contents - the erawan group · in 2005, the company registered baht 258 million net profit (or baht...
TRANSCRIPT
1A n n u a l R e p o r t 2 0 0 5
2 Message from the Board of Directors
4 Financial Highlights
5 Corporate Structure
6 Corporate Profile
8 Investment of The Erawan Group Plc. in Subsidiary and Other
Companies as of 31 December 2005
9 Revenue Structure
10 Milestones in 2005
12 Business Overview and Competition
15 Risk Factors
16 Capital Structure
17 Management Structure
24 Directorship in Subsidiary Companies
25 Corporate Governance
29 Connected Transactions
31 Explanation and Analysis of Financial Statements
and Operating Results
35 Future Projects
36 Statement from the Audit Committee
37 Report of Independent Auditor
38 Financial Statements
47 Notes to Financial Statements
84 General Information of the Company
Contents
2 A n n u a l R e p o r t 2 0 0 5
Message from the Board of Directors
To Shareholders,
The past year was quite a challenging year for The Erawan Group Public Company Limited. We readjustedour corporate image and reformulated our strategy with a focus to expand our business in a hope to increase andmaintain our competitive edge.
We changed our name from çAmarin Plaza Public Company Limitedé to çThe Erawan Group PublicCompany Limitedé and altered our abbreviation in the shares traded in the Stock Exchange of Thailand (SET) fromçAMARINé to çERAWAN.é Subsequently, we also changed the names of all subsidiaries to reflect our newly-adjusted business direction.
The Grand Hyatt Erawan Bangkok opened its i.sawan Residential Spa & Club on the hotelûs fifth floor,offering a service area of more than 7,000 square meters to our patrons for the first time. The i.sawan ResidentialSpa & Club consists of a fitness center, a spa, a swimming pool, guest rooms in a spa cottage style and theBreezeway Restaurant. The ultimate goal is to turn the Grand Hyatt Erawan Bangkok into a true resort hotel rightin the heart of the bustling city of Bangkok.
The JW Marriott Bangkok also opened its Tsu and Nami Restaurants offering both traditional Japanesecuisine and Teppanyaki Steakhouse to our customers.
We also officially launched the Renaissance Koh Samui Resort & Spa at Lamai Beach to the southeast ofthe island of Samui. With a service area of 14-2-85 rai and 78 guest rooms, which are divided into 45 deluxerooms and suites and 33 pool villa-styled rooms, the five-star hotel is currently managed by the Marriott Group.At the same time, the company is renovating the 14-floor Parklane Mansion residence in order to turn it into thefour-star çCourtyard by Marriott Bangkoké hotel. Having already signed a contract with the Marriott Group tomanage our newest family member for 30 years, the Courtyard by Marriott Bangkok will be ready to offer itsimpeccable service by the second quarter of 2007.
In 2005, the Company registered Baht 258 million net profit (or Baht 0.18 per share), which fell 24 percentfrom Baht 339 million net profit a year ago. This was largely a result of the fact that the Ploenchit Center, AmarinPlaza, Grand Hyatt Erawan Bangkok and Renaissance Koh Samui Resort & Spa were closed for renovation while
3A n n u a l R e p o r t 2 0 0 5
the Parklane Mansion was in the process of being morphed into a four-star hotel for business traveller. Thisinevitably affected the Companyûs incomes as it still had the same expenses plus some other additional burdens.
Incomes from the hotel business rose 17.8 per cent while those from other businesses rose at a mere 2.8per cent, prompting the Companyûs total incomes from the operation to rise 14.9 per cent to Baht 2.858 billionfrom last yearûs Baht 2.488 billion.
The operating profit rose 1.9 per cent from Baht 528 million a year ago to Baht 538 million due largely toa 17.3-per cent increase of the operating expenses, most of which came from the consolidated operating expensesafter we started owning the Renaissance Koh Samui Resort & Spa and rising expenses of the Amarin Plaza.In addition, depreciation costs also rose 24.7 per cent from a start-up of the Erawan Bangkok Boutique Mall andthe Companyûs three hotels.
Interest expenses rose 35 per cent to Baht 154 million in 2005 from Baht 114 million the previous yeardue to the Baht 4.406-billion loan as of 31 December 2005, which was a combined result of a consolidation ofErawan Samui Co., Ltdûs Baht 413-million loan following the acquisition of the hotel and an additional investmentin fixed assets. The lending cost rose on average 0.47 per cent from the same period a year ago while interestrates also increased.
The Company is focusing to expand its hotel business which is its main business to increase its incomebase and operating profits. We are very confident that this will eventually create added values to shareholders andall stakeholders.
The Board of Directors would like to take this opportunity to express our heartfelt appreciation toshareholders, customers, financial institutions and stakeholders who have been supporting us all along. We wouldalso like to thank our management and all staff, who are a true driving force behind our success.
Mr. Luen KrisnakriChairman
4 A n n u a l R e p o r t 2 0 0 5
Financial Highlights
(Unit : Thousand Baht)
Description 2005 2004 2003
Revenues from operations 2,858,278 2,488,104 2,468,151Total revenues 2,901,201 2,539,873 2,592,401Gross profit 1,588,951 1,427,524 1,336,676EBITDA 884,779 805,836 714,381Net operating profit (loss) before extraordinary items 257,673 344,126 269,385Net profit (Loss) 257,789 339,198 315,508
Total Assets 9,561,205 8,499,768 8,194,085Total Liabilities 5,571,086 4,501,208 4,304,023Total Shareholdersû Equity 3,990,119 3,998,561 3,890,062Equity attributable to companyûs shareholders 3,615,291 3,529,882 3,432,089Paid-up Share Capital (Baht in Thousand) 1,453,048 1,453,048 1,453,048Number of paid-up shares (Thousand shares) 1,453,048 1,453,048 242,175Par value per share (Baht) 1 1 6Earning per share (Baht) 0.18 0.23 1.31Dividend per share (Baht) 0.04 0.06 0.65Book Value per share (Baht) 2.49 2.43 14.18
Significant Financial RatioCurrent ratio (Times) 0.25 0.30 0.61Quick ratio (Times) 0.13 0.24 0.48Liquidity ratio (Cash Flow Basis) (Times) 0.36 0.66 0.52Gross profit ratio 54.76% 56.21% 51.56%Net operating profit margin 8.88% 13.55% 10.40%Net profit margin 8.88% 13.36% 12.17%Return on Total Assets 2.85% 4.08% 3.81%Return to Equity 7.22% 9.74% 9.53%Debt to Equity Ratio (Times) 1.39 1.13 1.11Interest Bearing Debts to Equity Ratio (Times) 1.01 0.86 0.85Interest Coverage Ratio (Times) 3.77 5.08 4.22
Million BahtMillion Baht
Million Baht
Total Revenues EBITDA Net Operating Profit before extraordinary itemsNet profit
5A n n u a l R e p o r t 2 0 0 5
Corporate Structure
Business Groups Subsidiaries% of companyûs
shareholding (directly and indirectly)
Hotel Business* In Operation
- Grand Hyatt Erawan Bangkok Erawan Hotel Plc 73.64%- JW Marriott Bangkok Erawan Ploenchit Co., Ltd. 99.75%- Renaissance Koh Samui Resort & Spa Erawan Samui Co., Ltd. 99.99%
* Under development- Courtyard by Marriott Bangkok Erawan Rajdamri Co., Ltd. 99.99%- Six Senses Resort & Spa Erawan Phuket Co., Ltd. 99.99%- Land on Naka Yai Island, Phuket Erawan Naka Co., Ltd. 99.99%
Office Buildings and Shopping Centers - Amarin Plaza Erawan Ratchaprasong Co., Ltd. 99.99% - Ploenchit Center Erawan Ploenchit Co., Ltd. 99.75% - Erawan Bangkok Erawan Ratchaprasong Co., Ltd. 99.99%
∑’Ë¥‘π√Õæ—≤π“
Hotels
99.99%Amarin Plaza
Erawan Ratchaprasong Co., Ltd.Baht 676A Million : 9 YearB
99.99%Erawan Bangkok
Erawan Ratchaprasong Co., Ltd.Baht 361A Million : 15 YearC
99.75%Ploenchit Center
Erawan Ploenchit Co., Ltd.Baht 1,006A Million : 20 YearB
73.64%Grand Hyatt Erawan Bangkok
Erawan Hotel Plc.Baht 3,154A Million :36 YearsB
Erawan Naka Co., Ltd. Baht 13.9A Million(Land on Naka Yai island 3-3-6 Raià)
99.99%Six Senses Resort & Spa
Erawan Phuket Co., Ltd. Baht 177A Million(Land on Naka Yai island 71-3-14 Raià)
Erawan Rajdamri Co., Ltd.Baht 177A Million : 30 YearsC
99.99%Courtyard by Marriott Bangkok
Development Projects
Office Buildings & Shopping Centers
Erawan Samui Co., Ltd.Baht 605A Million
99.99%Renaissance Koh Samui Resort & Spa
99.75%JW Marriott Bangkok
Erawan Ploenchit Co., Ltd.Baht 2,222A Million : 40 YearsB
6 A n n u a l R e p o r t 2 0 0 5
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Corporate Profile
The main business objective of the Company and its subsidiaries is to invest, develop and operate hotels located instrategic locations that match customersû demand. Secondly, the Company develops and manages : office buildings and shoppingcenters as minor businesses. The corporate profiles are as follows.
Grand Hyatt Erawan Bangkok
Category : 5-star hotel with resort-style facilitiesLocation : Ratchaprasong, Rajdamri RoadGuest Room : 380 rooms and suitesHighlights : Magnificent Grand Ballroom,
residential style meeting room :the residence, resort-style Spa & Club :çi.sawané, exceptional restaurants & bars :Erawan Tea Room, Spasso
Established : 1991Managed by : Hyatt International CorporationOwned by : Erawan Hotel Plc.
JW Marriott Bangkok
Category : 5-star hotelLocation : Sukhumvit Soi 2 RoadGuest Room : 441 rooms and suitesHighlights : Marriott Spa & Fitness
unique restaurants & bars : Tsu, Nami,Marriott Cafe, New York Steakhouseand Manho
Established : 1997Managed by : Marriott International Hotels, Inc.Owned by : Erawan Ploenchit Co., Ltd.
Hotel Business
Renaissance Koh SamuiResort and Spa
Category : 5-Star Boutique Resort & SpaLocation : Lamai Beach, Koh SamuiGuest Room : 78 deluxe rooms and pool villasHighlights : Distinctive resort-style decor with a
private beach, Tawann Restaurant andQuan spa.
Established : Under Renaissance Koh SamuiResort & Spa December 2005
Managed by : Marriott International Hotels, Inc.Owned by : Erawan Samui Co., Ltd.
Courtyard by Marriott Bangkok(under construction)
Category : 4-Star Business HotelLocation : Soi Mahadlekluang, Rajdamri RoadGuest Room : 316 roomsHighlights : Guest rooms for business traveller.Completing : 2nd quarter of 2007Managed by : Marriott International Hotels, Inc.Owned by : Erawan Rajdamri Co., Ltd.
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7A n n u a l R e p o r t 2 0 0 5
Office Buildings and Shopping Centers
Erawan Bangkok Boutique Mall
Category : Chic Boutique Mall & Lifestyle CenterLocation : Ratchaprasong, Ploenchit RoadArea : 13,000 sq.m., 5-storeyHighlights : Chic fashion & accessories, wellness
facilities and wide selection of internationalcuisine.
Established : 2004Owned by : Erawan Ratchaprasong Co., Ltd
Amarin Plaza & Tower
Category : Office Tower & Shopping CenterLocation : Ratchaprasong, Ploenchit RoadArea : 45,000 sq.m., 22-storey (retail : 5-storey)Highlights : Kolors of Style : home decor, design
products and apparel, jewelry, designershops & cafeûs.
Established : 1985Owned by : Erawan Ratchaprasong Co., Ltd.
Ploenchit Center
Category : Office Tower & RestaurantsLocation : Sukhumvit Soi 2 RoadArea : 46,000 sq.m., 26-storey (retail : 4-storey)Highlights : Villa Supermarket, international cuisine,
and services.Established : 1996Owned by : Erawan Ploenchit Co., Ltd.
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Exploring the Horizons
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8 A n n u a l R e p o r t 2 0 0 5
Investment of The Erawan Group Plc.in subsidiary and other companies as of 31 December 2005
Companyûs name
Office
Type of Business
Paid-Up Total Number of % of shares held As comparedLocation Capital shares sold shares held directly and to % of shares
(Million Baht) directly and indirectly as of held directly andindirectly 31 Dec 05 indirectly as of
(as of 31 Dec 05) 31 Dec 04
(1) Erawan Hotel Plc. Bangkok Hotel 119.5 79,666,667 58,666,628 73.64 73.64Tel. 66(0)2 254 1234 Fax: 66(0)2 254 6311
(2) Erawan Ploenchit Co., Ltd. Bangkok Hotel and 2,011.7 201,168,831 200,668,826 99.75 99.71(formerly: Makasan Real Estate Co., Ltd.) Property rental :Tel. 66(0)2 257 4588 Fax: 66(0)2 257-4577 office buildings
(3) Erawan Samui Co., Ltd. Bangkok Hotel 120 12,000,000 11,999,994 99.99 -Tel. 66(0) 77 429 3000 Fax: 66(0) 77 429 333
(4 ) Erawan Rajdamri Co., Ltd. Bangkok Hotel 160 1,600,000 1,599,994 99.99 99.99(formerly: Mahadlekluang Real Estate Co., Ltd)Tel. 66(0)2 256 9111 Fax: 66(0) 2 256 9910
(5) Erawan Phuket Co., Ltd. Bangkok Hotel 190 190,000 189,994 99.99 99.99(formerly: Nakaburi Co., Ltd.)Tel. 66(0)2 257 4588 Fax: 66(0)2 257 4577
(6) Erawan Ratchaprasong Co., Ltd. Bangkok Property rental : 500 5,000,000 4,999,984 99.99 99.99(formerly: Amarin Development Co., Ltd.) office buildings andTel. 66(0)2 257 4588 Fax: 66(0)2 257 4577 shopping centers
(7) Erawan Chaopraya Co., Ltd. Bangkok Real estate 3 30,000 29,994 99.99 99.99(formerly: Rimnam Chaophaya Co., Ltd.) development Tel. 66(0)2 257 4588 Fax: 66(0)2 257 4577
(8) Hatawan Co., Ltd.* Bangkok Real estate 40.56 405,600 325,593 80.27 80.00Tel. 66(0)2 257 4588 Fax: 66(0)2 257 4577 development
(9) Erawan Naka Co., Ltd. Bangkok Real estate 7.5 100,000 99,994 99.99 99.99(formerly: Erawan Japanese Restaurant Co., Ltd.) developmentTel. 66(0)2 256 9131 Fax: 66(0)2 253 5359
(10) Ploenchit Real Estate Co., Ltd. Bangkok Companyûs 690 15,000,000 14,999,994 99.99 99.99Tel. 66(0)2 257 4588 Fax: 66(0)2 257 4577 dissolution and
in processof liquidation
(11) Toriensei Overseas (Thailand) Co., Ltd. Bangkok Temporarily 5 100,000 25,000 25.00 25.00 Tel. 66(0) 2 256 9131 Fax: 66(0)2 253 5359 cease the
operation
(12) Rajprasong Development Co., Ltd Bangkok Manage BTS 1 10,000 4,800 48.00 48.00Tel.66(0)2 656 1516 Fax: 66(0)2 656 1197 Sky Bridge
(13) Rajprasong Square Co., Ltd. Bangkok Manage 1.46 146,000 34,000 23.29 23.29Tel. 66(0)2 656 1516 Fax: 66(0)2 656 1197 Ratchaprasong
Shopping Street
The Company has invested in the following subsidiaries and other companies (directly and indirectly) by holding 10per cent shares or over of their total shares sold.
Note : *The Company entered an agreement to sell all shares its held in Hatawan Co., Ltd. on 27 January 2006.
9A n n u a l R e p o r t 2 0 0 5
Revenue Structure
ë Hotel business 2,364 82% 2,007 79% 1,803 69%
ë Office Buildings and Shopping Centers 495 17% 481 19% 489 19%
ë Other incomes 42 1% 54 2% 300 12%
Total 2,901 100% 2,540 100% 2,592 100%
Business Groups2005 2004 2003
Incomes(Million Baht) % Incomes
(Million Baht) % Incomes(Million Baht) %
Exploring the Horizons
10 A n n u a l R e p o r t 2 0 0 5
Milestones in 2005
April ë The Annual General Meeting of Shareholders No. 1/2548 approved to allow the Company to issue and offerdebentures worth no more than Baht 1 billion either in a single issue for a full amount or from time to time tomobilize funds for its operations and investment and/or to repay scheduled loans. The issuance of such debentureshowever was subject to the Board of Directorsû discretion.
May ë The Company issued (senior) non-secured debentures for a total of Baht 300 million to no more than 10 specificinvestors where the debentures were called çNon-secured Debentures No. 1/2548 with a single principal repaymentof The Erawan Group Plc. without registrar and debenture holder trustee with a maturity period in 2008.é
June ë The Company changed its name from Amarin Plaza Public Company Limited to The Erawan Group PublicCompany Limited and changed the abbreviation of its shares currently traded in the Stock Exchange of Thailandfrom çAMARINé to çERAWANé.
July ë The Company changed the names of its subsidiaries as follows:Former Subsidiaryûs name New Name
1. Makasan Real Estate Co., Ltd. Erawan Ploenchit Co., Ltd.2. Amarin Development Co., Ltd. Erawan Ratchaprasong Co., Ltd.3. Mahadlekluang Real Estate Co., Ltd. Erawan Rajdamri Co., Ltd.4. Rimnam Chaophaya Co., Ltd. Erawan Chaopraya Co., Ltd.5. Nakaburi Co., Ltd. Erawan Phuket Co., Ltd.6. Erawan Japanese Restaurant Co., Ltd. Erawan Naka Co., Ltd.7. Aman Zen Co., Ltd. Erawan Samui Co., Ltd.
The Companyûs Businesses1. Hotel BusinessJuly ë The Company bought 99.99 per cent in Erawan Samui Co., Ltd. which operated the Buriraya Resort & Spa Hotel
in Samui Island at Lamai Beach (to the southeast of Samui Island) on a 14-2-85 rai of land. The hotel hadaltogether 78 rooms divided into 45 deluxe rooms and suites and 33 pool villa. Other services include spa, an80-guest banquet room, two restaurants and a fitness center. The company signed management agreement withthe Marriott International to manage the property for 30 years and upgraded the hotel to the Marriottûs standardbefore changing its name to the Renaissance Koh Samui Resort and Spa. The hotel has commenced its fulloperation since mid December 2005.
ë Erawan Rajdamri Co., Ltd also signed management agreement with the Marriott International to manageçCourtyard by Marriott Bangkoké for 30 years as it was upgrading its 14-floor residential condominium into afour-star 316-room hotel, which is expected to cost the firm around Baht 990 million. The construction has startedsince January 2006 and will be ready for operation by Q2 of 2007.
ë The Grand Hyatt Erawan Bangkok opened its i.sawan Residential Spa & Club on its fifth floor. Boasting an area ofmore than 7,000 square meters, the i.sawan Residential Spa & Club consists of 6 spa cottage, 12 spa treatmentrooms, fitness center, free-form swimming pool, nail bar, beauty salon and the Breezeway restaurant. The place isaimed to make the hotel a comprehensive resort-style stop in the heart of the metropolitan to strengthen the hotelûscompetitiveness and in providing service to business travellers and high-ended local customers. The investmentwas around Baht 250 million.
August ë Ploenchit Real Estate Co., Ltd sold and transferred all businesses to Erawan Ploenchit Co., Ltd in a bid to increaseoperation efficiency. The firm registered its dissolution with the Department of Business Development, Ministry ofCommerce on 5 September 2005 and is currently in the process of liquidation.
11A n n u a l R e p o r t 2 0 0 5
2. Office Buildings and Shopping CentersSeptember ë The Ploenchit Center was going through the refurbishment process both interior and exterior where parts of
commercial areas were converted instead to office space for rent to increase office space for rent to 85 per centfrom originally 45 per cent under a total investment budget of Baht 190 million.
October ë The Amarin Plaza Building finished its renovation process under the çKolors of Styleé concept and the1,500-square meter çThe Cooké food center on the fourth floor kicked off its operation in November.
3. Other BusinessNovember ë The Company signed an agreement to sell all 325,593 shares its held in Hatawan Co., Ltd (80.3 per cent of all
shares) totaling Baht 216.1 million where shares would be transferred and payment would be made on 27 January2006. Hatawan Co., Ltd does not operate any business but owns two plots of land totaling 10-0-79 rai adjacentto Chaengwattana Road, Amphoe Pakkred, Nonthaburi Province. The lands however are not in the Companyûsdevelopment plan.
Exploring the Horizons
12 A n n u a l R e p o r t 2 0 0 5
Business Overview and Competition
Trends in the Tourism IndustryIn 2005, 11.7 million tourists visited Thailand which was less than what the Tourism Authority of Thailand (TAT) forecast
in the early of the year. The drop was a result of natural disaster (Tsunami), civil unrest in the three southernmost provinces inThailand and economic slowdown due to hiking oil prices.
In 2006, the TAT expects the number of tourists to be increased by 10 per cent to approximately 13 million people. Theauthorities plan to attract more tourists from the EU, US, Japan, China, Russia and India, which should bolster the hotel businessin general.
Number of Visitors in Thailand
Business CompetitionThe competition in 2005 was not fierce due to an unchanged number of hotels and five-star hotel rooms in Bangkok.
Altogether, there are 19 five-star hotels with approximately 7,000 rooms. An average occupancy rate raised from 72.9 per centin 2004 to 73.6 per cent in 2005.
It is expected that in a few years, Bangkok will see an increase of hotel rooms to accommodate an increasing number ofvisitors thanks to active promotional campaigns of the TAT and the opening of the new Suwannaphumi International Airport.
As a result, the Company is preparing for this business opportunity by renovating its hotel rooms and upgrading itsservices as well as move ahead with its expansion plan.
Bangkok hotels expected to open in the next few yearsFive-star hotel
Hotelûs Name Location Estimated Rooms Expected Year of Service
Sofitel Sukhumvit Sukhumvit Soi 13 350 rooms Q1/2007
Le Meridien Surawong Surawong Road 350 rooms Q2/2007
Crowne Plaza Sukhumvit Soi 27 400 rooms Q4/2007
Four-star hotel
Hotelûs Name Location Estimated Rooms Expected Year of Service
Courtyard by Marriott Bangkok Ratchaphasong District 316 rooms Q2/2007
Novotel King Power Sri Ayudhaya Road 450 rooms Q4/2007
Central World Plaza Ratchaprasong District 512 rooms Q3/2008
Riverside hotel
Hotelûs Name Location Estimated Rooms Expected Year of Service
Millennium Hilton Chao Phraya River 542 rooms Q1/2006
13A n n u a l R e p o r t 2 0 0 5
Airport hotel
Hotelûs Name Location Estimated Rooms Expected Year of Service
Novotel Suwannaphumi Suwannaphumi Airport 600 rooms Q2/2006Source: Companyûs estimates
Business Strategies and Target Customers
The Grand Hyatt Erawan Bangkok and the JW Marriot BangkokTheir strength lies in their reputation and the hotel management, their prime location in Bangkokûs CBD, convenient access
international service standard and efficient reservation system with worldwide network. The hotel management has also created asuccessful marketing and sales force both to maintain its prestigious customer base and to expand the new horizon.
The hotelûs main customers are business traveller which made up of 70%-80% foreign visitors and thai businessmen whohave high spending power and the rest are customers who come for social fuctions and restaurants.
The Renaissance Koh Samui Resort and SpaThe hotel boasts its breathtaking location, pool villa rooms with private swimming pool and the Marriot management,
which in turns is managing only the second world-class hotel on Samui Island with high standards in guest rooms and servicesbacked up by an extensive and efficient worldwide reservation system.
The hotelûs main customers are foreign visitors aiming to rest and relax here and high-ended local customers includinglocal walk-in customers who enjoy hotel restaurants and banquet services.
Operating ResultsHotel Business
Table of comparative operation results of three hotels in 2003, 2004 and 2005
HotelAverage Occupancy Rate (%)
2005 2004 2003
JW Marriott Bangkok 86.5% 84.2% 76.1%Grand Hyatt Erawan Bangkok 75.4% 68.0% 60.1%Renaissance Koh Samui Resort & Spa* 32.4% - -
Note : * Operation result between Jul-Dec 2005. Acquired in July 2005 and closed for renovation before full operation in midDecember 2005.
