(translation) independent financial advisor report opinion ...(“sirisub patthana”) and a leading...

(Translation)

Independent Financial Advisor Report

Opinion Regarding Connected Transaction

Of

Golden Land Property Development Public Company Limited

By

RHB OSK Securities (Thailand) Public Company Limited

26 March 2014

Contents

Page

1. Executive Summary 4

2. Characteristics and Details of Transactions 7

3. Summary of Company Information 19

4. Reasonableness to Enter into the Transaction 33

5. Fairness of Price and Conditions of the Transaction 37

6. Conclusion of Independent Financial Advisor’s Opinion 47

Definition

Abbreviation Full Name

The Company Golden Land Property Development Public Company Limited

Univentures Univentures Public Company Limited

Sirisub Patthana Sirisub Patthana Company Limited

TCC TCC Holding Company Limited

IFA RHB OSK Securities (Thailand) Public Company Limited

Independent Appraiser Advanced Appraisal Company Limited

SET The Stock Exchange of Thailand

SEC The Securities and Exchange Commission

Asset Acquisition or Disposition Notification The Notification of the Capital Market Supervisory Board No.

TorJor. 20/2551 (2008) Re: Rules on Entering into Material

Transactions Deemed as Acquisition or Disposal of Assets and the

Notification of The Board of Governors of the Stock Exchange of

Thailand Re: Disclosure of Information and Other Acts of Listed

Companies Concerning the Acquisition and Disposition of Assets

B.E. 2547 including any later amendments

Connected Transaction Notification The Notification of the Capital Market Supervisory Board No.

TorJor. 21/2551 (2008) Re: Rules for making related transactions

and the Notification of The Board of Governors of the Stock

Exchange of Thailand Re: Disclosure of Information and Other Acts

of Listed Companies Concerning the Connected Transactions B.E.

2546 (2003) and its amendment

Opinion of Independent Financial Advisor regarding Connected Transaction

Page 1

The English translation of this document is prepared solely for reference for non-Thai shareholders of the Company. It should neither be relied upon as the definitive nor the official document of the Company. The Thai version is the official document and shall prevail in all respects in the event of any inconsistency with English translation.

26 March 2014

Subject: Opinion of the Independent Financial Advisor regarding Connected Transaction

To Shareholders

Golden Land Property Development Public Company Limited

The Board of Directors’ meeting No. 5/2013 of Golden Land Property Development Public Company

Limited (the “Company” or “GOLD”) held on 8 November 2013 had resolved to approve in principle the sales and

bidding of non-core land located on Ramkhuamhaeng Road, Hua Mak Subdistrict, Bang kapi District, Bangkok

with 31 rai 70 sq. wah of total area via the process of announcement through newspapers and contact through

sales representative where the offering price is not lower than market price or book value whichever is higher.

Subsequently, the Company advertised the sales of the land to the public through announcement in

Naewna Newspaper, dated 25 - 27 December 2013 and Prachachat Turakij newspaper, dated 2 – 5 January

2014. Harrison Public Company Limited was appointed to be the representative of the Company to contact the

interested parties who sent in bids to purchase the aforementioned land. Sirisub Patthana Company Limited

(“Sirisub Patthana”) and a leading property developer showed the intention to purchase the aforementioned land

and building with Sirisub Patthana offering the purchasing price of Baht 980.00 million which was the higher price

of the two. Therefore, the Company signed a sale-purchase agreement with Sirisub Patthana on 13 January

2014 with condition that the Company will enter into the transaction once the sharesholder’s meeting passes a

resolution for entering into the transaction.

On 24 February 2014, the Board of Directors’ meeting No 1/2014 had resolved to propose the Annual

General Meeting of Shareholders No. 21/2557 to consider and approve the disposition of assets of the Company

which is 35 plots of land, totaling 31 rai 70 sq. wah together with 11 buildings located on Ramkhamhaeng Road,

Hua Mak Subdistrict, Bang Kapi District, Bangkok to Sirisub Patthana who is a connected person to the

Company at the price of Baht 980.00 million.

Such transaction is considered as a disposition of assets according to the Notification of the Capital

Market Supervisory Board No. TorJor. 20/2551 (2008) Re: Rules on Entering into Material Transactions Deemed

as Acquisition or Disposal of Assets and the Notification of The Board of Governors of the Stock Exchange of


Page 2

Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and

Disposition of Assets B.E. 2547 including any later amendments (collectively called “Asset Acquisition or

Disposition Notification”). Based on the total consideration of Baht 980 million, the highest transaction size

calculated based on the Total Value of Consideration criteria, is equal to 7.80% of the total assets of the

Company according to the audited consolidated financial statement of the Company as at 31 December 2013.

When this is combined with the disposition of other assets over the past 6 months with transaction size of 0.62%

of total value of the Company’s assets, calculated based on Total Value of Consideration criteria, the combined

transaction size is 8.42%. Therefore the transaction size is considered insignificant according to the Asset

Acquisition or Disposition Notification.

Furthermore, because Sirisap Pattana, the purchaser of the assets, is considered as a connected

person of the Company in which Mr. Panot Sirivadhanabhakdi who is the Vice Chairman of the Board of Director

of the Company is also a director of TCC Holding Company Limited (“TCC”) which is a major shareholder of

Sirisap Pattana (as at 21 November 2013, TCC holds 99.97% of Sirisap Pattana shares), the entering into the

transaction is classified as a connected transaction according to the Notification of the Capital Market

Supervisory Board No. TorJor. 21/2551 (2008) Re: Rules for making related transactions and the Notification of

The Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of

Listed Companies Concerning the Connected Transactions B.E. 2546 (2003) and its amendment (collectively

called “Connected Transaction Notification”). The transaction size is 16.18% of the net tangible assets as at 31

December 2013 which exceeds 3% of the net tangible assets. The Company did not enter into any transactions

with the same related person or close relatives of such person over the past 6 months. Therefore, the Company

has to disclose information of the transaction to the the Stock Exchange of Thailand (“SET”) and is required to

gain approval to enter into the transaction from shareholders’ meeting with not less than three fourths of the

votes from shareholders attending the meeting and eligible to vote. In addition, the Company is required to

appoint an independent financial advisor to provide their opinions concerning rationality, fairness of the price, and

conditions of the transaction to shareholders of the Company as part of the consideration for the transaction

approval. As the Company is a subsidiary company of Univentures Public Company Limited (“Univentures”);

therefore, the entering into transaction must also be approved from Univentures shareholders’ meeting as well.

The Company has appointed RHB OSK Securities (Thailand) Public Company Limited, a financial

advisor which is endorsed by the Securities and Exchange Commission (“SEC”) and is independent of the

parties involved in the transaction, as an Independent Financial Advisor (“IFA”) to provide opinion on connected

transaction to the shareholders for consideration in approving the transaction.

In providing the IFA’s opinion, we studied and received information from the Company and publicly

available documents, such as Board of Directors’ meeting resolutions, Information Memorandum, Annual


Page 3

Registration Statement (56-1), financial statements, financial projection and key assumptions and relevant

documents, notification of shareholder meeting, documents related to land and building i.e. lease agreement,

land purchase agreement, information gathered from interviews with the Company’s management and industry

research papers including information from interviews with property developers from listed companies and other

property developers, as information in order to analyze and provide our opinion.

Thus, our opinion is based on the assumption that all public information, all information and documents

received from the Company, including information gathered from interviews with the Company’s management,

and other related information are complete and accurate. With our best effort, we comprehensively reviewed the

information in accordance with professional standard. Also, we considered the industry development and the

surrounding circumstance while we were conducting our study and providing our opinion and place importance

on the benefits of minority shareholders. If an event occurred and resulted in a material change regarding

information and circumstance from the present such as a significant change or incomprehensiveness and

inaccuracy of the relied information, the event could have a significant effect on our opinion.

Our opinion in relation to the entering into the transaction is as follow:


Page 4

1. Executive Summary

The Board of Directors’ meeting No. 5/2013 of Golden Land Property Development Public Company Limited

(“the Company” or “GOLD”) held on 8 November 2013 had resolved to approve in principle the sales and

bidding of non-core land located on Ramkhuamhaeng Road, Hua Mak Subdistrict, Bang kapi District,

Bangkok with 31 rai 70 sq. wah of total area via the process of announcement through newspapers and

contact through sales representative where the offering price is not lower than market price or book value

whichever is higher.

Subsequently, the Company advertised the sales of the land to the public through announcement in

Naewna Newspaper, dated 25 - 27 December 2013 and Prachachat Turakij newspaper, dated 2 – 5

January 2014. Harrison Public Company Limited was appointed to be the representative of the Company to

contact the interest parties who sent in bids to purchase the aforementioned lands. Sirisub Patthana

Company Limited (“Sirisub Patthana”) and a leading property developer showed the intention to purchase

the aforementioned land and building with Sirisub Patthana offering the purchasing price of Baht 980.00

million which was the higher price of the two. Therefore, the Company signed a sell-purchase agreement

with Sirisub Patthana on 13 January 2014 with condition that the Company will enter into the transaction

once the sharesholder’s meeting passes a resolution for entering into the transaction.

On 24 February 2014, the Board of Directors’ meeting No 1/2014 had resolved to propose the Annual

General Meeting of Shareholders No. 21/2557 to consider for approval the disposition of assets of the

Company which is 35 plots of land, totaling 31 rai 70 sq. wah together with 11 buildings located on

Ramkhamhaeng Road, Hua Mak Subdistrict, Bang Kapi District, Bangkok to Sirisub Patthana who is a

connected person to the Company at the price of Baht 980.00 million.

Such transaction is considered as a disposition of assets according to the Notification of the Capital Market

Supervisory Board No. TorJor. 20/2551 (2008) Re: Rules on Entering into Material Transactions Deemed

as Acquisition or Disposal of Assets and the Notification of The Board of Governors of the Stock Exchange

of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition

and Disposition of Assets B.E. 2547 including any later amendments (collectively called “Asset Acquisition

or Disposition Notification”). Based on the total consideration of Baht 980 million, the highest transaction

size calculated based on the Total Value of Consideration criteria, the transaction size is equal to 7.80% of

the total assets of the Company according to the audited consolidated financial statement of the Company

as at 31 December 2013. When this is combined with the disposition of other assets over the past 6

months with transaction size of 0.62% of total value of the Company’s assets, calculated based on Total


Page 5

Value of Consideration criteria, the combined transaction size is 8.42%. Therefore the transaction size is

considered insignificant according to the Asset Acquisition or Disposition Notification.

