ANNUAL REPORT 2011 Raimon Land Public Company Limited
CONTENT
Message from the Chairman Message from the CEO
4 6
Section 1: Corporate Review 8 11 14 19 26 28
Performance Review Financial Review Market Review Project Review CSR Review Audit Committee Report
Section 2: Corporate Information Board of Directors Corporate Structure General Information on the Company, its Subsidiaries, and Other Relevant Companies Shareholder and Capital Structure Management Connected Transactions
Risk Factors
30 31 32 34 36 59 62
Section 3: Financial Statements Auditor’s Report Consolidated Financial Statements Notes to Consolidated Financial Statements
68 69 79
Message from the Chairman
Sompoch Intranukul
The new Financial Reporting Standards adopted in Thailand restrict Raimon Land to reporting sales only on transfers. The previous rules based on reporting sales as a percentage of project completion had been the preferred method among property developers in Thailand, including Raimon Land. The accounting restrictions inevitably cast a shadow over the Company’s considerable progress last year and in spite of strong sales performance across all projects, the Company was forced to announce a net loss in 2011. By the same token, the outlook for the Company is very promising with transfers scheduled for The River in 2012, followed by 185 Rajadamri in 2013 and Zire Wongamat in 2014. A number of key events shaped 2011: 1. Asset consolidation: In an effort to consolidate its assets, Raimon Land acquired all outstanding shares of Taksin Hotel Holdings Co. Ltd. and Raimon Land Development Co. Ltd., the holding companies for The River and Zire Wongamat projects, respectively. As a result, Raimon Land now owns 100% of all its core projects. 2. Product diversification: In order to increase its market share and reduce its reliance on any given market segment, Raimon Land successfully rolled out two new condominium brands, namely Zire - the Company’s first dedicated resort brand targeting weekenders from Bangkok and Unixx - which encapsulates all of the Company’s traditional unique selling points in a more compact product aimed at younger customers looking for quality, style and convenience at affordable prices.
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Annual Report 2011
3. Improved governance: The Company continued to implement new corporate governance procedures to improve organizational transparency and accountability. The Human Resources department was given a mandate to simplify reporting lines, set clear authority levels and implement standardized compensation plans designed to reduce employee turnover and improve recruitment efforts. 4. Reduced gearing: The Company’s total net interest-bearing debt at the end of December 2011 stood at Baht 6.0 billion. As a proportion of the Company’s market ‘Enterprise Value’, Net Debt has fallen from over 70% in 2010 to around 61% at the end of December 2011. Overall, Raimon Land has positioned itself for strong growth going forward. And as always, Raimon Land’s commitment to its customers and its dedication to the highest standards of property development remains our priority. As Chairman of the Board of Directors, I would like to thank our shareholders, management, staff and other stakeholders for their tremendous efforts and support throughout 2011. With a strong foundation in place, the future is looking brighter than ever.
Mr. Sompoch Intranukul Chairman of the Board of Directors
Annual Report 2011
5
Message from the CEO
Hubert R. Viriot
This past year marked a turning point for Raimon Land and its continuing strategy to ensure growth well into the future for its stakeholders. In spite of global macroeconomic weakness and serious flooding in Bangkok, Raimon Land’s presales increased by 23% year-on-year to a record level of over Baht 5 billion while total secured backlog at the end of December 2011 reached Baht 17.4 billion. Just under two-thirds of the backlog related to sales at The River project (76% sold by year end), while around a quarter was generated by sales at the 185 Rajadamri project (51% sold by year end). We also inaugurated a new phase of growth and diversification for Raimon Land with the launch of three new projects: 1. Vue: Sitting adjacent to The River, Vue is Raimon Land’s first retail development in Bangkok. It was launched in the first quarter of the year with completion due in April 2012. By year end, over 60% of the mall’s lettable area had been rented out to reputable retailers. 2. Zire Wongamat: Situated adjacent to Northpoint, Raimon Land’s award-winning project on Wongamat Beach, Zire Wongamat comprises 480 residential units with a sales value of Bt 2.8 billion. The luxury condominium project was also launched in the first quarter of 2011 and is due for completion in 2014. The project was well received in particular by weekenders from Bangkok and was 59% sold by year end.
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Annual Report 2011
3. Unixx South Pattaya: Launched towards the end of the year, Unixx South Pattaya is the Company’s first project under the UNIXX brand and will be differentiated by a smarter and more compact product with a hip aesthetic which should appeal to a younger target market, expatriates working on the Eastern Seaboard and holiday home buyers. The Baht 2.95 billion project is due for completion by the end of 2014. Within two weeks of launch, over 20% of the 1,207 units were sold. The success of these new projects has been strongly linked to our growing reputation and market share amongst Thai customers. Overall, Thai buyers represented two-thirds of our sales in 2011. With ‘unrecognized’ sales value from existing projects alone worth over Baht 31.2 billion (equivalent to over USD 1 billion) and more projects in the pipeline, we are assured of strong cash flow and profitability in the years ahead. Our progress has at last begun to be recognized by the equity capital markets. In 2011 we generated exceptional gains for our shareholders with share price growth of over 150% during the year. Going forward, with substantial revenue recognition on the immediate horizon from unit transfers coupled with the fact that our market multiples are still a fraction of our listed peers, we can expect further strong returns for our shareholders. I would like to take this opportunity to thank our customers, our staff, our partners and all other stakeholders for their confidence and support last year. I look forward to working with you all again in 2012.
Hubert R. Viriot Chief Executive Officer
Annual Report 2011
7
PERFORMANCE REVIEW In 2011, the Company recorded presales of around Baht 5 billion, an increase of approximately 23% compared to the previous year which resulted in a total secured backlog of more than Baht 17.4 billion at the end of 2011. With a secured backlog of over 17 billion baht, Raimon Land is assured of a steady stream of cash flow in the coming years. The weak accounting figures clearly misrepresent Raimon Land’s strong growth over the past several years. Under the new Thai Accounting Standard, the Company is limited to reporting sales only on transfers, even if a project is under construction with cash installments being received from customers on non-transferred units. Under this standard, Raimon Land was restricted during 2011 to registering sales of only Baht 1,152 million on transfers at Northpoint and The Heights.
Profit and Loss Summary (as Consolidated Financial Statement) 2011 (Million Baht)
2010 (Million Baht) (Restated)
1,228
3,492
-65%
(1,344)
(3,235)
-58%
(116)
257
n.a.
(41)
(25)
64%
EBIT
(157)
232
n.a.
Finance cost
(114)
(152)
-25%
Corporate income tax
(209)
(21)
895%
6
4
n.a.
Net income (loss)
(474)
63
n.a.
Basic earning (loss) per share
(0.15)
0.02
n.a.
Total revenue Net operating expenses EBITDA Depreciation & amortisation
Minority interest
% Change
In 2011, the Company and its subsidiaries incurred a net loss of Baht 474 million compared to a net operating profit of Baht 63 million in 2010 due to the following major factors. 1. In December 2011, a decrease in tax rates was enacted through a royal decree which reduced the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent from 2013. Effects of changes in the new applicable tax rate through the deferred tax asset re-calculation has increased income tax expenses by Baht 278 million (a one-off transaction as stipulated in note 15 to financial statements).
The Company and its subsidiaries will have a net operating loss of Baht 196 million if it excludes such income tax expenses from effects of changes in the applicable tax rates.
2. The Company’s recognized income from the sales and transfers of properties decreased by approximately 64% or Baht 2,089 million compared to 2010.
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Annual Report 2011
Revenue Under the new Thai Accounting Standard, the Company is limited to reporting sales only on transfers, even if a project is under construction with cash installments being received from customers on non-transferred units. Under this standard, Raimon Land was restricted in 2011 to registering sales of only Baht 1,152 million, a decrease of approximately 64% or Baht 2,089 million compared to 2010. If the former Accounting Standard (reporting sales on a basis of the percentage-of-completion method) was used, the Company and its subsidiaries would have recorded sales of Baht 3,549 million in 2011. In 2011, 94% of the total revenue was recognised from two real estate projects, namely Northpoint in the amount of Baht 1,062 million or 87% of the total revenue and The Heights Phuket which amounted to Baht 90 million or 7% of the total revenue. Projects
The Heights Phuket Northpoint Others* Total
2011
2010
Revenue (million Baht)
%
Revenue (million Baht)
%
90
7%
425
12%
1,062
87%
2,816
81%
76
6%
251
7%
1,228
100%
3,492
100%
* This includes revenue realised from other projects, rental and service income, project management fees, commission, interest, foreign exchange gain, revenue from reversal of provision for impairment loss of land awaiting sales.
Cost of goods sold In 2011, the cost of goods sold decreased by approximately 64% compared to the previous year which is consistent with the decreased in revenue.
Projects
2011
2010 %
Cost of goods sold (million Baht)
%
62
8%
306
13%
Northpoint
757
92%
2,008
87%
Total
819
100%
2,314
100%
The Heights Phuket
Cost of goods sold (million Baht)
Gross profit The gross profit margin of the Company and its subsidiaries increased in 2011. In 2009, the margin stood at 26% while in 2010 and 2011, the margin reached 29%. This means that the Company and its subsidiaries have maintained their profit making efficiency.
Annual Report 2011
9
Selling and administrative expenses Selling and administrative expenses were the second major expense for Raimon Land, accounting for 41% of the total expenses in 2011. The selling and administrative expenses increased from Baht 543 million in 2010 to Baht 577 million in 2011, which is a 6% increase. The increase was due largely to staff related expenses to support the newly launched projects and to transfer units to customers. Selling and administrative expenses
2011 (Million Baht)
2010 (Million Baht)
% Change
Salary and staff benefits
89.4
77.9
14.76%
Management remuneration
53.7
39.6
35.61%
Depreciation and amortisation
41.0
25.4
61.42%
Specific business tax & transfer fee
46.4
99.6
-53.41%
142.0
145.2
-2.20%
61.7
54.9
12.39%
Other expenses
142.6
100.6
41.75%
Total
576.8
543.2
6.19%
Other selling expenses Other administrative expenses
Reduction of interest receivable on loans to jointly controlled entities In 2010, the Company reduced the interest rate charged on loans to two jointly controlled entities from 15% per annum to 7.5 % per annum retroactively effective from the initial date on the loan agreement. The reduction of Baht 94 million is adjusted to the Company’s accrued interest receivable on loans to jointly controlled entities.
Share of loss from investment in joint venture In 2010, a jointly controlled entity of Raimon Land sold land at a price lower than the value of the loan and accrued interest which the jointly controlled entity owed to financial institutions and the Company. As a result, the Company realised a loss from its investment in the jointly controlled entity in the same proportion with the joint investment.
Finance expense Most of the finance expense from project development borrowing is capitalised as a project development cost until project completion. Therefore in 2011, the Company had lower finance expenses than last year since ownership has been transferred to the buyers of various projects. This enabled the Company to repay short-term loans from financial institutions and consequently lower financial expenses.
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Annual Report 2011
FINANCIAL REVIEW Statements of Financial Position Summary (as Consolidated Financial Statement) 2011 (Million Baht)
2010 (Million Baht) (Restated)
Cash and cash equivalent
662
581
14%
Project development cost
12,620
9,868
28%
Other current assets
614
356
72%
Fixed assets*
200
241
-17%
1,203
1,358
-11%
15,299
12,404
23%
Current liabilities
7,887
6,177
28%
Non-current liabilities
6,809
4,828
41%
14,696
11,005
34%
603
1,399
-57%
15,299
12,404
23%
Other non-current assets Total assets
Total liabilities Total shareholders’ equity Total liabilities & shareholders’ equity
% Change
* Fixed assets include Investment properties, Leasehold right, and Land awaiting development
Assets Raimon Land’s total assets as of 31 December 2011 increased 23% from the year earlier. Major changes in assets are included: 1. Project development cost and advance payment to contractors increased by Baht 2,752 million and Baht 295 million, respectively, mainly due to construction progress at the River and 185 Rajadamri. 2. Long-term loans to jointly controlled entities reduced by Baht 258 million from the previous year since the Company purchased of the 49% shares of Raimon Land Residences Limited and Raimon Land Development Limited. Thus, the status of the two companies changed from jointly controlled entities to subsidiaries.
Liabilities The Company and its subsidiaries’ total interest bearing liabilities increased by Baht 2 billion, from Baht 4.6 billion in 2010 to Baht 6.6 billion in 2011 due to the amount drawn down to cover project development costs including advance payments to contractors as construction progressed. Non-interest bearing liabilities rose by Baht 1.7 billion, from Baht 6.4 billion in 2010 to Baht 8.1 billion in 2011. This was due to the increase in project sold value and deposits received from customers. In 2011, the Company received deposits from customers in the amount of Baht 1.4 billion.
Annual Report 2011
11
Shareholders’ equity At the end of 2011, the shareholders’ equity of the Company equalled Baht 603 million, a decrease of Baht 795 million or 57% from 2010. The decrease was due to the Company’s net loss for 2011 amounting to Baht 474 million and the excess acquisition price over the attributable net book value of the subsidiary at the acquisition date amounting to Baht 321 million.
Cash flows In 2009, 2010 and 2011, the Company and its subsidiaries’ net cash flows from operating activities was Baht (469) million, Baht 349 million and Baht (1,043) million, respectively. In 2011, the Company recorded Baht (1,043) million in net cash flow from operating activities due mainly to construction progress. Therefore, the Company and its subsidiaries’ net cash paid for project development costs was Baht (2,186) million and the deposit received from sales booking was Baht 1,231 million. In 2009, 2010 and 2011, the Company’s net cash flow from investing activities was Baht (76) million, Baht 988 million and Baht (503) million, respectively. In 2011, net cash flow from investing activities was negative since the Company paid for the purchase of investments in subsidiaries and rights of claim in debt amounting to Baht 517 million. In 2009, 2010 and 2011, the Company’s net cash flow from financing activities was Baht 543 million, Baht (1,090) million and Baht 1,627 million, respectively. Borrowing from financial institutions is the main source of funds for the Company’s project development. The net cash received from financing activities resulted from the increase in long-term loans from financial institutions as the construction progressed.
Liquidity Overall, the Company’s liquidity improved from the year prior. The Company spent Baht 1,043 million on operating activities, Baht 503 million on investing activities and received Baht 1,627 million from financing activities. In summary, the Company’s net cash position has increased by Baht 81 million from the year before. The Company’s current ratio improved slightly from 1.75 in 2010 to 1.76 in 2011 and quick ratio improved from 0.15 in 2010 to 0.16 in 2011. Moreover, due to the change in accounting policy in recognising revenue from real estate sales on 1 January 2011, the Company was forced to record an accumulated loss of Baht 1,247 million that made the Interest-Bearing Debt to Equity ratio rise from 3.27 times to 11.01 times. However, the debt to equity ratio has no effect on the Company and its subsidiaries’ operating activities because one of the covenants on a loan agreement with a certain bank requires the Company to maintain a certain debt to equity ratio as calculated from a separate financial statement. In this case, the ratio is 1.63 times.
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Annual Report 2011
Summary of key financial ratios (from consolidated financial statement) 2011
2010 (Restated)
Current ratio (time)
1.76
1.75
Quick ratio (time)
0.16
0.15
28.88%
28.60%
Net profit margin (%)
-38.62%
1.82%
Return on equity (%)
-47.60%
3.33%
Return on assets (%)
-3.42%
0.57%
Total assets turnover (time)
0.08
0.29
Fixed assets turnover (time)
25.36
47.24
Debt to equity ratio (time)
24.37
7.87
Interest-bearing debt to Equity (time)
11.01
3.27
Interest coverage ratio (time)
-1.37
1.53
0.18
0.43
-0.15
0.02
Total assets growth (%)
23.34%
26.61%
Total liabilities growth (%)
33.54%
50.82%
Total shareholder’s equity growth (%)
-56.87%
-44.06%
Total revenues growth (%)
-64.83%
1.65%
Total expenses growth(4) (%)
-51.15%
-9.21%
Liquidity Ratios
Profitability Ratios Gross profit margin (1) (%)
Efficiency Ratios
Leverage Ratios
(2)
Per Share Ratios Book value per share(3) (Baht) Earnings per share (Baht) Percentage of Growth (% per year)
(1)
Gross profit margin = (total sales – cost of sales)/total sales, where as total sales consists of sale of residential condominium units
(2)
Interest coverage ratio = Income before finance cost and income tax/ finance cost, finance cost means interest and other charges associated with financing activities, e.g. front end fee
(3)
Book value does not include equity attributable to minority shareholder
(4)
Excluding loss from reduction of interest receivable of loans to jointly controlled entities and impairment of value of land awaiting sales
Annual Report 2011
13
Competitive Market
Condominium market in 2011 Bangkok, Thailand Severe flooding occurred during the 2011 monsoon season in Thailand. Beginning at the end of July, flooding quickly spread through the provinces of Northern, Northeastern and Central Thailand along the Meklong and Chao Phraya river basins. In October, floodwaters inundated parts of Bangkok and persisted in some areas until mid-January 2012, which affected approximately 13.6 million people according to government statistics. Although most of downtown Bangkok was successfully defended from inundation, the city’s real estate market experienced economic damages and losses due to flooding. Disruptions to supply chains delayed the construction of on-going developments while launches of new projects were postponed whilst many completed condominiums could not be transferred to buyers due to limited accessibility to parts of Bangkok. Unsurprisingly, the number of residential units registered in Bangkok and the peripherals dropped in 2011 when compared to the previous year. From January to December, 93,533 units were registered versus 106,893 units in 2010. Similarly, in the off-plan market, condominium presales with major listed developers dropped from Baht 72,200 million in 2010 to Baht 61,930 million in 2011. Despite the slowdown, the market remained active with 36,932 condominium units launched in Bangkok and its vicinity throughout the year. 2011 saw the opening of five new BTS/MRT stations from On nut to Bearing, pushing developments further outside the inner-city areas. Development prices were quite stable, although average unit size decreased. Approximately 70% of the new supply was low end, located in the city’s outskirts with average unit prices below Baht 2 million; 22% was medium end, located along existing BTS/MRT lines with average unit prices ranging between Baht 2 and 5 million; the remaining 8% was high end, located in the central business district area with prices above Baht 5 million per unit.
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Annual Report 2011
New housing registrations in bangkok and vicinity
36,813
No. of Units 40000 38000
100%
36000
90%
30,127
34000
14000
25,671
24,633
17,355
20,568
22,661
22,598
23,295
22,714 18,244
16,070
14,868
15,631
16000
11,989
18000
15,584
20000
13,781
22000
14,098
24000
16,572
20,874
26000
21,339
24,276
25,449
30000 28000
80%
26,718
32000
70%
60%
50%
40%
12000
30%
10000 8000
20%
6000 4000
10%
2007
2006
2008
2009
2010
Q4/11
Q3/11
Q2/11
Q1/11
Q4/10
Q3/10
Q2/10
Q1/10
Q4/09
Q3/09
Q2/09
Q1/09
Q4/08
Q3/08
Q2/08
Q1/08
Q4/07
Q3/07
Q2/07
Q1/07
Q4/06
Q3/06
Q2/06
0
Q1/06
2000 0
2011
Source: Bank of Thailand
Housing Project
Apartment and Condominium
Self - Built Housing
Total
% of Condominiums
Presales of condominiums in listed developers Million Baht
13,399
13,998
11,206
7,397
9000
8,516
15000 12000
21,094
11,360
19,814
15,137 Q4/09
18000
15,427
21000
Q3/09
24000
19,931
27000
23,328
30000
6000
2009
2010
Q4/11
Q3/11
Q2/11
Q1/11
Q4/10
Q3/10
Q2/10
Q1/10
Q2/09
0
Q1/09
3000
2011
Source: Stock Exchange of Thailand, company reports
Annual Report 2011
15
Pattaya, Thailand Pattaya was relatively untouched by the floods. The main impact was on international tourist arrivals, which declined during the fourth quarter of the year, however the drop was compensated by an influx of domestic tourists from the northern part of the country searching for shelter during the inundations. As a result, real estate activity was healthy for most of the year. The Pattaya residential market is primarily driven by three specific segments: (a) holiday homes for foreign tourists, (b) weekend homes for Bangkokians and (c) first homes or upgrades for Pattaya residents and/ or professionals working along the Eastern Seaboard. It is interesting to note that whilst foreign buyers used to make up the bulk of residential demand in Pattaya until 2008-2009, domestic buyers now drive market growth. Pattaya authorities outlined their clear goal to push hard to become a tourism and logistics hub. Developments include motorway extensions from Pattaya city to the Map Ta Phut industrial zone, the Airport Link extension to connect with Suvarnabhumi International Airport, the Pattaya Tram to ease the traffic in the Pattaya city, and the upgrade of the U-tapao Airport to triple its daily capacity - all in an effort to attract more businesses, tourists and permanent residents to Pattaya. The city is also taking advantage of large investments from the private sector including shopping malls, a duty free center, new hotels, serviced residences and water parks. Twenty-six condominium projects were launched in Pattaya in 2011, totaling 14,498 units. Prime developments with beachfront units priced above Baht 5 million accounted for just 3% of total launches. Another 11% of units launched were in the mid-end segment (Baht 2-5 million), still largely located near the beach or across the beach road. But the vast majority of new launches (86%) targeted the market below Baht 2 million primarily with projects located inland.
Outlook for 2012 In Bangkok, we anticipate the bulk of the new supply to occur along the upcoming BTS/MRT stations. New supply in the central districts is likely to be more restricted due land scarcity and high land values. The Bangkok Metropolitan Administration is also expected to roll out a new city planning within the next 12 months, which is likely to impact various market fundamentals such as maximum permissible build up areas, height restrictions and environmental requirements, in particular along the smaller sois of central Bangkok. This will likely persuade developers to launch projects further to the edge of the city or along main avenues such as Sukhumvit road, Rachada, Rama IX etc. In Pattaya, we expect new high-end residential development to occur primarily in the city centre, in particular in Pratumnak Hill/ South Pattaya, which is the preferred location among domestic buyers and investors. Developments along the coastline will be more limited due to land scarcity; however popular areas such as Wongamat beach are likely to remain in high demand among domestic and foreign buyers alike owing to the favourable seascape and high level of privacy. We anticipate construction costs to increase across the country once new regulations on minimum wages become effective in April 2012. This will have an upward effect on condominium prices in particular in central locations in Bangkok and Pattaya. Developers are thus likely to continue reducing unit sizes in these locations. Alternatively buyers will be compelled to acquire larger properties in the cities’ outskirts.
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Annual Report 2011
On the demand side, we expect a strong recovery in 2012 owing to higher domestic consumer confidence post floods, an increase in international tourist arrivals, availability of mortgage finance and lower interest rates. However, we also anticipate end users’ expectations to increase drastically as many buyers lost their homes or suffered material damages during the floods, often due to the poor construction standards. As such, high end developers offering quality specifications, excellent safety standards and efficient after sales services are likely to benefit most from the recovery.
