Prinsiri Public Company Limited
Table of Content Page Financial Summary Message from Board of Director Board of Directors and Management Team Report from Audit Committee General Information Nature of Business Risk Factors Real Estate Industry Future Plan Structure of Shareholders and Management Corporate Governance Supervision of the Use of Insider Information Internal Controls Related Transactions Financial State and Performance Analysis Auditor’s Report Financial Statement Notes to Financial Statement
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3 8 9 10 11 13 23 26 32 34 50 57 58 60 70
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Financial Summary Financial Highlights (Unit : MB.)
2004
2005
2006
Financial Position Total Assets Total Liabilities Total Equity
2,124.42 1,334.70 789.72
3,196.99 1,748.09 1,448.91
4,395.97 2,589.84 1,806.13
Operator Result Total Revenue Revenue Cost of Good Sold Gross Profit Net Profit
1,486.66 1,469.22 1,046.75 422.48 184.18
2,325.34 2,312.40 1,612.19 700.21 304.75
2,960.52 2,948.73 2,001.62 947.10 447.80
4.83 28.76 12.39 26.75 8.52 1.69 0.36 1.55 0.14
2.60 30.28 13.11 27.23 11.45 1.21 0.56 2.68 0.18
3.36 32.12 15.13 27.51 11.80 1.43 0.67 2.70 0.27*
Financial Ratios Current Ratio (Times) Gross Profit Margin (%) Net Profit Margin (%) Return on Equity (%) Return on Assets (%) Debt on Equity (Times) Earning per Share (Baht) Book Valuse per Share (Baht) Devidend per Share (Baht)
Note : * is the dividend paid per share as approved by the Company’s Board of Directors on 23 February 2007. The meeting considered to pay dividends for performance for the year 2006 and proposed this ratio for approval in the 2007 Annual Shareholders’ Meeting.
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Total Revenues (Million Baht)
Gross Profit Margin (%)
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Net Profit (Million Baht)
Total Assets, Total Liabilities and Total Equity (Million Baht)
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Debt on Equity Ratio (Times)
Return on Total Assets (%)
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Return on Shareholders' Equity (%)
Dividend Per Share (Baht)
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Message from Board of Director To
The Shareholders of Prinsiri Public Company Limited
According to the corporate goal commitment focusing on being one of leaders in Thai real estate development and receiving recognition and trust from the consumers with our brand name “Prinsiri”, the progressive growth of previous performance is proof to assure that the Company is achieving its goal. The real estate market, especially housing, in 2006, was impacted by many factors including increase of crude oil prices, which relatively raised costs of construction materials with transportation, political fluctuation, the unrest in the South and the bird flu situation. Furthermore, periodic increases in interest rates directly affected entrepreneurs and buyers. However, with professional skills in the real estate business, the Company’s directors, management team and employees dedicate themselves as a team. As a result, in 2006 the Company's total revenue and net income were Baht 2,960.52 and 447.80 million, a 27.32 and 46.94 percent increase accordingly. In addition to a commitment to the business objectives, the Company also intends to run the business with transparency and good corporate. With its slogan of “Quality with Morality”, the Company seriously and progressively applies good corporate governance to develop competitive capabilities for sustainable growth and to add share value for long-term shareholders. The Company Board of Directors would like to thank all concerned people including our shareholders, customers, business alliances, employees, financial institutes, media channels, and securities analysts for their trust and continuous support. In return, the Company will continue to dedicate itself towards developments with transparency, for sustainable and maximum prosperity for all interested parties as one of the top leaders in the Thai real estate operations industry.
(Mr.Mongkol Pao-in) Chairman
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(Miss.Siriluck Kovitchaindachai) President and Managing Director
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Board of Directors and Management Team Board of Directors 1. 2.
Mr. Mokol Pao-in Mr. Surabhon Kwunchaithunya
3.
Lt. Sivarak Pinijarom
4.
Mr. Amnat Ngamsuriyarote
5. Ms. Siriluck Kovitchindachai 6. Mr. Chaiwat Kovitchindachai 7. Mr. Kwanchai Mongkolkittaveepol 8. Mrs. Moogda Arriyavat 9. Mr. Numchai Wanaphanubeth 10. Mr. Sakol Pao-in
Chairman/ Independent Director Independent Director/Chairman of Audit Committee Independent Director/Member of Audit Committee Independent Director/Member of Audit Committee Director Director Director Director/ Independent Director Director Director/Secretary of Board of Director
Management Team
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1. 2.
Ms. Siriluck Kovitchindachai Mr. Chaiwat Kovitchindachai
3.
Mr. Kwanchai Mongkolkittaveepol
4.
Mr. Numchai Wanaphanubeth
5.
Mr. Sakol Pao-in
6.
Miss Nipha Aphirattanarungruang
Managing Director Deputy Managing Director Acting Assistant Managing Director, Construction Acting Assistant Managing Director, Sales and Marketing Assistant Managing Director, Customer Relations Assistant Managing Director, Finance Assistant Managing Director, Administration Assistant Managing Director, Organizational Development
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Report from the Chairman of Audit Committee To
The Shareholders of Prinsiri Public Company Limited
The Extraordinary Shareholders' Meeting No. 1/2004 held on 26 March 2004, resolved to appoint three independent audit committees as follows. 1. Mr. Surabhon Kwunchaithunya Chairman of Audit Committee 2. Lt. Sivarak Pinijarom Audit Committee and Independent Director 3. Mr. Amnat Ngamsuriyarote Audit Committee and Independent Director Mr. Sakol Pao-in, Assistant Managing Director, administration, was appointed as the secretary of the Audit Committee. In 2006, the Audit Committee held four meetings to undertake the following major issues: 1. Review the Company’s quarterly and fiscal financial statement to ensure its accuracy according to accounting standards and adequate disclosure of related transactions, connected transactions, and possible conflicts of interest prior to submission to the Management; 2. Review the efficiency of the internal control system and monitor corrective action for the system performed by the Internal Audit Section. It was found that the Management resolved the problem. Then it could confirm that the Company had sufficient internal controls and supervision of internal audit according to the plan concerning of risks against the organization as well as monitor for further audit developments; 3. Review the report of the Company’s risk management as is adequate and suitable. The Management appointed the Risk Management Committee which affirmed that the risk management process was sufficient and continuously undergoing improvements. 4. Review compliance with guidelines for listed companies on the Securities Exchange of Thailand and relevant laws and regulations; and 5. Review and recommend notes to connected transactions or possible conflicts of interest and considered adequate correct disclosure of such information. The Committee can request for unlimited information and consult with any particular management department, internal audit, auditors and external consultants as needed. The Committee is of the view that the Company’s financial statement was correctly formulated according to standard accounting systems with adequate disclosure of information. The connected transactions were performed correctly and are complete. All transactions comply with laws and regulations. The internal control system for efficiency assessment was sufficient. Furthermore, there was continuous good development of corporate governance. For 2006, the Audit Committee was satisfied with the result of the independent assessment of the auditor and suggested the Company’s Board of Directors to nominated Mrs. Wilairat Rojchanakarin, a certified public accountant, registration number 3104, auditor from DIA, an auditing company, as the Company’s auditor for 2007 in the Annual Shareholders’ Meeting.
(Mr.Surabhon Kwunchaithunya) Chairman of the Audit Committee
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General Information Company Information Company Name Issue Name Type of Business Head Office
: : : :
Registration No. Home Page Telephone Fax Listed Security
: : : : :
Prinsiri Public Company Limited PRIN Real Estate Developer 123 Suntowers, 12th Fl., Bldg.A, Vibhavadi-Rangsit Road, Chombhon, Chatuchak, Bangkok 10900 0107574700320 www. prinsiri.com 0-2617-6900 0-2617-6910-1 As of 31 December 2006 Registered Capital of Baht 670,000,000 comprising 670,000,000 common shares at a par value of Baht 1 Issued and paid-up share capital of Baht 670,000,000 , which is a total of 670,000,000 common shares at par value of Baht 1
Information of Subsidiary Companies Company Name Type of Business Head Office
: : :
Registration No. Telephone Fax Listed Security
: : : :
Company Name Type of Business
: :
Head Office Registration No. Telephone Fax Listed Security
: : : : :
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Prinventure Company Limited Real Estate Developer 123 Sunflowers, 12th Fl., Bldg.A, Vibhavadi-Rangsit Road, Chombhon, Chatuchak, Bangkok 10900 0105548055398 0-2255-9401 0-2201-3370-1 As of 31 December 2006 Registered Capital of Baht 100,000,000 comprising 10,000,000 common shares at a par value of Baht 10 Issued and paid-up share capital of Baht 76,250,000 , which is a total of 7,625,000 common shares at par value of Baht 10 Growed Yotha Company Limited Construction Contractor and Construction Materials Representative 609/ Nawamin 80,Klongkhum,Bungkhum,Bangkok 0105545057390 0-2933-9822-5 0-2933-6768 As of 31 December 2006 Registered Capital of Baht 10,000,000 comprising 100,000 common shares at par value of Baht 100
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Issued and paid-up share capital of 10,000,000, which is a total of 100,000 common shares at par value of Baht 100
Reference Information Share Registrar Head Office Telephone Fax
: : : :
The Thailand Securities Depository Co.,Ltd. 62 Ratchadapisek Road, Klongtoey, Bangkok 10110 0-2596-9309 0-2832-4994-5
Auditor Head Office
: :
Telephone Fax
: :
Office of DIA International Auditing 316/32 Soi Sukhumvit 22, Khlong Toei, Khlong Toei Bangkok 10110 0-2259-5300 0-2260-1553
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Nature of Business Background Prinsiri Public Company Limited was incorporated as the limited company on February 23rd, 2000 with the initial registered and total paid-in capital of five million Baht. The Company engages in real estate development business, for-sale housing estate, with expertise in detached houses, townhouses and condominium. In 2001 and 2004 the Company’s housing design won Awards of Merit from Pacific Coast Builders Conference (PCBC) held in USA. In 2006 the Company has increased its registered capital to be totaled paid-in at 670 million Baht. Significant Development
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2005
• Invested in Growed Yotha Limited, a construction contractor and construction material distributor company by holding 99.99 percent of 10 million registered and paid-in capitals. • Jointly invested with Univentures Public Company Limited to operate a real estate development business by holding 51 percent of five million registered capitals. • Offered public 155 million ordinary share offering with the price of 2.80 Baht per share of one Baht par value to increase the Company’s registered and paid-in capitals to 670 million Baht. • The Company started to be in trade at the main board on November 7th, 2005
2006
• The Company developed and sold the first condominium project named the Pulse located in Soi Ladprao 44. • The Company and Univentures Public Company Limited increase investment in Prinventure Limited by holding 51 percent of registered capital at 76.25 million Baht. • The Company provided a loan to Prinventure Limited, subsidiary company, according to proportion of holding shares, to operate the business. At December 31st, 2006 the Company lent the total loan of 248.28 million Baht.
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Overview of Business of the Company and its Subsidiaries Prinsiri Public Company Limited, the Company, and Prinventure, a subsidiary, engage in real estate development business offering for-sale housing estate with land and condominium. In the role of project developer and owner, the Company and the Subsidiary emphasize on building housing estate under the concept “Charms of the Home in Harmony with Nature”. In 2006 the Company sold for-sale housing estate with land and condominium at the percentage of 85.93 and 10.76 respectively. At present, the Company is a real estate developer who receives good recognition and trust from many customers under the brand name of “Prinsiri”. It is well known for good location, good project, good quality, reasonable price and good after-sale service. In order to meet consumers’ needs with optimum purposes, the Company has continuously developed and improved its products such as project design, project plan, housing design, area utilities, location, selection of suitable construction and finishing materials for environment of each project. In addition the Company’s housing design won Awards of Merit in 2001 and 2004 from Pacific Coast Builders Conference (PCBC) held in USA. Although the Company and Prinventure Limited, the Subsidiary, develop same type of products, they separately operate their business. For the land to be developed as a for-sale project of the Company, it is provided and bought by the Company on its own decision. On the other hand, the developing land of Prinventure Limited is from Univentures Public Company Limited, the venture, who holds 49 percent of registered capital of Prinventure Limited. The venture shall supply and propose a land for mutual decision to buy. The company will then become project developer, contractor and seller for Prinventure Limited and be paid for such operation. Furthermore, projects of the Company and Prinventure Limited use different project name for each product. Growed Yotha Group Limited, a subsidiary, is a construction contractor and construction material distributor such as cement, paint colors, steel and wood. Its main customers are the Company and its contractors. In 2006 the proportion of revenues between construction and material distribution was about 19.59 and 80 percent respectively. Structure of Shareholding of Prinsiri Public Company Limited As of 31 December 2006
Prinsiri Public Company Limited Paid-up capital of 670 MB. “Real Estate Developer”
51.00 % Prinventure Co.,Ltd. Paid-up capital of 76.25 MB. “Real Estate Developer”
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99.99 % Grow Yotha Group Co.,Ltd. Paid-up capital of 10.0 MB. “Contractor and Material Distributor”
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Revenue Structure of the Company Revenue
SDH - High income SDH - Middle income Townhouse/Home Office Condominium Land Total Revenue from Property Sales Revenue from Sales Other revenue Total revenue
Operator Prinsiri Prinsiri/Prinventure Prinsiri/Prinventure
2004 The Company Only Financial Statement MB % 563.99 37.94 574.81 38.66 330.43 22.23
2005 Consolidated financial statement MB % 428.38 18.42 1,312.46 56.44 419.80 18.05
2006 Consolidated financial statement MB % 127.36 4.30 1,526.09 51.55 890.65 30.08
Prinsiri Prinsiri Prinsiri/Prinventure
1,469.23
98.83
80.38 2,241.02
3.46 96.37
318.56 2,862.66
10.76 96.69
Grow Yotha Group Company/Subsidiary
17.43 1,486.66
1.17 100.00
71.39 12.94 2,325.35
3.07 0.56 100.00
86.07 11.79 2,960.52
2.91 0.40 100.00
Note: Single Detached House (SDH) SDH for high-income market has price range at THB 7 million and up SDH for medium -income market has price range at THB 1.7-3.0 million
Product Characteristic Prinsiri Public Company Limited engages in real estate development business offering for-sale housing estate with land and condominium as project developer and owner. The majority of the Company's projects is located in central Bangkok and Bangkok Metropolitan Region where is near communities with infrastructure and convenience including electricity, water supply, communication system and transportation. All projects developed with the “Prinsiri” brand are under the concept “Charms of the Home in Harmony with Nature”.
Logo of the Company’s Brand
The Company concentrates on product quality with delicate details. All selected qualified materials are used in order to make each component is the best for a house. Moreover, quality inspection is performed for each step. Also, the Company has progressive improvement on product development to meet customers’ needs. At present, buying a product of the Company, customers shall pay house deposit, down payment and deposit on signing contract at amount of 10-30 percent of the selling price. Duration of down payment is 3-8 times depending on construction period and agreement between a customer and the Company. Date of Delivery and ownership transfer of a house shall be specified on the signing contract day and written down on the agreement to sell. However, the date will depend on each customer readiness. Details of product in each type are following: Annual Report 2006
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1.
For-sale housing estate with land The Company’s projects of for-sale housing estate with land are horizontal development. Products in this type are house or building with height not more than 4 stories. Housing or building design and project design of individual project is different by location and customers’ needs. However, each project under the Company’s operation will have complete central infrastructure, facilities and safety such as a clubhouse, a swimming pool, a park and security system. In addition, the Company’s for-sale housing estate with land projects can also classified by specific qualifications and target group under particular names as follow: (1)
Single Detached House (1.1) High-end Single Detached House Logo of the Project
:
Project Name Price Range Target Market
: : :
Siritawara THB 7 million and up High-income customers
Sample of high-end Single Detached House
(1.2) Medium-End Single Detached House Logo of the Project Project Name Price Range Target Market
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: : : :
Prinyada THB 3-7 million Relatively high income customers
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Sample of Medium-End Single Detached House
(2)
Town House & Home Office Logo of the Project Project Name Price Range Target Market
: : : :
Prinyaluck THB 1.5-3.0 million Medium income customers
Sample of Town House
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Sample of Home Office
3.1.2 Condominium The Company’s projects of for-sale condominium are vertical development. Products in this type are condominiums with height at least 8 stories. Building design and project design of individual project is different by location and customers’ needs. However, each project under the Company’s operation will have complete central infrastructure, facilities and safety such as a swimming pool with beautiful garden, elevators, Digital Satellite Television and security system.
Logo of the Project Project Name Price Range Target Market
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: : : :
The Pulse THB 1.29-3.60 million Medium income customers and up
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Sample of Condominium
Marketing The company implements business strategies to differentiation-base focus and concentrate on developing trust of customers towards the Company and its products. Therefore, the Company’s marketing applies competitive strategy divided as following. (1) Product strategies The Company set top priority for product strategies to promote differentiation-base focus under the slogan “Charms of the Home in Harmony with Nature" in order to meet different needs of customers such as project location, housing design and Living area. Theme names are used to indicate particular products. The products are designed to meet customers’ requirement for accommodation and maximum satisfaction. From selecting of location, housing design, project and landscape design, quality material selection and construction, each step is under quality control. In addition, all products have been improved progressively. Therefore, the Company’s products are recognized and trusted for beautiful housing design, fit living area, project plan with green environment, dedication in construction and premium grade construction with standard materials. (2) Pricing strategies The Company has price policy to be competitive in the market price, especially among projects in the same or nearby location. In addition, product quality and project cost are taken into account such as land price, design cost, construction cost, marketing expenses.
