Seamless Integration
Annual Report 2009
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Annual Report 2009
1
CONTENTS
Financial Highlights 3
Message from Chairman 5
Message from the Chief Executive Officer 8
Bo...
BRILLIANT VISIONS
CREATE IMPRESSIONISTIC
SERVICES
Annual Report 2009
3
FINANCIAL
HIGHLIGHTS
2007 2008 2009
Total Revenue THB Million 13,889 15,178 17,497
Net Profit THB Mil...
Annual Report 2009
5
MESSAGE
FROM
CHAIRMANThe Thai economy in 2009 slowed down further
especially during the first quarter...
AN ARRAY OF EXPERTISE INTERWOVEN
TO ACHIEVE ULTIMATE SUCCESS
Annual Report 2009
8
MESSAGE
FROM
THE CHIEF
EXECUTIVE
OFFICER
In 2009, despite Thailand’s economic slowdown
and political ...
9
tofavourthestrongest.Furthermore,incooperation with
its business partners, Sansiri continued to build its
long term bran...
THE INTEGRAL REPUTATION RISING TOWARDS
WORLD RECOGNITION.
FROM A FOUNDATION OF PERFECTION,
BUILDING TOWARDS ICONIC OF LIVING
FROM A FOUNDATION OF PERFECTION,
BUILDING TOWARDS ICONI...
Annual Report 2009
12
BOARD OF
DIRECTORS
1. Chairman of the Board
(Independent Director)
Mr. Kovit Poshyananda
2. Vice-Cha...
13
EXECUTIVE
COMMITTEE
1. Chairman of the Executive Committee
Mr. Apichart Chutrakul
2. Deputy Chairman
of the Executive C...
Annual Report 2009
14
AUDIT
COMMITTEE
1. Chairman of the Audit Committee
Mr. Mana Noppun
2. Member of the Audit Committee
...
Annual Report 2009
16
REPORT ON
CORPORATE
GOVERNANCE
BY THE AUDIT
COMMITTEE
FOR 2009The Audit Committee is constituted in ...
17
control system is sufficient, appropriate and being regularly updated to cope with the
changing environment and serve t...
Annual Report 2009
18
accountability, competitiveness, and credibility, and that its financial reports are in
conformity w...
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3+2-.#...
Annual Report 2009
20
SUBSIDIARIES IN WHICH SANSIRI DIRECTLY
HOLDS SHARES
CHANACHAI LIMITED Property 90,000,000 baht 100
4...
21
ROJNARUEMIT LIMITED Property 4,875,000 baht 100
12th Floor, 475 Sri Ayutthaya Road, Development consisting of 780,000
T...
Annual Report 2009
22
PAPANAN LIMITED Medical Service, 20,000,000 baht 100
2/2, Bhakdi Building, Wireless Road, Aesthetics...
23
PLUS PROPERTY VENTURE CO., LTD. Property 10,000,000 baht 100
16th Floor, 163 Rajchapark Building, Development consistin...
Annual Report 2009
24
OTHER
REFERENCES
SECURITIES REGISTRATION
Thailand Securities Depository Co.,Ltd
Capital Market Acade...
25
TYPE OF
BUSINESS
OPERATIONAL STRUCTURE OF THE COMPANY AND SUBSIDIARIES
Sansiri Group is made up of Sansiri Public Compa...
Annual Report 2009
26
1.2 Property Development for Rent includes office buildings, apartment and leasehold
commercial buil...
27
3. International Investment consists of :
Company Name Divisions of Operations within the Group
1. Sansiri Global Inves...
Annual Report 2009
28
REVENUE
STRUCTURERevenue structure classified by business groups during 2007 – 2009, is as follows:
...
29
Remark - SIRI means Sansiri Public Company Limited
PLUS means Plus Property Company Limted
CC means Chanachai Limited
S...
Annual Report 2009
30
MILESTONE
DURING
THE YEAR
May 2009! "! #$%$&'(&!)*+,'(-!./0!-1'!2334!/)'0*-$(5!0'678-6!9*6!,*&'!*-!-...
31
August 2009!!!!!!!!!"! #$%!&'(&)*)+,-.!/0'($1'&%!2,13%,4-!5)6)4%*.!7+&!,%8+6%*!41!9:+4)4!
Pattana Personnel Center Limi...
Annual Report 2009
32
February 2010! "! #$%!&'()*!+,)$-./%!(0!#$-12-.3!4&+#5!-667(8%3!'$%!219'1./!(0!9$-7%!
warrants of Sa...
33
TYPE OF PRODUCTS
OR SERVICESCore operations of Sansiri Group include two businesses namely 1) Property Development,
and...
Annual Report 2009
34
train routes, and one project in Hua Hin district with project value ofapproximately
2,000 million b...
35
MARKET AND
COMPETITION1.MARKETING
Despite the global economic downturn and political instability at the beginning of 20...
Annual Report 2009
36
!"#$%"&'( In 2006, Sansiri launched the medium-priced townhouse projects under the
brand “Plus Cityp...
37
In 2009, Sansiri cooperated with several strategic partners creating business synergy in
terms of innovative marketing ...
Annual Report 2009
38
2. SUMMARY OF PROPERTY MARKET IN 2009
SITUATION OF LOW RISE RESIDENTIAL UNITS
Therecoveryofseveralec...
39
Based on housing supply in the latter half of 2009, single-detached house with average
price of 3 to 5 million baht per...
Annual Report 2009
40
TOWNHOUSE MARKET
In the latter half of 2009, the number of townhouse supply amounted to 17,591 units...
41
!"#$%&'()''*+,-%./"-0'12/&'-3'4-506-$,&'"0'720#8-8'209':";"0"/"&,'+<'=%";&'>&?&@,
SITUATION OF HIGH RISE RESIDENTIAL UN...
Annual Report 2009
42
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
TotalUnitsSold
2004 2005 2006 2007 20...
43
140,000
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
Price(Baht/Sq.m.)
2004 ...
Annual Report 2009
44
PRODUCT
PROCUREMENT
1. SELECTION OF LOCATIONS FOR PROJECT DEVELOPMENT
Sansiri has the dedicated busi...
45
In order to select the qualified suppliers, Sansiri considers not only competitive price and
production capacity but al...
Annual Report 2009
46
RISK
FACTORS
!"#$%&'(&))*+,#-.+/.0*+*10(
Selling condominiums before commencing construction not onl...
47
2. LAND PROCUREMENT
Obtaining land plots in prime locations at reasonable prices is the first priority of Sansiri’s
lan...
Annual Report 2009
48
Special units has been established to closely monitor, and to promptly react when the
price of major...
49
The low interest rate in 2009 had positive impact on Sansiri’s cost of fund as all of project
financing loan are carryi...
Annual Report 2009
50
transferred or 2) Percentage of completion when certain criteria are met or 3) Installment
due when ...
51
The change in accounting practice of revenue recognition method will impact not only on
the income before tax from the ...
Annual Report 2009
52
SHAREHOLDERS
STRUCTURE AND
MANAGEMENT
SHAREHOLDERS STRUCTURE
1. THE COMPANY’S SECURITIES : ORDINARY ...
53
Public Company Limited (SIRI-W1), totalling of 736,814,346 units to the Company’s existing
shareholders on a pro rata b...
Annual Report 2009
54
4.DIVIDEND PAYMENT POLICY
The Company’s dividend policy is to pay dividend at the rate of approximat...
!!
!"#"$%!%#&
"#$%&'&()*)'+#,+-./+.-)
0)*&-1##2#34)#56)/.+78)9#&//:-;7'(#+:#+4)#;)<7'7+7:'#.';)-#+4)#=:+7<7/&+7:'#:<#+4)#>...
Annual Report 2009
56
1. MANAGEMENT STRUCTURE
The Company’s management structure consists of the Board of Directors, the A...
57
SELECTION OF INDEPENDENT DIRECTOR
The Company specifies the qualifications of its independent director in accordance wi...
Annual Report 2009
58
8. Do not operate the same and competitive business with the business of the Company,
or its subsidi...
59
SCOPE OF AUTHORITY AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
The Audit Committee of the Company has the scope of duti...
Annual Report 2009
60
(7) to perform any other act as assigned by the Company’s Board of Directors, with the
approval of t...
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Annual Report 2009

  1. 1. Seamless Integration Annual Report 2009 !!!"#$%#&'&"()*
  2. 2. Annual Report 2009 1 CONTENTS Financial Highlights 3 Message from Chairman 5 Message from the Chief Executive Officer 8 Board of Directors and Executive Committee 12 Report on Corporate Governance by the Audit Committee 16 Investment Structure of Sansiri Group 19 General Information of the Company and its Subsidiaries 20 Other References 24 Type of Business 25 Revenue Structure 28 Milestone during the Year 30 Type of Products and Services 33 Marketing and Competition 35 Product Procurement 44 Risk Factors 46 Shareholders Structure and Management 52 Details on the Directors and Management 86 Inter- Related Transactions 98 Table of Key Financial Ratios 99 Management Discussion and Analysis 100 Financial Statement 112 Summary of Transactions Specified According to 174 the Form 56-2 in Annual Report 2009
  3. 3. BRILLIANT VISIONS CREATE IMPRESSIONISTIC SERVICES
  4. 4. Annual Report 2009 3 FINANCIAL HIGHLIGHTS 2007 2008 2009 Total Revenue THB Million 13,889 15,178 17,497 Net Profit THB Million 708 914 1,608 Total Asset THB Million 21,032 23,492 25,375 Total Shareholdes Equity THB Million 8,346 8,955 10,124 Gross Margin (Core Revenue) % 28.77 30.04 30.29 Net Profit Margin % 5.10 6.02 9.19 Debt to Equity Times 1.43 1.54 1.44 Net Gearing Ratio Times 0.68 0.88 0.70 Earnings per Share Baht 0.48 0.62 1.09 Book Value per Share Baht 5.66 6.08 6.87 Remark: Financial figures are based on the consolidated financial statements. 2007 THBMILLION 2008 2009 2007 THBMILLION 2008 2009 2007 THBMILLION 2008 2009 2007 THBMILLION 2008 2009 TOTAL REVENUE REVENUE FROM PROJECT SALE NET PROFIT TOTAL ASSET 13,889 15,178 17,497 12,910 14,395 16,629 21,032 23,492 25,375 708 914 1,608
  5. 5. Annual Report 2009 5 MESSAGE FROM CHAIRMANThe Thai economy in 2009 slowed down further especially during the first quarter of the year as a result of the global economic downturn. However, the economic outlook in the second half of 2009 turned positive with clearer signals of economic recovery including export growth in December, increase in the consumer confidence index, lower unemployment rate, recovering tourism, and the implementation of the economic stimulus “Strong Thailand Scheme”. Despite these positive indications, Thai economy was still vulnerable to many factors such as political uncertainty, and the suspension of projects in Map Ta Phut Industrial Estate, which raisedconcernsnotonlyoverinvestmentopportunities by foreign investors but also over business operation and expansion among Thai entrepreneurs. Overall real estate market in 2009 was stable with the sluggish overall demand in the first half of the year that improved in the latter half of the year thanks to recovering consumer confidence, property- related taxes cut by the Government, and low mortgage rate. With commercial banks still prudent on lending to small and medium developers, as well as large developers postponing new launches and scaling down constructions, housing supply in the first six months was limited in response to the softer demand in that period. However, the demand recovered well in the second half resulting in more launches and heavier marketing spending. Sansiri group has managed to grow its total revenues by 15%, and increase its net profit by 76% leveraging off its unique fully-integrated business model. Sansiri not only develops all types of residential properties in every segment, but also provides a full range of property services to customers. Sansiri also improved profitability through cost efficiency and effective inventory management. Nevertheless, Sansiri model continues to stress on customer’s satisfaction through strict controls on quality and cost while uncompromising in its maintenance of high standards of corporate governance and social responsibilities.Overall,Sansiriexpectstherealestate market in 2010 will continue to improve in line with economic recovery with the condominium demand along the BTS and MRT standing out meeting the need for convenient transportation and changing lifestyle of urban community. Sansiri Public Company Limited would like to express our sincere appreciation to our shareholders, bond- holders, customers, financial institutions, the media and business partners for their supports, along with every member of the management and staff for their dedication to strengthen Sansiri’s market leadership and be ahead of the competition. Kovit Poshyananda Chairman
  6. 6. AN ARRAY OF EXPERTISE INTERWOVEN TO ACHIEVE ULTIMATE SUCCESS
  7. 7. Annual Report 2009 8 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER In 2009, despite Thailand’s economic slowdown and political uncertainties, Sansiri has managed to achieve its growth in both the revenues and net profits. Sansiri owes this success to customer’s brand loyalty and to Sansiri products and services, Sansiri’s commitment to deliver quality projects and prudent inventory and cost management. Capitalizing on its fully-integrated business model, Sansiri outpaced competitors with capability to serve consumers’ demand for property projects and services in every segment. With commercial banks limiting their funding only to large developers and growing consumer preference towards more established brands, Sansiri has strengthened its grip as a leader in a market tended
  8. 8. 9 tofavourthestrongest.Furthermore,incooperation with its business partners, Sansiri continued to build its long term brand loyalty by launching innovative products and services to meet evolving consumer lifestyle. In 2009, Sansiri reported total revenue of 17,497 million baht, a 15% growth over 2008, with net profit of 1,608 million baht, representing an earning per share of 1.09 baht. Revenue from property sales of 16,629 million baht contributed 95% of total revenue. Of the total revenue from project sales in 2009, 8,829 million baht (53%) derived from condominium projects, 5,292 million baht (32%) derived from single- detached house projects, and the balance of 2,479 million baht (15%) derived from townhouse projects. In 2010, the economic situation is anticipated to improve and property market to prosper. With our competitive strengths, and dedicated commitment of management and staff, Sansiri will continue to grow its sales and profitability to remain one of the strongest leaders in Thailand’s property market. Apichart Chutrakul Chief Executive Officer
  9. 9. THE INTEGRAL REPUTATION RISING TOWARDS WORLD RECOGNITION.
