erw: annual report 2011

รายงานประจำป 2554บริษัท ดิ เอราวัณ

กรุป จำกัด (มหาชน)

Annual Report 2011 l The Erawan Group Public Company Limited

A

First line For 30 yearwe have been committed to “integrity”, a quality which is fundamental and vital to our stable growth.

Todaywe strive to be a leader in the hotel investment and development business while enhancing our core values for a long term sustainable growth.

MISSIONTo continue growing quality hotel portfolio in Thailand which optimize values to shareholders as well as other stakeholders.

Core Values “SPICE”• System “Systematic management approach to enhance eff iciency as well as to lessen reliance on individuals”• People “Competent workforce with dedication to further learning and continual improvement”• Information “Accurate, adequate, and up-to-date database for the purpose of management and decision-making”• Culture “Sound corporate culture to support sustainable growth”• Environment “Being a good, responsible corporate citizen by taking care of all stakeholders including community and environment”

VISION 2015To become Thailand’s leading hotel developer and investor.

B

SUCCESS WITH INTEGRITY

First lineFor 30 year

we have been committed to “integrity”, a quality which is fundamental and vital to our stable growth.

Todaywe strive to be a leader in the hotel investment and development business while enhancing our core values for a long term sustainable growth.

MISSIONTo continue growing quality hotel portfolio in Thailand which optimize values to shareholders as well as other stakeholders.

Core Values “SPICE”• System “Systematic management approach to enhance eff iciency as well as to lessen reliance on individuals”• People “Competent workforce with dedication to further learning and continual improvement”• Information “Accurate, adequate, and up-to-date database for the purpose of management and decision-making”• Culture “Sound corporate culture to support sustainable growth”• Environment “Being a good, responsible corporate citizen by taking care of all stakeholders including community and environment”

VISION 2015To become Thailand’s leading hotel developer and investor.

MISSIONMISSIONTo continue growing quality hotel To continue growing quality hotel portfolio in Thailand which optimize portfolio in Thailand which optimize values to shareholders as well as other values to shareholders as well as other stakeholders.stakeholders.

Core Values Core Values “SPICE”“SPICE”•• SSystemystem “Systematic management approach to enhance “Systematic management approach to enhance e efff f fff ff iciencyiciency as well as to lessen reliance on individuals” as well as to lessen reliance on individuals”iciencyiciency as well as to lessen reliance on individuals”iciencyiciency•• PPeopleeople “Competent workforce with dedication to further “Competent workforce with dedication to further learning and continual improvement” learning and continual improvement”•• IInformationnformation “Accurate, adequate, and up-to-date database “Accurate, adequate, and up-to-date database for the purpose of management and decision-making” for the purpose of management and decision-making”•• CCultureulture “Sound corporate culture to support sustainable growth” “Sound corporate culture to support sustainable growth”•• EEnvironmentnvironment “Being a good, responsible corporate citizen “Being a good, responsible corporate citizen by taking care of all stakeholders including community by taking care of all stakeholders including community and environment” and environment”

VISION 2015VISION 2015To become Thailand’s leading To become Thailand’s leading hotel developer and investor.hotel developer and investor.

!"##

!"#$%&!%'

! "#! $%&'&(%')!*%+,)%+,-.!

! "/! *0-1)!'&2!31.04-.!504-60)%0

! "7! 8,'%49'&!31:%1;

! <=! 31>04-!06!-,1!?@2%-!8099%--11!-0!A,'41,0)214

! <<! 31>04-!06!-,1!B0'42C.!31.>0&.%D%)%-E!%&!-,1!$%&'&(%')!A-'-191&-.

()*+,#%$('("

! </! 540>14-%1.!%&!F>14'-%0&

! G=! F@4!B@.%&1..!A-4'-1+E

! G<! F@4!A,'41,0)214.!'&2!H'&'+191&-

! #"! A,'41,0)2%&+!06!-,1!B0'42!06!I%41(-04.!'&2!H'&'+191&-

)+-!"%--#*&%$&!%'! #<! *0-1)!J&[email protected]

! ##! 3%.K!$'(-04.

.**/#0*$1*$(,%#.*&%$"("0%! L"! 804>04'-1!M0:14&'&(1!50)%(E

! /<! 319@&14'-%0&!06!-,1!B0'42!06!I%41(-04.!'&2!H'&'+191&-

! /G! 804>04'-1!A0(%')!31.>0&.%D%)%-E

! /7! J&-14&')!80&-40)

! /N! 80&&1(-12!O4'&.'(-%0&.

(11%"/!0%-

! 7G! ?@2%-!$11

! 7#! $%&'&(%')!A-'-191&-.

!=#=! 804>04'-1!J&6049'-%0&

02345346

03


Our Capital Structure & Management

2011 in REVIEW

Financial Highlights The Erawan Group Public Company Limited

04 05Financial Highlights

(Unit : Thousand Baht)

Description

DescriptionRevenues from Operations

Total Revenues

Gross Profit

EBITDA

Net Profit (Loss)

Total Assets

Total Liabilities

Total Shareholders’ Equity

Equity Attributable to Company’s Shareholders

Paid - up Share Capital

Number of Paid - Up shares (Thousand shares)

Par Value Per Share (Baht)

Earning Per Share (Baht)

Dividend Per Share (Baht)

Book Value Per share (Baht)

Signif icant Financial RatioCurrent Ratio (Times)

Quick Ratio (Times)

Liquidity Ratio (Cash Flow Basis) (Times)

Gross Profit Ratio (%)

Net Profit Margin (%)

Return on Total Assets (%)

Return to Equity (%)

Debt to Equity Ratio (Times)

Interest Bearing Debts to Equity Ratio (Times)

Interest Coverage Ratio (Times)

2009

3,149,033

3,191,623

1,658,132

782,991

(229,411)

13,288,817

9,749,858

3,538,959

3,406,397

2,244,779

2,244,779

1

(0.10)

-

1.52

0.52

0.27

0.38

52.66%

n/a

n/a

n/a

2.76

2.42

2.38

2011

3,755,544

4,487,232

1,965,740

1,635,878

491,325

12,237,865

8,468,390

3,769,475

3,588,610

2,244,779

2,244,779

1

0.22

-

1.60

0.53

0.40

0.66

52.34%

10.95%

3.90%

14.62%

2.25

2.00

2.35

2010

3,321,248

3,364,328

1,677,912

804,829

(275,017)

12,949,266

9,676,317

3,272,950

3,130,975

2,244,779

2,244,779

1

(0.12)

-

1.39

0.41

0.27

0.63

50.52%

n/a

n/a

n/a

2.96

2.63

2.70

EBITDA

1,207

1,011

782805

1,636

0

200

400

600

800

1,000

1,200

1,400

1,600


Operating Income

2007 2008 2009 2010 2011

3,194 3,3773,149 3,321

3,756

0

1,000

2,000

3,000

4,000

Net Profit/(Loss)

402

79

491

(229)(275)

0

250

500

Financial Highlights The Erawan Group Public Company Limited

04 05Financial Highlights


Description

DescriptionRevenues from Operations

Total Revenues

Gross Profit

EBITDA

Net Profit (Loss)

Total Assets

Total Liabilities

Total Shareholders’ Equity

Equity Attributable to Company’s Shareholders

Paid - up Share Capital

Number of Paid - Up shares (Thousand shares)

Par Value Per Share (Baht)

Earning Per Share (Baht)

Dividend Per Share (Baht)

Book Value Per share (Baht)

Signif icant Financial RatioCurrent Ratio (Times)

Quick Ratio (Times)

Liquidity Ratio (Cash Flow Basis) (Times)

Gross Profit Ratio (%)

Net Profit Margin (%)

Return on Total Assets (%)

Return to Equity (%)

Debt to Equity Ratio (Times)

Interest Bearing Debts to Equity Ratio (Times)

Interest Coverage Ratio (Times)

2009

3,149,033

3,191,623

1,658,132

782,991

(229,411)

13,288,817

9,749,858

3,538,959

3,406,397

2,244,779

2,244,779

1

(0.10)

-

1.52

0.52

0.27

0.38

52.66%

n/a

n/a

n/a

2.76

2.42

2.38

2011

3,755,544

4,487,232

1,965,740

1,635,878

491,325

12,237,865

8,468,390

3,769,475

3,588,610

2,244,779

2,244,779

1

0.22

-

1.60

0.53

0.40

0.66

52.34%

10.95%

3.90%

14.62%

2.25

2.00

2.35

2010

3,321,248

3,364,328

1,677,912

804,829

(275,017)

12,949,266

9,676,317

3,272,950

3,130,975

2,244,779

2,244,779

1

(0.12)

-

1.39

0.41

0.27

0.63

50.52%

n/a

n/a

n/a

2.96

2.63

2.70

EBITDA

1,207

1,011

782805

1,636

0

200

400

600

800

1,000

1,200

1,400

1,600

0


Operating Income

2007 2008 2009 2010 2011

3,194 3,3773,149 3,321

3,756

0

1,000

2,000

3,000

4,000

00

Net Profit/(Loss)

402

79

491

(229)(275)

0

250

500

Hotel and Resorts PortfolioThe Erawan Group Public Company Limited

Chairman ReviewThe Erawan Group Public Company Limited

Bangkok

Phuket

Pattaya

Huahin

Samui

Pattaya

ibis PattayaHoliday Inn Pattaya

Huahin

ibis Hua Hin (Opened January 2012)

Samui

Renaissance Koh Samui Resort and Spa

ibis Samui Bophut

Phuket

ibis Phuket Kataibis Phuket PatongThe Naka Island, a Luxury Collection Resort & Spa, Phuket

Mr. Prakit PradipasenChairman of the Board of Directors

Excellent CGR Report 2009-2011

Bangkok

Grand Hyatt Erawan Bangkok

JW Marriott Bangkok Courtyard by Marriott Bangkok

ibis Bangkok Sathorn ibis Bangkok Riversideibis Bangkok Nana

Mercure Bangkok Siam and ibis Bangkok Siam (Under development)

First line

06 Hotel and Resort Portfolio

Hotel and Resorts PortfolioThe Erawan Group Public Company Limited

Chairman ReviewThe Erawan Group Public Company Limited

Bangkok

Phuket

Pattaya

Huahin

Samui

Pattaya

ibis PattayaHoliday Inn Pattaya

Huahin

ibis Hua Hin (Opened January 2012)

Samui


ibis Samui Bophut

Phuket

ibis Phuket Kataibis Phuket PatongThe Naka Island, a Luxury Collection Resort & Spa, Phuket

Mr. Prakit PradipasenChairman of the Board of Directors

Excellent CGR Report 2009-2011

Bangkok

Grand Hyatt Erawan Bangkok

JW Marriott Bangkok Courtyard by Marriott Bangkok

ibis Bangkok Sathorn ibis Bangkok Riversideibis Bangkok Nana

Mercure Bangkok Siam and ibis Bangkok Siam (Under development)

07


In 2011, Thailand welcomed as many as 19 million tourist arrivals, the highest ever in its history. This represented a tremendous growth of 20 percent, which was also the highest increase in South East Asia.The figurewas impressiveconsidering the factthat a number of tourists fell in Q4 of the year due to thecountry’sdevastatingfloodintheCentralincludingBangkok and its vicinity.

At ERAWAN, we continue to commit to build our business and organization for long-term sustainable growth. In 2011, we successfully implemented our plans set forth in the five-year Master Plan (2011-2015)andrecordedBaht491millioninnetprofitthisyear. Our commitment to transparency and good corporate governance has been well recognized. This year we received an “Excellent” rating for corporate governance from the Corporate Governance Report of Thai Listed Companies 2011 survey organized by the Thai Institute of Directors for the third consecutive year. We were also rated “Excellent” for our Annual General Meeting from the Stock Exchange of Thailand for the fourth consecutive year. As we have always given a priority to risk management while putting in place a comprehensive contingency plan to protect the interests of all stakeholders, during the country’s major flood in late 2011,wemanaged to effectivelyprotect our properties in all risk areas. Plans were successfully formulated in advance and implemented to safeguard our properties, customers, suppliers and ourstaff.At theother front, tohelp floodvictims,wedonated fund and items via the Thai Listed Companies

Association, public and private agencies and other relief organizations. Our staff also voluntarily extended direct assistance to affected communities. For our own staff suffering from the flood, we provided shelters and financial assistance to help them get back to normalcy as soon as possible.

We are deeply committed to the business philosophy of honesty and integrity. At ERAWAN, we believe that only success with integrity will make the business sustainable in the long run.

First line

08 ChiefExecutiveOfficerReview

Chief Executive Off icer ReviewThe Erawan Group Public Company Limited

Although 2011 was another year that Thailand’s

hotel business and tourism industry were to confront

with an unexpected, this time natural-made, event as

thecountrysufferedthedisastrousfloodinlate2011,

we managed to grow our revenue by 13 percent

fromthepreviousyear,bringingournetprofittoBaht

491 million, thanks largely to our three strategies as

follows:

Our hotel growth strategy designed to expand

and diversify our hotel portfolio to serve customers at

all levels and to be strategically present in Thailand’s

key destinations yielded a good result. Our gross

revenue from the hotel business jumped more than

50 percent when compared to what we achieved in

2006 despite lower incomes from our two established

luxury hotels in Bangkok along with the hotel industry

which have been affected by a series of unexpected

situations and intensified competitions. At present,

we own 14 hotels with total of 3,512 hotel rooms.

Our initiative to build an economy hotel chain under

the international ibis brand as one of our key strategic

direction has proven to be a right move. Our hotels

in the economy segment has not only been well

received by domestic and international markets but

alsodirectlybenefits fromawaveofgrowingtourists

from RIC countries such as China, Russia and India.

Our midscale hotels which currently include Holiday

Inn Pattaya and Courtyard by Marriott Bangkok have

also been warmly welcomed by both corporate and

leisure customers. The success of our expansion is

clearly a result of an ongoing internal development of

our resources. Over the years, we managed to secure

land banks in the right locations to develop various

projects as planned while controlling our investment

costs to save almost Baht 500 million from the

original budget. That’s why our investment projects

still yield a projected long-term return although the

tourism and hotel industry suffered from one after

another devastating events during the past three to

four years. As for projects which were slower-than-

expected in generating an expected return, we have

closely monitored and continuously put in a plan for a

turnaround. The key event last year on this front was

when we changed hotel management operator for our

resort at Koh Naka, Phuket in July 2011. The resort,

which has resumed its operation since November

Holiday Inn Pattayaibis Huahin The Naka Island, a Luxury Collection Resort & Spa, Phuket

09


ChiefExecutiveOfficerReview

2011, has shown significant operating improvement

and expected to generate positive EBITDA in 2012.

A strategy designed to reinforce shareholders’

returns by selling the assets to recognize its market

values introduced in late 2010 was aimed to yield an

appropriateandrecurringprofitstoourshareholders.

As hotel investment is long term and requires some

times before a net profit can be generated, this

strategy will be an important tool to generate short-

termprofitsforourshareholders.Lastyear,westarted

implementing the strategy when we sold the Pleonchit

CenterOfficeBuildingtoapropertyfundandrecorded

a difference between a net sales price and a book

value of thebuilding as our net profit in 2011. This

significantly increased our dividend capability for

our shareholders compared to a period when there

had been no asset disposal. We plan to continue

implementing this strategy as time and opportunity

prevails.

We believe that the two aforementioned strategies,

when implementing simultaneously, will create a

balanceofboth short- and long-termbenefits to our

shareholders.

Our third strategy aimed to strengthen a

sustainable growth. This strategy will allow us to

continue upgrading and enhancing our resources,

internal systems, database to support decision-

making, corporate culture and the pursuit of corporate

governance while balancing optimal interests of all

stakeholders including the environment and the

community we live in. All of this has been critical

success factors to help us survive through crisis after

crisis from 2008 up to the present and we strongly

believe that these fundamentals will continue to be

the platform for our sustainable growth in the long run.

With Thailand’s competitiveness and its potential

as a tourism and business center in the region as well

as the operations guided by our visionary strategies,

we are confident that we will be able to generate

returns to shareholders and benefits to other

stakeholders while continue to play important role in

boosting the standard of Thailand’s hotel industry.