Ratios of main incomes of the three hotels in 2005 are as follows.
Office Buildings and Shopping CentersAs of end of 2005, total supply for office space was at 7.20 million square meters, which rose a little from 7.18 million
square meters during the same period a year ago. However, supply for office space in the CBD area accounted for as much as49 per cent of the total areas or 3.53 million square meters while the remaining 51 per cent or 3.68 million square meters wereoffice space supply in the non-CBD zones.
Room Revenue53%
F&B Revenue36%
OthersRoom Revenue
65%F&B Revenue
25%
OthersRoom Revenue
48%F&B Revenue
45%
Others
JW Marriott Bangkok Renaissance Koh Samui Resort & SpaGrand Hyatt Erawan Bangkok
Exploring the Horizons
14 A n n u a l R e p o r t 2 0 0 5
Business Overview and Competition
Total demands for office space as of end of 2005 were at 6.25 million square meters, or an increase by as much as306,666 square meters, compared to only 5.95 million square meters during the same period the previous year.
Average rent of office space in Q4, 2005, for Grade-A and Grade-B office space rose from the same period a year ago byapproximately 23-26 per cent depending on quality and location. For Grade-A office building in CBD area, the rent rose by 23.2per cent or from Baht 550 per square meter in the same period last year to Baht 678 per square meter.
Average rent of office space for Grade-B building in the CBD area was around Baht 473 per square meter, a 28.8 per centincrease from the same period a year ago of Baht 368 per square meter. Average rent of Grade-B building in non-CBD areaincreased 18.7 per cent from the previous year.
Since demands continued to increase compared to the existing supplies in 2005, the rent therefore continued to rise,allowing office buildings in premium locations with generous links to public transportation to command high rental rates.
During 2006-2007, it is expected that supply of office buildings will rise by 200,000 square meters during the two yearsûperiod while demands in the same period are expected to increase by 300,000 square meters a year, which is an extremely healthytrend. This applies especially to Grade-A and Grade-B office buildings along or closed to mass transit systems. At the same time,store space in Bangkokûs shopping malls totaled 4.3 million square meters as of end of 2005, or a 8.4 per cent increase fromthe same period a year ago. The increasing supply was a result of two new kids on the block that recently unveiled themselves- Siam Paragon and Central World Plaza, which is also renovating its retail space. This increases more choices for shopping butat the same time add much competitions to the retail business. The projects however are not direct competitors of the shoppingmall currently managed by the Company as we target different groups of customers.
Business Strategies and Target CustomersPloenchit Center
The Company has upgraded the look of the buildingûs interior and exterior to maintain its sophistication. A cross-overbridge linking the building with public roads has also been refurbished. In addition, store space, restaurants and other serviceshave been added to make the building more attractive to todayûs customers.Amarin Plaza
The Company has renovated the Amarin Plaza to make sure that its look is keeping up with the changes in theRatchaprasong area. The lofty reasonably-priced Cook Food Center has been added to increase its competitiveness. Lightingsystem and public areas have also been renovated with a focus on its customers, 60 per cent of whom are locals and the restare visitors.Erawan Bangkok Boutique Mall
This is a boutique-styled shopping mall with an emphasize on different goods and services offered to high-end customers.While personal attention is focused down to miniscule details, the boutique mall offers products that respond to customers rangingfrom middle to high-end new generations, 80 per cent of whom are locals. The strategy is to maintain its status as a boutiquemall and being the destination.
The table below shows comparative annual rental rates between office buildings and shopping centers.:
Occupancy Rate 2005 2004 Difference
Amarin Plaza*
- Office space 95% 100% -5%
- Retail outlets (excluding long-term space rental) 79% 72% +7%
Ploenchit Center*
- Office space 78% 90.% -2%
- Retail outlets 59% 77% -18%
Erawan Bangkok Boutique Mall
- Retail outlets 98% 95% +3%
* In 2005, Amarin Plaza and Ploenchit Center partially closed for renovation.
15A n n u a l R e p o r t 2 0 0 5
Risk Factors
Risk Characteristics and Response Measures
1. Management risk: Dependence of third-party hotel managementThe Company has hired the management from Hyatt International Corp. to manage the Grand Hyatt Erawan Bangkok and
Marriott International Hotels Inc to manage the JW Marriott Bangkok and the Renaissance Koh Samui Resort and Spa Hotel. Thecontract is long-term, which poses certain risk as the ability of their management might decline internationally, prompting the abilityto manage the hotels to meet the target set in the contract to reduce or fail to achieve. However, they are reputable and highly-experienced groups of hotel management for a long time and a chance for such failure is minimal. Yet, should the incident takeplace on a continued basis, the contract can be revoked and a new reputable hotel management can be recruited.
2. Exchange riskThe hotel business is exposed to an exchange risk which affects room incomes since most hotel customers agree with the
room rates in US dollar (where payment is made in Thai Baht equivalent to the US dollar exchange rate at the time of payment),changes in an exchange rate therefore might affect the hotelûs average room rate estimated earlier and the business may enjoy lessroom incomes than expected if the Thai Baht appreciates against the US dollar. However, the Bank of Thailandûs policy to overseethe countryûs exchange policy means there are measures to ensure that the exchange volatility moves in such a narrow band thatit will not affect much to the hotelûs room rates.
3. Risk from increasing construction costs of new hotelsInvestment in new hotels may be faced with increasing costs of construction materials. However, before starting a new
project, the Company will do a feasibility study to ensure that the project will yield an expected return. In addition, when estimatingcosts of each project, the Company also estimates contingency costs for possible cost increase. As a result, it can be assured thatthe risk is kept minimal.
4. Risk from increasing suppliesThe hotel business grows ceaselessly, meaning more competitions to come in the future. This is especially the case if a
price-cutting strategy is implemented to increase market shares. This may affect incomes and operating profits from both the hotelbusiness and the office and shopping mall business. However, since our hotel business has been managed by Hyatt InternationalCorp. and Marriott International Corp., two well-recognized and highly-experienced hotel management groups, it has a lot ofadvantages and is in good hands amid fierce competition. Regarding the office buildings and shopping centers business, althoughthe competition is intense, demands for space remain quite strong especially for that in the CBD area and the shopping district,which are exactly where the Companyûs projects are located. The risk is therefore minimal and manageable.
5. External risk affecting hotel businessExternal factors such as terrorism, epidemic or natural disaster that may affect the hotel business and the tourism industry
are inevitable and unpredictable. However, in the past, it has already been proven that these factors affected the Companyûs hotelbusiness only in the short run, which makes the risk somewhat acceptable. It was proven from the Tsunami disaster thatinternational operated hotel recovered faster and make better communication to its clients all over the world. In addition, theCompany has implemented a preventive measure by taking an all-risk insurance to cushion itself from business interruption. Theinsurance also covers risks from terrorism. The Companyûs hotels also actively implement security measures to monitor possibleterrorism threats as well as other measures against communicable diseases.
6. Interest rate riskThe risk is a result of changes in future market interest rates. The change may affect cash flow of the Company, which,
as of 31 December 2005, registered Baht 1.393 billion loans with floating rates, or 32 per cent of all loans. In addition, anotherBaht 1.72 billion is about to be changed into floating-rate loan by September 2006. The Company has no measure to protect itselffrom the risk. But the management is considering whether to use financial derivatives or other measures such as offering fixed-rate debentures (see details in 32.2 of the Notes to Financial Statements)
Exploring the Horizons
16 A n n u a l R e p o r t 2 0 0 5
Capital Structure
1). Securities of the Company(a) The Companyûs capital as at 31 December 2005 :Registered Capital : 1,519,700,408 Baht divided into :
1,519,700,408 ordinary shares at par value 1 Baht/share or equal to 1,519,700,408 BahtPaid-Up Capital : 1,453,048,008 Baht divided into :
1,453,048,008 ordinary shares at par value 1 Baht/share or equal to 1,453,048,008 Baht(b) Other shares with rights or terms that are different from ordinary shares: -Nil-(c) The Company does not intend to issue and offer shares or convertible securities for sale to Thai trust funds, or to
issue any NVDR of which the Companyûs shares are reference securities.(d) The Company issued and offered the unsubordinated and unsecured ordinary debentures on 9 May 2005 at an
amount of Baht 300 Million which is called çBullet Principal Repayment Debentures of The Erawan Group Plc.No.1/2005 Due 2008 without Collateral, Registrar and Debenture Representative é to private placement for no morethan 10 bondholders.
(e) Shareholding Agreement with respect to the effect of issuance and securities offering for sale, the company enteredinto the agreement : -Nil-
2). Shareholders(a) Top ten shareholders holding the highest number of shares as of 31 December 2005.
No. Name Number of Shares % of All Shares Sold
1. Mr. Sukakarn Wattanavekin 273,007,311 18.792. Mitr Phol Sugar Co., Ltd 198,509,090 13.663. City Holding Co., Ltd 195,123,651 13.434. Ufinves Co., Ltd 79,762,530 5.495. United Farmer and Industry Co., Ltd. 76,530,614 5.276. MBK Plc. 58,198,100 4.017. Mr. Isara Vongkusolkit 58,078,998 4.008. Chodthanawat Co., Ltd 57,190,458 3.949. Mr. Supol Wattanavekin 38,280,000 2.63
10. HSBC Bank Plc.-Clients General A/C 37,980,000 2.61
Note : Investor will be able to see the updated shareholders list from the Companyûs website at www.TheErawanGroup.com before the General Ordinary Shareholdersû Meeting of 2006.(b) Group of major shareholders whose behavior influences management policy or the Companyûs operation significantly.
No. Name Number of Shares % of All Shares Sold
1. Mr. Sukakarn Wattanavekin 273,007,311 18.792. Mitr Phol Sugar Co., Ltd 198,509,090 13.663. City Holding Co., Ltd 195,123,651 13.434. Ufinves Co., Ltd 79,762,530 5.495. United Farmer and Industry Co., Ltd. 76,530,614 5.276. Mr. Isara Vongkusolkit 58,078,998 4.007. Chodthanawat Co., Ltd 57,190,458 3.948. Mr. Supol Wattanavekin 38,280,000 2.63
3). Dividend PolicyThe Board of Directors has determined that the Company will pay dividend for its operations from 2004-2006 at around
25 per cent of its net profit since its subsidiaries have plans to expand hotel business in Bangkok and the provinces, a move whichexpects to require a lot of investment.
17A n n u a l R e p o r t 2 0 0 5
Management Structure
Note : *Independent director according to the rules. Nomination is done by contacting experts having competent experiences toformulate a policy in line with business development while being independent enough to perform audit tasks to balancethe managementûs performance.
(1) Management structure consists of five boards and committees as follows.
Board of Directors consists of the following 12 directors:
Name Title Education
1. Mr. Luen Krisnakri * Chairman of the Board Honorary Doctoral of EngineeringChulalongkorn University
2. Mr. Prakit Pradipasen * Director and Chairman of the MBAAudit Committee Wayne State University, Michigan, U.S.A.
3. Assoc. Prof. Manop Pongsadadt * Director and Audit Director Master of Architecture (M.Arch).Kansas State University, U.S.A.
4. Mr. Dej Bulsuk * Director and Audit Director Faculty of Commerce & AccountancyThammasat University
5. Mr. Banyong Pongpanich * Director MBA (Finance)Sasin Graduate Institute of BusinessAdministrationChulalongkorn University
6. Mr. Dolchai Boonyaratavej * Director MSA (Advertising Design)Syracuse University,New York, U.S.A
7. Mr. Vitoon Vongkusolkit Director Bachelor of ScienceChulalongkorn University
8. Mr. Supol Wattanavekin Director Master of ManagementSasin Graduate Institute of BusinessAdministrationChulalongkorn University
9. Mr. Chanin Vongkusolkit Director MBA (Finance)St. Louis University, Missouri, U.S.A.
10. Mrs. Panida Thepkanjana Director MBASasin Graduate Institute of BusinessAdministrationMaster of LawsChulalongkorn UniversitySarrister-at-LawThe Institute of Thai Bar Association
11. Mr. Krisda Monthienvichienchai Director MBAChulalongkorn University
12. Mr. Kasama Punyagupta President & CEO MBA (International Business)University of Bridgeport, Connecticut, U.S.A.
18 A n n u a l R e p o r t 2 0 0 5
Qualifications of DirectorsPrinciples:
The Board of Directors should consist of members with a variety of experiences, whether it is in finance, economy,management, business administration, marketing and service, tourism and law. The idea is to ensure that together, they canformulate a right policy for the development of hotel and resort business while having specialized skills, ability to see things in abig picture and enough independence to audit the Management in a balancing manner. The Board of Directors has two significantroles; namely, supporting the Management on the basis of the Good Corporate Governance and formulate a strategy to achieveour business goals.
General Qualifications :1. Director should possess a variety of experiences while being a professional with an ethical mind2. Director should fully understand his obligations and practices with a commitment to create long-term values to the business
and shareholders3. Director should have enough time to perform his duties effectively4. Director should be able to assess himself and is ready to notify the Board of Directors upon change or if there is anything that
prevents him from performing his job effectively5. Each directorûs term of office is 3 years whereby the Board of Directors may nominate him to shareholders for re-election
which however will be assessed from his performance on an annual basis
Specific Qualifications :Chairman
Aside from the duties mentioned above, Chairman will have extraduties; namely, (1) acting as chairman of the Board of Directorsû meeting; (2)exercising a casting vote in case of tie at the Board of Directorsû meeting; (3)calling for the meeting of the Board of Directors; and (4) acting as chairman ofthe Shareholdersû Meeting. As a result, qualifications of the Chairman will beslightly different from those of other directors as follows.ë Chairman must be Non Executive Director (NED)ë Chairman must not be involved in a day-to-day management; nor shall he be employee, staff, advisor receiving monthly salary
or a person with controlling power of the company, affiliated company, associated company, auditing company, or be a personwho may have conflict of interest without having to have interest or stakes in such manner
Executive DirectorDirector who is also Chief Executive Officer (CEO) is advised not to become director in more than three other listed
companies.
Independent Directorë Independent director shall hold less than 5 per cent of the total shares with voting rights in a company, its affiliated company,
associated company or any other person with possible conflicts of interest.ë Independent director must not be involved in the management and is currently not being and has never been employee, staff,
advisor enjoying monthly income or person with controlling power of the company, its affiliated company, associated companyand auditing company; nor shall he be a person with conflict of interest without having to have any interest or stake in suchmanner for no less than one year.
ë Independent director must have no direct or indirect business relationship, interest or stake financially and in the managementof a company, its affiliated company and associated company; nor shall he be a person with possible conflict of interest in amanner that deprives him of his independence.
ë Independent director must not be a closed relative of executives or major shareholders of a company or its affiliated company,associated company or any person with possible conflicts of interest; nor shall he be appointed as representative to take careof interest of directors or major shareholders.
Management Structure
19A n n u a l R e p o r t 2 0 0 5
ë Independent director must not be director in company in which senior executives are co-directors.ë Independent director must attend at least one of the following courses held by The Thai Institute of Directors (IOD); namely,
- Directors Certification Program (DCP); or- Directors Accreditation Program (DAP); or- Audit Committee Program (ACP)
Transactions with Possible Effects to Independenceë Being authorized to approve transactions or signing to bind the companyë Being employee, staff, advisor with monthly income or person with controlling power of the company, its affiliated company,
associate company, audit company; or being a person with possible conflict of interestë Attending a meeting or voting in a matter he has an interest or a conflict of interest therein
Prohibited Characteristics :Company directors and executives must not posses the following prohibited characteristics:
1. Being ordered by the court for receivership; being declared bankrupt, incompetent or quasi-incompetent2. Being blacklisted by the Stock Exchange of Thailand as inappropriate to become an executive according to the regulations
of the Stock Exchange of Thailand3. Being accused or indicted in a criminal case by agencies with legal authority in an offence relating to unfair securities
trading or futures contracts or management fraud or corruption4. Currently subject to a period under the order of an agency with authorities according to foreign laws prohibiting one from
being companyûs executive5. Being sentenced by a final court judgment of guilty as charged under Clause 3 or being fined for the offence described
in Clause 36. There is a reasonable cause to believe that he/she breaches or had breached his duties of care and duties of loyalty for
the best interests of the business and shareholders of an operation in which he is or was executive or person withcontrolling power; or that he/she participates or supports or had participated or supported such practices of others.
7. There is a reasonable cause to believe that his/her behavior is corrupted or fraudulent; or that he/she is or was anaccomplice or supporter of such practices by others.
8. There is a reasonable cause to believe that he/she acts or had acted unfairly or took advantage of investors; or that heparticipates or supports or had participated or supported such practices by others.
9. There is a reasonable cause to believe that he/she conceals or had concealed the truth about a financial status orperformance of listed companies or those offering securities to the public; or that he/she intends to submit false statementswhich however are material contents or to conceal material facts that should have been notified in any document requiredto be disclosed to the public or submitted to the Office of the Securities and Exchange Commission whether on behalf ofhimself or of a juristic person or business he is authorized to manage; or that he participates or had participatedor supported such practices of others.
10. There is a reasonable cause to believe that he/she is neglecting or neglected to ensure a proper auditing the way executivesor persons with controlling power of a listed company or a company offering securities to the public in which he is or wasexecutive or person with controlling power or its subsidiaries thereof should do to prevent the firm from breaching orviolating the laws, the Objects in Details, the Articles of Association and the meetingûs resolutions, which may lead toskepticism in the capital market or damage reputation, status or business of such company.
Scopes of Work and Responsibilities of the Board of Directorsë To manage the Company according to the laws, the Objects in Detail, the Articles of Association and resolutions of the
Shareholdersû Meeting with integrity and prudence for the Companyûs interests.ë To determine the companyûs visions obligations and business policy.ë To review the Companyûs business and development plans to increase potential of itself and the subsidiariesë To consider budgets to maximum the businessûs economic values and for better returns to shareholdersë To formulate a compensation policy and a succession plan of senior executives; to evaluate the Companyûs operations and
senior executivesû performances
20 A n n u a l R e p o r t 2 0 0 5
ë To supervise and develop risk assessmentë To supervise and develop the Companyûs corporate governance complianceë To supervise and set up an internal control and an internal audit systemë To take care of interests of both major and minor shareholders so that they can equally exercise and maintain their interests
while accessing accurate and complete information with transparence and accountabilityë To appoint committees in order to determine scopes of work and monitor their performancesë To assess senior executivesû work performances and the HR development policy
Term of DirectorsAt the Annual General Meeting (AGM), one-third of all directors shall resign by rotation. The resigning directors may be re-elected.
The Audit Committee will consist of three members as follows.
1. Mr. Prakit Pradipasen * Chairman of the Audit Committee2. Assoc.Prof. Manop Pongsadadt * Audit Director3. Mr. Dej Bulsuk * Audit Director
Note : * Independent directors
Scopes of Work and Responsibilities of the Audit Committeeë To review an annual financial statement already audited by auditors to
ensure that it meets the generally-accepted accounting principles; toconsider and screen financial information together with the Financial andRisk Management Committee and the auditors before releasing it to thethird party
ë To select, propose for appointment and determine auditorûs feesë To review material problems and obstacles auditor may come across
while performing his duty and to settle differences between the auditor and the management.
ë To supervise and ensure that proper and efficient internal control andinternal audit systems are in place according to international standards
ë To set up a defensive work system for business units in the Company to increase operation efficiency and effectivenessë To review an annual internal audit plan proposed by the Internal Audit Officeë To supervise, review and offer opinions towards the Internal Audit Officeûs performances, the performances of accounting
director and finance director and to coordinate with auditors regarding financial auditingë To promote and support the development of a financial reporting system that meets the international standardsë To control companyûs compliance with the laws on securities and exchange and other legislations relating to its businessë To determine fraud prevention measures and review results of a corruption inspection reportë To review the accuracy and effectiveness of information technology relating to the internal control system; to offer advice for
regular updatesë To consider the Companyûs information disclosure in case of connected transactions or transactions which may involve conflict
of interest to ensure that all are correct, sound and carried out in a normal course of businessë To prepare the Audit Committeeûs report to be signed by chairman of the Committee and disclosed it in the Companyûs annual
reportë To act otherwise as required by the laws or entrusted by the Board of Directors; when performing along its scopes of work,
the Audit Committee shall be empowered to order President & CEO, senior executives, heads of department or related staff toprovide their opinions, participate in meeting or submit documents deemed necessary or relevant.
Management Structure
21A n n u a l R e p o r t 2 0 0 5
Term of Audit Director : 2 years each term.
The Financial and Risk Management Committee consists of six members as follows.
1. Mr. Vitoon Vongkusolkit Chairman of the Financial and Risk Management Committee2. Mr. Banyong Pongpanich * Financial and Risk Management Director3. Mr. Supol Wattanavekin Financial and Risk Management Director4. Mr. Chanin Vongkusolkit Financial and Risk Management Director5. Mrs. Panida Thepkanjana Financial and Risk Management Director6. Mr. Kasama Punyagupta Financial and Risk Management Director
Note : * Independent directors
Scopes of Work and Responsibilities of the Financial and Risk Management Committeeë To supervise financial operations of companies within the Groupë To supervise, screen, approve and monitor approved investment projectsë To assess and formulate a systematic, clear-cut and efficient risk management planë To supervise and monitor risk assessment tasks as well as to adjust and develop the risk management on a regular basis
Term of Financial and Risk Management Director : 2 years each term.
The Nominating and Corporate Governance Committee consists of three members as follows.
1. Mr. Luen Krisnakri * Chairman of the Nominating and Corporate Governance Committee2. Mrs. Panida Thepkanjana Nominating and Corporate Governance Director3. Mr. Chanin Vongkusolkit Nominating and Corporate Governance Director
Note : * Independent directorsScopes of Work and Responsibilities of the Nominating and Corporate Governance Committeeë To determine the Board of Directorsû composition and qualification of its members as well as members of board committeesë To nominate candidates for the Board of Directors and member of board committeesë To evaluate the boardûs and each committeeûs performanceë To propose corporate governance policies and guidelines to the Board of Directors and to review and update such policies
and guidelines on ongoing basisë To ensure that the Board of Directors and managementûs operations are being conducted within corporate governance polices
and guidelines
Term of Nominating and Corporate Governance Director : 2 years each term.
The Management Development and Compensation Committee consists of three members as follows.
1. Mr. Supol Wattanavekin Chairman of the Management Development and Compensation Committee2. Mr. Vitoon Vongkusolkit Management Development and Compensation Director3. Mr. Banyong Pongpanich * Management Development and Compensation Director
Note : * Independent directors
Exploring the Horizons
22 A n n u a l R e p o r t 2 0 0 5
Scopes of Work and Responsibilities of the Management Development and Compensation Committeeë To assess and evaluate performances; to determine annual remunerations and a compensation structure of President & CEO
while offering him an advice regarding remunerations of senior executivesë To consider a plan to develop skills and competency of President & CEO nominees (in case of change)ë To review significant HR policies i.e. HR policy and budgeting, annual remunerations, bonus payment and structure of staffûs
remunerationsë To consider an allocation of the Employees Share Options Program (ESOP) in case such allocation exceeds 5 per cent of the
programûs shares.
Term of Management Development and Compensation Director : 2 years each term.
ë Executives with control powerNames of authorized directors who shall sign and bind the Company
1. Mr. Vitoon Vongkusolkit Director2. Mrs. Panida Thepkanjana Director3. Mr. Chanin Vongkusolkit Director4. Mr. Supol Wattanavekin Director5. Mr. Krisda Monthienvichienchai Director6. Mr. Kasama Punyagupta President & CEO
Names of executives with control power
1. Mr. Poom Osatananda Executive Vice President, Finance and Information Technology2. Mr. Anuphong Wangphongsawasd Executive Vice President,Business Development3. Mr. Paisit Kaenchan Executive Vice President, Hotel Business4. Mr. Suchai Wuthworachairung Assistant Executive Vice President, Human Resources5. Mr. Surapon Jaimsuwan Vice President, Office Buildings & Shopping Centers
(2) Nomination of directors and executivesë The Company is starting a nomination process of its appointed directors through the Nominating and Corporate Governance
Committee since the Committee was only appointed in late 2004.ë Numbers of directors who are also major shareholder are as follows.
Directorûs Names Groups of Major Shareholders
1. Mr. Vitoon Vongkusolkit List of major shareholders under the Vongkusolkit Group is as follows:2. Mr. Chanin Vongkusolkit Mitr Phol Sugar Co., Ltd.3. Mr. Krisda Monthienvichienchai City Holding Co., Ld.
