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Areeya Property PLC.
MD & A

1) General Information

The Company was founded in 2000. Later in 2003, the Company has transformed into a public limited company and registered its stocks in the stock market in 2004. In addition, the company has formed subsidiaries to provide of each business as follows:

  • In the year 2004, the subsidiary (Areeya Service Co., Ltd.) has been formed to provide after-sale services for property with 99.99% ownership interest.
  • In the year 2007, the Company has established a subsidiary company (One Up Co., Ltd.) with 64.99% ownership interest to provide construction services to Areeya’s projects and outside customers.
  • In the year 2008 the Company purchased 35% of the share capital of One Up from other shareholder. As a result, the Company’s ownership interest increased to 99.99%.
  • In the year 2008 the Company had formed 2 companies with 99.99% ownership interest which consisted of:
    • Areeya Management Co., Ltd. for development of real estate projects and to provide a management service for juristic person.
    • Cool Space Co., Ltd. for development of real estate projects.
  • In the year 2009 the Company had formed a company with 99.99% ownership interest which consisted of White Living Co., Ltd. for development of real estate projects.
  • In the year 2010 the Company had formed a company with 99.99% ownership interest which consisted of Chill Space Co., Ltd. for development of real estate projects.
  • In the year 2014, the Company has established Areeya Convenience Store Co., Ltd with 99.97% ownership for retail business.

The Company business is real estate development business: land for sale and house construction, which all are single house projects. Since 2005, the Company has started to sell the pre-built house and 3, 4-storey townhouse and additionally in 2006-2011 the Company has introduced two new products to the market. They are fully-furnished modern condominium and fully-furnished 2-storey townhouse.

In addition, in the year 2013, the company started business on Community Mall in Sukhumvit 77 was named “Pickadaily Bangkok”. In the year 2015, the company has opened the news project named “Life Style Club” in Kaset-nawamintr.

2) Overview Summary and Significant Change

On 27 February 2014, the Extraordinary General Meeting of the Company no.1/2014 has approved the issuance and offering for sale of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 3 Billion Baht by issuing either single or multiple offerings.

On 10 September 2014, According to Board of Director (“BOD”) Meeting No. 9/2014, has resolutions to register Areeya Convenience Store Co., Ltd. with registered, a subsidiary with a registered capital of one million baht in Thailand. This subsidiary operate the retail business.

On 26 February 2015, the Extraordinary General Meeting of the Company no.1/2015 has approved the issuance and offering for sale of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 2 Billion Baht by issuing either single or multiple offerings.

On 23 April 2015, The Annual General Shareholders’ Meeting 2015 has approved the increase in the Company's authorized share capital by Baht 220 million; from 980 Million Baht to 1,200 Million, par value Baht 1 per share.

On 23 February 2016, the Extraordinary General Meeting of the Company no.1/2016 has approved the issuance and offering for sale of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 3 Billion Baht by issuing either single or multiple offerings.

On 5 October 2016, the Company issued 1,000 million baht of debentures (1,000,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders' representative and debentures mature in year 2020, but not the company can be early redemption.

On 20 October 2016, the Company issued 646.8 million baht of debentures (646,800 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders' representative and debentures mature in year 2019.

On 20 December 2016, the Extraordinary General Meeting of the Company no.2/2016 has approved the issuance and offering for sale of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 5 Billion Baht by issuing either single or multiple offerings.

As at 31 December 2016, the Company has 49 current projects and 2 community malls, totally 51 projects as follows:

No. Project

Location

Type of Product
1. Areeya Bussaba Laoprao 130 Single Detached House
2. Areeya Sawana 3 Kaset-nawamintr Single Detached House
3. Areeya Metro Kaset-nawamintr Single Detached House
4. Areeya Como Bangna Bangna Single Detached House
5. The Village Chaengwattana-Tiwanon Chaengwattana- Tiwanon Single Detached House/Twinhome
6. Areeya Como Bangna Wongwan Bangna Single Detached House
7. Areeya Como Wongwan Ramintra Hathairath Single Detached House
8. The Village Cottage Kanjanapisek- Ratchapruek Sai Noi Single Detached House
9. Areeya Donmuang-Songprapa Donmuang Songprapa Single Detached House
10. Areeya Como Ladkrabang- Suvarnabhumi Ladkrabang- Suvarnabhumi Single Detached House
11. Areeya Como Wongwan-Ratchapruek Bangbuathong Single Detached House
12. At Home Kaset-nawamintr Townhouse
13. The Colors Chaengwattana-Tiwanon Chaengwattana- Tiwanon Townhouse
14. Areeya To Be Lat Phrao Townhouse
15. Areeya Daily Kaset-nawamintr Townhouse
16. The Colors Premium Bangna Bangna Townhouse
17. The Colors Bangna K.M.10 Bangna Townhouse
18. The Village Bangna K.M.10 Bangna Townhouse
19. The Colors Leisure Bangna K.M.8 Bangna Townhouse
20. The Colors Leisure Bangna K.M.10 Bangna Townhouse
21. The Colors Bangna Wongwan Bangna Townhouse
22. The Colors Premium Bangna Wongwan Bangna Townhouse
23. The Village Bangna Wongwan Bangna Townhouse
24. The Colors Premium Rangsit- Lumlukka Rangsit Townhouse
25. Areeya Mandarina Sukhumvit 77 Sukhumvit 77 Townhouse
26. The Colors Donmuang-Songprapa Phase 1 Donmuang-Songprapa Townhouse
27. Areeya Brigg Donmuang-Songprapa Donmuang-Songprapa Townhouse
28. The Village Kanjanapisek- Ratchapruek Sai Noi Townhouse
29. The Colors Premium Kanjanapisek- Ratchapruek Sai Noi Townhouse
30. The Colors Kanjanapisek- Ratchapruek Sai Noi Townhouse
31. The Colors Premium Wongwan Ramintra Hathairath Townhouse
32. The Colors Wongwan Ramintra Hathairath Townhouse
33. The Colors Premium Wongwan- Ratchapruek Bangbuathong Townhouse
34. The Colors Wongwan-Ratchapruek Bangbuathong Townhouse
35. The Colors Premium Kanjanapisek- Ratchapruek 2 Sai Noi Townhouse
36. A Space Asoke Asoke-Ratchada Condominium
37. A Space Kaset Kaset-nawamintr Condominium
38. A Space Play Ratchada-Suttisan Ratchada-Suttisan Condominium
39. A Space Sukhumvit 77 Sukhumvit 77 Condominium
40. A Space Me Sukhumvit 77 Sukhumvit 77 Condominium
41. A Space Me Bangna Bangna Condominium
42. A Space I.D. Asoke-Ratchada Asoke-Ratchada Condominium
43. A Space Me Rattanathibet Rattanathibet Condominium
44. Pickadaily Bangkok Sukhumvit 77 Community Mall
45. Life Style Club Kaset-nawamintr Community Mall
46. Areeya Brigg Rangsit-Lumlukka Rangsit Townhouse
47. The Colors Rangsit-Klong 4 Rangsit-Klong 4 Townhouse
48. The Village Bangna Wongwan 2 Bangna Townhouse
49. The Village Kanjanapisek- Ratchapruek 2 Sai Noi Townhouse
50. The Place Kanjanapisek-Ratchapruek 2 Sai Noi Townhouse
51. The Colors Kanjanapisek- Ratchapruek 2 Sai Noi Townhouse

