Pf 05 by Brother Roger

Content Message from Board of Directors Company Information Financial Information Nature of Business The Board of Directors Organization Chart Property PerfectĂs Projects Property PerfectĂs Projects Map Marketing and Competition Real Estate Industry Trend 2006 Other Information Report of Independent Auditor Balance Sheets Notes to Consolidated Financial Statements Audit Committee Report 2005 Auditor Fee Accuracy Sanctification Form

1 3 4 5 10 12 14 15 16 19 20 58 59 67 91 92

Message from Board of Directors

To Shareholders Property market in 2005 continued the growth pace from the previous year, amid the higher interest rates and oil prices which forced homebuyers to be more cautious. Several developers have improved its capacity in terms of administration, management and foreign partnership for long-term survival. Several large-scale developers have embraced the investment from Hong Kong and Singapore investors, expecting to reap new business knowledge and technologies as well as financial assistance. Seeking foreign partners is inevitable, like what we witnessed from the banking sector, particularly for large developers who want to further establish their strong presence. Homebuyers have also adjusted themselves. Though demand continues to rise, the types of development have changed. Demand is now concentrated in units priced less than Bt3 million, in the locations that must not be too far from city areas as they are cutting down oil consumption. It is expected that medium-priced condominium and townhouses in city areas would further enjoy popularity until the mass transit development is completed.

Annual Report 2005 1

To accommodate the demand, late 2005 Property Perfect launched Metro Park, its first low-rise condominium project which has received warm welcome. Late this year, the company will also unveil a townhouse project along the Airport Rail Link route. This will mark the company没s return into the townhouse market, after the extraordinary success 5 years ago. In 2005, the company reaped Bt 4,932 million in revenue, 19.5% up from Bt4,126 million a year earlier. Five single house projects were launched, but the units were put on the market in the latter half of the year. While the company will be aggressively sell the units in these projects throughout this year, we will also launch two new single house projects later this year. The company will concentrate on suburban areas and neighbouring provinces of Bangkok, with the development projects designed to run along infrastructure projects such as the Suvarnabhumi Airport, the skytrain-subway routes, expressways and new roads. The types of development will also be expanded to cover all types of potential buyers, with the unit price from Bt1 million to Bt15 million.

As a marketing strategy, we will focus on developing projects with a large clubhouse, nestled in a big lake and garden, which won two projects an outstanding environment award from the Natural Resources and Environment Ministry. This year, five big clubhouses will be constructed, aside from four outstanding clubhouses. Financially, early last year the company issued bills of exchange worth Bt1,575 million which carry lower interest rates than bank loans and the maturity of less than 9 months fit the company没s house sales realisation. All the short-term loans were repaid, and most of the company没s borrowing is long-term, which is appropriate for the nature of business. The company now shoulders secured bonds worth Bt1,550 million, which would be redeemed in 2 years. The company earlier also issued convertible bonds worth less than US$30 million: US$20 million bonds were issued to GEMS a Hong Kong private fund which manages assets worth Bt28,000 million. The 5-year bonds carry the annual coupon rate of 3.5%. The bonds incurred no foreign exchange risks. These demonstrate our focus in financing development with long-term financing as well as reduce the outstanding debts. Throughout the past year, the Board of Directors would like to thank all shareholders, customers, suppliers, financial institutions and business partners who have extended strong supports to the company, as well as all executives and employees who have dedicated their time and ability in pushing the company forward.

Tawatchai Nakata Chairman

2 Annual Report 2005

Chainid Ngowsirimanee Managing Director

Company Information

Name Head Office

: Property Perfect Public Company Limited : 17th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2245-6640-7 Fax. 0-2247-3328 Type of Business : Real Estate Development No. of Paid-up Share : 782,535,025 Share Par value : Baht 6 Paid-up Capital : Baht 4,695,210,150

Investment in other companies Name and Address

Registered Capital (MB)

Paid-up Capital

Percentage of Investment

Type of Business

Krungthep Land Co., Ltd. 21th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2645-0960-3 Fax. 0-2645-0380

1,700

150,000,000

20.00%

Real Estate Development

Estate Perfect Co., Ltd. 17th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2245-6640-7 Fax. 0-2645-1976

1,000

100,000,000

100.00%

Real Estate Development

Real Service Co.,Ltd. 100/9 Soi Ta-it, Rattanathibet Rd., Nonthaburi Tel. 02-594-4001-5 Fax. 02-594-4021

400,000

19.00%

Home Service

Perfect Satellite Services Co., Ltd. 19th Flr. Vongvanich B Bldg., 100/52 Rama IX Rd., Tel. 0-2645-1406-8 Fax. 0-2645-1409

100

99.94%

Manage Fitness and Clubhouse

Annual Report 2005 3

Financial Information

Financial Position Total Assets Project Development Cost and Land for Development Total Liabilities Shareholders没 Equity Operation Results Sales Total Revenue Gross Margin Net Income (Loss) Financial Ratio Return on Total Revenue Return on Equity Return on Total Assets Current Ratio Quick Ratio Per Share Data Net Income (loss) per Share Dividend Book Value

4 Annual Report 2005

Consolidated 2005

2005

Unit : Million Baht The Company Only 2004 2003

13,861

13,414

11,755

8,593

11,285 7,924 5,937

9,832 7,476 5,937

8,847 6,621 5,134

6,847 4,473 4,121

4,932 5,789 34.55% 1,093

4,149 5,185 5,185 34.09% 1,093

3,926 4,387 37.82% 1,016

3,758 4,127 35.74% 1,157

18.88% 19.74% 8.34% 3.03 0.20

21.07% 19.74% 8.68% 2.65 0.19

23.15% 21.95% 9.98% 5.64 0.35

1.40 0.40 7.59

1.33 0.00 6.58

28.02% 34.77% 14.50% 2.45 0.15 Unit : Baht 1.54 0.00 6.84

Nature of Business The company and subsidiaries mainly develop residential units for sale, offering single houses, townhouses and low-rise condominium units in Bangkok and neighboring provinces. The company and subsidiaries have subcontracted the construction works to contractors, and closely supervised the construction by a team of engineers and architects who also control raw material quality. The company also focuses on maximising usable space, with over 60 standard house designs with appropriate prices to satisfy customers. A company survey showed high demand for residential units priced between Bt1-Bt2 million in the convenient locations. Thus, we launched a condominium project on New Sathorn Road (Kalapapruek) to satisfy these clients in November 2005 namely çMetro Parké. The road is planned to accommodate the mass-transit development which will be a key route leading to downtown Silom. çMetro Parké is developed with our concerns in environmental surroundings, facilities, space design, value for money and location. Nearly 70% of the development area is reserved for the green area. The company believes that thanks to the location and value for money, this project would be warmly welcomed. The company and subsidiaries have developed the units in two categories:

ë Complete houses: The company will finish the units first before putting them on sale. When interested, customers will put up 10% of house value as downpayment and when the balance is paid, the unit could be transferred. ë Units on order and condominium units: Customers would file the order forms for the chosen designs. To reserve a housing unit, customers would sign a purchase contract and pay downpayment which is about 10-30% of house value or 10% of a condominium unit price. The downpayment would be paid out in 8-12 months and during that period, the construction would be constructed. On completion, the houses are ready for customersû inspection. The units would be transferred when customers pay the balance. As after-sale service, customers are provided a 2-year guarantee from the transfer date. While construction is under way, the company also provides the management services for the central green areas as well as on security and infrastructure. Once the projects are complete, all the central areas and infrastructure will be transferred to the project committees. Our dedication to create livable environment reflects through a variety of trees, club houses, holiday activities created to boost friendship among neighbors, closed-

Annual Report 2005 5

circuit TV monitors in key areas, and around-the-clock security guards. Our dedication bears fruit when in 2005 the company was presented the EIA Monitoring Awards 2005 from the Natural Resources and Environment Ministry

for two projects - Perfect Place RamkhamhaengSuvarnabhumi and Perfect Place Rattanathibet. This confirms our standards and dedication in creating the perfect quality for all residents of all projects

Revenue Structure: By Development Type Project Brand Masterpiece Maneeya Masterpiece Maneeya Masterpiece Exclusive Zone Perfect Masterpiece Ekamai-RamIndra Brand Perfect Place Perfect Place Rattanathibet Perfect Place Rattanathibet- Rachapreuk Perfect Place RamkhamhaengSuvarnabhumi (Phase 1-3) Perfect Place RamkhamhaengSuvarnabhumi (The Lakeside Home) Perfect Place RamkhamhaengSuvarnabhumi (Colonial Zone) Perfect Place RamkhamhaengSuvarnabhumi (Garden Zone) Perfect Place RamkhamhaengSuvarnabhumi (The Private Zone) Perfect Place RamaV-Rachapreuk Perfect Place Sukhumvit 77Suvarnabhumi** Brand Maneerin Maneerin Lake & Park Maneerin Exclusive Park Rangsit Maneerin Lake & Lagoon Maneerin Masterpiece Maneerin Park Rangsit Maneerin Park Rattanathibet Brand Perfect Park Perfect Park Rattanathibet-Rachapreuk Perfect Park RamkhamhaengSuvarnabhumi Other Nantana Garden Rangsit Nantana Garden Park Place Nantana Shop House Nantana Garden Teparak Land Total Revenue from the Sale of land and houses

Product Type

SDH SDH SDH

2005

375 547

8% 11%

SDH/Land SDH

496 46

SDH/Land

2004

483 0 157

12% 0% 4%

370 36 -

10% 1% -

10% 1%

1,125 -

27% -

1,398 -

37% -

139

615

16%

SDH

105

216

272

SDH

189

176

SDH

515

10%

618

15%

SDH SDH

148 362

3% 7%

SDH

781

16%

201

SDH/Land SDH SDH /Land SDH SDH SDH

337 435 407

7% 9% 8%

370 189 4 0 201 247

9% 5% 0% 0% 5% 6%

463 85 110 344 -

12% 2% 3% 9% -

SDH

TH TH CB TH

1 -

5 60

0% 2%

4,931

100%

4,126

100%

3,758

100%

Remark : SDH = Single Detached House, TH = Townhouse, CB = Commercial Building, Land = Land ** Developed by 100%-owned subsidiary Estate Perf Perfect Co.,Ltd .

6 Annual Report 2005

2003

As shown in the balance sheet, Property Perfect chalked up Bt4,150 million in sales revenue in2005 and Bt3,825 million in 2004. In the same period, subsidiariesû revenue is Bt781 million and Bt201 million, respectively.

Financial Developments Like other developers, the company plunged into business problems after the 1997 financial crisis. On 19 February 2001, the Central Bankruptcy Court ordered us to fall through business rehabilitation. On 2 October 2001, the court approved the rehabilitation plan, with Asian International Planners Co., Ltd. as the planner and plan administrator. The company had followed through the plan and fully restructured the loans. The company consequently exited the plan on the court order on 12 April 2004, and the management power has been returned to the old management team since then.

2004

ë The company reduced the registered capital from Bt12,000 million to Bt7,200 million, by slashing the par value from Bt10 apiece to Bt6. The paid-up capital consequently dropped from Bt7,803.604 million to Bt4,682.163 million, constituted by 780.36 million common shares with par value of Bt6 apiece. The capital reduction followed the resolution of the 1/2004 extraordinary shareholder meeting on 24 May 2004. (Details are in Note No. 18) ë The company sold secured debentures: 1/2004 Set 1 worth Bt450 million, 1/ 2004 Set 2 worth Bt750 million, and 2/ 2004 Set 1 worth Bt350 million. The proceeds of Bt1,550 million were used

Annual Report 2005 7

to refinance short-term loans and buy new land for business expansion, according to the resolution of the 1/ 2004 extraordinary shareholder meeting on 24 May 2004. (Details on investment structure) 2005

ë The company increased the investment in Estate Perfect Co Ltd, buying 5 million newly-issued shares, with Bt10 par value, for a total amount of Bt50 million. The proceeds were used to speed up the construction of a project on Sukhumvit 77, ahead of the opening of the Suvarnabhumi International Airport. The company subscribed to all shares to maintain the major shareholder status, in accordance with the 2/005 board of directorsû resolution on 2 March 2005. (See details in Note No. 9) ë Krungthep Land Co., Ltd. an affiliate, reduced its capital from Bt1,550 million to Bt1,000 million and increased the capital to Bt1,700 million (consisting of 17 million shares with Bt10 apiece in par value). The new shares were offered in a private placement and/or institutional investors. Due to the capital restructuring, the companyûs stake in Krungthep Land decreased to 20%.(See detail in Note No. 9). ë On 21 April 2005, the company registered the new capital with the Commerce Ministryûs Business Development Department, after the reduction of capital from Bt7,200 million to Bt4,779.57 million. The capital was reduced due to the cancellation of 403.41 million unallocated shares. The

8 Annual Report 2005

shares, totaling Bt2,420 million with par value of Bt6 apiece were originally reserved for the exercise of unallocated warrants and for the conversion of unsecured debts in accordance with the resolution of the 1/2005 shareholder meeting on 7 April 2005. (See detail on Note No.18) ë On 22 April 2005, the company increased the registed capital to Bt5,013.56 million, to accommodate the exercise of 39 million warrants to be offered to directors and employees under the Employee Stock Option Program (ESOP). ë Shareholders at the 1/2005 extraordinary meeting on 19 September 2005 approved the issuance of 5-year convertible debentures worth no more than US$35 million or Bt1,480 million in equivalent Thai baht for sale to foreign or local institutions. The board of directors or the executive board would handle the issuance. ë The company offered US$20 million of convertible debentures, carrying 3.50% coupon rate, to Pyrite International Finance Ltd on 25 November 2005. The holder can convert the debentures for common shares at Bt6.25 apiece. The company still has US$15 million of unallocated convertible debentures. ë Mr. Ka Kay Yip was appointed the director to replace Mr.Tamra Ngowsirimanee who passed away. He represents Pyrite International Finance as prescribed in the bondholderûs condition as of 1 December 2005

The Board of Directors

Management Structure

Authorised directors

After the Central Bankruptcy Court approved the rehabilitation plan and appointed the planner on 19 February 2001, control over the companyûs business and assets as well as shareholdersû legal rights, except the right to dividend payment, fell into the plannerûs hands under the bankruptcy law. On 2 October 2001, the court approved the plan, having Asian International Planners Ltd as the planner. The planner had completed all plans and the company was released from the rehabilitation process on 12 April 2004. The original management team has resumed the management power. At present, the companyûs management structure comprises 5 boardsû-the board of directors, the audit committee, the executive board, the director selection committee and the remuneration and human resources committee.

Mr. Chainid Ngow-Sirimanee is authorised to sign papers together with Mrs. Wanida Waiyawajamai or Mr. Pramote Rermyindee.

Board of Directors , authority and scope of responsibility The Board of Directors are authorized to make decisions and ensure that the companyûs operations follow the objectives, regulations, shareholdersû resolutions and legal conditions. Its authority does not cover the decisions which must be approved by shareholders as prescribed by the Securities and Exchange Commission and the Stock Exchange of Thailand. Under the companyûs regulations, the Board of Directors is authorized to appoint the executive board which will monitor the daily operations of the company under the guidelines and budget approved by the Board of Directors and handle other tasks bestowed A. The Board of Directors by the Board of Directors. The executive board can As of December 30, 2005, the board consists of 12 approve the decisions within its power granted by the individuals. Board of Directors or have to propose the issues beyond its power for the Board of Directorsû consideration. The No. Name Title regulations also empower the Board of Directors to appoint 1. Dr. Tawatchai Nakhata Chairman / Chairman of the Audit other officers or other working committees to assist the Committee and executive board. Independent Director 2. Mr. Chainid Ngow-Sirimanee Managing Director 3. Mrs. Wanida Waiyawajamai Director 4. Mr. Vichai Singvicha Director 5. Dr. Theerachon Manomaiphibul Director 6. Mr. Phairat Senachack Director 7. Mrs. Paneepan Tisapong Director 8. Mr. Pramote Rermyindee Director 9. Mr. Vidhya Nativivat Director 10. Mr. Ka Kay Yip* Director 11. Mr. Somsak Toruksa Director / Independent Director and Auditing Director 12. Dr. Thamnoon Ananthothai ** Director / Independent Director and Auditing Director With Mr. Pramote Rermyindee as secretary of the board

B. Audit Committee As of 30 December 2005, the Audit Committee consists of 3 independent directors. No. Name 1. Dr. Tawatchai Nakhata 2. Mr. Somsak Toruksa 3. Dr. Thamnoon Ananthothai

Title Chairman of the Audit Committee Auditing Director Auditing Director

With Ms. Doungporn Rermyindee as the secretary.

* appointed on 1 December 2005 to replace a director who passed away ** appointed to replace a resigning director

Annual Report 2005 9

Audit Committee , s authority and scope of No. Name Title responsibility 1 Mr. Chainid Ngow-Sirimanee Chief Executive 1. Supervise the companyûs operations to ensure Director honesty, transparency, and responsibility to 2 Mr. Pramote Rermyindee Executive Director shareholders. and Secretary 2. Ensure that the executive board and executives 3 Mrs. Wanida Waiyawajamai Executive Director handle their responsibilities in an accurate, complete 4 Mr. Vichai Singvicha Executive Director 5 Mrs. Paneepan Tisapong Executive Director and standard manner. Senachack Executive Director 3. Ensure the accuracy, sufficiency, and credibility of 6 Mr. Phairat 7 Dr. Theerachon Manomaiphibul Executive Director the financial results, as well ensure the accurate 8 Mr. Surasak Vacharapongpreecha Executive Director and sufficient disclosure through coordination with 9 Ms. Supee Reodacha Executive Director the auditor. 10 Mr. Kritapas Pongpakawat Executive Director 4. Ensure appropriate and effective internal control, through the coordination with the internal auditors Executive Committee , s authority and scope of and auditors. 5. Appoint the auditor and set the auditor fee, which responsibility must be approved by the shareholders. 1. Run the companyûs daily operations under the 6. Make sure that the company follows the legal guidelines set by the Board of Directors and within conditions set by the Securities and Exchange the scope of rules and regulations, as well as the Commission, the Stock Exchange of Thailand and companyûs objectives and regulations. other related agencies. 2. Set the annual budget for the Board of Directorsû 7. Prevent conflicts of interest through the inspection approval. of the transactions of the company with connected 3. Consider investment projects for the Board of parties and through coordination with the auditor. Directorsû approval. 8. Prepare the audit committeeûs report and disclose 4. Consider and approve borrowings and the financing the report in the annual report. of normal transactions such as the investment, land 9. Review the internal controlûs reports. purchases or others. 10. Review the internal controlûs findings. If finding or 5. Prepare, recommend and set business strategies for suspecting of any misconduct, or the insufficiency the Board of Directors. of the internal control, they must ask for the Board 6. Consider and approve the corporate marketing and of Directorsû judgment. 11. Review the internal controlûs inspection and the public relations plans. auditorûs recommendations, and follow through the 7. Evaluate the companyûs performance in terms of improvements. asset management and financial management to 12. The audit committee is authorized to invite a ensure efficiency and effectiveness. member of the executive board, executives, 8. Conduct other tasks assigned by the Board of advisors, and the auditor to a meeting whereby they Directors. would be informed of crucial information. Notably, the executive board has no authority in 13. They can act on other missions ordered by the handing its power to any member or others to approve a Board of Directors. connected transaction (as prescribed by the Securities and Exchange Commission) or a transaction which could pose C. Executive Board conflicts of interest with the company or subsidiaries Contains 10 individuals, as of 30 December unless the transaction is part of the normal business 2005. operations within its authority.

10 Annual Report 2005

The Selection Committeeûs power must not involve the The Director Selection Committee consisted of 3 authorisation over transactions that they or connected parties (as defined by the Securities and Exchange persons as of 30 December 2005. Commission) are involved with or could encounter conflicts of interest with the company or subsidiaries, unless it is a No Name Position normal and clearly-defined business transaction. 1. Dr. Tawatchai Nakhata Chairman of the committee To present the selected persons to the board of 2. Dr. Thamnoon Ananthothai Selection committee member directors, the Selection Committee must nominate only 3. Mr. Pramote Rermyindee Selection committee member those who will fill the available director seats. Except when The Selection Committeeûs scope of authority and the committee members could not reach an agreement, they are allowed to present all the nominated names to the responsibility 1. Review the individuals who are fit to be the board for their consideration. companyûs directors and nominate the list to the board of directors and/or present the list to E. The Remuneration and shareholders for official appointment. Human Resources Committee 2. In reviewing the individualsû qualifications, the The Remuneration and Human Resources Committee committee must consider their expertise, knowledge, consisted of 3 persons as of 30 December 2005. ability and relevant experiences to ensure that the No Name Position individualsû qualifications would be useful for the 1. Dr Tawatchai Nakhata Chairman companyûs operations. Besides, the committee must 2. Mr. Vidhya Nativivat Member consider that the nominations follow the legal 3. Mr. Somsak Toruksa Member framework particularly when it involves the nominations for independent directors and the audit The Remuneration and Human Resources committee members. Committeeûs scope of authority and responsibility 3. In selecting independent directors and the audit 1. Consider the companyûs policies and criteria in committee members, the committee must take into paying the managing director, directors, and the account; companyûs advisors. ë The nominated individuals must hold no more 2. Consider the annual salary, annual pay increase, than 5% of the paid-up capital of the company, and the interim pay increase, as well as other affiliates or subsidiaries. The percentage is benefits to award all employees. inclusive of the shareholding of related 3. Consider the employment terms, regulations, and individuals - their spouses and underaged penal clauses which should be appropriate and fair. children. 4. The committee will report directly to the board of ë The nominated persons must not be related to directors, to whom they will explain and answer all the companyûs executives or major shareholders. questions regarding the pays for employees at all ë The appointed persons must not have conflicts levels. of interest, directly or indirectly, in terms of The committeeûs power must not involve the finances or management of the company and affiliates. They must not be the companyûs major authorisation over transactions that they or connected parties (as defined by the Securities and Exchange shareholders. 4. The appointed persons must be able to work and Commission) are involved with or could encounter conflicts present their views with independence, free from of interest with the company or subsidiaries, unless it is a the control from executives or major shareholders normal and clearly-defined business transaction. as well as their relatives.