Furthermore, because Sirisap Pattana, the purchaser of the assets, is considered as a connected person of

the Company in which Mr. Panot Sirivadhanabhakdi who is the Vice Chairman of the Board of Director of

the Company is also a director of TCC Holding Company Limited (“TCC”) which is a major shareholder of

Sirisap Pattana (as at 21 November 2013, TCC holds 99.97% of Sirisap Pattana shares), the entering into

the transaction is classified as a connected transaction according to the Notification of the Capital Market

Supervisory Board No. TorJor. 21/2551 (2008) Re: Rules for making related transactions and the

Notification of The Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and

Other Acts of Listed Companies Concerning the Connected Transactions B.E. 2546 (2003) and its

amendment (collectively called “Connected Transaction Notification”). The transaction size is 16.18% of the

net tangible assets as at 31 December 2013 which exceeds 3% of the net tangible assets. The Company

did not enter into any transactions with the same related person or close relatives of such person over the

past 6 months. Therefore, the Company has a duty to disclose information of the transaction to the the

Stock Exchange of Thailand (“SET”) and is required to gain approval to enter into the transaction from

shareholders’ meeting in which the transaction requires not less than three fourths of the votes from

shareholders attending the meeting and eligible to vote. In addition, the Company is required to appoint an

independent financial advisor to provide their opinions concerning rationality, fairness of the price, and

conditions of the transaction to shareholders of the Company as part of the consideration for the transaction

approval. As the Company is a subsidiary company of Univentures Public Company Limited (“Univentures”);

therefore, the entering into transaction must also be approved from Univentures shareholders’ meeting as

well.

Currently, the Company has a policy to develop low-rise real estate in the Bangkok area with a price range

of Baht 3 – 6 million and commercial high-rise real estate, such as office building, hotel, etc. The Company

conducted feasibility studies of possible real estate development on this land; such as single detached

houses, town homes, condominium, etc. From the feasibility study, due to the land is relatively big and the

land cost is relatively high, the real estate projects which were suitable for the land are hi-end level low-rise

real estate projects and high-rise real estate projects. However, the investment costs developing the hi-end

level low-rise real estate projects with average price of more than Baht 10 million per unit and high-rise real

estates are high and the selling period is longer.

Furthermore, the IFA inquired the opinion of experts in the real estate industry; such as listed property

developers and owners of property companies and their opinions are in line with the Company’s studies that

on the appropriate projects to develop on the land and selling period of such projects.


Page 6

In addition, with the current financial constraints on high debt burden and high finance cost, which in 2011-

2013 the Company had finance cost of Baht 173.54 million, Baht 286.04 million and Baht 248.81 million

resulting in the Company’s deficit of Baht 253.33 million, Baht 618.15 million and Baht 454.15 million,

respectively. Subsequently additional borrowing from financial institutions is restricted; therefore the source

of funds to invest in the projects according to the Company’s policy is limited. For the mentioned reasons,

the Company has shown the intention to sell non-core land located on Ramkhamhaeng Road, Hua Mak

Subdistrict, Bang Kapi District, Bangkok comprising of 35 plots of land with total area of 31 rai 70 sq. wah.

Entering into transaction, the Company will receive Baht 926.54 million1 in cash (after deducting transfer fee

and tax of Baht 53.66 million) which Baht 500.00 million will be used to repay short-term loans from

financial institution, as a result will decrease financial cost by approximately Baht 25.00 million2 and the

remaining of Baht 426.54 million will be used as working capital of the Company and for investment in real

estate projects according to the Company’s policy. Moreover, the Company will recognize profits from sales

of assets of Baht 231.84 million3 which will lower the debt to equity ratio from 1.14 times to 1.01 times

(Details of the calculation in item 4.2)

On the negative side, the Company will lose the opportunity to receive rental and service income from

warehouse rental, lose the opportunity in developing a real estate project on the land, and lose opportunity

in the potential profits from the appreciation of the market price of the land in the future.

The Company has received an offer from Sirisub Patthana to purchase land and building for Baht 980.00

million, and has appointed Advanced Appraisal Company Limited (the “Independent Appraiser”) to appraise

the value of the land and building. The Independent Appraiser has appraised the value of the land and

building based on the Cost Approach at Baht 836.27 million. The offer price of Baht 980.00 million is

39.11% higher than book value as at 31 December 2013 and 17.19% higher than appraisal value by the

Independent Appraiser. As for the terms and conditions for the transaction, the IFA deems that the terms

and conditions of transaction are reasonable and as of common practice for this type of transaction,

therefore the Company’s shareholders will not deprived of any benefits.

Based on the above rationale, we have an opinion that the shareholders should vote in favor of the entering

into the transaction; however, the decision of approving or not approving this transaction is to be made at

the shareholders’ own discretion. 1 The offer price of Baht 980.00 million is deducted by transfer fee, special business tax and withholding tax of approximately Baht 53.46

million. Therefore, the Company will receive net cash of Baht 926.54 million. 2 Calculated based on the interest rate in the loan agreement with Thanachart Bank Public Company Limited for Baht 500.00 million loan. 3 Profit from asset sales is calculated from Baht 275.50 million of profit from asset sales deducting by transfer fee and tax of Baht 43.66

million. The Company is expected to be able refund Baht 9.80 million of withholding tax since to the Company’s has tax losses carried forward.


Page 7

2. Characteristics and Details of the Transaction

2.1. Type and Value of Transaction

The Company has the intention to sell 35 plots of non-core land with total area of 31 rai 70 sq. wah

located on Ramkhamhaeng Road, Hua Mak Subdistrict, Bang Kapi District, Bangkok together with 11

buildings. The aforementioned land and buildings are the Company’s ownership.

The transaction is considered as a disposition of assets according to the Notification of the Capital

Market Supervisory Board No. TorJor. 20/2551 (2008) Re: Rules on Entering into Material Transactions

Deemed as Acquisition or Disposal of Assets and the Notification of The Board of Governors of the

Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies

Concerning the Acquisition and Disposition of Assets B.E. 2547 including any later amendments

(collectively called “Acquisition or Disposal Notification”). Based on the total consideration of Baht 980

million, the highest transaction size calculated based on the Total Value of Consideration criteria, is

equal to 7.80% of the total assets of the Company according to the audited consolidated financial

statement of the Company as at 31 December 2013. When this is combined with the disposition of

other assets over the past 6 months with transaction size of 0.62% of total value of the Company’s

assets, calculated based on Total Value of Consideration criteria, the combined transaction size is

8.42%. Therefore the transaction size is considered insignificant according to the Asset Acquisition or

Disposition Notification. The transaction size is calculated as follows:

Calculation 31-rai 70 sq.wah Land at Ramkhamhaeng Transaction value (Baht million) 980 Total assets as of 31 December 2013 (Baht million) 12,580 Formula of calculation 980 x 100

12,580 Transaction size 7.80% Transaction size of disposed assets over the past 6 months 0.62% Total transaction size 8.42%

Furthermore, Sirisub Patthana, the purchaser of the assets, is considered as a connected person of the

Company in which Mr. Panot Sirivadhanabhakdi who is the Vice Chairman of the Board of Director of

the Company is also a director of TCC Holding Company Limited (“TCC”) which is a major shareholder

of Sirisap Pattana (as at 21 November 2013, TCC holds 99.97% of Sirisap Pattana shares), the

entering into the transaction is classified as a connected transaction according to the Notification of the


Page 8

Capital Market Supervisory Board No. TorJor. 21/2551 (2008) Re: Rules for making related

transactions and the Notification of The Board of Governors of the Stock Exchange of Thailand Re:

Disclosure of Information and Other Acts of Listed Companies Concerning the Connected Transactions

B.E. 2546 (2003) and its amendment (collectively called “Connected Transaction Notification”). The

transaction size is 16.18% of the net tangible assets as at 31 December 2013 which exceeds 3% of the

net tangible assets. The Company did not enter into any transactions with the same related person or

close relatives of such person over the past 6 months. Therefore, the Company has a duty to disclose

information of the transaction to the Stock Exchange of Thailand (“SET”) and is required to gain

approval to enter into the transaction from shareholders’ meeting in which the transaction requires not

less than three fourths of the votes from shareholders attending the meeting and eligible to vote. The

transaction size is calculated as follows:

Calculation 31-rai 70 sq.wah Land at Ramkhamhaeng Net tangible asset (Baht million)1/ 6,056 Transaction value (Baht million) 980 Formula of calculation 980 x 100

6,056 Transaction size 16.18%

Note 1/ Net tangible asset means total assets deducted by intangible assets such as goodwill,

deferred expenses before being ducted by liabilities and minority shareholders’ equity.

2.2. Value of Consideration and Basis for Determination of Consideration Value

Total value of consideration of disposed land on Ramkhamhaeng Road, Hua Mak Subdistrict, Bang

Kapi District, Bangkok of 35 plots, 31 rai 70 sq. wah with 11 items of buildings is Baht 980.00 million

which is the purchase price offered by Sirisub Patthana, the acquirer for the land. The offering price

excludes transfer fee and tax which the Company is responsible to pay.

Moreover, the offering price by Sirisub Patthana is higher than appraised value of land and building of

Baht 836.27 million which was appraised by Advance Appraisal Company Limited, an independent

appraiser accredited by The Valuers Association of Thailand and The Securities and Exchange

Commission (“SEC”).


Page 9

2.3. Connected persons and Nature of Relationship

1) Parties Involved

Seller : Golden Land Property Development Public Company Limited

Acquirer : Sirisub Patthana Company Limited

2) Relationship between the Involved Parties

Sirisub Patthana is a connected person to the Company. Mr. Panot Sirivadhanabhakdi who is the

Vice Chairman of the Board of Director of the Company is also a director of TCC which is a major

shareholder of Sirisub Patthana (as of November 21, 2013, TCC holds 99.97% of Sirisub Patthana

shares).

Note: The Company is Golden Land Property Development Public Company Limited TCC is TCC Holding Company Limited

Sirisub Patthana is Sirisub Patthana Company Limited

Accordingly, Mr. Panot Sirivadhanabhakdi, who is considered a director with a conflict of interest in

this connected transaction, did attend and vote on the agenda to approve this transaction at the

Board of Directors’ meeting.

2.4. Details of Asset Disposal

Type of Asset Land and buildings Location Ramkhamhaeng Road, Hua Mak Subdistrict, Bang Kapi

District, Bangkok Land Area Total area is 31 rai 70 sq. wah or 12,470 sq.wah Acquisition date 4 August 1995 Ownership Golden Land Property Development Public Company Limited Expropriation No expropriation for nearby area


Page 10

Contingents The asset is mortgaged to be collateral for a Baht 500 million loan with Thanachart Bank Public Company Limited

Related Laws The assets are located in Bangkok city plan, orange area (Yo. 6-20) which is moderately high density of residential area.

