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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 subsidiarycompany (One Up Co.,Ltd.) with64.99% ownership interest to provide construction services to Areeya’s projects and outside customers.
  • In the year 2008 the Company purchased 35% of the sharecapitalof One Upfrom 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.
  • On November 3, 2017, Areeya Convenience Store Co., Ltd. has changed its name to Areeya Hospitality Co., Ltd. and registered with Department of Business Development and Ministry of Commerce and change the business nature to restaurant business from 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 2012, the Company launched 2 storey townhouse “village” and 3 storey townhouse “Daily” and, In year 2014, the Company launched new 2 storey single detached house “Areeya COMO” and launched new 3 storey townhouse “Brigg” in year 2015.

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 issuanceandofferingforsaleofall typesofdebentures, 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 Bahtby issuingeither singleor multipleofferings.

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 issuanceandofferingforsaleofall typesofdebentures, 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 Bahtby issuingeither singleor multipleofferings.

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 issuanceandofferingforsaleofall typesofdebentures, 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 Bahtby issuingeither singleor multipleofferings.

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 of 31 December 2017, the Company has 62 current projects and 2 community malls, totally 64 projects as follows:

No. Project

Location

Type of Product
1. Areeya Busaba Laoprao 130 Single Detached House
2. Areeya Sawana 3 Kaset-nawamin Single Detached House
3. Areeya Metro Kaset-nawamin 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 Wongwaen Bangna Single Detached House
7. Areeya Como Wongwaen Ramintra Hathairath Single Detached House
8. The Village Cottage Kanjanapisek-Ratchaphruk 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 Wongwaen-Ratchaphruk Bangbuathong Single Detached House
12. At Home Kaset-nawamin Townhouse
13. The Colors Chaengwattana-Tiwanon Chaengwattana-Tiwanon Townhouse
14. Areeya To Be Ladphrao Townhouse
15. Areeya Daily Kaset-nawamintr Townhouse
16. The Colors Premium Bangna Bangna Townhouse
17. The Colors Bangna KM.10 Bangna Townhouse
18. The Village Bangna KM.10 Bangna Townhouse
19. The Colors Leisure Bangna KM.8 Bangna Townhouse
20. The Colors Leisure Bangna KM.10 Bangna Townhouse
21. The Colors Bangna Wongwan Bangna Townhouse
22. The Colors Premium Bangna Wongwaen Bangna Townhouse
23. The Village Bangna Wongwaen 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-Ratchaphruk Sai Noi Townhouse
29. The Colors Premium Kanjanapisek-Ratchaphruk Sai Noi Townhouse
30. The Colors Kanjanapisek-Ratchaphruk Sai Noi Townhouse
31. The Colors Premium Wongwaen Ramintra Hathairath Townhouse
32. The Colors Wongwaen Ramintra Hathairath Townhouse
33. The Colors Premium Wongwaen-Ratchaphruk Bangbuathong Townhouse
34. The Colors Wongwaen-Ratchaphruk Bangbuathong Townhouse
35. The Colors Premium Kanjanapisek-Ratchaphruk 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 Wongwaen 2 Bangna Townhouse
49. The Village Kanjanapisek-Ratchaphruk 2 Sai Noi Townhouse
50. The Place Kanjanapisek-Ratchaphruk 2 Sai Noi Townhouse
51. The Colors Kanjanapisek-Ratchaphruk 2 Sai Noi Townhouse
52. The AVA Residence Sukhumvit 77 Single Detached House
53. The Colors Premium Kanjanapisek-Ratchaphruk 3 Sai Noi Townhouse
54. Areeya Brigg Bangna KM.10 Bangna Townhouse
55. Areeya Brigg Bangna Wongwaen Bangna Townhouse
56. The Colors Wongwaen Ramintra 2 Hathairath Townhouse
57. The Colors Mix Rangsit Wongwaen Rangsit Townhouse
58. The Village Rangsit Wongwaen Rangsit Townhouse
59. A Space Mega Bangna Condominium
60. Chalermnit Art De Maison Sukhumvit Condominium
61. The Village Exclusive Bangna Bangna Townhouse
62. The Village Exclusive Bangna 2 Bangna Townhouse
63. The Colors Bangna Wongwaen 2 Bangna Townhouse
64. Areeya Brigg Rangsit Klong 4 Rangsit 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 2017, 2016 and 2015 by the type of real estate.