Ufinves Co., Ltd.United Farmer and Industry Co., Ltd.Mr. Isara Vongkusolkit
4. Mr. Supol Wattanavekin List of major shareholders under the Wattanavekin Group is as follows:5. Mrs. Panida Thepkanjana Chodthanawat Co., Ltd
Mr. Sukakarn WattanavekinMr. Supol Wattanavekin
Management Structure
23A n n u a l R e p o r t 2 0 0 5
Rights of retail investors to appoint directorClause 19 of the Companyûs Articles of Association provides details about directorûs appointment. Clause 49.1 determines
shareholderûs votes as follows.Clause 19. The Shareholdersû Meeting shall elect directors according to the following rules and procedures:
19.1 Chairman of the Meeting shall propose names and work experiences of nominees submitted by the Board ofDirectors for approval.
19.2 Each shareholder shall have voting rights equal to the number of shares he holds.19.3 An election of director may be done by voting either one or several persons as director as the Shareholdersû Meeting
deems appropriate. However, each shareholder must exercise all of his voting rights existed under Clause 21.2 foreach director. Dividing votes to a particular nominee is not permitted.
19.4 Those receiving the highest votes in a sequent order shall be elected as directors for an available number of directors.Should those elected in a subsequent order enjoy equal votes which however exceed the number of the existingdirectors, Chairman of the Meeting shall have a casting vote.
Clause 49. A resolution of the Shareholdersû Meeting shall consist of the following votes:49.1 In a normal case, majority votes of shareholders who attend the meeting (either by themselves or by proxy) and
exercise their votes shall be considered a resolution.
(3) Executiveûs remunerations1. Monetary remunerations
A. Remunerations of directors of the Companyûs Board of Directors and Committees in 2005 are shown in the CorporateGovernance section.
B. Remunerations, which are total wages in 2005 of the management (assistant executive vice president and over) paid bythe Company and its subsidiaries to six executives, totaled Baht 17,766,795.
2. Other remunerationsOther remunerations are provident fund of the executives under B totaling Baht 668,528.
Shareholding ratio of executives in The Erawan Group Public Company Limited Name of Executive Title Number of shares Change
As of 31 Dec 04 As of 31 Dec 03 Increase (Decline)1. Mr. Luen Krisnakri Chairman of the Board - - -2. Mr. Prakit Pradipasen Chairman of the Audit Committee - - -3. Assoc. Prof. Manop Pongsadadt Audit Director - - -4. Mr. Dej Bulsuk Audit Director - - -5. Mr. Vitoon Vongkusolkit Director 1,790,694 1,790,694 -6. Mrs. Panida Thepkanjana Director - - -7. Mr. Chanin Vongkusolkit Director 512,948 12,948 500,0008. Mr. Supol Wattanavekin Director 38,280,000 38,280,000 -9. Mr. Banyong Pongpanich Director 2,000,000 - 2,000,00010. Mr. Krisda Monthienvichienchai Director - - -11. Mr. Dolchai Boonyaratavej Director - - -12. Mr. Kasama Punyagupta President & CEO - - -13. Mr. Poom Osatananda Executive Vice President, Financial - - -
Management and Information Technology14. Mr. Anuphong Wangphongsawasd Executive Vice President, Business Development - - -15. Mr. Paisit Kaenchan Executive Vice President, Hotel Business - - -16. Mr. Suchai Wuthworachairung Assistant Executive Vice President, Human Resources - - -17. Mr. Surapon Jaimsuwan Vice President, Office Buildings & Shopping Centers - - -18. Ms. Ariya Watana Senior Vice President, Accounting 180,000 180,000 -19. Mr. Viboon Chaisutyakorn Vice President, Financial & Legal 396,600 396,600 -
24 A n n u a l R e p o r t 2 0 0 5
Directorship in Subsidiary Companies
Subsidiary Companies
EWH EPC ESM ERD ERP EPK ENK ECP PC HW
1. Mr. Luen Krisnakri / - - - - - - - - -
2. Mr. Prakit Pradipasen - - - - - - - - - -
3. Assoc. Prof. Manop Pongsadadt - - - - - - - - - -
4. Mr. Dej Bulsuk - - - - - - - - - -
5. Mr. Vitoon Vongkusolkit / X X X X X X X - X
6. Mrs. Panida Thepkanjana / - - - - - - - - -
7. Mr. Chanin Vongkusolkit - - - - - - - - - -
8. Mr. Supol Wattanavekin - - - - - - - - - -
9. Mr. Banyong Pongpanich - - - - - - - - - -
10. Mr. Krisda Monthienvichienchai - - - - - - - - - -
11. Mr. Dolchai Boonyaratavej - - - - - - - - - -
12. Mr. Kasama Punyagupta // // // // / // // // - //
13. Mr. Poom Osatananda / / / / / / / / * /
14. Mr. Anuphong Wangphongsawasd - / / / / / / / - /
15. Mr. Paisit Kaenchan / / / / / / / / - /
16. Mr. Suchai Wuthworachairung - - - - - - - - - -
17. Mr. Surapon Jaimsuwan - / - - // - - - - -
18. Ms. Ariya Watana - - - - - - - - - -
19. Mr. Viboon Chaisutyakorn - - - - - / / / - /
Directorship in Subsidiary Companies of the Companyûs executives
Name of Executive
Name Company
EWH Erawan Hotel Plc.
EPC Erawan Ploenchit Co., Ltd.
ESM Erawan Samui Co., Ltd.
ERD Erawan Rajdamri Co., Ltd.
ERP Erawan Ratchaprsong Co., Ltd.
EPK Erawan Phuket Co., Ltd.
ENK Erawan Naka Co., Ltd.
ECP Erawan Chaopraya Co., Ltd.
HW Hatawan Co., Ltd.
PC Ploenchit Real Estate Co., Ltd.
Note :
X Chairman
/ Director
// Managing Director
* Liquidator
25A n n u a l R e p o r t 2 0 0 5
Corporate Governance
The Board of Directors of The Erawan Group Public Company Limited has made it a priority as a public company to ensurethat its business is administered within a framework of corporate governance. Best practices on corporate governance from localand international companies have been compiled while the Company tries to understand the principles behind the concept so thatthey can be successfully applicable to The Erawan Group. As some practices cannot yet be concluded as the best, the Board ofDirectors therefore sets a policy to review the practices on corporate governance at least once a year or even more, if necessary.
Aside from ensuring compliance according to the principles of good corporate governance as required by the StockExchange of Thailand, the Board of Directors has also appointed the Nominating and Corporate Governance Committee (NCG),whose duties are to review the Board of Directorsû structure, determine specific qualifications of its members, recruit candidatesto become directors and ensure that directors, executives and other staff realize the importance of corporate governance whilecomplying with them constructively in a manner that corresponds to the groupûs unique corporate culture.
Corporate Governance PolicyThe Erawan Group is managed by a team of executives and staff under the supervision of a Chief Executive Officer (CEO)
whereby shareholders appoint a 12-member Board of Directors from candidates with eclectic experiences in finance, businessadministration, finance, management, marketing, service, tourism and law. The directors will monitor the management to ensurelong-term added values for the Companyûs shareholders while taking into consideration the interests of other stakeholders; namely,customers, suppliers, creditors, staff and the environment.
The Erawan Group has pursued the principles of corporate governance in its business policy since 2002 and a manual ofbusiness ethics has already been published. The manual consists of the best practices and the good corporate governance policiesthat correspond to the Groupûs strategies and business all directors, executives and employees are to comply.
Balance of power by Non-Executive Directors, Consolidation and Division of PositionThe Company has determined qualifications of those nominated as members of its Board of Directors that are in line with
and no less than the requirements set by the Stock Exchange of Thailand. Each committee has a clear scope of power. To balancethe power, no less than one-third of the Companyûs directors must be independent (meaning one independent director out of twocompany directors). This refers to one management executive; namely, President and Chief Executive Officer (CEO), six independentdirectors and five directors with stakes, totaling 12. Chairman of the Board meanwhile will be an independent director and adifferent person from the CEO and Managing Director to ensure a transparent exercise and balance of power.
CommitteesThe Board of Directors has appointed four committees on the principles of balancing the power, transparency and division
of labor based on responsible scopes of power. Chairman of each committee has a duty to propose approved policies to the Boardof Directors.
Board of Directorsû MeetingIn 2005, the Company organized seven meetings of the Board of Directors, five meetings of the Executive Development
and Compensation Committee, four meetings of the Nominating and Corporate Governance Committee and five meetings of theAudit Committee. At each meeting, no fewer than 84.72 per cent of directors attended the meeting. All meetings were recordedin writing.
Report of Board of DirectorsThe Company requires all meetings be recorded in writing where material contents are fully and adequately summarized.
Compensations of Directors and ExecutivesThe Nominating and Corporate Governance Committeeûs duty is to consider the soundness of directorûs compensations
based mainly on their scopes of work and responsibilities before proposing them to the Shareholdersû Meeting for approval.Directorûs compensations both of the Company and its subsidiaries meanwhile are individually disclosed in an annual report. TheNominating and Corporate Governance Committee has also determined compensations of President and Chief Executive Officer aswell as approved the compensation policy for senior executives.
26 A n n u a l R e p o r t 2 0 0 5
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1, 2
007
6/7
5/5
5. M
r. Ba
nyon
g P
ongp
anich
Directo
rAp
r. 19
, 200
4 - A
pr. 1
8, 2
007
4/7
4/5
6/12
6. M
r. Do
lchai
Boo
nyarata
vej
Directo
rAp
r. 19
, 200
5 - A
pr. 1
8, 2
008
6/7
7. M
r. Vitoon
Vo
ngku
solki
tDi
recto
rAp
r. 19
, 200
5 - A
pr. 1
8, 2
008
7/7
5/5
12/12
8. M
r. Su
pol
Watt
anav
ekin
Directo
rNo
v. 4, 2
004
- Nov
. 3, 2
007
6/7
5/5
12/12
9. M
r. Ch
anin
Vong
kuso
lkit
Directo
rNo
v. 4, 2
004
- Nov
. 3, 2
007
7/7
10/12
4/4
10. M
rs. P
anida
The
pkan
jana
Directo
rAp
r. 19
, 200
5 - A
pr. 1
8, 2
008
5/7
9/12
4/4
11. M
r. Kr
isda
Mon
thien
vichie
ncha
iDi
recto
rNo
v. 4, 2
004
- Nov
. 3, 2
007
6/7
12. M
r. Ka
sama
Pun
yagu
pta
Pres
ident a
nd C
EOAp
r. 19
, 200
5 - A
pr. 1
8, 2
008
7/7
12/12
Corporate Governance
27A n n u a l R e p o r t 2 0 0 5
Total c
ompe
nsations
for the
Board
of D
irectors
and
the
committee
s in 2
005
Name
Title
Board
ofDi
rectors
Man
agem
ent
Deve
lopm
ent a
ndCo
mpe
nsation
Committee
Fina
ncial a
ndRi
sk M
anag
emen
tCo
mmittee
Nominating
and
Corporate
Gove
rnan
ceCo
mmittee
Audit
Committee
Gran
d To
tal
1. M
r. Lu
en
Krisn
akri
Chair
man
300,00
0-
-60
,000
-36
0,00
0
2. M
r. Pr
akit
Pradip
asen
Directo
r24
0,00
0-
--
100,00
034
0,00
0
3. A
ssoc
. Pro
f. Man
op
Pong
sada
dtDi
recto
r24
0,00
0-
--
100,00
034
0,00
0
4. M
r. De
j Bu
lsuk
Directo
r24
0,00
0-
--
100,00
034
0,00
0
5. M
r. Ba
nyon
g P
ongp
anich
Directo
r24
0,00
045
,000
180,00
0-
-46
5,00
0
6. M
r. Do
lchai
Boo
nyarata
vej
Directo
r24
0,00
0-
--
-24
0,00
0
7. M
r. Vitoon
Vo
ngku
solki
tDi
recto
r24
0,00
056
,250
240,00
0-
-53
6,25
0
8. M
r. Su
pol
Watt
anav
ekin
Directo
r24
0,00
075
,000
180,00
0-
-49
5,00
0
9. M
r. Ch
anin
Von
gkus
olkit
Directo
r24
0,00
0-
180,00
045
,000
-46
5,00
0
10. M
rs. P
anida
Th
epka
njana
Directo
r24
0,00
0-
180,00
045
,000
-46
5,00
0
11. M
r. Kr
isda
Mon
thien
vichie
ncha
iDi
recto
r24
0,00
0-
--
-24
0,00
0
12. M
r. Ka
sama
Pun
yagu
pta
Pres
ident a
nd C
EO24
0,00
0-
180,00
0-
-42
0,00
0
Total
2,94
0,00
017
6,25
01,14
0,00
015
0,00
030
0,00
04,70
6,25
0
(Amou
nt in
Bah
t)
28 A n n u a l R e p o r t 2 0 0 5
Shareholders : Equal RightsThe Company respects in an equal access by all shareholders to disclosed information in a timely fashion. It also
implements measures to protect the use of insiderûs information for unfair purpose.
Shareholdersû MeetingThe Company prepares a meeting by sending invitation letter to attend the meeting with supporting documents to its
shareholders no fewer than seven days in advance to ensure that shareholders receive enough information according to theapplicable standards. At the same time, shareholders are given an opportunity to exercise his rights or give proxy to anindependent director to attend the meeting and vote on his behalf. The Company also takes care of matters such as facilitatingtravel to attend the meeting, arranging the meeting venue and offering shareholders a chance to inquire by providing enough timeand attention at every meeting.
Rights of Various Groups of StakeholdersThe Company has determined the rights of its stakeholders; namely, shareholders, customers, suppliers, creditors,
employees and the society in general, to access its information, as well as a proper guideline to comply with when one is tocontact these groups of stakeholders on a fair and equal basis.
Investor RelationsThe Company has set up an Investor Relation unit as a point
of contact between itself and institutional investors, shareholders,analysts and relevant government agencies.
Leadership and VisionThe Company has allowed its executives to determine
management strategies independently as long as they remain withinthe Companyûs objectives and missions. At the same time, guidelinesfor executives have also been determined to ensure that they knowwhat their main duties are both as corporate leader and supervisor.
Internal Control and AuditingThe Audit Committeeûs direct responsibility is to supervise the
Companyûs Internal Auditing Office, review and hire its auditor andensure adequate internal auditing procedures for the sake of thoroughand vigilant operations.
Conflicts of InterestThe Company has determined guidelines on how to conduct connected transaction which may involve conflicts of interest.
Such transaction, if taking place, must be approved by the Audit Committee or the Board of Directors, as the case may be. At thesame time, the Company also requires that the transaction and its value that might lead to a conflict of interest in the previousyear be revealed where necessity and soundness of such transaction must be clearly stipulated in an annual report.
Business EthicsOne of the Companyûs priorities is to promote business ethics to its staff while performing their tasks and at the same time
to constantly update them to suit the Companyûs corporate culture since the ultimate goal is to ensure that directors, executivesand employees truly realize what their duties to stakeholders, the society and the environment are.
Corporate Governance
29A n n u a l R e p o r t 2 0 0 5
Connected TransactionsCo
nnec
ted
Tran
sactions
in 2
005, th
e Co
mpa
ny a
nd it
s su
bsidi
aries
had
con
necte
d tra
nsac
tions
with
perso
ns o
f pos
sible
conflic
t of i
nteres
t spe
cified
by
the
audit
ors
have
alre
ady
stated
in it
s No
tes to
Fina
ncial
Stat
emen
ts of w
hich
detai
ls are
as fo
llows
.
Person
/Juristic
Perso
n of P
ossible
Conflic
t of I
nteres
t and
Nature
of R
elations
hip
Tran
saction
Tran
saction
Value
2005
(Ba
ht)
Nece
ssity
of t
he T
rans
actio
nPr
icing
Polic
y an
d Op
inions
of th
e Au
dit C
ommittee
The
Leas
e Ag
reeme
nt of
Offic
e Sp
ace
in Plo
ench
it Bu
ilding
ë Re
venu
es fr
om re
nts a
nd s
ervice
ë Ac
coun
t Rec
eivab
les fr
om re
ntsan
d se
rvice
s at
end
of ye
arë
Mone
y on
Dep
osit
at en
d of
year
The
Leas
e Ag
reeme
nt of
Offic
e Sp
ace
of the
Ama
rin P
laza
Build
ingë
Reve
nues
from
rents
and
serv
ices
ë Ac
coun
t Rec
eivab
les fr
om re
ntan
d se
rvice
s at
end
of ye
arë
Mone
y on
Dep
osit
at en
d of
year
The
Build
ing a
nd H
otal B
usine
ssIns
uranc
e Ag
reeme
nt wi
th the
Com
pany
and
its s
ubsid
iaries
ëIns
uranc
e pre
mium
ëIns
uranc
e pre
mium
paid
in a
dvan
ce
The
Contr
actin
g Ag
reeme
ntë
Servi
ce fe
es
13,907
,608
.21
1,06
8,32
0.91
1,29
3,13
8.08
30,464
,044
.88
2,44
9,16
3.19
7,71
4,90
7.22
6,90
6,54
5.00
6,09
4,53
7.00
2,60
0,00
0 .00
ëNo
rmal
commercia
l trans
actio
në
Three-ye
ar re
ntal
term
ë No
rmal
commercia
l trans
actio
në
Three-ye
ar re
ntal
term
ëNo
rmal
comercia
l trans
actio
në
One-ye
ar in
suranc
e po
licy.
ëOn
e-tim
e tra
nsac
tion
Five-mon
th c
ontra
ct ter
m(1
Dec
200
4-30
Apr
200
5)ë
No te
nden
cy fo
r futur
etra
nsac
tion
This
is a
majo
r ten
ant.
The
agreed
Price
is fa
ir an
d no
t low
er th
anan
ave
rage
pric
e ag
reed
with
other
tenan
ts ba
sed
on th
e bu
sines
sûscrite
ria.
This
is a
majo
r ten
ant.
The
agreed
price
is fa
ir an
d no
t low
er th
an a
nav
erag
e pr
ice a
gree
d wi
th o
ther
tenan
ts ba
sed
on th
e bu
sines
sûscrite
ria.
ëIt
is a
non-
life in
suranc
eco
mpa
ny th
at offer
s the
best
deal.
ë Th
e ch
oice
is mad
e ba
sed
on th
efirmûs
poten
tial a
nd in
line
with
the
Compa
nyûs
regu
lation
s.
The
contracto
r is
the
mos
t able
and
its e
xperien
ces
are
cons
idered
the
mos
t suit
able.
The
agr
eed
price
is co
nside
red
fair a
nd b
enefi
ts the
mos
t to
the
Compa
nyTh
e hir
ing is
mad
e on
the
basis
of
the
Compa
nyûs
regu
lation
s.
1. Mitr
Pho
l Group
of C
ompa
nies
and
its a
ffilia
tesTy
pe o
f bus
iness
: To
man
ufactu
re an
d se
llgra
nulat
ed s
ugar
and
molas
ses
Natur
e of
Relat
ionsh
ip :
ëMr
. Vito
on V
ongk
usolk
it, an
auth
orized
dire
ctor a
ndMr
. Cha
nin V
ongk
usolk
it, the
Com
pany
ûs dir
ector
,are
an
autho
rized
sign
atory
and
a dir
ector
of
Mitr
Phol
Suga
r Co.,
Ltd.
ëTh
e Mi
tr Ph
ol Gr
oup
of Co
mpan
ies h
olds
more
than
10 p
er ce
nt of
the C
ompa
nyûs
share
s.
2. Kia
tnakin
Ban
k Pub
lic C
ompa
ny L
imite
d Gr
oup
of co
mpan
iesTy
pe o
f bus
iness
: Co
mmerc
ial b
ank
Natur
e of
Relat
ionsh
ip :
Mr. S
upol
Watt
anav
ekin
and
Asso
c. Pr
of.Ma
nop
Pong
sada
dt, th
e Co
mpan
yûs d
irecto
rs,are
the
Bank
ûs dir
ector
s
3. IAG
Insuran
ce (T
haila
nd) C
o., L
td.
(Roy
al an
d Su
n Allia
nce
Insuran
ce (T
haila
nd)Ltd.
)Ty
pe o
f bus
iness
: no
n-life
insu
rance
com
pany
Natur
e of
Relat
ionsh
ip :
Mr. V
itoon
Von
gkus
olkit
and
Mr. C
hanin
Von
gkus
olkit,
the C
ompa
nyûs
direc
tors,
are d
irecto
rsof
IAG In
suran
ce (T
haila
nd) C
o., L
td.
4. B
rand
scap
e Co
., Ltd
Type
of b
usine
ss :
a pr
oduc
tion
hous
e an
d ac
t as
aco
ntracto
r to
prod
uce all
kind
s of entertai
nmen
t acti
vities
Nature o
f Rela
tions
hip :
Mr.
Dolch
ai Bo
onya
ratav
ej, d
irecto
r, is
a foun
der
and
Chief
Exe
cutiv
e Of
ficer o
f Brand
scap
e Co
., Ltd.
30 A n n u a l R e p o r t 2 0 0 5
Person
/Juristic
Perso
n of P
ossible
Conflic
t of I
nteres
t and
Nature
of R
elations
hip
Tran
saction
Tran
saction
Value
2005
(Ba
ht)
Nece
ssity
of t
he T
rans
actio
nPr
icing
Polic
y an
d Op
inions
of th
e Au
dit C
ommittee
The
Leas
e Ag
reeme
nt of
Offic
e Sp
ace
and
Servi
ce w
ith E
rawan
Hote
l Pu
blic
Comp
any
Limite
dë
Reve
nues
from
rents
and
serv
ices
ëAc
coun
t Rec
eivab
les o
f ren
ts an
dse
rvice
s at
end
of ye
ar
The
Leas
e Ag
reeme
nt of
the E
rawan
Bang
kok
ë Re
venu
es fr
om re
nts a
nd s
ervice
së
Acco
unt R
eceiv
ables
of r
ents
and
servi
ces
at en
d of
year
ëMo
ney
depo
sit
The
Contr
actin
g Ag
reeme
nt for
HR
mana
geme
nt an
d pu
rchas
ing s
ervice
së
Admi
nistra
tive
fees
P/N
to gu
arante
e the
loan
ëP/N
ëLo
an in
teres
të
Outst
andin
g int
erest
at en
d of
year
2,589
,146.0
038
5,075
.00
3,745
,313.6
725
2,450
.64
1,493
,728.0
0
1,35
5,70
1.00
130,00
0,00
0.00
1
,766
,758
.90
339
,958
.90
ëNo
rmal
comm
ercial
tran
sacti
on
ëNo
rmal
comm
ercial
tran
sacti
onë
Three
-year
rent t
erm
ëTe
mpora
ry tra
nsac
tion
ëTe
mpora
ry tra
nsac
tion
ëInt
erest
rate
is low
er tha
na
bank
loan
rate
The
agree
d pri
ce is
the
mark
et pri
ceco
mpare
d to o
ther le
ased
spac
e in n
earby
areas
and
is no
t low
er tha
n tha
t offe
redto
other
tenan
ts or
servi
ce c
ustom
ersac
cordi
ng to
the
hotel
bus
iness
ûscri
teria.
The
agree
d pri
ce is
the
marke
t pric
eco
mpare
d to
other
lease
d sp
ace
inne
arby
areas
and
is n
ot low
er tha
ntha
t offe
red to
othe
rtena
nts o
r serv
icecu
stome
rsacc
ording
to th
e ho
telbu
sines
sûs c
riteria
.
The
agree
d pri
ce is
fair
and
theCo
mpan
y rec
eives
an
admi
nistra
tive
fee fo
r the
sam
e am
ount
of the
valu
eit
previo
usly
paid.
The
con
tract
ende
din
April
2005
.Pr
icing
Poli
cy a
nd O
pinion
s\ A
norm
al tra
nsac
tion
to se
cure
itswo
rking
cap
ital,
which
is re
ason
able
enou
gh a
nd th
e Co
mpan
y be
nefits
the
most
from
the tr
ansa
ction
.
5. Ch
ai-Ta
ly Ho
tel C
o., L
td.Ty
pe o
f bus
iness
: Ho
tel o
perat
ionNa
ture
of Re
lation
ship
:Mr
s. Pa
nida
The
pkan
jana,
direc
tor, i
s a
close
drel
ative
of M
rs. C
hans
amorn
Watt
anav
ekin,
an a
uthori
zed s
ignato
ry of
Chai-
Talay
Hote
l Co.,
Ltd.
6. Mino
r Corpo
ratio
n Pu
blic
Compa
ny L
imite
dTy
pe o
f bus
iness
: Of
fer m
anag
emen
t serv
ice,
comp
uter,
acco
untin
g an
d pro
perty
leas
ingse
rvice
s ; i
nves
ting
in oth
er co
mpan
ies; s
elling
boo
ks,
educ
ation
equ
ipmen
t, rea
dy-to
-wea
r, co
smeti
cs a
nd s
parep
arts.