Raimon land’s customers Thai nationals were the single most important group of buyers for Raimon Land representing sales of Baht 3,107 million in 2011, up from Baht 2,800 million in 2010 (+ 11%). Adding Baht 460 million of sales from foreigners residing in Thailand, total domestic demand accounted for 70% of sales in 2011. Sales to foreign buyers also improved from Baht 1,200 million in 2010 to Baht 1,468 million in 2011 (+22%). Russian, British and Singaporean buyers were the top three foreign buyers in 2011. Overall, it is interesting to note foreign demand was primarily driven by Asian countries, which accounted for 12.95% of total sales in 2011 or 34% of total sales to foreign buyers. Besides strong demand from Singaporean investors, the Company also recorded healthy increases from China, Japan and South Korea. European nations, which historically were the Company’s key feeder markets, accounted for Baht 575 million in sales or 11.42% of total sales. This shift in the Company’s customer base is primarily due to the European economic crisis, the strengthening of the Thai baht against the Euro and the limited availability of mortgages for foreign buyers in Thailand. As a result, European demand for condominiums in Thailand increased moderately in recent years. Owing to the Company’s cautious geographic diversification, 2011 sales were evenly spread between Bangkok and Pattaya. Sales at the River and 185 Rajadamri accounted for 47% of total sales in 2011; whilst sales at Northpoint, Zire Wongamat and Unixx South Pattaya accounted for the remaining 53%. The Company’s product segmentation also bore its fruits in 2011. Sales to the top end segment (units above Baht 10 million) accounted for 57% of Raimon Land’s sales in 2011; the high-end segment (units between Baht 5-10 million) accounted for 17%; whilst the mid-end segment (units below Baht 5 million) made up the balance at 26%. The diversification of the Company’s products and markets enabled Raimon Land to increase its market share in 2011, particularly in the domestic market. Overall the Company reduced its risk profile and set the basis for strong growth in the years ahead. Going forward, the Company intends to continue its rapid expansion focusing on its core markets – Bangkok and Pattaya – and signature brands – Lofts, Zire and UNIXX.
Annual Report 2011
17
Raimon Land Pattaya AND BANGKOK SALEs 2011
7.83% Asia 2.62% America
9.05% 12.47% Western Europe Eastern Europe 18.41% 0.36%
2.85% 16.64%
66.68% Thailand 1.35% Others 1.42% 60.31%
2011 market share Pattaya BANGKOK
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Annual Report 2011
Projects Review Raimon Land Public Company Limited is a commercial property developer for sale and/or rent, specialising in residential project developments from middle to top-end markets in Thailand. The Company has a long history of delivering excellent customer satisfaction and winning premium awards for its condominiums. Over the years, Raimon Land has been a consistent leader in terms of design standards and construction quality in Bangkok and the resort locations.
Raimon Land project details as of 31 December 2011 Launch year (Q/Year)
Land area (Rai-NganWah)
Saleable area (sq.m.)
Townhouse
Q1/2003
3-0-64
3,486
25
Condominium
Q3/2003
1-2-90.5
26,062
Condominium
Q1/2004
1-1-40
Northshore
Condominium
Q3/2004
Kata Gardens
Condominium
The Lofts Yennakart
Average price per sq.m.
Completion year
400
115,000
2004
165
1,685
65,000
2005
9,672
75
842
87,000
2005
2-1-51
21,271
193
1,490
71,000
2006
Q4/2004
5-0-59.4
6,767
33
447
66,000
2006
Condominium
Q3/2005
3-0-19.1
17,240
176
1,234
72,000
2007
The Heights Phuket
Condominium
Q4/2005 14-0-41.2
13,337
51
1,205
90,500
2008
Northpoint
Condominium
Q4/2006
12-0-54
40,133
376
4,850
125,000
2010
The River
Condominium
Q1/2007
12-3-41
104,000
838
14,950
145,000
2012
185 Rajadamri
Condominium
Q3/2010
4-1-62.9
38,000
268
9,600
250,000
2013
Zire Wongamat
Condominium
Q1/2011
5-3-70
28,500
480
2,800
100,000
2014
Unixx South Pattaya
Condominium
Q4/2011
7-0-16
46,155
1,200
2,950
65,000
2014
Projects
Type
No.of units
Project sale value (Million Baht)
Completed Projects The Lofts Sathorn The Lakes Condominium The Legend Saladeang
On - going Projects
Since 2005, Raimon Land has completed eight new properties with a total sales value of over Baht 12 billion: four in central Bangkok (The Lofts, The Lakes, The Legend), two in Pattaya (Northshore, Northpoint) and two in Phuket (Kata Gardens, The Heights Phuket). The Company currently has a portfolio of five on-going projects worth a total sales value of Baht 30.3 billion. These projects include The River, a major condominium project on the Chao Phraya in Bangkok, 185 Rajadamri, the last freehold residential development on Rajadamri road in Bangkok, Zire Wongamat and Unixx South Pattaya in Pattaya, and Vue, Raimon Land’s first shopping mall located in front of The River project. In quarter 4, 2011, the Company launched a new project and brand named “UNIXX” in Pattaya. The new brand name “UNIXX” is part of our new marketing strategy to build a variety of projects targeting a wider range of
Annual Report 2011
19
customers. UNIXX will feature Raimon Land’s distinctive emphasis on quality at an affordable price coupled with a modern design within a more compact size for customers who are looking for a quality residence with a suitable price.
Projects in 2011 In 2011, Raimon Land Public Company Limited developed, sold, and/or rented the following 6 projects:
Million Baht
31%(c) Project Value 14,950
82% 76%
Sold Value 10,723
43%
10,723 Project Value
Recognised sales value
% Contracted (a)
% Received (b)
Unrecognised sales value
% Constructed (d)
Project value not sold
Remarks: (a) Saleable area contracted / total saleable area
(b) Cash received / total value of outstanding contracts
(c) Cash received / total project value
(d) Completed cost / total development cost
The River Located on the Chao Phraya riverbank and developed under Taksin Property Company Limited, The River is Raimon Land’s largest project to date. The project has been well received and of the total sales value of Baht 14,950 million, at the end of 2011, the project value sold amounted to Baht 10,723 million, or about 76% of the total saleable area. Construction progressed significantly in 2011 with the main structure of both the 69 floor Tower A, and 41 floor Tower B, reaching completion. The Company expects to transfer ownership to customers in the second quarter of 2012. Upon completion, the River will be the tallest riverside residential building in Bangkok.
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Annual Report 2011
Million Baht
14%(c)
Project Value 9,600
51%
Sold Value 4,450
30%
4,450 Project Value
12% % Contracted (a)
Recognised sales value
% Received (b)
Unrecognised sales value
% Constructed (d) Project value not sold
Remarks: (a) Saleable area contracted / total saleable area
(b) Cash received / total value of outstanding contracts
(c) Cash received / total project value
(d) Completed cost / total development cost
185 Rajadamri 185 Rajadamri is ultra-luxury and the last freehold project on Rajadamri road. The property is surrounded by business districts, premium shopping malls, top schools, consulates, five-star hotels and the lush Lumpini Park, and the Royal Bangkok Sport Club. 185 Rajadamri comprises 268 units and at the end of 2011, 51% of the project was sold.
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21
Million Baht
82%(c) Project Value 4,850
100% 97%
186
84%
Sold Value 4,089
3,903 Project Value
% Contracted (a)
Recognised sales value
% Received (b)
Unrecognised sales value
% Constructed (d) Project value not sold
Remarks: (a) Saleable area contracted / total saleable area
(b) Cash received / total value of outstanding contracts
(c) Cash received / total project value
(d) Completed cost / total development cost
Northpoint Northpoint is Raimon Land’s second Grade-A condominium development in Pattaya. With 80 metres of beach frontage on Pattaya’s Wongamat Beach, the property boasts uninterrupted views over the gulf of Thailand and provides extensive facilities. The project is completed and the ownership of the majority of the sold units has been transferred to customers. Northpoint consists of 376 condominium units and about 84 percent of the total saleable area was sold at the end of 2011.
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Annual Report 2011
Million Baht
8%(c)
Project Value 2,800 59%
Sold Value 1,451
1,451 Project Value
14% % Contracted (a)
Recognised sales value
% Received (b)
Unrecognised sales value
6% % Constructed (d) Project value not sold
Remarks: (a) Saleable area contracted / total saleable area
(b) Cash received / total value of outstanding contracts
(c) Cash received / total project value
(d) Completed cost / total development cost
Zire Wongamat Zire Wongamat is Raimon Land’s third residential project in Pattaya, located adjacent to Northpoint. The Company purchased over 5 Rai of land to develop the Zire Wongamat project which consists of two towers having 37 and 53 floors offering panoramic views of the Gulf of Thailand. Zire Wongamat consists of 480 units with various unit types including studio, 1 - 2 bedrooms and multi-leveled units. By the end of 2011, the project was about 59% sold.
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23
Million Baht
2%(c)
Project Value 2,950
612
20%
Sold Value 612
Project Value
Recognised sales value
9% % Contracted (a)
% Received (b)
Unrecognised sales value
0% % Constructed (d)
Project value not sold
Remarks: (a) Saleable area contracted / total saleable area
(b) Cash received / total value of outstanding contracts
(c) Cash received / total project value
(d) Completed cost / total development cost
Unixx South Pattaya Unixx South Pattaya is Raimon Land’s fourth residential project in Pattaya. The project targets the middle-end market including both Thai and foreigners residing in Pattaya as well as Bangkokiens looking for weekend homes or second homes during holidays. The project occupies over 7 Rai on Pratumnak road that belonged to one of Raimon Land’s subsidiaries. Unixx South Pattaya consists of 1,200 units with an average price of Baht 65,000 per square meter and an average area of not more than 40 square meter. By the end of 2011, the project value sold amounted to Baht 612 million or about 20% of the total saleable area. The project is expected to be completed by the end of 2014.
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Annual Report 2011
Vue Vue is a lifestyle shopping centre sized 3,000 – 4,000 square meter and located in front of the River Project on Charoennakorn Road. The project area covers 2 - 3 Rai. There will be a 4-level building, inclusive of basement. The project will be anchored by a supermarket with remaining tenants consisting of restaurants, a café, bakery shop, ice cream shop, etc. The project is expected to officially launch in the second quarter of 2012.
Future projects Going forward, Raimon Land intends to maintain continuous growth by developing at least 1-2 new mid-tohigh-end projects every year. The new projects will be valued around Baht 2.5 – 5.0 billion (depending on land size, laws and regulations) with potential locations including both Bangkok and resort areas.
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CSR REVIEW
Raimon Land understands that consistency and determination are key to a successful Corporate Social Responsibility (CSR) program, and as such, the company is committed to supporting a wide range of projects. Raimon Land continued its traditional CSR program in 2011 and added several important new activities throughout the year to help to make a positive impact throughout the country. For the fourth year in a row Raimon Land proudly supported Habitat for Humanity Thailand, a non-profit organization founded in 1998 that is dedicated to eradicating poor housing from Thai society by constructing simple, decent and affordable houses. This year, top management including approximately 30 staff went to work on the Eastern Seaboard where they put their knowledge and experience of construction to good use and built two houses for the most needy in Thailand. The company also continued its efforts to heed its corporate motto of “developing a better environment� by once again supporting the company-funded tree nursery in Khao Yai, operated by the Plant-A-Tree-Today Foundation. Raimon Land employees and clients took part in the trip to Khao Yai for the fourth time since its founding in 2008 and helped educate children on environmental issues and supported the establishment of a tree nursery of growing saplings with the help of PATT.
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Annual Report 2011
Since its birth in 2008, the company has been supporting its adopted female calf elephant, Pang Raimon, who has been placed in a natural habitat at the Anantara Elephant Camp in Chiang Rai province. Our long-term sponsorship commitment to supporting Pang Raimon ensures that one of Thailand’s national symbols and one of the world’s most threatened species remains in proper care for the rest of her life. New editions to Raimon Land’s CSR initiatives included sponsorship of The Asian Beach Polo Championship, a charity polo match organized to raise funds for the Kamlangjaj Projects initiated by HRH Princess Bajrakitiyabha. Finally, the company was grateful to have had the opportunity to sponsor the book “King Bhumibol Adulyadej: A Life’s Work” which aimed to honour, promote and protect His Majesty the King’s lifelong achievements since his accession to the throne in 1946. The book was launched to coincide with His Majesty’s 84th birthday, and the sizable proceeds collected were donated to charity. Going forward, Raimon Land will continue to build a strong corporate social responsibility program by contributing and mobilizing even more resources to develop a better environment and help the underprivileged with our valued partners.
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Audit Committee Report 2011 Attention: Shareholders of Raimon Land Public Company Limited The Audit Committee of Raimon Land Public Company Limited is comprised of three independent directors qualified under the Code of Best Practice Guidelines of the Stock Exchange of Thailand. Presently the members of the Company’s Audit Committee are Mr. Kitti Gajanandana serving as the Chairman of the Audit Committee and Mr. Sompoch Intranukul and Mr. Jirawud Kuvanant, both serving as Members of the Audit Committee. The Audit Committee has performed its duties in accordance with the scope, duties and responsibilities as assigned by the Board of Directors which are consistent with the relevant rules of the Stock Exchange of Thailand. There were four Audit Committee meetings in the 2011 accounting year and one Audit Committee meeting in 2012 for a total of five meetings. The Audit Committee held the meetings with the Company’s Management and external and internal auditors as appropriate. A summary of the aforementioned meetings is as follows:
1. Review of quarterly financial statements and 2011 financial statements The Financial Statements were reviewed during the Meeting of the Company’s Management exclusively by the Auditors and the panel of the Audit Committee. Inquiries were addressed and recommendations about various issues concerning the Company’s Financial Statements were made before presenting to the Board of Directors for consideration and approval to disclose information to the Stock Exchange of Thailand and the Securities Exchange Commission. Moreover, the Board of Directors has acknowledged the accounting audit plan for 2011 has agreed with the external auditors that the Company’s Financial Statements were correctly prepared in all material respects in accordance with generally accepted accounting policy.
2. Review of the company’s operation and internal control systems The review is conducted to assess the adequacy, appropriateness and effectiveness of Internal Control Systems which help to encourage successful operations by referring to and considering the 2011 Internal Audit Report following the approved framework covering the Company’s important operating systems. The management continually followed the recommendations of the internal auditor. At the same time, the Audit Committee has reviewed the Internal Control Systems in relation to the assessment of the Stock Exchange of Thailand and they determined that the Company employed accurate Internal Control Systems and maintained adequate and effective supervision and follow-up systems in respect of the operation of the Company and its subsidiaries.
3. Review of internal audit The Internal Audit was conducted considering missions, scopes, duties, responsibilities, independence, headcount, internal audit budget and the annual audit plan. The Audit Committee determined that the Company has accurately operated the Internal Audit process and maintained adequate and effective supervision and follow-up.
4. Review of law compliance The Audit Committee found no material issues in relation to non-compliance with relevant laws, the rules of the Stock Exchange of Thailand or any other laws concerning the Company’s business including agreements between the Company and third parties.
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Annual Report 2011
5. Review of risk management system The review of the Risk Management System is done to coincide with the Internal Control Systems of the company’s risk management plan. The Audit Committee reviewed policies, risk management models and its progress in which the Company is developing a risk management system to enhance its effectiveness and efficiency.
6. Review of connected transactions and disclosure of relevant information The review is conducted in accordance with the requirements of the Stock Exchange of Thailand and the Securities and Exchange Commission. The auditor determined that information relating to commercial transactions between the Company and related parties has been fully disclosed in the Company’s financial statements and notes to the financial statements in all material respects. The Audit Committee agrees with the auditor’s views and further believes that such transactions are reasonable and have been made in the best interests of the Company’s business operations and that the relevant disclosures have been correct and complete in nature.
7. Consideration of selection and nomination of the auditor and auditor’s remuneration for 2012 This process is done in order to gather information to propose to the Board of Directors for approval by the 2012 Annual General Meeting of Shareholders. The Audit Committee has taken into account the performance, independence and appropriateness of auditor’s remuneration and determined that Ms. Siraporn Ouaanunkun, certified public accountant no. 3844 and/or Mr. Narong Puntawong, certified public accountant no. 3315 and /or Mr, Supachai Phanyawattano, certified public accountant no. 3930 of Ernst & Young Office Limited should be re-appointed to be the Company’s auditor, together with the auditor’s remuneration not exceeding Baht 1,350,000. The Audit Committee’s opinion on the re-appointment of the auditors is as follows: In the last fiscal year, the auditor has performed his or her duties with knowledge and to professional standards. The recommendations relating to the internal control system and risks including independence have been made. In performing their works, the Securities and Exchange Commission’s requirements relating to the rotation of the auditor who certifies the financial statements every five fiscal years have been in compliance. If the appointment of the auditor for 2012 is approved, it will be the second fiscal year out of the required five year rotation. The auditor has no relationship with the Company and its subsidiaries.
Opinion on performance of duties The Audit Committee has completely performed its duties as specified in the Audit Committee Practice Code which has been approved by the Board of Directors. The Audit Committee is of the view that the Company has maintained accurate financial, internal audit, operations and internal control systems and that the Company has been in compliance with the relevant laws, requirements and agreements. The disclosures relating to connected transactions have been accurately made, and operations are consistent with transparent and reliable good corporate governance. 1 March 2012 For and on behalf of The Audit Committee
(Mr. Kitti Gajanandana) Chairman of the Audit Committee Annual Report 2011
29
Board of Directors Raimon Land has assembled a strong and respected Board of Directors with a wealth of property-related experience across a diverse range of markets and disciplines. The Board is well equipped to guide executive management towards long term value creation for all shareholders and stakeholders.
Mr. Sompoch Intranukul Chairman of the Board of Directors, Independent Director and Audit Committee Member Mr. Talal J M A Al Bahar
Director and Chairman of the Executive Committee
Mr. Werner Johannes Burger
Director and Executive Committee Member
Mr. Hubert Romary Bertrand Viriot
Director, Executive Committee Member and Chief Executive Officer
Mr. Kitti Tungsriwong
Director, Executive Committee Member and Company Secretary
Mr. Kitti Gajanandana Director, Independent Director and Chairman of Audit Committee Mr. Jirawud Kuvanant
Director, Independent Director and Audit Committee Member Mr. Numan Mohamed Numan Mohamed Mr. Piaras Rodrigo Moriarty Alvarez
30
Annual Report 2011
Director Director
Corporate Structure
of Raimon land Public Company Limited in 2011 Raimon Land PLC Active Subsidiaries
Contemporary Property Co., Ltd. Develop The Lofts Yennakart
98.59% 99.99%
Inactive Subsidiaries Northpoint PRC Co., Ltd. (Formerly Wireless one Residences Co., Ltd.)
11% The River Co., Ltd.
88.99%
(a)
95%
Raimon Land Planner Co., Ltd.
99.99% 99.99%
Taksin Properties Co., Ltd. Develop The River
99.93%
Raimon Land Resorts Co., Ltd. Investment and Service
Raimon Land Development Co., Ltd. Develop Zire Wongamat
Raimon Land Residences Co., Ltd.
Raimon Land Park View Development Co., Ltd.
(b)
(c)
99.99%
99.99%
51% (d)
Raimon Land Unixx Co., Ltd. (Formerly Ploenchit Residences Co., Ltd.) Develop Unixx South Pattaya
49%
(e)
Raimon Land Services Co., Ltd. 99.94% (Formerly Ploenchit Management Co., Ltd.) Remarks a)
Following a resolution from the extraordinary general meeting on 23 December 2010 which resolved to approve the purchase of 1,848,005 shares of The River Co., Ltd. from Bangkok Property Investments Pte Limited. Prior to this share purchase transaction, the Company and its subsidiaries held 84.85 percent of the shares in The River Co., Ltd. After the share purchase, the Company and its subsidiaries now hold 99.85 percent of the shares in The River Co., Ltd.
b)
On 28 September 2011, the Company purchased 49 percent of the shares in Raimon Land Development Co., Ltd. Therefore, the shareholding proportion of the Company in Raimon Land Development Co., Ltd. has increased from 51 percent to 99.99 percent which changed the structure from a jointly controlled entity to a subsidiary.
c)
On 31 May 2011, the Company purchased 49 percent of the shares in Raimon Land Residences Co., Ltd. and purchased 49 percent of the shares in Ploenchit Residences Co.,Ltd. (Raimon Land Residences Co., Ltd.’s subsidiary holding 51 percent of the shares). Therefore, the shareholding proportion of the Company in Raimon land Residences Co., Ltd. has increased from 51 percent to 99.99 percent which changed the structure from a jointly controlled entity to a subsidiary.
d)
Formerly known as Ploenchit Residences Co., Ltd. The Company has registered the name change with the Ministry of Commerce on 22
e)
Formerly known as Ploenchit Management Co., Ltd. The Company has registered the name change with the Ministry of Commerce on
December 2011.
1 November 2011. On 28 October 2011, the Company purchased 99.94 percent of the shares in Raimon Land Unixx Co., Ltd. (Formerly Ploenchit Residences Co., Ltd.) Therefore, the shareholding proportion of the Company in Raimon Land Services Co., Ltd. is now 99.94 percent.
Annual Report 2011
31
General Information of the Company, Subsidiaries and Other Related Companies Company (Registration No.) 1)
Raimon Land Public Co. Ltd. (0107536001508)
Address
Business
Authorised Capital (baht)
Paid-up % of Capital Invest(baht) ment
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4, 66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614 E-mail: info@raimonland.com Website: www.raimonland.com
Property development
3,250,385,569
3,250,385,569
-
1,232,030,000
1,232,030,000
99.84%
Subsidiaries
32
1)
The River Co., Ltd. (0105534045182)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development and/or investing in subsidiary company for property project development
2)
Taksin Properties Co., Ltd. (0105530057879)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development
375,000,000
375,000,000
99.84%
3)
Contemporary Property Co., Ltd. (0105526003476)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Investment and property development
200,000,000
200,000,000
98.59%
4)
Raimon Land Resorts Co., Ltd. (0105550123958)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Investment and service
1,000,000
250,000
99.93%
5)
Raimon Land Planner Co., Ltd. (0105543094441)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Business Reorganization
2,000,000
2,000,000
95.00%
6)
Raimon Land Park View Development Co., Ltd. (0105549121467)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development
100,000,000
100,000,000
99.99%
7)
Northpoint PRC Co.,Ltd. (0105551107123) (Formerly “Wireless One Residences Co., Ltd.�)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development
10,000,000
2,500,000
99.99%
8)
Raimon Land Development Co., Ltd. (0105549013966)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development
500,000,000
500,000,000
99.99%
Annual Report 2011
Company (Registration No.)
