CHANGE IS EVER CONSTANT. ANNUAL REPORT 2015 SC Asset Corporation Public Company Limited TABLE OF CONTENTS MESSAGE FROM THE CHAIRMAN 4 BOARD OF DIRECTORS 6 THE BOARD OF DIRECTORS REPORT 25 REPORT OF THE EXECUTIVE COMMITTEE 28 REPORT OF THE AUDIT COMMITTEE 29 REPORT OF THE NOMINATION AND REMUNERATION COMMITTEE 31 REPORT OF THE RISK MANAGEMENT COMMITTEE 32 REPORT OF THE CORPORATE GOVERNANCE AND SOCIAL & ENVIRONMENTAL RESPONSIBILITY COMMITTEE 33 POLICY AND BUSINESS OVERVIEW 34 NATURE OF BUSINESS 38 RISK FACTORS 48 GENERAL INFORMATION OF THE COMPANY AND ITS SUBSIDIARIES 52 SHAREHOLDERS 54 DIVIDEND PAYMENT POLICY 57 MANAGEMENT 58 CORPORATE GOVERNANCE 83 CORPORATE SOCIAL RESPONSIBILITIES 145 INTERNAL CONTROLS AND RISK MANAGEMENT 146 DETAILS OF DIRECTORS, MANAGEMENT TEAM, ADVISOR, CONTROLLING PERSONS AND COMPANY SECRETARY 152 RELATED TRANSACTIONS 172 FINANCIAL HIGHLIGHTS 177 MANAGEMENT DISCUSSION AND ANALYSIS 178 FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS 187 “ Investors can study additional information of the Company from Annual Registration Statements (Report Form 56-1) provided on www.sec.or.th or on the Company’s website (www.scasset.com).” MESSAGE FROM THE CHAIRMAN Dear Shareholders, In the modern era of unexpected changes and severe competition in the business world, corporates must be prepared and capable in the face of any uncertainty and adversity. Similar to any other businesses, the ability to adapt to changes in circumstances, improve product quality and operational efficiency are key success factors in the real estate industry. These factors are consistently required from an early stage of market and consumer research to design process, product development, and pre-post sales services. Corporate communications and customer relations are other important elements that promote competitive advantage and sustainable growth. In 2015, SC Asset Corporation Public Company Limited (SC Asset) has promoted its business as well as its brand recognition in accordance with its five-year corporate strategy which targets for quality development and sustainable growth. One out of its five strategic plans is to penetrate a new market segment under new brands both for high-rise and low-rise developments. “Saladaeng One” - an ultra-luxury condominium project and “PAVE Rangsit” - a residential project featuring single detached houses in the range of Baht 3-5 million are examples of our achievement in this strategic aspect. It has also been the Company’s main policy to engage in premium property developments in all market segments, while emphasis on its professional standard of providing quality products and services with attentive care of all relevant details. Its housing designs are developed with keen concerns on exquisiteness, innovation, function, and usefulness that best suit dwellers’ needs and requirements. At present, the Company is the market leader in the development of luxurious housing for a price above Baht 15 million and it is always well trusted by home buyers. During the year, the Company paid attention to public activities aimed to encourage a unified and friendly society under the concept “Lively Neighbourhood”. It also hosted another year of its “SC Run For Good Mornings” mini-marathon that is intended to ignite social awareness on the importance of health and exercises, as well as charitable giving. All proceeds from this mini-marathon jointly contributed by the Company’s customers, employees, and business alliances were donated to the Pediatric Cardiac Surgery Foundation. In addition, the Company launched its innovative service known as “SC MINE”, which is an online after sales service for its “SC FAMILY” clientele intended to support modern lifestyles of the digital era. The Company also provides its “KNOCK KNOCK” estate agent service for its home buyers for sale or lease of properties purchased from the Company’s developments. A proven achievement of the Company is the continued growth in its better-than-expected sales despite a major economic slowdown with the lower-than-expected GDP growth of 2.8% for the past year. In 2015, the Company recorded total revenues of Baht 14,184 million, or a 12% growth from the previous year. Operating revenues was Baht 14,050 million, and profit for the year was Baht 1,895 million. Earnings per share was Baht 0.45. As of 31 December 2015, the Company and its subsidiaries had total consolidated assets of Baht 30,957 million, and total consolidated liabilities of Baht 17,732 million. The Company’s book value per share was Baht 3.16. During the year, the Company launched 6 new projects with a total project value of Baht 12,000 million. It has also operated 38 residential projects in the form of single detached houses, town houses, and condominium developments with