Mr. Kasama PunyaguptaChiefExecutiveOfficer

First line

10 President’s Report

President’s ReportThe Erawan Group Public Company Limited

(A) 2011 Prof it & Loss OverviewTheyearof2011wasagoodyearforhotelbusinessandtourismindustryofThailandregardlesstheflood

situation in Thailand in the fourth quarter of 2011. The overall tourist arrivals in 2011 were historically high at 19 million, a 20percent growth from2010, and the highest growth in the region. This onceagain reaffirmed the

strong fundamental of Thailand’s tourism industry. In 2011 we completed the implementation of strategies set forth in our 5-yr Master Plan (2011-2015) as

follows:Hotel Growth Strategy

• Webeganconstructionof threenewhotels inHuaHinandBangkokasplanned. Our ibisHuaHin with 200 room inventory was already opened on January 16, 2012 while the Mercure Bangkok Siam and ibis Bangkok Siam with total 380 rooms are scheduled to open in 4Q12. This will increase our

room inventory from 3,312 at the end of 2011 to 3,892 at the end of 2012. Enhancing Return Strategy

• AspartofAssetMonetizationprogram,on1stApril2011,wesoldandtransferredoneofourrental properties, Ploenchit Center building with leasehold right of land where the building is situated at total transactionvalueofBaht1,423milliontoPrimeOfficeLeaseholdPropertyFundsetupbyathirdparty, SCB Asset Management. We recorded net gains from this disposal of asset at Baht 664 million in 2Q11. Net proceeds was partially used to prepay long term loan of Baht 460 million while the remaining

balance has been reserved to support our expansion plan.

• AspartofAssetImprovementprogram,inJuly2011,weenteredtheagreementwithStarwoodHotels

& Resorts Worldwide Inc., a global leading hotel operator, to manage our property under the brand

“A Luxury Collection”. This partnership and additional brand will further strengthen our current hotel

portfolio which already in partnership with world-class hotel operators such as Hyatt, Marriott, Accor

and IHG and also broaden the brands platform for our hotel expansion. We rebranded our resort to

“The Naka Island, a Luxury Collection Resort & Spa, Phuket” which reopened in November 2011

resultinginsignificantimprovementofoccupancyandRevPARcomparedtothesameperiodlastyear. Additionally, to support the company growth strategy and allow the company to maintain the capital structure

at appropriate level, on 26th April 2011, the Company’s Annual General Meeting for the year 2011 resolved to approve the issuance of warrants to be given without cost to the existing shareholders not exceeding 224,477,900 units(detailsgivenintheNotificationtotheStockExchangeofThailandon19thMay2011).Thesewarrantswerelistedand tradedon theStockExchangeofThailandon27thMay2011(detailsgiven in theNotification to the

11


President’s Report

Stock Exchange of Thailand on 25th May 2011) and the issuance and offering of 35,743,099 ordinary shares to employees of the Company to motivate the employees to drive the performance towards the success of the strategic objectives set forth in the 5-yr Master Plan (see Note 24 in the Financial Statement).

Our total operating income in 2011 was recorded at Baht 3,756 million, a 13% increase from the same period last year, despite the absence of 9-month income from Ploenchit Center which we divested in the second quarter of 2011. Our income from hotel operation increased 21% from the same period last year to record at Baht3,536milliondespitetheslow-downfromthefloodsituationinthefourthquarterof2011andtheabsenceof 3-month income from Naka resort in Phuket which was closed for rebranding during August-October. Total income including the gains from disposal of Ploenchit Center was recorded at Baht 4,487 million, a 33% increase andEBITDArecordedatBaht1,636million,a103%increasefromlastyear.Afterthedeductionoffinancecost,non-cashdepreciation, and tax,we recordeda netprofit ofBaht 491million, compared to a net loss ofBaht275 million in 2010.

Grand Hyatt Erawan BangkokCourtyard by Mariott Bangkok

First line

12

IncomeIn line with our diversification strategy, the composition of our total income has changed in 2011.

Our “Midscale Hotels” and “Economy Hotels” segment contributed more income to the group while income from rental properties decreased from the divestment of Ploenchit Center to property fund in the second quarter of

2011. Details illustrated in the table below.

Baht Million 2010 2011 Changes

Hotels’ Operating Income

Rental and Service Income

2,930

391

3,536

219

+21%

- 44%

Total Operating Income 3,321 3,756 +13%

Gain from Disposal of Asset

Other Income

-

43

664

67

N.A.

+56%

Total Income 3,364 4,487 +33%

Operating Expenses (2,559) (2,851) +11%

EBITDA 805 1,636 +103%

Depreciation & Amortization (684) (646) -6%

Operating Profit 121 990 +716%

Finance Costs (361) (407) +13%

Pre-Tax Profit/(Loss) (293) 584 N.A.

Taxes

Minority Interest

(20)

(16)

(53)

(39)

+169%

+148%

Net Profit/(Loss) (275) 491 N.A.

E.P.S (0.12) 0.22 N.A.

*Details are explained in later section of this report


13


20102009

Baht Million

0

500

1,000

2,500

3,000

3,500

4,000

4,500

1,500

2,000

172

143

3,3643,192

2011

132

4,487

Midscale Hotels

Luxury Resorts

Luxury Hotels

Economy HotelsRental Properties

Other Income

+ 5%+ 33%

2009 2010 2011

Btm % total Btm % total Btm % total

Luxury Hotels

Luxury Resorts

Midscale Hotels

Economy Hotels

1,997

182

272

297

62.6%

5.7%

8.5%

9.3%

1,848

206

449

428

54.9%

6.1%

13.3%

12.7%

2,110

220

631

576

47.0%

4.9%

14.1%

12.8%

Income from hotel properties

Income from rental properties

2,748

401

86.1%

12.6%

2,930

391

87.1%

11.6%

3,536

219

78.8%

4.9%

Other income

Gains from sales of Asset

43

-

1.3%

-

43

-

1.3%

-

67

664

1.5%

14.8%

Total 3,192 100.0% 3,364 100.0% 4,487 100.0%


First line

14

Operating performance from all properties in 2011 as follows:

Hotel Business Our income from hotel operations increased 21% from the same period last year to record at Baht 3,536

million in 2011. Room revenue which generated approximately 56 percent to total revenue produced 23% growth in 2011. Food and beverage revenue, a 38 percent of income from hotel business, also increased 15% from 2010.

Hotel revenue breakdown by type of income in 2010 and 2011 are listed below.

Baht Million

0

500

1,000

2,500

3,000

3,500

4,000

1,500

2,000

2010 2011

1,600

1,170

160

1,969

1,347

220

0

Room RevenueFood and Beverage RevenueOther Operations

Luxury Hotels Our two luxury hotels in Bangkok, Grand Hyatt Erawan Bangkok Hotel and JW Marriott Hotel Bangkok

recordedahigher incomein2011despitetheinterruptionfromfloodinthefourthquarter in2011.Theaverageoccupancy increased from 60 percent to 68 percent, with a RevPAR improvement of 13%. Room revenue

increased 12% and food and beverage revenue increased 11% from the same period last year.


15


Luxury Resorts We have two luxury resorts; both demonstrated good improvement this year.Our Renaissance Koh Samui Resort and Spa closed with 11 % higher occupancy resulted in a 13 % growth

of RevPAR and room revenues. For our luxury resort in Phuket, we rebranded it from “Six Senses Sanctuary” to “A Luxury Collection” and

renamed the resort to “The Naka Island, a Luxury Collection Resort & Spa, Phuket” with aim to optimize its financial return. The rebrandingwhich transformed the resort fromawellnessdestination to a luxurypool villaresort has allowed it to capture the broader market demand. The resort closed for rebranding from August 2011 and reopened on 1 November 2011. As a result, it achieved a better performance in 2011 with the average occupancy increased 2% and RevPAR increased 3% from the same period last year.

In total, income from our four luxury hotels increased 13% from previous year to Baht 2,330 million in 2011.

Midscale Hotels We have 2 hotels under the midscale segment, Courtyard by Marriott Bangkok and Holiday Inn Pattaya.

This segment was our highest income growth in 2011 at 41% above 2010. Total revenue was recorded at Baht 631 million with room revenue increased 46% and food and beverage revenue increased 30% from last year.

The average occupancy increased 20% and the average RevPAR increased 46% from 2010.

Economy Hotels

Our hotel properties under this segment are all under “ibis” brand. At the end of 2011, we had total of 7

economyhotelswithtotalof1,704rooms.Thefirstfouribishotels,namelyibisPhuketPatong,ibisPattaya,ibis

Bangkok Sathorn and ibis Samui Bophut , were opened in the second half of 2008. We added ibis Bangkok

Nana and ibis Phuket Kata in 2009 and ibis Bangkok Riverside in November 2010. Our 8th ibis, ibis Hua Hin was

recently opened in January 2012 and our 9th ibis, ibis Bangkok Siam will be opened in December 2012.

This segment also shown the strong growth in 2011 with the occupancy grew by 10% resulting in a 16%

growth in RevPAR from the same period last year. Our seven ibis hotels generated Baht 576 millions of

aggregated revenues, representing a growth of 35% from the same period last year with majority of their revenues

came from room sales. Food and beverages also increased 46% from 2011.


First line

16

(Baht Million)

0

500

1,000

2,500

1,500

2,000

2010 2011Luxury

2010 2011Midscale

2010 2011Economy

ibis PattayaHoliday Inn PattayaThe Naka Island, a Luxury CollectionResort & Spa, Phuket

Revenue breakdown by segments in 2010 and 2011 are listed below.


17


Rental PropertiesAt the end of 2011, we have only Erawan Bangkok, the high-end retail shopping centers located adjacent

to Grand Hyatt Erawan Bangkok Hotels, which continued to generate steady rental income. The average occupancy recorded at 89%, a 3% increase from last year which leading to a 10% increase in total income.

The combined income from rental business (including those from shops in Grand Hyatt Erawan Hotel’s arcade) in 2011 was Baht 291 million representing a decrease of 44% from last year due to the absence of

income from Ploenchit Center which we divested in April 2011.

(Baht Million)

0

500

1,000

2,500

3,000

1,500

2,000

2010 2011Bangkok

2010 2011Non-Bangkok

Revenue breakdown by destinations in 2010 and 2011 are listed below.


First line

18

Profit from OperationsOur Earnings before Interest, Tax, Depreciation and Amortization (“EBITDA”) recorded at Baht 1,636 million

in 2011, with normalized EBITDA (excluding gain from asset disposal) to record at Baht 972 million, a 21% growth from 2010. We also recorded a higher EBITDA margin of 25 percent in 2011 vs. 24 percent in 2010. Our Depreciation and Amortization (“D&A”) decreased by Baht 38 million from last year to record at Baht 646 million for 2011 mainly from the absence of Ploenchit Center which we divested in April 2011. With the said EBITDA above, our Earnings before Interest and Tax (“EBIT”) stood at Baht 990 million for 2011 with normalized EBIT

(excluding gain from asset disposal) to record at Baht 326 million, a 169% increase from 2010.

Finance CostsTotal interest expenses recorded at Baht 407 million in 2011. The increase came mainly from the

recognition of interest expenses from new hotel opened in 4Q10 in our P&L which recorded only 2 months in 2010 but 12 months in 2011 and the increasing interest rates. The market interest rates increased approximately 1.1% from 2010 while our average cost of funding (combined both short term and long term loans) increased

approximately 0.9% from last year to 5.4% in 2011.

Gains from Asset Sale In 2011, we recorded a gain of Baht 664 million from the divestment of Ploenchit Center Building to Prime

Off ice Leasehold Property Fund in 2Q11.

JW Marriott Bangkok


19


37%ibis Huahin

11%The Naka Island 22%

Others Hotels

5%Rental Properties & Others

25%Mercure & ibis Bangkok Siam

(B) Financial Status

Capital Expenditure We recorded Baht 544 million of capital expenditure during the year which mainly for i) ibis Hua Hin project

which already opened in January 2012, ii) Mercure Bangkok Siam and ibis Bangkok Siam project which will be opened in December 2012 and iii) the rebranding of our resort at Koh Naka Phuket and the normal maintenance for our existing properties. Sources of funding to support this capital expenditure were our cash flow from operations and project loans. With improving performance of our hotels and rental properties, we generated Baht 991millionofoperatingcashflowbeforechangesinoperatingassetsandliabilitiesin2011.Wealsoadditionallygenerated Baht 1,352 million of net proceeds from the divestment of Ploenchit Center in April 2011 of which the funds were used to 1) prepay Baht 460 million mortgage loan related Ploenchit Center, 2) repay scheduled

long-term debt and reduce short-term loan, and 3) fund our investments.

The breakdown of 2011 capital expenditure by asset type as follows:


First line

20

Our total assets decreased from Baht 12,950 million at the end of 2010 to Baht 12,238 million as of

31 December 2011 as a result of annual depreciation of our assets and the divestment of Ploenchit Center.

Our total interest-bearing debts declined from Baht 8,599 million to Baht 7,499 million and our total liabilities

decreased from Baht 9,676 million to Baht 8,468 million, from the end of 2010 to the end of 2011. This is mainly

due to scheduled principal repayment of long term loan in 2011 and the prepayment of mortgaged loan of

PloenchitCenter.Withadditionalprofitsfortheyear,ourshareholderequitiesincreasedfromBaht3,273million

to Baht 3,769 million.

Our total liabilities-to-equity ratio positively improved from 2.9 times at the end of 2010 to 2.2 times at the

endof 2011withnet interestbearingdebt-to-equityof 1.9 times.Withnetprofitgenerated in2011, theBoard

of Director proposed to the Annual General Meeting in 2012 to consider the dividend payment of Baht 0.08

per share representing a 37% payout ratio.

Mrs. Kamonwan WipulakornPresident


Report of the Audit Committee to Shareholder 21


Report of the Audit Committee to ShareholderThe Erawan Group Public Company Limited

To Shareholders of The Erawan Group Public Company Limited,

TheAuditCommittee, consisting of three independentdirectorswithqualifications as announcedby the

Stock Exchange of Thailand and whose terms are three years each, performed its duties within its scopes of

responsibility and as entrusted by the Board of Directors. In 2011, the Audit Committee met four times to consider

the following:

1. Toreviewthequarterlyfinancialstatementsandthe2011financialstatementswhereitexchangedviews

withtheauditor,ExecutiveVicePresidentandChiefFinancialOfficerandtheinternalauditortodetermine

thatthefinancialstatementsoftheCompanyanditssubsidiarieswerehavingaccurateandcomplete

information deserved to be trusted and were in line with the Generally-Accepted Accounting Principles,

theSET’sannouncementsandtheSEC’snotifications.

2. To evaluate an adequacy of the internal control system to see if the Company had an appropriate internal

control system that well responded to its business, as well as a way and mean to take care of its properties

and to prevent the Company from suffering damages. The evaluation was conducted through the internal

auditor’s report, the auditor’s report and through inquiries with the management. So far, no material defect

hasbeenfound.Asaresult,theCompany’sinternalcontrolsystemisperceivedtobeefficientandadequate.

3. Toreviewconnectedtransactionsorconflictofinterestandtodiscloseinformationofthesetransactions

toseeiftheywerenormal,reasonableandwasforthebestbenefitstotheCompanywhileincompliance

with the authorities’ rules and regulations.

4. To give advice and approve the annual auditing plan; to acknowledge and submit an internal auditing

result to the Board of Directors; to review an annual budget and to supervise and evaluate the Internal

Audit Department’s performance.

The Audit Committee, having reviewed the 2012 auditor and the soundness of the auditing fee, eventually

proposed to the Board of Directors to seek the Annual General Meeting’s approval to appoint Mr.Charoen

Phosamritlert, CPA No. 4068 and/or Miss Vannaporn Jongperadechanon, CPA No. 4098 and/or Mr. Vichien

Thamtrakul,CPA No.3183ofKPMGPhoomchaiAuditLtd.astheCompany’sauditor.

Mr. Sansern Wongcha-umChairman of the Audit Committee

21 February 2012

Report of the Board’s Responsibility in the Financial Statements

First line

22

Report of the Board’s Responsibility in the Financial StatementsThe Erawan Group Public Company Limited

TheBoardofDirectorswasresponsibleforthefinancialstatementsofTheErawanGroupPublicCompany

Limitedanditssubsidiaries.ThefinancialstatementwasdoneaccordingtotheGenerally-AcceptedAccounting

Principles in Thailand where an appropriate accounting policy was chosen and implemented. In addition, discretion

was exercised, the best estimates were selected and adequate information was disclosed in Notes to Financial

Statement.

The Board of Directors appointed the Audit Committee, which consisting of 3 independent directors,

to responsible for auditing the company’s financial statements and to evaluate the internal control system

forefficiency.TheAuditCommittee’sopinioninthismatterwasinReportoftheAuditCommitteetoShareholder.

In this regard, the Board of Directors is of the opinion that the Company’s internal control system is proven

satisfactory and contributes to the Company’s credibility as of 31st December 2011.