3) Previous Performance Results

  • Revenue and Cost
  • The company’s revenues consist of revenue from sales of land and houses which are recognized upon full payment and the land title deeds and constructions had been transferred to the buyers. And service income on house constructions which are recognized in proportion to the stage of completion of the contract.

    The revenue recognition schedule for the year 2016, 2015 and 2014 by the type of real estate.

    Type Sales
    2016 2015 2014
    Unit MB Unit MB Unit MB
    Condo 491 1,030 354 566 152 264
    Single Detached house 161 780 134 616 89 443
    Townhouse / twin house 1,205 3,075 1,267 3,262 749 2,020
    Land - - - - - -
    Total 1,857 4,885 1,755 4,444 990 2,727
    % Increase from prior year 6% 10% 77% 63% -25% -22%

    Type Transferred
    2016 2015 2014
    Unit MB Unit MB Unit MB
    Condo 636 1,330 631 762 37 46
    Single Detached house 139 686 56 372 26 171
    Townhouse / twin house 1,032 2,627 1,189 3,054 732 2,066
    Land - - 2 1,210 1 154
    Total 1,807 4,643 1,878 5,398 796 2,437
    % Increase from prior year -4% -14% 136% 122% 36% 39%

    Condominium For the year 2016, sales of condominiums increased from year 2015 due to the new Condominiums are completed and ready to deliver two projects, and combined with the price increase after the pre-sale.

    In the year 2016, the company recognized revenue of A Space Me Sukhumvit 77 and A Space Me Bangna , which continues from 2015. The company has a new project completed and ready for delivery this year namely A Space I.D. Asoke-Ratchada, which has commenced the transfer of ownership in the second quarter of 2016. This year,The revenue recognition of A Space Me Bangna, A Space Me Sukhumvit 77, A Space I.D. Asoke- Ratchada and A Space Me Sukhumvit 77 were worth 336 million baht, 346 million baht, 641 million baht and 7 million baht, respectively.

    In the year 2015, sales and revenue recognition of condominiums increased from year 2014 due to Condominiums are completed and ready to deliver two projects, total project value of 2,908 million Baht, revenue recognition of 720 million baht.

    In the year 2014, sales of condominiums decreased from year 2013 due to political still uncertain in the first to third quarter, The Company did not make as much as they should because they do not have confidence in the response of the condominium market. After that the political situation began to unravel in the fourth quarter, and the company began more confidence so we start preparing marketing plans to increase sales of condominium in the first quarter of 2015. Decrease in revenue recognition of year 2014 and 2013 according to the main projects under construction. However, the Company speed up the construction in order to recognize the revenue in the year 2015. During the year 2014, there were 2 condominium projects under construction which is expected to transfer in the second quarter of the year 2015. The total projects value of such 2 condominium were 2,763 Million Baht and the amount of backlog was 830 Million Baht as at 31 December 2014 or 70% of the total project value.

    Single Detached House In year 2016, The Company has launched 3 project include Areeya Donmuang-Songprapa, Areeya Como Ladkrabang-Suvarnabhumi, and Areeya Como Wongwan- Ratchapruek with total project value of 916 Million Baht and total revenue recognition amounting to 77 Million Baht in the year 2016. There are two more projects that have been transferred in late 2015, and highly to be transferred in 2016, namely, Areeya Como Bangna Km. 10 and Areeya Como Wongwan-Ramintra with an increase in transfers from year 2015 of 422 million baht, it is expected to see more revenue in year 2016 than in year 2015.

    The Company has launched new single detached house and recognized revenue in 2014 amounting to 87 Million baht or 25% of total project value. The main target of single detached house project is middle to high income families. Moreover, The Company has launched 2 project with total project value of 1,248 Million Baht and the amount of backlog was 68 million baht and total revenue recognition amounting to 334 Million Baht in the year 2015.

    Townhouse Townhouse is the main product of the Company and the main target of townhouse project is people with low to medium income level. As at 31 December 2016, There were 30 townhouse projects with total project value of 15,059 Million Baht or 5,579 units, which included 9 new projects opened in the year 2016, altogether contributed the total project value of 4,260 Million Baht and total revenue recognition amounting to 2,627 Million Baht.

