Metro 12

Contents 02 03 04 08 15 16 21 24 36 43 48 56 58 66 69 70

Message from the Chairman Audit Committee’s Report Organization Chart Information of Chairman, Board of Directors, Audit Committee and Management Team General Information Business Profiles Present and Future Projects Industry and Competition Report of Financial Analysis and Operation Risk Factors Management Structure The Recruitment of Directors and Management Corporate Governance Connected Person and Related Party Transaction Report of Independent Auditor Financial Statement

Annual Report 2012 Metrostar Property Public Company Limited

Message from the Chairman Overall, Thailand’s 2012 economics has faced the changing real estate markets as resulted of the 2011 Situation flood. Obviously, more than 60 percent condominiums in Bangkok and its vicinity have entered into the markets while the trail system for telecommunication network gets started construction and distribution to the perimeters. Consequently, the condominium’s skipping growth has been recognized in term of new market penetration and number of registered and completely units. Following the flood disaster recovery, the economic situation recovers because of the government’s effort to solve the problems and to stimulate the economy.

In 2013, the real estate markets are expected to grow because of the consumer confidence that has resumed to normality following the great flood by the late 2011. Over the past, the supporting factors include low interest rate and attracting factors such as tendency of change in house price as resulted from the rapidly-high land price, especially the land located along the BTS direction, increasing construction cost, daily minimum wage of 300Baht, rising constructing materials price as resulted of the growing need of the mega pubic projects, the potential tendency of real estate markets up-countries with expansion of job sources and incomes that draw an attention of the real estate developers to make investment increasingly, the construction of new rail routes and its extension which will happen in the next 3-5 years in Bangkok and vicinity, the regional hi-speed rail system connecting the opening of the trades and investment for the forthcoming AEC, all these have influenced the demand and supply in the real estate market significantly.

In 2013, the company has still been a real estate developer, focusing the central business district, prime area, and location surrounding the BTS and MRT. The company also has the development plan for the potential tourist attractions by consideration of the real estate project nature and location appropriateness correspondingly to the needs of the prospective consumers. In addition, the company has expanded the business opportunity through revenue recognition; from 90% sales and 10% rental to 70% sales and 30% rental so that the company can earn the revenues continuously for the future. In addition, since March 2009, the company has recognized the revenues from rental and serviced apartment on the first project; Marriott Executive Apartment Sathorn Vista Bangkok, which generates the continuous income higher than the previous year, it helps distribute the business risk and ensure of the forecasting the total growing revenues. Regarding company’s results of the operations in 2012, the company incurs loss amounted 58.46 million Baht, or accounting for 29.84% net loss of total revenue and net loss per share is of 0.13 Baht.

The company’s 2012 financial position has been stable with total value of 1,932 million Baht assets.

The consolidated liabilities are of 939 million Baht, shareholders’ equity is of 993 million Baht. Total liabilities decrease by 46 million Baht or decreased by 2.34% from the year 2011, because the company during the year has calculated depreciation for Marriott Executive Apartment Sathorn Vista Bangkok, serviced apartment for rent, which the project has completely constructed and launched the operation since March 2009. The company’s D/E ratio is 0.95:1, resulted that the company’s financial position has been as stable as the previous year and enhance the company’s investment leverage in the future.

Besides, the company’s operation is aware of the highest interest of all the stakeholders and operates under the principle of Good Corporate Governance and Code of Conduct to reassure the confidence and constant contribution of the shareholders, clients, financial institution, business alliances, mass media, government and private sector, as well as executives and employees at all levels who cooperatively and effectively perform their functions and duties for the company, creatively produce the quality performance, and delivery of the best quality products and service to all everybody continuously.

02

Mr. Veera Burapachaisri Chairman of the Board

Annual Report 2012 Metrostar Property Public Company Limited

Audit Committee Report Dear Shareholders, The Audit Committee consisted of three non-executive independent directors who are qualified and experienced in financial accounting and business administration. Mrs.Pilai Piemphongsarn, serves as Chairman of the Audit Committee , Mr.Phaiboon Siripanoosatien and Pol.Col.Kidanun Komkhum as the Audit Committee members and Miss Thiranan Sangphungtham as the Audit Committee Secretary.

The Audit Committee perform their function according to the scope of duties and responsibilities assigned by the Board of Directors in accordance with the SET requirements. In 2012, The Audit Committee held four meeting with the Executive, external auditors and internal auditor to discuss about main issues and exchange ideas lisen to the company operation explanation, and give beneficial recommendations to the Mrs.Pilai Piemphongsarn, Mr.Phaiboon Siripanoosatien and Pol.Col.Kidanun Komkhum attended all the meetings. The following matters were summarized:1. Review the quarter financial statements and the 2012 financial statements, question and listen the auditors regarding the accuracy and reliability of the company’s financial statements and the sufficieney of disclosure of important information, and the change in accounting principles. The Audit Committee were opinion that the company’s financial statements was accurate in accordance with the generally accepted accounting principles, which the auditors presented the report unconditionally.

2. Consider the results of internal audit and internal control evaluation, assessment and analysis of system potential risks; they approved that the company provided effective internal control appropriately.

3. Ensure that the report is in compliance with the requirements of SET, the regulations of SET, the laws on related business, and the company’s rule and regulation; they were opinion that the company follows the law, rule and regulation effectively and continually.

4. Review and comment on entering the connected transaction or any transaction that may cause the conflict of interest, to ensure the compliance with the SET requirements. By consideration consider the appropriateness of the details of the transaction are fair and reasonable to the shareholders.

5. The Audit Committees reviewed the performance undertaken by the auditors of the Ernst and Young Co., Ltd. They were opinion that auditors proved to so well qualified, professional and autonomous that they were presented to the Board of Directors for approving and appointing Mr.Sophon Permsirivallop, Certified Public Accountant (Thailand) No. 3182 and/or Ms. Rungnapa Lertsuwankul, Certified Public Accountant (Thailand) No. 3516 and/or Mr. Chayapol Suppasedtanon Certified Public Accountant (Thailand) No. 3972 and/or Miss Pimjaj Manitkajonkit, Certified Public Accountant (Thailand) No. 4521 as auditor for year 2013.

6. Review and approve the 2013 internal audit plan, focusing on the internal control evaluation, and potential risk assessment of main activities of business operation.

(Mrs.Pilai Piemphongsarn ) Chairman of Audit Committee 28 February 2013

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Annual Report 2012 Metrostar Property Public Company Limited

ORGANIZATION CHART

Board of Directors Audit Committees Managing Director/CEO Internal Audit Executive Vice President

Business Development, Marketing and Sale Department

04

Secretary to MD

Legal Department

Project Government Finance Accounting Personnel Development Liaison Department Department and Department Department Administration Department

Annual Report 2012 Metrostar Property Public Company Limited

Board of Directors and Chairman of the Board

1. Mr.Chatchaval Jiaravanon Chairman of the Board 2. Mr.Veera Burapachaisri Director, Chief Executive officer and Managing Director 3. Mrs.Vipavadee Burapachaisri Director and Executive Director

4. Miss Pimjai Burapachaisri 5. Mr.Thanadet Kupvong

Director Director, Vice President-Financial and Acting for Vice President-Purchasing

05

Annual Report 2012 Metrostar Property Public Company Limited

Director and Audit Committee

1. Mrs.Pilai Piamphongsarn 3. Mr.Phaiboon Siripanoosatien 4. Pol.Col.Kidanun Komkhum

06

Director and Chairman of The Audit Committee Director and Member of The Audit Committee Director and Member of The Audit Committee

Annual Report 2012 Metrostar Property Public Company Limited

Management Team

1. Mr.Damri Pattana-anake 2. Mr.Surath Parichartrungruang

Executive Vice President-Business Development Vice President-Project Development

3. Miss Piyarat Watcharapongvinich Vice President-Accounting 4. Miss Thiranan Sangphungtham Assistant Vice President-Coordinated Affairs

07

08 Age Education Name-Surname, (Year) Background Position Mr.Chatchaval Jiaravanon 1 50 - Bachelor of Business Chairman of Board Administration, University of Southern California, USA - Director Accreditation Program (DAP)

Family Share Holding Relation with Management (%) -

No

Period 2004 - Present 2007 - Present 2004 - Present 2003 - 2006 2002 - 2006 2002 - 2007 2001 - Present 2000 - Present 2000 - Present 1993 - Present

Working Experience for past 5 years Position Name of Organization/ Business Nature Chairman of Board Metrostar Property Pcl. Chairman of Board and Finansia Syrus Securities Pcl. Associate Director, Board of Associate CP Group Company Directors Independence Director Saving Bank Director Saving Bank Director Syrus Securities Pcl. Director and Member of Ticon Industrial Connection Pcl. / The Audit Committee Construction Factories for Rent in Industrial Estate Managing Director and Telecom Holding Company Limited / Chairman of Managment Invest in other company Director AEON Thana Sinsub (Thailand) Pcl. / Personal Financial Service Director, Management True Corporation Pcl. Vice President

Annual Report 2012 Metrostar Property Public Company Limited

Details of Board of Directors and the Management of Company as at 31 December 2012

Name-Surname, Position Mr.Veera Burapachaisri, Director, Chief Executive Officer and Managing Director

45

- Bachelor of Business Administration-Finance Chulalongkorn University - MBA University of North Texas, USA.

1.39

Working Experience for past 5 years Position Name of Organization/ Business Nature Managing Director Metrostar Property Pcl. Director, Chief Executive Metrostar Property Pcl. Officer Metro Machinery Company Limited / Executive Director Import - Export ,Retail Heavy Equipment, Engine and Spare Parts Executive Director MTS Engineering and Rental Company Limited /Retails and Rent Machinery, Crane and Cat Director Metro Machinery Group of Company

Wife of Mr.Veera 2000 - Present Executive Director Burapachaisri 2000 - Present Director

Metrostar Property Pcl. Ravipol Holding Company Limited / Invest in Other Company

Annual Report 2012 Metrostar Property Public Company Limited

Mrs.Vipavadee Burapachaisri, Director and Executive Director

Family Share Period Holding Relation with Age Education Management (%) (Year) Background 46 - Bachelor of Mechanical 47.91 Husband of 2008 - Present Engineering University Mrs.Vipavadee 2004 - Present of Colorado at Boulder, Burapachaisri USA. 1993 - Present - MBA in Finance & Marketing University of Illinois at Urbana1993 - Present Champaign, USA. - Director Accreditation Program (DAP) 1993 - Present

09

10 Mr.Damri Pattana-anake, Executive Vice President Business Development

48

- Bachelor of Business Administration Marketing Assumption University (ABAC) - Master of Science, Computer Engineering Management, Assumption University (ABAC) - Master of Housing Development Program, Chulalongkorn University

-

No

2004 - 2006 Vice President - Marketing Metrostar Property Pcl. 2006 - Present Executive Vice President - Metrostar Property Pcl. Business Development

Annual Report 2012 Metrostar Property Public Company Limited

Age Education Name-Surname, (Year) Background Position Miss Pimjai Burapachaisri, 50 - Bachelor of Business Director Administration Management Chulalongkorn University - MBA University of Hartford, Connecticut, USA. - Director Accreditation Program (DAP)

Working Experience for past 5 years Position Name of Organization/ Business Nature Director Metrostar Property Pcl. Executive Director of Metro Machinery Company Limited / Finance and Administration Import - Export ,Retail Heavy Machinery, Engine and Spare Parts 1995 - Present Director MTS Engineering and Rental Company Limited /Retails and Rent Machinery, Crane and Cat and Executive Director MMC Leasing Company Limited / Director Leasing Metro Machinery Group of Company

Family Share Period Holding Relation with Management (%) 0.60 Older sister of 2004 - Present Mr.Veera 1995 - Present Burapachaisri

Working Experience for past 5 years Position Name of Organization/ Business Nature Vice President - Finance Metrostar Property Pcl. Director Metrostar Property Pcl. Secretary of the Company Metrostar Property Pcl. Acting for Vice President - Metrostar Property Pcl. Purchasing

2005 - Present 2008 - Present 2009 - Present 2009 - Present

Mr.Surath Parichartrungruang,2 Vice President - Project Development

44

- Bachelor of Engineering, Kasetsart University

-

No

2004 - Present Vice President - Project Metrostar Property Pcl. Development

Miss Piyarat Watcharapongvinich, Vice President - Accounting

46

- Bachelor of Accounting, Petchaburi Rajabhat University

0.09

No

2003 - 2008 Accounting Manager Metrostar Property Pcl. 2009 - Present Vice President - Accounting Metrostar Property Pcl.

Period

Annual Report 2012 Metrostar Property Public Company Limited

Family Share Holding Relation with Age Education Name-Surname, Management (%) (Year) Background Position 43 - Bachelor of AccountingMr.Thanadet Kupvong, No Director, Vice President Finance The University Finance and Acting for Vice of The Thai Chamber of President - Purchasing Commerce - MBA in General Management, NIDA - Director Accreditation Program (DAP)

11

12 Period 2004 - Present 1999 - Present 1999 - Present 1999 - Present

Working Experience for past 5 years Position Name of Organization/ Business Nature Director and Chairman Metrostar Property Pcl. of The AuditCommittee Chief of The Company Audit and Management Consultant Co.Ltd,.

Member of The Audit Crown Seal Pcl. and Thaivivat Committee Insurance Pcl. Member of The Audit Thai Wiwat Assurance Pcl. Committee

Annual Report 2012 Metrostar Property Public Company Limited

Family Share Holding Relation with Age Education Name-Surname, Management (%) (Year) Background Position Mrs.Pilai Piampongsarn, 76 - Bachelor of Accounting, No Director and Chairman of The Chulalongkorn University Audit Committee - Certified Public Accountant (Thailand) (CPA. No.2336) - Certified Internal Auditor Honorary from Institute of Internal Auditors (CIA. No.30861) - Director Certification Program (DCP)

Period 2009 - 2010 2009 - Present 2008 - Present 1997 - Present 2008 - Present 1997 - 2012 2011 - Present

Working Experience for past 5 years Position Name of Organization/ Business Nature Director The Government Saving Bank Director ACL Securities Co., Ltd. Director and Member of Metrostar Property Pcl. The Audit Committee Director Finansia Syrus Securities Pcl. Director Electricity Generating Pcl. Director Trinity Plus Co., Ltd. Executive Director Office of Small and Medium Enterprises Promotion (OSMEP)

Annual Report 2012 Metrostar Property Public Company Limited

Family Share Holding Relation with Age Education Name-Surname, Management (%) (Year) Background Position Mr.Phaiboon Siripanoosatien, 49 - Bachelor of Engineering, No Director and Member of Chulalongkorn University The Audit Committee - Master of Arts (Political Science), Sukhothai Thammathirat University - Graduate Diploma in Public Law and Management, King Prajadhipok ’s Institute - Diploma in Politics and Governance in Democratic Systems for Executives, King Prajadhipok ’s Institute - Diploma in High Level Executive, Capital Market Academy - Director Certification Program (DCP) - Audit Committee Program (ACP)

13

14 Note : * Share holding as at 07 February 2013 1 Mr.Chatchaval Jiaravanon as Director and Chairman of Board resigned from The Company since 1 March 2012 2 Mr.Surath Parichartrungruang as Vice President - Project resigned from The Company since 1 November 2012

Annual Report 2012 Metrostar Property Public Company Limited

Age Education Name-Surname, (Year) Background Position Pol.Col. kidanun Komkhum 46 - Bachelor of Business Director and Member of Administration-Accounting The Audit Committee Chulalongkorn University - MBA English Program Bangkok University - 88th Applied Psychology Operation Staff Course - 52nd Superintendent Course - Director Accreditation Program (DAP) - Audit Committee Program (ACP)

Working Experience for past 5 years Family Share Period Position Name of Organization/ Holding Relation with Management Business Nature (%) No 2010 - Present Director and Member of Metrostar Property Pcl. The Audit Committee 2009 - Present Superintendent Royal Thai Police Accountancy 1 Sub - Division Accountancy Division 2008 Superintendent Royal Thai Police 2007 ADC to Deputy Chief of Royal Thai Police Royal Court Security Police

Annual Report 2012 Metrostar Property Public Company Limited

General Information Company Name Registered Capital Paid up Capital Par Value Business Type Head Office Branch Registration No. Telephone Facsimile Website

Metrostar Property Public Company Limited 607 Million baht 466,900,000 shares 1 baht per share Property Development 1758/4 Sukhumvit road, Bangjak, Prakhanong, Bangkok 10260 1 Soi Suanplu, Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 0107547000869 (Old Registration No. 0107574700864) 02-742-7887 02-742-7557 www.metrostarprop.com

Other Reference Share Registrar :

Thailand Securities Deposity Company Limited 7th Floor Stock Exchange of Thailand 62 Building, Ratchadapisek Road, Klongtoey, Bangkok 10110 Telephone 02-229-2800

Auditor

Mr.Sophon Permsiriwanlop, Registration No.3182 Ms.Rungnapa Lertsuwankul, Registration No.3516 Mr. Chayapol Suppasedtanon, Registration No.3972 Ms.Pimjai Manitkajohnkit, Registration No.4521

:

CPA (Thailand) CPA (Thailand) CPA (Thailand) CPA (Thailand)

Ernst & Young Office Company Limited 193/136-137 33rd Floor, Lake Ratchada Tower, Ratchadapisek Road, Bangkok 10110 Telephone No. 02-264-0777 Fax. 02-264-0789-90

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Annual Report 2012 Metrostar Property Public Company Limited