Natur
e of
Relat
ionsh
ip :
Mr. P
rakit
Prad
ipase
n, dir
ector
, is
Direc
tor o
f Mino
rCo
rporat
ion P
ublic
Com
pany
Lim
ited.
7. Ba
an C
hai-T
aly P
rope
rty C
o., L
td.Ty
pe o
f bus
iness
: rea
l esta
te de
velop
er an
d se
ller
Natur
e of
Relat
ionsh
ip :
Mrs.
Panid
a T
hepk
anjan
a, dir
ector
, is
a clo
sed
relati
ve o
fMr
s. Ch
ansa
morn
Watt
anav
ekin,
an
autho
rized
sign
atory
ofBa
an C
hai-ta
lay P
roperl
y Co
., Ltd
.
8. Mrs.
Cha
nsam
orn
Watt
anav
ekin
Natur
e of
Relat
ionsh
ip :
Mrs.
Chan
samo
rn W
attan
avek
in, is
a c
losed
relat
ive o
fMr
s. Pa
nida
The
pkan
jana,
the a
uthori
zed s
ignato
ry,an
d Mr
. Sup
ol W
attan
avek
in, th
e Co
mpan
yûs d
irecto
r.
Connected TransactionsCo
nnec
ted
Tran
sactions
in 2
005, th
e Co
mpa
ny a
nd it
s su
bsidi
aries
had
con
necte
d tra
nsac
tions
with
perso
ns o
f pos
sible
conflic
t of i
nteres
t spe
cified
by
the
audit
ors
have
alre
ady
stated
in it
s No
tes to
Fina
ncial
Stat
emen
ts of w
hich
detai
ls are
as fo
llows
.
31A n n u a l R e p o r t 2 0 0 5
1. Operating ResultThe accounting year of 2005 was a challenging one for ERAWAN as Ploenchit Center, Grand Hyatt Erawan Bangkok, and
Renaissance Koh Samui Resort and Spa were under renovation while Parklane Mansion began the process of converting into a4-star business traveller hotel. All these were done while most of our expense items either remained in tact or increased.Acquisition of Erawan Samui, owner of Renaissance Koh Samui Resort and Spa, in July also pulled down ERAWANûs overall profitas the hotel was under renovation and management transition. All in all, the company reported a net profit of Baht 258 millionwhich was a 24% drop from the previous year.
ERAWANûs Consolidated Profit & Loss Statement (period ended 31 December)
Baht Million FY2005 FY2004 ChangesHotelsû Operating income 2,363.7 2,007.0 +17.8%Rental and service income 494.6 481.1 +2.8%Total Operating Income 2,858.3 2,488.1 +14.9%Operating expenses (1,973.5) (1,682.3) +17.3%EBITDA 884.8 805.8 +9.8%Depreciation & amortization (346.3) (277.6) +24.7%Operating Profit 538.5 528.2 +1.9%Other income 42.9 51.8 -17.1%Interest expenses (154.2) (114.1) +35.1%Pre-tax Profit 427.2 465.9 -8.3%Taxes (113.2) (78.2) +44.7%Minority interest (56.2) (48.4) +16.1%Net Profit 257.8 339.2 -24.0%E.P.S. 0.18 0.23 -24.0%
(1) Operating Incomes and Operating ProfitsOverall, the Companyûs operating incomes totaled Baht 2.858 billion, which increased by 14.9 per cent from Baht 2.488
billion in 2004 due to the operating incomes from the hotel business rose 17.8 % from Baht 2.007 billion in 2004 to Baht 2.364billion in 2005 while incomes from other business rose only 2.8 %.
The Company recorded the Earning before Tax, Interest and Deprecation (çEBITDAé) of Baht 885 million and the operatingprofit of Baht 538 million, or a rise by 9.8 per cent and 1.9 per cent, respectively, although income rose by 14.9 per cent. Thiswas because the overall operating expenses increased 17.3% per cent significantly caused by the consolidation of RenaissanceKoh Samui Resort and Spa , an increase of Amarin Plazaûs operating expenses and an increase of total depreciation which rose24.7% year-on-year from Erawan Bangkok and those all three hotels.
By Operation Analysis:Grand Hyatt Erawan Bangkok (çGHEBé)ë GHEBûs total operating income was Baht 1,188 million in FY2005, increases of 16% year-on-year. Although, F&B was the
driver of growth throughout the year with revenue reaching all-time high of Baht 527 million in 2005, representing a 17% risefrom last year, it is worthwhile to note that room department was the key to 2005 growth from last year. That 2005 figurewas achieved via occupancy of 75.4% (up 4%) and average room rate (çARRé) of Baht 5,423 (up 9%).
ë New F&B outlets, the residence, Erawan Tea Room, and Breezeway contributed Baht 63 million in FY2005. In 2005, all F&Boutlets showed year-on-year growth with exception to The Chinese Restaurant. Banquet remained the key component ofGHEBûs F&B income with Baht 169 million in 2005, up 32%, while Dining room and Spasso are still the top 2 restaurants interms of income, Baht 228 million combined for 2005, up 5%.
Explanations and analysis of financial statementsand operating results
32 A n n u a l R e p o r t 2 0 0 5
ë i.sawan, a Baht-250-million investment on 5th floor, added an income of Baht 24 million to the property since opening inAugust with treatments & nail, overnight cottages, Breezeway restaurant, and fitness membership fees as key incomecontributors.
ë For FY2005, GHEB generated an EBITDA of Baht 412 million, a dramatic improvement of 17% from Baht 351 million in 2004.
JW Marriott Bangkok (çJWMé)ë The hotel generated income of Baht 1,141 million in FY2005, up 14% from 2004. Room revenue registered growth of 10%
in FY2005 (Baht 603 million) thanks to rises in both occupancy and ARR. In FY2005, occupancy was 86.5%, up 2.3% fromlast year while ARR rose 7% to Baht 4,328.
ë Throughout 2005, F&B was the main top-line growth driver as the 2-part Japanese restaurant, Tsu and Nami (Baht 73 millionincome during 2005), help raise income from this department to Baht 411 million in FY2005, up 27%. The hotelûs top 2 F&Boutlets, Marriott Cafe and New York Steakhouse, have a strong year in 2005 with 17% and 6% growth respectively, combiningto generate Baht 170 million in income.
ë JWM generated an EBITDA of Baht 415 million in FY2005, up 18% .
Renaissance Koh Samui Resort & Spa (çRKSé)ë Since acquisition (4 July 2005), the hotel generated income from room sales of Baht 32 million on occupancy of 32.4% and
ARR of Baht 6,933 with renovation done in December. Excluding room nights which were not available due to facilityupgrading during the past 6 months, occupancy rate from July-December was 44%. Total income from RKS was Baht 51 millionin 2005.
ë EBITDA was a negative Baht 6 million since acquisition due to largely to pre-conversion expenses (traveling expenses forMarriottûs development team, lay-off expenses, etc.).
Office Buildings and Shopping Centersë Amarin Plaza & Tower (çAPé) : For FY2005, AP generated total operating income (excluding leased rights income) of Baht
198 million, down 6% year-on-year, mostly a result of rent-free period for a tenant during April to June. APûs operatingexpenses rose 27% year-on-year mainly from 3 items, rent paid to landlord, marketing expenses, and property tax whichcombined to increase by Baht 22 million in 2005. EBITDA for the year was Baht 66 million, a 38% drop year-on-year.
ë Ploenchit Center (çPCé) : FY2005 was the year of renovation for PC. Apart from the facelift, more than 13,000 sqm. of retailspaces were converted into office to service the vastly growing demand. Occupancy consequently dropped to 71% from 88%in 2004 and rental income to Baht 101 million from Baht 145 million in 2004. With other service income impacted also, PCûstotal operating income (excluding leased rights income) was only Baht 147 million in 2005, down 28% year-on-year. On theexpense side, only energy and utility-related items decreased from the previous year as most costs normally have upwardadjustments based on contracts signed (cleaning, security, rent paid to landlord). EBITDA was only Baht 29 million, a sharpdecline of 64% from Baht 80 million in 2004.
ë Erawan Bangkok (çEBé) : The addition of EB in 2005 has somewhat eased the impacts of renovations at other non-hotelproperties. The boutique mall, opened in December 2004, generated total operating income of Baht 113 million in 2005, Baht96 million of which came from monthly rent. EBITDA was Baht 59 million for the year, compared to a negative Baht 23 millionin 2004.
Othersë Parklane Mansion : US Embassy, the buildingûs sole tenant for the past 10 years, completely vacated the building at the
end of September, when conversion to Courtyard by Marriott Bangkok officially began. Operating income was Baht 8 millionfor FY2005. EBITDA for FY2005 was a negative Baht 2 million. This was a big decline from Baht 29 million in the sameperiods last year.
Explanations and analysis of financial statementsand operating results
-
33A n n u a l R e p o r t 2 0 0 5
Occupancy Rates 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter2004 2005 2004 2005 2004 2005 2004 2005
Amarin Plaza 80% 81% 81% 84% 80% 81% 74% 79%
Ploenchit Center 96% 68% 94% 62% 89% 73% 74% 82%
Erawan Bangkok - 98% - 99% - 99% - 97%
(2) Other itemsë Other income : Dropped slightly to Baht 43 million in FY2005 from Baht 52 million in the previous year. Absences from 2004
were booked (1) Reversal of withholding tax write-off, Baht 8 million (2) Expiration of Sogoûs discount coupons, Baht 3 million(3) Baht 3 million income from a customer at Amarin Plaza which has been reclassified as çRental and Service incomeé in2005 (4) Recognition of tenantûs deposit as income, Baht 11 million and (5) Compensation from a tenant for relocation, Baht3 million. In 2005, accounting gains from accrued interest write-off (Baht 5 million) and from sales of limousine fleet (Baht11.6 million) somewhat help compensate for those items mentioned.
ë Depreciation : An increase of 25% year-on-year to Baht 346 million in FY2005 was primarily from Erawan Bangkok (Baht25 million), GHEB (Baht 11 million), JWM (Baht 14 million) and RKS (Baht 18 million).
ë Interest expense : Rose 35% year-on-year as total interest-bearing debts increased to Baht 4,406 million as at 31 December2005 due to consolidation of Erawan Samui (Baht 413 million) and Baht 751 million capital expenditure in FY2005. Anotherfactor is the rising funding cost, up 47 basis points from 2004 as interest rates increased.
ë Income tax : Baht 113 million booked in FY2005 was an increase of 45% from last year. Effective tax rate increased to 26%during the period as JWMûs operation was without tax shield during the 6-month period between February-July. Consequently,the effective rate dropped back to 22% in 4Q05.
2. Financial Status(1) Assets
As of 31 December 2005, the Companyûs total assets were Baht 9,561 million, an incresase of 12% from Baht 8,499billion at the end of 2004. The additions are mainly from the following investments made during the year :ë Renaissance Koh Samui Resort & Spa (çRKSé)
On 4 July 2005, the Company acquired Erawan Samui Company Limited (previously Aman Zen Co., Ltd.), the owner ofBuriraya Resort & Spa.
ë i.sawan Residential Spa & Club :Since August 2005, the 5th floor at Grand Hyatt Erawan Bangkok, under a subsidiary Erawan Hotel Plc., has now becomeçi.sawan Residential Spa & Clubé.
ë Revamp at Ploenchit Center :Apart from facelift, most retail spaces have now been converted into areas for offices. The 40,000-sqm building is now 85%office and 15% retail.
ë Revamp at Amarin Plaza :Retail space was upgraded to create a çKolors of Styleé theme concept while a 1,500-sqm food court called çThe Cooké wasopen on the 4th floor in November.
Detail of investment value is shown in the table under (3). Aside from the investment above, there was no material changein the Companyûs other assets during the past year.
Exploring the Horizons
34 A n n u a l R e p o r t 2 0 0 5
(2) LiquidityAlthough the investment mentioned in (1) was quite substantial, our liquidity situation has not deteriorated thanks to strong
cashflow from operation. During 2005, the Company generated cash from operating activities of Baht 611 million (or 2.4 timesnet profit). This, along with additional debt drawdown, help paid for Baht 917 million worth of investment activities (including Baht61 million construction cost payables and retention), Baht 254 million long-term loan amortization, and Baht 220 million dividendpayment (totaling Baht 133 million paid to minor shareholders in Erawan Hotel Plc). The Companyûs additional borrowing duringthe period was mainly long-term loans. Based on year-end numbers, the Companyûs debt-to-equity ratio (D/E) is still relatively lowat 1.40 times while both its net debt to EBITDA and debt service coverage ratio (DSCR) are at manageable levels of 4.8 times and2.1 times respectively. There also is unused short-term loan facility of Baht 451 million at end of 2005.
(3) Capital Expenditure and InvestmentThe breakdown of Baht 917 million investment during 2005 is as follows :
Project Investment in 2005 (Million Baht)
Renaissance Koh Samui & Spa 213i.sawan Residential Spa & Club 160Revamp at Ploenchit Center 189Revamp at Amarin Plaza & Tower 85Others 270 Total 917
(4) Sources of fundingAs mentioned above, the Companyûs D/E at year end remained low at 1.4 times although total interest-bearing debt
increased to Baht 4,347 million, a 27% increase from end of 2004. As of 31 December 2005, details of short- and long-termdebts as well as interest rates are as follows.
Type Company Outstanding (Bt million) Interest Rate
Short-term loans from financial ERAWAN and EPC 149 MMR (money market rate)institutionsShort-term loans from connected ERAWAN 130 4.15%personSubtotal › Short-term debts 279Unsecured ordinary debentures ERAWAN 300 5.2%Long-term from financial institutions EPC 1,860 3.5% until September 2006
then the lower rate betweenthe one-year fixed deposit rate+ 2.5% and MLR › 1.50%
EWH 500 4.0% until January 2006then the lower rate between
the one-year fixed deposit rate+ 2.5% and MLR › 1.50%
EWH 450 MLR › 1.50%EPC 530 MLR › 1.50%ESM 413 One-year fixed deposit rate + 3%
Other long-term loans ERP and EWH 15 3.5%Subtotal › Long-term debts 4,068Total Debts 4,347
Note : Please see abbreviation page 24
Explanations and analysis of financial statementsand operating results
35A n n u a l R e p o r t 2 0 0 5
1. Courtyard by Marriott BangkokErawan Rajdamri Co., Ltd is currently renovating the Parklane Mansion in
Soi Mahadlekluang 1 into a four-star hotel for business traveller. The renovationhas been approved by the Royal Property Bureau, the lessor who agrees to leasethe space for 30 years starting from 1 January 2008. On 4 July 2005, theCompany signed a contract with the Marriott Group to let it manage the hotel for30 years under the çCourtyardé brand. The Baht 990 million hotel will have 316rooms and is expected to open its door in second quarter of 2007.
2. Hotel project managed by the Six SensesErawan Phuket Co., Ltd, an owner of the 75-2-20 rai of land on Phuketûs
Naka Yai Island (to the northeast of Phuket) plans to turn it into a 60-pool-villaresort hotel with an investment budget of around Baht 950 million. The hotel isexpected to start its operation in fourth quarter of 2007 and will be managed bythe Six Senses, which currently manages eight Soneva Resort, Evason Hideawayand Evason Resort hotels in three countries.
Future Projects
Exploring the Horizons
36 A n n u a l R e p o r t 2 0 0 5
Dear Shareholders of The Erawan Group Public Company Limited,
The Audit Committee, which consists of three independent directors, all of whom are neither the Companyûs official norstaff, convened altogether five times in 2005 to consider the following:
1. To consider the quarterly and annual financial statements of 2005 where viewpoints and information were exchangedwith the auditor and Executive Vice President, as well as the Finance Department to ensure that the financial statements wereprepared in accordance with the generally-accepted accounting principles and that the information was adequately disclosed.
2. To assess the efficiency of the internal control system; to offer consultancy and approval for an annual auditing plan;to acknowledge and submit results of the internal auditing to the Board of Directors with a purpose to increase the efficiency ofthe internal controlûs system.
3. To approve whether a transaction that may lead to conflict of interest was an actual transaction normally done duringa course of business and whether it was reasonable, benefited the most under the Companyûs policy and complied with thegovernmentûs rules and regulations.
4. To review an annual budget; to supervise, review and assess the Internal Audit Departmentûs performances.
The Audit Committee, having considered the matter, is of the opinion that the financial statements of both the Companyand its subsidiaries for the year that ended 31 December 2005 are accurate and that the information is adequately disclosed andprepared under the generally-accepted accounting principles.
The Audit Committee has also selected the auditor as well as proposed the auditing fee to the Board of Directors to seekfurther approval from the Shareholdersû Meeting to appoint Mr. Sophon Permsirivallop, Certified Public Accountant (Thailand),License No. 3182, and/or Ms. Sumalee Reewarabandith, Certified Public Accounting (Thailand), License No. 3970, and/or Ms.Visutta Jariyathanakorn, Certified Public Account (Thailand), License No. 3853, of Ernst & Young Office Limited, as the Companyûsauditor for the year 2006.
Statement from the Audit Committee
Mr. Prakit PradipasenChairman of the Audit Committee
20 February 2006
Exploring the Horizons
37A n n u a l R e p o r t 2 0 0 5
To The Board of Directors and Shareholders ofThe Erawan Group Public Company Limited(Formerly known as çAmarin Plaza Public Company Limitedé)
I have audited the accompanying consolidated balance sheets of The Erawan Group Public Company Limited andits subsidiaries as at 31 December 2005 and 2004, and the related consolidated statements of earnings, changes inshareholdersû equity and cash flows for the years then ended, and the separate financial statements of The Erawan GroupPublic Company Limited for the same years. These financial statements are the responsibility of the management of theCompany and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is toexpress an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that Iplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. I believe that my audits provide areasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financialposition of The Erawan Group Public Company Limited and its subsidiaries and of The Erawan Group Public CompanyLimited as at 31 December 2005 and 2004, and the results of their operations and cash flows for the years then endedin accordance with generally accepted accounting principles.
Rungnapa LertsuwankulCertified Public Accountant (Thailand) No. 3516Ernst & Young Office LimitedBangkok: 23 February 2006
Report of Independent Auditor
38 A n n u a l R e p o r t 2 0 0 5
Balance SheetsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)AS AT 31 DECEMBER 2005 AND 2004
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY
Note 2005 2004 2005 2004
ASSETSCURRENT ASSETS
Cash and cash equivalents 89,319,000 239,458,571 956,095 10,127,446Current investment 5 45,016,291 - - -
Trade accounts receivable - net 6 114,906,174 90,529,491 348,526 4,545,562Trade accounts receivable - related parties 7 5,121,589 818,453 - -Inventories - net 8 49,888,841 32,876,934 - -Short-term loans to a subsidiary company 7 - - 18,792,507 34,694,741
Other current assetsPrepaid expenses 22,482,582 12,824,179 1,553,507 709,430Prepaid expenses - related parties 7 11,509,660 5,415,123 925,810 925,810
Withholding tax deducted at source - refundablewithin one year 16 - 6,201,294 - -
Advances 545,566 1,040,000 - 1,040,000Others 29.9 155,220,560 28,130,361 1,364,892 1,232,143
TOTAL CURRENT ASSETS 494,010,263 417,294,406 23,941,337 53,275,132NON-CURRENT ASSETS
Investments accounted for under equity methodInvestments in subsidiary companies 9 - - 3,319,448,939 4,112,292,568
Investments in associated companies 10 338,271 338,271 - - Other long-term investments
Pledged fixed deposits at financial institution 228,000 210,848 - -Investments in related company 11 4,702,007 4,100,223 2,612,226 2,314,706Investments in other company 206,206 206,206 - -Long-term loans to and interest receivable fromsubsidiaries 7 - - 1,233,710,711 973,302,270Property, plant and equipment - net 12 8,488,725,109 7,501,046,338 55,139,133 51,835,157Land awaiting development 13 254,511,944 254,511,944 - -Intangible assets - net 14 49,278,322 49,050,195 6,411,276 7,257,690Other non-current assetsDeposits for lease of land, building and equipment 208,819,553 209,414,344 40,391,196 43,336,242Withholding tax deducted at source - net of refundable
within one year 16 41,089,251 41,038,695 9,209,556 12,940,666Others 19,296,203 22,556,817 - 51,196
TOTAL NON-CURRENT ASSETS 9,067,194,866 8,082,473,881 4,666,923,037 5,203,330,495TOTAL ASSETS 9,561,205,129 8,499,768,287 4,690,864,374 5,256,605,627
The accompanying notes are an integral part of the financial statements.
Exploring the Horizons
39A n n u a l R e p o r t 2 0 0 5
CONSOLIDATED THE COMPANY ONLY
Note 2005 2004 2005 2004
LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES
Bank overdrafts and short-term loans fromfinancial institutions 17 149,100,000 744,618,615 52,700,000 741,447,628Accounts payable - trade and construction 192,196,437 191,217,673 197,942 10,798,624
Trade accounts payable - subsidiary companies 7 - - 501,958 6,294,503Current portion of liabilities under financelease agreements 18 12,105,981 8,878,810 - -Current portion of hire purchase payable 1,891,150 1,511,361 1,790,502 1,511,361Current portion of long-term loans 19 1,174,787,066 254,183,988 40,000,000 -Short-term loans from related party 7 130,339,959 - 130,339,959 -Other payable - subsidiary companies 7 - - 3,028,194 884,708Other current liabilitiesManagement, royalty, marketing and other fees payable
- hotel business 36,913,138 29,301,730 - -Retention 14,584,150 22,643,240 - 93,750Advances from customers 24,924,822 20,084,214 - 98,550Value added tax payable 11,509,928 9,166,927 - 170,910Accrued expenses 87,659,982 52,819,553 10,904,844 2,644,126Income tax payable 62,688,329 36,763,296 - -Deposits received from sale of investmentin subsidiary 9 21,611,459 - 21,611,459
Others 59,810,796 42,752,232 1,142,386 1,272,378TOTAL CURRENT LIABILITIES 1,980,123,197 1,413,941,639 262,217,244 765,216,538NON-CURRENT LIABILITIES
Liabilities under finance lease agreements- net of current portion 18 41,622,449 13,849,961 - -
Hire purchase payable - net of current portion 2,481,077 3,515,252 2,481,077 3,515,252Long-term loans from a subsidiary company 7 - - - 808,391,123Long-term loans - net of current portion 19 2,593,469,744 2,413,410,335 490,000,000 -Unsecured debentures 20 300,000,000 - 300,000,000 -Accounts payable for leasehold rights 30.4 360,000,000 360,000,000 - -Deposits from lessees 191,502,564 184,016,160 20,875,120 25,154,072Deferred income - net 21 101,887,189 112,474,257 - -Provision for loss on investments insubsidiary companies 9 - - - 124,446,933
TOTAL NON-CURRENT LIABILITIES 3,590,963,023 3,087,265,965 813,356,197 961,507,380TOTAL LIABILITIES 5,571,086,220 4,501,207,604 1,075,573,441 1,726,723,918
(Unit: Baht)
The accompanying notes are an integral part of the financial statements.
Balance Sheets (Continued)THE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)AS AT 31 DECEMBER 2005 AND 2004
40 A n n u a l R e p o r t 2 0 0 5
CONSOLIDATED THE COMPANY ONLY
Note 2005 2004 2005 2004
SHAREHOLDERûS EQUITYShare capital 22
Authorised share capital1,519,700,408 ordinary shares of Baht 1 each 1,519,700,408 1,519,700,408 1,519,700,408 1,519,700,408
Issued and paid-up share capital1,453,048,008 ordinary shares of Baht 1 each 1,453,048,008 1,453,048,008 1,453,048,008 1,453,048,008
Additional paid-in capitalPremium on ordinary shares 4,000,000 4,000,000 4,000,000 4,000,000Surplus from revaluation of land, buildings and leasehold
rights of subsidiaries - net 15 1,428,255,549 1,513,961,024 1,428,255,549 1,513,961,024Change in percentage of holding in subsidiaries 119,324,942 119,324,942 119,324,942 119,324,942Unrealised gain on changes in the value of investments 1,038,152 529,776 1,038,152 529,776
Retained earningsAppropriated - statutory reserve 23 62,662,577 58,426,478 46,390,000 33,490,000Unappropriated 546,961,705 380,591,481 563,234,282 405,527,959
EQUITY ATTRIBUTABLE TO COMPANYûS SHAREHOLDERS 3,615,290,933 3,529,881,709 3,615,290,933 3,529,881,709MINORITY INTEREST - EQUITY ATTRIBUTABLETO MINORITY SHAREHOLDERS OF SUBSIDIARIES 374,827,976 468,678,974 - -
TOTAL SHAREHOLDERSû EQUITY 3,990,118,909 3,998,560,683 3,615,290,933 3,529,881,709TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 9,561,205,129 8,499,768,287 4,690,864,374 5,256,605,627
(Unit: Baht)
The accompanying notes are an integral part of the financial statements.