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(3) Promotional strategies Promotional strategies are one of other important strategies for the Company and used to compete in the market in order to promote brand awareness, to motivate need of products, to remind the products, to develop trust and good image for the Company. Promotional tools including advertisement, salesperson, promotion, direct marketing and indirect marketing are employed. In the year 2006, the Company advertised through channels to reach target group as much as possible. Details of advertisement are following. Above the line strategy • Radio advertisement with concept “It’s time to go home” was the first media illustrating ‘Prinsiri’ to customers. • Television advertisement with theme “It’s time to go home” was to convey warming view of Prinsiri home. • Advertisement on magazines and newspapers • VDO Wall in department stores • POV in office buildings and BTS Below the line strategy • Cut Out on main streets around the Company’s projects to attract prospects to visit the projects • www.prinsiri.com • Road show with mascot Teddy Bear Family specially designed for Prinsiri to introduce projects and provide information to customers (4) Product cost The Company manages product cost that focus on cost control in order to maintain appropriate budget, gross profit margin and competitive price. The control process begins from selecting land and buying at reasonable price. Research and improvement of construction materials and furniture are performed for best selection of good quality that is compliance with required standard within the preset cost. Construction techniques and technology are used for cost control and enhancement of efficiency and product standard. (5) After-sale service As to promote customers’ trust in the Company’s products and to be part of buying motivator, the Company provides after-sale service for customers as following. • 1 Year guarantee for default of construction, materials and finishing since the date of ownership transfer • Free one-year theft insurance Products and services Each project of the Company is developed and owned by the Company. All processes including land buying, housing and project design, applying for registration of land allocation, applying for construction permission, construction, quality control and inspection, and sales are operated by the Company.
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Construction period of each project is different depending on its properties such as product type, size and design. However, the average construction duration of each housing type is following: • A single detached house – six to seven months • One raw of town house/home office – seven to eight months • A condominium – eleven to twenty months Production policy The Company's production policy is to increase or decrease the production capacity in compliance with housing needs of customers for each project. Since the Company employs contractors, if the customers of each project need more living area, the Company can increase production capacity by employing more contractors in order to meet the customers' needs. Concentrating the quality control of construction to be at the same standard, the Company has quality control policy to inspect the quality as following. (1) Set construction and material standard for contractors (2) Arrange meeting with contractors regarding construction plan before construction phase (3) Appoint project engineers and a project manager for each project to monitor construction plan and incoming Inspection of contractors (4) Set up quality control team to inspect all construction to be compliance with specified standard Land buying Land is a significant factor in project developing and construction because it becomes 40-50 percent of total cost. Therefore, the Company's policy of buying land concentrates on potential land that can be developed instantly. Many consideration factors are also included such as potential of location, land price, city plan, law enforcement, growth trend of living location, city development and expansion, and competitors. Channels for buying land are land agent, land owner and its employees. For the maximum efficiency, before buying land, the Company performs feasibility study and report to the management as a reference data for buying approval. Selecting and employing contractors The Company employs contractors for construction and assigns its project engineers and a project manager to supervise and control the quality of construction to be in compliance with the construction plan and specified standard. In recruiting a new contractor, the Company considers the contractor's experience, portfolio, previous work quality, and financial position. For contractors who used to work for the Company, their information is input in database. Such information includes work details, work performance and related data for future consideration of a new project's contractor. At present the Company connects with 200 contractors. Then, the Company is confident that there are adequate contractors for more construction and future plan.
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Table of proportion between job values during construction of main contractors and the total project value during construction Item proportion between job value during construction of main contractors (percent) Number of main contractors
2004 38.05
2005 -
2006 -
2
-
-
Note: Main contractor refers to a contractor whose proportion of job value during construction more than 10 percent of total amount during construction.
In 2004, there were two contractors whose proportion of job value during construction more than 10 percent of total amount during construction. That was because at that time the Company has small number of contractors and project was not big. However, after that more contractors have been recruited. As a result in 2005 and 2006, none of those contractors obtained proportion of job value during construction more than 10 percent of the total amount. Buying construction and finishing materials The Company set top priority of material quality. Therefore, befittingness, good quality and standard are major factors of purchasing of construction and finishing materials. Price will then later consider as reference contributor. Major construction materials include cement, steel, roof truss, roof-tile, ceramic tile, gypsum board, brick, floor panel and bored pile. Purchasing of construction material and finishing can be divided into two major practices as following. (1) Construction materials and finishing supplied by contractors Since the Company employs the contractors for construction, some materials of each contract work will be provided and purchased by such contractors. Materials and their properties must be in good quality and standard as described in the contract. (2)Construction materials and finishing supplied by the Company Most of construction materials and finishing provided by the Company are those being used in large quantity or required to be order with particular distributor that needs time for delivery. Such operation enables the Company to control cost in the budget and decrease contractors' obligation to supply and purchase themselves. At present, the Company purchase construction materials and finishing from 150 internal distributors. Before ordering each material and finishing, the Company estimate total quantity needed for that project and then purchase at the estimated amount. However, such product will be delivered and charged time by time at actual needed quantity. In 2004-2006 none of purchase proportion of construction materials and finishing of any main distributor was higher than 10 percent of total cost during construction.
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Risk Factors Prinsiri Public Company Limited values risk management in business operation. The Company established a risk management policy in each department. All directors, management teams and employees have to follow the policy. The Risk Management Committee is also appointed to monitor overall Company risks. An Internal Audit unit will inspect and assess internal controls on a quarterly. The result will be directly reported to the Audit Committee. This is undertaken to insure that the Company can achieve its goals efficiently. Risk factors reported in the 2006 annual report are those evaluated from current situation. There may be unknown risks at present or factors that the Company considers as unrelated risks. Information involving economic conditions or government policies is obtained from government agencies and reliable sources. The Company did not inspect such data. Public investors should consider it carefully. Risk factors of the Company are as follows. Risk from construction material price volatility Since the Company operates a real estate business, construction materials are major raw materials for project development. Such products are subject to price volatility from fuel price increases. Not only cost of construction materials related to petroleum increases but others also through transportation charges. Meanwhile the company could not increase sales prices immediately when the construction costs rose. Although the Company could increase its price because of higher costs, the adjusted prices might affect sales volumes if competitors in the same area did not adjust their prices. Therefore, volatility of construction material prices may impact construction costs that in turn affect Company profitability . However, the Company’s purchase of construction materials can be mainly divided to two types: • those supplied by contractors; and • those supplied by the Company as described on “products and services”. Regarding materials provided by contractors, the Company specified lump sum cost for construction and materials in employment contracts. Therefore, although costs of construction materials might increase, the Company would pay the contractors as stated in the agreements. For those materials supplied by the Company, since the Company has many construction projects , it had quite a high advantage in negotiations with sellers. Hence, the Company could control costs of materials by planning construction and estimating quantities of each material for the whole project and order procurement at such estimation. Moreover, Growed Yotha Co., Ltd. is a subsidiary that operates construction and sells construction materials. The subsidiary is taken into account as the company unit in control of material cost for the Company’s project development and enhancement of potential competition.
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Risk from building pre-built houses At present the Company and its subsidiary have a policy to develop for-sale housing with land by building pre-built homes before opening. Such policy requires higher advance investment in construction because there was no money is received from customers to be used as cash flow during construction. In addition, the Company faces risks from possible factors affecting buying decisions of prospects such as political situation, economic recession, increase of petrol prices and higher interest rates. The pre-built homes then might not be sold or will sell out slowly. As a result, the Company would have high inventory costs. That would also affect liquidity and profitability of the Company. Most customers prefer to select a pre-built homes because they are confident of the certain transfer of ownership. Aiming toward providing excellent products and services under the slogan “Charms of the Home in Harmony with Nature”, the Company’s products under brand “Prinsiri” receive good recognition and trust from customers. However, the Company has a policy to decrease the impact from those related factors and to ensure, to the extent possible, that the products meet customers’ needs. . The Company also conducts research and studies consumer behavior before project development. Moreover, construction plans are designed to respond to sale quantities by separating project developments by phases. Each active project consists of pre-built and semi pre-built houses. Sales promotion is used continuously to promote brand awareness, to motivate needs, to remind markets of the products and to develop trust and a good image for the Company. Then the Company ensures that such effect is decreased at some level. Risk from land procurement for future project development The Company has no policy to accumulate a large amount of land bank for it does not want to have financial cost burden. The Company would only purchase a piece of land after a careful study of the potential for project development. Therefore, the rapid growth of the real estate development industry may result in a risk due to the increasing in land price. The Company might not be able to buy a land in wanted location. That would result in higher total cost or unavailability of land for development. However, the Company planned for land procurement in advance according to individual year of development projects. Then there was adequate time to search for new potential land for the future project development at reasonable price. Moreover, the Company has continuously had land brokers to search for land in appropriated location with reasonable price. Risk from major shareholders of the Company that is more than 75 percent As at 31 December 2006, the major shareholder of the Company, is the Kovitchindachai family, whose share holding is 509,245,000 or 76.01 percent of total registered capital. Holding more than 75 percent of total shares, the major shareholders control the majority vote of the shareholders' meeting. Therefore, public investors may confront the risk from the inability to monitor and to balance the major shareholder group on agendas that require the majority vote from the shareholders' meeting. In addition, although other shareholders may see an opportunity to increase
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commercial value, the Company is unable to be taken over without agreement from these major shareholders. However, the Company appointed five people from the third party to be independent directors. An Audit Committee was also appointed to balance management control.
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Real Estate Industry Industrial Events Throughout the year 2006, political condition, economic recession, petrol price and increase of interest rate affected real estate market. Overall property market was slow growth. However, there were new projects opening in 2006, totally of 70,444 units, worth 218,858 million Baht. Housing was major part of new project development of 66,118 units. The total value was 186,886 million Baht or 94 percent of the total new projects in the market. It valued 85 percent of the total amount in 2006. New housing project became major part of real estate because of market demand. Chart shows increase of housing registration in Bangkok Metropolitan and peripheral area Unit
%
90,000
8
78,116
80,000
7
67,829
70,000
6
62,796
60,000 5
50,594 50,000
4 40,000
34,023
34,035 3
30,000 2
20,000
1
10,000 0
0 2001
2002
2003
Housing Registration (Unit)
2004
2005
2006
GDP (%)
Source: Bank of Thailand
Expansion of housing registration increased in Bangkok Metropolitan and peripheral area. The number has increased throughout 2001-2006 from 34,023 units, 34,035 units, 50,594 units, 62,796 units 67,829 units and 78,116 units respectively. Compound Annual Growth Rate (CAGR) was 18.08 percent a year. Although in 2006 property market especially in the South was impacted by many factors including increase of petrol price, increase of construction materials because of higher transportation cost, unstable political situation, unrest in the South and bird flu situation as well as periodic increase of interest rate that directly affect housing buyers, real estate market in overall expanded in the year 2006. Number of housing registration in Bangkok Metropolitan and peripheral area grew. Comparing
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Prinsiri Public Company Limited
with 2005, it increased 15.17 percent, from 67,829 units in 2005 to 78,116 units in 2006. Comparing chart of new housing development project in Bangkok Metropolitan and peripheral area 2005 Total housing is 63,579 units.
2006 Total housing was 66,118 units Allocated Land, 1%
Allocated Land, 3%
Single Detached House, 20%
Single Detached House, 31% Condominium, 30%
Semi Detached House, 5%
Condominium, 45%
Semi Detached House, 5%
Commercial Building, 3%
Townhouse, 27% Townhouse, 28%
Commercial Building, 2%
Source : Agency for Real Estate Affairs Company Limited (AREA)
According to survey report of Agency for Real Estate Affairs Company Limited (AREA), it was found that there was new housing project in Bangkok Metropolitan and peripheral area at amount of 63,579 units. Among those housing, single detached house was majority of 31 percent, followed by condominium of 30 percent and townhouse of 28 percent, semi detached house of 5 percent and commercial building and land of 3 percent respectively. The total worth was 196,177 million Baht. In 2006 new housing project in Bangkok Metropolitan and peripheral area was 66,118 units, top with condominium of 45 percent, followed by townhouse of 27 percent, single detached house of 20 percent, semi detached house of 5 percent, commercial building of 2 percent and land of 1 percent respectively. The total worth was 186,886 million Baht Table of housing of new project opening in Bangkok Metropolitan and Peripheral area, 2006, classified by price range (Unit : Unit) Price Range (Baht)
Single Detached House
Semi Detached House
Townhouse
Commercial Building
Condominium
Less Than 500,001 500,001 - 1,000,000 1,000,001 - 2,000,000 2,000,001 - 3,000,000
1,411 3,439
62 1,887 789
6,986 5,220 2,345
355 361
404 4,472 14,044 3,216
3,000,001 - 5,000,000 5,000,001 - 10,000,000 10,000,001 - 20,000,000
5,549 2,568 401
252 -
2,948 360 -
788 136 10
4,293 2,001 592
More Than 20,000,000 Total
153 13,521
2,990
17,859
1,650
244 29,266
Source:
Allocated Land
Total
138 252 310 38
542 11,772 23,227 10,188
88 6
13,918 5,065 1,009
832
397 66,118
-
Agency for Real Estate Affairs Company Limited (AREA)
Annual Report 2006
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Prinsiri Public Company Limited
Regarding information of housing price for new projects in Bangkok Metropolitan and peripheral area in 2006, it indicated that selling price of single detached house, which was the majority, was around 3.001-5.000 million Baht, representing 41.04 percent of new single detach house projects. The second runner was single detached house with worth of 2.001-3.000 million Baht, representing 25.43 of new single detach house projects. For the semi detached house, the majority of new opening projects valued 1.0012.000 million Baht, representing 63.11 percent of total new semi detached houses. The second runner was semi detached house costed 2.001-3.00 million Baht, representing 26.39 percent of total new semi detached house. Among townhouse type, the top opening projects was those with price of 0.5011.000 million Baht, representing 39.12 percent of total new townhouses. It was followed by worth of 1.001-2.000 million Baht, representing 29.33 percent of the whole new townhouse projects. The top proportion of commercial building was projects with offered price of 3.001-5.000 million Baht, representing 47.76 percent of total new commercial building projects. The second part was those with 2.001-3.000 million Baht, representing 21.88 percent of total new commercial building projects. The majority of condominium type was new projects costed of 1.001-2.000 million Baht, representing 47.99 percent of total new condominium opening projects. The second run was those of 0.501-1.000 million Baht, representing 15.28 percent of total new opening condominiums. Finally, allocating land was mostly offered for sales at the price of 1.001-2.000 million Baht, representing 37.26 percent of total allocating land projects. It followed by that at 0.501-1.000 million Baht, representing 30.29 of total allocating land. Chart of number of housing sold of new opening projects in Bangkok Metropolitan and peripheral area, 2006 Total housing is 32,804 units.
Allocated Land, 1%
Single Detached House, 13% Semi Detached House, 3%
Townhouse, 22% Condominium, 59%
Commercial Building, 2% Source:
Annual Report 2006
Agency for Real Estate Affairs Company Limited (AREA)
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Prinsiri Public Company Limited
On demand factor, according to survey report of AREA, it was found that in 2006 number of housing sold in new opening projects in Bangkok Metropolitan and peripheral area was 32,804 units, representing 50 percent of total housing in the said area in the same year. Majority of sold property was condominium, representing 59 percent. The second proportion was townhouse of 22 percent, followed by single detached house of 13 percent, semi detached house of 3 percent, commercial building of 2 percent and allocating land of 1 percent respectively. Table of number of housing sold in new opening projects in Bangkok Metropolitan and peripheral area, 2006, classified by price range (Unit: Unit) Price Range (Baht)
Single Detached House
Semi Detached House
Condominium
Allocated Land
Total
Less Than 500,001 500,001 - 1,000,000 1,000,001 - 2,000,000
419
22 760
3,270 1,436
183
371 2,106 9,596
72 95 142
443 5,493 12,536
2,000,001 - 3,000,000 3,000,001 - 5,000,000 5,000,001 - 10,000,000 10,000,001 - 20,000,000 More Than 20,000,000
869 1,702 1,067 104 32
134 107 -
746 1,516 148 -
138 387 55 1 -
2,443 3,327 1,125 263 83
24 58
4,354 7,097 2,395 371 115
Total
4,193
1,023
7,116
764
19,314
Source:
-
Townhouse
Commercial Building
3 394
32,804
Agency for Real Estate Affairs Company Limited (AREA)
Referring to price information of housing sold in new opening projects in Bangkok Metropolitan and peripheral area, 2006, it was found that single detached house with top selling was that of 3.001-5.000 million Baht, representing 40.59 percent of total single detached house sold. The second runner was that of 5.00110.000 million Baht, representing 25.45 percent of total single detached house sold. For semi detached house, the top selling belonged to semi detached house with price of 1.001-2.000 million Baht, representing 74.29 percent of total semi detached house sold. The second sold proportion was that with price of 2.001-3.000 million Baht, representing 13.10 percent of total semi detached house sold. The top selling townhouse was that with price of 0.501-1.000 million Baht, representing 45.95 percent of total townhouse sold. The second sold proportion was that with price of 3.001-5.000 million Baht, representing 21.30 percent of total townhouse sold. Among commercial building type, the winner was building offering selling price of 3.001-5.000 million Baht, representing 50.65 percent of total commercial building sold. The second proportion belonged to that of 1.001-2.000 million Baht, representing 23.95 percent of total commercial building sold. For condominium, the top sold went to condominium with the price of 1.0012.000 million Baht, representing 49.68 of total condominium sold. The second one was that of 3.001-5.000 million Baht, representing 17.23 percent of total condominium sold. Finally, the majority of allocating land sold was that of 1.001-2.000 million Baht, representing 36.04 percent of total allocating land projects. The second one was that of 0.501-1.000 million Baht, representing 24.11 percent of total allocating land sold.
