Annual Report 2006
Property Perfect Public Company Limited
Content
Message from Board of Directors Company Information Financial Information Nature of Business Management Organization Chart Project Project Map Marketing and Competition Real Estate Industry Trend 2007 Other Information Report of Independent Auditor Balance Sheets Notes to Consolidated Financial Statements Audit Committee Report 2006 Auditor Fee Accuracy Sanctification Form
1 3 4 5 12 19 20 21 22 27 31 72 73 80 105 106
Report 2006 1 Annual Property Perfect Public Company Limited
Message from Board of Directors
Combined net profit of 519 companies listed in the Stock Exchange of Thailand and the Market for Alternative Investment in 2006 fell by 12% from 2005, due to several negative factors. The rising oil price, which is the main cause of higher costs in all businesses and negative gross profit margin; the higher interest rates › lending in particular, which sent impact on expenses and profitability, are the important negative factors. Not only companies but also consumers feel the impacts as seen by the fact that purchasing power and consumer confidence have declined continually. The political change and the unrest in Bangkok late last year were also taken into account. To handle with the negative factors, the company has adjusted its strategy in operating business by constructing smaller-sized single houses to comply with consumersû weakening purchasing power but maintaining functions. In addition to condominiums which can be sold continually, the company in the year launched new products - townhouses and duplex houses - priced below Bt3 million per unit. Given the strategy change, the companyûs pre-sales for all types of residents in 2006 amounted to Bt6,557 million, up 14.89% from the previous year. The companyûs 2006 revenue from land and house sales, however, dropped at annual rate of 9.22% to Bt4,477 million as sales from condominium and townhouse projects, which are built-to-construction residents, could not be realised in that year and sales revenue from only single houses were booked. The company delivered a mere Bt12 million net profit in 2006. At the end-2006, the companyûs backlog was in the tune of Bt3,374 million and it would be realised as sales revenue from 2007 onwards, the companyûs revenue and net profit in 2007 would jump significantly from 2006. For year 2007, the companyûs board of directors predicted that the local situation would improve or at least not get worsened than 2006 because of the falling oil price trend. The Bank of Thailandûs reduction in its policy interest rate by 50 basis points early this year prompted anticipation from many parties that another 0.75-1% cut in the key interest rate within this year is possible and this would boost consumer confidence and home buyersû purchasing power. The political situation is likely to be clearer by the end of this year. Moreover, the government has policy to invest in electric train projects and bidding or construction of any line would stimulate the countryûs overall economy and property development projects located along the rail network. The company would be one among them to reap benefits as most projects are in this category. The company plans to unveil another 5 projects worth totally Bt7,587 million in 2007 and one of them is the Villa, a townhouse project on Pattanakarn Road to accommodate market demand after The Villa on Rattanathibet Road was warmly welcomed during the opening late October 2006.
Report 2006 2 Annual Property Perfect Public Company Limited
The remaining 4 projects are Perfect Masterpiece-Rattanathibet, a single detached house project; Maneerin Park 2-Rangsit, a single detached house and duplex house project; Perfect Masterpiece - Pattanakarn, a single detached house project; and Perfect Park - Romklao-Suvarnabhumi, a single detached house. Townhouse and condominium projects would contribute 13% and 18%, respectively of the companyรปs total sales revenues and single house projects would account for 69%. The company has changed its strategy to meet with market demand by concentrating in building lower priced residents from Bt5-Bt6 million per unit to Bt3-Bt4 million. Even though competition in this price bracket residents is expected to be rather intense as many property developers have jumped into this market, the company would get an edge over competitors because focus on good environment surrounding, club house and large-sized lake for all projects is the companyรปs selling points and they deserve for outstanding environment awards for two years in a row. The company still believes that possessing land and house is consumerรปs ultimate desire. Although buying city condominium is gaining popularity and sales of single houses last year hit by the skyrocketing oil price, the company believes that this trend is not permanent. Consumers would change their interest to single houses and townhouse projects with price of Bt2-Bt4 million along electric train routes in 15-20 kilometers radius when construction of the governmentรปs electric trains is materialised. With the companyรปs residents extended to cover all prices and products, flexibility to adjust itself according to changeable customer demand then increases. Throughout last year, the company would like to express a sincere gratitude to all shareholders, financial institutions, customers, business partners and employees for their support and understand as always. Even though the company posted lower-than-expected operating results in the previous year, the strategic plan adjusted throughout last year would give a blessing to its performance from this year. The company hopes that all would always trust and be confident in the company.
Tawatchai Nakhata Chairman
Chainid Ngow-Sirimanee Managing Director
Report 2006 3 Annual Property Perfect Public Company Limited
Company Information Name Head Office
Type of Busines No. of Paid-up Share Par value Paid-up Capital
Property Perfect Public Company Limited 17th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2245-6640-7 Fax. 0-2247-3328 Real Estate Development 782,555,715 Share Baht 6 Baht 4,695,334,290
Investment in other companies Name and Address
Krungthep Land Plc. 21th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2645-0960-3 Fax. 0-2645-0380 Estate Perfect Co., Ltd. 17th Flr. Vorasombat Bldg., 100/1 Rama IX Rd., Huay Kwang, Bangkok Tel. 0-2245-6640-7 Fax. 0-2645-1976 Real Service Co., Ltd. 100/9 Soi Ta-it, Rattanathibet Rd., Nonthaburi Tel. 02-594-4001-5 Fax. 02-594-4021 Perfect Satellite Services Co., Ltd. 19th Flr. Vongvanich B Bldg., 100/52 Rama IX Rd., Tel. 0-2645-1406-8 Fax. 0-2645-1409
Registered Capital (MB)
Paid-up Capital
Percentage of Type of Business Investment
2,100.00
150,000,000
20.00%
Real Estate Development
1,000.00
100,000,000
100.00%
Real Estate Development
40
400,000
19.00%
Home Service
1
100
99.94%
Manage Fitness and Clubhouse
Report 2006 4 Annual Property Perfect Public Company Limited
Financial Information
Consolidated 2006 Financial Position Total Assets Project Development Cost and Land for Development Total Liabilities Shareholders没 Equity Operation Results Sales Total Revenue Gross Margin Net Income (Loss)
13,176 11,059 7,500 5,676
Unit : Million Baht The Company Only 2006 2005 2004 12,453 9,574 6,777 5,676
13,414 9,832 7,476 5,937
11,755 8,847 6,621 5,134
4,477 4,534 30.90% 12
3,815 3,922 30.55% 12
4,149 5,185 34.09% 1,093
3,926 4,387 37.82% 1,016
Financial Ratio Return on Total Revenue Return on Equity Return on Total Assets Current ratio Quick Ratio
0.26% 0.21% 0.09% 3.65 0.15
0.31% 0.21% 0.09% 3.10 0.14
21.07% 19.74% 8.68% 3.50 0.26
23.15% 21.95% 9.98% 5.64 0.35
Per Share Data Net Income (loss) per share Dividend Book Value
0.02 0.35 7.25
0.02 0.35 7.25
1.40 0.40 7.59
Unit : Baht 1.33 0.00 6.58
Report 2006 5 Annual Property Perfect Public Company Limited
Nature of Business
The company and subsidiaries mainly develop residential units for sale, offering single houses, townhouses and condominium units in Bangkok and neighboring provinces. The company and subsidiaries have subcontracted the construction works to contractors, and closely supervised the construction by a team of engineers and architects who also control raw material quality to ensure the construction process in line with standards in offering the best quality. The companyûs housing design team always keeps eyes on innovative development to improve designs to fit with projectûs concept and differentiate to let consumers feel the continuously perfect change in each project from over 90 standard designs. The companyûs housing design development concentrates in beauty, which are harmonised with each projectûs atmosphere, benefits from various types of usable space to fit with family size and budget, and satisfies customer needs in consideration of worthwhile investment with appropriate prices. The company and subsidiaries have developed the units in two categories: ë Pre-built houses The company completes construction before selling the houses to interested customers, who are entitled to pay deposit, sign the contracts and inspect houses. When the balance is paid, the units are transferred. ë Built-to-order houses Customers can construct houses according to desired designs. During reservation process, they are entitled to sign contracts to buy and sell and pay down payment. For condominium units, down payment is paid out during that period. The company signs contract to buy and sell with customers before the down payment is paid out in 10-15 months and during that period houses/condominium units are constructed for delivery. The houses/condominium units, on completion, are ready for customersû inspection. The units are transferred when customers pay the balance.
Report 2006 6 Annual Property Perfect Public Company Limited
In 2006, pre-built houses were available to be ready for customers to move in, but some client needs were not match with the companyรปs existing products at that time. To serve customer demands and offer optimum satisfaction in accordance with the companyรปs business operation goal, higher number of built-to-order houses were made and the company can maintain customer base in a certain level. Built-to-order houses in the past accounted for a small portion of the total sales revenue. Given competition condition, higher interest rates and weakened purchasing power in 2006, the company developed products to fit with consumer behavior. In the fourth quarter of 2006, two new built-to-order townhouse and single-detached house projects, located in Rattanathibet and Rachapruek-Bangyai, with units priced between Bt1.7 million and Bt3 million were put on sales. Following the residential projectsรป reservations and a signing of agreement to buy and sell, right is scheduled to transfer in 2007. The projects received so good response from customers that the companyรปs and its subsidiaryรปs townhouse and single house backlog worth Bt1,063.72 million is carried over to 2007. Metro Park is a condominium in garden, located on Kalapaphruek Road near rail network and the route links to central business district of Bangkok (Silom). Metro Park is priced at Bt1.2-2.5 million for families and working people who prefers convenience in traveling to business areas without time waste from traffic jam problem. Besides, the company offers alternative designs for usable space in condominium units. For single houses, the company provides after-sale services with a one-year guarantee from right transfer date to customers. Maintenance services for club houses, swimming pools, play grounds, central green area, and infrastructures in projects are offered while construction is under way. All the central areas and infrastructures will be transferred to project committees when the projects are completed. Our dedication to create livable environment reflects through a variety of trees, club houses, holiday activities created to boost friendship among neighbors, closed-circuit TV monitors in key areas, and around-the-clock security guards. Our dedication bears fruit when in 2005 the company was presented the EIA Monitoring Awards 2005 from the Natural Resources and Environment Ministry for two projects (1) Perfect Place Ramkhamhaeng (2) Perfect Place Rattanathibet. In 2006, the company continued emphasizing on environment and it won EIA Monitoring Awards 2006 for 3 following projects (1) Perfect Place Rattanathibet project (2) Perfect Place Ramkhamhaeng phase 1 (3) Perfect Place Ramkhamhaeng phase 2 and 3 This confirms our standards and dedication in creating the perfect quality for all residents of all projects
Report 2006 7 Annual Property Perfect Public Company Limited
Revenue Structure Revenue Structure: By Development Type Project
Brand Masterpiece
Maneeya Masterpiece Maneeya Masterpiece Exclusive Zone Perfect Masterpiece Ekamai-RamIndra
Brand Perfect Park
Perfect Park Rattanathibet- Rachapreuk Perfect Park Ramkhamhaeng-Suvarnabhumi
Other
Nantana Garden Rangsit Total Revenue from the Sale of land and houses
2004
%
MB
%
MB
%
SDH SDH SDH
333 33 833
7% 1% 19%
375 547
8% 11%
483 0 157
12% 0% 4%
162 214 8
4% 5% 0%
496 46 20
10% 1% 1%
1,125 139
27% 3%
119 110 328 419 662
3% 2% 7% 9% 15%
105 189 515 148 362 781
2% 4% 10% 3% 7% 16%
216 176 618 201
5% 4% 15% 5%
SDH/Land SDH SDH/ Land SDH SDH SDH
323 4 5 203 104
7% 0% 0% 5% 2%
337 435 407
7% 9% 8%
370 189 4 0 201 247
9% 5% 0% 0% 5% 6%
SDH SDH
341 272
8% 6%
69 98
1% 2%
-
-
Perfect Place Rattanathibet SDH/Land Perfect Place Rattanathibet- Rachapreuk SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (Phase 1-3) SDH/Land Perfect Place Ramkhamhaeng-Suvarnabhumi (The Lakeside Home) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (Colonial Zone) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (Garden Zone) SDH Perfect Place Ramkhamhaeng-Suvarnabhumi (The Private Zone) SDH Perfect Place RamaV - Rachapreuk SDH Perfect Place Sukhumvit 77-Suvarnabhumi** SDH Maneerin Lake & Park Maneerin Exclusive Park Rangsit Maneerin Lake & Lagoon Maneerin Masterpiece Maneerin Park Rangsit Maneerin Park Rattanathibet
2005
MB
Brand Perfect Place
Brand Maneerin
2006
Product Type
TH
4 0% 1 4,477 100% 4,931 100% 4,126 100%
Remark : SDH = Single Detached House, TH = Townhouse, CB = Commercial Building, Land = Land ** Developed by 100%-owned subsidiary Estate Perfect Co.,Ltd . The company has two subsidiaries comprising Estate Perfect Co., Ltd. And Perfect Satellite Service Co., Ltd. arranged consolidated financial statement since the first quarter 2004 . As shown in the balance sheet, Property Perfect chalked up Bt3,815million in sales revenue in2006 ,Bt4,150 million in 2005 and Bt3,925 million in 2004. In the same period, subsidiaries没 revenue is Bt662 million , Bt781 million and Bt201 million, respectively.
Report 2006 8 Annual Property Perfect Public Company Limited
Financial Developments Like other developers, the company plunged into business problems after the 1997 financial crisis. On 19 February 2001, the Central Bankruptcy Court ordered us to fall through business rehabilitation. On 2 October 2001, the court approved the rehabilitation plan, with Asian International Planners Co., Ltd. as the planner and plan administrator. The company had followed through the plan and fully restructured the loans. The company consequently exited the plan on the court order on 12 April 2004, and the management power has been returned to the old management team since then. 2005 : At the 1/2004 extraordinary shareholdersû meeting on 24 May 2004, resolutions were as follows : ë The company reduced the registered capital from Bt12,000 million to Bt7,200 million, by slashing the par value from Bt10 apiece to Bt6. The paid-up capital consequently dropped from Bt7,793.94 million to Bt4,676.36 million, constituted 779.39 million common shares with par value of Bt6 apiece. The Bt3,117.58 million reduction in the paid-up capital was used to write down its accumulated losses totaling Bt3,812.62 million as of December 31, 2006, leaving Bt695.04 million in retained losses. ë
The company issued secured debentures worth no more than Bt2,000 million for sale to public and/or institutional investors.
ë
company sold secured debentures: 1/2004 Set 1 worth Bt450 million, 1/2004 Set 2 worth Bt750 million, and 2/2004 Set 1 worth Bt350 million. The proceeds of Bt1,550 million were used to refinance short-term loans and buy new land for business expansion.
2006 : At the 2/2005 board of directors meeting on 2 March 2005, resolutions were as follows : ë The company increased the investment in Estate Perfect Co Ltd, buying 5 million newly-issued shares, with Bt10 par value, for a total amount of Bt50 million. The proceeds were used to speed up the construction of a project on Sukhumvit 77, ahead of the opening of the Suvarnabhumi International Airport. The company subscribed to all shares to maintain the major shareholder status, in accordance with the 2/005 board of directorsû resolution on 2 March 2005. (See details in Note No. 9) : At the general shareholdersû meeting on 7 April 2005, resolutions were as follows : ë The company canceled warrants leftover from an allocation to unsecured creditors in accordance with the business rehabilitation plan. It offered 53 million free warrants to all unsecured creditors. Each warrant is eligible to convert into a common share at the exercise price of Bt0.01 per share. During the allotment, official receivership revoked the claim of some creditors and the company then offered 50.93 million warrants to unsecured creditors as approved by official receivership. As a result, the meeting resolved the cancellation of the unallocated 2.07 million warrants. ë
The company registered the new capital with the Commerce Ministryûs Business Development Department, after the reduction of capital from Bt7,200 million to Bt4,779.57 million. The capital was reduced due to the cancellation of 403.41 million unallocated shares. The shares, totaling Bt2,420 million with par value of Bt6 apiece were originally reserved for the exercise of unallocated warrants and for the conversion of unsecured debts in accordance with the resolution of the 1/2005 shareholder meeting on 7 April 2005. (See detail on Note No.18)
Report 2006 9 Annual Property Perfect Public Company Limited
The company offered 39 million free warrants to directors and/or employees under the Employee Stock Option Program (ESOP). Each warrant can be exercised for a common share at the price of Bt6 each. The board of directors would decide on the issuanceรปs details to comply with related regulations and rules and authorised directors could amend the warrantรปs details and conditions. -
The company raised its registered capital from Bt4,779.57 million to Bt5,013.37 million by floating 39 million newly issued shares with a par value of Bt6 for the exercise of warrants issued to directors and/or employees under Employee Stock Option Program (ESOP).
: At the 1/2005 extraordinary shareholdersรป meeting on 19 September 2005, resolutions were as follows : - The company allotted convertible debentures worth no more than US$35 million or Bt1,480 million in equivalent to Thai baht. Type Principal amount Face value Coupon rate Exercise price Exercise date Maturity Offered to
: Unsecured convertible debentures with right to exercise for the companyรปs common shares : No more than US$35 million or Bt1,480 millionin equivalent to Thai Baht : US$100 : Not exceeding 4% per annum, depending on market condition. The rate would be fixed ahead of the issuance. : Not greater than 120% of the stockรปs closing price averaged during 7-15 straight days before the offering : Convertible debenture holders are entitled to exercise right according to conditions to be set later : Not longer than 5 years : Foreign or local institutional investors
The board of directors or the executive board has been authorised to set and revise conditions, pricing, face value, coupon rate and other details of the convertible debentures, and proceed necessary process for the issue of the convertible debentures.
Report 2006 10 Annual Property Perfect Public Company Limited
ë
The company increased its registered capital from Bt5,013.57 million to Bt6,213.57 million by allocating 200 million capital increased shares with a par value of Bt6 for the convertible debenture exercise into common shares. Company prospectus article 4 concerning the registered capital increase was revised following the share issue.
ë
The company on 25 November 2005 followed a resolution of the 1/2005 extraordinary shareholdersû meeting on 19 September 2005 by selling the US$20-million convertible debentures to Pyrite International Finance Limited (çPyriteé) at the exercise price of Bt6.25 apiece. The company is liable to interest payment rate and redemption of the unexercised convertible debentures at the same foreign exchange rate as the issuance date at Bt41.15 per dollar to prevent risk from foreign exchange (see detail in financial structure). The company still has US$15 million of unallocated convertible debentures.
: At the 7/2005 board of directors meeting on 1 Dectember 2005, resolutions were as follows : ë Mr. Ka Kay Yip was appointed the director to replace Mr.Tamra Ngow-sirimanee who passed away. He represents Pyrite International Finance as prescribed in the bondholderûs condition as of 1 December 2005 2006 : At the general shareholdersû meeting on 28 April 2006, resolution were as follows : ë The company reduced its par value in accordance with opinion and practice of Federation of Accounting Professions and the Securities and Exchange Commission (see detail in note to financial statements). Shareholders at the 1/2004 extraordinary meeting on 24 May 2004 resolved the capital reduction by lowering par value from Bt10 each to Bt6 to reduce retained losses without clearing off share discount first. As the Federation of Accounting Professions at present requires company to clear off share discount before deducting retained losses, it was necessary for the company to revise its financial statements ended 31 December 2005 to comply with guideline of the Federation of Accounting Professions and the Securities and Exchange Commission. The company then used the reduced capital of Bt3,121,441.776 to clear off share discount of Bt346,583,259.81 before using the remaining amount to write down retained losses of Bt3,812,615,553.75 as of 31 December 2003. The company had the remaining retained losses of Bt1,037,757,037.56 as a result. ë
The company allocated legal reserves in the tune of Bt60 million and paid dividend of Bt0.35 per share, totaling Bt237.88 million, to shareholders whose names appeared in the share register book closed on 10 May 2006 for its 2005ûs operating results. Dividend was payable on 28 May 2006 and its yield represented 6%.
ë
The company re-elected Mrs. Wanida Waiyawajamai, Mr. Vichai Singvicha, Mr.Somsak Toruksa and Mr. Vidhya Nativivat, who retired by rotation in this occasion.
Report 2006 11 Annual Property Perfect Public Company Limited
ë
The company had unanimously appointed Mr. Ruth Chaowanagawi, Certified Public Accountant No.3247, and/or Mr. Narong Puntawong, Certified Public Accountant No.3315, and/or Mr. Supachai Phanyawattano, Certified Public Accountant No.3930, and/or Miss Siraporn Ouaanunkun, Certified Public Accountant No.3844, of Ernst & Young Office Limited as the companyûs auditors for year 2007 for another term and fix the remuneration of the auditors in the amount not exceeding Bt1,515,000.
: Resolutions of the 1/2006 extraordinary shareholdersû meeting on 21 June 2006 ë The 1/2006 extraordinary shareholdersû meeting on 21 June 2006 resolved the company to issue secured and unsubordinated debentures worth no more than Bt1,200 million. Details are as follows: Type
Outstanding amount Offered to Coupon rate Maturity Others conditions
: Secured and unsubordinated debentures with the one-time principal payment on maturity date. Redemption can be made with or without bearersû trustee depending on market condition at the issuance date of each set. : Not more than Bt1,200 million : Local investors and/or institutional investors and/or specific investors for all or partly and/or foreigninvestors for the entire amount at one time or series. : Depending on market condition at the issuance date : The maximum 3 years from the issuance date : The companyûs board of directors and the executive boards has authorised to fix and amend pricing, face value, coupon rate and other conditions and details of secured and unsubordinated debentures as appropriated as well as handle with the issuance.
Report 2006 12 Annual Property Perfect Public Company Limited
Management After the Central Bankruptcy Court approved the rehabilitation plan and appointed the planner on 19 February 2001, control over the companyรปs business and assets as well as shareholdersรป legal rights, except the right to dividend payment, fell into the plannerรปs hands under the bankruptcy law. On 2 October 2001, the court approved the plan, having Asian International Planners Ltd as the planner. The planner had completed all plans and the company was released from the rehabilitation process on 12 April 2004. The original management team has resumed the management power.
Management Structure At present, the companyรปs management structure comprises 5 boards (A) The board of directors (B) The audit committee (C) The executive board (D) The director selection committee (E) The remuneration and human resources committee. Each boardรปs authority and scope of responsibility as follows :
(A) The Board of Directors
As of December 31, 2006, the board consists of 12 individuals. No.
Name
1 Dr. Tawatchai Nakhata 2 3 4 5 6 7 8 9 10 11 12
Mr. Chainid Ngow-Sirimanee Mrs. Wanida Waiyawajamai Mr. Vichai Singvicha Dr. Theerachon Manomaiphibul Mr. Phairat Senachack Mrs. Paneepan Tisapong Mr. Pramote Rermyindee Mr. Vidhya Nativivat Mr. Ka Kay Yip* Mr. Somsak Toruksa Dr. Thamnoon Ananthothai
Title Chairman / Chairman of the Audit Committee and Independent Director Managing Director Director Director Director Director Director Director Director Director Director / Independent Director and Auditing Director Director / Independent Director and Auditing Director
With Mr. Pramote Rermyindee as secretary of the board
Report 2006 13 Annual Property Perfect Public Company Limited
Authorised Directors
Authorised signatory directors are 1)
Two-thirds of the following directors - Mr. Chainid Ngow-Sirimanee, Mr. Pramote Rermyindee, or Mrs. Wanida Waiyawajamai › are duly authorised to sign documents and affix the companyûs seal or.
2)
Any one of the following directors - Mr. Chainid Ngow-Sirimanee, Mr. Pramote Rermyindee, or Mrs. Wanida Waiyawajamai - is authorised to co-sign documents with one the these directors Mrs. Paneepan Tisapong, Dr. Theerachon Manomaiphiboon or Mr. Phairat Senachack › and affix the companyûs seal.
Board of Directorsû authority and scope of responsibility
The Board of Directors are authorized to make decisions and ensure that the companyûs operations follow the objectives, regulations, shareholdersû resolutions and legal conditions. Its authority does not cover the decisions which must be approved by shareholders as prescribed by the Securities and Exchange Commission and the Stock Exchange of Thailand. Under the companyûs regulations, the Board of Directors is authorized to appoint the executive board which will monitor the daily operations of the company under the guidelines and budget approved by the Board of Directors and handle other tasks bestowed by the Board of Directors. The executive board can approve the decisions within its power granted by the Board of Directors or have to propose the issues beyond its power for the Board of Directorsû consideration. The regulations also empower the Board of Directors to appoint other officers or other working committees to assist the executive board.
(B) Audit Committee
As of 31 December 2006, the Audit Committee consists of 3 independent directors. No. 1 2 3
Name Dr. Tawatchai Nakhata Mr. Somsak Toruksa Dr. Thamnoon Ananthothai
Title Chairman of the Audit Committee Auditing Director Auditing Director
With Ms. Doungporn Rermyindee as the secretary.
