Number of Flight Arriving at Samui Airport
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From 56-REIT2 Annual Report 31 December 2020 Samui Airport Property Fund (Leasehold) Disclaimer This document is the translated version of Thai document, in the case that there are conflicts in any of the contents specified herein, contents of the original version shall supersede such conflict contents. “Unitholders may obtain further information regarding the fund in annual report (56-REIT1) on www.sec.or.th or https://am.kkpfg.com” Form 56-REIT2 Year 2020 Samui Airport Property Fund (Leasehold) : SPF Content Message to Unitholders ........................................................................................................................................... 3 1 Summary of the Fund ........................................................................................................................................... 5 2 Fund Information ................................................................................................................................................. 10 3 Business Overview and Procurement of Benefit ................................................................................................. 10 4 Overview of Benefit from Real Estate Investment ............................................................................................... 41 5 Risk Factors ........................................................................................................................................................ 52 6 Legal Conflict ...................................................................................................................................................... 62 7 Other Important Information ................................................................................................................................ 62 8 Unit and Unitholders Information ......................................................................................................................... 63 9. Management Structure ....................................................................................................................................... 67 10 Corporate Governance ...................................................................................................................................... 86 11 Corporate Social Responsibility ........................................................................................................................ 95 12 Internal Control and Risk Management ............................................................................................................. 98 13 Prevention of Conflict of Interest ....................................................................................................................... 99 14 Significant Financial Information...................................................................................................................... 100 15 Management Discussion and Analysis (MD&A) by the Management Company/Fund Manager ...................... 104 16 Review of Trustee ........................................................................................................................................... 110 Attachment : Audit report and financial statements .............................................................................................. 111 Message to Unitholders To Unitholders Kiatnakin Phatra Asset Management Company Limited ("Management Company") would like to report to unitholders with regard to this annual report 2020 of Samui Airport Property Fund (Leasehold) as of 1 January 2020 - 31 December 2020. Thailand’s economy in the year 2020 was severely decelerated with the reduction of 6.1% from 4.0% growth in 2018 and 2.3% growth in 2019 due to the effect of the COVID-19 outbreak in Thailand and the world. This resulted in the decrease of investment value of the private sector by 8.4% when compared with the previous year, and the private consumption was shrunk by 1.0% due to the reduced purchase power. Moreover, the export value was reduced by 6.6% from the previous year. The public sector has remedied and stimulated the economy and disbursed the loan under the Royal Decree empowering the Ministry of Finance to borrow the money to solve the problems, remedy, and rehabilitate the economy and social affected by the COVID-19 outbreak in the year 2020, a total of 1 trillion Baht. In this year, the value of the public sector’s consumption and investment was increased by 5.7% and 0.8% respectively from the previous year. Additionally, the public sector has employed various measures to assist the affected persons and economic stimulating projects, e.g., the extension of taxation period, abatement of contributions payable by the employers and secured persons, Khon La Khrueng project lightening the financial burdens of the people, Shop Di Mi Khuen Project stimulating the expenditure by providing tax incentives. Thailand’s economy for the year 2021 tended to be recovered from the low base in 2020 with a growth rate of 2.5 – 3.5%. The expansion of Thailand’s economy was restricted even if the vaccines have been developed from several manufacturers, e.g., Pfizer, Moderna, Sinovac, and Astra Zeneca but the comprehensive vaccine development requires time. The vaccination in Thailand was expected to be commenced in the mid of 2021, Meanwhile, the new wave of outbreak from the end of 2020 led to the issuance of intensely strict measures applicable to certain areas which resulted in recovery constraints in the consumption and investment of the private sector including the recovery of the tourism sector because of the low number of foreign tourists visiting Thailand. Nevertheless, it was expected that the consumption and investment of the public sector would be continually grown from the previous year including the positive tendency of exportation thanks to the progress of vaccine distribution of the developed countries. Also, the economy in this year is supported by the stimulating measures continually issued by the public sector and the new wave of the pandemic has been dealt by the new intense measures focusing on the highly risky areas but the lockdown measure was not applied as the first wave, therefore, the collective economy tends to be affected less. For the tourism sector in the year 2020, it has been severely affected by the COVID-19 outbreak in Thailand and the world resulting in a great decrease in the number of foreign tourists from March 2020, a total of 6.7 million persons this year, reduced from the previous year by 83.2%, due to the government’s measures controlling the outbreak such as the temporary closures of certain establishments, quarantine measure against the persons coming from abroad, restriction of the travel of the foreign tourists, and prohibition of the international flights from landing on Thailand. Nevertheless, Thailand tends to have good control over the outbreak including its tourism stimulating measures such as Rao Thio Duai Kan and Special Tourist VISA (STV) to attract the foreigners to return to Thailand, etc. Nonetheless, the tendency of recovery of the business sector remains to encounter the restriction due to the second wave of the outbreak in Thailand at the end of the year and the regulatory requirement for 14-days quarantine after entering Thailand, therefore, the number of tourists visiting Thailand via STV program was not much. It was discovered that, in 2020, the Koh Samui tourism sector yielded a significant decline in the number of flights and visitors from the previous year, 5,485 flights (64.3% decrease) and 0.43 million persons (61.7% decrease) respectively, due to the emergency announcement across the Kingdom of Thailand from March 26th, 2020 onwards, the CAAT’s notification prohibiting the air transportation from overseas effective from April to September 2020, and the pandemic existing in a lot of worldwide areas in 2020. Therefore, the international flights, e.g., Samui-Singapore, Samui-Hong Kohng, Samui-Chongquing, and Samui-Chengdu were ceased in such a period, including the decrease of number of the domestic flights to be consistent with the needs of transportation to Koh Samui resulting in the significant decrease of overall flights of Samui Airport in the year 2020. Such significant reduction has occurred since April 2020 after comparing with the same period in the previous year before the situation of COVID-19 outbreak. In 2021, the tourism of Koh Samui has tended to be collectively recovered as the overall situation of Thailand’s tourism resulted from the progress of vaccination in Thailand and foreign countries and relented criteria applicable to foreign travelers. For the performance of Samui Airport Property Fund (Leasehold) from 1 January 2020 to 31 December 2020, the Fund’s net investment income before including unrealized gains on investments equaled 698.14 million baht. The Fund’s unrealized loss on investments largely consisted of 1,488.84 million baht of profit from asset appraisals. As a result, the Fund’s total net loss equaled 790.69 million baht. During the year, the Management Company announced dividend payments at a rate of 0.7200 baht per investment unit, or 684.00 million baht, consistent with the dividend payment policy of paying dividends at least 90 percent of net profit excluding unrealized gains on investment asset appraisals and audits of real estate leasehold rights for each accounting period with payments to be made no more than four times per year. The Fund’s net total asset value as of 31