    Type Sales
    2017 2016 2015
    Unit MB Unit MB Unit MB
    Condo 1,881 4,246 491 1,030 354 566
    Single Detached house 159 845 161 780 134 616
    Townhouse / twin house 2,255 6,035 1,205 3,075 1,267 3,262
    Land 1 2 - - - -
    Total 4,296 11,128 1,857 4,885 1,755 4,444
    % Increase from prior year 131% 128% 6% 10% 77% 63%

    Type Transferred
    2017 2016 2015
    Unit MB Unit MB Unit MB
    Condo 637 1,569 636 1,330 631 762
    Single Detached house 155 783 139 686 56 372
    Townhouse / twin house 1,034 2,604 1,032 2,627 1,189 3,054
    Land 1 2 - - 2 1,210
    Total 1,827 4,958 1,807 4,643 1,878 5,398
    % Increase from prior year 1% 6.8% -4% -14% 136% 122%

    Condominium For the year 2017, sales of condominiums amounted to Baht 4,246 million which increased from prior year for Baht 3,216 million. The increasing of revenue increase is mainly from the new project launched during the year and the international market expansion including with revenue from the projects continued from last year.

    Sales of the year 2017 significantly increased from A Space Mega and A Space I.D. Asoke-Ratchada which generate revenue for Baht 2,808 million. A Space Mega is the new project launched in the year 2017 and A Space I.D. Asoke-Ratchada is the ongoing project from last year.

    The Company also launch another new project this year which is Chalermnit Art De Maison and generate revenue for this year for Baht 312 million. Other ongoing projects of the company could also generate more sales in this year as well. Especially in A Space Me Rattanathibet, A Space ME Bangna and A Space Sukhumvit 77, with total sales of Baht 1,121 million. Therefore, the total sales of this year are higher than the prior year.

    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.

    Single Detached House For the year 2017, single-detached house sales increased by Baht 65 million from 2016 as a result of the company launching a new project in 2017, “The AVA Residence”, a single detached house project on Sukhumvit 77 with the selling price starting at 30 million. This project generate sales for Baht 123 million. In addition, The Projects that have been in operation since the prior year, such as Areeya Como Bangna-Wongwaen and Areeya Wongwaen-Ramintra also increase sales this year. For this reason, the total sales are higher than the prior year.

    For the revenue from transfer of the year 2017, it was increased by Baht 97 million from 2016. The increasing was from a new project in 2017, “The AVA Residence”, a single detached house project 101 on Sukhumvit 77 which had revenue recognition this year for Baht 74 million and revenue from the Projects that have been transferred since the prior year, such as Areeya Como Bangna - Wongwaen and Areeya Wongwaen – Ramintra also continue transferred this year and recognize revenue for Baht 480 million. For this reason, the revenue from transfers was higher than the prior year.

    In year 2016, The Company has launched 3 project include Areeya Donmuang-Songprapa, Areeya Como Ladkrabang-Suvarnabhumi, and Areeya Como Wongwaen-Ratchaphruk 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 WongwaenRamintra 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.

    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 of 31 December 2017. The Company has 25 townhouse projects with total project value of 11,828 Million Baht or 4,423 units, and recognize revenue this year for 23 projects, amounting to 2,604 Million Baht.

    As of 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

      The cost of sales for the year 2017 increased from prior year from Baht 3,056 million to Baht 3,302 million, representing an increase of Baht 246 million or 8%, due to the increase in cost of sales of single detached houses and townhouses by Baht 102 million and increasing in cost of sales of condominiums for Baht 144 million.

      The increase of cost of sales was higher in the same way as the sale revenue. Gross margins of 2017 and 2016 are 33% and 34%, respectively.

      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 secondquarterof2016of twoprojectsnamely 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. Inthesecondquarter, riseofconstructioncostaround 1 percent of total project value. In this regards, the qualityofconstruction materialsishigher inaccordance 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’s gross profit for the year 2017 and 2016 is Baht 1,656 million and Baht 1,587 million, or 33.4% and 34.2%, respectively. There was no significant difference in the gross margin for these two years. The company will focus on the efficiency of cost management which will help gross margin to increase further in the future.

