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150 - 151 MESSAGE FROM THE CHAIRMAN

2:2č!: #+8 :! ++) :+ 152 - 153 AUDIT COMMITTEE REPORT

+:*:! 5 8 ++) :++/25" 154 - 155 ORGANIZATION CHART

$95 č + 156 - 169 BOARD OF DIRECTORS

+:*!:) 8 ++) :+ 170 - 181 DETAILS OF COMPANY'S PROJECT

+:*-8D5=*F + :+ 182 - 185 OVERALL BUSINESS

(:&+/)G! :+#+8 5" @+ < 186 - 187 MARKETING AND COMPETITION

:+-:E-8(:/8 :+E ĉ 9! 188 - 193 RISK FACTORS & RISK MANAGEMENT

#ď9* /:)D2=L*

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194 - 195 SHAREHOLDERS STRUCTURE AND MANAGEMENT

F +2+Ċ: :+?53@Ċ!E-8 :+9 :+ 196 - 221 MANAGEMENT

:+9 :+ 222 - 223 RELATED TRANSACTIONS

+:* :++83/ĉ: 9! 224 - 235 MANAGEMENT DECISION AND ANALYSIS

Q:5 <":*E-8 :+/<D +:83č: $AĊ"+<3:+ 236 - 237 BOARD OF DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING

+:*:! /:)+9"$<5" 5 8 ++) :+ ĉ5+:*:!: :+D<! 238 - 317 AUDIT REPORT OF CERTIFIED PUBLIC ACCOUNTANT

+:*:!$AĊ25""9= 318 - 319 GENERAL INFORMATION

Ċ5)A-9L/H# 5"+<19E-8"+<19*ĉ5* 320 - 321 SUBSIDIARY

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MESSAGE FROM THE CHAIRMAN .6.Ĝ 6'46''%6'

The year 2010 was a time of adjustment for the global economy after the latest financial crisis. Although not directly impacted, the Thai economy experienced a high degree of volatility and domestic political conflict. However, overall national economy growth to satisfactory level and the real estate sector grew expanded in the same direction as national economy. Areeya Property Public Company Limited had revenue from sales of Baht 3,330 million and net profit of Baht 485 million in the year 2010, which softening down when compare with the year 2009. It’s because, the company has marketing expenses increased from the new projects and the tax increased from transfer that make a goodwill impairment charge of selling and administrative higher than last year. It should be noted that the cost of sales ratio has decreased when compared to sales, since the company can control the lower cost than estimated. Besides that, in terms of total assets of the Company, it is increased. Since the company has purchased land for the new projects to support rate of growth in the year 2011 and 2012. Therefore, it is ensured that the company will have enough projects to keep sales volume and growth rates in the next three years. For further, the loans ratio of the current year is lower than the last year. Due to transfer sales and profitability, the firm has returned more liabilities to the bank that make the bank debt-equity ratio at 1.08 time, a level that will allow the company to better compete the financial costs in the industry. Among, the uncertainty domestic economy and political, the company realizes that in the year 2011, our growth is based not only on making profit, a main business objective, but also the strong and sustainable status. Therefore we pursue the policy of careful but effective and transparent capital management according to the corporate governance code which makes the company continued growth in the long term. In conclusion , On behalf of Areeya Property Public Company Limited ,would like to take this opportunity to express my deep gratitude to our esteemed shareholders ,customers and business partners for their continued support to Areeya Property , especially , during this most challenging and rewarding time. May I also thank you our management and staff for the most valuable contributions, exemplary hard working and complete dedication to Areeya Property.

Mr. Wisit Laohapoonrungsee Chairman and Chief Executive Officer

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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AUDIT COMMITTEE REPORT '6& 61 4''%6''+ .1 To Shareholders Areeya Property Public Company Limited The Audit Committee of Areeya Property Public Company Limited consists of 3 independent members; Mr.Chalit Satidthong as the Chairman and Mr.Wanchai Tantikul and Mr.Preecha Boonyakida as a member of the Audit Committee. They are all appointed from the meeting of the Board. All 3 members of the Audit Committee are selected from those specialized in finance, law and organization management. They have performed their duties and provided their opinion independently within the scope of duties and responsibilities assigned to them by the Board which are in compliance with the Notification of the Stock Exchange of Thailand regarding Qualifications and Scope of the Operation of the Audit Committee B.E.2008. In the year 2010, the Audit Committee held 4 meetings which were also attended by the management, chief of internal audit office and representatives from accounting department according to the agenda. Another meeting was held with the CPA without the management. The Audit Committee’s audits and recommendations given on different occasions can be summarized as follows:



Audit quarterly and annual financial statements of the year 2010 With the cooperation from the management and the CPA, it is of the view that financial reports and transactions with related persons are correctly and adequately prepared with transparency and reliability and they are in accordance with generally accepted accounting standards. Accounting system and financial statements can be relied upon with adequate disclosure of information in such financial statements in a timely manner. They also give observations and acknowledge solutions for the optimal benefit of the company.



Audit and assess adequacy of internal control system The Audit Committee has reviewed internal control system with the internal control office every quarter and is of the view that the company has adequately implemented internal control system. There is none of material concern or defect. Therefore, confidence is reasonably established that the company has achieved the objectives in respect of efficient and effective operation including assets management, reliability of financial reports and compliance with rules and regulations and policy of the company.



Supervision of internal control operation The Audit Committee reviewed auditing report for the year 2010 according to the approved work plan in order to enhance efficiency and effectiveness of the operation with well-established internal control system, compliance with laws relating to securities and stock exchange market and other provisions of laws relating to the company’s businesses as well as following up the issues needed to be addressed according to internal audit report. In addition, the Audit Committee has also considered auditing plan for 2011 which is prepared based on the assessment of internal control and the company’s risks.



Appropriateness of the CPA The Audit Committee is of the view that KPMG, the company’s auditor in 2010, has no relationship to the company whether through shareholding nor providing other services for the company other than auditing works. They have performed their function appropriately in accordance with auditing professional standards and have good understanding toward the company’s businesses.



Related transactions The Audit Committee has audited related transactions which may cause conflict of interest and is of the view that they were all actual transactions in normal course of business. Their related transactions were disclosed in accordance with the principle of good corporate governance while conflict of interest was prudently avoided in a reasonable and independent manner and all shareholders were treated impartially.



Appointment of the CPA for the year 2011 The Audit Committee has selected and nominated the CPA to the Board in order to seek for approval from the general meeting of the shareholders for the year 2011 to appoint Miss Wannaphon Chongpheeradechanont, CPA Licence No. 4098 or Miss Bunsi Chotiphaiboonphan, CPA License No. 3756 from KPMG as the company’s auditor for the year 2011.

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In conclusion, the Audit Committee views that the company bases its operation on good corporate governance and as a result, it has adequately established internal control system without any material shortcoming. Appropriate risk management system is also implemented while statutory requirements are properly met. For the financial statements for the year ended 31 December 2010, there is no such event indicating problem or such item affecting financial status. Preparation of financial statement is properly done with adequate information disclosure and in accordance with accounting standards. On behalf of the Audit Committee

(Mr.Chalit Satidthong) Chairman of the Audit Committee 23 February 2011

152

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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OVERALL BUSINESS

$6"'+%D6''41<'8 Areeya Property Public Company Limited (the “Company” or “Areeya”), registration number 0107546000431, with the security symbol “A” on the Stock Exchange of Thailand, was established at January 20, 2000 start from house construction service. Furthermore in year 2002, the Company expands to be property developer by allotting land and constructing house in the named of “Areeya”. In year 2003, the Company registered as a public company. And then its security was listed in the Stock Exchange of Thailand in year 2004.

Type of Business Areeya Property PCL. operates its business with three product lines, namely: 1. Single Detached House Project: The Company sells company-owned vacant plots of land and undertakes to contract for the construction of houses on plots of land in the said Project or sells plots of land on which a complete house is built. At the present, the Company owns two project locations, namely, in Kaset-Nawamintr and Lad Pla Kao areas, etc. 2. Town House Project: At present, the Company has developed the town house project with three distinctive designs as follows:



Two-Storey Design (The Colors) Townhouse project is a 2-storey town house with 5.7 meters wide compartment to accommodate groups of customers who need residence for small-sized family and those would be new families. Currently, the Company has 4 project locations, namely, The Colors Project in Kaset-Nawamintr in Tiwanon Bangna and in Rangsit respectively. Moreover, the Company is planning to increase project locations to meet similar demand to cover areas around Bangkok Metropolis and its peripheral areas.



Three-storey Design (Areeya Mova and Areeya To be) Townhouse project with 5 meters wide compartment and 5.5 meters wide compartment, 3-storey high, to meet the demand of small and medium family customers to provide them with alternative options. Currently, this project is located in two locations, namely, in Kaset-Nawamintr and in Sukhumvit 77.



Four-storey Design (Mandarina) Townhouse project with 5 meters wide compartment and 5.5 meters wide compartment, 4-storey high, to meet the demand of premium-grade townhouse customers who require larger utility areas with distinctive design to response to a variety of needs of this group of customers. At present, this project has two locations, namely, Mandarina project in Sutthisan and in Sukhumvit 77.

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3. Condominium Project: The Company’s salient product line is that it is centrally located in vicinity of urban area, of communication facilities and various public amenities to fully meet the needs of customers. The condominium projects focus on 3 distinctive designs as follows:



Small and medium condominium projects: at the present, the Company’s condominium project is located in 4 locations, namely, Aspace Kaset, Aspace Asoke Ratchada, Aspace Play and Aspace Sukhumvit 77. Moreover, the Company is planning to increase its project locations to meet similar needs to cover all areas around Bangkok Metropolis.



Luxurious condominium project namely A Attitude: the large-sized condo project emphasizing meeting the needs of premium customers group on central business district. Its sales point is private club to meet the needs of customers who require premium-grade services. At present, the Company has one condominium project area located on Asoke-Ratchada road.

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Moreover, the Company is planning to increase its project locations to meet similar needs to cover all areas around Bangkok Metropolis.

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The Revenue Structure Our major income is real estate development. We are selling land with building and also servicing on house construction which is shown below: 2010 Consolidated Source of revenue Sales of real estate Service income from house construction and sales of construction material 1 Other income 2 Total revenues

2009 Consolidated

2008 Consolidated

Mio. Baht

%

Mio. Baht

%

Mio. Baht

%

3,330

99.17

3,383

97.80

752

88.28

4

0.13

53

1.53

52

6.08

23

0.70

23

0.67

48

5.64

3,357

100.00

3,459

100.00

852

100.00

Notice : 1. Sales of construction material are less proportion when compared to the total revenues. 2. The other income consists of the real estate management service income, design fee, interest income, forfeiting deposit from customer and reimbursement from projectsâ&#x20AC;&#x2122; utility usage.

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MARKETING AND COMPETITION 6')6B)4$6+46'BĘ 5

The housing market in Bangkok enjoyed its boom time in the first half of 2010, mainly because of the incentives granted by the government. Developers were very bullish and launched plenty of new projects, especially condominiums, in the third quarter. However, the Bangkok housing market has probably passed its peak, and will grow at a slower rate in 2011. The Property market in Bangkok and its suburbs forecast to be fall in the year due to many negative factors. The end of property tax incentives last year, The Market recorded high growth last year following the expiry of tax incentives in June, a move that doubled year on year sales in the first quarter. But now the incentives have expired so we expected that the market will return to the normal situation. Also, Rising interest rates will be a major concern, along with the central bank’s efforts to rein in protective measures such as stricter loan-to-value ratio for mortgages to limit mortgages to 90% of a condominium’s value since January 1. It will definitely impact ot customer buyers decisions to purchase home, especially condominiums which accounted for 54% of all registrations last year since the buying power is tied tightly with the interest rates. The percentage change in interest rates will have a significant impact on buyer s affordability. Moreover, The political situation as election year will also bring in uncertainties and investors may adopt a wait-and-see attitude. Apart from that, The other factor is the land department plans to amend the condominium law to protect buyers, especially to impose utilization space of at least 30 sq.m per unit, it will effect on low income condominium buyers since the package will be increased following to the size.

Supply and Demand From AREA research, the new projects launched in year 2010 valued at Baht 304,533 million which the highest number of new projects launched are condominium 60,972 units or account for 52% of overall new projects launched by units or 49% of total new projects launched by value.

Figure : The remaining units for sale in year 2011 The remaining units for sale as of year 2009

The remaining units for sale as of year 2010

110,656

Increase (Decrease) 130,382

Remaining units for sales more than 10 years

10,000

Construction progress less than 20%

41,000

Construction progress less than 40%

14,524

Total

65,524

18%

Remark – Unit : Unit Source : Agency for Real Estate ffairs The remaining units for sale from year 2010 increased by 18% compared with year 2009, which can divided by 54% to condominium, 30% to Single Detached House, 11% to Townhouse and the Rest 5 % to Twin house and commercial building respectively. As summarized in the above, remaining units for sales more than 10 years is only 10,000 units. From 0.13 million units 50% of them are under construction in progress less than 20% and 40%. It means that the maximum cancellation or cease the construction is 50%. There are some areas in Bangkok with vast quantities of housing supply, but it still does not fall into the definition of “bubbles” as prices have not been shooting up across the market. Many housing projects will likely spring up along the new Purple Line mass transit route, as it is the only new route now with realistic progress. The real estate market in Thailand has recorded high growth, as seen from new condominiums that reached 70,000 units by the end of 2010. Nonetheless, unsold units in the market have been accumulating, prompting concern about a market imbalance.

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187


RISK FACTORS & RISK MANAGEMENT ĝ 5& +6%A.9I& 

The company realized the important of risk management, therefore we have target to manage the risks within acceptable level. Based on the company business, the possible risk factors and the impact on our future operation are as follows.

1. Risk in construction work 1.1 Fluctuation of construction material’s price The Company realized that major construction material’s price is always change and uncontrollable. In order to minimize the risk, we have negotiated in advance and fixed price for appropriate period with major suppliers for all projects. As a result, the fluctuation of material price can be controlled as well as the construction budget. This strategy also can reduce the burden of our sub-contractors. They can buy major construction material at our negotiated price which is lower than market price. In addition, the Company also has a group of pricing analyst who perform price analysis, monitoring and searching for alternative construction material. This is to ensure that we have the latest pricing in order to determine construction price as well as to be competitive in the market. The Company also emphasized on research and development. We have established the R&D team which responsible to study new construction technology and alternative material such as tunnel form system, precast element, bathroom pods, solar cell, and mechanical lift. We believe new invention can help to reduce cost and more effective. That is support to two-storey and three-storey townhome construction period in 6-7 months. It can control the risks of price fluctuations of materials. For condominium, which must be at least 1-2 years construction the company to evaluate the fluctuations in the costs of construction. 1.2 Contractor Performance & Experience In order to reduce risk which may occur by contractors, the Company had established One Up Co. Ltd (a subsidiary with 99.99% shares hold by the Company) in November 2007. The main objectives are to be able to control construction budget, quality and delivery on time. We have employed professional top management who has experienced in local and international construction business. Most of our engineers were recruited from local top university and have direct experience in high rise and low rise building. Apart of subsidiary company, the Company also awarded contract to other contractors. The Company selected middle to big size contractors who has good performance and strong financial background. This is to ensure that this group of contractor have high responsibility and be able to pay wages to their worker on time. Therefore can minimize the risk of project delay or stop construction due to contractor stop work. 1.3 Construction standard and quality The Company is focus on quality and standard in order to reduce risk of being complaint from customer. Therefore, the Company would like to obtain international standard which is recognize worldwide. One Up Co., Ltd (its subsidiary), which is acting as construction division of the Company have conducted the process according to ISO standard. The company successfully audited and was awarded ISO 9001:2000 in 2008 and upgraded to ISO 9001:2008 in 2009 form Moody International Co., Ltd. In addition, the Company had set up Quality Assurance Department which consists of QA, QC and inspector who responsible to monitor quality of work process and report directly to management. This is to ensure that our product meet quality standard and conform to customer requirements. The Company also focuses on personal development emphasis on the staff competency. We have organized training in order to provide knowledge in term quality and standard to employees, sub contractors and direct workers. This prevention action will help to increase all party skill and therefore reduce risk of not meeting quality and standard. 1.4 The shortage of workers in the construction sector Data from the Thai Construction Industry Association. Indicate that workers in the construction sector was approximately 4 million people next year would be around 200 - 300 hundred people shortages due to migration to the agricultural sector because of the motivation of agricultural products have risen. The company has a solution by developing technology or using alternative construction materials package to solve the labor shortage.