D. The Director Selection Committee

Annual Report 2005 11

Organization Chart

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12 Annual Report 2005

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Annual Report 2005 13

Property Perfect Plc’s Projects

Project

Current Projects 1. Perfect Place Rattanathibet 2. Maneeya Masterpiece Rattanathibet 3. Maneerin Park Rattanathibet 4. Perfect Park Rattanathibet- Rachapruek 5. Perfect Place Rattanathibet- Rachapruek 6. Maneerin Exclusive Park I Rangsit 7. Maneerin Park Rangsit 8. Maneerin Lake & Park Tiwanon-Ring Road 9. Perfect Place RamaV - Rachapruek 10. Perfect Place Ramkhamhaeng-Suvarnabhumi (Phase 1-3) 11. Perfect Place Ramkhamhaeng-Suvarnabhumi (Garden Zone) 12. Perfect Place Ramkhamhaeng-Suvarnabhumi (Colonial Zone) 13. Perfect Place Ramkhamhaeng-Suvarnabhumi (The Private Zone) 14. Perfect Place Ramkhamhaeng-Suvarnabhumi (The Lakeside Home) 15. Perfect Place Sukhumvit 77-Suvarnabhumi** 16. Perfect Masterpiece Ekamai-RamIndra 17. Perfect Park Ramkhamhaeng-Suvarnabhumi 18. Metro Park Sathorn New Projects in 2006 19. Perfect Masterpiece piece Rattanathibet 20. Perfect Park RamaV - Bangyai 21. Townhouse Pattanakarn Total ** Subsidiary Companyûs Project (Estate Perfect Co.,Ltd.) SDH = Single Detached House CD = Condominium TH = Townhouse

14 Annual Report 2005

Time to Develop

Product Total Remaining Remaining Units Units Project Value (MB)

1996-2006 2002-2006 2005-2006 Q4/2005-2006 Q3/2005-2007 2003-2004 2004-2006 2002-2007 Q2/2005-2007

SDH SDH SDH SDH SDH SDH SDH SDH SDH SDH

953 152 189 147 381 65 222 687 306

44 27 33 126 371 1 65 307 243

334 361 158 478 1,780 4 276 1,488 1,433

1994-2006

SDH

1,171

100

2004-2006

SDH

241

117

2004-2006

SDH

352

Q3/2005-2007

SDH

277

254

1,793

2003-2006 2004-2009 2004-2008 Q3/2005-2007 Q4/2005-2009

SDH SDH SDH SDH CD

77 780 191 198 198 4,560

1 618 132 169 4,036

8 3,462 1,716 659 6,578

Q4/2006-2009 Q4/2006-2008 Q4/2006-2009

SDH SDH TH

180 368 500 11,743

180 368 500 7,565

1,450 1,200 2,000 25,747

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Annual Report 2005 15

Marketing and Competition

Marketing Marketing Strategy

The company sets marketing strategies in line with competition, as well as economic and social conditions. Products. The company concentrates on developing the products that respond to market demand and competition. ë Location: The companyûs locations are in areas wit high-growth potential, located long the electric train routes or new roads to satisfy target groups who demand convenient transport networks and proper infrastructure. Comparatively, the companyûs projects are in the better locations than competitorsû. The company also has the policy to embark on new locations and expand the existing projects to cover a broader development area as well as better satisfy target groups. ë Designs: Beautiful home designs are on offer, highlighting the usable space to fit buyersû demand and purchasing power. This is a result of cooperation between the interior design team and an outside leading architectural company, for a variety of perfect and complete design concepts including the house in the garden concept, garden in the house or a city home. Moreover, the Home Automation system has been employed to fit the new near expressways or new roads, they are perfect for generationûs lifestyle and add the house value. buyers who prefer convenient transport networks for their Project and environment Aside from the houses, the company also emphasises living quality. the focus on the environmental management in the projects, security system, and after-sale services to ensure ë çBaan Kon Muangé The city home concept is a perfect community for all clients. Confirming that the portrayed along the companyûs logo to demonstrate company has offered good quality to clients is the fact the higher standards in terms of locations. All that two projects - Perfect Place Ramkhamhaenghouses are developed under the çperfect homeé Suvarnabhumi and Perfect Place Rattanathibet won the EIA concept, deriving from a client survey, to demonstrate Monitoring Awards 2005 from the Natural Resources and the product standard, while clients are benefiting Environment Ministry. from the companyûs partnership with other businesses Besides, several projects also provide a public park in creating a complete community around the sport and large-scale club houses. multiplexes or clubhouses. Those partners include Black Canyon, Clark Hatch, V Shop, KPN Dokya Brand building strategy bookstore and Sindy. The company has focused on brand building to ensure ë There are 4 project titles to fit different target the positive image and effective advertisement of the groups. projectsû concept, outstanding points, and product 1. Perfect Masterpiece, offering high-end clients positioning. As the projects are located along rail routes, 16 Annual Report 2005

with units priced above Bt8 million. 2. Perfect Place, for upper medium-income earners with houses valued between Bt4-Bt7 million. 3. Perfect Park and Maneerin, for new families with units priced between Bt3-Bt5 million. 4. Metro Park for condominium buyers who dream of the convenient rail transport network, with units priced at Bt0.9-Bt2.5 million. This will expand the market the cover those who work or live in city areas.

Pricing

The company sets the unit prices in line with the competition. We take into account the development cost, location potential, home designs and special offers. To beat competitors, the company can offer the lower prices for the houses in the same locations with competitors, or a

slightly higher price for a bigger house in the same area. With improvement in quality and services, clients consider it is a worthwhile investment to buy a unit from the company. Moreover, the company also expands to cover clients who are looking for housing units with the Bt1-Bt2 million price tag, through the opening of a condominium project on New Sathorn Road (Kalapaphruek) which is warmly welcomed due to the rail linkage.

Advertising, sale and sale channels

In the past year, mass marketing was adopted aside from direct marketing to reach potential buyers in a broad and narrow scale. The sales team were aggressive with the analysis and search for target groups while advertisements were created for a number of projects, which saved the advertising cost but yielded an effective result. This was supported by event marketing and relationship marketing activities to ensure the words of mouth, as well as E-marketing to attract buyers through the Internet. Annual Report 2005 17

Real Estate Industry Trend 2006

Trends in the real estate industry in 2006 are as follows; Marketing: Oversupplies occurred in some areas and in some price brackets particularly the luxury sector that offers units worth over Bt10 million, after the end of stimulus packages in 2004. In 2006, developers will return to focus on single houses priced between Bt2-Bt5 million, as well as the search for new markets and new locations to expand the target groups. Meanwhile, home buyers will take a longer time to make a buying decision, while looking for a house at an affordable price. Due to the upward interest cycle as well as the higher oil price and living expenses, most home buyers would look for housing units with the price tag of Bt2-Bt5 million as well as townhouses and condominiums in city areas or near the mass transit network. Though interest rates increase, they remain in low levels which should not largely affect demand but would drive buyers towards cheaper units. Demand should grow along rail routes, if the government speeds up on the mass transit network development, as well as demand for houses near the Suvarnabhumi International Airport. Consumers: will first base their decision making on information and developers没 credibility. The most favorite accommodation is single houses, followed by townhouses

and condominiums in city areas or near train stations. Mostly, they are buying the houses for themselves. Most buyers would be attracted to large-scale developers, which would leave several small developers in problems. Financial institutions: State-owned institutions like Government Housing Bank and commercial banks have scaled down the fixed-interest period and adopted a more stringent measure on borrowers没 qualifications. Moreover, they are also stringent with the lending to small and medium-sized developers. This should reduce new supplies and allow large-scale developers to reap higher market shares. Foreign funds: They have played a higher role. have played a higher role. Having a foreign fund as a shareholder requires property companies没 management to better conform with international standards, with higher concerns in return on investment and risk management. Meanwhile, they are transferred new skills and technology. Industrial-styled construction: While the industry is picking up, developers should lay down construction plans as well as the strategies in locating beautiful, more durable and cheaper alternative raw materials. Some developers secure large-sized contractors to handle the construction works to control the cost, quality and delivery deadline, to sufficiently address the demand in this year.

Annual Report 2005 19

Other Information

Financial structure 1.

The company没s securities (1)

Common shares As of 31 December 2005, the company had Bt6,213,565,176 in registered capital, or 1,035,594,196 common shares at the par value of Bt6 each. A paid-up capital of Bt4,695,210,150 or 782,535,025 common shares were paid up. These are changes of registered capital during the past 3 years. Accounting year Registered capital - Value (Bt) - No. of shares Paid-up capital - Value (Bt) - No. of shares

2005

2004

2003

6,213,565,176 1,035,594,196

7,200,000,000/1 12,000,000,000 1,200,000,000 1,200,000,000

4,695,210,150 782,535,025

4,682,162,664/1 780,360,444

6,024,162,340 602,416,234

2002 12,000,000,000 1,200,000,000 778,256,470 77,825,647

Note : 1/ As of 13 December 2004, the company没s registered capital was Bt7,200,000,000 (1,200,000,000 shares) and paid-up capital of Bt4,682,162,664 (780,360,444 shares at Bt6 par value). On 24 May 2004, the company reduced the par value from Bt10 to Bt6 according to the resolution of the 1/2004 extraordinary shareholder meeting. The reduced capital of Bt3,121,441,776 was used to reduce the share capital loss of Bt346,583,260 and reduce accumulated losses which stood at Bt3,812,615,554 as of 31 December 2003. After that, the accumulated losses totaled Bt1,037,757,038. On 7 April 2005, shareholders at the 1/2005 ordinary meeting approved the registered capital reduction from Bt7,200,000,000 to Bt4,779,565,176, by canceling 403,405,804 unallocated shares of which value stood at Bt2,420,434,824. The new shares were reserved for warrants which were not allocated and reserved for the conversion of unsecured debts. The shareholders also approved the capital increase from Bt4,779,565,176 to Bt5,013,565,176, or by Bt234,000,000 A number of 39,000,000 shares were issued, reserved for the exercise of warrants which would be issued to directors and/or employees under the ESOP program. Shareholders at the extraordinary meeting on 19 September 2005 approved the capital increase from Bt5,013,565,176 (835,594,196 shares at the value of Bt6 each) to Bt6,213,565,176 (1,035,594,196 shares at the value of Bt6 each) for the conversion of debentures. The company registered the new capital with the Commerce Ministry on 7 October 2005. As of 31 December 2005, the company没s paid-up capital stood at Bt4,695,210,150 (782,535,025 shares at the value of Bt6 each), due to the exercise of warrants worth Bt13,047,486 or 2,174,581 shares in December 2004 and June 2005. The company registered the new capital with the Commerce Ministry on 12 January and 7 July, respectively. (2)

20 Annual Report 2005

Warrants Under the rehabilitation plan, the company must issue warrants to unsecured creditors, at the ratio of Bt1,000 of debt for 7 free warrants. Each warrant can be exercised for 1 common share, at the price of Bt0.01. The Securities and Exchange Commission approved the issuance of 53 million warrants, of which maturity is 10 years from 7 November 2002. The exercise period was set at the last day of Quarter 2 and Quarter 4 of each year, starting from the fourth quarter of 2002.

The Receiver revoked the claim of some creditors. The company thus issued only 50.93 million warrants and a number of 2.07 million units remained. Shareholders at the 1/2005 meeting approved the cancellation of the unallocated warrants. At present, a number of 14.06 million warrants are not yet exercised. (3)

Debentures As of 30 December 2005, outstanding debentures are as follows; A.

1/2004 Secured debentures, Set 1* Issue date : 18 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 450,000 Price : Bt1,000 Maturity : 1 year and 6 months from issue date (18 August 2004) Interest rate : 340 basis points above Siam City Bank没s 6-month deposit rate Rate payment : Biannually. The first payment was on 18 February 2005 Redemption date : 18 February 2006 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB- (tha) by Fitch Ratings (Thailand) Ltd, as of 21 October 2005 The company redeemed the debentures on maturity, on 18 February 2006.

1/2004 Secured debentures, Set 2 Issue date : 18 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 750,000 Price : Bt1,000 Maturity : 2 years from issue date (18 August 2004) Interest rate : 350 basis points above Siam City Bank没s 6-month deposit rate Rate payment : Biannually. The first payment was on February 18, 2005 Redemption date : 18 August 2006 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB- (tha) by Fitch Ratings (Thailand) Ltd, as of 21 October 2005

2/2004 Secured debentures, Set 1 Issue date : 23 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 350,000 Price : Bt1,000 Maturity : 2 years and 6 months from issue date (23 August 2004) Interest rate : 365 basis points above Siam City Bank没s 6-month deposit rate Rate payment : Biannually. The first payment was on 23 February 2005 Redemption date : 23 February 2007 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB- (tha) by Fitch Ratings (Thailand) Ltd, as of 21 October 2005 Annual Report 2005 21

(4)

Unsubordinated convertible debentures 1/2005 Issue Issue date Type Offered to No. of units Price Maturity Interest rate Coupon rate payment Principal payment Conversion price Conversion period Conversion conditions

: 25 November 2005 : unsecured holder-bearing convertible debentures, without trustee : Foreign institutions through a private placement, in US dollar, fully hedged at all cost by investors : 200,000 : US$100 : 5 years from issue date (25 November 2005) : fixed 3.50% : Quarterly, from offering date. : The unconverted debentures will be redeemed in US dollar, with 31.60% premium from the issue price. The redemption is fixed with the foreign exchange rate as of the issuance date. : Bt6.25 : 18 months after offering, until the redemption date : The company withholds the right to call holders to convert 1 third of the original number of debentures when 1.

Over 10 million shares are traded on average during the 45 days before the company would exercise the right, and

The company没s average share closing price during the 60-day period and the closing of the 5 days before the company would exercise the right accounts for - 130% of conversion price in Year 1-2 - 150% of conversion price in Year 3 - 175% of conversion price in Year 4-5 Then, the company can ask the bearers to convert one third of the original number of debentures under these conditions.

Bearers没 conditions

22 Annual Report 2005

The bearers who were forced to convert the debentures sold out all the common shares, or

The company can exercise the right again at least 60 days after the first right exercise. Under this condition, the number of shares traded and the average share closing must fit the earlier conditions.

: The company would hold a meeting to appoint an individual, nominated by any foreign institutional investor who bought and paid US$20 million upwards for the debentures, a director.

Major shareholders The first 10 largest shareholders as of 30 December 2548 are; Rank 1 2 3 4 5 6 7 8 9 10

Name Thailand Securities Depository Co.,Ltd. For Depositor Japan Asia Group Co., Ltd./1 Thailand Securities Depository Co.,Ltd. For Depositor MJL Intertrade Co., Ltd. /2 Natee International Law Office Co.,Ltd./3 Japan Asia Group Limited Ms.Sumalee Wangprakorbsuk Mr. Pramote Rermyindee Mr. Vidhya Netivivat Krungthep Land Co.,Ltd.

No. of shares

384,196,706 124,776,944 83,684,042 47,589,227 37,018,928 12,467,224 11,385,000 11,385,000 10,580,000 9,200,000

49.10 15.95 10.69 6.08 4.73 1.59 1.45 1.45 1.35 1.18

(Data from Thailand Securities Depository Co Ltd) Note :

Japan Asia Group Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. Japan Asia Group is registered in British Virgin Islands, a UK colony, as a financial services and investment firm. Under the BVI law, outsiders cannot obtain details of the registration in terms of shareholders, registered capital or financial results. What is revealed is Star Mark Enterprises Ltd has the authority over Japan Asia Group. Property Perfect also learns that the company没s ultimate shareholder is Mrs. Wai Ching Chung, a resident of Hong Kong. Property Perfect and Japan Asia Group have no connection, in terms of shareholding or cross-directorship or cross-executive or the nominee account.

MJL Intertrade Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. MJL is a holding company and according to the document from the Commerce Ministry, its two major shareholders are the Aswintrangkul family who holds a 79.80% stake (Mr. Chaiwat Aswintrangkul, 40%; Mr. Chaiyong Aswintrangkul, 29.8; Mrs. Amphai Aswintrangkul, 5%; and Kittima Aswintrangkul, 5%) and the Vajarothai family (Vajarakitti Vajarothai) who owns 20% of the registered capital. Its ultimate shareholder, according to the revelation from MJL, are the Vajarothai family, 60%; and the Aswintrangkul family, 40%.

Natee International Law Office became a shareholder as it, as the lawyer of a creditor in the rehabilitation plan who converted debts to equity. A condition for Property Perfect to exit the rehabilitation plan is the company must issue common shares to all eligible creditors. One creditor is eligible for the conversion right. However, two companies claimed that they were transferred the claim from the creditor - Loves Partner Investment Co Ltd and Glory Buy Associate Co Ltd. Both filed petitions to the Central Bankruptcy Court. Property Perfect thus agreed to have Natee International Law Office to hold the common shares on behalf of the creditor. The legal office is also assigned to oversee the given shares until the Central Bankruptcy Court would determine who the shares should be transferred to. Natee International Law Office offers legal and accounting services.

Annual Report 2005 23

However, on 25 October 2005, the Central Bankruptcy Court ruled that Glory Buy Associate has the right over the shares. The company没s name is not yet included in the top 10 shareholders list, as it has not yet received the shares. Glory Buy Associate is registered in Samoa to invest in businesses. Its director and executive is United Continental Investors Ltd. Property Perfect and Glory Buy Associate have no connection, in terms of shareholding or cross-directorship or cross-executive or the nominee account. Foreign shareholders who hold the company没s shares through Thai NVDR Co Ltd are entitled to the same returns as other shareholders, but not the voting right (except in the voting to revoke the company没s listing status in the Stock Exchange of Thailand. To trace the number of shares issued in the form of NVDR, investors should check the SET没s website, www.set.or.th. Holdings by nationalities as of 30 December 2005 Shareholders Thai Foreign Total

No. 236 9 245

Shares 553,204,093 229,330,932 782,535,025

% 70.69 29.31 100.00

No. 14 4 18

Corporate Shares 490,870,751 227,783,128 718,653,879

% 62.73 29.11 91.84

No. 222 5 227

Individuals Shares 62,333,342 1,547,804 63,881,146

% 7.97 0.21 8.16

Note : from Thailand Securities Depository Co.,Ltd Dividend policy of the company and subsidiaries The company holds the policy to pay out 50% of after-tax net profit as dividend. The dividend payout must be approved by shareholders. However, during the rehabilitation until the company exited the rehabilitation plan, the company would not pay any dividend, accordingly to the rehabilitation plan. The subsidiaries have the policy to pay 50% of net profit as dividend.

24 Annual Report 2005

Management and Authorized Person of the Company

Name-Title

1 Dr. Tawatchai Nakhata Chairman Independent Director Audit Committee

Age

Academic Qualifications

59 Ph.D. University of Illinois

Equity Holding Relationship (%) 0.00096 %

Career experience within the past 5 years Timing Designation 1992 - Present Chairman Chairman of the Audit Committee Independent Director 1995 - Present Managing Director 1995 - Present

Fellow Member

1984 - 1995

Consultant Engineer/ Managing Director Head of Construction Resource Section

1978 - 1984 2 Mr. Chainid Ngow-Sirimanee 52 Bachelor of Laws Managing Director / Chulalongkorn University Chief Executive Director / Thai Barrister-at-Law Director Thai Bar Association

0.850 %

1985 - Present 2002 - Present 1999 - Present 1995 - Present

3 Mr. Somsak Toruksa Director Independent Director Audit Committee

55 Master of Laws Ramkhamhaeng University

0.000 %

1998 - Present 1993 - Present

Director Independent Director Audit Committee Managing Director

2005 - Present

1998-2002

Director Independent Director Audit Committee Dean of College of Business Administration President & CEO

5 Mr. Vidhya Nativivat Director

2004-Present

Director

1986 - Present

Managing Director

52 Master of Laws 1.352 % The George Washington University, USA Bachelor of Laws Thammasat University

Property Perfect Public Company Limited Ceda Co., Ltd. / Structural engineering design service The Engineering Institute of Thailand Ceda Co., Ltd. Public Works Department, Ministry of the Interior

Managing Director Property Perfect Public Chief Executive Director Company Limited Director Krungthep Land Public Company Limited / Real Estate Director Estate Perfect Company Limited / Real Estate Director Thai Property Public Company Limited / Real Estate (Formerly known as Ă§Rattana Real Estate Public Company LimitedĂŠ)

4 Dr. Thamnoon Ananthothai 48 Ph.D., International Management, 0.000 % Director Walden University, Naple, Independent Director Florida U.S.A. Audit Committee A.C.A. Certificate, American Accreditation Council for Accountancy, U.S.A. M.B.A., Management, The University of Sarasota-Sarasota Florida, U.S.A. B.A., Accountancy & Management, Eckerd College-St. Petersburg, U.S.A. Certificate of Attendance Audit Committee Program - ACP

2002-2003

Company / Business Type

Property Perfect Public Company Limited Somsak Toruksa Law Office Co., Ltd./ Law Property Perfect Public Company Limited Dhurakij Pundit University / University DBS Thai Danu Securities Limited / Securities

Property Perfect Public Company Limited Bunchong and Vidhya Law Office Co., Ltd./ Law

Annual Report 2005 25

Name-Title

6 Mr. Ka Kay Yip Director

Age

Academic Qualifications

41 A.B. degree, magna cum laude, Harvard University

Equity Holding Relationship (%) 0.000 %

Career experience within the past 5 years Timing Designation 2005 - Present Director

Company / Business Type

Property Perfect Public Company Limited GEMS, a private equity management company with around US $ 650 Million under management for investment in Asia.

