Notification of the Allocation and Subscription Documents for Capital Increase Ordinary Shares
Section 1 Information of the Capital Increase Ordinary Shares Allocation
1. Date, Month, Year and Number of the Shareholders’ meeting of the Company which a resolution was passed for the allocation of capital increase ordinary shares The allocation of capital increase ordinary shares to the existing shareholders of the Company in proportion to the number of shares held by each of them was approved by the Annual General Meeting of Shareholders of the Company for the year 2017, held on April 24, 2017. 2. Details of allocation of capital increase ordinary shares According to the Annual General Meeting of Shareholders for the year 2017 of Grande Asset Hotels and Property Public Company Limited (the “Company”), held on April 24, 2017, resolved for the Company to increase the registered capital in an amount of 2,110,960,763.- Baht by issuing 2,110,960,763 ordinary shares, with the par value of 1.- Baht per share, and to allot and offer the capital increase ordinary shares in the amount of 866,711,771 shares to the existing shareholders of the Company in proportion to the number of shares held by each of them (Right Offering) at the ratio of 10 existing shares to 3 new shares (fractions of shares being disregarded), at the offering price of 1.- Baht per share. And the Board of Directors Meeting of the Company No. 1/2018, held on February 14, 2018 fixed the names of the shareholders who are entitled to subscribe the said capital increase ordinary shares (Record Date) on March 5, 2018 and the date for subscription and payment of the capital increase ordinary shares during on April 5, 2018 and April 9-12, 2018 (total 5 business days) during 9.00 hrs. - 15.30 hrs., which the details of allotment are as follows: Type of the new shares : Newly issued ordinary shares Registered Capital : Baht 5,000,000,000 with a par value of Baht 1.00 per share, (as of March 5, 2018) divided into - Ordinary shares 5,000,000,000 shares - Preferred shares - shares Current paid-up capital : Baht 2,889,039,237 with a par value of Baht 1.00 per share, divide into - Ordinary shares 2,889,039,237 shares - Preferred shares - shares Paid-up capital after capital : Baht 3,755,751,008 with a par value of Baht 1.00 per share, increase divide into (in case the new shares - Ordinary shares 3,755,751,008 shares are fully subscribed) - Preferred shares - shares
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Allocation method : The shares shall be allocated to the existing Shareholders of the Company in proportion to the number of shares held by each of them (Right Offering) at the ratio of 10 existing shares to 3 new shares (fractions of shares being disregarded), whereby they shall be allocated to the shareholders whose names appeared on the date of fixing the names of the Shareholders who are entitled to subscribe the capital increase ordinary shares on March 5, 2018. However, the existing shareholders can subscribe for the shares in excess of their rights and pay for the ordinary shares for the amount in excess of their entitlements, together with the subscription and payment of the ordinary shares. Number of allocated shares : 866,711,771 shares Subscription ratio : 10 existing shares to 3 new shares (In the calculation of subscription rights for each shareholder, the fractions of shares from such calculation (if any) shall be discarded.) Offering price per share : Baht 1.00 In case where the existing shareholders have not subscribed all of the said allotted capital increase ordinary shares above or there are remaining unsubscribed shares in any case whatsoever, the said remaining shares shall be allotted and offered to the existing shareholders of the Company, who have subscribed and made payment for the ordinary shares for the amount in excess of their entitlements, together with the subscription and payment of the ordinary shares as subscribed above, at the price of 1.- Baht per share, whereby the Executive Committee or the authorized directors of the Company are authorized to consider the allotment and offer of the said remaining shares to the existing shareholders, who have subscribed and made payment for the ordinary shares for the amount in excess of their entitlements, under the following criteria and conditions: (a) In case the number of the ordinary shares as subscribed by the existing Shareholders for the amount in excess of their entitlements aforesaid is more than the number of the remaining shares, the allotment of the said remaining shares shall be made to the existing shareholders who have subscribed the shares for the amount in excess of their entitlements and paid for the subscription price in proportion to the existing shareholding until they are no more or they cannot be allotted due to being the fraction of shares. (b) In case the number of the ordinary shares as subscribed by the existing shareholders for the amount in excess of their entitlements aforesaid is less than the number of the remaining ordinary shares, the allotment of the said remaining shares shall be made to all those existing shareholders who have subscribed the shares for the amount in excess of their entitlements and paid for the subscription price in proportion to the existing shareholding until no existing shareholders wish to subscribe the said shares anymore.
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Provided that the Company shall return the subscription money without interest for the amount covering the unallotted additional number of the ordinary shares of the relevant existing Shareholders within 14 days from the closing date for the subscription. In addition, the allotment of capital increase ordinary shares in accordance with (a) and (b) above in any case whatsoever, will not cause to any existing shareholders who have subscribed the shares for the amount in excess of their entitlements, hold the shares of the Company categorized to make the tender offer of entire shares of the Company (Tender Offer) in accordance with the Notification of the Capital Market Supervisory Board No. Tor Jor. 12/2554 Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business Takeover or under the characteristic as infringement of the restriction of foreign shareholding as stated in the Articles of Association of the Company. (c) In case there are still unsubscribed ordinary shares remaining after the allotment mentioned in (a) and (b) above, the above remaining ordinary shares shall be allotted and offered to investors in private placement (Private Placement) categorized under the Notification of the Capital Market Supervisory Board No. Tor Jor. 72/2558 Re: Approval for the Listed Companies to Offer Newly Issued Shares to Investors in Private Placement in accordance with the resolution of the Annual General Meeting of Shareholders for the year 2017. 3. Date for fixing the names of shareholders entitled to subscribe for capital increase ordinary shares The Company fixed the date for fixing the names of the shareholders who are entitled to subscribe the capital increase ordinary shares (Record Date) on March 5, 2018. 4. Share subscription and payment period On 5 April 2018 and 9-12 April 2018 (total 5 business days) during 9.00 hrs. - 15.30 hrs. at the head office of the Company, as detailed below: Accounting and Financial Department Grande Asset Hotels and Property Public Company Limited Unit 3203-4, 32nd Floor, Exchange Tower 388 Sukhumvit Road., Klongtoey, Klongtoey, Bangkok 10110 Tel: 0 2204 9900 Fax: 0 2204 9996 5. Objectives of capital increase and plans for utilizing proceeds received from the capital increase. For use as the working capital and reserve fund for the business operations of the Company and its subsidiaries, repayment of loan and supporting the investment and development in real estate projects of the Company and its subsidiaries, including the hotels, the villas for sale and the residential condominiums for sale. Currently, the Company has three hotels which had been completely constructed and launched for rendering services such as The Westin Grande Sukhumvit Hotel, Sheraton Hua-Hin Resort & Spa Hotel and Sheraton Hua-Hin Pranburi Villas Hotel, and has four real estate projects which had been completely
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constructed and under the period of sale and ownership transfer such as Hyde Sukhumvit 13, Hyde Sukhumvit 11, Hua-Hin Blue Lagoon and The Trendy Office Condominium Projects. In addition, the Company has a hotel project which is under the construction i.e., Hyatt Regency Bangkok Sukhumvit Hotel, equivalent to the investment value of approximately 3,300 Million Baht which the Company expected that such hotel will be able to launch for rendering services within the second quarter of 2018. Moreover, pursuant to the business plan of the Company for 2018, the Company had planned to launch the new projects such as the real estate project in Rayong province which consists of the hotel, the villas for sale and the residential condominiums for sale, equivalent to the total investment value of approximately 5,794 Million Baht, whereby the Company expects that the villas for sale will be started to construct in the first quarter of 2018, and the hotel will be started to construct in the fourth quarter of 2019, including the residential condominiums for sale will be started to construct in the first quarter of 2020. For Hyde Heritage Thonglor which is the residential condominiums project for sale on Sukhumvit Road, equivalent to the investment value of approximately 6,500 Million, whereby the Company expects that it will be started to construct in the fourth quarter of 2018. Moreover, the Company had planned to renovate the existing hotels to increase the luxury and modern in order to improve the awareness of customers effecting to the brand by upgrade to Luxury Brand and to increase the room rate which the Company expects that it will be started to renovate in the first quarter of 2018. Furthermore, the Company had planned to take over the hotels in local which has launched for rendering services with potential generating revenue. Therefore, the Company is required to have a capital reserve for accommodation of the investment and development of all projects in the future and for use as the working capital in the business operation of the Company and its subsidiaries including for repayment of loan. In this regards, the Company expects that the capital received from the capital increase at this time will help strengthen the financial stability of the Company and when combined with the Company’s existing assets and the revenue generated from the current business operations of the Company, it will enable the Company to achieve its objectives and its specified plans for utilizing the fund. 6. Benefits received by the Company from allotment of capital ordinary increase shares. This is considered to be the expansion of the capital base of the Company which will help strengthen the Company’s financial strength and stability, resulting in the lower cost of borrowing of the Company in the future. This also enables the expansion in the investment and the business operation of the Company to be even more effective. As a result, the business operation of the Company has a tendency to growth in the future while the shareholders will benefit from the increased value of the Company and the return on the investment on a regular basis. 7. Dividend policyand right to receive dividends of capital increase shares. 7.1 Dividend policy The Company has the policy to pay dividends at the rate not lower than 50% of the net profits after deduction of the corporate income tax. However the Company may fix the dividends payment lower than the rate as specified above, in case the Company has necessary for taking the said amount of the net profits in order for completion of the existing projects or for expending the business of the Company.
