,347,603 Net book value 31 December 2007 65,058,827 188,646,546 48,034,841 10,627,001 22,169,336 11,858,325 346,394,876 31 December 2008 61,106,629 163,872,601 52,215,660 6,698,003 56,437,090 7,386,592 347,716,575 Depreciation for the years as included in administrative expenses 2007 41,789,133 2008 55,846,530
(Unit : Baht)
As at 31 December 2008, certain plant and equipment items had been fully depreciated but were still in use. The original cost of those assets amounted to approximately Baht 66.6 million (2007: Baht 30.7 million) (Separate financial statements: Baht 57.8 million (2007: Baht 23.7 million)). During the current year, the Company and its subsidiary changed the estimate useful lives of clubhouses from 20 years to 10 years in order to reflect their estimated useful lives. The changes have the effect of decreasing net income in the consolidated financial statements for the period ended 31 December 2008 by approximately Baht 14.8 million (Separate financial statements: Baht 13.1 million).
17. Leasehold rights
(Unit: Baht) Consolidated and separate financial statements 2008 2007 Leasehold rights - cost 345,317,693 343,879,241 Less: Accumulated amortisation (35,907,052) (32,687,160) 309,410,641 311,192,081 Less: Allowance for loss on impairment (189,843,897) (189,843,897) 119,566,744 121,348,184 Transfer to leasehold rights awaiting sale, net (60,717,672) (60,717,672) Net 58,849,072 60,630,512 Amortisation for the years as included in administrative expenses 3,129,892 3,211,094 The outstanding balance comprises leasehold rights to approximately 4 rai of land, which the Company subleased for the remainder of the lease period. The sublessee made an advance payment and paid annual rental at rates stipulated in the contract. The Company recognises the advance lease payment over the period of the sublease contract.
18. Leasehold rights awaiting sale
On 25 December 2007, the Company entered into an agreement to transfer leasehold rights to a subsidiary, with a contract value of Baht 200 million, of which Baht 80 million was paid on the contract date. The remaining balances are to be paid by the subsidiary on the date the transfer of leasehold rights is registered. Subsequently, on 27 June 2008, the Company entered into an amended agreement to transfer leasehold rights to the subsidiary, whereby it is to make the remaining payment to the Company on the date the transfer of leasehold rights is registered, and no later than 30 June 2009.
19. Bank overdrafts and short-term loans from financial institutions
As at 31 December 2008 and 2007, the outstanding balance of bank overdrafts and short-term loans from financial institutions consist of the following:
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(Unit: Million Baht) Separate financial statements 2008 2007 - 30 508 277
Interest rate Consolidated financial statements (% per annum) 2008 2007 Bank overdrafts MOR - 30 Short-term loans from MOR, MLR, MLR+1 528 292 financial institutions Total 528 322 508 307 Bank overdrafts and short-term loans from financial institutions are secured by the guarantee of the Company, the Company’s director and the mortgage of part of the Company’s project land and construction. The loan agreements contain normal covenants relating to various matters as required in the normal course of business.
20. Loans from other company/individual
The loans are subject to interest at a rate of 8% per annum and are payable on demand.
21. Debentures
The Company During the current year, the Company made payment of secured debentures amounting to Baht 450 million and redeemed land from mortgage. The Annual General Meeting of the Company’s shareholders held on 30 April 2008 passed a resolution to approve the issue and offer of not more than Baht 2,000 million secured or unsecured debentures and/or the equivalent in another currency, as detailed below. Term : Not over 5 years from the issue date Offering : To local investors by a way of public offering and/or private placement and/or to overseas investors and/or local institutional investors in one or several tranches Redemption : Debentureholders and the Company may or may not have early redemption rights, as stipulated in the prospectus for each tranche of debentures Interest rate : Depends on the state of the market when the debentures are issued and offered, or as stipulated in the prospectus for each tranche of debentures However, the Company’s Board of Directors or authorised persons have the authority to stipulate details regarding the debentures. The Company has now been granted approval to offer the debentures by the Office of the Securities and Exchange Commission and is considering details to offer to investors. The subsidiary On 18 August 2008, Bright Development Bangkok Company Limited (“Bright”), a subsidiary, issued and offered 462,150 secured debentures with a par value of Baht 1,000 each, or a total value of Baht 462,150,000 to a financial institution, as previously approved by the Extraordinary General Meeting of shareholders held on 15 May 2007. The debentures mature on 28 November 2008, bear interest at a rate of THBFIX plus 5.55256% per annum and are secured by a guarantee provided by the Company, the mortgage of parts of the Company and Bright’s project land and construction and the pledge of ordinary shares of Bright held by the Company. Subsequently on 26 February 2009, Bright entered into an amendment to the agreement with the financial institution, amending the details of the debentures, so that the debentures are to be paid in installments, are to be paid in full within May 2009, and bear interest at a rate of THBFIX plus 8.55256% per annum.
