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รายงานประจำ�ปี

2556

Annual Report 2013

บริษัท ไทยพัฒนาโรงงานอุตสาหกรรม จำ�กัด (มหาชน) เลขที่ 18 ซอยสาทร 11 แยก 9 อาคารทีเอฟดี แขวงยานนาวา เขตสาทร กรุงเทพมหานคร 10120 โทรศัพท์ : (66) 2676 4031-6, (66) 2676 3836-9 โทรสาร : (66) 2676 4038-9 Thai Factory Development Public Company Limited 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok 10120 Thailand Tel : (66) 2676 4031-6 , (66) 2676 3836-9 Fax : (66) 2676 4038-9 www.tfd-factory.com

YOUR SATISFACTION IS OUR BUSINESS.

บริษัท ไทยพัฒนาโรงงานอุตสาหกรรม จำ�กัด (มหาชน) Thai Factory Development Public Company Limited


TFD Factory Location Map มุ่งมั่น สร้างสรรค์ พัฒนาอสังหาริมทรัพย์ ด้านโรงงาน อุตสาหกรรม อาคารสำ�นักงาน และที่พักอาศัย พร้อมการบริการ ด้วยใจอย่างต่อเนื่อง เพื่อสร้างความพึงพอใจสูงสุดแก่ลูกค้า

Be Dedicated, Be Creative, Be a Quality Real Estate Developer In Industrial Factories, Office Buildings & All Real Estate Sectors Providing the Best Customer Service for Our Customers’ Satisfaction


Contents 02 03 04 10 11 14 18 37 40 41 44 122 136

Financial Highlights Message from Chairman of the Board Board of Directors Organization Chart Managements Corporate Social Responsibilities in the year 2013 Principles on the Good Corporate Governance Report Internal Control Report from the Audit Committee Independent Auditor’s Report Financial Statements and Notes Business Overview Status of Industry and Competition

Thai Factory Development Public Company Limited

146 Policy on Conflict of Interest and Transactions with Subsidiaries 153 Risk Factors 161 Management Discussion and Analysis 178 Report of the Board of Directors’ Accountability to the Financial Statements 179 Shareholders and Management 181 Major Shareholders 182 General Information

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ข้อมูลส�ำคัญทางการเงิน Financial Highlights 2556 2013

(หน่วย : ล้านบาท) Unit : Baht Million

2555 2012

2555 2012

2554 2011

(ปรับปรุงใหม่) (Restated) ข้อมูลทางการเงิน / Financial Data : 1. รายได้จากการขายและบริการ Income from Sales and Service 882.82 1,323.75 1,323.75 1,132.12 2. รายได้รวม Total income 945.42 1,360.58 1,350.29 1,143.69 3. ก�ำไร (ขาดทุน) สุทธิ Net profit (loss) 153.86 503.00 525.16 146.52 4. สินทรัพย์รวม Total assets 7,683.00 5,977.45 3,664.35 2,433.46 5. หนี้สินรวม Total liabilities 6,054.91 3,967.85 2,032.65 1,430.65 6. ส่วน­ของผู้ถือหุ้น Shareholder’s equity 1,628.10 2,009.60 1,631.69 1,002.81 อัตราส่วนทางการเงิน / Financial Ratio : 1. อัตราก�ำไรสุทธิต่อรายได้รวม Net profit to total income 16.27% 36.97% 38.89% 12.81% 2. อัตราผลตอบแทนต่อส่วนของผู้ถือหุ้น Return on equity 9.45% 25.03% 32.18% 14.61% 3. อัตราผลตอบแทนต่อทรัพย์สินรวม Return on total assets 2.00% 8.41% 14.33% 6.02% 4. ก�ำไร (ขาดทุน) สุทธิต่อหุ้น (บาท) Net profit (loss) per share (Baht) 0.14% 0.64% 0.68% 0.2106% 5. เงินปันผลต่อหุ้น(บาท) Dividend per share (Baht) 0.30% 0.09% 0.00% 0.00% 6. มูลค่าตามบัญชีต่อหุ้น(บาท) Book value per share (Baht) 1.50% 2.54% 2.07% 1.43% 7. อัตราส่วนสภาพคล่อง(เท่า) Current ratio (time) 1.19% 1.63% 1.59% 2.02% 8. หนี้สินรวมต่อส่วนของผู้ถือหุ้น(เท่า) Debt: Equity ratio (time) 3.71% 1.97% 1.25% 1.43% หมายเหตุ : งบการเงินปี 2555 ได้ปรับปรุงใหม่เกิดจากบริษัทได้ลงทุนในบริษัทแห่งหนึ่ง ซึ่งถือเป็นการรวมกิจการภายใต้การควบคุมเดียวกัน Remark : The Financial Statements of 2012 were restated because of the Company invested in subsidiary. The acquisition was thus considered to be a business combination under common control.

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Thai Factory Development Public Company Limited


Message from Chairman of the Board

Dear Shareholders, In 2013, Thailand mourned the death of two Buddhist leaders as both Somdet Phra Sangharaja Sakalamahasanghaparinayaka, the Supreme Patriarch of Thailand, and Somdet Phra Buddhacarya (Somdet Kiaw Upasenฺ o), the Acting Supreme Patriarch of Thailand, passed away in the same year. The Company by its Board of Directors and personnel attended the Abidharmma religious rite to pay final respect to the highly revered monks. Aside from the demise of the head of the religion, the Company was affected by economic, financial and monetary volatility. As one may be well aware of, Thailand’s significant problems included social and rice problems which seemed to be gradually resolved despite so many obstacles. In addition, Thai Baht was increasingly stronger leading to a need to keep it at a level resilient enough to cope with future currency fluctuation. However, Thailand is not the only country affected from economic volatility. Other countries including European Union and the US also do. Shareholders may already be aware that several countries have suffered from not only

economic difficulties but also political havoc. There were political demonstrations, protests and even killings amid demands for change of political regime. Most countries have indeed been affected from the chaos. TFD Public Company Limited was able to wade through crises and generated as high as Baht 370 million profit in 2013. The profit which was higher than the 2012 profit was a result of dedication and commitment to hard work of every personnel whether they were the Board, executive directors, members of the Audit Committee and staff. TFD Public Company Limited commits to continue enhancing the progress of various projects in hands especially residential condominium projects in future years. I would like to express our deepest gratitude and appreciation to not only shareholders who have actively supported us but also customers and financial institutions as well as members of the press for your collaboration. We do hope to continue receiving your support for years to come. Yours sincerely, Dr. Sunthorn Sathirathai Chairman of the Board

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Board of Directors Dr. Sunthorn Sathirathai Chairman, Independent Director Appointed on February 1, 2002

Education

Ph.D.(Hons), Economics Sorbonne, France 1956 Master’s Degree in Economics Sorbonne, France 1954 Bachelor’s Degree in Political Science Thammasat University

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Working Experience

Chancellor at Eastern Asia University Professor Emeritus in Law at Chulalongkorn University Chairman of the Committee on Industrial Estate

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Holding prominent positions at the Ministry of Finance from 1957 – 1988 Deputy Permanent Secretary Director General-Comptroller General’s Department Director General-Treasury Department Counsellor-Fiscal Policy Office Head of Banking Supervision and Savings Division

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Dr. Apichai Taechaubol Director, Executive Chairman Appointed on February 20, 2012

Education

Honorary Degree of Master of Business Administration in Department of General Management Ramkhamhaeng University Master’s Degree in Political Science Ramkhamhaeng University Bachelor’s Degree in Business Administration North Central University Bachelor’s Degree in Political Science Ramkhamhaeng University

   

Directors Program Training from IOD DAP, Class 39/2005 Chairman 2000 Program

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Working Experience Director and Executive Chairman J.C. Kevin Development Co., Ltd. Director Executive Chairman VSSL Enterprise Co., Ltd. Vice Minister for Office Of Prime Minister Director to the DASTA Director and Executive Chairman - SG Land Co., Ltd. Deputy Advisor for the Internal Affairs Ministry Consultant to the Thai/Chinese Chamber of Commerce Chairman Princeton Park Suites Co., Ltd. Vice Chairman Total Industrial Services Co., Ltd.

        

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Mr. Prasong Vara-ratanakul Audit Committee Chairman Corporate Governance, Nominating and Remuneration Committee Chairman Independent Director Appointed on April 30, 1999

Education

Master of Public Administration Chulalongkorn University Bachelor of Commerce Chulalongkorn University Bachelor of Law Ramkamhaeng University

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Directors Program Training from IOD DCP, Class 72/2006 DAP, Class 51/2006 ACP, Class 12/2006

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Working Experience Director and Audit Committee Chairman Krungthep Land PLC.

Mr. Nan Kitjalaksana Audit Committee Member Corporate Governance, Nominating and Remuneration Committee Independent Director Appointed on February 1, 2002

Education

MBA, University of Michigan, U.S.A. Higher Diploma in Accountancy, Thammasat University

 

Directors Program Training from IOD DAP, Class 58/2006

Working Experience Director of The Far East Law Office (Thailand) Co., Ltd.

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Mr. Sommart Sangkhasap Audit Committee Member Corporate Governance, Nominating and Remuneration Committee Independent Director Appointed on April 2, 2003

Education

Bachelor’s Degree in Law Thammasat University Bachelor’s Degree in Accounting Thammasat University Bachelor’s Degree in Commercial Thammasat University

  

Directors Program Training from IOD DAP, Class 58/2006

Working Experience Consultant in Taxation of Sapsataporn Co., Ltd.

Mr. Gumpol Tiyarat Director Executive Director Managing Director Appointed on February 1, 2002

Education

Master’s Degree of Business Administration Kasetsart University Bachelor’s Degree of Economics Thammasat University Bachelor’s Degree of Accounting Dhurakijbundit University Bachelor’s Degree of Law Chulalongkorn University

   

Directors Program Training from IOD

Role of the Chairman, Class 22/2009 DCP Refresher, Class 2/2006 DCP, Class 30/2003 (Certificate of Completion and Diploma)

  

Other Institute

Business and Economic Analysis Program, Class 22/2009 Faculty of Economics, Chulalongkorn University

Working Experience

Tax Economist Officer of Revenue Department Ex-Police Sub-commission on Laws & Regulations Royal Thai Police Executive Director Total Industrial Services Co., Ltd. Executive Director SG Land Co., Ltd. Managing Director Princetonparksuite Co., Ltd.

    

Thai Factory Development Public Company Limited

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Mr. Anukul Ubonnuch Director Executive Director Deputy Managing Director Appointed on February 1, 2002

Education

Master’s Degree in Business Administration Kasetsart University Barrister at Law Institute Legal Education Thai Bar Association Bachelor’s Degree in Law Ramkhamhaeng University

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Directors Program Training from IOD DCP, Class 7/2001 Director Diploma Examination Chartered Director, Class 5/2009

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Training from other Institute

Graduate Diploma in Public Law and Management King Prajadhipok’s Institute Certificate of Applied Psychology for National Security The Institute of Applied Psychology, National Defence Studies Institute

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Working Experience

Director SG Land Co., Ltd. Director Total Industrial Services Co., Ltd. Managing Director (1995 - 2005) Credit Foncier Unico Housing Limited Chief Legal Department (1992 - 1995)

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Remark: Mr. Anukul Ubonnuch resigned in the position of Executive Director on December 31, 2013

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Thai Factory Development Public Company Limited


Mrs. Sumalee Ongcharit Director Appointed on April 29, 2010

Education

Master of Business Administration (MBA-Finance) Thammasat University Bachelor of Business Administration (BA-Marketing) Ramkhamhaeng University Bachelor of Science (BS-Biotechnology) Kasetsart University

  

Working Experience

Director Capital Alliance Co., Ltd. Eastem Printing Public Company Limited. Seadog International Co., Ltd. Perkasa Holding Co., Ltd. Seashell Siam Co., Ltd. Darunrak Co., Ltd. Kiridhara Co., Ltd. JKR Energy Co., Ltd. RPV Energy Co., Ltd. Borploi Solar Co., Ltd. EPCO Green Power Plus Co., Ltd. Aquatist Energy Co., Ltd. Lopburi Solar Co., Ltd. A Plus Planner Co., Ltd. Bangkok Mass Transit System Public Company Limited. Advance Securities Co., Ltd. Richfield Asset Management Co., Ltd. Remark: Mrs. Sumalee Ongcharit resigned in the position of Director on January 17, 2014 

Mr. Pisuth Viriyamattakul Director Appointed on April 18, 2013

Education

Master of Business Administration Finance, California State University Bachelor’s Degree International Business Management Assumption University (ABAC)

 

Working Experience

Managing Director Taparak Development Co., Ltd. CMT Network Sulutions Co., Ltd. Deputy Managing Director Ratchada Office Building Co., Ltd. 

Remark: Mr. Pisuth Viriyamattakul resigned in the position of Director on January 22, 2014

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Organization Chart as of January 22, 2014

Board of Director

Corporate Governance, Nominating and Remuneration Committee

Assistant Managing Director Industrial Business Development

Executive Chairman

Audit Committee

Managing Director

Internal Audit

Assistant Managing Director Business Development - Residential and Office Building

Assistant Managing Director Administration Information Technology

Assistant Managing Director Finance

Remark : The Company’s internal auditor has assigned to the Non-Juristic Body of Person, responsible an all function of work and the other related to the assignment from the Audit Committee.

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Managements

Dr. Apichai Taechaubol

Executive Chairman

Mr. Gumpol Tiyarat

Managing Director

Mr. Anukul Ubonnuch

Deputy Managing Director *Mr. Anukul Ubonnuch resigned in the position of Deputy Managing Director on December 31, 2013

Mrs. Siriporn Pinprayong

Assistant Managing Director/ Administration InformationTechnology/ Company Secretary

Mrs. Rachanee Siwawej

Assistant Managing Director Finance

Mrs. Vilai S. Ngow

Assistant Managing Director Industrial Business Development

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Managements Dr. Apichai Taechaubol Executive Chairman

Education

Honorary Degree of Master of Business Administration in Department of General Management Ramkhamhaeng University Master’s Degree in Political Science Ramkhamhaeng University Bachelor’s Degree in Business Administration North Central University Bachelor’s Degree in Political Science Ramkhamhaeng University

   

Joined TFD in 2012 Mr. Gumpol Tiyarat Managing Director

Education

Master’s Degree of Business Administration Kasetsart University Bachelor’s Degree of Economics Thammasat University Bachelor’s Degree of Accounting Dhurakijbundit University Bachelor’s Degree of Law Chulalongkorn University

   

Joined TFD in 2002 Mr. Anukul Ubonnuch Director, Deputy Managing Director

Education

Master’s Degree in Business Administration, Kasetsart University Barrister at Law Institute, Legal Education Thai Bar Association Bachelor’s Degree in Law, Ramkhamhaeng University

  

Joined TFD in 2002 Remark: Mr. Anukul Ubonnuch resigned in the position of Deputy Managing Director on December 31, 2013

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Thai Factory Development Public Company Limited


Ms. Rachanee Siwawej Assistant Managing Director, Finance

Education

Bachelor’s Degree in Commerce Thammasat University

Joined TFD in 1981

Mrs. Siriporn Pinprayong Assistant Managing Director, Administration Information Technology, Company Secretary

Education

Master of Arts in English Naresuan University Bachelor of Science in Business Administration (Finance) Roosevelt University, Chicago, U.S.A.

 

Joined TFD in 1994

Mrs. Vilai S. Ngow Assistant Managing Director, Business Development - Industrial

Education

Bachelor’s Degree in Computer Science West Coast University, U.S.A.

Joined TFD in 1997

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Corporate Social Responsibilities in the year 2013 The Thai Factory Development Public Company Limited (The Company) and its subsidiaries are mindful realize the importance of social responsibility in every places that the Company has developed its business, especially in the areas of social care and creating community benefits. In the year 2013, the Company has operated the helpful activities and community development activities in remote areas and also continuously performs in the areas where the Company operates its business. The activities are in areas of education, quality of life development and also including donations to the local Foundations. In order to do all these activities and projects, the Company will focus on the participation of the Company, staffs and the community. The main activities are as follow:

Activities on National Children’s Day, year 2013

The Company mainly emphasizes on children and youth which the Company realizes that these young people are potential become the valuable national human resources in the future. In the year 2013, the Company, together with the Subdistrict Administrative Organization of Tha Sa-an, celebrate the National Children’s Day. The purpose is to create awareness to the children of their duty, discipline, behavior and commitment to the National Institute for religion and monarchy. The theme emphasizes on the participation of Company’s staffs, the related local organization and, most of all, the children in the area closed by the TFD Industrial Estate.

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Activities to preserve Thai culture and promote community’s unity

In order to encourage Thai youth and both Thai and foreign tourists to realize and aware of Thai traditional customs and cultures, the Company, together with Subdistrict Administrative Organization of Pak Nam Pran has organized the activity of “Songkran Beach retro” at Pak Nam Pran beach, Prachuap Khiri Khan. The theme is to emphasize on retroactive customs such as water-pouring to the Buddha, building the sand pagodas and other traditional plays. All of these are created to show the unity of the community and also the good relationship with the Company.

“Free of Drug School” Currently the Company has recognized the importance of the Drug problems which the Company considered is major problem affecting the youth of the country. The Company has then cooperated with “Wat Tha Sa-an Booranasin Anusorn” School in order to set the Project “Free of Drug School” by providing sports equipment to the school and encourage young and youth students to spend their free time on sports to make them strong, healthy and also “free and far away from drug”.

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TFD scholarships to outstanding academic students The Company also realizes the importance of educations and the promotion of educations for youth and children. So on the occasion of Her Majesty Queen Sirikit’s birthday on August 12, 2013, the Company has established scholarship program to students who has outstanding academic results from “Wat Tha Sa-an Booranasin Anusorn” School in order to promote the student’s morale and also to encourage the outstanding students who are short of financial support. This will also be a good example to other students to put more effort and persevering.

Donations of materials to The Bangkok School for The Blind. The Company has collected the 2-pages used papers to hand over and then donate to The Bangkok School for The Blind so that the school can use them to prepare the instruction media (The Braille letter). On the same day, the Company also gives a luncheon party to the students of the school, to let them know that they are still part of the society.

Trip to visit the Wastewater Treatment System and drainage system in the TFD Industrial Estate The Company also recognizes the preservation of natural environment and coexistence in the society, especially in the area surrounding TFD Industrial Estate, Tambon Tha Sa-an, Amphoe Bang Pakong, Changwat Chachoengsao. The Company also share a corporate society by implementing the Wastewater Treatment System and drainage system using in the TFD Industrial Estate to control and maintain the quality of water. The Company also takes the villagers in the communities nearby the estate to visit and see the process of wastewater treatment and the drainage system within TFD Industrial Estate to ensure that the Company does not neglect the importance of quality of life and the well-being of the community.

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Providing and supporting educational materials, sports equipment and lunch to students of Mae Hong Son Border Patrol School. TFD’s working group, altogether with the Compassion for Smile Group, has organized the project the “Compassion for Smile” continuously every year to donate and support educational materials and equipment to rural areas or in remote areas where living is inconvenient. In the past year 2013, TFD’s working group and the Compassion for Smile Group has traveled to Mae Hong Son to provide school materials, sports equipment and lunch to three Border Patrol schools during December 5-7, 2013. The purpose of this project is to promote, support, improve the education and also for the better lives of children and youth.

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Principles on the Good Corporate Governance Realizing that corporate governance helps strengthen trust and confidence among investors, financial institutions, business partners and other stakeholders in the business, the Board of Directors of Thai Factory Development Public Company Limited has adopted the principles of corporate governance (CG) as a guideline for directors, executives and employees to comply with. The Board of Directors has periodically updated the CG principles as well as disseminated this and other information through the Company’s website at http://www.tfd-factory.com. The principles on good corporate governance can be divided to eleven important chapters are as follows: Chapter 1 Business philosophy Chapter 2 The Board of directors Chapter 3 Ethics of the Board of directors, the management and the employees Chapter 4 Reports on the finance, the management and the internal control Chapter 5 Risk management Chapter 6 Rights of the shareholders Chapter 7 Equitable treatment of shareholders Chapter 8 Role of the stakeholders Chapter 9 Disclosure of the information and transparency Chapter 10 Responsibility for the society and the environment Chapter 11 The anti-corruption

Chapter 1 Business philosophy The Company has the intention to be the best on the organization that does business on real estate development with good management, focusing on increasing the operation to be flexible with the capability in competition and can operate with optimization to the involved persons, including the stakeholders. Moreover, the Company is determined to be an organization with good ethics, transparency and accountability to increase the value to the business and acceptability by everyone involved. From the said intention the Company has prescribed the philosophy in the business for the Board of directors, the management and the employees to use as guidelines for the operations. It emphasizes the personnel to have good attitude with the learning behavior and development creatively and consciously on the overall society. The said philosophy consists of the following essence: 1. Main principles in the business operations and good corporate governance 1.1 Accountability is the responsibility on decision-making and self-action and can explain the decisions. 1.2 Responsibility is the responsibility toward the duty with adequate capability and effectiveness. 1.3 Equitable treatment is treating the stakeholders and all parties equally, justifiably and explicably. 1.4 Transparency is transparent operations that can be verified and the information disclosed to all involved parties. 1.5 Vision to create long-term value is having the vision to build added value to the business in the long run. 1.6 Ethics is maintaining the ethical value while doing the business.

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2. Corporate Values 2.1 To the shareholders - It shall do business with sustainable growth and profitability, considering the good return on investment. 2.2 To the customers - It shall build satisfaction to the customers by presenting the products and services with high quality at the international-standard level at the fair prices. 2.3 To the employees - It shall support the development on capability of working at the professional level continuously with confidence for the life quality of the employees to be equal to the leading companies. 2.4 To the community - It shall be responsible for and has participated in development of the environment with good quality life for the community. 2.5 To the trade partner - It shall build good relations for mutual interest. 3. Corporate Culture 3.1 Attitude - Having the ownership feeling. - Focusing the business interest as priority. - It is customer-centered. - Focusing the organization to have continuous development. - Having the conscience on team spirit with the mutual goal that is clear. 3.2 Thinking method - Thinking in analytical method with the strategic system and in-line issue. 3.3 Working behavior - Having the clear framework and working plan. - The working method can be adjusted according to the situation. - Working in teamwork. - Recording and collecting information for analysis and building as knowledge. - Having the system to transfer the working method systematically. - Knowing how to manage the time.

Chapter 2 The Board of Directors 1. Criteria and procedure for nominating director and the high-level management 1.1 State of leadership and independence of the board of directors - The Board of directors under the leadership of the chairman shall have the state of leadership and can control the operations of the management efficiently and effectively to achieve the targets that are the heart of the business of the Company by building and increasing the investment value to the shareholders, the government sector, the people and the stakeholders. - The Board of directors should consist of independent directors with knowledge and capability, and should convene at least four times per month. The independent directors must access to the financial data and other business sufficiently to express opinions independently, keeping interest of those involved by attending the meeting regularly. - The Company requires that Chairman and Managing Director be elected from members of the Board of Directors and that they are two different persons where roles and responsibilities relating to policy, performance evaluation and management are separated from each other. Chairman of the Board shall have leadership skills. His major responsibilities are to ensure that the Board is independent from the management, to adopt meeting agendas based on the Board’s responsibility and to effectively chair the meeting of the Board of Directors and Shareholders by encouraging all directors to participate at the meeting. Thai Factory Development Public Company Limited

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1.2 Elements of the Board of directors and the appointments - The Board of directors be comprised of: Executive director, Non-executive director, Independent Director - The Company aims to have the independent directors to be the most professional possible, but no less than 3 persons. - The directors should come from the authorities in various fields to integrate the necessary ability, consisted of the persons knowledgeable in real estate development at least 3 persons, at least one legal-knowledgeable person, and one person in accounting and finance. - Appointments of the directors should comply with the specific agenda, transparency and clarity by disclosed the number of years each director has been with the company in the annual report and the company’s website. 1.3 Appointments of other committees - The Independent Committee: The Board of directors must appoint the independent committee as part of it; from the directors at least 3 persons with 1 person must have knowledge on accounting/finance. The audit committee must have the qualification on independence, according to the notice of the SET on the qualification and scope of operations of the audit committee to inspect/supervise the operations of the Company. It shall report on finance, internal control, selection of the auditor, and consideration on the interest, including reporting on governance of the business of the audit committee. At present, the Company has three members of the Audit Committee with acknowledge for reviewing the Company financial report and related experiences as follows: 1. Mr. Prasong Vara-ratanakul Audit Committee Chairman 2. Mr. Nan Kitjalaksana Audit Committee Member 3. Mr. Sommart Sangkhasap Audit Committee Member - The Corporate Governance, Nomination and Remuneration Committee: The Board of Directors on 11 November 2010 appointed three independent directors as members of the Corporate Governance, Nomination and Remuneration Committee whose term of office is three years or until they are no longer the Company’s directors. The three are fully qualified according to the criteria of the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) Re: Qualifications of independent directors. They are: 1. Mr. Prasong Vara-ratanakul Corporate Governance, Nomination and Remuneration Chairman 2. Mr. Nan Kitjalaksana Corporate Governance, Nomination and Remuneration Committee 3. Mr. Sommart Sangkhasap Corporate Governance, Nomination and Remuneration Committee The Corporate Governance, Nomination and Remuneration Committee should meets at least twice during the year for consideration of any matters to achieve their responsibilities assigned by the Board. In addition, the Board of directors clearly state a policy that independent directors who have served on the Board beyond nine years from the date of their first appointment should be subject to particularly rigorous review of their continued independence.

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2. Characteristics and qualifications of the Board of directors - Having the qualification and disqualification meeting the Public Company Act. - The Board of Directors will thoroughly review performance of directors sitting in the board of various companies. In other words, each director should not hold directorship in more than five listed companies and non-listed subsidiaries. - The independent directors must have the qualifications concerning independency, according to the notices of the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) Re: Qualification and scope of work of the audit committee, and can oversee the interests of all the shareholders equally, and no conflict of interest between the Company and the management, the major shareholders of other companies, which the management / major shareholders in the same group. Moreover, it can attend the Board meetings and express opinions independently. - According to the rule and regulation of the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) Re: Qualifications of an independent director, determine the structure of Listed Company’s Board of Directors that shall be at least one-third of the Board membership is made up of independent directors and the sub directors should be an independent director. The Company is able to determine the qualifications of an independent director over the standard of SET and SEC. - The independent directors must have the qualifications concerning independency from major shareholders, executives, and related person or director not being as executive of the Company, subsidiary, and associated companies. Those qualifications are comply with the rules and regulations regarding clause 16: qualifications of an independent director of Notification of the Capital Market Supervisory Board No. TorChor. 28/2008 Re: Application for and Approval of Offer for Sale of Newly Issued Shares as follows. Qualifications of TFD’s independent director 1. Holds shares not exceeding 1% of the total shares with voting right of the applicant, its parent company, subsidiaries, associates, major shareholders, and controlling parties of the applicant, provided that the shares held by the related parties of such independent director shall be included. 2. Is not or has never been an executive director, employee, staff, advisor who receives salary, nor controlling parties of the applicant, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of the applicant unless the foregoing status ended at least 2 years prior to the date of submitting the application to the Securities and Exchange Commission (SEC), provided that such prohibition shall not include the case that such independent director has ever been official or advisor of the government sector that is the major shareholder or controlling party of the applicant. 3. Is not the person who has relationship by means of descent or legal registration under the status of father, mother, spouse, brothers and sisters, and children. The prohibitive persons also include spouses of daughters and sons of management, major shareholders, controlling party or the person who is in the process of nomination to be the management or controlling party of the applicant or its subsidiary. 4. Have no or never had business relationship with the applicant, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the applicant in respect of holding the power which may cause the obstacle of the independent decision, including not being or never been the significant shareholder, or controlling parties of any person having business relationship with the applicant, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the applicant unless the foregoing status ended at least 2 years prior to the date of submitting the application to the SEC. Thai Factory Development Public Company Limited

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The business relationship mentioned under the first paragraph shall include business transaction in ordinary business manner of rent, or lease the immovable property, transaction related to assets or services, or the financial support regardless of being lent or borrowed, guaranteed, secured, by assets, debt, and any otherwise similar performance which causes liability or obligation to the applicant or counter party, have provided that such liability is equal to or exceed 3% of the net tangible assets of the applicant or equal or above 20 million baht, whichever is lower. In this regard, the calculation of such liability shall be in accordance with the calculation method of the value of connected transaction under the Notification of Capital Market Supervisory Board governing the conditions of connected transaction mutatis mutandis. The liabilities incurred during a period of 1 year prior to the date of having business relationship with the above party shall be included on calculation of such liabilities. 5. Is not or has never been the auditor of the applicant, its parent company, subsidiaries, associates, major shareholders, or controlling parties of applicant, and is not the significant shareholder, controlling parties, or partner of the auditing firm which employs such auditor of the applicant, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the applicant unless the foregoing status ended at least 2 years prior to the date of submitting the application to the SEC. 6. Is not or has never been the professional service provider, including but not limited to legal service or financial advisor with received service fee more than 2 million baht per year from the applicant, its parent company, subsidiaries, associates, major shareholders, or controlling parties, and is not the significant shareholder, controlling parties, or partner of the above mentioned service firms unless the foregoing status ended at least 2 years prior to the date of submitting the application to the SEC. 7. Is not the director who is nominated to be the representative of directors of the applicant, major shareholders, or any other shareholder related to the major shareholders. 8. Do not operate the same and competitive business with the business of the applicant, or its subsidiaries, or is not a significant partner of the partnership, or is not an executive director, employee, staff, advisor who receives salary, nor holds shares for more than 1% of the total shares with voting right of any other company which operates same and competitive business with the business of the applicant, or its subsidiaries. 9. Is not any otherwise which is unable to have the independent opinion regarding the business operation of the applicant Such independent director may be assigned by the Board of directors to make decision in respect of collective decision on business operation of the applicant, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of applicant. 3. Main duties and responsibilities of the Board of directors and sub-Committees 3.1 Scopes of work of the Board of Directors 1. To review and approve actions as required by the laws 2. To regularly review managing director’s performance; to set managing director’s remunerations 3. To determine the business’s vision and be responsible for the business’s operation results and performances of the management by promoting attentiveness and prudence 4. To review and approve major strategies and policies, objectives, financial goals, work plans and to regularly monitor the management for their compliance 5. To set up a reliable accounting system, financial reporting and auditing as well as a process that evaluates the soundness of an internal control system and an internal auditing system to ensure their efficiency and the effectiveness of the Company’s risk management, financial reporting and monitoring practices, at least annually as well as disclose the review results in the annual report.

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6. To supervise and resolve problems of conflict of interest among stakeholders 7. To oversee the Board of Director’s practices to be in line with corporate governance and ethical work practices 3.2 Major responsibilities of the Sub-Committees The Board of Directors has set up two committees; namely, the Audit Committee and the Corporate Governance, Nomination and Remuneration Committee, whose responsibilities are as follows. 3.2.1 Scopes of work of the Audit Committee 1. To ensure that both quarterly and annual financial statements are complete according to the generally-accepted accounting principles by coordinating with an auditor and an internal auditor 2. To oversee an internal control system to ensure effectiveness and compliance with the generally-accepted standards by reviewing it with the Company’s auditor and an internal auditor to determine its adequacy 3. To select and nominate the Company’s auditor 4. To prevent a problem of conflict of interest by reviewing connected transactions between the Company and its subsidiaries or other connected persons or agencies 5. To duly comply with rules and regulations within a timeframe 6. To prepare a corporate governance report of the Audit Committee and to disclose it in an annual report. The report must be signed by Chairman of the Audit Committee 7. To perform other jobs as required by the Board or as designated on a case-by-case basis. 3.2.2 Scopes of work of the Corporate Governance, Nomination and Remuneration Committee The Corporate Governance, Nomination and Remuneration Committee has a duty to recommend, supervise and review corporate governance practices of the Company as well as nominate those qualified as the Company’s directors to replace directors resigning on rotation or in other cases. The Committee also reviews an evaluation system of performance of the Board and other committees. It is responsible for a succession plan of the Company’s managing director, which will then be reported to the Board for approval or for proposing to the Shareholders’ Meeting, as the case may be. The Committee also studies changes and trends of director’s remunerations and recommend it as a policy to keep quality people with the Company while acting as an incentive to help expanding the Company. Its jobs are as follows. 1. To review corporate governance policies and practices and business ethics to see if they are sound and adequate; to improve and update such policies 2. To monitor the compliance of a corporate governance policy and business ethics by the Board, the management and staff according to the Company’s practices and policies 3. To promote compliance with corporate governance policies and practices and business ethics for continued effect and to ensure that it fits the Company’s business 4. To recommend the Company, the Board, the management and workgroups on corporate governance 5. To determine how to nominate director or managing director systematically and transparently 6. To nominate those appropriate as a director or a managing director in case of vacancy for further recommendation to the Board or the Shareholders’ Meeting, as the case may be. 7. To recruit future directors to replace those whose term is expired for further recommendation to the Board or the Shareholders’ Meeting 8. To nominate director qualified as a member of the Committee for recommendation to the Board in case of vacancy Thai Factory Development Public Company Limited

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9. To recommend how to evaluate performances of directors, the Board and the Committee and to follow up with the evaluation 10. To review and propose amendments to the scopes of work and responsibilities of Corporate Governance, Nomination and Remuneration Committee and to determine its remunerations that suit each situation 11 To recommend remunerations of and how to pay remunerations or other benefits to the Board, the Committees and managing director with fair and reasonable criteria and to propose it to the Board for consideration 12. To perform other jobs as entrusted by the Board.

4. Qualifications and responsibilities of Company Secretary The Board of Directors shall appoint a Company Secretary to oversee activities of the Board and to ensure that both the Board and the Company comply with relevant laws, rules and regulations. Company Secretary is to oversee the meeting of the Board and Shareholders as well. Qualifications of Company Secretary - Understand the Company’s business and related roles and responsibilities of Company Secretary’s work including having fundamental knowledge in principles of laws and regulations of supervising agencies, the laws on public company and the laws on securities and exchange. Company Secretary is to seek knowledge from experts or legal advisors to strengthen his/her understanding. - Being knowledgeable; understand and support the Company’s operation to achieve the purposes under the principle of corporate governance and best practices on CG - Refrain from seeking personal interest from the Company’s business opportunities; able to keep the Company’s secrets; having integrity and taking into consideration all stakeholders; refrain from action that could defame the Company’s reputation and harm its image. - Have excellent interpersonal skills; able to coordinate with both internal departments and external agencies Roles and Responsibilities of Company Secretary - Give basic advice to Directors in respect of laws, orders and regulations of the Company of which the Borad of Directors needs to know, as well as to ensure proper and consistent compliance. Report any significant change in matter of laws to directors. - Organize the shareholders’ meeting and Board meeting in accordance with the laws, articles of association and proper practice. - Prepare and keep documents of the Board of Directors and shareholders; namely registration of directors, invitation letter to attend the meeting of the Board and Shareholders, minutes of the meeting of the Board and Shareholders, annual report and quarterly financial statements - Keep the reports of interests filed reported by directors or executives and make submission as required by laws. - Have information and IT reports under his/her responsibility disclosed to supervising agencies in compliance with the laws and the Company’s rules and regulations on information disclosure. - Contact and communicate with general shareholders to keep them informed of various shareholders’ rights and Company’s news. - Do any other actions as entrusted

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The Company has appointed Mrs. Siriporn Pinprayong, who has proper qualifications as the Company Secretary on 14 November, 2007. Name Mrs. Siriporn Pinprayong Title Assistant Managing Director, Administration Information Technology, Company Secretary Education - Master of Arts in English Naresuan University - Bachelor of Science in Business Administration (Finance) Roosevelt University, Chicago, U.S.A. IOD Training course - Effective Minute Taking 8/2007 - Company Secretary Program 22/2007 - Role of The Compensation Committee 1/2006 5. Holding the Board meetings and the receipts of documents and data - Have the office of the managing director to be the secretary of the Company to hold board meetings, shareholders’ meetings, and advice on the various laws that the directors should know. - The Board set its meeting schedule and agenda in advance and notify each director of the schedule so that each member of the Board can manage time to attend meetings. - The Board of directors should dedicate and pay attention to the Company fully, and are ready to attend the meetings regularly at least once every three months, and as necessary. If there is a special agenda, it requires at least one half of the total directors to attend to achieve the quorum. Absence of the Board meetings more than three consecutive times without a reasonable cause shall be regarded as not wanting to be a director anymore. If the meetings are not monthly, the Board should receive, for the month of not meeting, a monthly report on the company’s performance so that it can monitor management performance continuously and promptly. - No less than two-thirds of all directors shall be present at the meeting of the Board of Directors when a resolution is adopted, - The chairman should encourage all directors to attend at least 75% of all the Board meetings held during the year. - The chairman of the Board should give approval on the meeting agenda by consulting with the managing director; however, the managing director should consider a request by some directors to put other important matters in the agenda in the next meeting. - The chairman of the Board should give confidence that the Board of directors to allocate the time sufficiently for the management to present documents and information for discussion and adequacy for the directors to discuss the important issues. - The chairman of the board should have the clear measure for the directors to receive the information involved in advance with sufficient time to study and decide correctly on the matters at each board meeting. Meeting documents will be sent to each director at least five business days in advance of the meeting. - The Board of directors can access to additional information,under prearranged by seek documents, data, consulting words, and various services concerning the operations from the high-level management or company secretary and may seek independent opinions from outside consultants as necessary to supplement each meeting, at the company’s expense. - It should prepare the minutes of the Board meetings for clarity and reference.

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The Board of directors’ Meeting attendance in 2013 Name

1. Dr. Suthorn 2. Dr. Apichai 3. Mr. Prasong 4. Mr. Nan 5. Mr. Sommart 6. Mr. Gumpol 7. Mr. Anukul 8. Mrs.Sumalee 9. Mr. Pisuth

Sathirathai Taechaubol Vara-ratanakul Kitjalaksana Sangkhasap Tiyarat Ubonnuch Ongcharit Viriyamettakul

Time (s) / Total meeting

Board of

Executive

Audit

Directors

Committee

Committee

9/9 9/9 9/9 9/9 9/9 9/9 9/9 7/9 7/9

7/7

7/7 7/7

6/6 6/6 6/6

Corporate Governance, Nomination and Remuneration Committee

3/3 3/3 3/3

Company Secretary : Mrs.Siriporn Pinprayong (Assistant Managing Director, Administration Information Technology) 6. Evaluation of the Board of directors Criteria for the evaluation of the Board of directors - The Board of directors should prepare the self-evaluation form for use as the framework for examination of the operation of the directors constantly. - The Board of directors should set its working standards with criteria and evaluation on its operations to compare with the criteria periodically. - The managing director should participate in explaining the expectations from the board of directors. - The Board should appoint an external consultant to facilitate a board assessment at least once every three years, and assessment results should be disclosed in the annual report. The process and the evaluation of the borad of directors - To comply with the principles of corporate governance, the Board and sub-Committees have come up with an evaluation form where they will be subject to it once a year. The Board and sub-Committees conducted a self-evaluation on a group basis by using an evaluation form of the SET and the Institute of Directors as a framework to check and improve the performances of its directors. The evaluation form of the entire Board consists of four topics as follows 1. Structure of the Board 2. Strategy and directions of the Company 3. Monitoring and evaluation of the management 4. Responsibilities of the Board - To evaluate performances of the Board of Directors, self-evaluation surveys of each individual director will be gathered. Results of the evaluations in “appropriate” and “to be improved” columns will be added up and divided by the total number of directors conducting the self evaluation to come up with a percentage of directors who consider relevant practices appropriate or otherwise.

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7. Board and management training - The Board of Directors encourages and facilitates directors, executives, Company Secretary and related parties to attend coursework organized by the Thai Institute of Directors (Thai IOD), the Stock Exchange of Thailand (SET), or other independent agencies to improve their performances. Whenever a new director is appointed, the management will provide documents and information proven beneficial to his/her performance including organizing a session to introduce the Company’s nature of business and direction to the new director. - The Board requires Managing Director to regularly report a succession plan as well as to appoint a successor to replace executives at various levels in case they cannot perform their duty. All the information has already been stated in the Company’s HR policy and HR development plan annually.