      The Companyhasgrossprofit for theyear2016,2015 and 2014 amounted to Baht 1,587 million, Baht 1,381 million and Baht 805 million, respectively, or 34%, 26% and 33%, 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 companyhas manageditscostofsales moreefficiently. 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 2017, the Company had unrealized loss in fair value on investment properties of 32.55 Million Baht. The Company presented investment properties in fair value which were appraised by the independent property valuers in the basis of income approach and the principal assumptions used in the appraisal are as follows: Rental rates, increasing rate of rental, discount rates and yields including with revenues from rental and services related to investment property and other types of income of the company as addressed in the appraisal report dated 17 January 2018.

      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 February 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.

    • Selling Expenses
      Type Transferred
      2017 2016 2015
      MB Transferred % Transferred MB Transferred % Transferred MB Transferred % Transferred
      Selling Expenses 742.8 4,958.1 15.0% 519.3 4,643.3 11.2% 535.8 4,187.9** 12.8%
      % Increase (Decrease) 223.5   3.8% (16.5)   (1.6%) 215.6   (0.4%)

      ** 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 major selling expenses of the Company and its subsidiaries consist of advertising and marketing costs, transfer fees, Special business tax and other sales related expenses. Transfer fees and Special business tax will vary according to the income from the transfer of ownership of real estate.

      In 2017, compared with 2016, the company has increased in transfer amount which make the transfer fees and special business tax increase as well. In addition, the cost of advertising has increased especially online media and events, and in 2017, the company expand to international market so this also make the cost of marketing and events increased. As a result of international market expansion, the company can generate sales over 1,049 million baht, representing 10% of total transfer revenue in 2017

      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.

    • Administrative expenses
      Type Transferred
      2017 2016 2015
      MB Transferred % Transferred MB Transferred % Transferred MB Transferred % Transferred
      Administrative expenses 577.7 4,958.1 11.7% 523.9 4,643.3 11.3% 436.0 4,187.9** 10.4%
      % Increase (Decrease) 53.8   0.4% 87.9   0.9% 42.5   (5.6%)

      *** 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 2017, the Company has administrative expenses of Baht 53.8 million which higher than the year 2016, mainly due to the following expenses.

      Maintenance cost for housing stock and cost of project management, these expenses increase by the number of completed stocks and the number of projects which rise from 39 projects in 2016 to 56 projects in 2017. In 2018, the company will focus on project construction and inventory management to reduce these costs.

      Employee Costs and Management Fees, these expenses increase from prior year to support the business expansion.

      However, the ratio of administrative expenses to transfer amount between 2017 and 2016 was not significantly different. The increase was 0.37% while the transfer amount increased over Baht 315 million.

    • Finance costs

      For the year 2017 and 2016, the Company’s financial cost was Baht 259 million and Baht 237 million, respectively. Increasing from prior year for Baht 23 million or 10% which resulting from the interest cost from debentures and debenture issuing costs.

      During the year 2017, the Company issued debentures amounting to Baht 2,997 million and debenture redemptions of Baht 3,000 million.

      For the year 2016, financial cost was in amount of 237 Million and 166 Million Baht in the year 2015 increased by 43 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 647 million baht in October 2016

    • Net Profit

      For the year 2017, the Company’s netprofit was Baht 98 million,or2%, while netprofit was Baht263 million or 6% in 2016.

      Netprofitdecreasedfrom prior year for Baht165 million or 63% due to the increase in selling expenses, such as advertising costs, marketing costs, advertising on billboards and especially online media and events. In addition, in the year 2017, the company expanded its customer base to overseas market. However, the increase in advertising and marketing this year, the company has analyzed the customer thoroughly and use the advertising and marketing tools,both in offline and online to communicate to the potential customers directly including the expansion to overseas market which will be a long-term impact on sales and profits in the future.

      In addition, The Company had the actuarial loss of Baht 23 million at the end of year 2017 due to the change in assumptionsonemployeebenefitobligation. However, this item is included in the other comprehensive income statement and has no impact on the Company’s earnings per share

      For the year 2016, the Company reported net profit of 263 million Baht, increased 22 percent from 217 million Baht in the year 2015. The main factor was the increase in revenue of real estate and effective project cost management.

