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Land & Development


Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Contents “√∫—≠ Financial Highlights

3

®ÿ¥‡¥àπ∑“ß°“√‡ß‘π Message from the Board of Directors

75 4

“ åπ®“°§≥–°√√¡°“√∫√‘…—∑œ Economic & Competitive Condition

76 5

¿“«–‡»√…∞°‘®·≈–°“√·¢àߢ—π The Company’s Business Profile

78 6

≈—°…≥–°“√¥Ì“‡π‘π∏ÿ√°‘® Major/Significant Events in 2005

79 9

‚§√ß°“√∑’Ë Ì“§—≠„πªï 2548 Management Analysis

83 11

∫∑√“¬ß“π·≈–°“√«‘‡§√“–Àå¢ÕßΩÉ“¬∫√‘À“√ Management Structure

85 13

‚§√ß √â“ß√–∫∫°“√®—¥°“√ Audit Committee’s Report

87 19

√“¬ß“π§≥–°√√¡°“√µ√«® Õ∫ Independent Certified Public Accountants’ Report

93 20

√“¬ß“π¢ÕߺŸâ Õ∫∫—≠™’√—∫Õπÿ≠“µ Financial Statements & Notes to Financial Statements

94 21

ß∫°“√‡ß‘π·≈–À¡“¬‡Àµÿª√–°Õ∫ß∫°“√‡ß‘π Shareholding & Organization Structure

95 68

‚§√ß √â“ߺŸâ∂◊ÕÀÿâπ·≈–‚§√ß √â“ßÕߧå°√ General Information

146 69

¢âÕ¡Ÿ≈∑—Ë«‰ª¢Õß∫√‘…—∑œ Information of Board of Directors, Audit Committee and Management

147 70

¢âÕ¡Ÿ≈¢Õߧ≥–°√√¡°“√∫√‘…—∑œ §≥–°√√¡°“√µ√«® Õ∫ ·≈–§≥–ºŸâ∫√‘À“√ Checklist to the SEC 56-2 From

148 72

√ÿª√“¬°“√∑’Ë°Ì“À𥵓¡·∫∫ 56-2 ¢Õß °.≈.µ Project Summary & Other References

√ÿªº≈‚§√ß°“√·≈–¢âÕ¡Ÿ≈Õâ“ßÕ‘ßÕ◊ËπÊ

150 73

151


HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Financial Highlights Key Financial Figures (Million Baht)

Key Financial Ratios 2003

Sales and Services Revenue Industrial Land Sales Industrial Estate Utilities SME Factory (Rent) SME Factory (Sales) Other Utility Industrial Services Project Residential Sales Sales of Undeveloped Property Total Revenue Net Income Total Assets Total Liabilities Total Shareholder’s Equity Earning Per Share (Baht) Par (Baht)

2004 1,529 854 377 95 93 110 2,050 1,383 7,061 2,532 4,529 0.35 1

2005 2,414 1,481 430 122 23 46 311 1,071 3,734 951 8,062 2,822 5,240 0.17 1

2,930 1,117 458 153 201 94 907 3,010 637 8,960 3,390 5,570 0.11 1

2003 Current Ratio (Times) Net Debt to Equity (Times) Return on Assets Return on Equity Net Profit Margin Book Value per Share (Baht) No. of Shares Outstanding (Million Shares)

2004

2005

3.40 0.32 22% 42% 67% 0.84

4.91 0.35 12% 19% 26% 0.90

4.86 0.41 7% 12% 21% 0.91

5,416.57

5,831.79

6,090.75

Net Debt To Equity

Total Assets And Total Liabilities Million Baht 10,000

Times 1.00 8,960

7,500

8,062

7,061

0.75

0.50

5,000 3,390 2,822

2,532

2,500

0.41 0.32

0.35

2003

2004

0.25

0.00

0 2003

2004

2005

Year

2005

Year

Total Assets Total Liabilities

Net Income

Total Revenue Composition Million Baht

Million Baht 4,000

1,071

3,000

2,000

2,000

3,734

249

2,050

3,010

1,500

80

1,383

951

1,000

521 2,930

637

2,414

1,000

500

1,529 0

0 2003

2004

2005

Year

2003

2004

2005

Year

Operating Revenue Other Revenues Sale of Undeveloped Property

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Message from the Board of Directors We are pleased to report that Hemaraj Land And Development Public Company Limited had a strong overall 2005 operating performance. For the Year 2005, Hemaraj Total Operating Revenue from core businesses was Baht 2,930 million versus Baht 2,414 million in 2004, or a 21 % improvement. Total Revenue reported for the Year 2005 was Baht 3,010 million versus Baht 3,734 million, a decrease of 19%. However, for the Year 2004, Total Revenue included Baht 1,071 million from the sale of undeveloped land, which was mainly property in Phuket. 2005 Net Income was Baht 637 million, a decrease of 33% in total from the previous year. However, Net Operating Income, excluding non-operating items and one time gain from sales of assets, was Baht 584 million, representing a 20% improvement over the previous year. Operating Gross Margins was 41 % with adjusted EBITDA margins at 29 %, both levels exceeding average industry margins. Financially, Hemaraj has maintained a strong balance sheet and cash flexibility to fund our growth plans. Hemaraj reported 2005 Year-end Total Assets of Baht 8,960 million including Baht 1,092 million in cash. Total Liabilities were Baht 3,390 million with Total Shareholders Equity of Baht 5,570 million. The Net Debt to Equity ratio was 0.41 to 1. Hemaraj continued to broaden the revenue base from complementary property platform customer solutions. This has shown success in 2005 with the SME factory area under sales and rental expanding by 22%, and the residential revenue, contributed by The Park Chidlom, growing by 191%. The Park Chidlom sales through 2005 were 158 units with a value of Baht 4,071 million of which Baht 1,218 million in revenue was realized through 2005. Completion is in 2006 with title transfers from the fourth quarter of 2006. The 2005 sale and lease of industrial land were 716 rai with a record high 51 contract and 23 new customers. Hemaraj customers are now 312 with 103 customers in our “Detroit of the East” automotive cluster. The year 2005 also witnessed continued petrochemical investments as well as food products, electronics, logistics, metal, plastics and others. During mid 2005, we entered a joint venture with The Siam Cement Public Company Limited subsidiary by purchasing a 25 % share with options to expand this in S I L Industrial Land, thus expanding Hemaraj’s multiple industrial estate locations to Saraburi and in Rayong. We also signed an exclusive power development joint venture with Glow Energy, our long time Tractebel Suez partner, and established Glow Hemaraj Energy Company to enter the Thailand IPP power bids upcoming. The Hemaraj strategy is to develop complementary property utility and infrastructure customer solutions that have predictable growing revenue and superior profit opportunities in order to optimize shareholder value. The Management and the Board of Directors are grateful to our stakeholders for entrusting us with this responsibility.

David R. Nardone President & Chief Executive Officer 27 March 2006

Sawasdi Horrungruang Chairman of the Board of Directors 27 March 2006

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Economic & Competitive Condition The 2005 Thai economy grew modestly as witnessed by the strong Foreign Direct Investment inflow amid several negative effects such as tsunami, disaster, drought, rising oil price, interest rate upward trend, and inflation. The 2005 Gross Domestic Production (GDP) grew by 4.5% compared to 6.2% in 2004. In 2005, the Private Consumption Index expanded only by 4.4% while Manufacturing production continued to grow by 11.2% and the capacity utilization rate slightly increased to 72.7%. For the year 2005, the Private Investment Index continuously grew by 11.2%. Export volumes for Thailand were increased to US$ 109.21 billion, a 14% increase. Imports increased by 25% to US$ 117.79 billion mainly resulting from the rising of crude oil price, the increasing of raw materials and capital goods. Service, income and transfer account remained surplus, which narrowed the current account deficit to US$ 3.71 billion. The balance of payments was US$ 5.42 billion surplus. The 2005 property market sales were in general very good. However, condominium sales especially the Grade A in CBD area of Bangkok continued to grow, despite higher costs. The industrial property market sector grew significantly by 49% year over year as a result of the continued expanding economy and significant increased in Foreign Direct Investment (FDI), especially in automotive and petrochemical industries. Sales of industrial land were 4,008 rai in 2005. The Board of Investment (BOI) project approval has set the new record with the number of approved projects increased to 1,254 projects in 2005. Thailand remained a growing regional production hub in the ASEAN automotive industry, particularly for one-ton pickups, with the production exceeding one million vehicles per year in 2006. Vehicle sales continued to grow despite the rising oil price and interest rate. Domestic vehicle sale in 2005 continued to growth with more than 700,000 vehicles and 440,000 vehicles for export.

GDP % 8.0

Capacity Utilization % % 110

6.9

7.0

100

6.2

6.0

90

4.8

5.0

4.5

80 70 60

4.0

3.0 2.0

40

1.0

30

50

0.0

2002

2003

Year

2005

2004

20

2002 Total

2003

2004

Vehicles & Parts

2005P

Year

Petrochemical

Thailand’s Auto Market Vehicles (ù000) units 1,200

*

1,000

*

800

*

600 400 200

*

*

*

*

*

0 1998

1999

Local Demand

2000

2001

Imports

2002

2003

2004

*

Production

2005 Year

Exports

Source: Global Insight Automotive, August 2005 Bank of Thailand, February 2006

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

The Company’s Business Profile Hemaraj Land And Development Public Company Limited was established in 1988 and listed on the Stock Exchange of Thailand in 1992. Hemaraj, Thailand’s leading industrial estates, utilities, property, and infrastructure customer solutions, has 4 Industrial Estates and 2 Industrial Zones (from April 2005) under development and management namely Hemaraj Chonburi Industrial Estate, Eastern Seaboard Industrial Estate (Rayong), Hemaraj Eastern Industrial Estate (Map Ta Phut), Hemaraj Eastern Seaboard Industrial Estate, S I L Industrial Land (Saraburi), and Rayong Industrial Land. Hemaraj sees promising continued opportunities in integrated infrastructure development that will be complementary to industrial estates. These are industrial estate utilities, SME factories for rent and sale, and other utilities and industrial services. Hemaraj has broadened into condominium development, “The Park Childom”, the exclusive high-rise residential condominium with projected revenue over Baht 5,850 Million.

Industrial Estate Development Hemaraj Chonburi Industrial Estate in Chonburi, Hemaraj Eastern Industrial Estate in Map Ta Phut, Rayong, and Eastern Seaboard Industrial Estate in Rayong (ESIE), and Hemaraj Eastern Seaboard Industrial Estate in Rayong and Chonburi are developed by Hemaraj and located on the Eastern Seaboard of Thailand. With a combined land area of 22,123 rai, 248 industrial customers and a comprehensive infrastructure, Hemaraj is positioned as a supplier of premium industrial estates. Hemaraj Chonburi Industrial Estate (“Hemaraj CIE”) with total area of 3,993 rai and BOI Zone II privileges has a customer base of steel and power industry with some auto parts, electronics, building materials and general industries. Customers include Honeywell, Wearnes, Chonburi Steel Mill Services, Nakornthai Strip Mill (NSM), Millennium Steel (MS), Bangkok Industrial Gas, Kitagawa, Toei Denshi, Fuji Xerox, and Glow IPP. Hemaraj Eastern Industrial Estate (“Hemaraj EIE”) with total area of 2,865 rai and BOI zone III privileges is located adjacent to the Map Ta Phut Petrochemical Complex and designed for heavy industry including steel, petrochemical and chemical industries. Hemaraj EIE customers include Siam Mitsui PTA, PTT Chemical, PTT Phenol, PTT Utility, Glow SPP, Solutia Chemical, BlueScope Steel, Siam United Steel and DOW Chemical. The petrochemical expansion has continued as witnessed from the various project expansions and new investments in recent years. Eastern Seaboard Industrial Estate (“ESIE”) with total area of 8,305 rai BOI Zone III privileges is a 60:40 joint venture with Siam Food Products Plc. Renown as the “Detroit of the East” for its world-class integrated industrial environment, ESIE is home to over 92 automotive supply-line companies, including GM, Ford, Mazda and 9 of the world’s top 10 automotive suppliers as well as 25 Toyota group companies. The ESIE prospect as an integrated automotive hub remains bright in clustering for the automotive industry in the region. Hemaraj Eastern Seaboard Industrial Estate (“Hemaraj ESIE”) comprises 6,960 rai with an option to buy 2 parcels of adjacent land with an aggregate area of 2,516 rai, or 9,476 rai of land in total, most of which is BOI Zone III privileges in Rayong while the rest is BOI Zone II privileges in Chonburi.

Hemaraj’s Increasing Land Sales

Number of Customers by Industry Total thru 2005 = 312 customers Steel/Metal, 22 (7%)

Cumulative Land Sales (rai) 8,000 7,000

Petrochemical, 41 (13%)

Auto, 103 (33%)

6,000 5,000 4,000 3,000

Others, 27 (9%)

2,000 1,000

Logistics, 10 (3%)

0

Electronics, 26 (8%)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Hemaraj CIE

Hemaraj EIE

ESIE

Rayong IL

SIL

Consumer, 47 (15%)

1 Rai = 1,600 Sq.m. or 0.4 acres *Included S I L/Rayong IL from 1 May 2005

Bldg. Material, 36 (12%)

*Included S I L/Rayong IL Industrial Customers from May 1, 2005

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This location is in the heart of the area selected for automotive, metal, electronics, plastics, and consumer products while expanding our customer base further in these areas and continuing the “Detroit of the East” auto cluster. In April 2005, Hemaraj has entered into an industrial property joint venture agreement with Cementhai Property, a subsidiary of The Siam Cement Public Company Limited to acquire shares in S I L Industrial Land Co., Ltd. The acquisition continues Hemaraj’s strategy to expand industrial estates in multiple strategic locations by adding over 7,000 rai of land under development and so industrial customers from two industrial zones, S I L Industrial Land (Saraburi) and Rayong Industrial Land. S I L Industrial Land (Saraburi), (“S I L”), with total area of 3,622 rai and BOI Zone II privileges, is in Nong Khae District Saraburi Province only 70 kilometers north of Bangkok with excellent logistic access being on Thailand’s main Highway 1. S I L thus provides an ideal location for north, east, southern and airport transportation. S I L is home to 45 customers including a number of Siam Cement Group companies and joint ventures from multiple countries. Rayong Industrial Land (“Rayong IL”), with total area of 3,468 rai and BOI Zone III privileges, is in Ban Khai Rayong Province approximately 22 kilometers from the Map Ta Phut deep-sea port. Rayong IL is home to 19 customers including a number of Siam Cement Group companies and joint ventures with high quality infrastructure provided.

Industrial Estate Utilities Industrial Estate Utility Revenues are through the sale of raw water, treated potable water/clearified water, gray water, waste water treatment, and general maintenance fees. This utility provision and infrastructure services are 100% operated, managed, and owed by Hemaraj to ensure the growing recurring income. The Asset base has been amortized in the cost of industrial land development. The revenue basis is mostly cost plus, which provides consistent gross margin. Revenue from Industrial Estate Utilities has been increasing significantly over the past 6 years, from Baht 222 million in 2000 to Baht 458 million in 2005. The utility revenues are more recurring, and more predictable income stream. Hemaraj has unique exposure to petrochemical, steel, power, and major utility users with highest revenue in the industry. Increasing new customers as well as expanding business of the current customers significantly contributes to utility consumption growth. Total water consumption (raw + clearified) has been increasing from 12.75 million cubic meters (mcm.) in 2000 to 27.91 million cubic meters (mcm.) in 2005, representing a 119% increase over the past 6 years.

Total Water Consumption MCM 27.91

30 23.90

25

27.02

20 15

13.08

16.44

12.75

10 5 0 2000

7

2001

2002

2003

2004

2005

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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SME Factories for Rent and Sales CUMULATIVE RENT AND SALES IN SQUARE METERS m2 200,000

150,000

133,997, +22% 109,713, +37%

100,000

36,317

80,028, +15% 50,000

56,537

34,536 73,396

77,460

2004

2005

45,492

-

2003 Sales

Rent

The attractiveness of Hemaraj SME factories for sales or rent is continuing. Hemaraj with a concept of expandable SME factories gives more flexibility to SME customers. Sizing from 750 square meters to 6,000 square meters offers manufacturers various alternatives to fit their needs for ready or ready to build factories with a quick entry, a low inital investment cost and flexibility for expansion. Under the competitive market, locating in the industrial estates with a fully integrated infrastructure SME factories provides advantage to the clustering of the industry for the supply chain management and ease to expand. As of December 31, 2005, 25 units or 56,537 square meters were sold and 39 units of 77,460 square meters were leased.

Other Utilities and Industrial Services Hemaraj also invests and extends industrial utilities and services for both inside and outside Hemaraj’s industrial estates by investing 40% in Elyo-H Facilities Management - a joint venture with Tractebel Suez, 100% in Eastern Pipeline Services, 100% in H-Construction Management and Engineering, 15% in Eastern Fluid Transport and holding 5% directly in GLOW IPP. In 2005, Hemaraj established Glow Hemaraj Energy, a 50/50 joint venture with Glow Energy to develop potential Independent Power Producer (“IPP”) projects to supply power to the Electricity Generating Authority of Thailand (“EGAT”). Also, in 2005, Hemaraj established “Hemaraj Water Company Limited” to produce, operate, and manage the industrial water to supply to customers both inside and outside our industrial estates and “SME Factory Company Limited” to manage and operate SME factory for rent and sales. These services provide Hemaraj’s revenue to be more predictable and more recurring to complement business growth.

Niche Selective Property Projects The Park Chidlom is located on five and one half rai at the prime residential area between Soi Somkid and Chidlom, including two rai of landscape pool and recreation space. The two residential towers: the 35-storey Somkid Tower and the 28-storey Chidlom Tower, with a total of 219 units comprise 87,000 gross square meters and 53,000 net square meters. The project has various unit types including 2 bedrooms of 140 to 148 square meters and 3 plus 1 bedrooms of 257 to 310 square meters as well as duplex penthouse units. Total Project Value is projected over Baht 5,850 million. The Park Chidlom with the Art Deco crowns of the two towers - is reminiscent of the luxury residences of New York and other international global markets. The buildings with the combination of luxury, privacy and harmony with nature feature lighting and designs that will provide an enduring landmark on the Bangkok skyline. Architectural and engineering standards, including the structural, security and environmental considerations, are based on the standards used in some of the world’s best residences.

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Major/Significant Events in 2005 In 2005, major/significant events are summarized as follows:

“The PARK CHIDLOM” Progress

Launched in early 2004, the 219-units or 53,068-square-meters luxury condominium – The Park Chidlom – has received an impressive market response. Over 2 years since the project commenced, its target revenue has increased to Baht 5,850 million in December 2005. Up to December 2005, Hemaraj has realized Baht 1,218 million of revenue from 158 units sold (approximately 70% of the total sellable area), with sales contract value amounting to Baht 4,071 million. The construction has progressed and the project is planned to start transferring at the end of 2006.

Joint Development Agreement with Glow Energy In March 2005, Hemaraj and Glow Energy PCL (Thailand’s largest private power producer with 1,670 MW) have entered into a Joint Development and Venture Agreement in order to develop potential Independent Power Producer (IPP) projects. The project aimed to supply part of the future power demand that will arise between 2011 and 2015 to the Electricity Generating Authority of Thailand (EGAT). As a result of the agreement, a joint development company, called Glow Hemaraj Energy Co., Ltd., was set up and 50:50 equity shares from Hemaraj and Glow Energy.

Joint Venture with Siam Cement’s Industrial Park Subsidiary In April 2005, Hemaraj acquired 25% of the issued capital shares of S I L Industrial Land Co., Ltd. (S I L), with an option to acquire the remaining 75% by way of a joint venture with Cementhai Property (2001) Public Company Limited (“CPPC”), a subsidiary of The Siam Cement Public Company Limited (“SCC”). S I L is an industrial park developer, having approximately 7,000 rai of land under development and management – 3,600 rai located in Saraburi province and 3,500 rai in Rayong province. As such, the acquisition allowed Hemaraj to expand industrial estates in multiple strategic locations in Thailand, added 50 new customers plus potential new customers from the Siam Cement group, and provided Hemaraj opportunities for further utility and SME factory development.