Chapter 3 Ethics of the Board of directors, the management and the employees So as to show the intention of doing the business by the Company transparently with merits and responsibility toward the stakeholders, considering the society and the environment, so it should set the Company ethics for the Board of directors, the management, and all the employees to use as guidelines in practice in parallel with the Company rules/ regulations as follows: 3.1 Ethics of the Board of directors and the management For compliance with the above principle the Board of directors and the management to have duty on the ethics as follows: 3.1.1 The Board of directors and the management shall perform the duty according to the laws, objectives and regulations of the Company and the resolutions of the shareholder’s meeting. 3.1.2 The Board of directors and the management must manage for the benefit of the Company, the shareholders, and the employees at present and future, also to maintain the image of the Company. 3.1.3 The Board of directors and the management must manage the job with integrity for the benefit of the Company, the shareholders and the employees at present and future. 3.1.4 The Board of directors must have the important role in control and decision-making on the policy, including appointing the management to manage daily affairs with each side has the responsibility on the duty toward each other to comply with the objectives and rules of the Company. The Board of directors should give power to the management to do the daily jobs fully without interfering on the operations and no justifiable cause. 3.1.5 The Board of directors and the management must not have conflict of interest or competition with the Company directly or indirectly. 3.1.6 The Board of directors and the management must shall manage the operations avoiding conflict of interest with the Company, so the management is effective and beneficial to the Company, including - Not seeking personal interest from the directorship. - Not abuse the confidential information of the Company. - Not a director in a competing company. - Not having interest in signing a contract for the Company. 3.1.7 The Board of directors and the management must manage the job carefully, and not bind the Company that may have conflict with their duty later. 3.1.8 The Board of directors and the management must not seek personal interest from working directly or indirectly.

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3.1.9 The Board of directors and the management must work on their duty in full capacity for the maximum interest to the Company. 3.1.10 The Board of directors and the management must not be an important operator or shareholder or having a family member as a director or shareholder in the business or any business in the same condition and being competition or doing business with the Company regardless of for self-interest or for others. 3.1.11 The Board of directors and the management team must not do any kind of management that would conflict with the Company interest or grant advantage to the other person or company for self or other profit. 3.1.12 The Board of directors and the management must determine to protect and eliminate corruption of all kinds based on speediness, clarity and definiteness. 3.1.13 The Board of directors and the management must be independence in decision-making and performance, including creating satisfaction from the correctness of the decision-making by the board of directors and the management. 3.2 Implementations by the employees The Company’s business is the real estate development both in the industrial and residential sectors. The Company optimize to the shareholders that it is necessary to maintain professionalism, flexibility and independence to maintain those characteristics further. So the Company has guidelines for the employees as follows: 3.2.1 S/he does the duty with responsibility, integrity, determination, dedication and observation of the rules and policies with interest of the Company as priority. 3.2.2 S/he strictly maintains the secrets of the customers, trade partners, and caring not to allow the secret of the Company to the outsiders that may cause damage to the Company. 3.2.3 S/he respects in personal rights of other employees, avoiding bringing data or information of other employees concerning the operations and personal matters to disclose or comment in the form to cause damage to employees or overall image of the Company. 3.2.4 S/he does not defame or do anything to lead into the internal division which damage the Company or persons involved. 3.2.5 S/he maintains and creates unity and team spirit among the employees, and helps to support each other for benefit to the Company on the overall. 3.2.6 S/he treats the colleagues with politeness, spirit and good human relations, not concealing necessary data on the operation of the colleagues, and be good cooperate with other people, including giving honor to others, not claiming the work products of others as his own. 3.2.7 S/he shall behave and develop himself/herself for benefit themselves and the company by always seeking knowledge and experience to build working ability, adhere to the merits, abstaining from all the vices, not to behave that may cause bad reputation to self and the Company. 3.2.8 S/he shall notify the superior or the audit committee if finding the Company or its management or employee to do something in bad faith or corruption. 3.2.9 S/he shall pay attention and help in anything to conserve the environment and atmosphere on working, including development of the organization to excellence. 3.2.10 S/he should avoid to give / receive things, giving / accepting a party or any benefits from the trade partners or stakeholders of the Company, except for the benefit in doing business in the righteous way of the Company, or in festival or tradition at the suitable value. The recipient shall consider if the gift received in the monetary form or things with high value shall notify the superior or return it.

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Chapter 4 Reports on the finance, the management and the internal control - The committee should report on the status evaluation and trend of the Company, summarizing in the terms that is easy to understand in the annual report of the Company. - The Board of directors must prepare the balance sheet, profit and loss statement and report of the auditor together with the annual report of the Board of directors presented to the shareholders in the annual general meeting (AGM) for approval. - It shall prepare the administrative report on analysis in various forms as the Board of directors required, other than the financial and audit reports. The audit committee and the auditor - The Board of directors should provide the system that is official and transparent in maintaining relation with the internal and external auditors with the audit committee as the coordinator. - The external auditor should confirm independency of himself each year to the audit committee, and the various methods used in the auditing office for confidence of independency of the external auditor. - The auditor is entitled to verify the reports or other financial reports that the Board of directors issues together with the financial report that it has audited, and can report the abnormality in the report that is inconsistent with the audited financial statement. - The audit committee has the duty to be responsible for the review and the financial report. - The remuneration on the audit and other fees paid to the auditor should be disclosed separately in the financial statement for transparency and independency of the auditor. Internal Control Realizing the significance of internal control and regular supervision, the Board has designated the Audit Committee to review and assess the internal control process. The Internal Audit Department which is independent from the management shall directly report the Audit Committee to ensure efficient and effective performance. The efficiency of the internal control system is regularly assessed. The audit should cover everything including the financial control, operations, governance and compliance control, risk management, and priority to the unusual items.

Chapter 5 Risk management The Company assesses both internal and external risks that could affect its operation. It analyzes and ranks major risks based on impacts and potentials of the risks to strike each business process as a means to adopt a risk management plan. In addition, risk factors and circumstances are closely monitored. Set up teamwork or clearly authorize to the unit within the Company for verifying and governing of the risk management such as financial risks, operation risks, business risks or event risk, etc. and Preparing the risk management report to be presented to the Board of directors. In addition, the Board of Directors also discloses risk management practices and risk factors in the Company’s Annual Report and every time the level of risk exposure changes. This includes giving priority to advanced warning signals and unusual transactions. The Board of Directors also reviews the adequacy of the risk management process and risk management efficiency at least once a year or as deemed necessary.

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Chapter 6 Rights of the shareholders The Company recognize shareholders rights and avoid any action that violates those rights as well as encourage shareholders to exercise their right for controlling the Company by appointing the Board of directors to act as their representatives. Shareholders are eligible to make decisions on any significant corporate changes. - The Board of directors publicly disclose policies to encourage all shareholders, especially institutional ones, to attend the company’s shareholders meeting. - The Company provides shareholders, in advance of meetings, with the date, time, venue, and all agenda items with the rationale or explanation for each agenda item or resolution in the notice of the annual general meeting or extraordinary general meeting or circulars and/or the accompanying statement. - The chairman of the meeting should allocate the time appropriately and promote expression of opinions and inquiries at the meeting, including allow shareholders to send their questions to the company prior to the meeting date. Investors can be clearly informed in advance of the determined criteria for accepting advance questions and the process for submitting them on company’s website. - The Board of directors encourage shareholders are specify their votes by allow shareholders to appoint an independent director as their proxy. - The Board of directors encourage the company to use secure, fast, precise, and accurate technology in the shareholders meeting, including in recording attendee registration, printing ballots and processing voting results. - Each director, especially the chairman of the Board/chairman of the committees should attend the meetings of the shareholders to answer the questions by the meeting attendants. - The shareholders should have the right to vote for each item proposed, and the Board of directors should not bundle many unrelated businesses for approval in one resolution.In addition, there are no bundling of several items into the same vote; for example, election of directors. - The Company appoints an independent party of scrutineers/inspectors to count and/or validate votes the annual general meeting or extraordinary meeting. This scrutineer shall be disclosed at the meeting and recorded in the minutes. - For the sake of transparency, the Board encourage the use of voting cards for important agenda items such as related party transactions or disposal of significant assets. - The Board make publicy available on company’s website by the next working day the result of voting during the annual general meeting or extraordinary general meetings for all resolutions.

Chapter 7 Equitable treatment of shareholders The Board of directors provides convenience at the shareholders meetings with equal treatment for all, nothing to limit the information of the Company, and attend the meetings of the shareholders. - The Company releases its annual general meeting notice, with detailed agenda and explanatory circulars, at least 30 (thirty) days before the date of the meeting. Morover, the company’s notice of shareholders meeting will be fully translated into English and published at the same time as the local language version. The Company will deliver an invitation letter to attend the meeting to shareholders at least seven days before the meeting date or as required by the Office of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). - The Company informs shareholders of meeting procedures and voting criteria, including the voting rights attached to each class of shares. If a shareholders in a management position wishes to add any agenda item, he/she should notify other shareholders in advance, especially if it is an issue that will require shareholders to spend a good deal of time to study before deciding.

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- The Board, in advance of the meeting date, have pre-determined criteria on allowing minority shareholders to propose any agenda item and on screening those propose by them. The Board establish procedures for the nomination of candidates by minority shareholders. One alternative is to nominate via the company’s nomination committee three to four months prior to the meeting date. Supporting information, candidates’ qualifications and their consent, should be provided by the minority shareholders nominating the candidates. - The process used in election of directors allow shareholders to vote on individual nominees. - The Board has adopted a policy that requires any director having an interest in any agenda to refrain from attending the meeting in that agenda. Directors are to report their interests at least before the agenda starts which shall be recorded in the minutes of the Board of Directors’ Meeting. - The Company has adopted a policy to prevent connected transactions as much as possible. Yet, if necessary, such a transaction will be done with transparency, rationality and necessity for the benefit of the Company and investors in general. Connected transactions will be fairly done at arm’s length and during a normal course of business while being disclosed as required by relevant rules and regulations in strict compliance with the Company’s approval measures of connected transactions. - There are written procedure concerning the use and protection of inside information. The Board establish these procedures and communicate them to everyone in the company. Every director and executives regularly submit to the Board a report on their ownership of the company’s shares and this information will be disclosed in the firm’s annual report.

Chapter 8 Role of the stakeholders - The Board of directors should be aware and gives confidence that the stakeholder of the Company shall be taken care fully. - The Board of directors should report the non-financial data that shows the stakeholder are taken care and considered very well in making a decision for the Company. - The Board of directors should specify fully who are the stakeholders, and rank their priority for consideration without any mistake or failure in business operation at the end. The role of the stakeholders of the Company is as follows 8.1 Responsibility for the shareholders The Company is determined to be the good representative of the shareholders to do business to build highest satisfaction for the shareholders, considering the value growth of the Company in the long run and good return on investment continuously at the suitable level. It shall do transparently; build confidence of the accounting system to comply with the said principle, so it embraces these guidelines: 8.1.1 The Company’s growth of value in the long run - It performs the duty with integrity and fairness to the major and ultimate shareholders for overall maximization. - It manages by using the knowledge, ability and skill fully, including carefulness and prudence in the decision to do in any cases. - It does not do anything to cause conflict of interest to the Company.

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8.1.2 Disclosure of information - It reports the status and the future trend of the Company to the shareholders equally, regularly and fully as it actually happens. - It shall not seek self-interest and from the involved persons, using any value of the Company not disclosed to the public. - It does not disclose confidential data to the outsiders, which may cause adverse effects to the Company. 8.2 Relationship with the customers The Company is determined to create satisfaction and confidence with the customers to receive the good products and service with the quality at the suitable price, including maintaining good and sustainable relations, so it has set the guidelines as follows: 8.2.1 Produces quality goods and service with determination to develop the standard of the goods to have higher quality continuously, and reveal the information on the goods and service correctly and completely, no distortion of facts and keeps up with the event. 8.2.2 Gives warranty on the goods and service under the suitable conditions. 8.2.3 Produces the system for the customers can complain on the goods, service and operations the best for the goods to receive quick response. 8.2.4 Do not make excessive profit compared with the quality of the goods or service in the same type or kind, and do not specify the trade conditions that are unfair to the customers. 8.2.5 Complies with the terms and conditions with the customers strictly, if it cannot do it, it must notify the customers in advance to consider jointly finding guidelines on correction. 8.2.6 Keeps the secret of the customers seriously and constantly, including not using for self-interest and for the involved persons illegally. 8.3 Relations with its trade partners, competitors and creditors The Company shall consider the equality and integrity in the business operations and the interests jointly with its trade partners, as they shall comply with the laws and rules strictly and good ethics in the business operations. While the business that is in competition, the Company shall adhere to the rules on good competition and guidelines and fairness in borrowing from the creditor and repayment. So as to comply with the said principle the Company has specified practical guidelines as follows: 8.3.1 Relations with the trade partners - It shall not demand or receive or pay for the benefit of any in bad faith from its trade partners. - It shall comply with the existing conditions strictly with partners. - In case of cannot comply with the conditions, it shall notify the trade partners in advance to jointly find the guidelines on solving the problems with justification. 8.3.2 Relations with the trade competitors - It shall comply with the rules on good competition. - It shall not try to destroy the reputation of the competitor by slandering and baseless allegation. 8.3.3 Relations with the trade creditors - It shall maintain and comply with the conditions with the creditors strictly on repayment and care of securities, guarantees and other conditions, including not using the funds received from loans to be contrary to the objective in the agreement made with the lenders.

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- Report the financial status to the creditors with honesty. - Report to the creditors in advance if it cannot comply with the obligations in the contract, and try to find guidelines on a joint solution. 8.4 Responsibility for the employees The Company shall regard the employees are a factor to its success, so it determines to develop, build culture and good atmosphere, including promoting teamwork for confidence of the employees. So they can do sustainable work with the Company, so it specifies the guidelines as follows: 8.4.1 The employees receive fair remuneration in the form of salaries and/or annual compensation, including the various fringe benefits. 8.4.2 Cares for the working condition with safety for the life and property of the employees. 8.4.3 Appoints and transfers, including gives rewards and makes disciplinary action with equality, honesty and justification based on the knowledge, ability and suitability, including making or performing for the employees. 8.4.4 Gives priority on development and transfer of knowledge and ability of the employees by giving opportunity to the employees widely and regularly. 8.4.5 Listens to the ideas and propositions from the employees at all levels equally and equitably. 8.4.6 Complies with the laws and regulations concerning the employees strictly. 8.4.7 Manages by avoiding anything unfair, which may have effects on the duty stability of the employees. 8.4.8 Treats the employees with politeness and respect equally for everyone. 8.4.9 The employees have an opportunity to notify on illegality of the Company by reporting to the superior or the audit committee.

Chapter 9 Disclosure of the information and transparency

The role of the Board of directors concerning the disclosure of information and transparency - The Board of directors has the duty to disclose information on financial and non-financial report sufficiently, reliably, and in time for the shareholders and the stakeholders to receive the information equally as prescribed by the law, regulation and the public sector involved. - The Company should be prepared the corporate information carefully, clearly, and compactly, using simplified language with transparency. Regularly disclose of important information on both positive and negative sides which carefully not to cause users misunderstanding and confuse of factual information. - Providing an investor relations unit to publicizes/communicates data that is beneficial to the shareholders, the investors, the securities analysts, and the involved persons to know the information of the Company. - The Board of directors should provide sufficient resources to help develop capability of the management in presenting information and communications. - In addition to disclosing information as specified in regulations the SET, annual statements (Form 56-1), and annual reports, the Board disclose information, both in Thai and English, via company’s website. All disclosed information will be up-to-date, the minimum information as follows: - Objectives of the Company. - Financial status and operation results of the Company (current and at least one prior year) - Direct and indirect shareholding structure and the right to vote. - List of the directors, committees, the senior management and their remuneration. - Factors and policies on risk management that is visible, concerning the operations and finance. - Issues with essence concerning the employees and the stakeholders.

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- The Board encourage the company to make a Management Discussion and Analysis (MD&A) for each quarterly financial statement, to help investors better understand changes in the company’s financial status and performance each quarter, not just be presented with the figures by themselves. - It should unveil in the annual report on the number of times that each of the directors and/or the subcommittees attends the meetings, compared with the number of times of the Board meetings and/or subcommittees each year, including ongoing professional education or training of its directors, are disclosed in the annual report. - The Board should ensure that audit and non-audit fees are disclosed.

Chapter 10 Responsibility for the society and the environment Having a vision to be a business with social and environmental responsibility, the Company has set up a working committee to oversee environmental management issues when conducting business. A social responsibility strategy has been concretely adopted to maximize the management of various projects by improving environmental protection processes and practices and by conducting an environmental impact assessment before a project starts. The Operation Department may directly report the Corporate Governance, Recruitment and Remunerations Committee when necessary but a performance report must be made at least once a year. In addition, a business review will be conducted from the perspectives of social responsibility, risk assessment and effects to sustainable growth where plan and practices to respond to the issue of social responsibility will be strategically adopted. The Company and its subsidiaries are responsible for pursuing business on the basis of policies and plans adopted within the framework of social responsibility. We are also responsible for strengthening our knowledge and understanding within our responsible context through the monitoring and the reporting. As a result, we have come up with the following practices with a view to pursue a sustainable business development: 10.1 To consider the option with minimum impact on the society, environment and life quality of the people by using the benefits from natural resources. 10.2 To support the creative activities for the society and environment regularly from the Company’s profit. 10.3 To inculcate the conscience of social responsibility and the environment among the employees at all levels continuously and earnestly. 10.4 To give priority of all transaction deal with the trade partners who has the same goal in society and environment. 10.5 To treat and cooperate or control for strict treatment, according to the intention of the law and regulations, issued by the corporate governance section. 10.6 To regard it as a main duty and policy to give priority to the activities of the community and society, aiming for development of society, the environment, creativity and conservation of the good natural resources. Including supporting education to the youth, support public activities that benefit the deprived communities to be stronger, self-reliant, under the self-sufficient economy with creativity to skill and development of occupation to the general communities.

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Chapter 11 The anti-corruption To assure that we have put in place appropriate policy, practice and requirements to prevent corruption possibly incurred from our business activities and to encourage thorough decisions and actions that could potentially be exposed to corruption risk, the Company has adopted an anti-corruption policy in writing as a clear practice for our operation and for sustainable corporate development. Roles and Responsibilities 1) The Board of Directors has roles and responsibilities to adopt a policy and to supervise a system that will effectively support anti-corruption practices. This is to create awareness among the management of the importance of this practice and thereby promote it as a corporate culture. 2) The Audit Committee has roles and responsibilities to audit financial statements and the systems of financial and account reporting, internal control, internal audit and risk management for compliance with international standards while making sure that they remain precise, sound, sophisticated and effective. 3) Managing Director, the management and executives have roles and responsibilities to set up a system that will help supporting and communicating an anti-corruption policy to employees and related parties. They are also to review the soundness of the measures to reflect business, legal and regulatory changes. 4) An internal auditor has roles and responsibilities to audit and review compliance with policy, practice, authority and regulatory rules and laws to ensure that the Company has indeed an adequate and appropriate system against potential corruption risk. The internal auditor directly reports to the Audit Committee. Practices 1) Directors, executives and employees at all levels are to comply with the Company’s anti-corruption policy where they shall neither directly nor indirectly be involved in corruption. 2) Employees must not remain ignorant if witnessing action potentially qualified as corruption in relation to the Company. They shall report the incident to supervisors or responsible persons and cooperate with the examination process. In case of doubt or question, employees should consult with supervisors or persons designated to be responsible for such policy compliance through available channels. 3) The Company will protect and fairly treat employees who report or refuse to be involved in corruption in relation to the Company through measures designed to protect whistleblowers of corruption. 4) Corrupting is an offense and is subject to disciplinary actions based on the Company’s regulations. Besides, corrupted persons may be subject to legal punishment if the action is found illegal. 5) The Company underlines the importance of disseminating anti-corruption information and knowledge and making the third party collaborating with the Company or whose action could affect to the Company comply with this anti-corruption policy. 6) The Company commits to promote and nurture the corporate culture that corruption is inacceptable when conducting transactions with either the public or private sectors.

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Reporting of grievances and whistle-blowing The Board of Directors has adopted whistle-blowing or grievance measures which allow employees or stakeholders to file complaints against legal violation, corrupted malpractice or improper behavior of the Company’s personnel. In addition, measures to protect them are also adopted to enable stakeholders to effectively help protecting the Company’s interests. Issues to be reported - Legal violation, corruption against the Company’s regulations, wrongdoings committed by directors, executives and employees - Unusual items in financial statements; defected internal control system - Matters that could jeopardize the Company’s interests or reputation Channels of Grievance Company’s website: www.tfd-factory.com Email: cs@tfd-factory.com Address: Thai Factory Development Public Company Limited 18, Soi Sathorn 11, Yaek 9 TFD Building, Kwaeng Yannawa, Sathorn District, Bangkok 10120 Tel. 0-2676-4031-6 All grievances will go through independent directors or members of the Audit Committee for investigation of the matter based on a process already adopted by the Company before reporting the result to the Board. Whistleblower Protection Mechanisms - A database of confidential information received from whistleblowers will be established. Only executives from Deputy Managing Director and over will be authorized to access the database. - It’s the duty and responsibility of supervisor and head of the person whose action is reported to protect whistle-blowers, witnesses and collaborators from being exposed to danger, threat or injustice resulted from such reporting, from being the witness or from confiding the information.

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Policy on internal control 1. Objective of the internal control “Internal Control� is the process of working or implementing the job that the board of directors and personnel of all levels of the Company provided for confidence with justification on the operations of the Company to achieve the following objectives: - The operations shall have efficiency and effectiveness by achieving the goal of the Company, including caring not to lose or misuse the assets. - The financial reporting must be accurate and in-time presentation. - The compliance with policies, rules, and regulations shall be performed the duties strictly to the rules and regulations of the Stock of Exchange of Thailand, or laws relating to business of the company.

2. Importance of the internal control system

The internal control system is the important mechanism that gives confidence with justification to the management for: - Helps to reduce the business risk. - Helps to do business effectively with suitable allocation of the resources and achieve the established goal. - Help to prevent corruption, protect misusing, and safeguard and care of property. - Helps to assure the reliability of the financial statement. - Helps the personnel to comply with the laws and rules involved. - Helps to give protection on the investment of the shareholders. The internal control is the main factor behinds the success of all business either in government or private sectors. The management as the leader, must perform their duties in responsible to various elements and environment of their units. In additional they should: - Encourage team work mind-set to the subordinates of all levels to be aware of the importance to coordinate and comply with constantly and continuously. So the measures and mechanisms of the internal control system set up by the management to accomplish the established objective. - Regularly monitoring and evaluating of internal control in order to obtain suitable strategies and mechanism under the variation in difference circumstance of risks. The internal control, regardless of design or implementation, shall give only confidence at the reasonable level, as it can protect from loss, waste or accomplishment and effectiveness. However, it can not assure or give confidence of the business success, because the internal control has several limitations, which mostly involving with the human behavior.

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3. Policy on internal control of the Company 3.1 The Company commit that its management must aware with the important of internal control is sufficiently efficient to acceptable risk level and suitable with the circumstances of the job or activity of that units. It divides the duties and responsibilities concerning the internal control of the Company as follows: 3.1.1 The board of directors as well as the audit committee must perform their duties and responsibilities to provide the effective internal control system, to manage and control of risks in the suitable level. Specifying the policy concerning to the internal control system, risk management, and monitoring of the evaluation constantly that whether or not the established system goes as planned. However, the audit committee has the duty to review that the elements of the internal control system of the five aspects are comply with effectiveness as follows: - The business has good control environment. - The business has proper procedure of risk assessment. - The business has good control on activities - The business has good system on information and communications. - The business has good system on monitoring and evaluation. 3.1.2 The management has duty and responsibility to fulfill the policy which the board of directors has delegated, so the Company determining the management must be treated as it important of the internal control. The management has direct duty and responsibility to provide the internal control system in the company, including works or various activities of all levels or latent in the business methods of the management function by: - The senior management shall provide the internal control that covers all elements in the Company, encouraging the subordinates discipline and good conscience on the internal control. - The middle management shall provide the internal control with the responsibility to evaluate the efficiency of the internal control, adjust the system to be complete and review on its compliance. 3.1.3 The employees of all levels must perform their duties by complying with all laws, regulations, rules, announcement, policies, plans, measures, and the internal control system, the management has established. Conduct their duties honestly with care in the performance, and regularly provide the implementation that ensures the efficiency of internal control system. As a result, the operations shall comply with the goal effectively and economically. All the employees must have the conscience to be aware of the importance of the internal control. 3.1.4 Internal control, the internal auditor has duties and responsibilities of evaluation the internal control, and examination the operating system, periodically and regularly. Updating and assuring that the various control measures are suitable with all significant situation, circumstance, and incidence of risk, with the objective to assist and recommend the senior and middle managements to provide the efficient internal control in the company’s business units as the policies: - The internal auditor is independent and perform their duties in a more effective manner as it deems appropriate according to the profession standard of the internal control - The internal auditor has the right to request for checking the assets and activities, including the books, accounting, supplementary documents on the records, bookkeeping, correspondences and reports involved. - The internal auditor can ask the audited units to give data, explanations and delivery of the documents on the audited matters.

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However, the personnel of all levels must provide full cooperation to give the availability of information, resource, and material needed by the internal and external auditors which their duties is examination and evaluation to ensure that the internal control sufficient and effective as intended to respond with the company goal, and give recommendation for improvement, as it deems appropriate.

Risk management When doing business, the Company had to confront several risks and uncertainties which can materially affect its incomes, profits, assets, liquidity and share price. Since today’s connection between financial and economic activities has been very sophisticated, the Company therefore had to adjust itself to face with economic dynamism that could affect the Company’s business direction, strategy, decision and operation. As a result, to minimize business volatility, Thai Factory Development Public Company Limited has adopted a risk management process in writing covering product risk, income risk as well as risk from natural disasters, competitions, finance and lending both at the management and operational levels for use as a direction to achieve its goal. Aside from these risks, there could be other risks that the Company is not aware of or cannot yet identify at the moment. Besides, certain risks that it believes having no material effect at the moment may become significant in the future. As a result, stakeholders should consider both the impacts and possibilities and other possible risk factors that the Company may confront aside from those stated here. 1. Employees at all levels shall be responsible for risk management. They must be aware of operation risk both in their functions and within the organization where risk management shall be carried out in a way that there is enough management and that risk is kept at an appropriate level. 2. Risk management shall be an important tool to manage the Company where the risk management system shall be part of a decision-making process, strategic planning as well as the Company’s action plan and operation. The risk management system shall also be highlighted for the Company to achieve its objectives, goals, visions, mission and strategies. Personnel of all levels must understand and collaborate in the implementation of risk management for a good corporate image, to strengthen its corporate governance (CG) practice and operation excellence and to boost confidence of shareholders or stakeholders. 3. Financial and non-financial causes of risk that could affect the Company shall be identified and risk shall be reviewed whenever there is change of risk factors affecting the Company’s investment funds. 4. Types of risk and acceptable levels of risk shall be identified for use as criteria to respond to the Company’s risks. 5. Risk prevention and mitigation guidelines shall be adopted to avoid possible damage or loss. In addition, the Company shall regularly monitor and evaluate risk management results quantitatively and qualitatively for better accuracy. 6. The Company shall introduce a sophisticated information technology (IT) system to manage the Company’s risks and it should enable personnel at all levels to extensively access risk management information. Besides, the Company should put in place a risk management report mechanism to allow the Board to efficiently manage the Company’s risks. In addition, the Company has determined roles and responsibilities and approval authority regarding risk management. It has already posted the risk management policy and procedures on its website for everyone’s compliance. Besides, a risk management report has been prepared and submitted to the Board for refinement of the Company’s risk management plan. Thai Factory Development Public Company Limited

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Report from the Audit Committee In 2013, Thai Factory Development Public Company Limited complied with the following requirements set by the Stock Exchange of Thailand and as entrusted by the Board of Directors. Details are : 1. The Audit Committee convened Five times in 2013. The meeting was attended by all members of the Audit Committee. The auditor meanwhile attended the Audit Committee meeting at least once a year. 2. The Audit Committee reviewed and approved the 2013 auditing plan of the Internal Audit Department where it focused at strengthening the internal control system, reinforcing adequate auditing in required areas and reporting results of such internal control to the Audit Committee on a regular basis. Having reviewed and assessed the Audit Committee’s operation in 2013, the Board of Directors had an opinion that the internal control system was efficient enough to control and supervise the operation of both Thai Factory Development Plc and its subsidiaries and no material defect was found. 3. Both quarterly and annual financial statements of the Company were reviewed to provide full and accurate financial information based on the generally-accepted accounting principles in a timely fashion as well as a true reflection of the company’s financial status before they were submitted to the Board of Directors. 4. The Audit Committee reviewed an evaluation form of the adequacy of the Company’s internal control system to ensure that it had an appropriate and adequate internal control system to supervise operation based on its business objectives. 5. The Audit Committee reviewed risk management procedures by taking into consideration a risk management policy and a risk management plan and guideline based on prevailing corporate risks. It also regularly reviewed the efficiency and suitability of the Company’s risk management system. 6. The Company was requested to be compliant with corporate governance on the basis of the Stock Exchange of Thailand’s guideline and to develop its CG practice to match the international standards. 7. The Audit Committee reviewed the Company’s compliance with the laws and the authorities’ rules and regulations. 8. The Audit Committee reviewed connected transactions and items that could cause conflict of interest as well as ensured that the information was accurately and completely disclosed. 9. The Audit Committee appointed an auditor and set his remuneration before submitting the information to the Board of Directors for proposing to the Shareholders’ Meeting for its approval.

(Mr. Prasong Wararatanakul) Chairman of the Audit Committee February 19, 2014

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Independent Auditor’s Report To the Shareholders of Thai Factory Development Public Company Limited Independent Auditor’s Report To the Shareholders of Thai Factory Development Public Company Limited I have audited the accompanying consolidated financial statements of Thai Factory Development Public Company Limited and its subsidiaries, which comprise the consolidated statement of financial position as at 31 December 2013, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and have also audited the separate financial statements of Thai Factory Development Public Company Limited for the same period. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Thai Factory Development Public Company Limited and its subsidiaries and of Thai Factory Development Public Company Limited as at 31 December 2013, and their financial performance and cash flows for the year then ended, in accordance with Thai Financial Reporting Standards. Emphasis of matters I draw attention to the following matters: a)

I draw attention to Note 4 to the financial statements regarding the change in accounting policy due to the adoption of Thai Accounting Standard 12 Income Taxes. The Company has restated the consolidated and separate financial statements for the year ended 31 December 2012, presented herein as comparative information, to reflect the adjustments resulting from such change. The Company has also presented the consolidated and separate statements of financial position as at 1 January 2012 as comparative information, using the newly adopted accounting policy for income taxes.

b)

As discussed in Note 2.2 to the financial statements, during the second quarter of the current year the Company invested in a subsidiary, the shares of which used to be held by a major shareholder of the Company. The acquisition was thus considered to be a business combination under common control. In order to reflect this, the management of the Company restated the consolidated statements of financial position as at 31 December 2012 and 1 January 2012, the consolidated statements of comprehensive income for the year ended 31 December 2012 and the consolidated statements of changes in shareholders’ equity for the year ended 31 December 2012 of Thai Factory Development Public Company Limited and its subsidiaries, as presented herein for comparative purposes.

My opinion is not qualified in respect of this matter.

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Other matters a) The consolidated statement of financial position of Thai Factory Development Public Company Limited and its subsidiaries and the separate statement of financial position of Thai Factory Development Public Company Limited as at 31 December 2011 (which have been used for preparing the consolidated and separate statements of financial position as at 1 January 2012) were audited by other auditor, who expressed an unqualified opinion on those statements, under her report dated 29 February 2012. b) The financial statements of VSSL Enterprise Company Limited (the subsidiary) for the year ended 31 December 2012 (before adjusted) were audited in accordance with Thai Standards on Auditing by other auditor who expressed an unqualified opinion on those statements, under his report dated 25 March 2013.

Siraporn Ouaanunkun Certified Public Accountant (Thailand) No. 3844 Ernst & Young Office Limited Bangkok: 21 February 2014

3

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43


Statements of financial position Thai Factory Development Public Company Limited and its subsidiaries As at 31 December 2013 Thai Factory Development Public Company Limited and its subsidiaries Statements of financial position (Unit: Baht) Consolidated financial statements

Note

Separate financial statements

As at

As at

As at

As at

As at

As at

31 December 2013

31 December 2012

1 January 2012

31 December 2013

31 December 2012

1 January 2012

(Restated)

(Restated)

(Restated)

Assets Current assets Cash and cash equivalents

8

1,268,664,102

403,895,924

33,240,706

1,192,374,575

132,682,254

525,641

Trade and other receivables

9

20,439,696

19,208,978

17,906,604

6,914,524

2,384,913

5,396,801

Short-term loan to and 7

-

115,494,142

-

1,288,334,502

-

-

Project development costs

10

4,824,249,144

4,120,325,653

2,499,940,682

2,029,814,086

1,989,409,457

828,473,037

Deposit for purchase of land from related party

7

300,000,000

-

-

-

-

-

54,642,250

29,712,350

236,351,000

54,642,250

29,712,350

236,351,000

-

100,000,000

-

-

100,000,000

-

79,000,000

24,000,000

-

79,000,000

24,000,000

-

interest receivable from related parties

Deposit for purchase of land Deposit for acquisition of ordinary shares of a subsidiary Deposit for construction

7,12 15

Other current assets

58,830,948

34,221,241

13,430,825

38,943,965

18,852,879

7,752,532

6,605,826,140

4,846,858,288

2,800,869,817

4,690,023,902

2,297,041,853

1,078,499,011

13,214,711

26,926,295

15,863,370

10,957,129

25,215,295

30,863,370

7

-

-

106,745,962

234,137,075

230,438,030

224,856,333

12

-

-

-

598,477,317

101,576,482

101,576,482

Total current assets Non-current assets Restricted bank deposits

11

Long-term loan to and interest receivable from subsidiaries Investments in subsidiaries Investments in equity securities 13

243,000,000

160,500,000

-

243,000,000

-

-

14

440,983,090

502,264,437

179,709,697

46,668,454

48,082,650

49,496,845

Investment properties

15

232,189,070

365,005,064

1,072,384,998

-

-

204,773,577

Equipment

16

60,703,981

18,829,002

18,205,859

59,495,225

17,873,194

16,612,700

4, 31

60,628,988

30,844,919

42,565,883

3,202,532

1,931,130

3,779,713

26,459,019

26,223,201

27,851,033

6,725,173

3,523,147

3,168,927

avaliable for sales Leasehold rights

Deferred tax asset Other non-current assets Total non-current assets

1,077,178,859

1,130,592,918

1,463,326,802

1,202,662,905

428,639,928

635,127,947

Total assets

7,683,004,999

5,977,451,206

4,264,196,619

5,892,686,807

2,725,681,781

1,713,626,958

The accompanying notes are an integral part of the financial statements.

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Statements of financial position (continued) Thai Factory Development Public Company Limited and its subsidiaries As at 31 December 2013

Thai Factory Development Public Company Limited and its subsidiaries Statements of financial position (continued)

(Unit: Baht) Consolidated financial statements

Note

Separate financial statements

As at

As at

As at

As at

As at

As at

31 December 2013

31 December 2012

1 January 2012

31 December 2013

31 December 2012

1 January 2012

(Restated)

(Restated)

(Restated)

Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions

17

2,560,200,000

504,007,364

51,131,777

2,030,200,000

234,000,000

46,470,413

Short-term loans from 18

-

53,500,000

-

-

53,500,000

-

Trade and other payables

19

585,495,097

968,005,264

407,008,219

85,279,839

519,864,439

236,360,451

Debentures

20

1,344,547,659

-

-

1,344,547,659

-

-

21

3,449,803

3,711,762

3,265,846

3,431,908

3,686,798

3,038,948

other individuals

Current portion of liabilities under finance lease agreements Current portion of long-term loans financial institutions Current portion of debt restructuring payable

22

894,223,409

1,209,919,380

152,462,205

335,506,915

264,046,724

129,624,923

23

47,180,074

44,384,147

41,473,657

-

-

-

7,24

13,333,707

46,131,871

11,736,861

-

-

-

Current portion of long-term loans from from related parties Short-term loan and interest payable to subsidiaries

7

Income tax payable Other current liabilities

-

-

-

56,333,495

52,973,495

43,950,023

50,352,808

119,236,604

28,268,546

37,355,576

80,091,915

28,268,546

7,498,667

13,677,673

21,352,531

2,244,636

2,492,643

1,382,754

5,506,281,224

2,962,574,065

716,699,642

3,894,900,028

1,210,656,014

489,096,058

21

3,741,960

7,185,665

7,419,375

3,741,960

7,167,770

7,376,516

Total current liabilities Non-current liabilities Liabilities under finance lease agreements, net of current portion Long-term loans from financial institutions, net of current portion Debt restructuring payable, net of current portion

22

155,002,284

525,051,380

1,591,065,986

155,002,284

18,354,149

132,162,190

23

19,530,806

66,711,307

111,227,074

-

-

-

7,24

300,035,798

334,674,944

330,730,661

-

-

-

53,055,271

60,034,967

86,088,130

-

-

16,919,200 129,500,000

Long-term loans from related party and interest payable, net of current portion Rental deposit received Deposit from sale of project

7,14

-

-

-

129,500,000

129,500,000

Deferred tax liabilities

4, 31

3,911,577

3,423,952

3,388,418

3,911,577

444,033

1,103,918

Provisions for long-term employee benefits

25

8,941,877

5,197,920

2,986,385

7,244,158

4,162,231

2,642,380

Long-term provisions

26

3,897,710

Other non-current liabilities Total non-current liabilities Total liabilities

2,372,500

-

9,620,627

2,372,500

-

2,032,500

2,999,400

-

2,032,500

2,019,400

-

548,624,573

1,005,279,535

2,142,526,656

303,804,979

161,647,583

293,601,914

6,054,905,797

3,967,853,600

2,859,226,298

4,198,705,007

1,372,303,597

782,697,972

The accompanying notes are an integral part of the financial statements.

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Statements of financial position (continued) Thai Factory Development Public Company Limited and its subsidiaries As at 31 December 2013

Thai Factory Development Public Company Limited and its subsidiaries Statements of financial position (continued)

(Unit: Baht) Consolidated financial statements

Note

Separate financial statements

As at

As at

As at

As at

As at

As at

31 December 2013

31 December 2012

1 January 2012

31 December 2013

31 December 2012

1 January 2012

(Restated)

(Restated)

(Restated)

Shareholders' equity Share capital

27

Registered 1,264,029,396 ordinary shares of Baht 1 each (31 December 2012: 902,879,943 ordinary shares of Baht 1 each)

1,264,029,396

902,879,943

836,000,000

1,264,029,396

902,879,943

836,000,000

1,083,500,205

789,530,385

701,357,785

1,083,500,205

789,530,385

701,357,785

147,783,522

147,196,958

147,196,958

147,783,522

147,196,958

147,196,958

-

68,176,473

-

-

68,176,473

-

Issued and fully paid up 1,083,500,205 ordinary shares of Baht 1 each (31 December 2012: 789,530,385 ordinary shares of Baht 1 each) Share premium Share subscriptions received in advance Retained earnings Appropriated - statutory reserve Unappropriated Other components of shareholders' equity Equity attributable to owners of the Company Non-controlling interests of the subsidiary

29

50,655,721

32,122,695

15,602,230

50,655,721

32,122,695

15,602,230

421,117,042

559,166,755

127,167,077

397,642,352

316,351,673

66,772,013

(172,338,733)

320,337,404

321,940,300

14,400,000

-

-

1,916,530,670

1,313,264,350

1,693,981,800

1,353,378,184

930,928,986

1,530,717,757 97,381,445

93,066,936

91,705,971

-

-

-

Total shareholders' equity

1,628,099,202

2,009,597,606

1,404,970,321

1,693,981,800

1,353,378,184

930,928,986

Total liabilities and shareholders' equity

7,683,004,999

5,977,451,206

4,264,196,619

5,892,686,807

2,725,681,781

1,713,626,958

-

-

-

0

-

-

The accompanying notes are an integral part of the financial statements.

