A Year of Transition
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v Thailand Amata Corporation PCL. Amata City Co., Ltd. Bangkok Office Amata Nakorn Industrial Estate Amata City Industrial Estate 2126 Kromadit Building 700 Moo 1 Klong Tamru, Moo 3 Bowin, Sriracha New Petchburi Road Muang 20000 Chonburi, 20230 Chonbutn, Thailand Bangkapi, Huay Kwang Thailand Tel : +66 38 346 007 10320 Bangkok, Thailand Tel : +66 38 213 007 Fax : +66 38 345 771 Tel : +66 2 792 0000 Fax : +66 38 213 700 Fax : +66 2 318 1096 Vietnam Amata (Vietnam) Co., Ltd. A Year of Transition Liaison Office 165 Nguyen Van Troi, Annual Report 2006 Phu Nhuan Dist., Ho Chi Minh City, Vietnam Tel : (84 - 8) 845 0007 / 844 3709 Fax : (84 - 8) 844 3713 E-mail : [email protected] Amata Corporation Public Company Limited Contents Executives’ Messages 2 Chairman’s Statement 3 CEO’s Report Performance at a Glance 6 Performance at a Glance 7 Amata Consolidated Results 2003 - 2006 About Amata 9 About Amata Responsibilities for community and environment 11 Amata’s Responsibilities for community and environment Corporate Governance 13 Report 17 Risk Factors 18 Shareholding & Dividend Policy Board of Directors 20 Biographies 25 Structure 26 Meetings Attendance 27 Remuneration Committees and working Groups 29 Committees Overview and Responsibilities 32 Working Groups 33 Remuneration Policies 34 Income Structures and Internal Information Management Financial Assessment 36 Management Analysis 37 Responsibility for Financial Assessment 38 Report of The Audit Committee 39 Report of Independent Auditor Financial Statements 41 Balance Sheet 44 Statements of Income 45 Statement of Changes 47 Statement of Cash Flows 49 Explanations on the Financial Statements Executives 66 Organization Chart 67 Biographies 71 Executives’ Shareholdings Amata Group of Companies Information 73 Shareholding Structures 74 Directors in Amata Subsidiary Companies 75 Profile & Contacts 80 Other Information Executives’ Messages Chairman’s Statement Message from CEO Vikrom Kromadit A Year of Transition 2006 was a transitional year for both Thailand and Amata Corp. It was difficult in many ways, but also had positive developments. For Amata’s existing clients - the manufacturers already operating in our estates - it was largely a good year. Many of them expanded their exports, part of Thailand’s overall 20% year-on-year estimated growth in exports. Other clients completed building their facilities and started up successfully, while still others expanded. All of these clients benefited from new and improved infrastructure and services, some of it supplied by Amata, some of it part of Thailand’s ongoing industrial upgrades. Close to both of Amata’s Thai estates in the nation’s Eastern Seaboard development region near Bangkok, Suvarnabhumi Airport opened successfully in September, while Laem Chabang deep sea port added capacity and technology. But for Amata’s core operations developing industrial land in Thailand, it was a challenging time, as it was for our entire industry. Many potential new investors, especially newcomers to the region and Western firms, were forced to take a wait-and-see approach amid the nation’s political stalemate, which lasted from April until it was broken by the non-violent coup on September 19. The impact is reflected in Amata’s decline in land sales to 546.61 rai (87.46 hectares or 218.64 acres), following two straight record years. Fortunately, this delay in land sales was partly offset by our recurring revenues from sources like sales of utilities and services to existing clients, rental factory income and income from our Bien Hoa estate near Ho Chi Minh City in Vietnam. As a result, despite a 31% decline in land sales, our revenues were down by only 23%. Police General Chavalit Yodmani As for political developments, we note that the coup was peaceful and widely supported within Thai society. As noted by many Thais as well as foreigners like the head of the Joint Foreign Chambers of Commerce in Thailand, the interim government includes some of Thailand’s most highly regarded and capable individuals, who have made clear their commitment to a restoration of full democracy via political reforms and a new election in 2007. Foreign direct investment interest resumed shortly after the coup, when major projects were announced by several Japanese corporations and others. Thailand’s advantages in terms of costs, human resources, infrastructure and ease of doing business are as strong as ever. Investors continue to want to come here, as we are confident this year’s results will prove. We expect to show increased sales and profits in 2007. Sincerely, Police General Chavalit Yodmani Chairman of the Board of Directors Annual Report 006 AMATA Corporation Public Company Limited AMATA Corporation Public Company