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Credit Rating By TRIS In September 2005, Hemaraj received the company rating of “BBB+” and the rating outlook of “stable” from TRIS Rating. According to TRIS, “The (‘BBB+’) rating reflects the company’s proven record in industrial estate development, recurring income from utilities sales, and a satisfactory balance sheet. The rating also takes into consideration the fluctuation of industrial estate development, the company’s business expansion into the residential condominium market and substantial investments during the next 2-3 years.” TRIS also stated “The ‘stable’ outlook reflects an expectation that Hemaraj will be able to maintain its strong position in industrial estate development to generate revenue from land sales and recurring income...”

Hemaraj EIE Expansion In 2005, Hemaraj acquired an additional area to support the expected future expansion of the petrochemical industry in the Eastern Industrial Estate (EIE) area.

H-ESIE Development

In December 2005, Hemaraj signed a contract with Thai Military Bank PCL. to secure Baht 1,060 million Credit Facilities Agreement aiming to fund its huge expansion and development of Hemaraj Eastern Seaboard Industrial Estate (H-ESIE). With a brightened outlook, H-ESIE is a continuation of the Eastern Seaboard Industrial Estate (ESIE) or “Detroit of the East” auto cluster. The 2,000 rai area of the first phase development is currently under development and to be available for sale in the early of 2006, with 700 rai allocated for a Customs Duty Free Zone.

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Management Analysis Operating Performance For the Year 2005, Hemaraj reported Total Net Income of Baht 637 million, a decrease of 33% compare with the same period of last year. However, Net Operating Earnings was Baht 584 million, representing an increase of 20%, compared with the same period of last year, due to an increase of Rental and Sales of SME factories as well as an increase in revenue from condominium sales. The decrease in Total Net Income of Baht 314 million was due only to a decrease in non-operating earnings of Baht 270 million, realized in 2004 through sales of securities, debt restructuring, property revaluation and the profit from sales of undeveloped land of Baht 141 million. Total Revenue was Baht 3,010 million compared with Baht 3,734 million of the same period of 2004, representing a 19% decrease. Total Operating Revenue from core businesses was Baht 2,930 million, increasing by 21% from the same period of 2004. In 2004, Total Revenue included the sales of 2 parcels of undeveloped land in Phuket and in Map Ta Phut Rayong, for total consideration of Baht 1,071 million. Industrial Land Sales for the Year 2005 were Baht 1,117 million, a 25% decrease from the previous year, being impacted by government water distribution constraints at mid year that are now resolved. Industrial land sales were from the sale and lease of 716 rai. Revenue from Utilities increased to Baht 458 million, reecting an increase of 7% compared to Baht 430 million in 2004. The Income from the Sales and Rental of Mini Factories were Baht 354 million compared to Baht 145 million in 2004, an increase of 144%. In 2005, contracts were signed with 13 factories rented and 7 factories sold. Revenue contribution from the Park in 2005 was Baht 907 million from total contract value of Baht 4,071 million, representing a 191% increase, compared with those in 2004 of Baht 311 million from total contract value of Baht 2,600 million.

Financial Status The consolidated Balance Sheet in 2005 is summarized as follows. Total Assets in 2005 were Baht 8,960 million, a 11% increase from Baht 8,062 million in 2004. Total Current Assets in 2005 were Baht 6,897 million compared to Baht 6,370 million in 2004. This includes Cash on Hand of Baht 1,092 million, Account Receivable of Baht 699 million and Land held for Real Estate development of Baht 4,995 million. Other Assets were Baht 2,062 million in 2005. This includes Land held for commercial purposes not under development of Baht 281 million, assets for rent of Baht 929 million, sinking funds of Baht 62 million, and long-term investment in other companies of Baht 447 million which includes the joint investment in S I L Industrial Land Co., Ltd. with the company in Siam Cement Group. Total Liabilities in 2005 were Baht 3,390 million a 20% increase from Baht 2,822 million in 2004. Total Shareholders Equity in 2005 was Baht 5,570 million versus Baht 5,240 million in 2004, or a 6% increase. The 2005 Net Debt to Equity ratio remained low at 0.41 to 1.

Risk Factors & Others External Risks The company faces investment and management risks associated with the government and Bank of Thailand policies, external political and economic environment in Thailand as well as in neighboring and other countries. In addition Foreign Direct Investment, rising oil price, interest rates, land cost, and construction cost are factors affecting the company businesses. The company is well aware of the risks and effects associated with such factors by having a systematic monitoring and analytical measurement to prevent and minimize such risks.

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Financial Risks An appropriate and sufficient source of funds with a reasonable cost of capital will support the company’s competitiveness. Since the economic crisis, the company’s financial structure has been continuously strengthening resulting in improving in net debt to equity ratio. In 2005 the company has the net debt to equity ratio of 0.41 to 1. The operating performance, financial status, economic environment in Thailand and other countries, an access to financial and capital market, and interest rates are factors to the company financial management.

New Projects In accordance with Thailand’s Power Development Plan 2004, 12,755 MW of net new electricity generating capacity is expected to come on line between 2011 and 2015. It is expected that part of this new capacity would be tendered for bidding by private IPPs, who would supply power to EGAT under long-term agreements. Glow and Hemaraj have entered into an exclusive agreement to develop any such IPPs and set up a joint development company for this purpose. The company is called Glow Hemaraj Energy Company Limited. Hemaraj have a 50% stake in projects of 350 MW and a 35-40% stake in larger projects. Glow has been in charge of the general and operational management of the new project companies and of the construction supervision. (The Power Development Plan 2004 was endorsed by EGAT’s board of directors in May 2004 and received Cabinet approval in August 2004)

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Management Structure Board of Directors 1. 2. 3. 4. 5. 6. 7. 8. 9.

Mr. Sawasdi Horrungruang Mr. Thavorn Anankusri Mr. David Richard Nardone Mr. Sudhipan Charumani Mr. Peter John Edmondson Mrs. Punnee Worawuthichongsathit Mr. Vivat Jiratikarnsakul Ms. Pattama Horrungruang Ms. Somphong Wanapha

Chairman of the Board of Directors Director Managing Director Independent Director Independent Director Independent Director Director Director Director

The Board of Directors has the authority in formulating visions, policies and strategies of the company being pursued to continue in increasing shareholders values including in reviewing the company business plan, and management control in accordance with the laws, SET’s and SEC’s rules and regulations, objectives, restrictions, regulations, the resolutions of the shareholder’s meeting, and 15 guidelines of Good Corporate Governance.

Executive Committee 1. 2. 3. 4. 5.

Mr. Sawasdi Horrungruang Mr. Thavorn Anankusri Mr. David Richard Nardone Mr. Vivat Jiratikarnsakul Ms. Pattama Horrungruang

Chairman of the Board of Directors Vice Chairman of the Board Executive Director Executive Director Executive Director

The Executive Directors shall have the duty as assigned by the Board of Directors in formulating and reviewing specific strategic or policy issues in lieu of committees or reviewing the company business plan, budget, and investment prior to submission to the Board of Directors or other issues as assigned by the Board of Directors.

Audit Committee 1. Mr. Sudhipan Charumani 2. Mr. Peter John Edmondson 3. Mrs. Punnee Worawuthichongsathit

Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee

The Audit Committee has the following duties and responsibilities to the Company’s Board of Directors: 1. To review that the Company’s Financial reports are correct and sufficient; 2. To review that the Company has appropriate and efficient internal control and internal audit systems; 3. To review that the Company complies with laws relating to securities and securities markets, as well as with SET’s rules and regulations and any other law relating to the Company’s business; 4. To consider, select and propose the appointment of the Company’s statutory auditor and to propose his professional fees; 5. To consider whether the Company discloses correct and adequate information with regards to third party transactions or any transactions with a conflict-of-interest tendency; 6. To include in the Company’s annual report the Audit committee’s own review result, expressing opinion on the Company’s internal control system, as well as on the preparatory procedure and data disclosure of the financial statements. This review report shall be signed by the audit committee chairman; 7. To report the Audit Committee’s performance to the Company’s Board of Directors at least on quarterly basis; 8. To participate in the appointment, removal, work assessment and remuneration granting of the internal auditor; and 9. To perform any other work that the Audit Committee agrees to, as may be assigned by the Company’s Board of Directors.

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Remuneration Committee The Company has not formed a Remuneration Committee to date. Compensations for general staff below the top-executive level are determined by the Management, taking into account such factors as the basic in-house rates under the Executive Board’s guidline, the prevailing employment environments, actual work performance or contribution, as well as the degree of dedication shown to the Company. These consideration factors, which provide necessary encouragement to quality and key staff, are also utilized by the Executive Board in its consideration of top executives’ employments. The compensation to the Board of Directors are considered and proposed by the Board of Directors for Shareholders’ formal approved at the Company’s Annual General Meeting, as in relevent cases of joint-venture or subsidiary companies. The objective in assessing the compensation level of Directors is to be generally in line with the market and to compensate based on contribution and the performance and financial position of the Company.

Good Corporate Governance Committee Although the company does not set up a specific GCG Committee, the Company’s Board of Directors has given the importance to the promotion and effective application of GCG principles, especially with regard to equitable treatment and fairness to all stakeholders, correct and adequate information disclosure and transparency of operation. Such stakeholders, apart from individual shareholders, would includes the Company’s own management personnel and employees, customers, suppliers, outside organizations and businesses, joint-venture partners, creditors, regulatory bodies, as well as the communities in which it has operations.

Company Management 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Mr. David Richard Nardone Mr. Vivat Jiratikarnsakul Ms. Pattama Horrungruang Mr. Khamhoung Ratsamany Mr. Tanin Subboonrueng Mr. Sirisak Kijraksa Ms. Somjai Wachiraha Mr. Niphone Harnpatanapanich Mr. Paopitaya Smutrakalin Ms. Jinnapat Tongviseskul Ms. Ladda Rojanavilaivudh Ms. Anchalee Parsertchand Ms. Chantana Hinkaew Mr. Apichat Trongsukson

President & Chief Executive Officer Executive Vice President Senior Vice President & Chief Financial Officer Director - Industrial Estate Operations Director - Development Director - Accounting Director - Finance Director - Residential Project Planning Director - Planning and Investor Relations Director - Residential Customer Development Director - Industrial Customer Development Director - Industrial Customer Development Director - Corporate Marketing Assistant Director - Information System & Services

The Management shall have the responsibilities as appropriately assigned by the President & CEO in order to manage the business of the company and to implement the strategies and policies as approved by the Board of Directors of the company.

Selection of Company’s Director and Management The Company has not appointed a Nomination Committee to date. The recommendation of new Directors to serve on the Board shall be deliberated by the Board of Directors. A Director nominee will be proposed by, any Directors, shareholders, or others for consideration. The objective in selecting Directors is to be able to attract knowledgeable experienced members with visions and reputations. After approval, the Board of Directors shall propose the candidates to the Shareholders Meeting for approval. According to the company rules, one third or nearly to one third of the Board of Directors who completed their terms shall be retired by rotation in the Shareholders Meeting every year but can be reelected regard to the company guidelines. 14

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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Remuneration for Director and Management The total remuneration for 9 Directors in 2005 was Baht 16,230,000.00 The total remuneration for 17 Executive Committee and Management in 2005 was Baht 111,441,275.11

Good Corporate Governance The Board of Directors are collectively responsible for the Good Corporate Governance of the Company, and in their role to direct monitor and supervise the strategy policy and control of the Company provide this direction to the Management of the Company to be adhered to. Good Corporate Governance is developed in conformity with the 15 guidelines of the SET’s Code of Best Practices. 1.

Good Corporate Governance Policy The Company policy is to fully embrace the principles of Good Corporate Governance and this is the responsibility of the Board of Directors specifically to ensure its full adherence within the organization and by practice within the management and organization of the Company. The underlying principles of good corporate governance relies on the principles of equitable treatment and fairness of all stakeholders, the full and meaningful disclosure, and the transparency of the Company its operations and information.

2. Rights and Equitable Treatment to Shareholders All shareholders are invited to the annual shareholder’s meeting. The company would send out an invitation letter and agenda of each meeting to the shareholders prior to the meeting for their consideration. Shareholders have voting rights equal to the number of shares owned and must exercise all eligible votes to safeguard their investment in voting for a resolution, an opinion for a significant decision making, for example, regulations amendment, capital increase. All shareholders have right to receive correct, up-to-date, fully disclosed information. Shareholders wishing to appoint a proxy representation may appoint any person or may elect to appoint the Independent Director and Chairman of the Audit Committee as recommended by the SEC. 3. Rights of Various Groups of Stakeholders The company realizes and respects the rights of various groups of stakeholders, including shareholders, minority shareholders, employees, customers, creditors, vendors, the public and communities through various procedures such as the Shareholders’ Meeting, providing information on employee’s rights concerning welfare benefits, receiving all inquiries from customers and nearby communities, environmental education and community programs in the areas where we operate, contracts with customers and ongoing dialogue, and contracts entered with vendors and suppliers. 4. Shareholders’ Meeting A Shareholders’ Meeting is to be held at least once a year. Prior to the meeting, not only does the company send an invitation letter along with the Shareholder’s Meeting agenda in advance, but also publish the meeting in the local media to ensure the full disclosure of the scheduled meeting. During the meeting, the Board of Director provides Shareholders’ information and gives opportunity to Shareholders to raise any concerns and/or issues related to the company’s operation. The Board of Director will also directly monitor and supervise the company’s management to efficiently operate and manage as the business plan. Additionally Shareholders could contact the company anytime through the Investor Relations Department and the company website. 5. Leadership & Vision The company’s Board of Directors, selected to have a broad experience level, formulates the company’s vision, strategy, oversight of its business plan, and oversees a level of control and risk management of its operation. The Board of Directors objective is to maximize the return to shareholders in a controlled way and according to the goodcorporate governance.

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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6. Conflict of Interest Conflict of Interest The Company’s Board of Directors and Management have been acknowledged and realized the importance of legal and ethical conflict of interest and related transactions guidelines. The company has disclosed, in accordance with the regulations of Stock Exchange of Thailand, such information, detail and reason/necessity, if any in the company’s Annual Report and the 56-1 Form. The Company further uses the Audit Committee, internal auditors, external auditors, and external lawyers to review compliance. Insider Trading Controls The Company’s Board of Directors and Management uses a number of safeguards to prevent the risks that may occur as recommended by the Audit Committee, the outsourced internal auditor, external auditor, and professional legal advisors. The Company has set an internal control system to follow SET’s rules and regulations in preventing internal information disclosure to outsiders prior to the company press release. The Company also informs the Board of Directors and Management about the notification of SET and SEC concerning rules, procedures and disclosure of securities holdings and changes in holdings. 7.

Business Ethics The Company policy from the Board of Directors, communicated through top management to both management and employees in the employee handbook is to conduct business with sound ethics toward the company, all stakeholders, and the public.

8. Balance of Power for non-management Directors The company’s Board of Directors consists of 9 directors which are: Executive Directors 5 persons Independent Directors 3 persons Directors 1 person Therefore, the company has 3 independent directors and the other 1 director, who are not involved in the daily operations of the company. 9. Aggregation or Segregation of Positions The company’s Chairman of the Board of Directors is not the same person as the President & CEO and the structure of the Board of Directors consists of three Independent Directors with highly experience and knowledge in accounting, finance, and other businesses. This creates a balance between the interests and representation of the shareholders and the management as well as independent persons whom could review the company’s business plans, controls, and create a balanced view according to the company Audit Committee Charter. 10. Remuneration for Director and Management The remuneration of the company’s Directors has been considered and proposed for approval in the Shareholders Meeting. The Remuneration Compensation is in order to be competitive in the market in attracting highly qualified individuals, to reflect the contributions and performance of the individuals in meeting the company objectives, and consistent with the performance of the Company. 11. Board of Directors’ Meeting During 2005, from January to December, the company held 8 Board of Directors’ Meetings. There were calls for regular meetings and/or for emergency meetings when need of the directors/committee’s consideration, opinion and decision by sending out prior notice, invitation and agenda to all directors and committee.

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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Name of Directors Mr. Sawasdi Horrungruang Mr. Thavorn Anankusri Mr. David Richard Nardone

Position

Number of Attendance/Total Meetings

Chairman of the Board of Directors

8/8

Director

8/8

Managing Director

8/8

Mr. Sudhipan Charumani

Independent Director

7/8

Mr. Peter John Edmondson

Independent Director

4/8

Mrs. Punnee Worawuthichongsathit

Independent Director

6/8

Mr. Vivat Jiratikarnsakul

Director

8/8

Ms. Pattama Horrungruang

Director

8/8

Mr. Somphong Wanapha

Director

6/8

12. Committee The authority and responsibility of the Board of Directors and Committee are clearly defined. The report of the Board and Committees’ meeting as well as any items for further consideration are reviewed by the related Committee for the accuracy and completeness before distributing out for further action. 13. Controlling System & Internal Audit The Audit Committee is appointed to be responsible to analyze, review, follow, and discuss with the external auditor, the outsourced internal audit, and the management for the accuracy, completeness and accountability of the financial statements and the company internal control system effectiveness including giving the observation notes according to related laws, regulations of the Government and SET, General Accepted Accounting Principles and Good Corporate Governance. The Audit Committee meets and reports to the Board of Directors at least quarterly and has an annual Audit Committee Report as included in the Company Annual Report. 14. Report from the Board of Directors on the company’s Financial Statements With a thoroughly consideration and carefully review the company’s financial statements, the Board of Directors will ensure its follow the Generally Accepted Accounting Standard. The company has regularly exercised an appropriate accounting policy and standard. In addition, the Board of Directors as the plan recommends by the Audit Committee and Management to appoint the outsiders to be the internal Auditors, to observe the company’s internal control system and to verify the completeness and accuracy of the company’s financial statements. 15. Relations with Investors Investor Relations Department has been established for individual investors or stockholders benefits and interests as the company sees the significant of their investments and values. The analyst meetings are held consistently to meet with investors and analysts to provide on the updated company financial results and businesses. A site visit or company visit are always welcome by contacting the Investor Relations Department. The company information and press releases can also be found in the company website at www.hemaraj.com. Or email any concerns to invest@hemaraj.com.

Dividend Policy After having considered investment plan and cash flow, the company will pay a minimum of 50% of net profit for dividend payment on each year, when the company has not accumulated loss. In addition, dividend policy of the subsidiary companies is based on the business performance and cash flow in each year.

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Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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Related Party Transactions 1.

Related Party Transactions during the year During the year of 2005 and 2004, the Company had certain transactions with its subsidiaries associated companies and related companies relating to normal business operations (please see Note to financial statement No.4)

2. The Necessity and appropriateness of Transactions Transactions with related parties occurred during the year were relating to the Company’s normal business operations with fair and reasonable market price and were considered and approved by Board of Directors, Executive Committee or top management, as the cases may be, including reviewing by the Audit Committee according to the regulations as noted in the Company’s Articles of Association. 3. Policy and Criteria in approving related party transactions. Transactions with related parties occurred and will occur in the future will be proposed and approved by top management, Executive Board, Board of Directors or Shareholders’ Meeting, as the case may be, according to as noted in the Company Articles of Association. The Company has the policy for related party transactions as follows: -

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Transactions with related parties are related to normal business operations with fair and reasonable price. The Audit Committee will review those related party transactions to be compliance with the regulations as the Company’s Articles of Association. The Company will disclose those related party transactions according to the related Rules and Guideline of the Stock Exchange of Thailand and The Securities and Exchanges Commission of Thailand and according to the generally accepted accounting principles.