  10. 10. FROM A FOUNDATION OF PERFECTION, BUILDING TOWARDS ICONIC OF LIVING FROM A FOUNDATION OF PERFECTION, BUILDING TOWARDS ICONIC OF LIVING
  11. 11. Annual Report 2009 12 BOARD OF DIRECTORS 1. Chairman of the Board (Independent Director) Mr. Kovit Poshyananda 2. Vice-Chairman Chief Executive Officer Mr. Apichart Chutrakul 3. Independent Director Mr. Mana Noppun 4. Independent Director Mr. Jesadavat Priebjrivat 5. Independent Director Mr. Wirat Uanarumit 6. Director / President Mr. Srettha Thavisin 7. Director / Chief Operating Officer Mr. Wanchak Buranasiri 8. Director Mr. Kriengkrai Thiennukul 9. Director Mrs. Nujchanart Panthawangkun 10. Independent Director Mr. Porntat Amatavivadhana 1 4 7 10 2 5 8 3 6 9
  12. 12. 13 EXECUTIVE COMMITTEE 1. Chairman of the Executive Committee Mr. Apichart Chutrakul 2. Deputy Chairman of the Executive Committee Mr. Srettha Thavisin 3. Member of the Executive Committee Mr. Wanchak Buranasiri 4. Member of the Executive Committee Mr. Thalin Aeimtitiwat 5. Member of the Executive Committee Mr. Monthian Soisuwan 6. Member of the Executive Committee Mr. Uthai Uthaisangsuk 7. Member of the Executive Committee Mr. Nopporn Boonthanom 8. Member of the Executive Committee Mr. Metha Angwatanapanich 9. Member of the Executive Committee Mr. Somchai Charntanawet 10. Member of the Executive Committee Mr. Manu Trakulwattanakit 11. Member of the Executive Committee and Secretary to the Executive Committee Mrs. Anongluk Rathprasert 1 4 7 10 11 2 5 8 3 6 9
  13. 13. Annual Report 2009 14 AUDIT COMMITTEE 1. Chairman of the Audit Committee Mr. Mana Noppun 2. Member of the Audit Committee Mr. Jesadavat Priebjrivat 3. Member of the Audit Committee Mr. Wirat Uanarumit 1 2 3
  14. 14. Annual Report 2009 16 REPORT ON CORPORATE GOVERNANCE BY THE AUDIT COMMITTEE FOR 2009The Audit Committee is constituted in such a way as to be independent of the Company’s management. All members of the Audit Committee are qualified individuals and independent directors who possess the qualifications stipulated by the Stock Exchange of Thailand. Presently, the Audit Committee is composed of Mr. Mana Noppun as a Chairman of the Audit Committee with other 2 members, Mr. Jesadavat Priebjrivat and Mr. Wirat Uanarumit. The Audit Committee performs the tasks assigned to it by the Board of Directors. It acts independently, however, and is unconstrained in its access to information and always receives good co-operation from the Company, in conformity to regulations of the Stock Exchange of Thailand. In 2008, the present Audit Committee met 4 times, in which the Chairman and all members of Audit Committee have attended all meetings in full. Moreover, the Audit Committee also consulted with the Management and the internal audit officer as deemed appropriate. Meetings with the internal audit officer were free of direction from the Management. The findings of the Audit Committee are summarized as follows: 1. Review of financial statements : Prior to submission of quarterly and annual financial statements that were reviewed and audited by the independent auditor to the Board of Directors for approval, the Audit Committee had reviewed these statements based on its queries and explanations provided by the management. The review shows that these financial reports were in conformity with generally accepted accounting principles as well as provided sufficient disclosure of accurate and reliable information in the timely manner without any significant adjustment from auditor during or after the reviews. 2. Review of internal control system : The Audit Committee, in cooperation with the internal audit officer, has not only regularly reviewed the Company’s internal control system in order to assess the effectiveness and sufficiency of the system, but also has made suggestions on improving effectiveness. The review shows that the Company’s internal
  15. 15. 17 control system is sufficient, appropriate and being regularly updated to cope with the changing environment and serve the business operations to achieve the objectives while conforming to the pertinent regulations. The Audit Committee did not find any significant constraints or deficiency leading to impediment to business operations. In addition, the Audit Committee has emphasized that the Management must continue improving the internal control system to be highly effective at all times. 3. Review of disclosure of connected transactions and potential conflicts of interest : Prior to the approval by the Board of Directors for any connected transactions and potential conflicts of interest, the Audit Committee had reviewed and commented on such transactions to ensure the transparency and conformity to the rules and regulations of the Stock Exchange of Thailand. In this regard, the Audit Committee did not find any significant issues regarding the violation of the regulation of Stock Exchange of Thailand concerning connected transactions or any potential conflicts of interest. 4. Compliance with laws and regulations: The Audit Committee had reviewed the processes and procedures to ensure compliance with regulations regarding securities and the Stock Exchange of Thailand, guidelines by the Stock Exchange of Thailand, and other related business acts. The review shows that the Company has always acted in compliance with laws and regulations. In this regard, the Audit Committee did not find any significant issues regarding the violation of regulations, guidelines, and obligations with any external parties. 5. Overseeing and monitoring the internal control matters : The Audit Committee, in cooperation with the internal audit officer, has reviewed the report on internal control matters on quarterly basis. The information technology system was also developed and fully utilized to support the auditing work. The review shows that the internal control was conducted in the independent, sufficient, and effective manners with the sufficiently elaborate information security safeguards. Moreover, the summary of findings and the guidelines to prevent or mitigate any potential risks were sent to the involved parties for their further actions. 6. Good corporate governance : The Company realizes the importance of good corporate governance and has focused our operations to ensure the efficiency, transparency, and good business ethics, resulting in our integrity known among shareholders, investors, and all parties involved. 7. Selecting, appointing and proposing remunerations for the auditor : The Audit Committee has reviewed the performance, the independency and the appropriation of the remunerations of the auditor, and agreed to continue the appointment of Ernst & Young Office Limited as the Company’s auditor for the accounting period ended 31 December 2010. The appointment of auditor will be proposed for further approval at the Annual General Meeting 2010. Considering the overall operations of the Company, the Audit Committee has performed the tasks assigned to it by the Board of Directors and is convinced that the Company adheres to good business ethics, that its internal control systems and internal audit systems are effective, that its risk management systems are sufficiently protective, that its corporate governance is based on the principles including transparency, integrity,
  16. 16. Annual Report 2009 18 accountability, competitiveness, and credibility, and that its financial reports are in conformity with generally accepted accounting principles with sufficient disclosure of accurate and reliable information. The Company has always acted in compliance with all related regulations. The Audit Committee also believes that the Company has shown strong determination to continuously improve its operational processes, leading to the transparent and effective management with good corporate governance. Thus, the Management’s performances could be examined to ensure the best interest of all stakeholders. On behalf of the Audit Committee, (Mr. Mana Noppun) Chairman of the Audit Committee 2 March 2010
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
  18. 18. Annual Report 2009 20 SUBSIDIARIES IN WHICH SANSIRI DIRECTLY HOLDS SHARES CHANACHAI LIMITED Property 90,000,000 baht 100 475 Sri Ayutthaya Road, Thanon Phayathai Development consisting of 90,000 Sub-district, Rajthevi District, Bangkok 10400 ordinary shares with Tel. (662) 201-3905-6 Fax. (662) 201-3904 a par value of 1,000 baht each Company / Head Office address Type of Paid-up Capital % of Business shareholding GENERAL INFORMATION OF THE COMPANY AND ITS SUBSIDIARIES Sansiri Public Company Limited (the “Company” or “Sansiri”), registration number 0107538000665, with the security symbol “SIRI” on the Stock Exchange of Thailand, was establishedin1984toengageinrealestatebusiness.TheCompanyconvertedtobeapublic company limited in 1995 and has been listed on the Stock Exchange of Thailand since 1996 As at 22 February 2010, the Company’s registered capital is 15,991,205,802.64 baht consisting of 3,736,263,038 ordinary shares at the par value of 4.28 baht, with issued and paid-up capital of 6,307,130,801.76 baht. The Company’s head office is located at 16th Floor, 475 Sri Ayutthaya Road, Thanon Phayathai Sub-district, Rajthevi District, Bangkok 10400, Telephone number : (662) 201-3905 and (662) 201-3906, Fax : (662) 201-3904, Home Page : www.sansiri.com The Company’s subsidiaries are as follows :
  19. 19. 21 ROJNARUEMIT LIMITED Property 4,875,000 baht 100 12th Floor, 475 Sri Ayutthaya Road, Development consisting of 780,000 Thanon Phayathai Sub-district, ordinary shares with Rajthevi District, Bangkok 10400 a par value of Tel. (662) 201-3905-6 Fax. (662) 201-3904 6.25 baht each ARNAWAT LIMITED Property 10,000,000 baht 100 12th Floor, 475 Sri Ayutthaya Road, Development consisting of 1,000,000 Thanon Phayathai Sub-district, ordinary shares with Rajthevi District, Bangkok 10400 a par value of Tel. (662) 201-3905-6 Fax. (662) 201-3904 10 baht each PIWATTANA LIMITED Property 1,000,000 baht 100 12th Floor, 475 Sri Ayutthaya Road, Development consisting of 100,000 Thanon Phayathai Sub-district, ordinary shares with Rajthevi District, Bangkok 10400 a par value of Tel. (662) 201-3905-6 Fax. (662) 201-3904 10 baht each RED LOTUS PROPERTIES LIMITED 16th Floor, 475 Si Ayutthaya Road, Property 20,000,000 baht 100 Thanon Phayathai Sub-district, Development consisting of 2,000,000 Rajthevi District, Bangkok 10400 ordinary shares with Tel. (662) 201-3905-6 Fax. (662) 201-3904 a par value of 10 baht each SANSIRI VENTURE CO.,LTD. Property 3,000,000 baht 100 475 Sri Ayutthaya Road, Thanon Phayathai Development consisting of 300,000 Sub-district, Rajthevi District, Bangkok 10400 ordinary shares with Tel. (662) 201-3905-6 Fax. (662) 201-3904 a par value of 10 baht each PACIFIC CHALLENGE HOLDING CO.,LTD. Property 2,500,000 baht 85 2/2, Bhakdi Building, Wireless Road, Development consisting of 250,000 Lumpini District, Pathumwan Sub-district, ordinary shares with Bangkok 10330 a par value of Tel. (662) 253-1010 Fax. (662) 253-9625 10 baht each S.U.N. MANAGEMENT CO., LTD. Property 10,000,000 baht 51 16th Floor, 475 Sri Ayutthaya Road, Development consisting of 1,000,000 Thanon Phayathai Sub-district, ordinary shares with Rajthevi District, Bangkok 10400 a par value of Tel. (662) 201-3905-6 Fax. (662) 201-3904 10 baht each Company / Head Office address Type of Paid-up Capital % of Business shareholding