    • Cost of sales of real estate

      For the year ended December 31, 2016, the cost of sales of real estate decreased by 23.91% from prior year (cost of sales in 2016 and 2015 amounted to 3,056.22 million baht and 4,016.73 million baht, respectively) mainly due to decrease in cost of sales of real estate from the cost of land sales of Baht 862 million in previous year. However, there is no sale of land in 2016. Therefore, when considering the cost of sales of real estate, only the portion of the house and condo will decrease from last year to 99 million baht. The company has improved cost management makes the perceived cost of home sales fell 317 million baht. The cost of condominium projects increased of Baht 218 million from the previous year due to the transfer of ownership of the project began in late 2015 and the second quarter of 2016 of two projects namely A Space Me Sukhumvit 77 and A Apace ID Asoke – Ratchada.

      For the year 2015, Cost of sale of real estate increased from that of the year 2014 as a leap because of revenue recognition for the company's rapid growth. In the second quarter, rise of construction cost around 1 percent of total project value. In this regards, the quality of construction materials is higher in accordance with the material prices in order to deliver high quality products to customers and to be competitive. The company spend much money for construction cost but still maintain the same selling price.

    • Gross Profit Margin

      The Company has gross profit for the year 2016, 2015 and 2014 amounted to Baht 1,587.03 million, Baht 1,381.29 million and Baht 805.48 million, respectively, or 34.17%, 25.61% and 32.58 %, respectively. The increase in gross margin in 2016 is due to the company's higher selling price. The gross margin has increased significantly. And the company has managed its cost of sales more efficiently. The gross margin can be increased over the year 2015. The future trend is to manage the cost of sales more efficiently. As a result, the gross margin is expected to increase further in the future.

    • Unrealized Gain (loss) in Fair Value on Investment Properties

      At 31 December 2016, the Company had unrealized loss in fair value on investment properties of 44.41 Million Baht. The Company presented investment properties in fair value which were appraised by the independent property valuers in the basis of income approach as addressed in the appraisal report dated 5 January 2017 and 3 Febuary 2017.

      In 2015, the Company had unrealized loss in fair value on investment properties of 25.85 Million Baht. The Company presented investment properties in fair value which were appraised by the independent property valuers in the basis of income approach as addressed in the appraisal report dated 30 December 2015.

      In 2014, the Company had unrealized gain in fair value on investment properties of 62.62 Million Baht. Such investment properties are shopping mall having space for rent in Sukhumvit area. The Company presented investment properties in fair value which were appraised by the independent property valuers in the basis of income approach. The Assumption for appraisal consists of space rental rate, rate of rent increase, discount rate, and the rate of return. The rest is revenue from rental and service in relation to investment properties and other income of the company.

    • Selling Expenses
      Type Transferred
      2016 2015 2014
      MB Transferred % Transferred MB Transferred % Transferred MB Transferred % Transferred
      Selling Expenses 519.27 4,643.252 11.18% 535.84 4,187.92*** 12.79% 320.38 2,437.56 13.14%
      % Increase (Decrease) (16.57%)   (3.09%) 215.56   67.30% 15.91   5.23%

      ***The total revenue for the year 2015 was 5,398.02 million baht, which included the revenue from the sale of land of 1,210.10 million baht to compare the revenue from the transfer of ownership of houses and condominium units. The above transfer figures for the year 2015 do not include revenues from land sales.

      The main Selling Expenses’s Company and its subsidiaries is consist of advertising, public relation, marketing costs, transfer fees, specific business tax and other expenses. As table above, selling expenses was in line with the revenue recognition from the sale of real estate especially transfer fees and specific business tax. In addition, in year 2016, Advertising expenses, public relations expense have increased, especially in the billboard, online media and events has increased this year's expenses.

      However, in year 2016, the government issued a policy to reduce Transfer fees from 1 percent to just 0.01 percent in January-April 2016, thus resulting in a decrease in selling expense for 2016, even with increased transfers.

      Advertising, public relations and other marketing expenses decreased due to the company focus marketing expenses only Low-rise projects. Moreover, the Company could control and manage selling and marketing expense as specialist in property market and products. In the year 2015, there is Selling Expenses increased from prior year to increase from the transfer of 2 condominium projects which will be relating to sales and revenue recognition.

    • Administrative expenses
      Type Transferred
      2016 2015 2014
      MB Transferred % Transferred MB Transferred % Transferred MB Transferred % Transferred
      Administrative expenses 523.94 4,643.25 11.28% 436.04 4,187.92*** 10.41% 393.58 2,437.56 16.00%
      % Increase (Decrease) 87.90   20.16% 42.46   10.79% 105.82   36.77%

      *** The total revenue for the year 2015 was 5,398.02 million baht, which included the revenue from the sale of land of 1,210.10 million baht to compare the revenue from the transfer of ownership of houses and condominium units. The above transfer figures for the year 2015 do not include revenues from land sales.

      For the year 2016, the administrative expenses are more than 20.16% higher than the year 2015, mainly due to the increase in staff expenses and administrative expenses. In order to be able to handle the increased work of the expansion of business more. However, the ratio of administrative expenses to transfers did not differ significantly compared to last year.

    • Finance costs

      Financial cost was in amount of 236.80 Million Baht in the year 2016 and 166.34 Million Baht in the year 2015 increased by 42.36 percent. Mainly due to the Company had financial cost from debentures increased. Which in October 2015, the Company issued 1,000 million baht of debentures and 1,353.20 million baht in April 2016, (Redeemed of 511 million baht in April 2016) and issued 646.80 million baht in October 2016

      Financial cost was in amount of 166.34 Million Baht in the year 2015 and 145.05 Million Baht in the year 2014 and which were 3.08, 5.95 and 5.21 percent of total revenue, respectively. Due to the fact that the Company had provided increase external financial sources from debentures and bill of exchange and so the Company had financial cost increased. Regarding to such sources of fund, the Company could realize the part of financial cost for the cost of real estate projects approximately the percentage of 60 to debentures while the amount of debentures were 2,000 Million Baht in the year 2015 and 3,000 Million Baht in the year 2014 (and redeemed before maturity date of 989 million baht in the year 2014).

