Report of the Audit Committee

CENTRAL PATTANA PUBLIC COMPANY LIMITED

Location 30th – 33rd Floors, The Offices at CentralWorld, 999/9 Rama I Road, Patumwan Sub-District, Patumwan District, Bangkok 10330, Thailand Telephone : +66 (0) 2667 5555 Facsimile : +66 (0) 2264 5593

Corporate Website: www.cpn.co.th

Registration No: 0107537002443

Year of Establishment: 1980

Business Overview: Develop and invest in retail property for rent comprising large-scale shopping complexes and other related supportive businesses. In addition, the Company invests in retail property fund and acts as a property manager of the fund.

Securities Information Common shares of Central Pattana Public Company Plc. were listed and traded on the Stock Exchange of Thailand in 1995 under the abbreviated security name of “CPN”.

Registered Capital: Baht 2,178,816,000

Issued and Paid-up Capital: Baht 2,178,816,000 Comprising ordinary shares of 2,178,816,000 shares Par value of Baht 1 per share

Contacts Corporate Secretary Telephone : +66 (0) 2667 5555 Ext.1678 and 1687 Facsimile : +66 (0) 2264 5593 Email : [email protected]

Investor Relations Telephone : +66 (0) 2667 5555 Ext.1614 and 1688 Facsimile : +66 (0) 2264 5593 Email : [email protected]

14 18 22 24 25 28 CONSOLIDATED MESSAGE FROM REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF THE OPERATIONAL & THE BOARD AUDIT COMMITTEE NORNIMATION & RISK MANAGEMENT CORPORATE FINANCIAL REMUNERATION COMMITTEE GOVERNANCE HIGHLIGHTS COMMITTEE COMMITTEE

57 66 70 73 76 77 ASSETS UNDER CPN'S FUTURE PROJECTS VISION & MISSIONS BUSINES STRATEGY CORPORATE VALUES NATURE OF MANAGEMENT BUSINESS

107 122 125 132 134 144 SUSTAINABILITY RISK FACTORS CAPITAL STRUCTURE ORGANIZATION MANAGEMENT NOMINATION OF MANAGEMENT CHART STRUCTURE DIRECTORS AND MANAGEMENT

243 252 256 257 260 261 MANAGEMENT GENERAL LIST OF COMMITTEE EXISTING PROJECTS REFERENCE FIRMS INFORMATION FOR BIOGRAPHY INFORMATION OF IN SUBSIDIARIES MANAGED BY CPN INVESTORS BUSINESS HELD BY THE COMPANY 10% UPWARD

CONTENTS 30 32 36 38 42 49 BOARD OF AWARDS OF GREAT 2012 YEAR IN BRIEF ECONOMIC AND 2012 FINANCIAL CPN TODAY DIRECTORS AND PRIDE IN 2012 RETAIL INDUSTRY PERFORMANCE MANAGEMENT OVERVIEW IN 2012 REVIEW TEAM

82 83 85 99 102 106 GROUP STRUCTURE REVENUE CORPORATE ORGANIZATION HUMAN RESOURCE HUMAN CAPITAL OF THE COMPANY STRUCTURE OF THE GOVERNANCE DEVELOPMENT MANAGEMENT DEVELOPMENT AND ITS COMPANY AND ITS SUBSIDIARIES SUBSIDIARIES

147 150 161 162 163 242 REMUNERATION OF CONNECTED RESPONSIBILITY AUDIT REPORT OF FINANCIAL AUDITOR'S FEE DIRECTORS AND TRANSATIONS OF THE BOARD CERTIFIED PUBLIC STATEMENTS MANAGEMENT OF DIRECTORS ACCOUNTANT TO FINANCIAL STATEMENT To be the most Most Admired World-Class admired and dynamic Dynamic Regional Retail Developer Rewarding regional retail property Retail Developer Retail Developer Of All Stakeholders Experience developer with world-class rewarding experience Thailand’s shopping complex pioneer, through decades of hard-earned experience, is still on its march to perfection with commitment to success in larger arenas. Success that accompanies everyone’s happiness.

A force to be reckoned with in Thailand’s retail property management-and the undisputed leader-is now poised for international ventures.

Innovations are what CPN has brought to today’s shopping scene. Yet, by no means do we intend to stop there. We strive to become the definitive source of merchandise for customers and business partners alike—in short, the shopping centers of choice.

What makes us a leading brand is our string of successes, recognized by world-class institutions. As such, we’re constantly offering breakthrough lifestyles, sophistication, and diversity-above all, experience beyond expectations.

At CPN, success doesn’t come from a handful of people. Rather, we attribute our success and quality to teams dedicated to the same goals-total trust from customers, business partners, and tenants. 14 | 15 CPN ANNUAL REPORT 2012

CONSOLIDATED OPERATIONAL AND FINANCIAL HIGHLIGHTS

82% 5% Office Retail 4% Hotel 4% Food & Beverage 5% Other Income

Remarks : Excludes interest income, dividend income, share of profit from associate, and non- recurring income. 761,111 97% 967,430 96% 964,612 95% 1,085,102 96% 1,125,492 97% 144,280 94% 163,746 86% 163,991 81% 175,831 87% 169,133 96% ,08 ,09 ,10 ,11 ,12 ,08 ,09 ,10 ,11 ,12

SHOPPING Ratail leasable area (sqm) OFFICE Office leasable area (sqm) CENTER Occupancy rate (%) Occupancy rate (%)

Ratail leasable area (sqm) Office leasable area (sqm) Occupancy rate (%) Occupancy rate (%) 15

, 43,784 , 50,895 53,869 64,059 70,284 , 28,610 , 31,887 , 34,952 , 43,611 , 44,384 , 15,173 , 19,008 , 18,918 , 20,448 , 25,900 08 09 ,10 ,11 ,12 08 09 10 11 12 08 09 10 11 12

TOTAL ASSETS TOTAL LIABILITIES TOTAL SHAREHOLDERS’EQUITY (Million Baht) (Million Baht) (Million Baht) 9,271 11,755 11,388 12,766 17,687 2,158 2,292 1,552 1,871 4,413 0.99 1.05 0.71 0.86 2.03 6.65 8.57 8.48 9.16 11.64 ,08 ,09 ,10 ,11 ,12 ,08 ,09 ,10 ,11 ,12 ,08 ,09 ,10 ,11 ,12 ,08 ,09 ,10 ,11 ,12

TOTAL REVENUES ADJUSTED NET PROFIT ADJUSTED EARNINGS BOOK VALUE PER PER SHARE SHARE (Million Baht) (Million Baht) (Baht) (Baht) 16 | 17 CPN ANNUAL REPORT 2012

As at 31 December 2008 2009 2010 2011 2012

Operational performance of assets under CPN’s management

Leaseable Area (square metres) 911,764 1,137,549 1,134,976 1,267,306 1,300,998

> Retail 761,111 967,430 964,612 1,085,102 1,125,492 > Office 144,280 163,746 163,991 175,831 169,133 > Hotel (room) - 255 557 561 561 > Residential 6,373 6,373 6,373 6,373 6,373

Occupancy Rate (%)

> Retail 97% 96% 95% 96% 97% > Office 94% 86% 81% 87% 96% > Hotel - 68% 50% 45% 76% > Residential 69% 67% 67% 52% 59%

Consolidated Financial Results Unit : (‘000 Baht)

Total Revenues 1) 9,270,743 11,754,650 11,387,613 12,765,702 17,687,323

Revenue from Rental & Service, Food & Beverage, Hotel 8,598,631 10,934,257 10,529,901 11,950,730 16,761,773

Cost of Rental & Service, Food & Beverage, Hotel 4,889,596 6,696,678 6,924,476 7,783,446 9,433,399

Gross Profit 2) 4,381,147 5,057,972 4,463,137 4,982,256 8,253,924

Net Profit 2,185,788 4,951,623 1,124,866 2,058,123 6,188,698

Adjusted Net Profit 2) 2,157,858 2,292,460 1,551,950 1,871,108 4,412,862

Remarks: 1) Excludes interest income, dividend income, share of profit of associate, and non-recurring incomes. 2) Excludes non-recurring items. 3) Net interest-bearing debt excludes loans from related parties. 4) Excludes minority interest in subsidiaries. 5) Basic earnings per share only attributable to ordinary shareholders. 17

As at 31 December 2008 2009 2010 2011 2012

Consolidated Financial Position Unit : (‘000 Baht)

Total Assets 43,783,780 50,895,450 53,869,402 64,059,165 70,283,819

Total Liabilities 28,610,457 31,887,348 34,951,652 43,610,988 44,383,845

Net Interest-Bearing Debt 3) 12,768,404 14,128,862 17,452,337 24,300,067 21,357,620

Total Shareholders’ Equity 15,173,322 19,008,102 18,917,749 20,448,177 25,899,974

Retained Earning 10,089,338 14,539,840 14,339,464 15,828,190 21,210,726

Issued and Paid-up Share Capital 2,178,816 2,178,816 2,178,816 2,178,816 2,178,816

Total Number of Shares (‘000 Shares) 2,178,816 2,178,816 2,178,816 2,178,816 2,178,816

Consolidated Financial Ratios

Net Interest-Bearing Debt to Equity 3) (time) 0.84 0.74 0.92 1.19 0.82

Gross Profit Margin 2) (%) 47.26 43.03 39.19 39.03 46.67

Net Profit Margin 2) (%) 22.02 18.74 13.03 14.06 24.05

Return on Assets (%) 5.40 10.46 2.15 3.49 9.21

Return on Equity 4) (%) 15.89 29.85 6.06 10.71 27.31

Earnings per Share 5) (Baht) 1.00 2.27 0.52 0.94 2.84

Adjusted Earnings per Share 2) 5) (Baht) 0.99 1.05 0.71 0.86 2.03

Book Value per Share (Baht) 6.65 8.57 8.48 9.16 11.64

Dividend per Share (pay in the following year) (Baht) 0.33 0.58 0.25 0.37 0.95 MESSAGE FROM THE BOARD TO THE SHAREHOLDERS OF area. Customer response has been CENTRAL PATTANA PUBLIC tremendous, whether service users ROBUST FINANCIAL PROFILE COMPANY LIMITED or leading shop owners that added to CPN and its subsidiaries grossed its strength and diversity. Indeed CPN revenues of Baht 19,541 million this It was another terrific year for our takes great pride in this accomplish- year, a rise of 50% from last year, and business, with the launches of all our ment. planned going very smoothly in both netted a profit of Baht 6,189 million performance and outcomes, unlike two Other current projects are ongoing in a this year, a rise of 20% from last year. years ago, when CentralWorld under bid to make CPN-managed properties The sharp rise in performance results went prolonged suspension and truly complete, modern, and responsive naturally came from an extraordinary CentralPlaza Lardprao underwent a to customers’ needs while supplementing item, namely the profit derived from the major overhaul. And while the overall long-term value to properties. inclusion of The Offices at CentralWorld economic conditions this year was with CPNCG (CPN Commercial Growth expanding at a slower rate in line with To lay down a firm domestic business Fund). Without this item, however, the the world economy, CPN posted foundation, CPN has defined a plan to gross revenue and gross profit of CPN outstanding results, fulfilling its constantly launch new projects over the and its subsidiaries would still be an strategic plans by expanding its next five years. Under the 2011-2015 outstanding 31% and 130% respectively, branches while the share price rose business plan, which strives for 15% attributable to the launches of new 117% from year-end 2011. CAGR, CPN is determined to develop projects and steady rises in rental rates new projects in both Bangkok and pro- for current projects, not to mention vincial areas, with a steady launch of efficient cost and expense control. CONSTANTLY DEVELOPING OUR 3-4 projects a year. Domestic ones SHOPPING COMPLEXES under formally-announced develop- The above-mentioned capital growth ment consisted of CentralPlaza Ubon- by including The Offices at Central- The year saw two shopping com- ratchathani, CentralFestival Hatyai, and World in CPNCG garnered an excellent plex projects materialize : Central CentralFestival Chiangmai, all due for response from investors, with pro- Plaza Suratthani (October) and Central launch in 2013. As for business develop- spective bookers at the initial offering Plaza Lampang (November). With oc- ment in Asian countries, CPN will need exceeding 6 times the actual volume for cupancy rates exceeding 95% on the time for careful investment deliberation, retail investors and 3.5 times the actual launch dates, both received excellent since these are new markets, a differ- volume for institutional investors. The responses from tenants and custom- ent tune from the domestic market. number of shareholders represented ers alike. Apart from these, CPN inau- CPN will continue to stress income in this fund exceeds 17,000, which tops gurated the extension of CentralPlaza growth in current shopping complexes all other property funds. The par price Udonthani, with an addition of 25,000 together with expansion of new ones. on the first day of trade on the Stock sq.m. in leasable area and revamped or Exchange of Thailand was Baht 13, a relocated shops in the original portion, Incidentally, CPN still maintains its 26% rise from the initially offered price thus making this CentralPlaza a great market leadership among shopping of Baht 10.30 a unit. shopping complex in the Northeast, with complex developers, with some one more than 250,000 sq.m. in project million square meters of leasable area. 20 | 21 CPN ANNUAL REPORT 2012

We continue to steer our capital struc- mation Mission” (T-Mission). Completed Our overall success this year could not ture policy carefully, maintaining the net were the missions of restructuring and have happened without the unified interest-bearing debt to equity ratio at HRIS (Human Resources Information cooperation of the CPN executives and 0.82 time as of year-end 2012, so you System). The work process improve- employees, and so the Board wishes may rest assured about our financial ment being executed along with to take this opportunity to express its status that we will encourage CPN to Enterprise Resource Planning (ERP) is sincere appreciation to everyone for grow in a sustainable manner over the ongoing and due for a soft launch by their devotion to duties. Indeed, you have long term. the end of the second quarter of 2013. been the cornerstone of our success and the key to our robust growth. In view of this year’s performance Committed to developing CPN toward outcomes and overall financial status, excellence, today we have shown More important, the Board is grateful coupled with CPN’s potential to secure through our managerial skills and to the shareholders, tenants, business capital for its future investment plans, outcomes acceptance from national allies, financial institutions, public and the Board decided to table for the and international entities. The variety private agencies, the media, and all its shareholders’ consideration on 26 April of awards won this year—for project customers for their excellent trust 2013 approval of Baht 0.95 a share in design and development, branding and and support. Please be assured that dividend payment, which approximates marketing, management and finance, CPN will remain committed to right- 33.4% of the net profit this year. corporate governance, and environ- eousness and corporate governance in mental conservation—speak volumes the best interests of all stakeholders. of our caliber of leadership in shopping We will also remain committed to PROFESSIONAL MANAGEMENT complex development and relentless developing CPN toward the vision of This year, CPN executed its restruc- self-improvement; these qualities, we being “the most admired and dynamic turing and internal work processes to believe, will bring sustainable growth to regional retail property developer with accommodate and encourage future CPN and groom it for regional shopping world-class rewarding experience”. business expansion under the “Transfor- complex developer.

Mr. Suthichai Chirathivat Chairman

Mr. Kobchai Chirathivat President & CEO 21

MOURNING MR. VANCHAI CHIRATHIVAT

The CPN workforce fondly remembers Mr. Vanchai Chirathivat, Honorary Chairman, who passed away recently. Knowledgeable and with a vision for business management in the Central Group that had made it the retail business leader for over 60 years, he was truly instrumental in trailblazing Central Department Store, the prototype of Thai department stores.

One might say that CPN’s success recorded throughout its existence owes much to the fact that CPN is run by the Central Group, which in turn has a variety of businesses, including department stores, hotels, restaurants, and diverse retail businesses. Certainly, Central Group’s assorted businesses are strong business allies with such intimate relationship with CPN that has supported CPN’s growth from the beginning and will continue to do so in the future. 22 | 23 CPN ANNUAL REPORT 2012

REPORT OF THE AUDIT COMMITTEE

TO THE SHAREHOLDERS: Reviewed were the Company’s compli- ADEQUACY OF INTERNAL ance with SEC laws, SET’s regulation, Consisting of four qualified independent CONTROL SYSTEM, INTERNAL and applicable laws; in addition, the directors, the Audit Committee is AUDIT, RISK MANAGEMENT, Committee regularly monitored the chaired by Mr. Paitoon Taveebhol, who AND GOOD CORPORATE management’s improvement approach. is knowledgeable and experienced in GOVERNANCE The Committee considers the Company reviewing the financial statements, is in full compliance. with Mr. Chackchai Panichapat, Mrs. Reviewed were the audit reports of Sunandha Tulayadhan, and Mr. Karun Internal Audit and of the external auditor Kittisataporn as members. concerning assessment of the internal TRANSACTIONS WITH POTENTIAL control system, risk management, and CONFLICTS OF INTEREST In 2012, there were total of 11 Audit good corporate governance, as well Committee meetings, whereby all as the improvement of executives’ The Audit Committee has given Audit Committee members attended performance as recommended in such emphasis in reviewing, on a quarterly all these meetings. At some meetings, reports, while internal processes of basis, all connected transactions as well it consulted the President & CEO, the whistleblower system and complaint as those transactions that may involve management, the external auditor, the handling were also considered. It is the possible conflicts of interest in full com- internal auditor, and non-executive Committee’s view that the Company’s pliance with all laws and regulations of directors as seen necessary and internal control system is adequate and the Stock Exchange of Thailand. It provided candid views and recom- appropriate. assigned the Internal Audit to make the mendations. The Committee reported initial assessment annually, as well as, its performance to the Board of Direc- The Audit Committee had reviewed always requested the external auditor tors on six occasions, with the following the annual internal audit plan for the to undertake a full review of all these summary of performance and views: year which was based on the risk- transactions. The Audit Committee based audit plan and also the outputs considers these connected transac- based on this plan, as well as regularly ACCURACY, COMPLETENESS, tions part of the normal course of consulted Internal Audit executives in AND RELIABILITY business with regular commercial the absence of the management. In OF FINANCIAL STATEMENTS conditions, sensible and fair conditions, addition, the outcomes of the quality and in the best interests for the assurance review, evaluated by a Reviewed were the quarterly and Company. annual financial statements, significant qualified independent external firm, accounting policies and financial were satisfied. Therefore, the Audit reports, coupled with the consideration Committee considers that the Internal SUITABILITY, CONSIDERATION, of the audit scope and plans, audit Audit activities of the Company are SELECTION, AND ENDORSEMENT methods, and detected issues, jointly independent and appropriate. OF THE EXTERNAL AUDITOR investigated by the management and The Audit Committee made an assess- the external auditor. It is the Committee’s COMPLIANCE WITH SECURITIES ment of the degree of independence of view that the Company’s financial AND EXCHANGE COMMISSION the external auditor and reviewed their reports, prepared under generally (SEC) LAWS, THE STOCK activities outputs of 2012, which was accepted accounting procedures, are EXCHANGE OF THAILAND’S their 7th year as the external auditor of accurate, complete, and reliable with a (SET’S) REQUIREMENTS, AND the Company. However, the external sensible choice of accounting policies. APPLICABLE LAWS auditor authorized to sign the Company’s 23

audited financial statements has The Audit Committee had made a self- been changed since 2009. The overall assessment of its overall performance performance of the external auditor is for 2012 on 18 January 2013; whereby considered fully satisfactory; and they this assessment was in 2 parts: Firstly, has been fully independent in their the overall activities of the Audit audit activities. Additionally, the Audit Committee during the year. And Committee had two meeting with the secondly, the specific activities of the external auditor without any present of Committee, which in total consist of the management team to obtain their 6 activities, namely : (1) reviewing of opinions on the Company’s operational the financial reports to ensure theirs activities and the coordination with accuracy and adequacy; (2) reviewing relevant member of the management that both internal control systems team. and internal audit functions were fully effective and efficient; (3) reviewing As for the selection and appointment that the Company activities were in full of the external auditor for 2013, the compliance with all the requirements of Committee has considered the the securities laws and regulations of performance and scope of work in the Stock Exchange of Thailand as well comparison to the proposed audit fees as the laws relevant to the business and agreed to appointed sector in which the Company operated; (4) reviewing and selecting the pro- KPMG Phoomchai Audit Limited as posed appointment of the Company’s CPN’s and its subsidiaries’ external external auditor; (5) reviewing all auditor for 2013 with total audit fee of connected transactions; and (6) Baht 6,010,000. preparing and submitting the report of the Audit Committee. It is the overall OVERALL VIEW AND REMARKS view of the Audit Committee that it AS A RESULT OF PERFORMANCE has performed its duties adequately UNDER THE CHARTER and completely.

Mr. Paitoon Taveebhol Chairman of the Audit Committee 24 | 25 CPN ANNUAL REPORT 2012

REPORT OF THE NOMINATION AND REMUNERATION COMMITTEE

In 2012, the Nomination and Remunera- its growth, domestically and tion Committee held two meetings and internationally, effectively and reported its performance to the Board efficiently. for acknowledgment after each meeting, summarized below: >> Evaluated the President & CEO’s performance in the preceding year >> Recruited suitable candidates for and worked with the President & tabling to the Board and the share- CEO in setting goals and evaluation holders’ meetings at the 2012 AGM methods for his performance in the for their consideration. The Company current year. offered minor shareholders a chance to nominate directors from >> Followed up on the progress and 15 September 2011, to 15 January provide opinions on the Company’s 2012. Since no such nomination human capital policy and manage- emerged, the Committee recom- ment as well as organizational mended that the retired directors development, including guidelines who finished their terms in 2012 for personnel development, com- should be reappointed to another munication and staff engagement term. The 2012 AGM approved in support of business expansion. every nominated director. >> Reviewed its own charter for more >> Considered the 2012 compensation alignment with the situation and for the Board and the subcommit- best-practice guidelines of regula- tees, comprising the Audit tors. Committee, the Nomination and >> Deliberated and provided opinions Remuneration Committee, and on the implementation of the the Risk Management Committee, ASEAN CG Scorecard criteria under and then submitted it to the Board the responsibility of the Board of and the shareholders’ meetings for Directors to lead to the develop- consideration and approval, taking ment of relevant international into account their responsibilities standards and to comply with the and performance related to revenue Company’s business. earned and other relevant factors. The compensation amounts are The Nomination and Remuneration also compared with industry peers Committee cautiously completed its and met with approval from the duties with integrity, based on the shareholders. responsibilities designated in its charter. It adhered to the principle of good Deliberated and provided opinions >> governance adequately and suitably for on succession plans for senior the balanced and sustainable benefits Mr. Chackchai Panichapat executives to ensure continuity and of all stakeholders. Chairman of the Nomination and consistency with CPN’s strategic Remuneration Committee plans as well as to accommodate 25

REPORT OF THE RISK MANAGEMENT COMMITTEE

CPN has set a clear policy of treasuring least four times a year. The committee risk management to supplement value also reviews major risk factors by to its shareholders. To this end, CPN conducting a corporate risk survey, focuses on developing and promoting arranging a risk prioritization workshop risk management practices across the with executives and identifying risk Company and defines a sustainable risk owners to reduce risk to the acceptable management policy to identify key risk level. In 2012 the committee has factors that encompass all aspects of emphasized on the following areas: corporate and operational risks. Emphasis is on either managing such STRATEGIC RISKS COMPRISING: risks to an acceptable level or transferring the risks appropriately. Business Readiness Risks–In supporting Two risk management committees are the policy of growth through domestic therefore currently in place: branch expansion and tackling fierce domestic competition, CPN plans to The Operational Risk Management constantly expand its business by Committee considers policies, adhering to its risk management strategies, structure, and framework principles; investment through feasibility for the management of operational studies, personnel development, risks, at the head office and each business partners’ readiness analysis, shopping complex, and presents to its as well as maintaining the efficiency and corporate counterpart an overview of competitiveness of shopping center major risks, mitigation methods, and management. outcomes of risk monitoring. This committee meets at least every Foreign Investment Risks–CPN plans quarter. CPN has focused on the to expand business in foreign countries operational risk management and in response to its policy of constant continuously developed a work plan for business growth. An overseas all relevant departments investment team has been set up to study proper investment directions, The Corporate Risk Management opportunities, and business formats Committee considers policies, under each country’s environment. strategies, structure, and framework for enterprise risk management. Besides supporting the top management in OPERATIONAL RISKS COMPRISING: defining a risk management structure to cover the entire company, this Change Management Risks in adopting committee executes risk reviews, new business processes–Having follow-ups, and evaluation of the developed and installed an IT system efficiency and effectiveness of overall that applies the concept and risk management, with meetings held at management method of ERP 26 | 27 CPN ANNUAL REPORT 2012

(Enterprise Resource Planning) to to effectively manage incidents at serve business requirements, CPN is all level of severities to minimize the equipped with modern and effective impacts and prevent any disruption to IT technology that covers its major the business. This activity is a part of processes. Installed by an experienced the Business Continuity Planning (BCP) and reliable business partner, this system also aligns with CPN’s vision and strategies that focus on domestic and FINANCIAL RISKS COMPRISING overseas growth. Capital Sufficiency Risks–In sustaining Recruitment and personnel its strength under the capital-intensive engagement–People Development requirement of the real-estate Committee is in place to set out policies business and fierce competition, CPN and strategies for every level of acquires sufficient funding at an personnel management and appropriate cost to retain its low development to be in line with CPN’s debt-to-equity ratio. The Company expansion plan and domestic maintains its flexibility in expanding competition. business and reduces financial risks by endeavoring to achieve robust financial statements with a low level of debt, as HAZARD RISKS COMPRISING: well as leveraging appropriate financial instruments in sourcing capital. Accident and other threats related to shopping center management–CPN CPN constantly reviews its risk has appointed a loss prevention team management system to ensure that under the supervision of its Operational the system properly and efficiently Standard Promotion and Supervision encompasses every risk factor under Bureau. To establish the awareness of the assigned priorities. By integrating risk factors such as fires, floods and all risk factors in the management others threats, CPN has developed a at strategic and operating levels, the manual as its operational regulations system is applied throughout the for every branch to study, formulate Company. action plans based on simulated incidents, conduct constant drills, and monitor the outcomes to ensure compliance.

