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5 Years Financial Highlights Yearly Financial Information Message from the Chairman Vision & Mission
2 5 6 7
Business Operations 1. Background & 5 Years History of Development 2. Business Structure and Products 3. Revenue Structure • Production and Marketing Management 4. Capital Structure 5. Business Trend and Key Factors 6. Risk Factors • Business Risk Factors • Other Risk Factors
8 15 23 30 34 38 45
Shareholding Structures 1. Major shareholders 2. Restriction on Foreign Shareholding 3. Dividend Policy 4. Subsidiaries’ Shareholding Structure
45 46 47 48
Management Structure 1. Organization Chart 2. The Board of Directors 3. Working Committees • Audit Committee • Risk Management Committee
49 50 55 58
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• Corporate Governance Committee • Nomination and Remuneration Committee 4. Executive Committees 5. Management 6. The Board & Management Profile 7. Controlling Persons of the Company and its Subsidiaries
59 60 62 64 67 94
Remuneration of Directors and Management 1. Monetary remuneration 2. Other remuneration
95 97
Good corporate Governance Internal Control • Control of Information exploitation
99 109 111
Connected Transactions • Disclosure of connected transactions • Necessity and Appropriateness of Connected Transactions • Measure or procedures for approving connected transaction
112 113 114 114
Management Discussion and Analysis 115 The responsibility for the Financial Reporting of the Board of Director 116 Audit Committee Report 117 Audit fee 120 Corporate Social Responsibility ( brief summary) 121 General Information 124 Annual Financial Statements and Audit report of Certified Public Accountant 126
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5 Years Financial Highlights
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Yearly Financial Summary
2005
2006 7,149 5,881 6,568 2,174
13,646 9,060 7,074 2,180
16,187 9,399 8,913 2,191
22,775 12,100 11,249 2,207
9,843 3,573 6,270 7,621 7,635 2,648 1,272
9,386 2,049 7,338 8,181 8,203 2,633 1,303
11,095 2,889 8,206 9,054 9,093 3,174 1,302
16,292 6,182 10,110 12,969 13,033 4,947 2,373
18,871 5,848 13,023 18,943 19,033 7,284 3,622
3.0 0.73 0.18 4.9
3.4 0.60 0.20 5.9
3.8 0.60 0.22 8.4
4.6 1.08 0.33 4.4
5.9 1.64 0.55 17.8
Market Capitalization (million Baht) Dividend Paid during the year (million Baht)
10,328 464.9
12,675 388.8
18,314 433.8
9,598 479.6
39,281 723.2
Financial Ratio : Asset Turnover (% on average) Average ROA (%) ROE (% on average) D : E ratio (times) D - cash : E ratio (times) Net Profit Margin (%) P/E (times) P/BV (times) Dividend Payout ratio Cash & S-T investment (million Baht)
82% 14% 25% 0.57 0.76 17% 8.6 1.6 25% 1,479.4
85% 14% 19% 0.28 0.94 16% 9.6 1.7 33% 448.5
89% 13% 17% 0.35 0.87 14% 16.2 2.2 37% 1,081.7
95% 17% 26% 0.61 0.85 18% 4.9 1.0 31% 1,529.6
108% 19% 31% 0.45 0.21 19% 10.8 3.0 34% 3,150.8
Booking (million Baht) Booking (units) Unit transferred Paid- Up capital (million Baht, million share) Financial Data : Unit = million Baht Assets Liabilities Equities Real Estate Income Total Revenue Gross Profit Net Profit Per Share basis (Baht per share) Book Value per share Earning per share Dividend per share (performance year) Market Price at Year-end (started 2005)
7,516 5,770 6,136 2,125
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2007
2008
2009
Message from the Chairman
“Best Under A Billion Award” - Forbes Asia is one of the Company’s honorable successes. There were 12,000 candidates - listed companies - in Asia but only 200 companies won the awards. Absolutely, Preuksa was not only one of that but the Company was also one of five Thai listed companies received the awards because of the excellent performance.
Dr. Pisit Leeahtam
Thongma Vijitpongpun
Chairman of the Board of Directors
Chief Executive Officer
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In 2009, Thai economy was affected by fluctuations in global economy resulting from U.S subprime mortgage crisis, including the domestic political instability all year round that reduced consumers’ confidence in spending. However, the economic crisis did challenge the Company to accomplish the targets no matter how situations or external factors changed. Due to the careful risk management and maintenance of growth rate, the Company financial stability was very strong as shown on 2009 proud operation performance. Sales and units transfer were set as new records resulting from the determination to execute the Company’s missions and goals. This has led to the net profit of Baht 3,621.8 million, rose by 53% year-on-year. In addition, the rapid change in the Company’s business strategies supported to maintain its leap in growth rate as well as its strong financial structures amidst the low demands in the overall property market. In foreign markets in 2009, the Company has developed residential projects – condominiums and townhouses, in Bangalore, India, and in Haiphong, Vietnam. Besides, Preuksa in corporation with the government of Republic of Maldives will develop residential projects there, which is now on business feasibility studies. The Company is confident that the property industry continues to grow in 2010. With the Company’s competitive advantages, Preuksa expects to expand its business both upcountry and abroad, which will also help to develop Thai economy. 7
Not only have the businesses been developed but various parts such as human resources (the Company’s valuable asset), information technology, and cost management have also been improved significantly. Moreover, Corporate Social Responsibility (CSR) activities are our sincere effort to contribute to the community and the society. Last but not least, principles of Corporate Governance have been implemented throughout the organization. “Best Under A Billion Award” held by Forbes Asia Best Under A Billion Award in Singapore is one of the Company’s honorable successes. There were 12,000 candidates - listed companies - in Asia but only 200 companies won the awards. Absolutely, Preuksa was not only one of that but the Company was also one of five Thai listed companies received the awards because of the excellent performance. Finally, we would like to express my sincere appreciation to shareholders, business partners, people concerned, especially, Preuksa management and staffs for their dedication, hard work, and persistence, that has enabled Preuksa to become a successful company. The Company, Preuksa, will try all our best to continuously and steadily maintain the growth rate by improving our products and services, focusing on customer satisfaction, and creating good relationship with customers. Dr. Pisit Leeahtam Chairman of the Board of Directors
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Thongma Vijitpongpun Chief Executive Officer
Vision – Goals – and Organization Culture Vision
“Preuksa Real Estate Pcl. is one on the top tenth leading property developers in Asia, of which vision is to focus on world class management quality emphasizing the steadily sustainable growth, the impression, the highest satisfaction among customers, staff, business partners, and shareholders, including operating business with conscious and responsibility to return to the society in every country where we operate”
Organization Culture
1. Specific: realize own responsibilities or any situation while working 2. Passion: fondness for own work, kind-heartedness, helpfulness, and speaking and doing right 3. Think It Right: be discreet 4. Customer Focus: concentrate and focus on what customers want 5. Getting Things Done (Execute): determine to get things done 6. Deliver Excellence: deliver excellent products and services
Goals
• Be one on the top tenth leading property developers in Asia • Generate at least 25% per year of income growth • Generate at least 18% per year of net income growth • Generate income of Baht 100,000.- million by 2017
Business Strategy
1. World-class product and service management 2. Efficient supply chain management 3. Cost-efficient management 4. Strategic business units (SBUs) operation in order to be an agile organization and be ready for the Company’s fast expansion 5. Innovative and up-to date construction technology 6. Offering products and services maximizing customers satisfactio and impression 7. Continuous operational process improvement
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Business Operation Background Preuksa Real Estate Plc. was founded by Mr.Thongma Vijitpongpun on April 20, 1993 with the initial registered capital of Baht 50 million. It concentrates on developing projects for townhouses, single-detached houses and condominiums. Mr. Vijitpongpun, the founder, had brought his experience and expertise in construction from government and private projects into the business of the Company. Such factor together with professional management team, outsourcing consultants for continuous development of entire corporate operation process, appropriate business strategy resulted in The Company’s positive bottom lines throughout the past 16 years of operation even during the economic downturn. The Company’s products comprises of townhouses, singledetached houses and condominiums, focusing on Bangkok Metropolis and its suburbs in areas with high growth potential : . It has developed townhouses under the brands “Baan Preuksa”, “Preuksa Ville” and “The Connect” focusing on low-to-middle income bracket market. Moreover, it produces, single-detached houses under the brand “Preuksa Village”, “Passorn” and “The Plant” for middle-to-high income bracket market. Lastly, the Company builds, condominium under the brands “Ivy Condominium”, “The Seed Condominium” and “City Ville Condominium” and “the Tree” Unlike most other real estate developers who generally hire contactors to handle construction work for the entire project, the Company is a real estate developer that adopts modern construction 9
technologies from foreign countries to construct housing units and manages the construction of projects itself. In operating a project, the Company will set up project specifications and detailed design. With respect to construction, the Company manages its own construction by dividing work into parts and hiring contractors to perform specific tasks such as constructing foundation, concrete work, building installation, tiling and roofing, whereas raw materials are bought in bulk by the Procurement Department. Engineers and foremen will oversee the construction work to ensure it is in compliance with the standards and specifications. With in-house construction management and adoption of such technologies, it can effectively control the quality, manage construction time and cost. As such, the Company becomes a low cost leader among real estate developers. As approved from its Extraordinary General Meeting of Shareholders on April 22, 2005, the Company then increased its registered capital by issuing 532.5 million new shares with par value of Baht 1. On April 27, 2005, the Company converted itself into a public company. Later on December 6, 2005, it started trading on the Stock Exchange of Thailand (SET) under the ticker “PS”. As of 31 December 2008, the company has a registered capital of Baht 2,255,753,400 (being 2,255,753,400 common share at Baht 1 par). The paid up capital was 2,191,394,200 Baht and shares. - On 5 February 2009, the company has registered its paidup capital resulting from 5,169,900 Baht and shares resulting from
ANNUAL REPORT 2009
warrant exercised. As such, the company’s paid-up capital reached 2,196,564,100 Baht and shares. - On 7 August 2009, the company has registered its paid-up capital resulting from 5,086,500 Baht and shares resulting from warrant exercised. As such, the company’s paid-up capital reached 2,201,650,600 Baht and shares. - On 4 December 2009, the company has registered its paidup capital resulting from 5,161,400 Baht and shares resulting from warrant exercised. As such, the company’s paid-up capital reached 2,206,812,000 Baht and shares.
Subsidiaries The Company has 9 subsidiaries. The first one was Kaysorn Construction Co.,Ltd. with registered capital of Baht 1.0 million on February 2, 2005. It operates as a contractor for housing decoration.. The Company holds 9,993 shares, representing 99.93% of its registered capital. The consequent two subsidiaries, Putthachart Estate Co.,Ltd and Phanalee Estate Co.,Ltd, were incorporated on October 2, 2006, with an initial registered share capital of Baht 1.0 million each (10,000 shares at Baht 100 par value). The Company holds 99.99% of each subsidiary. Both companies are property developers for greater flexibility in business operation. The two subsidiaries
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increased their authorized share capital from Baht 1 million to Baht 50 million (500,000 shares at Baht 100 par value) on November 22, 2006. During 2007, The Company increased its investment in the two subsidiaries to Baht 50,000,000 each. On September 12, 2007, Phanalee Estate Co.,Ltd. had increased registered capital from Baht 50 million to Baht 200 million (2,000,000 shares at Baht 100 par value). The said amount was fully paid up in June 2008. Lastly, a subsidiary “Preuksa Overseas Co.,Ltd” was established on 17 November 2008 in order to operate real estate business outside Thailand with Baht 100 million capital registered. In 2009 and the first quarter of 2010, another 5 subsidiaries were set up and in-process of setting up 1) Preuksa International Co.,Ltd., a new subsidiary for construction and development of housing projects outside Thailand , was set up with Baht 100,000,000 and later increased to Bt. 500,000,000 registered capital. Preuksa Real Estate Pcl. Holds 99.97%. 2) Preuksa India Housing Private Ltd., a new subsidiary in Bangalore, Karnataka State for construction and development of housing projects in India, was set up with Rs 10,000,000 (Ten million Rupees). Preuksa Overseas Co.,Ltd. and Kaysorn Construction Co.,Ltd. each hold 50% in the company.
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3) Preuksa India Construction Private Ltd., a new subsidiary in Bangalore, Karnataka State for construction and development of housing projects in India, was set up with India Rupees 500,000 registered capital. 4) Preuksa Vietnam Ltd, a new subsidiary in Hai Phong, Socialist Republic of Vietnam, was set up with VnD 170,000,000,000 registered capital. The purpose is for construction and development of housing projects in Vietnam. 85% Of the company (or approximately Baht 297.7 million) will be held by Preuksa International Co.,Ltd. Another 15% will be held by a Vietnam company.
As at 31 December, 2009 several changes in subsidiaries has resulted in as follows 1) Preuksa Overseas Co., Ltd. achieved the increase in registered capital and paid-up to Baht 200 million. 2) Kaysorn Construction achieved the increase in registered and paid-up capital to Baht 100 million. 3) Phuttachart Estate achieved the increase in registered and paid-up capital to Baht 100 million.
5) Preuksa Vietnam Construction Company Limited, a new subsidiary for construction business in Vietnam was set up with VnD 850,000,000 Registered Capital, 100% will be held by Preuksa Overseas Co.,Ltd., a subsidiary of Preuksa Real Estate Pcl.
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Major Developments during the past 5 years Year 2005
- The Precast Concrete Factory was completed and has started producing housing parts. - The Precast Fence and Pillar Factory, with approximately Baht 150 million project cost (excluding the value of the land at location), was completed and has commenced production. - The Company set up Kaysorn Construction Company Limited to be a contractor for housing decoration. - The Company set up the Business Processes Improvement and Workforce Management Systems, a solution offered by IBM (Thailand) Co., Ltd. The value of the project is Baht 12.7 million. The systems are designed to improve the business processes (including construction, sales, marketing and services) of the Company and personnel management. The purpose of this improvement is to support the business expansion, to increase the competitive edge in the future and to reduce the operating cost. - The Company converted itself into a public company and increased its registered capital from Baht 1,700 million to Baht 2,232.5 million and reduced the par value from Baht 100 to Baht 1. - The Stock Exchange of Thailand has granted a listing of common shares of Preuksa Real Estate Public Company Limited under the ticker “PS” of which trading began on December 6, 2005.
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Year 2006
The Company increased its paid-up capital from Baht 2,125.0 million to Baht 2,159.7 million on January 9, 2006. The Company increased its paid-up capital from Baht 2,159.7 million to Baht 2,166.7 million on July 5, 2006, to accommodate the first exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 6,992,400 units on June 30, 2006. The Company has adopted Business Process Improvement (BPI), Business Intelligence (BI) and Balance Score card Software to enhance the Company’s operations and management. Precast Concrete Factory was modified for more efficiency in production process. The Company has set up two new subsidiaries named Putthachart Estate Company Limited and Phanalee Estate Company Limited, with an initial registered share capital of Baht 1 million each and later registered to increase the authorised share capital to Baht 50 million on November 22, 2006. The Company was granted approval of issuance of shortterm Bill of Exchange (BE) (within 270 days) to investors at a total amount of Baht 1,000 million.
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Year 2007
The Company increased its paid-up capital from Baht 2,166.7 million to Baht 2,173.8 million on January 10, 2007, to accommodate the second exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 7,104,600 units, on December 29, 2006. As per the 2007 Annual General shareholders’ Meeting’s approval, the Company registered the decrease in authorised share capital through eliminating non-traded shares of the Company in the amount of 7,746,600 shares at a par value of Baht 1, and also registered the Amendment of Memorandum of Association Article no.4 to be in line with the decrease of the Company’s registered capital, from Baht 2,232.5 million to Baht 2,224.75 million, with the Ministry of Commerce, on April 20, 2007.
At the 2007 Annual General shareholders’ Meeting held on April 9, 2007, the shareholders approved the issuance and offer for sale of Debt Securities under the project (Shelf Filing) to decrease the financial cost of the Company and to provide an alternative of sources of funds for project development. The maximum amount of Debt Securities must not exceed Baht 2,000 million within three years. The Company issued 2 Tranche of unsubordinated and unsecured debentures in an aggregate amount of Baht 1,000 million (however the outstanding balance as at 31 December 2009 is Baht 600 million) as follow: Tranche 1: Debenture of Baht 600 million (600,000 units at Baht 1,000), issued on August 8, 2007, bears interest at 4.91% per annum, semi-annually payable and matures on August 9, 2010.
As per the 2007 Annual General shareholders’ Meeting’s approval, the Company registered the increase in authorised share capital and also registered the Amendment of Memorandum of Association Article no.4 to be in line with the increase of the Company’s registered capital, from Baht 2,224.75 million to Baht 2,255.75, with the Ministry of Commerce, on April 23, 2007.
Tranche 2: Debenture of Baht 400 million (400,000 units at Baht 1,000), issued on August 15, 2007, bears interest at 4.68% per annum, semi-annually payable andalready matured on August 17, 2009. The Company has adopted a SBU (Strategic Business Unit) structure to accommodate its long-term growth.
As per the 2007 Annual General shareholders’ Meeting’s approval, the Company registered the Amendment of Memorandum of Association Article no.3 in respect of the Company’s Objectives, from 36 to 42 clauses, with the Ministry of Commerce, on April 23, 2007.
The Company increased its paid-up capital from Baht 2,173.8 million to Baht 2,180.2 million on August 9, 2007, to accommodate the third exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 6,327,800 units on July 31, 2007.
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ANNUAL REPORT 2009
Year 2008
- The company increased its paid up capital from Baht 2,180.2 million to Baht 2,185.95 million on 6 Febuary 2008 to accommodate the fourth exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 5,774,500 units on January 31, 2008. - The company builted a plant manufacturing precast steelreinforced concrete panel with special element. The project value is Baht 90 million excluding land cost and is on stream in June 2008 with 400-cubic-metre-per-month capacity. This locates in the same area of the first and second plant). - The company increased its paid up capital from Baht 2,185.95 million to Baht 2,191.39 million on 8 August 2008 to accommodate the fifth exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 5,441,500 units on July 31, 2008.
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Year 2009
- At the 2008 Annual General shareholders’ Meeting held on April 11, 2008, the shareholders approved the issuance and offer for sale of Debt Securities under the project (Shelf Filing). The maximum amount of Debt Securities must not exceed Baht 2,000 million within three years. The Company issued unsubordinated and unsecured debentures in an aggregate amount of Baht 1,500 million with 3 years tenor. The interest was fixed at 5.25% for the first 1.5 years and 5.75% for the 1.5 year later. Date of issuance was 29 January 2009 with the maturity date of 29 January 2012. - The company increased its paid up capital from Baht 2,191.39 million to Baht 2,196.6 million on 5 Febuary 2009 to accommodate the sixth exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 5,169,900 unit on 31 January 2009. - The company increased its paid up capital from Baht 2,196.6 million to Baht 2,201.65 million on 7 August 2009 to accommodate the seventh exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 5,086,500 unit on 31 September 2009. - The company increased its paid up capital from Baht 2,201.65 million to Baht 2,206.8 million on 4 December 2009 to accommodate the eightth exercise of warrants by the Company’s directors, employees and advisors and/or the subsidiaries (PS-WA), in a total amount of 5,161,400 unit on 30 November 2009.
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Business Structure The Company as a current leader in Real Estate Developer in Thailand has 2 parts of business structures. 1. Domestic real estate business 2. Overseas real estate business Either domestic or overseas real estate business the Company always focuses on its expertise in residential housing project development which the Company has become an advantageously competent player in real estate business over many years.
3) Condominiums: under the brands of “Ivy”, “The Seed”, “The City Ville” and “The Tree” The Company has been developing residential housing projects primarily emphasized on developing projects in Bangkok and its perimeters including in central business district area in high growth potential areas with high population growth rate. From the 1993 to the date on 31 December 2009, the Company has launched 177 residential housing projects. The operating results of the Company over the last 2 years were rapidly boomed with revenue of Baht 18,943 million and Baht 12,963 million in 2009 and 2008 respectively at 31% of 5-year average growth rate (Year 2005 – Year 2009). The revenues are divided as follows:
1. Real estate business in Thailand
The Company has developed residential housing projects in 3 categories such as 1) Townhouses: under the brands of “Baan Preuksa”, “Preuksa Ville”, “The Connect”, “Preuksa Town” and “The Plant City” 2) Single-detached houses: in the names of “Preuksa Village”, “Passorn” and “The Plant”.
Categories of Products by Project name Townhouses Single-detached houses Condominiums Total revenues from Sales
For the year ended 31 December 2007 2008
2006
Million Baht 4,882 3,269 - 8,151
% 60% 40% - 100%
Million Baht 5,150 3,863 43 9,056
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% 57% 43% 0.4% 100%
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Million Baht 7,536 4,869 564 12,969
% 58% 38% 4% 100%
2009 Million Baht 9,729 5,619 3,595 18,943
% 51% 30% 19% 100%
Existing residential housing projects as of 31 December 2009
Classified by Type Total by Project name Total
Numbers Project of Project 95 Single-detached Houses Passorn 7 Single-detached Houses The Plant 5 Single-detached Houses Preuksa Village 16 Townhouses The Plant City 1 Townhouses Preuksa Town 2 Townhouses The Connect 6 Townhouses Preuksa Ville 22 Townhouses Baan Preuksa 23 Condominiums Ivy 5 Condominiums The Seed 6 Condominiums The Tree 1 Condominiums Be You 1
Total Project Units 36,382 2,801 916 4,479 199 820 1,892 6,777 14,111 2,259 1,414 340 374
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Million Baht 66,956 9,859 3,633 10,892 439 1,723 3,280 10,078 13,660 8,736 3,995 295 365
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Units Sold Units 24,280 2,191 374 2,672 198 457 1,023 4,053 9,540 2,010 1,350 340 72
Million Baht 45,091 7,905 1,512 6,364 436 996 1,824 5,934 8,955 6,918 3,882 295 71
Unsold Units 12,102 610 542 1,807 1 363 869 2,724 4,571 249 64 - 302
Million Baht 21,865 1,955 2,122 4,528 4 727 1,456 4,144 4,705 1,818 113 294
1. Townhouses
The Company has undertaken townhouse construction under the brands of “Baan Preuksa”, “Preuksa Ville” and “The Connect”. However, during Year 2008 – Year 2009 the Company had also launched a new product under the brands of “The Preuksa Town” and “The Plant City”, 2-storey and 3-storey townhouses located in the inner areas of Bangkok Metropolis. There are 5 price ranges as the following: • Baht 0.6-1.2 million per unit under the brand “Baan Preuksa” • Baht 0.9-1.4 million per unit under the brand “Preuksa Ville” • Baht 1.4-1.8 million per unit under the brand “The Connect” • Baht 1.7-2.7 million per unit under the brand “Preuksa Town” • Baht 1.8-3.5 million per unit under the brand “The Plant City”
Ownership Transfer of Townhouses Project Total Units in townhouse project Revenues from sales in townhouse projects (Million Baht) Additional registered townhouses, commercial buildings, and duplex houses in Bangkok Metropolis and its suburbs Market shares
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The Company aims to focus on low-to-middle income earners who desire to have their own houses and are not buying for speculation. The Company has constructed townhouses under the concept “A House for Everyone” in order to respond to basic needs of customers for housing of comparable quality but lower prices when compared to other developers’ housing of similar designs, sizes, and locations. Generally, the Company’s sale prices for townhouses are 15-20% lower than those offered by other developers. This is because the Company manages the construction itself and, as a result, it can efficiently control the costs of construction in shorten the construction period.
2007 5,635 5,150
16,367 34%
ANNUAL REPORT 2009
2008 6,824 7,536
13,149 52%
2009 7,651 9,729
13,177 58.1%
In 2009, townhouses, 51% of all products, were the Company’s
main product owing to the expansion of products and new brands covering more various customers. Besides, new projects were launched to respond to customers’ needs of housing at the inner areas of Bangkok Metropolis and its perimeters. This results in an increase in the Company’s market shares.
Future Plan - Townhouses
From 2007 to 2009 the Company had successfully expanded 2 new townhouse products under the brands of “The Connect” and “Preuksa Ville” in Bangkok Metropolis and its suburbs as well as the successful expansion of its coverage areas. In 2009 the Company further enhanced this growth of townhouse business, according to real estate business stimulus measures through waivers of transfer fees, mortgage loan fee, property tax incentives, being effective till 28 March 2010, as well as housing demand stimulus measures through tax policy such as tax breaks of Baht 300,000.- on principal payment, being effective till 31 December 2009. The Company will even enter into the new segment by launching 3-storey and 2-storey city townhouse projects in the inner areas under the brand “The Plant City” at the price range of Baht 1.8 - 3.5 million per unit. In 2010 the Company will push efforts on townhouse development under the existing brands to new market areas such as “Baan Preuksa” in the other provinces beside Bangkok and its perimeters, “The Connect” and “Preuksa Ville” in new urban areas where are undeveloped by the Company before. Moreover, the Company will launch new brand of townhouses under named “Urbano” located in urban areas. 18
2. Single-detached Houses
The Company has constructed single-detached houses under the “Preuksa Village” and “Passorn” names and the new-lasted brand “The Plant” has just been launched in the first quarter of 2008. The target customers with the price ranges are as the followings: • Baht 1.8 - 3.0 million per unit under the brand “Preuksa Village” • Baht 2.2 - 5.0 million per unit under the brand “Passorn” • Baht 2.5 - 5.0 million per unit under the brand “The Plant” The Company focuses on customers in the low-to-middle income brackets responding to their demand for ownership of a large single-detached house with internal useable areas that offers the most “Value for money”, compared with single-detached houses with similar designs, sizes and locations offered by other developers. Generally, the prices of the Company’s single-detached houses are about 10-15% lower than those of other developers. By promoting its single-detached house products under the brand of “Preuksa Village” during 2007 brought the Company success launches of single-detached housing projects. In 2008, the Company entered into new single-detached house market by developing a new product under the brand “The Plant”, stylish single-detached house with price range of Baht 2.5 - 5.0 million per unit. According to the state’s real estate business stimulus measures through waivers of transfer fees, mortgage loan fee, property tax incentives, being effective till 28 March 2010, as well as housing demand stimulus measures through tax policy such as tax breaks of Baht 300,000.- on principal payment, being effective till 31 December 2009, the Company has adjusted the investment aim by investing more in single-detached
ANNUAL REPORT 2009
house projects with medium size, so the Company can exercise the granted real estate stimulus measures. In 2009 the Company had improved the project features and relocated project sites including rebuilt new architectural conceptual design under “Passorn” singledetached houses project, in consequence, its total revenue came up at highest amount since the Company has founded. According to its continuously emphasizing on the singledetached houses project for many years, the Company has increased market share on the single house sector in Thailand. In 2005 the Company had only 5% of market shares, however, only 5 years later the Company’s market shares were up to 18% in 2009.
Ownership Transfer of single-detached houses projects Total Units in Single-detached house Projects Revenues from sales in single-detached houses project (Million Baht)
Additional registered single-detached houses in Bangkok Metropolis and its suburbs from the Real Estate Information Center
2007
2008
2009
3,863
4,869.0
5,619
16,374
13,229
10,309
8.5%
12.0 %
18%
1,396
Market shares
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ANNUAL REPORT 2009
1,668
1,870
Future Plan - Single-detached Houses
According to the success of developing the single-detached houses project in recent years with its fulfilled development obviously reflected to a large portion of market shares, The Company plans to expand the single houses project to upper level to achieve more market shares in single houses market by launching the projects under a new brand in near future.
2. Condominiums
As anticipated rapid changes in lifestyles and housing demands in Bangkok Metropolis and its suburbs, especially increasing demands in condominium development in areas surrounding the
Ownership Transfer of Condominiums Projects Total Units in condominium projects
new extensions of the mass transit systems i.e. sky train and subway, the Company clarified its marketing strategy and revenue structure in 2007, together with adopted Strategic Business Unit organizational structure to swiftly identify and respond to market as well as satisfy certain customer demands, resulted in successful launches of new condominium projects under the brands “Ivy”, “The Seed” and “City Ville”. The Company is then recognized as an emerging leader in condominium market within a short period of time. In 2008, the Company will develop condominium projects to respond and satisfy those modern lifestyle segments, as well as will continuously piece into the same condominium market developed in 2007 for the greater expansion.
2007
2008
2009
43
421
1,728
43
564
3,595
16,229
29,681
46,452
0.26%
1.7%
3.7%
Revenues from sales in condominiums projects (Million Baht) Additional registered condominiums in Bangkok Metropolis and its suburbs from the Real Estate Information Center Market shares
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ANNUAL REPORT 2009
In 2009 the Company’s condominium project has been developed into new market by initially being constructed under the brand “The Seed Theme” in terms of Boutique condominiums which are “The Seed Musee Sukhumvit 26” and “The Seed Memory Siam”. Those 2 condominium projects were accepted from the market with impressive satisfactions by rapidly sold out. Besides, the Company has been developing further condominium projects to serve the promotion privileges of the Board of Investment (BOI) by realizing the demand of the lowto-middle income earners in the price range lower than Baht 1.0 million with the utility area not less than 28 square meters. In 2009 the Company had launched a new brand of condominium project named “The Tree” initially located in Ladpraow area “The Tree Ladpraow” at high response with shorten sold out period. With the successful launches of all brand projects of the Company in 3 years continuously, the Company can rapidly take more market shares in Condominium market.