1998 - Present

A senior partner

1988 - Present

Director / Executive Director / Assistant Managing Director Chief of Accounting Division / Internal Audit and Planning Manager

Property Perfect Public Company Limited

7 Mrs. Wanida Waiyawajamai 52 Bachelor of Accountancy Director Chulalongkorn University Executive Director DAP 50 ; Director Certificate Assistant Managing Director Program (IOD)

0.026 %

8 Mr. Vichai Singvicha Director Executive Director Assistant Managing Director

51 MBA Kasetsat University Bachelor of Laws Chulalongkorn University

0.026 %

1988 - Present

Director / Executive Director / Assistant Managing Director

Property Perfect Public Company Limited

9 Mrs. Paneepan Tisapong Director Executive Director Assistant Managing Director

52 M.A. Mass Communication College of Journalism City University, England DAP 50 ; Director Certificate Program (IOD)

0.026 %

1989 - Present

Director / Executive Director / Assistant Managing Director

Property Perfect Public Company Limited

10 Mr. Phairat Senachack Director Executive Director Assistant Managing Director

57 Mini MBA Thammasat University Bachelor of Business Administration Assumption University DAP 30 ; Director Certificate Program (IOD)

0.000 %

1996 - Present

Director / Executive Director / Assistant Managing Director

Property Perfect Public Company Limited

11 Mr. Pramote Rermyinde Director Executive Director Company Secretary

52 Bachelor of Laws Chulalongkorn University Thai Barrister-at-Law Graduate Diploma in Business Law Thammasat University DCP 69 ; Director Certificate Program (IOD)

1.454 %

1998 - Present

Director / Property Perfect Public Executive Director / Company Limited Company Secretary Management Partnership Thammatit Law Office Group of Persons / Law Executive Director Finance House Co., Ltd./ Finance Executive Director Credit Fancier Srinakorn Co.,Ltd. / Finance

26 Annual Report 2005

1985 - 1988

1992 - Present 1994 - 1997 1993

Dhananan Finance and Securities Co.,Ltd. / Finance

Name-Title

Age

Academic Qualifications

Equity Holding Relationship (%)

Career experience within Company / Business Type the past 5 years Timing Designation 2002 - Present Director / Property Perfect Public Executive Director / Company Limited Assistant Managing Director 2000 - 2002 Executive Director Bangkok Rubber Public Company Limited / Footwear Manufacturer Managing Director Saharattananakorn é Co., Ltd / Industrial Estate Managing Director Jaruphon Patana Co.,Ltd. é / Entertainment Managing Director Maikiew Chabadaeng é Co.,Ltd. / Entertainment

12 Dr. Theerachon Manomaiphibul Director Executive Director Assistant Managing Director

44 Ph.D. Engineering The Ohio State University, USA DAP 30 ; Director Certificate Program (IOD)

0.019 %

13 Ms. Supee Reodacha Executive Director Treasury and Financial Management Division Director

47 MBA Roosevelt University

0.000 %

14 Mr. Surasak Vacharapongpreecha Executive Director Accounting Division Director

42 MBA Thammasat University Bachelor of Accountancy Thammasat University Certified Public Accountant

0.126 %

1993 - Present

Executive Director / Property Perfect Public Division Director / Company Limited Deputy Director / Assistant Director, Estate Perfect Project Senior Manager, Financial Management Dept., Treasury Division Senior Manager, Financial Management Dept., Accounting Division

15 Mr. Kritapas Pongpakawat Director Budgeting Office Director

48 Certify of Top Management Program / The Boss Institute Certify Of Management Engineering Institute Of Thailand Bachelor of Accounting Ramkhamhaeng University

0.000 %

2004 - Present 2001 - 2004

Executive Director / Division Director Vice President / Director of Rehab Company

1999 - 2000

Internal Audit

2002 - Present 1996 - 2000

Executive Director / Division Director Business Development Manager

Property Perfect Public Company Limited Chai Talay Co.,Ltd / Hotel

Property Perfect Public Company Limited Asian International Planners Ltd. / Financial Advisory & Planner Asian Capital Advisers Public Company Limited / Advisory - Law financial, Accounting, Marketing of commercial and Industrial. Income Hotel / Hotel

Annual Report 2005 27

Details

of directors, executive directors and directors of Property Perfect Plc. as of 31 December 2005

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

Company Subsidiary Company Associated Company Name PF PSS ESTPF KL Mr. Tawatchai Nakhata X, * , / Mr. Chainid Ngow-Sirimanee /, // / / Mrs. Wanida Waiyawajamai /, // Mr. Vichai Singvicha /, // Dr. Theerachon Manomaiphibul /, // Mr. Phairat Senachack /, // Mrs. Paneepan Tisapong /, // Mr. Pramote Rermyindee /, // / Mr. Somsak Toruksa *,/ Mr. Vidhya Nativivat *,/ Ms. Supee Reodacha // Mr. Surasak Vacharapongpreecha // Mr. Kritapas Pongpakawat //

Remark : 1. PF PSS ESTPF KL REAL BKW DSW 2. X * / //

= = = = = = =

Property Perfect Public Company Limited Perfect Satellite Services Company Limited Estate Perfect Company Limited Krungthep Land Company Limited Real Service Company Limited Bangkok Way Company Limited DS Way Company Limited

= = = =

Chairman Independent Director Director Executive Director

3. REAL , BKW and DSW cease operations

28 Annual Report 2005

Other Company REAL

BKW

DSW

Details

of directors, executive directors and directors of Property Perfect Plc. subsidiaries and affiliates as of 31 December 2005

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Company Subsidiary Company Associated Company Name PF PSS ESTPF KL Mr. Chainid Ngow-Sirimanee /, // / / Mr. Pramote Rermyindee /, // / Mrs. Janthanee Manomaiphibul / Ms. Rassamee Metavikul / Ms. Sureeporn Pipatwattanapong / Mr. Tongchai Peyasantiwong / Dr. Bhichit Rattakul / Mrs. Uraiwan Bhatarakarnt / Mr. Thongchai Kunakornporamut / Mrs. Wilawan Leongnarktongdee / Mr. Chainarong Ngernsopha Mr. Pornchai Ketlek

Remark : 1. PF PSS ESTPF KL REAL BKW DSW 2. X * / //

= = = = = = =

= = = =

Chairman Independent Director Director Executive Director

Other Company REAL

BKW

/ /

DSW

3. REAL , BKW and DSW cease operations

Annual Report 2005 29

Executivesâ&#x20AC;&#x2122; remuneration

Cash remuneration During 2005, 11 directors were paid Bt 3,080,000 as meeting allowances and 3 independent directors paid Bt 340,000. (Note: Aside from meeting allowances, directors are awarded salaries as executives and directors.) Directors and Independent DirectorsĂť remuneration Name

Dr. Tawatchai Mr. Somsak Dr. Thamnoon Mr. Sukpot Mr. Chainid Mrs. Wanida Mr. Vichai Dr. Theerachon Mrs. Paneepan Mr. Phairat Mr. Pramote Mr. Vidhya Total

Nakhata* Toruksa* Ananthothai * Chotikavanij Ngow-Sirimanee Waiyawajamai Singvicha Manomaiphibul Tisapong Senachak Rermyindee Nativivat

* Independent directors

30 Annual Report 2005

Independent Directors Meeting allowances 200,000 80,000 60,000

340,000

2005 Directors Meeting allowances 550,000 270,000 250,000 270,000 220,000 220,000 270,000 220,000 270,000 270,000 270,000 3,080,000

Independent Directors Meeting allowances 200,000 80,000 80,000

360,000

2004 Directors Meeting allowances 150,000 60,000 20,000 60,000 60,000 60,000 40,000 40,000 40,000 40,000 40,000 610,000

Executivesâ&#x20AC;&#x2122; remuneration (Continued)

The remunerations for the executive board and executives, comprising 19 persons, totaled Bt57.38 million in 2005. Details are as follows: Salary Bonus Total

No. of persons 19 19

Amount (Bt million) 45.76 11.62 57.38

Expenses on employees are: Types of expenses Salary Bonus Others

Amount (Bt million) 122.06 28.52 25.56

The number of employees as of 31 December 2005 totaled 415 persons. Executives Back office Marketing and project management Total

19 persons 169 persons 227 persons 415 persons

Annual Report 2005 31

Corporate Governance

The company has emphasized corporate governance issue, to ensure transparent operations as well as increase the competitiveness for the long-term sake of shareholders, under ethical standards and concerns for other stakeholders and society. The company thus incorporates the audit committee that consists of experts who serve as independent directors. The audit committee has held meetings to supervise the companyûs operations, with focus on transparency, job responsibility and competitiveness. Besides, the company realizes that good corporate governance is of grave concerns to investors who use this in their investment decisions. The company has continually improved the information system to ensure the smooth dissemination of information to investors and the public, so that they can inspect the operations. The investors relations unit has also worked hands in hands with other departments in disseminating the information. In doing so, the company has followed the following 15 good governance guidelines set by the Stock Exchange of Thailand. 1.

Good Governance Policies The board of directors realise the importance of good governance, as a crucial and necessary tool to ensure efficiency and boost the companyûs sustainable growth - to raise confidence among shareholders, investors and stakeholders which would create long-term benefits to the company in line with the Stock Exchange of Thailandûs guidelines. The company has accordingly set policies to promote good governance, under the legal and business ethical frameworks. The key areas covered are as follows; ë ë ë ë

All shareholders and stakeholders must be fairly and equally treated. The board of directors is dedicated to boosting the corporate value in the long term, cautious management and efficient policy implementation for the maximum benefits to shareholders. The board will also ensure no conflicts of interests and be responsible for business decisions. The company is operated with transparency, integrity and check-and-balance mechanism, where information is sufficiently distributed to all relevant parties. The board issues a code of ethics for directors, executives and employees. To be in line with the Stock Exchange of Thailandûs good governance guidelines, the board focuses on the supervision and internal control as well as ensures that the management efficiently implements business policies for the long-term benefits of shareholders under the legal and business ethical frameworks.

Shareholdersû rights The board of directors acknowledges the importance of equality of shareholders. In hosting shareholdersû meeting, the company treats all shareholders equally, by sending them invitation with the meeting agenda at least 7 days ahead of the meeting so that the shareholders have ample time to thoroughly study the agenda and make a right decision. Shareholders are also assisted and encouraged to cast votes at the meeting or vote through proxies or through independent directors. The meeting minutes are completely recorded for retroactive inspection.

Stakeholdersû rights The company has also been concerned with stakeholders, be they employees, competitors creditors, raw material suppliers, contractor, communities and society, as well as state agencies. The company thus has the policy to protect their rights and ensure equal treatment, as the stakeholdersû supports are crucial in boosting the companyûs long-term achievement. The company has realised the rights of each group, under the legal frameworks as well as commitments between the company and stakeholders.

32 Annual Report 2005

Shareholdersû meeting The company has the policy to conduct the meeting in transparency and ensure equal right and appropriate time slots to shareholders in posting questions during the meeting. The board of directors and executives are present to answer the questions and the session is incorporated in the meeting minutes, for shareholdersû scrutiny.

Leadership and vision The board of directors consists of experienced, knowledgeable and able individuals. The board is in charge of plotting policies, set the companyûs direction, and supervise the management in efficiently following the policies for the maximum benefits to the company and raise confidence among shareholders. Besides, there is a clear set of roles and responsibilities for the board of directors, executive board, the audit committee and executives. The internal control has also run the checking periodically and present their reports to the board of directors.

Conflicts of interests The board of directors and the executive team have so far handled conflicts of interests with full caution, integrity and independence under the good governance practices, for the corporate benefits. To ensure transparency and prevent conflicts of interest, the executive board and executives stipulate that connected individuals would be barred from making opinions or making votes on the transactions that could benefit them. Moreover, the company has clearly set the policies and procedures in approving the transactions that could stir conflicts of interests or connected transactions, in line with the announcements by the Stock Exchange of Thailand. In setting the policies and procedures, the company emphasises on shareholdersû benefits. The audit committee also seeks the board of directorsû acknowledgement for connected transactions that might involve conflicts of interest, which are screened with caution and in line with the Stock Exchange of Thailandûs regulations. The transactions were included in the reports which are completed on a quarterly basis. The transactions are also included in the annual report and the annual information disclosure form 56-1. The company also has the policy to bar directors and executives from revealing internal information, which has not yet been publicised, for their own benefits or the benefits of others, directly or indirectly. Moreover, directors, executives and employees who obtain the financial information must not make use of the information within a month before the public disclosure. The directors, executives and employees should avoid trading the companyûs shares before the disclosure of the financial information. The directors and executives are also reminded of the importance of the reporting of their ownership of the companyûs securities as well as any change in the shareholding to the Securities and Exchange Commission under the Article 39 and the penal clause Article 275 of the Securities and Exchange Act BE2535. The company puts in place disciplinary actions on employees who violate the companyûs regulations which are specified in the employeeûs manuals.

Annual Report 2005 33

Business ethics The company has created the code of ethics for directors and employees so that they could behave in accordance with the company and shareholdersû expectation and have the guidelines in performing their jobs.

Balance of power by non-executive directors The companyûs policy is to have at least 3 independent directors. At present, the company has 12 experienced and knowledgeable directors - 7 executive-cum-directors or 58.33 per cent, 2 non-executive directors or 16.67 per cent, and 3 independent directors or 25.00 per cent or lower than one third of all directors. The company thus pays huge attention on the opinions of independent directors. Whenever the independent directors recommend on any issue, the issue would be reviewed.

Position consolidation or split The companyûs chairman must not be the identical individual as the managing director, to clearly separate the duties in formulating business policies and the daily operations. The company has clearly specified in writing the scope of authority of executives in each level. The company has put the wall on the decision-making authorisation and the accounting/asset management to ensure check and balance.

10. Directors and executivesû remunerations Directorsû remunerations: The company has transparently set directors remunerations, to ensure that qualified directors are well-treated and encouraged to stay on in power. Members of the audit committee will receive higher pays, in line with their higher responsibility. Executivesû remunerations: The pays are set in line with the industryûs, comparable to what are offered by companies of the same size, to match their responsibilities and their pays. 11. Directorsû meeting Under the companyûs regulations, to make a quorum, at least half of the directors must be present at the meeting. In case that the chairman is not present or could not perform his duty, the vice chairman would chair the meeting if there is one vice chairman. If there are more than one vice chairman, the present directors must appoint one of them to chair the meeting. In case that there is no vice chairman, or there is but the vice chairman could not perform his duty, the present directors must appoint one of them as the chairman. The decisions are absolute, based on the majority vote principle. 12. Sub-committees The company has appointed sub-committees to help supervise the companyûs operations and to increase the operationsû efficiency. There are four sub-committees - the audit committee, the directors selection committee, the remuneration and human capital committee, and the executive committees. 13. Internal control system The company has put emphasis on the internal control efficiency in the executive level and the operating level, by put it in writing the procedure manual and the authorisation chart. The internal control is run as a special unit, to ensure efficiency. The unit will report directly to the audit committee.

34 Annual Report 2005

14. Board of directorsû reports The board of directors assigned the independent directors who are not the companyûs executives to supervise and disclose the financial statements, the internal control and internal inspection, to ensure the accuracy, sufficiency and credibility of the annual reports. 15. Investorsû relations The board of directors emphasises on the disclosure of information which have influence on investors and stakeholdersû decision making. The information - financial or non-financial as well as other crucial information - must be accurate, complete, sufficient, transparent, credible and in time. The information must be disclosed through the Stock Exchange of Thailandûs channel to reach investors, stock analysts and the public. The company has set up the investorsû relations departmentûs investors relations and information unit, to be responsible for the information disclosure. The unit can be contacted at: Khun Sirirat Wongwatana, Tel 0-2247-7106, Fax 0-2247-3328, e-mail address: sirirat@pf.co.th, or at http:// www.pf.co.th/ir.

Annual Report 2005 35

Reference

Rehabilitation Plan Administrator

Asian International Planners Limited 195 Empire Tower 3, 19th Floor, South Sathorn Rd., Kwaeng Yannawa, Sathorn, Bangkok 10120 Tel. 0-2670-1144 Fax. 0-2670-1152

Auditors

Mr. Narong Puntawong Mr. Sophon Permsirivallop Mr. Supachai Phanyawattano Miss Siriporn Aueanankul Ernst & Young Office Limited 33 rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road, Bangkok 10110 Tel. 0-2264-0777, 0-2661-6190 Fax. 0-2264-0790, 0-2661-9192

Legal Advisor

Banchong and Vidhya Law Office 33/35, 33/39-40 Wallstreet Tower 9th Flr. Surawong Road, Kwaeng Suriyawongse, Bangrak, Bangkok Tel. 0 2236-2334 Fax. 0 2236-3916

Share Registra

Thailand Securities Depository Co., Ltd. 4, 6-7th Flr. The Stock Exchange of Thailand Bldg., 62 Ratchadaphisek Road, Klongtoey Bangkok 10110 Tel. 0-2359-1200 Fax. 0-2359-1259

36 Annual Report 2005

Connected Transactions

27 February 2006 To All shareholders of Property Perfect Plc I, Dr Tawatchai Nakhata, as chairman and an independent director of Property Perfect Plc (the company), would like to present my opinions on the following transactions as follows; 1.

Connected Transactions with Estate Perfect Co.,Ltd. (Estate) Relationship - The company is the major shareholder of Estate, holding a 100 per cent stake. - The company and Estate share two directors - Chainid Ngow-Sirimanee and Pramote Rermyindee. Details of Transaction Description

Items

Value (Bt million) 2005 2004

1. The company loaned to Estate, having promissory notes represent partial loan disbursement. The PN carries the interest rate the company must pay to creditors accordingly to the debt restructuring plan, plus 1 percentage point.

Outstanding as of 31 Dec - Principal 290 - Received interest 14 - Unpaid interest 19

2. The company charges Estate the project administration cost as some executives and employees were dispatched to help Estate in the beginning of development.

Outstanding as of 31 Dec - revenue

3. The company made advance payment Outstanding for the transfer of Estate没s units to as of 31 Dec clients in 2005. - Debtor

Description 4. The company guaranteed a Bt850 million loan from financial institutions to Estate without charging premium. In 2004, Estate restructured Bt545 million. The company then guaranteed a new borrowing contract, that included extra loan, worth Bt975 million without charging premium. Regarding the unrestructured loan, the claim over the loan was transferred to a company. Later, the company received advance payment from the company and sent the company common shares in Estate in return.

197 5 5

Opinion I consider this a necessary financial assistance to help Estate没s project development and expansion as planned.

I consider this a normal business transaction, charged on the cost.

I consider this as an urgent advance payment.

Opinion I consider this necessary financial assistance as Estate needed to restructure the debts to continue its operations. As the major shareholder, the company needed to come up with the guarantee.

Annual Report 2005 37

Description

Opinion

5. The company restructured its loans to Estate on 27 February 2004, by converting the Bt143 million loan to equity. In return, the company received 14.3 million common shares with Bt10 in par value.

I consider this necessary financial assistance to an affiliate. (Then, the company held 43.33% in Estate). Then, Estate needed to restructure the loan to continue its business. Other creditors also followed this condition.

6. In September 2005, the company struck a guarantee the Bt434 million loan to Estate without premium, following the board of directors没 resolution on 19 September 2005.

I consider this necessary financial assistance to allow Estate to expand business. As the major shareholder, the company needed to provide the loan guarantee.

Connected transactions with Krungthep Land Co.,Ltd. (KLand) Relationship - The company is a major shareholder of KLand, holding a 20% stake - The company and KLand share a director - Chainid Ngow-sirimanee Details of Transactions Description

Item

1. The company loaned to KLand without a contract, having promissory notes represent partial loan disbursement. The PN carries the interest rate of 11%.

Outstanding as of 31 Dec - Principal - Unpaid interest

Value (Bt million) 2005 2004 84 62

Description 2. As a creditor in Item 1, the company struck four loan repayment agreements with KLand.

38 Annual Report 2005

114 62

Opinion I consider this necessary financial assistance as KLand needed the amount to finance land purchase. (In 2006 when the company held 99% of KLand, the company mortgaged a land plot of KLand worth Bt142 million in accounting value. Thus, KLand had no land for development.)

Opinion

Description 2.1 Dated 14 December 2003 ë The company stopped charging interest from 1 November 2003 and KLand must repay Bt164 million as principal and 3-month overdue interest. The payment must be made in 12 installments, Bt14 million each. The first installment was due on 25 February. Once all payments were made, the company would relieve KLand from the remaining overdue interest. (KLand could not follow the condition).

Opinion I consider this necessary financial assistance as the affiliate company suffered from financial crisis that it temporarily suspended operations. It thus could not repay the loan and the debt restructuring was necessary.

2.2 Dated 30 July 2004 I consider this rightly follow the rehabilitation plan. ë The company reduced the loan amount with the Bt7.7 million amount the company owed to KLand according to the rehabilitation plan. ë The company would claim ownership on 49 land plots of KLand, with combined land of 2-2-48 rai, as a loan repayment. The land value was not over the valuation by independent appraisers accredited by the SET and the SEC. ë After the debt reduction and the takeover of the land, KLand would repay the remaining debt or offer the company assets to settle the loan within a month after the land transfer. (After the debt reduction, KLand could not repay the remaining debt or offer the company assets to settle the loan within a month after the land transfer. 2.3 Dated 31 August 2004 ë The company took ownership of 50 land plots of KLand The transaction value, set by the two companies, with combined land area of 3-2-48 rai to settle the Bt38 did not exceed independent appraisersû valuation. million debt. (KLand offered an extra plot in addition to the agreement No. 2.2.) ë KLand agreed to repay at least Bt60 million within September 2004. (After the land transfer, KLand could not repay the loan as promised.)