Mr. Prakit PradipasenChairman of The Board of Directors

Mrs. Kamonwan WipulakornPresident

23


ABOUT ERAWAN

Corporate Prof ile

First line

24

Corporate Prof ileThe Erawan Group Public Company Limited

Courtyard by Marriott Bangkok

2007

Holiday Inn Pattaya

2009

Grand Hyatt Erawan Bangkok Hotel

1991JW Marriott Hotel Bangkok

1997

7 ibis Hotels

2008-2010

Erawan Bangkok

2004

Established on 29 December 1982and continue to develop various real-estate (Hotels and Rental Properties) over the past

30 years

1985

Amarin Plaza 1985

The Company was founded

1988

Registeredon Stock Exchange

of Thailand

1991


1997

JW Marriott Hotel Bangkok

2007

Amarin Plaza Sold

Courtyard by Marriott Bangkok Hotel

2009

Holiday Inn Pattaya

2 ibis Hotels : ibis Bangkok Nana and ibis Phuket Kata

2010

ibis Bangkok Riverside

2008

Six Senses Sanctuary Phuket 4 ibis Hotels : ibis Phuket Patong, ibis Pattaya, ibis Bangkok Sathorn and ibis Samui Bophut

2005


1994

Converted in to a Public Company

1996

Ploenchit Center

2004

Erawan Bangkok

Ploenchit Center Sold; Erawan’s Subsidiary, Erawan Commercial Management Co.,Ltd, continues to manage the building

The Naka Island, a Luxury Collection Resort and Spa Phuket; rebranded from Six Senses Sanctuary Phuket

2011

Corporate Profile 25


Corporate Prof ileThe Erawan Group Public Company Limited

Courtyard by Marriott Bangkok

2007

Holiday Inn Pattaya

2009


1991JW Marriott Hotel Bangkok

1997

7 ibis Hotels

2008-2010

Erawan Bangkok

2004

Established on 29 December 1982and continue to develop various real-estate (Hotels and Rental Properties) over the past

30 years

1985

Amarin Plaza 1985

The Company was founded

1988

Registeredon Stock Exchange

of Thailand

1991


1997

JW Marriott Hotel Bangkok

2007

Amarin Plaza Sold

Courtyard by Marriott Bangkok Hotel

2009

Holiday Inn Pattaya

2 ibis Hotels : ibis Bangkok Nana and ibis Phuket Kata

2010

ibis Bangkok Riverside

2008

Six Senses Sanctuary Phuket 4 ibis Hotels : ibis Phuket Patong, ibis Pattaya, ibis Bangkok Sathorn and ibis Samui Bophut

2005


1994

Converted in to a Public Company

1996

Ploenchit Center

2004

Erawan Bangkok

Ploenchit Center Sold; Erawan’s Subsidiary, Erawan Commercial Management Co.,Ltd, continues to manage the building

The Naka Island, a Luxury Collection Resort and Spa Phuket; rebranded from Six Senses Sanctuary Phuket

2011

Current Business Operations

First line

26

Current Business OperationsThe Erawan Group Public Company Limited

The company and its subsidiaries’ core businesses are investment and development of diversified hotel properties across Thailand’s key destinations. Currently, the company owns 13 hotels and operates other business including retail space rental, and management of office building.

Hotels and Resorts

Grand Hyatt Erawan BangkokSegment : Luxury HotelNumber of rooms : 380 roomsLocation : Rajdamri Road, Bangkok, CBD.Remaining on the current lease : 30 yearswww.bangkok.grand.hyatt.com

The Naka Island, a Luxury Collection Resort & Spa, PhuketSegment : Luxury Resort and spaNumber of rooms : 67 pool villas Location : Koh Naka Yai, Phuketwww.nakaislandphuket.com

JW Marriott Hotel BangkokSegment : Luxury HotelNumber of rooms : 441 rooms Location : Sukhumvit Soi 2, Bangkok, CBD.Remaining on the current lease : 33 years www.marriott.com/bkkdt

Renaissance Koh Samui Resort and SpaSegment : Luxury ResortNumber of rooms : 45 deluxe rooms and 33 pool villasLocation : Lamai Beach, Koh Samui, Surat Thaniwww.marriott.com/usmbr

Holiday Inn PattayaSegment : Midscale Hotel Number of rooms : 367 rooms Location : Pattaya Sai 1 Road, Chon Buriwww.holidayinn.com/pattaya

Courtyard by Marriott BangkokSegment : Midscale Hotel Number of rooms : 316 roomsLocation : Rajdamri Road, Bangkok, CBD.Remaining on the current lease : 26 yearswww.courtyard.com/bkkcy

ibis Phuket Patong Segment : Economy HotelNumber of rooms : 258 roomsLocation : Patong Beach, Phuketwww.ibishotel.com

ibis Phuket Kata Segment : Economy HotelNumber of rooms : 258 roomsLocation : Kata Beach, Phuketwww.ibishotel.com

Current Business Operations 27

SUCCESS WITH INTEGRITYCurrent Business OperationsThe Erawan Group Public Company Limited

The company and its subsidiaries’ core businesses are investment and development of diversified hotel properties across Thailand’s key destinations. Currently, the company owns 13 hotels and operates other business including retail space rental, and management of office building.

Hotels and Resorts

Grand Hyatt Erawan BangkokSegment : Luxury HotelNumber of rooms : 380 roomsLocation : Rajdamri Road, Bangkok, CBD.Remaining on the current lease : 30 yearswww.bangkok.grand.hyatt.com

The Naka Island, a Luxury Collection Resort & Spa, PhuketSegment : Luxury Resort and spaNumber of rooms : 67 pool villas Location : Koh Naka Yai, Phuketwww.nakaislandphuket.com

JW Marriott Hotel BangkokSegment : Luxury HotelNumber of rooms : 441 rooms Location : Sukhumvit Soi 2, Bangkok, CBD.Remaining on the current lease : 33 years www.marriott.com/bkkdt

Renaissance Koh Samui Resort and SpaSegment : Luxury ResortNumber of rooms : 45 deluxe rooms and 33 pool villasLocation : Lamai Beach, Koh Samui, Surat Thaniwww.marriott.com/usmbr

Holiday Inn PattayaSegment : Midscale Hotel Number of rooms : 367 rooms Location : Pattaya Sai 1 Road, Chon Buriwww.holidayinn.com/pattaya

Courtyard by Marriott BangkokSegment : Midscale Hotel Number of rooms : 316 roomsLocation : Rajdamri Road, Bangkok, CBD.Remaining on the current lease : 26 yearswww.courtyard.com/bkkcy

ibis Phuket Patong Segment : Economy HotelNumber of rooms : 258 roomsLocation : Patong Beach, Phuketwww.ibishotel.com

ibis Phuket Kata Segment : Economy HotelNumber of rooms : 258 roomsLocation : Kata Beach, Phuketwww.ibishotel.com


First line

28

ibis Bangkok Nana Segment : Economy HotelNumber of rooms : 200 roomsLocation : Sukhumvit Soi 4, Bangkok, CBD.Remaining on the current lease : 27 yearswww.ibishotel.com

ibis Bangkok Riverside Segment : Economy HotelNumber of rooms : 266 roomsLocation : Charoennakorn Road, Chaophraya River,BangkokRemaining on the current lease : 23 yearswww.ibishotel.com

ibis Samui BophutSegment : Economy HotelNumber of rooms : 205 rooms Location : Bophut Beach, Koh Samui, Surat Thaniwww.ibishotel.com

Segment : Economy HotelNumber of rooms : 213 roomsLocation : Rama IV Road, Bangkok, CBD.Remaining on the current lease : 27 yearswww.ibishotel.com

ibis Bangkok Sathorn

ibis Hua HinSegment : Economy HotelNumber of rooms : 200 roomsLocation : Hua Hin, Prachuap Khiri Khan(Opened January 2012)

Properties Under Development

Mercure Bangkok Siam ibis Bangkok SiamSegment : Midscale and Economy HotelNumber of room : 380 roomsLocation : Siam Square, shopping area next to BTS National Stadium Station, Bangkok, CBD.Remaining on the current lease : 31 years

ibis PattayaSegment : Economy HotelNumber of rooms : 259 rooms Location : Pattaya Sai 2 Road, Chon Buriwww.ibishotel.com

Current Business Operations 29


ibis Bangkok Nana Segment : Economy HotelNumber of rooms : 200 roomsLocation : Sukhumvit Soi 4, Bangkok, CBD.Remaining on the current lease : 27 yearswww.ibishotel.com

ibis Bangkok Riverside Segment : Economy HotelNumber of rooms : 266 roomsLocation : Charoennakorn Road, Chaophraya River,BangkokRemaining on the current lease : 23 yearswww.ibishotel.com

ibis Samui BophutSegment : Economy HotelNumber of rooms : 205 rooms Location : Bophut Beach, Koh Samui, Surat Thaniwww.ibishotel.com

Segment : Economy HotelNumber of rooms : 213 roomsLocation : Rama IV Road, Bangkok, CBD.Remaining on the current lease : 27 yearswww.ibishotel.com

ibis Bangkok Sathorn

ibis Hua HinSegment : Economy HotelNumber of rooms : 200 roomsLocation : Hua Hin, Prachuap Khiri Khan(Opened January 2012)

Properties Under Development

Mercure Bangkok Siam ibis Bangkok SiamSegment : Midscale and Economy HotelNumber of room : 380 roomsLocation : Siam Square, shopping area next to BTS National Stadium Station, Bangkok, CBD.Remaining on the current lease : 31 years

ibis PattayaSegment : Economy HotelNumber of rooms : 259 rooms Location : Pattaya Sai 2 Road, Chon Buriwww.ibishotel.com


First line

30

Retail Shops (up-scale) : 6,849 sq.m. Location : Adjacent to Grand Hyatt Erawan Hotel Rajdamri Road, Bangkok, CBD.Remaining on the current lease : 30 yearswww.erawanbangkok.com

Ploenchit CenterPloenchit CenterOwner: Prime Office Leasehold Property Fund Owner: Prime Office Leasehold Property Fund (managed by The Erawan Group PLC)(managed by The Erawan Group PLC)

Office Building : 42,590 sq.m. Location : Sukhumvit Road Bangkok, CBD.

Rental PropertiesRental Properties

Erawan Bangkok Erawan Bangkok Erawan Bangkok Retail Shops (up-scale) : 6,849 sq.m. Retail Shops (up-scale) : 6,849 sq.m.

Rental PropertiesRental PropertiesRental Properties

31


Our Business StrategyThe Erawan Group Public Company Limited

The Erawan Group’s Third-Party Hotel Management Partners

Our Business Strategy

Core Business Strategies as follows;

1. Existing Properties: Maximizing value through continuous improvement and effective management.

2. FutureProjects:Developingawell-diversifiedhoteland/orresortportfoliotomeetdiversecustomers’needs

to diversify risks and yield appropriate returns.

3. Ensuring stability and sustainable growth of the organization through development of systems, human

capitals, core competencies, information database for decision making, and core corporate culture.

Third-Party Hotel Management Company Selection Policy: Third-Party Hotel Management Companies selected

tomanageourpropertiesareInternationalhoteloperatorswithreputableprofile,andmanagementexperience.

Criteria for hotel Brand selection is based on expertise of Management Company and suitability of the Brand for

the property.

First line

32 Our Shareholders and Management

Our Shareholders and ManagementThe Erawan Group Public Company Limited

Shareholders

As at 31st December 2011, the company’s paid up capital is Baht 2,244,779,001 divided into 2,244,779,001 ordinary shares at par value 1 Baht per share. Top ten shareholders holding the highest number of shares as of 31st December 2011 are as follows:

1. Mr. Sukakarn Wattanavekin 379,185,716 16.89%

2. City Holding Co., Ltd. 210,481,318 9.38%

3. Mrs.Wansamorn Wannamethee 131,611,349 5.86%

4. Mitr Phol Sugar Co., Ltd. 131,353,314 5.85%

5. MBK Company Limited 130,937,938 5.36%

6. SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) 120,222,500 5.36%

7. Mr. Isara Vongkusolkit 101,257,910 4.51%

8. Miss Jintana Kanjanakumnerd 83,296,177 3.71%

9. PAN-ASIA SUGAR FUND LIMITED 73,000,000 3.25%

10. Mr. Supol Wattanavekin 58,698,916 2.61%

Total top ten shareholders holding 1,420,045,138 62.78%

Vongkusolkit Group 871,994,642 39 %

Wattanavekin Group 709,907,357 31 %

Total major shareholders 1,581,901,999 70 %

Thai Institution Investor and Foreign Institution Investor 239,354,501 14 %

MBK Company Limited Group 141,468,738 6 %

Company’s executives 16,330,705 1 %

Others 192,094,692 9 %

Total 2,244,779,001 100 %

Investor will be able to see the updated shareholders list from the Company’s website at www.TheErawan.com before the Annual General Shareholders’ Meeting. Detail Groups of Major Shareholders are as follows:

Shareholder’s name Number of shares % of total shares

Major Shareholders Number of shares % of total shares

First line

Our Shareholders and Management 33


Management Structure

The Board of directors consists of thirteen (13) directors, the Board has appointed four committees namely: The Audit Committee (AC), The Investment Committee (IC), The Nominating and Corporate Governance Committee (NCG) and The Management Development and Compensation Committee (MDC).

Directors that represent the major shareholders are as follows:

1. Mr. Vitoon Vongkusolkit Vongkusolkit Group

2. Mr. Chanin Vongkusolkit Vongkusolkit Group

3. Mr. Gavin Vongkusolkit Vongkusolkit Group

4. Mr. Supol Wattanavekin Wattanavekin Group

5. Mrs. Panida Thepkanjana Wattanavekin Group

1. Mr. Prakit Pradipasen Chairman of the Board and Independent Director

• MasterofBusinessAdministration(MBA)Wayne State University, Michigan, U.S.A.

2. Mr. Sansern Wongcha-um Independent Director and Chairman of the Audit Committee

• MasterDegreeofBusinessEconomicsUniversity of Bridgeport, Connecticut, U.S.A.

3. Assoc. Prof. Manop Bongsadadt

Independent Director and Member of the Audit Committee

• MasterofArchitecture(M.Arch),Kansas State University, U.S.A.

4. Mr. Dej Bulsuk Independent Director and Member of the Audit Committee

• BachelorofBusinessAdministrationThammasat University

5. Mr. Banyong Pongpanich Independent Director • MasterofBusinessAdministration(MBA)Sasin Graduate Institute of Business Administration of Chulalongkorn University

6. Mr. Ekasith Jotikasthira Independent Director • MasterofBusinessAdministration(MBA)Sasin Graduate Institute of Business Administration of Chulalongkorn University

7. Mr. Vitoon Vongkusolkit Director • BachelorofScienceChulalongkorn University

Director’s Names Groups of Major Shareholders

Name Title Education

First line


8. Mr. Supol Wattanavekin Director • MasterofBusinessAdministration(Executive) (EMBA) Sasin Graduate Institute of Business Administration of Chulalongkorn University

9. Mr. Chanin Vongkusolkit Director • MasterofBusinessAdministration(Finance) St. Louis University, Missouri, U.S.A.

10. Mrs. Panida Thepkanjana Director • MasterofBusinessAdministration(MBA)Sasin Graduate Institute of Business Administration of Chulalongkorn University

• MasterofLaws,ChulalongkornUniversity• Barrister-at-Law.TheInstituteofThai Bar Association

11. Mr. Gavin Vongkusolkit Director • MasterofBusinessAdministration(Finance) The University of Sydney

12. Mr. Kasama Punyagupta Chief Executive Officer • MasterofBusinessAdministration(International Business) University of Bridgeport, Connecticut, U.S.A.

13. Mrs. Kamonwan Wipulakorn President • MasterofBusinessAdministration (Finance), Western Illinois University, USA.

Authority to sign on behalf of the CompanyTwo of the following four directors namely, Mr. Vitoon Vongkusolkit or Mrs. Panida Thepkanjana or Mr. Kasama

Punyagupta or Mrs.Kamonwan Wipulakorn, shall jointly sign a document together.

Dividend PolicyApproximately35percentofthenetprofitsoftheconsolidatedfinancialstatementsafterdeductionofallkind

ofreservesasspecifiedbylawandtheCompany(withadditionalconditions)

Company Secretary: Miss Kanokwan Thongsiwarugs

Name Title Education

First line



Roles and Responsibilities of the Board of Directors and the CommitteeBoard of Director’s Roles and Responsibilities are:

1. To manage the Company according to the laws, the Objects in Detail, the Articles of Association and resolutions of the Shareholders’ Meeting with integrity and prudence for the Company’s interests.

2. To determine the company’s visions, obligations and business policy. 3. To review the business development plans to increase potential of itself. 4. To consider budgets to maximum the business’s economic values and for better returns to shareholders. 5. To formulate the compensation policy and a succession plan of executives. 6. To supervise and develop risk assessment. 7. To supervise and develop the Company’s corporate governance compliance. 8. To supervise and set up an internal control and an internal audit system. 9. To take care of interests of both major and minor shareholders so that they can equally exercise and

maintain their interests while accessing accurate and complete information with transparence and accountability.