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ANNUAL REPORT 2009
Future Project of Condominiums
In 2010 the Company will have a better opportunity to expand the Condominium segment with continuing growth. There will be a new kind of business in condominium market even in low-to-middle or BOI level under the new brands of “Be You Condominium” and “Condolette”.
Investment Promotion Policy announced by BOI-Townhouse and Condominium Previous Investment Promotion Policy
Amendment of Investment Promotion Policy for BOI Baht 1.0 million (Condominium)
Amendment of Investment Promotion Policy for BOI Baht 1.2 million (Townhouse or Single house)
• Projects must comprise a minimum of 150 • Projects must comprise a minimum of 50 residential units in Zone 1 and 75 residential residential units in every location units in Zone 2 and Zone 3
• Projects must comprise a minimum of 50 residential units in every location
• For any residential project, area per unit • For Zone 1, a minimum area per unit must not must not be less than 31 square meters be less than 28 square meters and for Zone 2 and Zone 3, a minimum area per unit must not be less than 31 square meters
• For Zone 1, a minimum area per unit must not be less than 70 square meters
• Its sale price per unit must not exceed • Its sale price per unit must not exceed Baht 600,000 Baht (including land cost) 1.0 million (including land cost) for Zone 1 and not exceed 600,000 Baht for Zone 2 and Zone 3
• Its sale price per unit must not exceed Baht 1.2 million (including land cost) for Zone 1 and not exceed 600,000 Baht for Zone 2 and Zone 3
• Projects must obtain building permits • Projects must obtain building permits under the under the Building Control Act or other Building Control Act or other related laws related laws
• Projects must obtain building permits under the Building Control Act or other related laws
Notes: Zone 1 Zone 2 Zone 3
comprise 6 provinces such as Bangkok, Samutprakan, Samutsakhon, Pathumthani, Nonthaburi and Nakhonpathom comprise 10 provinces such as Chonburi, Chachoengsao, Samutsongkhram, Nakhonnayok, Saraburi, Ayutthaya, Ratchaburi, Angthong, Suphanburi and Kanchanaburi encompasses the remaining 60 provinces and Laemchabang Industrial Park 22
ANNUAL REPORT 2009
Production and Marketing Management Construction Management - townhouses
The Company organizes construction management into two departments as follows: Construction Management Department: This department supervises and implements the construction of all projects under the agreed plans and models. Besides, it has a duty to keep the construction costs within the budget and to coordinate with the Company’s Budget Department. Quality Assurance Department: This department has a duty to inspect the quality of each individual housing unit to ensure that it is up to the standards required. Besides, the Company has central departments to support construction management, with duties to support both townhouse and single-detached house projects. The support departments are as follows: Contractor Recruiting Department: This department has a duty to recruit specialized contractors and laborers to help in each project as required. Research and Development Department: This department has a duty to introduce appropriate technologies for application in design and construction work. Engineering Department: This department is responsible for designs and solving technical problems. 23
Project Development Department: This department serves as the coordinator and participates in the development of housing designs. Purchasing Department: This department has a duty to purchase materials for use in construction. House Design: In designing housing units for each project, the Marketing and Sales Department will coordinate with the Project Development Department to determine conceptual design guidelines, including the construction budgets and techniques. After that the Project Development Department will assign outside architects to design the project under the guidelines on the agreed conceptual design. If the Project Development Department agrees with the project design proposed by the architect, the architect will continue with the detailed design to ensure completeness of the design before the launch of each project. In a townhouse construction project, the Company divides the work into production lines, each of which is able to build about 40 townhouse units per month. In each project, there may be more than one production line, depending on the project size. The Company assigns about 10 staff members to supervise the construction work at each production line, with the project manager being the project supervisor, and project engineers, field engineers, and foremen supervising construction work at each stage and specialized contractors hired to carry out detailed work, such as foundation work, masonry, parts installation, floor tiling, and
ANNUAL REPORT 2009
roofing. The Company hires specialized contractors and laborers at appropriate numbers for each production line. During the construction period, the Company’s quality assurance department inspects the house quality periodically and the overall quality after completion of the house construction, prior to sale or delivery to the customer. The Company is able to build this type of house, with comparable quality and more useable area., and with similar designs, sizes and locations, at a cost lower than those of other operators. In addition to the ability to manage construction work by itself, the Company has another advantage, i.e., it employs production technologies to reduce the construction period. This can save costs and labor expenses, while maintaining work quality. The Company uses the Cast-Institu Load Bearing Wall Structure system in the construction of Baan Preuksa projects and the RC Load Bearing Wall Prefabrication system in the construction of single-detached houses in the “Preuksa Ville” and “The Connect” projects. For the Cast-In-situ Load Bearing Wall Structure system, the Company purchased this technology from France. This system uses walls to bear the weight in place of pillars and beams, skipping the step of cement pouring for pillars and beams. The walls are assembled and installed at the construction site. Then the walls are tied with a steel structure into which cement is poured. The steel frame is subsequently removed and a bearing wall is created. By this method, the work is done more quickly. 24
The Company was among the first few developers which employed this system in the construction of one-story townhouses. This technique was first employed in the construction of one-story townhouses, requiring about 30 days from the commencing date to complete the construction of a house, which is more efficient than the conventional method of construction, which requires about 180 days. The Company had used the conventional method in the construction of early townhouse projects such as Baan Preuksa 1 and Baan Preuksa 2. Later, with constant development efforts, the Company has come up with new construction technologies to boost house construction efficiency. It has employed the Tunnel Technology in the construction of two-story townhouses. The construction starts with the fitting of steel-framed walls and the upper floor at the same time, followed by structure steel bar wire tying and concrete pouring for the lower walls and the upper floor, also in one step. Then the upper walls and roof frames are fitted in. By this method, the outside working period is much shorter than the conventional method and a solid, strong and beautiful house is obtained. By using Tunnel Technology in construction, a house is completed in about 60-80 days. This method is much quicker, compared with the conventional method, which requires about 180 days. The Company has used this technology in the construction of Baan Preuksa 3 project and the subsequent projects. In addition to the construction of townhouses, this technology can be used in the construction of 8-story condominiums.
ANNUAL REPORT 2009
The advantages of this technology are as follows: 1) The house structure is solid and strong because the precast steel-reinforced concrete walls are longer lasting than conventional brick walls. 2) Easier quality control as the system has a firmly established procedure. 3) The construction period can be easily controlled as unnecessary construction steps are skipped, thus requiring shorter time for construction than the conventional method. 4) It is appropriate for major products which have the same models. 5) It depends less on skilled labor, which is an important part of the construction cost. 6) Bricklaying and masonry on walls is omitted in addition to concrete pouring for beams and pillars. 7) The problem on wastes from work - which is a major problem in construction - is reduced, resulting in cost saving and an orderly working condition in the construction site.
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For the details of RC Load Bearing Wall Fabrication technology, please see construction management of Single-detached housing projects (2). Besides using the aforementioned technology in the construction of townhouses, the Company has a factory, using a battery mold system, to produce precast fences and pillars for single-detached houses and townhouses (“Preuksa Ville” and “The Connect” projects). Therefore, the Company is able to build townhouses in mass to meet market demands and in effect to manage construction costs efficiently, thus achieving the economies of scale.
ANNUAL REPORT 2009
Construction Management - single-detached house
Managing a single-detached house project is similar to managing a townhouse construction project. However, for the construction of each project, the Company assigns staff by project rather than by product line, as the number of housing units in each single-detached house project is smaller than that of a townhouse project. About 30-40 staff members are assigned to supervise the construction of each project and specialized contractors and daily-wage workers are hired for each project as appropriate. RC Load Bearing Wall Prefabrication: At the beginning, the Company cooperated with the Asian Institute of Technology (AIT) in developing the RC Load Bearing Wall Prefabrication technology (or “precast wall technology� as it is often referred to) for its construction work at each site. Later, in 2004, the Company built its own Precast Concrete Factory by purchasing the technology from Germany, which uses the Semi-Automated Pallet Circulating System, the most advanced system in Thailand. The Company has used this construction technology with twostory single-detached house projects as single-detached houses have diverse wall designs. Each house has 30-60 parts, which under this technology are precast in the factory and delivered to the construction site for assembly. This technology not only has the similar advantages to those of Cast-In-situ Load Bearing Wall Structure but it also has other major advantages including more useable area rather than a space for beams and pillars. Moreover, the walls are better fire-proof, heat insulating, sound-opaque, and water-proof than those built by Mon bricks or light weight bricks. In addition, 26
houses built under this technology require low maintenance as it has a precast structure and the insurance premium is low as a precast structure house is better fire resistant, more solid and more durable. Preuksa and the Asian Institute of Technology (AIT) jointly studied and developed this construction technology and have been able to construct houses which can withstand an earthquake measuring up to 6 on the Richter scale. Under this technology, the construction period is about 75-90 days for a house, compared with approximately 180 days required for constructing a house by a conventional method. However, in the early stage of using this technology, each part was cast on the construction site and not all of the parts were able to be cast. Therefore, the early housing projects had to use parts produced under this technology and those produced under conventional methods (except for single-detached houses under Passorn 11 project, which were entirely built under conventional methods). The Company built the Precast Concrete Factory by using this technology in producing the parts. The factory, built in 2004 and completed in January 2005, has a capacity to build parts for up to 3, 600 single-detached houses per year. It has started production of parts and the production increased from 60 % to 80 % of the total capacity in June 2006. The Company also has a factory to produce finished fences and pillars by using the Battery Mold system. In the production process, steel molds are placed and removed by a hydraulic control system to ensure the exact distance required between the molds before cement pouring. The factory has a total capacity to produce fences and pillars for 12 houses per
ANNUAL REPORT 2009
day. At present, production of pillars fences for single-detached house projects and townhouse projects, and decoration pillars and townhouse parapets has been increased. According to the plan, construction of a second precast concrete factory will begin in 2010 and is expected to be completed by early 2011. The factory will have a capacity which is 50% greater than that of the existing one - equivalent to 5, 400 singledetached houses per year.
Distribution and Channels of Distribution of All Products
itself and uses advanced and efficient construction technologies. It is therefore able to maintain low production costs and shorten the construction periods. Therefore, it is able to offer prices lower than those of other developers by 15-20% for townhouses and singledetached houses. And since its main objective is to build housing units for low income earners, in order to help society, it is one of the very few real estate developers granted BOI promotional privileges, with corporate income tax exemption for incomes from sales of housing units with a price not exceeding Baht 1,200,000 each.
Pricing strategies: With a view of a niche in the real estate market for low-to-middle income earners, the Company has focused on this segment. The Company’s construction costs are also lower than those of other developers as it manages construction work
Advertising and public relations strategies: To support sales, the Company has launched advertising and public relations campaigns through 1) Newspaper advertisements 2) Billboards that advertise the Company’s projects in the localities 3) Brand Building Aiming to boost public awareness, the Company has been sponsoring various TV programs, such as “Faen Phan Thae” and applying the concept of Customer Relations Management, through various activities, such as offering scholarships to children of dwellers in the Company’s housing projects, providing mobile medical services to the Company’s housing project dwellers for free health check-ups and organizing various activities in the housing projects. 4) Mobile telephone systems 5) The Internet (e.g., the Company’s website www.ps.co.th or through www.facebook.com).
The Company has strategies to promote its products as follows: Product strategies: In 2007, the Company developed a number of new products and expanded coverage areas with the objective of being the leader in middle-to-low income market in all products covering of the whole Bangkok Metropolis, its suburbs and also commercial centre areas. Besides, the Company has been consistently seeking more efficient construction technologies in order to fulfill homebuyers’ requirements. This partly explains its ability to complete the construction quickly, to achieve good quality and to deliver houses to customers as scheduled. The Company also has inventory management methods to maintain the inventory level appropriate to the sales of housing units.
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ANNUAL REPORT 2009
Distribution Strategies: The Company has a direct channel of distribution, mainly through its sales offices, in addition to sales offered at housing fairs. Besides, it offers the sales of new housing projects to expand the customer base by various means, such as the “Members Get Members” project, where the customer who introduces new customers to the Company are entitled to referral fees. Currently, the Company has a customer base of over 66,000 households. Besides, the Company has a plan to expand business units in order to be support units and to help increase competitiveness of itsmajor business as well as to utilize the customer base of over 66,000 households for long-term growth.
Procurement of New Products and Services 1. Land Purchase The Company has no policy to hold a land bank. If it is interested in developing a real estate in a certain area, it will conduct a project feasibility study, and market condition and competition surveys, including the customer demand in the target location. Then it will negotiate the land purchase directly with the land owner or broker, comparing the proposed price with the official appraisal price or market price, to ensure that the land prices are not unreasonably high. 2. Construction Materials Since the Company manages construction work itself, it is
28
the direct buyer of construction materials. After the Purchasing Department is informed of the material requirements in detail, it will contact each material producer directly to compare prices. Generally, the Company is given a considerable discount as its purchases are of high volumes. After the Company has agreed with the producer on the material quantities and prices, it will order the materials through the producer’s agent for delivery to the project sites. The Company has a credit term of 15–90 days. Since 2006, it made change to the procurement of major construction materials, such as cement, steel, and tiles, by inviting tenders and entering into long-term price agreements; e.g., one year or 3-6 months. These methods have reduced the risks of price fluctuations. Having good relationship with suppliers, the Company is able to obtain construction materials at a desired quantity and has never suffered a shortage of construction materials. However, it does not rely on any one supplier of construction materials. 3. Construction Contractors The Company is one of the very few real estate developers who manage construction work themselves. In running a project, it determines the project concept and details of the design. For project construction, it manages the construction work by dividing it into parts such as foundation work, masonry, parts installation, floor tiling, and roofing. It hires specialized contractors to implement the work and supervises the implementation by assigning its engineers and foremen to work at the project site to ensure that construction specifications and standards are met. The Company
ANNUAL REPORT 2009
is also able to manage construction costs efficiently as it procures construction materials itself. Nevertheless, in order to better manage the construction capacity, the Company has begun to hire outside contractors for construction of condominiums, starting with the Ivy Thonglor project. 4. Production Technologies The Company utilizes construction technologies in the construction of townhouses, single-detached houses and condominiums. (For more details, please see Construction Management for Townhouses and Single-detached Houses.) 5. Environmental Impact The project’s housing and utilities constructions are subject to the Ministry of Natural Resources and Environment’s Notification on the Criteria, Methods, Procedures, and Guidelines on the Preparation of the Report on Environmental Impact Analysis issued by virtue of the Environment Quality Promotion and Maintenance Act B.E.2535. The notification requires companies engaged in land development for housing or commercial purpose in a plot divided into 500 or more sub-plots or in a plot of over 100 rai to submit a report on the environment impact analysis (EIA) together with the application for land development under the land development law. Prior to the project construction, the companies must also submit
29
the EIA report to the Office of Natural Resources and Environment Plans and Policy. On this matter, the Company has the required EIA report prepared by outside experts and has never had any problem on environment impact. In housing construction, especially in a single-detached house project, there may be environment impact from waste water. The Company therefore has provided a waste water treatment system for each individual house and set up a central waste water treatment system for each project, so as to avoid any impact on public water sources. As for the Company’s Precast Concrete Factory, which is subject to the provisions of the Factory Act B.E. 2535, the Company has established standards and methods to control the release of pollutants or any substances that may have environmental impact as a result of the factory’s operations. To ensure that it operates with responsibility for environmental impact, the Company has three pollution control measures; (a) water pollution control by providing water treatment ponds and water sediment ponds to prevent the release of waste water to the community areas; (b) air pollution control by installing water sprays in the factory area to prevent dust. In early July 2005, the Company installed vapor fans inside the factory to reduce heat and also prevent dust; (c) noise pollution control by installing noise barriers in 2008 to prevent noise pollution that may arise from construction work inside the factory.
ANNUAL REPORT 2009
The Company’s Securities 1. Common Shares
As at 4 December 2009, Preuksa Real Estate Public Company Limited had registered capital of Baht 2,224,753,400 (2,224,753,400 ordinary shares with Baht 1 par value) with issued and paidup share capital of Baht 2,206,812,000 (2,206,812,000 ordinary shares with Baht 1 par value).
2. Warrants (PS-WA)
The Company has issued a number of warrants to the Directors, Management and advisors of the Company and/or the subsidiaries (PS-WA) as per the following details : Category : Warrants to purchase the ordinary shares of Preuksa Real Estate Public Company Limited (PS-WA) Type : Being entered in a name certificate and non-negotiable Term of warrants : Four years from the date of issuance Issue Date : November 28, 2005 Expiry Date : November 30, 2009 Number of Warrants Issued : 64,401,500 units Offering price per unit : Baht 0 Exercise Ratio : One Warrant per one ordinary share Exercise price per unit : Baht 1
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Warrant exercise period : The holder of the Warrant shall be entitled to exercise the right to purchase the newly issued ordinary shares of the Company on a semi-annual basis, except for the exercising of right at the last time when the right may be exercised within the maturity date of the Warrant. In this case, the directors, employees and advisors of the Company and/or its subsidiary shall have the right to purchase the ordinary shares in a number not exceeding one-eighth of the total number of the Warrants allotted to each of the directors, employees and advisors of the Company. However, the directors, employees and advisors of the Company and/or subsidiary companies shall be able to exercise such right only upon completion of the six-month period from the day on which the ordinary shares of the Company start to be traded on the Securities Exchange of Thailand, until the maturity of the Warrant. If the directors, employees and advisors of the Company and/or subsidiary company cannot exercise the right to purchase the ordinary shares up to one-eighth of the total number
ANNUAL REPORT 2009
of the Warrants allotted to each of the directors, employees and advisors of the Company and/or subsidiary company, such directors, employees and advisors may apply the remaining Warrants in the subsequent exercising of right
Number of ordinary shares reserved for the exercise of warrants : Not exceeding 65,000,000 shares control dilution : As at 31 December 2009, there are no effect to the profit sharing or voting right of existing shareholders (control dilution) as there are no more outstanding balance.
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ANNUAL REPORT 2009
- After the ordinary PS shares started trading in Securities Exchange of Thailand, there have been chronological change as follows :
Date 30/6/2006 29/12/2006 20/04/2007 (1) 23/04/2007 (2) 31/7/2007 31/1/2008 31/7/2008 30/1/2009 23/04/2009 (3) 31/7/2009 30/11/2009
Shares Purchased from warrants exercised (Share, Baht)
Capital Registered Warrants (Baht) exercised (unit) 2,232,500,000 2,232,500,000 2,224,753,400 2,255,753,400 2,255,753,400 2,255,753,400 2,255,753,400 2,255,753,400 2,224,753,400 2,224,753,400 2,224,753,400
6,992,400 7,104,600
6,992,400 7,104,600
6,327,800 5,774,500 5,441,500 5,169,900
6,327,800 5,774,500 5,441,500 5,169,900
5,086,500 5,161,400
5,086,500 5,161,400
- (1) (2) (3) According to 2007 Annual General Meeting of Shareholders held on 9 April 2007, the company has changed its registered capital and later in 2009. All the change are: - Registered a decrease of the Company’s authorised share capital from Baht 2,232,500,000 (2,232,500,000 ordinary shares with Baht 1 par value) to Baht 2,224,753,400 (2,224,753,400 ordinary shares with Baht 1 par value) on April 20, 2007 . 32
Registration at Ministry of Commerce
Paid-Up Capital (Baht)
5/7/2006 10/1/2007 20/04/2007 (1) 23/04/2007 (2) 9/8/2007 6/2/2008 8/8/2008 5/2/2009 23/4/2009 7/8/2009 4/12/2009
2,166,745,800 2,173,850,400 2,173,850,400 2,173,850,400 2,180,178,200 2,185,952,700 2,191,394,200 2,196,564,100 2,196,564,100 2,201,650,600 2,206,812,000
- Registered an increase of the Company’s authorized share capital to Baht 2,255,753,400 (2,255,753,400 ordinary shares with Baht 1 par value) on April 23, 2007 - Decrease Capital Registered from 2,255,753,400 Bt. ( 2,255,753,400 Common share @ 1 Bt. Par) to 2,224,753,400 Baht. (2,255,753,400 common share @ 1 Baht Par) by canceling 31,000,000 shares previously prepared for exercising the company’s share warrant
ANNUAL REPORT 2009
3. Debenture
As of December 31, 2009, there were Baht 2,100 Billion outstanding. Such debentures can be divided into 2 tranches as follows :
Name of Debentures
Debentures of Preuksa Real Estate Pcl. No. 1/2007 Due 2010
Debentures of Preuksa Real Estate Public Company Limited No. 1 /2009 Due 2012
Type of Debentures Name Registered Debenture, without Debenture holders’ representative Status Unsubordinated and unsecured Kasikorn Bank Plc. Lead Underwriter Capital Nomura Securities PCL. Registrar and Paying Agent TMB Bank Plc. Kasikorn Bank Plc. Par Value 1,000 Baht Issue Price 1,000 Baht 1,500 Million Baht Issue Size 600 Million Baht 1,500,000 Units No. of Debenture 600,000 Units 3 years from issuing date Duration 3 years from issuing date 29 January 2009 Issuing Date 8 August 2007 29 January 2012 Maturity Date 9 August 2010 Coupon Rate
4.91% p.a until maturity, payable semiannually
: 5.25% per annum for the period of 1 year and 6 months after the issuance date and : 5.75% per annum for the remaining period until the maturity date
Coupon Payment Date
8 August and 8 February
29 January, 29 April, 29 July, and 29 October
Redemption
The Issuer shall redeem the Debentures on the Maturity Date by repayment of principal amounts of the denomination of the Debentures and unpaid interest of the final interest payment (if any).
Repurchase of Debenture Credit Rating
The Issuer at any time is entitled to repurchase the Debentures from the secondary market or otherwise. BBB+ as issued on July 11, 2007, A- as issued on January 13, 2010,
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ANNUAL REPORT 2009
Economic Trend and Impacting Factors on Property Business From the late 2008 to the 2nd quarter of 2009 was represented as the height of the global financial crisis resulting from the Hamburger crisis in the States. The recovery in the global economy has started since the last quarter of 2009 due to many countries’ economic stimulus packages, the improvements of Business Confidence Index and Consumer Confidence Index shown through the increase in investment, consumption including the tacit improvement of stock prices. The global economy is expected to expand by 3% after a 1% contraction in 2009. Developed countries’ economy will slowly recover by 1.25% after a 3.5% contraction in 2009 while that of new emerging market countries will expand by 5% after a 1.75% increase last year. Asian economy, especially in China, India, and Vietman where their economic growth is higher than others’, will expand pretty well because of strong basic economic Key Thai Economic Data 2003 Nominal Gross Domestic Product (Nominal GDP) (billion baht) 5,917.4 Gross Domestic Product 1988 (Real GDP) (billion baht) 3,468.2 Growth Rate of Gross Domestic Product (%) 7.1 1 Year Bank Deposit Interest Rate 0.75 Minimum Loan Rate (MLR) 5.69 Consumer Price Index (CPI) 1.8 Source: Bank of Thailand 34
factors, domestic consumption, and effective fiscal and monetary measures. Thai economy has shown improvement in line with the global economy, especially the 3rd quarter of 2009 – a 2.8% contraction after a 7.1% and a 4.9% contraction in the 1st and 2nd quarters, respectively. However, the continued political turbulence, a domestic risk factor, has resulted in Thai people’s consumption confidence and foreign investors’ confidence. It was expected that Thai economic expansion in 2009 would improved due to the government continued economic stimulus measures which help support the recovery of domestic consumption. Moreover, low money market interest rates has eased private investments in the country including the improvement of exports which were shown as 2009 economic figures – a 3% contraction of full-year expected growth and -0.9% inflation rate. The summary of the mentioned figures is as follows: 2004 2005 2006 6,489.5 7,092.9 7,850.2 3,688.2 3,858.0 4,056.6 6.3 4.6 5.1 0.75 2.25-4.0 3.5-5.13 5.69 6.81 7.99 2.7 4.5 4.6
ANNUAL REPORT 2009
2007 8,529.8 4,256.6 4.9 2.0-3.5 6.88 2.2
2008 2009 9,075.5 9,047.6 4,361.4 4,262.0 2.5 -2.3 2.5-3.5 0.75 6.0-6.5 5.87-6.25 5.4 -0.8
2010F 9,500.0 4,500.0 3.0 1.75 6.8-7.0 3.2
Economic Table of Invested Countries…The Global Economy…India, China, Vietnam, Maldives Growth Rate of Gross Domestic Product (%) Countries China U.S.A India Vietnam Maldives Source: Bank of Thailand
2003 10 2.5 7.33 7.3 8.538
2004 10.1 3.6 7.25 7.8 9.504
2005 10.4 3.1 9.18 8.4 -4.63
2006 11.6 2.7 9.9 8.2 18
2007 13 2.1 9.33 8.5 7.221
2008 9.6 0.4 7.48 6.2 6.3
2009 8.7 -2.4 6.45 5.3 -3.0
2010F 9.5 3 7.7 5.3 2.1
2004 3.9 2.68 3.97 0 -1.68
2005 1.82 3.38 3.97 0 1.3
2006 1.47 3.23 6.26 6.6 2.74
2007 4.77 2.87 6.38 12.63 6.793
2008 5.9 3.85 8.32 19.89 12.04
2009 -0.68 -0.35 1.08 6.52 4.5
2010F 3.2 2 8.4 11.0 4.7
Consumer Price Index (COPI) (%) Countries China U.S.A India Vietnam Maldives Source: Bloomberg
2003 1.17 2.28 3.64 0 -1.26
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ANNUAL REPORT 2009
The latest global economic crisis has little affected Thai financial institutions because of 1997 economic crisis we learned from. This has led to not only the strength of Thai financial institutions but also the cautiousness of credit providing. Furthermore, high liquidity in the economic systems and the continued ease of monetary policy - low policy interest rate and low money market interest rates- play as major factors strengthening Thai economy. Nevertheless, interest rates are expected to remain low until the 2nd quarter of 2010 due to high liquidity, low inflation rate, and the continued strong Baht against other currencies. The improvement of real estate business is in line with the economic recovery, the improvement of consumers’ confidence, the government’s real estate stimulus measures, low interest rates, and high competition for providing mortgage loan by financial institutions. Compared to last year, new property supplies gradually recover as shown by the increase of new project openings, especially big developers delaying new project openings in the first six months of 2009. This well indicates developers’ confidence in the recovery of real estate business. Compared with 2008, the rise or fluctuation in steel prices did not really affect 2009 construction cost since steel prices are counted as 3% of the overall cost. Due to high imported interior decorations from China, the decrease in their prices help lower the construction cost as well. The risk of oversupply is now expected to be low owing to property related laws and financial institutions’ cautiousness of credit providing. In addition, developers conduct 36
a marketing survey before launching new projects and have no policy on purchasing land as a stock. However, the demand for steel may rise in 2010 due to the public’s infrastructural construction such mass transit projects. Oil price this year will fluctuate depending on the global demand. Consumers’ demand for property gradually recovers in line with the better consumers’ confidence resulting from the economic recovery as well as the property tax incentives ended in March 2010, including the taxable income deduction on mortgage principal payments of up to BHT 300,000.- expired at the end of December 2009. Low interest rates and the competition among financial institutions for mortgage loan releasing are one of the factors help spur the property demand as seen from transactions of buyingselling land plots and buildings, especially condominiums and town houses located close to skytrain, underground, express way, and other infrastructures, in Bangkok and outskirt areas. The purpose of buying condominiums is as residence rather than speculation. Thai economic trend in 2010 will gradually recover in line with signs of an improving global economy and domestic politics including the rise in Business Confidence Index. In addition, economic stimulus packages, the government’s investment in mega projects, public banks’ policy on credit release spurring, and low interest rates are expected to continue until the first six months of 2010 since these factors will help support private sectors’ investments and maintain the economic recovery continuously. According to Bank of Thailand and other Institutions’ analysis
ANNUAL REPORT 2009
reports, Thailand’s 2010 Gross Domestic Product is expected to grow by 3% - 4% due to the global economic recovery and the state continued incentive plans. The inflation projection stays between 2.5% and 3.5% while the unemployment rate is 1.4%. Thailand’s current account surplus and oil price are estimated at 5.3%, and US$75-85 per barrel, respectively. However, there are some risky factors such as political conflicts, domestic incentive plans, and the impact of global economic crisis that may affect Thai economy in 2010. Besides, global imbalances arising from the United States of America’s high current account deficit challenge Thailand and other Asian countries since America is a huge import market where many Asian countries’ economy relies on leading to increase their high current account surplus and foreign reserves significantly. If the global imbalances have not been solved entirely, this challenging problem will eventually affect the global economic stability and Thai’s economy will be unavoidably affected. Furthermore, the global economy can continuously expand if each country tries to increase private sectors’ demand, which can drive sustainable economy, instead of depending on the public’s one due to its limits on fiscal policy. Other economic factors influencing to property business in 2010 are as follows: 1. The existing economic stimulus packages are required for a period of time so that the global economic recovery can continue. For Thailand, the government’s property stimulus measures ended 37
on 28 March 2010 are expected to be extended in order to spur property demands bringing about businesses, consumption, and continued employment. 2. After hitting the lowest rates last year, local interest rates would likely increase this year in line with the improvement of global interest rates, and the increase in capital demanded by both public and private sectors. This would have an effect on people’s consumption ability, and privates’ and households’ investments, especially their abilities to purchase new dwellings and to repay loans. 3. Fluctuations in prices of construction materials and oil due to the weakness of the dollar against other currencies. As the global economy continues to recover, demands in construction materials and oil are high, especially in Asian region – China, India etc. Developers may have an effect on construction cost, so proper construction cost management is suggested. 4. The sustainability of global economic recovery and the domestic political stability. In conclusion, Thai economy is expected to expand continuously under the following conditions: domestic political stability, consumers’ confidence in consumption, investors’ confidence, a low unemployment rate, development and production capabilities, and a stimulus to exports. Private sectors, meanwhile, have to try to maintain their business stability and growth by searching for new markets having strong economic systems such as China, India, Vietnam, and Indonesia. This would help their businesses to be survived amid economic crisis. In other words, they should turn crisis into an opportunity under the pressure of financial crisis and concern about the continuation of global economic recovery.