Annual Report 2005 39

Description

Opinion

2.4 Dated 19 August 2005 I consider this necessary financial assistance as the (following the board of directorsû resolution on 11 August 2005) affiliate is under project development and suffers from ë The company agreed to allow KLand to repay the remaining cash flow problem. Bt118 million debt in 5 installments within a year, starting from August 2005 to August 2006. Upon completion, the company would relieve KLand from unpaid interest. In case of miss payment, KLand is subject to penalty rate of 15%. (KLand followed the condition by repaying Bt30 million in 2005.) 3. The company guaranteed a Bt30 million loan from financial institutions to KLand without charging premium.

I consider this necessary financial assistance to an affiliate. (Then, the company held 99.93% in KLand).

Connected transactions with Real Service Co.,Ltd. (Real Service) Relationship - The company is a major shareholder in Real Service, holding a 19% stake. - The companyûs employee - Chainarong Ngernsopha - is Real Serviceûs director. - The companyûs executives - Pornsawat Ketchulasriroj, Surasak Watcharapongpreecha, Thiti Inklinphan and Somkid Chidtrakul - hold a combined stake of 38% in Real Service. - KLandûs executive - Thosaporn Jirakiatdeekul - holds a 5% stake in Real Service. Details of Transactions Description

Item

1. The company loaned to Real Service without a contract or promissory notes as disbursement evidence. The loan is charged 11% in interest rate.

Outstanding as of 31 Dec - principal - interest receivables

Description 2. The company struck a loan repayment agreement with Real Service on 14 December 2003. ë The company would stop counting interest from 1 November 2003 and Real Service must repay the principal and 3-month overdue interest, worth totally Bt4 million, in 12 installments, Bt0.37 million each. The first installment was set for 25 February 2004. When all installments were made, the company would relieve it from the remaining overdue interest. (Real Service repaid the company Bt2 million.)

40 Annual Report 2005

Value (Bt million) 2005 2004 2 3

2 3

Opinion I consider this necessary financial assistance to a company which has been connected since 1998, so that Real Service could expand its service in supporting the companyûs house transfer. Real Service later recorded lower revenue and could not repay the loan.

Opinion I consider this necessary financial assistance as Real Service encountered financial and business problems that obstructed it from repaying the loan in full. A debt restructuring was necessary.

Connected transactions with Perfect Satellite Services Co.,Ltd. (Satellite) Relationship - The company is the major shareholder of Satellite, holding a 99.94% stake. - The company没s executives - Rasamee Metavikul, Thongchai Piyasantiwong, and Sureeporn Pipatwattanapong - are Satellite没s directors. - Chanthanee Manomaipibul, the wife of the company没s director, is a director of Satellite. (She resigned in February 2006). Details of Transactions Description 1. The company hired Satellite to manage the clubhouses in its projects, at the cost of Bt250,000 a month per project. The company would transfer revenue from the clubs to Satellite, while Satellite would shoulder the expenses in serving club members.

Item

Value (Bt million) 2005 2004

As of 31 Dec. - Clubhouse management cost 10.2 - Other revenue 1.1 - Overdue expenses 1.1 - Overdue revenue 0.2

7.6 0.8 -

Opinion This is a normal business transaction, whereby both sides jointly set the price.

Sincerely Yours,

(Dr. Tawatchai Nakhata) Chairman and independent director

Annual Report 2005 41

Risk Factors

Factors that could put investors or the company at risks are as follows; 1.

Risks from higher working capital requirement to finance house construction As the company has the policy to offer complete houses rather than take construction orders since 2003 to assure the buyers of product delivery and raise their confidence, the company is thus in need of higher working capital as the construction, consuming about 6-8 months, is no longer financed by downpayments. The company needs higher working capital and may incur risks as the complete house might not attract buyers. This will add into the inventories cost and the companyรปs liquidity. As of 31 December 2005, the companyรปs cash cycle is 1,164 days, average debt collection period of 3 days, average sale period of 1,187 days, and average debt repayment period of 27 days. However, consumer behavior analysis showed that in looking for a house, consumers paid attention on the price, location, design, the size of land, and environment. The company can plan how many houses should be built in each location to be in line with the sale activity. In the past year, we found that the complete houses meet consumersรป preferences and the company can realise revenue after a purchase contract is signed in a faster manner. In addition, the company has the policy to penetrate in the medium-priced condominium market, which requires long-term planning. The policies would help mitigate risks on the rising development cost as the company would know the overall cost before putting the units on sale. This is different from house construction service, of which price is set ahead of the construction and consequently could spur risks from higher construction materials cost. The need for higher working capital does not pose problems to the companyรปs debt repayment as each project generates income in different period. That helps us manage the inflow. The company also addresses the risk by obtaining some loans from financial institutions as additional working capital. Moreover, we thoroughly monitor the sale activity so that we can keep the number of complete units or inventories in the level sufficient to support the marketing activities.

Risks from adjustment in construction material costs and contractor shortage Due to the continued expansion in the property market since late 2003, construction materials have called for higher prices while labour shortage is imminent. This results in higher operating cost. The company has put efforts in lowering the risks by putting more focus on the sale of complete houses, rather than take construction orders. This shapes the construction plans in advance, enable the company to negotiate the prices of construction materials and control the cost to some extent. The company also knows the overall cost before selling the houses. Moreover, the companyรปs policy is to order main construction materials such as construction piles or roofs for the company and subsidiaries. This increases the power in bargaining for the right price and the better delivery conditions. So far, the company has not witnessed any negative consequences from the upward adjustment of construction material prices. On contractor issue, the company now hires over 100 medium- and small-sized construction companies. The qualifications and prices are agreed before contract signing, as well as the delivery deadline. The company has ensured that the contractors are constantly awarded appropriate construction works/ The company also creates the supply chain to supply construction materials to the contractors, educates contractors, fairly classify contractors on their quality, and adjust the construction cost accordingly to market conditions and construction material prices. The inspection is based on the standards created to raise mutual understanding between the company and the contractors. At present, the company starts to delay the construction of new units and speeds up on the sale of the inventories to reduce oversupplies in some locations.

42 Annual Report 2005

Risk from guarantees of loans to affiliate The company guaranteed a bank loan to an affiliate, Krungthep Land Plc, with the outstanding as of 31 December 2005 at Bt30 million. (Details are in çconnected transactionsé). At present, Krungthep Land has honored the obligations and the company is not required to take responsibility for the financial creditors - who are classified as Creditor No.11 in the rehabilitation plan. However, if Krungthep Land defaults, the company would need to shoulder the burden, by repaying 8% of the amount in cash and converting 92 per cent in equity. Meanwhile, free warrants would be issued, accordingly to the rehabilitation plan. However, Krungthep Land has restructured the loan with the financial creditors, and it receives a favourable repayment condition. At present, Krungthep Land is developing 3 housing estates, with combined value of Bt11,531 million*. So far, it has never missed a payment and resulted in the companyûslow risk from the loan guarantee. *Including The Pano condominium project which is jointly undertaken by Centre Point Property Co Ltd - a large-sized property developer from Singapore.

Risk from higher market competition Due to the higher competition among property developers following oversupplies especially in luxury segment since 2004, developers have to adjust their development strategies to meet the demand. Not all developers could adjust themselves to re-focus on low-priced development, particularly when financial institutions become more stringent in extending project financing as well as the upward interest rate cycle. The number of developers has declined and most of the existing are large-sized, which has huge capital base and has been in the industry for a long time. Competition consequently has intensified. Due to focus on location, home design development, the introduction of home automation system, fair pricing, good infrastructure and after-sales service, the companyûs projects are of high quality with premium project environment and superb security system. These wins buyersû hearts and they recommend their friends. This helps reduce the risk to some extent.

Risk from debenture redemption After getting out of rehabilitation on 24 May 2004, shareholders approved the plan to issue debentures worth no more than Bt2,000 million. This raised the companyûs debt in 2004 to Bt7,192.94 million from Bt4,472.57 million in 2003, or a 60.82% increase. The bond issuance also raised the debt to equity (D/E) ratio by 1.09 times to 1.40 in 2004, or up 28.44%. In 2005, the D/E ratio dropped 0.05% from 2004. Meanwhile, the bond issuance accounted for 19.56% of the companyûs total liabilities.

Annual Report 2005 43

However, the D/E ratio as of 31 December 2005 equalled 1.33 times, down 0.05% from 2004, as the company issued promissory notes to raise working capital to finance home construction. The P/N replaced project financing which carried higher interest rates. The P/N issuance was recorded in the overdraft and short-term borrowing from financial institutions item in the balance sheets. As of 26 December 2005, the company repaid the mature P/N, accounting for 95% of total issued P/N. The company没s obligations for debentures and unsubordinated convertible debentures are as follows; 1.

Debentures issued in 2004, consisting of 3 sets of secured debentures worth no more than Bt1,550 million. Details of each set are; 1.1 1/2004 secured debentures Set 1, maturing in 2006. The 450,000 units, with face value of Bt1,000 or total Bt450 million, carries the maturity of one year and a half and will come due on 18 February 2006. The coupon rate is 3.4 percentage points above Siam City Bank没s 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1. 1.2. 1/2004 secured debentures Set 2, maturing in 2006. The 750,000 units, with face value of Bt1,000 or total Bt750 million, carries the maturity of two years and will come due on 18 August 2006. The coupon rate is 3.5 percentage points above Siam City Bank没s 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1. 1.3. 1/2004 secured debentures Set 2, maturing in 2007. The 350,000 units, with face value of Bt1,000 or total Bt350 million, carries the maturity of two years and a half and will come due on 23 February 2007. The coupon rate is 3.65 percentage points above Siam City Bank没s 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1.

* The company redeemed the debentures on maturity date, 28 February 2006. 2.

Unsubordinated convertible debentures issued in 2005 1/2005 unsubordinated convertible debentures, maturing in 2010 The company receives the Securities and Exchange Commission to offer convertible debentures worth no more than US$30 million in a private placement to foreign investors. The debentures carry the fixed 3.5% coupon rate and can be converted within 5 years. The company is obliged to repay principal only to the unconverted debentures. As of 25 November 2005, the company issued $20 million on such issue.

44 Annual Report 2005

Though the company has secured project financing and short-term loans to boost working capital as well as the lower obligations to creditors in the rehabilitation plan, in 2005 the company chalked up higher sales, through the opening of 5 new projects. The sales increased 19.51%, exclusive of the sale proceeds from çMetro Parké condominium of which Phase I has been 70% sold. The company will realise the revenue in 2006. The company is thus confident of the ability to redeem the secured debentures and the debentures which will be issued in 2006. The company has also redeemed the 1/2004 debentures Set 1 on 18 February 2006. 6.

Risk from upward interest cycle Higher interest rates will negatively affect the property sector. The companyûs interest expenses are rising while consumersû purchasing power drops. As of 31 December 2005, the companyûs debentures and floating-rate loans from financial institutions accounted for 73.32% of total liabilities. Due to the upward cycle, the company expects this to affect the decision to buy houses as mortgage loans are longterm and consumers could be less confident on their ability to repay the loan. Some buyers could also delay the decision. However, the company softens the risk by sourcing out fixed-rate financing including the issuance of 2-year secured debentures and the suggestion for shareholdersû approval for the issuance of dollar-denominated 5-year convertible debentures at a fixed exchange rate. The dollar debentures, worth no more than US$30 million with the coupon rate of 3.5% per annum, were approved by the Securities and Exchange Commission. The coupon rates of both debentures and convertible debentures, allowing the company to know the financial cost in advance and shoulder no risk in additional burden throughout their maturities. Meanwhile, the company has developed products to suit buyersû demand - including the provision of near-town units in a medium-price range. This allows the company to realise revenue in a short time and quickens the debt repayment. However, as consumersû confidence drops, the company anticipates slight negative impact now that the average lending rate is about 6% compared to 14-17% in the prefinancial crisis. At the level, the interest rates remain low. The company has also continually studied consumersû expectations to best responded to their requirements.

Annual Report 2005 45

Explanation and Analysis of Financial and Operating Results

Property Perfect Plcûs consolidated operating and financial results are as follows; Operating Result Analysis The analysis in 2003 results focuses only on the companyûs result, while the results from 2004 are consolidated. In 2004, the company invested additionally in Estate Perfect Co.,Ltd. (Estate), under the debt restructuring strucked by both companies. The companyûs stake in Estate rose from 43.33% to 76.30% of the latterûs paid-up capital, which turned Estate into an affiliate to a subsidiary. In the second quarter of 2004, the company made additional share purchase from original shareholders of Estate, increasing its stake to 99.99% of paid-up capital. Estate has launched products and started realising revenue in the fourth quarter of 2004. Meanwhile, in 2004, the company established another subsidiary, Perfect Satellite Services Co.,Ltd., in which it owns 99.94% of paid-up capital. The subsidiary manages fitness and recreation clubs in the companyûs projects. Operating Results The companyûs results have continued the growth pace in the past 3 years, due to the successful business rehabilitation and debt restructuring which had been carried out since 2001. On 12 April 2004, the Central Bankruptcy Court allowed the company to exit the rehabilitation. Also contributing to the growth in operating results was also the change in business strategies to raise confidence among buyers: the company has switched its focus from taking construction orders to producing complete units. Buyers also become more confident due to the economic improvement, low-interest rates, as well as the governmentûs stimulus packages - the reduction in transaction fee and related taxes. The company and subsidiaries launched 2 projects in 2002, 3 projects in 2003 and 6 projects in 2004. In 2005, undergoing projects accounted for 16, including one low-rise condominium project. Consolidated Operating Result- Financial Result ë Sale revenue The company realises land & house sales proceeds when the construction is complete and the completed units are transferred to buyers who pay all the cost under the completion method. In 2004, the consolidated sales revenue totalled Bt4,126.49 million, up 9.80% from Bt3,758.30 million in 2003, due to the launch of 6 projects in 2004 in addition of 10 undergoing projects. The new projects, located near the future masstransit network, offer complete housing projects, which shortened the transfer period. The revenue rose also because of the projects undertaken by subsidiaries, amid improvement in the economy and the property sector. Though, the stimulus packages ended on 31 December 2003 - which encouraged many buyers to complete the transfers by the end of the year and resulted in slow sales in the first quarter of 2004.

46 Annual Report 2005

In 2005, the consolidated sale revenue is split in two parts. -

Land & house sale revenue This is the main income contributor. Consolidated land & house sale revenue in 2005 totalled Bt4,931.89 million, or 97.62% of total sale revenue. The amount increased 19.52% from the 2004 level of Bt4,126.49 million. This is a result of the launch of 5 projects in 2005, focusing on all market segments. This is supported by the continued public relations from 2004 to instill the companyûs image among customers, a variety of designs, locations that fit consumersû requirements and continued demand.

Land sale revenue The revenue from land sale totalled Bt120 million or 2.38% of total sale revenue. The land plots were sold as the company had no plan to develop them and the board of directors approved the sale at the price based on independent appraisersû opinions (See more details on financial notes No.10 on land bank).

The company and subsidiaries booked revenue from each project in separate accounts (See more details from the table on revenue structure by product). ë Sale cost and gross margin The sale cost calculation takes into account all costs that could arise (and also actual costs) and the sale cost is realised after the company books revenue from the sale of a particular unit. The cost covers the price of land, designs, infrastructure, construction and related interest. Consolidated sale cost in 2004 totalled Bt2,565.40 million, up 6.23% or Bt150.39 million from the previous year, due to the 9.80% increase in sale revenue. However, house development cost in 2004 was lower than the previous year, reflected through the lower increase in sale cost compared to the increase in sale revenue. The company emphasised on construction works quality control by obtaining appropriate materials and construction period control. Meanwhile, the company and subsidiaries take charge for the supply of key materials such as construction piles and roof for all projects, which resulted in a certain bargaining power and a control on the sale cost while house quality was improved or maintained the previous yearûs quality. The consolidated sale cost consists of: -

Key cost: the cost in the sale of land & house, which totalled Bt3,227.83 million, up Bt662.43 million from the previous year or 25.82%. The percentage increase is higher than the 19.52% increase in sale revenue in the same period, because of higher construction material prices.

Land bank cost totalled Bt120 million. This is the cost of the sale of undeveloped land plots, estimated by independent appraisers authorised by the Securities and Exchange Commission. The price is lower than the original land cost but provisions were reserved for the decrease in the asset value.

Annual Report 2005 47

Consolidated gross margin from ordinary operations stood at 37.83% in 2004 and 34.55% in 2005, due to the 3-4% increase in housing prices in the last quarter of 2003. Higher construction material prices did not pose significant impacts. The material prices raised the sale cost by less than 10%. Moreover, most revenue reaped in 2004 came from the projects which maintained the original construction cost while the company did not adjust house prices in 2005 amid higher construction material prices and fiercer competition. ë Other revenue The consolidated other revenue in 2004 totalled Bt409.86 million or 9.04% of total revenue. Most of them come from: -

The transfer of the Bt139.49 million investment in Estate to income and the booking of loan provisions of Bt143.41 million, resulting from Estateûs successful restructuring in the debt and equity structure which put Estateûs equity back in the positive area. In the first quarter of 2004, the investment, which was earlier booked as expenses, were booked as revenue. Meanwhile, the company converted debt to Estate to equity at the par value of Bt10 a share: thus, the company reduced the loan provision and reverted the reduced sum as revenue. The total amount of Bt282.90 million accounted for 6.24% of total revenue.

The company gained Bt40.11 million as Estateûs creditors forwent a loan claim. The company guaranteed the loan for Estate and the creditor became the companyûs creditor. After Estate completed debt restructuring, the claim was cleared.

In 2005, consolidated other revenue totalled Bt736.70 million, mostly from: -

The revert of Bt70.90 million provisions on possible decrease in the value of land plots which were sold in the second quarter based on independent appraisersû evaluation. The evaluation is higher than the accounting value as of 31 December 2004. In 2005, the company and subsidiaries also had the fair value of çland banké re-appraised by independent appraisers and the fair value was Bt100.68 million higher than the accounting value. The increasing value is thus booked as other revenue.

The revert of provisions on possible decrease in project value. In 2005, the company and subsidiaries had the fair value of çproject development costé re-appraised by independent appraisers and the fair value was Bt467.41 million above the accounting value. The sum was booked as other revenue.

The booking of debt restructuring gain, of Bt49.11 million, as revenue. The company gained from the restructuring as the loans to creditors with collaterals were repaid in a faster manner than expected.

48 Annual Report 2005

ë Sale and administration cost In 2003, consolidated sale and administration cost totalled Bt833.42 million, up Bt298.85 million or 55.90% from the previous year, due to 3 main reasons. -

The end of stimulus packages - the reduction in the special business tax and transaction fee - which raised property companiesû tax burden. The special business tax was raised in 2004 to 3.3% from 0.11% in 2003. Meanwhile, transaction fee from 0.01% to 2% increased the transaction expenses by Bt179.2 million.

The opening of 5 new projects in 2004, which incurred the increase of Bt96.6 million in expenses related to the opening and advertisement. The advertisement has raised the companyûs sale volume during the year.

The depreciation of net goodwill by Bt21.58 million. This incurred from the debt and equity restructuring of Estate worth Bt30.28 million. The company also bought Estateûs common shares from original shareholders at the below-accounting-value price, resulting in Bt8.7 million negative goodwill. The company booked the entire net decrease as the sale and administration cost.

Sale and administration cost in 2005 totalled Bt1,043.39 million, up Bt209.97 million from 2004 or 25.19%. This resulted from the preparation of launching 6 projects in the year which needed continued advertisement to promote sales and instill the brands among consumers. ë Net profit Consolidated net profits during 2003-2005 are: (Unit: million baht) 2003 Net Profit 1,156.64

2004 1,015.52

2005 1,092.64

The 2004 consolidated net profit dropped from 2003 level despite the 9.80% sale revenue increase, due to the higher sale and administration cost which increased 55.90% year on year. Most of them incurred from the higher special business tax and transaction fees and the advertisement cost as well as higher interest expenses as the company borrowed additional money and issued debentures to finance expansion. The sale cost also rose 6.23% year on year. However, consolidated gross margin increased from the previous year, as mentioned above. The 2005 consolidated net profit totalled Bt1,092.64 million, up Bt77.12 million or 7.59% from the previous year, due to the higher sale revenue and other revenue. Exclusive of other revenue - the revert of project development cost provision of Bt467.41 million, the revert of landbank value provision of Bt171.58 million, the revert of debt restructuring gain of Bt49.11 million and the revert of asset value provision of Bt32.90 million, the consolidated net profit would be Bt437.45 million.

Annual Report 2005 49

But for other revenue - the reverts of investment in Estate of Bt139.49 million and the loan provision of Bt143.41 million as well as the booking of debt restructuring gain of Bt47.76 million and the goodwill booking of Bt21.58 million - the 2004 consolidated net profit would have been Bt706.34 million. Comparatively, but for these extra items, the 2005 net profit dropped Bt268.89 million from the 2004 level. This is a result of the lower gross margin, as mentioned above, the higher sale and administration cost and higher interest expenses on the back of higher borrowings to finance expansion of the company and subsidiaries. Financial Status Overall picture Consolidated financial status table As of 31 Dec 2003 As of 31 Dec 2004 As of 31 Dec 2005

Assets 8,593.15 12,326.90 13,861.16

(Unit: million baht) Shareholdersû equity 4,120.59 5,133.96 5,937.43

Liabilities 4,472.56 7,192.94 7,923.73

ë Assets Consolidated assets totalled Bt12,326.90 million and Bt13,861.16 million in 2004 and 2005, respectively, indicating an increase of Bt1,534.26 million or 12.45%, due party to business expansion. By item, contributing the highest portion of the assets is the project development cost worth Bt7,625.47 million or 55.01% of total assets. Following are land bank, Bt3,659.57 million, and advance on land purchases of Bt851.10 million, which constituted 26.40% and 6.14%, respectively. The structure fits the company and subsidiariesû nature of business. Details of assets are; Project development cost Non-consolidated Subsidiaries Consolidated *

3,661.59 3,661.59

2003

100% 100%

5,070.53 1,168.75 6,239.28

2004

81.27% 18.73% 100%

(Unit: million baht) 2005 6,442.29 84.48% 1,183.18 15.52% 7,625.47 100%

Note: * the 2003 figures are non-consolidated while the 2004 and 2005 figures are consolidated. -

The companyûs project development cost rose due to the higher number and value of undergoing projects. The 2005 cost totalled Bt6,442.29 million, including the depreciation provision of Bt69.98 million and the accounting value provisions in case that accounting values exceed independent appraisersû evaluation.