Political uncertainty and political violence threats–CPN has set up an emergency management committee Mr. Paitoon Taveebhol Chairman of Risk Management Committee 27

CentralPlaza Khonkaen 28 | 29 CPN ANNUAL REPORT 2012

REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

In compliance with the policy set forth the cultivation of ethics and honest together with society, the committee by the Board of Directors, Central conduct, publicizing communication also encouraged all CPN-managed Pattana Public Company Limited channels for stakeholders to report shopping centers to participate in operates its business with strong suspicious cases or file complaints, project initiation. commitment to its Code of Conduct and protecting the rights of whistle- and Corporate Governance Policy, with blowers. 4. Deliberated and provided advices the Corporate Governance Committee on the establishment of Sustainable overseeing relevant programs and This year, CPN also continually Development Department (SD) to communicating with all personnel to communicated the revised Code of take charge of CPN’s SD operation. ensure full compliance. The committee Conduct and Corporate Governance Currently, the department’s structure held three meetings this year and Policy completed in 2011 via various and operating direction are under reported its performance to the Audit channels, such as email, intranet, the consideration. Committee and the Board as sum- in-house magazine, bulletin boards, 5. Acknowledged and followed up on marized below: e-learning media, and staff orientation, to ensure strict compliance compliance with ASEAN CG Score- 1. Deliberated on the Corporate by current and new employees. All card and ensured adequate Governance Promotion Project and CPN directors, executives, and information disclosure under this provided suggestions in line with employees must put their signatures program. SET’s regulations and the Organisa- on acknowledgment forms and Firmly committed to running its tion for Economic Co-operation and comply with CPN’s Code of Conduct business while consistently reporting Development (OECD)’s corporate and Corporate Governance Policy under corporate governance principles, governance policy in five principles: as a part of the Company’s dicipline. and with the excellent support and 1) Rights of Shareholders 2. Acknowledged the assessment cooperation of the directors, the 2) Equitable Treatment of Share- results of corporate compliance on management, and staff, CPN won both holders CPN’s regulation, rules, ethical code, domestic and international awards this 3) Roles of Stakeholders and policies. Summarized informa- year, including: 4) Disclosure and Transparency tion obtained from employees’ >> SET Awards 2012 (Top corporate 5) Responsibilities of the Board. self-assessment forms was applied governance report Awards), to rank the communication of sponsored by SET and Money & The committee focused on vari- specific information to ensure Banking Magazine, for the third time ous activities, such as informing employees’ proper understanding and the second year in a row. stakeholders about connected of regulation, rules, the ethical code, transactions, organizing “execu- and policies. tives meet employees” activities to prevent conflicts of interests from 3. Deliberated and provided suggest- connected transactions, developing ions on CSR promotion projects. e-learning media to spread Code Seeking to encompass every of Conduct and Corporate Govern- neighboring community and achieve ance Policy, producing media for solid growth for CPN’s business 29

>> Among listed companies, CPN’s corporate governance report got an ‘Excellent’ rating based on the evaluation of its 2012 CG report for the fourth consecutive year by the Thai Institute of Directors (IOD). The evaluation result also ranked CPN among the top quartile of corporations with market capitalization of Baht 10 billion or higher.

>> Corporate Governance Asia Annual Recognition Awards 2012 and Asian Corporate Director Recognition Awards 2012, sponsored by the Hong Kong-based Corporate Governance Asia Magazine.

Mr. Naris Cheyklin Chairman of Corporate Governance Committee 30 | 31 CPN ANNUAL REPORT 2012

BOARD OF DIRECTORS AND MANAGEMENT TEAM Mr. S Mr. P Mr. C Mrs. S Mr. K Mr. K Mr. S

01 02 03 04 uthichai Chirathivat 05 aitoon Taveebhol 06 hackchai Panichapat 07 unandha Tulayadhan arun Kittisataporn anchit Bunajinda Chirathivat uthikiati 01 02 03 heyklin Mr. S Mr. S Mr. S Mr. P Mr. K Mr. S Mr. Naris C

08 09 10 11 uthichart Chirathivat 12 udhisak Chirathivat 13 udhitham Chirathivat 14 rin Chirathivat obchai Chirathivat udthidej Chirathivat 08 09 10 ttaya Chirathivat ttaya ttakit Tangpoonsinthana Ms. W Mr. S Mr. S Mrs. Nar Mr. T Ph.D. Na Mrs. P

15 16 17 18 Chirathivat allaya 19 omchart Baramichai 20 uthipak Chirathivat 21 erachart Numanit anida Sooksridakul 15 16 17 31

04 05 06 07

11 12 13 14

18 19 20 21

AWARDS OF GREAT PRIDE IN 2012

The year 2012 marked another milestone year for CPN. The 15 prestigious achievements by leading organizations, domestic and international, represent just one forward step for us. We are convinced that the application of shopping complex innovations to our development and management in parallel with consistently sound organizational management will lead CPN on a path to sustainable growth and the most admired and dynamic regional retail property development and management. 34 | 35 CPN ANNUAL REPORT 2012

AWARDS OF GREAT PRIDE IN 2012

“Outstanding Building Award for Safety Concern in Office Building Category” was presented to The Offices at CentralWorld by Bangkok Public Works Department

“Best Hotel Architectural Design-Thailand Property Awards 2012” was presented to Hilton Pattaya Hotel by Inside Media

“Best Luxury Emerging Hotel- World Luxury Hotel Awards 2012” was presented to Hilton Pattaya Hotel by World Luxury Hotel Award

”Asia Pacific Property Awards 2012 in Retail Development for Thailand (National Awards)-Commercial Renovation/Redevelopment” was presented to CentralPlaza Lardprao by International Property Awards in associated with Bloomberg Television

”Asia Pacific Property Awards 2012 in Retail Development for Thailand (National Awards) - Retail Architecture” was presented to Central Plaza Chiangrai by International Property Awards in associated with Bloomberg Television

“BCI Asia Top 10 Developer Awards 2012” was presented to Central Pattana Plc. by BCI Asia Construction Information Sdn Bhd and FuturArc Journal

AWARDS IN BRANDING AND MARKETING

“2012 Best-of-The Best VIVA Award Honoree –Marketing” was presented to CentralWorld by International Council of Shopping Centers (ICSC)

AWARDS IN MANAGEMENT AND FINANCE

“SET Awards 2012 - Top Corporate Governance Report Awards” was presented to Central Pattana Plc. by The Stock Exchange of Thailand for the third time and the second year in a row.

“Corporate Governance Asia Annual Recognition Awards 2012” was presented to Central Pattana Plc. by Corporate Governance Asia Magazine 35

“Asian Corporate Director Recognition Awards 2012” was presented to Mr. Kobchai Chirathivat, President & CEO, by Corporate Governance Asia Magazine

“Entrepreneur of the Year Awards” was presented to Mr. Kobchai Chirathivat, President & CEO, by Enterprise Asia Magazine

“Excellent Workplace for Labor Relation and Social Welfare 2012“ was presented to Central Pattana Plc. by Ministry of Labour

“Narcotics Control in Work Place Certification” was presented to Central Pattana Plc. by Department of Labour Protection and Welfare.

AWARDS IN ENVIRONMENT CONSERVATION

1st runners-up for “ASEAN Energy Awards 2012 – Energy Management in Building for Large Building” was presented to Central Plaza Rattanathibet by ASEAN Ministers on Energy Meeting (AMEM)

5 “Thailand Energy Awards 2012” by Department of Alternative Energy Development and Efficiency, Ministry of Energy as follows:

>> “Organisation that promote Energy Saving and Energy Substitution” was presented to Central Pattana Plc.

>> “The Best Energy Efficiency Award under the category of designated building” was presented to CentralPlaza Rattanathibet, CentralPlaza Chiangmai Airport and CentralFestival Pattaya Beach

>> “The Best Innovation for Energy Efficiency Award under the category of new building” was presented to CentralPlaza Khonkaen 36 | 37 CPN ANNUAL REPORT 2012

04 05 06-08 April May June - August

>> CPN inaugurated the extension of >> CPN was affirmed its corporate and >> CPN signed a 5 to 7-year loan CentralPlaza Udonthani with addi- issue ratings at A+ by TRIS Co., Ltd., agreement with a financial institution tional leasable area of 25,000 sq.m. reflecting the Company’s strength, for Baht 3,000 million, reflecting This project included renovation and credibility and growth. the Company’s credibility and relocation of shops in the existing financial strength. mall. Thus, CentralPlaza Udonthani has become a great shopping com- >> CPN issued 1.5-year and 5-year plex in the Northeast, with more unsecured debentures, in the amount than 250,000 sq.m. in total project of totaling Baht 1,500 million, offered area. It has received excellent exclusively to institutional investors, feedback from both customer and which were extremely well received. well-known tenants which enhanced its strength and diversity.

>> CPN held the annual general shareholders’ meeting number 1/2012 covering two major agenda items: 1) approval of its financial statements ending on 31 December 2011, and 2) approval of dividend payments of Baht 0.37 per share for its performance in 2011.

2012 YEAR IN BRIEF 37

09 10 11 September October November

>> CPN raised fund by transferring The >> CPN unveiled CentralPlaza Surat >> CPN unveiled CentralPlaza Lampang, Offices at CentralWorld to CPN thani, the trade center of the up- located in a high-potential area. The Commercial Growth Property Fund per South. With a location on a new project is in the heart of Lampang, on (“CPNCG”) for in the amount of Baht economic road that links the city Lampang – Laos Super Highway Road, 4,394 million, garnered an excellent with the airport. The project is well which connects the city with the response from investors, with respond to the city expansion and airport. The complex is also prospective bookers at the initial easily accessible forgrowing market surrounded by major sites, such as offering exceeding six times the of local and foreign tourists. Fur- a university, higher education actual volume for retail investors thermore, the project is surrounded institutions, colleges, hospitals, and 3.5 times the actual volume for by major attractions, educational and banks. Lampang has a major institutional investors. The number institutions, and government agen- economic route that connects of shareholders represented in this cies. Suratthani is also a major trade Thailand with Laos and China, as fund exceeds 17,000, which tops and tourism spot of the southern well as connects itself to seven all other property funds. The par region, thanks to its connecting to high-potential Northern provinces. price on the first day of trade on other five provinces. Moreover, it locates near major the Stock Exchange of Thailand was tourist destinations, including Baht 13, a 26% rise from the initially historical sites and a national park. offered price of Baht 10.30 a unit. As a result, Lampang is one of the major tourist destinations in the North, welcoming local and foreign tourists throughout the year. This significantly increases the potential purchasing power.

38 | 39 CPN ANNUAL REPORT 2012

ECONOMIC AND RETAIL INDUSTRY OVERVIEW IN 2012

2012 ECONOMIC OVERVIEW electrical appliance sectors. To fulfill due to fierce market competition. domestic demand, production was The decrease in European tourists, This year the Thai economy has fully speeded up with surging inventories, caused by the economic crisis in their recovered from the Great Floods of late which gradually drove the recovery of home countries, also affected other 2011. Driven by consumers’ increased the export sector—only to slow down businesses beyond the tourism sector income and confidence, the production later with the Euro crisis. because there were fewer tourists to sector in all regions of the country grew buy goods and services in Thailand. with sufficient capacity to fulfill do- Despite the steady economic recovery mestic demand. Yet, the export sector during the first half of this year, impacts Private-sector investments slowed suffered from the impact of the Euro of the global economic situation and down after businesses had completed crisis and expanded only moderately. export slowdown started being felt their restoration in the first half of this in the second half. These retarded year. Still, there were continual invest- In the first quarter, the economy steadily the overall export sector in relation to ments in productivity improvement and recovered from increased consumption the same period of last year, with the labor replacement. With the steady due to the restoration and replacement exception of the food product group, launching of new projects in the real- of flood-ravaged properties in tandem which continued its healthy expansion. estate business, especially community with the pent-up demand. Factors To alleviate the impacts of the Euro cri- malls, continued expansion of this contributing to the economy’s rapid sis and Chinese economic deceleration, sector is expected in responding to recovery included financial relief meas- export businesses adjusted themselves consumers’ changing behavior and ures for flood victims provided by the by penetrating new markets in the Mid- needs. government and financial institutions, dle East and ASEAN, which replaced the industrial sector’s investment in the only some parts of their staple markets. This year’s economic growth rate reparation and restoration of business Therefore, businesses still need more surged from 0.1% in 2011 to 5.7%, sites, manufacturing plants and ma- time to implement their production, caused by the low level of economic chinery, together with flood prevention sales, and marketing strategies to activities last year due to the Great investments. Gradually, all industries develop their long-term competitiveness Floods, the restoration and replace- restored their production and service in these new markets. ment of properties early this year, and capacities to pre-flood levels, which the pent-up demand from last year. clearly indicated the fully recovered In the second half of this year, the overall The automotive, electrical appliance production and export sectors. domestic production and consumption and food industries were expanding expanded well, thanks to government quite remarkably. This year’s headline The second quarter saw a steady measures, the rising minimum wages inflation fell to 2.2% from 2.4% in the increase in consumers’ confidence and and salaries of government officials, previous year, while the core inflation spending, driven by the campaigns including the accommodating monetary dropped to 2.9% from 3.8% in 2011. The and stimulation measures of both factors of low interest rates and easy low inflation resulted from the impact public and private sectors. Domestic access to lending sources. However, of the global economic slowdown and production and consumption contin- most entrepreneurs were affected by the quick end to business and industrial ued to expand steadily, especially in the increased labor cost, which could sectors’ investment in the restoration automobile, motorcycle, furniture, and not be totally passed on to consumers of flood-damaged properties. 39

purchasing power is growing steadily, tools for customer relations and social RETAIL AND WHOLESALE there is no large shopping complex (or media were used to maintain customer INDUSTRY OVERVIEW center) except a hypermarket in most bases and stimulate spending through provinces. Besides, an efficient shopping constant communication, with Shopping Centers and Department complex could satisfy local consumers’ special privileges offered during festive Stores needs in tastes and lifestyles, which seasons. This year, entrepreneurs in this group are not yet sufficiently provided by Urged by the needs to replace their continued to develop new projects in any hypermarket. Entrepreneurs with damaged belongings during the Great both Bangkok and provincial areas. experience in retail development and Floods of 2011, consumers increased The newly-opened large shopping management, adequate capital, net- spending this year, especially in semi- complexes consisted of CentralPlaza works of stores, including the flexibility durable products like household appli- Suratthani, CentralPlaza Lampang, and for keeping their stores modernized, ances, apparel, and shoes, with positive Mega Bangna, while large shopping have the competitive advantage to lead results for the entrepreneurs of these complexes like CentralPlaza Udonthani the expansion of retail businesses to businesses. During the period of 2012 were under renovation. A number of prospective provinces and can even- to 2015, shopping complex and depart- shopping complex projects like Central tually dominate and establish market ment store entrepreneurs planned Embassy, The Emporium II, and Gateway engagement. to constantly expand their branches, Ekamai were under construction, due Marketing strategies remained crucial especially in the provinces border- for completion next year. In addition, to stimulate customers’ spending. ing Myanmar, Laos, and Cambodia, CentralPlaza Bangna and The Mall Bang Entrepreneurs applied diverse mar- because the upcoming launch of the Khae were under restoration. keting approaches to attract target ASEAN Economic Community (AEC) in In provincial areas, major projects groups, along with creating new shop- 2015 will expand business opportuni- under construction included Central ping experiences to satisfy customers’ ties in these areas. With the expected Plaza Ubonratchathani, CentralFesti- ever-increasing expectations. Apart boom in ASEAN and international val Hatyai, CentralFestival Chiangmai, from stimulating customers’ traffic and tourists visiting Thailand, entrepreneurs Promenada Chiangmai, and Robinson spending, these marketing approaches must be ready to serve their needs. Suphanburi. also presented customers with new As foreign competitors can expand experiences, which fostered long-term their businesses into Thailand more Judging from the general market and customer retention and customer easily under the AEC, Thai entrepre- competitive situations, business oppor- loyalty. Besides organizing marketing neurs could well face the pressure of tunities is now quite limited in Bangkok events to attract target groups, increased competition. Therefore, the because of the numerous shopping entrepreneurs focused on staging sale entrepreneurs who can properly and complexes found all over the area. promotion activities in parallel with efficiently adapt to these changes will Entrepreneurs have turned to opportu- creating business alliances that be able to maximize their benefit from nities in suburban areas, including prov- co-hosted major marketing events to the increased trade opportunities. inces with adequate purchasing power. maximize yields from their limited This is a good move because while the marketing budgets. More and more 40 | 41 CPN ANNUAL REPORT 2012

Community Malls and Lifestyle Malls this year included Rain Hill, The Walk, Hypermarkets Asiatique The Riverfront, The Prom- and Convenience Stores This retail group, both urban and enade Ramintra, Pure Place, Jatujak suburban projects, has been on the Green, INT-Intersect and Tonsung Av- This year this group of entrepreneurs expansion in response to the current enue. Projects under construction instill focused on implementing the multi- behavior of consumers seeking travel cluded Thanya Shopping Park Srinaka- format strategy to conform to urban convenience and preferring to perform rindra, Sena Fest Chareon Nakhon, and planning laws and zoning regulations, daily activities close to their homes. Nawamin Festival Walk. Community which limited areas available for the In developing these malls, the direc- mall development is rapidly spreading establishment of large branches in tion focused on locating projects near to provincial areas, with more and more the form of hypermarkets. Under this communities, with pleasant, restful, and local entrepreneurs implementing this strategy, diverse forms of projects were uniquely beautiful settings. To satisfy type of projects, especially in Phuket, developed, namely large, stand-alone customers’ key needs for recreation, Nakhon Ratchasima, Khon Kaen, and retail store projects, combination of shopping, and friendly gathering ac- Prachuap Khiri Khan. retail store and small shopping center tivities, these malls provide assorted projects, and small store projects, magnet shops to attract customers, In the future, the number of this retail much like convenient stores. To add including food outlets, bakery shops, group will probably continue to rise and market penetration flexibility for strat- supermarkets, beauty parlors, tutor- expand much more. It is expected that egies to increase sales volumes, these ing schools, bookstores, drug stores, in 2013, this group will operate more entrepreneurs no longer focused on and banks. shopping areas than the hypermarket low prices, discounts, promotions, group, which ranks first in the retail premiums, and product management, In addition to retail business entrepre- industry at present—with increasing but rather on the management of neurs, investment in community mall competition. Hypermarket entre- customers’ spending behavior through and lifestyle mall projects this year has preneurs also started modifying the customer relations programs via store continued to come from entrepreneurs form, reducing the size and increasing membership cards and credit cards. outside the retail industry, namely the shopping center features of their To maximize the efficiency of customer real-estate entrepreneurs and other stores. Therefore, community mall en- management, customers were placed groups with available plots of land. trepreneurs must further adjust them- into a price-sensitive group, a group Project formats included stand-alone selves for differentiation and constantly that prefers quality products at rea- community malls, mixed-use develop- catering to consumers’ needs by modi- sonable prices, and a service-sensitive ments, combined community mall and fying and expanding projects, attracting group. Furthermore, these entrepre- large residential developments, and new shops to create differentiation, neurs offered satisfaction guaranteed second-phase developments to add acquiring all varieties of magnet shops to nurture customers’ confidence in value to original real-estate projects. to serve customers’ needs, maintain- quality and communicated with con- Unlike hypermarkets, the locations for ing, and continuously expanding regular sumers via television, newspaper, and community mall projects are easier to customer bases. Further challenges for direct mail to promote dynamic pro- find and can be closer to communities. these entrepreneurs could also come motions through intensive benchmark Current community malls also cover al- from the rising labor cost because campaigns. most every target group, starting from highly-skilled technicians are required middle-income consumers to the pre- to manage some facilities. mium group. Major projects launched 41

Apart from the above-mentioned strategies, these entrepreneurs started penetrating upper-market sectors, which comprise consumers with more demanding taste than hypermarket customers. Their approach was to open retail stores in ‘extra’ forms with improved images, product quality, and service to satisfy this consumer group’s preference for premium products.

On the whole, hypermarket and supermarket retail entrepreneurs have focused on developing smaller retail outlets as super convenient stores and convenient stores, such as Lotus Express, Mini BigC, Tops Daily, CP Food Market, and Max Value. New branches of such stores were constantly opened this year in both Bangkok and major provinces to serve consumers’ needs in residential areas, office buildings, condominiums along mass transport (electric train) routes, and emerging communities. It is expected that these entrepreneurs will start penetrating second-tier provinces and sell more food products in the future. 42 | 43 CPN ANNUAL REPORT 2012

2012 FINANCIAL PERFORMANCE REVIEW

COMPANY’S PERFORMANCE For FY2011: gain was recorded in 4Q12. (See OVERVIEW notes to the financial statements >> A 187-MB income from reversals of for the year ended 31 December The overall retail sentiment in 2012 was provisions for impairments of as- 2012, Item 35) superior to that of the preceding year, sets incorporated in the 4Q11 (See mainly stemmed from strong domes- notes to the financial statements CPN Commercial Growth Leasehold tic demand. The retail sales index has for the year ended 31 December Property Fund, “CPNCG” was success- escalated since 1Q12 after the great 2011, Item 28) fully set up on 14 September 2012 to floods in 4Q11, while consumer confi- invested in a 20-year sub-leasehold dence index rocked a six-year high. The For FY2012: right in the Offices at CentralWorld. growth in retail market in 2012 was due The units of CPNCG have been traded >> A 1,776-MB gains from the divest- to an increase in domestic demand as a in the Stock Exchange of Thailand since ment of the Offices at CentralWorld result of government’s stimulus policies, 21 September 2012. Such investment to the CPNCG. A 1,602-MB gain was political stability, and a year without was divided into 2 phases, as follows: recorded in 3Q12 and a 174-MB natural disaster.

