for 5 years and may be renewed twice, The Department of Public Works and Town & Country Planning has extended theexpiry of the ministerial regulations for a year (to expire on 15 May 2011). The owners of high rise buildings are likely to be impacted by this law because it imposed tighter restrictions on construction factors like floorarea ratio or open space ratio in certain zones of Bangkok. (The proportion of total area of built structures to the plot size of land – the floor-area ratio – is decreased, while the required ratio of a structure’s open space to its total area – the open space ratio – is increased). The City Planning Regulation also set many additional requirements for road construction to minimize traffic problems, such as the sizes of roads connecting large buildings to public roads, and their location in relation to the nearest sky train stations. The regulation can cause business owners to bear higher costs when acquiring lands, which will consequently drive the higher prices of the units for sales. These regulations may affect the Company’s future income as it limits the number of units that can be built in its various projects due to larger space requirement. In addition, such limitations may induce higher unit price of the Company’s houses. In addition, the limitations of the Land Allocation Act, of 2000, as well as any further official rules and guidelines introduced in the future, may be in conflict with the Company’s future policy. However, these laws have no retrospective effects, thus the Company’s current projects will continue to progress as planned. Moreover, the “Baan Rock Garden Bypass 6” project, which comprises of 10 phases, that the Company started to develop in 2007 on Phuket Bypass Road, is expected to generate sufficient income for the Company for the next 3 – 5 years. The project has already been permitted to be built by Phuket’s local authority. In addition, the Company also plans to develop “Baan Rock Garden Airport, Phase 3” in Samut Prakarn province, near the Suvarnbhumi Airport, as a continuation from the “Baan Rock Garden Airport, Phase 1-2,” which is currently in the process of document submission for approval by the authority. The Company plans to develop all these new projects by taking all the new laws into consideration, as well as regularly studying real estate market conditions. The Company believes it will be able to expand its operations in compliance with all the laws and regulations. 1.2 Production and project construction risk 1.2.1 Risk from price fluctuation of construction materials With new real estate supply by developers as well as high oil prices, construction material prices rose, adversely affecting construction project costs. Nevertheless, the company has made contracts with contractors regarding all construction materials, covering foundation – roof materials, irons and toilet ware, of the projects such as Baan Rock Garden By-pass 3 project - Baan Rock Garden By-pass 6 phase 1, Baan Rock Garden Airport phase 1 - phase 2, including forthcoming projects which are Baan Rock Garden By-pass 6 phase 2-10 and Baan Rock Garden Airport phase 3, including other projects in Bangkok and up-countries. These material costs were included in employment contracts in advance. Hence, the company is able to reduce its risks from any increase in construction material prices or uncertain conditions of construction materials. The company is able to manage such risks at a certain level and forecast expenses in advance. The company then adjusts costs in a timely manner so such changes will not affect its profit.
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