Directors

46

Annual Report 2013

Thai Factory Development Public Company Limited


Statements of comprehensive income

Thai Factory Development Public Company Limited and its subsidiaries

Thai Factory Development Public Company Limited and its subsidiaries ended 31 December 2013 ForFor the the yearyear ended 31 December 2013 Statements of comprehensive income

(Unit: Baht) Consolidated financial statements Note

2013

2012

Separate financial statements 2013

2012

(Restated)

(Restated)

Profit or loss: Revenues Revenues from sale of land and building

15

460,000,000

327,706,850

460,000,000

327,706,850

Revenue from sale of land to a subsidiary

7

-

-

207,937,800

-

40,357,974

130,429,695

-

130,429,695

Revenue from sale of condominium units Revenue from rental and services

248,134,700

310,722,823

9,241,397

38,917,314

15

134,330,943

554,894,044

-

327,614,579

Dividend income

12

7,815,000

-

204,535,923

-

Proceeds from the transfer of land-purchasing rights

7

-

-

16,032,000

-

Gain from sell of investment properties Other income

Others Total revenues

54,784,145

36,830,661

78,418,834

51,725,988

945,422,762

1,360,584,073

976,165,954

876,394,426

Expenses Cost of land and building sold

244,229,218

164,677,521

244,229,218

164,677,521

Cost of land sold to a subsidiary

-

-

73,344,746

-

Cost of condominium units sold

32,204,320

77,304,387

-

77,304,387

148,913,284

157,988,526

8,962,740

12,607,757

52,761,515

81,764,521

31,577,779

58,638,604

Administrative expenses

158,150,153

136,121,621

128,508,512

102,828,215

Total expenses

636,258,490

617,856,576

486,622,995

416,056,484

Profit before finance cost and income tax expenses

309,164,272

742,727,497

489,542,959

460,337,942

(113,136,172)

(85,518,780)

(74,855,681)

(29,795,710)

196,028,100

657,208,717

414,687,278

430,542,232

(42,168,780)

(154,210,044)

(44,026,774)

(101,321,646)

153,859,320

502,998,673

370,660,504

329,220,586

7,500,000

10,500,000

18,000,000

-

Cost of rental and services Selling expenses

Finance cost Profit before income tax expenses Income tax expenses

31

Profit for the year

Other comprehensive income for the year: Gain on change in value of available-for-sale investment Income tax effect

(1,500,000)

(2,100,000)

(3,600,000)

-

Other comprehensive income for the year

6,000,000

8,400,000

14,400,000

-

Total comprehensive income for the year

159,859,320

511,398,673

385,060,504

329,220,586

31

The accompanying notes are an integral part of the financial statements.

Thai Factory Development Public Company Limited

Annual Report 2013

47


Statements of comprehensive income (continued) Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013 Statements of comprehensive income (continued) Thai Factory Development Public Company Limited and its subsidiaries

For the year ended 31 December 2013 (Unit: Baht) Consolidated financial statements Note

2013

2012

Separate financial statements 2013

2012

(Restated)

(Restated)

Profit attributable to: Equity holders of the Company

151,320,113

The major shareholder of the Company

(1,775,302)

Total

149,544,811

Non-controlling interests of the subsidiary

511,640,604

370,660,504

329,220,586

385,060,504

329,220,586

0.3124

0.3474

-

-

0.2955

0.3276

-

-

(10,002,896) 501,637,708

4,314,509

1,360,965

153,859,320

502,998,673

157,320,113

520,040,604

Total comprehensive income attributable to: Equity holders of the Company The major shareholder of the Company

(1,775,302)

Total Non-controlling interests of the subsidiary

Earnings per share

(10,002,896)

155,544,811

510,037,708

4,314,509

1,360,965

159,859,320

511,398,673

0.1275

0.5398

(0.0015)

(0.0106)

0.1206

0.5091

(0.0014)

(0.0100)

32

Basic earnings per share Profit attributable to equity holders of the Company Loss attributable to the major shareholder of the Company

Diluted earnings per share Profit attributable to equity holders of the Company Loss attributable to the major shareholder of the Company

The accompanying notes are an integral part of the financial statements.

48

Annual Report 2013

Thai Factory Development Public Company Limited


Statements of changes in shareholders’ equity Thai Factory Development Public Company Limited and its subsidiaries Statements of changes in shareholders' equity

Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013 For the year ended 31 December 2013

(Unit: Baht) Consolidated financial statements Equity attributable to owners of the Company Other components of equity Other comprehensive income

Share Issued and fully

subscriptions

paid-up

received

share capital

Share premium

Retained earnings

in advance

Appropriated

Unappropriated

Equity

Surplus (deficit)

Difference

on changes

from changing

Surplus

Total other

Total equity

attributable to

invalue of

investment

from business

components of

attributable to

non-controlling

Total

available-for-sale

proportion

combination under

shareholders'

owners of

interests of

shareholders'

investment

in subsidiaries

common control

equity

the Company

the subsidiaries

equity

Balance as at 31 December 2011 - as previously reported

701,357,785

147,196,958

-

15,602,230

104,705,343

-

(45,699,839)

-

-

-

-

-

-

-

-

367,640,139

(45,699,839)

923,162,477

79,643,789

1,002,806,266

367,640,139

367,640,139

-

367,640,139

Retained earning of the subsidiary as at 31 December 2011 (before acquisition) Cumulative effect of change in accounting policy relating to income taxes (Note 4) Balance as at 31 December 2011 - restated Increase share capital

-

-

-

-

22,461,734

-

-

-

-

22,461,734

12,062,182

34,523,916

701,357,785

147,196,958

-

15,602,230

127,167,077

-

(45,699,839)

367,640,139

321,940,300

1,313,264,350

91,705,971

1,404,970,321

32,065,776

-

-

-

-

-

-

-

-

32,065,776

-

32,065,776

-

-

68,176,473

-

Share subscription received in advance from -

-

68,176,473

-

-

Loss of a subsidiary- before acquisition

exercise of warrants

-

-

-

-

-

Total comprehensive income for the year - as restated

-

-

-

-

511,640,604

-

-

-

16,520,465

-

-

(10,002,896)

(10,002,896)

(10,002,896)

68,176,473 (10,002,896)

8,400,000

-

-

8,400,000

520,040,604

1,360,965

521,401,569

-

-

-

-

-

-

-

Unappropriated retained earnings transferred to statutory acquisition

(16,520,465)

Dividend paid (Note 35) Cash dividend

-

-

-

-

(7,013,637)

-

-

-

-

Stock dividend

56,106,824

-

-

-

(56,106,824)

-

-

-

-

-

-

-

789,530,385

147,196,958

68,176,473

32,122,695

559,166,755

8,400,000

(45,699,839)

357,637,243

320,337,404

1,916,530,670

93,066,936

2,009,597,606

789,530,385

147,196,958

68,176,473

32,122,695

547,366,058

10,500,000

(45,699,839)

-

(35,199,839)

1,549,192,730

82,500,938

1,631,693,668

Balance as at 31 December 2012

(7,013,637)

-

(7,013,637)

Balance as at 31 December 2012 - as previously reported Cumulative effect of change in accounting -

-

-

-

11,800,696

(2,100,000)

-

-

(2,100,000)

9,700,696

10,565,998

20,266,694

Balance as at 31 December 2012 - as restated

policy relating to income taxes (Note 4)

789,530,385

147,196,958

68,176,473

32,122,695

559,166,754

8,400,000

(45,699,839)

-

(37,299,839)

1,558,893,426

93,066,936

1,651,960,362

Increase share capital (Note 27,28)

113,412,216

586,564

(68,176,473)

-

-

-

-

-

-

45,822,307

-

45,822,307

-

-

-

-

-

-

-

(141,038,894)

(141,038,894)

(141,038,894)

-

(141,038,894)

-

-

-

18,533,026

(18,533,026)

-

-

-

-

-

-

(90,279,195)

Surplus from business combination under common control (Note 2.2) Unappropriated retained earnings transferred to statutory acquisition Dividend paid (Note 35) Cash dividend

-

-

-

-

(90,279,195)

-

-

-

-

(90,279,195)

-

Stock dividend

180,557,604

-

-

-

(180,557,604)

-

-

-

-

-

-

-

-

-

-

-

151,320,113

6,000,000

-

-

6,000,000

157,320,113

4,314,509

161,634,622

1,083,500,205

147,783,522

-

50,655,721

421,117,042

14,400,000

(45,699,839)

(141,038,894)

1,530,717,757

97,381,445

1,628,099,202

Total comprehensive income for the year Balance as at 31 December 2013

(172,338,733)

The accompanying notes are an integral part of the financial statements.

Thai Factory Development Public Company Limited

Annual Report 2013

49


Statements of changes in shareholders’ equity (continued)

Thai Factory Development Public Company Limited and its subsidiaries Statements of changes in shareholders' equity (continued)

Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013

For the year ended 31 December 2013

(Unit: Baht) Separate financial statements Other components of equity Other comprehensive income Surplus (deficit) on changes

Issued and

Share

fully paid-up

subscription

share capital

Balance as at 31 December 2011 - as previously report

Share premium

701,357,785

invalue of Retained earnings

received in advance

147,196,958

Appropriated

-

Unappropriated

15,602,230

64,096,217

available-for-sale

Total shareholders'

investment

equity

-

928,253,190

Cumulative effect of change in accounting policy relating to income taxes (Note 4) Balance as at 31 December 2011 - as restated Increase share capital

-

-

-

-

2,675,796

-

2,675,796

701,357,785

147,196,958

-

15,602,230

66,772,013

-

930,928,986

32,065,776

-

-

-

-

-

32,065,776

Share subscription received in advance from exercise of warrants Total comprehensive income for the year - as restated

-

-

68,176,473

-

-

-

68,176,473

-

-

-

-

329,220,586

-

329,220,586

-

-

-

16,520,465

(16,520,465)

-

-

Unappropriated retained earnings transferred to statutory reserve Dividend paid (Note 35) Cash dividend

-

-

-

-

(7,013,637)

-

Stock dividend

56,106,824

-

-

-

(56,106,824)

-

(7,013,637) -

Balance as at 31 December 2012 - restated

789,530,385

147,196,958

68,176,473

32,122,695

316,351,673

-

1,353,378,184

Balance as at 31 December 2012 - as previously reported

789,530,385

147,196,958

68,176,473

32,122,695

314,864,576

-

1,351,891,087

Cumulative effect of change in accounting policy relating -

-

-

-

1,487,097

-

1,487,097

Balance as at 31 December 2012 - as restated

to income taxes (Note 4)

789,530,385

147,196,958

68,176,473

32,122,695

316,351,673

-

1,353,378,184

Increase share capital (Note 27,28)

113,412,216

586,564

(68,176,473)

-

-

-

45,822,307

-

-

-

18,533,026

(18,533,026)

-

-

(90,279,195)

Unappropriated retained earnings transferred to statutory reserve Dividend paid (Note 35) Cash dividend

-

-

-

-

(90,279,195)

-

Stock dividend

180,557,604

-

-

-

(180,557,604)

-

-

-

-

-

-

370,660,504

14,400,000

385,060,504

1,083,500,205

147,783,522

-

50,655,721

397,642,352

14,400,000

1,693,981,800

Total comprehensive income for the year Balance as at 31 December 2013

The accompanying notes are an integral part of the financial statements.

50

Annual Report 2013

Thai Factory Development Public Company Limited


Cash flow statement Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013 Cash flow statement Thai Factory Development Public Company Limited and its subsidiaries

For the year ended 31 December 2013 (Unit: Baht) Consolidated financial statements 2013

Separate financial statements

2012

2013

2012

Cash flows from operating activities Profit before tax

198,247,227

669,712,337

414,687,278

430,542,232

-

6,420

-

6,420

3,743,957

2,211,535

3,081,927

1,519,851

Depreciation and amortisation

71,843,231

79,866,483

7,190,681

9,857,721

Dividend income

(7,815,000)

Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Allowance for doubtful accounts Provision for long-term employee benefits

Loss on sales of equipment Gain on sales of investment properties Proceeds from the transfer of land-purchasing rights Interest income Interest expenses

(134,330,943) (13,490,316)

23,652 (554,894,044) (633,536)

(204,535,923)

-

-

23,652 (327,614,579)

(16,032,000)

-

(32,825,847)

(22,115,194)

98,904,686

76,756,929

74,855,682

29,495,710

217,102,843

273,049,776

246,421,798

121,715,813

Profit from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade and other receivables

77,722,303

(1,328,181)

(8,529,611)

(1,067,267,456)

(79,111,457)

Project development costs

(425,152,934)

Deposit for purchase of land - related party

(300,000,000)

-

Deposit for purchase of land - unrelated parties

(84,127,069)

-

(104,839,419)

Deposit for construction

(75,000,000)

-

(75,000,000)

Other current assets Other non-current assets

3,005,468 (1,067,267,456)

-

-

3,135,778

(4,927,353)

3,279,636

(8,523,287)

15,670,804

(22,638,789)

797,975

(24,354,220)

(361,091,142)

296,168,011

Operating liabilities increase (decrease) Trade and other payable Rental deposit received

(6,977,696)

Other current liabilities

(12,385,028)

Other non-current liabilities Cash flows used in operating activities Cash paid for interest expenses Withholding tax received Cash paid for corporate income tax Net cash flows used in operating activities

404,133

(26,055,163) 9,880,426 (6,962,627)

(448,539,169) (248,007) 2,385,600

283,627,953 (16,919,200) 1,109,888 (1,878,310)

(950,698,008)

(550,081,356)

(463,382,654)

(709,483,351)

(219,228,072)

(84,971,082)

(105,975,643)

(52,202,096)

6,515,572

6,113,730

-

-

(140,245,343)

(60,803,625)

(88,166,971)

(48,309,578)

(1,303,655,850)

(689,742,333)

(657,525,268)

(809,995,025)

The accompanying notes are an integral part of the financial statements.

Thai Factory Development Public Company Limited

Annual Report 2013

51


Cash flow statement (continued) Thai Factory Development Public Company Limited and its subsidiaries

Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013 For the year ended 31 December 2013 Cash flow statement (continued)

(Unit: Baht) Consolidated financial statements

Separate financial statements

2013

2012

2013

2012

13,711,584

(9,351,925)

14,258,166

(9,351,925)

Cash flows from investing activities Increase in restricted bank deposits Increase in short-term loan to subsidiaries

-

-

Cash received from repayment of short-term loan to a subsidiary

-

-

Cash received from repayment of long-term loan to subsidiary Cash paid for investment in a subsidiary Acquisition of investments in equity securities avaliable for sales Cash advance paid for investment in ordinary shares of a subsidiary Proceeds from sale of investment properties Received from collateral for letter of guarantee Increase in leasehold rights improvement Dividend income

(312,491,746) (75,000,000) -

-

-

12,564,179

11,768,154

-

(396,900,835)

-

(88,968,000)

-

(150,000,000)

-

(100,000,000)

268,588,951

1,000,597,798

-

663,518,979

-

15,000,000

-

15,000,000

(112,350) 7,815,000

(100,000,000)

-

-

-

-

204,535,923

-

-

-

(1,612,349)

(495,120)

Acquisition of equipment

(1,856,965)

(1,578,911)

Cash received from interest Net cash flows from (used in) investing activities

-

35,000,000

Acquisition of investment properties

Proceeds from sales of equipment

(1,317,075,533)

(1,160,281)

(1,528,877)

17,802

47,976

-

47,976

13,488,260

960,659

10,303,653

5,092,466

(87,451,814)

755,180,477

(1,527,442,728)

584,546,773

432,868,223

1,796,200,000

187,529,587

Cash flows from financing activities Increase short-term loans from financial institutions Increase (decrease) in short-term loans from other individuals

1,826,200,000 (53,500,000)

53,500,000

(53,500,000)

53,500,000

Increase in short-term loan from subsidiaries

-

-

175,500,000

224,900,000

Repayment of short-term loan from subsidiaries

-

-

(175,500,000)

(219,000,000)

(4,380,297)

(3,167,094)

Repayment of liabilities under financial lease agreement Increase in long-term loans from financial institutions Cash received from issued debenture Repayment of long-term loans from financial institutions

(4,407,422)

(3,427,557)

553,552,696

501,108,854

551,578,545

531,108,855

1,342,689,176

-

1,342,689,176

-

(1,239,297,763)

(706,704,898)

(343,470,219)

(510,495,095)

Repayment of debt restructuring payable

(44,384,575)

(21,768,154)

-

-

Repayment of long-term loans from related party

(61,741,164)

(41,605,276)

-

-

Cash received from share premium Share subscription received in advance from exercise of warrants Cash received from exercise of warrants Dividend paid Net cash flows from financing activities

586,564

-

586,564

-

68,176,473

-

68,176,473

45,235,743

32,065,776

45,235,743

32,065,776

(90,279,195)

(7,013,637)

(90,279,195)

(7,013,637)

2,274,654,060

307,199,804

3,244,660,317

357,604,865

Net increase in cash and cash equivalents

883,546,396

372,637,948

1,059,692,321

132,156,613

Cash and cash equivalents at beginning of year

385,117,706

12,479,758

132,682,254

525,641

1,268,664,102

385,117,706

1,192,374,575

132,682,254

Cash and cash equivalents at end of year

The accompanying notes are an integral part of the financial statements.

52

Annual Report 2013

Thai Factory Development Public Company Limited


Cash flow statement (continued) Thai Factory Development Public Company Limited and its subsidiaries

Thai Factory Development Public Company Limited and its subsidiaries For the year ended 31 December 2013 For the year ended 31 December 2013 Cash flow statement (continued)

(Unit: Baht) Consolidated financial statements 2013

2012

Separate financial statements 2013

2012

Supplemental cash flow information: Non-cash transactions Stock dividend

180,557,604

56,106,824

180,557,604

56,106,824

-

3,762,958

-

3,762,958

Transfer of deposit for purchase of land to project development costs

59,197,169

206,638,650

59,197,169

206,638,650

Transfer project development costs to equipments

46,238,235

-

46,238,235

-

100,000,000

-

100,000,000

-

Annual Report 2013

53

Purchase of assets under finance lease agreements

Transfer deposit for acquisition of ordinary shares of a subsidiary to investment in subsidiary

The accompanying notes are an integral part of the financial statements.

Thai Factory Development Public Company Limited


Notes to consolidated financial statements Thai Factory Development Public Company and itsLimited subsidiaries Thai Factory Development Public Limited Company and its subsidiaries For the year ended 31 December 2013 statements Notes to consolidated financial For the year ended 31 December 2013 1.

General information Thai Factory Development 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 26 JC Kevin Tower, 10th Floor, Narathiwat-Ratchanakarin Road, Yannawa, Sathorn, Bangkok. On 18 December 2013, the Company moved its head office to 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok.

2.

Basis of preparation

2.1

The financial statements have been prepared in accordance with Thai Financial Reporting Standards enunciated under the Accounting Professions 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.

2.2

Basis of consolidation a)

The consolidated financial statements include the financial statements of Thai Factory Development Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”):

Company’s name

Nature of business

Country of

Percentage of

incorporation

shareholding 2013

2012

Percent

Percent

Total Industrial Services Company Limited

Factory rental

Thailand

100.00

100.00

SG Land Company Limited

Office rental

Thailand

49.91

49.91

VSSL Enterprise Company

Residential condominium Thailand

100.00

-

Limited

54

units for sale

1

Annual Report 2013

Thai Factory Development Public Company Limited


On 1 April 2013, the Company acquired 100% of the ordinary shares of VSSL Enterprise Company Limited which was established on 10 July 1998. The shares of such company were used to be held by the major shareholder of the Company. This acquisition was thus considered to be a business combination under common control. The investment value was Baht 497 million. The difference between the cost of this business combination under common control and the net book value of the equity of VSSL Enterprise Company Limited amounting to Baht 141 million was recorded as “Surplus on business combination under common control” and separately presented under other components of equity in the consolidated statements of changes in shareholders’ equity. The Company restated the consolidated statements of financial position as at 31 December 2012 and 1 January 2012, the consolidated statements of comprehensive income and the consolidated statement of changes in shareholders’ equity for the year ended 31 December 2012 as presented herein for comparative purposes, as if the VSSL Enterprise Company Limited has been a subsidiary of the Company. However, these restatements do not affect the consolidated statement of cash flows for the year ended 31 December 2012. The consolidated statements of comprehensive income for the year ended 31 December 2013 and 2012 included the operating results of VSSL Enterprise Company Limited since 1 January 2013 to 31 December 2013 and 1 January 2012 to 31 December 2012 respectively without concerning the date of the business combination under common control (the date of share acquisition).

Thai Factory Development Public Company Limited

Annual Report 2013

2

55


The net book values of assets and liabilities as at the acquisition date (1 April 2013) and the cash payment made to purchase the investment in the subsidiary are summarised below. Million Baht Net book values of assets and liabilities as at the acquisition date Cash and cash equivalents

84

Other account receivables

84

Project development costs

2,269

Deferred tax asset

8

Other non-current assets

13

Restricted bank deposits and other non-current assets

2

Short-term loans from financial institution

(250)

Trade and other payables

(386)

Short-term loan from related parties

(12)

Other current liabilities

(2)

Long-term loans from financial institution

(1,453)

Other deposits

(1)

Total net assets of the subsidiary

356

Surplus on business combination under common control

141

Cash payment for purchase of investment in the subsidiary separate financial statements

497 (84)

Less: Cash - subsidiary Cash payment for purchase of investment in the subsidiary consolidated financial statements

56

413

3

Annual Report 2013

Thai Factory Development Public Company Limited


The amounts of adjustments affecting the consolidated statements of financial position as at 31 December 2012 and 1 January 2012 and the consolidated statement of comprehensive income for the year ended 31 December 2012 are summarised below. (Unit: Thousand Baht) Consolidated financial statements 31 December 2012

1 January 2012

Statements of financial position Increase in cash and cash equivalents

18,778

20,761

Increase in trade and other receivables

1,049

1,069

115,494

-

2,130,916

1,671,468

13,830

2,368

1,711

15,000

-

106,746

92

104

7,154

4,654

390

656

20,007

-

423,942

150,759

1,342

18,897

1,452,570

1,255,530

33,573

-

343

-

Increase in short-term loan to and interest receivable from related party Increase in project development costs Increase in other current assets Increase in restricted bank deposits Increase in long-term loan to and interest receivable from related party Increase in equipment Increase in deferred tax asset Increase in other non-current assets Increase in short-term loans from financial institutions Increase in trade and other payables Increase in other current liabilities Increase in long-term loans from financial institutions Increase in long-term loans from related party Increase in other non-current liabilities

(Unit: Thousand Baht) For the year ended 31 December 2012 Statements of comprehensive income Profit or loss: Increase in other revenues

10,290

Increase in selling expenses

21,131

Increase in administrative expenses Increase in finance cost Decrease in income tax expenses

1,432 231 2,500

Decrease in profit for the year

10,003

Decrease in basic earnings per share (Baht)

0.0084

Decrease in diluted earnings per share (Baht)

0.0080

4

Thai Factory Development Public Company Limited

Annual Report 2013

57


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 subsidiary companies have been eliminated from the consolidated financial statements.

e)

Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position.

2.3

The separate financial statements, which present investments in subsidiaries under the cost method, have been prepared solely for the benefit of the public.

3.

New accounting standards Below is a summary of accounting standards that became effective in the current accounting year and those that will become effective in the future. (a) Accounting standards that became effective in the current accounting year Accounting standards: TAS 12

Income Taxes

TAS 20 (revised 2009)

Accounting for Government Grants and Disclosure of Government Assistance

TAS 21 (revised 2009)

The Effects of Changes in Foreign Exchange Rates

Financial Reporting Standard: TFRS 8

Operating Segments

Accounting Standard Interpretations: TSIC 10

Government Assistance - No Specific Relation to Operating Activities

TSIC 21

Income

Taxes

-

Recovery

of

Revalued

Non-

Depreciable Assets TSIC 25

Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

Accounting Treatment Guidance for Transfers of Financial Assets These

accounting

standards,

financial

reporting

standard,

accounting

standard

interpretations and accounting treatment guidance do not have any significant impact on the financial statements, except for the following accounting standard.

5

58

Annual Report 2013

Thai Factory Development Public Company Limited


TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences between the carrying amount of an asset or liability in the statement of financial position and its tax base and recognise the tax effects as deferred tax assets or liabilities subjecting to certain recognition criteria. The Company and its subsidiaries have changed this accounting policy in the first quarter of the current year and restated the prior year’s financial statements, presented as comparative information, as though the Company and its subsidiaries had initially recognised the tax effects as deferred tax assets or liabilities. The cumulative effect of this change in accounting policy has been presented in Note 4 to the financial statements. (b) Accounting standards that will become effective in the future Effective date Accounting Standards: TAS 1 (revised 2012)

Presentation of Financial Statements

1 January 2014

TAS 7 (revised 2012)

Statement of Cash Flows

1 January 2014

TAS 12 (revised 2012)

Income Taxes

1 January 2014

TAS 17 (revised 2012)

Leases

1 January 2014

TAS 18 (revised 2012)

Revenue

1 January 2014

TAS 19 (revised 2012)

Employee Benefits

1 January 2014

TAS 21 (revised 2012)

The Effects of Changes in Foreign

1 January 2014

Exchange Rates TAS 24 (revised 2012)

Related Party Disclosures

1 January 2014

TAS 28 (revised 2012)

Investments in Associates

1 January 2014

TAS 31 (revised 2012)

Interests in Joint Ventures

1 January 2014

TAS 34 (revised 2012)

Interim Financial Reporting

1 January 2014

TAS 36 (revised 2012)

Impairment of Assets

1 January 2014

TAS 38 (revised 2012)

Intangible Assets

1 January 2014

Financial Reporting Standards: TFRS 2 (revised 2012)

Share-based Payment

1 January 2014

TFRS 3 (revised 2012)

Business Combinations

1 January 2014

TFRS 4

Insurance Contracts

1 January 2016

TFRS 5 (revised 2012)

Non-current Assets Held for Sale and

1 January 2014

Discontinued Operations TFRS 8 (revised 2012)

Operating Segments

1 January 2014

6

Thai Factory Development Public Company Limited

Annual Report 2013

59


Effective date Accounting Standard Interpretations: TSIC 15

Operating Leases - Incentives

1 January 2014

TSIC 27

Evaluating the Substance of Transactions

1 January 2014

Involving the Legal Form of a Lease TSIC 29

Service Concession Arrangements:

1 January 2014

Disclosures TSIC 32

Intangible Assets – Web Site Costs

1 January 2014

Financial Reporting Standard Interpretations: TFRIC 1

Changes in Existing Decommissioning,

1 January 2014

Restoration and Similar Liabilities TFRIC 4

Determining whether an Arrangement

1 January 2014

contains a Lease TFRIC 5

1 January 2014

Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

TFRIC 7

1 January 2014

Applying the Restatement Approach under TAS 29 Financial Reporting in Hyperinflationary Economies

TFRIC 10

Interim Financial Reporting and

1 January 2014

Impairment TFRIC 12

Service Concession Arrangements

1 January 2014

TFRIC 13

Customer Loyalty Programmes

1 January 2014

TFRIC 17

Distributions of Non-cash Assets to

1 January 2014

Owners TFRIC 18

Transfers of Assets from Customers

1 January 2014

The Company’s management believes that these accounting standards, financial reporting standard,

accounting

standard

interpretations

and

financial

reporting

standards

interpretations will not have any significant impact on the financial statements for the year when they are initially applied.

7

60

Annual Report 2013

Thai Factory Development Public Company Limited


4.

Cumulative effect of changes in accounting policies due to the adoption of new accounting standard During the current year, the Company and its subsidiaries made the changes described in Note 3 to the financial statements to its significant accounting policies, as a result of the adoption of Thai Accounting Standard 12 Income Taxes. The cumulative effect of the changes in the accounting policies has been separately presented in the statements of changes in shareholders’ equity. The amounts of adjustments affecting the statements of financial position and the statements of comprehensive income are summarised below. (Unit: Thousand Baht) Separate financial statements

Consolidated financial statements As at

As at

31 December 31 December

As at

As at

1 January

2012

2012

(Restated)

(Restated)

2013

As at

As at

31 December 31 December 2013

2012

1 January 2012

(Restated)

Statements of financial position Increase in deferred tax assets

60,629

30,845

42,566

3,203

Increase in deferred tax liabilities

(3,912)

(3,424)

(3,388)

(3,912)

3,600

2,100

(7,954)

(10,566)

(52,363)

(18,955)

1,931 (444)

3,780 (1,104)

Increase in other components of shareholders’ equity

-

3,600

-

-

(12,062)

-

-

-

(27,116)

2,891

Increase in non-controlling interests of the subsidiary Decrease (increase) in unappropriated retained earnings

(1,487)

(2,676)

8

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Annual Report 2013

61


(Unit: Thousand Baht) For the year ended 31 December Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated)

(Restated)

Statements of comprehensive income Profit or loss: Increase in income tax

30,796

9,657

1,406

1,189

(2,612)

(1,496)

-

-

30,243

8,652

1,406

3,165

2,501

-

(0.0255)

(0.0091)

(0.0012)

(0.0027)

(0.0026)

-

(0.0241)

(0.0086)

(0.0011)

(0.0025)

(0.0025)

Decrease in profit attributable to non-controlling interest of the subsidiary Increase (decrease) in equity holders of the Company

(1,189)

Increase in equity holders of the major shareholder of the Company

-

Decrease in basic earnings per share (Baht) - equity holders of the Company

(0.0013)

Decrease in basic earnings per share (Baht) - equity holders of the major shareholder of the Company

-

Decrease in diluted earnings per share (Baht) - equity holders of the Company

(0.0012)

Decrease in diluted earnings per share (Baht) - equity holders of the major shareholder of the Company

-

-

3,600

-

Other comprehensive income: Increase in gain on changes in value of available-for-sale investments

5.

Significant accounting policies

5.1

Revenue recognition

1,500

-

Revenues recognition from real estate sales Revenues from sales of land, factory and condominium units are recognised as revenues when 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. Rental and related service income Rental income is recognised as income over the periods of the leases. Service income is recognised when services have been rendered taking into account the stage of completion. 9

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Annual Report 2013

Thai Factory Development Public Company Limited


Interest income Interest income is recognised on an accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 5.2

Cost of property sales In determining the costs of land, factory and condominium units sold, the Company and its subsidiaries allocated anticipated total development costs (after receognising the costs incurred to date) are attributed to units already sold on the basis of the salable area and then recognised as costs in the income statements. Project development costs are stated at the lower of cost and net realisable value. Cost comprises cost of land, design fees, utilities, construction costs and directly related finance cost and expenses. The Company and its subsidiaries recognise loss on diminution in project value (if any) in the income statements.

5.3

Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

5.4

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.

5.5

Investments a)

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.

b)

Investments in subsidiaries are accounted for in the separate financial statements using the cost method.

The fair value of marketable securities is based on the lastest bid price of the last working day of the year. 10

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63


5.6

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 the following estimated useful lives: Building and factory

30 years

Office building

28 years

Improvement of leasehold building

29 - 30 years

Improvement of office building

5 years

Infrastructure system

20 years

Improvement of leasehold land

8, 29 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. 5.7

Equipment/Depreciation Equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of equipment is calculated by reference to their costs on the straight-line basis over the following estimated useful lives: Improvement of leasehold office building

5 years

Furniture and office equipment

5, 8 years

Motor vehicles

5 years

Depreciation is included in determining income. No depreciation is provided on assets under installation. An item of 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 is included in profit or loss when the asset is derecognised. 5.8

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. 11

64

Annual Report 2013

Thai Factory Development Public Company Limited


5.9

Leasehold right and amortisation Leasehold right are stated at cost less accumulated amortisation and any accumulated impairment losses (if any). Amortisation is calculated by reference to its cost on a straightline basis over the following leasehold period: Leasehold rights - land

30, 40 years

Leasehold rights - factory

15 years

The amortisation is included in determing income. 5.10 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include 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. 5.11 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 longterm payables, while the interest element is charged to profit or loss over the lease period. The assets acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease period. Lease 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. 5.12 Foreign currencies The consolidated and separate financial statements are presented in Baht, which is also the Company’s functional currency. Items of each entity included in the consolidated financial statements are measured using the functional currency of that entity. 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 determining income. 12

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65


5.13 Impairment of assets At the end of each reporting period, the Company performs impairment reviews in respect of the 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. An impairment loss is recognised in profit or loss. 5.14 Employee benefits Short-term employee benefits Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred. Post-employment 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 fund’s assets are held in a separate trust fund and the Company’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 profit or loss. The defined benefits liability comprises the present value of the defined benefit obligation less unrecognised past service cost and unrecognised actuarial gain or losses. For the first-time adoption of TAS 19 Employee Benefits, 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, as an expense on a straight-line basis over up to five years from the date of adoption. 5.15 Provisions Provisions are recognised when the Company has 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. 13

66

Annual Report 2013

Thai Factory Development Public Company Limited


5.16 Income tax Income tax expense represents the sum of corporate income tax currently payable and deferred tax. Current tax Current 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. Deferred tax Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period. The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised. At each reporting date, the Company and its subsidiaries review and reduce the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. The Company and its subsidiaries record deferred tax directly to shareholders' equity if the tax relates to items that are recorded directly to shareholders' equity. 6.

Significant accounting judgements and estimates The preparation of financial statements in conformity with financial reporting standards at times requires management to make subjective judgements and estimates regarding matters that are inherently uncertain. These judgements and estimates affect reported amounts and disclosures; and actual results could differ from these estimates. Significant judgements and estimates are as follows: Recognition and derecognition of assets and liabilities 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 its best knowledge of the current events and arrangements.

14

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67


Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgement regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgement and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Impairment of equity investments The Company treats available-for-sale investments and investments in subsidiaries as impaired when 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 judgement of the management. Equipment/Depreciation In determining depreciation of equipment, the management is required to make estimates of the useful lives and residual values of the equipment and to review estimate useful lives and residual values when there are any changes. In addition, the management is required to review equipment for impairment on a periodical basis and record impairment losses when it is determined that their recoverable amount is lower than the carrying amount. This requires judgements regarding forecast of future revenues and expenses relating to the assets subject to the review. Investment property The initial recognition and measurement of goodwill and intangible assets, and subsequent impairment testing, require management to make estimates of cash flows to be generated by the asset or the cash generating units and to choose a suitable discount rate in order to calculate the present value of those cash flows. Deferred tax assets Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the temporary differences and losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimate future taxable profits. 15

68

Annual Report 2013

Thai Factory Development Public Company Limited


Post-employment benefits under defined benefit 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. Litigation The Company has contingent liabilities as a result of litigation. The Company’s management has used judgement to assess of the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the end of reporting period. 7.

Related party transactions During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

Transfer Pricing Policy

2012

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

-

-

26

22

Interest rate at 5.5 - 7.0 % per annum and 15% per annum (2012: 6.625% and 15% per annum)

Dividend income

-

-

197

-

Recorded all amount declared

-

-

16

-

Contract price

Building management income

-

-

5

4

Contract price

Revenue from sale of land

-

-

208

-

Market price

Interest expense

-

-

4

4

Interest rate at MLR per annum

Proceeds from the transfer of landpurchasing rights

(2012: MLR per annum) Transactions with related companies Interest income

2

-

-

-

Interest rate at 8.4% per annum (2012: at 8.4% per annum)

Interest expense

25

32

-

-

Interest rate at 15% per annum (2012: at 15% per annum)

16

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69


During the third quarter of the current year, the Company transferred land-purchasing rights to the subsidiary and received proceeds of such transfer amounting to Baht 16 million from the subsidiary. In addition, in the fourth quarter of the current year, the Company sold the 49-rai land to a subsidiary amounting to Baht 208 million. The Company received partial payment by securities which were classified as available for sales investment as describe in Note 13 to the financial statement and has already received the whole amount of remaining payment from the subsidiary. As at 31 December 2013 and 2012, the balances of the accounts between the Company and those related companies are as follows: (Unit: Thousand Baht) Consolidated financial statements 2013

2012

Separate financial statements 2013

2012

(Restated) Trade account receivables (Note 9) Subsidiary SG Land Company Limited

-

-

429

391

Total Industrial Services Company Limited

-

-

618

-

Total

-

-

1,047

391

Schubert Holdings Pte. Ltd.

139

139

139

139

Total

139

139

139

139

Grand total

139

139

1,186

530

Schubert Holdings Pte.Ltd.

573

345

-

-

Total

573

345

-

-

Shareholder of the Company

-

100,000

-

100,000

Total

-

100,000

-

100,000

Group Company Limited� )

104

-

104

-

Total

104

-

104

-

Related party

Other receivable (Note 9) Related party

Deposit for acquisition of ordinary shares (Note 12) Related person

Trade account payable (Note 19) Related party JC Kevin Development Company Limited (formerly known as “V.C.A.L. Business

17

70

Annual Report 2013

Thai Factory Development Public Company Limited


(Unit: Thousand Baht) Consolidated financial statements 2013

2012

Separate financial statements 2013

2012

(Restated) Deposit from sale of project Subsidiary SG Land Company Limited

-

-

129,500

129,500

Total

-

-

129,500

129,500

Group Company Limited” )

300,000

-

-

-

Total

300,000

-

-

-

Deposit from purchase of land Related party JC Kevin Development Company Limited (formerly known as “V.C.A.L. Business

Deposit from purchase of land On 25 December 2013, VSSL Enterprise Company Limited (a subsidiary) (“Buyer”) made 138-rai land sale agreement amounting to Baht 800 million with J.C Kevin Development Company Limited (formerly known as “VCAL Business Group Company Limited”) (“Seller”), which is a related party to the Company and a subsidiary, under the following payment terms: 1. First deposit amounting to Baht 300 million paid on the agreement signing date (already paid). 2. Second deposit amounting to Baht 20 million paid on 30 December 2013 (already paid) and another amount of Baht 180 million scheduled to be paid on 31 March 2014. 3. Remaining amount of Baht 300 million scheduled to be paid on 30 June 2014, which is the transfer date. The seller will pay tax expense and stamp duty, but, as for transfer expenses and other expenses which need to be paid on the date of transfer of ownership, both parties agree to pay 50/50 each for these expenses.

18

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71


Loans to related parties and loan from related parties As at 31 December 2013 and 2012, the balance of loans between the Company and those related companies and the movement are as follows: (Unit: Thousand Baht) Consolidated financial statements During the year

Related by

Balance as at

Balance as at

1 January

31 December

2013

2013

Increase

Decrease

104,145

-

(104,145)

-

11,349

3,238

(14,587)

-

115,494

3,238

(118,732)

-

Loan

201,441

-

(55,168)

146,273

Interest payable

145,793

25,468

(4,164)

167,097

347,234

25,468

(59,332)

313,370

33,573

-

(33,573)

-

33,573

-

(33,573)

-

380,807

25,468

(92,905)

313,370

(Restated) Short-term loan and interest receivable from related parties JC Kevin Development Company Limited (formerly known as “V.C.A.L.

Co-shareholders

Business Group Company Limited� )

and directors

Loan Interest receivable Total Long-term loan and interest payable from related party (Note 24) Shareholders in Schubert Holdings Pte. Ltd.

subsidiary

Total Shareholders of Related person Loan Total Grand total

the Company

19

72

Annual Report 2013

Thai Factory Development Public Company Limited


(Unit: Thousand Baht) Separate financial statements During the year

Related by

Balance as at

Balance as at

1 January

31 December Increase

2013

Decrease

2013

Short-term loan to and interest receivable from related parties Total Industrial Services Company Limited

Subsidiary

Loan

-

35,000

(35,000)

-

Interest receivable

-

290

(290)

-

-

35,290

(35,290)

-

Loan

-

1,282,076

-

1,282,076

Interest receivable

-

6,259

-

6,259

-

1,288,335

-

1,288,335

-

1,323,625

(35,290)

1,288,335

138,837

-

(12,565)

126,272

91,601

19,928

(3,664)

107,865

230,438

19,928

(16,229)

234,137

Total VSSL Enterprise Company Limited

Subsidiary

Total Long-term loan to and interest receivable from subsidiary SG Land Company Limited

Subsidiary

Loan Interest receivable Total Short-term loan from and interest payable to subsidiaries SG Land Company Limited

Subsidiary

Loan

48,000

-

-

48,000

4,973

3,360

-

8,333

52,973

3,360

-

56,333

Loan

-

20,000

(20,000)

-

Interest payable

-

19

(19)

-

-

20,019

(20,019)

-

Loan

-

155,500

(155,500)

-

Interest payable

-

1,004

(1,004)

-

-

156,504

(156,504)

-

52,973

179,883

(176,523)

56,333

Interest payable Total Total Industrial Services Company Limited

Subsidiary

Total VSSL Enterprise Company Limited

Subsidiary

Total Grand total

20

Thai Factory Development Public Company Limited

Annual Report 2013

73


Short-term loan to related parties The subsidiary of the Company has short-term loan to related party under a promissory note, carrying interest at a rate of 8.4 percent per annum (31 December 2012: 8.4 percent per annum) and, due at call. Subsequently, during the first quarter of the current year, the subsidiary received a repayment of short-term loan and interest from such related party in full. Long-term loans to subsidiary The Company entered into loan agreements with a subsidiary, of which details are as follows: Credit line (1)

A credit line of Baht 90 million

which was fully drawn down, carrying

interest at a rate of 15 percent per annum, with principal shall to be repaid monthly, together with interest at a relaxed rate, in amounts not lower than Baht 1 million per month. The subsidiary must repay the loan to the Company at the earlier of 9 years from the first draw down date and the loan closing date. Credit line (2)

A credit line of Baht 135 million which was fully drawn down, carrying interest at a rate of 15 percent per annum. Interest is to be paid monthly at a relaxed rate. The agreement stipulates that the first payment of principal (2) is to be made in the month of the loan closing date, and full settlement is to be made within 3 years after the loan closing date.

