Page 1


CONTENTS 1. Financial Highlights for the year 2010 - 2012………………………………………………………………….5 2. Message from President and Chief Executive Officer……………………………………………........……6 3. Responsibilities of the Board of Directors in Regards to Financial Report………………………………..12 4. Report from the Audit Committee…………………………………………………………………...........…13 5. The Board of Directors and Executives………………………………………………………………………..15 6. The Profile of Directors and Executives………………………………………………………………………..16 7. Nature of Business………………………………………………………………………………………………22 8. The Company’s Investments……………………………………………………………………………………30 9. Marketing and Competition……………………………………………………………………………………..32 10. Revenue Structure………………………………………………………………………………………………..39 11. Risk Factors……………………………………………………………………………………….......…………41 12. Shareholder Structure and Management………………………………………………………………...…..46 12.1 Shareholders 12.2 Management 12.2.1 Structure of the Board of Directors 12.2.2 Remuneration for Directors and Executives 12.2.3 Corporate Governance 12.2.4 Supervision of the Use of Insider Information 12.2.5 Personal 12.3 Dividend Payment Policy 12.4 Internal Control 13. Connected Party Transactions…………………………………………………………………………………76 14. Explanation and Analysis of Financial Position and Operation Results……………………….. ………..109 15. Financial Statements 15.1 Report of Independent Auditor………………………………………………………………………..121 15.2 Financial Statements……………………………………………………………………………………122 15.3 Remuneration for the Auditor………………………………………………………………………….177 16. Other References ………………………………………………………………………………………………178 17. Head Office and Projects Location……………………………………………………………………………180 18. Content Summary of Transaction Specified in the Annual Report 2012 (Form 56-2)………...........……184


Quality Houses Public Company Limited

VISION

Q TWELVE

Q TWELVE

To be the top-of-mind real estate development company for customers in all segments for its leadership in product quality and services

MISSIONS - Product Quality and Service Quality : Always improve and develop the Company’s 5 qualities to satisfy the consumer . - Work Life Quality : Create work environment and company culture and improve employee benefits to achieve maximum performance. - Personnel Quality : Operate legally with a transparency which can be checked at every stage. : Encourage and support employees to develop their potential in various fields in accordance with their responsibilities. - Social Quality : Promote accountability to the communities and the surroundings of areas where the Company, Quality Houses Plc., and its subsidiaries operate, as well as society. : Seek for new and better ways to create and build sustainability for products, environment, organization and society. - Investment Quality : Improve operational efficiency in order to achieve growth in profitability. : Find new ways to generate sustainable long-term profitability.


OUR PROJECTS

Q Twelve

Prukpirom Ratchapruk Rattanathibet

Prukpirom Regent Ratchapruk Rattanathibet

Laddarom Elegance Ratchapruk Rattanathibet

Laddarom Watcharapol Rattanakosin

Q.House Avenue Phraram 5

Laddarom Elegance Outer Ring Road - Sathorn

Laddarom RatchaprukRattanathibet 2

Vararom Premium Watcharapol-Chatu Chot

Casa Grand Petchkasem-Sai 1

Casa Grand Taksin-Phraram 2

Laddarom ChaiyaprukChaengwattana

Casa Grand Outer Ring RoadOn Nuch

Casa Grand ChaiyaprukChaengwattana

Casa Grand RattanathibetRatchapruk


Casa Legend KasetNawamintr

Casa Premium RatchaprukPharam 5

Casa Premium RatchaprukChaengwattana

Casa Presto Phraram 2

Casa Presto RatchaprukChaengwattana

Casa Ville Ratchapruk Phraram 5

Casa Ville Ramkamhaeng Outer Ring Road

Casa Ville Ramintra-Outer Ring Road

Casa Ville Rangsit Khong 2

Casa Ville RatchaprukChaengwattana

Casa Ville Watcharapol Sukhaphiban 5

The Trust Ville KanchanapisekHathairat

The Trust Ville WatcharapolHathairat

The Trust City Ngamwongwan 25

The Trust Town Outer Ring Road - Lumlukka

Gusto Ramkhamhang

Gusto Thanam-nont

Gusto Pinklao


Laddarom Elegance Middle Ring Road - Mahidol Junction

Vararom Kaewnawarat

Vararom Charoen Muang

Casa Ville Sriracha

Casa Seaside Rayong

Casa Seaside Cha-Am

Q Langsuan

Q.House Sukhumvit 79

Casa Condo Asoke Dindang

Casa Condo Sukhumvit 97

Casa Condo Chang Puak (Chiangmai)

The Trust Residence RatchadaPhraram3

The Trust Residence Pinklao

The Trust Condo Hua-Hin

Casa Legend Sriracha

CONDOMINIUM

Casa Condo RatchadaRatchapruk

The Trust Condo Central Pattaya


FINANCIAL HIGHLIGHTS FOR THE YEAR 2010 - 2012 (Unit : million baht)

2010

2011

2012

Summary of Financial Statements Information

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Financial Ratio

2010

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2012

2010

2011

2012

2010

2,386 853

2,003

14,409

10,032

13,631 2011

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41,565

37,966

30,549

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2011

2012

Quality Houses Public Company Limited

05


MESSAGE FROM PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mr. Rutt Phanijphand President and Chief Executive Officer

Dear Shareholders, ,Q7KDLODQGt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u&RPSDQ\v LQZDVEHWWHUWKDQWKHSUHYLRXV\HDUDVVXPPDUL]HGEHORZ

1. Revenue from operations by business segment 







2012

 2011

 Difference (million baht)

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Difference(%)

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06 Annual report 2012


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07


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2012

2011

Difference (million baht) Difference (%)

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3. Cost of sales by business segment  8QLWPLOOLRQEDKW

2012

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2011

Difference(million baht)

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4. Expenses  8QLWPLOOLRQEDKW

2012

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08 Annual report 2012

2011

         

Difference (million baht)

Difference(%)

    

    

 

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5. Profit for the year 











2012

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Difference(million baht)

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Quality Houses Public Company Limited

09


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31 Dec 2012

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31 Dec 2011 Difference(million Baht)

    

  

Difference(%)

  

6. Financial position

Financial Position

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Shareholders’ Equity

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10 Annual report 2012


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RESPONSIBILITIES OF THE BOARD OF DIRECTORS IN REGARDS TO FINANCIAL REPORT

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12 Annual report 2012



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14 Annual report 2012











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THE PROFILE OF DIRECTORS AND EXECUTIVES Education

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Mr.Rutt Phanijphand [ 65 years ]

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THE PROFILE OF DIRECTORS AND EXECUTIVES Education

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1RQH Ms.Kanokvalee Viriyaprapaikit [ 47 years ]

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THE PROFILE OF DIRECTORS AND EXECUTIVES Education

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Mr.Krit Phunratanamala [ 44 years ]

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Mr.Suang Chaisurote [ 57 years ]

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Mr.Pravit Choatewattanaphun [ 55 year ]

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23


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24 Annual report 2012


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Quality Houses Public Company Limited

25


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3. The business enterprises

3.1 Overview of business operations of the Company, Subsidiaries and Associated Companies

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26 Annual report 2012


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3.2 Policies in dividing the operations of the Companies, Subsidiaries and Associated Companies

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Quality Houses Public Company Limited

27


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28 Annual report 2012


3.3 Goals of business operation

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Quality Houses Public Company Limited

29


THE COMPANYâ&#x20AC;&#x2122;S INVESTMENT 1. The investments of Quality Houses Plc. &RPSDQ\

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Note

1/ On November 08, 2011, the Quality Houses Property Fund had received an approval from the SEC to amend the fundâ&#x20AC;&#x2122;s name to â&#x20AC;&#x153;Quality Houses Leasehold Property Fund (QHPF)â&#x20AC;?.

30 Annual report 2012


2. The investments of Q.H. International Co., Ltd. (Subsidiary) &RPSDQ\

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3. The investment of The Confidence Co., Ltd. (Subsidiary) &RPSDQ\

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4. The investment of Casa Ville Co.,Ltd. (Subsidiary) &RPSDQ\

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Quality Houses Public Company Limited

31


MARKETING AND COMPETITION 1. Marketing and competition

1.1 Nature of products or services

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(Price per unit)

Q Twelve > 100 million baht

Detached House Project Prukpirom / Laddarom / Q House Avenue Prukpirom Regent Laddarom Elegance 24-80 million baht 30-85 million baht 7-30 million baht

Vararom/ Vararom Premium 4-12 million baht

1. Quality Houses Plc. 2. Casa Ville Co.Ltd.

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(Price per unit)

Detached House Project Company 4XDOLW\+RXVHV3OF &DVD9LOOH&R/WG &DVD9LO H 3HWFKEXUL  &R/WG &DVD9LOOH 5D\RQJ  &R/WG

32 Annual report 2012

Casa Grand / Legend 7-12 million baht

Town House Project

Casa Premium

Casa Ville/ Presto

Casa Seaside

Casa City

5-7 million baht

4-6 million baht

3-6 million baht

2-5 million baht


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(Price per unit)

Single House Project The Trust 3-5 million baht

Company

Town House Project Gusto The Trust 2-3 million baht 3-4 million baht

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Company

High-end Product Q. Condo Q. House Condo 14-140 million baht 3-7 million baht

Medium Product Casa Condo 2-5 million baht

Low-end Product The Trust Residence 1.5-4 million baht

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Quality Houses Public Company Limited

33


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1.2 Pricing policy

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1.3 Distribution and distribution channels

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1.4 Target customers and their characteristics

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Quality Houses Public Company Limited

35


1.5 Environmental impact

:LWKUHJDUGWRWKHLPSOHPHQWDWLRQRIDOOWKH&RPSDQ\tVDQGLWVVXEVLGLDULHVt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

2. Industrial situation and competition

&ODVVLILHGDFFRUGLQJWRWKHQDWXUHRIEXVLQHVVHVRSHUDWHGE\WKH&RPSDQ\DVIROORZV 2.1 Business of land and houses for sale

7KHKRXVLQJPDUNHWLQZDVLQFUHDVLQJDVUHIOHFWHGE\WKHWRWDORIXQLWVRIKRXVHUHJLVWUDWLRQGXULQJ -DQXDU\1RYHPEHURULQFUHDVHLQFRPSDULVRQWRWKHWRWDORIXQLWVGXULQJWKHVDPHSHULRGRI :KHQFRQVLGHULQJWKHVSHFLILFW\SHVRIFRQVWUXFWLRQWKHQXPEHURIGHYHORSHUEXLOWKRXVHVZDVXQLWV LQFUHDVLQJE\ZKLOHWKHQXPEHURIRZQHUEXLOWKRXVHVZDVXQLWVLQFUHDVLQJE\IURPWKHVDPH SHULRGRIWKH\HDU ,QFUHDVHLQ5HVLGHQWLDO8QLW5HJLVWUDWLRQLQ%DQJNRNDQG0HWURSROLWDQ$UHD Developer-built

148,557 5

160,000

121,2133

140,000

owner-built

0

79,720 21,917

58,550 18,616

22,4988

19,618

24,0177

, 50,189 25,341

8 50,808 8 28,949

46,469 4 25,244 4

48,441 4 19,859

18,598

19,489 17,693

37,487

44,338 3

14,341 19,639

20,000

15,010 18,064

40,000

22,716 13,532 15,497

28,059 8

60,000

27,418 4

80,000

61,562

775,359

100,000

84,395

120,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source : Information Center, Government Housing Bank

36 Annual report 2012

Jan-Nov Jan-Nov


$GGLWLRQDOGHYHORSHUEXLOWKRXVHUHJLVWUDWLRQVFODVVLILHGE\W\SHVRIKRXVLQJEHWZHHQ Additional developer-built house registrations classified by types of housing

2011 (Jan-Nov)

2012 (Jan-Nov)

% changes of 2012/2011

   

   

   

   

84,395

58,550

79,720

+36.16%

2007

2008

2009

2010

7RZQKRXVHVDQGFRPPHUFLDOEXLOGLQJV &RQGRPLQLXP

   

   

   

Total additional developer-built house registration

50,189

61,562

75,359

'HWDFKHGKRXVHV 'XSOH[HV

Source : Information Center, Government Housing Bank

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37


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

: Central Business District - Silom, Sathorn, Surawongse, Rama IV, Ploenchit, Wireless, Down Town Sukhumvit, and Asoke Roads, etc. Non CBD : Sukhumvit, Petchburi, Rachadapisek, Paholyothin, Vibhavadee-rangsit, Rama III, Bangna-Trad Roads, etc. 2.3 Residential buildings for rent/ service apartments/ hotels

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ource : Alien Section, Work Provision Department; The Office of Board of Investment; The Tourism Department; Information gathered by Quality Houses Plc. Remark : * The number of residential units has been adjusted to be as actual as possible since some projects were during the development phase and the project design was still unclear.

38 Annual report 2012


REVENUE STRUCTURE Revenue structure of Quality Houses Public Company Limited and its Subsidiaries 1/ Revenue by Business

Operate by

(Unit : million baht)

2010

2011

2012

Revenue

%

Revenue

%

Revenue

%

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Note :

1/ The Companyâ&#x20AC;&#x2122;s revenue is entirely from domestic sales. 2/ Subsidiaries are Casa Vill Co.,Ltd., The Confidence Co.,Ltd., Casa Ville (Petchburi 2553) Co.,Ltd. and Casa Ville (Rayong 2553) Co.,Ltd and Gusto Village Co.,Ltd.

Single Detached House Business

68.7

76.2

60.0

21.1

11.7

5.1 2.2 2.9

7.0 3.3 1.8

23.2 5.2 2.4 9.2

2010

2011

Residential Condominium for Sale Business Serviced Apartment Business Office Building for Rent Business Other income

2012 Quality Houses Public Company Limited

39


7KHVWUXFWXUHRISURILW ORVV IURPDVVRFLDWHGFRPSDQLHVWKURXJKHTXLW\PHWKRG (Unit : million baht)

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:

1/

/+)LQDQFLDO*URXS 3OF



On 21 April 2009, the Annual General Meeting of the Companyâ&#x20AC;&#x2122;s shareholders passed a resolution acknowledging the process of changing the direct investment in Land and Houses Retail Bank Plc. to an indirect investment through LH Financial Group Plc.

2/ On 28 November 2011, the Quality Houses Property Fund had received an approval from the SEC to amend the fund's name to "Quality Houses Lease hold Property Fund (QHPF)".