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Under the debenture agreement, there are normal covenants relating to various matters as required in the normal course of business.
22. Creditors per rehabilitation plan
During the current year, the Company made payments to creditors per rehabilitation plan; however, there were creditors receiving payments amounting to Baht 383 million. Subsequently, on 27 February 2009, the Company paid creditor per rehabilitation plan for a total of Baht 138 million. The Company is in the process of arranging for the creditors to receive settlement of the remaining amount of Baht 127 million.
23. Unsubordinated convertible debentures
In accordance with a resolution of the Extraordinary General Meeting of shareholders held on 19 September 2005, on 25 November 2005, the Company issued and offered 200,000 unsubordinated convertible debentures with a par value of USD 100 each, or a total value of USD 20 million, to an overseas company. The debentures have been convertible since 25 May 2008, mature in 25 November 2010, and bear interest at a rate of 3.50% per annum. The conversion price is Baht 6.25 per ordinary share, and the debentures are convertible in a ratio of 1 debenture per 658.4 ordinary shares. Those debentures which are not converted will be redeemed at USD 131.60 per unit, using a stipulated exchange rate of Baht 41.15 per USD. The Company recorded the provision for debentures which are not converted over the life of debentures and presented it as a separate item under the heading “Long-term provisions” in balance sheet as discussed in Note 25 to the financial statements. Under the Company’s debenture agreement, there are normal covenants relating to various matters as required in the normal course of business. The Extraordinary General Meeting of the Company’s shareholders No.1/2008, held on 20 June 2008, passed a resolution regarding unsubordinated convertible debentures, as follows: a) Approved the cancellation of the issue and offer of the USD 15 million unsubordinated convertible debentures as previously approved by the Extraordinary General Meeting of the Company’s shareholders No.1/2005 held on 19 September 2005 (The Company was approved to issue and offer USD 35 million unsubordinated convertible debentures which were issued by USD 20 million as discussed above). b) Approved the issue and offer of not more than USD 30 million of unsubordinated convertible debentures, or the equivalent of not more than Baht 1,000 million, as detailed below. Term : Not over 5 years from the issue date Unit price : USD 100,000 Interest rate : Not over 5% per annum Conversion price : Not less than 110% of average closing price of the Company’s shares during the 7 - 15 consecutive working days before the offer date, and not less than Baht 6.50 per share Allocation method : To overseas institutional investors or local institutional investors However, the Company’s management is authorised to stipulate or amend details of the method and conditions of the issue and offer of the unsubordinated convertible debentures, such as offering price, conversion price, unit price, interest rate, exercise period, termination date of conversion and redemption price. Currently, the Company’s management is considering the details of the issue and offer of these unsubordinated convertible debentures.
24. Long-term loans
The Company Long-term loans consist of loans granted by four financial institutions under the following credit facilities.
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A facility of Baht 793 million
A facility of Baht 464 million
A facility of Baht 1,186 million
A facility of Baht 722 million
A facility of Baht 1,070 million
1)
2)
3)
4)
5)
Annual Report 2008
452.8
95.2
-
464.1
365.5
177.9
228.9
230.8
232.8
-
Balance 2008 2007 (Million Baht)
The mortgage of part of the Company’s project land and construction.
The guarantee of other company and the Company’s director and the mortgage of part of the Company’s project land and construction and the shares in the Company held by a shareholder and shares of other company. The guarantee of the Company’s director and the mortgage of part of the Company’s project land and construction.
The mortgage of part of the Company’s project land and construction.
The mortgage of part of the Company’s project land and construction.
Security
Repayment period
Interest at a rate tied to the minimum Repaying each time a plot of land is loan rate (MLR) redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Interest at a rate tied to the minimum Repaying each time a plot of land is loan rate (MLR) redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within February 2010. Interest at a rate tied to the minimum Repaying each time a plot of land is loan rate (MLR) redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within April 2011. Interest at a rate tied to the minimum Repaying each time a plot of land is loan rate (MLR) redeemed from mortgage, at a rate of not less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within December 2009. Interest at a rate tied to the minimum Repaying each time condominium unit is redeemed from mortgage, at a rate of not loan rate (MLR) less than 80 percent of the selling price, which is not to be less than the amount informed to the bank.
