CentralCentral PattanaPattana PlcPlc.. Property Development & Investment
Non Deal Roadshow – U.S.A (May 16-18, 2007) Organized by DBS Vickers Important Notice
The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for share in Central Pattana Public Company Limited (“CPN” and shares in CPN, “shares”) in any jurisdiction nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract or commitment whatsoever.
This presentation may include information which is forward-looking in nature. Forward-looking information involve known and unknown risks, uncertainties and other factors which may impact on the actual outcomes, including economic conditions in the markets in which CPN operates and general achievement of CPN business forecasts, which will cause the actual results, performance or achievements of CPN to differ, perhaps materially, from the results, performance or achievements expressed or implied in this presentation.
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2 Content
Economic Overview & Market Update
Company Overview & Business Strategy
Operations
Developments
Financial Highlights
3 Economic Overview & Market Update Economic Overview
Economic Overview in 1Q 2007
Overall Thai economy in 1Q 2007 continued to reflect The recovery process was jolted by several elements stagnancy resulted from weakened in domestic demand. arising in 1Q 2007
BOT downgraded GDP growth 2007 to 3.8-4.8% from the Although the capital control has been eased for foreign fund previous forecasted of 4-5%. flows, foreign investors have not applied those measures in Private Consumption Index showed a negative growth of practice due to it creates higher cost. 0.5%yoy The politics persisted an uncertainty as incidences of bomb Private Investment Index displayed a negative growth of 2.5% yoy. in Bangkok. Consumer Confidence Index fell reflecting fragile domestic Ministry of Commerce amended the Foreign Business Act growth. to crack down on nominee structure, creating risk to recovery of private investment in 2007 and also sent a Situation in 1Q 2007 helped cushion sluggish economy misunderstanding unfriendly message to foreign investors. by:
Interest rate has been cut in total of 100bps since the beginning of 2007 which could stimulate property sector.
Inflation was subdued to a decelerate pace at 2.0% in Mar 2007 which put less pressure on people purchasing power.
Export and tourism remained strong and expand satisfactorily at 19%yoy and 4%yoy, respectively.
Source : Bank of Thailand and NESDB 5 Retail Overview
Retail in 1Q 2007 Expectation for 2007
Retail sales during 1Q 2007 continued to experience Although there are still many negative economic & lackluster period mainly due to decline in domestic external factors weighing down the economic recovery, demand partly evidence as lower consumer CPN believes that the recovery in the economy, retail confidence and business sentiment index. sector and consumer confidence will enhance in the
Retail sales growth in Feb 2007 decelerated by 1.8%yoy, 2H07. This assumption is made on the basis that: lower than a 4%yoy growth in 2006. Political situation remains steady. Sales of retail operators retreated a single-digit to zero Oil price remains at current levels.
growth after staying double digits since the financial crisis. Interest rate continues downward trend. The draft of new Retail Business Law was Consumer Confidence and Business Sentiment improves. approved by the Cabinet on May 8th,07 after being rejected in Mar 07. The draft will be further sent to the Tourism is anticipated to continually flourished. Council of State for revision before submitting to the Amendment to Constitution is expected to complete in 4Q07. National Legislative Assembly for approval. The first- Election is scheduled to take place in December 2007. ever Retail Business Law is purpose to eliminate unfair trade between large-scaled and small retailers. However, the giant retailers urged the government to consider the impact of new law on consumers. Therefore it is likely that retail growth will continue to depress through 2007 amidst the uncertainties.
Source : Bank of Thailand and NESDB 6 Bangkok Retail Market Overview
Comments Retail Supply
Total retail supply in Bangkok increased by 220,000 Sqm (‘000) Vacancy % 2,500 10.8% sqm or 5.1% yoy in 2006 and most of new area came 6.8% from shopping malls, of which leasable area increased by 2,281 2,250 5.5% 2,059 10.8% yoy. Major supply operational in 2006 includes 5.4%
CentralWorld (60,000 sqm) 2,000 1,928 1,927 The Esplanade (44,000 sqm) 5.1% 5.0% The Avenue – Chaengwattana (21,173 sqm) 1,750 4.7%
The average vacancy in 2006 was 3.5%, a significant 1,500 decrease from 5.4% in 2005 mainly due to nearly fully 1,265 1,275 1,289 1,278 4.5% occupied space at newly opened mall, CentralWorld. 1,250
1,007 1,007 New retail supply in 2007 will be approximately 200,000 1,000 815 4.0% sqm, mostly from shopping mall; JJ Mall (65,000 sqm), 779 ZenWorld@CentralWorld (30,000 sqm), Jaturas Jamjuri 750 (20,000 sqm), SF Kaset Nawamin (21,000 sqm). 500 3.5% Rental rates have generally been stable since 2H05 due 3.5% 250 to the steady supply of new retail leaseable area. It is
also expected to remain stead in the short-term and may 0 3.0% again rise depending on how quickly the country’s 2003 2004 2005 2006 Superstores Dept. Stores Malls Vacancy economic condition improves. New Supply (sqm) 45,000 338,000 220,000
Total Supply (sqm) 3,972,000 4,017,000 4,355,000 4,575,000
Source : CBRE and Company’s estimate 7 Bangkok Office Market Overview