Annual Report 2006
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Prinsiri Public Company Limited
Competition At present there is more competition in property market. One of evidence is more new opening projects in Bangkok Metropolitan and peripheral area. According to survey report of AREA, it showed that in 2006 the number of new opening projects was totally 366 with selling units of 66,118. Units sold increased from the year 2005 at 4 percent. The total value of opening projects was 186,885 million Baht, which decreased from the year 2005 at 5 percent approximately. Such higher number of unit and lower value of total projects indicated that trend of housing price decreased. Real estate developers constructed cheaper housing to meet customers’ affording capability. Average selling price per unit in 2006 was 2.827 million Baht, which was lower that the year 2005 at 3.111 million Baht. Table listing top ten companies having high number of housing in new opening projects, 2006 Rank
1 2 3 4 5 6 7 8 9 10
Company Name
No. of Project (Project)
No. of housing (Unit)
Preuksa Real Estate Public Company Limited Land and Houses Public Co., Ltd. Supalai Public Company Limited L.P.N. Development Public Company Limited Asian Property Development Public Company Limited Plus Property Partners Co., Ltd. Areeya Property Public Company Limited Prinsiri Public Company Limited New City Airport Development Co., Ltd. Narai Property Co., Ltd.
17
4,616
15 6 4
3,695 3,563 3,476
12
2,870
20 2 12 1 2
2,858 1,700 1,512 1,395 1,285
Source:
Agency for Real Estate Affairs Company Limited (AREA)
Table listing top ten companies having high value of housing in new opening projects, 2006 Rank
1 2 3 4 5 6 7 8 9 10
Company Name
No. of Project (Project)
Project value (Million Baht)
Land and Houses Public Co., Ltd. Asian Property Development Public Company Limited T.C.C. Capital Land Co., Ltd Supalai Public Company Limited Plus Property Partners Co., Ltd. L.P.N. Development Public Company Limited Preuksa Real Estate Public Company Limited CASA VILLE Co., Ltd. Prinsiri Public Company Limited MR Sukhumvit Co., Ltd.
15 12
14,170 10,543
3 6 20 4
10,281 9,682 8,075 5,845
17 7 12 1
5,704 5,372 4,849 4,587
Source:
Annual Report 2006
Agency for Real Estate Affairs Company Limited (AREA)
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Prinsiri Public Company Limited
Industry trend and future competition According to predicted figure of Housing Business Association and Thai Condominium Association suggested that housing business will be positive in 2007. That is because housing supply has been gradually developed while demand in the market will possibly increase. The expected growth is supported by economical, social and political factors: (1) Housing need still continues because politics situation is improved. Buyers have more confidence while trend of unemployment rate is still low. This is a good chance of housing market. (2) The government has policy to progressively develop Bangkok Mass Transit System in Bangkok Metropolitan and peripheral area. Extension of this transportation system will promote expansion of city communities and housing area. (3) There is a sign from financial institutes including Bank of Thailand that the current interest rate is the peak one. Then it should decrease later on. (4) Petrol price decreases. (5) Buying power increases after buyers hold their decision to buy in 2006. Table of survey report on buying budget for housing
Price Range (Baht) Less Than 500,000 500,001 - 1,000,000 1,000,001 - 2,000,000 2,000,001 - 3,000,000 3,00,0001 - 4,000,000 4,000,001 - 5,000,000 5,000,001 - 7,000,000 More Than 7,000,001 Unspecifed Total
% 3.54 15.92 37.12 18.06 8.55 5.24 3.74 2.07 5.76 100.00
Survey report on need of housing of people attending 15th Housing and Condo Fair, 28 September-1 October 2006 Collected by: Real Estate Information Center, BAAC cooperation with Home Buyer Guide Ltd.
Source:
According to the survey report on need of housing, conducted by Real Estate Information Center, Bank for Agriculture and Agricultural Cooperatives (BAAC), there were trends of selling price of housing required by buyers in 2007 as following. Most wanted housing was that of 1,000,001-2,000,000 Baht, representing 37.12 percent. The second desire was housing with worth of 500,001-3,000,000 Baht. These two proportions were totally high as 71.10 percent. The report specified that need for single detached house was high as 39.90 percent, followed by townhouse of 22.25 percent, condominium of 21.57 percent, commercial building of 6.02 percent, semi detached townhouse of 5.69 and allocating land of 4.36 percent.
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Prinsiri Public Company Limited
Future Plan As of 31 December 2006, the Company and subsidiaries had a total of 18 active projects on hand, valued at Baht 9,402.73. Eleven projects are in construction and are expected to be available for sale in 2007, valued at Baht 8,139 million. Details of those projects are as follows. Prinsiri Projects
Projects Prinyaluck EkachaiBangbon Condominium Rajprarop Condominium Narathiwad Rachanakarin Condominium -
Phahonyothin Prinyada Samakee Prinyaluck Samakee Prinyada Ratchaphruek Rama 5 Prinyaluck Ratchaphruek Rama 5
Types of Project/ Area (Rai)
Units
Townhouse - 3 stories 19-0-00 Rai
EkachaiBangbon
Condominium - 33 stories 3-1-53 Rai Condominium - 31 stories 1-1-98 Rai
Rajprarop Rd. 547
209
Total Value (Baht in Million)
Expected Opening Date
674
Quarter 2
1,550
Quarter 2
Narathiwad Rd. Rachanakarin
187
800
Quarter 2
Condominium Soi - 8 stories Phahonyothin 37 3-3-0 Rai SDH - 2 Samakee Rd. stories 24-2-20 Rai Townhouse Samakee Rd. - 2 stories 17-2-52 Rai Semi SDH Ratchaphruek - 2 stories Rd. 26-3-6 Rai
308
693
Quarter 2
119
474
Quarter 3
207
480
Quarter 3
148
754
Quarter 4
Townhouse - 2 stories 41-0-56 Rai
291
738
Quarter 4
Total
Annual Report 2006
Location
Ratchaphruek Rd.
2,016
6,163
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Prinsiri Public Company Limited
Prinventure Projects
Projects
Types of Project/ Area (Rai)
Location
Total Value (Baht in Units Million)
Expected Opening Date
EuroNova
Townhouse On Nut Rd. 184 626 Quarter 1 - 3 stories On Nut 18-1-74.56 Rai Northern SDH Vibhavadi 242 800 Quarter 1 Prime - 2 stories Rangsit Rd. Rangsit 21-1-77 Rai Northern Townhouse Vibhavadi 312 550 Quarter 1 Nova - 3 stories Rangsit Rd. Rangsit 23-2-27 Rai Total 738 1,976 Note: Projects belong to Prinventure Company Limited, which the Company holds 51 percent of paid-up capital.
Annual Report 2006
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Prinsiri Public Company Limited
Structure of Shareholders and Management Structure of Shareholders As at 31 December 2006, the Company has registered capital amounts of 670,000,000 Baht at the par value each to 1.00 Baht. Shareholders As at latest registered book closing date on 29 December 2006, the tenth largest shareholders of the Company are: Shareholders 1. Kovitchindachai family 2. The Thailand Securities Depository Co., Ltd. for Depositor 3. Other Shareholders Total
Number of Shares 509,245,000 159,496,250
Percent 76.01 23.80
1,258,750 670,000,000
0.19 100.00
Note: Shareholders of Kovitchindachai family that are in the same group and vote on the same side are: 1. 2. 3. 4. 5. 6. 7.
Name Surname Ms. Siriluck Kovitchidachai Mr. Prinya Kovitchindachai Mr. Santi Kovitchindachai Mrs. Kimlang Kovitchindachai Mr. Chaiwat Kovitchindachai Mr. Chaiyo Kovitchindachai Mr. Chaiwut Kovitchindachai
8. Mr. Chavai Kovitchindachai 9. Mr. Titiwach Chaiyatanawat 10. Ms. Patcharee Kovitchindachai 11. Ms. Suparat Kovitchindachai 12. Thanin Kovitchindachai 13. Ms. Nipha Aphirattanarungruang 14. Ms. Busayarat Kovitchindachai 15. Mr. Pisanu Kovitchindachai 16. Ms. Worarat Kovitchindachai 17. Mr. Wongwai Kovitchindachai 18. Ms. Sudarat Kovitchindachai 19. Mr. Kwanchai Kongkolkittaveepol
Number of Shares 155,595,000 100,000,000 95,000,000 80,000,000 6,050,000 5,200,000 5,200,000 5,200,000
Percent 23.22 14.93 14.18 11.94 0.90 0.78 0.78 0.78
5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,200,000 5,000,000
0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.75
Dividend payment policy The Company has a policy to pay dividends to its shareholders in the amount of not less than 40 percent of its net profit. The dividend payment ratio are taken into consideration, such as operating results, expansion plan, liquidity and other relevant management factors. Any dividend payment is also subjected to the approval of the board of directors as appropriate and concerns the maximization of shareholders’ wealth. The Company’s subsidiaries have the same dividend payment policy as the Company’s.
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Prinsiri Public Company Limited
Management Organization As of 31 December 2006
Board of Directors As at 31 December 2005, the Company's Board of Directors consists of 10 directors. 1.
Mr. Mongkol Pao-in
2.
Mr. Surabhon Kwunchaithunya
3.
Lt. Sivarak Pinijarom
4.
Mr. Amnat Ngamsuriyarote
5. 6. 7. 8.
Ms. Siriluck Kovitchindachai Mr. Chaiwat Kovitchindachai Mr. Kwanchai Mongkolkittaveepol Mrs. Moogda Arriyavat
9. 10.
Mr. Numchai Wanaphanubeth Mr. Sakol Pao-in
Annual Report 2006
Chairman and Independent Director Independent Director and Chairman of Audit Committee Independent Director and Audit Committee Independent Director and Audit Committee Director Director Director Director and Independent Director Director Director and Secretary of Board of Director
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Prinsiri Public Company Limited
Authorized Directors Authorized directors who can sign to comply with the company are: (1) Mr. Mongkol Pao-in co-sign with Ms. Siriluck Kovitchindachai, totally two persons and affix the company seal or one of them co-sign with Mr. Kwanchai Mongkolkittaveepol or Mr. Chaiwat Kovitchindachai, totally two persons and affix the company seal; and (2) Mr. Kwanchai Mongkolkittaveepol or Mr. Chaiwat Kovitchindachai or Mr. Numchai Wanaphanubeth or Mr. Sakol Pao-in, either two persons signing together with the company’s seal affixed on documents used for application of land allocation permission, land-sale permission, building and construction permission, request of inspection, consolidation or separation of land title deed, permission to separate co-ownership, mortgage registration, clearance to mortgage, redemption of land plot or building, request for house ID, application to use and transfer electricity and water supply, right lease, telephone line, general request of telephone, permission to connect with roads and drainage pipes, permission to cut a curb, request for inspection of land position and area, request for land plot measure and separation, condominium registration, juristic condominium, juristic person for immovable property, usage of building, commercial location, communication including submission and receipt of any document related the Revenue Department, prosecution, submission of pleading both civil suit and criminal case, grievance or report incrimination to a police or inquiry official instead of grievance, compromising, pleading, submission and retrieving any documents related to a sued case, application for permission from government agencies or state enterprises, and certifying true copy of documents. Scope of Authority and Duty of the Board of Directors 1. Manage the Company in compliance with its objectives, regulations and resolutions of legitimate shareholders meetings with integrity and care to protect the interests of the Company; 2. Determine the objectives, guidelines, policies, work plans and budgets of the Company and monitor and administration and management of the Executive Board to ensure full compliance with the regulations of the Securities and Exchange Commission of Thailand; and 3. The Board of Directors has right to appoint a director and/or the management at their discretion to be the Executive Board with authorities and responsibilities to manage the Company’s business as assigned by the Board of Directors. Except for the following tasks which can be implemented only under the resolutions from Shareholder Meeting and under the stipulation that any director or person who might be involved with either conflicts of interests or any other beneficial conflicts with the company or subsidiary company shall not be granted the right to vote in that matter. • Matters stipulated by Laws must be obtained the resolutions from Shareholder Meeting. • Transactions that any directors are involved with either conflict of interest or any other beneficial conflicts particularly stated by Laws or Stock Exchange Specifications must be obtained the resolutions from Shareholder Meeting.
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Prinsiri Public Company Limited
In the year 2006, the Company held four meetings for Board of Directors, in which attendance of each member is shown as follows: No. 1 2 3 4 5 6 7 8 9 10
Name-Surname Mr. Mongkol Pao-in Mr. Surabhon Kwunchaithunya Lt. Sivarak Pinijarom Mr. Amnat Ngamsuriyarote Ms. Siriluck Kovitchindachai Mr. Chaiwat Kovitchindachai Mr. Kwanchai Mongkolkittaveepol Mrs. Moogda Arriyavat Mr. Numchai Wanaphanubeth Mr. Sakol Pao-in
2005 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 2/5 5/5
2006 4/4 4/4 4/4 3/4 4/4 4/4 4/4 4/4 4/4 4/4
Audit Committee As at 31 December 2005, the Company's Audit Committee consists of three members as follows. 1. Mr. Surabhon Kwunchaithunya Chairman of Audit Committee 2.
Lt. Sivarak Pinijarom
Audit Committee
3.
Mr. Amnat Ngamsuriyarote
Audit Committee
Mr. Sakol Pao-in is also a secretary of Audit Committee. Scope of Authority and Duty of Audit Committee 1. Review the Company's financial statement to be accurate, reliable and having sufficient disclosure by coordinating with the external auditors and responsible management to prepare quarter and fiscal financial statement. The Audit Committee may recommend the external auditors to review or examine any items viewed as necessary and important during the auditing period. 2. Review the efficiency and effectiveness of the Company's Internal Control and Internal Audit by coordinating with the External Auditor and Internal Auditor. 3. Advise and determine the parameter for inspection and the internal audit and the auditor's plan to be congruent and supporting each other in terms of financial auditing. 4. Review the interim financial statements with the auditors and internal control prior to submitting to the regulators. 5. Review and propose the appointment and remuneration of the auditors to the Company's Board of Directors to receive approval from the shareholders' meeting, including the auditor's fees 6. Review the Company's practice to follow the rules and regulation of the Stock Exchange of Thailand and other related laws. 7. Consider the disclosing of the Company's information to be reliable and sufficient in case of related transactions and conflict of interest. 8. Prepare internal control report of the audit committee signed by the chairman of Audit Committee and disclose the report in the Company's annual report. 9. Review and propose the Company's policy to be updated and appropriated to the situation to the Board of Directors.
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Prinsiri Public Company Limited
10. Other duties and responsibilities that are approved by the Board of Directors and Audit Committee. In the year 2006, the Company held three meetings for Audit Committee, in which attendance of each member is shown as follows:
1 2 3
Name-Surname Mr. Surabhon Kwunchaithunya Lt. Sivarak Pinijarom Mr. Amnat Ngamsuriyarote
2005 4/4 4/4 4/4
2006 4/4 4/4 4/4
Risk Management Committee As at 31 December 2005, the Company's Risk Management Committee consists of four members as follows. 1.
Mr. Chaiwat Kovitchindachai
Chairman of Risk Management Committee 2. Mr. Kwanchai Mongkolkittaveepol Risk Management Committee 3. Mr. Numchai Wanaphanubeth Risk Management Committee 4. Mr. Sakol Pao-in Risk Management Committee Mr. Sakol Pao-in serves as a secretary of Audit Committee. Scope of Authority and Duty of Risk Management Committee 1. Consider and approve policy and framework of risk management. 2. Monitor development of risk management framework. 3. Monitor process of risk indicator and assessment. 4. Assess and approve risk management plan. 5. Report risks and risk management to the Board of Directors. 6. Communicate important risks to Audit Committee In the year 2006, the Company appointed Risk Management Committee and held four meetings for the committee, in which each member attended every time. Executive Committee As at 31 December 2005, the Company's Executive Committee consists of five directors as follows.
1. 2. 3. 4. 5.
Annual Report 2006
Ms. Siriluck Kovitchindachai
President
Mr. Chaiwat Kovitchindachai
Executive Director
Mr. Kwanchai Mongkolkittaveepol
Executive Director
Mr. Numchai Wanaphanubeth
Executive Director
Mr. Sakol Pao-in
Executive Director
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Prinsiri Public Company Limited
Scope of Authority and Duty of Executive Committee 1. Review the Company’s policies, directions, strategies, management structure and operating principles outlined to conform with economic conditions and market competition as proposed by its executives and to seek approval from the Board of Directors thereafter; 2. Propose the Company’s business plan, budgets and management level of authority to the Board of Directors for consideration and approval. This includes the authority to approve, change, and increase annual budget appropriation in any urgent cases and submit a report to the Board of Directors; 3. Monitor and ensure the Company’s policies and management guidelines are carried out efficiently to support the Company’s operation; 4. Monitor the Company’s performance and ensure full compliance with the business plan as approved by the Board of Directors; 5. Approve the Company’s investment projects according to the business plan; 6. Appoint and discharge the Company’s employees at position below Managing Director; 7. Undertake the Company’s financial activities with financial institutes in relation to account opening, loan acquisition, mortgage, guarantee and others including sales, purchase and ownership registration of land plots to facilitate the Company’s operation; 8. Consider schemes of incentives, bonus and remunerations for the Company’s staffs and employees as well as other parties carrying out any business activities for the Company; 9. Approve the purchase and sale of office supplies, land plots, buildings as well as construction and renovations of office building; and 10. Perform any other works as assigned by the Company’s Board of Directors. The authorization of aforementioned Executive Committee executed by the Company’s Board of Directors, under its authority, does not include authorization or delegation which entitles the Executive Committee or their authorized attorney to approve any transactions in which they or other party who are in dispute or have interests or are in conflicts of interests (as promulgated by the Securities and Exchange Commission of Thailand) execute with the Company or its subsidiaries unless it is in compliance with the policies and criteria stipulated by the Company’s Board of Directors. Management As of 31 December 2006, the Company’s management comprises six persons as follows:
1. 2.