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7.2 Subscribers in capital increase ordinary shares in this occasion are entitled to receive dividend from operation effecting from the date of registration to become shareholders of the Company. 7.3 Others: -none- 8. Other details necessary for the shareholders in support of their decision for investment in capital increase shares. The Company hereby advised the shareholders to study the information memorandum of the Company as attached to this notice. And the shareholders should consult with their financial advisor (if any) before making any decision in subscription of the capital increase ordinary shares in this occasion.
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Section 2 Preliminary Information of the Company
1. Name and address of the Company Name Grande Asset Hotels and Property Public Company Limited Address Unit 3203-4, 32nd Floor, Exchange Tower 388 Sukhumvit Road, Klongtoey, Klongtoey, Bangkok 10110 TEL. 0 2204 9900 FAX. 0 2204 9996 Website http://www.grandeasset.com 2. Type of business and nature of operation of the core business of the Company and its subsidiaries Grande Asset Hotels & Property Public Company Limited (“GRAND”) was established on 21 April 1988. At present, the registered capital is at the amount of 5,000,000,000 Baht and the paid-up capital is at the amount of 2,889,039,237 Baht, divided into 2,889,039,237 ordinary shares with the par value of 1 Baht per share. The Company engages in two main businesses which are Hotel Business and Real Estate Development Business with the details as follows: 2.1 Hotel Business The Company is aiming to focus its business on the investment in 4-5 star hotel business by hiring experienced hotel management company with international and global network to manage the business such as Marriott International, and Hyatt International Corporation. For hotel investment in Bangkok Metropolitan, the Company chooses to invest in hotels with locations that are convenient to commute and are located in central business district. In addition, the Company also has a policy to diversify its investment in hotel business to other provinces that are the leading tourist attractions of the country by aiming to target foreign and local customers with medium to high income or other tourist location with potential in other provinces. The details are as follows: 2.1.1 The Westin Grande Sukhumvit Hotel The hotel is located directly on Sukhumvit Soi 19, near Asoke BTS station and Sukhumvit MRT station, managed by Marriott International Group which is the world-class hotel management company with a leading five-star hotels and hotel management experience and has more than 5,500 affiliated hotels in over 100 countries worldwide and being one of the world’s largest hotel management company. The Westin Grande Sukhumvit Hotel is a five- star hotel, residing in a 25-storey building and comprising of 362 rooms offering an outstanding facilities with various impeccable services related to hotel services, e.g. Grand Ballroom, Conference Room and Banquet Hall, “Seasonal Taste” restaurant serving international food and beverage, “Kisso” Japanese Restaurant “Zest Bar & Terrace”, Business Center, Vareena Spa and Westin Work Out Fitness Studio equipped with modern fitness facilities for those who enjoy exercise. The hotel also provides an outdoor catering and laundry services for corporate.
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2.1.2 Sheraton Hua Hin Resort and Spa The leading five-star hotel managed under “Sheraton Hotels & Resorts”, a brand of Marriott International Group, located on a peaceful seaside of Cha-Am District, only 200 kilometers away from Bangkok with a convenient traveling of only two and a half hours by car. The hotel is a two-storey building lined around the lagoon pool and surrounded by lush gardens featuring 240 resort rooms together with outstanding facilities with various impeccable services related to hotel services, e.g. Grand Ballroom and 2 additional meeting rooms with the area of 820 Sq.m. in total and “The Chandelier” meeting room, which is the most elegant, luxurious and perfect, with the area of 892 Sq.m., “The Deck” restaurant, “InAzia” restaurant, “Salas” restaurant, “Luna Lanai” restaurant or to hold a private party in casual atmosphere at “@Black”. In addition, the hotel offer massage service for at “Shine Spa by Sheraton”, Sheraton Fitness Center, tennis court and Star club. 2.1.3 Sheraton Hua Hin Pranburi Villas The leading five-star hotel managed under “Sheraton Hotels & Resorts”, a brand of Marriott International Group. Sheraton Hua Hin Pranburi Villas consists of 53 private pool villas surrounded by lush tropical gardens and beautiful seaside of Pranburi with outstanding facilities with various impeccable services related to hotel services 2.1.4 Hyatt Regency Bangkok, Sukhumvit Hotel The Company's newest hotel, which is currently under construction, located on Sukhumvit Road next to Sukhumvit Soi 13, close to Nana BTS station. It features various room types with the total amount of 273 rooms. The Company has appointed Hyatt International Corporation to manage this hotel. The Company expected that Hyatt Regency Bangkok, Sukhumvit Hotel will be ready for service in 2018. 2.2 Real Estate Development Business The Company will focus on the investment in projects that generate a short-term gain and mainly invest in business district or tourism area that has high potentials to be developed, accessible to various convenient transportation networks with variety of facilities located nearby. The Company is targeting medium to high income customers (both local and foreign), who require residential accommodation in the business districts or who need private getaway for recreation or a place to settle down after retirement. In addition, the company's business is also focused on after- sales service to satisfy long-term customer. Currently, the Company has real estate projects as follows: 2.2.1 Hyde Sukhumvit Project This 40-storey residential condominium project offers one, two and three- bedroom units, junior penthouse and penthouse at the total number of 454 units with the useable area ranging from 32.03 to 487.63 S.qm. The value of
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the project is at the total amount of over THB 5 Billion. Hyde Sukhumvit is located directly on Sukhumvit Soi 13. The Company has completed the construction of the project and the ownership transfer to condominium unit buyers has started since December, 26 2013 until the 4th quarter of 2017. More than 99 percent of the total units were transferred. The remaining units are large condominium units in the type of duplex and penthouse. 2.2.2 Hyde Sukhumvit 11 Project The value of Hyde Sukhumvit 11 Project is at the amount of over THB 4 Billion. It features 39-storey residential building with fully equipped facilities and a 9-storey parking building for residential and commercial purposes as well as the rooftop recreation space. The Project offers various condominium unit types which divided into 476 residential units which consists of 1, 2, 3 bedrooms studio, duplex loft, duplex penthouse and villa penthouse, with the useable area ranging from 27 to 178 Sq.m., plus 2 units designed for commercial purpose. Since the launch of Hyde Sukhumvit 11, in the last period of the first quarter of 2015 until December 31, 2017, the project has pre-sold approximately 60% of the total units. 2.2.3 Hua Hin Blue Lagoon Resort Project Hua Hin Blue Lagoon Resort Project is divided into two main parts: Blue Lagoon Condominium and Island Villas located adjacent to the Sheraton Hua Hin Resort & Spa. Blue Lagoon Condominium Project consists of 18 three-storey residential condominium buildings, whereby each building consists of 6 units, totaling 108 units. The project has been completed and ready to reside and there are only 3 units available for sale with immediate transfer of ownership as of December 31, 2017. As for Island Villa, which a two-storey island style private villa with 3 bedrooms, totaling 37 Island Villa accommodations are currently sold out. 2.2.4 The Trendy Condominium Project The Trendy Condominium Project is a mixed use condominium located in Soi Sukhumvit 13, 70 meters away from Sukhumvit Road. The project consists of residential condominium, office, and shopping plaza. The project has already been completed and most of the residential condominium, office and shopping plaza units have been transferred to buyers as of December 31, 2017. There are only 2 units available for sale with immediate transfer of ownership. 2.2.5 Hyde Heritage Thonglor Project Hyde Heritage Thonglor Project is a luxury condominium project that combines classic and modern style, both for living and investing potential. The investment value is at the amount of over THB 4,514 Million, located on 2.5 rai area on Sukhumvit Road between Thonglor and Ekkamai BTS stations and only 350 meters away from Thonglor BTS station. It is expected to launch in Q3 of 2018.