Business Profiles Corporate History and Main Development The Company was established on 22 August 2000 by Mr.Veera Burapachaisri with initial paid up capital of five million baht under the name of MTS Property Co., Ltd. Afterward, the Company changed its name to Metrostar Property Public Company Limited on 24 March 2003. The objective of the Company is to develop property projects principally in central business district (CBD) and prime area. In the year 2000, the Company developed the first project under the name of Silom Terrace by purchasing and redeveloping an unattended incomplete building which its former owner faced financial difficulty and was a non-performing loan during the economic crisis. Silom Terrace was the 8 storey condominium located on Soi Saladeang 2 with project value of 341.87 million baht. The project construction was completed and opened for sales in the year 2001. The key milestones of the Company are summarized as follows: Year 2003 l Increased its authorized capital from 5 million baht to 100 million baht with paid up capital of 30 million baht. The main objective of the capital increase was to purchase potential land banks for future development l Purchased land banks on Saladaeng road, then constructed and sold under the name of Silom Grand Terrace which was located in the same area with Silom Terrace February 2004 l Fully paid up for capital of 100 million baht July 2004 l Increased its authorized capital from 100 million baht to 200 million baht with fully paid up in order to pay back short-term loans due at the end of the year 2004 August 2004 l Started the construction of Saint Louis Grand Terrace l Increased its authorized capital from 200 million baht to 300 million baht September 2004 l Became a public company limited and increased its authorized capital of 170 million baht thus its total capital was 470 million baht to prepare for the initial public offering of 150 million baht and for the registration in the SET. The capital of 20 million baht was reserved for the exercise of warrants offered to the management and employees of the Company June2005 l Started the construction of Marriott Executive Apartments Sathon Vista, Bangkok July 2005 l Started the construction of Baan Ravipa Sukhumvit (Townhouse) project in Soi Udomsuk October 2005 l Initially traded of the Company’s stocks in the SET May 2006 l The change of the par value of the company’s share from 2 baht per share to be 1 baht per share as the resolution of the 2006 Annual General Meeting of the Shareholders held on 25 April 2006 and increase the Company’s registered capital in amount of 140 million baht to reserve for the conversion of convertible debentures so the existing registered capital of baht 470 million baht to be 610 million baht July 2006 l The Company was nominated to be “Best Newly Listed Company” from SET AWARD 2006 August 2006 l Purchased land around Sukhumvit road to develop Metro Avenue Sukhumvit 66 December 2006 l Purchased land around Ratchayothin junction to develop Metro Avenue Ratchayothin March 2007 l Grand Opening Metro Avanue Ratchayothin and Metro Avenue Sukhumvit 66 November 2007 l Changing name of Sathorn Terrace to Marriott Executive Apartments Sathorn Vista, Bangkok

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Annual Report 2012 Metrostar Property Public Company Limited

December 2007

l l

July 2008

l

September 2008

l

December 2008

l

March 2009

l

June 2009

l

January 2010

l

December 2010

l

Planning to set up Property Fund As at 31 December 2007 The company have paid up capital million baht 459.11 due to exercised ESOP warrants 3 times in amount million baht 9.11 To sell Land Bank on Sathorn road area 1,750 sq.wah in sale value million baht 1,400, the Company got profit from sale land in amount of million baht 737.40 The Company was announced to be a Good Property Development Certificate of 2007 - 2008 form Office of the Consumer Protection Board (OCPB) As at 31 December 2008 The company have paid up capital million baht 466.90 due to exercised ESOP warrants in the year amount million baht 7.78 Construction of Marriott Executive Apartments Sathorn Vista, Bangkok completed and to start operation St. Louis Grand Terrace Project received The Outstanding Architecture Award, the 2008 type Residential Building from Her Royal Highness Princess Maha Chakri Sirindhorn which was selected by The Association of Siamese Architects under the Royal Patronage of His Majesty the King.

To sell Land and Building around Ratchayothin junction area 5,921 sq.wah in sale value million baht 681.

To sell Land and Building on Sukhumvit road area 1,832 sq.wah in sale value million baht 513.

Overall Business Profile The Company focuses on property development mainly in the central business district and prime area and the Company then design the types of project in order to fit with the characteristic of each area. For instance, Silom and Sathorn areas are appropriate for the development of residential condominium since those areas are the central business district that where the number of land banks are limited and a lot of office buildings are located but the supply of residential condominium are shortage. The Company started developing “Silom Terrace� as its first real estate project by purchasing and redeveloping an unattended incomplete building and the Company accomplish in the sales of that project. Besides The Company have policy to extend to property for rent, in year 2010 the Company have the projects for rent on operating. l

Marriott Executive Apartment Sathorn Vista, Bangkok is 5 stars serviced apartment which is 31 storey building located in 1 Soi Sathorn 3, South Sathorn road, Tungmahamak, Sathorn, Bangkok.

Besides, the company is looking for potential land to develop other projects in the future for the growth of company.

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Annual Report 2012 Metrostar Property Public Company Limited

Revenue Structure 2010 2011 Million % Million Revenue from the sales of properties 31.65 9.90 Rental and services income 110.23 34.47 153.89 Gain from sales of land, construction 175.57 54.90 0.04 in progress and equipment* Other revenues 2.32 0.73 9.91 Total revenue 319.77 100.00 163.84 Types of Revenue

%

93.93 0.02

Million 190.19 0.05

6.05 100.00

5.75 195.99

2012

% 97.04 0.03

2.93 100.00

Note : *Gain from sales of land and construction in progress. The Company amortizes the assets

In the past, the Company’s main revenues is only sales of property, in year 2009 the Company have started rental and services income from Marriott Executive Apartment Sathorn Vista, Bangkok which is the first residential for rent project which completed construction and started to operate since March 2009 and will generate continually revenue to the Company in the future.

Business Objective The Company aims at being the leader in residential property development industry by providing customers with high quality projects that satisfy the need of the Company’s targeted customers. The Company focuses on property development in central business district and prime area, both inside and outside Bangkok included with area near BTS and MRT line. The types of projects are designed to fit with the characteristic of each area e.g. condominium, townhouse, single-detached house, apartment, hotel and resort. The business principle of the Company is “C C Q” or Concept, Class and Quality, which means the unique concept of project development with high quality, high standard of living and full facilities to attract class B up customer target groups.

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Annual Report 2012 Metrostar Property Public Company Limited

Present and Future Projects Business characteristic The Company develops property projects in central business district and prime area, which fully equipped with a circle of well facilities for both transportation and living. The Company develops property projects both for sale and rent such as residential properties, office buildings, commercial buildings, or others as follows: - Condominiums: The Company will select to develop both low-rise and high-rise condominiums in potential central business district, prime area and along route BTS and MRT. From the year 2000 to the year 2004, the Company had launched three condominium projects in the central business district, namely, Silom Terrace, Silom Grand Terrace located at Soi Saladang 2 and Saint Louis Grand Terrace located at Soi Sathorn 11.

- Properties for rent: In the area selection, the Company will focus on central business district in developing projects such as residential properties, office buildings, and commercial buildings. The above areas are in the high demands of high level executives both foreigners and Thai. In the year 2005, the Company started the construction of Sathon Vista, Bangkok - Marriott Executive Apartment (Soi Suanpul) located at Soi Sathorn 3 as the first A-class serviced apartment project of the Company which construction completed and started to operate since March 2009.

Besides the Company is looking for attractive land both in prime area and tourist destination area to develop good quality project.

- Residential properties, house and land: The Company has recognized the importance of the needs of various groups of potential customers. The Company, then, had expanded marketing bases to respond to potential customers’ needs in various communities. Thus, in the year 2005, the Company developed Townhouse project located in Sukhumvit area namely Baan Ravipa Sukhumvit.

Past projects 1. Silom Terrace (Condominium) Location Silom Road Soi 2, Silom , Bangrak , Bangkok Project Area 1-1-1 rai Project Detail Condominium 8 storey 2. Silom Grand Terrace Location Silom Road, Silom , Bangrak , Bangkok Project Area 737.6 square wah Project Details Condominium 20 storey

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Annual Report 2012 Metrostar Property Public Company Limited

3. St.Louis Grand Terrace Location Sathorn Soi 11 , South Sathorn Road , Yannawa, Sathorn , Bangkok Project Area 820.0 square wah Project Details Condominium 27 storey 4. Baan Ravipa Sukhumvit (Townhouse) Location Soi Udonsuk 39/1, Sukhumvit road, Prakhanong, Bangkok Project Area 7-2-37 rai Project Detail 75 units of 4-storey townhouse with land size of 24 - 38 square wah and usage area of 244 - 306 square meter

Current projects Residential for Sales The Supply of land for project Residential for Rent 1. Marriott Executive Apartment – Sathorn Vista Bangkok (Sathorn Terrace) Location Project Area Sale Area Project Detail Project Highlight

1 Soi Sathorn 3 (Suanplu) , South Sathon road, Thoongmahamak, Sathon, Bangkok 834.30 square wah 17,290 square meter 31-storey service apartment for rent High quality residential building five stars for rent in central business district of Bangkok included with full facilities.

Number of Units l Residential zone: 184 units, unit size 61 - 163 square meter Target customers group Businessmen and working people in Sathorn area (class A to A+) and Tourist would like to stay in full facilities room and long stay.

Project Value Approximately 2,500 million baht Investment Value Approximately 1,800 million baht Operation Period Since March 2009 Construction Progress 100% (approximated by the project consultant) Construction Period Started in June 2005 and complete in March 2009

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Annual Report 2012 Metrostar Property Public Company Limited

For each project development, the Company concerns primarily on the standard of living of residents.

Therefore, the Company puts very high attention on project location selection by considering several factors such as the convenience of transportation such as near BTS stations and MRT station, major important places and attractions nearby such as academic institutions, hospitals, department stores, financial institutions, and office building. In addition, the Company also pays attention to project architecture design focusing primarily on usage space. Therefore, in every project, the Company provides full public facilities such as swimming pool, fitness room, sauna room, study room, play room, and park, etc. Besides, to serve modern lifestyle of new generations, the Company also provides high speed broad band internet in every project.

Regarding security systems, the Company not only put in place high standard fire protection system in every project such as sprinkles, smoke detectors, heat detectors, fire hose reels, air compressions, stairs, and automatic warning systems, but also provides 24-hour security guard, key card system, and visualize access control security system.

Besides, in the future, the Company will provide post-sales services by acting as an agent of room owners in acquiring tenants, setting appropriate rental rates, working on administrative work on agreement preparation between tenants and room owners, including designing room decoration.

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Annual Report 2012 Metrostar Property Public Company Limited

Industry and Competition Industry and trend Following the great flood of the late 2011, the real estate operators in Bangkok and vicinity have sold the increasing number of condominium units in the year 2012, especially in non-flood residence inner Bangkok, opposite to the new townhouses which the units sold are lesser. In addition, it is obvious that the urban operators have launched the new residence projects in up-countries increasingly. However, after the relief of flood-related anxiety, the operators turn to launch the townhouse residence project increasingly while number of the condominium projects opened has been declined by the second half of the year.

In addition Bangkok and its vicinity, other provinces are potential in the residence project development, for examples, Northeastern and Northern provinces which are situated in the main telecommunication routes including East-West Economic Corridor, highway, and new motorway, hi-speed train routes, airports with convenient flights, and Bridge over the Mae Khong River, etc.

The residential market situation in 2012 is relatively fair as resulted of the benefits gained from the government measures on soft loan during the mid year and the first house policy and customer confidence that has recovered to normal situation by the second half of the year, thereby resulting that the financial institutions have the newly-released home loans increasingly.

In 2013, Bangkok metropolitan is predisposed to enforce the principle city plan prior to the former city plan which has been extended a validity which will expire by the mid May 2013. This brings forth the clearness in designating the operator’s business plan. New city plan concentrates the strictness in certain areas. Currently, most operators have still not hurriedly acquired the land plots, however, when the operation plan has been more explicit, it is expected that acquisition of the land will be purchased for development immediately.

A continuous shortage of labors is a hindrance for residence markets in the year 2013; the operators are more likely to cope with such a shortage by inventing or supplying the finished walls and parts to reduce the dependency on labors.

That a growing supply of the residences in some areas, along with speculation and hot money influx from overseas may be a risk the government sector has to take control and implementation of the economic policy.

Such factors as hot money influx, household loans and inflation, along with political factors might cause the real estate sector become vulnerable in the future (Source: Journal of Real Estate Information Center; 8th Year, Vol.26, Jan-Mar 2013)

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Annual Report 2012 Metrostar Property Public Company Limited

Diagram and tables represent newly completed and registered housing units in Bangkok and vicinities

Types/Year Detached house Duplexes Townhouse and Commercial Building Condominiums Total

2008 34,618 2,296

2009 28,998 1,138

2010 31,687 1,520

14,616 34,049 85,579

11,116 13,767 53,725 59,919 94,977 106,893

(Unit : Unit) Increase 2011 2012 E (Decrease) % 31,510 10,030 (68.17%) 1,456 998 (31.46%) 14,016 34,734 81,716

10,603 58,089 79,720

(24.35%) 67.24% (2.44%)

Note E = Estimate Source : Real Estate Information Center : Prachachat Business newspaper 24th- 27th January 2013, Years 35, No.4491 : Annual Report 2011 / Real Estate Information Center

As shown in Table, information from January to November, according to the Prachachat newspapers 24th - 27th January 2013, the total completely-constructed residences are approximate of 79,720 units, decreased by 2.44% from 81,716 units in 2011, including single house, twin house, townhouse, commercial building, and condominium, respectively. The number of the condominiums has growing mostly, 25,868 units, or 67.24%, possibly because of the BTS and MRT extensions. In responsiveness to those customers who are not desirous to continue a living in flood zone and to accommodate those who are seeking for the cheaper condominium, the most declined ratio includes single house, decreased by 21,480 units or 68.17%, mainly caused by the tendency of rising interest rate and the loan-to- value measures set out by the Bank of Thailand, city plan, and new property valuation which take effect within 2012, these may affect the project cost and the operators’ stiffer competitions.

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Annual Report 2012 Metrostar Property Public Company Limited

Diagram and tables represent the tranferreds properties in Bangkok and Vicinities

Types/Year Detached house Duplexes Townhouse Commercial Building Condominiums Total

2009 33,268 4,577 51,892 15,389 56,114 161,240

2010 32,357 5,486 56,226 16,250 73,441 183,760

2011 26,808 4,124 46,481 12,498 60,278 150,189

2012 E 26,700 4,100 46,000 12,800 66,700 156,300

Increase (Decrease)% (0.04%) (0.58%) (1.03%) 2.42 10.65 4.07

Note E = Estimate From : Real Estate Information Center : Annual Report 2011 / Real Estate Information Center

As shown in Table below, it indicates demand (transfer of ownership) by type of residential. In 2012, transfer of ownership for residences in Bangkok and vicinity was 156,300 units totally, increased by 4.07% from the year 2011.Regarding to the newly-released loan throughout 2012, it is expected that the financial institutions release the new loans up to approximate 400,000 million Baht, higher than previously expected and up to 16% higher than consolidated released loan in 2011. Obviously, the loan for minor operators (Post Finance) increases sharply in 2012 from the year 2011 resulted from the government measures on low interest loan and the first home policy.

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Annual Report 2012 Metrostar Property Public Company Limited

Factors supporting the demand of customers to purchase condominiums: 1. Lifestyles of people have changed. The transportation is relying more on BTS and MRT. 2. There are lots of low-price condominiums opening especially in the area along BTS and MRT routes, which attractive to middle-income groups to low.

3. Condominium is the residence that response to the need of people that stay alone or family without children.

It is convenient for the transportation. The residents do not have to face traffic problem as most of projects are opened in the area along BTS and MRT routes.

4. Returns on Investment from the speculation on condominium prices by purchasing and selling in the future are higher than interests received from banks deposits.

5. The government policy for urging the real estate property was aimed to contribute more people to buy the residences.

6. Nearby large utilities, such as large retail Mall, Hospital, School, Main Road.

7. Political and Economic situation both inbound and outbound

Competition Condominium Market Condominium projects have gradually been introduced into the markets since 2007 until present, especially the medium and low price condominium situated along the BTS and MRT way. The projects have been accepted by the customers greatly over the past year and many projects have been debut until the past 2012 and it is expected that the tendency will be continuous until 2013, particularly in the potential province because the customer need is relatively high and competition has been high in some areas, especially those located along the BTS way and non-risk flood zones, as well as BOI-promoted residence projects at the reasonable price of less than 1,000,000Baht, and Government Housing project for those low-income and middle-income population.

The completeness and readiness of information as well as self-adjustment of property developer companies as abovementioned are key factors that create confidence on residential market. This confidence was not only from people who intended to purchase residential properties, but also financial institutions that granted mortgage loans, project development loans. Those factors also created confidence to the government mechanism that participated in the supervision of residential market both directly and indirectly such as the Bank of Thailand, Ministry of Finance, and Ministry of Interior.

Serviced Apartment Market The growing foreign investment over the past year and the growing number of the foreign firms established in Bangkok is currently becoming a factor that boosts the growth of the serviced apartment business.

During 2007-2010, the serviced apartment business has been growing greatly. Over the past 4 years, number of the serviced apartments entering into the markets accounts for approximates 5,000 units. As major customer group is the foreigners, the same period when the global economics crisis occurred, the number of the checked-in foreigners decreased sharply, resulted that many operators have to suspend its projects or convert the business types to others. Thus, the number of the serviced apartments entering into the market accounts 1,380 units only while 150 units are scheduled to complete by 2013.