40 Annual report 2012


RISK FACTORS 1. Financial Risk Risk from investments, lending, and guarantees made to the related company, Harbour View Co., Ltd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t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tVULVNIURPWKHJXDUDQWHHWRWKLVORDQKDVEHHQUHGXFHG$GGLWLRQDOO\WKH &RPSDQ\DOVRFORVHO\PRQLWRUVWKHILQDQFLDOVLWXDWLRQSHUIRUPDQFHDQGWKHLPSOHPHQWDWLRQRIWKHGHEWUHVWUXFWXULQJ SODQRI+DUERXU9LHZ&R/WG

Quality Houses Public Company Limited

41


Risks of liabilities of the issuance of the Company bond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isks of interest rate volatility and access to capital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

2. Business Risk Risk incurred from pre-built home construction 7KH&RPSDQ\DQGLWVVXEVLGLDULHVRSHUDWHDEXVLQHVVRISURSHUW\GHYHORSPHQWZLWKWKHPDLQUHYHQXHJHQHUDWHGIURPWKH VDOHVRIODQGDQGKRXVHV,QDQGWKH&RPSDQ\DQGLWVVXEVLGLDULHVtUHYHQXHIURPVDOHVRIODQGDQGKRXVHVZDV DQGRIJHQHUDWHGWRWDOUHYHQXHIURPWKHLUSURSHUW\EXVLQHVVUHVSHFWLYHO\7KH&RPSDQ\DQGLWVVXEVLGLDULHV KDYHWKHRSHUDWLQJSROLF\WRLQVXUHWKDWKRXVLQJFRQVWUXFWLRQVZHUHFRPSOHWHEHIRUHVHOOLQJIRUKRXVHVDWWKHPHGLXPSULFH

42 Annual report 2012


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43


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44 Annual report 2012


4. Risks that may occur due to flood in the 4th quarter of 2011 7KHPDMRUIORRGLQJWKHLQFHQWUDOUHJLRQRI7KDLODQGDVZHOODVLQ%DQJNRNDQGYLFLQLW\DIIHFWHGPRVWRIWKHUHVLGHQWLDO SURMHFWVORFDWHGLQ%DQJNRNDQGLWVYLFLQLW\DQGOHGWRDPDVVLYHVORZGRZQLQWKHEXVLQHVVRISURSHUW\IRUVDOHVLQWKHWK TXDUWHURI )RUWKH&RPSDQ\tVDQGLWVVXEVLGLDULHVtSURMHFWVORFDWHGLQWKH]RQHVRI5DWFKDSUXHN5RDG&KDL\DSUXHNURDGDQGRWKHU IORRGHGDUHDVWKHWRWDORISURMHFWVZHUHDIIHFWHGDVIROORZV  w7KH&RPSDQ\DQGLWVVXEVLGLDULHVKDGFRQVLGHUDEO\ORZUHFRJQL]HGUHYHQXHIURPWKHVDOHVRUWKHWUDQVIHURIODQG DQGKRXVHSURMHFWVORFDWHGLQWKHIORRGHG]RQHV w7KH&RPSDQ\DQGLWVVXEVLGLDULHVZHUHREOLJHGWRSURYLGHDIXQGIRUSURMHFWVWRUHKDELOLWDWHWKHSURMHFWHQYLURQPHQW WRUHSDLUKRXVHVWKDWKDGFRPSOHWHO\EHHQEXLOGEXWQRW\HWVROGRUWUDQVIHUUHGDQGWRUHSDLUWKHSXEOLFLQIUDVWUXFWXUH ZLWKLQWKHDIIHFWHGSURMHFWV7KHDPRXQWRIIXQGPD\H[FHHGWKHIRUHFDVW ,QDGGLWLRQWKHRYHUDOOPDUNHWIRUWKHEXVLQHVVRIODQGDQGKRXVHVIRUVDOHVVORZHGGRZQHVSHFLDOO\WKHSURMHFWVORFDWHG LQWKHIORRGHG]RQHV7KLVPD\KDYHVKRUWWHUPLPSDFWWRWKH&RPSDQ\tVDQGLWVVXEVLGLDULHVtUHYHQXHIURPWKHVDOHVRI ODQGDQGKRXVHVLQDIHZ\HDUVVLQFHFXVWRPHUVZKRKDYHDQHHGWREX\ODQGDQGKRXVHVKDYHSRVWSRQHGWKHLUEX\LQJ GHFLVLRQLQRUGHUWRVWXG\PRUHDQGWRGHWHUPLQHZKHWKHURUQRWWKHORFDWLRQZLOOEHVDIHIURPWKHIORRGDVLQ 7KHDERYHPHQWLRQHGLPSDFWPD\DOVRDIIHFWWKHFDVKLQIORZRIWKH&RPSDQ\DQGLWVVXEVLGLDULHVZKLFKPD\GHFOLQH EHFDXVHWKHQXPEHURIKRXVHVWUDQVIHUGRHVQRWPHHWWKHVHWWDUJHW+RZHYHUWKH&RPSDQ\DQGLWVVXEVLGLDULHVKDYHD SROLF\WRUHGXFHFDVKRXWIORZDQGWRDFFHOHUDWHFDVKLQIORZDVIROORZV )RFXVRQEXLOGLQJKRXVHVDQGFRQGRPLQLXPVIRUVDOHLQWKHSURMHFWVZLWKJRRGVDOHSHUIRUPDQFHDQGWKDWDUHQRW ORFDWHGLQWKHIORRG]RQHV$FFHOHUDWHWKHH[SDQVLRQRISURSHUW\IRUVDOHEXVLQHVVLQSURYLQFLDODUHDVZKHUHWKH VXEVLGLDULHVRSHUDWH 'HFUHDVHGHOD\SRVWSRQHWKHEX\LQJRIQHZSORWVRIODQGDQGDQ\LQYHVWPHQWLQODUJHDVVHWV 5HGXFHVHOOLQJDQGDGPLQLVWUDWLYHH[SHQVHVZKLFKDUHQRWXUJHQWRUQHFHVVDU\ 0DQJHFDVKIORZRIHDFKSURMHFWVHSDUDWHO\E\DFFHOHUDWLQJWKHVDOHVLQRUGHUWRDFTXLUHPRQH\IRUWKHFRQVWUXFWLRQ RIKRXVHVLQWKHSURMHFWWREHLQOLQHZLWKLWVGHPDQG 7KH&RPSDQ\HVWDEOLVKHG4XDOLW\+RXVH+RWHODQG5HVLGHQFH)UHHKROGDQG/HDVHKROG3URSHUW\)XQGDWWKHYDOXH RIPLOOLRQEDKW7KH&RPSDQ\DOVRVROGWKHSURMHFWVQDPHO\WKH&HQWUH3RLQW+RWHODQG5HVLGHQFH 3HWFKEXULWKH&HQWUH3RLQW+RWHODQG5HVLGHQFH6XNKXPYLWDQGWKH&HQWUH3RLQW+RWHODQG5HVLGHQFH /DQJVXDQWRVXFK)XQGIRUWKHSULFHRIPLOOLRQEDKWDQGLQYHVWHGVRPHRIWKHDFTXLUHGPRQH\LQWKH)XQG DWWKHSURSRUWLRQRIRUPLOOLRQEDKWLQ-XO\

Quality Houses Public Company Limited

45


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46 Annual report 2012


2. Management

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Quality Houses Public Company Limited

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55


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56 Annual report 2012


(E) Risk Management Committee As the Board of Directorsâ&#x20AC;&#x2122; Meeting No.7/2010 convened on December 21st, 2010, has passed its resolution to establish the Risk Management Committee which consists of directors and executives, totally 4 persons, as follows: Risk Management Committee

Title

1. Mr. Rutt

Phanijphand

Chairman

2. Mrs.Suwanna

Bhuddhaprasart

Director

3. Mr.Sanpin

Sukhee

Director

4. Mr.Somsak

Jirarungruangvong

Director

Authorities and Duties of the Risk Management Committee 1) To determine criteria, policies and processes of evaluation and management of risks which have impacts on the Company; 2) To evaluate, analyze and prioritize the risks and to determine guidelines and strategies for risk management so that the risks shall be at an acceptable level under proper costs; 3) To follow up and evaluate the risk management and to report the result of risk evaluation to the Audit Committee; 4) To make decisions and to give advice on major problems occurred in the risk management process; (F) The Executives The Companyâ&#x20AC;&#x2122;s Executives as of December 31st, 2012 are as follows: The Executives

Title

1. Mr. Rutt

Phanijphand

President and Chief Executive Officer

2. Mr. Suang

Chaisurote

Senior Executive Vice President

3 Mrs. Suwanna

Bhuddhaprasart

Senior Executive Vice President

4. Mr. Pravit

Choatewattanaphun

First Executive Vice President

5. Mr. Sanpin

Sukhee

Executive Vice President

6. Mr. Ravee

Mongkholthavee

Executive Vice President

7. Mr. Somchai

Warunpantulak

Senior Vice President, Financial and Accounting Department

8. Mr. Somsak

Jirarungruengvong

Senior Vice President, Customer Transaction Serviced and Treasury Financial and Accounting Department

Quality Houses Public Company Limited

57


2.2 Remunerations for Directors and Executives

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2.3 Corporate Governance

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Procedure for connected transactions and conflicts of interest transaction 7KH&RPSDQ\KDVWKHSROLF\WKDWLWVRSHUDWLRQVPXVWEHLQDFFRUGDQFHZLWKWKHKLJKHVWVWDQGDUGVRIODZVUHOHYDQW UHJXODWLRQVDQGEXVLQHVVHWKLFV 7KH$XGLW&RPPLWWHHKDVUHJXODUO\UHYLHZHGWKHFRQQHFWHGWUDQVDFWLRQVRUWKHUHODWHGWUDQVDFWLRQVDQGKDVHQVXUHG WKDWWKHFRQGLWLRQVIRUWKHWUDQVDFWLRQVVHUYHWKHEHVWLQWHUHVWRIWKH&RPSDQ\E\WUHDWLQJWKHPDVWUDQVDFWLRQVZLWK RXWVLGHUV uDUPtVOHQJWKEDVLVv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eporting the stakeholding of directors $WWKH%RDUGRI'LUHFWRUVt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tVSROLF\RIJRRGFRUSRUDWHJRYHUQDQFH7KHWUHDWPHQWVWRZDUGVHDFKJURXSRIVWDNHKROGHUVDUHDVIROORZV Employees 7KH&RPSDQ\KDVUHDOL]HGWKDWHPSOR\HHVDUHRQHRIWKHPRVWFUXFLDOIDFWRUVWKDWSURPRWHWKH&RPSDQ\tVVXFFHVVHV DQGJURZWKWKHUHIRUHWKH&RPSDQ\KDGLWVSROLF\WRSURPRWHDQGVXSSRUWWKHGHYHORSPHQWRIDOOSHUVRQQHORIWKH &RPSDQ\WRREWDLQSURSHUNQRZOHGJHDQGDELOLWLHVDQGKDYHWKHHTXLWDEOHWUHDWPHQWRILWVHPSOR\HHVDQGWRUHVSHFW WKHKXPDQULJKWVWRFUHDWHJRRGDQGVDIHZRUNLQJHQYLURQPHQWDQGWRJLYHIDLUDQGUHDVRQDEOHUHPXQHUDWLRQDQGZHO IDUHWRLWVHPSOR\HHVDFFRUGLQJWRWKHSRVLWLRQVGXWLHVDQGUHVSRQVLELOLWLHVIRUH[DPSOH

60 Annual report 2012


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61


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Quality Houses Public Company Limited

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2.4 Supervision of the use of inside information

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70 Annual report 2012


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72 Annual report 2012


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Quality Houses Public Company Limited

75


CONNECTED PARTY TRANSACTIONS 1. Transactions between Quality Houses Plc. and its Subsidiaries and Related Companies/Persons 1.1 Land and Houses Property and Loan Fund II (“the Fund”)

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(A) Centre Point Hotel & Residence Wireless Road Project

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Remark

The Company and its subsidiary (Q.H. International Co., Ltd.) held 25.78% and 1.45% of the total shares in Q-CON (as of December 31st, 2009) respectively. On February 23rd, 2010, the Company and its subsidiary signed the Sale of Q-CON Share Agreement with SCG Construction Products Co., Ltd., which Siam Cement Plc., has held 100% of the shares. The whole payment was made and all shares were transferred on February 24th , 2010. Moreover, on March 2nd , 2010, the Company signed the Product Sale Agreement with Q-CON, with the term of Agreement of 3 years. The Company agreed to purchase light-weight bricks at the minimum quantity and prices as prescribed in the Product Sale Agreement incorporated as part of the conditions of the Sale of Q-CON Share Agreement.

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1.11 L&H Property Co., Ltd. 

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1.12 L&H Sathorn Co., Ltd.

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107


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108 Annual report 2012


EXPLANATION AND ANALYSIS OF FINANCIAL POSITION AND OPERATION RESULTS A Overview of Performance

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B Performance of Each Business Sector

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109


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110 Annual report 2012


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Companies/Funds

Year 2011

Year 2012

Increased (decreased)

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638.6

804.0

165.4

Total

3) Cost of Sales, Selling Expenses, Administrative Expenses and Provision for loss arising from Guarantee of minimum Rental Income of the Projects

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111


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6) Operating Results

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112 Annual report 2012


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C Financial Status 1) Assets

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Current Assets

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113


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Non-Current Assets

Investments in associated companies ,QYHVWPHQWVLQDVVRFLDWHGFRPSDQLHVXQGHUWKHFRVWPHWKRGDWWKHHQGRIDQGZHUHPLOOLRQEDKW DQGPLOOLRQEDKWUHVSHFWLYHO\:KLOHDFFRUGLQJWRWKHHTXLW\PHWKRGLQYHVWPHQWVZHUHPLOOLRQEDKW DQGPLOOLRQEDKWUHVSHFWLYHO\ 8QLWPLOOLRQEDKW

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   5,339.5

   6,059.3

   6,392.3

   7,015.2

      1,052.8 955.9

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114 Annual report 2012


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Quality Houses Public Company Limited

115


3) Liquidity

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Year 2011

Year 2012

 

 



 

  

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116 Annual report 2012


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117


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118 Annual report 2012

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119


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Quality Houses Public Company Limited

121


Quality Houses Public Company Limited and its subsidiaries Statement of financial position As at 31 December 2012

Note Assets Current assets Cash and cash equivalents Trade and other receivables Land and construction in progress Advance for construction work Advance for construction material Other current assets Total current assets Non-current assets Restricted bank deposits Investments in subsidiaries Investments in associates Other long-term investments Long-term loans to related parties Investment properties Property, plant and equipment Leasehold rights Land and project development costs Deposits for lease of land and building Deposits for purchase of land Other non-current assets Total non-current assets Total assets

  



        

Consolidated financial statements 2012 2011

(Unit: Baht) Separate financial statements 2012 2011

1,649,810,180 87,774,810 21,697,163,358 809,655,336 57,355,994 194,717,365 24,496,477,043

1,113,322,277 67,321,657 16,426,938,092 292,147,056 59,600,472 216,745,572 18,176,075,126

763,124,593 68,305,703 8,783,894,231 152,888,744 13,689,197 127,355,077 9,909,257,545

573,439,807 58,020,845 6,840,172,302 19,839,529 30,612,638 140,607,983 7,662,693,104

30,306,964 7,015,172,957 1,998 8,581,029 529,364,416 505,678,786 928,100,879 7,915,453,326 90,430,386 9,922,500 35,272,356 17,068,285,597

22,528,123 6,059,309,034 1,998 3,532,458 544,291,914 1,433,913,818 1,512,365,076 10,031,519,389 95,389,753 56,130,824 31,097,121 19,790,079,508

26,426,249 3,393,027,000 6,392,345,749 1,998 14,747,483,722 529,364,416 440,750,668 928,100,879 2,081,449,906 90,430,386 20,361,888 28,649,742,861

22,208,123 3,388,027,500 5,339,545,750 1,998 11,429,822,585 544,291,914 1,375,494,714 1,512,365,076 3,888,842,155 95,389,753 4,720,000 20,898,824 27,621,608,392

41,564,762,640

37,966,154,634

38,559,000,406

35,284,301,496

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV

122 Annual report 2012


Quality Houses Public Company Limited and its subsidiaries Statement of financial position (continued) As at 31 December 2012

Note Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions Trade and other payables Current portion of long-term loans Current portion of unsecured debentures Short-term loans Short-term loan from related party Income tax payable Short-term provisions Advance received from customers Deposits for rental and service Retention guarantees Current portion of rental income received in advance Other current liabilities Total current liabilities Non-current liabilities Long-term loans, net of current portion Unsecured debentures, net of current portion Long-term loan from related parties Provision for long-term employee benefits Long-term provisions Rental income received in advance, net of current portion Total non-current liabilities Total liabilities

     