Comments Office Supply
Sqm (‘000) Vacancy % Total office supply in 2006 increased by 3.5%yoy or 5,346 5,500 5,243 28.0% 253,000 sqm to 7.46 mil sqm due to the opening of 5,000 4,740 4,714 24.0% 4,500 25.0% 9 office buildings: 4,000 20.0% 20.9% 16.0% 3 offices in CBD (Q House Lumpini, Column Tower and 3,500 3,000 16.0% Exchange Tower). 2,376 2,471 16.4% 2,500 1,967 2,117 12.0% 6 offices in Non CBD (Fenix Tower, Supalai Grand Tower, 2,000 13.5% 10.2% 8.0% I Tower, Central Pinklao Tower B, Rasa Tower II, and 1,500 1,000 7.2% 4.0% King Power New Head Office). 500 4.8% 0 0.0% The average vacancy for Grade A in 2006 considerably 2003 2004 2005 2006 Grade A Grade B & C Vacancy - A Vacancy - B&C increased from 4.8% in 2005 to 7.2% in 2006 due to the new supply. Meanwhile Grade B slightly decreased from New Supply (sqm) 70,000 25,000 253,000 16.4% in 2005 to 16.0% in 2006. Total Supply (sqm) 7,115,000 7,185,000 7,210,000 7,463,000 New supplies of approximately 200,000sqm are Office Rental Rate
expected to come in 2007 (Grade A:20%, Grade B:80%). + 9.7% The only new grade A building in CBD to be completed Bt/sqm 700 653 + 12.9% will be Athenee Tower on Wireless Rd., anticipated to 595 open in 2H07. 600 506 483 500 431 428 Rental rate growth for 2006 increased by 10-13%, lower 400 365 311 than that of 2005 due to the new supply, stagnant 300
economy, and weakened private investment. However 200
due to the continued demand in office space for company 100
establishment and expansion, we expect rental to 0 2003 2004 2005 2006 increase at a moderate pace. Grade A Grade B
Source : CBRE and Company’s estimate 8 Company Overview & Business Strategy Business Overview
Highlights Recent Achievements
CPN is the leading retail developer and investor in CPN was rated among “Asia’s Best under a Billion” by Thailand with a 28% market share in Bangkok’s mall FORBES Magazine. leaseable area. CPN was included in SET50 on the Stock Exchange of CPN owns/manages 10 shopping centers, 5 office Thailand (SET). towers and 2 apartments in Thailand. CPN was ranked in the Top Quartile category for Good CPN continuously achieves strong growth through green Corporate Governance of Thai listed companies. field developments, acquisition & redevelopments and asset enhancement projects. CPN is included in MSCI Index in May 2006.
CPN is a fully integrated retail developer with unparallel (1) synergies with its major shareholders, Central Group Shareholder’s Value Creation and Thailand Equity Fund, and unmatched financing 4.4% capability through its property fund. Bt mn 60,000 56.9% 49,241 51,420 CPN is the largest retail developer on Stock Exchange 50,000 of Thailand (SET) with a market capitalization of approx. 86.7% 40,000 31,375 USD 1.9bn. 30,000 16,802 CPN is the property manager and largest shareholder 20,000 (33%) in Thailand’s largest REIT - CPN Retail Growth Property Fund (Approx. USD 380mn). 10,000 0 31 Dec 2004 31 Dec 2005 29 Dec 2006 30 Mar 2007
Note 1: Source from SetSmart as of 31 March 2007, CPN price at Bt23.60 per share 10 Strong Development & Acquisition Pipelines
Throughout its 25 years, CPN not only achieved success in its own green field projects but also success in its acquisition and redevelopment projects
Past Developments (Core Growth) Future Growth
2008 - Open 1995 - Opened “Central Plaza Chaengwattana” “Central Plaza Pinklao” 1982 - Opened AND “Central Festival Pattaya” 2009 - Open “Central Plaza Lardprao”, the first “Central Pattaya Beach” integrated shopping complex in Thailand 1997 - Opened AND “Central Chonburi” “Central Plaza AND “Central KhonKaen” 1980 - Established under 1993 - Opened Ratchada Rama 3” 2002 - Opened “Central Plaza Co., Ltd.” “Central Plaza Ramindra” “Central Plaza Rama 2” 2011 - Open “Central Plaza Rama 9
2002 – Acquired “Centralworld (World Trade Center”, a mix-used complex
1996 – Acquired full equity stake in 2004 – Completed “Central Airport Plaza Chiangmai” “The Offices at CentralWorld”
2000 – Completed “Central Airport 2005 – Completed Plaza Chiangmai Phase 2A “Central Plaza Rattanathibet” 2001 – Acquired full equity stake in “Central City Bangna” 2006 – Complete CPN Current Portfolio: “CentralWorld 2002 – Acquired 10 - Shopping Centers “CentralWorld” (Formerly World 2003 – Completed 5 – Office Towers Trade Center) “Central Airport Plaza Chiangmai Phase 2B AND Acquired “Central Plaza Rattanathibet (Formerly Siam Jusco Rattanathibet” Acquisitions and Redevelopments (Opportunity Growth)
11 Leading Market Share of Mall Retail Space in BMA
CPN is the leading retail property developer and investor in Thailand with approximately 28% market share in Bangkok Metropolitan Area’s mall saleable space
CPN 28% Others 16%
The Mall Group Siam Piwat 14% 1%
MBK 3% Seri Center Future Park Rangsit 4% 10% Fashion Island Siam Future Seacon Square Siam Paragon 5% 6% 6% 7%
Source : Updated by CPN as of 31 March 2007. Based on NSCB Richard Ellis report 25 February 2002. 12 Strategic Shareholders
CPN is one of the flagship businesses of the Central Group (Chirathivat Family). As a strong and supportive shareholder, the Chirathivat family brings to CPN a wealth of retail-related expertise through the family’s long record and successful leadership in Thailand’s dynamic and competitive landscape of shopping mall developments and department store / specialty stores operations. As a strategic investor, Lombard’s Thailand Equity Fund(1) brings to CPN a wealth of financial advisory, international shopping center knowledge, corporate governance initiatives and many other business know-how’s.