Interest rate
ขอไฟล์ต้นฉบับด้วยครับ ตั้งแต่หน้า 106-109 มีแต่ ใบปริ้นท์ ไม่มี ไฟล์ครับ
Property Perfect Public Company Limited
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A facility of Baht 1,501 million
A facility of Baht 130 million
A facility of Baht 1,280 million
A facility of Baht 550 million
A facility of Baht 430 million
6)
7)
8)
9)
10)
480.2
15.8
583.1
212.7
159.6
421.3
-
93.6
137.5
91.4
Balance 2008 2007 (Million Baht)
The guarantee of the mortgage of part of the Company’s project land and construction.
The guarantee of the Company’s director and the mortgage of part of the Company’s project land and construction.
The mortgage of part of the Company’s project land and construction.
The mortgage of part of the Company’s project land and construction.
The mortgage of part of the Company’s project land and construction.
Security
Repayment period
Interest at a rate tied to the minimum Repaying each time a plot of land with townhouse is redeemed from mortgage, at a loan rate (MLR) rate of not less than 80 percent of the selling price. Any remaining balance is to be repaid within June 2013. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Interest at a rate tied to the minimum Repaying each time condominium unit is redeemed from mortgage, at a rate of not loan rate (MLR) less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within July 2010. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 72 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within May 2011. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 75 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within April 2010.
Interest rate
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Annual Report 2008
A facility of Baht 481 million
A facility of Baht 1,578 million
A facility of Baht 201 million
Total Less: Current portion Long-term loans - net of current portion
12)
13)
14)
A facility of Baht 160 million
11)
2,564.9 (228.9) 2,336.0
78.8
555.7
334.1
160.0
3,006.9 (458.1) 2,548.8
-
-
-
-
Balance 2008 2007 (Million Baht)
The guarantee of the mortgage of part of the Company’s project land and construction.
The guarantee of the mortgage of part of the Company’s project land and construction.
The guarantee of the mortgage of part of the Company’s project land and construction.
The guarantee of Company’s director and the mortgage of part of the Company’s project land and construction.
Security
Repayment period
Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 75 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within May 2011. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within May 2013. Interest at a rate tied to the minimum Repaying each time a plot of land with house is redeemed from mortgage, at a rate of not loan rate (MLR) less than 80 percent of the selling price. Any remaining is to be repaid within June 2013. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within February 2010.
Interest rate
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A facility of Baht 328 million
A facility of Baht 382 million
A facility of Baht 10 million
A facility of Baht 15 million
Total Less: Current portion Long-term loans - net of current portion
1)
2)
3)
4)
389.5 (4.2) 385.3
4.2
-
116.7
268.6
500.6 (4.9) 495.7
-
9.6
284.8
206.2
Balance 2008 2007 (Million Baht)
The guarantee of the Company and its subsidiary’s director and the mortgage of part of the Company’s project land and construction. The guarantee of the Company and its subsidiary’s director and the mortgage of part of the Company’s project land and construction.
The guarantee of the Company and its subsidiary’s director and the mortgage of part of its subsidiary’s project land and construction.
The guarantee of the Company and its subsidiary’s director and the mortgage of part of its subsidiary’s project land and construction.
Security
Repayment period
Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within March 2010. Interest at a rate tied to the minimum Repaying each time a plot of land is redeemed from mortgage, at a rate of not loan rate (MLR) less than 60 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within April 2010. Interest at a rate tied to the minimum Repaying principal and interest is to be made in 24 installments of at least Baht 465,000 loan rate (MLR) each, with full settlement to be made within December 2009. Interest at a rate tied to the minimum Repaying principal and interest is to be made in 21 installments of at least Baht 785,000 loan rate (MLR) each, with full settlement to be made within December 2009.
Interest rate
Its subsidiary Long-term loans consist of loans granted by two financial institutions under the following credit facilities.
he outstanding long-term loans are detailed as follow: (Unit: Million Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Long-term loans 2,954.4 3,507.5 2,564.9 3,006.9 Less: Current portion (233.1) (463.0) (228.9) (458.1) Long-term loans - net of current portion 2,721.3 3,044.5 2,336.0 2,548.8 The loan agreements contain normal covenants relating to various matters as required in the normal course of business. As at 31 December 2008, the long-term credit facilities of the Company and its subsidiary which have not been drawn down amounted to Baht 2,428.1 million.