      According to the Company’s operation as mentioned above,consideringprofitability ratioin2017,2016and 2015, the Company had gross profit margin at 33, 34 and 26 percent, respectively, net profit at 1.93, 5.57 and 3.97 percent respectively and return on equity at 2.94, 8.22 and 7.27 percent, respectively

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

      Real estate business in Bangkok and suburbs shows continuously positive trend, many businesses have plans to invest in land for potential new projects in 2018. Large real estate developer will more focus on middle to high market segments and will likely increase investing in Mixed use projects. Due to higher land cost, only developing in condominium may not meet the breakeven point.

      The real estate sector in the province is expected to be stable. Purchases in the provinces are limited and lot of housing stocks are still available. The construction of expressway and expansion of new roads around Bangkok will help to create new locations which suitable for development of real estate projects and also help to diversify the economy.

      Real estate developers consider that the investors are the key drivers for the property market recovery, but in the long run, long-term investors who buy property for long-term rent or hold are becoming saturated since the rental yield decrease (Less than 6% per year) which impact to the attraction of investors. Therefore, the demand from the investors in the next phase may not much accelerate because they will invest with more concern. However, Chinese investors are becoming an increasingly important part of Thailand’s Real estate. The price of real estate in some projects and some areas such as Pattaya increased significantly.

      In addition, housing loan rejection rate continue to be high, especially in low-to-middle income customers, which is a major obstacle to the business. Commercial banks should have more flexibility in housing loan approval or commercial banks may consider pre-mortgage loans as well as banks in Singapore and Malaysia to solve the problem of housing loan rejection.

      Real estate developers also consider about the commercial rentals such as community mall and mixed use development which continue growing and cause the over supplies problem in some area in the future. The Growth of online business is also one significant threat to the space rental and leasing business and alsoaffectdirectly totenants in manybusinesses, such as clothing stores, schools, tutors, and entertainment.

    4. Financial position

    4.1 Assets

     
    2017
    2016
    2015
    Total assets (Million Baht) 13,510 13,516 12,861
    Increase from the previous year (Million Baht) (6) 655 905
    Percentage (0.0) 5.1 7.6
    Real estate projects under development (Million Baht) 11,474 11,396 10,931
    Increase from the previous year (Million Baht) 78 465 1,089
    Percentage 0.7 4.2 11.1

    For the year 2017, compared to 2016, total assets decreased slightly. Due to the decrease in Fixed assets and investment properties with the net increase in real estate projects under development, deposit of land and trade and other receivables.

    The decrease in fixed Assets and investment property are due to the depreciation recognized during the year and unrealized losses on fair value of investment properties of Baht 98 million and Baht 33 million, respectively. The increase in real estate projects under development and the deposit of land is due to the low-rise projects under development in Bangna, Sai Noi and Rangsit and high-rise projects in the Rajdamri and Rattanathibetarea, Includingadditional landacquisition in Bangna, Hatairat, Rangsit and Bang Lamung. For the increase in trade and other receivable was due to the income from penalty of the delayed project.

    An increased assets in 2015 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 107 projects under development because of launched the new projects in year 2015 in the area KanjanapisekRatchaphruk (Soi noi), Wongwaen Ramintra, Wongwaen Ratchaphruk (Bangbuathong), Rangsit, LadkrabangSuvarnabhumi 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-Ratchaphruk (Soi noi), Wongwaen Ramintra, Wongwaen Ratchaphruk (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.

    • Cash and Cash Equivalent

      Cash flow for the year ended 31 December 2015 to 2017 as follows.

        2017 2016 2015
      Cash flow from operating activity before changing of operating assets and liabilities 524 695 508
      Changing of operating assets and liabilities 508 -437 -450
      Corporate income tax -84 -51 -60
      Net cash provided by (used in) operating activities 948 207 -2
      Net cash provided by (used in) investing activities -22 -77 -4
      Net cash provided by (used in) financing activities -956 -114 91
      Cash and cash equivalent increase/ -decrease -30 16 85
      Cash and cash equivalent at the beginning of the year 321 306 221
      Cash and cash equivalent at the end of the year 292 322 306

      From the figures of cash flow as of 31 December 2017 above, the Company has balance of cash and cash equivalents decreased from December 31, 2016 amounting to Baht 30 million, resulting from the net cash used in the three operating activities. (1) Cash flow used in operating activities for Baht 22 million (2) Cash flow used in financing activities for Baht 956 million and (3) Cash flow from operating activities for Baht 948 million.