ANNUAL REPORT 2009
Risk Factor 1. Inconsistency of policy on mortgage loans
More than 90 percent of company’s home buyers borrow by mortgage. Thus, changes in policy from commercial banks or Government Housing Bank on mortgage loans, loan controlling procedures and available funds would directly customers’ purchasing power, company’s revenue as the consequence. To mitigate the risk of both home buyers and company, a paper form for the salesperson and the home buyers to fill in this loan application is arrange to submit to the banks for preapproved. As such, home buyers is able to know whether the loan will be granted. From the aforementioned risk, the Company has appointed a working committee to regularly monitor and track on the banks’ loan policy and the economic status in order to adapt the appropriate strategy according such changes. Additionally, the company has collaborated to the commercial banks and Government Housing Bank to offer the best services and shorten loan approval period to the company’s customers.
2. Increases in construction material prices and shortage of the materials
The Company adopts presale strategy; in most cases, land and houses are sold before constructions and later transferred to its customers. If materials costs or wages increase after selling agreement contract are executed, certain variance or even effect from below-target transfer of ownership will lead to higher cost of sales which results in lower gross profit margin.
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Cost of construction materials is crucial. Prices of main construction materials have significantly increased as a result of a growth in demand both from the real estate sector and the new mega-projects. Certain rising prices of raw materials including steel, copper and coal, coupled with upwards trends of oil prices in the world market, have driven the transportation cost, a main factor for the increase of the prices of construction materials, and subsequently, result in an increase of the Company’s cost. If the Company cannot raise its sales prices forthwith or can not raise its prices to the levels that correspond with such increased costs, this can affect its sales volume and as a consequence would have a significant negative effect on the Company’s business, financial condition and operating results. Moreover, rise in of property developers may result in a shortage of construction materials. If those events occur and the Company cannot buy construction materials within the prescribed period or in a sufficient amount to respond to its need, or the Company cannot find construction materials at all, the Company will not be able to complete the construction within the prescribed period or according to the required volumes or cannot continue the construction at all. As a consequence, it would have a material affect on the Company’s business, financial condition and results of operation. Nevertheless, adoption of construction technologies enables the Company to construct townhouses and a single-detached house within only 60 days and 120 days, respectively. These are much quicker than that of conventional method and therefore reducing risk. In addition, to better control certain risks, the
ANNUAL REPORT 2009
Company has adopted a tender process in procurement of major items of construction materials since 2006 in order to ensure fixed construction costs throughout the year. The policy is also in line with the Company’s code of conduct. Besides, the Company holds a monthly procurement meeting to perceive any movements in material prices and effects on costs of sales in order to adjusting the selling prices or seeking for substituted materials.
3. Shortage of Specialized Contractors and Skilled Labors
According to the Company’s construction technology, Precast Concrete Panels are the main parts of housing construction which require assembly at construction sites. Moreover, the Company manages construction itself and require no contractors for major constructions. It only hires contractors to work on specific housing tasks, such as laying foundation, installing building parts, tiling and roofing. The Company’s engineers and foremen supervise and oversee the work conducted by those contractors. Currently, there are more entrepreneurs taking on real estate development projects or engaging in overseas construction while a number of large scale infrastructure projects will be implemented, thus resulted in a shortage of contractors with specific skills to work in its construction projects. Consequently, the construction may be delayed or may not be completed and the Company may not be able to transfer units to the buyers as scheduled, or may not be able to do so at all. Fortunately, there are a large number of skilled contractors and skilled labors in the industry. As parts of outsourcing contract, the Company will hire certain workforce at reasonable market rate 39
on a continual basis, whereas payments to contractors are on a fair and regular manner and within acceptable periods, which could help the contractors with their financial burdens. The contractors therefore are pleased to work for the Company. Currently, there are approximately 4,600 contractors in the Company’s work system. Besides, to reduce risks resulting from the shortage of contractors with specific skills, the Company therefore regularly set up training courses for contractors to enhance their efficiency together with follow up hiring such well-trained workforce. As for high value projects or urgent tasks (for example, a bridge crossing a canal to the project site, a gate arch, or a swimming pool), the Company would outsource through tender and contracting in much the same way as procurement of major materials. This method enables the Company to find competent contractors who can provide deliveries according to the Company’s set standards, conditions and budget.
4. Dependence on highly skilled personnel
The company adopts modern technologies in housing construction process, specifically, Cast-Institu Load Bearing Wall Structure system or Tunnel Technology and RC Load Bearing Wall Fabrication technology. Thus, it relies on the experience, knowledge and skills of its employees in its business operations, especially engineers and foremen. If the Company is unable to retain its key personnel, its business may be interrupted, and would significantly affect its financial condition. The Company then sets up policies to retain qualified people, and continue to seek qualified work force with long term
ANNUAL REPORT 2009
employment by providing competitive compensation and benefits. At the same time, it has consistently organized training programs, especially to develop quality work. In addition, the Company may conduct internship programs with educational institutes for future business expansions.
a fair and regular manner within acceptable periods, so they are pleased to offer more. At present, there are over 10 agents offering land pieces to the Company. Due to the fact that the Company’s housing products are diversified therefore enables the Company to set a wider range to purchase and for development of projects.
5. Acquisition of land for development
6 Stringent laws and regulations
The Company has no a policy to accumulate land for future projects because it views that purchase of land without clear development plans will add financial burden effecting Company’s liquidity, especially during an economic downturn. The Company will purchase land only when it needs to develop a specified project. As such, when the Company actually purchase land for a new project, the purchase price could be higher than earlier anticipated, or it cannot purchase the land in the amount it wants. In addition, the company incurs fixed cost from the Precast Concrete Factory. These factors may result in higher cost when unit production is not as planned. The Company, therefore, may not be able to fulfill its expansion plans, and, as a result, would have a significant effect on the Company’s business, financial condition and operating results. For land procurement, the Company purchases land from owners and agents or at reasonable market prices. Consequently, the company’s development cost is lower than others and so enables the company to lower its selling prices. This increase more opportunities in unit sold as well as more opportunities to acquire more land. Besides, the land payments to agents are in 40
The business of the Company is regulated under stringent laws and regulations such as obtaining land appropriation permission, land trading permission and construction permission from the relevant government authorities. In case of sizeable projects or condominium projects, the Company must submit the EIA report to the Office of Natural Resources and Environment Plans and Policy. Such consent is needed prior to the project construction. If such government authorities do not issue the permits in timely manner or disapprove, it may result in interruption or implementation delays, or the Company may not be able to pursue the projects, which will significantly affect the Company’s business. Any establishment or change of laws, regulations or policies, such as the requirement for implementing the law governing escrow account (the draft of which is being reviewed by the Juridical Council Office before being proposed to the Parliament for consideration) which requires real estate developers to maintain down payments or installment payments they receive from buyers in a separate escrow account. This may put the Company to be insufficient in working capital or to incur funding cost . This effects the Company’ business and financial position.
ANNUAL REPORT 2009
In this regards, the Company set up working team to study related laws and the amendment, especially the Escrow Account law. The working team meets regularly on a monthly basis to update and improve working process as well as to ensure the company’s compliance on such regulations. Nevertheless, the Company would not be much affected by the Escrow Account
law, due to the fact that the down payment terms are rather short, at 3-6 months and in just small amounts. As for condominium projects, down payment terms are quite longer. The Company, however, can finish the projects through self-funding, meanwhile, it also seek alternative sources of funds with lower cost, to compare with direct borrowing from financial institutions.
7. Tax incentive that will expire Payer / base
Existing
New
0.11%
Transfer Fee
Company on selling price or appraisal value (whichever is higher) Company & home buyer 50 : 50 on appraisal value
Mortgage Fee
Home buyer (if mortgage loan granted) on mortgage amount
0.01%
3.3% After 28/3/10 2% After 31/5/10 1% After 31/5/10
Type Specific Business tax
As the specific business tax, transfer fee, and mortgage fee are reduced from 3.3%, 2%, 1% to 0.1%, 0.11%, and 0.1% respectively. The reduction will last as shown in table. After such expiration date, the company’s cost will be increased and also the home buyers’ purchasing power therefore 41
0.01%
Difference 3.19% 1.00% 0.99%
will be diminished. In addition, the company may be at risk for not able to deliver the houses to those buyers in time to enjoy the fee reduction period. However, to mitigate such risk, the company has allocate proper resources to finish constructions that the transfer can be made by 31 May 2010
ANNUAL REPORT 2009
Risk Factors for Running Business in Foreign Countries The Company has expanded its core business in foreign markets in 2009. Two countries where the Company has already started projects are Bangalore, India, and Haiphong, Vietnam. The Company has also planned to sign the joint venture agreement with business alliances in Chennai, Mumbai, India, and in Huhlu Male, the Republic of Maldives. The Company’s investment in foreign assets was Baht 337 million, 1.8% of the total assets, at the end of 2009. Should the planned joint venture businesses are achieved, the estimated Company’s capital investment in overseas to the total assets will increase approximately 10% in the next 1-2 years. In addition, the Company will expand its foreign investment proportion to 40% if such investment is successful in the long term. To run property development business, developers need to understand economic situations, local people’s dwelling needs, lifestyle, taste, and income, including domestic laws and construction regulations varying with cities. Therefore, the Company has carefully studied and expanded its business in foreign countries. Risk factors for running business abroad are as follows: 1. Lack of understanding of competitive conditions and dwelling needs in cities where the operations are undertaken • The Company has studied and conducted market surveys by its own teams, as well as consulting firms, being expert in the property business, are hired to conduct market surveys to ensure that each city is a potential market where the Company’s 42
competitive advantages are against local competitors. Apart form that, dwelling needs to support the Company’s future expansion are considered too. 2. Land allocation in prime areas with reasonable prices • As a foreign investor, the Company realizes the weakness of lacking understanding and experience in negotiating the purchase of land. As a result, the Company has made a relationship with local real estate agents for coordinating with interested land sellers, and acquiring desired size of land required by the Company. Besides, local joint-venture partners also assist in allocating land for the Company. 3. Shortage of construction craftsmen and workers • Since the Company’s construction policy is to use the same construction method (Load bearing wall system), helping speed up construction with good qualities, as used and been successful in Thailand, local construction workers may not be familiar with the method. Consequently, at an early stage, the Company plans to send some Thai foremen and construction craftsmen to supervise the construction so that local workers can have opportunities to learn the Company’s construction process and standard. 4. Capital control policy of countries in where the Company operates • The issue, which may impact on the transferring of the Company’s dividends resulting from oversea operations, or that
ANNUAL REPORT 2009
of loans or capital to Thailand, is out of control of the Company. However, a study conducted by hired consultants is shown that there are no capital control restrictions and conditions in countries where the Company operates. • In India, foreign companies running property development business must reserve their capital investment at least 3 years. The capital can be transferred to their home countries after 3-year period. • In Vietnam, the inflow amount of capital investment must be specified in investment conditions and project duration. There are no restrictions of capital control when projects are completed. • There are no restrictions of capital control in the Republic of Maldives either. • According to analyzed prior data, no change of capital control restrictions being obstacles to the investment has been found yet. Therefore, it is estimated that the risk of the issue to happen is low.
5. Applicable countries’ business regulations and permits
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• The Company’s policy is to operate business be in line with each country’s business regulations. The company’ local joint venture partners will provide the support regarding local business regulations and permits and coordinate with government agencies. • Expert consulting firms will be hired to apply for permits in case the investment is done by wholly-owned subsidiaries of the Company. 6. Currency exchange fluctuation • The management of currency exchange fluctuation of the Company is divided into 2 parts: 1. In case of the long term investment, the Company has its own working teams whose duties are to follow up currency exchange fluctuation and to apply appropriate financial tools whenever fluctuations tend to occur significantly. 2. In order to hedge against currency risks, US dollar is the main currency used and entered into a foreign exchange futures contract in case of lending transactions between domestic company and oversea subsidiaries of the Company.
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Other Risk Factors 1. Control of Major Shareholders
As at 31 December 2009, the largest group of shareholders is Mr. Thongma Vijitpongpun’s Group, who hold 1,690.08 million shares, or 76.6% of the total paid-up capital. In addition, there will be no more warrant exercised. Therefore, the Group is able to control shareholders’ resolutions in relation to major matters, which are required by the laws or Articles of Association of the Company to be passed by a majority vote of shareholders with voting rights attending the meetings. Moreover, Mr. Thongma, a major shareholder, will continue to be the Chairman of the Executive Committee, Chief Executive Top 10 Shareholders (a) as at 31/12/2009 1 2 3 4 5 6 7 8 9 10
group(b)
Vijitpongpun Thai Equity Fund Chase Nominees Limited Social Securities Office Thai NVDR Co., Ltd. Somers (U.K.) Limited American International Assurance Niyomstian Family (Suwat, Valaiya, Saowaluck) SCBT fund Phattra Securities
Officer and Authorized Director of the Company. Therefore, other shareholders may not be able to obtain sufficient votes to achieve proper balance. As reported in the latest Ministry of Commerce’s certification dated December 4, 2009, Preuksa Real Estate Public Company Limited had registered capital of Baht 2,224,753,400 comprising 2,224,753,400 ordinary shares at Baht 1 par value with issued and paid-up share capital of Baht 2,206,812,000 comprising 2,206,812,000 ordinary shares at Baht 1 par value. The top ten shareholders of the Company as of the latest share register book closing, on December 31, 2009, are as follows:
Shares held
Total Top 10 Shareholders Total Paid-up share capital
1,690,084,100 106,000,000 44,838,100 28,196,900 23,863,520 23,549,700 17,138,000 14,408,000 10,578,000 10,000,000
1,968,656,320 2,206,812,000
Notes: (a) There is none of nominee of Mr.Thongma Vijipongpun Group beside the first ranking. (b) Vijipongpun Group consists of 1) Mr.Thongma Vijitpongpun 2) Mrs.Tipsuda Vijitpongpun 3) Chanya Vijitpongpun 4) Mrs.Rattana Promsawad 5) Mr.Chamlong Promsawad 6) Miss Malinee Vijitpongpun 7) Mr.Thavorn Vijitpongpun 8) Ms. Anchalee Vijipongpun 9) Mrs. Patcha Vijitpongpun 45
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%
76.58% 4.80% 2.03% 1.28% 1.08% 1.07% 0.78% 0.65% 0.48% 0.45%
89.21% 100.00%
Restriction on Foreigners’ Shareholding The foreign shareholders are able to hold in an aggregate portion of no more than 40% of the Company’s total issued and paid-up shares. As of December 31, 2009, foreign shareholders held approximately 7.1 % of the Company’s issued and paid-up capital.
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ANNUAL REPORT 2009
Dividend Payment Policy & Information The Company’s Board of Directors may consider paying annual dividends, subject to approval by a shareholders meeting. However, due to the fact that Federation of Accounting Professions (FAP) announced that the Thai Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries” under which FAP announcement No. 26/2006 requires a parent company has to record investments in a subsidiaries and associates with the cost method instead of the equity method. By this respect, the Company has adopted the accounting change according to foregoing announcement since January 1, 2007, which resulted that the net profit amount shown in the Company’s Consolidated Financial Statements are not equivalent to the Company’s Separate Financial Statements. In order to ensure the same understanding between the Company and its shareholders and investors, the Board of Directors at the meeting No.5/2007 on August 7, 2007 has approved the Company’s dividend payment policy of making annual dividend
Performance of the year 2009 2008 2007 2006
payment to its shareholders at a rate of not less than 30.0% of the Company’s net profit after deduction of all legal reserves, however, are subject to change depending on the Company’s investment plans, necessities as well as other justifications and considerations that the Board of Directors deems appropriate. In respect of dividend payment policy by the subsidiaries, such subsidiaries will pay dividends to the Company from their net profits. The dividend payment is, however, subject to many factors such as their financial condition and results of operations, liquidity, business expansion and factors related to the operation of their business. Moreover, dividends from net profits from the businesses with BOI privileges are exempted from income tax and the Company is not obligated to deduct withholding tax from such dividend payments. The following are dividends that the Company paid to its shareholders from 2006 onwards:
Net Profit Legal reserves % of dividend Amount of dividend Dividend per (million Baht) (million Baht) payment paid (million Baht) share (Baht) 3,621.83 2,373.37 1,269.88 1,303.28
2.33 -
33.33 30.54 37.87 33.36
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ANNUAL REPORT 2009
1,213.75 724.90 480.91 434.77
0.55 0.33 0.22 0.20
Payment Date May 13, 2010 April 23, 2009 May 8, 2008 May 4, 2007
Subsidiaries’ Shareholding Structure
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ANNUAL REPORT 2009
Organization Chart Preuksa Real Estale Public Company Limited
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ANNUAL REPORT 2009
The Board of Directors
As reported in the latest Ministry of Commerce’s certification dated 25 December 2009, the Board of Directors of Preuksa Real Estate Public Company Limited, who possessed qualifications in accordance with section 68 the Public Company Act B.E.2535 and the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, consisted of 11 members as follows:
1. Dr. Pisit Leeahtam
7. Mr. Mayta Chanchamcharat
2. Mr. Thongma Vijitpongpun
8. Mr. Kanchit Bunajinda
3. Mr. Narong Manavapat
9. Professor Emeritus Dr.Trungjai Buranasomphop
Chairman and Independent Director Director Executive Vice Chairman
Director (Resigned 1/2/210)
4. Mr. Prasert Taedullayasatit Director
5. Mrs. Ratana Promsawad Director
6. Mr. Piya Prayong Director 50
ANNUAL REPORT 2009
Director
Independent Director
10. Mr. Weerachai Ngamdeevilaisak Independent Director 11. Mr. Adul Chandanachulaka Independent Director
Authorised Directors who can sign on behalf of the Company
Authorised Directors who can jointly sign and bind the Company are: either Mr. Thongma Vijitpongpun or Mrs. Rattana Promsawad jointly signing with Mr. Mayta Chanchamcharat , Mr. Piya Prayong or Mr. Prasert Taedullayasatit with the Company’s seal affixed. Scope of powers and duties of the Board of Directors : 1. The Board of Directors shall perform with responsibility, caution, and faithfulness and conduct the Company’s business according to the laws, Company’s objectives, Articles of Association, and resolutions of the shareholders’ meetings, except for matters which require prior approval at shareholders’ meetings, such as matters required by law to be approved by a shareholders’ meeting, entering into connected transactions, and any purchase or sale of material assets pursuant to the regulations of the SET or those prescribed by other government authorities. 2. To consider approval of the business policy, target, operation plan, business strategy and annual budget of the Company. 3. To consider appointment of a person who possesses qualifications and does not posses any characteristics prohibited under the Public Company Act B.E. 2535 and the laws governing securities and exchange and any relevant rules, regulations and/or notifications, to be Director in case there is a vacancy due to a cause other than retirement by rotation. 4. To consider appointment of Executive Directors from Directors of the Company and prescribe their roles, powers, duties and responsibilities. 51
5. To consider appointment of independent Directors by taking into consideration qualifications and prohibited characteristics under the laws governing securities and exchanges, including relevant rules, regulations and/or notifications of the SET or propose to a shareholders’ meeting for such appointment. 6. To consider appointment of Audit Committee members who have qualifications under the laws governing securities and exchange including rules, regulations and/or notifications of the SET. 7. To prescribe and change the names of Directors who can have the power to sign to bind the Company. 8. The Board of Directors may, as deemed appropriate, also appoint any persons to conduct the business under the control of the Board of Directors and may authorise such persons to have powers and/or prescribe the period of such powers and the Board of Directors may terminate, withdraw, or amend such powers. 9. To consider approval of transactions relating to acquisition or disposition of assets, except where such transactions require approval by a shareholders’ meeting. Such approval must be in compliance with the SET’s relevant rules, regulations and/or notifications. 10. To consider approval of connected transactions, except where such transactions require approval by a shareholders’ meeting. Such approval must be in compliance with the SET’s relevant rules, regulations and/or notifications. 11. To consider approval for interim dividend payment when it considers that the Company has sufficient profits to do so and to report such payment to the following shareholders’ meeting.
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12. To consider appoinment of sub-committee to assist the operation according to Board of Director’s Responsibilities. The Board of Directors shall elect a Director to be the Chairman. If it is deemed appropriates, the Board of Directors may consider electing a Vice Chairman or Vice Chairmen, who shall be assigned by the Chairman to perform duties to conduct the Company’s business according to the Articles of Association. The Board of Directors shall meet at least once every three months. However, in granting of powers, duties and responsibilities, the Board of Directors shall not be granted power, or sub-grant powers to a grantee to approve transactions in which the Board of Directors, or any person who may have any conflict of interest (as defined in the notification of the SEC), have a vested interest, or may have any other conflict of interest with the Company or its subsidiaries, except where the approval of such transaction is consistent with the policy and criteria approved by the meeting of shareholders or of the Board of Directors.
Composition and Appointment of the Board of Directors
Composition of the Board of Directors and appointment, removal or release of Directors as stipulated in the Company’s Articles of Association can be summarized as follows: 1. The Board of Directors shall consist of not less than five (5) Directors. No less than half (1/2) of the total number of Directors shall have domicile in Thailand. 2. The election of Directors by the shareholders’ meeting shall be in accordance with the following rules and procedures: (1) A shareholder shall have one vote for one share. 52
(2) Each shareholder shall use all his or her votes under (1) to elect one or several persons as a Director. However, he or she may not divide his or her votes among the candidates. (3) The persons who receive the most votes in ranking order will be elected as Directors up to the number of Directors required or the number that shall be elected at that meeting. In case the persons elected in subsequent order have equal votes but their election would exceed the number of Directors required or the number that shall be elected at that meeting, the Chairman of the meeting shall have a casting vote. 3. At each Annual General Meeting of shareholders, onethird of the Company’s Directors shall retire in rotation. Should the number of Directors to retire in rotation not be divisible by three, the number of Directors nearest to one-third (1/3) of all Directors shall retire. In the first and second year of the registration of the Company, Directors shall draw lots to decide who shall retire the longest-serving Directors shall retire in the third and subsequent years. Directors who retire may be re-elected. 4. A Director may resign from office by submitting a resignation letter to the Company. The resignation shall become effective from the date the resignation letter arrives at the Company. 5. A resolution for any Director to leave office prior to the expiration of his term requires the votes of at least three-fourths (3/4) of the number of the shareholders attending the meeting and having voting rights and holding in aggregate shares amounting to not less than half (1/2) of the number of shares held by shareholders who attend the meeting and have voting rights.
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Qualifications of Independent Directors: The Company had determined the qualifications of independent directors as follows: 1) Holding not more than 1% of the total shares with voting right of the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of interest. The amount of shares includes those held by the independent director’s related persons. 2) Being a director who is not involved in management, inclusive of not being an employee, staff or consultant with a regular salary or a person with controlling interest in the Company, a subsidiary, associated company or affiliate thereof, or a juristic person with a potential conflict of interest, except that such characteristics have lapsed for at least two years. 3) Being a director who has no relation by blood or lawful registration as father, mother, spouse, sibling, offspring, including spouse of the offspring of an executive, a major shareholder, a person with controlling interest or a person being nominated as an executive or a person with controlling interest of the Company and a subsidiary thereof. 4) Being a director who does not have or has never had a business relationship with the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of
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interest in a manner that may impede the exercise of his/her independent judgment, including a person being or having been a major shareholder, a non-independent director, or an executive with a business relationship with the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of interest, except that such characteristics have lapsed for at least two years prior to the appointment. The business relationship in the first paragraph includes normal transactions of business, rent or lease of real property, transactions related to assets or services, or a provision or receipt of financial assistance by receiving or granting a loan, guarantee, allowing the use of an asset as collateral for a debt, including other similar acts that result in the Company or its party being liable to the other party from three percent of a tangible asset or 20 million Baht, which ever is smaller. The calculation of such obligation shall comply, mutatis mutandis, with the method used in the calculation of connected transactions under the Office of the Securities and Exchange Commission’s Notification Re: Information Disclosure and Practices of Listed Companies on Connected Transactions. The amount of the obligation shall include the amount incurred one year prior to the date of business relationship with the same person. 5) Being a director who is not or has never been an auditor of the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of interest and not
ANNUAL REPORT 2009
being a major shareholder, non-independent director or managing partner of an audit firm which has its auditor as an auditor of the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of interest, except that such characteristics have lapsed for at least two years. 6) Being a director who is not or has never been a provider of any professional service including legal service or financial advisor service with a service fee amounting to over two million Baht per year from the Company, a subsidiary or associated company thereof, or a juristic person with a potential conflict of interest. In case the professional service provider is a juristic person, a major shareholder, non-independent director, executive, or managing partner of the professional service provider is included, except that such characteristics have lapsed for at least two years prior to the appointment.
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7) Being a director who is not appointed to represent a director, major shareholder or related person of a major shareholder of the Company. 8) Not having any other characteristics in a manner that may not be able to offer an independent opinion on the Company’s operations. After being appointed as an independent director with qualifications in the items 1-8 above, the independent director may be assigned by the Board of Directors to decide on an operation of the Company, a subsidiary, associated company or affiliate thereof, or a juristic person with a potential conflict of interest, in a collective decision.
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2
Audit Committee
The Company’s Audit Committee consisted of the Independent Directors with qualifications in accordance with section 68 the Public Company Act B.E.2535 ,the Announcements of Capital Market Supervision Board and the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand. The Committee must consist of at least 3 members, at least must be qualified in accounting & finance and has adequately experience to review the integrity of the financial statement of the Company. Audit Committee comprised of 3 Independent Directors as follows:
55
1. Professor Emeritus Dr.Trungjai Buranasomphop Chairman of the Audit Committee 2. Mr.Adul Chandanachulaka Member
3. Mr.Weerachai Ngamdeevilaisak Member
ANNUAL REPORT 2009
1
3
Scope of Powers, Duties and Responsibilities of the Audit Committee
7. To have unrestricted access to Management and employees and relevant information.
1. To review the Charter of the Audit Committee at least once a year and make adjustments that necessary and appropriate.
8. To do the review with relevant units (such as Legal) for the Company to comply with laws related to the Security and Stock Exchange and any other laws related to the company’s business.
2. To review to have in place the system for financial reports and disclosure of financial statements in accordance with accounting standards stipulated by laws in transparent, accurate and sufficient manner. 3. To consider and approve any changes in significant accounting principles or procedure as proposed by management of the Company. 4. To inspect that the Company has appropriate and efficient internal control and internal audit system in accordance with procedure and standards generally accepted. 5. To consider the independency of Internal Audit Unit and to make decision in appointment, removal and termination of the Chief Internal Auditor. 6. To review internal audit reports submitted to the management and to review the management’s decision in relation to said report as submitted and reported.
56
9. To do selection and appointment of independent persons to act as external auditors of the Company and propose their remuneration. 10. To have a meeting with external auditors without the management, at least once a year. 11. To consider any related reports or any potential conflict of interest issue pursuant to the laws and notification from the Security Exchange Committee in order to ensure that those reports are reasonable and most beneficial to the Company. 12. To make report of the Board of Audit Committee for disclosure in the Company’s annual report to be signed by the Chairman of the Audit Committee and it shall be at least included with following information; 12.1 Opinion regarding accuracy, completeness and integrity of the Company’s financial report. 12.2 Opinion regarding adequacy of internal control system.