10. To appoint committees in order to determine scopes of work and monitor their performances. 11. To performance evaluation’s executives and the HR development policy.

Term of Directors3 years each term. At the Annual General Meeting (AGM), one-third of all directors shall resign by rotation.

The resigning directors may be re-elected.

The Audit Committee consists of three members as follows:

1. Mr. Sansern Wongcha-um Chairman 2. Assoc. Prof. Manop Bongsadadt Member of the Committee 3. Mr. Dej Bulsuk Member of the Committee

Audit Committee’s Roles and Responsibilities are: 1. To review an annual financial statement already audited by auditors and to ensure that it meets the

generally-accepted accounting principles; to consider and screen financial information together with the Financial and Risk Management Committee and the auditors before releasing it to the third party.

2. To consider and select, propose for appointment and determine auditor’s fees and met four times a year with the auditors.

3. To review material problems and obstacles the auditor may come across while performing his duty and to settle differences between the auditor and the management.

4. To review the appropriateness and effectiveness of the internal control system and internal audit systems are in place according to international standards. 5. To set up a defensive work system for business units in the company to increase operation efficiency

and effectiveness. 6. To review an annual internal audit plan proposed by the Internal Audit Office. To provide opinion on the

consideration of performance, appointment, removal, and remuneration of the Company’s internal auditor.

First line


7. To promote and support the development of a financial reporting system that meets the international standards.

8. To control company’s compliance with the laws on Securities and Exchange and other legislations relating to its business.

9. To determine fraud prevention measures and review results of a corruption inspection report. 10. To review the accuracy and effectiveness of information technology relating to the internal control

system; to offer advice for roles and regular updates. 11. To consider the Company’s information disclosure in case of connected transactions or transactions

which may involve conflict of interest to ensure that all are correct, sound and carried out in a normal course of business.

12. To prepare the Audit Committee’s report to be signed by chairman of the Committee and disclosed it in the Company’s annual report.

13. To act otherwise as required by the laws or entrusted by the Board of Directors; when performing along its scopes of work, the Audit Committee shall be empowered to order President and Chief Executive Officer, senior executives, heads of department or related staff to provide their opinions, participate in meeting or submit documents deemed necessary or relevant.

Term of Audit Directors:3 years each term.

The Investment Committee consists of seven members as follows: 1. Mr. Vitoon Vongkusolkit Chairman 2. Mr. Banyong Pongpanich Member of the Committee 3. Mr. Supol Wattanavekin Member of the Committee 4. Mr. Chanin Vongkusolkit Member of the Committee 5. Mrs. Panida Thepkanjana Member of the Committee 6. Mr. Kasama Punyagupta Member of the Committee 7. Mrs. Kamonwan Wipulakorn Member of the Committee

The Investment Committee’s Roles and Responsibilities are: 1. To supervise and approve investment projects and divestment transactions as set out in the Company’s

master plan. The Committee’s responsibilities shall include preliminary approvals of project feasibility, financialreturns,andreviewofrisksassociatedwiththeprojectincludingfinancingandrelevantlegalcommitmentsandproposedtotheBoardofDirector forfinalapproval.

2. Toassessandformulateasystematic,clear-cutandefficientriskmanagementplan. 3. To supervise and monitor risk assessment tasks as well as to adjust and develop the risk management on a regular basis.

Term of Investment Directors:3 years each term.

The Nominating and Corporate Governance Committee consists of four members as follows: 1. Mr. Prakit Pradipasen Chairman 2. Mrs. Panida Thepkanjana Member of the Committee 3. Mr. Chanin Vongkusolkit Member of the Committee 4. Mr. Gavin Vongkusolkit Member of the Committee

First line



Nominating and Corporate Governance Committee’s roles and responsibilities are: 1. Todetermine theBoardofDirectors’compositionandqualificationof itsmembersaswellasmembers of board committees. 2. To nominate candidates for the Board of Directors and member of board committees. 3. To determine the Remuneration of Directors. 4. To propose corporate governance policies and guidelines to the Board of Directors and to review and update such policies and guidelines on ongoing basis. 5. To evaluate the Board of Directors and each committee’s performance and to ensure that the Board of Directors and management’s operations are being conducted within corporate governance policies and guidelines. 6. To promote knowledge acquisition for the Company’s nature of business, regulations, and strategy.

Term of Nominating and Corporate Governance Director:

3 years each term.

The Management Development and Compensation Committee consists of four members as follows:

1. Mr. Supol Wattanavekin Chairman 2. Mr. Vitoon Vongkusolkit Member of the Committee 3. Mr. Banyong Pongpanich Member of the Committee 4. Mr. Ekasith Jotikasthira Member of the Committee

Management Development and Compensation Committee’s roles and responsibilities are:

1. To assess and evaluate performances; to determine annual remunerations and a compensation structureofPresidentandChiefExecutiveOfficerwhileofferinghimanadviceregardingremunerations of senior executives. 2. ToconsideraplantodevelopskillsandcompetencyofPresidentandChiefExecutiveOfficerNominees (in case of change). 3. TodeterminesignificantHRpolicies i.e.andstructureofstaff’s remunerations forAnnualRemunerations and Budgeting, Rewards (bonus), etc. 4. To consider an allocation of the Employees Share Options Program (ESOP) in case such allocation exceeds 5 percent of the program’s shares.

Term of Management Development and Compensation Directors:

3 years each term.

Independent Directors, who account for 46 percent of the Company’s Board of Directors, consist of:

1. Mr. Prakit Pradipasen Independent Director 2. Mr. Sansern Wongcha-um Independent Director 3. Assoc. Prof. Manop Bongsadadt Independent Director 4. Mr. Dej Bulsuk Independent Director 5. Mr. Banyong Pongpanich Independent Director 6. Mr. Ekasith Jotikasthira Independent Director

First line


The Company’s Executives consist of:

1. Mr.KasamaPunyagupta ChiefExecutiveOfficer 2. Mrs. Kamonwan Wipulakorn President 3. Mr.KrailuckAsawachatroj ExecutiveVicePresidentandChiefFinancialOfficer 4. Mr. Petch Krainukul Executive Vice President 5. Mrs. Varisara Gerjarusak Executive Vice President 6. Mr. Apichan Mapaisansin Assistant Executive Vice President 7. Mr. Suchai Wuthworachairung Assistant Executive Vice President 8. Miss Pakinee Pramtade Senior Vice President 9. Mr. Viboon Chaisutyakorn Vice President

Duties and Authorities of Chief Executive Officer (CEO)

1. To formulate the Company’s Vision and Mission. 2. To formulate the Company’s business plans and strategies to achieve Vision set forth for the Company.

3. To formulate development plans for the Company’s top executives and be responsible for succession plansoftheCompany’sChiefExecutiveOfficerandPresident. 4. Be responsible for the Company’s long term strategic direction and expansion plans. 5. To provide advice to President for the Company’s overall management.

Duties and Authorities of President

1. To formulate the Company’s business plan and strategy in accordance with the Company’s Vision and Mission. 2. To formulate the Company’s annual budget and allocate required resources to achieve annual goal. 3. Tomanagehumanresourcesincludingrecruiting,settingcompensations,welfareandbenefits,setting evaluation methods, appointing, removing and transferring staff and issuing rules, regulations and announcements as deemed appropriate.

4. To set forth management structure, determine roles, duties and approval authorities.5. Todevelopvarioussystemstoensureeffectiveandefficientoperations.

6. To build and nurture corporate cultures to achieve long term sustainable growth. 7. To develop skills, knowledge and employee competency in accordance with the Company’s business plan. 8. Todevelopvalidandsufficientdatabasestosupportdecisionmaking. 9. Torepresentandpromotecorporateimageandprofiletopublic. 10. To develop good corporate governance and ensure good practice throughout both at company and employee’s level.

First line



Duties and Responsibilities of Company Secretary The Company Secretary shall have duties and responsibilities that are no fewer than what the Securities and

Exchange Act (No. 4) B.E. 2551 and/or other related laws, rules and regulations have stipulated. This includes:1. TosupporttheBoardtoperformitsfiduciarydutieswithintegrityandcareasanormalpersonmaydo

in the same situation; to offer advice to directors, the Management and staff to ensure compliances to the laws, rules and regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) and other relevant legislations.

2. To supervise the internal auditing, the internal control system, compliance to the principle of good corporate governance and to be a center in compiling risk management plans.

3. Tocoordinatemattersrelatingtodirectorssuchaschangesofqualifications,changesofrolesandduties,termsofofficesofcommittees,resignationonrotation,resignationpriortoaduetermandappointmentof new directors.

4. Tospecifyandinformaplacewhereimportantdocumentsofthefirmarekeptandtodiscloserelatedinformation based on duties and responsibilities to the SEC.

5. To monitor the Management’s performances to ensure good practices. 6. To prepare enough annual reports for distribution to shareholders and related persons. 7. To review invitation letters to the Annual General Meeting of Shareholders and the Extraordinary General

Meeting of Shareholders, adequacy of documents, supporting documents and information disclosure to the meeting and minutes of the meeting.

8. To disclose related information under the Secretary’s duties and responsibilities to the SET.

The Company’s Articles of Association of the Nomination of DirectorsClause 18 the Shareholders’ Meeting shall elect directors according to the following rules and procedures:

18.1 Chairman of the Meeting shall propose names and work experiences of nominees submitted by the Board of Directors for approval.

18.2 Each shareholder shall have voting rights equal to the number of shares he holds. 18.3 An election of director may be done by voting either one or several persons as director as

the Shareholders’ Meeting deems appropriate. However, each shareholder must exercise all of his voting rights existed under Clause 18.2 for each director. Dividing votes to a particular nominee is not permitted.

18.4 Those receiving the highest votes in a sequent order shall be elected as directors for an available number of directors. Should those elected in a subsequent order enjoy equal votes which however exceed the number of the existing directors, Chairman of the Meeting shall have a casting vote.

Clause 48 A resolution of the Shareholders’ Meeting shall consist of the following votes: 48.1 In a normal case, majority votes of shareholders who attend the meeting (either by themselves

or by proxy) and exercise their votes shall be considered a resolution.

Shareholding of the Board of Directors and Management40

1. Mr. Prakit Pradipasen

2. Mr. Sansern Wongcha-um

3. Assoc. Prof. Manop Bongsadadt

4. Mr. Dej Bulsuk

5. Mr. Banyong Pongpanich

6. Mr. Ekasith Jotikasthira

7. Mr. Vitoon Vongkusolkit

8. Mr. Supol Wattanavekin

9. Mr. Chanin Vongkusolkit

10. Mrs. Panida Thepkanjana

11. Mr. Gavin Vongkusolkit

12. Mr. Kasama Punyagupta

13. Mrs. Kamonwan Wipulakorn

14. Mr. Krailuck Asawachatroj

15. Mr. Petch Krainukul

16. Mrs. Varisara Gerjarusak

17. Mr. Apichan Mapaisansin

18. Mr. Suchai Wuthworachairung

19. Miss Pakinee Pramtade

20. Mr. Viboon Chaisutyakorn

Chairman of the Board of Directors

Independent Director





Director

Director

Director

Director

Director

Chief Executive Off icer

President

Executive Vice President andChiefFinancialOfficer

Executive Vice President

Executive Vice President

Assistant ExecutiveVice President

Assistant ExecutiveVice President

Senior Vice President

Vice President

150,058

-

319,729

660,000

-

-

11,457,870

58,698,916

5,493,550

3,797,416

97,213

9,999,999

-

-

839,082

-

1,000,000

1,745,716

-

1,088,697

150,058

-

319,729

660,000

3,001,500

-

11,457,870

58,698,916

5,493,550

3,797,416

97,213

11,510,211

-

-

839,082

-

1,000,000

1,825,716

-

1,088,697

-

-

-

-

(3,001,500)

-

-

-

-

-

-

(1,510,212)

-

-

-

-

-

(80,000)

-

-

Shareholding of the Board of Directors and ManagementThe Erawan Group Public Company Limited

Note: From report of securities held by the Company’s directors as of 31st December 2011

TitleNameOrdinary Share (Units)

31 Dec.2011 31 Dec.2010 +(-)

Hotel Industry

First line

42

Hotel IndustryThe Erawan Group Public Company Limited

Trend of the Tourism IndustryThailand tourism industry had clearly shown its strength and potential in the year 2011. Despite being

adverselyaffectedbythefloodduringthehighseasoninthelastquarter,annualinternationaltouristarrivalshadreached19.1millionarrivals*,up20percentfrom2010.Thefigurewaswellsurpassed16–17millionarrivals,a forecasted number by Tourism Authority of Thailand (TAT) at the beginning of 2011, but it was below a mid-yearrevisedforecastof19.5millionarrivals.Domestictourism,however,tookagreaterimpactfromthefloodas local tourism shrink to show 100 million* trips for the year, less than a projection by Kasikorn Research Center of 105 million trips. Nevertheless, income from tourism, international and local combined, soared 8 percent to reachanoutstandinglevelofmorethan1trillionBaht.Thisfirmdevelopmentin2011wasdrivenbymanyfactorsespecially from political stability, growth in Asian economy leading to growth in Asian tourists, sharp increase inRussianvisitors,andconstantmarketingactivitiesbyTATsuchastradeshowstostimulatetouristconfidenceandstrengthentheimageofThailandtourism.Thestrengthofthetourismindustrywasalsoreflectedbyasurveyresult of Travel & Leisure Magazine’s, which readers voted Bangkok as number one for World’s Best City Award 2011, the same position for two consecutive years.

2004

Million Arrivals

10

12

14

20

16

18

2005 2006 2007 2008 2009Political Unrest

& Flu Pandemic

PoliticalUnrest

FloodCrisis

AirportClosure

Coup D'etat

Tsunami

2010 2011 E 2012 F

Growth (%)Number of International Tourist Arrivals

+16%

+19%

-1%

+5%

+1%

+13%

+20%

+8%

-3%

Sources: TAT; Ministry of Tourism and Sports; Department of Tourism

* Preliminary information from TAT in January 2012

Hotel Industry 43


Holiday Inn Pattaya

During the first quarter of 2011, foreign tourist arrivals continued itsmomentum from the last quarter of

2010 showing 5.4 million arrivals, the best performing quarter of the year. Chinese, Russian, and Indians showed

significantgrowth fromthesamequarter lastyear.Secondquarterstilldemonstratedstrong touristconfidence,

as international arrivals saw a tremendous 54 percent growth from same period last year, a period with political

riots in Bangkok CBD. Despite political uncertainty during pre- and post-election periods in the third quarter,

internationalarrivalsstill increasedby28percentcomparedwith2010.However, thefloodduringthefourth

which devastated many areas particularly in the Northern and Central regions of Thailand as well as parts of

Bangkok urged many foreign governments to issue Travel Warnings to their citizens not to visit affected areas

withinThailand.SuchTravelWarningsalongwith thenews footageof floodedDonMuangAirport,andseveral

tourist attractions greatly impacted the number of international tourist arrivals to Bangkok area due to many trip

cancellations.Tourismsituationatothermajortouristdestinations,unaffectedbyflood,suchasPhuket,Samui,and

Chiang Mai, had received no adverse impact from the Warnings and the news because of the rising popularity in

commutingbycharteredflightsanddirectflightsdirectlytosuchresortdestinations.Intotal,internationalarrivals

during the last quarter dropped 9 percent compared with last year to 4.3 million arrivals.

Hotel Industry

First line

44

As regards todomestic tourismduring2011, thesituationappearedpromisingduring the firsthalfof theyearasdomestictripsincreased2percentcomparedwithsameperiodlastyear.However,thefloodadverselyimpacted the tourism industry during the last quarter of the year. Even though, countless Bangkok residences evacuatedfromthefloodedareastostayataccommodationsinnearbydestinationssuchasPattayaandHuaHin,the momentum of domestic tourism during such high season was greatly deteriorated especially during the festiveperiod. Number of domestic trips dropped 5% from 2010 and less than its forecasted numbers to report an annual figureof100milliontrips.

Thailand tourism industry in 2012 is expected to continue its positive trend and show concrete growth in terms of both number of tourist arrivals and income from tourism. Major positive factors contributing to its continued growth include strong Asian economy leading to greater number of Asian tourists, as well as the steady expansionof low-costairlinesintermsofmorefrequentflights,moreroutes,andmore airporthubs.In2012,tourists from China, Russia, and India (RIC), which currently contribute 18 percent of total international tourist arrivals,willplayasignificant role instimulatingThailandtourism industry.TATandtheTourismCouncilofThailand(TCT)expect internationaltouristarrivalstogrowby8–10percentwhichwillbringthefiguretoastaggering20.5 – 20.8million*Preliminary forecast fromTAT in January 2012 arrivals for 2012. As regards to marketing strategies, TAT will promote Thailand under the campaign “Amazing Thailand: Always Amazes You” to build up its strengths as a valued destination offering memorable travel experience to differentiate Thailand from other tourist destinations.