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Hyde Heritage Thonglor Project is the collaboration with Property Perfect Public Company Limited and leading Japanese company, “Sumitomo Forestry”, which has been established for more than 326 years and is a leader in the forestry, home building and housing developing business in many countries. 2.2.6 Rayong Villa & Condominium Project Rayong Villa & Condominium Project is divided into 2 areas, which are villa and condominium projects, situated adjacent to the Hyatt Regency Rayong Hotel. The villa project is located on an area of 34 rai, which is a two-story residential condominium with 2 to 4 bedrooms with swimming pool at the total number of 61 villas. It is expected to be launched within Q4 of 2018. In the future, the project plans to build a beachside high rise condominium on an area of 5 rai with full facilities. 2.3 Information of the Subsidiaries and the Affiliated Company The Company has 3 subsidiaries and 1 affiliated company as follows; 1) Honor Business Company Limited Type of business : Subsidiary Business characteristic : Management of Sheraton Hua Hin Resort and Spa Paid-up capital : 125 Million Baht Shareholding proportion : 100% Value of investment : 207 Million Baht Other relationships : There are 5 directors of the Company who are the directors of the Subsidiary. 2) Owendelle Company Limited Type of business : Subsidiary Business characteristic : Operation of Sheraton Hua Hin Pranburi Villas Paid-up capital : 280 Million Baht Shareholding proportion : 100% Value of investment : 215 Million Baht Other relationships : There are 5 directors of the Company who are the directors of the Subsidiary. 3) Grande Equity Development Company Limited Type of business : Subsidiary Business characteristic : Real Estate Development Business Paid-up capital : 250 Million Baht Shareholding proportion : 100% Value of investment : 250 Million Baht
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Other relationships : There are 5 directors of the Company who are the directors of the Subsidiary. 4) Grand Star Company Limited Type of business : Affiliate Company Business characteristic : Development of Hyde Heritage Thonglor Project Paid-up capital : 1,200 Million Baht Shareholding proportion : 40% Value of investment : 480 Million Baht Other relationships : There are 2 directors of the Company who are the directors of the Affiliated Company. 2.4 Important Assets of the Company and its Subsidiaries The important assets of the Company and its subsidiaries as of December 31, 2017 have the book values as follows:
Book Value (Baht) Types of Assets Consolidated Separated Financial Statements Financial Statements Cost of real estate development 2,269,342,483 2,269,342,483 Land pending development 117,119,709 117,119,709 Cash and cash equivalents 1,411,516,716 882,601,243 Immovable properties for 24,711,074 24,711,074 Investment Leasehold rights 291,306,082 12,278,813 Land, buildings and equipments 3,487,097,686 3,406,523,251
2.5 Industrial Outlook and Competitive Environment 2.5.1 Hotel Business In 2017, Thailand’s tourism has welcomed 35.4 million visitors, increased from 32.6 million visitors in 2016, representing an increase of 8.8 percent. Tourism revenue generated was increased by 11.7 percent which is equivalent to THB 1.82 Billion in 2017. Thailand’s tourism sector has continued strong growth due to the fact that Thailand is one of the most popular destinations of foreign visitors, partially is a result of its competitive advantages with regards to room rate pricing and value of money comparing to other Asia Pacific countries. However, the suppression of illegal tour operation since 2016 temporary pressured the Chinese tourists which have been recovered in 2017, evidenced by 12% Y-o-Y growth in number of Chinese tourists, rising from 8.76 million in 2016 to 9.81 million in 2017, still ranking as the highest number of international tourists. The second highest number of tourist came from Malaysia, stayed at 3.35 million, followed by Korea, Laos, and Japan, respectively. Part of the growth in tourist number is due to additional flight to the current routes or new serviced routes such as new flight connecting between
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Bangkok-Daegu, South Korean and Bangkok-Jaipur and Bangkok-Tiruchirappalli, India. For tourists from ASEAN countries, which are approximately 26% of total international tourists, owing to ASEAN Economic Community (AEC) implementation, which makes international travel in Southeast Asia more convenient. For example, Laotian tourists usually visit Thailand for shopping, therefore, more retail developments in particular provinces such as Nong Khai, Udon Thani, Khon Kaen, and Nakornratchasima also support an increase in a number of Laotian tourists. Following East Asia tourists (14.52 million) and ASEAN tourists (9.12 million), European tourist is the third market source, increasing from 6.17 million to 6.51 million, or 23% Y-o-Y increase. The reason of the increased number of European tourist is due to decreased number of Russian in the past few years have recovered in 2017, increasing from 1.09 million in 2016 to 1.35 million in 2017, equate to 23% Y-o-Y growth. This implies that stronger Ruble against Thai Baht has helped lifting arrivals from Russia. Also, a number of South Asian tourists ranked the fourth, stayed at 1.77 million in 2017, or 16% Y-o-Y growth. One of the factors that increase Indian tourist is the new flight routes, as aforementioned. India is one of the new growth markets since its larger number of population and high purchasing power. Another factor supporting number of arrivals is visa fee waiver and reduction for visas on arrivals for tourist from 21 countries such as China, India, Saudi Arabia and Taiwan. This measure is introduced in December 2015, after a sudden decrease in arrivals from China crackdown on zero dollar tours. The travelers, who hold passport holders from these 21 countries can apply for tourist visas at Royal Thai Embassies or Thai Consulates abroad without any fees for entry visas, while the fees for visas on arrival (VoA) have been reduced from 2,000 Baht to 1,000 Baht per person. Moreover, the Tourism Authority of Thailand (TAT) has been boosting uniqueness of Thai tourism, specifically Gastronomy Tourism. One of the TAT’s Gastronomy Tourism initiatives is the launch of the Michelin Guide Bangkok at the end of 2017. Gastronomy Tourism aimed to inspire local and international visitors to visit many parts of Thailand to taste local dishes in the destinations of origin. Thailand’s tourism boom is likely to continue and generate consistent demand for hotel accommodation. However, the competition is more aggressive due to the increasing number of hotel supply in different segments. Large scaled hotel operators have actively enlarged their businesses both domestically in Bangkok and other provinces, and also internationally. Foreign investors have also invested in hotel in Thailand. Small to medium scaled hotel operators have built their unique identities in order to target those tourists who prefer new experiences and focus on higher value of money. This has resulted in a more variety of small to medium scaled hotel types. The hotel investments in other provinces or destinations in Thailand such as Hua Hin, Pattaya, Chiang Rai, have expanded, but the challenge is how to drive the occupancy and room rates. Overall, there is a government effort trying support tourism and hotel operators. For example, early 2017, the cabinet approved a reform plan for the country’s aviation sector that will allow private sector companies to invest in a USD16.4 Billion expansion of Thai airports through public- private partnerships as authorities prepare to handle a projected capacity of 277 million passengers in 10 years time. Aside from expanding Thailand’s three main international airports, it will upgrade and expand 36 provincial airports in all corners of the country. A key part of the plan is establishing Thailand as the premier aviation maintenance and repair center in the region and perhaps all of East Asia. The