25. Provisions
These comprise the following: Short-term provision Provision for loss arising from minimum revenue guarantee Long-term provisions Provision for loss arising from minimum revenue guarantee Provision for unconverted debentures
26. Share capital
(Unit: Baht) Consolidated and separate financial statements 2008 2007 26,483,178 26,483,178
- -
(Unit: Baht) Consolidated and separate financial statements 2008 2007 13,940,447 145,841,636 159,782,083
- 93,864,720 93,864,720
The Extraordinary General Meeting of the Company’s shareholders No.1/2008 held on 20 June 2008 passed the following resolutions with respect to share capital: a) Approved the cancellation of 39,000,000 ordinary shares reserved for the exercise of warrants issued to directors and/or employees of the Company (ESOP). b) Approved the cancellation of 65,000,000 ordinary shares reserved for the conversion to ordinary shares of the convertible debentures as discussed in Note 23 a) to the financial statements.
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Annual Report 2008
c)
d)
Approved the reduction of the registered share capital from Baht 6,213,565,176 (1,035,594,196 ordinary shares at a par value of Baht 6 each) to Baht 5,589,565,176 (931,594,196 ordinary shares at a par value of Baht 6 each) by canceling 104,000,000 ordinary authorised but unissued shares with a par value of Baht 6 each, a total of Baht 624 million, previously reserved to accommodate the exercise of warrants and the conversion to ordinary shares of convertible debentures as discussed in a) and b). The Company registered the reduction of its registered share capital with the Ministry of Commerce on 1 July 2008. Approved the increase of the Company’s registered and issued capital by Baht 5,589,565,176 (931,594,196 ordinary shares at a par value of Baht 6 each) to Baht 6,552,000,000 (1,092,000,000 ordinary shares at a par value of Baht 6 each), to be reserved for the conversion to ordinary shares of convertible debentures, as discussed in Note 23 b) to the financial statements. The Company registered the increase of its capital with the Ministry of Commerce on 2 July 2008. As at 31 December 2008, the Company’s issued and fully paid share capital has increased to Baht 4,726,329,720 (787,721,620 ordinary shares of Baht 6 each), with Baht 1,382,556 (230,426 ordinary shares of Baht 6 each) of this being the result of the exercise of warrants in December 2007 and June 2008. The Company registered the corresponding increase in its capital with the Ministry of Commerce on 8 January 2008 and 8 July 2008.
27. Warrants
Units Outstanding as at 31 December 2007 8,909,176 Exercised during the year (36,600) Outstanding as at 31 December 2008 8,872,576 The warrants are to be exercisable in a ratio of 1 warrant to 1 new ordinary share at an exercise price of Baht 0.01 per share and have an exercise period of 10 years from the issue date, 7 November 2002, with stipulated exercise dates of the end of the second and the fourth quarter of each year. The Extraordinary General Meeting of the Company’s shareholders No.1/2008 held on 20 June 2008 passed to approve the cancellation of 39,000,000 ordinary shares reserved for the exercise of warrants issued to directors and/or employees of the Company (ESOP). In December 2007 and June 2008, the Company received advance subscription of Baht 0.01 per share to 230,426 of the additional ordinary shares arising from the exercise of the warrants, a total of Baht 2,304. The Company registered the resulting increase of Baht 1,382,556 in its capital with the Ministry of Commerce on 8 January 2008 and 8 July 2008, resulting in share discount totaling Baht 44,093,444.
28. Statutory reserve
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.
29. Expenses by nature
Significant expenses by nature are as follows:
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(Unit: Baht) Consolidated Separate financial statements financial statements 2008 2007 2008 2007 Salary and wages and other employee benefits 371,077,851 320,879,898 310,610,611 270,576,130 Depreciation and amortisation 67,761,368 48,074,143 58,976,422 45,000,227 Rental expenses 23,840,531 19,300,317 19,358,596 18,493,938 Specific business tax and transfer fees 74,097,269 243,016,213 68,805,738 221,694,721 Marketing expenses 294,714,725 300,270,296 268,781,269 278,420,225 Loss arising from minimum revenue guarantee 73,800,000 - 73,800,000 - Real estate development during the year 4,827,401,202 4,109,976,791 3,840,439,231 3,692,338,356 Changes in real estate projects 180,233,686 86,858,366 734,867,361 169,027,945 Finance cost 434,326,714 479,147,011 364,961,272 435,071,991
30. Corporate income tax
The Company is not liable to corporate income tax for the year 2007 due to tax loss brought forward.