Annual Report 2006
Ms. Siriluck Kovitchindachai
Managing Director
Mr. Chaiwat Kovitchindachai
Deputy Managing Director Acting Assistant Managing Director,Construction Acting Assistant Managing Director, Sales and Marketing
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Prinsiri Public Company Limited
3.
Mr. Kwanchai Mongkolkittaveepol
4.
Mr. Numchai Wanaphanubeth
5.
Mr. Sakol Pao-in
6.
Ms. Nipha Aphirattanarungruang
Assistant Managing Director, Customer Relation Assistant Managing Director, Finance Assistant Managing Director, Administration Assistant Managing Director, Organizational Development
Scope of Authority and Duty of the Managing Director 1. Operate and manage the administration of the Company; 2. Operate and manage the administration and the management to be in accordance with policies, plans and strategies approved by the Board of Executive Committee; 3. Provide an authority and/or to sub-authorize to other persons to carry out specific task. Such sub-authorization shall be under the scope of authorization as stated in the given power of attorney and/or shall be comply with the regulations, specifications or order stated by law and the company; 4. Implement other tasks as periodically instructed by the Board of Directors; 5. Process and authorize an approval of employment, contract, and commitment of the Company’s business with budget approved by the Board of Directors or the Board of Executive Committee. The budget is subject to be changed appropriately under the consideration of the Board of Executive Committee. The authorization of aforementioned Managing Director has to be in compliance with the policies and criteria stipulated by the Company. It does not include authorization or delegation which entitles the Managing Director to approve any transactions in which any directors or other party who are in dispute or have interests or are in conflicts of interests. The Managing Director has to report that issue to the Company’s Executive Committee. In addition, a transaction that relates or involves with obtaining or distributing of the Company’s or its subsidiaries’ asset, case by case, requires approval from the shareholder meeting and/or other implementation as stated under the stipulation of such issue in compliance with regulations of the Stock Exchange of Thailand for that transaction. Selection of Board of Directors and Management The Company does not have a nominating committee to select candidates and appoint as the Board. However, to the best interests of the Company in operating its business, the Company’s Board of Directors shall consider candidates with knowledge, competency, experiences and qualifications to meet the criteria as stipulated under section 68 of the Public Companies Act, and related announcements of the Securities and Exchange Commission of Thailand. Selection of Board Members The board members are nominated and elected by the shareholders at the Shareholders’ meeting using the following procedures and methods: 1. One share is entitled to one vote. 2. Each shareholder is to vote with all his/her entitlement according to 1. Election may be at individual or of groups, as the meeting of shareholders deems
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Prinsiri Public Company Limited
appropriate. No shareholder may divide his/her votes among several individual or groups. 3. Board members are elected using majority of votes at the Shareholders’ meeting. Where the votes of candidates are tied, the Chairman has the casting vote. The Company appoints at least five members of the Board with over half of total board members must have domicile in Thailand. The Board members must be qualified according to criteria stipulated in the Public Companies Act and Securities and Stock Exchange Act. At each annual ordinary shareholders’ meeting, one third of the directors must resign from duties. If the number of directors to resign is not exactly one third, the closest number shall apply. As for directors who are to resign in the first and second years after registering the company, a draw will be held to select the person to resign. In each subsequent year, the longest serving directors shall resign. The directors who resign after completing theirs terms may be elected to resume the position. In case that a new director is sought to fill a vacant seat as a result of a cause other than the expiration of term, the Board of Directors shall nominated the candidate who is eligible according to the Public Companies Act in the next Board of Directors’ meeting except the vacant term is less than 2 months. The nominated director shall be in duty for the remaining term of the director she/he is fulfilling. The Board of Directors’ resolution to induct the said director requires a three quarter vote by the remaining Board of Directors. The Shareholders’ meeting may vote any of the directors to resign prior to ending of their term with ¾ of total votes by shareholders attending the meeting and of which the total shares must not less than half of total shares held by the shareholders attending the meeting and eligible to vote. Audit Committee The Board of Directors appoints Audit Committee by considering quality of a committee in compliance with criteria of the Securities and Exchange Commission of Thailand and nominating the committee for approval of the Shareholders’ meeting. Terms of holding office of the Audit Committee is three years. After completing, a committee may be elected to resume the position. Risk Management Committee The Company’s Board of Directors appoints Risk Management Committee who is authorized and assigned to manage the Company’s risks. Executive Directors The Company’s Board of Directors appoints executive directors who are authorized and assigned to supervise and monitor company business activity.
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Mr. Surabhon Kwunchaithunya Chairman of Audit Committee / Independent Director
Mr. Sivarak Phinicharomma Audit Committee / Independent Director
2.
3.
Annual Report 2006
Mr. Mongkol Pao-in Chairman / Independent Director
Name / Title
1.
No.
55
55
77
Age
Certificate of Taxation UCLA, California, USA H&R BLOCK TAX SCHOOL Pasadena, California, USA
Master of Business Administration (Finance) University of Washington, USA Bachelor of Science in Industrial Engineering University of Washington, USA -Certificate of Directors Accreditation Program Class 14/2004 dated 17 May 2004 Certificate of Directors Certificate Program Class 44/2004 dated 18 July 2004
LL.B Thammasart University Barrister at law (Thai Bar)
Education
The Profile of Directors and Executive Boards
Prinsiri Public Company Limited
None
None
None
Share Holding (Share)
None
None
Relation with Management Uncle of Mr. Sakol Pao-in
2000-2001
2004- Present 2004- Present 2001- 2004
1997-2002 1995-1997 1993-1995
2003- Present
2004- Present
2005- Present
1984-1987
1989-1990
1988-1992
Period 2004-Present 1993-1997
Experience
Audit Committee Vice President, Internal Audit Assistant Vice President, Internal Audit
Chairman Justice of the Constitutional Court The Commission of Counter Corruption Chief Judge of the Supreme Court Chief Justice of Region 3 (Nakhonratchasirma) Assistant Executive Committee Committee Chairman of Audit Committee Chairman of Audit Committee Managing Director President President
Title
Page
42
Prinsiri Public Company Limited Shin Satellite Plc Shin Satellite Plc
Tycoons Worldwide Group (Thailand) PLC. Secondary Mortgage Corporation Vajir-dhanathun Finance Co., Ltd. Siam City Finance and Securities Co., Ltd.
Adkinson Securities Public Company Limited Prinsiri Public Company Limited
Ministry of Justice
Company Prinsiri Public Company Limited The Constitutional Court of the Kingdom of Thailand Institute of Police Administration Development Royal Thai Police Ministry of Justice
Ms. Siriluck Kovitchindachai Director / Chairman of Executive Committee / Managing Director
Mr. Kwanchai Mongkolkittaveepol Director /
5.
6.
Annual Report 2006
Mr. Amnat Ngamsuriyarote Audit Committee / Independent Director
Name / Title
4.
No.
Prinsiri Public Company Limited
45
57
52
Age
Experience in Real Estate business for more than 15 years
Master of Arts in Public Administration, Minnesota State University Bachelor Degree in Political Science, Chaingmai University -Certificate of Directors Accreditation Program Class 14/2004 dated 17 May 2004 Certificate of Directors Certificate Program Class 44/2004 dated 18 July 2004 Bachelor Degree in Accounting -Certificate of Directors Accreditation Program Class 14/2004 dated 17 May 2004 Certificate of Directors Certificate Program Class 44/2004 dated 18 July 2004 Experience in Real Estate business for more than 15 years -Certificate of Directors Accreditation Program Class 20/2004 dated 8 July 2004
Education
0.75
17.42
None
Share Holding (Share)
Younger brother of Ms. Siriluck
Older sister of Mr. Kwanchai Mongkolkittavee pol / Aunt of Mr. Chaiwat Kovitchindachai
None
Relation with Management
2000 – 2005
2005- Present
1993 – 2002
1995 – 2004
2000 – Present
2521-2525 2517-2521
2004- Present 2003- Present 1987- Present 2525-1987
1992-1996
1999-2000 19961998 1994-1996
Period
Assistant Managing Director - Customer Relation
President & Managing Director President & Managing Director President & Managing Director
Audit Committee Chairman of Audit Committee Managing Director Personnel, Admin & Finance Director Internal Audit Senior Auditor
Page
43
Prinsiri Public Company Limited
Prinsiri Public Company Limited
Thai Chinda Property Co., Ltd.
Chindapong Property Co., Ltd.
Prinsiri Public Company Limited
Thai Gypsum Products Pcl. SGV Na-Thalang Co., Ltd
Prinsiri Public Company Limited Hwa Fong Rubber (Thailand) Pcl. Amnat & Associates Co., Ltd. Amex Team Advertising Co., Ltd.
Experience Title Company Digital Phone Co., Ltd. Deputy Chief Financial Officer Assistant Vice President Shin Satellite Plc Manager of Internal Audit Shinawatra International, Plc. Office Manager of Accounting & STA Group Plc. Finance Borg-Werner California, USA Director of Auditing & System Development Head of Accounting Office, Los Angeles
Mr. Sakol Pao-in Director / Director / Assistant Managing Director - dministration
Mrs. Moogda Arriyavat Director / Independent Director
8.
9.
Annual Report 2006
Mr. Chaiwat Kovitchindachai Director / Executive Director / Assistant Managing Director
Executive Director / Assistant Managing Director - Customer Relations
Name / Title
7.
No.
Prinsiri Public Company Limited
53
43
38
Age
Master degree from University of Illinois Bachelor degree from Chulalongkorn University
LL.B. Thammasat University Barrister at Law -Certificate of Directors Accreditation Program Class 20/2004 dated 8 July 2004
MBA, Ramkhamhaeng University BB (Computer Science), Ramkhamhaeng University -Certificate of Directors Accreditation Program Class 20/2004 dated 8 July 2004
-Certificate of Directors Accreditation Program Class 20/2004 dated 8 July 2004
Education
None
0.19
0.90
Share Holding (Share)
None
Nephew of Mr. Mongkol Pao-in
Nephew of Ms. Siriluck Kovitchindachai and Mr. Kwanchai Mongkolkittavee pol / Husband of Ms. Nipha Aphirattanarungr uang
Relation with Management Kovitchindachai / Uncle of Mr. Chaiwat Kovitchindachai
2003-2004
2004- Present 2004- Present
1999- Present 1995-2541 1992-1995 1989-2534 1985-1988
2003- Present
1993-1995
1996-1999
2005- Present 2000- Present
1993 – 1995
1996 – 1999
Period
Director Independent Director and Audit Committee Independent Director
Assistant Managing Director - Administration Managing Director Vice President Manager Deputy Manager Credit Control Division
Page
GM Multimedia Pcl.
44
Prinsiri Public Company Limited
Dherakupt Law Office Co., Ltd. Ekkapat Finance and Securities Pcl. Thana One Finance and Securities Pcl. Finance One Limited Phatratharakij Finance Securities
Prinsiri Public Company Limited
Experience Title Company Assistant Managing Director Chindapong Property Co., Ltd. - Marketing Assistant Managing Thai Chinda Property Co., Ltd. Director - Marketing Vice President, Marketing Assistant Managing Prinsiri Public Company Limited Prinsiri Public Company Limited Director Assistant Managing Director Chindapong Property Co., Ltd. - Construction Thai Chinda Property Co., Ltd. Assistant Managing Director - Construction Vice President, Construciton
Ms. Nipha Aphirattanarungruang
11.
Annual Report 2006
Mr. Namchai Wanaphanubeth Director / Executive Director / Assistant Managing Director - Finance
Name / Title
10.
No.
Prinsiri Public Company Limited
38
49
Age
MBA Kasetsart University B.S. (Chemistry) Ramkhamhaeng University
MBA, NIDA BA (Accounting) Thammasat University -Certificate of Directors Accreditation Program Class 45/2005 dated 27 September 2005
-Certificate of Directors Accreditation Program Class 12/2004 dated 7 April 2004 Audit Committee Program Class 1/2004 dated 9-10 August 2004
Education
0.78
None
Share Holding (Share)
Wife of Mr. Chaiwat Kovitchindachai
None
Relation with Management
1993-1995
1996-2000
2002-2004 2001-2002
2004-2006
2006- Present
1999- Present 1999- Present 1999- Present
2005- Present
1995-1997
1997-2003
Period
Assistant Managing Director – Organizational Development Director – Human Resources & Administration Department Business Owner Director – Account & Finance Department Director – Account & Finance Department Director – Account & Finance Department
Assistant Managing Director - Finance Director Financial Consultant Deputy Managing Director
Page
45
Thai Chinda Property Co., Ltd.
Chindapong Property Co., Ltd.
Business Owner Prinsiri Public Company Limited
Prinsiri Public Company Limited
Prinsiri Public Company Limited
C&M Engineering Co., Ltd. Ritthaweeland Co., Ltd. SME Trade Promotion Co., Ltd.
Prinsiri Public Company Limited
Vachira Securities Co., Ltd.
Experience Title Company Independent Director and Roynet Pcl. audit Committee Manager Dynasty Ceramic Pcl. Managing Director MCL Management Co., Ltd.
Annual Report 2006
Page
46
Note: Authorized directors who can sign to comply with the company are those with no. 1, 5, 6, 7, 8 and 10 as following. (1) Mr. Mongkol Pao-in co-sign with Ms. Siriluck Kovitchindachai, totally two persons and affix the company seal or one of them cosign with Mr. Kwanchai Mongkolkittaveepol or Mr. Chaiwat Kovitchindachai, totally two persons and affix the company seal; and (2) Mr. Kwanchai Mongkolkittaveepol or Mr. Chaiwat Kovitchindachai or Mr. Numchai Wanaphanubeth or Mr. Sakol Pao-in, either two persons signing together with the company’s seal affixed on documents used for application of land allocation permission, land-sale permission, building and construction permission, request of inspection, consolidation or separation of land title deed, permission to separate co-ownership, mortgage registration, clearance to mortgage, redemption of land plot or building, request for house ID, application to use and transfer electricity and water supply, right lease, telephone line, general request of telephone, permission to connect with roads and drainage pipes, permission to cut a curb, request for inspection of land position and area, request for land plot measure and separation, condominium registration, juristic condominium, juristic person for immovable property, usage of building, commercial location, communication including submission and receipt of any document related the Revenue Department, prosecution, submission of pleading both civil suit and criminal case, grievance or report incrimination to a police or inquiry official instead of grievance, compromising, pleading, submission and retrieving any documents related to a sued case, application for permission from government agencies or state enterprises, and certifying true copy of documents.
Prinsiri Public Company Limited
Annual Report 2006
/
// = Executive Director O = Executive
/ = Director X = Chairman
/
/
Note:
, X , @ , $ , @ , $ , @ , $ , @ , // , O , // , O , // , O , // , O / , @ / , // , O O
/ / / / / / / / O
Shin Satellite PLC
/ /
Related Companies Dherakupt C&M Law Office Engineering Co., Co., Ltd. Ltd.
@ = Independent Director
/
Amnat & Associates Company Limited
$ = Audit Committee
Subsidiaries Growed Prinventure Yotha Co., Co., Ltd. Ltd.
Mr. Mongkol Pao-in Mr. Surabhon Kwunchaithunya Mr. Sivarak Phinicharomma Mr. Amnat Ngamsuriyarote Ms. Siriluck Kovitchindachai Mr. Kwanchai Mongkolkittaveepol Mr. Chaiwat Kovitchindachai Mr. Sakol Pao-in Mrs. Moogda Arriyavat Mr. Namchai Wanaphanubeth Ms. Nipha Aphirattanarungruang
Name
Prinsiri Public Co., Ltd.
Active Position Holders of Director and Executive Boards of the Company
Prinsiri Public Company Limited
Page
O
47
SME Trade Promotion Co., Ltd.
Prinsiri Public Company Limited
Position Holders of Director and Executive Boards of the Company’s Subsidiaries Ad of 31 December 2006
Name
Mr. Chaiwat Kovitchindachai Mr. Namchai Wanaphanubeth Ms. Nipha Aphirattanarungruang Mrs. Ornruedi Na-Ranong Mr. Thanapol Sirithanachai Mr. Titiwach Chaiyatanawat Mrs. Pailin Vichatevichai
Growed Yotha Company Limited
Prinventure Company Limited
/ , //
/ , // / , // / / , // / , //
/ /
Note: / = Director // = Executive Director
Remuneration of the Directors and Management Cash remuneration Remuneration for a directorship The Company’s remuneration for a directorship consists of meeting allowance and annual bonus. In 2005 and 2006, these were amounted to 2,080,000 and 1,850,000 Baht respectively as shown in following table.