      Compared to 2016, cash flow used in investing activities was decreased due to the company decrease in investing in fixed assets from last year. Cash flow used in financing activities increased due to the repaymentofshort-term loansfrom financial institutions during the year and change source of fund to longterm loans instead. For the cash flow from operations before changes in operating assets and liabilities which decreased was mainly from the lower operating profit from last year.

      As of 31 December 2016, cash and cash equivalent increased from the year 2015 by 16 Million Baht mainly from (1) Net cash provided by operating activities by 207 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 million baht, due to purchase machinery and construction equipment and vehicles. (3) Net cash used in financing activities by 114 million baht, mainly due to repayment of long-term loans from financial institutions, finance costs paid and repayments of debentures totaling 4,132 million baht and decrease in bank overdrafts and short-term loans from financial institutions, repayment of finance lease liabilities, dividends paid totaling 155 million baht (However, the Company had proceeds from issuance of debentures andlong-term loans from financial institutionsof4,174 million baht.)

      As of 31 December 2015, cash and cash equivalent increased from that of the year 2014 by 85 Million Baht mainly from increase of cash flow from financing activities by 91 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.

    • Deposits for Land
       
      2017
      2016
      2015
      Deposits for Land (Million Baht) 292 274 80
      Increase/-decrease from the previous year 18 194 -267

      As of 31 December 2017, the increase in Deposits for land for Baht 18 Million from year 2016 was from The Company has new deposits for new project in Sainoi and Bang Lamung.

      As of 31 December 2016, the increase in Deposits for land for Baht 194 Million from year 2015 was from The Company has new deposits for new project in Rangsit, Sai Ma, the area expansion in Bangna.

      As of 31 December 2015, the decrease in deposits for land for Baht 267 Million from year 2014 was from The Company has transferred the land in the area expansion in Bangna, Wongwaen Ratchaphruk (Bangbuathong), Expansion in Kanjanapisek-Ratchaphruk.

    • Investment properties
       
      2017
      2016
      2015
      Investment properties (Million Baht) 454 494 535
      Increase/-decrease from the previous year -40 -41 25

      As of 31 December 2017, The Company had an investment properties decreased by Baht 40 million or 8% from previous year due to the adjustment of unrealized loss in fair value on investment properties Baht 32 million and the reclassification of investment property into real estate projects under development for Baht 8 million.

      As of 31 December 2016, The company had an investment properties of 8 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 of 31 December 2015, The Company had an investment properties of 535 million baht which increased from that of the year 2014 by 25 million baht or 5 percent due to the increase in construction in the community at Kaset-nawamin named “Life Style Club”

      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 17 January 2018. 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
       
      2017
      2016
      2015
      Property,plantand equipment (Million Baht) 274 400 411
      Increase/-decrease from the previous year -126 -11 11

      Property, plant and equipment as of 31 December 2017 decreased from prior year due to the depreciation recognized during the year for Baht 98 million, including reclassificationofpreviously recognizedproperty,plant and equipment to Investment properties for Baht 55 million and also decreasing in investing in fixed assets from prior year.

      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.

      As of 31 December 2015, all assets on the leased asset which recognized as Property, Plant and equipment in the statement of financial position were reclassified and newly recognize as “Building on lease land” and change to “prepaid rental expenses” from 2016 onward and the company has also 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

      As of 31 December 2017, prepaid rental expenses as of 31 December 2017 and 2016 are Baht 136 million and Baht 145 million, respectively, decreased by Baht 9 million from the amortization of the prepaid rental during the year which disclose in the notes to the financial statements no.15 “prepaid rental expenses” and no. 32 “Administrative expenses”. The amortization of the prepaid rental is classified as “depreciation and amortization” in Administrative expenses, however, the Company will disclose the amortization of prepaid rental as “rental expense” (Reclassify) to accordance with accounting standards and financial reporting standards inthe financial statements for the year2018

      In case the reclassification from “depreciation and amortization” to “rental expense” was made, the amount of depreciation and amortization in notes to the financial statements no.32 for the year 2017 will be decreased from Baht 57 million to Baht 48 million and Baht 53 million to Baht 45 million for the year 2016. Meanwhile, the rental expense will be increased at the same amount of reclassification and no impact to the figure of Statements of comprehensive income. For the Financial statement As of 31 December 2017, 2016and2015havebeenreclassifiedto Prepaid Rental Expense as table below (Decreased from amortization prepaid rental expenses);

       
      2017
      2016
      2015
      Building on lease land (Million baht) 136 145 153
      Increase/-decrease from the previous year -9 -8 -9

    • *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 of 31 December 2017, 2016 and 2015 was 2.98, 4.38 and 3.53 percent, respectively due to the Company had net profit in the year 2017 less than 2016. As a result, the return on assets decreased.