Remark:

“the loan closing date� means the date that liabilities under the debt restructuring agreement (Note 23) and liabilities under the Baht 180 million loan agreement (entered into by Thai Factory Development Public Company Limited and Schubert holdings Pte. Ltd. with Siam Commercial Bank Plc.) are to have been fully repaid.

In addition, the Company granted long-term loan to subsidiaries in a form of the promissory note which has interest at the rate of 5.5 - 7.0 percent per annum and is repayable on demand without collateral. Short-term loan from subsidiary This represents a short-term loan from a subsidiary under a promissory note, carrying interest at a rate of MLR percent per annum, due at call and unsecured.

21

74

Annual Report 2013

Thai Factory Development Public Company Limited


Collateral for letter of guarantee The Company has used credit facilities of a subsidiary to issue bank guarantee of Baht 22 million for submission with the Privy Purse Bureau as described in Note 36.2.2 (6). Directors and management’s benefits During the year ended 31 December 2013 and 2012, the Company and its subsidiaries had employee benefit expenses of their directors and management as detailed below. (Unit: Thousand Baht)

Short-term employee benefits

Consolidated

Separate

financial statements

financial statements

2013

2012

2013

2012

46,336

49,523

42,037

44,343

872

1,827

872

1,827

47,208

51,350

42,909

46,170

Post-employment benefits Total

Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 36.4.1 to the financial statements. 8.

Cash and cash equivalents (Unit: Thousand Baht)

Cash

Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

460

421

325

325

Bank deposits

1,268,204

403,475

1,192,050

132,357

Total

1,268,664

403,896

1,192,375

132,682

As at 31 December 2013, bank deposits in saving accounts and fixed deposits carried interests between 0.5 and 2.8 percent per annum (2012: between 0.60 and 0.80 percent per annum).

22

Thai Factory Development Public Company Limited

Annual Report 2013

75


9.

Trade and other receivables (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated) Trade receivables - related parties (Note 7) Aged on the basis of due dates Past due Up to 3 months

-

-

850

391

3 - 6 months

-

-

197

-

139

139

139

139

139

139

1,186

530

1,927

2,109

-

-

Up to 3 months

9,732

6,613

1,648

1,408

3 - 6 months

1,655

5,289

35

404

63

2,414

56

-

6,387

5,142

189

-

Total

19,764

21,567

1,928

1,812

Less: Allowance for doubtful debts

(3,842)

(3,842)

-

-

Total trade receivables - unrelated parties, net

15,922

17,725

1,926

1,812

Total trade receivable - net

16,061

17,864

3,114

2,342

Others

573

345

-

-

Total other receivables - related parties

573

345

-

-

Others

3,806

1,000

3,801

43

Total other receivables - unrelated parties

3,806

1,000

3,801

43

Total other receivables

4,379

1,345

3,801

43

20,440

19,209

6,915

2,385

Over 12 months Total trade receivables - related parties Trade receivables - unrelated parties Aged on the basis of due dates Not yet due Past due

6 - 12 months Over 12 months

Other receivables - related parties

Other receivables - unrelated parties

Trade and other receivables - net

23

76

Annual Report 2013

Thai Factory Development Public Company Limited


10.

Project development costs (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012 (Restated)

Land and land improvement

1,788,880

1,589,067

1,622,710

1,589,067

Interest cost*

468,784

379,804

73,287

116,114

Construction in progress

346,534

2,151,455

333,817

284,228

Condominium units available for sale

2,220,051

-

-

-

Project development cost - net

4,824,249

4,120,326

2,029,814

1,989,409

*Capitalisation rates are 4.77 – 6.61% per annum

During the year ended 31 December 2013, the amount of borrowing costs capitalized by the Company and its subsidiary to their projects was approximately Baht 165 million (separate financial statements: Baht 29 million (2012: Baht 142 Million (separate financial statements: Baht 23 million)). The Company and its subsidiaries has mortgaged land for sale under the property development project and the construction thereon, totaling Baht 4,309 million (2012: Baht 3,897 million) (Separate financial statements: Baht 1,688 million and 2012: Baht 1,766 million), as collateral for bank overdraft facility and long-term loans from financial institutions. 11.

Restricted bank deposits This balance represents fixed deposits pledged with banks to secure credit facilities of long-term loans from financial institutions and letters of guarantee issued by the banks on behalf of the Company and its subsidiaries.

24

Thai Factory Development Public Company Limited

Annual Report 2013

77


12.

Investments in subsidiaries Details of investments in subsidiaries as presented in separate financial statements are as follows: (Unit: Thousand Baht) Dividend received Company’s name

Paid-up capital 2013

Shareholding percentage

2012

2013

2012

(Percent)

(Percent)

during the year

Cost 2013

2012

2013

2012 (Restated)

Total Industrial Services Company Limited SG Land Company Limited

100,000

100,000

100.00

100.00

97,550

97,550

196,721

-

100,450

100,450

49.91

49.91

45,523

45,523

-

-

701,000

-

100.00

-

496,901

-

-

-

639,974

143,073

196,721

-

(41,497)

(41,497)

-

-

598,477

101,576

196,721

-

VSSL Enterprise Company Limited Total Less: Allowance for diminution in value of investments in subsidiaries Net

The Company pledged the share certificates of SG Land Company Limited with a bank as collateral for credit facilities of long-term loans (credit line (2)). Investment in VSSL Enterprise Company Limited As mentioned in Note 2.2, on 1 April 2013, the Company acquired the ordinary shares of VSSL Enterprise Company Limited totaling 7,009,998 shares or 100% of registered and fully paid-up share capital of such company. The terms of payment are as follows: 1.

Deposit of Baht 100 million is to be paid as at the agreement date. (The Company paid the deposit in the year 2012.)

2.

An amount of Baht 200 million is to be paid within 3 days after the shareholders of the Company approve this transaction. (The Company made payments for ordinary shares amounting to Baht 170 million to the seller in March 2013 and Baht 30 million in April 2013.)

3.

The remainder of Baht 200 million is to be paid in a 6-month promissory note within 3 days after the shareholders of the Company approve this transaction. (The Company issued promissory note for a six-month period (due within 1 October 2013) amounting to Baht 200 million to the seller on 1 April 2013 which was the date the seller transferred shares to the Company.)

Subsequently, the Company requested to pay the promissory notes before their maturity and received the discount. The Company has paid Baht 49 million (net of discount) in June 2013 and the remaining balance in July 2013, totaling of Baht 197 million after discount. 25

78

Annual Report 2013

Thai Factory Development Public Company Limited


13.

Investment in equity securities available for sales (Unit: Thousand Baht) Consolidated financial statements Unrealised gain on changes in value of

Shareholding Fund’s name

Cost

percentage 2013

2012

(Percent)

(Percent)

13.08

15.46

2013

Carrying amount

investment 2012

2013

(Restated)

2012

2013

(Restated)

2012 (Restated)

MFC Industrial Investment Property and Leasehold Fund (M-II) Total

225,000

150,000

18,000

10,500

243,000

160,500

225,000

150,000

18,000

10,500

243,000

160,500

(Unit: Thousand Baht) Separate financial statements Unrealised gain on changes in value of

Shareholding Fund’s name

investment

Cost

percentage 2013

2012

(Percent)

(Percent)

13.08

-

2013

2012

2013

(Restated)

Carrying amount

2012

2013

(Restated)

2012 (Restated)

MFC Industrial Investment Property and Leasehold Fund I(M-II) Total

225,000

-

18,000

-

243,000

-

225,000

-

18,000

-

243,000

-

During the third quarter of the current year, the Company purchased unit fund of MFC Industrial Investment Property and Leasehold Fund (M-II) (“the Fund”) from Total Industrial Services Company Limited (a subsidiary) at a par value of Baht 10, totaling Baht 150 million. The Company paid Baht 12 million to a subsidiary and the remaining amount was the offset of debts between parties as follows: 1.

The amount of Baht 100 million was deposit for land which a subsidiary purchased from the Company (Note 7)

2.

The amount of Baht 38 million was proceeds of the transfer of land-purchasing rights amounting to Baht 16 million and outstanding debts (Note 7)

In addition, on 27 November 2013, the Company purchased 7.5 million unit fund of the Fund at a par value of Baht 10, totaling Baht 75 million, in accordance with the investment in the Fund agreement in Note 15; therefore, as at 31 December 2013, the Company has proportion in the Fund at 13.08 percent of the value of the Fund. During the current year, the Company received dividend amounting to Baht 8 million from MFC Industrial Investment Property and Leasehold Fund (M-II). 26

Thai Factory Development Public Company Limited

Annual Report 2013

79


14.

Leasehold rights (Unit: Thousand Baht) Separate financial Consolidated financial statements

statements

Prepaid rental

Prepaid rental

Leasehold

Leasehold

- Land

- Building

right - Land

right - Building

Leasehold Total

right - Land

Cost As at 1 January 2012

132,264

476,256

83,316

9,096

700,932

56,376

As at 31 December 2012

132,264

476,256

83,316

9,096

700,932

56,376

Addition

-

112

Disposal

-

-

132,264

476,368

28,039

Amortisation for the year

7,635

As at 31 December 2012 Amortisation for the year

-

112

-

-

(26,940)

-

56,376

9,096

674,104

56,376

112,332

12,143

4,784

157,298

6,879

30,803

2,314

618

41,370

1,414

35,674

143,135

14,457

5,402

198,668

8,293

7,635

30,952

2,235

616

41,438

1,414

-

-

-

(6,985)

-

43,309

174,087

9,707

6,018

233,121

9,707

As at 31 December 2012

96,590

333,121

68,859

3,694

502,264

48,083

As at 31 December 2013

88,955

302,281

46,669

3,078

440,983

46,669

As at 31 December 2013

(26,940)

Accumulated amortisation As at 1 January 2012

Depreciation on disposals As at 31 December 2013

(6,985)

Net Book Value

14.1 Separate financial statements The Company has leased land from the Privy Purse Bureau to construct a residential building (Mahadlekluang project). The residential building is to be the property of the Privy Purse Bureau from the commencement of construction, and the Company has to comply with conditions stipulated in the lease agreement, as stated in Note 36.2.2. In 2008, the Company entered into an agreement with an overseas investor holding shares of a subsidiary (SG Land Company Limited), whereby the leasehold rights and other rights of the Mahadlekluang project are to be sold to the subsidiary for a total of Baht 280 million. The Company and the overseas investor each hold equal investments of 50%, or equivalent to Baht 140 million each. The Company has received partial payment from the subsidiary amounting to Baht 130 million. The Company recorded such amount as a liability under the caption of deposit from sale of project in the statement of financial position. As at 31 December 2012, the Company has placed land leasehold rights received from the Office of Privy Purse with total net book value of Baht 48 million as collateral to secure longterm loans from financial institutions (Credit line (1)), as stated in Note 22. Later, during the year 2013, the Company made repayment of such loans in full and redeemed the collateral.

27

80

Annual Report 2013

Thai Factory Development Public Company Limited


14.2 Subsidiary 1)

The subsidiary records leasehold rights to land that it has leased since 1993 from the Privy Purse Bureau as prepaid rental - land. The subsidiary constructed an office building for rent on the leased land and the office building has been the property of the lessor since the commencement of the construction. The subsidiary has received the right to use the office building for rent until the end of the lease term, and therefore has recorded value of the office building as prepaid rental - building.

2)

The subsidiary received leasehold rights to land from a company to construct an office building for rent, and leasehold rights to land from natural persons to construct a factory for lease, as stated in Note 15.

The subsidiary has placed the land leasehold rights under agreements with the Privy Purse Bureau, with total net book values as at 31 December 2013 of Baht 318 million (2012: Baht 349 million), as collateral to secure debt restructuring liabilities. 15.

Investment properties The net book value of the investment properties as at 31 December 2013 and 2012 is presented below. (Unit: Thousand Baht) Consolidated financial statements Land and factory building for lease

Office building Total

for lease

31 December 2013 Cost

3,001

339,944

342,945

(1,509)

(109,247)

(110,756)

1,492

230,697

232,189

Cost

150,107

338,550

488,657

Less Accumulated depreciation

(33,535)

(90,117)

(123,652)

Net book value

116,572

248,433

365,005

Less Accumulated depreciation Net book value 31 December 2012

The subsidiary operates its factory rental business on land leased from the Industrial Estate Authority of Thailand and natural persons, as stated in Note 36.2.3, and office rental business on land leased from a company, as stated in Note 36.2.4.

28

Thai Factory Development Public Company Limited

Annual Report 2013

81


A reconciliation of the net book value of investment properties for the years 2013 and 2012 is presented below. (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2012

365,005

708,460

-

204,774

1,612

495

-

-

-

90,021

-

90,021

(110,225)

(400,110)

-

(290,311)

Depreciation charged

(24,203)

(33,861)

-

(4,484)

Net book value at end of year

232,189

365,005

-

Net book value at beginning of year Acquisition of assets/adjustment Transfer from project development costs Disposals - net book value

2013

2012

-

The fair value of the investment properties as at 31 December 2013 and 2012 stated below:

(Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2012

2013

Land and factory building for rent

350,000

590,000

-

-

Office building for rent

946,000

946,000

-

-

2012

The fair values of the above investment properties have been determined based on valuations performed by an accredited independent valuer. The fair value of the land and factory building for rent and office building for rent has been determined using the income approach. The main assumptions used in the valuation are yield rate, inflation rate, longterm vacancy rate and long-term growth real rates. The subsidiary have pledged investment properties amounting to approximately Baht 232 million (2012: Baht 365 million) as collateral against debt restructuring liabilities.

29

82

Annual Report 2013

Thai Factory Development Public Company Limited


Sale of assets to MFC Industrial Investment Property and Leasehold Fund in 2013 On 8 August 2013, the Company and its subsidiary entered into an agreement with MFC Industrial Investment Property and Leasehold Fund (“the Fund”) as follows: 1.

The

Company

and

Total

Industrial

Services Company Limited (a subsidiary) entered into a sales and purchase agreement whereby the Company agreed to sell assets consisting of property and a factory building in TFD industrial Park and a factory building in Kingkaew Project to the Fund at a price of Baht 460 million (inclusive of VAT) and Baht 265 million (inclusive of VAT), respectively. The Company and its subsidiary registered the transfer of the ownership of the assets to the Fund in December 2014. 2.

Total Industrial Services Company Limited (a subsidiary) entered in to a land lease agreement to grant the Fund land leasehold rights in Kingkaew Project at the consideration of Baht 25 million (inclusive of VAT). On 4 December 2013, the Fund has entered in to a land lease agreement with a group of owners.

3.

The Company and a subsidiary have agreed to invest in an addition of unit trusts of the Fund as follows: 3.1 The Fund has planned to increase the unit trust of the Fund to Baht 750 million with a purpose to buy a property and a factory building located in TFD industrial Park and Kingkaew Project and received the transfer of leasehold right of Kingkaew Project. The Company and a subsidiary agreed to pay the increase of unit trust to the Fund amounting to

Baht 15 million and Baht 10 million,

respectively. The Company and a subsidiary already paid an additional of unit trusts to the Fund. 3.2 An agreement regarding compensation for property and factory building in a plot of which a sublease agreement has not been made or a sublease has been made but rental or service fee has not started or has started but the remaining lease period is less than 6 months. The Company and a subsidiary agreed to guarantee the minimum rental rate and service fee for these assets for a period of three years from the date the property ownership was transferred. 3.3 An agreement relating to investment in unit trusts of the Fund, whereby the Company or its subsidiary agree to invest in unit trusts not less than 10% of the increase value in unit trust, equivalent to Baht 75 million (7.5 million units). As at 31 December 2013, the Company made an investment in the Fund, equivalent to 13.08 % of the value of the Fund’s unit trusts. The Company recorded a gain of Baht 18 million on the measurement of its investment in the unit trusts as “Gain on changes in value of available-for-sale investment”, in other comprehensive income for the year (Note 13). 30

Thai Factory Development Public Company Limited

Annual Report 2013

83


4.

An amendment agreement of Property manager appointment agreement No. 1 made with the Fund whereby the Fund appointed the Company the Management Company of the increase of unit trusts to seek benefits from this fund. In this regard, the Company agreed to place additional deposit of Baht 0.5 million with the Fund as a performance guarantee the Management Company.

On 23 December and 27 December 2013, the Fund issued a letter to inform the result of acceptance of construction of the TFD Industrial Estate with significant details as follows: 1)

An agreement related to property and a factory building under correction, addition, repair or refurbishment work. According to the asset transfer agreement, the Company agreed to place a Baht 79 million, Baht 4 million deducted from the sale value of land and factory building and Baht 75 million paid in cash, security with the Fund to guarantee the asset transfer. The Fund will return this money to the Company when the above mentioned work is completed.

2) The Company agreed to guarantee of the construction for the period of 5 years after the date of transfer of the factory building to the Fund. The Company estimated the cost of minimum revenue guarantee for leasing in No. 3.2, and guarantee of the construction which states that the Company must pay to Fund at Baht 6 million and record this amount in cost of sale in profit and loss statement. The Company had gain from sales of land and factory building amounting to Baht 222 million (net form related selling expenses) and realised it in profit or loss in the current year’s financial statements. The subsidiary estimated the cost of minimum revenue guarantee for leasing in No. 3.2, which states that the subsidiary must pay to Fund at Baht 2 million and record this amount as a deduction against gain from sale of investment property. The Company had gain from sales of assets and transfer of land leasehold right amounting to Baht 134 million (net form related selling expenses) and realised it in profit or loss in the current year’s financial statements.

31

84

Annual Report 2013

Thai Factory Development Public Company Limited


Sale of assets to MFC Industrial Investment Property and Leasehold Fund in 2012 On 11 December 2012, the Company and its subsidiary entered into a sales and purchase agreement whereby the Company and its subsidiary agreed to sell assets consisting of property and a factory building in TFD industrial Park, Navanakorn Industrial Promotion Zone and Laem Chabang Industrial Park to MFC Industrial Investment Property and Leashold Fund (“the Fund�) at a price of Baht 845 million (inclusive of VAT). The Company and its subsidiary registered the transfer of the ownership of the assets to the Fund on 18 December 2012. Furthermore, Total Industrial Services Company Limited (a subsidiary) entered into a contract to transfer land leasehold rights to enable the Fund to obtain the right to rent property in Laem Chabang Industrial Park for a total consideration of Baht 125 million (inclusive of VAT). On 21 December 2012, the Fund entered into a land lease agreement with the Industrial Estate Authority of Thailand for the term of approximately 20 years. Moreover, the Fund executed another contract with the Industrial Estate Authority of Thailand to rent property belonging to the Port Authority of Thailand for a term of approximately 6 years. The Company and its subsidiary have entered into an undertaking agreement with the Fund, agreeing to the following: 1)

An undertaking by the Company and its subsidiary regarding the land leasehold rights under the sublease agreement with the Port Authority of Thailand, whereby the subsidiary agrees to act as coordinator to enable the Fund to extend the sublease agreement with the Port Authority of Thailand by a period such that it at least matches the term of the lease with the Industrial Estate Authority of Thailand, and the Company and its subsidiary agree to be jointly and severally responsible for compensating the Fund for losses totaling Baht 10 million if the sublease agreement cannot be extended.

2)

A specific undertaking regarding compensation for property and factory building plots under construction and properties with plots that have no sublease agreements, whereby the Company agreed to guarantee the Fund minimum rental rates and service fees for these assets for a period of three years from the date from the date property ownership was transferred.

3)

An agreement regarding the property and factory building under construction under the conditions of the asset transfer per the above agreement, whereby the Company agrees to place a Baht 24 million security with the Fund to guarantee the asset transfer.

4)

An agreement relating to investment in unit trusts of the Fund, whereby the Company or its subsidiary agree to invest not less than Baht 150 million in unit trusts (15 million units) on the date that they are issued by the Fund. 32

Thai Factory Development Public Company Limited

Annual Report 2013

85


The Company has estimated that the cost of their guaranteeing a minimum leasing revenue, as mentioned under 2), which the Company and its subsidiary must pay to Fund will total Baht 7 million (separate financial statements: Baht 6 million) and recorded this amount as a deduction against gain from sale of investment assets. The Company and its subsidiaries had gains from the sale of assets and the transfer of leasehold rights in TFD Industrial Park, Navanakorn Industrial Promotion Zone and Laem Chabang Industrial Park relating to these three factory projects totaling Baht 529 million (net of related selling expense) (separate financial statements: Baht 302 million) and realised these in profit or loss in the year 2012 financial statements. Moreover, the Company and its subsidiary entered into an agreement to pay the Fund’s establishment costs and the costs of appointing MFC Asset Management Public Company Limited (“the Management Company”) as management company. The Company and its subsidiary agreed to support investment in a total of 15 million fund units in order to be able to exercise its rights to ensure the appointment of the Management Company and its reappointment as management company for at least five consecutive years from the date that the Fund is established. In the event that the Company and its subsidiary take any action to encourage other parties to assume the role of the Management company during this period, they are to pay compensation of Baht 10 million to the Management Company. On 11 December 2012, the Company was appointed as the manager of the Fund’s property for a period of five years, from the effective date of the contract. The Company will receive monthly compensation for management of the property as stated in the contract and must find sub-lessees to enter into agreements to lease the assets under the scheme from the Fund, at the specified rates. As stated in Note 13 to the financial statements, the subsidiary has made investment in the Fund equal to 15.46% of the value of the Fund’s unit trusts. The subsidiary recorded a gain of Baht 11 million on the measurement of its investment in the unit trusts as “Gain on changes in value of available-for-sale investment”, in other comprehensive income for the year 2012.

33

86

Annual Report 2013

Thai Factory Development Public Company Limited


16.

Equipment (Unit: Thousand Baht) Consolidated financial statements Improvement of

Furniture,

leasehold office

fixtures and

building

Motor vehicles

office equipment

Total

Cost As at 1 January 2012

6,596

32,243

28,830

67,669

Additions

12

4,576

768

5,356

Disposals

-

-

Transfers

-

(117)

(117)

(6,207)

6,207

-

6,608

30,612

35,688

72,908

Additions

711

467

747

1,925

Disposals

-

-

Transfers

-

-

46,238

46,238

7,319

31,079

82,654

121,052

6,590

17,814

25,059

49,463

Depreciation for the year

5

2,760

1,897

4,662

Depreciation on disposals

-

-

As at 31 December 2012

6,595

20,574

26,910

54,079

Depreciation for the year

3

3,356

2,914

6,273

Depreciation on disposals

-

-

6,598

23,930

As at 31 December 2012

As at 31 December 2013

(19)

(19)

Accumulated depreciation: As at 1 January 2012

As at 31 December 2013

(46)

(4)

(46)

(4)

29,820

60,348

Net book value: As at 1 January 2012

6

14,429

3,771

18,206

As at 31 December 2012

13

10,038

8,778

18,829

As at 31 December 2013

721

7,149

52,834

60,704

Depreciation for the year 2012 (All included in an administrative expenses)

4,662

2013 (All included in an administrative expenses)

6,273

34

Thai Factory Development Public Company Limited

Annual Report 2013

87


(Unit: Thousand Baht) Separate financial statements Improvement of

Furniture, fixtures

leasehold office

and office Motor vehicles

building

equipment

Total

Cost As at 1 January 2012

4,521

27,323

11,936

43,780

Additions

12

4,576

704

5,292

Disposals

-

-

Transfers

-

(117)

(117)

(6,207)

6,207

-

4,533

25,692

18,730

48,955

Additions

-

467

693

1,160

Transfers

-

-

46,238

46,238

4,533

26,159

65,661

96,353

4,521

13,482

9,164

27,167

Depreciation for the year

1

2,420

1,538

3,959

Depreciation on disposals

-

-

As at 31 December 2012

4,522

15,902

10,658

31,082

Depreciation for the year

1

3,107

2,668

5,776

As at 31 December 2013

4,523

19,009

13,326

36,858

-

13,841

2,772

16,613

As at 31 December 2012

11

9,790

8,072

17,873

As at 31 December 2013

10

7,150

52,335

59,495

As at 31 December 2012

As at 31 December 2013 Accumulated depreciation: As at 1 January 2012

(44)

(44)

Net book value: As at 1 January 2012

Depreciation for the year 2012 (All included in an administrative expenses)

3,959

2013 (All included in an administrative expenses)

5,776

35

88

Annual Report 2013

Thai Factory Development Public Company Limited


As at 31 December 2013, the Company had vehicles and equipment under finance lease agreements with net book values amounting to Baht 11 million (2012: Baht 14 million). As at 31 December 2013, certain improvement of leasehold office building and equipment items have been fully depreciated but are still in use. The gross carrying amount before deducting accumulated depreciation of those assets amounted to approximately Baht 45 million (2012: Baht 50 million) (The Company only: Baht 22 million, 2012: Baht 22 million). 17.

Short-term loans from financial institutions (Unit: Thousand Baht)

Interest rate

Bill of exchange

Consolidated

Separate

financial statements

financial statements

(percent per annum)

2013

2012

2013

2012

MLR-1%, 4.7-5.3%

2,560,200

504,007

2,030,200

234,000

2,560,200

504,007

2,030,200

234,000

Bank overdrafts facility of the Company are secured by part of the project development of the Company. Such short-term loans are unsecured bill of exchange. However, the Company has provided guarantee for a subsidiary’s issuance and sale of bill of exchange as stated in Note 36.4.1. A subsidiary has mortgaged most of its land and buildings held for lease, assigned the rights to benefits under the insurance policies covering its buildings held for lease, and assigned the rights under land and building lease agreements with the Industrial Estate Authority of Thailand to its lenders, to secure bank overdrafts facilities and long-term loans from financial institutions. Later, in December 2012, the subsidiary cancelled the bank overdrafts facilities and redeemed all collaterals. 18.

Short-term loans from other individuals The Company has short-term loans from other individuals in the form of promissory notes, carrying interest at a rate of 5.1 percent per annum (2012: 7.5 percent and 10 percent per annum) and due within January and April 2014. These loans are unsecured. During the fourth quarter of the current year, the Company repayment such loans in full.

36

Thai Factory Development Public Company Limited

Annual Report 2013

89


19.

Trade and other payables (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2012

2013

2012

(Restated) Trade payables Trade accounts payable - unrelated 14,024

20,245

6,039

16,964

104

-

104

-

75,143

110,268

483

483

522

389,491

-

389,491

89,793

520,004

6,626

406,938

390,033

314,955

6,860

28,413

Retention for constructors

24,443

33,795

12,097

12,695

Accrued expenses

75,054

69,641

57,417

47,922

6,172

29,610

2,280

23,896

Total other payables

495,702

448,001

78,654

112,926

Total trade and other payables

585,495

968,005

85,280

519,864

parties Trade accounts payable - related parties (Note 7) Accounts payable - construction Accounts payable - land Total trade payables Other payables Advance received from customers

Other

20.

Debenture (Unit: Thousand Baht) Consolidated / Separate financial statements 2013

2012

Senior and unsecured debenture 1/2556

500,000

-

Senior and unsecured debenture 2/2556

850,000

-

Less: Unamortised cost relating to the issuance of debenture Debenture - net

(5,452) 1,344,548

-

37

90

Annual Report 2013

Thai Factory Development Public Company Limited


Movement in debenture account during the year ended 31 December 2013 are summarised below. (Unit: Thousand Baht) Consolidated / Separate financial statements Balance as at 1 January 2013

-

Issue debenture during the year

1,342,690 1,858

Add: Amortisation of deferred debenture issuing costs

1,344,548

Balance as at 31 December 2013

The Extraordinary General Meeting of the Company’s shareholders held on 24 June 2013 passed resolutions to approve the issue and offer of senior and unsecured debenture not more than Baht 3,500 million with term to maturity of not more than 5 years to institutional investors, private investors and the public. On 3 July 2013, the Company issued and offered 500,000 the senior and unsecured secured debenture#1 with a par value of Baht 1,000 each, or a total value of Baht 500 million. The debenture mature on 3 July 2014, bear interest at a rate of 5.3% per annum and pay interest every 6 months. Subsequently on 22 November 2013, the Company issued and offered 850,000 units of senior unsecured debentures #2 with a par value of Baht 1,000 each, or a total of Baht 850 million. The debentures mature on 22 November 2014, bearing interest at a rate of 5.5% per annum that is paid in every 3 months. The balance of the debenture presented net of deferred debenture issuing costs. Under the debenture agreement, there are normal covenants relating to various matters as required in the normal course of business. 21.

Liabilities under finance lease agreements (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013 Liabilities under finance lease agreements Less: Deferred interest expenses Total Less: Portion due within one year

7,863 (671)

2012 12,270 (1,373)

2013 7,844 (670)

2012 12,224 (1,369)

7,192

10,897

7,174

10,855

(3,450)

(3,712)

(3,432)

(3,687)

3,742

7,185

3,742

7,168

Liabilities under finance lease agreements - net of current portion

38

Thai Factory Development Public Company Limited

Annual Report 2013

91


The Company and subsidiaries has entered into finance lease agreements with leasing companies to lease motor vehicles, truck, backhoe loaders and photocopying machines for use in its operations, whereby it is committed to pay rental on a monthly basis. The average term of the agreements is 48 months. Future minimum lease payments required under the finance lease agreements were as follows: (Unit: Thousand Baht) Consolidated financial statements Less than 1 year 2013

1 - 4 years

2012

2013

(Restated) Future minimum lease payments Deferred interest expenses

3,880 (430)

4,408

2012

2013

2012

(Restated) 3,983

(696)

Total

(241)

7,862

(Restated) 7,863

(677)

12,270

(671)

(1,373)

Present value of future minimum lease payments

3,450

3,712

3,742

7,185

7,192

10,897

(Unit: Thousand Baht) Separate financial statements Less than 1 year 2013

1 - 4 years

2012

2013

(Restated) Future minimum lease payments Deferred interest expenses

3,861 (429)

4,380 (693)

2012

Total 2013

(Restated) 3,983 (241)

7,844 (676)

2012 (Restated)

7,844 (670)

12,224 (1,369)

Present value of future minimum lease payments

3,432

3,687

3,742

7,168

7,174

10,855

39

92

Annual Report 2013

Thai Factory Development Public Company Limited


22.

Long-term loans from financial institutions (Unit: Thousand Baht) Credit facilities (Million Baht)

Consolidated financial statements

Remaining amount as at Credit No.

31 December 2013

Amount

2013

2012 (Restated)

1

500

-

-

10,533

2

90

-

18,347

30,912

3

1,796

573

322,162

141,217

4

100

-

-

99,739

5

990

840

150,000

-

6

1,550

95

558,716

1,452,570

5,026

1,508

1,049,225

1,734,971

Total Less : Current portion

(894,223)

Long-term loans - net of current portion

155,002

(1,209,920) 525,051

(Unit: Thousand Baht) Credit facilities (Million Baht)

Separate financial statements

Remaining amount as at Credit No.

31 December 2013

Amount

2013

2012

1

500

-

-

10,533

2

90

-

18,347

30,912

3

1,796

573

322,162

141,217

4

100

-

-

99,739

5

990

840

150,000

-

3,476

1,413

490,509

282,401

(335,507)

(264,047)

155,002

18,354

Total Less: Current portion

Long-term loans - net of current portion

40

Thai Factory Development Public Company Limited

Annual Report 2013

93


Credit line (1)

This is a Baht loan from a local bank under a total facility of Baht 500 million. On 25 February 2011, the Company entered into a memorandum with the bank to additionally amend the repayment conditions as follows: (1)

Loan is Baht 40 million and accrued interest under the agreement is Baht 5 million. On the memorandum date, the Company repaid principal of Baht 5 million and the interest of Baht 0.2 million. Repayment of the remaining principal was extended to be made in 30 monthly installments, commencing from the memorandum date. Principal and interest payments of at least Baht 1 million made in each installment and, the interest rate is MLR, commencing from March 2011. The loan must be repaid in full within August 2013.

(2)

The fee for facility cancellation is Baht 9 million and the fee for interest default is Baht 0.2 million. The bank will release an accrued interest in (1) amount of Baht 5 million, facility cancellation fee and interest default fee in (2) to the Company, if the Company complies with all conditions in (1).

In March 2013, the Company repaid the loan in full and redeemed the collateral. Credit line (2)

On 30 April 2008, the Company had a loan facility of Baht 90 million from a local bank. The same facility is also used by a joint investor giving a total amount of Baht 180 million (which has been drawn down in full). It carries interest at MLR - 1% per annum and principal and interest are to be paid together, in monthly installments of Baht 1 million, commencing from May 2008. The loan must be fully repaid within May 2017. Such loan was secured by the pledge of 10,022,950 ordinary shares of a subsidiary with a par value of Baht 5 each held by the Company, and by such subsidiary as a joint receivable.

Credit line (3)

On 9 June 2011, the Company received a loan facility of Baht 1,796 million from a local bank (Baht 1,223 million of which was drawn down), carrying interest at MLR per annum. The interest must be paid monthly and principal is to be paid using funds from the sale of real estate that is released from mortgage, in accordance with the agreement conditions. The loan must be repaid in full within June 2017.

41

94

Annual Report 2013

Thai Factory Development Public Company Limited


Such loan was secured by the following: (1)

The mortgage of land with construction thereon and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender.

(2)

The pledge of the Company’s rights to the fixed deposit with the bank.

Credit line (4)

On 20 December 2011, the Company received a loan facility of Baht 100 million from a local bank (fully drawn down), carrying interest at MLR+1%

per annum. The interest is to be paid monthly, and the loan must be fully settled within June 2013.

Such loan was secured by the following: (1)

The mortgage of land with construction thereon and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender.

(2)

The pledge of the Company’s rights to promissory notes with financial institutions.

(3)

Letter of guarantee from the Executive Chairman.

In February 2013, the Company repaid the loan in full and redeemed the collateral. Credit line (5)

On 26 December 2012, the Company received a loan facility of Baht 990 million from a local bank (Baht 150 million has been drawn down), carrying interest at MLR+0.5% per annum. The principal is to be paid using funds from the sale of condominium units, in accordance with the agreement conditions. The loan must be repaid in full within December 2017. Such loan was secured by the following: (1)

The mortgage of land with construction thereon and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender.

(2)

Letter of guarantee from the Executive Chairman.

42

Thai Factory Development Public Company Limited

Annual Report 2013

95


Credit line (6)

On 25 March 2010, the subsidiary received a loan facility of Baht 1,550 million from a local bank (Baht 1,455 million has been drawn down), carrying interest at SPRL+ risk rate 1.25% per annum. The principal is to be paid using funds from the sale of condominium units, in accordance with the agreement conditions. Such loan was secured by the following: (1)

The mortgage of land with construction thereon and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender.

(2)

Letter of guarantee from the Executive Chairman.

Most loan agreements contain certain covenants and restrictions among other things, require the company to maintain certain financial ratio in normal course of business, make dividend payment and maintain the shareholder structure. 23.

Debt restructuring payable (Unit: Thousand Baht) Consolidated financial statements 2013 Debt restructuring payable Less: Current portion Debt restructuring payable - net of current portion

2012

66,711

111,095

(47,180)

(44,384)

19,531

66,711

A subsidiary has made a debt restructuring agreement with a financial institution at interest rate MLR-1% per annum whereby principal and interest payment of Baht 4 million is to be made monthly and it must be fully paid within April 2017. Such loan was guaranteed by the pledge of leasehold rights and mortgage of office for rent of the subsidiary, including the assignment of the beneficiary rights under the insurance policies covering these assets to the lender.

43

96

Annual Report 2013

Thai Factory Development Public Company Limited


24.

Long-term loan from related party and interest payable (Unit: Thousand Baht) Consolidated financial statements 2013

2012 (Restate)

Long-term loan from related party

146,272

235,014

Interest payable

167,097

145,793

Total

313,369

380,807

Less: Current portion

(13,333)

(46,132)

300,036

334,675

Long-term loan from related party and interest payable net of current portion

On 30 April 2008, a subsidiary entered into loan agreements with an overseas related party with details as follows: Credit line (1)

A loan facility of Baht 90 million, which is fully drawn down, carries the interest at 15 percent per annum. The principal and interest must be repaid monthly with interest charged at a relaxed rate. Payments must be at least Baht 1 million per month. As stipulated in the agreement, such loan must be repaid at the earlier of 9 years after the first draw down date and the loan closing date.

Credit line (2)

A loan of Baht 135 million, drawn down in full, carries the interest at 15 percent per annum, and to be monthly repaid at a relaxed rate. According to the agreement, the first principal payment is to be made in the month of the loan closing date and full repayment is to be made within 3 years after the loan closing date.

Credit line (3)

The subsidiary obtained a loan of Baht 140 million (Baht 120 million drawn down) to use in acquiring Company’ leasehold rights of Mahadlekluang project. The loan carries interest at a rate of 15% per annum, to be paid on a monthly basis. As stipulated in the agreement, payment conditions are the same as those of credit line (2).

44

Thai Factory Development Public Company Limited

Annual Report 2013

97


Remark: “the loan closing date� means the date that liabilities under the debt restructuring agreement (Note 23) and liabilities under loan agreements of Baht 180 million (entered by Thai Factory Development Public Company Limited and Schubert Holdings Pte. Ltd. with Siam Commercial Bank Plc.) have fully been repaid. There was no collateral for such long-term loans. 25.

Provision for long-term employee benefits Provision for long-term employee benefits, which is compensations on employees’ retirement, was as follows: (Unit: Thousand Baht)

Defined benefit obligation at beginning of year Current service cost and interest cost

Consolidated

Separate

financial statements

financial statements

2013

2012

2013

2012

10,580

10,162

8,684

8,671

1,950

1,760

1,575

1,263

-

Benefits paid during the year

(1,342)

-

(1,250)

Defined benefit obligation at end of year

12,530

10,580

10,259

8,684

Unrecognised past service costs

(3,588)

(5,382)

(3,015)

(4,522)

8,942

5,198

7,244

4,162

Provisions for long-term employee benefits at end of year

Long-term employee benefit expenses included in the profit or loss was as follows: (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

Current service cost and interest cost

2,945

1,760

1,575

1,263

Past service costs recognised during the year

1,794

1,794

1,507

1,507

Total expense recognised in profit or loss

4,739

3,554

3,082

2,770

4,739

3,554

3,082

2,770

Line items under which such expenses are included in profit or loss Administrative expenses

45

98

Annual Report 2013

Thai Factory Development Public Company Limited


Principal actuarial assumptions at the valuation date were as follows: Consolidated financial statements

Separate financial statements

2013

2012

2013

2012

(% per annum)

(% per annum)

(% per annum)

(% per annum)

Discount rate

4%

4%

4%

4%

Future salary increase rate

5%

5%

5%

5%

0% - 15%

0% - 15%

0% - 6%

0% - 6%

Staff turnover rate (depending on age and level of staffs)

Amounts of defined benefit obligation for the current and previous two year are as follows: (Unit: Thousand Baht) Defined benefit obligation

26.

Consolidated

Separate

financial statements

financial statements

Year 2013

8,942

7,224

Year 2012

5,198

4,162

Year 2011

2,986

2,642

Long-term provisions (Unit: Thousand Baht) Consolidated

Separate

financial statement

financial statement

1 January 2012

9,621

3,898

Increase during the year

1,404

1,404

(11,025)

(5,302)

Reversal of provisions 31 December 2012

-

-

Increase during the year

2,373

2,373

31 December 2013

2,373

2,373

Demolition cost The Company and its subsidiary recognised a provision for demolition costs associated with factory buildings for rent owned by the Company and its subsidiary because they were committed to demolish the factory buildings that were subleased in accordance with land lease agreement with the Industrial Estate Authority of Thailand.