  20. 20. Annual Report 2009 22 PAPANAN LIMITED Medical Service, 20,000,000 baht 100 2/2, Bhakdi Building, Wireless Road, Aesthetics, consisting of 2,000,000 Lumpini District, Pathumwan Sub-district, Health Care and ordinary shares with Bangkok 10330 Medical Spa a par value of Tel. (662) 253-1010 Fax. (662) 253-9625 10 baht each NATIONAL EDUCATION DEVELOPMENT CO., LTD. Educational 40,000,000 baht 100 380 Panya-Indra Road, West Samwa Business named consisting of 400,000 Sub-district, Klong Samwa District, “SATIT Pattana ordinary shares with Bangkok 10510 School”) a par value of Tel. (662) 915-5390-2 Fax. (662) 915-5501 100 baht each SATIT PATTANA PERSONEL CENTER LIMITED Consultancy 1,000,000 baht 100 380 Panya-Indra Road, West Samwa and Advisory consisting of 100,000 Sub-district, Klong Samwa District, Services ordinary shares with Bangkok 10510 Pertaining to a par value of Tel. (662) 915-5390-2 Fax. (662) 915-5501 Business 10 baht each Administration PLUS PROPERTY CO., LTD. Property 600,000,000 baht 100 10th Floor, 163 Rajchapark Buliding, Development consisting of 60,000,000 Sukhumvit 21 (Asoke), North Klongtoey District, ordinary shares with Wattana Sub-district, Bangkok 10110 a par value of Tel. (662) 661-7555 Fax. (662) 661-6633 10 baht each SUBSIDIARIES IN WHICH SANSIRI INDIRECTLY HOLDS SHARES THROUGH PLUS PROPERTY CO., LTD. SANSIRI LAND LIMITED Property 1,000,000 baht 100 11th Floor, 475 Sri Ayutthaya Road, Development consisting of 100,000 Thanon Phayathai Sub-district, ordinary shares with Rajthevi District, Bangkok 10400 a par value of Tel. (662) 201-3905-6 Fax. (662) 201-3904 10 baht each TOUCH PROPERTY CO., LTD. Building 5,000,000 baht 100 14th Floor, 163 Rajchapark Buliding, Inspection, consisting of 500,000 Sukhumvit 21 (Asoke), North Klongtoey District, Brokerage, Sale ordinary shares with Wattana Sub-district, Bangkok 10110 Management, a par value of Tel. (662) 661-7555 Fax. (662) 661-6633 Property 10 baht each Management Company / Head Office address Type of Paid-up Capital % of Business shareholding
  21. 21. 23 PLUS PROPERTY VENTURE CO., LTD. Property 10,000,000 baht 100 16th Floor, 163 Rajchapark Building, Development consisting of 1,000,000 Sukhumvit 21 (Asoke), North Klongtoey District, ordinary shares with Wattana Sub-district , Bangkok 10110 a par value of Tel. (662) 661-7555 Fax. (662) 661-6633 10 baht each PLUS PROPERTY SPACE CO., LTD. Property 10,000,000 baht 100 16th Floor, 163 Rajchapark Building, Development consisting of 1,000,000 Sukhumvit 21 (Asoke), North Klongtoey, ordinary shares with Wattana Sub-district , Bangkok 10110 a par value of Tel. (662) 661-7555 Fax. (662) 661-6633 10 baht each SUBSIDIARIES IN OVERSEAS COUNTRIES SANSIRI GLOBAL INVESTMENT PTE LTD Holding 50,000 Singapore 100 (registered in Singapore) Company Dollars consisting of 3 PHILLIP STREET #18-00 COMMERCE POINT 50,000 ordinary shares SINGAPORE (048693) SUBSIDIARIES IN WHICH SANSIRI INDIRECTLY HOLDS SHARES THROUGH SANSIRI GLOBAL INVESTMENT PTE LTD SANSIRI GUERNSEY (2009) LIMITED Real Estate 10,000 Pounds 100 (registered in Guernsey) Development consisting of 10,000 La Tonnelle House Les Banques St Sampson for Sale and ordinary shares GUERNSEY GY1 3HS Lease in United Kingdom Company / Head Office address Type of Paid-up Capital % of Business shareholding
  22. 22. Annual Report 2009 24 OTHER REFERENCES SECURITIES REGISTRATION Thailand Securities Depository Co.,Ltd Capital Market Academy Building, Stock Exchange of Thailand 2/1 Moo 4 (North park) Vipavadee – Rangsit Road KM. 27 Thungsonghong , Laksi, Bangkok 10210 Telephone : (662) 596-9000 Facsimile : (662) 832-4994- 5 and Thailand Securities Depository Co.,Ltd 62 Rachadapisek Road , Klongtoey, Klongtoey, Bangkok 10110 Telephone : (662) 229-2800 Facsimile : (662) 359-1259 THE AUDITOR Mr. Sophon Permsirivallop Certified Public Accountant (Thailand) No. 3182 Ernst & Young Office Limited 193/136-137 33rd Floor, Lake Rajada Office Complex Rajadapisek Road, Klongtoey, Klongtoey, Bangkok 10110 Telephone : (662) 264-0777 Facsimile : (662) 264-0790
  23. 23. 25 TYPE OF BUSINESS OPERATIONAL STRUCTURE OF THE COMPANY AND SUBSIDIARIES Sansiri Group is made up of Sansiri Public Company Limited as a parent company with a broad range of eighteen subsidiaries, thirteen of which are directly held by Sansiri Public Company Limited while five of which are indirectly held through the subsidiaries. Currently, core business of Sansiri Group could be summarized as follows: 1. Property Development consists of: 1.1 Property Development for Sale includes single detached house, detached house, townhouse, and condominium projects, being operated through: Property Development for Sale Company Name Divisions of Operations within the Group 1. Sansiri Public Company Limited Development of single-detached house and condominium projects for middle to high-end consumers 2. Plus Property Company Limited Development of condominium and townhouse projects for middle-end consumers 3. Piwattana Limited Development of single-detached house, detached house condominium and townhouse projects for middle-end, and middle to low-end consumers 4. Red Lotus Properties Limited Development of single-detached house and townhouse projects for foreign consumers 5. Sansiri Venture Company Limited Development of condominium projects for high-end consumers 6. Sansiri Land Limited Development of townhouse projects operated and managed by Plus Property Company Limited 7. Plus Property Venture Company Limited Development of condominium and townhouse projects for middle-end consumers and managed by Plus Property Company Limited 8. Plus Property Space Company Limited Development of condominium and townhouse projects for middle-end consumers and managed by Plus Property Company Limited 9. Chanachai Company Limited Development of single-detached house and condominium projects for middle to high-end consumers
  24. 24. Annual Report 2009 26 1.2 Property Development for Rent includes office buildings, apartment and leasehold commercial building Property Development for Rent Company Name Divisions of Operations within the Group 1. Sansiri Public Company Limited Investment in office building and apartment for rent with monthly rental fee in return 2. Pacific Challenge Holding Company Investment in office building with monthly rental fee Limited (PCH) in return, only one investment in Bhakdi Building at present 3. S.U.N. Management Company Limited Development of commercial building for leasehold (SUN) agreement 2. Property Services consist of : Company Name Divisions of Operations within the Group 1. Plus Property Company Limited Property and asset management, property brokerage services, property sales management, property development consultancy, and property management 2. Touch Property Company Limited Housing procurement service such as furniture and home appliance under the brand “TouchDirect” and building inspection 3. Sansiri Public Company Limited Hotel business development, generating recurring income to the total revenues 4. Papanan Limited Medical spa services under the brand “S Medical Spa” 5. National Education Development Limited Educational business under the name “Satit Pattana School” 6. Satit Pattana Personnel Center Limited Personnel management for Satit Pattana School
  25. 25. 27 3. International Investment consists of : Company Name Divisions of Operations within the Group 1. Sansiri Global Investment Offshore investment in property development for sales Private Company Limited and/or for lease/rent 2. Sansiri Guernsey (2009) Limited Property development for sale and/or for lease/rent in the United Kingdom 4. Other Investment Sansiri Public Company Limited not only operates 3 business groups but also invests in other assets as follows: Investments in available for sales securities – Property Fund Sansiri Public Company Limited holds a 12.91 percent interest of Baan Sansiri Property Fund (SIRIPF). The investment is recorded under “Long-term investments in available for sales securities-Property Fund (Please see notes to consolidated financial statements no.22)
  26. 26. Annual Report 2009 28 REVENUE STRUCTURERevenue structure classified by business groups during 2007 – 2009, is as follows: 1)Property Development Property for sale - Condominium SIRI, PLUS, - , 100, 8,829 50 6,641 44 3,606 26 CC, SV 100, 100 - Single-detached house SIRI, PP, - , 100, 5,292 30 5,766 38 6,856 49 RED, CC 100, 100 - Townhouse PLUS, 100, 2,479 14 1,986 13 2,436 18 PPV, CC 100, 100 - Other PLUS, TOUCH 100,100 29 0 2 0 12 0 Property for rent - Projects for rent SIRI, CC, PCH - , 100, 85 186 1 195 1 217 2 - Leasehold rights written off CC, SUN 100, 51 43 0 43 0 42 0 2) Property Services SIRI, PLUS, - , 100, 491 3 405 3 381 3 TOUCH, PPN, 100, 100, NED,SPC 100, 100 3) Other Revenues 148 1 141 1 339 2 - Interest income 14 0 31 0 48 0 - Revenue from common 48 0 40 0 24 0 property charges - Revenue from forfeiture of 56 0 21 0 45 0 down payment and changed contract fee - Other income 30 0 49 0 59 0 - Gain on sale of investments - - - - 163 1 in related parties Total Revenue 17,497 100 15,178 100 13,889 100 % increase (decrease) in revenue 15 9 21 Products/Services Operated by % Year Ending Year Ending Year Ending Shares held 2009 2008 2007 by Sansiri Million % Million % Million % Baht Baht Baht
  27. 27. 29 Remark - SIRI means Sansiri Public Company Limited PLUS means Plus Property Company Limted CC means Chanachai Limited SV means Sansiri Venture Company Limited PP means Piwattana Limited RED means Red Lotus Properties Limited PPV means Plus Property Venture Company Limited PCH means Pacific Challenge Holding Company Limited SUN means S.U.N. Management Company Limited TOUCH means Touch Property Company Limited PPN means Papanan Limited NED means National Education Development Limited SPC means Satit Pattana Personnel Center Limited (formerly known as “Club House Property Limited”)
  28. 28. Annual Report 2009 30 MILESTONE DURING THE YEAR May 2009! "! #$%$&'(&!)*+,'(-!./0!-1'!2334!/)'0*-$(5!0'678-6!9*6!,*&'!*-!-1'! rate of 0.30 Baht (Thirty Stang) per share July 2009!!!! "! :1'!;/*0&!/.!#$0'<-/06!*))0/%'&!-1'!'6-*=8$61,'(-!/.!*!('9!67=6$&$*0+! in Singapore with the registered capital of 50,000 Singapore Dollars. The objective is to expand property development for sale and/or for rent/lease business offshore, and to invest in other businesses potentially benefiting overall performance of Sansiri Group. The structure of the company is follows: (1) To establish a new subsidiary in Singapore-“Sansiri Global InvestmentPte.Ltd.”,whollyownedbySansiri,plannedtooversee offshore investment business. (2) To set up the wholly-owned subsidiary of “Sansiri Global Investment Pte Ltd.” in Guernsey, named “Sansiri Guernsey (2009) Limited” with the registered capital of 10,000 Pounds, to engage in real estate development for sale and/or for rent/lease business in the United Kingdom. The Board of Directors approved the acquisition through share purchase of National Education Development Co., Ltd., an educational business operating “Satit Pattana School” in order to earn recurring income from the educational business, and to create an opportunity to expand business and synergy with property development business, as the Satit Pattana School is located near several residential projects of Sansiri Group.