Audit Committeeûs authority and scope of responsibility 1. 2.
Supervise the companyûs operations to ensure honesty, transparency, and responsibility to shareholders. Ensure that the executive board and executives handle their responsibilities in an accurate, complete and standard manner.
Report 2006 14 Annual Property Perfect Public Company Limited
3.
4. 5. 6. 7.
8.
9. 10. 11. 12. 13.
Ensure the accuracy, sufficiency, and credibility of the financial results, as well ensure the accurate and sufficient disclosure through coordination with external auditors and executives who take responsible for preparing quarterly and yearly financial statements as requested by the companyûs board of directors and/or the executive board. Ensure appropriate and effective internal control, through the coordination with the internal auditors and auditors. Appoint the auditor and set the auditor fee, which must be approved by the shareholders and based on reliability and adequacy of human resources, audit job volume made by the audit firm and experience of staffs who are in charge of the companyûs accounting audit. Make sure that the company follows the legal conditions set by the Securities and Exchange Commission, the Stock Exchange of Thailand and other related agencies. Prevent conflicts of interest through the inspection of the transactions of the company with connected parties and through coordination with the auditor as well as consider disclosing accurate and adequate information for connected transactions and any transactions that might cause conflicts of interest. Prepare the audit committeeûs report and disclose the report in the annual report, which includes at least following issues. - Opinion related to prepare the companyûs financial reports and accurate and reliable information disclosure. - Opinion concerning to sufficiency of the companyûs internal control system. - Reasons that the companyûs auditor is appropriate for another term appointment. - Opinion to comply with the Securities and Exchange Act, the Stock Exchange of Thailandûs rules and laws relevant to the companyûs business. - Other reports that should be acknowledged by shareholders and investors under scope of duty and responsibility assigned by the companyûs directors. Review the internal controlûs reports. Review the internal controlûs findings. If finding or suspecting of any misconduct, or the insufficiency of the internal control, they must ask for the Board of Directorsû judgment. Review the internal controlûs inspection and the auditorûs recommendations, and follow through the improvements. Power to investigate, audit and summon the related executive board, advisor and accounting auditors to attend the joint-meeting to receive benefit information Authorise to examine, audit, call executive directors, executives, advisors, and accounting auditors to attend meeting to acknowledge information and seek independent opinions from other professional advisors if necessary to achieve in tasks under responsibility.
14. Perform other tasks assigned by the companyûs board such as review of financial and risk management policy, and business ethics conducted by executives. The audit committee has a three-year term and it will be elected by the companyûs board when their terms are ended by rotation.
Report 2006 15 Annual Property Perfect Public Company Limited
Independent Directorsû qualifications
Independent directors must meet qualifications set by the Securities and Exchange Commissionûs announcement at Kor Jor.12/2000 governing asking for permission and approving newly issued share offering, and audit committee qualifications required by the Stock Exchange of Thailandûs regulations.
(C) The Director Selection Committee As of 31 December 2006, The Committee consisted of 3 persons No.
Name
1 2 3
Dr. Tawatchai Nakhata Dr. Thamnoon Ananthothai Mr. Pramote Rermyindee
Title Chairman of the committee Selection committee member Selection committee member
The Selection Committeeûs scope of authority and responsibility 1. 2.
3.
4.
Review the individuals who are fit to be the companyûs directors and nominate the list to the board of directors and/or present the list to shareholders for official appointment. In reviewing the individualsû qualifications, the committee must consider their expertise, knowledge, ability and relevant experiences to ensure that the individualsû qualifications would be useful for the companyûs operations. Besides, the committee must consider that the nominations follow the legal framework particularly when it involves the nominations for independent directors and the audit committee members. In selecting independent directors and the audit committee members, the committee must take into account; - The nominated individuals must hold no more than 5% of the paid-up capital of the company, affiliates or subsidiaries. The percentage is inclusive of the shareholding of related individuals - their spouses and underaged children. - The nominated persons must not be related to the companyûs executives or major shareholders. - The appointed persons must not have conflicts of interest, directly or indirectly, in terms of finances or management of the company and affiliates. They must not be the companyûs major shareholders. The appointed persons must be able to work and present their views with independence, free from the control from executives or major shareholders as well as their relatives.
To present the selected persons to the board of directors, the Selection Committee must nominate only those who will fill the available director seats. Except when the committee members could not reach an agreement, they are allowed to present all the nominated names to the board for their consideration.
Report 2006 16 Annual Property Perfect Public Company Limited
(D) The Remuneration and Human Resources Committee The Remuneration and Human Resources Committee consisted of 3 persons as of 31 December 2006. No. 1 2 3
Name
Title
Dr Tawatchai Nakhata Mr. Vidhya Nativivat Mr. Somsak Toruksa
Chairman Member Member
The Remuneration and Human Resources Committee没s scope of authority and responsibility 1. 2. 3. 4.
Consider the company没s policies and criteria in paying the managing director, directors, and the company没s advisors. Consider the annual salary, annual pay increase, and the interim pay increase, as well as other benefits to award all employees. Consider the employment terms, regulations, and penal clauses which should be appropriate and fair. The committee will report directly to the board of directors, to whom they will explain and answer all questions regarding the pays for employees at all levels
(E) Executive Board
Executive Board contains 10 individuals, as of 31 December 2006. No. 1 2 3 4 5 6 7 8 9 10
Name Mr. Chainid Mr. Pramote Mrs. Wanida Mr. Vichai Mrs. Paneepan Mr. Phairat Dr. Theerachon Mr. Surasak Ms. Supee Mr. Kritapas
Ngow-Sirimanee Rermyindee Waiyawajamai Singvicha Tisapong Senachack Manomaiphibul Vacharapongpreecha Reodacha Phongphakawat
Title Chief Executive Director Executive Director and Secretary Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director
Report 2006 17 Annual Property Perfect Public Company Limited
Executive Committeeûs authority and scope of responsibility
1. 2. 3. 4. 5. 6. 7. 8.
Run the companyûs daily operations under the guidelines set by the Board of Directors and within the scope of rules and regulations, as well as the companyûs objectives and regulations. Set the annual budget for the Board of Directorsû approval. Consider investment projects for the Board of Directorsû approval. Consider and approve borrowings and the financing of normal transactions such as the investment, land purchases or others with the maximum amount of Bt100,000,000 or Bt100 million. Prepare, recommend and set business strategies for the Board of Directors. Consider and approve the corporate marketing and public relations plans. Evaluate the companyûs performance in terms of asset management and financial management to ensure efficiency and effectiveness. Conduct other tasks assigned by the Board of Directors.
Notably, the executive board has no authority in handing its power to any member or others to approve a connected transaction (as prescribed by the Securities and Exchange Commission) or a transaction which could pose conflicts of interest with the company or subsidiaries with exception of approval for normal course of business transactions as policy and criteria resolved by the board of directors under the Securities and Exchange Act, and the Stock Exchange of Thailandûs regulations, announcements and instructions or rules.
Managing Director
Managing director is executivesû head who operate and report operating performance and the following issues to executive board, directors and shareholders. 1. Set policies, direction, and strategies for the companyûs business operation. 2. Set business planning, budget and authority of the companyûs internal units to seek the boardûs approval. 3. Manage normal course of business activities under policies set by the companyûs board, laws, conditions, regulations, memorandum of association, and the companyûs rules. 4. Perform other tasks assigned by the companyûs board. Managing directorûs authority, duty and responsibility could not be transferred to others in a way that those who are authorised by managing director can approve transactions that might lead to conflicts of interest (as defined in the Securities and Exchange Commissionûs announcement) with the company or the subsidiaries and affiliates, or he/she has vested interest with exception that those transactions are regarded as normal course of business as policies and principles set by the companyûs board.
Report 2006 18 Annual Property Perfect Public Company Limited
Strategy Committee
Strategy committee is appointed by managing director to perform tasks in accordance with the fast and competitive business expansion. Strategy committee as of 31 December 2006 comprised 6 members as follows No. 1 2 3 4 5 6
Name Mr. Chainid Mr. Vichai Mr. Phairat Dr. Theerachon Mrs. Paneepan Mr. Thongchai
Ngow-Sirimanee Singvicha Senachack Manomaiphiboon Tisapong Piyasantiwong
Authority and scope of responsibility
Title Chairman of the strategy committee The committee member The committee member The committee member The committee member Secretary of the committee
The committee takes responsible to set guideline to develop the company没s brand image, direction, business strategic plan to be appropriate and match with business opportunity and set other relevant policies according to managing director没s determination.
Investor Relations and Information Technology Project Management Zone 5
Project Management Zone 3
Budgeting
Accounting
Treasury and Financial Management
Assistant Managing Director
Project Management Zone 4
Construction Management
Assistant Managing Director
Strategy Committee
Design and Project Development
Project Planning
Project Management Zone 2
Advertising and Public Relations
Project Management Zone 1
Assistant Managing Director
Assistant Managing Director
Managing Director
Board of Executive Directors
Board of Directors
Chairman
Assistant Managing Director
Office of the Managing Director
Secretary to Board
Organization Chart
Legal Procedure & Ownership Transfer
General Management
Assistant Managing Director
Office of the Internal Auditor
Audit Committee
Remuneration and Human resources committee
Nominating Committee
Report 2006 19 Annual Property Perfect Public Company Limited
Report 2006 20 Annual Property Perfect Public Company Limited
Project Property Perfect Plc. and Subsidiaryรป re Projects. Project
Current Projects 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.
Perfect Place Rattanathibet Maneeya Masterpiece Rattanathibet Maneerin Park Rattanathibet Perfect Park Rattanathibet- Rachapruek Perfect Place Rattanathibet- Rachapruek The Villa Rattanathibet- Rachapruek Maneerin Park Rangsit Maneerin Lake & Park Tiwanon-Ring Road Perfect Place RamaV - Rachapruek Perfect Park RamaV โ บ Bangyai Perfect Place Ramkhamhaeng-Suvarnabhumi (Garden Zone) Perfect Place Ramkhamhaeng-Suvarnabhumi (Colonial Zone) Perfect Place Ramkhamhaeng-Suvarnabhumi (The Private Zone) Perfect Park Ramkhamhaeng-Suvarnabhumi Perfect Place Sukhumvit 77-Suvarnabhumi** Perfect Masterpiece Ekamai-RamIndra Metro Park Sathorn
New Projects in 2007 1. 2. 3. 4. 5.
Perfect Masterpiece Rattanathibet Maneerin Park Rangsit (16 Rais) Perfect Park Romkao The Villa Pattanakarn Perfect Masterpiece Pattanakarn I
Time to Develop
Product Total Units Remaining Remaining Project Units Value (MB)
1996-2007 2002-2007 2005-2007 2005-2007 2005-2009 Q4/2006-2008 2004-2007 2001-2008 2005-2007 Q4/2006-2007
SDH SDH SDH SDH SDH TH SDH SDH SDH SDH
935 148 189 147 395 461 222 702 306 403
5 6 13 37 325 329 16 333 163 355
22.5 70 65 150 1,412 658 80 1,304 995 1,031
2004-2007
SDH
241
4
20
2004-2007
SDH
99
31
276
2005-2008 2005-2007 2004-2009 2004-2007 2005-2009
SDH SDH SDH SDH CD
277 198 1,102 190 4,560
197 98 775 72 3,210
1,238 382 4,107 1,238 6,415
Q1/2007-2008 Q1/2007-2007 Q4/2007-2008 Q3/2007-2009 Q4/2007-2010
SDH SDH SDH TH SDH
180 99 280 421 428
180 99 280 421 428
1,270 247 1,148 1,600 3,300
** Subsidiary Companyรปs Project (Estate Perfect Co., Ltd.) SDH = Single Detached House TH = Townhouse CD = Condominium
Report 2006 21 Annual Property Perfect Public Company Limited
Project Map
Report 2006 22 Annual Property Perfect Public Company Limited
Marketing and Competition Marketing Marketing Strategy The company sets marketing strategies in line with competition, as well as economic and social conditions. Products. The company concentrates on developing the products that respond to market demand and competition. Factors that send impacts to competition are as follows: - Location The companyûs locations are in areas with high-growth potential, located along the electric train routes or new roads to satisfy target groups who demand convenient transport networks and proper infrastructure. Comparatively, the companyûs projects are in the better locations than competitorsû and high potential growth such as ë The companyûs projects in western zone, located near electric trainûs purple line (BangsueBangyai) and red line (Bangsue-Taling Chan), Rachapruek Road, Rama 4 Bridge (cross Pakkred intersection) linked to Chaeng Wattana Road. ë The companyûs projects in Suvarnabhumi Airport zone, located near an Airport Rail Link and so on. The company has continuously expanded projects into new and existing locations to widen market coverage by geography, as well as target customersû demand and purchasing power. -
Designs Beautiful home designs are on offer, highlighting the usable space to fit buyersû demand and purchasing power. This is a result of cooperation between the interior design team and an outside leading architectural company, for a variety of perfect and complete design concepts including the house in the garden concept, garden in the house or a city home. Beautiful home designs are developed to serve with target customersû taste. New design residents, of which sizes are smaller but complete function, are available to accommodate new customer groupsû purchasing power. Moreover, the Home Automation system has been employed to fit the new generationûs lifestyle and add the house value.
-
Project and environment Aside from the houses, the company also emphasises the focus on the environmental management in the projects, security system, and after-sale services to ensure a perfect community for all clients to add value to residents in projects. Confirming that the company has offered good quality to clients is the fact that two projects - Perfect Place RamkhamhaengSuvarnabhumi and Perfect Place Rattanathibet won the EIA Monitoring Awards 2005 from the Natural Resources and Environment Ministry. In 2006, 3 projects › Perfect Place Rattanathibet, Perfect Place Ramkhamhaeng phase 1 and Perfect Place Ramgkhamhaeng phase 2 and 3 › received EIA Monitoring Awards 2006. Such awards confirm the companyûs standards and commitment to good living quality for those who live in the projects.
Report 2006 23 Annual Property Perfect Public Company Limited
Moreover, the company develops projects with large and perfect club houses, and joins hand with business partners to create community around sport multiplexes or club house of each project for better living of the companyûs customers and these differences make the companyûs projects get edges over rivalsû. The partners include Black Canyon, KPN Music Academic School, Clark Hatch, V Shop and Dokya bookstore.
Brand building strategy The company has focused on brand building to ensure the positive image and effective advertisement of the projectsû concept, outstanding points, and product positioning. As the projects are located along rail routes, near expressways or new roads, they are perfect for buyers who prefer convenient transport networks for their living quality. çBaan Kon Muangé The city home concept is portrayed along the companyûs logo to demonstrate the higher standards in terms of locations. All houses are developed under the çperfect homeé concept, deriving from a client survey, to demonstrate the product standard. There are 5 project titles to fit different target groups. 1. 2. 3. 4. 5.
Perfect Masterpiece, offering high-end clients with units priced above Bt 7 million. Perfect Place, for upper medium-income earners with houses valued between Bt3.5-Bt7 million. Perfect Park and Maneerin, for new families with units priced between Bt2.5-Bt5 million. The Villa, a townhouse and new concept duplex house project, with locations along electric train routes for new families with units priced between Bt1.7-Bt3 million. Metro Park for condominium buyers who dream of the convenient rail transport network, with units priced at Bt1.2-Bt2.5 million. This will expand the market the cover those who work or live in city areas. The table described residence prices by brands Price Type
1-2 MB.
2-3 MB.
3-4 MB.
4-5 MB.
5-7 MB.
7 MB. Up
Single Detached House Town House Condominium The company has concerned in construction quality, designs and planning, facilities, club house, after-sale services, environmental maintenance within project areas, infrastructures and security system to offer perfect community and social to customers. The concept results in word-of-mouth, which is a sustainable brand building through projects customer experiences.
Report 2006 24 Annual Property Perfect Public Company Limited
Pricing The company sets the unit prices in line with the competition. We take into account the development cost, location potential, home designs and special offers. To beat competitors, the company can offer the lower prices for the houses in the same locations with competitors but better designs, environment and project没s planning, or a slightly higher price for a bigger house in the same area. With improvement in quality and services, clients consider it is a worthwhile investment to buy a unit from the company. Moreover, the company also expands to cover clients who are looking for housing units with the Bt1.2Bt2.5 million price tag, through the opening of a condominium project on New Sathorn Road (Kalapaphruek) which is warmly welcomed due to the rail linkage, and new families who want to buy townhouses or duplex houses, located along rail network on Rattanathibet Road and Rachapruek Road, with price of Bt1.7-Bt3 million per unit. The projects were received good response from customers in the previous year. Advertising, sale and sale channels In the past year, mass marketing was adopted aside from direct marketing to reach potential buyers in a broad and narrow scale. The sales team were aggressive with the analysis and search for target groups while advertisements were created for a number of projects, which saved the advertising cost but yielded an effective result. This was supported by event marketing and relationship marketing activities to ensure the words of mouth, as well as E-marketing to attract buyers through the Internet. Analysing target group correctly and efficiently results from a cooperation between the company没s sales and project planning teams.
Sale promotion
Appropriate and attractive marketing strategies are adopted to encourage purchases, such as the co-promotion with partners such as financial institutions that compe up special financial packages that include low interest rates or special loans or installment patterns. The company also teams up with furniture makers and interior designers to provide the design services to reduce buyers没 decoration budget and help them save money in case that they have to borrow to finance the decoration as the home decoration loan carries higher rates and home loans, and other partners to add value to homes and facilitate customers.
Target groups
Due to demand for houses near work places or transportation networks mainly the rail routes, the company has expanded the target groups by offering new product types in new locations. Target groups can be categorised as follows: Demographically - Income levels : Single-detached houses are offered with a focus on those earn more than Bt40,000 per month per household. The company expands market to cover broader types of target groups by launching condominium project, located along electric train routes, for those who have household income of over Bt24,000 per month; and townhouse and new concept duplex house project, located along electric train route on Rattanathibet Road and Rachapruek Road, for new families with household income of greater than Bt30,000 per month.
Report 2006 25 Annual Property Perfect Public Company Limited
Geographic - Clients who own first houses or work within the 10-km radius from the projects. They are familiar with the transportation network and the locations. - Those who dream of traveling convenience, from the mass transit network and expressways, which the companyรปs projects can offer. Psychographic - Those who dream of better living environment, a bigger house, or a perfect housing project.
Competition The company has focused on residential development, with single houses and condominiums. These are developed in four main locations. Group 1. Best locations, city areas (in 15-km radius) This is the least competitive, with a few small and medium-sized projects, due to scarcity of land. The market contains only highly-priced houses, mostly townhouses. Targets are high-income earners who prefer dwellings in the city. In 2005, the companyรปs survey showed high demand for downtown condominium or near-downtown condominiums with the price tag of Bt1.2-Bt2.5 million. The condominium project namely Metro Park was thus launched near the extended part of the Blue rail route, offering units at Bt1.2-Bt2.5 million. Group 2: Good locations (in 15-20 km radius) or near electric train stations Competition in this group is intense, given higher number of new projects with locations near city unveiled because lands near city or good locations with new roads linked to city for convenient transportation. Lands along these roads including Rama V Road, On-Nuch Road, Rachapruek Road, Rattanathibet Road and Ekamai-Ramindra Road can be developed to residential projects. Consumersรป housing purchase behavior now concentrates on quality houses developed by well-known firms and located in good areas. Projects will be highly welcomed by consumers if they are located near electric train stations, given that fast, convenient and cost saving are main reasons making this transportation mode gain increasing popularity. Most of the companyรปs projects classified into this group are as follows : Western zone projects are located near purple line rail route (Bangyai-Bangsue) and red line (BangsueTaling Chan). Suvarnabhumi Airport zone projects are located near Airport Rail Link route With location strategy plan, the company is warmly welcomed from customers. Medium- to upper medium-income earners are the companyรปs target customers who purchase housing units at price tags of around Bt3-Bt7 million.
Report 2006 26 Annual Property Perfect Public Company Limited
Group 3: Suburban locations (20-30-km radius) The market shows high competition, as land price in suburban areas remain low and that attracts a number of developers. The supply thus exceeds demand, inducing the price war. Developers have to sell the houses at low price and reaped low profits. Some of the company没s projects are in this category. The company now changes product strategy to smaller-sized houses but maintains completed function concept so that its prices are competitive and offer certain amount of profits to retain market share in this customer group. Group 4: Poor locations Houses in the areas hardly find buyers. In the past, they could as buyers hoped to gain from higher prices when infrastructure was more proper. However, most buyers shun them, due to poor traveling convenience and high traveling expenses. The company takes locations as a major part in formulating marketing strategies.
Report 2006 27 Annual Property Perfect Public Company Limited
Real Estate Industry Trend 2007 Demand in 2007 would continue to rise on the back of the growing residential demand according to expansion of Bangkok and suburban areas. However, consumers will take longer time to make a buying decision due to low consumer confidence undermined by political and economic factors. Consumer purchasing power this year is likely to improve on the falling inflation rate and interest rates. Figures 1 and 2 show interest rates and inflation rate situations.
Figure 1 : Interest rates Source : The Bank of Thailand
��
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Figure 2 : Inflation rate Source : The Commerce Ministry In 2006, number of registered residents continued to grow despite the countryûs skeptical situation (see figure 3). Real Estate Information Center of the Government Housing Bank also confirmed that the market in 2007 would grow further.
Report 2006 28 Annual Property Perfect Public Company Limited
Figure 3 : Completely built residents in Bangkok and suburban Source : Real Estate Information Centre, the Government Housing Bank New residential units almost across-the-board put on sales in 2006 were priced lower on average. Ratio of condominium units and townhouses increased from 2005 and 2004 as illustrated in figures 4,5 and 6.
Figure 4 : Average prices of residents located in Bangkok and its outskirts Source : Agency for Real Estate Affairs
Figure 5 : Comparative number of new residents in Bangkok and suburban by products Source : Real Agency Real Estate Affairs
Report 2006 29 Annual Property Perfect Public Company Limited
Figure 6 : Comparative number of residents in Bangkok and suburban by prices Source : Agency for Real Estate Affairs Supply in 2007 in terms of number tends to decline because of property developers没 more cautions in the business situation coupled with the tightened scrutiny of financial institutions in extending project finance (see figure 7 : only commercial banks没 real estate loans) to small-sized property developers in particular. Demand in high-end residential market continues to slow down due to oversupply in the market. Property developers in 2007 would focus on smaller-sized residential units with more affordable prices. Ratio of townhouses and condominium units would increase (see figure 8 : proportion of completely built residents in Bangkok and outskirts). Property developers would concentrate in launching products with price tags below Bt5 million and especially below Bt3 million in the market. Condominiums would be developed continuously in city but their prices would be cheaper due to the intensified competition.
Figure 7 : Only commercial banks没 real estate loans Source : The Bank of Thailand
Report 2006 30 Annual Property Perfect Public Company Limited
Figure 8 : Ratio of completely built residents in Bangkok and suburban Source : Real Estate Information Centre, the Government Housing Bank The overall market没s stability would improve because of the continuing demand, the greater purchasing power, the declining new supply and real demand in residents while reducing speculations. For building material prices, they would increase a little bit from the previous year due to growth in constructions of both government and private sectors.
Figure 9 : Building material price index Source : The Commerce Ministry
Report 2006 31 Annual Property Perfect Public Company Limited
Other Information Financial structure 1. The company没s securities (1) Common shares
As of 31 December 2006, the company had Bt6,213,565,176 in registered capital, or 1,035,594,196 common shares at the par value of Bt6 each. A paid-up capital of Bt4,695,337,290 or 782,555,715 common shares were paid up. These are changes of registered capital during the past 3 years. Accounting year
2006
2005
2004
2003
Registered capital - Value (Bt) - No. of shares
6,213,565,176 1,035,594,196
6,213,565,176 1,035,594,196
7,200,000,000/1 12,000,000,000 1,200,000,000 1,200,000,000
Paid-up capital - Value (Bt) - No. of shares
4,695,334,290 782,555,715
4,695,210,150 782,535,025
4,682,162,664/1 6,024,162,340 780,360,444 602,416,234
Note : 1/ AS of 13 December 2004, the company没s registered capital was Bt7,200,000,000 (1,200,000,000 shares) and paid-up capital of Bt4,682,162,664 (780,360,444 shares at Bt6 par value). On 24 May 2004, the company reduced the par value from Bt10 to Bt6 according to the resolution of the 1/2004 extraordinary shareholder meeting and the resolution of the 2006 annual general shareholders没 meeting. The reduced capital of Bt3,121,441,776 was used to reduce the share capital loss of Bt346,583,260 and reduce accumulated losses which stood at Bt3,812,615,554 as of 31 December 2003. After that, the accumulated losses totaled Bt1,037,757,038. On 7 April 2005, shareholders annual meeting at the 2005 ordinary meeting approved the registered capital reduction from Bt7,200,000,000 to Bt4,779,565,176, by canceling 403,405,804 unallocated shares of which value stood at Bt2,420,434,824. The new shares were reserved for warrants which were not allocated and reserved for the conversion of unsecured debts. The shareholders also approved the capital increase from Bt4,779,565,176 to Bt5,013,565,176, or by Bt234,000,000 A number of 39,000,000 shares were issued, reserved for the exercise of warrants which would be issued to directors and/or employees under the ESOP program. Shareholders at the extraordinary meeting at 1/2005 on 19 September 2005 approved the capital increase from Bt5,013,565,176 (835,594,196 shares at the value of Bt6 each) to Bt6,213,565,176 (1,035,594,196 shares at the value of Bt6 each) for the conversion of debentures. The company registered the new capital with the Commerce Ministry on 7 October 2005.