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Audit Committee’s Report The Audit Committee of Hemaraj Land And Development PLC was set up in accordance with the resolution of Extraordinary General Meeting of Shareholders No. 1/1999 The Committee comprises the following members :1) Mr. Sudhipan Charumani Committee Chairman and Independent Director 2) Mr. Peter J. Edmondson Independent Director 3) Mrs. Punnee Worawuthichongsathit Independent Director The Audit Committee held four formal meetings during 2005 to review the quarterly financial statements of the Company and its consolidated position, as well as to monitor good governance practice and assess internal control reliability. Particular attention was paid to issues of related party transactions and contingent liabilities, together with the adequacy of information disclosure and provisions thereon. Reports were received from and meetings held with the external auditor, the outsourced internal auditor, the external legal advisor and Company management. The Company obtained for 2005 an unqualified Auditor’s Report for its financial statements and internal control matters. Moreover, the company received a “BBB+” rating from TRIS based on a mid-2005 financial assessment, as well as achieving a 2nd quatile ranking amongst the Thai listed companied, as published in the 2005 Corporate Governance Report under the National CG Committee’s patronage. Such occurrences could be deemed attributable to the Company’s continued effort to formalize its corporate governance practice. A competent outsourced audit firm continued to be employed for the Company’s and its subsidiaries’ internal audits, with detailed work programs and remuneration being jointly considered and approved by the Audit Committee and the Management on an annual basis. No significant weaknesses were detected during the 2005 internal audit work with regard to accounting procedures and records, financial presentation, compliance with relevant law and regulations, safekeeping of assets, or any aspects of internal control. To the best of the Committee’s knowledge, the financial statements presented in the Company’s 2005 Annual Report are fair and accurate. The Committee has recommended to the Board of Directors, for proposal to the Annual General Meeting of Shareholders, that Professor Kesree Narongdej of A.M.T & Associates be re-appointed as the Company’s external auditor for the Financial Year ending 31 December 2006, at a remuneration of 6.20% above that in 2005 due to increased work volume.

(Sudhipan Charumani) Chairman of the Audit Committee 24 February 2006

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Independent Certified Public Accountants’ Report To the Shareholders of Hemaraj Land and Development Public Company Limited I have audited the consolidated balance sheets of Hemaraj Land and Development Public Company Limited and its subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of changes in shareholders’ equity, income and cash flows for the years then ended. I have also audited the financial statements for the same periods of Hemaraj Land and Development Public Company Limited. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hemaraj Land and Development Public Company Limited and its subsidiaries and of Hemaraj Land and Development Public Company Limited as of December 31, 2005 and 2004, the results of their operations, and cash flows for the years then ended in conformity with generally accepted accounting principles.

(KESREE NARONGDEJ) Certified Public Accountant Registration No. 76

A.M.T. & ASSOCIATES Bangkok, Thailand February 14, 2006

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Balance Sheets BAHT CONSOLIDATED ASSETS

NOTE

THE COMPANY ONLY

As of 31 st As of 31 st As of 31 st As of 31 st December, 2005 December, 2004 December, 2005 December, 2004

CURRENT ASSETS Cash and deposits at financial institutions

5

761,520,077.63

572,723,102.91

493,179,611.34

5, 6 and 28

307,334,496.20

330,472,529.31

30,325,817.34

322,968,295.34

22,968,285.32

-

400,000,000.00

-

400,000,000.00

73,358,697.02

131,993,832.87

73,358,697.02

131,993,832.87

Current investments Time deposits Promissory notes - financial institutions

5 and 6

Marketable securities

6

Trade account receivables

7

Related parties, net Other parties, net Short - term loans and advance to related parties Cost of real estate developments, net

4 9, 28 and 29

Other current assets Total Current Assets

1,913,782.19

-

1,491,438.76

-

697,130,273.32

551,556,427.09

176,765,754.51

8,791,802.86

5,108,142.82

2,179,164.80

765,205,421.50

666,666,375.71

4,995,426,423.49

4,657,410,909.00

1,555,750,702.68

1,209,233,372.26

33,011,421.00

23,358,107.50

22,913,593.14

9,840,081.85

6,897,941,346.78

6,369,547,361.51

3,411,633,514.29

2,756,828,247.07

270,693,466.78

14,733,157.47

3,635,164,982.96

3,348,673,842.04

NON - CURRENT ASSETS Investments for using the equity method

2, 4 and 28

Other long - term investments Related parties, net

4 and 28

1,500,000.00

1,500,000.00

-

-

Other parties, net

10 and 28

175,283,002.50

176,000,002.50

175,000,002.50

175,000,002.50

12,264,871.47

11,199,558.22

12,264,871.47

11,199,558.22

11

303,578,100.66

166,171,132.78

37,884,237.08

29,059,354.80

12 and 28

928,613,784.91

797,134,486.34

50,595,056.46

51,769,726.06

13 and 28

281,064,250.00

281,064,250.00

281,064,250.00

281,064,250.00

Long - term loans to other parties Property, plant and equipment, net Assets for rent, net Other non - current assets Leasehold land and land held for commercial purposes, net Sinking fund, net

14 and 29

Others Total Non - Current Assets

TOTAL ASSETS

62,235,152.50

197,836,827.69

27,328,047.99

129,902,023.93

26,849,124.95

45,587,491.56

20,014,950.94

26,639,320.96

2,062,081,753.77

1,691,226,906.56

4,239,316,399.40

4,053,308,078.51

8,960,023,100.55

8,060,774,268.07

7,650,949,913.69

6,810,136,325.58

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Balance Sheets BAHT CONSOLIDATED LIABILITIES AND SHAREHOLDERS’ EQUITY

NOTE

THE COMPANY ONLY

As of 31 st As of 31 st As of 31 st As of 31 st December, 2005 December, 2004 December, 2005 December, 2004

CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions

28

635,000,000.00

400,669,236.80

385,000,000.00

300,000,000.00

341,914.22

-

1,630,680.00

-

308,863,189.00

272,860,013.39

133,825,993.38

100,321,405.19

Trade account payables Related parties, net Other parties, net Current portion of long - term loans Related person

4 and 17

31,399,999.92

21,891,999.93

-

-

Others

18 and 28

95,046,249.98

27,429,000.01

-

-

4

32,041,424.66

40,039,482.05

51,557,130.43

24,462,416.08

8

125,673,285.53

363,900,208.00

22,802,980.11

239,380,754.63

8,275,479.47

12,666,917.78

3,317,808.23

2,585,753.44

-

20,000,000.00

-

20,000,000.00

Short - term loans and advance from related parties Other current liabilities Income received in advance Accrued interest expenses Account payable shares purchase Other account payable

4,999,616.39

14,181,548.41

1,085,636.39

1,341,509.49

Accrued specific business tax and transfer fee

66,603,797.16

42,806,081.82

44,813,030.63

12,283,026.60

Others

109,007,181.43

74,037,091.02

73,053,649.71

52,549,042.83

1,417,252,137.76

1,290,481,579.21

717,086,908.88

752,923,908.26

-

-

1,276,109,788.82

1,153,469,462.92

Total Current Liabilities

NON - CURRENT LIABILITIES Long - term loans from related party

4 and 16

Long - term loans from related persons

4 and 17

9,752,000.09

21,144,000.07

-

-

Other long - term loans

18 and 28

1,549,551,255.31

1,143,127,150.06

391,600,000.00

11,400,000.00

19

242,520,547.95

224,520,547.95

242,520,547.95

224,520,547.95

Provisions Other non - current liabilities Retention payables

69,609,949.01

58,831,231.71

33,128,074.07

15,190,072.58

Guarantee Received

74,934,516.00

57,962,479.17

5,036,500.00

5,782,900.00

11,529,745.97

12,548,446.64

-

-

Deferred leasehold right income Others Total Non - Current Liabilities

TOTAL LIABILITIES

14,037,041.86

12,141,194.35

10,868,923.66

4,767,309.01

1,971,935,056.19

1,530,275,049.95

1,959,263,834.50

1,415,130,292.46

3,389,187,193.95

2,820,756,629.16

2,676,350,743.38

2,168,054,200.72

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Balance Sheets BAHT CONSOLIDATED

THE COMPANY ONLY

NOTE

As of 31 st December, 2005

As of 31 st December,2004

As of 31 st December, 2005

As of 31 st December, 2004

20 and 21

15,000,000,000.00

13,000,000,000.00

15,000,000,000.00

13,000,000,000.00

6,090,749,424.00

5,831,793,766.00

6,090,749,424.00

5,831,793,766.00

SHAREHOLDERS’ EQUITY Share capital - Baht 1 par value Authorized share capital Common stocks 15,000,000,000 shares in 2005 and Common stocks 13,000,000,000 shares in 2004 Issued and paid-up share capital Common stocks 6,090,749,424 shares for the year 2005 and 5,831,793,766 shares for the year 2004 Warrants

20 and 21

10,249,352.11

10,982,820.20

10,249,352.11

10,982,820.20

Premium (discount) on common stocks, net

20 and 21

(2,803,105,284.71)

(2,618,167,546.01)

(2,803,105,284.71)

(2,618,167,546.01)

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

(18,588,060.17)

28,058,104.49

(18,588,060.17)

28,058,104.49

Currency translation differences

(24,922,881.78)

(27,155,313.03)

(24,922,881.78)

(27,155,313.03)

327,238,668.17

295,396,979.53

212,087,704.05

180,246,015.41

1,392,977,952.69

1,121,173,313.68

1,508,128,916.81

1,236,324,277.80

4,974,599,170.31

4,642,082,124.86

4,974,599,170.31

4,642,082,124.86

596,236,736.29

597,935,514.05

-

-

5,570,835,906.60

5,240,017,638.91

4,974,599,170.31

4,642,082,124.86

8,960,023,100.55

8,060,774,268.07

7,650,949,913.69

6,810,136,325.58

Retained earnings Appropriated - legal reserve Earnings Total Equity of Parent Company’s Shareholders Minority interest Total Shareholders’ Equity

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

22

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Appropriated - legal reserve

Dividend

Exercise of Warrant

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Dividend

Exercise of Warrants

Ending balance as of December 31, 2004

-

5,831,793,766.00

415,223,705.00

-

-

-

Net profit

22

-

Net gain (loss) not recognized in the income statement

Appropriated - legal reserve

-

Minority interest

-

Currency translation differences

Beginning balance as of January 1, 2004

10,982,820.20

(1,176,072.60)

-

-

-

-

-

-

-

12,158,892.80

5,416,570,061.00

Ending balance as of December 31, 2005

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

(733,468.09) 10,249,352.11

258,955,658.00

-

-

-

-

-

-

-

10,982,820.20

Warrants

6,090,749,424.00

-

22

Minority interest

-

-

Net profit

-

-

5,831,793,766.00

Net gain (loss) not recognized in the income statement

NOTE

Currency translation differences

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

Beginning balance as of January 1, 2005

Issued and paid-up share capital

(2,618,167,546.01)

(296,539,322.80)

-

-

-

-

-

-

-

(2,321,628,223.21)

(2,803,105,284.71)

(184,937,738.70)

-

-

-

-

-

-

-

(2,618,167,546.01)

Premium (discount) on common stocks

28,058,104.49

-

-

-

-

-

(75,503,476.95)

-

(75,503,476.95)

103,561,581.44

(18,588,060.17)

-

-

-

-

-

(46,646,164.66)

-

(46,646,164.66)

28,058,104.49

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

(27,155,313.03)

-

-

-

-

-

(341,565.54)

(341,565.54)

-

(26,813,747.49)

(24,922,881.78)

-

-

-

-

-

2,232,431.25

2,232,431.25

-

(27,155,313.03)

Currency translation differences

BAHT

295,396,979.53

-

-

47,532,172.02

-

-

-

-

-

247,864,807.51

327,238,668.17

-

-

31,841,688.64

-

-

-

-

-

295,396,979.53

Appropriated Legal reserve

1,121,173,313.68

-

(288,195,639.35)

(47,532,172.02)

-

950,643,440.31

-

-

-

506,257,684.74

1,392,977,952.69

-

(333,187,445.17)

(31,841,688.64)

-

636,833,772.82

-

-

-

1,121,173,313.68

Earnings (Deficit)

Retained earnings (deficit)

597,935,514.05

-

(85,919,594.48)

-

92,969,311.85

-

-

-

-

590,885,796.68

596,236,736.29

-

(82,960,088.20)

-

81,261,310.44

-

-

-

-

597,935,514.05

Minority interest

5,240,017,638.91

117,508,309.60

(374,115,233.83)

-

92,969,311.85

950,643,440.31

(75,845,042.49)

(341,565.54)

(75,503,476.95)

4,528,856,853.47

5,570,835,906.60

73,284,451.21

(416,147,533.37)

-

81,261,310.44

636,833,772.82

(44,413,733.41)

2,232,431.25

(46,646,164.66)

5,240,017,638.91

Total

FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Statements Of Changes In Shareholders’ Equity Consolidated

24

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22 22 21

Net gain (loss) not recognized in the income statement

Net profit

Appropriated - legal reserve

Dividend

Exercise of Warrant

Top of Section Next Section -

22 22 21

Net gain (loss) not recognized in the income statement

Net profit

Appropriated - legal reserve

Dividend

Exercise of Warrants

Ending balance as of December 31, 2004

-

(1,176,072.60) 10,982,820.20

415,223,705.00

-

-

-

-

-

-

12,158,892.80

10,249,352.11

(733,468.09)

-

-

-

-

-

-

10,982,820.20

Warrants

5,831,793,766.00

-

-

Currency translation differences

5,416,570,061.00

Beginning balance as of January 1, 2004

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

6,090,749,424.00

Ending balance as of December 31, 2005

258,955,658.00

-

-

5,831,793,766.00

Currency translation differences

NOTE

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

Beginning balance as of January 1, 2005

Issued and paid-up share capital

(2,618,167,546.01)

(296,539,322.80)

-

-

-

-

-

-

(2,321,628,223.21)

(2,803,105,284.71)

(184,937,738.70)

-

-

-

-

-

-

(2,618,167,546.01)

Premium (discount) on common stocks

28,058,104.49

-

-

-

-

(75,503,476.95)

-

(75,503,476.95)

103,561,581.44

(18,588,060.17)

-

-

-

-

(46,646,164.66)

-

(46,646,164.66)

28,058,104.49

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities

BAHT

(27,155,313.03)

-

-

-

-

(341,565.54)

(341,565.54)

-

(26,813,747.49)

(24,922,881.78)

-

-

-

-

2,232,431.25

2,232,431.25

-

(27,155,313.03)

Currency translation differences

180,246,015.41

-

-

47,532,172.02

-

-

-

-

132,713,843.39

212,087,704.05

-

-

31,841,688.64

-

-

-

-

180,246,015.41

Appropriated Legal reserve

1,236,324,277.80

-

(288,195,639.35)

(47,532,172.02)

950,643,440.31

-

-

-

621,408,648.86

1,508,128,916.81

-

(333,187,445.17)

(31,841,688.64)

636,833,772.82

-

-

-

1,236,324,277.80

Earnings (Deficit)

Retained earnings (deficit)

4,642,082,124.86

117,508,309.60

(288,195,639.35)

-

950,643,440.31

(75,845,042.49)

(341,565.54)

(75,503,476.95)

3,937,971,056.79

4,974,599,170.31

73,284,451.21

(333,187,445.17)

-

636,833,772.82

(44,413,733.41)

2,232,431.25

(46,646,164.66)

4,642,082,124.86

Total

FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Statements Of Changes In Shareholders’ Equity The Company Only

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Statements Of Income FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 BAHT NOTE

CONSOLIDATED 2005 2004

THE COMPANY ONLY 2005 2004

REVENUES Sales of land Sales of pre-fabricated factory Sales of condominium Service income Income from increase of salable area Other income Profits from sales of investments Interest income Management income Commission income Gain on dividend Gain on exchange rate Adjustment of loss on decline in value of estate development cost Guarantee income Others Share of profits from investments for using the equity method - subsidiary companies Share of profits from investments for using the equity method - associated companies

31 31 31 4 and 31 23

1,116,933,266.63 201,536,063.08 907,290,731.07 710,446,104.70 -

2,548,643,833.44 26,206,689.35 311,280,904.95 602,419,985.81 43,875,602.00

53,375,337.50 27,630,000.00 907,290,731.07 148,968,667.85 -

916,491,225.00 4,290,000.00 311,280,904.95 120,006,303.50 43,875,602.00

23,012,815.81 8,460,771.79 2,380,916.63 12,730,341.32 477,477.89 25,714,681.46

77,488,146.44 13,065,187.18 3,549,513.00 74,651,518.64 21,195,000.00 9,879,075.30

23,012,815.81 42,323,176.54 22,980,109.91 44,214,166.16 12,280,344.32 477,477.89 15,240,049.17

77,488,146.44 34,764,281.96 12,896,612.73 39,873,761.93 3,549,513.00 74,651,518.64 21,195,000.00 3,818,795.07

2 and 4

-

-

269,215,072.52

556,016,936.99

2 and 4

960,339.31

1,559,628.03

960,339.31

1,559,628.03

3,009,943,509.69

3,733,815,084.14

1,567,968,288.05

2,221,758,230.24

680,885,637.34 153,453,568.46 486,719,168.03 447,078,298.94 442,163,707.64

1,665,990,946.64 21,792,621.41 173,159,452.98 403,899,223.04 449,555,225.85

35,833,248.33 22,212,758.74 486,719,168.03 110,049,086.76 233,445,256.28

839,664,763.87 4,439,715.84 173,159,452.98 79,915,305.97 244,001,563.35

18,000,000.00 717,000.00

18,049,315.07 109,883.28 21,195,000.00

18,000,000.00 -

18,049,315.07 116,824.29 21,195,000.00

2,229,017,380.41

2,753,751,668.27

906,259,518.14

1,380,541,941.37

780,926,129.28 27,303,660.60 35,527,385.42

980,063,415.87 42,117,541.39 20,250,233.07

661,708,769.91 12,715,119.18 12,159,877.91

841,216,288.87 16,489,959.31 -

718,095,083.26 (81,261,310.44)

917,695,641.41 (92,969,311.85)

636,833,772.82 -

824,726,329.56 -

636,833,772.82

824,726,329.56

636,833,772.82

824,726,329.56

636,833,772.82

125,760,821.92 156,288.83 950,643,440.31

636,833,772.82

125,760,821.92 156,288.83 950,643,440.31

4 4 4

9 and 13

Total Revenues

EXPENSES Cost of land sales Cost of pre-fabricated factory sales Cost of condomonium sales Cost of services Selling and administrative expenses Other expenses Estimated loss on possible loss from lawsuit Loss on exchange rate Loss on investment revaluation

4 4 and 24 19

Total Expenses

PROFIT BEFORE INTEREST AND INCOME TAX EXPENSES INTEREST EXPENSES INCOME TAX EXPENSES

4

PROFIT AFTER TAX MINORITY INTEREST PROFIT FROM ORDINARY ACTIVITIES EXTRAORDINARY ITEMS - Gain from compromising debt - Gain from convertible bond repurchases

NET PROFIT

25

26

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Statements Of Income FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 BAHT CONSOLIDATED NOTE

2005

2004

THE COMPANY ONLY 2005

2004

BASIC EARNINGS PER SHARE (BAHT) Profit from ordinary activities

0.11

0.15

0.11

0.15

0.00

0.02

0.00

0.02

0.11

0.17

0.11

0.17

Profit from ordinary activities

0.07

0.10

0.07

0.10

Extraordinary item, net

0.00

0.01

0.00

0.01

0.07

0.11

0.07

0.11

Extraordinary item, net Net profit

26

DILUTED EARNINGS PER SHARE (BAHT)

Net profit

26

27

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Statements Of Cash Flows FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 BAHT CONSOLIDATED 2005

THE COMPANY ONLY

2004

2005

2004

CASH FLOW FROM OPERATING ACTIVITIES Net profits

636,833,772.82

950,643,440.31

636,833,772.82

950,643,440.31

1,041,056.92

(6,414,739.69)

459,672.00

(4,881,396.72)

-

-

(269,215,072.52)

(556,016,936.99)

Adjustments to reconcile net profit to net cash provided by (used in) Allowance for doubtful accounts Share of profits from investments for using the equity method - subsidiaries companies Share of profit from investments for using the equity method - associated companies

(960,339.31)

(1,559,628.03)

(960,339.31)

(1,559,628.03)

Loss on investment revaluation

717,000.00

21,195,000.00

-

21,195,000.00

-

(74,651,518.64)