  29. 29. 31 August 2009!!!!!!!!!"! #$%!&'(&)*)+,-.!/0'($1'&%!2,13%,4-!5)6)4%*.!7+&!,%8+6%*!41!9:+4)4! Pattana Personnel Center Limited” November 2009! "! #$%! ;<4,+1,*)8+,-! =%%4)8>! 1?! :$+,%$10*%,&! @1A! BCDEEF! $%0*! 18! G! November 2009 passed the significant resolutions as summarized below: (1) To approve the new allotment of newly issued shares of Sansiri by allocating the 1,473 million ordinary shares (which were approved by the resolution of the Extraordinary Meeting of Shareholders No. 1/2007 held on 18 January 2007) on a Private Placement basis according to the relevant laws and/or rules and/or regulations. The allotment and offer of such new ordinary shares may be made in whole at one time or divided into several parts to be offered and sold from time to time, at the offering price which is not less than 4.28 Baht per share and not less than 90 percent of the Market Price, calculated according to the relating rules and regulations, prior to the offering date by mean of Private Placement, and to approve the Board of Directors or any person assigned by the Board of Directors shall be authorized to allocate such new ordinary shares, locally and/or internationally. (2) To approve the issuance of the Share Warrants of Sansiri Public Company Limited No. 1 (SIRI-W1) totaling of 736,814,346 units to the Company’s existing shareholders on a pro rata basis (right offering), without a charge, at the ratio of 2 existing ordinary shares to 1 unit of the warrant, at the exercise price of 5.20 Baht per share.
  30. 30. Annual Report 2009 32 February 2010! "! #$%!&'()*!+,)$-./%!(0!#$-12-.3!4&+#5!-667(8%3!'$%!219'1./!(0!9$-7%! warrants of Sansiri Public Company Limited #1 (SIRI-W1) on 3 February 2010. In this regard, the SIRI-W1 totaling of 736,792,026 units has been traded on SET since 3 February 2010. ! "! :!;$-./%!1.!<-=(7!9$-7%$(23%79 Sansiri has been informed by the major shareholder, Trendy Plan Investments Limited, of the transfer of its holding in SIRI in the number of 178,274,400 shares, representing 12.09 percent of Sansiri’s issued and paid-up capital to Majestic Heart Limited who subsequently sold the same to T.S. Star Company Limited at the price of 5.00 baht per share on 2 February 2010. T.S. Star Company Limited, is the holding company wholly owned by Mr. Srettha Thavisin, who is also the director. Following the sale transaction, Mr. Srettha Thavisin Group (consists of T.S. Star Company Limited and Mr. Srettha Thavisin) became the major shareholder of Sansiri. As of 2 February 2010, Mr. Srettha Thavisin Group held total amount of 215,439,784 shares in Sansiri, representing 14.61 percent of Sansiri’s issued and paid-up capital.
  31. 31. 33 TYPE OF PRODUCTS OR SERVICESCore operations of Sansiri Group include two businesses namely 1) Property Development, and 2) Property Services. The detailed descriptions of each product or service category are as follows: 1 PROPERTY DEVELOPMENT 1.1 Property Development for Sale !"#$%&'()*(+,-.(/"0123( – Sansiri has developed more projects to serve the middle income consumers focusing on high quality according to Sansiri standards. In 2008, Sansiri launched a new single-detached house brand- “Habitia” with the unit price range between 3.6-4.7 million baht to serve middle income consumers. In 2009, Sansiri launched 5 new single-detached house projects with the project value of approximately 6,000 million baht. !"*(+,-.(/"0123( – Sansiri has developed the detached house projects through its subsidiary, Piwattana Limited, formerly named Prompt Pattana Property Limited. The first project was launched in 2006 under the brand “Baan Promptpatt Ramindra”. Currently, Sansiri has 3 detached house projects under “Baan Promptpatt” brand. !"415%.123( – Sansiri has developed townhouse projects focusing on the middle income consumers through Plus Property Company Limited (“Plus”) and its subsidiaries. In 2006, Plus successfully launched the projects under the brands “Plus Citypark” and “Plus Park Avenue” with the unit price between 3.3 – 5.4 million baht. In 2008, Plus launched “Town Plus” brand to extend its coverage of the middle income consumers. In 2009, Sansiri launched a new brand- “Town Plus X”, which are Town Plus X Prachachuen and Town Plus X Ladprao with the average unit price between 3.5-5.0 million baht. Currently, Plus has 10 projects under “Town Plus” brand with total value of approximately 7,400 million baht. !"61%/17$%$27 – Focusing on the middle and high income consumers, Sansiri chooses to develop its projects in the business districts with close proximity to the sky train and underground train routes, as well as in the prime resort area such as Hua Hin. In 2008, Sansiri launched 3 projects with total project value of approximately 3,500 million baht under the brand “HIVE” locating along sky
  32. 32. Annual Report 2009 34 train routes, and one project in Hua Hin district with project value ofapproximately 2,000 million baht. Focusing on its strategic locations along the sky train stations, Sansiri launched 3 condominium projects namely “Quattro by Sansiri”, The Vertical Aree”, and “Blocs77” at the total value of approximately 7,000 billion baht in 2009. 1.2 Property Development for Rent Sansiri has recurring income from properties for rent including two office buildings ; Siripinyo Building and Bhakdi Building, an apartment “Siri Apartment” on Wireless Road, and a leasehold commercial building in Silom area named “Sun Square Silom”. 2 PROPERTY SERVICES 2.1 Property Services Property service business suitably complemented to Sansiri’s core business- property development for sale by not only increasing customers’ satisfaction of fully-integrated services and expanding its sources of recurring incomes, but also allowing it to capitalize upon its database to further improve its property development projects corresponding to the market demand. Provided by Plus Property Company Limited (“Plus”) and Touch Property Company Limited, the full range of services include not only the sale, purchase, and lease of properties and property management but also the consulting services of project feasibility studies, market surveys and analysis, financial feasibility analysis, and the rehabilitation plan of derelict properties. Currently, Plus and its subsidiary manages over 200 residential and commercial projects covering the area of 7.4 million square meters (31 December 2009). 2.2 Educational Business Sansiri has operated a school under the name “Satit Pattana School” for recurring income from the educational business, and creating an opportunity to expand business and synergy to several of Sansiri’s property projects for sale located nearby. 2.3 HotelBusinessAt present, Sansiri operates a 46-key hotel named “Casa del Mare”, locating on the area of 3 Rai 2 Ngan and 51 Square Wah in Hua Hin District of Prachuap Kiri Khan province. 2.4 Medical Spa Business Sansiri has operated medical spa business through its subsidiary, Papanan Limited under the brand “S Medical Spa”, locating at Bhakdi Building on Wireless Road. Furthermore, “S Medical Spa” expands its business opportunity by launching “seaSpa”, a one-stop spa service center at Casa del Mare Hotel, in October 2007. It can be viewed that Sansiri has fully utilized its existing businesses to create synergy and truly add more value to the hospitality business.
  33. 33. 35 MARKET AND COMPETITION1.MARKETING Despite the global economic downturn and political instability at the beginning of 2009, the economic outlook in the second half of 2009 turned positive with clearer signals of economic recovery including an increase in the consumer confidence index, the implementation of the economic stimulus by the government, low interest rate, and increasing housing demand, especially for housing located along BTS sky train and MRT subway lines. Experienced developers with strong brand recognition and successful track record are likely to gain not only market shares but also pricing power whereas marketing activities will help stimulate housing purchase. PRODUCT STRATEGIES Sansiri has a collection of housing projects for sale; single-detached houses, detached houses, townhouses and condominiums, especially in business area and resort area, for both medium-income and high-income customers, with different product strategy as follows: !"#$%&'(&)*+,&-./012& Sansiri has successfully launched midsized single houses under three brands, including “Setthasiri” with average selling price per unit of 6 to 10 million baht, “Burasiri” with average selling price per unit of 5 to 8 million baht, and “Saransiri” with average selling price per unit of 3 to 5 million baht. In 2008, Sansiri launched a new brand “Habitia”, using the prefabrication construction technology for housing projects with average price per unit of 3 to 4 million baht. In 2009 Sansiri launched several midsized single-detached houses projects in high potential areas under various brands including Burasiri Ngamwongwan-Prachachuen, Saransiri Prachauthit-Suksawas, Habitia Bangyai, and Habitia Panyaindra. Condominium Sansiri has developed high-end and medium-end condominiums locating along the BTS sky train or close to express way in the business districts of Sukhumvit and Aree areas, with average selling price of 80,000 to 160,000 baht per square meter. Key success factors are uniquely modern architecture, high-quality construction materials and good value properties for customers. In 2009, Sansiri launched three mid-to-high-end condominium projects locating along BTS sky train routes namely “Quattro by Sansiri”, “The Vertical Aree”, and “Blocs 77”. The impressive selling rate of “The Vertical Aree”, which was already sold out, reflected market acceptance for Sansiri’s Project regardless of the economic slowdown.