Subsidiariesû cost belongs to Estate which is developing 1 project, of which cost at the end of 2005 was Bt1,183.18 million.

50 Annual Report 2005

Net land bank Non-consolidated Subsidiaries Consolidated *

3,185.45 3,185.45

2003

100% 100%

3,776.18 3,776.18

2004

100% 100%

(Unit: million baht) 2005 3,389.87 92.63% 269.70 7.37% 3,659.57 100%

Note: * the 2003 figures are non-consolidated while the 2004 and 2005 figures are consolidated. -

The non-consolidated net land bank value consists of land cost, development cost, construction cost, interest expenses minus costs that would be reverted to sale cost, the land transferred for debt restructuring and repayment accordingly to the rehabilitation plan and depreciation provisions of Bt142.44 million (See more detail in financial note No.10).

Subsidiariesรป net land bank value belongs to Estate, which consists of land cost and depreciation provision of Bt9.86 million. The land is near Suvarnabhumi Airport, which could support its expansion. The company and subsidiaries will consider booking the land bank as project development cost only when the development starts - for example, when the land is being cleared or when development plan is plotted.

Land purchase advance Non-consolidated Subsidiaries Consolidated *

543.98 543.98

2003

100% 100%

702.14 20.00 722.14

2004

97.23% 2.77% 100%

(Unit: million baht) 2005 800.44 94.05% 50.66 5.95% 851.10 100%

Note: * the 2003 figures are non-consolidated while the 2004 and 2005 figures are consolidated. Land purchase advance covers the downpayment paid in advance to land owners or to agents who accumulate land plots. Once the ownership is transferred, it will be booked as the project development cost or in the land bank item. In 2005, the advance payments totalled Bt851.10 million. -

Out of that, the company paid Bt728.7 million to landowner - Asoke Property Co.,Ltd. which holds a 0.58% stake in the company after a debt conversion. The land purchase was endorsed by Asian International Planners, the plan administrator, on 26 January 2004. Asian International Planners was appointed by the Central Bankruptcy Court to complete the rehabilitation plan on 19 February 2001 and to administer the plan on 2 October 2001, under the black case No. 40/2001 and red case No. 106/2001. Under the Bankruptcy Act BE2483รปs Articles 90/25 and 90/59, during the rehabilitation, the plan administrator was authorised to supervise the operations and assets of the debtor (Property Perfect Plc) and is legally transferred the debtorรปs legal rights except the right on dividend. Thus, legally, the plan administratorรปs approval on the land purchase is equivalent to the shareholdersรป resolution.

Annual Report 2005 51

Advance paid by the company and subsidiaries to landowners who agreed to sell the land through agents accounted for Bt56.1 million: Bt39.4 million by the company and Bt16.7 million by subsidiaries.

Advance paid by the company and subsidiaries to agents who accumulate land plots from landowners totalled Bt66.3 million: Bt32.3 million by the company and Bt34 million by subsidiaries.

The value of to-be-purchased land as of 2005 totalled Bt1,014 million. The outstanding would be booked as land cost when the land are transferred to the company and subsidiaries. These are the purchases of land in potential areas for future development which cover various locations. This will support continued development. At the end of 2004 and 2005, the company made advance payments to NRL Business Co.,Ltd., a co-developer of a project in Pattanakarn, worth Bt183.50 million. The payment was made as the company bought a land plot near the motorway, which is accessible to Pattanakarn Road. The land, covering about 200 rai, was used to back the 1/2004 debenture issue. It needs environmental impact assessment which would take nearly 1 year. The process will largely affect the project development cost. Thus, the company split the land plot to house two projects which are separated by a road which must not be owned by the company. An independent individual or juristic entity with no connection with the company or executives was sought. Property Perfect Plc. thus approved the advance payment to NRL Business for the purchase of the road area. Meanwhile, the land plots were backing the companyûs 1/2004 Sets 1-2 debentures. However, on 11 August 2005, the companyûs board of directors resolved to cancel the co-development contract and after the land pledge contract ends in February 2006, the land would be transferred to the company. Loans and net interest receivables to affiliates and related companies as of 31 December 2005 totalled Bt91 million. Consisted of loan to affiliates and related companies totalled Bt121 million and loan loss provisions were Bt60 million. In 2004, net loans and interest receivables totalled Bt121 million while loan loss provisions were Bt60 million. The investment in Krungthep Land Co.,Ltd. was raised from Bt150 million in 2003 to Bt300 million in July 2004, following the paid-up capital increase from Bt500 million to Bt1,000 million. The new shares were sold to existing shareholders and the companyûs board approved the additional investment to maintain the shareholding ratio. On 22 June 2005, Krungthep Landûs shareholders at the 3/2005 extraordinary meeting approved the hike in capital from Bt1,000 million (consisting of 100 million shares with Bt100 par value) to Bt1,550 million (155 million shares) and the 55 million new shares would be offered to the public. If any shares were left over, they would be offered in a private placement of institutional investors. On September 2005, Krungthep Landûs shareholders at the 4/2005 extraordinary meeting approved the capital decrease from Bt1,550 million (155 million shares) to Bt1,000 million (100 million shares), and approved the capital hike from Bt1,000 million (100 million shares) to Bt1,700 million (170 million shares). 50 million new shares would be issued in a private placement or to institutional investors and the remaining 20 million shares allocated to property development companies. Following the equity restructuring, the companyûs holding in Krungthep Land falls to 20% and Krungthep Landûs operations are included in the consolidated balance sheets through the equity method. In 2004 and 2005, the company booked revenue from Krungthep Land at Bt42.38 million and Bt3.99 million, respectively. The companyûs investment in affiliates under the equity method was valued at Bt349.07 million in 2004 and Bt353.06 million in 2005.

52 Annual Report 2005

Other guarantee obligations The company holds obligations to the loan guarantee to Estate Perfect Co.,Ltd. worth Bt1,409 million and Krungthep Land Co.,Ltd. worth Bt330 million. The company is not needed to honour the obligations now, as the subsidiary and the affiliate have not yet defaulted on the loans. ë Asset quality The companyûs policy is to realise revenue only after the transaction of housing or condominium units to clients. Thus, downpayments or installments would be booked as liabilities under the downpayment and clientsû advance payment item. The overdue installments would be booked in the trade receivables item. Though the company focuses on selling complete houses, some clients prefer to buy houses under construction. The houses are also sold to clients who must pay downpayment in installments. The installments are included in trade receivables. Mostly, the debts in this item is cleared in less than a year. In 2005, consolidated trade receivables totalled Bt41.73 million, against consolidated provisions on loans unpaid for over 12 months worth Bt10.24 million. Thus, net consolidated trade receivables totalled Bt31.49 million. The company believes that the provisions are sufficient for the current situation. Debtors in the category can be broken down into 3 groups. ë Clients with overdue installments These cover clients who failed to pay instalments for the houses under construction. Total loans were Bt21.17 million or 50.74% of total overdued loans. ë Clients with overdue transaction cost Some clients did not pay all debts on the transaction date, accounting for 48.91%. However, the overdued loan worth Bt20.41 million accounted for only 0.15% of total assets, an insignificant ratio. The company also set aside provision of Bt10.24 million. Moreover, as the company focuses on the sale of complete houses, such loans tend to fall in the later periods. For clients who fail to paid the debt for more than 6 months, the company has contacted them to honour their obligations and some cases have been brought to court. The company believes that the provisions are sufficient under the present circumstances and due to the policy to sell complete houses, the total debt should not be too high. ë Trade debtors Incurring from the unpaid electricity, water and telephone bills issued to contractors, worth Bt0.14 million or 0.35% of total trade debts.

Annual Report 2005 53

毛 Liquidity The cash flow balance sheet during 2003-2005 are as follows: item Operating cashflow Investment cashflow Financing cashflow Net cashflow increase (decrease)

2003 533.01 (1,940.53) 1,362.50 (45.02)

2004 90.63 (2,199.79) 2,216.68 107.53

(Unit: million baht) 2005 1,041.29 (1,258.73) 368.54 151.10

Consolidated net cashflow were minus Bt45.02 million in 2003 and has improved since 2004 to be in the positive area of Bt107.53 million and Bt151.10 million in 2004 and 2005, respectively. Most of them are loans from financial institutions as well as the sale of secured debentures and unsubordinated convertible debentures. The investment cashflow has been in the negative area, at Bt1,940.53 million, Bt2,99.79 million and Bt1,258.73 million during 2003-2005. This is a result of the company没s land purchases. Moreover, in 2004, the company invested additional Bt150 million in Krungthep Land to maintain the shareholding ratio. In 2005, the company没s advance payments for land purchases increased Bt308.18 million from the 2004 level as well as the land purchases of Bt902.05 million. The cashflow on financing activities stood at Bt1,362.50 million, Bt2,216.68 million, and Bt368.54 million during 20032005. In 2005, the company raised Bt823 million from the issuance of unsubordinated convertible debentures. The company paid dividend of Bt0.40 per share in 2004, totalling Bt312.70 million, as of 6 May 2005. The 2005 gearing ratio was 3.03 times, down from 6.56 in 2004, as Bt1,200 million out of the Bt1,550 million secured debentures issued in 2004 would come due in 2006. Current liabilities thus increased at the end of 2004. Sources of fund 毛 Liabilities Consolidated liabilities in 2005 totalled Bt7,923.73 million (Bt7,476.42 million belonging to the company and Bt447.31 million to subsidiaries), up Bt730.79 million from 2004. Most of the new loans are long-term borrowing and the sale of unsubordinated convertible debentures, which were raised to boost working capital and to develop projects. 50.92% of consolidated liabilities in 2005 was long-term loans, 10.39% as unsubordinated convertible debentures, 19.56% as debentures and 8.18% as loans from creditors in the rehabilitation plan. Details are as follows: -

54 Annual Report 2005

Long-term loans in 2005, long-term loans totalled Bt4,034.92 million: out of that Bt3.,648.73 million are borrowed by the company (and Bt52.39 million is due in a one-year period). The remaining Bt386.19 million are borrowed by subsidiaries. The loans are to finance project development and land purchases. The loan details are:

Long-term borrowing Minus: loans with 1-year maturity Net long-term borrowing

Nonconsolidated 2,767.12 27,56 2,739.56

523.85

(Unit: million baht) 31 December 2005 Non- subsidiaries consolidated consolidated 3,260.97 3,648.73 386.19 4,034.92

0.00 523.85

27,56 3,263.41

31 December 2004 subsidiaries consolidated

52.39 3,596.34

0.00 386.19

52.39 3,982.53

Moreover, the company guaranteed loans from banks and financial institutions to subsidiaries worth Bt1,439 million. -

Overdraft and short-term loan Totalling Bt225.01 million in 2005, entirely borrowed by the company. The item includes promissory notes worth Bt75 million, which comes due in January 2005 and short-term loans from financial institutions worth Bt150.01 million.

Debentures In 2005, outstanding secured debentures which must be redeemed in full are valued at Bt1,550 million. In 2004, the company issued 3 sets of debentures to buy new land, repay loans and boost working capital. The details of the debentures are: Issue 1/2004 Set 1 1/2004 Set 2 2/2004 Set 1 Total

Value Issue date (million baht) 450.00 18 Aug 2004 750.00 18 Aug 2004 350.00 23 Aug 2004 1,550.00

Maturity date

Condition

18 Feb 2006 - The ratio of collaterals to 18 Aug 2005 outstandingdebentures must be 23 Feb 2007 maintained at 1.5:1 - The ratio of total liabilities to shareholders没 equity must not exceed 1.75:1

Annual Report 2005 55

Unsubordinated convertible debentures Totalling Bt823 million in 2005, raised to refinance loans and boost working. Details are: Issue

Value Issue date Maturity date (million baht) Unsubordinated convertible 823.00 25 Nov 2005 25 Nov 2010 debentures (200,000 units with face value of US$100)

Condition - Conversion ratio of 1 debenture to 658.4 common shares or at Bt6.25 per share - Unconverted debentures will be redeemed at US$131.60 per unit at the exchange rate of Bt41.15/US$ - One individual nominated by foreign investors must be appointed a director.

Rehabilitation creditors After the exit of the rehabilitation plan, rehabilitation creditors own Bt648.41 million of the companyûs loans: Bt132 million by creditors with collaterals, Bt516 million by creditors without collaterals, Bt0.1 million by land & house buyers. The principal and interest repayment terms are: Type

Outstanding Principal repayment Interest rate (MB) year % Creditors with collaterals 132 - When cashflow exceeds Bt250 2004-2005 3% MLR but million at the end of each quarter 2006 below 10% Creditors without collaterals516 - When cashflow exceeds Bt250 2004-2005 1% MLR but million at the end of each quarter 2006 below 10% Land & house buyers 0.01 - Fully retired but some buyers have not yet collected the payments Total 648.41

†

ë Shareholdersû equity Consolidated shareholdersû equity in 2005 totalled Bt5,937.43 million, up Bt803.47 million from 2004. Consolidated net profit in 2005 reached Bt1,092.64 million and the company paid dividend for the 2004 operations at Bt0.40 per share or a total of Bt312.70 million as of 6 May 2005. The payment is in line with the 1/2004 shareholder resolution as of 7 April 2005. The equity consists of Bt4,695.21 million paid-up capital, and Bt13.03 million capital loss, unsubordinated convertible debenturesû equity portion worth Bt23.54 million, and Bt1,231.71 million accumulated profits.

56 Annual Report 2005

In 2005, outstanding warrants issued to creditors without collaterals stood at 14.06 million units. The warrantsû exercise ratio is one warrant to 1 share at the exercise price of Bt0.01. The 10-year warrants can be exercised on the last day of the second and fourth quarter, starting from the fourth quarter of 2002. ë Debt to equity ratio Consolidated debt to equity ratio at the end of 2004 stood at 1.40:1, up 28.44% from 1.09 in 2006, due to the 60.82% increase of total liabilities which were Bt7,192.94 million at the end of 2004 against Bt4,472.52 at end-2003. The liabilities increased mainly due to the issuance of Bt1,550 million debentures to raise fund for 5 new project launch, for land purchase and subsidiariesû debt creation of Bt572.05 million. The subsidiariesû debts were incorporated in the consolidated account in 2004. The non-consolidated debt to equity ratio at end-2004 increased only 18.35% from end-2003. In 2005, the ratio was 1.33, down 5% from 2004, as the liabilities increased Bt730.79 million or 10.16% following the sale of unsubordinated convertible debentures against the 15.65% or Bt803.48 million increase in equity based on the Bt1,092.64 million net profit and the equity portion of the unsubordinated convertible debentures of Bt23.54 million minus dividend payments of Bt312.70 million. Future projects The company and subsidiaries have plans to launch more projects in addition to the undergoing projects. The company plans to launch 3 new projects, with combined project value of Bt4,650 million, as follows: Project 1 Perfect Masterpiece 2 Perfect Park 3 Townhouse Total

Location Rattanathibet Banyai Pattanakarn

Type SDH SDH TH

Area (rai) 60 80 68 208

Project value No. of units 180 368 500 1,048

Value (MB) 1,450 1,200 2,000 4,650

Development period 2549-2552 2549-2551 2549-2551 2549-2552

Key factors and influences which may affect the future operations and finance After the Central Bankruptcy Court allowed the company to exit the rehabilitation, what would determine the companyûs operations and financial position remains the ability in selling housing units as well as project development cost control. It is necessary to ensure that operating expenses are used efficiently and appropriately so that the company can ensure the sufficiency of funds for the operations. The company also suffers from working capital constraints and have to honour loan obligations, whenever the cashflow exceeds Bt250 million at the end of each quarter. These will put constraints on the companyûs ability in investing the capital, until all loans are repaid to creditors or until the company can issue new shares to raise new capital.

Annual Report 2005 57

Report of Independent Auditor

To The Board of Directors and Shareholders of Property Perfect Public Company Limited I have audited the accompanying consolidated balance sheets of Property Perfect Public Company Limited and its subsidiaries as at 31 December 2005 and 2004, the related consolidated earnings statements, statements of changes in shareholders没 equity and cash flows for the years then ended, and the separate financial statements of Property Perfect Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company as to their correctness and the 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 statement presentation. I believe that my audits provide 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 Property Perfect Public Company Limited and its subsidiaries and of Property Perfect Public Company Limited as at 31 December 2005 and 2004, and the results of its operations, and cash flows for the years then ended in accordance with generally accepted accounting principles.

Supachai Phanyawattano Certified Public Accountant (Thailand) No. 3930 Ernst & Young Office Limited Bangkok : 24 February 2006

58 Annual Report 2005

Balance Sheets Property Perfect Public Company Limited and Its Subsidiaries As at 31 December 2005 and 2004

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade accounts receivable, net Amounts due from related companies Project development costs, net Other current assets Advances to contractors, net Prepaid expenses Others TOTAL CURRENT ASSETS NON-CURRENT ASSETS Restricted deposits Loans to related companies and interest receivable, net Advances to other company Investments accounted for under equity method - subsidiary companies Investments accounted for under equity method - associated company Other long-term investments, net Land held for development, net Advances for purchase of land Property, plant and equipment, net Other non-current assets Withholding tax deducted at source Others TOTAL NON-CURRENT ASSETS TOTAL ASSETS

2005

(Unit : Baht) The Company Only 2005 2004 (Restated)

Consolidated 2004 (Restated)

502,800,855 31,488,781 7,625,469,486

351,704,796 23,372,880 6,239,284,471

482,967,943 27,813,400 1,278,344 6,442,293,337

322,753,101 21,938,857 5,070,526,650

18,855,113 5,387,495 39,177,274 8,223,179,004

25,272,111 6,282,587 27,803,267 6,673,720,112

18,855,113 5,387,495 34,573,252 7,013,168,884

24,846,308 6,282,587 26,019,513 5,472,367,016

340,659

3,179,894

340,659

3,179,894

23 8

90,891,359 183,500,566

120,891,359 183,500,566

399,613,931 183,500,566

322,277,919 183,500,566

790,827,540

461,551,465

353,065,976 4,827,046 3,659,572,350 851,104,101 430,814,272

349,074,190 4,867,182 3,776,175,678 722,137,050 379,787,906

353,065,976 4,827,046 3,389,872,349 800,441,466 417,806,420

349,074,190 4,867,182 3,776,175,678 702,137,050 368,370,558

45,441,439 18,427,371 5,637,985,139 13,861,164,143

97,322,982 16,240,713 5,653,177,520 12,326,897,632

42,963,702 17,423,046 6,400,682,701 13,413,851,585

95,214,126 16,129,513 6,282,478,141 11,754,845,157

6 23 7

10 11 12

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

Annual Report 2005 59

Balance Sheets (Continued) Property Perfect Public Company Limited and Its Subsidiaries As at 31 December 2005 and 2004

Note LIABILITIES AND SHAREHOLDERS没 EQUITY CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts payable Amounts due to related company Deposits and cash received in advance Current portion of debentures Current portion of long-term loans Current portion of creditors per rehabilitation plan Other current liabilities Current portion of deferred gain on debt restructuring Current portion of liabilities under financial lease agreements Accrued interest Accrued expenses Others TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Debentures, net of current portion Unsubordinated convertible debentures - liability component Long-term loans, net of current portion Creditors per rehabilitation plan, net of current portion Other non-current liabilities Deferred gain on debt restructuring, - net of current portion Liabilities under financial lease agreement, net of current portion Deposits and cash received in advance for sublease agreement Provision for unconverted debentures TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES

2005

23 6 14 17

225,008,141 243,357,727 104,640,059 1,200,000,000 52,390,200

402,950,488 231,941,383 42,121,400 27,562,013

225,008,141 211,164,939 1,116,786 97,563,820 1,200,000,000 52,390,200

402,950,488 202,418,115 805,010 33,840,299 27,562,013

648,410,232

117,017,185

648,410,232

117,017,185

8,543,379

28,380,254

8,543,379

28,380,254

5,254,476 49,014,919 117,367,124 56,882,018 2,710,868,275

2,437,500 38,825,405 74,628,894 52,200,851 1,018,065,373

5,254,476 48,884,560 108,507,663 42,899,480 2,649,743,676

2,437,500 38,468,924 70,578,900 45,406,852 969,865,540

350,000,000

1,550,000,000

350,000,000

1,550,000,000

15 17

799,712,156 3,982,522,976

3,263,405,878

799,712,156 3,596,335,017

2,739,553,236

1,232,282,366

52,803,649

11,532,267

7,799,375

11,532,267

7,799,375

65,656,046 3,438,487 5,212,861,932 7,923,730,207

68,584,693 6,174,875,961 7,192,941,334

65,656,046 3,438,487 4,826,673,973 7,476,417,649

68,584,693 5,651,023,319 6,620,888,859

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

60 Annual Report 2005

Consolidated 2004 (Restated)

(Unit : Baht) The Company Only 2005 2004 (Restated)

Balance Sheets (Continued) Property Perfect Public Company Limited and Its Subsidiaries As at 31 December 2005 and 2004