Consolidated financial statements 2012 2011

(Unit: Baht) Separate financial statements 2012 2011

700,000,000 804,827,547 80,001,000 2,000,000,000 4,571,860,851 528,234,919 182,041,020 493,089,059 100,789,292 352,857,953

545,918,396 294,353,000 5,700,000,000 3,683,131,730 11,286,815 201,276,575 226,135,389 114,611,022 264,468,942

700,000,000 442,536,801 2,000,000,000 4,571,860,851 145,310,561 412,945,927 93,295,547 200,035,859 73,668,253 128,927,432

307,001,234 5,700,000,000 3,683,131,730 142,793,342 115,095,687 55,973,599 89,238,780 130,176,593

 

27,224,000 345,303,617 10,186,229,258

27,224,000 201,017,573 11,269,423,442

27,224,000 145,085,302 8,940,890,533

27,224,000 104,528,220 10,355,163,185



-

722,648,000

-

-

   

15,012,000,000 108,476,747 146,144,595

12,000,000,000 77,171,843 80,046,253

15,012,000,000 246,190,824 84,383,947 146,144,595

12,000,000,000 252,297,595 70,262,516 80,046,253



623,023,312 15,889,644,654

649,266,935 13,529,133,031

623,023,312 16,111,742,678

649,266,935 13,051,873,299

26,075,873,912

24,798,556,473

25,052,633,211

23,407,036,484

 

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV Quality Houses Public Company Limited

123


Quality Houses Public Company Limited and its subsidiaries Statement of financial position (continued) As at 31 December 2012

Note Shareholders' equity Share capital Registered 9,183,784,692 ordinary shares of Baht 1 each (2011: 8,883,558,370 ordinary shares of Baht 1 each) Issued and paid up 9,183,767,553 ordinary shares of Baht 1 each (2011: 8,477,339,715 ordinary shares of Baht 1 each) Share premium Retained earnings Appropriated - statutory reserve Unappropriated Other components of shareholders' equity Total shareholders' equity Total liabilities and shareholders' equity

Consolidated financial statements 2012 2011





9,183,784,692

8,883,558,370

9,183,784,692

8,883,558,370

9,183,767,553 379,246,114

8,477,339,715 379,246,114

9,183,767,553 379,246,114

8,477,339,715 379,246,114

526,779,581 5,316,478,185 82,617,295 15,488,888,728

441,120,546 3,814,064,409 55,827,377 13,167,598,161

526,779,581 3,416,572,653 1,294 13,506,367,195

441,120,546 2,579,557,343 1,294 11,877,265,012

41,564,762,640 -

37,966,154,634 -

38,559,000,406 -

35,284,301,496 -

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV

124 Annual report 2012

(Unit: Baht) Separate financial statements 2012 2011


Quality Houses Public Company Limited and its subsidiaries Statement of comprehensive income For the year ended 31 December 2012 Note Profits or loss: Revenues Sales of real estate Rental of units in office buildings and related service income Rental of units in residential buildings and related service income Other income  Dividend income Interest income Income from forfeitures of booking and down payments Gain on sales of investments Gain on sales of properties and transfer  of leasehold rights to building Gain on changes in shareholders' equity of associated company Others Total revenues Expenses Cost of real estate sold Cost of rental and related services - office buildings Cost of rental and related services - residential buildings Selling expenses Administrative expenses Provision for loss arising from guarantee  of minimum rental income of projects Total expenses Profit before share of profit from investments in associates, finance cost and income tax expenses Share of profit from investments in associates  Profit before finance cost and income tax expenses Finance cost Profit before income tax expenses Income tax expenses Profit for the year Other comprehensive income:  Actuarial losses Share of other comprehensive income of associates Other comprehensive income for the year Total comprehensive income for the year Earnings per share  Basic earnings per share Profit attributable to equity holders of the Company

Consolidated financial statements 2012 2011

(Unit: Baht) Separate financial statements 2012 2011

11,984,369,166

8,813,672,114

3,841,539,415

4,183,346,149

346,645,596

330,989,266

348,479,744

334,454,125

745,794,966

704,370,381

362,504,626

421,656,183

18,992,539

13,944,367

361,986,743 576,680,387

461,590,067 426,864,597

12,178,227 -

2,760,635 3,243,421

8,941,648 -

743,890 3,538,198

1,183,613,564

-

1,784,339,542

-

117,838,415 14,409,432,473

81,965,718 81,621,376 10,032,567,278

88,897,963 7,373,370,068

61,213,358 5,893,406,567

8,309,566,826 176,724,637

6,316,775,119 168,191,867

2,628,472,493 176,724,637

2,978,518,780 168,191,867

541,209,251 1,112,486,780 1,526,161,873

495,573,853 953,455,789 1,392,852,908

245,813,337 369,811,809 903,783,747

283,776,207 393,836,479 942,592,372

76,562,647 11,742,712,014

9,326,849,536

111,499,000 4,436,105,023

4,766,915,705

2,666,720,459 804,050,373

705,717,742 638,610,164

2,937,265,045 -

1,126,490,862 -

3,470,770,832 (294,807,114) 3,175,963,718 (790,294,971) 2,385,668,747

1,344,327,906 (309,096,639) 1,035,231,267 (182,310,808) 852,920,459

2,937,265,045 (726,087,495) 2,211,177,550 (497,996,847) 1,713,180,703

1,126,490,862 (598,343,166) 528,147,696 (42,401,816) 485,745,880

(12,691,567)

-

(5,601,989)

-

26,789,918 14,098,351 2,399,767,098

52,017,351 52,017,351 904,937,810

(5,601,989) 1,707,578,714

485,745,880

0.26

0.09

0.19

0.05

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV Quality Houses Public Company Limited

125


126 Annual report 2012 379,246,114 379,246,114

9,183,767,553

379,246,114

8,477,339,715

8,477,339,715 706,427,838 -

379,246,114 -

8,477,339,715 -

Share premium

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV

%DODQFHDVDW-DQXDU\ Stock dividend (Note 30) Dividend paid (Note 30) Total comprehensive income for the year Unappropriated retained earnings transferred to statutory reserve %DODQFHDVDW'HFHPEHU

%DODQFHDVDW-DQXDU\ Dividend paid (Note 30) Total comprehensive income for the year Unappropriated retained earnings transferred to statutory reserve %DODQFHDVDW'HFHPEHU

Issued and fully paid-up share capital

¼àÌ×Ôßä³ÚàÞÐÞ»àÍ×ÔήÚØÛÌÙä·ÔØÔßÐÏÌÙÏÔßÞÞàÍÞÔÏÔÌÝÔÐÞ ¾ßÌßÐØÐÙßÚÑÎÓÌÙÒÐÞÔÙÞÓÌÝÐÓÚ×ÏÐÝޒÐÜàÔßä ±ÚÝßÓÐäÐÌÝÐÙÏÐÏžœ¯ÐÎÐØÍÐݝ›œ

85,659,035 526,779,581

441,120,546 -

24,287,294 441,120,546

416,833,252 -

(85,659,035) 5,316,478,185

3,814,064,409 (706,427,838) (78,476,531) 2,372,977,180

(24,287,294) 3,814,064,409

4,002,628,837 (1,017,197,593) 852,920,459

1,294

1,294 -

1,294

1,294 -

82,616,001

55,826,083 26,789,918

55,826,083

3,808,732 52,017,351

82,617,295

55,827,377 26,789,918

3,810,026 52,017,351 55,827,377

&RQVROLGDWHGILQDQFLDOVWDWHPHQWV Other comprehensive of equity Other comprehensive income Surplus on changes Share of other in value of comprehensive Total other Retained earnings available-for-sale income components of Appropriated Unappropriated investments of associates shareholders' equity

15,488,888,728

13,167,598,161 (78,476,531) 2,399,767,098

13,167,598,161

13,279,857,944 (1,017,197,593) 904,937,810

Total

(Unit: Baht)


Quality Houses Public Company Limited

127

379,246,114 379,246,114

9,183,767,553

379,246,114

8,477,339,715 8,477,339,715 706,427,838

379,246,114 -

8,477,339,715 -

Share premium

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV

%DODQFHDVDW-DQXDU\ Stock dividend (Note 30) Dividend paid (Note 30) Total comprehensive income for the year Unappropriated retained earnings transferred to statutory reserve %DODQFHDVDW'HFHPEHU

%DODQFHDVDW-DQXDU\ Dividend paid (Note 30) Total comprehensive income for the year Unappropriated retained earnings transferred to statutory reserve %DODQFHDVDW'HFHPEHU

Issued and fully paid-up share capital

¼àÌ×Ôßä³ÚàÞÐÞ»àÍ×ÔήÚØÛÌÙä·ÔØÔßÐÏÌÙÏÔßÞÞàÍÞÔÏÔÌÝÔÐÞ ¾ßÌßÐØÐÙßÚÑÎÓÌÙÒÐÞÔÙÞÓÌÝÐÓÚ×ÏÐÝޒÐÜàÔßä ±ÚÝßÓÐäÐÌÝÐÙÏÐÏžœ¯ÐÎÐØÍÐݝ›œ

85,659,035 526,779,581

-

441,120,546 -

24,287,294 441,120,546

416,833,252 -

(85,659,035) 3,416,572,653

2,579,557,343 (706,427,838) (78,476,531) 1,707,578,714

(24,287,294) 2,579,557,343

3,135,296,350 (1,017,197,593) 485,745,880

Retained earnings Appropriated Unappropriated

6HSDUDWHILQDQFLDOVWDWHPHQWV

1,294

-

1,294 -

1,294

1,294 -

Other components of equity Other comprehensive income Surplus on changes in value of available-for-sale investments

13,506,367,195

11,877,265,012 (78,476,531) 1,707,578,714

11,877,265,012

12,408,716,725 (1,017,197,593) 485,745,880

Total

(Unit: Baht)


¼àÌ×Ôßä³ÚàÞÐÞ»àÍ×ÔήÚØÛÌÙä·ÔØÔßÐÏÌÙÏÔßÞÞàÍÞÔÏÔÌÝÔÐÞ ¾ßÌßÐØÐÙßÚÑÎÌÞÓÑ×ÚâÞ ±ÚÝßÓÐäÐÌÝÐÙÏÐÏžœ¯ÐÎÐØÍÐݝ›œ (Unit: Baht) 6HSDUDWHILQDQFLDOVWDWHPHQWV  

&RQVROLGDWHGILQDQFLDOVWDWHPHQWV  

&DVKIORZVIURPRSHUDWLQJDFWLYLWLHV Profit before tax Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Decrease in land and construction in progress as a result of transfer to cost of sales Depreciation Amortisation of leasehold rights Amortisation - others Unrealised gain on exchange Share of profit from investments in associates Income from forfeitures of booking and down payments Interest income Dividend income Loss (gain) on sales of equipments Gain on sales of investments Gain on changes in shareholders equity of associated company Gain on sales of properties and transfer of leasehold rights to building Provision for loss arising from litigation Provision for long-term employee benefits Provision for loss arising from guarantee of minimum rental income of projects Provision for loss on diminution in value of projects Reversal of provision for loss on diminution in value of projects Interest expenses Income from operating activities before changes in operating assets and liabilities 2SHUDWLQJDVVHWVGHFUHDVH LQFUHDVH

Trade and other receivables Land and construction in progress Advance for construction work Advance for construction material Other current assets Land and project development costs Deposits for purchase of land Other non-current assets

3,175,963,718

1,035,231,267

2,211,177,550

528,147,696

8,309,566,826 104,537,029 111,744,629 4,959,367 (607,589) (804,050,373) (12,178,227) (18,992,539) 3,960,446 -

6,316,775,119 123,376,591 115,341,280 4,959,367 (923,063) (638,610,164) (2,760,635) (13,944,367) 400,302 (3,243,421) (81,965,718)

2,628,472,493 90,465,002 111,744,629 4,959,367 (497,825) (8,941,648) (576,680,387) (361,986,743) 4,054,135 -

2,978,518,780 114,849,231 115,341,280 4,959,367 (513,569) (743,890) (426,864,597) (461,590,067) (44,092) (3,538,198) -

(1,183,613,564) 19,145,249 18,613,337

15,444,268 8,882,686

(1,784,339,542) 19,145,249 8,519,442

15,444,268 7,687,154

76,562,647 64,308,059

-

111,499,000 59,934,995

-

(30,882,983) 253,674,462

274,408,608

(22,326,444) 698,871,984

574,414,495

10,092,710,494

7,153,372,120

3,194,071,257

3,446,067,858

(20,453,153) (6,548,928,399) (517,508,280) 2,244,478 22,612,249 (4,140,085,274) 10,143,500 (4,175,235)

(15,892,612) (5,103,317,043) (277,157,802) 11,989,840 (44,908,018) (5,999,366,238) 56,828,454 (1,380,012)

(10,284,858) (1,892,338,693) (133,049,215) 16,923,441 13,252,906 (589,085,766) 536,936

(16,604,829) (2,008,881,939) (16,064,560) 22,293,485 (30,035,231) (1,194,514,430) (4,720,000) (447,991)

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV

128 Annual report 2012


¼àÌ×Ôßä³ÚàÞÐÞ»àÍ×ÔήÚØÛÌÙä·ÔØÔßÐÏÌÙÏÔßÞÞàÍÞÔÏÔÌÝÔÐÞ ¾ßÌßÐØÐÙßÚÑÎÌÞÓÑ×ÚâÞ“ÎÚÙßÔÙàÐϔ ±ÚÝßÓÐäÐÌÝÐÙÏÐÏžœ¯ÐÎÐØÍÐݝ›œ

2SHUDWLQJOLDELOLWLHVLQFUHDVH GHFUHDVH

Trade and other payables Advance from customers Deposits for rental and service Retention guarantees Other current liabilities Compensation paid for litigation Cash flows from (used in) operating activities Cash paid for interest expenses Cash paid for corporate income tax 1HWFDVKIORZVXVHGLQRSHUDWLQJDFWLYLWLHV &DVKIORZVIURPLQYHVWLQJDFWLYLWLHV Increase in restricted bank deposits Cash paid for purchase of additional shares of subsidiary companies Cash received from return of capital from associated company Cash paid for purchase of additional shares of associated companies Proceeds from sales of investment in associated company Decrease (increase) in long-term loans to related parties Cash received from interest income Dividend received from subsidiary Dividend received from associates Cash received from sales of properties and transfer of leasehold rights to building Increase in leasehold rights Increase in property, plant and equipment (net) 1HWFDVKIORZVIURP XVHGLQ LQYHVWLQJDFWLYLWLHV

&RQVROLGDWHGILQDQFLDOVWDWHPHQWV  

(Unit: Baht) 6HSDUDWHILQDQFLDOVWDWHPHQWV  

171,468,937 252,888,274 (13,821,730) 88,389,011 123,768,289 (2,212,573) (482,959,412) (926,270,578) (272,648,711) (1,681,878,701)

(78,197,487) 109,403,451 4,610,392 6,267,354 2,902,528 (4,174,845,073) (812,404,393) (482,499,669) (5,469,749,135)

47,918,012 126,760,284 (15,570,527) (1,249,161) 18,756,942 (2,212,573) 774,428,985 (909,982,657) (85,050,921) (220,604,593)

(71,387,590) (29,150,706) 6,345,566 (13,224,645) (37,155,084) 52,519,904 (808,979,545) (145,013,026) (901,472,667)

(7,778,841)

(537,840)

(4,218,126)

(217,840)

-

-

(4,999,500)

(4,999,600)

-

27,425,059

-

27,425,059

(1,052,800,000)

(1,134,432,000)

(1,052,800,000)

(1,134,432,000)