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government intends to develop U-Tapao as a commercial center and for the maintenance and repair hub. Moreover, the government is shifting focus from arrival figures to visitor spending by targeting high-spending niche markets. For Bangkok, as the capital and tourist destination, contributes to the majority of the hotel supply in Thailand and has the highest average room rates in Central region. This has pushed up the occupancy rate of the Central to be higher than other areas. Luxury hotels in Bangkok became more popular again in 2017, with that trend continuing in 2018, after very limited new luxury hotels were added in the market during the past few years. Currently, Thailand is one of the key MICE destinations in Asia. Luxury or high-end business hotels, not only in Bangkok but other provinces, which support MICE tourists potentially raise their revenues markedly from room rates, conference hall and meeting room, and food & beverages from catering, as MICE tourists have 2-3 times higher expenses than average tourists. Mid-scale and economy hotels might be competing with alternative accommodation such as condominiums, hostels or Airbnb. Although the majority of Airbnb users are Western tourists who tend to look for accommodation options other than hotels in order to reduce travel costs as they usually stay longer (14-16 nights) than Asian tourists (around 7 nights), the Chinese tourists are increasingly booking rooms through Airbnb. Therefore, the competition of mid-scale and economy hotels tends to be more aggressive, specifically within the areas concentrated by Chinese tourists such as Chiang Mai, Pattaya, and Phuket. Still, the strong competitive advantages of the hotel are related to amenities, safety, cleanliness, and the availability of reception staff. Even the number of international tourists is continuously increasing; there are a number of risk factors such as domestic politic situation, local and world economy. Minimizing uncontrollable risks, the government seeks to encourage tourism by encouraging domestic markets; namely, the government has approved a series of tax deduction measures to promote seminars, leisure travel and MICE events in 55 second-tier tourist provinces nationwide all through 2018 2.5.2 Real Estate Business Real estate development has expanded itself within Bangkok Metropolitan Region including those commercial cities while the construction sector slowed down from the delay in government construction project to the 4th Quarter in 2017. Real estate business within Bangkok Metropolitan Region has continued its expansion which reflected in sale volumes of accommodation from both horizontal and vertical. The supporting factors are from: The progression of mass transportations Those new property projects which launched publicly after such delay in the first half year in order to fasten the remaining supplies Increasing in Advertising & Sale Promotions after the Royal Cremation Ceremony of King Rama the 9th. From the developers’ standpoint, such a positive increase in Sale volume was, majority, derived from customers with medium-to-high income whereas the purchasing power from those customers with low-to-medium income has slowed down since income has not, obviously increased and some has high level of debt which raise awareness to banking institutions when approving loan (Post-Finance) which reflected in various number of home loan rejected at 40-50%
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From the 1st Quarter in 2017, many developers expected the continued growth in real estate business within Bangkok Metropolitan Region resulting in many businesses have more plans for land acquisitions for new projects in 2018 where those large developers will focus on group of customers from medium-to-high income and there is trend on investment for Mixed Used projects since the costs of land has shifted up significantly which the Break-Even Point cannot be achieved if focus only on condominium project. Meanwhile, the present trend for real estate business in the region is expected to sustain its position since the current purchasing power from other provinces is limited as well as various projects still have remaining unsold units, the Government should increase the public construction i.e. express way and new public roads in those areas around Bangkok and other provinces since new public construction will introduce new area of real estate development and expand economy to those areas. Investors are key driver to the recovery of real estate development, the present trend seems to indicate that long-term investors who purchased properties for renting out or for long-term holding starting to achieve the peak period from their continuous investments as well as the return in term of rental has declined (expected to be lower than 6% p.a.) which draw less attention on property investment. Therefore, the demand for the next period may not seem to be accelerated causing from more caution in investment and more selective behavior on project investment. However, presently, Chinese investors starting to play significant role in driving the price in some property projects such as Patttaya. The rejection or disapproved loans from the banks are in high rate especially on those low-to-medium income earners which is the main obstacle in real estate business. Therefore, the banking institutions should be more flexible and render some leniency on loan approve process and provide different criteria for approval of loans for those low-to- medium income earners or releasing those whose names are on Credit Bureau to be shorter period from 3 years to 2 years. Furthermore, project owners are encouraging those banking institutions to consider the Pre-Mortgage loan approach like those banking institutions in Malaysia and Singapore to resolve the issue on loan rejection when property transfer process is initiated. The real estate business in regards to commercial rental trends to increase continuously including rental space in new Community Mall and in Mixed Use property, therefore, the concern on over-supply in some areas arise. Presently, the tenants in many projects such as cloth shop, tutorial school and other entertainment activities are facing the impact from online business, thus rental business is at risk and requires expertise to manage where such risk can be seen from closing down in number of Community Malls whereas those banking institutions have continued approved loans on this kind of projects. 2.6 Production, Marketing and Distribution 2.6.1 Hotel Business The investment in the hotel business of the Company will focus on the investment in 4-5 star hotels. In Bangkok, the Company will invest in properties that have convenient transportation and located in business district such as The Westin Grande Sukhumvit Hotel and Hyatt Regency Bangkok, Sukhumvit Hotelt (under construction), the Company has a policy to diversify its investment in the hotel business to other provinces that are the leading tourist attractions of the country with high potential such as Sheraton Hua Hin Resort and Spa and Sheraton Hua Hin Pranburi Villas by aiming to target foreign and local customers with medium to high
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income and in operating the hotel business, the Company will hire experienced hotel management company with international and global network to manage the business such as Marriott International Group and Hyatt International Corporation Group. The said hotel management companies have extensive marketing networks both in the country and abroad which is an important channel to find customers for your hotel. The Company also has a team of its own, which also serves to promote the sales and marketing of its hotel business. In addition, the Company is also coordinating with travel agencies both domestically and internationally and famous travel websites, including Tourism Authority of Thailand to help promote the sales and marketing of the hotel business of the Company. 