    4.2 Liabilities and sources of financing.

     
    2017
    2016
    2015
    Total liabilities 10,169 10,201 9,771
    Increase from the previous year (32) 430 688
    Bank overdrafts and short-term loans from financial institutions 347 1,546 1,610
    Current portion of long-term loans from financial institutions 301 492 692
    Current portion of debentures 1,000 3,000 1,509
    Long-term loans from financial institutions 1,342 214 933
    Debentures 5,976 3,990 3,997

    As of December 31, 2017, the Company’s total liabilities decreased by Baht 32 million from 2016. Overall, the total liabilities of 2017 and 2016 were not significantly different.

    During the year 2017, the company change source of fund by reducing short-term loans from financial institutions and increase the portion of long-term loans instead for more efficient in financial liquidity management. For this reason, during the year, a large amount of short-term loans from financial institutions were repay and the borrowings in long-term loans from financial institutions increased.

    For the debentures of 2017, during the year, the debentures were redeemed in the amount of Baht 3,000 million, and new debentures for Baht 2,997 million were issued. Therefore, the debentures of the years 2017 and 2016 were not different.

    As of 31 December 2016, Total liabilities increased from the year 2015 by 430 million baht mainly due to the Company issued 1,353 million baht of debentures in April 2016 (Redeemed of 511 million baht) and issued 1,647 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 million baht, a decrease inlong-term loans from financial institutionsamounting to919.26 millionbahtandrepaymentof financial lease liabilities of 52 million baht.

    As of 31 December 2015, Total liabilities increased from the year 2014 by 688 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 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 shortterm bills of exchange. As a result, short-term bills of decreased of 549 million baht.

    • Bank overdrafts and short-term loans from financial institutions

      As of 31 December 2017, Bank overdrafts and short-term loans from financial institutions decreased from the previous year by Baht 1,199 million due to the repayment during the year and decrease in new borrowings, especially in promissory note and change source of fund to long-term loans instead for more efficient in financial liquidity management.

      As of 31 December 2016, Bank overdrafts and shortterm loansfrom financial institutionsdecreasedfrom the previous year by 64 million Baht or 4 percent mainly from promissory notes.

      As of 31 December 2015, Bank overdrafts and shortterm loans from financial institutions decreased from that of the year 2014 by 549 million Baht or 25 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.

    • Long-term loans from financial institutions

      As of December 31, 2017, long-term loans from financial institutions increasedby Baht 937 milliondue to the Company change source of funds by reducing the proportion of short-term loans from financial institutions and increase the portion of long-term loans instead for better liquidity management. This year, the company has borrowed Bath 2,723 million which more than last year and repayment during the year for Baht 1,786 million.

      As of 31 December 2016, Long-term loans from financial institutions decreased by 919 million baht or 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 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 of 31 December 2015, Long-term loans from financial institutions decreased from that of the year 2014 by 816 million Baht or 33 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.

    • Debentures

      As of December 31, 2017, the debentures amounted to Baht 6,976 million, a slight decrease from the previous year of Baht 14 million. During the year, the debentures were redeemed in the amount of Baht 3,000 million and debentures were issued at Baht 2,997 million. For the year 2017, the Company issued the debentures as follows:

      On January 31 2017, the Company issued Baht 654.5 million of debentures (654,500 units, Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative and debentures mature on 31 January 2020.

      On April 5, 2017, the Company issued Baht 1,500.0 million of debentures (1,500,000 units, Baht 1,000 each). The debentures were registered, unsubordinated and secured and debentures mature on 5 April 2021. The Company has right to redeem this debenture before maturity

      On October 31 2017, the Company issued Baht 842.3 million of debentures (842,300 units, Baht 1,000 each). The debentures were registered, unsubordinated, unsecured and without a debenture holders’ representative and debentures mature on 30 April 2021.