188

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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1.5 Safety of Life and Property The Company realized the important of safety of life and property of our employee, subcontractors, direct workers and resident. Therefore, company have set security system and employed official security officer to ensure that everyone in the site are strictly follow security standard. Effective preventive action can minimize lost of life and property of all party. Besides, we can ensure that company have effective investment as well as save cost of renovation in the near future.

2. Acguiring center business district land for project development. Most of company’s project located at city center because is very popular among customer due to easy access and facility provided. The land of city center is and highly demanded from developer. The Company have realized the risk of limited city center land, thus we have planned ahead and already purchased sufficient city land for our future project development. Besides, the Company also bought other land area which researched and analyzed by marketing research team that it will have potential to be business center, resident center and government center such as Chaengwattana and Kaset-Nawamintr.

3. Expert in condominium segment The Company only started involved in Condominium segment in year 2006 under brand of “A Space” and to date, we have launched 6 projects (4,430 units). Realized that company is the expert in condominium segment compared to other developer, we launch sales before start construction work. This method can help to reduce the risk of unsold condominium. After launched sales of these 6 projects, we have found that sales of our condominium were very successful. Other risk factor is fluctuation of construction cost of condominium due to sales before construction work. Thus, company have awarded contract to main contractor based on turnkey project basis. Besides, we have negotiated and purchased material in advance to prevent fluctuation of material price. Although One Up Co., Ltd. which is its subsidiary just established in November 2007, but with professional top management who have experience in real estate and all type of construction, we have completed 13 projects within 3 years of operation. They are:-



6 Projects of Condominium. (1) a space Asoke Phase I, (2) a space Asoke Phase II, (3) a space Kaset-Nawamintr, (4) a space On-Nuch, (5) a space Asoke hideaway and (6) a space Play



7 Projects of Townhome (1) The Colors Kaset Phase I, (2) The Colors Kaset Phase II, (3) The Colors Tiwanon Phase I, and (4) Areeya Mova, (5)The Colors Premium Kaset Phase I, (6) The Colors Premium Tiwanon Phase I (7) Areeya To Be

„

„

For year 2011, we already secured 7 projects; 2 projects are under construction and 5 projects in the pipeline. Based on few years’ performance in single house, town home and condominium, we are able to be one of the new wave market leaders in real estate industry. The Company commits to produce high quality product at reasonable price in order to fulfill modern lifestyle of our customer.

4. Risk of major shareholders controlling the company At present, the Company has 2 groups of major shareholders - Laohapoonrungsee family and Porncharoenchaisilp family who hold 29.36 % and 25.31% of total shares respectively. If they collaborate their votes in the future, they are able to control all the shareholders even in the committee appointment or the special resolution which need major vote except the special resolution that require 75 ¾ of the shareholder’s vote for other activities during the Company’s shareholders meeting. However, the company still has the committee who will examine and consider the implementation of the Company so that it is fair to all shareholders.

190

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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5. Financial risk As of December 31, 2010, the Company had total short-term loan of Baht 1,019.42 million and total long-term loan of Baht 1,527.39 million from local financial institutions to invest in land acquisition, development and construction costs of the company’s single house, townhouse and condominium projects. At the end of 2010, the company had Bank-Debt-to-Equity ratio equal to 1.08 times and Debt-to-Equity ratio equal to 1.34 times. Therefore, the financial risk has sharply decreased compared to the previous year.

6. The risk of political instability. Problem of political instability that are still vulnerable to the chaos that would happen. Every time there is a political problem occurs will provide a decision to slow down. Although this year will have different risk factors but real estate business. It also tends to grow. It's like living in the greater Bangkok area are ongoing.

192

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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SHAREHOLDERS STRUCTURE AND MANAGEMENT C ' .'ę6 6';1/<ęB)46' 56' Shareholders Structure „ Ordinary

Shares

The Company’s registered capital, as of December 31, 2010, is Baht 949.6 million with issued and paid-up capital of Baht 758.0 million consisting of 758,000,000 ordinary shares at the par value of Baht 1 per share. „ Shareholders

The ten largest shareholders as of December 31, 2010 are as follows: No.

Name

No. of shares

%

1.

Laohapoonrungsee Family

222,567,000

29.36%

2.

Mrs. Patcharee

191,859,100

25.31%

3.

PROGRESSIVE OPULENT HOLDING (SINGAPORE) PTE., LTD.

60,000,000

7.92%

4.

Mr.Thakorn

Nitipanyawut

41,977,800

5.54%

5.

Mr. Thawat

Tantivorasit

37,772,500

4.98%

6.

Bootdee Family

25,136,900

3.32%

7.

Ms. Thitiporn

Assawaraksawong

24,360,000

3.21%

8.

Mr. Amnart

Chandhanupong

21,761,900

2.87%

9.

Mrs. Niphapat

Romerattanaphun

20,000,000

2.64%

10.

Mr. Tongchart

Thammapramote

18,657,900

2.46%

664,093,100

87.61%

Porncharoenchaisilp

Total

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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MANAGEMENT 6' 56' Management Structure The Company’s management structure consists of the Board of Directors, the Audit Committee and the Executive Committee, which are described below:

1. Board of Directors As of December 31, 2010 , there are six directors as the names were shown below: No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Chairman of the Board of Director

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

4.

Mr. Chalit

Satidthong

Independent Director

5.

Mr. Wanchai

Tantikul

Independent Director

6.

Mr. Preecha

Boonyakida

Independent Director

Authorized signatories are Mr. Wisit Laohapoonrungsee, signing together with Mrs. Niphapat Romerattanaphun with affixing the company’s seal. In addition, the authorized signatories can also be either of these two directors signing with Mr. Thun Thiansuwan with affixing the company’s seal. Scope of duty and responsibility of the Board 1.

To perform their job legally and follow the company objectives and rules as well as the resolution in the shareholders’ meeting with the following exception that need approval from shareholders’ meeting before execution such as the activities that the law assign to have the resolution from the shareholders’ meeting, relating transactions and purchasing and selling any securities according to the regulation of the Stock Exchange of Thailand or as assigned by other Government section.

2.

To appoint or change the company’s authorized signatories.

3.

To set policy, strategy and direction of company management as well as to supervise the executive to carry on the work effectively in accordance with the business policy, strategy and direction, in order to supremely increase economic value for the shareholders and for sustainable growth.

4.

To consider and decide in important activities such as business plan, budget, mass investment projects, or any legal regulation.

5.

To assess the results of the performance and determine the payment for the executives.

6.

To be responsible for the results of execution and duty performance of executives with intention and carefulness.

7.

To conduct accounting system, financial report and accounting report, to set the process in assessing the proper internal control, as well as to have an efficient and effective of internal audit; risk management; financial reporting and monitoring.

8.

To prevent conflict of interest among the company’s stakeholders.

9.

To supervise duty performance to be in ethical behavior.

10.

To set internal regulation and company code.

11.

To report their job responsibility, in conducting financial report, together with the audited financial report revealed in the annual report; and include important activities in accordance with the Stock Exchange of Thailand policy of desirable performance for the company’s board.

12.

To appoint someone to administer the company business activities under their supervision or give the person authority and/or within the agreed time period; and the board can cancel, discharge or change this authority at any time.

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2. Audit committee The audit committee consists of three independent directors as follow: No.

Name

Position

1.

Mr. Chalit

Satidthong

Chairman of Audit Committee

2.

Mr. Wanchai

Tantikul

Audit Committee

3.

Mr. Preecha

Boonyakida

Audit Committee

Audit Committee is an independent organization to support, review the financial information, and report to the shareholders and other related persons. Scope of duty and responsibility of the audit committee 1.

To review the Company’s financial report is accuracy and adequacy.

2.

To ensure that the Company has a suitable and efficient internal control system and internal audit, the audit committee shall consider the following issue: „ To

strengthen the independence of the internal audit department, the audit committee shall approve any selection, promotion, rotation or termination of the department head.

„ To

ensure the independence of the internal audit department, the audit committee shall consider other factors that might impact its independent performance, including reporting and supervision processes.

3.

To ensure that Company compliance with the securities and stock exchange laws, the Stock Exchange of Thailand’s regulations and other business laws.

4.

To consider, select, nominate and recommend remuneration of the Company’s external auditor. The audit committee shall consider the following issues: „ To

ensure the independence of the external auditor. The audit committee shall consider any factors that may conflict with the auditor’s efficient and professional operations.

„ To

freely discuss significant matters, the audit committee shall meet privately with the external auditor once a year, without the management team being present.

5.

To ensure that the firm complies all related rules when is a connected transaction or transaction that may lead to conflict of interests.

6.

To make Audit’s Committee’s performance report which is signed by the Chairman of Audit Committee and disclosed in the Company’s annual report, its report should include the following information: (a) accurateness, completeness and credibility of the company’s financial report. (b) adequacy of the firm’s internal control system. (c) compliance with SEC’s and SET’s laws and regulation and other laws relevant to the company’s business. (d) suitability of the external auditor. (e) transactions that may cause conflicts of interest. (f) the number of committee meetings and attendance of each member. (g) other concerns that have arisen as the audit committee performed its duties as defined in the committee’s charter. (h) anything else which should be made available to shareholders and general investors within the scope of duties and responsibilities assigned by the Board.

7.

To perform any other activities assigned by the Board of Directors and agreed by Audit Committee.

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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3. Executive Committees Executive Committees of the Company consist of three executive committees as follow: No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Chief of Executive Committee

2.

Mrs. Niphapat

Romerattanaphun

Executive Director

3.

Mr. Thun

Thiansuwan

Executive Director

The member shall be appointed by the Board to have duty and responsibility. Their power are unable to authorize items or persons that can gain and loss, or may have a conflict of interest (according to the designation of The Securities and Exchange Commission, Thailand) except in approve some activities that agree with policies, methods or regulations that Board approved. Scope of duty and responsibility of Executive Committee 1.

To determine policies, directions strategies and structures of the Company’s business to support an economic conditions and competition that has announced to the shareholders to ask for and agreement of the Board.

2.

To determine business plan, budget and managing authority of the Company to ask for an agreement of the Board.

3.

To examine and monitor the determined policy and managing method to be efficiently and benefit to the company.

4.

To monitor the company’s progress to follow the approved business plan.

5.

To consider an investment project of the company in order to offer to the Board.

6.

To make the legal act with the financial institution of opening an account, borrowing, mortgaging, pawning, guaranteeing, bargaining and register a proprietary right in order to run company’s business.

7.

To supervise and approve company’s normal business activities, and may hand over power to the Directors or other people to routine work.

8.

To run other business activities as the Board assigned.

200

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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4. Management Team The 2010 management team of the Company consist of seven top executives: No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Chairman and Chief Executive Officer

2.

Mr. Archawan

Eiampaiboonphan

EVP - Construction Department

3.

Ms. Pachoun

Limprasitisara

EVP - Finance & Accounting Department

4.

Mr. Chernchin

Cherdchoochai

SVP - Brand Corporate Department

5.

Ms. Duangthida

Hongkanarug

VP - Sales & Marketing Department

6.

Ms. Wilai

Aothong*

7.

Mr. Ekasit

Kaewaumporn**

VP - Community Management Department VP - Business Development Department

Remark *Ms. Wilai Aothong resigned from an officer and management team since 30 November 2010. ** Mr. Ekasit Kaewamporn resigned from an officer and management team since 31 December 2010

5. Board of Directors in subsidiary companies Areeya Service Co., Ltd. No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Managing Director

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

One Up Co., Ltd. No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Chairman

2.

Mr. Dennis

Ong Boon Seong

3.

Ms. Pachuon

Limprasitisara

Director

4.

Mr. Archawan

Eiampaiboonphan

Director

5.

Mr. Somphol

Thiansuwan

Director

Chief Executive Officer

Areeya Management Co., Ltd. No.

202

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

Managing Director


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203


Cool Space Co., Ltd. No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Managing Director

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

White Living Co., Ltd. No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Managing Director

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

Chill Space Co., Ltd. No.

Name

Position

1.

Mr. Wisit

Laohapoonrungsee

Managing Director

2.

Mrs. Niphapat

Romerattanaphun

Director

3.

Mr. Thun

Thiansuwan

Director

6. Chief Executive Officer Chief Executive Officer of the company is Mr. Wisit Laohapoonrungsee. The Board of Directors has assigned Chief Executive Officer (CEO) to have duties and responsibilities in operation. The detail of assigned authority conforms to the scope of duty and responsibility of Chief Executive Officer which the authority assignment of CEO and other persons as the approval by CEO have not included the power and/or authority to approve any transactions that CEO or the authorized person may have any conflict of interests or any advantage from the company or subsidiary company (compliance with the Regulation of the Securities and Exchange Commission). Such transactions have to be proposed in the Board of Directors’ meeting and/or Shareholders’ meeting for consideration and approval as indicated in the company’s Articles of Association or related law except the approval of transactions following the company’s Policies, Methods, Rules approved by the Board of Directors or Executive Committee. Scope of duty and responsibility of Chief Executive Officer 1.

To operate and manage the company’s business complying with plan and budget approved by the Board of Directors.

2.

To operate and manage the company’s business entirely complying with the company’s Objectives, Policies, Rules, Articles of Association, Orders, Resolutions of Board of Directors’ Meetings or Executive Committee’s Meetings.

3.

To have an authority to operate and act as the company’s representative for the related business beneficial to the company.

4.

To have an authority to issue the Announcement, Orders or Memorandum in order to control the operation complying with the company’s policies and benefit and to maintain the disciplines in the organization work.

5.

To approve the appointment of Staffs and Consultants in any fields necessary for the company’s operation.

6.

To operate as assigned by the Board of Directors or Executive Committee under the company’s Rules and Articles of Association.

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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205


The approval of transactions under the scope of duty and responsibility has to comply with the payment approval authority approved by the Board of Directors.

Payment Approval Authority The Board of Directors has determined the payment approval authority for the company’s normal course of business, financing, credit facility requesting, including mortgaging with the details as follows: Payment Approval Authority Normal course of business transactions

Financial transactions

Chief Executive Officer

Not over Baht 50 Million

Not over Baht 100 Million

Executive Committee

Not over Baht 200 Million

Not over Baht 500 Million

No Limit

No Limit

Board of Directors

7. Secretary of the Company The Board of Directors Meeting No. 2/2010 on March 22, 2010 appointed Ms. Siriluck Tangwiboonpanich to be the Acting for the Secretary of the Company by effective until now. Scope of duty and responsibility of the Secretary of the Company 1.

Monitor the activities of the Board to perform their job legally and follow the rule and regulation.

2.

Establish the Board of Directors’ Meeting and the Shareholders’ Meeting, including Invitation of Shareholders’ Meeting.

3.

Maintain information and document of the Company.

4.

Prepare Annual Report.

5.

Follow the Regulation of The Security and Exchange Commission, Thailand.