Central Holding Other 27% 35%
The Central Group 60%
Lombard's Thailand Chirathivat Family Equity Fund 33% 5%
As of 9 April 2007
Note1: Lombard’s Thailand Equity Fund is a US$245 million private equity fund sponsored by Lombard Investments, Inc., headquartered in San Francisco, and the International Finance Corporation ("IFC"), part of the World Bank Group. The fund was formed with the support of the Government of the Kingdom of Thailand in order to make private equity investments in operationally competitive Thai businesses and is managed by MFC Asset Management. Investors in the fund include the IFC, California 13 Public Employees'Retirement System ("CalPERS"), Asian Development Bank, DEG (a member of Germany's KfW Group), the Ministry of Finance of the Government of Thailand, and ten leading Thai banks and other institutions. Strategic Shareholder: Central Group
CPN’s strong synergy with the Central Group helps CPN to attract dynamic tenants, increase people traffic and command higher rents.
The Central Group and Chirathivat Family
60%100% 67% 100% Central Pattana Central Retail Central Hotel Central Marketing Corporation Group (CPN) (CRC) (CENTEL) (CMG)
Owner and developer of Owner of retail chains Owner of Central hotel Owner of international retail Shopping Centers and Mix- including and resorts and franchisees for; Used Complex Central Department Stores, franchisees of fastfood - Cosmetics : Clarins, Robinson Department retail chains including Elizabeth Aden, Payot... Stores, ZEN Department KFC, Pizza Hut, Baskin - Apparel : G2000, U2, Store, Power Buy, Super Robbins, Mister Donut, S'fare, John Henry, Sports, B2S, Home-works, Auntie's Anne Daniel Hechter, Tops Supermarket, Office Hush Puppies, Jockey, Depot, etc. Wrangler, Lee, FCUK, Energy, Miss Sixty... - Others : Samsonite, Pentax, Guess watch, Casio....
14 Fully Integrated Business Platform
CPN is the only retail developer in Southeast Asia with a fully integrated business platform that will allow it to expand on a sustainable basis and achieve operational enhancements and success with its synergies with the Central Group of companies.
CPN will use this integrated business platform to expand further throughout Thailand, maintaining market share in Bangkok while increasing market share in the Provincial area. CPN will also utilize this optimal business platform in its expansion into neighboring countries.
Central GroupCPN CPNRF – Property Fund
Largest and most popular retail Leading retail developer, property Provide optimal funding source: chains in Thailand manager and investor in Thailand with Unlock CPN’s asset value Guarantee space take-up with market share of 28% of Bangkok’s mall saleable area Free up capital for business successful brands and store expansion concepts Integrated development, leasing and Lower leverage and avoid Increase people traffic property management teams have ensured continuous success for dilution Most successful and most over 25 years Create fee base income experienced retail company in Thailand Strategic location Improve CPN’s financial position: Attract tenants to locate in Optimal tenant mix Tax benefit CPN shopping centers World class standard Capital redeployment to Allow CPN to achieve higher Branded malls to ensure innovative projects with higher return rental rates than others designs and functionality to suit customer needs
15 Vision and Strategy
Vision To be the leading retail developer with world-class experience.
Mission To constantly achieve a sustainable growth with maximum satisfaction for all stakeholders.
Core Business Growth Strategy
Develop new shopping centers with multi formats both in country and overseas. Retain and extend the shopper customers. Develop new retail tenants.
Organization Development Strategy Improve business processes. Provide effective human capital align with company growth. Deploy new management tools and initiatives in organization development.