Name 1. Mr. Mongkol Pao-in 2. Mr. Surabhon Kwunchaithunya 3. Lt. Sivarak Pinijarom 4. Mr. Amnat Ngamsuriyarote 5. Ms. Siriluck Kovitchindachai 6. Mr. Chaiwat Kovitchindachai 7. Mr. Kwanchai Mongkolkittaveepol 8. Mrs. Moogda Arriyavat 9. Mr. Namchai Wanaphanubeth 10. Mr. Sakol Pao-in Total
Annual Report 2006
2005 Meeting Bonus Allowances 145,000 200,000 245,000 200,000 245,000 125,000 245,000 125,000 12,500 50,000 12,500 50,000 12,500 50,000 145,000 100,000 5,000 50,000 12,500 50,000 1,080,000 1,000,000
2006 Meeting Allowances 100,000 200,000 200,000 200,000 10,000 10,000 10,000 100,000 10,000 10,000 850,000
Bonus 200,000 200,000 125,000 125,000 50,000 50,000 50,000 100,000 50,000 50,000 1,000,000
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Prinsiri Public Company Limited
Remuneration for executive directors and management
remuneration Total salary Total bonus Grand total
Number 5 5 5
2005 remuneration (Baht) 6,400,000 1,800,000 8,200,000
Number 6 6 6
2006 remuneration (Baht) 8,640,000 2,000,000 10,640,000
Other remuneration -None-
Human Resources Number of employees As at 31 December 2006, the Company has totally 240 employees excluding directors and management team. Number of employees can be classified by line as following. Line Administration Sales and Marketing Construction Finance Customer Relation Organizational Development Total
Number (person) 10 58 117 17 15 23 240
For three previous years, the company has had none of labor depute. Remuneration for employees The total remuneration for employees paid to all that were employed during the year. The remuneration includes salary, wages and bonus. In 2005 there were 189 employees with remuneration amounted to 46.47 million Baht. In 2006 the total of 240 employees are paid 66.39 million Baht. Human Resources Development Policy The Company has a policy to support the development of human resources. This enables our employees to further develop their capabilities for their career advancement. The Company’s human resources department regularly organizes trainings for all levels of operational and project employees. Regarding result of training survey, some regular and special courses are arranged for general employees and executives.
Annual Report 2006
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Prinsiri Public Company Limited
Corporate Governance In order to develop sustainable competitive capability and growth as well as add value to long-term shareholders and other stakeholders, the Company commits on the management under principles of good corporate governance in compliance with the laws concerning securities and stock exchange and regulations, announcement, order or specifications of the Stock Exchange of Thailand. Good governance is a value driver, leading to enhanced corporate credibility and wealth through the release of complete and reliable information to investors, business associates, and various stakeholder groups. The Company set up its good corporate governance policy and has implemented it since 3 April 2004. Practice manual for good corporate governance and code of conduct were prepare and distributed as guidelines for the Company’s staff. The Company’s operation on good corporate governance can be summarized as following. 1.
Objectives of Corporate Governance Policy The Board of Directors concentrates on good corporate governance. Two particular committees are appointed to monitor important tasks under principles of good corporate governance. They are Audit Committee and Risk Management Committee. Members of the Committees meet the qualifications specified in Section 68 of the Public Limited Liability Company Act B.E. 2535 and announcement No. 12/2543 of the Office of Securities and Exchange Commission. The Committees are clearly assigned their responsibilities concerning good corporate governance. Their scope of work is followings. 1. Provide guidelines for good corporate governance to the Boards of Directors. 2. Provide comments and suggestions about good corporate governance to the Board of Directors. 3. Monitor operation of Committees and management to be in compliance with the Company’s good corporate governance. 4. Review guidelines of the Company’s good corporate governance by comparing with international practice and report to the Board of Directors. The Board of Directors set the objectives of the Company’s good corporate governance: “The Company commits to deliver its business under related laws and regulations with transparency and fairness. Risk estimation, control system and sufficient information disclosure shall be adequately provided for business operations which shall be consistently followed up. This is to enhance the Company’s sustainable wealth and maximally benefit shareholders and stakeholder groups under ethical and moral principles.” In addition, the Company uses campaign to promote importance of strict practices under the principles of good corporate governance. Policy and information concerning the Company’s good corporate governance is distributed and promoted through the Corporate Governance Manual and Code of Conduct Manual. The Company also provides convenience to all employees, shareholders, investors, stake holders and related parties in reaching data for reference by posting it on the Intranet and Website both in Thai and English.
Annual Report 2006
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Prinsiri Public Company Limited
2.
Shareholders’ Right The Company realizes and concerns the right of shareholders by operating and supporting the shareholders to utilize their right. In addition the Company also supervises indiscriminate practice and protects equal basic right protection. Ordinary shareholders meeting of the Company shall be held once a year within 4 months after the end of fiscal year. In case of emergency requiring resolution from the shareholders’ meeting, the Company will arrange extraordinary meeting at by case basis. Before the date of meeting, the Company will send meeting invitation to shareholders at least 14 days in advance and announce that invitation in daily newspaper at least 3 day prior the date of meeting. The invitation must be publish in one Thai newspaper and one English newspaper at least 3 day consecutively. The announcement has to provide information of meeting invitation with details of meeting agenda and meeting documents in advance before the documents are sent to the shareholders. In order to provide time to study data adequately prior getting information in form of hard copy, the Company publishes such information on its Website under the section “Investor Relations” both in Thai and English at least 30 days before the meeting. In addition, the shareholders can propose agenda to the meeting via the Company’s Website. In the date of meeting, the Company will provide convenience to all shareholders equally. Registration for the meeting will be arranged 2 hours before the meeting commences. Meeting venue and time is considered with the attendances’ convenience. In shareholders meeting, the Company will pay attention and provide opportunity to each shareholder equally. Before the meeting commences, Chairman of the meeting will clearly explain regulation used in the meeting and voting procedures. During the meeting, the Chairman will let participates to express opinions and suggestions and ask question for each agenda. He/she will supervise adequate and appropriate discussion. For explaining and answering questions, the Chairman and executives will pay attention to each issue by answering it clearly and straight forward. Counting of votes will be practiced with method of international guidelines and transparency. Minutes of the meeting will be recorded accurately and completely in order to enable inspection by the shareholders. The minutes are organized for easy and convenient auditing. In addition the Company has Investor Relations to serve as center of accurate, complete, consistent, in time, transparent and equal information disclosure and information technology of the Company to shareholders, investors, reporters and public who interested in the Company’s securities. This is to provide convenience for the Company’s data and information technology such as corporate information, financial statements, annual report, meeting invitation, information reported to the Office of Securities and Exchange Commission and activities related to securities. The Company also publishes those data on its Website under the section “Investor Relations” both in Thai and English. The shareholders can contact Investor Relations directly or via the Website. 3.
Stakeholders’ Right The company is well aware of the Stakeholders’ right namely the employees and company’s executives or external stakeholders namely trade partners, competitors, creditors or any other institutions concerned. In order that the rights of all these stakeholders are well taken care of, the company set it clearly as the policy
Annual Report 2006
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Prinsiri Public Company Limited
for good corporate governance and code of conduct. Each stake holder has the right as following. - Employee : The Company deals with employees without discrimination and provides fair and appropriate remuneration. - Trade partners and payables : The Company deals with trade partners and payables with fairness according to trading conditions and mutual agreement. - Customers : The Company takes care and is responsible for customers by producing quality standard products and meeting customers’ needs. Quality products, services and reasonable are considered as important elements. - Competitors : The Company practice in good competition in order to keep up norm of competition. - Community : The Company commit on environment caring by being responsible for clean of impact towards communities’ and society’s environment. 4.
Shareholders Meeting In the year 2006 there was an Ordinary Shareholders Meeting no. 1/2549 on 24 April 2006. For this meeting, the Company sent shareholders meeting invitation with details of agenda, comments of directors, minutes of previous meeting, annual report, meeting document, and power of attorney with description of such use. Those documents were sent more than 7 days prior the date of meeting. The Company provided the mentioned documents to every shareholder listed in the book of shareholders as at the date of closing. The Company also announced the meeting invitation on daily newspaper at least 3 days in advance, one in Thai issue and one in English issue at least 3 consecutively. In addition, independent directors were appointed as proxy of shareholders who would like to assign those directors to attend the meeting on behalf of them. However, shareholders could give power of attorney to any person or appointed independent directors. For the shareholders meeting in 2007, the Company will distribute information of meeting invitation with details of meeting agenda and meeting documents to shareholders in advance before sending them documents and publish on its Website under the section of Investor Relation both in Thai and English at least 30 days prior the date of meeting. Shareholders can propose an agenda via the site. In the shareholders meeting of previous year 2006, 10 members of Board of Directors attended the meeting. The Chairman of the Board acted as the chairman of the meeting. He explained description of meeting attendants, how to vote, vote counting and how to use a voting card. He declared the results of each agenda clearly and transparently. He also provided attendants opportunity to ask and comment at appropriate and adequate time. Directors and executives answered questions clearly. The meeting session processed completely and accurately as stated by laws. Regarding convenience provided to shareholders, registration was provided 2 hours before the meeting commenced until it ended. Snakes were served during the 1.30 hours of meeting brake. Minutes of the meeting was recoded accurately and completely to enable inspection by shareholders. The minutes were organized for easy and convenient auditing.
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Prinsiri Public Company Limited
After the meeting, shareholders can access the minutes of meeting via the Company’s website under the section “Investor Relations”. 5.
Leadership and Vision The Board of Directors is composed of directors who are qualified, skilled and experienced in business activities under the framework of the law, objectives, Articles of Association, and resolutions passed at shareholder meetings. The discharge of these duties shall be executed responsibly, honestly, and prudently according to good practices. The Board of Directors shall take part in establishing company’s objectives, strategies, goals and policy, and shall approve business plans and company’s budget, and shall then follow up the operation result to comply with the established objectives, policies and business plans for the maximum benefits of the organization and shareholders. In the previous year the Executive Committee proposed an annual business plan and fiscal budget to the Board of Directors. After being discussed and commented by the Board and Committee, those plan and budget were adjusted and approved. 6.
Conflicts of Interest The Company’s policy concerning conflict of interest is based on the principle that every employee must perform his responsibilities in the best interest of the Company. Employee actions and decisions shall not be influenced by personal gains or nepotism, and duties shall be executed in strict accordance with the Company’s code of conduct. The Board of Directors supervises possible related transaction carefully and use of internal information as following. 1. Possible related transaction It is determined, as a measurement to prevent conflicts of interest which may arise from making connected transactions between the Company and other persons, that the executives and stakeholders shall not be able to make approvals on such transactions. The said transactions must be reported to the Audit Committee for comments and the Board of Directors after on. Those must be in compliance with the laws concerning securities and stock exchange and regulations, announcement, order or specifications of the Stock Exchange of Thailand. 2. Supervision of use of internal information The Company’s policy prohibits directors and executive to use the Company’s information neither directly or indirectly for personal benefits according to description of supervision of use of internal information. In every meeting of Board of Directors, the Chairman shall inform the meeting to follow the policy concerning conflict of interest. A related or concerned director of possible conflict of interest has to report to the meeting in order not to vote or comment for that agenda. The Audit Committee shall carefully consider appropriation and reason of related transaction, conflict of interest and accounting standards specified by The Institute of Certified Public Accountants and Auditors of Thailand before propose to
Annual Report 2006
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Prinsiri Public Company Limited
the Board of Directors for approval. Those transactions must be recorded and disclosed in every quarter report, annual report and annual information form. 7. Business Ethics Realizing importance of practice for ethics and morality, the Company developed its Code of Conduct and has implemented that code since 3 April 2004 as practice guidelines for directors, executives and employees to perform and deal with related group with fairness. This supports sustainable growth to the organization. All directors, executives and employees have to follow and perform in compliance with the code strictly. In addition, the Company commits to promote utilization of this code among raw material suppliers, contractors, consultants and partners. The Company widely distributes code of conduct to directors, executives and employees through Intranet and website under the section “Investor Relations”. 8.
Counterbalance of Non-executive Directors The Company have counterbalance of non-executive directors by do not let a person or group to solely make a decision. In order to establish a counterbalance mechanism and effective administration, the Company appointed 10 directors as following. - 5 executive directors - 5 non-executive directors There are five independent directors which only some are also executive directors, representing 50 percent of all directors. Independent directors can serve as shareholders’’ representatives as an dependence. Therefore, there is appropriate counterbalance. 9.
Merging and Splitting of Titles The Company clearly separates the roles and authority of directors and management. In order to create a healthy balance between the supervision and management of the Company’s business, the Chairman of the Board of Directors is not the same person as the Managing Director 10.
Remuneration of Directors and Executives The remuneration of directors and executives shall be set at an appropriate amount which is in the same level of the industry. There shall be no overpaid remuneration. The remuneration of the Directors shall be paid as meeting allowance according to the number of attendance which shall be approved by the Shareholders Meeting. For the Executives, the company shall provide remuneration according to the performance of each executive and the company operation result. The company is trust that the said remuneration is sufficient to motivate and maintain qualified personnel. In 2006, the Company provided remuneration of the Board of Directors as approved by the shareholders’ meeting for allowance of meeting and bonus of totally not excess 2,480,000 Baht. Executive directs entitled to receive remuneration in form of salary and bonus. For more information of remuneration of directors and management, please see article 9.3: Remuneration of Directors.
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Prinsiri Public Company Limited
11.
Directors Meeting It is the company policy to hold a directors meeting at least once every three month and additional meeting may be held should the needs arise. In each meeting, the agenda must be stated clearly and appointment letters shall be distributed 7 days prior to the meeting so that there is sufficient time for the directors to study all information before attending the meeting. Except in case of emergency to reserve right or benefit of the Company, other method of making appointment shall be used and date of meeting is earlier. The meeting takes at least two hours. In the meeting, all directors have chance to discuss and openly express comments. The Chairman of the Board of Directors shall be the person who processes conclusion from the meeting. Any directors who take part of related transaction of considered issue have to leave the meeting during that agenda. The record of meeting must be made in writing and the minutes of meeting that has been certified by the Board of Directors must be filed so that it can be examined by the Board of Directors and persons concerned at all times. In 2006 the Board of Directors held four general meetings. Please see attendances by directors in structure of management. 12.
Sub-committee For the Company’s effective performance, Board of Directors appoints special two committees to monitor important tasks. They are Audit Committee and Risk Management Committee. Description of authority and duties are in subject of Audit Committee and Risk Management Committee. The Board of Directors assigns the Audit Committee to supervise good corporate governance. The scope of authority is following. 1. Provide guidelines for good corporate governance to the Boards of Directors. 2. Provide comments and suggestions about good corporate governance to the Board of Directors. 3. Monitor operation of Committees and management to be in compliance with the Company’s good corporate governance. 4. Review guidelines of the Company’s good corporate governance by comparing with international practice for improvement and report to the Board of Directors. 13.
Internal Control and Internal Audit System In order to achieve effective results both in executive and operation levels, the company has specified clear and appropriate criteria and procedures in Internal Control System. The duty and authority of operating staff and executives are stipulated clearly in written. The duties of operator staff, supervisor, controller and evaluator are separated to achieve proper counterbalance and counter investigation. Apart from this, there are effective internal control system and risk management covering all administration including management control, financial control and operational control. The said system is follow-up and assessed regularly by Audit Committee to ensure its efficiency. The Company appoints Risk Management Committee who is assign to oversee organizational risks in overall, evaluate risks and plan structure of risk management in order to manage risks at the acceptable level. Those risks include financial risks, operation risks, business risks and event risk. The Committee also has to analyze and assess possible risks and trends impacting the Company both internally
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Prinsiri Public Company Limited
and externally. Risk management report has to be submitted to the Boards of Directors. The Board of Directors is highly concerned about Risk Management. Determination and estimation of business risk together with any risk which might affect the company’s operation. Risk Management Committee developed risk management manual for organizational risk management as guidelines to determine and manage risks. In 2006 the Company provided training on risk management to all staff. Internal Audit Office is also set up from out source to assure that the main operation and financial activities of the company are effectively carried out in accordance with its policy, laws and related regulations. In order that the Internal Audit Office can work independently on investigation and counterbalance, the Board of Directors has specified that the Internal Audit Office report directly to the Audit Committee and be evaluated by the Audit Committee. 14.
Report of the Board of Directors The Board of Directors shall be responsible for the company’s financial budget and financial information that appear in the annual report. The financial budget shall be prepared in accordance with the accounting standards generally approved in Thailand. The financial budget shall be made regularly under appropriate policy with careful judgment and best forecast. Important information shall be revealed sufficiently in the financial report notes. The Board of Directors has an opinion that the internal control of the Company is at the appreciated level in overall and can build trust reasonably for accountability of the Company’s financial statements. 15.
Relationship with Investors Board of Directors realizes the Company’s information neither relevant nor irrelevant to financial position which might influence the decision making of investors and stake holders. Company then has policy to disclose information accurately, straight with the truth, trustful, consistent, in time and in compliance with laws, rules, regulations related information disclosure of the Office of Securities and Exchange Commission. The management follows this policy strictly. In addition to disclose information according to the stipulation of the Stock Exchange of Thailand and the Office of Securities and Exchange Commission, the Company set up Investor Relations which is responsible for information disclosure of the Company to shareholders, investors, analysts, reporters and public who are interested in the Company’s securities. In 2006 the Company arranged activities to provide information of the Company both directly and indirectly through 6 road shows in Thailand, 8 analysts meeting, 1 meeting with minority investors, 3 site visits, 2 participations in Opportunity Day and press release. When the Company has important investment or activity, the information will publish via television programs from time to time. In addition, Investor Relations is keeping on providing information and answering questions inquired by investors and reporters via e-mail. Further more, the Company also provide company information, performance report, financial statements, press release, securities information, securities activity, annual report, shareholders meeting invitation, minutes of meetings, and other information via its website: www.prinsiri.com, under section Investor Relations. The data on this channel is always updated.