Note SHAREHOLDERS没 EQUITY Share capital Registered 1,035,594,196 ordinary shares of Baht 6 each (31 December 2004 : 1,200,000,000 ordinary shares of Baht 6 each) Issued and fully paid up 782,535,025 ordinary shares of Baht 6 each (31 December 2004 : 780,360,444 ordinary shares of Baht 6 each) Share discount Share subscriptions received in advance Unsubordinated convertible debentures - equity component Retained earnings Appropriated - statutory reserve Unappropriated TOTAL SHAREHOLDERS没 EQUITY TOTAL LIABILITIES AND SHAREHOLDERS没 EQUITY

2005

(Unit : Baht) The Company Only 2005 2004 (Restated)

Consolidated 2004 (Restated)

6,213,565,176

7,200,000,000

6,213,565,176

7,200,000,000

19 19

4,695,210,150 (13,025,740) -

4,682,162,664 13,942

4,695,210,150 (13,025,740) -

4,682,162,664 13,942

23,535,270

100,000,000 1,131,714,256 5,937,433,936

40,000,000 411,779,692 5,133,956,298

100,000,000 1,131,714,256 5,937,433,936

40,000,000 411,779,692 5,133,956,298

13,861,164,143

12,326,897,632

13,413,851,585

11,754,845,157

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

Annual Report 2005 61

Earnings Statements Property Perfect Public Company Limited and Its Subsidiaries For The Years Ended 31 December 2005 and 2004

Note

REVENUES Revenues from sales of land and houses Revenues from sales of land held for development Other income Interest income Revenues from forfeiture of down payments Reversal of cost of investment written-off Share of profit from investments accounted for under equity method - subsidiary companies Share of profit from investments accounted for under equity method - associated company Gain from surrender of rights of claim Reversal of provision for doubtful account Reversal of provision for impairment of project development costs Reversal of provision for impairment of land held for development Reversal of deferred gain on debt restructuring Others TOTAL REVENUES EXPENSES Costs of sales of land and houses Cost of sales of land held for development Selling and administrative expenses Provision for impairment of assets Amotisation of goodwill TOTAL EXPENSES EARNINGS BEFORE INTEREST EXPENSES AND CORPORATE INCOME TAX INTEREST EXPENSES CORPORATE INCOME TAX NET EARNINGS FOR THE YEAR EARNINGS PER SHARE Basic earnings per share Net earnings Weighted average number of ordinary shares Diluted earnings per share Net earnings Weighted average number of ordinary shares

2005

Consolidated 2004

4,931,890,254

4,126,485,185

4,149,295,470

3,925,725,455

120,000,000

6,807,811

12,920,005

25,579,665

16,624,897

5,824,914 -

2,896,981 139,485,919

5,404,271 -

2,499,411 139,485,919

279,276,075

49,188,842

9 9 23

3,991,786 -

42,380,912 40,111,110 143,405,200

3,991,786 -

42,380,912 40,111,110 143,405,200

467,405,239

340,279,077

10 22

171,577,982 49,107,586 31,982,443 5,788,588,015

7,758,904 20,903,054 4,536,347,270

181,435,706 49,107,586 30,830,540 5,185,200,176

7,758,904 20,039,483 4,387,220,133

3,227,825,652 120,000,000 1,043,388,170 32,903,416 4,424,117,238

2,565,403,360 833,417,105 21,581,812 3,420,402,277

2,734,975,687 120,000,000 968,667,974 32,903,416 3,856,547,077

2,440,981,458 810,367,833 21,581,812 3,272,931,103

1,364,470,777 (255,976,791) (15,857,546) 1,092,636,440

1,115,944,993 (100,265,208) (162,674) 1,015,517,111

1,328,653,099 (236,016,659) 1,092,636,440

1,114,289,030 (98,771,919) 1,015,517,111

10 12 9

26 1.40 1.33 1.40 1.33 782.1 million shares 765.2 million shares 782.1 million shares 765.2 million shares 26 1.36 1.29 1.36 1.29 810.5 million shares 784.0 million shares 810.5 million shares 784.0 million shares

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

62 Annual Report 2005

(Unit : Baht) The Company Only 2005 2004

Statements of Cash Flows Property Perfect Public Company Limited and Its Subsidiaries For The Years Ended 31 December 2005 and 2004

Cash flows provided from (used in) operating activities : Net earnings for the year Adjustments to reconcile net earnings to net cash provided by (paid from) operating activities : Reversal of cost of investment written - off Share of profit from investments accounted for under equity method - subsidiary companies Share of profit from investments accounted for under equity method - associated company Amortisation goodwill Depreciation and amortisation Amortisation of premium on debentures Provision for unconverted debentures Withholding tax deducted at source written - off Reversal of provision of doubtful account Reversal of deferred gain on debt restructuring Rental received in advance recognition Reversal of provision for impairment of project development costs Reversal of provision for impairment of land held for development Provision for impairment of assets Provision for loss on diminution in value of investments Gain from surrender of rights of claim Gain on sales of fixed assets Decrease (increase) in operating assets Trade accounts receivable Amounts due from related companies Project development costs Advances to contractors Withholding tax deducted at source Prepaid expenses Interest receivable Other current assets Other non-current assets Increase (decrease) in operating liabilities Trade accounts payable Amounts due to related company Deposits and cash received in advance Accrued interest Other current liabilities Net cash provided from operating activities

2005

(Unit : Baht) The Company Only 2005 2004

Consolidated 2004

1,092,636,440

1,015,517,111

1,092,636,440

1,015,517,111

(139,485,919)

(279,276,075)

(49,188,842)

(3,991,786) 34,557,978 247,425 3,438,487 (49,107,586) (3,278,646)

(42,380,912) 21,581,812 23,159,791 6,022,004 (143,405,200) (7,758,904) (2,656,514)

(3,991,786) 33,052,340 247,425 3,438,487 (49,107,586) (3,278,646)

(42,380,912) 21,581,812 22,307,703 6,022,004 (143,405,200) (7,758,904) (2,656,514)

(467,405,239)

(340,279,077)

(171,577,982) 32,903,416 40,136 (400,226) 468,062,417

603,448 (40,111,110) (2,731) 691,082,876

(181,435,706) 32,903,416 40,136 (400,226) 304,549,142

603,448 (40,111,110) (2,731) 641,041,946

(8,115,901) 427,337,499 6,416,998 51,881,543 895,092 (10,551,283) (822,723) (2,186,657)

(22,500,080) (531,287,762) 8,583,290 (41,514,349) (10,313,495) 477,184 (2,785,218)

(5,874,543) (1,278,344) 314,624,958 5,991,195 52,250,424 895,092 (24,100,044) 1,997,544 (1,293,532)

(21,066,057) (406,775,106) 9,009,093 (39,405,493) (15,292,195) 1,994,587 (4,364,064)

11,416,344 62,518,659 (13,343,425) 47,777,200 1,041,285,763

(37,621,243) 32,996,800 (23,091,973) 26,604,700 90,630,730

8,746,824 311,776 63,723,521 (13,117,303) 35,779,195 743,205,905

(54,621,263) 25,499,199 (23,377,499) 18,768,952 131,412,100

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

Annual Report 2005 63

Statements of Cash Flows (Continued) Property Perfect Public Company Limited and Its Subsidiaries For The Years Ended 31 December 2005 and 2004

(Unit : Baht) The Company Only 2005 2004

Consolidated 2005 2004 Cash flows provided from (used in) investing activities : Decrease (increase) in restricted deposits 2,839,235 Decrease (increase) in loans to related companies 30,000,000 Increase in advances to other company Increase in land held for development (902,051,678) Increase in advances for purchase of land (308,175,039) Increase in property, plant and equipment, net (81,744,474) Increase in investment in subsidiary Net cash paid for acquisition of investments in associated company Net cash paid for acquisition of investments in subsidiaries (Note 9) Cash paid to minority interest to acquire of investment in subsidiary Cash received from sales of assets 403,645 Net cash used in investing activities (1,258,728,311) Cash flows provided from (used in) financing activities : Decrease in bank overdrafts and short-term loans from financial institutions (177,942,347) Cash received from issuance of debentures Cash received from issuance of unsubordinated convertible debentures 823,000,000 Increase in long-term loans 743,945,285 Decrease in creditors per rehabilitation plan (700,889,319) Decrease in loan to related companies Decrease in liabilities under financial lease agreements (6,873,136) Dividend paid (312,701,876) Net cash provided from financing activities 368,538,607 Net increase in cash and cash equivalents 151,096,059 Cash and cash equivalents at beginning of year 351,704,796 Cash and cash equivalents at end of year 502,800,855 Supplement cash flows information : Cash paid during the years for Interest expenses (included interest expenses which capitalised to land cost) 338,007,629 Corporate income tax and withholding tax deducted at source 53,762,053 Non-cash transactions Record accrued interest on secured and unsecured creditors and unsecured debt awaiting conversion to equity 23,009,597 Record loan to subsidiary company to investment in subsidiary company Reversal of unsecured debt awaiting conversion to equity Transfer advances for purchase of land to project development costs and land held for development 179,207,987 Transfer advances for purchase of land to advances to other company 35,355,905 Transfer project development costs to fixed assets 23,328,409 Transfer land held for development to project development costs 1,349,795,537 Fixed assets increase from financial lease agreement 13,423,004 The accompanying notes are an integral part of the financial statements.

64 Annual Report 2005

(840) (58,293,110) (2,297,125) (1,190,211,630) (575,512,683) (82,936,038) -

2,839,235 (63,787,250) (642,493,955) (257,512,403) (78,643,625) (50,000,000)

(840) (167,431,963) (2,297,125) (1,190,211,630) (555,512,683) (76,351,930) -

(150,000,000)

(50,485,791)

(60,999,400)

(90,053,916) 3,271 (2,199,787,862)

403,645 (1,089,194,353)

(90,053,916) 3,271 (2,292,856,216)

(445,176,453) 1,550,000,000

(177,942,347) -

(445,176,453) 1,550,000,000

1,575,967,890 (461,918,954) (2,187,931) 2,216,684,552 107,527,420 244,177,376 351,704,796

823,000,000 881,609,968 (700,889,319) (6,873,136) (312,701,876) 506,203,290 160,214,842 322,753,101 482,967,943

1,597,115,248 (461,918,954) 2,240,019,841 78,575,725 244,177,376 322,753,101

242,500,643

312,512,635

204,789,022

41,514,349

42,963,702

39,405,493

40,858,952

23,009,597

40,858,952

143,405,200 476,191,995

361,998,035

159,207,987

361,998,035

35,355,905 23,328,409

906,346,918 -

1,349,795,537 13,423,004

906,346,918 -

Annual Report 2005 65

(61,617,081) (284,966,179) 346,583,260 (13,025,740) (13,025,740)

6,024,162,340 -

285,251,461

1,032,812,919

461,377,720

(3,121,441,776)

4,682,162,664 -

13,047,486

4,695,210,150

(21,746)

13,942 7,804

(285,282)

275,588 23,636

(476,191,995) -

(1,032,812,919)

1,509,004,914 -

(461,377,720)

461,377,720 -

23,535,270 23,535,270

60,000,000 100,000,000

40,000,000 40,000,000 -

(312,701,876) (60,000,000) 1,092,636,440 1,131,714,256

476,191,995 (40,000,000) 1,015,517,111 411,779,692 -

(2,172,376)

2,774,858,516

(3,812,615,554) -

Consolidated Share subscriptions Unsecured debt Debt in excess of Unsubordinated Retained earnings received awaiting conversion collateral value convertible Unappropriated Share discount in advance to equity awaiting conversion debentures Statutory reserve (deficit) (Restated) to equity equity component (Restated)

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

Balance - end of year 2003, reported Share subscriptions received in advance Additional ordinary shares as a result of warrants exercise Additional ordinary shares as a result of conversion of unsecured debt to equity Additional ordinary shares as a result of conversion of debt in excess of collateral value to equity Decrease in share capital - Restated (Note 4) Record accrued interest of unsecured debt awaiting conversion to equity Adjust unsecured debt awaiting conversion to equity Increase in statutory reserve Net earnings for the year Balance - end of year 2004, as restated Share subscriptions received in advance Additional ordinary shares as a result of warrants exercise Unsubordinated convertible debentures - equity component Dividend paid (Note 25) Increase in statutory reserve Net earnings for the year Balance - end of year 2005

Issued and paid-up share capital

Property Perfect Public Company Limited and Its Subsidiaries For The Years Ended 31 December 2005 and 2004

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity

23,535,270 (312,701,876) 1,092,636,440 5,937,433,936

1,015,517,111 5,133,956,298 7,804

(2,172,376)

4,120,587,927 23,636

Total

(Unit : Baht)

66 Annual Report 2005 1,509,004,914 (1,032,812,919) (476,191,995) -

275,588 23,636 (285,282) 13,942 7,804 (21,746) -

(461,377,720)

461,377,720 -

23,535,270 23,535,270

60,000,000 100,000,000

40,000,000 40,000,000 -

(312,701,876) (60,000,000) 1,092,636,440 1,131,714,256

476,191,995 (40,000,000) 1,015,517,111 411,779,692 -

(2,172,376)

2,774,858,516

(3,812,615,554) -

The Company Only Share subscriptions Unsecured debt Debt in excess of Unsubordinated Retained earnings received awaiting conversion collateral value convertible Unappropriated Share discount in advance to equity awaiting conversion debentures Statutory reserve (deficit) (Restated) to equity equity component (Restated)

Balance - end of year 2003, reported 6,024,162,340 (61,617,081) Share subscriptions received in advance Additional ordinary shares as a result of warrant exercise 285,251,461 (284,966,179) Additional ordinary shares as a result of conversion of unsecured debt to equity 1,032,812,919 Additional ordinary shares as a result of conversion of debt in excess of collateral value to equity 461,377,720 Decrease in share capital - Restated (Note 4) (3,121,441,776) 346,583,260 Record accrued interest of unsecured debt awaiting conversion to equity Adjust unsecured debt awaiting conversion to equity Increase in statutory reserve Net earnings for the year Balance - end of year 2004, as restated 4,682,162,664 Share subscriptions received in advance Additional ordinary shares as a result of warrant exercise 13,047,486 (13,025,740) Unsubordinated convertible debentures - equity component Dividend paid (Note 25) Increase in statutory reserve Net earnings for the year Balance - end of year 2005 4,695,210,150 (13,025,740) The accompanying notes are an integral part of the financial statements.

Issued and paid-up share capital

Property Perfect Public Company Limited and Its Subsidiaries For The Years Ended 31 December 2005 and 2004

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity (Continued)

23,535,270 (312,701,876) 1,092,636,440 5,937,433,936

1,015,517,111 5,133,956,298 7,804

(2,172,376)

4,120,587,927 23,636

Total

(Unit : Baht)

Notes to Consolidated Financial Statements Property Perfect Public Company Limited and Its Subsidiaries

GENERAL INFORMATION Property Perfect Public Company Limited was incorporated as a public limited company under Thai laws. The Company operates its business in Thailand and its principal activity is property development. The Company没s registered office is located at 100/1 Vorasombat Building, 17th Floor, Rama 9 Road, Huaykwang, Bangkok.

BASIS OF CONSOLIDATION These consolidated financial statements included the financial statements of Property Perfect Public Company Limited (hereinafter called as 莽the Company茅) and its subsidiaries as follows :-

Increase of investment in subsidiary from debt and capital restructuring Estate Perfect Company Limited(1) A newly established subsidiary company Perfect Satellite Services Company Limited (1)

Percentage of shares Nature of business Paid up capital held by the Company 2005 2004 2005 2004 Million Million Percent Percent Baht Baht

Property development

1,000

Property management

950 100.00 100.00

99.94

Total assets of subsidiaries which are included in consolidated balance sheets 2005 2004 Percent Percent

Total revenues as a percentage to the consolidated total for the year ended 31 December 2005 2004 Percent Percent

11.51

10.00

15.58

4.44

0.04

0.02

0.25

0.18

Change status from an associated company to a subsidiary company in the first quarter 2004.

Intercompany balances and transactions, the Company没s investments in subsidiaries and share capital of the subsidiaries have been eliminated from the consolidated financial statements. 3.

SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. Significant accounting policies adopted by the Company and its subsidiaries are summarised below. 3.1 Revenues recognition a) Sales of land and houses Sales of land and houses are recognised as revenue when the construction work is completed and the ownership has been transferred to the buyer after full payment has been received from the buyer (Completion method).

Annual Report 2005 67

Sales of residential condominium units Sales of residential condominium units are recognized as revenue when the major risks and rewards of ownership are transferred to the buyer.

3.2 Costs of sales of land and houses and residential condominium units In determining the costs of sales of land and houses, the anticipated total development costs (after recognizing the costs incurred to date) are attributed to units already sold on the basis of the salable area and then recognised as costs in the earnings statements on a completion basis. In determining the cost of sales of residential condominium units, the anticipated total development costs (after recognizing the cost incurred to date) are attributed to units already sold on the basis of the sale value and then recognized as cost in the earnings statement in proportion to the recognised revenue. Ă§Development costsĂŠ are stated at costs, consisting of the costs of land, design fees, utilities, construction and related interest. The Company and its subsidiary recognise provision for impairment of projects (if any) in the earnings statements. 3.3 Allowance for doubtful debts Allowance for doubtful debts is provided for the estimated collection losses that may occur from collection of receivables. The allowance is based on collection experience and the status of accounts receivable outstanding at the balance sheet date. 3.4 Capitalisation of interest costs The interest costs of borrowings for use in the construction of the projects are capitalised as part of the costs of those assets, with capitalisation ceasing when the projects are started to transfer the ownership to the buyer, or when the construction is suspended and until active development resumes. 3.5 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of plant and equipment is calculated by reference to their costs on the straight-line method over the estimated useful lifes, which are as follows :Office buildings and clubhouses Furniture and equipment for offices and clubhouses Vehicles Others

20 years 5 years 5 years 5 years

No depreciation has been provided for land and construction in progress. Subleased rights are stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the periods of the contracts. The Company and its subsidiaries recognise provision for impairment (if any) in the earnings statements.

68 Annual Report 2005

3.6 Investments Investments in subsidiary and associated companies are stated under the equity method of accounting. Investments in other securities, which the Company and its subsidiary hold as other investments, are valued at costs. The Company and its subsidiary recognise any loss on impairment of other investments (if any) in the earnings statements. 3.7 Cash and cash equivalents Cash and cash equivalents include cash, cash at banks and financial institutions with an original maturity of 3 months or less and not subject to restrictions. 3.8 Gain from troubled debt restructuring The Company and its subsidiary adopt an accounting policy related to troubled debt restructuring whereby in case of a transfer of assets to settle debts, the excess of the debt extinguished by the creditors over the fair value of the assets transferred is recognised as an extraordinary items in the earnings statements and the difference between the fair value and the net book value of the assets transferred is treated as a gain/loss from disposal of assets. 3.9 Earnings per share Basic earnings per share is calculated by dividing the net earnings for the year by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing net earnings for the year, adjusted to reflect the effect of transactions relating to dilutive securities, by the sum of the weighted average number of ordinary shares in issue and the weighted average number of ordinary shares to be issued for conversion of all dilutive securities to ordinary shares (irrespective of the exercise period of the dilutive securities). 3.10 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from these estimates. 4.

PRIOR YEAR ADJUSTMENT When the Securities and Exchange Commission issued letter No. SEC CHOR SOR (WOR) 4/2548 concerning its opinion on the method of recording reductions in capital made in order to offset deficit, the Company noted that it had yet to deduct share discount from the share premium of Baht 346.6 million (as a result of the reduction in capital), before offsetting deficit. The Company has therefore adjusted the prior year没s financial statements by deducting the share discount of Baht 346.6 million from the beginning balance of deficit, in accordance with the letter of the office of the Securities and Exchange Commission.

RESTRICTED DEPOSITS The outstanding balances of restricted deposits represent deposits with a bank and a financial institution respectively amounting to, as at 31 December 2005, Baht 0.3 million (2004 : Baht 3.2 million) which have been pledged with the bank and the financial institution to secure the issuance of bank guarantees for interest payment of customers.