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Annual Report 2012 Metrostar Property Public Company Limited

Overall, serviced apartment business growth has been obvious for the competition is relatively high in Bangkok territory while some foreigners prefer to reside at the highland apartments rather than service apartments, because the rental is cheaper, but located in the same location with the same facilities. These two kinds of business remain a major rival to the serviced apartment this year. Even though the competition will be stiffer in the future, it is expected that the operators will increase 10% rental and following the opening the ASEAN ECONOMIC COMMUNITY (AEC), it will thrust the market growth in the future.

Supply apartment chart the quarter 4/2012 SUPPLY BY LOCATION, Q4 2012 Other Areas 11%

Central CBD Area 13%

Late Sukhumvit Area 12%

Central Lumpiny Area 19%

Early Sukhumvit Area 40%

Southem Fringe Area 5%

From : www.colliers.co.th.

The diagram represented the number of apartment service and number of guests, check-in rate for Thailand apartment during 2011 - 2012

Occupancy Rate

OCCUPANCY RATES BY LOCATION, 2010 TO Q4 2012 BY QUARTER

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Q3 2011

28

Q2 2011

From : www.colliers.co.th.

Q1 2011

100% 80% 60% 40% 20% 0%

Annual Report 2012 Metrostar Property Public Company Limited

Diagram represent the number of foreign tourists (2010 - 2011)

Number of Expatrlates

NUMBER OF EXPATRIATES IN BANGKOK, Q4 2012 64,000 62,000 60,000 58,000 56,000 54,000 52,000 50,000 48,000 46,000 44,000 42,000 40,000 Q1 Q2 2010 2010

Q3 2010

Q4 Q1 2010 2011

Q2 2011

Q3 Q4 2011 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

From : www.colliers.co.th

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Annual Report 2012 Metrostar Property Public Company Limited

Factors Influencing the Real Estate Industry Tendency in 2013 Political situation

Over the past 2012, internal political factors have changed into a positive direction; however, close follow-up of the political situation is still needed. If the political situation has been more stable, it would be a factor causing a positive effect on residence market tendency and the consumers may be more confident in making a decision on buying the real estates.

Government Policies Over the past 2012, the government has implemented the policies that promote the business as whole. They include adjusting a minimum wage of 300Baht, B.A salary of 15,000 Baht, tax abatement for those who buy the first house priced under 5,000,000Baht, long-term water management measures, less than 95% LTV measures which will take effect for the horizontal house projects by 2013, and the adoption of the property valuation 2012-2015.

However, these policies and measures may have positive and negative effect on the real estate industry.

Interest Rate The U.S.A economic and financial crisis has affected the countries worldwide, including Thailand. The interest rate decreased by the first half of the year to 0.75-1.00 Baht and become static in the second half of the year 2008.

Following the second half of the year 2008, the U.S.A economic has recovered along with other countries gradually.

The buying power comes from potential consumers who need for residence primarily. However, the interest rate in the second half of the year 2010 increased slowly until 2011 and constant in the rang later this year 2011. Because the flood situation occurred. However, after the flood situation begins to normal. In 2012 interest rate still stable, However in 2013 interest rate trend depends on The Bank of Thailand has a period of time to evaluate the economic condition prior to signal the strict control on finance by increasing interest rate If the interest rate tends to rise up, it’s possible that the operator’s financial cost will rise. Despite higher price adjustment of the residence, such situation could not recover the real estate industry because it’s directly affected the buying power and loan repayment. Consequently, the customers may be slow down buying the house because they are unsure of whether the economic situation would be recovered as reported or not.

Fuel Price Retail price for fuel oil is a major cost for any business. As Thailand’s logistic system has neither been perfect nor cost-efficient as compared to that of other countries, the business has been strongly affected by fuel hike has.

In the past year 2011 fuel price start stratic.had insignificant impact on product cost, but in the year 2012 from the political events that occurred outside the country, especially fuel production, the countries in the Middle East.

The constructing material price was adjusted highly, the real estate entrepreneurs have to adjust higher price to compensate the higher cost consequently.

As fuel price has been steady in 2011, the operators and consumers have continuously been confident of the investment and consumption. Even though the fuel price has increased but not sharply in 2012, it is essential to assess the economic situation for the year 2013 of how it would be affected by the Central East political situation, particularly the fuel-producing nations, consequent effect of price in Thailand, and constructing material cost.

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Annual Report 2012 Metrostar Property Public Company Limited

BTS and MRT construction project In 2011, the consumers became assured of BTS skytrain as a fundamental necessity for Bangkok metropolitan and its vicinity. The government sector has to complete the construction whether be the Airport Link which operated and service in 2010. It’s expected that the project in adjacent to the BTS will be given more attention due to the linkage between the BTS and MRT. Metro extension project On Nuch - Baring the service will be available in 2011. In addition, the government has approved the purple BTS project (Bangsue - Bangyai), and red BTS project (Bangsue - Talingchun) which is expected to be completed by 2014. The government also proclaimed to construct additional BTS projects continually 12 route with 20 year construction period (2010-2029). The BTS new routes will not be different from the BTS carried out by former government.

Therefore, in terms of the study for project development location and the study for residential property location selection, the BTS and MRT routes are just like relocation line for potential residential areas. Thus, development projects including other types of property projects linked to mass transit system such as BTS and MRT are expected to success as planned.

In addition, the investment in mass transit system, BTS and MRT, also stimulated the growth in economy and increases purchasing powers. Thus, it helped encouraging consumers to purchase residential properties more 2011rapidly. The investment policy to stimulate economy of new government was also another factor that stimulated property market.

Construction cost The announcement of land appraisal which is effective from June 1, 2012 because flood that occurred dur-ing the end of the year 2011 has resulted the referred price mainly has been adjusted highly and even so highly in some plots that causes higher cost in form of transfer fees and others. These factors cause the operator’s higher cost.

The current issue is the appraised value of real estate development business, has announced several major with new housing prices increased by 5-10% . Because the employer has higher costs, both from construction material prices and adjusting the minimum mage up to late. With the middle years 2013. The Government will force using the new city law chart which have stringent in some area. Allowing employers to have the cost of environmental impact assessment (EIA). To reduce the impact that will occur including land price, especially in a city scale. In addition, The labor shortage is on of problem which have to be solve.

Condominium Market Adjustment The condominium operators and developers have to make constant adjustment. The costly to premium condominium have to reduce in number and change to pay attention to medium-price condominium, for examples, an increased number BOI projects. The anxiety of the bubble economics during in the year 2010 - 2011 has been existent, but lesser than a year earlier. This also affected the consumer’s decision-making on buying the condominium because the construction must be complete before moving in. Should consumer’s anxiety of the bubble economics diluted, it then comes positive consequence of condominium market as whole.

However, as there was high proportion on the investments in term of purchasing condominiums for rent; thus, overall residential properties for rent markets such as service apartments, apartments, and hotels should also be taken into consideration. In overall, there was a higher competition in residential properties for rent markets especially those targeting on foreign customers or in serviced apartment markets due to the increase of new supplies both on serviced apartments or hotels and resorts.

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Annual Report 2012 Metrostar Property Public Company Limited

Domestic renters markets or apartment markets were competing with condominiums for rent that were bought as investments in significant volumes, both in forms of individuals, groups, and juristic persons. Higher competitions resulted from condominiums sold since the year 2008 - 2009. The condominiums constructions were completed and ready to move-in the year 2010-2011 and will complete several projects launched since 2010.

The 2012 real estate business has been growing consistently with the economical recovery and has been promoted by the government policies; for instances, the first house policy, soft loan, new BTS routes and its extensions. Because of some complicated factors, the tendency of the real estate business in 2013 has been given an attention; e.g. changes in house price, land cost in reference to the property valuation, which will take effect on July 1, 2013, the proclamation of new city plan which is more strict, constructing cost, adjusted minimum wage, as well as shortage of workers facing the operators in the stiff competition, all these have resulted of the positively facilitating factors, thereby consequently the real estate operators have debut the more new investment projects than a year earlier. In addition, the loan control measures set out in 2010 will enforce the sale and purchase agreement in 2013. They include Loan to Value (LTV ratio) set out by the Financial Institution Policy Commissions, the Bank of Thailand to control and protect the risks of the bubble economics in the real estate business as resulted of the loan rendered by the financial institutions.

Marketing policy and market characteristic Characteristic of target customer group The current property development projects of the Company are condominium projects located primarily in downtown area, especially central business district area such as Sathorn and Silom, etc. Therefore, the main target groups of the Company are businessmen, guardians of students, and working people who demand convenience transportation to those areas to avoid traffic jam during rush hours. The Company focuses on the target groups of class B+ or above or families with household income of more than 80,000 baht per household per month. In addition, the Company also has a policy to focus on those target groups to expand the businesses, especially to new generations such as businessmen, guardians of students, and people who work in central business district areas who has income of approximately 25,000 baht or above per month, including customers who like social and city lifestyles which is convenient residential properties with full facilities, and convenient transportation.

Sale and distribution channel Main distribution channel of the Company is the direct sale via a sale office of each project. The Company will build sale office around project site. The Company has several types of public relations such as billboards, posters, and leaflets, etc. In addition, the Company’s public relations also come up in various types such as project grand opening, marketing promotion campaigns, and advertisements. The Company will arrange more public relations via many distribution channels in the future in order to create the brand awareness on the Company’s name and projects among customers. For the past projects, the Company had got good responses from customers because of excellent locations and all units are sold out in a short period of time.

Competitive strategy and strength of the Company Because of many supporting factors, the company has a high potential to compete with other competitors in the industry. Details of supporting factors are as follows: l Good location - prime area One of the most important factors for the success of property development project is the location. The Company realizes that location of the project is the most important factor that influences purchasing

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Annual Report 2012 Metrostar Property Public Company Limited

decision of target customers. Therefore, the Company focuses on property development projects in the areas close to BTS and MRT stations or in central business district such as Sathorn and Silom, also in other prime area. The Company currently possesses 5 projects under development located in central business district area and MRT and BTS extension areas. The Company also is searching for new land in potential location for future projects development. l

l

l

l

l

High quality project with full facilities Apart from good location, which is considered an important factor for the success of property project, quality of projects and high standard of living of the residents are also important factors that affect purchasing decision of customers. When developing the project, the Company takes into consideration of space usages and conveniences of residents. Thus, the Company provides full public facilities in every project such as parking lots, swimming pools, jogging paths, fitness rooms, sauna rooms, parks, and conference rooms. High-speed broad band internet technology is also provided for internet connection.

Regarding security system, the Company puts in place not only high standard of fire protection systems in each project such as sprinkles, smoke detectors, and heat detectors, but also provides visualize access control security system in every project.

Professional and experiences of management The management of the Company has solid experiences in property development industry especially condominium development projects because they were in management level of other property development companies and participated in several major property development projects (details in Annex 1: Profile of directors, managements, and executives). The success in development projects of the company such as Silom Terrace project the first development project in the year 2000, Silom Grand Terrace project, Baan Ravipa Sukhumvit project and Marriott Executive Apartment - Sathorn Vista Bangkok project.

Although some time will be in a stagnant economy it is proven as well.

Good and efficient after-sale service The Company has a good and efficient after-sale service by acting as an agent of room owners in decorating the rooms, acquiring tenants, setting appropriate rental rates, and doing administrative works on agreement preparation between tenants and room owners. Currently, the Company provides such after-sale service in Silom Grand Terrace project, Saint Louis Grand Terrace project and Baan Ravipa Sukhumvit project.

On-going marketing research To monitor on-going changes of customers’ needs, the Company continuously does the researches both by internal units and by applying member of real estate information center to acquire relevant information. The Company also consistently gathers comments and voices from project customers and general customers. Such information would be regularly used in reviewing the Company’s marketing plans.

Readiness in Project Development The company’s futuristic projects have been in process of seeking for prime location in both Bangkok metropolitan and vicinity nearby the BTS and MRT, and potential tourist attraction for further development of quality projects.

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Annual Report 2012 Metrostar Property Public Company Limited

Acquisition and selection of products or services Acquisition of products for sale Acquisition of land banks To acquire land banks for property development projects, the Company considers the acquisition from two major sources, which are the recommendations from acquaintances and the acquisition via agents acknowledged by the Board of Directors and both direct and indirect bidding from financial institutions. The Company places high importance on the properness and potential of the locations for property development projects. Upon receiving preliminary details of the land bank, the Company, then, identifies the suitable project design in compliance with the location, does the feasibility study, and checks related laws and regulations. If the outcomes from the aforementioned actions are feasible, the Company will identify the land price and further negotiate with the seller. The Company’s policy regarding the purchase of land bank is to immediately develop upon the purchase of the land bank since the Company would not like to have any carrying costs without necessary.

In case of land banks acquired from other companies that could lead to conflict of interest, the Company is in compliance with the inter-transactions policy as specified in Item 11.2: Future inter-transactions policy. l

Selection of consultants for construction control In acquiring consultants for construction control, the Company considers mainly on performance and reputation of consulting companies. The consulting companies should possess long-term and acceptable experiences in property development area. Generally, the Company sets the auction by selecting 2-3 well-known consulting companies to submit the proposals. l

Selection of construction contractors In acquiring construction contractors, the important criterion that the Company considered is reputation and performance of the contractors during the past years. Such contractors should possess experiences in executing projects similar to those of the Company. The aforementioned criteria indicate construction experiences, expertise, and financial status. In addition, the Company also considers current numbers of jobs under construction of the contractor. As even though possessing a lot of jobs on hand is a guarantee for the professional of such contractor, it may impact the Company’s quality assurance and project submission. l

Acquisition of construction materials In acquiring construction materials for the construction of the projects, the construction contractors must be responsible for procurement and purchasing of construction materials including for price changes of major construction materials such as bricks, rocks, cements, sand, and steels, etc in normally. The company is responsible for only the procurement of some types of construction materials, especially construction materials that are exactly countable and per unit price is high such as elevators, sanitary wares, electric generators, and telephone system, etc. This method could help the Company to control the costs of project construction.

The construction materials that the Company procures are about 4-7% of the project values. The Company normally purchases construction materials from 7-8 domestic suppliers who are business alliances of the Company. l

Construction process The construction period of property development projects of the Company is different for each project depending on size and type. Normally, the construction process and period are as follows: l

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Annual Report 2012 Metrostar Property Public Company Limited

1. Acquiring land bank: The Company acquires land bank on the potential location or prime area for property development project. The Company, usually, purchases land bank from agent or acquaintance.

2. Designing project in compliance with land location: Upon acquisition of proper land area, the Company, then, selects experienced architect with fair price to design project. The Company also takes into account space usage and facilities in the project during design.

3. Preparing for the environmental impact assessment report: Upon finishing the project design before applying for construction permission, the Company must request the registered consulting company to prepare environmental impact assessment report. Then, the report will be submitted to the Office of Natural Resources and Environmental Policy and Planning, Ministry of Natural Resources and Environment for approval. The approval period takes approximately 8 months.

4. Applying for construction permission: The next step after preparing the report is to apply for construction permission from the Public Works Department, Bangkok Metropolitan Administration. The consideration period until construction permission takes about 2 - 4 months.

5. Selecting for construction control consultant: Upon receiving the permission, the Company, then, selects the consultant to be responsible for setting fair price and controlling the construction project.

6. Arranging auction for the selection of construction contractor: The consultant prepares the fair price for auction to select an experienced construction contractor.

7. Operating the construction: The construction period of each project is different according to the size and type of the project. The construction of condominium project takes about 12 - 30 months and the construction of house and townhouse project takes about 12 - 20 months.

8. Constructing and decorating of sale office before project opening: During the construction period stated in No. 7, the Company starts renting a nearby area and requesting for approval of sale office and model room construction. At the same time, the Company prepares other tools to help promote the sales such as brochures, computer graphics, and project information, etc., as well as advertising and public relations plans. After finishing the sale office construction, the Company is ready for the formal grand opening of each project.

Environmental impact To apply for construction permission, The Company must firstly comply with related rules and regulations.

The Company must prepare environmental impact assessment report to be submitted to the Office of Natural Resources and Environmental Policy and Planning before starting the construction. The report shall indicate suitable methods to protect pollution to the environment both during the construction process and after the construction completed. For instance, during the construction, the building should be covered by canvas to protect pedestrians from dangers resulting from the fall of construction materials. When the construction completed, the building should possess central wastewater treatment system and provide sufficient and proper green areas in the building, etc.

The Company has placed much importance on various environmental measures and ensures that every project has been in compliance with the specified standards. Therefore, the Company has no additional expenses regarding the execution to control the environmental impact except consultant fee to prepare the environmental impact assessment report. The consultant fee depends on project size.

Since 2007, Regulations regarding environmental laws that aim to reduce global warming problem was issued.

These Regulations affected the application for licensing. Besides, Regulations regarding building structures that have to support earthquake situation was also issued. These Regulations made the construction costs increase around 2 - 5 percent. However, the increase of the strict regulations that may cause problems to the company, reflecting the better quality of life of consumer in the long run.

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Annual Report 2012 Metrostar Property Public Company Limited

REPORT OF FINANCIAL ANALYSIS AND OPERATION 1. Overview of Previous Operation The company launched its operation in real estate development business for condominium category since 2000 by purchasing the completely constructed project from the project owner who encountered the financial issues.