    • Net Profit

      For the year 2016, the Company reported net profit of 263.34 million Baht, increased 21.53 percent from 216.69 million Baht in the year 2015. The main factor was the increase in revenue of real estate and effective project cost management.

      For the year 2015, the Company reported net profit of 216.69 million Baht, increased 425.05 percent from 41.27 million Baht in the year 2014. The main factor was the increase in revenue of real estate at 121.45 percent.

      For the year 2014, the Company and its subsidiaries reported net profit of 41.27 Million Baht which increased 199.49 percent from 13.78 Million Baht in the year 2013 with the net profit margin of 1.61 percent of total revenue. The main factor was the revenue from real estate projects, other income and unrealized gain in fair value on investment properties together with increase of selling and administrative expenses and financial cost at 25.66 percent whereas in the year 2014, gross profit margin was at 33.04 percent, net profit margin at 2.22 percent of total revenue. An effective corporate income tax expense was at 27.30 percent of earning before corporate income tax.

      According to the Company’s operation as mentioned above, considering profitability ratio in 2016, 2015 and 2014, the Company had gross profit margin at 34.17, 25.61 and 32.58 percent ,respectively, net profit at 5.57, 4.00 and 1.61 percent respectively and return on equity at 8.22, 7.27 and 1.44 percent, respectively.

    • Important factors which may result to the operation in the future

      The fourth quarter of 2013 the country has political instability. So the consumers delay their decision making on buying property which from that factor makes the slowdown in property market of year 2014 seems unavoidable. But when the political unravel, the economy situations are improving with a return of consumer confidence, the real estate market finally will be back to normal.

      In year 2015-2016, Low-rise real estate direction tend to grow well due to the change of new families’ behavior, the expansion of public transportation and more stability of public situation. However, foreign financial crisis may result to the price of construction materials as well. Demand of single detached house and townhome still perform better in line with an increase of the low-rise projects transferred.

      Regarding condominium projects, there was the slightly growth mostly around sky train and subway areas, presenting the higher price in BTS and metro lines than that of condominium around Bangkok metropolitan region. Nevertheless, demand of condominium around shopping malls and community is quite due to the expansion of department store to Bangkok metropolitan area and so the selling price of condominium projects in such area is not quite high, which also attract customers.

    4. Financial position

    4.1 Assets

     
    2016
    2015
    2014
    Total assets (Million Baht) 13,515.77 12,861.19 11,956.52
    Increase from the previous year (Million Baht) 654.58 904.67 2,968.37
    Percentage 5.09 7.57 33.02
    Real estate projects under development (Million Baht) 11,395.98 10,930.65 9,841.68
    Increase from the previous year (Million Baht) 465.33 1,088.97 2,909.90
    Percentage 4.26 11.06 41.98

    An increased assets in 2014 to 31 December 2016 was mainly from an increase of Real estate projects under development and deposit land.

    In the year 2016, Slightly increased in Real estate projects under development because of launched the new projects in year 2015 in the area Kanjanapisek-Ratchapruek (Soi noi), Wongwan Ramintra, Wongwan Ratchapruek (Bangbuathong), Rungsit, Ladkrabang- Suvarnabhumi and expansion in Bangna. Furthermore, The Company is acquired land in the area Sukhumvit zone.

    In the year 2015, Increase in Real estate projects under development because of launched the new projects in the area Kanjanapisek-Ratchapruek (Soi noi), Wongwan Ramintra, Wongwan Ratchapruek (Bangbuathong), and expansion in Bangna. Furthermore, The company also is accelerating condo two projects in the area Sukhumvit and Bangna zone to increase revenue recognition in Quarter 3 and 4 of 2015. Now, the two projects were completed and have been gradually transferred to customers during the period.

    In the year 2014, Increase in Real estate projects under development is acquired land amounting to 1,600 Million Baht for development and transfer in 2015 at Sukhumvit 77, Bangbuatong Sai Noi, expansion in Bangna and Rattanathibet area while in 2013, Land acquisition was for development at Sukhumvit 77, Donmuang-Songprapa and Bangna area. The rest was the construction cost for low-rise projects ready to presale in 2015 amount to 3 projects which mostly completed in the year 2014 and will be transferred in the year 2015 as well as the construction cost of 3 condominium which 2 projects consumed the construction cost approximately 637.0 Million Baht and ready to transfer and recognize revenue in the year 201 while the other project was under construction around 77.5 percent, costly 2,141.1 Million Baht.

    • Cash and Cash Equivalent

      Cash flow for the year ended 31 December 2014 to 2016 as follows.

        2016 2015 2014
      Cash flow from operating activity before changing of operating assets and liabilities 694.57 508.59 1,818.62
      Changing of operating assets and liabilities -436.38 -450.39 -3,544.95
      Corporate income tax -51.30 -60.34 -23.95
      Net cash provided by (used in) operating activities 206.89 -2.14 -1,750.28
      Net cash provided by (used in) investing activities -77.44 -3.57 -286.29
      Net cash provided by (used in) financing activities -113.79 90.63 2,149.25
      Cash and cash equivalent increase/ -decrease 15.66 84.92 112.68
      Cash and cash equivalent at the beginning of the year 305.81 220.89 108.21
      Cash and cash equivalent at the end of the year 321.47 305.81 220.89

      As at 31 December 2016, cash and cash equivalent increased from the year 2015 by 15.66 Million Baht mainly from (1) Net cash provided by operating activities by 206.89 Million Baht. (Due to investment in real estate project under development and transferred in the period) (2) Net cash used in investing activities by 77.44 million baht, due to purchase machinery and construction equipment and vehicles. (3) Net cash used in financing activities by 113.79 million baht, mainly due to repayment of longterm loans from financial institutions, finance costs paid and repayments of debentures totaling 4,132.41 million baht and decrease in bank overdrafts and short-term loans from financial institutions, repayment of finance lease liabilities, dividends paid totaling 155.28 million baht (However, the Company had proceeds from issuance of debentures and long-term loans from financial institutions of 4,173.90 million baht.)