In 2012, CPN accomplished its expan- Transaction Summary sion plan with the launches of two new projects, CentralPlaza Suratthani and Fund Name CPN Commercial Growth Leasehold Property Fund CentralPlaza Lampang, and achieved (“CPNCG”) its financial targets. CPN reported its Fund Size THB 4,394 million FY2012 consolidated net profit of 6,189 No. of Units 426,639,000 units MB, increased by 201% y-o-y with total revenues of 19,463 MB, grown by 50% CPN’s Units 106,660,000 units (25% of total units) y-o-y. Offering Price THB 10.30 Dividend Policy At least 90% of net distributable income FY2011 and FY2012 financial performance incorporated the following non- recurring items as follows: 43

Investment Asset : Phase I

Land 2-1-4 Rais Office Building GFA : 116,028 sqm NLA : 74,605 sqm All office building leaseble area, except >> Retail space in B1-B3, G, 3fl >> 6fl (partial), 7fl, 25fl, 44fl (to be acquired in Phase II) M & E electricity, water system, air conditioning, fire alarm, telephone, elevator and escalator system Car Parking Service Right to use car parking space of 1,218 cars Investment Timing 14 September 2012 Asset Price THB 4,370.3 million (including offering expenses borne by CPN) Source of Fund THB 4,394.4 million equity raised from unitholders

Investment Asset : Phase II

Leasable Area NLA : 5,961 sqm (6fl (partial), 7fl, 25fl and 44fl) Car Parking Service Right to use car parking space of 53 cars Investment Timing By end of December 2012 Asset Price THB 366.0 million Source of Fund THB 370.0 million long-term loan (~8% of NAV) 44 | 45 CPN ANNUAL REPORT 2012

Unit : Million Baht

CPNCG's Transaction 1st Phase 2nd Phase Total Value Summary (14 Sep 12) (21 Dec 12) Asset Price 4,366 366 4,732 Net Gains (Realized) 1,602 174 1,776

Without the non-recurring items, World, CentralPlaza Udonthani, FY2012 consolidated total revenue and CentralPlaza Phitsanulok, as would have increased by 39% y-o-y well as an increase in rental rate and the net profit would have grown by due to the renewal of three-year 130% y-o-y, excluding revenue from the contracts at projects launched Offices at CentralWorld after transfer- in 2009 (CentralFestival Pattaya ring to CPNCG since September 2012. Beach, CentralPlaza Khonkaen, and CentralPlaza Chinburi) The y-o-y growth for the CPN’s performance were primarily due to the >> A decrease in discounts given to following factors: tenants in every projects

>> The fully re-opened of CentralWorld >> Efficient cost and expense manage- including Zen Department Store in ment January 2012 Excluding CentralPlaza Udonthani, >> The re-launch of CentralPlaza CentralPlaza Phitsanulok, Central Lardprao in August 2011, after Plaza Grand Rama9, and the two major renovation, with full year newly opened malls in 2012, other retail operation in 2012 properties achieved 14% y-o-y same- store growth on average in effective >> The re-launch of CentralPlaza rental rate. Udonthani in May 2012, after major refurbishment and expansion with As at 31 December 2012, CPN man- an increase in leasable area of aged 20 shopping centers (10 projects 25,000 sq.m. in Bangkok and 10 in the provinces), 7 office towers, 2 residential properties >> A gain of 1,776 MB from transfer- (totaling 62 units). These include the ring the Offices at CentralWorld to properties which had been transferred the CPNCG to CPN Retail Growth Leasehold Prop- erty Fund (“CPNRF”) and CPN Com- >> An increase in rental rates in every mercial Growth Leasehold Property projects, especially at Central- 45

Fund (“CPNCG”), of which CPN acts vices increased by 41% y-o-y to 15,325 by 53% y-o-y to 712 MB, mainly from as the property manager. In addition, MB, primarily due to: the strong performance of Hilton Pat- CPN owned 2 hotel properties (totaling taya Hotel and a full-year contribution 561 guest rooms), but outsourced their >> Revenue increased from two new of Centara Hotel & Convention Center, managements. projected launched in 2012 Udonthani.

As at the end of FY2012, the occupancy >> A continuous increases in rental Total Costs rate for CPN’s retail properties rates and a decrease in discount averaged 97%, same as the previous given to tenants in every existing CPN encountered a growing challenges year, owing to the high occupancy rates properties as well as an increase in cost management, especially in three of CentralWorld, CentralPlaza Udon in rental rate due to the renewal of distinctive sources: minimum wages, thani, and the newly opened projects – three-year contracts at projects minimum based salary, and utilities CentralPlaza Grand Rama9 (launched launched in 2009 costs, which went up approximately in December 2011), CentralPlaza 20-40%. Total operating costs and >> The fully re-opened of CentralWorld Suratthani (launched in October 2012), expenses for FY2012 posted at 12,175 in January 2012 CentralPlaza Lampang (launched in MB, up only 19% y-o-y, thanks to an efficient cost and expense management. December 2012). Nevertheless, Central >> The re-launch of CentralPlaza Plaza Rama 3 and CentralPlaza Lardprao in August 2011, after major Costs of Rent and Services Bangna revealed a temporary drop in renovation, with full year operation occupancy rates due to the renovation in 2012 Costs of rent and services constituted and re-arrangement of their tenant utilities, on-site personnel, depreciation mixes to add more modern brands, >> The re-launch of CentralPlaza & amortization, repair & maintenance, including international fashion brands. Udonthani in May 2012, after major insurance premium and property tax. The occupancy rate at these malls is refurbishment and expansion, with expected to recover by the 1Q14. an increase in rental rate of more For FY2012, costs of rental and ser- than 50% vices increased by 21% y-o-y to 8,556 As for CPN’s office properties, take-up MB. The increase was mainly due to rate at the 2012 year-end averaged Food and Beverage Sales compounding effects of the following 96%. sources: FY2012, the business posted a 15% y-o-y growth in sales. The increase >> Higher depreciations of Central- FINANCIAL PERFORMANCE was attributed to the new food courts Plaza Udonthani after its renovation at CentralPlaza Suratthani and Cen- and expansion completed in 2Q12, At the end of FY2012, CPN managed tralPlaza Lampang coupled with an as previously mentioned. 20 shopping centers, 7 office towers impressive sales growth at the Central- and 2 residential properties. In addition, Plaza Udonthani (after refurbishment), >> A full-year depreciation of the new CPN also owned 2 hotel properties but CentralFestival Pattaya Beach, and projects, launched in 2011, was rec- outsourced their management. CentralPlaza Phitsanulok. ognized in 2012.

Total Revenues Revenues from Hotel Operations >> Operating cost of the new projects launched in 2012. Revenues from Rent and Services Hotel operations are considered as CPN’s non-core businesses. For FY2012, FY2012 revenues from rent and ser- revenues from hotel operations grew 46 | 47 CPN ANNUAL REPORT 2012

Costs of Food and Beverage Gross Profit Ratio & Operating Profit In 2012, CPN achieved its target with the Ratio launches of two new projects – Central- Costs of food and beverage constituted Plaza Suratthani (Southern Thailand) food centers’ operating costs as well For FY2012, total revenues grew 39.0% on 11 October 2012, with 25,100 sq.m. as depreciation, repair & maintenance y-o-y while total operating costs and of net leasable area (excluding the costs of equipment, and decoration expenses increased only 19.0% y-o-y. area of Robinson Department Store) costs. This leads to a Gross Profit Ratio of and CentralPlaza Lampang (Northern 46.7% from 39.9% in FY2011 and the Thailand) on 30 November 2012, with For FY2012, costs of food and beverage Operating Profit Ratio of 31.6% from 16,100 sq.m. of net leasable area increased by 13% y-o-y, in line with the 22.0% in FY2011–that shows a potential (excluding the area of Robinson growth in food and beverage sales, as in generating higher revenues and an Department Store). Additionally, CPN previously mentioned. efficiency of cost and expense also achieved in one asset enhance- management. Costs of Hotel Operations ment at CentralPlaza Udonthani, in May 2012, with a 22,000-sq.m. increase in Net Profit FY2012 costs of hotel operations net leasable area. amounted to 269 MB, up 40% y-o-y. FY2012 net profit amounted to 6,189 For 2013, four new projects are under- The rise in costs was in line with the MB, up 201% y-o-y. Without the non-re- construction – CentralPlaza Ubon- growth in hotel revenues. curring items, FY2012 consolidated net ratchathani (Northeastern Thailand), profit would have grown by 130% y-o-y, Total Operating and Administration CentralFestival Chiangmai (Northern mainly from an increase in rental rates Expenses Thailand) and CentralFestival Hatyai and an efficient cost management. (Southern Thailand) and CentralWest- Total operating and administrative Gate. expenses constituted expenses on NEW DEVELOPMENTS personnel, marketing & promotion, In addition, there are another three office supplies, professional fees, and Under its 5-year plan (FY2011-FY2015), secured plots of land under detailed depreciation & amortization of office CPN aims to increase its revenues at a studies. equipment. compound annual growth rate (CAGR) of 15% per annum. To achieve this FY2012 operating and administration CAPITAL STRUCTURE goal, CPN has determined to expand expenses surged by 14% y-o-y, while its business through enhancing its as- marketing and promotional expenses Total CAPEX for FY2012 was approxi- sets, increasing rental rates, cutting showed a decrease of 2% y-o-y. mately 9,502 MB, comprising 2,388 MB down on costs and expenses as well as on asset enhancement projects and Excluding the expenses for the grand developing new projects. CPN targets 7,114 MB on new developments and openings of the new projects, FY2012 to grow its portfolio by 10% a year. In land acquisitions. marketing and promotional expenses light of Thailand’s urbanization, CPN will would have been 2.3% of total rev- expand its business more aggressively During FY2012, CPN raised new debts enues, compared to 3.5% of FY2011 in Bangkok and the provinces. CPN will of approximately 8,300 MB, compris- and 4.8% of FY2010. These numbers also study other formats to introduce ing 1,500 MB unsecured bonds and reflected not only the economy of scale, modern shopping malls to the market 6,800 MB long-term borrowings to but also the efficiency of marketing as well as oversea markets to sustain repay unsecured bonds and loans expense management through top- growth in the long-term. totaling 7,480 MB. The remaining pro- line driven. 47

ceeds were used for future business expansion. DIVIDEND

As at the end of FY2012, interest- CPN’s Board of Directors has pro- bearing debts stood at 25,565 MB, posed Baht 0.95 per share (2,070 MB) comprised 87% fixed and 13% floating dividend to be paid for the FY2012 interest rate with a weighted average performance, comparing to 0.37 per interest rate of 4.38% per annum. As at share (806 MB) in 2011, pending the the end of FY2012, net interest-bearing approval at the shareholders’ meeting debt to equity ratio stood at 0.82 times, in April 2013. The dividend payment considerably decreased from 0.88 time represents a 33.4% dividend payout in 3Q12 and 1.2 times in FY2011. This was ratio of the FY2012 net profit, retrieving primarily due to the loan repayment from 40% of normal net profit and 17.2% after the transferring of the Offices at of extra gains from sublease assets CentralWorld to CPNCG. to CPNCG. CentralPlaza Chiangrai CPN TODAY

premium shopping centers shopping centers in Bangkok shopping centers in prime in Thailand Metropolitan Area and its vicinities provincial areas

Over 30 years of full dedication, CPN has continually grown and enthroned as the leader in retail property market by having the largest and most modern shopping complexes in Thailand. Our goal is “To be the most admired and dynamic regional retail property developer with world-class rewarding experience” vision.

Nowadays, CPN develops and manages CPN’s long-term business strategy is 20 shopping complexes, seven office to develop shopping complexes with projects, two hotels, and two residential world-class standards in potential buildings. The newly opened projects in locations, both in Bangkok and provincial 2012 were CentralPlaza Suratthani and areas, capable of yielding high profits. CentralPlaza Lampang. Furthermore, CPN has future plans for business expansion to overseas projects, particularly to countries with substantially high economic growth rate. 50 | 51 CPN ANNUAL REPORT 2012

POTENTIAL LOCATI0N… As the leading retail property developer, CPN is well aware that location is crucial for being a successful market leader. Moreover, the experience in selecting the location of each shopping complex and profound comprehension in retail business is significant elements for CPN to obtain the highest potential location for success shopping complex development. 51

Total project GFA: 310,000 sq.m. Total project GFA: 86,000 sq.m. Total project GFA: 340,000 sq.m. Parking space: 3,000 vehicles Parking space: 1,000 vehicles Parking space: 3,500 vehicles Hall: 2,500 sq.m.

CENTRALPLAZA LARDPRAO CENTRALPLAZA RAMINDRA CENTRALPLAZA PINKLAO Bangkok Bangkok Bangkok

With its new outstanding organic-form Total project GFA: 86,000 sq.m. This As the integrated shopping complex on the design inspired by beauty of nature, Thai- shopping center was built for family west side of Bangkok, CentralPlaza Pinklao land’s first integrated shopping complex, and community, consisting of Central can respond to the needs of various target CentralPlaza Ladprao, was re-launched Department Store, retails, restaurants, and customer segments, such as educational as the newest lifestyle destination, fully six movie theaters. Regular family-oriented institutes, offices, and communities with equipped with innovative facilities and and community activities and easy access high purchasing power and strong growth. services. Under new sky lights, shoppers by public transportation, CentralPlaza It includes leading retail shops, food and will experience a new relaxed ambience. Ramindra is a perfect shopping mall for beverage outlets, eleven movie theaters, The complex comprise hotel, office building, families and community. Central Department Store, and two office Central Department Store, and shopping buildings. center with a full range of leading domestic and international retailers

Total project GFA: 180,000 sq.m. Total project GFA: 62,000 sq.m. Total project GFA: 220,000 sq.m. Parking space: 2,300 vehicles Parking space: 400 vehicles Parking space: 2,300 vehicles Hall: 2,800 sq.m.

CENTRAL CENTER PATTAYA CENTRALPLAZA CHIANGMAI AIRPORT CENTRALPLAZA RAMA 3 Chonburi Chiangmai Bangkok

Central Center Pattaya caters to respond CentralPlaza Chiangmai Airport is the larg- CentralPlaza Rama 3 is situated in Bangkok’s to various customers – local residents, busi- est shopping and entertainment complex new economic district, in the vicinity of five ness and convention travelers, Bangkokians in the north of Thailand, accommodating leading banks’ head offices, and it is the who visit Pattaya during weekends, and over approximately six million visitors a year in- only integrated shopping complex with an two million tourists who travel to Pattaya per cluding Thai and foreign tourists. It embraces entertainment place within five kilometers, year. Central Center Pattaya not only is an Robinson Department Store, seven movie including various retails, Central Department exquisitely decorated tropical architectural theaters, a multi-purpose convention hall, Store, a food park, nine movie theaters, and center, but also anchored by a Big C Super and a “Northern Village” – local handicraft a game arcade Center and six movie theaters. zone with all-inclusive famous items of the northern region for clients to comfortably shops. 52 | 53 CPN ANNUAL REPORT 2012

Total project GFA: 450,000 sq.m. Total project GFA: 210,000 sq.m. Total project GFA: 140,000 sq.m. Parking space: 3,250 vehicles Parking space: 3,200 vehicles Parking space: 2,000 vehicles

CENTRALPLAZA BANGNA CENTRALPLAZA RAMA 2 CENTRALPLAZA RATTANATHIBET Bangkok Bangkok Nonthaburi

CentralPlaza Bangna is situated in the east CentralPlaza Rama 2 is located on a main After acquiring Siam-Jusco Rattanathibet side of Bangkok, near Suvarnabhumi Airport, highway in the south of Bangkok, a rapidly ex- in December 2003, CPN changed the name and with rapidly growing communities. It was panding residential district. The complex has and refurbished the building into a shopping designed to be an all-encompassing city Central Department Store, Tops Supermar- center in a warm ambiance for families, pro- within a city, comprising a six-story shopping ket, OfficeMate, HomeWork, B2S, fully retail viding the best comfort. The complex con- complex, a condominium tower, a 37-story shops, a food center, an entertainment and sists of Robinson Department Store, Index office tower, a cinema, a water park, and a leisure complex, a 30-lane bowling center, Living Mall, HomeWork, OfficeMate, cinemas, high-tech game center. 10 movie theaters, and public garden space. and a bowling center to add varieties to truly be the family’s favorite shopping mall.

Total project GFA: 800,000 sq.m. Total project GFA: 310,000 sq.m. Total project GFA: 210,000 sq.m. Parking space: 7,000 vehicles Parking space: 3,300 vehicles Parking space: 2,000 vehicles Hall: 2,500 sq.m. Hall: 2,500 sq.m. 302-room Hilton Pattaya Hotel

CENTRALWORLD CENTRALPLAZA CHAENGWATTANA CENTRALFESTIVAL PATTAYA BEACH Bangkok Nonthaburi Chonburi

CentralWorld located in the heart of Bangkok Being the largest and most comprehensive CentralFestival Pattaya Beach is Asia’s larg- and became the largest shopping complex lifestyle shopping complex on the north- est natural beachfront shopping complex. in South East Asia. CentralWorld houses western side of Bangkok, the complex is The project comprises a shopping mall and Zen Department Store and Isetan Depart- outstanding for its design technology with a hotel with 360 panorama view of Pattaya ment Store, SF World Cineplex, TK Park, and energy-saving and eco-friendly. The shop- Beach. The project has brought modern and flagship stores of world renowned brand. ping complex consists of a seven-storey lively lifestyle center to the tourist city. The Other components to complete the com- of shopping mall and a 16-storey of office complex includes Central Department Store, prehensive project are a grade - A office tower. Surroundings by Government Centre SFX Cinema, and fully retail shops in total building with 45-storey. With its prime loca- and commercial buildings, the project has of renowned fashion boutiques, interna- tion and variety, CentralWorld has become become a destination for all needs with tional restaurants, retail shops, as well as the an admired destination among local and completed combinations of Central Depart- arena in front of the shopping mall for lively foreign tourists. ment Store, cinema, fashion and boutique activities among local and foreign tourists. shops, food and beverage outlets and fully retail shops. 53

Total project GFA: 250,000 sq.m. Parking space: 2,000 vehicles Total project GFA: 130,000 sq.m. 259-room Hotel Parking space: 2,040 vehicles Hall: 2,800 sq.m.

CENTRALPLAZA UDONTHANI CENTRALPLAZA CHONBURI Udonthani Chonburi

Located en route to Indochina is the lifestyle The largest and most complete lifestyle complex of the upper Northeast that finds shopping complex in Chonburi province, popularity with Thais and those from neigh- marked by a unique architectural design to boring countries alike. The shopping complex enable shoppers to feel the sunlight perme- consists of Robinson Department Store, ating through the clear glass façade. Inside Tops Supermarket, movie theaters, bowling one finds Robinson Department Store, alleys, and fully retail shops. Fulfilling the Carrefour, Tops Market, B2S, PowerBuy, Su- project’s scope is Centara Udonthani Hotel perSports, OfficeMate, SF Cinemas City, the with 255 rooms and sizeable multipurpose first modern karaoke in the city, and varie- conference rooms. ties of retail shops, fashion boutiques, food and beverage, and entertainment zone. 54 | 55 CPN ANNUAL REPORT 2012

Total project GFA: 200,000 sq.m. Total project GFA: 110,000 sq.m. Total project GFA: 100,000 sq.m. Parking space: 2,100 vehicles Parking space: 1,000 vehicles Parking space: 1,440 vehicles Hall: 2,540 sq.m.

CENTRALPLAZA KHONKAEN CENTRALPLAZA CHIANGRAI CENTRALPLAZA PHITSANULOK Khonkaen Chiangrai Phitsanulok

CentralPlaza Khonkaen is the largest and CentralPlaza Chiangrai is the first lifestyle Situated in the center of a business zone most modern lifestyle shopping complex shopping center of Chiangrai province with – which links the Central region with the of the Northeast with an architectural style an architectural style of Northern (Lanna) Northern region and Indochinese countries, of Northeastern art and cultural form, and art and beauty of nature. Recognized as CentralPlaza Phitsanulok is outstanding for by a green-building concept for energy Thailand’s first shopping center by an eco- its design inspired by traditional Thai-style conservation. Inside one finds Robinson friendly concept, CentralPlaza Chiangrai – Benjarong – pottery, floating houses, and Department Store, SF Cinemas City, strike was developed by using green technolo- creative art of Thai textile. The shopping bowl, and fully retail shops, fashion bou- gies, environmentally friendly materials, and complex consists of Robinson Department tiques, food and beverage, as well as a large energy-efficient equipments. Inside one Store, Tops Supermarket, PowerBuy, B2S, convention center. The variety and comple- finds Robinson Department Store, Tops SuperSport, Major Cineplex, and fully tion of the project has supported Khonkaen Supermarket, PowerBuy, B2S, SuperSport, retail shops. province to be a center of educational activi- Major Cineplex, karaoke, and variety of ties, government centers, and commercial retail shops, fashion boutiques, and food units in the Northeast of Thailand. and beverage. 55

Total project GFA: 130,000 sq.m. Total project GFA: 214,000 sq.m. Total project GFA: 110,000 sq.m. Parking space: 1,400 vehicles Parking space: 2,400 vehicles Parking space: 2,000 vehicles Hall: 2,500 sq.m.

CENTRALPLAZA GRAND RAMA 9 CENTRALPLAZA SURATTHANI CENTRALPLAZA LAMPANG Bangkok Suratthani Lampang

Located in a high potential business zone of CentralPlaza Suratthani, the Most Complete CentralPlaza Lampangi, the Newly Lifestyle Bangkok, the one-stop lifestyle entertain- Lifestyle Shopping Center in the South, Shopping Center in the North, is outstanding ment shopping complex is outstanding for its is outstanding for its natural resort style for an iconic charming with Lanna archi- modern futuristic design with ribbon-shape with Tropical Architectural Design based tectural design on openwork with modern LED lights inspired by dynamic life of the on sustainable urban development. Cen- graphic. CentralPlaza Lampang comprise Rama 9. Positioned as a dream destination tralPlaza Suratthani consists of Robinson Robinson Department Store, Tops Market, for “work & play” generations, CentralPlaza Department Store, Tops Market, PowerBuy, PowerBuy, B2S, SuperSport, OfficeMate, Grand Rama 9 comprises the most mod- B2S, SuperSport, OfficeMate, and leading and leading retailers and a complete en- ern flagship store of Robinson Department retailers, a complete entertainment complex tertainment complex with four SF Cinemas Store, Tops Market, PowerBuy, B2S, Super- with seven SF Cinemas theatres, Fun Planet theatres, Fun Planet, and “Hug You” sheep Sport, OfficeMate, world-class 11-screen and Pet Planet with scarce animal, such as farm. SFX Cinemas, Thailand’s first Olympic-sized Meerkat and Raccoon. ice skating rink, and fully retail shops. CentralPlaza Grand Rama 9 ASSETS UNDER CPN’S MANAGEMENT

RETAIL CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA CENTRAL CENTER PROPERTIES LARDPRAO RAMINDRA PINKLAO 1) PATTAYA

Year of Operation December 1982 November 1993 March 1995 July 1995

Development Greenfield Greenfield Greenfield Greenfield

Land Ownership Leasehold end of Leasehold end of Leasehold end of Leasehold end of 2028 2023 2024 2015

Investment Cost of Total Project as end 4,350 634 1,215 373 of 2012 2)

Leaseable Area 48,140 17,156 57,538 15,226 (Sq.m)

Occupancy Rate (%) 100% 100% 99% 96%

No.of Tenants 291 80 249 129 (shops)

Top Five Anchor SFX Cinema SFC Cinema, EGV Cinema, SFC Cinema, Tenants 3) PowerBuy, SB Furniture, SuperSports SuperSports B2S

Remarks: 1) For CentralPlaza Pinklao, 42% of asset was subleased to CPNRF since November 2009 to December 2024. For CentralPlaza Rama 3, 81% of asset was leased to CPNRF since August 2005 to August 2035. For CentralPlaza Rama 2, 96% of asset was subleased to CPNRF since August 2005 to August 2025. Operational performance of CentralPlaza Pinklao, Rama III, and Rama II includes those of assets transferred to CPNRF and CPN acts as the property manager. 2) Includes investment of office/residentail/hotel components. Excludes annual lease payments and investments of the assets leased/subleased to CPNRF. 3) Anchor are tenants who occupy over 1,000 sq.m. of leaseable area. 58 | 59 CPN ANNUAL REPORT 2012

RETAIL CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA PROPERTIES CHIANGMAI AIRPORT RAMA 3 1) BANGNA RAMA 2 1)

Year of Operation March 1996 4) October 1997 December 2001 4) December 2002

Development Acquisition Greenfield Acquisition Greenfield

Land Ownership Freehold Freehold Freehold Leasehold end of 2025

Investment Cost of Total Project as end 3,218 1,289 4,356 1,013 of 2012 2)

Leaseable Area 75,891 55,245 58,112 94,882 (Sq.m)