Address
Business
Authorised Capital (baht)
Paid-up % of Capital Invest(baht) ment
9)
Raimon Land Residences Co., Ltd. (0105551069892)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development and/or investing in subsidiary company for property project development
10,000,000
10,000,000
99.99%
10)
Raimon Land Unixx Co.,Ltd. (0105551070491) (Formerly “Ploenchit Residences Co., Ltd.”)
The Millennia Tower, 22/F, Units 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development
10,000,000
10,000,000
99.99%
11)
Raimon Land Services Co.,Ltd. (0105553005034) (Formerly “Ploenchit Management Co.,Ltd.”)
The Millennia Tower, 22/F, Unit 2201-3, 62 Langsuan Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66 (0) 2651 9601-4,66 (0) 2651 9615-6 Fax: 66 (0) 2651 9614
Property development and/or investment and/or operation
500,000
500,000
99.94%
33/F, Lake Rajada Office Complex, 193/136-137 Rajadapisek Road, Klongtoey, Bangkok 10110 Tel: 66(0) 2264 0777 Fax: 66(0) 2264 0789-90 Website: www.ey.com
Auditor of Raimon Land Plc, and Subsidiaries
N/A
N/A
N/A
Other Relevant Parties 1)
Ernst & Young Office Ltd.
2)
Allen & Overy (Thailand) Co., Ltd.
22/F, Sindhorn Building III, 130-132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 66(0) 2263 7600 Fax: 66(0) 2263 7699 Website: www.allenovery.com
Legal Advisor of Raimon Land Plc.
N/A
N/A
N/A
3)
Bangkok Jurist Ltd.
SSP Building 3, 19/F Silom Road, Suriyawong, Bangrak, Bangkok 10500 Tel: 66(0) 2267 2460 Fax: 66(0) 2267 2464 Website: www.bangkokjurist.com
Legal Advisor of Raimon Land Plc.
N/A
N/A
N/A
4)
Bunchong and Vidhya Law Office Ltd.
33/35, 33/39-40, Wall Street Tower, 9/F Surawongse Road, Suriyawong, Bangrak, Bangkok 10500 Tel: 66(0) 22361950, 66(0) 22366163 Fax: 66(0) 2236 3916 Website: www.bcvidhya.com
Legal Advisor of Subsidiaries
N/A
N/A
N/A
5)
Thailand Securities Depository Co., Ltd.
62 Stock Exchange of Thailand Building Ratchadapisek Road Klongtoey, Bangkok 10110 Tel: 66(0) 2229 2800 Fax: 66(0) 2654 5427 TSD Call center: 0 2229 2888 Website: www.tsd.co.th
Securities Registrar of Raimon Land Plc.
N/A
N/A
N/A
Annual Report 2011
33
Shareholders and Capital Structure Raimon Land Plc.’s capital structure comprises both equity and debt financing.
Equity Financing : Ordinary Shares As at 31 December 2011, the Company had registered capital (ordinary shares) detailed as follows :
31 December 2011 Total registered capital (million shares)* Total registered and paid up capital (million shares)
3,250.4 3,250.4
Remark: * par value at 1 Baht each Shareholders Names of the top 10 major shareholders shown in the Company’s share register book as at 2 December 2011 are as follows : Names of shareholders IFA HOTELS & RESORTS 3 LTD Quam Securities Company Limited A/C Client Mr. Sirisak Sonsopon Thai NVDR Co., Ltd. Mr. Arnonchai Weeraprawat Mr. Sompong Cholkhadeedamrongkul M.R. Chatumongkol Sonakul Mr. Narat Sukthinthai Mr. Pravit Jarungpitaksakul Ms. Jantana Jindapornburana Total
% Shareholding 41.08% 6.98% 3.86% 3.35% 3.08% 1.98% 1.34% 0.98% 0.93% 0.77% 64.35%
The Company had registered and fully paid-up capital Baht 3,250,385,569 (3,250,385,569 ordinary shares at par value of 1 Baht each) as at the book closing dated 2 December 2011. The top 10 shareholders hold 64.35 percent of the paid-up shares. IFA Hotels & Resorts 3 Ltd. (“IFA HR3”) is the largest shareholder of Raimon Land Plc., holding 41.08 percent share.
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Annual Report 2011
Debt Financing : The second component of Raimon Land Plc.’s capital structure is debt financing. Details are as follows :
Type of Liabilities Short term loan from financial institutions Short term loan from major shareholders Long term loan from financial institutions * Others * Total interest bearing liabilities
Unit : Million Baht As at 31 December 2011 As at 31 December 2010 30 6,607 6,637
30 3 4,540 4 4,577
Remark * Include the current portion of these facilities
Dividend Policy : The Company’s dividend policy requires that the dividend in the form of cash shall be paid no more than 50 percent of net profit after tax and legal reserve when the Company has net profit and there is no accumulated loss. The dividend policy of the Company’s subsidiaries is subject to the resolution from the shareholders meeting at each subsidiary.
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35
Management Management Structure of Raimon Land Public Company Limited in 2011
Board of Directors
Audit Committee
Executive Committee
Internal Auditor
Chief Executive Officer Mr. Hubert Romary Bertrand Viriot
Chief Operating Officer Mr. Kitti Tungsriwong
Vice President, Client Management
Vice President, Project Development
Vice President, Special Projects
Mr. Piaras Rodrigo Moriarty Alvarez
Mr. Gerard Conor Healy
Mr. Montri Hemvichitr
Vice President, Corporate Finance Ms. Lamai Pittrakul
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Annual Report 2011
Vice President, Customer Relations Management
Vice President, Corporate Planning & Strategic Investment
Vice President, Human Resources
Mr. Stephen Anthony Brajak
Ms. Janjira Panitpon
Mrs. Walapa Poolsap
Board of Directors At present, the Board of Directors of Raimon Land Plc. comprises nine Directors as follows: 1. Mr. Sompoch Intranukul Chairman of the Board of Directors, Independent Director and Audit Committee Member 2. Mr. Talal J M A Al Bahar Director and Chairman of the Executive Committee 3. Mr. Werner Johannes Burger Director and Executive Committee Member 4. Mr. Hubert Romary Bertrand Viriot Director, Executive Committee Member and Chief Executive Officer 5. Mr. Numan Mohamed Numan Mohamed Director 6. Mr. Piaras Rodrigo Moriarty Alvarez Director 7. Mr. Kitti Tungsriwong Director, Executive Committee Member and Corporate Secretary 8. Mr. Kitti Gajanandana Director, Independent Director and Chair man of Audit Committee Mr. Jirawud Kuvanant Director, Independent Director and Audit 9. Committee Member Attendance at Board of Directors Meetings in 2011 There were seven Board of Directors meetings in 2011. The table below gives the attendance details: Name 1) Mr. Sompoch Intranukul 2) Mr. Talal J M A Al Bahar 3) M r. Werner Johannes Burger 4) M r. Hubert Romary Bertrand Viriot 5) Mr. Numan Mohamed Numan Mohamed 6) Mr. Piaras Rodrigo Moriarty Alvarez 7) Mr. Kitti Tungsriwong 8) Mr. Kitti Gajanandana 9) Mr. Jirawud Kuvanant
Number of Attendances 7 1 7 5 7 6 2
Number of Absences 7 6 7 2 1 5
Director authorisation and restriction Two signatures of the following six directors, Mr. Kitti Tungsriwong or Mr. Hubert Romary Bertrand Viriot or Mr. Werner Johannes Burger or Mr. Talal J M A Al Bahar or Mr. Numan Mohamed Numan Mohamed or Mr. Piaras Rodrigo Moriarty Alvarez, with the affixing of the official company seal.
Annual Report 2011
37
Scope of Authority of the Company’s Board of Directors The Company’s directors are required to perform their duties in compliance with all relevant laws and regulations as well as with the Company’s objectives and articles of association and the resolutions of shareholders meetings in good faith. The Company’s directors are prohibited from carrying out any business of the same nature as and in competition with the Company’s business and from being partners or shareholders or directors of other juristic persons carrying out a similar and competitive business, unless the shareholders are informed of such in a shareholders meeting prior to his/her appointment. If a director has direct or indirect interests in any agreements to be entered into with the Company or increases or decreases his/her shareholding or debenture holding in the Company and its affiliates or debenture, the director must inform the Company without delay.
Executive Committee Members of the Executive Committee 1. Mr. Talal J M A Al Bahar Chairman of Executive Committee 2. Mr. Werner Johannes Burger Executive Committee Member 3. Mr. Hubert Romary Bertrand Viriot Executive Committee Member 4. Mr. Kitti Tungsriwong Executive Committee Member
Scope of Authority, Duties and Responsibilities of the Executive Committee 1. To manage the company in all respects on a day-to-day basis; 2. To decide management emphasis and to draw up company policies, business plans, budget and administrative structure; 3. To submit suggested operational guidelines responsive to change in economic conditions to the Board of Directors for consideration; 4. To review the Company’s operating results and monitor the operations undertaken in accordance with policy; The Executive Committee has no authority to approve a transaction that may create a conflict of interest or approve a transaction that would benefit a member of the Executive Committee or connected person or which could conflict with the Company or its subsidiaries under Stock Exchange of Thailand regulations. Such transaction must be submitted to the Company Board of Directors and/or shareholders meeting for approval, as required by the Company’s Articles of Association and relevant laws.
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Annual Report 2011
Audit Committee Members of the Audit Committee 1. Mr. Kitti Gajanandana Chairman of Audit Committee 2. Mr. Jirawud Kuvanant Audit Committee Member 3. Mr. Sompoch Intranukul Audit Committee Member (member with accounting background) Scope of Authority, Duties and Responsibilities of the Audit Committee 1. To perform joint evaluation with the auditor and/or management to ensure efficiency and adequacy of the internal control system and the standards of the internal audit system. 2. To review the Company’s financial statements to ensure that it maintains accurate financial reports and provides for adequate disclosure prior to submission to the regulators. 3. To review the Company‘s compliance with all laws pertaining to its business and the regulations of the Securities Exchange Commission and the Stock Exchange of Thailand. 4. To disclose adequately and accurately all information pertaining to connected transactions or transactions that may have conflict of interest as required by rules and regulations. 5. To prepare the Audit Committee Report to be published in the company’s annual report and to give an opinion on the procedures for preparing and disclosing information in financial reports and opinion concerning the company’s internal control system, to be signed by the Chairman of Audit Committee. 6. To propose a list of auditors to the Board of Directors together with suggested remuneration each year for appointment by the Annual General Meeting of shareholders and to review and evaluate the auditors’ performance. 7. To report to the Board of Directors the work carried out by the Audit Committee at least once each quarter. 8. To give a joint opinion during the consideration of the appointment, dismissal, performance and remuneration of the internal auditor. 9. To perform any other tasks as assigned by the Board of Directors and agreed by the Audit Committee. The term an Audit Committee member is four years. In the case of vacancy due to any reason other than expiration of the term, the Company Board of Directors is to appoint a qualified person to be the Audit Committee member. The replacement will then complete the term remaining of the replaced member of the Audit Committee.
Annual Report 2011
39
Management Team List of the Company’s management 1) Mr. Hubert Romary Bertrand Viriot Director, Executive Committee Member and Chief Executive Officer 2) Mr. Kitti Tungsriwong Director, Executive Committee Member and Chief Operating Officer 3) Miss Lamai Pittrakul Vice President, Corporate Finance 4) Mr. Stephen Anthony Brachak Vice President, Customer Relations Management 5) Mr. Gerard Conor Healy Vice President, Project Development 6) Mr. Montri Hemvichitr Vice President, Special Projects 7) Mrs. Piaras Rodrigo Moriarty Alvarez Vice President, Client Management 8) Miss Janjira Panitpon Vice President , Corporate Planning & Strategic Investment 9) Mrs. Walapa Poolsap Vice President, Human Resources Scope of Authority of the Chief Executive Officer According to the resolution of the Board of Directors of Raimon Land Plc.at the 9/2006 Shareholders Meeting held on 11 August 2006, the Chief Executive Officer has the following scope of authority: The Chief Executive Officer is authorised to carry out normal business practice in approving the investment budget, operating expenses, purchase of fixed assets, sale of inventory and other operation including delegating administrative authority to the responsible persons at a lower level which is approved by the Board of Directors. The administrative power and delegation will not include the administration and authorisation which gives the power to the Chief Executive Officer and the authorised person to approve a transaction in
which the Chief Executive Officer and the authorised person or possible person may have a conflict of interest or interest or other type of conflict of interest with the Company and/or its subsidiaries.
Selection of Directors and Executives Selection of Directors An appointment of directors must be approved by the general shareholders’ meeting except when the appointment is made necessary by a reason expiration of term. In that case, the Board of Directors will appoint a person to fill the vacancy. The replacement may only serve the remaining term. The selection of directors does not require a nominating committee process. The Board of Directors has the responsibility of selecting an individual who is qualified, knowledgeable, capable, and experienced in relevant fields. In addition, the person will have no prohibited traits as defined in the Public Companies Act and notifications of the Securities and Exchange Commission. The requirements and procedures for selection of company directors are given below.
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Annual Report 2011
According to Section 4 of the Company’s Articles of Association, the Board of Directors comprises at least five directors and at least half of the directors must reside in Thailand. The appointment of directors must be carried out at the shareholders’ meeting in accordance with the following requirements and procedures: 1) Each shareholder has one vote to one share. 2) In appointing directors, each shareholder may exercise the votes to elect one or more candidates to be the director(s) and the voting requirement in item no. 1 above must apply. However, the votes are indivisible (the voting for appointment of directors shall be non-cumulative voting). 3) The directors will be selected based on the total number of votes; in the case of a tie, the Chairman will cast the deciding vote. 4) At every Annual General Shareholders’ Meeting, one third of the directors - or the number nearest to one-third - must retire from the board. The retiring directors may be re-elected. 5) There must be drawing by lots to determine the directors retiring by rotation on the first and second years following a conversion into a public company. In each subsequent year, the directors who have been directors for the longest period must retire. In addition to the retirement by rotation, director vacates from the post upon: .
a. Death b. Resignation c. Disqualifications or possessing prohibited traits according to the Public Companies Act d. Removal by a resolution of the shareholders at the general shareholders’ meeting e. Dismissal by a court order
6) Any director wishing to resign is required to submit a resignation letter to the Company. The resignation is effective immediately upon the letter being received by Company. The director may notify the registrar of the resignation. Selection of Independent Directors The Company realises the importance of independent directors, who are in charge of auditing and supervising the transparency and the performance of the Executive Committee under appropriate internal control systems, laws and regulations of relevant regulators as well as improving the Company’s operational efficiency. An independent director must be knowledgeable, competent and experienced. Independent directors are selected according to criteria set by the Company in having a committee set up by the Board of Director to submit a short-list of candidates to the Board for consideration. Once approved, the selections are proposed to the shareholders for approval at a shareholders’ meeting, as outlined in the Company’s Articles of Association. To qualify as an independent director, an individual must meet the following criteria:
Annual Report 2011
41
1) Holding less than one percent of the Company’s total voting shares; 2) Having no involvement in Company management, nor being an employee or a consultant on the Company’s payroll or must not have power to exert control in the Company, its affiliates, associated companies or connected person. The individual may not possess a potential conflict of interest for at least two years prior to appointment. In addition, an independent director must not have any juristic relationship with the legal consultant or external auditor of the Company or its affiliates; 3) H aving no involvement in any business relationship in terms of financial and management with the Company, affiliates, joint venure or connected person of the amount equal to or more than 3 percent total net tangible assets. This includes relationship as a customer, a supplier, a trade creditor/debtor, or a financial creditor/debtor without receiving benefits from the Company; and 4) N ot having close family relationship with management, major shareholders of the Company or its affiliates and associated companies nor someone that may create a conflict of interest; and shall not be appointed to represent interests of particular directors or major shareholders.
Management Remuneration Monetary Remuneration Directors’ Remuneration
Name
Remuneration in 2011 (Baht)
1) Mr. Sompoch Intranukul 2) Mr. Kitti Gajanandana
1,020,000 480,000
Total
1,500,000
Management’s remuneration Type of Remuneration Salary and Bonus Employee Joint Investment Program Contribution to Provident Fund Others Total
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Annual Report 2011
For 2011 (Baht) 42,331,473 6,954,504 1,575,592 1,315,186 52,176,755
Summary of Employee Joint Investment Program (EJIP)
Contribution from employee
Contribution from company
A deduction from employee’s payroll on regularly basis (Voluntarily)
A grant from company to its employee to buy company’s stock
Representative A securities company represents to… - Buy company’s stock periodically as specified - Allocate stock to individual employee account each time
Objective of program In an EJIP, employees, management, and directors of a listed company join on a voluntary basis to regularly invest only in their company’s stock, using the dollar cost-averaging method. EJIP is an alternative compensation to employees, management, and directors of the Company to be a longterm incentive for HR to build up motivation and create a sense of ownership. Board Meeting Date
13 May 2011
Program Duration
4 Years 3 Months
Eligible Company
Raimon Land Plc.
Eligible Participants
Managements approved by the Board of Directors
Contribution Ratio
50 : 50 (Company : Employee)
Frequency to Invest
Monthly basis as identified in advance
Condition for Holding (Silent Period)
• • • • •
Representative
Phillip Securities (Thailand) Pcl.
Benefits in securities
• • •
Related Taxes
• •
No right to sell shares during the first year. Right to sell 20% of shares after 1 year (except: CEO is not allowed.) Right to sell 30% of shares after 2 years. Right to sell 30% of shares after 3 years. Right to sell 20% of shares after 4 years (except: CEO is allowed to sell 40% of shares)
EJIP participants will directly receive dividend payment JIP participants will directly receive capital gain when they sell securities. E EJIP participants will directly have other rights such as right issues, warrant and shareholders’ meeting.
EJIP participants must pay personal income taxes on the contribution amount received from the Company. The Company can claim tax deductible on the contribution amount.
Annual Report 2011
43
Corporate governance policy Raimon Land Plc has set out policies for corporate governance that adhere to the Principles of Good Corporate Governance for Listed Companies promoted by the Stock Exchange of Thailand. The Company ensures transparency, integrity and accountability in line with international standards by setting up an Audit Committee with three qualified individuals who are tasked with the independent auditing and monitoring performance of the Board of Directors. To further ensure good corporate governance, it appointed an internal auditor at the end of 2003 to improve the supervision. The Audit Committee and internal auditor are structured in a way to ensure their independence from the Company’s Executive Committee. The Board has committed itself to compliance with the Code of Best Practice for Directors of Listed Companies and the five principles of Good Corporate Governance 2003 as follows: 1) Rights of shareholders: •
The Board of Directors holds that good corporate governance is vital both for its business operations and its investors and thus has set up policies and procedures to ensure transparency under relevant laws and business ethics for its business operation bearing in mind the best interests of shareholders and preventing conflicts of interest, exerting appropriate risk management, and having proper internal control systems in place as well as having internal audit system reviewed by Independent Directors/Audit Committee Members.
•
The Company discloses up-to-date information to the public via its corporate profile, corporate website and company newsletter, all of which are in both English and Thai. Shareholders are notified at least seven days in advance of each shareholder’ meeting in a letter that specifies the date, time and venue of the meeting, and also provided with a detailed agenda. The Board of Directors’ opinion is provided on each item on the agenda in order to ensure shareholders receive adequate and timely information for decision making at each meeting.
•
The Company has fully complied with the right of shareholders to access information and the Company is open in receiving comments and ideas from shareholders. The Company arrange for representatives of the Executive Committee, management, Audit Committee and auditors to attend each meeting. Complete and accurate minutes are taken at each meeting and shareholders are given access to the minutes, a copy of which is filed with the Stock Exchange of Thailand within 14 days following the meeting. The minutes of the last meeting will be presented to shareholders for acceptance at the next meeting.
2) Equitable treatment of shareholders •
All shareholders have equal rights to attend and vote at meetings as specified in the Articles of Association. Should a shareholder be unable to attend a meeting, the shareholder is encouraged to appoint a proxy to attend the meeting or assign an independent director to voice his/her opinions. All shareholders are treated equally with respect to their rights.
•
The chairman at the shareholders’ meeting provides shareholders an opportunity during the meeting to express opinions and ask questions related to the agenda items or the Company as a whole.
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Annual Report 2011
3)
•
The Board of Directors provides an opportunity for shareholders to elect directors on an individual basis.
•
The Board of Directors uses voting cards for important agenda items such as election of directors, related party transactions, acquisitions or disposals of core assets, etc.
Role of stakeholders •
The Company values to the rights of all stakeholders who are involved with the Company, e.g., employees, management, suppliers, creditors, joint venture partners, and auditors, as well as the community and government sector. Upon the occurrence of events that concern the right of those parties, the Company will take into account fair treatment for all parties concerned within the scope of the law and regulations of relevant regulators.
•
The Board of Directors has established clear policies on fair treatment to each group of stakeholders for implementation and measurement of policy effectiveness in order to prevent infringement of stakeholder right and to redress violations of stakeholders’ legal rights.
4) Disclosure and transparency •
The Company recognises the importance of accurate, complete, transparent and timely disclosure financial reporting, general information as well as other information that may affect the price of the company’s securities. Although there is no Investors Relation Unit, the Finance Department has been assigned to handle communication with investors and analysts with an emphasis on complete, transparent and timely disclosures.
•
The Company’s Board of Directors is responsible for the accuracy of the Company’s and its subsidiaries’ consolidated financial statements and related information as shown in the annual reports, which are prepared in accordance with generally accepted Thai accounting principles. Conservative judgments and best estimates have been used to prepare the financial statements to ensure adequate and proper disclosure in the notes to the financial statements.
•
The Company’s Board of Directors has arranged for an efficient internal control system to ensure that financial information is recorded accurately, completely and adequately in order to maintain the Company’s assets and to help identify deficiencies to enable preventive measures in relation to fraud and material operation irregularities.
•
The Board is satisfied with the overall effectiveness of its internal control system and that it ensures the reliability of the financial statements of the Company and its subsidiaries as at 31 December, 2011.
•
The Company determines directors’ remuneration clearly, transparently and appropriately by comparison with other companies in the same industry. Directors’ remuneration is approved by shareholders at the general meeting and management remuneration is discussed and approved by the Board of Directors or the Executive Committee, which will take into account the Company’s operating results and achievements of the management.
Annual Report 2011
45
5) Responsibilities of the Board of Directors •
The Board of Directors of the Company consists of nine directors as follows:
a) Executive Directors 4 persons b) Non-Executive Directors 2 persons c) Independent Directors 3 persons
There are three independent directors, the Audit Committee Chairman, and two audit committee members, representing for at least one-third of the Board of Directors, which is considered appropriate. The Independent Directors/Audit Committee are encouraged to express their views and maintain an independent review of the operations and transactions and are also involved in evaluating audit and internal control systems.