The company proceeded on executing the project brought under the name “Silom Terrace” with project value of 341.8 million Baht. Fortunately, the project units had been sold out in short time. In July, 2003 and January 2004, after achieving the accomplishment of the first project, the company had launched other two projects in the territory of business center, firstly; “Silom Grand Terrace” with project value of 1,245 million Baht, which title assignment had been made to customers during year 2006, and secondly; “St. Louis Grand Terrace” with project value of 1,036 million Baht. Its construction had completed in 2007. In 2008, overall project units had been sold out. In addition, in 2005, the company launched other two projects which included “Marriott Executive Apartments - Sathorn Vista Bangkok” (Sathorn Terrace) Apartments for rent. The first one located in the central business area at front of Soi. Suan Plu, construction was completed and began operation in March 2009 and “Rawipa House” project on Sukhumvit Road, located in community area, its project value was approximate 355 million Baht. The construction was completed in 2007, and in the year 2010 the company can close sales and deliver all to customers.

Marriott Executive Apartments - Sathorn Vista Bangkok had been completed and launched its operation by March 2009. The project generates income from rent and service continuously from the beginning of operation until present. Besides, the company continues to look for the locations in prime area surrounding the BTS sky train for a convenience of travelling and other locations in the important cities with potential tourist destinations in order to accommodate the growth of other diverse real estate projects in the future.

Since 2000, the company’s accounting cycle was August - July. The company has recognized the income by means of the due installment basis. However, from the year 2005 to 2011, the company has changed the accounting cycle into January - December, and changed the recognized income method from due installment method into recognized earning based on percentage of completion method; this is to align along with the current business of the company. Since 2011 the company has changed the accounting policy on revenue recognition in the real estate for sale development. When the company has transferred to the buyers the significant risks and rewards of ownership of the goods, this change has no impact on loss by the ended 31 December 2011 because the company has recognized the revenues from selling the real estates in all projects and has completely transferred the buyers the ownership within the year 2010.

2. Operating Results and Financial Position as of 31 December 2012 2.1 Previous Operating Results Following changing into the percentage of completion method for recognized income, the company’s financial statement has been aligned to the same method since 2004 according to the accounting cycle of January - December, which relies on the similar accounting standard that can be comparable. Major earning of the company derives from selling the real estate property.

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Annual Report 2012 Metrostar Property Public Company Limited

Revenue from selling real estate properties The revenue from selling real estate properties for the year 2012 has not been recognized because the company has no project that recognized the earning from selling.

Residential building services income As of the ended 31 December 2012, the company has revenues generating from residence project; “the Marriott Executive Apartment Sathorn Vista Bangkok”, the company’s first residence project completely constructed and launched an operation since March 2009. The residential building services income in 2012 and 2011 accounts for 190 million Baht and 154 million Baht, respectively, increased by 36 million Baht or 23.59% from the past year, as resulted of the better economic and political situation and the growing number of the expatriates and tourists; the increasing occupancy rate and increasing rental rate as continuous income for the future. In addition, the income generating from serviced apartments is revenue apart from revenue from sales which has been only major source of the revenues of the company since the past.

Other incomes As of December 31, 2012 the company earned other incomes amounted 5 THB million; consisting of 3 THB million interest income and 2 THB million miscellaneous incomes. The company’s incomes decreased by 4 THB million (or 41.65%) from the year 2011 because the company gained interest decreased in 2012.

Cost of sales Cost of sales includes the acquisition cost of land, land development cost, construction cost, and other project-related expenses and interest paid from loan for project development. As the company has no recognized incomes from sales, then it has no Cost of sales.

Cost of residential building services Cost of residential building services includes room rental cost and service cost relevant to the customers of Marriott Executive Apartments - Sathorn Vista Bangkok, which had been completed and launched operation since March 2009. In 2012 and 2011, Cost of residential building services was 115 THB million and 108 THB million, respectively, or accounted for 60.42% and 70.01% of Cost of residential building services, respectively.

As the figures shown, Cost of residential building services in 2012 was less than that of 2011 due to the company could carry out the cost management more effectively.

Gross Profit Gross profit in 2012 derived from residential building services. The company had a consolidated gross profit in 2012 and 2011 amounted of 75 THB million and 46 THB million, respectively or accounted for 39.58% and 29.99% of overall residential building services, respectively. The company’s gross profit in 2012 increased by 29 THB million from that in 2011, or increased by 63.15%. The reasons the company earned higher gross profit in 2012 was because the company earned additional gross profit from services apartment. Due to in 2012 the company could manage cost in efficiency.

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Annual Report 2012 Metrostar Property Public Company Limited

Selling and Administrative Expenses Selling and administrative expenses mainly comprises advertisement and promotion cost, employee wage, special business tax expense, depreciation, and other related expenses. Selling and administrative expenses in 2012 was 99 THB million, or accounted for 50.33% of overall earning, increased by 1 THB million from the previous year, or increased by 0.66%. Main reasons for increased selling and administrative cost of the company in 2012 was due to the increased selling and administrative cost as resulted of increased residential building service.

In 2012, the company had business cost amounted of 41 THB million, or accounted for 20.87 of total income, reduced by 9 THB million from the past year, or reduced by 17.95%, In 2012, as the company has been granted the 6-month special loan interest to alleviate the flood damages that occurred by the late 2011 from financial institutions for the Marriott Executive Apartment Sathorn Vista Bangkok project.

In 2012, the company has no expenses pertaining to corporate income tax.

Operating Profit (Loss) As of December 31, 2012 the company incurred a loss of 23 THB million, or accounted for 12.28% loss of service apartment, reduced by 28 THB million (54.88%) from previous year. The cause of decreased operating loss was that the company gained the more gross profit from service apartment, which is an extra income in addition to realization of selling the real estates only.

Net Profit (Loss) As of December 31, 2012 and 2011 the company incurred net loss of 58 THB million and net profit (loss) of 92 THB million, respectively, or accounted for 29.84% and 55.96% of net profit (loss) per gross income, respectively.

In 2011, the company incurred net loss increased by 33 THB million (36.23%) for the following reasons.

The company’s income generated by the Marriott Executive Apartment Sathorn Vista Bangkok increases 36.30 million Baht or 23.59% from the year 2011 as resulted of the better economic and political situation and the growing number of the expatriates and tourists; the increasing occupancy rate and increasing rental rate.

In addition, the operating results mentioned above, as of the ended 31st December 2012, the company incurred net loss of 0.13 THB per share (adjusted par value to 1.0 Baht per share), which was a fully diluted earning per share.

Return on Equity As of December 31, 2012 the company’s return on equity was minus 5.72%, decreased from the past year; 8.36%.

The company increased residential building services income result decreased in the net loss from operation.

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Annual Report 2012 Metrostar Property Public Company Limited

2.2 Financial Position 2.2.1 Total Assets The company’s total assets as of December 31, 2012 and 2011 valued of 1,932 THB million and 1,978 THB million, respectively, reduced by 46 THB million from the year 2011, or accounted for 2.34%. The details of the main assets were as follows. l

l

l

Land and Work in process Construction: as of December 31, 2012 and 2011, the company has no land and work in process construction because of the company has no work in process projects.

Account receivable: Net account receivables of the company in 2012 were those customers of Marriott Executive Apartments - Sathorn Vista Bangkok. The outstanding rental and service as of December 31, 2012, amounted of 8 THB million included those customers who payment remains premature.

Land, building and equipment amounted of 1,559 THB million, consisting of land, building, and overall improvements on Marriott Executive Apartments - Sathorn Vista Bangkok.

2.2.2 Sources of Funds Liabilities In 2012, the company’s consolidated liabilities grows by 939 million Baht from the year 2011, 927 million Baht in 2011, increased by 12 million Baht or 1.32%, because during the year the company has increased income from the trade payables, other current liability, employee benefit reserves as resulted of the company’s operation. However, the company has the remaining loan from the Marriott Executive Apartment Sathorn Vista Bangkok, apartment for rental project which requires an enormous investment with scheduled repayment term.

Details of the loan from financial institutions as of December 31, 2012.

Unit : Million Baht

Outstanding Beginning Principle amount Date of Types of loans st Due repayment’s Short-Term Amount 31 Dec Interest principle rate repayment condition Collateral Date of loans 2012 Loan Short-Term Loan Promissory Note Repay Loan within1 year 76 O/D Account 10 MOR (A) Long-term Loan Promissory Note Loan 1,029 818 MLR-1% Sep 05 - Jan 09 2008 - Dec 16 Project Finance (B) Total 1,039 894 Remark : (a) Land and building of Mr. Veera Burapachaisri and guarantee by Mr. Veera Burapachaisri and Mrs. Vipavadee Burapachaisri (b) Land and building of the project and guarantee by Mr. Veera Burapachaisri and Mrs. Vipavadee Burapachaisri

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Annual Report 2012 Metrostar Property Public Company Limited

Regarding to 818 million Baht long-term loans for land purchase and construction purposes, composing of “Marriott Executive Apartments - Sathorn Vista Bangkok” The loan was a project finance where repaying is scheduled upon completion of the contract it gradually repaid when income has derived from rental and service. In 2012, the partial long-term loan has been reclassified as current portion of long-term loans amounted of 76 million Baht.

In addition, the company has other current liabilities, including, account payables and other creditors for amount of 30 THB million, or accounted for 3.15% of total liabiliteies ; which mainly includes account payables, other creditors, and accrued expense. Other current liabilities amounted of 12 THB million, or accounted for 1.27% of total liabilities, which were advanced receipts from premises and resident rental in Marriott Executive Apartments - Sathorn Vista Bangkok. Non-current liabilities including long-term reserve benefit of the employees amounted of 4 THB million, or accounted for 0.39 of total liabilities which was reserve expenses of employees, directors, and executive.

Obligation and contingent liabilities As of December 31, 2012 the company had entered into the agreement with other companies to pursue on the projects, including - Operating lease commitments which the company enters into the lease and equipment rental agreement, service agreement, which the term of contract is 1-4 years averagely. As of December 31, 2012 the company had a minimum amount of 4 THB million for future payment within 1-year period under the irrevocable agreement and up to 1 year but not over 2 years amount 1 million baht.

- Long-term service commitments on January 24, 2007, the company entered into the management contract with the renowned international hotels group to hire them as ‘Residence Manager’ for the company, provided that the company shall pay the contract parties the fees at rate specified in the agreement.

Such a residency agreement lasts 30 years, effective from the launching the operation and the company has right to extend the contract for at least a length of 10 years, depending on the certain conditions specified in the said agreement. During 2012, the company incurred the consultant fees and expenses under such agreement for amount of 12 THB million approximately.

- In 2012, the company was prosecuted on reimbursement in connection with condominium purchased by customers for amount of 0.5 THB million, and the action was dismissed by Appeal Court in August 2011.

Nonetheless, later on January 24, 2012, the plaintiff brought an action against the company toward the Supreme Court, which the lawsuit has been in process of the Supreme Court. The Management believes that this will not cause the adverse impact on the company substantially, so the company has not appropriated a reserved allowance for bad debts that may occur.

- In 2012, the company was sued by the Condominium Juristic Persons of St.Louise Grand Terrace that the company shall assign the ownership of the land as servitude or shall compensate 49 THB million for damages, provide the additional parking areas or shall compensate 106 THB million for damages, and 4 THB million for repairing the deteriorated condominium, which the Trial Court had dismissed such a lawsuit in December 2010. However, the plaintiff sued an appeal to the Appeal Court, which the lawsuit has been in hearing. Management believes that this will not cause the adverse impact on the company substantially.

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Annual Report 2012 Metrostar Property Public Company Limited

Shareholders’ Equity As of December 31, 2012 the company, shareholders’ equity of the company was 993 THB million, reduced by 58 THB million from the previous year, resulted from the reduced retained earning. The company incurred net loss of 58 THB million for the year 2012.

As of December 31, 2012 the company’s book value per share was 2.13 THB per share and 2.25 THB per share at December 31, 2011, the book value decreased by 0.12 THB because the company had a net loss in the year 2012.

Appropriateness of Capital Structure Regarding to debt to equity ratio (D/E ratio), the company has a relatively high D/E ratio since the past, and gradually declined until 2005. D/E ratio is 0.95 times in 2012 and 0.88 times in 2011. As compared to the past, it is obvious that company’s D/E ratio has reduced constantly. In 2011, the company has repaid the debts involving the projects at fair ratio. However, even though in 2012 the company has increasing D/E ratio from the year 2011, the increasing ratio is considered slightly and reasonably to the business. In addition, the company plans to minimize the D/E ratio appropriately with the real estate business, and the appropriate D/E ratio has been further retained.

2.2.3 Liquidity As of the ended 31 December 2012, cash flow from operating activities accounts for 10 million Baht net cash flow. In 2011, cash flow from operating activities spends for 20 million Baht in net cash flow, increased by million Baht from the year 2011. Main reasons for receiving more in cash include a reduced loss before tax as resulted of increasing income, reduced interests paid from long-term loan for the Marriott Executive Apartment Sathorn Vista Bangkok development project. Net cash spent on investing activities accounts for 8 million Baht, because during the year the company has the bank deposits as collateral while cash from funding activities in 2012 has been still.

Liquidity Ratio In 2012, the company’s liquidity ratio is of 0.54 times while it was of 1.87 times in 2011. The decreased liquidity ratio in 2012 is because current assets increases by 7 million Baht, or accounted for 12.39, including the growing current assets; cash and cash equivalent, temporary investment and account receivables whilst the current liabilities in 2012 increases by 87 million Baht or accounted for 289.98% from the past year, including increasing trade payables, long-term loan due in one year, and other current liabilities. Main causes of decreased liquidity ratio have stemmed from the long-term loan which has been renovated into the long-term loan due in one year, amounted 76 million Baht.

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Annual Report 2012 Metrostar Property Public Company Limited

Regarding to solvency, the company’s ability to pay interest in 2012 and 2011 is of 1.26 times and 0.60 times respectively. The causes for increased ratio include net cash from operating activities amounted of 10 Million Baht in 2012 while it spent 20 million Baht net cash on operating activities, increased by 30 million Baht from the year 2011, mainly caused by the company has reduced loss before tax and reduced interest payment for the Marriott Executive Apartment Sathorn Vista Bangkok. However, the company is potential to solvency continuously.

2.3 Auditor’s Remuneration Office of DIA International Auditing served as company’s auditor until 2005. Ernst & Young Office Ltd., served as company’s auditor from 2006 to 2012. The resolution made at Shareholder General Meeting FY 2006 - 2012 be as follow;

Remuneration to auditor Other services* Total Remark : For overtime expenses service of auditor

42

31 Dec 10 0.70 0.01 0.71

31 Dec 11 0.60 0.02 0.62

Unit : Million Baht 31 Dec 12 0.55 0.01 0.56

Annual Report 2012 Metrostar Property Public Company Limited

Risk Factors Risk factors that have affected the company’s operation can be recognized below; 1.1 Operation Risk Risk of Income Discontinuity: The Company sold all houses together with assignment for the Ravipa Sukhumvit Town house Project in 2010 and sold lands with construction in two suspended projects, resulting in discontinued income recognition from project for sale. Such data has impact on income recognition which income would be persistent for a period until commencement of new development projects.

However, since 2009 the company had the rental and service earning from the Marriott Executive Apartment Sathorn Vista Bangkok which income can be recognized every year and it would be extra income when company’s earning is discontinued. In regard of new development project, the company has been in duration of feasibility study for location which is considered a prime area for development. However, the company needs time to consider carefully which tendency the country’s economics is.

1.2 Financial Risk Major current transaction of the company involves real estate business: Before year 2009, the company has operated core activity; real estate development business. As the company’s revenue recognition is based on percentage of finished work, resulted in the discontinuity of recognized revenues. In addition, the company has had a few development projects, especially in the economic downturn since 2008 until today. However, in 2009 the company has expanded the additional premise rental business; including residential building which is costly and must take time to cover the break-even point. Despites economic downturn, the company’s revenues remain constant. The rental business has lead to higher debt and capital ratio and longer period of interest paid than selling as it takes time to collect the debts.

Overall, company’s financial statement in the past year, the income recognition continued. In addition to project for sale, the company had real estate for rent since 2009, which it would generate the earning continuously and regularly, including Marriott Executive Apartment Sathorn Vista Bangkok Credit risk : The Company is exposed to credit risk primarily with respect to trad accounts receivable. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company does not have high concentration of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables as stated in the statement of financial position.

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Annual Report 2012 Metrostar Property Public Company Limited

Risk from Interest rates volatility: The company has a significant risk of the interest rate in relation to the deposit at financial institution and short-term and long-term loan interest. However, assets and liabilities mainly facing the interest rate volatility, up-and-down with the market rate or fixed interest rate, which is proximal to the current market rate, then the risk of interest rate facing the company is relatively low.

Table and Diagram Represent the Tendency of Minimum Loan Rate (MLR) End-month MLR 12-m deposit1/

Commercial Banks’ Real Interest Rates Dec 11 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 7.25 7.13 7.13 7.13 7.13 7.03 7.00 7.00 2.87 2.86 2.86 2.86 2.86 2.66 2.49 2.46 MLR* Real 12m deposit**

% p.a 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -3.0 -2.0 -3.0 Jan 2010

12m deposit**

Dec 1012 7.00 3.94 2.46 -0.19 -0.48 Apr

July

Oct

Jan 2011

Source: Bank of Thailand Table and Diagram Represent Interest Rates Policy

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Real MLR** Real Polocy Rate

Apr

July

Oct

Jan 2012

Apr

July

Oct

Annual Report 2012 Metrostar Property Public Company Limited

Commercial Banks’ Real Interest Rates (End of period)

2010

Money Market Rates 2011 2012 Q1/12 Q2/12 Q3/12

R/P 1 day Interbank (mode)

2.00 1.87

3.25 3.15

% p.a.