-

(74,651,518.64)

(Gain) loss on exchange rate

(477,477.89)

127,716.44

(477,477.89)

127,716.44

Gain from sales of equipment

(448,483.39)

-

(160,737.47)

-

Gain from sales of investments

(23,012,815.81)

(76,457,040.44)

(23,012,815.81)

(76,457,040.44)

Depreciation and amortization

73,731,334.68

67,905,718.47

15,270,221.98

14,125,671.11

Adjustment of loss on decline in value of estate development cost

Amortization of goodwill

-

745,120.79

-

745,120.79

Gain from compromising debt

-

(125,760,821.92)

-

(125,760,821.92)

Gain from convertible bonds repurchases

-

(156,288.83)

-

(156,288.83)

Increase in estimated loss from lawsuit

18,000,000.00

18,049,315.07

18,000,000.00

18,049,315.07

Realization of deferred leasehold right income

(29,762,192.85)

(22,681,696.82)

-

-

81,261,310.44

92,969,311.85

-

-

(1,913,782.19)

1,795,319.33

(1,491,438.76)

1,795,319.33

Net profit of minority interests (Increase) in account receivables - related parties (Increase) decrease in account receivables - other parties

(146,614,903.15)

(308,383,238.53)

(168,433,623.65)

5,084,838.39

(Increase) in cost of real estate developments

(514,106,824.98)

(321,069,230.60)

(212,988,371.41)

(378,442,776.01)

6,879,419.98

(2,432,605.70)

3,792,715.49

(4,281,837.23)

-

840,389,748.69

-

840,389,748.69

18,738,366.61

(11,472,232.90)

6,624,370.02

(12,795,055.64)

341,914.22

-

1,630,680.00

-

(Increase) decrease in other current assets Decrease in leasehold land and land held for commercial purposes (Increase) decrease in other non - current assets Increase in account payables - related parties Increase in trade account payables Increase (decrease) in income received in advance

36,003,175.61

25,138,753.51

33,504,588.19

78,641,648.34

(238,226,922.47)

(97,143,013.51)

(216,577,774.52)

238,822,367.17

Increase (decrease) in accrued interest expense

(4,391,438.31)

7,502,535.49

732,054.79

(1,740,272.68)

Increase (decrease) in other account payables

(9,181,932.02)

12,480,926.54

(255,873.10)

1,341,509.49

58,767,805.75

45,970,188.44

53,034,610.91

26,356,975.29

Increase in other current liabilities Increase in retention payables

10,778,717.30

23,512,960.81

17,938,001.49

12,871,045.20

Increase in deferred leasehold right income

28,743,492.18

21,507,930.64

-

-

Increase (decrease) in guarantee payable

16,972,036.83

12,343,704.92

(746,400.00)

-

1,895,847.51

(17,602,422.16)

6,101,614.65

(21,710,291.00)

21,608,138.48

1,076,493,213.53

(100,397,622.10)

951,735,851.49

Increase (decrease) in other non - current liabilities Net Cash Provided by (Used in) Operating Activities

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Statements Of Cash Flows FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 BAHT CONSOLIDATED NOTE

2005

THE COMPANY ONLY

2004

2005

2004

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) in current investments in securities

(110,402,400.00)

(Increase) in short - term loans and advance to related parties

(12,911,870.00)

(110,402,400.00)

(12,911,870.00)

(2,928,978.02)

(4,148.97)

(98,539,045.79)

(119,668,366.55)

(Increase) in investments for using the equity method

(254,999,970.00)

(674,885,653.97)

(251,632,598.74)

(674,885,653.97)

Decrease in account payable shares purchase

(20,000,000.00)

-

(20,000,000.00)

-

(Increase) in long - term loans to other parties

(587,835.36)

(319,030.54)

(587,835.36)

(319,030.54)

Dividend received from subsidiary companies

-

-

281,439,876.80

718,879,712.00

96,157,173.69

-

559,882.02

-

Cash received from sale of the investments in securities

127,660,839.96

126,516,546.00

127,660,839.96

126,516,546.00

(Increase) in building and equipment

(94,954,388.50)

(17,929,429.24)

(20,156,337.47)

(11,915,116.98)

(28,315,790.67)

(16,023,566.96)

(139,827.60)

-

(2,152,513.02)

107,636,914.98

-

(107,154.78)

(290,523,861.92)

(487,920,238.70)

(91,797,446.18)

25,589,065.18

234,330,763.20

(1,056,644.72)

85,000,000.00

(50,738,219.53)

Cash received from sales of building and equipment

(Increase) in assets for rent (Increase) decrease in sinking fund Net Cash Provided by (Used in) Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in bank overdrafts and short-term loans from ďŹ nancial institutions Cash paid for convertible bond redemption

-

(1,326,829.10)

-

(1,326,829.10)

Cash paid for compromising debt

-

(130,500,000.00)

-

(130,500,000.00)

(7,998,057.39)

(20,537,504.25)

(6,006,562.60)

(15,381,108.32)

-

-

78,749,750.00

(285,289,719.90)

(1,883,999.99) (106,048,000.00)

-

-

(Decrease) in short - term loans and advance from related parties Increase (decrease) in long - term loans from related party (Decrease) in long - term loans from related persons Increase (decrease) in other long - term loans

474,041,355.22

(178,502,763.01)

380,200,000.00

(50,605,859.72)

73,284,451.21

117,508,309.60

73,284,451.21

117,508,309.60

Cash paid for dividend

(333,187,445.17)

(288,195,639.35)

(333,187,445.17)

(288,195,639.35)

Dividend paid to minority interests

(82,960,123.20)

(85,920,288.00)

-

-

355,626,943.88

(694,579,358.83)

278,040,193.44

(704,529,066.32)

2,232,431.25

(341,565.54)

-

-

35.00

-

-

-

Proceeds from exercise of warrants

Net Cash Provided by (Used in) Financing Activities Currency translation differences Minority interest Increase (Decrease) in cash and cash equivalents, net

88,943,686.69

(106,347,949.54)

85,845,125.16

272,795,850.35

Cash and cash equivalents, beginning of years

5

972,735,009.14

1,095,899,419.61

707,334,496.20

457,506,931.17

Cash at banks pledged as collateral, beginning of years

5

30,313,911.11

13,497,450.18

22,968,285.32

-

5 and 28

(30,446,907.96)

(30,313,911.11)

(22,967,276.00)

(22,968,285.32)

1,061,545,698.98

972,735,009.14

793,180,630.68

707,334,496.20

Cash at banks pledged as collateral, end of years

Cash and cash equivalents, end of years

5

29

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Statements Of Cash Flows FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 BAHT CONSOLIDATED 2005

THE COMPANY ONLY

2004

2005

2004

OPERATING ACTIVITIES, INVESTING ACTIVITIES AND FINANCING ACTIVITIES NOT AFFECTING CASH Decrease in unrealised gain from changes in carrying amount of available-for-sale securities

46,646,164.66

76,885,002.15

46,646,164.66

76,885,002.15

Decrease in surplus from available-for-sale securities by above

(46,646,164.66)

(76,885,002.15)

(46,646,164.66)

(76,885,002.15)

Decrease in cost of real estate development by transfer to assets for rent and property, plant and equipment

309,620,269.21

247,543,830.96

-

-

Increase in assets for rent by above

(238,899,127.08)

(247,543,830.96)

-

-

(70,721,142.13)

-

-

-

Increase in investments in subsidiary company

-

(20,000,000.00)

-

(20,000,000.00)

Increase in account payable share purchase

-

20,000,000.00

-

20,000,000.00

133,528,959.01

-

133,528,959.01

-

-

-

(33,101,276.95)

-

(133,528,959.01)

-

100,427,682.06

-

Interest expenses

113,798,976.13

54,705,370.63

13,064,027.64

16,900,279.75

Income tax expenses

35,653,357.58

30,285,641.32

7,235,945.94

13,102,186.23

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Increase in property, plant and equipment by above

Increase in cost of real estate development from land received for sinking fund return from the Industrial Estate Authority of Thailand Increase in short-term loan and advance from related parties by above Decrease in sinking fund by above

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid during the period for :

30

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

Annual Report 2005

Notes to Financial Statements DECEMBER 31, 2005 AND 2004

1. GENERAL INFORMATION On August 15, 1988, Hemaraj Land and Development Public Company Limited (“the Company”) was incorporated under the Civil and Commercial Code of Thailand and was subsequently listed on the Stock Exchange of Thailand and trans formed as a Public Company Limited on July 10, 1992 and July 12, 1993, respectively. The Company, which is the parent company of Hemaraj Group, operates its business as a real estate developer as follows : 1.

Industrial estate development projects located in the Eastern Seaboard of Thailand. The projects are operating under the joint operation agreements with the Industrial Estate Authority of Thailand, in the names of the Company and its 3 subsidiaries as follows:

Company Name

Industrial Estate

Site Location

Hemaraj Land and Development Plc.

Hemaraj Chonburi

Sriracha district, Chonburi province

Eastern Industrial Estate Co., Ltd.

Hemaraj Eastern (Map Ta Phut)

Muang district, Rayong province

Eastern Seaboard Industrial Estate (Rayong) Co., Ltd.

Eastern Seaboard (Rayong)

Pluak Daeng district, Rayong province

Hemaraj Eastern Seaboard Industrial Estate Co., Ltd.

Hemaraj Eastern Seaboard

Pluak Daeng district, Rayong province

2. A condominium for sale being developed under the Company’s name is called “The Park of Chidlom”, which located at Chidlom Road, Bangkok. 3. Service business related to the mentioned industrial estates consisting of service providing for public utilities, prefabricated factory for sale and lease, land rental, commercial plaza rental, pipe rack rental in Industrial Estates, building contractor and others. Hemaraj Group’s head office is located at 18th floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang subdistrict, Suanluang district, Bangkok, Thailand 10250. As at December 31, 2005 and 2004, Hemaraj Group employs 199 and 168 staffs, respectively.

2. BASIS OF CONSOLIDATED FINANCIAL STATEMENT PRESENTATION 2.1 Basis for preparation and presentation of financial statements The financial statements of the Company have been presented in accordance with the Department of Business Development’s announcement on September 14, 2001, regarding the brief items to be presented in the financial statements B.E. 2544 and in conformity with generally accepted accounting standards. The Company’s financial statements are prepared in the Thai language as required by Thai law, and translated into English for the convenience of a reader of the financial statements. Certain amounts in the financial statements for the year ended December 31, 2004 have been reclassified to conform to the current year classification, with no effect on previously reported net profit or shareholders’ equity.

31

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Basis of consolidated financial statement presentation (continued)

2.2 Basis for preparation and presentation of consolidated financial statements The consolidated accounts incorporate the accounts of the Company and its majorities owned directly or indirectly (over 50%) subsidiaries as at December 31, are as follows: TYPE OF BUSINESS

HOLDING OF INTEREST (%) 2005

2004

Eastern Industrial Estate Company Limited

Industrial Estate Development

99.99

99.99

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Industrial Estate Development

60.00

60.00

Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. *

Industrial Estate Development

99.99

99.99

Eastern Pipeline Services Company Limited

Pipe Rack Rental

99.99

99.99

H-International (BVI) Company Limited

Holding Company

100.00

100.00

Hemaraj International Limited **

Holding Company

100.00

100.00

Design and Construction Supervision Service

99.99

99.99

H-Construction Management and Engineering Company Limited The Park Residence Company Limited

Real Estate Development and Service Management

99.99

99.99

Hemaraj Water Company Limited ***

Water Resources Development and Management

99.99

-

Sale and Lease of Factory

99.99

-

SME Factory Company Limited ***

*

As a subsidiary of the Company since November 5, 2004

** As an oversea subsidiary, used information from the financial statements were provided by the management and have not been audited. However, the total assets and net profit as show in these financial statements were not material to the consolidated financial statements as a whole. *** As subsidiaries of the Company since June 29, 2005, which were registered and setup. Significant inter-company transactions are eliminated from the consolidated financial statements. All subsidiaries were incorporated in Thailand except H-International (BVI) Company Limited and Hemaraj International Limited which were incorporated in British Virgin Islands and Cayman Islands, respectively. In addition, the consolidated and the Company’s financial statements for the years ended December 31, include share of profits (losses) from associated companies as follows: MILLION BAHT 2005

2004

Elyo-H Facilities Management Limited *

2.14

1.56

S I L Industrial Land Company Limited **

(1.02)

-

Glow Hemaraj Energy Company Limited **

(0.16)

-

*

Based on information from the financial statements which were provided by the management and were not audited by an auditor.

** Based on information from the financial statements which were audited by other auditor.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 The Measurement Bases Used in Preparing the Financial Statements Other than those disclosed in other topics, significant accounting policies and other notes to the financial statements, the financial statements are prepared on the historical cost basis.

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Summary of signification accounting policies (continued)

3.2 Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and at banks, and temporary investments net of cash at banks pledged as collateral. 3.3 Current Investments Available-for-sale securities consist of investments in marketable securities, which are stated at fair value (net of allowance for investments revaluation). Gain (loss) on investment revaluation is included in the equity. 3.4 Trade Account Receivables and Allowance for Doubtful Accounts Trade account receivables represent real estate sale contract receivables under contract price net of installments received and deferred income. Public utilities service receivables are presented net of allowance for doubtful accounts. Allowance for doubtful accounts is based on receivables which are overdue by more than 90 days. 3.5 Cost of Real Estate Developments Cost of real estate developments consists of land costs, development costs, pre-fabricated factory costs, condominium construction costs, interest expenses on loans for projects development, pre-fabricated factory, condominium construction, land deposits and advances for construction costs. These costs are transferred to cost of sales when revenue from sales is recognized. Cost of real estate developments is stated at the lower of aggregate cost or net realizable value. Loss on projects revaluation is included in the statements of income. 3.6 Capitalization of Borrowing Costs The Company and its subsidiaries have accounting policy to record interest expenses and fees on long-term loans and loan from related persons for development projects by capitalizing to cost of real estate developments. The capitalization will be suspended or ceased when the development projects are interrupted or completed. 3.7 Investments and Loans Investments A. Investments in subsidiary and associated companies are recorded by using the equity method. B. Other investments represent investments in related and other companies which are stated at cost net of provision for impairment loss. Impairment loss on other investments is included in the statements of income. Loans The Company and its subsidiaries have recorded allowance for doubtful debts by using uncollectible amounts, based on a review of the current financial status and the repayment ability. The recognition of interest income is ceased when overdue of more than 180 days. 3.8 Property, Plant and Equipment Land is stated at cost. Property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment loss. Motor vehicles under financial lease are stated at fair value less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the assets of 5 years for equipment and 20 years for building and structures. No depreciation is provided for land.

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Summary of signiďŹ cation accounting policies (continued)

3.9 Assets for Rent Land for rent is stated at cost. Assets for rent, except land, are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the assets of 15 years for pipe rack and 20 years for building. No depreciation is provided for land for rent. 3.10 Leasehold Right and Land Held for Commercial Purposes Leasehold right and land held for commercial purposes consist of land leasehold right, land costs, development costs and capitalized interest on loans for undeveloped projects and projects which were temporarily suspended from development. Leasehold land and land held for commercial purposes are stated at the lower of aggregate cost or net realizable value. Loss on projects revaluation is included in the statements of income. 3.11 Sinking Fund The Company and its subsidiaries have recorded a fund for the major maintenance and replacement of utilities systems and facilities for the customers in the industrial estate, under the joint operating agreements with the Industrial Estate Authority of Thailand (“IEAT�) to be Deferred Sinking Fund and has recorded amortization to be cost of services by the straight-line method over 20 years of useful lives. 3.12 Deferred Interest Expense on Hire-Purchase Agreement Deferred interest expense on hire-purchase agreement, which is amortized over the period of agreements, presented net from hire-purchase payable. 3.13 Impairment of Assets The Company and its subsidiaries have evaluated the impairment of properties, plant and equipment and other assets when the event is occurred or there is the situational change, which indicates that the recoverable amount of assets will be lower than their book value. The Company and its subsidiaries will recognize the loss from impairment as an expense in the statements of income. 3.14 Income Received in Advance Income received in advance represents the amounts received from real estate and condominium sales contracts, which are recognized by using the percentage of completion method, and from utilities and rental income, received in advance. 3.15 Deferred Leasehold Right Income Deferred leasehold right income represents leasehold right received from rental of land, building and pipe rack, and is recognized as revenue over the period of rental contract. 3.16 Revenue and Expense Recognition Other than those disclosed in other topics, the policy of the Company and its subsidiaries on revenue and expense recognition are as follows: A. Recognition of Revenue and Cost of Land Sales Revenue from land sales are recognized upon signing of contract and receiving of installments by the percentage of completion method, using the ratio of actual development costs incurred to total estimated development costs for each projects excluding land cost. Cost of sales is calculated from the realized sales contracts based on the ratio of total estimated project costs to total estimated project sales. Total estimated costs and sales of each project shall be revised when there are significant changes in the estimated costs and expected sales price of each project. B. Recognition of Revenue and Cost of pre-fabricated Factory Sales Revenue and cost of pre-fabricated factory sales are recognized upon signing of sales contract.

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Summary of signification accounting policies (continued)

C. Recognition of Revenue and Cost of Condominium Sales The Company recognizes the revenue and cost of condominium sales by the percentage of completed work which is based on the proportion of actual costs (excluding cost of land) to the total estimated costs which are estimated by the Companyís engineer advisor. The Company recognizes revenue when sales contracts have been executed not less than 40% of the area opened for sales and collection received exceeds 20% of each contract value, and the progress of completed construction work is more than 10%. D. Recognition of Income and Cost of Services Income and cost of services are recognised on the accrual basis. Service income represents income received from providing of public utilities, potable water, raw water and reused water, waste water treatment processing, additional work in building construction and rental services in respect of land, commercial plaza, warehouse, factory, resident and pipe rack to the Industrial Estate, training center and business center. Cost of services represents cost incurred from providing of such services. Revenue and cost from mini and micro pre-fabricated factory construction are recognized upon signing of contract and receiving of installments by the percentage of completion method. The recognition of income from public utilities service is ceased when the customers cease their business operations and has payment difficulty. E. Gain from Compromising Debt (Hemaraj Land and Development Public Company Limited) The Company has recorded the difference between the aggregate amount of loan and related accrued interest expense, which have been compromised under the Restructuring Agreements, as revenue in the statements of income in full on the signing date of the Restructuring Agreement. F. Other Incomes and Expenses. Other incomes and expenses are recognized on the accrual basis. 3.17 Accounts in Foreign Currency A. The financial statements of our overseas subsidiary company are translated into Baht for consolidation purposes using rates of exchange as follows: A.1 Assets and liabilities are translated at the average selling and purchasing price of exchange rate at the end of the year. A.2 Revenues and expenses are translated at the average selling and purchasing price of exchange rate at the end of each month. A.3 Share capital is translated at the exchange rate on the transaction date. Adjustments from translation of foreign financial statements are included under shareholders’ equity. B. Other foreign currency transactions occurring during the year are converted into Baht at the rates prevailing on the dates of the transactions. Assets and liabilities at the end of the year are converted into Baht at the rates of exchange on that date. Gain and loss on exchange rate is included in the statements of income. 3.18 Corporate Income Tax Corporate income tax for each year is recognized on the accrual basis, which is based on the taxable profit for the year. 3.19 Earning per Share Basic earning per share is computed by dividing net profit attributable to ordinary shareholders for the year by the weighted average number of ordinary shares outstanding during the year.

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Summary of signiďŹ cation accounting policies (continued)

Diluted earning per share is computed by dividing net income attributable to ordinary shareholders for the year, as adjusted for the effect of dilutive ordinary shares, by the weighted average number of ordinary shares outstanding during the year plus the number of dilutive ordinary shares

4. TRANSACTIONS WITH RELATED PARTIES The Company has certain transactions with its related parties. Intercompany terms are determined at the rate not exceeding 5% - 10% of contracted price for commission on sales of land, not exceeding 5% management fees of service income received, and 4.5% - 10% as the reasonable market rate at that time for interest on loans from/to related parties relating to business operation. Enterprises that directly or indirectly through one or more intermediaries, control, or are under common control with the Company by through same shareholder and management or director as at December 31 are as follows: COMPANY NAME

TYPE OF BUSINESS

RELATIONSHIP

PERCENTAGE OF HOLDING 2005

2004

Subsidiary Companies Eastern Industrial Estate Company Limited

Industrial Estate Development

Common shareholders and management

99.99

99.99

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Industrial Estate Development

,,

60.00

60.00

Hemaraj Eastern Seaboard Industrial Estate Co., Ltd.