  34. 34. Annual Report 2009 36 !"#$%"&'( In 2006, Sansiri launched the medium-priced townhouse projects under the brand “Plus Citypark” and “Plus Park Avenue”. In 2007, Sansiri successfully launched townhouse projects under the new brand, “TownPlus”, with average selling price per unit of 2.6 to 4.3 million baht, Sansiri successfully launched 10 townhouse projects with total project value of approximately 7,000 million baht (as of 31 December 2009). Detached House Sansiri has expanded business further by successfully penetrating the new market of detached houses through the launch of new brand, “Baan Promptpatt”, which is developed by the subsidiary named Piwattana Limited, (formerly known as Prompt Pattana Property Limited). Targeting at new family group, Sansiri successfully launched 3 detached house projects under brand “Baan Promptpatt”. MARKETING ACTIVITIES The economic slowdown in 2008 and the political instability at the beginning of 2009 resulted in the delays in new property launches and marketing activities. However, Sansiri opted to build brand awareness amid sluggish market situation, while the market supplies were limited with consumers tend to truly realize the importance of brand, reputation and credibility of developers. Sansiri’s marketing strategies in 2009 emphasized on synergies through co-promotion with strategic partners, optimizing accessibility to target clientele through appropriate communication channels, and continuous development of innovative communication; while the efficiency and effectiveness of each marketing activities were closely monitored. In 1Q2009 Sansiri cooperated with many strategic partners such as Siam Commercial Bank to organize “Living in Style 2009” at Royal Paragon Hall, Siam Paragon, in which various marketing activities and sales promotions were provided to Sansiri customers. Sansiri also launched several projects simultaneously in order to provide customers with variety of products while Sansiri got economies of scales from decreasing marketing cost per project. Projects launched at this event included 3 condominium projects, which are Quattro by Sansiri, The Vertical Aree, and Blocs 77, and 8 townhouse projects under TownPlus brand. The feedback from this event exceeded the expectation with sales amount as high as 2,000 million baht. In order to sustain sales momentum following the Living in Style 2009, Sansiri launched new TV commercial advertisement under the concept of “Share the happiness across the fences”, and other TV commercial advertisements to stimulate sales of some specific projects such as Quattro by Sansiri and Blocs 77. Capitalizing on the positive feedback from Living in Style 2009, Sansiri organized similar activities at various leading department stores convenient to visit to stimulate housing sales upon the expiring tax privileges as well as to provide the property market update including product and services of Sansiri to customers. The Sansiri Best Buy event, for example, was the four-day event at Siam Paragon, which Sansiri offered ready-to-move-in residential units at special prices.
  35. 35. 37 In 2009, Sansiri cooperated with several strategic partners creating business synergy in terms of innovative marketing activities to increase customer satisfaction. In 1Q2009, Sansiri cooperated with business partners to organize Family, Rhythm & Harmony concert for our customers and tenants at Impact Arena, Muang Thong Thani, to show our appreciation for their support. The feedback was very positive with over 10,000 audiences participating in this concert. Moreover, Sansiri, in cooperation with Siam Commercial Bank, launched SCB Sansiri Platinum Credit Card under the concept of Privileged Living, providing various benefits and special services for living for the cardholders. The launch of credit card marked a major milestone of the real estate industry with SCB Sansiri Platinum Card as the first credit card for ultimate living. Sansiri also determines to develop innovative marketing communication not only to increase the accessibility to the consumer, but also to explore alternative cost effective marketing channels. In this regard, Sansiri is the first property developer to launch digital marketing channel, and create social network. In 2009, Sansiri re-launched website and developed Sansiri on Mobile to provide property information to customer through mobile phone services. Sansiri has arranged several customer relationship management activities for Sansiri customers and tenants, for example One-Sabuy-Sapai-Glong-Tong-Wattanatham activity (1-day trip activity for cultural photography), and Pitsanulok cultural and historical flashback activities. Moreover, Sansiri also conducted corporate social responsibility activities such as “Phee Pa Nong Tiew” activities, in which Sansiri hosted a field trip to outreach kids. Sansiri also supported educational activities, including “Future Living”, a residential design contest co-hosted by Sansiri and King Mongkut’s University of Technology Thonburi, and a contest hosted by Sansiri in cooperation with CasaViva Magazine to promote educational activities. In 2010, Sansiri plans to conduct research and development in great detail of current and future lifestyles of customer in order to develop products and services to provide the best alternatives for Sansiri customers under “The Iconic Living” concept.
  36. 36. Annual Report 2009 38 2. SUMMARY OF PROPERTY MARKET IN 2009 SITUATION OF LOW RISE RESIDENTIAL UNITS Therecoveryofseveraleconomicindicatorstogetherwiththeimprovementinsocialstability since 3Q2009 resulted in an improvement in consumer confidence. Government real estate stimulus package such as property tax incentive and reduction in transfer fee directly benefited middle to lower income market segments especially in pre-built detached house and townhouse segments. Ability of developers to control the number of new launched projects, resulting in reduction in the remaining supply, and stable absorption rate. However, the size of housing units could be smaller as developers would like to control the selling price at the affordable level for middle to lower income segments. !"#$%&'(&)*+,&(-,./!&-0*12&) The number of single-detached house supply in the latter half of 2009 amounted to 17,134 units from 394 projects, decreased by 1 percent or 203 units from that of the first half of the year. Overall single-detached house units available for sales in 2009 compared to that of 2008 dropped due to the reduction in remaining supply and limited number of new launched projects. The contraction of supply occurred in Northeastern, Northern and Eastern Bangkok at the rate of 36 percent, 21 percent and 14 percent respectively. The supply in Southern Bangkok, however, has increased by 16 percent due to the investment in transportation projects such as industrial ring-road, and the Southern outer ring road increasing the convenience to commute to central business district. The area with highest number of single-detached house supply remained in Northern and Western Bangkok, accounted for 27 percent and 26 percent of total single-detached house supply respectively In the second half of 2009, the number of sold units amounted to 7,060 units, a 14 percent or 865 units increase from that of the first half with a slight improvement in absorption rate to 41 percent. The number of the remaining units at the end of 2009 was at 10,074 units, decreased by 16 percent compared to that of last year, lowering the possibility of oversupply. The absorption rate of single-detached house was highest at 50 percent in Western Bangkok area. Total number of unit sold in such area was at 2,251 units, accounted for 32 percent of total single detached house sales in latter half 2009, resulting from strong demand for new projects with matching selling prices.
  37. 37. 39 Based on housing supply in the latter half of 2009, single-detached house with average price of 3 to 5 million baht per unit dominated the market with total available for sale of 8,202 units representing 48 percent of total units available for sale in the market, followed by house with average price of less than 3 million baht per unit with 3,283 units available for sale or 19 percent market share and houses with average price of 5 to 7 million baht per unit with, 2,717 units available for sale or 16 percent market share. Due to low level of supply and a suitable match between available supply and customers’ demand, the absorption rate of single detached house with average price of 10 to 20 million baht was the highest at 53 percent. However, the single-detached houses in the mid-market segment still dominated the housing supply in the market, similar to that of last year. !"#$%&'()'*+,-%./"-0'12/&'-3'4"0#5&67&/289&:';-$,&,'"0'<20#=-='20:'>"8"0"/"&,'+?'@%"8&'A&B&5, Source: Research & Development Department, Plus Property Co., Ltd. Source: Research & Development Department, Plus Property Co., Ltd. C2+5&'()'*+,-%./"-0'12/&'-3'4"0#5&67&/289&:';-$,&,'"0'<20#=-='20:'>"8"0"/"&,'"0'DEEF'+?'A-82/"-0 10,000 7,500 5,000 2,500 0 60% 45% 30% 5% 0% Units Lower than 3 Upper than 207-10 10-203-5 5-7 Units Offered in 2H-2008 Units Offered in 1H-2009 Units Offered in 2H-2009 % Units Sold in 2H-2008 % Units Sold 1H-2009 % Units Sold 2H-2009 Unit Price (Million Baht) 42%42% 45%45%41%41% 36%36% 41%41% 43%43% 36%36% 36%36% 42%42% 42%42% 53%53% 42%42% 26%26% 5%5% 35%35% 54%54% 35%35% 24%24% 3,932 2,802 3,283 9,385 8,642 8,202 3,952 3,472 2,717 2,178 1,538 2,064 387 760 773 175175 123123 9595 ' ' (;6DEEF' (;6DEEF Total Total % Sold Average Total Total % Sold Average Area Units Units Unit Sold Units Units Unit Sold Offered Sold /Month/ Offered Sold /Month/ Project Project Northern 5,658 1,900 34% 2.6 4,644 1,806 39% 2.7 Northeastern 2,928 800 27% 2.1 2,920 915 31% 2.5 Eastern 2,579 705 27% 0.2 3,040 1,353 45% 3.3 Western 4,553 2,228 49% 3.2 4,491 2,251 50% 3.5 Southern 1,619 562 35% 2.1 2,039 735 36% 2.8 Total 17,337 6,195 36% 2.5 17,134 7,060 41% 3.0
  38. 38. Annual Report 2009 40 TOWNHOUSE MARKET In the latter half of 2009, the number of townhouse supply amounted to 17,591 units, a 10 percent increase from that of the first half due to the economic recovery in 3Q2009, The highest number of supply was in Northern Bangkok area at 6,070 units or 35 percent of total supply. Major developers have been competing more actively in townhouse market, controlling 55 percent of total available for sale units. In terms of total units available for sale by major developers, Pruksa Real Estate Company Limited held the highest market share of 44 percent with 4,218 units from 49 projects, followed by Sansiri Public Company Limited with 21 percent market share or 2,002 units from 14 projects and Supalai Public Company Limited with 7 percent market share or 639 units from 10 projects. Sales of townhouse in the second half of 2009 amounted to 8,298 units from the totalsupply of 17,591 units representing 47 percent absorption rate with an 8 percent increase from that of the first half due to the improvement in consumer confidence. In the second half of 2009, townhouse sales significantly improved from that of the first half with average selling units per month rose to 5.1 units. The highest absorption rate was in Western Bangkok, at 51 percent with average sales per month per project at 5.9 units due to convenient transportation and matching selling price of below 3 million baht per unit. In terms of housing supply, the middle to lower-end segment still led the market in the second half of 2009 with townhouses in the 1 to 3 million baht segment held the highest market share of 70 percent or 12,308 units, mostly located in the Western Bangkok due to the extension plan of BTS routes in the area. Townhouse with the price range over 5 million baht has the highest absorption rate at 63 percent due to low level of supply and available projects located in right location, followed by 3 to 5 million baht segment with the absorption rate of 50 percent. !"#$%&'(&)#*+,-./+0&1".%&+2&!+304+5*%&60/.*&/0&7"089+9&"0:&;/</0/./%*&/0&'==>&#?&@+<"./+0*& Source: Research & Development Department, Plus Property Co., Ltd. & & ABC'==>& ABC'==> Total Total % Sold Average Total Total % Sold Average Area Units Units Unit Sold Units Units Unit Sold Offered Sold /Month/ Offered Sold /Month/ Project Project Northern 5,870 2,692 46% 6.0 6,070 3,010 50% 6.0 Northeastern 1,630 644 40% 3.3 2,051 853 42% 3.7 Eastern 3,040 1,103 36% 3.9 2,980 1,230 41% 3.9 Western 3,399 1,236 36% 3.3 4,617 2,345 51% 5.9 Southern 2,090 593 28% 3.8 1,873 860 46% 4.9 Total 16,029 6,268 39% 4.3 17,591 8,298 47% 5.1