General Environment The asset is adjacent to Ramkhamhaeng Road. Surrounding environment is mostly commercial and residential with the important places such as Bangkok College of Industrial Technology, Saint Theresa School, Hua Mak Police Station, Ramkhamhaeng Hospital, Ramkhamhaeng University, etc. The liquidity of sales and development trend is considered moderate.

Accessibility Land is adjacent to public road and the accessibility is convenient

Details of land and buildings are as follows:

2.4.1 Land

The land comprise of 35 plots of land with total area of 31 rai 70 sq. wah or 12,470 sq.m. The

shape of the land is in rectangle shape with estimate 90 meters in width adjacent to the road

and 524 meters in depth. The details of 35 plots of land are as follows:

No. Title Deed

No. Survey Page Land No.

Land Area Rai Ngan Sq. wah

1 70046 3126 1299 1 0 1.00 2 70047 3127 1300 1 0 4.00 3 70048 3128 1301 1 0 7.00 4 70049 3129 2814 1 0 9.00 5 70050 3130 2815 1 0 12.00 6 70051 3131 2816 1 0 15.00 7 70052 3132 2817 1 0 17.00 8 70053 3133 2818 1 0 20.00 9 70054 3134 2819 1 0 22.00 10 70055 3135 2820 1 0 25.00 11 70056 3136 2821 1 0 28.00 12 70057 3137 2822 1 0 26.00 13 70058 3138 2823 1 0 21.00 14 70063 3143 2813 3 1 0.00 15 70064 3144 1297 1 0 0.00 16 70065 3145 1298 1 0 0.00 17 70066 3146 2789 1 0 0.00


Page 11

No. Title Deed

No. Survey Page Land No.

Land Area Rai Ngan Sq. wah

18 70067 3147 2790 1 0 0.00 19 70068 3148 2791 1 0 1.00 20 70069 3149 2792 1 0 1.00 21 70070 3150 2793 0 2 0.00 22 70071 3151 2794 0 2 0.00 23 70072 3152 2795 0 2 0.00 24 70073 3153 2796 0 2 0.00 25 70074 3154 2797 0 2 0.00 26 70075 3155 2798 0 2 0.00 27 70076 3156 2799 0 2 0.00 28 70077 3157 2800 0 2 0.00 29 70078 3158 2801 0 2 0.00 30 70079 3159 2802 0 2 0.00 31 70080 3160 2803 0 2 1.00 32 70081 3161 2804 0 2 1.00 33 70082 3162 2805 0 2 1.00 34 70083 3163 2806 0 2 1.00 35 94407 9739 2788 1 1 57.00

Total 31 0 70.00

Book value of land as of 31 December 2013 is Baht 692.90 million.


Page 12

Map of Land Title Deed


Page 13

2.4.2 Buildings

Details of all 11 buildings are as follows: Item Usable area (sq.m.) Age of building (years)

1. 8-story office building 8,332.00 35 2. 2-story office building with canteen 1,478.00 35 3. 2-story office building with warehouse 12,800.00 25 4. Warehouse 1 4,000.00 25 5. Warehouse 2 6,400.00 25 6. Warehouse 3 2,800.00 25 7. Warehouse 4 1,400.00 25 8. Warehouse 5 240.00 25 9. Guardhouse 1 2.50 25 10. Guardhouse 2 2.50 25 11. Guardhouse 3 2.50 25

Book value of all 11 buildings as of 31 December 2013 is Baht 11.60 million.

Location map of assets


Page 14

Pictures of the Buildings


Page 15

From the IFA’s survey of the buildings, it is evident that office buildings and warehouses have

not been well maintained. Some buildings are vacant and are not in a good condition for use.

Currently, the Company has leased some of the warehouses to 4 outside parties not related to

the Company in which the Company receives rental and service income of Baht 1.13 million per

month. After entering into the transaction, it is agreed that the obligations of the Company

according to the current lease agreement will be transferred to Sirisub Patthana until the period

stated in the lease agreement ends.


Page 16

Moreover, all lands and buildings are mortgaged as collateral for a Baht 500.00 million short-

term loan with Thanachart Bank Public Company Limited. However, the Company will release

any mortgage and obligation by repaying the Baht 500.00 million short-term loan to Thanachart

Bank Public Company Limited before transferring the ownership of land and building to Sirisub

Patthana.

2.5. Summary of Land with Building Sell-Purchase Agreement

The summary of the Sales-Purchase Agreement between the Company, as the “Seller” and Sirisub

Patthana Company Limited, as the “Acquirer”

Asset to be sold and purchased : The Seller agrees to sell and the Acquirer agrees to purchase

35 plots of land located in Hua Mak (Southern Hua Mak)

District, Bang Kapi District, Bangkok with the total area of 31 rai

70 sq. wah together with buildings on the land, equipment,

elevator system, air condition system, electricity system,

electricity transformers, water system, telephone system,

sanitary system and their components.

The land and buildings are free of obligation and mortgage

except for lease of buildings of no more than 3 years.

Price and payment : The Acquirer agrees to pay Baht 980,000,000 to the Seller and

the Seller allows the Acquirer make payments as follows:

1. The Acquirer agrees to deposit Baht 50,000,000 to the

Seller. The deposit will be part payment on the ownership

transfer date.

2. The remaining Baht 930,000,000 of asset price will paid to

the Seller on the ownership transfer date.

Registration of ownership

transfer

: The Seller and the Acquirer agree to transfer the ownership of

assets at the Official Land Office within 15 May 2014. In the

case, on that day, the Seller has not got approval to sell the

land from the shareholder’s meeting, the Seller and the

Acquirer agree to transfer the ownership of land within 15 days

from receiving the shareholder’s meeting approval but this shall


Page 17

not be more than 6 months from the agreement date.

Moreover, the Seller must transfer all assets simultaneously in

the same day without any obligation and mortgage except the

lease obligations.

Fee and tax : The Seller agrees to be solely responsible for fee, withholding

tax, stamp duty, and special business tax related to the

ownership transfer.

Right and duty of the Seller : 1. The Seller agrees not to make any obligation for the assets

except receiving written approval letter from the Acquirer.

2. The Seller agrees to transfer the original and copied

licenses and related documents which issued by the

government including the original of lease agreement on the

ownership transfer day.

3. The Seller agrees to transfer the telephone ownership to

the Acquirer without any compensation.

4. The Seller agrees to change user name for utilities with the

related parties within 30 days.

5. The Seller agrees to pay utility cost until the ownership

transfer day.

Land tax, building tax and local

tax

: The Seller agrees to be responsible for building tax and land

tax for the assets until the ownership transfer day.

Insurance deposit and Rental

income

: The Seller agrees to transfer insurance deposit of all tenants to

the Acquirer on the ownership transferring day.

Rental income and other benefits of all assets will belong to the

Acquirer from the ownership transfer day.

Termination of the agreement : If any party breaches the agreement, the non-breached party

must inform in writing the other party to act according to

agreement to within 30 days from the date informed of the

breach. If not, the non-breached party has a right to terminate


Page 18

the agreement.

If the Acquirer does accept the ownership transfer within the

period indicated the agreement, the Seller has a right to

withhold the deposit.

2.6. Conditions of the Transaction

The transaction is classified as a connected transaction according to the Notification of the Capital

Market Supervisory Board No. TorJor. 21/2551 (2008) Re: Rules for making related transactions and

the Notification of The Board of Governors of the Stock Exchange of Thailand Re: Disclosure of

Information and Other Acts of Listed Companies Concerning the Connected Transactions B.E. 2546

(2003) and its amendment (collectively called “Connected Transaction Notification”). Therefore, the

Company has to disclose the information of this transaction to the Stock Exchange of Thailand (“SET”)

and gain approval to enter into transaction from the shareholders’ meeting with not less than three

fourths of the votes from shareholders attending the meeting and eligible to vote. The Company has

arranged the Annual General Meeting of Shareholders No. 21/2014 on 21 April 2014 at 2.00 pm to

consider and approve entering into the transaction.

As of 13 March 2014 Univentures holds 58.59% shares in the Company, therefore the Company is

considered a subsidiary of Univentures. Hence, the entering into this transaction must be approved

from the shareholder’s meeting of Univentures as well. Univentures will arrange the Annual General

Meeting of Shareholders No. 35/2014 on 21 April 2014 at 9.30 am to consider and approve entering

into transaction.

On 13 January 2014, the Company signed sale-purchase agreement with Sirisub Patthana at the

purchase price of Baht 980.00 million. Sirisub Patthana agreed to deposit Baht 50.00 million and the

remaining of Baht 930.00 million will be paid on the date assets are transferred.

In case, the shareholders’ meeting of both the Company and Univentures approve entering into the

transaction, the Company will transfer the ownership of land and buildings to Sirisub Patthana within 15

May 2014. However, in case, the Company and Univentures have not got approval to enter into

transaction from the shareholders’ meeting by that date, it is agreed that to transfer the ownership of

assets will be within 15 days from gaining approval from the shareholders’ meeting of the Company

and Univentures but not more than 6 months from the signing date of the agreement. The Company


Page 19

expects that ownership transfer and payment from Sirisub Patthana will be completed within the

second quarter of 2014.

3. Summary of Company Information

3.1. Overview of Business Operations

The Company develops mainly 2 property types as follows:

1. Development of Residential Projects

2. Development of Commercial Projects

The details of characteristics of products and Services are as follows:

3.1.1 Residential Projects

In 2013, the Company has a policy to develop low-rise residences; detached house, town

house and home office for sale. The projects are developed and sold until 2013 as follows:

Golden Heritage Project

The project was developed in 2005. It is located on Ratchapruek Road, near Sathornbride.

The project occupies 154 rai 2 ngan 25.6 sq. wah consisting of 212 units. The project

emphasizes on the Grand Italian architectural style, which is combined with the dignity of

the classic architectural style. Currently, all residences of the project were sold out.

Golden Legend Project

The project was developed in 2005. It is located Kalaprapruek Road. The total area of the

project is 142-1-22 rai consisting of 272 units. The design of the premises on the project is

inspired by the charm of Mediterranean style. Currently, only 17 residences are unsold and

it is expected that it will sold out within 2014.

Golden Nakara Project

The project was developed in 2005. It is located on Rama IX Road which is on the east

side of Bangkok. The project can be conveniently reached via the motorway, and not far

away from Tub Chang station of the Airport Link facility. The total of the project is 106-1-

35.1 rai with 247 units of residence. The project is expected to be sold out in the middle of

2014.