99.99

Industrial Estate Development

,,

99.99

Eastern Pipeline Services Company Limited *

Pipe Rack Rental

,,

99.99

99.99

H-International (BVI) Company Limited

Holding Company

,,

100.00

100.00

Hemaraj International Limited H-Construction Management and Engineering Company Limited The Park Residence Company Limited Hemaraj Water Company Limited SME Factory Company Limited

Holding Company

,,

100.00

100.00

Design and Construction Supervision Service

,,

99.99

99.99

Real Estate Development and Service Management

,,

99.99

99.99

Water Resources Development and Management

,,

99.99

-

Sale and Lease of Factory

,,

99.99

-

Facilities Management Service

Common shareholders and management

39.99

39.99

Electricity and Power Generation

,,

49.99

-

Associated Companies Elyo-H Facilities Management Limited Glow Hemaraj Energy Company Limited S I L Industrial Land Company Limited

Industrial Estate Development

,,

25.00

-

Rayong Industrial Land Company Limited **

Industrial Estate Development

,,

25.00

-

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Transactions with related parties (continued)

COMPANY NAME

TYPE OF BUSINESS

RELATIONSHIP

PERCENTAGE OF HOLDING 2005

2004

Common shareholders and co-directors

6.4

9.54

0.11

0.17

-

-

Related Companies Sriracha Harbour Public Company Limited Nakornthai Strip Mill Public Company Limited

Port Service and Transportation Steel Manufacturer and Distributor

,,

Agriculture and Scrap Steel Business

Common directors

N.T.S. Steel Group Public Company Limited

Steel Manufacturer and Distributor

,,

-

-

Eastern Fluid Transport Company Limited

Pipe Rack Maintenance

,,

15.00

15.00

Sun Tech Group Public Company Limited

Steel Top Company Limited

Steel Manufacturer and Distributor

,,

-

-

Metal Star Company Limited

Steel Manufacturer and Distributor

Relationship with directors

-

-

Processing Agriculture Producer

Co-investors

-

-

Facilities Management Service

,,

-

-

Holding Company

,,

-

-

Glow Energy Public Company Limited

Energy

,,

-

-

Tractebel Asia Company Limited ***

Energy

,,

-

-

-

Directors and shareholders

-

-

Siam Food Products Public Company Limited Teo Hong Silom Company Limited Cementhai Property (2001) Public Company Limited

Related Person

*

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited.

** 25% directly held by the Company in S I L Industrial Land Company Limited that has held 99.99% in Rayong Industrial Land Company Limited. *** Changed from former co-investor, Elyo South Asia PTE. Ltd.

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Transactions with related parties (continued)

As at December 31, balances with related parties are presented in the balance sheets as follows: Assets THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2005 2004 2005 2004

INTERCOMPANY TERMS

Short - term loans and advance to related parties: Subsidiary companies: Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited

Hemaraj Eastern Seaboard Industrial Estate Company Limited Eastern Pipeline Services Company Limited H-Construction Management and Engineering Company Limited Hemaraj Water Company Limited SME Factory Company Limited Associated companies: Elyo-H Facilities Management Company Limited S I L Industrial Land Company Limited Rayong Industrial Land Company Limited Related company: Sriracha Harbour Public Company Limited * Total Less: Allowance for doubtful debts

Total

-

-

260,139 51,382

395,349 196,664

-

-

343,149 91,176 14,238 7 6

71,081 1,393 -

2,182 2,839

2,179 -

2,182 2,839

2,179 -

87

-

87

-

11,355 16,463 (11,355) 5,108

11,355 13,534 (11,355) 2,179

11,355 776,560 (11,355) 765,205

11,355 678,021 (11,355) 666,666

MLR +1% 5%-10% of contract price, 5% of service income received and 4.5% interest rate MLR +1% MLR +1% MLR +1% MLR 5% of service income received and MLR -1% 5% of service income received

The Company provided the provision for doubtful debt in full amount as the Company’s basis. This company entered into the Business Reorganization Plan under the Bankruptcy Court, and now is under the process of the Business Reorganization Plan. The Company has not yet adjusted the provision for the receivable under the Business Reorganization Plan and will adjust accordingly when obtaining the settlement from it as the Plan. Balance of Assets with related parties and its movement for the year 2005 are as follows: BEGINNING

THOUSAND BAHT INCREASE DECREASE

ENDING

Consolidated Short - term loans and advance to related parties: Associated companies

Total short – term loans and advance to related parties The Company Only Short - term loans and advance to related parties: Subsidiary companies Associated companies

Total short – term loans and advance to related parties

38

2,179 2,179

3,115 3,115

(186) (186)

5,108 5,108

664,487 2,179 666,666

404,993 3,115 408,108

(309,383) (186) (309,569)

760,097 5,108 765,205

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Transactions with related parties (continued)

Liabilities THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2005 2004 2005 2004

INTERCOMPANY TERMS

Short - term loans and advance from related parties: Subsidiary companies: Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Related company: Siam Food Products Public Company Limited

Total Long - term loans from related party:

-

-

33,101 18,456

24,462

32,041

40,039

-

-

32,041

40,039

51,557

24,462

-

-

1,276,110

1,153,469

31,400 9,752

21,892 21,144

-

-

41,152

43,036

-

-

Subsidiary company : H-International (BVI) Company Limited

4.5% and 5.25%

-

Long - term loans from related person: Current portion of long-term loans Long-term loans

Total

4.25%, MLR (KBANK) +1% and MLR (KBANK)

Balance of Liabilities with related parties and its movement for the year 2005 are as follows: BEGINNING

THOUSAND BAHT INCREASE DECREASE

ENDING

Consolidated Short - term loans and advance from related parties Long – term from related persons

40,039 43,036

32,919 20,000

(40,917) (21,884)

32,041 41,152

24,462

69,244

(42,149)

51,557

1,153,469

122,741

(100)

1,276,110

The Company Only Short - term loans and advance from related parties: Subsidiary companies Long - term loans from related party: Subsidiary company

The significant transactions with related parties for the years ended December 31, are as follows: MILLION BAHT CONSOLIDATED THE COMPANY ONLY 2005 2004 2005 2004 Service income Interest income Commission and management income Cost of service Interest expenses

39

20.09 0.89 2.38

19.54 0.50 -

19.11 36.81 67.19

18.57 29.13 52.77

8.50 0.92

7.88 2.51

1.34 -

1.62 -

INTERCOMPANY COST POLICY Market price MLR +1%, 4.5%, MLR and MLR –1% 5% - 10% of contract price and 5% of service income received Market price 4.5% and 5.25%

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Industrial Estate Development Industrial Estate Development Pipe Rack Rental Holding Company Holding Company Design and Construction Supervision Services Real Estate Development and Service Management Water Resources Development and Management Sale and Lease of Factory

Eastern Seaboard Industrial Estate (Rayong) Company Limited Hemaraj Eastern Seaboard Industrial Estate Company Limited Eastern Pipeline Services Company Limited * H-International (BVI) Company Limited Hemaraj International Limited H-Construction Management and Engineering Company Limited

10.00 500.00 1,000.00

50.00

0.25

0.25

0.25

358.00 595.00 3.75 0.08 0.03 0.25

400.00

49.99 25.00 25.00

39.99

99.99

99.99

99.99

60.00 99.99 99.99 100.00 100.00 99.99

99.99

Holding of Invesment (%)

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited.

Common shareholders and Co-directors ,, ,, ,,

,,

,,

,,

Common shareholders and management ,, ,, ,, ,, ,, ,,

Relationship

Paid-up Capital (Million Baht)

5.00 250.00 1,577.59

20.00

0.25

0.25

0.25

214.80 683.87 2.81 0.08 0.03 0.25

400.00

(0.16) (1.02) 2,057.57

(3.12)

(0.02)

(0.02)

(0.05)

671.17 (20.24) (22.74) 1,298.35 0.01 (9.05)

144.47

4.84 248.98 3,635.16

16.88

0.23

0.23

0.19

885.97 663.63 (19.93) 1,298.43 0.04 (8.80)

544.47

Investments Net Equity Change Cost (Million in Equity (Million Baht) (Million Baht) Baht)

B. Hemaraj International Limited was registered in the Cayman Islands (US. currency is used for business operation). C. In the year of 2005, the Company received dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited in amount of Baht 124.44 million and Eastern Industrial Estate Company Limited in amount of Baht 157 million.

A. H-International (BVI) Company Limited was registered in the British Virgin Islands (US. currency is used for business operation).

Additional information

*** 25% directly held by the Company in S I L Industrial Land Company Limited that has held 99.99% in Rayong Industrial Land Company Limited.

** The Company acquired 25% investment from the shareholders’ equity in the amount of Baht 1,000 million presented in the Proforma Balance Sheet as at April 30, 2005 which was regularly prepared by the management of S I L Industrial Land Company Limited. Later, the Company obtained the reviewed financial statements as at April 30,2005 reviewed by other auditor which presented the shareholders’ equity in the amount of Baht 915.10 million. The discrepancy of the shareholders’ equity is on the process in discussion with Cementhai Property (2001) Public Company Limited.

*

Electricity and Power Generation Industrial Estate Development Industrial Estate Development

Glow Hemaraj Energy Company Limited S I L Industrial Land Company Limited ** Rayong Industrial Land Company Limited ***

Total Investments for Using the Equity Method

Facilities Management Services

Elyo-H Facilities Management Limited

Associated Companies

SME Factory Company Limited

Hemaraj Water Company Limited

The Park Residence Company Limited

Industrial Estate Development

Type of Business

Eastern Industrial Estate Company Limited

Subsidiary Companies

Company

As at December 31, 2005 the Company’s investment for using the equity method are as follows:

Transactions with related parties (continued)


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Facilities Management Services

Real Estate Development and Service Management

Common shareholders and Co-directors

,,

,,

,,

,,

,,

,,

,,

Common shareholders and management

Relationship

50.00

0.25

0.25

0.03

0.08

3.75

595.00

358.00

400.00

39.99

99.99

99.99

100.00

100.00

99.99

99.99

60.00

99.99

Holding of Investment (%)

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited.

1,326.70

20.00

0.25

0.25

0.03

0.08

2.81

688.48

214.80

400.00

Cost (Million Baht)

3,348.67

14.73

0.21

0.39

0.04

1,268.12

(15.47)

671.71

888.22

520.72

D. In 2004, the Company entered into agreement to purchase shares of Hemaraj Eastern Seaboard Industrial Estate Company Limited in amount of Baht 688.48 million.

C. During the year 2004, the Company received dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited in amount of Baht 128.88 million, Eastern Industrial Estate Company Limited in amount of Baht 430 million and H-International (BVI) Company Limited in amount of Baht 160 million.

B. Hemaraj International Limited was registered in the Cayman Islands (US. currency is used for business operation).

2,021.97

(5.27)

(0.04)

0.14

0.01

1,268.04

(18.28)

(16.77)

673.42

120.72

Net Change Equity in Equity (Million Baht) (Million Baht)

Investments

A. H-International (BVI) Company Limited was registered in the British Virgin Islands (US. currency is used for business operation).

Additional information

*

Total Investments for Using the Equity Method

Elyo-H Facilities Management Limited

Associated Company

The Park Residence Company Limited

Design and Construction Supervision Services

Holding Company

Hemaraj International Limited

H-Construction Management and Engineering Company Limited

Pipe Rack Rental Holding Company

Industrial Estate Development

Hemaraj Eastern Seaboard Industrial Estate Company Limited

H-International (BVI) Company Limited

Industrial Estate Development

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Eastern Pipeline Services Company Limited *

Industrial Estate Development

Type of Business

Eastern Industrial Estate Company Limited

Subsidiary Companies

Company

Paid-up Capital (Million Baht)

As at December 31, 2004 the Company’s investment for using the equity method are as follows:

Transactions with related parties (continued)


Transactions with related parties (continued)

Other long-term investments - related parties, net THOUSAND BAHT CONSOLIDATED 2005

THE COMPANY ONLY

2004

2005

2004

Investments in related parties Sriracha Harbour Public Company Limited

75,300

75,300

75,300

Eastern Fluid Transport Company Limited

1,500

1,500

-

-

76,800

76,800

75,300

75,300

(75,300)

(75,300)

(75,300)

(75,300)

1,500

1,500

-

-

Total

Less Provision for impairment loss on investments Other Long-term Investments - Related Parties, net

75,300

5. CASH AND CASH EQUIVALENTS For the purpose of preparation of the statements of cash flows in accordance with the relevant Thai Accounting Standard, as at December 31, cash and cash equivalents consisted of: THOUSAND BAHT CONSOLIDATED 2005 Cash and deposits at financial institutions

THE COMPANY ONLY

2004

761,520

2005

2004

572,723

493,180

307,334

330,473

30,326

322,968

22,968

-

400,000

-

400,000

Temporary investments Time deposits Promissory notes - financial institutions

Less Cash at banks pledged as collateral and deposits with maturity dates longer than 3 months

Cash and Cash Equivalents

(30,447)

(30,314)

(22,968)

(22,968)

1,061,546

972,735

793,180

707,334

6. CURRENT INVESTMENTS As at December 31, current investments consisted of: THOUSAND BAHT CONSOLIDATED 2005 Time deposits

THE COMPANY ONLY

2004

2005

2004

330,472

30,326

322,968

22,968

-

400,000

-

400,000

Promissory notes - financial institutions Marketable securities Available-for-sale securities - Equity securities Nakornthai Strip Mill Public Company Limited

85,150

85,150

85,150

85,150

Other companies and unit trusts

52,536

64,525

52,536

64,525

Total Marketable securities

137,686

149,675

137,686

149,675

Less Allowance for investments revaluation

(64,327)

(17,681)

(64,327)

(17,681)

73,359

131,994

73,359

131,994

403,831

562,320

396,327

554,962

Marketable securities, net

Total Current Investments

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7. TRADE ACCOUNT RECEIVABLES, NET As at December 31, trade account receivables, net consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2005 2004 2005 2004 Related parties Service receivables Accrued service income Less Allowance for doubtful accounts

Trade Account Receivables-Related Parties, net Other parties Real estate sales contracts receivables Real estate sales contracts Less Installments received Installment receivables Less Deferred income Real Estate Sales Contracts Receivables, net Service receivables Accrued service income Less Allowance for doubtful accounts Service Receivables, net

Trade Account Receivables-Other Parties, net

26,028 (24,114) 1,914

27,740 (27,740) -

18,200 (16,709) 1,491

20,335 (20,335) -

4,844,041 (1,557,981) 3,286,060 (2,634,325)

900,407 (302,658) 597,749 (86,590)

3,838,264 (1,045,092) 2,793,172 (2,623,740)

-

651,735

511,159

169,432

-

49,261 (3,866) 45,395 697,130

43,920 (3,523) 40,397 551,556

8,218 (884) 7,334 176,766

9,219 (427) 8,792 8,792

As at December 31, 2005, real estate sales contracts receivables in the consolidated and company only financial statements were included receivables, whose installments were due but not received, in amount of Baht 18.19 million and 12.62 million, respectively. For the allowance for doubtful accounts of related party receivables, which obtain facility services in the industrial estate provided and charged by the Company. With the economic crisis in 1997 in Thailand, these companies have encountered with operation problem and the Company provided the provision for doubtful debt in full amount as the Company’s basis. Later, these companies entered into the Debt Restructure under CDRAC or Business Reorganization Plan under the Bankruptcy Court. The Company has not yet adjusted the provision for these receivables under the Business Reorganization Plan until obtaining the settlement as the Plan or debt restructure from each receivable. As at December 31, the real estate sales contracts receivables and accrued service income classified by aging are as follows: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2005 2004 2005 2004

Real estate sales contracts receivables

Undue installments Less than 3 months Over 3 months to 12 months Over 12 months Installments paid on date of transfer of title deed Less Deferred income

Total real estate sales contracts receivables Accrued service income

Less than 3 months Over 3 months to 6 months Over 6 months to 12 months Over 12 months

Less Allowance for doubtful accounts Accrued service income, net

43

3,267,867 18,193 (2,634,325) 651,735

597,749 (86,590) 511,159

2,780,546 12,626 (2,623,740) 169,432

-

45,359 496 221 3,185 49,261 (3,866) 45,395

40,397 12 60 3,451 43,920 (3,523) 40,397

7,333 460 425 8,218 (884) 7,334

8,792 37 390 9,219 (427) 8,792

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8. INCOME RECEIVED IN ADVANCE As at December 31, income received in advance consisted of: THOUSAND BAHT CONSOLIDATED 2005

THE COMPANY ONLY

2004

2005

2004

Income received in advance – Land and condominium Land and condominium sale contracts

8,638,527

10,147,308

301,896

(8,461,884)

(8,118,001)

(152,838)

(649,549)

Installment receivables

176,643

2,029,307

149,058

2,011,645

Less Deferred income

(288,823)

(2,389,247)

(163,962)

(2,251,026)

(112,180)

(359,940)

(14,904)

(239,381)

Income received in advance – Service and Rental

(13,493)

(3,960)

(7,899)

-

Total income received in advance

(125,673)

(363,900)

(22,803)

(239,381)

Less Installments received

Income received in advance – Land and condominium

2,661,194

9. COST OF REAL ESTATE DEVELOPMENTS, NET As at December 31, cost of real estate developments, net consisted of: THOUSAND BAHT CONSOLIDATED 2005

THE COMPANY ONLY

2004

2005

2004

Land cost - under development

5,989,029

5,251,500

1,686,459

1,335,061

Development project costs

7,509,137

6,617,363

1,834,073

1,370,956

Interest expenses capitalized

2,074,601

1,980,703

642,543

639,599

8,028

7,402

7,534

7,248

123,069

52,478

115,614

44,845

15,703,864

13,909,446

4,286,223

3,397,709

(9,621,118)

(8,380,780)

(2,586,634)

(2,044,638)

(943,482)

(727,417)

-

-

Additional utility cost Advance for construction costs

Less Accumulated costs transferred to cost of land sales Accumulated costs transferred to Assets for rent Accumulated costs transferred for Debt settlement

Cost of Real Estate Developments, net

(143,838)

(143,838)

(143,838)

(143,838)

4,995,426

4,657,411

1,555,751

1,209,233

Information of cost of real estate developments of Hemaraj Land and Development Public Company Limited, Eastern Industrial Estate Company Limited, Eastern Seaboard Industrial Estate (Rayong) Company Limited and Hemaraj Eastern Seaboard Industrial Estate Company Limited is as follow:Valuation Stated in the Financial Statements Cost of real estate developments is stated at the lower of aggregate cost and net realisable value for the projects in the same area of each company. During the year 2004, the Company and the 3 subsidiaries had obtained appraisal reports by an independent appraisal company. Surplus from assets appraisal were recorded as adjustment of loss on decline in value of real estate development cost in amount of Baht 38.48 million, as in the year of 2002, the Company’s and its subsidiaries’ cost of real estate development were appraised and deficit from appraisal was recorded as loss on decline in value of real estate development cost in 2002. Obligation of Assets as at December 31, 2005 The portion of land in the projects of the Company and the subsidiaries has been mortgaged as collateral for loans from local financial institutions, other companies and related persons and portion of land has been pledged as collateral in the court. 44

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Cost of real estate developments, net (continued)

Capitalization of Borrowing Costs Consolidated For the years ended December 31, 2005 and 2004, interest expenses were capitalised to the cost of real estate developments in the approximate amounts of Baht 83.97 million and 20.89 million, respectively. The Company Only For the years ended December 31, 2005 and 2004, interest expenses were capitalised to the cost of condominium in the approximate amount of Baht 2.94 million and 0.13 million, respectively.