Annual Report 2005 69

TRADE ACCOUNTS RECEIVABLE Trade accounts receivable balances as at 31 December 2005 and 2004 comprise :-

Consolidated 2005 2004 30,745,126,425 24,838,474,456 28,804,865,779 24,011,068,903 (28,763,136,282) (23,977,614,907) 41,729,497 33,453,996 (10,240,716) (10,081,116) 31,488,781 23,372,880

Total value of contracts signed Installments due Less : Cash received Installments receivable Less : Allowance for doubtful debts Installments receivable, net

(Unit : Baht) The Company Only 2005 2004 29,683,330,676 24,462,966,664 28,015,047,063 23,802,028,072 (27,976,992,947) (23,770,008,099) 38,054,116 32,019,973 (10,240,716) (10,081,116) 27,813,400 21,938,857

As at 31 December 2005 and 2004, çUnbilled completed worké and çUnearned incomeé comprise the following :(Unit : Baht) Consolidated The Company Only 2005 2004 2005 2004 28,804,865,779 24,011,068,903 28,015,047,063 23,802,028,072 (28,700,225,720) (23,968,947,503) (27,917,483,243) (23,768,187,773) 104,640,059 42,121,400 97,563,820 33,840,299

Installments due Less : Accumulated sales recognition The balance comprise : Unbilled completed work Unearned income Total Installments receivable, net Unbilled completed work Total trade accounts receivable, net

(104,640,059) (104,640,059) 31,488,781 31,488,781

(42,121,400) (42,121,400) 23,372,880 23,372,880

(97,563,820) (97,563,820) 27,813,400 27,813,400

As at 31 December 2005 and 2004, trade accounts receivable were classified by aging as follows :-

Accounts receivable - installments Accounts receivable at transfer date Accounts receivable Total Less : Allowance for doubtful debts Trade accounts receivable, net

70 Annual Report 2005

Less than 3 months 15,723,887 3,441,100 147,692 19,312,679 19,312,679

Consolidated As at 31 December 2005 3-6 6 -12 months months 5,176,902 3,370,000 1,965,000 8,546,902 1,965,000 8,546,902 1,965,000

Over 12 months 271,000 11,633,916 11,904,916 (10,240,716) 1,664,200

(33,840,299) (33,840,299) 21,938,857 21,938,857 (Unit : Baht)

Total 21,171,789 20,410,016 147,692 41,729,497 (10,240,716) 31,488,781

Accounts receivable - installments Accounts receivable at transfer date Total Less : Allowance for doubtful debts Trade accounts receivable, net

Less than 3 months 13,985,994 8,054,800 22,040,794 22,040,794

Consolidated As at 31 December 2004 3-6 6 -12 months months 49,786 1,213,700 68,600 1,263,486 68,600 1,263,486 68,600

Less than 3 months 13,700,000 2,937,600 16,637,600 16,637,600

The Company Only As at 31 December 2005 3-6 6 -12 months months 4,176,600 3,370,000 1,965,000 7,546,600 1,965,000 7,546,600 1,965,000

Less than 3 months 13,409,757 7,210,800 20,620,557 20,620,557

The Company Only As at 31 December 2004 3-6 6 - 12 months months 36,000 1,213,700 68,600 1,249,700 68,600 1,249,700 68,600

(Unit : Baht) Over 12 months 10,081,116 10,081,116 (10,081,116) -

Total 14,035,780 19,418,216 33,453,996 (10,081,116) 23,372,880 (Unit : Baht)

Over 12 months 271,000 11,633,916 11,904,916 (10,240,716) 1,664,200

Total 18,147,600 19,906,516 38,054,116 (10,240,716) 27,813,400 (Unit : Baht)

Over 12 months 10,081,116 10,081,116 (10,081,116) -

Total 13,445,757 18,574,216 32,019,973 (10,081,116) 21,938,857

The Company and its subsidiaries believe that the allowance for doubtful debts as set up in the accounts is adequate at this current stage.

Annual Report 2005 71

PROJECT DEVELOPMENT COSTS Consolidated

Land costs Development costs Construction costs Capitalised interest Total Less : Transferred to cost of sales Land transferred to settle debt under rehabilitation plan Less : Provision for impairment Project development costs, net

2005 2004 10,147,152,451 8,835,276,703 5,030,710,894 4,326,519,736 11,418,634,616 9,431,756,860 3,527,672,890 3,315,195,307 30,124,170,851 25,908,748,606 (20,975,485,460) (17,586,326,332) (1,453,236,254) 7,695,449,137 (69,979,651) 7,625,469,486

(1,453,236,255) 6,869,186,019 (629,901,548) 6,239,284,471

(Unit : Baht) The Company Only 2005 2004 9,306,190,086 8,043,611,765 4,719,172,754 4,055,333,800 10,932,832,715 9,236,447,459 3,331,588,301 3,119,110,718 28,289,783,856 24,454,503,742 (20,324,274,612) (17,455,385,592) (1,453,236,255) 6,512,272,989 (69,979,652) 6,442,293,337

(1,453,236,255) 5,545,881,895 (475,355,245) 5,070,526,650

During the year 2005, the Company and its subsidiary hired an independent appraiser to appraise the value of the Company and its subsidiaryûs assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of çProjects development costsé as at 31 December 2005 was approximately Baht 467.4 million (The Company Only : Baht 340.3 million) higher than its net book value. The Company and its subsidiary reversed part of the provision for impairment of these projects in its accounts, presenting it in the earnings statement for the year 2005. The Company and its subsidiaryûs project land and construction thereon with a net book value of Baht 4,062.7 million as at 31 December 2005 (2004 : Baht 4,941.0 million), have been mortgaged with banks and financial institutions as collateral for short-term loans and long-term loans. 8.

ADVANCES TO OTHER COMPANY The outstanding balance represents land costs which the Company paid in advance on behalf of a company which is counterparty to an agreement with the Company concerning the future development of a project, with such company then mortgaging the land as security for the Companyûs debentures. Subsequently, on 11 August 2005, a meeting of the Companyûs Board of Directors passed a resolution approving the cancellation of the agreement to jointly develop land with the above company, and subsequent to the end of the mortgage of the land, in February 2006, the ownership of such land is to be transferred to the Company.

72 Annual Report 2005

INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD

Companyûs name Associated company Krungthep Land Public Company Limited (Formerly known as çKrungthep Land Company Limitedé)

(Unit : Thousand Baht) Consolidated and the Company Only Issue and paid-up Percentage owned Investments Share capital by the Company Cost method Equity method 2005 2004 2005 2004 2005 2004 2005 2004

1,500,000 1,000,000

20.00

30.00 299,999 299,999 353,066 349,074 299,999 299,999 353,066 349,074 (Unit : Thousand Baht)

Companyûs name Subsidiaries Estate Perfect Company Limited Perfect Sattelite Services Company Limited

The Company Only Issue and paid-up Percentage owned Investments Share capital by the Company Cost method Equity method 2005 2004 2005 2004 2005 2004 2005 2004 1,000,000 1,000

950,000 100.00 100.00 538,459 488,459 789,946 459,669 1,000 99.94 99.94 999 999 881 1,882 539,458 489,458 790,827 461,551

The Company has guaranteed loan facilities of an associated and a subsidiary companies from banks and financial institutions of Baht 1,439 million. On 19 July 2004, an Extraordinary General Meeting of the Shareholders of Krungthep Land approved that companyûs increasing its registered and paid up share capital from Baht 500 million to Baht 1,000 million to be offered to its existing shareholders. A meeting of the Companyûs directors approved the purchase of Baht 150 million of this additional capital (15,000,000 ordinary shares with a par value of Baht 10 each) in order to maintain the Companyûs existing shareholding structure in Krungthep Land. On 22 June 2005, an Extraordinary General Meeting of the Shareholders No. 3/2005 of Krungthep Land approved that companyûs increasing its share capital from Baht 1,000 million (100,000,000 ordinary shares at a par value of Baht 10 each) to Baht 1,550 million (155,000,000 ordinary shares at a par value of Baht 10 each) by issuing 55,000,000 ordinary shares at a par value of Baht 10 each to be allocated and offered to public. Any shares remaining after this allocation are to be allocated, in whole or in part, by means of private placement and/or to institutional investors. On 30 September 2005, an Extraordinary General Meeting of the Shareholders No. 4/2005 of Krungthep Land approved a reduction in that companyûs share capital from Baht 1,550 million (155,000,000 ordinary shares of Baht 10 each) to Baht 1,000 million (100,000,000 ordinary shares of Baht 10 each) and increase its share capital from Baht 1,000 million (100,000,000 ordinary shares of Baht 10 each) to Baht 1,700 million (170,000,000 ordinary shares of Baht 10 each) through the issue of 50,000,000 ordinary shares of Baht 10 each by private placement and/or to institutional investors and the remaining 20,000,000 ordinary shares of Baht 10 each allocated to the shareholders group of the limited company operating property development business. As a result of the capital restructuring of Krungthep Land, the percentage holding of the Company in Krungthep Land decreased to 20 percent.

Annual Report 2005 73

A creditor financial institution of another associated company (Estate) sued Estate and the Company, as the guarantor of loan. The Company set aside provision totalling Baht 1,367 million for loss on its investment in Estate and subsequently adjusted such balance in accordance with the amounts notified by the Comptroller in Bankruptcy, recording the net balances as unsecured creditors and unsecured debt awaiting conversion to equity in accordance with the rehabilitation plan. On 30 December 2003, Estate entered into debt restructuring agreement with the creditor financial institution. Under the agreement, the Company is still the guarantor of Estateûs loan and the financial institution is granted the option receive repayment of debt from the Company under the rehabilitation plan or under the debt restructuring agreement between it and Estate. In March 2004, Estate repaid its debt in accordance with the debt restructuring agreement made with such financial institution, resulting in a surrender of rights of claim between such financial institution and the Company. The Company recorded the gain on the above balances, amounting to Baht 40.1 million, under the caption of çCreditors per rehabilitation plané as çGain from surrender of rights of claimé and presented it as a separate item in the earnings statement for the year 2004. The outstanding balances, amounting to approximately Baht 476.2 million, which are presented as çUnsecured debt awaiting conversion to equityé, were adjusted against the deficit. On 25 December 2003, an Extraordinary General Meeting of the Shareholders of Estate approved an increase in its registered and paid up share capital from Baht 450 million (45,000,000 ordinary shares at a par value of Baht 10 each) to Baht 950 million (95,000,000 ordinary shares at a par value of Baht 10 each) in order to achieve the debt and capital restructuring which will be discussed as follows. On 27 February 2004, a meeting of the Companyûs directors approved Estateûs debt and capital restructuring, described below:1.

According to a memorandum between the Company and another company dated 18 October 2002, under which that company agreed to surrender its right to claim settlement of Baht 236.46 million from the Company (formerly presented under çCreditors per rehabilitation plané and çUnsecured debt awaiting conversion to equityé), with such surrender to be treated as settlement of an advance of Baht 195 million with the Company (the Company recorded the gain on such transaction, amounting to Baht 41.46 million, as çGain from surrender of rights of claimé, presenting it as an extraordinary item in the earnings statement of the year 2002). In addition, that company is to pass on to the Company all the benefits it receives, with 23,646,000 ordinary shares in Estate with a par value of Baht 10 each to be transferred to the Company, as stipulated in the memorandum. The Company therefore recorded the effect of these transactions, amounting to approximately Baht 139.5 million, under çReversal of cost of investment written-offé as a separate item in the earnings statement for the year 2004.

In accordance with a letter of intent to convert debt to equity dated 3 March 2004, the Company has recorded loans to a related company amounting to approximately Baht 143.4 million as an investment in Estate, with the Company receiving 14,340,520 ordinary shares with a par value of Baht 10 each. The Company thus had goodwill of Baht 58.8 million as a result of such transaction.

The Company purchased ordinary shares of Estate from another Estateûs shareholder for Baht 60.0 million (15,000,000 ordinary shares with a par value of Baht 10 each). The Company thus had Baht 28.5 million of negative goodwill as a result of such transaction.

74 Annual Report 2005

As a result of the above debt and capital restructuring, the percentage holding of the Company in Estate increased to 76.30 percent, resulting in a change in its status from an associated company to a subsidiary company. Therefore, Estateûs financial statement has been included in the consolidated financial statements of the first quarter 2004. For circumspectness, the Company considered to amortise goodwill which described above in 2 and 3, totaling Baht 30.3 million, to be expense, under the caption of çAmortisation goodwillé as a separate item in the earnings statement for the year 2004. Valuation of acquired assets and liabilities as at the acquisition date of investment in subsidiary can be summarized below :Cash and cash equivalents Project development costs Property, plant and equipment, net Other current assets Trade accounts payable Deposits payable and cash received in advance Other current liabilities Loans from related companies and interest payable Long-term loan Total net assets Less : Minority interests Less : Convertible debt to equity Less : Reversal of cost of investment written-off Add : Goodwill Cash payments for purchase of investment in subsidiary Less : Cash and cash equivalents of subsidiary Net cash paid for acquisition of investment in subsidiary

(Unit : Thousand Baht) 9,514 1,044,245 5,685 266 (12,523) (783) (2,274) (89,457) (545,000) 409,673 (97,093) (143,405) (139,485) 30,310 60,000 (9,514) 50,486

On 18 June 2004, a meeting of the Companyûs directors approved the purchase of ordinary shares from Estateûs remaining shareholder for Baht 90.1 million. The Company received 22,513,479 ordinary shares with a par value of Baht 10 each and the transaction thus resulted in negative goodwill amounting to Baht 8.7 million. As a result of such transaction, the percentage of holding of the Company in Estate increased to 100.00 percent and the Company considered to recognize the negative goodwill together with goodwill arising from the debt and capital restructuring of Estate. Amortization of goodwill thus amounted to Baht 21.6 million, and this was presented under the caption of çAmortisation goodwillé as a separate item in the earnings statement for the year 2004. On 30 March 2005, an Extraordinary General Meeting of the shareholders of Estate approved that companyûs increasing its registered and paid up share capital from Baht 950 million to Baht 1,000 million to be offered to its existing shareholders. A meeting of the Companyûs directors approved the purchase of this additional ordinary shares of Baht 50 million (5,000,000 ordinary shares of Baht 10 each) in order to maintain the Companyûs existing shareholding structure in Estate.

Annual Report 2005 75

10. LAND HELD FOR DEVELOPMENT

Land costs Development costs Construction costs Capitalised interest Total Less : Transferred to cost of sales Transferred of land for debt restructuring Transferred of land to settle debt under rehabilitation plan Less : Provision for impairment Land held for development, net

Consolidated 2005 2004 5,119,223,992 5,194,129,842 137,282,043 148,069,360 17,449,523 18,929,718 802,756,478 952,581,243 6,076,712,036 6,313,710,163 (501,818,992) (326,024,823) (1,540,946,166) (1,540,946,166)

(Unit : Baht) The Company Only 2005 2004 4,841,698,097 5,194,129,842 135,250,213 148,069,360 17,449,523 18,929,718 802,756,478 952,581,243 5,797,154,311 6,313,710,163 (501,818,992) (326,024,823) (1,540,946,166) (1,540,946,166)

(222,073,509) 3,811,873,369 (152,301,019) 3,659,572,350

(222,073,509) 3,532,315,644 (142,443,295) 3,389,872,349

(222,073,509) 4,224,665,665 (448,489,987) 3,776,175,678

During the year 2005, the Company had a plot of land, which is part of the land awaiting development, appraised by an independent appraiser. According to the appraisal report, the fair value of that plot of land was approximately Baht 70 million higher than its book value. The Company therefore reversed the provision for impairment, shown as a separate item in the earnings statement for the year 2005 (as the Company previously recorded the provision for impairment amounting to Baht 127 million). Since the Company did not plan to develop this plot of land, with the approval of the Company没s directors, the Company sold the land to a company whose major shareholder is a director of a related company. The abovementioned transaction is not classified by the Company as a related party transaction since the purchaser is independent from the Company and the transaction amount is based on the fair market value with no influence from any persons. During the year 2005, the Company and its subsidiary hired an independent appraiser to appraise the value of the Company and its subsidiary没s assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of 莽Land held for development茅 as at 31 December 2005 was approximately Baht 100.6 million (The Company Only : Baht 110.5 million) higher than its net book value. The Company and its subsidiary reversed part of the provision for impairment of these projects in its accounts, presenting it in the earnings statement for the year 2005. The above land and construction, of which the net book value as at 31 December 2005 was Baht 2,293.1 million (2004 : Baht 3,073.0 million), has been mortgaged with banks and financial institutions as collateral for short-term loans, debentures, long-term loans and as bank guarantees for public utilities works.

76 Annual Report 2005

11. ADVANCES FOR PURCHASE OF LAND

Balance-beginning of year Cash paid during the year Title of plots of land transferred during the year Balance-end of year

Consolidated 2005 2004 722,137 543,978 1,376,088 1,801,163 (1,247,121) (1,623,004) 851,104 722,137

(Unit : Thousand Baht) The Company Only 2005 2004 702,137 543,978 1,021,634 1,781,163 (923,330) (1,623,004) 800,441 702,137

Approximately Baht 56.1 million (The Company Only : Baht 39.4 million) of the above balance represents advance paid to landowners by the Company and its subsidiary under agreements to purchase and to sell land already signed with the landowners by an agent on behalf of the Company and approximately Baht 728.7 million (The Company Only : Baht 728.7 million) were paid to a landowner who is the Company没s shareholder. The land purchases were approved by the rehabilitation plan administrator. The landowner has mortgaged the land to secure the Company没s long-term loans from bank. Currently, such advances for purchase of land is in the process of being transferred ownership with the Land Department. As at 31 December 2005, the Company and its subsidiary are contracted to purchase and to sell land amounting to Baht 1,014 million (The Company Only : Baht 963.5 million). The remaining advance, amounting to approximately Baht 66.3 million (The Company Only : Baht 32.3 million), have been paid to an agent in acquiring land and agreements to purchase and to sell land are still in the process of being signed with landowner. The outstanding balance of such advances will be recognised as part of land costs when the title to the related land is transferred to the Company and its subsidiary.

Annual Report 2005 77

12. PROPERTY, PLANT AND EQUIPMENT

(Unit : Baht)

Consolidated

Land Cost 31 December 2004 23,762,946 Addition Disposals Transfer from project development costs 23,328,409 Transfer in (out) 31 December 2005 47,091,355 Accumulated depreciation/amortisation 31 December 2004 Depreciation/amortisation for the year Depreciation on disposals 31 December 2005 Provision for impairment 31 December 2004 31 December 2005 Net book value 31 December 2004 23,762,946 31 December 2005 47,091,355 Depreciation/amortisation charges for the years as included in the consolidated earnings statements 2004 2005

78 Annual Report 2005

Furniture and Office equipment buildings for offices Leasehold and and Construction rights clubhouses clubhouses Vehicles in progress Others

Total

339,936,209 114,009,091 64,575,124 21,850,873 21,690,290 47,993,049 1,307,688 24,216 33,120,284 15,115,158 42,883,207 2,752,201 (88,184) (1,248,842) - 50,430,041 - (51,896,977) 1,466,936 341,243,897 164,463,348 98,607,224 35,717,189 12,676,520 52,212,186

633,817,582 95,202,754 (1,337,026) 23,328,409 751,011,719

23,053,876 11,681,393 21,020,688 6,277,801 3,211,095 6,554,900 14,977,607 5,743,901 (44,783) (1,248,840) 26,264,971 18,236,293 35,953,512 10,772,862 156,940,481 189,843,897

- 35,055,437 97,089,195 - 4,070,475 34,557,978 - (1,293,623) - 39,125,912 130,353,550 -

- 156,940,481 - 189,843,897

159,941,852 102,327,698 43,554,436 15,573,072 21,690,290 12,937,612 379,787,906 125,135,029 146,227,055 61,653,712 24,944,327 12,676,520 13,086,274 430,814,272

23,159,791 34,557,978

(Unit : Baht)

The Company Only

Land

Furniture and Office equipment buildings for offices Leasehold and and Construction rights clubhouses clubhouses Vehicles in progress Others

Cost 31 December 2004 23,762,946 339,936,209 106,172,103 Addition - 1,307,688 24,216 Disposals Transfer from project development costs 23,328,409 Transfer in (out) - 50,333,701 31 December 2005 47,091,355 341,243,897 156,530,020 Accumulated depreciation/amortisation 31 December 2004 - 23,053,876 11,221,286 Depreciation/amortisation for the year - 3,211,095 6,170,531 Depreciation on disposals 31 December 2005 - 26,264,971 17,391,817 Provision for impairment 31 December 2004 - 156,940,481 31 December 2005 - 189,843,897 Net book value 31 December 2004 23,762,946 159,941,852 94,950,817 31 December 2005 47,091,355 125,135,029 139,138,203 Depreciation/amortisation charges for the years as included in the earnings statements 2004 2005

60,742,200 31,531,498 (46,534) 92,227,164

21,842,673 21,561,890 13,710,758 42,786,867 (1,248,842) - (51,800,637) 34,304,589 12,548,120

19,385,181 14,321,130 (43,117) 33,663,194

6,277,388 5,695,672 (1,248,840) 10,724,220

Total

40,532,851 2,705,601 1,466,936 44,705,388

614,550,872 92,066,628 (1,295,376) 23,328,409 728,650,533

- 29,302,102 89,239,833 - 3,653,912 33,052,340 - (1,291,957) - 32,956,014 121,000,216 -

- 156,940,481 - 189,843,897

41,357,019 15,565,285 21,561,890 11,230,749 368,370,558 58,563,970 23,580,369 12,548,120 11,749,374 417,806,420

22,307,703 33,052,340

The Company has mortgaged parts of its land with banks to secure bank overdraft facilities. Leasehold rights consist of the payments and compensation provided to land owners, tenants and project consultants for the leasehold to approximately 11 rai of land for a period of 30 years. The Company subleased its rights to approximately 4 rai of land for the remainder of the lease period. The sublessee made an advance payment and paid annual rental at rates stipulated in the contract. The Company recognised the advance lease payment over the period of the sublease contract.

Annual Report 2005 79

During the year 2005, the Company hired an independent appraiser to appraise the value of the Companyûs assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of çLeasehold rightsé as at 31 December 2005 was approximately Baht 32.9 million lower than its net book value. The Company recorded the provision for impairment of assets, presenting it in the earnings statement for the year 2005. 13. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS The outstanding balance of short-term loans from financial institutions consists of :1)

Short-term loans from a local commercial bank of Baht 50 million are subject to interest at a rate tied to the money market rate (MMR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land. Principal is payable on demand.

Short-term loans from a local commercial bank of Baht 100 million are subject to interest at a rate tied to the money market rate (MMR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land. Principal is payable on demand.

Discounted bills of exchange of Baht 75 million carry interest at the discount rate 4.45 percent per annum, and mature in one year.

14. DEBENTURES

Secured debentures 1/2004# 1 Secured debentures 1/2004# 2 Secured debentures 2/2004# 3 Total Less : Current portion of debentures Debentures, net of current portion

(Unit : Thousand Baht) Consolidated and the Company Only 2005 2004 450,000 450,000 750,000 750,000 350,000 350,000 1,550,000 1,550,000 (1,200,000) 350,000 1,550,000

On 24 May 2004, an extraordinary general meeting of the Companyûs shareholders passed a resolution to approve the issue and offer of secured debentures in an amount not exceeding Baht 2,000 million. The Company splited the debentures into two offers as follows:(1)

80 Annual Report 2005

Secured debentures 1/2004 #1 The Company offered 450,000 Units with a par value of Baht 1,000 each, 1.5 years, secured debentures to the financial institutions and the public, with a total value of Baht 450 million. The debentures mature on 18 February 2006 and interest was payable semi-annual at the six-month fixed deposit rate of a commercial bank plus 3.4 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company.