Page 20

Grande Monaco Project

The project was developed in 2005. It is located in the east side of Bangkok, near the

outer ring and Bangna Trad Road. The total area is 64-1-41.9 rai with 181 units of

residences. The project is expected to be sold out in the middle of 2014.

Golden Village Project

The project is located in Banchang Subdistrict, Banchang District, Rayong province. The

project incorporated town houses, detached houses, and commercial buildings. The lands

and residences of the project are expected sold out within 2014.

Golden Avenue Chaengwattana-Tiwanon Project

The project was developed in 2012 located on Tiwanon Road, Soi Sukaprachasan 3. The

total area is 51-2-95.3 rai with 411 units of residences. The project consist 90 units of Baht

3-6 million detached houses and Baht 3-4 million twin houses, 321 units of Baht 2-3 million

town home.

3.1.2 Commercial Projects

The Ascott Sathorn Bangkok and Sky Villas

The project is located in the Central Business District (CBD). It is a modern 35-storied

residence and service apartment that is comprised of 177 units. The project is located

near the business areas of Silom and Sathorn and Chong Nonsi BTS station. It is

operated by The Ascott Group Ltd. which is a leading company in property management

and service from Singapore. From 21st to 35th story of this building are the locations of Sky

Vilas which are luxurious residences designed by renowned designers. The Company

holds 60% stake in this project.

Mayfair Marriott Executive Apartment

Mayfair Marriott is designed to be one of the most luxurious service apartments in

Bangkok. It is a 25-storied building with a license of hotel operation. The Company sold

building lease to Gold Property Fund (the Company holds 1/3 of the shares). The building

incorporates 164 units. These rooms have from 1 to 3 bedrooms. It is managed by Marriott

International which is a world’s leading company in hotel management. The project is

located in the heart of Lang Suan Road, not far from a BTS station and close to Lumpini

Park, which is considered one of the best parks in the business area of Bangkok. The

Company holds 33% stake in this project.


Page 21

Golden Land Building

Golden Land Building provides around 11,000 square meters space to lease. This building

is 8-story high, with one basement floor. It is located near important shopping centers and

hotels such as Central World, Gaysorn Plaza, Central Chidlom department store, Four

Seasons Hotel, Grand Hyatt Erawan Hotel and Inter Continental Hotel. Furthermore, the

Golden Land Building is just a few minutes’ walk from Rajadamri and Chidlom BTS

stations. The Building itself is designed to have flexibility in space usage in order to fit

different requirements of customers who lease the space. The Company holds 100% stake

in this project.

Panarama Golf and Country Club

Panarama Golf and Country Club is located in Si Khew District, Nakhon Ratchasima

Province. It is a resort for those who desire to rest or reside in the center of beautiful hill

side scenery. The project occupies 2,000 rai which incorporates an 18 holed-standard golf

course surrounded with hills, natural waterfalls, allocated lands, condominiums, single

detached houses, a golf training center, a sport complex, a forest park, a gigantic club with

many shops and seminar rooms, and free spaces which are ready for the development in

the future. The Company holds 100% stake of the project.

Ramkhamhaeng Complex (Inscape Ramkhamhaeng)

The project is located on Ramkhamhaeng Road, with total area of 31.18 rai comprising of

an 8-storied building with the 8,010 sq.m. area for rent, and the warehouses for rent with

total are for rent of 31,046 sq.m. The Company holds 100% stake of the project.

Sathorn Square

This project is a 40-storied office building with the space of 75,000 square meters, located

in a major business area of Bangkok. It is at the intersection between Sathorn and

Narathiwas Roads. This building is accessible through the passage from Chong Nonsi

BTS station. Sathorn Square has the unique architectural style. Most importantly, each of

the space to lease in this building is widely opened because there is no pillar; thus, the

usage of the space is flexible. The Company holds 100% stake of this project.

FYI Center Project

The project is located opposite to Queen Sirikit National Convention Center and the Stock

Exchange of Thailand. The project is built on 8-3-75.28 rai of land located on the corner of

the intersection between Rama IV Road and Ratchadapisek Road, near Queen Sirikit


Page 22

Center MRT station. The project will be developed into office space for rent and standard

hotel. It is expected to be completed in 2017. The Company holds 100% stake of the

project.

W Hotel Bangkok

W Hotel Bangkok is located beside Sathorn Square Office Tower, on Sathorn Road. It is a

403-room luxurious hotel with several facilities. Besides that, it is also conveniently

accessible via several transportation channels including cars and the BTS sky train. This

lively hotel is suitable for those who want to stay away frenzy of the metropolis. It has

been operating since December 2012. The Company holds 20% stake of the project.

3.2. List of Shareholders

Top 10 shareholders as of 13 March 2014 as follows:

Shareholder Name No. of Shares % Shareholding 1. Univentures Public Company Limited 747,789,387 58.59% 2. Well Base Development Limited 282,366,000 22.12% 3. Thai NDVR Company Limited 37,815,505 2.93% 4. Bualuang Top Ten Open-end Fund 13,641,400 1.07% 5. Bualung Infrastucture Fund 9,469,500 0.74% 6. Bualund Infrastructure 7,453,300 0.58% 7. Mr. Chukiat Rujanapornpaji 4,050,000 0.32% 8. Mrs. Sudjai Wutthisaksilp 3,750,000 0.29% 9. Mr. Sanid Dusadeenord 3,605,200 0.28% 10. Mr. Boonkiat Eiarsudkij 3,490,000 0.27%

3.3. Management Structure

3.3.1. Board of Director

As of 13 March 2014, the Company’s Board of Director consisted of 9 members as follows:

Name Title 1. Mr. Wanchai Sarathulthat Chairmen of the Board 2. Mr. Panot Sirivadhanabhakdi Vice Chairman 3. Mr. Thapana Sirivadhanabhakdi Director 4. Mr. Chotiphat Bijananda Director 5. Mr. Sithichai Chaikriangkrai Director 6. Mr. Weerawong Chittmittrapap Independent Director and Chairman of Audit Committee 7. Mr. Chainoi Puankosoom Independent Director and Audit Committee 8. Mr. Udom Puasakul Independent Director and Audit Committee 9. Mr. Thanapol Sirithanachai Director

Note: Mr. Thapana Sirivadhanabhakdi (brother of Mr. Panot Sirivadhanabhakdi) is not connected person for the transaction


Page 23

3.3.2. Executive Committee

As of 13 March 2014, the Executive Committee consisted of 6 members as follow:

Name Title 1. Mr. Panot Sirivadhanabhakdi Executive Chairman 2. Mr. Sithichai Chaikriangkrai Executive Committee 3. Mr. Thanapol Sirithanachai Executive Committee 4. Mr. Somboon Wasinchutchawal Executive Committee 5. Mr. Saenphin Sukhee Executive Committee 6. Mr. Khumpol Poonsonee Executive Committee

3.3.3. Compensation and Nominating Committee

As of 13 March 2014, the Compensation and Nominating Committee consisted of 3 members as

follows:

Name Title 1. Mr. Wanchai Sarathulthat Chairman of Compensation and Nominating

Committee 2. Mr. Panot Sirivadhanabhakdi Compensation and Nominating Committee 3. Mr. Chainoi Puankosoom Compensation and Nominating Committee


Page 24

3.4. Operating Results and Financial Position

3.4.1. Summary of Operating Results and Financial Position

Statement of Financial Position

Note: 35 plots of land, 31 rai 70 sq.wah and buildings are recorded in Investment Properties.

31-Dec-13 31-Dec-12 31-Dec-11

(Restated)

Million Baht Million Baht Million BahtCurrent Assets

Cash and cash equivalents 164 219 820

Current investment - fixed deposit 40 114 84

Current investment under commitments -

- Saving deposits - - 0

Trade account receivable 121 118 44

Amount due from related parties 2 1 5

Short-term loans to related parties - 196 171

Real estate projects under development 1,884 656 1,035

Other current assets 72 81 93

Assets classified as held for sale 51 - - Total current asset 2,333 1,385 2,252

Non-current assets

Deposit at banks under commitments 6 7 9

Investment in associated 271 371 421

Investment in subsidiaries - - -

Amounts due from related parties - - -

Long-term loans to related parties 175 - -

Properties developed for sale 155 149 149

Investment properties 6,213 6,429 6,069

Leasehold rights 1,489 1,522 2,002

Property, plant and equipment 1,787 1,692 1,656

Intangible assets 55 48 52

Deferred tax assets 21 27 -

Other non-current assets 76 67 73 Total non-current asset 10,247 10,312 10,431 Total assets 12,580 11,697 12,683


Consolidated


Page 25

Note: Baht 500 million short-term loan from Thanachart Bank Public Company Limited is recorded in bank overdraft

and short-term loans from financial institutions.

31-Dec-13 31-Dec-12 31-Dec-11

(Restated)

Million Baht Million Baht Million BahtCurrent liabilities

Bank overdrafts and short-term loans from

financial institutions 866 2 4

Trade account payable 132 40 231

Amount due to related parties - - 0

Current portion of long-term loans from - - -

financial institutions 243 1,343 509

Current portion of deferred income 30 30 30

Current portion of finance lease liabilities - - 4

Income tax payable - 1 7

Short-term provisions - - 2

Advanced receipts for exercising warrants 25 2 -

Other current liabilities 379 476 963 Total current liabilities 1,675 1,893 1,749

Non-current liabilities

Long-term loans from financial institutions 3,023 1,972 2,871

Amounts due to related parties - - -

Loang-term loans from related parties - - -

Long-term loans from shareholder 273 262 252

Deferred income 769 799 829

Deferred tax liabilities 204 206 -

Employee benefit obligation 16 24 23

Long-term provisions 206 156 27

Other non-current liabilities 527 445 237 Total non-current liabilities 5,018 3,864 4,239

Total liabilities 6,693 5,757 5,988

Equity

Share capital Authorised share capital 16,382 16,382 16,382

Issued and paid-up share capital 12,679 11,341 11,341

Discount on ordinary shares (4,747) (3,811) (3,811)

Retained earning (Dificit) - - -

Appropriated - legal reserve 104 100 99

Deficit (1,905) (1,469) (768) Equity attributable to owners of the Company 6,132 6,161 6,862

Non-controlling interests (245) (221) (167) Total equity 5,887 5,940 6,695 Total liabilities and equity 12,580 11,697 12,683


Consolidated


Page 26

Comprehensive Income Statement

2013 2012 2011(Restated)