Report 2006 32 Annual Property Perfect Public Company Limited
As of 31 December 2005, the companyûs paid-up capital stood at Bt4,695,210,150 (782,535,025 shares at the value of Bt6 each), due to the exercise of warrants worth Bt13,047,486 or 2,174,581 shares in December 2004 and June 2005. The company registered the new capital with the Commerce Ministry on 12 January and 7 July, respectively. The companyûs paid-up capital as of 31 December 2006 was raised by Bt4,695,334,290 (782,555,715 common shares at a the par value of Bt6 each) due to the exercise of warrants worth totally Bt124,140 (20,690 common shares at a Bt6-par value in June 2006. The company registered the new paid-up capital with the Commerce Ministry on 7 July 2006. Also, the company as of 11 January 2007 registered the new paid-up capital with the Commerce Ministry. The increased capital stemmed from the exercise of warrants worth Bt29,137,674 (4,856,279 common shares at the par value of Bt6) in December 2006 and the companyûs paid-up capital was then increased to Bt4,724,471,964 (787,411,994 common shares at the par value of Bt6 each) as of 14 February 2007. (2) Warrants Under the rehabilitation plan, the company must issue warrants to unsecured creditors, at the ratio of Bt1,000 of debt for 7 free warrants. Each warrant can be exercised for 1 common share, at the price of Bt0.01. The Securities and Exchange Commission approved the issuance of 53 million warrants, of which maturity is 10 years from 7 November 2002. The exercise period was set at the last day of Quarter 2 and Quarter 4 of each year, starting from the fourth quarter of 2002. The Receiver revoked the claim of some creditors. The company thus issued only 50.93 million warrants and a number of 2.07 million units remained. Shareholders at the 1/2005 meeting approved the cancellation of the unallocated warrants. At present, a number of 9,182,202 warrants are not yet exercised. The companyûs annual general shareholdersû meeting for year 2005 had a resolution to allocate free 39,000,000 warrants to directors and/or employees under ESOP program. Each warrant is entitled to exercise into a common share at the price of Bt6 each and the warrants have maturity of 5 years from the issuance date. The company has not issued the warrants yet. The companyûs board of directors meeting on 25 September 2006 approved the cancellation of the issuance of 1,900,000 warrants to directors and/or employees under ESOP program and the board meeting also resolved the cancellation the allocation of 37,100,000 warrants to directors and/or employees under ESOP program. The two meeting totally cancelled the issuance of 39,000,000 warrants, the same units as approved by shareholders in the annual general meeting for year 2005.
Report 2006 33 Annual Property Perfect Public Company Limited
(3.) Debentures As of 31 December 2006, outstanding debentures are as follows;
1/2004 secured debentures, set 1 1/2004 secured debentures, set 2 2/2004 secured debentures, set 3 1/2006 secured debentures Total Less : debentures with maturity within 1 year Debentures › Net of debentures with maturity within 1 year
(unit : Thousand Baht) 2006
2005
350,000 450,000 800,000 (350,000)* 450,000
450,000 750,000 350,000 1,550,000 (1,200,000) 350,000
*Full amount paid on redemption date on 23 February 2007 Details of debenture issuance On 24 May 2004, shareholders at the 1/2004 extraordinary meeting approved the allocation of secured and unsubordinated debentures in amount not exceeding Bt2,000 million. The company divided the issuance into two batches as follows : A. 1/2004 Secured debentures, Set 1* Issue date : 18 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 450,000 Price : Bt1,000 Maturity : 1 year and 6 months from issue date (18 August 2004) Interest rate : 340 basis points above Siam City BankĂťs 6-month deposit rate Rate payment : Biannually. The first payment was on 18 February 2005 Redemption date : 18 February 2006 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB- (tha) by Fitch Ratings (Thailand) Ltd, as of 21 October 2005 The company redeemed the debentures on maturity, on 18 February 2006.
Report 2006 34 Annual Property Perfect Public Company Limited
B.
1/2004 Secured debentures, Set 2 Issue date : 18 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 750,000 Price : Bt1,000 Maturity : 2 years from issue date (18 August 2004) Interest rate : 350 basis points above Siam City Bank没s 6-month deposit rate Rate payment : Biannually. The first payment was on February 18, 2005 Redemption date : 18 August 2006 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB- (tha) by Fitch Ratings (Thailand) Ltd, as of 21 October 2005 * Full amount paid on redemption as scheduled on 18 August 2006.
C.
2/2004 Secured debentures, Set 1 Issue date : 23 August 2004 Type : secured holder-bearing debentures, with trustee Offered to : financial institutions and public investors No. of units : 350,000 Price : Bt1,000 Maturity : 2 years and 6 months from issue date (23 August 2004) Interest rate : 365 basis points above Siam City Bank没s 6-month deposit rate Rate payment : Biannually. The first payment was on 23 February 2005 Redemption date : 23 February 2007 Principal payment : Full amount paid on redemption date Other conditions : collateral value-outstanding debenture value ratio must be 1.5:1 Rating : BBB+ (tha) by Fitch Ratings (Thailand) Ltd, as of 12 February 2007 * The company redeemed the debentures as scheduled on 23 February 2007.
D. 1/2006 secured debentures Issue date : Type : Offered to : No. of units : Face value : Maturity : Coupon rate : Coupon rate payment : Redemption date : Principal payment : Other conditions : Rating
9 February 2006 secured holder-bearing debentures, with trustee financial institutions and public investors 450,000 Bt1,000 2 years from issue date on 9 February 2006 6.65% per annum Biannually. The first payment was scheduled on 21 August 2006 8 February 2008 Full amount paid on redemption date collateral value-outstanding debenture value ratio must be maintained at 1.5:1 : BBB (tha) by Fitch Ratings (Thailand) Ltd on 12 February 2007
Report 2006 35 Annual Property Perfect Public Company Limited
4.
Unsubordinated convertible debentures 1/2005 Issue Issue date : 25 November 2005 Type : unsecured holder-bearing convertible debentures, without trustee Offered to : Foreign institutions through a private placement, in US dollar, fully hedged at all cost by investors No. of units : 200,000 Price : US$100 Maturity : 5 years from issue date (25 November 2005) Interest rate : fixed 3.50% Coupon rate payment : on 25 February, 25 May, 25 August and 25 November every year until maturity. The first interest payment was made on 25 February Principal payment : The unconverted debentures will be redeemed in US dollar, with 31.60% premium from the issue price. The redemption is fixed with the foreign exchange rate as of the issuance date. Conversion price : Bt 6.25 Conversion period : 18 months after offering, until the redemption date with the minimum conversion of US$1 million Conversion conditions : The company withholds the right to call holders to convert 1 third of the original number of debentures when 1. Over 10 million shares are traded on average during the 45 days before the company would exercise the right, and 2.
Bearers没 conditions
The company没s average share closing price during the 60-day period and the closing of the 5 days before the company would exercise the right accounts for - 130% of conversion price in Year 1-2 - 150% of conversion price in Year 3 - 175% of conversion price in Year 4-5
Then, the company can ask the bearers to convert one third of the original number of debentures under these conditions. 1. The bearers who were forced to convert the debentures sold out all the common shares, or 2. The company can exercise the right again at least 60 days after the first right exercise. Under this condition, the number of shares traded and the average share closing must fit the earlier conditions. : The company would hold a meeting to appoint an individual, nominated by any foreign institutional investor who bought and paid US$20 million upwards for the debentures, a director.
Report 2006 36 Annual Property Perfect Public Company Limited
2.
Major shareholders The first 10 largest shareholders as of 31 December 2006 are; Rank
Name
1 Thailand Securities Depository Co.,Lttd. For Depositor 2 Japan Asia Group Co., Ltd./1 3 Thailand Securities Depository Co.,Lttd. For Depositor 4 MJL Intertrade Co., Ltd. /2 5 Natee International Law Office Co.,Ltd./3 6 Japan Asia Group Limited 7 Ms.Sumalee Wangprakorbsuk 8 Mr. Pramote Rermyindee 9 Mr. Vidhya Netivivat 10 Krungthep Land Plc. (Data from Thailand Securities Depository Co., Ltd.)
No. of shares
%
433,915,113 104,776,944 72,294,552 47,589,227 37,018,928 12,467,224 11,385,000 11,385,000 10,580,000 9,200,000
55.11 13.31 9.18 6.04 4.70 1.58 1.45 1.45 1.34 1.17
Note: /1 Japan Asia Group Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. Japan Asia Group is registered in British Virgin Islands, a UK colony, as a financial services and investment firm. Under the BVI law, outsiders cannot obtain details of the registration in terms of shareholders, registered capital or financial results. What is revealed is Star Mark Enterprises Ltd has the authority over Japan Asia Group. Property Perfect also learns that the companyรปs ultimate shareholder is Mrs. Wai Ching Chung, a resident of Hong Kong. Property Perfect and Japan Asia Group have no connection, in terms of shareholding or cross-directorship or cross-executive or the nominee account. MJL Intertrade Co Ltd became a shareholder as it, as a creditor in the rehabilitation plan, converted debts to equity. MJL is a holding company and according to the document from the Commerce Ministry, its two major shareholders are the Aswintrangkul family who holds a 79.80% stake (Mr. Chaiwat Aswintrangkul, 40%; Mr. Chaiyong Aswintrangkul,29.8; Mrs. Amphai Aswintrangkul, 5%; and Kittima Aswintrangkul, 5%) and the Vajarothai family (Vajarakitti Vajarothai) who owns 20% of the registered capital. /2
Its ultimate shareholder, according to the revelation from MJL, are the Vajarothai family, 60%; and the Aswintrangkul family, 40%. Natee International Law Office became a shareholder as it, as the lawyer of a creditor in the rehabilitation plan who converted debts to equity. A condition for Property Perfect to exit the rehabilitation plan is the company must issue common shares to all eligible creditors. One creditor is eligible for the conversion right. However, two companies claimed that they were transferred the claim from the creditor โ บ Loves Partner Investment Co Ltd and Glory Buy Associate Co Ltd. Both filed petitions to the Central Bankruptcy Court. Property Perfect thus agreed to have Natee International Law /3
Report 2006 37 Annual Property Perfect Public Company Limited
Office to hold the common shares on behalf of the creditor. The legal office is also assigned to oversee the given shares until the Central Bankruptcy Court would determine who the shares should be transferred to. Natee International Law Office offers legal and accounting services. Foreign shareholders who hold the company没s shares through Thai NVDR Co Ltd are entitled to the same returns as other shareholders, but not the voting right (except in the voting to revoke the company没s listing status in the Stock Exchange of Thailand. To trace the number of shares issued in the form of NVDR, investors should check the SET没s website, www.set.or.th. Holdings by nationalities as of 31 December 2006 Shareholders Thai Foreign Total
No. 238 8 246
Shares % No. 596,325,470 75.73 19 191,086,524 24.27 3 787,411,994 100.00 22
Corporate Shares % 544,949,358 69.21 189,538,720 24.07 734,488,078 93.28
No. 219 5 224
Individuals Shares 51,376,112 1,547,804 52,923,916
% 6.52 0.20 6.72
Note: from Thailand Securities Depository Co., Ltd. 3.
Dividend policy of the company and subsidiaries The company holds the policy to pay out 50% of after-tax net profit as dividend. The dividend payout must be approved by shareholders. However, during the rehabilitation until the company exited the rehabilitation plan, the company would not pay any dividend, accordingly to the rehabilitation plan. The subsidiaries have the policy to pay 50% of net profit as dividend.
Report 2006 38 Annual Property Perfect Public Company Limited
Management and Authorized Person of the Company Name-Title
1 Dr.Tawatchai Nakhata Chairman Independent Director Audit Committee
Age
Academic Qualifications
Equity Holding Relation ship
60 Ph.D. University of Illinois Audit Committee Program (ACP) 13/2006 Director Accreditation Program (DAP) 52/2006 ; Thai Institute of Directors
0.00096 %
Career experience within the past 5 years Timing 1992 - Present
1995 - Present
Chairman Chairman of the Audit Committee Independent Director Managing Director
1995 - Present
Fellow Member
1984 - 1995
Consultant Engineer/ Managing Director Head of Construction Resource Section
1978 - 1984 2 Mr. Chainid Ngow - Sirimanee Managing Director / Chief Executive Director / Director
53 Bachelor of Laws Chulalongkorn University Thai Barrister - at - Law Thai Bar Association
0.850 %
3 Mr. Somsak Toruksa Director Independent Director Audit Committee
56 Master of Laws Ramkhamhaeng University Audit Committee Program (ACP) 13/2006 Director Accreditation Program (DAP) 52/2006 : Thai Institute of Director
0.000 %
4 Mr. Vidhya Nativivat Director
53 Master of Laws The George Washington University, USA Bachelor of Laws Thammasat University
1.352 %
5 Mr. Ka Kay Yip Director
42 A.B. degree, magna cum laude, Harvard University
0.000 %
Designation
1985 - Present
Company / Business Type Property Perfect Public Company Limited Ceda Co., Ltd. / Structural engineering design service The Engineering Institute of Thailand Ceda Co., Ltd. Public Works Department, Ministry of the Interior
2002 - Present
Managing Director Chief Executive Director Director
Property Perfect Public Company Limited Krungthep Land Public Company Limited / Real Estate Estate Perfect Company Limited / Real Estate Thai Property Public Company Limited / Real Estate (Formerly known as çRattana Real Estate Public Company LimitedÊ)
1999 - Present
Director
1995 - Present
Director
1998 - Present
Property Perfect Public Company Limited
1993 - Present
Director Independent Director Audit Committee Managing Director
2004 - Present
Director
1986 - Present
Managing Director
Property Perfect Public Company Limited Bunchong and Vidhya Law Office Co., Ltd./ Law
2005 - Present
Director
1998 - Present
A senior partner
Somsak Toruksa Law Office Co., Ltd./ Law
Property Perfect Public Company Limited GEMS, a private equity management company with around US $ 650 Million under management for investment in Asia.
Report 2006 39 Annual Property Perfect Public Company Limited
Name-Title
6 Dr. Thamnoon Ananthothai Director Independent Director Audit Committee
Age
Academic Qualifications
Equity Holding Relation ship
49 Ph.D., International Management, 0.000 % Walden University, Naple, Florida U.S.A. A.C.A. Certificate, American Accreditation Council for Accountancy, U.S.A. M.B.A., Management, The University of Sarasota - Sarasota Florida, U.S.A. B.A., Accountancy & Management, Eckerd College - St. Petersburg, U.S.A. Audit Committee Program (ACP) 10/2005, Director Accreditation Program (DAP) 48/2005, Director Certification Program ( DCP) 70/2006 The Role of the Chairman Program (RCP) 14/2006, Understanding the Fundamental of Financial Statement (UFS) 7/2007: Thai Institute of Directors
Career experience within the past 5 years Timing 2005 - Present 2002 - 2003 1998 - 2002
1988 - Present
Designation
Company / Business Type
Director Independent Director Audit Committee Dean of College of Business Administration President & CEO
Property Perfect Public Company Limited
Director / Executive Director / Assistant Managing Director Chief of Accounting Division / Internal Audit and Planning Manager
Property Perfect Public Company Limited Dhananan Finance and Securities Co.,Ltd. / Finance
Dhurakij Pundit University / University DBS Thai Danu Securities Limited / Securities
7 Mrs. Wanida 53 Bachelor of Accountancy Waiyawajamai Chulalongkorn University Director Director Accreditation Program (DAP) Executive Director 50/2006 ; Thai Institute of Directors Assistant Managing Director
0.026 %
8 Mr. Vichai Singvicha 52 MBA Kasetsat University Director Bachelor of Laws Executive Director Chulalongkorn University Assistant Managing Director Direct Certification Program (DCP) 74/2006, Direct Accreditation Program (DAP) 54/2006 ; Thai Institute of Directors
0.026 %
1988 - Present
Director / Executive Director / Property Perfect Assistant Managing Director Public Company Limited
9 Mrs. Paneepan Tisapong 52 M.A. Mass Communication College of Director Journalism City University, England Executive Director Director Accreditation Program (DAP) Assistant Managing Director 50/2006 ; Thai Institute of Directors
0.026 %
1989 - Present
Director / Executive Director / Property Perfect Assistant Managing Director Public Company Limited
10 Mr. Phairat Senachack 57 Mini MBA Thammasat University Director Bachelor of Business Administration Executive Director Assumption University Assistant Managing Director Director Certification Program (DCP) 74/2006, Director Accreditation Program (DAP) 30/2004 ; Thai Institute of Directors
0.000 %
1996 - Present
Director / Executive Director / Property Perfect Assistant Managing Director Public Company Limited
11 Mr. Pramote Rermyinde 52 Bachelor of Laws Chulalongkorn University Director Thai Barrister - at - Law Executive Director Graduate Diploma in Business Law Company Secretary Thammasat University Director Certification Program (DCP) 69/2006 Director Accreditation Program(DAP) 43/2005 Finance for Non-Finance Director ; Thai Institute of Directors
1.454 %
1998 - Present
Director / Executive Director Property Perfect Company Secretary Public Company Limited Management Partnership Thammatit Law Office Group of Persons / Law Executive Director Finance House Co., Ltd./ Finance Executive Director Credit Fancier Srinakorn Co.,Ltd. / Finance
1985 - 1988
1992 - Present 1994 - 1997 1993
Report 2006 40 Annual Property Perfect Public Company Limited
Name-Title
Age
Academic Qualifications
Equity Holding Relation ship
12 Dr. Theerachon 44 Ph.D. Engineering Manomaiphibul The Ohio State University, USA Director Director Certification Program (DCP) 74/2006, Executive Director Director Accreditation Program (DAP) Assistant Managing Director 30/2004 ; Thai Institute of Directors
0.019 %
Career experience within the past 5 years Timing 2002 - Present 2000 - 2002 é é é
Director / Executive Director / Property Perfect Assistant Managing Director Public Company Limited Executive Director Bangkok Rubber Public Company Limited / Footwear Manufacturer Managing Director Saharattananakorn Co., Ltd / Industrial Estate Managing Director Jaruphon Patana Co.,Ltd. / Entertainment Managing Director Maikiew Chabadaeng Co.,Ltd. / Entertainment
13 Ms. Supee Reodacha 47 MBA Roosevelt University Executive Director Treasury and Financial Management Division Director
0.000 %
14 Mr. Surasak 42 MBA Thammasat University Vacharapongpreecha Bachelor of Accountancy Executive Director Thammasat University Accounting Division Director Certified Public Accountant
0.126 %
1993 - Present
Executive Director / Property Perfect Division Director Public Company Limited Deputy Director Assistant Director, Estate Perfect Project Senior Manager, Financial Management Dept., Treasury Division Senior Manager, Financial Management Dept., Accounting Division
0.000%
2004 - Present
Executive Director / Division Director Vice President / Director of Rehab Company
15 Mr. Kritapas Pongpakawat Director Budgeting Office Director
48 MBA. Ramkhamheng University Bachelor of Accounting Ramkhamheang University Certify Of Management Engineering Institute Of Thailand Certify of Top Management Program / The Boss Institute
2002 - Present
Designation
Company / Business Type
1996 - 2000
2001 - 2004
1999 - 2000
Executive Director / Division Director Business Development Manager
Internal Audit
Property Perfect Public Company Limited Chai Talay Co.,Ltd / Hotel
Property Perfect Public Company Limited Asian International Planners Co, Ltd / Financial Advisory & Planner Asian Capital Advisers Public Company Limited / Advisory - Law financial, Accounting, Marketing of commercial and Industrial. Income Hotel /Hotel
Report 2006 41 Annual Property Perfect Public Company Limited
Details
of directors, executive directors and directors of Property Perfect Plc., subsidiary company and affiliates as of 31 December 2006 Name
Company PF
1. Mr. Tawatchai 2. Mr. Chainid 3. Mr. Somsak 4. Dr. Thamnoon 5. Mrs. Wanida 6. Mr. Vichai 7. Dr. Theerachon 8. Mr. Phairat 9. Mrs. Paneepan 10. Mr. Kittapas 11. Mr. Pramote 12. Mr. Vidhya 13. Mr. Ka Kay 14. Ms. Supee 15. Mr. Surasak 16. Ms. Rassamee 17. Mr. Tongchai 18. Ms. Sureeporn 19. Mrs. Sukannatha 20. Dr. Bhichit 21. Mr. Thongchai 22. Mrs. Uraiwan 23. Mrs. Wilawan 24. Mr. Prasong 25. Mr. Keangkai 26. Mr. Charan 27. Mr. Somchai 28. Mr. Chainarong
Nakhata Ngow-Sirimanee Toruksa Ananthothai Waiyawajamai Singvicha Manomaiphibul Senachack Tisapong Pongpakawat Rermyindee Nativivat Yip Reodacha Vacharapongpreecha Metavikul Peyasantiwong Pipatwattanapong Surathamrong Rattakul Kunakornporamut Bhatarakarnt Leongnarktongdee Wararattanakul Chiwanant Unmettaaree Trirattanapitak Ngernsopha
X, *, / /, // *, / *, / /, // /, // /, // /, // /, // // /, // / / // //
Remark : 1. PF = Property Perfect Public Company Limited PSS = Perfect Satellite Services Company Limited ESTPF = Estate Perfect Company Limited KL = Krungthep Land Company Limited REAL = Real Service Company Limited 2. X = Chairman * = Independent Director / = Director // = Executive Director 3. REAL , BKW and DSW cease operations
Subsidiary Company PSS ESTPF
/
Associated Other Company Company KL REAL
/
/
/ / / /
/ / / / / / / /
/
Report 2006 42 Annual Property Perfect Public Company Limited
Executives没 remuneration Cash remuneration During 2006, 12 directors were paid Bt 4,380,000 as meeting allowances, 3 independent directors paid Bt 720,000 and 3 directors paid Bt90,000 (Note: Aside from meeting allowances, directors are awarded salaries as executives and directors.) Directors and Independent Directors没 remuneration Directors and Independent Directors没 remuneration Name
Dr.Tawatchai Mr. Somsak Dr. Thamnoon Mr. Sukpot Mr. Chainid Mrs. Wanida Mr. Vichai Dr. Theerachon Mrs. Paneepan Mr. Phairat Mr. Pramote Mr. Vidhya Total
Meeting allowance
Nakhata*, ** Toruksa*, ** Ananthothai * Chotikavanij Ngow-Sirimanee Waiyawajamai Singvicha Manomaiphibul Tisapong Senachak Rermyindee Nativivat **
600,000 300,000 300,000 250,000 100,000 250,000 300,000 300,000 250,000 300,000 300,000 300,000 3,550,000
Audit committee/ Remuneration Committee
450,000 180,000 160,000
20,000 810,000
Total
1,050,000 480,000 460,000 250,000 100,000 250,000 300,000 300,000 250,000 300,000 300,000 320,000 4,360,000
* Audit Committee and Independent directors **emuneration Committee The remunerations for the executive board and executives, comprising 10 persons, totaled Bt 28.79 million in 2006. Details are as follows: Salary Bonus Total
No. of persons
Amount (Bt million)
10 10
28.79 28.79
Report 2006 43 Annual Property Perfect Public Company Limited
Expenses on employees are: Types of expenses
Salary Bonus Others Total
Amount (Bt million)
193.05 15.75 208.8
The number of employees as of 31 December 2006 totaled 411 persons. Executives Back office Marketing and project management Total
10 persons 179 persons 222 persons 411 persons
Report 2006 44 Annual Property Perfect Public Company Limited
Corporate Governance The company has emphasized corporate governance issue, to ensure transparent operations as well as increase the competitiveness for the long-term sake of shareholders, under ethical standards and concerns for other stakeholders and society. The company thus incorporates the audit committee that consists of experts who serve as independent directors. The audit committee has held meetings to supervise the companyûs operations, with focus on transparency, job responsibility and competitiveness. Besides, the company realizes that good corporate governance is of grave concerns to investors who use this in their investment decisions. The company has continually improved the information system to ensure the smooth dissemination of information to investors and the public, so that they can inspect the operations. The investors relations unit has also worked hands in hands with other departments in disseminating the information. In doing so, the company has followed the following 15 good governance guidelines set by the Stock Exchange of Thailand. 1.