(4,388,177) 18,939,735 361,986,743

3,859,648 799,526 13,835,410 161,590,067

(3,311,102,175) 570,619,250 361,986,743

3,859,648 (4,597,676,432) 452,459,938 300,000,000 161,590,067

3,159,671,030 (50,891,215) (84,896,141) 2,339,843,134

(215,408,907) (105,957,167) (1,248,826,204)

3,159,671,030 (50,891,215) (64,408,788) (396,142,781)

(215,408,907) (64,232,201) (5,071,632,268)

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV Quality Houses Public Company Limited

129


¼àÌ×Ôßä³ÚàÞÐÞ»àÍ×ÔήÚØÛÌÙä·ÔØÔßÐÏÌÙÏÔßÞÞàÍÞÔÏÔÌÝÔÐÞ ¾ßÌßÐØÐÙßÚÑÎÌÞÓÑ×ÚâÞ“ÎÚÙßÔÙàÐϔ ±ÚÝßÓÐäÐÌÝÐÙÏÐÏžœ¯ÐÎÐØÍÐݝ›œ (Unit: Baht) 6HSDUDWHILQDQFLDOVWDWHPHQWV  

&RQVROLGDWHGILQDQFLDOVWDWHPHQWV  

&DVKIORZVIURPILQDQFLQJDFWLYLWLHV Increase in short-term loans Increase (decrease) in short-term loan from related party Cash received from long-term loans Repayment of long-term loans Increase (decrease) in long-term loan from related parties Proceeds from issuance of debentures Cash paid for redemption of debentures Dividend paid 1HWFDVKIORZIURP XVHGLQ ILQDQFLQJDFWLYLWLHV 1HWLQFUHDVH GHFUHDVH LQFDVKDQGFDVKHTXLYDOHQWV Cash and cash equivalents at beginning of year &DVKDQGFDVKHTXLYDOHQWVDWHQGRI\HDU Supplemental cash flows information Non-cash transactions Stock dividends Transfer of land and project development costs to land and construction in progress Transfer of property, plant and equipment to land and project development costs Transfer of land and project development costs to property, plant and equipment Transfer of deposit for purchase of land to land and project development costs Adjustment of provision for long-term employee benefits with the beginning balance of retained earnings Actuarial losses

1,582,000,000 1,257,593,669 (2,194,593,669) 5,012,000,000 (5,700,000,000) (78,476,530) (121,476,530) 536,487,903 1,113,322,277 1,649,810,180

3,108,000,000 2,457,824,297 (1,530,873,297) 6,300,000,000 (2,600,000,000) (1,017,197,593) 6,717,753,407 (821,932) 1,114,144,209 1,113,322,277

1,582,000,000 (3,000,000) 864,500,000 (864,500,000) (6,091,310) 5,012,000,000 (5,700,000,000) (78,476,530) 806,432,160 189,684,786 573,439,807 763,124,593

3,108,000,000 7,000,000 587,146,630 (587,166,630) 43,000,000 6,300,000,000 (2,600,000,000) (1,017,197,593) 5,840,782,407 (132,322,528) 705,762,335 573,439,807

706,427,838

-

706,427,838

-

6,430,216,537

6,354,712,703

2,475,909,551

1,647,051,759

88,640,490

2,435,000

88,640,490

2,435,000

21,000,000

-

21,000,000

-

36,064,824

185,280,000

4,720,000

13,569,000

12,691,567

92,774,512 -

5,601,989

62,575,362 -

7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHUJUDOSDUWRIWKHILQDQFLDOVWDWHPHQWV 130 Annual report 2012


Quality Houses Public Company Limited and its subsidiaries Notes to consolidated financial statements For the year ended 31 December 2012 1.

General information Corporate information

Quality Houses Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the property development. The registered office of the Company is at 7th Floor, Q. House Lumpini Building, No. 1 South Sathorn Road, Tungmahamek, Sathorn, Bangkok.

2.

Basis of preparation

2.1 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 28 September 2011, 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 the Thai language financial statements. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies. %DVLV RI FRQVROLGDWLRQ

a) The consolidated financial statements include the financial statements of Quality Houses Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”): Country of incorporation

Subsidiary companies

Nature of business

Casa Ville Co., Ltd. Q.H. International Co., Ltd.

Real estate development Lease of residential building and managing of service apartment Lease of land Lease of residential building Real estate development

Property Host Co., Ltd. Centre Point Hospitality Co., Ltd. The Confidence Co., Ltd.*

Thailand Thailand

Percentage of shareholding 2011 2012 % % 100 100 100 100

Thailand Thailand Thailand

100 100 -

100 -

Quality Houses Public Company Limited

131


Subsidiary companies

Nature of business

Q.H. Management Co., Ltd. (19% held through The Confidence Company Limited) Q.H. International (BVI) Co., Ltd.**

Managing of public utilities of real estate business and land owner Holding company

Casa Ville (Rayong 2553) Co., Ltd.* Casa Ville (Petchburi 2553) Co., Ltd.* Idea Fitting Co., Ltd.*

Real estate development Real estate development Distribution and installation of furniture Real estate development Real estate development Real estate development

Gusto Village Co., Ltd.* Casa Ville (Chonburi 2554) Co., Ltd.* Casa Ville (Prachuapkhirikhan 2554) Co., Ltd.*

Country of incorporation

Percentage of shareholding 2012 2011 % % Thailand81 81

British Virgin Island Thailand Thailand Thailand

-

-

-

-

Thailand Thailand Thailand

-

-

* 100% held through Casa Ville Co., Ltd. ** 100% held through Q.H. International Co., Ltd. b) Subsidiaries are fully consolidated 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 using the same significant accounting policies as the Company. d) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. 2.3 The separate financial statements, which present investments in subsidiaries and associates under the cost method, have been prepared solely for the benefit of the public.

132 Annual report 2012


3.

New accounting standards not yet effective The Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2013. Accounting standards: TAS 12 TAS 20 (revised 2009) TAS 21 (revised 2009)

Income Taxes Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates

Financial Reporting Standard: TFRS 8 Operating Segments Accounting Standard Interpretations: SIC 10 Government Assistance - No Specific Relation to Operating Activities SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders The Company’s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied, except for the following accounting standard. TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences, which are differences between the carrying amount of an asset or liability in the accounting records and its tax base, and to recognize deferred tax assets and liabilities under the stipulated guidelines. The management of the Company expects the adoption of this accounting standard to have the effect of increasing the Company and its subsidiaries’ brought-forward retained earnings and other components of shareholders’ equity of the year 2013 by approximately Baht 297 million in total (the Company only: approximately Bath 178 million). In addition, the Federation of Accounting Professions has issued Notification No. 30/2555 - 34/2555, published in the Royal Gazette on 17 January 2013, mandating the use of accounting treatment guidance and accounting standard interpretations as follows. Effective date 1 January 2013 Accounting Treatment Guidance for Transfers of Financial Assets Accounting Standard Interpretation: SIC 29 Service Concession Arrangements: Disclosures 1 January 2014 Financial Reporting Standard Interpretations: TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014 1 January 2014 TFRIC 12 Service Concession Arrangements 1 January 2014 TFRIC 13 Customer Loyalty Programmes The management of the Company has assessed the effect of these standards and believes that Accounting Treatment Guidance for Transfers of Financial Assets, SIC 29, TFRIC 4 and TFRIC 12 are not relevant to the Quality Houses Public Company Limited

133


business of the Company. The management believes that TFRIC 13 will not have any significant impact on the financial statements for the year when they are initially applied.

4.

Significant accounting policies

4.1 Revenue recognition

(a) Sales of land and houses and sales of residential condominium units Sales of land and houses and sales of residential condominium units are recognised as revenue when the significant risks and rewards of ownership of the goods have passed to the buyer, whereby construction works are completed and the ownerships have been transferred to buyers after all payments received from the buyers. (b) Rental and services income Rental of units in office buildings and residential buildings and related services income are recognised on an accrual basis over the period of contract. (c) Interest income Interest income is recognised on an accrual basis based on the effective interest rate method. (d) Dividends Dividends are recognised when the right to receive the dividends is established.

4.2 Cost of land and houses sold and cost of residential condominium units sold

In determining the cost of land and houses sold and cost of residential condominium units sold, the anticipated total development costs (taking into account actual costs incurred to date) are attributed to land and houses sold on the basis of the salable area and to residential condominium units sold on the basis of the salable area weighted to the selling price of the unit, and then recognised as costs in the income statement concurrently with revenue from sales. Development costs are stated at cost, consisting of cost of land, design fees, utilities, construction and related interest.

4.3 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, 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 experience and analysis of debt aging.

4.5 Land and construction in progress

Land and construction in progress are stated at cost less provision for loss on diminution in value of projects. The details of cost calculation are as follows: -

134 Annual report 2012


Land Construction in progress

- Cost of land using the weighted average method, calculating it separately for each project. - Construction in progress consists of the cost of construction, public utility costs and interest capitalised to cost of projects by records cost of construction and public utilities based on the actual cost incurred.

4.6 Investments

a) Investments in securities held for trading are stated at fair value. Changes in the fair value of these securities are recorded in profit or loss. b) Investments in available-for-sale securities are stated at fair value. Changes in the fair value of these securities are recorded in comprehensive income, and will be recorded in profit or loss when the securities are sold. c) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). d) Investments in associates are accounted for in consolidated financial statements using the equity method. e) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method, net of allowance for impairment loss (if any).

The fair value of marketable securities is based on the latest bid price of the last working day of the year. The fair value of debt instruments is determined based on yield rates quoted by the Thai Bond Market Association. The fair value of unit trusts is determined from their net asset value. The weighted average method is used for computation of the cost of investments. On disposal of an investment, the difference between net disposal proceeds and the carrying amount of the investment is recognised as income or expenses in the income statement. 4.7 Investment properties

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and allowance for loss on impairment (if any). Depreciation of investment properties is calculated by reference to their costs on the straight-line basis over estimated useful lives of 15 - 60 years. Depreciation of the investment properties is included in determining income. On disposal of investment properties, the difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period when the asset is derecognised.

4.8 Property, plant and equipment/Depreciation

Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation, and less allowance for impairment of assets (if any). Quality Houses Public Company Limited

135


Depreciation of plant and equipment is calculated by reference to their costs on a straight-line basis over the following estimated useful lives: Buildings Architectural work Interior work Furniture, fixtures, equipment and office equipment Motor vehicles

-

60 years 30 years 10 - 15 years 5 years 5 years

Depreciation is included in determining income. No depreciation is provided on building and equipment under development. The cost of linen, crockery, glass, silver and kitchen utensils purchased to meet the normal requirements of the residential buildings have been regarded as a base stock and subsequent purchases are expended when incurred. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised. 4.9 Leasehold rights and amortisation

Leasehold rights are stated at cost less accumulated amortisation. The Company amortises leasehold rights on a straight-line basis over the leasehold period. The amortisation is included in determining income.

4.10 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. Capitalisation rates are calculated based on the weighted average of the interest expenses incurring during the year on loans for development of projects.

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.

136 Annual report 2012


They also include associated companies 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 Long-term leases

Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to profit or loss over the lease period. The property, plant or equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease period. Leases of property, plant or equipment which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.

4.13 Foreign currencies

Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of reporting period. Gains and losses on exchange are included in profit or loss.

4.14 Impairment of assets

At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of the investment properties, property, plant and equipment, land and construction in progress, land and project development costs and other intangible assets 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 profit or loss.  In the assessment of asset impairment if there is any indication that previously recognised impairment losses may no longer exist or may have decreased, the Company estimates the asset’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The increased carrying amount of the asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that Quality Houses Public Company Limited 137


would have been determined had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. 4.15 Employee benefits



Short-term Short - termemployee employeebenefits benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. benefits Post-employment Post - employee benefits Defined contribution plans The Company and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company. The fundâ&#x20AC;&#x2122;s assets are held in a separate trust fund and the Companyâ&#x20AC;&#x2122;s contributions are recognised as expenses when incurred. Defined benefit plans The Company has obligations in respect of the severance payments it must make to employees upon retirement under labor law. The Company treats these severance payment obligations as a defined benefit plan. The obligation under the defined benefit plan is determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method. Actuarial gains and losses arising from post-employment benefits are recognised immediately in other comprehensive income. The defined benefits liability comprises the present value of the defined benefit obligation less unrecognised past service cost and unrecognised actuarial gains or losses. For the first-time adoption of TAS 19 Employee Benefits in 2011, the Company elected to recognise the transitional liability, which exceeds the liability that would have been recognised at the same date under the previous accounting policy, through an adjustment to the beginning balance of retained earnings in 2011.

4.16 Provisions

Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

4.17 Income tax

Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.

138 Annual report 2012


5.

Significant accounting judgments and estimates The preparation of financial statements in conformity with financial reporting standards 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 from these estimates. Significant judgments and estimates are as follows: Recognition and and derecognition derecognitionofofassets assetsand andliabilities. liabilities Recognition In considering whether to recognise or to derecognise assets or liabilities, the management is required to make judgement on whether significant risk and rewards of those assets or liabilities have been transferred, based on their best knowledge of the current events and arrangements. 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 Allowance for for doubtful doubtfulaccounts 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 ofof financial financialinstruments 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 Impairment ofof equity equityinvestments investments The Company and its subsidiaries treat available-for-sale investments and other investments as impaired when the management judgment 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 of the management. Property, plant plant and andequipment/Depreciation equipment / Depreciation In determining depreciation of plant and equipment, the management has to make estimates of the useful lives and salvage values of the Company’s 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 cost. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Quality Houses Public Company Limited

139


Project development development costs costsestimation estimation In calculating cost of land and houses sold, the Company and its subsidiaries have to estimate all project development costs, comprising land and land improvement costs, design and construction costs, public utility costs, borrowing costs and other related costs. The management estimates these costs based on their business experience and revisits the estimations on a periodical basis or when the actual costs incurred significantly vary from the estimated costs. Provision for loss arising arising from fromloan loanguarantees guarantees In recording provision for loss arising from guarantees of loans to related companies, the management estimates the expenses expected to be incurred as a result of providing such guarantees based on the ability of those companies to make payment of their debts to the creditors, and records the provision according to the proportion of guarantee provided. Post-employment Post-employmentbenefits benefitsunder underdefined definedbenefit benefitplans plans The obligation under the defined benefit plan is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate. Provision Provision for forpublic publicutilities utilitiesmaintenance maintenance In estimating the Companyâ&#x20AC;&#x2122;s and subsidiariesâ&#x20AC;&#x2122; provision for public utilities maintenance, management considered historical data and/or currently available information about the costs of various types of repairment work. Provision Provision for forguarantee guaranteeofofminimum minimumrental rentalincome income In recording provision for guarantee of minimum rental income of projects, the management needs to estimate the operating results of projects based on historical data on rental income and related expenses, and other current available information, and record the amount that is expected to be paid to the Fund as provision. Compensation CompensationforforHousing HousingEstate EstateJuristic JuristicPersons Persons The Company and its subsidiaries estimate the compensation for Housing Estate Juristic Persons using the rate specified by the regulator and the budgeted public utilities costs as a basis for the calculation. Litigation Litigation The Company and its subsidiaries have contingent liabilities as a result of litigation. The management has exercised judgment to assess of the results of the litigation and recorded certain provision as at the end of reporting period. However, actual results could differ from the estimates.

6.