47

Thai Factory Development Public Company Limited

Annual Report 2013

99


In December 2012, the Company and its subsidiary sold factory buildings for rent to the Fund as mentioned in Note 15. Therefore, the demolish task was transferred to the Fund. The Company and its subsidiary thus reversed such provision in the profit or loss for the year 2012. Provision of construction guarantee for factory building projects As mentioned in Note 15, in December 2013, the Company has estimated a provision of construction guarantee for factory building projects paid to the Fund for 5 years amounting to Baht 2.3 million. 27.

Share Capital On 18 April 2013, the 2012 Annual General Meeting of Company’s shareholders approved a change in the registered share capital of the Company as follows:

Previous

Shares

Amount per share

Register share capital

(Thousand shares)

(Baht)

(Thousand Baht)

902,880 (1)

Decrease Increase New

1 1

902,880 (1)

361,150

1

361,150

1,264,029

1

1,264,029

In addition, the Company has registered the paid up capital as follows: Shares

Amount per share

Paid up capital

(Thousand shares)

(Baht)

(Thousand Baht)

Previous

789,530

1

789,530

Increase from dividend paid

180,558

1

180,558

Increase from exercise of warrant

113,412

1

113,412

1,083,500

1

1,083,500

New

The Company registered the change in its registered and paid up share capital with the Ministry of Commerce in January, April, May, July and October 2013.

48

100

Annual Report 2013

Thai Factory Development Public Company Limited


28.

Warrants to purchase ordinary shares Details of warrants are as follows: TFD-W1

TFD-W2

Number of warrants granted (Units)

122,401,965

180,557,606

Life of warrants

10 years from the issue date

3 years from the issue date (17 May 2013)

Date of exercise

Exercisable in every three months with the first

The last working date of the Company of each quarter

exercise date on 30 June 2003 and the final exercise date on 1 April 2013 Exercise price per 1 ordinary share (Baht)

1.00

5.00

Exercise ratio (warrant to ordinary share)

1:1.188

1:1

On 1 April 2013, the Company received payment totaling Baht 45,089,102 from holders of 37,953,940 warrants (TFD-W1) who exercised their final rights to buy the Company’s 45,089,102 newly issued ordinary shares at the price of Baht 1 per share. The Company registered its share capital with the Ministry of Commerce on 3 April 2013. On June 2013, the Company received payment from holders who exercised their rights to buy the Company’s 56,261 newly issued ordinary shares (TFD-W2) at the price of Baht 5 per share, totaling Baht 281,305. The Company registered the increase of Baht 56,261 in its capital with the Ministry of Commerce on 7 July 2013. On September 2013, the Company received payment from holders who exercised their rights to buy the Company’s 90,380 newly issued ordinary shares (TFD-W2) at the price of Baht 5 per share, totaling Baht 451,900. The Company registered the increase of Baht 90,380 in its capital with the Ministry of Commerce on 2 October 2013. In December 2013, no warrant (TFD-W2) was exercised. As at 31 December 2013, there were a total of 180,410,965 outstanding unexercised warrants (TFD-W2). 29.

Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. 49

Thai Factory Development Public Company Limited

Annual Report 2013

101


30.

Expenses by nature Significant expenses by nature are as follows: (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated)

(Restated)

Purchase of land, construction in progress and project development cost Changes in project development costs

31.

980,356

1,826,367

357,979

1,402,918

(703,923)

(1,620,385)

(40,405)

(1,160,936)

Salaries and wages and other employee benefits

41,820

38,731

26,799

27,422

Depreciation and amortisation expenses

71,843

79,866

7,191

9,858

Director and management benefits

56,246

52,613

50,106

44,343

Rental expenses from operating lease agreements

20,498

14,458

3,578

2,903

Income tax Income tax expenses for the years ended 31 December 2013 and 2012 are made up as follows: (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated)

(Restated)

Current income tax: Current income tax charge

72,964

144,554

45,432

100,133

Deferred tax: Relating to origination and reversal of temporary differences Effects of changes in the applicable tax rates

(30,796)

7,685

(1,406)

746

-

1,971

-

443

42,168

154,210

44,026

101,322

Income tax expense reported in the statement of comprehensive income

50

102

Annual Report 2013

Thai Factory Development Public Company Limited


The amounts of income tax relating to each component of other comprehensive income for the years ended 31 December 2013 and 2012 are as follows: (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2012

2013

2012

(Restated)

(Restated)

Deferred tax relating to gain on change in value of available-for-sale investments

1,500

2,100

3,600

-

Reconciliation between income tax expenses and the product of accounting profit multiplied by the applicable tax rates for the years ended 31 December 2013 and 2012 (Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated) Accounting profit before tax

Applicable tax rate

(Restated)

196,028

657,209

414,687

430,542

20%

23%

20%

23%

39,206

151,158

82,937

99,025

-

1,971

-

443

Accounting profit before tax multiplied by applicable tax rate Effects of changes in the applicable tax rates Effects of: Dividend income which exempt income tax expense Non-deductible expenses Additional expense deductions allowed Others Total

(1,563)

-

(40,907)

-

5,620

4,769

634

588

(3,668)

(7,106)

(30)

2,574

3,418

1,392

1,272

2,963

1,081

(38,911)

1,854

42,169

154,210

(6)

Income tax expenses reported in the statement of comprehensive income

44,026

101,322

51

Thai Factory Development Public Company Limited

Annual Report 2013

103


The components of deferred tax assets and deferred tax liabilities are as follows: (Unit: Thousand Baht) Statements of financial position Consolidated financial statements

Separate financial statements

As at

As at

As at

As at

As at

As at

31 December

31 December

1 January

31 December

31 December

1 January

2013

2012

2012

2013

2012

2012

(Restated)

(Restated)

Deferred tax assets Allowance for doubtful accounts

768

1,921

768

-

-

-

Impairment loss

-

-

-

Unrealised gain

30,241

-

-

-

-

2,210

-

-

-

11,415

14,244

15,567

-

-

-

1,788

1,058

635

1,449

832

566 897

Accumulated depreciation Investment property Provision for long-term employee benefits Long term provision Unused tax loss Others Total

1,773

180

2,212

1,753

1,099

14,229

13,442

23,276

-

-

-

415

-

108

-

-

107

60,629

30,845

42,566

3,202

1,931

3,780

3,600

2,100

-

3,600

-

-

-

876

3,228

-

-

945

Deferred tax liabilities Unrealised gain on available-forsale investments Accumulated depreciation change in useful lives of assets Effect of depreciation expenses between account base and tax base of the financial lease Total

312

448

160

312

444

159

3,912

3,424

3,388

3,912

444

1,104

In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent from 2013. In addition, in order to comply with the resolution of the cabinet, in December 2011, the decreases in tax rates for 2012 - 2014 were enacted through a royal decree. The Company has reflected the changes in the income tax rates in its deferred tax calculation, as presented above. 32.

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, after adjusting the number of ordinary shares to reflect the impact of the stock dividend as discussed in Note 35 to the financial statements. The prior period’s basic earnings per share has been recalculated as if the stock dividend and the change in number of ordinary shares had been distributed and incurred at the beginning of the earliest period reported.

52

104

Annual Report 2013

Thai Factory Development Public Company Limited


Diluted 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 plus the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. In addition, the number of ordinary shares reflect the impact of the stock dividend as discussed in Note 35 to the financial statements. The prior year’s diluted earnings per share has been recalculated as if the stock dividend and the change in number of ordinary shares had been distributed and incurred at the beginning of the earliest period reported. The following table sets for the computation of basic and diluted earnings per share: Consolidated financial statements For the year ended 31 December

Profit

Weighted average

Earnings

number of ordinary shares

per share

2013

2012

2013

2012

2013

2012

(Thousand

(Thousand

(Thousand

(Thousand

(Baht)

(Baht)

Baht)

shares)

Baht)

(Restated)

shares)

(Restated)

(Restated)

Basic earnings per share Profit attributable to equity holders of the Company

151,320

511,641

1,186,455

947,751

0.1275

0.5398

-

-

68,016

57,171

151,320

511,641

1,254,471

1,004,922

0.1206

0.5091

(1,775)

(10,003)

1,186,455

947,751

(0.0015)

(0.0106)

-

-

68,016

57,171

(1,775)

(10,003)

1,254,471

1,004,922

(0.0014)

(0.0100)

Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Profit attributable to ordinary shareholders assuming the conversion of warrants to ordinary shares Basic earnings per share Loss attributable to the major shareholder of the Company Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Loss attributable to the major shareholder of the Company assuming the conversion of warrants to ordinary shares

53

Thai Factory Development Public Company Limited

Annual Report 2013

105


Separate financial statements For year ended 31 December

Profit

Weighted average

Earnings

number of ordinary shares

per share

2013

2012

2013

2012

2013

(Thousand

(Thousand

(Thousand

(Thousand

(Baht)

Baht)

Baht)

shares)

shares)

(Restated)

2012 (Baht) (Restated)

(Restated)

Basic earnings per share Profit attributable to equity holders of the Company

370,661

329,221

1,186,455

947,751

-

-

68,016

57,171

370,661

329,221

0.3124

0.3474

0.2955

0.3276

Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Profit attributable to ordinary shareholders assuming the conversion of warrants to ordinary shares

33.

1,254,471

1,004,922

Segment information Operating segment information is reported in a manner consistent with the internal reports that are regularly reviewed by the chief operating decision maker in order to make decisions about the allocation of resources to the segment and assess its performance. The chief operating decision maker has been identified as the Executive Chairman of the group. For management purposes, the Company and its subsidiaries have four reportable segments as follows: (1)

Land and factory building for sale segment concerns purchase of land to develop and to construct a factory as well as utilities with an objective to sell the empty developed land and the land with factory thereon.

(2)

Land and factory building for rent segment concerns purchase or long-term lease of land for development and construction of factory as well as utilities with an objective to rent out the land with factory thereon.

(3)

Office building for rent segment concerns long-term lease of land for development and construction of office with an objective to rent out office space and provide services.

(4)

Residential condominium units for sale segment concerns construction of residential condominium in city center and suburban area for sale to general people.

54

106

Annual Report 2013

Thai Factory Development Public Company Limited


No operating segments have been aggregated to form the above reportable operating segments of the Company and its subsidiaries. The chief operating decision maker monitors the operating results of the business units separately for the purpose of making decisions about resource allocation and assessing performance. Segment performance is measured based on operating profit or loss, total assets and total liabilities and on a basis consistent with that used to measure operating profit or loss, total assets and total liabilities in the financial statements. The basis of accounting for any transactions between reportable segments is consistent with that for third party transactions. The following tables present revenue, profit, total assets and total liabilities information regarding the Company and its subsidiaries’ operating segments for the year ended 31 December 2013 and 2012.

55

Thai Factory Development Public Company Limited

Annual Report 2013

107


(Unit: Thousand Baht) For the year ended 31 December Residential Land and factory

Land and factory

Office building

condominium units

building for sale

building for rent

for lease

for sale

2012

2013

2013

(Restated)

2012

2012

2013

(Restated)

Consolidation

2012

2013

(Restated)

2013

(Restated)

2012 (Restated)

Revenue External customers

460

809

48

113

200

198

40

130

748

1,250

Segment profit

216

202

27

78

72

75

8

53

323

408

-

-

134

555

-

-

-

-

134

555

62

37

(53)

(57)

Administrative expenses

(158)

(199)

Financial expenses

(113)

(86)

(42)

(157)

153

501

Gain from sell of investment properties Revenue and expense did not allocate: Other revenue Selling expenses

Income tax expenses Profit for the year Profit attributable to non-controlling interest of the subsidiary Loss attributable to the major shareholder of the Company Profit for the year (Equity holders of the Company)

108

Annual Report 2013

(4)

(1)

2

12

151

512

Thai Factory Development Public Company Limited56


(Unit: Thousand Baht) Residential Land and factory

Land and factory

Office building for

condominium units

building for sale

building for rent

lease

for sale

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

60

18

1

1

-

-

-

-

-

-

61

19

-

-

1

117

231

248

-

-

-

-

232

365

2,030

1,989

330

-

-

-

2,620

2,131

-

4,824

4,120

47

48

3

24

391

430

-

-

-

441

502

Central properties

3,756

671

31

395

237

240

352

151

(2,251)

(486)

2,125

971

Total assets

5,893

2,726

366

537

859

918

2,972

2,282

(2,407)

(486)

7,683

5,977

Loans from financial institutions

2,520

516

210

270

67

111

879

1,453

3,676

2,350

87

520

13

4

19

21

467

424

585

968

1,345

-

-

-

-

-

-

37

80

13

39

-

-

211

256

12

8

594

4,200

1,372

248

321

680

Equipment Investment properties Project development costs Leasehold rights

Trade and other payables Debentures Income tax payable Central liabilities Total liabilities

Thai Factory Development Public Company Limited

Eliminations

(156) -

Consolidation

-

-

(1)

(1)

-

-

-

1,345

-

-

-

-

-

50

119

621

1,291

55

(1,709)

(410)

399

530

753

2,637

1,932

(1,710)

(411)

6,055

3,967

Annual Report 2013 57

109


Geographic information The Company and its subsidiaries are operated in Thailand only. As a result, all of the revenues and assets as reflected in these financial statements pertain to the aforementioned geographical reportable. Information of major customer For the year 2013, the Company and its subsidiaries obtained revenue from one major customer amounting to Baht 460 million and Baht 290 million, arising from sales of land and factory building for sale and from land and factory building for lease (2012: The Company and subsidiaries received revenue from one major customer of Baht 555 million, arising from land and factory building for lease). 34.

Provident fund The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with Provident Fund Act B.E. 2530. The Company, its subsidiaries and their employees contributed to the fund monthly at the rates of 5 to 10 percent of basic salary. The fund, which is managed by MFC Asset Management Public Company Limited and TMB Asset Management Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2013, the Company and its subsidiaries contributed Baht 3 million (2012: Baht 3 million) to the fund.

35.

Dividend paid Dividend Final dividends for 2012

Approved by

Total dividend

Dividend per share

(Thousand Baht)

(Baht)

Annual General Meeting of the shareholders held on 18 April 2013

- Cash dividend

90,279

0.10

180,558

0.20

270,837

0.30

7,014

0.01

56,107

0.08

63,121

0.09

- Stock dividend of 181 million ordinary shares Total dividend paid during 2013 Final dividend for 2011

Annual General Meeting of the shareholders held on 27 April 2012

- Cash dividend - Stock dividend of 56 million ordinary shares Total dividend paid during 2012

58

110

Annual Report 2013

Thai Factory Development Public Company Limited


36.

Commitments and contingent liabilities

36.1 Capital commitments 36.1.1 As at 31 December 2013, the Company and its subsidiaries had commitments in respect of agreements to design, improve and construct a residential condominium and a construction management and supervision agreement as follows: (Unit: Million Baht) Consolidated financial statements 2013

Separate financial statements

2012

2013

2012

(Restated) Agreements to design, improve and construct a residential condominium Total

98

413

81

149

98

413

81

149

36.1.2 As at 31 December 2013, the Company had commitments under the following agreements in respect of TFD Industrial Estate project. -

Commitments of approximately Baht 8 million (2012: Baht 3 million) under an agreement to construct building and utilities system.

-

Commitments of approximately Baht 238 million under an agreement to buy land for project development and of Baht 0.1 million in commission for land acquisition (2012: Baht 89 million and Baht 3 million, respectively).

36.2 Operating lease commitments 36.2.1 The Company had commitments totaling Baht 47 million (2012: Baht 1 million) under other service agreement. 36.2.2 The Company leased land from the Privy Purse Bureau on which it has the right to construct a residential building. In January 2007, a permit to construct the residential building was received from the relevant government agency. In June 2007 and February 2008, the Company entered into an agreement with Privy Purse Bureau to construct the building and to lease the land with completed building thereon for a period of 30 years, commencing from 1January 2010.

59

Thai Factory Development Public Company Limited

Annual Report 2013

111


On 21 September 2010, the Company received a letter from the Privy Purse Bureau approving the Company’s request to change the pattern and size of the project provided that the Company complied with new conditions. As at 31 December 2013, the Company had the following commitments in respect of the agreement: (1)

The permit to construct the residential building is to be under the name of the Privy Purse Bureau and the ownership of the building and other constructions on this land is to be transferred to the Privy Purse Bureau, while the Company is to pay all expenses related to the construction of the building until completion.

(2)

The construction period is 5 years starting from the date the permit to construct the new building is granted by the relevant government agency.

(3)

The lease period is 30 years commencing from the end of the construction period as per (2). However, if the construction is completed earlier than the specified completion date, the lease period shall commence from the completion date. Rental payment is to be made on a monthly basis at a rate of Baht 500,000 per month in the first year, with the rate to be increased by 5% every year until the end of the lease period.

(4)

Throughout the construction period, the Company is obliged to pay compensation for loss of benefit at a rate of Baht 500,000 per month, commencing from September 2010, together with a gate pass fee of Baht 4,700 per month.

(5)

The Company is to make extra payment to the Privy Purse Bureau in the amount of Baht 30 million within 20 December 2010.

(6)

The Company was to submit a letter of guarantee with a credit line of Baht 50 million within 20 December 2010. Baht 22 million of this was already submitted using the letter of guarantee facility of VSSL Enterprise Company Limited (a subsidiary) granted by a bank.

Further to (5) and (6), the Company requested extensions for the payment of the special remuneration and submission of the letter of guarantee. On 14 December 2010, the Company received a letter from the Privy Purse Bureau approving extensions for 30 days after completion of construction passes the environmental impact assessment conducted by the relevant agency.

60

112

Annual Report 2013

Thai Factory Development Public Company Limited


36.2.3 The subsidiary has annual lease payment commitments to the Industrial Estate Authority of Thailand and natural persons related to its operation of its factory rental business for a period of 15 years and 30 years. As at 31 December 2013 and 2012, the balance of commitments is as follows: (Unit: Million Baht) 2013

2012

Up to 1 year

2

3

From 1 to 5 years

7

14

Over 5 years

-

35

9

52

Payable:

Total

During the fourth quarter of the current year, the subsidiary transferred land leasehold under the lease agreement with natural persons to the Fund as mentioned in Note 15. 36.2.4 The Privy Purse Bureau granted the subsidiary leasehold rights to land and the right to construct a residential building on such land, with a lease term of 30 years from November 1993 to October 2023. The residential building is initially under the ownership of the Privy Purse Bureau. As at 31 December 2013, the subsidiary has the following outstanding rental commitments: (Unit: Million Baht) 2013

2012

3

3

From 1 to 5 years

15

17

Over 5 years

22

23

40

43

Payable: Up to 1 year

Total

The subsidiary also has gate pass fee commitments of Baht 50,000 per month. 36.2.5 The subsidiary was granted leasehold rights to land by a company and the right to construct an office building on such land, with a lease term of 30 years, from December 1995 to November 2025. The ownership of this office building will be assigned to the sub-leasers upon the termination of the lease agreement.

61

Thai Factory Development Public Company Limited

Annual Report 2013

113


36.3 Long-term service commitments 36.3.1 As at 31 December 2013, the Company had commitments in respect of an agreement to develop TFD Industrial Estate project in collaboration with the Industrial Estate Authority of Thailand. The Company has to pay an annual fee for supervision of services rendered within the area of the project of approximately Baht 1 million, commencing in 2009. Such fee may be increased by no more than 10% on the existing fee, every 3 years. 36.3.2 As at 31 December 2013, the Company and subsidiaries have commitments under service agreement as follows: (Unit: Million Baht) Consolidated financial statements 2013

2012

Payable: Up to 1 year From 1 to 5 years Total

Separate financial statements 2013

2012

(Restated)

(Audited)

21

13

3

4

1

3

-

-

22

16

3

4

36.4 Guarantees 36.4.1 As at 31 December 2013, the Company has provided guarantees for bank loan and credit facilities of subsidiaries totaling Baht 530 million. (2012: Baht 440 million). 36.4.1 As at 31 December 2013, there were outstanding bank guarantees issued by the banks on behalf of the Company and its subsidiaries as follows:

Letter of guarantee

(Unit: Million Baht)

Consolidated

Separate

financial statements

financial statements

2013

2013

2012

2012

(Restated) To guarantee performance under the

agreement with the Industrial Estate Authority of Thailand

To guarantee relating to the electricity use and others

Total

8

32

8

32

10

25

4

17

18

57

12

49

62

114

Annual Report 2013

Thai Factory Development Public Company Limited


36.5. Litigations 36.5.1 In 2008, Princeton Park Suites Company Limited was sued as a joint defendant (the third defendant) with the local administration of Paknampran Sub-District by a company (the plaintiff) for trespassing and construction in a public area in Paknampran Sub-District, Prachuab Kiri Khan Province. The area is the location of the Company’s The Colonial Kao Tao Hua Hin project (which the Company bought from Princeton Park Suites Company Limited). The amount in dispute was Baht 1 million with interest at 7.5 percent per year of such amount and additional damages of Baht 3,000 per day from the day of the litigation to the day that the defendant demolishes the construction on the plaintiff’s land. Currently, the case was dismissed by the Supreme Court. 36.5.2 In 2012, the Company was sued as a joint defendant (the fourth defendant), together with Paknampran Subdistrict Administrative Organisation), by a company (the plaintiff) demanding the Court to revoke the construction permit of The Colonial Kao Tao Hua Hin project, a project of the Company, on the grounds that the construction permit allowed the construction to be less than 200 meters from the shoreline, as stated in an announcement of the Ministry of Natural Resources and Environment. Such construction permit was therefore in violation of the law. The Company also petitioned the court to order the parties that were sued not to continue the construction or take any action until the lawsuit was final. Subsequently, on 23 August 2013, the Central Administrative Court ordered the suspension of the construction permit until the Court issued a judgment or ordered otherwise. In this regard, the Company submitted an appeal with the Supreme Administrative Court on 25 September 2013. The case is currently under consideration of the Supreme Administrative Court. The Company’s management made judgment to assess the outcome of the lawsuit and the damage caused by the suspension of construction work, and believed that it would not result in any damage to the value of project. The Company therefore did not record allowance for diminution in the value of the project or a provision for liabilities as at the end of the reporting period.

63

Thai Factory Development Public Company Limited

Annual Report 2013

115


37.

Financial instruments

37.1 Financial risk management The Company’s financial instruments, as defined under Thai Accounting Standard No.107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, other receivable, loans, investments, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company is exposed to credit risk primarily with respect to trade and other receivable and loans to. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company does not have high concentrations of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables and loans to as stated in the statement of financial position. Interest rate risk The Company’s exposure to interest rate risk relates primarily to its cash at banks, loans to, bank overdrafts, short-term and long-term borrowings. However, since most of the Company’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities classified by type of interest rate 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.

64

116

Annual Report 2013

Thai Factory Development Public Company Limited


(Unit: Million Baht) Consolidated financial statement as at 31 December 2013 Fixed interest rates Within

1-5

Floating

Non- interest

1 year

years

interest rate

bearing

Effective Total

interest rate (% per annum.)

Financial Assets Cash and cash equivalent Deposits at bank with restrictions

-

-

1,033

236

1,269

0.5 - 2.8

13

-

-

-

13

1.9 - 2.5

13

-

1,033

236

1,282

2,560

-

-

-

2,560

Financial liabilities Short-term loans from financial institutions

4.7 - 5.5 Reference to MLR

Long-term loans from financial -

-

1,049

-

1,049

and SPRL

Liabilities under finance lease agreements

-

7

-

-

7

3.6 - 12.2

Debt restructuring payable

-

-

67

-

67

MLR-1

institutions

Long-term loans from related parties and interest payable Debenture

-

313

-

-

313

1,345

-

-

-

1,345

3,905

320

1,116

-

5,341

15.0 5.3 and 5.5

(Unit: Million Baht) Separate financial statement as at 31 December 2013 Fixed interest rates Within

1-5

Floating

Non- interest

1 year

years

interest rate

bearing

Effective Total

interest rate (% per annum.)

Financial Assets Cash and cash equivalent

-

-

952

240

1,192

0.5 - 0.6

-

234

1,288

-

1,522

5.5 - 15.0

11

-

-

-

11

1.9 - 2.5

11

234

2,240

240

2,725

2,030

-

-

-

2,030

5.30 - 5.45

-

-

56

-

56

5.50 - 7.00

Loan to related parties and interest receivable Deposits at bank with restrictions

Financial liabilities Short-term loans from financial institutions Short-term loans from subsidiary and interest payable

Reference to MLR Long-term loans from financial institutions

-

-

491

-

491

and SPRL

Liabilities under finance lease agreements

-

7

-

-

7

3.6 - 12.2

1,345

-

-

-

1,345

3,375

7

547

-

3,929

Debenture

Thai Factory Development Public Company Limited

5.3 and 5.5

65

Annual Report 2013

117


(Unit: Million Baht) Consolidated financial statement as at 31 December 2012 Fixed interest rates Within

1-5

Floating

Non- interest

1 year

years

interest rate

bearing

Effective Total

interest rate (% per annum.)

Financial Assets Cash and cash equivalent

0.6 - 0.8

-

-

339

65

404

116

-

-

-

116

8.4

27

-

-

-

27

2.3 - 2.5

143

-

339

65

547

504

-

-

-

504

4.8 - 5.3

54

-

-

-

54

10.0

-

381

-

-

381

15.0

Debt restructuring payable

-

-

111

-

111

MLR -1

Liabilities under finance lease agreements

-

11

-

-

11

3.6 - 12.2

Short-term loan to and interest receivable from related parties Deposits at bank with restrictions

Financial liabilities Short-term loans from financial institutions Loan from other individuals Short-term loan and interest payable from related parties

Reference to MLR and Long-term loans from financial institutions

-

-

1,735

-

1,735

558

392

1,846

-

2,796

SPRL

(Unit: Million Baht) Separate financial statement as at 31 December 2012 Fixed interest rates Within

1-5

Floating

Non- interest

1 year

years

interest rate

bearing

Effective Total

interest rate (% per annum.)

Financial Assets -

-

68

65

133

0.60 - 0.625

13

218

-

-

231

15.0

25

-

-

-

25

2.5

38

218

68

65

389

234

-

-

-

234

5.3

Loan from other individuals

-

-

53

-

53

MLR

Liabilities under finance lease agreements

-

11

-

-

11

3.6 - 12.2

Long-term loans from financial institutions

-

-

282

-

282

234

11

335

-

580

Cash and cash equivalent Long-term loans to subsidiaries and interest receivable Deposits at bank with restrictions

Financial liabilities Short-term loans from financial institutions

Reference to MLR and SPRL

66

118

Annual Report 2013

Thai Factory Development Public Company Limited


Foreign currency risk The Company’s exposure to foreign currency risk is limited since nearly all business transactions are denominated in Thai Baht. 37.2 Fair values of financial instruments Since the majority of the Company’s financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in statement of financial position. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instruments or by using an appropriate valuation technique, depending on the nature of the instrument. 38. Capital management The primary objective of the Company’s capital management is to ensure that it has appropriate capital structure in order to support its business and maximise shareholder value. As at 31 December 2013, the Group's debt-to-equity ratio was 3.72 :1 (2555: 1.97:1) and the Company's was 2.48:1 (2555: 1.01:1). 39.

Subsequent events On 30 January 2014, the Extraordinary General Meeting of the Company’s shareholders No. 1/2557 approved the following matters. 1. Approved the issuance and offering of not more than 116,000,000 newly issued ordinary shares at a par value of Baht 1 each to general investors (the “Public Offering”). 2. Approved the issuance and offering of the Warrants to purchase the Company’s newly issued ordinary shares No.3 (“Warrants No.3” or “TFD-W3”) in the amount not exceeding 119,950,020 units as follows: 2.1

Warrants No.3 in the amount not exceeding 11,600,000 units to be offered free of charge to the general investors who subscribe for newly issued ordinary shares at the ratio of 10 newly issued shares:1 unit of Warrants No.3 (10 newly issued ordinary shares shall be allotted by 1 unit of Warrants No.3) (any fraction shall be disregarded).

67

Thai Factory Development Public Company Limited

Annual Report 2013

119


2.2

Warrants No.3 in the amount not exceeding 108,350,020 units to be offered free of charge to the existing shareholders of the Company whose names appear on the Record Date i.e. on 5 March 2014 in proportion to their respective shareholdings (the “Rights Offering�), by the ratio of 10 existing shares:1 unit of Warrants No.3.

3. Approved the reduction of the registered capital of the Company from Baht 1,264,029,396 to Baht 1,263,911,170 by cancelling 118,226 authorized but unissued ordinary shares at a par value of Baht 1 each (excluding the ordinary shares reserved for the remaining issued ordinary shares which have been reserved for exercise of the holders of Warrants No.2 (TFD W-2)), amounting to 180,410,965 shares), to enable the Company to increase its capital to any other amounts onwards and amended of Memorandum of Association to make it consistent the share capital decrease. 4. Approved the increase of the registered capital of the Company in the amount of Baht 235,950,020 from the registered capital of Baht 1,263,911,170 to Baht 1,499,861,190 by authorizing 235,950,020 newly issued ordinary shares at a par value of Baht 1 each and amended of Memorandum of Association to make it consistent with the share capital increase. 5. Approved the allocation of the newly issued ordinary shares in the amount 235,950,020 shares at a par value of Baht 1 each as follows: 5.1

Approved to allocate the newly issued ordinary shares in the amount not exceeding 116,000,000 shares at the par value of Baht 1 each to general investors through the Public Offering.

5.2

Approved to allocate the newly issued ordinary shares in the amount not exceeding 11,600,000 shares at the par value of Baht 1 each to be reserved for the exercise of Warrant No.3 (TFD-W3), which is allotted to general investors who subscribe for the newly issued ordinary shares according to item 2.1 aforementioned.

68

120

Annual Report 2013

Thai Factory Development Public Company Limited


5.3

Approved to allocate the newly issued ordinary shares in the amount not exceeding 108,350,020 shares at the par value of Baht 1 each to be reserved for the exercise of Warrant No.3 (TFD-W3), which is allotted to existing shareholders in proportion to their respective shareholdings with details as follows:

No. of warrants granted (Units)

119,950,020

Life of warrants

Three years from the date of the issuance and offering the Warrants

Exercisable

On the last business day of March, June, September and December of each calendar year throughout the tenor of the Warrants No.3 and on the last exercise date (the date shall be on the 3rd anniversary of the issuance and offering date of the Warrant No.3)

40.

Exercise price per 1 ordinary share

Baht 6.30 (may be changed subject to the

(Baht)

condition of the rights adjustment)

Exercise ratio (warrant to ordinary

1 Warrant to 1 ordinary share (may be changed

share)

subject to the condition of the rights adjustment)

Approval of interim financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 21 February 2014.

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Business Overview 1. Structure of incomes of the Company and subsidiaries In 2013, sales of land and factory buildings in industrial estates accounted for the highest ratio compared to the Company’s total incomes since during Q4, the Company and TISCOM had sold part of the assets totaling Baht 750 million to a property fund. 2011 (1) 2012 (2) 2013 (2) Million Million Million % % % Baht Baht Baht 1. Land development and factory building business at the TFD Industrial Estate and other industrial estates - Sales incomes 662.95 57.97 327.71 24.09 460.00 48.66 - Rent and service incomes 96.95 8.48 112.94 8.30 47.92 5.07 2. Office space for rent business - Rent and service incomes 187.32 16.38 197.78 14.54 200.21 21.18 3. Residential condominium business 184.90 16.17 130.43 9.59 40.36 4.27 4. Profit from sales of properties for 554.89 40.78 134.33 14.21 investment purpose 5. Other incomes 11.57 1.01 36.83 2.71 62.60 6.62 Total incomes 1,143.69 100.00 1,360.58 100.00 945.42 100.00 Note: (1) In 2011, the Company complied with the accounting standard Re: Change of the account booking policy of the real estate sector from originally recognizing incomes based on completed work to recognizing incomes when risk and return which reflects material ownership is transferred to buyers. (2) During Q2 of 2013, the Company invested in VSSL which had once been held by the Company’s major shareholder, an action considered as a merger of business as it would be subject to the same control. As such, statements of comprehensive profits and loss for the year that ended December 31, 2012 of the Company and subsidiaries were adjusted in retrospect and shown here for comparison purpose.

2. Business of each product line 2.1 Nature of products and service The Company and subsidiaries develop properties in a variety of shapes and forms which can be classified into five main business groups as follows. • Industrial estate - operated by the Company • Land with standard factory/warehouse - operated by Total Industrial Services Co., Ltd. (TISCOM) • Residential project (condominium) - operated by the Company and VSSL • Office building for rent - operated by SG • Property management service - operated by the Company

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Note: In the past, the Company and TISCOM ran a business which provided land along with standard factory/warehouse buildings. However, in 2013, as the Company planned to list TISCOM in the stock exchange, TISCOM was thereby restructured for clearer corporate position to provide land with standard factories/warehouse buildings. 2.1.1 Industrial estate In 2007, the Company set up the TFD Industrial Estate at Bangpakong District, Chachoengsao Province, to develop land, set up basic infrastructure and build standard factory buildings. The Company signed a joint-operation contract with the Industrial Estate Authority of Thailand (IEAT) and provided for Thai and foreign investors lands for rent in two zones; namely, General Zone and Free Zone. Target groups of customers were businesses in the auto part industry, electronics and manufacturing industry not generating pollution. To facilitate investors, the Company chose the site located not so far from Bangkok along the Motorway at Km 43 next to an exit into the Chachoengsao-Chonburi Highway. The site is flanked with convenient highways and not prone to flood which makes it extremely ideal to build factories and warehouses as a logistics center. Thanks to the site’s competitive advantage as it’s no more than 20 minutes from the Suvarnabhumi Airport and no more than 40 minutes from the Laem Chabang Deep Sea Port plus its close proximity to Bangkok, Thailand’s capital, the location has become a very highly potential one. Most of the Company’s customers are Japanese investors who have invested in electronic parts and auto part industries. At present, the TFD Industrial Estate is operated in two phases as follows. (1) Phase 1 Of the project’s entire area totaling 302.86 rai, 230.47 rai of the Phase 1 Project are generating incomes. Of this, 73.83 rai are in Free Zone and 156.64 rai are in General Zone. Since 2011, the Company has recognized incomes from the project both from sales of vacant land and sales of land along with completed factory buildings between 1,500-3,000 square meters. As of end of 2013, the Phase 1 TFD Industrial Estate sold as many as 225.48 rai of its areas. There remained only 4.99 rai or 2.17 per cent of the total income-generating lands left unsold. (2) Phase 2 At present, the Company plans to expand the TFD Phase 2 Industrial Estate project area which is adjacent to its Phase 1 by another 2,500 rai. The project is currently under development, having landscape architecture and infrastructure systems designed while an environment impact assessment (EIA) report is under preparation to seek permission from the authorities as well as approval to use the land for an industrial purpose. At present, the Company has already bought approximately 986.51 rai of vacant land for the Phase 2 project. During the 2014-2016 investment plan, it expects to buy 750 additional rai of land which will cost the Company around Baht 3 billion. The total project value is around Baht 5-6 billion and the Company expects to debut its sales in 2014. In addition, the Company has provided a comprehensive service to customers wishing to build or extend factory building located in the Company’s industrial estate or on a leased land as a channel to generate additional incomes. To facilitate Thai and foreign investors, the Company is currently offering services to contact the authorities, apply for permits as well as renovate, extend and repair buildings to support and accommodate their needs.

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2.1.2 Land with standard factory/warehouse building At present, TISCOM has built standard factory and warehouse buildings for rent at various sites within industrial estates and industrial zones to facilitate investors taking into consideration convenience in commuting, transporting, communicating as well as basic infrastructure, safety and environment conditions. Factory buildings are available in both General Zone and Free Zone based on investor’s needs. (1) Completed factory building The standard completed factory is typically offered as a one-floor building with mezzanine floor for use as office in varying sizes from 1,000 square meters to 3,000 square meters. The factory is built at a fenced-in site to also include a security guard’s house and parking space. The factory floor can accommodate 3 metric tons per square meter. TISCOM also builds factory based on customer’s design. It can also offer customers a variety of options where they may buy land together with factory or to lease land with factory building or to lease it with the rights to purchase it later. The rental term of most lease agreements that TISCOM has signed with customers is three years with an option for renewal. Customer is required to deposit six months’ worth of rent as a down payment. The following table features information of completed factory buildings and occupancy rate of both the Company and TISCOM. Completed Number of factory Number of factory Number of factory Average annual factory building buildings at the buildings sold to the buildings at end of period occupancy rate With tenants No tenants beginning of period property fund 2011 Number (buildings) 12.00 11.00 1.00 Area (square meters) 14,970.00 13,890.00 1,080.00 92.79% 2012 Number (buildings) 12.00 12.00 Area (square meters) 14,970.00 14,970.00 100.00% 2013 Number (buildings) 7.00 Area (square meters) 14,970.00 As of December 31, 2013, TISCOM had no completed factory remained as all had been built and immediately sold to the M-II Property Fund in Q4 of 2013. (2) Completed warehouse TISCOM’s standard warehouse building is a one-storey building with mezzanine floor for use as office offered in various sizes from 2,000 square meters to 10,000 square meters. The warehouse is built at a fenced-in site with a security guard’s house, parking space and loading space. The warehouse’s floor can accommodate up to 3 metric tons per square meter. TISCOM also builds warehouses based on customer’s needs. It offers various options for investors to either buy land with warehouse or to lease land with warehouse or with a right to purchase it later.

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The rental term of most lease agreements that TISCOM has signed with customers lasts three years with option for customers to renew. TISCOM requires customers to deposit six months’ rent as a down payment. The following table features information of completed warehouse buildings and occupancy rate of both the Company and TISCOM. Number of factory Number of factory Number of factory Completed Average annual buildings at the buildings sold to the buildings at end of period factory building With tenants No tenants occupancy rate beginning of period property fund 2011 Number (buildings) 40.00 37.00 3.00 Area (square meters) 42,664.10 37,909.10 4,755.00 88.85% 2012 Number (buildings) 40.00 18.00 20.00 2.00 Area (square meters) 42,664.10 19,350.00 20,764.10 2,550.00 94.02% 2013 Number (buildings) 22.00 17.00 5.00 Area (square meters) 23,314.10 15,034.10 8,280.00 91.45% As of December 31, 2013, TISCOM had five completed warehouse buildings totaling 8,280 square meters at the Laem Chabang Industrial Estate, each of which boasted an average area of 750-3,330 square meters. TISCOM bought land at the TFD Phase 2 Industrial Estate situated at Tambon Thasa-an, Bangpakong District, Chachoengsao Province, and plans to build eight warehouses expected to open and operate by 2014. The following table features years when lease agreements of factory and warehouse buildings become due as of December 31, 2013. Year when lease agreements become due Ratio of rent incomes vs. total rent incomes (%) 2014 39.64 2015 60.36 After 2015 Total 100.00 Most of TISCOM’s clients are Japanese in electronic parts and auto part industries. 2.1.3 Residential project (condominium) In 2006, the Company started developing two residential condominium projects for the first time; namely, the Lakegreen Apartment Project and the 59 Heritage Project, both of which were completely sold. At present, there are three ongoing projects; namely, the 15 Sukhumvit Residence Project, the Colonial Kao Tao Hua Hin Project and the Mahadlek Residence Project. The Company and subsidiaries are developing condominiums for sales to respond to the need of those eyeing for condominiums in the city close to skytrain and other facilities as well as to those wishing to own the second home at a serene seaside resort town at Pranburi District, Prachuab Kiri Khan Province. At present, there are three projects currently under development and/or sold and/or about to be transferred to customers. Details are as follows.