Occupancy Rate (%) 99% 94% 89% 100%

No.of Tenants 517 289 277 341 (shops)

Top Five Anchor Robinson Major Cineplex Major Cineplex Central Department Tenants 3) Department Store, Fitness First, Toy R’Us, Store, Tops Market, IT City IT City HomeWorks, Major Cineplex, Major Cineplex & IT City Bowling, Tops Super, OfficeMate

CENTRALWORLD CENTRALPLAZA CENTRALPLAZA CENTRALFESTIVAL CENTRALPLAZA RATTANATHIBET CHAENGWATTANA PATTAYA BEACH UDONTHANI

December 2002 4) December 2003 4) November 2008 January 2009 April 2009 4)

Acquisition Acquisition Greenfield Greenfield Acquisition

Leasehold end of Freehold Freehold Freehold Freehold 2032

12,614 2,299 5,252 6,385 4,854

187,054 77,238 64,857 57,161 68,806

96% 100% 93% 96% 99%

441 222 346 285 278

Zen Department Robinson SFX Cinema, SFX Cinema Robinson Store, Department Store, Fitness First & Strike Bowl, Department Store, Isetan Department HomeWorks, Toy R’Us Major Cineplex Store, SFC Cinema & & Bowling, SF World Cinema, Strike Bowl Sport World Central Food Hall, Index Living Mall, SB Design Square, Tops Market PowerBuy 60 | 61 CPN ANNUAL REPORT 2012

RETAIL CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA PROPERTIES CHONBURI KHONKAEN CHIANGRAI PHITSANULOK

Year of Operation May 2009 December 2009 March 2011 October 2011

Development Greenfield Greenfield Greenfield Greenfield

Land Ownership Freehold Freehold Freehold Freehold

Investment Cost of Total Project as end 2,839 3,855 1,604 1,568 of 2012 2)

Leaseable Area 40,386 50,146 21,459 24,974 (Sq.m)

Occupancy Rate (%) 96% 95% 99% 99%

No.of Tenants 273 338 115 152 (shops)

Top Five Anchor SFC Cinema, SFC Cinema Major Cineplex, Major Cineplex, Tenants 3) Tops Market, & Strike Bowl, Tops Market, Tops Market, PowerBuy, Tops Market, PowerBuy, PowerBuy, Fitness First, PowerBuy B2S, B2S SuperSports SuperSports SuperSports

Remarks: 2) Includes investment of office/residentail/hotel components. Excludes annual lease payments and investments of the assets leased/subleased to CPNRF. 3) Anchor are tenants who occupy over 1,000 sq.m. of leaseable area. 61

CENTRALPLAZA CENTRALPLAZA CENTRALPLAZA GRAND RAMA 9 SURATTHANI LAMPANG

December 2011 October 2012 November 2012

Greenfield Greenfield Greenfield

Leasehold end of Freehold Leasehold end of 2040 2041

5,279 2,129 1,069

59,505 30,104 21,612

99% 96% 99%

227 134 93

SFX Cinema, SFC Cinema, SFC Cinema, Tops Market, Tops Market, Tops Market, PowerBuy, PowerBuy, PowerBuy, B2S, OfficeMate, SuperSports, SuperSports B2S B2S 62 | 63 CPN ANNUAL REPORT 2012

OFFICE LARDPRAO PINKLAO TOWER A PROPERTIES OFFICE OFFICE 1)

Year of Operation December 1982 March 1995

Development Greenfield Greenfield

Land Ownership Leasehold end of Leasehold end of 2028 2024

Office Properties 16,250 22,426

Occupancy Rate (%) 97% 98%

No.of Tenants 74 55 (shops)

Major Business Tutorial, Language Tutorial, Language Type of Tenant and Computer and Computer School, School, Clinic, Health Government Agency, Care & Beauty palor, General Offfice General Offfice Administration Administration

Remarks: 1) Pinklao Tower A and Tower B were subleased to CPNRF since November 2009 until December 2024. 2) Year of acquisition. 3) 97% of the Offices at CentralWorld were subleased to CPNCG since September 2012 until September 2032. 63

BANGNA THE OFFICES AT PINKLAO TOWER B CHAENGWATTANA GRAND RAMA 9 OFFICE CENTRALWORLD 3) OFFICE 1) OFFICE OFFICE

December 2001 2) November 2004 March 2006 March 2009 December 2011

Acquisition Acquisition Greenfield Greenfield Greenfield

Freehold Leasehold end of Leasehold end of Freehold Leasehold end of 2032 2024 2040

10,007 82,796 11,334 19,867 6,454

98% 98% 98% 85% 95%

30 104 45 45 32

Tutorial, Language Multinational Tutorial, Language Tutorial, Language Tutorial, Language and Computer Corporation, and Computer and Computer and Computer School, Bank & Financial School, School, School, Clinic, Health Institution, Clinic, Health Clinic, Health Clinic, Health Care & Care & Beauty Law & Business Care & Beauty, Care & Beauty Beauty parlor, parlor, Consultant, General Offfice parlor, General Office General Offfice Communication Administration Communication & Administration Administration & Services Services, General Office Administration 64 | 65 CPN ANNUAL REPORT 2012

HOTEL CENTARA HILTON PROPERTIES UDONTHANI 1) PATTAYA 2)

Year of Operation April 2009 3) November 2010

No.of Guest Rooms 259 302

Occupancy Rate (%) 70% 80%

Remarks: 1) CPN is the project owner and Central Plaza Hotel Plc. is the hotel manager. 2) CPN is the project owner and Hilton Hotel Corporation is the hotel manager. 3) Year of acquisition.

RESIDENTIAL LANGSUAN CENTRAL CITY PROPERTIES COLONADE RESIDENTIAL 1)

Year of Operation December 1998 December 2001 2)

Leaseable Area 4,466 1,907 (Sq.m)

Occupancy Rate (%) 63% 50%

Remarks: 1) CPN owns strata-title of 12 units of the condominium. 2) Year of acquisition.

CentralWorld 65

CentralWorld 66 | 67 CPN ANNUAL REPORT 2012

FUTURE PROJECTS

CENTRALPLAZA LOCATION: POTENTIAL: UBON RATCHATHANI On Highway 231, Tambon Chae Ra Mae, The project is in Ubon Ratchathani Amphoe Muang, Ubon Ratchathani province, a major business center in Province the Northeastern. It is situated on the bypass, which connects the city with the SIZE: airport. It is also surrounded by major Approximately 76 rai plot of land (CPN sites, such as a university, higher educa- has the land ownership) with a total tion institutions, colleges, hospitals, and project area of 140,000 sq.m., of which banks. Ubon Ratchathani is the gate- 118,000 sq.m. belongs to CPN. The pro- way to trade and tourism in Indochina, ject consists of Robinson Department namely Thailand, Laos, Cambodia, and Store and anchor tenants, including Vietnam. In the future, the Depart- Tops Market, Power Buy, B2S, and ment of Land Transport will expand an SuperSports. There are also cinemas, international road system, namely Ubon a Fun Planet amusement park, over Ratchathani–Champa Sak, Kon Pa Peng, 250 retail shops, such as boutique and and Siam Reap. It is therefore a major fashion stores, banks, service centers, economic town regarded as suitable for restaurants, and cafés, as well as a investment and significant development parking lot for more than 1,500 vehicles. in the future. 67

CentralWestGate

CentralFestival Hatyai

PROGRESS: Under construction, progressing as planned and budgeted

OPENING SCHEDULE: The project is due to inaugurate in April 2013 CentralFestival Chiangmai

INVESTMENT: Approximately 1,800 MB (excluding investment in Robinson Department Store, which is under the responsibility of Robinson Department Store Plc)

CentralPlaza Ubonratchathani 68 | 69 CPN ANNUAL REPORT 2012

rants, and cafés, as well as a parking lot PROGRESS: CENTRALFESTIVAL for more than 2,100 vehicles. CHIANGMAI Under construction, progressing as planned and budgeted POTENTIAL:

LOCATION: The project is situated in a high- OPENING SCHEDULE: potential area in the heart of Hat Yai, At the intersection of the superhighway The project is expected to be inaugu- considered a large city as well as the and Chiang Mai-Doi Saket Road, facing rated in the last quarter of 2013. leading trade and business center in the both superhighway and Chiang Mai-Doi South. It is on the road which connects Saket Road. INVESTMENT: the city with the international airport, Approximately 4,500 MB (excluding SIZE: regarded as Thailand’s number five in investment in Central Department Approximately 68-rai plot of land in traffic volume. It is also the gateway to Store, Which is under the responsibility total (CPN has the land ownership) Malaysia and Singapore, whose popu- of Central Department Store) with a total project area of 250,000 lations have high purchasing power. sq.m. The project consists of Central Furthermore, the project is surrounded Department Store and anchor tenants, by major sites, such as universities, CENTRALFESTIVAL including Central Food Hall, Power Buy, higher educational institutions, colleges, HATYAI B2S, and SuperSports. There are also hospitals, and banks. This economic and cinemas, 3D cinemas, a Fun Planet tourist destination indeed welcomes many Thai and foreign tourists. The amusement park, over 250 retail shops, LOCATION: project is also located in a strategic such as boutique and fashion stores, On Highway 4, Kanchanawanit Road, area of economic development, which banks, service centers, restaurants, and Tambon Koh Hong, Amphoe Hat Yai, consists of Indonesia, Malaysia, and cafés, as well as a parking lot for over Songkhla Province. The front is next to Thailand. This significantly increases the 1,500 vehicles. the highway, with one side connecting potential purchasing power and great with Chotewitthayakul 1 Road, which is POTENTIAL: development in the future. an easy access to the city center. This project is located in Chiang Mai PROGRESS: Province, a capital city of the North and SIZE: Under construction, progressing as a high-potential area in development Approximately 50 rai plot of land (CPN planned and budgeted and growth, in terms of economic and has the land ownership) with a total investment and the biggest tourism in project area of 250,000 sq.m., of which OPENING SCHEDULE: the North, only second to Bangkok. This 210,000 sq.m. belongs to CPN. The The project is expected to be inaugu- project is situated on the Highway Road, project consists of Central Department rated in the last quarter of 2013. which connects the city with the airport. Store and anchor tenants, including This project is also surrounded by major Tops Market, Power Buy, B2S, Super- INVESTMENT: sites, such as a university, higher edu- Sports, and OfficeMate. There are also Approximately 5,200 MB (excluding cation institutions, colleges, hospitals, cinemas, 3D cinemas, a Fun Planet investment in Central Department and banks. Furthermore, Chiang Mai is amusement park, an ice-skating rink, Store, which is under the responsibility a popular cultural and natural tourist a large meeting room, over 250 retail of Central Department Store) destination among local and foreign shops, such as boutique and fashion tourists, which will enhance their re- stores, banks, service centers, restau- markable growth in purchasing power. 69

necting Dawei Port to the Andaman ensure that overseas investment has CENTRALWESTGATE Sea, will be constructed to support been carried out prudently for steady the AEC in 2015, as well as the third- and sustainable growth. LOCATION: stage expressway that connects the West Outer Ring Road and Chonburi On Bang Yai Intersection, Tambon Sao Motorway, which will become a new Thong Hin, Amphoe Bang Yai, Non- residential area. thaburi Province. The front is next to Kanchanapisek Road and Ratanathibet PROGRESS: Road. Under construction, progressing as SIZE: planned and budgeted Approximately 98 rai plot of land (CPN OPENING SCHEDULE: has the land leasehold right) with a The project is expected to be inaugu- total project area of 330,000 sq.m.. The rated in the second quarter of 2015. project is in a form of a “Super Regional Mall”, a combination of lifestyle complex INVESTMENT: and state-of-the-art entertainment Approximately 6,500 MB (excluding complex. The project consists of Central investment in Central Department Department Store and anchor tenants, Store, which is under the responsibility including Tops Market, Power Buy, B2S, of Central Department Store) SuperSports, and HomeWorks. The project also offers more than 1,000 of well-known retail shops, a new concept dining destination that meets every OVERSEAS PROJECTS lifestyle, as well as a parking lot for more than 2,000 vehicles. Since the Company has foreseen business opportunities and would like to POTENTIAL: diversify risks, for the past five years, The project is situated in a high- CPN has studied opportunities to ex- potential area which connects many pand its investment abroad by focusing major roads together, including the its interest on Asian countries with high West Outer Ring Road. The Bang Yai potential and economic growth. Yet, Intersection, where 12-lane Kanchan- CPN is aware of differences in market apisek Road and 10-lane Ratanathibet circumstances, competition condi- Road meet, can accommodate more tions, and risks arising from overseas than 85 million cars a year. The MRT businesses. The Company, therefore, Purple Line (Bang Yai-Bang Sue) and has appointed a team of specialists a skywalk, connected to the project, will to study economic, social, and political be constructed to serve more than 13 conditions, industry and competition, million people. In the future, the motorway business laws, and other risks in each No.81 ( Bang Yai – Kanchanaburi), con- country that CPN is interested in to CentralWorld

VISION

“To be the most admired and dynamic regional retail property developer with world-class rewarding experience” CentralWorld

VISION AND MISSIONS

MISSIONS

Based on the vision, CPN strives to accomplish four missions to turn its vision into reality.

MOST ADMIRED RETAIL DEVELOPER OF ALL STAKEHOLDERS “To be the preferred mall of choice, delivering extraordinary values that exceed all stakeholders’ expectation”

>> To be the investor of choice by delivering competitive and sustainable returns to shareholders, investors, and strategic partners.

>> To be the happiness experience destination of targeted shoppers by delivering world-class rewarding experience.

>> To be the most preferred partner of targeted tenants and partners by delivering business success together with long-term relationships.

>> To be the top-ranked employer of choice by offering brilliant career opportunities and engaged society.

>> To be the most socially and community-admired brand through CPN’s shopping mall positioning and signature corporate social responsibility programs.

DYNAMIC RETAIL DEVELOPER “To create new retail formats and merchandising mix that fit better with our targeted customers’ changing lifestyles.”

CPN fully recognizes that customers’ dynamicity poses a key challenge. By the minute, customers have higher expectations, more complicated needs, and ready access to information. CPN’s own dynamicity pushes its shopping centers toward greater sophistication to cater to customers’ lifestyles. To this end, CPN never stops inventing formats for shopping centers, selects novelty shops and outlets that are both modern and match customers’ needs, applies advanced technology to customer services, stages outstanding and unique activities to create new experiences for customers, and synergizes with affiliates in catering to customers’ needs while striving for maximum impression among service users. 72 | 73 CPN ANNUAL REPORT 2012

REGIONAL RETAIL DEVELOPER “To be a potential leader in the region and be considered as threat in all markets that we operate in”

CPN is committed to steady, sustainable growth, with the next step being a regional organization. To this end, we are committed to becoming a renowned retail property developer, with rapidly successful regional projects. Our prospective markets are clearly identified after prudent, strategic deliberation, with business plans and alliance formation plans that can promptly address business opportunities. All the time, the organization and its teams develop themselves for the capability and readiness to operate overseas business as envisioned.

WORLD-CLASS REWARDING EXPERIENCE “To be the shopping mall destination delivering world-class shopping experience superior to those of our competitors in all markets that we have presence in”

Constantly recognizing that CPN is not just a shopping center developer, but also a deliverer of happiness to everyone, we ensure that all components of our shopping centers pay due attention to service users—whether through shop selection aimed for diversity and novelty, staging of interesting activities, or complete amenities. CPN is convinced that high standards and world-class qualities lead to market leadership, which is why we are always committed to attaining world-class status. We are convinced that our world-class happiness experience can put CPN at the top of customers’ mind and at the top of regional shopping center developers’ list in the future. BUSINESS STRATEGY

CPN emphasizes steady and sustainable growth in both financial STRATEGY FOR SHOPPING COMPLEX DEVELOPMENT and organizational aspects to ensure CPN focuses on expanding its business steadily in both Bangkok Metropolis satisfaction of all stakeholders and and provincial areas. The complexes are constantly modernized and achieve goals and missions. CPN’s main opportunities for new expansion sought so as to establish steady and elements of the overall strategy are sustainable growth and be ready for the ASEAN Economic Community as follows. in 2015.

CPN emphasizes developing and improving shopping complexes of high potential with quality and efficiency.

>> High-potential shopping complex development, starting from market research to identify potential markets, acquiring strategic locations, designing mall formats, and allocating an appropriate proportion of merchandising mix to meet customers’ expectations while staying ahead.

>> Efficient shopping complex development, from conducting feasibility studies, acquiring locations, supervising designs and construction, contacting shops, marketing, to commercial opening, so that CPN can develop various new projects simultaneously, within schedule and budget.

>> Standardization development in decoration and construction to reduce construction time and costs as well as operating costs, with acceptable standards.

STRATEGY FOR COMPLEX MANAGEMENT

CPN focuses on supplementing value from existing complexes through reinforcing the strengths of retails shops, marketing, and management of the complexes to boost business growth and rental prices and supervise operating costs.

To do a good job of addressing tenants’ and customers’ needs, management of complex emphasizes the following areas:

>> Merchandising mix through market and customer analysis and adjusting the shops as well as finding new local and international retailers to modernize shopping complexes and address customers’ demand. 74 | 75 CPN ANNUAL REPORT 2012

>> Marketing activities to attract targeted customers, increase sales volumes, and give customers rewarding experiences. CPN, based on its market survey, focuses on joint sales promotions conducted with department stores, Central Group businesses, and allied retail shops to create superior value. As for events, the emphasis is on outstanding signature events that create memorable shopping experiences. All these are efficiently communicated via different channels.

>> Service and facility management (including that of toilets, parking, public relations counters): CPN focuses on personnel development, enhancing quality of services and facilities on a par with international standards, and application of advanced technologies to maximize customers’ satisfaction and lower operating costs.

STRATEGY FOR DEVELOPMENT TO SUSTAINABILITY

Based on good corporate governance practices, CPN focuses on strengthening the foundation of corporate sustainability through international standardization of internal management processes, personnel development to cultivate competency, integrity and corporate commitment, and responsible actions toward society and neighboring communities.

>> Development of internal management processes toward excellence: Information technology (IT) and quality management systems are applied to address ongoing business needs. CPN developed IT systems to efficiently support organizational growth. It has improved work processes and applied enterprise resource planning (ERP) to support management, as well as improving its corporate management system under the Thailand Quality Award (TQA) approach.

>> Development of human capital and organization: CPN stresses development of its human capital to instill professional aptitude and integrity through its talent management program, which ensures staff competency in supporting future corporate growth. The program defines recruitment processes and skill development, while enhancing leadership potential by using integrated development mechanisms of CPN Academy. In addition, CPN has in place individual career growth and assessment system development, and strives to create a sense of belonging among employees. In organizational development, CPN promotes corporate core values and culture, good governance, employer branding, and sound internal communication. 75

>> CSR Strategy: CPN implements Green Experience, CPN Volunteer, and CPN Cultivate Thai Wisdom projects. Focusing on energy conservation and employee-initiated programs, these projects improve neighboring communities and enrich the knowledge of underprivileged groups in remote areas.

REGIONAL STRATEGY

CPN has analyzed opportunities to expand its investment in different regions, focusing on Asian countries. The regional strategy raises CPN’s capability and competitiveness toward the realization of the vision of becoming a regional retail property developer. CPN’s business allies in each of these countries are chosen from local companies with specific strengths that contribute to the maximization of CPN’s business growth

Overseas projects include the renovation of shopping centers and development of new projects in high-potential locations. CPN may undertake joint investment with business allies in target countries to increase its market penetration speed, efficiency, and competiveness. In addition, collaborations between CPN and other business groups within Central Group such as retail, hotel, and restaurant businesses will attract and convince the local businesses to be CPN’s alliances.

Target countries are selected for market opportunities and compatibility with CPN’s business after a comprehensive study, covering each country’s economic, social, political, regulatory, and overall retail market conditions. CPN also undertakes detailed feasibility assessment of all projects under its investment plan to maximize the benefit from each investment decision.

ORGANIZATION EXCELLENCE STRATEGY

To maximize the efficiency and effectiveness of CPN’s internal infrastructure to support continuous business growth in domestic and overseas markets, CPN has invested in developing its management systems, covering the basic IT and human resource development systems, as well as improving the flexibility, speed, and efficiency of administrative procedures and key processes. 76 | 77 CPN ANNUAL REPORT 2012

CORPORATE VALUES

With challenging goals and internal organization development to support long-term vision, CPN still commits to its corporate values “To be confidently creative and strive for excellence together” which has passed on to motivate and create quality outcomes to Thai society.

COMMITTED COMMITTED COMMITTED COMMITTED TO CREATING FOR FAITH TO EXCEL- TO JOINT SATISFYING LENCE SUCCESS EXPERIENCES WITH PART- NERS

CPN is committed to ensur- CPN is committed to cul- CPN focuses on achieve- CPN stresses its employees’ ing that everyone exercises tivating trust and achiev- ment by all personnel and cordial relations with others their initiatives and sparks ing acceptance by others their ability to push for re- by extending cooperation, positive ideas, methods, through a display of matu- sults against goals with due help, support, information, or innovations to improve rity, credibility, judiciousness, attention and recognition of and wholehearted contri- work through outstanding fairness, collaboration, ac- all quality-related aspects. bution to teams or people, and unique performance. countability, and other ac- It also focuses on profes- both inside and outside their Unfamiliar ideas can be tions taken with due regard sionalism and mastery of own units. Employees should developed and applied for for related parties and CPN the task at hand, as well as manage conflicts and crea- positive benefit and impres- at large. attention paid to regular tively resolve problems with sive outcomes. self-improvement to sup- consistent respect for and plement value and support honor toward others so as CPN’s successful achieve- to maintain friendship with ment of desired directions all parties. and strategies. 77

NATURE OF BUSINESS

Established on 17 June 1980, to develop and manage large-format and inte- SHOPPING COMPLEXES grated shopping centers, the Company has been listed on the Stock Exchange CPN’s main source of income, the shopping complex business generates of Thailand (SET) since 1 March 1995. over 79% of the total revenue. Income includes rental of retail spaces, Its current issued and paid-up share utility, and security services, apart from cleaning services at 17 proper- capital is Baht 2,178,816,000, of which ties. Another source of income in this category is the management fee the majority is held by Central Hold- at three property projects under CPNRF and a share of profits from ings Co., Ltd., and Chirathivat fam- investment in CPNRF. ily members. CPN’s core businesses According to its estimated data, as of 31 December 2012, CPN’s earned comprise development of large-scale a 22% market share of the retail industry in bangkok shopping complexes and provision of retail space for rent and services. CPN’s shopping complex development starts from finding strategic At present, CPN manages 20 shop- locations, conducting feasibility studies, controlling designs and ping complexes, owning 17 projects, construction, administering sale, to managing the shopping complexes with three leased out to CPN Retail after their commercial opening. Also in the scope of work is the Growth Leasehold Property Fund (“CP- provision of utilities, together with security and cleaning services at each NRF”). CPN also runs office, residential, site. and hotel buildings as its supporting business to optimize the use of land, OFFICE BUILDINGS diversify income sources, and draw in more customers to shopping complex- The office building business involves the development of office buildings es. CPN operates related businesses, for rent, whereas there is demand for office space in shopping complex such as water and recreational parks, areas. It was found that the office building business not only comple- and food centers in some shopping ments that of the shopping complex, but also added value to the project. complexes to facilitate shoppers. Ser- It also enhanced land usage and efficiency of car park management. vices and facilities provided at each The decision to develop an office building depends mainly on supply and complex mainly depend on locations demand for office space at each location. Income from the business and the needs of target customers. comprises rental of office space, rental of retail shops in office buildings, CPN’s business falls into various busi- and utility service fees. ness groups. Categorized by the source CPN’s office building development starts from conducting feasibility of income, there are six business studies, controlling designs and construction, leasing, to managing the groups, described as follows: buildings when they come into operation. Also in the scope of work is the provision of utilities, together with security and cleaning services at each site.