ANNUAL REPORT 2009
12.3 Opinion regarding the compliance of the Security laws and regulations of Security Exchange of Thailand or the laws relating to the business of the Company. 12.4 Opinion regarding appropriateness of auditors. 12.5 Opinion regarding transactions which may have conflict of interest. 12.6 The number of Audit Committee’s meetings and their attendance of each member of the Audit Committee. 12.7 Opinion or observation the Audit Committee recognizes by performing the Charter. 12.8 Any other items that the shareholders and general investors shall know under duties and responsibilities obtained from the Company’s Board of Directors. 13. To perform other tasks within the scope of its duties and responsibilities stipulated in its Charter, including any tasks as may be assigned by the Board of Directors which the Audit Committee agrees. 14. In performing their duties if it is appeared or when in doubt that any transactions may have a potential conflict of interest
57
or corrupt practice or an uncommon or improper in the internal control system or any violation of laws and regulations relating to Security or Security Exchange or any laws relating to the business of the Company which may significantly affect financial status and performance of the Company, a report to the Board of Directors shall be submitted in order to adjust or improve within timeframe as the Audit Committee considers.
Selection of the Audit Committee
The Board of Directors shall appoint at least 3 Audit Committee members from Independent Directors of the Company who have qualifications as stipulated by the laws governing securities and exchange and the announcements of the Capital Market Supervision Board including the rules, regulations and/or notifications of the Security Exchange of Thailand governing qualifications and scope of power and duties of the Audit Committee. At least one member of the Audit Committee must have accounting and related financial expertise and has adequately experience to review the integrity of the financial statement of the Company. The term of each member of the Audit Committee shall be 3 years according to the maximum service term of Director.
ANNUAL REPORT 2009
Risk Management Committee
The Board of Directors appointed the Risk Management Committee currently consisting of 4 members as follows:
1. Mr.Weerachai Ngamdeevilaisak
3
2
1
4
Chairman of Risk Management Committee
2. Mr.Thongma Vijitpongpun
Scope of Powers, Duties and Responsibilities of Risk Management Committee
Member
3. Mr.Prasert Taedullayasatit
Risk Management Committee is to prescribe policy guidelines and provide recommendations to the Board of Directors with respect to the management of external and internal risks to Company’s operations to ensure they are within the appropriate and acceptable level.
Member
4. Mr.Somboon Wasinchutchawal Member
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ANNUAL REPORT 2009
4
3
1
2
6
5
Corporate Governance Committee
The Board of Directors appointed the Corporate Governance currently consisting of 6 members as follows:
1. Mr.Adul Chandanachulaka
Chairman of Corporate Governance Committee
Scope of Powers, Duties and Responsibilities of Corporate Governance Committee
Corporate Governance Committee is responsible for overseeing and reviewing major best practices of the Company to ensure its compliance with good governance. This includes reviewing corporate governance policy, principles and practices; making recommendations on business ethical requirements and best practices for Directors, Management, employees; ensuring that such requirements are met effectively; making reports to the Board of Directors about the Company’s corporate governance, giving opinions on best practices adopted in order to improve or adjust them as needed; reviewing and proposing publicizing of the Company’s efforts with respect to good corporate governance.
2. Mr.Thongma Vijitpongpun Member
3. Mr.Prasert Taedullayasatit Member
4. Mr.Kanchit Bunajinda Member
5. Mr.Wirasak Kaewnoo Member
6. Mr.Somboon Wasinchutchawal Member
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ANNUAL REPORT 2009
4
Nomination and Remuneration Committee
The Board of Directors appointed the Nomination and Remuneration Committee on currently consisting of 4 members as follows:
1. Mr.Weerachai Ngamdeevilaisak Chairman of Nomination and Remuneration Committee
2. Dr.Pisit Leeahtam Member
3. Mr.Thongma Vijitpongpun Member
4. Mr.Wirasak Kaewnoo Member
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3
2
1
Scope of Powers, Duties and Responsibilities of Nomination and Remuneration Committee
The Nomination and Remuneration Committee is responsible for nominating persons to be appointed as new Directors, Chairman of Executive Committee and Chief Executive Officer or as replacements at the end of the term of office or when vacancies occur for other reasons. Furthermore, the Nomination and Remuneration Committee has the responsibility to propose guidelines and methods for payment of remuneration and other benefits to the Directors, Committee Members, Chairman of Executive Committee and/or Chief Executive Officer. This includes setting criteria for review and evaluation of remuneration to make it commensurate with their duties and responsibilities, overall business performance of the Company and the general business circumstances.
ANNUAL REPORT 2009
Meeting attendance of the Directors in 2009 and 2008
Name 1. Dr.Pisit Leeahtam 2. Mr.Thongma Vijitpongpun 3. Professor Emeritus Dr.Trungjai Buranasomphop 4. Mr.Weerachai Ngamdeevilaisak 5. Mr.Adul Chandanachulaka 6. Mr.Narong Manavapat 7. Mr.Prasert Taedullayasatit 8. Mr.Piya Prayong 9. Mrs.Rattana Promsawad 10. Mr.Kanchit Bunajinda (1) 11. Mr.Mayta Chanchamcharat (2) 12. Mr.Somboon Wasinchutchawal 13. Mr.Wirasak Kaewnoo
(3)
Board of Directors Audit Committee Risk Management Committee 2009 2008 2009 2008 2009 2008
Nomination and Corporate Remuneration Governance Committee Committee 2009 2008 2009 2008
7 / 7 7 / 7
8 / 8 8 / 8
- 3 / 4
- 4 / 4
4 / 4 4 / 4
7/7 7/7
8 8 8 8 7 8 7 7
- - / 4 - / 4 - - / 4 - / 4 / 4
- - / 4 - / 4 - - / 4 - / 3 / 4
- 4 / 4 - - - - - - - - 4 / 4
7/7 -
6 6 7 6 7 7 7 7 3
/ 7 / 7 / 7 / 7 / 7 / 7 / 7 / 7 / 3 - -
/ 8 / 8 / 8 / 8 / 8 / 8 / 8 / 8 - - -
- - 12 / 12 12 11 / 12 11 12 / 12 12 - - - - - - - -
- -
- 8 / 9
/ 12 / 12 / 12 - - - - - - - -
- 9 / 9 - - 9 / 9 - - - - 9 / 9 -
- 8 / 9
9
8
3 7
- / 9 - - / 9 - - /3 - / 7 -
4 4
2 4 4
4 4
4 2 4
Notes: (1) Mr. Kanchit Bunajinda has resigned from Risk Management Committee on 21 April 2008 (2) Mr. Mayta Chanchamcharat was appointed as a Director on 7 August 2009 (3) Mr.Somboon Wasinchutchawal was appointed as a Risk Management Committee and Corporate Governance Committee On 7 March 2008 replacing Mr. Veera Srichanachaichok who resigned from both committee with effective from 1 February 2008 61
ANNUAL REPORT 2009
1. Mr.Thongma Vijitpongpun 3
2
Chairman of Executive Committee
1
4
5
2. Mr.Prasert Taedullayasatit Executive Committee
3. Mr.Mayta Chanchamcharat
Executive Committee
For the best management serving the company’s policies, objectives to achieve long term goal, Executive Committee, with qualifications in accordance with section 68 the Public Company Act B.E.2535 and the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, currently consists of 5 members as follows: 62
Executive Committee
4. Mr.Piya Prayong Executive Committee
5. Mr.Wirasak Kaewnoo Executive Committee
ANNUAL REPORT 2009
Powers and Duties of Executive Committee
1. To prepare and propose business policies, strategies, targets, operation plans and the annual budget to the Board of Directors for approval. 2. To determine business plans, budget and administrative powers and propose to the Board of Directors. 3. To oversee operation according to the policies of the Company, targets, business strategy, and budget as approved by the Board of Directors in an efficient manner and corresponding to the condition of the business. 4. To consider and approve capital expenditure or operating expenses, borrowing or seeking credit facilities from financial institutions, including acting as a guarantor in the normal course of business in an amount not exceeding Baht 500 million or equivalent. 5. To establish an organization structure and efficient management and administration, covering recruitment, training, hiring and termination of employees, who are executives or members of senior management The Executive Committee may authorise Chief Executive Officer of the Company to act on the Company’s behalf in signing employment agreements.
63
6. To supervise, control and approve matters relating to the operations of the Company. The Executive Committee may appoint or authorise one or more persons to take any action on behalf of the Executive Committee as it may deem appropriate and may terminate, change or amend such authority. 7. To carry out other duties as assigned by the Board of Directors. However, in the granting of powers, duties and responsibilities, the Executive Committee shall not be granted or sub-grant power to a grantee that causes the Executive Committee or the grantee to approve transactions in which the Executive Committee or the grantee, or any person who may have any conflict of interest (as defined in the notification of the SEC), may have a vested interest, or any other conflict of interest with the Company or its subsidiaries. Approval of such transaction is recurred to be presented to the Board of Directors Meeting and/or the Shareholders. Meeting as the case may be, for approval, as required by the Articles of Association of the Company or the subsidiaries or the relevant laws, except where the approval of such transactions is consistent with normal business practice and has a clearly defined scope.
ANNUAL REPORT 2009
Management
Executive (who has qualifications in accordance with the Public Company Limited Act B.E. 2535 (1992) and the related notifications of the Office of the Securities and Exchange Commission). The company’s executives consists of 7 persons as follows :
1. Mr.Thongma Vijitpongpun
Chief Corporate Service
7. Mr.Prasert Suppakitpiput
Vice President, Accounting Dept.
8. Ms.Sujittra Bupphajaroen
Chief Executive Officer
Senior Manager, Finance Dept.
2. Mr.Piya Prayong
Chief Operation Officer 1
Notes: Management (as defined by SEC) mean Chief Executive Officer or person (s) in the next four executive levels immediately under Chief Executive Officer including every person (s) who is equivalent to that fourth level and also include the Financial Officer in the case that the Financial Officer is not in the same level as the fourth-executive level Management has qualifications in accordance with section 68 the Public Company Act B.E.2535 and the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand. (1) Mr. Mayta Chanchamcharat is appointed as Chief Business Officer on May 4, 2009
3. Mr.Prasert Taedullayasatit Chief Operation Officer 2
4. Mr.Mayta Chanchamcharat Chief Business Officer
6. Mr.Wirasak Kaewnoo
(1)
5. Mr.Somboon Wasinchutchawal Chief Financial Officer
64
ANNUAL REPORT 2009
Scope of Powers and Duties of Chief Executive Officer
1. To be responsible for overall and day-to-day operations of business. 2. To coordinate with Internal Audit Department in relation to accounts and payment procedures of the Company should he find or suspect that it is not in accordance with the Company’s policy. 3. To establish an organization structure and efficient management in accordance with the guidelines which may be set up by the Executive Committee. This shall include recruitment, training, hiring and termination of employees who are not Management or members of senior management. Chief Executive Officer is authorised to sign employment agreements on behalf of the Company. 4. To consider and approve any capital expenditure or operating expenses for the Company’s business operation or any borrowing or seeking credit facilities from financial institutions, including acting as a guarantor in the normal course of business, in an amount not exceeding Baht 20 million, or equivalent. 5. To conduct any other affairs necessary for operation of the Company as assigned by the Board of Directors or Executive Committee. 6. To participate in the review of budget with the Board of Directors or Executive Committee.
65
7. To negotiate and review agreements or documents in relation to the normal business operations of the Company, advise and propose such matters to the Board of Directors and/or Executive Committee and/or persons in charge of such matters for consideration, review and finding solutions. 8. To have the power to authorise and/or appoint a person or persons to undertake specific business on his behalf, provided that such authorization and/or appointment is subject to the scope of authority given under the power of attorney and/or in accordance with the rules, regulations or orders empowering the Board of Directors and/or Executive Committee and/or the Company or Chief Executive Officer to cancel, change or amend such powers. However, the granting of powers, duties and responsibilities to Chief Executive Officer shall not empower Chief Executive Officer to approve transactions in which he or any person who may have a conflict of interest may have a vested interest or any other conflict of interest with the Company or subsidiaries (as defined in the notification of the SEC). Approval of such transactions is required to be reported to the Board of Directors Meeting or Shareholders’ Meeting, as the case may be, for approval as prescribed by the Articles of Association of the Company or the subsidiaries or the relevant laws, except where the approval of such transaction is consistent with normal business practice and has a clearly defined scope.
ANNUAL REPORT 2009
Company secretary
The Board of Directors appoints a person as Company Secretary to be responsible for organizing the Board of Directors and Shareholders’ meetings and other activities of the Board to ensure that the Board and the Company properly comply with the related laws and regulations, including the promotion of good governance practices. At present, the Board has appointed Mr Paisarl Rumphan as the Company Secretary, effective May 9, 2008.
Qualifications
1. Must have basic knowledge on legal principles and regulatory requirements relating to the laws on public companies and securities and exchange 2. Must have knowledge and understanding of the principles of good governance and best practices under good governance 3. Must have knowledge on the Company’s business and ability in communication
Duties and Responsibilities
1. Organize the meetings of Shareholders, the Board and Specific Committees in accordance with laws, the Company’s Articles of Association, each Committee’s Charter and best practices 2. Inform the related management of the resolutions and policies of the Board and Shareholders and follow up on the implementation of the resolutions and policies 3. Give initial advice and recommendations to the Board and Specific Committees on issues in regard to laws, regulations, 66
the Company’s Articles of Association and best practices on good governance, follow up on the implementation to ensure correctness and continuity, including report on significant changes to the Board 4. Take the minutes of the meeting of the Shareholders and the Board and follow up on the implementation of the resolutions of the Shareholders and the Board’s meetings 5. Supervise the disclosure and report of information under responsibility to the regulatory agencies to ensure compliance with laws and regulations and the Company’s information disclosure policy 6. Communicate with the Shareholders to ensure they are informed of their rights and have access to the Company’s information 7. Keep reports on stake holding submitted by directors or management and other important documents such as the Register of the Company’s Directors, notices and minutes of the meetings of Board and the Company’s annual reports, including the notices and minutes of the Shareholders’ meetings 8. Supervise the Company’s Secretariat to serve as the center of corporate records such the Company’s Certificate of Juristic Person Registration, Memorandum of Association, Articles of Association, Shareholders’ Register, etc. 9. Give suggestions and advice to newly appointed- directors on their directorship 10. Supervise the activities of the Board and carry out other matters as provided by law or assigned by the Board or as announced by SEC.
ANNUAL REPORT 2009
The Board & Management Profile
67
ANNUAL REPORT 2009
The Board & Management Profile
Dr.Pisit Leeahtam Chairman of the Board of Directors / Member of Nomination and Remuneration Committee / Independent Director Age
59 Years
Shareholding (%)
0.068 (1,500,000 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Chairman of the Board of Directors / Member of Nomination and Remuneration Committee / Independent Director
Education
Doctorate Degree (Economics), Erasmus University, Rotterdam, The Netherlands Master Degree (Economics), Erasmus University, Rotterdam, The Netherlands Bachelor Degree (Economics), Erasmus University, Rotterdam, The Netherlands
68
ANNUAL REPORT 2009
Other Position(s)
Dean - Faculty of Economics, Chiang Mai University Country Chairman (Thailand) - Jardines Matheson (Thailand) Ltd. Vice Chairman of the Board of Directors / Chairman of the Audit Committee - KGI Securities (Thailand) Plc. President - Provident Fund Association Council Member - Rajamangala University of Technology Krungthep Council Member - King Mongkut’s University of Technology, Thonburi Director / Chairman of the Audit Committee - Synchrotron Light Research Institute (Public Organization) Council Member - Faculty of Commerce and Accountancy, Thammasart University
Work Experience
2001-2003 President & CEO, TT&T pcl. 1997-2001 Deputy Minister of Finance, Ministry of Finance 1995-1997 Executive Vice President, Head of Investment Banking Group, Bangkok Bank pcl. 1991-1994 Director, Office of the Governor, Bank of Thailand 1987-1990 Economist, Exchange and Trade Relations Department, The International Monetary Fund, Washington D.C., USA
Training
Directors Certification Program - DCP 18/2002, Thai Institute of Director (IOD)
69
ANNUAL REPORT 2009
Mr.Thongma Vijitpongpun Authorised Director / Executive Vice Chairman of the Board of Directors / Chairman of Executive Committee / Member of Risk Management Committee / Member of Corporate Governance Committee / Member of Nomination and Remuneration Committee / Chief Executive Officer
70
ANNUAL REPORT 2009
Age
52 Years
Shareholding (%)
61.31 (1,353,096,900 shares as at 30 December 2009)
Family Relationship Among the Executives
Elder brother of Mrs. Rattana Promsawad
Positions
Authorised Director / Executive Vice Chairman of the Board of Directors / Chairman of Executive Committee / Member of Risk Management Committee / Member of Corporate Governance Committee / Member of Nomination and Remuneration Committee / Chief Executive Officer
Education
Bachelor Degree (Engineering), Chulalongkorn University
Other Position(s)
Director - Preuksa Overseas Co.,Ltd. Director - Preuksa International Co.,Ltd.
Work Experience
1998 - 2004 Managing Director - Kaysorn Restaurant Co., Ltd. (stopped operating the business on January 28, 2005) 1985 - 1991 Manager - Siam Engineering Limited Partnership
Training
Directors Certification Program - DCP 51/2004, Thai Institute of Director (IOD) Finance for Non-Finance Directors, Thai Institute of Director (IOD)
71
ANNUAL REPORT 2009
Mr. Narong Manavapat Director (Resigned on 1 February 2010)
72
ANNUAL REPORT 2009
Age
58 Years
Shareholding (%)
0.06 (1,372,300 shares as at 30 December 2009)
Family Relationship with executives
-
Current Position
Director
Educations
Bachelor Degree (Engineering), Prince of Songkla University
Other Current Position
-
Major Experiences
2004 - 2005 Executive Vice Chairman (Operation) - K-Tech Construction Pcl 1997 - 2004 Director / Executive Director - K-Tech Construction Pcl 1989 - 1997 Director / Executive Director - Philip Holzman (Thailand) Co., Ltd 1980 - 1988 Project Manager - Thai Airways International Pcl 1974 - 1980 Field Engineer - Pranakorn Construction Co., Ltd.
Training
Directors Certification Program – DCP 67/2005, Thai Institute of Director (IOD)
73
ANNUAL REPORT 2009
Mr.Prasert Taedullayasatit Authorised Director / Member of Executive Committee / Member of Risk Management Committee / Member of Coporate Governance Committee / Chief Operation Officer Age
42 Years
Shareholding (%)
0.011 (248,600 shares as at 30 December 2009) - Authorised Director / Member of Executive Committee / Member of Risk Management Committee / Member of Coporate Governance Committee / Chief Operation Officer Master Degree (Business Administration (Marketing & Finance)), Chulalongkorn University Bachelor Degree (Accountancy: 2nd class Honor) ,Thammasat University
Family Relationship Among the Executives Positions Education
74
ANNUAL REPORT 2009
Other Position(s)
Work Experience
Training
Director - Kaysorn Construction Co.,Ltd. Director - Preuksa Vietnam Construction Co.,Ltd. Director - Thai Condominium Association Director - Housing Business Association Director - Thai Investor Relations Club 2005 - 2008 Director / Executive Vice President Preuksa Real Estate Public Company Limited 2002 - 2005 Director / Executive Director / Executive Vice President (Business Development) - Lalin Property Pcl 1999 - 2002 Senior Marketing and Business Development Manager - Lalin Property Co., Ltd 1993 - 1999 Marketing and Business Development Manager - Lalin Property Co., Ltd Directors Certification Program - DCP 56/2005, Thai Institute of Director (IOD) Director Accreditation Program - DAP 1/2003, Thai Institute of Director (IOD) Public Economic Management for Executives Program - 5/2007, King Prajadhipok’s Institute Property Management for Executives Program - RECU10, Faculty of Architecture, Chulalongkorn University
75
ANNUAL REPORT 2009
Mrs.Rattana Promsawad Authorised Director / Director of CEO Office
76
ANNUAL REPORT 2009
Age
49 Years
Shareholding (%)
3.66 (80,816,800 shares as at 30 December 2009)
Family Relationship Among the Executives
Younger sister of Mr.Thongma Vijitpongpun
Positions
Authorised Director / Director of CEO Office
Education
Bachelor Degree (Law), Ramkhamhaeng University
Other Position(s)
Director Director Director Director
Work Experience
2003 - 2005 Finance Advisor - Preuksa Real Estate Co., Ltd. 1998 - 2004 Director - Kaysorn Restaurant Co., Ltd. (stopped operating the business on January 28, 2005) 1993 - 2003 Finance Manager - Preuksa Real Estate Co., Ltd. 1986 - 2001 Finance Manager - Siam Engineering Limited Partnership
Training
Directors Certification Program – DCP 52/2004, Thai Institute of Director (IOD)
-
Kaysorn Preuksa Preuksa Preuksa
77
Construction Co.,Ltd. Overseas Co.,Ltd. International Co.,Ltd. India Housing Pvt.,Ltd.
ANNUAL REPORT 2009
Mr.Piya Prayong Authorised Director / Member of Executive Committee / Chief Operation Officer
78
ANNUAL REPORT 2009
Age
40 Years
Shareholding (%)
0.012 (263,600 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Authorised Director / Member of Executive Committee / Chief Operation Officer
Education Other Position(s)
Bachelor Degree (Engineering), Kasetsart University Director - Kaysorn Construction Co.,Ltd.
Work Experience
2003 Production Manager - Siam Engineering Limited Partnership 2002 Assistant Director - Siam Engineering Limited Partnership
Training
Directors Certification Program - DCP 59/2005, Thai Institute of Director (IOD)
79
ANNUAL REPORT 2009
Mr.Kanchit Bunajinda Director / Member of Coporate Governance Committee
Age
42 Years
Shareholding (%)
-
Family Relationship Among the Executives
-
Positions
Director / Member of Coporate Governance Committee
80
ANNUAL REPORT 2009
Education
Master Degree (Finance & International Business), Sasin Graduate Institute of Business Administration, Chulalongkorn University Bachelor Degree (Engineering), Chulalongkorn University
Other Position(s)
Director - Central Plaza Hotel Public Company Limited Director - True Vision Public Company Limited Director - Central Pattana Public Company Limited Director - Private Equity (Thailand) Company Limited (An Affiliatte of Lombard Investment, Inc.) Alternate Director - Asian Corporate Governance Association, Hong Kong
Work Experience
1991 - 2002 Senior Vice President and Head of the Financial Institutions Groups / Mergers and Acquisition, Merrill Lynch Phatra Securities Company Limited (Present: Phatra Securities Public Company Limited)
Training
Directors Certification Program - DCP 30/2003, Fellow Member, Thai Institute of Director (IOD) Directors Accreditation Program - DAP 35/2005, Thai Institute of Director (IOD) Audit Committee Program - ACP 14/2006, Thai Institute of Director (IOD) Monitoring the System of Internal Control and Risk Management - MIR 4/2008, Thai Institute of Director (IOD) Monitoring the Quality of Financial Reporting - MFR 8/2009, Thai Institute of Director (IOD)
81
ANNUAL REPORT 2009
Professor Emeritus Dr.Trungjai Buranasomphop Independent Director / Chairman of the Audit Committee Age
67 Years
Shareholding (%)
0.016 (359,000 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Independent Director / Chairman of the Audit Committee
Education
Diplome de 3 eme Cycle d’ Architecture, Ecole Des Beaux Arts, Paris, France Doctorate Degree (Town Planning), Pantheon-Sorbonne , Paris, France Post Grad Certificate (Energy Conscious Building Design), Sogesta, Italy Post Grad Diploma (Housing Planning and Building), Bouwcentrum, The Netherlands Master Degree (Tropical Architecture), Pratt Institute, New York, USA Bachelor Degree (Architecture), Chulalongkorn University 82
ANNUAL REPORT 2009
Other Position(s)
President - NT Architects, Planners Co., Ltd. President - NT Interior Design Co., Ltd. President - NT Estate International Co., Ltd. Senator, Chairman of the Standing Committee on Religions, Moral, Ethics, Arts and Culture.
Work Experience
1968 - 2008 Professor Emeritus Level 11 - Faculty of Architecture, Silpakorn University 2002 - 2008 Chairman of the International Programs of Master and Doctorate Degrees in “Architectural Heritage Management and Tourism� - Silpakorn University 2006 - 2007 Advisor of the Governor of Bangkok 2002 - 2007 Vice President - Council of Thai Architects 2004 - 2006 President - Zonta International Association Bangkok 7 1996 - 2000 President - Silpakorn University 1988 - 1992 Dean, Faculty of Architecture - Silpakorn University 1989 - 2000 Committee Member of Energy Conservation Fund - Office of Energy Plan and Policy 1989 - 2000 President of Land Readjustment Association - Civil and City Planning Department 1975 - 1981 Director - Siam Architects Association 1966 - 1967 Architect - Alfred Easton Poor, New York, USA 1965 - 1966 Architect - Louis Berger Inc. / Architect - Ammann & Whtney Inc. / Architect - Intaren Co.,Ltd.
Training
Directors Certification Program - DCP 67/2005, Thai Institute of Director (IOD) Directors Accreditation Program - Thai Institute of Director (IOD) Audit Committee Program - Thai Institute of Director (IOD)
83
ANNUAL REPORT 2009
Mr.Weerachai Ngamdeevilaisak Member of the Audit Committee / Chairman of Risk Management Committee / Chairman of Nomination and Remuneration Committee / Independent Director
84
ANNUAL REPORT 2009
Age
47 Years
Shareholding (%)
0.004 (87,500 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Member of the Audit Committee / Chairman of Risk Management Committee / Chairman of Nomination and Remuneration Committee / Independent Director
Education
Bachelor Degree (Commerce and Accountancy), Thammasat University
Other Position(s)
Director - Professional Outsourcing Solutions Co., Ltd Director - Computer Science Corporation Limited Director - Audit One Co., Ltd.
Work Experience
1999 1996 1992 1985
Training
Directors Certification Program - DCP - Train the Trainer, Thai Institute of Director (IOD) Role of the Compensation Committee 3/2007, Thai Institute of Director (IOD) Sucessful Formulation & Execution of Strategy 4/2009, Thai Institute of Director (IOD)
-
2003 1999 1996 1992
85
Executive Director - Arthur Andersen Thailand’s Group of companies Assistant Director - SGV-Na-Thalang Co., Ltd Audit Manager - SGV-Na-Thalang Co., Ltd Assistant Auditor - SGV-Na-Thalang Co., Ltd
ANNUAL REPORT 2009
Mr.Adul Chandanachulaka Member of the the Audit Committee / Chairman of Corporate Governance Committee / Independent Director
86
ANNUAL REPORT 2009
Age Shareholding (%)
64 Years 0.007 (150,000 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Member of the the Audit Committee / Chairman of Corporate Governance Committee / Independent Director Bachelor Degree (Commerce and Accountancy), Chulalongkorn University Independent Director and Audit Committee of Jutha Maritime Public Company Limited 2003 - 2004 Director - Siam Press Management Co., Ltd. 2001 - 2002 Chairman of the Board of Directors - Siam Integrated Service Co., Ltd. Director - Dusit Sinthorn Co., Ltd 2000 - 2002 Director - Jalaprathan Cement Plc 1968 - 2002 Last Position: Executive Vice President - Siam Commercial Bank Plc Directors Accreditation Program - DAP 5/2003, Thai Institute of Director (IOD) Audit Committee Program - ACP 7/2005, Thai Institute of Director (IOD) Role of the Compensation Committee - 3/2007, Thai Institute of Director (IOD)
Education Other Position(s) Work Experience
Training
87
ANNUAL REPORT 2009
Mr.Mayta Chanchamcharat Authorised Director / Member of Executive Committee / Chief Business Officer
88
ANNUAL REPORT 2009
Age
45 Years
Shareholding (%)
- - Authorised Director / Member of Executive Committee /Chief Business Officer Master Degree (Public Administration), Indiana University, USA Bachelor Degree (Finance and Banking), Chulalongkorn University Director - Preuksa Overseas Co.,Ltd. Director - Preuksa India Construction Pvt. Ltd. 2005-April 2009 Chief Executive Officer - Plus Property Co., Ltd. 2004-2005 Managing Director - Plus Property Co., Ltd. 2002-2004 Vice President; Corporate Finance and Investor Relations Department - Sansiri Public Company Limited 1997-2002 Senior Manager;Head of Corporate Department - Fortis Bank - BIBF, Bangkok Directors Certification Program – DCP 124/2009, Thai Institute of Director (IOD)
Family Relationship Among the Executives Positions Education Other Position(s) Work Experience
Training
89
ANNUAL REPORT 2009
Mr.Wirasak Kaewnoo Member of Executive Committee / Member of Corporate Governance Committee / Member of Nomination and Remuneration Committee / Chief Corporate Services
90
ANNUAL REPORT 2009
Age
51 Years
Shareholding (%)
-
Family Relationship Among the Executives
-
Positions
Member of Executive Committee / Member of Corporate Governance Committee / Member of Nomination and Remuneration Committee / Chief Corporate Services
Education
Master Degree (Public Administration), National Institute of Development Administration (NIDA)
Other Position(s)
Director - Preuksa Overseas Co.,Ltd. Director - Preuksa India Construction Pvt.,Ltd.