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(1) The 15 Sukhumvit Residence Project Situated between Soi 13 and Soi 13 on Sukhumvit Road, the 2-3-73 rai project is a 26-floor reinforced concrete tower bought by VSSL in 2013. The total project value is Baht 3,612.61 million. The project’s permits: • Construction permit No. 841/2533 and No. 595/2548 dated September 6, 1990 and October 31, 2005 and Form Kor Thor Mor (BMA) 6 Original No. 404/2553 dated September 16, 2010 based on Form Kor Thor Mor (BMA)1 Received No. 360/2554 dated June 30, 2011 • Approval Letter for the EIA Report of the 15 Sukhumvit Residence Project No. Tor Sor 1009.5/2742 issued by the Office of Natural Resources and Environmental Policy and Planning dated March 21, 2011 The project’s total useable areas are 58,902 square meters of which 31,659.43 square meters are total sales areas. Details of the sales areas are: • 491 units of condominiums with a total sales area of 28,339.95 square meters broken down into the following: Types of unit Size Types of unit Total sales areas (square meters) (Square meters) Studio 23-28 144 3,818.56 One bedroom 34-90 197 9,601.93 Two bedrooms 65-90 127 9,949.05 Three bedrooms 125 15 1,889.96 Pool villa 230-350 4 2,070.73 Penthouse 241-242 4 1,009.72 Total 491 28,339.95

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• Commercial area for a total sales area of 3,319.48 square meters. At present, VSSL is building the project which is expected to complete in 2014. VSSL already sold condominium units and commercial space for approximately 48.12 per cent of the project’s value as of end of 2013. • Summary of the 15 Sukhumvit Residence Project

Project site

Between Sukhumvit Soi 13 and Soi 15, Sukhumvit Road, Kwaeng Klongton Nua, Wattana District, Bangkok Project type A 26-floor residential condominium Project area 2-3-73 rai of land (1,173 square wah) Sales area 31,659.43 square meters Average sales price per square meter Approximately Baht 110,000.00 per square meter Sales price per unit Approximately Baht 2.19-26.45 million per unit Usable areas Around 23.30-631.25 square meters per unit Project’s highlights Located in the heart of the city next to skytrain station Number of units 491 units broken down into: 144 studios; 197 one-bedroom units; 127 two-bedroom units; 15 three-bedroom units; four pool villas and four penthouses Project value Approximately Baht 3,612.61 million Construction progress 99.77 per cent Sales progress (as of Dec 31, 2013) Sales contracts amounted to 48.12 per cent of the project’s value were signed (totaling 341 units). Ratio of income recognition (as of Dec 31, 2013) 1.12 per cent of the project’s value (10 units) Number of remaining units 98.88 percent of the project’s value (481 units); sales contracts amounted to 47.00 per cent of the project’s value (331 units) were (ownership not yet transferred) signed. Other projects in the same neighborhood • The Trendy Condominium • The Prime 11 Condominium • The Interlux Residence Condominium • The Sukhumvit City Resort Condominium • The Oleander Sukhumvit Condominium • The Hyde Sukhumvit • The Millennium Residence Condominium

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(2) The Colonial Kao Tao Hua Hin Project A residential condominium, the project is located at Kao Tao, Tambon Paknam Pran, Pranburi District, Prachuab Kiri Khan Province, in the 9-0-42.3 rai of land. With a total value of around Baht 3.375 billion, the project can be broken down into two sections as follows. 1st Section - The first section is a residential condominium to be built in the 7-0-23.4 rai of land. The Company submitted the EIA Report and the project’s protective and preventive measures of environmental impacts to the Office of Natural Resources and Policy and Planning (the “Office”) from which it was granted a permission on July 31, 2008. In addition, the project also received construction permits to build, renovate and remove building (Form Or 1) No. 64/2552 (Building A), and No. 65/2552 (Building B and Car-Park Building) as well as a permit for a recreational club as per the permit to build, renovate and remove building (Form Or 1) No. 85/2555. Details of the project are: • One 28-storey residential building (Building A) consisting of 205 units with a total construction area of 27,425 square meters and a total sales area of 19,457.49 square meters. • One 28-storey residential building (Building B) consisting of 178 units with a total construction area of 22,431 square meters and a total sales area of 16,379.31 square meters. • One 8-storey car-park building (Building C) with a total construction area of 6,121 square meters to accommodate 228 cars 2nd Section - One three-storey office building with a construction area of around 1,995 square meters together with 320 square meters of parking space to accommodate 16 cars The project offers unit types from one-bedroom units of 56.90 square meters to 2-bedroom units ranging from 79.40 to 201.50 square meters and 3-bedroom units starting from 148.30-170.10 square meters. In addition, it offers for sales two-storey duplex with two to four bedrooms ranging from 99.20-272.50 square meters and 3 to 4-bedroom penthouses offering usable space from 188-334.10 square meters. The Company already completed the construction of the 3-storey office building which was used as a sales office. As for the construction of residential buildings, there remained the construction of foundation of both the two residential towers and the car park building. Yet, at present, the Company temporarily suspends the project’s construction due to an ongoing lawsuit filed with the Central Administrative Court to revoke the project’s construction permits to which the Court did order the construction of the project to be temporarily halted. The Company however appealed to the Supreme Administrative Court to revoke the Central Administrative Court’s order. Regarding the project’s sales progress, as of December 31, 2013, with the project delay, customers returned 31 units to the project. Only seven units now remain.

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Summary of the Colonial Kao Tao Hua Hin Project

Project site

Kao Tao, Tambon Paknam Pran, Pranburi District, Prachuab Kiri Khan Province Project type Two 28-storey residential towers A and B Project area 9-0-42.3 rai of land (3,642.30 square wah) Sales area • Tower A: 19,457.49 square meters • Tower B: 16,379.31 square meters Average sales price per square meter Approximately Baht 90,000.00 per square meter Sales price per unit Approximately Baht 5.21-30.07 million per unit Usable areas Approximately 56.9-334.1 square meters per unit Project’s highlights Next to the sea and mountain Number of units 383 units broken down into • Tower A: 205 units • Tower B: 178 units Project value Around Baht 3.375 billion Construction progress 10 per cent (Construction is temporarily suspended.) Sales progress (as of Dec 31, 2013) The Company temporarily suspends its sales according to the order of the Central Administrative Court. Customers asked to return 31 units. There remain seven units. Ratio of income recognition (as of Dec 31, 2013) 0 per cent of the project’s value (0 unit) Number of remaining units 100 per cent of the project value (383 unit) (ownership not yet transferred) Other projects in the same neighborhood • Baan Nub Kluen • Serona Kao Tao • Amari Condominium • Santorino Hua Hin • Baan Lon Sai

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(3) The Mahadlek Residence Project The residential project consists of one 43-storey building located in a 1-3-28 rai of land in Soi Mahadlek Luang 2, Rajdamri Road. The project’s total sales area is 23,310 square meters which houses 516 condominium units offered in four different types of studio, one-bedroom, two-bedroom and penthouse units ranging from 34.70-175 square meters per unit. The project’s total value is Baht 2.552 billion. At present, the Mahadlek Residence Project is seeking an Environmental Impact Assessment (EIA) approval from the Office of Natural Resources and Environmental Policy and Planning, which is considered an important step for the project. In other words, the Company has to receive the approval before starting the project’s construction.

Note : *The Company bought the sub-leasehold right over the land owned by Office of Privy Purse from Capital Planner Co Ltd for a total of Baht 61 million with a purpose to develop a residential project. The lease term is 30 years. Details of the Mahadlek Residence Project

Project site Project type Project area Sales area Average sales price per square meter Sales price per unit Usable areas Project’s highlights Number of units Project value Construction progress Sales progress (as of Dec 31, 2013) Ratio of income recognition (as of Dec 31, 2013) Number of remaining units) (ownership not yet transferred) Other projects in the same neighborhood

Soi Mahadlek Luang 2, Rajdamri Road, Bangkok One 43-storey residential tower 1-3-28 rai of land (728 square wah) 23,310.00 square meters Approximately Baht 109,500.00 per square meter Approximately Baht 3.83-12.48 million per unit Approximately 35-114 square meters per unit The project is located in the center of the capital. 516 units Approximately Baht 2.552 billion 0 per cent as the Company is seeking an EIA approval Sales contract signed: 0 per cent of the project’s value (0 unit) 0 per cent of the project’s value (0 unit) 100 per cent of the project’s value (516 units)

• The Hansa Rajdamri • The Rajdamri Condominium • Baan Rajprasong Condominium • The St. Regis Residence • The Oriental Residences Bangkok Note : Information of the Mahadlek Residence Project is subject to change as the project is currently seeking EIA approval.

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2.1.4 Office building for rent In 2008, the Company jointly invested in the office for rent business via SG in which it holds 49.91 per cent shares and which offers two office buildings for rent in Soi Mahadlek Luang 3, Rajdamri Road and on Langsuan Road for a total rentable area of 26,754.03 square meters. At present, the Company manages both properties. Details are as follows. (1) SG Tower 1 The building is located on the 2-3-85 rai of land at No. 161/1 Soi Mahadlekluang 3, Rajdamri Road, Kwaeng Lumpini, Pathumwan District, Bangkok. SG Tower 1 is a 19-storey office tower plus two stories of underground parking space offering a total area of 30,752 square meters for rent. This could be broken down into 14,840.38 square meters of space for rent; 7,711.62 square meters of common areas and 8,200 square meters of parking space (for 220 cars). As of end of 2013, 98.72 per cent of the tower’s total rentable areas were rented. (2) The Millennia (SG Tower 2) The building which is located at 62 Langsuan Road, Kwaeng Lumpini, Pathumwan District, Bangkok is situated on the 1-3-22 rai of land and houses one 26-storey office building plus one underground parking space totaling 29,700 square meters. This consists of 11,913.65 square meters for rent, 7,916.35 square meters of common areas and 9,870 square meters of parking space (to accommodate 220 cars). As of end of 2013, 86.87 per cent of The Millennia’s total areas were rented. Most of the rental terms of lease agreements between the Company and its customers are three years with options for customers to renew the lease. The Company requires customers to deposit three months’ rent as a down payment.

The following table features the Company’s office buildings currently under operation. Rent area Remaining Occupancy Office Location Nature Total rate building rental areas under lease rent areas (square agreements (square meters) (square meters) meters) 189.85 98.72% One 19-storey 14,840.38 14,650.53 SG Tower 1 161/1 Soi Mahadlekluang 3, office tower plus Rajdamri Road, two stories of Kwaeng Lumpini, underground Pathumwan District, parking space Bangkok 1,564.32 86.87% The Millennia 62 Langsuan Road, One 26-storey 11,913.65 10,349.33 Kwaeng Lumpini, office building Pathumwan District, plus one underground Bangkok parking space Grand total 26,754.03 24,999.86 1,754.17 93.44%

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2.1.5 Property management service The Company and TISCOM started selling land and factory buildings to the TIF1 Property Fund for the first time in 2005 before selling additional assets to the TIF1 Property Fund and the M-II Property Fund again in 2007, 2012 and 2013. Aside from selling land, factory and warehouse buildings, the Company has been appointed as a property manager of the property funds as well as property manager of SG’s office buildings for rent in return for management fees summarized as follows.

The TIF1 Property Fund and the M-II Property Fund • Property management fees and additional premiums • Brokerage fees for securing new tenants • Brokerage fees for contract renewal • Brokerage fees in case of property sales or transfer of property leasehold (excluding sales of property to property manager or persons within the group of property manager) (More details can be seen in the property manager appointment contract under Section 5: Operating assets.)

The following are properties currently managed by the Company: (1) Assets under the TIF1 Property Fund consisting of 25 factory buildings and one 12-room apartment building situated in the following locations: Industrial estate/Industrial zone 1. The Hi-Tech Industrial Estate 2. The Bangpa-in Industrial Estate 3. The Navanakorn Industrial Estate 4. The Amata Nakorn Industrial Estate 5. The Bangkadi Industrial Estate 6. The Bangkadi Industrial Estate (four-storey apartment building) 7. The TFD Industrial Estate Grand total

Location

Types of service

Ayutthaya Ayutthaya Pathum Thani Chonburi Pathum Thani Pathum Thani

Land+Factory Land+Factory Land+Factory Land+Factory Land+Factory Apartment

Chachoengsao

Vacant land Land+Factory

Areas (square meters) 17,248.00 1,980.00 2,310.00 9,150.00 1,800.00 8,811.00

Number of units (units) 12 1 1 7 2 12

3,240.00

2

44,539.00

37

(2) Assets under the M-II Property Fund consisting of 39 factory buildings and 17 warehouse buildings situated in the following locations: Number of Industrial estate/Industrial zone Location Types of service Areas (square units (units) meters) 1. The Navanakorn Industrial Estate Pathum Thani Land+Factory 2,160.00 2 2. The TFD Industrial Estate Chachoengsao Vacant land 32,820.00 19 Land+Factory 3. The Laem Chabang Industrial Estate Chonburi Land+Factory 19,350.00 18 4. The Kingkaew Warehouse Samut Prakan Warehouse 15,034.10 17 Grand total 69,364.10 56

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(3) SG’s office buildings for rent which consist of two office buildings connected to each other between Soi Mahadlekluang 3, Rajdamri Road and Langsuan Road. Details are as follows: Office buildings for rent 1. SG Tower 2. The Millennia Grand total

Rent areas (square meters) 14,840.38 11,913.65 26,754.03

Rights and benefits received by the Company and subsidiaries: • Rights and benefits from being a listed company in the Stock Exchange of Thailand (SET) - Corporate income tax exemption from dividends received from having invested in the M-II Property Fund which is listed in the SET.

3. Marketing and competitions 3.1.1 Marketing strategies Industrial estate Target groups of customers for the Company’s industrial estate business are supporting industry and major operators who have already bought vacant land in the TFD Industrial Estate. Major target groups of customers are small and medium-sized enterprises which do not generate pollution who however look for transportation convenience. This refers especially to electronics and auto part manufacturers. Thailand’s major flood in 2011 led to demand surge from investors who wanted to buy vacant land and rent factory building in the TFD Industrial Estate which is situated at least two meters above the sea level and therefore is perceived safe from flood. In addition, the industrial estate also enjoys rights and privileged granted by the Board of Investment (BOI) for Zone 2 investment of which the location is nearest to Bangkok. The site where the industrial estate is situated is a strategic location and is indeed the Company’s competitive advantage. Besides, the Company has gathered 984 rai of land ready for development as its Phase 2 TFD Industrial Estate Project within the next five to eight years. The lands were purchased at lower costs compared to current sales prices. There isn’t as much land available for industrial development purpose at the moment. That’s a reason why raw land price dramatically increases compared to what happened in the past. This refers especially to land adjacent to highways in the area where the TFD Industrial Estate is situated as well as land along Bangna-Trad Highway between Km 20 and Km 40. Together with the fact that land in any industrial estate is highly demanded by investors and there appears to be a shortage of such land, demands for land in the TFD Industrial Estate have consistently increased. The Company’s pricing of its land and rent will however be based on construction costs, funding costs and land prices in the neighborhood. The Company adjusts both the rent and sales prices of vacant land to accord with market conditions on a yearly basis. The Company has two major sales and distribution channels; namely, sales office at the TFD Industrial Estate and real estate agents but it has no policy to appoint or hire any property agent. At the other end, it communicates with markets through billboards erected at the TFD Industrial Estate, newspapers, websites and joint events co-organized with the BOI.

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Land with standard factory building/warehouse building TISCOM’s target groups of customers in the completed factory and warehouse for rent business are small and medium-sized enterprises (SME) as well as Thai and foreign operators wishing to restrict their investment risk during the initial investment phase. Some foreign investors prefer to set up factory and warehouse in an industrial estate thanks to available public infrastructure and related industrial services. In addition, by concentrating in the industrial estate, they can take advantage from developed transportation system, raw material management and interdependency with other industrial counterparts. This is especially the case of the automobile industry and the petrochemical industry. In addition, completed factory and warehouse building help them save time and labor costs to build a factory to manufacture products. That’s why factory and warehouse building for rent is an alternative that enables investors to reduce investment costs while enhancing their competition flexibility. Customers can choose to rent factory and warehouse buildings during an initial phase and will only buy industrial land, factory or warehouse of their own when business subsequently expands. This service also helps the Company to maintain a good long-term relationship with customers as they could focus more at their strategic investment without having to put money into land, factory or warehouse and thereby reduces investment costs while increasing investment returns. As a result, TISCOM’s factory and warehouse location and its comprehensive one-stop service center are indeed its competitive advantage. Rents charged by TISCOM’s factory and warehouse buildings depend mainly on costs of construction and funding costs. When setting a rent, TISCOM will take into consideration the site of factory and warehouse together with rents offered by competitors in nearby industrial estates to ensure competitiveness. TISCOM has two main distribution channels; namely, through salespersons and real estate agents but it has no policy to hire a real estate agent. Other than the two channels, customers are introduced to the industrial estate through various agencies by word-of-mouth. In addition, TISCOM also advertises through media such as billboards erected at the TFD Industrial Estate, newspapers, website and joint events co-organized by the BOI similar to market communications carried out by the industrial estate business. Residential building (Condominium) Target groups of customers in the residential building project of both the Company and VSSL are medium-income earners who eye for a condominium in the heart of the city close to skytrain and those wishing to have the second home for weekend retreat. At present, the Company and VSSL have three condominium projects under development and/or sold and/or waiting to be transferred to customers which include (1) the 15 Sukhumvit Residence Project; (2) the Colonial Kao Tao Hua Hin Project; and (3) The Mahadlek Residence Project. Competitive advantage of the Company and VSSL in the condominium business is a result of the management’s long-time experience in the real estate development industry which enables the Company to effectively select an ideal site for residential projects. Each project’s sales prices are based mainly on costs of land and construction. To determine sales prices, the Company and VSSL will take into consideration condominium sales prices of other projects in nearby areas to ensure competitiveness. Approximate prices of the three residential condominium projects are as follows: Condominium Projects Approximate price (Baht/square meter) 1. The 15 Sukhumvit Residence Project 110,000 2. The Colonial Kao Tao Hua Hin Project 90,000 3. The Mahadlek Residence Project 109,500

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The Company and VSSL have two major sales and distribution channels; namely, direct sales through each project’s sales office and sales through broker companies both officially hired and not hired by the Company and VSSL. However, at present, there is no policy to hire an agency company. The Company and VSSL’s marketing communications are conducted through various channels ranging from discount and promotion campaigns to payment of the CAM (Common Area Management) fee for condominium customers during the first year. Office building for rent SG’s target groups of customers are Thai and foreign operators wishing to secure an office in the Central Business District (CBD). SG’s main group of customers is foreign business introduced to SG by word-of-mouth. At present, the Company has co-invested in the office for rent business through SG in which it holds 49.91 per cent shares. SG has two office buildings for rent; namely (1) SG Tower 1; and (2) The Millennia (SG Tower 2). Locations of these two office buildings are connected between Soi Mahadlekluang 3, Rajdamri Road and Langsuan Road which are close to two BTS Skytrain stations of Rajdamri and Chidlom. The site is considered a strategic location which helps enhancing SG’s competitive advantage in this office for rent business. SG determines the rent of its office space on the basis of original rents it currently charges customers while rents of neighboring offices are also taken into consideration to ensure SG’s competitiveness. SG has a policy to adjust its rents every three years based on the rental term to consistently reflect market conditions. SG has two major sales and distribution channels consisting of direct sales through SG’s sales office and sales through brokers. However, SG does not hire any agency company. SG neither has marketing activities nor organizes promotion campaign in the office space for rent business since the majority of its clients are introduced by word-of-mouth. At present, both office towers boast as high as 93.44 per cent occupancy rate.

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Status of Industry and Competition

Industrial Estate

Currently the Industrial Estate Authority of Thailand (“IEAT”) has 49 industrial estates in operation in 15 provinces, 11 of them are operated by I-EA-T and 38 are jointly operated with other developers. The others are industrial estates and industrial parks which are operated by the public companies. IEAT now has its plan to develop new industrial estates in many provinces especially in the area near the borders of the country. As of now, the total areas of industrial estate in the eastern and central part of Thailand represent 95 percent of the total supply, where the eastern part still are the favorite of the investors because of its safety from the flood. However, the central area has the highest rate of average occupancy, following by the eastern part. Most investors still interest in the central areas due to many supportive factors from the central utilities and infrastructures such as Deep Sea port, international airport and railway route etc. As both many Thai and foreign investors still remain confident in Thailand, thus the occupancy rate in every parts has increased from the past year even in the areas which faced the flooding crisis. The pricing of the land in both industrial estate and industrial parks is effected mainly by several factors i.e. locations, distance from the transportation system, the infrastructures and their suppliers. As a result, the price of the land in Bangkok industrial estates are the highest one because of the fact that they are in the center of the transportation including sea ports and international airport, whereas Chachoengsao and Rayong are the second and third , consecutively. The average land selling price in industrial estate in the first half of the year 2013 has slightly increased from the past year, depending on its location. In some eastern industrial estate, the price has increased by 10-30 % as a result of the increase in the cost of fundamental structure and because of the limited supply of land as some industrial estates still having problem to expand their areas due to city planning, laws and related regulations, yet also including the objection from the nearby community. Diagram : Supply by region and Occupancy Rate of each region as the first half of the year 2013

 Source: The industrial market estate in H1 2556 (Colliers International).

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Diagram : Land price of industrial estate as the first half of the year 2013

ďżź

Source: The industrial market estate in H1 2556 (Colliers International).

The competition in industrial estate is considered not too high due to few numbers of developers and also the high initial investment required . The direct competitors of the company are others industrial estate in the same zoning which are the Gateway City Industrial Estate and the Well Grow Industrial Estate. Because of the superb location of TFD Industrial Estate which is the strategic and competitive advantage point, the Company can compete fairly high and hence is able to be the Price Leader or Maker to other industrial estates which are closed by. Land with standard ready built factory / warehouse For industrial estate development industry, the process will start from the industrial land development, invest in fundamental structures in the industrial land and then sell land to industrial entrepreneurs to build factory and warehouse. The manufacturers / investors may have a choice to rent the factory and warehouse instead so as to decrease such investment and also risk from any uncertainties which may occur. Also the investors will have convenience from full range services from the industrial estate developer. In addition the industrial estate development, the standard ready-built factory and warehouse also attract foreign entrepreneurs who want to set up their manufacturing bases in Thailand without to invest in ownership in factories and warehouses. Supply of standard ready-built factory and warehouse can be classified into 2 main types : supply from developers who also own industrial lands , thus the developer of factory and warehouse is the same person as the owner of industrial estate , and supply from developers who build factory and warehouse on the industrial land , either purchased or rent from other developers. For example, the company that builds factory and warehouse for rent on the land purchased from the industrial estate developer in various locations etc. The demands of the standard ready-built factory and warehouse for rent come from the manufacturers who do not want to own the factory and warehouse in order to decrease the project’s investment and for the flexibility in the operation. Moreover, Thailand is still a great choice for foreign investors because of its location, which located= in the central part of Asia, skill workers, good infrastructure including the rules and regulations which support the investment from abroad. Therefore, the demand for the factory and warehouse for rent is still increase. According to the report of CB Richard Ellis (Thailand) (CBRE Thailand), in the third quarter of the year 2013 , supply of industrial ready built factories (RBFs) increased 1.5 % comparing to the second quarter of the same year. Currently there are some ready built factories which are under construction, these factories will be additional supply in the future by 12 % of the current supply, while the demand of ready built factories for rent has increased from 1,480,000 sq.m in the second quarter to 1,510,000 sq.m in the third quarter of year 2013. The increase in such supply resulted in decrease Thai Factory Development Public Company Limited

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in occupancy rate from 79% in second quarter to 77 % in the third quarter, a slightly reduction of 2%. Diagram : Supply, demand and rental rates Industrial space for rent ďżź

Source: CBRE Research The competitions in the industrial land and standard ready built factory and warehouse is still considered moderate as there are few developers because of the high cost of investment same as to the industrial estate developers. In addition, most of the entrepreneurs and investors which have demand in the factory and warehouse for rent, normally have target location in which such developers can support their needs. Direct competitors of TISCOM are the industrial estate developers, which provide the land and standard ready built factory / warehouse for rent in the same location. However, due to the good location of TFD Industrial Estate which is considered a strategic point and a competitive advantage to the Group Company. As a result , the Company and TISCOM still have high competitive potential and thus make them to be a Price maker in the nearby industrial estates. Residential Condominium Currently, as people’s lifestyles and consumer behaviors in living places has switched from townhouses or single-detached to residential condominium units as a result of their working places are in town. The demand of residential condominium does not decrease and most of developers has turned to develop high rise condominiums though in some areas the supply are relatively high such as Rachada, Rama 9, Lad Prao, Sukhumvit etc. Moreover, the Bangkok City Plan committee has assigned the new city plan, for the Condominium sectors, to still base on the original plan in 2006 which yield the benefit to Condominium Construction in lanes which the cost of land is not as much high as land located along main road. The research of CB Richard Ellis (Thailand) (CBRE Thailand) shows that for the condominium market in Bangkok , there are clear differences between the condominium in the downtown market comparing to suburban market by the sizes and quality. The downtown market are those expensive projects while the suburban projects mostly aim on the mass market, with single bedroom units. Total supply of condominium in Bangkok currently is approximately 380,000 units, the majority of supply is in the suburban areas whereas the downtown projects is a limited volume but very high price. The supply of numbers of projects in downtown has increased approximately by 22% from the second quarter of year 2013. The increased number of downtown mainly are located in the less prime location, the area between downtown and suburban. The surplus in supply in downtown areas has decreased and so the price has then increased, especially for high quality projects and those in prime location because the luxurious and high-end consumers realized the high price of both prime quality and location projects. About 80% of the buyers are still Thai but the number in foreign buyers has increased especially the numbers of buyers from Hong Kong, Singapore and also Taiwan. The Bank of Thailand has also followed up the lending from commercial banks to this sector on the quality of loans and has adjusted more rigid lending criteria to the real estate industry.

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Diagram : Supply, demand and rental rates Condominium projects in downtown Bangkok

Source: CBRE Research Diagram : Condominiums in Bangkok

Source: CBRE Research The competitive situations in the residential condominiums of the Company and VSSL are considered highly competitive because the demand of the condominium market does not decrease or slightly decrease while the developers, both small and large, still increase to develop high-rise buildings even in the areas where supply is high. Direct competitors of the Group Company are the other condominium projects in the same or nearby area of the Company. However, due to the long experiences on the real estate sector of the Company’s management, the Company can select the right and appropriate location to develop its condominium project effectively. Altogether with the reasonable and very competitive price, these factors result in that the Company and VSSL still have potential to compete with other developers in this industry. Office Building According to the research by CB Richard Ellis (Thailand) (CBRE Thailand), at the end of the third quarter of the year 2013, there was no new office building completed in this quarter, thus the total supply of the office space remained constant at 8,090,000 sq.m, comprise of grade B offices 78.3% and grade A offices which located in Central Business District (CBD) 15.1% of total supply respectively. From the disclosure information, it is expected that additional 438,820 sq.m. will be completed during the year 2013-2015 while the total supply of the office space for rent in the third quarter was 7,270,000 sq.m., the increase of 1.0% from the second quarter, or a 3.1% comparing year to year from 2012. The total demand has increased continuously with a tendency to increase in the future. The total occupancy rate of office market slightly improved from 88.9% in the second quarter to 89.8% in the consecutive quarter, an increase of 0.9% or 2.6% comparing to the same period of last year. The take-op rate of office grade A CBD in the third quarter was equal to 90.1 % , an increase from 88.2% in the previous quarter, mainly due from expansion of existing tenants.

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The rental rates in total has increased, as in the third quarter of 2013, rental rate were as follows : • Average rental rate of Grade A in CBD is Baht 810/sq.m./month, an increase of 1.5% from last quarter or 8.0% form the same period last year. ( Y-o-Y) • Average rental rate of Grade B in CBD is Baht 568/sq.m./month, an increase of 2.7% from last quarter or 9.9% form the same period last year. ( Y-o-Y) • Average rental rate of Grade A non-CBD is Baht 602/sq.m./month, an increase of 1.5% from last quarter or 5.1% form the same period last year. ( Y-o-Y) • Average rental rate of Grade B non-CBD is Baht 531/sq.m./month, an increase of 1.5% from last quarter or 9.9% form the same period last year. ( Y-o-Y) The above average rental rates are calculated based on space of 200-300 sq.m. For the rental space for more than 1,000 sq.m., the tenants will get an approximately discount of 5-15% . Diagram : Supply, demand and rental rates The rental office in Bangkok 

Source: CBRE Research Diagram : Supply, demand and rental rates of office buildings for rent by region as of Q3 2556

Source: CBRE Research Diagram : Build a new office building for rent In Bangkok

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Source: CBRE Research The competitive condition of the office building for rent under the operation by SG deemed to be low because of continuous growth in demand while the supply was limited especially in the CBD. In addition, the target customers of SG are the foreign customers who are introduced by the existing customers. The direct competitor in this business is other office buildings for rent in the same location of SG. However, with the strategic and competitive advantage point of SG from its location , SG still have e potential to compete with other companies in the same industry.

Product or Service procurement industrial estate The Company has spent 3-5 years duration to develop land for the project TFD Industrial Estate phase 1. Such time does not include the time in process of asking for permission from related authorities which is the key factor to the time duration. Another factor is season as it is very hard to develop in the rainy season. The procedures to develop the Company’s industrial estate can be summarized as below : Acquisition of Land Study the feasibility of the Project Approve the change area color Of Government EIA and Mater Plan approval from the Government

Marketing and Public Relations Continue to improve Open the Book and Purchase Agreement

Transfer the Ownership After Sales Service

The main materials and services in developing land to set up Industrial estate comprises of land, contractor, project designer or planner and construction materials such as cement and steel etc. The contractor that the Group Company has assigned to do the construction part for the project will also responsible to procure such materials.

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Land with standard ready-built factory / warehouse TISCOM has spent 6-7 months duration to build the standard ready built factory and warehouse in the phase 1 of TFD Industrial Estate which also exclude the time spent on permission from related authorities. The duration of time for building depend on the time spent on permission from related authorities and also the season as it is hard to build in the rainy season, same factors as the case to develop the industrial estate. The procedure to build the factory and warehouse of the Group Company are as follows: The main materials and services in building the standard ready built factory and warehouse consists of land,

Acquisition of Land Study the feasibility of the project Approve the change area color Of Governmen EIA and Mater Plan approval from the Government

Factory / warehouse to meet the needs of customers

Marketing and Public Relations Open the Book and Purchase Agreement

Transfer the Ownership After Sales Service

contractor, project designer or planner and construction materials, the same ingredients as used to develop land for the industrial estate. The contractor that the Group Company has assigned to do the construction part for the project will also responsible to procure such construction materials. Residential Condominium

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The Company and VSSL have spent 2.5-3 years duration to develop and build the Condominium, not taking in to account the time in process of asking for permission from related authorities. The time used in building each condominium project will depend mainly on the size of the project. The steps to develop the Group’s condominium project can be summarized as follow : Main materials in building Condominium project are land , contractor, Project designer and construction materials such

Study the feasibility of the project Acquisition of Land Project Design Construction and EIA approval from the Government

Operations, Sample Construction Implementation Project

Marketing and Public Relations Open the Book and Purchase Agreement

Transfer the Ownership After Sales Service

as Precast concrete, glass and aluminum etc. The contractor that the Group Company has assigned to do the construction will also responsible to procure such construction materials.

Office building

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The Company also operate the office building for rent, by co-operate with the partnership ,Schubert Holdings Plc., Ltd, to take over SG Company which owns 2 office buildings. After such investment, the Company also acts as the project management company. Besides these two buildings, the Company has no policy to build any new office buildings, nor take over other exist office buildings to expand its business in this sector. Policy for land procurement The company and its subsidiaries have many channels to search for lands to develop each project such as acquisition of land by the management executives who possess very long experience in real estate industry, through the Company’s Business development department and acquisition through the real estate agencies. The Company and its subsidiaries will consider to acquire new plot of land when they have new projects or when the land spaces in the industrial estate are reduced and/or when there are some proposed sale or offerings. The Company and its subsidiaries will consider the location, the environment, then conduct project appraisal and feasibility and return on such investment. After go through all these processes, the Company will then consider the price and make a bargain for price and payment conditions/terms before finally enter into the purchase agreement with each owner. Policy of procuring the contractor The company and its subsidiaries have the policy to procure the contractor by open the bids from at least 2-3 company. The Group Company will select and evaluate the contractor from those who are qualified in the Approved Supplier List and then compare the price and the conditions. After selectively agree with the contractor, the Company will prepare an agreement and define all the details such as price, volume, timing, retention guarantee (if needed) etc. Finally the Company will follow up the selected contractor’s performances and also evaluate them by take into account the quality of work, procedure and labor skills, delivery of work, cooperation with regard to the rules and regulations and also for such problems solving.

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Policy of procuring the project design

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Construction Manager of the Company and its subsidiaries will receive the policy from the management executives and also customer’s need and demand to design the project or factories including the interior design. Then they will do the physical test whether the project can be operate according to all the policy assigned. Finally, Construction Manager will search for and select the project design by considering the company’s profile and portfolio, and emphasize on experiences, skills and proficiency. After checking all those qualification then they will prepare for the executive’s meeting to enquire about their works and other details before make the decision to select the project design. Unfinished Work At the end of the year 2013, the inventory of the Company are as shown in the table. Project’s details Number of units Number of units Rai% of Total unit Number of units sold Number of units % awaiting for transfer already Ngan-Wa progress unsold progress Project type of sales transfer the ownership units Value units Value units Value units Value units Value (MB) (MB) (MB) (MB) (MB) 15 Sukhumvit Condominium 2-3-73 99.77% 491 3,613 341 1,738 150 1,874 48.12% 10 40 331 1,698 Residence 26 storey The Colonial Khao Condominium 9-0-42.3 10.00% 383 3,375 7 66 376 3,309 1.96% 383 3,375 Tao Hua Hin 26 storey Note: Currently the Company has suspended the Project The Colonial Khao Tao Hua Hin for some reason.

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Policy on the conflict of interest 1. Policy on the conflict of interest The policy of the Company involves the conflict of interest is based on the principle that any decision-making of the personnel at all levels of the business must perform for the optimized interest of the Company only. The said decision shall be made free of personal influence, family tie or close associates, who may affect the decision-making to decide which the optimized interest of the Company is. Especially for all personnel to work full time for the Company in full capability, and should not have interest in other business outside the Company to take the time off or dedication to the duty on responsibility for the Company, and may cause damage to it. The conflict of interest may happen in case the personnel of all levels have the personal interest or family members or close associates on finance or other sides in the business, which may receive interest from the decision-making of that person in performance of duty to the Company or realize its activity or operation or future plan. The Company deems to be the duty of personnel of all levels to avoid having involvement in finance and/or relation with the outsiders, who may result in the Company to lose interest or cause conflict on loyalty or interest or obstruction of effective performance. The Company has the policy to safeguard its justified interests, while to have the scope of freedom in various activities of the personnel of all levels to the minimum.

2. Examples of the situations on the conflict of interest The personnel of all levels should take the following examples as guidelines for their interest and consider it as an importance thing for working Disclose and consult in step to help unravel problems or lead into the appropriate solutions. They should ask for advice when they are in situation of doubt or confuse. 2.1 General investment The general rule of this matter is the personnel of all levels, family members or close associates must not hold the shares or receive interest from the competitor companies or any enterprises, including the customers, trade partners/sellers that the Company has contact. The purchase of shares of the listed companies in the SET or investment via the mutual fund or investment units are not conflict of interest, as long as it does not affect the performance with the Company. 2.2 Supply of goods and services to the Company The conflict of interest may happen if the personnel at the level of family or close associates supply goods or service to the Company as a trade partner/seller. If that person can lead or influence to the said operations, although no duty involved the business operations of the Company with that business. In the event that the personnel of all levels of the Company have a family member or close associate as an employee, owner, customer, trade partner/seller or competitor, and s/he participates in the decision-making involve with the business related with that enterprise, shall be regarded as conflict of interest.

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Likewise, if the customer, trade partner/seller or employee of a competitor has a family member as employee of the Company, then it is not appropriate to authorize that person the power to influence on a decision-making in the company’s activity involve with the family member. The Company shall not buy or lease property, equipment, raw material or use service from an employee of the Company, family member or close associate, and not sign a contract for that matter (except the employment contract) except in a special case and approved in writing from the Managing Director. 2.3 Entertainment and gifts The personnel of all levels should not receive entertained things, gifts, passenger tickets, sports tickets and other tickets for recreation or entertainment or offers that are personal matters involving their duty, if such action can lead to binding the Company or cause them to be put in the situation of conflict of interest. 2.4 Accepting academic job as a host or public service or any positions The management or employee can participate in the outside activities with good reasons. In several cases the Company encourages its personnel to participate in the external activities as it deems those activities may expand the perspective and experience to its personnel, which can help to improve the job of these people to the Company even more. The personnel who accept the jobs in professional institutions as lecturers, public service or offices such as a director, consultant, etc, they must ask for approval from the Managing Director before acceptance of the job or title. The employee that received approval should be realized that s/he would not bring the Company or his/ her title to bind the outside activity, except by approval to do so. In the event that the management or employee is appointed the secretary of the board of directors of the Company or agent in the management of a project/director in an affiliate or subsidiary shall not be regarded as a conflict of interest.

3. Definitions “Family” means the person with relation to the personnel of all levels from the bloodline or legal marriage, including legally adopted persons. “Close member” means the person with involvement with the personnel of all levels in any relations closely.

Connected Transactions

The Company and subsidiaries conducted transactions with persons having potential conflict of interest. The transactions were those executed with directors, executives and/or shareholders of the Company and subsidiaries as well as those with persons having potential conflict of interest of directors, executives and/or shareholders. Details of the Company’s relationship with persons having potential conflict of interest are as follows.

1. Persons with potential conflict of interest and nature of relationship Person with potential conflict of interest Nature of relationship Mrs. Chalida Taechaubol (Dr. Apichai’s wife) JC Kevin Development Co Ltd (“JC Kevin”) holds 100 percent of its shares. (formerly named V.C.A.L Business Group Co., Ltd) Dr. Apichai Taechaubol and Mr. Chotiwit Taechaubol The company develops condominiums for sales, office (Dr. Apichai’s son) are JC Kevin Co., Ltd’s directors. space for rent and hotels. Dr. Apichai Taechaubol CEC and major shareholder Mrs. Chalida Taechaubol Dr. Apichai Taechaubol’s wife

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2. Transactions between the Company and subsidiaries vs. persons with potential conflict of interest In 2013, the Company and subsidiaries conducted transactions with persons having potential conflict of interest without causing any conflict of interest. Details are as follows. Person having potential conflict of interest

JC Kevin

JC Kevin

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Company

Nature of transaction

TFD

TFD used JC Kevin’s restaurants and hotels to entertain guests and to organize the Board of Directors’ Meeting and the Shareholders’ Meeting Trade payables JC Kevin signed an agreement to lease TFD’s factory on December 20, 2013 - The rental term is three years from March 1, 2014 to February 28, 2017. - The rent and service fee is Baht 200 per square meter totaling Baht 360,000 per month.

TFD

Value (Million Baht) As of December 31, 2013

0.42

0.10 -

Necessity and Rationality

JC Kevin charged a service fee with a 10-per cent discount. The Audit Committee’s opinion: The Audit Committee is of the opinion that the transaction was reasonable as it was convenient for the Company to entertain guests and organize meetings since the hotel was close to TFD’s office and the Company was given a discount. The rent is the same as what TFD charges the third party. The Audit Committee’s opinion: The Audit Committee is of the opinion that the transaction was a normal course of business.

Thai Factory Development Public Company Limited


Person having potential conflict of interest

JC Kevin

Company

Nature of transaction

VSSL

On December 25, 2013, VSSL signed an agreement to buy and sell 138 rai of land totaling Baht 800 million with JC Kevin

Thai Factory Development Public Company Limited

Value (Million Baht) As of December 31, 2013

300

Necessity and Rationality

VSSL entered into an agreement to buy and sell land totaling 138 rai at Khao Yai for Baht 800 million with JC Kevin to develop a property project for sales. The transaction was not disclosed to the Stock Exchange of Thailand (SET) and did not seek approval from the Shareholders’ Meeting, either. Asia Plus Advisory Company Limited, a financial advisor who helped preparing documents for submission to the Securities and Exchange Commission (SEC) to seek approval to issue and offer shares , was of the opinion that as the transaction was a normal unconditional business transaction which exceeded 3 per cent of the net tangible assets, the Company therefore had to seek an approval from the Board of Directors’ Meeting, disclose the transaction to the SET and seek approval from the Shareholders’ Meeting according to a relevant notification. The Company was of the view that since an independent financial advisor had to be hired for the transaction to express opinions to be approved by the Shareholders’ Meeting, this would further delay the land purchase and prevent the Company from achieving its plan within a deadline. The Company therefore terminated the agreement and asked for a return of the down payment on March 6, 2014. The Audit Committee’s opinion: The Audit Committee was of the opinion that the Khao Yai land purchase was reasonable to the Company’s business as it would allow VSSL to continue developing and having residential projects for sales. The financial advisor however pointed out that the transaction was a normal unconditional business transaction that accounted for more than 3 per cent of the net tangible assets. As a result, the Company was required to disclose information to the SET and seek approval from the Shareholders’ Meeting. The Audit Committee was of the view that an independent financial advisor had to be hired to provide an opinion before the Company could seek the Shareholders’ Meeting approval, an act which would further delay the land purchase and could affect the share issuance and offer. The Audit Committee agreed that the Company should revoke the transaction. Annual Report 2013

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Person having potential conflict of interest

Dr. Apichai Taechaubol

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Company

Nature of transaction

TFD

On April 1, 2013, the Company bought 7.01 million shares of VSSL which accounted for 100 per cent of its registered and paid-up capital from Mr. Apichai and Mrs. Chalida Taechaubol for a total of Baht 497 million. (The agreed price was Baht 500 million but as the Company paid before the due date, a discount of Baht 3 million was given.)