(2)

Secured debentures 1/2004 #2 The Company offered 750,000 Units with a par value of Baht 1,000 each, 2 years, secured debentures to the financial institutions and the public, with a total value of Baht 750 million. The debentures mature on 18 August 2006 and interest was payable semi-annual at the six-month fixed rate deposit of a commercial bank plus 3.5 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company.

(3)

Secured debentures 2/2004 #3 The Company offered 350,000 Units with a par value of Baht 1,000 each, 2.5 years, secured debentures to the financial institutions and the public, with a total value of Baht 350 million. The debentures mature on 23 February 2007 and interest was payable semi-annual at the six-month fixed deposit rated a commercial bank plus 3.65 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company.

Subsequently on 6 February 2006, the Company received approval for the issue and offer of the remaining debentures from the office of the Securities and Exchange Commission. As a result of the approval, the Company offered 450,000 Units with a par value of Baht 1,000 each, 2 years, secured debentures to the financial institutions and the public, with a total value of Baht 450 million. The debentures mature on 8 February 2008 and interest was payable semi-annual at 6.65 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company. 15. UNSUBORDINATED CONVERTIBLE DEBENTURES In accordance with a resolution of the Extraordinary General Meeting of shareholders held on 19 September 2005, on 25 November 2005 the Company issued and offered 200,000 unsubordinated convertible debentures with a par value of USD 100 each, or a total value of USD 20 million, to an overseas company. The debentures have been convertible since 25 May 2007, mature in 25 November 2010, and bear interest at a rate of 3.50 percent per annum. The conversion price is Baht 6.25 per ordinary share, and the debentures are convertible in a ratio of 1 debenture per 658.4 ordinary shares. Those debentures which are not converted will be redeemed at USD 131.60 per unit, using a stipulated exchange rate of Baht 41.15 per USD. The Company recorded the provision for debentures which are not converted over the life of debentures presented it as a separate item in balance sheet. According to the Thai Accounting Standard No. 48 çFinancial Instruments: Disclosure and Presentationé, the issuer of convertible debentures is required to classify the debenturesû liability and equity components and present them separately in the balance sheets. The Company has therefore separated such components, determining the liability component by discounting the stream of future payments of principal and interest at the prevailing market rate. The carrying amount of the equity component, as presented in the balance sheet under the caption of çUnsubordinated convertible debentures - equity componenté, is determined by deducting the liability component from the total face value of the unsubordinated convertible debentures and amortising the difference over the life of the unsubordinated convertible debentures. Under the Companyûs debenture agreement, there are normal covenants relating to various matters on behalf of the normal business.

Annual Report 2005 81

16. CREDITORS PER REHABILITATION PLAN / CURRENT PORTION OF CREDITORS PER REHABILITATION PLAN Details and the movements of creditors per rehabilitation plan during the year are as follows :(Unit : Thousand Baht) Consolidated and the Company Only 31 December 2004 Repayment 31 December 2005 Down payments and deposits payable 144 144 Secured creditors 833,224 (700,889) 132,335 Unsecured creditors 515,931 515,931 Total 1,349,299 (700,889) 648,410 Less : Current portion (117,017) Creditors per rehabilitation plan, net of current portion 1,232,282 17. LONG-TERM LOANS/CURRENT PORTION OF LONG-TERM LOANS The Company Long-term loans consist of loans granted by four local banks under the following credit facilities. (a)

A facility of Baht 1,000 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 60 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within June 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 475.6 million (2004 : Baht 578.6 million).

(b)

A facility of Baht 793 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within April 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 469.0 million (2004 : Baht 424.7 million).

(c)

A facility of Baht 250 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 60 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within August 2006. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 29.2 million (2004 : Baht 143.1 million).

(d)

A facility of Baht 450 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within September 2007. As at 31 December 2005, the Company has no balance of these loans (2004 : Baht 69.1 million).

82 Annual Report 2005

(e)

A facility of Baht 660 million subject to interest at a rate tied to minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within November 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 294.4 million (2004 : Baht 338.2 million).

(f)

A facility of Baht 515 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs director and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within February 2008. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 331.8 million. (2004 : Baht 259.9 million).

(g)

A facility of Baht 318 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 75 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within June 2006. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 23.2 million (2004 : Baht 131.9 million).

(h)

A facility of Baht 640 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by other company and the mortgage of the land of other company and the shares in the Company held by a shareholder. It is be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 60 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within April 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 640.0 million (2004 : Baht 416.0 million).

(i)

A facility of Baht 780 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 70 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within December 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 378.0 million (2004 : Baht 378.0 million).

(j)

A facility of Baht 275 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs directors and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within March 2008. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 169.2 million (2004 : Nil).

(k)

A facility of Baht 742 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the guarantee of the Companyûs directors and the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within June 2009. As at 31 December 2005, outstanding balance of these loans was approximately Baht 713.4 million (2004 : Nil).

Annual Report 2005 83

(l)

A facility of Baht 232 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the mortgage of parts of the Companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 75 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within October 2007. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 124.8 million (2004 : Nil).

Its subsidiary Long-term loans consist of the credit facilities as following :(a)

A facility of Baht 925 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the Company and the mortgage of parts of its subsidiaryûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 65 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within August 2006 and February 2008. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 220.2 million (2004 : Baht 523.9 million).

(b)

A facility of Baht 434 million subject to interest at a rate tied to the minimum loan rate (MLR) per annum and secured by the Company and the guarantee of the subsidiary companyûs directors and the mortgage of parts of the subsidiary companyûs project land and construction thereon. It is to be repaid each time a plot of land is redeemed from mortgage, at a rate of not less than 60 percent of the selling price, which is not to be less than the amount informed to the bank. Any remaining balance is to be repaid within September 2009. As at 31 December 2005, the outstanding balance of these loans was approximately Baht 166.0 million (2004 : Nil).

Under the Company and its subsidiaryûs loan agreements, there are normal covenants relating to various matters on behalf of the normal business. 18. SHARE CAPITAL A resolution of an extraordinary general meeting of the Companyûs shareholders on 24 May 2004 approved a reduction in registered capital. The Company is to reduce its registered capital from Baht 12,000 million to Baht 7,200 million, through a reduction in the par value of the Companyûs ordinary shares from Baht 10 to Baht 6, while paid up share capital will decrease from Baht 7,803,604,440 (780,360,444 ordinary shares of Baht 10 each) to Baht 4,682,162,664 (780,360,444 ordinary shares of Baht 6 each), in order to offset deficit of Baht 3,121,441,776. The Company registered decrease in its capital with the Ministry of commerce on 26 August 2004. On 7 April 2005, a resolution of a general meeting of the Companyûs shareholders approved a reduction in its registered capital from Baht 7,200,000,000 (1,200,000,000 ordinary shares of Baht 6 each) to Baht 4,779,565,176 (796,594,196 ordinary shares of Baht 6 each) and an increase in its registered capital to Baht 5,013,565,176 (835,594,196 ordinary shares of Baht 6 each) which are reserved for the exercise of rights to purchase the Companyûs ordinary shares of the Companyûs directors and employees as discussed in Note 19. The Company registered decrease and increase in its capital with the Ministry of Commerce on 21 April 2005 and 22 April 2005, respectively. As at 31 December 2005, the Companyûs issued and paid up share capital has increased to Baht 4,695,210,150 (782,535,025 ordinary shares of Baht 6 each), with totaling Baht 13,047,486 (2,174,581 ordinary shares of Baht 6 each) being the result of the exercise of warrants in December 2004 and June 2005. The Company registered increases in its capital with the Ministry of Commerce on 12 January 2005 and 7 July 2005.

84 Annual Report 2005

On 19 September 2005, a resolution of an extraordinary general meeting of the Company没s shareholders approved an increase in its registered capital from Baht 5,013,565,176 (835,594,196 ordinary shares of Baht 6 each) to Baht 6,213,565,176 (1,035,594,196 ordinary shares of Baht 6 each) which are reserved for the exercise of rights to convert debentures to ordinary shares as discussed in Note 15. The Company registered increase in its capital with the Ministry of Commerce on 7 October 2005. 19. WARRANTS In December 2004, the Company received advance subscription of Baht 0.01 per share to 1,394,246 of the additional ordinary shares arising from the exercise of the warrants, a total of Baht 13,942. The Company registered the resulting increase of Baht 8,365,476 in its capital with the Ministry of Commerce on 12 January 2005 (as discussed in Note 18), resulting in a share discount totaling Baht 8,351,534. In June 2005, the Company received advance subscription of Baht 0.01 per share to 780,335 of the additional ordinary shares arising from the exercise of the warrants, a total of Baht 7,803 The Company registered the resulting increase of Baht 4,682,010 in its capital with the Ministry of Commerce on 7 July 2005, resulting in a share discount totaling Baht 13,025,740. As at 31 December 2005, there were a total of 14,059,171 outstanding unexercised warrants. On 7 April 2005, the general meeting of the Company没s shareholders approved the cancellation of warrants issue to the Company没s creditor per rehabilitation plan of 2,073,229 warrants and approved the issue of 39,000,000 warrants to directors and/or employees of the Company (ESOP), at no cost. The warrant entitled the holders to subscribe to the Company没s ordinary shares in a ratio of 1 warrant per 1 ordinary share, a price of Baht 6 each, and are exercisable for 5 years from the issue date. Currently, the Company has not yet lodged an application to issue such warrants with the Office of the Securities and Exchange Commission. 20. NUMBER OF EMPLOYEES AND RELATED COSTS

Number of employees at end of year (Persons) Employee costs for the year (Thousand Baht)

Consolidated 2005 2004 474 419 252,618 225,995

The Company Only 2005 2004 415 391 237,118 220,632

21. PROVIDENT FUND The Company and their employees have jointly registered a provident fund scheme under the Provident Fund Act B.E. 2530. The fund is contributed to by both employees and the Company. The fund is managed by Kasikorn Bank Public Co., Ltd. and will be paid to the employees upon termination in accordance with the rules of the fund. During the year, the Company contributed Baht 9.9 million to the fund. 22. DEFERRED GAIN ON DEBT RESTRUCTURING / CURRENT PORTION OF DEFERRED GAIN ON DEBT RESTRUCTURING / REVERSAL OF DEFERRED GAIN ON DEBT RESTRUCTURING During the year 2005, the Company made earlier than normal payment of debt under the rehabilitation plan to a secured creditor. The Company therefore reversed deferred gain on debt restructuring, presenting it as a separate item in the earnings statement of the year 2005.

Annual Report 2005 85

23. RELATED PARTY TRANSACTIONS During the years, the Company had significant business transactions with its subsidiaries and associated and related companies (related by the way of common shareholders or common directors). These transactions were in the ordinary course of business of the Company and these financial statements therefore reflect the results of the transactions on the basis agreed between the parties. The significant transactions are summarised below :(Unit : Million Baht) The Company Only For the years ended 31 December 2005 2004 Pricing policy Transactions with subsidiary companies Interest income 13.5 4.9 4 percent per annum Project management income 3.4 By mutual agreement Club house management expense 10.2 7.6 By mutual agreement The outstanding balances of the above transactions are shown as separate items in the balance sheets as follows :(Unit : Thousand Baht) Consolidated The Company Only 2005 2004 2005 2004 Amounts due from related companies Estate Perfect Company Limited (1) 1,101 Perfect Satellite Services Company Limited 177 Amounts due from related companies 1,278 Loans to related company and interest receivable Loans to subsidiary company Estate Perfect Company Limited (1) 290,339 196,552 Less : Provision for doubtful debts (474) (474) 289,865 196,078 Interest receivable from subsidiary company Estate Perfect Company Limited (1) 18,858 5,309 Loans and interest receivable from subsidiary company, net 308,723 201,387 Loans to associated company Krungthep Land Public Company Limited (2) 84,091 114,091 84,091 144,091 84,091 114,091 84,091 144,091 Interest receivable from associated company Krungthep Land Public Company Limited (2) 61,687 61,687 61,687 61,687 Less : Provision for doubtful debts (57,303) (57,303) (57,303) (57,303) 4,384 4,384 4,384 4,384 Loans and interest receivable form associated company, net 88,475 118,475 88,475 118,475

86 Annual Report 2005

Loans to related company Real Service Company Limited

2005

(Unit : Thousand Baht) The Company Only 2005 2004

Consolidated 2004

2,298 2,298

2,612 (2,494) 118 Loans and interest receivable from related company, net 2,416 Loans to related companies and interest receivable, net 90,891 Amounts due to related company Perfect Satellite Services Company Limited Amounts due to related company -

2,612 (2,494) 118 2,416 120,891

2,612 (2,494) 118 2,416 399,614

2,612 (2,494) 118 2,416 322,278

1,117 1,117

805 805

Interest receivable from related company Real Service Company Limited Less : Provision for doubtful debts

(1) Change status from an associated company to a subsidiary company in the first quarter 2004. (2) Formerly known as çKrungthep Land Company Limitedé. On 27 February 2004, a meeting of the Companyûs directors passed a resolution approving the debt and capital restructuring of Estate Perfect Company Limited as discussed in Note 9. As a result, the Company has recorded reversal of provision for doubtful debts amounting to approximately Baht 143.4 million as a separate item in the earnings statements of the first quarter 2004 and recorded a loan as investment in the subsidiary company amounting to approximately Baht 143.4 million, with the Company receiving 14,340,520 ordinary shares with a par value of Baht 10 each in accordance with the letter of intent to convert debt to equity dated 3 March 2004. On 25 August 2004, a meeting of the Companyûs directors passed a resolution approving a memorandum of debt settlement with an associated company, Krungthep Land, dated 30 July 2004. Krungthep Land has debt to the Company totaling approximately Baht 164.2 million. The Company settled indebtness of Krungthep Land which is a creditor of the Company totaling Baht 7.7 million. Under the memorandum the Company also received land amounting to approximately Baht 40.7 million in partial payment, with Krungthep Land responsible for the land transfer expenses, amounting to approximately Baht 2.7 million. As a result the outstanding balance of loans to and interest receivable from Krungthep Land amounts to approximately Baht 118.5 million. On 11 August 2005, a meeting of the Companyûs directors passed a resolution approving the debt restructuring agreement from Krungthep Land. The outstanding balance of loans to and interest receivable from Krungthep Land amounts to approximately Baht 118.5 million. The repayment schedule was extended until August 2006 and divided into 5 installments, with the first installments of Baht 5 million to be made on the date of debt restructuring agreement. Subsequently, the following installments totaling Baht 113.5 million are to be made from November 2005 to August 2006. Currently, Kungthep land is conforming with the above agreement.

Annual Report 2005 87

24. CORPORATE INCOME TAX Its subsidiary calculated corporate income tax for the year ended 31 December 2004 on net earnings after adding back certain expenses which are disallowable for tax computation purposes, using rates of 15 percent on earnings up to Baht 1 million, 25 percent on earnings over Baht 1 million but not more than Baht 3 million, and 30 percent on earnings over Baht 3 million. The tax rates applied in the calculation are in compliance with the provisions of Royal Decree 431 (B.E. 2548) dated 21 January 2005, issued the revenue Code, regarding the reduction of income tax rates. Its subsidiary calculated corporate income tax for the year ended 31 December 2005 on net earnings after adding back certain expenses which are disallowable for tax computation purposes. The Company had no corporate income tax for the year ended 31 December 2005 and 2004 since the losses brought forward prior years exceeded net earnings for the years. 25. DIVIDENDS A resolution of General Meeting of the Company没s shareholders on 7 April 2005, it was resolved that the Company pay a dividend of Baht 0.40 per share (totaling Baht 312.7 million) in respect of the year 2004 earnings. 26. RECONCILIATION OF DILUTED EARNINGS PER SHARE

(Unit : Baht)

Consolidated and the Company Only For the year ended 31 December Weighted average number of Earnings Net earnings ordinary shares (shares) per share 2005 2004 2005 2004 2005 2004

Basic earnings per share Net earnings 1,092,636,440 1,015,517,111 Effect of dilutive potential ordinary shares Warrants 14,059,171 units (2004 : Warrants 16,912,735 units) Unsubordinated convertible debentures 6,605,870 Diluted earnings per share Net earnings of ordinary shareholders assuming the conversion of dilutive potential ordinary shares 1,099,242,310 1,015,517,111

782,154,478

765,244,621

14,961,701

18,758,303

13,348,384

810,464,563

784,002,924

1.40

1.33

1.36

1.29

27. BANK GUARANTEES As at 31 December 2005, there were outstanding banks guarantees of Baht 414.1 million (2004 : Baht 203.9 million) issued by the banks on behalf of the Company and its subsidiary to the Land Allocation Controlling Committee and as securities for public utilities works, and electricity and water usage.

88 Annual Report 2005

28. COMMITMENT As at 31 December 2005, the Company and its subsidiary had the following outstanding commitments. 28.1 The Company and its subsidiary had the outstanding commitment in respect of construction contracts of land and houses projects of which the Company and its subsidiary had already entered into contracts with subcontractors of approximately Baht 401.5 million. 28.2 The Company had the outstanding capital commitment in respect of purchase of land of approximately Baht 229.2 million. 29. STATUTORY RESERVE Under the Public Company Limited Act B.E. 2535, the Company is required to set aside a statutory reserve of at least 5 percent of its net profit, after deduction accumulated deficit brought forward (if any) until the reserve reaches 10 percent of its registered share capital. The statutory reserve connot be used for dividend payment. 30. FINANCIAL INFORMATION BY SEGMENT The Company and its subsidiariesรป operations involve principally a single industry segment, property development, and are carried on in the single geographic area of Thailand. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area. 31. FINANCIAL INSTRUMENTS 31.1 Financial risk management and policies The Company and its subsidiaries are exposed to risks from changes in market interest rates, and from nonperformance of contractual obligations by counterparties. The Company and its subsidiaries do not use derivative financial instruments to manage such risks. They do not hold or issue derivative instruments for speculative or trading purposes. 31.2 Interest rate risk The interest rate risk is the risk that future movements in market interest rates will affect the results of the Company and its subsidiariesรป operations and their cash flows. The Company and its subsidiariesรป exposure to interest rate risk relates primarily to its deposits with financial institutions, bank overdrafts, short-term loans and long-term loans from financial institutions. The Company and its subsidiaries do not use derivative financial instruments to hedge such risk. 31.3 Credit risk The Company and its subsidiaries are exposed to credit risk primarily from trade with counterparties involved the real estate business. However, due to the large number and diversity of entities comprising the Company and its subsidiariesรป customer base, the Company and its subsidiaries do not anticipate material losses from its debts collection beyond that for which provision has already been set aside. 31.4 Fair value Since the majority of the financial assets are short-term and that the loans carry interest at rates close to market rates, the management believes that the fair values of the Company and its subsidiariesรป financial assets and liabilities do not materially differ from their carrying value.

Annual Report 2005 89

32. PRESENTATION The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development date 14 September 2001, issued under the Accounting Act B.E. 2543. Certain amounts in the financial statements for the year ended 31 December 2004 have been reclassified to conform to the current year没s classification, with no effect on previously reported net earnings or shareholder没s equity. 33. APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the authorised directors on 24 February 2006.

90 Annual Report 2005

Audit Committee Report 2005

Dear Shareholders Property Perfect Plcรปs audit committee comprises three independent directors - Dr. Tawatchai Nakhata, Chairman, Dr. Thamnoon Ananthothai and Mr.Somsak Toraksa. In 2005, the audit committee held 4 meetings and achieved the following agenda; 1. Review the quarterly and annul financial statements in 2005 to ensure the sufficiency of the information and the conformity to the general accounting standards. The audit committee also ensures the sufficiency and credibility of the disclosure of the financial statement and connected transactions. 2. Ensure that the company honours the securities and related laws. 3. Assess the internal control and ensure proper internal control. The appraisal found no significant error which might affect the financial resultsรป accuracy and credibility. 4. Ensure that the internal control is in line with the professional standards and approve the inspection report for 2005 as well as acknowledge the internal control unitรปs quarterly reports. The audit committee also ensures that the company follows through the recommendations from the internal control unit to tighten and boost the efficiency of the internal control. 5. Recommend the company on financial, accounting, legal and engineering issues, so that the company achieves business objectives. 6. Select and propose the preferred auditor as well as consider the audit fee to the board of directors, to get shareholdersรป approval to appoint Ernst & Young Co.,Ltd. as the 2005 auditor. The Audit Committee would like to inform all that it has performed the independent directorsรป responsibility and appropriately come up with honest opinions for the benefit of the company, all shareholders and other related parties.

Dr. Tawatchai Nakhata Chairman of the Audit Committee February 27, 2006

Annual Report 2005 91

Auditor Fee Accuracy Sanctification Form

Audit Fee Item 1 2 3

Payer Property Perfect Public Company Limited Estate Perfect Co.,Ltd. Perfect Satellite Services Co.,Ltd Total fee

Auditor Mr. Supachai Phanyawattano Mr. Supachai Phanyawattano Mr. Supachai Phanyawattano

Fee 1,500,000 250,000 50,000 1,800,000

The above information is I certify there is no other service I know of that the company and subsidiaries awarded to me, my auditing P Accurate. firm, and individuals or companies connected to me. Inaccurate. Note : To improve the above information (if any), I affirm the accuracy of all information in this form that shows the audit fee and other service fee that the company and subsidiaries pay to me, my auditing firm, and individuals or companies connected to me.

(Mr.Supachai Phanyawattano) Ernst & Young Co.,Ltd Auditor of Property Perfect Public Company Limited

92 Annual Report 2005