Work Experience
Director (Human Resources Management Department) - Microchips Technology (Thailand) Co., Ltd. Director (Human Resources Management Department) - Toshiba Thailand Co., Ltd. Manager (Human Resources Management Department) - Chromalloy (Thailand) Co., Ltd. Manager (Human Resources Management Department) - AT&T (Thailand) Inc. Manager (Quality Improvement Program) - AT&T (Thailand) Inc. Head of Production Section - Philips Semiconductors Thailand Co., Ltd.
Training
Role of the Compensation Committee, Thai Institute of Director (IOD)
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Mr.Somboon Wasinchutchawal Member of Risk Management Committee / Member of Corporate Governance Committee / Chief Financial Officer
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Age
47 Years
Shareholding (%)
0.01 (230,000 shares as at 30 December 2009)
Family Relationship Among the Executives
-
Positions
Member of Risk Management Committee / Member of Corporate Governance Committee / Chief Financial Officer
Education
Master Degree (Business Administration), Thammasat University Graduate Diploma (Auditing), Thammasat University Bachelor Degree (Accountancy), Thammasat University.
Other Position(s)
Director - Preuksa Overseas Co.,Ltd. Director - Preuksa International Co.,Ltd. Director - Preuksa India Housing Pvt.,Ltd.
Work Experience
2003-2007 Executive Vice President / Corporate Secretary - Areeya Property Pcl. 1993-2003 Senior Vice President, Property Perfect Pcl.
Training
Modern Real Estate Management #14 Faculty of Architecture Chulalongkorn University Directors Certification Program – DCP 102/2008, Thai Institute of Director (IOD)
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Controlling Persons of the Company and its Subsidiaries As at 31 December 2009
Name
The Kaysorn The Company Construction Co.,Ltd
1. Dr.Pisit Leeahtam 2. Mr.Thongma Vijitpongpun 3.. Professor Emeritus Trungjai Buranasomphop 4. Mr.Adul Chandanachulaka 5. Mr.Weerachai Ngamdeevilaisak 6. Mr.Narong Manavapat 7. Mr.Prasert Taedullayasatit 8. Mr.Mayta Chanchamcharas 9. Mrs.Rattana Promsawad 10. Mr.Piya Prayong 11. Mr.Kanchit Bunajinda 12. Mr.Wirasak Kaewnoo 13. Mr.Somboon Wasinchutchawal Remarks : X = Chairman, / = Director
Phanalee Putthachart Estate Co.,Ltd Estate Co.,Ltd
Preuksa International Co.,Ltd.
Preuksa Overseas Co.,Ltd.
X //
- -
- -
- -
- X
X
/ / / / // // / // / // -
- - - - / / / - - -
- - - - - - - - - - -
- - - - - - - - - - -
- - - - - - / - - - /
/ / / /
// = Executive Director
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Remuneration of Directors and Management Remuneration of Directors and Management herein means monetary remuneration and other remuneration of Directors, Chief Executive Officer (CEO or President) and Management in the next four executive levels immediately under the CEO including every person who is equivalent to that fourth level excluding Head of Accounting and Head of Finance Department. Details are as follows:
Monetary remuneration Remuneration of Independent Directors Name & Position
1. Dr.Pisit Leeahtam Chairman of the Board of Directors and Nomination and Remuneration Committee 2. Professor Emeritus Dr.Trungjai Buranasomphop Director and Chairman of Audit Committee 3. Mr. Adul Chandanachulaka Director, audit committee, and Chairman of Corporate Governance Committee 4. Mr.Weerachai Ngamdeevilaisak Director, audit committee, and Chairman of Risk Management and Chairman of Nomination and Remuneration Committee
The 2009 Annual General Shareholders’ Meeting, held on 9 April 2009, approved 2009 remuneration of Directors. Such amount must not exceeding Baht 12 million to Independent Directors and to Directors who are Chairman of the Board of Directors, Chairman of Audit Committee, Chairman of Risk Management Committee, Chairman of Corporate Governance Committee and Chairman of Nomination and Remuneration Committee, whilst other Directors will not receive any. The details of remuneration paid in 2009 compared to that of 2008, 2007 are as follows: Unit = Baht
2009 2008 2007 Remuneration Bonus (1) Remuneration Bonus (1) Remuneration Bonus (1) 3,159,000 1,443,664
3,170,000 1,168,695
3,140,000 709,093
4,602,664 1,372,800 635,212 2,008,012 1,100,000 519,719
4,338,695 1,372,800 514,226 1,887,026 1,110,000 420,730
3,849,093 1,372,800 312,001 1,684,801 1,110,000 255,273
1,619,719 1,402,800 635,212
1,530,730 1,422,800 514,226
1,365,273 1,392,800 312,001
2,038,012 1,937,026 7,034,600 3,233,807 7,075,600 2,617,876 Total Grand total 10,268,407 9,693,475 Notes: Bonus of the year included the second half-year bonus, paid on January 31 in the next year
1,704,801 7,015,600 1,588,368 8,603,968
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Remuneration of Executive Directors and Management
Total remuneration of Executive Directors and Management are as follows:
2009 Nature of Compensation Salary / Wage Bonus Contribution to Provident Fund Others Total
No. of Management 8 8 8 8 8
2008 Amount in Baht
34,181,139 14,156,898 1,287,426 2,510,350 52,135,813
No. of Management 9 9 9 9 9
Note : Bonus included the second half-year bonuses, paid on January 31 of the next year.
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2007 Amount in Baht
No. of Management
34,286,362 11,739,120 1,274,073 3,575,950 50,875,504
8 8 8 8 8
Amount in Baht
27,912,880 10,258,385 1,116,509 256,710 39,544,484
Other remuneration
Other remuneration was in the form of share warrants offered to the directors, employees and advisors of the Company and/or the subsidiaries, with a conversion ratio of 1 warrant to 1 ordinary share and semi-annual exercisable (For more details, see item “Warrants (PS-WA)”). The Exercise Period of warrants represents the right to purchase the newly issued shares of the Company from the last business day of June and December of each year to the last business day of July and January of each year, whereas other
Name
conditions remain the same. Therefore the warrants were exercised twice in 2006, on June 30 and December 29, once in 2007. In 2006, the warrants were exercised on July 30 and 29 December. Except for 2009, there are three time exercise of warrants, last business day of January, July, and November. As per the 2009 Organizational Structure, cumulative of 9,152,300 units of warrants were allocated to 8 Directors and Management. All Directors and Management exercised their rights to purchase the Company’s common shares. Details are shown for directors and management positions as at 31 December 2009.
No. of Warrant Allocated (unit)
1. Dr.Pisit Leeahtam 2. Professor Emeritus Dr.Trungjai Buranasomphop 3. Mr.Adul Chandanachulaka 4. Mr.Weerachai Ngamdeevilaisak 5. Mr.Narong Manavapat 6. Mr.Prasert Taedullayasatit 7. Mrs.Rattana Promsawad 8. Mr.Piya Prayong
1,500,000 700,000 700,000 700,000 2,252,300 1,440,000 300,000 1,560,000 9,152,300
Total
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No. of Warrant Exercised (Unit) 2007 2009 2008
562,500 262,500 262,500 262,500 844,700 540,000 112,500 585,000 3,432,200
375,000 175,000 175,000 175,000 563,100 360,000 75,000 390,000 2,288,100
187,500 87,500 87,500 87,500 281,500 180,000 37,500 195,000 1,144,000
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Good Corporate Governance The Company adheres to corporate governance principles which are consistent with international principles and the Stock Exchange of Thailand’s policy, the Company therefore has established “The Principles of Good Corporate Governance” in order to ensure the ethical conduct of its business. The Company strongly believes that its good corporate governance procedures are beneficial to the Company’s performance, being one of the keys to achieving its basic goal. The Company’s Corporate Governance Policy is divided into seven categories, as follows: o The Board of Directors o Rights of shareholders o Equitable Treatment of Shareholders o Role of Stakeholders o Disclosure and Transparency o Internal Controls and Risk Management o Philosophy and Code of Conduct The Company communicated “The Principles of Good Corporate Governance” on the Company’s website, www.pruksa.com, has encouraged the Directors, Management and employees to acknowledge and observe.
1. The Board of Directors
The Board of Directors is accountable to the shareholders for ensuring that the business of the Company is managed properly in the best interests of the shareholders and other stakeholders, as well as the general public. The Board of Directors has a key role in making sure that management commit themselves to performance excellence, with due consideration to the risk exposure of the Company 99
1.1 Structure of the Board of Directors The Board of Directors comprises at least five directors, of whom at least one third, but no fewer than three, shall be independent directors. Chairman of the Board of Directors and Chairman of Executive Committee should not be the same person The Board of Directors of Preuksa Real Estate Public Company Limited comprises 5 non-management Directors (4 Independent Directors: Dr.Pisit Leeahtam, Professor Emeritus Dr.Trungjai Buranasomphop, Mr.Weerachai Ngamdeevilaisakand Mr.Adul Chandanachulaka, which exceeds one third of the entire Board) and 5 management Directors. Besides, Chairman of the Board of Directors (Dr.Pisit Leeahtam) and Chairman of the Executive Committee (Mr.Thongma Vijitpongpun) are not the same person. 1.2 Director Qualifications Directors on the Board of Directors shall possess all the qualifications stated in the public company law and other related laws.They shall not possess any characteristic unsuitable for trustworthy to manage business which the general public is the shareholders pursuant to the notifications of the Office of the Securities and Exchange Commission. Directors must also have sufficient knowledge and expertise, and a high standard of integrity and business ethics. In addition, they must be able to commit enough time to contribute their knowledge and expertise to perform their duties for the Company.
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Independent directors must additionally meet the independence criteria adopted by the Company and in compliance with the same qualifications in accordance with the Notification of the Stock Exchange of Thailand on Qualifications and Scope of Work of the Audit Committee. By making unconditional opinions, independent directors are expected to be capable of safeguarding the interests of all the shareholders 1.3 Term of Service A Board of director’s term of service is fixed for three years. A period of one year is hereby defined as the period between the Annual General Meeting of Shareholders of the year of appointment and the Annual General Meeting of Shareholders of the following year. Upon the expiration of the term, a director may be re-elected by the shareholders. Sub-Committees’ term of service is in line with the term of the Boards’. Upon the expiration of the term, a committee may be re-elected by the Boards. 1.4 Sub-Committees The Company has established the Audit Committee pursuant to the regulations of the SET and has also established the following sub-committees to carry out duties as assigned by the Board of Directors: the Risk Management Committee, the Corporate Governance Committee, and the Nomination and Remuneration Committee. 100
1.4.1 Audit Committee The Audit Committee is responsible for reviewing the Company’s financial statements and financial reports to ensure the accuracy and completeness of the financial statements and the reports with adequate and effective internal control and internal audit system ; Contemplating the independency of internal audit and also approve the appointment, removal and termination of the Chief Internal Auditor or any other function responsible for internal auditing; Considering the disclosures of information, connected transaction(s) and transactions with a potential conflict of interest pursuant to laws and the regulations of the Stock Exchange of Thailand to ensure the reasonableness of the transaction and to the most benefit of the company; Preparing the Audit Committee Report for disclosure in the Company’s Annual Report; Reviewing to ensure compliance with the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand or laws and regulations relevant to the business of the Company; Making recommendations on the appointment of external auditors of the Company and propose their remuneration, for consideration of the Board of Directors; Performing any other tasks within the scope assigned by the Board; Reviewing and giving opinions in an independent and objective manner on any internal auditing tasks performed by Internal Audit Department; and Consulting regularly with the external auditors. 1.4.2 Risk Management Committee The Risk Management Committee is responsible for prescribing policy and guidelines and providing recommendations to the Board
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with respect to the management of external and internal risks to Company operations to ensure they are within the appropriate and acceptable level. 1.4.3 Nomination and Remuneration Committee The Nomination and Remuneration Committee is responsible for nominating persons to be appointed as new Directors, Chairman of Executive Committee and Managing Director or as replacements at the end of the term of office or when vacancies occur for other reasons.
such requirements are met effectively; making reports to the Board of Directors about the Company’s corporate governance, giving opinions on best practices adopted in order to improve or adjust them as needed; reviewing and proposing publicizing of the Company’s efforts with respect to good corporate governance. 1.5 Charter of the Board of Directors The Company has established a charter for the Board of Directors and for the sub-committees in order for each to have a clearly-defined operating procedure.
Besides, the Nomination and Remuneration Committee has the responsibility to propose guidelines and methods for payment of remuneration and other benefits to the Directors, Committee Members, Chairman of Executive Committee and Managing Director. This includes setting criteria for review and evaluation of remuneration to make it commensurate with their duties and responsibilities, overall business performance of the Company and the general business circumstances.
1.6 Conflict of Interest The Company attaches great importance to proper management of conflicts of interests of parties concerned in both corporate level and employee level, handling them in a careful, fair and transparent manner and determine best practice in handling the conflict of interest. Full disclosure of information thereof is required in all cases. Where a member of the Board of Directors or an executive has an interest in a matter under consideration, he or she shall leave the meeting room or abstain.
1.4.4 Corporate Governance Committee Corporate Governance Committee is responsible for overseeing and reviewing major best practices of the Company to ensure its compliance with good governance. This includes reviewing corporate governance policy, principles and practices; making recommendations on business ethical requirements and best practices for directors, executives, employees; ensuring that
1.7 Remuneration for Directors and Management The Company remunerates the directors for their service at an appropriate and motivating level in order to retain quality directors. The remuneration is offered both in monetary and nonmonetary forms. The Nomination and Remuneration Committee is responsible for reviewing and proposing appropriate remuneration for directors, for approval by shareholders annually.
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Management directors shall only be remunerated only for their service in the capacity of Management. Such remuneration shall be based on the Company’s operation performance and their individual performance. 1.8 Knowledge Development and Training for Board of Directors A newly appointed director shall be adequately informed of the rules and regulations and business of the Company on a continual basis. In addition, the Board of Directors shall participate in training courses regularly as their increased knowledge and expertise have contributed to the efficient oversight of Company business. So far, 9 of the 10 Directors have attended the Director Certification Program (DCP), and one attended the Director Accreditation Program (DAP) of the Thai Institute of Directors (IOD). 1.9 Appraisal of the Board of Directors’ Performance The Board of Directors is required to carry out a self-performance appraisal, summarize overall performance and suggest and make recommendations for the purpose of enhancing their overall efficiency.
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2. Rights of shareholders
Recognizing the importance of the rights of shareholders, the Company refrains from any act that may violate or curtail the rights of the shareholders, for instance, rights to attend shareholders’ meeting and vote, rights to grant proxy to any one to attend the meeting and vote on behalf, rights to ask make comments and ask questions in the shareholders’ meeting, rights to appoint directors and rights to appoint external auditors and determine auditors’ fees, etc. 2.1 Shareholders’ Meeting • Date, time, and venue of the meeting The Company shall hold an annual general shareholders’ meeting within four months of the annual account closing date, and will fix the date, time, and venue of the meeting that are convenient for the shareholders to attend. The Company may call an extraordinary meeting of the shareholders if the Board of Directors deems this necessary. The Company shall send an invitation to the shareholders to attend the meeting at least 14 days in advance to allow sufficient time for shareholders to consider the agenda and prepare details of the matters they wish to propose for consideration at the meeting. Each agenda item shall clearly indicate whether it is a matter for acknowledgement, deliberation or approval, and shall be accompanied by opinions of the Board of Directors.
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In addition, the Company shall publish the invitation in a Thai daily newspaper for at least three consecutive days as well as in the Company’s website, www.pruksa.com (Investor Relations/ Shareholders’ Meeting), complete with details of the date, time, venue and agenda of the meeting, downloadable proxy form B and proxy foam C and sufficient information pertaining to the matters to be considered at the meeting. • Invitation to Shareholders’ Meeting In attending a meeting, shareholders should carry a document showing their identity, for example, an ID card or passport. In case of attendance by a proxy of a natural person, the documents of the appointer must also be produced, i.e. a filled-out proxy, a copy of ID card or passport. In case of proxy of a juristic person, the documents of the appointer must be produced, i.e. a filled-out proxy form and a certified copy of the juristic person registration. The Company will arrange for the shareholders to register for the meeting in advance of the meeting time. • Board of Directors’ attendance in shareholders’ meeting Shareholders’ Meeting is considered very important and the directors will normally attend such a meeting, which is usually chaired by the Chairman of the Board of Directors. In addition, the Chairman of Executive Committee, Managing Director, Chairman of each sub-committee, and the Company’s auditors or representative and legal advisor will also attend the meeting to listen to comments and answer queries of the shareholders. 103
• Queries and comments from the shareholders, voting, and minutes of the meeting. At a shareholders’ meeting, the Company shall explain to shareholders voting and vote-count procedures prior to the meeting. During the meeting every shareholder is offered an opportunity to make comments and ask questions on a fair basis. In voting, one share is represented by one vote and the resolution is passed by majority of votes. In the event of a tie, the chair shall have a second and casting vote. The Company shall record the resolutions passed at each meeting, clearly indicating the “yes,” “no,” and “abstain” votes in the minutes of the meeting, together with the details of questions, answers and comments raised during the meeting. A shareholder who has an interest in a matter being considered shall refrain from voting, except in the vote to appoint or remove a director. 2.2 Dividend Payment The annual dividend payment must be approved at a shareholders meeting. Dividends can be paid to shareholders only when the Company has earned profit from its operation and registered no accumulated losses. The dividend amount is divided equally by the number of Company shares. In case the Company has earned profit from its operation enough to pay dividend, from time to time the Board may consider
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interim dividend payment and inform shareholders in the next shareholders’ meeting. The residual amount of annual dividend payment or interim payment shall be allocate to reserves and is subject to justifications and considerations that the Board of Directors deems appropriate. The payment of dividends shall be made within one month of the date of the shareholders’ resolution, or one month of the date of the Board of Directors’ resolution in case of interim dividend payment. The shareholders will be informed in writing of the dividend payment, which will also be announced in a newspaper. 2.3 Appointment of the Company’s Auditors The Shareholders’ Meeting will appoint the Company’s external auditors and also fix the audit fee, proposed by the Board of Directors. The Company’s auditors shall not be a director, officer or employee of the Company. The Company shall hold an annual general shareholders’ meeting within four months of the annual account closing date, and will fix the date, time, and venue of the meeting that are convenient for the shareholders to attend.
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3. Equitable Treatment of Shareholders
The Company is responsible for the fair and equitable treatment of all the shareholders in order to uphold their basic rights. 3.1 Nomination of Candidates for Directorship A process for a shareholder to nominate a candidate for directorship has been established, according to which a shareholder can nominate a qualified person to be elected as director by submitting background information as well as the consent of the nominee to the Chairman of the Board of Directors three days in advance of the shareholders’ meeting. In accordance with the Company’s policy and best practice of promoting good corporate governance as well as for the purpose of equitable and fair treatment to all shareholders, the Company invited shareholders to nominate persons whom he deem qualified, knowledgeable and competent as their representatives to act as directors 3-4 months in advance of the shareholders’ meeting (during December 1,2009 – January 31, 2010)
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3.2 Shareholders’ Meeting 3.2.1 Agenda Prior to each Shareholders’ Meeting, the Company will invite the shareholders to propose agenda items in advance through the Company’s website so that the Board of Directors can consider the appropriateness of the proposed agenda items for inclusion in the meeting agenda.
3.3 Prevention of the Use of Inside Information The Company has set out and communicated guidelines for safeguarding inside information and the use thereof to the employees for their observance. The Company also requires that the directors and executives who are required by law to hold securities report on their holdings to the Board regularly.
In accordance with the Company’s policy and best practice of promoting good corporate governance as well as for the purpose of equitable and fair treatment to all shareholders, the Company invited shareholders to propose the agenda of the 2008 Annual General Shareholders’ Meeting 3-4 months in advance of the shareholders’ meeting (during December 1, 2009 – January 31, 2010).
The Company recognizes and respects the rights of all stakeholders and has established a code of conduct outlining the guidelines in this respect. The purpose is to ensure that the lawful rights of stakeholders, whether it be shareholders, employees, executives, customers, partners, creditors, or the general public, are properly protected and cooperation among these groups is promoted and benefits generated to all concerned in a fair manner. It is believed that these factors will ensure the sustainable growth of Company’s business.
3.2.2 Appointment of proxy to attend and vote at Shareholders’ Meeting If a shareholder is not able to attend a meeting, he or she can appoint a proxy to attend and vote on his or her behalf by completing a proxy form provided with explanation in the invitation to a meeting. In the invitation, the Company will propose at least one independent director as a choice for the shareholders to appoint as their proxy. (Proxy form B and Proxy form C can be downloaded from the Company’s website: www.pruksa.com (Investor Relations / Shareholders’ Meeting))
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4. Role of Stakeholders
Shareholders: • The Company intends to be good representative of shareholders operates business in such a way that satisfy shareholders the most; to ensure long-term growth of the Company’s value with sustainable growth of return on equity as well as disclosure and transparency Employees: • The Company recognized value of human resources and genuinely wants its employees to feel proud of the organization by maintaining an atmosphere in which employee
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participation is promoted. In addition, the Company offers equal opportunities in respect of career advancement to its employees and consistently supports their endeavors to learn and gain new skills so that the Company can add value and uphold business excellence. • The Company promotes equal treatments in terms of gender, race, ethnicity, religion and belief • The Company is committed to enhancing the wellbeing of its employees and surrounding community, and maintaining a decent working condition. The Company set up work safety procedures in accordance with the laws and relevant regulations. Customers: • The Company aims to build customer engagement and gain their confidence from its quality services and products at affordable prices, and to maintain good relationship with the customers. Guidance is as follows: Products & Services • The Company has paid attention to and has been responsible for customers. It has produced product with quality and up to standards Customers’ confidential information • Directors Management and employees at all level are committed to keep the customers’ information confidential, despite permission granted, or it is required by the law and regulations to disclose information to concerned parties
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Competitors: • The Company supports an ethical way of business competition. It seeks to outperform its competitors within the good competition framework, on the basis of fairness and honesty, and will refrain from acting in bad faith to the detriment of competitors. Business Partners and Creditors: • The Company and its business partner carry out business with justifiability and impartiality in accordance with the ethical framework and for the mutual interest and for value chain delivery. The Company will refrain from acting in bad faith to the detriment of its reputation. • The Company has complied with the conditions as agreed in the borrowing: to repay principal and interest. Social: • The Company conducts its business in a manner responsible for environment, community and society The Company complies with the provisions of the relevant laws, rules and regulations to take good care of the rights of these stakeholders
5. Disclosure and Transparency
It is a policy of the Company to fully and sufficiently disclose useful information, both financial and non-financial, in a timely, manner in accordance with the rules and regulations of the SEC and the SET, as well as relevant laws.
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The Company has established an Investor Relations Department, tasked with coordinating with shareholders, securities analysts, investors, government agencies and other parties concerned, on an equitable basis. Company information is reported via the ELCID platform of the SET for displaying on its website, www.set.or.th. Relevant information is also reported to the SEC and displayed in both Thai and English on the Company’s own website, www.pruksa.com (Investor Relations). Throughout the year 2009, the Investor Relations Department arranged investor relations activities on a regular basis as follows: • Dissemination of news and information annually and quarterly; for instance, the Financial Statements, the Annual Report, the Annual Registration Statement (Form 56-1), Notice of the Annual General Meeting of Shareholders as well as letters inviting shareholders to propose agenda items and/or to nominate persons deemed capable and suitable to represent them as members of the Board of Directors 3-4 months in advance of the shareholders’ meeting, notification to the SET, documents such as those for analyst & investor meetings, Company visits and presentations for road shows which are displayed on the Company’s website, www.pruksa.com • Organizing Annual Analyst & Investor Meetings to convey quarterly operating result (4 times / year) and the Company’s annual business plan announcement (once a year), after submission of the Financial Statements and the Analytical Report of Operating Results to the SEC and the SET 107
• Producing and publicizing information and documents pertaining to the Annual Business Plan and the Company’s operating results to securities analysts, investors and interested parties on a quarterly basis • Creating opportunities for securities analysts and investors to pay a Company visit or have a conference call with the executives to discuss policies, strategies and business plans, as well as financial information (audited by the Certified public Auditor accountant, following notification to the SET and the SEC), nonfinancial issues and progress of the implementation of various projects of the Company, including exchange of business views on a regular basis • Organizing visits for securities analysts and investors to the precast concrete factory which uses the Semi-Automated Pallet Circulating System, the most advanced system in Thailand, as well as visits to various single-detached house and townhouse projects • Conducting road shows domestically and internationally at the invitation of the SET and/or securities companies to provide information and attend to queries of shareholders, securities analysts and corporate investors. In 2009, there was 1 local roadshow and 3 international roadshows. • Arrangement of executive interviews on television • participating in activities of the Thai IR Club to exchange knowledge and share experiences with a view to further developing the Company’s Investor Relations function. The company’s director Chief Operating Officer, Prasert Taedullayasatit, is the club’s director.
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For enquiries, shareholders, securities analysts, investors, Government agencies and parties concerned should contact the Investor Relations Department at (66) 02298 0101 Extension 1863 or Email: IR@ps.co.th
persons, and the setting up of reporting and follow-up procedures. The Risk Management Committee provides recommendations on guidelines and/or policies on the handling of critical risks.
The Company has a firm intention to encourage all the executives and employees to adopt the same standard of conduct. Toward this purpose, we have announced “Code of Conduct� and established a department to be responsible specifically for promoting the established Code of Conduct so that employees at all levels understand it and observe it with genuine willingness.
6. Internal Controls and Risk Management
The Company has comprehensive internal control and internal audit systems, covering matters concerning finance, operations, compliance, and risk management. 6.1 Internal Control and Internal Audit systems The Company requires that its internal control system be reviewed and reported by responsible executives regularly while the Internal Audit Department, which is an independent unit, is responsible for internal auditing on a regular basis, to ensure that management and employees strictly comply with the rules and regulations, as well as the Management Authorities. These functions are under the supervision of the Audit Committee.
7. Philosophy and Code of Conduct
6.2 Risk management The Company’s risk management policy requires that internal and external risk factors be reviewed regularly in order to contain risk within appropriate and acceptable levels. Such a review shall cover strategic risks, financing risks, construction management risks, and other operational risks. The review also includes an assessment of risk exposure and possible impacts, prevention and impact mitigation measures, the assignment of responsible
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Internal Control The Board of Directors emphasizes the necessity of internal control system that is commensurate with the level of risk exposure and working environment. At every Board of Directors’ meeting, the Audit Committee is invited to present their views on the adequacy and appropriateness of the Company’s internal controls, and also to suggest the management for changes and/or improvements on internal control system. The Board of Directors and Audit Committee mutually agree that the current system of internal controls is appropriately managed, as described below.
1. Internal Control Environment
The Company maintains the environment and organization structure which facilitate internal control function. Our business objectives and targets, as approved by the Board of Directors, which are guidelines for employees to follow in the conduct of their business, are clearly-defined and measurable. The organizational structure is also arranged so that management can perform their duties with efficiency while adhering to the principle of integrity and high ethical standards. In 2006, the Corporate Governance Policy and the Code of Conduct were established to be used as best practices for members of the Board of Directors, Management, and employees to observe.
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2. Risk Assessment
A Risk Management Committee has been created in recognition of the importance of this particular area of internal controls. The committee has the duty to give advice to management on appropriate risk management procedure. As a result, risk factors have been assessed and specific precautionary measures initiated, so as to minimize possible adverse effects on the Company’s operations. At meetings of the Risk Management Committee, representatives of line functions are invited to report on what they have done in accordance with the established risk management guidelines so that the committee members can perceive their problems and constraints. Then they will arrived at suggestion / solution afterward. In 2007 and 2008, 10 and 9 meetings were held respectively.
3. Control Activities
The Balanced Scorecard System (Balanced Scorecard) and the Key Performance Indicators (KPI) have been introduced as planning and control tools, whereby lines of responsibility and accountability between departments have been clearly defined to achieve proper checks and balances. The Operational Procedures have been issued to provide guidelines for systematic and effective operations to prevent or mitigate risks of damage caused by the various departments in the course of performing their duties.
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Management Authorities have been established, where the scope, authority and financial approval limit at each level have been defined for the purpose of flexibility and clarity. In regard to compliance, the Company has devised methods to ensure compliance with related laws and regulations. For example, stringent measures have been implemented in cases where the Company transacts business with major shareholders, directors etc, including the requirement that such a transaction be subject to approval by persons having no vested interest in order to prevent the siphoning of the Company’s assets and interests. Moreover, the Company has strictly complied with the regulations on information disclosure of the Securities Exchange Commission (SEC), Securities Exchange of Thailand (SET), and Thai Gennerally Accepted Accouting Standard regarding connected/related persons or businesses.