The Company has made a clear outline defining the authority and responsibility of its Board of Directors, Executive Committee, Audit Committee and the CEO. Chairman of the Board of Directors also acts as an independent director and has no relationship with management nor is a representative of major shareholders or is the same person with the CEO.
•
Raimon Land’s directors perform their duties in the best interests of the Company, all stakeholders and shareholders as detailed below:
a)
Review and approve key business matters such as the vision and mission, strategy, financial targets, risks and company master plan
b)
Monitor implementation by management to ensure efficiency and effectiveness.
c)
Set and approve a written corporate governance policy and review the policy to ensure consistency at least annually.
Ensure that an internal control system and financial control is consistent with policy control and review the system at least annually.
d)
Supervision of the usage of inside information The Company is conscious of the importance of protecting sensitive internal information. It has established policies and procedures to supervise management with regard to the misuse of inside information for their own benefit, and will take legal action against any individual, who misuses inside information to the extent of criminal prosecution. The Company also limits the access to such information by management and officers to the extent possible. The Company ensures that relevant management and officers adhere to the restrictions on trading the Company’s shares using inside information and/or forbids any inappropriate use of information in case the Company enters into a transaction which may have impact on security price. The management and officers are fully aware that they must not trade the Company’s securities or cause others to trade on non-public information. Such information must not be disclosed to any other party prior to notification to the Stock Exchange of Thailand.
46
Annual Report 2011
In addition, the Company also requires management to report any changes in their holdings in the Company’s securities to the Securities and Exchange Commission, as outlined in Section 59 of Securities and Exchange Act B.E. 2535. An executive is required to provide a copy of the report to the Company on the date that the executive reports it to the Securities Exchange Commission.
Human Resources Number of employees As at 31 December, 2011, the company had 137 employees, excluding nine directors. The number of employees in each function is as follows: Department 1) Executive Office 2) Corporate Planning 3) Finance and Accounting 4) Human Resources 5) Transfer and Purchasing 6) Administration 7) Research & Development 8) Project Development 9) Customer Relations Management 10) Marketing 11) Special Project 12) Sales 13) Information Technology Total
No. of employees 4 3 15 4 3 15 4 9 25 18 5 28 4 137
Employee remuneration
Type of remuneration
For 2011 (Baht)
Salary, overtime Bonus Commission Provident fund Others
61,551,708 13,082,279 8,116,240 2,676,747 12,127,252
Total
97,554,226
Annual Report 2011
47
Internal Control Raimon Land Public Company Limited (the “Company�) realizes the importance of internal audit systems that are sufficient and appropriate for its business operations. The Company is committed to sustainable growth, transparency and good corporate governance practices. It has specified the duty, responsibility, and authorizing power for both management and operation levels in writing, which covers the financial control system, operations, resources management, assets management, and regulations of the Company. Such actions help the Company to operate its business efficiently and effectively, as well as reduce and prevent risks, while enabling the Company to achieve its vision and mission. The Board of Directors of the Company has assigned Audit Committee of the Company to supervise the financial reporting process of the Company in accordance with generally accepted and consistently applied accounting standards and in line with the rules and regulations of the Stock Exchange of Thailand as well as concerned legislations. The responsibilities of Audit Committee also includes reviewing the company performance in compliance with corporate governance principles, maintaining suitable, effective, and well-recognized internal control and audit systems, selection and recommendation of external auditors, and any other tasks as designated by the Board of Directors. The company has in house Internal Audit reporting directly to the Audit Committee. The Internal Department is responsible for reviewing the adequacy of internal control systems. Internal Audit department reports its findings and recommendations to the Management and the Audit Committee. Audit Committee periodically reviews the audit finding with the Internal Audit Department. The Audit Committee together with Internal Audit Department ensures that recommendations for improvement of Internal Controls are implemented by the respective entities. The Internal Audit Department carries out the Internal Control reviews of Procurement and Accounts Payables Process, Sales & Marketing and Accounts Receivables, Human Resources Process, Asset Management, Accounts & Finance and Operations etc. Upon completion of auditing work, the internal auditor will prepare an internal audit report, then discuss the result of the findings with the Audit Committee, the external auditor and the Company’s management and suggest improvement to better the internal control system. In 2011, four Audit Committee meetings were convened to review corporate governance, quarterly financial statements and annual financial statements, including the disclosure of notes to financial statements, and discuss any problems occurred as well as preventive and corrective measures that could be taken. The Audit Committee views that the financial reporting over the past year comply with the generally accepted accounting principles and that the disclosure of information, internal control and internal audit systems were adequate and in compliance with all key legal requirements and relevant regulations. Besides, the Company has undertaken corrective measures recommended by the internal auditor and the Audit Committee to ensure good corporate governance and the best interest of its shareholders.
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Annual Report 2011
Annual Report 2011
49
Name / Surname Position
Mr. Sompoch Intranukul
No
1
73
Age
Chartered Director Class (CDC 3/2008)
Director Accreditation Program (DAP 63/2007)
Directors Certification Program (DCP 24/2002)
Certificate of National Defense, College of Thailand
Senior Executive Program, Sasin Business Administration
Bachelor Degree Accounting & Commerce Faculty, Chulalongkorn University
Education
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
-
Family’s relationship between management
2008 - Present
1995 - Present
1999 - Present
1999 - Present
2003 - Present
2003 - Present
Period
Company / Type of business
Chairman/ Raimon Land Plc. I n d e p e n d e n t - Property development Director/ Audit Committee Member Chairman SCMB Co., Ltd. - Financial advisory services Chairman of Subsrithai Co.,Ltd. Audit Committee - Warehouse Chairman of Dheves Insurance Plc. Audit Committee - Insurance Chairman Siam Administrative Management Co., Ltd. - Administrative services Chairman of Hifi Orient Thai Pcl. Audit Committee - Electronic products
Position
Working experiences in last 5 years
Details of executive officers and persons in control of the Company as at 31 December 2011
50
Annual Report 2011
Mr. Talal J M A Al Bahar (Authorised Director)
2
33
Age
Loyola Marymount Los Angeles USA
Bachelor Degree in Business Studies
Education
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
-
Family’s relationship between management
Director Director
Director Director Director Director
2009 - Present 2009 - Present
2008 - Present 2008 - Present 2007 - Present 2007 - Present
2009 - Present
2007 - Present
Director/ Chairman of Executive Committee Vice Chairman/ Director / CEO Director
Position
2006 - Present
Period
* Raimon Land Unixx Co., Ltd. was formerly Ploenchit Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 December 2011.
IFA Hotels & Resorts Ltd. - Property development The River Co., Ltd. (1) - Property development Taksin Properties Co., Ltd.(1) - Property development Northpoint PRC Co., Ltd. (1) (Wireless One Residences Co., Ltd.*) - Property development Raimon Land Residences Co., Ltd. (1) - Property development Raimon Land Unixx Co., Ltd. (1) (Ploenchit Residences, Co. Ltd.*) - Property development Contemporary Property Co. Ltd. (1) - Property development Raimon Land Park View Development Co., Ltd.(1) - Property development
Raimon Land Plc. - Property development
Company / Type of business
Working experiences in last 5 years
* Northpoint PRC Co., Ltd. was formerly Wireless One Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 July 2011.
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Details of executive officers and persons in control of the Company as at 31 December 2011
Annual Report 2011
51
Mr. Talal J M A Al Bahar (Authorised Director)
Mr. Werner Johannes Burger (Authorised Director)
2 (Con’t)
3
42
Age
University of Pretoria Pretoria, South Africa
Bachelor of Science in Building Management
Education
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
-
-
Family’s relationship between management
Director Director Director Director
2009 – Present 2009 - Present 2009 - Present
2010 - Present
2005 - Present
2008 - Present
Independent director
2005 - Present
Director / Executive Director COO & Director of Management & Administration Director
Director
2007 - Present
2006 - Present
Director
Position
2007 - Present
Period
* Raimon Land Unixx Co., Ltd. was formerly Ploenchit Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 December 2011.
Raimon Land Services (1) (Ploenchit Management, Co. Ltd.*) - Property development and/or investment Raimon Land Residences Co., Ltd. (1) - Property development Raimon Land Unixx Co., Ltd. (1) (Ploenchit Residences Co., Ltd.*) - Property development Raimon Land Planner Co., Ltd. (1) - Business reorganisation Raimon Land Park View Development Co., Ltd. (1) - Property development
Raimon Land Plc. - Property development IFA Hotels& Resorts Ltd. - Property development
Raimon Land Development Co., Ltd. (1) - Property development Raimon Land Planner Co., Ltd. (1) - Business reorganisation Druke & Scull - Construction consultant
Company / Type of business
Working experiences in last 5 years
* Raimon Land Services Co., Ltd. was formerly Ploenchit Management Co., Ltd. The name change has been registered with the Ministry of Commerce on 1 November 2011.
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Details of executive officers and persons in control of the Company as at 31 December 2011
52
Annual Report 2011
Mr. Werner Johannes Burger (Authorised Director)
Mr. Hubert Romary Bertrand Viriot (Authorised Director)
3 (Con’t)
4
34
Age
Bachelor Degree in Hospitality and Tourism Management,Glion Hotel School, Switzerland
Bachelor of Science in International Hospitality and Management, University of Wales
Education
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
-
-
Family’s relationship between management
Director Director Director
2009 -Present 2009 -Present 2009 -Present
Director
Director Director
2009 - Present
2009 - Present 2009 - Present
2010 - Present
Director/Executive Committee Member/Chief Executive Officer Director
Director
2009 -Present
2006 - Present
Director
Position
2009 -Present
Period
* Raimon Land Services Co., Ltd. was formerly Ploenchit Management Co., Ltd. The name change has been registered with the Ministry of Commerce on 1 November 2011.
Raimon Land Services Co., Ltd. (1) (Ploenchit Management Co., Ltd.*) - Property development and/or investment Northpoint PRC Co., Ltd. (1) (Wireless One Residences Co., Ltd.*) - Property development Raimon Land Resorts Co., Ltd.(1) - Investment and Service The River Co., Ltd. (1) - Property development
Raimon Land Plc. - Property development
Raimon Land Development Co., Ltd (1) - Property development The River Co., Ltd. (1) - Property development Taksin Properties Co., Ltd.(1) - Property development Contemporary Property Co. Ltd. (1) - Property development Northpoint PRC Co., Ltd.(1) (Wireless One Residences Co., Ltd.*) - Property development
Company / Type of business
Working experiences in last 5 years
* Northpoint PRC Co., Ltd. was formerly Wireless One Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 July 2011.
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Details of executive officers and persons in control of the Company as at 31 December 2011
Annual Report 2011
53
Mr. Hubert Romary Bertrand Viriot (Authorised Director)
4 (Con’t)
Age
Education
Shareholding Proportion (%)
Family’s relationship between management Director Director Director Director Director Director Director Vice President
2008 - Present 2008 - Present 2007 - Present 2007 - Present 2007 - Present 2007 - Present 2005 - Present
Position
2009 - Present
Period
Taksin Properties Co., Ltd.(1) - Property development Raimon Land Residences Co., Ltd. (1) - Property development Raimon land Unixx Co., Ltd. (1) (Ploenchit Residences Co. Ltd.*) - Property development Contemporary Property Co., Ltd. (1) - Property development Raimon Land Park View Development Co., Ltd. (1) - Property development Raimon Land Development Co., Ltd (1) - Property development Raimon Land Planner Co., Ltd. (1) - Business reorganization IFA Hotels & Resorts Ltd. - Property development
Company / Type of business
Working experiences in last 5 years
* Raimon Land Unixx Co., Ltd. was formerly Ploenchit Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 December 2011.
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Details of executive officers and persons in control of the Company as at 31 December 2011
54
Annual Report 2011
Mr. Numan Mohamed Numan Mohamed
Mr. Piaras Rodrigo Moriarty Alvarez
Mr. Kitti Tungsriwong (Authorised Director)
5
6
7
42
45
36
Age
- Ordinary Shares (RAIMON) None
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
Advance Certificate Course for Public Economics Management for Executive (Class no.9)
Directors Certification Program (DCP 43/2004)
Bachelor Degree in Accounting, The University of the Thai Chamber of Commerce
Master Degree in - Ordinary Shares Real Estate Business, Faculty (RAIMON) of Commence and Accountancy, 1,000,000 units Thammasat University
Bachelor of Business Administration and Property Development Dubai Real Estate Institute, UAE
Bachelor in Finance, DePaul University, Chicago, Illinois, USA
Education
-
-
-
Family’s relationship between management
Director Director
2008 - Present
Director
Director / Executive Director / COO / Company Secretary Director
2008 - Present
2008 - Present
2010 - Present
2004 - Present
2004 - Present
Director/ Vice President Client Management Vice President Client Management
Vice President Finance and Administration
2003 - Present
2009 - Present
Director
Position
2010 - Present
Period
* Raimon Land Services Co., Ltd. was formerly Ploenchit Management Co., Ltd. The name change has been registered with the Ministry of Commerce on 1 November 2011.
* Raimon Land Unixx Co., Ltd. was formerly Ploenchit Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 December 2011.
Raimon Land Services Co., Ltd. (1) (Ploenchit Management Co., Ltd.*) - Property development Northpoint PRC Co., Ltd. (1) (Wireless One Residences Co., Ltd.*) - Property development Raimon Land Residences Co., Ltd.(1) - Property development Raimon Land Unixx Co., Ltd. (1) (Ploenchit Residences Co., Ltd.*) - Property development
Raimon Land Plc. - Property development
IFA Hotels & Resorts Ltd. - Property development
Raimon Land Plc. - Property development
Raimon Land Plc. - Property development IFA Hotels & Resorts Ltd. - Property development
Company / Type of business
Working experiences in last 5 years
* Northpoint PRC Co., Ltd. was formerly Wireless One Residences Co., Ltd. The name change has been registered with the Ministry of Commerce on 22 July 2011.
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Details of executive officers and persons in control of the Company as at 31 December 2011
Annual Report 2011
55
Mr. Kitti Tungsriwong (Authorised Director)
7 (Con’t)
Note: (1) Raimon Land’s subsidiaries
Name / Surname Position
No
Age
Education
Shareholding Proportion (%)
Family’s relationship between management Director Director Director Director Director Director Director Senior Consultant
2007 - Present 2006 - Present 2006 - Present 2006 - Present 2005 - Present 2005 - Present 1998 - 2002
Position
2007 - Present
Period
Raimon Land Planner Co., Ltd. (1) - Business reorganisation Raimon Land Resorts Co., Ltd. (1) - Investment and service Raimon Land Park View Development Co., Ltd. (1) - Property development Raimon Land Development Co., Ltd.(1) - Property development The River Co., Ltd. (1) - Property development Taksin Properties Co., Ltd. (1) - Property development Contemporary Property Co., Ltd. (1) - Property development Price Waterhouse Cooper F.A.S Co., Ltd. - Financial advisory
Company / Type of business
Working experiences in last 5 years
Details of executive officers and persons in control of the Company as at 31 December 2011
56
Annual Report 2011
Name / Surname Position
Mr. Kitti Gajanandana
Mr. Jirawud Kuvanant
No
8
9
52
60
Age
Bachelor Degree of Accounting & Commerce Faculty, Chulalongkorn University
Master Degree in Business Administration (MBA) North Texas State University
Education
- Ordinary Shares (RAIMON) None
- Ordinary Shares (RAIMON) None
Shareholding Proportion (%)
-
-
Family’s relationship between management
1987 - Present
2002 - Present
2003 - Present
2001 - Present
2004 - 2011
2004 - Present
Period
Independent Director/ Audit Committee Independent Director Executive Director
Independent Director / Chairman of Audit Committee Director / Audit Committee Advisor
Position
Raimon Land Plc. - Property development Kowyuha Motor Group - Automobile
Raimon Land Plc. - Property development
CINMIT Company Limited - Financing advisory services Fiscal Policy Research Institute - Research and consulting business
Raimon Land Plc. - Property development
Company / Type of business
Working experiences in last 5 years
Details of executive officers and persons in control of the Company as at 31 December 2011
Annual Report 2011
57
Name / Surname Position
Mr. Gerard Conor Healy
Ms. Lamai Pittrakul
Mr. Montri Hemvichitr
No
10
11
12
53
41
51
Age
Shareholding Proportion (%)
Certificate in Social Research, NIDA
Certificate from the advance Marketing Program, Thammasat University
Bachelor Degree in Marketing, Ramkhamhaeng University
Master Degree in Economics Institute of Social Technology
Bachelor Degree in Accounting, Bangkok University
Master Degree in Accounting, Faculty of Commence and Accountancy, Thammasat University
- Ordinary Shares (RAIMON) 875 units
- Ordinary Shares (RAIMON) None
Bachelor Degree in Architecture - Ordinary Shares (B.Arch) University College (RAIMON) Dublin, Ireland 23,745 units
Education
-
-
-
Family’s relationship between management
2000 - 2004
2005 - Present
2001 - 2007
2007 - 2008
2008 - Present
1996 - 2002
2002 - Present
Period
Major Development Plc. - Property development Destination Properties Co., Ltd. - Hotel & property development
Raimon Land Plc. - Property development
Woods Bagot (Thailand) Co., Ltd. - Design and decoration
Raimon Land Plc. - Property development
Company / Type of business
Vice President Raimon Land Plc. Special Projects - Property development Project Director Raimon Land Plc. - Property development
Vice PresidentCorporate Finance Director of Finance Director of Finance
Vice President Project Development Development & Research Manager
Position
Working experiences in last 5 years
Details of executive officers and persons in control of the Company as at 31 December 2011
58
Annual Report 2011
Name / Surname Position
Mrs. Walapa Poolsap
Ms. Janjira Panitpon
Mr. Stephen Anthony Brajak
No
13
14
15
44
35
44
Age
Shareholding Proportion (%)
Member of International Businessman’s Association of Phuket (IBAP)
Holy Spirit College, Belami (St Paul’s College)
Bachelor Degree of Business Administration, Assumption University (ABAC)
Master degree in Business Administration (MBA), University of San Francisco
Bachelor Degree of Liberal Arts, Major in English, Thammasat University
- Ordinary Shares (RAIMON) None
- Ordinary Shares (RAIMON) None
Master Degree of Liberal Arts, - Ordinary Shares Major in English, (RAIMON) Thammasat University None
Education
-
-
-
Family’s relationship between management
2003 - 2004
2004 - 2006
2007 - 2008
2008 - Present
Vice President Sales & Operations General Manager Marketing and Sale Development Manager Marketing and Sale Development Manager
Assistant to Vice president of Portfolio
2004 - 2006
2006 - 2008
Vice President Corporate Planning & Strategic Investment Vice President of Portfolio,
Vice President Human Resources Human Resources Management Manager Human Resources & General Affairs Director
Position
2008 - Present
2005 - 2008
2008 - 2011
2011- Present
Period
Nopawong Construction Co., Ltd. - Construction
Raimon Land Plc. - Property development Tropical Life Co., Ltd. - Property development
Raimon Land Plc. - Property development
Bangkok Capital Alliance Co., Ltd. - Assets management Bangkok Capital Alliance Co., Ltd. - Assets management
Raimon Land Plc. - Property development
Chuo Senko (Thailand) Co., Ltd. - Advertising agency
Yum Restaurants International (Thailand) Co., Ltd. - Quick service restaurant chains
Raimon Land Plc. - Property development
Company / Type of business
Working experiences in last 5 years
Details of executive officers and persons in control of the Company as at 31 December 2011
Annual Report 2011
59
17/03/2011 11/04/2011 and 29/09/2011
15/11/2010 8/12/2010 and 18/04/2011
Notification Date
Relationship
• BPI holds 15 percent share in RV. BPI is a company in IFA group. IFA is Raimon Land’s major shareholder, holding 41.08 percent of Raimon Land’s total issued shares. • C o m m o n d i r e c t o r s o f Raimon Land IFA and Development are as follows: (1) Mr. Talal Al Bahar (2) Mr. Werner Burger
• I FA RLD holds 49 percent share in RLD. IFA RLD is a company in IFA group. IFA is Raimon Land’s major shareholder, holding 41.08 percent of Raimon Land’s total issued shares. • C o m m o n d i r e c t o r s o f Raimon Land IFA and Development are as follows: (1) Mr. Talal Al Bahar (2) Mr. Werner Burger
Connected Person
• B angkok Property Investment PTE LTD (BPI) • R aimon Land Plc. (Raimon Land) • The River Co., Ltd. (RV)
• I FA Raimon Land Development Company Limited (IFA RLD) • Raimon Land Plc. (Raimon Land) • Raimon Land Development Co., Ltd. (RLD)
Value of Transaction (Baht)
• R aimon Land acquired 24.5 million 280 million shares in RLD, being 49% of the total shares in RLD, from IFA RLD and the loan given by IFA RLD to RLD of Baht 144.3 million with the interest of Baht 55.2 million, totaling Baht 199.5 million (being the total outstanding amount as at 17 March 2011).
• R aimon Land acquired 1.85 million 315 million shares in RV, being 15% of the total s h a r e s i n RV, f r o m B P I . A f t e r t h e acquisition, the Company and its subsidiary hold 99.84% of the total shares in RV.
Nature of Transaction
Connected Transactions in 2011
• R aimon Land will used loan from financial institution to pay IFA RLD for the price of the 49% acquired shares in RLD and IFA RLD unpaid loan.
• R aimon Land used loan from financial ]institution to pay BPI for share price.
Remarks
The acquisition of 49% of shares in RLD from IFA RLD will enhance clearly the Company to control and determine policy in developing real estate project to be developed by RLD. Moreover, the acquisition of shares in RLD from IFA RLD will provide a clear shareholding structure in the Company’s subsidiary and eliminate conflict of interest among the Company its major shareholder and subsidiary. The Company will gain commercial benefit from the differences of sale price of the acquired shares and IFA RLD unpaid loan and the value of the acquired shares and IFA RLD unpaid loan with discount.
The acquisition of 15% of shares in RV from BPI will enhance clearly the Company to control and determine policy in developing The River project, the large residential condominium located on the bank of The Chaopraya river. If the development of The River project is completed, it will generate profits proportional to shareh o l d i n g o f 9 9 . 8 4 % . M o r e o v e r, t h e acquisition of shares in RV from BPI will provide a clear shareholding structure in the Company’s subsidiary and eliminate conflict of interest among the Company its major shareholder and subsidiary.