10. OTHER LONG-TERM INVESTMENTS, NET THOUSAND BAHT CONSOLIDATED 2005 Glow IPP Company Limited (Formerly : Bowin Power Company Limited) Other company Total

Less Provision for impairment loss on investment Other Long-Term Investments, net

45

THE COMPANY ONLY

2004

2005

2004

175,000

175,000

175,000

1,000

1,000

-

175,000 -

176,000

176,000

175,000

175,000

(717)

-

-

-

175,283

176,000

175,000

175,000

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2.93 45.35 3.22 50.80 41.08 5.34 3.65

535.27

17.28 275.10 7.40 89.03 72.14 70.66 3.66

11.60 1.42 39.27 17.98 1.61

168.84

65.52 3.51 68.11 30.09 1.61

0.36 3.56 6.77 0.24

27.54

8.48 0.87 7.00 10.95 0.24

(0.65) (5.35) -

(11.82)

(0.65) (11.17) -

11.96 1.42 42.18 19.40 1.85

184.56

74.00 4.38 74.46 29.87 1.85

Property, Plant and Equipment, net

of land and office building

Total Less Reserve for impairment loss of assets Less Reserve for possible loss of title 138.62

20.15

(6.40)

152.37

71.88

10.93

(6.00)

76.81

(36.96)

(36.96)

37.88

(0.72)

(0.72)

29.06

75.56

66.74

2.93 33.39 1.80 8.62 21.68 5.34 1.80

303.58

(36.96)

(10.17) (36.96)

350.71 (10.17)

17.28 201.10 3.02 14.57 42.27 70.66 1.81 213.29

17.28 138.86 3.89 16.70 23.84 10.67 2.05

Net Book Value Beginning Ending

2.93 33.75 1.80 9.22 16.09 0.91 2.04

(0.65) (5.75) -

(12.54)

(0.65) (11.89) -

Changes in Accumulated Depreciation Beginning Depreciation Disposal Ending

Land Building and structure Building improvements Office equipment, furniture and fixture Vehicles Construction in progress Raw water pipe

2.96 12.76 4.43 -

165.68

70.72 4.87 30.10 59.99 -

Ending

166.16 2.93 45.35 3.22 48.49 34.07 0.91 3.65

382.13

17.28 204.38 7.40 84.81 53.93 10.67 3.66

Changes in Cost Addition Disposal

(Amounts: Million Baht)

Property, Plant and Equipment, net The Company Only

of land and office building

Total Less Reserve for impairment loss of assets Less Reserve for possible loss of title

Land Building and structure Building improvements Office equipment, furniture and fixture Vehicles Construction in progress Raw water pipe

Consolidated

Beginning

As at December 31, 2005 and 2004, property, plant and equipment, net consisted of:

11. PROPERTY, PLANT AND EQUIPMENT, NET


Property, plant and equipment, net (continued)

Consolidated For the year ended December 31, 2005, depreciation of building and equipment were included in selling and administrative expenses and cost of services in the amounts of Baht 17.15 million and 10.40 million, respectively. As at December 31, 2005 and 2004, the property, plant and equipment of the Company and its subsidiaries have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets was in the amounts of Baht 59.29 million and 57.13 million, respectively. The Company Only For the year ended December 31, 2005, depreciation of building and equipment were included in selling and administrative expenses and cost of services in the amounts of Baht 10.56 million and 0.37 million, respectively. As at December 31, 2005 and 2004, the property, plant and equipment of the Company have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets was in the amounts of Baht 36.15 million and 10.28 million, respectively. Hemaraj Land and Development Public Company Limited As at December 31, 2005 and 2004, the Company has provided reserve for loss of the possessive right over the land and ofďŹ ce building in the amount of Baht 36.96 million as the management of the Company viewed that the Company might not receive the transfer of such possessive right.

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12.32

4.80

0.14 0.14

54.30

-

-

279.55

-

35.49

-

-

-

-

(116.93)

(12.32)

-

(2.43)

(79.34)

(22.84)

54.44

0.14

26.24

28.06

1,072.16

-

162.95

2.37

731.08 *

175.76 *

Ending -

2.53

-

2.53

-

112.41

-

52.32

-

6.09

1.31

-

1.31

-

40.75

-

9.44

0.03

31.28

-

Depreciation -

-

-

-

-

(9.61)

-

-

-

(9.61)

Transfer -

3.84

-

3.84

-

143.55

-

61.76

0.03

81.76

Ending

Changes in Accumulated Depreciation Beginning

51.77

-

23.71

28.06

797.13

12.32

75.14

-

555.73

153.94

Beginning

50.60

0.14

22.40

28.06

928.61

-

101.19

2.34

649.32

175.76

Ending

Net Book Value

(Amounts: Million Baht)

Depreciation of building for the year ended December 31, 2005 was totally included in cost of services.

The Company Only

Depreciation of building and pipe rack for the year ended December 31, 2005 was included in cost of services.

As at December 31, 2005 and 2004, portions of land and building for rent, which had been transferred from the cost of real estate developments, were in the accumulated amounts of Baht 906.84* million and 769.76* million, respectively.

Consolidated

Total

44.66 194.60

Transfer

Changes in Cost Addition

-

26.24

Building

Improvement Building

28.06

Land

The Company Only

909.54

Construction in progress

Total

127.46

Pipe rack

-

Building

Improvement Building

153.94 * 615.82 *

Land

Consolidated

Beginning

As at December 31, 2005 and 2004, assets for rent, net consisted of:

12. ASSETS FOR RENT, NET


13. LEASEHOLD LAND AND LAND HELD FOR COMMERCIAL PURPOSES, NET As at December 31, leasehold land and land held for commercial purposes, net consisted of: THOUSAND BAHT CONSOLIDATED 2005 Land bank

THE COMPANY ONLY

2004

2005

2004

10,201

10,201

10,201

10,201

Land cost of projects suspended from development

1,135,711

1,135,711

1,135,711

1,135,711

Suspended development project costs

268,034

268,034

268,034

268,034

556,119

556,119

556,119

556,119

77,077

77,077

77,077

77,077

2,047,142

2,047,142

2,047,142

2,047,142

(645,413)

(645,413)

(645,413)

(645,413)

Accumulated Cost of sales

(841,514)

(841,514)

(841,514)

(841,514)

Loss on projects evaluation

(279,151)

(279,151)

(279,151)

(279,151)

281,064

281,064

281,064

281,064

Interest expenses capitalized Leasehold land

Less Accumulated costs transferred for debt settlement

Leasehold Land and Land Held for Commercial Purposes, net

Information of leasehold land and land held for commercial purpose of Hemaraj Land and Development Public Company Limited, Eastern Industrial Estate Company Limited, Eastern Seaboard Industrial Estate (Rayong) Company Limited and Hemaraj Eastern Seaboard Industrial Estate Company Limited is as follow:Valuation Stated in the Financial Statements Leasehold land and land held for commercial purposes are stated at the lower of aggregate cost and net realizable value. During the year 2004, the Company and the subsidiary had obtained appraisal reports by an independent appraisal company. Surplus from assets appraisal were recorded as adjustment of loss on decline in value of real estate development cost in amount of Baht 36.17 million, as in the year of 2002, the Company’s and its subsidiary’s leasehold land and land held for commercial purposes were appraised and deficit from appraisal was recorded as loss on decline in value of real estate development cost. Obligation of Assets as at December 31, 2005 Portion of land in the projects of the Company and the subsidiary has been mortgaged as collateral for loans from local financial institutions.

14. SINKING FUND, NET The Company and its subsidiaries had entered into the joint operating agreements with the Industrial Estate Authority of Thailand (“IEAT”) (as disclosed in the Note 29 to the financial statements). The Company and its subsidiaries are committed to be a provider and to set up a fund (“Sinking Fund”) for the major maintenance and replacement of utilities systems and facilities for the customers in the industrial estate. The Company and its subsidiaries had made the payment by cash and by transferring of partial piece of land for the Sinking Fund, and in addition, the Company and its subsidiaries had transferred the withdrawal rights over the Sinking Fund to the IEAT per the terms and conditions of such agreements. The Company and its subsidiaries have recorded the cash paid and land transferred to IEAT for Sinking Fund to Sinking Fund. The amortization period of 20 years is applied on the useful future economic life of Sinking Fund under the joint contract agreements with IEAT. The Company and its subsidiaries have recorded the interest income from the said Sinking Fund to the other assets because the Company and its subsidiaries have the right to withdraw these interest income for the major maintenance and replacement of the utilities systems and facilities.

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Sinking fund, net (Continued)

On June 22, 2004, the Notification of IEAT’s Board of Directors No.1/2547 had amended the joint operating agreement conditions to cap the Sinking Fund amount not exceeding Baht 60 million. Later on August 27, 2004, the IEAT’s Board of Directors resolved that it would allow the Company and its subsidiaries to combine two joint operating agreements to one agreement. In the third quarter of 2004, a subsidiary of the Company had provided the amendment of mentioned agreement with IEAT. As the result of the amendment, the Sinking Fund had decreased in amount of Baht 113.51 million. On March 29, 2005, the Company and another subsidiary had provided the amendment of the agreement with IEAT resulting in a decrease in the Sinking Fund in amount of Baht 99.55 million and 32.77 million, respectively. As at December 31, sinking fund, net consisted of: THOUSAND BAHT CONSOLIDATED 2005 Sinking Fund

275,383

Less Refund of Sinking Fund from IEAT Sinking Fund balance

Less Accumulated amortization Sinking Fund, net

THE COMPANY ONLY

2004

2005

2004

273,231

151,955

151,955

(132,318)

-

(99,550)

-

143,065

273,231

52,405

151,955

(80,830)

(75,394)

(25,077)

(22,053)

62,235

197,837

27,328

129,902

15. CONVERTIBLE BONDS Hemaraj Land and Development Public Company Limited issued the US$ 60 million convertible bonds, divided into 60,000 unit convertible bonds of US$ 1,000 per unit, which bear interest at the rate of 3.5 percent per annum on September 9, 1993 by proposing to sell all the convertible bonds for foreign investor and the bonds would be redeemed on September 9, 2003. The Company had repurchased convertible bonds processed the cancellation by the trustee as stipulated by the Prospectus. During the year 2004, the Company has repurchased convertible bonds processed the cancellation for the all last portion. As at December 31, 2004, the Company had no convertible bonds outstanding.

16. LONG-TERM LOANS TO RELATED PARTY As at December 31,2005 and 2004, Hemaraj Land and Development Public Company Limited had loan with an overseas subsidiary company, H-International Company Limited, in the amount of Baht 1,276.11 million and 1,153.47 million, respectively, which did not have the maturity date and interest charge.

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6.00 192.00

B.3 Promissory note dated August 10, 2005

Total Loans from Related Persons Less Current portion of long-term loan shown

August 2005 to December 2007

March 2003 to December 2007

May 2001 to July 2005

May 2000 to July 2007

August 2005 to May 2006

-

Quarterly

Quarterly

Quarterly Monthly

-

Quarterly

Monthly

Quarterly

Term

Period

-

Repaying the total amount when promissory note is due.

5 years equal installments be repaid or be fully repaid after the second year, when the lender call.

4

Monthly

Monthly

Monthly

Total of the first 3 periods, which approximates 25% of principal of each promissory note will, after grace period, be repaid equally, and the remaining will be repaid in the last period.

4

Monthly

Monthly

Total of the first 3 periods, which approximates 25% of principal Monthly of each promissory note for Baht 20 million loan will, after grace period be repaid equally, and the remaining will be repaid in the last period and 48 months equal installments be repaid for Baht 10 million loan, after grace period.

Repaying the total amount when promissory note is due.

5 years equal installments be repaid or be fully repaid after the second year, when the lender call.

Monthly

Total of the first 3 periods, which approximates 25 of principal Monthly of each promissory note for Baht 80 million loanwill,after grace period, be repaid equally, and the remaining will be repaid in the last period. 48 months equal installments be repaid for Baht 10 million loan, after grace period.

Principal Repayment

4.25%

MLR of KBANK

MLR+1% of KBANK

MLR+1% of KBANK

4.25%

MLR of KBANK

MLR+1% of KBANK

Rate (%)

Interest Payment

4 12

-

4

12

4

Total Installments

Current Conditions

21.14

(21.89)

(31.40) 9.75

43.03

-

4.20

3.83

2.66 6.67

-

15.00

6.67

4.00

2004

41.15

6.00

2.80

-

4.17

14.00

10.00

4.18

-

2005

Balances

(Amounts: Million Baht)

The above mentioned subsidiary company obtained loans from its related person for financing the construction of mini pre-fabricated factories and micro pre-fabricated factories for sale and rent. Part of land and factories has been mortgaged as collateral for such loans.

Long-term Loans from Related Persons, net

under current liabilities

7.00

20.00

- Under the agreement dated May 2, 2001

B.2 Under the agreement dated January 30, 2003

20.00 10.00

14.00

March 2003 to December 2007

August 2002 to August 2007

10.00 25.00

November 2000 to April 2005

Credit Period

80.00

- Under the agreement dated October 31, 2000 and July 24, 2002

B. 1 Promissory note with grace period of 1 year

B. Loan from 2 shareholders

A.3 Promissory note dated August 10, 2005

A.2 Under the agreement dated January 30, 2003

A.1 Promissory note of with grace period of 1 year

A. Loan from directors

Credit Line (Million Baht)

As at December 31, long-term loans from related persons consisted of:

Eastern Seaboard Industrial Estate (Rayong) Company Limited

17. LONG-TERM LOANS FROM RELATED PERSONS


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3.85 % in 1st year MLR-1.75 % in 2nd–3rd year MLR-1.5% in 4th year

Rate (%)

391.60

391.60

2005

270.00

320.00

300.00

325.00

A.2 Loan in the amount of Baht 320 million, repayable within 4 years from the first withdrawal.

A.3 Loan in the amount of Baht 300 million, repayable within 5 years from the first withdrawal.

A.4 Loan in the amount of Baht 325 million, repayable within 4 years from the first withdrawal.

December 2004 to December 2008

December 2003 To December 2008

February 2003 to February 2007

March 2002 to March 2009

Monthly

Monthly

MLR-2%, in 1st-3rd year. MLR-1%, in 4th-5th year.

MLR MLR-0.5%, only 1st year

MLR MLR-0.5%, only 1st year

Repayment on date of mortgage release, Monthly MLR-2%, not less than 50% from land selling price, in 1st-2nd year. but not less than Baht 1million per rai MLR-1%, in 3rd year onwards

Repayment on date of mortgage release, not less than Baht 0.28 million per rai.

Minimum 30% of the repayment amount. Monthly In case of mortgage release, not less than Baht 0.85 million per rai by deducting from the amount that already repaid.

Minimum Baht 4 million per month, commencing the first payment in September 2004.

113.65

137.52

122.32

17.69

124.02

82.98

113.73

-

1.00

1.00

11.40

11.40

2004

-

-

-

-

-

-

391.60

391.60

2005

-

-

-

-

-

-

11.40

11.40

2004

The Company Only

Balances

(Amounts: Million Baht)

Consolidated

25.18

Monthly

Period

Interest Payment

720.00

Repayment on mortgage release date at 60 % of condominium contract price.

Principal Repayment

25.18

June 2004 to June 2008

Credit Period

Current Conditions

720.00 October 2003 Under grace period for 18 months, Monthly Personal fixed deposit to January In 2005, not less than Baht 15 million each. 1 year rate+3.75% 2009 In 2006, not less than Baht 30 million each. 4.5% only 1st year In 2007, not less than Baht 45 million each. 4.75% only 2nd year In 2008, not less than Baht 50 million each. Pay quarterly

1,800.00

1,800.00

A.1 Loan in the amount of Baht 270 million, repayable within 7 years from the first withdrawal.

A. Loans from local commercial banks consisted of:

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Total

A. Loan with credit line of 720 million, fully repay within 5 years and 3 months from the sign agreement date.

Eastern Industrial Estate Company Limited

Total

A.1 Loan with credit line of Baht 1,800 million for condominium project.

A. Loans from local commercial banks

Hemaraj Land and Development Public Company Limited

Credit Line (Million Baht)

As at December 31, other long-term loans consisted of:

18. OTHER LONG-TERM LOANS


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50.00

A.6 Loan in the amount of Baht 50 million, repayable within 6 years from the first withdrawal.

63.00

30.00

B.3 Under the agreement dated September 1, 2005

B.4 Promissory note dated August 10, 2005 1,669.00

25.00

B.2 Under the agreement dated January 30, 2003

Total

165.00

B.1 Under the agreement dated October 31, 2000

B. Loans from other person consisted of:

121.00

Credit Line (Million Baht)

A.5 Loan in the amount of Baht 121 million, repayable within 6 years from the first withdrawal.

Other long-term loans (continued)

Principal Repayment

August 2005 to May 2006

September 2005 to December 2007

March 2003 to March 2008

November 2000 to August 2005

July 2005 to July 2011

Repaying the total amount when promissory note is due.

Equal installments be repaid for Baht 5 million, first repayment in January 2006.

5 years equal installments be repaid or be fully repaid after the second year, when the lender calls.

Total of the first 3 periods, which approximates 25% of principal of each promissory note, after grace period, be repaid equally, and the remaining will be repaid in the last period.

60 months equal installments be repaid Baht 0.84 million commencing from the 13th month after the first withdrawal, and the remaining will be repaid in the last period.

March 2005 60 months equal installments be repaid to March 2011 Baht 2.02 million commencing from the 13th month after the first withdrawal, and the remaining will be repaid in the last period.

Credit Period

Current Conditions

Monthly

Monthly

Monthly

Monthly

Monthly

Monthly

Period

4.25%

Average MLR-0.5% of three major commercial banks

MLR+1% KBANK

MLR+1% KBANK

MLR-1.75%, in 1st-2nd year MLR-1.25%, in 3 rd-4thyear MLR-1%, in 5th-6th year.

F/D +2.75% in 1st-3rd years, F/D +3.75% onwards

Rate (%)

Interest Payment

586.18

30.00

63.00

10.00

-

33.00

59.00

2005

-

-

358.16

-

-

15.00

22.43

2004

2005

-

-

-

-

-

-

-

2004

Balances The Company Consolidated Only

-

-

-

-

-

-

-

ts: Million Baht)


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Other Long-Term Loans, net

Less Current portions of other long-term loans shown under current liabilities

Total Other Loans 5,789.00

1,600.00

800.00

B. Loan from local commercial bank consisted of: B.1 Loan in the amount of Baht 800 million

Total

800.00

Credit Line (Million Baht)

A.1 Loan in the amount of Baht 800 million

A. Loan from other companies consisted of:

Hemaraj Eastern Seaboard Industrial Estate Company Limited

Other long-term loans (continued)

December 2005 to December 2010

November 2004 to November 2011

Credit Period

Repayment when able to sell any plot of land, each not less than 50% of sale contract price, but not less than Baht 1 million per rai.

Repayment when able to sell any plot of land at Baht 0.20 million per rai or 10 periods for each 6 months in amount of Baht 80 million, ďŹ rst payment due in May 2007.

Principal Repayment

Current Conditions

Monthly

Monthly

Period

MLR-1%

MLR+1%

Rate (%)

Interest Payment

1,549.54

(95.05)

1,644.59

641.63

190.00

451.63

2005

1,143.13

(27.43)

1,170.56

800.00

-

800.00

2004

Consolidated

391.60

( - )

391.60

-

-

-

2005

11.40

( - )

11.40

-

-

-

2004

The Company Only

Balances

ts: Million Baht)


19. PROVISIONS As at December 31, 2005 and 2004, the Company has recorded the maximum loss reserve, which may arise from entering into security pledged agreement for a related party before the Company being listed in Securities Exchange of Thailand in 1992, in the amount of Baht 242.52 million and 224.52 million, respectively. In the year of 2004, the Company entered into a debt compromising agreement in relation to security pledged agreements resulting in a gain from compromising debt as disclosed in Note 25.