At present, CPN runs seven projects of office towers, on the premises of CentralPlaza Lardprao, CentralPlaza Pinklao, CentralPlaza Bangna, Cen- tralWorld (The Offices at CentralWorld), CentralPlaza Chaengwattana, and CentralPlaza Grand Rama 9. For office buildings, CPN owns four projects and manages three projects, two project under CPNRF (Pinklao CentralPlaza Chaengwattana Tower A and B Office buildings at CentralPlaza Pinklao) and one project under CPNCG (The Offices at CentralWorld). Tenants of office buildings in CentralPlaza Lardprao, CentralPlaza Pinklao, CentralPlaza Bangna, Cen- tralPlaza Chaengwattana, and CentralPlaza Grand Rama 9 projects are mostly operators of businesses benefiting from shopping complexes, such as tutorial schools, language and music schools, beauty parlors, and securities brokerage firms. The Offices at CentralWorld is different because it is a grade A office building located in the heart of the central business district, so most tenants are leading businesses, both Thai and foreign, and multinational companies looking to base their headquarters there.

HOTELS

CPN’s hotels and shopping centers are located in the same areas since there is a natural demand that supports the retail business. This practice adds value to each project by making the most use of properties for the maximum return on investment. Key principles for consideration of hotel investment include project location, demand, supply, surrounding areas, and the project’s growth potential. The hotel business comprises guest rooms, seminar rooms, and convention centers to serve the growth of the MICE (Meeting Incentive Convention and Exhibition) industry. Currently, CPN owns two hotels. One is the 259-room Centara Hotel Udonthani (formerly known as Charoensri Grand Royal Hotel, a part of Charoensri Complex, acquired by CPN in April 2009) and the other is Hilton Pat- taya Hotel with 302 rooms (situated on top of CentralFestival Pattaya Beach and open on November 2010). CPN has employed expert hotel management companies, namely Central Plaza Hotel Plc and Hilton Hotel Corporation, to manage Centara Hotel Udonthani and Hilton Pattaya Hotel respectively for the maximum benefit.

RESIDENTIAL BUILDINGS

At present, CPN manages two residential building projects. One is Lang- suan Colonade, a 50-unit serviced apartment, and the other is Central City Residence Condominium, a 12-unit condominium on the premises of CentralPlaza Bangna. 80 | 81 CPN ANNUAL REPORT 2012

WATER PARKS AND RECREATIONAL PARKS

Water parks and recreational parks are supporting businesses for shopping complexes, adding variety to features and services of shopping complexes. Not only can they attract more customers to shopping complexes, but also bring happiness to customers and people in surrounding communities. To make this happen, the size of land and space availability in the project are key. Current projects in this category are “Leoland Water Park” on the sixth floor of CentralPlaza Bangna and “Central Park”, a large-scale recreational park on the premises of CentralPlaza Rama 2, open to the public and consisting of a health park, a children playground, an activity area, and renowned restaurants.

FOOD CENTERS

Food Centers are considered essential to shopping complexes. They are intended for providing customers with a wide variety of economical and ready-to-serve dishes. CPN earns sizeable income from the sale of food and beverage in food centers. 81

CURRENTLY, THE PROJECTS UNDER THE MANAGEMENT OF CPN AND ITS SUBSIDIARIES ARE:

Projects Owned by CPN Shopping Complexes Office Buildings Hotel Residential Buildings Food Centers

CentralPlaza Lardprao • • CentralPlaza Ramindra • Central Center Pattaya • CentralPlaza Chiangmai Airport • • Langsuan Colonade • CentralPlaza Bangna • • • • CentralWorld • CentralPlaza Rattanathibet • • CentralPlaza Chaengwattana • • • CentralFestival Pattaya Beach • • • CentralPlaza Udonthani • • • CentralPlaza Chonburi • • CentralPlaza Khonkaen • • CentralPlaza Chiangrai • • CentralPlaza Phitsanulok • • CentralPlaza Grand Rama 9 • • CentralPlaza Suratthani • • CentralPlaza Lampang • •

Projects Managed by CPN Shopping Complexes Office Buildings Hotel Residential Buildings Food Centers

CentralPlaza Pinklao 1) • • • CentralPlaza Rama 3 2) • • CentralPlaza Rama 2 3) • • CentralWorld 4) •

Remarks: 1) 42% of CPN’s shopping malls and all of the office buildings were subleased to CPNRF from November 2009 to December 2024 2) 81% of CPN’s asset was leased to CPNRF from August 2005 to August 2035 (a 30-year lease can be renewed twice) 3) 96% of CPN’s asset was subleased to CPNRF from August 2005 to August 2025 4) 97% of the Offices at CentralWorld was leased to CPNCG from September 2012 to September 2032 82 | 83 CPN ANNUAL REPORT 2012

GROUP STRUCTURE OF THE COMPANY AND ITS SUBSIDIARIES

CENTRAL PATTANA PLC.

27.80% 25.00% 100.00% 100.00% 1)

CPN Retail Growth CPN Commercial Thai Business Leasehold Property Growth Leasehold Thai Business Fund 4 Fund 5 Fund Property Fund

99.99% Central Realty Services Co., Ltd.

99.99% CPN Pattaya Beach Co., Ltd.

99.99% 99.99% 99.99% Langsuan Realty Co., Ltd. Bangna Central Property Co., Ltd. Central Play Land Co., Ltd. Direct 99.99% 12.00% Central Pattana Rama 2 Co., Ltd. Siam Retail Development Co., Ltd. Indirect 99.99% 3.00% Central Pattana Chiangmai Co., Ltd. Square Ritz Plaza Co., Ltd. 12.00% 99.99% 11.85% Central Pattana Rattanathibet Co., Ltd. Ayudhya Agrocity Co., Ltd.

99.99% 60.99% Central Realty Service Rama 3 Co., Ltd. 2)

39.00% Central Pattana Rama 3 Co., Ltd.

99.99% 24.99% Central Food Avenue Co., Ltd. CPN City Co., Ltd. 75.00% 90.00% 99.99% CentralWorld Co., Ltd. CPN Complex Co., Ltd.

78.13% 10.00% Central Pattana Khon Kaen Co., Ltd.

99.99% Central Pattana Chonburi Co., Ltd.

93.30% Central Pattana Nine Square Co., Ltd.

99.93% CPN Construction Management Co., Ltd

99.99% Global Commercial Property Limited. CPN Pattaya Beach Hotel Co., Ltd. 100.00% 99.99% Central Pattana Development Co., Ltd. 3) Central (Shanghai) Management 99.94% Consulting Co., Ltd. CPN Global Co., Ltd. Global Retail Development & Investment Limited. 100.00% 4) 100.00%

Remarks: 1) Only capital from owner type unitholders 2) Registered its dissolution on 2 August 2010 and are currently not registered complete liquidation. 3) CPN Chiangrai Co., Ltd. has changed its name to Central Pattana Development Co., Ltd. on 29 May 2012 4) Capital was paid up in full on 27 September 2012. 83

REVENUE STRUCTURE OF THE COMPANY AND ITS SUBSIDIARIES

Unit : Million Baht

% of Type of Business / Operated By Year 2012 Year 2011 Year 2010 Year 2009 Year 2008 Amount % Amount % Amount % Amount % Amount %

Shopping Centers 14,505 79.10% 10,062 75.60% 9,142 76.70% 9,254 75.70% 7,244 73.90% > Central Pattana Plc. > Central Pattana Chiangmai Co., Ltd. 99.99% > Bangna Central Property Co., Ltd. 99.99% > Central Play Land Co., Ltd. 99.99% > Central Pattana Rama 3 Co., Ltd. 99.99% > Central Pattana Rama 2 Co., Ltd. 99.99% > Central Pattana Rattanathibet Co., Ltd. 99.99% > CPN Pattaya Beach Co., Ltd. 99.99% > Central World Co., Ltd. 100.00% Central Pattana Khon Kaen Co., Ltd. 78.13% > > Central Pattana Chonburi Co., Ltd. 99.99% > Central Pattana Nine Square Co., Ltd. 93.30% > Central Pattana Development Co., Ltd. 99.99%

Office Buildings 794 4.30% 767 5.80% 655 5.50% 898 7.30% 868 8.90% > Central Pattana Plc. > Bangna Central Property Co., Ltd. 99.99% > Central World Co., Ltd. 100.00%

Hotel 712 3.90% 465 3.50% 157 1.30% 116 1.00% - - Central World Co., Ltd. 100.00% > > CPN Pattaya Beach Hotel Co., Ltd. 99.99%

Residences 18 0.10% 18 0.10% 20 0.20% 21 0.20% 24 0.20% > Langsuan Realty Co., Ltd. 99.99% > Bangna Central Property Co., Ltd. 99.99%

Water and Recreation Park 8 0.00% 6 0.00% 6 0.10% 5 0.00% 7 0.10% > Central Pattana Rama 2 Co., Ltd. 99.99% > Bangna Central Property Co., Ltd. 99.99%

Food Centers 725 4.00% 632 4.70% 550 4.60% 639 5.20% 456 4.70% > Central Food Avenue Co., Ltd. 99.99% > Central Pattana Chiangmai Co., Ltd. 99.99% > Bangna Central Property Co., Ltd. 99.99% > Central Pattana Rama 2 Co., Ltd. 99.99% > Central Pattana Rattanathibet Co., Ltd. 99.99% Central World Co., Ltd. 100.00% > > Central Pattana Development Co., Ltd. 99.99%

Interest Income 78 0.40% 48 0.40% 49 0.40% 27 0.20% 167 1.70% Share of Profits from Investment in CPNRF 584 3.20% 498 3.70% 475 4.00% 451 3.70% 362 3.70% Others 925 5.00% 815 6.10% 858 7.20% 820 6.70% 972 7.20%

Total Revenues* 18,349 100% 13,311 100% 11,912 100% 12,231 100% 9,800 100%

Remark : Excludes non-recurring items CentralWorld CORPORATE GOVERNANCE

Recognizing the significance of good new staff, e-mail, intranet system, >> CPN equitably provides share- corporate governance in creating internal bulletins, announcement holders, whether major or minor sustainable relationships and interests boards, E-learning programs, CPN ones, foreign or institutional investors, among all stakeholders, the Board of website and the organization of diverse with basic shareholding rights and Directors has formulated CPN’s good activities. right protection treatment, including corporate governance (CG) principles the right to purchase, sell, and In 2012, CPN started producing E- since 2004, with constant revisions transfer shares; to receive clear learning media to enhance staff’s to ensure that the principles suitably and accurate information; to attend understanding of its CG principles and conform to international standards. shareholders’ meetings and vote on code of business conduct. The system The current CG principles fully conform significant transactions; to elect or was launched in January 2013 and, at to the guidelines issued by the Stock dismiss directors to manage CPN; present, provides an round-the-clock Exchange of Thailand (SET) in 2006 to set Board compensation; to learning to all executives and staff, and the Organisation for Economic appoint and dismiss external auditors who can access the system from their Co-operation & Development (OECD)’s and set their fees; to receive part offices and other locations through the good CG principles. of CPN’s profit as dividends; and to internet. participate in and be adequately CPN’s code of business conduct and informed on decisions about CPN’s good CG principles are revised annually fundamental changes. CORPORATE GOVERNANCE and approved by the Board. The latest PRINCIPLES revision on 29 September 2011 con- >> Details about the exercise of these forms to the international standards Below are the five sections of CPN’s rights are distributed via SET’s and guidelines set by the United Nation CG principles: information disclosure system, with Global Compact (UNGC) and the ISO due respect for the equitable and 26000 guidelines on corporate social 1. Rights of Shareholders convenient access to information, responsibility (CSR) practices, adapted as well as the right-exercising for implementation by CPN. period. No action will be taken to CPN takes the following measures to limit shareholders’ rights of access protect the rights of every shareholder: All directors, executives, and employees to CPN’s information system or are well aware of the guidelines for obstruct communication between >> CPN ensures that shareholders will ethical conduct and good CG principles. shareholders. receive full returns from investments All of them have also put their by maintaining a straightforward signatures on acknowledgment forms 2. Equitable Treatment of structure of alliance among CPN, to express their joint commitment in Shareholders its affiliates, and joint ventures, with strict conformance to the guidelines no joint-holding or cross-holding and principles as part of their work of shares. It also has no pyramid CPN observes the principle of affording discipline. Furthermore, the guidelines shareholding structure within the equitable treatment to all shareholders and principles are constantly publicized Group. without discrimination, whether major to raise the awareness and participation of all through the orientation of 86 | 87 CPN ANNUAL REPORT 2012

or minor ones, institutional or foreign The 2012 AGM was held on Friday, 27 >> Meeting notices are in Thai and investors. Practical guidelines to April 2012, at 14.00 hours at the Bangkok English. For the 2012 AGM, the promote genuine equality include: Convention Center, 5th floor, Central meeting notice was posted on CPN’s Plaza Lardprao Shopping Center, 1693 website on 21 March 2012, 30 days >> CPN has put in place internal regu- Phaholyothin Road, Chatuchak, Bangkok. ahead of the meeting date, and was lations to prevent abuse of inside A total of 1,038 shareholders personally distributed to shareholders 21 days information and conflicts of interest. attended or were represented by ahead. This provided shareholders Relevant details appear under their proxies (equal to 79.05% of all with enough time to examine the “Control and Prevention of the Use shares issued) together with 11 (of the information. of Inside Information” on page 97 12) directors (equal to 91.67% of the Board), which included the Chairman >> In the meeting notice, CPN enclosed >> Transactions with possible conflicts of the Board, Chairman of the Audit essential, adequate facts and of interest must be submitted to the Committee, Chairman of the Nomination rationales, as well as directors’ Audit Committee for their review and and Remuneration Committee, comments on all items on the agenda comments before submission to the Chairman of the Risk Management for shareholders’ consideration. The Board and shareholders’ meetings Committee, President & CEO, Chief AGM agenda comprises: for approval, if applicable. CPN Financial Officer, Company Secretary, discloses complete, essential and the external auditor. Details of the . 1 Nomination of Directors: CPN information under the law and AGM proceedings are as follows: provides basic information on regulations. Relevant details appear candidates, including each one’s under “Monitoring of Conflicts of Before the Meeting name, age, type of directorship, Interest” on page 97 education, director training >> CPN provided minority shareholders courses attended, experience, >> Acting under the principles and with the right to propose in ad- positions held in other busi- guidelines on affording equal vance additional agenda items and nesses, number of years in each treatment to all shareholders during nominate directors from 15 position, and participation in shareholders’ meetings as detailed September 2011 to 15 January 2012. committees’ meetings as below: This included shareholders’ rights to member of such committees query meeting agenda before the during the previous year, 2012 AGM: meeting date by submitting their shareholding in CPN, and other queries to the Company Secretary. information such as any conflict CPN recognizes the importance of Criteria for such consideration, which of interest incurred in the giving identical rights and affording were agreed by the Board, can be previous year. equal treatment to all shareholders. viewed at CPN’s website. However, Relevant guidelines have been adopted in 2012, no shareholder proposed . 2 Compensation: CPN provides for actual actions (before, during and any name or agenda item for information on the policy, amount, after meetings) for all shareholders’ consideration. and form of compensation meetings. 87

for each director’s position download Proxy Forms A, B, and >> Participants were informed of the and responsibility, criteria, and C from www.cpn.co.th. In addition, voting result for each agenda item the procedures for determining the names and profiles of the four and presented with the voting compensation. independent directors are provided scores. for shareholders’ voting by proxy. At . 3 Appointment of External Audi- the 2012 AGM, 539 shareholders >> CPN transparently conducted the tors: CPN provides informa- appointed independent directors as AGM by following respective agenda tion on the names of auditors their proxies. Details are as follows: items as stated in the meeting and their affiliations, auditors’ notice, in strict conformance to the law independence, and the number > 356 shareholders appointed and CPN’s regulations. Representa- of service years with the audit Mr. Paitoon Taveebhol, Chairman tives from KPMG Phoomchai Audit company for consideration of of the Audit Committee. Limited were invited to observe the the suitability of the auditors’ meeting. fee, presented separately from > 183 shareholders appointed other fees. Mr. Karun Kittisataporn, member >> Shareholders were allowed to attend of the Audit Committee. a meeting in progress and vote on . 4 Dividend Payment: CPN provides remaining items. information on the dividend policy During the Meeting and dividend amount proposed >> CPN allowed shareholders to freely for approval, in comparison >> CPN provided at least a two-hour express their views and raise their with the amount paid in the registration period before the questions at the meeting. The previous year. meeting. A barcode system eased Chairman of the Board, Chairman of registration and vote counting to the Audit Committee, Chairman of >> There was no significant, extraordi- speed up the process and ensure the Nomination and Remuneration nary document distributed at the information accuracy and reliability. Committee, President & CEO, meeting, no added item, and no executive management, and external amendment made to material >> CPN provided shareholders with auditor attended the meeting information without informing the voting rights equivalent to the to clearly answer all aspects of shareholders in advance. number of shares held. One share shareholders’ questions. yields one vote. >> CPN facilitates shareholders who After the Meeting cannot attend the meeting them- >> Shareholders were informed by CPN selves by enclosing in the meeting about the vote-tallying procedures >> CPN submitted the resolutions of notice Proxy Form B, on which they before the shareholders’ meeting. every shareholders’ meeting through can state their voting preference, SET’s information disclosure system together with details about how >> CPN introduced the use of ballots on the same day so that non- to appoint a proxy to sharehold- for casting votes. The ballots were attending shareholders might be ers’ meetings. Shareholders can prepared separately for each immediately informed. agenda item for shareholders’ voting convenience. 88 | 89 CPN ANNUAL REPORT 2012

>> Shareholders could also view a of Business Conduct for Stakeholders”, 2. Developing of service staff and webcast of the AGM via CPN’s as detailed below: evaluation of their services, website or request a video recording including tenant relations staffs’ of each meeting from the Office of >> Shareholders: Stimulate growth with daily visits to each store to the Company Secretary. quality and stability for the share- serve tenants and listen to holders’ sustainable benefit with their problems and complaints. >> Minutes of each shareholders’ good and efficient performance; Customer service staff are also meet ing were distributed in Thai respect the shareholders’ equal rights assigned to walk around shopping and English through the Company’s to receive necessary information; areas inside every center website within 14 days after the disclose correct and actual to handle shoppers’ questions or meeting date, with a copy sent to information; conduct business based promptly provide recommenda- SET within the stated period. on honesty, transparency, and tions, thereby saving them a trip fairness. Relevant details appear to the PR counter. >> Shareholders’ opinions on the under “Rights of Shareholders” and organizing of shareholders’ meeting “Equitable Treatment of Shareholders” 3. Meeting and communicating any were obtained through a satisfaction significant operational plans with survey. The information acquired >> Customers: Satisfy the customers tenants at least once a year, was then applied to improving the with good service, fair, and proper including meeting with the tenants efficiency of future shareholders’ treatment of customers; provide when opening or renovating any meetings. complete, correct, and actual CPN’s shopping complex, in order information; undertake customer to announce its policies and to

In 2012, CPN received a quality assess- satisfaction surveys, the results plan any joint marketing activities. ment score of 100 for the AGM quality of which are used to continuously Furthermore, these meetings assessment project, jointly conducted improve the service. These activities provide an opportunity for by the Thai Investors Association, the are described below: tenants to express their opinions Securities and Exchange Commission and make any recommendations (SEC), and the Thai Listed Companies 1. Managing and providing stand- for continuous service improve- Association. The assessment criteria ardized services to tenants ment. included steps undertaken before each under the supervision of the shareholders’ meeting and activities on Standard Promotion and Control . 4 Jointly developing plans with the meeting date and afterward. Unit (SCU). The activities run by tenants such as organizing SCU included the standardization activities on assorted occasions,

3. Roles of Stakeholders of policies, work processes related including shop openings, new to tenants at all branches, and product launches, business CPN values all stakeholders and public information of the services partnerships, and joint sales observes sustainability of common provided by CPN. promotions between retail shops benefits. It has clearly set policies and and the shopping complex to roles toward stakeholders in its “Code enhance shop owners’ pre- paredness in running their businesses. 89

. 5 Undertaking satisfaction surveys >> Business partners: Based on equi- to present information to its decision relating to the services provided table treatment of business -makers so as to improve the quality to the tenants on a regular and partners and joint benefit, CPN of their work lives in pursuit of joint annual basis, in order to be observes its clearly detailed development. informed and aware of any procurement procedures and tenants and customers’ needs as practices to facilitate mutual >> Business competitors: Conduct well as to improve CPN’s trust and long-term relationships, business with fairness; refrain from excellence in services. including economic, social, and improperly seeking competitors’ environmental cooperation. confidential information; refrain from . 6 Providing more communication abusing the intellectual property channels for customers to >> Creditors: Strictly respect agree- rights of others or those of receive business information and ments with creditors; manages loans competitors; promote the sharing of to voice complaints, including according to lending objectives; avoid information that benefits the overall direct contact with tenant service using the loans to cause damage development and management of officers at each branch, I - Box, to CPN; ensure timely repayment shopping complexes to strengthen Company website and CPN Call of loans and interests; thoroughly the business and contribute to Center at +66(0) 2635–1111, etc. honor loan conditions as agreed; sustainable national economic, social, and competently operate the and environmental development. . 7 Conducting focus groups to learn business to assure creditors about the specific needs of each tenant CPN’s healthy financial standing and The establishment of the Thai Shop- group and assessing the loan repayment capabilities. ping Center Association exemplifies outcomes for service improve- close cooperation between CPN ment. >> Employees: CPN provides fair and and industry peers, designed to proper treatment of employees share useful business directions and . 8 Recognizing the importance of without discrimination, whether in experience for common benefit. In developing public relations media opportunity, compensation, job 2012, joint discussions included the by not using images or contents assignment, job transfer, or com- following: that may cause negative petency development, as well as attitudes, social division, or im- managing employees’ workplaces to 1. Establishment of standards for proper values, especially those ensure the safety of their lives and shopping complex food centers about sex or immorality, in the properties. Relevant details appear and creation of value-added company’s sales campaigns. under "Organization Development" features. and "Human Resource Management" . 9 Overseeing that the environ- on page 99 and 102 respectively. . 2 Exploring measures to ease traf- ment, the area inside and around In addition, CPN encourages dialogue fic congestion around shopping the property under the com- between the Company and centers, such as the intelligent pany’s management, is safe for employees or their representatives parking lot project. health, life, and property. 90 | 91 CPN ANNUAL REPORT 2012

. 3 Sharing of experience and and experience to all social sectors. Policy on adherence to human rights in formation among industry Relevant details appear under protection laws and regulations peers, such as the protection “Sustainability Management” on covered by different insurance page 107 A key basis of CPN’s business conduct policies and the establishment is legal compliance, which includes of safety standards in shopping >> Government: Cooperate and domestic and foreign laws, as well centers. support government policies for the as relevant customs, traditions, and benefit of the country under relevant cultures. CPN also tries to surpass . 4 Joint organization of social law and criteria; actively implements standards, such as complying with responsibility activities, such as projects beneficial to the public, international standards by cooperating building libraries, organizing whether as assigned by the govern- with an air traffic control agency walking-jogging marathons, ment or company-initiated projects. in the improvement of CentralPlaza launching donation corners within Lampang Shopping Center’s roof for shopping centers, and organizing >> Independent organizations and the safety of airplanes, and stressing energy-saving campaigns. related social organizations: CPN the structure, stability, and safety of its upgrades cooperation and infor- office buildings. . 5 Organizing activities to bolster mation-sharing with independent relationships among Association organizations and other related CPN promotes and respects the members. social organizations for joint, sustain- protection of human rights, and ensures able development of society and the that its business conducts have no >> Society, communities and the country, taking into account impacts connection with any human rights environment: Respect relevant on the economy, society, and the violation such as forced labor or child laws and/or regulations and try to environment. labor. All stakeholders are treated fairly surpass standards, such as inventing on human dignity and non-discrimination or applying the innovation of energy- Policy on intellectual properties of national origin, race, gender, age, skin efficient buildings in CPN’s shopping color, religion, physical condition, status, centers and office buildings; monitor CPN conducts its business strictly under or birth. It also promotes the monitoring the operation of the company and the law or regulations on intellectual of human rights compliance within CPN prevent it from damaging the quality property rights, whether in trademarks, and encourages subsidiary companies, of life of society, communities, and patents, copyrights, classified com- investors, business partners, and all the environment; develop society in mercial information, or other stipulated stakeholders to observe the interna- its quality of life, education, energy categories of intellectual property, such tional standards of the principles of saving, and environmental protec- as using only licensed software that has human rights. Another example of CPN’s tion. Furthermore, CPN actively been inspected and installed by CPN’s human rights practices is the protection communicates and spreads knowl- Information Technology Department, of stakeholders whose rights are edge of environmental conservation and encouraging employees to ensure affected by CPN’s operation by offering to its relevant stakeholders to that the application of research findings compensation at a rate comparable to establish an environmental protec- or other data in their work does not what is stated by the law. tion network that spreads knowledge constitute a violation of other people’s intellectual property rights. 91