Annual Report 2006
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Prinsiri Public Company Limited
Supervision of the Use of Insider Information The Company has prohibited its executives and directors from the use of insider information which had not been made public for their own interests including trading of the Company’s shares. In doing so, the Company adopted the following policies and methods in monitoring the use of insider information by its executives and employees for their own interest: 1. Informing its executives of their duty to report their holdings of the Company’s shares and related penalties as stipulated under the sections 59 and 275 of the Securities and Stock Exchange of Thailand Act, B.E. 2535. 2. Sending a circular letter informing its executives that those who have learned of insider information of significance that will affect the stock prices must refrain from trading the shares for one month before the financial statement or the information is made public. The Company also informs parties related to the insider information that they must not disclose it to others until it is made public. 3. The Company implements prevention to use the Company’s information. Any unit getting insider information shall not disclose such data to any party or unconcerned person. In order to monitor and inspect said operation, apart from requiring its directors and executives to report on the changes in their holdings of the Company’s shares to the Securities and Exchange Commission as stipulated under section 59 of Securities and Stock Exchange Act, B.E. 2535, the Company requires a copy of the report on the same day it is sent to the Securities and Exchange Commission of Thailand. The Company has not set out any disciplinary punishment for its executives who fail to comply with the aforementioned measures. However, the Company had informed its executives of penalties stipulated under section 59 of the Securities and Stock Exchange Act, B.E. 2535 for breaching the aforementioned measures. This supervision of the use of insider information is very important for the Company as it becomes part of code of conduct that directors, executives and employees should strictly follow.
Annual Report 2006
Page
57
Prinsiri Public Company Limited
Internal Control The Company is highly concerned about Internal Control. The Board of Directors assigns the Audit Committee to review assessment of internal control system by concentrating on its sufficiency and appropriate criteria for business operation. The system must obtain efficiency and effectiveness of procedures. It should promote resource utilization and asset maintenance while prevent error, mistakes, loss, waste and depravity. Accounting system and financial statements have to be accurate and reliable as well as in compliance with regulations related to the Company’s business. In order that the Internal Audit Office can work independently on investigation and counterbalance, the Company employs out source auditor and has specified that the Internal Audit Office report directly to the Audit Committee. In 2006 the Audit Committee reviewed assessment of internal control reported by the Internal Audit Office as following. 1. Organization and environment Executives and employees possess positive attitude that is advantage for Internal Control. The management pays attention to morality, code of conduct and honesty. Assignment and authority given to staff is appropriate. Policy related to human resources is attractive and support employees. In overall, the Company’s organization and environment is suitable and promotes effectiveness and efficiency of the Internal Control. 2. Risk management The Company set out a policy and guidelines of risk management in order to mange risks under international standard. Risk Management Committee oversees risks of the organization including those in management, finance, business run, operation, administrating and managing safety, health and environment, and other risks related to the Company’s business. The Risk Management Committee specifies organizational risks and covers all important activities. The plan to manage risks to be at acceptable level is set up and inspected quarterly by the Committee in order to monitor risk management and prevent possible damage or opportunity loss. 3. Operation control The Company has sufficient systems that are adequate, effective and efficient. Practice regulations are written and operating at high risks is specified. Control mechanism is set up to control and eliminate mistakes. There is performance assessment performed by the management and KPI is adopted with all employees in the organization. Internal control for important activities, such as administration, finance, accounting, purchase and human resources, are appropriate and adequate. 4. Information technology and communications The Company has system of information technology and communications related its operation. Financial and performance report, practice under policies and regulations and information technology obtained from external sources are communicated to the management and internal users in forms that support receivers of such data can perform their duties efficiently and effectively. The Company’s information technology and communication system is appropriate for its business.
Annual Report 2006
Page
58
Prinsiri Public Company Limited
5. Follow-up mechanism The Company has continuously followed up assessment of Internal Audit and evaluated its performance by requiring report of performance after audit plan from each line and regularly assessing its work as part of normal work procedure of the management, supervisors and related persons. In addition, there are quarter and annual performance assessments of Internal Audit Office. Moreover, suggestions from auditing of financial statements are provided by the Company’s auditor. The Board of Directors always reviews those reports of risk management. When any point needs to be improved, procedures and follow-up steps are set to insure that that qualifier from inspection will be corrected. The Audit Committee reviewed the Internal control system evaluated by the Internal Audit and did not find any significant problem or default. This agrees with comment of the Company’s auditor. The Company’s internal control system is sufficient, effective and efficient. At the Company’s Board of Directors meeting No. 1/2006, the Board evaluated the sufficiency of the Company’s internal control. The Board was in the opinion that the company had adequate internal control in terms of transactions with major shareholders, board members, executives and parties related to them. As for internal control system, the Board concluded that it was adequate and there was no significant error found. Therefore, it can assure that the Company has effective internal control system and improvement as advised by the independent internal auditor for the maximum benefits of corporate management.
Annual Report 2006
Page
59
Yotha
Annual Report 2006
contractor and materials distributor
1. Growed Co., Ltd.
Related Person/Juristic Person
-Subsidiary, holding 99.99 percent of registered capital
Relationship
(1.1) Company - Construction material paid - Contractor paid - Account payable - Retention - Deposit guarantee for bank overdraft
Transaction Category
52.27 73.41 -
2005 91.45 42.41 -
2006
Value of Related Transaction (Million Baht)
14.64 6.26 -
9.14 6.45 5.00
Balance (Million Baht) As of 31 December 2005 2006
Related Transactions
Value and balance of related transaction with relate person
Prinsiri Public Company Limited
Page
60
Such retention is incurred from employing Growed Yotha Co., Ltd., for construction such as roofing work. The retention is received according to the contract of contractor at the normal rate like other contractors of the Company. Since Growed Yotha is the Company’s subsidiary, this transaction is expected to post.
The aforementioned account payable was incurred by those above purchase. Growed Yotha Co., Ltd., provided payment term of 30-60 days as common payment manner in trading business.
Prinsiri Public Company Limited holds shares of Growed Yotha Co., Ltd., as to have this subsidiary as its business unit in material cost control for the Company’s project development and for potential competition. The company purchases materials, such as cement, door panel, wooden strips, steel, floor panels and etc, and employs Growed Yotha Co., Ltd., as one of its contractors. Offered selling price and construction cost of Growed Yotha Co., Ltd. , is similar to that proposed to other contractors. However, price of some category of materials sold to the Company is slightly lower than sold to other contractors. That is because Growed Yotha is the Company’s subsidiary. Future material purchase is expected.
Reason of the Transaction
Annual Report 2006
Related Person/Juristic Person
Prinsiri Public Company Limited
Relationship
Transaction Category
2005
2006
Value of Related Transaction (Million Baht)
2005
2006
Balance (Million Baht) As of 31 December
Page
61
The Audit Committee has examined this transaction and determined that Deposit guarantee for bank overdraft for Growed Yotha Co., Ltd., provided liquidity to the Company’s Subsidiary than did not have any asset to do that itself. In addition, the Company holds 99.99 percent of this subsidiary’s shares.
Deposit guarantee for bank overdraft is a transaction in the year 2006. The Company uses a land plot of 275 war squares in Soi Jamjan (the Company’s AfterSale Service Office) as deposit guarantee for bank overdraft for Growed Yotha Co., Ltd., in order to increase the subsidiary’s liquidity. Since the subsidiary does not have any asset worth for deposit guarantee for bank overdraft, the Company has to use that land to deposit for its subsidiary. This transaction will appear in the future because Growed Yotha is the Company’s subsidiary.
The Audit Committee has examined that mentioned transactions of paid, account payable and retention and determined that they are reasonable for business of the Company and Growed Yotha Co., Ltd., is the Company’s subsidiary.
Reason of the Transaction
Annual Report 2006
Installer of curtains, blinds and wallpapers as well as distributor of furniture
2. Thai Chinda Curtain Company Litmited
Related Person/Juristic Person
Prinsiri Public Company Limited
Mr. Santi Kovitchindachai (major shareholder) is a managing Director. He is brother of Ms. Siriluck Kovitchidachai. At present he holds the Company’s shares at 14.18 percent of registered capital.
Relationship
(2.1) Company - Paid (Curtain) - Account payable
(1.2) Prinventure Company Limited - Construction material paid - Contractor paid - Account payable - Retention
Transaction Category
15.94 -
-
2005
20.62 -
33.21 9.20 -
2006
Value of Related Transaction (Million Baht)
2.91
-
2005
2.09
4.63 0.46
2006
Balance (Million Baht) As of 31 December
Page
62
The Audit Committed has examined the transaction and determined it to be reasonable.
Account payable was incurred by the above purchase. Thai Chinda Curtain Company Limited provides term of payment at 30 – 60 day, which is normal practice in trading business.
The Company purchased curtain, blinds and wallpaper from Thai Chinda Curtain Company Limited. The sold price is similar to that offered by other suppliers. The Company has purchase with this company for years because of product’s quality, especially its curtain that is well known for the sewing quality. In addition product delivery is on time. Therefore, this transaction is expected to appear in the future.
The reason in consideration of the Audit Committee is like above explanation (1.1) in terms of material purchase, contractor employment, account payable and retention because Growed Yotha Coompany Limited and Prinventure Company Limited are the Company’s subsidiaries. Future purchase of materials is expected to continue.
Reason of the Transaction
Annual Report 2006
Real Estate developer, housing with land and condominium
3. Prinventure Company Limited
Related Person/Juristic Person
Prinsiri Public Company Limited
Subsidiary company of Prinsiri PCL, which holdings of 51 percent of registered capital
Relationship
(3.1) Company - Short-term borrowing - Interest receivable - Interest earned - Management revenue - Loan guarantee
Transaction Category
45.90 1.80 2.45 -
2005 208.38 14.08 10.47 -
2006
Value of Related Transaction (Million Baht)
45.90 1.80 243.22
2005 248.28 15.88 544.12
2006
Balance (Million Baht) As of 31 December
Page
The Audit Committed has examined the transaction and determined it to be reasonable by percentage of holding and will increase liquidity of Prinventure. Moreover, the interest rate of the market rate, and maximizes benefit to the Company and subsidiary.
63
The Company’s management revenue is in compliance with the joint venture contract. The management charge is 350,000 Baht per month per project. The selling management is 2 percent of sales. Since Prinventure is the Company’s subsidiary, this transaction will appear in the future.
Interest receivable and interest earned from the short-term loan is in compliance with the joint venture contract.
Prinventure Co., Ltd. is a joint venture company between the Company and Univenture PCL. The Company held 51% of registered capital. The shortterm loan is to increase liquidity of Prinventure according to the joint venture contract stated that Prinventure can borrow loan from shareholder at proportion of holdings but not excess of 500 million Baht with interest at MLR+2 per year. Since the borrowed amount is lower than the maximum loan, that borrowing amount is expected to continue.
Reason of the Transaction
Annual Report 2006
Related Person/Juristic Person
Prinsiri Public Company Limited
Relationship
Transaction Category
2005
2006
Value of Related Transaction (Million Baht)
2005
2006
Balance (Million Baht) As of 31 December
Page
64
The Audit Committed has examined the transaction and determined it to be reasonable by percentage of holding and will increase liquidity of Prinventure for project development. This maximizes benefit to the Company and subsidiary.
Loan guarantee is the transaction since 2005 as deposit guarantee for bank overdraft, aval, long-term loan and letter of guarantee. It is guarantee by share proportion according to the joint venture contract. This guarantee is for project development of Prinventure Company Limited. Since that company is the Company’s subsidiary, this transaction is expected to continue.
Reason of the Transaction
Annual Report 2006
4. Mr. Santi Kovitchindachai
Related Person/Juristic Person
Prinsiri Public Company Limited
Mr. Santi Kovitchindachai is Ms. Siriluck ‘s brother. He holds 14.18 percent of paid up capital.
Relationship
(4.1) Company - Short-Term Borrowing - Interest Expense
Transaction Category
20.00 0.70
2005 20.00 0.77
2006
Value of Related Transaction (Million Baht)
20.00 -
2005 20.00 -
2006
Balance (Million Baht) As of 31 December
Page
65
The Audit Committee has examined the transaction and determined that short-term borrowing and interest expense is reasonable. It is borrowing for the Company’s cash flow and land purchase. In addition, the interest rate is lower than other issuers. This benefits the Company.
Interest expense was incurred by above mentioned short-term loan of promissory note which offering lower rate when comparing with other issuers.
The Company has borrow loan from Mr. Santi Kovitchindachai in form of promissory note that has to be paid when request. In 2005 and 2006 the loan was calculated at the rate of 3.50 and 5.00 per year respectively. This amount of money is used in the Company’s cash flow and buying land. In the future, if the interest of Mr. Santi Kovitchindachai is not higher than other promissory note issued by other issuer of the Company, this transaction will continue.
Reason of the Transaction
Annual Report 2006
6. Mr. Kwanchai Mongkolkittaveepol
5. Ms. Siriluck Kovitchidachai
Related Person/Juristic Person
Prinsiri Public Company Limited
Director / Executive Director / Assistant Managing Director – Customer Relations and shareholders He holds 0.75 percent of paid up capital.
Director / Chairman of Executive Commitee / Managing Director and Shareholder She holds 23.22 percent of paid up capital.
Relationship
(6.1) Company - Sold (vehicle)
(5.1) Company - Reimbursement - Advance paid
Transaction Category
-
3.00 3.00
2005
1.50
-
2006
Value of Related Transaction (Million Baht)
-
-
2005
-
-
2006
Balance (Million Baht) As of 31 December
Page
66
The Audit Committee has examined the sold transaction and determined that it is reasonable. The car was not used for benefit of the Company. Then it should be sold. In addition the selling process was fair. The sold price was normal when compared with that in the market.
The Company sold a car to Mr. Kwanchai Mongkolkittaveepol because it did not be used in the Company’s business. The car was sold by auction. Mr. Kwanchai won the auction with the highest offered price.
The Audit Committee has examined the transaction of advance payment and determined it is reasonable. There is no interest or commission and for liquidity of land purchase which benefits the Company.
In 2005, the Company received and refund advance payment from and to Ms. Siriluck Kovitchidachai as down payment of land purchase of the Company that she paid in advance for the Company. That was because of case emergency. That advance payment was reimbursed to her by the Company. Therefore, this transaction did not appear in 2006. In the future, this activity may occur by case and emergency.
Reason of the Transaction
Annual Report 2006
7. Mr. Sakol Pao-in
Related Person/Juristic Person
Prinsiri Public Company Limited
Director / Executive Director / Assistant Managing Director – Administration and Shareholder He holds 0.19 percent of paid up capital.
Relationship
(7.1) Company - Sold (Condominium)
Transaction Category
-
2005 2.65
2006
Value of Related Transaction (Million Baht)
-
2005 -
2006
Balance (Million Baht) As of 31 December
Page
67
The Audit Committee has examined the sold transaction and determined that it is reasonable because the selling was performed with normal price and conditions. The discount rate is as same as that offered to other VIP customers.
The Company sold two units of the Pulse, Ladprao 44 to Mr. Sakol Pao-in. The selling price was under general conditions with the Company’s discount rate for VIP customers as offered to employees of commercial banks that provide loan to the Company or contact civil officers.
Reason of the Transaction
Prinsiri Public Company Limited
Measures/procedures of related transaction The Board of Directors agreed that related transactions must be approved by the Audit Committee. However, such related transactions must be carried out to the best interests of the Company. Prices for related transactions are made in line of prevailing market prices which can be compared to those offered by other suppliers. The terms of related transactions are to be consistent with normal trade practices. Other suppliers are also offered the same and equal opportunity to submit their prices. The Company strictly complies with the Securities and Stock Exchange Act including regulations set by the Stock Exchange of Thailand regarding related transactions and trading of company assets. Those with potential conflicts of interests for connected transactions are not granted to vote in those transactions and are to report this information to the Board of Directors. Policy or trend of related transactions The Company has definitely set a related transaction approval procedure and a related person. The audit committee will be the person who gives comment on the necessity, reason, and suitability of the transaction by stating the conditions to be in accordance with the standard price in the market which can be compared with others’. The company will have the audit committee or an independent expert to express the opinion in the transaction occurred in order to use for further consideration of the committee and shareholders. For future related transactions, such as purchase of curtain, blinds and wallpaper with Thai Chinda Co., Ltd, depend on reason and necessity of the Company. Price offered and paid for these transactions must follow the market standard and is fair. The Audit Committee will be the person who comments on such posting and compares the price with other suppliers. In case a related transaction occurs with an executive and a group of conflict of interest will benefit in some way shall not have a hand in approval any mentioned transaction. The audit committee will be the person who gives comment on the necessity, reason, and suitability of the transaction by stating the conditions to be in accordance with the standard price in the market which can be compared with others’. Measures to protect public investors In order to protect public investors, if in the future there is any related transaction that occur with conflict of interest, benefits or possible conflict of interest, the Company will arrange that transaction through the meeting in which the Audit Committee attend. This will let the Committee to oversee such transaction to be fair and reasonable. In case that the audit committee is not familiar with the transaction details, the company will instead have an independent expert or the Company’s accounting auditor to express the opinion in the transaction occurred in order to use for further consideration of the committee and shareholder. The Board of Directors will ensure the company abides by security law and SET regulation, announcement, and declaration as well as follow the obligation regarding the information disclosure of the connected transaction, the asset obtained or distributed according to the accounting standard set by the accountant association. However, this excludes related transactions that are common business transaction and their policy of price setting and conditions is the market price or does not differ from the third party.