31. Earnings per share
Basic earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. The following table sets forth the computation of basic and diluted earnings per share: (Unit: Baht) Consolidated financial statements Weighted average Earnings Net income number of ordinary shares per share 2008 2007 2008 2007 2008 2007 Basic earnings per share Net income attributable to equity holders of the parent 804,546,744 411,606,819 787,703,620 787,454,478 1.02 0.52 Effect of dilutive potential ordinary shares Warrants 8,872,576 units (2007: 8,909,176 units) - - 8,867,662 9,114,330 Unsubordinated convertible debentures 84,133,336 - 131,680,000 - Diluted earnings per share Net income of ordinary shareholders assuming the conversion of dilutive potential ordinary shares 888,680,080 411,606,819 928,251,282 796,568,808 0.96 0.52
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Annual Report 2008
(Unit: Baht)
Separate financial statements Weighted average Earnings Net income number of ordinary shares per share 2008 2007 2008 2007 2008 2007 Basic earnings per share Net income attributable to equity holders of the parent 798,268,725 368,780,745 787,703,620 787,454,478 1.01 0.47 Effect of dilutive potential ordinary shares Warrants 8,872,576 units (2007: 8,909,176 units) - - 8,867,662 9,114,330 Unsubordinated convertible debentures 84,133,336 - 131,680,000 - Diluted earnings per share Net income of ordinary shareholders assuming the conversion of dilutive potential ordinary shares 882,402,061 368,780,745 928,251,282 796,568,808 0.95 0.46 Since the conversion to ordinary shares of the unsubordinated convertible debentures would increase earnings per share in the consolidated and separate financial statements for the year ended 31 December 2007. Therefore, the Company has not assumed conversion of unsubordinated convertible debentures in calculation of diluted earnings per share in the consolidated and separate financial statements for the year ended 31 December 2007.
32. Financial information by segment
The Company’s and its subsidiaries’ operations involve principally a single industry segment, property development, and are carried on in the single geographic area of Thailand. As a result, all of the revenues, operating income and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area.
33. Provident fund
The Company, its subsidiary and their employees have jointly established provident funds in accordance with the Provident Fund Act B.E. 2530. The Company, its subsidiary and their employees contributed to the fund monthly at the rate of 3 10 percent of basic salary. The fund, which is managed by Kasikorn Asset Management will be paid to employees upon termination in accordance with the fund rules. During the current year, the Company and its subsidiary contributed Baht 15.5 million (2007: Baht 13.3 million) (Separate financial statements: Baht 13.1 million (2007: Baht 11.5 million)) to the fund.
34. Dividends
Final dividend for 2007
Approved by Total dividends Annual General Meeting of the shareholders on 30 April 2008 Baht 189.0 million
Dividend per share Baht 0.24
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35. Commitments and contingent liabilities
35.1 Capital commitments a) The Company and its subsidiary had outstanding commitments of approximately Baht 608.5 million in respect of construction contracts of land and house projects and residential condominium units of which the Company and its subsidiary had already entered into contracts with subcontractors. b) The Company and its subsidiary had outstanding capital commitments of approximately Baht 1,240.1 million in respect of purchases of land. c) The subsidiary had the outstanding capital commitments of approximately Baht 17.2 million in respect of land lease for real estate development. d) The subsidiary had outstanding commitments of approximately Baht 14.0 million in respect of a design contract for a shopping center and office project. e) The Company had outstanding commitment in respect of a contract to construct no fewer than 300 residential units using a prefabrication system, and if the Company assigns the contractor to build fewer than 300 units, it must pay compensation of an amount stipulated in contract.