  39. 39. 41 !"#$%&'()''*+,-%./"-0'12/&'-3'4-506-$,&'"0'720#8-8'209':";"0"/"&,'+<'=%";&'>&?&@, SITUATION OF HIGH RISE RESIDENTIAL UNITS The sluggish economy and political uncertainties in 2009 only temporarily restrained overall residential supply and demand. In the second half of 2009, the signs of economic recovery were clearly seen from the improvement in consumer confidence index. In 2010, real estate sector is expected to recuperate as a result of several supportive factors for property development and the expansion of mass transportation to suburban areas such as extension of BTS routes, leading to an increase in new supply in the areas. Housing demand is forecasted to rise at least by 2 to 3 percent resulting in lower than 5 months of market absorption rate for the remaining available units for sale in 2009, while the average selling price is expected to rise by approximately 10 to 15 percent. CONDOMINIUM MARKET Despite the recovery signs in the latter half of 2009, the number of condominium units available for sale of total 8 areas in 2009 decreased by 18 percent or by 7,697 units to 35,727 units from that of 2008 due to the delay of new project launches in the first half of 2009. The number of condominium supply in Ratchadapisek area decreased at the highest rate of 34 percent down to 7,814 units, resulting from the reduction in the number of new launches to avoid excess supply, and the low level of the remaining unsold units. The supply in Phayathai area has decreased by 31 percent down to 1,264 units. Only Sukhumvit and central business district areas such as Ploenchit-Chidlom and Silom-Sathornareasshowanincreaseinnumberofcondominiumunitsavailableforsaleby 13 percent to 5,988 units and 12 percent to 2,662 units respectively. Source: Research & Development Department, Plus Property Co., Ltd. 40% 33% 26% 2,1052,105 1,4801,480 1,4221,422 10,068 11,725 12,308 2,1822,182 2,4442,444 3,5343,534 326 355 327 47% 50% 63% 36% 34% 47% 37% 44% 40% 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 100% 75% 50% 25% 0% Units Lower than 1 3-5 More than 51-3 Units Offered in 2H-2008 Units Offered in 1H-2009 Units Offered in 2H-2009 % Units Sold 2H-2008 % Units Sold 1H-2009 % Units Sold 2H-2009 Unit Price (Million Baht)
  40. 40. Annual Report 2009 42 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 TotalUnitsSold 2004 2005 2006 2007 2008 2009 6,143 8,620 22,969 27,992 26,652 20,477 CBD1 1 1 1 1 1 1 Sukhumvit Rama III Phayathai Phaholyothin Ratchadapisek Thonburi Outer Sukhumvit2 2 2 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 6 7 7 7 7 7 7 7 8 8 8 8 8 Figure 3: Annual Damand of Condominium Units in 2004 to 2009 Total number of condominium units sold in all 8 areas during the second half of the 2009 stood at 15,395 units, 2.03 times higher than that of the first half at 5,082 units. Total number of condominium units sold in 2009 amounted to 20,477 units, a 23 percent decrease from that of 2008. The percentage of number of units sold to supply has decreased by 4 percent from last year to 57 percent mainly due to the economic slowdown. The area with the highest sales drop compared to that of last year was Ratchadapisek area which decreased by 46 percent down to only 4,597 units due to demand approaching saturation as well as projects in better location has been absorbed during the last few years. The second biggest sales drop area was Thonburi with a 43 percent decrease to 3,850 units. The sales in central business districts area was still strong with a 28 percent increase to 1,484 units because of the location advantages and project concepts, which match affluent consumers, resulting in continuous sales growth. The second highest sales growth area was Sukhumvit area with a 25 percent increase in sales to 3,678 units. Ratchadapisek area still had the highest sales at 4,579 units, followed by outer Sukhumvit area at 3,888 units. Source: Research & Development Department, Plus Property Co., Ltd.
  41. 41. 43 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 Price(Baht/Sq.m.) 2004 2005 2006 2007 2008 2009 CBD Sukhumvit1 1 1 1 1 1 1 76,968 87,772 91,198 103,557 85,021 100,671 130,313 135,522 109,309 95,169 85,010 76,33677,445 80,628 86,741 81,667 70,625 64,671 83,103 75,280 53,406 54,040 75,285 56,000 50,300 51,891 72,694 54,000 45,933 47,731 Rama III3 3 3 3 3 3 3 Phayathai4 4 4 4 4 4 4 Phaholyothin5 5 5 5 5 5 5 2 2 2 2 2 2 2 Figure 4: Asking Price of Condominium Units by Area in 2004 to 2009 The average selling price of condominium in 2009 went up by 6 percent compared with that of last year or increased by 5,798 Baht per square meter to 100,214 Bath per square meter. Phayathai area had the highest growth with a 15 percent increase to 95,169 Baht per square meter, due to the high potential of the new launched projects in prime location with high quality materials and innovative designs. Sukhumvit area was the second highest price increase area with the price raised by 9 percent compared to that of last year to 109,309 Baht per square meter. Average price of condominium units in Phaholyothin area increased by 5 percent to 85,010 Baht per square meter, and that of the Central Business Districts went up by 4 percent to 135,522 Baht per square meter. Source: Research & Development Department, Plus Property Co., Ltd.
  42. 42. Annual Report 2009 44 PRODUCT PROCUREMENT 1. SELECTION OF LOCATIONS FOR PROJECT DEVELOPMENT Sansiri has the dedicated business development division which focuses on selecting the locations for our project developments. To select suitable locations for development, this division works closely with our brokerage network and with Plus Property Company Limited and also relies upon site surveys compiled by the business development team. The business development division, in cooperation with other departments, including government affairs, legal, product development, project development, and marketing, analyzes and studies the feasibility of the project development as well as selects the right product among single-detached houses, condominiums, and townhouses, for each location. Our business development division, together with our legal and government affairs team undertakes feasibility studies regarding matters such as the height of the buildings and set-back areas, while our product development and marketing teams select the product suitable for that particular plot of land and decide on the target customer group for that project. At this stage, the project development team completes a feasibility study on the construction costs. Finally, in order to establish an accurate and realistic sales forecast, the business development team reviews relevant market information in consultation with the sales and marketing teams. 2. PROCUREMENT OF CONSTRUCTION MATERIALS Sansiri has transparent and clear procedure of construction material procurement process to optimize purchasing price according to the high standard set forth. Bidding process to procure construction materials allows Sansiri to compare the price versus the quality. Sansiri also gained economies of scale from consolidating volume, and negotiating in bulk with the manufacturers. Construction material price volatility has been mitigated by assigning specific teams to closely monitor key construction material price change. Sansiri copes with the fluctuation of construction materials for single-detached houses and townhouse projects by purchasing the materials directly from the manufacturers, which accounts for approximately 30-40 percents of the total project construction costs. Sansiri also purchases some materials for condominium projects on a lump sum amount and enjoys the benefits from economies of scale, and mitigates risk of increasing material cost through the turnkey construction contract with contractors.
  43. 43. 45 In order to select the qualified suppliers, Sansiri considers not only competitive price and production capacity but also the raw material sourcing capability to ensure the timely delivery of construction materials. Sansiri regularly updates the qualified supplier list by closely monitoring and evaluating the timely delivery of every supplier on a semi-annual basis. 3. SELECTION OF CONTRACTORS The ability to procure the services of quality and dependable contractors is important to real estate business. Sansiri mitigates the risk of contractor shortage by establishing good relationship with a group of contractors. In recent periods, Sansiri has not encountered any material difficulty procuring the services of contractors. Following the preliminary selection process, Sansiri evaluates the construction capability to ensure timely construction. Having several small contractors for a single project provides more flexibility, Sansiri has been able to manage coordination among contractors through rigorousqualitycontrolmonitoring.Sansirialsohas alistofqualifiedcontractors,including more than 50 medium and large contractors, to ensure high-standard housing projects. Since 2008, Sansiri has held the QC Award ceremony to motivate contractors to deliver high quality and timely construction.
  44. 44. Annual Report 2009 46 RISK FACTORS !"#$%&'(&))*+,#-.+/.0*+*10( Selling condominiums before commencing construction not only reduces the market risk while giving Sansiri more flexibility in developing these products to cope with the changing market conditions, it also provides Sansiri with a working capital. Nonetheless, pre-sales of condominiums bear the risk of unexpected construction costs that cannot be passed on to the buyers, as the sales prices have already been finalized. Therefore, lower gross profit is an inevitable consequence of higher construction costs. Sansiri has mitigated the risk by negotiating turnkey construction contracts with contractors, enabling Sansiri to control construction costs effectively and to protect profits from the uncertainties of rising construction material costs. The construction of condominium projects normally lasts 14 to 26 months. It is the responsibility of Sansiri to ensure the timely construction progress as well as project completion and delivery to customers as scheduled. Since Sansiri has many years of considerable skill and experience in condominium construction and always works closely with contractors, problems of this sort can be handled smoothly. Consequently, constructions have always been completed on time. In addition, pre-selling condominiums bears the market risk of having unsold units upon the construction completion should the condominium projects were not well-received from customers. Sansiri has mitigated the inventory risk by doing in-depth research to develop condominium projects suitable for each customer group, as well as initiating attractive sale promotions prior to the construction completion to stimulate the sales. Generally, down payment and installments for condominium projects are set at 10 to 20% of the selling prices with the balance to be paid upon condominium unit transfer. In this regard, there is a risk that some customers may forfeit their deposits. Sansiri has mitigated the speculative buying risk by requiring high down payment and installments at 25 to 35% of the selling prices together with introducing the “NPV campaign” to stimulate the higher down payment and installments. Customers who join the NPV campaign will get the cash discount should they opt to pay the 100% of selling price all at once or pay all the installments at once instead of paying installments over the construction period. Essentially, the NPV campaign is initiated to discourage speculative buying, and will result in the condominium unit transfer to customers as scheduled. As of 31 December 2009, the number of customers who join the NPV program was high at 24% of total condominium customers.
  45. 45. 47 2. LAND PROCUREMENT Obtaining land plots in prime locations at reasonable prices is the first priority of Sansiri’s land procurement team. We have different strategies depending on the type of product. For condominium projects, we generally choose mid-city locations near key business areas, mainly close to both the BTS Sky Train and MRT subway lines (or in areas where extensions of transit lines have been approved and construction has commenced). The risk of not getting prime locations for condominium projects has been mitigated through the extensive network of brokers as well as the large database of “Plus Agency”, operated by the wholly-owned subsidiary named Plus Property Company Limited (“Plus”). Being Thailand’s leading property management and brokerage firm, “Plus” is the valuable source of property information or “market intelligence” for Sansiri Group. To reduce dependence on condominium market and to provide further opportunities for future growth, Sansiri has expanded the businesses and successfully penetrated the single-detached house and townhouse markets in recent years. Sansiri acquired land along the city’s Outer Ring Road and in suburbs that offer numerous advantages for single home development while locating townhouse projects on routes with easy access to the city center. 3. FLUCTUATION IN CONSTRUCTION MATERIAL PRICES In 2009, the price index of construction materials decreased by 13.1 percent compared to that of 2008 (Source: Bureau of Trade and Economic Indices, Ministry of Commerce), mainly resulted from the economic slowdown and the decreasing price index of steel and steel products. However, some construction materials price index such as sanitary ware, wood and wooden product, and paint, also rose in 2009 compared to that of 2008. These construction materials are key components for project development, thus the construction material price volatility will directly impact cost of project development. Sansiri is aware of construction material price volatility risk and has carefully planned to mitigate the risk by purchasing directly from the manufacturers through the bidding process and pre-agreeing the delivery prices. In this regard, Sansiri has focused on increasing our bargaining power and negotiating deeper discounts on large volume purchases for several projects under construction. Direct procurement of some construction materials for single-detached house and townhouse projects such as pile and roof tiles has been increasing to 40% of total 2009 construction cost. For the condominium project development, direct procurement has been used for several items such as tiles, sanitary ware, and air conditioner. In addition, Sansiri also mitigated the risk of higher material cost of condominium project through the turn-key construction contract with contractors, resulting in better cost and quality control.