Balance Sheets (Continued)THE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)AS AT 31 DECEMBER 2005 AND 2004
Exploring the Horizons
41A n n u a l R e p o r t 2 0 0 5
CONSOLIDATED THE COMPANY ONLY
Note 2005 2004 2005 2004
(Unit: Baht)
The accompanying notes are an integral part of the financial statements.
REVENUESRevenues from hotel operations 2,363,660,208 2,007,026,081 - -Rental of units in buildings and related service income 494,618,069 481,078,332 45,153,300 133,579,460Other income
Gain on exchange 5,936,889 7,177,150 - -Interest income 1,655,208 703,043 58,338,722 40,554,505Others 35,331,041 43,888,845 104,271 7,555,904
Share of profits from investmentsaccounted for under equity method - - 310,035,277 355,044,857
TOTAL REVENUES 2,901,201,415 2,539,873,451 413,631,570 536,734,726EXPENSES
Cost of sales and direct cost of rental and services 1,269,327,741 1,060,579,868 19,980,082 66,541,556Selling and administrative expenses 697,585,748 611,996,138 70,733,858 61,499,434Depreciation and amortisation 346,259,562 277,600,543 11,032,194 6,434,484Other expenses - 4,928,955 - -Directorsû remuneration 24 6,586,250 4,763,000 4,541,250 1,355,000
TOTAL EXPENSES 2,319,759,301 1,959,868,504 106,287,384 135,830,474EARNINGS BEFORE INTEREST AND
INCOME TAX EXPENSES 581,442,114 580,004,947 307,344,186 400,904,252INTEREST EXPENSES (154,241,197) (114,147,824) (49,554,983) (61,706,235)INCOME TAX 25 (113,196,896) (78,238,107) - -EARNINGS AFTER INCOME TAX 314,004,021 387,619,016 257,789,203 339,198,017EARNINGS OF MINORITY INTEREST (56,214,818) (48,420,999) - -NET EARNINGS FOR THE YEAR 257,789,203 339,198,017 257,789,203 339,198,017BASIC EARNINGS PER SHARE
Net earnings 0.18 0.23 0.18 0.23Weighted average number of ordinary shares 1,453.0 1,453.0 1,453.0 1,453.0
million shares million shares million shares million shares
Statements of EarningTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)FOR THE YEAR ENDED 31 DECEMBER 2005 AND 2004
42 A n n u a l R e p o r t 2 0 0 5
Statem
ents
of C
hang
es in
Sha
reho
lder
sû Eq
uity
THE
ERAW
AN G
ROUP
PUB
LIC
COMPA
NY L
IMITED
AND
ITS
SUBS
IDIA
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(FOR
MER
LY K
NOW
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çAM
ARIN
PLA
ZA P
UBLIC
COMPA
NY L
IMITED
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R TH
E YE
AR E
NDED
31
DECE
MBE
R 20
05 A
ND 2
004
(Unit
: Bah
t)CO
NSOL
IDAT
EDSu
rplus
from
Chan
ge in
Unrea
lised
gain
Issue
d an
drev
aluati
on o
f lan
d,pe
rcenta
ge(lo
ss)
paid-
upSh
arebu
ilding
and
leas
ehold
of ho
lding
on c
hang
es in
the
Retai
ned
earni
ngs
(defic
it)sh
are c
apita
lpre
mium
rights
of s
ubsid
iaries
in su
bsidi
aries
value
of i
nves
tmen
tsAp
propri
ated
Unap
propri
ated
Mino
rity in
teres
tTo
tal
Balanc
e - b
eginning
of y
ear 20
041,4
53,04
8,008
4,000
,000
1,597
,797,1
1411
9,324
,942
685,2
2032
,992,5
7722
4,240
,899
457,9
73,26
93,8
90,06
2,029
Chan
ges
in the
valu
e of
inves
tmen
ts-
--
-(1
55,44
4)-
--
(155
,444)
Amor
tisati
on o
f sur
plus
from re
valua
tion
offix
ed a
ssets
of s
ubsid
iaries
(Note
15)
--
(83,8
36,09
0)-
--
--
(83,8
36,09
0)Un
realis
ed tr
ansa
ction
s in
earn
ings
statem
ent
--
(83,8
36,09
0)-
(155
,444)
--
-(8
3,991
,534)
Net e
arning
s for
the
year
--
--
--
339,1
98,01
7-
339,1
98,01
7Di
viden
d pa
ymen
t (No
te 26
)-
--
--
-(1
57,41
3,534
)-
(157
,413,5
34)
Lega
l res
erve
of a
subs
idiary
(Note
23)
--
--
-8 ,4
73,90
1(8
,473,9
01)
--
Lega
l res
erve
(Note
23)
--
--
-16
,960,0
00(1
6,960
,000)
--
Increa
se in
mino
rity
intere
st-
--
--
--
10,70
5,705
10,70
5,705
Balanc
e - e
nd o
f yea
r 20
041,4
53,04
8,008
4,000
,000
1,513
,961,0
2411
9,324
,942
529,7
7658
,426,4
7838
0,591
,481
468,6
78,97
43,9
98,56
0,683
Chan
ges
in the
valu
e of
inves
tmen
ts-
--
-50
8,376
--
-50
8,376
Amor
tisati
on o
f sur
plus
from re
valua
tion
offix
ed a
ssets
of s
ubsid
iaries
(Note
15)
--
(85,7
05,47
5)-
--
--
(85,7
05,47
5)Un
realis
ed tr
ansa
ction
s in
earn
ings
statem
ent
--
(85,7
05,47
5)-
508,3
76-
--
(85,1
97,09
9)Ne
t earn
ings
for th
e ye
ar-
--
--
-25
7,789
,203
-25
7,789
,203
Divid
end
paym
ent (
Note
26)
--
--
--
(87,1
82,88
0)-
(87,1
82,88
0)Le
gal r
eserv
e of
a su
bsidi
ary (N
ote 2
3)-
--
--
17,25
2,000
(17,2
52,00
0)-
-Tr
ansfe
r leg
al res
erve
of a
subs
idiary
com
pany
toret
ained
earn
ings
- una
ppro
priat
ed (N
ote 9
)-
--
--
(25,9
15,90
1)25
,915,9
01-
-Le
gal r
eserv
e (N
ote 2
3)-
--
--
12,90
0 ,000
(12,9
00,00
0)-
-De
creas
e in
mino
rity
intere
st-
--
--
--
(93,8
50,99
8)(9
3,850
,998)
Balanc
e - e
nd o
f yea
r 20
051,4
53,04
8,008
4,000
,000
1,428
,255,5
4911
9,324
,942
1,038
,152
62,66
2,577
546,9
61,70
537
4,827
,976
3,990
,118,9
09
The
acco
mpa
nying
notes
are a
n int
egral p
art o
f the
fina
ncial
stat
emen
ts.
Exploring the Horizons
43A n n u a l R e p o r t 2 0 0 5
(Unit
: Bah
t)TH
E CO
MPA
NY O
NLY
Surpl
us fr
omCh
ange
inUn
realis
edrev
aluati
on o
f lan
d,pe
rcenta
ge o
fga
in (lo
ss)
Issue
d an
d pa
id-up
Share
build
ing a
nd le
aseh
oldho
lding
inon
cha
nges
in th
eRe
taine
d ea
rning
s (de
ficit)
share
cap
ital
premi
umrig
hts o
f sub
sidiar
iessu
bsidi
aries
value
of i
nves
tmen
tsAp
propri
ated
Unap
propri
ated
Total
Balanc
e - b
eginning
of y
ear 20
041,4
53,04
8,008
4,000
,000
1,597
,797,1
1411
9,324
,942
685,2
2016
,530,0
0024
0,703
,476
3,432
,088,7
60Ch
ange
s in
the v
alue
of inv
estm
ents
--
--
(155
,444)
--
(155
,444)
Amor
tisati
on o
f sur
plus
from re
valua
tion
offix
ed a
ssets
of s
ubsid
iaries
(Note
15)
--
(83,8
36,09
0)-
--
-(8
3,836
,090)
Unrea
lised
tran
sacti
ons
in ea
rning
s sta
temen
t-
-(8
3,836
,090)
-(1
55,44
4)-
-(8
3,991
,534)
Net e
arning
s for
the
year
--
--
--
339,1
98,01
733
9,198
,017
Divid
end
paym
ent (
Note
26)
--
--
--
(157
,413,5
34)
(157
,413,5
34)
Lega
l res
erve
(Note
23)
--
--
-16
,960,0
00(1
6,960
,000)
-Ba
lanc
e - en
d of y
ear 20
041,4
53,04
8,008
4,000
,000
1,513
,961,0
2411
9,324
,942
529,7
7633
,490,0
0040
5,527
,959
3,529
,881,7
09Ch
ange
s in
the v
alue
of inv
estm
ents
--
--
508,3
76-
-50
8,376
Amor
tisati
on o
f sur
plus
from re
valua
tion
offix
ed a
ssets
of s
ubsid
iaries
(Note
15)
--
(85,7
05,47
5)-
--
-(8
5,705
,475)
Unrea
lised
tran
sacti
ons
in ea
rning
s sta
temen
t-
-(8
5,705
,475)
-50
8,376
--
(85,1
97,09
9)Ne
t earn
ings
for th
e ye
ar-
--
--
-25
7,789
,203
257,7
89,20
3Di
viden
d pa
ymen
t (No
te 26
)-
--
--
-(8
7,182
,880)
(87,1
82,88
0)Le
gal r
eserv
e (N
ote 2
3)-
--
--
12,90
0,000
(12,9
00,00
0)-
Balanc
e - en
d of y
ear 20
051,4
53,04
8,008
4,000
,000
1,428
,255,5
4911
9,324
,942
1,038
,152
46,39
0,000
563,2
34,28
23,6
15,29
0,933
The
acco
mpa
nying
notes
are a
n int
egral p
art o
f the
fina
ncial
stat
emen
ts.
Statem
ents
of C
hang
es in
Sha
reho
lder
sû Eq
uity
THE
ERAW
AN G
ROUP
PUB
LIC
COMPA
NY L
IMITED
AND
ITS
SUBS
IDIA
RIES
(FOR
MER
LY K
NOW
N AS
çAM
ARIN
PLA
ZA P
UBLIC
COMPA
NY L
IMITED
é)FO
R TH
E YE
AR E
NDED
31
DECE
MBE
R 20
05 A
ND 2
004
44 A n n u a l R e p o r t 2 0 0 5
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY
2005 2004 2005 2004
The accompanying notes are an integral part of the financial statements.
Cash flows provided from operating activities:Net earnings for the year 257,789,203 339,198,017 257,789,203 339,198,017Adjustments to reconcile net earnings to net cashprovided by (paid from) operating activities:
Minority interests in net earnings of subsidiaries 56,214,818 48,420,999 - -Share of profits from investments accounted forunder equity method - - (310,035,277) (355,044,857)
Loss on changes in value of investments 12,789,265 13,064,788 - -Loss (gain) on sales of fixed assets (11,618,303) 4,928,955 (11,450) (440,121)Allowance for doubtful accounts (reversal) (1,413,333) 2,619,382 54,770 232,481Provision for obsolete inventories (reversal) (1,178,363) 1,178,363 - -Provision for non-refundable withholding taxdeducted at source (reversal) 11,223,434 (1,750,464) 5,483,265 3,186,253
Depreciation and amortisation 346,259,562 277,600,543 11,032,194 6,434,484Amortisation of prepaid interest expenses 14,544,982 684,910 14,544,982 684,910Rental deposits and leasehold rights received from lesseesapplied as rental charge (11,743,831) (17,043,425) (15,030) (4,090,307)
Deferred income and advance received from customersapplied as income (20,811,800) (17,749,570) (98,550) (4)
Earnings (loss) from operating activities beforechanges in operating assets and liabilities 652,055,634 651,152,498 (21,255,893) (9,839,144)
Decrease (increase) in operating assetsTrade accounts receivable (15,421,411) (14,987,404) 3,932,024 (403,045)Trade accounts receivable - related parties (4,303,136) (1,705,328) - -Inventories (6,299,846) 6,237,857 - -Advances 494,434 14,697,681 - (1,040,000)Other receivable - subsidiary company - - - 31,388Other current assets (134,637,197) 19,693,548 63,174 3,360,423Other non-current assets (1,178,111) 29,667,612 1,244,086 (1,759,269)
Statements of Cash FlowsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)FOR THE YEAR ENDED 31 DECEMBER 2005 AND 2004
Exploring the Horizons
45A n n u a l R e p o r t 2 0 0 5
CONSOLIDATED THE COMPANY ONLY
2005 2004 2005 2004
Increase (decrease) in operating liabilitiesTrade accounts payable 6,507,976 33,513,614 (10,600,682) (947,891)Trade accounts payable - subsidiary companies - - (5,792,545) 6,823Management, royalty, marketing andother fees payable - hotel business 7,611,408 3,202,794 - -
Advances from customers and deferred income 14,957,909 2,529,259 - 94,683Income tax payable 25,925,033 (1,157,510) - -Other current liabilities 47,027,609 (27,637,339) 7,866,066 (2,067,026)Deposits from lessees 18,294,610 26,365,199 (4,053,681) 2,304,225Net cash provided from (used in) operating activities 611,034,912 741,572,481 (28,597,451) (10,258,833)
Cash flows provided from investing activities:Increase in current investment (45,016,291) - - -Decrease (increase) in short-term loans to a subsidiary company - - 15,902,234 (34,694,741)Increase in long-term loans to and interest receivablefrom subsidiaries - - (260,408,441) (253,390,444)
Increase in investments in subsidiary companies (166,047,730) (221,987,548) (550,553,633) -Cash received from the return of share capitalof a subsidiary company - - 743,999,702 -
Deposits received from sale of investment in subsidiary (Note 9) 21,611,459 - 21,611,459 -Increase in property, plant and equipment - net (690,736,484) (645,222,393) (12,441,305) (27,378,517)Increase in land awaiting development - (13,911,944) - -Increase (decrease) in accounts payable- construction and retention (60,758,462) 51,172,677 - 8,410,938
Increase in deposits with maturity of more than 3 monthsor with restrictions (17,152) (1,043) - -
Dividend received from subsidiary companies - - 699,491,284 207,833,234Net cash provided from (used in) investing activities (940,964,660) (829,950,251) 657,601,300 (99,219,530)
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Statements of Cash Flows (Continued)THE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)FOR THE YEAR ENDED 31 DECEMBER 2005 AND 2004
46 A n n u a l R e p o r t 2 0 0 5
CONSOLIDATED THE COMPANY ONLY
2005 2004 2005 2004
(Unit: Baht)
The accompanying notes are an integral part of the financial statements.
Cash flows provided from financing activities:Increase (decrease) in bank overdrafts and short-termloans from financial institutions (632,030,599) 264,745,691 (703,292,610) 443,762,718
Decrease in liabilities under finance lease agreementsand hire purchase payable (26,672,047) (9,514,184) (1,792,033) (1,503,613)
Increase in short-term loans from related party 130,339,959 - 130,339,959 -Decrease in long-term loans and other payable- subsidiary companies - - (806,247,636) (177,644,364)
Increase (decrease) in long-term loans 628,686,125 (113,692,096) 530,000,000 -Cash received from issuance of debentures 300,000,000 - 300,000,000 -Dividend payment (87,182,880) (157,413,534) (87,182,880) (157,413,534)Dividend paid to minority interest (133,350,381) (21,000,099) - - Net cash provided from (used in) financing activities 179,790,177 (36,874,222) (638,175,200) 107,201,207
Net decrease in cash and cash equivalents (150,139,571) (125,251,992) (9,171,351) (2,277,156)Cash and cash equivalents at beginning of year 239,458,571 364,710,563 10,127,446 12,404,602Cash and cash equivalents at end of year 89,319,000 239,458,571 956,095 10,127,446
Supplemental cash flows informationCash paid during the year for: -Interest expenses 139,019,006 126,009,613 34,238,193 65,231,136Corporate income tax 85,644,963 94,125,373 1,752,156 3,698,618
Non-cash transactions: -Decrease in surplus from revaluation of fixedassets in subsidiaries- the Companyûs interest 85,705,475 83,836,090 85,705,475 83,836,090
Decrease in surplus from revaluation of fixedassets in subsidiaries- minority interest 16,715,322 16,715,135 - -
Settlement of rental deposit received from lessees withaccounts receivable 3,323,559 2,937,758 210,242 1,375,170
Vehicles purchased under finance lease agreementsand hire purchase agreements 56,846,346 4,702,000 1,037,000 4,702,000
Statements of Cash Flows (Continued)THE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)FOR THE YEAR ENDED 31 DECEMBER 2005 AND 2004
Exploring the Horizons
47A n n u a l R e p o r t 2 0 0 5
1. GENERAL INFORMATION1.1 The Erawan Group Public Company Limited is a limited company incorporated under Thai law and operates in Thailand.
The Companyûs main business acts as a holding company, investing in several businesses, as described in Note 3 to thefinancial statements and is office building rental. The Company registered its change of status to a public company under thePublic Limited Companies Act on 1 June 1994.
The Companyûs registered head office is located at 2 Sukhumvit Road, Klong Toey, Klong Toey, Bangkok and branchon. 1 is located at 496-502 Ploenchit Road, Lumpini, Pathumwan, Bangkok.1.2 During the year, the Company and certain subsidiaries have registered with the Ministry of Commerce for the change oftheir name as follows: -
Date of registration withFormer name New name
the Ministry of Commerce
Amarin Plaza Public Company Limited The Erawan Group Public Company Limited 14 June 2005Amarin Development Limited Erawan Ratchaprasong Company Limited 30 June 2005Makasan Real Estate Company Limited Erawan Ploenchit Company Limited 14 June 2005Mahadlekluang Real Estate Company Limited Erawan Rajdamri Company Limited 30 June 2005Erawan Japanese Restaurant Company Limited Erawan Naka Company Limited 30 June 2005Rimnam Chaophaya Company Limited Erawan Chaophraya Company Limited 30 June 2005Nakaburi Company Limited Erawan Phuket Company Limited 30 June 2005Aman Zen Company Limited Erawan Samui Company Limited 1 September 2005
1.3 These financial statements were authorised for issue by the authorised directors of the Company on 23 February 2006.
2. GOING CONCERN ASSUMPTIONAs of 31 December 2005, certain subsidiaries have incurred losses from their operations and have significant deficits.
The management is considering measures to restructure the operations and believe that these will resolve the problems beingfaced. Nevertheless, there remain significant uncertainties which may give rise to doubt as to the ability of the subsidiaries tocontinue as a going concern and whether the realisation of assets and settlement of liabilities will occur in the ordinary course ofbusiness. However, the financial statements of the subsidiaries as included in the consolidated financial statements have beenprepared on the going-concern basis.
3. BASIS OF CONSOLIDATIONThe consolidated financial statements include the financial statements for the years ended 31 December 2005 and 2004
of The Erawan Group Public Company Limited (hereinafter called çthe Companyé) and the following subsidiaries which have alltheir operations in Thailand: -
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
48 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Percentage of shareholdingSubsidiary companies by the Company Principal activities
2005 2004% %
Erawan Hotel Public Company Limited 73.64 73.64 HotelErawan Ratchaprasong Company Limited 99.99 99.99 Office and retail building rentalErawan Ploenchit Company Limited 99.75 99.72 Hotel/Office and retail building rentalErawan Rajdamri Company Limited 99.99 99.99 Residential building rentalHatawan Company Limited 80.27 80.00 Land ownerPloenchit Real Estate Company Limited 99.99 99.99 HotelErawan Naka Company Limited
(99.99% held by Erawan RatchaprasongCo., Ltd.) - - Land owner
Erawan Chaophraya Company Limited(99.99% held by Erawan RajdamriCo., Ltd.) - - Real estate development
Erawan Phuket Company Limited(2005: 99.99% held by ErawanPloenchit Co., Ltd. (2004: 99.99%held by Ploenchit Real Estate Co., Ltd.)) - - Hotel
Erawan Samui Company Limited 99.99 - Hotel
During the current year, the Company acquired an additional investment in ordinary shares and preference shares ofErawan Samui Company Limited. As a result of this transaction, the Company now holds a 99.99% equity interest in suchcompany.
The percentage of total assets and total revenues of the subsidiaries included in the consolidated financial statements areas follows: -
Subsidiaryûs total assets Subsidiaryûs total revenuesSubsidiary companies as a percentage to the as a percentage to the
consolidated total consolidated total2005 2004 2005 2004% % % %
Erawan Hotel Public Company Limited 33.40 37.14 41.84 41.32Erawan Ratchaprasong Company Limited 11.01 12.28 9.16 3.82Erawan Ploenchit Company Limited 39.65 11.63 22.91 8.20Erawan Rajdamri Company Limited 1.88 2.04 0.29 1.56Hatawan Company Limited 2.52 2.83 - -Ploenchit Real Estate Company Limited - 30.30 22.39 39.56Erawan Naka Company Limited 0.15 0.17 - -Erawan Chaophraya Company Limited 0.61 0.41 - -Erawan Phuket Company Limited 1.87 2.07 - -Erawan Samui Company Limited 8.08 - 1.86 -
Exploring the Horizons
49A n n u a l R e p o r t 2 0 0 5
Significant balances and intercompany transactions between the Company and its subsidiaries have been eliminated fromthe consolidated financial statements. Investments in subsidiaries in the financial statements of the Company only was eliminatedwith the subsidiariesû shareholdersû equity in preparing consolidated financial statements.
4. SIGNIFICANT ACCOUNTING POLICIESThe financial statements have been prepared in accordance with accounting standards enunciated under the Accounting
Profession Act B.E. 2547. The consolidated financial statements and financial statements of the Company only have been preparedon the basis of historical cost, with certain items, such as property, plant and equipment and leasehold rights, adjusted to reflecttheir reappraised value.
Significant accounting policies adopted by the Company and its subsidiaries are summarised below: -4.14.14.14.14.1 Revenue and expense recognitionRevenue and expense recognitionRevenue and expense recognitionRevenue and expense recognitionRevenue and expense recognition
a) Revenue from hotel and restaurant operationsRevenue from hotel and restaurant operations mainly comprises room sales, food and beverage sales and revenuesfrom auxiliary activities, and represents the invoiced value (excluding value added tax) of goods supplied and servicesrendered after deducting discounts and adding service charges.
b) Rental and services incomeRental and related services income from units in office buildings, residential buildings and shopping center arerecognised on an accrual basis.
c) Interest incomeInterest income is recognised on a time proportion basis, taking into account the effective rate of return on theprincipal, unless there is doubt as to collectibility.
d) Expenses are recognised on an accrual basise) Interest expenses are charged to earnings on an accrual basis. In case where interest charges have been included in
the face value of notes, the interest is deferred and charges to earnings evenly over the lives of the notes.4.24.24.24.24.2 Cash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalents
Cash and cash equivalents are cash on hand and deposits at financial institutions with an original maturity of threemonths or less since the deposit date and without restrictions.
4.34.34.34.34.3 Trade accounts receivable and allowance for doubtful accountsTrade accounts receivable and allowance for doubtful accountsTrade accounts receivable and allowance for doubtful accountsTrade accounts receivable and allowance for doubtful accountsTrade accounts receivable and allowance for doubtful accountsTrade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for on
the basis of collection experience and payment ability of the accounts receivable at the end of the year, taking intoaccount overdue balance of each debtor.
4.44.44.44.44.4 InventoriesInventoriesInventoriesInventoriesInventoriesInventories for the hotel business are valued at cost, using the average method for three subsidiaries.
Provision for obsolete stocks is made for damages and obsolete stock.4.54.54.54.54.5 Property, plant and equipment/leasehold rightsProperty, plant and equipment/leasehold rightsProperty, plant and equipment/leasehold rightsProperty, plant and equipment/leasehold rightsProperty, plant and equipment/leasehold rights
Property, plant and equipment and leasehold rights are stated at cost less accumulated depreciation and provision forloss on impairment of fixed assets.
All subsidiaries initially recorded land, buildings and leasehold rights at cost at the acquisition date. Land, buildingsand leasehold rights were however subsequently revalued by independent appraisers, to their fair values. Revaluations areto be made with sufficient regularity to ensure that their carrying amount does not differ materially from their fair valueat the balance sheet date.