      As at 31 December 2015, cash and cash equivalent increased from that of the year 2014 by 84.92 Million Baht mainly from increase of cash flow from financing activities by 90.63 Million Baht. As a result of the Company received from the issuance of debentures of 2,000 million in the year 2015, which objective for issue debentures is for repayment all or partially short-term bills of exchange.

      As at 31 December 2014, cash and cash equivalent increased from that of the year 2013 by 112.68 Million Baht mainly from an increase of Cash flow from operating activity before changing of operating assets and liabilities by 593.07 Million Baht while the Company invested in real estate projects under development amounting to 800 Million Baht, partly from an increase of cash flow from financing activities.

    • Deposits for Land
       
      2016
      2015
      2014
      Deposits for Land (Million Baht) 274.39 80.00 347.00
      Increase/-decrease from the previous year 194.39 -267.00 -395.00

      Increase in Deposits for land as at 31 December 2016 was 194.39 Million Baht from year 2015 due to The Company has new deposits for new project in Rungsit, Sai Ma, the area expansion in Bangna.

      Decrease in Deposits for land as at 31 December 2015 was 267.00 Million Baht from year 2014 due to The Company has transferred the land in the area expansion in Bangna, Wongwan Ratchapruek (Bangbuathong), Expansion in Kanjanapisek-Ratchapruek.

      Decrease in Deposits for land as at 31 December 2014 was 395.00 Million Baht from year 2013 due to there was land acquisition in the year 2014 from the deposit in the year 2013 and new deposits for new projects in the future to support expansion of sales.

    • Investment properties
       
      2016
      2015
      2014
      Investment properties(Million Baht) 494.24 535.23 510.20
      Increase/-decrease from the previous year -40.99 25.03 87.94

      As at 31 December 2016, The company had an investment properties of 7.66 percent which decreased from that of the year 2015 mainly due to the decrease of unrealized gain on fair value adjustment of the previously recognized of community mall.

      As at 31 December 2015, The Company had an investment properties of 535.23 million baht which increased from that of the year 2014 by 25.03 million baht or 4.91 percent due to the increase in construction in the community at Kaset-nawamintr named “Life Style Club”

      As at 31 December 2014, The Company had an investment properties of 510.20 million baht which increased from that of the year 2013 by 87.94 million baht or 20.83 percent because of increase in unrealised gain on investment properties of 62.62 million baht and construction cost in the period for 2 community mall of 25.32 million baht.

      In the current period, investment properties named “Pickadaily Bangkok” and “Life Style Club” have been completed. Such investment properties is a shopping center by dividing the space for rent. The investment properties have been presented under fair value method. The fair value has been determined based on valuation performed by an accredited independent valuer, using the income approach as addressed in the appraisal report dated 5 January 2017 and 3 February 2017. The valuation technique used in measuring the fair value of investment properties as rental rate, rental growth rate, Risk-adjusted discount rates, and the rental yield.

    • Property, plant and equipment
       
      2016
      2015
      2014
      Property, plant and equipment 399.88 411.24 400.01
      Increase/-decrease from the previous year -11.36 11.23 22.77

      Decrease in Property, plant and equipment in the year 2016 because of accumulate depreciation and disposal of assets.

      On 28 March 2013,the Board of Directors Meeting has approved the Company (the "Leasee") entered into a land lease agreement ( "Leased Property") with two directors ( "the lessor) to build a head office building , for a period of 10 years from the date of land lease registration.

      Now, the Company and lessor has conclusion that the lessor and the leasee agreed to extend the lease for another 10 years. As for pricing, the rental rates in the 11 to 20 year lease agreement on the new rate at market price or other appropriate price. If the Company agrees to extend the agreement, the Company must submit written notice in advance as stipulated in the memorandum. Upon the expiry of the lease term of this agreement, or any extension thereof, or upon termination of the agreement due to the fault of the Company, the Company must return the leased asset to the lessor in the same condition as before the lease commenced. The Company must demolish all assets on the leased asset, if not the ownership of assets will be transferred to the lessor without any cost. If the lessor does not intend to receive the assets, the Company has the obligation to pay for any cost, such as demolition cost as stipulated in the memorandum.

      Consent to renew the lease for another 10 years, this intended to provide clarity and interest of the Company and its shareholders. However, the amendment to the terms of the lease and duration of the lease agreements have no significant impact on the financial statements of the Company. The figure in the Statements of comprehensive income, Statements of financial position, and Statements of changes in equity for the fiscal year 2013 to 2015 is stable. Change in net building from 153.41 million baht and 161.96 million baht to present Building on lease land. Such reclassify transaction has consulted with the certified public accountant (CPA). As at 31 December 2015 and 2014, total assets was 12,861.19 million baht and 11,956.52 million baht.

      However, Building on lease land will be presented as prepaid rental expenses - Building on lease land as same balance. The depreciation expense - Building on lease land in note financial statement is revised name “rental expenses”, which such transaction is presented administrative expenses. The figure in Statements of comprehensive income for the year ended 31 December 2015 is recorded amortized expenses - Building on lease land amounting 8.55 million baht and 7.20 million baht for the year ended December 31, 2015 and 2014 respectively. Disclosure in the notes to the financial statements no.14, Depreciation, If the amendment is rental expense, The total amount of depreciation and amortization will be reduced by the amount of 50.13 million baht to 41.58 million baht as at 31 December 2015 and the total number is down from 40.22 million baht to 33.02 million baht as at December 31, 2014 decreased by improving (Reclassify) the amortization of rights to use the property as a rental fee of 8.55 million baht and 7.2 million baht respectively. The rental fee are disclosed in note to the financial statements with amount of improvement. Total comprehensive income in the statement of comprehensive income for the year 2015 was 216.69 million baht and for the year 2014, 44.25 million baht remains the same.