Good Governance Policies The board of directors realise the importance of good governance, as a crucial and necessary tool to ensure efficiency and boost the companyûs sustainable growth - to raise confidence among shareholders, investors and stakeholders which would create long-term benefits to the company in line with the Stock Exchange of Thailandûs guidelines. The company has accordingly set policies to promote good governance, under the legal and business ethical frameworks. The key areas covered are as follows; ë All shareholders and stakeholders must be fairly and equally treated. ë The board of directors is dedicated to boosting the corporate value in the long term, cautious management and efficient policy implementation for the maximum benefits to shareholders. The board will also ensure no conflicts of interests and be responsible for business decisions. ë The company is operated with transparency, integrity and check-and-balance mechanism, where information is sufficiently distributed to all relevant parties. ë The board issues a code of ethics for directors, executives and employees. To be in line with the Stock Exchange of Thailandûs good governance guidelines, the board focuses on the supervision and internal control as well as ensures that the management efficiently implements business policies for the long-term benefits of shareholders under the legal and business ethical frameworks.
2.
Shareholdersû rights The board of directors acknowledges the importance of equality of shareholders. In hosting shareholdersû meeting, the company treats all shareholders equally, by sending them invitation with the meeting agenda at least 7 days ahead of the meeting so that the shareholders have ample time to thoroughly study the agenda and make a right decision. Shareholders are also assisted and encouraged to cast votes at the meeting or vote through proxies or through independent directors. The meeting minutes are completely recorded for retroactive inspection.
Report 2006 45 Annual Property Perfect Public Company Limited
3.
Stakeholdersû rights The company has also been concerned with stakeholders, be they employees, competitors creditors, raw material suppliers, contractor, communities and society, as well as state agencies. The company thus has the policy to protect their rights and ensure equal treatment, as the stakeholdersû supports are crucial in boosting the companyûs long-term achievement. The company has realised the rights of each group, under the legal frameworks as well as commitments between the company and stakeholders.
4.
Shareholdersû meeting The company has the policy to conduct the meeting in transparency and ensure equal right and appropriate time slots to shareholders in posting questions during the meeting. The board of directors and executives are present to answer the questions and the session is incorporated in the meeting minutes, for shareholdersû scrutiny.
5.
Leadership and vision The board of directors consists of experienced, knowledgeable and able individuals. The board is in charge of plotting policies, set the companyûs direction, and supervise the management in efficiently following the policies for the maximum benefits to the company and raise confidence among shareholders. Besides, there is a clear set of roles and responsibilities for the board of directors, executive board, the audit committee and executives. The internal control has also run the checking periodically and present their reports to the board of directors.
6.
Conflicts of interests The board of directors and the executive team have so far handled conflicts of interests with full caution, integrity and independence under the good governance practices, for the corporate benefits. To ensure transparency and prevent conflicts of interest, the executive board and executives stipulate that connected individuals would be barred from making opinions or making votes on the transactions that could benefit them. Therefore, the executive board and executives stipulate that connected individuals would be prohibited from making opinions or casting votes on the transactions that could benefit them to ensure transparency and prevent conflicts of interest. The company has clearly set the policies and procedures in approving the transactions that could stir conflicts of interests or connected transactions, in line with the announcements by the Stock Exchange of Thailand. In setting the policies and procedures, the company emphasises on shareholdersû benefits. Moreover, the audit committee also seeks the board of directorsû acknowledgement for connected transactions that might involve conflicts of interest, which are screened with caution and in line with the Stock Exchange of Thailandûs regulations. The transactions were included in the reports which are completed on a quarterly basis. The transactions are also included in the annual report and the annual information disclosure form 56-1.
Report 2006 46 Annual Property Perfect Public Company Limited
The company also has the policy to bar directors and executives from revealing internal information, which has not yet been publicised, for their own benefits or the benefits of others, directly or indirectly. Moreover, directors, executives and employees who obtain the financial information must not make use of the information within a month before the public disclosure. The directors, executives and employees should avoid trading the companyûs shares before the disclosure of the financial information. The directors and executives are also reminded of the importance of the reporting of their ownership of the companyûs securities as well as any change in the shareholding to the Securities and Exchange Commission under the Article 39 and the penal clause Article 275 of the Securities and Exchange Act BE2535. The company puts in place disciplinary actions on employees who violate the companyûs regulations which are specified in the employeeûs manuals. 7
Business ethics The company has created the code of ethics for directors and employees so that they could behave in accordance with the company and shareholdersû expectation and have the guidelines in performing their jobs.
8.
Balance of power by non-executive directors The companyûs policy is to have at least 3 independent directors. At present, the company has 12 experienced and knowledgeable directors - 7 executive-cum-directors or 58.33 per cent, 2 non-executive directors or 16.67 per cent, and 3 independent directors or 25.00 per cent or lower than one third of all directors. The company thus pays huge attention on the opinions of independent directors. Whenever the independent directors recommend on any issue, the issue would be reviewed.
9.
Position consolidation or split The companyûs chairman must not be the identical individual as the managing director, to clearly separate the duties in formulating business policies and the daily operations. The company has clearly specified in writing the scope of authority of executives in each level. The company has put the wall on the decision-making authorisation and the accounting/asset management to ensure check and balance.
10. Directors and executivesû remunerations Directorsû remunerations: The company has transparently set directors remunerations, to ensure that qualified directors are well-treated and encouraged to stay on in power. Members of the audit committee will receive higher pays, in line with their higher responsibility. Executivesû remunerations: The pays are set in line with the industryûs, comparable to what are offered by companies of the same size, to match their responsibilities and their pays.
Report 2006 47 Annual Property Perfect Public Company Limited
11. Directorsû meeting Under the companyûs regulations, to make a quorum, at least half of the directors must be present at the meeting. In case that the chairman is not present or could not perform his duty, the vice chairman would chair the meeting if there is one vice chairman. If there are more than one vice chairman, the present directors must appoint one of them to chair the meeting. In case that there is no vice chairman, or there is but the vice chairman could not perform his duty, the present directors must appoint one of them as the chairman. The decisions are absolute, based on the majority vote principle. 12. Sub-committees The company has appointed sub-committees to help supervise the companyûsû operations and to increase the operationsû efficiency. There are four sub-committees - the audit committee, the executive committees, the directors selection committee and the remuneration and human capital committee. 13. Internal control system The company has put emphasis on the internal control efficiency in the executive level and the operating level, by put it in writing the procedure manual. The internal control is run as a special unit, to ensure efficiency. The unit will report directly to the audit committee. 14. Board of directorsû reports The board of directors assigned the independent directors who are not the companyûs executives to supervise and disclose the financial statements, the internal control and internal inspection, to ensure the accuracy, sufficiency and credibility of the annual reports. 15. Investorsû relations The board of directors emphasises on the disclosure of information which have influence on investors and stakeholdersû decision making. The information - financial or non-financial as well as other crucial information must be accurate, complete, sufficient, transparent, credible and in time. The information must be disclosed through the Stock Exchange of Thailandûs channel to reach investors, stock analysts and the public. The company has set up the investorsû relations departmentûs investors relations and information unit, to be responsible for the information disclosure. The unit can be contacted at: Khun Sirirat Wongwatana, Tel 0-22477106, Fax 0-2247-3328, e-mail address: sirirat@pf.co.th, or at http://www.pf.co.th/ir.
Report 2006 48 Annual Property Perfect Public Company Limited
Reference Rehabilitation Plan Administrator
Asian International Planners Limited 195 Empire Tower 3,19TH Floor, South Sathorn Rd., Kwaeng Yannawa, Sathorn, Bangkok 10120 Tel. 0-2670-1144 Fax. 0-2670-1152
Auditors
Mr. Narong Puntawong Mr. Ruth Chaowanakawi Mr. Supachai Phanyawattano Miss Siriporn Aueanankul Ernst & Young Office Limited 33 rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road, Bangkok 10110 Tel. 0-2264-0777, 0-2661-6190 Fax. 0-2264-0790, 0-2661-9192
Legal Advisor
Banchong and Vidhya Law Office 33/35, 33/39-40 Wallstreet Tower 9th Flr. Surawong Road Kwaeng Suriyawongse Bangrak Bangkok 10500 Tel. 0 2236-2334 Fax. 0 2236-3916
Share Registra
Thailand Securities Depository Co., Ltd. 4, 6-7th Flr. The Stock Exchange of Thailand Bldg., 62 Ratchadaphisek Road, Klongtoey Bangkok 10110 Tel. 0-2359-1200 Fax. 0-2359-1259
Report 2006 49 Annual Property Perfect Public Company Limited
Connected Transactions with Related Persons 1.
Connected transactions with Estate Perfect Co., Ltd (çEstateé) Relationship - Property Perfect is major shareholder of Estate, holding 100% stake. - Property Perfect and Estate share two directors Mr. Chainid Ngow-Sirimanee and Mr. Pramote Rermyindee
Details of transactions Description
Item
2006 (Unit : Million Baht)
Loan
Debtor Interest income Accrued interest
Guarantee
Credit line
Audit Committeeûs Opinion
2.
Note
94.3 Property Perfect loans to Estate with promissory notes 14.3 represented for partial loan disbursement. The loan carries 1.5% 4.7 on top of Property Perfectûs weighted average financial cost. On 26 February 2007, Property Perfectûs audit committee acknowledged the loan to Estate to finance project development and purchase land totalling Bt150 million. 1,401 Property Perfect entered into a guarantee contract for loans borrowed from financial institutions to Estate without premium. The guaranteeûs details are as follows : - Loan for Ronklao project with credit line of Bt434 million - Loan for Perfect Place project with credit line of Bt967 million. On 26 February 2007, Property Perfectûs audit committee acknowledged an additional Bt30 million credit line guarantee to Estate. The increased credit line would be backed by 2-3-21 rai of land bank and 1-3-4.5 rai of land and houses in Property Perfectûs projects. The company also put 2-2-37.2 rai of land and houses in its projects for additional collateral to replace in case that some collateral must be mortgage-free when they are sold. Such mortgage free deemed that Property Perfect paid debts in advance on behalf of Estate. The loan is the necessary financial assistance for Estateûs project development and expansion as planned. In addition, Property Perfect needed to provide the guarantee as it owns a 100% stake in Estate.
Connected transactions with Krungthep Land Plc. (çKLandé) Relationship - Property Perfect is a major shareholder of Kland, holding a 20% stake. - Property Perfect and KLand share a direct - Mr. Chainid Ngow-Sirimanee.
Report 2006 50 Annual Property Perfect Public Company Limited
Details of transactions Description
Item
2006 (Unit : Million Baht)
Loan
Debtor Interest income Accrued interest
Guarantee
Credit line
Audit Committeeûs Opinion
3.
Note
56.1 Property Perfect loaned to Kland without contract but having 4.5 promissory notes represent partial loan disbursement. The loan 66.2 charges interest rate of 11%. Property Perfect and KLand restructured debts for several times. KLand had partially repaid debts to Property Perfect but the repayments occasionally missed schedules as agreed. KLand, however, paid out the debts on 5 January 2007. 30 Property Perfect entered a guarantee contracts for loans extended by financial institutions to KLand without premium The loan is considered as the necessary financial assistance as KLand mortgaged land to secure Property Perfectûs loans. The guarantee is the financial assistance to the subsidiary (Property Perfect at that time held 99.93%). However, such guarantee remains exist until now because creditors do not allow the guaranteeûs termination.
Connected transactions with Real Service Co., Ltd. (çReal Serviceé) Relationship - Property Perfect is a major shareholder of Real Service, holding a 19% stake. - An employee of Property Perfect - Mr. chainarong Ngernsopha - is Real Serviceûs director. - Property Perfectûs executives - Mr. Pornsawat Ketchulasriroj, Mr. Surasak Watcharapongpreecha, Mr. Thiti Inklinphan and Mr. Somkid Chidtrakul own a combined stake of 38% in Real Service. - KLandûs executive - Mr. Thosaporn Jirakiatdeekul - holds a 5% stake in Real Service.
Report 2006 51 Annual Property Perfect Public Company Limited
Details of transactions Description
Loan
Item
Debtor Accrued interest
Audit Committeeûs Opinion
4.
2006 (Unit : Million Baht)
Note
2.3 Property Perfect loaned to Real Service without a contract or 2.6 promissory notes as disbursement evidence. The loan charges 11%. The company inked a dent restructuring agreement with Real Service on 14 December 2003 with a condition that Real Service was entitled to payment of Bt4 million for principal and accrued interest. The company received only Bt2 million. On 15 February 2007, the company signed a new debt restructuring contract with Real Service with a condition that the latter is required to pay the remaining debts for 4 installments, starting from signing date and ending October 2007. Property Perfect will terminate the entire accrued interest when Real Service pays out the debt. The transaction is the financial assistance to a company, which has been connected since 1998, to allow Real Service to expand its service in supporting Property Perfectûs house transfer. The debt restructuring is agreed by both companies.
Connected transaction with Perfect Satellite Services Co., Lrd. (çSatellite) Relationship - Property Perfect is the major shareholder of Satellite, holding a 99.94% stake. - Property Perfectûs 4 executives - Miss Rasamee Metavikul, Mr. Thongchai Piyasantiwong, Miss Sureeporn Pipatwattanapong and Mrs. Sukannatha Surathamrong - are Satelliteûs directors.
Details of transactions Description
Hire to manage club houses
Item
Expenses Revenues Creditor
Audit Committeeûs Opinion
2006 (Unit : Million Baht)
Note
10.8 Property Perfect hired Satellite to manage the companyûs club 0.2 houses at the service fee of Bt250,000 per month per project. 1.7 The company would transfer revenue from the club houseûs members to Satellite, while Satellite would shoulder expenses from serving members. The condition took effect from January to June 2006. Both companies later reached the new agreement from managing club house to only maintenance them with service fee of Bt120,000 per month per project with effect from July 2006. The transaction is a normal course of business transaction whereby both companies jointly set the price.
Report 2006 52 Annual Property Perfect Public Company Limited
Risk Factors 1.
Risk Factors
Factors that could put investors or the company at risks are as follows; 1.1 Risks from higher working capital requirement to finance house construction In 2006, the company remained its policy to offer on pre-built houses to assure consumers and serve their demand that they would receive house transfer as promised. The company also offered built-toorder houses (houses under construction), which have the exact construction designs and costs. To meet with demand and offer the product at proper volume, it has set the number of pre-built houses based on Moving Average estimate model and volumes of built-to-order houses. The companyûs built-toorder houses have gained higher popularity than pre-built houses, which might not meet with customers demand at that time. Thatûs why it is necessary for the company to offer the optimal satisfaction to customers. The companyûs built-to-order houses in the potential projects are received good response from customers because they trust in the companyûs reputation and they are confident that houses would be delivered as contracted. Presales from the companyûs two built-to-order single detached house and townhouse projects in different locations in the fourth quarter helped the company mitigate risk from seeking working capital because financial institutions are confident in potential of projects, which have continuing revenue. Customersû advance payments for home purchases also reduce risk from unsold pre-built houses and lower requirement for working capital to develop projects as the company use customersû installment payment as working capital. Meanwhile, the company has applied prefabrication of load bearing wall and rigid frame (skeleton) structures to its construction works to shorten construction period and better control of material quality as the structures do not need many labours to assembly. The company would be able to efficiently manage product inventories at the appropriate level because housing construction from the prefabrication takes around 4-5 months, compared with 6-8 months for traditional construction. Despite the need for higher working capital to expand business, it does not deteriorate the companyûs debt-serving ability but reduces financial institutionsû risk as the company can realise revenue from presales of under construction houses at a faster manner, its costs are saved and its debts would be paid to creditors faster. Besides, the company can manage working capital as each project contributes revenue in different periods and available credit lines from financial institutions can be used as additional working capital. 1.2 Risks from adjustment in construction material costs and contractor shortage Due to the continued expansion in the property market since late 2003, construction materials have called for higher prices while labour shortage is imminent. This results in higher operating cost. The company has put efforts in lowering the risks by putting more focus on the sale of complete houses, rather than take construction orders. This shapes the construction plans in advance, enable the company to negotiate the prices of construction materials and control the cost to some extent. The company also
Report 2006 53 Annual Property Perfect Public Company Limited
knows the overall cost before selling the houses. Moreover, the companyûs policy is to order main construction materials such as construction piles or roofs for the company and subsidiaries. This increases the power in bargaining for the right price and the better delivery conditions. So far, the company has not witnessed any negative consequences from the upward adjustment of construction material prices. On contractor issue, the company now hires over 100 medium- and small-sized construction companies. The qualifications and prices are agreed before contract signing, as well as the delivery deadline. The company has ensured that the contractors are constantly awarded appropriate construction works/ The company also creates the supply chain to supply construction materials to the contractors, educates contractors, fairly classify contractors on their quality, and adjust the construction cost accordingly to market conditions and construction material prices. The inspection is based on the standards created to raise mutual understanding between the company and the contractors. At present, the company starts to delay the construction of new units and speeds up on the sale of the inventories to reduce oversupplies in some locations. Adopting prefabrication of load bearing wall and rigid frame or skeleton structures shortens housing construction periods, solves problems from shortage of labours and skill labours because such structures are manufactured from plants, and better control material quality. 1.3 Risk from guarantees of loans to affiliate The company guaranteed a bank loan to an affiliate, Krungthep Land Plc, with the outstanding as of 31 December 2005 at Bt30 million. (Details are in çconnected transactionsé). At present, Krungthep Land has honored the obligations and the company is not required to take responsibility for the financial creditors - who are classified as Creditor No.11 in the rehabilitation plan. However, if Krungthep Land defaults, the company would need to shoulder the burden, by repaying 8% of the amount in cash and converting 92 per cent in equity. Meanwhile, free warrants would be issued, accordingly to the rehabilitation plan. However, Krungthep Land has restructured the loan with the financial creditors, and it receives a favourable repayment condition. At present, Krungthep Land is developing 5 housing estates, with combined value of Bt9,281 million. (Details in product and service section). So far, it has never missed a payment and resulted in the companyûslow risk from the loan guarantee. ë
Estate Perfect Co., Ltd. (çEstateé)(subsidiary company) The company guaranteed total credit lines worth Bt1,401 million from financial institutions to Estate (as described in details in notes to financial statements 2006).
Report 2006 54 Annual Property Perfect Public Company Limited
The companyûs board of directors approved the guarantee to loans of 2 projects of the subsidiary (the company holds a 100% stake). The company entered into a contract with a financial institution to guarantee the Bt434 million credit line for Romklao project and the Bt967 million for Perfect Place Sukhumvit 77. The guarantee is to provide necessary financial assistance to develop project and expand business as planned. Also, the company is needed to guarantee the loans because it holds a 100% stake in Estate. Both projects are now under development. Perfect Place Sukhumvit 77 and Romklao phase 1 projects have outstanding project value of Bt4,107 million and Bt1,148 million. With price, product and locations near Suvarnabhumi Airport, the company is confident that Romklao project would receive warm welcome following the success of Perfect Place Sukhumvit 77, which will be closed in 2007. 1.4 Risk from higher market competition Due to the higher competition among property developers following oversupplies especially in luxury segment since 2004, developers have to adjust their development strategies to meet the demand. Not all developers could adjust themselves to re-focus on low-priced development, particularly when financial institutions become more stringent in extending project financing as well as the upward interest rate cycle. The number of developers has declined and most of the existing are large-sized, which has huge capital base and has been in the industry for a long time. Competition consequently has intensified. The company has paid attention to the competition situation by closely monitor consumer behavior concerning price, locations, quality and environment surrounding through study and research to meet consumersû demand and optimise satisfaction. In 2006, the company changed its strategy to built smaller houses in accordance with consumersû weakening purchasing power but maintain functions such as club houses, and big-sized lake for good living quality of home buyers. It diversified into new products by building townhouses and duplex houses with unit price less than Bt3 million each, in addition to condominium. The company also entered into 2 new locations for low-rise residents › single and duplex houses with price tags of Bt2.5-Bt3 million Bt1.7-Bt3 million per unit and townhouses with a unit price of Bt1.7-Bt2.2 million › and they received so good welcome that consolidated backlog worth Bt3,374 million is carried over to 2007. Of the total backlog, Bt2,310.79 million belongs to condominium and Bt1,063.72 million to single houses. The company started realise revenue from the backlog in February 2007. The company is confident that its strategy would continuously attract consumersû interest and mitigate risk to the low level. 1.5 Risk from debenture redemption After getting out of rehabilitation on 24 May 2004, shareholders approved the plan to issue debentures worth no more than Bt2,000 million. This raised the companyûs debt in 2004 to Bt7,192.94 million from Bt4,472.57 million in 2003, or a 60.82% increase. The bond issuance also raised the debt to equity (D/E) ratio by 1.09 times to 1.40 in 2004, or up 28.44%.
Report 2006 55 Annual Property Perfect Public Company Limited
The companyûs debt to equity ratio in 2005 fell by 5% to 1.33 times as an increase of Bt803.48 million or 15.65% of shareholdersû equity was greater than a rise of Bt730.79 million or 10.16% in total liabilities following the issuance of unsubordinated convertible debentures. The higher shareholdersû equity could be ascribed to profit of Bt1,092.46 million and subordinated convertible debentures in part of equity component valued Bt23.54 million less dividend of Bt312.70 million. Debt to equity ratio in 2006 was 1.32 times, compared with 1.33 times in 2005. In the year, both consolidated shareholdersû equity and total liabilities decreased. The company, as schedules, redeemed secured debentures issued in 2004. The debentures comprise two sets worth totally Bt1,200 million. Details are as follows : 1.
1/2004 secured debentures Set 1, maturing in 2006. The 450,000 units, with face value of Bt1,000 or total Bt450 million, carries the maturity of one year and a half and will come due on 18 February 2006. The coupon rate is 3.4 percentage points above Siam City Bankûs 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1.
2.
1/2004 secured debentures Set 2, maturing in 2006. The 750,000 units, with face value of Bt1,000 or total Bt750 million, carries the maturity of two years and will come due on 18 August 2006. The coupon rate is 3.5 percentage points above Siam City Bankûs 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1.
At present, the company has commitment to redemption of two sets of secured debentures worth totally Bt800 million. Details are as follows : 1.
1/2004 secured debentures Set 2, maturing in 2007. The 350,000 units, with face value of Bt1,000 or total Bt350 million, carries the maturity of two years and a half and will come due on 23 February 2007. The coupon rate is 3.65 percentage points above Siam City Bankûs 6-month deposit rate, payable bi-annually. Throughout the maturity, the company is obliged to maintain the ratio of collaterals to the value of outstanding debentures at 1.5:1, and the D/E ratio at below 1.75:1. Note** The company already redeemed the 2/2004 debentures set 1 worth Bt350 million on 23 February 2007.
2.
The 2/2004 secured debentures, set 1 › maturity in 2008. The 450,000 units of debentures had a Bt1,000 face value each, constituting Bt450 million, with a two-year maturity due on 3 February 2008. It carries a coupon rate of 6.655 per annum with semiannually interest payment throughout the maturity. The company is committed to maintaining debts to equity ratio, dividend payment and collateral value to the total value of debentures.
Report 2006 56 Annual Property Perfect Public Company Limited
The company has short-term financing project credit facilities, short-term loans and the leftover amount for borrowing from creditors in the rehabilitation plan to utilise as working capital for normal business operation. In 2006, the companyÝs pre-sales rose from the opening of 6 new projects. Its pre-sales in the year jumped by 19.51% with exception of pre-sales from its condominium project çMetro ParkÊ, of which 90% of phase 1 and over 60% of phase 2 are already reserved. The company then has a Bt2,310.79 million backlog from both phases carrying over from 2006 and it would be realised from the first quarter of 2007. In addition, the company has single-detached house backlog worth Bt1,063.72 million to be recognised from early 2007. The company, therefore, is confident that its financial liquidity would be able to redeem any set of securities debentures and maintain liquidity for business operation.