2004

Million trips

50

60

70

100

110

80

90

2005 2006 2007 2008 2009Political Unrest

& Flu Pandemic

Political Unrest

Flood Crisis

Airport Closure

Coup D'etat

Tsunami

2010 2011 E 2012 F

Growth (%)Domestic Tourist Trips

+8%+6%

+2% +1% +2% +3%

+17%

-1%

+7%

5050

Sources: TAT; Ministry of Tourism and Sports; Department of Tourism

*Preliminary forecast from TAT in January 2012

Hotel Industry 45


For domestic tourism, TAT is fully committed to stimulate the industry back from a slump starting with a conceptofvolunteertourismintheregionsthatexperiencedfloodinthelastquarterof2011andthecampaign“Travel with a New Heart for a Sustainable Thailand” will be launched to stimulate 2012 domestic tourism. In addition, TCT expects domestic tourism to fully recover in the second quarter, particularly during Songkran Festival and school holiday. However, the degree of tourism recovery depends largely on restoration of tourist attractions and tourist services as well as the effectiveness of marketing activities to stimulate Thai tourists. Domestic tourist trips are expected to reach 107.48 million trips or grow by 7 percent from 2011, according to TAT.

Regarding new international- and regional-chain hotel supply, it is expected that many luxury and mid-scale hotels will commence their business in 2012, especially in Bangkok that several luxury and mid-scale hotels opened their doors since middle of 2011 and the opening will continue throughout 2012. This growing new supplyin luxury and mid-scale segments tends to lead to intense competition within the segments since the highest contributing and fastest-growing tourist source markets, the RIC, have a tendency to travel as tour series groups and accommodate at economy hotels.

Nonetheless, Thailand tourism industry is still a robust and prospective industry. Long-lasting tourism reputation; sincere Thai hospitality; variety and beauty of cultural and natural attractions, and value-for-money all contributes to Thailand as a competitive tourism product. In addition, sharp increase in number of Asian tourists and the travel behavior to travel more in neighboring countries will become main factors contributing to long-term sustainability of Thailand tourism industry.

Renaissance Koh Samui Resort & Spa

Risk Factors 46

Risk FactorsThe Erawan Group Public Company Limited

Our company has the Investment Committee (“IC”) to supervising and managing policies, plans and investment projects approved by the Board. The Committee also ensures that the firm has a systematic, distinct and effective risk management system. Each head of department are responsible to analyze and formulate with the strategies to manage or mitigate the risks. Risks associated with our operations are:

1. Risk Management: Dependence of Third-party Hotel managementThe company has no policy to manage hotels by ourselves. International hotel operators are hired to utilize

their reputations, experiences and expertise in managing and administering our hotels. These hotel operators include Hyatt International, Marriott International, Accor Hotels, InterContinental Hotels Group, and Starwood Hotels & Resorts Worldwide. The operators we have selected are amongst the world’s largest operators with proven track records, tested systems, reputations, and strong financial positions. Therefore, we believe that, even though hotel management agreements are of long-term nature and could exposed the company to the risk that brand reputations and operators’ capabilities to compete may decline during the contracted period, the possibilities of such deterioration of performances is minimal. Furthermore, all hotel management agreements with the hotel operators include termination for non-performance clause in case hotel performances have constantly not reached desired level. This clause, therefore, allows the company to appoint another international hotel operator to take over the management of the property.

2. Risk from Declining Demand and Increasing SupplyThe unbalanced situation of supply and demand could cause an intense competition in the hotel market,

which may affect company’s income and operating profit. However, the company hires different highly-experienced hotel management operators to manage our properties base on their expert market segments. Such hotel operators can provide competitive advantage such as, wide-range of customer base to ensure certain level of demand, and proactive crisis management under unpredictable situation. Furthermore, the company has always been proactive in reestablishing and introducing new hotel competitive strengths as well as continuously manages its expenses to stay at the minimum. In addition, a strategy to diversify investment portfolio to luxury, mid-scale and economy hotels in various tourist destinations help to mitigate this demand-supply risk effectively.

3. External Risk Factors Impacting Company’s Assets and Business OperationsExternal risk factors such as natural disaster, terrorism or political unrest that may have an impact on

company’s properties and business operations are unpredictable and uncontrollable. However, the company has set certain emergency standard procedures based on international standard to reduce adverse impacts from such unpredictable events. For example, crisis management at different hotel properties during the flood, which was established according to the severity of each location, including constructing flood barriers to defend important sites of the hotels, preparation of food, beverages, and other consumer products, preparation of power generator, and temporarily close high-risk property and transfer hotel guests to other low-risk properties. Standard procedures to manage political unrest risks have also been implemented, including restricted access to and from properties, setup barriers within vicinity, and evacuation in accordance with international standard. Furthermore,

Risk Factors 47


all hotel properties of the company are covered under all-risk, business interruption, and terrorism insurances to cover the aforementioned damages should they have direct impact to any of the properties.

4. External Risk Factors Affecting Hotel Business Performance External risk factors affecting hotel business performance, such as natural disaster, political unrest or

epidemic, are beyond company’s control and prevention. Such external factors could cause sudden drop in number of international tourist arrival, which will have a direct impact on hotel revenue and net income. Nevertheless, precedent events have shown a pattern that these adverse impacts are short-lived, around 3 - 9 months, depending on severity. The company’s risk management strategies to handle these external factors are to haveaflexibilityandresponsivenessinoursystems.Salesandmarketingactivitiesareflexibleforfastreactiontomarketcondition,whileproactivecostmanagementpoliciesallowthecompanytoberesilientindifficultperiods.

5. Interest rate risk Interest rate risk, which is a result of changes of market rates in the future, will affect our operating results

andcashflow.Forthepurposeoffinancialriskmitigationinlightofinterestuptrend,theCompanyconvertedaportionoflongtermloanfromfloatingratesintofixedrates.Asof31st December 2011, approximately 34 percent of our long term loans were subject to a fixed rate and 66 percent were subject to a floating interest rate. Ourfloating-ratetermloansapplyaMinimumLendingRate(MLR),a6-monthFixedDepositRateand12-monthFixed Deposit Rate as a benchmark.

6. Human Resources Risk Loss of executive management or key personnel of the company is also considered a risk for the company.

However, human resources development and management is one of the key priorities of the company. Over the past years, the company has recruited employees and managements in rapid growth departments and provides continuous training and development to existing employees. More importantly, the company has implemented a 3-layersuccessionplanfromPresidentandChiefExecutiveOfficerdowntoVicepresidentlevelwhichsupervisedby the Management Development and Compensation Committee (“MDC”) and Executive Vice President of each departmentrespectively.Inaddition,withaprofessionallyrunstructure,thecompanyoperatesunderanefficientsystem and do not rely on sole capability or decision-making of a single individual. Authority has been decentralized to various level employees under the supervision of the Board of Directors. These structures of management will help reduce risk from loss of key personnel.

In addition, key corporate cultures including “Team spirit” and “With integrity”, will also attract capable professionalswith integrity to join thecompany.Lastly,competitivecompensationandbenefits,bonusschemewhich links to corporate strategy map as well as long term stock option plan for executive management and employees also creates commitment and loyalty to employees which will help them to work more efficiently. This compensation structure will also help to retain quality employees with the company.

Good Coporate Governance Award

First line

48

Good Corporate Governance AwardThe Erawan Group Public Company Limited

Year 2011 • “Excellent” AGM Assessments Program

Project: AGM Assessments Program 2011

• “Excellent” CGR Report 2011

Project: Corporate Governance Report of Thai Listed Companies

•Nomination to “Excellent CSR Awards 2011”

Project: SET Awards 2011

Excellent CGR Report 2009 - 2011

Year 2005-2010 •“2nd Quartile Year 2005” (Top rating = 1st Quartile), Project: Corporate Governance Report of Thai Listed Companies •“good”AGMAssessmentsProgram,Project:AGMAssessmentsProgram2006 • “verygood”CGRReport2006,Project:CorporateGovernanceReportofThaiListedCompanies • “verygood”AGMAssessmentsProgram,Project:AGMAssessmentsProgram2007 •BoardoftheYearforDistinctivePractices2006/2007,Project:BoardoftheYearAwards2006 • “verygood”CGRReport2008,Project:CorporateGovernanceReportofThaiListedCompanies • “Excellent”AGMAssessmentsProgram,Project:AGMAssessmentsProgram2008 • “Excellent”CGRReport2009,Project:CorporateGovernanceReportofThaiListedCompanies • “Excellent”AGMAssessmentsProgram,Project:AGMAssessmentsProgram2009 • 1in3Nominationto“IRExcellent”Awards2009,Project:SETAwards2009 • “ExcellentrecognizedasGoodExample”AGMAssessmentsProgram,Project:AGMAssessmentsProgram2010 •“Excellent”CGRReport2010,Project:CorporateGovernanceReportofThaiListedCompanies • “Excellent”IRAwards2010,Project:SETAwards2010 •Nominationto“ExcellentCSRAwards2010”,Project:SETAwards2010

Year 2011Year 2011 • • “Excellent” AGM Assessments Program“Excellent” AGM Assessments Program

First line

50 Corporate Governance Policy

The Erawan Group Plc. (ERW) is managed on the principle of good corporate governance. The business is run in compliance with the laws and on the basis of the Business Code of Conduct where information is disclosed in a transparent and straightforward manner. We have also put in place efficient auditing mechanisms. We operate our business by taking into consideration our responsibility in every aspect to shareholders and stakeholders, the structure of our Board of Directors, supervision mechanisms and efficient management responsibility. Aside from complying with the OCED’s best practices, we also implement other best practices normally practiced overseas; for example, The Erawan Group have set up four sub-committees to help supervising each task or the fact that our board consists of as much as 46 percent of Independent Directors out of the entire board. With regard to corporate governance, The Erawan Group has set up the Nominating and Corporate Governance Committee (NCG) to regularly review and update corporate governance policies and practices so the company will continue to have up-to-date criteria that it can be actually implemented. To comply with the policy, the Chief Executive Officer and President has been directed to promote corporate governance among staff of all levels.

The President requires the Code of Conduct be made for employees of all levels as a clear guideline for practices under the corporate governance policy. Two Town Hall meetings a year are held to promote understanding in this subject matter. Besides, we also aim to do our success with integrity, which is one of the four values set as our corporate culture. We also ensure that staff understands the concept of Social Corporate Responsibility (CSR) where business is run by properly taking into consideration the interest of all stakeholders whether they are customers, suppliers, shareholders, creditors, employees, the society or the environment. The Erawan Group regularly conducts an opinion survey of stakeholders. Results of the survey are used to improve business efficiency and to be one of the factors evaluating our staff performances annually.

How we started our CSR?It started at the corporate leader who had the right understanding of the CSR framework. The CSR core

is to be responsible in one’s own duty and to treat all stakeholders whether they are shareholders, employees, their families, customers, creditors, suppliers, competitors, government, the society and industrial counterparts with respect and sincerity.

Today, when people heard about CSR, they tend to think of corporate activities held for the benefit of the community, society and the environment. This can be donations for various forms of campaigns to sponsoring a sports event to building schools to the less fortunate students or even promoting the use of green products. In short, any social project aims to return something good to the society we live in is considered a CSR project. While this is right, this aspect of CSR is only a minor part of the overall CSR activity.

Beyond this activity is the fact that for a company to set up a policy, work plan or strategy, it must take into consideration direct and indirect effects to other stakeholders and the company must not focus at shareholders’ profits alone and only. In short, the Board of Directors must come up with a policy that achieves a right balance of corporate social responsibility to everyone and this policy must function not only during a good time when the business enjoys profits but also when the company confronts the crisis.

At ERAWAN, we believe that CSR is our path to sustainable success. The reason is because CSR is a key factor that makes our organization accepted by all stakeholders and it’s something that makes them want to

Corporate Governance PolicyThe Erawan Group Public Company Limited


First line

Corporate Governance Policy 51

associate with us. For example, to retain good staff, The Erawan Group must start first by making them happy to come to work. Likewise, customers must be satisfied and wish to come back for our service times after time. Suppliers are glad to deal with us due to the way we do our business frankly while our decisions are made on the basis of facts and not the kickbacks or anything along that line. Minor and major shareholders are confident that they will get access to equal and direct information during the good and bad business time. Creditors are confident in the transparency of the information they receive from us as well as The Erawan Group accountability for debt payment, legal compliance as well as accurate tax record and payment. If every organization is able to take a good care of all stakeholders, the society and the economy will benefit as a whole. As such, one can see that social contribution projects are only a small part of the CSR. The organization will not achieve CSR if it continues to take advantage of other stakeholders.

At ERAWAN we have committed to the CSR concept for more than six years. We started first by making sure that there was a right understanding of the issue in our organization. One of our questions was how everyone can naturally incorporate CSR in their daily life without taking so much effort. That’s why we made it one of our four the Erawan mottos considered our DNA. In addition, an important factor of our corporate strategy is to take into consideration the satisfaction of all stakeholders when interacting with us and this very factor became one of the criteria to evaluate our staff during the Balance Score Card process, which results in the overall assessment of everyone’s performance in the organization. Creating awareness and accountability for all stakeholders is a time-consuming process and cannot be forced to happen overnight. Only when everyone in the organization witnesses by his own that something good out of his practice actually happens to the organization, then, he will be confident and feel like pursuing it. Only then that everyone will communicate on the same basis. We are confident and committed to this path as we believe that it’s the right path although the result cannot be felt in the short term. The end result is not merely an accolade or an award but it must really exist and can be felt by everyone in the organization. Those interacting with us can feel it by their heart without any publicity because in the end, all stakeholders who feel good after interacting with us will be the best and most effective publicity vehicle in the whole world to tell the rest who we really are.

Social and environmental projects in 2011

Despite various problems Thailand faced during the past few years which forced us to confront with a series of unexpected crises, we continue to carry out our corporate activities for communities and the society. As the Company sets to spend 0.5 percent of our net profit for corporate contributions, which is not much in monetary term, we intend to maximize our corporate projects, which could be carried out on an ongoing basis and are measurable, to answer most to the needs of relevant communities. We encourage staff, their families and the public to participate in our activities as a good citizen of the society. Most important of all, our social activities are not part of a publicity campaign. In our view, corporate contributions are what we do and expect nothing in return. Giving back to the society within our means is what we want to do despite the crisis. Of all corporate contribution activities, we divide them in four groups as follows.

First line


1. Tourism-related activities

1.1 The Welcome Guide to Thailand: The project has taught English to taxi drivers without charge since 2008. So far, we have organized 10 classes and trained 295 taxi drivers. Aimed to enhance English-speaking skills to taxi drivers, the project has been well-received and more classes have been requested. In 2011, three classes were held and one was organized at ibis Bangkok Riverside hotel. For the remaining 2 times, the Company currently collaborates with AOT Public Company Limited, who operates national airports, to hold English classes to taxi drivers of the International Suvarnabhumi Airport. The training was organized at the airport’s fire station.

1.2 Traditional gift to celebrate the Thai New Year: To continue the tradition of the Thai New Year, in 2011, we came up with a corporate gift with meaningful messages distributed to our corporate

customers when we sought their blessings on this auspicious occasion.

2. Community activities

2.1 The Erawan Group for Flood Victims Project: As Thailand suffered the country’s worst flood in its 50-year history, we provided money and necessary items through various channels. Details are as follows.

• Assistance to our staff: we provided temporary shelters without charge for staff whose homes were under water. They were later given money to help renovating their homes and resume their life.

• The public: The Company offered hotel rooms to the public at a special rate during flood until the situation returned to normal. • Cash donation: We donated Baht 500,000 via the Association of Listed Companies’s flood victim assistance project • Cash and Food box donation: The Erawan Group donated 620,000 Baht to “Krob Krua Kao” Channel 3 to assist with flood relief operation. The donation included 200,000 Baht cash and 420,000 Baht worth of 14,000 food boxes. The company daily delivered 500 food boxes to the

news station for 28 days during 3-30 November, 2012 • Survival kit donation: The Company distributed survival kits to the Sakae Temple Community, Ayutthaya Province, through the Support Service Department of the Royal Thai Army; and the Ladkrabang Community through the Ladkrabang District Office. • One-to-One assistance: The Erawan Group offered a tricycle for Ms. Son Daengsa-ard to help her start making a living again. We also financed construction materials for Mr. Sukchai Pansapsan of Wangnoi District, Ayutthaya Province to repair his home. The two were selected by TV Burapha Co., Ltd, who picked them from various flood victim candidates for their unique dedications to other community members although they, too, suffered from the flood. • Participation in the Beautiful Thailand Project: On December 4, 2011, we participated in the Beautiful Thailand project held by the Tourism Authority of Thailand (TAT) at Ayutthaya Province to restore the old capital suffering vast damage from the flood.