2.6.2 Real Estate Business The investment in the real estate business of the Company will focus on investment in projects that generate short-term gain. In Bangkok, the Company will invest and develop condominium projects in the business district and close to major transportation systems such as The Trendy Condominium Project, Hyde Sukhumvit Project, Hyde Sukhumvit 11 Project and Hyde Heritage Thonglor Project which are luxury living condominium whereby the Company is targeting medium to high income customers (both domestic and international), who require residential accommodation in the business districts. The Company also has a policy to diversify its investment in the real estate business to other provinces that are the leading tourist attractions of the country with high potential such as Hua Hin Blue Lagoon Resort Project and Rayong Villa & Condominium Project in order to offer to the customers with medium to high income (both domestic and international), who seek private getaway for recreation or a place to settle down after retirement. In terms of marketing and distribution, the Company will employ well-known sales agents, locally and internationally, such as CBRE and HARRISON. The Company also has a team of its own, which will serve as the marketing and sales support for the Company's real estate business. In this regards, the Company provided training on the company's products to the sales team regularly in order for the salespersons to give advice, answer questions, present highlights and ensure target customers. In addition, the Company has developed its website, http://www.grandeasset.com, to be attractive, easily access and retrieve information and has complete details about the projects of the Company to use for advertisement and as a channel to connect with other target customers. 3. Names of Directors, Management and Top Ten Major Shareholders as at the date for fixing the names of the Shareholders who are entitled to subscribe the capital increase ordinary shares (Record Date) on March 5, 2018 3.1 Namesof the Board of Directors of the Company The Board of Directors of the Company comprises of 11 members as follows: 1. Mr. Wichai Thongtang Chairman of the Board 2. Dr. Bhichit Rattakul Vice Chairman of the Board and Chairman of Executive Committee 3. Mr. Chainid Adhyanasakul Director and Vice Chairman of Executive Committee 4. Mr. Vitavas Vibhagool Director, Executive Committee and Chief Executive Officer of Real Estate Business
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5. Miss Wilawun Leongnarktongdee Director, Executive Committee and Chief Executive Officer of Financial Group 6. Mr. Suradej Narula Director and Executive Committee 7. Mr. Amarin Narula Director and Executive Committee 8. Mr. Paisit Kaenchan Director, Executive Committee and Chief Executive Officer of Hotel Business 9. Mr. Pornchai Kittipanyangam Independent Director and Chairman of the Audit Committee 10. Mr. Wattana Suthipinijtham Independent Director, Audit Committee Member and Risk Management Committee 11. Mr. Amarit Pansiri Independent Director and Audit Committee Member 3.2 Names of the Managementof the Company The Executive Committee and Management of the Company comprises of 14 members as follows: 1. Dr. Bhichit Rattakul Chairman of Executive Committee 2. Mr. Chainid Adhyanasakul Vice Chairman of Executive Committee 3. Mr. Vitavas Vibhagool Executive Committee and Chief Executive Officer of Real Estate Business 4. Miss Wilawun Leongnarktongdee Executive Committee and Chief Executive Officer of Financial Group 5. Mr. Suradej Narula Executive Committee 6. Mr. Amarin Narula Executive Committee 7. Mr. Paisit Kaenchan Executive Committee and Chief Executive Officer of Hotel Business 8. Mr. Somchai Treeratanaphitak Executive Vice President of Legal Affairs 9. Mr. Sathit Kiatkrajai Executive Vice President of Accounting& Control 10. Mr. Pheeraphon Nonthasoot Executive Vice President of Sales& Marketing 11. Miss Tipaporn Panitpong Chief Operating Officer 12. Mr. Somsak Chaipitoonsawas Executive Vice President ofConstruction, Design and Project Development 13. Mr. Sutipong Jitnotai Executive Vice President of Business Development 14. Miss Chadaporn Chayawan Vice President of Finance 3.3 Top Ten Major Shareholders The Company has the major shareholders as follows:
Number of Shares Proportion of No. Name of Shareholders Shareholding (Shares) (%) 1 Metro Premier Holding Co., Ltd. 1,026,558,657 35.53 2 Citynet Asia Limited 206,850,000 7.16
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Number of Shares Proportion of No. Name of Shareholders Shareholding (Shares) (%) 3 Thai Property Public Co., Ltd. 147,000,000 5.08 4 Mr. Surachai Ratithong 144,000,000 4.98 5 Miss Saranya Chaichutaporn 74,023,800 2.56 6 Mr. Tavee Anantaratana 65,531,090 2.26 7 Mr. Vilert Wongapisumpho 58,964,005 2.04 8 Property Perfect Public Co., Ltd. 49,099,819 1.70 9 Mr. Teeratach Poolkasem 43,424,115 1.50 10 Mr. Surakit Ratithong 41,500,000 1.43
4. Historical information of capital increase and dividend payment during the past 3 years In the year 2015, the Company had paid the dividends for the performance results of the fiscal year 2014 to the Shareholders of the Company as follows: (1) To pay the dividend by ordinary shares to the Shareholders of the Company at the ratio of 20 existing shares to 1 dividend share, being ordinary shares in the amount not exceeding 137,573,333 shares, with the par value of 1.- Baht per share, totaling amount not exceeding 137,573,333.- Baht or equivalent to the rate of payment of share dividends of 0.05 Baht per share. In case of any Shareholder has a friction of existing share after allotment of the dividend share, the dividend shall be paid by cash in place of the payment by ordinary shares at the rate of 0.05 Baht per share; and (2) To pay the dividend by cash at the rate of 0.00556 Baht per share, being the amount not exceeding 15,298,155.- Baht. Therefore, the total payment of dividends for the performance results of the fiscal year 2014 is at the rate of 0.05556 Baht per share. And the Company had increased the registered capital from the existing amount of 2,751,466,667.- Baht to 2,889,040,000.- Baht; namely, to increase the registered capital by another 137,573,333.- Baht by issuing 137,573,333 new ordinary shares, with the par value of 1.- Baht per share, in order to reserve for the payment of dividends by the ordinary shares to the Shareholders of the Company. In the year 2017, the Company had increased the registered capital from the existing amount of 2,889,400,000.- Baht to 5,000,000,000.- Baht; namely, to increase the registered capital by another 2,110,960,763.- Baht by issuing 2,110,960,763 new ordinary shares, with the par value of 1.- Baht per share in order to allot and offer as follows: (1) To allot and offer the newly issued capital increase ordinary shares in the amount of 866,711,771 shares, with the par value of 1.- Baht per share to the existing Shareholders of the Company in proportion to the number of shares held by each of them (Right Offering) at the ratio of 10 existing shares to 3 new shares (fractions of shares being disregarded), at the offering price of 1.- Baht per share which the price equals to the par value of share of the Company is 1.- Baht per share, whereby the Board of Directors of the Company is authorized to consider the fixing of the names of the shareholders who are entitled to subscribe the capital increase ordinary shares of the Company.
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(2) To allot and offer the newly issued capital increase ordinary shares in the amount of 1,244,248,992 shares, with the par value of 1.- Baht per share together with the unsubscribed ordinary shares remaining after the allotment to the existing Shareholders in accordance with Clause (1) above (if any), for offering in entirety or in portions for offering in lots from time to time to investors in private placement categorized under the Notification of the Capital Market Supervisory Board No. Tor Jor. 72/2558 Re: Approval for the Listed Companies to Offer Newly Issued Shares to Investors in Private Placement which such persons are not connected persons of the Company, whereby the Board of Directors of the Company or the person who designated by the Board of Directors of the Company shall have the authority to determine the offering price of the shares at the best market price in accordance with the market condition during the offering period to the investor(s) which shall not lower than 1.- Baht per share and shall not lower than the following price: 2.1 The weighted average of the Company’s share price trading on the Stock Exchange of Thailand (“SET”) for not lower than 7 consecutive trading days but not exceeding 15 consecutive trading days prior to the determination date of the offering price of such shares (“Market Price”), whereby such weighted average of share price is required to use the average price of shares trading in each day. Provide that, the determination date of offering price is required to backward not exceeding 3 trading days prior to the first date of offering shares to the investor(s). However, the Board of Directors of the Company may determine the discount on the offering price but shall not exceed 10% of such Market Price. 2.2 The price which is determined by the book building method surveyed by the securities company.