Policy against fraud and corruption laws and regulations, its guidelines Audit Committee cover the offering and taking of gifts, Central Pattana Public Company On 9 November 2010, CPN stated its assets, entertainment meals, and Limited position on the “Collective Action other benefits; excessive expenses that 30th floor, The Offices at Coalition” on anti-corruption practices, a are out of line with CPN’s regulations; CentralWorld 999/9 Rama 1 Road, collaboration jointly undertaken by the procurement practices; and donations. Patumwan Bangkok 10330 Thai Institute of Directors Association Tel : +66(0) 2667 5555 ext. 1200 (IOD), Thai Chamber of Commerce, Details of these policies and other Email : [email protected] foreign chambers of commerce, Thai important policies appear in the “Code Listed Companies Association, and of Conduct and Corporate Governance The President & CEO Thai Bankers’ Association. The Board Principles”, whereas important details P.O. Box 99 has also set a policy against fraud on treatment of stakeholders appear Pratunam, Bangkok 10409 and corruption and has informed the under “Sustainability Management” on management and all employees about page 107 The rights of whistleblowers who are this. There has also been knowledge- employees, customers, and outsourced sharing and experience-sharing with Whistleblowing and Complaints persons will be protected under the the government, the private sector, law. Relevant details appear in “Code and stakeholders–for example, the CPN has set up a committee respon- of Conduct and Corporate Governance attendance of CPN’s representatives sible for reviewing and investigating Principles”. for “Anti- Corruption Day 2012: Join complaints or information, and has Forces to Change Thailand” held by given clear assignment of roles, In 2012, CPN was engaged in no Anti-Corruption Network, on September responsibilities, and procedures to deal significant dispute with any stakeholder. 6, 2012. with such situations with transparency and accountability to ensure that 4. Disclosure and Transparency “Stop Corruption” boxes are installed whistleblowers can fully trust and have at several shopping centers under CPN confidence in this process. CPN is committed to correct, complete, management, such as CentralPlaza transparent, thorough, and timely Udonthani and CentralPlaza Khonkaen Should employees or stakeholders disclosure of information, whether shopping centers, to accept complaints suspect any unlawful activities or those financial or non-financial, so that and information about suspicious in violation of the law, rules, regulations, investors and all stakeholders may practices. This is to cooperate with or code of business conduct, they can regularly receive reliable and adequate government agencies in offering alert or file complaints together with information fortheir decisions. Disclosure convenient channels for all stakeholders detailed evidence to CPN’s Audit of such information includes: to provide clues about corruption. Committee. Then, the committee or CPN’s management will investigate the >> CPN’s material information and cur- CPN provides communication channels facts related to such activities and rent news are provided through for stakeholders to report dishonest or propose its findings to the Board for various communication channels, illegal practices. Based on transparency, acknowledgement and further fairness, and compliance with relevant consideration. Details of communication channels are as follows: 92 | 93 CPN ANNUAL REPORT 2012

such as CPN’s website, SET’s shareholders, and the general public. This report provides shareholders information disclosure system, Investor Relations works closely with and investors with enough accurate quarterly reports, business action senior executives to formulate policies information for their decision-making plans, and annual reports. as well as quarterly and annual plans, on investment and monitoring of the including operational guidelines and Company’s performance. >> The information includes Form 56-1, approaches for developing CPN Annual Report (Form 56-2), financial Investor Relations practices on a par with 3. CPN discloses its information via information, information on major leading regional listed companies. The the www.cpn.co.th website under shareholders and voting rights, division also presents performance “Investor Relations” to facilitate information on directors and mem- results and comments from share- investors’ and the interested public’s bers of subcommittees, information holders, analysts, and investors to the study of its information. The website, sent to SET, dividend policy, Code of Board twice a year. available in both Thai and English, Conduct and corporate governance has been regularly updated. Investor principles, CPN’s activities, and CPN discloses complete, accurate Relations discloses information, action plans. corporate and financial information such as financial information, MD&A, through the following channels: shareholding structure, corporate Responsible persons for information governance, company information disclosure 1. Form 56-1 and the Annual Report submitted to SET through its ELCID (Form 56-2) provide detailed system, Annual Report, Form 56-1, CPN has assigned specific persons information on significant topics, notices to shareholders’ meetings, responsible for disclosing its material including business overviews, risk minutes of shareholders’ meetings, information, comprising the President factors, capital structure and press releases and photo releases, & CEO, Company Secretary, and top management, connected transac- investor relations calendar (IR Event executives responsible for finance tions, management of inside informa- and Calendar), factsheets for and investor relations, including top tion, corporate governance, financial existing and new projects, and executives responsible for marketing status and performance, and future presentations used during both do- and public relations. These parties are projects. mestic and international roadshows responsible for disclosing information by senior executives. The website only related to their respective areas 2. The Management Discussion and received over 10,540 visitors a month, of responsibility. Analysis (MD&A) quarterly and with over 569,984 viewings of the annual reports, which provide detailed webpage information a month (128% Investor Relations operation and financial information, higher than last year). Furthermore, including analysis and explanations over 3,247 people subscribed CPN established an Investor Relations of factors causing changes in per- to Investor Relations’ electronic Division in 2006 as the center for formance results, progress reports newsletters. handling enquiries, disclosing the of projects under development, key Company’s information, and managing factors or influences that may affect relations with investors, analysts, future results and financial status. 93

Quarterly Meetings with Sharehold- Meeting Investors 4. Holding 14 conference calls with ers and Investors investors. CPN regularly hosted a variety of 5. Communicating information via email CPN has joined SET in organizing investor-meeting activities to ensure and telephone 4-6 times per day. quarterly “Opportunity Day” activi- that senior executives and Investor ties so that its senior executives may Relations meet investors and explain CPN hopes that the Investor Relations present the Company’s quarterly reports specific information on performance, Division will continue to serve as the on performance results and explain strategic plans, guidelines on business center for disseminating information, business progress, such as expansion growth, and a summary of major events handling enquiries, and regularly projects, new projects, business in 2012, including answering questions. receiving and exchanging shareholders’ trends, and how to deal with positive This year these activities included: or investors’ opinions. Shareholders, and negative effects caused by internal investors, and interested parties may and external factors. This is a good 1. Hosting roadshows, which were contact the Company for additional opportunity for executives to meet and divided into: information through: answer the questions from analysts, investors, and shareholders in person. > 14 overseas roadshows Ms. Ampawee Chompoopongkasem In each quarter this year, an average > 7 domestic roadshows. Investor Relations Division of 80-100 investors and the interested Central Pattana Public Company public participated. SET also provides 2. Hosting 138 company visits to Limited st a live webcast via SET’s website, with enable analysts, as well as Thai 31 Floor, The Offices at a quarterly average of 458 persons and foreign retail and institutional CentralWorld 999/9 Rama I Road, following the activity via this channel. investors, to meet CPN’s senior Patumwan Bangkok 10330, Thailand Computer monitors are set up in front executives and investor relations Tel: +66(0) 2667 5555 of CPN executives so that the viewers specialists to, via prior appointments, ext. 1614 or 1688 can post their questions and get real- acquire Company information. Fax: +66(0) 2264 5593 time responses from the management E-mail: [email protected] during Q&A sessions. Furthermore, 3. Via prior appointments, hosting 19 5. Board Responsibilities visual and audio recordings of site visits for investors and securities executives’ presentations are provided analysts. This year, CPN, in coopera- The Board plays a crucial role in steering through a webcast system and posted tion with securities companies took CPN’s growth by setting its policies, on the CPN website to ensure that the foreign and Thai investors to visit vision, commitment, and annual Company’s quarterly performance is the Company’s shopping centers strategies, as well as constantly over- comprehensively disseminated to under CPN’s management, where seeing and monitoring the progress investors who did not participate. they appreciated business operation of operational aspects to ensure that through presentations from execu- all operations comply with CPN’s CG tives. principles. 94 | 95 CPN ANNUAL REPORT 2012

The Board’s structure Chairman’s roles Policy on limiting the number of companies and the term of directorship The Board consists of five independent While not being an independent di- for directors and the President directors out of a total of 12, accounting rector himself, the current Chairman for more than one-third of the represents shareholders. Based on >> A director must not serve on more total. A list of independent directors’ the deliberation of the Nomination than five SET-listed companies. names and information appears under and Remuneration Committee, and Currently, this requirement applies. “Management Biography” on page 243 with the approval of the Board, the Fully qualified under CPN’s standard, current structure is appropriate for >> Independent directors may hold of- independent directors can effectively CPN’s business and, in fact, is a forte fice for up to two consecutive terms, and efficiently discharge their duties supporting CPN’s constant success and extendable for another term, totaling for the full benefit of CPN. business growth, since the Chairman is up to nine years, effective on 4 knowledgeable, experienced, skillful in March 2013 The Board considers To ensure an inclusive supervision the retail and property development such a flexible policy appropriate of all operational aspects under CG industries, and conforms to the princi- due to the time-consuming process principles, CPN has set up four Sub- ples of good governance. in nominating a qualified independ- Committees, one Executive Committee, ent director. and one Management Committee, as In addition to the discharge of responsi- well as appointing the Company Secre- bility as a director under CPN’s Charter >> The President may hold director- tary to help the Board in performing its governing the functions of directors, ships in another company, but such duties. Relevant details appear under the Chairman of the Board has always action must not affect his own re- “Management Structure” on page 134 strictly conformed to ethical and good sponsibility for CPN. In addition, the CG principles to set a good example for other company must not be in the Diversity in Board structure directors, executives, and employees. same business or in competition with The Chairman sets the agenda for CPN. Board approval must first be The Board considers it appropriate Board meetings, ensures that every sought before accepting a director- that its structure comprises ethical and meeting proceeds properly, and pro- ship in another company. Currently, honest experts who are knowledgeable, vides full opportunities for all directors the President serves as a director of experienced, and skillful in diverse fields to creatively and freely express their CPN and two other listed companies. relevant to the conduct of business. opinions or suggestions. Whenever Furthermore, Board members are the Chairman has vested interests on Board meetings selected with non-discrimination of any agenda item of a Board meeting gender, race, religion, age, professional or shareholders’ meeting, he will stay >> The Board jointly plans meeting skill, or other qualifications. away from the meeting, abstain from dates for the entire year in advance, voting on that particular agenda item, with at least six meetings a year. In and assign another director to chair the meeting. 95

2012, there were six regular Board >> Any director with a vested interest in February, September, and No- meetings and no extraordinary on any agenda item must abstain vember to discuss strategic plans meeting, consisting of a total of 36 from the meeting and voting on and the procedure of connected agenda items for consideration and that item. transactions. A summary of issues 40 agenda items for acknowledg- and recommendations from the ment. >> If a situation occurs that is critically meetings were acknowledged by important or may have a significant the Board and the management for >> The Chairman, President, and Com- impact on CPN and/or any stake- further improvement of CPN. pany Secretary jointly set a clear holder, the management will submit agenda before each Board meet- full details of the incident to the >> The efficiency of Board meetings ing. All directors can freely propose Board for consideration, opinions, is evaluated at every Board meeting agenda items for consideration by and suggestions–for example, the to promote constant improvement the Chairman before inclusion in a Great Floods of 2011 and the political of directors’ performance and meeting. unrest of 2010. meeting arrangement. The outcomes of such evaluations for 2012 >> The Company Secretary must >> The minutes of Board meetings and averaged 94.49%. submit meeting documents that can all relevant information and docu- be revealed in a written form without ments are safely stored in electronic >> The Board also regularly considers affecting CPN’s business opera- files together with the original docu- any changes in relevant laws, rules, tions to the directors at least seven ments. and regulations that are crucial to days in advance for consideration, CPN, together with any news and up- together with an invitation letter >> For any question arising during a dates on good CG practices, so that specifying the meeting date, time, meeting that requires follow-ups ongoing activities of the Board fully place, and agenda. In emergencies, and/or additional information from conform to any revised and relevant to protect CPN’s rights or interests, any involved department, the Com- laws, as well as rules, regulations, and appointments for such meetings can pany Secretary will coordinate and guidelines currently in effect. be made through other methods at submit additional details/informa- shorter notice. tion to the Board as soon as pos- The Board’s Self-Evaluation sible.

>> During each meeting, the Chairman Method allocates enough time for discussion >> The Company Secretary must submit monthly reports, comparing of each significant issue and encour- By applying SET’s evaluation approach achievements against the Board- ages all directors to creatively and to suit the characteristics and structure approved targets, for the directors’ freely express ideas with due discre- of CPN’s Board of Directors, CPN direc- acknowledgment. tion, with the Company Secretary tors’ self-evaluation form is used for and Legal Department in attend- the entire Board. The results are key ance to take notes. >> Non-executive directors must hold factors for the enhancement of direc- at least one exclusive meeting a tors’ performance and related duties. year. In 2012, meetings were held The evaluation form consists of two key components: 96 | 97 CPN ANNUAL REPORT 2012

Component I The Board evaluates Evaluation of the CEO’s performance each year, the Company Secretary the scores given to the following six will distribute a CEO evaluation form aspects of its operation: Method to all directors and the CEO for self- evaluation. The completed forms will >> Board structure and qualifica- Based on SET’s evaluation approach, then be compared, and the information tions the CEO evaluation form consists of acquired from the comparison will >> The roles, duties, and responsi- two key components: be used for the CEO’s further career bilities of the Board development. >> Board meetings Component I Evaluation of the 10 >> Board performance following aspects of CEO’s perfor- The Company Secretary will collect all >> Relationship with management mance: the information and prepare a summary >> Director’s self-improvement and report, which will be submitted executive development. 1. Leadership skills to the Nomination and Remuneration 2. Strategic identification skills Committee and the Board for Component II The Board gives its 3. Adherence to strategic plans the consideration of the CEO’s future opinions and suggestions or identifies . 4 Financial planning and outcomes compensation. special issues of interest about its 5. Relationship with the Board performance or different aspects of 6. Relationship with other business Training and Seminars of the Board CPN’s operation. entities and other sectors . 7 Management skills and staff In supporting Board members’ continual Procedure relationship knowledge enhancement and the shar- 8. Succession plan ing of experience gained from their At the end of each year, the Company 9. Products and service knowledge discharge of duties as a Board and/ Secretary will send a self-evaluation 10. Personal qualifications. or sub-committees member, the form to every director, collect the Company Secretary keeps them Component II CEO development: completed forms, prepare a summary informed about upcoming seminars and Under this component, CEO’s report, and submit it to a Board meeting training courses dedicated to directors, strengths are identified, including as an agenda item for acknowledgment as well as coordinating and facilitating other aspects that should be further and discussion. their attendance. Details of attendance developed, with additional opinions at seminars and participation in directors’ provided by the Board. The outcomes of the self-evaluation for training courses appear under 2012 scored an average of 94.01%. “Management Biography” on page 243. Procedure Furthermore, the Board gave its opinions on diverse issues, including Internal Control and Internal Audit The CEO participates in the process strategic and human resource of setting his own performance preparations for the expansion of CPN’s internal control and internal targets and acknowledges the targets business to ASEAN markets, and the audit are key mechanisms ensuring the approved for the year. At the end of identification and formulation of CPN’s efficiency and effectiveness of CPN’s strategic plan. 97

operation, the accuracy and reliability of prohibited from undertaking dishonest Disclosure on the holding of CPN financial reports, and strict compliance stock transactions for their own shares: The Company Secretary to relevant laws and regulations. Staff’s benefit or the benefit of others, the must file a quarterly report on the understandings of these mechanisms Board ensures that a policy is in place shareholding of directors, executives, are constantly enhanced at all levels via to control the use of inside information and related persons and submit it their respective lines of command and and transactions on CPN’s shares. to the Board. CPN’s diverse public relations channels. >> Control of inside information: Monitoring of conflicts of interest Assessment on the adequacy of CPN’s Directors, executives, and all internal control system is undertaken employees must not use any It is CPN’s policy to conduct business annually by relevant management significant information of CPN, with honesty, open-mindedness, trans- divisions and Internal Audit. The five not yet disclosed to the public, parency, and fairness. CPN’s directors, aspects of control are as follows: for their own benefit or the benefit executives, and employees must not of others and must strictly observe engage in any business in competition 1. Corporate and business control the policy specifying the safeguard- with CPN or undertake any connected environment ing and use of inside information. transaction related to them or people/ 2. Risk management legal entities, which could pose any 3. Management’s operation >> CPN stocks: CPN directors, executives, conflict of interest to CPN. The Board . 4 Information technology system ecutives, and employees may invest must ensure strict conformance to the and communication in CPN’s share transactions. However, regulations and procedures for the . 5 Monitoring and evaluation to prevent conflicts of interest, disclosure of connected transactions system. these personnel and related specified by the law and the regulators. persons (spouses and under-aged The findings are reviewed by the Audit children) must not buy, sell, transfer, If a connected transaction is unavoid- Committee and reported to the Board or accept any transfer of the shares able, however, such transaction must for consideration and opinions. during the one-month period be- follow the general business provisions fore the public disclosure of CPN’s as specified and approved by the CPN’s current head of Internal Audit is financial statements. If any of them Board, based on transparency and Ms. Suwannee Watcharodomprasert, buys, sells, transfers, or accepts fairness in the same way as ordinary appointed by the Audit Committee and transfer of CPN’s stocks, they must transactions undertaken with outsiders, serving as Senior Manager of Internal prepare and report their lists of taking into account the best interests of Audit. shareholding and any change in CPN. Any party involved in a conflict of their shareholding to the regulators interest transaction must not take part Control and Prevention of the Use of as specified. in the consideration of such transaction. inside information If connected transactions that breach If any executive or employee violates the approved general business provi- To ensure equitable treatment of all this policy, they will be considered sions could pose any conflict of interest, shareholders and assuring them that guilty of having violated CPN’s regu- the Audit Committee will examine such relevant directors and executives are lations and may be punishable by law. 98 | 99 CPN ANNUAL REPORT 2012

transactions and include its opinions to contracts, names of counterparties, the Board or shareholders for approval. and their personal interests in such contracts. >> Disclosure of connected transactions: For each fiscal year end- >> Disclosure of vested interests: ing on December 31, directors and Directors and executives must executives must fill out the connected report vested interests held by transactions disclosure form to themselves and related persons demonstrate their transparency, under the regulations, conditions, thoroughness, and discretion for and methods specified by the deliberating connected transactions Capital Market Supervisory Board. during the year. The form is provided The Company Secretary must compile by the Company Secretary, who also and submit a copy of the report collects the disclosed information. of such vested interests to the Chairman and Chairman of the Audit >> Disclosure of personal interests Committee within seven days after held by directors, executives, receiving the report. and related parties: Directors and executives must submit their In 2012, CPN did not receive any first disclosure report within 30 complaint about misuse of inside days after first holding office and information committed by any director submit subsequent reports of their or executive. interests as of December 31 every year. To ensure the transparency of direct and indirect transactions undertaken by directors, executives, or related parties during the year, such directors or executives must notify CPN without delay by indicating facts about the nature of such 99

ORGANIZATION DEVELOPMENT

Throughout this year, CPN undertook To ensure more flexibility and efficiency, (TQA), the Company has developed active organizational development to CPN restructured in parallel with the a standard appraisal and monitoring support business expansion. Both the development of the ERP (Enterprise system for internal assessment and structure and core operations were Resource Planning) system. Further- evaluation. The system focuses on key realigned to fulfill customer satisfaction, more, it will reduce non-value added management issues, such as the iden- development of work processes and IT tasks so that staff might earn more tification of a given shopping complex’s systems, supervision of shopping com- time and have a chance to express their targets and strategies, communica- plex management under the Thailand talents, improve their performance, and tion within that shopping center, risk Quality Award evaluation criteria, and create more innovations. management, leader and personnel employee engagement. All these will development, knowledge management, lead to greater competency and sup- The ERP project was undertaken col- improvement of work and procedures, port CPN’s move toward its “To be the laboratively by a consultant team with among others. Basic organizational and most admired and dynamic regional experience in developing IT manage- personnel development activities that retail property developer with world- ment systems for the world’s leading contribute to sustainable growth are class rewarding experience” vision. corporations and our team with exper- retained, such as the Dream Team pro- tise in CPN’s diverse work processes, in ject, knowledge-sharing activities, and short combining the best practices of a system on international standards. ORGANIZATIONAL REALIGNMENT both CPN and international standards. In 2012, CentralPlaza Chiangmai Airport CPN continued implementing the CPN also continued its Human Re- won the prestigious Thailand Quality realignment of its organization, work sources Information System (HRIS) Class (TQC) Award for the third con- processes, and related units from the development from 2011 by developing secutive year, a proof of management work done in 2011. It constantly moni- the recruitment, welfare disbursement, dedication in every unit of CPN and the tored outcomes to ensure that under and performance evaluation modules, international standards of CPN’s retail the realigned structure, all operations together with launching the service that management systems. The knowledge, run in harmony and customer services allows HRIS access for all employees to experience, and work processes ob- are truly upgraded. Ensuring that the improve their work hours and request tained from this effort were replicated newly planned system can efficiently approvals to take leave. Once fully in every CPN-managed shopping com- support its growth, CPN hired a con- completed, staff can use the system for plex to raise its management level for sultant with international experience self-service, such as assessing personal customers’ recognition and sustainably in shopping complex management to data, checking work hours, seeking ap- create rewarding experiences for them assess its management system and provals to take leave, and requesting and society. identify major strengths as well as key welfare disbursement. opportunities for corporate development. These assessment findings will TO BE A LEARNING, INNOVATIVE be applied to future corporate projects. SUPERVISION OF SHOPPING ORGANIZATION CENTER MANAGEMENT STANDARDS UNDER THE TQA “CPN Share More, Learn More” DEVELOPMENT OF CORPORATE EVALUATION CRITERIA INFRASTRUCTURE THROUGH ERP To be a learning organization with AND HRIS Ensuring that all CPN-run shopping knowledge-sharing at both executive complexes adopt the management ap- and staff levels, this year CPN started proach of the Thailand Quality Award organizing the CPN Executive Sharing 100 | 101 CPN ANNUAL REPORT 2012

Project that enables executives to es increased to 15, namely CentralPlaza tification in 2013, namely Central share views and knowledge, including Lardprao, CentralPlaza Pinklao, Cen- Plaza Khonkaen, CentralPlaza Rama 3, relevant economic and social trends. tralPlaza Rama 2, CentralPlaza Bangna, CentralPlaza Ramindra, Central The project also supports knowledge- CentralPlaza Rama 3, CentralPlaza Plaza Lardprao, CentralPlaza Udontha- sharing activities between operating Ramindra, CentralPlaza Chiangmai ni, CentralPlaza Chonburi, CentralPlaza units. To enhance the efficiency of ac- Airport, CentralPlaza Rattanathibet, Chaengwattana, CentralFestival Pat- tivities, the project organizes internal Central Center Pattaya, Central- taya Beach, and CentralWorld. training to improve facilitators’ under- World, CentralPlaza Chaengwattana, standing and skills. Furthermore, an and CentralFestival Pattaya Beach, FOSTERING EMPLOYEE internal IT system is being developed to CentralPlaza Chonburi, CentralPlaza ENGAGEMENT store the knowledge of a pilot shopping Udonthani, and CentralPlaza Khonkaen. complex. The system will be reviewed Three additional shopping complexes Promotion of Value, Culture, and to identify strong and weak points for have applied for such certification, Corporate Governance improvement before further imple- namely CentralPlaza Chiangrai, Cen- mentation. tralPlaza Grand Rama 9, and Central- Under CPN’s policy to conduct business Plaza Phitsanulok. with ethics and virtue, CPN encour- “Dream Team” ages all executives and employees to perform their duties under six corpo- Besides individual creativity, CPN ENVIRONMENTAL MANAGEMENT rate governance principles, namely promotes teamwork under the PDCA UNDER ISO 14001:2004 “Integrity, Transparency, Fairness, (Plan-Do-Check-Act) framework, a Equality, Keeping Promises, and Caring tool that trains employees to system- ISO 14001:2004, an environmental for Society” in parallel with CPN’s core atically analyze and solve problems. management standard valued by CPN, value of “To be confidently creative and The “Dream Team” Project, initiated is applied to ensure that its business strive for excellence together”. These in 2009, has been operated annually, grows in tandem with environmental translate into policies, operating guide- a remarkable success evident in con- development. Operation focuses on lines, activities, and campaigns, such as tinuous work improvement. This year, pollution prevention and continuous corporate governance orientation for CPN had more than 120 Dream Teams development of an environmental new employees, inclusion of corporate nationwide, designed to improve the management system. governance principles on the monthly efficiency of internal functions. This year CPN expanded its envi- meeting agenda, a contest on the core ronmental management system in value, “CPN Volunteer” projects for em- RETAIL PROPERTY MANAGEMENT conformance to the standard of ISO ployees’ community and social services UNDER ISO 9001:2008 14001:2004 under four certified pro- (please see details under “Sustainability jects, namely CentralPlaza Pinklao, Management”), an employee opinion ISO 9001:2008 is a quality manage- CentralPlaza Bangna, CentralPlaza survey (EOS), voicing of their opinions ment standard adopted by CPN to Chiangmai Airport, and Central Center via P.O. Box 99 and the idea-BOX, the ensure customers’ and tenants’ ut- Pattaya to CentralPlaza Rattanathibet Voice of Internal Customer (VoIC), and most satisfaction. It is a management and CentralPlaza Rama 2. Therefore, the “Khon Dee, Khon CPN” Award Pro- process with systematic linkage and six projects have now achieved such ject for employee role models. Firmly continuous service development. certification. CPN is also implement- committed to corporate governance ing the standard in nine additional principles from executive to operational This year the number of CPN’s ISO projects to be applied for the cer- levels, CPN was recognized for its excel- 9001:2008 certified shopping complex- 101

lent corporate governance (five stars) by Thai Institute of Directors Associa- tion (IOD).