First line


2.2 The Nice & Neat Surrounding Project: In 2011-2012, together with other businesses in Rachaprasong area and the Pathumwan District Office, we renovated and will continue to renovate a traffic island section from Rachaprasong Road to the Chidlom Intersection. The project, which is designed to keep our neighborhood clean and beautiful, is currently ongoing. 2.3 The Love Charity Project: Set to provide education opportunities for needy children, the project built

a library for the Ban Koh Naka School, the only school on the Naka Yai Island, Phuket Province, in 2011. Children now get access to books and computers from the library.

3. Energy-saving and environmental projects

3.1 The Trash for Egg Project: To promote waste recycling, we have collaborated with Recycle Wongpanich Group Co., Ltd. to buy recycled waste at the Pleonchit Center Building. The waste came from our staff, customers, suppliers and the public frequenting the building who exchanged their trash for eggs. The objective is to reduce the amount of garbage while promoting effective use of resource. So far, the project has been warmly received as the volume of recycled trash has significantly increased that we currently sell approximately one ton of recycled trash a month from once every two months a while ago. We also increase recycled waste drop-off locations inside the building and educate the public how to better separate waste.

3.2 The Erawan Let’s Green Project is to educate staff and tenants of the Ploenchit Center Building how to effectively separate and recycle waste through a training hosted by Dr Somthai Wongcharoen, Chairman of Recycle Wongpanich Group Co., Ltd.

4. The Thai Elephant Conservation Project To prevent the Thai elephants, our symbolic and beloved animal, from extinction, The Erawan Group has

sponsored the project since 2005 through various forms. Between 2010-2011, together with the Return Elephants to the Nature Foundation, we planted trees and built small reservoirs at the Sub Langka Wildlife Sanctuary, Lopburi Province. The activity, which continued for two consecutive years, aimed to create an abundant habitat for elephants. The project was overwhelming participated by our staff, their family members, taxi drivers who attended the Welcome Guide to Thailand Project and other volunteers.

All activities mentioned above were carried out with transparency. They were monitored and measured for possibilities to enhance their efficiency. What staff and participants got from these projects was getting awareness in this subject. While we intended to do our best in these activities, there was room to improve. So far, a unit, which reports directly to the Chief Executive Officer and President, has been set up to monitor and coordinate these projects for everyone’s benefit.

First line


Corporate Contributions

We believe that our staff has a public mind and that’s why mobilizing participation from our staff is not difficult. We offer an opportunity for staff to express ideas, propose a project either of their interest or viable under our policy framework, participate in an activity on a voluntary basis and solicit participation from the wider public. The activity should not be limited to our staff but rather open to all stakeholders. Everyone is doing this because we are happy to do it together. While this commitment is beautiful, the very important thing is how to induce all stakeholders to participate in this corporate contribution projects.

Good Corporate Governance can be divided into nine areas as follows:

1. Code of ConductWe have announced a policy to conduct our business based on the principles of good corporate governance.

In 2005, we combined the best practices and the Code of Conduct, which not only were in line with our corporate strategy, but were also practicable, into our Code of Conduct manual. The manual was updated in 2008, which was indeed a significant move based on our motto of “Success with Integrity”. The updated Code of Conduct has been distributed to executive officers and staff for implementation to ensure our success with integrity and also to promote our corporate culture and ethical performances. Our Code of Conduct is now posted in our website at http://www.TheErawan.com, a mechanism to ensure that our executive officers and staff commit to their responsibilities to all stakeholders, communities, the society and the environment.

2. Qualifications, Structure, Duties and Responsibilities of the Board and the ManagementNot only qualifications of our directors are in line with the SET’s requirements but they are also much more

intensive. Director’s term of office is three years each term with clear scopes of work and with power being balanced between non-executive directors. Half of the Board’s entire members are independent non-executive directors. The Board consists of Chairman of the Board, who is an independent Director and different person from the Chief Executive Officer where their roles, authority and responsibilities are clearly separated to maintain balance between managing and supervising the company. In addition, there are five other independent directors, five non-executive directors and two executive directors (Chief Executive Officer and President). The total number is 13.

The Board has appointed four different committees in a move to clearly define duties and responsibilities. The Board also has a policy to promote rotation among directors to sit at different committees for appropriate timeframe and on appropriate occasions. Chairman of a committee has a duty to submit a clear-cut policy of his committee to the Board. Every committee must appoint a secretary, who will coordinate with directors and the Management to ensure that the policy is translated into action. In addition, the secretary must also record minutes of meeting in writing. The committees include the following:

The Audit Committee (AC): The entire Audit Committee consists of independent Directors and at least three members, who must have adequate accounting knowledge to be responsible for auditing the company’s financial statements and its internal control system and to monitor the company’s risk management practices on a regular basis. In addition, the Audit Committee will also review the independence of the company’s Internal Audit Unit; approve appointment, transfer or termination of supervisor who works as its secretary; review legal compliance;

ล้อม


First line


select, appoint and propose an auditor and auditor’s fees and review the auditing and disclose information about connected transactions to meet the criteria in an accurate and transparent manner.

The Investment Committee (IC) (Name change from Financial and Risk Management Committee (FRC)):

This Committee consists of no fewer than seven directors and is responsible for supervising and managing policies, plans and investment projects approved by the Board. The Committee also ensures that the firm has a systematic, distinct and effective risk management system.

The Nominating and Corporate Governance Committee (NCG): This Committee consists of no fewer than four members. Its chairman shall be an independent non-executive director while the remaining two members are non-executive directors. The Committee is responsible for reviewing the structure of the Board, setting qualifications of a particular position, reviewing and recruiting experts to become our directors as well as assessing the Board’s performances and other committees appointed by the Board. The Nominating and Corporate Governance Committee also sees that directors, executive officers and staff of all levels comply with the Good Corporate Governance practices and Code of Conduct.

The Management Development and Compensation Committee (MDC): The Committee, consisting of no fewer than four non-executive directors, is responsible for proposing development policies, assessing knowledge and skills of and compensations to new President and Chief Executive Officer, writing a senior management succession plan and reviewing the company’s HR development policy.

The Board also appoints the company’s Secretary to perform duties as stipulated by the Securities and Exchange Act, No. 4, B.E. 2551 and/or other relevant legislations. The Secretary also monitors and coordinates with the Board, the Management and related internal and external parties.

3. Qualification of Directors

Principles: The Board of Directors should consist of members with a variety of knowledge and experiences, whether it

is in finance, economy, management, business administration, marketing and service, tourism and law. The idea is to ensure that together, they can formulate a right policy for the development of hotel and resort business while having specialized skills, ability to see things in a big picture and enough independence to audit the Management in a balancing manner. The Board of Directors has two significant roles; namely, supporting the Management on the basis of the Good Corporate Governance and formulate a strategy to achieve our business goals.

General Qualifications:1. Director should possess a variety of knowledge and experiences while being a professional with an

ethical mind. 2. Director should fully understand his obligations and practices with a commitment to create long-term

values to the business and shareholders. 3. Director should have enough time to perform his duties effectively.4. Director should be able to assess himself and is ready to notify the Board of Directors upon change or

if there is anything that prevents him from performing his job effectively.

First line


Director’s Term of Office and Retirement Criteria

1. Director shall be in office three years each term. The Board may nominate a director for shareholders to re-elect him/her after his term ends by reviewing his performances on an annual basis. The term of a committee’s member is also three years each term.

2. Director shall retire when he/she is fully 75 years old effective from the day following the Annual General Meeting of Shareholders. The calculation will start after the day the director is fully 75 years old.

Specific Qualifications:Chairman of the Board of Directors: aside from the duties mentioned above, Chairman will have extra

duties; namely, (1) acting as chairman of the Board of Directors’ meeting; (2) exercising a casting vote in case of tie at the Board of Directors’ meeting; (3) calling for the meeting of the Board of Directors; and (4) acting as chairman of the Shareholders’ Meeting. As a result, qualifications of the Chairman will be slightly different from those of other directors as follows:

• Chairman must be Non-Executive Director (NED). • Chairman must not be involved in a day-to-day management, be an auditor, or others such as a legal

consultant; nor shall he be employee, staff, advisor receiving monthly salary or a person with controlling power of the company, affiliated company, associated company, auditing company, or be a person who may have conflict of interest without having to have interest or stakes in such manner.

Executive Director • Director who is also Chief Executive Officer (CEO) is advised not to become director in more than three

other listed companies.

Independent Director• Independent Director shall hold less than 1 percent of the total shares with voting rights in a company,

its affiliated company, associated company or any other person with possible conflicts of interest (including shares held by related persons).• Independent Director must not be involved in the management and is currently not being and has never

been employee, staff, advisor enjoying monthly income or person with controlling power of the company, its affiliated company, associated company and auditing company; nor shall he be a person with conflict of interest without having to have any interest or stake in such manner for no less than two years.

• An Independent Director shall have neither blood nor registered relationship as a father, mother, spouse, sibling and children including spouse of children of executive officers, major shareholders, persons with controlling authority or anyone to be nominated as an executive officer or a person with controlling power of the company or its subsidiary.

• An Independent Director shall have no business relationship with the company during the previous two years. Details are as follows:

- No relationship as a provider of professional service including being an auditor (in any case), or of other professions such as being a legal consultant, a financial advisor or an asset appraiser with an

annual transaction value exceeding Baht 2 million. - A business and trade relationship including normal transactions, renting or leasing of property, transactions relating to assets and services and giving or getting financial assistance with a transaction value from Baht 20 million or 3 percent of the Company’s NTA, whichever is lower. This however shall include values of all retroactive transactions during at least the six previous months prior to the latest transaction.



• AnIndependentDirectorshallpossessnoothercharacteristicthatpreventshim/herfromexpressinghisopinionindependently.

• IndependentDirectormustattendatleastoneofthefollowingcoursesheldbytheThaiInstituteofDirectors(IOD);namely,DirectorsCertificationProgram(DCP)orDirectorsAccreditationProgram(DAP)orAuditCommitteeProgram(ACP)

Member of the Audit Committee• He/sheshallbeanIndependentDirectorappointedbytheBoardorShareholders.• He/sheshallnotbeadirectorentrustedbytheBoardtomakeanydecisionwithregardtoabusinessofthecompany,itsparentcompany,subsidiary,affiliate,subsidiaryofthesamelevelorotherentitiesthatmayhaveaconflictof interest.

• HisdutiesmustnotbefewerthanwhatisstipulatedbytheSET.

Transactions with Possible Effects to Independence

• BeingauthorizedtoapprovetransactionsorsigningtobindtheCompany,toexemptcollectivedecision.• Attendingameetingorvotinginamatterhehasaninterestoraconflictof interesttherein.

Prohibited Characteristics Directors and executive officersmust possess noqualifications that are conflictingwith the company’s

requirements and announcementsmadeby theSECand theSET.Additional information canbe read in thecompany’swebsite.

4. Rules and Responsibility of the Board of Directors and the ManagementTheBoardofDirectorsdeterminespoliciesandpracticesforthemanagement,whichincludeimportanttasks

ofanexecutive.Inaddition,theBoardalsoallowsthemanagementtoformulateamanagementpolicybasedontheCompany’sobjectivesandmissions,whichwillbesubjecttotheBoard’sapproval.

TheBoardofDirectorsalsosetstohaveitsIndependentDirectorsmeetingeveryyearsothatalldirectorsmeetthemanagement.

5. Board of Directors’ MeetingThecompanysetsthenumberoftheBoard’smeetingsandthemeetingsofitscommitteesbyscheduling

themand lettingdirectorsand relevantpartiesknowabout them inadvance throughout theyear. Independentdirectors’meetingwas held on November 29, 2011 prior to the Board of Directors’ Meeting No. 7/2554to allow them to freelyexchange their viewpoints. In addition, theBoardconvened itsNo.8/2554meetingonDecember20,2011without the presence of Chief ExecutiveOfficer, whowas the highestmanagementofficer, todiscussoperationperformancesandannualbudget.

In2011,theCompanyorganized8BoardofDirectors’meeting,4AuditCommittee’smeetings,6FinancialandRiskManagementCommittee’smeetings(namechangedtotheInvestmentCommittee),2NominatingandCorporateGovernanceCommittee’smeetingsand2ManagementDevelopmentandCompensationCommittee’smeetings.Minutes ofmeetingwere recorded inwriting at each and everymeeting and kept at theOffice of Secretary and on a data server so that officers can conveniently access the database.Details ofmeeting

attendanceofdirectorsareinthefollowingtable:


Nam

eTi

tleTe

rm

Tim

es o

f at

tend

ance

/Num

ber

of T

otal

atte

ndan

ce

Boar

d of

D

irect

ors

Audi

t C

omm

ittee

Inve

stm

ent

Com

mitt

ee(F

inan

cial

and

Risk

M

anag

emen

t Co

mm

ittee

)

Nom

inat

ing

and

Corp

orat

e G

over

nanc

e C

omm

ittee

Man

agem

ent

Dev

elop

men

t an

d Co

mpe

nsat

ion

Com

mitt

ee

1. M

r. Pr

akit

Prad

ipas

enC

hairm

anAp

r. 20

09 –

201

2*7/

8-

-2/

2-

2. M

r. Sa

nser

n W

ongc

ha-u

mIn

depe

nden

t dire

ctor

Apr.

2009

– 2

012*

7/8

4/4

--

-

3. A

ssoc

. Pro

f. M

anop

Bon

gsad

adt

Inde

pend

ent d

irect

orAp

r. 20

09 –

201

2*8/

84/

4-

--

4. M

r. D

ej B

ulsu

kIn

depe

nden

t dire

ctor

Apr.

2009

– 2

012*

7/8

3/4

--

-

5. M

r. Ba

nyon

g Bo

ngpa

nich

Inde

pend

ent d

irect

orAp

r. 20

10 –

201

36/

8-

4/6

-2/

2

6. M

r. Ek

asith

Jot

ikas

thira

Inde

pend

ent d

irect

orAp

r. 20

11 –

201

46/

8-

--

1/1

7. M

r. Vi

toon

Von

gkus

olki

tD

irect

orAp

r. 20

11 –

201

48/

8-

6/6

-2/

2

8. M

r. Su

pol W

atta

nave

kin

Dire

ctor

Apr.

2010

– 2

013

8/8

-5/

6-

2/2

9. M

r. C

hani

n Vo

ngku

solk

itD

irect

orAp

r. 20

10 –

201

36/

8-

5/6

2/2

-

10. M

rs. P

anid

a Th

epka

njan

aD

irect

orAp

r. 20

11 –

201

48/

8-

5/6

2/2

-

11. M

r. Kr

isda

Mon

thie

nvic

hien

chai

**D

irect

orAp

r. 20

10 –

201

36/

7-

--

-

12. M

r. G

avin

Von

gkus

olki

t**D

irect

orD

ec. 2

011

– 20

131/

1-

--

-

13. M

r. Ka

sam

a Pu

nyag

upta

Chi

ef E

xecu

tive

Offic

erAp

r. 20

11 –

201

47/

8-

6/6

--

14. M

rs. K

amon

wan

Wip

ulak

orn

Pres

iden

tAp

r. 20

11 –

201

45/

5-

--

-

perc

ent o

f dire

ctor

s’ a

ttend

ed90

%92

%86

%10

0%10

0%

Rem

afk

*

To

pro

pose

the

Annu

al G

ener

al M

eetin

g of

Sha

reho

lder

s on

Tue

sday

24th

Apr

il 20

12, t

o re

appo

int 4

dire

ctor

s w

ho re

tire

by ro

tatio

n to

suc

ceed

for a

noth

er te

rm.

** O

n 29

th N

ovem

ber 2

011,

Mr.

Kris

da M

onth

ienv

ichi

ench

ai a

n au

thor

ized

dire

ctor

resi

gned

from

the

dire

ctor

of t

he B

oard

and

the

Boar

d ap

poin

ted

Mr.

Gav

in V

ongk

usol

kit a

s th

e ne

w

d

irect

or e

ffect

ive

on 1

st D

ecem

ber 2

011.

Tim

es o

f A

tten

danc

e 20

11


First line


BOD Structure& Component

82%

Rule duties & Responsibility

BOD’s Meeting DirectorFiduciary Duty

Relations withExecutive

Management

Directors’improvement &ManagementDevelopment

84% 84% 82% 81%79%

6. Evaluation of the Board’s PerformancesWe evaluate performances of our Board annually. Twelve directors conduct a self-evaluation and an evaluation

of the entire board independently before sending evaluation results to the Nominating and Corporate Governance Committee for further assessment. Evaluation results are used to improve and develop directors and work processes according to the guidelines recommended by the SET and Institute of Thai Directors.