ĶŗŕőŖʼnŜőŗŖŗŎŜŐōĪŗʼnŚŌŗŎĬőŚōŋŜŗŚ At present, the company has no the nominating committee for selecting directors and independent directors. However, the Board has to consider the person who has good qualifications, knowledge, capabilities and related experiences. In addition, he (or she) shall not have prohibited characteristics according to the law. The independent directors are not the company’s employee, advisor or stakeholder, not have any family related with major shareholder and not a management of subsidiary. The company’s director selection is as follow regulation:

206

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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1.

Committee election by the shareholders shall follow the majority of votes by the following the rules and method below: 1)

Each shareholder will have a number of votes equal to one share per one vote.

2)

In case that the number of nominees is less than the number of the member required, the shareholders shall vote according to their belonging shares as the subject. (1) The votes can not be divided to any other person.

3)

Casting a vote one by one shall be used, in case that the number of nominees is more than the number of member required. Each nominee shall get the vote from the shareholders according to their belonging shares as the subject. (1) The votes can not be divided to any other person. Nominee who gets the highest votes shall carry an election. The number of nominees who carry an election depends on the member required. The chairman of the meeting shall decide if voted are tie.

2.

In case that member of the Board vacates until unable to be a quorum, remaining directors have to work on behalf of the Board only to run an election for replacing directors.

3.

Subject 2 above, in case that a vacant position comes from other factors except retiring by rotation, the Board will, at the next scheduled meeting, to select a replacing director who has proper qualification and shall not have prohibited characteristics according to the law. The said director shall be on duty as long as the term of office of the retiring director remains. Unless the term of office is less than 2 months, there will be no replacing director.

The Board’s resolution according to the first clause comprises more than 3/4 of votes. Furthermore, The Company specifies the qualifications of its independent director in accordance with the requirements of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand, as follows: 1.

Hold share not exceeding 1% of the total voting shares of the Company, its parent company, subsidiaries, associates, major shareholders or controlling parties of the Company, provided that the share held buy 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 Company, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of the Company.

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 Company or its subsidiary.

4.

Have no or never had business relationship with the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company in respect of controlling which may harm the independent decision-making, including not being or never been the significant shareholder, or controlling parties of any person having business relationship with the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company

5.

Is not or has never been the auditor of the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of Company, and is not the significant shareholder, controlling parties, or partner of the auditing firm which employs such auditor of the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company.

6.

Is not or has never been the professional service provider, including but not limited to legal service or financial advisor with received the service fee more than 2 million baht per year from the Company, 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.

7.

Is not the director who is nominated to be the representative of directors of the Company, major shareholders, or any other shareholders related to the major shareholders.

8.

Do not operate the same and competitive business with the business of the Company, 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 share of more than 1% of the total voting shares of any other company which operates same and competitive business with the business of the Company, or its subsidiaries.

9.

Is not any otherwise which is unable to have the independent opinion regarding the business operation of the Company.

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After being appointed as the independent director in accordance with the conditions under the article (1) - (9), such independent director may be assigned by the board of directors to make decision in respect of collective decision on business operation of the Company, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of Company. The definition of independent director of the Company is equal to the minimum requirement of the Securities and Exchange Commission and the Stock Exchange of Thailand.

Remuneration of Directors 1. Monetary Remuneration. 1.1 Director Remuneration In 2010, the Company paid remuneration in the following: (Unit : Baht) No.

Name

1.

Mr. Wisit

Laohapoonrungsee

2.

Mrs. Niphapat

3.

Position

Amount

Chairman and Chief Executive Officer (CEO)

-

Romerattanaphun

Director and Executive Director

-

Mr. Thun

Thiansuwan

Director and Executive Director

-

4.

Mr. Chalit

Satidthong

Independent Director and Chairman of Audit Committee

368,000

5.

Mr. Wanchai

Tantikul

Independent Director and Audit Committee

368,000

6.

Mr. Preecha

Boonyakida

Independent Director and Audit Committee

368,000

The remuneration was given in term of a meeting allowance and annual premium. The directors who act as The Executive Committee will not be paid. 1.2 Remuneration of the Executive committee and Management In 2010, the Company spent Baht 53.5 million including salary, bonus and provident fund on ten members for the Executive Committee and Management Team.

2. Other Remuneration – None –

210

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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Monitoring the Usage of Insider Information Board of Directors has realized about defense to be misused by someone with self-exploitation. They are stipulated information confidentiality policy to limit access to information within company for authorized staffs solely. The company informs executives, including executive’s spouses and minor children to report their holding or changing the company’s securities to the Securities and Exchange Commission (the office) under the rule and procedures of the Securities and Exchange Act B.E. 2535 section 59 and its punishment of section 275. Also, such mentioned persons as directors, management and employees including their spouse and minor children, are prohibited to make any security transaction; either purchasing, or selling, or transferred by taken advantage of the internal confidential information, which has not yet been disclose to the public. However, in case of the transactions occur in normal business, directors and management including their spouse and minor children, he/she had to report to the office within three working days since the event takes place, and copy to documents will be handled to company as evidence. In addition, the company provides ethical policy that director, management and employees are always expected to observe honestly and virtuously and should not participate to any immoral behaviors deteriorating company recognition. If any evidence has shown that company information confidentiality are disclosed by self – exploitation insiders, it’s doomed that such a person is accused of severe disciplinary violation and may be deserved condemnation according to employee regulation.

Internal Control In the Audit Committee Meeting No. 1/2011 held on February 23, 2011, Audit Committee had evaluated the sufficient and appropriated internal control system. This annual evaluation based on summary data of 5 main categories as follows: 1. Organization and Environment 2. Risk Management 3. Management Control 4. Information Technology System 5. Monitoring System The Audit Committee give an opinion that the company’s Internal Control System is sufficient and all of functions work effectively. The 2010 Annual Evaluation Questionnaire of Sufficient of an Internal Control System is submitted to Board of Directors for consideration in the Board of Directors’ Meeting No. 1/2011 held on February 23, 2011. The Company provides effective management and internal control system where executives have contributed to be aware of the importance on internal control by providing effective organizational supervision, definitely assign roles and responsibilities, including regulations, rules, policies, management level and authorization level in written form. The Company also provides Internal Control Department, whose independently follow-up and evaluate internal control system and report directly to Audit Committee, to review operating systems to meet overall corporate objectives and goals. In previous audit, there are no mistake found that affect internal control substantially. Furthermore, the Audit Committee has frequently organized meetings with our external auditors (KPMG Phoomchai Auditor Ltd.) to review the efficiency of company’s internal control and found no significantly deficiencies in the company’s internal control system.

212

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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Dividend Policy The company has the policy to pay dividend in the amount of approximately 40% of the Company’s net profit after corporate income tax and all kinds of reserve fund, provided that such dividend payment must not materially affect the Company’s normal operation and shall depend on the Company’s results of operations and financial condition, liquidity, business growth, the necessity and other appropriate matters in the future, as well as other factors related to the management of the Company as the Board of Directors considers appropriate or advisable for the maximize benefits of the shareholders.

Corporate Governance 1. The corporate governance policy The company considers on fair-treated to all the shareholders, internal control system, internal audit risk management and justice implementation to assure the consistent growth of the company.

2. The right of the shareholders The Company adopts the policy on equal treatment to shareholders by acknowledging the shareholder’s rights. It also gives priority to shareholders’ meeting especially with respect to the components of the meeting to maintain impartiality among the shareholders. For instance, the Company shall organize the shareholders’ meeting on date, time and venue which will not prevent the shareholder form attending the meeting. All information relating to the matter to be concluded in the meeting will be adequately informed to all shareholders in advance. Apart from giving invitation letter for the meeting describing objectives and background of each agenda as well as recommendation of the Board in advance for not less than 14 days pursuant Section 29 of the Company’s articles of association regarding calling for shareholders’ meeting, the Company also publicize such meeting documents in its website (www.areeya.co.th) prior to the meeting for not less than 30 days. Although the Board has not prescribed the procedures for the minor shareholders to nominate person as a member of the Board or to add agenda in advance before the shareholders’ meeting date, during the shareholders’ meeting, the Board, the Audit Committee and related executives shall attend the meeting. Chairman of the Board or person nominated by the meeting to act as the Chairman of the meeting will manage to have agendas considered and voted by the meeting as per the order of agenda specified in the invitation letter. Further, the Company will inform the shareholders number of vote required for each resolution before casting vote to ensure transparency and validity. In addition, independent law firm will be retained for counting votes while volunteers from the shareholders will be asked to witness such vote count. Vote count is facilitated by applying bar code reader. The Board shall cause to be recorded the minutes of the shareholders’ meeting which will materially contain details such as significant statement, question and opinion including votes required for each agenda. The preparation of meeting report shall be completed before the end of period specified by law and it shall be kept in good filling system which can be traceable and citable. In order to obtain more complete and valid meeting report, the Company provides the record of vote casting and count in its meeting report. In the event that the shareholder is not able to attend the meeting by him/herself, the Company provides option for such shareholder by designating at least 1 independent director from all of the Company’s independent directors to be a person to be authorized by such shareholder. In the past, many shareholders have chosen to authorize such independent director to vote on their behalf in many various meetings. In case any shareholder is not able to attend the meeting, the Company encourages him/her to use ballot especially on significant agenda.

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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3. The right of stakeholders The company has given the priority to the right of all the groups who involve the company: the officers, the creditors, the customers, the dealers, the shareholders, the auditor, the independent appraisal agency, the Government sector and the closed-communication. This is because it will respond to the company’s policy, “Areeya admire You.” Moreover, the company also gives the priority to energy saving and conserve environment policy. Shareholders : The Company aims to ensure that the shareholders receive appropriate returns for their investment by ensuring sound business operation results and continued business development. The Company also implements effective and efficient internal control system to ensure that the benefits of the Company and the shareholders are protected. Customer : The Company pays attention to and is responsible for the customer, either as a stakeholder or supporter, through the development of promising and quality project. The Company has also set up 24-hour emergency repair unit for the customer whose residence has troubles while the project environment will be always maintained in good condition. The Company has prepare project details, house design, standard material used in the project to the extent that it will enable the customer to satisfactorily consider before making his/her decision and the customer will also be allowed to change certain material and decoration as desired. In addition, the Company always realizes the significance of family and social institution. Therefore, on such special occasion, the customers will be invited to join the Company in an exclusive party either those being transferred of title or the new ones and at the same time, these activities can also strengthen family bond such as Areeya Fam New Year Party 2011 held for customer at Lad Pla Khao Project or a space Asoke-Ratchada (for all a space Projects’ customers) in which the attendants enjoyed with concert, outdoor theatre and giving a prize etc. Creditors and Trade Partners : The Company has a fair and transparency policy to select a contractor. The Company seriously follows trade condition and consistently consider about the problem happens with our contractor so that the company can solve it along. For example, organize a training to increase their knowledge, find the loaning source by negotiating with the bank so that our contractor can use an invoice to guarantee of loan and provide some construction materials which are not available in the market. Trade Competitor : The Company supports and encourages a fair and trade competition according to the acceptable rules and avoids the dishonest trading. Employee : The Company takes care, pays attention on employee developing, and gives a reasonable remuneration. Moreover, the Company also encourages participating in the following activities by: „ Planning

to have a training plan and employee developing program annually.

„ Planning

to have a training and seminar to increase their knowledge.

„ Encouraging

employees’ relationship by set a Sport day.

Society: The Company adopts the policy that always and constantly gives priority to social responsibility by organizing various activities under the project titled “Love to Live”. For the year 2010, the Company continued to run the projects of 2009 in commemoration of the celebrations on the auspicious occasion of His Majesty the King's 60th Accession to the Throne where 12 VIP persons from different sectors were invited to create T-shirt design limited edition “Long Live Our King” and sell for raising fund which, after deducted by the expenses and added up with donation from the Company, will be donated to The Chaipattana Foundation under Royal Patronage. On 25 November 2010, the Company gave the sum of Baht 300,000 in cash to the show “Chao Doo Woody” to raise fund for helping people suffering from flood in the South.

4. Shareholders’ Meeting A shareholder’s meeting is a very important process for the Board. The directors shall attend in every meeting (as the names mentioned in the meeting report). During the meeting, the chairperson proposes the opportunity to the shareholders to review the company’s operation, question and given opinions are recorded in the meeting report already.

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5. Leadership and Vision The Board participates in approving the company polices, managing direction and supervising the management to follow the company’s policies effectively in order to get the highest wealth to the shareholders as well. Furthermore, the company has defined scope of duty and authority of the Board, the Executive Committee and the Audit Committee clearly.

6. Conflict of Interest The company set up the Audit Committee in order to consider about revelation of company information which some transactions may impact or cause a conflict of interest. The disclosed information must be accuracy and adequacy to prevent those conflicts among all stakeholders. The Board of Directors is aware of each incidence of a potential conflict of interest or related-party transaction and considers the appropriateness of each occurrence. The Company complies with the principles of the stock exchange whereby prices and conditions are negotiated strictly on an arm’s length basis. The details of each transaction, its value, the parties involved and the reason or necessity for the transaction are explained in the Annual Report and Form 56-1. In particular, directors, management and employees are not allowed to consider or cast their votes on matters in which they may have a potential conflict of interest.

7. Code of Conduct The company has the code of conduct to regulate the Board of Directors and employees to act in the way that prevent cause of the conflict of interest. The company adds more ethical notices about the code of conduct of the Board of management and employees to work honesty and justice.

8. Balanced Power of the Committee (Non-Executive Directors) The Board’s members consist of 6 persons who are: „

3 member of Executive Directors

„

3 members of Independent Directors (1/2 of the Board’s members)

9. Combination and Separation of Authority The Chairman and the CEO of the company is the same person, however the Board of Directors which consists of 3 Independent Directors must approve all kinds of special business activities. Any decision to invest in each project also requires an approval from the Board of Directors, including decision to acquire some lands for future development.

10. Directors and Management Remuneration The company’s policy of remuneration for the committee is rather the same as in industrial business that is being paid in terms of a premium and meetings’ allowance only to none Executive Directors and shall be approved by the resolution of the shareholders’ meeting and paid in term of salary, bonus and provident fund but depend on the company’s profits and an achievement of each person.

11. Board of Director’s Meeting The Board of Directors has regular meetings and special meetings (as needed) by fixing the agendas and business monitoring agendas. The company will send out an invitation letter with meeting agendas and all related information document at least 7 days before meeting so that the committee members have enough time to prepare for the meeting. In year 2010, the Board held ninth meetings and all meeting details were recorded in the reports.

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12. Self Evaluation of the Board of Directors The Company acknowledges the information about performance evaluation of the Board of Directors in accordance with the regulation set by SET. The Company carefully and appropriately evaluates the performance of the Board of Directors and to use this information to improve and develop more performance efficiency of the Board of Directors.

13. The Sub-Committee The Audit Committee has been appointed to assist in handling company’s business and to ensure the correctness, transparency and adequacy of information disclosure in the company’s financial statements. The scope of duty and responsibility is determined by The Stocks Exchange of Thailand. The committee consists of 3 Independent Directors. At least one member will be a specialist in finance or accounting. The Company has not yet established the Nominating Committee and Remuneration Determination Committee because the Company can have the meeting of mentioned Committee at the same time of the Board of Directors’ meeting.

14. Internal Control and Internal Audit The company pays significant attention to our internal control system by setting an Internal Audit Officer as an independent unit. The committee has an authority to audit and evaluate other departments. There was an internal audit manual for auditing finance, operation, administration, information technology, execute company’s regulation, compliance auditing and report directly to the CEO and Audit Committee. There duties are for advising and marking other people can work effectively and it is also one of the risk management methods.