People Teams

Besides CPN’s development of personnel welfare, benefits, and policies, employees with a compassionate attitude toward colleagues are developed and formed into “People Teams” at each shopping complex. CPN undertakes a survey of employee engagement and satisfaction toward it and provides the report for these teams to study, analyze, and plan satisfaction enhancement measures that fit each shopping complex’s circumstances and employees.

Staff Activities

CPN organizes quality-of-life improvement activities for employees throughout the year. They can freely choose to participate in diverse activities, including New Year’s celebration, birthday and Family Day parties, Sports Day, Football Club, and CPN Volunteer activities, and so on. New benefits are also provided from time to time, with constant up- dates to keep everyone informed. 102 | 103 CPN ANNUAL REPORT 2012

HUMAN RESOURCES MANAGEMENT

CPN is well aware that the Company is higher processing speed and more a small fraction of a large society. Yet, accuracy in wages and salary when the personnel of this small society computation to support its future feel contented and have self-esteem, expansion. Under this new system, these people are ready to create good staff can use the on-line system for things for customers, partners, and the self-service to assess personal data organization as well as playing a key role and request approvals to take leave, in developing the economy and society with more efficient management of to ensure sustainable growth. their time, thanks to the streamlined approval processes.

WELFARE PROVISION AND THE RECOGNITION OF STAFF AS PERSONNEL DATA BUSINESS PARTNERS CPN’s headcount as of December 31 for the past five years: Recognizing the partnership between Branch / Year 2008 2009 2010 2011 2012 CPN and employees in growth in 1) 588 635 655 725 896 tandem, CPN provides more competitive Head Office welfare than the industry’s average, Ladprao 183 178 187 154 158 including medical welfare, financial Ramindra 50 53 51 52 48 assistance for the education of staff’s Pinklao 146 141 138 127 123 children, and individual staff who wish Pattaya Center 96 89 91 87 84 to pursue their education, marriage Rama 3 107 106 103 101 97 contribution, emergency loans, and Chiang Mai 143 142 142 146 124 funeral contribution. Furthermore, Bangna 183 179 179 168 155 employees can make suggestions on diverse issues and seek advice from Rama 2 142 141 142 139 116 CPN on both personal and work-related CentralWorld 387 396 375 356 327 matters to get more comprehensive Rattanathibet 96 96 99 100 95 solutions. All these contribute to the Chaengwattana - 127 129 135 127 future development of employees Pattaya Beach - 149 155 155 152 themselves and CPN’s business alike. Udonthani - 121 124 129 114 Chonburi - 100 99 97 91 APPLICATION OF HR SOFTWARE Khonkaen - 110 111 108 108 IN HUMAN RESOURCES Chiang Rai 43 88 84 MANAGEMENT Phitsanulok 78 74 Recognizing the benefit of HR software Rama 9 110 118 application to CPN’s management, this Suratthani 76 year CPN upgraded its HR system into Lampang 60 a more comprehensive HRIS (Human Ubonratchathani 47 Resources Information System) with Total 2,121 2,763 2,823 3,055 3,274

1) Remarks: Staff of Langsuan Colonade are included. 103

PERSONNEL SELECTION AND RECRUITMENT

To support domestic and overseas business growth, and enhance its international competitiveness, CPN 52% 48% ensures that every staff member EMPLOYEE recruited through its personnel Female 1,718 Male 1,556 BY GENDER selection and recruitment process meets the experience, knowledge, and competency requirements to perform the assigned duty. Besides staff’s personal qualifications, CPN considers their potential for sustainable career growth along with CPN’s business to align with the core value of “To be 11% confidently creative and strive for Age 46-60 years excellence together”. 348 Under the concept of growth in tandem, 50% 39% CPN continuously implements the EMPLOYEE BY AGE Executive Trainees Program to Age 31-45 years Age 18-30 years underscore its policy of promoting and 1,634 1,292 creating opportunities for career advancement. By selecting and recruiting executives from within the corporation, CPN provides its employees with self-development and career growth opportunities. Consistent with its expansion plan to 18% 7% several provinces in all regions of More than 10 years Trainees Thailand, CPN also endorses staff 595 227 relocation to their hometowns where its shopping complexes are located. Ensuring transparency in compliance EMPLOYEE BY 22% 35% with good corporate governance, the YEARS 5-10 years Less than 3 years selection of relocated employees OF SERVICE 735 1,133 occurs jointly between Human Capital Management and employees’ 18% supervising departments. In addition to happiness at work, these staff can 3-5 years share CPN’s determination to bring 584 development and diversify revenue to local communities. 104 | 105 CPN ANNUAL REPORT 2012

PERFORMANCE MANAGEMENT TALENT MANAGEMENT AND SUCCESSION PLANS FOR In conformance to CPN’s goal of EXECUTIVES achieving corporate excellence and principles of good corporate Recognizing the importance of governance, the management of staff retaining outstanding and high- performance has been continuously potential personnel as vital elements developed, with KPIs and performance of business growth, CPN systematically calibration meetings serving as implements its Talent Management evaluation tools to ensure and Successive Plans for Executives. transparency and fairness. During Staff at the level of branch supervisor performance calibration meetings, or Head Office assistant manager supervisors get a chance to fully and higher management levels, whose present their teams’ performance for performance and potential more balanced evaluation. consistently meet the evaluation criteria, do qualify as trainees in Leadership Development Program for COMPENSATION AND BENEFITS the cultivation of CPN DNA Leadership MANAGEMENT talents, with identification based on Recognizing that compensation and the corporate vision. Trainees’ benefits have direct effects on development activities and individual employees’ decisions to continue development plans are jointly working with it, CPN takes this part formulated by the program and of management very seriously. This trainees’ supervisors, with Human year, various supporting systems and Capital Development monitoring structures were developed for CPN’s progress quarterly to compile and competitive edge in the labor market, report all development data to namely the application of Hay Group’s Ex-Com meetings periodically. Other job evaluation method used by leading development programs organized corporations worldwide, improvement exclusively for managers who join the of salary structures, and a Program, with Academy Team’s compensation system for talented cooperation, include the Executive staff. CPN also reviewed staff Coaching Program for high-level compensation and benefits to ensure executives, Leaders as Coach compatibility with the present economic Program for middle managers, People situation. All these support CPN’s & Task Management Program for business plan as the leader in the junior managers, and Knowledge property retail business. Sharing workshop under the topic of IDP-Driven Mechanism for Head Office junior managers. Adherence to the principle of performance-based pay 105

also encourages a long-term skill development, such as on-the-job commitment among talented staff training, training skills, coaching skills, with readiness for growth, before and facilitator’s skills for those who advancing to the stages under the seek to become facilitators in their succession plan process. own departments, which enables staff to gain coaching skills as a basis for As for employees at shopping career growth. complexes that form the key function of its business, CPN continues the Furthermore, the competency model quarterly monitoring of IDP plans and was reviewed for use as the core of organizes group feedback meetings. CPN’s personnel development in the The overall progress of staff long run. Corporate values and the five development at each shopping CPN Leadership DNAs were reviewed complex are reported in the meetings by identifying behavioral levels under in parallel with the selection of each career stage for application in knowledge-sharing topics which focus other functions of the HR system, on supervisors’ feedback to keep such as the selection and recruitment subordinates constantly informed process, curriculum development of about supervisors’ opinions about training courses for each job position, their self-development in performing competency evaluation, performance their functions. Another focused topic management, and formulation of a is the application of IDP as a channel career growth system. for the planning of activities for career 106 | 107 CPN ANNUAL REPORT 2012

HUMAN CAPITAL DEVELOPMENT

CPN’s vision is to be “The Most Admired An on-boarding program was de- CPN also organizes teambuilding and Dynamic Regional Retail Property veloped for the orientation of new activities for the operation units that Developer with World-Class Reward- employees as an introduction to the underwent restructuring and line-of- ing Experience”. It recognizes the Company’s values, background, and command adjustments, including the importance of creating and developing key processes. To provide trainees operation teams of newly opened employees’ capabilities in a systematic, with more flexibility in learning about shopping centers. These activities en- continuous way because it believes that the Company’s basic information, CPN able the top executives and every staff competent staff is pivotal to business Academy plans to develop additional, of the unit to learn about each other prosperity and a competitive advan- tailor-made e-learning media for CPN. through new perspectives, which differ tage in the long run. These media include the ethics of CPN from their working relations, and clearly people, learning about oneself through understand the corporate directions The Company established the CPN DISC, cross-cultural management, and and the directions of their unit. Academy at the end of 2012 and introduction to the ASEAN Economic started formulating a conceptual Community. framework for practical development of its personnel. Development courses are categorized to suit the knowledge requirements of staff at each level, namely basic training, career path training, leadership training, and business administration training. The business administration course for the management level was developed jointly with Chulalongkorn University. The training under this course provides officers at the middle management and executive levels with business administration perspectives, strategic approaches in developing their work, and more knowledge from the experience of highly qualified instructors. 107

SUSTAINABILITY MANAGEMENT

From the onset of operations, CPN has based its policies and business direction on corporate governance principles so as to create staff’s devotion to corporate values and earnest response to CPN’s commitment of becoming the most admired company of communities and society. As a result, CPN’s business operation demonstrates its social responsibility for optimal use of energy with recognition of its value. Furthermore, the sustainable business development approach together with community and environmental development will soon be integrated into CPN’s operating direction.

SUSTAINABILITY DEVELOPMENT Committee. Comprising nine ex- operation, business development, REPORT ecutives headed by the President and accounting and finance lines, & CEO, the committee defines perform the duties of setting up This is the first Annual Report to in- CPN’s integrated economic, envi- human resource management and clude a sustainability development ronmental, and social policies and development policies at all levels section, designed to demonstrate the operational approaches. and for all functional lines, based on outcomes of CPN’s economic, social, fairness and equitable treatment, and environmental undertaking this The Corporate Governance Com- >> as well as respecting the human year. With only some parts based on mittee, comprising six executives rights of each staff. Global Reporting Initiatives (GRI: G3), headed by the Senior Executive the report aims to be used as the start- Vice President, defines corporate In ensuring consistency between the ing point for a comprehensive review governance policies, strategies monitoring approaches and action of processes within the corporation. and operating plans, as well as plans, CPN has assigned a working Its scope covers the performance of monitoring the outcomes and so- group to take responsibility for each 18 CPN-managed shopping centers, cial responsibility execution. The issue. For example, the corporate excluding CentralPlaza Suratthani and committee also advocates a more governance working group, comprising CentralPlaza Lampang. systematic management that pro- four management officers, is respon- motes corporate sustainability. sible for corporate governance, social Interested persons can also send que- responsibility, energy conservation, and ries and suggestions to jasaowanee@ The Energy-Saving Committee >> volunteering practices. Each shopping cpn.co.th comprises two senior executives center also has an energy management and 11 management officers rep- working group and an energy manage- resenting the head office and SUSTAINABILITY MANAGEMENT ment assessor group. These commit- branches. The committee oversees, DIRECTION tees and working groups hold regular supervises, and monitors the overall meetings to monitor the progress of management of energy at every This year, CPN has restructured its their respective projects on a monthly, shopping center to achieve the committees and their scopes of re- quarterly, or annual basis. sponsibility to accommodate sustain- specified target of CPN’s five-year able development as follows: plan on energy conservation.

>> CPN’s Sustainability Management >> Human Resources Development Committee is the Management Committees at the corporate and functional levels, consisting of 108 | 109 CPN ANNUAL REPORT 2012

ECONOMIC DIMENSION

CPN conducts its business by observing its shopping center development and management strategies, with the commitment of constant growth and sustainability, to become a regional key player. The Executive Committee takes charge of implementing its four-pronged strategies, based on effective control of risks at both the corporate and operational levels. CPN’s Corporate Risk Management Committee, comprising two directors and three independent directors, defines the policy on business risks and ensures the proper functioning of the Operational Risk Management Committee, which consists of one director and 16 senior depart- mental executives. As a result, CPN has achieved secure, continual growth in its business operation as demonstrated by its Performance and Risk Management Approaches on page 122 109

CentralPlaza Suratthani

BRANCH EXPANSION IN BANGKOK community members. These people resembled by design a rattan container AND OTHER PROVINCES gain opportunities to take part in CPN’s for glutinous rice; the long-boat shape business chain as suppliers, dealers, of CentralPlaza Phitsanulok and the In pursuing shopping center develop- and retailers. Therefore, the economy external decorations of CentralPlaza ment opportunities, CPN focuses on of each province expands in tandem Chiangrai and CentralPlaza Suratthani, domestic opportunities in parallel with the growth of CPN’s shopping inspired by Indian Cork Tree flowers and with overseas expansion. Domestic centers, starting from the construc- coconut trees, the unique identities of branch expansion aims to decentral- tion period. these provinces. ize progress to all regions of Thailand. Throughout the past five years, CPN CPN always recognizes the need to has expanded its branches in other integrate the local culture and values in ENVIRONMENTAL DIMENSION provinces, along with constant mod- its business process so as to bring pro- CPN always follows the policy of envi- ernization of its shopping centers in gress to local communities, as well as ronmental conservation, in parallel with Bangkok. Meanwhile, the numbers of ensuring sustainable corporate growth economic and social efforts, in line with CPN’s provincial branches have in- and a harmonized relationship. There- its management strategy. The main creased from 10 to 20 branches and fore, its site selection process includes a focus is to reduce shopping centers’ the ratio of its shopping centers in other survey on the potential economic, road operating expenses, especially energy provinces versus Bangkok has changed traffic, and transportation impacts on costs, in parallel with demonstrating its from 20:80 to 50:50. CPN’s develop- neighboring communities, for example, social responsibility by minimizing nega- ment and management strategies have the construction of CentralPlaza Grand tive impacts on neighboring communi- yielded higher financial performance Rama 9, which connects with the MRT ties through its effective wastewater and continually increased its share subway system. The design of CPN’s treatment, waste reduction, and traffic value, as demonstrated under Opera- shopping centers also incorporates facilitation measures. CPN has become tional Performance on page 14 indigenous arts and local cultures, Thailand’s pioneer in retail property evident in each building’s shape and developers to implement ISO 14001 at Apart from fulfilling its market expan- decorations. For examples, the main its shopping centers to ease negative sion objectives, CPN’s provincial expan- building of CentralPlaza Khonkaen sion creates jobs for local people and environmental impacts. 110 | 111 CPN ANNUAL REPORT 2012

Energy Management

Technical Recognizing the value of energy, CPN takes energy management seriously to optimize energy consumption. The main focus is to reduce electricity consumption, nearly 40% of total service cost. This is consistent with the management strategy for shopping centers, which aims to achieve a balance between the reduction of operating costs and the enhancement of all Behavioral Organization stakeholders’ satisfaction and admira- Structure & Policy tion. As a result, CPN has developed a three-dimensional policy on energy For 32 years, CPN has committed to conservation, as follows: conducting its business with energy conservation awareness. It has put in 1. Technical dimension: Application place a five-year plan for energy con- of up-to-date and environmen- servation, specifying clear indicators on tally friendly technologies to CPN’s energy consumption with strict assess- projects. ment of the reduction of energy con- 2. Organizational structure and policy sumption. CPN has become Thailand’s dimension: Issuing policies and as- pioneer in retail property development signing a clearly designated work- in applying modern energy conserva- ing group on energy conservation tion and environmental technologies to at the executive, managerial, and its daily management of shopping cent- operational levels. This included an ers with the best outcomes. This year, audit panel, consisting of repre- CPN invested Baht 57,831,926 million sentatives from different levels of in the application of five additional relevant departments. Conserva- energy conservation technologies at tion practices are closely monitored nine shopping centers, which cut energy through the audit panel’s regular consumption by 5,944,855 kWh per

meetings and assessments by ex- year, equivalent to the reduction of CO2 ternal experts. emission by 3,151 tons per year.

3. Behavioral dimension: Communica- tion and campaigning for behavioral changes among staff, tenants, customers, and neighboring communities through energy conservation awareness. 111

Electricity Consumption

Year Number of Total Electricity Electricity Consumption Projects Consumption Per Unit Area (GWh) (kWh/m2) 2010 14 448 284 2011 15 456 282 2012 18 524 281

Indirect energy consumption by primary source 2012

47% 24% Shop Common Areas 1% 2%

29% % Contribution Change from Y2010 Air Conditioning Increase 1% Decrease

Energy conservation measures Number Reduction Reduction of

applied by CPN of of electricity CO2 emission projects consumption* (Ton/year) (kWh/year)

Reduction of electricity consumption by chillers

Installation of innovative high efficiency 8 18,260,869 9,678 chillers and environmentally friendly coolant agents

Installation of Variable Speed Drive 11 8,519,070 4,515 (VSD) in cold-water and coolant pumps, and ventilators

Utilization of Ball Cleaning Systems, 6 3,285,314 1,742 which automatically clean the interiors of copper ventilators of water coolers 112 | 113 CPN ANNUAL REPORT 2012

pied parking spots on each parking Energy conservation measures Number Reduction Reduction of lot, making it more convenient for of of electricity CO emission applied by CPN 2 shoppers to park their cars and projects consumption (Ton/year) enhance their satisfaction. CPN (kWh/year) has invested Baht 73 million in such systems in six projects, namely Insulation of heat from outside buildings CentralWorld, CentralPlaza Lad- Installation of PU foams and heat 2 125,218 66 prao, CentralPlaza Rama 3, Central insulators on shopping centers’ roofs Plaza Chaengwattana, CentralPlaza Bangna and CentralPlaza Grand Application of alternative-energy sources and other measures Rama 9, and will have all shopping centers in Bangkok and its vicinity Installation of solar-cell panels on 1 146,000 77 equipped with this system by 2015. shopping centers’ roofs to employ solar energy and cut electricity >> Opening the “GreenWorld Experi- consumption from the power grid ence Learning Center” at the Cen- tral Court Zone on the sixth floor of the CentralWorld shopping complex, primarily to encourage Other technical measures applied by minimum energy requirement and the business sector and the public, CPN as energy conservation standards quickest arrival to selected floors. especially youths, to recognize the to all projects include: importance of energy and environ- CPN also implemented other measures, mental conservation. Knowledge >> Installation of heat-shield glasses, including: about energy-saving innovations which allow natural light but not heat successfully adopted by CPN was >> Application of the innovative Lead- to enter the building publicized to serve as a role model ership in Energy & Environmental for people. >> Installation of double-layer doors at Design (LEED) concept, which shopping centers’ entrances and stresses designs that allow more >> Joining the Department of Alter- exits to create buffer areas which natural light to enter buildings, native Energy Development and absorb heat from the outside and uses more environmentally friendly Efficiency, Thailand Environment cool air from the inside of these materials, and incorporates more Institute (TEI), and Thailand Busi- buildings. green space. ness Council for Sustainable De- velopment (TBCSD) in the Energy >> Replacing old light bulbs with com- >> Allocating the best parking zone on Conservation Campaigning Project pact fluorescent (CFL), T5, and Level B1 of Centralworld as Car- under a voluntary agreement, un- LED bulbs pool Parking for cars with at least der which CPN will set up additional four passengers to promote en- energy-conservation centers at >> Installation of intelligent elevator ergy conservation practices among CentralPlaza Rama 2, CentralPlaza systems at CentralWorld and Cen- shoppers. The area accommo- Khonkaen, CentralPlaza Chiangmai tralPlaza Chaengwattana projects. dates 50 cars. The system automatically process Airport, CentralPlaza Ladprao, and data to select the most suitable >> Installation of intelligent parking CentralFestival Pattaya Beach. elevator for users, based on the systems displaying a list of unoccu- These centers will enhance the 113

propagation and promotion of energy conservation practices among 30% 48% communities and society. Water for common Water for retail shops areas and tenants >> Organizing Energy Day activities at least once every year. All staff and Water reuse for retail shops in the participating air-conditioning system shopping centers are encouraged to attend recreational activities and learn how to save energy at the same time. Other Energy Day 22% activities include “Slogan Contest Water for air-conditioning on Energy Conservation” and the system production of diverse public relation media to cultivate energy conservation awareness. The following measures were applied CPN manages the release of waste- to trim water consumption in common water in all projects in full legal com- In the future, CPN will adopt the ISO areas and the management process pliance. Before its release to public 50000 standard for its energy man- of shopping centers: water sources, all wastewater must agement to align with its five-year mas- be treated in treatment ponds with ter plan on energy conservation, as well >> Replacement and installation of systematic monitoring, testing, re- as undertaking additional studies on sensors at restroom sinks cording, and reporting processes. The the use of alternative-energy sources. system control section at each branch >> Experimental installation of auto- has two plans and one handbook to matic water flushing system in office follow, namely the Preventive Mainte- WATER MANAGEMENT buildings’ toilets nance Plan, System Repair Plan, and Besides reusing treated wastewater, >> Installation of rain-water storage Maintenance Handbook, in testing the management process of all CPN’s systems as alternative water sourc- water quality in treatment ponds, as shopping centers relies on piped water es at suitable branches with avail- well as before and after it enters the supplied by the Metropolitan Water- able space water treatment system. Water qual- works Authority and local waterworks ity is also tested at least once every authorities, without impacting water >> Reusing of treated wastewater quarter by external agencies certified users in other communities. This in air-conditioning systems and for by ISO/IEC 17025. Bio-technological year, its management of 17 shopping watering plants at shopping cent- treatment of wastewater is also ap- center projects, excluding CentralPlaza ers. With the installation of a fully plied to projects adjoining public water Udonthani, CentralPlaza Suratthani, integrated wastewater manage- sources, namely CentralPlaza Rama 3, and CentralPlaza Lampang, consumed ment and reuse system, Central- CentralPlaza Khonkaen, CentralPlaza 6,474,380 cubic meters of piped wa- Plaza Chonburi and CentralPlaza Udonthani, CentralPlaza Rattanathibet, ter, mostly in common areas and air- Khonkaen reduced the use of piped CentralPlaza Chiangmai Airport, Cen- conditioning systems, including water water by 33,315 and 50,720 cubic tralPlaza Chaengwattana, CentralPlaza for the consumption of retail shops meters respectively, accounting Bangna, CentralPlaza Rama 2, Central- and tenants. for 11% and 17.77% of their total Plaza Pinklao, CentralPlaza Chonburi, consumption. 114 | 115 CPN ANNUAL REPORT 2012

CentralPlaza Ramindra, CentralPlaza CPN’s waste management process burned by government agencies in Chiangrai, CentralPlaza Phitsanulok, and comprises two main stages as follows: respective areas. Hazardous waste CentralPlaza Grand Rama 9, with the and infectious waste are separately 1. Sorting of waste into four groups remaining projects undergoing system packed into properly marked bags, describing the type of waste in upgrades. CPN sorts waste generated within each bag, and moved away to be shopping centers into (1) general Model projects: Installation of destroyed through proper methods waste (2) recyclable waste (or wet an innovative and fully integrated by contractors. These contrac- garbage from food zones) (3) haz- wastewater management and re- tors are also selected under CPN’s ardous waste, and (4) infectious use system to maximize efficiency regulation specifying a systematic waste. Each shopping center also and effectiveness at CentralPlaza comparison of their qualifications. allocates different trash bins to Chonburi and CentralPlaza Khon- suit each zone’s requirements. In kaen comprises a storage system the general zone, three types of for (1) treated wastewater from the trash bins are provided (bins for Deep Shaft System (2) rainwater general waste, bins for recycled from the roof (3) treated waste- waste, and bins for hazardous water from office tower, and (4) waste). Transparent trash bins or condensed water from air handling bags are provided for areas with units. The stored water is used limited space to assure shoppers to water plants, clean floors, and that there is no hazardous waste refill cooling towers, with constant inside. For retail shops that gener- tests of its purity parameters. Test ate infectious waste, CPN provides results were found to consistently specific recommendations and surpass standards. informs them about the regulations for the management of such waste WASTE MANAGEMENT either by themselves or by CPN through internal contracts. Each shopping center is, by itself, a small community that generates 2. Waste collection and manage- household waste both from shop- ment pers and retail shops. Recognizing the significance of this issue, CPN has Each day, all garbage is disposed applied the standard of ISO14000 in into waste piling shelters and sorted managing shopping centers’ waste. into four groups as mentioned This year, 81,395 cubic meters of waste, above. Saleable waste is sorted according to the measurement and from general waste, recycled waste, calculation by 17 branches (excluding and wet garbage, and is sold to CentralPlaza Udonthani, CentralPlaza contractors for recycling. Con- Suratthani, and CentralPlaza Lampang), tractors are selected under CPN’s was disposed into the proper waste regulation, specifying systematic management processes. comparison of their qualifications. The remaining waste is buried or 115

Group of waste General waste Recycled waste Hazardous waste Infectious waste

Storage methods in Black plastic bag Recycled waste Hazardous waste Retail shops / Red plastic bag waste piling shelter bin bin tenants coordinate the management Management and Daily, Monthly Monthly According to of waste with collection frequency except for garden individual service service providers refuse, which is contracts by themselves collected weekly

Responsible parties Assigning the job to private / governmental providers of waste disposal service, with proper recording of the assignment for future references and checks.