Based on such evaluation, 82 percent of assessors agreed that the structure and components of directors were appropriate and that there were enough independent directors to achieve a balanced power. 84 percent agreed that the Board understood its independence in making decisions without being influenced by anyone. Meanwhile, 84 percent agreed that matters regarding the number of meetings, acknowledgement when the meeting would be held and the getting of documents in advance was getting much better than before. 82 percent agreed that every director shall bear the fiduciary duties of overseeing the management of the company that it operates in the best interests of the shareholders, for whom the director is responsible. 81 percent agreed that there was a good relationship with the Management Team and directors could directly discuss with the President and Chief Executive Officer. 79 percent agreed about better self-development among directors, better understanding about business and their duties and responsibilities. Details are in the following:

First line


7. Nomination of Directors and Executives

The Board entrusts the Nominating and Corporate Governance Committee to draft a clear nomination policy and process for directors. This refers to a process to initially check a nominee’s qualifications to ensure that his are in compliance with director’s qualifications; a selection and courting process of a nominee to be our director; a nomination process to the Board or shareholders and a reviewing process of director being re-nominated. An individual evaluation of a director’s performances while in the office will be used to support the consideration.

Furthermore, the selection was independently conducted without being subject to anyone’s influence. The President and Chief Executive Officer conducted a two-hour orientation session and arranged for a management team to meet the new director so that he learned about the company, got access to corporate information and strategic plans.

The Board designated the Management Development and Compensation Committee to recruit and formulate a succession plan of executives; namely, President and Chief Executive Officer, to ensure continued performances and to avoid business disruption.

8. Remunerations of the Board of Directors and Management

The Board entrusts several committees to formulate a compensation plan for directors, executives and staff as follows:

The Nominating and Corporate Governance Committee has a duty to formulate a compensation policy of directors where it is to review the soundness of compensations being paid on an annual basis on the basis of directors’ scopes of duties as well as their roles and responsibilities and the Company’s financial status and operation results vis-à-vis others in a similar business enjoying the same amount of revenues. Compensations will be paid in two types: meeting allowances (retainer fees or attendance fees) and bonuses. Director entrusted as a committee’s member shall receive additional compensations based on his additional responsibilities and this will be submitted to the Annual General Meeting of Shareholders for approval on an annual basis.

The Management Development and Compensation Committee evaluates performances of President and Chief Executive Officer based on four aspects; namely, finance, customer satisfaction, internal process and HR and corporate development, as part of a review of his compensation and annual compensation. Together with President and Chief Executive Officer, the Committee formulates a policy to pay executives and Staffs based on the nature of their work.

The President and Chief Executive Officer reviews annual compensations of executives based on a formulated policy through two evaluation processes; namely, (1) Balance Score Card (BSC) evaluation, which reviews strategic significances of each department vis-à-vis corporate strategy through a linkage that will eventually trigger corporate-level strategies to lower levels; namely, from corporate strategy, to departmental and section strategies;


First line


and (2) Competency Skill Behavior (CSB) evaluation, where behaviors that support corporate culture will be evaluated. Supervisors will evaluate each individual. Some of the evaluation will be based upon the company’s policies; others upon something else, depending on criteria set by department supervisors. To ensure effective evaluation and to access information from co-workers of various levels, the assessment is conducted from every direction. In this regard, supervisors will evaluate their supervisees and vice versa. In addition, staff of all levels is encouraged to conduct a self-evaluation. Results of both BSC and CSB evaluations are used to allocate the company’s overall returns to departments, sections and units.

Remunerations in cash for the year ending 31st December 2011 totaled Baht 36,547,295.45:1. Remunerations of directors of the Company’s Board of Directors and Committees totaled Baht 4,461,250.00 2. Remunerations of directors of the Company’s subsidiary totaled Baht 1,575,000.00 3. Remunerations, which were total wages of the nine (9) executives paid by the Company and its subsidiaries,

totaled Baht 29,490,519.53 4. Provident fund of the executives under item 3 above totaled Baht 1,020,525.92

Remunerations of the Board of Directors and the Committees

First line

62

Rem

ark:

* O

n 29

th N

ovem

ber 2

011,

Mr.

Kris

da M

onth

ienv

ichi

ench

ai a

n au

thor

ized

dire

ctor

resi

gned

from

the

dire

ctor

of t

he B

oard

and

the

Boar

d ap

poin

ted

Mr.

Gav

in V

ongk

usol

kit

as th

e ne

w d

irect

or e

ffect

ive

on 1

st D

ecem

ber 2

011.

Rem

uner

atio

ns in

cas

h fo

r th

e ye

ar e

ndin

g 31

st D

ecem

ber

2011

Nam

eTi

tle

Com

pens

atio

n in

cas

h fo

r m

embe

r of

the

Com

mitt

ee

Tota

l

(Bah

t/yea

r)Bo

ard

of

Dire

ctor

sAu

dit

Com

mitt

ee

Inve

stm

ent

Com

mitt

ee(F

inan

cial

and

Risk

M

anag

emen

t Co

mm

ittee

)

Nom

inat

ing

and

Cor

pora

te

Gov

erna

nce

Com

mitt

ee

Man

agem

ent

Dev

elop

men

t and

C

ompe

nsat

ion

Com

mitt

ee

1.

Mr.

Prak

it Pr

adip

asen

Cha

irman

300,

000

--

30

,000

-

330,

000

2.

Mr.

Sans

ern

Won

gcha

-um

Inde

pend

ent d

irect

or24

0,00

0

100,

000

--

-

340,

000

3.

Asso

c. P

rof.

Man

op B

ongs

adad

tIn

depe

nden

t dire

ctor

240,

000

80

,000

--

-

320,

000

4.

Mr.

Dej

Bul

suk

Inde

pend

ent d

irect

or24

0,00

0

60,0

00-

--

30

0,00

0

5.

Mr.

Bany

ong

Pong

pani

chIn

depe

nden

t dire

ctor

240,

000

-

180,

000

-

22,5

00

442,

500

6.

Mr.

Ekas

ith J

otik

asth

iraIn

depe

nden

t dire

ctor

240,

000

--

-

11,2

50

251,

250

7.

Mr.

Vito

on V

ongk

usol

kit

Dire

ctor

240,

000

-

240,

000

-

22,5

00

502,

500

8.

Mr.

Supo

l Wat

tana

veki

nD

irect

or24

0,00

0-

18

0,00

0-

30

,000

45

0,00

0

9.

Mr.

Cha

nin

Vong

kuso

lkit

Dire

ctor

240,

000

-

180,

000

22

,500

-

442,

500

10. M

rs. P

anid

a Th

epka

njan

aD

irect

or24

0,00

0-

18

0,00

0

22,5

00-

44

2,50

0

11.

Mr.

Krisd

a M

onth

ienv

ichi

ench

ai*

Dire

ctor

220,

000

--

--

22

0,00

0

12. M

r. G

avin

Von

gkus

olki

t*D

irect

or 2

0,00

0-

--

-

20,0

00

13. M

r. Ka

sam

a Pu

nyag

upta

Chi

ef E

xecu

tive

Offic

er24

0,00

0-

Do

not g

et p

aid

as E

xecu

tive

--

24

0,00

0

14. M

rs. K

amon

wan

Wip

ulak

orn

Pres

iden

t16

0,00

0-

Do

not g

et p

aid

as E

xecu

tive

--

16

0,00

0

Tota

l3,

100,

000

24

0,00

0

960,

000

75

,000

86

,250

4,

461,

250

Remunerations for the Board of Directors and the committees in the year ending 31st December 2011The Erawan Group Public Company Limited

Corporate Social Responsibility


63

Corporate Social Responsibility (CSR)The Erawan Group Public Company Limited

9. Corporate Social Responsibility (CSR)Corporate Social Responsibility, shortly called CSR, is one of the Erawan Plc.’s major business strategies.

We truly believe that CSR will guide our business while let us be accountable to shareholders, staff, suppliers, creditors, the society, the environment and neighboring communities where our properties are located. To ensure that everyone here understands the same thing, we have determined CSR guidelines and principles for those involved as follows.

Duties and Responsibilities of the Board to ShareholderThe Board of Directors takes into consideration shareholders’ rights without limiting only to their fundamental

rights as stipulated by laws. This refers to their rights to trade or transfer shares, to share the company’s profits, to adequately receive the company’s information, to attend meetings to vote at shareholders’ meeting in order to either appoint or remove directors and to appoint auditors and discuss important matters affecting the company. In this regards, important matters can range from allocating dividends to formulating or amending rules and regulations and the Memorandum of Association, increasing or reducing capital and approving special transactions. The Board of Directors also supervises to ensure that meeting’s time, date, place and meeting agendas are given to shareholders; that relevant documents and information required for making decisions at a meeting are available to shareholders, that shareholders are notified of applicable rules at the meeting, that voting procedures are not too complicated and that a meeting location is convenient and not expensive for shareholders to attend the meeting.

The Board of Directors has allowed shareholders to propose agendas of the Annual General Meeting of Shareholders in advance prior to the meeting date. Clear rules and regulations in doing so have been posted in the company’s website to facilitate shareholders. Shareholders may submit a document to propose potential meeting agendas by January 31 of every year. The Board encourages shareholders to use Proxy Form B so that shareholders can determine a voting direction as there are names and information of six Independent Directors who can be alternative proxy for shareholders. In addition, the information must be posted in the Company’s website at least 30 days prior to the meeting. Documents must also be sent to shareholders in advance enough for them to study prior to the meeting.

During the Meeting, the Company treats every procedure equally. No agendas are shortened, deleted or alternated. This is especially the case of an agenda to appoint directors where shareholders are entitled to vote for directors individually upon enough information. All ballots featuring yes, no and abstention votes are duly kept as evidence.

At every the shareholders’ meeting, Chairman of the Board, Chairman of the Committees, Directors, Chief Executive Officer, President and Chief Financial Officer (CFO) attend the meeting to allow shareholders to express their views and ask questions about relevant matters to the meeting. During the past 5 years (2007-2011), the entire Board attended the meeting to allow shareholders to ask questions in an adequate fashion, which however did not delay the meeting. In addition, Q&A sessions, resolutions adopted at the meeting and votes received at each agenda were properly recorded in writing in the Company’s minutes of meeting and posted at the Company’s website within 14 days from the shareholders’ meeting date.

Aside from the Board’s responsibilities to shareholders as mentioned above, the Board also formulates a Corporate Social Responsibility policy, which includes responsibilities to shareholders as follows.


First line

64

Responsibilities to Shareholders

1. To manage the Company in a way that will turn it into a quality corporation committed to integrity while creating sustainable strength and growth for shareholders in the long run.

2. To perform our job with thorough care and competency as a business may do under the same situation.

3. To perform our duty with integrity and to fairly treat both major and minor shareholders for the benefit of

all relevant parties.

4. To manage the Company’s properties in a manner that avoids their depreciation.5. To report the Company’s status and operation results regularly, accurately and completely based on

existing facts.6. To prevent the Company’s confidential information from being improperly disclosed to the third party.7. To avoid doing anything that may lead to a conflict of interest against the Company without any advanced

notice.8. To respect the rights and to equally treat all shareholders, whether they are executive or non-executive

shareholders, and foreign shareholders.

Responsibility to Investor RelationsThe Erawan Group Plc. sets up the Investor Relations (IR) Department as a center to provide complete company

information to retail and institutional investors, shareholders, analysts and the public sector. Contacts can be made directly at the Company’s office or visit us at www.TheErawan.com. Inquiries can also be made through [email protected].

We conduct an Investor Relations IR Survey to gauge satisfaction in relation to our information disclosure at least once a year. In 2011, we conducted the survey by distributing questionnaires to analysts at the Quarterly Meeting held in November 2011, and also the last meeting of the year. All respondents were within a target group. More than 50 percent of the respondents had monitored our information for no less than 3 years. 85.11 percent of the respondents said they were satisfied with the information.

Responsibility of the right to access information of stakeholders We give all stakeholders an access to information. We also determine guidelines and practices for our

executive officers and staff to encourage their fair and equal interactions with all stakeholders. We also allow stakeholders to directly contact the Board, the Audit Committee and the Nominating and Corporate Governance Committee for their valuable suggestions that will not only benefit but also add more values to our management at our office, No. 2, Ploenchit Center Building, 6th Floor, Sukhumvit Road, Klongtoey District, Bangkok; or at the Office of Corporate Governance, email: [email protected]. All information is treated confidential and will be

directly forwarded to the Board.



65

Responsibilities to Employees1. To determine an appropriate structure of remunerations in line with market rates, staff’s competency and

responsibilities and their work performances through three levels of strategic assessments; namely, corporate strategy, department strategy and division strategy. The Competency Skill Behavior Assessment

will be carried out in a 360-degree manner where supervisor will assess supervisees and vice versa and where everyone will have a self-evaluation at all levels.

2. To provide appropriate welfare and other benefits such as accident insurance to staff and executives working out of the office, health insurance and allowances for healthcare services as an out-patient, annual

health check-up and coffee & tea corner for staff. 3. To ensure staff’s Understanding about their professional roles and responsibilities as well as their career goals, to provide an opportunity for staff to grow professionally and to acknowledge and recognize

staff’s work.4. Award and punishment will be conducted based on the concept of right and wrong and with integrity.5. To ensure workplace safety, health and sanitation.6. To have a clear and efficient working system that allows staff to exercise their knowledge and competency

while supporting their knowledge enhancement and recognizing their participation role.7. To promote the Code of Conduct to staff to help them duly understand and fully comply with the Code.8. To comply with all the rules and regulations relating to labor laws and staff welfare.9. To avoid action considered unfair and illegitimate that may affect staff’s advancement and job security

while respecting an individual’s rights.

Responsibilities to Customers1. To set up a pricing policy considered fair and appropriate.2. To treat all business deals equally without treating anyone more favorably where every deal is considered

conducted on an arm’s length basis.3. To procure and improve the procurement process considered appropriate and meeting business conditions.4. To execute a fair contract with customers. (without depriving a customer of his benefits)5. To disclose related and beneficial information accurately, completely and in time without any distortion.6. To keep customer’s confidential information secret as if it is the Company’s own information and not using it for the Company’s own benefit.7. Not demanding, receiving from or not giving any illicit profit to customers.


First line

66

Responsibilities to Suppliers and Creditors1. To offer a fair competition environment where the procurement and hiring process of goods and services

is carried out properly, transparently and efficiently. This will include finalizing price negotiations, making quotations, bidding methods, special methods and procurement methods for government agencies and state enterprises. Questionnaire will be regularly issued to ask for opinions about the Company’s bid participation in order to regularly improve its procurement and hiring process of goods and services.

2. Avoid specify a particular product or choosing a particular product intentionally unless otherwise there is an enough reason to do so. In case of change of products or specifications of the product, suppliers must be informed. If necessary, a new price quotation must be submitted. An original supplier must be given an opportunity to equally offer his quotation.

3. Choose a quality supplier who is really interested in doing the job. Avoid inviting suppliers just to have enough participating suppliers as stated in a regulation. All bidders are to receive the same written

details, information and conditions. If notified verbally, they shall receive a written confirmation later.4. Executives or staff involving in the procurement or hiring process must disclose information and/or their

personal relationship as well as that of their spouses or closed relatives or a personal relationship with a particular bidder that may directly result in an opaqueness of their job. They shall also exercise their responsibility by not attending a decision-making process when a particular supplier is chosen.

5. Not demanding and receiving gifts, favors or treats unless otherwise on appropriate occasions; refrain from having a special relationship with suppliers so much so that others may believe it may lead to an unfair treatment especially if it makes other suppliers misunderstand, refuse to participate in quoting prices or spread ill words that damages the Company’s reputation.

6. To prepare a fair contract and to comply with an agreement executed with suppliers and creditors. In case the Company is unable to comply with its contract, negotiate with suppliers/creditors without

delay to find a solution and to prevent further damage.7. To refrain from doing anything that will prevent suppliers from paying tax to the state.8. To disclose related and beneficial information accurately, completely and in time without distortion.

Responsibilities to Social and EnvironmentThe Erawan Group formulates a clear-cut policy for social, community and environmental causes. It plans to

implement “The Erawan Group for the Society and the Environment” project, to which the Board has already approved to allocate 0.5 percent of its annual net profit as a social contribution. Of the entire budget, 50 percent will be spent for the benefits of communities closed to the Company’s properties whereas the other 50 percent will be spent for the benefit of the society in general.