15. The Board of Directors’ report The Board takes a responsibility to the consolidated financial statement of the Company and its subsidiary disclosing together with the report of certified public accountant, which is provided in an annual report. The financial report is made conformity with the Generally Accepted Accounting Standard in Thailand. The proper accounting polices are carefully judged and the best budgeting are consistently followed and it is also appropriate disclosed information in the notes to financial statement.

16. Investor Relations The Company has a policy to disclose accurate, transparent, timely and adequate information. The Investor Relations Department has been set up to take responsibility in providing company’s information to stakeholders. This unit shall be a representative to give the complete, reliable and timely information to analysts, investors, shareholders and government officers. At the same time, all investors can access to the company’s basic information via www.areeya.co.th. The Company has set up the Investor Relations Department to be responsible for communication and provision of the Company information and activities to the shareholders, analysts and other investors, fairly and equally. The role of the Investor Relations also includes to create and to ensure positive image, attitude, and confidence from the analyst and investors. The investors or any parties can contact the IInvestor Relations at the telephone number (662)539-4000 ext. 714 or ir@areeya.co.th.

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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RELATED TRANSACTIONS '6&6''4/+Ę6 5

Related transactions in the year 2010 classified by categories are as follows:

1. An ordinary and usual course of business transaction The Company has transactions with related parties are those linked to the Group and the Company as shareholders or by common shareholders or directors as disclosed in Note to Financial Statement No. 4. Comments of independent directors on these related transactions are the ordinary and usual course of business transaction with normal commercial terms. The related transactions created the benefits to the Company.

2. An asset or service transaction The Company has transactions with related parties are those linked to the Group and the Company as shareholders or by common shareholders or directors as disclosed in Note to Financial Statement No. 4. Comments of independent directors on these related transactions are the ordinary and usual course of business transaction with normal commercial terms. The related transactions created the benefits to the Company.

3. A financial support transaction The Company has transactions with related parties are those linked to the Group and the Company as shareholders or by common shareholders or directors as disclosed in Note to Financial Statement No. 4. and 13. Comments of independent directors on these related transactions are the ordinary and usual course of business transaction with normal commercial terms. The related transactions created the benefits to the Company.

Reason(s) for making related transaction(s) Transactions with the subsidiaries were created for the company’s benefit so that the company can successfully achieve its business strategies and objectives. In case of lending/borrowing between parent company and subsidiary, the interest rate is an agreed rate based on market rate at the time of lending/borrowing. The transactions with the other related parties were the ordinary and usual course of business transaction with normal commercial terms.

Policy and Trend of Related Transaction(s) The related transaction with our subsidiary, at least own 51% by the company, are made as part of normal business operations. Therefore, it is likely that such transactions will occur in the future on the continual basis. However, the company will obey the security law, rules & regulations of the Stock Exchange of Thailand and the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand. Moreover, the company will consider the reasonable reason of the transactions. If the company makes related transaction with any person with possibility of creating any conflict of interest, the company will consult with the Audit Committee who will review and comment the necessity and suitability of that related transaction(s). In case that the Audit Committee does not have expertise in any specific area, the company will arrange to hire an expert or company’s auditor to provide comments to the Audit Committee or shareholders for approving the transaction(s). The company also discloses the related transaction(s) in the Notes to Financial Statement as part of the Audited Financial Statements.

222

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MANAGEMENT DECISION AND ANALYSIS N6186&B)46'+èA '64/Ĝ 6 =ę'è/6' 1) General Information The company was founded in 2000. Later in 2003, the company has transformed into a public limited company and registered its stocks in the stock market in 2004. In addition, the subsidiary (Areeya Service Co., Ltd.) has been formed to provide after-sale services for property with 99.99% ownership interest. In 2007, the company has established a subsidiary company (One Up Co., Ltd.) with 64.99% ownership interest to provide construction services to Areeya’s projects and outside customers. Subsequently 2008 the company purchased 35% of the share capital of One Up from other shareholder. As a result, the company’s ownership interest increased to 99.99%. In addition, in the year 2008 the company had formed 2 companies with 99.99% ownership interest which consisted of Areeya Management Co., Ltd. for development of real estate projects and to provide a management service for juristic person and Cool Space Co., Ltd. for development of real estate projects. And in the year 2009 the company had formed a company with 99.99% ownership interest which consisted of White Living Co., Ltd. for development of real estate projects. Moreover, in the year 2010 the company had formed a company with 99.99% ownership interest which consisted of Chill Space Co., Ltd. for development of real estate projects. The company business is real estate development business: land for sale and house construction, which all are single house projects. Since 2005, the company has started to sell the pre-built house and 3, 4-storey townhouse and additionally in 2006-2010 the company has introduced two new products to the market. They are fully-furnished modern condominium and fully-furnished 2-storey townhouse.

2) Overview Summary and Significant Change At the Extraordinary Shareholders’ Meeting held on July 19, 2005, the shareholders approved the resolution to change the company’s par value from Baht 2 per share to Baht 1 per share, resulting in the increase of share number from 379,000,000 shares to 758,000,000 shares. In addition, on June 29, 2007, the 1/2007 Extraordinary General Meeting has resolved to issue 191.6 million units of Warrant to be offered to (1) institutional lender(s) of the company for not more than 40 million units; and (2) existing shareholders for 151.6 million units in proportion of existing 5 shares to 1 unit of warrant at no cost. The newly issued warrant has 36-month useful life after issuing date. The EGM also resolved to increase registered capital and share from 758 million shares to 949.6 million shares to cope up with the future exercise of Warrant. In 2008, the company had not offered the said warrants to public due to no loan transaction occurred with the said financial institution. So the warrants had been expired.

224

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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In 2010, the company has 21 current projects as follows: No.

Project

1

Areeya Bussaba

Location

Type of Product

Ladprao 130

Single Detached House

2

Chaba Exclusive

Kaset-Nawamintr

Single Detached House

3

Sawana 3

Kaset-Nawamintr

Single Detached House

4

Areeya Metro

Kaset-Nawamintr

Single Detached House

5

At Home

Kaset-Nawamintr

Townhouse

6

Areeya Mova

Kaset-Nawamintr

Townhouse

7

The Colors Kaset Phase 1

Kaset-Nawamintr

Townhouse

8

The Colors Kaset Phase 2

Kaset-Nawamintr

Townhouse

9

The Colors Kaset Premium

Kaset-Nawamintr

Townhouse

10

Areeya To Be

Kaset-Nawamintr

Townhouse

11

The Colors Tiwanon

Tiwanon

Townhouse

12

The Colors Tiwanon Premium

Tiwanon

Townhouse

13

The Colors Tiwanon Premium Phase 2

Tiwanon

Townhouse

14

The Colors Premium Bangna

Bangna

Townhouse

15

The Colors Rangsit

Rangsit

Townhouse

16

Areeya Mandarina Sukhumvit 77

Sukhumvit 77

Townhouse

17

a space Asoke

Asoke-Ratchada

Condominium

18

a space Kaset

Kaset-Nawamintr

Condominium

19

a space Play

20

a space Sukhumvit 77

21

A attitude

Ratchada-Sutthisan

Condominium

Sukhumvit 77

Condominium

Asoke-Ratchada

Condominium

3) Previous Performance Results „ Revenue

and Cost

The company’s revenues consist of revenue from sales of land and houses which are recognized upon full payment and the land title deeds and constructions had been transferred to the buyers. And service income on house constructions which are recognized in proportion to the stage of completion of the contract. Since the company has sold the pre-built houses and townhouses since 2005 to maximize the customer satisfaction, the portion of revenue from sales of land and houses have increased continuously from 65.34% of the total revenue in 2005 to 89.08% in 2006, slightly decreased to 89.02% in 2007, 88.28% in 2008, 98.46% in 2009 and increased again 99.85% in 2010. The main reason was that during 2006 – 2010 the company launched additional 12 townhouse projects and 5 condominium projects without any new project for the house construction. For the year 2010, the total revenue was in the amount of Baht 3,357.43 million, decreased by Baht 101.60 million or -2.94 percent, compared to Baht 3,459.03 million in last year. Which the revenue was down slightly due to the total revenue of this year was mainly from the transfer of condominium units at Asoke which they transferred continuing from last year and the project almost completely transferred of the project. However new condominium project at Sutthisan was ready to transfer increased from last year. Moreover the company recognized revenue from 3 townhouse projects which started transferred since year 2009.

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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

227


Table: Recognized Revenue of Company in 2010 and 2009, separated by type of real estate Year 2010

Revenue Million Baht Condominium Townhouse Single Detached House Total

„ Gross

Year 2009 Percent

Million Baht

Percent

2,551

77

2,248

67

779

23

1,120

33

-

-

15

-

3,330

100

3,383

100

Profit Margin

In 2010, the company had gross profit margin at 35.2% of total sales revenue, increased by 3.9% compared to 31.3% in year 2009. Due to the company adjusted cost of old projects which closed in year 2010. „ Selling

Expenses

In 2010, Selling Expenses was in amount Baht 301.88 million, increased by Baht 209.79 million or 227.81 percent, compared to Baht 92.09 million in last year due to the Company had the increase of specific business tax from government measure which terminated in March 2010 and the transfer fee reduction terminated in June 2010. Moreover the Company had more completed construction and transferred projects, therefore, the Company increased marketing expenses to persuade the customer to transfer. In addition, marketing expenses for the launch of 4 new projects increased. „ Administrative

Expenses

In 2010, Administrative Expenses was in amount Baht 221.62 million, increased by Baht 21.38 million or 10.68 percent, compared to Baht 200.24 million in last year. Due to the company recruited new staffs to support incoming projects. „ Corporate

income tax

In 2010, Corporate income tax was in amount Baht 138.14 million, decreased by Baht 34.96 million or -20.20 percent, compared to Baht 173.10 million in last year due to increase in large amount of selling expenses. As a result, the Company had profit from operations decreased, corporate income tax reduced. „ Net

Profit Margin

In 2010, the company had net profit margin at 12.75%, decreased by 2.23%, compared to 14.98% in last year. Due to the company had net profit Baht 427.95 million in this year but had net profit Baht 518.01 million in last year. „ Important

factor which may result to the operation in the future

Because of in year 2011 real estate business still confront with the risk factor and the challenge in many sides such as the recovery of Thai economy which still has the risk from something not political of Thailand stability, interest rate start rising and the strength of the recovery of world economy, especially The United States of America and Europe then may make the recovery of Thai economy that has the direction improves with uncertainty which might affect to the making a decision in residence buying of the investor and who want to buy for live. The growth of the real estate sector in year 2011 doesn’t differ from year 2010.

228

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

229


4) Financial Status 4.1 Assets Total Assets as at December 31, 2010, accounted for Baht 5,512.70 million, increased by Baht 168.41 million or 3.15% compared with Baht 5,344.28 million in 2009. The Increase was mainly based on real estate projects development costs due to this year the Company launched 6 new projects to divide into 2 condominium and 4 townhouse projects. Major change in company assets are as follows: „ Cash

and cash equivalents

Cash and cash equivalents as at December 31, 2010, accounted for Baht 112.27 million, decreased by Baht 54.03 million or 32.49% compared with Baht 166.29 million in year 2009. (please see Notes to Financial Statement No. 5) Due to in last year the government had activated the sale of property by customers to transfer house in year 2009. The customer could bring the housing payment for reduction of personal income tax Baht 300,000. So it resulted the Company large volume of house transfer in the end of year 2009. „ Real

estate projects development costs

Real estate projects development costs as at December 31, 2010 was Baht 5,085.69 million, increased by Baht 466.06 million or 10.09% compared with Baht 4,619.63 million in year 2009. Due to this year the Company launched 6 new projects to divide into 2 condominium projects and 4 townhouse projects. So this year the Company acquired 4 new lands while the Company had no purchase new land in last year. „ Deposit

in land

Deposit in land as at December 31, 2010 was Baht 26 million, decreased by Baht 101 million or 79.53% compared with Baht 127 million in year 2009. Due to this year the Company had already purchased land which paid deposit in land in last year. „ Efficiency

Ratios

Return on Assets and Return on Fixed Assets decreased from 9.36% in 2009 to 7.88% in year 2010 and from 393.10% in year 2009 to 329.52% in year 2010, respectively. As a result from decrease in net profit due to increase in large amount of selling expenses.

4.2 Liquidity „ Cash

Flows from Operating Activities

Cash flows from operating activities at end of year 2010 was equal to Baht 51.69 million. Compared with year 2009, the company had cash flows from operating activities equal to Baht 1,225.33 million. The main reason of decrease balance was real estate projects development costs-net increased amount of Baht 235.04 million due to this year the Company spent on 6 new projects dividing into 2 condominium projects and 4 townhouse projects and purchased 4 new lands. Moreover this year net profit decreased Baht 90.06 million from last year. „ Cash

Flows from Investing Activities

Cash flows from investing activities of year 2010 was Baht -10.14 million whereas Baht -43.83 million in year 2009 mainly affected from decrease in acquiring construction equipment by the Company’s subsidiary. (One Up Company Limited). Moreover the company used of saving deposits as collateral for the banks to issue the letter of guarantee less than in last year. „ Cash

Flows from Financing Activities

Cash flows from financing activities of year 2010 was Baht -95.58 million whereas Baht -1,066.78 million in year 2009. Although this year the Company had high volume transferred units to customers and the company could also repay both long-term and short term loans from financial institutions in large amount but the Company had requested for new loan for acquiring in new lands. As a result, the Company’s cash flows from financing activities decreased less than last year.

230

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

231


„ Liquidity

ratio

Liquidity Ratio decreased from 4.40 times in 2009 to 3.50 times in 2010 due to increase in current liabilities in amount of Baht 349.08 million or 30.15%. The company had bank overdraft and short-term loans increased amount Baht 779.27 million due to the Company issued promissory notes of Baht 534 million to buy land, but the company had current liabilities increased only Baht 180.55 million or 3.55%. „ Liabilities

and Source of Funds

Total Liabilities as at December 31, 2010 amount of Baht 3,158.44 million, decreased from total liabilities as end of year 2009 by Baht 259.54 million or -7.59%. This was mainly the long-term loan from financial institutions for land and land development mortgaged by the land of such projects as collateral. The company has no foreign exchange liabilities, the company has no exposure to foreign exchange rate fluctuation. Detail of loan from financial institutions as of December 31, 2010 are as follows:

Loan Type

Amount (Million Baht)

Interest rate / Fees (%)

Due Date

Collateral

Bank Overdraft (O/D)

122.43

MOR, Saving deposits rate + Fixed rate per annum

No due date

Company deposits, A Director deposits

Short-term Loans (P/N)

896.99

Saving deposits rate + Fixed rate per annum, Fixed deposit rate + Fixed rate per annum

Within 90 days and 180 days after issuing date

Company deposits, A Director deposits, Project lands and construction

Long-term Loans

1,527.39

MLR and MLR +/- Fixed rate per annum

70.70

2.00%

Letter of Guarantee (L/G) „ Loans

As per loan agreements-- Project lands and construction until Year 2015 Year 2011 onwards-No Due date

Project lands, company deposits

from Financial Institutions

Bank overdraft and short-term loan as at December 31, 2010 increased from year 2009 by Baht 779.27 million or 324.50%, while long-term loan decreased from 2009 by Baht 637.05 million or -29.48%. Short-term loan increased due to the Company issued promissory notes of Baht 534 million for land acquisition. However, the company gradually repaid the long-term loan proportionally when the properties were sold to customers. The company then redeemed the mortgage on the land for transferring ownership to customers following the loan agreements so making long-term loan decrease. „ Financial

Policy Ratios

The company’s Debt-to-Equity ratio as at December 31, 2010 decreased from year 2009 by 1.77 times to 1.34 times in year 2010. Bank-Debt-to-Equity ratio decreased from year 2009 by 1.30 times to 1.08 times in year 2010. Due to the company repaid long-term loan in the amount of Baht 2,606.73 million and drawdown the amount of Baht 1,865.01 million. So long-term loan decreased in amount of Baht 741.72 million.