Million Baht Million Baht Million BahtIncome

Revenue from sales of real estate 622 846 583 Revenuw from rental and services 921 775 471 Revenue from golf course operation 22 23 22 Management fee income 8 6 14 Reversal of impairment loss on investment - - - Investment income 14 23 35 Other income 6 8 18 Total income 1,594 1,681 1,144Expenses

Cost of sale of real estate 484 636 384 Cost of rental and services 621 578 372 Cost of golf course operation 12 12 11 Selling expenses 45 73 61 Aministrative expenses 561 686 420 Inpairment loss on investment - - - Financial costs 249 286 174 Total expenses 1,972 2,272 1,422

Share of loss of associated (69) (2) 46Loss before income tax expense (447) (593) (232)

Income tax expense (7) (27) (21) Loss for the yeat (454) (620) (253) Other comprehensive income

Defined benefit plan actuarial gains - 2 -Other comprehensive income for the year - 2 - Total comprehensive income for the year (454) (618) (253)

For the year ended 31 December

Statement of Comprehensive Income


Page 27

Cash Flow Statement

Financial Ratio

Financial Ratio 2013 2012

(Restated)

2011

1 Liquidity Ratio Current ratio 1.39 0.73 1.29 Quick ratio 0.19 0.24 0.54 Cash ratio (time) -0.56 -0.05 0.05 Receivable turnover 13.12 18.98 25.45 Average collection period (days) 27.44 18.97 14.34 Inventory turnover 0.38 0.75 0.30 Average day sale (days) 945.51 478.33 1,215.16 Payable turnover 5.62 4.71 4.12 Average payment period (days) 64.02 76.44 88.56 Cash cycle (days) 1,036.96 573.74 1,140.94 2 Profitability Ratio Gross profit margin ( %) 29% 25% 29% Net profit margin (%) -27% -34% -22% Return on equity (%) -7% -9% -4% 3 Efficiency Ratio Return on asset (%) -4% -5% -2% Return on fixed asset (%) -22% -30% 1% Total asset turnover 0.13 0.14 0.10 4 Financial Policy Ratio Bank debt to equity ratio (time) 0.55 0.56 0.51 Total debt to equity ratio (time) 1.09 0.93 0.89 5 Per Share Book value per share (Baht) 4.84 5.43 6.66 Net profit per share (Baht) -0.35 -0.49 -0.23 6 Growth Rate Total assets (%) 8% -8% 15% Total liabilities (%) 16% -7% -8% Selling income -5% 53% -43% Operating expenses -20% 58% -19% Net loss -27% 145% -22%

2013 2012 2011(Restated)

Million Baht Million Baht Million Baht

Net cash from (used in) operating activities (991) (84) 93 Net cash from (used in investing activities (88) (190) (1,500) Net cash from (used in) financing activities 1,024 (326) 1,862 Net increase (decrease) in cash and cash equivalents (55) (600) 455

Cash and cash equivalents at 1 January 219 820 365 Cash and cash equivalents at 31 December 164 219 820

For the year ended 31 December

Statement of Cash Flow


Page 28

3.4.2. Management Discussion and Analysis

1) Performance Analysis

Revenue from Sale of Real Estate

In 2011, revenue from sale of real estate decreased by Baht 583 million from year before or a

decrease of 36% due to decrease in ownership transfer of housing projects which are at the

last stage of the project, namely Golden Legend Project, Golden Nakara Project and Grand

Monaco Project. With the effect of flood crisis in Bangkok, the construction and ownership

transfer are slow down.

In 2012, revenue from sale of real estate increased by Baht 846 million from year before or

an increase of 45% due to increasing of ownership transfer of Golden Heritage Phase II

Project and Grand Monaco Phase I project.

In 2013, revenue from sale of real estate decreased by Baht 622 million from the year before

or a decrease of at 26% due to decreasing of ownership transfer of old housing projects. The

Company has not recognized revenue from new developing projects.

Revenue from Rental and Service

In 2011, revenue from rental and service increased by Baht 471 million from the year before

or an increase of 10% due to the confidence of tourists on Thai politics, together with the

recovery of tourism in Thailand, increase of occupancy rate in outer Bangkok at the end of

year (period of flood crisis)

In 2012, as the impact of restated financial statement for 2012 according to new accounting

standard, revenue from rental and service changed from Baht 713 to 775 million. Compared

with the year before, revenue from rental and service increased by 65%, due to increase of

revenue of rental and service from Sathorn Square.

In 2013, revenue from rental and service increased by Baht 921 million from the year before

or an increase of 19% due to mostly increase of revenue from Sathorn Square office tower.

Revenue from Golf Course Operation

In 2011 – 2013, revenues from golf course operation were Baht 22 million, Baht 23 million

and Baht 22 million, respectively.


Page 29

Cost of Sale of Real Estate

In 2011, cost of sale of real estate was Baht 384 million including Baht 8 million of asset

impairment. The decrease of cost to revenue ratio resulted from the decrease of construction

cost.

In 2012, cost of sale of real estate was Baht 636 million including Baht 12 million of asset

impairment. The increase of cost to revenue ratio resulted from the increase of utility

improvement for housing projects.

In 2013, cost of sale of real estate was Baht 484 million which was 78% of revenue. The

increase of cost to revenue ratio resulted from the increase of utility improvement for housing

projects.

Cost of Rental and Service

In 2011, cost of rental and service was Baht 372 million or 79% of revenue from increase of

cost of rental and service for Sathorn Square Office which has been operated since quarter 3,

2011.

In 2012, cost of rental and service was Baht 578 million or 81% of revenue. The increase was

from the cost of Sathorn Square Office and recognition of depreciation and land rental in

September 2011 when the project construction finished.

In 2013, cost of rental and service was Baht 621 million or 67% of revenue resulted mostly

from increase of occupancy rate of Sathorn Square Office; meanwhile variable service cost

increased according to occupancy rate. Fixed cost and depreciation did not increase much.

Cost of Golf Course Operation

In 2013, cost of golf course operation was Baht 13 million or 56% of revenue. In 2012, the

cost was Baht 12 million or 51% of revenue. In 2011, the cost was Baht 11 million or 48% of

revenue.

Selling Expense

In 2011, selling expense was Baht 61 million a decrease of Baht 12 million or 17% from 2010.

It resulted from decrease of marketing expenses especially for Grand Monaco Project and

Golden Heritage Project which were in the last stage of the projects.


Page 30

In 2012, selling expense was Baht 73 million, an increase of Baht 12 million or 20% from

2011 due to the increase of selling expense (brokerage expense) for Sathorn Square.

In 2013, selling expense was Baht 45 million, a decrease of Baht 28 million or 39% from 2012

resulting mainly from selling expense of Sathorn Square project by displacing brokerage with

the Company officers for selling the projects.

Administration Expense

In 2011, administration expense was Baht 420 million or 37% of total revenue, a decrease of

Baht 125 million or 17 from 2010, mainly due to the decrease of rental insurance of Baht 55

million, the decrease of expense for lawsuit liability estimation of Baht 24 million.

In 2012, administration expense was Baht 686 million or 41% of total revenue, an increase of

Baht 266 million or 63% from 2011 mainly due to increase of lawsuit liability estimation,

allowance for asset devalue, building tax from increase in rental of Sathorn Square and

business tax from land and housing ownership transfer.

In 2013, administration expense was Baht 561 million or 35% of total revenue, a decrease of

Baht 125 million or 18% from 2012 mainly due to the decrease of lawsuit liability estimation,

allowance for asset devaluation, unemployment benefits, management fee, etc.

Net Profit (Loss)

In 2011, net loss was Baht 253 million. In 2012, net loss after restated according to new

accounting standard was Baht 620 million (previous Baht 667 million) and in 2013 net loss

was Baht 454 million.

2) Analysis of Financial Position

Total Assets

In 2012, as the impact of restated financial statement according to new accounting standard

as of 31 December 2012, the Company had total assets of Baht 11,697 million. As of 31

December 2013, the Company had total assets of Baht 12,580 million an increase from the

year before mainly resulted from the increase of developing property projects and the

Company invested to purchase new lands for 5 real estate projects.

Total Liabilities

As of 31 December 2012, the Company had total liabilities of Baht 5,757 million. Compared

with restated financial statement of the year before, liabilities decreased due to the payment in


Page 31

trade accounts payable, retention payment, prepaid revenue decrease from housing

ownership transfer and other current liabilities and increase of lawsuit liability estimation. As of

31 December 2013, the Company had total liabilities of Baht 6,693 million which increased

from the year before due to the increase of Baht 1,051 million in long-term loans from

financial institution used for housing development. The Company used short-term loans for

repayment to be inconsistent with warrant exercise on 31 March 2014 and selling of non-core

assets in 2014.

Total Equity

Total equity as of 31 December 2012 and 31 December 2013 were Baht 6,161 million and

Baht 6,132 million, respectively. The decrease was mainly due to the net losses of the

Company.

3) Liquidity

In 2011, net cash from operating activities was Baht 93 million decreasing from the year

before. It mostly resulted from the decrease of real estate income because the Company did

not open any new projects but focused on the construction of Sathorn Square Office Tower.

Net cash used in investing activities decreased from last year resulting from acquisition of

land from Ascott, investment in Sathorn Square and Rama IV projects, including no cash

flows from sales of non-core assets as in the year before. Net cash from financing activities

increased from last year due to issuance of new shares to shareholders in total of Baht 1,512

million.

In 2012, net cash used in operating activities was Baht 84 million. Although increase in

transfers of houses but operating expenses still maintain at a high level and cash flows from

Sathorn Square projects was in the beginning stage. Net cash used in investing activities

was Baht 190 million mainly continuous investment Rama IV project. Net cash used in

financing activities was Baht 326 million mainly from interest payments.

In 2013, net cash used in operating activities was Baht 991 million mainly from cash flow

used in 5 new projects. Net cash used in investing activities was Baht 88 million mainly from

investments in equipment to construct new housing projects, improvement to investment

properties and investment is new software. Net cash from financing activities was Baht 1,024

million. The changes were mainly from the Company received the proceeds from the

exercised warrants for Baht 424 million and interest and fee paid of Baht 227 million.