35.2 Operating lease commitments The Company and its subsidiary have entered into several lease agreements in respect of the lease of land, vehicles, advertising board, office space and various services. The terms of the agreements are generally between 1 and 3 years. Operating lease agreements are non-cancellable. As at 31 December 2008, future minimum lease payments required under these non-cancellable operating lease contracts were as follows. Payable within: Million Baht Less than 1 year 46.9 1 to 5 years 14.4 During the year 2008, the Company and its subsidiaries recognised rental expenses of Baht 23.8 million (Separate financial statements: Baht 19.4 million). 35.3 Long-term service commitments The Company has entered into clubhouse management agreements with its subsidiary. Under the conditions of these agreements, the Company is to pay monthly service fees as stipulated in the agreements. The fees for the year 2008 amounted to approximately Baht 10.5 million. 35.4 Guarantees a) The Company has guaranteed debentures and bank credit facilities of its subsidiaries amounting to Baht 1,304.9 million. b) As at 31 December 2008, there were outstanding bank guarantees of approximately Baht 458.5 million in respect of public utilities issued by the banks on behalf of the Company and its subsidiary. c) As at 31 December 2008, there was an outstanding letter of guarantee issued by a bank on behalf of the Company to guarantee minimum revenue of the Fund of Baht 55 million per year for a period of 5 years, ending on 31 December 2012.
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36. Financial instruments
36.1 Financial risk management The Company’s and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally consist of the following. Financial assets Financial liabilities • Cash and cash equivalents • Bank overdrafts and short-term loans from • Trade accounts receivable, net financial institutions • Account receivable - land • Trade accounts payable • Advances to contractors, net • Loans from other company/individua l • Restricted deposits • Debentures • Advances to related company • Creditors per rehabilitation plan • Loans to related companies, net • Amounts due to related companies • Investments in subsidiaries • Advance from director • Investment in associate • Deposits and cash received in advance • Other long-term investments, net • Unsubordinated convertible debentures • Advances for purchases of land • Long-term loans • Deposits and cash received in advance for sublease agreement The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, account receivable - land, advances and loans. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk involved the real estate business since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of trade accounts receivable, account receivable - land, advances and loans and as stated in the balance sheet. Interest rate risk The Company and its subsidiaries are exposed to interest rate risk relating primarily to their cash at banks, loans, bank overdrafts and short-term loans from financial institutions, loans from other company/individual, creditors per rehabilitation plan, debentures, unsubordinated convertible debentures and long-term loans. However, since most of the Company’s and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2008 classified by type of interest rates are summarised in the table below on the maturity date or, the repricing date if this occurs before the maturity date.
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Consolidated financial statements Fixed interest rates Floating Within 1 - 5 Over interest Non-interest 1 year years 5 years rate bearing Total Financial assets
Cash and cash equivalents Trade accounts receivable, net Account receivable - land Advances to contractors, net Restricted deposits Investment in associate Other long-term investments, net Advances for purchases of land Financial liabilities Bank overdrafts and short-term loans from financial institutions Trade accounts payable Loans from other company/individual Debentures Creditors per rehabilitation plan Advance from director Deposits and cash received in advance Unsubordinated convertible debentures Long-term loans Deposits and cash received in advance for sublease agreement
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(Unit: Million Baht)
Interest rate (% p.a.)
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -
452.9 - - - 8.9 - - - 461.8
2.1 33.8 35.4 44.7 - 416.7 51.7 476.2 1,060.6
455.0 0.125% - 0.75% 33.8 - 35.4 - 44.7 - 8.9 0.25% - 0.5% 416.7 - 51.7 - 476.2 - 1,522.4
- - 31.0 - - - - - -
- - - - - - - 809.2 -
- - - - - - - - -
528.3 - - 462.2 265.6 - - - 2,954.4
- 472.9 - - - 80.0 112.2 - -
528.3 MLR 472.9 - 31.0 8.00% 462.2 8.80% - 12.153% 265.6 MLR 80.0 - 112.2 - 809.2 9.56% 2,954.4 MLR
- 31.0
- 809.2
- -
- 4,210.5
57.7 722.8
57.7 - 5,773.5
Separate financial statements Fixed interest rates Floating Within 1 - 5 Over interest Non-interest 1 year years 5 years rate bearing Total
(Unit: Million Baht)
Interest rate (% p.a.)