4. Information and Communication
The Company has continually improved the information system by maintaining effective and efficient information and communication channels, internal and external, ensuring that the information, financial and otherwise, is complete, accurate, timely and sufficient for sound decision making. For internal communication, information necessary for conducting Company business is readily available for all employees on the Company’s Intranet. For external communication, there is a communication system that enables
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the Company’s to provide information and operational reports to various authorities required by the relevant laws and regulations in a timely manner. Entry and dissemination of information is subject to effective control, whereby tasks are clearly defined, responsible persons designated and access restricted to only individuals requiring such information to perform their duties.
5. Follow–Up and Evaluation
The Company’s follow-up and evaluation system allows the Board of Directors to regularly assess the operating results against the set objectives and targets. The Internal Audit Department meanwhile is responsible for reporting to the Audit Committee on the results of their internal control reviews, in accordance with the prescribed internal control measures.
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Control of Information Exploitation Utilisation of Inside Information
The Company has a policy and methods of governing utilisation of the Company’s inside information by Directors and Management as follows: 1. The Company has informed its Directors and Management of their duties to disclose their holding of securities of the Company and provisions on penalties stipulated in the Securities and Exchange Act B.E 2535 and the regulations of the SET. 2. The Company requires its Management to report any change in their holding of Company securities to the Office of the Securities and Exchange Commission (SEC) in accordance with Section 59 of Securities and Exchange Act B.E. 2535, and to submit one copy of the securities disclosure report to Company on the same day.
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3. The Company has instructed its Management that Management who have access to inside information which may affect changes in the Company share price to exercise caution in selling or buying securities of the Company 15 days before and one day after the disclosure of financial statements or such inside information to the public. The Company will instruct persons involved with any inside information not to disclose it to other persons until it is reported to the SET. Sanctions by the Company for breach of the above rules include appropriate disciplinary sanctions, i.e., verbal warning, written warning, salary cut, work suspension, employment termination and legal actions.
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Connected transactions The Company enters into connected transactions as it may consider appropriate by complying with the laws governing securities and exchange, regulations, notifications, orders or rules of the SET as well as accounting standards regarding information disclosure of related persons or business as prescribed by the Certified Public Accountant Association of Thailand. In case of transactions that occur regularly and continuously in the future, the Company prescribed a policy and practice guidelines to be in accordance with the general business conditions, in reliance upon prices and conditions that are suitable, fair and appropriate and can be inspected and can prevent siphoning.
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Such guidelines shall be proposed to the Audit Committee for consideration and approval after which execution can be made. Should the Company enter into a connected transaction, it will arrange for the Audit Committee to give an opinion as to the appropriateness of such transaction will not cause siphoning of benefits between the Company and its shareholders, and that the transaction is conducted in the best interests of all shareholders. For the accounting period ending December 31, 2009 and 2008, the Company entered into connected transaction as follows:
ANNUAL REPORT 2009
Connected Related Relationship with Type of transaction and business transaction value person the Company requirement (Million Baht)
Price and Detail
Item 1 Director and The Company leased space in Laksi 31/12/2008 31/12/2009 Lease and Service Agreement dated October 1, 2008 of 425.58 square Metre area, monthly rental Mr.Thongma Shareholder of the Plaza, 10th Floor, from Mr.Thongma service will be charged and paid at Baht 127,674, 1.5 Vijitpongpun Company Vijitpongpun to use as a traning center. 0.38 from October 1, 2008, to 1 October 2010. Such rental and service fees are at the rates comparable to the market rates and conditions that are not different from the cases the Company enters into agreements. Item 2 Director and Mr.Thongma Shareholder of the Vijitpongpun Company
The company purchased land from Mr.Thongma Vijitpongpun to build townhouses
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ANNUAL REPORT 2009
11.9
The Company entered into an agreement with Mr. Thongma Vijitpongpan, President, Chief Executive Officer, and a major shareholder, to purchase land with a total of four title deeds (numbers 39809, 39810, 51443 and 79020), located in Tambon Lamphakkood (Klong Rangsit Fang Tai), Amphur Thanyaburi (Klang Muang Thanyaburi) Pathumthani Province, and a total area of 5 -1-16 rai (2,116 square wah) at a price equal to the official appraisal price, 11,896,000.- Bht. The seller shall pay for the ownership transfer fees, duty stamps and all relevant taxes. the transaction is well in line with the business plan. The price agreed is not different from that of transactions with independent outside persons.
Necessity and Appropriateness of Connected Transactions
The Audit Committee has issued the opinion regarding the connected transaction as mentioned was under normal business practice and no benefit to a related person or a person who might have a conflict of interest.
Measures or procedures for approving connected transactions
For any connected transaction of the Company, or the Company together with a person who may have a vested interest or may potentially have a conflict of interest, the Audit Committee will provide an opinion on the necessity of entering into the transaction and appropriateness of the pricing aspect of the
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transaction by considering various conditions to determine whether it is in accordance with the normal course of business in the industry. Further, there shall be a price comparison with a third party or the market price. In the event that the Audit Committee does not have appropriate expertise to consider the connected transaction, the Company will arrange for an independent expert or the Company’s Auditor to provide an opinion as input for the Audit committee’s decision. The opinion of the Audit Committee or the expert will be used by the Board of Directors or the Shareholders, as the case may be, to make a decision. The Director who has a vested interest shall have no voting right in the consideration of the transaction, which will be disclosed in the Notes to the Financial Statements, audited or reviewed by the auditors.
ANNUAL REPORT 2009
Management Discussion & Analysis Total Revenue
In 2009, the company and its subsidiaries earned Bt. 19,033.4 million, increased by 46% from 2008. Such increase was attributed by all type of houses. There were Bt. 2,271.2 million or 29.7 % growth in townhouse sale. The single detached houses also rose by Bt. 666.8 million or 13.9% . The condominium enjoyed more Bt. 3,042.3 million sale from only Bt. 534.7 million in 2008. Revenue from land sale boosted by Bt. 17.2 million. These portrayed success in implementing company’s strategies. The company’s business launched many projects consistently from late 2007. We continually develop houses to best satisfy our home buyers with right pricing. As such, we are successful in all housing sales.
Cost of sales
In 2009, Cost of sales were Bt. 11,749.0 million or 61.9 % of property sale, down 0.4% from 62.3 % in 2008. This is the result of reasonable pricing in new projects while cost management can be achieved as planned.
All selling and operating expense accounted for 12.8% of total revenue, reduced from 14.3% from that of last year. This was the result of business expansion, and benefits from the government’s economy stimulators.
Income tax
For 2009, income tax was Bt. 1,177.2million or 6.2 % of total income while the 2008’s was Bt. 659.3 million or 5.1% of total 2008 revenue. The profit before tax of 2009 was Bt. 4,799.0 million with Bt. 1,766.3 million or 58.2% increase from that of last year. The company paid higher tax in proportion than last year. The reason was the BOI-promoted housing income has declined in portion due to higher cost. The company shifts to higher- priced houses.
Net Profit
In 2009, the company and its subsidiaries earned Bt. 3,621.8 million, Bt. 1,248.5 million or 52.6 % growth from that of last year.
Selling & Administration
In 2009, selling expense was Bt. 809.3 million, Bt. 18.3 million or 2.3% rose from 2008. The 2009 administration expense was Bt. 1,576.9 million , Bt. 560.9 million or 55.2% increase from 2008. The management remuneration in 2009 were Bt. 52.1 million, Bt. 1.2 million rise from 2008.
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ANNUAL REPORT 2009
The Responsibility for the Financial Reporting of the Board of Directors The Board of Directors of Preuksa Real Estate Public Company Limited takes responsibilities of the consolidated Financial Statements including financial data presenting in this Annual Report. In preparing the Financial Statements, the Company and its subsidiaries have used appropriate accounting standards policies and consistently applied. The Financial Statements are adequately disclosed of significant data in notes to Financial Statements, also audited with unqualified opinion from independent auditors, thus, reflects a true and fair view of Balance Sheet, Income Statement and Cash Flow Statement of the Company and subsidiaries. The Board of Directors set up and maintained effective risk management and internal audit system to ensure that the Company and its subsidiaries keep accounting records which disclose with reasonable accuracy, completeness and adequacy of financial positions, to safeguard assets of the Company and its subsidiaries and to prevent and detect fraud and other irregularities. In so doing, the Board of Directors appointed the Audit Committee which consists of independent Directors to supervise and take responsibilities of the quality of Financial Statements and effective internal audit system. The opinions of the Audit Committee are stated in the report of the Audit Committee presenting in this Annual Report. The Board of Directors is of the opinion that the Company’s internal audit system is generally satisfactory and should assure the creditability of the consolidated Financial Statements of the Company and its subsidiaries as of December 31, 2009. Dr. Pisit Leeahtam Chairman of the Board of Directors 116
ANNUAL REPORT 2009
Thongma Vijitpongpun Chief Executive Officer
Audit Committee Report Preuksa Real Estate Public Company Limited’s Audit Committee comprises Professor Emeritus Dr.Trungjai Buranasomphop as Chairman, and Mr.Adul Chandanachulaka and Mr.Weerachai Ngamdeevilaisak as Members. The Audit Committee performed the duties in accordance with the scope of the responsibilities assigned by the Company’s Board of Directors, in supervising the operations of the Company to ensure that the Company is clearly managed by the Executive Committee or Management with appropriate levels of integrity and accountability to the shareholders, and that the Executive Committee and Management followed the Company’s policies properly, completely, and up to professional standards. In 2009, 12 meetings were held, with the attendance of executives, internal auditors, and the Auditor, during which presentations, discussions and exchanges of views on relevant subjects were included. Below is a summary of the main points: 1. Approval of the audited Quarterly Financial Statements and the 2009 Financial Statements prior to submission to the Board of Directors for approval. Inquiries were made to the Auditors on the accuracy and completeness of the Financial Statements and the sufficiency of information disclosure. The Auditors’ Management Letter which made recommendations on the internal control system and the 2009 Audit Schedule were also reviewed. The Audit Committee is of the opinion that the Company’s process of accounting and financial reporting procedures are under sufficient control for ensuring that the financial reports on its financial positions and operations are accurate and up to the legally required
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accounting standards, and that the Financial Statements disclose sufficient information. 2. Review and approval of the practice guidelines for entering into connected transactions or transactions with potential conflicts of interest, including reviews of transactions which could be categorized as connected, or ones with potential conflicts of interest, which took place during the year, as well as reviews of the disclosure of pertinent information to ensure that it was accurate, complete and in compliance with the Stock Exchange of Thailand’s relevant notifications, regulations and guidelines. The Audit Committee is of the opinion that Management entered into such transactions for the Company’s best interests, on an arm’s length basis, at reasonable prices, and with sufficient disclosure of information. 3. Review of compliance with relevant provisions, regulations and laws. The Internal Audit Division was instructed to include compliance audit of every operation system as one of its key tasks. From the results of the internal audit in 2009 and the meetings with the Company’s Legal Department, the Audit Committee found no indications leading to a belief that there had been significant deficiencies regarding non-compliance and/or practices conflicting with or violating relevant provisions, regulations or laws. 4. Reviews of the internal control system to assess the adequacy and effectiveness which will help the Company achieve its targets. The reviews were done by considering the 2009 internal audit report against the approved work plan and the audit report of the external
ANNUAL REPORT 2009
consultant firm, covering major systems; e.g., the procurement and material administration systems, the construction system, the project management system, sales, quality control and service, and the system for preparation and analysis of financial reports and executive reports. No significant weaknesses or deficiencies were found. In addition, assessment was carried out in accordance with the guidelines of the Office of the Securities and Exchange Commission in management, finance and compliance control. The Audit Committee is of the opinion that the Company has an appropriate, sufficient and effective internal control system. 5. Supervision of the internal control function. The Audit Committee considered the mission, the scope of operations, duties and responsibilities, auditor independence, organization and manpower of the internal control function, as well as considered and approved the Internal Audit Manual and reviewed the Internal Audit Charter to ensure that it is appropriate and up to professional standards. The Committee also reviewed the Audit Report on a monthly basis, as well as the overall performance of the internal audit function, including the survey of satisfaction of executives and the audited departments at all levels. The supervision also included approval of the 2009 Audit Schedule, prepared in accordance with the Company’s risks, the Audit Quality Improvement Plan and development of the knowledge skills and expertise of the internal audit personnel. The Audit Committee is of the opinion that the Company’s internal audit system is satisfactorily independent, sufficient and effective and is in line with the set objectives.
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6. Quarterly reports on the operation of the Audit Committee to the Board of Directors. Opinions and recommendations for managerial purposes were presented to Management, who has made appropriate improvements and adjustments as recommended. 7. Review of the Audit Committee Charter and recommendations for revision made to the Board of Directors for approval. The recommended revisions covered the qualifications of the Audit Committee Members; the Committee’s scope of responsibilities, duties and authority, and meetings, in order to be in line with the policy of good corporate governance outlined in the Notification of the Capital Market Supervisory Board and as required by the Stock Exchange of Thailand. The revision has been approved by the Board of Directors. 8. Selection of the Auditors for 2009; nominating the Auditors and proposing their fee to the Board of Directors for submission to the 2009 Shareholders’ Meeting for approval. The Audit Committee considered the independence, performance and service of the Auditors, as well as the appropriateness of the fee and was of the opinion that the Auditors had expressed opinions and made recommendations beneficial for the preparations of financial reports and internal control. It was therefore deemed appropriate to propose that the Board of Directors request approval from the Shareholders’ Meeting to re-appoint the auditors from KPMG Phoomchai Audit Ltd, as the Company’s Auditors, for 2009.
ANNUAL REPORT 2009
In 2009, the Audit Committee performed its assigned duties and responsibilities, using the members’ knowledge and competence with carefulness and sufficient independence, without limitation to access to information from the executives, staff members or the relevant people. The Committee also expressed opinions and made recommendations for equitable benefits to all relevant stakeholders.
This Audit Committee Report was reviewed and approved by the Audit Committee on February 16, 2010.
As a summary of the overall perspective, the Audit Committee is of the opinion that the Company’s Board of Directors and its executives are ethical and committed to performing their duties to achieve its objectives, and have placed utmost importance to managing the operation under an effective internal control environment, appropriate and watertight risk management, sufficient good corporate governance with transparency and trustworthiness, as well as continual improvement of the operations systems.
Professor Emeritus Dr. Trungjai Buranasomphop Chairman, Audit Committee Preuksa Real Estate Public Company Limited
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On behalf of the Audit Committee
ANNUAL REPORT 2009
Audit Fees
Prueksa Real Estate Public Company Limited and its subsidiaries paid for its auditors from KPMG Phoomchai Audit Limited, for review and audit of the Company and its subsidiaries’ Financial Statements from 2006 to 2009 as follows : Unit : Baht Audit Fees Other Fees Total
Y 2009 3,750,000 202,356 3,952,356
Y 2008 3,960,000 116,000 4,076,000
Y 2007 3,820,000 70,653 3,890,653
Y 2006 3,560,000 74,500 3,634,500
2. KPMG Phoomchai Business Advisory Ltd. Unit : Baht Business Intelligent Report IFRS Quick Scan Analysis Receive – Payment audit process Tax Consulting fee for India Investment Total
In addition, There are other services as follows : 1. KPMG Phoomchai Audit Limited Unit : Baht Y 2009 Y 2008 Y 2007 Y 2006 BOI review 595,802 430,920 408,605 185,150 Y 2009 2,996,000 1,819,000 1,551,500 2,876,000 9,242,500
Y 2008 -
Y 2007 -
Remark : KPMG Phoomchai Business Advisory Ltd is another entity and service renders are different area from audit service
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ANNUAL REPORT 2009
Y 2006 -
Corporate Social Responsibility (CSR) Business operation is not only a part of Preuksa’s success but contribution to the society is also integrated as said in the Company’s vision. “Preuksa Real Estate Pcl. is one on the top tenth leading property developers in Asia, of which vision is to focus on world class management quality emphasizing the steadily sustainable growth, the impression, the highest satisfaction among customers, staff, business partners, and shareholders, including operating business with conscious and responsibility to return to the society in every country where we operate” Our attitude is to look at CSR as activities joining our core business interests (CSR-in-process), focusing on product quality, on time delivery, and good presale and after sale services as well as activities beyond those (CSR-after-process).
CSR-in-process
• Technology – Pruksa Precast Pruksa’s construction projects are operated with systematic management. Since product and service performance as well as eco-friendly production process are considered, a new construction technology – Pruksa Precast has been developed. With the new technology, construction waste, noise pollution, dust, and traffic during constructions have been reduced. Besides, houses built under this technology, compared with the conventional method, have better quality standard because construction processes are controlled by computers. 121
• “Prototype House” Project The purpose of the project is to be the first model from which development and improvement are implemented. Other departments can also learn from “Prototype House” and apply to their projects: construction period reduction, equipment selection, and construction techniques. This has led to exchangeable knowledge among staff and enabled all construction projects to build quality houses which match customers’ desire and maximize customer satisfaction. • “Small Group Activity” (SGA) Project In order to improve working processes, SGA project was set up to encourage staff’s participation in project presentation. In addition, the project has brought about good relationship among working teams, and staff’s attachment to the Company which then lead to excellence delivery and customer satisfaction. • Human Resources Development Project Personnel are regarded as valuable asset, so Pruksa has focused on people development in terms of ability, creativity, analytical thinking, and systematic working. Both In-house and external trainings such as Lean Six Sigma for Greenbelt, Change Management, Introduction ISO 9001:2008, Service Standard for Sale, Training CRM for Sale Manager, etc. are continuously arranged in order to support the staff for the Company’s expansion both upcountry and abroad. Moreover, training for the Company’s contractors such as Management Skills, Filing Income Tax, etc. are organized to enhance the efficiency and working system. • Pruksa Call Center - 1739 Pruksa call center -1739 aims at providing assistance and information regarding Pruksa’s projects to customers and interested people. In addition, the call center, as a coordinator, is charged with
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handling and following up all projects’ requests for maintenance or repair services under the guarantee period. This will definitely lead to maximizing customer satisfaction. • Pruksa website – www.pruksa.com Customers and interested people can search for all information they need through Preuksa website 24 hours. Besides, site visit appointments, prices or brochure request, suggestions or comments, and repair notifications can be done via the internet. All financial information is also posted in the website.
CSR-after-process
Rather than CSR-in process, Pruksa has implemented CSRafter process to strengthen and support the sustainable growth of all communities. Pruksa’s CSR-after process policy has been defined as follows: - Education and the youth development - Society and the environment - Religion and arts and culture - Emergency assistance and helping the underprivileged
Education and the Youth Development
• “Pruksa scholarship” Project Scholarships are given to both customers’ children and staff’s children studying in primary schools, high schools, and universities. Moreover, schools located nearby Preuksa’s projects are target groups of the project too. • “Pruksa Precast Factory Learning Center” Project Its purpose is to be a learning center where college students 122
or interested people can learn, obtain information, and access to knowledge such as innovative construction method. From the production processes to the construction of Pruksa’s projects are also demonstrated so that learners’ skills can be developed by experiencing real situations. • Making a donation to the construction of Faculty of Engineering’s new learning building Pruksa made a donation of Baht 1,000,000.- to the Faculty of Engineering, Chulalongkorn University, for the construction of its new learning building – 100th anniversary learning building. Apart from the above projects, Pruksa also supports other educational activities and the youth development projects such as donations of items on Children’s day, playground donations, and drawing contests.
Society and the Environment
• “Mobile medical service” Project Pruksa in corporation with hospitals, sanitariums, and local administration (Tambol) provide “Mobile medical service”, which includes physical examination, screening for diabetes, anemia test, blood pressure test, rabies vaccination, and infantile paralysis vaccination, to customers and communities around Preuksa’s projects. Other than medical service, Pruksa also supports exercise for health in the communities. • “82 home-building in honor of His Majesty the King’s 82nd birthday anniversary” Project Being a part of “82 home-building in honor of His Majesty the King’s 82nd birthday anniversary” project organized by Habitat
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for Humanity Thailand, Pruksa aims at, in 2009, building 82 homes for the home needy at Nongkunkhu Village, Tambol Muang-len, Amphoe Sansai, Chiangmai.
With all these activities, all parties would empathize and have relations with each other, bringing about the unity and then turning to the strong, happy, and sustainable society.
In order to contribute to the society as well as keep relationship with customers, staff, or the public, Pruksa has organized various activities throughout the year as follows:
Religion and Arts and Culture
- Pruksa Workshop Project : professional training program and finance investment consulting service were provided to customers and the public. - Natural and Environmental Conservation Project : fathers together with sons, who are Pruksa’s customers, participated in releasing aquatic species. - Blood Donation Project: Pruksa in corporation with Thai Red Cross organized blood donation project targeting at staff and the public.
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• “Buddhism support” Project Pruksa contributed Baht 1,000,000.- to Dharma Dissemination Foundation for producing a television documentary on “Bhuddhaphum Su Suwannaphum” of which purpose is to support Buddhism and promote self-sufficient living in accordance with the Buddhist way.
Emergency Assistance and Underprivileged Helping
• Due to the fire damage, Pruksa made a donation of Baht 200,000.- to Bangkaewprachasawan School, Samutprakarn, located near Pruksa’s project to help renovate its learning building and purchase learning materials and school supplies.
ANNUAL REPORT 2009
General Information Preuksa Real Estate Public Company Limited
Head Office Address: 27th Floor, SM Tower, 979/83, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Real estate development for residential purposes, including townhouses, single-detached houses, and condominiums Company Registration: No. Bor. Mor. Jor. 0107574800307 Telephone: 0-2298-0101 Fascimile: 0-2298-0102 Homepage: www.pruksa.com
Pruksa Precast Factory
Address: 54/1 Moo 4, Tambon Ladsawai, Amphur Lamlookka, Pathumthani Business Type: Precast Concrete Factory and Precast Fence and Pillar Factory Telephone: 0-2532-8124~32 Fascimile: 0-2532-8123
Kaysorn Construction Co., Ltd. (Subsidiary)
Phanalee Estate Co., Ltd. (Subsidiary)
Address: 30th Floor, SM Tower, 979/97, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Real estate development Telephone: 0-2298-0010
Preuksa Overseas Co., Ltd. (Subsidiary)
Address: 30th Floor, SM Tower, 979/83, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Real estate development outside Thailand Telephone: 0-2298-0101
Preuksa International Co., Ltd. (Subsidiary)
Address: 28th Floor, SM Tower, 979/83, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Real estate development outside Thailand Telephone: 0-2298-0101
Preuksa India Housing Private Limited (Subsidiary)
Address: 29th Floor, SM Tower, 979/95, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Contractor for Housing Decoration Telephone: 0-2298-0101 Extension 172
Address: Ferns Icon, Unit No. 7, 1st Floor, Next to Akme Ballet, Marathahalli Outer Ring Road, Bangalore-560 037 Karnataka, India Business Type: Real estate development in India
Putthachart Estate Co., Ltd. (Subsidiary)
Preuksa India Construction Private Limited (Subsidiary)
Address: 30th Floor, SM Tower, 979/99, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Business Type: Real estate development Telephone: 0-2298-0820 124
Address: Ferns Icon, Unit No. 7, 1st Floor, Next to Akme Ballet, Marathahalli Outer Ring Road, Bangalore-560 037 Karnataka, India Telephone: +91 9632707654
ANNUAL REPORT 2009
Preuksa Vietnam Company Limited (Subsidiary)
Auditor
Address: Haiphong, Vietnam Business Type: Real estate development in Vietnam
1. Miss Somboon Supasiripinyo Certified Public Accountant Registration No. 3731 and/or 2. Mr. Supot Singhasaneh Certified Public Accountant Registration No. 2826 and/or 3. Miss Wanaporn Jongpeeradechanon Certified Public Accountant Registration No. 4098 Company Name: KPMG Poomchai Audit Ltd. Head Office: 195 Empire Tower, 22nd Floor, South Sathon Road, Yannawa, Bangkok 10120 Telephone: 0-2677-2000
Preuksa Vietnam Construction Co., Ltd (Subsidiary) Address: Haiphong, Vietnam Business Type: Real estate development in Vietnam
Security Registrar Thailand Securities Depository Co.,Ltd.
Head Office: 62 The Stock Exchange of Thailand, Ratchadapisek Road, Klong Toey, Bangkok 10110 Telephone: 0-2229-2800
Legal Advisor 1) Baker & Mckenzie Ltd.
Head Office: 25th Floor, Abdulrahim Place 999 Rama IV Road, Bangkok 10500 Telephone: 0-2636-2000
Debenture No. 1 and No. 2 / 2550 Registrar TMB Bank Public Company Limited Head Office: Phaholyothin Road, Chomphon, Chatuchak, Bangkok 10900 Telephone: 0-2299-1111
2) Price Waterhouse Coopers Co.,Ltd.
Debenture No. 1 / 2552 Registrar Kasikornbank Public Company Limited
Head Office: 1 Soi Kasikornthai Rajburana Rd. Kwaeng Rajburana, Rajburana District, Bangkok Telephone: 0-2222-0000, 0-2888-8888
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Head Office: 179/74-80, South Sathorn Rd., Kwaeng Toongmahamek, Sathorn District Bangkok 10120 Telephone: 0-2286-9999, 0-2344-1000
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Annual financial statements and Audit report of Certified Public Accountant For the years ended 31 December 2009 and 2008
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ANNUAL REPORT 2009
Audit report of Certified Public Accountant To the shareholders of Preuksa Real Estate Public Company Limited I have audited the accompanying consolidated and separate balance sheets as at 31 December 2009 and 2008, and the related statements of income, changes in equity and cash flows for the years then ended of Preuksa Real Estate Public Company Limited and its subsidiaries, and of Preuksa Real Estate Public Company Limited, respectively. The Company’s management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits.