      As of 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 ofdebentures, 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 of 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’ Meetingapprovedtheissuanceandofferingofall 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 singleor multipleofferings.The Company issued debentures two times during the year 2015.

    • Short-term Bill of exchange
       
      2017
      2016
      2015
      short-term Bill of exchange (Million Baht) 70 1,402 1,280
      Increase/-decrease from the previous year (1,332) 122 -316

      As of 31 December 2017, short-term bills of exchange amounted to Baht 70 million, a decrease of Baht 1,332 million from the end of last year. It was mainly from the Company policy to change the funding sources from short-term to long-term by reducing short-term bills of exchange and increase the portion of long-term loans instead for more efficient in financial liquidity management.

      As of 31 December 2016, Increase in short-term Bill of exchange by 122 Million Baht or 9 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 of 31 December 2015, Decrease in short-term Bill of exchange by 316 Million Baht or 20 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.

    • Equity

      As of December 31, 2017, the Company’s shareholders’ equity was Baht 3,340 million, increasing for Baht 26 million or 1% from the previous year, resulting from an increase in profit for the year 2017 of Baht 98 million and decrease by the payment of dividends during the year 2017 amounting to Baht 48.98 million and the Actuarial loss of Baht 23 million due to the change in assumptionsonemployeebenefitobligation. However, this item is included in the other comprehensive income statement and has no impact on the Company’s earnings per share.

      As of 31 December 2016, the shareholders Equity of the Company was amount 3,314 million baht which the shareholders Equity increased from year 2015 of amount 224 million baht or 7 percent due to increase in net profit for the year of 263 million baht and dividend payment of 39 million baht during the year 2015.

      As of 31 December 2015, the shareholders Equity of the Company was amount 3,090 million baht which the shareholders Equity increased from year 2014 of amount 217 million baht and no dividend payment for the year 2014.

    • Liquidity
       
      2017
      2016
      2015
      Cash flow from operating activities before changing of operating assets and liabilities 524 694 508
      Changing of operating assets and liabilities 508 -437 -450
      Income tax paid -84 -51 -60
      Net cash provided by (used in) operating activities 948 207 -2

      Net cash flow from operating activities was increased from last year. The main reason is the cash received from real estate projects during development increased and decrease in the cash used for deposit the land.

      In year 2016, as a result of the company focused on developing real estate projects by increasing the construction volume and acquired more land to accommodate new projects that will take place in the future, cash were used in large amount and result in the decrease in cash flow from operating activities. Thus, in year 217, the company develop the inventory management by controlling the construction volume and accelerate the sale of existing inventories, this make the company had cash received from many development projects during the year 2017 which result in the increasing of operating cash flow.

       
      2017
      2016
      2015
      Net cash provided by (used in) investing activities -22 -77 -4

      Net cash flow used in investment activities in 2017 decreased from 2016 mainly due to the decrease in fixed assets acquisition and the increasing for available cash from the secured bank deposits for letters of guarantee which matured during the year of Baht 32 million.

       
      2017
      2016
      2015
      Net cash provided by (used in) financing activities -956 -114 91

      Net cash flow used in financing activities in 2017 increased from 2016 mainly due to the repayment of debentures due within the year of Baht 3,000 million, repaymentofshort-term loansfrom financial institutions amounted to Baht 1,200 million, financial expenses amounted to Baht 595 million and dividend payment for Baht 49 million.

      However, during the year, the Company also issued additional debentures and borrowed long-term loans from financial institutions but it was in the less portion than the repayment which making net cash used in financing activities this year was higher than last year.

      As of 31 December2016,The Company had cash flow used in financing activities amounting to 114 million baht, mainly due to repayment of long-term loans from financial institutions, debentures and finance costs paid total amounting to 4,132 million baht, decrease in bank overdrafts and short-term loans from financial institutions, repayment of finance lease liabilities and dividend paid totaling 155 million baht. (However, the company had issued of debentures and proceed from long-term loan from financial institutions during the period amounting to 4,174 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. Regardinglong-term loanfrom financial institution, loan repayment was approximately 816 million baht and repayment short-term Billofexchangeandfinancecost of 549 million baht and 486 million baht, respectively.

    • Significant Financial Policy Analysis Ratios

      Liquidity ratio

      The Company’s liquidity ratio as of December 31, 2017 was 4.75 times and as of December 31, 2016 was 2.07 times, increasing by 2.68 times due to the Company’s current liabilities decreased.