Financial assets Cash and cash equivalents - - - 426.9 1.7 428.6 0.125% - 0.75% Trade accounts receivable, net - - - - 30.2 30.2 - Account receivable - land - - - - 35.4 35.4 - Advances to contractors, net - - - - 42.2 42.2 - Restricted deposits - - - 8.9 - 8.9 0.25% - 0.50% Advances to related company - - - - 1.5 1.5 - Loans to related companies, net - - - 412.1 - 412.1 8.34% - 9.00% Investments in subsidiaries - - - - 541.1 541.1 - Investment in associate - - - - 360.0 360.0 - Other long-term investments, net - - - - 51.7 51.7 - Advances for purchases of land - - - - 388.9 388.9 - - - - 847.9 1,452.7 2,300.6 Financial liabilities Bank overdrafts and short-term loans from financial institutions - - - 508.0 - 508.0 MOR, MLR Trade accounts payable - - - - 402.8 402.8 - Creditors per rehabilitation plan - - - 265.6 - 265.6 MLR Amounts due to related companies - - - - 84.0 84.0 - Deposits and cash received in advance - - - - 103.7 103.7 - Unsubordinated convertible debentures - 809.2 - - - 809.2 9.56% Long-term loans - - - 2,564.9 - 2,564.9 MLR Deposits and cash received in advance for sublease agreement - - - - 57.7 57.7 - - 809.2 - 3,338.5 648.2 4,795.9 36.2 Fair value of financial instruments Since the majority of the Company’s and its subsidiaries’ financial assets and liabilities are short-term or have interest rates close to the market rates. The fair values of these financial assets and liabilities are not expected to differ materially from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using and appropriate valuation technique, depending on the nature of the instrument.
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37. Capital management
The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. According to the balance sheet as at 31 December 2008, the Group’s debt-to-equity ratio was 0.9:1 (2007: 1.1:1) and the Company’s was 0.8:1 (2007: 1.1:1).
38. Subsequent event
On 27 February 2009, a meeting of the Company’s Board of Directors passed a resolution to propose the payment of a dividend of Baht 0.36 per share, totaling Baht 283.6 million in respect of the year 2008 income.
39. Approval of financial statements
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These financial statements were authorised for issue by the Company’s Board of Directors on 27 February 2009.
Annual Report 2008
The Board of Directors’ responsibilities for financial reports Property Perfect Public Company Limited’s and subsidiaries’ financial statements are prepared in compliance with accounting standard stipulated in the Accounting Professions Act B.E.2547, presented in accordance with the requirements in the Business Development Department’s announcement on 14 September 2001 regarding in the Accounting ACT.B.E.2543 , and adjusts accounting practices to be in line with the Federation of Accounting Professions Notification 9/2007, 38/2007 and 62/2007 concerning the accounting standard. The Board of Directors has appointed the Audit Committee comprising non-executive directors to take responsible for financial reports to follow the account standard and related regulators, disclose adequate and on-time information, and have internal control system to supervise internal control activities and the Audit Committee’s Opinions in the Audit Committee’s reports shown in the annual report The Board of Directors takes responsible for Property Perfect’s and its subsidiaries’ financial reports prepared to ensure that financial position, revenue, expense and cash flow are presented accurately and reasonably. The Board of Directors prepares accurate and complete accounting records to maintain assets, and internal control system to prevent fraudulent irregularities activities. The Board of Directors has selected the appropriated and constantly practical accounting policy in preparing the financial reports to reflect the company’s actual performance in compliance with the Generally Accepted Accounting principles and adequate information disclosure in notes to financial statements. Auditor expresses opinions on Property Perfect’s and subsidiaries’ financial statements in auditors’ report. Tawatchai Nakata Chainid NgOw-sirimanee Chairman Chief Executive office
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Audit Committee Report 2008 Dear Valued shareholders Property Perfect Public Company Limited’s Audit Committee comprises three independent directors – Mr.Virayuk Puntupetch as Chairman, and Mr. Somsak Toraksa and Dr. Thamnoon Ananthothai as directors. In 2008, the Audit Committee performed duty in accordance with scope of responsibility assigned by the company’s Board of Directors. It held 8 meetings to consider financial information, operating results, risk management, and operation problems and obstacles. Executives were occasionally invited to participate the audit committee’s meeting to clarify information and report improvement of internal control as suggested. The Audit Committee organized a joint meeting with auditor to acknowledge auditor’s opinion on the company’s annual financial statements and discussed with legal consultants to acknowledge practices under related laws. The Audit Committee’s activities can be summarized as follows: 1. To review quarterly and yearly financial statements, and yearly consolidated financial statements for the year 2008 Audit Committee jointly reviewed the financial statements with executives and auditor to ensure that the financial statements were prepared appropriately, and compliance with the Generally Accepted Accounting Principles and other related regulations. The committee also has duty to assure accounting system’s accuracy and reliability and sufficient and on-time information disclosure in financial statements to benefit investors and financial statements users in making investment decision. 