50 A n n u a l R e p o r t 2 0 0 5
The differences arising from revaluation are dealt with in the financial statements of the subsidiaries as follows: -- When an assetûs carrying amount is increased as a result of the revaluation of the subsidiaries, the increase is
credited directly to equity under the heading of çSurplus from revaluation of land, buildings, and leasehold rightsé.The Companyûs proportional interest in the surplus from revaluation of the assets of the subsidiaries (based on theCompanyûs equity holding in the subsidiaries) is presented under the caption of çSurplus from revaluation of land,buildings and leasehold rights of subsidiariesé in shareholdersû equity in the balance sheet.
- When an assetûs carrying amount is decreased as a result of the revaluation of the subsidiaries, the decrease isrecognised as çProvision for loss on revaluation of fixed assetsé in the earnings statement. However, a revaluationdecrease is to be charged directly against the related çSurplus from revaluation of land, buildings and leaseholdrightsé to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of thosesame assets. Any excess amount is to be recognised as çProvision for loss on revaluation of fixed assetsé in theearnings statement.
4.64.64.64.64.6 Depreciation and amortisationDepreciation and amortisationDepreciation and amortisationDepreciation and amortisationDepreciation and amortisationDepreciation of plant, equipment and leasehold rights is calculated by reference to their costs or reappraised value on
a straight-line basis over the following estimated useful lives: -
Buildings and improvements 20 - 40 yearsHotel equipment 5 - 10 yearsFurniture fixture and equipment 5 - 10 yearsVehicles 5 yearsLeasehold rights to land and building thereon and to buildings for rent 20 - 30 yearsLeasehold rights to land, buildings and equipment 37 - 40 yearsCopyrights 5 - 10 years
No depreciation has been provided for land and work in progress.Depreciation on devalued assets is calculated on the straight-line method, based on the reappraised value of the fixed
asset and its remaining useful life. Depreciation is included in determining earnings.The amount of the surplus amortised is the difference between depreciation based on the revalued carrying amount
of the asset and depreciation based on the assetûs original cost. Amortisation is transferred to the earnings statement.The cost of linen, crockery, glass, silver and kitchen utensils purchased to meet the normal requirements of the hotel
operations have been regarded as a base stock and subsequent purchases are expended when incurred.Deferred income has been amortised over the lease terms, which are 20-30 years.
4.74.74.74.74.7 InvestmentsInvestmentsInvestmentsInvestmentsInvestmentsInvestments in subsidiary companies (in the financial statements of the Company only) and associated companies are
stated under the equity method of accounting. Under this method, the investment is recorded at cost. For eachsubsequent year the investment is adjusted to incorporate the Companyûs proportionate share of the operating results inthe subsidiary and associated companies.
Investments in securities held for trading are determined at fair value. Gains or losses arising from change in thevalue of securities are included in determining earnings. The fair value of units trust is determined from their net asset value.
Long-term investments in marketable equity securities, which the Company intends to hold as investments available-for-sale, are determined at fair value. Fair value is based on the latest bid price of the last working day of year quotedby the Stock Exchange of Thailand, or the net asset value of the unit trust at the balance sheet date. The Company andsubsidiaries recognise changes in value of investments as a separate item under shareholdersû equity in the balance sheetuntil the securities are sold, when the change is included in determining earnings.
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
51A n n u a l R e p o r t 2 0 0 5
Long-term investments in non-marketable securities which its subsidiary hold as other investments are valued at cost.Loss on impairment (if any) of available-for-sale investment and other investments is recognised in the earnings statement.The weighted average method is used for computation of the cost of investments.
4.84.84.84.84.8 Goodwill and negative goodwillGoodwill and negative goodwillGoodwill and negative goodwillGoodwill and negative goodwillGoodwill and negative goodwillGoodwill which was incurred from the additional investments in subsidiaries being made at costs higher than the
subsidiariesû net book value.Negative goodwill which was incurred from the additional investments in subsidiaries being made at costs lower than
the subsidiariesû net book value.Goodwill and negative goodwill are amortised on a straight-line basis over 10 years.
4.94.94.94.94.9 Finance leaseFinance leaseFinance leaseFinance leaseFinance leaseThe Company and subsidiaries recorded transportation equipment under finance leases as assets and liabilities in the
balance sheets at amounts equal at the inception of the lease to the fair value of the leased property or, if lower, at thepresent value of the minimum lease payments. In calculating the present value of the minimum lease payments, thediscount factor used is the interest rate implicit in the lease. The interest charge is recorded to periods during the leaseterm on the remaining balance of the liability for each period.
4.10 Capitalisation of interest costs4.10 Capitalisation of interest costs4.10 Capitalisation of interest costs4.10 Capitalisation of interest costs4.10 Capitalisation of interest costsInterest costs on borrowings for use in projects construction are capitalised as part of the cost of the relevant assets.
Capitalisation will cease when projects are completed or when construction is suspended, until active development resumes.4.11 Foreign currencies4.11 Foreign currencies4.11 Foreign currencies4.11 Foreign currencies4.11 Foreign currencies
Foreign currency transactions during the year are translated into Baht at the rates of exchange ruling on thetransaction dates. Assets and liabilities in foreign currency outstanding on the balance sheet date are translated into Bahtat the rates ruling on the balance sheet date.
Exchange gains and losses are included in determining earnings.4.12 Employee benefits4.12 Employee benefits4.12 Employee benefits4.12 Employee benefits4.12 Employee benefits
The Company and its subsidiaries and their employees have jointly established a provident fund as approved by theMinistry of Finance in accordance with the Provident Fund Act (B.E. 2530). The fund is contributed to by both employeesand the Company and its subsidiaries at rates of between 3 - 10% of the employeesû salaries, depending on length ofservice, and will be paid to employees upon termination in accordance with the rules of the fund. The fund is managedby Finansa Asset Management Limited (formerly known as çKrungdhep Thanathon Asset Management Company Limitedé).
4.13 Financial instruments4.13 Financial instruments4.13 Financial instruments4.13 Financial instruments4.13 Financial instrumentsThe Company and its subsidiaries have no policy to speculate in or engage in the trading of any financial derivative
instruments.Financial instruments carried in the balance sheet include cash and cash equivalents, current investment, trade
accounts receivable, bank overdrafts, loans from financial institutions, and trade accounts payable. The particularrecognition methods adopted are disclosed in the individual policy statements associated with each item.
4.14 Earnings per share4.14 Earnings per share4.14 Earnings per share4.14 Earnings per share4.14 Earnings per shareThe basic earnings per share is calculated by dividing the net earnings for the year by the weighted average number
of ordinary shares held by outside parties in issue during the year.4.15 Use of accounting estimates4.15 Use of accounting estimates4.15 Use of accounting estimates4.15 Use of accounting estimates4.15 Use of accounting estimates
Preparation of financial statements in conformity with generally accepted accounting principles requires managementto make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notesrelated thereto. Subsequent actual results may differ from these estimates.
52 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
5. CURRENT INVESTMENT(Unit: Baht)
CONSOLIDATED2005 2004
Cost Fair value Cost Fair value
Current investmentTrading security - Unit trust 45,016,291 45,016,291 - -Unrealised gain on changes in
the value of investment - - - -45,016,291 45,016,291 - -
6. TRADE ACCOUNTS RECEIVABLEThe aging of the outstanding balance of accounts receivable as at 31 December 2005 and 2004 are as follows: -
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Less than 3 months 107,583,470 84,169,243 314,189 3,046,8803 - 6 months 4,190,470 1,149,697 - 17,8316 - 12 months 978,849 4,243,257 55,183 1,427,585More than 12 months 7,110,547 7,337,789 419,571 438,913Total accounts receivable 119,863,336 96,899,986 788,943 4,931,209Less: allowance for doubtful accounts (4,957,162) (6,370,495) (440,417) (385,647)Trade accounts receivable - net 114,906,174 90,529,491 348,526 4,545,562
The trade accounts receivable classified by types of business are as follows: -(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Accounts receivable - Hotel 92,105,040 70,762,824 - -Accounts receivable - Rental 27,758,296 26,134,182 788,943 4,931,209Accounts receivable from sales - 2,980 - -Total accounts receivable 119,863,336 96,899,986 788,943 4,931,209Less: allowance for doubtful accounts (4,957,162) (6s,370,495) (440,417) (385,647)Trade accounts receivable - net 114,906,174 90,529,491 348,526 4,545,562
Exploring the Horizons
53A n n u a l R e p o r t 2 0 0 5
7. RELATED PARTY TRANSACTIONSDuring the years, the Company had significant business transactions with its subsidiary, associated and related companies
(related by way of common shareholders, directors and/or management). Such transactions, which have been concluded on theterms and bases determined by the Company and those companies, are summarised below: -
(Unit: Million Baht)
CONSOLIDATED Pricing policy2005 2004
Transactions with related companies: -Rental and service income 41 44 Baht 326-350 per square meter
per month depending on locationUtilities income 8 8 Cost methodLand rental 11 11 Baht 11 million per annumInsurance expenses 7 7 Fair price under the
best conditions
(Unit: Million Baht)
THE COMPANY ONLY Pricing policy2005 2004
Transactions with subsidiary companies: -Interest income 58 41 At the rates of 3.70 - 5.15%,
MLR, MLR + 0.5% per annum(2004: at the rates of 4.25%,MLR, MLR + 0.5% per annum)
Dividend income 699 208 Baht 6.35 per share, Baht 6.40per share, and Baht 15.75per share (2004: Baht 1 pershare and Baht 10 per share)
Rental and service expenses 10 8 Baht 250 per square meterper month
Utilities expenses 5 36 Cost methodInterest expenses 15 54 At the rates of 3.76 - 4.66%,
MLR per annumTransactions with related parties: -Rental and service income - 22 Baht 235 per square meter
per monthInterest expenses 2 - At the rates of 3.76 - 4.15%
per annum
54 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
The outstanding balances of the above transactions have been separately shown in the balance sheets as follows: -
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Trade accounts receivable - related parties: -Kiatnakin Bank Plc. 2,449,163 - - -Minor Corporation Plc. 120,975 - - -MP Particle Board Co., Ltd. 799,035 - - -Armin Systems Ltd. 131,476 - - -Mitr Phol Sugar Co., Ltd. 537,561 114,465 - -Chai Talay Hotel Co., Ltd. 385,075 677,395 - -Other companies 698,304 26,593 - -
5,121,589 818,453 - -Prepaid expenses › related parties: -Erawan Ratchaprasong Co., Ltd. - - 925,810 925,810The Syndicate of Thai Hotels & Tourists Enterprises Ltd. 5,415,123 5,415,123 - -IAG Insurance (Thailand) Ltd. 6,094,537 - - -
11,509,660 5,415,123 925,810 925,810
(Unit: Baht)
THE COMPANY ONLY2005 2004 Interest policy
Short-term loans to a subsidiary company: -Erawan Hotel Plc. 18,792,507 34,694,741 At the rates of 4.00 - 4.80%
per annum (2004: At the rateof 4.25% per annum)
Long-term loans to and interest receivable from subsidiaries: -Erawan Ratchaprasong Co., Ltd. 737,414,904 670,168,686 At the rates of 4.15 - 5.15%
per annum (2004: at the rateof MLR per annum)
Erawan Ploenchit Co., Ltd. 254,551,029 179,162,379 At the rates of 4.00 - 4.64%per annum (2004: at the rateof MLR per annum)
Hatawan Co., Ltd. - 3,458,377 At the rates of 4.10 - 4.64%per annum (2004: at the ratesof MLR, MLR + 0.5%per annum)
Erawan Rajdamri Co., Ltd. 42,058,156 120,512,828 At the rates of 4.15 - 5.15%per annum (2004: at the rateof MLR per annum)
Erawan Samui Co., Ltd. 199,686,622 - At the rates of 3.70 - 4.87%per annum
1,233,710,711 973,302,270
Exploring the Horizons
55A n n u a l R e p o r t 2 0 0 5
During the year, the movement transactions of short-term/long-term loans to and interest receivable from subsidiaries asfollows: -
(Unit: Baht)
THE COMPANY ONLY2004 Increase Decrease 2005
Erawan Hotel Plc. 34,694,741 225,677,862 (241,580,096) 18,792,507Erawan Ratchaprasong Co., Ltd. 670,168,686 139,442,064 (72,195,846) 737,414,904Erawan Ploenchit Co., Ltd. 179,162,379 443,802,751 (368,414,101) 254,551,029Hatawan Co., Ltd. 3,458,377 199,440 (3,657,817) -Erawan Rajdamri Co., Ltd. 120,512,828 57,091,562 (135,546,234) 42,058,156Erawan Samui Co., Ltd. - 229,038,003 (29,351,381) 199,686,622
973,302,270 896,573,820 (609,165,379) 1,233,710,711
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Trade accounts payable -subsidiary companies: -
Erawan Ratchaprasong Co., Ltd. - - 432,693 6,163,984Erawan Ploenchit Co., Ltd. - - 55,215 37,388Erawan Hotel Plc. - - 14,050 -Ploenchit Real Estate Co., Ltd. - - - 93,131
- - 501,958 6,294,503Other payable - subsidiary companies: -Erawan Ratchaprasong Co., Ltd. - - 3,028,194 873,562Ploenchit Real Estate Co., Ltd. - - - 11,146
- - 3,028,194 884,708
56 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
(Unit: Baht)
CONSOLIDATED AND THE COMPANY ONLY2005 2004 Interest policy
Short-term loans from related party: -Related person 130,339,959 - At the rate of 4.15%
per annum
(Unit: Baht)
THE COMPANY ONLY2005 2004 Interest policy
Long-term loans from a subsidiary company: -Ploenchit Real Estate Co., Ltd. - 808,391,123 At the rate of MLR per annum
During the year, the movement transactions of short-term loans from related party, short-term loans and long-term loansfrom a subsidiary are as follows: -
(Unit: Baht)
CONSOLIDATED AND THE COMPANY ONLY2004 Increase Decrease 2005
Short-term loans from related party - 161,766,759 (31,426,800) 130,339,959
(Unit: Baht)
THE COMPANY ONLY2004 Increase Decrease 2005
Short-term loans from a subsidiary company: -Erawan Hotel Plc. - 155,457,036 (155,457,036) -Long-term loans from a subsidiary company: -Ploenchit Real Estate Co., Ltd. 808,391,123 474,784,760 (1,283,175,883) -
Exploring the Horizons
57A n n u a l R e p o r t 2 0 0 5
8. INVENTORIES(Unit: Baht)
CONSOLIDATED2005 2004
Inventories: -- Hotel business 49,888,841 34,055,297Less: Allowance for slow-moving and obsolete inventories - (1,178,363)
49,888,841 32,876,934
9. INVESTMENTS IN SUBSIDIARY COMPANIES(Unit: Baht)
THE COMPANY ONLYAs at 31 December 2005
Nature of Type of Paid up Percentage
business relation capital owned by Investment
Companyûs name the Cost method Net equity method DividendCompany
ProvisionNet for loss on
Percent Cost investment investment
Subsidiary companies Held byThe Erawan Group Public Company LimitedErawan Ploenchit Co., Ltd. Hotel/Office Common
(included equity in Building shareholdersErawan Phuket Co., Ltd.) Rental and common
directors 2,011,688,310 99.75 1,798,461,117 293,355,505 - -Erawan Hotel Plc. Hotel Common
shareholdersand commondirectors 119,500,000 73.64 819,709,948 1,891,230,375 - 372,533,088
Hatawan Co., Ltd. Land owner Commonshareholdersand commondirectors 40,560,000 80.27 199,488,000 193,249,318 - -
Erawan Rajdamri Co., Ltd. Residential Common(included equity in Erawan Building shareholdersChaophraya Co., Ltd.) Rental and common
directors 160,000,000 99.99 161,291,348 215,671,245 - -Erawan Ratchaprasong Co., Ltd. Office Building Common
(included equity in Rental shareholdersErawan Naka Co., Ltd.) and common
directors 500,000,000 99.99 499,998,400 594,602,341 - -Ploenchit Real Estate Co., Ltd. Hotel Common
shareholdersand commondirectors 690,000,000 99.99 1,168,499,533 98,335 - 332,249,867
Erawan Samui Co., Ltd. Hotel Commonshareholdersand commondirectors 120,000,000 99.99 166,857,633 131,241,820 - -
4,814,305,979 3,319,448,939 - 704,782,955
58 A n n u a l R e p o r t 2 0 0 5
THE COMPANY ONLYAs at 31 December 2004
Nature of Type of Paid up Percentage
business relation capital owned by Investment
Companyûs name the Cost method Net equity method DividendCompany
ProvisionNet for loss on
Percent Cost investment investmentSubsidiary companies Held byThe Erawan Group Public Company Limited
Erawan Ploenchit Co., Ltd. Office Building CommonRental shareholders
and commondirectors 1,761,688,310 99.72 1,548,461,117 - (124,446,933) -
Erawan Hotel Plc. Hotel Commonshareholdersand commondirectors 119,500,000 73.64 819,709,948 2,144,170,096 - 58,666,628
Hatawan Co., Ltd. Land owner Commonshareholdersand commondirectors 40,000,000 80.00 195,792,000 189,761,855 - -
Erawan Rajdamri Co., Ltd. Residential Common(included equity in Erawan Building shareholdersChaophraya Co., Ltd.) Rental and common
directors 30,000,000 99.99 31,291,348 105,073,381 - -Erawan Ratchaprasong Co., Ltd. Office Common
(included equity Building shareholdersin Erawan Naka Co., Ltd.) Rental and common
directors 500,000,000 99.99 499,998,400 641,471,568 - -Ploenchit Real Estate Co., Ltd. Hotel Common
(included equity in Erawan Phuket shareholdersCo., Ltd.) and common
directors 690,000,000 99.99 1,912,499,235 1,031,815,668 - 149,999,9405,007,752,048 4,112,292,568 (124,446,933) 208,666,568
On 23 March 2004, the Annual General Meeting No. 1/2547 of the shareholders of Erawan Hotel Plc. approved thepayment of a dividend of Baht 1 per share to the shareholders of 79,666,667 ordinary shares, or a total of Baht 79.7 million, inrespect of the 2003 earnings. The dividend was paid on 30 March 2004.
On 23 March 2004, the Annual General Meeting No. 1/2547 of the shareholders of Ploenchit Real Estate Co., Ltd.approved the payment of a dividend of Baht 10 per share to the shareholders of 15,000,000 ordinary shares, or a total of Baht150 million, in respect of the 2003 earnings. The dividend was paid on 22 April 2004.
On 5 October 2004, Ploenchit Real Estate Co., Ltd. entered into an agreement to purchase 99,994 ordinary shares inErawan Phuket Co., Ltd. at a price of Baht 1,320.01 per share, or a total of Baht 132 million. In addition, under the terms of theagreement, the above company agreed to increase its share capital from Baht 100 million to Baht 190 million and granted thesubsidiary the right to purchase all additional shares. The subsidiary paid up the shares and the additionally issued shares on 6October 2004 and as a result of these transactions, the Company has an indirect equity interest of 99.99%.
On 7 March 2005, the Annual General Meeting No. 1/2548 of the shareholders of Ploenchit Real Estate Co., Ltd.approved the payment of a dividend of Baht 15.75 per share to the shareholders of 15,000,000 ordinary shares, or a total of Baht236.25 million, in respect of the 2004 earnings. The dividend was paid on 9 March 2005. In addition, on 1 June 2005, MeetingNo. 2/2548 of the Board of Directors of the subsidiary approved the payment of an interim dividend of Baht 6.40 per share tothe shareholders of 15,000,000 ordinary shares, or a total of Baht 96 million, in respect of the January to May 2005 earnings.The dividend was paid on 24 June 2005.
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
59A n n u a l R e p o r t 2 0 0 5
On 24 March 2005, the Annual General Meeting No. 1/2548 of the shareholders of Erawan Hotel Plc. approved thepayment of a dividend of Baht 6.35 per share to the shareholders of 79,666,667 ordinary shares, or a total of Baht 505.88 million,in respect of the 2004 earnings and the subsidiaryûs unappropriated retained earnings. The dividend was paid on 20 April 2005.
On 15 June 2005, the Company entered into an agreement to purchase 11,999,994 shares (comprising 7,319,994ordinary shares and 4,680,000 preference shares) in Erawan Samui Co., Ltd., which operates the hotel business namedRenaissance Koh Samui Resort & Spa (formerly known as çBuriraya Resort and Spa Samuié), for a total of Baht 166.86 million.The Company made partial payment of the shares of Baht 163.78 million on 4 July 2005 and Baht 3.08 million on 8 September2005. As a result of this transaction, the Companyûs interest in the equity of the above company is 99.99%.
On 12 July 2005, the Extraordinary General Meeting No. 1/2548 of the shareholders of Ploenchit Real Estate Co., Ltd.approved the disposal and transfer of all of its business as at 31 July 2005 to Erawan Ploenchit Co., Ltd. On 1 August 2005, thesubsidiary transferred all assets, employees and liabilities held on 31 July 2005 and ceased all of its operations. It subsequentlyregistered its dissolution on 5 September 2005. In addition, on 1 August 2005 Meeting No. 4/2548 of the Board of Directors ofthe subsidiary approved the return of share capital to the shareholders prior to liquidation at the rate of Baht 49.25 per share, atotal of Baht 738.75 million, and such amount was paid on same date. The Company therefore transferred çRetained earnings -legal reserveé of such subsidiary to çRetained earnings - unappropriatedé in the consolidated financial statements, since there areno longer restrictions on the utilisation of such earnings. Moreover, on 31 October 2005 the subsidiary additional paid the returnof share capital at the rate of Baht 0.35 per share, a total of Baht 5.25 million.
A resolution of the Extraordinary General Meeting No. 4/2548 of the shareholders of Erawan Ploenchit Co., Ltd. held on26 July 2005, authorised a plan to increase that subsidiaryûs share capital from Baht 1,761.69 million to Baht 2,011.69 millionthrough the issue of 25 million additional ordinary shares, with a par value of Baht 10 each. The Company purchased all Baht 250million of these additional shares, resulting in an increase in the Companyûs shareholding in that company from 99.72% to99.75%.
On 1 September 2005, a resolution of the Extraordinary General Meeting of the shareholders of Erawan Rajdamri Co., Ltd.authorised a plan to increase that subsidiaryûs share capital from Baht 30 million to Baht 160 million through the issue of 1.30million additional ordinary shares, with a par value of Baht 100 each. The Company purchased all of the additional shares, tomaintain its existing shareholding.
On 11 October 2005, a resolution of the Extraordinary General Meeting of the shareholders of Hatawan Co., Ltd.authorised a plan to increase that subsidiaryûs share capital from Baht 40.00 million to Baht 40.56 million through the issue of5,600 additional ordinary shares, with a par value of Baht 100 each, at a price of Baht 660 per share. The Company purchasedall of the additional shares, resulting in an increase in the Companyûs shareholding in that company from 80.00% to 80.27%.
On 22 November 2005, the Company entered into an agreement to sell 325,593 ordinary shares of Hatawan Co., Ltd.at a price of Baht 663.7 per share, or a total of Baht 216.1 million. Under the terms of the agreement, the Company will transferthe ownership of these shares to the purchaser on the date of receipt of the final installment, which is 27 January 2006. As at31 December 2005, the Company has received the first installment of the share payment, amounting to Baht 21.6 million, andpresents this under çDeposits received from sale of investment in subsidiaryé in the balance sheet. On 27 January 2006, theCompany received the remaining payment for the shares and transferred ownership of the shares to the purchaser.