16 Operations Existing and New Property Locations
Thailand Bangkok Metropolitan Area (BMA)
Existing Properties: Chaeng- Rattanathibet wattana (Plaza) 9 Shopping Centers: 10 Chiangmai Ramindra (Plaza) 6 (Plaza) - World 1 (BMA) 2
- Plaza 8 (BMA – 7) Lardpro Khon- (Plaza) - Festival 1 (Province) kaen 1 Pinklao (Plaza) Offices: 5 (BMA) 3 Chonburi Rama 9
Pipeline Properties – 3-5 Yrs: Pattaya CentralWorld Festival (1) (World) Shopping Centers: 5 4 10
(Bangkok Metropolitan Area) Pattaya - Chaengwattana Beach (2) -Rama9
Rama3 (Province) (Plaza) 5
- Khon Kaen Rama2 Bangna (Plaza) 8 - Chonburi (Plaza) 7 - Pattaya Beach-2 New Offices: 1 (BMA) Projects Existing Properties Projects under Properties in CPNRF (Land development Bank)
18 Leaseable Area and Occupancy: Retail
Comments Shopping Center
Leaseable No.of Occupancy Rate (2) Shopping Format area (1) Tenants 1Q07 4Q06 1Q06 Center (sqm) 1Q07 (1)
1. Ladprao Plaza 55,553 370 99% 100% 100% Increased leaseable area after the completion of 2. Ramindra Plaza 17,943 62 89% 76% 94% major renovation in December 2006. 3. Pinklao Plaza 55,638 302 98% 98% 99%
4. Pattaya Festival 15,227 144 96% 100% 100%
5. Rama 3 (3) Plaza 54,026 328 98% 96% 97% Undergoing minor renovation. Completion date in 2Q 2007 (Please see CPNRF) 6. Chiangmai Plaza 76,654 535 99% 99% 96%
7. Bangna Plaza 57,721 310 99% 99% 98% Undergoing minor renovation. Completion date in 8. Rama 2 (3) Plaza 96,795 343 99% 99% 97% 3Q 2007 (Please see CPNRF) 9. Rattanathibet Plaza 76,287 149 92% 90% 99% Completion of minor renovation in Dec 2006.
10. CentralWorld World 185,851 391 88% 81% 67% Underwent major renovation, Phase 1 and 2 opened in August and December 2006, respectively. Total 691,695 2,934 95% 92% 91%
% LT : ST (1) 29% : 71%
Note 1: Excluding rental agreements < 1 year, such as kiosk, carts, ATMs and coin machines. Note 2: Percentage based on leaseable area. 19 Note 3: Rama II and Rama III are under CPNRF (CPN acts as the property manager). Leaseable Area and Occupancy: Office & Residential
Comments
Leaseable No.of Occupancy Rate (2) Office area (1) Tenants 1Q07 4Q06 1Q06 (sqm) 1Q07 (1)
1. Ladprao 18,134 47 100% 100% 99%
2. Pinklao A 22,560 56 92% 92% 97%
3. Pinklao B 11,335 30 66% 60% 24% Occupancy rate has continuously increased since the opening in 1Q 2006. 4. Bangna 9,796 27 97% 97% 99%
5. CentralWorld 83,684 94 92% 90% 82%
Total 145,508 254 91% 89% 83%
% LT : ST (1) 1% : 99%
Leaseable area (1) Occupancy Rate (2) Residential (sqm) 1Q07 4Q06 1Q06
1. Bangna 1,907 48% 57% 65%
2. Lang suan 4,466 66% 62% 75%
Total 6,373 61% 59% 72%
% LT : ST (1) 0% : 100%
Note 1: Including retail space. Excluding storage. Note 2: Percentage based on leaseable area. 20 Contract Types
Types Revenue recognition
73% Fixed Rent 71% • Increase rental rate by Rental income Short term rent 6 - 8% p.a. • realize on monthly basis (up to 3 years) • Aprox. 1/3 of rental contract expires every year Service fee Monthly basis collection 27% • realize on monthly basis % of Sales Utility fee Contracts • Tenants: Food centers, • realize on monthly basis Cineplex and international brands such as “Mac Donalds, KFC ...” Up-front payment 29% • Percentage ranges from • realize throughout lease 10% - 30% Long term lease contract period on • Includes minimum guarantees straight line basis (up to 20 years) Service & Utility fees Up-front- collection • Collect and realize on monthly basis
Note1: Percentage based on leaseable area. Note2: Date as of 31 March 2007. 21 Effective Rental Rate
Average Rental Rates (Retail Space Only)(1)
Average rental rates have steadily increased over the past years. The rental rate increased by 12%yoy in 2006. However, as a result of slowdown economy and lower traffic at CentralWorld after the bomb incidence on New Year’s Eve, effective rental rate in 1Q 2007 (net discount given to selected stores at CentralWorld) grew by 8%yoy.
4% 1,250 1,214
1,200 1,164 12% 1,150
1,100 10% 1,050 1,040 Bt per sqm per per sqm per Bt 1,000
950 945
900
850
800 2004 2005 2006 1Q 2007
Note 1 : Company Estimates. Average retail rental rates after discount. 22 People Traffic Flow
Traffic By Properties(1)
180,000 160,000 1Q2006 4Q2006 1Q2007 140,000
120,000 100,000 80,000
60,000 40,000
person per day (average) day per person 20,000
0 Lardprao Pinklao Bangna Rama 3 Rama 2 CentralWorld Ram Indra Pattaya ChiangMai Rattanathibet
ChangeYoY 1Q06/1Q07 (6%) (14%) 7% 36% 5% 178% (25%) (4%) 12% 13%
Significant increase in traffic at CentralWorld due to the newly opened phase after completion of its major renovation. Traffic increase at Rama 3 due to completion of construction of overpass and newly opened anchors (SuperSport and PowerBuy). Increase in Rattanathibet traffic on the completion of new retail space expansion and new car park building.