      The decreasing in current liabilities was mainly from the decrease in short-term loans from financial institutions and debentures due within one year. Short-term loans from financial institutionsdecreasedfrom therepayment during the year and less borrowing since the Company change to funding from long-term loans instead. .

      For the debentures due within one year, it was decreased due to the outstanding debentures due within the year 2016 amounting to Baht 3,000 million, while the balance of 2017 are only Baht 1,000 million. As a result of matters above, the current liabilities decreasedfor theyear2017andaffectedtothebetter liquidity ratio.

      As of 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 million baht or 24.65 percent, mainly due to the increase in debentures of 1,491 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, Duetocashandcashequivalentsfrom operating activitiesof207 millionbaht,cashflow usedininvesting activities andfinancing activities of 77 millionbaht and 114 million baht, respectively, resulting in an increase in cash and cash equivalents from year 2015 amount 16 million baht.

      Interest coverage ratio

      The Company’s interest coverage ratio is 1.55 times as of December 31, 2017 and 2.44 times as of December 31, 2016, which is decrease for 0.89 times. In year 2017, profit before interest expenses and income tax were less than the prior year for Baht 175 million or a decrease of 30%. At the same time, the interest expenses of 2017 is more than the year 2016 of Baht 23 million or 10%. With the proportion of profit decreased, but the interest expenses increased, the interest coverage ratio in 2017 decreased from 2016.

      For the Company’s interest coverage (Cash basis) is 1.59 times as of December 31, 2017 and 0.50 times as of December 31, 2019, increasing 1.09 times as the Companyhascashflow from operatingactivities in 2017 for Baht 948 million, increased by Baht 741 million from 2016 whichhadcashflow from operatingactivities of Baht207 million. Cashflow from operatingactivities which increased was mainly from cash received from development of real estate projects and reduction of the cash used for the deposit of land.

      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’s debt to equity ratio is 3.04 times as at 31 December 2017 and 3.08 times as at 31 December 2016. The decrease in total debt to equity ratio was mainly from the Company’s liabilities decreasedandshareholders’equityincreasedthisyear. The Company’s liabilities decreased as a result of the decreasing of short-term and long-term liabilities from financial institutions including financial lease liabilities which decreased from repayment during the year.

      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. 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 anddeposits atbanks used as collateral for debentures:

      • 2) Debentures of Areeya Property Public Company Limited No. 1/2016 due B.E. 2019.
      • 3) Debentures of Areeya Property Public Company Limited No. 2/2016 due B.E. 2020 with the issuer’s right of early redemption.
      • 4) Debentures of Areeya Property Public Company Limited No. 3/2016 due B.E. 2019.
      • 5) Debentures of Areeya Property Public Company Limited No. 1/2017 due B.E. 2020.
      • 6) Debentures of Areeya Property Public Company Limited No. 2/2017 due B.E. 2020. The Company has right to redeem this debenture before maturity
      • 7) Debentures of Areeya Property Public Company Limited No. 3/2017 (No. 1) due B.E. 2021 (Debenture No. 1) and Amortizing debentures of Areeya Property Public Company Limited No. 3/2017 (No. 2) due B.E. 2021 (Debenture No. 2).

      As of 31 December 2017, the Company maintained a net debt-to-equity ratio of 2.68 times (as described in clause 6.2.11 for debentures No. 1) and 2.53 times for debentures No. 2) - 5) and No. 7) according to the terms and conditions in clause 6.2.11 and for debentures No. 6) according to the terms and conditionsinclause7.2.11financialcondition; Netdebt for ratio calculation is the debt after deduct cash and cash equivalent, short-term investment and deposits at banks used as collateral.

      However, the Company has prepared the policies to maintainitsdebt toequity ratioandcapital structureto the appropriate level in the future: 1) Capital Increase Plan, 2) Partial Repayment for Debt from financial institutions and 3) Debenture Partial Redeem Plan and 4) Accelerate the sale and transfer of completed projects in both of low-rise and high-rise projects by launching new promotions and advertisement both offline and on-line to reach the potential customers including with controlling the Company’s operating expenses.

      As a results of these policies, the Company expect the increase in revenue recognition and decrease in operatingexpenses which willhelptheprofit increased, debt-to-equity ratio decreased and appropriate structure of Company’s capital.

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