232

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

233


Auditors’ Remuneration 1) Audit fee In during the year 2008 - 2010, the Company and subsidiary paid to the audit firm and/or its related parties as follows: Auditor: KPMG Phoomchai Audit Ltd. (Unit : Baht) Description

Year 2010

Year 2009

Year 2008

Areeya Property PCL.

1,550,000

1,550,000

1,550,000

Subsidiary companies

850,000

850,000

800,000

2,400,000

2,400,000

2,350,000

Total

2) Non-audit fee In during the year 2008 - 2010, the Company and subsidiary did not have any services from audit firm and/or its related parties.

234

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

235


BOARD OF DIRECTORSâ&#x20AC;&#x2122; RESPONSIBILITY FOR FINANCIAL REPORTING

'6& 6 +6%'5 Ä&#x2039;11 4''%6'Ä&#x2DC;1'6& 66 6'A è The Board of Directors of Areeya Property Public Co., Ltd. is responsible for ďŹ nancial statements and consolidated ďŹ nancial statements presented in this annual report. The aforementioned ďŹ nancial statements are prepared in accordance with generally accepted accounting principles, using careful judgment and the best estimations. Important information is adequately and transparently disclosed in the notes to ďŹ nancial statements for the companyâ&#x20AC;&#x2122;s shareholders and investors.

The Board of Directors has provided and maintained efďŹ cient internal controls to ensure that accounting records are accurate, reliable and adequate to protect its assets that may be presented in order to prevent fraud or materially irregular operations. The ďŹ nancial statements of the company and the consolidated ďŹ nancial statements of the company have been examined by external auditor, KPMG Phoomchai Audit Ltd. To conduct the audits and express an opinion in accordance with generally accepted auditing standards, the auditor was provided with all of the companyâ&#x20AC;&#x2122;s records and related data as requested. The auditorsâ&#x20AC;&#x2122; opinion is presented in the auditorsâ&#x20AC;&#x2122; report as part of this annual report. The Board of Directors is satisďŹ ed that an efďŹ cient internal audit control is rendered credibility and reliability to ďŹ nancial statements of Areeya Property Public Co., Ltd. And its consolidated ďŹ nancial statements for the year ended December 31, 2010. The Board of Directors also believed that all these ďŹ nancial statements have been prepared in accordance with generally accepted accounting principles and related regulations.

Mr. Wisit Laohapoonrungsee Chairman and Chief Executive OfďŹ cer

236

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

237


AUDIT REPORT OF CERTIFIED PUBLIC ACCOUNTANT '6& 6 =Ä&#x2122;.15g9

To the Shareholders of Areeya Property Public Company Limited I have audited the accompanying consolidated and separate balance sheets as at 31 December 2010 and 2009, and the related statements of income, changes in equity and cash ďŹ&#x201A;ows for the years then ended of Areeya Property Public Company Limited and its subsidiaries, and of Areeya Property Public Company Limited, respectively. The Companyâ&#x20AC;&#x2122;s management is responsible for the correctness and completeness of information presented in these ďŹ nancial statements. My responsibility is to express an opinion on these ďŹ nancial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the ďŹ nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ďŹ nancial statements. An audit also includes assessing the accounting principles used and signiďŹ cant estimates made by management, as well as evaluating the overall ďŹ nancial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated and separate ďŹ nancial statements referred to above present fairly, in all material respects, the ďŹ nancial positions as at 31 December 2010 and 2009 and the results of operations and cash ďŹ&#x201A;ows for the years then ended of Areeya Property Public Company Limited and its subsidiaries, and of Areeya Property Public Company Limited, respectively, in accordance with generally accepted accounting principles.

Ms.Vannaporn Jongperadechanon CertiďŹ ed Public Accountant Registration No. 4098

KPMG Phoomchai Audit Ltd. Bangkok 23 February 2011

238

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

239


BALANCE SHEETS

<)

Areeya Property Public Company Limited and its Subsidiaries As at 31 December 2010 and 2009

Consolidated financial statements Note

2010

Separate financial statements

2009

2010

2009

(in Baht) Assets Current assets Cash and cash equivalents

5

Trade accounts receivable and unbilled construction work in progress

4, 6

Real estate projects under development

4, 7, 28 (b)

112,266,876

166,291,811

60,854,378

108,799,179

1,831,545

36,534,466

13,896,407

25,821,979

5,085,691,637

4,619,627,209

4,376,142,638

3,924,698,063

Deposits for land

8

26,000,000

127,000,000

26,000,000

127,000,000

Other receivables - related parties

4

-

-

341,620,961

111,089,588

Other current assets

9

43,585,025

139,374,499

30,260,984

108,576,120

5,269,375,083

5,088,827,985

4,848,775,368

4,405,984,929

93,557,856

99,086,458

67,651,832

88,521,842

-

-

300,999,539

298,895,747

Total current assets

Non-current assets Deposits at banks used as collateral Investments in subsidiaries

31 1, 10

Property, plant and equipment

11

142,724,925

141,172,005

98,308,365

91,150,495

Intangible assets

12

1,213,771

1,139,344

837,020

647,181

5,823,981

14,056,159

4,202,958

9,892,294

243,320,533

255,453,966

471,999,714

489,107,559

5,512,695,616

5,344,281,951

5,320,775,082

4,895,092,488

Other non-current assets Total non-current assets

Total assets

Notes to financial statements form an integral part of these statement

240

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

241


BALANCE SHEETS (CONTINUED)

<)•Ę1–

Areeya Property Public Company Limited and its Subsidiaries As at 31 December 2010 and 2009

Consolidated financial statements Note

2010

Separate financial statements

2009

2010

2009

(in Baht) Liabilities and equity Current liabilities Bank overdrafts and short-term loans from financial institutions Trade accounts payable

13 4, 14

1,019,419,038

240,147,892

962,741,361

225,271,502

165,559,957

240,651,556

227,038,697

267,805,374

Current portion of long-term loans from financial institutions

13

3,717,150

108,385,280

3,717,150

108,383,279

Current portion of finance lease liabilities

13

11,266,827

6,133,844

6,600,277

4,230,145

Current portion of construction retentions Unrecognised income on installments due

39,333,635

34,263,991

38,065,971

33,335,592

6

65,049,923

303,368,323

63,717,223

300,182,763

34,518,147

78,732,642

30,607,831

70,768,976

4, 15

167,965,429

146,066,730

359,080,180

145,538,249

1,506,830,106

1,157,750,258

1,691,568,690

1,155,515,880

1,523,669,114

2,160,716,361

1,338,802,314

1,794,404,261

-

-

9,700,000

9,700,000

Income tax payable Other current liabilities Total current liabilities

Non-current liabilities Long-term loans from financial institutions Long-term loans from subsidiary

13 4, 13

Finance lease liabilities

13

27,702,286

15,462,820

10,064,876

8,211,546

Construction retentions

4

-

-

42,862,526

28,861,222

46,720,413

58,916,791

32,120,868

50,599,928

36,922,465

25,135,148

36,922,465

25,135,148

16,600,000

-

16,600,000

-

Total non-current liabilities

1,651,614,278

2,260,231,120

1,487,073,049

1,916,912,105

Total liabilities

3,158,444,384

3,417,981,378

3,178,641,739

3,072,427,985

Receipt for common expense - juristic person Utilities guarantee Provision for lawsuit

30

Notes to financial statements form an integral part of these statement

242

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

243


BALANCE SHEETS (CONTINUED)

<)•Ę1–

Areeya Property Public Company Limited and its Subsidiaries As at 31 December 2010 and 2009

Consolidated financial statements Note

2010

Separate financial statements

2009

2010

2009

(in Baht) Liabilities and equity Equity Share capital

16

Authorised share capital

949,600,000

949,600,000

949,600,000

949,600,000

Issued and paid-up share capital

758,000,000

758,000,000

758,000,000

758,000,000

17

524,909,894

524,909,894

524,909,894

524,909,894

17

50,889,000

34,915,000

50,889,000

34,915,000

1,020,452,338

608,475,679

808,334,449

504,839,609

Total equity

2,354,251,232

1,926,300,573

2,142,133,343

1,822,664,503

Total liabilities and equity

5,512,695,616

5,344,281,951

5,320,775,082

4,895,092,488



Share premium Retained earnings



Appropriated to legal reserve



Unappropriated

Notes to financial statements form an integral part of these statement

244

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

245


STATEMENTS OF INCOME

N6E'6<

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Consolidated ďŹ nancial statements Note

2010

Separate ďŹ nancial statements

2009

2010

2009

(in Baht) Income

4

Revenue from sales of real estate

3,329,818,183

3,383,012,595

2,891,982,283

3,331,958,695

4,278,080

52,943,757

11,996,045

27,310,042

23,332,865

23,071,745

11,721,246

18,915,951

3,357,429,128

3,459,028,097

2,915,699,574

3,378,184,688

2,175,672,116

2,377,237,793

2,009,320,701

2,527,913,360

13,320,777

40,681,237

9,445,805

25,307,623

Service income from house construction and sales of construction materials Other income

19

Total income

Expenses

4

Cost of sales of real estate Cost of service from house construction and cost of construction materials Selling expenses

20

301,875,719

92,088,118

224,575,979

68,787,633

Administrative expenses

21

221,620,844

200,235,759

178,079,945

140,626,427

Management beneďŹ t expenses

22

54,572,600

52,901,759

50,446,400

48,350,274

2,767,062,056

2,763,144,666

2,471,868,830

2,810,985,317

590,367,072

695,883,431

443,830,744

567,199,371

(24,278,369)

(4,778,355)

(22,555,857)

(4,484,956)

566,088,703

691,105,076

421,274,887

562,714,415

(138,138,044)

(173,097,157)

(101,806,047)

(130,015,181)

427,950,659

518,007,919

319,468,840

432,699,234

0.56

0.68

0.42

0.57

Total expenses

ProďŹ t before ďŹ nance costs and income tax expenses Finance costs

4, 24

ProďŹ t before income tax expense Income tax expense

25

ProďŹ t for the year

Earnings per share

26

Basic Notes to ďŹ nancial statements form an integral part of these statement

246

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

247


STATEMENTS OF CHANGES IN EQUITY

B. 6'A)9I&B) .Ę+1 =ę;1/<ę

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Consolidated financial statements Retained earnings

Note

Issued and paid-up share capital

Share premium

Appropriated to legal reserve Unappropriated

Total equity

(in Baht) Balance at 1 January 2009

758,000,000

524,909,894

13,280,000

112,102,760

1,408,292,654

-

-

-

518,007,919

518,007,919

-

-

21,635,000

(21,635,000)

-

Balance at 31 December 2009

758,000,000

524,909,894

34,915,000

608,475,679

1,926,300,573

Balance at 1 January 2010

758,000,000

524,909,894

34,915,000

608,475,679

1,926,300,573

-

-

-

427,950,659

427,950,659

-

-

15,974,000

(15,974,000)

-

758,000,000

524,909,894

50,889,000

1,020,452,338

2,354,251,232

Profit for the year Appropriated to legal reserve

17

Profit for the year Appropriated to legal reserve Balance at 31 December 2010

17

Notes to financial statements form an integral part of these statement

248

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

249


STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

B. 6'A)9I&B) .Ę+1 =ę;1/<ę•Ę1–

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Separate financial statements Retained earnings

Note

Issued and paid-up share capital

Share premium

Appropriated to legal reserve Unappropriated

Total equity

(in Baht) Balance at 1 January 2009

758,000,000

524,909,894

13,280,000

93,775,375

1,389,965,269

-

-

-

432,699,234

432,699,234

-

-

21,635,000

(21,635,000)

-

Balance at 31 December 2009

758,000,000

524,909,894

34,915,000

504,839,609

1,822,664,503

Balance at 1 January 2010

758,000,000

524,909,894

34,915,000

504,839,609

1,822,664,503

-

-

-

319,468,840

319,468,840

-

-

15,974,000

(15,974,000)

-

758,000,000

524,909,894

50,889,000

808,334,449

2,142,133,343

Profit for the year Appropriated to legal reserve

17

Profit for the year Appropriated to legal reserve Balance at 31 December 2010

17

Notes to financial statements form an integral part of these statement

250

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

251


STATEMENTS OF CASH FLOWS (CONTINUED)

'4B.A è.

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Consolidated financial statements 2010

Separate financial statements

2009

2010

2009

(in Baht) Cash flows from operating activities Profit for the year

427,950,659

518,007,919

319,468,840

432,699,234

Depreciation and amortisation

39,803,530

37,628,682

14,191,034

16,404,422

Finance costs

24,278,369

4,778,355

22,555,857

4,484,956

Adjustments for

Doubtful debts expense Provision for litigation Loss on disposal of office equipment Reversal of impairment loss of investment in subsidiary Write off real estate projects development costs

8,040,531

9,005,149

8,040,531

9,005,149

16,600,000

-

16,600,000

-

(849,730)

(489,999)

(1,448,668)

(489,999)

-

-

(1,103,852)

-

-

36,796,665

-

36,796,665

138,138,044

173,097,157

101,806,047

130,015,181

653,961,403

778,823,928

480,109,789

628,915,608

34,813,473

(21,642,489)

12,036,124

(18,615,184)

(235,042,061)

880,145,687

(237,997,988)

1,180,857,777

(26,000,000)

(127,000,000)

(26,000,000)

(127,000,000)

-

-

(230,531,373)

(10,461,211)

93,603,727

(88,274,924)

76,129,389

(67,381,718)

2,266,842

15,003,932

(276,000)

8,395,568

Income tax expense

Changes in operating assets and liabilities Trade accounts receivable and unbilled construction work in progress Real estate projects under development Deposits for lands Other receivables - related companies Other current assets Other non-current assets Trade accounts payable

(75,091,600)

53,631,859

(40,766,677)

77,147,784

Construction retentions

5,069,644

(11,951,005)

18,731,682

8,318,427

(238,318,400)

(219,802,136)

(236,465,540)

(209,718,038)

19,188,819

42,708,212

210,800,393

25,395,630

(12,196,378)

18,177,404

(18,479,059)

10,501,682

11,787,318

15,218,709

11,787,318

15,218,709

Unrecognised income on installments due Other current liabilities Receipt for common expense - juristic person Utilities guarantee Income tax paid

(182,352,539)

(109,706,068)

(141,967,192)

(59,568,778)

51,690,248

1,225,333,109

(122,889,134)

1,462,006,256

Net cash provided by (used in) operating activities Notes to financial statements form an integral part of these statement

252

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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253


STATEMENTS OF CASH FLOWS (CONTINUED)

'4B.A è.•Ę1–

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Consolidated financial statements 2010

Separate financial statements

2009

2010

2009

(in Baht) Cash flows from investing activities Decrease (increase) in deposits at banks used as collateral

5,528,602

(22,797,309)

20,870,010

(18,423,696)

-

-

(999,940)

(163,999,940)

(16,628,260)

(21,326,612)

(11,922,930)

(7,534,585)

1,448,598

490,000

1,448,598

490,000

(487,706)

(194,963)

(475,615)

(106,163)

(10,138,766)

(43,828,884)

8,920,123

(189,574,384)

(125,590,856)

(192,975,648)

(106,260,906)

(161,514,075)

4,366,397,588

5,558,937,172

3,902,935,911

5,492,509,701

(3,587,126,442)

(5,597,638,163)

(3,165,466,052)

(5,546,087,083)

1,865,011,137

2,159,233,500

1,592,092,638

1,655,350,500

(2,606,726,514)

(2,988,048,087)

(2,152,360,714)

(2,612,907,038)

(7,541,330)

(6,293,302)

(4,916,667)

(5,381,098)

Net cash provided by (used in) financing activities

(95,576,417)

(1,066,784,528)

66,024,210

(1,178,029,093)

Net increase (decrease) in cash and cash equivalents

(54,024,935)

114,719,697

(47,944,801)

94,402,779

Cash and cash equivalents at beginning of year

166,291,811

51,572,114

108,799,179

14,396,400

Cash and cash equivalents at end of year

112,266,876

166,291,811

60,854,378

108,799,179

Investments in subsidiaries Purchases of equipments Sales of equipments Purchases of intangible assets Net cash provided by (used in) investing activities

Cash flows from financing activities Finance costs paid Bank overdrafts and short-term loans from financial institutions Repayment of bank overdraft and short-term loans from financial institutions Long-term loans from financial institutions Repayment of long-term loans from financial institutions Repayment of finance lease liabilities

Non-cash transaction During the year ended 31 December 2010, the Group and the Company acquired equipment and vehicles at a total cost of Baht 20.7 million and Baht 9.2 million, respectively (2009 : Baht 18.6 million and Baht 9.4 million, respectively) by means of finance leases.