      As at 31 December 2016, prepaid rental expenses - Building on lease land has been disclosed in financial line “Prepaid Rental Expense” by the financial statement for the year ended 31 December 2016, the total of 144.87 million baht decreased from 153.41 million baht as of 31 December 2015 with the amortization of the right of use property. This disclosure in amortized in Note 14 to the financial statement and included in the name “depreciation and amortization” in Administrative expenses. If the amendment is rental expense, The total amount of depreciation and amortization will be reduced by the amount of 53.38 million baht to 41.58 million baht as at 31 December 2016 and the total number is down from 50.13 million baht to 41.58 million baht as at December 31, 2015 decreased by reclassify the amortization of rights to use property as a rental fee of 8.55 million. The rental fee are disclosed in note to the financial statements with amount of improvement. Total comprehensive income in the statement of comprehensive income for the year 2016 was 263.34 million baht and for the year 2015, 216.69 million baht remains the same.

      In the financial statement for the year ended 31 December 2016, the company has amended the notes to the financial statement regarding the Significant Accounting Policies in the topic of “Building on lease land” to “Prepaid rental expense” and amortized over the estimate useful live of 20 years, but will disclose the amortization of prepaid rentals as a rental (Reclassify) to accordance with accounting standards and financial reporting standards in the financial statements for the year 2017.

      For the Financial statement as at 31 December 2016, 2015 and 2014 have been reclassified to Prepaid Rental Expense as table below (Decreased from amortization prepaid rental expenses);

       
      2016
      2015
      2014
      Building on lease land 144.86 153.41 161.96
      Increase/-decrease from the previous year -8.55 -8.55  

    • The adequacy of the provision and allowance for doubtful accounts.

      The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

    • The ratio shows the efficiency of major operations.

      Return on assets of the Company as at 31 December 2016, 2015 and 2014 was 4.38, 3.53 and 0.39 percent, respectively due to the Company had net profit in the year 2016 more than 2015. As a result, the return on assets improved to the order.

    4.2 Liabilities and sources of financing.

     
    2016
    2015
    2014
    Total liabilities 10,201.31 9,770.87 9,082.89
    Increase from the previous year 430.44 687.98 2,953.53
    Bank overdrafts and short-term loans from financial institutions 1,545.89 1,610.31 2,159.07
    Current portion of long-term loans from financial institutions 491.87 692.29 1,648.67
    Current portion of debentures 3,000.00 1,509.35 -
    Long-term loans from financial institutions 213.78 932.62 792.34
    Debentures 3,989.50 3,996.60 3,511.00

    As at 31 December 2016, Total liabilities increased from the year 2015 by 430.44 million baht mainly due to the Company issued 1,353.20 million baht of debentures in April 2016 (Redeemed of 511 million baht) and issued 1,646.80 million baht in October 2016 (Redeemed of 1,000 million baht). However, overdrafts and short-term loans from financial institutions were decreased, resulting in a decrease in liabilities of 64.42 million baht, a decrease in long-term loans from financial institutions amounting to 919.26 million baht and repayment of financial lease liabilities of 51.66 million baht.

    As at 31 December 2015, Total liabilities increased from the year 2014 by 687.98 million baht mainly from issuing bond of amount 2,000 million baht. However, the Company repaid bank loans for the project rather than drawdown from bank loan of 816.10 million baht from the revenues from the sale of real estate more than year 2014. Meanwhile, the company has used proceeds from the issuance of bonds to pay short-term bills of exchange. As a result, short-term bills of decreased of 548.76 million baht.

    Total liabilities as at 31 December 2014 increased mainly from an increase of the debentures of 2,011.00 Million Baht, bill of exchange and trades payable amounting to 1,034.70 Million Baht and decrease of loans from financial institution of 337.40 Million Baht.

    • Bank overdrafts and short-term loans from financial institutions

      As at 31 December 2016, Bank overdrafts and short-term loans from financial institutions decreased from the previous year by 64.42 million Baht or 4.00 percent mainly from promissory notes.

      As at 31 December 2015, Bank overdrafts and short-term loans from financial institutions decreased from that of the year 2014 by 548.76 million Baht or 25.42 percent because of increase in revenue from sale of real estate. Moreover, in April and October 2015, the Company issued debentures of 2,000 million baht which objective for issue debentures is for repayment all or partially short-term bills of exchange.

      As at 31 December 2014, Bank overdrafts and short-term loans from financial institutions increased from that of the year 2014 by 936.39 million Baht or 76.58 percent as same year 2013 which increased by 259.80 million baht due to The company has access a new sources of funding such as short-term bills of exchange and issuing bond to effect decreasing long-term loans from financial institutions. Because shortterm bills of exchange and bond had interest rates lower than loans from financial institutions and no guarantees.

    • Long-term loans from financial institutions

      As at 31 December 2016, Long-term loans from financial institutions decreased by 916.26 million baht or 56.57 percent from prior year because of increase in revenue from sale of real estate. It can be used to more repayment long-term loan. Moreover, in April 2016 and October 2016, the Company issued debentures of 1,353.20 million baht and 1,646.80 million baht, respectively. Which objective for repayment the debentures maturing redemption and repayment of such long-term loan because debentures have lower financial costs.

      As at 31 December 2015, Long-term loans from financial institutions decreased from that of the year 2014 by 816.1 million Baht or 33.43 percent because of increase in revenue from sale of real estate. Moreover, in April and October 2015, the Company issued debentures of 2,000 million baht which objective for issue debentures is for repayment all or partially short-term bills of exchange and using source of fund to reduce draw down long-term loans from financial institutions.

      As at 31 December 2014, Long-term loans from financial institutions decreased from that of the year 2014 by 337.42 million Baht or 12.14 percent due to the Company issued debentures of 3,000 million baht in the year 2014 to reduce draw down long-term loans from financial institutions because bond had interest rates lower than loans from financial institutions and no guarantees same as year 2013.