Page 32

3.5. Industry Overview

3.5.1. Real Estate Industry Situation

In Overview of residence market in 2013, registered residences in Bangkok and suburb area are

117,900 units with 5.5% increase. It is classified to 21,240 units of self-constructed housing, 2.9%

decrease from 2012 (21,850 units) and 96,660 units of housing development, 7.4% increase from

2012 (89,538 units) Data comparison for registered residences classified by operation type in 2008 – 2013

Type 2008 2009 2010 2011 2012 (Jan-May)

2013 (Jan-May)

Self-Constructed 24,017 19,618 22,498 20,128 21,850 21,240

Housing Development 61,562 75,359 84,395 61,728 89,538 96,660

Total 85,579 94,977 106,893 81,856 111,388 117,900

% change 9.9% 11.1% -30.6% 26.5% 5.5% Source: REIC

In 2013, market of condominium still mostly expands. The new condominiums are around 84,250

units from 180 projects, followed by new town house around 28,047 units from 144 projects and

new detached house around 12,789 units from 99 projects, respectively. The Condominium mostly

expends along with sky train routes both in current and previous routes. (Unit: units)

3.5.2. Industry Trend and Competitive Environment in the Future

In 2014 real estate industry is expected to have continuous growth according to expanding of the

overall economy, decreasing interest rate resulting in the increase in confidence level of investors

and consumers. In addition, government related infrastructure system projects expanding to up

country areas and AEC in 2015 will have positive impact on middle level in real estate business.

+29%


Page 33

In 2014, the proportion of low-rise residence will increase form 2013. However, there are negative

factors from slow down economic situation and lack of labor. The crisis of labors will encourage

the project developers to use semi-finished products for construction and displace labors with

technology. The significant positive and negative factors for real estate market; such as Thai

economic situation, inflation rate, price of construction material, strictness of commercial bank,

residence price, etc.

4. The Reasonableness to Enter into the Transaction

4.1. Objective and Necessity of the Transaction

In 1995, the Company purchased 35 plots of lands, 31 rai 70 sq.wah located on Ramkhamhaeng Road,

Hua Mak Subdistrict, Bang Kapi District, Bangkok along with 11 buildings on the land with the main

objective to use the land, which the Company foresaw the potential, to develop a real estate project.

After the purchase was made, the buildings have not been maintained or develop for rental purpose;

however, there were some interested parties who ask to rent the some of the warehouses.

Subsequently, there were several changes in the Company’s shareholders, boards of directors, and

management until the present. The Board of Director had considered and deemed that the

aforementioned land is non-core asset so therefore approved in principle for the land to be sold.

As the current Board of Directors and management direction, the Company has a policy to develop

low-rise real estate in the Bangkok area with a price range of Baht 3 – 6 million and commercial high-

rise real estate, such as office building, hotel, etc. The Company conducted feasibility studies of

possible real estate development on this land; such as single detached houses, town homes,

condominium, etc. From the feasibility study, due to the land is relatively big and the land cost is

relatively high, the real estate projects which were suitable for the land are hi-end level low-rise real

estate projects and high-rise real estate projects. However, the investment costs developing the hi-end

level low-rise real estate projects with average price of more than Baht 10 million per unit and high-rise

real estates are high and the selling period is longer.

Furthermore, IFA inquired the opinion of experts in the real estate industry; such as listed property

developers and owners of property companies and their opinions are in line with the Company’s study

that on the appropriate projects to develop on the land and selling period of such projects.

In addition, with the current financial constraints on high debt burden and high finance cost, which in

2011-2013 the Company had finance cost of Baht 173.54 million, Baht 286.04 million and Baht 248.81

million resulting in the Company’s deficit of Baht 253.33 million, Baht 618.15 million and Baht 454.15


Page 34

million, respectively. Subsequently additional borrowing from financial institutions is restricted; therefore

the source of funds to invest in the projects according to the Company’s policy is limited. For the

mentioned reasons, the Company has shown the intention to sell non-core land located on

Ramkhamhaeng Road, Hua Mak Subdistrict, Bang Kapi District, Bangkok comprising of 35 plots of

land with total area of 31 rai 70 sq. wah. The Company advertised the sales of the land to the public

through announcement in Naewna Newspaper, dated 25 - 27 December 2013 and Prachachat Turakij

newspaper, dated 2 – 5 January 2014. Harrison Public Company Limited was appointed to be the

representative of the Company to contact the interest parties who sent in bids to purchase the

aforementioned land. Sirisub Patthana which is considered a connected person of the Company as Mr.

Panot Sirivadhanabhakdi who is the Vice Chairman of the Board of Director of the Company is also a

director of TCC which is a major shareholder of Sirisub Patthana (as of November 21, 2013, TCC

holds 99.97% of Sirisub Patthana shares) showed the intention to purchase the aforementioned land

and buildings offering the purchase price of Baht 980.00 million which is the higher price than other

bidders. Therefore, the Company signed a sale-purchase agreement with Sirisub Patthana on 13

January 2014. The Company will increase cash flow from entering into transaction to be utilized for

short-term debt repayment to financial institution and investment real estate projects according to the

Company’s policy.

4.2. Advantages and Benefits of Entering into the Transaction

1) Higher Financial Liquidity

The Company will receive Baht 926.54 million from the transaction (after deducting by transfer

fee of Baht 53.46 million). The Company has plans to utilize the proceeds to repay short-term

loans of Baht 500.00 million and the remaining Baht 426.54 million will be used as working

capital and used to invest in new real estate projects with high return in potential locations

according to the Company’s policy.

2) Recognize Profit from Asset Disposition

Book value of the assets to be disposed is Baht 704.50 million according to consolidated financial

statement of the Company as of 31 December 2013. In entering into the transaction, the

Company will receive Baht 980.00 million in return for the assets; therefore, the Company will

recognize profit from sales of assets of Baht 231.84 million. The details are as follows:


Page 35

Item Million Baht

Asset price 980.00

Related expenses

Transfer fee1/ (11.32)

Special business tax2/ (32.34)

Withholding tax3/ (9.80)

Total related expenses (53.46)

Book value as of 31 December 2013 704.50

Profit from asset disposal 231.84

Note: 1/ Transfer fee is equal to 2% of appraised price of land by the government agency

2/ Special business tax is equal to 3.3% of selling price

3/ Withholding tax is equal to 1% of selling price

Withholding tax of Baht 9.80 million will be credited in the calculations for corporate income tax

for 2014. Since the Company tax loss carried forward, it is expected that the Company will use

tax loss carried forward and be able to refund the withholding tax occurred from the transaction.

For this reason, the IFA did not include the aforementioned withholding tax in the related

expenses. Therefore, net selling price after deducting by transfer fee and special business tax is

Baht 936.34 million; hence the Company will recognize Baht 231.84 million in profit from sales of

assets.

3) Improved Shareholder Equity

The Company will recognize Baht 231.84 million in profit from sales of assets which will result in

increase in retained earnings. The Baht 926.34 million of cash flow from the asset disposal will

be utilized for short-term debt repayment at Baht 500.00 million which will decrease of DE ratio

from 1.14 times to 1.01 times. The details are as follows:

Item Consolidated Financial Statement (Million Baht)

As of 31 December 2013 After the transaction Total liabilities - before the transaction 6,692.67 6,692.67 Debt repayment to financial institution - (500.00) Total liabilities 6,692.67 6,192.67 Total equity – before the transaction 5,886.87 5,886.87 Profit from asset disposal - 231.84 Total equity 5,886.87 6,118.71 Debt to equity ratio (times) 1.14 1.01

Note: Debt to equity calculated is only the direct impact from entering into transaction only. It does not consider impact from

future performance of the Company or any future borrowing of the Company in the future.


Page 36

Furthermore, the remaining Baht 426.54 million will be used as working capital of the Company

and used to invest in potential real estate projects which should generate profits and returns for the

Company in the future.

4.3. Disadvantages and Risks of Entering into the Transaction

1) Loss rental and service income from the assets

Currently, the Company has allowed 4 outside parties, who are not connected to the Company,

lease some part of the land and buildings in which the Company receives rental and service

income of Baht 1.13 million monthly. If the Company sells the land and buildings, the Company

will lose the aforementioned rental and service income.

2) Opportunity Loss for Project Development on the Land

The land is adjacent to Ramkhamhaeng Road and nearby important places; such as

Ramkhamhaeng University, Stadium, shopping mall and hospital which is considered a potential

location where the Company can develop a real project. However, the Company studied the

feasibility of the projects on the land and discovered that the potential projects were not

consistent with the Company’s policy at the present. Therefore, the Company does not have a

policy to develop a project on the land.

3) Opportunity Loss to Make a Profit from the Appreciation of Market Price of Land in the

Future

This land is adjacent to Ramkhamhaeng Road has the potential to develop commercial and

residential projects. Therefore, the trend of land price may increase in the future. If the Company

sells the land now, the Company may lose the opportunity to make a higher profit from the

appreciation of the market price of land in the future.

4.4. Comparison Benefits and Impacts between Entering into the Transaction with a Connected Party

and that with a Third Party

The sales of the Company’s land along with 11 buildings which the Company advertised to the public

through announcement in Newspaper where the interested parties that sent in a bid comprise of both

parties who are a connected person and third party. However, the offering price from the connected

person of Baht 980.00 million was higher than other bids, and was higher than the appraised value of


Page 37

the assets, therefore entering into the transaction with a connected person in this case will be most

beneficial to the Company.

However, entering into the transaction with a connect person will take longer time to approve including

higher expenses as the connected transaction must be approved by the shareholder’s meeting and

require the Company to appoint an independent financial advisor to provide an opinion on the

connected transaction.

5. Fairness of Price and Conditions of the Transactions

5.1. Book Value of Assets

Assets consist of 35 plots of land with total area of 31 rai 70 sq. wah and 11 buildings. As of 31

December 2013, the detail of book value is as follows:

Item Asset Value (million Baht)

Accumulated Depreciation (million Baht)

Book Value (million Baht)

Land 35 plots, 31 rai 70 sq. wah 692.90 - 692.90 11 Buildings 136.56 124.96 11.60 Total 829.46 124.96 704.50

5.2. The Appraised Value of Disposed Assets

The assets to be disposed are land and buildings which the buildings have not been maintained and

developed, thus the assets are not utilized to it full benefit. Moreover, the Company does not have a

plan to develop on project on the land, therefore the IFA considers the value of disposed assets from

the appraised value of the assets by Independent Appraiser.

5.2.1. The Appraised Value of Assets by the Independent Appraiser

The Company appointed Advanced Appraisal Company Limited (the “Independent Appraiser”) to

appraise the value of the assets. The Independent Appraiser surveyed the assets on 13 February 2014

and issued an appraisal report dated 20 February 2014. The Independent Appraiser is certified by The

Valuers Association of Thailand and The Securities and Exchange Commission

The Independent Appraiser considered factors related the appraised asset; such as legal restriction,

land characteristics, land utilization, market situation, other restrictions, assumptions, and other


Page 38

conditions of appraisal. In appraising the assets, the Independent Appraiser applied Cost Approach and

Income Approach, details as follows:

1) Cost Approach

In the Cost Approach, the Independent Appraiser estimated value of the land using Market

Approach and the building by applying Replacement Cost Approach.