60 A n n u a l R e p o r t 2 0 0 5
10.INVESTMENTS IN ASSOCIATED COMPANIES(Unit: Baht)
CONSOLIDATEDNature of Type of Paid up Percentage
Companyûs name business relation capital owned Investment
Million by the Company Cost method Equity methodBaht 2005 2004 2005 2004 2005 2004
Percent Percent
Held by Erawan Ratchaprasong Co., Ltd.Tourianse Overseas(Thailand) Ltd. Restaurant Common
shareholders 5.0 25.00 25.00 - - - -
Rajprasong CommonDevelopment shareholdersCo., Ltd. Service and common
directors 1.0 48.00 48.00 480,000 480,000 338,271 338,271
480,000 480,000 338,271 338,271
11.INVESTMENTS IN RELATED COMPANY(Unit: Baht)
EQUITY INTEREST CONSOLIDATED2005 2004 2005 2004
Percent PercentRelated companyThe Asia Recovery 2 Fund 0.2 0.2 3,570,241 3,570,241Add: allowance for change in value 1,131,766 529,982Total investments in related company 4,702,007 4,100,223
(Unit: Baht)
EQUITY INTEREST THE COMPANY ONLY2005 2004 2005 2004
Percent Percent
Related companyThe Asia Recovery 2 Fund 0.1 0.1 1,983,467 1,983,467Add: allowance for change in value 628,759 331,239Total investments in related company 2,612,226 2,314,706
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
61A n n u a l R e p o r t 2 0 0 5
12. P
ROPE
RTY, P
LANT
AND
EQU
IPMEN
T(U
nit: B
aht)
CONS
OLID
ATED
Asse
ts wh
ich c
arrie
d at
reap
prais
ed v
alue
Asse
ts wh
ich c
arrie
d at
cost
Leas
ehold
Build
ingLe
ase
hold
Land
and
Leas
e ho
ldBu
ilding
and
Leas
e ho
ldEq
uipmen
t,rig
hts
and
build
ingrig
hts
oflan
drig
hts
build
ingrig
hts
offurn
iture a
ndof la
ndim
prov
emen
tsbu
ilding
sim
prov
emen
tof la
ndim
prov
emen
tsfix
ture
Othe
rsTo
tal
Cost /
Reap
praise
d va
lue:-
31 D
ecem
ber 2
004
1,387
,265,3
978,6
72,57
7,119
323,8
35,49
216
1,671
,126
13,73
7,000
-39
,744,3
75 1
,426,1
43,70
612
,145,0
2412
0,111
,085,2
39Pu
rchas
es22
,718,3
5339
,054,6
53-
26,69
9,014
-6,4
80,82
7 -
262
,775,8
8941
7,770
,437
775
,499,1
73Ad
dition
from
purc
hase
--
-94
,640,7
922,8
60,84
4 4
58,94
7,643
- 6
3,986
,377
698,7
37 6
21,13
4,393
of a
subs
idiary
Trans
fer in
(out)
-68
,869,5
56-
--
--
5,032
,427
(73,8
84,58
3)17
,400
Dispo
sals
-(2
,675,1
39)
--
- (6
,267,8
02)
- (2
9,043
,314)
(45,4
37,95
9) (8
3,424
,214)
Adjus
tmen
t-
(6,95
0,993
)-
--
--
--
(6,95
0,993
)31
Dec
embe
r 200
51,4
09,98
3,750
8,770
,875,1
96 3
23,83
5,492
283,0
10,93
216
,597,8
44 4
59,16
0,668
39,74
4,375
1,728
,895,0
8541
9,257
,656
13,45
1 ,360
,998
Accu
mula
ted d
eprecia
tion:
-31
Dec
embe
r 200
443
1,568
,633
3,173
,349,0
6419
1,013
,543
--
-22
,859,0
1276
2,173
,020
30,39
3,932
4,611
,357,2
04De
precia
tion
for th
e ye
ar26
,131,3
6618
3,200
,364
4,543
,135
-81
,184
11,56
8,256
1,703
,923
103
,507,0
0412
,208,8
68 3
42,94
4,100
Depre
ciatio
n for
reva
luatio
n12
,625,2
9792
,811,9
126,0
81,12
7-
--
--
-11
1,518
,336
Accu
mulat
ed d
eprec
iation
--
--
--
21,42
4,538
- 1
8,801
,602
254,2
2540
,480,3
65ad
dition
from
purc
hase
of a
subs
idiary
Accu
mulat
ed d
eprec
iation
-(7
,029)
--
-(2
,700)
-56
5,462
-55
5,733
for a
djustm
ent
Depre
ciatio
n for
disp
osals
-(2
,250,9
33)
--
--
-(2
8,057
,996)
(34,7
20,94
8)(6
5,029
,877)
31 D
ecem
ber 2
005
470,3
25,29
63,4
47,10
3,378
201
,637,8
05-
81,18
4 3
2,990
,094
24,56
2,935
856
,989,0
928,1
36,07
7 5
,041,8
25,86
1Im
pairm
ent l
oss:
-31
Dec
embe
r 200
4-
--
--
--
500,0
00-
500,0
00De
creas
e du
ring
the y
ear
--
--
--
-(5
00,00
0)-
(500
,000)
31 D
ecem
ber 2
005
--
--
--
--
--
62 A n n u a l R e p o r t 2 0 0 5
12.
PROP
ERTY
, PLA
NT A
ND E
QUIP
MEN
T (C
ontin
ued)
(Unit
: Bah
t)
CONS
OLID
ATED
Asse
ts wh
ich c
arrie
d at
reap
prais
ed v
alue
Asse
ts wh
ich c
arrie
d at
cost
Leas
ehold
Build
ingLe
ase
hold
Land
and
Leas
e ho
ldBu
ilding
and
Leas
e ho
ldEq
uipmen
t,rig
hts
and
build
ingrig
hts
oflan
drig
hts
build
ingrig
hts
offurn
iture a
ndof la
ndim
prov
emen
tsbu
ilding
sim
prov
emen
tof la
ndim
prov
emen
tsfix
ture
Othe
rsTo
talNe
t boo
k va
lue: -
31 D
ecem
ber 2
005
939,65
8,45
45,32
3,77
1,81
812
2,19
7,68
728
3,01
0,93
2 1
6,51
6,66
0 4
26,170
,574
15,181
,440
871
,905
,993
411,12
1,57
98,40
9,53
5 ,13
7Eli
mina
ted79
,189
,972
8,48
8,72
5,10
931
Dec
embe
r 200
47,53
3,22
8,03
5Eli
mina
ted(3
2,18
1,69
7)7,50
1,04
6,33
8De
prec
iatio
n ch
arge
includ
ed in
earning
sstatem
ent f
or th
e ye
ar: -
2005
342,94
4,10
0Eli
mina
ted(1
,740
,043
)34
1,20
4,05
720
0427
8,23
1,02
1Eli
mina
ted(3
,491
,975
)27
4,73
9,04
6Ne
t boo
k va
lue
(prese
nted
at c
ost):
-31
Dec
embe
r 200
571
8,99
8,57
33,39
0,79
8,53
852
,264
,730
31 D
ecem
ber 2
004
722,41
1,58
53,47
7,31
3,03
956
,807
,866
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
63A n n u a l R e p o r t 2 0 0 5
(Unit: Baht)
THE COMPANY ONLYBuilding and Leasehold Equipment,
building right of furnitureimprovements building and fixture Others Total
Cost: -31 December 2004 12,184,427 39,744,375 19,474,526 16,541,518 87,944,846Purchases - - 3,533,881 9,128,000 12,661,881Disposals - - (146,432) - (146,432)31 December 2005 12,184,427 39,744,375 22,861,975 25,669,518 100,460,295
Accumulated depreciation: -31 December 2004 1,514,775 22,859,012 10,017,021 1,718,881 36,109,689Depreciation for the year 2,285,043 1,703,923 3,300,065 2,067,240 9,356,271Depreciation for disposals - - (144,798) - (144,798)31 December 2005 3,799,818 24,562,935 13,172,288 3,786,121 45,321,162
Net book value: -31 December 2005 8,384,609 15,181,440 9,689,687 21,883,397 55,139,13331 December 2004 10,669,652 16,885,363 9,457,505 14,822,637 51,835,157
Depreciation charge included inearnings statement for the year: -
2005 9,356,2712004 5,344,320
As at 31 December 2005, certain plant and equipment items of the Company and its subsidiaries have been fullydepreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounted to Baht698.3 million (the Company only: Baht 6.9 million) (2004: Baht 533.4 million (the Company only: Baht 6.2 million)).
A part of çFixed assets - othersé consists of motor vehicles of the Company and three subsidiaries of which are underhire purchase and finance lease agreements. Their net book value as at 31 December 2005 is Baht 60.2 million (the Companyonly: Baht 6.4 million) (2004: Baht 25.5 million (the Company only: Baht 6.8 million)).
In 2004, other subsidiaries hired independent appraisers to reappraise the value of their leasehold rights to land, hotelbuildings and an office building, using the discounted cash flow approach applying discounts of 12 - 15% per annum, and theresidual approach. The appraised value of these assets based on the reports of independent appraisers was approximately Baht2,912 million higher than their net book value as at 31 December 2004. However, the subsidiariesû management decided not torecognise the additional revaluation surplus in their accounts. The Company therefore did not record its proportional interest inthe surplus from this revaluation (based on the Companyûs equity holdings in the subsidiaries) in its own accounts, as theybelieved the appraisals do not properly reflect the value of the assets.
The subsidiaries have mortgaged most of their leasehold land and the construction thereon, which have a net book valueof Baht 5,589 million, with banks to secure the loans and pledged certain of their machinery and equipment, which have a netbook value of Baht 27 million, and transferred the related beneficiary rights under insurance policies to the bank to secure theloans. In addition, a subsidiary has assigned its leasehold rights to land and building thereon to a local bank to secure long-termloans. The beneficiary rights under the insurance policies for the leased building are also assigned to the lessor.
64 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
13. LAND AWAITING DEVELOPMENT(Unit: Baht)
CONSOLIDATED
Reappraised value: -31 December 2004 254,511,94431 December 2005 254,511,944
Net book value (presented at cost): -31 December 2005 53,935,57531 December 2004 53,935,575
In 2004, a subsidiary hired independent appraiser to reappraise the value of its land, using the residual approach. Theappraised value of the asset based on the report of independent appraiser was approximately Baht 33 million higher than its netbook value as at 31 December 2004. However, the subsidiaryûs management decided not to recognise the additional revaluationsurplus in its accounts. The Company therefore did not record its proportional interest in the surplus from this revaluation (basedon the Companyûs equity holdings in the subsidiary) in its own accounts, as they believed the appraisal does not properly reflectthe value of the asset.
A subsidiary mortgaged land with a net book value of Baht 240.6 million with a bank to secure loans of the Company.However, on 25 January 2006 the subsidiary withdrew the collateral.
14. INTANGIBLE ASSETS(Unit: Baht)
CONSOLIDATEDNegative
Copyright Goodwill goodwill Total
Cost: -31 December 2004 36,014,693 108,748,989 (98,317,407) 46,446,275Purchases 5,301,032 - - 5,301,032Transfer in (17,400) - - (17,400)31 December 2005 41,298,325 108,748,989 (98,317,407) 51,729,907
Accumulated amortisation: -31 December 2004 15,660,477 18,894,007 (37,158,404) (2,603,920)Amortisation for the year 4,141,539 10,745,707 (9,831,741) 5,055,50531 December 2005 19,802,016 29,639,714 (46,990,145) 2,451,585
Net book value: -31 December 2005 21,496,309 79,109,275 (51,327,262) 49,278,32231 December 2004 20,354,216 89,854,982 (61,159,003) 49,050,195
Amortisation charge included in earnings statement for the year: -2005 5,055,5052004 2,861,497
Exploring the Horizons
65A n n u a l R e p o r t 2 0 0 5
(Unit: Baht)
THE COMPANYONLY
Copyright
Cost: -31 December 2004 13,027,207Purchases 829,50931 December 2005 13,856,716
Accumulated amortisation: -31 December 2004 5,769,517Amortisation for the year 1,675,92331 December 2005 7,445,440
Net book value: -31 December 2005 6,411,27631 December 2004 7,257,690
Amortisation charge included in earnings statement for the year: -2005 1,675,9232004 1,090,164
15. SURPLUS FROM REVALUATION OF LAND, BUILDINGS AND LEASEHOLD RIGHTS OF SUBSIDIARIES
(Unit: Baht)2005 2004
Balance - beginning of year 1,513,961,024 1,597,797,114Amortisation (based on the proportion of the subsidiariesû equity
held by the Company) (85,705,475) (83,836,090)Balance - end of year 1,428,255,549 1,513,961,024
The revaluation surplus can neither be offset against retained deficit nor used for dividend payment.
66 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
16. WITHHOLDING TAX DEDUCTED AT SOURCEAs at 31 December 2005 and 2004, the Company and its subsidiaries have the following amounts of withholding tax
deducted at source in each year: -(Unit: Million Baht)
CONSOLIDATED THE COMPANY ONLYYear 2005 2004 2005 2004
2002 - 9.30 - 5.482003 18.00 24.20 3.85 3.852004 6.35 13.74 3.61 3.612005 16.74 - 1.75 -
41.09 47.24 9.21 12.94Less: Refundable within one year - (6.20) - -Net 41.09 41.04 9.21 12.94
The Company and its subsidiaries regard withholding tax deducted at source as an asset since they have the right toclaim a tax refund. In 2005 and 2004, the subsidiaries received a tax refund amounting to Baht 11.53 million and Baht 39.84million, respectively. Moreover, a subsidiary applied to the Revenue Department to refund a total of Baht 11.40 million in relationto the 2003 tax year.
17. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Bank overdrafts - 3,170,987 - -Short-term loans from financial institutions 149,100,000 741,447,628 52,700,000 741,447,628Total 149,100,000 744,618,615 52,700,000 741,447,628
As at 31 December 2004, short-term loans of the Company consisted of Baht 22 million in loans from a local bankwhich were payable in January 2005 and carry interest at 3.35 - 3.40% per annum. The Company had issued Baht 719.4 millionin bills of exchange which were purchased by a financial institution at discounts of 3.35 - 3.70% on the face value and werepayable in September 2005.
As at 31 December 2005, short-term loans of the Company and its subsidiary comprise Baht 149.1 million in loans froma local bank which carry interest rate of 4.90% per annum and mature in January 2006.
The subsidiaries have mortgaged most of their freehold and leasehold land, and the constructions thereon, with banksto secure bank overdrafts and short-term loans of the Company and its subsidiaries. Besides, in 2004 bank overdrafts and short-term loans of the Company were guaranteed by a subsidiary.
Exploring the Horizons
67A n n u a l R e p o r t 2 0 0 5
18. LIABILITIES UNDER FINANCE LEASE AGREEMENTS
(Unit: Baht)
CONSOLIDATED2005 2004
Liabilities under finance lease agreements 64,403,683 23,900,103Less: Deferred interest expenses (10,675,253) (1,171,332)
53,728,430 22,728,771Less: Portion due within one year (12,105,981) (8,878,810)Liabilities under finance lease agreements › net of current portion 41,622,449 13,849,961
Two subsidiaries have entered into finance lease agreements with leasing companies to lease motor vehicles for operationand committed to pay rental fee on a monthly basis for a period of 4 years.
19. LONG-TERM LOANSDuring the year, the subsidiaries made normal long-term loans repayments in accordance with the conditions stipulated
in the debts restructuring agreements.(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
The Company19.1 Baht loan, carrying interest at MLR minus 1.5
percent per annum. Repayable in semi-annualinstallments of Baht 20 million per installment. Theremaining amount of the loan is then to be repaidwithin December 2010. 530,000,000 - 530,000,000 -
The subsidiary companies19.2 Baht loan
Credit line no. 1, at MLR per annum, repayablewithin 30 December 2008. - 5,000,000 - -Credit line no. 2, interest free, repayablewithin 31 March 2009. - 32,780,821 - -
19.3 Baht loan, carrying interest at 3.5 percent perannum. Principal and interest are repayable inmonthly installments of Baht 0.85 million permonth from October 2003 to December 2006.The remaining amount of the loan is then tobe repaid within January 2007. 10,648,623 20,311,207 - -
68 A n n u a l R e p o r t 2 0 0 5
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
19.4 Baht loan, carrying interest at 4.75 percent perannum from November 2002 to October 2004,and after that at the average MLR of twocommercial banks. Repayable in semi-annualinstallments of Baht 50 million per installmentfrom June 2002 to December 2006. In 2004,the subsidiary entered into a memorandumof understanding to amend the interest to aninterest rate of 4 percent per annum as from15 January 2004 to 14 January 2006 and thenat the lower of the 12-month fixed depositrate plus 2.5 percent per annum or the averageMLR minus 1.5 percent per annum. 500,000,000 600,000,000 - -
19.5 Baht loan, carrying interest at MLR minus 1.5percent per annum. Repayable in semi-annualinstallments of Baht 25 million per installment toJune 2006. The remaining amount of the loan isthen to be repaid within December 2006. 450,000,000 - - -
19.6 Baht loan, carrying interest at 3.5 percent perannum. Principal and interest are repayable inmonthly installments of Baht 0.40 million permonth from October 2003 to December 2006.The remaining amount of the loan is then tobe repaid within January 2007. 4,981,854 9,502,295 - -
19.7 Baht loan, carry interest at the rate of 3.5 percentper annum until September 2006 and after thatat the lower of the average 12-month fixeddeposit rate plus 2.5 percent per annum or theaverage MLR minus 1.5 percent per annum.Repayable in semi-annual installments ofBaht 70 - 80 million, from March 2005 to March2008, with the remainder of the loan to berepaid within September 2008. 1,860,000,000 2,000,000,000 - -
19.8 Baht loan, carring interest at MLR minus 1.75 perannum. In 2005, the subsidiary entered into amemorandum of understanding to amend the interestto an interest rate of the one-year fixed deposit rateplus 3% per annum. Repayable in quarterlyinstallments from March 2006 untilDecember 2012. 280,000,000 - - -
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
69A n n u a l R e p o r t 2 0 0 5
(Unit: Baht)
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
19.9 Baht loan, carring interest at MLR minus 0.75 perannum. In 2005, the subsidiary entered into amemorandum of understanding to amend the interestto an interest rate of the one-year fixed deposit rateplus 3% per annum. Repayable in quarterlyinstallments from March 2006 untilDecember 2012. 34,500,000 - - -
19.10 Baht loan, carring interest at MLR minus 0.75 perannum. In 2005, the subsidiary entered into amemorandum of understanding to amend the interestto an interest rate of the one-year fixed deposit rateplus 3% per annum. Repayable in quarterlyinstallments from March 2006 untilDecember 2012. 35,000,000 - - -
19.11 Baht loan, carring interest at the one-year fixeddeposit rate plus 3% per annum. Repayable inquarterly installation from March 2006 toDecember 2012. 18,000,000 - - -
19.12 Baht loan, carring interest at the one-year fixeddeposit rate plus 3% per annum. Repayable inquarterly installation from March 2006 toDecember 2012. 45,126,333 - - -Total long-term loans 3,768,256,810 2,667,594,323 530,000,000 -Less: Current portion of long-term loans (1,174,787,066) (254,183,988) (40,000,000) -Net 2,593,469,744 2,413,410,335 490,000,000 -
Most of the long-term loan balance is secured by the mortgage of most of the land, leasehold rights and buildingsthereon belonging to the subsidiaries and the pledging of certain machinery and equipment of the subsidiaries. Other security wasprovided by the subsidiariesû assignment of beneficiary rights under insurance policies to the lenders. Besides, in 2004 part of thebalance secured by the guarantees of the Company.
Most loan agreements contain certain covenants and restrictions imposed by the lenders regarding, among other things,the proportion of shareholding of the major shareholders, changes in management, guarantees to loans or aval to promissorynotes of any other persons or other companies, dividend payments, merger or consolidation with any other companies, andmaintenance of certain financial ratios.
20. UNSECURED DEBENTURESOn 9 May 2005, the Company issued 0.3 million unsubordinated, unsecured, unregistered debentures, with a debentureholdersû
representative. The debentures, which have a face value is Baht 1,000 each, are to be offered by private placement to no morethan 10 investors, at an offer price of Baht 1,000 per unit, or a total of Baht 300 million. They have a tenor of 2 years and 320days from the issue date, maturing on 25 March 2008, and the coupon rate is fixed at 5.2 percent per annum.
70 A n n u a l R e p o r t 2 0 0 5
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
The debentures impose certain restrictions on the Company relating to, among other things, the reduction of paid-upshare capital, dividend payment, and the maintenance of certain financial ratios.
21. DEFERRED INCOME(Unit: Baht)
CONSOLIDATED2005 2004
Leasehold rights - building, service and equipment- third parties 299,934,484 299,934,484Less: Accumulated amortisation (198,047,295) (187,460,227)Net book value 101,887,189 112,474,257
Amortised to income for the year 10,587,068 10,943,158
22. SHARE CAPITALOn 23 April 2004, the Annual General Meeting No.1/2547 of the shareholders of the Company approved the change of
the par value of the ordinary shares and preference shares from Baht 6 per share to Baht 1 per share. As a result, the Companyûsshare capital of Baht 1,573 million comprises 1,039,603,674 ordinary shares and 533,444,334 preference shares of Baht 1 eachand paid-up share capital of Baht 1,453 million comprises 919,603,674 ordinary shares and 533,444,334 preference shares ofBaht 1 each. The Company registered the change of par value with the Ministry of Commerce on 13 May 2004.
On 24 September 2004, the Companyûs existing shareholders exercised options to buy back a total of 538,460,880shares, comprising 533,444,334 convertible preference shares and 5,016,546 ordinary shares, from WREP Thailand Holdings(çWREPé) at a total of Baht 2,108.6 million. The shareholders then converted all preference shares to ordinary shares. As a resultof these transactions, there are no longer any preference shares and the Companyûs registered share capital of Baht 1,573,048,008comprises 1,573,048,008 ordinary shares of Baht 1 each while the paid-up share capital of Baht 1,453,048,008 comprises1,453,048,008 ordinary shares of Baht 1 each. The Company registered the conversion of the preference shares to ordinaryshares with the Ministry of Commerce on 7 October 2004.
In addition, on 4 November 2004 the Extraordinary Meeting of shareholders No. 1/2547 approved: -
- Reduce the Companyûs registered share capital from Baht 1,573.05 million to Baht 1,453.05 million by canceling the120 million shares reserved for the exercise of the rights granted under the Share Purchase Option Agreement between WREP andthe Company.
- Issue and offer 66,652,400 ordinary shares to directors of the Company and employees of the Company and/or thesubsidiaries (ESOP), as described in Note 27, increasing the Companyûs registered share capital from Baht 1,453.05 million toBaht 1,519.70 million through the issue of 66,652,400 additional ordinary shares with a par value of Baht 1 each.
The Company registered the decrease and increase of its share capital with the Ministry of Commerce on 19 November2004 and 23 November 2004, respectively.
Exploring the Horizons
71A n n u a l R e p o r t 2 0 0 5
Reconciliation of number of preference shares and ordinary shares(Unit: Shares)
FOR THE YEARS ENDED31 DECEMBER
2005 2004
Registered share capitalPreference sharesNumber of preference shares at the beginning of year - 533,444,334Decrease - (533,444,334)Number of preference shares at the end of year - -Ordinary sharesNumber of ordinary shares at the beginning of year 1,519,700,408 1,039,603,674Increase - 600,096,734Decrease - (120,000,000)Number of ordinary shares at the end of year 1,519,700,408 1,519,700,408
1,519,700,408 1,519,700,408Issued and paid-up share capitalPreference sharesNumber of preference shares at the beginning of year - 533,444,334Decrease - (533,444,334)Number of preference shares at the end of year - -Ordinary sharesNumber of ordinary shares at the beginning of year 1,453,048,008 919,603,674Increase - 533,444,334Number of ordinary shares at the end of year 1,453,048,008 1,453,048,008
1,453,048,008 1,453,048,008
23. STATUTORY RESERVEAccording to the Public Limited Companies Act B.E. 2535 under section 116, the Company and its subsidiary company
are required to set aside a statutory reserve of at least 5% of its net profit after deducting accumulated deficit brought forward(if any) until the reserve reaches 10% of its registered share capital. The statutory reserve is not available for dividend distribution.
24. DIRECTORSû REMUNERATIONDirectorsû remuneration represents the benefits paid to the Companyûs directors in accordance with Section 90 of the
Public Limited Companies Act, exclusive of salaries and related benefits payable to executive directors.
72 A n n u a l R e p o r t 2 0 0 5
25. INCOME TAXNo corporate income tax of the Company was payable on net earnings for the years 2005 and 2004 since tax loss
brought forward from previous years exceed net earnings for these years.
Corporate income tax of the subsidiaries has been calculated at the rate of 30 percent on net earnings, after adding backcertain expenses which are disallowable for the tax purposes, and deducting dividend income, which is exempted from income taxunder Section 65 bis (10) of the Revenue Code and tax loss brought forward from previous year.
26. DIVIDEND PAYMENTDividends payment in 2005 and 2004 consist of the following: -
(Unit: Baht)
TOTAL DIVIDENDAPPROVED BY DIVIDENDS PER SHARE
Dividend from the earnings 2003 Annual General Meeting of theshareholders on 23 April 2004 157,413,534 0.65
157,413,534Dividend from the earnings 2004 Annual General Meeting of the
shareholders on 19 April 2005 87,182,880 0.0687,182,880
27. EMPLOYEE STOCK OPTION PLAN (ESOP)On 4 November 2004, the Extraordinary Meeting of shareholders No. 1/2547 approved the employee stock option plan.