Notes to financial statements form an integral part of these statement

254

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

255


NOTES TO THE FINANCIAL STATEMENTS /%6&A/<'41 6'A è

Areeya Property Public Company Limited and its Subsidiaries For the years ended 31 December 2010 and 2009

Note

256

Contents

1

General information

2

Basis of preparation of the financial statements

3

Significant accounting policies

4

Related party transactions and balances

5

Cash and cash equivalents

6

Trade accounts receivable and unbilled construction work in progress

7

Real estate projects under development

8

Deposits for land

9

Other current assets

10

Investments in subsidiaries

11

Property, plant and equipment

12

Intangible assets

13

Interest-bearing liabilities

14

Trade accounts payable

15

Other current liabilities

16

Share capital

17

Share premium and reserves

18

Segment information

19

Other income

20

Selling expenses

21

Administrative expenses

22

Employee benefit expenses

23

Expenses by nature

24

Finance costs

25

Income tax expense

26

Earnings per share

27

Financial instruments

28

Commitments with non -related parties

29

Other contracts

30

Litigation

31

Contingent liabilities

32

Thai Financial Reporting Standards (“TFRS”) not yet adopted

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

257


These notes form an integral part of the financial statements. The financial statements were authorised for issue by the directors on 23 February 2011. 1. General information



Areeya Property Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office at 67/4 Ladprao Road, Kwaeng Wangthonglang, Khet Wangthonglang, Bangkok.



The Company was listed on the Stock Exchange of Thailand in April 2004.



The Company’s major shareholders during the financial year were Laohapoonrungsee (39.92% of shareholdings) and Porncharoenchaisilp (25.31% of shareholdings).



The principal business of the Company is the development of real estate projects. Details of the Company’s subsidiaries as at 31 December 2010 and 2009 were as follows:

Name of the entities

Type of business

Country of incorporation

Ownership interest (%) 2010

2009

Direct subsidiaries Areeya Service Co., Ltd.

After sales services for property

Thailand

99.99

99.99

One Up Company Limited

Construction service

Thailand

99.99

99.99

Areeya Management Co., Ltd.

Development of real estate projects and property management

Thailand

99.99

99.99

Cool Space Co., Ltd.

Development of real estate projects

Thailand

99.99

99.99

White Living Co., Ltd.

Development of real estate projects

Thailand

99.99

99.99

Chill Space Co., Ltd. (See note 10)

Development of real estate projects

Thailand

99.99

-

2. Basis of preparation of the financial statements The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. The financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated. They are prepared on the historical cost basis except as stated in the accounting policies. The financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRS”); guidelines promulgated by the Federation of Accounting Professions (“FAP”); applicable rules and regulations of the Thai Securities and Exchange Commission; and with generally accepted accounting principles in Thailand. During 2010, the FAP announced the re-numbering of the following TFRS. Former no.

258

Revised no.

Topic

TAS 11

TAS 101

Doubtful Account and Bad Debts

TAS 26

TAS 102

Income Recognition For Real Estate Business

TAS 40

TAS 105

Accounting for Investment in Debt and Equity Securities

TAS 48

TAS 107

Financial Instruments Disclosure and Presentation

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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The Group has adopted the revised Framework for the Preparation and Presentation of Financial Statements (revised 2009), which was issued by the FAP during 2010 and effective on 26 May 2010. The adoption of the revised framework does not have any material impact on the consolidated or separate financial statements. The FAP has issued during 2010 a number of new and revised TFRS which are not currently effective and have not been adopted in the preparation of these financial statements. These new and revised standards and interpretations are disclosed in note 32. The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: Note 7

Real estate projects under development

Note 30

Litigations

3. Significant accounting policies (a)

Basis of consolidation



The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”).



Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(b)

Cash and cash equivalents Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments.

(c)

Trade and other accounts receivable Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(d)

Real estate development projects Real estate development projects are projects for the development of properties with the intention of sale in the ordinary course of business. They are stated at the lower of cost or estimated net realisable value. Net realisable value represents the estimated selling price less costs to be incurred in selling the properties.

260

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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The cost of real estate development projects comprises specifically identified costs, including acquisition costs, development expenditure, borrowing costs and other related expenditure. Borrowing costs payable on loans funding real estate development projects are capitalised, on a specific identification basis, as part of the cost of the property until the completion of development. (e)

Investment Investments in subsidiaries Investments in subsidiaries in the separate financial statements of the Company are accounted for using the cost method less impairment.

(f)

Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Leased assets Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Property and equipment acquired by way of finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the statement of income. Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Leasehold improvements

3 and 5

years

20

years

5

years

Furniture, fixtures and office equipment

3 and 5

years

Machinery and construction equipment

3 and 5

years

5

years

Club house Temporary building

Vehicles No depreciation is provided on freehold land or assets under construction. (g)

Intangible assets Intangible assets that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and impairment losses. Intangible assets are amortised in the statement of income on a straight-line basis over their estimated useful lives from the date that they are available for use. The estimated useful life of software licenses is 5 years.

262

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

263


(h)

Impairment The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. Calculation of recoverable amount The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. Reversals of impairment An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i)

Interest-bearing liabilities Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of income over the period of the borrowings on an effective interest basis.

(j)

Trade and other accounts payable Trade and other accounts payables are stated at cost.

(k)

Employee benefits Defined contribution plans Obligations for contributions to defined contribution plans are recognised as an expense in the statement of income as incurred.

(l)

Provisions A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(m)

Revenues Revenue excludes value added taxes and other sales taxes and is arrived at after deduction of trade discounts. Sales of land and houses and sales of residential condominium units Sales of land and houses and sales of residential condominium units are recognised as revenue when the construction works are completed and the ownerships have been transferred to buyers and after all payments have been received from the buyers.

264

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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265


Construction contracts Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognised in the statement of income in proportion to the stage of completion of the contract. The stage of completion is assessed by reference to surveys of work performed. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in the statement of income. Sales and other income Sales and other income are recognised in the statement of income as it accrues. (n)

Expenses Lease payments Payments made under operating leases are recognised in the statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income in the accounting period in which they are incurred. Finance costs Interest expenses and similar costs are charged to the statement of income for the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. The interest component of ďŹ nance lease payments is recognised in the statement of income using the effective interest rate method.

(o)

Income tax Income tax on the proďŹ t or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

4. Related party transactions and balances Related parties are those parties linked to the Group and the Company as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market prices exist, at contractually agreed prices.

266

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010




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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

267


Relationships with related parties that control the Company or are being controlled by the Company or have transactions with the Group were as follows: Name of entities

Country of incorporation / nationality

Nature of relationships

Areeya Service Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

One Up Company Limited

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

Areeya Management Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

Cool Space Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

White Living Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

Chill Space Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding, more than 50% of directors are representatives of the Company

Laohapoonrungsee and Porncharoenchaisilp groups

Thailand

The group of major shareholders

Wisit Laohapoonrungsee

Thailand

A Director of the Company / Group

The pricing policies for particular types of transactions are explained further below: Transactions

268

Pricing policies

Revenue from sale of projects

Market prices / Contractually agreed rates

Service income from house construction and sale of construction materials

Market prices / Contractually agreed rates

Other income

Market prices / Contractually agreed rates

Cost of service from house construction and sale of construction material

Market prices / Contractually agreed rates

Finance cost

Market prices

OfďŹ ce rental

Contractually agreed rates

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

269


Significant transactions for the years ended 31 December 2010 and 2009 with related parties were as follows: Consolidated financial statements



2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Subsidiaries Revenue from sales of projects

-

-

288,000

527,500

Service income from house construction and sale of construction materials

-

-

7,165

9,748

Other income

-

-

1,920

1,920

Cost of sales of projects

-

-

288,000

527,500

7,138

9,242

-

-

461

461

54,573

52,902

50,446

48,350

3,672

3,072

3,672

3,072

Cost of service from house construction and sale of construction materials Finance cost

Other related parties Management benefit expense Office rental

Balances as at 31 December 2010 and 2009 with related parties were as follows: Consolidated financial statements



2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Trade accounts receivable from related parties Subsidiaries One Up Company Limited

-

-

12,699

7,570

Areeya Management Co., Ltd.

-

-

747

2,756

White Living Co., Ltd.

-

-

268

-

Cool Space Co., Ltd.

-

-

41

45

Total

-

-

13,755

10,371

-

-

313,499

480,629

Real estate projects under development Subsidiary One Up Company Limited

270

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

271


Consolidated financial statements



2010

Separate financial statements

2009

2010

2009

(in thousand Baht) Other receivable Subsidiaries Chill Space Co., Ltd.

-

-

287,507

-

Areeya Management Co., Ltd.

-

-

48,084

73,420

One Up Company Limited

-

-

4,989

2,595

Areeya Service Co., Ltd.

-

-

493

496

Cool Space Co., Ltd.

-

-

333

12,450

White Living Co., Ltd.

-

-

215

22,128

Total

-

-

341,621

111,089

-

-

207,741

234,304

Trade accounts payable to related party Subsidiary One Up Company Limited

Consolidated financial statements

Interest rate 2010



2009

2010

2009

(% per annum)

Separate financial statements 2010

2009

(in thousand Baht)

Long-term loan from Subsidiary Areeya Service Co., Ltd.

4.75

4.75

-

-

Consolidated financial statements



2010

2009

9,700

9,700

Separate financial statements 2010

2009

(in thousand Baht) Construction retentions Subsidiary One Up Company Limited

272

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

-

-

42,863

28,861






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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

bhŲhfa

273


Consolidated financial statements



2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Other current liabilities Subsidiaries Areeya Management Co., Ltd.

-

-

154,875

47,695

White Living Co., Ltd.

-

-

47,800

-

Cool Space Co., Ltd.

-

-

39,822

5,622

Areeya Service Co., Ltd.

-

-

808

461

One Up Company Limited

-

-

416

1,022

Total

-

-

243,721

54,800

Long-term loan Due to the requirements of the Land Development Act B.E. 2543, during 2003 to 2004 the Company transferred the title on certain parcels of land used for entrance ways roading and utilities with a cumulative value at 31 December 2010 of Baht 57.4 million (2009: Baht 57.4 million), to a director for nil consideration so that the director could hold the title of the land on behalf of the Company as a representative for the purposes of entering into any contract in relation to the land. As specified in the agreement, the director may not perform any activities on the land. In addition, the director has registered the land subject to servitudes and restrictions to the projects of the Company for construction of utilities for the projects without any compensation and with no time limit. During 2004 to 2007, the Company transferred the title of certain parcels of land used as site entrance roads of development projects with a cumulative value at 31 December 2010 of Baht 79.1 million (2009: Baht 79.1 million) to a subsidiary, without any compensation for the subsidiary to hold title to such land on behalf of the Company as a representative for the purposes of entering into any contract in relation to the land. In addition, the subsidiary has registered the land subject to servitudes and restrictions to the projects of the Company for construction of the utilities of the projects without any compensation and with no time limit. In addition, in 2009, a subsidiary also transferred the title of certain parcels of land used as site entrance roads of development projects with a cumulative value at 31 December 2010 of Baht 0.4 million (2009: Baht 0.4 million) to a subsidiary, without any compensation for the subsidiary to hold title to such land on behalf of the subsidiary as a representative for the purposes of entering into any contract in relation to the land. In addition, the subsidiary has registered the land subject to servitudes and restrictions to the projects of the subsidiary for construction of the utilities of the projects without any compensation and with no time limit. Contracts with subsidiaries and other related party

274

(a)

In 2010, the Company entered into a sale agreement for projects to a subsidiary at cost with proceeds amounting to Baht 288 million.

(b)

As at 31 December 2010, the Company had outstanding commitments relating to project development contracts with a subsidiary amounting to Baht 181.5 million (2009: Baht 191.7 million).

(c)

The Company entered into a condominium rental agreement with a related person for a period of 3 years from 1 March 2008 to 28 February 2011 at a rental totaling Baht 3.82 million. As a 31 December 2010, the Company has commitment up to the effective date of the said rental agreement amounting to Baht 0.2 million.

(d)

The Company entered into a condominium rental sublease agreement to a subsidiary (tenant) for certain space of such condominium and equipment for a period of 3 years from 1 March 2008 to 28 February 2011 totaling Baht 5.76 million.

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010






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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

275


(e)

The Company entered into a condominium rental agreement with a related person for a period of 3 years from 1 March 2009 to 28 February 2012 at a rental totaling Baht 7.2 million. As at 31 December 2010, the Company has commitment amounting to Baht 2.8 million.

Other The Company guaranteed loans of subsidiaries with local banks and a subsidiary guaranteed loans of the Company with a local bank and the Company guaranteed finance lease liabilities (note 13). In 2009, the Company charged a subsidiary a penalty of Baht 44 million for failing to complete construction works on the date prescribed in the agreements of each project. The penalty fine rate is 0.1 % of the contract value of each project per day based on the period from their due date until all of the works are completed.

5. Cash and cash equivalents Consolidated financial statements



2010

Separate financial statements

2009

2010

2009

(in thousand Baht) Cash on hand

1,036

1,375

220

550

Cash at banks

111,231

116,510

60,634

59,842

-

48,407

-

48,407

112,267

166,292

60,854

108,799

Cashier cheque to bank for loan repayment Total

Cash and cash equivalents of the Group and the Company as at 31 December 2010 and 2009 were denominated in Thai Baht.