4.0 3.5 3.0 2.5 2.0 1.5 1.0 Jan 2010

2.75 2.65

3.00 2.90

3.00 2.90

3.00 2.90

Interbank

Jan 2011

Jul

2.75 2.65

1-25 Jan 13 2.75 2.65

1-25 Jan 2013 2.75 2.65

1-day R/P

Jul

Q4/12

Jan 2012

Jul

Jan 2013

Source: Bank of Thailand

However, based on financial structure, the company has policy to fund through project finance to correspond with period of construction. With development project on beneficial location, mostly long-term loans are characterized of fixed interest, partially are adjustable interest rate. Despite inclusion of floating interest rate as project cost component, the floating interest rate charged by financial institutions was considered low when compared to industrial level of -0.25 - 2% MLR. In addition year 2009, Marriott Executive Apartments - Sathorn Vista Bangkok had been constructed completely. The company can start repay the project loan with the lower interest rate due to the effect of the recession of the world economic. Though there is a tendency of the higher interest rate in year 2010 as the economic recovery, and restart stable in the year 2012. However, in the year 2013 the economic uncertainty and the continuity of the government’s economic stimulation policy still maintains. The interest rate is expected to be unaffected to the company’s financial cost.

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Annual Report 2012 Metrostar Property Public Company Limited

Effect of increased interest rate and customer’s installment has been illustrated in the TABLE Case 1 THB 1 million loan for 20 year period. How does the installment vary with different interest rate?

Interest rate Installment Increase in installment from 6% interest rate 6.00 7,164 0 6.25 7,309 145 6.50 7,455 291 6.75 7,603 439 7.00 7,753 589 7.25 7,903 739 7.50 8,055 891 7.75 8,209 1,045 8.00 8,364 1,200 8.25 8,520 1,356 8.50 8,678 1,514 8.75 8,837 1,673 9.00 8,997 1,833

% Increase in installment from 3% interest rate 0 2.02 4.06 6.13 8.22 10.32 12.44 14.59 16.75 18.93 21.13 23.35 25.59

According to the above table : The increase of 1% interest rate affects 8% increase of the installment amount or 589 Baht per Month.

The increase of 2% interest rate affects 16% increase of the installment amount or 1,200 Baht per month.

The MLR of the bank on December 31, 2010 is about 6.67% which affects the increase of installment amount only 291 baht per month.

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Annual Report 2012 Metrostar Property Public Company Limited

1.3 Legal Risks In addition to the interest rate, fuel price and inflation rate that have affected the economic uncertainty, the southern unrest situation and the political uncertainty; for instances, change in government and public policy, also have affected the legislation and policies relating to the domestic business operation. In 2013, Bangkok metropolitan is predisposed to enact the principle city plan prior to that of the former one which has been renewed and will expire by the mid May 2013 (the Bangkok City Plan which has been enacted and effective from May 16, 2006 to May 15, 2010 expired and renewed until the mid May 2013). The Department of City Planning Bangkok Metropolitan Administrator has been in process of drafting the new city plan which contains changes of essences in several topics that might have affected the various areas significantly; that is FAR, OSR, or other regulations that might have affected the construction in the future, enabling the clearness in designing the business plan on the operators and under the new city plan its enforcement is more stringent in some areas. In 2007, new legislations have more concerned of the real estate and environmental laws that stress the reduced global warming that has affected applying for the license, as well as the earthquake-resistant structure requirements that results in the increased construction cost by 2-5 percent. These regulations have affected those concerned entrepreneurs in the real estate business in various parts significantly, especially those real estate operators who desire to buy a new land plot for project development, the reduced profitability in opposite to the increased cost; the need for downsizing the project on the same space, reduced units in case of condominium project, or smaller utility space in case of office building and supermarkets. According to the Condominium Act (No.4) B.E.2008 (amended version) dated February 27, 2008, it contains the restrictions on human right and freedom, conditions alteration, selling house price for medium and low-income and people, or BOI housing, to align the BOI-promoted investment with the current situation and to stimulate the real estate operators who are interested in investing the housing development projects increasingly.

Following the great flood of the late 2011, the real estate operating companies have been competitive to create the new projects increasingly, non flood affected areas. However, after flood recovery in 2012, the operators are more likely to focus on the projects in the perimeters and the outer skirt of Bangkok, particularly in the areas where the BTS run through. In 2010, the Financial Institution Policy Commissions, the Bank of Thailand set out the additional measures; sets the LTV ratio (Loan to Value) for the financial institution that renders the loan to the clients for buying a house. This is to control the housing loan ratio to the people who make a speculative investment. In addition, by the mid year 2012, the Treasury Department prepares to re-announce the property valuation through the country, which will take effect from within 2012 to December 31, 2015; resulted that it might have affected the land price.

However, under the restriction on new city planning, it may affect the company’s futuristic project operation in some areas. However, prior to land acquisition for project development, the company has conducted a feasibility study of the project thoroughly in term of legal, marketing, and finance as well as the financial feasibility study ahead, comprising income and constructing cost. The LTV ratio set out by the Bank of Thailand has a small impact on buyers as most operators are typically set a down payment at higher than that of the existing LTV rate.

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Annual Report 2012 Metrostar Property Public Company Limited

Management Structure Shareholders The top ten shareholders with highest shares are as follows: As of 07 February 2013 No. 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

Name Mr. Veera Burapachaisri Mrs. Kwanja Jiaravanon Mrs. Yeak-seang Luan-chawee Mr. Visoot Luan-chawee Mrs. Jinda Burapachaisri Mrs.Veena Pattaraphasit Mrs. Sirikarn Sukdidetpanupun Na Ayuthaya Mrs. Vipavadee Burapachaisri Mr.Kittichai Detphaiboonyod Miss. Ployphapat Sittirujirod Total Other Total Paid up Capital

of shares 223,700,000 27,920,700 22,993,500 22,593,500 22,559,900 10,125,000 10,000,000 6,500,000 6,000,000 5,150,000 357,542,600 109,357,400 466,900,000

% 47.91 5.98 4.92 4.84 4.83 2.17 2.14 1.39 1.29 1.10 76.58 23.42 100.00

Dividend Payment Policy The Company has dividend payment policy to shareholders no less than 40 percent of Net Profit after Tax, Legal Reserve and Other Reserve. Dividend payment may be changed that depends on the Company operating result business plan liquidity, necessary and appropriated others in the future that assign to consideration of The Board of Committees and the performance have to make maximization shareholders benefits.

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Annual Report 2012 Metrostar Property Public Company Limited

1. Board of Directors Board of Committee of Metrostar Property Public Company Limited compose of qualification persons who are knowledge and experience to the Company’ s benefits eight Board of Directors members as follows: No. 1.

2.

3.

4.

5.

6.

7.

8.

Name Mr. Chatchaval Mr.Veera Mrs. Vipavadee Miss Pimjai Mrs. Pilai Mr. Phaiboon Pol.Col. Kidanun Mr. Thanadet

Position Jiaravanon Burapachaisri Burapachaisri Burapachaisri Piemphongsarn Siripanoosatien Komkhum Kupvong

Chairman Director Director Director Director Director Director Director

No. of Meeting in Jan. - Dec. 2012 1 5 5 5 5 5 5 5

Remarks : Five times Board of Meetings were convened during Jan – Dec 2012. : Mr. Chatchaval Jiaravanon resigned from Chairman Director effective since 1st March 2012.

Role and responsibilities of the Board of Directors The Board performs its duties, including authorized power, roles and responsibilities, in accordance with the laws, objectives and regulation of the Company, including the resolutions undertaken at the General Meetings of Shareholders, with honesty and caution to protect the Company’s interests. The roles and responsibilities can be summarized as follows: 1. To hold the Shareholders Annual General Meeting within four months after the end of accounting period of the Company.

2. To hold the Board meeting at least once every three months.

3. To present to the Shareholders General Meeting the Company’s audited balance sheet and profit and loss statement at the end of the accounting period for approval.

4. The Board may delegate the authority to one Director or more, or other persons to act on behalf of the Board under the Board supervision; or the Board may appoint such person with certain authority approved by the Board to act on behalf of the Board under the committed timeframe. The Board holds the right to dismiss, make any changes regarding the authorized person or particular authority as deem appropriate.

In addition, the Board may delegate the authority as specified within the scope of work to one of the Executive Committee or more to perform the duties. However, the delegation of authority must not provide one of the Executive Committee or more with the authority to approve transactions done by authorized person or person who may have conflict of interests with the Company or its subsidiaries except that the approved transaction is the typical transaction which has already been approved by the Board.

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Annual Report 2012 Metrostar Property Public Company Limited

5. To set the goal, guideline, policy, work plan and budget of the Company and to oversee the management in order to ensure that it acts in compliance with the policies except the following policies where the Board needs to seek an approval from the Shareholder General Meeting before performing. Those are one set out by the law to have resolution of Shareholder General Meeting, for example, the increase and decrease in capital, issuance of debentures, selling or transferring partly or wholly of the Company business to another person, the acquisition of other companies, changes in the memorandum of association, etc. Moreover, the Board has responsibilities to oversee the Company compliance with the Securities and Exchange Commission Act, the Stock Exchange of Thailand’s rules and regulations such as performing related transaction, purchasing or selling particular assets as specified under the Securities and Exchange Commission Act or the related laws.

6. To consider the organizational chart and management organization, appoint the Executive Committee, the Chairman of the Committee, the Managing Director and other Board members as deem appropriate, including the evaluation of performance and the determination of the management remuneration.

7. To continuously monitor the operating performance to ensure the compliance with the work plan and budget.

8. The Board must not conduct the similar business to the Company where it could compete with the Company or to be one of the shareholder in the partnership or to be unlimited shareholder under the partnership limited or to be the Board member of the private company or other companies that conduct similar businesses and compete with the Company even for own interests or other interests except that the Board have informed the Shareholders General Meeting on this matter before they have appointed.

9. The Board needs to inform the Company without delay if the contract done by the Company has either direct or indirect conflict of interests or if there is an increase or decrease in the Company or the subsidiaries’ stocks or debentures. Therefore, the list of transactions where conflict of interests between the Board members and the Company may occur should be identified and that board member with conflicting interest must not allow approving such transactions.

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Annual Report 2012 Metrostar Property Public Company Limited

2. Scope of the Company Secretary To the principles of good corporate governance of listed companies. And the requirements of the Securities and Exchange Commission. The Company has appointed Mr.Thanadet Kupvong as the Company Secretary position. Since February 26, 2009 by resolution of the Board of Directors Meeting No. 1/2009, with the following scope of authority 1. Preparing and keeping the Company’s important documents.

2. Keeping stakeholder information report and doing other business according to requirements specified by the Capital Market regulator.

3. Organize meeting of Board of Director and Audit’s Committee in specified subject.

4. Preparing report of meeting and important documents such as to find place for board of meeting, shareholder’s meeting, to specify meeting agenda and documents of the meeting, record report of meeting.

5. Preparing annual report to present shareholder’s meeting.

6. To coordinate and organize shareholders’ meetings, take care shareholder and investor.

7. To draft the Company’s management policy.

8. To look after the Company and the Board of Directors to comply with the rules and regulations of the Stock Exchange Commission and the Stock Exchange market (SEC) and the Stock Exchange of Thailand (SET).

9. To promote the Company have suitable Good Corporate Governance standards.

10. To be registrar of the company and coordinate for dividend payment.

11. To conduct the resolution of the Board of Directors or shareholders’ meeting.

3. Executive committee In the year 2012 three Executive Committee members as follows: No. 1.

2.

3.

Name Mr.Veera Burapachaisri Mrs. Vipavadee Burapachaisri Mr. Thanadet Kupvong

Position Chief Executive Officer Executive Director Executive Director

Role and responsibilities of the Executive Committee The Executive Committee performs its duties, including authorized power, roles and responsibilities, set out by the Board and in accordance with the scope of work set by the Board. The roles and responsibilities can be summarized as follows: 1. To be responsible for all management regarding the normal business operation and overall management of the Company. To determine the Company’s business plan, budget, management structure, and managing authority, as well as guidelines on business operations to conform with economic conditions in order to present to the Board for approval or consent. To examine and monitor the performance of the Company under specified policies.

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Annual Report 2012 Metrostar Property Public Company Limited

2. To operate and manage the Company’s operation in accordance with the objectives, principles, policies, procedures, rules and regulations, including the resolutions undertaken at the Board meeting and/or the shareholders General Meeting in all cases.

3. To determine and set the Company’s policy, direction and business strategy and to set the financial plan, budget, human resource management, technology innovation and public relation in order to present to the Board for approval and further determination.

4. To appoint the working group and oversee its operation in order to ensure its compliance with policies and the set target.

5. To examine and consider annual budget allocation proposed by the management before presenting to the Board for consideration and approval.

6. To examine, consider, and approve the spending on capital expenditure where the amount of each transaction does not exceed 25 million baht. Moreover, such transactions must be present to the Board for approval or ratification.

7. To approve the major capital investments as specified in the annual expenditure budget, which is assigned by the Board or has been approved in principle by the Board.

8. To examine and approve the Company’s transactions on borrowing, acquiring credit lines, or applying for loans with the amount not exceed 100 million baht per transaction. Moreover, such transactions must be present to the Board for approval or ratification.

9. To decide on the dividend payment during the year or the annual dividend payment, then present to the Board for consideration and approval.

10. To set organizational structure, management structure, including the appointment, recruitment and rotation. To set salary and remuneration packages, and bonus for the management level who is not appointed as the Executive Committee, including abolition.

Additionally, the Executive Committee’s authority will exclude the authority in approving the transaction that may lead to conflict of interests or transaction that may be approved by the Executive Committee or a person who might have conflict of interests with the Company or its subsidiaries as specified under the Securities and Exchange Commission Act, the Stock Exchange of Thailand rules and regulations. To be able to approve such transaction, it must be presented to the Board meeting and/or the Shareholders General Meeting for consideration and approval where it must comply with the regulations of the Company and related laws.

4. Audit Committee Audit Committee include with three independent directors or 1-3 of the Board of Directors and one of Member of Audit Committee have knowledge, understanding and experience in accounting or finance enough to do function to review a trust of financial statement. The company’s member of audit committee does not concern to manage the company operation as regulations or conditions of SET. Term of position is 3 years and when the term expire the Audit Committee can re-appointment the position, the company have four of Member of Audit Committee as follows:

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Annual Report 2012 Metrostar Property Public Company Limited

No. 1.

2.

3.

Name Mrs. Pilai Piemphongsarn Mr. Phaiboon Siripanoosatien Pol.Col. Kidanun Komkhum

Position Chairman of Audit Committee Audit Committee Audit Committee

Role and responsibilities of the Audit Committee The Audit Committee performs its duties, including scope, roles and responsibilities, assigned by the Board and report directly to the Board. The roles and responsibilities can be summarized as follows: 1. To ensure that the Company’s financial reporting is accurate and adequate.

2. To ensure that the Company’s internal control and internal audit systems are appropriate and efficiency, to consider the independence of the Internal Audit department and to give its opinion on the appointment, transfer or dismissal of Vice President of Internal Audit.

3. To ensure that the Company operates function in accordance with the law relating to securities and the stock exchange and with regulations of the Stock Exchange or laws relating to the Company’s business.

4. To consider the selection and nomination of independent individuals to perform duties as the Company’s auditors, and to propose their remuneration; to attend meetings with the auditors, without management departments being present, at least once a year.

5. To consider related party transactions and transactions likely to give rise to a conflict of interest so as to ensure that they are conducted in accordance with the law and with regulations of the Stock Exchange of Thailand so as to provide confidence that such transactions are fitting and proper and in the Company’s best interests.

6. To deliver a report on the Audit Committee’s activities for publication in the Company’s Annual Report, such report to be signed by the Chairman of the Audit Committee and must contain at least the following information: (a) Its opinion on the accuracy, completeness and reliability of the Company’s financial statements (b) Its opinion on the adequacy of the Company’s internal control systems (c) Its opinion on the Company’s compliance with the law relating to securities and the stock exchange and with regulations of the Stock Exchange and laws relating to the Company’s business (d) Its opinion on the suitability of the auditors (e) Its opinion on likely to give rise to a conflict of interest (f) The number of times the Audit Committee has met, together with individual attendance details (g) Its opinion or general observations based on the performance of its duties as per its charter (h) Any other matters that it considers shareholders and investors generally should know within the scope of action, duties and responsibilities assigned to it by the Company’s Board of Directors 7. To responsible to the Company’s Board of Directors function and responsibility which assign from the Company’s Board of Directors. As responsibility form the Company’s operating to the third person is the Company’s Board of Directors.

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Annual Report 2012 Metrostar Property Public Company Limited

5. Management Team The company has 6 senior executives as follows: No. 1.

2.

Name Mr. Veera Burapachaisri Mr. Damri Patana-anake

3.

4.

5.

6.

Mr. Thanadet Mr. Surat Miss Piyarat Miss Thiranan

Kupvong Parichatrungruang Watcharapongvinit Sangphungtham

Position Chief Executive Officer Executive Vice President - Business Development and Marketing Finance Acting for Vice President - Purchasing Vice President - Project Development Vice President - Accounting Assistant Vice President - Coordinated Affairs

Remarks: Mr.Surat Parichatrungruang resigned from Chairman Director effective since 1st November 2012.