Decrease in Ramindra traffic mainly due to closure of selected areas for renovation. Traffic decreased at Pinklao due to minor renovation. Traffic decreased at Ladprao due to some visitors concerned over bomb blasting in high traffic malls.
Note 1 : Company Estimates. 23 Developments CentralWorld Project Update
Net Leaseable 2007 Target Area Status Occupancy Area (sqm) Occupancy - Zone B & C 49,619 Opened (Aug 18) - Zone D, E and F 61,036 Opened (Aug 18) Phase 1 - Isetan & Major Cineplex 35,139 Existing Total 145,794 93% 98%
- Zone A 21,243 Opening (Dec 2006) Phase 2 - Zen Dept. Store 18,814 Opening (Dec 2006) Total 40,057 71% 91%
Total Project - 6 Zones & 2 Dept Stores 185,851 88% 96%
DD EE CC FF
AA BB
Note1: As of 31 March 2007. 25 CentralWorld Project Update (Cont’d)
Zen Dept Store Zone “A” Atrium After New Year’s Eve bombings, traffic at CentralWorld dropped 30% from the average of 70,000 visitors per day (the peak was at 100,000 visitors per day) in Dec 06.
However, the average traffic has resumed to approximately 70,000 - 80,000 visitors per day in 1Q07. Marketing activities to boost traffic flow including: Advertising locally via – Billboards, BTS Plasma, Magazines, TV and Zone “B” Beacon Radio.
Advertising internationally via – Airport Billboards, In-Flight TV and Zone “C” Central Court Magazines. Events and Promotion campaigns all year round. Tourist privileges. Zone “D” Dazzle Upcoming Events
Convention Center will be opened in July 2007. Zen World (Tower) will be completed around end of July 2007. Jewelry Zone, 1st floor in Zone D, will be opened in 3Q07.
th More F&B outlets, 7 floor in Zone A, will be opened stores in 3Q07. Zone “E” Eden Zone “F” Forum Grand celebration at CentralWorld is planned to launch in late Sep 2007. International Fashion Brand, 1st floor in Zone A, will come in 3Q08.
26 Future Projects – Chaengwattana (PLAZA)
Project Highlights Investment Cost (1) 4,500 - 5,000 MB Program - Shopping Center (N.L.A) 64,000 sqm (Excl. Dept Store) - Office (G.A) 27,000 sqm - Parking (G.A) 106,000 sqm (3,218 cars) Location Suburb of Bangkok (Vicinity where 28 government agencies will be relocated to)
Development Process Status / Time line Construction Period Sep 2006 to Dec 2008 Progress - Piling work Completed - Main contractor bidding Completed Leasing Start March 2007 - Confirm anchors Central Department Store, B2S Tops Supermarket, SuperSports, PowerBuy, Office Depot /2 SF Cinema, Fitness First Opening - Shopping Center December 2008 - Office Building January 2009
Note1: Including land and construction cost 27 Future Projects – Pattaya (FESTIVAL)
Project Highlights Investment Cost (1) 3,500 - 4,000 MB Program - Shopping Center (N.L.A) 55,000 (Excl. Dept store) - Hotel or Service Apt (G.A) (2) 40,000 sqm - Parking (G.A) 66,000 sqm (1,935 cars) Location - Pattaya, Chonburi Province - Approximately 1 1 /2 hours drive east of Bangkok
Development Process Status / Time line Construction Period Jan 2007 to Apr 2009
Progress - Design developmen t Completed - Interior design 80% (Completion by June 2007)
Leasing Start January 2007 - Confirm anchors Central Department Store, B2S Tops Supermarket, SuperSports, PowerBuy, Food Loft, /2 SFX Cinema, True Fitness
Opening February 2009
Note1: Including land and construction cost Note 2: Hotel and service apartment under consideration to sub-lease 28 Future Projects - Others
Khon Kaen Investment Cost(1) : 1,500 to 2,000 MB Program(2) : Shopping center/Dept. Store - NLA – 66,000sqm : Parking – G.A – 92,716sqm (2,235 cars) Location : Northeastern Thailand Construction Period : 4Q 2007 – 2Q 2009 Progress : Construction permit approved : Designing phase / detailed feasibility study Opening : June 2009 Chonburi Investment Cost(1) : 1,500 to 2,000 MB Program(2) : Shopping center/Dept. Store - NLA – 55,700sqm : Parking – G.A – 52,500sqm (1,500 cars) Location : 1 hour drive south of Bangkok Construction Period : 3Q 2007 – 2Q 2009 Progress : Construction permit approved : Designing phase / detailed feasibility study Opening : April 2009
Rama 9 Investment Cost : 3,500/2 to 4,000 MB Program : Shopping center/Dept. Store – Under study : Parking – Under study Location : Bangkok Construction Period : Tentative 3Q 2008 – 1Q 2011 Progress : Feasibility study
Note1 : Total investment cost including land and construction cost Note2: Including Central Group’s area (department store and CRC specialty stores) 29 Capital Expenditure Profile
Major capital expenditure will be used to develop 8 new projects (8 shopping centers and 1 office) and renovate 5 existing shopping centers. Financing plan for future expansion includes:
Cash flow from operation