6. Trade accounts receivable and unbilled construction work in progress

 

Consolidated financial statements

Separate financial statements

2010

2010

2009

2009

(in thousand Baht) Sales with signed agreements Ratio of sales with signed agreements to total project sales (%)

276

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

12,013,895

10,366,109

10,271,786

9,304,568

68.15

73.75

61.39

70.71


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

277




As at 31 December 2010 and 2009, trade accounts receivable and unbilled construction work in progress and unrecognised income on installment due consisted of:

Consolidated financial statements



2010

2009



Separate financial statements 2010

2009

(in thousand Baht) Installments due

11,251,141

8,159,641

9,610,548

7,243,031

(11,186,091)

(7,856,273)

(9,546,831)

(6,942,848)

65,050

303,368

63,717

300,183

11,251,141

8,159,641

9,610,548

7,243,031

(11,250,580)

(8,158,930)

(9,609,998)

(7,242,320)

Receivables on installments due

561

711

550

711

Other receivables

177

15,380

13,932

25,752

2,788

22,248

1,108

1,164

3,526

38,339

15,590

27,627

(1,694)

(1,805)

(1,694)

(1,805)

1,832

36,534

13,896

25,822

(111)

167

(111)

167

Less sales recognised to date Unrecognised income on installments due

Installments due Less payments received on installments due

Receivables from construction

Less allowance for doubtful accounts Net Bad and doubtful debt expense for the year (Reversal) Unbilled construction work in progress

Consolidated financial statements



2010

2009

Separate financial statements 2010

2009

(in thousand Baht)

278

Cost and attributable profit

-

21,084

-

-

Progress billings

-

(7,751)

-

-

Total

-

13,333

-

-

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

279


Aging analyses for trade accounts receivable were as follows: Consolidated ďŹ nancial statements



2010

2009

Separate ďŹ nancial statements 2010

2009

(in thousand Baht) Related parties Less than 3 months

-

-

475

1,018

3-6 months

-

-

2,065

7,618

6-12 months

-

-

3,644

1,669

Over 12 months

-

-

7,571

66

Total

-

-

13,755

10,371

-

13,333

-

-

1,720

979

30

979

3-6 months

29

2,817

29

2,818

6-12 months

14

15,833

13

8,082

1,763

5,377

1,763

5,377

3,526

38,339

1,835

17,256

(1,694)

(1,805)

(1,694)

(1,805)

Net

1,832

36,534

141

15,451

Total

1,832

36,534

13,896

25,822

Other parties Unbilled Less than 3 months

Over 12 months

Less allowance for doubtful accounts

The normal credit term granted by the Group and the Company ranges from 30 days to 60 days. Trade accounts receivable and unbilled construction work in progress of the Group and the Company as at 31 December 2010 and 2009 were denominated in Thai Baht.

280

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

281


7. Real estate projects under development

 Consolidated financial statements 2010



Show houses Construction in progress Construction materials Total Portion transferred to cost of sales Net

Finance costs capitalised during the year

bd

Rates of interest capitalised (% per annum)

2009

Separate financial statements 2010

2009

(in thousand Baht)

Note

Land and development costs of projects for sale



9,834,233

8,070,374

8,438,579

7,021,978

107,990

101,568

96,779

92,470

5,240,801

3,832,106

4,630,039

3,472,489

7,299

5,658

5,796

5,658

15,190,323

12,009,706

13,171,193

10,592,595

(10,104,631)

(7,390,079)

(8,795,050)

(6,667,897)

5,085,692

4,619,627

4,376,143

3,924,698

175,376

201,288

116,361

165,946

5.79

6.01

5.80

6.02

As at 31 December 2010 and 2009, land and construction thereon of the Company’s projects have been mortgaged as collateral for loans and credit facilities from financial institutions as described in note 13.

8. Deposits for land In 2009, the Company paid deposit for land amounting to Baht 127 million whose the Company had entered into a purchase agreement for land amounting to Baht 250 million.

9. Other current assets Consolidated  financial statements 2010



Separate financial statements 2010

2009

(in thousand Baht)

Advance payment to employees

11,999

41,728

11,061

27,303

Other receivables

10,337

35,280

4,891

34,773

3,702

10,990

3,476

10,125

Others

17,547

51,376

10,833

36,375

Total

43,585

139,374

30,261

108,576

Deposits

282

2009



AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

283


10. Investments in subsidiaries Separate financial statements 2010



Note

(in thousand Baht)

At 1 January Additional investment in share capital

2009

1

Reversal of impairment loss At 31 December

298,896

134,896

1,000

164,000

1,104

-

301,000

298,896

Chill Space Co., Ltd , a subsidiary , registered share capital of Baht 1 million divided into 100,000 shares at par value of Baht 10 each with the Ministry of Commerce on 19 March 2010. The Extraordinary Shareholders’ Meeting of One Up Company Limited held on 7 October 2009 resolved to increase the registered share capital from Baht 60 million to Baht 100 million by fully paid capital at par value of Baht 10. The subsidiary registered the increased share capital with the Ministry of Commerce on 7 October 2009. An Extraordinary Shareholders’ Meeting of Cool Space Co., Ltd., a subsidiary, held on 2 July 2009 resolved to increase the registered share capital from Baht 1 million to Baht 60 million by fully paid capital at par value of Baht 10. The subsidiary registered the increased share capital with the Ministry of Commerce on 3 July 2009. A Meeting of White Living Co., Ltd. held on 27 December 2008 resolved to establish the Company. The subsidiary registered share capital of Baht 1 million divided into 100,000 shares at par value of Baht 10 each with the Ministry of Commerce on 26 January 2009. The Extraordinary Shareholders’ Meeting of White Living Co., Ltd., a subsidiary, held on 9 October 2009 resolved to increase the registered share capital from Baht 1 million to Baht 65 million by fully paid capital at par value of Baht 10. The subsidiary registered the increased share capital with the Ministry of Commerce on 12 October 2009. Investments in subsidiaries as at 31 December 2010 and 2009 and dividend income for the years then ended were as follows: Separate financial statements Ownership interest 2010

Paid-up capital

2009

2010

2009

Cost method 2010

(%)

2009

Impairment 2010

2009

At cost-net 2010

Dividend

2009 2010 2009

(in thousand Baht)

Subsidiaries Areeya Service Co., Ltd

99.99

99.99

One Up Company Limited

99.99

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-

Areeya Management Co., Ltd.

99.99

99.99

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65,000

10,000

65,000

10,000

65,000

10,000

65,000

- (1,104)

10,000

-

-

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-

-

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65,000

8,896

65,000

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99.99

60,000

60,000

60,000

60,000

-

-

60,000

60,000

-

-

White Living Co., Ltd.

99.99

99.99

65,000

65,000

65,000

65,000

-

-

65,000

65,000

-

-

Chill Space Co., Ltd.

99.99

-

1,000

-

1,000

-

-

-

-

-

-

-

- (1,104) 301,000 298,896

-

-

Total

284

10,000

301,000 300,000 301,000 300,000

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

Ĺł Ĺł Ĺł Ĺł Ĺł Ĺł 285


11. Property, plant and equipment Consolidation financial statements Club house and temporary Leasehold building Land improvements

Furniture, fixtures and office equipment

Machinery and Construction equipment

Vehicles

Construction inprogress

Total

(in thousand Baht) Cost At 1 January 2009

32,112

10,216

57,658

25,510

55,734

31,628

7,441

220,299

Additions

-

1,103

-

4,178

13,771

12,919

5,150

37,121

Transfers

-

2,778

-

(329)

2,590

-

(5,039)

-

Disposals

-

-

-

-

-

(1,364)

(905)

(2,269)

32,112

14,097

57,658

29,359

72,095

43,183

6,647

255,151

Additions

-

34

-

5,441

4,558

17,542

13,979

41,554

Transfers

-

-

-

-

3,388

-

(3,388)

-

Disposals

-

(13)

-

(136)

(204)

(5,877)

(372)

(6,602)

32,112

14,118

57,658

34,664

79,837

54,848

16,866

290,103

At 1 January 2009

-

7,600

24,004

16,323

9,239

21,613

-

78,779

Depreciation charge for the year

-

2,651

5,357

3,927

20,221

4,408

-

36,564

Transfers

-

-

-

(142)

142

-

-

-

Disposals

-

-

-

-

-

(1,364)

-

(1,364)

At 31 December 2009 and 1 January 2010

-

10,251

29,361

20,108

29,602

24,657

-

113,979

Depreciation charge for the year

-

2,385

3,804

3,951

22,913

6,326

-

39,379

Disposals

-

(7)

-

(22)

(75)

(5,876)

-

(5,980)

At 31 December 2010

-

12,629

33,165

24,037

52,440

25,107

-

147,378

At 31 December 2009 and 1 January 2010

At 31 December 2010

Accumulated depreciation

Net book value At 1 January 2009 Owned assets Assets under finance leases

32,112

2,616

33,654

8,191

46,495

1,418

7,441

131,927

-

-

-

996

-

8,597

-

9,593

32,112

286

2,616

33,654

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

9,187

46,495

10,015

7,441

141,520


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

287


Consolidation financial statements Club house and temporary Leasehold building Land improvements

Furniture, fixtures and office equipment

Machinery and Construction equipment

Vehicles

Construction inprogress

Total

(in thousand Baht) At 31 December 2009 and 1 January 2010 Owned assets

32,112

3,846

28,297

6,875

38,611

1,928

6,647

118,316

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3,882

16,598

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32,112

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28,297

9,251

42,493

18,526

6,647

141,172

32,112

1,489

24,493

5,514

21,372

15,140

16,866

116,986

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5,113

6,025

14,601

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25,739

32,112

1,489

24,493

10,627

27,397

29,741

16,866

142,725

Assets under finance leases

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Separate financial statements Club house and temporary Leasehold building Land improvements

Furniture, fixtures and office equipment

Machinery and Construction Construction equipment Vehicles inprogress

Total

(in thousand Baht) Cost At 1 January 2009

32,112

10,116

57,658

24,146

1,392

30,573

7,441

163,438

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-

1,103

-

2,836

184

7,502

2,554

14,179

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2,778

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329

-

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-

-

-

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32,112

13,997

57,658

26,653

1,905

36,711

6,312

175,348

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-

-

3,555

150

6,580

10,790

21,075

Disposals

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-

-

(11)

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-

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17,102

190,536

At 31 December 2009 and 1 January 2010

At 31 December 2010

288

32,112

13,997

57,658

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

30,197

2,055

37,415


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

289


Separate financial statements Club house and temporary Leasehold building Land improvements

Furniture, fixtures and office equipment

Machinery and Construction Construction equipment Vehicles inprogress

Total

(in thousand Baht) Accumulated depreciation At 1 January 2009

-

7,583

24,004

16,122

863

21,526

-

70,098

Depreciation charge for the year

-

2,630

5,357

3,488

239

3,750

-

15,464

Transfers

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-

-

(142)

142

-

-

-

Disposals

-

-

-

-

-

(1,364)

-

(1,364)

At 31 December 2009 and 1 January 2010

-

10,213

29,361

19,468

1,244

23,912

-

84,198

Depreciation charge for the year

-

2,359

3,804

3,233

255

4,255

-

13,906

Disposals

-

-

-

-

-

(5,876)

-

(5,876)

At 31 December 2010

-

12,572

33,165

22,701

1,499

22,291

-

92,228

32,112

2,533

33,654

7,028

529

1,415

7,441

84,712

-

-

-

996

-

7,632

-

8,628

32,112

2,533

33,654

8,024

529

9,047

7,441

93,340

32,112

3,784

28,297

4,809

661

-

6,312

75,975

-

-

-

2,376

-

12,799

-

15,175

32,112

3,784

28,297

7,185

661

12,799

6,312

91,150

32,112

1,425

24,493

3,431

556

15,124

17,102

94,243

-

-

-

4,065

-

-

-

4,065

32,112

1,425

24,493

7,496

556

15,124

17,102

98,308

Net book value At 1 January 2009 Owned assets Assets under finance leases

At 31 December 2009 and 1 January 201 Owned assets Assets under finance leases

At 31 December 2010 Assets under finance leases Owned assets

The gross amount of the Group and the Company’s fully depreciated plant and equipment that was still in use as at 31 December 2010 amounted to Baht 59.1 million (2009: Baht 53.4 million).

290

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

291


12. Intangible assets Software licenses Consolidated financial statements

Separate financial statements

(in thousand Baht) Cost At 1 January 2009

6,906

6,296

195

106

7,101

6,402

Additions

509

476

Disposal

(21)

-

7,589

6,878

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4,897

4,814

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1,065

941

At 31 December 2009 and 1 January 2010

5,962

5,755

Amortisation charge for the year

425

286

Disposal

(12)

-

6,375

6,041

At 1 January 2009

2,009

1,482

At 31 December 2009 and 1 January 2010

1,139

647

At 31 December 2010

1,214

837

Additions At 31 December 2009 and 1 January 2010

At 31 December 2010 Accumulated amortization

At 31 December 2010

Net book value

292

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

293


13. Interest-bearing liabilities Consolidated financial statements 2010 Note

2009

Separate financial statements 2010

2009

(in thousand Baht)

Current (See note 27) Bank overdrafts - secured

122,434

70,148

109,241

60,272

Short-term loans from financial institutions

896,985

170,000

853,500

165,000

1,019,419

240,148

962,741

225,272

3,717

108,385

3,717

108,383

11,267

6,134

6,600

4,230

1,523,669

2,160,716

1,338,802

1,794,404

-

-

9,700

9,700

27,702

15,463

10,065

8,212

Bank overdrafts and short-term loans from financial institutions

Current portion of long-term loans from financial institutions secured

Current portion of finance lease liabilities

Non-current (See note 27) Long-term loans from financial institutions secured

Long-term loans form subsidiary unsecured

4

Finance lease liabilities

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294

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

295


Bank overdrafts and loans from financial institutions are secured by bank deposits of a director together with the mortgage of the land of each project. Some projects are secured by the Company and the subsidiaries and by certain directors. Under the terms of the above loan agreements, the Group and the Company must comply with certain terms and conditions prescribed in the agreements. Long term loan from Areeya Service Co., Ltd., a subsidiary, amounts to Baht 9.7 million. This loan bears interest at 4.75% per annum and is repayable on demand. However, the said subsidiary agreed not to recall the loan within twelve months. Finance lease liabilities Finance lease liabilities as at 31 December were payable as follows: Consolidated financial statements 2010 Principal

2009

Interest

Payment

Principal

Interest

Payment

(in thousand Baht) Within one year

11,267

2,090

13,357

6,134

1,284

7,418

After one year but within five years

27,702

2,800

30,502

15,463

1,593

17,056

Total

38,969

4,890

43,859

21,597

2,877

24,474

Separate financial statements 2010 Principal

2009

Interest

Payment

Principal

Interest

Payment

(in thousand Baht) Within one year

6,600

790

7,390

4,230

640

4,870

After one year but within five years

10,065

738

10,803

8,212

541

8,753

Total

16,665

1,528

18,193

12,442

1,181

13,623

The Group and the Company entered into finance lease contracts covering its vehicles, equipment and machineries. These contracts will expire in various years until 2015. Under the terms of the lease contracts, the Group and the Company must comply with certain conditions prescribed in the agreement. Finance lease contracts covering machinery of a subsidiary are secured by the Company. Interest-bearing liabilities of the Group and the Company as at 31 December 2010 and 2009 were denominated in Thai Baht.

296

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

297


14. Trade accounts payable

 Consolidated financial statements 2010 Note Related parties

4

Other parties Total

 

4

2009

2010

2009

(in thousand Baht) -

-

207,741

234,304

165,560

240,652

19,298

33,501

165,560

240,652

227,039

267,805

Trade accounts payable as shown above include retention payable under construction business as follows: Consolidated financial statements 2010 Note

 

Separate financial statements

2009

Separate financial statements 2010

2009

(in thousand Baht)

Other parties

42,844

32,938

-

-

Total

42,844

32,938

-

-

Trade accounts payable of the Group and the Company as at 31 December 2010 and 2009 were denominated entirely in Thai Baht.

15. Other current liabilities

 Consolidated financial statements 2010 Note

2010

2009

(in thousand Baht)

Accrued expenses

90,955

63,956

67,122

39,308

Output vat

26,928

26,367

192

2,352

17,828

33,775

17,828

33,775

10,654

-

10,522

-

-

-

243,721

54,800

Others

21,600

21,969

19,695

15,303

Total

167,965

146,067

359,080

145,538

Fee on retaining the right according to land purchase contact

28(d)

Accrued promotion expenses Other payable - related companies

298

2009

Separate financial statements

d

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

299


16. Share capital 2010 Number Par value per share (in Baht)

2009 Amount

Number

Amount

(in thousand shares / thousand Baht)

Authorised At 1 January - ordinary shares

1

949,600

949,600

949,600

949,600

1

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949,600

949,600

949,600

1

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758,000

758,000

758,000

1

758,000

758,000

758,000

758,000

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ųordinary shares At 31 December - ordinary shares

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18. Segment information The Group does not present information on business segments and geographical segments in the financial statements since the Group is only engaged in real estate development in the Bangkok and broader metropolitan area.