Land

The Independent Appraise inspected value of lands for registration of right and juristic act,

which was determined by the Treasury Department. . The details are as follows:

No. Title Deed

No.

Land Area Appraised price by the government

agency (Baht/sq.wah)

Appraised price by the government

agency (Baht) Rai Ngan Sq.wah

1 70046 1 0 1.00 130,000 52,130,000

2 70047 1 0 4.00 43,000 17,372,000

3 70048 1 0 7.00 43,000 17,501,000

4 70049 1 0 9.00 43,000 17,587,000

5 70050 1 0 12.00 43,000 17,716,000

6 70051 1 0 15.00 43,000 17,845,000

7 70052 1 0 17.00 43,000 17,931,000

8 70053 1 0 20.00 43,000 18,060,000

9 70054 1 0 22.00 43,000 18,146,000

10 70055 1 0 25.00 43,000 18,275,000

11 70056 1 0 28.00 43,000 18,404,000

12 70057 1 0 26.00 43,000 18,318,000

13 70058 1 0 21.00 43,000 18,103,000

14 70063 3 1 0.00 21,500 27,950,000

15 70064 1 0 0.00 130,000 52,000,000

16 70065 1 0 0.00 43,000 17,200,000

17 70066 1 0 0.00 43,000 17,200,000

18 70067 1 0 0.00 43,000 17,200,000

19 70068 1 0 1.00 43,000 17,243,000

20 70069 1 0 1.00 43,000 17,243,000

21 70070 0 2 0.00 43,000 8,600,000

22 70071 0 2 0.00 43,000 8,600,000

23 70072 0 2 0.00 43,000 8,600,000

24 70073 0 2 0.00 43,000 8,600,000

25 70074 0 2 0.00 43,000 8,600,000

26 70075 0 2 0.00 43,000 8,600,000


Page 39

No. Title Deed

No.

Land Area Appraised price by the government

agency (Baht/sq.wah)

Appraised price by the government

agency (Baht) Rai Ngan Sq.wah

27 70076 0 2 0.00 43,000 8,600,000

28 70077 0 2 0.00 43,000 8,600,000

29 70078 0 2 0.00 43,000 8,600,000

30 70079 0 2 0.00 43,000 8,600,000

31 70080 0 2 1.00 43,000 8,643,000

32 70081 0 2 1.00 43,000 8,643,000

33 70082 0 2 1.00 43,000 8,643,000

34 70083 0 2 1.00 43,000 8,643,000

35 94407 1 1 57.00 21,500 11,975,500

Total appraised price by the government agency 565,971,500 Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

The total appraised price by the government agency for the 35 plots of land is Baht 565.97

million.

The Independent Appraiser estimated land value by surveying sale-purchase price and

offering price of lands from 5 datas which are located nearby the appraised land on

Ramkhamhaeng Road and Hua Mak Road. However, the Independent Appraiser considered

that the land in data 1 was sold in 2010 therefore the land in data 1 is not a good

comparable for the appraised land. The Independent Appraiser did not use the land data 1

for this asset appraisal. The comparable land data is shown as follows:

Description Comparable Land

Data 2 Data 3 Data 4 Data 5

Type of asset Vacant land Vacant land Vacant land Vacant land

Location Adjacent to

Ramkhamhaeng Road

Adjacent to

Ramkhamhaeng Road

Adjacent to Hua Mak

Road

Adjacent to

Ramkhamhaeng soi

32 section 4

Area (sq.wah) 1,167 6,033 2,405 800

Land Shape Rectangle Rectangle Rectangle Rectangle

Land Size 26 meters in width and

187 meters in depth

36 meters in width and

680 meters in depth

45 meters in width 40 meters in width and

80 meters in depth

Land level At road level At road level 1 meter below road

level

0.50 meter below road

level

Current Utilization No utilization Partly utilization for

petrol

Under condominium

development

No utilization

Public Utilities Power, water supply, Power, water supply, Power, water supply, Power, water supply,


Page 40

Description Comparable Land

Data 2 Data 3 Data 4 Data 5

telephone and drain telephone and drain telephone and drain telephone and drain

Offered or sales price

(Baht/sq.wah)

200,000 160,000 69,503 34,000

Date of data collection 13 February 2014 13 February 2014 13 February 2014 13 February 2014 Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

Land is appraised by market adjustment and scoring by applying Weighted Quality Score

(WQS), where scores will be given based on factors; such as location, environment, land

size, potential development, etc., for the appraised land and the comparable land. The

weighted average of adjusted price for each comparable data is considered to evaluate the

value of the appraised land. The details are as the following table:

Description Appraised

Assets Data 2 Data 3 Data 4 Data 5

Adjusted Price

Land size (sq.wah) 12,470 1,167 6,033 2,405 800

Land level (meters) 0.00 0.00 0.00 -1.00 -0.50

Offered or sales price (Baht/sq.m.) 200,000 160,000 69,503 34,000

Adjusted price1/ (Baht/sq.m.) -50,000 -60,000 0 0

Offered or sales price after adjustment

(Baht/sq.m.)

150,000 100,000 69,503 34,000

Adjusted Period

Number of year of selling period 0 0 0 0

Percent (%) 0% 0% 0% 0%

Price after period adjustment (Baht/sq.wah) 150,000 100,000 69,503 34,000

Price after adjustment (Baht/sq.wah) 150,000 100,000 69,503 34,000 Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

Note 1/ Adjusted price means the price that can be negotiable between buyer and seller

Comparison and Weighted Quality Score Factor Weight Score Assets Data 2 Data 3 Data 4 Data 5

1. Location 10% 10 8 8 8 6 4 2. Environment 10% 10 8 8 8 6 4 3. Land size 10% 10 3 8 5 7 8 4. Land shape 10% 10 5 9 8 7 7 5. Land level (Land fill) 5% 10 6 6 6 4 5 6. Road, power, water

supply and telephone 5% 10 8 8 8 6 6


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Comparison and Weighted Quality Score Factor Weight Score Assets Data 2 Data 3 Data 4 Data 5

7. Charateristic and width of public road

10% 10 8 8 8 6 6

8. Legal restrictions 0% 10 8 8 8 8 8 9. Potential development 20% 10 4 9 8 5 4 10. Market population and

liquidity 20% 10 3 9 8 5 3

Weighted score 100% 5.30 8.40 7.60 5.70 4.85 Score ratio 0.63 0.70 0.93 1.09 Adjusted price 94,643 69,737 64,626 37,155 Appraisal weight1/ 100% 6% 8% 46%2/ 41%2/ Weighted value (Baht/sq.wah)

5,572 5,533 29,485 15,068

Market price (Baht/sq.wah) 55,658 Rounding 55,000

Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

Note: 1/ Appraisal weight means percentage of reliability on survey information in aspects of similarity to appraised assets

2/ Data 4 and 5 is most similar to the appraised assets; therefore, the appraisal weight of Data 4 and 5 are higher than Data

2 and 3

The Independent Appraiser estimated land value, 31 rai 70 sq. wah by Market Comparable

approach at 55,000 Baht/sq.wah or the total value of the land of Baht 685.85 million.

Building

The Independent Appraiser estimated the value of buildings by Replacement Cost approach

in which the replacement cost is referred and adjusted according to the standard of

construction cost of 2013 from The Valuers Association of Thailand. Then, the replacement

cost of the building adjusted by physical obsolescence, functional obsolescence and external

obsolescence.

The buildings and other developing area; such as ferro-concrete road, are 25 years and 35

years old with moderate conditions and lack of maintenance but in usable condition.

Therefore, Independent Appraiser deducted 60% of depreciation for the aforementioned

assets. Details are as follows:


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Item Replacement Cost

(Baht) Depreciation

(%)

Appraisal Value for Building (Baht)

8 – story office building 124,980,000 60% 49,992,000 2 – story office building with canteen 12,563,000 60% 5,025,200 2 – story office building with warehouse 124,000,000 60% 49,600,000 Warehouse 1 30,000,000 60% 12,000,000 Warehouse 2 48,000,000 60% 19,200,000 Warehouse 3 21,000,000 60% 8,400,000 Warehouse 4 10,500,000 60% 4,200,000 Warehouse 5 960,000 60% 384,000 Guardhouse 1 12,500 60% 5,000 Guardhouse 2 12,500 60% 5,000 Guardhouse 3 12,500 60% 5,000 Other developing area 4,000,000 60% 1,600,000 Appraisal value for buildings 150,416,200


Note: Independent Appraiser applied depreciation of 60% based on the remarks to standard construction cost 2013

indicated by The Valuer Association of Thailand, a building constructed by engineering standard can be used for

over 100 years, but the building system, walls and other parts are depreciated over the life of the building.

Normally, structure of the building accounts for around 60% of the total building value therefore; In the case the

buildings life is over 30 years, the value of remaining structure shall be not less than 40% of price of new

replacement cost.

The Independent Appraiser estimated building and infrastructure value by Replacement Cost

approach at Baht 150.85 million.

The total appraised value of the assets by Cost Approach is as follows: Detail of Asset Asset Value (Baht)

1. Lands: 31 rai 70 sq. wah or 12,470 sq. wah

@ Baht 55,000 per sq. wah

685,850,000

2. 11 buildings 150,416,200

Total asset value 836,266,200

(Rounding) 836,266,000 Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

The Independent Appraiser estimated value of appraised assets by Cost Approach at Baht

836.27 million.


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2) Income Approach

The Independent Appraiser calculated net present value using discounted cash flow method

considering the income which can be generated from the appraised assets on an ongoing

basis. The future projected cash flows are projected based on expectation of future trend on

market situation, demand, supply, general company expense. The Independent Appraiser

estimated cash flow under the assumption that the current buildings require improvements

so that the condition of the buildings are comparable to the normal market conditions and

survey the market rental rate for similar assets as reference for the assumptions of projected

rental income and expenses. The assumptions of asset appraisal are as follows:

Item Assumption

Income For income approach, the Independent Appraiser indicated

assumptions for 8 building for rent as follows:

1. 8-story office building – rental area 8,332 sq.m. market rental

200 baht/sq.m.

2. 2-story office building with canteen – rental area 739 sq.m.

market rental 200 baht/sq.m. 739 sq.m. of canteen area is

free of charge for rental

3. 2-story office building with warehouse – rental area 10,240

sq.m. market rental 200 baht/sq.m. warehouse area 4,000

sq.m. with 100 baht/sq.m. of market rental

4. Warehouse 1 – rental area 4,000 sq.m. market rental 100

baht/sq.m.


baht/sq.m.


baht/sq.m.


baht/sq.m.