Opinions of the Board of Directors and Audit Committee
60
Annual Report 2011
1/06/2011 and 6/06/2011
Notification Date
Relationship
• I FA RLR and IFA PR are affiliates of IFA, RL’s major shareholder, holding approximately 41.08% of RL’s total issued shares. • R L a n d I F A R L R h o l d approximately 51% and 49% of RLR’s total shares, respectively. • R L R a n d I F A P R h o l d approximately 51% and 49% of PR’s total shares, respectively. • C ommon directors of RL, IFA , RL R a n d PR ar e a s follows: (1) Mr. Talal Al Bahar (2) Mr. Werner Burger
Connected Person
• I FA Raimon Land Residences Company Limited (IFA RLR) • IFA Ploenchit Residences Company Limited (IFA PR) • Raimon Land Company Limited (RL) • Raimon Land Residences Company Limited (RLR) • P l o e n c h i t R e s i dences Company Limited (PR)
Value of Transaction (Baht)
• RL acquired 49% shares in RLR from 4 IFA RLR with the price of Baht 1. • RL acquired 49% shares in PR from IFA PR with the price of Baht 1. • R L accepted the assignment of the principle and accrued interest of Baht 352.17 million (balance as at 31 May 2011) from IFA RLR with the price of Baht 1. • R L accepted the assignment of the principle and accrued interest of Baht 692.87 million (balance as at 31 May 2011) from IFA PR with the price of Baht 1.
Nature of Transaction • PR expects to receive a tax credit of approximately Baht 40.52 million from the Revenue Department and fund from other assets. PR will use such fund to repay its shareholder loans to RLR and IFA PR in proportion to the shareholding in PR (before the acquisition of shares). Upon the receipt of the repayment of the shareholder loan by RLR from PR, RLR will use such fund to repay its shareholder loans to the Company and IFA RLR in proportion to the shareholding in RLR (before the acquisition of shares).
Remarks
Not applicable, because the value and size of transaction are not qualified under the notification of the Stock Exchange of Thailand.
Opinions of the Board of Directors and Audit Committee
Necessity and reasonableness of transactions In entering into such connected transactions, the Company considered that such transactions were necessary and reasonable. The transactions were carried out in the best interests of the Company and generally in line with normal business practice. The relevant consideration, fee and commercial terms were based on the fair market price of the like transactions between the Company and other non-related parties. There was no transfer of benefits between the Company and any person with potential conflict of interest or interested party. The Company’s Audit Committee acknowledged and agreed with the decision made and the action of the Board of Directors and/or the management by taking into account the appropriateness of entering into all connected transactions in 2011. Measurement and Procedures for Approval of Connected Transactions The approval for the connected transactions has fully complied with the Securities and Exchange Act, regulations, notifications, orders and requirements of the Stock Exchange of Thailand. Any interested director or person who may have conflict of interest with the Company in any particular transaction will not be allowed to participate in considering and approving the transaction, unless the nature of such conflict of interest is waived by the laws concerning Securities and Exchange Act, regulations, notifications, orders or rules of the Stock Exchange of Thailand regarding Disclosure of Information and Other Acts of Listed Companies concerning Connected Transactions B.E. 2546. Policy and Tendency of Future Connected Transactions In the future, the Company may enter into a connected transaction if such transaction will benefit most to the Company. The Company has set out policy for future connected transaction to be in line with normal commercial business practices with a fair market price which is comparable to the transactions between the Company and other non-related parties. The Company is determined to comply with the Securities and Exchange Act, regulations, notifications, orders or requirements of the Stock Exchange of Thailand, including abiding by disclosure requirement of connected transaction and assets acquisition and disposition transaction. In addition, the Audit Committee shall attend the Board of Directors meeting held to consider the approval of any connected transaction, in order to opine on appropriateness of transaction price and reasonableness in entering into the transaction.
Annual Report 2011
61
Risk Factors 1) Business Risks Risk of land acquisition for project development Raimon Land does not employ a land bank policy for further development unless it is land which the Company determines has a high potential for development with reasonable prices to provide a satisfactory level of return. While seeking and acquiring land in prime areas at reasonable prices is a risk, but also a key success factor of the Company. The Company mitigates the risk of acquiring land for project development through its extensive network of brokers, the Company’s website, directors and executives. This powerful network enables the Company to seek or acquire land in prime areas at reasonable prices. In addition, the Company minimises this risk by making use of extensive market research and surveys. Effective market research and surveys permit the Company to analyse relevant data in order to both consider, and mitigate the risk of land acquisition. Risk of project development Raimon Land minimises risk associated with the volatility of construction material costs by employing only one construction contractor to a turnkey construction contract, which permits Raimon Land to effectively control construction costs. In addition, in order to reduce costs, the Company purchases various construction materials directly from suppliers including steel and tiles. Moreover, in some cases, the Company reduces risk by proactively fixing the delivered price of construction materials which has a direct impact on the costs of construction in order to eliminate volatility. In addition to the fluctuation of construction material costs, finding qualified contractors is another challenge which may impact project quality as well as the delivery schedule. The Company adheres to the following three risk management guidelines: 1. Raimon Land utilizes a project development risk management review and audit system for every project, which includes strictly monitoring contractor selection guidelines, conducting performance tests of key materials (steel, windows, glass and bricks), seeking new technology, focusing on developing quality construction materials, and improving the construction management system to ensure optimisation of cost and negotiation of material prices to retain consistent or even better product quality. When hiring contractors, the Company routinely enters into a fixed lump sum price contract in order to reduce the risk of cost overruns. In some cases, the Company also makes advance payments should opportunities for cost savings or risk mitigation of costs arise. 2. Raimon Land manages project development risk by hiring external consultants with appropriate capabilities, skills and expertise suited for each project. The criteria for selecting these consultants is based on their specific skills, resources, reputation, ability to apply modern technology and materials for quality control and cost savings, and improving the effectiveness of work visa efficient and effective construction methods. The consultants recommend a list of qualified contractors/ suppliers for the Company to select from and the project manager will then control and monitor the contractor, report construction progress as well as negotiate costs.
62
Annual Report 2011
3. For every project, the Company will select the main contractor from leading international construction contractors. Contractors are chosen based on their reliability to be solely accountable for the project’s management, construction, design coordination, and their overall ability to sub-contract or co-ordinate, financial, technological and organisational resources, staff competency, past experience, and reputation and reliability in delivering completed work on time and within budget. Risk of Sales The pace of sales at each project is critical for a condominium developer like Raimon Land. Faster sales help lower the Company’s financial risk and other burdens. Also, this enables the Company to manage the project’s risk easier because the Company’s projects have a construction period of between 2-4 years each. Therefore, Raimon Land focuses on effective sales management techniques, construction control to ensure project completion and transfer of ownership to customers as scheduled, and cash flow management. In order to boost sales, the Company adjusts its marketing strategy through advertising, public relations, and promotional activities as needed taking into account the current economic environment. Also, to reach Raimon Land’s customers, the Company has set up a customer relationship department to disseminate construction progress information and assure a systematic payment process. The competitive environment of the property segment, the volatility of economic environment and political uncertainty also affect the sales pace of the Company’s projects. Raimon Land focuses on sales risk management by developing projects on prime sites, brand building, initiating new ideas in project development, understanding the market, and expanding its customer base. The Company believes that the right location is the most important factor in minimizing sales risk. As a result, the Company has aggressively invested in research and feasibility studies which include the assessment of project locations, market environment, competition, target customers as well as current and future infrastructure and public transportation systems. Investment in the Company’s brand building is beginning to pay dividends as the Company is now known as a major player in the premium residential market. Raimon Land projects are well accepted domestically and internationally resulting from the value delivered to customers which meet or exceeds their expectations. Consequently, Raimon Land has a large number of repeat customers who perceive value the Company’s projects both in terms of investment assets and as a residence. In the past, since 50% of the Company’s clients were international buyers, the Company’s sales were heavily exposed to economic downturns in foreign countries. As a result, Raimon Land now focuses on the domestic market, especially Thai nationals to mitigate risk or sales volatility. In 2011, the Company successfully expanded its Thai national market which represented 65% of the Company’s sold value. At the same time however, the Company realigned is traditional foreign buyer base in 2011 to reflect market realities including the weakness in European currencies and the lingering effects of the global financial crisis. As a result, the Company increased the number of buyers from non-traditional countries including South Korea, China, Taiwan, and Russia. Further, the expansion of the Company’s customer base will create the need to continuously develop new projects which can help the Company to mitigate risks arising from competition and changes in customers’ behaviour because the Company will be able to adjust its business strategies to suit the changing environment and economic volatility while developing projects to meet customers’ needs. Furthermore, the Company is confident that the expansion to the domestic customer base will help to mitigate risks arising from international economic uncertainties.
Annual Report 2011
63
Risk from regulatory changes The Company minimises risks from amendments to related government agencies’ acts, codes and regulations including city planning acts, building control acts, building design and related ministerial regulations like open space ratio OSR, floor area ratio FAR, BMA code, Land Department code, Treasury Department code as well as regulations on environmental permits, especially regarding large and high-rise building by closely monitoring the amendments with the relevant government agencies. At the same time, the Company performs project feasibility studies by thoroughly and strictly abiding by acts, codes and regulations of the related authorities. Therefore, the Company can be confident that projects strictly comply with relevant acts, codes and regulations. Moreover, in project design, the Company also embraces innovation and technology which are environmentally friendly. The flooding in Bangkok and other parts of Thailand in 2011 greatly impacted the real estate market. While there were some indirect effects on labour supplies etc., Raimon Land’s projects avoided being directly impacted as they were located in flood-free areas. In addition, the flooding created significant demand for condominiums located in the preferred areas including Pattaya. Sale values of both Nothpoint and Zire Wongamat in Pattaya increase significantly. Because of the flooding the government may be forced to issue or amend related policies, acts, codes, and city planning acts to solve and prevent future floods which will impact the Company’s location finding activities for future projects. In order to mitigate the risk from changes in related government agencies’ acts, codes, and regulations, Raimon Land will closely monitor events as they progress. 2) Financial Risk and Other Potential Risks Risks of obtaining funds for project development Due to the nature of condominium development projects, they usually require substantial funding in the initial stages with a payback period between 3-5 years. Therefore, the Company’s ability to access a low-cost financial source is among the key factors in determining the project’s success, both from a profitability perspective and a liquidity perspective. At the same time, the Company focuses on actively managing Thailand’s rising construction costs, both the cost of raw materials and the cost of land. This also includes quality control throughout construction to assure projects are completed as scheduled. In general, developers have three major funding sources: their own working capital, borrowing from financial institutions and installments received from customers including down payments and payments received on the transfer date of condominium units. Any difficulty in obtaining financial support usually arises from sluggish sales, installment delinquency and lack of support from financial institutions. Raimon Land minimizes sales risk by selecting good locations, developing quality projects by combining innovation and technology that accounts any environmental impact. As a result, Raimon Land has been praised both domestically and overseas while the Company’s understanding of its customers has lead to the expansion of its customer base. The Company receives down payments between 25-40 percent of the selling price which is above the industry norm which helps mitigate risk from the collection of instalments. In addition, Raimon Land has been considered a premium customer and has received excellent support from many local financial institutions which is expected to continue. Raimon Land also maintains a strong relationship with investors and many private investment funds which support the Company by both funding projects and jointly investing in projects. Risk from interest rate volatility
64
Annual Report 2011
Most of the Company’s borrowings have been subject to floating interest rates or MLR which varies depending on market conditions. Hence, interest rate volatility can potentially impact the Company’s operating results and cash flows. Nevertheless, to date, such interest rate volatility has had a negligible impact on the Company’s operating results and cash flows. However, the upward trend of interest rates may reduce demand due to our clients’ ability to secure credit from financial institutions. Risk from major shareholder having control over resolutions at the shareholders meeting and over the Company’s management IFA Hotels & Resorts 3 Ltd. (IFA HR3), is the Company’s major shareholder and they exercise control over the Company’s management, the appointment of directors as well as control the majority of the shareholder voting rights for resolutions which require majority ruling. However, IFA HR3 may not vote in the agenda as it is a party with interest. For the sake of transparency, the ability to be audited and maintain operational checks and balances the Company has appointed independent individuals to serve as the Company’s independent directors and audit committee members to comply with the good corporate governance principles of the Stock Exchange of Thailand. Risk from relying on major shareholders for financial assistance From 2010 - 2011, Raimon Land paid back the loan principal and interest in full to IFA HR3 which is the Company’s major shareholder and at present, the Company does not require financial assistance from IFA HR3. Nonetheless, going forward, should the Company require financial assistance, we strongly believe that IFA HR3 would provide such assistance as they have consistently supported the Company including granting additional loans and extending repayment periods for principal and interest. The Company is confident it will continue to receive such good support in the future. Risk from providing financial assistance to subsidiaries and affiliates Raimon Land has provided financial support by way of loans and guarantees to its subsidiaries and affiliates which may create a risk in terms of expenses or liabilities if those subsidiaries or affiliates fail to repay those debts. Nonetheless, the Company’s financial assistance is specifically granted to those entities which the Company has control over and manages. To minimize this risk, the Company has strictly complied with the criteria outlined by the Stock Exchange of Thailand regarding connected transactions. That is, the Company will request the opinion of the audit committee and the approval of the Company’s board of directors and/or from its shareholders meeting, if the matter meets the requirements set forth by the Stock Exchange of Thailand. Additionally, if the Company and/or its subsidiaries have any surplus liquidity, the Company and/or its subsidiaries will, by way of inter-company loans, manage to gain maximum returns and benefits to the group both directly and indirectly, given that the Company is their major shareholder. Risk from the change of revenue recognition method Previously, the Company and its subsidiaries used the percentage-of-completion method in recognizing revenue from real estate sales. However, in 2011 the Company and its subsidiaries changed its revenue recognition policy in accordance with Thai Accounting Standard 18 (revised 2009) “Revenue”. Thus, the Company and its subsidiaries recognize revenue when significant risks and rewards are transferred to the buyer instead of the percentage of completion method. The Change has decreased profit on paper for the Company and its subsidiaries for the year 2011 by Baht 461 million (company only: profits increased by Baht 9 million). Annual Report 2011
65
Nevertheless, the change in revenue recognition method does not affect the Company’s cash flow, operations or saleability of condominium units developed by the Company and its subsidiaries. The Company and its subsidiaries will be able to recognise the revenue reversed from retained earnings (losses) due to the accounting standard amendment once the Company and its subsidiaries have transferred significant risks and rewards to the buyer in subsequent years. Risk from unpaid dividend As a result of the adoption of the new Thai Accounting Standard “Revenue”, the Company had to record an increased retained loss. As of 31 December 2011, the Company has retained losses of Baht 604 million which has not allowed the Company to pay dividends in accordance with the law. Under Raimon Land’s policy, shareholders bear the risk of no dividends until the accumulated retained losses are covered. Risk from the attrition of key personnel The real estate development business relies heavily on the knowledge and capabilities of personnel. To this end, the Company has selected and employed qualified and competent employees who have a high potential for advancement. The Company recognizes the importance of its personnel and constantly strives to increase morale and enable the personal and professional growth of its personnel through suitable levels of remuneration, benefits, and opportunities for training. As a result, the Company believes that it has minimised the risk of key personnel leaving the Company. Risk from political environment There had been much political unrest domestically in recent years and this unrest among the Thai population is one of the factors affecting local customers’ confidence in government policy and management. Safety has become a concern among foreign customers and because of this, foreign investors or buyers of condominium units has receded. For these reasons, the Company closely monitors the political landscape and may implement a business contingency plan to handle issues which may arise and that may cause business disruptions in the future. In order to mitigate sales risk, the Company has increased its focus on the domestic customer by developing projects that meet customer needs in the middle to high end markets.
66
Annual Report 2011
Financial Statements
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Report and consolidated financial statements 31 December 2011
Annual Report 2011
67
Report of Independent Auditor To the Shareholders of Raimon Land Public Company Limited I have audited the accompanying consolidated statement of financial position of Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities as at 31 December 2011, the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and have also audited the separate financial statements of Raimon Land Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company, its subsidiaries and its jointly controlled entities as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities, and the separate financial statements of Raimon Land Public Company Limited as at 31 December 2010 and for the year then ended, as presented herein for comparative purposes, were audited in accordance with generally accepted auditing standards by another auditor of our firm who expressed an unqualified opinion on those financial statements, under her report dated 28 February 2011. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities and of Raimon Land Public Company Limited as at 31 December 2011, the results of their operations, and cash flows for the year then ended, in accordance with generally accepted accounting principles. Without qualifying my opinion on the aforementioned financial statements, I draw attention to Note 3 and 5 to the financial statements. During the current year, the Company adopted a number of revised and new accounting standards as issued by the Federation of Accounting Professions, and applied them in the preparation and presentation of its financial statements. The Company has restated the financial statements as at 31 December 2010 and for the year then ended to reflect the changes in accounting policies resulting from the adoption of these new accounting standards.
Siraporn Ouaanunkun Certified Public Accountant (Thailand) No. 3844 Ernst & Young Office Limited Bangkok: 27 February 2012
68
Annual Report 2011
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of financial position As at 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note
2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Assets Current assets Cash and cash equivalents
9
661,618,586
580,814,671
438,296,803
326,792,170
18
25,100,000
25,100,000
25,100,000
25,100,000
8
-
-
335,655,440
268,441,081
and interest receivable
8
-
-
439,005,874
23,861,884
Project development cost
10
12,620,106,370
9,868,122,434
3,347,304,667
3,864,026,062
514,025,124
218,657,379
304,904,508
5,372,824
Withholding tax deducted at source
14,657,915
65,709,184
14,651,807
36,789,492
Other current assets
60,322,724
46,726,055
10,641,258
11,085,740
13,895,830,719
10,805,129,723
4,915,560,357
4,561,469,253
8, 12
-
258,465,802
-
258,465,802
Investments in subsidiaries
11
-
-
1,713,964,476
1,007,769,834
Investments in joint ventures
12
-
4,192,138
-
254,999,940
14,670,181
7,397,454
14,670,181
7,397,454
Restricted bank deposits Amounts due from related parties Short-term loans to related parties
Advance payment to contractors
Total current assets Non-current assets Long-term loans to related parties and interest receivable
Land awaiting development Investment properties
13
38,076,330
39,724,203
38,076,330
39,724,203
Property, plant and equipment
14
65,016,499
107,551,882
53,487,180
93,296,847
Deferred tax assets
15
1,050,084,032
1,049,951,717
268,209,075
401,787,062
Leasehold right
82,500,000
85,833,333
-
-
Deposits
23,954,723
11,328,033
4,723,033
5,018,033
Withholding tax deducted at source
98,913,026
11,441,805
36,789,492
11,325,493
Other non-current assets
30,404,281
22,802,944
9,995,335
14,218,964
Total non-current assets Total assets
1,403,619,072
1,598,689,311
2,139,915,102
2,094,003,632
15,299,449,791
12,403,819,034
7,055,475,459
6,655,472,885
The accompanying notes are an integral part of the financial statements.
Annual Report 2011
69
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of financial position (continued) As at 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note
2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Liabilities and shareholders’ equity Current liabilities Short-term loans from financial institutions
16
30,000,000
30,000,000
30,000,000
30,000,000
Trade and other payables
17
981,216,091
703,096,800
429,210,233
320,382,263
Accrued expenses
51,534,353
27,763,988
38,704,881
25,713,943
Retention payable
89,639,738
76,224,510
50,410,948
57,455,650
Current portion of additional purchase of investment in subsidiary payable
11
57,494,746
160,631,407
57,494,746
160,631,407
Current portion of income tax payable
15
143,547,441
-
-
-
19
6,370,082,392
4,951,892,755
1,526,345,659
1,097,946,960
18
15,000,000
-
15,000,000
-
8
-
3,189,190
567,708,957
231,812,045
100,510,819
186,823,545
-
-
48,306,261
37,913,541
33,969,295
28,045,156
7,887,331,841
6,177,535,736
2,748,844,719
1,951,987,424
11
-
54,721,086
-
54,721,086
15
29,614,791
-
-
-
18
6,592,229,691
4,539,811,184
1,609,059,748
1,817,785,566
Deferred tax liabilities
15
172,021,575
220,998,049
-
-
Provision for long-term employee benefits
20
14,097,506
10,711,584
14,097,506
10,711,584
1,081,427
1,647,513
552,929
1,647,513
6,809,044,990
4,827,889,416
1,623,710,183
1,884,865,749
14,696,376,831
11,005,425,152
4,372,554,902
3,836,853,173
Deposits and advance received from customers Current portion of long-term loans from financial institutions Short-term loans from related parties and accrued interest Accrued income tax Other current liabilities Total current liabilities Non-current liabilities Additional purchase of investment in subsidiary payable, net of current portion Income tax payable, net of current portion Long-term loans from financial institutions, net of current portion
Other non-current liabilities Total non-current liabilities Total liabilities
The accompanying notes are an integral part of the financial statements.
70
Annual Report 2011
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of financial position (continued) As at 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note
2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Shareholders’ equity Share capital Registered 3,250,385,569 ordinary shares of Baht 1 each
3,250,385,569
3,250,385,569
3,250,385,569
3,250,385,569
3,250,385,569
3,250,385,569
3,250,385,569
3,250,385,569
(564,048,205)
(242,939,538)
-
-
Issued and paid up 3,250,385,569 ordinary shares of Baht 1 each Excess of investment in subsidiary arising as a result of additional purchase of investment in the subsidiary at a price higher than the net book value of the subsidiary at the acquisition date
11
Retained earnings (deficits) Appropriated - statutory reserve Unappropriated
21
36,131,233
36,131,233
36,131,233
36,131,233
(2,123,638,729)
(1,649,332,733)
(603,596,245)
(467,897,090)
598,829,868
1,398,393,882
2,682,920,557
2,818,619,712
4,243,092
4,149,351
-
-
603,072,960
1,398,393,882
2,682,920,557
2,818,619,712
15,299,449,791
12,403,819,034
7,055,475,459
6,655,472,885
-
-
-
-
Equity attributable to owners of the Company Non-controlling interests of the subsidiaries Total shareholders’ equity Total liabilities and shareholders’ equity
The accompanying notes are an integral part of the financial statements.
................................................................................. Directors .................................................................................