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Section 3 Financial Information in the Past 3 Years
1. Summary of Financial Reporting The financial statements of the Company for the fiscal year ended 31 December 2015 were audited by the auditor approved by the Office of Securities and Exchange Commission, Mr. Supachai Phanyawattano, CPA Registration No. 3930, of EY Office Limited, and the financial statements of the Company for the fiscal years 2016-2017ended 31 December 2016-2017 were audited by the auditor approved by the Office of Securities and Exchange Commission, Miss Krongkaew Limkittikul, CPA Registration No. 5874, of EY Office Limited. The auditors certified and expressed their opinions in the Auditor’s Report as follows: The financial statements for the fiscal year ended 31 December 2015, the auditor gave an unqualified opinion in the auditor’s report that the separate financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries present the financial position, operating performance and cash flows fairly, in all material aspects in accordance with Thai Financial Reporting Standards. The auditor drew attention to to the financial statements for the year 2015 regarding the lawsuit between the Company and the owners of the land on which a hotel of the Company is located. The financial statements for the fiscal year ended 31 December 2016, the auditor gave an unqualified opinion in the auditor’s report that the separate financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries present the financial position, operating performance and cash flows fairly, in all material aspects in accordance with Thai Financial Reporting Standards. The auditor drew attention to the financial statements for the year 2016 regarding the lawsuit between the Company and the owners of the land on which a hotel of the Company is located. On 21 September 2016, the Supreme Court ordered the dismissal of the plaintiff’s claim. Therefore, the case was finalised. The financial statements for the fiscal year ended 31 December 2017, the auditor gave an unqualified opinion in the auditor’s report that the separate financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries present the financial position, operating performance and cash flows fairly, in all material aspects in accordance with Thai Financial Reporting Standards. The auditor drew attention to the financial statements for the year 2017 regarding a subsidiary’s sales of assets to a Real Estate Investment Trust and recognition of profit of Baht 573 million from the transactions. These transactions were highly significant to financial statements and did not occur in the normal course of business.
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2. Summary of Financial Position and Operating Results of the Company and its Subsidiaries during the past three years Summary of Financial Information
Consolidated financial Separate financial statements statements Unit : Million Baht 2017 2016 2015 2017 2016 2015
Statement of financial position Assets Current assets 4,327.78 2,689.90 1,935.71 3,812.64 3,923.41 3,119.03 Non-Current assets 4,957.02 4,999.45 3,947.77 5,547.67 4,409.08 3,258.02 Total assets 9,284.80 7,689.35 5,883.48 9,360.31 8,332.49 6,377.05 Liabilities Current liabilities 2,585.34 1,843.00 1,961.12 2,685.76 2,003.26 2,087.04 Non-current liabilities 3,076.25 2,944.19 1,026.10 3,046.03 2,907.67 991.64 Total liabilities 5,661.59 4,787.19 2,987.22 5,731.79 4,910.93 3,078.68 Shareholders’ equity Issued and fully paid capital 2,889.04 2,889.04 2,889.04 2,889.04 2,889.04 2,889.04 Retained earnings 734.17 13.12 7.22 739.48 532.52 409.33 Shareholders’ equity 3,623.21 2,902.16 2,896.26 3,628.52 3,421.56 3,298.37
Income statement Revenues Revenues from hotel operations 1,093.20 1,079.22 1,052.40 646.53 628.36 576.77 Revenues from sales of real estate 1,195.64 320.28 286.51 1,195.64 320.28 286.51 Other income Gain on sales of assets to trust 573.44 - - - - - Gain associated with the loss of control in subsidiary 8.75 - - - - - Rental income 16.16 17.85 22.29 15.65 17.38 21.56 Interest income 14.27 3.26 1.85 99.01 73.06 106.18 Other income 34.34 33.24 23.02 49.62 36.50 21.77 Total revenue 2,935.80 1,453.85 1,386.07 2,006.45 1,075.58 1,012.79 Costs and expense Cost of hotel operations 392.05 388.83 390.12 218.63 219.53 214.04 Cost of sales of real estate 692.66 100.82 137.72 692.66 100.82 137.72 Selling expenses 214.32 127.20 186.32 179.91 87.89 145.63
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Consolidated financial Separate financial statements statements Unit : Million Baht 2017 2016 2015 2017 2016 2015 Administrative expenses 507.62 472.95 476.75 322.79 305.34 303.46 Depreciation and amortisation 230.02 251.33 232.34 123.78 128.23 118.50 Other expenses Loss on impairment of investment in subsidiary - - - 84.42 - - Total Costs and expenses 2,036.67 1,341.13 1,423.25 1,622.19 841.81 919.35 Gross profit Gross profit from hotel operations 701.15 690.39 662.28 427.90 408.83 362.73 Gross profit from real estate 502.99 219.46 148.79 502.99 219.46 148.76 Gross profit 1,204.13 909.85 811.06 930.88 628.30 511.52 Net profit (losses) 723.05 5.90 (120.48) 213.70 123.19 5.57 Cash flow statement Cash flows from (used in) operating activities 738.98 (0.39) 283.74 (25.44) (55.61) 180.11 Cash flows from (used in) investing activities (255.92) (1,284.62) (315.75) 52.74 (1,242.83) (231.21) Cash flow from financing activities 454.77 1,387.80 164.83 462.95 1,385.75 163.27 Net increase in cash and cash equivalents 937.83 102.79 132.82 490.25 87.32 112.17 Cash and cash equivalents at beginning of year 473.69 370.90 238.08 392.35 305.03 192.86 Cash and cash equivalents at end of year 1,411.52 473.69 370.90 882.60 392.35 305.03
Summary of Financial Ratios
Consolidated financial Separate financial statements statements Financial Ratios 2017 2016 2015 2017 2016 2015
Liquidity ratio (Times) 1.67 1.46 0.99 1.42 1.96 1.49 Debt to equity ratio (Times) 1.56 1.65 1.03 1.58 1.44 0.93 Gross profit margin(%) 52.61% 65.01% 60.58% 50.53% 66.23% 59.25%
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Consolidated financial Separate financial statements statements Financial Ratios 2017 2016 2015 2017 2016 2015
Gross profit margin-Hotel (%) 64.14% 63.97% 62.93% 66.18% 65.06% 62.89% Gross profit margin-Property (%) 42.07% 68.52% 51.93% 42.07% 68.52% 51.93% Net profit margin (%) 24.63% 0.41% (8.69)% 10.65% 11.45% 0.55% Book value per share (Baht/Share) 1.21 0.97 0.96 1.21 1.14 1.10 Net profit per share (Baht/Share) 0.24 0.002 (0.04) 0.07 0.04 0.002
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3. Explanatory and analysis of the Company’s Operating Performance and Financial Position
Operating Performance
Revenues
In 2017, the Group Company had total revenues of Baht 2,936 million, increased by Baht 1,482 million, equivalent to 102% from 2016, which are the revenues of the Company of Baht 2,006 million, increased by Baht 931 million, equivalent to 87% from 2016. The major revenues of the Group Company were from the revenues from the hotel operations of Baht 1,093 million, equivalent to 37% of total revenues, increased by Baht 14 million, equivalent to 1% from 2016, due to the higher average room rates. Regarding the revenues from real estate business of Baht 1,196 million, equivalent to 41% of total revenues, they were increased by Baht 875 million,equivalent to 273% from 2016. This was due to the transfer of ownerships of the Hyde Sukhumvit 11 project, Hyde Sukhumvit project and Hua Hin Blue Lagoon Condominium project. Moreover, the Group Company had the gain on sales of assets to Trust of Baht 573 million, equivalent to 20% of total revenues, as a result of its subsidiary selling the assets of Sheraton Hua Hin Resort & Spa Hotel to Trust.