20. SHARE CAPITAL The 2005 Annual General Meeting of Shareholders of Hemaraj Land and Development Public Company Limited on 29 April 2005 had resolved as follows: 20.1 A reduction of the registered capital by canceling 2,957,820,750 unissued shares at the par value of Baht 1 amounting to Baht 2,957,820,750 reserved for private placement (2,827,820,750 shares) and for the exercise of convertible debentures (130,000,000 shares) from the existing registered capital of Baht 13,000,000,000 be Baht 10,042,179,250 registered capital divided into 10,042,179,250 shares at the par value of Baht 1. The Company had registered the decrease of its authorized share capital with the Ministry of Commerce on May 6, 2005. 20.2 An increase of the registered capital of the Company by another Baht 4,957,820,750 by an issue of 4,957,820,750 new ordinary shares at the par value of Baht 1 each from the existing registered capital of Baht 10,042,179,250 to be the new registered capital of Baht 15,000,000,000 divided into 15,000,000,000 ordinary shares at the par value of Baht 1. The Company registered the increase of its authorized share capital with the Ministry of Commerce on May 9, 2005 in accordance with the following allotment: -

750,000,000 shares will be allotted at the offering price per share to be calculated by reference to the weighted average price of the Company’s shares traded on the SET for a consecutive period of 30 trading days before the offering date, subject to a cap of 10% higher or lower of the “market price” to Cementhai Property (2001) Public Company Limited paid for the investment in S I L Industrial Land Co.,Ltd.

-

4,207,820,750 shares will be alloted by way of private placement in accordance with the SEC notification no.KorJor. 12/2543 regarding the application and permission for offer of new shares.

21. WARRANTS According to the resolutions of the Annual General Meeting of Shareholders dated April 30, 1999, the Company issued 141,531,150 warrants to the existing shareholders and specific investors, at the unit price of Baht 0.1. Total cash received from offer of warrants was in the approximate amount of Baht 14.15 million. The Company registered its warrants with the Stock Exchange of Thailand (“SET”) as listed securities and the warrants were approved by the SET to be listed securities from December 15, 1999 onwards. The Extraordinary Meeting of Shareholders No. 1/2001 of the Company held on December 28, 2001 approved the extension of exercised period to 10 years from the issuing date, which will end within September 30, 2009 and for the adjustment of exercised price to Baht 3 per share. Subsequently, the Board of Directors’ Meeting No. 1/2002 held on February 20, 2002 approved the adjustment to the numbers of the existing warrants with the additional ratio of 2.33333 units per each 1 existing warrant, in accordance with announcement of the Office of the Securities and Exchange Commission regarding guidelines on the adjustment to the exercise price/exercise ratio of warrants. The warrants after the adjustment are 471,686,471 units with the exercise ratio of 1 ordinary share per each warrant and exercise price of Baht 3 per share.

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Warrants (Continued)

The Board of Directors’ Meeting No. 7/2003 held on September 15, 2003 had passed the resolution in accordance with the provision for the adjustments of warrant exercise ratio as stipulated by the Prospectus that would be changed from 1:1 to be one warrant exercisable to 1.05918 ordinary shares. The Company shall not adjust the exercise price, however the Company shall bring forward the adjustment to be included in the following adjustment of rights. The above adjustments would take effect upon the first date of the ordinary shares offering. Later, the Extra-Ordinary Meeting of Shareholders held on October 16, 2003 had passed the resolution of the adjustments of the Company’s par value, resulting in the exercise ratio changing from 1 : 1.05918 to be one warrant exercisable to 10.5918 ordinary shares at the exercise price of Baht 0.283 per share. According to the SEC’s Notification regarding guideline relating to adjustments of the exercise price/ratio of warrants, it permits the Company to adjust the number of warrants rather than to adjust the exercise ratio. Therefore, the Company chose to adjust the number of warrants which resulting that the number of warrants increased from 427,084,638 to 4,527,831,794. Consequently, the warrants have the same exercise ratio at one warrant exercisable to purchase one ordinary share at Baht 0.283 per share.

22. STATUTORY RESERVE AND DIVIDEND Statutory Reserve Under the Public Limited Company Act B.E. 2535, the Company is required to set aside as a statutory reserve at least 5% of its net profit after deducting accumulated deficit brought forward (if any) until the reserve reaches 10% of the registered share capital. The statutory reserve is not available for dividend distributions. Dividend The 2005 Annual General Meeting of Shareholders on 29 April, 2005 approved the distribution of dividends at the rate of Baht 0.035 per share, total sum amount of Baht 211.51 million. The Board of Directors’ Meeting No. 7/2005 held on November 14, 2005 approved the distribution of interim dividends deriving from the operating results of the first half year 2005 at the rate of Baht 0.02 per one ordinary share, amounting to Baht of 121.68 million, totaling dividend amounting to Baht 333.19 million. The Annual General Meeting of the shareholders of the Company of the year 2004 held on April 23, 2004 approved the distribution of dividends at the rate of Baht 0.03 per one ordinary share, amounting to Baht 172.92 million. The Board of Directors’ Meeting No. 5/2004 held on August 19, 2004 approved the distribution of interim dividends deriving from the operating results of the first half year 2004 at the rate of Baht 0.02 per one ordinary share, amounting to Baht of 115.28 million, totaling dividend amounting to Baht 288.20 million.

23. INCOME FROM INCREASE OF SALABLE AREA In the year of 2004, the Company had recorded income from the increase of approved salable area which was realized as revenue and cost in the past in amount of Baht 43.88 million. As the result of this change, the over cost realization in previous accounting period has been adjusted in present account period and the impact was presented in the statements of income.

24. DIRECTORS’ REMUNERATION AND PERSONNEL EXPENSES For the years ended December 31, directors’ remuneration which consisting of meeting fee and annual compensation are as follows: MILLION BAHT 2005

2004

Hemaraj Land and Development Public Company Limited

16.27

15.01

Eastern Seaboard Industrial Estate (Rayong) Company Limited

9.88

10.07

26.15

25.08

Total

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Directors’ Remuneration and Personnel Expenses (Continued)

For the years ended December 31, personnel expenses included in selling and administrative expenses and cost of services in the statements of income are as follows: MILLION BAHT Consolidated statements of income The Company’s statements of income

2005

2004

175.05

157.89

77.92

84.81

25. EXTRAORDINARY ITEMS 25.1 Gain from compromising debt In the year of 2004, the Company entered into a debt compromising agreement with a creditor. As referred in the agreement, the principal shall be Baht 130.50 million to be paid equally in 18 monthly installments bearing interest at the rate of 3.5 percent per annum, from the seventh installment. The Company has recorded the gain from debt compromising of Baht 125.76 million. 25.2 Gain from convertible bond repurchases In the year of 2004, the Company has repurchased its convertible bonds from the bondholders of 26 units, resulting in Baht 0.16 million gain from convertible bonds repurchase.

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Net profit attributable to ordinary shareholders in case of all warrants being exercised

Earnings per share after adjustment by the effect of potential ordinary shares

Number of shares that would have been issued without consideration price as the average fair value of ordinary shares exceeds the exercise price

The effect of potential ordinary shares Warrants

Net profit attributable to ordinary Shareholders

Basic earnings (loss) per share

636,834

636,834

Net profit for the Year

Thousand Baht

8,520,937

2,505,514

6,015,423

Number Of Share (Thousand share)

2005

0.07

0.11

Earnings per share

Baht

950,643

950,643

Net profit for the Year

Thousand Baht

2004

8,498,244

2,812,198

5,686,046

Number Of Share (Thousand share)

Earnings per share computation in the consolidated financial statements for the years ended December 31, consisted of:

26. EARNINGS PER SHARE COMPUTATION

0.11

0.17

Earnings per share

Baht


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2,419.57

Other assets 8,826.32

302.85

Property, plant and equipment, net

Total Assets

827.41

281.06

4,995.43

Assets for rent, net

Commercial purposes, net

Leasehold land and land held for

Cost of real estate developments, net

Industrial Estate

Domestic

-

-

111.31

9.38

0.73

101.2

Others

2005

-

-

-

-

22.39

22.39

Holding Company

Overseas

8,960.02

2,451.34

303.58

928.61

281.06

4,995.43

Total

Domestic

7,850.09

2,036.72

165.22

709.68

281.06

4,657.41

Industrial Estate

MILLION BAHT

-

-

96.04

7.64

0.95

87.45

Others

2004

-

-

-

-

114.64

114.64

Holding Company

Overseas

8,060.77

2,159.00

166.17

797.13

281.06

4,657.41

Total

As at December 31, business segment information in the consolidated balance sheets classiďŹ ed by domestic and overseas business are as follows:

27. BUSINESS SEGMENT INFORMATION


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907.29 680.79

Sales of condominium

Service income

23.01

Gain on sale of investment

(15.81)

718.09

(35.53)

636.83

-

- Gain from convertible bond repurchases

Net profit

-

- Gain from compromising debt

Extraordinary item, net

636.83

(7.30)

-

(27.30)

(0.72)

(18.00)

0.96

0.48

-

23.01

49.29

725.90

2,936.21

-

710.45

907.29

201.54

1,116.93

Profit from ordinary activities

(741.20)

Profit (loss) after tax

-

-

-

-

-

-

-

-

0.39

(16.2)

-

-

-

-

-

-

Total

(81.26)

(35.53)

Income tax expenses

(0.02)

-

-

-

-

-

-

0.74

(8.02)

29.66

-

29.66

-

-

-

Holding Company

Overseas

941.84

(20.25)

(42.10)

(21.20)

(18.05)

1.56

(0.11)

74.65

77.49

47.27

842.58

3,509.24

43.84

579.27

311.28

26.21

2,548.64 -

-

-

2004

(7.35)

-

(0.02)

-

-

-

-

-

-

0.36

(7.69)

23.15

-

23.15

Others

Domestic Industrial Estate

MILLION BAHT

Net profit of minority interest

(27.28)

(0.72)

Interest expenses

- loss on investment revaluation

(18.00)

0.96

Share of gain from investments for using the equity method - associated companies

Other expenses - estimated loss on possible loss from lawsuit

0.48

Gain (loss) on exchange rate

-

48.16

Adjustment of loss on decline in value of estate development cost

750.12

Other income

2,906.55

Profit (loss) from operations

Total Sales and Services income

-

201.54

Sales of pre-fabricated factory

Income from increase of salable area

1,116.93

Sales of land

Others

Domestic Industrial Estate

2005

-

-

-

-

-

-

(16.79)

-

-

-

-

-

-

-

-

0.07

(16.86)

Holding Company

Overseas

950.64

0.15

125.76

824.73

(92.97)

917.70

(20.25)

(42.12)

(21.20)

(18.05)

1.56

(0.11)

74.65

77.49

47.70

818.03

3,532.39

43.84

602.42

311.28

26.21

2,548.64

Total

For the years ended December 31, operation in the consolidated statements of income classified by domestic and overseas business are as follows:

Business segment information (continued)


28. PLEDGED ASSETS As at December 31, 2005, pledged assets are as follows: Hemaraj Land and Development Public Company Limited 1.

The partial land and attachments have been mortgaged as collateral for loans from local commercial banks and financial institutions and partial land have been pledged as collateral in the court.

2. 15 million ordinary shares of Sriracha Harbour Public Company Limited, which is a related company, have been pledged in the court. 3. The ordinary shares of Hemaraj Eastern Seaboard Industrial Estate Company Limited, which is a subsidiary company, have been pledged with 2 lenders secured for loans obtained by that subsidiary. 4. 17.5 million ordinary shares of Glow IPP Company Limited have been pledged with the lender secured for loan obtained by that company. 5. Time deposit of approximate Baht 22.97 million has been pledged with bank to secure letter of guarantee issued by bank in respect of certain course of business of a subsidiary. Eastern Industrial Estate Company Limited 1.

Time deposit of approximate Baht 7.43 million has been pledged to local banks against security given for performance under utility construction.

2. The majority of the Company’s land held for commercial purposes has been mortgaged as collateral for long-term loans from local commercial banks. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1.

The majority of the Company’s land has been mortgaged as collateral for overdrafts and loans from one commercial bank.

2. Partial land, mini and micro pre-fabricated factories of the company have been mortgaged as collateral for loans from related persons. 3. Time deposit of Baht 0.05 million has been pledged as security for public utility services. Hemaraj Eastern Seaboard Industrial Estate Company Limited 1.

The Company’s partial land title deeds have been pledged with 2 lenders for loan security.

2. The Company’s partial land has been mortgaged as collateral for long-term loans from local commercial banks.

29. COMMITMENTS UNDER AGREEMENTS As at December 31, 2005, commitments under agreements are as follows: Hemaraj Land and Development Public Company Limited 1.

The Company has participated in the project establishment of Chonburi Industrial Estate (Bor Win) in Phase 1 and Phase 2 with the Industrial Estate Authority of Thailand (“IEAT”) according to the joint operation agreements dated July 5 and December 29, 1989, respectively. Later on October 31, 2001, the Company entered into the amendment to such joint operation agreements with IEAT. The major conditions are summarized as follows: 1) The Company shall provide utilities systems and facilities to the entrepreneurs in the industrial estate with payment of expenses on its participation in the procedures to the IEAT. 2) The Company shall not transfer assets, component part and equipment as well as utilities systems and facilities to the IEAT.

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Commitments under agreements (Continued)

3) The Company shall provide a fund for the maintenance and construction of utilities systems and facilities in the industrial estate (“Sinking Fund”). 2. The Company acquired 5% investment in amount of Baht 175 million in Glow IPP Co., Ltd. and has to maintain the 5% investment ration to comply with the conditions with Electricity Generating Authority of Thailand. 3. The Company has commitment under construction, infrastructure and equipment installation contracts with 8 contractors for the Company’s condominium project, with the remaining commitment balance amounting to Baht 1,345.29 million. 4. The Company has commitment under construction contracts with 2 contractors to construct mini pre-fabricated with the remaining commitment balance amounting to Baht 15.47 million. 5. The Company has entered a purchase and sale contract agreement in a project in amount of Baht 629 million, and has obliged to buy not over 10 April 2006. The Company has already paid Baht 47 million deposits. Eastern Industrial Estate Company Limited 1.

The Company has participated in the establishment project of Eastern Industrial Estate (Map Ta Phut) with the IEAT according to the joint operation agreement dated December 27, 1989. On October 31, 2001 and later on March 29, 2005, the Company entered into the amendment to such joint operation agreement with IEAT. The major conditions are summarized as follows: 1) The Company shall provide utilities systems and facilities to the entrepreneurs in the industrial estates with payment of expenses on its participation in the procedures to the IEAT. 2) The Company shall not transfer assets, component part and equipment as well as utilities systems and facilities to the IEAT. 3) The Company shall provide a fund for the maintenance and construction of utilities systems and facilities in the industrial estate (“Sinking Fund”).

2. The Company has commitment under construction contracts with 3 contractors to construct utilities system of the Company’s project, with the remaining commitment balance amounting to Baht 7 million. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1.

The Company has participated in the establishment project of Eastern Seaboard Industrial Estate (Rayong) with the IEAT according to the joint operation agreement No. 1/2539 and 1/2540 (in the third quarter of 2004, two agreements were combined to one). The major conditions are summarized as follows: 1) The Company shall provide utilities systems and facilities to the entrepreneurs in the industrial estate with payment of expenses on its participation in the procedures to the IEAT. 2) The Company shall not transfer assets, component part and equipment as well as utilities systems and facilities to the IEAT. 3) The Company shall provide a fund for the maintenance and construction of utilities systems and facilities in the industrial estate (“Sinking Fund”).

2. The Company has obligations, under a joint-investment agreement with Hemaraj Land and Development Public Company Limited and another company, that the Company has to pay commission on sale of land and management fee to Hemaraj Land and Development Public Company Limited based on revenues from sales of land, public utility service providing and lease of factory. 3. The Company has commitment under construction contracts with 2 contractors to construct mini pre-fabricated and micro pre-fabricated factories, with the remaining commitment balance amounting to Baht 69.02 million. 4. The Company has commitment under construction contracts with 5 contractors to construct utilities system of the Company’s project, with the remaining commitment balance amounting to Baht 26.44 million.

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Commitments under agreements (Continued)

Hemaraj Eastern Seaboard Industrial Estate Company Limited 1.

The Company has commitment under construction contracts with 3 contractors to construct utilities system of the Company’s project, with the remaining commitment balance amounting to Baht 219.24 million.

30. COMMITMENTS AND CONTINGENT LIABILITIES As at December 31, 2005, commitments and contingent liabilities consisted of: Hemaraj Land and Development Public Company Limited 1.

The Company has obligations under condition of the letters of guarantee issued by the banks for its performance under the joint operation agreements with the Industrial Estate Authority of Thailand, the construction of utilities under land sale contract, and its performance under the raw water purchase agreement and others, as well as the letters of guarantee issued by the banks for the performance of its associated company under the power plant construction agreement with the Electricity Generating Authority of Thailand, in the total amount of Baht 26.87 million.

2. Company has obligations regarding guarantee of the hire purchase agreements of its 3 related companies in the total credit line of Baht 8.12 million. Eastern Industrial Estate Company Limited 1.

The Company has entered into land sale and purchase contracts. Under the terms of the contracts, the Company is contingently liable to repay deposits and installments in the event that buyers are unable to obtain satisfactory approval from the Board of Investment and/or the IEAT to set up operations.

2. The Company has obligations regarding guarantee of the hire purchase agreements of its 3 related companies in the total credit line of Baht 28.90 million. 3. The Company has obligation, under condition of the letters of guarantee issued by the banks for its performance under the joint operation agreement with the IEAT, under the raw water purchase agreement, and others in the total amount of Baht 37.22 million. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1.

The Company has entered into land sale and purchase contracts. Under the terms of the contracts, the Company is contingently liable to repay deposits and installments in the event that buyers are unable to obtain satisfactory approval from the Board of Investment and/or the IEAT to set up operations.

2. The Company has obligation under condition of the letters of guarantee issued by banks to guarantee its performance under the joint operation agreement with the IEAT, the construction of utility, transmission lines, power station and sale of land in its industrial estate, and others in the total amount of Baht 95.74 million. Hemaraj Eastern Seaboard Industrial Estate Company Limited 1.

The Company has obligation, under condition of the letters of guarantee issued by a bank for its performance under the joint operation agreement with the IEAT, in the total amount of Baht 22.97 million.

31. PROMOTIONAL PRIVILEGES The Company and its 3 subsidiary companies have been granted promotional certiďŹ cates under the Investment Promotion Act, B.E. 2520 as follows:

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Promotional Privileges (Continued)

Hemaraj Land and Development Public Company Limited A. Industrial Estate Business A.1 On December 29, 1988, obtaining the approval of promotional privilege for the development area of 1,500 Rais. A.2 On February 15, 1990, obtaining the approval of promotional privilege for the development area of 2,000 Rais. A.3 On July 25, 2001, obtaining the approval of promotional privilege for the development area of 1,282 Rais. B. Industrial Factory Development Business B.1 On June 21, 2000, obtaining the approval of promotional privilege for the development of industrial factories for sale or of rent, 11 units for micro factory. Major Privileges 1.

Exemption from corporate income tax on net income derived from the promoted business for a period of 7 years as from the date when revenues are ďŹ rst earned.

2. Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date of the privilege No.1 under condition A.1. The promotion period under condition A.1 and A.2 expired and the Company is currently in the promotion period under condition B.1. For A.3, the Company has not earned the revenues yet. Eastern Industrial Estate Company Limited A. Industrial Estate Business A.1 On May 8, 1989, obtaining the approval of promotional privilege for the development area of 626 Rais. Later, on September 23, 1992, obtaining the approval of the development area extension from 626 Rais to 1,850 Rais. A.2 On November 27, 2002, obtaining the approval of promotional privilege for the development area of 565 Rais. Major Privileges 1.

Exemption from corporate income tax on net income derived from the promoted business for a period of 5 and 8 years as from the date when revenues are ďŹ rst earned.

2. Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date under the privilege No.1. The promotion period under condition A.1 expired and the Company is currently in the promotion period under condition A.2. Eastern Seaboard Industrial Estate (Rayong) Company Limited A. Industrial Estate Business A.1 On June 21, 1995, obtaining the promotional privilege for the development area of 2,063 Rais, which subsequently, extended to be 3,595 Rais on August 9, 1995. A.2 On October 27, 1997, obtaining the promotional privilege for the development area of 2,466 Rais, which subsequently, extended to be 2,791 Rais on August 26, 2003. A.3 On July 25, 2001, obtaining the promotional privilege for the development area of 716 Rais. A.4 On December 8, 2004, obtaining the promotional privilege for the development area of 680 Rais. B. Industrial Factory Development Business B.1 On January 19, 2000, obtaining the promotional privilege for the development of industrial factories for sale and rent, 5 units for mini factories and 17 units for micro factories. B.2 On June 21, 2000, obtaining the promotional privilege for the development of industrial factories for sale and rent, 7 units for mini factories and 6 units for micro factories. 64

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Promotional Privileges (Continued)

B.3 On November 29, 2000, obtaining the promotional privilege for the development of industrial factories for sale and rent, 11 units for mini factories and 1 unit for micro factory. B.4 On January 16, 2002, obtaining the promotional privilege for the development of industrial factories for sale and rent, 1 unit for mini factory and 50 units for micro factories. B.5 On March 27, 2002, obtaining the promotional privilege for the development of industrial factories for sale and rent, 22 units for mini factories. Major Privileges 1.

Exemption from corporate income tax on net income derived from the promoted business for a period of 8 and 7 years as from the date when revenues are first earned.

2. Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date under the privilege No.1. 3. Double deduction of transportation expenses, electricity expenses and water supply expenses is allowed for 10 years from the date when the revenues are first earned. The promotion period under the privilege No.1 for condition A.1 and A.2 expired and the Company is currently in the promotion period under the privilege No.2. Hemaraj Eastern Seaboard Industrial Estate Company Limited A. Industrial Estate Business A.1 On May 22, 1997, obtaining the promotional privilege for the development area of 1,407 Rais. A.2 On May 22, 1997, obtaining the promotional privilege for the development area of 1,375 Rais. A.3 On May 22, 1997, obtaining the promotional privilege for the development area of 1,485 Rais. A.4 On September 26, 1996, obtaining the promotional privilege for the development area of 1,332 Rais. Major Privileges 1.

Exemption from corporate income tax on net income derived from the promoted business for a period of 8 years as from the date when revenues are first earned.

2. Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date the privilege No.1. 3. Double deduction of transportation expenses, electricity expenses and water supply expenses is allowed for 10 years from the date when the revenues are first earned.

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Promotional Privileges (Continued)

For the years ended December 31, domestic revenues are classified into the promoted and the non-promoted businesses as follows: MILLION BAHT The non-promoted 2005 2004

The promoted 2005 2004

Total 2005

2004 2,929.96

Consolidated Revenue from sales Service income

Total The Company Only Revenue from sales

1,137.88

1,498.64

1,087.88

1,431.32

2,225.76

285.75

381.09

424.70

200.21

710.45

581.29

1,423.63

1,879.73

1,512.58

1,631.53

2,936.21

3,511.26

-

-

988.30

1,275.90

988.30

1,275.90 27.83

Service income Public utilities

-

-

15.56

27.83

15.56

Potable Water

-

-

20.93

15.51

20.93

15.51

Raw Water

-

-

47.88

45.89

47.88

45.89

Waste water treatment Rental

-

-

5.51

4.89

5.51

4.89

2.15

3.31

12.80

13.09

14.95

16.40 8.47

Construction

-

-

43.17

8.47

43.17

Others

-

-

0.96

1.01

0.96

1.01

Total service income

2.15

3.31

146.81

116.69

148.96

120.00

Total

2.15

3.31

1,135.11

1,392.59

1,137.26

1,395.90

32. FINANCIAL INSTRUMENTS Risk Management Policy Exposure to interest rate and currency risk arises in the normal course of the Hemaraj Group’s business. These are subject to the risk of market rates changing subsequent to transaction date. The Hemaraj Group’s policy on interest rate risk and currency risk hedging is as follows: A. Maintaining proportions of domestic and foreign borrowings. B. Borrowing loans at fixed and floating interest rates. C. Pledging assets as collateral against loans. The Hemaraj Group has no policy to speculate on or engage in the trading of any off-balance-sheet derivative financial statements. Fair Value of Financial Instruments Except as disclosed in Note 3 to the financial statements, fair value of significant financial instruments consists of: A. Fair value of cash and cash equivalents, deposits for investment, account receivables, bank overdrafts and loans from financial institutions, account payables and accrued expenses approximate the carrying amount because of short maturity of these instruments. B. Fair value of short-term investments in available-for-sale securities is equal to the market value. C. Fair value of short-term loans and advances to related parties, loans to related parties, short-term loans and advances from related parties, due to and loans from related parties could not be determined since the repayment period is not determined.

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33. PROVIDENT FUND The Company and its 4 subsidiaries which are Eastern Industrial Estate Company Limited, Eastern Seaboard Industrial Estate (Rayong) Company Limited, Eastern Pipeline Services Company Limited and H - Construction Management and Engineering Company Limited, jointly established the provident fund under the Provident Fund Act B.E. 2530, named “Hemaraj Provident Fund”, to provide membership for their employees. According to regulations of the fund, member and the Company contributes 4% - 10% of employees’ monthly salaries, depending on the working period. Members are entitled to their whole contributions plus net benefit thereon, and the Company’s contributions plus benefits thereon at the rates, depending on their working period.

34. APPROVAL OF FINANCIAL STATEMENTS These financial statements for the year ended December 31, 2005, have been accepted on February 14, 2006 by an authorized person designated by the Company for proposing to the Company’s Board of Directors for approval for issue.

Certified Public Accounting Fee 1.

Audit Fee The company and its subsidiaries have paid for the audit fee in the amount of baht 2,740,000 to A.M.T. & Associates for the fiscal year 2005, which includes baht 30,000 of the audit fee for its subsidiaries established in 2005.

2. Non-Audit Fee The company and its subsidiaries have paid for other accounting services, BOI report for example, in the amount of baht 40,000 to A.M.T. & Associates for the fiscal year 2005.

67

Annual Report 2005 HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Shareholding & Organization Structure Top Ten of Hemaraj Land and Development’s Shareholders as of 30/11/05 No. 1 2 3 4 5 6 7 8 9 10

Major Shareholders

No. of Shares

Thai NVDR Co., Ltd. Miss Phenpunnee Horrungruang Mr. Sumeth Horrungruang SOMERS (U.K.) LIMITED MORGAN STANLEY & CO INTERNATIONAL LIMITED Mr. Chan Bulakul Miss Jaruwon Chaisupawon Miss Kornkanok Tongme HSBC (SINGAPORE) NOMINEES PTE LTD. Mrs. Siriwon Darakorn Na Ayudaya

% of Total Issued Share 5.92% 5.79% 5.17% 4.58% 3.74% 3.64% 3.01% 2.51% 2.14% 1.60%

359,966,100 352,540,770 314,723,120 278,642,200 227,664,300 221,737,909 183,335,360 152,500,010 130,000,000 97,500,000

Organization Structure of Hemaraj Land And Development Public Company Limited as of January 2006 Shareholders

Board of Directors Audit Committee Executive Committee

President & CEO

Internal Audit

Executive Vice President

Customer Development

I.E. Operations

Senior Vice President

Planning & Investor Relations

Information SYS & Services

Development

Corporate Marketing

Residential Project Planning

Residential Customer Development

Finance

Account

Legal

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

General Information Nature of Business

Name

Address

Hemaraj Land And Development Public Company Limited Registration No. Bormorjor. 0107536000676 Share Capital 15,000,000,000 shares Issued 6,090,749,424 shares

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand Tel.(662) 719-9555 Fax (662) 719-9546-7 www.hemaraj.com E-mail: invest@hemaraj.com

Paid % of Capital Invesment (Mil.Baht)

Industrial Estate Developer

6,091

Revenue (Mil. Baht) 2005

%

2004

%

1,197.06

40%

1,582.71

42%

644.98

2003

31%

%

0.39

0%

0.07

0%

52.02

3%

1,135.27

30%

444.05

22%

Subsidiary Companies Hemaraj International Limited (1)

Scotia Centre, 4th Floor P.O. Box 2804, George Town, Grand Cayman, Cayman Islands

Holding Company

0.03

100

H-International (BVI) Company Limited (2)

Romasco Place, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola British Virgin Islands.

Holding Company

0.08

100

Eastern Industrial Estate Company Limited

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Industrial Estate Developer

400

99.99

709.30

24%

Eastern Pipeline Services Company Limited (3)

18th Floor, UM Tower, Pipe Rack Rental 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

3.75

99.99

30.00

1%

23.04

1%

21.53

1%

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Industrial Estate Developer

358

60

1,066.38

35%

989.78

27%

887.86

43%

H-Construction Management and Engineering Company Limited

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Supervision Service

0.25

99.99

0.40

0%

0.47

0%

The Park Residence Company Limited

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Property Development and Marketing and Service Management

0.25

99.99

Hemaraj Eastern Seaboard Industrial Estate Company Limited

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Industrial Estate Developer

595

99.99

5.45

0%

0.91

0%

Hemaraj Water Company Limited

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang, Bangkok 10250, Thailand

Industrial Water Distributor

0.25

99.99

SME Factory Company Limited

18th Floor, UM Tower, Factory Sale and 9 Ramkhamhaeng Road, Rental Suanluang, Bangkok 10250, Thailand

0.25

99.99

2.14

0%

1.56

0%

(2.15)

0%

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Associated Companies Elyo-H Facilities Management Limited

107/1 Moo 4, Eastern Seaboard Industrial Estate (Rayong), Pluakdeang, Rayong, Thailand

Facilities Management Services

50

40

Rayong Industrial Land Company Limited (4)

1 Siam Cement Road, Bangsue Bangkok 10800, Thailand

Industrial Estate Developer

1,000

25

S I L Industrial Land (Saraburi) Company Limited

111 Moo 7, Nong Pla Mao Sub-District Nong Khae District, Saraburi 18140, Thailand

Industrial Estate Developer

500

25

(1.02)

0%

Electricity and Power Generation

10

49.99

(0.16)

0%

Management and Maintenance of Pipe Rack

10

15

Glow Hemaraj Energy Company Limited 195 Empire Tower, 38th Floor Park Wing, South Sathorn Road Bangkok 10120, Thailand Related Companies Eastern Fluid Transport Company Limited

618 Nimom Makkasan Road Makkasan, Ratchthewi Bangkok 10400, Thailand

Total Revenue : Hemaraj Land And Development PLC. and Subsidiaries

3,009.94

100%

3,733.81

100%

2,048.29

Remark 1) Incorporated in the Cayman Islands 2) Incorporated in the Territory of the British Virgin Islands 3) Held 74.99% directly and 25% indirectly through Eastern Industrial Estate Company Limited 4) Held 25% directly in S I L Industrial Land (Saraburi) Company Limited and also S I L held 99.99% in Rayong Industrial Land Company Limited

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100%


HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Information of Board of Directors, Audit Committee and Management Present Position - Others Name / Position 1

Mr. Sawasdi Horrungruang Chairman of the Board Chairman of the Executive Board

Age

Education

65

Honorary Doctorate Degree Bachelor Degree of Business Administration Humanity Faculty, Burapha University

2

Mr. Thavorn Anankusri Director / Vice Chaiman of the Executive Board

64

-

3

Mr. David Richard Nardone Director / Executive Director / Managing Director

50

MBA Northeastern University Boston, USA

Position President Chairman Chairman Chairman Chairman Chairman Chairman

1.16

Chairman Vice Chairman / Executive Director and Director Director Chairman Director Chairman Chairman Chairman

Thai Industrial Estate Association. Nakornthai Strip Mill PCL. Millennium Steel PCL. Sun Tech Group PCL. Sriracha Harbour PCL. The Park Residence Co., Ltd. Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. Eastern Industrial Estate Co., Ltd. Eastern Seaboard Industrial Estate (Rayong) Co., Ltd. Eastern Pipeline Services Co., Ltd. Hemaraj International Co., Ltd. H-International (BVI) Co., Ltd. Hemaraj Water Co., Ltd. SME Factory Co., Ltd. Glow Hemaraj Energy Co., Ltd.

Director

Eastern Industrial Estate Co., Ltd.

0.26

Chairman Chairman Chairman

Elyo-H Facilities Management Ltd. Eastern Pipeline Services Co., Ltd. H-Construction Management and Engineering Co., Ltd The Park Residence Co., Ltd. Eastern Seaboard Industrial Estate (Rayong) Co., Ltd. Eastern Industrial Estate Co., Ltd. Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. Glow Co., Ltd. Hemaraj International Co., Ltd. H-International (BVI) Co., Ltd. Hemaraj Water Co., Ltd. SME Factory Co., Ltd. Rayong Industrial Land Co., Ltd. S I L Industrial Land (Saraburi) Co., Ltd. Glow Hemaraj Energy Co., Ltd.

0.56

Director Executive Director and Director Director Director Director Director Director Director Director Director Director Director 4

Mr. Sudhipan Charumani Independent Director / Chairman of the Audit Committee

62

Charter Accountant Institutes (Britian and Wales)

5

Mr. Peter John Edmondson Independent Director / Member of the Audit Committee

55

Bachelor of Science in in Chemistry (Honor) University of ShefďŹ eld, England

6

Mrs. Punnee Worawuthichongsathit Independent Director / Member of the Audit Committee

54

Master in Accounting Chulalongkorn University

7

Mr. Vivat Jiratikarnsakul Director / Executive Director / Deputy Managing Director

50

Bachelor of Sanitary Faculty of Engineering Chulalongkorn University

Independent Director Director

Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. Vasupak Associates Co., Ltd.

Investor Consultant

Private Sector

Independent Director / Member of the Audit Comittee Independent Director / Member of the Audit Committee Independent Director / Member of the Audit Committee

TT&T PCL.

Director Director Executive Director and Director

Eastern Fluid Transport Co., Ltd. Eastern Industrial Estate Co., Ltd. Eastern Seaboard Industrial Estate (Rayong) Co., Ltd. Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. Elyo-H Facilities Management Ltd. H-Construction Management and Engineering Co., Ltd The Park Residence Co., Ltd. Eastern Pipeline Services Co., Ltd. Hemaraj International Co., Ltd. H-International (BVI) Co., Ltd. Hemaraj Water Co., Ltd. SME Factory Co., Ltd. Rayong Industrial Land Co., Ltd. S I L Industrial Land (Saraburi) Co., Ltd. Glow Hemaraj Energy Co., Ltd.

Director Director Director Director Director Director Director Director Director Director Director Director 8

Ms. Pattama Horrungruang Director / Executive Director / Deputy Managing Director

43

MBA Thammasat University

Sector / Company

Stocks held by Directors/ Management (%) as of 31/12/2005

Director Director Executive Director and Director Director Director Director Director Director

-

0.06

-

Nakornthai Strip Mill PCL. The Brooker Group PCL. 0.14

Eastern Industrial Estate Co., Ltd. Hemaraj Eastern Seaboard Industrial Estate Co., Ltd. Eastern Seaboard Industrial Estate (Rayong) Co., Ltd. The Park Residence Co., Ltd. Millennium Steel PCL. Nakornthai Strip Mill PCL. Hemaraj Water Co., Ltd. SME Factory Co., Ltd.

-

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Information of Board of Directors, Audit Committee and Management (Continued) Present Position - Others Name / Position

Age

Education

Position

MBA, Finance Independent Chairman and Director Michigan State University, USA Director (Royal Thai Government Scholarship) Chairman Director

Sector / Company

Stocks held by Directors/ Management (%) as of 31/12/2005

9

Mr. Somphong Wanapha Director

61

10

Mr. Khamhoung Ratsamany Director - Industrial Estate Operations

39

MBA Bangkok University

11

Mr. Tanin Subboonrueng Director - Development

42

MBA, Business Administration Assumption University

Director

H-Construction Management and Engineering Co., Ltd.

-

12

Mr. Sirisak Kijruksa Director - Accounting

45

Bachelor of Accounting Bangkok University

Director

H-Construction Management and Engineering Co., Ltd.

-

13

Ms. Somjai Wachiraha Director - Finance

45

Bachelor of Business Administration General Affairs, Ramkhamhaeng University

-

-

-

14

Mr. Niphone Harnpatanapanich Director - Residential Project Planning

49

MBA Chulalongkorn University

-

-

-

15

Mr. Paopitaya Smutrakalin Director - Planning & Investor Relations

35

MS, Finance Drexel University, Philadelphia, USA

-

-

-

16

Ms. Jinnapat Tongviseskul Director - Residential Customer Development

36

MBA, Economic & Administration Chulalongkorn University

-

-

-

17

Ms. Ladda Rojanavilaivudh Director - Industrial Customer Development

38

MBA, Bangkok University MA, Japanese Nara Women University, Nara,Japan

-

-

-

18

Ms. Anchalee Parsertchand Director - Industrial Customer Development

36

MBA, Assumption University MA, Japanese Keio University, Tokyo, Japan

-

-

-

19

Ms. Chantana Hinkaew Director - Corporate Marketing

36

MBA University of Nottingham, UK

-

-

-

Director -

Government Savings Bank Integrated Pilot Research Projects, National Research Coucil Executive Board on M.B.A. Program, Thammasat State Enterprise Performance agreement Evaluation Committee, State Enterprise Policy OfďŹ ce, Ministry of Finance Sahapatana Interholding PCL.

-

-

-

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Annual Report 2005

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Checklist to the SEC 56-2 Form Page 1. General Information 1.1 1.2 1.3 1.4 1.5 1.6

Financial Highlights Shareholding & Organization Structure General Information – The Company & its Subsidiaries Information of Board of Directors, Audit Committee and Management Project Summary Other References

3 68 69 70 73 73 4

2. Message from the Board of Directors 3. The Company’s Business Profile 3.1 3.2 3.3

Nature of Business Core and Related Business Revenue Structure by Business Line

6 6 3 5

4. Economic and Competitive Conditions 5. Management Analysis 5.1 Operating Performance 5.2 Financial Status 5.3 Risk Factors & Others 5.4 New Projects

11 11 11 12

6. Management Structure 6.1 6.2 6.3

7. 8. 9. 10. 11. 12.

Board of Directors and Executive Committee Audit Committee Company Management and Structure

13 13 14 14 15 70 15 20 21

Selection of Company’s Directors and Management Remuneration for Directors and Management Report of Securities held by Directors / Management Good Corporate Governance Report of Certified Public Accountant Financial Statements and Notes to Financial Statements

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HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED

Annual Report 2005

Project Summary & Other References As of December 31, 2005 Total Area (Rai)

Industrial Estate Hemaraj Chonburi Industrial Estate Hemaraj Eastern Industrial Estate (Map Ta Phut) Eastern Seaboard Industrial Estate (Rayong) Hemaraj Eastern Seaboard Industrial Estate S I L Industrial Land (Saraburi) Rayong Industrial Land

3,993 2,865 8,305 6,960 3,622 3,468 29,213

Grand Total

Other References Reference Persons Share Registrar

Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Bldg. 4th Floor 6-7th Floor, Rachadapisek Road, Klongtoey Bangkok 10110, Thailand Tel. 0-2359-1200-1

Auditor

A.M.T & Associates 491/27 Silom Plaza, Silom Road, Bangruk, Bangkok 10500, Thailand Tel. 0-2234-1676, 0-2234-1678 Fax 0-2237-2133 - Kesree Narongdej CPA No. 76

Attorney

Allen & Overy (Thailand) Co., Ltd. 130 Sindhorn Building III, 22nd Floor, Wireless Road Bangkok 10330, Thailand Tel. 0-2263-7600

Financial Advisor

Per Project

Advisor or Manager and under contract management

The Brooker Group 16th Floor, Harindhorn Building, 54 North Sathorn Road, Bangrak, Bangkok 10500, Thailand Tel. 0-2267-9222 Fax 0-2632-2606

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Hemraj 05  

HEMRAJ_2005 HEMARAJ LAND AND DEVELOPMENT PCL Annual Report 2005

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