Waste management The Environmental Working Group follows up on and records the outcomes of environmental assessor operations regarding waste management on the ISO 14000 standard form and follow-up on the outcomes of corrective actions within the specified period.

Model project: Recycling of dry Promotion Foundation, and neigh- waste into biofertilizer under the boring communities in producing bi- CentralPlaza Chiangmai Airport’s ofertilizer from dry leaves around its “Paeng Khi Yuea – Hue Pen Boon” building, including dry leaves brought project, implemented for the third by customers and neighboring com- consecutive year, represents inte- munities. Vacant spaces around gration of social and environmental the shopping center are used in strategies. The shopping center fertilizer production, which involves cannot burn dried leaves because it an odorless and non-polluting hy- is located by the airport. Previously, gienic fermentation process that the center used to manage its dry lasts 60 days. This year, Central waste, consisting of dry leaves from Plaza Chiangmai Airport trans- its entire area, by delivering it to the formed three tons of dry waste into Chiang Mai provincial waste disposal one ton of fertilizer and distributed agency, which piled up and burned it to interested people and neigh- all waste together, causing air pol- boring communities, establishing lution – one of Chiang Mai’s major good relationships with communi- problems. Therefore, the shopping ties together with CPN’s staff who center has collaborated with Maejo volunteered to work in the project. University, the Department of Mineral Resources, the Thai Health 116 | 117 CPN ANNUAL REPORT 2012

SOCIAL DIMENSION

By observing its social responsibility commitment in conformity with Central Group’s maxim of “We exist because of You”, CPN values its care toward communities, stakeholders, and society so as to make all people appreciate and be proud of being a part of CPN, as well as having CPN as a part of their communities. Under this commitment, its Executive Committee has established the following strategies and implementation goals:

Listening to stakeholders’ views and responding to the needs of each group

Stakeholder Responsive Action Policy and Approach

Staff >> Executives meet employees >> Valuing personnel management, individual development, activity engagement strengthening, and quality of work >> Executive meeting development processes to meet international standards >> Taking note of suggestions or >> Providing appropriate compensation rates complaints >> Development of all personnel in every profession without >> Staff engagement survey exception >> CPN WhistleblowerPolicy >> Organizing staff relations activities to serve different >> CPN Academy needs based on equal rights

Retail shops / >> Annual meeting of retail shops Treating all tenants fairly and transparently, based on tenants >> Taking note of suggestions or non-discrimination and respect of human rights as well complaints as corporate governance. Responding to suggestions and applying international standards to the development of >> Call Center service quality >> Applying ISO 9000 and ISO 14000 to management >> Organizing valuable, creative, exceptional, and commendable sales promotion activities to attract consumers >> Implementing safety management policy >> Cooperating in the promotion of knowledge about value-add approaches for retail shops

117

Stakeholder Responsive Action Policy and Approach

Customers >> Conducting customer satisfaction Commitment to creating rewarding experience surveys for customers and attracting target groups by >> Taking note of suggestions or >> Organizing valuable, creative, exceptional, and complaints commendable sales promotion activities >> Communicating with customers via effective channels >> Providing comprehensive assortment of retail shops and merchandising mix

Shareholders >> Annual General Meeting of Operating business under corporate governance, Shareholders clearly segregating connected transactions, and >> Taking note of suggestions or constantly add value for stakeholders complaints and passing them on to the Audit Committee >> IR Direct line

Neighboring >> Conducting opinion and satisfaction Focusing on the construction of public structures communities surveys on targeted communities and encouraging staff’s volunteering action in >> Taking care of the environment around participating with communities on quality of life and environmental improvement around communities shopping centers and neighboring communities, Supporting communities’ activities >> as appropriate to the Company’s roles and capabilities

Partners >> Cooperation and coordination Providing assistance and offering shopping (government centers’ spaces agencies and the public sector) 118 | 119 CPN ANNUAL REPORT 2012

DEVELOPMENT OF HUMAN CAPITAL Committee formulating policies and Health TO CULTIVATE PROFESSIONALISM monitoring implementation results. AND INTEGRITY The Personnel’s Job Satisfaction CPN has instituted a policy for air- Working Group in each branch, quality management and control inside This year, CPN has set up Human Re- which comprises staff stationed its buildings by the law and the ISO sources Committees at the corporate there, the shopping center manag- 14001:2004 standard for environmental and operation levels to define person- er, and Human Capital and Organi- management. Automatic ventilation nel management strategies and goals, zation Development Department’s systems draw in fresh air from outside covering personnel development, con- staff jointly take responsibility for the buildings and making customers feel sideration of compensation and ben- job satisfaction by sharing staff’s refreshed while shopping. CO detec- efits, job promotion, and job satisfaction views with prompt remedial actions. tors were also installed at parking lots to strengthen personnel engagement. to monitor carbon monoxide levels and All personnel are treated fairly, based prevent it from exceeding the stand- on the respect of human rights and SERVICE RESPONSIBILITIES ards. CPN also set up a plan under non-discrimination of national origin, re- the Clean Kitchen Project to conduct CPN’s service responsibilities fall into ligion, or gender, and are provided with regular assessments of food outlets in four aspects, namely (1) quality aspect self-improvement opportunities for job its shopping centers so as to promote (2) environmental and occupational rotation, relocation to their hometowns, hygienic awareness and practices health aspect (3) safety aspect, and and promotion to the executive level as among food-outlet operators. (4) health aspect. CPN has applied a described on page 102 certification process of international Model case: For the past five years, standards, such as ISO 9001 and ISO SOCIAL AND COMMUNITY CPN has applied the Aon Hewitt’s 14001 to its quality, environmental, and DEVELOPMENT Top Employer Assessment Process occupational health management as Wherever CPN operates its business, in paying attention to the free views described on page 99 it is committed to fostering sustainable of all staff through the annual as- Safety progress for neighboring communities sessment process of staff engage- by encouraging its staff and all social ment. In this year’s assessment, CPN monitors and controls the environ- sectors to take part in social activities 88% of all staff, who had passed ment within and around its shopping to promote Thailand’s ethical and cul- their trial period as of July 21, 2012, centers, office buildings, and residential tural image in line with CPN’s corporate participated in the attitude survey. leasing projects to ensure safety for governance on social responsibility. Its Analysis of assessment results, per- the lives and assets of tenants and social and community development formed by external experts, showed customers. It installed CCTVs and set projects fall into eight categories, that respondents’ level of corporate up regular maintenance schedules for namely human rights, children and engagement was 50%, which is accident-prone equipment, such as youths, education, religion, culture, the the average level (compared with elevators, escalators, gas stoves, and environment, community relations and 47% in 2011). The outcome of that cooking appliances. An emergency others, which are undertaken through analysis was converted into plans response and situation control plan four lines of action as follows: to foster job satisfaction among was also developed under the ISO staff, with the People Development 9001:2008 standard. 1. Donation of money, consumer goods, and computers, including the 119

installation of educational satellites tional, religious, private and non-profit in schools under the CPN Cultivates sectors, including retail shops, tenants, Thai Wisdom Project. CPN’s shop- neighboring communities, and the public ping centers also offer their space in providing shopping centers’ spaces for use as donation centers for cash for public activities, exhibitions, and and non-cash items, including blood diverse forms of donations. During donations. the year, 19 CPN-managed shopping centers, excluding CentralPlaza Lam- 2. Providing shopping centers’ spaces pang, organized 71 projects (only major and services for social values pro- ones) covering 50 schools, 10 temples, motion through the organization and more than 20 communities all over of public exhibitions, activities, and Thailand. musical events, among others. The “CPN Cultivates Thai Wisdom” 3. Organizing activities in CPN’s shop- Project ping centers and community areas under CPN Loves Communities and Projects undertaken by CPN in each category through appropriate line Protects the Environment Project, of action organizing educational promotional activities under the CPN Cultivates Human rights Thai Wisdom Project and promoting Children staff participation in activities for the public good under CPN Volun- Education teer Project. Religion 4. Construction of public facilitation structures, such as flyover paths Culture and police kiosks, including learning (knowledge) centers for children Environment and communities under the CPN Cultivates Thai Wisdom Project. Community

This year, CPN provided budget sup- Others port to and cooperated with educa- No. of Projects

0 10 20 30 40 50

Dunation Providing space Oranizing Construction of pulic activities service structure

Remark : Some projects can fulfill the objective of more than one promotional category 120 | 121 CPN ANNUAL REPORT 2012

CPN is convinced that youths repre- vironmental, and community improve- in Surat Thani Province, with 53 volun- sent the cornerstone of society, and ment. In the past year alone, the group teers taking part in organizing Children that educating and instilling moral and organized 12 activities. Day activities for 705 students and ethical conducts in them will enable presenting more than 800 gifts to them. communities and society to become Model project: CPN Volunteers’ sustainable and self-sufficient. Through Greeting Cards for Good Kids this project, CPN has cooperated with Project was initiated by CPN Vol- government agencies, our partners, unteers Group to take the same and other companies under the Central rewarding experience that every Group to provide assorted educational CPN’s shopping center is commit- support for less-privileged communities ted to delivering to customers, and and youths, such as building community take it to underprivileged children in learning centers and libraries for needy remote areas. schools, as well as donating teaching The project focuses on the presentation and learning tools. To date, CPN has of gifts that bring joy to both the giver supported the development of learning and receiver, targeting children and centers at nine provincial schools and youths from pre-school up to second- has implemented 30 long-distance ary school level in chosen areas. Each learning-via-satellite projects. child is told to write about the gift he or CPN Volunteer” Project she wishes for on a greeting card and send it via a CPN volunteer to the giver, The “CPN Volunteers” project started who is also a CPN volunteer. Then each from a small group of CPN employees volunteer chooses the card describing who truly reflected the intention of the gift that he or she wishes to buy, and CPN’s executives, who wish to see staff then buys it for that child, to be deliv- participate in activities for the public ered on the second Friday of January good to foster their awareness of the of each year by another group of CPN importance of repaying society. The volunteers. The project chooses that CPN Volunteers group annually takes day to organize this activity so that on turns conducting activities at commu- the next day the children and youths nities near CPN-managed shopping can attend the National Children’s centers. Volunteers can also propose Day celebration, traditionally held on projects for their home communities every second Saturday of January. to the CPN Volunteer Committee for This year, the CPN Volunteers group consideration. These activities revolve and CentralPlaza Suratthani together around three aspects of social re- conducted the Greeting Cards for Good sponsibility and sustainable community Kids Project at Wat Somwang School development, namely educational, en- 121 122 | 123 CPN ANNUAL REPORT 2012

RISK FACTORS

RISK TYPE RISK MANAGEMENT

STRATEGIC RISKS FOCUS ON IMPLEMENTING STRATEGIES IN CONFORMANCE TO CPN’S MISSION AND BUSINESS PLAN TO ENSURE THAT STRATEGIES AND OBJECTIVES ARE COMPATIBLE WITH ACCEPTABLE RISKS.

>> Business Readiness >> Investment through feasibility studies In supporting the policy of growth >> Personnel development through domestic branch expansion >> Business partners’ readiness analysis and tackling fierce domestic >> Maintaining the efficiency and competitiveness of shopping center competition, CPN plans to management constantly expand its business

>> Foreign Investment Risk >> Set up an overseas investment team CPN plans to expand business in >> Study business related information under each country’s environment carefully foreign countries in response to its before making an investment decision policy of constant business growth. >> Continuously monitor economic, social, and related business situations to ensure appropriate responses. >> Jointly invest with high-potential business allies. >> Undertake organizational and personnel preparation to ensure readiness for overseas investment. >> Enhance differentiation and competitiveness through continuous development of shopping centers, standard of services, and management. >> Acquire funding sources to ensure capital adequacy and maintain appropriate net interest-baring debt to equity ratio. 123

RISK TYPE RISK MANAGEMENT

OPERATION RISKS FOCUS ON EVERY STEP OF OPERATING PROCESSES FROM INVESTMENT, IT, TO PERSONNEL, INCLUDING SAFETY RISKS, WHICH COULD HARM LIVES AND CAUSE DAMAGE TO CPN PROPERTIES.

>> Change Management Risk in >> Equipped with modern and effective IT technology that covers its major adapting new business processes processes CPN has developed and installed an >> The system is aligned with CPN’s vision and strategies that focus on domestic IT system that applies the concept and overseas growth. and management method of ERP >> Installed by an experienced and reliable business partner (Enterprise Resource Planning) to serve business requirements.

>> Personnel recruitment and >> Develop a People Development Committee to oversee the policy and commitment to the Company strategies of human resource management and development Due to its continuous expansion, >> Ensure that personnel at all levels obtain standard quality to support CPN’s domestic and international, CPN growth and local competition has to recruit new staff to fulfill its need and also build decent relationship with key staff

HAZARD RISKS FOCUS ON PROACTIVE PROTECTION MANAGEMENT BY DEVELOP A PLAN AND APPLY CONSISTENTLY TO ENSURE READINESS IN EVERY CIRCUMSTANCE AS WELL AS CONTINUOUSLY MONITOR NEWS AND INFORMATION

>> Accident and other threats >> Appoint a loss prevention team under the supervision of its Operational related to shopping center Standard Promotion and Supervision Bureau to establish the awareness of management risk factors such as fires, floods and other threats >> Develop a manual as its operational regulations for every branch to study >> Formulate action plans based on simulated incidents, conduct constant drills, and monitor the outcomes to ensure compliance >> Risks from political instability >> Formulate Emergency Committee to efficiently manage the situations in any and violence particular severity >> Formulate Emergency (Crisis) Management Plans and Business Continuity Plan (BCP) to minimize impacts caused by emergencies or crises. 124 | 125 CPN ANNUAL REPORT 2012

RISK TYPE RISK MANAGEMENT

FINANCIAL RISKS FOCUS ON MANAGING THE COMPANY UNDER PRUDENT MONETARY POLICY BY CONTROLLING EXPENSES UNDER THE APPROVED BUDGET, THUS ENSURING APPROPRIATE RETURNS, AS WELL AS THE PUBLIC’S CONFIDENCE IN THE COMPANY’S ACCEPTABLE, EFFICIENT RISK MANAGEMENT AND INTERNAL CONTROLS UNDER THE FAST-CHANGING BUSINESS ENVIRONMENT.

>> Capital Sufficiency Risks >> Retain its low debt-to-equity ratio to maintain its liquidity In sustaining its strength under the >> Achieve robust financial statement with a low level of debt capitak-intensive requirement of >> Leveraging appropriate financial instruments in sourcing capital the real-estate business and fierce >> These factors will provide CPN more flexibility in expanding business as well competition, CPN acquires as reduce financial risks sufficient funding at an appropriate cost to retain its low debt-to-equity ratio 125

CAPITAL STRUCTURE

CPN’s capital structure, as at 31 December 2012, was as follows:

1. CAPITAL STRUCTURE

Common shares

Authorized share capital 2,178,816,000 Baht Paid-up share capital 2,178,816,000 Baht Number of common shares 2,178,816,000 shares Par value 1.00 Baht Share price 81.75 Baht

Unsecured and unsubordinated debentures

Repayment of Maturity Balance as Credit Amount Life Interest Payment Debenture Issuance Date Principle Date at 31 Dec Rating (MB) (year) Cycle 2012 CPN135A A+ 2,000 21/05/2009 4 Every 6 months Upon maturity 21/05/2013 2,000

CPN145A A+ 1,000 21/05/2009 5 Every 6 months Upon maturity 21/05/2014 1,000

CPN136A A+ 1,200 26/06/2009 4 Every 6 months Upon maturity 26/06/2013 1,200

CPN15DA n/a 500 28/12/2010 5 Every 6 months Upon maturity 28/12/2015 500

CPN163A n/a 500 25/03/2011 5 Every 6 months Upon maturity 25/03/2016 500

CPN164A A+ 1,000 29/04/2011 5 Every 6 months Upon maturity 29/04/2016 1,000

CPN16OA A+ 1,200 12/10/2011 5 Every 3 months Upon maturity 12/10/2016 1,200

CPN18OA A+ 500 12/10/2011 7 Every 3 months Upon maturity 12/10/2018 500

CPN21OA A+ 300 12/10/2011 10 Every 3 months Upon maturity 12/10/2021 300

CPN156A n/a 1,000 23/12/2011 3.5 Every 6 months Upon maturity 23/06/2015 1,000

CPN171A n/a 1,000 23/12/2011 5.1 Every 6 months Upon maturity 23/01/2017 1,000

CPN176A A+ 1,000 01/06/2012 5 Every 6 months Installment started 01/06/2017 1,000

CPN13NA n/a 500 01/08/2012 1.3 Every 6 months Upon maturity 29/11/2013 500

Remarks : Average applicable annual loan interest rate of 4.30% per annum 126 | 127 CPN ANNUAL REPORT 2012

Company Financial Ratios following the Covenant Ratios As at 31 Dec 2012 Debenture’s Rights and Conditions

1. Total Debt to Total Shareholders’ Equity Not over 2.50 times 1.69 times

2. Total Interest Bearing Debt to Total Shareholders’ Equity Not over 1.75 times 0.99 times

3. Total Assets (excluding Secured Debt) to Unsecured Debt Not less than 1.50 times 3.32 times

2. SHAREHOLDERS

CPN’s shareholding distributions as at 28 November 2012 (Book Closing Date for Extraordinary Meeting of Shareholders No. 1/2013) are: are:

Shareholders Shares Shareholding (%)

Registered Capital 2,178,816,000 100.00%

Local Shareholders >> Juristic persons 902,051,605 41.40% >> Persons 752,589,470 34.54% Total 1,654,641,075 75.94%

Foreign Shareholders >> Juristic persons 479,612,845 22.0 1 % >> Persons 44,562,080 2.05% Total 524,174,925 24.06% 127

Top ten major shareholders as at 28 November 2012 (Book Closing Date for Extraordinary Meeting of Shareholders No. 1/2013) are:

are:

Shareholders Shares Shareholding (%)

1. Central Holding Co., Ltd. 588, 1 7 1 ,980 27.00%

2. HSBC (Singapore) Nominees Pte Ltd* 178,315,819 8.18%

3. Thai NVDR Co., Ltd. 94,838,635 4.35%

4. Mrs. Arunee Chan 89,444,070 4.10%

5. The Bank of New York (Nominees) Limited* 60,848,910 2.79%

6. Mr. Suthichai Chirathivat 41 ,794,000 1.92%

7. Mr. Suthikiati Chirathivat 4 1 ,730,200 1.92%

8. Mrs. Suchittra Mongkolkiti 33,198,400 1.52%

9. Mr. Prin Chirathivat 30,1 50,550 1.38%

10. Mr. Tos Chirathivat 30,1 50,550 1.38%

Remarks : * The Share Registrar is not able to give details of the names of Shareholders; however these nominee accounts do not have any influence over the Company’s strategies or operational management.

Major shareholders who have significant de facto influence on policies or operations of CPN

Since Central Holding Co., Ltd., and members of the Chirathivat family altogether hold approximately 60% of the total shares in CPN, they have significant de facto influence on its policy formulation and operations. This is because 7 out of 12 members of the Board are representatives of these major shareholders.

Foreign Limit in Shareholding

CPN has set a foreign limit of 30% of the total paid-up capital. As at 28 November 2012, foreign investors altogether held 24.06% of CPN’s total paid-up capital. 128 | 129 CPN ANNUAL REPORT 2012

Directors and executives holding CPN shares as at 31 December 2012, are as follows:

No. of Shares No. Name Position 1) As at 1 January 2012

Direct Indirect 2) Total

1 Mr. Suthichai Chirathivat Chairman 41,794,000 200,000 41,994,000 - - - 41,794,000 200,000 41,994,000 1.93

2 Mr. Paitoon Taveebhol Independent Director ------Chairman of Audit Committee Chairman of Risk Management Committee

3 Mr. Chackchai Panichapat Independent Director ------Chairman of Nomination and Remuneration Committee Member of Audit Committee

4 Mrs. Sunandha Tulayadhan Independent Director ------Member of Audit Committee Member of Normination and Remuneration Committee

5 Mr. Karun Kittisataporn Independent Director ------Member of Audit Committee Member of Normination and Remuneration Committee

6 Mr. Kanchit Bunajinda Independent Director ------Member of Normination and Remuneration Committee Member of Risk Management Committee

7 Mr. Suthikiati Chirathivat Director 41,730,200 - 41,730,200 - - - 41,730,200 - 41,730,200 1.92

8 Mr. Suthichart Chirathivat Director 4,659,000 4,659,100 9,318,100 January - (4,659,100) June 1,827,200 - December - 4,659,100 6,486,200 4,659,100 11,145,300 0.51

9 Mr. Sudhisak Chirathivat Director 14,173,200 - 14,173,200 - - - 14,173,200 - 14,173,200 0.65

10 Mr. Sudhitham Chirathivat Director 13,382,300 - 13,382,300 - - - 13,382,300 - 13,382,300 0.61

11 Mr. Prin Chirathivat Director 30,150,620 - 30,150,620 March 100,000 - Member of Risk May (100,000) - Management Committee July (70) - August 182,000 96,000 30,332,550 96,000 30,428,550 1.40

Remarks: 1) Updated on 22 February 2013 2) Securities held by a spouse and / or children under the legal age of directors or executive officers. 129

Changes in No. of Shares No. of Shares Shareholding (%) Increased/Decreased during 2012 As at 31 December 2012 As at 31 December 2012

Month Direct Indirect 2) Direct Indirect 2) Total