Loan – project financing Property fund (Bt mil) Properties 2007 2008 2009 2010 2011 CentralWorld (Phase 1 & 2) 1,600 Chaengwattana 1,800 2,200 370 Pattaya Beach (New) 1,400 1,200 320 Khon Kaen 230 630 210 Chonburi 60 440 340 Rama 9 1,000 1,500 1,000
Enhancement Projects 500 500 500 500 1,000
3 New Projects (1) 600 1,500 2,000 3,500 2,200
Total 6,190 6,470 4,740 5,500 4,200
Company estimates Note1: Tentative development projects 30 Future Leaseable Area & Occupancy Rate
Retail Leaseable Area and Occupancy Rate (Shopping Center Only)
years % in 5 h of 50 growt le area aseab sqm Le % Occupancy
1,000,000 97% 97% 100% Rama 9 95% 95% 95% 95% 96% 94% 95% 93% 95% 900,000 92% Pattaya Beach 800,000 90% Khon Kaen (1) 700,000 85% (1) 600,000 80% Chonburi
500,000 75% Chaengwattana 400,000 70% Rattanathibet - 300,000 65% additional space (2) 60% CentralWorld - 200,000 expansion phase 100,000 55% Existing area 0 50% (2) Occupancy rate 2001 2002 2003 2004 2005 2006 2007 F 2008 F 2009 F 2010 F 2011 F (%)
Leaseable area (Sq.m.) 2001 2002 2003 2004 2005 2006 2007 F 2008 F 2009 F 2010 F 2011F Shopping Center 281,623 518,894 598,587 591,007 617,299 684,587 684,587 748,587 925,287 925,287 1,025,287 Office Building 49,833 49,833 49,833 134,099 134,038 145,700 145,700 145,700 171,700 171,700 171,700 Residential 16,825 16,825 16,336 16,336 6,373 6,373 6,373 6,373 6,373 6,373 6,373 Total 348,281 585,552 664,756 741,442 757,710 836,660 836,660 900,660 1,103,360 1,103,360 1,203,360
Note: Company estimates at 31 December 2006. Include leaseable area of Rama 2 & 3 which were partially transferred to CPNRF, but still under CPN’s management. Note1: Including Central Group’s areas (department store and CRC specialty stores). 31 Note 2: Including CentralWorld’s original space. Financial Highlight Consolidated Performance
Adjusted items in 2005 (unit : Bt mm) Adjusted items in Q42005 (unit : Bt mm) Net profit 3,295 Net profit 382 Adjusted 1.Gain from CPNRF (2,885) Adjusted 1.Gain from CPNRF (118) Bt m il 2.Impairment provision 407 2.Tax of 1. 35 12,000 3.Tax of 1.&2. 743 Net profit after adjusted 299 4.Minority interest of 2. (114) 9,729 Net profit after adjusted 1,446 10,000
7,292 8,000 6,844 6,158 6,298 6,000 4,877 3,413 3,677 3,106 3,295 4,000 2,399 2,590 2,187 1,952 1,446 1,685 1,687 1,348 1,059 2,000 656 560 527 299 365 0 2004 2005 2005 Adj.* 2006 4Q05** Adj. 4Q06
(1) (2) Total revenue EBIT DA Operating profit Net profit
Growth (% Y-o-Y) 2004 2005 2005 Adj.* 2006 4Q06 Y-o-Y Total revenue (1) 12% 58% 11% 7% 16% EBITDA 13% 103% 10% 8% 61% Operating profit 14% 123% 10% 8% 6% Net profit 13% 144% 7% 17% 22% (3) 9% 10% 10% 13% 16% Same store growth
Note: * Excluding gain from CPNRF of Bt 2,885 mil and impairment provision of Bt 406.6 mil in 2005 performance. (see box above graph) *Excluding gain from CPNRF of Bt 118 mil in 4Q05 performance. (see box above graph)
Note1: Total Revenue = Rental & Service Income + Food & Beverage Income + Other Income Note2: EBITDA is calculated by taking operating income and adding back depreciation and excluding interest income. It also includes long-term lease revenue which is a non-cash item Note3: Same store growth 2006 compare with 2005 excludes revenue from Rama2 & Rama3 33 Same store growth 2005 compare with 2004 excludes revenue from Rama2 & Rama3 in 4Q and The Offices at Centralworld Same store growth 2004 compare with 2003 excludes revenue from Rattanathibet Revenue Breakdown
Revenues Comments (FY06 vs. FY05)
Revenue increased by 1% y-o-y. Although Rama 2 and Rama 3 properties were leased Retail out to CPNRF in August 2005, retail revenue still experienced a marginal increase due to higher revenue from relaunching Rattanathibet in Sep 05, relaunching of 7% CentralWorld’s expansion and redevelopment phases and adjustments of co-service rate in Aug 06. Bt m il 7,292 Revenue increased 54% y-o-y. 8,000 6,844 7,000 Office Increase came from higher occupancy rate and higher 6,000 16% rental rates for new contracts signed at The Offices at 5,000 CentralWorld and new space at Pinklao Tower B. 4,000 3,000 1,952 1,687 Revenue decreased 6% y-o-y. 2,000 1,000 Food & Decrease came mainly from closure of food court at 0 Beverage Rama 3 in 3Q06 for renovation and ceasing of food court 4Q05 4Q06 2005 Adj 2006 operation at CentralWorld also in 3Q06
4Q05 4Q06 %yoy FY05 FY06 %yoy
Retail 1,247 1,501 20% 5,460 5,534 1% Revenue decreased 45% y-o-y. Other Office 152 199 31% 482 743 54% Decrease came from conversion of Pinklao Tower B from Rental residential apartments to office building. F&B 114 92 (19%) 420 397 (6%) Other rental 7 5 (29%) 60 33 (45%) Other income 167 155 (7%) 422 586 39% Revenue increased 39% y-o-y. Other Increase came mainly from full year book of property Income management fee from CPNRF and realized income of operating lease of land to CPRNF.