  46. 46. Annual Report 2009 48 Special units has been established to closely monitor, and to promptly react when the price of major construction material categories changes. These reactions include but not limited to re-negotiate the future contract price with the manufacturers or contractors when the construction material price significantly decreases. Sansiri usually gets cooperation from the manufacturers or contractors, resulting from being a valuable business partner, good reputation, and long experience in real estate business. In order to select qualified suppliers, Sansiri considers not only the competitive price and production capacity but also the sourcing capability to ensure the timely delivery of construction materials. Sansiri regularly updates the qualified supplier lists by closely monitoring and evaluating performance of every supplier on a semi-annual basis. 4. A SHORTAGE OF CONTRACTORS Sansiri and subsidiaries have successfully launched housing projects in various locations, leading to several active projects in progress. Sansiri mitigates the risk of contractor shortage by establishing good relationship with a group of contractors to create a valuable database. Following the preliminary selection process, Sansiri evaluates the construction capability to ensure the right and timely construction. Having several small contractors for a single project provides more flexibility but introduces some difficulties in coordination with the associated risk of late or wrong construction delivery. Sansiri mitigates these risks through the closely monitoring and meticulously inspecting by Quality Control Department to ensure the high standard of every housing project. Banking on our efficientoperationalsystemandtransparentselectionprocess,Sansirihasalistofqualified contractors, including more than 50 medium and large contractors to ensure high standard housing projects. Since 2008, Sansiri has held the annual QC Award ceremony to motivate contractors to deliver high quality and timely construction. The award-winning contractor will receive certain privilege, such as the reduction in retention amount. 5. A CHANGE IN INTEREST RATES AND ACCESSIBILITY TO SOURCES OF FUND Interest rate in 2009 remained low with the slight decrease from that of 2008 as a result of both the global and local economic slowdown, whereas commercial banks maintain prudent lending policy, making it difficult for some developers to obtain project-financing loans. Sansiri has established strong relationship with various commercial banks and always negotiates to get the competitive pricing of project financing loans. In any case, all of current projects are secured by project financing loans and other credit facilities made available by domestic financial institutions.
  47. 47. 49 The low interest rate in 2009 had positive impact on Sansiri’s cost of fund as all of project financing loan are carrying floating interest rate. However, in order to provide alternative source of fund, and reduce the dependence on long-term project financing loan as well as diversify financing portfolio with the fixed rate credit facilities, Sansiri has issued unsecured debentures in 2009 with cost of fund close to other unsecured financing loans. Successful placement of the debentures provides Sansiri another alternative source of fund for future project development. Moreover, Sansiri might consider entering into financial derivative contracts with commercial banks to mitigate interest rate risk. 6. UNSOLD UNITS Currently, Sansiri plans construction progress based on sales forecast, which has been regularly updated by sales and marketing team. However, the economic slowdown could lead to decreasing sales and temporary unsold housing stock. Sansiri has mitigated the inventory risk through the efficient inventory management. To enhance the ability to cope with the changing environment, the single-detached house and townhouse projects have been phased with both pre-built houses and semi pre-built houses available for sale. Consequently, Sansiri could adjust the construction plan correspondingly to the softer housing demand as well as to modify the housing projects in the next phase to satisfy the changing consumer preferences and affordability. Currently, Sansiri has 18 single- detached house projects under construction and available for sale with total project value of 22,821 million baht, 13,977 million baht or 61 percent of which were sold. Of the total project value of 9,478 million baht from 13 active townhouse projects under construction and available for sale, 4,793 million baht or 51 percent of total project value were sold. Consequently, Sansiri has finished but unsold housing stock of 459 units worth approximately of 2,261 million baht as of 31 December 2009. For condominium projects, Sansiri always conducts the in-depth research on consumer behavior before launching any projects and initiates the attractive sales promotion to stimulate sales transaction. Currently, Sansiri has 11 condominium projects available for sale with total project value of 16,740 million baht, 13,580 million baht or 81 percent of which were sold. As of 31 December 2009, Sansiri has finished but unsold condominium stock of 20 units, worth approximately of 110 million baht. 7. ACCOUNTING PRACTICE CHANGE Sansiri anticipated that Federation of Accounting Profession (FAP) together with the Securities and Exchange Commission (SEC) might require changing in accounting policy of revenue recognition method for real estate business in order to comply with the International Financial Reporting Standards (IFRS). Currently, revenue recognition of real estate business shall be recognized by 1) The whole amount when property rights are
  48. 48. Annual Report 2009 50 transferred or 2) Percentage of completion when certain criteria are met or 3) Installment due when certain criteria are met. Under the new accounting system, real estate revenue of all entities shall be realized only by the whole amount when property rights are transferred, which is expected to be applicable to companies registered in SET50 first, followed by companies registered in SET100. The revision of this accounting rule will impact financial performance of Sansiri, which currently registered in SET100 and recognizes the revenue of real estate sales using the percentage of completion method. The significant criteria required to recognize revenues under current method are 1) Sales agreements have been finalized. In the case of condominium projects, sales agreements have been finalized for a minimum of 40 percent of total area offered for sales, 2) A non-refundable deposit has been finalized of at least 20 percent of the value of sales agreement have been received, and 3) Development progress has completed at a minimum of 10 percent (as measured by construction costs incurred compared with total budgeted construction cost) The accounting policy change in revenue recognition into the method of fully recognition when the property rights are transferred will not have significant impact on revenue realization of single-detached house and townhouse projects, constituting approximately 50 to 60 percent of total revenue of Sansiri. Followed the market practice, single-detached house and townhouse projects require down payment deposit less than 20 percent of the contract price, making it not qualified for revenue recognition as percentage of completion. Consequently, sales of single-detached houses and townhouses are practically realized when the property rights are transferred, which is similar to the new accounting method. Sales of condominium projects, which currently qualify for revenue recognition as percentage of completion, are expected to have greater impact if there is any discrepancy in revenue recognition between the values of transferred property in particular year and the expected revenues applying the percentage of completion method. In other words, Sansiri shall record higher profit when the value of transferred property in particular year is higher than the expected revenues applying the percentage of completion method. On the other hand, Sansiri shall record lower profit when the value of transferred property in particular year is lower than the expected revenues applying the percentage of completion method. The realized profit during the previous years will be adjusted through the item “retained earnings”. Notwithstanding, Sansiri has assessed the impact and set measurement to keep up with the accounting policy change by closely monitoring the construction progress of project development and managing the transfer period of condominium projects to smooth out revenue streams. However, this accounting policy change will not have any impacts on the normal operations of property development.
  49. 49. 51 The change in accounting practice of revenue recognition method will impact not only on the income before tax from the alteration in revenue, but also on the corporate income tax due to discrepancy between taxable income as defined by accounting policy and by the Revenue Department. In summary, taxable income and corporate income tax payable to the Revenue Department will be based on revenue recognition as percentage of completion whereas revenue recognition as reported on income statements will be based on transfer basis. Thus, if the forecasted revenues applying percentage of completion method (current method) is higher than the value of transferred property in particular year, Sansiri will have higher taxable income, compared to income before tax as appeared on income statement, causing the effective tax rate (referred to corporate income tax as a percentage of income before tax) to be higher than 30 percent. On the other hand, if the forecasted revenues assuming percentage of completion method (current method) is lower than the value of transferred property in particular year, Sansiri will have lower taxable income, compared to income before tax as appeared on income statement, causing the effective tax rate to be lower than 30 percent. Therewith, such discrepancies will become less in the future as new projects will apply new method of revenue realization (at the property right transfer), making revenue realization for tax purpose and for accounting purpose be the same. 8. ENVIRONMENTAL IMPACT ASSESSMENT (EIA) REPORT APPROVAL There are several projects under the development of Sansiri and subsidiaries, which required Sansiri to prepare environment impact assessment report prior to receiving permissionfromtheEnvironmentalImpactEvaluationBureau,MinistryofNatureResources and Environment. In this regard, Sansiri has worked closely with professional consultant company, registered with Ministry of Nature Resources and Environment, to prepare EIA report in compliance with rules and regulations under National Environmental Quality Act (NEQA) 1992. The projects which required EIA approvals are condominium projects with more than 79 units; while single-detached house and townhouse projects are not required to get EIA approval. Sansiri and subsidiaries comply with all EIA rules and regulations for all projects which required approval from the Environmental Impact Evaluation Bureau. In this regard, Sansiri and subsidiaries work closely with contractors to ensure that the construction is carried out pursuant to specifications approved by EIA committee to reduce controversy, claims and litigations, and thus no additional environmental investment is required. Sansiri closely monitors the progress and expects that all projects would receive approval from the Environmental Impact Evaluation Bureau according to schedule.