In my opinion, the consolidated and separate financial statements referred to above present fairly, in all material respects, the financial positions as at 31 December 2009 and 2008 and the results of operations and cash flows for the years then ended of Preuksa Real Estate Public Company Limited and its subsidiaries, and of Preuksa Real Estate Public Company Limited, respectively, in accordance with generally accepted accounting principles.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
(Somboon Supasiripinyo) Certified Public Accountant Registration No. 3731
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ANNUAL REPORT 2009
KPMG Phoomchai Audit Ltd. Bangkok 16 February 2010
Preuksa Real Estate Public Company Limited and its Subsidiaries Balance sheets As at 31 December 2009 and 2008
Assets
Note
Consolidated financial statements 2009 2008
Separate financial statements 2009 2008 (in Baht)
Current assets Cash and cash equivalents Current investments Installment receivables Receivable from subsidiaries Short-term loans to subsidiaries Property development projects Deposits for purchase of land Other current assets
5 6, 7 8 4 4 6, 9
846,252,967 2,304,521,701 59,779,582 13,201,936,684 486,380,284 204,933,667 17,103,804,885
1,526,168,206 3,424,107 38,316,705 12,621,939,173 99,055,113 138,156,927 14,427,060,231
561,414,129 1,728,046,212 56,241,098 138,895,842 126,511,235 11,994,026,728 486,380,284 187,604,778 15,279,120,306
1,175,206,278 3,424,107 35,460,307 199,506,187 328,670,572 11,383,647,680 99,055,113 108,986,625 13,333,956,869
Non-current assets Investment in subsidiaries Property, plant and equipment Land not used in operations Deferred tax assets Intangible assets Other non-current assets Total non-current assets
10 6, 11 6, 12 13 14
1,299,179,820 127,869,798 176,965,607 86,727,956 76,524,574 1,767,267,755
1,505,913,958 127,829,591 116,963,345 78,830,209 35,670,611 1,865,207,714
799,998,300 1,202,114,667 127,829,591 143,992,662 75,918,654 58,789,519 2,408,643,393
275,997,825 1,402,422,772 127,829,591 90,544,730 68,712,410 30,985,029 1,996,492,357
18,871,072,640
16,292,267,945
17,687,763,699
15,330,449,226
Total current assets
Total assets
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ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Balance sheets As at 31 December 2009 and 2008
Liabilities and equity Current liabilities Short-term loans from financial institutions Trade accounts payable - Subsidiaries - Others Payables for purchase of land Current portion of long-term debentures Short-term loan from subsidiary Customers’ deposits Income tax payable Other current liabilities
Total current liabilities Non-current liabilities Long-term loans Long-term debentures Employee benefits
Total non-current liabilities Total liabilities
Note
Consolidated financial statements 2009 2008
Separate financial statements 2009 2008 (in Baht)
6, 15 4 15 4, 15 16
6, 15 15 17
-
1,993,108,263
-
1,845,108,263
798,867,269 350,227,637 600,000,000 946,558,910 687,319,333 924,190,785 4,307,163,934
535,505,161 300,685,648 400,000,000 819,156,597 405,943,812 490,384,791 4,944,784,272
81,350,134 707,189,676 246,510,049 600,000,000 926,835,724 603,399,543 785,376,435 3,950,661,561
71,359,198 421,519,193 240,498,522 400,000,000 39,217,225 782,095,087 320,700,669 431,126,542 4,551,624,699
30,000 1,500,000,000 40,999,587 1,541,029,587
606,656,710 600,000,000 30,841,233 1,237,497,943
20,000 1,500,000,000 38,795,851 1,538,815,851
583,055,710 600,000,000 29,474,916 1,212,530,626
5,848,193,521
6,182,282,215
5,489,477,412
5,764,155,325
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ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Balance sheets As at 31 December 2009 and 2008
Liabilities and equity Equity Share capital Authorised share capital Issued and paid-up share capital Share premium Fair value changes on investments Currency translation differences Retained earnings Legal reserve Unappropriated
Note
Consolidated financial statements 2009 2008
Separate financial statements 2009 2008 (in Baht)
18 18 18
2,224,753,400 2,206,812,000 1,361,595,353 534,804 35,980
2,255,753,400 2,191,394,200 1,361,595,353 -
2,224,753,400 2,206,812,000 1,361,595,353 275,793 -
2,255,753,400 2,191,394,200 1,361,595,353 -
225,575,340 9,228,194,402
225,575,340 6,331,244,526
225,575,340 8,404,027,801
225,575,340 5,787,729,008
Minority interests
Total equity
13,022,747,879 131,240 13,022,879,119
10,109,809,419 176,311 10,109,985,730
12,198,286,287 12,198,286,287
9,566,293,901 9,566,293,901
Total liabilities and equity
18,871,072,640
16,292,267,945
17,687,763,699
15,330,449,226
Total equity attributable to equity holders of the Company
18
130
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Statements of income For the years ended 31 December 2009 and 2008
Consolidated financial statements Note Revenues Revenue from sale of real estate Dividend income Other income Total revenues Expenses Cost of real estate sales Selling expenses Administrative expenses Management benefit expenses
Total expenses
Profit before finance costs and income tax expense
4, 10
20 21 22
Finance costs
24
Income tax expense
25
Profit before income tax expense Profit for the year Profit attributable to:
Equity holders of the Company Minority interest
Profit for the year
Earnings per share Basic Diluted
2009
Separate financial statements 2009
2008
2008
(in Baht)
18,966,048,930 67,399,703 19,033,448,633
12,968,506,304 65,093,604 13,033,599,908
17,033,514,333 99,930,000 84,176,062 17,217,620,395
11,442,786,027 96,876,213 11,539,662,240
11,749,037,439 809,271,694 1,576,911,182 52,135,813 14,187,356,128
8,085,646,990 790,981,129 1,016,012,063 50,875,504 9,943,515,686
10,585,074,538 754,131,453 1,430,237,109 52,135,813 12,821,578,913
7,247,633,103 732,643,746 958,171,207 50,875,504 8,989,323,560
4,846,092,505 (47,053,343) 4,799,039,162 (1,177,206,394) 3,621,832,768
3,090,084,222 (57,393,443) 3,032,690,779 (659,322,472) 2,373,368,307
4,396,041,482 (44,382,280) 4,351,659,202 (1,010,494,421) 3,341,164,781
2,550,338,680 (53,756,514) 2,496,582,166 (518,256,901) 1,978,325,265
3,621,815,864 16,904 3,621,832,768
2,373,265,826 102,481 2,373,368,307
3,341,164,781 3,341,164,781
1,978,325,265 1,978,325,265
1.65 1.64
1.08 1.08
1.52 1.51
0.90 0.90
26 26
131
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Statements of changes in equity For the years ended 31 December 2009 and 2008 Consolidated financial statements Issued and Note paid-up share capital Profit for the year
Dividends Share capital issued Investment of minority interest
28 18
Balance at 31 December 2008 Balance at 1 January 2009 Changes in equity for 2009
Net change in fair value recognised in equity Translation of financial statement differences Net income recognised directly in equity Profit for the year
Total recognised income Dividends Share capital issued Purchase investment from minority interest
Balance at 31 December 2009
Total equity (in Baht)
Balance at 1 January 2008 (restated) Total recognised income
Total equity
attributable Fair value Currency Retained earnings to equity Share changes on translation Minority holders of premium investments differences Legal reserve Unappropriated the Company interests
28 18
2,180,178,200 1,361,595,353 11,216,000 2,191,394,200 1,361,595,353
-
-
225,575,340 225,575,340
4,438,885,962 2,373,265,826 2,373,265,826 (480,907,262) 6,331,244,526
8,206,234,855 2,373,265,826 2,373,265,826 (480,907,262) 11,216,000 10,109,809,419
73,755 8,206,308,610 102,481 2,373,368,307 102,481 2,373,368,307 - (480,907,262) 11,216,000 75 75 176,311 10,109,985,730
2,191,394,200 1,361,595,353
-
-
225,575,340
6,331,244,526
10,109,809,419
176,311 10,109,985,730
-
-
534,804
-
-
-
534,804
-
534,804
-
-
-
35,980
-
-
35,980
-
35,980
15,417,800
-
534,804 534,804 -
35,980 35,980 -
-
3,621,815,864 3,621,815,864 (724,865,988) -
570,784 3,621,815,864 3,622,386,648 (724,865,988) 15,417,800
16,904 16,904 (61,000) -
570,784 3,621,832,768 3,622,403,552 (724,926,988) 15,417,800
2,206,812,000 1,361,595,353
534,804
35,980
225,575,340
9,228,194,402
13,022,747,879
132
ANNUAL REPORT 2009
(975) (975) 131,240 13,022,879,119
Preuksa Real Estate Public Company Limited and its Subsidiaries Statements of changes in equity For the years ended 31 December 2009 and 2008 Separate financial statements
Retained earnings Fair value changes on investments Legal reserve Unappropriated
Issued and Share Note paid-up premium share capital Balance at 1 January 2008 (restated) Profit for the year
Total recognised income Dividends Share capital issued
Balance at 31 December 2008
28 18
Balance at 1 January 2009 Changes in equity for 2009 Net change in fair value recognised in equity Net income recognised directly in equity Profit for the year
Total recognised income Dividends Share capital issued
Balance at 31 December 2009
2,180,178,200 1,361,595,353 11,216,000 2,191,394,200 1,361,595,353
-
225,575,340 225,575,340
4,290,311,005 1,978,325,265 1,978,325,265 (480,907,262) 5,787,729,008
(in Baht) 8,057,659,898 1,978,325,265 1,978,325,265 (480,907,262) 11,216,000 9,566,293,901
2,191,394,200 1,361,595,353
-
225,575,340
5,787,729,008
9,566,293,901
-
275,793
-
-
275,793
15,417,800 2,206,812,000 1,361,595,353
275,793 275,793 275,793
225,575,340
3,341,164,781 3,341,164,781 (724,865,988) 8,404,027,801
275,793 3,341,164,781 3,341,440,574 (724,865,988) 15,417,800 12,198,286,287
-
28 18
Total equity attributable to equity holders of the Company
133
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Statements of cash flows For the years ended 31 December 2009 and 2008
Cash flows from operating activities Profit for the year Adjustments for Allowance for decline in value of property development projects Allowance for impairment loss on plant and equipment (reversal) Allowance for impairment loss on land not used in operations Reversal of doubtful debts expense Depreciation and amortisation Gain on disposal of equipment Dividend income from subsidiary Currency translation differences Employees benefits Finance costs Income tax expense Changes in operating assets and liabilities Installment receivables Receivable from subsidiaries Property development projects Deposits for purchase of land Other current assets Other non-current assets Trade accounts payable - subsidiaries Trade accounts payable - others Payables for purchase of land Customers’ deposits Other current liabilities Income tax paid
Net cash provided by (used in) operating activities
134
Consolidated financial statements 2009 2008
(in Baht)
Separate financial statements 2009 2008
3,621,832,768
2,373,368,307
3,341,164,781
1,978,325,265
4,245,452 121,921,797 45,895,372 215,628,356 (6,696,493) 35,980 10,158,354 47,053,343 1,177,206,394 5,237,281,323
108,359,154 (627,526) (8,860,000) 189,835,038 (1,321,485) 9,548,333 57,393,443 659,322,472 3,387,017,736
2,044,420 121,921,797 189,267,265 (6,712,882) (99,930,000) 9,320,935 44,382,280 1,010,494,421 4,611,953,017
104,696,859 (627,526) (8,860,000) 174,171,462 (1,347,743) 8,764,664 53,756,514 518,256,901 2,827,136,396
(21,462,877) (439,015,474) (387,325,171) (66,776,740) (59,743,644) 263,362,108 49,541,989 127,402,313 427,126,761 (955,833,135)
(23,178,789) (4,459,117,746) (28,966,212) 26,354,022 (35,746,029) (64,542,893) 66,925,148 472,401,685 171,106,591 (470,059,844)
(20,780,791) 60,610,345 (461,383,500) (387,325,171) (78,618,153) (44,543,471) 9,990,936 285,670,483 6,011,527 144,740,637 347,570,660 (781,243,479)
(22,027,991) (165,127,813) (3,871,802,841) (28,966,212) (70,049,133) (32,011,909) (40,208,599) (37,680,009) 105,895,877 452,155,095 150,314,906 (361,238,890)
4,174,557,453
(957,806,331)
3,692,653,040
(1,093,611,123)
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Statements of cash flows For the years ended 31 December 2009 and 2008
Consolidated financial statements 2009 2008
Cash flows from investing activities Decrease in short-term deposits at financial institutions Purchase of debt securities Sale of debt securities Increase in short-term loans to subsidiaries Decrease in short-term loans to subsidiaries Increase in property, plant and equipment Increase in land not used in operations Increase in investment in subsidiaries Dividend received from subsidiary Proceed from disposal of equipment
Net cash used in investing activities
Cash flows from financing activities Increase (decrease) in short-term loans from financial institutions Proceeds from long-term loans Proceeds from long-term debentures Proceeds from short-term loan from subsidiaries Proceeds from issue of ordinary shares Repayment of long-term loans Repayment of long-term debentures Repayment of short-term loan from subsidiaries Investment of minority interests Finance costs paid Dividends paid Dividends paid to minority interest in subsidiary
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year 135
(in Baht)
Separate financial statements 2009 2008
1,772,312 (17,569,681,784) 15,267,346,682 (139,153,296) (37,825,734) 19,243,049 (2,458,298,771)
51,067,325 (394,952,785) 23,140,358 (320,745,102)
1,772,312 (14,419,176,370) 12,693,057,746 (351,877,089) 554,036,426 (120,205,364) (524,000,475) 99,930,000 18,850,358 (2,047,612,456)
51,067,325 (307,576,788) 390,043,542 (289,341,195) (174,999,925) 23,058,536 (307,748,505)
(1,993,108,263) 426,730,252 1,500,000,000 15,417,800 (1,033,356,962) (400,000,000) (975) (186,928,785) (724,865,988) (61,000) (2,396,173,921)
1,993,108,263 1,804,910,000 11,216,000 (1,417,528,260) 75 (133,291,636) (480,907,262) 1,777,507,180
(1,845,108,263) 426,730,252 1,500,000,000 372,080,837 15,417,800 (1,009,765,962) (400,000,000) (411,298,062) (182,023,347) (724,865,988) (2,258,832,733)
1,845,108,263 1,716,310,000 39,217,225 11,216,000 (1,268,528,260) (125,864,886) (480,907,262) 1,736,551,080
(679,915,239) 1,526,168,206 846,252,967
498,955,747 1,027,212,459 1,526,168,206
(613,792,149) 1,175,206,278 561,414,129
335,191,452 840,014,826 1,175,206,278
ANNUAL REPORT 2009
Preuksa Real Estate Public Company Limited and its Subsidiaries Annual financial statements and Audit report of Certified Public Accountant For the years ended 31 December 2009 and 2008 Note Contents 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
General information Basis of preparation of the financial statements Significant accounting policies Related party transactions and balances Cash and cash equivalents Assets used as collateral Current investments Installment receivables Property development projects Investment in subsidiaries Property, plant and equipment Land not used in operations Deferred tax assets Intangible assets Interest-bearing liabilities Other current liabilities Employee benefits
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
136
Share capital, warrants, share premium and legal reserve Segment information Selling expenses Administrative expenses Employee benefit expenses Expenses by nature Finance costs Income tax expense Earnings per share Promotional privileges Dividends Financial instruments Lease agreements Commitments and contingent liabilities Others Thai Accounting Standards (TAS) not yet adopted Reclassification of accounts
ANNUAL REPORT 2009
These notes form an integral part of the financial statements. The financial statements were authorised for issue by the directors on 16 February 2010.
1. General information
Preuksa Real Estate Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office at 979/83, SM Tower 27th floor, Phaholyothin Road, Samsennai, Phayathai, Bangkok.
Name of the entity Direct subsidiaries Kaysorn Construction Company Limited Putthachart Estate Company Limited Phanalee Estate Company Limited Preuksa Oversea Company Limited Preuksa International Company Limited Indirect subsidiaries Preuksa India Housing Private Limited Preuksa India Construction Private Limited
The Company was listed on the Stock Exchange of Thailand in December 2005. The principal activity of the Company is sale of real estate in Thailand. Details of the Company’s subsidiaries are as follows:
Type of business Home decoration/Construction Sale of real estate Sale of real estate Investment Property development and construction
Country of incorporation
Ownership interest (%) 2009 2008
Thailand Thailand Thailand Thailand Thailand
99.99 99.99 99.99 99.99 99.99
99.93 99.99 99.99 99.99 -
Property development and construction
India
100.00
-
Property development and construction
India
100.00
-
137
ANNUAL REPORT 2009
2. Basis of preparation of the financial statements The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) and Thai Financial Reporting Standards (“TFRS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand. On 15 May 2009, the FAP announced (Announcement No. 12/2009) the re-numbering of TAS to the same numbers as the International Accounting Standards (“IAS”) on which the TAS/TFRS are based. The Group has adopted the following revised TAS/TFRS which were issued by the FAP during 2008 and 2009 and effective for annual accounting periods beginning on or after 1 January 2009: TAS 36 (revised 2007) Impairment of Assets TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations (formerly TAS 54)
138
Framework for the Preparation and Presentation of Financial Statements (revised 2007) (effective on 26 June 2009) The adoption of these revised TAS/TFRS does not have any material impact on the consolidated or separate financial statements. The FAP has issued during 2009 a number of new and revised TAS which are not currently effective and have not been adopted in the preparation of these financial statements. These new and revised TAS are disclosed in note 33. The financial statements are presented in Thai Baht, rounded in the notes to the financial statements to the nearest thousand unless otherwise stated. They are prepared on the historical cost basis except as stated in the accounting policies. The preparation of financial statements in conformity with TAS and TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.
ANNUAL REPORT 2009
3. Significant accounting policies (a) Basis of consolidation The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group�).
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.
Transactions eliminated on consolidation
Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of income. Non-monetary assets and liabilities measured at cost in foreign currencies are translated to Thai Baht using the foreign exchange rates ruling at the dates of the transactions.
Foreign entities
The assets and liabilities of foreign entities are translated to Thai Baht at the foreign exchange rates ruling at the reporting date.
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
The revenues and expenses of foreign entities are translated to Thai Baht at rates approximating the foreign exchange rates ruling at the dates of the transactions.
(b) Foreign currencies
Foreign currency transactions
Foreign exchange differences arising on translation are recognised in a separate component of equity until disposal of the investments.
139
ANNUAL REPORT 2009
Where monetary items, in substance, form part of the Group’s net investment in a foreign entity, foreign exchange differences arising on such monetary items and related hedges are recognised directly in a separate component of equity until disposal of the investment.
(c) Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
(d) Other accounts receivable
Other accounts receivable are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.
(e) Property development projects
Development properties are those properties which are held with the intention of development and sale in the ordinary course of business. They are stated at the lower of cost plus, where
140
appropriate, a portion of attributable profit and estimated net realisable value, net of progress billings. Net realisable value represents the estimated selling price less costs to be incurred in selling the properties. The cost of properties under development comprises specifically identified costs, including acquisition costs, development expenditure, borrowing costs and other related expenditure. Borrowing costs payable on loans funding a development property are capitalised, on a specific identification basis, as part of the cost of the development property until the completion of development.
(f) Investments
Investments in subsidiaries
Investments in subsidiaries in the separate financial statements of the Company are accounted for using the cost method.
Investments in debt securities
Debt securities that the Group intends and is able to hold to maturity are stated at amortised cost less impairment losses. The difference between the acquisition cost and redemption value of such debt securities is amortised by using the effective interest rate method over the period to maturity.
Debt securities other than those securities intended to be
ANNUAL REPORT 2009
held to maturity, are classified as available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available-for-sale monetary items, are recognised directly in equity. Impairment losses and foreign exchange differences are recognised in the statement of income. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the statement of income. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the statement of income. The fair value of financial instruments classified as availablefor-sale is determined as the quoted bid price at the reporting date.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in the statement of income.
(g) Property, plant and equipment
Depreciation
Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Land improvement 10 years Building 20 years Machinery and equipment 5, 10 years Furniture, fixtures and office equipment 3, 5 years Transportation 5 years No depreciation is provided on freehold land or assets under construction.
(h) Intangible assets
Software licenses
Software licenses that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Software licenses are amortised in the statement of income on a straight-line basis for 10 years.
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
141
ANNUAL REPORT 2009
(i) Impairment
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amount are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income.
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. Reversals of impairment An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. 142
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(j) Interest-bearing liabilities
Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of income over the period of the borrowings on an effective interest basis.
(k) Trade and other accounts payable
Trade and other accounts payable are stated at cost.
(l) Employee benefits
The Group’s net obligation in respect of long-term employee benefits (Legal Severance Payment) is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on government bonds. The calculation is performed using the projected unit credit method.
ANNUAL REPORT 2009
(m) Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
(n) Revenue
The stage of completion is assessed by reference to surveys of work performed. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in the statement of income.
Interest and dividend income
Interest income is recognised in the statement of income as it accrues. Dividend income is recognised in the statement of income on the date the Group’s right to receive payments is established.
Revenue from sale of real estate is recognised in the statement of income when the ownership of the real estate has been transferred.
Other income Other income is recognised in the statement of income as it accrues.
(o) Expenses
Operating leases
Construction contracts
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognised in the statement of income in proportion to the stage of completion of the contract.
143
Payments made under operating leases are recognised in the statement of income on a straight line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income for the accounting period in which they are incurred.
ANNUAL REPORT 2009
Financial costs
Interest expenses and similar costs are charged to the statement of income for the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. (p) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary 144
differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. . A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
4. Related party transactions and balances Related parties are those parties linked to the Group and the Company by as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices. Relationships with related parties that control or jointly control the Company or are being controlled or jointly controlled by the Company or have transactions with the Group were as follow:
ANNUAL REPORT 2009
Name of entities
Country of incorporation/nationality
Kaysorn Construction Company Limited Putthachart Estate Company Limited Phanalee Estate Company Limited Preuksa Oversea Company Limited Preuksa International Company Limited Preuksa India Housing Private Limited Preuksa India Construction Private Limited Thongma Vijitpongpun
Thailand Thailand Thailand Thailand Thailand India India Thailand
Transactions for the years ended 31 December 2009 and 2008 with the subsidiaries were as follows:
(in thousand Baht)
Policy of pricing Dividend income Upon declaration Sales of raw materials Cost plus 5-10% Receiving of services Cost plus 5% Interest income MLR + 1% Other income Cost plus 5% Interest expense MMR
Nature of relationships Subsidiary, 99.99% shareholding Subsidiary, 99.99% shareholding Subsidiary, 99.99% shareholding Subsidiary, 99.99% shareholding Subsidiary, 99.99% shareholding Subsidiary, 100.00% shareholding Subsidiary, 100.00% shareholding Major shareholders, 10% or more shareholding, and a director
Balances as at 31 December 2009 and 2008 with the subsidiaries were as follows:
(in thousand Baht)
Separate financial statements 2009 2008 99,930 52,484 863,102 22,495 2,759 1,212
71,462 833,426 35,498 1,484 1,783 145
Separate financial statements 2009 2008 Receivable from subsidiaries Phanalee Estate Co., Ltd. Putthachart Estate Co., Ltd. Kaysorn Construction Co., Ltd.
ANNUAL REPORT 2009
115,368 22,838 690 138,896
101,253 24,101 74,152 199,506
(in thousand Baht)
Movements during the years ended 31 December 2009 and 2008 of short-term loans to subsidiaries were as follows: (in thousand Baht)
Separate financial statements 2009 2008 Short-term loans to subsidiaries Putthachart Estate Co., Ltd. Phanalee Estate Co., Ltd. Preuksa India Housing Private Limited Kaysorn Construction Co., Ltd. Trade accounts payable Kaysorn Construction Co., Ltd. Putthachart Estate Co., Ltd. Phanalee Estate Co., Ltd.
Short-term loans from subsidiary Kaysorn Construction Co., Ltd.
124,370 1,447 512 182 126,511
115,291 190,837 22,543 328,671
61,950 11,379 8,021 81,350
71,359 71,359
-
39,217
146
Separate financial statements 2009 2008
At 1 January 328,671 411,137 Increase 351,877 307,577 Decrease (554,037) (390,043) At 31 December 126,511 328,671 Movements during the years ended 31 December 2009 and 2008 of short-term loans from subsidiaries were as follows: (in thousand Baht)
Separate financial statements 2009 2008
At 1 January Increase Decrease At 31 December
ANNUAL REPORT 2009
39,217 372,081 (411,298) -
279,411 (240,194) 39,217
Significant agreements with related parties The Company entered into lease agreements covering office space (including related service charges) with a major shareholder and also a director of the Company, commencing October 2008 up to October 2010. The rental and service charges for the year ended 31 December 2009 amounted to approximately Baht 1.5 million (2008: Baht 0.1 million).
During 2009, the subsidiaries have registered land not used in operations with a cumulative value at 31 December 2009 of Baht 45.8 million, which is subject to servitudes and restrictions to the projects of the Company for construction of the utilities of the projects with no time limit and for which the Company has received compensation of Baht 46.4 million.
5. Cash and cash equivalents Consolidated financial statements
2009
8,157 42,964 327,331 182,223 282,253 3,325 846,253
Cash on hand Cash at banks – current accounts Cash at banks – savings accounts Highly liquid short-term investments Cheques on hand Others
Total
2008
12,333 408,602 189,087 676,571 237,097 2,478 1,526,168
(in thousand Baht)
Separate financial statements
2009
6,103 36,542 251,806 658 264,236 2,069 561,414
2008
5,035 408,419 83,842 456,127 219,402 2,381 1,175,206
Cash and cash equivalents of the Group and the Company as at 31 December 2009 and 2008 were denominated entirely in Thai Baht.
147
ANNUAL REPORT 2009
6. Assets used as collateral
Savings account and fixed deposits (totalling Baht 1.7 million as at 31 December 2009), property, plant and equipment (with net book value of Baht 802 million as at 31 December 2009), land not used in operations (with net book value of Baht 128 million as at 31 December 2009) and part of property development projects (land and structure thereon) are used as collateral for overdraft lines of Baht 158 million, loan lines from banks of Baht 7,829 million and letters of guarantee lines of Baht 3,513 million. Savings account, fixed deposits and promissory note (totalling Baht 3 million as at 31 December 2008), property, plant and equipment (with net book value of Baht 854 million as at 31
7. Current investments
December 2008), land not used in operations (with net book value of Baht 128 million as at 31 December 2009) and part of property development projects (land and structure thereon) are used as collateral for overdraft lines of Baht 159 million, loan lines from banks of Baht 8,397 million and letters of guarantee lines of Baht 3,871 million. Property development projects (land and structure thereon) of the subsidiaries are used as collateral for loan lines from banks of Baht 598 million and letters of guarantee lines of Baht 779 million (31 December 2008: Baht 736 million and Baht 484 million, respectively).
Consolidated financial statements
2009
Current investments Short-term deposits at financial institutions Debt securities available for sale
1,652 2,302,870 2,304,522
Total
148
ANNUAL REPORT 2009
2008 3,424 3,424
(in thousand Baht)
Separate financial statements
2009
1,652 1,726,394 1,728,046
2008 3,424 3,424
Movements during the years ended 31 December 2009 and 2008 of marketable debt securities were as follows: (in thousand Baht) Consolidated Separate financial financial statements statements
2009
2008
2009
2008
Current investments
Available for sale securities
17,569,682 (15,267,347) 535 2,302,870
At 1 January Purchases during the year Sales during the year Valuation adjustment
At 31 December
-
8. Installment receivables
Ageing analyses for installment receivables were as follows:
Consolidated financial statements
2009 Overdue : Less than 3 months 3-6 months 6-12 months Over 12 months
42,037 11,282 6,025 436 59,780
Total
149
ANNUAL REPORT 2009
2008 34,601 3,209 486 21 38,317
-
14,419,176 (12,693,058) 276 1,726,394
(in thousand Baht)
Separate financial statements
2009
39,068 10,887 6,000 286 56,241
2008 32,575 2,575 310 35,460
9. Property development projects
(in thousand Baht)
Consolidated financial statements
2009
2008
2009
2008
5,904,317 297,989 1,388,731 507,023 499,914 81,440 8,679,414 1,864,344 2,247,883 13,373,343 (171,406) 13,201,937
5,354,932 359,221 1,996,408 434,629 402,283 86,389 8,633,862 2,314,908 1,016,744 12,789,099 (167,160) 12,621,939
5,571,384 243,386 1,258,660 416,467 437,096 78,900 8,005,893 1,747,452 1,872,477 12,159,570 (165,543) 11,994,027
4,912,078 309,489 1,700,987 357,955 350,287 83,105 7,713,901 2,070,416 1,011,214 11,547,146 (163,499) 11,383,647
57 17 12 9 95
60 15 13 10 98
43 16 12 9 80
46 15 13 9 83
173,943 407,759
Construction materials Sample houses Projects under development - land - land improvements - construction cost - public utilities - overhead costs - interest costs Land, and land and houses for sale Land held for development
Total
Less allowance for decline in value of property development projects
Net
Number of projects under development: Baan Preuksa Preuksa Village Passorn Project Condominium
Total Projects
150
Separate financial statements
ANNUAL REPORT 2009
344,219 479,366
155,722 378,026
316,101 435,514
10. Investment in subsidiaries
(in thousand Baht)
Separate financial statements 2009 2008 At 1 January Acquisitions At 31 December
275,997 524,001 799,998
Investment is subsidiaries as at 31 December 2009 and 2008, and dividend income from those investments for the years then ended were as follows:
100,997 175,000 275,997 (in thousand Baht)
Separate financial statements Paid-up capital Cost method
Ownership interest
Subsidiaries Kaysorn Construction Co., Ltd. Putthachart Estate Co., Ltd. Phanalee Estate Co., Ltd. Preuksa Oversea Co., Ltd. Preuksa International Co., Ltd.
Total
Dividend income
2009 (%)
2008 (%)
2009
2008
2009
2008
2009
2008
99.99 99.99 99.99 99.99 99.99
99.93 99.99 99.99 99.99 -
100,000 100,000 200,000 200,000 200,000 800,000
1,000 50,000 200,000 25,000 276,000
99,999 100,000 199,999 200,000 200,000 799,998
999 49,999 199,999 25,000 275,997
99,930 99,930
-
151
ANNUAL REPORT 2009
On 12 September 2007, the subsidiary named Phanalee Estate Co., Ltd. registered to increase its authorised share capital from Baht 50 million (500,000 shares at Baht 100 par value) to Baht 200 million (2,000,000 shares at Baht 100 par value) with the Ministry of Commerce. As at 31 December 2008, these additional authorised shares had been paid up.
Ministry of Commerce. As at 31 December 2009, these additional authorised shares had been paid up and the remainder of the initially authorised shares had been paid up.
On 9 April 2009, the subsidiary named Kaysorn Construction Co., Ltd. registered to increase its authorised share capital from Baht 1 million (10,000 shares at Baht 100 par value) to Baht 100 million (1,000,000 shares at Baht 100 par value) with the Ministry of Commerce. As at 31 December 2009, these additional authorised shares had been paid up.
During year 2009, the Company invested in Preuksa International Co., Ltd. (authorised share capital 1,000,000 shares at Baht 100 par value) amounting to Baht 25 million. On 3 September 2009, Preuksa International Co., Ltd. registered to increase its authorised share capital from Baht 100 million (1,000,000 shares at Baht 100 par value) to Baht 500 million (5,000,000 shares at Baht 100 par value) with the Ministry of Commerce. As at 31 December 2009, there is additional paid-up shares amounting to Baht 175 million.
During year 2008, the Company invested in Preuksa Oversea Co., Ltd. (authorised share capital 1,000,000 shares at Baht 100 par value) amounting to Baht 25 million. On 16 June 2009, Preuksa Oversea Co., Ltd. registered to increase its authorised share capital from Baht 100 million (1,000,000 shares at Baht 100 par value) to Baht 200 million (2,000,000 shares at Baht 100 par value) with the
On 12 October 2009, the subsidiary named Putthachart Estate Co., Ltd. registered to increase its authorised share capital from Baht 50 million (500,000 shares at Baht 100 par value) to Baht 100 million (1,000,000 shares at Baht 100 par value) with the Ministry of Commerce. As at 31 December 2009, these additional authorised shares had been paid up.