Related party transactions

6.1 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. 140 Annual report 2012


Consolidated financial statements 2012 2011

Transactions with subsidiary companies (eliminated from the consolidated financial statements) Interest income -

(Unit: Million Baht)

Separate financial statements 2012 2011

Transfer pricing policy

562

417

2 28 10 18

4 1 35 9 300 17

3.9% to 4.4%, MLR and MLR minus certain rates per annum Market price Market price Market price Contract value As declared MLR minus certain rates per annum

Rental and service income Rental and service expenses Other service expense Building management income Dividend income Interest expense

-

-

Transactions with associated companies Material cost

10

10

5

6

Rental expenses 111 Bank charge Rental and service income 28 Gain on sales of properties and transfer of leasehold rights to building 1,184 Provision for loss arising from guarantee of minimum rental income or projects 76 Building management income 25

33 1 28

34 28

33 28

-

1,784

-

As detailed in Note 15

25

111 8

7

Interest income Dividend income Other service expenses

13 3

13 35

10 362 1

10 162 16

As detailed in Note 15 1% of gross property operating revenue and 2.4% of net property profit 0.3% to 3.5% per annum As declared Contract value

Transactions with related parties Lease of land and building

89

134

-

-

116 22 14 16 60 -

147 23 12 3 4 42 12

26 3 13 4 59 -

53 4 12 39 12

Material cost Other service fee Rental and service income Sales of real estate Building management income Other service income Interest expenses

Wholesale price charged by the related company to third parties Contract value Market price Market price

Contract value which compared to the amounts as estimated by independent consultant Market price Contract value Market price Market price Contract value Contract value 2.3% to 3.9% and MLR minus certain rates per annum

Quality Houses Public Company Limited

141


As at 31 December 2012 and 2011, the balances of the accounts between the Company and those related parties are as follows: (Unit: Thousand Baht) Consolidated financial Separate financial statements statements 2011 2012 2011 2012 Deposits institutions(shown (shownunder undercash cashand andcash cashequivalents) equivalents) Deposits at financial institutions Associated company Land and Houses Bank Plc. 937,421 762,305 469,612 409,219 Related company (Common directors) KASIKORNBANK Plc. 53,759 10,076 6,903 8,375 Total 772,381 476,515 417,594 991,180 other receivable receivable--related relatedparties parties Trade and other Trade accounts receivable-related parties Subsidiary companies Associated companies Related companies (Common directors or common shareholders) Total trade accounts receivable related parties

546

17

131 393

113 -

1,779

127

66

127

2,325

144

590

240

2,456

2,874

21,130 823

3,496 1,372

30,585 33,041

18,291 21,165

27,138 49,091

17,423 22,291

1,699 34,740 37,065

21,165 21,309

1,388 1,699 52,178 52,768

1,139 23,430 23,670

Deposit for for rental rental and andservice service(shown (shownunder underother othercurrent currentassets) assets) Deposit Associated company 6,926 6,926

6,926

6,926

Other receivables - related parties Other receivable: Subsidiary companies Associated companies Related companies (Common directors or common shareholders) Advance: Subsidiary company Associated company Total other receivables - related parties Total

Trade and other other payable-related payable-relatedparties parties Trade accounts payable-related parties Subsidiary company Associated company Related companies (Common directors or common shareholders) Total trade accounts payables - related parties 142 Annual report 2012

1,373

340

24,216 1,066

11,686 249

39,057

15,410

2,403

5,633

40,430

15,750

27,685

17,568


Other payables - related parties Subsidiary company Associated company Related companies (Common directors or common shareholders) Total other payables - related parties Total

(Unit: Thousand Baht) Separate financial statements 2012 2011

Consolidated financial statements 2011 2012 63,218

-

9,373 63,218

748 -

339 63,557 103,987

15,750

51 72,642 100,327

748 18,316

801 107

800 107

1,931 2,839

1,618 2,525

1,306 264

1,001 335

294 1,864

177 1,513

Accrued for expenses-related parties (shown under other current liabilities) rental and service-related parties Deposit Subsidiary companies Associated company 107 107 Related companies (Common directors or common shareholders) 1,618 1,930 Total 1,725 2,037 Accrued expenses-relatedparties parties(shown (shownunder underother othercurrent currentliabilities) liabilities) Accrued expenses-related Subsidiary companies Associated companies 42,892 450 Related companies (Common directors or common shareholders) 23,412 16,244 Total 23,862 59,136

receivedininadvance advance Rental income received Associated company (Note 6.3) Current portion Non-current portion

27,224 27,224 27,224 649,267 623,023 623,023 676,491 650,247 650,247 Provision for for liabilities liabilitiesarising arisingfrom fromguarantee guarantee of minimum - related company of minimum rentalrental incomeincome - related company (shown under long-term long-termprovision) provision) Associated company 49,166 49,166

27,224 649,267 676,491 -

Quality Houses Public Company Limited

143


Long-term Long-term loans to related parties related Subsidiary companies Q.H. International (BVI) Co., Ltd. Casa Ville Co., Ltd.

Consolidated financial statements 2011 2012

(Unit: Thousand Baht)

Separate financial statements 2012 2011

Interest policy (% p.a.)

-

-

1,425 14,737,674

1,364 11,420,386

MLR 3.9%, 4.1% and 4.4% 3.9%

Property Host Co., Ltd. Related party Harbour View Co., Ltd. (Common directors)

-

-

8,385

8,073

8,581

3,532

-

-

Total

8,581

3,532

14,747,484

11,429,823

Short-term Short-term loan from related related party Subsidiary company Q.H. International Co., Ltd.

-

-

145,311

142,793

Long-term Long-term loan from related related parties Subsidiary companies Q.H. Management Co., Ltd.

3.9% to 4.4% and MLR - 1%

-

-

229,101

252,298

Centre Point Hospitality Co., Ltd. Total

-

-

17,090 246,191

252,298

MLR - 1%, 3.9% and 4.4%, 4.1%

LIBOR + 2% and 8%

During the year 2012, the movements of loans to and loans from related parties were as follows:

Long-term loan Long-term loan toto related relatedparty party Related party Harbour View Co., Ltd.

144 Annual report 2012

(Unit: Thousand Baht) Consolidated financial statements 31 December 31 December 2011 Increase Decrease 2012 3,532

5,168

(119)

8,581


31 December 2011

Separate financial statements

(Unit: Thousand Baht) 31 December 2012

Increase

Decrease

1,364 11,420,386 8,073 11,429,823

61 9,651,102 312 9,651,475

(6,333,814) (6,333,814)

1,425 14,737,674 8,385 14,747,484

Short-term loan from from related relatedparty party Subsidiary company Q.H. International Co., Ltd.

142,793

37,518

(35,000)

145,311

from related relatedparties parties Long-term loan from Subsidiary companies Q.H. Management Co., Ltd. Centre Point Hospitality Co., Ltd. Total

252,298 252,298

12,615 37,091 49,706

(35,812) (20,001) (55,813)

229,101 17,090 246,191

loans toto related relatedparties parties Long-term loans Subsidiary companies Q.H. International (BVI) Co., Ltd. Casa Ville Co., Ltd. Property Host Co., Ltd. Total

Directors and managementâ&#x20AC;&#x2122;s benefits management's benefits During the years ended 31 December 2012 and 2011, the Company and its subsidiaries had employee benefit expenses payable to their directors and management as below. (Unit: Million Baht) Separate Consolidated financial statements financial statements 2011 2012 2011 2012 Short-term employee benefits 54 67 54 67 Post-employment benefits 2 2 2 2 Total 69 56 69 56 Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related party and provision of financial support to its subsidiary, as described in Note 31.

Quality Houses Public Company Limited

145


6.2 The Company and its subsidiaries have the following long-term agreements with property funds in which it or its related companies hold investment units: (Unit: Million Baht) Contract amount 2012 2011 Counterparty Land and Houses Property and 151 151 a) Agreement relating to the lease of Loan Fund-II building and assets - Centre Point Hotel and Residence Wireless Road Land and Houses Property and -* 39* b) Agreement relating to the lease of building and assets - Centre Point Hotel Loan Fund-II and Residence Sukhumvit - Thonglor Quality Houses Leasehold 819 819 c) Agreement to lease immovable properties - Ploenchit Q. House Project Property Fund d) Agreement to sale properties - Centre Quality Houses Hotel and 1,142 Point Hotel and Residence Petchburi Residence Freehold and Leasehold Property Fund e) Agreement to sale properties - Centre Quality Houses Hotel and 1,470 Point Hotel and Residence Sukhumvit Residence Freehold and Leasehold Property Fund 730 f) Agreement to transfer leasehold rights to Quality Houses Hotel and building, a procurement agreement with Residence Freehold and respect the Fund's acquisition of leasehold Leasehold Property Fund rights to building, and agreement to sell movable properties - Centre Point Hotel and Residence Langsuan * The lease agreement was cancelled since 22 March 2012. 6.3 On 21 November 2006, the Company entered into an agreement to lease immovable properties of Q. House Ploenchit project to Quality Houses Leasehold Property Fund, whereby the Company agreed to lease land, building and other related equipment to the Fund and in return received 30 yearsâ&#x20AC;&#x2122; rental for the land, building, public utilities and other related equipment of the project totaling Baht 819 million. The Company recorded this rental fees as â&#x20AC;&#x153;Rental income received in advanceâ&#x20AC;? in the statements of financial position, and it will be recognised as income over the period of the lease contract.

7.

Cash and cash equivalents

Cash Bank deposits Total

Consolidated financial statements 2011 2012 13,644 6,425 1,106,897 1,636,166 1,113,322 1,649,810

(Unit: Thousand Baht) Separate financial statements 2012 2011 8,794 3,098 754,331 570,342 763,125 573,440

As at 31 December 2012, bank deposits in current accounts, saving accounts and fixed deposits carried interests between 0.10% and 2.85% per annum (2011: between 0.50% and 2.50% per annum).

146 Annual report 2012


8.

Trade and other receivables

Trade receivables - related parties Aged of receivables Up to 3 months 3 - 6 months 6 - 12 months Total trade receivables - related parties Trade receivables - unrelated parties Aged of receivables Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful debts Total trade receivables - unrelated parties, net Total trade receivable - net Other receivables Advance to related parties (Note 6) Other receivables - related parties(Note 6) Other receivable - unrelated parties Total other receivables Total trade and other receivables - net

Consolidated financial statements 2011 2012

(Unit: Thousand Baht) Separate financial statements 2012 2011

1,128 584 613 2,325

144 144

590 590

240 240

36,136 1,699 670 934 39,439 (613)

33,833 4,478 3 1,023 39,337 (770)

11,573 290 670 361 12,894 (323)

26,057 4,210 1 388 30,656 (381)

38,826 41,151

38,567 38,711

12,571 13,161

30,275 30,515

1,699 33,041 11,884 46,624 87,775

21,165 7,446 28,611 67,322

3,087 49,091 2,967 55,145 68,306

1,139 22,291 4,076 27,506 58,021

Quality Houses Public Company Limited

147


9.

Land and construction in progress Consolidated financial statements 2011 2012 10,788,801 8,352,104 1,411,980 975,657 7,130,191 9,560,821 21,761,602 16,457,952

Land Interest cost Construction under development Total Less: Provision for loss on diminution in value of projects Land and construction in progress - net

(31,014) 16,426,938

(64,439) 21,697,163

(Unit: Thousand Baht) Separate financial statements 2012 2011 4,145,157 3,155,949 716,622 477,239 3,986,554 3,233,815 8,848,333 6,867,003 (64,439) 8,783,894

(26,831) 6,840,172

10. Restricted deposits at financial institutions 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:

Company's name

Paid-up capital 2012 2011

Casa Ville Co., Ltd. 3,000,000 3,000,000 Q.H. International Co., Ltd. 76,836 76,836 Property Host Co., Ltd. 5,000 5,000 Centre Point Hospitality Co., Ltd. 5,000 The Confidence Co., Ltd.* 1,000,000 1,000,000 Casa Ville (Rayong 2553) Co. Ltd.* 5,000 5,000 Casa Ville (Petchburi 2553) 5,000 5,000 Co. Ltd.* Idea Fitting Co., Ltd.* 5,000 5,000 Gusto Village Co., Ltd.* Casa Ville (Chonburi 2554) Co., Ltd.*

148 Annual report 2012

5,000 5,000

5,000 5,000

(Unit: Thousand Baht)

Separate financial statements Shareholdings percentage Cost 2012 2011 2012 2011 (%) (%) 100 100 100 100 -

Dividend received during the year 2012 2011

100 2,999,999 2,999,999 100 76,836 76,836 100 5,000 5,000 4,999 -

-

300,000 -

-

-

-

-

-

-

-

-

-

-

-

-


Paid-up capital 2012 2011

Company's name

Q.H. Management Co., Ltd. (and 19% held through The Confidence Co., Ltd.) Q.H. International (BVI) Co., Ltd.**

(Unit: Thousand Baht)

Separate financial statements Shareholdings percentage Cost 2012 2011 2012 2011 (%) (%)

380,000

380,000

81

30,796

30,796

-

81

-

306,193

Dividend received during the year 2012 2011

306,193

-

-

3,393,027 3,388,028

-

300,000

* 100% held through Casa Ville Co., Ltd. ** 100% held through Q.H. International Co., Ltd On 15 June 2012, the Company established Centre Point Hospitality Co., Ltd. with a registered share capital of Baht 5 million (consisting of 50,000 ordinary shares with a par value of Baht 100 each). The Company made payment for such shares on 6 August 2012.

12. Investments in associates 12.1 Details of associates:

Company's name

Quality Houses Leasehold Property Fund(1)

Quality Houses Hotel and Residence Freehold and Leasehold Property Fund(2)

Nature of business

Country of

Shareholdings percentage incorporation 2011 2012 (%) (%) Investment in Thailand 26 26 immovable properties Investment in Thailand immovable properties

31

-

(Unit: Thousand Baht) Consolidated financial statements Carrying amounts based on Cost equity method 2012 2011 2012 2011 2,017,695

2,017,695

1,052,800

-

1,328,366 1,359,343

491,704

Quality Houses Public Company Limited

-

149


Company's name

Home Product Center Plc. LH Financial Group Plc. (held 100% in Land and Houses Bank Plc.)

Nature of business

Trading Holding company

Country of

Shareholdings percentage incorporation 2011 2012 (%) (%) Thailand Thailand

20 22

(Unit: Thousand Baht) Consolidated financial statements Carrying amounts based on Cost equity method 2012 2011 2012 2011

20 22

650,819 2,671,032

650,819 2,671,032

2,074,095 1,738,907 3,121,008 2,961,059

6,392,346

5,339,546

7,015,173 6,059,309

(1)

Carrying amounts are based on equity method, and presented net of unrealised gains on sales of building and transfer of leasehold rights to land of Q. House Lumpini project to the Fund.

(2)

Carrying amounts are based on equity method, and presented net of unrealised gain on sales of properties of Centre Point Hotel and Residence Petchburi and Centre Point Hotel and Residence Sukhumvit, and transfer of leasehold rights to building of Centre Point Hotel and Residence Langsuan, addition with unrealised expenses on providing guarantee of minimum rental income of the three Centre Point projects to the Fund.

Company's name

Quality Houses Leasehold Property Fund Quality Houses Hotel and Residence Freehold and Leasehold Property Fund Home Product Center Plc. LH Financial Group Plc. (held 100% in Land and Houses Bank Plc.)