Roles and responsibilities of the Chief Executive Officer 1. To oversee the business operations and/or manage the Company’s day to day operations.

2. To perform the duties in accordance with the policy, plan and budget as approved by the Board and/or Executive Committee.

3. To manage the Company’s business in accordance with the objective, principles, regulations, policy, procedures, rules, and resolutions of the Shareholders General Meeting and/or resolutions of the Board Meeting and the Executive Committee Meeting in all cases.

4. To appoint and oversee the working group for the good effective management and transparency. To have authority to delegate and/or assign other persons to operate certain tasks. Such delegation and/ or assignment must be under the power of attorney approved by the Board of Directors and/or in compliance with regulations, guidelines, and order set by the Board of Directors and/or the Company.

5. To set the Company’s mission, objective, direction, guideline and policy, including to order and oversee overall operations to ensure the best benefit of management.

6. To regularly monitor and evaluate the Company’s performance in order to prevent the Company from internal and external risk factors.

7. To have authority in the area of recruitment, appointment, rotation, relocation to different group/ department/ team or dismissal.

8. To set the rules and regulation, procedures, notification and memo in order to ensure that the business operations have been performed in accordance with the Company’s policy and for the Company’s best interests and to maintain the work discipline.

9. To perform other duties as assigned by the Board for time to time.

10. To have the approving limit of the Chief Executive Officer comply with the Company’s management authority manual.

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Annual Report 2012 Metrostar Property Public Company Limited

Rule and responsibility of Managing Director 1. To oversee the business operations and/or manage the Company’s day to day operations.

2. To perform the duties in accordance with the policy, plan and budget as approved by the Board and/or Executive Committee.

3. To manage the Company’s business in accordance with the objective, principles, regulations, policy, procedures, rules, and resolutions of the Shareholders General Meeting and/or resolutions of the Board Meeting [and the Executive Committee Meeting in all cases].

4. To appoint and oversee the working group for the good effective management and transparency. To have authority to delegate and/or assign other persons to operate certain tasks. Such delegation and/or assignment must be under the power of attorney approved by the Board of Directors and/or in compliance with regulations, guidelines, and order set by the Board of Directors and/or the Company.

5. To set the Company’s mission, objective, direction, guideline and policy, including to order and oversee overall operations to ensure the best benefit of management.

6. To regularly monitor and evaluate the Company’s performance in order to prevent the Company from internal and external risk factors.

7. To have authority in the area of recruitment, appointment, rotation, relocation to different group/department/ team or dismissal.

8. To set the rules and regulation, procedures, notification and memo in order to ensure that the business operations have been performed in accordance with the Company’s policy and for the Company’s best interests and to maintain the work discipline.

9. To perform other duties as assigned by the Board for time to time.

10. To have the approving limit of the Managing Director comply with the Company’s management authority manual.

Additionally, the Chief Executive Officer and Managing Director, including the delegation to other parties as deemed appropriate will exclude the authority and/or the delegation in approving any transaction to the authorized person who may have any conflict of interests with the Company as stated under the Securities and Exchange Commission Act, the Stock Exchange of Thailand rules and regulations. To be able to approve such transaction, it must be presented to the Board meeting and/or the Shareholders General Meeting for consideration and approval where it must comply with the regulations of the Company and related laws.

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Annual Report 2012 Metrostar Property Public Company Limited

The Recruitment of Directors and Management At present, the Company has appointed the recruitment and remuneration committee to select and nominate the candidates for the position of Director. However, if the Director position is released, the Board will be in charge of recruiting and selecting the candidates to nominate for the position of Director. The selection criteria include knowledge, capability and relevant experience to business. Moreover, the candidate must have qualification and do not have any prohibited characteristic as specified in the Public Company Limited Law and the notification of Stock Exchange Commission, besides this committee has function to set remuneration for director who is not the company’s management.

Currently, the Board has set the criteria for the appointment and removal of Directors as follows: 1. The Board is composed of at least five members appointed by the Shareholders General Meeting. More than half of the total numbers of Directors must take up residence in Thailand.

2. In every Annual General Meeting of Shareholders, one-third of the Directors will be resigned from the positions. If the number of the Directors cannot be equally divided into three parts, the number of Directors left the position will be the nearest figure of one-third. For the first two years after the Company registration, the Company will draw lots in deciding who would leave the position. After that, the Directors with the highest terms will leave the position. The Directors who leave the position due to finishing the term may be reelected to the position.

3. The appointment of Directors is conducted by the majority votes during the Shareholders General Meeting.

Methods and rules for the appointment are as follows: 3.1 One share is eligible for one vote. Each shareholder has voting rights equal to the number of shares hold.

3.2 Each shareholder has to use all their votes to vote one or more persons for the Director position.

However, transferring the vote is not allowed.

3.3 The person who receives the highest number of votes and sequence down until the number of persons reach the limit will be appointed as Directors. In case there is a tie vote and the number of Directors has already reached, then the President of the meeting will vote one more time for the deciding vote.

4. In the case that the Director leaves the position due to reasons other than finishing the term, the Board may appoint the person who has qualification and do not have prohibited characteristic as specified in the Public Company Limited Law to be a Director and to attend the next Board meeting. If the term of the Director who left the position is less than two month, the newly appointed Director can only stay for the remaining term. Such appointment could only be made if the vote is not less than three-forth of the total number of Directors.

5. The Director may leave the position before his term due to the resolution passed at the Shareholders General Meeting with the vote higher than three-forth of the total number of eligible shareholders in the meeting and more than half of the total shares owned by eligible shareholders in the meeting.

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Annual Report 2012 Metrostar Property Public Company Limited

Remuneration of Management 1. Monetary remuneration The Member of the Board of Directors 1.

2.

3.

4.

6.

7.

8.

9.

Mr. Chatchaval Mr. Veera Mrs. Vipavadee Miss Pimjai Mrs. Pilai Mr. Phaiboon Pol.Col. Kidanun Mr.Thanadet Total

Jiaravanon Burapachaisri Burapachaisri Burapachaisri Piemphongsarn Siripanoosatien Komkhum Kupvong

Meeting Allowance (million baht) 0.010 0.060 0.085 0.085 0.085 0.325

Bonus (million baht) 0.21 0.11 0.20 0.11 0.15 0.78

Remarks : Mr. Chatchaval Jiaravanon resigned from Chairman Director since 1st March 2012

Managements Nine executives are composed of 7 senior executives as specified under the item 9.1(5) have 6 persons and Mrs. Vipavadee Burapachaisri, Executive Director. The remuneration of the management is as follows: Salary Bonus Provident Fund and Other Total

Baht 9,376,400 44,100 9,420,500

2. Other remuneration -None-

57

Annual Report 2012 Metrostar Property Public Company Limited

Corporate governance In consistence with the guideline set by Stock Exchange of Thailand, the Company determines the good corporate governance policy, which is essential for the Company’s sustainability. The good corporate governance and the efficient performance evaluation will enhance the appropriate development and growth of the Company.

Details of the policy are as follows: Report of Good Corporate Governance 1. Policy on corporate governance The Board recognizes the essence of good corporate governance to enhance confidence of shareholders, investors and related parties. The good corporate governance will ultimately lead to higher competitive capability of the Company and to sustainable growth by enhancing transparency and efficiency of the management.

The Board set the policy to support good corporate governance aiming on the Directors of the Company, the transparency of business operations and the information disclosure, and the supervisory of the management to operate in compliance with the policies for long-term benefits of shareholders under the scope of laws and business ethics.

2. Rights of shareholders The company respects for the fundamental right of all shareholder as investor and business owner. They all are treated equitably and fairly. They are allowed to know the operational result, management policy, or conducting the related transactions accurately, completely through the Stock Exchange of Thailand (SET)’s website (www.set. or.th). The shareholders can be always ensured of such right, protection and non-discrimination, for examples, - Right of attending the Shareholder’s General Meeting which is held once yearly on date and place specified properly. The company notifies them of the meeting by mailing the letter of meeting and necessary documents that represent the background and the Board of Directors’ comment at any occasion with the following detail; l Information about nominated persons as member of the Board of Director upon expiry tem of the office. l Information about nominated person as Director l Information about the Article of Association l Attendant’s document and evidence showed prior to attending, proxy algorithms, registration, and voting in the Shareholder’s Meeting l Map of meeting place l Letter of Attorney Type B (Form with specified detail) The company provides three types of the Letter of Attorney according to the Announcement, Ministry of Commerce; including Type A, Type B, and Type C. Any of three types mentioned can be downloaded via the company’s website. This is intended that the shareholders shall be provided with the information supporting their decision and voting no less than seven days in advance. The company also has it posted in the local newspaper for sequential 3-days period. To smooth the meeting, the registration can be done no less than an hour prior to commencement of the meeting.

- The company provides additional channels to disseminate the invitation of meeting and necessary documents through company’s website www.metrostarprop.com so that the shareholders shall have sufficient time to consider what matters appropriately.

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Annual Report 2012 Metrostar Property Public Company Limited

- The company grants the right for the shareholders who attend the meeting late after the meeting gets started. They have right to vote for the current agenda during consideration when resolution is not made and accounted for a quorum since attending and voting onward.

- In the Shareholder’s Meeting, prior to commencement of the meeting, all members of the Board of Directors and company’s auditors will be introduced. The shareholders will be informed of how to vote and shareholder’s right. The meeting chairman is responsible for supervising the meeting accordingly with the agenda specified in the letter of invitation, setting aside time adequately and reasonably for presentations at each session, open the opportunity for shareholders to express their opinion and comments or to enquire any doubt matters pertaining to the company’s operation. The meeting minutes will be recorded completely, and to finalize the solution and votes transparently and equitably.

- In the Shareholder’s General Meeting 2011, it’s term to appoint the directors to replace the expired ones.

The shareholders are given a chance to vote the members of the Broad as they actually prefer.

- During the Board of Directors’ Meeting, the shareholders are given a chance to express their opinion and comments and suggestions or enquire any questions independently prior to making a resolution.

- The company conducts the Shareholder’s meeting minutes after the end of the meeting completely and thoroughly accordingly to the fact cited in the meeting, and submit them to the Stock Exchange of Thailand and the Ministry of Commerce within 14 days of the meeting date, and publicized through the company’s website, www.metrostarprop.com - The company is in duration of examining the criteria, appropriateness, and feasibility to give the minor shareholders a chance to nominate the committee and agenda through company’s website, based on the maximum interest of the company.

3. Equitable Treatment on Shareholders The company has operated the business based on integrity, code of conduct, social responsibility and those concerned parties. The Board of Directors performs the duty respective of the optimal benefits of shareholder equitably, respect for and value the right of ownership of the shareholder without discriminative act. The shareholder can be ensured of their right protection and non-discrimination.

- The company discloses the accurate sufficient information about the operational result, management policy, and related transaction to shareholders on timely manner, including information necessary to shareholder’s decision-making through the SET website www.set.or.th, and company’s website, www. metrorstarprop.com. The company conducts the meeting orderly in agreement with the letter of meeting invitation.

- The company shall not add any agenda without a prior notice. If there is any topics other what’s specified in the letter of meeting invitation, it shall be approved at the shareholder’s meeting with votes no less than one third of overall shares sold with a right of vote.

- At any Shareholder’s Meeting, the company mails the letter of meeting invitation along together with supporting detailed accurate documents and the Board of Directors’ comments for each session sufficiently within a period defined by law to all shareholders. In addition, necessary meeting information shall be posed on the company’s website www.metrostarprop.com in advance so that the shareholder shall have sufficient time on contemplating.

59

Annual Report 2012 Metrostar Property Public Company Limited

- If any member fails to attend the meeting, in the letter of meeting invitation, the letter of attorney according to the form specified by the Ministry of Commerce is enclosed so that the shareholder authorizes a proxy or independent committee to join the meeting instead.

- Voting right at the shareholder’s meeting shall be consistent with a number of shares hold. One share is equal to one vote.

4. Shareholders’ Meeting The Board of Directors highly recognizes the importance of Shareholders’ Meeting. The name of Directors who attend Shareholders’ Meeting are listed in the Meeting Minutes. During the meeting, the Chairman gives equal rights to shareholders to examine the operations of the Company, to ask questions and to comment or recommend in the meeting. Those questions, comments, and recommendations are also addressed in the Minutes of Meeting.

5. Rights of stakeholders The Company has placed much importance on the rights of each group of stakeholders, not only internal stakeholders such as employees and executives of the Company and its subsidiaries, but also external stakeholders such as competitors, creditors, government agencies, and other related parties. The Company recognizes that the support of stakeholders contributes to competitiveness and profitability of the Company and, consequently, the long-term accomplishment of the Company. Details are shown as follows: l

l

l l

l

l

Employees

: The Company treats all employees equally and fairly and offers proper returns to retain capable staff.

Counter parties : The Company purchases goods and services from counter parties according to trading condition and acts consistent with the agreements.

Creditors : The Company is in compliance with the lending agreement.

Customers : The Company is considerate and responsible for customers by offering qualified and standardized goods and set a unit or appoint a person to respond to customers’ complains promptly.

Competitors : The Company follows the sound competition rules, maintain the prudential standard in the competition and compete with competitors without unfair manner.

Community : The Company is responsible for the environment of community and society. Over years, the Company is strictly in compliance with laws and regulations set by related authorities such as Office of The Natural Resources and Environmental Policy and Planning (ONEP), Bangkok or other units responsible for administering regional areas. The Company often performs above the standard.

6. Leadership and vision The Board participates in approving vision, mission, strategy, objective, business plan and budget of the Company. In addition, the Board also oversees the management to ensure that the operation is efficiently and effectively consistent with business plan and budget to raise the economic value of the Company and the highest stability of shareholders.

60

Annual Report 2012 Metrostar Property Public Company Limited

7. Conflict of interests The Company set the Audit Committee to be responsible for the accurate and complete information disclosure with regards to inter-transactions or any transactions that could lead to conflict of interests. Additionally, the Board of Directors is also responsible for preventing conflict of interests between stakeholders of the Company, setting policy and procedure of approving inter-transactions in written and setting policy and procedure to prevent the management and related parties from acquiring benefits from the inside information of the Company. The details are described as follows: Possible Conflict of Interests: The Board is aware of potential conflict of interests and possible inter-transactions and consciously considers the appropriateness every time. The Company complies with the regulations set by the Stock Exchange of Thailand whereby prices and conditions are set on arm’s length basis. The details of contract values with counter parties, and the reasons or necessity are recorded in the annual report and Form 56-1.

Furthermore, the Company also set the policy to prevent the management and related parties from acquiring benefits from the inside information of the Company.

8. Business ethics The Company set policy regarding the code of professional ethics of the Board, the management and employees named “Business Ethic Manual” for related parties as the guideline regarding the interaction with all stakeholders, public and society with integrity, honesty, and fairness in accordance with the Company’s mission. The Company notifies this manual to stakeholders to ask for their cooperation, communicates to employees regularly, and monitors the implementation of manual regularly.

9. Balance of power of non-executive Directors The Board of Directors consists of 8 members as follows: l Executive Directors 3 persons (one-third of all members) l Non-executive Directors 2 persons (one-two of all members) l Audit Committee 3 persons (one-third of all members) 10. Aggregation or segregation of position The Chairman of the Board of Directors is not the same person as the Chairman of the Board of Executive Directors to segregate the powers, duties and positions of the management and to set clear scope of power even though their relationships are brother-in-law and wife’s younger brother. In addition, the structure of the Board of Directors consists of Independent Directors, one-third of all Directors, will create the check and balance of the management.

11. Remuneration for Committee members and the management Remuneration for Directors: The Company determines the remuneration policy for Committee members clearly and transparently, which is equivalent to the industry standard. The remuneration is also high enough to attract and retain qualified Committee members. This policy was approved by the Shareholders’ Meeting. Committee members with additional roles and responsibilities assigned will get extra remuneration for more responsibilities.

61

Annual Report 2012 Metrostar Property Public Company Limited

12. Meeting of the Board of Directors The meeting of the Board would be regularly held every three months or at least four times a year. An additional meeting might be held if necessary. The meeting agenda is set in advance, including the meeting agenda regarding the regular monitoring of the Company’s operations. The administrative department will send the invitation letters together with the meeting agenda and relevant documents to the Board members seven days in advance.

Therefore, the Board members have sufficient time to study all documents prior to the meeting. The meeting minutes are kept in written, endorsed by the Board, then filed for further examination by the Board and related parties.

13. Sub-Committee The Company appoints Sub-Committee to help supervise the operations of the Company as follows: The Audit Committee composes three Independent Directors, and at least 2 - 3 of those must be a specialist in accounting or finance.

14. Control system and internal audit Recognizing the essential of the internal control system, the Company recruits and selects Easy Accountings Company Limited to be responsible for internal audits, revising any weaknesses of internal control systems, and preparing the internal auditing manual. The Easy Accountings Company Limited is not the auditor of the Company and, has independently to result report Audit Committee. The meeting of the Audit Committee would be held at least three months prior to the meeting of the Board of Directors.

15. Report of the Board of Directors The Board of Directors’ responsible for the accuracy and completeness of the Company’s financial statements and the financial information addressed in the annual report. The financial statements are in compliance with the Thai generally accepted accounting standard. Appropriate accounting policy and the best forecasting method are applied and implemented regularly with high care and circumspection, including sufficient disclosure of essential information within the notes to financial statements. In addition, the Board of Directors put in place the sustention of the efficient internal control system to ensure that the accounting records is accurate, complete, and adequate to maintain the Company’s assets. Therefore, the Company is able to acknowledge any weaknesses to prevent the fraud and the irregular operations.