Report 2006 57 Annual Property Perfect Public Company Limited
Explanation and Analysis of Financial and Operating Results Property Perfect Public Company Limitedûs consolidated financial and operating results for year 2004-2006 were as follows : Operating Result Analysis The analysis of operating results for year 2004-2006 would focus on consolidated results. The company in 2004 invested additionally in Estate Perfect Co., Ltd. (Estate) in accordance with both companiesû debt restructuring plan. The companyûs shareholding increased from 43.33% to 76.30% of Estateûs paid-up capital, resulting in a change in Estateûs status from an affiliate to a subsidiary. In the second quarter of 2004, the company purchased additional shares of Estate from original shareholders, raising its stake to 99.99% of the paid-up capital. Estate has launched projects and started realising revenue in the fourth quarter of 2004. Also, the company set up another subsidiary, Perfect Satellite Services Co., Ltd., to expand into fitness and club houses in the companyûs projects. The company holds 99.94% of Perfect Satelliteûs paid-up capital. Overall Operating Results The companyûs operating results continued to grow in the past 3 years to 2005 and slowed down in 2006. The company and subsidiaries unveiled 6 projects in 2004 and 5 projects, one of which is a low-rise condominium, in 2005 to serve with consumer demand. The company in 2006 launched 3 projects, one of which is a townhouse, raising undergoing projects to 16. Consolidated Operating Results ë
Sale revenue The company realises land and house sales as revenues in statements of income when ownership rights are transferred to buyers. In 2004, consolidated revenue from selling land and houses amounted to Bt4.126.49 million, up 9.80% from Bt3,758.30 million in 2003, due to the successful launch of the 6 projects in 2004 in addition to 10 undergoing projects. As the new projects focusing on locations near the future electric train routes are pre-built houses, right transfer period is shortened. The higher revenue could be ascribed to revenue contributed from sales of land and houses of subsidiariesû projects, which started launching in 2004, and improvement in the overall economy and property sector. The company enjoyed the growth, though the governmentûs stimulus package to reduce fee and tax relevant to land transactions - which encouraged accelerating of housing transfers by the end of 2003, ended on 31 December 2003 and resulted in slow down sales in the first quarter of 2004. In 2005, consolidated sales revenue was divided into two parts as follows -
Land and house sales revenue Land and house sales revenue is the companyûs main contributor. Consolidated sales revenue in 2005 stood at Bt4,931.89 million, representing 97.62% of total sales revenue and rising 19.52% from Bt4,126.49 million in the previous year. The growth resulted from launch of 5 new projects concentrating on low-, middle- and high-income earners - in 2005, the continued advertising from 2004 to now to repeat the companyûs image in customersû memory and a focus on various design pre-built houses, locations which meet with customersû need and continued demand.
Report 2006 58 Annual Property Perfect Public Company Limited
-
Land sales revenue Land sales revenue was Bt120 million, or 2.38% of total sales revenue. Some plots of land bank were sold as the company had no plan to develop them, so the companyûs board of directors resolved the sale at the prices based on appraisal prices of independent appraisers (see additional details on notes to financial statements as of 31 December 2005 No.10 on land bank).
Consolidated sales revenue in 2006 contributed from land and house sales fell 9.22% from Bt4,931.89 million in 2004 to Bt4,477.29 million, given the slowdown economy triggered by the higher interest rates and oil price, political uncertainty and the companyûs strategy change from pre-built to built-to-order houses in some projects resulting in longer period of right transfer. These projects are Perfect Park Rama 5-Bangyai and the Villa Rattanathibet-Rachapruek. As of 31 December 2006, the company had condominiumûs pre-sales backlog worth Bt2,310.79 million, which will realise revenue when rights are transferred to customers. The condominium project is now under construction and registration as condominium juristic person. The construction is expected to complete and rights would transfer to customers late first quarter of 2007. Consolidated sales revenue separated by project between 2004-2006 can be seen from table on revenue structure by product. ë
Sale cost and gross margin Calculation of land and house sale cost, which is the companyûs and subsidiariesû main cost, takes into account all project development costs that estimated to arise proportionately to land sold (and also actual costs) and the sale cost is realised after the company books revenue from the sale of a particular unit. The above project development costs are presented at net cost from provision of losses from a write-down in project value. The cost covers the price of land, designs, infrastructure, construction and related interest. Consolidated sale cost in 2004 was Bt2,565.40 million, up 6.23% or Bt150.39 million from the previous year, due to a 9.80% increase in sales revenue. However, house development cost in 2004 was lower than the previous year, reflected through the lower increase in sale cost compared to the 9.8% increase in sale revenue. The company has construction works quality control standard, chooses appropriate building materials and construction period control. Moreover, the company and subsidiaries take responsible for key building material procurement such as construction piles and roof for all projects, which resulted in a certain bargaining power and a control on the sale cost while house quality is improved or at least maintained. Consolidated sale cost in 2005 incorporated -
Key cost is cost in sales of land and house totalled Bt3,227.83 million, up Bt662.43 million or 25.82%, from the previous year. The percentage increase exceeded the 19.52% year-on-year increase in sales revenue, due to higher construction material prices.
Report 2006 59 Annual Property Perfect Public Company Limited
-
Land bank cost amounted to 120 million. This is the cost of sales of land bank, estimated by independent appraisers certified by the Securities and Exchange Commission. The appraisal price was lower than the historic land cost but provisions for reduce value assets were made.
Consolidated sale cost in 2006 was Bt3,093.99 million, down Bt133.83 million or 4.15% from the previous year. Sale cost accounted for 69.10%, higher than 65.45% in the previous year. According to gross profit from normal operation, consolidated gross profit stood at 37.83% in 2004 and 34.55% in 2005, due to the 3-4% increase in housing prices in the last quarter of 2003. Higher construction material prices, however, did not send significant impacts to the company as the material prices raised the sale cost by less than 10% and most revenue booked early 2004 came from the projects with the historic construction cost. The company in 2005 did not increase housing prices despite rising construction material prices due to intensified competition. In 2006, consolidated gross profit from sales of land and houses declined from 34.55% in 2005 to 30.90% due to the tougher competition and effect from reversal of loss provisions from a write-down of project value and land bank in 2005 (see details in other revenues in 2005), resulting in higher land and land development costs. ë
Other revenues The consolidated other revenue in 2004 totalled Bt409.86 million or 9.04% of total revenue. Most of them derived from the following transactions. -
The transfer of the Bt139.49 million investment in Estate to income and reversal of allowance for doubtful debts amounting to Bt143.41 million for the combined amount of Bt282.90 million, resulting from Estateûs successful restructuring in the debt and equity structure which turned Estate shareholdersû equity back in the positive territory. In the first quarter of 2004, there was reversal of investment cost, which was earlier amortised as expenses, were booked as revenue of Bt139.49 million. The company converted Estateûs debts to equity at the par value of Bt10 a share, it then reduced allowance for doubtful debts and reverted the reduced sum as revenue in the amount of Bt143.41 million.
-
Gain from waive of loan claim worth Bt40.11 million as the company guaranteed loan for Estate creditor who later became the companyûs creditor under the debt restructuring plan. After Estate completed the debt restructuring, the claim was cancelled.
Report 2006 60 Annual Property Perfect Public Company Limited
In 2005, consolidated other revenue totalled Bt736.70 million and most of them came from -
The reversal of loss provision from impairment of land bank amounted to Bt70.90 million. The land plots were sold in the second quarter of 2005 based on independent appraisersû evaluation price. The appraisal price was higher than book value as of 31 December 2004. In 2005, the companyûs and subsidiariesû fair value of land bank were re-appraised by independent appraisers and the fair value was Bt100.68 million higher than the book value. The company then reverted and booked above item as other revenue in statements of income.
-
Reversal of loss provisions of project value write-down. In 2005, the company and subsidiaries had independent appraisers re-appraise fair value of project development cost and the fair value exceeded book value by Bt467.41 million. The sum was then reverted and booked as other revenue in statements of income.
-
Reversal of debt restructuring gain of Bt49.11 million as revenue. The company gained as company could repay debts to creditors with collaterals under the business rehabilitation plan faster than expected.
Consolidated other revenue in 2006 totalled Bt56.52 million, most of which were projectsû infrastructure maintenance fee. ë
Selling administration expenses In 2004, consolidated selling and administration expense totalled Bt833.42 million, up Bt298.85 million or 55.90% from 2003. The higher expenses could be attributed to 3 main causes. -
The end of the governmentûs tax incentive to stimulate real estate business. It included the reduction in the special business tax and transfer fee, which raised property companiesû tax expenses. The special business tax was raised from 0.11% to 3.3% and transfer fee from 0.01% to 2% increased these expenses by Bt179.2 million.
-
The opening of 5 new projects in 2004. Expenses related to the opening and advertisement was increased by Bt96.6 million. The advertisement significantly raised the companyûs sale volume during the year.
-
Amortisation of net goodwill of Bt21.58 million. This incurred from the debt and equity restructuring of Estate worth Bt30.28 million. The company also bought Estateûs common shares from original shareholders at price below book value, resulting in Bt8.7 million negative goodwill. The company booked the entire net decrease as selling and administration expenses.
Report 2006 61 Annual Property Perfect Public Company Limited
Selling and administration expenses in 2005 totalled Bt1,043.39 million, up Bt209.97 million from 2004 or 25.19%. This resulted from the preparation of launching 6 projects in the year which needed continued advertisement to promote sales and instill the brands among consumers. This resulted in higher selling and administration expenses. Sales revenue from these projects started realising from late third quarter of 2005 to 2006. Selling and administration expenses stood at Bt1,087.76 million, up Bt44.37 million or 4.25%. ĂŤ
Net profit Consolidated net profit during 2004-2006 were (Unit : Million Baht)
Net profit
2004
2005
2006
1,015.52
1,092.64
11.99
The 2004 consolidated net profit dropped from 2003 despite the 9.80% increase in sales revenue, due to the higher selling and administration expenses which increased 55.90% year-on-year. Most of them incurred from the higher special business tax and transfer fee and the advertisement cost as well as higher interest expenses as the company borrowed additional money and issued debentures to finance expansion. The sale cost also rose 6.23% year on year. However, consolidated gross margin increased from the previous year, as mentioned above. The 2005 consolidated net profit totalled Bt1,092.64 million, up Bt77.12 million or 7.59% from the previous year, due to the higher sale revenue and other revenue. Exclusive of other revenue - the reversal of project development cost provision of Bt467.41 million, the reversal of land bank value provision of Bt171.58 million, the reversal of debt restructuring gain of Bt49.11 million and the reversal of asset value provision of Bt32.90 million, the consolidated net profit would be Bt437.45 million. But for other revenue - the reversal of investments in Estate of Bt139.49 million and the allowance for doubtful loans of Bt143.41 million, the booking of debt restructuring gain of Bt47.76 million and the goodwill amortisation of Bt21.58 million › the 2004 consolidated net profit was Bt706.34 million. Excluded these items, the 2005 net profit dropped Bt268.89 million from the 2004, due to the lower gross margin as mentioned above, the higher selling and administration expenses and higher interest expenses from higher borrowings to finance business expansion of the company and subsidiaries. In 2006, consolidated net profit slumped Bt1,080.64 million or 98.90% from the previous year to Bt11.99 million, given declines in sales revenue and other revenue. With the absence of items related reversal of provisions as stated above, net profit in 2005 totalled Bt437.45 million compared with the 2006 net profit, a Bt425.46 million fall year-on-year, due to sale revenues decline and the intensified competition decreased gross profit margin.
Report 2006 62 Annual Property Perfect Public Company Limited
Financial Status Overall Picture of Financial Status Table presented consolidated financial status
(Unit :Million Baht)
As of 31 December 2004 As of 31 December 2005 As of 31 December 2006 ë
Assets
Liabilities
12,326.90 13,861.16 13,176.13
7,192.94 7,923.73 7,500.54
Shareholdersû equity
5,133.96 5,937.43 5,675.59
Assets Consolidated assets totalled Bt12,326.90 million, Bt13,861.16 million and Bt13,176.13 million at the end 2004, 2005 and 2006, respectively. The 2005 assets rose by Bt1,534.26 million or 12.45% from 2004, due party to projectsû expansion. However, the 2006 assets declined by Bt685.03 million or 4.94% from 2005, due to the decline in cash and booking project development cost as selling cost in percentage as required. By items as at 31 December 2006, the project development cost worth Bt8,016.19 million or 60.84% of total assets controlled the highest portion. Following were land bank amounting to Bt3,042.35 million, and advance on land purchases of Bt730.08 million, which accounted for 23.09% and 5.54%, respectively. The asset structure was deemed appropriate with the companyûs and subsidiariesû nature of business. Details of assets are as follows :
Project development cost
(Unit :Million Baht) 2004
Company › unconsolidated Subsidiaries Total *
5,070.53 1,168.75 6,239.28
81.27% 18.73% 100%
2005
6,442.29 1,183.18 7,625.47
84.48% 15.52% 100%
2006
6,531.99 1,484.20 8,016.19
81.48% 18.52% 100%
Note * Project development cost in consolidated financial statements as of 31 December 2005 and 2006 -
The companyûs project development cost (unconsolidated) continued to rise due to the higher number and value of project developed for sales. The 2006 project development cost totalled Bt6,531.99 million, including the net value worth Bt69.04 million from loss provisions from project value write-down, which is booked as required by accounting standard when accounting cost exceeds independent appraisersû evaluation price.
Report 2006 63 Annual Property Perfect Public Company Limited
-
Subsidiariesû project development cost belonged to Estate, which is developing 2 projects. The cost in 2006 totalled Bt1,484.20 million, of which Bt9.86 million was net value from loss provisions from project value write-down.
Net land bank
(Unit :Million Baht) 2004
Company › unconsolidated Subsidiaries Total *
3,776.18 3,776.18
2005
100% 100%
3,389.87 269.70 3,659.57
2006
92.63% 7.37% 100%
3,042.35 3,042.35
100% 100%
Note * Net land bank mentioned in financial statements at 31 December 2004 and 2006 -
The companyûs net land bank (unconsolidated) consists of land cost, development cost, construction cost, interest expenses minus costs that would be reverted to sale cost, the land transferred for debt restructuring and repayment according to the rehabilitation plan and loss provision from impairment of land bank in 2006 of Bt127.4 million (See additional detail in notes to financial statements No.10).
The company and subsidiaries will consider reverting land bank to book as project development cost only when the development starts - for example, when the land is being cleared or when development plan is plotted. Advance in land purchase
(Unit :Million Baht) 2004
Company › unconsolidated Subsidiaries Total *
702.14 20.00 722.14
2005
97.23% 2.77% 100%
800.44 50.66 851.10
2006
94.05% 5.95% 100%
629.12 100.96 730.08
86.17% 13.83% 100%
Note * Advance in land purchase as stated in financial statements as of 31 December 2004 and 2006 Land purchase advance covers the down payment paid in advance to landowners or to agents who accumulate land plots. Once the ownership is transferred, it will be reverted to record as project development cost or land bank item.
Report 2006 64 Annual Property Perfect Public Company Limited
Consolidated advance payments in 2006 were Bt730.08 million comprising. ë
Advance in land purchase amounted to Bt572.2 million, which already paid in advance to landowner - Asoke Property Co.,Ltd., which holds a 0.58% stake in the company through a debt-to-equity conversion. The land purchase was approved by Asian International Planners, who was appointed by the Central Bankruptcy Court to complete the business rehabilitation plan on 19 February 2001 and to administer the plan on 2 October 2001, under the black case No. 40/2001 and red case No. 106/2001. Under the Bankruptcy Act B.E.2483 Articles 90/25 and 90/59, during the rehabilitation, the plan administrator was authorised to supervise the operations and assets of the debtor (Property Perfect Plc) and is legally transferred the debtorûs legal rights except the right on dividend. Thus, legally, the plan administratorûs approval on the land purchase is regarded as shareholdersû resolution. The company, however, had policy to transfer the ownership accordingly to the project developmentûs progress. The land, covering approximately 81.45 rai, was initially transferred to the company in the fourth quarter of 2006 while the remaining land plot will be completely transferred within the second quarter of 2007.
ë
Advance paid by the company and subsidiaries to landowners who agreed to sell the land through agents who jointly gathered land with landowners accounting for Bt139.9 million. Of the total, Bt44.9 million by the company and Bt95 million by subsidiaries.
ë
Advance paid by the company and subsidiaries to agents who accumulate land plots from landowners totalled Bt18 million. Of the total, Bt12 million by the company and Bt6 million by subsidiaries.
The value of purchase to buy and sell contracts as of 2005 totalled Bt1,286 million. The outstanding would be booked as land cost when the land are transferred to the company and subsidies. Purchases of land in potential areas are aimed at future development which cover various locations and continued development in the ongoing projects. At the end-2005, the company made advance payments to NRL Business Co.,Ltd., a codeveloper of a project in Pattanakarn, worth Bt183.50 million (at 31 December 2006, there was no outstanding from such payment in advance). The payment was made as the company bought a land plot near the motorway, which is accessible to Pattanakarn Road. The land, covering about 200 rai, was used to back the 1/2004 debenture issue. It needs environmental impact assessment which would take nearly 1 year. The process will largely affect the project development cost. Thus, the company split the land plot to house two projects which are separated by a road which must not be owned by the company. An independent individual or juristic entity with no connection with the
Report 2006 65 Annual Property Perfect Public Company Limited
company or executives was sought. Property Perfect Plc. thus approved the advance payment to NRL Business for the purchase of the road area. Meanwhile, the land plots were backing the companyûs 1/2004 Sets 1 and 2 debentures. However, on 11 August 2005, the companyûs board of directors resolved to cancel the co-development contract and after the land pledge contract of the 1/2004 set 1 and 2 ended in February 2006 and August 2006, respectively, all land plots would be transferred to the company in August 2006, so the company would book net settlement between the companyûs advance payment and accrued interest. Loans and net accrued interest to affiliates and related companies as of 31 December 2006 totalled Bt67.4 million (loans borrowed under debt restructuring plan). The loans consisted of loan to affiliates and related companies totalling Bt127.2 million and allowance for doubtful debts for accrued interest worth Bt59.8 million. In 2005, net loans and accrued interest totalled Bt90.9 million while doubtful loan allowance for Bt59.8 million. An affiliate company in January and February 2007 paid the loan and accrued interest totalling Bt65 million and associated companies paid the loan for Bt0.4 million. Investment in Krungthep Land Plc. was Bt300 million in 2004. Krungthep Landûs shareholders at the 3/2005 extraordinary meeting approved the registered capital increase from Bt1,000 million (100,000,000 ordinary shares at the par value of Bt10 each) to Bt1,550 million (155,000,000 ordinary shares at a Bt10-par value) by issuing 55 million new shares at a Bt10 par value to the public. If any shares were left over, they would be offered in a private placement of institutional investors. On September 2005, Krungthep Landûs shareholders at the 4/2005 extraordinary meeting approved the capital decrease from Bt1,550 million (155 million shares at Bt10 par value) to Bt1,000 million (100 million shares at Bt10 par value), and approved the capital hike from Bt1,000 million (100 million shares at Bt10 par value) to Bt1,700 million (170 million shares at Bt10 par value). the 50 million new shares would be sold through a private placement and/or institutional investors and the remaining 20 million shares at Bt10 par value allocated to property development companies. Following the equity restructuring, the companyûs holding in Krungthep Land falls to 20% and Krungthep Landûs operations are included in the consolidated balance sheets through the equity method. In 2004 and 2005, the company booked revenue from Krungthep Land at Bt42.38 million and Bt3.99 million, respectively. The companyûs investment in affiliates under the equity method was valued at Bt349.07 million in 2004, Bt353.06 million in 2005 and Bt329.69 million in 2006. On November 22, 2006, Krungthep Landûs shareholders at the extraordinary meeting approved to decrease the companyûs registered capital from Bt1,700 million (consisting of 170 million shares with a Bt10 par value) to Bt1,500 million (consisting of 150 million shares with a Bt10 par value) by canceling 20 million unallocated shares at a par vale of Bt10, with total value of Bt200 million. The company also increased its registered capital from Bt1,500 million (comprising 150 million shares at a Bt10 par value) to Bt2,100 million (comprising 210 million shares at a Bt10 par value) by issuing 60 million new shares with a par value of Bt10 to existing shareholders at the offering price of Bt10 apiece. Krungthep Land registered the registered capital reduction and increase with the Commerce Ministry on December 1, 2006 and December 4, 2006, respectively.
Report 2006 66 Annual Property Perfect Public Company Limited
Property Perfectûs board of directors at the 1/2007 meeting resolved the company to fully exercise its right to subscribe to Krungthep Landûs capital increased shares to maintain its shareholding. The company assigned a financial and a legal advisor to conduct a study concerning financial data and the Stock Exchange of Thailandûs regulations. The financial advisor recommended that the right exercise to maintain its shareholding in Krungthep Land should be done as it would benefit the company rather than the right waive and the legal advisor issued a letter stating that the company could follow the plan to maintain the shareholding without any dispute from the Stock Exchange of Thailand. Following the share allocation, Krungthep Land as of January 31, 2007 had the registered capital of Bt2,100 million and the paid-up capital of Bt1,780 million consisting of 178 million common shares with a Bt10 par value and the company held a 20.22% stake. Other guarantee obligations The company holds obligations to the loan guarantee to its subsidiaries, Estate Perfect Co.,Ltd., worth Bt1,409 million and affiliate company, Krungthep Land Co.,Ltd., worth Bt30 million with financial institutions. The company is no need to honour the obligations as the subsidiary and the affiliate have not yet defaulted on the loans. ë
Asset quality The company has policy to realise revenue only when ownership rights of housing are clients. Thus, downpayments or installments would be booked as liabilities under the downpayment and clientsû advance payment items. The overdue installments would be booked in the trade debtors item. Though the company focuses on selling pre-built houses, some clients prefer to buy houses under construction. The company then sold such houses to customers who are required to pay downpayment in installments. The installments are included in trade debtors. Mostly, the debts in this item is cleared in less than a year. In 2006, consolidated trade debtors receivables totalled Bt44.82 million and consolidated allowance for doubtful debts for debtors who unpaid for over 12 months worth Bt11.o4 million. Thus, net consolidated trade debtors totalled Bt33.78 million. The company believes that the allowances are sufficient for the current situation. Consolidated trade debtors can be broken down into 3 groups. -
Customers with overdue installments Customers with overdue installments are those who failed to pay installments for houses under construction. They had overdue installments of Bt25.89 million or 57.76% of total overdue loans.
-
Customers with overdue transfer fee Customers with overdue transfer fee are those who did not pay all debts on the transaction date, accounting for 42.24%. However, the overdue loan worth Bt18.93 million representing 0.14% of total assets, an insignificant ratio. The company also made allowance worth Bt11.04 million.
Report 2006 67 Annual Property Perfect Public Company Limited
For clients who fail to paid the debts for 6 months or longer, the company has contacted them to pay their obligations and some cases have been brought to court. The company believes that the allowance for doubtful debts is sufficient under the present circumstances. ë
Liquidity Statements of cash flow between 2004 and 2006 were as follows : Item
Cash flow from operating activities Cash flow from investment activities Cash flow from financing activities Net cash flow increase (decrease)
(Unit: Million Baht) 2004
90.63 (2,199.79) 2,216.68 107.53
2005
1,041.29 (1,258.73) 368.54 151.10
2006
1,025.51 (315.79) (899.78) (190.06)
Consolidated net cash flow was minus Bt45.02 million in 2003 and has improved since 2004 to be in the positive area of Bt107.53 million, and Bt151.10 million in 2004 and 2005, respectively. Most of them are loans from financial institutions, and the sale of secured and unsubordinated convertible debentures. Consolidated net cash flow in 2006 was minus Bt190.06 million, though there was the positive cash flow from operating activities from the debenture and dividend payments. Cash flow from investment activities has been in the negative area, totalling Bt2,199.79 million, Bt1,258.73 million and Bt315.79 million during 2004-2006, due to the companyûs land bank purchases to prepare for the companyûs projects. Moreover, the company in 2004 invested additional Bt150 million in Krungthep Land to maintain the shareholding ratio. In 2005, the companyûs advance payments for land purchases amounted to Bt308.18 million and the land bank purchases of Bt902.05 million. In 2006, consolidated cash flow from investment activities incurred from advance payments for land purchases and land bank purchase of Bt243.10 million. Cash flow from financing activities totalled Bt2,216.68 million, and Bt368.54 million in 2004 and 2005, respectively. Significant sources of fund in 2004 derived from the issuance of unsubordinated convertible debentures worth Bt823 million. Cash flow from financing activities in 2006 was repayments of net debts and dividend worth Bt625.90 million and Bt273.89 million, respectively. The company paid dividend of Bt0.40 per share in 2004, totalling Bt312.70 million, on 6 May 2005 and Bt0.35 per share, constituting Bt273.9 million, on 26 May 2006. The 2006 gearing ratio was 3.65 times, down from 3.99 times at the end of 2005, due to a Bt176 million rise in customersû down payments and advance payments, resulted in higher current liabilities at the end of 2006.