2. To review connected transactions Audit Committee reviewed connected transactions between the company and subsidiaries and associates to assure that the company operated in normal course of business and provided necessary financial assistance to subsidiaries for project development and expansion as planned. 3. To review risk management Audit Committee reviews the company’s risk assessment, gives suggestions about the organisation’s risk management measures, evaluates risk factors of the overall business to ensure that the company can mitigate risk to the acceptable level and achieve its objectives. 4. To review good corporate governance Audit Committee conducted corporate governance self assessment as assigned by the company’s Board of Directors and proposed the evaluation result to the company’s Board of Directors. According to the overall evaluation result, the company’s practice to be compatible with corporate governance’s principles was good. However, the company should set more appropriate practical principles concerning rights of stakeholders and responsibility of the company’s Board of Directors. In addition, the company should set the practical principles for Audit Committee to supervise the company to transparently disclose information to comply with the Securities and Exchange Act and laws governing the company’s business. 5. To review evaluation of internal control system Audit Committee reviews as to whether the company’s internal control system is appropriate, achieves its objectives in using resources efficiently and effectively, and has a preventive system to reduce mistakes, damages and deplete the company’s resources as well as whether the financial statements is reliable. The company’s auditor give opinion results from the company’s internal control system evaluation do not found any substantial fault that might affect to accuracy and reliability of the company’s financial statements.
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6. To supervise internal audit activities Audit Committee has duty to approve the annual audit plan if the internal audit office, acknowledge the 2007 internal control system evaluation’s results as approved plan, supervise internal audit tasks proceeded efficiently and effectively under the acceptable risk level and appropriately with the changed environment, set audit mission to focus on preventing risk that might happen, and let the company follow suggestions in important matters stated in the system evaluation report. 7. To review the company’s monitoring and operating performance evaluation system Audit Committee reviews the company’s performance to ensure that the company follows the targets and adjusts operation to be accordance with the changed situation. The committee supports the company to determine clearer performance evaluation and indicators, and constantly follow the internal control system activities, and enhance the internal control become a part of normal practice of management and related staff. 8. To conduct audit committee’s self assessment Audit Committee carried out self assessment to evaluate the entire committee in many aspects including authority, internal control, and financial statements arrangement to use the result in improving its operation and to report to the company’s Board of Directors. 9. To review Audit Committee Charter Audit Committee amended Audit Committee Charter in part of scope of authority to be clearer. 10. To present academic information concerning property development business from locally and internationally. Audit Committee also suggests the company about financial, accounting, legal, and engineering to enable the company to accomplish its business goal. 11. To select auditor Audit Committee selects auditor based on their independence and appropriateness of remuneration to seek approval from the company’s Board of Director and shareholders. Both the Board of Directors and shareholders appointed Ernst & Young
Co., Ltd. as the auditor for 2009. Audit Committee constantly reports resolutions of all meetings to the Board of Directors, independently practices assigned tasks on behalf of the Audit Committee with knowledge and competence, and gives suggestions straightly and appropriately for interests of the company, shareholders and other stakeholders. (Mr. Virayuk Puntupetch) Chairman of the Audit Committee 27 February 2009
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Auditor Fee Accuracy Sanctification Form Audit Fee Item 1 2 3 4 5 Total fee
Payer
Auditor Miss. Siraporn Ouaanunkun Miss. Siraporn Ouaanunkun Miss. Siraporn Ouaanunkun Miss. Siraporn Ouaanunkun Miss. Siraporn Ouaanunkun
Property Perfect Plc. Estate Perfect Co.,Ltd. Perfect Satellite Services Co.,Ltd Bright Development Bangkok Co.,Ltd. Center Point Shopping Mall Co.,Ltd.
Fee 1,650,000 500,000 100,000 220,000 100,000 2,570,000
The above information is Accurate. I certify there is no other service I know of that the company and subsidiaries awarded to me, my auditing firm, and ind ividuals or companies connected to me. Inaccurate. Note: To improve the above information (if any), I affirm the accuracy of all information in this form that shows the audit fee and other service fee that the company and subsidiaries pay to me, my auditing firm, and individuals or companies connected to me. (Miss. Siraporn Ouaanunkun) Ernst & Young Co.,Ltd Auditor of Property Perfect Public Company Limited
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