    • Debentures

      As at 31 December 2016, the Company had debenture 6,989.50 million baht which increased from the year 2015 by 1,483.55 million baht or 26.94 percent. On 23 February 2016, the Extraordinary Shareholders’ Meeting No. 1/2016 approved the issuance and offering of all types of debentures, with and/or without a name registered, the combined total amount not exceeding 3.0 Billion baht by issuing either single or multiple offerings.

      On 20 October 2016, the Company issued 646.8 million baht of debentures (646,800 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders' representative and debentures mature on 20 July 2019.

      On 5 October 2016, the Company issued 1,000 million baht of debentures (1,000,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders' representative and debentures mature on 1 October 2020. The Company has right to redeem this debenture before maturity. Meanwhile, the debenture of Areeya Property Public Company Limited No. 1/2015 due B.E. 2016 in amount of 1,000 million baht, which has been fully redeemed by the Company on 5 October 2016.

      On 1 April 2016, the Company issued a debentures name of The Debentures of Areeya Property Public Company Limited No. 1/2016 due B.E. 2019 amounting to 1,353.20 million baht. Meanwhile, the debenture of Areeya Property Public Company Limited No. 1/2013 due B.E. 2016 in amount of 511 million baht, which has been fully redeemed by the Company on 12 April 2016.

      As at 31 December 2015, the Company had debenture 5,505.95 million baht which increased from the year 2014 by 1,994.95 million baht or 56.82 percent. On 26 February 2015, the Extraordinary Shareholders’ Meeting approved the issuance and offering of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 2.0 Billion baht by issuing either single or multiple offerings. The Company issued debentures two times during the year 2015.

      As at 31 December 2014, the Company issued debentures of 3,511.00 Million Baht which increased from the issuance of 2,011.00 Million Baht debentures in the year 2013 which increased 134.07 percent. According to the Shareholders’ Extraordinary General Meeting No.1/2014. The resolution is to approve the issuance and offering of all types of debentures, with and/or without a name registered, secured and/or unsecured debentures, with and/or without debenture holders representative, subordinated debentures and/or unsubordinated debentures, and perpetual and/or tenured depending on market conditions at the time of offering. The combined total amount not exceeding 3.0 Billion baht by issuing either single or multiple offerings. The Company issued debentures two times during the year 2014.

      1st time, On 11 April 2014, the Company issued 1,500 million baht of debentures (1,500,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative. The debentures bear interest at a rate of 5.95% per annum, and mature in 3 years.

      2nd time, On 31 October 2014, the Company issued 1,500 million baht of debentures (1,500,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative. The debentures bear interest at a rate of 5.85% per annum, and mature in 3 years. The Company had fully redeemed this debenture.

      Compared to 2013, the company has issued and offered debentures for the first time. Issued and offered 2 times.

      1st time, On 12 April 2013, the Company issued 511 million baht of debentures (511,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative. The debentures bear interest at rates of, year 2014 and 2013 are 5.90% and 5.75%, respectively per annum, and mature in 3 years.

      2nd time, On 31 July 2013, the Company issued 989 million baht of debentures (989,000 units of Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative. The debentures bear interest at a rate of 6.10% per annum, and mature in 2 years. The Company had fully redeemed this debenture on 31 October 2014.

    • Short-term Bill of exchange
       
      2016
      2015
      2014
      short-term Bill of exchange 1,402.08 1,280.54 1,596.81
      Increase/-decrease from the previous year 121.54 -316.27 642.65

      As at 31 December 2016, Increase in short-term Bill of exchange by 121.54 Million Baht or 9.49 percent from year 2015 for working capital in the companies. Because of the Short-term bill of exchange have lower financial costs and unsecured loans.

      As at 31 December 2015, Decrease in short-term Bill of exchange by 316.27 Million Baht or 19.81 percent from year 2014 due to the Company has issued debentures of 2,000.00 million baht for repayment all or partially of bank overdrafts, short-term loans and loans from the financial institutions.

      As at 31 December 2014, Increase in short-term Bill of exchange by 642.65 Million Baht or 67.35 percent from year 2014 due to the company loan to invest development cost both low-rise and high-rise product for supporting revenue recognition upcoming in year 2015 and future. Furthermore, short-term bills of exchange had interest rates lower than loans from financial institutions and no guarantees.

    • Equity

      As at 31 December 2016, the shareholders Equity of the Company was amount 3,314.46 million baht which the shareholders Equity increased from year 2015 of amount 224.14 million baht or 7.25 percent due to increase in net profit for the year of 263.34 million baht and dividend payment of 39.20 million baht during the year 2015.

      As at 31 December 2015, the shareholders Equity of the Company was amount 3,090.32 million baht which the shareholders Equity increased from year 2014 of amount 216.69 million baht and no dividend payment for the year 2014.

      As at 31 December 2014, the shareholders Equity of the Company was amount 2,873.63 million baht which the shareholders Equity increased from year 2013 of amount 44.25 million baht which Shareholders' equity decreased by the dividend payment of 29.39 million baht.

    • Liquidity
       
      2016
      2015
      2014
      Cash flow from operating activities before changing of operating assets and liabilities 694.57 508.59 1,818.62
      Changing of operating assets and liabilities -436.38 -450.39 -3,545.95
      Income tax paid -51.30 -60.34 -23.95
      Net cash provided by (used in) operating activities 206.89 -2.14 -1,750.28

      Cash flow from operation activities was mainly used for real estate project under development especially during political situation is becoming stable and the economy continues to improve in year 2016. The company has 13 new projects that will start to realize revenue for the year 2016, amounting to 796 million for low-rise and 641 million baht for a condominiums.

       
      2016
      2015
      2014
      Net cash provided by (used in) investing activities -77.44 -3.57 -286.29

      Net cash flow used in investing activities in 2016 amounting 77.44 was mainly due to Increase in deposits at banks used as collateral amounting 33.40 million baht and purchase of equipment amounting 57.45 million baht. Cash flow from investing in 2014 is mainly invested in property, plant and equipment in head office and aluminum forms used in low-rise and high-rise construction projects that last for more than 3 years by partially replacement due to the company is prepared to invest in property, plant and equipment and aluminum form in the year 2013 and 2014 to effect cash flow to investing activities only 3.57 million baht.

