SIIAM FUTURE DEVELOPMENT PUBLIIC CO..,, LTD.. Esplanade Ratchadapisek 99 Ratchadapisek Road, Din Dang, Bangkok, Thailand 10400. Tel: +662-660-9000 Fax: +662-660-9010, +662-660-9020, +662-660-9030 Website: www.siamfuture.com SIAM FUTURE DEVELOPMENT PLC Contents Page 1 Message from the Board of Directors 2 Audit Committee Report 3 General Information 6 Major Accomplishments of the Company 7 Financial Highlights 9 Explanation and Analysis on the Financial Status 11 Nature of Business 17 Market and Competition 27 Risk Factors 31 Organization Chart 32 Shareholding Structure and Management 44 Report on Compliance with Principles of Good Corporate Governance 50 Report of Independent Auditor and Financial Statements Annual Report 2011 SIAM FUTURE DEVELOPMENT PLC Message from the Board of Directors The Company proved to be prosperous during the first value adjustments on investment properties after tax (in three quarters of year 2011. However, caused by Thailand accordance with TAS 40 re Investment Property adopted flood disaster in the last quarter of the year affecting by the Company in 2010) of this project of THB 152 almost the entire country including Bangkok, 5 out of 29 million. projects of the Company were affected as owners and In 2011, the Company’s total revenues declined from 2010 staffs of the shops were unable to go to work. The by THB 572 million or 27% to THB 1,566 million while this Company sympathized with and was aware of the difficulty year’s net profit increased by THB 191 million or 37% to faced by these affected individuals and, as such, has THB 709 million. Such a reduction in revenue was due to considered to exempt them from rental and service fees a disposal of leasehold rights of Suzuki Avenue for the projects which was directly and indirectly affected in Ratchayothin Shopping Center, a 50:50 joint venture order for them to be able to carry on the business and for between the Company and Major Cineplex Group PLC., to continuous business partnership going forward. Total Major Cineplex Lifestyle Leasehold Property Fund (MJLF) rental reduction stood at THB 15.5 million. totaling THB 960 million. As a result of the government’s The Company’s growth during the past 18 years has been announcement of corporate income tax rate cut from 30% continued, sometimes even been soared especially during to 23 – 20% in 2012 – 2014, respectively, this year’s net the period of capital increase and listed on the Market for profit increased from the adjustment of Deferred Income Alternative Investment (MAI) and the Stock Exchange of Tax by THB 215 million (in accordance with TAS 40 re Thailand (SET) in 2002 and 2004, respectively. During Investment Property). such period, the Company’s rental spaces jumped from For the benefit of all stakeholders of the Company and in 8,759 sq.m. in 1995 to 36,972 sq.m. in 2003 (average order to achieve sustainable revenue, the Company growth of 40% p.a.). The Company will demonstrate a emphasizes on improvement of the existing projects to rocketing growth again in 2012 from its joint venture with maintain the existing target customers such that the Ikano Pte. Ltd. through an establishment of SF projects can be steadily improved, thereby incurring Development Co., Ltd. to develop Mega Bangna Project positive profit and sustainable return to the shareholders in with the investment of THB 10,000 million and total a long run. The development of new projects will be leasable area of 180,000 sq.m. due to be fully operated on carefully considered with a focus on total quality 5 May 2012. management. The Board of Directors continues to act In November 2011, IKEA Store, home furnishing center upon the principles of good corporate governance, under brand IKEA situated on a 40,000-sq.m. space in professional management with ethical and governance Mega Bangna Project, has now been opened. As a result, transparency of business operation. the Company recognized profit from financial lease after Lastly, the Board of Directors would like to convey a tax of THB 26 million. Such store opening was very well sincere appreciation to supporters, shareholders, suppliers, accepted that demand from customers exceeded the customers, financial institutions, financial advisors and all merchandise put in the store, proving accomplishment of employees for their continuous trust and support in the this joint venture with Ikano Pte. Ltd. 93% (as at the end past and going forward. Accomplishment the Company has of January 2012) of Mega Bangna Project had been made is a result of dedication, commitment and leased while the Company is under screening process of cooperation to perform the duties at their best capability suitable lessees for the remaining area. from all groups of business alliances of the Company not In September, the Company launched Nawamin City by achievement of single individual. Avenue Phase 2 Project under the name of “Festival Walk Nawamin Art Village” with total