Annual Report 2006
Page
68
Prinsiri Public Company Limited
The Company will disclose the related transaction in the remarks of the audited financial statements. Its policy is to post related transaction only when it involves with main business. At present the Company has the Audit Committee to monitor relate transactions and internal control system for corporate transparency and enhancement of investors’ trust. Moreover, the Company adopts the principal of decreasing all business risks by having the Risk Management Committee oversees this in other way.
Annual Report 2006
Page
69
Prinsiri Public Company Limited
Financial State and Performance Analysis Analysis of Operation Results Overview picture of previous performance Although there are many factor affecting real estate development business, housing in real estate industry has grown up. This should be result of customers’ need that is quite high and progressive. Each year the Company has opened new projects. In 2006 the Company started to receive revenue from condominium project. Since 2005 the Company has implemented policy to recognize revenue throughout the year, not only in few quarters, by planning project development to be appropriate and in compliance with revenue recognition of each quarter. At present the Company processes better revenue in each quarter. In 2005 demand of cheaper housing increased. Then the Company turned to develop more allocating housing and condominium for this target group. Major revenue of the Company or more than 95 percent of revenue comes from property sales. In 2004 – 2006, the Company had more gross profit ratio from 28.76 percent to 30.92 percent and 32.70 percent respectively by controlling and managing cost of contraction through research and development and utilization of construction techniques and technology. Apart from real estate revenue, the Company has received revenue from material selling since 2005 through Growed Yotha Company Limited, the Company’s subsidiary. This revenue is approximately 3.00 of total revenue. In 2006 the Company and subsidiaries opened 9 new projects. As of 31 December 2006, the Company had active 17 projects, valued 6,860.56 million Baht, total value contract of 3,621.39 million Baht or 52.79 precent of active projects. At the end of 2006, Euro Prime project, On Nut, which was developed by Prinventure Company Limited, the Company’s subsidiary, had gradually ownership transfer and recognized revenue. In 2006 the Company and subsidiaries had total revenue of 2,960.52 million Baht and net profit of 447.80 million Baht. Revenue Major revenue of the Company and subsidiaries are from revenue of real estate selling for allocating housing and condominium or around 96.00 – 98.00 percent of total revenue. In 2004, 2005 and 2006 the Company and subsidiaries had revenue property sale of 1,469.22 million Baht, 2,241.01 million Baht and 2,862.65 million Baht respectively. It increased 52.53 percent and 27.74 percent respectively. The revenue from selling increase because housing market has grown although during the years there were many factors affecting real estate development industry. This should be a result of customers’ need that was quite high and progressive. In addition, the Company and subsidiaries open more projects and higher value every year. The Company also has developed and controlled its project quality continuously in order to meet customers’ need. Customer recognizes and trusts in the Company’s products that provide utilization function, modern look, high quality and standard. The Company and subsidiaries has policy to recognize revenue from real estate selling on product delivery (when ownership is transferred). Construction period of each project will be varying depending type of project, size, design and etc. A single detached house may take 6-7 months. A row of townhouse and home office
Annual Report 2006
Page
70
Prinsiri Public Company Limited
may need construction duration of 7-8 months. Construction of condominium may take 11-20 months. Therefore, quarterly revenue may shift at some level, depending on type of developing project. In 2004-2006, most revenue from selling property was from selling single detached house, especially single detached house for medium market, which was the biggest revenue of that period. The Company had revenue from selling property of single detached house for high-end market of 563.99 million Baht in 2004, 428.38 million Baht in 2005 and 127.36 million Baht in 2006 respectively. It decreased 24.04 percent and 70.27 percent respectively. During that period, the Company had developed only one project of single detached house for top market. It was Siritawara Oriental project of twostory single detached on Praditmauntham Road (near Ramintra Express way). The project size is 30-2-44 rai with 59 units, project’s value of 1,145.42 million Baht. As of 31 December 2006 the Company transferred ownership of 32 units, valued 549.94 million Baht. Selling price of the project is 13.00 – 14.00 million Baht per unit. The Company and subsidiaries had revenue from selling property of single detached house for medium market of 574.81 million Baht in 2004, 1,312.46 million Baht in 2005 and 1,526.09 million Baht in 2006 respectively. It increased 128.33 percent and 16.28 percent respectively. Revenue from selling property of townhouse/home office of 330.43 million Baht in 2004, 419.80 million Baht in 2005 and 890.65 million Baht in 2006 respectively. It increased 27.05 percent and 112.16 percent respectively. Since customer needed more housing of 1.00 – 5.00 million Baht, the Company and subsidiaries developed more projects of single detached house for medium market and townhouse/home office. At the end of 2006, Prinventure Company Limited, the Company’s subsidiary, open selling of its first project named Euro Prime, On Nut project. It was 2-story single detached house on On Nut– Ladkrabung Road. The project size was 15-2-36 rai of 62 unites, valued at around 359.50 million Baht. The ownership transfer was done and revenue recognition was in the same year. The Company received the first revenue from selling property of condominium in 2006. Since customers had needed more housing in form of condominium, the Company developed condominium project to meet such demand. The first and only one condominium project in 2006 named the Pulse Condominium, 9 stories in Ladprao 44, 202 units in 1-2-0 rai area, project value of 325.25 million Baht. This project was to finish construction before selling. Therefore in 2006 the Company sold the project and can perform ownership transfer as well as recognize revenue in the same year. As of 31 December 2006 the Company had revenue from selling 200 units of this condominium, value of 318.56 million Baht. The Company had revenue from selling construction material since 2005 through Growed Yotha Group Company Limited, the Company’s Subsidiary. Most of projects were sold to the Company’s contractors. It was 3.00 percent of total revenue. In 2005 and 2006 the Company and subsidiaries has revenue from selling materials of 71.39 million Baht and 86.07 million Baht respectively. It increased 20.56 percent because the Company has developed new projects and more value products. Therefore, the subsidiary could sell more construction material to the Company’s contractors. In addition to revenue from selling property and revenue from selling goods, the Company and subsidiaries have revenue from waived deposit, which customer did not do buying contract at due time, and left down payment, which some customer paid
Annual Report 2006
Page
71
Prinsiri Public Company Limited
down installment and then stopped without notice or contacting. revenue was not major revenue of the Company and subsidiaries.
However, this
Cost of Sales Cost of sales for real estate consists of land cost, developing cost, construction cost, related cost of project and paid interest. The Company and subsidiaries had cost of sales of 1,046.75 million Baht in 2004, 1,548.09 million Baht in 2005 and 1,926.62 million Baht in 2006 respectively, representing 71.24 percent, 69.08 percent and 67.30 percent of revenue from selling property respectively. Ratio between costs of sales to revenue from selling property has progressively decreased because of following reasons. (1) Potential land for project development and reasonable price Since land play major role in project development and construction. It normally 40 – 50 percent of total product cost. The Company has policy for land purchasing to buy only potential land that can be developed at once. Factors considered in buying consists of location, cost of land, city plan, stipulation of laws, trend of housing expansion, development plan, city expansion, competitors and etc. The Company will conduct feasibility study every time before buying in order to have sufficient information for consideration of good land and good price. (2) Effective management of construction cost control The Company manages cost control through procedures such as developing construction technique and technology, having Growed Yotha Group Company Limited (the Company’s subsidiary) as a Company’s business unit to control construction material cost for the Company’s developing project. The subsidiary also serves as contractor and construction material seller for the Company and the Company’s contractors. For cost of sales incurred from Growed Yotha Group Company Limited, the Company’s subsidiary was construction materials sold to all contractors of the Company. In 2005 and 2006 the company had cost of sales of 64.10 million Baht and 75.00 million Baht respectively, representing 89.78 percent and 87.14 percent of revenue from selling goods respectively. Ratio of cost of sales to revenue from selling goods slightly decreased because the Company had number of ongoing projects and consecutive period. Then the subsidiary has quite high power in negotiation. Selling and administrative expenses In 2004, 2005 and 2006 the Company and subsidiaries had cost of selling and administrative expenses of 159.01 million Baht, 262.31 million Baht and 356.69 million Baht respectively. It increased 64.96 percent and 35.98 percent respectively. The cost of selling and administrative expenses increased each year because major expenses of employee’s salary and bonus increased. That was a result from recruiting more employees to support expansion of the Company. In addition transfer fee and specific business tax increased by increase of the Company’s revenue. Cost of public advertisement and promotion increased. During previous year the Company opened more projects that needed to be more advertised to consumers and target groups. Although selling expenses became higher every year, when comparing with proportion of total selling and administrative expenses, it was shown that in 2004, 2005 and 2006 the proportion was 10.70 percent, 11.28 percent and 12.05 percent of total revenue. It proves that the Company has well managed and controlled cost of selling and administrative expenses.
Annual Report 2006
Page
72
Prinsiri Public Company Limited
Profit In 2004, 2005 and 2006, the Company and subsidiaries had gross profit margin of 28.76 percent, 30.28 percent and 32.12 percent respectively. The Company and subsidiaries had gross profit margin progressively. That is a result from continuous decrease of cost of sales as explained in the subject of cost of sales. In 2004, 2005 and 2006, the Company and subsidiaries had profit margin from operating of 19.01 percent, 19.41 percent and 20.36 percent respectively. The profit margin increased because of operating as explained in the subject of cost of selling and administrative expenses In 2004, 2005 and 2006, the Company and subsidiaries had net profit of 184.18 million Baht, 304.75 million Baht and 447.80 million Baht respectively. Proportion of net profit was 12.39 percent, 13.11 percent and 15.13 percent respectively. Progressive increase of net profit came from the abovementioned causes. Furthermore, the Company is a listed company in SET since the end of 2005, it receives creditability from financial institutes. Therefore the Company get loan with lower interest. In 2006 the Company granted the tax right of listed company to pay income only 25 percent, from normal justice person of 30 percent. Return on equity In 2004, 2005 and 2006, the Company had return on equity of 26.75 percent, 27.23 percent and 27.51 percent. Return on equity had increased because the Company had net profit every year. The Company paid dividend for performance of the year 2004 and 2005 of 72.10 million Baht and 120.60 million Baht respectively. Analysis of Financial Position Assets The Company and subsidiaries had total assets of 2,124.40 million Baht as of the end of 2004, 3,196.99 million Baht as of the end of 2005 and 4,395.97 million Baht as of the end of 2006. As of 31 December 2005, the total assets of the Company and subsidiaries consisted of current assets and non-current assets of 4,192.06 million Baht and 203.91 million Baht respectively, representing 95.36 and 4.96 percent of the total assets respectively. The core assets of the Company were inventory. As of 31 December 2006, the Company and subsidiaries had inventory of 3,873.10 million Baht or 88.11 percent of the total assets. Temporary investment The Company had temporary investment in 2005 by purchasing open ended fund – debt securities because at that time the Company’s liquidity was very well. Then the Company invested excess cash for benefits. At the end of 2005 and 2006, investment in open ended fund – debt securities was 139.14 million Baht and 26.98 million Baht respectively. As of 31 December 2006 the investment amount was decreased from 2005 of 112.16 million Baht, representing decrease of 80.61 percent. Since in 2006 the Company developed new project that needed capital for project developing and invested more in the subsidiaries and gave them loan, The Company had to sell that investment.
Annual Report 2006
Page
73
Prinsiri Public Company Limited
Accounts receivable - net As of the end of 2004 and 2005 the Company and subsidiaries had net accounts receivable of 0.31 million Baht and 26.16 million Baht respectively. Most of increase accounts receivable was accounts receivable during 1 – 90 days. It increased from 0.16 million Baht to 15.51 million Baht. Most were accounts receivable of Growed Yotha Group Company Limited, which sell construction materials to contractors of the Company and subsidiaries. As of 31 December 2006 the Company and subsidiaries had net accounts receivable of 30.27 million Baht, increase from the end of 2005 at 15.73 percent. With same reason in 2005, Growed Yotha Group Company Limited had more sales of construction materials. Therefore, number of accounts receivable increased. Details of accounts receivable as of the end of 2004, 2005 and 2006 are shown below.
Accounts receivable
Specified During 1 – 90 days During 91 – 180 days During 181 – 360 days More than 360 days Total Minus – Doubtful accounts net accounts receivable
As of 31 As of 31 December 2004 December 2005 158,000.00 645,000.00 281,593.00 1,084,593.00 776,593.00 308,000.00
7,325,404.90 15,506,931.13 2,976,951.13 612,629.15 2,571,065.57 28,992,981.88 2,836,097.26 26,156,884.62
( : ) As of 31 December 2006 8,279,672.96 9,369,217.56 3,859,471.33 8,762,210.80 3,332,119.87 33,602,692.52 3,332,119.87 30,270,572.65
The Company and subsidiaries had policy to reserve for doubtful accounts. The reserve amount is evaluated from accounts receivable that Company and subsidiaries may not be able to be paid and payment history. As at the end of 2004, 2005 and 2006, the Company and subsidiaries had doubtful accounts totally 0.78 million Baht, 2.84 million Baht and 3.33 million Baht respectively. The management pays attention on this increase amount. Those doubtful accounts will be followed up. In case it is possible that an account may be doubtful, the Company will set up reserve for that loss in order to report actual financial statements. However, amount of doubtful accounts is not much when comparing with total revenue of the Company. At the end of 2004, 2005 and 2006, the proportion was 0.05 percent, 0.12 percent and 0.11 percent respectively. The Company and subsidiaries has accounts receivable more than 360 days at the end of 2004, 2005 and 2006 of 0.28 million Baht, 2.57 million Baht and 3.33 million Baht respectively. They are construction material buyers of Grow Yotha Group Company Limited as above mentioned. At present the management concentrates on administration of accounts receivable by setting up clear policy on payment credit, aging and legal action for payment from those doubtful accounts. Payment of active projects As of 31 December 2006, the Company had money paid on due of accumulated accounts receivable by installments of 5,508.70 million Baht, representing 87.20 percent of sold project. The amount was accumulated installment paid of 5,506.88 million Baht, representing 99.97 percent of due accumulative payment. Accrual accumulated amount was 1.82 million Baht, representing 0.03 percent of due accumulated amount. Remaining amount that is not on due is 808.33 million Baht, representing 12.80 percent of sold value. Details are below. Annual Report 2006
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Prinsiri Public Company Limited
Table of payment of active projects as of 31 December 2006 (Unit : Million Baht) Accumulated payment on due
Project Name
Accrual accumulated payment % of money of Amount accumul ated payment on due 0.40 0.27 1.25 0.22 -
697.32 398.09 148.64 630.28 274.09
697.32 398.09 148.64 574.30 266.60
100.00 100.00 100.00 91.12 97.27
697.32 398.09 148.24 573.05 266.60
% of money of accumul ated payment on due 100.00 100.00 99.73 90.78 -
298.44
298.44
100.00
298.44
100.00
-
1,032.03
999.75
96.87
999.64
99.99
525.63 215.03 371.81 192.69 318.56 435.19 306.56
522.04 210.49 316.54 184.81 318.56 285.97 220.26
99.32 97.89 85.13 95.91 100.00 65.71 71.85
522.04 210.49 316.54 184.81 318.56 285.97 220.26
120.15
5.53
4.60
77.92 262.03 12.56 6,317.02
2.78 57.69 0.89 5,508.70
3.57 22.02 7.09 87.20
Sold Value
% of sold value
Amount
Prinsiri Nawamin Prinsiri Nualchan Prinyada Chamchan Siritawara Oriental Prinyada Theparak Phase 1 Prinyada Theparak Phase 2 Prinyada Wongwan Sathorn Prinyaluck Rama 2 Prinyaluck Exclusive Prinyada Rama 2 Prinyaluck Intraluck the Pulse condominium Prinyada Kaset-Nawamin Prinyaluck Wongwan Sathorn Prinyaluck Petchkasem 69 Prinyada Kanchanapisek Euro Prime Euro Nova Total
Paid accumulated payment
Amount
Balance waiting for on due
Amount
% of sold value
55.98 7.49
8.88 2.73
-
-
-
0.11
0.01
32.28
3.13
100.00 100.00 100.00 100.00 100.00 100.00 100.00
-
-
3.59 4.54 55.27 7.88 149.22 86.3
0.68 2.11 14.87 4.09 34.29 28.15
5.48
99.10
0.05
0.90
114.62
95.40
2.77 57.69 0.89 5,506.88
99.64 100.00 100.00 99.97
0.01 1.82
0.36 0.03
75.14 204.34 11.68 808.33
96.43 77.98 92.99 12.80
Table of accrual accumulated accounts receivable as of 31 December 2006 (Unit : million Baht) Project Name Prinyada Chamchan Sirithawara Oriental Prinyada Wongwan Sathorn Prinyaluck Petchkasem 69 Prinyada Kanchanapisek Total
Accumulated accounts receivable No. Amount 1 0.40 1 1.25 1 0.11
Accrual 1-30 days No. -
Amount -
Accrual 31-60 days No. -
Amount -
Accrual 61-90 days No. -
Amount -
Accrual More than 90 days No. Amount 1 0.40 1 1.25 1 0.11
2
0.05
1
0.03
1
0.02
-
-
-
-
1 6
0.01 1.48
1 2
0.01 0.04
1
0.02
-
-
3
1.76
Note Data was collected from installment on due. The Company did not transfer ownership transfer to accounts receivable. Accrual amount above differed from accrual accounts receivable in notes to financial statements because it was recognized after the construction was completed and transferred ownership to buyers. This collection will then higher than accrual accounts receivable in financial statements.