Report 2006 68 Annual Property Perfect Public Company Limited
Sources of fund 毛
Liabilities Consolidated liabilities in 2006 totalled Bt7,500.54 million (Bt6,777.47 million was the company and Bt723.07 million was subsidiaries), a Bt432.19 million lower from 2005. The decline in debenture payments-net totalling Bt750 million and the increase in borrowing of Bt129 million and customers没 advance payments of Bt176 million were attributable to the declined consolidated liabilities. According to consolidated liabilities structure in 2006, long-term loans accounted for 54.78% of total liabilities, unsubordinated convertible debentures represented 10.70%, debenture creditors were 10.66% and creditors in the rehabilitation plan accounted for 8.64%. Details are as follows: -
Long-term loans In 2006, long-term loans amounted to Bt4,108.91 million, of which Bt3,468.49 million were borrowed by the company (Bt940.89 million is due within one year) and Bt386.19 million were borrowed by subsidiaries. The loans were to finance project development and land purchases for future project development. The loan details are: (Unit : Million Baht) 31 December 2005
31 December 2006
The Company Only Subsidiaries Total The Company Only Subsidiaries
Long-term loans Less : loans due within 1 years Long-term loans (net)
3,648.73 52.39 3,596.34
386.19 4,034.92 0.00 52.39 386.19 3,982.53
3,468.49 940.89 2,527.60
Total
640.42 4,108.91 0.00 52.39 640.42 3,168.02
Moreover, the company guaranteed loans from banks and financial institutions to affiliate worth Bt30 million and subsidiaries worth Bt1,409 million. -
Overdraft and short-term loans The company没s total borrowing in 2006 amounted to Bt280 million. Those includes promissory notes worth Bt100 million, short-term loans from financial institutions worth Bt150.01 and overdraft worth Bt30 million.
-
Debentures Debentures as at 31 December 2006 worth Bt800 million comprised of Secured debentures which must be redeemed in full, amounted to Bt800 million. Proceeds from the issuance of the debentures were to buy land for project expansion, repay loans and reserve as working capital. Details of the debentures are:
Report 2006 69 Annual Property Perfect Public Company Limited
Issue
-
Value Issue date (Million Baht)
2/2004 debentures, set 1
350.00
1/2006 debentures, set 1
450.00
Total
800.00
Maturity date
Condition
23 August 2004 23 February 2007 - The ratio of collateral to outstanding debentures must be maintained at 1.5:1 - The ratio of total liabilities to shareholdersû equity must be maintained at 1.75:1 9 February 2006 8 February 2008
Unsubordinated convertible debentures The issuance objective was to refinance loans and reserve as working. Debentures details are: Issue
Value Issue date (Million Baht)
Unsubordinated convertible debentures (200,000 units at face value of US$ 100)
-
823.00
25 November 2005
Maturity date 25 November 2010
Condition - Conversion ratio of 1 debenture to 658.4 common shares or at Bt6.25 per share - Unconverted debentures will be redeemed at US$131.60 per unit at the exchange rate of Bt41.15/US$ - One individual nominated by foreign investors must be appointed a director.
The 1/2005 unsubordinated convertible debentures (only liabilities part) as at 31 December 2006 valued Bt802.74 million (On 25 November 2005, the company issued US$20 million convertible debentures for sales). Booking convertible debentures in balance sheets will be divided into two parts › liabilities and equity › as follows : ë
Convertible debentures- liabilities component is computed from cash flow of principal and interest rate to be paid in future less the current market interest rate
ë
Convertible debentures-equity component is calculated from outstanding convertible debentures less liabilities. The difference between the liabilitiesû book value and convertible debenturesû face value will be amortised based on convertible debenturesû maturity
Report 2006 70 Annual Property Perfect Public Company Limited
-
Creditors in business rehabilitation plan After the companyû s exit of the rehabilitation plan, rehabilitation, creditors in the Business rehabilitation plan had outstanding loans of Bt648.41 million comprising of Bt132 million by creditors with collaterals, Bt516 million by creditors without collaterals, Bt0.1 million by land and house buyers. The principal and interest repayment terms are as follows: Type Creditors with collaterals
132
Creditors without collaterals
516
Land and house buyers Total
ë
Outstanding (Million Baht)
0.1
Principal repayment
Interest rate Year
- From cash flow exceeds Bt250 million at the end of each quarter - From cash flow exceeds Bt250 million at the end of each quarter - Fully repaid but some buyers have not yet received the payments
%
2547-2548 3% From 2006 MLR but below 10% 2004-2005 1% From 2006 MLR but below 10% -
648.41
Shareholdersû equity Consolidated shareholdersû equity in 2006 totalled Bt5,675.59 million, down Bt261.85 million from 2005. Consolidated net profit in 2006 was Bt11.99 million and the company paid dividend for the 2005 operating results at Bt0.35 per share totalling Bt273.89 million on 26 May 2006. The payment was in line with the 1/ 2006 general annual shareholders meetingûs resolution on 28 April 2006. Shareholdersû equity structure incorporates Bt4,695.33 million paid-up capital at Bt6 par value, Bt13.03 million discount on share, 0.05 million share subscription in advance, unsubordinated convertible debenturesû equity component worth Bt23.54 million, and Bt969.82 million accumulated profits. In 2006, outstanding unconverted warrants issued to creditors without collaterals were 9.18 million units. Each warrant is entitled to a 1 common share conversion at the price of Bt0.01 per share. The 10-year warrants can be exercised on the last day of the second and fourth quarter, starting from the fourth quarter of 2002.
ë
Debt to equity ratio Debt to equity ratio at the end of 2005 was 1.33 times, down 5% from 2004, due to the Bt730.79 million or 10.16% increase of total liabilities The liabilities from the issuance of unsubordinated debentures and a Bt803.48 million or 15.65% increase in shareholdersû equity from a profit of Bt1,092.64 million and equity component worth Bt23.54 million of the unsubordinated debentures less a Bt312.70 million dividends. Debt to equity ratio at the end of 2006 stood at 1.32 times, compared with 1.33 times at the end-2005. Although consolidated shareholdersû equity at the end of 2006 fell from 2005, total liabilities at the end of 2006 also dropped.
Report 2006 71 Annual Property Perfect Public Company Limited
Future projects The company and subsidiaries have planned to launch 5 new projects, in addition to property development projects as mentioned in the ongoing projects. The new projects worth totally Bt7,565 million are as follows : Project没s name
Location
Product type
Project value Area (rai)
1 Perfect Masterpiece Rattanathibet Rattanathibet 2 Maneerin Park Rangsit Rangsit, Pathumthani 3 Perfect Park Romklao (phase1)* Ramkhamhaeng Suvarnabhumi 4 The Villa Pattanakarn Pattanakarn 5 Perfect Masterpiece Pattanakarn Pattanakarn Total
Development period
Number of Value (Unit) (Million Baht)
SDH SDH SDH
56.2 16.62 68.04
180 99 280
1,270 247 1,148
2007-2008 2007 2007-2007
TH SDH
51.55 147.9
421 428
1,600 3,300
2007-2009 2007-2010
1,408
7,565
* project of subsidiary (Estate Perfect Company Limited) Key factors and influences which may affect the future operations and finance After the Central Bankruptcy Court allowed the company to exit the rehabilitation, what would determine the company没s operations and financial position remains the ability in selling housing units as well as project development cost control. It is necessary to ensure that operating expenses are used efficiently and appropriately so that the company can ensure the sufficiency of funds for the operations. The company has restriction from working capital and obligations to repay loans, whenever it has cash surplus of Bt250 million at the end of each quarter. These are obstructions for the company in utilizing capital, until all loans are repaid to creditors or until the company can increase capital to obtain fresh fund.
Report 2006 72 Annual Property Perfect Public Company Limited
Report of Independent Auditor To The Board of Directors and Shareholders of Property Perfect Public Company Limited I have audited the accompanying consolidated balance sheets of Property Perfect Public Company Limited and its subsidiaries as at 31 December 2006and 2005, the related consolidated earnings statements, statements of changes in shareholders没 equity and cash flows for the years then ended, and the separate financial statements of Property Perfect Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Property Perfect Public Company Limited and its subsidiaries and of Property Perfect Public Company Limited as at 31 December 2006 and 2005, and the results of its operations, and cash flows for the years then ended in accordance with generally accepted accounting principles. Disclaimer of opinion, I noticed the company没s advance for land purchases and the plan ownership right transfer to be taken place within the second quarter of 2007 as stated in notes to financial statements No.11.
Supachai Phanyawattano Certified Public Accountant (Thailand) No. 3930 Ernst & Young Office Limited Bangkok : 26 February 2006
Report 2006 73 Annual Property Perfect Public Company Limited
Balance Sheets
AS AT 31 DECEMBER 2006 AND 2005 (Unit : Baht) Consolidated Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade accounts receivable, net Amounts due from related companies Project development costs, net Other current assets Advances to contractors, net Prepaid expenses Others TOTAL CURRENT ASSETS NON-CURRENT ASSETS Restricted deposits Loans to related companies and interest receivable, net Advances to other company Investments accounted for under equity method - subsidiary companies Investments accounted for under equity method - associated company Other long-term investments, net Land held for development, net Advances for purchase of land Property, plant and equipment, net Lease rights - net Leasehold rights - net Other non-current assets Withholding tax deducted at source Others TOTAL NON-CURRENT ASSETS TOTAL ASSETS
The Company Only 2006 2005
2006
2005
312,742,938 33,779,857 8,016,191,069
502,800,855 31,488,781 7,625,469,486
271,119,989 31,923,101 6,531,990,915
482,967,943 27,813,400 1,278,344 6,442,293,337
70,393,200 9,244,664 9,404,544 8,451,756,272
18,855,113 5,387,495 39,177,274 8,223,179,004
70,393,200 9,244,664 5,211,319 6,919,883,188
18,855,113 5,387,495 34,573,252 7,013,168,884
840,659
340,659
840,659
340,659
23 8
67,415,253 -
90,891,359 183,500,566
166,442,291 -
399,613,931 183,500,566
9
-
-
836,143,429
790,827,540
9
329,694,862 4,802,024 3,042,351,674 730,081,570 364,229,267 62,523,935 60,717,672
353,065,976 4,827,046 3,659,572,350 851,104,101 305,679,243 125,135,029 -
329,694,862 4,802,024 3,042,351,674 629,118,935 339,629,000 62,523,935 60,717,672
353,065,976 4,827,046 3,389,872,349 800,441,466 292,671,391 125,135,029 -
39,027,390 22,692,258 4,724,376,564 13,176,132,836
45,441,439 18,427,371 5,637,985,139 13,861,164,143
38,658,509 22,252,403 5,533,175,393 12,453,058,581
42,963,702 17,423,046 6,400,682,701 13,413,851,585
6 23 7
10 11 12 13 13
The accompanying notes are an integral part of the financial statements.
Report 2006 74 Annual Property Perfect Public Company Limited
Balance Sheets (Continued) AS AT 31 DECEMBER 2006 AND 2005
(Unit : Baht) Consolidated Note LIABILITIES AND SHAREHOLDERS没 EQUITY CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts payable Amounts due to related company Deposits and cash received in advance Current portion of debentures Current portion of long-term loans Other current liabilities Current portion of deferred gain on debt estructuring Current portion of liabilities under financial lease agreements Accrued interest Accrued expenses Others TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Debentures, net of current portion Creditors per rehabilitation plan Unsubordinated convertible debentures - liability component Long-term loans, net of current portion Other non-current liabilities Liabilities under financial lease agreement, net of current portion Deposits and cash received in advance for sublease agreement Provision for unconverted debentures TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES
14
2006
2005
The Company Only 2006 2005
280,405,548 290,128,748 280,634,844 350,000,000 940,891,581
225,008,141 243,357,727 104,640,059 1,200,000,000 52,390,200
280,405,548 244,995,542 1,738,380 265,999,802 350,000,000 940,891,581
225,008,141 211,164,939 1,116,786 97,563,820 1,200,000,000 52,390,200
-
8,543,379
-
8,543,379
5,254,476 43,071,532 69,643,170 55,497,701 2,315,527,600
5,254,476 49,014,919 117,367,124 56,882,018 2,062,458,043
5,254,476 42,716,886 59,292,517 41,583,465 2,232,878,197
5,254,476 48,884,560 108,507,663 42,899,480 2,001,333,444
15 16
450,000,000 648,410,232
350,000,000 648,410,232
450,000,000 648,410,232
350,000,000 648,410,232
17 18
802,735,788 3,168,021,930
799,712,156 3,982,522,976
802,735,788 2,527,597,078
799,712,156 3,596,335,017
6,238,792
11,532,267
6,238,792
11,532,267
63,077,400 46,532,744 5,185,016,886 7,500,544,486
65,656,046 3,438,487 5,861,272,164 7,923,730,207
63,077,400 46,532,744 4,544,592,034 6,777,470,231
65,656,046 3,438,487 5,475,084,205 7,476,417,649
23 6 15 18
17
The accompanying notes are an integral part of the financial statements.
Report 2006 75 Annual Property Perfect Public Company Limited
Balance Sheets (Continued)
AS AT 31 DECEMBER 2006 AND 2005 (Unit : Baht)
Consolidated Note SHAREHOLDERS没 EQUITY Share capital 19 Registered 1,035,594,196 ordinary shares of Baht 6 each Issued and fully paid up 782,555,715 ordinary shares of Baht 6 each (31 December 2005 : 782,535,025 ordinary shares of Baht 6 each) Share discount 20 Share subscriptions received in advance 20 Unsubordinated convertible debentures - Equity component 17 Retained earnings Appropriated - statutory reserve 28 Unappropriated TOTAL SHAREHOLDERS没 EQUITY TOTAL LIABILITIES AND SHAREHOLDERS没 EQUITY
The Company Only 2006 2005
2006
2005
6,213,565,176
6,213,565,176
6,213,565,176
6,213,565,176
4,695,334,290 (13,149,673) 48,563
4,695,210,150 (13,025,740) -
4,695,334,290 (13,149,673) 48,563
4,695,210,150 (13,025,740) -
23,535,270
23,535,270
23,535,270
23,535,270
100,600,000 869,219,900 5,675,588,350 13,176,132,836
100,000,000 1,131,714,256 5,937,433,936 13,861,164,143
100,600,000 869,219,900 5,675,588,350 12,453,058,581
100,000,000 1,131,714,256 5,937,433,936 13,413,851,585
The accompanying notes are an integral part of the financial statements.
Report 2006 76 Annual Property Perfect Public Company Limited
Earnings Statements
FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit : Baht) Consolidated Note REVENUES Revenues from sales of land and houses Revenues from sales of land held for development Other income Interest income Revenues from forfeiture of down payments Share of profit from investments accounted for under equity method - subsidiary companies Share of profit from investments accounted for under equity method - associated company Reversal of provision for impairment of project development costs Reversal of provision for impairment of land held for development Reversal of deferred gain on debt restructuring Others TOTAL REVENUES EXPENSES Cost of sales of land and houses Cost of sales of land held for development Selling and administrative expenses Lost - Sharing from investment under equity method - affiliate Lost from impairment of assets TOTAL EXPENSES EARNINGS BEFORE INTEREST EXPENSES AND CORPORATE INCOME TAX INTEREST EXPENSES CORPORATE INCOME TAX NET EARNINGS FOR THE YEAR EARNINGS PER SHARE Basic earnings per share Net earnings
The Company Only 2006 2005
2006
2005
4,477,287,835 -
4,931,890,254 120,000,000
3,815,290,328 -
4,149,295,470 120,000,000
4,986,643 7,858,840
6,807,811 5,824,914
19,184,352 7,219,925
25,579,665 5,404,271
9
-
-
45,315,889
279,276,075
9
-
3,991,786
-
3,991,786
7
-
467,405,239
-
340,279,077
10
43,677,400 4,533,810,718
171,577,982 49,107,586 31,982,443 5,788,588,015
35,363,171 3,922,373,665
181,435,706 49,107,586 30,830,540 5,185,200,176
3,093,994,393 1,087,757,637
3,227,825,652 120,000,000 1,043,388,170
2,649,707,305 965,142,984
2,734,975,687 120,000,000 968,667,974
23,371,114 4,205,123,144
32,903,416 4,424,117,238
23,371,114 3,638,221,403
32,903,416 3,856,547,077
328,687,574 (293,228,680) (23,465,991) 11,992,903
1,364,470,777 (255,976,791) (15,857,546) 1,092,636,440
284,152,262 (272,159,359) 11,992,903
1,328,653,099 (236,016,659) 1,092,636,440
0.02
1.40
0.02
1.40
0.02
1.36
0.02
1.36
10
10 9 13
24 26
Diluted earnings per share Net earnings
The accompanying notes are an integral part of the financial statements.
Report 2006 77 Annual Property Perfect Public Company Limited
Statements of Cash Flows
FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit : Baht)
Consolidated 2006 Cash flows provided from (used in) operating activities : Net earnings for the year 11,992,903 Adjustments to reconcile net earnings to net cash provided by (paid from) operating activities : Share of profit from investments accounted for under equity method - subsidiary companies Share of profit from investments accounted for under equity method - associated company 23,371,114 Depreciation and amortisation 42,819,181 Amortisation of advance expenses 10,732,356 Amortisation of premium on debentures 3,023,633 Provision for unconverted debentures 43,094,256 Reversal of deferred gain on debt restructuring Reversal of lost provisions from a write-down of project value Reversal of provision for impairment of land held development Received advance amortisation of lease hold rights (3,778,646) Reversal of liabilities (8,727,575) Lost from impiarment of assets Lost from impiarment of investments 25,022 Doutful Debts 3,430,650 lost (profit) from diposal of office land and equipment 711,927 126,694,821 Decrease (increase) in operating assets Trade accounts receivable (3,281,076) Amounts due from related companies Project development costs 792,287,636 Advances to contractors (51,538,087) Withholding tax deducted at source 6,414,049 Prepaid expenses (14,589,526) Interest receivable (4,523,894) Other current assets 9,168,662 Other non-current assets (4,264,887) Increase (decrease) in operating liabilities Trade accounts payable 49,975,008 Amounts due to related company Deposits and cash received in advance 175,994,785 Accrued interest (14,486,766) Other current liabilities (42,335,912) Net cash provided from operating activities 1,025,514,813
The accompanying notes are an integral part of the financial statements.
The Company Only 2006 2005
2005 1,092,636,440
11,992,903
1,092,636,440
-
(45,315,889)
(279,276,075)
(3,991,786) 34,557,978 7,156,931 247,425 3,438,487 (49,107,586)
23,371,114 40,718,852 10,732,356 3,023,633 43,094,256 -
(3,991,786) 33,052,340 7,156,931 247,425 3,438,487 (49,107,586)
(467,405,239) (171,577,982) (3,278,646) 32,903,416 40,136 (400,226) 475,219,348
(3,778,646) (8,727,575) 25,022 1,930,650 711,927 77,778,603
(340,279,077) (181,435,706) (3,278,646) 32,903,416 40,136 (400,226) 311,706,073
(8,115,901) 427,337,499 6,416,998 51,881,543 (6,261,839) (10,551,283) (822,723) (2,186,657)
(5,099,701) 1,278,344 823,611,642 (51,538,087) 4,305,194 (14,589,526) 9,682,751 8,283,610 (4,829,360)
(5,874,543) (1,278,344) 314,624,958 5,991,195 52,250,424 (6,261,839) (24,100,044) 1,997,544 (1,293,532)
11,416,344 62,518,659 (13,343,425) 47,777,200 1,041,285,763
37,034,591 621,594 168,435,982 (14,711,053) (43,758,804) 996,505,780
8,746,824 311,776 63,723,521 (13,117,303) 35,779,195 743,205,905
Report 2006 78 Annual Property Perfect Public Company Limited
Statements of Cash Flows (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005
(Unit : Baht) Consolidated Note
2006
Cash flows provided from investing activities : Decrease (increase) in restricted deposits (500,000) Decrease (increase) in loans to related companies 28,000,000 Increase in land held for development (131,187,037) Increase in advances for purchase of land (111,915,000) Purchase of office land and equipment (98,887,379) Increase in leasehold right pending sales (1,317,672) Increase in investment in subsidiary Cash received from diposal of land office and equipment 17,350 Net cash used in investing activities (315,789,738) Cash flows provided from financing activities : Increase (decrease) in bank overdrafts and short-term loans from financial institutions 55,397,407 Cash received from issuance of unsubordinated convertible debentures Increase (decrease) in long-term loans 74,000,335 Decrease in debentures (750,000,000) Decrease in creditors per rehabilitation plan Decrease in liabilities under financial lease agreements (5,293,475) Dividend paid (273,887,259) Net cash provided from (used in)financing activities (899,782,992) Net increase (decrease) in cash and cash equivalents (190,057,917) Cash and cash equivalents at beginning of year 502,800,855 Cash and cash equivalents at end of year 312,742,938 Supplement cash flows information : Cash paid during the years for Interest expenses (included interest expenses which capitalised to land cost) 457,112,556 Corporate income tax and withholding tax deducted at source 59,273,495 Non-cash transactions Transfer advances for purchase of land to project development costs and land held for development 231,437,531 Transfer land held for development to project development costs 1,023,934,892 Transfer of advance payment of other companies as land held for development 183,500,566
The accompanying notes are an integral part of the financial statements.
The Company Only 2006 2005
2005 2,839,235 30,000,000 (902,051,678) (308,175,039) (80,436,786) (1,307,688) 403,645 (1,258,728,311)
(500,000) 223,963,151 (146,387,039) (44,915,000) (85,194,639) (1,317,672) 17,350 (54,333,849)
2,839,235 (63,787,250) (642,493,955) (257,512,403) (77,335,937) (1,307,688) (50,000,000) 403,645 (1,089,194,353)
(177,942,347)
55,397,407
(177,942,347)
823,000,000 743,945,285 (700,889,319) (6,873,136) (312,701,876) 368,538,607 151,096,059 351,704,796 502,800,855
(180,236,558) (750,000,000) (5,293,475) (273,887,259) (1,154,019,885) (211,847,954) 482,967,943 271,119,989
823,000,000 881,609,968 (700,889,319) (6,873,136) (312,701,876) 506,203,290 160,214,842 322,753,101 482,967,943
338,007,629 53,762,053
414,376,810 38,658,508
312,512,635 42,963,702
179,207,987
216,237,531
159,207,987
1,349,795,537
754,234,892
1,349,795,537
-
183,500,566
-
(13,025,740) (13,025,740) (123,933) (13,149,673)
4,682,162,664 -
13,047,486
4,695,210,150 -
124,140 4,695,334,290
Discount on share
The accompanying notes are an integral part of the financial statements.
BALANCE AT THE END OF YEAR 2004 Share subscription received in advance Additional ordinary shares as a result of warrant exercise Unsubordinated convertible debentures - equity component Dividend paid (Note 25) Increase in statutory reserve Net earnings for the year BALANCE AT THE END OF YEAR 2005 Share subscription received in advance Additional ordinary shares as a result of warrant exercise Dividend paid (Note 25) Increase in statutory reserve Net earnings for the year BALANCE AT THE END OF YEAR 2006
Issued and paid-up share capital
FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005
(207) 48,563
48,770
(21,746)
13,942 7,804
23,535,270
23,535,270 23,535,270 -
-
-
Share subscription Unsubordinated received convertible debentures in advance equity component
600,000 100,600,000
60,000,000 100,000,000 -
-
40,000,000 -
(273,887,259) (600,000) 11,992,903 869,219,900
(312,701,876) (60,000,000) 1,092,636,440 1,131,714,256 -
-
411,779,692 -
Retained earnings Statutory Unappropriated reserve
Consolidated and The Company Only
Statements of Changes in Shareholders没 Equity
(273,887,259) 11,992,903 5,675,588,350
23,535,270 (312,701,876) 1,092,636,440 5,937,433,936 48,770
-
5,133,956,298 7,804
Total
(Unit : Baht)
Report 2006 79 Annual Property Perfect Public Company Limited
Report 2006 80 Annual Property Perfect Public Company Limited
Notes to Consolidated Financial Statements 1.
GENERAL INFORMATION Property Perfect Public Company Limited was incorporated as a public limited company under Thai laws. The Company operates its business in Thailand and its principal activity is property development. The Companyûs registered office is located at 100/1 Vorasombat Building, 17th Floor, Rama 9 Road, Huaykwang, Bangkok.
2.
FINANCIAL STATEMENT PREPARATION BASIS The financial statements were prepared in conformity with the generally accepted accounting standards stipulated under the Accounting Profession Act B.E. 2547 and financial statementsû format was conducted in accordance with regulations in the Department of Business Development dated 14 September 2001 under the Account Act B.E. 2543. The financial statements were applied to the historic cost accounting basis excepted as disclosed in accounting policies.
3.
Basis of consolidation 3.1 These consolidated financial statements included the financial statements of Property Perfect Public Company Limited (hereinafter called as çthe Companyé) and its subsidiaries as follows :-
Nature of business
Percentage of shares held Paid-up by the capital company
Total revenues Total of subsidiaries assets of which included subsidiaries in consolidated which included Statements of in consolidated income for the years balance sheets ended December 31 2006
2005
2006
2005
Million baht Percent Percent Percent Percent Percent
Estate Perfect Company Limited Perfect Satellite Services Company Limited
Property development Project management
1,000 100.00 12.56 11.14 14.67 15.58 1 99.94 0.04 0.04 0.37 0.25
3.2 Account receivables and significant connected transactions between the company and subsidiaries were eliminated from the consolidated financial statements. 3.3 The companyûs investment in subsidiaries and affiliates was already taken from shareholdersû equity of subsidiaries. 4.