Value (Million Baht) As of December 31, 2013

496.90

Necessity and Rationality

The Company agreed to buy VSSL at Baht 500 million but was given Baht 3 million discount after a payment was made before the due date. The net amount being paid was Baht 497 million while the appraisal price by an independent financial advisor was at Baht 582.98 million. The price therefore was lower than a fair value. The Audit Committee’s opinion: Having reviewed issues relating to this transaction, the Meeting of the Audit Committee No. 8/2555 held on December 26, 2012 was of the opinion that the purchase of VSSL’s shares was reasonable to the Company’s operation as this would add a major source of income and cash flows to the Company in the near future. The transaction was considered beneficial to the Company. The Committee unanimously resolved that the purchase of VSSL’s ordinary shares which was a connected transaction be submitted to the Board of Directors’ Meeting to seek further approval from the Shareholders’ Meeting.

Thai Factory Development Public Company Limited


Loans between the Company and subsidiaries with persons having potential conflict of interest Person with potential conflict of interest

Nature of Transaction

Carried forward (Million Baht)

2013 Outstanding Increase Payment

- (104.15) JC Kevin borrowed money from VSSL Principal 104.15 3.24 (14.59) and issued VSSL a promissory note Accrued 11.35 interest (P/N) with the following details: - Issue date: Nov 30, 2010 for a face Total 115.50 3.24 (118.73) value of Baht 124.2 million with due payment upon demand and 8 per cent interest per annum - New P/N was issued in 2011 and 2012 to replace the existing one for a total of Baht 104.15 million with an interest rate being adjusted to 8.4 per cent per annum - During Q1 of 2013, VSSL was entirely repaid for both the short-term loan and interest incomes. Loans between the Company and subsidiaries with persons having potential conflict of interest

- This transaction had taken place before the Company - bought VSSL who was repaid before being acquired by the Company. - According to Clause 7 of Notes to Financial Statements: Transactions with connected business Page 15: Interest income in 2013 totaled Baht 2 million (8.4 per cent interest rate per annum) should be a transaction between VSSL and JC Kevin. Page 18: Loan between VSSL and JC Kevin Accrued interest in 2013 increased by Baht 3.24 million.

JC Kevin

Person with potential conflict of interest

Nature of Transaction

Carried forward (Million Baht)

Principal Mrs. Chalida Taechaubol VSSL borrowed from Mrs. Chalida Taechaubol and a P/N was issued in return on December 27, 2012 for a face value of Baht 33.57 million with due payment upon demand and without interest.

Thai Factory Development Public Company Limited

33.57

2013 Outstanding Increase Payment

- (33.57)

Necessity and Rationality

Necessity and Rationality

- This transaction had taken place before the Company bought VSSL as a subsidiary.

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Loan guarantee with financial institutions Person with potential conflict of interest

Mr. Apichai Taechaubol

152

Annual Report 2013

Borrower Guarantee Mortgage

TFD TFD VSSL

ü ü ü

Loan amount as of

990.00 1,529.00

Outstanding debts Nature of As of Dec As of Dec transaction 31, 2012 31, 2013

99.74 1,452.57

150.00 558.72

Necessity and Rationality

Personal This guarantee was given in accordance with loan conditions guaraantee of a financial institution from which a loan was borrowed for use as working capital and to buy land and build projects of the Company and subsidiaries, which is a transaction carried out for the best interest of the Company and subsidiaries. The Audit Committee’s opinion: The Audit Committee is of the opinion that loan guarantee of the Company and subsidiaries was reasonable and necessary and it would benefit performance of both the Company and subsidiaries.

Thai Factory Development Public Company Limited


Risk Factors 1. Operation risk of the Group of Companies 1.1 Legal risk relating to the real estate sector Amendments of laws, rules and regulations relating to the real estate sector such as the Land Development Act, zoning regulations, the town and city planning laws and attempts to set more areas as green zones defined as farm and rural areas and fewer areas as purple zone catered for industrial activity could expose the Group to a possible risk. Such amendments may affect the Group’s operation or delay the Group’s ongoing projects. The Group manages this risk by studying and consistently monitoring possible regulatory changes for to stay ready for possible change. 1.2 Risk from delay of property projects currently under development The TFD Phase 2 Industrial Estate Project An industrial estate developer is required to submit a master plan together with a conceptual design and other supporting documents to the Industrial Estate Authority of Thailand (IEAT) for approval. The master plan has to correspond to relevant laws, rules and regulations. In case of legal or regulatory amendment, the developer must update its master plan to correspond to the change. That’s why there is likelihood for the TFD Phase 2 Industrial Estate Project to be delayed as a result of change and adjustment of its master plan. In addition, based on the Ministerial Regulation which has enforced the 2011 comprehensive town and city planning of the Bangpakong Community, Chachaoengsao Province, land under area No. 6.2 where the TFD Phase 2 Industrial Estate is located is classified s rural and farm lands (Green Zone) and therefore not allowed for industrial purpose. At present, the Company is seeking permission from the authorities to change certain parts of the land under area No. 6.2 into land for industrial and warehousing purpose (Purple Zone), a process which could further delay this project. The Town and Country Planning Board has already approved the amendment and a public hearing was already conducted to which stakeholders were invited to review the amended plan, requirements and specifications. The Company continues to study and monitor possible regulatory changes for any adjustment of the master plan, conceptual design and other supporting documents to accommodate possible change without delay.

The Colonial Khao Tao Huahin Project In 2012, the Company was sued as a co-defendant (Defendant No. 4) together with Paknam Pran Tambon Administration Organization in a lawsuit in which the plaintiff asked the court to revoke a construction permit of the Colonial Khaotao Huahin Project based on an allegation that the permit had been issued for a site located fewer than 200 meters from the seashore as announced by the Ministry of Natural Resources and Environment, making the construction permit violating the legal provision. The defendants have been prohibited from building or doing anything until the case becomes finalized. The Central Administrative Court has ordered the construction to be temporarily halted.

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At present, the Company temporarily suspends the project’s sales and construction activity. It has appealed the Central Administrative Court’s order with the Supreme Administrative Court requesting the latter to revoke the court order. As of December 31, 2013, the Company already invested Baht 396.62 million in the project. However, if the court eventually decides not to allow the Company to build the project based on its original design, it will adjust the design to meet the court’s decision; or it may dispose of the project to other investors. Based on an appraisal by Brookes Real Estate Co., Ltd, the project is valued at Baht 589 million which is higher than the Company’s current investment in the project. The Mahadlek Residence Project The Company has leased 728 square wah from Office of the Privy Purse in Soi Mahadlek Luang 2, Rajdamri Road, since 2004 to construct the Mahadlek Residence Project with the 30-year leasehold right starting from the day the construction is completed. At present, the Company is seeking the project’s Environmental Impact Assessment (EIA) approval from the Office of Natural Resources and Environmental Policy and Planning. The project’s sales will start after it gets the EIA approval. As of December 31, 2013, the Company invested a total of Baht 204.74 million investment including project expenses. It expects to receive a result of the EIA review by Q2 of 2014. The Company has already completed the project’s construction design and, upon the approval, will immediately apply for a construction permit as well as build and sell the project. 1.3 Risk from sourcing additional lands for the development of the TFD Phase 2 Industrial Estate Project As of December 31, 2013, the Company bought approximately 986.51 rai of additional vacant land in the Phase 2 project. The land which is located close to the project’s Phase 1 is part of the Company’s plan to expand its Phase 2 project by another 2,500 rai. It is currently doing landscape architecture, designing infrastructure and preparing an EIA report for submission to the authorities. The Company therefore could be exposed to a risk of not able to buy as much land for the development of the TFD Phase 2 project as it needs or at a location it wishes. It may also be exposed to higher land prices which could deprive the Company of a chance to achieve the land size and location as required in the TFD Phase 2 project development plan; or which could result in higher costs of project development and thereby may affect the Company’s financial position and operation results. However, the Company manages this risk by signing a contract with property brokers to negotiate land prices upon the Company’s conditions as well as to complete land purchase transactions. The Company’s property brokers are both from outside Chachoengsao Province and residents in the area who help facilitating the attempt. 1.4 Risk from the shortage of construction contractors Construction contractors are vital to the real estate sector. The Company and its subsidiaries therefore could be exposed to a shortage of contractors which could delay the Group’s construction projects and project development plans from original schedules and which may affect the Group’s financial position and operation results. However, the Company and subsidiaries manage the risk by internally setting up the Construction Department and by sourcing construction contractors through a bidding process. After selecting a contractor, the Company and subsidiaries will monitor his activity and evaluate his performance based on quality of his work. Contractor passing an evaluation by the Company and subsidiaries will have his name kept in the Approved Supplier List for opportunity to work in the Group’s future projects.

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1.5 Risk from economic and political conditions The business of both the Company and subsidiaries may be affected from economic and political volatility as well as other macroeconomic factors. This refers especially to the industrial estate business, the property development business which offers standard factory/warehouse buildings and the office space for rent business since their major clients are foreign operators who could curtail or relocate their investments from Thailand and thereby reduce demands for factory. The risk may affect the Group’s financial position and operation results. However, the Group manages the risk by diversifying its business which now ranges from industrial estate projects to residential projects and office towers for rent. Besides, the Group provides alternatives for business operators to either buy or lease land, factory and warehouse building to reduce their investment risk which not only answers to their need but also reduces fluctuated demands the Group usually experienced by economic, political and other macroeconomic factors. 1.6 Risk from natural disasters Natural disaster risks such as fire, earthquake and flood could adversely affect financial position and operation results of both the Company and subsidiaries. It’s true that the Group was not affected from Thailand’s tragic flood in 2011 since its factory/warehouse site is situated in the eastern part of Thailand. As a matter of fact, the Group does benefit from higher demands of customers wishing to relocate production base to Thailand’s eastern region, a reason why demands have significantly increased to the point where the Company and TISCOM (Total Industrial Services Co., Ltd) could not promptly build factory/warehouse buildings to satisfy the needs. However, this does not guarantee, either, that any flood or natural calamities will not affect the TFD Industrial Estate in the future. The Group has laid down disaster and risk prevention systems which include a flood control system and buffer around the project. Both the Company and the subsidiaries have also bought property insurance, natural disaster insurance and related-damage insurance resulted from fire, lightening, explosives, storm, hail, earthquake or eruption of earthquake or tsunami and water-induced threat. The insurance also covers loss of rent incomes. 1.7 Risk from competitions from other industrial estate developers Other industrial estate developers operating the same business as the Company’s core business could bring in higher competitions in a form of developing other industrial estates and luring away customers. The competition could either push project development costs higher when other developers offer higher prices for the purchase of the same land in the same or nearby areas where the Company’s project is located; or it may lower sales prices of an industrial estate due to price-cutting competitions among industrial estate projects located close to the TFD Industrial Estate which could affect the Company’s financial position and operation results. However, thanks to experiences of the Company’s executives in the business, the Company is able to select a strategic location which becomes its competitive advantage as this has enabled the Company to highly compete and be a price maker among industrial estates within the same area. In addition, by sourcing land through land brokers who negotiate the best price based on the Company’s conditions, the Company can keep its land costs under control. 1.8 Risk from continued development of residential projects Developing property for sales has a risk of discontinued flow of incomes. In 2012, the Company sold out its 59 Heritage Project, a residential project located in the prime area which was its major source of incomes. Realizing the importance of creating constant flow of incomes, it acquired a company which owns the 15 Sukhumvit Residence Project. At present, VSSL is building the project expected to complete within 2014. So far, 48.12 per cent of the project’s value has been sold. The project is an extended attempt to continue recognizing the Group’s incomes as demands for condominiums within the area remain high thanks to its prime location. Thai Factory Development Public Company Limited

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Yet, the Company manages its future risk by formulating a consolidated three-year operation plan of both the Company and its subsidiaries. The plan has duly taken into consideration a continued flow of operating incomes in each business line. 1.9 Risk from dependence on incomes from property sales to a Property Fund/the Real Estate Investment Trust (REIT) Property fund is one of the major channels to which the Company sells its properties. In 2012, the Company and Total Industrial Services Co., Ltd (TISCOM) sold completed factory buildings and leasehold rights in the TFD Industrial Estate Project and other industrial estates worth Baht 1.044 billion to a property fund before recognizing Baht 554.89 million as sales profit from the transaction. In 2013, the Company sold and transferred another 460 million worth of land and factory buildings to the property fund before subsequently recognizing Baht 215.77 million as profit. In addition, TISCOM transferred the leasehold rights and sold factory buildings worth Baht 290 million to the property fund before recognizing another Baht 134.33 million as sales profit. In 2014, the Securities and Exchange Commission (SEC) required that funds and investment in the real estate sector be mobilized through the REIT instead of through a property fund. So far, no REIT has yet been approved by the SEC. Together with tax differences between both vehicles, this could result in a lower return on investment for REIT unit holders compared to investment units of a property fund. As a result, the Company and subsidiaries are exposed to the risk of dependence on real estate sales incomes to a property fund or to the REIT; or it may also be exposed to a risk of not able to sell assets to the property fund or the REIT in 2014. Yet, although the Company and subsidiaries could not sell properties to either the property fund or the REIT, the Group’s factory and warehouse building business will continue to generate rent incomes. Besides, the Group and subsidiaries will still sell assets to the general public who, not being the property fund or the REIT, continues to be the Group’s core customers. 1.10 Risk from lease agreement renewal The business in which standard factory or warehouse buildings are built for customers to rent in several industrial estates or industrial zones operated by the Company and subsidiaries is one of the Group’s major sources of incomes. In addition, incomes from property management directly vary with rent incomes derived from the property. As a result, the Company and subsidiaries are exposed to risk from having to secure new customers or from the fact that most lease agreements for existing clients are short-term. An average term of a lease agreement is three years which when due may not be renewed by customers and therefore could affect the Group’s future incomes. However, based on past performances, occupancy rate of standard factory and warehouses buildings of the Company and TISCOM remained as high as 80-90 per cent where some were 100 per cent fully rented. In other words, we could not build enough factory and warehouse buildings to respond to customer’s need. Besides, most customers renew the agreements which hardly leave the factory and warehouse vacant. The risk in this area remains low and the Company can compete with other contenders. As of December 31, 2013, the Group planned to build eight warehouses which are currently under operation. The Group therefore could be exposed to a risk of having no tenants for warehouses currently in the construction plan. This could leave the Company with construction cost burden and a fall of the Group’s overall occupancy rate. However, the Company and subsidiaries will start building factory or warehouse buildings for rent only when there are customers wishing to rent such factory or warehouse to minimize the risk of factory or warehouse buildings in the construction plan not having tenant.

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SG’s office space for rent business is also exposed to a risk of tenants not renewing lease agreements of which the term is mostly three years. If a lot of tenants choose not to renew the agreement and SG could not secure new tenants, this could directly affect cash flows and operating results of both SG and the Company. However, based on past performances, SG’s occupancy rate was as high as 80-90 per cent and most customers opted to renew their lease agreements since SG’s office towers are strategically located. The risk is therefore low and the business is considered competitive. 1.11 Risk from land expropriation Based on an agreement relating to investment in the asset resulted from the capital increase of the MFC Industrial Investment Property and Leasehold Fund (the “M-II Property Fund”), the Company and TISCOM have made an agreement in regard to the Fund’s leasehold right in the land lease agreement of the Huabcham Group (landlord according to the land lease and development agreement with TISCOM). To elaborate, if the Kingkaew Project land is partially or entirely expropriated, the Company and TISCOM will jointly and separately agree to compensate the Fund if such expropriation prevents the Fund or small-time tenants from exploiting the land. Besides, if an asset of the Company and TISCOM must be replaced, restored or repaired, the Company and TISCOM agree to restore the asset to an original ready-to-use condition prior to the expropriation having the same or better quality than TISCOM’s existing pre-expropriated asset for the Fund at the expense of the Company and TISCOM. This will also be carried out in accordance with relevant construction standards. However, if the M-II Fund cannot renew the leasehold rights or take transfer of the leasehold rights under the lease agreement between TISCOM and the Huabcham Group which will expire on February 19, 2036 and of which the renewal will be registered for 30 years from February 20, 2036 to February 19, 2066 by any reason excluding the Fund’s fault, the Company and TISCOM agree to compensate Baht 40 million to the Fund. The Company and subsidiaries therefore could be exposed to land expropriation in the Kingkaew Project and the fact that TISCOM and the Huabcham cannot renew the lease agreement or transfer the leasehold hereunder which will subject the Company and subsidiaries to compensate or pay additional expenses under the agreement. The Company cannot guarantee that the land under the project will not be expropriated since land expropriation is the government policy and this depends on the need of the public sector to use the land at a particular point in time. However, the land lease and development agreement between TISCOM and the Huabcham states that if the leased land is partially or wholly expropriated by the authorities, the Huabcham agrees to compensate the land leasing fee to TISCOM in proportion to the remaining lease term during which TISCOM cannot exploit. In addition, TISCOM shall be a superficiary to claim for compensation of building or construction with the expropriating authorities to replace profits TISCOM has lost from having invested in such building or from being deprived of the rights to exploit the building or construction. The land lease and development agreement between TISCOM and the Huabcham also states that the Huabcham has covenanted that when the lease term is due in 2036, it agrees to let TISCOM rent the land for another 30 years; and when this 30-year rental term is due, the Huabcham agrees to let TISCOM continue renting this piece of land if TISCOM wishes to do so for no fewer than 20 years. As a result, the risk from land expropriation in the Kingkaew Project and the risk from not being able to renew a lease agreement or to transfer the leasehold rights according to the lease agreement remain low.

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2. Financial risk 2.1 Risk from interest rate increase and the Bank of Thailand’s regulations relating to the real estate sector Risk from interest rate increase The policy interest increase as announced by the Monetary Policy Committee has raised loan interests of financial institutions which directly affects the real estate sector in two aspects as follows. 1. Impact to customer’s home-buying decision Since most targeted customers in the condominium business will apply for residential loans from financial institutions, interest rates and loan payment conditions are crucial to their decision to buy a condominium unit. If loan interest is up, this will affect the customer’s costs of fund which could delay his/her buying decision. The Company manages this risk by studying customer’s behavior and needs before offering sales and down payment conditions that could minimize their financial burden when buying a condominium unit. 2. Impact to the Group’s costs of fund Since the Group seeks loans from financial institutions to develop various real estate projects now and in the future, increase of interest rates will also affect the Group’s financial costs. However, following the issuance and offer of the capital-increase shares, the Company was able to mobilize funds from shareholders’ equity which helped reducing its dependency to raise funds from liabilities. The risk incurred from the interest rate increase that would affect the Company’s costs of fund therefore was reduced. Risk from changes of the Bank of Thailand’s regulations relating to the real estate sector At present, the Bank of Thailand closely monitors quality of loans extended by commercial banks which has made them stricter when approving customer loans. Besides, loan approval procedures were adjusted and loan amounts given to general customers who may not be major business were reduced compared to collaterals. As a result, this group of customers is required to place a higher down payment when applying for home loan from financial institutions, an act which could affect their purchasing power and decision. On the other hand, the fact that commercial banks are stricter when extending loans helps the Group screen and reach customers who are really qualified and indeed having a real purchasing power. 2.2 Liquidity risk and risk from accessing funding sources The property development business is a capital-intensive business where a lot of investments are needed from the start to buy land, develop the property, construct buildings and conduct sales activities. All of these activities require money before the Group gets paid from the majority of sales values on the day the ownership is transferred which will be realized only after the construction is completed. As a result, the Group has to endure a project management period for 2-5 years depending on the project’s type and size. In other words, the business is exposed to a risk of having to manage financial liquidity and accessing funding sources required in the business. Yet, the Company manages this risk by carefully reviewing a development plan which starts from selecting a site, studying and analyzing the project’s feasibility and hiring project consultant to ensure success to every project. In addition, the Company and subsidiaries mobilize funds from a variety of channels whether through the capital market or financial institutions to reduce dependency risk from having to depend on a single source of fund.

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2.3 Risk from having an overly high debt to equity (D/E) ratio As the Company has borrowed a loan from a commercial bank in Thailand in which the agreement requires that to enable to get access to the loan, it is to maintain the D/E ratio to not exceeding 2.5 times. In addition, in 2013, the Company issued and offered debentures twice. During the No.1/2556 issuance of Baht 500 million worth of debentures, one of the terms requires the Company to maintain its D/E ratio to not exceeding 2.5 times as of end of each fiscal year throughout the entire debenture term. Meanwhile, “liabilities” means total liabilities in the issuer’s financial statements already audited or reviewed by the issuer’s auditor but not including trade payable debts; and “shareholders’ equity” means shareholders’ equity of the issuer as shown in a balance sheet audited or reviewed by auditor. During the second issuance No. 2/2556 of Baht 850 million debentures, the term requires that the Company maintain its D/E ratio to not higher than 3.5 times as of end of each fiscal year throughout the debenture term. “Net liabilities” means total liabilities in the issuer’s financial statements already audited by the issuer’s auditor but excluding trade payable debts less cash and cash equivalents; and “shareholders’ equity” refers to shareholders’ equity of the debenture issuer as shown in a balance sheet already audited by the auditor. As of December 31, 2013, the Company’s D/E ratio based on a definition in the loan agreement signed with the commercial bank was 3.72 times; the D/E ratio based on the definition in the No.1/2556’s debenture term was 3.36 times; and the D/E ratio based on the definition in the No. 2/2556’s debenture term was 2.58 times. This means that the Company is currently having higher D/E ratios than the commercial bank’s requirement and that of No.1/2556’s debenture requirement and therefore is exposed to a risk of having higher D/E ratios than the threshold under the agreements described above. However, the Company has issued a letter asking to amend terms and conditions regarding its access to the loan with the commercial bank in order to adjust the D/E ratio that the Company is to maintain under the relevant loan agreement to 3.5 times. Currently, the Company is organizing the Meeting of Debenture Holders No. 1/2557 to amend this D/E ratio term and definition of liabilities when calculating the ratio. The term will be amended to the following: the Company is to maintain a net Debt to Equity ratio (D/E) to not higher than 3.0 times. In addition, the capital increase has increased the Company’s shareholders’ equity which in effect lowered its D/E ratio.

3. Management risk and other risks 3.1 Risk from having major shareholder having influence over an adoption of management policy The Company has the Techaubol Family as its major shareholder who together holds more than 50 per cent of the issued and paid-up capital. The Company and/or minority shareholders therefore could be exposed to a risk of having the major shareholder control almost all of resolutions made by the Shareholders’ Meeting unless in matters where the law or the Company’s regulations provide that at least three-fourths of votes in the Shareholders’ Meeting are required. In addition, the major shareholder could have influence over management policies because together he holds more than half of the shares and is the Company’s CEO. However, the Company manages this risk by adopting a check and balance mechanism. Four independent directors (three of whom are also members of the Audit Committee) out of the total seven directors have been appointed. Besides, the Audit Committee also functions as the Corporate Governance, Nomination and Compensation Committee, which should enhance management efficiency and transparency through the Company’s auditing system and the Executive Board’s balancing act. The Company therefore is confident that shareholders and stakeholders will be equally and fairly treated. Thai Factory Development Public Company Limited

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3.2 Risk from share price decline (dilution effect) Investors could be exposed to a decline of prices of shares and warrants for the rights to buy the Company’s shares as soon as the capital-increase shares as well as warrants for the rights to buy the Company’s common stocks (capital-increase shares offered to the public and warrants for the rights to buy shares allotted to existing shareholders and the public who have subscribed to the capital-increase shares) to be issued and offered are traded in the Stock Exchange of Thailand (SET) (dilution effect).

4. Research and development

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Management Discussion and Analysis 1. Overview of the business operations and significance changes The Company and its subsidiaries have operated the business of real estate development for sales and rent in many sectors, with the core business is in the Industrial Estate Development The Company’s business currently can be classified in 5 sectors as follows : 1. Business of industrial estate development : operated by The Company (TFD) 2. Business of land with standard ready-built factory / warehouse: operated by TISCOM 3. Business of residential buildings (condominium) : operated by The Company and VSSL 4. Business of office building for rent : operated by SG 5. Business of asset management services - operated by The Company Note: In the past , the land with standard ready-built factory / warehouse business has been operated by the Company and TISCOM. However in the year 2013, the Company has a plan to take TISCOM to list in the SET, as a result the Company has changed its business structure to be more precisely by handover this business sector to TISCOM so that TISCOM will concentrate and operate all the land with standard ready-built factory / warehouse business. The significant events during the year 2013 are as follows : • The increase and decrease of the Company’s Capital. - The Company has decreased its share capital from Baht 902.880 million to Baht 902.878 million in the second quarter as a result of the reduction of the shares remaining after the stock dividends and Warrant TFD-W1 - The Company has increased its share capital from Baht 902.878 million to Baht 1,264.029 million in the second quarter in order to reserve for the provision of the Stock dividends and the exercise of the warrant TFD-W2 - The Board Resolution has approved the decrease of share capital from Baht 1,264.029 million to Baht 1,263.911 million in the fourth quarter to cut out the unsold shares. (Except the common shares which are reserved for the exercise of the rights of warrant holders of TFD-W2 which are still existing) - The Board Resolution has approved the increase of share capital from Baht 1,263.911 million to Baht 1,499.861 million in the fourth quarter for public offering and also for the exercise of the warrant TFD-W3 • The Extraordinary General Meeting has approved the issuances of Debenture in total amount not exceed Baht 3,500 million : - The first lot, Debenture 1/2013 total Baht 500.00 million : sold in the third quarter - The second lot, Debenture 2/2013 total Baht 850.00 million : sold in the fourth quarter • The Company has acquired the 100% of ordinary common shares of VSSL, which also operate real estate development and is the owner of the project Condominium 15 Sukhumvit Residence, in the second quarter with the total amount of investment of Baht 496.90 million.

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The sale of assets to the MFC Industrial Investment Property and leasehold Fund (M-II) - TISCOM has transferred the leaseholds rights and sold the factory buildings to MFC Industrial Investment Property and leasehold Fund (M-II) in the fourth quarter with the value of Baht 290 million - The Company has sold and transferred the leaseholds rights of land and factories to MFC Industrial Investment Property and leasehold Fund (M-II) in the fourth quarter with the value of Baht 263.45 and 196.55 million, respectively. VSSL (“Buyer”) has entered into the sale agreement of 138 rai of land with J.C. Kevin Development Co.,Ltd. (formerly known as VCAL Business Group Co.,Ltd.) (the "Seller" ), a related party to the Company and its subsidiaries, in the amount of Baht 800 million and has paid the deposit of Baht 300 million at the date of the agreement signing. In addition, in the first quarter of the year 2014, VSSL has paid the second deposit of Baht 20 million. However, as of 6 March, 2014, VSSL has already cancelled this agreement because the Asia Plus Securities Co.,ltd which is the company’s Independent financial advisor for the preparation of public offering to the Securities and Exchange Commission has an opinion that such transaction is normal business without any trade terms. To avoid any negative impacts to the issuance and sale of the additional shares, the Company has then cancelled the agreement and has received the refund of all deposits back.

2. Operating Performance and Profitability 2.1 Revenue Total Revenue. Total Revenue of the Company comprises of revenue from sale of land and factory building, sale of condominium units, rental and services, gain on sale of investment properties and other income. Total Revenue (Million Baht)

Year 2011

Year 2012

Year 2013

Revenue from sale of land and factory building (Million Baht)

Year 2011

Year 2012

Year 2013

Revenue from sale of land and factory building 662.95 327.71 460.00 Revenue from sale of condominium units 184.90 130.43 40.36 Revenue from rental and services 284.28 310.72 248.13 Gain on sale of investment properties 554.89 134.33 Other Income 11.57 36.83 62.60 Total revenue 1,143.69 1,360.58 945.42 Total Revenue of the Company was Baht 1,143.69 million, 1,360.58 million and 945.42 million during the year 20112013 consecutively , an increase of 18.96 % in 2012 and a decrease of 30.51 % in 2013. Revenue from sale of land and factory building Revenue from sale of land and factory building, which is the core revenue of the Company , arising from the sale of developed land and factory building including all fundamental infrastructure. The main purpose is to sale developed land and land and ready built factory building. Revenue from sale of developed land 662.95 327.71 Revenue from sale of land and factory building 460.00 Total Revenue 662.95 327.71 460.00 The revenue from sale of land and factory building equaled to Baht 662.95 million, Baht 327.71 million and Baht 460.00 million during the consecutive year 2011-2013 with 50.57 % decrease in Year 2012 and 40.37% increase in the following year. This was due to the fact that the Company has just invested in the utility system and was also seek for

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approval for industrial operation business from the Industrial Estate Authority of Thailand (I-EA-T) which was completed in the Year 2010 and the Company has started to transfer the ownership since the year 2011. However the revenue in the year 2012 has decreased because the Company has transferred most of ownership of the selling land and factory building in the previous year 2011, together with the fact that most of the rented land and factory buildings have also been sold to the Property Fund which will be recognized as gain on sale of investment properties. The increase of this revenue sector in year 2013 resulted from revenue from selling the land and factory building to the MFC Industrial Investment Property and leasehold Fund ( M-II) in the last quarter. Revenue from sale of Condominium units This portion of revenue is from sale of residential condominium for sale, both in the central area of the town and also in the leisure area. Currently the Company owns 3 Condominium Projects in hand: The 15 Sukhumvit Residence , The Colonial Khao Tao Hua Hin and The Mahadlek Residences. Revenue from sale of Condominium units (Million Baht)

Year 2011

Revenue from Rental and Services ( Million Baht)

Year 2011

Year 2012

Year 2013

26.83 70.12 187.32 284.28

38.92 74.03 197.78 310.72

9.24 38.97 199.93 248.13

Year 2012

Year 2013

The 59 Heritage Condominium Project 184.90 130.43 The 15 Sukhumvit Residence Project 40.36 Total 184.90 130.43 40.36 Revenue from sale of Condominium units in year 2011-2013 equaled to Baht 184.90 million, Baht 130.43 million and Baht 40.36 million consecutively, with 29.46 % decrease in year 2012 and a significant 69.06% decrease in year 2013. The decrease in year 2012 was attributed to the transfer of ownerships of The 59 Heritage Condominium to all buyers in the year 2012. Also VSSL was under construction of the The 15 Sukhumvit Residence Project which is expected to complete by early 2014 and will recognized most of revenue in the same year. However, in year 2013, the Company has recognized the revenue from The 15 Sukhumvit Residence Project amounted to Baht 40.36 million. In the meantime, the Company has considered to temporary suspended the sale and construction of The Colonial Khao Tao Hua Hin because of a file with the Central Administrative Court to revoke the construction permit , and the Court has also ordered the suspension of the project’s construction. The Company, then, has also filed an appeal to the Supreme Administrative Court for an order to set aside the order of the Administrative Court. For other projects, the Company is now under the process of seeking the approval of the EIA report from the Offices of Natural Resources and Environment Policy and Planning for the Mahadlek Residences. Revenue from Rental and Services Revenue from rental and services is the revenue attributed to the land and building for rent. In this sector, the Company will acquire the land (purchased or long term leased) , then develop the land and the factory has been built including the infrastructure and utility for long term lease of developed land and ready-built standard factory including office building for rent, which the Company will long term lease land and then develop and build the office building for rent and provide related services. Rental Revenue from factory Rental Revenue from warehouse Rental Revenue from office building Total Revenue from Rental and Services

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Total Revenue from rental and services equals to Baht 284.28 million, Baht 10.72 million and Baht 248.13 million during the year 2011-2013 , with the 9.3 % increase in year 2012 as a result from the increase in number of tenants and also the adjustment of rental price, attributed from all rentals from ready built factory, warehouse and office. The revenue decreased 20.14 % in the year 2013 due to the reason that the Company and TISCOM have sold their assets, both factory and warehouse for rent, to MFC Industrial Investment Property and leasehold Fund ( M-II) which resulted that the Group Company was no longer be able to recognize the revenue from the rental of these assets. However, the rental revenue from the SG office building has tendency to increase continuously from both increase in numbers of tenants and the rental price. Gain on sale of investment properties Gain on sale of investment properties is the profit gain from sale of assets and the transfer of leasehold rights to the Property Fund. Gain on sale of investment properties (Million Baht)

Year 2011

Other revenue ( Million Baht)

Year 2011

Year 2012

Year 2013

Gain from sale of real estate to TIF1 28.97 Gain from sale of real estate to M-II 525.92 134.33 Total gain on sale of investment properties 554.89 134.33 Revenue from gain on sale of investment properties of the Company was Baht 554.89 million and Baht 134.33 million in the year 2012 - 2013, consecutively. In 2012, the Company and TISCOM have sold the ready built factory and the land leasehold in the TFD Industrial Estate and other industrial estates to the Thai Industrial 1 Fund (TIF 1) and MFC Industrial Investment (M-II) in total of Baht 1,044 million and has recognized the gain from these transactions of Baht 554.89 million. In year 2013, TISCOM has also transferred leasehold of land and sold factory building to Property Fund for Baht 290 million which TISCOM has recognized the profit fain of Baht 134.33 million Other revenue Other revenue is all other incomes from non-core business of the Company which includes dividend, interest, management fee and other miscellaneous income. Year 2012

Year 2013

Management Fee 5.55 4.20 6.16 Interest earned 0.50 0.63 6.35 Dividends 7.81 Gain from disposal of Asset 0.88 Other miscellaneous incomes 4.64 32.00 42.28 Total Other revenue 11.57 36.83 62.60 Other revenue in year 2011-2013 was Baht 11.57, Baht 36.83 and Baht 62.6 million respectively. The growth of 218.39% in 2012 and additional 69.96 % in 2013 were due to dividends from the investment in securities for sale and from accounting adjustment transactions. 2.2 Cost and Expense Total Cost Total Cost of the Company comprises of cost of land and factory building, cost of Condominium unit, cost of rental and services, and selling and administrative expenses.

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Total Cost (Million Baht)

Year 2011

Year 2012

Year 2013

Cost of selling and services (Million Baht)

Year 2011

Year 2012

Year 2013

426.08 132.51 141.28 699.88

164.68 77.30 157.99 399.97

244.23 32.20 148.91 425.35

Cost of land and factory building (MB)

Year 2011

Year 2012

Year 2013

cost of land and factory building ( as percentage of each type of revenue)

Year 2011

Year 2012

Year 2013

Cost of Condominium Unit (MB)

Year 2011

Year 2012

Year 2012

Cost of Condominium Unit ( as percentage of each type of revenue)

Year 2011

Year 2012

Year 2013

71.67% 71.67%

59.27% 59.27%

79.80% 79.80%

Cost of land and factory building 426.08 164.68 244.23 Cost of condominium unit 132.51 77.30 32.20 Cost of rental and services 141.28 157.99 148.91 Selling Expenses 34.69 81.76 52.76 Administrative Expenses 153.14 136.12 158.15 Total Cost / Expenses 887.70 617.86 636.26 Total cost of the Company in the year 2011-2013 was Baht 887.70 million, Baht 617.86 million and Baht 636.26 million with the decrease of 30.40 % in the year 2012 and then the increase of 2.99% in the final year. Cost of selling and services Cost of selling and services are cost of land and factory building, cost of condominium unit and cost of rental and services. The details are as explained in the table below : cost of land and factory building cost of condominium unit cost of rental and services Total

1) Cost of land and factory building Cost of vacant land Cost of land and factory building Total

426.08 426.08

164.68 164.68

244.23 244.23

Cost of vacant land 64.27% 50.25% n/a Cost of land and factory building n/a n/a 53.09% Total 64.27% 50.25% 53.09% Total cost of land and factory building was Baht 426.08 million, Baht 164.68 million and Baht 244.23 million consecutively during the year 2011-2013. When comparing to revenue of each type, the percentage of cost of land and factory building was 64.27% , 50.25% and 53.09 % accordingly, of which in year 2011-2012 the percentage represented the cost of vacant land whilst in the year 2013, the figure represented the cost of land and factory building sold to the MFC Industrial Investment Property and leasehold fund (M-II) in the last quarter. The percentage of cost of vacant land in year 2012 was decreasing from year 2011 according to the lower cost of the land. 2) Cost of Condominium unit The 59 Heritage Condominium Project The 15 Sukhumvit Residence Project Total The 59 Heritage Condominium Project The 15 Sukhumvit Residence Project Total

Thai Factory Development Public Company Limited

132.51 132.51

77.30 77.30

32.20 32.20

Annual Report 2013

165


Total cost of condominium unit of the Company was Baht 132.51, Baht 77.30 and Baht 32.20 million in the year 2011-2013, consecutively. In year 2011-2012 , total cost belonged to The 59 Heritage Condominium while for the year 2013, total cost was from the 15 Sukhumvit Residence Project. Considering the percentage of cost to revenue of The 59 Heritage Condominium in 2012 has decreased significantly because during that year, the Company has sold the Penthouse which is on the top floor and is the largest size cover area of two floors. That penthouse unit is the highest price one and thus produces the highest contribution margin among the other units. However, the ratio of the cost was increase in the year 2013 according to the higher cost of acquisition of building and internal decoration of the new project, The 15 Sukhumvit Residence Project , when comparing to The 59 Heritage Condominium. 3) Cost of rental and services Cost of rental and services ( MB)

Year 2011

Year 2012

Year 2013

Cost of rental and services (as percentage of each type of revenue)

Year 2011

Year 2012

Year 2013

Selling and Administrative Expenses (Million Baht)

Year 2011

Year 2012

Year 2013

34.69 153.14 187.82

81.76 136.12 217.89

52.76 158.15 210.91

Selling and Administrative Expenses (as percentage of total revenue)

Year 2011

Year 2012

Year 2013

3.03% 13.39% 16.42%

6.01% 10.00% 16.01%

5.58% 16.73% 22.31%

Cost of factory rental Cost of warehouse rental Cost of office building rental Total

5.51 24.16 111.61 141.28

12.61 22.80 122.58 157.99

8.96 11.48 128.47 148.91

Cost of factory rental 20.53% 32.40% 96.99% Cost of warehouse rental 34.46% 30.80% 29.46% Cost of office building rental 59.58% 61.98% 64.26% Total 49.70% 50.85% 60.01% Total cost of rental and services was Baht 141.28 million, Baht 157.99 million and Baht 148.91 million in the year 2011-2013 respectively. Considering the percentage of cost to revenue of each type, the cost of factory rental has a tendency to increase continuously, especially in the year 2013 as the Group Company has sold most of the factories to the Property Fund. Thus the rest of factories of the Company have few tenants, while cost of the rental is fixed cost from depreciation. The cost of warehouse rental is declining steadily according to the Group Company has sold some warehouses which has not yet lease to the Property Fund. Cost of office building for rent is in the uptrend as the Company has renovated office building for rent which yielded in the higher cost than the previous year. Selling and Administrative Expenses Selling expenses of the Company consists of the advertising and promotion, salary, sale management and commission etc. While the administrative expenses which consists of salary, director’s remuneration, traveling expenses and allowances. Selling Expenses Administrative Expenses Total

Selling Expenses Administrative Expenses Total

166

Annual Report 2013

Thai Factory Development Public Company Limited


Selling Expenses of the Company equaled to Baht 34.69 million, Baht 81.76 million and Baht 52.76 million in the year 2011-2013 respectively while the percentage of total revenue is 3.03%, 6.01% and 5.58%. The increase in selling expenses in the year 2012 was a result of the increase transfer of ownerships of condominium units which caused additional expenses related to the transfer such as Specific Business Tax. The decrease in selling expense in the year 2013 was from the decrease of such transfer when comparing to the prior year. Administrative Expenses was Baht 153.14 million, Baht 136.12 million and Baht 158.15 million in the year 2011-2013 with the percentage to total revenue of 13.39 % , 10.00 % and 16.73 % respectively. The decrease in the administrative expenses in the year 2012 was due to the company’s efficiency to control cost of utility services. In contrast, the increase of such cost in year 2013 was due to the financial advisor’s fee and legal advisor fee to serve the expansion plan of the Company’s business. Financial Costs Financial costs mainly are interest and fees. Financial costs of the Company was equivalent to Baht 71.21 million, Baht 85.52 million and Baht 113.14 million in the year 2011-2013 , with the 19.99% increase in the year 2012 due to the increase in borrowing of the Company and its subsidiaries, to support the business expansion of the Group. The financial cost still rose in year 2013 with growth rate of 32.29 % comparing to the year 2012 as the Company has issued debenture Baht 500 million in the third quarter and another debenture totaled Baht 850 million in the last quarter, altogether with the Promissory notes of Baht 1,403.7 million during the same period. 2.3 Profitability Gross margin The company’s gross margin was 38.18% , 47.98% and 43.17% in the year 2011-2013 respectively. The increase of the Company’s gross margin rate in the year 2012 was attributed to the Company’s efficiency to control cost of the property for sale and also cost of services. However, the percentage of gross margin has decreased in the year 2013 due to the reduction in gross margin in every business sectors of the Company. The profit margin of the Company can be divided in to 3 sectors according to its business as follow : Gross Profit Margin ( % )

Year 2011

Year 2012

Year 2013

Sale of land and factory building 35.73% 49.75% 46.91% Sale of condominium units 28.33% 40.73% 20.20% Sale from rental and services 50.30% 49.15% 39.99% Total Gross Margin 38.18% 47.98% 43.17% From the above mentioned table, the gross profit margin from sale of land and factory building equaled to 35.73% in the year 2011 , 49.75% in the year 2012 and 46.91% in year 2013 The increase in the year 2012 was due to the lower cost of lands comparing to year 2011. The gross profit margin in 2013 was represent the profit from sale of land and factory building to the M-II in the last quarter. The gross profit margin of the sale of condominium units was 28.33 %, 40.73% and decreased to 20.20 % in the year 2011-2013, consecutively. The fluctuation of the margins was because in year 2012 the Company was able to sell the penthouse suite of The 59 Heritage Condominium which is the largest unit and contributed the highest margin in the project. The decrease of gross profit margin in the year 2013 was due to the cost of The 15 Sukhumvit Residence Project which the acquisition and the interior design cost was actually higher than The 59 Heritage Condominium. For the last group, the gross profit margin of rental and services was equal to 50.30%, 49.15% and 39.99% during the consecutive year 2011-2013. The decrease in the year 2012 was because the increase in cost of rental of factory and office building. The percentage was still continue to decrease in the year 2013 as the result of the Company’s selling most of the factory to Property Fund, hence the percent came from the rest of factory with few tenants , especially when comparing to fixed cost from depreciation. Thai Factory Development Public Company Limited

Annual Report 2013

167


Operating profit The operating profit margin of the Company in the year 2011-2013 were as follows : 21.59%, 19.64% and 14.99%. The continuous decrease in operating profit margin, was a result of the exclusion of profit from gain on sale of investment properties , dividend and other revenues from the operating profit when calculate the operating profit margin. Consequently , the operating profit margin decreased in both years. The Company and its subsidiaries have also sold their assets to Property fund during the same period of time and has recorded the gain on sale of investment properties. Moreover in year 2013, the Company earned some dividends from its investments in Property fund M-II. All these other revenues have impacts to revenues and operating profits but as they were excluded in the calculation of the operating profit margin, thus it was the explanation of the decrease in the two years margin. Net Profit Net profit margin of the Company was 12.92 % , 37.60% and 16.01% in the year 2011-2013. The significance increase of net profit of the year 2012 was attributed mainly to the gain from selling the property assets to the Property funds. In contrast, the decrease of gross profit margin in the year 2013 was due to the increase in overall cost of sales and services, selling and administrative expenses and finance cost with regard to the issuance of Company’s debenture and Promissory notes. Return on common equity Return on common equity of the Company was equivalent to 13.07 %, 29.97% and 8.32 % during the year 2011-2013, respectively. The increase in the Return on common equity in year 2012 was due to gain from selling the property assets to Property fund. In the year 2013 , this return has decreased because of the decrease of net profit and also the decrease in shareholders’ equity from cash dividend of Baht 90.28 million and a difference between the equity from the business combination under common control and the net book value of VSSL in total Baht 141.04 million, such difference is classified as “Surplus on business combination under common control” and separately presented under other components of equity in the shareholders’ equity. 2.4 Ability in assets management Assets Main assets of the Company comprises of the Project development cost, leasehold rights and Investment properties. Total assets was Baht 4,264.19 million, Baht 5,977.45 million and Baht 683.00 million in the year 2011-2013, an increase of 40.18% in the year 2012 and 28.53% in the following year. The increase in total assets of the Company in the year 2012 was because the Company has invested more in lands and development of phase 2 of the TFD industry estate in order to serve the demand of the investors and also to support the expansion of the business from the coming Asian Economic Community (AEC). In the year 2013, total assets of the Company also increased because of the increase in cash from the sale of assets to the Property funds , additional investment in Project development cost (phase 2 of the TFD Industrial Estate ) and deposit of land purchase from related company. For detailed explanation, VSSL has entered in to the land purchase agreement with the J.C. Kevin Development , a connected company to the Company and its subsidiaries, and has paid the first deposit of Baht 300 million on the date of agreement. However, VSSL has finally cancelled such agreement on March 6, 2014. The return on assets was 4.36%, 9.99% and 2.22% in year 2011-2013. The significant increase in year 2012 was because of the recognized of gain on sale of investment properties, from the fact that the Company and TISCOM have sold the assets to the Property funds. On the contrary, the Company faced the decrease in return on assets in 2013 as a result of decrease in net profit while total assets has increased.