150 Annual report 2012

Nature of business

Investment in immovable properties Investment in immovable properties Trading Holding company

Country of incorporation

Thailand

(Unit: Thousand Baht) Separate financial statements Shareholdings percentage Cost 2011 2012 2011 2012 (%) (%) 26 26 2,017,695 2,017,695

Thailand

31

-

1,052,800

-

Thailand Thailand

20 22

20 22

650,819 2,671,032

650,819 2,671,032

6,392,346

5,339,546


12.2 Share of profit/loss and dividend received

During the year, the Company has recognised its share of profit/loss from investments in associate companies in the consolidated financial statements and dividend income in the separate financial statements as follows: (Unit: Thousand Baht) Separate financial Consolidated financial statements statements Share of profit from investments in associates during the year Dividend received during the year Company's name 2011 2012 2011 2012 Quality Houses Leasehold Property Fund 121,650 118,846 152,628 128,638 Quality Houses Hotel and Residence Freehold and Leasehold Property Fund 4,694 Home Product Center Plc. 530,398 400,512 199,915 32,952 LH Financial Group Plc. 119,252 9,444 147,308 Total 638,610 361,987 161,590 804,050 12.3

Fair value of investments in listed associates

In respect of investments in associated companies that are listed companies on the Stock Exchange of Thailand, their fair values are as follows: Company's name Quality Houses Leasehold Property Fund Quality Houses Hotel and Residence Freehold and Leasehold Property Fund Home Product Center Plc. LH Financial Group Plc. Total

(Unit: Million Baht) Fair values as at 31 December 2011 2012 2,331 1,697 1,105 17,551 3,587 24,574

12,769 3,548 18,014

Quality Houses Public Company Limited

151


12.4 Summarised financial information of associates

Financial information of the associated companies is summarised below:

Company's name Quality Houses Leasehold Property Fund Quality Houses Hotel and Residence Freehold and Leasehold Property Fund Home Product Center Plc. LH Financial Group Plc.

Paid-up capital as at 31 December 2012 2011

Total assets as at 31 December 2012 2011

7,863

8,882

7,863

3,360 - 3,483 7,041 5,837 25,801 11,979 11,472 122,427

8,944

Total liabilities Total revenues as at for the year ended 31 December 31 December 2012 2011 2012 2011 296

286

(Unit: Million Baht) Net income for the year ended 31 December 2012 2011

959

919

524

542

4 140 20,650 15,941 12,529 36,969 81,245 108,260 67,933 5,252

30,502 3,545

119 2,679 683

2,005 496

Quality Houses Hotel and Residence Residence Freehold Freehold and and Leasehold LeaseholdProperty PropertyFund Fund On 18 July 2012, the Company invested in 105.28 million units of Quality Houses Hotel and Residence Freehold and Leasehold Property Fund at par value of Baht 10 each, amounting to Baht 1,053 million, representing 31.33% of the registered units of the Fund.

Home Product Center Plc. During the current year, the warrantholders of Home Product Center Plc. converted 10 million warrants to 32 million ordinary shares. The Company's shareholding in Home Product Center Plc. remained at approximately 20%. On 5 October 2012, the Extraordinary General Meeti ng of the shareholders of Home Product Center Plc. passed a resolution to approve payment of dividend to its shareholders, comprising a stock dividend at a rate of 1 dividend shares for every 5 existing shares, or equivalent to Baht 0.20 per share, and payment of a cash dividend of Baht 0.022223 per share. The Company received 232 million shares of stock dividend and Baht 26 million of cash dividend in October 2012.

152 Annual report 2012


LH Financial Financial Group Plc. LH On 23 April 2012, the Annual General Meeting of the shareholders of LH Financial Group Plc. approved the payment of dividend to its shareholders. This comprised a stock dividend at a rate of 1 dividend share for every 30 existing shares, or equivalent to Baht 0.0333 per share, and a cash dividend of Baht 0.0037 per share. The Company received stock dividend 85 million shares and cash dividend Baht 9 million on 17 May 2012.

During the current year, the warrantholders of LH Financial Group Plc. converted 120 million warrants to 124 million ordinary shares. The Company's shareholding in LH financial Group Plc. remained 22%.

13. Other long-term investments

Investments in marketable equity securities Investment in other company Held by Q.H. International (BVI) Co., Ltd. Harbour View Co., Ltd. (Registered in Vietnam) Less: Allowance for impairment of investment Investment in other company - net Total other long-term investment

Consolidated financial statements 2011 2012 2 2

(Unit: Thousand Baht) Separate financial statements 2012 2011 2 2

32,599

32,599

-

-

(32,599)

(32,599)

-

-

2

2

2

2

As discussed in Note 31.7, the Company has an outstanding obligation in respect of loan guarantees provided on behalf of Harbour View Co., Ltd., equal to 50% of that companyâ&#x20AC;&#x2122;s obligations to its bank. For prudent reasons, the Company has set aside a provision of Baht 61 million for losses arising from the guarantees and believes that such provision should be appropriated under current situation.

14. Investment properties The net book value of investment properties as at 31 December 2012 and 2011 is presented below.

Quality Houses Public Company Limited

153


Office building for rent Cost Less: Accumulated depreciation Less: Allowance for diminution in value Net book value

(Unit: Thousand Baht) Consolidated and separate financial statements 2012 2011 888,957 (259,287) (100,305) 529,365

888,957 (238,281) (106,384) 544,292

A reconciliation of the net book value of investment properties for the years 2012 and 2011 is presented below.

Net book value at beginning of 1 January 2011 Depreciation charged Depreciation adjustment Net book value at beginning of 31 December 2011 Depreciation charged Depreciation adjustment Net book value at end of 31 December 2012

(Unit: Thousand Baht) Consolidated and separate financial statements 559,219 (21,006) 6,079 544,292 (21,006) 6,079 529,365

As at 31 December 2012, the net book value of rental income received in advance from lessee amounting to Baht 650 million (2011: Baht 676 million), and the fair value of investment properties as determined based on valuations performed by an accredited independent valuer was Baht 839 million (2011: Baht 860 million), which has been determined using the income approach. The main assumptions used in the valuation are yield rate, inflation rate, long-term vacancy rate and long-term growth in real rental rates which has been determined based on rental information of tenants of building of Quality Houses Leasehold Property Fund that leased the building from the Company.

154 Annual report 2012


15. Property, plant and equipment (Unit: Thousand Baht) Consolidated financial statements Land and land improvement Cost 1 January 2011 Transfer in (out) Transfer to land and project development costs Purchase Disposal 31 December 2011 Transfer in (out) Transfers from land and project development costs Transfer to land and project development costs Purchase Disposal 31 December 2012 Accumulated depreciation 1 January 2011 Depreciation for the year Depreciation for disposal 31 December 2011 Depreciation for the year Depreciation for disposal 31 December 2012 Allowance for impairment 1 January 2011 31 December 2011 Transfer from land and project development costs 31 December 2012

Leasehold improvement

574,974 -

271,187 -

-

-

574,974 -

3,653 (722) 274,118 -

27,053

-

(85,926) (153,205) 362,896

2,587 492 3,079 492 3,571

Furniture Office Operating and Buildings equipment supplies fixtures 1,209,069 226,232 1,961 2,061

Operating equipment

Building and equipment Vehicles under and others development

Total

25,572 -

626,806 1,836

197,747 12,300

179,065 -

1,939 (18,158)

3,312,591 -

-

-

-

-

-

-

(2,435)

2,918 21,599 (20) (9,440) 1,211,493 240,452 4,576 -

7,140 (2,288) 30,424 -

9,617 (21,791) 616,468 -

1,084 (18,265) 192,866 965

35,435 (10,351) 204,149 454

22,514 6,295 (5,995)

103,960 (62,877) 3,351,239 -

-

-

-

-

-

-

27,053

1,555 (216,554) 59,119

1,836 13,995 (1,063,985) (52,836) 153,920 201,611

1,130 (18,201) 13,353

5,541 (423,411) 198,598

2,342 (132,606) 63,567

20,302 (35,192) 189,713

(2,715) 3,207 (526) 266

(88,641) 49,908 (2,096,516) 1,243,043

114,135 9,880 (208) 123,807 7,109 (95,935) 34,981

656,512 189,545 18,717 14,207 (13) (9,246) 675,216 194,506 11,724 14,931 (610,287) (49,355) 76,653 160,082

-

495,057 36,216 (21,594) 509,679 25,327 (369,066) 165,940

168,747 10,145 (18,140) 160,752 7,294 (112,800) 55,246

148,947 12,712 (9,193) 152,466 16,653 (32,101) 137,018

-

1,775,530 102,369 (58,394) 1,819,505 83,530 (1,269,544) 633,491

(2,435)

-

97,820 97,820

-

-

-

-

-

-

-

-

97,820 97,820

6,053 103,873

-

-

-

-

-

-

-

-

6,053 103,873

Quality Houses Public Company Limited

155


(Unit: Thousand Baht) Consolidated financial statements Land and land Leasehold Office Operating improvement improvement Buildings equipment supplies

Furniture and fixtures

Operating equipment

Vehicles and others

Building and equipment under development

Total

Net book value 1 January 2011

474,567

157,052

552,557

36,687

25,572

131,749

29,000

30,118

1,939

1,439,241

31 December 2011

474,075

150,311

536,277

45,946

30,424

106,789

32,114

51,683

6,295

1,433,914

31 December 2012

255,452

24,138

77,267

41,529

13,353

32,658

8,321

52,695

266

505,679

Depreciation for the year 2011 (Baht 71 million included in cost of rental and services, and the balance in administrative expenses)

102,369

2012 (Baht 49 million included in cost of rental and services, and the balance in administrative expenses)

83,530 (Unit: Thousand Baht)

Separate financial statements

Land and land improvement Cost 1 January 2011 Transfer in (out) Transfer to land and project development costs Purchase Disposal 31 December 2011 Transfer in (out) Transfers from land and project development costs Transfer to land and project development costs Purchase Disposal 31 December 2012 Accumulated depreciation 1 January 2011 Depreciation for the year

Leasehold improvement

Buildings

Furniture Office Operating and equipment supplies fixtures

Operating Vehicles equipment and others

Building and equipment under development

Total

574,910 -

268,866 -

1,208,863 212,638 1,961 2,061

21,478 -

623,378 1,836

194,277 12,301

153,144 -

1,939 (18,159)

3,259,493 -

574,910 -

2,484 (165) 271,185 -

(2,435) 1,592 15,120 (20) (9,112) 1,209,961 220,707 2,841 -

5,637 (2,253) 24,862 -

8,260 (21,786) 611,688 -

531 (17,884) 189,225 965

7,707 (10,021) 150,830 454

20,779 4,559 (4,260)

(2,435) 62,110 (61,241) 3,257,927 -

27,053

-

-

27,053

(85,026) (153,205) 362,832

2,543 485

156 Annual report 2012

-

-

-

1,554 (216,553) 56,186

1,836 6,313 (1,063,985) (52,145) 150,653 174,875

950 (17,335) 8,477

2,415 (421,569) 192,534

2,017 (132,606) 59,601

9,066 (34,592) 125,758

(2,715) 3,207 (526) 265

113,774 9,757

656,491 18,699

-

493,933 35,489

165,949 9,852

132,103 8,059

-

183,305 11,502

-

-

-

(88,641) 27,358 (2,092,516) 1,131,181

1,748,098 93,843


(Unit: Thousand Baht) Separate financial statements

Depreciation for disposal 31 December 2011 Depreciation for the year Depreciation for disposal 31 December 2012 Allowance for impairment 1 January 2011 31 December 2011 Transfer from land and project development cost 31 December 2012 Net book value 1 January 2011

Land and land improvement

Leasehold improvement

3,028 485 3,513

(102) 123,429 6,962 (95,935) 34,456

97,820 97,820

-

6,053 103,873

Buildings

(13) 675,177 11,562 (610,287) 76,452

Furniture Office Operating and equipment supplies fixtures

Building and equipment under development

Operating Vehicles equipment and others

Total

(8,982) 185,825 11,144 (48,755) 148,214

-

(21,589) 507,833 24,733 (368,131) 164,435

(17,759) 158,042 6,963 (112,800) 52,205

(8,884) 131,278 7,607 (31,603) 107,282

-

(57,329) 1,784,612 69,456 (1,267,511 586,557

-

-

-

-

-

-

-

97,820 97,820

-

-

-

-

-

-

-

-

6,053 103,873

474,547

155,092

552,372

29,333

21,478

129,445

28,328

21,041

1,939

1,413,575

31 December 2011

474,062

147,756

534,784

34,882

24,862

103,855

31,183

19,552

4,559

1,375,495

31 December 2012

255,446

21,730

74,201

26,661

8,477

28,099

7,396

18,476

265

440,751

Depreciation for the year 2011 (Baht 71 million included in cost of rental and services, and the balance in administrative expenses) 2012 (Baht 49 million included in cost of rental and services, and the balance in administrative expenses)

93,843 69,456

On 19 July 2012, the Company entered into agreements to purchase and to sell, whereby it agreed to sell the land, buildings, related systems, furniture and equipment of Centre Point Hotel and Residence Petchburi Project and Centre Point Hotel and Residence Sukhumvit Project to Quality Houses Hotel and Residence Freehold and Leasehold Property Fund (â&#x20AC;&#x153;the Fundâ&#x20AC;?), for total considerations of Baht 1,142 million and Baht 1,470 million, respectively (including value added tax). The Company registered the transfer of the ownership of the properties to the Fund on 20 July 2012. In addition, the Company entered into an agreement to transfer the leasehold rights to the building of Centre Point Hotel and Residence Langsuan Project to the Fund, a procurement agreement enabling the Fund's acquisition of leasehold rights to that building, and an agreement to sell movable properties of the project to the Fund, whereby it is to receive a total consideration of Baht 730 million (including value added tax). On 20 July 2012, the Fund entered into a lease agreement for the building with the original lessor for a period of 3 years, 10 months and 12 days, and two further periods of 5 years each, based on rental rates and conditions for adjustment of rental rates in accordance with the agreement. The Company entered into an agreement to guarantee the performance of the Fund in accordance with the lease agreement throughout the lease period. Quality Houses Public Company Limited

157


On 19 July 2012, Centre Point Hospitality Co., Ltd. (a subsidiary) entered into an agreement with the Fund to lease and sublease the assets of the three Centre Point Projects, for a period of three years as from the date on which the Fund assumes ownership and possession of the leased properties. The subsidiary provided assurance that if the Fund wishes and calls for the subsidiary to continue the lease and sublease of the properties after the expiration of the lease period, the subsidiary would continue leasing them for another 3 years. The agreements to lease and sublease can be extended for further periods of 3 years each time, counting from their expiry dates, with a fixed rental fee and variable rental fee in accordance with the conditions stipulated in the agreement.

The Company had gains on the sale of properties and transfer of the leasehold rights to the buildings of the three Centre Point Projects totaling Baht 1,784 million (net of related selling expenses). The Company recognised this transaction in profit or loss for the current year. Furthermore, the Company entered into an agreement to guarantee the minimum rental income that the Fund will receive from Centre Point Hospitality Co., Ltd. with respect to the three Centre Point Projects, which over the period of 3 years totals Baht 836 million. The Company has estimated provision for loss from the minimum rental income guarantee at the present value of the cash flows which it expects to pay to the Fund, a total of Baht 111 million, and recorded it as an expense in profit or loss for the current year. As discussed in Note 12, the Company has acquired 31.33% of the registered units of Quality Houses Hotel and Residence Freehold and Leasehold Property Fund. The Company treated Baht 601 million of its gains on sales of properties and transfers of leasehold rights to buildings to the Fund as unrealised gains, in proportion to its investment in the Fund. This was presented as a deduction item in the investments in associated company account in the consolidated statements of financial position. In addition, the Company treated Baht 35 million of the expense of providing a minimum rental income guarantee with respect to the projects as unrealised expenses, in proportion to its investment in the Fund. This was included in the investments in associated company account in the consolidated statements of financial position. During the current year, the Company hired an independent valuer to appraise the fair value of all of the Company's office building and serviced apartment projects, using the income approach for its active projects and the market approach and/or cost approach for non-active projects and projects under development but not yet generating income. The fair values of those assets as appraised by the independent appraiser exceeded their net book value. As at 31 December 2012, certain plant and equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation and allowance for impairment loss) of those assets amounted to approximately Baht 337 million (2011: Baht 655 million) (the Company only: Baht 317 million, 2011: Baht 639 million). The Company has mortgaged certain plots of land and structures thereon as collateral for credit facilities granted by financial institutions.