In 2016, the Group Company had total revenues of Baht 1,454 million, increased by Baht 68 million, equivalent to 5% from 2015, which are the revenues of the Company of Baht 1,076 million, increased by Baht 63 million, equivalent to 6% from 2015. The major revenues of the Group Company were from the revenues from the hotel operations of Baht 1,079 million, equivalent to 74% of total revenues, increased by Baht 27 million, equivalent to 3% from 2015, due to the higher number of tourists and businessmen travelling to Thailand in 2016 than the prior year, resulting in the better occupancy rates and average room rates. Regarding the revenues from real estate business of Baht 320 million, equivalent to 22% of total revenues, they were increased by Baht 34 million, equivalent to 12% from 2015. This was due to the transfer of condominium ownerships of Hyde Sukhumvit project.
In 2015, the Group Company had total revenues of Baht 1,386 million, decreased by Baht 3,542 million, equivalent to 72% from 2014, which are the separate revenues of the Company of Baht 1,013 million, decreased by Baht 3,611 million, equivalent to 78% from 2014. The major revenues of the Group Company were from the revenues from the hotel operations of Baht 1,052 million, equivalent to76% of total revenues, increased by Baht 227 million, equivalent to 28% from 2014, due to the higher number of tourists and businessmen travelling to Thailand in 2015 than the prior year, resulting in the better occupancy rate and average room rates. Regarding the revenues from real estate business of Baht 287 million, equivalent to 21% of total revenues, they were decreased by Baht 3,757 million, equivalent to 93% from 2014. This was because most condominium ownerships of Hyde Sukhumvit project were transferred in 2014.
Total Expenses and Costs of Hotel Operations and Sales of Real Estate
The Group Company had total costs and expenses for the year 2017 of Baht 2,036 million, increased by Baht 695 million, equivalent to 52% from 2016, which are the costs and expenses of the Company of Baht 1,622 million, increased by Baht 780 million, equivalent
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to 93% from 2016. They are mainly comprised of the costs of hotel operations of the Group Company of Baht 392 million, increased by Baht 3 million, equivalent to 1% from 2016. This was due to an increase in the costs related to the employees, i.e., salaries, wages and other welfares from the higher number of employees. Regarding the costs of sales of real estate, they were increased by Baht 592 million from 2016, owing to the higher proportion of areas of the transferred condominium ownership of Hyde Sukhumvit 11 project and Hua Hin Blue Lagoon condominium project.
The Group Company had total costs and expenses for the year 2016 of Baht 1,341 million, decreased by Baht 82 million, equivalent to 6% from 2015, which are the costs and expenses of the Company of Baht 842 million, decreased by Baht 77 million, equivalent to 8% from 2015. They are mainly comprised of the costs of hotel operations of the Group Company decreased by Baht 1 million from 2015 and the costs of the Company increased by Baht 5 million, equivalent to 3% from 2015. This was due to the changes in the revenues of hotel business. Regarding the costs of sales of real estate, they were decreased by Baht 37 million from 2015, owing to the lower proportion of areas of the transferred condominium ownership of Hyde Sukhumvit project.
The Group Company had total costs and expenses for the year 2015 of Baht 1,423 million, decreased by Baht 2,539 million, equivalent to 64% from 2014, which are the costs and expenses of the Company increase by Baht 919 million and the costs of the Company decreased by Baht 2,569 million, equivalent to74% from 2014. They are mainly comprised of the costs of hotel operations of the Group Company of Baht 53 million, equivalent to 16% from 2014 and the costs of the Company increased by Baht 32 million, equivalent to18%from 2014. This was due to the higher revenues of hotel business. Regarding the costs of sales of real estate, they were decreased by Baht 2,465 million from 2014, owing to a decrease inrevenue recognition of the transferred condominium ownership of Hyde Sukhumvit project.
Selling and Administrative expenses
In 2017, the Group Company had total selling and administrative expenses of Baht 722 million, increased by Baht 122 million, equivalent to 20% from 2016. They were comprised of selling expenses of Baht 214 million, increased by Baht 87 million, equivalent to 68% from 2016, costs of promotion and transfer of ownerships, expenses related to public events of Hyde Sukhumvit project and Hyde Sukhumvit 11 project. Moreover, there were expenses related to the transfer of condominium ownerships such as specific business tax, transfer fee and commission, which were higher from the revenues of transfer of condominium ownership. Regarding administrative expenses of Baht 508 million, they were increased by Baht 35 million, equivalent to 7% from 2016, mainly due to the expenses related to the employees, write-off of the deposits of the past projects of the Company and rental expenses of a hotel of Trust.
In 2016, the Group Company had total selling and administrative expenses of Baht 600 million, decreased by Baht 63 million, equivalent to 9% from 2015. They were comprised of selling expenses of Baht 127 million, decreased by Baht 59 million, equivalent to 32% from 2015. In 2015, the Company introduced its new condominium project namely Hyde Sukhumvit 11, resulting in the additional expenses of commission, advertising and sales and
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marketing in public events. Regarding administrative expenses of Baht 473 million, they were decreased by Baht 4 million, equivalent to 1% from 2015, mainly due to, in 2015, the adjustments in rental expenses to be recognised on a straight line basis over the lease agreement period in accordance with the accounting standard.
In 2015, the Group Company had total selling and administrative expenses of Baht 663 million, decreased by Baht 154 million, equivalent to 19% from 2014. They were comprised of selling expenses of Baht 186 million, decreased by Baht 148 million, equivalent to 44% from 2014, mainly due to a decrease in expenses related to the transfer of condominium ownership and a decrease in sales promotion expenses of Hyde Sukhumvit project. However, the Company introduced its new condominium project of Hyde Sukhumvit 11 in March 2015, resulting in the additional expenses of commission, advertising and marketing in public events. Regarding administrative expenses of Baht 477 million, they were decreased by Baht 5 million, equivalent to 1% from 2014, mainly due to, in 2014, there were expenses related to the introduction of Hyde Sukhumvit project, the additional provision for the compensation from the lawsuit, the provision of penalties and surcharges from sales of Crowne Sukhumvit Plaza project and higher expenses of its subsidiary in hotel renovation and opening of Sheraton Hua Hin Pranburi Villas Hotel.
Net Profit
In the year 2017, the Group Company had net profit of Baht 723 million. The net profit increased by Baht 717 million from the prior year. This was mainly due to an increase in the gross profit of real estate business from the transfer of condominium ownership of the Hyde Sukhumvit 11 project and Hua Hin Blue Lagoon Resort project, an increase in the gross profit of hotel business from the higher average room rates than the prior year. Moreover, there were gain from Trust in 2017 and a decrease in depreciation and amotisation from its subsidiary sellingthe assets of Sheraton Hua Hin Repost and Spa to Trust.
In the year 2016, the Group Company had net profit of Baht 6 million. The net profit increased by Baht 126 million from the prior year. This was mainly due to an increase in the gross profit of real estate business from the transfer of condominium ownership of the Hyde Sukhumvit project, an increase in the gross profit of hotel business from the higher occupancy rates than the prior year. However, cost of sales of real estate were decreased due to the opening of new condominium in 2015, resulting in the higher expenses related to advertising and sales promotion in public events than in 2016.
In the year 2015, the Group Company had net loss of Baht 120 million. The net profit decreased by Baht 722 million from the prior year, owing to a decrease in the gross profit of real estate business because in 2015, there was a lower transfer of condominium ownership of the Hyde Sukhumvit project than the prior year. This was due to the ownership of the most of condominium units of Hyde Sukhumvit project were transferred in 2014.