       
      2016
      2015
      2014
      Net cash provided by (used in) financing activities -113.79 90.63 2,149.25

      As at 31 December 2016, The Company had cash flow used in financing activities amounting to 113.79 million baht, mainly due to repayment of long-term loans from financial institutions, debentures and finance costs paid total amounting to 4,132.41 million baht, decrease in bank overdrafts and short-term loans from financial institutions, repayment of finance lease liabilities and dividend paid totaling 155.28 million baht. (However, the company had issued of debentures and proceed from long-term loan from financial institutions during the period amounting to 4,173.90 million baht).

      Cash flow from financing activities in 2015 was mainly provided from issuance of debentures and mainly used for payment of debentures amounting to 2,000 million baht. Regarding long-term loan from financial institution, loan repayment was approximately 816.1 million baht and repayment short-term Bill of exchange and finance cost of 548.76 million baht and 486.05 million baht, respectively.

      Cash flow from financing activities in 2014 was mainly provided from issuance of debentures and mainly used for payment of debentures amounting to 2,011 Million Baht. Regarding long-term loan from financial institution, loan repayment was approximately 337.4 Million Baht while cash outflow for loan repayment is from bill of exchange to save interest.

    • Significant Financial Policy Analysis Ratios

      Liquidity ratio

      As at 31 December 2016, Liquidity ration of the Company was amount of 2.07 times by decrease from 2.44 times from the year 2015. Due to current liabilities increased by 1,152.74 million baht or 24.65 percent, mainly due to the increase in debentures of 1,490.65 million baht.

      The Company’s quick ratio was 0.11 times as of 31 December 2016 by increase from 0.09 times in year 2015, Due to cash and cash equivalents from operating activities of 206.89 million baht, cash flow used in investing activities and financing activities of 77.44 million baht and 113.79 million baht, respectively, resulting in an increase in cash and cash equivalents from year 2015 amount 15.66 million baht.

      Interest coverage ratio

      The Company's interest coverage ratio is 2.44 times as of 31 December 2016, decrease from 2.63 times in year 2015. The ability to pay interest is derived from income before interest and corporate income tax divided by financial costs. In year 2016, profit before interest expenses and corporate income tax increased by 140.18 million baht or 32 percent. However, year 2046 financial cost is higher than year 2015 of 70.46 million baht or 42 percent. As a result, interest coverage in year 2016 will decrease from year 2015, while the Company has a 0.50 times as much cash interest coverage ratio as of 31 December 2016, up from 0.12 times in year 2015. The Company's cash flow from operating activities was 206.89 million baht, an increase of 2.14 million baht from the previous year.

      Debt to equity ratio

      The Company has a total debt to equity ratio of 3.08 times as of 31 December 2016, decrease from 3.16 times in year 2015 and year 2014. The decrease in total debt to equity ratio due to increased recognition of revenue from transfer, including cost management and manage the cost effectively. As a result, the net profit margin increased. As of 31 December 2016, the Company had inventories balance for sale worth 11,396 million baht. Upon transfer of ownership, the debt to equity ratio will gradually decrease.

    • The Maintenance of the net debt to equity ratio

      The Company has reiterated its intention to fully comply with terms and conditions of the maintaining net debt to equity not exceeding the proportion of 3:1 in accordance with the rules stated in the Terms and Conditions clause 6.2. The condition of issuer to comply with clause 6.2.11 the following debentures include:

      • 1) Debentures of Areeya Property Public Company Limited No. 1/2014 due B.E. 2017.
      • 2) Debentures of Areeya Property Public Company Limited No. 2/2014 due B.E. 2017 with the issuer’s right of early redemption.
      • 3) Debentures of Areeya Property Public Company Limited No. 2/2015 due B.E. 2018 with the issuer’s right of early redemption.

        In addition, the Company has reiterated its intention to fully comply with the terms and conditions of the maintaining net debt to equity of not exceeding the proportion of 3:1 times as specified in the Terms and Conditions of Clause 6.2. The condition of issuer to comply with clause 6.2.11 Financial Conditions Specify net liabilities to be deducted by cash and cash equivalents, current investment and deposits at banks used as collateral for debentures:
      • 4) Debentures of Areeya Property Public Company Limited No. 1/2016 due B.E. 2019.
      • 5) Debentures of Areeya Property Public Company Limited No. 2/2016 due B.E. 2020 with the issuer’s right of early redemption.
      • 6) Debentures of Areeya Property Public Company Limited No. 3/2016 due B.E. 2019.
      • 7) Debentures of Areeya Property Public Company Limited No. 1/2017 due B.E. 2020.

      As at 31 December 2016, the Company maintained a net debt-to-equity ratio of 2.79 times (as described in clause 6.2.11 for debentures No. 1) - 3). Shareholders' equity is 2.62 times for debentures 4) - 6) According to the terms and conditions in clause 6.2.11)

      Part 7) Debentures issued after December 31, 2016 are required to comply with clause 6.2.11. By specifying the net liabilities to be calculated is deducted by cash and cash equivalents. Temporary investment and secured bank deposits same as the debentures in 4) - 6)

      However, the company has prepared to maintain its debt to equity ration and capital structure to the appropriate level in the future:

      1) Repayment short-term debt instrument and/or long-term debt instrument in whole or in part, Short-term and long-term debt instrument of the company will be bue within 90 days are as follows:

      1. Repayment of short-term debt instrument of 758 million baht.
      2. Repayment of long-term debt instrument of 1,500 million baht.

      2) Accelerate the sale and transfer of completed projects and transfers of low-rise and high-rise projects amounting to 6,971 million baht as of 31 December 2016 with the promotion, promotion and public relations projects to reach more customers. The Company expects that this measure will increase the Company's revenue recognition and profit margins, resulting in a decrease in total debt to equity ratio and capital structure in an appropriate proportion.

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