300

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

301


19. Other income Consolidated financial statements 2010 Note Project management fees

29

2009

Separate financial statements 2010

2009

(in thousand Baht) 10,970

11,351

-

7,370

Others

12,363

11,721

11,721

11,546

Total

23,333

23,072

11,721

18,916

20. Selling expenses Consolidated financial statements 2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Marketing

194,493

69,474

141,778

49,011

Specific business tax and cost of land transfer

91,972

5,550

71,302

4,750

Employee benefit expenses

15,411

17,064

11,496

15,027

301,876

92,088

224,576

68,788

Total

21. Administrative expenses Consolidated financial statements 2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Employee benefit expenses Other administrative expense Total

302

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

123,777

87,273

99,654

50,247

97,844

112,963

78,426

90,379

221,621

200,236

178,080

140,626


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

303


22. Employee benefit expenses Consolidated financial statements 2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Management Salaries

51,585

44,145

47,565

40,580

2,433

2,292

2,327

2,194

51

-

51

-

54,069

46,437

49,943

42,774

127,199

119,384

71,052

62,432

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1,841

11,500

3,110

3,045

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8,398

8,272

6,368

5,374

137,438

139,156

80,530

70,851

191,507

185,593

130,473

113,625

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Other employees Salaries and wages

Total

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2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Marketing Expenses

69,474

141,778

49,011

Employee benefit expenses

22

191,507

185,593

130,473

113,625

Business tax and cost of land transfer

20

91,972

5,550

71,302

4,750

39,803

37,629

14,191

16,404

Depreciation and amortization

304

194,493

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

305


24. Finance costs Consolidated financial statements Note

2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Interest expenses



Related parties



Financial institutions

Capitalised as real estate projects development

d

g

Net

-

-

461

461

199,654

206,066

138,456

169,970

199,654

206,066

138,917

170,431

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(116,361)

(165,946)

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22,556

4,485

25. Income tax expense Royal Decree No. 387 B.E. 2544 dated 5 September 2001 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the five consecutive accounting periods beginning on or after enactment. The listed companies that received income tax reduction under this Royal Decree are also eligible to continue the period of tax reduction under Royal Decree No. 475 but shall not be exceeding the 2010 accounting period ending on or after 31 December 2010.

26. Basic earnings per share The calculations of basic earnings per share for the years ended 31 December 2010 and 2009 were based on the profit for the years attributable to equity holders of the Company and the number of ordinary shares outstanding during the years as follows: Consolidated financial statements 2010

2009

Separate financial statements 2010

2009

(in thousand Baht/thousand shares) Profit attributable to equity holders of the Company (basic)

427,951

518,008

319,469

432,699

Number of ordinary shares outstanding (basic)

758,000

758,000

758,000

758,000

0.56

0.68

0.42

0.57

Earnings per share (basic) (in Baht)

27. Financial instruments Financial risk management policies The Group is exposed to normal business risks from changes in market interest rates and from non-performance of contractual obligations by counterparties. The Group does not hold or issue derivative financial instruments for speculative or trading purposes. Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

306

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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307


Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding minority interests and also monitors the level of dividends to ordinary shareholders. Interest rate risk Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows because loan interest rates are mainly fixed. The Group is primarily exposed to interest rate risk from floating interest rates of short-term and long-term loans from financial institutions. The effective interest rates of interest-bearing financial liabilities as at 31 December 2010 and 2009, and the periods in which those liabilities mature or re-price were as follows: Consolidated financial statements Average Effective Interest rate

After 1 year but Within 1 year

(% per annum)

within 5 year

After 5 year

Total

(in thousand Baht)

2010 Current Bank overdrafts and loans payable - Financial institutions

5.79

1,023,136

Non-current Loans payable - Financial institutions

5.79

-

Total

-

1,023,136

1,523,669

-

1,523,669

1,023,136

1,523,669

-

2,546,805

348,533

-

-

348,533

-

2,160,716

-

2,160,716

348,533

2,160,716

-

2,509,249

2009 Current Bank overdrafts and loans payable - Financial institutions

6.01

Non-current Loans payable - Financial institutions

6.01

Total

308

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

309


Separate financial statements Average Effective Interest rate

After 1 year but Within 1 year

(% per annum)

within 5 year

After 5 year

Total

(in thousand Baht)

2010 Current Bank overdrafts and loans payable - financial institutions

5.80

966,458

-

-

966,458

Non-current Loans payable - financial institutions

5.80

-

1,338,802

-

1,338,802

Loans payable - related party

4.75

-

9,700

-

9,700

966,458

1,348,502

-

2,314,960

-

333,655

Total

2009 Current Bank overdrafts and loans payable - financial institutions

6.02

333,655

-

Non-current Loans payable - financial institutions

6.02

-

1,794,404

Loans payable - related party

4.75

-

9,700

-

9,700

333,655

1,804,104

-

2,137,759

Total

1,794,404

Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or a counter party to settle its financial and contractual obligations to the Group as and when they fall due. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Fair values A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. In determining the fair value of its financial assets and liabilities, the Group takes into account its current circumstances and the costs that would be incurred to exchange or settle the underlying financial instrument. Fair values of financial assets and liabilities are not significant difference with the carrying values at 31 December 2010 and 2009.

310

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

311


28. Commitments with non-related parties As at 31 December 2010, the Group and the Company had: (a)

Non-cancellable operating lease commitments Consolidated financial statements 2010

2009

Separate financial statements 2010

2009

(in thousand Baht) Within one year

5,027

3,111

4,453

1,815

After one year but within five years

1,240

4,466

1,240

2,280

Total

6,267

7,577

5,693

4,095

Ůb)

Outstanding commitments relating to project development contracts amounting to Baht 339.8 million. (2009: Baht 499.2 million)

(c)

As at 31 December 2010, a subsidiary had facilities for letter of credit - trust receipt and letter of guarantee and/or aval agreements with certain local banks totaling Baht 60 million.

(d)

An agreement to buy and sell land from a vendor for a purchase consideration of Baht 500 million, against which a deposit of Baht 50 million has been paid. The Company has incurred development costs on the land amounting to Baht 73 million. The Company has recorded the deposit and development costs in the real estate projects under development account in the balance sheet. Under the terms of the agreement, the vendor has permitted the Company to develop and make use of the land. The Company entered into the amendment of the agreement of Baht 23 million. The Company paid Baht 3 million on the date of entering into the amendment and the remaining balance will be paid on or before the date of the land transfer, together with a retaining fee from the date of the amendment of the agreement to the date of land transfer calculated at the rate per day as specified in the amendment of the agreement. Currently, the agreements will extend the payment of the land cost and the remaining balance and the date of the transfer of the title of the land to the year 2011. As at 31 December 2010, the remaining balance is Baht 17.8 million which is included in other current liabilities.

29. Other contracts

Ůa)

The Company had managed projects on behalf of other company under which the Company received management fee at 3 percent of project value upon the ownership of the land being transferred to customers.

(b)

The Company had managed projects on behalf of other company under which the Company received management fee at 3% of the condominium value by installment upon the customers paying deposit and advance payment (0.75%), paying down payment (0.75%) and fully paying the remaining balance when each building was completely constructed (1.5%). This managing project to the said company was cancelled in the year 2010.

30. Litigation As at 31 December 2010, the Company and its subsidiary are engaged in lawsuits for damage claimed totaling Baht 47.5 million. Up to the date of this report, these lawsuits are not finalised and the Company has already recorded liabilities in the financial statements amounting to Baht 21.7 million which are presented under unrecognised income on installments due and provision during the year 2010 for lawsuit of Baht 5.1 million and Baht 16.6 million, respectively.

312

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

313


31. Contingent liabilities As at 31 December 2010, the Group and the Company were contingently liable for letters of guarantee issued by several local banks to government agencies for construction of utilities and to suppliers for purchase of goods totaling Baht 70.7 million and Baht 56.5 million in the consolidated financial statements and separate financial statements, respectively (2009: Baht 98.9 million and Baht 48 million, respectively) partial amounts guaranteed by cash at banks and the mortgage of the land of each project as specified in the loan agreements.

32. Thai Financial Reporting Standards (“TFRS”) not yet adopted The Group has not adopted the following new and revised TFRS that have been issued as of the reporting date but are not yet effective. The new and revised TFRS are anticipated to become effective for annual financial periods beginning on or after 1 January in the year indicated in the following table. TFRS

314

Topic

Year effective

TAS 1 (revised 2009)

Presentation of Financial Statements

2011

TAS 2 (revised 2009)

Inventories

2011

TAS 7 (revised 2009)

Statement of Cash Flows

2011

TAS 8 (revised 2009)

Accounting Policies, Changes in Accounting Estimates and Errors

2011

TAS 10 (revised 2009)

Events after the Reporting Period

2011

TAS 11 (revised 2009)

Construction Contracts

2011

TAS 12

Income tax

2013

TAS 16 (revised 2009)

Property, Plant and Equipment

2011

TAS 17 (revised 2009)

Leases

2011

TAS 18 (revised 2009)

Revenue

2011

TAS 19

Employee Benefits

2011

TAS 21 (revised 2009)

The Effects of Changes in Foreign Exchange Rates

2013

TAS 23 (revised 2009)

Borrowing Costs

2011

TAS 24 (revised 2009)

Related Party Disclosures

2011

TAS 26

Accounting and Reporting by Retirement Benefit Plans

2011

TAS 27 (revised 2009)

Consolidated and Separate Financial Statements

2011

TAS 33 (revised 2009)

Earnings per Share

2011

TAS 34 (revised 2009)

Interim Financial Reporting

2011

TAS 36 (revised 2009)

Impairment of Assets

2011

TAS 37 (revised 2009)

Provisions, Contingent Liabilities and Contingent Assets

2011

TAS 38 (revised 2009)

Intangible Assets

2011

TFRS 3 (revised 2009)

Business Combinations

2011

TFRIC 15

Agreements for the Construction of Real Estate

2011

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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Management has presently determined the effects from adoptions of the new and revised TFRS on the financial statements of the Company. Those accounting standards that will have direct effect on the Company are as follows: TAS 16 (revised 2009) – Property, plant and equipment The principal changes introduced by the revised TAS 16 that will affect the Company is that (i) costs of asset dismantlement, removal and restoration have to be included as asset costs and subject to annual depreciation; (ii) the depreciation charge has to be determined separately for each significant part of an asset; and (iii) the residual value of an item of property, plant and equipment has to be measured at the amount estimated receivable currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life. Furthermore, the residual value and useful life of an asset have to be reviewed at least at each financial year-end. The revised TAS 16 (revised 2009) permits as a transitional provision that these changes may be introduced prospectively from the year of introduction. The Company intends to adopt this transitional provision which the management has already determined will not have any material impact on the financial statements. TAS 19 – Employee benefits The accounting standard, Employee Benefits, has been in effect for financial periods beginning on or after 1 January 2011. The Company therefore has not presently accounted for the costs of post-employment benefits under defined benefit plans; other longterm employee benefits; and termination benefits until such costs are incurred. This accounting standard includes the requirements to recognise expenses and provision for employee benefits in the period in which the service is performed. The standard requires actuarial assumptions to measure the obligations and expenses of long-term benefits and to measure on a discounted basis due to the settlement of these benefits would incur in the subsequent years of services. Management is in under consideration of the transitional liability as at 1 January 2011 for employee benefits.

316

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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GENERAL INFORMATION

Ä&#x2122;1%=)5I+E1 'è-5B)4'è-5&Ä&#x2DC;1& Company Name

Areeya Property Public Company Limited

Type of Business

Development of real estate

Head OfďŹ ce Address

67/4 Dynasty Complex 2, Ladprao 71 Road, Khwang Saphansong, Khet Wangthonglang, Bangkok 10310

Company Registration No.

0107546000431

Authorized Share Capital

949,600,000 common shares, Baht 1 per share, Total authorized share capital Baht 949,600,000, Paid-up share capital Baht 758,000,000

Home Page

www.areeya.co.th For more details about a space condominium project, please visit www.aspace.co.th For more details about the colors town home project, please visit www.thecolors.co.th

Telephone

0-2933-0333, 0-2539-4000, 0-2789-1122

Facsimile

0-2955-9766

Auditor

KPMG Phoomchai Audit Ltd. 51st Floor, Empire Tower, 195 South Sathorn Road Khwang Yannawa, Khet Sathorn, Bangkok 10120 Tel 66(02) 677-2000 Fax 66(02) 677-2222

Security Registrar

Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, Ratchadapisek Road, Khwang Klongtoey, Khet Klongtoey, Bangkok 10110 Tel 66(02) 229-2800 Fax 66(02) 359-1262-3

Legal Advisor

Kunnatham Law OfďŹ ce 72/2-3 Sutthisanwinitchai Road, Samsen-Nok, Huay-Kwang, Bangkok 10310 Tel 66(02) 274-7529-30 Fax 66(02) 274-7638

318

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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SUBSIDIARY Ä&#x2122;1%=)'è-5&Ä&#x2DC;1& Company Name

Type of Business

Authorized Share Capital

Shareholding Percentage (%)

Areeya Service Co., Ltd. 67/4 Dynasty Complex 2, Ladprao 71 Rd., Saphansong, Wangthonglang, Bangkok 10310 Telephone 0-2933-0333, 0-2539-4000 Facsimile 0-2955-9766

After sale service for property

1,000,000 common shares, Baht 10 per share Total share capital Baht 10,000,000

99.99

One Up Co., Ltd. 184 Forum Tower 27 Floor, Ratchadapisek Rd., Huaykwang, Bangkok 10310 Telephone 0-2645-3535 Facsimile 0-2645-3538-9

Construction Service

10,000,000 common shares, Baht 10 per share Total share capital Baht 100,000,000

99.99

Areeya Management Co., Ltd. 67/4 Dynasty Complex 2, Ladprao 71 Rd., Saphansong, Wangthonglang, Bangkok 10310 Telephone 0-2933-0333, 0-2539-4000 Facsimile 0-2955-9766

Development of real estate projects and property management

6,500,000 common shares, Baht 10 per share Total share capital Baht 65,000,000

99.99

Cool Space Co., Ltd. 67/4 Dynasty Complex 2, Ladprao 71 Rd., Saphansong, Wangthonglang, Bangkok 10310 Telephone 0-2933-0333, 0-2539-4000 Facsimile 0-2955-9766

Development of real estate projects

6,000,000 common shares, Baht 10 per share Total share capital Baht 60,000,000

99.99

White Living Co., Ltd. 67/4 Dynasty Complex 2, Ladprao 71 Rd., Saphansong, Wangthonglang, Bangkok 10310 Telephone 0-2933-0333, 0-2539-4000 Facsimile 0-2955-9766

Development of real estate projects

6,500,000 common shares, Baht 10 per share Total share capital Baht 65,000,000

99.99

Chill Space Co., Ltd. 67/4 Dynasty Complex 2, Ladprao 71 Rd., Saphansong, Wangthonglang, Bangkok 10310 Telephone 0-2933-0333, 0-2539-4000 Facsimile 0-2955-9766

Development of real estate projects

100,000 common shares, Baht 10 per share Total share capital Baht 1,000,000

99.99

320

AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010


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AREEYA AWARD WINNING ANNUAL CHIC REPORT 2010

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