Annual Report 2011
71
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of comprehensive income For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note
Separate financial statements
2011
2010 (Restated)
2011
2010 (Restated)
1,151,397,885 12,010,578
3,240,896,690 4,115,057
1,151,397,885 7,150,098
3,240,896,690 4,115,057
35,904,918 13,299,367 -
11,318,832 50,305,904 33,591,199
30,728,182 89,491,958 31,623,406 17,566,134 -
30,728,183 180,471,155 64,329,844 33,591,199
15,632,994
76,026,294 75,835,588
9,444,307
65,860,130
1,228,245,742
3 ,492,089,564
1,337,401,970
3,619,992,258
818,878,641 202,217,472 374,575,907
2,314,016,262 244,716,235 298,490,545
818,878,641 138,705,021 300,828,287
2,314,016,262 181,775,420 257,490,667
8
-
-
-
11,724,000
8
-
-
-
335,115,578
11
-
-
-
99,999,930
12
-
-
-
5,099,300
Profit or loss: Revenues Sales of residential condominium units Rental and service income Other income Project management fee income Marketing commission income Guarantee fee income Interest income Gain on exchange rate Reversal of allowance for diminution in value of land awaiting sale Others
8 8 8 8
Total revenues Expenses Cost of residential condominium units sold Selling expenses Administrative expenses Other expenses Doubtful account in short-term loan to subsidiary Doubtful account in long-term loan to jointly controlled entity Loss on diminution in value of investment in subsidiaries Loss on diminution in value of investment in joint venture Reduction of interest receivable of loans to jointly controlled entities
-
93,908,942
-
93,908,942
Total expenses
8
1,395,672,020
2 ,951,131,984
1,258,411,949
3,299,130,099
Profit (loss) before share of profit (loss) from investments in joint ventures, finance cost and corporate income tax Share of profit (loss) from investments in joint ventures
(167,426,278)
540,957,580
78,990,021
320,862,159
10,610,535
(309,138,596)
-
-
(156,815,743) (114,710,310)
231,818,984 (151,589,893)
78,990,021 (81,111,188)
320,862,159 (142,713,785)
(271,526,053) (208,794,869)
80,229,091 (20,785,712)
(2,121,167) (133,577,988)
178,148,374 (64,064,483)
(480,320,922)
59,443,379
(135,699,155)
114,083,891
-
-
-
-
(480,320,922)
59,443,379
(135,699,155)
114,083,891
12
Profit (loss) before finance cost and corporate income tax Finance cost Profit (loss) before corporate income tax Corporate income tax Profit (loss) for the year
15
Other comprehensive income for the year Total comprehensive income for the year
The accompanying notes are an integral part of the financial statements.
72
Annual Report 2011
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of comprehensive income (continued) For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note
2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Profit (loss) attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
(474,305,996)
63,625,291
(6,014,926)
(4,181,912)
(480,320,922)
59,443,379
(474,305,996)
63,625,291
(6,014,926)
(4,181,912)
(480,320,922)
59,443,379
(0.15)
0.02
(135,699,155)
114,083,891
(135,699,155)
114,083,891
(0.04)
0.04
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
Earnings per share
23
Basic earnings (loss) per share Profit attributable to equity holders of the Company
The accompanying notes are an integral part of the financial statements.
Annual Report 2011
73
74
Annual Report 2011
3,250,385,569
The accompanying notes are an integral part of the financial statements.
Balance as at 31 December 2011
-
Additional purchase of investment in the subsidiary Total comprehensive income for the year 11
3,250,385,569
Balance as at 31 December 2010 - as restated
-
3,250,385,569
Balance as at 31 December 2010 - as previously reported Cumulative effect of changes in accounting policies due to the adoption of new accounting standards 5
3,250,385,569
Balance as at 31 December 2010 - as restated
(564,048,205)
(321,108,667) -
(242,939,538)
-
(242,939,538)
(242,939,538)
(242,939,538) -
-
3,250,385,569 -
5
(242,939,538)
3,250,385,569
alance as at 31 December 2009 - as restated B Total comprehensive income for the year (restated)
Balance as at 31 December 2009 - as previously reported Cumulative effect of changes in accounting policies due to the adoption of new accounting standards
Note
Issued and fully paid-up share capital
Excess of investment in subsidiary arising as a result additional purchase of investment in the subsidiary at a price higher than the net book value of the subsidiary at the acquisition date
36,131,233
-
36,131,233
-
36,131,233
36,131,233
-36,131,233 -
-
36,131,233
Appropriated
(2,123,638,729)
(474,305,996)
(1,649,332,733)
(1,134,438,408)
(514,894,325)
(1,649,332,733)
(1,712,958,024) 63,625,291
(1,100,554,603)
(612,403,421)
Unappropriated
Retained earnings (deficits)
Equity attributable to owners of the Company
598,829,868
(321,108,667) (474,305,996)
1,394,244,531
(1,134,438,408)
2,528,682,939
1,394,244,531
1,330,619,240 63,625,291
(1,100,554,603)
2,431,173,843
Total equity attributable to owners of the Company
Consolidated financial statements
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Statements of changes in shareholders’ equity For the years ended 31 December 2011 and 2010
4,243,092
6,108,667 (6,014,926)
4,149,351
(119,657,660)
123,807,011
4,149,351
8,331,263 (4,181,912)
(60,400,398)
68,731,661
Equity attributable to non-controlling interests of the subsidiaries
603,072,960
(315,000,000) (480,320,922)
1,398,393,882
(1,254,096,068)
2,652,489,950
1,398,393,882
1,338,950,503 59,443,379
(1,160,955,001)
2,499,905,504
Total shareholders’ equity
(Unit: Baht)
Annual Report 2011
75
The accompanying notes are an integral part of the financial statements.
2,682,920,557
(603,596,245)
36,131,233
Balance as at 31 December 2011
3,250,385,569
(135,699,155)
(120,632,904)
(135,699,155)
(120,632,904)
Total comprehensive income for the year
36,131,233
2,939,252,616
2,818,619,712
(467,897,090)
(347,264,186)
114,083,891
2,704,535,821
(639,404,151)
3,343,939,972
114,083,891
(581,980,981)
(639,404,151)
57,423,170
Unappropriated
Total
2,818,619,712
3,250,385,569
36,131,233
36,131,233
36,131,233
36,131,233
Appropriated
Retained earnings
(Unit: Baht)
(467,897,090)
Balance as at 31 December 2010 - as restated
the adoption of new accounting standards
Cumulative effect of changes in accounting policies due to
3,250,385,569
Balance as of 31 December 2010 - as previously reported
3,250,385,569
3,250,385,569
5
5
3,250,385,569
share capital
Balance as at 31 December 2010 - as restated
Total comprehensive income for the year (restated)
Balance as at 31 December 2009 - as restated
the adoption of new accounting standards
Cumulative effect of changes in accounting policies due to
Balance as of 31 December 2009 - as previously reported
Note
Issued and fully paid-up
Raimon RaimonLand LandPublic PublicCompany CompanyLimited, Limited,its itssubsidiaries subsidiariesand andits itsjointly jointlycontrolled controlledentities entities Statements Statements of changes of changes in shareholders’ in shareholders’ equity equity (continued) (continued) For the years For the ended years 31ended December 31 December 2011 and2011 2010and 2010
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Cash flow statements For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements 2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Cash flows from operating activities Profit (loss) before tax
(271,526,053)
80,229,091
(2,121,167)
178,148,374
40,971,317
25,421,761
30,376,561
15,179,800
Adjustments to reconcile profit (loss) before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation Loss (gain) on disposal/ written - off of equipment
7,766,065
(652,005)
7,670,287
(681,300)
Unrealised loss (gain) from exchange
2,773,599
(21,829,804)
2,773,599
(21,829,804)
-
(76,026,294)
-
-
-
-
-
11,724,000
-
-
-
335,115,578
-
-
-
99,999,930
-
-
-
5,099,300
-
93,908,942
-
93,908,942
(10,610,535)
309,138,596
-
-
Reversal of allowance for diminution in value of land awaiting sale Doubtful account in short-term loan to subsidiary Doubtful account in long-term loan to jointly controlled entity Loss on diminution in value of investment in subsidiaries Loss on diminution in value of investment in joint venture Reduction of interest receivable of loans to jointly controlled entities Share of loss profit from investments in joint ventures Provision for long-term employee benefits Interest income
3,385,922
2,103,941
3,385,922
2,103,941
(13,299,367)
(50,305,904)
(17,566,134)
(64,329,844)
386,723,236
369,236,647
161,196,506
215,035,807
146,184,184
731,224,971
185,715,574
869,474,724
-
(67,214,359)
(158,016,246)
Interest expenses (consist of interest expenses for operating and interest capitalised as part of project development cost) Profit from operating activities before changes in operating assets and liabilities Operating assets decrease (increase)
Amounts due from related parties Project development cost Advance payment to contractors Other current assets Deposits Other non-current assets
(1,890,737,979)
(604,045,710)
509,448,668
584,221,723
(295,162,674)
228,641,243
(299,531,684)
45,414,062
(2,901,012)
(17,027,305)
444,482
(7,006,716)
(12,626,690)
(2,438,397)
295,000
(2,636,397)
(809,912)
3,901,119
3,238,619
(8,170,274)
The accompanying notes are an integral part of the financial statements.
76
Annual Report 2011
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Cash flow statements (continued) For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements 2011
Separate financial statements
2010
2011
(Restated)
2010 (Restated)
Operating liabilities increase (decrease) Trade and other payables
207,484,424
184,502,168
88,396,706
(154,364,568)
Accrued expenses
7,785,204
5,905,846
12,847,310
6,767,940
Retention payable
11,950,775
8,524,481
(7,044,702)
850,533
1,231,389,330
270,934,849
428,398,699
(880,981,209)
9,692,157
5,556,872
5,924,139
39,429,892
(1,001,342)
(2,224,471)
(1,094,585)
(2,224,471)
(588,753,535)
813,455,666
859,823,867
332,758,993
4,814,741
1,892,684
2,302,248
128,678,414
(368,711,611)
(367,916,139)
(119,724,703)
(200,714,899)
11,382,813
19,227,154
11,325,493
6,760,036
(101,578,503)
(117,705,547)
(14,651,807)
(36,789,493)
(1,042,846,095)
348,953,818
739,075,098
230,693,051
1,759,079
-
(23,627,272)
Deposits and advance received from customers Other current liabilities Other non-current liabilities Cash flows from (used in) operating activities Cash received from interest income Cash paid for interest expenses Cash refund from withholding tax deducted at source Cash paid for corporate income tax Net cash flows from (used in) operating activities Cash flows from investing activities Decrease (increase) in restricted bank deposits
-
Decrease in short-term loans to related parties
-
-
2,890,700
163,560,000
Decrease in long-term loans to related parties
-
576,901,800
-
576,901,800
Cash paid for investment in joint venture
-
(254,490,000)
-
(254,490,000)
Cash received from sale of land awaiting sale
-
711,800,000
-
-
(12,710,580)
(50,446,876)
(11,791,773)
(49,758,697)
Cash received from sales of building and equipment
16,187,477
2,444,186
16,187,477
2,444,186
Cash paid for purchase of investment in subsidiaries
(315,499,700)
-
(315,499,700)
-
Cash paid for acquisition of building and equipment
Net cash paid for purchase of investment in subsidiary and rights of claim in debts (Note 11)
(201,341,041)
-
(280,000,000)
-
10,226,693
-
(4)
-
(503,137,151)
987,968,189
(588,213,300)
415,030,017
Cash received from purchase of investments in subsidiaries (Note 11) Net cash flows from (used in) investing activities
The accompanying notes are an integral part of the financial statements.
Annual Report 2011
77
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Cash flow statements (continued) For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements 2011
2010
Separate financial statements 2011
(Restated)
2010 (Restated)
Cash flows from financing activities Decrease in short-term loans from financial institutions
-
(1,726,398,955)
-
(120,000,000)
-
(540,695,216)
315,000,000
(536,789,270)
1,787,418,507
1,278,453,028
(193,725,819)
359,927,410
(160,631,346)
(101,470,127)
(160,631,346)
(101,470,127)
1,626,787,161
(1,090,111,270)
(39,357,165)
(398,331,987)
80,803,915
246,810,737
111,504,633
247,391,081
Cash and cash equivalents at beginning of the year
580,814,671
334,003,934
326,792,170
79,401,089
Cash and cash equivalents at end of the year
661,618,586
580,814,671
438,296,803
326,792,170
Increase (decrease) in short-term loan from related parties Increase (decrease) in long-term loans from financial institutions Cash paid for purchase of investment in subsidiary payable Net cash flows from (used in) financing activities Net increase in cash and cash equivalents
The accompanying notes are an integral part of the financial statements.
78
Annual Report 2011
Raimon Land Public Company Limited, its subsidiaries and its jointly controlled entities Notes to financial statements For the years ended 31 December 2011 and 2010
1. General information
Raimon Land Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. Its major shareholder is IFA Hotels & Resorts 3 Ltd., a company existing under Kuwait laws. The Company is principally engaged in the property development. The registered office of the Company is at 62 The Millennia Tower, 22nd Floor, Unit 2201-3, Langsuan Road, Lumpini, Pathumwan, Bangkok.
2. Basis of preparation 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession 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. 2.2 Basis of consolidation a) The consolidated financial statements include the financial statements of the Company (“the Company”) and the following subsidiary companies (“the subsidiaries”):
Annual Report 2011
79
Company’s name
Contemporary Property Company Limited Raimon Land Planner Company Limited The River Company Limited and its subsidiary (Held by the Company 88.99% (2010: 73.99%) and indirect held by Contemporary Property Company Limited 10.85%) Raimon Land Property Company Limited Raimon Land Park View Development Company Limited Raimon Land Resorts Company Limited Northpoint PRC Company Limited (Formerly known as “Wireless One Residences Company Limited) Raimon Land Residences Company Limited (2010: jointly controlled entity, held by the Company 51%) Raimon Land Unixx Company Limited (Formerly known as “Ploenchit Residences Company Limited”) (Held by the Company 49% and indirect held by Raimon Land Residences Company Limited 51%) (2010: jointly controlled entity) Raimon Land Development Company Limited (2010: jointly controlled entity, held by the Company 51%) Raimon Land Services Company Limited
Nature of business
Country of incorporation
Percentage of shareholding 2011 Percent
2010 Percent
Property development Plan and planner administrator Property development
Thailand Thailand
98.59 95.00
98.59 95.00
Thailand
99.84
84.84
Dissolution Property development
Thailand Thailand
99.99
99.99 99.99
Investment and service Property development
Thailand Thailand
99.93 99.99
99.93 99.99
Property development
Thailand
99.99
-
Property development
Thailand
99.99
-
Property development
Thailand
99.99
-
Services
Thailand
99.94
-
On 31 March 2011, the Company purchased an additional 1,848,005 ordinary shares with a par value of Baht 100 each of The River Company Limited (the subsidiary), representing a 15% shareholding, for a price of Baht 170.45 per share, or a total of Baht 315 million. This investment increased the Company’s shareholding from 73.99% to 88.99% of the subsidiary’s registered share capital. On 31 May 2011, the Company entered into agreements to purchase a 49% shareholding in Raimon Land Residences Company Limited and a 49% shareholding in Ploenchit Residences Company Limited (a subsidiary of Raimon Land Residences Company Limited which has a 51% shareholding). These investments increased the Company’s shareholding in Raimon Land Residences Company Limited from 51% to 99.99% and gave it a 49% shareholding in Ploenchit Residences Company Limited. The status of Raimon Land Residences Company Limited and its subsidiaries thus changed from jointly controlled entities to subsidiaries and their financial statements have therefore been included in the consolidated financial statements as from 31 May 2011. On 28 September 2011, the Company entered into an agreement to purchase a 49% shareholding in Raimon Land Development Company Limited. This investment increased the Company’s shareholding in Raimon Land Development Company Limited from 51% to 99.99%. The status of Raimon Land Development Company Limited thus changed from jointly controlled entity to subsidiary and its financial statements has therefore been included in the consolidated financial statements as from 28 September 2011. On 28 October 2554, the Company purchased a 4,997 ordinary shares with a par value of Baht 100 each of Raimon Land Services Company Limited, representing a 99.94% shareholding, for a total price of Baht 499,700.
80
Annual Report 2011
b) Subsidiaries are fully consolidated, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company. d) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. e) Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position. 2.3 The separate financial statements, which present investments in subsidiaries and joint ventures under the cost method, have been prepared solely for the benefit of the public. 3. Adoption of new accounting standards during the year During the current year, the Company adopted a number of revised and new accounting standards, issued by the Federation of Accounting Professions, as listed below. Accounting standards: TAS 1 (revised 2009) TAS 2 (revised 2009) TAS 7 (revised 2009) TAS 8 (revised 2009) TAS 10 (revised 2009) TAS 11 (revised 2009) TAS 16 (revised 2009) TAS 17 (revised 2009) TAS 18 (revised 2009) TAS 19 TAS 23 (revised 2009) TAS 24 (revised 2009) TAS 26 TAS 27 (revised 2009) TAS 28 (revised 2009) TAS 29 TAS 31 (revised 2009) TAS 33 (revised 2009) TAS 34 (revised 2009) TAS 36 (revised 2009) TAS 37 (revised 2009) TAS 38 (revised 2009) TAS 40 (revised 2009)
Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events after the Reporting Period Construction Contracts Property, Plant and Equipment Leases Revenue Employee Benefits Borrowing Costs Related Party Disclosures Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements Investments in Associates Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Investment Property
Annual Report 2011
81
Financial reporting standards: TFRS 2 TFRS 3 (revised 2009) TFRS 5 (revised 2009) TFRS 6
Share-Based Payment Business Combinations Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral Resources
Financial Reporting Standard Interpretations: TFRIC 15
Agreements for the Construction of Real Estate
Accounting Standard Interpretations: SIC 31
Revenue-Barter Transactions Involving Advertising Services
These accounting standards do not have any significant impact on the financial statements, except for the following accounting standards which have the effect to the financial statements of the Company and a subsidiary. TAS 18 (revised 2009) Revenue This accounting standard requires entities to recognise revenue from sales of goods, which includes real estate developed for sale, when significant risks and rewards are transferred to the buyer. Previously, the Company and its subsidiaries elected to use the percentage-of-completion method in recognising revenue from real estate sales. The Company and its subsidiaries changed this accounting policy in the current year and restated the prior year’s financial statements, presented for comparative purposes, as though the Company and its subsidiaries initially recognised revenue from real estate sales when the significant risks and rewards were transferred to the buyer. The change has the effect of decreasing profit of the Company and its subsidiaries for the year 2011 by Baht 461 million (0.142 Baht per share) (Separate financial statements: increasing profit by Baht 9 million, or 0.003 Baht per share). However, the Company and its subsidiary are unable to disclose the effect to each line of the financial statements for the year. The cumulative effect of this change in accounting policy on the beginning balance has been presented in Note 5 to the financial statements.
TAS 19 Employee Benefits This accounting standard requires employee benefits to be recognised as expense in the period in which the service is performed by the employee. In particular, an entity has to evaluate and make a provision for post-employment benefits using actuarial techniques. The Company and its subsidiaries previously accounted for such employee benefits when they were incurred.
82
Annual Report 2011
The Company and its subsidiaries have changed this accounting policy in the current year and recognise the liability in the transition period retrospectively as though the Company and its subsidiaries initially recorded these employee benefit expenses. The change has the effect of decreasing the profit of the Company and its subsidiaries for the year 2011 by Baht 2 million, (0.001 Baht per share) (Separate financial statements: decreasing profit by Baht 2 million, or 0.001 Baht per share). The cumulative effect of the changes in the accounting policy has been presented in Note 5 to the financial statements. 4. New accounting standards issued during the years 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: TAS 12 TAS 20 (revised 2009) TAS 21 (revised 2009)
Income Taxes Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates
Accounting Standard Interpretations: SIC 10 SIC 21 SIC 25
Government Assistance - No Specific Relation to Operating Activities Income Taxes - Recovery of Revalued Non-Depreciable Assets Income Taxes - Changes in the Tax Status of an Entity or its Shareholders
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. However, in 2010 the Company has early adopted TAS 12 “Incomes Taxes” before the effective date. 5. Cumulative effect of changes in accounting policies due to the adoption of new accounting standards During the current year, the Company made the changes to its significant accounting policies described in Note 3 to the financial statements, as a result of the adoption of revised and new accounting standards. The cumulative effect of the changes in the accounting policies has been separately presented in the statements of changes in shareholders’ equity.
The cumulative effect of the changes in accounting policies due to the adoption of new accounting standards and restatement of the financial statements, on the beginning balance of retained earnings for 2011 and 2010, comprises: (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
2011
2010
2011
2010
(1,246,598)
(1,154,929)
(113,135)
(633,378)
Cumulative effect of changes in accounting policies: Revenue recognition from real estate sales Employee benefits Total
(7,498)
(6,026)
(7,498)
(6,026)
(1,254,096)
(1,160,955)
(120,633)
(639,404)
Annual Report 2011
83
The amounts of adjustments affecting the statement of financial position as at 31 December 2010 and for the year ended 31 December 2010 are summarised below. (Unit: Thousand Baht) 31 December 2010 Consolidated financial statements
Separate financial statements
Statements of financial position Decrease in unbilled receivable
(1,770,147)
(312,753)
3,805,693
466,532
39,724
39,724
Decrease in property, plant and equipment
(39,724)
(39,724)
Increase in deferred tax assets
612,010
52,130
Decrease in accrued expenses
(228,630)
(24,719)
Increase in deposits and cash received from customers
4,045,459
340,549
74,111
-
Increase in project development cost Increase in investment properties
Increase in deferred tax liabilities Increase in provision for long-term employee benefits Decrease in non-controlling interests of the subsidiaries Increase in deficits
10,712
10,712
(119,658)
-
(1,134,438)
(120,633)
(Unit: Thousand Baht) For the year ended 31 December 2010 Consolidated financial statements
Separate financial statements
Statements of comprehensive income Increase (decrease) in sales of residential condominium units Increase (decrease) in cost of residential condominium units sold Decrease in selling expenses Decrease in administrative expense
(229,934)
2,514,050
(22,094)
1,794,159
(129,314)
(20,927)
(1,004)
(1,004)
Increase in employee expenses
2,104
2,104
Increase in corporate income tax
13,515
220,947
Decrease in profit attributable to non-controlling interest of the subsidiaries
(70,488)
-
Increase (decrease) in profit attributable to equity holders of the Company
(22,653)
518,771
(0.01)
0.16
Increase (decrease) in basic earnings per share (Baht)
6. Significant accounting policies 6.1 Revenue recognition
84
Sales of residential condominium units
Revenues from sales of residential condominium units are recognised as revenues when significant risks and rewards are transferred to the buyer.
Annual Report 2011
Rental and related service income
Rental and related service income of units in office buildings and residential buildings are recognised on an accrual basis.
Interest income
Interest income is recognised on an accrual basis based on the effective interest rate.
6.2 Cost of residential condominium units sold
In determining the cost of residential condominium units sold, the total development costs are attributed to units sold on the basis of the sale value.
6.3 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. 6.4 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 experience and analysis of debt aging.
6.5 Project development cost
Project development cost is stated at cost less allowance for loss on diminution in value of projects. The details of cost calculation are as follows:
Land Construction in progress
-
The Company and its subsidiaries record cost of land s eparately for each project.
-
Construction in progress consists of the cost of design, cost of construction, public utility costs and interest capitalised to cost of projects. The Company and its subsidiaries record cost of design, construction and public utilities based on the actual cost incurred.
