Procurement of Products and Services

6.1 Being a Leader in Cost

Cost Leadership is the strength of the Company. The executives of the Company comprise experienced architects and engineers who deeply understand cost issues. The business alliances have been working with the Company for so long that they understand the direction and share the same goal of ensuring the efficiency of construction. The construction of a large number of projects is completed in a timely and efficient manner. All of these factors lead to new innovations which are unique to the Company. 1. Provision of Products and Services The main products of the Company in 2017 are residential condominiums for the target group in the middle to upper range who are in need of quality residence with reasonable price which is safe, equipped with facilities and locates near public transportation system or expressways. In order to respond to the competitive situation of the market, laws and changing costs, the Company has established a project development guideline and processes as follows:

1) Survey the demands in the market in various locations

both in Bangkok and peripheral areas as well as in provinces with high economic growth rate. The information received from the survey will be used to decide project locations in order to expand the customer base and locations of projects. The market situation, competitors, demand and supply and economic and social situations at the time will also be surveyed. 2) Analyze the project, plan marketing goal, consider to purchase a land and analyze the location, shape, size, surroundings, regulations of the government which can affect the project as well as competitors to decide the characteristics, size, development process and product value of the project based on the returns of investment, the suitability of the location and the format of project development.

6.2 Building Product Differentiation

To ensure utmost customer satisfaction, the Company has never stopped searching for a balance that is suitable for customers’ lifestyle. It chooses to differentiate its products by designing the products under “LPN Design” concept which focuses on the design that is adequate and has usable space that perfectly responds to the lifestyles of the residents. The Company also builds a service differentiation with the emphasis on the services and the management after move-in which does not only support a private living but also encourages a perfect togetherness of everybody on the same basis and focuses on the quality of life

of the residents of all age groups.

3) Plan and design the project to be in line with the survey

result by selecting quality architects and project consultants who understand the concept of the Company.

The architects and engineers are very important since their performance will directly affect the costs especially indirect costs such as the sale space to land ratio which reflects the efficiency in design. Indirect cost control is one of the cost leadership strategies of the Company to maintain its ability to compete in the market.

4) Produce project development plan, financial plan, project

financing plan, sale management and marketing plan as well as community management after handover plan. 5) Prepare the team and decide manpower for the management of the project i.e. sale team, construction team, ownership transfer and handover team and community management team. 6) Manage sale and marketing work as follows: - Planning of sale i.e. sale price establishment, planning of customer payment and provision of sources of loan during the ownership transfer period by considering the financial institution which offers highest benefit to the customers, sale target set up and sale team training. - Preparation of marketing plan i.e. advertisement and promotion plan to reach the target group, production of sale materials, schedule and sale opening process.

7) Manage construction work with the following stages:

• Coordinate with and provide project information to all stakeholders i.e. government agencies and especially neighboring communities who will be directly affected by the development. • Prepare the Environmental Impact Assessment report for the approval of the Office of Natural Resources and

Environmental Policy and Planning and seek approval for the construction from related departments respectively. • Prepare the construction plan and select a contractor.

The construction period up to the project launch is limited to 18 months for high-rise buildings and 12 months for the buildings that are not higher than eight stories in height. The Company has developed the construction system and technique and used readymade materials. A subsidiary company is responsible for managing and controlling all process of the construction according to the roles and responsibilities assigned. • Report project progress to customers on a regular basis. 8) Assess and follow-up the sale result and profits of the project by producing a summary report as an information and case study for the next project of the Company. 9) Manage the community after the handover under “Livable

Community For All” strategy with an aim to create a good quality of life for the residents and be responsible for the environment and society.

2. Production Capacity and Volume The Company does not have the production capacity and volume directly but hires construction contractors who are business alliances and have been working closely with the Company (they are referred to as LPN Team) with experiences appropriate for each project to carry on the construction work. A subsidiary company is responsible for managing and controlling construction work closely and arranging an auction and a price investigation to decide a proper cost of the construction. A construction package deal including materials and wage will be agreed to reduce the risk of the cost fluctuation in construction materials and supplies. In addition, the policy of the Company is not to depend only on one contractor but will arrange separate auctions for each type of work such as foundation piles, structure, ceilings, windows, aluminum and electricity and water supply system to reduce risks and indirect costs. All contractors will coordinate with each other for speedy and quality construction. The main contractor and subsidiary company will be the coordinators of all the works. In some cases, the Company will purchase some materials directly such as elevators which have high purchase volume and require services from the seller directly. The process above has been followed efficiently both in terms of costs and timing as a result of the strengths and reliability of the alliances (LPN Team). This is considered to be the competitive advantage of the Company.

3. Provision of Raw Materials The Company hires construction contractors who are business alliances of the Company with experiences appropriate for each project to carry on the construction. A construction package deal including materials and wage will be agreed to reduce the risk of the cost fluctuation in construction materials and supplies. However, the land for project development is the most important raw material. The Company determines the following factors as criteria for the provision of a plot of land to be developed: 1) The location of the land must be in densely populated area on a main road, equipped with full facilities, near workplace or large scale communities, near transportation system or expressways and conveniently accessible. 2) The width and shape of land must be suitable and in line with the Building Control Act for the best use of the land. It also has to be in accordance with the land use regulations. 3) Land price must not be higher than 30% of the project costs so that the Company would be able to maintain the selling price and return of investment to be in accordance with the policy and competitive strategy of the Company.

4) The provision of land is also done by publishing an announcement on the Company’s website to directly contact the owner of the land or through a broker or offering to buy from a financial institutions and Thai

Asset Management Cooperation (TAMC). The Company establishes a Department to be directly responsible for seeking and checking land qualifications.The Company will inform the Stock Exchange of Thailand when a land is purchased to ensure transparency. Land appraisal will be done by an independent appraiser to double check the price of the land. The value of all plots of land the Company purchases is lower than the appraised value.