8. Warehouse 5 – rental area 240 sq.m. market rental 100

baht/sq.m.

- 8 buildings must be maintained before releasing for rent. The

cost of maintainance is 84,097,700 baht.

- Warehouse rental area is 500 – 3,000 sq.m. the occupancy


Page 44

Item Assumption

rate is approximately 30% of total warehouse ares

Expenses - Administration expense is 230,000 baht/month with 3%

increase each year

- Building maintenance at 2% of total income

- Fire insurance at 0.1 of building value, 3% increase each year

- Contingency at 1% of total income

- 8% return rate

- 12% discount rate

- Building tax is responsible of the tenants Source: Appraisal report from Advanced Appraisal Co., Ltd, No.1013/2557 dated 20 February 2014

Independent Appraiser estimates cash flow from commercial operation as follows: (Unit: million Baht) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Inome from office rental 23.09 23.09 25.19 27.71 30.03 30.03 33.02

Income from warehouse rental 14.70 14.70 15.83 17.41 18.65 18.65 20.52

Total rental income 37.79 37.79 41.02 45.12 48.68 48.68 53.54

Total expenses (87.61) (4.37) (4.57) (4.79) (5.00) (5.11) (5.37)

Net cash flow from operating (49.82) 33.42 36.45 40.33 43.67 43.57 48.18

Terminal value 602.20

Discount rate 12%

Net cash flow (44.36) 26.50 25.74 25.36 24.45 321.96

Appraised value by income

approach

379.64


The Independent Appraiser estimated building and infrastructure value by Replacement Cost

approach at Baht 150.85 million.

The Independent Appraiser estimated value of appraised assets by Income Approach at

Baht 379.64 million.

From the estimated value of the appraised assets using two approaches: Cost Approach

and Income Approach, the Independent Appraiser suggest that the Cost Approach is the

appropriate approach to value the appraised assets; therefore, appraised value for the

assets is Baht 836.27 million.


Page 45

The summary of asset appraisal by Independent Appraiser is as follows:

Asset Appraisal Million Baht

Cost Approach 836.27

Income Approach 379.64

Selected Approach Cost Approach

Appraised Asset Value 836.27

5.2.2. Opinion of the IFA on the Property Appraisal by the Independent Appraisal

The IFA renders an opinion on the Asset Appraisal by the Independent Appraisal as the following

details:

1) Opinion of the IFA on Selected Approach of Asset Appraisal

From the appraisal report conducted by the Independent Appraiser, the Cost Approach is

applied for asset appraisal at Baht 836.27 million and the Income Approach is applied for

asset appraisal at Baht 379.64 million. The IFA deems that the Cost Approach is the

appropriate approach as the Independent Appraiser surveyed the sale and offered land prices

which can be comparable to the appraised land. The Independent Appraiser estimated the

land price by comparing the sales and offered price of the similar land and adjusted scoring

based on factors of each plot of land. This approach, in terms of land value, would most

reflect the market price of the land. As for the buildings, the Independent Appraiser estimated

the building value by the Replacement Cost Approach where the replacement cost buildings

will be deducted by accumulated depreciation. The Independent Appraiser deems that the

buildings appraised according to building condition and utilization deducting by 60% of

depreciation which in this case is most appropriate since it is the value of the building as its

current condition.

Meanwhile, the Income Approach may not appropriate for appraised assets since the

buildings were not maintained and not in a good condition for optimal utilization. Moreover,

the Company does not have a plan to utilize the disposed assets; such as property

development, etc. Therefore, the Income Approach will not reflect the real value of the

disposed assets.


Page 46

From the reasons, the IFA has an opinion in consistent with the Independent Appraiser that

the Cost Approach is the appropriate approach reflecting the fair value of the disposing

assets.

2) Opinion of the IFA on Official Appraised Values

The Independent Appraiser disclosed the land appraised price by government agency of the

35 plots of land in the appraisal report dated 20 February 2014 at the price ranging from Baht

21,500 – 130,000 per sq. wah. with the total land appraised price by government agency of

Baht 565.97 million. IFA have rechecked the appraised price by government agency and the

price in the appraisal report is in consistent with the latest information based on the land cost

appraisal for Bangkok Metropolitan released by the Treasury Department on 1 July 2012 and

official effective for the fiscal year 2012 – 2015.

However, the appraised price by the government agency is lower than the market value

appraised by the Independent Appraiser. This is because the official appraised value is, in

general, intended to be used as a basis for calculation in the registration of rights and juristic

acts, fee calculation, tax from property sale income, special tax, etc. Therefore, the appraised

price by the government agency not considered the market value and is lower than the

market value in most cases. The appraised price by the government agency is not generally

adopted as a basis for land sale and purchase transactions.

The IFA is of the opinion that the determination of fair price for disposing assets can be

considered based on appraised value by the Independent Appraiser of Baht 836.27 million.

(Unit: million baht)

Book Value1/

As of 31 December 2013 Appraised Asset Value2/ Offering Price3/

704.50 836.27 980.00 Note 1/ Book value of the assets which consist of land and all buildings as of 31 December 2013

2/ Appraised asset value of land and building by the Independent Appraiser

3/ Offering price for land and building by Sirisub Patthana

Compared with the offering price by Sirisub Patthana at Baht 980.00 million, the price offered is

39.11% higher than book value as at 31 December 2013 and 17.19% higher than appraised value by

the Independent Appraiser.


Page 47

5.3. Appropriateness of the Terms and Conditions for the Transaction

The Company has the intention to sell 35 plots of land with total area of 31 rai, 70 sq. wah along with

11 buildings to Sirisub Patthana for Baht 980.00 million (excluding ownership transferring fee and tax of

Baht 53.46 million). The Company will enter into transaction when the Company receives approval from

the Annual General Meeting of Shareholders No. 21/2557 to be held on 21 April 2014 at 2.00 pm. As

of 13 February 2014, Univentures holds 58.59% stake in the Company, therefore the Company is

considered a subsidiary of Univentures. Therefore, the entering into transaction must be approved from

the shareholders’ meeting of Univentures as well. Univentures’ Annual General Meeting of

Shareholders No. 35/2014 to be held on 21 April 2014 at 9.30 am to consider and approve the entering

into transaction.

On 13 January 2014, the Company signed sale-purchase agreement with Sirisub Patthana at the

purchase price of Baht 980.00 million. Sirisub Patthana agreed to deposit Baht 50.00 million and the

remaining of Baht 930.00 million will be paid on the date assets are transferred

In case, the shareholders’ meeting of both the Company and Univentures approve entering into the

transaction, the Company will transfer the ownership of land and buildings to Sirisub Patthana within 15

May 2014. However, in case, the Company and Univentures have not got approval to enter into

transaction from the shareholders’ meeting by that date, it is agreed that to transfer the ownership of

assets will be within 15 days from gaining approval from the shareholders’ meeting of the Company

and Univentures but not more than 6 months from the signing date of the agreement.

Furthermore, the Company will transfer the remaining lease obligation to Sirisub Patthana until the

period stated in the lease agreement ends. And the assets are free of any mortgage and obligation

except lease obligations before transfer of the ownership of land and building to Sirisub Patthana.

In the IFA’s opinion, the conditions for the transaction described above have been concluded through

negotiations between the Company and Sirisub Patthana, who is a connected person, based primarily

on appropriateness and benefits of the Company. Those conditions do not cause any disadvantage to

the Company and mainly conform to the general terms and conditions in a sale and purchase

agreement of land. Therefore, the IFA considers that the conditions for the transaction are appropriate.

6. Conclusion of the IFA’s Opinion

The IFA deems that the entering into transaction to sell 35 plots of non-core land located on

Ramkhamhaeng Road, Hua Mak Subdistrict, Bang Kapi District, Bangkok with total area of 31 rai 70 sq.

wah. Along with 11 buildings is appropriate. The aforementioned transaction is in line with the Company’s


Page 48

policy. Entering into transaction, the Company will receive Baht 926.54 million in cash (after deducting

transfer fee and tax of Baht 53.66 million) which Baht 500.00 million will be used to repay short-term loans

from financial institution, as a result will decrease financial cost by approximately Baht 25.00 million and the

remaining of Baht 426.54 million will be used as working capital of the Company and for investment in real

estate projects according to the Company’s policy. Moreover, the Company will recognize profits from sales

of assets of Baht 231.84 million which will lower the debt to equity ratio from 1.14 times to 1.01 times.

On the negative side, the Company will lose the opportunity to receive rental and service income from

warehouse rental, lose the opportunity in developing a real estate project on the land, and lose opportunity

in the potential profits from the appreciation of the market price of the land in the future.

The Company has received an offer from Sirisub Patthana to purchase land and building for Baht 980.00

million, and has appointed Advanced Appraisal Company Limited (the “Independent Appraiser”) to appraise

the value of the land and building. The Independent Appraiser has appraised the value of the land and

building based on the Cost Approach at Baht 836.27 million. The offer price of Baht 980.00 million is

39.11% higher than book value as at 31 December 2013 and 17.19% higher than appraisal value by the

Independent Appraiser. As for the terms and conditions for the transaction, the IFA deems that the terms

and conditions of transaction are reasonable and as of common practice for this type of transaction,

therefore the Company’s shareholders will not deprived of any benefits.

The price offered by Sirisub Patthana of Baht 980 million is appropriate. The price offered is 39.11% higher

than book value as at 31 December 2013 and 17.19% higher than appraised value by the Independent

Appraiser. Furthermore, the conditions for transaction, are deemed reasonable and beneficial to the

Company’s shareholders and will not deprive any benefits.

Based on the above rationale, the IFA have an opinion that the shareholders should vote in favor of the

entering into the transaction; however, the decision of approving or not approving this transaction is to be

made at the shareholders’ own discretion.


Page 49

We hereby certify that we have rendered opinion on the asset acquisition and the connected transaction

prudently under the code of professional practices and in the interest of the shareholders.

Sincerely Yours,

RHB OSK Securities (Thailand) Public Company Limited

-Victor Yuen Tuck Choy- -Supin Suravichai-

(Mr. Victor Yuen Tuck Choy) (Ms. Supin Suravichai)

Chief Executive Officer Chief Operating Officer

-Nattorn Kijsamrej-

(Mr. Nattorn Kijsamrej)

Operational Controller

(translation) independent financial advisor report opinion ...(“sirisub patthana”) and a leading...

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