6.6 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction of the projects that necessarily takes a substantial period of time to get ready for its intended sale are capitalised as part of the cost of the respective projects and will be ceased when the projects are completed or when the construction is suspended until active development resumes. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Annual Report 2011
85
6.7 Investments a) Investments in joint ventures are accounted for in the consolidated financial statements using the equity method. b) Investments in subsidiaries and joint ventures are accounted for in the separate financial statements using the cost method. 6.8 Investment properties Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and allowance for loss on impairment (if any). Depreciation of investment properties is calculated by reference to their costs on the straightline basis over estimated useful lives of 20 years. Depreciation of the investment properties is included in determining income. On disposal of investment properties, the difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period when the asset is derecognised. 6.9 Property, plant and equipment and depreciation Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets. Depreciation of buildings and equipment is calculated by reference to their costs on a straight-line basis over the following estimated useful lives: Buildings and building improvement Temporary show building Furniture, fixtures and office equipment Motor vehicles
20 years 3 years 3, 5 years 5 years
Depreciation is included in determining income. No depreciation is provided on land and land improvement. 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. 6.10 Leasehold right and amortisation Leasehold right is stated at cost less accumulated amortisation. Amortisation of leasehold right is calculated by reference to its cost on a straight-line basis over the leasehold period.
86
Annual Report 2011
6.11 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. 6.12 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. 6.13 Impairment of assets At the end of each reporting period, the Company performs impairment reviews in respect of the property, plant and equipment and other 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. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in profit or loss. 6.14 Employee benefits Short-term employee benefits Salaries, wages, bonuses, contributions to the social security fund and employee joint investment program 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. Annual Report 2011
87
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 a professionally qualified independent actuary 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. 6.15 Income tax Income tax expense represents the sum of corporate income tax currently payable and deferred tax. Current tax Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation. Deferred tax Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period. The Company recognises deferred tax liabilities for all taxable temporary differences while it recognises deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised. At each reporting date, the Company reviews and reduces the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. The Company records deferred tax directly to shareholders’ equity if the tax relates to items that are recorded directly to shareholders’ equity. 7. Significant accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles 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:
88
Annual Report 2011
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 the Company’s 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 in the period 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. Deferred tax assets Deferred tax assets are recognised in respect of temporary differences only to the extent that it is probable that taxable profit will be available against which these differences can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimate future profits. 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. 8. Related party transactions During the years, the Company and its subsidiaries 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.
Annual Report 2011
89
(Unit: Million Baht) Consolidated financial statements Transactions with subsidiaries (Eliminated from the consolidated financial statements)
2011
Project management fee income
Separate financial statements
2010 (Restated)
2011
Transfer Pricing Policy
2010 (Restated)
-
-
31
31
As stipulated in agreements
Marketing commission income
-
-
54
169
Guarantee fee income
-
-
32
-
At 1% of average outstanding guarantee per annum
Interest income
-
-
7
16
Interest rate of 5-10% per annum
Interest expense (Baht 44 million was capitalised as part of project development cost during 2010)
-
-
24
53
Interest rate of 5% per annum and interest rate of average MLR-0.75% per annum (2010: Interest rate of 5% and 10% per annum)
At prices charged to the third parties
(Unit: Million Baht) Consolidated financial statements
Separate financial statements
2011
2011
2010 (Restated)
Transfer Pricing Policy
2010 (Restated)
Transactions with jointly controlled entities Interest income Marketing commission income
8
48
8
48
Interest rate of 7.5% per annum At prices charged to the third parties
30
-
30
-
2
3
1
2
-
41
-
41
Interest rate of 10% and 15% per annum
-
15
-
15
Similar to market price
Transactions with related companies (Related by the way of common directors) Service fee expenses
Similar to market price
Transactions with major shareholder Interest expenses Transactions with directors and employees Sales of residential condominium units
90
Annual Report 2011
As at 31 December 2011 and 2010, the balances of the accounts between the Company and those related parties are as follows: (Unit: Thousand Baht) Consolidated financial statements 2011
Separate financial statements
2010 (Restated)
2011
2010 (Restated)
Amounts due from related parties Subsidiaries - Taksin Properties Company Limited - Raimon Land Development Company Limited* Related company - Cha-am Campus City Company Limited Less: Allowance for doubtful debts Net Amounts due to related parties (Note 17) Major shareholder - IFA Hotels & Resorts 3 Ltd Related company - The Siam Administrative Management Company Limited Deposits and cash received from customers related parties - Directors and employees - Related companies (related by the way of common directors)
-
-
314,115 21,540
268,441 -
19,200 (19,200)
19,200 (19,200)
19,200 (19,200)
19,200 (19,200)
-
-
335,655
268,441
29,983
275
-
275
564
181
41
90
30,547
456
41
365
3,712
22,419
-
-
34,541
37,493
6,962
200
38,253
59,912
6,962
200
Annual Report 2011
91
Loans to related parties and loan from related parties As at 31 December 2011 and 2010, the balance of loans to and related interest receivable, and loans from and related accrued interest between the Company and those related companies and the movement are as follows: (Unit: Thousand Baht) Consolidated financial statements Balance as at 31 December 2010 Short-term loans to related parties and interest receivable Related company - Cha-am Campus City Company Limited Loans Interest receivable Less: Allowance for doubtful debts Net Long-term loans to related entities and interest receivable Jointly controlled entities - Raimon Land Development Company Limited* Loans I nterest receivable - Raimon Land Residences Company Limited* Loans I nterest receivable Less: Provision for loss on investment in joint ventures (Note 12) Net Short-term loans from related party and accrued interest Major shareholder - IFA Hotels & Resorts 3 Ltd. Accrued interest
Balance as at 31 December 2011
Decrease during the year
Increase during the year
427,319 401,996 (829,315)
-
-
427,319 401,996 (829,315)
-
-
-
-
150,195 96,306
144,305 8,485
(294,500) (104,791)
-
259,230 87,850
-
(259,230) (87,850)
-
593,581
152,790
(746,371)
-
(335,115)
-
-
-
258,466
152,790
(411,256)
-
3,189
-
(3,189)
-
* During the year, the Company purchased 49% shareholding in Raimon Land Residences Company Limited and Raimon Land Development Company Limited which changed their status from jointly controlled entities to subsidiaries. Therefore, the Company has classified loans to jointly controlled entities and interest receivable to be loans to subsidiaries and interest receivable.
92
Annual Report 2011
(Unit: Thousand Baht) Separate financial statements Balance as at 31 December 2010 Short-term loans to related parties and interest receivable Subsidiaries - Raimon Land Property Company Limited Loans - Raimon Land Park View Development Company Limited Loans I nterest receivable - Raimon Land Resorts Company Limited Loans I nterest receivable - Raimon Land Development Company Limited* Loans I nterest receivable - Raimon Land Residences Company Limited* Loans I nterest receivable Related company - Cha-am Campus City Company Limited Loans I nterest receivable Less: Allowance for doubtful debts Net Long-term loans to related parties and interest receivable Jointly controlled entities - Raimon Land Development Company Limited* Loans I nterest receivable - Raimon Land Residences Company Limited* Loans I nterest receivable Less: Allowance for doubtful debts Net Short-term loan from related parties and accrued interest Subsidiaries - Contemporary Property Company Limited Loan A ccrued interest - Taksin Properties Company Limited Loan A ccrued interest Major shareholder - IFA Hotels & Resorts 3 Ltd. A ccrued interest
Decrease during the year
Increase during the year
Balance as at 31 December 2011
285,500
-
-
285,500
16,700 343
835
6,620 199
445
(560) (68)
-
294,500 110,358
-
294,500 110,358
-
259,230 87,850
(2,331) -
256,899 87,850
427,319 401,996
-
-
427,319 401,996
1,138,677 (1,114,815)
753,218 (335,115)
(2,959) -
1,888,936 (1,449,930)
23,862
418,103
(2,959)
439,006
150,195 96,306
144,305 8,485
(294,500) (104,791)
-
259,230 87,850
-
(259,230) (87,850)
-
593,581 (335,115)
152,790 -
(746,371) 335,115
-
258,466
152,790
(411,256)
-
182,500 46,123
9,125
-
182,500 55,248
-
315,000 14,961
-
315,000 14,961
3,189
-
(3,189)
-
231,812
339,086
(3,189)
567,709
16,700 1,178 6,060 576
* During the year, the Company purchased 49% shareholding in Raimon Land Residences Company Limited and Raimon Land Development Company Limited which changed their status from jointly controlled entities to subsidiaries. Therefore, the Company has classified loans to jointly controlled entities and interest receivable to be loans to subsidiaries and interest receivable.
Annual Report 2011
93
Directors and management’s remuneration During the years ended 31 December 2011 and 2010, the Company and its subsidiaries had employee benefit payable to their directors and management as presented below. (Unit: Million Baht) Consolidated financial statements 2011 Short-term employee benefits
Post-employment benefits Total
Separate financial statements
2010
2011
2010
52
39
52
39
1
1
1
1
53
40
53
40
Guarantee obligations with related parties The Company and a subsidiary have outstanding guarantee obligations with their related parties, as described in notes 18 to the financial statements. Short-term loans to related parties and interest receivable Loans to subsidiaries are an unsecured loan carrying interest at a rate of 5-10 percent per annum and loan repayment is due at call. The Company has recorded full allowance for doubtful accounts for the short-term loan to and interest receivable from Raimon Land Property Company Limited. Long-term loans to related parties and interest receivable Loans to jointly controlled entities are an unsecured loan carrying interest at a rate of 15 percent per annum and loan repayment is due within 10 August 2012. Subsequently, on 14 May 2010, a meeting of the Company’s Board of Directors No.4/2010 passed resolutions granting approval to reduce the interest rate charged from the loans to jointly controlled entities to be 7.5 percent per annum, effective from the date of the loan agreements (August 2008). As a result of the interest rate reduction, the Company adjusted interest receivable, decreasing it by Baht 94 million and recording it as expenses in profit or loss in the year 2010. The Company has recorded full allowance for doubtful accounts for the long-term loan to and interest receivable from Raimon Land Residences Company Limited amounting to Baht 335 million. Short-term loans from related entities and accrued interest Loan from Contemporary Property Company Limited is an unsecured loan carrying interest at a rate of 5 percent per annum and loan repayment is due at call. n 1 April 2011, the Company entered into a loan agreement to obtain a loan of Baht 315 million from Taksin O Properties Company Limited (a subsidiary of The River Company Limited), to be used to pay for the additional investment in The River Company Limited. This is an unsecured loan carrying interest at a rate of average MLR - 0.75% per annum and due at call.
94
Annual Report 2011
9. Cash and cash equivalents (Unit: Thousand Baht) Consolidated financial statements 2011 Cash
2010
Separate financial statements 2011
2010
540
263
165
240
Bank deposits
661,079
580,552
438,132
326,552
Total
661,619
580,815
438,297
326,792
As at 31 December 2011, bank deposits in saving accounts and fixed deposits carried interests between 0.50 and 1.25 percent per annum (2010: 0.25 percent per annum). 10. Project development cost (Unit: Thousand Baht) Consolidated financial statements 2011 Land and construction under development Developed land and construction Total
2010 (Restated)
Separate financial statements 2011
2010 (Restated)
11,868,334
4,990,394
2,600,376
2,290,946
751,772
4,889,097
746,929
1,584,449
12,620,106
9,879,491
3,347,305
3,875,395
-
(11,369)
-
(11,369)
12,620,106
9,868,122
3,347,305
3,864,026
Less: Allowance for loss on diminution in value of project Project development cost, net
During 2011 and 2010, the Company and its subsidiaries capitalised interest of approximately Baht 345 million and Baht 235 million, respectively (separate financial statements: Baht 90 million and Baht 75 million, respectively) as part of project development cost. The capitalisation rate on project development cost is approximately 7 percent per annum. The Company and its subsidiaries have mortgaged their land and construction thereon with banks and financial institutions to secure the Company’s and its subsidiaries’ loans from these banks and financial institutions.
Annual Report 2011
95
11. Investments in subsidiaries Details of investments in subsidiaries as presented in separate financial statements are as follows: (Unit: Thousand Baht) Separate financial statements Company’s name
Contemporary Property Company Limited Raimon Land Planner Company Limited
The River Company Limited and its subsidiary (Held by the Company 88.99% (2010: 73.99%) and indirect held by C ontemporary Property Company Limited 10.85%) Raimon Land Resorts Company Limited
Cost
2011
2010
2011 (%)
2010 (%)
2011
2010
200,000
200,000
98.59
98.59
196,126
196,126
2,000
2,000
95.00
95.00
1,900
1,900
-
10,000
-
99.99
-
10,000
100,000
100,000
99.99
99.99
100,000
100,000
1,232,030
1,232,030
99.84
84.84
1,121,994
806,994
Raimon Land Property Company Limited Raimon Land Park View Development Company Limited
Shareholding percentage
Paid-up capital
250
250
99.93
99.93
250
250
2,500
2,500
99.99
99.99
2,500
2,500
Raimon Land Residences Company Limited (2010: presented as jointly controlled entity, held by the Company 51%)
10,000
-
99.99
-
5,099
-
Raimon Land Unixx Company Limited (Formerly known as “Ploenchit Residences Company Limited”) (Held by the Company 49% and indirect held by Raimon Land Residences Company Limited 51%) (2010: presented as jointly controlled entity)
10,000
-
99.99
-
-
-
500,000
-
99.99
-
390,695
-
500
-
99.94
-
500
-
Total
1,819,064
1,117,770
Less: Allowance for loss on diminution in value of investments in subsidiaries
(105,099)
(110,000)
Investments in subsidiaries, net
1,713,965
1,007,770
Northpoint PRC Company Limited (Formerly known as “Wireless One Residences Company Limited”)
Raimon Land Development Company Limited (2010: presented as jointly controlled entity, held by the Company 51%) Raimon Land Services Company Limited
The Company pledged the ordinary shares of The River Company Limited and Raimon Land Development Company Limited as collateral of a subsidiary’s long-term loans from banks.
96
Annual Report 2011
Raimon Land Park View Development Company Limited During 2010, the Company recorded the allowance for loss on diminution in value of investment in Raimon Land Park View Development Company Limited (subsidiary) totaling Baht 100 million, because the subsidiary ceased its operations. The River Company Limited On 22 May 2009, the Company entered into an agreement to purchase 3,080,050 ordinary shares of the River Company Limited at a cost of USD 10.5 million, as a result the investment in subsidiary increased by Baht 361 million and its shareholding in the subsidiary increased from 48.99 percent to 73.99 percent. As at 31 December 2011, there was a balance of USD 1.8 million (or Baht 58 million) payable for the additional shares, which is to be paid in installments until May 2012. On 23 December 2010, the Extraordinary General Meeting No.1/2010 of the Company’s shareholders passed resolutions granting approval for the purchase of 1,848,005 ordinary shares with a par value of Baht 100 each of The River Company Limited, representing 15% shareholding, for a price of Baht 170.45 per share, or a total of Baht 315 million. Subsequently, on 31 March 2011, the Company purchased the additional shares and fully paid for the investment on 1 April 2011. As a result of the additional investment, the Company’s shareholding increased from 73.99% to 88.99% of the subsidiary’s registered share capital. The excess of the acquisition price over the attributable net book value of this subsidiary at the acquisition date, amounting to Baht 321 million (2011: Baht 243 million), was recorded in shareholders’ equity under the caption of “Excess of investment in subsidiary arising as a result of additional purchase of investment at a price higher than the net book value of the subsidiary at the acquisition date”. Raimon Land Services Company Limited On 28 October 2011, the Company purchased the 4,997 ordinary shares with a par value of Baht 100 each of Raimon Land Services Company Limited, a total of Baht 499,700, representing a 99.94% shareholding of the registered share capital. Raimon Land Residences Company Limited and Raimon Land Unixx Company Limited (Formerly known as “Ploenchit Residences Company Limited”) On 5 August 2010, the Meeting of the Company’s Board of Directors No.5/2010 passed resolutions granting approval for the acquisition of a 49% shareholding in Raimon Land Residences Company Limited for Baht 1 from IFA Raimon Land Residences Company Limited and a 49% shareholding in Raimon Land Unixx Company Limited (a subsidiary of Raimon Land Residences Company Limited which had a 51% shareholding) for Baht 1 from IFA Ploenchit Residences Company Limited. Subsequently, on 31 May 2011, the Company entered into agreements to purchase these investments which increased the Company’s shareholding in Raimon Land Residences Company Limited from 51% to 99.99% and acquired a 49% shareholding in Raimon Land Unixx Company Limited. The status of Raimon Land Residences Company Limited and its subsidiaries thus changed from jointly controlled entities to subsidiaries and their financial statements have therefore been included in the consolidated financial statements as from 31 May 2011.
Annual Report 2011
97
Furthermore, on 31 May 2011, the Company entered into agreements whereby it received rights of claim in balances of principle and accrued interest of Raimon Land Residences Company Limited amounting to Baht 340 million from IFA Raimon Land Residences Company Limited, for a payment of Baht 1, and balances of principle and accrued interest of Raimon Land Unixx Company Limited amounting to Baht 669 million from IFA Ploenchit Residences Company Limited, for a payment of Baht 1. Consolidated financial statement Fair value of the identifiable assets acquired and liabilities as at the acquisition date of investments in Raimon Land Residences Company Limited and its subsidiaries can be summarised below. (Unit: Thousand Baht) Cash and cash equivalents
10,227
Other non-current assets
40,525
Short-term loans from shareholders and accrued interest Other current liabilities Total assets (liabilities) - net Cash payment for purchase of investments and rights of claim in debts Add: Investment in joint venture
(379,197) (6,670) (335,115) (335,115) (335,115)
Reconcile net cash payment Cash payment for purchase of investments and rights of claim in debts Less: Cash and cash equivalents of the group Net cash received from purchase of investments in subsidiaries
(10,227) 10,227
Raimon Land Development Company Limited On 28 April 2011, the Annual General Meeting No.1/2011 of the Company’s shareholders passed resolutions granting approval for the acquisition of 24.5 million ordinary shares with par value of Baht 10 per share in Raimon Land Development Company Limited, representing a 49 percent shareholding, from IFA Raimon Land Development Company Limited, together with loans of Baht 144 million provided by IFA Raimon Land Development Company Limited to Raimon Land Development Company Limited, and related unpaid interest of Baht 55 million, or a total of Baht 199 million (outstanding balance as at 17 March 2011), at a purchase price of Baht 280 million. This acquisition will occur when the sale of a jointly controlled entity’s project is not less than 40 percent of the total project value. Subsequently, on 28 September 2011, the Company entered into agreements to purchase a 49% shareholding in Raimon Land Development Company Limited and to purchase the rights of claim over a loan from IFA Raimon Land Development Company Limited amounting to Baht 144 million and accrued interest amounting to Baht 61 million, for a total payment of Baht 280 million. The resulting increase in the Company’s shareholding in Raimon Land Development Company Limited from 51% to 99.99%, changed the status of Raimon Land Development Company Limited from jointly controlled entity to subsidiary, and its financial statements have therefore been included in the consolidated financial statements as from 28 September 2011.
98
Annual Report 2011
Consolidated financial statement Fair value of the identifiable assets acquired and liabilities as at the acquisition date of investments in Raimon Land Development Company Limited can be summarised below. (Unit: Thousand Baht) Cash and cash equivalents Project development cost Other current assets Equipment Land awaiting development Deferred tax assets Other non-current assets Trade accounts payable
78,659 667,775 3,074 3,713 200,744 95,000 7,779 (14,561)
Short-term loans from shareholders and accrued interest
(254,986)
Deposits and cash received from customers
(186,800)
Long-term loan from financial institution
(280,000)
Deferred tax liabilities
(10,923)
Other current liabilities
(14,671)
Total assets - net
294,803
Cash payment for purchase of investment and rights of claim in debts
280,000
Add: Investment in joint venture
14,803 294,803
Reconcile net cash payment Cash payment for purchase of investment and rights of claim in debts
280,000
Less: Cash and cash equivalents of the subsidiary
(78,659)
Net cash paid for purchase of investment in subsidiary and rights of claim in debts
201,341
12. Investments in joint ventures/Provision for loss on investment in joint venture 12.1 Details of investments in joint ventures: Investments in joint ventures represent investments in entities which are jointly controlled by the Company and affiliated companies of IFA Hotels & Resorts 3 Ltd. according to the shareholder agreements. Details of these investments are as follows:
Annual Report 2011
99
(Unit: Thousand Baht) Consolidated financial statements Jointly controlled entities
Nature of business
Country of incorporation
Shareholding percentage
2011 (%) Raimon Land Residences Company Limited and its subsidiaries
Property development
Thailand
Raimon Land Development Company Limited
Property development
Thailand
Carrying amounts based on equity method - net
Cost
2010 (%)
2011
2010
2011
2010
-
51
-
5,099
-
-
51
-
255,000
-
4,192
-
260,099
-
(330,923)
- Investment in joint venture
-
4,192
- Provision for loss on investment in joint venture presented net in long-term loans to jointly controlled entity (Note 8)
-
(335,115)
Total
(335,115)
Presented as:
(Unit: Thousand Baht)
Separate financial statements Jointly controlled entities
Nature of business
Country of incorporation
Shareholding percentage 2011 (%)
Raimon Land Residences Company Limited and its subsidiaries
Property development
Raimon Land Development Company Limited
Property development
Total
2010 (%)
Cost 2011
Carrying amounts based on cost method - net
Allowance for impairment of investmentt
2010
2011
2010
2011
2010
Thailand
-
51
-
51
-
5,099
-
(5,099)
-
-
Thailand -
255,000
-
-
-
255,000
-
260,099
-
(5,099)
-
255,000
As at 31 December 2011, Raimon Land Residences Company Limited and its subsidiaries and Raimon Land Development Company Limited were changed their status from jointly controlled entities to subsidiaries as described in Note 11 to the financial statements. During 2010, the Company fully recorded allowance for loss on diminution in value of investment in Raimon Land Residences Company Limited in its separate financial statements. 12.2 Share of profit/loss During the year, the Company recognised its share of profit/loss from investments in joint ventures in consolidated financial statements as follows.
100
Annual Report 2011
(Unit: Thousand Baht) Consolidated financial statements
Jointly controlled entities
Share of profit (loss) from investments in joint ventures during the year 2011
2010 -
(270,414)
Raimon Land Development Company Limited
10,611
(38,725)
Total
10,611
(309,139)
Raimon Land Residences Company Limited and its subsidiaries
12.3 Summarised financial information of jointly controlled entities a) Raimon Land Residences Company Limited and its subsidiary (Raimon Land Unixx Company Limited (Formerly known as “Ploenchit Residences Company Limited”)).