New accounting standards The Federation of Accounting Professions in October 2006 made its announcement issue 26/2006 governing accounting standard and issue 44 concerning consolidated financial statements for investment in subsidiaries (the 1st amendment), requiring company to revise investment in subsidiaries, affiliates, companies under joint control, booked in separate financial statements from equity to cost methods of accounting. Companies which were not ready to apply to the cost method in 2006 have a one-year grace period, and the new accounting method must be implemented from 1 January 2007.
Report 2006 81 Annual Property Perfect Public Company Limited
The company changes its accounting recognition method in 2007, resulting in adjusting financial statements of the company alone for year 2006 to be shown to compare with the financial statement in 2007. As a result, Bt21.9 million (EPS of Bt0.03) would be declined in the adjusted 2006 financial statements of the company alone and Bt326.4 million would be dropped in the adjusted statements of changes in shareholders没 equity as of 31 December 2006. 5.
SIGNIFICANT ACCOUNTING POLICIES 5.1 Revenues recognition Sales of land and houses The company and subsidiaries recoginise sales of land and houses as revenue when ownership has been transferred to the buyer. 5.2 Costs of sales of land and houses and residential condominium units In determining the costs of sales of land and houses, the anticipated total development costs (after recognizing the costs incurred to date) are attributed to units already sold on the basis of the salable area and then recognised .as costs in the earnings statements on a completion basis. 5.3 PROJECT DEVELOPMEMT COSTS Project development costs are stated at net cost less loss provisions from the project value reduction. Project development costs comprise costs of land, development and construction, and related interest. 5.4 Cash and Cash Equivalents Cash and cash equivalents are cash on hand, deposits at banks and high-liquidity short-term investment due within 3 months and not subject to withdrawal restrictions. 5.5 Trade debtors Trade debtors are shown at the net receivables. The company and subsidiaries realise allowance for doubtful debts provided by estimated collection losses, which are generally based on collection experience and debtor age analysis. 5.6 Capitalisation of interest costs The interest costs of borrowings for use in the construction of the projects are capitalised as part of the costs of those assets, with capitalisation ceasing when the projects are started to transfer the ownership to the buyer, or when the construction is suspended and until active development resumes. 5.7 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment of assets (if any). Depreciation of plant and equipment is calculated by reference to their costs on the straight-line method over the estimated useful lifes, which are as follows :Office buildings and clubhouses Furniture and equipment for offices and clubhouses Vehicles Others
20 5 5 5
years years years years
Report 2006 82 Annual Property Perfect Public Company Limited
Depreciation is included in calculation of operating results. No depreciation has been provided for land and construction in progress. 5.8 Leasehold rights and amortization/leasehold rights pending sales Leasehold rights are stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the periods of contracts. The Amortisation is included in calculation of operating results. Leasehold rights pending sales are stated at cost or the estimated selling price, whichever is lower. 5.9 Investments Investments in subsidiary and affiliate companies stated in financial statements of the company only are presented under equity method. Investments in equity securities, which are no market need, are deemed as general investments stated at cost less the impairment (if any). 5.10 RELATED PARTIES TRANSACTIONS Related persons or companies are persons or companies who have controlling power over the company or are controlled by the company either directly or indirectly or under the same control as the company. In addition, related persons or companies include affiliate companies, persons who have significant influence over the company, important executives, directors, and the company没s employees who are empowered to plan and control the company没s operation. 5.11 FINANCIAL LEASE Land, office and equipment leases, of which risk and most of compensation from possessing such assets are transferred to leases, are financial leases. The financial leases are recorded as equity expenses at fair value of lease assets or net present value of amount to be paid as stated in contracts, whichever is lower. Commitments under leases less financial expenses are booked as long-term liabilities. Interest expenses are booked in statements of income over the periods of contracts. Depreciation of assets under financial leases is calculated over life of lease assets or periods of contracts, whichever is lower. 5.12 UNSUBORDINATED CONVERTIBLE DEBENTURES Unsubordinated convertible debenture is presented separately as equity and liability components in balance sheets. The company has then determined the liability component by discounting the stream of future payments of principal and interest at the prevailing market rate. The company has determined the equity component by deducting the liability component from the total face value of the unsubordinated convertible debentures and amortising the difference over the life of the unsubordinated convertible debentures.
Report 2006 83 Annual Property Perfect Public Company Limited
5.13 DEPRECIATION The company and subsidiaries at the balance sheet date evaluate whether there is sign of depreciation of the company没s and subsidiaries没 assets. If so, the company and subsidiaries will estimate recoverable amount. In case that book value exceeds recoverable amount, the company and subsidiary companies will write down book value to the same level as recoverable amount and realise losses from impairment of assets in statements of income. Recoverable amount is defined as the net selling price or value in use, which ever is higher. 5.14 EMPLOYEE BENEFITS The company and subsidiaries booked salary, bonus, and contributions to the Social Security Fund and the provident fund as expenses upon transactions. 5.15 Provisions The company and subsidiaries realise provisions when there are the current obligations occurred from the past, high possibility of loss in resources having economic benefits to settle for such obligations and reliable estimation is provided. 5.16 CORPORATION INCOME TAX The company and subsidiaries booked corporate income tax calculated from net profit in accordance with laws governing the tax. 5.17 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates for certain accounting transactions and assumptions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from these estimates. 6.
TRADE ACCOUNTS RECEIVABLE. Trade accounts receivable balances as at 31 December 2006 and 2005 comprise :Consolidated 2006 2005 Total value of contracts signed Installments due Less : Cash received Installments receivable Less : Allowance for doubtful debts Installments receivable, net
(Unit : Baht) The Company Only 2006 2005
36,981,949,458 30,745,126,425 35,259,727,701 29,683,330,676 33,658,760,436 29,005,477,816 31,998,773,373 28,015,047,063 (33,613,939,463) (28,963,748,319) (31,955,809,156) (27,976,992,947) 44,820,973 41,729,497 42,964,217 38,054,116 (11,041,116) (10,240,716) (11,041,116) (10,240,716) 33,779,857 31,488,781 31,923,101 27,813,400
Report 2006 84 Annual Property Perfect Public Company Limited
Deposits and money received in advance from customer at of 31 December 2006 and 2005 comprise :(Unit : Baht) Consolidated 2006 2005
The Company Only 2006 2005
Installments due 33,658,760,436 29,005,477,816 31,998,773,373 28,015,047,063 Less : Revenue (33,378,125,592) (28,900,837,757) (31,732,773,571) (27,917,483,243) Deposits and money received in advance from customer 280,634,844 104,640,059 265,999,802 97,563,820
As at 31 December 2006and 2005, trade accounts receivable were classified by aging as follows :-
(Unit : Baht)
Consolidated As at 31 December 2006
Accounts receivable - installments Accounts receivable at transfer date Total Less : Allowance for doubtful debts Trade accounts receivable, net
Less than 3 months
3-6 months
6 -12 months
Over 12 months
Total
13,301,730 3,930,000 17,231,730 17,231,730
2,837,126 2,837,126 2,837,126
6,985,502 1,600,000 8,585,502 8,585,502
2,769,600 13,397,015 16,166,615 (11,041,116) 5,125,499
25,893,958 18,927,015 44,820,973 (11,041,116) 33,779,857
(Unit : Baht) Consolidated As at 31 December 2005
Accounts receivable - installments Accounts receivable at transfer date Accounts receivable Total Less : Allowance for doubtful debts Trade accounts receivable, net
Less than 3 months
3-6 months
6 -12 months
Over 12 months
Total
15,723,887 3,441,100 147,692 19,312,679 19,312,679
5,176,902 3,370,000 8,546,902 8,546,902
1,965,000 1,965,000 1,965,000
271,000 11,633,916 11,904,916 (10,240,716) 1,664,200
21,171,789 20,410,016 147,692 41,729,497 (10,240,716) 31,488,781
(Unit : Baht) The Company Only As at 31 December 2005
Accounts receivable - installments Accounts receivable at transfer date Total Less : Allowance for doubtful debts Trade accounts receivable, net
Less than 3 months
3-6 months
6 -12 months
Over 12 months
Total
12,058,600 3,400,000 15,458,600 15,458,600
2,753,500 2,753,500 2,753,500
6,985,502 1,600,000 8,585,502 8,585,502
2,769,600 13,397,015 16,166,615 (11,041,116) 5,125,499
24,567,202 18,397,015 42,964,217 (11,041,116) 31,923,101
Report 2006 85 Annual Property Perfect Public Company Limited
(Unit : Baht) The Company Only As at 31 December 2005
Accounts receivable - installments Accounts receivable at transfer date Total Less : Allowance for doubtful debts Trade accounts receivable, net
7.
Less than 3 months
3-6 months
6 -12 months
Over 12 months
Total
13,700,000 2,937,600 16,637,600 16,637,600
4,176,600 3,370,000 7,546,600 7,546,600
1,965,000 1,965,000 1,965,000
271,000 11,633,916 11,904,916 (10,240,716) 1,664,200
18,147,600 19,906,516 38,054,116 (10,240,716) 27,813,400
PROJECT DEVELOPMENT COSTS
(Unit : Baht) Consolidated 2006 2005
Land costs Development costs Construction costs Capitalised interest Total Less : Transferred to cost of sales Land transferred to settle debt under rehabilitation plan Less : Provision for impairment Project development costs, net
11,386,760,898 5,513,646,475 12,989,927,926 3,816,335,330 33,706,670,629 (24,087,392,160)
10,147,152,451 5,030,710,894 11,418,634,616 3,527,672,890 30,124,170,851 (20,975,485,459)
(1,524,192,396) 8,095,086,073 (78,895,004) 8,016,191,069
(1,453,236,255) 7,695,449,137 (69,979,651) 7,625,469,486
The Company Only 2006 2005 10,189,758,528 9,306,190,086 5,114,206,251 4,719,172,754 12,214,790,120 10,932,832,715 3,598,359,916 3,331,588,301 31,117,114,815 28,289,783,856 (22,991,894,223) (20,324,274,612) (1,524,192,396) 6,601,028,196 (69,037,281) 6,531,990,915
(1,453,236,255) 6,512,272,989 (69,979,652) 6,442,293,337
During the year 2005, the Company and its subsidiary hired an independent appraiser to appraise the value of the Company and its subsidiaryûs assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of çProjects development costsé as at 31 December 2005 was approximately Baht 467.4 million (The Company Only : Baht 340.3 million) higher than its net book value. The Company and its subsidiary reversed part of the provision for impairment of these projects in its accounts, presenting it in the earnings statement for the year 2005. The Company and its subsidiaryûs project land and construction thereon with a net book value of Baht 6,569.8 million as at 31 December 2006 (2005 : Baht 4,062.7 million), have been mortgaged with banks and financial institutions as collateral for short-term loans and long-term loans. 8.
ADVANCES TO OTHER COMPANY The balance as of 31 December 2005 was payment in advance for land plot, covering 39 rai, on behalf of a company which is counterparty to an agreement with the company concerning the future development of a project, with such company then mortgaging the land as security for the companyûs debentures.
Report 2006 86 Annual Property Perfect Public Company Limited
Subsequently, on 11 August 2005, a meeting of the Companyûs Board of Directors passed a resolution approving the cancellation of the agreement to jointly develop land with the above company, and subsequent to the end of the mortgage of the land, in February 2006. The board in August 2006 also resolved the company to stop interest rate collection from the ex-counterparty. During the current year, the above company transferred the land ownership to the company (Evaluation price of the land was greater than amount stated in advance to other company). The company then booked net settlement between payment in advance to other company and receivable interest. 9.
INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD Investments in subsidiary and affiliate companies consist of investment in ordinary shares of the following companies (Unit:Baht)
Companyûs name Subsidiaries Estate Perfect Company Limited Perfect Satellite Services Company Limited
The Company Only Investments Cost method Equity method 2006 2005 2006 2005 538,459,056 999,400 539,458,456
538,459,056 999,400 539,458,456
832,331,411 3,812,018 836,143,429
789,946,933 880,607 790,827,540
(Unit : Baht)
Companyûs name Affiliate company Krungthep Land Public Company Limited(1)
Consolidated and the Company Only Investments Cost method Equity method 2006 2005 2006 2005 299,999,300 299,999,300
299,999,300 299,999,300
329,694,862 329,694,862
353,065,976 353,065,976
Paid-up capital at Bt1,500 million and the companyûs investments accounting for 20%
(1)
Meeting of the companyûs board of directors on 18 January 2007 approved the subscription of 6,000,000 common shares at the par value of Bt10 each of the affiliate company for Bt60 million to maintain the companyûs shareholding ratio.
Report 2006 87 Annual Property Perfect Public Company Limited
10. LAND HELD FOR DEVELOPMENT
(Unit : Baht) Consolidated 2006 2005
Land costs 4,565,869,911 Development costs Construction costs Capitalised interest Total Less :Transferred to cost of sales Transferred of land for debt restructuring Transferred of land to settle debt under rehabilitation plan Less :Provision for impairment Land held for development, net
The Company Only 2006 2005
5,119,223,992 118,647,838 17,449,523 661,617,598 5,363,584,870 (501,818,992) (1,540,946,166)
4,565,869,911 137,282,043 17,449,523 802,756,478 6,076,712,036 (501,818,992) (1,540,946,166)
4,841,698,097 118,647,838 17,449,523 661,617,598 5,363,584,870 (501,818,992) (1,540,946,166)
135,250,213 17,449,523 802,756,478 5,797,154,311 (501,818,992) (1,540,946,166)
(151,117,368) 3,169,702,344 (127,350,670) 3,042,351,674
(222,073,509) 3,811,873,369 (152,301,019) 3,659,572,350
(151,117,368) 3,169,702,344 (127,350,670) 3,042,351,674
(222,073,509) 3,532,315,644 (142,443,295) 3,389,872,349
During the year 2005, the Company had a plot of land, which is part of the land awaiting development, appraised by an independent appraiser. According to the appraisal report, the fair value of that plot of land was approximately Baht 70 million higher than its book value. The Company therefore reversed the provision for impairment, shown as a separate item in the earnings statement for the year 2005 (as the Company previously recorded the provision for impairment amounting to Baht 127 million). Since the Company did not plan to develop this plot of land, with the approval of the Company没s directors, the Company sold the land to a company whose major shareholder is a director of a related company. The abovementioned transaction is not classified by the Company as a related party transaction since the purchaser is independent from the Company and the transaction amount is based on the fair market value with no influence from any persons. During the year 2005, the Company and its subsidiary hired an independent appraiser to appraise the value of the Company and its subsidiary没s assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of 莽Land held for development茅 as at 31 December 2005 was approximately Baht 100.6 million (The Company Only : Baht 110.5 million) higher than its net book value. The Company and its subsidiary reversed part of the provision for impairment of these projects in its accounts, presenting it in the earnings statement for the year 2005. The above land and construction, of which the net book value as at 31 December 2006 was Baht 1,910.8 million (2005 : Baht 2,293.1 million), has been mortgaged with banks and financial institutions as collateral for short-term loans, debentures, long-term loans and as bank guarantees for public utilities works.
Report 2006 88 Annual Property Perfect Public Company Limited
11. ADVANCES FOR PURCHASE OF LAND
(Unit : Baht) Consolidated 2006 2005
Balance-beginning of year Increase during the year Title of plots of land transferred during the year Balance-end of year
851,104,101 111,915,000 (232,937,531) 730,081,570
722,137,050 308,175,039 (179,207,988) 851,104,101
The Company Only 2006 2005 800,441,466 44,915,000 (216,237,531) 629,118,935
702,137,050 257,512,403 (159,207,987) 800,441,466
As at 31 December 2006, the Company and its subsidiary are contracted to purchase and to sell land amounting to Baht 1,285.9 million (The Company Only : Baht 1,050.6 million). Approximately Baht 139.9 million (The Company Only : Baht 44.9 million) of the above balance represents advance paid to landowners by the Company and its subsidiary under agreements to purchase and to sell land already signed with the landowners by an agent on behalf of the Company and approximately Baht 572.2 million (The Company Only : Baht 572.2 million) were paid to a landowner who is the Company没s shareholder. The land purchases were approved by the rehabilitation plan administrator. The landowner has mortgaged the land to secure the Company没s long-term loans from bank. During the current year, some parts of the above land worth approximately Bt156.5 million were transferred to the company and the remaining land is expected to be transferred to the company within the second quarter of 2007. For approximately Bt18 million (the Company Only : Bt12 million) unpaid of the advance for purchase of land, it was amount agreed by the company and subsidiary to be paid in advance to the agent who gathered land bought and land pending signing contracts to buy and sell with landowners. The outstanding balance of such advances will be recognised as part of land costs when the title to the related land is transferred to the Company and its subsidiary.
Report 2006 89 Annual Property Perfect Public Company Limited
12. PROPERTY PLANT AND EQUIPMENT
(Unit : Baht) Consolidated
Office Furniture and buildings equipment and for offices and Construction clubhouses clubhouses Vehicles in progress
Land Cost 31 December 2005 Addition Disposals Transfer in (out) 31 December 2006
Total
47,091,355 164,463,348 97,607,224 35,717,189 12,676,520 52,212,186 409,767,822 420,563 18,845,651 371,600 76,460,284 2,789,281 98,887,379 - (5,712,843) - (20,704,825) (26,417,668) - 41,056,214 - (44,641,196) 3,584,982 47,091,355 205,940,125 110,740,032 36,088,789 44,495,608 37,881,624 482,237,533
Depreciation 31 December 2005 Depreciation Depreciation on disposals 31 December 20069 Net book value 31 December 2005 31 December 2006
Others
-
18,236,293 35,953,512 10,772,862 8,689,009 20,021,344 6,306,274 - (5,696,205) 26,925,302 50,278,651 17,079,136
47,091,355 146,227,055 61,653,712 47,091,355 179,014,823 60,461,381
- 39,125,912 104,088,579 - 4,591,460 39,608,087 - (19,992,195) (25,688,400) - 23,725,177 118,008,266
24,944,327 12,676,520 19,009,653 44,495,608
13,086,274 305,679,243 14,156,447 364,229,267
Depreciation for the year as included in selling and administration expenses 2005 2006
31,346,883 39,608,087
(Unit : Baht) The Company Only Office Furniture and buildings equipment and for offices and Construction clubhouses clubhouses Vehicles in progress
Land Cost 31 December 2005 Addition Disposals Transfer in (out) 31 December 2006 Depreciation 31 December 2005 Depreciation for the year Depreciation on disposals 31 December 2006 Net book value 31 December 2005 31 December 2006
Others
Total
47,091,355 156,530,020 92,227,164 34,304,589 12,548,120 44,705,388 387,406,636 26,563 18,214,805 360,000 64,077,855 2,515,416 85,194,639 - (5,712,845) - (20,704,827) (26,417,672) - 41,056,214 - (44,641,196) 3,584,982 47,091,355 197,612,797 104,729,124 34,664,589 31,984,779 30,100,959 446,183,603 -
17,391,817 33,663,194 10,724,220 8,225,852 19,134,302 6,021,654 - (5,696,205) 25,617,669 47,101,291 16,745,874
47,091,355 139,138,203 58,563,970 47,091,355 171,995,128 57,627,833
- 32,956,014 94,735,245 - 4,125,950 37,507,758 - (19,992,195) (25,688,400) - 17,089,769 106,554,603
23,580,369 12,548,120 17,918,715 31,984,779
Depreciation for the year as included in selling and administration expenses 2005 2006
11,749,374 292,671,391 13,011,190 339,629,000 29,841,245 37,507,758
The company mortgaged land with book value of Bt22.2 million as at 31 December 2006 (2005 : Bt22.2 million) to secure long-term loans from bank.
Report 2006 90 Annual Property Perfect Public Company Limited
As of 31 December 2006, the company had some building and equipment with full depreciation but functional. Cost of the assets were approximately Bt16.2 million (2005 : Bt39.6 million) (The Company Only : Bt9.2 million (2005 : Bt32.7 million)). 13. LEASEHOLD RIGHTS/LEASEHOLD RIGHTS PENDING SALES
(Unit : Baht)
Consolidated and the Company Only 2006 2005
Leasehold right โ บ cost Less : Accumulated amortization Less : Depreciation allowance Transfer as leasehold right pending sales-net Net Amortisation as included in selling and administration expenses
342,561,569 (29,476,065) 313,085,504 (189,843,897) 123,241,607 (60,717,672) 62,523,935 3,211,094
341,243,897 (26,264,971) 314,978,926 (189,843,897) 125,135,029 125,135,029 3,211,094
Leasehold rights consist of the payments and compensation provided to land owners, tenants and project consultants for the leasehold to approximately 11 rai of land for a period of 30 years. The Company subleased its rights to approximately 4 rai of land for the remainder of the lease period. The sub-leases made an advance payment and paid annual rental at rates stipulated in the contract. The company recognised the advance lease payment over the period of the sublease contract. During the year 2005, the Company hired an independent appraiser to appraise the value of the Companyรปs assets in various projects. According to the appraisal report dated 1 February 2006, the aggregate fair market value of leasehold rights as at 31 December 2005 was approximately Bt32.9 million lower than its net book value. The company recorded the provision for impairment of assets, presenting it in the earnings statement for the year 2005. The companyรปs board of directors on 13 November 2006 resolved the company to sublease rights of approximately 7 rai with the aggregate net book value of Bt60.7 million. The company then classified such sublease as leasehold rights pending sales by presenting it as separated item in balance sheets. 14. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS Bank overdraft and short-term loans from financial institutions as of 31 December 2005 and 2006 consisted of
Report 2006 91 Annual Property Perfect Public Company Limited
(Unit : Million Baht) Interest rate (% per annum) Overdraft Short-term loans from financial institutions Discounted bills of exchange Total
MOR MMR MLR
Consolidated 2549 2548 30 150 100 280
150 75 225
The Company Only 2549 2548 30 150 100 280
150 75 225
Overdraft and short-term loans from financial institutions guaranteed by the company没s board and secured by mortgage of some land and houses in the company没s projects 15. DEBENTURES
(Unit : Thousand Baht) Consolidated and the Company Only 2006 2005
Secured debentures 1/2004# 1 Secured debentures 1/2004# 2 Secured debentures 2/2004# 3 Secured debentures 1/2006 Total Less : Current portion of debentures Debentures, net of current portion
350,000 450,000 800,000 (350,000) 450,000
450,000 750,000 350,000 1,550,000 (1,200,000) 350,000
On 24 May 2004, an extraordinary general meeting of the Company没s shareholders passed a resolution to approve the issue and offer of secured debentures in an amount not exceeding Baht 2,000 million. The Company splited the debentures into two offers as follows:(1) Secured debentures 1/2004 #1 The Company offered 450,000 Units with a par value of Baht 1,000 each, 1.5 years, secured debentures to the financial institutions and the public, with a total value of Baht 450 million. The debentures mature on 18 February 2006 and interest was payable semi-annual at the six-month fixed deposit rate of a commercial bank plus 3.4 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company. (2) Secured debentures 1/2004 #2 The Company offered 750,000 Units with a par value of Baht 1,000 each, 2 years, secured debentures to the financial institutions and the public, with a total value of Baht 750 million. The debentures mature on 18 August 2006 and interest was payable semi-annual at the six-month fixed rate deposit of a commercial bank plus 3.5 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company.
Report 2006 92 Annual Property Perfect Public Company Limited
(3) Secured debentures 2/2004 #3 The Company offered 350,000 Units with a par value of Baht 1,000 each, 2.5 years, secured debentures to the financial institutions and the public, with a total value of Baht 350 million. The debentures mature on 23 February 2007 and interest was payable semi-annual at the six-month fixed deposit rated a commercial bank plus 3.65 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company. The company during the year paid the 1/2004 secured debentures set 1 and 2 in the total amount of Bt1,200 million. In February 2007, the company paid Bt350 million and redeemed the 2/2004 secured debentures set 3. Subsequently on 6 February 2006, the Company received approval for the issue and offer of the remaining debentures from the office of the Securities and Exchange Commission. As a result of the approval, the Company offered 450,000 Units with a par value of Baht 1,000 each, 2 years, secured debentures to the financial institutions and the public, with a total value of Baht 450 million. The debentures mature on 8 February 2008 and interest was payable semi-annual at 6.65 percent per annum. Compliance with certain conditions related to the maintenance of a certain debt to equity ratio, the payment of dividends, and the maintenance of a certain collateral value to debentures ratio is required of the Company. The company mortgaged some land to secure the secured debentures as stated in notes to financial statements no. 7 and 10. Shareholders at the 1/2006 extraordinary meeting on 21 June 2006 approved the issuance of debentures worth no more than Bt1,200 million for sale totally at one times or partly at several times. The debentures are secured and unsubordinated debentures with full amount of principal to be paid in phase or at one time on redemption date. The debentures carry a 3-year maturity from the issuance date and offered all or partly to local public investors and/or institutional investors and/or specific investors. The company has not allocated the debentures yet. 16. CREDITORS PER REHABILITATION PLAN
(Unit : Thousand Baht) Consolidated and the Company Only 2006 2005
Down payments and deposits payable Secured creditors Unsecured creditors Total
144 132,335 515,931 648,410
144 132,335 515,931 648,410
As stated in the business rehabilitation plan, the company would pay out debts within October 2008. The debts carry interest rate based on minimum lending rate. Some creditors who hold approximately Bt422.4 million debts under the business rehabilitation plan become the company没s shareholders and Bt8.9 million are the shareholders and the company没s directors.