Annual Report 2006
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75
Prinsiri Public Company Limited
Inventory At the end of 2004, 2005 and 2006, the Company and subsidiaries had inventory of 2,013.24 million Baht, 2,617.64 million Baht and 3,873.10 million Baht respectively. These figures showed an increase of 30.02 percent from 2004 and an increase of 47.96 percent accordingly. The trend of quantity was to increase by more revenue and the policy to sell finished houses and revenue recognition when ownership transfers. As a result, the Company and subsidiary had more inventory. The inventory as of the end of 2004, 2005 and 2006 are shown in the table.
Description Finished Goods - House for sale - Construction materials Land and land developing cost Ongoing construction Related expenses of project accrued interest payable Total
As of 31 December 2004
As of 31 December 2005
(Unit : Baht) As of 31 December 2006
1,471,634,732.11 481,046,875.98 14,554,997.37 46,000,680.64 2,013,237,286.10
489,623.55 1,714,309,008.96 820,923,615.16 18,726,872.77 63,186,201.80 2,617,635,322.24
46,164,934.34 1,389,115.17 2,426,041,071.82 1,274,716,316.12 26,709,676.52 98,082,011.27 3,873,103,125.24
Inventory of finished goods of the Company and subsidiaries can be divided to for sale house and construction materials. Regarding for sale house, the Company and subsidiaries stated to provide this finished housing since the end of 2006, valued of 46.16 million Baht. The inventory also came from the Company’s policy to finish construction before selling and at the end of that year, ownership transfer could not perform or goods were not sold. Most of inventory was houses in long opening project such as Prinsiri Nualchan, Prinsiri Nawamin and Prinyada Chamchan. Inventory of land and land developing cost was major part of total amount. That is because it is important factor in land and construction project development. Land and land developing cost is about 40 – 50 percent of total product cost. At the end of 2004, 2005 and 2006, the proportion was 73.10 percent, 65.49 percent and 62.64 percent of total inventory value. That proportion decreased because the Company has policy to buy only potential land that can be developed at once. Normally, the Company will develop a project after buying that land. The Company does not have policy for land bank. Therefore, the Company has more finished product and ongoing construction. Inventory of ongoing construction at the end of 2004, 2005 and 2006 was 481.05 million Baht, 820.92 million Baht and 1,274.71 million Baht respectively. It increased 70.65 percent and 55.28 percent respectively. Reason of increase is explain in topic of inventory of land and land developing cost. The Company does not need to reserve debase of assets because the Company employs independent assessor, which is a company approved by the Securities and Exchange Commission and the Stock Exchange of Thailand, to assess land price and building for selling of the Company and subsidiaries. The assessor suggested that assets have higher value than the previous cost. More information, please see article 5.1: Company’s Assets.
Annual Report 2006
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Prinsiri Public Company Limited
Land and equipment - net Ad of the end of 2004, 2005 and 2006, the Company and subsidiaries had net land and equipment of 27.67 million Baht, 29.94 million Baht and 36.43 million Baht respectively. It increased at 8.20 percent, and 21.67 percent respectively. However, increase of net land and equipment was required by operation and growth of the Company. Normally most of increase was in office equipment. At the end of 2005, it increased from 2004 at 60.18 percent. In 2006 it increased from 2005 at 37.61 percent. However, detail of net land and equipment at the end of 2004, 2005 and 2006 are shown in the table.
Description
Land Machinery and equipment Office furniture Office equipment Vehicles Total Accumulated depreciation Land and equipment - net
As of 31 December 2004 3,063,453.90 6,221,227.17 13,408,561.69 20,576,746.14 43,269,988.90 15,597,266.33 27,672,722.57
As of 31 December 2005 3,346,838.00 6,628,121.05 21,478,707.06 22,236,410.81 53,690,076.92 23,749,101.32 29,940,975.60
(Unit : Baht) As of 31 December 2006 3,279,342.43 4,015,004.24 8,062,698.78 29,556,573.49 25,669,335.81 70,582,954.75 34,154,300.36 36,428,654.39
In 2006 the Company had more land plot of 247 square war, valued 3.28 million Baht, in Soi Chamchan. The land was near Prinyada Chamchan. It used to be the same land plot but was separated when the road crossed. At present it is used as After-Sale Office. Since the land is small, the Company does not have policy to develop it. Land held for development The Company and subsidiaries had land held for development, valued of 3.28 million Baht at the end of 2004, 70.24 million Baht at the end of 2005 and 69.53 million Baht at the end of 2006. It increased 2,042.04 percent and 1.01 percent respectively. The land dramatically increased in 2005 because of land transfer transaction in Pranburi, Prachuapkhirikhan province from inventory list to land held for development because the Company did not have policy to develop that land plot, which had area of 16-0-89 rai. In 2006 the land size slightly increased from land improvement for future development. Deposit at bank with commitment Company and subsidiaries had deposit at bank with commitment of 9.78 million Baht at the end of year 2004, 88.37 million Baht at the end of year 2005 and 92.09 million Baht at the end of year 2006. The amount increased 803.88 percent and 4.21 percent respectively. Dramatic increase in 2005 was from transaction of customers’ housing allocation fund for central infrastructure collected since the beginning of the project to the Company’s account. The money was transferred from the account named Ms. Siriluck Kovitchidachai for Rak Baan Fund. The Company submitted this asset as a guarantee of aval for land purchase with a financial institute. For the year end 2006 the deposit at bank with commitment of the Company and subsidiaries included the money collected from customers for central infrastructure charge of 55.82 million Baht. The Company and subsidiaries have commitment to transfer the money to the Village Committee after it is set up. Annual Report 2006
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Prinsiri Public Company Limited
Liquidity Cash flow from operating activities In 2005 Company and subsidiaries had cash flow used in operating activities of 10.65 million Baht. The Company and subsidiaries gained that amount from net profit of 304.75 million Baht, depreciation of 9.22 million Baht, increase of trade accounts payable and promissory notes of 101.12 million Baht, non-revenue recognition installments paid of 25.27 million Baht, other current liabilities of 37.45 million Baht and accrual income tax of 28.49 million Baht. However the cash flow from operating activities decreased since increase of inventory of 409.96 million Baht and other current assets of 97.69 million Baht, which most was deposit for land and accounts receivable and Note Receivable of 3.86 million Baht. In 2006 Company and subsidiaries had cash flow provided from operating activities of 880.41 million Baht. The Company and subsidiaries gained that cash flow form net profit of 447.80 million Baht, depreciation 10.97 million Baht, bad debt of 2.00 million Baht, decrease of other current assets of 14.39 million Baht, increase of accounts payable and promissory note of 3.32 million Baht, current liabilities of 46.88 million Baht and accrual income tax of 2.95 million Baht. The cash flow from operating activities decreased because of increase of inventory of 1,091.30 million Baht, land payablepromissory note of 257.50 million Baht, non-revenue recognition installment of 48.40 million Baht, accounts receivable and note receivable of 6.61 million Baht and minority shareholders of 4.89 million Baht. Cash flow from investment In 2005 the Company and subsidiaries had net cash flow used in from investment of 206.96 million Baht. The Company invested this money by purchase open ended fund – debt securities of 159.00 million Baht. Since at that time the Company had much liquidity, excess was invested for benefits. The company paid cash to buy subsidiary of 22.52 million Baht, which the Company invest in Growed Yotha Group Company Limited, operating contractor and selling construction materials. The Company holds 99.99 percent of registered capital. This subsidiary is used as one business unit of the Company to control construction material cost for the Company’s project development and enhancement of competitive potential. The Company bought office equipment and supplies of 13.33 million Baht for the Company’s business and its expansion. There was increase of fix deposit with commitment of 33.88 million Baht because it was used to guarantee land payable-promissory note. In 2006 the Company and subsidiaries has net cash flow provided from investment of 107.31 million Baht. The Company sold open ended fund – debt securities of 145.60 million Baht because it needed capital for developing of many new projects, investing more in subsidiaries and lending subsidiaries loan for project development. There was decrease of fix deposit with commitment of 11.70 million Baht because the money collected for central infrastructure of customers was transferred to the Village Committee as it already set up. Cash flow from financing In 2005 the Company and subsidiaries had more net cash flow from financing of 265.56 million Baht. That cash flow included from increase capital of 424.71 million Baht, overdraft and short-term loan from financial institute of 219.27 million Baht and short-term loan of 44.10 million Baht. At the meantime there was cash flow used in payment of dividend of 72.10 million Baht and paid back long-term loan of 351.86 million Baht. Annual Report 2006
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Prinsiri Public Company Limited
In 2006 the Company and subsidiaries had more net cash flow from financing of 805.42 million Baht from long-term loan of 635.41 million Baht, short-term loan of 194.45 million Baht, overdraft and short-time loan from financial institutes of 61.25 million Baht and received cash from minority shareholders of 34.91 million Baht. At the same time there was cash flow used in dividend paid of 120.60 million Baht. Net cash flow In summary, at the end of 2004, 2005 and 2006 the Company and subsidiaries had net cash flow of 30.88 million Baht, 78.83 million Baht and 111.14 million Baht respectively. It increased 155.25 percent and 41.00 percent respectively. Liquidity ratio In 2005 the Company and subsidiaries had liquidity ratio and quick ratio of 2.60 times and 0.21 times respectively. In 2006 liquidity ratio and quick ratio were 3.36 times and 0.14 times respectively. Liquidity ratio was at normal level of business operation. However, quick ratio was quite low because most of current assets were inventory. Increase of inventory was from increase of revenue and the Company’s policy to build house before selling and to recognize revenue when ownership transfer. For information about inventory, please see article 12.2.2: Analysis of Financial Position, Inventory. Investment Expenses In 2005 and 2006, the Company and subsidiaries invested 173.69 million Baht and 63.32 million Baht. In 2005, the Company also invested in Glow Yotha Group Company Limited, a company engaged trading of construction materials and also a construction contractor. Its business supported the Company’s business in terms of construction cost and quality for the project development and potential competition. Therefore, the Company invested 32 million Baht to held 99.99 percent of total paid-up share capital of Growed Yotha Group Company Limited. In addition, the Company invested in open ended fund – debt securities that had high liquidity at that period for the Company’s benefit. During the year there was net buying and selling of 139.14 million Baht. The Company invested as joint venture with Univentures Public Company Limited to Prinventure Company Limited, real estate developer. The Company holds 51.00 percent of registered capital. That year the Company totally invested of 2.55 million Baht in Prinventure Company Limited. In 2006 the Company paid for registered capital of Pinventrue Company Limited for more 36.34 million Baht and invest in open ended fund - debt securities of 26.98 million Baht. According to the joint venture contract, the Company has to pay up for 100 million Baht. At present the Company already paid up for registered capital of 76.25 million Baht. Therefore the remaining to pay is 23.75 million Baht. It is expected that in 2007 the Company will have to pay that investment as per proportion of shareholders. The Company holds shares of Prinsiri Company Limited at the proportion of 51.00 percent of registered capital. Therefore, the Company has to pay for remaining registered capital of 12.11 million Baht. Fund Resources Liabilities As at the end of 2004, 2005 and 2006, the Company and subsidiaries had liabilities of 1,334.70 million Baht, 1,748.09 million Baht and 2,589.84 million Baht respectively. The amount increases 30.97 percent and 48.15 percent respectively. Increase of total liabilities in 2005 was mostly from increase of current liabilities as following. Bank overdraft and short-term loan form financial institutes increased from Annual Report 2006
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Prinsiri Public Company Limited
47.16 million Baht to 226.42 million Baht. Short-term loan – promissory note rose from 92.00 million Baht to 136.10 million Baht. Land payable – promissory note increased as new liability of 257.50 million Baht. Trade account payable and note payable increased from 97.91 million Baht to 214.16 million Baht. The Company increased abovementioned liabilities for land purchase and project development of the Company and subsidiaries for sale. However, in the same year the Company and subsidiaries paid back some of longterm loan. The loan amount decreased from 904.45 million Baht to522.59 million Baht. The loan payment was perform as stipulated by the loan contract specified that the payment shall be done when house ownership was transfer to customers at 70-80 percent of selling price. Increase of total liabilities in 2006 mainly incurred by increase of current and non-current liabilities as followings. Bank overdraft and short-term loan from financial institutes increased from previous year 61.25 million Baht. Short-term loan – promissory note rose from previous year 194.45 million Baht. Trade account payable and note payable increased from the previous year 27.15 million Baht. Land payable – long-term promissory note was added 100 million Baht. Long-term loan increased 635.41 million Baht. The Company increased abovementioned liabilities for land purchase and project development of the Company and subsidiaries for sale, which was like the reason of previous year. However, in the same fiscal year, the Company and subsidiaries got paid installment that did not recognize revenue from the previous year of 48.40 million Baht because there were ownerships transfer at high amount. In addition, land payable – promissory note dropped from previous 1933.33 million Baht because of reaching due payment. Shareholders’ Equity The shareholders’ equity of the Company equaled to 789.72 million Baht in 2004, 1,448.91 million Baht in 2005 and 1,806.13 million in 2006, representing an increase of 83.47 percent and 24.65 percent respectively. In 2004, the Ordinary Shareholders' Meeting no. 1/2004 approved the resolution to convert the company into pubic company, Prinsiri Public Company Limited, and changed its par value from THB 100 per share to THB 5 per share. The registered capital increased from 500 million to 670 million Baht. The meeting also allowed the selling of three million common shares to the Company’s directors and/or employees before the company’s public offering, 6 THB per share. Therefore, on 30 June 2004 the Company had paid-up registered capital of 515.00 million Baht. The excess of over purchasing value from increase common shares was 3 million Baht. After that, the Extraordinary Shareholders' Meeting no. 2/2004 held on 17 October 2004 approved the change of the par value of the Company from THB 5 per share to THB 1 per share. The common shares of the Company increased from 134 million to 670 million. The Company and subsidiaries gained additional 184.18 million Baht. In 2005, the Company offered the public 155 million increase common shares on 25-27 October 2005 at the price of par value THB 2.80 per share, total amount of 434 million Baht. The selling of those shares provided the Company capital for cash flows and project development. The Company had paid-up registered capital of 670 million Baht. There was dividend paid in the same year as the Ordinary Shareholders' Meeting held on 26 April 2005 approved payment of dividend for the performance of the year 2004 at 0.14 Baht per share, totally 72.10 million Baht. The dividend was paid to shareholders on 25 May 2005. The Company and subsidiaries gained additional 304.75 million Baht. In 2006, the Company paid dividend as approved by the Ordinary Shareholders' Meeting held on 24 April 2005. The resolution was to pay dividend for the performance of the year 2005 at 0.18 Baht per share, totally of 120.60 million Baht. The dividend was Annual Report 2006
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Prinsiri Public Company Limited
paid on 24 May 2006. The Company and subsidiaries gained additional 447.80 million Baht. Optimal capital structure As at the end of year 2004, 2005 and 2006, the Company and subsidiaries has debt to equity ratio equals to 1.69 times, 1.21 times and 1.43 times respectively. The ratio in 2005 dramatically decreases from 2004 because the Company offered increase common shares in 2005 and the Company and subsidiaries gained more profits. However, in the same year the Company paid its dividend to shareholders. The ratio in 2006 increases from 2005 because there was borrowing loan for capital in project development of the Company and subsidiaries, especially projects of Prinventure Company Limited, the Company’s subsidiary. Most projects were under developing and did not be on selling. As a result, the total amount of loan for project development was still high. In addition the Company paid dividend to shareholders. Optimal average debt to equity ratio of companies in real estate industry is less than 1.00 time. Hence, the Company’s dept to equity radio slightly excess the average. However, projects of the Company and subsidiaries are under developing. When they are opening for sale and transfer ownership to customers, the Company and subsidiaries will pay back the loan. Then the ratio will decrease. Factors and Influence affecting future performance or financial position Changes in customers’ needs of housing Many events including political situation, economic recession, increase of petrol price and increase of interest rate, are major factors to customers’ housing need and buying decision. Therefore, occurrence of related factors impacting on customers may make customers their buying decision. The Company’s products may not be bought or slower sold. This situation will then make the Company have higher cost of inventory. As a result, it will affect on the Company’s liquidity and profitability. However, concentrating on the excellence of products and services under slogan “Charms of the Home in Harmony with Nature”, the Company receives cognition and trust from customers for the brand “Prinsiri”. The Company decreases abovementioned impact by conducting research and studying customers’ behavior prior project development in order to assure that the Company’s products will meet customers’ needs as much as possible. In addition, construction plan is designed to go with expected selling quantity by separating project development into phrases. If the Company cannot sell its goods or takes more time to sell out, the Company is able to slow down or pause construction work. Moreover, the Company has implemented promotion progressively in order to promote brand awareness, buying need and remind brand recognition. The promotion also develops trust in the Company’s products and good image for the Company. Remunerations for auditors The Company and subsidiaries paid 0.59 million Baht in audit fee to auditors for the fiscal year 2004, 1.00 million Baht for the fiscal year 2005 and 1.18 million Baht for the fiscal year 2006. There was no other remuneration paid to any person or business related to the auditors except fund auditing.
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