The Company’s proportionate shares of the assets, liabilities, revenue and expenses of Raimon Land Residences Company Limited and its subsidiaries, according to proportion under joint venture agreement, is as follows: (Unit: Thousand Baht) As at 31 December 2011
2010
Current assets
-
13,200
Current liabilities
-
(348,315)
Net assets
-
(335,115)
(Unit: Thousand Baht) For the years ended 31 December 2011
2010
Other income
-
15,964
Administrative expenses
-
(236,654)
Finance cost
-
(49,724)
Loss for the year
-
(270,414)
In July 2010, the jointly controlled entity sold its land to an unrelated company and incurred loss from the land sale. The Company recognised share of loss from investments in joint ventures, as a result of this transaction in proportion to its interest in this entity, in the year 2010. b) Raimon Land Development Company Limited
The Company’s proportionate shares of the assets, liabilities, revenue and expenses of Raimon Land Development Company Limited, according to proportion under joint venture agreement, is as follows:
Annual Report 2011
101
(Unit: Thousand Baht) As at 31 December 2011
2010
Current assets
-
295,636
Non-current assets
-
102,537
-
398,173
Current liabilities
-
(24,439)
Non-current liabilities
-
(369,542)
-
(393,981)
-
4,192
Net assets
(Unit: Thousand Baht) For the years ended 31 December 2011 Other income Selling expenses
2010 2,867
5,978
(34,412)
(3,912)
Administrative expenses
(3,293)
(6,810)
Finance cost
(3,001)
(33,981)
Corporate income tax
48,450
-
Profit (Loss) for the year
10,611
(38,725)
13. Investment properties T he net book value of investment properties as at 31 December 2011 and 2010 is presented below. (Unit: Thousand Baht) Consolidated financial statement and separate financial statements Land and office building for rent 2011
Cost Less Accumulated depreciation Net book value
2010 53,478
53,478
(15,402)
(13,754)
38,076
39,724
A reconciliation of the net book value of investment properties for the years 2011 and 2010 is presented below. (Unit: Thousand Baht) Consolidated financial statement and separate financial statements 2011
2010 39,724
41,368
-
-
Depreciation charged
(1,648)
(1,644)
Net book value at end of year
38,076
39,724
Net book value at beginning of year Acquisition of assets
As at 31 December 2011 and 2010, the fair value of the above investment properties amounting to Baht 72 million, has been determined based on valuations performed by an accredited independent valuer, using the market approach. 102
Annual Report 2011
The Company has pledged investment properties amounting to approximately Baht 38 million as collateral against credit facilities received from a financial institution. 14. Property, plant and equipment (Unit: Thousand Baht) Consolidated financial statements Land and
Building and
land
building
Furniture
Office
Motor
improvement
improvement
and fixtures
equipment
vehicles
58,356
19,672
30,340
222,177
Total
Cost: 31 December 2009
33,960
79,849
(20,572)
(32,882)
-
(24)
-
(53,478)
13,388
46,967
58,356
19,648
30,340
168,699
Additions
-
41,402
7,242
1,803
-
50,447
Disposals/ Written-off
-
-
(3,090)
(497)
(333)
(3,920)
13,388
88,369
62,508
20,954
30,007
215,226
-
-
9,262
2,129
1,319
12,710
Disposals/ Written-off
-
(30,000)
(2,859)
(892)
(6,005)
(39,756)
Equipment of subsidiary as at acquisition date
-
-
3,924
1,314
2,750
7,988
13,388
58,369
72,835
23,505
28,071
196,168
Effect of changes in accounting policies 31 December 2009 - Restated
31 December 2010 Additions
31 December 2011 Accumulated depreciation: 31 December 2009
-
29,053
29,680
12,178
13,337
84,248
Effect of changes in accounting policies
-
(12,095)
-
(15)
-
(12,110)
31 December 2009 - Restated
-
16,958
29,680
12,163
13,337
72,138
Depreciation for the year
-
782
10,587
2,884
5,215
19,468
Depreciation on disposals/ written-off
-
-
(1,548)
(264)
(333)
(2,127)
31 December 2010
-
17,740
38,719
14,801
18,219
89,479
Depreciation for the year
-
15,201
11,867
2,724
5,213
35,005
Depreciation on disposals/ written-off
-
(7,081)
(1,898)
(819)
(6,005)
(15,803)
-
-
1,783
751
1,741
4,275
-
25,860
50,471
17,457
19,168
112,956
31 December 2010
13,288
4,907
-
-
-
18,195
31 December 2011
13,288
4,907
-
-
-
18,195
31 December 2010
100
65,722
23,789
6,153
11,788
107,552
31 December 2011
100
27,602
22,364
6,048
8,903
65,017
Accumulated depreciation of equipment of subsidiaries as at acquisition date 31 December 2011
Allowance for impairment loss:
Net book value:
Depreciation for the year: 2010 (all included in selling and administrative expenses)
19,468
2011 (all included in selling and administrative expenses)
35,005
Annual Report 2011
103
(Unit: Baht) Separate financial statements Land and land improvement
Building and building improvement
Furniture and fixtures
Office equipment
Motor vehicles
33,960
79,849
40,295
14,115
19,540
187,759
(20,572)
(32,882)
-
(24)
-
(53,478)
13,388
46,967
40,295
14,091
19,540
134,281
Additions
-
41,402
6,835
1,522
-
49,759
Disposals/ Written-off
-
-
(3,089)
(439)
-
(3,528)
13,388
88,369
44,041
15,174
19,540
180,512
Total
Cost: 31 December 2009 Effect of changes in accounting policies 31 December 2009 - Restated
31 December 2010 Additions
-
-
9,621
2,170
-
11,791
Disposals/ Written off
-
(30,000)
(2,493)
(892)
(6,005)
(39,390)
13,388
58,369
51,169
16,452
13,535
152,913
-
29,053
22,323
9,971
8,989
70,336
-
(12,095)
-
(15)
-
(12,110)
31 December 2011 Accumulated depreciation: 31 December 2009 Effect of changes in accounting policies 31 December 2009 - Restated
-
16,958
22,323
9,956
8,989
58,226
Depreciation for the year
-
782
6,887
1,769
3,122
12,560
Depreciation on disposals/ written-off
-
-
(1,549)
(217)
-
(1,766)
31 December 2010
-
17,740
27,661
11,508
12,111
69,020
Depreciation for the year
-
15,201
8,001
1,664
2,877
27,743
Depreciation on disposals/ written off
-
(7,081)
(1,627)
(819)
(6,005)
(15,532)
31 December 2011
-
25,860
34,035
12,353
8,983
81,231
31 December 2010
13,288
4,907
-
-
-
18,195
31 December 2011
13,288
4,907
-
-
-
18,195
31 December 2010
100
65,722
16,380
3,666
7,429
93,297
31 December 2011
100
27,602
17,134
4,099
4,552
53,487
Allowance for impairment loss:
Net book value:
Depreciation for the year: 2010 (all included in selling and administrative expenses)
12,560
2011 (all included in selling and administrative expenses)
27,743
As at 31 December 2011, certain equipment and motor vehicles items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount before deducting accumulated depreciation of those assets amounted to approximately Baht 41 million (Separate financial statements: Baht 40 million).
104
Annual Report 2011
15. Income tax Income tax expenses for the years ended 31 December 2011 and 2010 are made up as follows: (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
2011
2011
2010 (Restated)
2010 (Restated)
Current income tax: Current income tax charge
170,995
237,254
-
-
(6,462)
-
(9,293)
-
(234,122)
(216,468)
8,767
64,064
Effects of changes in the applicable tax rates
278,384
-
134,104
-
Income tax expenses reported in the statement of comprehensive income
208,795
20,786
133,578
64,064
Adjustment in respect of current income tax of previous year Deferred tax: Relating to origination and reversal of temporary differences
Reconciliation between income tax expenses and the product of accounting profit multiplied by the applicable tax rates for the years ended 31 December 2011 and 2010.
(Unit: Thousand Baht)
Accounting profit (loss) before tax Applicable tax rate
Consolidated financial statements
Separate financial statements
2011
2011
2010 (Restated)
2010 (Restated)
(271,526)
80,229
(2,121)
178,148
30%
30%
30%
30%
(81,458)
24,069
(636)
53,444
(6,462)
-
(9,293)
-
278,384
-
134,104
-
(9,218)
(42,287)
-
-
12,107
26,025
-
-
8,339
7,692
8,339
7,692
7,103
5,287
1,064
2,928
18,331
(3,283)
9,403
10,620
208,795
20,786
133,578
64,064
Accounting profit (loss) before tax multiply by applicable tax rate Adjustment in respect of current income tax of previous year Effects of changes in the applicable tax rates Effects of: Elimination of related transactions Deferred tax assets which were not recognised during the year - Tax losses of subsidiaries - Allowance for doubtful account Non-deductible expenses Total Income tax expenses reported in the statement of comprehensive income
Annual Report 2011
105
As of 31 December 2011 and 2010, the components of deferred tax assets and deferred tax liabilities are as follows: (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
2011
2011
2010 (Restated)
2010 (Restated)
Deferred tax assets Loss available for offsetting against future taxable income
95,517
107,641
19,372
107,641
Provision for long-term employee benefits
2,820
3,213
2,820
3,213
23,020
34,530
23,020
34,530
Allowance for doubtful accounts
135,723
198,541
135,723
198,541
Cash received from customers and project development cost from the difference between tax and accounting of revenue recognition
793,004
704,497
87,274
56,332
-
1,530
-
1,530
1,050,084
1,049,952
268,209
401,787
172,022
220,998
-
-
172,022
220,998
-
-
Allowance for diminution of investments
Others Total deferred tax assets Deferred tax liabilities Surplus of project development cost Total deferred tax liabilities
In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent from 2013. In addition, in order to comply with the resolution of the cabinet, in December 2011, the decreases in tax rates for 2012 - 2014 were enacted through a royal decree. The Company and its subsidiaries reflected the changes in tax rates in its deferred tax calculation, as presented above. As at 31 December 2011, the Company and its subsidiaries have deductible temporary differences and unused tax losses totaling Baht 536 million (2010: Baht 222 million), on which deferred tax assets have not been recognised as the Company and its subsidiaries believe that they might not be used to offset taxable income in the future. A subsidiary’s corporate income tax for the year 2010 and corporate income tax for the half-year of 2011 are payable in installments until January 2013 and June 2013, respectively. The liabilities are presented as “Income tax payable� in the statement of financial position as at 31 December 2011 and 2010.
106
Annual Report 2011
16. Short-term loans from financial institutions The Company has a short-term loan of Baht 30 million from a financial institution. This loan carried interest at MLR plus certain rate, as stipulated in the agreement and secured by the mortgage of part of the land and building of the Company. The loan repayment is due in April 2012.
17. Trade and other payables (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
2011
2011
2010
2010
798,808
661,846
278,513
279,222
30,547
456
41
365
Other payables - unrelated parties
151,861
40,795
150,656
40,795
Total trade and other payables
981,216
703,097
429,210
320,382
Trade payables - unrelated parties Other payables - related parties
Annual Report 2011
107
108
Annual Report 2011
Loans
a financial institution
4) Loan facilities of Baht 20 million from
from a commercial bank
3) Loan facilities of Baht 2,790 million
a commercial bank
2) Loan facilities of Baht 417 million from
a commercial bank
20
1,381
223
-
-
1,210
-
608
20
1,381
223
-
-
1,210
-
608
2010
statements 2011
statements 2010
financial
financial
2011
Separate
Consolidated
(Million Baht)
Balance
purchase and sale agreements in project’s condominium
transferred to a customer, whichever occurs first.
until March 2013.
To be repaid in 4 installments of Baht 5 million each
first draw down, whichever occurs first.
Mortgage of part of land and building of the Company.
saving account of Baht 25.1 million.
agreements with the major project contractors and a
rights under the performance bonds of construction
transferred to a customer, or due within 4 years from condominium project, the transfer of the beneficiary
Due whenever ownership of a condominium unit is Mortgage of the land and construction of the Company’s
insurance policy for the project to the lender.
units, and the transfer of beneficiary rights under
project, land, the transfer of beneficiary rights under
Mortgage of the condominium units of the Company’s
project.
Mortgage of the condominium units of the Company’s
Collateral
whenever ownership of a condominium unit is
Due within 2 years from first draw down, or due
years from the first drawdown date.
specified in the loan agreement, to be paid within 3
customers and the minimum amount of repayment,
Due when condominium units are transferred to
Loan repayment conditions
The Company and its subsidiaries had secured long-term loans from local financial institutions as follows:
1) Loan facilities of Baht 950 million from
18. Long-term loans from financial institutions
Annual Report 2011
109
Balance
Long-term loans, net of current portion
Less: Current portion
Total
from a commercial bank
6) Loan facilities of Baht 1,200 million
6,592
(15)
6,607
280
4,540
-
4,540
-
1,609
(15)
1,624
-
1,818
-
1,818
-
-
condominium project, the pledge of share certificates of
Due within 30 September 2013 or due 12 months after Mortgage of land and construction of the subsidiary’s
condominium project, the pledge of share certificates
an occupancy permit is issued, whichever occurs first.
the lender.
under insurance policies for the subsidiary’s project to
condominium units and the transfer of beneficiary rights
purchase and sale agreements for the project’s
of the subsidiary, the transfer of beneficiary rights under
of the subsidiary, a guarantee provided by the shareholders
Mortgage of land and construction of the Subsidiary’s
the lenders.
under insurance policies for the subsidiary’s project to
condominium units, and the transfer of beneficiary rights
purchase and sale agreements for the project’s
leasehold rights, the transfer of beneficiary rights under
shareholders, (in proportion to its shareholding),
guarantee provided by The River Company Limited’s
Due within 30 June 2015 or due 9 months after the date
customer, whichever occurs first.
ownership of a condominium unit is transferred to a the subsidiary and The River Company Limited,
-
Collateral
(2010: Baht 5,000 million)
2,722
Loan repayment conditions
the date an occupancy permit is issued or the date
4,703
2010
statements 2011
statements 2010
financial
financial
2011
Separate
Consolidated
(Million Baht)
from a commercial bank
5) Loan facilities of Baht 5,480 million
Loans
These loans carried interest at MLR minus certain rate, as stipulated in the agreements. As at 31 December 2011, the long-term credit facilities of the Company and its subsidiaries which have not yet been drawn down amounted to Baht 3,039 million (separate financial statements: Baht 1,409 million). Raimon Land Public Company Limited On 19 April 2011, the Company entered into a long-term loan agreement with a local financial institution, granting a Baht 20 million loan to be used as working capital. On 28 September 2011, the Company entered into a long-term loan agreement with a local bank, granting a Baht 417 million loan. Baht 137 million is to be used to repay an existing long-term loan from a bank and Baht 280 million is to be used to purchase shares and the rights of claim in debts in Raimon Land Development Company Limited (Note 11 to the financial statements). The loan agreements contain covenants as specified in the agreements that, among other things, require the Company to maintain certain debt to equity ratios according to the agreements Taksin Properties Company Limited (the subsidiary of the River Company Limited) On 23 May 2011, Taksin Properties Company Limited (the subsidiary) entered into long-term loan agreements with a group of lenders formed by three local banks, to increase its loan facilities from Baht 5,000 million to Baht 5,480 million. Baht 165 million of the additional facility is to be used to develop a shopping centre project, while the remaining Baht 315 million is to be used to provide an intercompany loan to Raimon Land Public Company Limited to settle the cost of additional shares purchased in The River Company Limited (Note 8 and 11 to the financial statements). Raimon Land Development Company Limited On 17 August 2011, Raimon Land Development Company Limited (the subsidiary) entered into a long-term loan agreement with a local bank, granting a facility of Baht 1,200 million. Baht 280 million is to be used to repay the existing long-term loan from a bank and Baht 920 million is to fund construction of the subsidiary’s project.
19. Deposits and cash received from customers As at 31 December 2011, the Company and a subsidiary have residential condominium units’ sales agreements with two major buyers (1 local buyer and 1 foreign buyer), amounting to Baht 953 million (separate financial statements: Baht 342 million) and received deposits of Baht 228 million (separate financial statements: Baht 108 million), which are recorded as “Deposits and cash received from customers” in the statements of financial position. These agreements appoint the Company to help the buyers sell on their units at an agreed price and grant the buyers an option to sell some units to the Company’s major shareholder.
110
Annual Report 2011
20. Provision for long-term employee benefits rovision for long-term employee benefits as at 31 December 2011 and 2010, which is compensations on P employees’ retirement, was as follows: (Unit: Thousand Baht) Consolidated and separate financial statements
2011
Balance at beginning of year Current service cost
2010 10,712
8,608
2,958
1,760
428
344
14,098
10,712
Interest cost Balance at end of year
Long-term employee benefit expenses included in the profit or loss for the year ended 31 December 2011 amounted to Baht 3 million (2010: Baht 2 million). Principal actuarial assumptions at the valuation date were as follows: Consolidated and separate financial statements
2011 (% per annum)
2010 (% per annum)
Discount rate
4
4
Future salary increase rate
4
4
21. 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 percent of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.
Annual Report 2011
111
22. Expenses by nature Significant expenses by nature are as follow: (Unit: Thousand Baht) Consolidated financial statements 2011
Separate financial statements
2010 (Restated)
2011
2010 (Restated)
818,879
2,314,016
818,879
2,314,016
Salary and other employee benefits
86,438
77,952
89,438
77,952
Management’s benefit expenses
53,677
39,589
53,677
39,589
Depreciation and amortisation expenses
40,971
25,422
30,377
15,180
Specific business tax and transfer fees
46,383
99,559
46,383
95,513
Cost of residential condominium units sold
Other selling expenses
142,035
145,157
78,523
86,262
Doubtful account in short-term loan to subsidiary
-
-
-
11,724
Doubtful account in long-term loan to jointly controlled entity
-
-
-
335,116
Loss on diminution in value of investment in subsidiaries
-
-
-
100,000
Loss on diminution in value of investment in joint venture
-
-
-
5,099
Reduction of interest receivable of loans to jointly controlled entities
-
93,909
-
93,909
23. Earnings per share Basis earnings (loss) per share is calculated by dividing profit (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.
Profit (loss) attributable to equity holders of the Company (Thousand Baht) Weighted average number of ordinary shares (shares) Earnings (loss) per share (Baht/share)
Consolidated financial statements
Separate financial statements
2011
2011
(474,306)
2010 (Restated)
2010 (Restated)
63,625
(135,699)
114,084
3,250,385,569 3,250,385,569
3,250,385,569
3,250,385,569
(0.04)
0.04
(0.15)
0.02
24. Provident fund The Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. The fund is monthly contributed to by employees, at the rate of 3 percent and 5 percent of their basic salaries, and by the Company at the rate of 5 percent of employees’ basic salaries, and will be paid to employees upon termination in accordance with the rules of the fund. The fund is managed by Kasikorn Thai Asset Management Company Limited. During 2011, the Company contributed Baht 4 million (2010: Baht 4 million) to the fund.
112
Annual Report 2011
25. Commitments and contingent liabilities 25.1 Capital commitments As at 31 December 2011, the Company and its subsidiaries had commitments of approximately Baht 3,461 million (separate financial statements: Baht 2,132 million) in respect of design and construction contracts of their projects. 25.2 Long-term service commitments The Company and a subsidiary had commitment in respect of agency fees of the projects to pay under the “Sole Agency Agreement” at the rate of 1 to 4 percent of project units’ gross sale price. 26. Segment information The Company’s and its subsidiaries’ business operations involve principally a single industry segment, property development, and are carried on in the single geographic area of Thailand. As a result, all of the revenues, operating income (losses) and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area. 27. Financial instruments 27.1 Financial risk management he Company and the subsidiaries’ financial instruments, as defined under Thai Accounting Standard T No.107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, other receivables, loans to, investments, trade and other payables, payable from purchase investment in subsidiary, 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 and its subsidiaries are exposed to credit risk primarily with respect to amount due from related parties and loans to. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk involved the real estate business since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of amount due from related parties and loan to as stated in the statements of financial position.
Annual Report 2011
113
Interest rate risk The Company and the subsidiaries’ exposure to interest rate risk relates primarily to their cash at banks, amounts due to related parties, loans to, trade and other payables, payable from purchase investment in subsidiary, short-term loans and long-term loans. However, since most of the Company and the subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2011 classified by type of interest rate 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) Consolidated financial statement Fixed interest rates Within 1 year
1-5 Years
Over 5 years
Floating interest rate
-
-
659
Non- interest bearing
Effective interest rate (% p.a.)
Total
Financial Assets Cash and cash equivalent
-
Restricted bank deposits
3
662
0.50 - 1.25 0.75
-
-
-
25
-
25
-
-
-
684
3
687
Financial liabilities Short-term loans from financial institutions
-
-
-
30
-
30
Trade and other payables
-
-
-
-
981
981
-
Purchase of investment in subsidiary payable
-
-
-
-
58
58
-
Long-term loans from financial institutions
-
-
-
6,607
-
6,607
-
-
-
6,637
1,039
7,676
Reference to MLR
Reference to MLR
(Unit: Million Baht) Separate financial statement Fixed interest rates Within 1 year
1-5 Years
Over 5 years
Floating interest rate
Non- interest bearing
Total
Effective interest rate (% p.a.)
Financial Assets Cash and cash equivalent
-
-
-
437
1
438
0.50 - 0.75
Restricted bank deposits
-
-
-
25
-
25
0.75
Amounts due from related parties Short-term loans to related company
-
-
-
-
336
336
-
317
-
-
-
122
439
3.50, 10.00
317
-
-
462
458
1,238
Financial liabilities Short-term loans from financial institutions
-
-
-
30
-
30
Trade and other payable
-
-
-
-
429
429
-
Purchase of investment in subsidiaries payable
-
-
-
-
58
58
MLR - 0.75 and 5.00
Short-term loan from related parties Long-term loans from financial institutions
114
Annual Report 2011
183
-
-
315
70
568
-
-
-
1,624
-
1,624
183
-
-
1,969
557
2,709
Reference to MLR
Reference to MLR
Foreign currency risk The Company has a significant foreign currency risk in respect of purchase of investment payable denominated in foreign currencies. The Company manages its exposure to foreign currency risk by considering purchase/sale of forward contracts from time to time so as to reduce exposure to the foreign currency risk which may incur. The Company and the subsidiaries had no forward contracts outstanding at the statement of financial position. As at 31 December 2011, the Company had outstanding balances of financial liabilities denominated in foreign currencies amounting to USD 1.8 million. 27.2 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 the 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 instruments or by using an appropriate valuation technique, depending on the nature of the instrument. 28. Capital management The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. 29. Reclassification To comply with the Notification of the Department of Business Development relating to the financial statement presentation as described in Note 2 and as the result of the adoption of revised and new accounting standards as described in Note 3, certain amounts in the financial statements for the year ended 31 December 2010 have been reclassified to conform to the current year’s classification, without any effect to the previously reported profit or shareholders’ equity. 30. Approval of financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 27 February 2012.
Annual Report 2011
115
Raimon Land Public Company Limited 22nd Floor, Unit 2201-3 The Millennia Tower 62 Langsuan Road, Lumpini, Pathumwan Bangkok 10330 Thailand Tel: 02 651-9601 Fax: 02 651-9614 Email: info@raimonland.com www.raimonland.com