158 Annual report 2012


16. Leasehold rights

Projects Q. House Convent Q. House Sathorn Q. House Asoke Centre Point Bangrak Centre Point Langsuan Total Less: Accumulated amortisation Leasehold rights - net Amortisation of leasehold rights for the year

(Unit: Thousand Baht) Consolidated and separate financial statements 2012 2011 348,395 347,216 502,063 499,729 650,210 645,324 1,018,340 1,013,489 832,657 2,519,008 3,338,415 (1,826,050) (1,590,907) 1,512,365 928,101 115,341

111,745

Baht 112 million of the amortisation of leasehold rights for the year 2012 (2011: Baht 115 million) has been charged to cost of rental and related services. In July 2012, the Company proceeded with the transfer of leasehold rights of Centre Point Hotel and Residence Langsuan Project to Quality Houses Hotel and Residence Freehold and Leasehold Property Fund, as detailed in Note 15. The Company has mortgaged its leasehold rights with structures thereon with a total net book value as at 31 December 2012 of Baht 445 million (2011: Baht 987 million) as collateral credit facilities granted by financial institutions.

17. Land and project development costs

Land Interest cost Construction under development Total Less: Provision for loss on diminution in value of projects Land and project development costs - net

Consolidated financial statements 2011 2012 6,780,424 8,686,183 415,875 521,430 957,127 1,067,932 8,153,426 10,275,545

(Unit: Thousand Baht) Separate financial statements 2012 2011 1,822,476 3,010,595 292,372 443,931 204,575 678,342 2,319,423 4,132,868

(244,026) (237,973) 7,915,453 10,031,519

(237,973) 2,081,450

(244,026) 3,888,842

During the current year, the Company hired an independent valuer to appraise the fair value of the Company and its subsidiariesâ&#x20AC;&#x2122; land and project development costs, using the market approach and/or cost approach. The fair Quality Houses Public Company Limited 159


values of the land and project development costs appraised by the independent appraiser exceeded their net book values. During the current year, the Company and its subsidiaries included borrowing costs of Baht 70 million (the Company only: Baht 7 million) (2011: Baht 86 million, the Company only: Baht 44 million) as cost of â&#x20AC;&#x153;Land and project development costsâ&#x20AC;?. These were determined by applying a capitalisation rate of 3.1% (the Company only: 1.1% (2011: 2.8%, the Company only: 1.1%). Movements in the provision for loss on diminution in value of projects during the year ended 31 December 2012 are summarised below. (Unit: Thousand Baht) Consolidated and Separate financial statements Balance as at 1 January 2012 244,026 Less: Transfer of provision to property, plant and equipment (6,053) Balance as at 31 December 2012 237,973 During the current year, the Company has transferred a Baht 6 million provision for loss on diminution in value of projects to property, plant and equipment because it had its development plans for the project from a residential condominium for sale project, to a residential condominium units for rent project. The Company and its subsidiaries have mortgaged certain plots of land and structures thereon as collateral for credit facilities granted by banks both short and long loans.

18. Short-term loans from financial institutions/Short-term loans

Interest rate

Repayment condition

(Unit: Thousand Baht) Consolidated and Separate financial statements 2012 2011

Short-termloans loansfrom from Short-term institutions financialinstitutions financial Promissory notes

3.63% - 3.85%

700,000

-

Short-term Short-termloans loans Bills of exchange

Repayment per schedule in 2013

2.92% - 3.88%

Repayment per schedule in 2013

4,590,000

3,708,000

(18,139) 4,571,861

(24,868) 3,683,132

Less: Prepaid interest Net 160 Annual report 2012


19. Trade and other payables

Trade payables - related parties (Note 6) Trade payables - unrelated parties Other payable - related parties (Note 6) Other payable - unrelated parties Accrued interest Total trade and other payables

Consolidated financial statements 2011 2012

(Unit: Thousand Baht) Separate financial statements 2012 2011

40,430 523,566

15,750 400,141

27,685 172,133

17,568 163,469

63,557 34,800 142,475 804,828

12,659 117,368 545,918

72,642 27,648 142,429 442,537

748 8,072 117,144 307,001

20. Long-term loans

Interest rate Repayment schedule - The security is under MLR minus Repayment when there development certain rates is the transfer of ownership of real estate and will generate income to project customers - The security has not MLR minus Repayment when there been developed yet certain rates is the transfer of ownership of real or is under estate development but to project customers not yet generating income Total Less: Current portion Less: Long-term loans - net of current Long-term currentportion portion

(Unit: Thousand Baht) Consolidated financial Separate financial statements statements 2012 2011 2012 2011 1 732,001 -

80,000

285,000

-

-

80,001 (80,001) -

1,017,001 (294,353) 722,648

-

-

Movements in the long-term loans account during the year ended 31 December 2012 are summarised below. (Unit: Thousand Baht) Consolidated Separate financial financial statements statements Balance as at 1 January 2012 1,017,001 Add: Additional borrowings during the year 1,257,594 864,500 Less: Repayment during the year (864,500) (2,194,594) Balance as at 31 December 2012 80,001 Quality Houses Public Company Limited 161


Most of the loan agreements include covenants and restrictions. These pertain to, among other things, dividend payment, increases and reductions of share capital, the provision of guarantees to loans or aval to promissory notes of any other persons or companies, conducting any merger or acquisition with other companies, and the maintenance of certain financial ratios. Any actions performed by the Company and its subsidiaries which are not in compliance with these covenants and restrictions are to be reported to the lenders in writing to request the lenders consent. In addition, the Company agreed to provide assurances to the lenders of a subsidiaries company, whereby there are certain covenants pertaining to, among other things, the maintenance of its level of shareholding in the subsidiaries, the provision of financial support to the subsidiaries if its lacks capital for development of its projects, the deferral of the application of any rights to demand payment of loans from the subsidiaries or the enforcement of rights over collateral, for as long as the subsidiaries has not made full repayment of credit facilities to the banks. The Company and its subsidiaries have mortgaged certain plots of land, leasehold rights, and related buildings thereon, to secure these loans, in accordance with the loan agreements. As at 31 December 2012, the long-term loan facilities of the Company and its subsidiaries which have not yet been drawn down amounted to Baht 7,514 million (2011: Baht 3,245 million).

21. Unsecured debentures

Type of debenture Interest rate Age Unsubordinated andunsecured unsecured debentures Unsubordinated and debentures - No. 1/2008 - Tranche II Years 1-3: Fixed rate of 4 years 4.25% p.a. Year 4: Fixed rate of 4.70% p.a. - No. 1/2009 Fixed rate 5.30% p.a. 3 years - No. 2/2009 Fixed rate 4.55% p.a. 3 years - No. 1/2010 - Tranche I Fixed rate of 3.45% p.a. 3 years - Tranche II Fixed rate of 3.45% p.a. 3 years - No. 2/2010 Fixed rate of 3.65% p.a. 5 years - No. 3/2010 Fixed rate of 3.65% p.a. 5 years - No. 4/2010 Fixed rate of 3.36% p.a. 3 years 6 months - No. 1/2011 Fixed rate of 3.90% p.a. 3 years - No. 2/2011 - Tranche I Years 1-2: Fixed rate of 3 years 4.70% p.a. Remaining 6 months 1.5 years: Fixed rate of 5.00% p.a. - Tranche II Years 1-3: Fixed rate of 5 years 5.00% p.a. Years 4-5:

162 Annual report 2012

Maturity date

Consolidated and separate financial statements Number of Amount debentures (Units) (Thousand Baht) 2012 2011 2012 2011

14 March 2012

-

600,000

-

600,000

19 March 2012 24 July 2012

-

1,300,000 2,500,000

-

1,300,000 2,500,000

17 May 2013 3 June 2013 9 July 2015 9 July 2015 11 April 2014

1,000,000 1,000,000 2,500,000 500,000 2,000,000

1,000,000 1,000,000 2,500,000 500,000 2,000,000

1,000,000 1,000,000 2,500,000 500,000 2,000,000

1,000,000 1,000,000 2,500,000 500,000 2,000,000

10 March 2014

2,000,000

2,000,000

2,000,000

2,000,000

25 February 2015 1,600,000

1,600,000

1,600,000

1,600,000

25 August 2016

1,400,000

1,400,000

1,400,000

1,400,000


Type of debenture - No. 3/2011 - No. 1/2012 - No. 2/2012 - Tranche I

Interest rate

Age

Number of debentures (Units) 2012 2011

Maturity date

Fixed rate of 5.30% p.a. Fixed rate of 3.90% p.a. 1 year

23 December 2012

Fixed rate of 4.59% p.a. 4 years

27 April 2016

Amount (Thousand Baht) 2012 2011

-

1,300,000

-

1,300,000

2,212,000

-

2,212,000

-

Fixed rate of 4.16% p.a. 3 years 23 February 2016 800,000 6 months

-

800,000

-

-

2,000,000

-

17,012,000 17,700,000

17,012,000 (2,000,000) 15,012,000

17,700,000 (5,700,000) 12,000,000

- Tranche II Fixed rate of 4.55% p.a. 5 years Total Less: Current portion of debentures Unsecured debentures - net of current portion

23 August 2017 2,000,000

Movements in debentures accounts during the year ended 31 December 2012 are summarised below. (Unit: Thousand Baht) Consolidated and separate financial statements Balance as at 1 January 2012 17,700,000 Add: Issuance of debentures during the year 5,012,000 Less: Redemption of debentures during the year (5,700,000) Balance as at 31 December 2012 17,012,000 All of unsecured debentures include covenants and restrictions. These pertain to, among other things, dividend payment and the maintenance of certain financial ratios. On 20 April 2012, the Annual General Meeting of the Companyâ&#x20AC;&#x2122;s shareholders approved the issuance and offer of debentures in an amount of Baht 10,000 million or the equivalent in any other currency, with a maximum term of 10 years, further to the previous debentures of Baht 10,000 million which was approved by the Annual General Meeting of Shareholders No. 1/2011. The total issue is thus not exceed Baht 20,000 million. The debentures may be issued in one or several tranches and/or offered for sales as a program, from time to time or as revolving issue, by way of public offering and/or private placement and/or institutional investors/major investors. During the year, the Company issued debenture No. 1/2012 and 2/2012 amounting to Baht 2,212 million and Baht 2,800 million, respectively.

Quality Houses Public Company Limited

163


22. Provision for long-term employee benefits Provision for long-term employee benefits, which is compensations on employeesâ&#x20AC;&#x2122; retirement, was as follows: (Unit: Thousand Baht) Consolidated Separate financial statements financial statements 2011 2012 2011 2012 Defined benefit obligation at beginning of year benefit obligation at beginning of year 77,172 68,289 70,263 62,575 Current service cost 15,457 6,294 5,687 5,368 Interest cost 3,627 3,210 3,303 2,941 Benefits paid during the year (471) (621) (471) (621) Actuarial loss 5,602 12,692 Defined benefit obligation obligationatatend endofofyear year 108,477 77,172 84,384 70,263 Long-term employee benefit expenses included in the profit or loss was as follows:

Current service cost Interest cost Total expense recognised in profit or loss Line items under which such expenses are included in profit or loss Selling and administrative expenses

Consolidated financial statements 2011 2012 15,457 6,294 3,210 3,627 19,084 9,504

9,504

19,084

(Unit: Thousand Baht) Separate financial statements 2012 2011 5,687 5,368 3,303 2,941 8,990 8,309

8,990

8,309

Total actuarial losses recognised in the other comprehensive income of the Company and its subsidiaries as at 31 December 2012 amounted to Baht 13 million (2011: Baht 6 million). Principal actuarial assumptions at the valuation date were as follows:

Discount rate Future salary increase rate (depending on age) Staff turnover rate

Consolidated and separate financial statements 2011 2012 (% per annum) (% per annum) 3.7% 4.7% 6.0% - 10.0% 6.0% - 10.0% 0% - 12.5% 0% - 12.5%

Amounts of defined benefit obligation for the current and previous three years are as follows: 164 Annual report 2012


Year 2012 Year 2011 Year 2010 Year 2009

Defined benefit obligation Consolidated Separate financial financial statements statements 108,477 84,384 77,172 70,262 68,289 62,575 59,558 54,928

(Unit: Thousand Baht) Experience adjustments arising on the plan liabilities Consolidated Separate financial financial Statements statements 5,304 8,413 -

23. Provisions

(Unit: Thousand Baht) Consolidated financial statements

Provision for public utility maintenance As at 1 January 2011 84,859 Increase during the year 27,044 (7,689) Utilised At 31 December 2011 104,214 Increase during the year 30,486 Utilised (26,362) 108,338 At 31 December 2012

Short-term provisions Compensation for Provision for Housing Estate repairment of Juristic houses after Persons floods 68,266 17,349 29,476 (18,028) 67,587 29,476 19,084 (12,968) (29,476) 73,703 -

Total 153,125 73,869 (25,717) 201,277 49,570 (68,806) 182,041

Long-term provisions Guarantee of minimum rental Loan income guarantee (Note 15) Litigation 61,000 3,602 15,444 61,000 19,046 49,166 19,145 (2,212) 61,000 49,166 35,979

Total 64,602 15,444 80,046 68,311 (2,212) 146,145

Quality Houses Public Company Limited

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Separate financial statements Short-term provisions Compensation for Provision for Provision for Housing Estate repairment of public utility Juristic houses after floods maintenance Persons As at 1 January 2011 55,040 45,034 Increase during the year 12,412 7,766 13,693 Utilised (13,976) (4,873) At 31 December 2011 62,579 38,824 13,693 Increase during the year 9,433 5,619 Utilised (6,001) (13,693) (17,158) At 31 December 2012 38,442 54,854

Total 100,074 33,871 (18,849) 115,096 15,052 (36,852) 93,296

(Unit: Thousand Baht)

Long-term provisions Guarantee of minimum rental Loan income guarantee (Note 15) Litigation 61,000 3,602 15,444 61,000 19,046 49,166 19,145 (2,212) 61,000 49,166 35,979

Total 64,602 15,444 80,046 68,311 (2,212) 146,145

During the year 2011, the Company and its subsidiaries recognised provision for repairment under warranty claims for customers' houses as a result of the floods in October and November 2011. In calculating this provision the Company and its subsidiaries took into account the number of houses damaged by the floods and currently available information about the cost of various types of repairment work.

24. Share capital On 20 April 2012, the Annual General Meeting of the Company’s shareholders passed the resolutions with respect to the Company’s share capital, as follows: 1) Dividend payment Approved the payment of a stock dividend of not more than 706,444,977 ordinary shares at a par value of Baht 1 each, a total value of Baht 706.5 million, to the Company’s shareholders, at a rate of 1 dividend share for every 12 existing shares, or equivalent to Baht 0.08333 per share; and approved the payment of a cash dividend of Baht 0.00926 per share, or a total of not more than Baht 78.5 million. The total dividend is thus Baht 0.09259 per share, or a total of not more than Baht 785 million, and it is to be paid within 18 May 2012. 2)

Decrease of registered capital Approved the decrease of the registered capital of the Company from Baht 8,883 million to Baht 8,477 million by cancelling the 406 million registered ordinary shares with a par value of Baht 1 each remaining from the exercise of warrants to purchase ordinary shares of the Company.

3)

Increase of registered capital Approved the increase of the registered capital of the Company from Baht 8,477 million to Baht 9,184 million by issuing an additional 707 million ordinary shares with a par value of Baht 1 each, to support the payment of a stock dividend.