  50. 50. Annual Report 2009 52 SHAREHOLDERS STRUCTURE AND MANAGEMENT SHAREHOLDERS STRUCTURE 1. THE COMPANY’S SECURITIES : ORDINARY SHARES The Company’s registered capital, as of 22 February 2010, is 15,991,205,802.64 baht, with issued and paid-up capital of 6,307,130,801.76 baht, consisting of 1,473,628,692 ordinary shares at the par value of 4.28 baht per share. 2. OTHER SECURITIES (A) ESOP Warrants offering to the Directors and Employees of the Company and its Subsidiaries (ESOP # 5/2006) The Annual General Meeting of Shareholders # 11/2006 held on 20 April 2006 had approved the Employee Stock Ownership Plan to Issue and Offer the ESOP Warrants to the directors and employees of Sansiri Public Company Limited and its subsidiaries # 5 (ESOP # 5/2006), summarized as follows: 1. Total number of warrants offered : 52,820,000 units 2. Exercise ratio : 1 unit per 1 ordinary share 3. Exercising price : 5 baht per 1 ordinary share 4. Total number of shares reserved : 52,820,000 shares for exercising right 5. Maturity : 5 years from the closing date of issuance warrants In this regard, the Company had notified to the SEC of its intention to comply with the new regulation regarding the Permission and the Offer for Sale of Securities pursuant to the Notification of the Capital Market Supervisory Board No. ThorChor 32/2008. The Company already issued and offered the new securities to directors and employees under the ESOP # 5/2006 on 30 June 2009. !"#$%&'()$*'(('+,-$./01$!%2324*1#$ The Extraordinary Meeting of Shareholders No. 1/2009 held on 6 November 2009 passed the resolution to approve the issuance and allocation of the share warrants No. 1 of Sansiri
  51. 51. 53 Public Company Limited (SIRI-W1), totalling of 736,814,346 units to the Company’s existing shareholders on a pro rata basis (right offering), without a charge, at the ratio of 2 existing ordinary shares to 1 unit of the warrant, at the exercise price of 5.20 Baht per share. The warrants are exercisable on the last business day of every quarter of each calendar year (March, June, September and December) throughout the maturity of the Warrant after the second anniversary of the issuance and offering date of the Warrants has elapsed. The Stock Exchange of Thailand (SET) approved the listing of share warrants of Sansiri Public Company Limited No. 1 (SIRI-W1) on 3 February 2010. 3. SHAREHOLDERS The ten largest shareholders as of 22 February 2010 which are adjusted according to the registry of shareholders on the latest closing date of the shares register book on 12 October 2009 (the closing date of the shares register book for determining the rights to attend the Extraordinary Meeting of Shareholders No. 1/2009) are as follows: Proportion of No. Name of Shareholder Number of shares shares holding % of ! ! ! ! "#$%&'"!(#"$)#* 1 MR. SRETTHA THAVISIN GROUP 1 215,439,784 14.62% 2 UOB KAY HIAN PRIVATE LIMITED 129,083,333 8.76% 3 RAFFLES NOMINEES (PTE) LIMITED A/C 1 (Major NVDR Holder) 2 118,033,300 8.01% 4 CHASE NOMINEES LIMITED 42 109,035,200 7.40% 5 VIRIYAH INSURANCE CO., LTD. 95,398,600 6.47% 6 NATURAL PARK PUBLIC COMPANY LIMITED 62,721,231 4.26% 7 FINANSA LIFE ASSURANCE CO., LTD. 53,572,800 3.64% 8 UBS AG SINGAPORE,BRANCH-PB SECURITIES CLIENT CUSTODY 45,182,100 3.07% 9 KASIKORN BANK PUBLIC COMPANY LIMITED 20,661,487 1.40% 10 MRS. JARUNEE CHINWONGWORAKUL 20,000,000 1.36% 10 TRENDY PLAN INVESTMENT LIMITED 20,000,000 1.36% Total 889,127,835 60.34% Remark 1 Mr. Srettha Thavisin Group consists of (1) T.S. Star Company Limited (the holding company wholly owned by Mr. Srettha Thavisin who is also the director), holding 178,274,400 shares, equivalent to 12.09% of the Company’s issued and paid-up capital and (2) Mr. Srettha Thavisin who hold 37,165,384 shares, equivalent to 2.52% of the Company’s issued and paid-up capital. 2 Thai NVDR Co., Ltd., a wholly owned subsidiary of the SET, is responsible for executing the purchase or sale of those listed Company shares whose investors wish to trade through NVDRs. This service is offered to all, irrespective of the number of securities held or the holder’s nationality. NVDR holders receive the same full financial benefits as they would receive by investmentdirectlyinshares(i.e.dividends,rights,andwarrants).However,therearenovotingrightsforNVDRholdersexceptinmotions involving delisting. The investor can find the report of investment in securities of Thai NVDR Co., Ltd. at www.set.or.th/nvdr/, that shown the proportion of investment as at the end of the working day prior to the date on which the investor’s checking.
  52. 52. Annual Report 2009 54 4.DIVIDEND PAYMENT POLICY The Company’s dividend policy is to pay dividend at the rate of approximately 50% of its consolidated net income after deduction of all reserves as required by laws and the Company. However, such dividend payment shall be conformed to the law and the Articles of Association of the Company as well as subject to the Company and its affiliates’ cash flow and investment plans, including justifications and other future considerations as deemed appropriate.
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
  54. 54. Annual Report 2009 56 1. MANAGEMENT STRUCTURE The Company’s management structure consists of the Board of Directors, the Audit Committee, the Compensation Committee, and the Executive Committee, which are described below: (A) BOARD OF DIRECTORS, Consists Of 10 Directors, Namely: (as of 22 February, 2010) Board Members Positions 1. Mr. Kovit Poshyananda Chairman of the Board (Independent Director) 2. Mr. Apichart Chutrakul Vice-Chairman 3. Mr. Mana Noppun Independent Director 4. Mr. Jesadavat Priebjrivat Independent Director 5. Mr. Wirat Uanarumit Independent Director 6. Mr. Srettha Thavisin Director 7. Mr. Wanchak Buranasiri Director 8. Mr. Kriengkrai Thiennukul Director 9. Mrs. Nujchanart Panthawangkun Director 10. Mr. Porntat Amatavivadhana Independent Director AUTHORIZED DIRECTORS As of 22 February, 2010, the directors of the Company whose signatures binding the Company shall be Mr. Apichart Chutrakul, Mr. Srettha Thavisin, Mr. Wanchak Buranasiri, two of three directors co-sign with the Company’s seal affixed. SCOPE OF AUTHORITY AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS According to corporate regulations, the Board of Directors is authorized to make decisions and ensure that the activities of the Company conform to the objectives and rules of the Company, resolutions of shareholders meetings, and all relevant laws. This decision-making power does not include matters that the law and regulations of the Securities Exchange Commission and the Stock Exchange of Thailand specify must first be approved by a meeting of shareholders. The corporate regulations permit the Board of Directors to appointanExecutiveCommitteethatcontrolsthedailyaffairsoftheCompanyinaccordance with the policies and budget approved by the Board of Directors and any other matters assigned to it by the Board. Included in these activities are operations that fall within the scope of responsibility assigned to the Executive Committee and screening of other matters beyond that scope for the Board of Directors to consider. The corporate regulations, moreover, authorize the Board of Directors to appoint other committees to assist the Board in its managerial responsibilities.
  55. 55. 57 SELECTION OF INDEPENDENT DIRECTOR The Company specifies the qualifications of its independent director in accordance with the requirements of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand, as follows: 1. Holds shares not exceeding 1% of the total voting shares of the Company, its parent company, subsidiaries, associates, major shareholders, and controlling parties of the Company, provided that the shares held by the related parties of such independent director shall be included. 2. Is not or has never been an executive director, employee, staff, advisor who receives salary, nor controlling parties of the Company, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of the Company. 3. Is not the person who has relationship by means of descent or legal registration under the status of father, mother, spouse, brothers and sisters, and children. The prohibitive persons also include spouses of daughters and sons of management, major shareholders, controlling party or the person who is in the process of nomination to be the management or controlling party of the Company or its subsidiary. 4. Have no or never had business relationship with the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company in respect of controlling which may harm the independent decision-making, including not being or never been the significant shareholder, or controlling parties of any person having business relationship with the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company 5. Is not or has never been the auditor of the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of Company, and is not the significant shareholder, controlling parties, or partner of the auditing firm which employs such auditor of the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties of the Company. 6. Is not or has never been the professional service provider, including but not limited to legal service or financial advisor with received the service fee more than 2 million baht per year from the Company, its parent company, subsidiaries, associates, major shareholders, or controlling parties, and is not the significant shareholder, controlling parties, or partner of the above mentioned service firms. 7. Is not the director who is nominated to be the representative of directors of the Company,majorshareholders,oranyothershareholdersrelatedtothemajorshareholders.
  56. 56. Annual Report 2009 58 8. Do not operate the same and competitive business with the business of the Company, or its subsidiaries, or is not a significant partner of the partnership, or is not an executive director, employee, staff, advisor who receives salary, nor holds share of more than 1% of the total voting shares of any other company which operates same and competitive business with the business of the Company, or its subsidiaries. 9. Is not any otherwise which is unable to have the independent opinion regarding the business operation of the Company. After being appointed as the independent director in accordance with the conditions under the article (1) - (9), such independent director may be assigned by the board of directors to make decision in respect of collective decision on business operation of the Company, its parent company, subsidiaries, associates, same-level subsidiaries, major shareholders, or controlling parties of Company. The definition of independent director of the Company is equal to the minimum requirement of the Securities and Exchange Commission and the Stock Exchange of Thailand. (B) AUDIT COMMITTEE The Audit Committee is constituted in such a way as to be independent of the Company’s management. AllmembersoftheAuditCommitteearequalifiedindividualsandindependent directors who possess the qualifications stipulated by the Stock Exchange of Thailand. Presently, the Audit Committee consists of 3 directors who are not taking part in the management of the Company or majority shareholder of the Company, and 1 secretary, namely: (as of 22 February, 2010) Name Positions 1. Mr. Mana Noppun Chairman of the Audit Committee 2. Mr. Jesadavat Priebjrivat Member of the Audit Committee 3. Mr. Wirat Uanarumit Member of the Audit Committee Remark : Secretary to the Audit Committee is Mr. Thalin Aeimtitiwat
  57. 57. 59 SCOPE OF AUTHORITY AND RESPONSIBILITIES OF THE AUDIT COMMITTEE The Audit Committee of the Company has the scope of duties and responsibilities to the Board of Directors on the following matters: (1) to review the Company’s financial reporting process to ensure that it is accurate and adequate; (2) to review the Company’s internal control system and internal audit system to ensure that they are suitable and efficient, to determine an internal audit unit’s independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit; (3) to review the Company’s compliance with the law on securities and exchange, the Stock Exchange of Thailand’s regulations, and the laws relating to the Company’s business; (4) to consider, select and nominate an independent person to be the Company’s auditor, and to propose such person’s remuneration, as well as to attend a non-management meeting with an auditor at least once a year; (5) to review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure that they are in compliance with the laws and the Stock Exchange of Thailand’s regulations, and are reasonable and for the highest benefit of the Company; (6) to prepare, and to disclose in the Company’s annual report, an audit committee’s report which must be signed by the audit committee’s chairman and consist of at least the following information: (a) an opinion on the accuracy, completeness and creditability of the Company’s financial report, (b) an opinion on the adequacy of the Company’s internal control system, (c) an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or the laws relating to the Company’s business, (d) an opinion on the suitability of an auditor, (e) an opinion on the transactions that may lead to conflicts of interests, (f) the number of the audit committee meetings, and the attendance of such meetings by each committee member, (g) an opinion or overview comment received by the audit committee from its performance of duties in accordance with the charter, and (h) other transactions which, according to the audit committee’s opinion, should be known to the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Company’s board of directors; and
  58. 58. Annual Report 2009 60 (7) to perform any other act as assigned by the Company’s Board of Directors, with the approval of the Audit Committee. In its performance of duties as described above, the Audit Committee must be directly responsible to the Company’s Board of Directors, while the Company’s Board of Directors shall remain responsible to third parties for the operations of the Company. The term of office for the Chairman of the Audit Committee and members of the Audit Committee is 3 years (including the additional appointment to and removal from the Audit Committee). Furthermore, the members of the Audit Committee who retired by the expiration of the term of the appointment may be re-elected for another term, if the board of directors or the shareholders’ meeting deems it appropriate. In this regard, the Chairman of the Audit Committee and all members have adequate expertise and experience to audit creditability of the Company’s financial reports. (C) COMPENSATION COMMITTEE Presently, the Compensation Committee consists of 3 non-executive directors and 1 secretary, namely: (as of 22 February, 2010) Name Positions 1. Mr. Mana Noppun Chairman of the Compensation Committee 2. Mr. Jesadavat Priebjrivat Member of the Compensation Committee 3. Mr. Porntat Amatavivadhana Member of the Compensation Committee Remark : Secretary to the Compensation Committee is Mr. Wanchak Buranasiri

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