152
ANNUAL REPORT 2009
11 Property, plant and equipment
(in thousand Baht)
Land and land improvement Cost At 1 January 2008 Additions Transfers, net Disposals Allowance for impairment At 31 December 2008 and 1 January 2009 Additions Transfers, net Disposals Allowance for impairment At 31 December 2009 Accumulated depreciation At 1 January 2008 Depreciation charge for the year Disposals At 31 December 2008 and 1 January 2009 Depreciation charge for the year Disposals At 31 December 2009 Net book value At 31 December 2008 At 31 December 2009
Consolidated financial statements Construction Machinery Furniture, progress and and fixtures Public Transportation inmachinery and equipment equipment under equipment and office utility equipment installation
Building
321,561 7,577 3,069 -
428,901 13,262 84,099 -
724,173 186,937 35,570 (28,162) (617)
130,158 39,747 807 (11,659) -
16,741 -
106,816 13,038 77 (10,731) -
332,207 708 (31,006) 301,909
526,262 4,137 (88,437) 441,962
917,901 43,819 30,798 (29,412) (2,479) 960,627
159,053 32,576 4,583 (6,934) 189,278
16,741 16,741
109,200 2,327 (27,201) 84,326
138 250 -
54,488 23,682 -
214,232 110,240 (9,924)
71,383 27,887 (9,497)
16,741 -
71,415 18,680 (9,312)
-
388 393 781
78,170 26,382 104,552
314,548 135,084 (21,314) 428,318
89,773 31,881 (5,194) 116,460
16,741 16,741
80,783 10,896 (24,493) 67,186
-
331,819 301,128
448,092 337,410
603,353 532,309
69,280 72,818
-
28,417 17,140
24,953 38,375
153
ANNUAL REPORT 2009
Total
14,183 134,392 (123,622) - 24,953 60,431 (47,009) 38,375
1,742,533 394,953 (50,552) (617) 2,086,317 139,153 (6,783) (63,547) (121,922) 2,033,218 428,397 180,739 (28,733) 580,403 204,636 (51,001) 734,038 1,505,914 1,299,180
(in thousand Baht)
Land and land improvement Cost At 1 January 2008 Additions Transfers, net Disposals Allowance for impairment At 31 December 2008 and 1 January 2009 Additions Transfers, net Disposals Allowance for impairment At 31 December 2009 Accumulated depreciation At 1 January 2008 Depreciation charge for the year Disposals At 31 December 2008 and 1 January 2009 Depreciation charge for the year Disposals At 31 December 2009 Net book value At 31 December 2008 At 31 December 2009
Separate financial statements Construction Machinery Furniture, progress and and fixtures Public Transportation inmachinery and equipment equipment under equipment and office utility equipment installation
Building
Total
321,561 7,577 3,069 -
428,901 13,262 84,099 -
714,956 95,139 34,430 (28,075) (617)
127,831 33,263 807 (11,659) -
16,741 -
106,662 5,772 77 (10,696) -
13,043 134,329 (122,482) -
1,729,695 289,342 (50,430) (617)
332,207 708 (31,006) 301,909
526,262 4,137 (88,437) 441,962
815,833 32,419 31,345 (29,189) (2,479) 847,929
150,242 28,512 4,037 (6,537) 176,254
16,741 16,741
101,815 1,917 (27,201) 76,531
24,890 57,357 (46,945) 35,302
1,967,990 120,205 (6,718) (62,927) (121,922) 1,896,628
138 250 -
54,488 23,682 -
213,919 98,217 (9,911)
71,240 26,591 (9,496)
16,741 -
71,408 17,612 (9,311)
-
427,934 166,352 (28,718)
388 393 781
78,170 26,382 104,552
302,225 114,387 (21,256) 395,356
88,335 29,176 (5,040) 112,471
16,741 16,741
79,709 9,396 (24,493) 64,612
-
565,568 179,734 (50,789) 694,513
331,819 301,128
448,092 337,410
513,608 452,573
61,907 63,783
-
22,106 11,919
24,890 35,302
1,402,422 1,202,115
154
ANNUAL REPORT 2009
The gross carrying amount of fully depreciated plant and equipment of the Company that was still in use as at 31 December 2009 amounted to Baht 135 million (2008: Baht 104 million).
12. Land not used in operations Consolidated financial statements
2009
173,765 (45,895) 127,870
Land not used in operations Less allowance for impairment
Net
155
ANNUAL REPORT 2009
2008
127,829 127,829
(in thousand Baht)
Separate financial statements
2009
127,829 127,829
2008
127,829 127,829
13. Deferred tax assets
Movements in deferred tax assets during the year were as follows:
(in thousand Baht)
Consolidated financial statement Charged / (credited) to As at 31 December 2009 As at 1 January 2009 Statement of income (Note 25) Deferred tax assets Property development projects Property, plant and equipment Land not used in operations Employee benefits Customers’ deposits Others Loss carry forward
Total
(1,870) (30,333) (13,219) (3,953) (11,342) (472) 1,187 (60,002)
56,118 419 5,555 51,042 2,642 1,187 116,963
57,988 30,752 13,219 9,508 62,384 3,114 176,965 (in thousand Baht)
Consolidated financial statement Charged / (credited) to As at 31 December 2008 As at 1 January 2008 Statement of income (Note 25) Deferred tax assets Property development projects Deposits of purchase of land Employee benefits Other current liabilities Customers’ deposits Others Loss carry forward
Total
(31,258) 2,020 (1,967) (570) (36,699) (956) 1,020 (68,410)
24,860 2,020 3,588 1,002 14,343 533 2,207 48,553
156
ANNUAL REPORT 2009
56,118 5,555 1,572 51,042 1,489 1,187 116,963
As at 1 January 2009 Deferred tax assets Property development projects Property, plant and equipment Employee benefits Customers’ deposits Others
Total
Total
(5,286) (30,333) (3,705) (12,665) (1,459) (53,448)
34,991 419 5,183 48,297 1,655 90,545
As at 1 January 2008 Deferred tax assets Property development projects Deposits for purchase of land Employee benefits Other current liabilities Customers’ deposits Others
Separate financial statement Charged / (credited) to Statement of income (Note 25)
Separate financial statement Charged / (credited) to Statement of income (Note 25)
11,490 2,020 3,447 1,002 12,601 533 31,093
157
ANNUAL REPORT 2009
(23,501) 2,020 (1,736) (570) (35,696) 31 (59,452)
(in thousand Baht)
As at 31 December 2009 40,277 30,752 8,888 60,962 3,114 143,993 (in thousand Baht)
As at 31 December 2008 34,991 5,183 1,572 48,297 502 90,545
14. Intangible assets
(in thousand Baht)
(in thousand Baht)
Consolidated financial statements Software licenses Cost At 1 January 2008 Additions At 31 December 2008 and 1 January 2009 Additions At 31 December 2009 Accumulated amortisation At 1 January 2008 Amortisation charge for the year At 31 December 2008 and 1 January 2009 Amortisation charge for the year At 31 December 2009 Net book value At 31 December 2008 At 31 December 2009
Separate financial statements Software licenses
78,367 26,796 105,163 18,890 124,053
Cost At 1 January 2008 Additions At 31 December 2008 and 1 January 2009 Additions At 31 December 2009
65,632 26,206 91,838 16,739 108,577
17,313 9,020 26,333 10,992 37,325
Accumulated amortisation At 1 January 2008 Amortisation charge for the year At 31 December 2008 and 1 January 2009 Amortisation charge for the year At 31 December 2009
15,382 7,744 23,126 9,532 32,658
78,830 86,728
Net book value At 31 December 2008 At 31 December 2009
68,712 75,919
158
ANNUAL REPORT 2009
15. Interest-bearing liabilities Consolidated financial statements
2009 Current Short-term loans from financial institutions Unsecured Current portion of long-term debentures Unsecured Short-term loans from subsidiary Unsecured Non-current Long-term loans from financial institutions Secured Long-term debentures Unsecured
Total
159
2008
(in thousand Baht)
Separate financial statements
2009
2008
-
1,993,108
-
1,845,108
600,000
400,000
600,000
400,000
600,000
2,393,108
600,000
39,217 2,284,325
30
606,657
20
583,056
1,500,000 1,500,030
600,000 1,206,657
1,500,000 1,500,020
600,000 1,183,056
2,100,030
3,599,765
2,100,020
3,467,381
ANNUAL REPORT 2009
Loans from financial institutions bear interest at market rates.
Certain loans contain restrictions on financial ratios, debt to equity ratio and payment of dividends. At the annual general meeting of the shareholders of the Company held on 9 April 2007, 11 April 2008 and 9 April 2009, the shareholders approved the Issuance and Offer for Sale of Debt Securities to decrease the financial cost of the Company and to provide an alternative source of funds for project development. The maximum amount of Debt Securities must not exceed Baht 6,500 million. On 29 January 2009, the Company issued unsubordinated and unsecured debentures of Baht 1,500 million (1,500,000 units at Baht 1,000). The debentures bear interest at 5.25% per annum for the period of 1 year and 6 months after the issuance date and 5.75% per annum for the remaining period until the maturity date, payable quarterly. The debentures mature in 2012.
160
In August 2007, the Company issued unsubordinated and unsecured debentures of Baht 600 million (600,000 units at Baht 1,000) and Baht 400 million (400,000 units at Baht 1,000). The debentures bear interest at 4.91% and 4.68% per annum, respectively, payable semi-annually. The debentures mature as follows: (in thousand Baht)
Maturity date August 2009 August 2010
Total
ANNUAL REPORT 2009
Consolidated and separate
financial statements 2009 2008 600,000 600,000
400,000 600,000 1,000,000
16. Other current liabilities Consolidated financial statements
2009
184,477 160,300 160,656 81,373 25,592 27,689 284,103 924,190
Accrued for property development projects Accrued for public utility Accrued bonus Retention Accrued interest expense Withholding tax deducted at source Others
Total
2008
14,104 145,655 112,201 43,725 18,913 19,836 135,951 490,385
(in thousand Baht)
Separate financial statements
2009
139,449 146,747 138,053 48,909 25,592 26,411 260,215 785,376
2008
139,312 94,607 32,703 18,913 18,258 127,333 431,126
17. Employee benefits
An independent actuary carried out an evaluation of the Company’s obligations for employee benefits using the projected unit credit method. The Company has provided the provision for employees benefits as follows: (in thousand Baht) Consolidated Separate financial financial statements statements
2009
Present value of unfunded obligation Expense recognised in profit or loss for the year ended 31 December Current service cost Interest cost
Total
Principal actuarial assumptions Discount rate (%) Future salary increase (%) Employees Daily wage staffs Retirement age (year old)
161
2008
2009
2008
40,999
30,841
38,796
29,475
9,111 1,047 10,158
8,803 745 9,548
8,321 1,000 9,321
8,040 725 8,765
3.5
3.5
3.5
3.5
5 and 8 3.5 and 5 60
5 and 8 3.5 and 5 60
5 and 8 3.5 and 5 60
5 and 8 3.5 and 5 60
ANNUAL REPORT 2009
18. Share capital, warrants, share premium and legal reserve Share capital, ordinary shares
(thousand shares / thousand Baht)
Par value per share (in Baht) Authorised At 1 January ordinary shares Reduction of shares At 31 December ordinary shares
Number
1 1 1
Issued and paid up At 1 January ordinary shares Exercise of warrants At 31 December ordinary shares
1 1 1
At the annual general shareholders’ meeting held on 9 April 2009, the shareholders approved a decrease of the Company’s authorised share capital from Baht 2,255,753,400 (2,255,753,400 ordinary shares with Baht 1 par value) to Baht 2,224,753,400 (2,224,753,400 ordinary shares with Baht 1 par value). The Company registered the decrease in authorised share capital with the Ministry of Commerce on 23 April 2009. On 30 January 2009, the holders of 5,169,900 warrants exercised options to purchase 5,169,900 ordinary shares at an exercise price of Baht 1 each, resulting in an increase in the
162
2009
2008
Baht
Number
Baht
2,255,753 (31,000) 2,224,753
2,255,753 (31,000) 2,224,753
2,255,753 2,255,753
2,255,753 2,255,753
2,191,394 15,418 2,206,812
2,191,394 15,418 2,206,812
2,180,178 11,216 2,191,394
2,180,178 11,216 2,191,394
issued and paid- up share capital from Baht 2,191,394,200 to Baht 2,196,564,100. The Company registered the increase in the issued and paid-up share capital with the Ministry of Commerce on 5 February 2009. On 31 July 2009, the holders of 5,086,500 warrants exercised options to purchase 5,086,500 ordinary shares at an exercise price of Baht 1 each, resulting in an increase in the issued and paid- up share capital from Baht 2,196,564,100 to Baht 2,201,650,600. The Company registered the increase in the issued and paid-up share capital with the Ministry of Commerce on 7 August 2009.
ANNUAL REPORT 2009
On 30 November 2009, the holders of 5,161,400 warrants exercised options to purchase 5,161,400 ordinary shares at an exercise price of Baht 1 each, resulting in an increase in the issued and paid- up share capital from Baht 2,201,650,600 to Baht 2,206,812,000. The Company registered the increase in the issued and paid-up share capital with the Ministry of Commerce on 4 December 2009. On 31 January 2008, the holders of 5,774,500 warrants exercised options to purchase 5,774,500 ordinary shares at an exercise price of Baht 1 each, resulting in an increase in the issued and paid- up share capital from Baht 2,180,178,200 to Baht 2,185,952,700. The Company registered the increase in the issued and paid-up share capital with the Ministry of Commerce on 6 February 2008. On 31 July 2008, the holders of 5,441,500 warrants exercised options to purchase 5,441,500 ordinary shares at an exercise price of Baht 1 each, resulting in an increase in the issued and paid- up share capital from Baht 2,185,952,700 to Baht 2,191,394,200. The Company registered the increase in the issued and paid-up share capital with the Ministry of Commerce on 8 August 2008. Warrants On 28 November 2005, the Company issued 64,401,500 units of free and non-transferable warrants exercisable to purchase the newly-issued ordinary shares of the Company, to its directors,
163
employees, and advisors of the Company and its subsidiary. The warrants have a 4 year-term from 1 December 2005 and mature on 30 November 2009. The first exercise date was 30 June 2006 and the last exercise date is 30 November 2009. The exercise ratio is one warrant to one ordinary share at an exercise cost of Baht 1 per share. From the Resolution of Board of Directors’ Meeting No. 1/2007 dated 22 February 2007, the Meeting acknowledged the alteration of the exercise date of warrants, representing the right to purchase the newly issued shares of the Company from the last business day of June and December of each year to the last business day of July and January of each year, whereas other conditions remain the same. The first exercise date following this change was 31 July 2007 and the final exercise date is 30 November 2009. During the exercise period, the holders of warrants are entitled to exercise their right to purchase shares on a semi-annual basis, except the last exercise when the right can be exercised within the maturity date of the warrants. The warrant holders have the right to purchase shares in an amount not exceeding oneeighth (12.5%) of the total number of the warrants allotted by the Company. However, if the warrant holder fails to purchase the full 12.5% of the shares on an exercise date, he may purchase the remaining shares on any subsequent exercise date.
ANNUAL REPORT 2009
During the years 2009 and 2008, the holders of 15,417,800 warrants and 11,216,000 warrants, respectively, exercised their options to purchase 15,417,800 and 11,216,000 ordinary shares of Baht 1 per share. During the years 2009 and 2008, there were cancellations of 471,600 warrants and 2,447,400 warrants, respectively, from employees who had resigned from the Company. As at 31 December 2009, there were no outstanding warrants that can be exercised for purchase of ordinary shares in the Company (2008: 15,889,400 warrants). Share premium Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.
19. Segment information
Business segments Management considers that the Group operates in a single line of business, namely real-estate business, and has, therefore, only one major business segment. Geographic segments In presenting information on the basis of geographical segments, segment revenue is based on the geographic location of customers. Segment assets are based on the geographical location of the assets. The followings are the main geographical locations: Segment 1 Thailand Segment 2 India
Legal reserve Section 116 of the Public Companies Act B.E. 2535 Section 116 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
164
ANNUAL REPORT 2009
Geographical segment results financial position
(in million Baht)
Segment 1
Revenue Revenue from external customers Segment assets Cash and cash equivalents Property development projects Property, plant and equipments
2009
2008
18,966
12,969
683 13,041 1,295
1,526 12,622 1,506
Segment 2
2009
Segment 3
2008
2009
2008
-
-
18,966
12,969
163 161 4
-
846 13,202 1,299
1,526 12,622 1,506
20. Selling expenses Consolidated financial statements
2009
443 322 21 5 18 809
Sales promotion Advertising expenses Special business tax Transfer fee Other
Total
165
ANNUAL REPORT 2009
2008
274 411 79 21 6 791
(in million Baht)
Separate financial statements
2009
414 299 19 5 17 754
2008
251 383 74 19 6 733
21. Administrative expenses
Consolidated financial statements
2009
684 170 142 66 65 55 73 322 1,577
Personnel expenses Allowance for impairment loss on assets Professional Fee Rent Repair Depreciation and amortisation Utilities Other
Total
22. Employee benefit expenses
2008
469 109 91 46 41 41 33 186 1,016
Consolidated financial statements
2009
(in million Baht)
Separate financial statements
2009
643 123 134 55 62 51 70 292 1,430
2008
445 105 88 37 41 39 33 170 958
(in million Baht)
Separate financial statements
2008
2009
2008
Total
1 17 52
1 16 51
1 17 52
1 16 51
Total
646 16 471 1,133
506 13 296 815
530 13 370 913
432 11 241 684
34
Management Wages and salaries Contribution to defined contribution plans Other-bonus and welfare Other employees Wages and salaries Contribution to defined contribution plans Other-bonus and welfare
166
ANNUAL REPORT 2009
34
34
34
The defined contribution plans comprise provident funds established by companies in the Group for their employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at 4% of their basic salaries
23. Expenses by nature
and by the Group at rates ranging from 4% of the employees’ basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by licensed Fund Managers.
Consolidated financial statements
2009
Changes in land, and land and houses for sale and projects under development Raw materials and consumables used Employee benefit expenses Depreciation and amortisation expense
423 6,591 1,185 216
24. Finance costs
193,608 (146,555) 47,053
Interest paid and payable to Subsidiaries Financial institutions Less capitalised as part of construction costs
Net
167
ANNUAL REPORT 2009
Separate financial statements
2008
2009
2008
(4,817) 9,106 866 190
31 6,089 965 189
(4,050) 7,725 735 174
Consolidated financial statements
2009
(in million Baht)
2008
133,291 (75,898) 57,393
(in thousand Baht)
Separate financial statements
2009
1,212 187,490 (144,320) 44,382
2008
1,783 124,082 (72,108) 53,757
25. Income tax expense Note Current tax expense Current year Under provided in prior years 13
Deferred tax expense Movements in temporary different Benefit of tax losses recognised
Total
Consolidated financial statements
2009
2008
(in thousand Baht)
Separate financial statements
2009
2008
1,228,535 8,673 1,237,208
724,153 3,579 727,732
1,056,085 7,857 1,063,942
574,049 3,660 577,709
(61,189) 1,187 (60,002) 1,177,206
(69,430) 1,020 (68,410) 659,322
(53,448) (53,448) 1,010,494
(59,452) (59,452) 518,257
Reconciliation of effective tax rate
(in thousand Baht)
Consolidated financial statements
2009 Rate (%) (in thousand Baht)
Profit before tax Income tax using the Thai corporation tax rate Income tax reduction Income not subject to tax Expenses not deductible for tax purposes Eliminated income Under provided in prior years Other
30
Total
25 168
ANNUAL REPORT 2009
4,799,039 1,439,712 (217,583) (99,432) 18,904 31,923 8,673 (4,991) 1,177,206
2008 Rate (%) (in thousand Baht) 30
22
3,032,691 909,891 (125,102) (144,221) 11,760 6,847 3,579 (3,432) 659,322
Reconciliation of effective tax rate
Separate financial statements
2009 (in thousand Rate (%) Baht)
Profit before tax Income tax using the Thai corporation tax rate Income tax reduction Income not subject to tax Expenses not deductible for tax purposes Under provided in prior years Other
30
Total
23
Income tax reduction Royal Decree No. 387 B.E. 2544 dated 5 September 2001 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit for the five consecutive accounting periods beginning on or after enactment.
169
4,351,659 1,305,498 (217,583) (99,214) 17,437 7,857 (3,501) 1,010,494
(in thousand Baht)
2008 (in thousand Rate (%) Baht) 30
21
2,496,582 748,975 (124,829) (116,082) 9,922 3,660 (3,389) 518,257
26. Earnings per share Basic earnings per share The calculations of basic earnings per share for the years ended 31 December 2009 and 2008 were based on the profit for the years attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the years as follows:
ANNUAL REPORT 2009
Consolidated financial statements
2009
2008
(in thousand share / in thousand Baht)
Separate financial statements
2009
2008
Profit attributable to equity holders of the Company (basic)
3,621,816
2,373,266
3,341,165
1,978,325
Number of ordinary shares at 1 January Effect of shares issued during year Weighted average number of ordinary shares outstanding (basic) Earnings per share (basic) (in Baht)
2,191,394 7,358 2,198,752 1.65
2,180,178 7,591 2,187,769 1.08
2,191,394 7,358 2,198,752 1.52
2,180,178 7,591 2,187,769 0.90
Diluted earnings per share The calculations of diluted earnings per share for the years ended 31 December 2009 and 2008 were based on the profit for the years attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the years after adjusting for the effects of all dilutive potential ordinary shares as follows:
Consolidated financial statements
2009
2008
(in thousand share / in thousand Baht)
Separate financial statements
2009
2008
Profit attributable to equity holders of the Company (diluted)
3,621,816
2,373,266
3,341,165
1,978,325
Weighted average number of ordinary shares outstanding (basic) Effect of diluted equivalent ordinary shares-warrants Weighted average number of ordinary shares outstanding (diluted) Earnings per share (diluted) (in Baht)
2,198,752 7,184 2,205,936 1.64
2,187,769 17,063 2,204,832 1.08
2,198,752 7,184 2,205,936 1.51
2,187,769 17,063 2,204,832 0.90
170
ANNUAL REPORT 2009
27. Promotional privileges
By virtue of the provisions of the Investment Promotion Act of B.E. 2520, the Group has been granted privileges by the Board of Investment relating to developing a housing project for persons who have low or middle income (where the usable area in each unit shall not be less than 31 square meters and the contracted sale amount is less than Baht 600,000). On 10 June 2009, the Board of Investment adds a new condition in respect to pricing for projects located in zone 1 requiring that any apartment building must have area per unit of at least 28 square meters and with a maximum selling price of Baht 1 million (including land cost) and any town house or detached house, area per unit must not be less than 70-square meters with a maximum selling price of Baht 1.2 million (including land cost). The principal privilege is the exemption from corporate income tax for a period of 5 years from the start of business operations related to these privileges. The promotional privileges will expire in various periods up to 10 December 2014. As promoted companies, the Company and its subsidiaries must comply with certain terms and conditions prescribed in the promotional certificates.
171
28. Dividends At the annual general meeting of the shareholders of the Company held on 9 April 2009, the shareholders approved the appropriation of dividends of Baht 0.33 per share, amounting to Baht 724.9 million from net profit relating solely to business operations benefiting from the privileges under the Investment Promotion Act of year 2008. The dividend was paid to shareholders during 2009. At the annual general meeting of the shareholders of the Company held on 11 April 2008, the shareholders approved the appropriation of dividends of Baht 0.22 per share, amounting to Baht 480.9 million from net profit relating solely to business operations benefiting from the privileges under the Investment Promotion Act of year 2007. The dividend was paid to shareholders during 2008.
29. Financial instruments Interest rate risk Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows. Management believes that the interest rate risk is minimal. Hence, the Group does not hedge such risk.
ANNUAL REPORT 2009
Liquidity risk
Capital management
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.
The primary objectives of the Company and its subsidiaries’ capital management are to maintain their ability to continue as a going concern and to maintain an appropriate capital structure. In addition, the Company has to maintain debt to equity ratio as stipulated in loan facility agreements.
Determination of Fair values The Group uses the following method and assumptions in estimating the fair values of financial instruments. Cash and cash equivalents, and current investments in savings account, fixed deposits and promissory note, and receivables and payables approximate their fair values due to the relative short-term maturity of these financial instruments. Bank overdrafts and short-term loans from financial institutions, and long-term loans approximate their fair values because these financial instruments bear interest at market rates. As at 31 December 2009, the carrying and fair value of the long-term debentures amounted to Baht 2,100 million and Baht 2,146 million, respectively (2008: Baht 1,000 million and Baht 1,024 million, respectively). The fair value is calculated based on the present value of future principal and interest cash flows discounted at the market rate of interest for similar liabilities at the reporting date. 172
As at 31 December 2009, debt to equity ratio in the consolidated financial statements is 0.16:1 (the separate financial statements: debt to equity ratio is 0.17:1) as conditions stipulated in loan facility agreements.
30. Lease agreements (a) The Company entered into lease agreements covering office space (including related service charges) for 3 years. These agreements will expire in various periods up to November 2012. The rental and service charges for the year ended 31 December 2009 amounted to approximately Baht 12.8 million (2008: Baht 11.0 million). (b) The subsidiaries have entered into lease agreements covering office space (including related service charges) for 3 years. These agreements will expire in various periods up to November 2010. The rental and service charges for the year ended 31 December 2009 amounted to Baht 7.0 million (2008: Baht 7.0 million).
ANNUAL REPORT 2009
31. Commitments and contingent liabilities As at 31 December 2009 and 2008, the Company and its subsidiaries had the following outstanding commitments and contingent liabilities: (a) The Company had outstanding commitments to purchase land of Baht 3,303 million (2008: Baht 742 million). (b) The Company and its subsidiaries had outstanding commitments for the development and construction of the Company’s projects of Baht 118 million (2008: Baht 130 million).
(d) The Company and its subsidiaries were contingently liable for letters of guarantee issued by certain local banks totalling Baht 1,869 million to certain government agencies (2008: Baht 1,683 million). (e) The Company was contingently liable as a guarantor of overdraft lines of Baht 65 million, loan lines from banks of Baht 598 million and letters of guarantee lines of Baht 829 million of the subsidiaries (2008: Baht 40 million, Baht 736 and Baht 834 million, respectively).
(c) The Company and its subsidiaries had outstanding commitments for the service agreement and professional fee of the Company of Baht 22 million (2008: Baht 11 million).
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ANNUAL REPORT 2009
32. Others
Sales with signed contracts and total project sales as at 31 December 2009 and 2008 were as follows:
Consolidated financial statements
2009
90,146
Sales with signed contracts Total project sales The ratio of sales with signed contracts against total project sales (%)
2008
67,371
(in million Baht)
Separate financial statements
2009
85,094
2008
64,158
97,895
76,835
92,108
72,327
92.08
87.68
92.39
88.71
33. Thai Accounting Standards (TAS) not yet adopted
The Group has not adopted the following new and revised TAS that have been issued as of the reporting date but are not yet effective. The new and revised TAS are anticipated to become effective for annual financial periods beginning on or after 1 January in the year indicated.
TAS TAS 20 TAS 24 (revised 2007) TAS 40
Topic Accounting for Government Grants and Disclosures of Government Assistance Related Party Disclosures Investment Property
Year effective 2012 2011 2011
Management is presently considering the potential impact of adopting and initial application of these new and revised TAS on the consolidated and separate financial statements.
174
ANNUAL REPORT 2009
34. Reclassification of accounts
Certain accounts in the 2008 financial statements have been reclassified to conform to the presentation in the 2009 financial statements. (in thousand Baht)
Consolidated financial statements
Balance sheet Intangible asset Other non-current assets Statement of income Selling and administrative expenses Interest expense Selling expenses Administrative expenses Management benefit expenses Finance costs
Before reclass.
2008
Separate financial statements
Reclass.
After reclass.
Before reclass.
Reclass.
After reclass.
114,502
78,831 (78,831) -
78,831 35,671
99,698
68,713 (68,713) -
68,713 30,985
1,887,063 28,199 -
(1,887,063) (28,199) 790,981 1,016,012 50,876 57,393 -
790,981 1,016,012 50,876 57,393
1,765,465 29,982 -
(1,765,465) (29,982) 732,644 958,171 50,876 53,756 -
732,644 958,171 50,876 53,756
The reclassifications have been made to comply with the classification set out in the Pronouncement of the Department of Business Development Re:Determination of items in the financial statements B.E. 2552 dated 30 January 2009 and because management considers that the separate presentation of intangible asset from other non-current assets is more appropriate.
175
ANNUAL REPORT 2009