168

Annual Report 2013

Thai Factory Development Public Company Limited


The return on fixed assets was equivalent to 17.40%, 52.27% and 27.55% during the year 2011-2013. The significance increase of the ratio in year 2012 because the Company and TISCOM have sold the assets to the Property funds while the decrease of this ratio in year 2013 was due to the percentage decrease in net profit which was higher than percentage decreased in fixed assets. Company’s assets turnover was equivalent to 0.34, 0.27 and 0.14 times in three consecutive year 2011-2013. The decrease in this ratio in the year 2012 was because the percentage change of the increase in assets is higher than the increase in its Revenue, this was owing to the Company further increased its investment in lands and development in the TFD Industrial Estate phase 2 , which is classified as long term assets and this investment cannot generate the income in the same accounting period. The change of asset turnover in the year 2013 was due to the decrease in revenue while the Group Company’s assets has slightly increased. Trade account receivables and other debtors. The Company’s trade account receivables and other debtors was Baht 17.91, Baht 19.21 and Baht 20.44 million in the year 2011-2013 , a slightly increase of Baht 1.30 million in year 2012 ( 7.25% growth) and further increase of Baht 1.23 million in year 2013, ( 6.41% growth). The change in this asset was a result of the change in the Group’s collection period in year 2013 , which resulted in the increase in the account receivables and other debtors. The increase in the days collection slightly rose up from 13.15 days, 10.49 days, and 11.38 days in year 2011 - 2013. Project development cost Project development cost of the Company was equal to Baht 2,499.94 million Baht 4,120.33 million and Baht 4,824.25 million during the year 2011-2013, the increase of Baht 1,620.39 million or 64.82% in the year 2012 and another additional of Baht 703.92 million or 17.08 % in the year 2013. The increase in year 2012 was because the Company has invested more in TFD Industrial Estate phase 2 to respond to increase in demand of land and factory for rent and also the increase in construction of existing residential project. The increase in the year 2013 mainly resulted from land purchase and additional development in the TFD Industrial Estate phase 2. Deposit for purchase of land. The Company’s deposit for purchase of land was Baht 236.35 million, Baht 29.71 million and Baht 54.64 million in the consecutive year 2011-2013, the decrease of Baht 206.64 million in the year 2012 (87.43% comparing to year 2011) and the increase of Baht 24.93 million in the year 2013 ( 83.91% increase comparing to year 2012). The highest amount of deposits in the year 2011 was for land purchase for TFD Industrial Estate phase 2 In addition, in the year 2013, VSSL has entered into the purchase agreement 138 rai of land from J.C. Kevin development, a related company with the Company and its subsidiaries, in total amount Baht 800 million with the first deposit payment of Baht 300 million at the date of agreement signed. However, VSSL has cancelled the mentioned agreement as the Company is in the period of submit the disclosure to The Securities and Exchange Commission (SEC) for the approval of capital increase thus Company cannot bring this issue to the shareholders’ meeting.

Thai Factory Development Public Company Limited

Annual Report 2013

169


Investments in securities available for sale. Investments in securities available for sale of the Group Companies is Baht 160.50 and Baht 243.00 million in the year 2012-2013, the increase of Baht 82.50 million or 51.40 percent from the year 2012. The Companies and its subsidiaries have just invested in securities in the year 2012 as TISCOM has invested in MFC Industrial Investment Property and Leasehold Fund ( M-II ) 15 million units , at the par value of Baht 10, the total investment of Baht 150 million in December 2012, with unrealized gain on changes in value of investment equivalent to Baht 10.50 million In quarter 3 of year 2013, the Company has purchased the investment units in M-II from TISCOM at a par value of 10 Baht, totaling Baht 150 million by cash payment of Baht 12 million, the rest was the offset of debts between the two parties by the Baht 100 million as a deposit for land which TISCOM purchased from the Company and the balance Baht 38 million was proceeds of the transfer of land-purchasing rights totaling Baht 16 million and other outstanding debts. In addition, the Company has further invested in M-II 7.5 million at a par value Baht 10, totaling Baht 75 million, in accordance with the investment in the M-II Fund Agreement, with unrealized gain on changes in value of investment equivalent to Baht 18.0 million as at 31 December, 2013. Leasehold rights The Company’s leasehold rights consist of prepaid rental of land and building , leasehold rights of land and building. The Company’s leasehold rights has values equal to Baht 179.71 million, Baht 502.26 million and Baht 440.98 million in the year 2011-2013, the increase of Baht 322.55 million in year 2012 (179.49 % from year 2011) and then decrease in the year 2013 of Baht 61.28 million (or 12.20 % from year 2012). The increase in value of leasehold rights in year 2012 was because the Company has reclassified the type of asset in its subsidiary to comply with the accounting standard. The decrease of leasehold rights in year 2013 was due to the amortization of the leasehold rights. Investment properties Investment properties mainly consists of building for rent, Factory and warehouse for rent. Investment properties was equal to Baht 1,072.38 million, Baht 365.01 million and Baht 232.19 million in the year 2011-2013 respectively. In year 2012 , the investment properties has decreased Baht 707.37 million ( or 65.96%) from year 2011 because the Company and TISCOM have sold their assets which are land and factory building in the TFD Industrial Estate , Nava Nakorn Industrial Promotion Zone and Laem Chabang Industrial Estate. In addition, TISCOM has also transferred the leasehold rights of land in Laem Chabang Industrial Estate to M-II. At the end of the year 2013, the Company’s investment properties has decreased by Baht 132.82 million, or 36.39% from the year 2012, because the Company and TISCOM has sold land and building in TFD Industrial Estate, building and structures for rent located in the King-kaew project and altogether with TISCOM ‘s transfer of leasehold rights in King-kaew project to MFC Industrial Investment Property and leasehold Fund ( M-II). Analysis of the quality of Current Assets. Trade receivables turnover in year 2011-2013 equaled to 27.37 , 34.32 and 31.63 times. The increase in the turnover in the year 2012 was due to the percentage decrease of Revenue less than the percentage decrease of trade receivables before average allowance for doubtful debts . ( Note : such revenue comprises of revenue from sale of land and factory building, condominium units and rental and services but exclude the gain on sale of investment properties). The decrease in turnover in year 2013 was due to the fact that the revenue decreased while the trade receivables (before average allowance for doubtful) has increased. The inventory turnover of the Company was equivalent to 0.39, 0.12 and 0.10 times during the three consecutive year. The decrease in turnover was because the decrease in cost of sale and services while the average inventory has increased. Moreover, in year 2013, the turnover decreased because the percentage increase of cost of sales was less than the percentage increase of average inventory.

170

Annual Report 2013

Thai Factory Development Public Company Limited


Analysis of quality of Trade receivables Trade receivables of the Company comprise of trade receivable from the office building rental, from factory and warehouse rental and from the asset management business. The Company has its policy to give credit for 30 days. The details of Trade receivables in the year 2011-2013 are as follows ; Trade receivable - related parties

Year 2011

Year 2012

Year 2013

Trade receivable - unrelated parties

Year 2011

Year 2012

Year 2013

Source of funds

Year 2011

Year 2012

Year 2013

Up to 3 months 3-6 months Over 12 months Total trade receivable- related parties

-

0.14 0.14

0.14 0.14

Not yet due 3.39 2.11 1.93 Up to 3 months 4.41 6.61 9.73 3-6 months 0.94 5.29 1.66 6-12 months 3.39 2.41 0.06 Over 12 months 7.04 5.14 6.39 Total 19.17 21.57 19.76 Allowance for doubtful debts (3.84) (3.84) (3.84) Total trade receivables 15.32 17.86 16.06 In determining an allowance for doubtful debts, Company’s management will need to make judgment and estimates the loss which may incur from each debtor based upon past collection history, the aging profile of the outstanding debts including the prevailing economic condition. The auditor considered that the allowance for doubtful debts .has no significant affect to the financial statement, so there is unadjusted audit difference. 2.5 Liquidity and sufficiency of funds 2.5.1 Source of Funds Total liabilities 2,859.22 3,967.85 6,054.91 Total equity 1,404.97 2,009.60 1,628.10 Debt to equity ratio 2.04x 1.97x 3.72x Liabilities Main liabilities of the Company comprises of short term borrowing from financial institutions, trade and other payable, debenture and long-term borrowing from financial institutions. Total liabilities was Baht 2,859.22 million, Baht 3,967.85 million and Baht 6,054.91 million in the year 2011-2013, consecutively. The increase of Baht 1,108.63 in year 2012 was due to the increase in borrowings to invest in the project development while at the end of year 2013 , the Company’s liabilities increase in the amount of Baht 2,087.05 million according to the issuance of the promissory note and debentures in this fiscal year. Short-term loans from financial institutions At the end of the year 2013, the Company has short term borrowing from financial institutions which is unsecured Bill of exchange. However, the Company has provided guarantee for the issuance and sale of short-term bill of exchange for its subsidiary, with the interest rate of MLR-1% and 4.7-5.3%. The shortterm loans from the finance institutions was Baht 51.13 million ,Baht 504.01million and Baht 2,560.20 million during the fiscal year 2011-2013. The increase in year 2012 (comparing to year 2011) was Baht 452.88 million (or 885.70% increase) and was attributed to the issuance of promissory notes of the Company and TISCOM in the amount of Baht 234 million and Baht 250 million , respectively. The borrowing in year 2013 has also increased in the amount of Baht 2,056.19 million or 407.97 % from the year 2012, due to the additional issuance of promissory note Baht 1,906.20 million

Thai Factory Development Public Company Limited

Annual Report 2013

171


Trade and other payables The Company’s trade payables consists of trade account payables, account payable - construction and account payable - land while the other payables are advance received from customers, retention for constructors, accrued expenses and other miscellaneous. Trade and other payables equaled to Baht 407.00 million, Baht 968.01 million and Baht 585.50 million in the year 2011-2013, accordingly. The increase of Baht 561.01 million (or 137.84 % from the year 2011) was due to the significance changes from the account payable-construction of the TFD Industrial Estate phase II and the Project The Colonial Khao Tao, Hua Hin. In turn, the decrease in the year 2013 of Baht 382.51 million (39.52% from 2012) was due to the payment of land and construction in the abovementioned projects. Debenture According to the Resolution of the Extraordinary General Meeting of Shareholders, held on 24 June, 2013, has approved the issuance and offering of senior and unsecured debentures in total amount up to Baht 3,500 million with term to maturity not more than 5 years to the institutional investors, private investors and public. On 3 July, 2013, the Company issued and offered the senior and unsecured debenture (lot # 1) 500,000 units, with a par value of Baht 1,000 , totaled Baht 500 million, matured on 3 July, 2014 with interest 5.3 % per annum, paying every 6 months. Then on the 22 November, 2013, the Company issued and offered the second lot of senior and unsecured debenture (lot # 2) 850,000 units ,with a par value of Baht 1,000, total amount of Baht 850 million, matured on 22 November, 2014 with interest 5.5 % per annum, paying every 3 months. Total outstanding of debenture net of deferred debenture issuing cost is Baht 1,344.55 million at the end of the year 2013. Under the debenture agreements, there are some normal covenants for normal business of the Company such as the maintaining of the Net Debt to Equity Ratio at the end of each fiscal year, in the Consolidated financial statements (Audited), not to exceed 3.5 times, throughout the aging of debenture. In this matter, the “liabilities” means total liabilities in the audited financial statements but exclude trade payable debts and deducted by cash and cash equivalents while the equity means Company’s shareholders’ equity as presented in the audited balance sheet. Long term loans from financial institutions. Long term loans from financial institutions was equivalent to Baht 1,743.53 million,1,734.97 million and1,049.23 million in the year 2011-2013. The slightly decrease of Baht 8.56 million (or 0.49% from year 2011) was due to the repayment of the Group Company to the financial institutions in that fiscal year. The significant decrease of this figure in the year 2013 was attributed to the Company’s change in capital structure by repayment the loans from funds received from debentures. At the end of year 2013, outstanding of long term loans from financial institutions is Baht 1,049.23 million which are the following 4 lines : Credit Line

1 2 3 4 Total

172

Annual Report 2013

Total line

90.00 1,796.00 990.00 1,550.00 4,426.00

Amount undrawn

573.00 840.00 95.00 1,508.00

Outstanding

18.35 322.16 150.00 558.72 1,049.23

Thai Factory Development Public Company Limited


Credit Line 1: On April 30, 2008, the Company had a loan facility from local bank in the amount of Baht 90 million. This facility is also used by a joint investor in total of Baht 180 million, fully drawdown. The interest rate is MLR-1 % per annum, the repayment of principal and interest are set as monthly installments of Baht 1 million, commencing from May 2008. The loan will be fully repaid within May 2017. Such loan was secured by the pledge of the ordinary shares of the subsidiary which the Company has invested in amount of 10,022,950 shares, par value of Baht 5.0. The abovementioned subsidiary also guarantee as a joint receivable. Credit Line 2: On 9 June, 2011, the Company received a loan facility of Baht 1,796 million from a local bank (of which Baht 1,223 million has been drawn down), with interest rate at MLR per annum, monthly payable while the principal is to be paid by the funds from sale of real estate that is released from mortgage, in accordance with the conditions. In the agreement. The loan must be fully paid within June 2017. The loan was secured by 1) The mortgage of land with construction thereon and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender. 2) The pledge of the Company’s rights to the fixed deposit with the bank. Credit Line 3: On 26 December 2012, the Company received another loan facility of total Baht 990 million from a local bank (of which Baht 150 million has already been drawn down), with the interest rate at MLR+0.5% per annum. The principal is to be paid using funds from the sale of condominium units, in accordance with the agreement conditions. The loan must be fully paid in full within December 2017. Such loan was secured by the following: 1) The mortgage of land and construction and the assignment of the beneficiary rights under the insurance policies covering these assets to the lender. 2) Personal guarantee by the Executive Chairman. Credit Line 4: On 25 March 2010, the subsidiary has received a loan facility of Baht 1,550 million from a local bank (of which Baht 1,455 million has been drawn down), carrying interest at SPRL + risk rate 1.25% per annum. The principal is to be paid by using funds from the sale of condominium units, in accordance with the agreement conditions. This loan was secured by the following: 1) The mortgage of land with construction, the assignment of the beneficiary rights under the insurance policies covering these assets to the lender. 2) Personal guarantee by the Executive Chairman

Most of the loan agreements contain some certain covenants and restrictions such as requirement the Company to maintain certain financial ratio in normal course of business, dividend payment , maintain the shareholder structure and maintain Debt to Equity not to exceed 2.5 times etc. Shareholders’ equity Total shareholders’ equity was Baht 1,404.97 million, Baht 2,009.60 million and Baht 1,628.10 million during the year 2011-2013 with the increase by Baht 604.63 million in the year 2012 ( an increase of 43.04% from year 2011) due to the exercising of the warrant TFD-W and also the increase in net profit. In the year Thai Factory Development Public Company Limited

Annual Report 2013

173


2013, total shareholders’ equity decreased because in that period the Company has paid out dividend of total Baht 90.28 million and a difference between the equity from the business combination under common control and the net book value of VSSL in total Baht 141.04 million, such difference is classified as “Surplus on business combination under common control” and separately presented under other components of equity in the shareholders’ equity. Debt to equity ratio The Company’s debt to equity ratio is 2.04 , 1.97 and 3.72 times in the year 2011-2013. The decrease of this ratio in the year 2012 was attributed to the Company’s efficiency in asset management which results in the continuous profit. As at the end of the year 2013, the Company has significant increase in this ratio to 3.72 times, according to the issuance of the promissory notes and debentures in this accounting period, which then yield in the higher total liabilities. 2.5.2 Investment Cost Investment cost of the Company and its subsidiaries, have the main objective to expand the Group’s business. The Investment projects in the past and under operation now are TFD Industrial Estate ( phase 1 & 2), The Lake Green Project, The 59 Heritage Condominium , The 15 Sukhumvit Residence( via the investment in VSSL), The Colonial Khao Tao Hua Hin, , The Mahadlek Residence, the investment project in office for rent (through investment in SG) , investment in the MFC Industrial Investment Property and leasehold Fund (M-II) etc. Most source of funds to operate the above-mentioned projects come from the credit lines with the financial institutions. The Group’s investment plan in the year 2014 are as follows : Investment Plan

Objective

TFD Industrial Estate

Developed land for sale / rent

The Colonial Khao Tao Hua Hin

Residential Condominium units for sale Residential Condominium units for sale Warehouse for rent

The Mahadlek Residence Klong Preng Warehouse

Warehouses in TFD Industrial Estate Warehouse for sale Residential Condominium -Sukumvit Residential Condominium units for sale

174

Annual Report 2013

Total Expected Source of Effect to Investment year to pay funds Company’s (million) the liquidity investment

807.52

2014

409.86

2014

126.54

2014

2,200.00

2014

831.9

2014

1,506.00

2014

Loan & Equity Loan & Equity Loan & Equity Loan & Equity Loan & Equity Loan & Equity

None

None None None None None

Thai Factory Development Public Company Limited


2.5.3 Sufficiency of Liquidity Cash flow (million Baht)

Year 2011

Year 2012

Year 2013

Cash flows from operating activities 216.22 (689.74) (1,303.66) Cash flows from investment activities (7.02) 755.18 (87.45) Cash flows from financing activities (215.02) 307.20 2,274.65 Net cash flows (5.82) 372.64 883.55 Cash flows from operating activities were Baht 216.22 million, a deficit of Baht 689.74 million and a deficit of Baht 1,303.66 million during the year 2011-2013. The cash flows from operating activities have been decreased continuously and since the year 2012 , cash flow from this part was in deficit. This was attributed to the investment in the TFD Industrial Estate phase II and The Colonial Khao Tao Hua Hin which has been recorded as Project development cost and was part of the cash flows from operating activities. Cash flows from investment activities during the year 2011-2013 were as follows : a deficit of Baht 7.02 million, a surplus of Baht 755.18 million and a deficit of Baht 87.45 million consecutively. The cash flows from investment activities in the year 2012 is a surplus of Baht 755.18 million due to the cash received from the sale of investment properties in total amount of Baht 1,000.60 million while the cash flows from investment activities in the year 2013 is a deficit mainly because of cash payment for investment in VSSL. Cash flows from financing activities of the Company were with a deficit of Baht 215.02 million, a surplus of Baht 307.20 million and surplus of Baht 2,274.65 million in the year 2011-2013 respectively. The cash flows from financing activities has increased continuously because in the year 2012 , the Company received the cash inflow from the borrowing , both short –term and long-term from the financial institutions, in amount of Baht 432.87 and Baht 501.11 million to support investment in TFD Industrial Estate phase II and The Colonial Khao Tao Hua Hin . At the end of the year 2013 , the Company has significant increase in cash flows from financing activities from the following sources: the increase in short-term loans from the financial institutions of Baht 1,826.20 million, cash received from Debenture Baht 1,342.69 million and long-term loans from the financial institutions of Baht 553.55 million. All these inflows were used to support the investment in TFD Industrial Estate phase II and The Colonial Khao Tao Hua Hin and also for Company’s working capital. The Company’s current ratio cannot accurately elaborate the Company’s liquidity as the Company did not record the inventory in current assets, because the Company’s assets are mainly land and factory which are not classified as current assets, while the company’s trade payable, both land and construction, are recorded as current liability, hence the current ratio of the Company is low. 2.5.4 Ability to provide the additional fund At the end of the year 2013, the Company has undrawn loans as follows: Type of loans

Due date

Undrawn portion (million)

Debenture - the rest of line Not yet identified 2,150.00 Long term loan from financial institutions - line 2 June 2017 573.00 Long term loan from financial institutions - line 3 December 2017 840.00 Long term loan from financial institutions - line 4 Repay by funds from sale of condominium units 95.00 Total 3,658.00 However, according to the high Debt to Equity ratio of 3.72, together with the interest coverage ratio and Debt Service coverage ratio were both negative, all these resulted in low possibility for the Company’ to obtain additional funds through liabilities . However, the Company has planned to solve the problem by increase its share capital and also to speed up the transfer of condominium units of The 15 Sukhumvit Residence Project in the second quarter of the year 2014. Thai Factory Development Public Company Limited

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2.5.5 Ability to pay debts and to perform and fulfill the covenants and other significant contingencies At the end of the year 2013, the interest coverage ratio and Debt Service coverage ratio were both negative because of the deficit from cash flow from operating activities. The Company has a plan to improve the situation by increase its share capital and to speed up the transfer of condominium units of The 15 Sukhumvit Residence Project in the second quarter of the year 2014, including the sale of vacant land in the TFD Industrial Estate, phase II. In order to get the financial support from one local bank, there is such covenant that the Company has to maintain the Debt to Equity ratio not exceed 2.5 : 1 . In addition, in the year 2013 when the Company has issued 2 lots of debentures, there are also covenants related to the Debt to Equity ratio similar to the Bank’s for each debenture. The covenants for the debenture 1/2013 is to maintain the ratio not to exceed 2.5 :with the ratio for the second lot, 2/2013 not to exceed 3.5 : 1, whereas at the end of year 2013 , the Company’s debt to equity ratio is 3.72 times. However, currently, the Company has submitted the written document to the said bank, asking for such amendment to the condition and covenant with regard to the debt to equity ratio from 2.5 to 3.5. The Company is also in the process to arrange a meeting of the bondholders # 1/ 2014 \ to get the consensus for the amendment of the ratio , from “Debt to Equity ratio” to “Net Debt to Equity ratio”, to amend the ratio “not to exceed 3.0:1,” and also to amend the definition of the debts used in calculation of such ratio. However, as the Company has planned to increase its share capital which will increase the equity of the Company, thus this will decrease the Debt to Equity ratio.

2.6 Contingent Liabilities and the management of off-balance liabilities Contingent Liability

Total

Less than 1 year

Payment period 1-3 year

3 – 5 year Over 5 year

CL : Operating rental 48.84 5.07 10.64 11.35 21.78 CL : purchasing 429.15 429.15 Other contingent liabilities 69.06 38.86 30.21 Total Contingent Liability 547.05 473.08 40.85 11.35 21.78 2.7 Factors or situations which will have impact to the Company’s financial status or operation in the future. The change in laws / regulations related to the real estate industry Change or additional laws, rules and regulation which related to real estate industry such as Land Development Act, regulations about the Zoning, City Planning Law, definition of Green Zone area and Purple zone area, which may have impact to the Company’s operation or may cause the delay to Project under development. However, the Group Company has already studied and followed all these rules and regulations continuously in order to prepare for any adjustment to its business and to cope with such changes. The delay of the real estate Project under development The delay of the real estate Project under development of the TFD Industrial Estate phase II which may incurred from the change and amendment of the Master Plan and also because the land in phase II is in the process of requesting a change from “Rural and Agriculture areas (Green area)” to “industrial and warehouse space. (Purple area)”, which the Company has studied and followed any changes to prepare for modification of the Master Plan, the Preliminary design concepts and documents.

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2.8 The details of the payment in the investment project Details of the payment of existing project as at the end of Year 2013

Project

Selling Value (1)

Cumulative payment due (2) million % of the value already sold

Cumulative Past due Amount O/S * payment received (2) – (3) (1) – (2) (3) million % of the million % of the million % of the cumucumuvalue lative lative already payment payment sold due due

The 15 Sukhumvit 1,729.89 466.66 26.98% 466.66 100.00% - 0.00% 1,263.23 Residence Project The Colonial Khao Tao Hua Hin 41.82 6.31 15.09% 6.31 100.00% - 0.00% 35.51 Note: * amount outstanding which is not yet due will be the payment received on the day of transfer the rights Amount Cumulative past due at the end of year 2013

84.91%

Cumulative Past due Project

The 15 Sukhumvit Residence Project The Colonial Khao Tao Hua Hin

# of customer

None None

Past due 1-3 Past due 3-6 Past due over 6 months months months million # of million # of million # of million customer customer customer

73.02%

-

None

-

None

-

None

-

-

None

-

None

-

None

-

Thai Factory Development Public Company Limited

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Report of the Board of Directors’ Accountability to the Financial Statements The Board of Directors is responsible for the accuracy and completion of a consolidated statement of the company and its subsidiaries and financial information published in the Annual Report. The financial statement has been prepared on the basis of the Generally-Accepted Accounting Principles (GAAP) of Thailand upon an appropriate accounting policy regularly practiced, an exercise of discretion, the best estimate and the disclosure of adequate material information in notes to the financial statements for the best interest of shareholders and investors. The Board of Directors has established and maintained an effective internal control to ensure that the company’s accounting record is accurate, complete and adequate for the maintenance of our assets and for monitoring weaknesses to prevent corrupted or unusual practices that are material. In this regard, the Board of Directors has set up the Audit Committee consisting of non-executive independent directors to be responsible for the quality of the financial statement and the internal control. The Auditor Committee’s opinions regarding the matters are published in the Auditor Committee’s report also included in the Annual Report. The Board of Directors is of the opinion that the company’s internal control system, in general, remains satisfactory, leading to its reasonable confidence that the financial statements of the company and subsidiaries as of December 31, 2013 are reliable in compliance with the GAAP and relevant laws, rules and regulations.

Dr. Sunthorn Sathirathai Chairman of the Board

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Mr. Gumpol Tiyarat Managing Director

Thai Factory Development Public Company Limited


Shareholders and Management

The Directors and Management who are holding Ordinary Shares of the Company as at January 15, 2014 Full Name

1. Dr. Apichai Taechaubol

15 Jan. 14

264,333,775

Number of Ordinary Shares (Share) 31 Dec. 13 Increase (Decrease)

264,333,775

-

Directors’ and managements’ remuneration as at December 31, 2013

(1) Baht 8,000,000 was approved by the 2013 AGM as remunerations for the Board of Directors where the Board of Directors shall allocate such remunerations to each director. The directors’ remuneration received as the meeting allowance and annual compensation as follows: Full Name

Positions

Meeting Annual Total Allowance Compensation Remuneration (Bt. / Y) (Bt. / Y) (Bt. / Y)

1. Dr. Sunthorn Sathirathai Chairman and Independent Director 180,000.- 1,700,000.- 1,880,000.2. Dr. Apichai Taechaubol Diector and Executive Chairman 165,000.850,000.- 1,015,000.3. Mr. Prasong Vara-ratanakul Audit Committee Chairman, Corporate 172,000.680,000.852,000.Governance, Nomination and Remuneration Chairman and Independent Director 4. Mr. Nan Kitjalaksana Audit Committee Member, Corporate 156,000.630,000.786,000.Governance, Nomination and Remuneration Committee and Independent Director 5. Mr. Sommart Sangkhasap Audit Committee Member, Corporate 156,000.595,000.751,000.Governance, Nomination and Remuneration Committee and Independent Director 6. Mr. Gumpol Tiyarat Director, Executive Director and Managing 147,000.580,000.727,000.Director 7. Mr. Anukul Ubonnuch* Director, Executive Director and Deputy 132,000.630,000.762,000.Managing Director 8. Mrs. Sumalee Ongcharit* Director 110,000.630,000.740,000.9. Mr.Pisuth Viriyamettakul* Director 88,000.399,000.487,000.Total 1,306,000.- 6,694,000.- 8,000,000.Remark : *Mr. Pisuth Viriyamettakul has been appointed as the 2013 Annual General Meeting of Shareholders’ resolution on April 18, 2013 and resigned in the position of the Director on the Board of Directors’ Meeting No. 1/2014 on January 22, 2014 Mrs. Sumalee Ongcharit resigned in the position of Director on January 17, 2014 Mr. Anukul Ubonnuch resigned in the position of Executive Director on December 31, 2013 Thai Factory Development Public Company Limited

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(2) The management’s remuneration starts from the Assistant Managing Director level up to the Managing Total of Remuneration

Salary / Annual Incentive

Managements

6

2013

27,603,857

Managements

8

2012

26,931,029.55

Remark : In 2013, there were 6 managements consist of 1) Dr. Apichai Taechaubol 2) Mr. Gumpol Tiyarat *3) Mr. Anukul Ubonnuch 4) Ms. Vilai S. Ngow 5) Ms. Siriporn Pinprayong 6) Mrs. Rachanee Siwawej

180

* Mr. Anukul Ubonnuch resigned in the position of Deputy Managing Director on December 31, 2013

Annual Report 2013

Thai Factory Development Public Company Limited


Major Shareholders as at January 15, 2014

1. Dr. Apichai Taechaubol 2. Mrs.Chalida Taechaubol 3. Mr. Pisuth Viriyamettakul 4. Mr. Chotiwit Taechaubol 5. Mr. Krittawat Taechaubol 6. Mr. Chaisith Viriyamettakul 7. Mr. Pijit Viriyamettakul 8. Thai NVDR Company Limited 9. Mr.Settavat Wattananamkul 10. Other Total

Thai Factory Development Public Company Limited

No. of Shares

264,333,775 193,583,772 88,560,000 51,382,959 51,000,000 50,660,000 16,740,000 9,261,846 8,245,600 349,732,253 1,083,500,205

%

24.397 17.867 8.174 4.742 4.707 4.676 1.545 0.855 0.761 32.939 100

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General Information

The Thai Factory Development Public Company Limited (“TFD”), registered no. 0107537000475 (Bor Mor Jor. 294) with head office at 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok 10120 Thailand Tel : (66) 2676 4031-6 , (66) 2676 3836-9 Fax : (66) 2676 4038-9 Website : www.tfd-factory.com

Nature of Business

The Company’s main activities are categorized according to its sources of revenue into 4 types as follows: 1. Industrial Estate 2. Sale and rental Land, ready-made factory, warehouses, and management 3. Rental for office space and property management service of real estate 4. Construction, Design and Construction Control

The Company’s Capital The Company’s registered capital is Baht 1,499,861,190.- divided into 1,499,861,190 of ordinary shares with a par value of Baht 1. The Company’s shares issued has registered at 1,083,500,205 shares with a par value of Baht 1, and paid up of Baht 1,083,500,205.-. The ordinary shares remaining at 416,360,985 shares, divided as unpaid as follows: 1). Ordinary shares in the amount of 180,410,965 shares to be reserved for the exercise of Warrants No. 2 (TFD-W2) which non exercise at 180,410,965 units with exercised price of Baht 5 and the last exercised date is on May 15, 2016. 2). Ordinary shares in the amount of 116,000,000 shares at the par value of Baht 1 each to general investors through the Public Offering. 3). Ordinary shares in the amount of 119,950,020 shares to be reserved for the exercise of Warrants No. 3 (TFD-W3), which is allotted to existing shareholders at 108,350,020 units in proportion to their respective shareholding and general public who subscribe for newly issued ordinary shares at 11,600,000 units.

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The Subsidiary Companies

Total Industrial Services Co., Ltd. was established in April 2003 with registered capital of Baht 400 millions, TFD holds 100% of shares, and the Company’s activity provides the construction of standard factory and warehouses for sale and rent. Head office is situated at 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok 10120 Thailand Tel. : (662) 676-4055-57 Fax. : (662) 676-4064 VSSL Enterprise Co., Ltd. was established in July 1998 with registered capital of Baht 701 millions, TFD holds 100% of shares, and the Company’s activity provides real estate business. Head office is situated at 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok 10120 Thailand Tel. : (662) 676-4031 Fax. : (662) 676-4038 SG Land Co., Ltd. was established in June 1988 with registered capital of Baht 100.45 millions, TFD holds 49.91% of shares, and the Company’s activity provides office building rental. Head office is situated at No. 161/1, Soi Mahad Lek Luang 3, Ratchadamri Road, Lumpini, Pathumwan, Bangkok 10500. Tel. : (662) 651-9485, (662) 651-8577-78 Fax. : (662) 651-8575, (662) 651-9471

The Shares Registrar

Thailand Securities Depository Co., Ltd. 4th and 7th Floor, No. 62 The Stock Exchange of Thailand Building Ratchadapisek Road Klongtoey, Bangkok 10110 Tel. : (662) 229-2000 Fax. : (662) 654-5649

The Auditor

Ms. Siraporn Ouaanunkun CPA No. 3844 or Ms. Chonlaros Suntiasvaraporn CPA No. 4523 or Mr. Khitsada Lerdwana CPA No. 4958 Ernts & Young Office Limited, 33rd Floor, Lake Rajada Office Complex, 193/136-137 Rajadapisek Road Klongtoey, Bangkok 10110 Tel. : (662) 264-0777 Fax. : (662) 264-0789-90

Thai Factory Development Public Company Limited

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The Solicitor

The Far East Law Office (Thailand) Co., Ltd. 24th Floor, No. 121/74-75, R.S. Tower, Dindaeng, Bangkok 10310 Tel. : (662) 711-4912 Fax. : (662) 711-4920

The Advisor

Mr. Thumrong Chientachakul No. 501/126, Sathu Pradit Road, Chong Nonsi, Yannawa, Bangkok 10120

The Share Listings

The Company’s shares are listed and traded on the Stock Exchange of Thailand.

The Bankers and Other Financiers

184

Isalamic Bank of Thailand The Siam Commercial Bank Plc Bank of Ayudhya Plc Government Savings Bank Kasikornthai Bank Plc Bangkok Bank Plc Thanachart Bank Plc Krungthai Bank Plc Land and Houses Bank Plc

Annual Report 2013

Thai Factory Development Public Company Limited


TFD Factory Location Map มุ่งมั่น สร้างสรรค์ พัฒนาอสังหาริมทรัพย์ ด้านโรงงาน อุตสาหกรรม อาคารสำ�นักงาน และที่พักอาศัย พร้อมการบริการ ด้วยใจอย่างต่อเนื่อง เพื่อสร้างความพึงพอใจสูงสุดแก่ลูกค้า

Be Dedicated, Be Creative, Be a Quality Real Estate Developer In Industrial Factories, Office Buildings & All Real Estate Sectors Providing the Best Customer Service for Our Customers’ Satisfaction


รายงานประจำ�ปี

2556

Annual Report 2013

บริษัท ไทยพัฒนาโรงงานอุตสาหกรรม จำ�กัด (มหาชน) เลขที่ 18 ซอยสาทร 11 แยก 9 อาคารทีเอฟดี แขวงยานนาวา เขตสาทร กรุงเทพมหานคร 10120 โทรศัพท์ : (66) 2676 4031-6, (66) 2676 3836-9 โทรสาร : (66) 2676 4038-9 Thai Factory Development Public Company Limited 18 Soi Sathorn 11 Yaek 9, TFD Building, Yannawa, Sathorn, Bangkok 10120 Thailand Tel : (66) 2676 4031-6 , (66) 2676 3836-9 Fax : (66) 2676 4038-9 www.tfd-factory.com

YOUR SATISFACTION IS OUR BUSINESS.

บริษัท ไทยพัฒนาโรงงานอุตสาหกรรม จำ�กัด (มหาชน) Thai Factory Development Public Company Limited

TFD: Annual Report 2013  

annual report

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