a total investment value of Baht 34,860 million. - 4 - In light of professional management and good corporate governance, in 2015 the Company was awarded various honors such as: “Thailand Sustainability Investment 2015” from the Stock Exchange of Thailand for listed companies with sustainable operations, “ESG 100” certificate for listed companies with outstanding status in Environmental, Social and Governance (EGS) from Thaipat Institute, “Thailand Property Awards 2015” for a winner of Best Developer”, a winner of “Best Housing Development (Bangkok)”, and a highly commended status for “Best Affordable Condo Development (Bangkok)”, and “BCI ASIA AWARDS 2015” for the best Thai real estate developer for the year, also known as “Top 10 Developer Awards”, for four consecutive years from the BCI Asia Construction Information Company Limited and the FuturArc Journal All of the abovementioned awards and honors create pride and inspiration for the Company and encourage it to continue its pledge to work towards sustainable growth, social awareness, and environmental responsibility. Each and every step towards the Company’s goals and achievements could not materialize without its stakeholders’ support. Therefore, on behalf of SC Asset Corporation Public Company Limited, the Company would like to express its gratitude to our shareholders, clients, financial institutions, and business alliances for their ceaseless confidence and support, and would also like to thank our management and staff for their dedication. The Company hopes that we can work together effectively towards our mutual success and sustainable growth. ( Mr.Rath Kitivejosoth ) ( Ms.Busaba Damapong ) Chairman of the Board of Directors Chairman of the Executive Committee - 5 - THE BOARD OF DIRECTORS Mr. Rath Kitivejosoth Ms. Busaba Damapong Chairman of the Board of Directors Director Mr. Nuttaphong Kunakornwong Mr. Nathpath Ouajai Mr. Kunodom Tharmmaphornphilas Director Director Independent Director Mr. Prasert Samanawong Mr. Precha Sekhararidhi Mr. Songsak Premsuk Independent Director Independent Director Independent Director -- 24 6 - - “CHANGE IS EVER CONSTANT” CHANGE IS… ‘Change’ isn’t something new in big cities like Bangkok, where things shift, people rotate, and landmarks renew themselves at a speedy pace. As a real estate development corporation, SC ASSET realises that often times, we take a major role in scene alteration. The idea that we want to portray is that ‘change’ is constant and inevitable but what’s important are the things we leave behind during the particular change we are involved in. ‘CHANGE IS…’ encourages the notion of transformation and adaptability to the constant flow of change in our society without neglecting the very essence of a community and its integrity, friendship, the act of kindness, and the sharing among people. FOR GOOD MORNINGS Change brings opportunity, and we believe that a home is not just a place where we live, but fundamental to all things. Your every morning starts right at home, so we build them with precision and attention to detail, for it to be a place of comfort and warmth, to make a home a perfect beginning towards every path and every opportunity that change may bring. OUR COMMITMENT 5 PERFECTIONS 1. PRACTICAL DESIGN Adjustable space that fits individual needs 2. ACCESSIBLE LOCATION Easy access to every route in prime locations 3. SECURITY CARE Confidence in high level safety and 24 hour security 4. INTELLIGENT HOME Innovative technology for smart living 5. LIVELY NEIGHBOURHOOD Happy living in quality communities with warm friendship LIVELY NEIGHBOURHOOD Friendship among neighbours is the humble first step towards a community of sharing. At SC ASSET, we believe that sharing is a momentum that drives greater contributions, creativity and positive change in our society. OUR PRODUCTS IN 2015 Simulated image for advertising purposes only. GRANADA PINKLAO-PHETKASEM GRANADA Pinklao-Phetkasem - Luxury residence in the style of Classical Simplicity amidst the close-knit exclusive community, with only 36 residences. GRANADA Pinklao-Phetkasem is located on Kanchanaphisek (Bangkok Western Outer Ring) Road, near The Mall Bangkhae. Photograph taken on location. LIFE BANGKOK BOULEVARD RATCHAPHREUK-PINKLAO LIFE BANGKOK BOULEVARD Ratchaphreuk-Pinklao - Modern Tropical-Style Single Detached Houses surrounded by a peaceful community. The property can be accessed via multiple routes, and a short distance from near-by community malls such as The Crystal, The Walk, and The Circle Ratchaphreuk. Simulated image for advertising purposes only. LIFE BANGKOK BOULEVARD RAMINTRA 65 LIFE BANGKOK BOULEVARD Ramintra 65 - Single Detached Houses with the ‘Modern Tropical-Style’ Newly equipped with advanced home function and space maximisation