Limited Annual Report 006 Chairman’s Statement Message from CEO Vikrom Kromadit Opportunities to build Amata’s business In a year when factory investment momentum slowed in Thailand, Amata took action, emphasizing cost control and service to existing clients. Our balanced growth strategy helped stabilize our performance. The logic of this strategy has always been airtight; now we find that the company is benefiting from it sooner than expected. The plan calls for Amata to balance income from Thailand land sales with an increasing share of recurring income from rents, utilities and our profitable Vietnam operations. As our industrial parks fill up with factories, the customers who first turn to us to buy land soon rely on us for quality support like electricity, water and other commercial services, on an ongoing basis. Under the balanced growth strategy, this other income is planned to equal 50% of total revenues by 2010; in 2006, the share of revenue from our recurring income and Vietnam operations was 36%, up almost 13 percentage points from 2005. While the political uncertainties of 2006 slowed investments mostly from American and European companies, new investments continued to arrive from sources in Asia like Japan, Singapore and Malaysia. Helping reinforce Amata’s leadership in hosting Japanese factories, we innovated a new service for their important suppliers - the parts makers, mould makers and other SMEs that until now have been too small in size to establish facilities in an industrial estate. Amata Nakorn now serves even the smallest of these firms at a new rental facility called Ota Techno Park. This building, already fully occupied and slated for expansion, serves as a kind of “factory apartment” where multiple Japanese firms can work side-by-side with convenient shared facilities like meeting rooms, display space and secretarial Vikrom Kromadit services. In 2007 we hope to create an international version of this facility for firms from all over the world. Amata is also reaching out to the many Chinese manufacturers that Beijing is encouraging to invest overseas in order to help reduce China’s huge trade surplus. China’s Holley Group has agreed to market land at Amata City, Rayong to companies in China. Beijing has designated this project as an official Chinese Overseas Industrial Zone, one of only ten in the world. Amata Facility Services is offering Amata Nakorn clients a new “total service” approach to waste disposal that emphasizes environmentally sustainable methods. The service, which includes consultancy, waste transportation and disposal of all waste streams, helps clients save cost while eliminating the need to rely on multiple vendors. AFS’s partner Eco Siam safely disposes of hazardous wastes by using them as fuel and raw materials in cement kilns. At Amata Nakorn, the popular new Amata Medical Center will expand to become a modern hospital. Scheduled for completion in 2009, this new hospital will provide quality service for employees working at the estate, while helping Amata’s corporate clients comply with occupational health regulations affordably and improve care for their employees. Joint ventures like this hospital are not only a source of new revenues for Amata; they are part of the full-service approach that has made us the leader in Thai factory estates. Annual Report 006 AMATA Corporation Public Company Limited AMATA Corporation Public Company Limited Annual Report 006 We expect Thailand’s incoming foreign direct investment to rebound in 2007. The structural advantages manufacturers enjoy in Thailand - costs, human resources, infrastructure, location, pro-business governance - are stronger than ever, thanks to upgrades like the new Suvarnabhumi Airport, opened in September, and the expansion of Laem Chabang Deep Sea Port. Because both of Amata’s estates are situated near these two key transport centers, our firm is especially well positioned to benefit from investors’ return. At Amata Nakorn, we opened Phase 8 of the park, with 1,000 rai of land for new factories. Amata foresees new opportunities. We devoted time and effort in 2006 to an important new marketing initiative to reach out to Western investors, especially in the United States. While the US and EU GNP represents some 30% of the global economy, American investors still account for just 10% of clients with investments at Amata. We see tremendous room for growth in hosting American and European firms as more and more of them launch or expand operations in Asia to benefit from the region’s attractive costs, human resources and markets. With that in mind, Amata is working with new sales and marketing partners in North America and Europe. Vietnam is another bright spot. Its booming economy, talented human resources and increasingly open governance are attracting