16. Investor relations The Board of Directors realizes that both financial and non-financial information of the Company affects the decision of investors and stakeholders. The Board suggests the management to strictly adhere to the accuracy, completeness, reliability, consistency and timeliness of information disclosure. The Company has not yet established any unit to be responsible for investor relations but assigned the Managing Director to be in charge of the communication with institutional investors, shareholders, analysts and related state agencies since there are still not so many aforementioned activities. Investors may contact the Company by telephone at 02-7427887, by e-mail at mtsp@metrostarprop.com or through the website www.metrostarprop.com

62

Annual Report 2012 Metrostar Property Public Company Limited

Additional, the Company possesses the policy in compliance with a Code of Best Practices of Listed Companies regarding roles and responsibilities of the Board of Directors. For instance, Directors must be in compliance with the laws and the regulations of the Company. Directors should be honest, be responsible for shareholders, possess knowledge, skills and experiences, and have intentions to do business continuously. Directors should also determine policy and direction of the Company and monitor and drive the management operation efficiently and effectively in consistent with policy. In addition, the Board of Directors should be responsible for the accuracy and completeness of the Company’s financial statements. Moreover, the Company put in place the regular meeting of the Board and appoints the Audit Committee to supervise the Company’s operations.

However the Company conducts to Good corporate Governance from The Principles of Good Corporate Governance for Listed Companies 2006 to adjust as much as appropriate to the Company’s operating and structure as follow: The principles of Rights of Shareholders by treating in an equal way (reference to the corporate governance policy of the company No.2 and No.4) 1. The Company conducted to protect rights of shareholders and encourage shareholders under fundamental of regulations conducts.

2. In the year 2007 the Company conducted rights of shareholders free to study company’s information and no interfere rights of shareholders by not adding agenda or any information after sending AGM notice for every AGM 3. The Company have direction to do for shareholders’ facilitation as the following: 3.1 The company will disclose AGM notice and information via the company’s Website which are the same original documents.

3.2 The company sent AGM notice prior to the meeting date as the regulations.

3.3 The company specified Chairman of Audit Committee or Audit Committee who are independence committee be shareholders’ proxy.

3.4 Shareholders were fully able to query and propose opinion.

4. As principles, the board of directors should establish procedures for the nomination of candidates by minority shareholders prior to the meeting date. The board of directors agreed that it did not appropriate to the Company’s operating and structure nevertheless the company is preparing to support this principles.

Other Principles, such as Role of Stakeholders, Disclosure and Transparency, and Responsibilities of the Board still as the corporate governance policy of the company and agree with regulations of concerned the government service departments.

63

Annual Report 2012 Metrostar Property Public Company Limited

Control of the use of inside information The Company possesses the policy regarding the control of the use of inside information to prevent internal stakeholders to disclose such inside information to other stakeholders. The Company puts in place policy and procedure for the management as follows: 1. Provide Directors and management with knowledge regarding their responsibilities to report the securities under their ownership, their spouses’ ownership and their children aged under 20’ ownership, including the penalties according to the Securities and Exchange Act, B.E. 2535 (1992) and the associated regulations of the Stock Exchange of Thailand.

2. Determine the management to report any changes of their ownership of securities to the Securities and Exchange Commission, Thailand and send the copy of that report to the Company on the same date.

3. Notify the management that the management and any units obtaining significant internal information affecting the changes of the stock’ prices must stop trading the stocks of the Company for one month period prior to the disclosure of such internal information or financial statements to the public. The significant information is not allowed to disclose to either outsiders or persons with no related responsibilities.

Any related parties override the policy mentioned above would be punished according to “Working Manual of the Metro Star Property Public Company Limited”. The penalties are classified into four types depending on the kinds and the severity of mistakes. l Verbal notice of violation l Written notice of violation l Written notice of violation and up to 7 days’ unpaid suspension l Termination of employment without any compensation Personnel As of December 31, 2012 the Company had total of 22 employees (including Executives).

Order 1.

2.

3.

4.

5.

6.

7.

64

Department Finance Department Accounting Department Business Development and Marketing Department Project Development Department Administrative and Legal Department Purchasing Department Office of the Directors Total

Number of Employees 1 3 4 3 7 1 3 22

Annual Report 2012 Metrostar Property Public Company Limited

Besides the company have no. of employees 120 who work at Marriott Executive Apartments Sathorn Vista, Bangkok which is under Management Agreement of Metrostar Property Public Company Limited and Marriott Hotels (Thailand) Limited.

Remuneration type (excluding Executives) Remuneration Type Salary Bonus Provident Fund and Others Total

(Unit : Baht) January – December 2010 4,120,500.00 99,605.00 4,220,105.00

Remarks: Benefits of the company employees were not added executives and employees of Marriott Executive Apartments Sathorn Vista, Bangkok.

Criteria for bonus payment: Bonus payment has been contemplated on a case-by-case basis. Normally, criteria taken into consideration when the Company has a policy to pay bonus are the Company’s performance, employee’s performance evaluation, and employee’s length of employment.

Legal dispute: -NonePersonnel development policy: The Company possesses the policy regarding the personnel development in order to enhance the Company’s competitive advantage in the future. Therefore, the Company supports employees to attend various kinds of training courses related to the Company’s operation. In addition, the Company also provides support to the employee if any employees would like to further their study in a higher level.

65

66 Disclousure Connected Person and Related Party Transaction may have conflict of interest Person/Juristic Value of Transaction Person with (Million Baht) conflict of interest Relations Details 2011 2012 1. Mr.Veera Authorized Director who l To take land and building to be Burapachaisri can perform as Chief collatteral to promissory note in Executive Director and amount of 70.- million baht which major shareholder of pledge of amount 60.- million the Company and major baht. shareholder (hold shares l Collateral bank overdraft, bill of 47.91% as of 7 February exchange and promissory note to 2013 ). financial institution in total amount of 10.- million baht. l

2. Mrs.Vipavadee Burapachaisri

As Director, Executive Director andคณะกร wife of Mr.Veera Burapachaisri and shareholder (hold shares 1.39% as of 7 February 2013)

l

l

Collateral long term loan to financial institution in total amount of 1,029.million baht.

894

Collateral long term loan to financial instution altogether with Mr.Veera Burapachaisri in total amont of 1,029.-million baht.

Collateral bank overdraft, bill of exchange and promissory note to financial institution in total amount of 10.- million baht.

894

818

l

l

l

l

l l

818

l l

-

-

l

l

Necessary/Reasonability/ Audit Committee’s comments Guarantee of Promissory Note for the Company’s projects.

Audit Committee ‘s opinion to this transaction that was proper for the Company’s liquidity.

Guarantee of Bank overdraft the Company’s working capital.

Audit Committee ‘s opinion to this transaction that was necessary for the Company’s operation.

Guarantee of Project Loans for the Company’s projects.

Audit Committee ‘s opinion to this transaction that was necessary for the Company’s operation Guarantee of Project Loans for the Company’s projects.

Audit Committee ‘s opinion to this transaction that was necessary for the Company’s operation Guarantee of Bank overdraft the Company’s working capital.

Audit Committee ‘s opinion to this transaction that was necessary for the Company’s operation

Annual Report 2012 Metrostar Property Public Company Limited

Connected Person and Related Party Transaction

Person/Juristic Person with conflict of interest 3. Metro Machinery Co.,Ltd (Operate Import, Retails of machine, engine and spare parts)

Relations Mr.Veera Burapachaisri as Chief Executive Director and major shareholder of the Company and major shareholder (hold shares 47.91% as 7 February 2013) take a position of Director (Authorized Director who can perform) and shareholder hold share 3.50%.

Details l

Service

Value of Transaction (Million Baht) 2011 2012 0.14

0.52

Necessary/Reasonability/ Audit Committee’s comments l

l

Creditors

0.03

0.04

l

The Creditor of companies. Because the service of infrastructure as detailed above.

Annual Report 2012 Metrostar Property Public Company Limited

l

Service of infrastructure contract as water and electricity instead of office rent start since July 2011 . Electricity rate 4.28 baht per unit and water rate 17.38 bath per unit and will calculated as the usable actual infrastructure until cancellation to use office area which service charge is as condition of trade and base on agreement between the Company and related person or company Audit Committee ‘s opinion to service agreement that was fair price when compared with service charge around area.

67

Annual Report 2012 Metrostar Property Public Company Limited

Inter - Transaction (Connected Person and Related Party Ttransaction) Necessity and Justification of Inter-Transaction Inter-transactions are necessary and justified for the best interest of the Company. The Audit Committee approved that inter transactions were rational with trading conditions where prices and conditions were set without conflicts of interest.

Procedures for Authorization of Inter-Transaction In case of inter-transaction between parties with possible conflict of interest, the Audit Committee will take responsibility for commending regarding necessity and justification. In case that the Audit Committee do not specialize in recommending in any inter-transaction, an independent specialist or an auditor of the Company will recommend such transaction instead. The approval of possible inter-transaction must be incompliance with the regulations of the company and the laws, regulations and guidelines of SET. Policies of Inter-Transaction In the future, if there are other inter-transaction from connected persons with possible conflict of interest, the Company will set the approval for such inter-transactions accordingly. The persons with possible conflict of interest will not be allowed to participate in the approval procedures. The Audit Committee will responsible for approving and recommending every inter-transaction. The approval procedures must be strictly in compliance with guidelines, rules and regulations of SEC and SET. The Company will set prices, compensation, or fees related inter-transactions according to market prices and accounting standard in compliance with Certified Public Accounting Association. The Company takes into consideration justification of transaction and interest of the Company. In addition, the Company will disclose details in notes of financial statement and annual report of the Company.

In the year 2012 The Company had Inter-Transaction as follow : 1. The Company have intercompany transactions with Metro Machinery Co., Ltd., infrastructure service charge as water and electricity instead of office rent which is necessary for head office of the company, and Service charge rate is market price which is suitable to calculate actual infrastructure of each month

68

Annual Report 2012 Metrostar Property Public Company Limited

Independent Auditor’s Report To the Shareholders of Metrostar Property Public Company Limited I have audited the accompanying financial statements of Metrostar Property Public Company Limited, which comprise the statement of financial position as at 31 December 2012, and the related statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Metrostar Property Public Company Limited as at 31 December 2012, and their financial performance and cash flows for the year then ended, in accordance with Thai Financial Reporting Standards.

Sophon Permsirivallop Certified Public Accountant (Thailand) No. 3182 Ernst & Young Office Limited Bangkok: 28 February 2013

69

Annual Report 2012 Metrostar Property Public Company Limited

Statement of financial position Metrostar Property Public Company Limited As at 31 December 2012

(Unit : Baht)

Note Assets Current assets Cash and cash equivalents Current investment Trade and other receivables Inventories Other current assets Total current assets Non-current assets Restricted bank deposits Property, plant and equipment Intangible assets Other non-current assets Total non-current assets Total assets

2012

2011

7 8 9

44,536,238 9,419,550 8,154,586 231,696 1,088,068 63,430,138

41,693,638 7,000,000 5,239,103 228,630 2,277,753 56,439,124

10 11 12 13

307,081,878 1,558,564,403 1,488,184 1,460,032 1,868,594,497 1,932,024,635

300,250,964 1,618,578,689 2,831,710 174,604 1,921,835,967 1,978,275,091

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

70

Annual Report 2012 Metrostar Property Public Company Limited

Statement of financial position (continued) Metrostar Property Public Company Limited As at 31 December 2012

(Unit : Baht) Liabilities and shareholders’ equity Current liabilities Trade and other payables Current portion of long-term loans Other current liabilities Total current liabilities Non-current liabilities Long-term loans, net of current portion Provision for long-term employee benefits Total non-current liabilities Total liabilities Shareholders’ equity Share capital Registered 606,900,000 ordinary shares of Baht 1 each Issued and fully paid-up 466,900,000 ordinary shares of Baht 1 each Premium on share capital Retained earnings Appropriated - statutory reserve Unappropriated Total shareholders’ equity Total liabilities and shareholders’ equity

Note

2012

2011

6, 14 15 16

29,595,926 76,000,000 11,943,842 117,539,768

19,399,810 10,740,745 30,140,555

15 17

818,000,000 3,645,388 821,645,388 939,185,156

894,000,000 2,833,750 896,833,750 926,974,305

606,900,000

606,900,000

466,900,000 390,990,000

466,900,000 390,990,000

36,180,000 98,769,479 992,839,479 1,932,024,635

36,180,000 157,230,786 1,051,300,786 1,978,275,091

18

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

71

Annual Report 2012 Metrostar Property Public Company Limited

Statement of comprehensive income Metrostar Property Public Company Limited For the year ended 31 December 2012

(Unit : Baht)

Note

2012

2011

190,186,590 3,374,252 2,429,581 195,990,423

153,886,659 7,739,383 2,206,810 163,832,852

114,903,118 13,883,856 84,757,776 213,544,750 (17,554,327) (40,906,980) (58,461,307)

107,743,111 11,546,690 79,655,663 6,707,710 205,653,174 (41,820,322) (49,853,261) (91,673,583)

Other comprehensive income: Other comprehensive income for the year

-

-

Total comprehensive income for the year

(58,461,307)

(91,673,583)

(0.13)

(0.20)

466,900,000

466,900,000

Profit or loss: Revenues Residential building services income Interest income Other income Total revenues Expenses Cost of residential building services Service expenses Administrative expenses Additional expense from the sale back of material Total expenses Loss before finance cost Finance cost Loss for the year

Basic loss per share Loss for the year

6

20

Weighted average number of ordinary shares (shares)

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

72

Annual Report 2012 Metrostar Property Public Company Limited

Statement of changes in shareholders’ equity Metrostar Property Public Company Limited For the year ended 31 December 2012

(Unit : Baht) Retained earnings Issued and Appropriatedpaid-up share Premium on statutory capital share capital reserve Unappropriated

Total

Balance as at 1 January 2011 466,900,000 Total comprehensive income for the year Balance as at 31 December 2011 466,900,000

390,990,000 390,990,000

36,180,000 36,180,000

248,904,369 1,142,974,369 (91,673,583) (91,673,583) 157,230,786 1,051,300,786

Balance as at 1 January 2012 466,900,000 Total comprehensive income for the year Balance as at 31 December 2012 466,900,000

390,990,000 390,990,000

36,180,000 36,180,000

157,230,786 1,051,300,786 (58,461,307) (58,461,307) 98,769,479 992,839,479

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

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Cash flow statement

Metrostar Property Public Company Limited For the year ended 31 December 2012 (Unit : Baht) Cash flows from operating activities Loss before tax Adjustments to reconcile loss before tax to net cash provided by (paid from) operating activities Depreciation and amortisation Allowance for doubtful accounts Gain from disposals of equipment Provision for long-term employee benefits Interest income Interest expenses Loss from operating activities before changes in operating assets and liabilities Decrease (increase) in operating assets Trade and other receivables Inventories Other current assets Other non-current assets Increase (decrease) in operating liabilities Trade and other payables Other current liabilities Cash flows from operating activities Cash paid for interest expenses Cash paid for corporate income tax Net cash flow from (used in) operating activities

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

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2012

2011

(58,461,307)

(91,673,583)

62,820,858 19,438 (54,165) 811,638 (3,374,252) 40,763,850

63,297,298 15,465 (38,159) 2,833,750 (7,739,383) 49,637,209

42,526,060

16,332,597

(2,934,921) (3,066) 1,501,434 (1,213,546)

1,775,270 (42,840) 5,642,011 15,991,794

10,196,116 1,204,124 51,276,201 (40,764,877) (71,882) 10,439,442

(14,877,922) 5,164,949 29,985,859 (49,669,951) (118,354) (19,802,446)

Annual Report 2012 Metrostar Property Public Company Limited

Cash flow statement (continued) Metrostar Property Public Company Limited For the year ended 31 December 2012

(Unit : Baht) Cash flows from investing activities Decrease (increase) in current investment Increase in restricted bank deposits Cash received from interest income Net proceeds from sales of equipment Acquisition of equipment and intangible assets Net cash flows used in investing activities Cash flows from financing activities Decrease in short-term loan from financial institution Repayment of long-term loans Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

2012

2011

(2,419,550) (6,830,914) 3,062,503 88,390 (1,497,271) (7,596,842)

143,000,000 (260,250,964) 8,187,528 78,411 (667,740) (109,652,765)

2,842,600 41,693,638 44,536,238

(19,000,000) (102,000,000) (121,000,000) (250,455,211) 292,148,849 41,693,638

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

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Annual Report 2012 Metrostar Property Public Company Limited

Notes to financial statements Metrostar Property Public Company Limited For the year ended 31 December 2012 1. General information 1.1 Corporate information Metrostar Property Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in real estate business and residential building service (Serviced Apartment) business. The registered office of the Company is at 1758/4 Sukhumvit Road, Bangjak, Prakhanong, Bangkok. The Company has a branch located at 1 Soi Suanplu, Sathorn Road, Thungmahamek, Sathorn, Bangkok.

1.2 Fundamental accounting assumption The Company has an operating losses of Baht 58 million for the year ended 31 December 2012 (2011: Baht 92 million), the condition raises substantial doubt about the Company’s ability to continue as a going concern.

However, the Company’s management are planning for performance of improvement the Company’s operation and they believe that they will be able to resolve these problems. For this reason, the financial statements have been prepared on the going concern basis.