space of 7,700 sq.m. as an extension of Nawamin City Avenue Phase 1. Design of the project focused on European Vintage style. The (Mr. Oranop Jantaraprapa) Company was, therefore, able to recognize profit from Chairman financial lease after tax of THB 11 million and gain on fair Annual Report 2011 Page 1 SIAM FUTURE DEVELOPMENT PLC Audit Committee Report The Audit Committee of Siam Future Development regulations of relevant authorities and ensure that Public Company Limited consists of: there is no conflict of interest. The Audit 1. Mrs. Nantiya Montriwat Committee has also reviewed the financial Chairman of the Audit Committee statements and proposed the appointment of the 2. Mrs. Sabaithip Suntaros Company’s auditor. In addition, the Audit Member of the Audit Committee Committee has continued to perform its tasks in 3. Mr. Dej Bulsuk other areas as usual. Member of the Audit Committee The Audit Committee has considered and is of the The Company continued to grow and expand its opinion that the Company’s internal control system business in 2011. In September 2011, the is sufficient and suitable for the Company’s Company has launched “neo-community mall” business according to the principles of good named “Festival Walk, Nawamin Art Village” corporate governance. The Company’s financial designed under the theme of European Vintage statements were prepared in conformity with on Kaset-Nawamin. This results in gain from generally accepted accounting principles and the financial lease of Baht 11 million and recognition information disclosure is complete and sufficient. of fair value in accordance with TAS 40 re Investment Property of Baht 152 million to the The Audit Committee has considered and agreed Company. to appoint Mr. Pisit Thangtanagul, C.P.A. number 4095 and/or Ms. Sakuna Yamsakul, C.P.A. Nevertheless, due to mega flood crisis in 2011 number 4906 and/or Mr. Chanchai Chaiprasit, affecting various districts in Bangkok and C.P.A. number 3760, under the name of metropolitan areas as well as neighboring PricewaterhouseCoopers ABAS Company Limited provinces, an assessment on its possible impact as the Company’s auditor and to have one of to the financial statements indicated that there these persons conduct the audit and provide were 5 projects within the group being flooded opinion on the year 2012 financial statements of around the shopping centers, making in the Company. inconvenient for vendors and customers to access the shops. However, no damages were caused to buildings or equipment of the Company. With an announcement of a number of new accounting standards, the Audit Committee has (Mrs. Nantiya Montriwat) emphasized that the Company must comply with Chairman of the Audit Committee the accounting standards, conduct transparent business operation according to the Company’s code of conduct, comply with related laws and Annual Report 2011 Page 2 SIAM FUTURE DEVELOPMENT PLC General Info rmation Siam Future Development Public Company Limited “Company” was incorporated on August 29, 1994 by Mr. Pongkit Suttapong and Mr. Nopporn Witoonchart with 10 Million Baht registered capital to run the business in open-air shopping center development and management. Presently the company owns altogether 30 operating projects. New Lifestyle center named Festival Walk Nawamin Art Village was launched on Kaset-Nawamin. Currently Total gross leasable area is 231,795 sq.m. as follows: Type of shopping center Number of Name of Shopping Centers shopping centers Neighborhood shopping center 8 Bangbon, Pracha-Utis, Sukhapiban 3, Sukhumvit 71 (Klong Ton), Thonglor, and Thungmahamek, Piyarom Place (Soi Sukhumvit 101/1), Market Place Nawamin Convenience shopping center 4 Ramindra Km.2, Wanghin, Ladprao Soi 120, Wanghin (Lotus Express) Stand-alone retail store 7 Ratchadaphisek – Huay Khwang, Ratchadaphisek-Rama3, Sathorn, Bangkae, Phaholyothin Km.27, Mengjai and Tha Phra. Power Center 3 SF Major Cineplex Cha Choeng Sao, Petchkasem Power Center, Ekkamai Power Center Lifestyle Center 7 J Avenue Thonglor 15, The Avenue Chaeng Watthana, La Villa Phonyothin, The Avenue Pattaya, Major Avenue Ratchayothin, Nawamin City Avenue, and Festival Walk Nawamin Art Village. Urban Entertainment Center 1 Esplanade Ratchadapisek Urban Y2011 Portfolio by type of shopping center Entertainment Power Center Center 29% 19% Lifestyle Center Neighborhood 33% Stand‐Alone Store Convenience Center Center 17% 1% 1% Additionally, we have 1 under construction projects named Mega Bangna with Total investment of THB 10 billion which joint venture with IKANO Pte. Ltd., the home furniture store under brand “IKEA” from Sweden. Annual Report 2011 Page 3 SIAM FUTURE DEVELOPMENT PLC IKEA store has opened on November 3rd, 2011 and shopping center which provides varieties of product on 180,000 sq.m. leasable area and comprise of famous anchor tenants i.e. Major Cineplex, Big C, Home Pro, Robinson. Mega Bangna targets to be fully operated on 5 May 2012.