Note1: Other Rental = Includes revenue form Residential + Water & Amusement Park Note2: Other income in 2005 excludes gain from financial lease of Rama 2 and Rama 3 to CPNRF 34 Cost of Rental and Service Breakdown
Cost of Rental and Service Comments (FY06 vs. FY05)
Cost increased 8% y-o-y. 8% Increase came from additional depreciation of the Bt m il Retail 3,783 expansion phrase of CentralWorld (opened in Aug 4,000 3,501 06) and higher cost at Central Plaza Rattanathibet 3,500 (reopened in Sep 05)
3,000 Cost increased by 23% y-o-y. 2,500 Office Increase came from additional cost from Pinklao Tower B (opened in Mar 06) and higher occupancy 2,000 22% at The Offices at CentralWorld.
1,500 1,071 878 1,000 Cost decreased 6% y-o-y. Food & Decrease came from the closure of food court at 500 Beverage Rama 3 and CentralWorld and in line with decrease in revenue from F&B. 0 4Q05 4Q06 2005 Adj 2006
4Q05 4Q06 %yoy FY05 FY06 %yoy Retail 656 831 27% 2,667 2,882 8% Office 118 156 32% 454 560 23% F&B 90 71 (21%) 323 304 (6%) Others 13 13 1% 56 37 (34%)
Note1: Others in 2005 excludes impairment of land under development. 35 Selling and Administration Expenses Breakdown
Selling and Administration Expenses Comments (FY06 vs. FY05)
8% Expenses increased 20% y-o-y. Bt mil Increase came from organization restructuring, 1,200 People 1,078 salary base adjustment, and increase in personnel to support business expansion. 999 1,000
800 Expenses increased by 15% y-o-y. Ads & Increase came from marketing activities during 17% 600 Promo and after the opening of CentralWorld’s expansion phrase. 375 400 319 Expenses increased 3% y-o-y. 200 Depre- Increase came from depreciation of incremental ciation office equipment. 0 4Q05 4Q06 2005 Adj 2006
4Q05 4Q06 %yoy FY05 FY06 %yoy
People 124 139 12% 374 450 20%
Ads&Promo 93 153 64% 294 338 15% Depreciation 12 15 25% 56 58 3% (1) Others 90 69 (23%) 275 232 (16%)
Note1: Others in 2005 excludes impairment of land under development. 36 Key Ratios
Corporate Performance
Key ratios 2004 2005 2005 Adj. 2006 Y-o-Y Chg 4Q05 4Q06 Y-o-Y Chg Gross profit margin (%) 45.9% 45.5% 45.5% 43.6% (1.9%) 42.3% 40.4% (1.8%) Operating profit margin (%) 35.5% 68.8% 30.2% 33.8% 3.6% 37.2% 27.2% (10.1%) EBITDA margin (%) 50.4% 64.4% 49.5% 49.3% (0.1%) 42.0% 52.8% 10.8% Net profit margin (%) 21.9% 33.7% 21.0% 22.6% 1.7% 20.7% 18.2% (2.5%)
ROA 5.0% 10.1% 4.8% 5.0% 0.2% 4.7% 4.3% (0.4%) ROE 15.9% 33.5% 14.7% 14.3% (0.4%) 13.9% 12.4% (1.5%)
Business Line Performance
Gross Profit Margin (%) 2004 2005 2005 Adj. 2006 Y-o-Y Chg 4Q05 4Q06 Y-o-Y Chg Retail 49.2% 51.2% 51.2% 47.9% (3.3%) 47.4% 44.7% (2.7%) Office 16.9% 5.8% 5.8% 24.6% 18.8% 22.1% 21.6% (0.4%) F&B 24.0% 23.1% 23.1% 23.4% 0.3% 21.1% 22.8% 1.8% Other rental 8.9% (10.4%) (10.4%) (12.1%) (1.7%) (85.7%) (160.0%) (74.3%)
Note: Inclusion of gain from financial lease of Rama 2 and Rama 3 to CPNRF and impairment of land under development in 2005. 37 Capital Structure
Bt m il D/E (Tim e s ) 14,000 1.0 0.9 12,574 11,789 0.9 12,000 11,041 11,112 0.8 0.7 9,653 10,000 8,743 0.6 0.7 7,995 7,956 8,000 0.6 6,140 0.5 6,000 0.4 3,690 4,000 0.4 0.3 2,279 2,100 0.2 2,000 0.1 0 0.0 2003 2004 2005 2006
Cash De bt Eq u it y Ne t De bt to Equity