Under the plan, the Company is to offer 66,652,400 ordinary shares with a par value of Baht 1 each, equivalent to 4.59% of thetotal paid-up shares, to its directors and its employees and/or its subsidiariesû. The plan is to cover a period of not more than 5years from the date it is approved by the Securities and Exchange Commission (SEC). Directors and employees who are grantedoptions under can exercise one-quarter of the total options granted during each of four exercise periods. The stipulated exerciseperiods and exercise prices are as follows: -
PERIOD EXERCISE PERIODS EXERCISE PRICES
1 1 June 2005 - 30 December 2008 2.67 Baht per share2 1 June 2006 - 30 December 2008 2.71 Baht per share3 1 June 2007 - 30 December 2008 2.75 Baht per share4 1 June 2008 - 30 December 2008 2.79 Baht per share
Following the final exercise period, any remaining options will be deemed to have expired and no further exercise will bepossible.
In December 2004, the Company requested the SEC approve the allocation of shares in accordance with such plan andon 7 April 2005, SEC granted approval for the offer.
There is no disclosure of diluted earnings per share in the financial statements for the year ended 31 December 2005as the exercise price of the stock options exceeded the fair value of the Companyûs ordinary shares.
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
73A n n u a l R e p o r t 2 0 0 5
28. EMPLOYEES AND RELATED COSTS
CONSOLIDATED THE COMPANY ONLY2005 2004 2005 2004
Number of employees at the end of year 1,837 1,606 54 51Employee costs for the year (Thousand Baht) 514,026 451,337 46,418 42,210
During the year 2005, the Company and the subsidiaries have contributed a total of Baht 14.8 million (2004: Baht 14.0million) to the provident fund.
29. COMMITMENTSAs at 31 December 2005, the Company and its subsidiaries had the following outstanding commitments and contingent
liabilities: -
Commitments with related parties29.1 The Company has entered into lease agreements with its subsidiary for lease of building space and equipment
for a period of 26 years and 7 months commencing as from 1 May 1988. The rental fee under the leaseagreements is approximately Baht 2.8 million per annum.
29.2 The Company and its subsidiary have commitments of approximately Baht 3.7 million (the Company only: Baht3.7 million) (2004: Baht 8.3 million (the Company only: Baht 6.9 million)) to another subsidiary in respect of thelease of space and related services agreements.
Commitments with third parties29.3 The Company has issued letters of guarantees to banks to secure loans granted to two subsidiaries totaling
approximately Baht 12.7 million (2004: Baht 19.6 million).29.4 The subsidiary has commitments of approximately Baht 1.7 million in respect of a lease agreement with third
party.29.5 The Company has commitments of approximately Baht 6.7 million (2004: Baht 7.8 million) in respect of sub-
lease agreements with third parties.29.6 The Company and the subsidiaries have commitments of approximately Baht 72.8 million and USD 0.1 million
(2004: Baht 83.5 million) the Company only: Baht 13.2 million (2004: Baht 8.1 million) in respect of mainte-nance service agreements.
29.7 The subsidiaries have commitments of approximately Baht 30.7 million and USD 0.05 million (2004: Baht 196.3million and USD 0.06 million) in respect of interior design agreements, the renovation, SPA service and thepurchase of hotel equipment.
29.8 The Company and its subsidiaries have commitments of approximately Baht 32.9 million (2004: Baht 38.2million) arising from outstanding bank guarantees issued by banks on behalf of the Company and its subsidiariesin respect of certain performance bonds required in the ordinary course of business of the Company and itssubsidiaries.
74 A n n u a l R e p o r t 2 0 0 5
29.9 On 5 April 2005, a subsidiary entered into an agreement to purchase and to sell land and buildings at a priceof Baht 637 million. The subsidiary paid a deposit of Baht 100 million on the date the agreement was executedand paid an additional deposit of Baht 12 million in July 2005. Providing the seller is able to comply with theconditions stipulated in the agreement, the subsidiary was committed to pay the remaining of Baht 525 millionwithin December 2005 or within the extension period granted in accordance with the conditions stipulated in theagreement. However, if the seller is unable to comply with the agreement, the subsidiary has the right to refundthe deposit and charge a penalty of double the amount of the deposit.
29.10 As at 31 December 2004, the subsidiary had issued letters of guarantees to local banks to guarantee bankoverdraft facilities, letters of guarantees, and loans of the Company totaling approximately Baht 22.0 million.These guaranteed loans were included as liabilities in the balance sheets. In 2005, the subsidiary withdrew suchguarantees.
30. LONG-TERM AGREEMENTSThe Company and certain subsidiaries have entered into the following long-term lease agreements and other agreements
with third parties, local companies, overseas companies, and Government organisations: -30.1 A subsidiary entered into a building lease agreement with a Government organisation covering a term of thirty
years, commencing 1 July 1987, whereby the subsidiary has to pay monthly rental at the rate for each yearspecified in the agreement. However, on 9 January 2006 the subsidiary entered into the Building Renovation andLand and Renovated Building Lease Agreement. Under the terms of this agreement, the subsidiary is to pay leaseremuneration of Baht 76 million during the construction period for two years, as from 1 January 2006.Furthermore, the subsidiary is to pay monthly rental at the rate stipulated for each year, covering a term of thirtyyears, commencing 1 January 2008.
30.2 On 1 April 1982, a subsidiary entered into a reciprocal land lease agreement with a local company for a term of30 years, to build structures thereon and to seek benefit from project management. Under the terms of theagreement and the addendum, the ownership of all structures on the leased land is to be transferred to this localcompany upon the expiration of the agreement. In consideration of this, the subsidiary agrees to pay a total ofBaht 61.2 million in leasehold rights, together with special remuneration of 25.2% of the income arising from theuse of office buildings on the leased land from the 21st to the 30th year of the lease agreement. The subsidiaryhas already paid for the leasehold rights in full.
30.3 A subsidiary has an agreement with a related company to lease land for a term of thirty years up to the year2022, renewable for another twenty years. The subsidiary is to pay land rental charges of Baht 10.9 million perannum, and the land rental charge may be adjusted every ten years. Upon the expiration of the agreement, theownership of buildings and building improvements on the leased land, including equipment, furniture and toolsnecessary for hotel operations, will be transferred to the lessor.
30.4 A subsidiary entered into two lease agreements for the leasehold rights to land on which its hotel building andoffice building are situated from the lessor. Ownership of all structures constructed on the leased land, includingthat of equipment, furniture and tools which are vital to the projectûs operation, will be transferred to the lessorupon the termination of the agreements. The subsidiary is to pay land rental charges of Baht 14.6 million per yearand the land rental charge may be adjusted every ten years. The term of the leases is a period of 30 years upto the year 2025. Under the terms of the lease agreement, the subsidiary shall assume obligation to pay thefollowing leasehold rights and deposits for rental.
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
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75A n n u a l R e p o r t 2 0 0 5
1. Leasehold rights amounting to Baht 360 million. The subsidiary will pay this amount within the 30th year ofthe lease and is recorded as part of çAccounts payable for leasehold rightsé in the consolidated balancesheets.
2. Deposits for rental amounting to Baht 180 million. The subsidiary has made the full payment of the deposits,which will be refunded in the 30th year and are presented as part of çOther assetsé in the consolidatedbalance sheets.As at 24 December 2002, the subsidiary entered into an agreement to lease part of the land on which thehotel building is located for extend the period of agreement which allows the lessee to extend the term of thelease upon expiration of the agreement. The subsidiary was granted an extension of the term of the leaseby 20 years as from 24 January 2025 to 23 January 2045 and is to pay rental of Baht 216.1 million, whichhas already been paid to the lessor.In addition to the above mentioned rental, the subsidiary also has a commitment to make the following rentalpayments: -- Rental from 2025 to 2034 at the greater of Baht 44.7 million per annum or an amount determined basedon an average of the consumer price index of Thailand.- Rental from 2035 to 2045 at the greater of Baht 89.4 million per annum or an amount determined basedon an average of the consumer price index of Thailand.
30.5 On 24 February 1988, a subsidiary entered into agreements with various companies in the Hyatt InternationalCorporation Limited Group (HYATT) whereby HYATT will provide necessary hotel construction and managementservices to the subsidiary. Under the terms of the agreements, the subsidiary is committed to pay a managementfee, license fee, and a share of marketing expenses to HYATT, at the rates indicated in the agreements. The termof the management agreement is for twenty years, counting from commencement of hotel operations, to beextended for a year of at least 10 years, dependent upon certain conditions specific in the agreement.During the years, the subsidiary had significant transactions with HYATT, which are summarised below:
(Unit: Million Baht)
2005 2004
Management fee 38.4 35.2Royalty fees 29.3 25.4Commission expenses 19.6 18.8Marketing and other fees 13.4 13.0
30.6 On 3 February 1994, a subsidiary entered into an agreement with Marriott Worldwide Corporation Group(Marriott) to appoint the Marriott as management of the subsidiaryûs hotel. The subsidiary also made agreementswith Marriott relating to the hotel operations. Under the terms of the agreements, the subsidiary is committed topay remuneration to Marriott at the rates, terms and basis specified in the agreements. The term of the hotelmanagement agreement is for twenty years, counting from commencement of hotel operations, to be extendedfor a year of at least 10 years, dependent upon certain conditions specified in the agreement.
76 A n n u a l R e p o r t 2 0 0 5
During the years, the subsidiary had significant transactions with Marriott, which are summarised below:
(Unit: Million Baht)
2005 2004
Management fee 50.4 43.8Royalty fees 17.1 15.0Commission expenses 29.3 32.0Marketing and other fees 19.9 17.5
30.7 On 3 January 2001, a subsidiary entered into a consulting service agreement with Gaysorn Realty CompanyLimited (Gaysorn Realty) for a term of 13 years and 11 months up to the year 2014. Under the terms of theagreement, Gaysorn Realty will provide consulting services relating to marketing and building development in thereal estate business. In consideration of this, the subsidiary agrees to pay a total of Baht 21.4 million, and suchpayment has already been made in full to Gaysorn Realty. However, on 1 November 2004, the subsidiary signeda memorandum to be attached to the consulting service agreement, agreeing to allow Gaysorn Realty to transferits entitlements and obligations under the agreement to Gaysorn Holding Company Limited.
As at 31 December 2005, the balance of this prepayment for consulting services amounting to approximatelyBaht 13.1 million (2004: Baht 14.6 million), is included in çOther assetsé in the consolidated balance sheets.
30.8 On 27 April 2001, a subsidiary entered into a consulting service agreement with Rajprasong Retail CompanyLimited (Rajprasong Retail) for a term of 12 years and 8 months up to the year 2013. Under the terms of theagreement, Rajprasong Retail will provide consulting services relating to marketing and building improvement forthe retail and department store businesses. In consideration of this, the subsidiary agrees to pay a total of Baht13 million, and such payment has already been made in full to Rajprasong Retail. However, on 1 June 2003, thesubsidiary signed a memorandum of such consulting service agreement regarding changes in details of servicesfrom provision of consulting services relating to marketing and building improvement for the retail and depart-ment store businesses to provide consulting services relating to marketing and building improvement for theAmarin Plaza building and Erawan Bangkok project, which is located at Erawan Hotel.
As at 31 December 2005, the balance of the consulting service amounting to Baht 7.7 million (2004: Baht8.6 million), is included in çOther assetsé in the consolidated balance sheets.
30.9 On 1 April 2002, a subsidiary entered into a land lease agreement with an unrelated party for periods of 22 yearsand 10 months up to the year 2025. Under the agreement, the subsidiary agrees to pay rental totaling Baht 32.8million, in three installments. The subsidiary has already paid the first and second installments of Baht 23.2million and the remaining Baht 9.6 million will be repay in 2025. In addition, the subsidiary is to pay a landrental charge of Baht 0.8 million per annum for the first four years, and such charge is then to be adjusted everyten years. Upon the expiration of the agreement, the ownership of all structures erected on the leased land,together with equipment, furniture and tools which are vital to the operation, are to be transferred to the lessor.
30.10 On 28 January 2002, a subsidiary entered into a land lease agreement with an unrelated party covering a termof five years up to the year 2007, renewable for another three years, with the land rental charge to be increasedby no more than 20%. Under the terms of the agreement, the subsidiary is to pay rental charge of Baht 63,000per month.
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
77A n n u a l R e p o r t 2 0 0 5
30.11 In 2002 and 2003, the Company entered into land sub-lease agreements with unrelated parties covering a periodof 3 years. The agreements can be renewable upon its termination and the rental charge will be increased by therates specified in the agreements. Under the terms of the agreements, the Company is committed to pay therental charge at the rates and in accordance with the conditions stipulated indicated in the agreements.
30.12 A subsidiary entered into an agreement to lease land from a foundation for the purpose of land development andbuilding construction. Under the terms of the agreement, the subsidiary is to pay rental charges of Baht 100,000per month commencing 1 November 2004, and the rental charge may be adjusted every ten years. The term ofthe lease is a period of 30 years up to the year 2034. The agreement is renewable upon its termination. In thisregard, the subsidiary will have to give notice of its intention in writing to the lessor at least 1 year, and not morethan 2 years in advance. Ownership of buildings and all structures constructed on the leased land will betransferred to the lessor upon the termination of the agreement.
30.13 On 4 July 2005, two subsidiaries entered into management agreements with Marriott Group (Marriott), to appointthe Marriott to manage the subsidiariesû hotel as a standardised Courtyard by Marriott and Renaissance byMarriott hotel. Under the terms of the agreements, the subsidiaries are committed to pay remuneration toMarriott in accordance with the rates, terms and basis specified in the agreements. The terms of the hotelmanagement agreements is to be for thirty years, counting from commencement of hotel operations, and is tobe extendible for a further period of at least 10 years, dependent upon the fulfillment of certain conditionsspecified in the agreements.During the year, the subsidiary had significant transactions with Marriott, which are summarised below:
(Unit: Million Baht)
2005
Management fee 0.1Royalty fees 1.1Commission expenses 1.7Marketing and other fees 0.5
31. LITIGATIONDuring the year, a subsidiary (Ploenchit Real Estate Co., Ltd.) and related counterparties have been sued for compensa-
tion totalling Baht 6.9 million by an employee of the subsidiary, for injuries sustained through the negligence of the counterparty,who is responsible for lift maintenance. The case is in the process of being heard by the court and the outcome is not yet known.
32. FINANCIAL INSTRUMENTS 32.1 Credit Risk
The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable fromthe hotel and office building and shopping center space rental businesses. However, due to the large number anddiversity of the entities comprising the Company and its subsidiariesû customer base, the Company and its subsidiariesdo not anticipate material losses from debt collection.
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32.2 Interest rate riskThe interest rate risk is the risk that future movements in market interest rates will affect the results of the Company
and its subsidiariesû operations and their cash flows. The Company and its subsidiariesû exposure to interest rate riskrelates primarily to their deposits at financial institutions, bank overdrafts and loans. The Company and its subsidiariesdo not use derivative financial instruments to hedge such risk.
(Unit: Million Baht)
CONSOLIDATED31 December 2005
Floating rate Fixed rate Non-interest Total
Financial assets/liabilitiesCash and cash equivalents 93.3 - (4.0) 89.3Pledged fixed deposits at financial institution - 0.2 - 0.2Bank overdrafts and short-term loans from financial institutions - 149.1 - 149.1Short-term loans from related party - 130.3 - 130.3Unsecured debentures - 300.0 - 300.0
The fixed interest rates on financial instruments held as of 31 December 2005 and the period of time from the balancesheet date to their maturity dates are as follows: -
(Unit: Million Baht)
CONSOLIDATED31 December 2005
Within Over InterestAt call 12 months 12 months Total rate
Financial assets/liabilitiesPledged fixed deposits at financial institution - 0.2 - 0.2 1.75% per annumShort-term loans from financial institutions - 149.1 - 149.1 4.90% per annumShort-term loans from related party - 130.3 - 130.3 4.15% per annumUnsecured debentures - - 300.0 300.0 5.20% per annum
(Unit: Million Baht)
THE COMPANY ONLY31 December 2005
Floating rate Fixed rate Non-interest Total
Financial assets/liabilitiesFinancial assets/liabilitiesFinancial assets/liabilitiesFinancial assets/liabilitiesFinancial assets/liabilitiesCash and cash equivalents 1.0 - - 1.0Short-term loans to a subsidiary company - 18.8 - 18.8Long-term loans to and interest receivable from subsidiaries - 1,233.7 - 1,233.7Short-term loans from financial institutions - 52.7 - 52.7Short-term loans from related party - 130.3 - 130.3Unsecured debentures - 300.0 - 300.0
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
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79A n n u a l R e p o r t 2 0 0 5
The details of long-term loans have presented in Note 19.32.3 Fair value
Fair value is defined as the amount at which the instrument could be exchanged in a current transaction betweenknowledgeable willing parties in an armûs length transaction. Fair values are obtained from quoted market prices,discounted cash flow models or net asset value as appropriate.
The following methods and assumptions are used to estimate the fair value of each class of financial instruments.Cash and cash equivalents and pledged fixed deposits at financial institution - the carrying values approximate their
fair values due to the relatively short-term maturity of these financial instruments.
Investment in marketable equity securities - the fair values of publicly traded instruments are estimated based on the last bidding price of the Stock Exchange of Thailand, all other instruments for which there are no quoted market prices,a reasonable estimate of fair value has been calculated based on the underlying net asset base for such investment, whichapproximately their carrying values.
Accounts payable - the carrying amounts of these financial liabilities approximately their fair values due to therelatively short-term maturity of these financial instruments.
Loans › the carrying value does not materially differ from their fair value since the loans carry interest at rates closeto market rates.
The fixed interest rates on financial instruments held as of 31 December 2005 and the period of time from the balancesheet date to their maturity dates are as follows: -
(Unit: Million Baht)
THE COMPANY ONLY31 December 2005
Within Over InterestAt call 12 months 12 months Total rate
Financial assets/liabilitiesShort-term loans to a subsidiary company - 18.8 - 18.8 4.00-4.80%
per annumLong-term loans to and interest receivable
from subsidiaries - - 1,233.7 1,233.7 3.70-5.15%per annum
Short-term loans from financial institutions - 52.7 - 52.7 4.90% perannum
Short-term loans from related party - 130.3 - 130.3 4.15% perannum
Unsecured debentures - - 300.0 300.0 5.20% perannum
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33. CASH FLOW - PURCHASE OF INVESTMENT IN SUBSIDIARY COMPANYOn 4 July 2005, the Company acquired an investment in Erawan Samui Co., Ltd. that had net assets value as follows: -
(Unit: Baht)Cash and deposits at financial institutions 809,903Trade accounts receivable 10,865,498Inventories 9,533,698Property, plant and equipment - net 577,793,184Leasehold rights - net 2,860,844Other assets 8,338,643Total assets 610,201,770Bank overdrafts 21,967,002Trade accounts payable 3,696,469Accounts payable - construction 29,344,381Short-term loans from directors 122,476,362Long-term loans 349,500,000Accrued expenses 5,193,239Other liabilities 20,688,045Total liabilities 552,865,498Net assets value 57,336,272Net assets value › equity attributable to the Companyûs shareholders 57,336,272Value of land and building which over NBV 109,521,361Purchase price 166,857,633Less: Cash on hand of subsidiary company (809,903)Cash flows on acquisition of subsidiary company 166,047,730
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
81A n n u a l R e p o r t 2 0 0 5
34. FINANCIAL INFORMATION BY SEGMENTThe Company and its subsidiaries conduct real estate developments appropriate to their location, sitting, the market
conditions and the target groups. The major products or services are commercial projects for leasing office space and shoppingcenters, both high-rise and low-rise residential buildings and hotel business. Regarding the location of the operations of theCompany and its subsidiaries, they have only one geographical segment, as the Company and its subsidiaries operate onlydomestically.
The Companyûs segmented financial information, divided into real estate business and hotel business, as presented in theconsolidated financial statements as of and for the years ended 31 December 2005 and 2004 is as follows: -
(Unit: Million Baht)
FOR THE YEAR ENDED 31 DECEMBER 2005Real Estate HotelBusiness Business Other Eliminate Total
Revenues - Third parties 445 2,364 43 ---- 2,852 - Related parties 74 ---- 81 (106) 49Total 519 2,364 124 (106) 2,901Operating profit 228 1,366 124 (86) 1,632Selling and administrative expenses (698)Depreciation and amortisation (346)Other expenses ----Directorsû remuneration (7)Interest expenses (154)Income tax (113)Earnings of minority interest (56)Net earnings for the year 258
82 A n n u a l R e p o r t 2 0 0 5
(Unit: Million Baht)
FOR THE YEAR ENDED 31 DECEMBER 2004Real Estate HotelBusiness Business Other Eliminate Total
Revenues - Third parties 429 2,007 52 ---- 2,488 - Related parties 110 ---- 110 (168) 52Total 539 2,007 162 (168) 2,540Operating profit 243 1,188 162 (114) 1,479Selling and administrative expenses (612)Depreciation and amortisation (278)Other expenses (5)Directorsû remuneration (5)Interest expenses (114)Income tax (78)Earnings of minority interest (48)Net earnings for the year 339
The Company and its subsidiaries have applied the pricing policies described in Note 7 to set the transfer prices.
(Unit: Million Baht)
31 DECEMBER 2005Real Estate HotelBusiness Business Other Eliminate Total
Inventories - net ---- 50 ---- ---- 50Property, plant and equipment - net 2,432 5,978 ---- 79 8,489Land awaiting development 255 ---- ---- ---- 255Other assets 767Total assets 9,561
Notes to Financial StatementsTHE ERAWAN GROUP PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOWN AS çAMARIN PLAZA PUBLIC COMPANY LIMITEDé)31 DECEMBER 2005 AND 2004
Exploring the Horizons
83A n n u a l R e p o r t 2 0 0 5
(Unit: Million Baht)
31 DECEMBER 2004Real Estate HotelBusiness Business Other Eliminate Total
Inventories - net ---- 33 - --- ---- 33Property, plant and equipment - net 2,251 5,282 - --- (32) 7,501Land awaiting development 255 ---- -- -- ---- 255Other assets 711Total assets 8,500
35. PRESENTATIONThe presentation of these financial statements have been made in compliance with the stipulations of the Notification of
the Department of Business Development dated 14 September 2001, as empowered under the Accounting Act B.E. 2543.Certain amounts in the financial statements for the year ended 31 December 2004 have been reclassified to conform to
the current yearûs classifications, with no effect on net earnings or shareholdersû equity previously reported.
84 A n n u a l R e p o r t 2 0 0 5
General Information of the Company
The Erawan Group Public Company Limited
Registration No. Bor Mor Jor 441
Head Office : 6th Floor, Ploenchit Center
2 Sukhumvit Road Soi 2, Kwang Klongtoey, Khet Klongtoey, Bangkok 10400
Telephone No. : Tel. 66 (0) 2 257 4588 Fax. 66 (0) 2 257 4577
Branch Office : 496, 498, 500, 502 Ploenchit Road, Kwang Lumpini, Khet Phathumwan, Bangkok 10330
Telephone No. : Tel. 66 (0) 2 256 9111 Fax. 66 (0) 2 256 9910
Web Site : www.TheErawanGroup.com
Type of Business : Investment, development and operation of hotels in appropriate locations suitable
for target groups of customers together with other businesses; namely, lease of
office space and shopping centers and residential apartment as minor business.
Companyûs Capital as at 31 December 2005.
Registered Capital : 1,519,700,408 Baht divided into:
1,519,700,408 ordinary shares at par value 1 Baht/share or equal to 1,519,700,408 Baht
Paid-Up Capital : 1,453,048,008 Baht divided into:
1,453,048,008 ordinary shares at par value 1 Baht/share or equal to 1,453,048,008 Baht
Other References
1. Registrar of Ordinary Shares : Thailand Securities Depository Co., Ltd.
No. 62 Rachadapisek Road, Klongtoey, Bangkok 10110
Tel. 66 (0) 2 359 1200-02 Fax: 66 (0) 2 359 1259
2. Auditor : Ernst & Young Office Limited by
1. Mr.Sophon Permsiriwanlop Certified Public Accountant (Thailand) No.3182
2. Mr.Ruth Chaovanakavi Certified Public Accountant (Thailand) No.3247
3. Mr.Narong Puntawong Certified Public Accountant (Thailand) No.3315
4. Ms.Rungnapa Lertsuwankul Certified Public Accountant (Thailand) No.3516
33rd Floor, Lake Rajada Office Complex, No.193/136-137 New Rajadapisek Road, Bangkok 10110
Tel. 66 (0) 2 264 0777 Fax: 66 (0) 2 264 0789-90
3. Legal Adviser : Law Alliance Co., Ltd.
208, 7th Floor, Wiithayu Road, Lumpini, Pathumwan, Bangkok 1330
Tel. 66 (0) 2 651 5490 Fax: 66 (0) 2 651 5499
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