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Financial Position
Assets
The Company had total assets as of 31 December 2017 of Baht 9,285 million, increased by Baht 1,596 million when compared with the amount as of the end of year 2016. This was due to the real estate development project of the Company of Baht 2,269 million, increased by Baht 252 million compared with the amount as of the end of year 2016, the increase in construction of Hyde Sukhumvit 11 project, an investment in joint venture of Baht 475 million resultingin the increase in short-term loans and interest receivable from joint venture of Baht 452 million, the investment in Trust of Baht 176 million, the deposit for acquisition of ordinary shares in other company of Baht 144 million and the new hotel construction. However, the assets were decreased from the sales of the assets of Sheraton Hua Hin Resort & Spa Hotel to Trust and the transfer of condominium ownership of the several projects.
The Company had total assets as of 31 December 2016 of Baht 7,689 million, increased by Baht 1,806 million when compared with the amount as of the end of year 2015. This was due to the real estate development project of the Company of Baht 2,017 million, increased by Baht 681 million compared with the amount as of the end of year 2015. This was due to the increase in construction of Hyde Sukhumvit 11 project, an investment in developing new real estate project and the advance for acquisition of land for the future project of Baht 422 million and the new hotel construction, resulting in the increase of the an advance and property, plant and equipment. However, the decrease in total assets was from the transfer of condominium ownership of Hyde Sukhumvit project.
The Company had total assets as of 31 December 2015 of Baht 5,883 million, increased by Baht 355 million when compared with the amount as of the end of year 2014. This was due to the construction of real estate development project of the Company, Hyde Sukhumvit 11 project, of Baht 1,336 million, increased by Baht 43 million compared with the amount as of the end of year 2014 and the increase in,the constructions of the new hotel construction of the Company and the construct of meeting room, dining room and swimming pool of the hotel of its subsidiary, resulting in the increase of the property, plant and equipment. However, the decrease in total assets was from the transfer of condominium ownerships of Hyde Sukhumvit project.
Liabilities
As of 31 December 2017, the Company had total liabilities of Baht 5,662 million, increased by Baht 875 million when compared with the total liabilities as of the end of year 2016. This was mainly due to an increase in issuance of debentures of Baht 1,597 million. However, the bills of exchange payable were decreased by Baht 683 million.
As of 31 December 2016, the Company had total liabilities of Baht 4,787 million, increased by Baht 1,800 million when compared with the total liabilities as of the end of year 2015. This was mainly due to an increase in debentures of Baht 1,346 million, an increase in the long-term loansfrom financial institutions of Baht 565 million and an increase in the deposits received from sales of condominium project of Baht 184 million.
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As of 31 December 2015, the Company had total liabilities of Baht 2,987 million, increased by Baht 491 million when compared with the total liabilities as of the end of year 2014. This was mainly due to an increase in bills of exchange payable and an increase in the deposits received from sales of condominium project.
Shareholder’s Equity
As of 31 December 2017, the Company had total shareholder’s equity of Baht 3,623 million, increased by Baht 721 million, equivalent to 25% of total shareholder’s equity as of the end of year 2016. This was due to an operating profit of the Group Company in 2017.
As of 31 December 2016, the Company had total shareholder’s equity of Baht 2,902 million, increased by Baht 6 million, equivalent to 0.2% of total shareholder’s equity as of the end of year 2015. This was due to an operating profit of the Group Company in 2016.
As of 31 December 2015, the Company had total shareholder’s equity of Baht 2,896 million, decreased by Baht 136 million, equivalent to 4% of total shareholder’s equity as of the end of year 2014. This was due to an operating loss of the Group Company and the dividend payment of both cash dividend and stock dividend in 2015.
Sources of Funds
During 2017, the major sources of funds of the Group Company were from the net cash flows from operating activities, mainly from the cash received from the hotel business and real estate business such as the booking fee, the deposit, installments and cash received from the transfer of ownerships from the condominium unit buyers of the real estate project of Baht 1,127 million. Moreover, the Group Company had the sources of funds from the sales of the assets of Sheraton Hua Hin Resort & Spa Hotel of its subsidiary to Trust of Baht 1,637 million and from several financing activities such as an issuance of bills of exchange of Baht 789 million, short-term loans from related party of Baht 100 million, an issuance of debentures of Baht 1,594 million and loans from financial institutions of Baht 2,072 million.
During 2016, the major sources of funds of the Group Company were from the net cash flows from operating activities, mainly from the cash received from the hotel business and real estate business such as the booking fee, the deposit, installments and cash received from the transfer of ownerships from the condominium unit buyers of the real estate project of Baht 510 million. Moreover, the Group Company had the sources of funds from several financing activities such as an issuance of bills of exchange of Baht 1,771 million, an issuance of debentures of Baht 1,344 million and loans from financial institutions of Baht 645 million.
During 2015, the major sources of funds of the Group Company were from the net cash flows from operating activities, mainly from the cash received from the hotel business and real estate business such as the booking fee, the deposit, installments and cash received from the transfer of ownerships from the condominium unit buyers of the real estate project of Baht 458 million. Moreover, the Group Company had the sources of funds from cash at banks which is free from any guarantees and not subject to withdrawal restrictions in 2015 of Baht 31 million and several financing activities such as an issuance of bills of exchange and loans from financial institutions of Baht 1,654 million.
Notification of the Allocation and Subscription Documents for Capital Increase Ordinary Shares of Grande Asset Hotels and Property Public Co., Ltd. page 26 of 27
Liquidity Management
During 2017, the Company used the funds from the above-mentioned sources mainly to repay the costs of land and construction of the real estate projects of Baht 344 million, to pay the corporate income tax of Baht 50 million, to invest in joint venture of Baht 480 million, to provide short-term loans to joint venture of Baht 452 million, to invest in available-for-sale securities of Baht 176 million, to deposit for acquisition of shares in other company of Baht 144 million, to pay the costs of purchasing of decorations and operating equipment, including the construction and renovation of the hotel of Baht 608 million, to deposit for construction of the new hotel of Baht 39 million, to repay the bills of exchange payable of Baht 1,488 million, to repay the loans from financial institutions of Baht 2,355 million and to pay the interest of Baht 253 million.
During 2016, the Company used the funds from the above-mentioned sources mainly to repay the costs of construction of the real estate projects of Baht 546 million, to pay the corporate income tax of Baht 12 million, to pay the cost of land awaiting development of Baht 86 million, to pay an advance for acquisition of land of Baht 422 million, to deposit for new hotel construction of Baht 117 million, topay the costs of purchasing of decorations and operating equipment, including the construction and renovation of the hotel of Baht 655 million, to repay the bills of exchange payable of Baht 2,030 million, to repay the short-term loan from related party of Baht 118 million, to repay the loans from financial institutions of Baht 83 million and to pay the interest of Baht 135 million.
During 2015, the Company used the funds from the above-mentioned sources mainly to repay the costs of construction of the real estate projects of Baht 440 million, to deposit for real estate project and hotel construction of Baht 167 million, to pay the corporate income tax of Baht 28 million, to pay the costs of purchasing of decorations and operating equipment, including the construction and renovation of the hotel of Baht 295 million, to repay the bills of exchange payable and loans from related party of Baht 1,354 million, to pay the interestof Baht 135 million and to pay cash dividend of Baht 15 million.
m/set/cap 61/หนงสั ือแจ้งการจดสรรหั ้นเพุ ิ่มทนุ _eng.doc
Notification of the Allocation and Subscription Documents for Capital Increase Ordinary Shares of Grande Asset Hotels and Property Public Co., Ltd. page 27 of 27