2. Basis of preparation The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 28 September 2011, issued under the Accounting Act B.E. 2543.

The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements.

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

3. New accounting standards not yet effective The Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2013.

Accounting standards: Income Taxes TAS 12 TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates Financial Reporting Standard: TFRS 8 Operating Segments Accounting Standard Interpretations: SIC 10 Government Assistance - No Specific Relation to Operating Activities SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

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Annual Report 2012 Metrostar Property Public Company Limited

The Company’s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied.

In addition, the Federation of Accounting Professions has issued Notification No. 30/2555 - 34/2555, published in the Royal Gazette on 17 January 2013, mandating the use of accounting treatment guidance and accounting standard interpretations as follows.

Effective date Accounting Treatment Guidance for Transfers of Financial Assets 1 January 2013 Accounting Standard Interpretation: SIC 29 Service Concession Arrangements: Disclosures 1 January 2014 Financial Reporting Standard Interpretations: TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014 TFRIC 12 Service Concession Arrangements 1 January 2014 TFRIC 13 Customer Loyalty Programmes 1 January 2014 The Company’s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied.

4. Significant accounting policies 4.1 Revenue recognition Sales of land and houses and sales of condominium units Sales of land and houses and sales of condominium units are recognised as revenue when the construction work is completed and the ownerships have been transferred to buyers after all payments are received from the buyers.

Residential building service income Residential building service income is recognised on an accrual basis. Recognised revenue does not include valued added tax and states net of discounts.

Interest income Interest income is recognised on an accrual basis based on the effective interest rate.

4.2 Cost of land and houses sold and cost of condominium sold In determining the cost of sales of land and houses and cost of sales of condominium units, the total land and houses and condominium development costs (after recognising the cost incurred to date) are attributed to units of land and houses already sold on the basis of salable area and condominium units already sold on the basis of the sale value, and then recognised as costs in the profit or loss concurrently with revenue from sales.

Development costs are stated at cost, consisting of cost of land, design fees, utilities, construction and related interest.

4.3 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

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Annual Report 2012 Metrostar Property Public Company Limited

4.4 Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging.

4.5 Inventories Inventories are valued at the lower of average cost and net realisable value.

4.6 Property, plant and equipment/Depreciation Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any).

Depreciation of building and equipment is calculated by reference to their costs on the straight-line basis over the following estimated useful lives: Building and improvements - 10, 20 and 40 years Office equipment - 5 years Furniture, fixture and equipment supplies - 5 years Depreciation is included in determining income.

No depreciation is provided on land.

The cost of linen, crockery, glassware, silverware and certain utensils purchased to meet the normal requirements of the serviced apartment operations has been regarded as a base stock and subsequent purchases are expended when incurred.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in profit or loss when the asset is derecognised.

4.7 Intangible assets Intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses (if any).

Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired.

The amortisation period and the amortisation method for such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to profit or loss.

A summary of the intangible assets with finite useful lives is as follows: Useful lives Computer softwares 5 years 4.8 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company.

They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Company’s operations.

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Annual Report 2012 Metrostar Property Public Company Limited

4.9 Long-term leases Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in long-term payables, while the interest element is charged to profit or loss over the lease period. The assets acquired under finance leases are depreciated over the useful life of the asset.

Lease of property, plant or equipment which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.

4.10 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of reporting period.

Gains and losses on exchange are included in determining income.

4.11 Impairment of assets At the end of each reporting period, the Company performs impairment reviews in respect of the property, plant and equipment and intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount.

An impairment loss is recognised in profit or loss.

4.12 Employee benefits Short-term employee benefits Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred.

Post-employment benefits Defined contribution plans The Company and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company. The fund’s assets are held in a separate trust fund and the Company’s contributions are recognised as expenses when incurred.

Defined benefit plans The Company has obligations in respect of the severance payments it must make to employees upon retirement under labor law. The Company treats these severance payment obligations as a defined benefit plan.

The obligation under the defined benefit plan is determined by the Company based on actuarial techniques, using the projected unit credit method.

Actuarial gains and losses arising from post-employment benefits are recognised immediately in profit or loss.

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Annual Report 2012 Metrostar Property Public Company Limited

For the first-time adoption of TAS 19 Employee Benefits in 2011, the Company elected to recognise the transitional liability, which exceeds the liability that would have been recognised at the same date under the previous accounting policy, immediately as an expense in profit or loss for the year.

4.13 Provisions Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

4.14 Income tax Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on the taxable profits determined in accordance with tax legislation.

5. Significant accounting judgments and estimates

80

The preparation of financial statements in conformity with financial reporting standards at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures; and actual results could differ from these estimates. Significant judgments and estimates are as follows: Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset have been transferred, taking into consideration terms and conditions of the arrangement.

Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.

Fair value of financial instruments In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercises judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longer-term volatility of financial instruments.

Property plant and equipment/Depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and residual values of plant and equipment and to review estimate useful lives and residual values when there are any changes.

In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.

Intangible assets The initial recognition and measurement of intangible assets, and subsequent impairment testing, require management to make estimates of cash flows to be generated by the asset or the cash generating units and to choose a suitable discount rate in order to calculate the present value of those cash flows.

Annual Report 2012 Metrostar Property Public Company Limited

Post-employment benefits under defined benefit plans The obligation under the defined benefit plan is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate.

Litigation The Company has contingent liabilities as a result of litigation. The Company’s management has used judgment to assess of the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the end of reporting period.

6. Related party transactions During the years, the Company had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties.

(Unit: Thousand Baht) 2012 2011 Transfer pricing policy Service fee 525 136 Approximate to other companies’ rate As at 31 December 2012 and 2011, the balances of the accounts between the Company and those related companies are as follows: (Unit: Thousand Baht) Relationship 2012 2011 Accrued expenses Metro Machinery Co., Ltd. Common shareholders and common directors 35 28 Directors and management’s benefits During the years ended 31 December 2012 and 2011, the Company had employee benefit expenses payable to their directors and management as follows: (Unit: Thousand Baht) 2012 2011 Short-term employee benefits 10,271 10,716 Post-employment benefits 61 1,826 Total 10,332 12,542

7. Cash and cash equivalents Cash Bank deposits Bills of exchange Total

2012 190 17,346 27,000 44,536

(Unit: Thousand Baht) 2011 140 11,554 30,000 41,694

As at 31 December 2012, bank deposits in saving accounts and bills of exchange carried interests between 0.75% and 2.75% per annum (2011: between 0.75% and 3.20% per annum).

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Annual Report 2012 Metrostar Property Public Company Limited

8. Current investment As at 31 December 2012, current investment of Baht 9 million (2011: Baht 7 million) represents a bill of exchange which carried interest at the rate of 3.5% per annum (2011: 3.75% per annum) and matures in March 2013.

9. Trade and other receivables (Unit: Thousand Baht) 2012 2011 Age on the basis of due dates Not yet due Past due up to 30 days Total Less: Allowance for doubtful debts Trade accounts receivable - net Other receivables Total trade and other receivables - net

7,758 24 7,782 (67) 7,715 440 8,155

5,260 11 5,271 (48) 5,223 16 5,239

10. Restricted bank deposits These represent savings deposits pledged with the bank to secure credit facilities.

11. Property, plant and equipment (Unit: Thousand Baht)

Cost: As at 1 January 2011 Additions Disposals As at 31 December 2011 Additions Disposals As at 31 December 2012 Accumulated depreciation: As at 1 January 2011 Depreciation for the year Depreciation on disposals As at 31 December 2011 Depreciation for the year Depreciation on disposals As at 31 December 2012 Net book value: As at 31 December 2011 As at 31 December 2012 Depreciation for the year 2011 2012

82

Building and improvements

Land

Office equipment

Furniture, fixture and equipment supplies

Total

227,517 227,517 227,517

1,421,006 1,421,006 1,421,006

5,449 62 (53) 5,458 56 5,514

143,356 585 (74) 143,867 1,441 (172) 145,136

1,797,328 647 (127) 1,797,848 1,497 (172) 1,799,173

-

68,228 37,473 105,701 37,473 143,174

4,407 572 (46) 4,933 333 5,266

44,982 23,694 (41) 68,635 23,671 (137) 92,169

117,617 61,739 (87) 179,269 61,477 (137) 240,609

227,517 227,517

1,315,305 1,277,832

525 248

75,232 52,967

1,618,579 1,558,564 61,739 61,477

Annual Report 2012 Metrostar Property Public Company Limited

As at 31 December 2012, certain equipment items have been fully depreciated but are still in use. The gross carrying amount before deducting accumulated depreciation of those assets amounted to approximately Baht 7 million (2011: Baht 5 million).

The Company has mortgaged property, plant and equipment amounting to approximately Baht 1,558 million (2011: Baht 1,619 million) as collateral for long-term credit facilities granted by commercial banks.

12. Intangible assets

(Unit: Thousand Baht) Computer softwares

Cost: As at 1 January 2011 Additions As at 31 December 2011 Additions As at 31 December 2012 Accumulated amortisation: As at 1 January 2011 Amortisation for the year As at 31 December 2011 Amortisation for the year As at 31 December 2012 Net book value: As at 31 December 2011 As at 31 December 2012 Amortisation for the years included in administrative expenses 2011 2012

7,973 20 7,993 7,993 3,604 1,557 5,161 1,344 6,505 2,832 1,488 1,557 1,344

13. Other non-current assets Prepaid corporate income tax Deposits Total

2012 72 1,388 1,460

(Unit: Thousand Baht) 2011 119 56 175

2012 5,315 12,566 11,715 29,596

(Unit: Thousand Baht) 2011 4,465 5,356 9,579 19,400

14. Trade and other payables Trade accounts payable Other payables Accrued expenses Total

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Annual Report 2012 Metrostar Property Public Company Limited

15. Long-term loans Long-term loans Less: Current portion Long-term loans, net of current portion

2012 894,000 (76,000) 818,000

(Unit: Thousand Baht) 2011 894,000 894,000

In October 2007, the Company entered into a loan agreement with a local bank to obtain a loan facility of Baht 1,029 million for the purpose of making payment for construction and equipment of its serviced apartment project. Interest on the loan is charged based on MLR minus 0.50 - 1.25% per annum, and the savings deposit rate plus 1% per annum for the loan principal which is secured by savings deposits. The loan is to be repaid in installments within 2016.

The loan is secured by mortgage of all project land and construction thereon, the pledge of savings deposits of the Company, and guarantees provided by the Company’s directors.

The loan agreement contains covenants as specified in the agreement that, among other things, require the Company to maintain debt to equity ratio according to the agreement.

16. Other current liabilities Advance received from customers Other current liabilities Total

2012 11,847 97 11,944

(Unit: Thousand Baht) 2011 10,237 504 10,741

17. Provision for long-term employee benefits Provision for long-term employee benefits, which is compensations on employees’ retirement, was as follows: (Unit: Thousand Baht) 2012 2011 Defined benefit obligation at beginning of year 2,834 Current service cost 695 2,752 Interest cost 116 82 Provisions for long-term employee benefits at end of year 3,645 2,834 Long-term employee benefit expenses included in the profit or loss were as follows: Current service cost Interest cost Total expense recognized in profit or loss Line items under which such expenses are included in profit or loss Service and administrative expenses

84

2012 695 116 811 811

(Unit: Thousand Baht) 2011 2,752 82 2,834 2,834

Annual Report 2012 Metrostar Property Public Company Limited

Principal actuarial assumptions at the valuation date were as follows: Discount rate Future salary increase rate (depending on age) Staff turnover rate

2012 (% per annum) 4.0% 0% - 8% 0% - 8%

2011 (% per annum) 3.9% 0% - 5% 5% - 8%

Amounts of defined benefit obligation for the current and previous one period are as follows: Year 2012 Year 2011

(Unit: Thousand Baht) Defined benefit obligation 3,645 2,834

18. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5% of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution.

19. Expenses by nature Significant expenses by nature are as follows: Salary, wages and other employee benefits Depreciation Management fee Amortisation expenses Rental expenses from operating lease agreements Additional expense from the sale back of material

2012 55,709 61,477 11,897 1,344 461 -

(Unit: Thousand Baht) 2011 49,492 61,739 9,252 1,557 516 6,708

20. Loss per share Basic loss per share is calculated by dividing loss for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year.

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Annual Report 2012 Metrostar Property Public Company Limited

21. Segment information The Company’s segment financial information is divided between the real estate business and residential building service business. These operations are mainly carried on in Thailand. Below is the financial information of the Company for the years ended 31 December 2012 and 2011 by segment.

(Unit: Million Baht) For the years ended 31 December Real estate Residential building business service business Total 2012 2011 2012 2011 2012 2011 Revenues from external customers 190 154 190 154 Segment operating loss (9) (22) (45) (69) (54) (91) Unallocated income and expenses: Other income 6 10 Administrative expenses (10) (11) Loss for the year (58) (92) (Unit: Million Baht)

Property, plant and equipment Intangible assets Unallocated assets Total assets

As at 31 December Real estate Residential building business service business Total 2012 2011 2012 2011 2012 2011 1 2 1,558 1,617 1,559 1,619 1 3 1 3 372 356 1,932 1,978

22. Provident fund The Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contributed to the fund monthly at rates of 2-5% of basic salary. The fund, which is managed by Thanachart Fund Management Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2012, the Company contributed Baht 511,899 (2011: Baht 191,715) to the fund.

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Annual Report 2012 Metrostar Property Public Company Limited

23. Commitments and contingent liabilities 23.1 Operating lease commitments The Company has entered into several lease agreements in respect of the lease of equipment and service agreements. The terms of the agreements are generally between 1 and 4 years.

Future minimum payments required under these non-cancelable operating lease contracts were as follows.

(Unit: Million Baht) As at 31 December 2012 2011 Payable: In up to 1 year 4 3 In over 1 and up to 2 years 1 23.2 Long-term service commitments On 24 January 2007, the Company entered into management agreements with a group company of a well known international standard hotel chain, appointing the hotel group to manage the Company’s serviced apartment. Under the conditions of the agreements, the Company is to pay remuneration to the hotel group at rates as stipulated in the agreements. The terms of the serviced apartment management agreements are 30 years, counting from commencement of operations, extendible for a further period of at least 10 years dependent upon certain conditions specified in the agreements being met. The fees for year 2012 amounting to approximately Baht 12 million (2011: Baht 9 million).

23.3 Guarantees As at 31 December 2012, there was no outstanding bank guarantee (2011: Baht 12 million) issued by the bank on behalf of the Company in respect of certain performance bonds required in the normal course of business of the Company. This included a letter of guarantee to guarantee a corporate income tax refund application.

23.4 Litigations a) In 2009, the Company’s customer sued the Company for the return of payments totaling Baht 0.5 million made for a condominium unit in the Company’s project. In August 2011, the Appeals Court dismissed the case. However, the plaintiff appealed again to the Supreme Court on 24 January 2012. At present, the case is being heard by the Supreme Court. However, the management believes that there will be no material impact to the Company, and therefore no provision for contingent liability has been set aside in the accounts. b) In 2009, the Company was sued by the juristic person of Saint Louis Grand Terrace to transfer title deed servitude or pay compensation of Baht 49 million and to provide parking areas or pay compensation of Baht 106 million, including payment of building maintenance compensation of Baht 4 million.

The Court of First Instance dismissed the case in December 2010. However, in March 2011, the plaintiff lodged an appeal with the Appeals Court, which is currently hearing the case. The management believes that there will be no material impact to the Company.

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Annual Report 2012 Metrostar Property Public Company Limited

24. Financial instruments 24.1 Financial risk management The Company’s financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, current investment, trade accounts receivable/payable, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below.

Credit risk The Company is exposed to credit risk primarily with respect to trade accounts receivable. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company does not have high concentration of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables as stated in the statement of financial position.

Interest rate risk The Company’s exposure to interest rate risk relates primarily to its cash at banks and short-term and long-term borrowings with interest bearing. Most of the Company’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate.

Significant financial assets and liabilities classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

(Unit: Million Baht) As at 31 December 2012

Fixed interest rates (within Floating Non-interest 1 year) interest rate bearing

Total

Effective interest rate

(% per annum) Financial assets Cash and cash equivalents Current investment Trade and other receivables Restricted bank deposits Financial liabilities Trade and other payables Long-term loans

88

27 9 36

17 307 324

1 8 9

45 9 8 307 369

0.75 - 2.75 3.50 0.75

-

894 894

30 30

30 894 924

Note 15

Annual Report 2012 Metrostar Property Public Company Limited

(Unit: Million Baht) As at 31 December 2011 Fixed interest rates (within Floating Non-interest 1 year) interest rate bearing

Total

Effective interest rate

(% per annum) Financial assets Cash and cash equivalents Current investment Trade and other receivables Restricted bank deposits Financial liabilities Trade and other payables Long-term loans

30 7 37

12 300 312

5 5

42 7 5 300 354

0.75 - 3.20 3.75 0.75

-

894 894

19 19

19 894 913

Note 15

24.2 Fair values of financial instruments Since the majority of the Company’s financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in statements of financial position.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

25. Capital management The primary objective of the Company’s capital management is to ensure that it has appropriate capital structure in order to support its business and maximise shareholder value.

The Company manages its capital position with reference to its debt-to-equity ratio in order to comply with a condition in a long-term loan agreement with a financial institution, which requires the Company to maintain a debt-to-equity ratio of not more than 2.5:1.

As at 31 December 2012, the Company’s debt-to-equity ratio was 0.95:1 (2011: 0.88:1).

26. Approval of financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 28 February 2013.

89