166 Annual report 2012


The Company registered the change of its share capital with the Ministry of Commerce on 18 May 2012. Reconciliation of number of ordinary shares

Registered share capital Number of ordinary shares as at 1 January Decrease in share capital during the year Increase in share capital during the year Number of ordinary shares as at 31 December Issued and paid-up share capital Number of ordinary shares as at 1 January Increase in share capital during the year Number of ordinary shares as at 31 December

(Unit: Shares) For the year ended 31 December 2011 2012 8,883,558,370 (406,218,655) 706,444,977 9,183,784,692

8,883,558,370 8,883,558,370

8,477,339,715 706,427,838

8,477,339,715 -

9,183,767,553

8,477,339,715

25. 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% of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution.

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167


26. Expenses by nature Significant expenses by nature are as follow: (Unit: Thousand Baht) Separate financial Consolidated financial statements statements 2012 2011 2012 2011 Purchase of land and payment of construction during the year 11,461,281 11,771,292 2,764,802 3,424,400 Changes in land and construction in (5,098,393) (5,567,881) (1,943,722) (838,477) progress Changes in land and project development costs 1,946,679 113,364 1,807,392 392,595 Salary and wages and other employee benefits 676,240 594,240 431,190 437,303 Depreciation 104,537 123,377 90,465 114,849 Amortisation expenses 111,745 115,341 111,745 115,341 217,273 64,797 64,959 Rental expenses from operating lease 251,542 agreements Expenses of pre-flood protection and post-flood repairment of houses 25,884 144,780 12,158 80,638

27. Earnings per share Basic earnings per share is calculated by dividing profit for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year. The number of ordinary shares of the prior year used for the calculation, as presented for comparative purposes, has been adjusted in proportion to the change in the number of shares as a result of the distribution of the stock dividends of 706 million shares on 18 May 2012, as if the shares comprising such stock dividends had been issued at the beginning of the earliest year reported.

Profit for the year (Thousand Baht) Weighted average number of ordinary shares (Thousand shares) Earnings per share (Baht/share)

168 Annual report 2012

For the year ended 31 December Consolidated Separate financial statements financial statements 2011 2012 2011 2012 (Restated) (Restated) 2,385,669 852,920 1,713,181 485,746 9,183,768 0.26

9,183,768 0.09

9,183,768 0.19

9,183,768 0.05


28. Segment information The Company and its subsidiariesâ&#x20AC;&#x2122; main business is a real estate developer, which consist of land and house projects, residential condominium projects, service apartment for rent, and office building for rent. The Company and its subsidiaries have only one geographical segment because they operate only in Thailand. The Company and its subsidiariesâ&#x20AC;&#x2122; financial information by segment of real estate business and rental and service business in the consolidated financial statements as of and for the years ended 31 December 2012 and 2011 are as follows: (Unit: Million Baht) Real estate business 2011 2012 11,984 8,814

Rental and service business 2012 2011 1,092 1,035

Revenues from external customers Inter-segment revenues 21 10 Total revenues 11,984 8,814 1,113 1,045 Segment income 1,473 544 134 145 Unallocated income (expenses): Interest income Gain on sales of investments Gain on sales of properties and transfer of leasehold rights to buildings Gain on changes in shareholdersâ&#x20AC;&#x2122; equity of associated company Selling expenses Administrative expenses Provision for loss arising from guarantee of minimum rental income of projects

Share of profit from Investments in associates Finance cost Income tax expenses Profit for the year Land and construction

Others 2012 2011 140 94 46 186 140

47 141 94

Total 2012 2011 13,216 9,943 67 13,283 1,747

57 10,000 783

Elimination of intersegment revenues 2012 2011

(67) (67) -

Consolidation 2012 2011 - 13,216 9,943

(57) (57) 13,216 - 1,747

9,943 783

9 -

4 3

1,184 (10) (212)

82 (5) (186)

(77)

-

804

639

(269) (790) 2,386

(285) (182) 853

Quality Houses Public Company Limited

169


(Unit: Million Baht) Real estate

Land and construction in progress Investment properties

Rental and service business 2012 2011

business 2011 2012

Others 2012 2011

Elimination of intersegment revenues 2012 2011

Total 2012 2011

Consolidation 2012 2011

21,707 89

16,442 223

529 397

544 1,189

20

22

21,707 529 506

16,442 544 1,434

(10) -

(15) -

21,697 529 506

16,427 544 1,434

7,947 -

10,064 -

928

1,512

-

-

7,947 928

10,064 1,512

(32) -

(32) -

7,915 928 9,990 41,565

10,032 1,512 8,017 37,966

equipment development costs Leasehold rights Unallocated assets Total assets

Transfer prices between business segment are set out in Note 6.

29. Provident fund The Company and its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees, and the Company and subsidiaries contributed to the fund monthly at the rates of 3 - 6% of basic salary. The fund, which is managed by Land and House Fund Management Co., Ltd., will be paid to employees upon termination in accordance with the fund rules. During the year 2012, the Company and its subsidiaries contributed Baht 17 million to the fund (the Company only: Baht 12 million) (2011: Baht 16 million, the Company only: Baht 12 million). 30. Dividend Dividends declared in 2012 and 2011 consist of the following: Approved by Dividend from the operating results of the year 2010 Stock dividend from the operating results of the year 2011 Dividend from the operating results of the year 2011

Annual General Meeting of the shareholders on 22 April 2011 Annual General Meeting of the shareholders on 20 April 2012 Annual General Meeting of the shareholders on 20 April 2012

Total dividends (Thousand Baht)

Dividend per share (Baht)

Paid on

1,017,197

0.12000

20 May 2011

706,428

0.08333

18 May 2012

78,476

0.00926

18 May 2012

31. Commitments and contingent liabilities As at 31 December 2012 and 2011, the Company and its subsidiaries have the following outstanding commitments and contingent liabilities: 170 Annual report 2012


31.1 The Company and its subsidiaries have the following outstanding commitments in respect of agreements to purchase of land and construction of projects: (Unit: Million Baht) 2011 2012 Construction contracts 6,033 4,112 Agreements to purchase land for development of future projects 114 336 31.2 The Company and its subsidiaries have entered into several lease agreements to lease land and buildings, for terms of approximately 30 years, and to lease motor vehicles and equipment, with terms of generally between 1 and 3 years. As at 31 December 2012 and 2011, future minimum lease payments required under those operating leases contracts were as follows. Payable: in up to 1 year in over 1 and up to 5 years 31.3 A subsidiary has entered into lease agreements to lease buildings and related assets from Land and Houses Property and Loan Fund-II (related company), with terms of 1 - 3 years. The subsidiary is entitled to renew the leases by giving the Fund notice of its intention to renew in writing at least 90 days before the expiration of the lease. As at 31 December 2012 and 2011, the subsidiary has the following future minimum lease payments for fixed rental fee as required under the lease agreements. (Unit: Million Baht) 2011 2012 Payable: 86 in up to 1 year 53 in over 1 and up to 3 years 53 However, written notice of at least 30 days is required if either party wishes to terminate the agreement prior to the expiration, with termination considered effective when the counter party consents. 31.4 A subsidiary has entered into lease and sublease agreements to lease buildings and related assets from Quality Houses Hotel and Residence Freehold and Leasehold Property Fund (associated company), with terms of 3 years, and provided assurance that it would continue leasing them for another 3 years. The agreement to lease and sublease can be extended for further periods of 3 years each time, counting from their expiry dates, with a fixed rental fee and variable rental fee in accordance with the conditions stipulated in the agreement. As at 31 December 2012 and 2011, the subsidiary has the following future minimum lease payments required under the lease agreements. Quality Houses Public Company Limited

171


( Payable: in up to 1 year 31.5 The Company and its subsidiaries have commitments totaling Baht 17 million in respect of various service commitments (2011: Baht 19 million). 31.6 The Company has commitment in respect of uncalled portion of investment in a subsidiary of approximately Baht 19 million (2011: Baht 19 million). 31.7 The Company has contingent liabilities in respect of loan guarantees provided on behalf of Harbour View Company Limited at an amount equal to 50% of that companyâ&#x20AC;&#x2122;s obligations to its bank. (As at 31 December 2012, that company has outstanding liabilities to the bank, based on the unaudited financial statements prepared by its management, of USD 2 million). As at 31 December 2012, the Company had set aside provision of Baht 61 million for losses arising from such guarantees in its accounts (2011: Baht 61 million). 31.8 The Company has contingent liabilities to banks in relation to the financial support it provided to subsidiary companies for loans obtained for development of the subsidiaryâ&#x20AC;&#x2122;s projects. (As at 31 December 2012, the subsidiaries have outstanding loans to the banks of Baht 80 million (2011: Baht 1,017 million)). 31.9 As at 31 December 2012, the Company and its subsidiaries have servitude over land of approximately 35 rai (2011: 39 rai) of which the cost is included in the cost of projects.

32. Bank guarantees As at 31 December 2012 and 2011, there were the following outstanding bank guarantees issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business of the Company and its subsidiaries. (Unit: Million Baht) Letters of guarantee for allotment of project areas Letters of guarantee for arrangement and maintenance Letters of guarantee for electricity usage Other letter of guarantee

172 Annual report 2012


33. Litigations 33.1 During the years 1998 to 2012, the Company’s customers sued the Company and a subsidiary for the refund of payments made for land and houses in the Company and a subsidiary’s projects, as at 31 December 2012, totaling Baht 12 million. The lawsuits are currently in the judicial process. For reasons of prudence, the Company has set aside provisions totaling Baht 1 million, which the Company deems appropriate, for the loss arising from these litigations. 33.2 During the year 2010, Housing Estate Juristic Person sued the Company for Housing Estate Subsidy and Public Utility Maintenance totaling Baht 32 million and Baht 102 million, respectively. The lawsuits are currently in the judicial process. For reasons of prudence, the Company has set aside provisions totaling Baht 24 million, which the Company deems appropriated, for the loss arising from these litigations. 33.3 During the year 2011, a Housing Estate Juristic Person sued the Company for compensatory damages amounting to Baht 16 million with respect to road construction work in the Company's project. The Company has set aside provisions totaling Baht 11 million, which the Company deems appropriated, for the loss arising from these litigations. In January 2013, the Company entered into a compromise agreement with the Housing Estate Juristic Person, whereby it agreed to pay a compensation totaling Baht 11 million. The Company made payment for such compensation on 7 January 2013. 33.4 During the year 2011 to 2012, individuals sued subsidiaries as defendant and/or co-defendant for compensatory damages totaling Baht 85 million with respect to tort and/or way of necessity. The lawsuits are currently being heard by the Civil Court. However, the management believes that there will be no material impact to the subsidiaries. 33.5 During the year 2011, the customers sued a subsidiary for compensatory damages and requested for the return of land and houses, with aggregated claim amounting to Baht 30 million. The lawsuits are currently being heard by the Civil Court. However, the management believes that there will be no material impact because the subsidiary company expects that it will be able to complete the repair of the houses to the customers.

34. Financial instruments 34.1 Financial risk management

The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, accounts receivable, loans, investments, accounts payable, short-term loans, long-term loans and debentures. The financial risks associated with these financial instruments and how they are managed in described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. 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 Quality Houses Public Company Limited

173


Company and its subsidiaries do not have high concentration of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans and other receivables as stated in the statement of financial position. Interest rate risk The Company and its subsidiaries exposure to interest rate risk relates primarily to their cash at financial institutions, short-term loans, debentures and long-term borrowings. Most of these financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate. Significant financial assets and liabilities classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

Fixed interest rates Within Over 1 year Financial assets Cash and cash equivalents Trade and other receivables Restricted deposits at financial institutions Long-term loans to related party Financial liabilities Short-term loans from financial institutions Short-term loans Trade and other payable Long-term loans Unsecured debentures

174 Annual report 2012

700 4,572

2,000

1-5 years 5 years -

-

-

-

-

-

-

-

-

-

-

-

-

-

15,012

-

(Unit: Million Baht)

As at 31 December 2012 Floating interest rate 1,062 30 9

80 -

Noninterest bearing 588 88 -

Total

Interest rate (% p.a.)

1,650 0.10% 2.85% 88 -

30 0.63% 1.75% 9 LIBOR + 2% and 8%

-

700 Note 18

-

4,572 Note 18

805 -

-

805 80 Note 20 17,012 Note 21


Fixed interest rates Within 1 year

1-5 years

As at 31 December 2011

Over 5 years

Floating interest rate

Noninterest bearing

(Unit: Million Baht)

Total

Interest rate (% p.a.)

Financial assets Cash and cash 834 279 1,113 0.50% equivalents 3.45% Trade and other receivables 67 67 Restricted deposits at 23 23 2.35% financial institutions 2.50% Long-term loans to 4 4 LIBOR + 2% related party Financial liabilities Short-term loans 3,683 3,683 Note 18 Trade and other payable 546 546 Long-term loans 1,017 1,017 Note 20 Unsecured debentures 5,700 12,000 - 17,700 Note 21 )RUHLJQFXUUHQF\ULVN As at 31 December 2012 and 2011, the Company and its subsidiaries have no material financial instruments which denominated in foreign currency. 34.2 Fair values of financial instruments

The estimated fair value of financial instruments in comparison with the related amounts carried in the statements of financial position, is as follows: (Unit: Million Baht) As at 31 December 2011 As at 31 December 2012 Carrying amount Fair value Carrying amount Fair value Financial assets 1,650 1,113 1,113 Cash and cash equivalents 1,650 Trade and other receivables 88 88 67 67 Restricted deposits at financial institutions 30 30 23 23 Long-term loans to related party 9 9 4 4 Financial liabilities Short-term loans from financial 700 700 institutions 4,572 3,683 3,683 Short-term loans 4,572 Trade and other payables 805 805 546 546 Long-term loans 80 80 1,017 1,017 Unsecured debentures 17,012 17,096 17,700 17,657 Quality Houses Public Company Limited

175


The methods and assumptions used by the Company and its subsidiaries in estimating the fair value of financial instruments are as follows: a) For financial assets and liabilities which have short-term maturity, including cash and cash at financial institutions, accounts receivable, accounts payable and short-term loans, their carrying amounts in the statement of financial position approximate their fair value. b) For debts and equity securities, their fair value is generally derived from quoted market prices, or based on generally accepted pricing models when no market price is available. c) For fixed rate debentures and long-term loans, their fair value is estimated by discounting expected future cash flow by the current market interest rate of the loans with similar terms and conditions. d) For debentures and long-term loans carrying interest approximate to the market rate, their carrying amounts in the statement of financial position approximates their fair value.

35. Capital management The primary objective of the Company's capital management is to ensure that it has an appropriate financial capital structure in order to support its business and maximise shareholder value. The Company manages its capital position with reference to its debt-to-equity ratio in order to comply with a condition in long-term loan agreements and a covenant of debentures, which requires the Company to maintain a debt-to-equity ratio of not more than 3:1 and 2:1, respectively (2011: 1.75:1 and 2:1, respectively). No changes was made in the objectives, policies or processes during the years end 31 December 2012 and 2011. 36. Events after reporting period On 26 February 2013, the meeting of the Company's Board of Directors approved the payment of a dividend of Baht 0.12 per share from the profit for the year ended 31 December 2012 to the Company's shareholders, or a total of Baht 1,102 million. The dividend will be paid on 13 May 2013. The above dividend payment is to be proposed to the Annual General Meeting of the Company's shareholders for approval. 37. Approval of financial statements These financial statements were authorised for issue by the Companyâ&#x20AC;&#x2122;s Board of Directors on 26 February 2013.

176 Annual report 2012


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178 Annual report 2012


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180 Annual report 2012


Location of Housing Projects

[ Call 1338 for all projects]

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183


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QH: Annual Report 2012  

Annual Report 2012