Report 2006 93 Annual Property Perfect Public Company Limited
17. UNSUBORDINATED CONVERTIBLE DEBENTURES In accordance with a resolution of the Extraordinary General Meeting of shareholders held on 19 September 2005, on 25 November 2005 the Company issued and offered 200,000 unsubordinated convertible debentures with a par value of USD 100 each, or a total value of USD 20 million, to an overseas company. The debentures have been convertible since 25 May 2007, mature in 25 November 2010, and bear interest at a rate of 3.50 percent per annum. The conversion price is Baht 6.25 per ordinary share, and the debentures are convertible in a ratio of 1 debenture per 658.4 ordinary shares. Those debentures which are not converted will be redeemed at USD 131.60 per unit, using a stipulated exchange rate of Baht 41.15 per USD. The Company recorded the provision for debentures which are not converted over the life of debentures presented it as a separate item in balance sheet. Under the Companyûs debenture agreement, there are normal covenants relating to various matters on behalf of the normal business. 18. LONG-TERM LOANS/CURRENT PORTION OF LONG-TERM LOANS ë
The Company Long-term loans consist of loans from 4 local banks. Details are as follows : Balance 2006 2005 (Million Baht)
Interest rate per annum
Principal repayment conditions
Loan collateral
1) Credit line Bt1,000 million
141.2
475.6
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of at least 60% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid with June 2007.
Guaranteed by the companyûs board and mortgaged some land and houses in projects.
2) Credit line Bt793 million
263.7
469.0
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 65% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid within April 2007.
Guaranteed by mortgage of some land and houses in the companyûs projects.
3) Credit line Bt250 million
-
29.2
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 60% of the selling price, which is not to be less than the amount informed to the banks.
Guaranteed by mortgage of some land and houses in the companyûs projects.
4) Credit line Bt660 million
196.7
294.5
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 70% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid within November 2007.
Guaranteed by the companyûs board and mortgage some land and houses of the companyûs projects.
¬Õ¥§ß‡À≈◊Õ
Report 2006 94 Annual Property Perfect Public Company Limited
Balance 2006 2005 (Million Baht)
Interest rate per annum
Principal repayment conditions
Loan collateral
5) Credit line Bt515 million
331.8
331.8
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 65% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid within February 2008.
Guaranteed by the companyûs board and mortgage some land and houses of the companyûs projects.
6) Credit line Bt318 million
-
23.2
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 75% of the selling price, which is not to be less than the amount informed to the banks.
Guaranteed by mortgage of some land and houses in the companyûs projects.
638.9
640.0
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 60% of the selling price, which is not to be less than the amount informed to the banks and any remaining balance will be repaid within April 2011.
Guaranteed by other company and mortgage land of other company, some land and houses of the companyûs projects and the companyûs shares held by a shareholder.
8) Credit line Bt780 million
-
378.0
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 70% of the selling price, which is not to be less than the amount informed to the banks.
Guaranteed by mortgage of some land and houses in the companyûs projects.
9) Credit line Bt275 million
58.4
169.2
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 65% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid within March 2008.
Guaranteed by the companyûs board and mortgage some land and houses of the companyûs projects.
10) Credit line Bt742 million
634.9
713.4
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 85% of the selling price, which is not to be less than the amount informed to the banks, and any remaining balance will be repaid within June 2009.
Guaranteed by the companyûs board and mortgage some land and houses of the companyûs projects.
11) Credit line Bt232 million
-
124.8
Minimum lending rate It will be repaid when a plot of land is redeemed from mortgage at a rate of not less than 75% of the selling price, which is not to be less than the amount informed to the banks.
Guaranteed by mortgage of some land and houses in the companyûs projects.
7) Credit line Bt1,200 million
Report 2006 95 Annual Property Perfect Public Company Limited
Balance 2006 2005 (Million Baht)
Principal repayment conditions
Loan collateral
12) Credit line Bt1,070 million
663.6
-
Minimum lending rate It will be repaid when each Guaranteed by mortgage unit of condominium is of some land and discharged from mortgage houses in the at a rate of 80% of the companyûs projects. selling price and any remaining balance will be repaid within May 2009.
13) Credit line Bt1,249 million
539.3
-
Minimum lending rate Cerdit line of Bt400 million will be repaid within August 2007 and the remaining Bt849 million will be repaid when a land lot and townhouse is redeemed from mortgage at a rate of not less than 70% of the selling price and any remaining balance will be repaid within August 2011.
3,468.5 (940.9)
3,648.7 (52.4)
2,527.6
3,596.3
Total Less : amount to be due within 1 year Total
ë
Interest rate per annum
Guaranteed by mortgage of some land and houses in the companyûs projects.
Its subsidiary Long-term loans were borrowed from local banks as follows : Balance 2006 2005 (Million Baht)
1) Credit line of Bt925 million
Interest rate per annum
Principal repayment conditions
Loan collateral
-
220.2
Minimum lending rate Repaid when the minimum (MLR) ratio of 65% of market price of each title deed but not lower than amount informed banks by subsidiaries is paid
Guaranteed by the company and pledge of land and houses in some subsidiariesû projects
2) Credit line of 434 million
177.5
166.0
Minimum lending rate Repaid when the minimum (MLR) ratio of 65% of market price of each title deed but not lower than amount informed banks by subsidiaries is paid
Guaranteed by the company and subsidiariesû board and pledge of land and houses in some subsidiariesû projects
3) Credit line of 887 million
462.9
-
Minimum lending rate Repaid when the minimum (MLR) ratio of 65% of market price of each title deed but not lower than amount informed banks by subsidiaries is paid and paid out the remaining amount within April 2011
Guaranteed by the company and subsidiariesû board and pledge of land and houses in some subsidiariesû projects
Report 2006 96 Annual Property Perfect Public Company Limited
Balance 2006 2005 (Million Baht)
Total Less: Portion to be due within 1 year Net
640.4
386.2
640.4
386.2
Interest rate per annum
Principal repayment conditions
Balance of long-term debts is summarized as follows
Long-term borrowing Less: portion to be due within 1 year Long-term borrowing โ บ Net less portion to be due within 1 year
Loan collateral
(Unit : Million Baht)
Consolidated 2006 2005
The Company Only 2006 2005
4,108.9 (940.9)
4,034.9 (52.4)
3,468.5 (940.9)
3,648.7 (52.4)
3,168.0
3,982.5
2,527.6
3,596.3
Most of loan contracts state some guidelines and restrictions under normal course of business of the company and subsidiaries. As at 31 December 2006, the company and subsidiaries had Bt2,748.4 million leftover long-term credit facilities. 19. SHARE CAPITAL As at 31 December 2006, the Companyรปs issued and paid up share capital has increased to Baht 4,695,334,290 (782,555,715 ordinary shares of Baht 6 each), with totaling Baht 124,140 (20,690 ordinary shares of Baht 6 each) being the result of the exercise of warrants in June 2006. The Company registered increases in its capital with the Ministry of Commerce on 7 July 2006. The company on 11 January 2007 registered the increased capital for warrant conversion worth Bt29,137,674 (4,856,279 common shares at Bt6-par value) with the Commerce Ministry as stated in notes to financial statements no. 20. 20. WARRANTS On 7 April 2005, the general meeting of the Companyรปs shareholders approved the cancellation of warrants issue to the Companyรปs creditor per rehabilitation plan of 2,073,229 warrants and approved the issue of 39,000,000 warrants to directors and/or employees of the Company (ESOP), at no cost. The warrant entitled the holders to subscribe to the Companyรปs ordinary shares in a ratio of 1 warrant per 1 ordinary share, a price of Baht 6 each, and are exercisable for 5 years from the issue date. Currently, the Company has not yet lodged an application to issue such warrants with the Office of the Securities and Exchange Commission.
Report 2006 97 Annual Property Perfect Public Company Limited
The company没s board of directors at the meeting on 25 September 2006 approved the cancellation of 1,900,000 warrants to be issued to directors and/or employees under ESOP program. In June 2006, the company obtained payment in advance from the conversion of warrants into 20,690 ordinary shares at a price of Bt0.01, constituting Bt207 million. The company registered the new capital of Bt124,140 million with the Commerce Ministry on 7 July 2006 and discount on shares rose to Bt13,149,673. In December 2006, the company received payment in advance for conversion of warrants into 4,856,279 common shares at a price of Bt0.01 totaling Bt48,563. The company registered the new capital for the conversion of Bt29,137,674 with the Commerce Ministry on 11 January 2007. As of 31 December 2006, there were 9,182,202 unconverted warrants. The company没s board of directors on 26 February 2007 approved the cancellation of 37,100,000 warrants to be issued to directors and/or employees under ESOP program. 21. NUMBER OF EMPLOYEES AND RELATED COSTS Consolidated 2006 Number of employees at end of year (Persons) Employee costs for the year (Thousand Baht)
497 240.9
The Company Only
2005 474 252.6
2006 411 208.8
2005 415 237.1
22. PROVIDENT FUND The company, subsidiaries and employees jointly established the provident fund under the Provident Fund Act B.E. 2530. The fund is contributed by employees and the company or subsidiaries. Employees The fund is managed by Kasikornbank Public Company Limited and will pay to employees upon termination in accordance with the rules of the fund. The company and subsidiaries during the year contributed Bt12 million (2005 : Bt10 million) (the company没s only : Bt10.9 million (2004: Bt9.9 million) to the fund. 23. RELATED PARTY TRANSACTIONS During the year, the company and subsidiaries had significant business transactions with persons and related companies. These transactions were normal course of business under trade conditions, and principles agreed between them. The transactions are summarised as follows
Report 2006 98 Annual Property Perfect Public Company Limited
(Unit : Million Baht) Consolidated 2006 2005 Transactions with subsidiary companies Interest income Project management income Club house management expenses Transactions with affiliate company Interest income
The Company Only 2006 2005
Pricing policy
-
-
14.3 0.2 10.8
13.5 3.4 10.2
4-8% per annum as contracts as contracts
4.5
-
4.5
-
15% per annum (penalty rate)
outstanding balances of the above transactions are shown as separate items in the balance sheets as follows :(Unit : Thousand Baht) Consolidated 2006 2005 Amounts due from related companies Estate Perfect Company Limited (1) Perfect Satellite Services Company Limited Amounts due from related companies Loans to related company and interest receivable Loans to subsidiary company Estate Perfect Company Limited (1) Less : Provision for doubtful debts Interest receivable from subsidiary company Estate Perfect Company Limited (1) Loans and interest receivable from subsidiary company, net
The Company Only 2006 2005
-
-
-
1,101 177 1,278
-
-
94,376 94,376
290,339 (474) 289,865
-
-
4,651 99,027
18,858 308,723
Report 2006 99 Annual Property Perfect Public Company Limited
(Unit : Thousand Baht) Consolidated 2006 2005 Loans to associated company Krungthep Land Public Company Limited (2)
The Company Only 2006 2005
56,091 56,091
84,091 84,091
56,091 56,091
84,091 84,091
66,211 (57,303) 8,908
61,687 (57,303) 4,384
66,211 (57,303) 8,908
61,687 (57,303) 4,384
64,999
88,475
64,999
88,475
2,298 2,298
2,298 2,298
2,298 2,298
2,298 2,298
2,612 (2,494) 118
2,612 (2,494) 118
2,612 (2,494) 118
2,612 (2,494) 118
Loans and interest receivable from related company, net 2,416 Loans to related companies and interest receivable, net 67,415
2,416 90,891
2,416 166,442
2,416 399,614
-
1,738 1,738
1,117 1,117
Interest receivable from related company Krungthep Land Public Company Limited (2) Less : Provision for doubtful debts Loans and interest receivable form associated company, net Loans to related company Real Service Company Limited Interest receivable from related company Real Service Company Limited Less : Provision for doubtful debts
Amounts due to related company Perfect Satellite Services Company Limited Amounts due to related company
-
During the year 2006, loans to related companies were as follows Balance As of Subsidiary Estate Perfect Company Limited Affiliate Krungthep Land Public Company Limited
(Unit : Thousand Baht) During the year
Balance As of
1 January 2006
Increase
Decrease
31 December 2006
290,339
75,500
(271,463)
94,376
84,091
-
(28,000)
56,091
Loan to affiliate company was non-interest-bearing loans under the debt restructuring contract. The repayment was dividend into installments as stated in the contract. The affiliate company in January 2007 paid Bt60.5 million for the loan and receivable interest and in February 2006 paid the remaining receivable interest amounting to Bt4.5 million. On 15 February 2007, Real Service Company Limited (çReal ServiceÊ) reached the debt restructuring agreement with the company. Real Service at that time had the outstanding balance of loans and interest receivable to the company with amount approximately Bt2.4 million. The first Bt0.4 million was paid on the contract signing date and the remainder has been paid in installments from April to October 2007.
Report 2006 100 Annual Property Perfect Public Company Limited
ĂŤ GUARATEE OBLIGATIONS TO RELATED COMPANIES The company is obliged to guarantees provided to related companies as stated in notes to financial statements no. 27.3.
. 24. CORPORATE INCOME TAX The company was not subject to corporate income tax for the year as the company had losses carried over from the previous year 25. DIVIDENDS Dividends announced to be paid in 2006 and 2005 have detailed as follows
Dividend paid from accumulated profit of year 2005 Dividend to paid from accumulated profit of year 2004
Approved by
Dividends
Dividend per share
Shareholders at the meeting on 28 April 2006 Shareholders at the meeting on 7 April 2005
Bt273.9 million
Bt0.35
Bt312.7 million
Bt0.40
26. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net earnings for that year by the weighted average number of common shares outstanding issued during the year. Diluted earnings per share is calculated by dividing net earnings for the year by the weighted average number of common shares outstanding issued during the year plus the weighted average number of shares outstanding that may be issued for conversion of all dilutive securities to common shares based on assumption that the conversion into common shares is made at the beginning of the year or the issue date of the dilutive securities. Effect in basic earnings per share and dilutive earnings per share are shown as follows
(Unit : Baht)
Consolidated and the Company Only For the years ended 31 December Weighted average number of common shares Net profit Weighted average (shares) Earnings per share 2006 2005 2006 2005 2006 2005 Basic earnings per share Net earnings Effect of dilutive potential ordinate shares Warrants 9,182,202 units (2006 : warrants 14,059,171 units) Unsubordinated convertible debentures
11,992,903 1,092,636,440 782,585,426 782,154,478
-
- 13,898,640 6,605,870 -
0.02
1.40
0.02
1.36
14,961,701 13,348,384
Diluted earnings per share Net earnings of ordinary shareholders, assuming the conversion of dilutive potential ordinary shares 11,992,903 1,099,242,310 796,484,066 810,464,563
Report 2006 101 Annual Property Perfect Public Company Limited
Earnings per share for year 2006 would increase following the conversion of unsubordinated convertible debentures, so the conversion was excluded from calculation of diluted earnings per share for year 2006 27. COMMITMENTS AND CONTIGENCY LIABILITIES 27.1 Commitments associated with capital expenditure 1) The company and subsidiaries had commitment of approximately Bt1,787.4 million (2005 : Bt401.5 million) in respect of construction contracts of land and houses as well as condominium projects. 2) The company and subsidiaries had commitment associated with land purchase in amount of approximately Bt573.8 million (2005 : Bt229.2 million). 3) The company had commitment with subcontractors associated with resident construction service by using prefabricate parts for not less than 300 units. The company is required to pay a certain amount of compensation as stated in the contracts in case that the company subcontracted lower than 300 units. 27.2 Commitments associated with operating contracts 1) The company had commitment in respect to office rental contract and service contracts in the tune of approximately Bt23.3 million (2005 : Bt22.7 million). 2) The company and subsidiaries had commitment in respect of billboard contract amounting to approximately Bt27 million (2005 : Bt14.3 million). 27.3 Guarantee 1) The company guaranteed loans and credit facilities to subsidiary and affiliate companies in mount of Bt1,401 million and Bt30 million, respectively (2005 : Bt1,409 million and Bt30 million, respectively). 2) As at 31 December 2006, banks issued letter of guarantee on behalf of the company and subsidiaries with outstanding amount of Bt376.7 million (2005 : Bt414.1 million). The letter of guarantee was associated with practical commitments from some normal business of the company and subsidiaries. 28. STATUTORY RESERVE To comply with article 116 under the Public Company Limited Act B.E. 2535, the company is required to allocate a statutory reserve of at least 5% of its annual net profit less accumulated losses brought forward (if any) until the reserve reaches 10% of its registered share capital. The statutory reserve cannot be used for dividend payment.
Report 2006 102 Annual Property Perfect Public Company Limited
29. FINANCIAL INFORMATION BY SEGMENT The Company and its subsidiaries没 operations involve principally a single industry segment, property development, and are carried on in the single geographic area of Thailand. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area. 30 FINANCIAL INSTRUMENTS 30.1 Financial risk management and policies Under the accounting standard issue 48 governing presentation and information disclosure for financial instruments, the company and subsidiaries have following important financial instruments stated in balance sheets. Financial assets - Cash and cash equivalents -
Trade debtors- Net Advance to contractors - Net Loans to related companies - Net Advance for land purchases
Financial liabilities - Overdraft and short-term loans from financial institutions - Trade creditors - Deposits and cash received in advance - Creditors in rehabilitation plan - Debentures - Unsubordinated convertible debentures - Long-term loans
The company and subsidiaries are exposed to the financial instrument risk and their risk management policy are as follows : -
Credit risk The company and its subsidiaries are exposed to credit risk from trade debtors and loans. However, the appropriate loan control method and policy has been applied to control such risk, so the company and subsidiaries do not anticipate a significant damage from credit loans. In addition, due to the large number and diversity of entities comprising the company and its subsidiaries没 customer base, the maximum amount that the company and subsidiaries may loss from credit loans is trade debtors没 book value and loans shown in balance sheets.
-
Interest rate risk The company and subsidiaries are exposed to interest rate risk from deposits at financial institutions, overdraft and short-term loans from financial institutions, debentures, unsubordinated convertible debentures and long-term loans. However, interest rate risk is in relatively low level as most of financial assets and liabilities carry floating interest rates based on market rates or fixed interest rates close to the current rates. As at 31 December 2006, important financial assets and liabilities could be classified into interest rate types and financial assets and liabilities with fixed rates could be divided by maturity date or interest rates at reset date (If reset date was due first). Details are as follows :
Report 2006 103 Annual Property Perfect Public Company Limited
(Unit : Million Baht) Consolidated Fixed interest rate Interest rate Within During More than tied to No interest 1 year 1-5 years 5 years market rate rate Total
Financial assets Cash and cash equivalents Trade debtors › Net Advance to contractors › Net Loans to associated companies Advance for land purchases Financial liabilities Overdraft and short-term loans from financial institutions Trade creditors Deposits and cash received in advance from customers Creditors in rehabilitation plan Debentures Unsubordinated convertible debentures Long-term loans
Interest rate (% per annum)
67.4 67.4
-
-
308.8 308.8
3.9 312.7 33.8 33.8 70.4 70.4 67.4 730.0 730.0 838.1 1,214.3
-
-
-
280.4 -
290.1
- 450.0 - 802.7 - 1,252.7
-
648.4 350.0 4,108.9 5,387.7
0.12% - 0.50% 15.00% -
280.4 MOR, MMR, MLR 290.1 -
280.6 280.6 - 648.4 - 800.0 - 802.7 - 4,108.9 570.7 7,211.1
MLR 6.65%-7.40% 9.56% MLR
(Unit : Million Baht) The Company Only
Financial assets Cash and cash equivalents Trade debtors › Net Advance to contractors › Net Loans to associated companies Advance for land purchases
Fixed interest rate Interest rate Within During More than tied to No interest 1 year 1-5 years 5 years market rate rate Total
67.4 67.4
-
Financial liabilities Overdraft and short-term loans from financial institutions MOR, MMR, MLR Trade creditors Deposits and cash received in advance from customers Creditors in rehabilitation plan Debentures - 450.0 Unsubordinated convertible debentures - 802.7 Long-term loans - 1,252.7
-
267.9 99.0 366.9
-
-
-
648.4 350.0 3,468.5 4,747.3
Interest rate (% per annum)
3.2 271.1 0.12% - 0.50% 31.9 31.9 70.4 70.4 - 166.4 7.16% - 15.00% 629.1 629.1 734.6 1,168.9 280.4
-
245.0 245.0 - 266.0 - 648.4 - 800.0 - 802.7 - 3,468.5 511.0 6,511.0
280.4 266.0 MLR 6.65%-7.40% 9.56% MLR
Report 2006 104 Annual Property Perfect Public Company Limited
30.2 Fair Value of Financial Instruments Since the majority of consolidated assets and liabilities are short-term and they carry interest at rates close to market rates, the company and subsidiary companies then estimate these assetsû and liabilitiesû fair value close to book value describ ed in balance sheets. Fair value is amount that buyer and seller agree to exchange assets each other while both parties have knowledge, are willing to exchange their assets and are freely negotiable in a manner without any connection. Fair value calculation depends on financial instruments. Fair value is computed from the latest market prices or basis of appropriate fair value calculation. 31. EVENTS AFTER FINANCIAL STATEMENT DATE The companyûs board of directors at the 1/2007 meeting and the 2/2007 meeting on 18 January 2007 and 26 February 2007 made the important resolutions as follows : ë Resolution to subscribe to its affiliateûs 6,000,000 capital increased shares at a price of Bt10 each for Bt60 million to maintain its shareholding. ë Resolution to cancel the companyûs 37,100,000 warrants to be issued to directors and/or employees under ESOP program. 32. PRESENTATION Certain amounts in the financial statements for the year ended 31 December 2005 have been reclassified to conform to the current yearûs classification, with no effect on previously reported net earnings or shareholderûs equity. 33. APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the authorised directors on 26 February 2007.
Report 2006 105 Annual Property Perfect Public Company Limited
Audit Committee Report 2006 Dear Shareholders Property Perfect Plcûs audit committee comprises three independent directors - Dr Thawatchai Nakhata, Chairman, Dr.Thamnoon Ananthothai and Mr.Somsak Toraksa. In 2006, the audit committee held 4 meetings and achieved the following agenda; 1.
Review the 2005 quarterly and annual financial statements to ensure accuracy and appropriateness, compliance with Generally Accepted Accounting Principle, as well as adequate and reliable disclosure of connected transactions and transactions that have conflicts of interest.
2
Ensure that the company honours the securities and related laws.
3.
Assess the internal control and ensure proper internal control. The appraisal found no significant error which might affect the financial resultsû accuracy and credibility.
4.
Supervise internal audit to be compliance with professional standards, approve the 2005 annul audit planning, acknowledge quarterly internal control evaluation results conducted by internal audit office, and encourage the company to follow the internal audit officeûs suggestions to tighten internal control system to be more efficient.
5.
Revise the audit committee charter in part of the audit committeeûs scope of duties to be more appropriate.
6.
Present academic information related to local and overseas property development business and provide suggestions about financial, accounting, legal and engineering to help the company achieve in business targets.
7.
Select and propose the preferred auditor as well as consider the audit fee to the board of directors, to get shareholdersû approval to appoint Ernst & Young Co.,Ltd. as the 2005 auditor.
The Audit Committee would like to inform all that it has performed the independent directorsû responsibility and appropriately come up with honest opinions for the benefit of the company, all shareholders, and other related parties.
Dr.Thawatchai Nakata Chairman of the Audit Committee February 26, 2007
Report 2006 106 Annual Property Perfect Public Company Limited
Auditor Fee Accuracy Sanctification Form Audit Fee Item
1 2 3 Total fee
Payer
Property Perfect Public Company Limited Estate Perfect Co., Ltd. Perfect Satellite Services Co., Ltd
Auditor
Mr. Supachai Phanyawattano Mr. Supachai Phanyawattano Mr. Supachai Phanyawattano
Fee
1,515,000 345,000 50,000 1,910,000
The above information is Accurate. I certify there is no other service I know of that the company and subsidiaries awarded to me, my auditing firm, and individuals or companies connected to me. Inaccurate. Note ...................................................................................................................... ........................................................................................................................................................................... ........................................................................................................................................................................... ........................................................................................................................................................................... ............................................ To improve the above information (if any), I affirm the accuracy of all information in this form that shows the audit fee and other service fee that the company and subsidiaries pay to me, my auditing firm, and individuals or companies connected to me.
(Mr. Supachai Phanyawattano) Ernst & Young Co.,Ltd Auditor of Property Perfect Public Company Limited