“ CPN’s Policy is to Maintain Net Debt to Equity at Lower Than 1.0 ”
Key ratios 2004 2005 2005 Adj. 2006 %Y-o-Y Chg 4Q05 4Q06 %Y-o-Y Chg
Net debt to equity (times) 0.9 0.4 0.4 0.6 22.8% 0.4 0.6 54.7% Total debt to equity (times) 2.1 1.8 1.8 1.7 (10.0%) 1.8 1.7 (5.5%) Interest coverage (times) 7.6 5.9 5.9 5.9 2.3% 3.7 9.7 158.9%
38 Debt Analysis
Outstanding Borrowings Bt 11,112 mil Financing Cost
Bt m il ST-Loan LT-Bond 700 621 11% Interest Expense 36% 600 544 ST-Bond 459 500 400 9% 400 300 158 200 126 100 0 LT-Loan 2003 2004 2005 2006 4Q05 4Q06 44% Weighted Avg. As of 31 December 2006. Interest Rate 4.9% 4.9% 5.3% 5.6% 4.9% 5.6%
Fixed vs Floating Mix
Bt mil Fixed Floating 11,041 11,112 12,000 10,000 7% 9,065 39% 8,043 8,000 44% 4,720 6,000 41% 4,000 93% 2,398 61% 48% 2,000 56% 59% 52% 71% 0 29% 2005 2006 2007 2008 2009 2010
Fixed Rate 4.8% 5.4% 5.6% 5.5% 5.6% 6.2% Floating rate MLR-0.5% MLR-1.35% MLR-1.32% MLR-1.37% MLR-1.36% MLR-1.46%
39 Share and Dividend Performance
30
Close Price (Bt) Volume ('000 share) 25 30,000 7% th of 5 Share Price Movement l grow Annua 20 25,000
15 20,000 1M 3M 12M
10 15,000 CPN (3.8%) 17.7% 56.9%
5 10,000 SET Index (8.0%) (0.9%) (4.8%) Property Index (11.0%) 4.3% 1.8% 0 5,000 6 6 6 6 6 6 6 6 0 0 0 6 0 0 0 0 7 /0 0 0 0 /0 0 0 0 0 /0 3 2 2 2 4 2 2 2 2 9 /0 / / / /0 / / / / /0 1 /2 /3 /5 7 7 9 1 2 2 0 5 9 9 0 /1 /2 /1 /1 0 1 2 1 8 9 3 7 0 0 0 1 2 Volumes ('000 shares) Close Price (Bt)
Share Overview Dividend Summary
2004 2005 2006 Par Value (Bt) 1.00
Stock Price (Bt) 22.60 Par Value (BT) 1.00 1.00 1.00 EPS (Bt/share) – 12M 2006 0.77 Dividend (Bt/share) 0.25 0.40 000.31 (1) P/E (Bt) 29.35 Dividend Paid (Bt mil) 545 872 675 P/BV (Bt) 3.92 Dividend Payout Ratio 40% 26%* 40% Market Capitalization (Bt mil) 49,241 Notes: Dividend policy is paid annually not less than 40% of net profit. Share Capital (Shares) 2,178,816,000 : Dividend Yield ~ 2.0% - 2.5% in last 3 years. : 40% of profit excluded extra gain (Bt 530 mil) plus 18% of gain from set up CPNRF(Bt 362 mil).
Source: SETSmart as of 31 December 2006. Note1: Earning per share (EPS) based on 2006 EPS of Bt 0.77 per share. 40 Appendix Borrowings: 31 December 2006
TRIS Rating Co., Ltd. has rated the Company’s senior debentures as “A” in May 2006.
Loan Bt mil Terms
Bill of Exchange & Promissory Note 239 3-mth fixed deposit rate Unsecured Bond (Mar’04) 1,000 5 years, 4.2% Unsecured Bond (Mar’ 04) 1,500 6.8 years, 5.24% Unsecured Bond (Apr’ 05) 500 2 years, 3.9% Unsecured Bond (Apr’ 05) 500 2 years, 3.8% Unsecured Bond (Jun’ 06) 1,500 3 years, 6.39%, MLR – 1.55% Property Fund Pinklao (Dec’02) 759 10 years, MLR-1%, MLR–0.75%(amortising) Property Fund Pinklao (Dec’02) 253 10 years, 7% (amortising) Property Fund Centralworld (Jun’03) 1,974 10 years, MLR - 1.25% (amortising) Property Fund Centralworld (Jun’03) 1,316 10 years, 6.125% (amortising) Property Fund Bangna (Mar’03) 929 15 years, 4.75%, MLR-1.25% (amortising) Property Fund Bangna (Mar’03) 242 15 years, 6% (amortising) Project Finance - Chiangmai 2B(Dec’02) 400 7 years, 6.25% (amortising) Total(Long Term Borrowings & Current Portion) 11,112 Less Cash (3,690) Net 7,422
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