Responsibilities to Suppliers and CreditorsResponsibilities to Suppliers and Creditors1.1. To offer a fair competition environment where the procurement and hiring process of goods and services To offer a fair competition environment where the procurement and hiring process of goods and services


First line

Internal Control 67

Internal ControlThe Erawan Group Public Company Limited

In 2011, the Board of Directors convened eight times at which the Audit Committee attended every time to give opinions about an adequacy and soundness of the internal control system. The Audit Committee summarized and reported internal audit activities to the Board of Directors on February 28, 2012 and the Board of Directors expressed the same opinions as the Audit Committee in this matter, which can be summarized as follows:

1. Internal Control System and Internal Auditing The Audit Committee has direct responsibilities to supervise the company’s internal control system in every

aspect, whether it is finance and accounting, legal compliance and compliance to relevant rules and regulations. The Audit Committee formulates auditing mechanisms to ensure effective balance of power. There is also the Internal Audit Department to audit performances of all departments based on a risk-based auditing plan and to offer advice on how to set up a good internal control system.

The Audit Committee has duties to review auditing plans; to control and supervise the Internal Auditing Department’s independence; to approve appointment, transfer and termination of the Internal Auditing Department’s supervisor and to ensure that the Internal Auditing Department remains independent. The Committee must also make sure that the Department can perform its auditing functions and balance the existing power according to the prevailing standards. The Department is to directly report its auditing work to the Audit Committee at least once each quarter to ensure that the company’s internal control and internal auditing work is conducted in a thorough manner and will not damage shareholders.

2. Protection of InformationOne of our priorities is focused at the use of our internal information and the prevention of our directors

and executives from using internal information for their benefit or the so-called abusing self-dealing. This applies specifically to internal information not yet disclosed to the public or information that may affect our corporate strategy, business, trade negotiations and share prices, which, if abused, not only means that our shareholders are taken advantage of but it can damage shareholders in general. That’s why we have set our Executives Ethic Standards as a practice with heavy penalties in case of violations or intended violation of the 10 practices stated in the Code of Conduct under the topic of “Executives Ethical Standards”

We also allow different levels of staff to get access to different types of internal information based mainly on their responsibilities and duties. Disciplinary actions are stated in our Work Regulations under the topic of “Disciplinary Actions and Penalties.” For example, Clause 3.2 Re: Disciplines with regard to confidentiality and corporate profits prohibits employees to “seek inappropriate benefit from the company or others relating to the company. Employees are prohibited to conduct personal business or to work for others in an identical or similar business as the company’s although the work may be performed outside the company’s office hours”. With regard to disciplinary actions and punishment, the company will normally appoint a disciplinary action committee to conduct an investigation and to ensure fairness to accused staff.

In In 2011, the Board of Directors convened eight times at which the Audit Committee attended every time to 2011, the Board of Directors convened eight times at which the Audit Committee attended every time to give opinions about an adequacy and soundness of the internal control system. The Audit Committee summarized give opinions about an adequacy and soundness of the internal control system. The Audit Committee summarized and reported internal audit activities to the Board of Directors on February 28, 2012 and the Board of Directors and reported internal audit activities to the Board of Directors on February 28, 2012 and the Board of Directors

First line

68 Internal Control

3. Conf lictflof interestThe Erawan Group requires an approval from either the Audit Committee or the Board, as the case may be,

when conducting a transaction that may cause a possible conflict of interest. In addition, details of transactions with possible conflict of interest during the past year and their values are disclosed while explanations and reasons for the transactions are clearly stated in the Annual Report. The Erawan Group requires its executive directors involving in the transaction to disclose the information and/or types of relationship not only of his own, but also of his spouse, closed relatives as well as personal relationship with any bidder for transparency purpose to the Office of the Corporate Governance. In addition, director shall abstain from voting and/or not be part of the decision-making process.

Connected transactions are shown in the Notes to Financial Statements and connected transactions table. All transactions were reasonable and were considered normal transactions. They were conducted for the company’s ultimate benefit. Connected transaction had already been reviewed by the Audit Committee and/or the Board on an arm’s length basis that they were in compliance with our requirements and rules and regulations of the SEC and the SET and that they were not against accounting standards Re: Disclosure of information in relation to connected persons or transactions.

In 2011 The Erawan Group has the other connected transaction in addition to the items mentioned above

as follows. All transactions were reasonable and were normal transactions.

• Mitr Phol Sugar Group of Companies

Revenue from Hotel Operation Baht 4,535,370.63

Receivables at end of period Baht 1,003,442.02

• Banpu Plc. Group of Companies


Receivables at end of period Baht 332,859.00

• Pacific World (Thailand) Ltd.


Receivables at end of period Baht 651,500.00

Connected Transactions


69

Connected transactionsThe Erawan Group Public Company Limited

Con

nect

ed tr

ansa

ctio

ns b

etw

een

busi

ness

es w

ith th

e fo

llow

ing

rela

tions

hips

wer

e ex

ecut

ed;

1. C

hai T

alay

Hot

el C

o., L

td.

(H

yatt

Rege

ncy

Hua

Hin

Hot

el)

Ty

pe o

f bus

ines

s: h

otel

s

Nat

ure

of re

latio

nshi

p:

• M

rs. P

anid

a Th

epka

njan

a, d

irect

or, i

s a

clos

ed re

lativ

e to

Mrs

. Wan

sam

orn

W

anna

met

hee

and

Khun

ying

Nat

thik

a

Wat

tana

veki

n, a

re a

utho

rized

dire

ctor

of

Cha

i Tal

ay C

o., L

td.

• W

atta

nave

kin

Gro

up h

olds

31

perc

ent o

f th

e C

ompa

ny’s

sha

res.

2. M

itr P

hol S

ugar

Gro

up o

f Com

pani

es

Type

of b

usin

ess:

sug

ar fa

ctor

ies

N

atur

e of

rela

tions

hip:

•

Mr.

Vito

on V

ongk

usol

kit a

nd M

r. C

hani

n Vo

ngku

solk

it, th

e C

ompa

ny’s

dire

ctor

s,

ar

e au

thor

ized

dire

ctor

and

dire

ctor

of

M

itr P

hol S

ugar

Co.

, Ltd

. •

Vong

kuso

lkit

Gro

up h

olds

39

perc

ent i

n th

e C

ompa

ny’s

sha

res.

3. B

ualu

ang

Secu

ritie

s Pu

blic

Com

pany

Lim

ited

Ty

pe o

f bus

ines

s: O

ther

finan

cial

inte

rmed

iatio

n

Nat

ure

of re

latio

nshi

p:•

Mr.

Sans

ern

Won

gcha

-um

, Ind

epen

tden

t di

rect

or, i

s C

hairm

an o

f the

Boa

rd o

f

Bual

uang

Sec

uriti

es P

ublic

Com

pany

Li

mite

d

Agre

emen

t to

leas

e of

fice

spac

e an

d th

e se

rvic

e ag

reem

ent w

ith

The

Eraw

an H

otel

Pub

lic C

ompa

ny

Lim

ited

• Re

ntal

and

ser

vices

inco

me

• Re

ceiva

bles

at e

nd o

f per

iod

Agre

emen

t to

rent

Plo

ench

it Ce

nter

’s sp

ace,

3-y

ear l

ease

ag

reem

ent.

• Re

ntal

and

ser

vices

inco

me

• Re

ceiva

bles

at e

nd o

f per

iod

• Pa

yabl

es o

f ren

t dep

osits

Agre

emen

t to

rent

Plo

ench

it Ce

nter

’s sp

ace,

3-y

ear l

ease

agr

eem

ent.

• Re

ntal

and

ser

vices

inco

me

• Re

ceiva

bles

at e

nd o

f per

iod

• Pa

yabl

es o

f ren

t dep

osits

Pric

e ag

reed

was

a m

arke

t pric

e co

mpa

red

to s

pace

in n

earb

y ar

eas

and

not l

ower

than

the

pric

e of

fere

d to

ot

her t

enan

ts o

r ser

vice

use

rs b

ased

on

the

busi

ness

sta

ndar

ds.

A m

ajor

tena

nt, t

he a

gree

d pr

ice

was

not

low

er th

an th

e av

erag

e pr

ice

agre

ed w

ith o

ther

tena

nts

base

d on

th

e bu

sine

ss s

tand

ards

.

Pric

e ag

reed

was

a m

arke

t pric

e co

mpa

red

to s

pace

in n

earb

y ar

eas

and

not l

ower

than

the

pric

e of

fere

d to

oth

er te

nant

s ba

se o

f the

bus

ines

s st

anda

rd.

2,46

8,88

4.44

243,

106.

48

45,1

31,8

80.5

41,

209,

192.

219,

037,

920.

83

2,15

3,75

7.60

19,3

50.9

549

7,17

4.40

4,30

1,90

2.18

44

8,94

0.39

11,7

21,4

76.3

9 -0-

-0-

547,

226.

90 -0-

-0-

Des

crip

tion

Pers

on/e

ntity

with

pos

sibl

e co

nflic

t of

inte

rest

and

nat

ure

of re

latio

nshi

pTr

ansa

ctio

n va

lue

(Bah

t)

20

10

2011

Pric

ing

polic

y an

d th

e Au

dit C

omm

ittee

’s o

pini

ons

Connected Transactions

First line

70

Necessity and Soundness of Connected TransactionsIn case the Company signs an agreement or conducts a connected transaction with a subsidiary company,

affiliate, related company and/or the third party, The Erawan Group will consider the necessity and soundness of such contract based mainly on The Erawan Group interests.

Approval Measures or Procedures of Connected TransactionsIf the Company is to execute a contract or if there is any connected transaction between itself and its

subsidiary, affiliate, related company, the third party and/or anyone with possible conflicts of interest, the Board of Directors requires The Erawan Group for the purpose of its benefits, to comply with the rules stated in the Stock Exchange of Thailand’s (SET) Announcement Re: Information disclosure and practices of listed companies in connected transactions. Meanwhile, prices and other conditions shall be as if the transaction is at an arm’s length where directors or staff having an interest in such transaction must not participate in any approval process.

Policy or Outlook for Future Connected Transactions

-None-

Note: Item No. 2 and No. 3 are not considered connected transactions as the Company terminated a rental

agreement with the Mitr Phol Group of Companies and Bualuang Securities Public Company Limited after we had sold the Ploenchit Center Building to the Prime Office Leasehold Property Fund on April 1, 2011. Our status has changed from the building owner and landlord to a building manager since. As a result, all rental activities relating to the office building including any consideration to rent the Pleonchit Center’s space and at what price are subject to the Fund’s approval. The two businesses have entered an office space rental agreement with the Prime Office Leasehold Property Fund accordingly.

First line

72 Audit Report of Certified Public Accountant

To the Shareholders of The Erawan Group Public Company Limited

I have audited the accompanying consolidated and separate statements of financial position as at 31

December 2011 and 2010, and the related statements of comprehensive income, changes in equity and cash

flows for the years then ended of The Erawan Group Public Company Limited and its subsidiaries, and of

The Erawan Group Public Company Limited, respectively. The Company’s management is responsible for the

correctness and completeness of information presented in these financial statements. My responsibility is to

express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require

that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated and separate financial statements referred to above present fairly, in all

material respects, the financial positions as at 31 December 2011 and 2010 and the results of operations and

cash flows for the years then ended of The Erawan Group Public Company Limited and its subsidiaries, and of

The Erawan Group Public Company Limited, respectively, in accordance with Financial Reporting Standards.

As explained in notes 2 and 3 to the financial statements, with effect from 1 January 2011 the Company

has adopted certain new and revised financial reporting standards. The consolidated and separate financial

statements for the year ended 31 December 2010 have been restated accordingly.

Audit Report of Certi f ied Public AccountantThe Erawan Group Public Company Limited

Vannaporn JongperadechanonCertified Public Accountant

Registration No. 4098

KPMG Phoomchai Audit Ltd.

Bangkok

28 February 2012

73


Audit Fee

Audit FeeThe Erawan Group Public Company Limited

In 2011, the audit fee paid to the external auditor of KPMG Phoomchai Audit Limited was Baht 3,855,000 (The Erawan Group Plc. Baht 2,300,000 and the Company’s subsidiary Bath 1,555,000). The Company did not pay any non audit fee to the auditor, the auditor’s office, and person or company related to the auditor and the auditor’s office. The fee was excluding the out of pocket expenses.

The accompanying notes are an integral part of these financial statements.

74

First line

(Unit: in Baht)

Consolidated financial statements

Separate financial statements

Note 2011 2010 2011 2010

(Restated) (Restated)

Assets

Current assets

Cash and cash equivalents

Trade accounts receivable

Inventories

Advances - construction

Value added tax refundable

Other current assets

6

5, 7

8

5, 9

450,196,331

134,393,606

52,821,584

37,644,306

39,362,933

56,894,127

220,384,384

148,046,349

72,898,210

15,023,839

50,625,364

49,537,238

140,711,404

74,702,818

9,229,593

36,525,750

-

19,268,382

93,907,272

79,207,822

28,045,046

13,905,283

-

15,882,989

Total current assets 771,312,887 556,515,384 280,437,947 230,948,412

Non-current assets

Investments in subsidiaries

Investment in associate

Investments in other related parties

Long-term loans to subsidiaries

Property, plant and equipment

Land held for development

Leasehold rights for land and buildings

Intangible assets

Deposits for lease of land, building and equipment

Other non-current assets

10

11

12

5

13, 16

14

15, 16

17

16

18

-

338,271

2,486,924

-

9,493,559,805

104,236,832

1,604,762,025

46,482,693

120,625,917

94,059,935

-

338,271

2,571,029

-

10,151,618,552

104,206,832

1,793,652,235

60,833,747

204,341,948

75,188,645

2,301,159,871

338,271

1,913,031

1,393,545,475

5,711,589,259

-

806,148,906

29,960,745

115,328,049

33,903,134

2,299,159,881

338,271

1,975,973

1,080,774,007

6,242,901,679

-

963,996,368

39,744,993

202,314,317

28,655,926

Total non-current assets 11,466,552,402 12,392,751,259 10,393,886,741 10,859,861,415

Total assets 12,237,865,289 12,949,266,643 10,674,324,688 11,090,809,827

Statements of f inancial position The Erawan Group Public Company Limited and its Subsidiaries As at 31 December 2011 and 2010


75

First line


(Unit: in Baht)



Note 2011 2010 2011 2010


Liabilities and equity

Current liabilities

Short-term loans from financial institutions

Trade accounts payable

Accounts payable - construction

Current portion of hire purchase payable

Current portion of long-term loans from financial institutions

Other current liabilities

19

5, 20

19

19

21

76,100,000

175,335,257

81,217,056

1,718,148

695,250,000

415,667,650

195,700,000

211,897,440

40,952,783

819,440

573,750,000

347,060,195

76,100,000

81,730,311

60,668,752

1,718,148

515,250,000

170,492,635

195,700,000

90,083,357

20,235,144

819,440

403,750,000

151,375,348

Total current liabilities 1,445,288,111 1,370,179,858 905,959,846 861,963,289

Non-current liabilities

Hire purchase payable

Long-term loans from a subsidiary

Long-term loans from financial institutions

Accounts payable for land leasehold rights

Deposits from lessees

Deferred income

Employee benefit obligations

19

5, 19

19

16

16, 22

23

3,458,178

-

6,727,667,051

180,000,000

42,222,972

26,481,927

43,271,996

621,197

-

7,829,517,051

360,000,000

100,677,747

15,320,798

-

3,458,178

45,438,032

4,357,900,000

180,000,000

40,031,238

26,481,927

17,543,228

621,197

38,860,995

5,314,750,000

360,000,000

99,232,325

15,320,798

-

Total non-current liabilities 7,023,102,124 8,306,136,793 4,670,852,603 5,828,785,315

Total liabilities 8,468,390,235 9,676,316,651 5,576,812,449 6,690,748,604

Statements of f inancial position (Continued)The Erawan Group Public Company Limited and its Subsidiaries As at 31 December 2011 and 2010


76

First line

(Unit: in Baht)



Note 2011 2010 2011 2010


Liabilities and equity

Equity

Share capital

Authorised share capital

24

2,505,000,000 2,244,779,001 2,505,000,000 2,244,779,001

Issued and paid-up share capital

Premium on shares

Employee stock options

Other components of equity

Retained earnings

Appropriated

Legal reserve

Unappropriated

25

24

25

2,244,779,001

358,142,539

4,920,510

(433,287)

115,108,000

866,092,809

2,244,779,001

358,142,539

-

(596,603)

79,608,000

449,041,861

2,244,779,001

358,142,539

4,920,510

(352,802)

103,158,000

2,386,864,991

2,244,779,001

358,142,539

-

(405,036)

67,658,000

1,729,886,719

Equity attributable to equity holders of the Company

Non-controlling interests

3,588,609,572

180,865,482

3,130,974,798

141,975,194

5,097,512,239

-

4,400,061,223

-

Total equity 3,769,475,054 3,272,949,992 5,097,512,239 4,400,061,223

Total liabilities and equity 12,237,865,289 12,949,266,643 10,674,324,688 11,090,809,827

Statements of f inancial position (Continued) The Erawan Group Public Company Limited and its Subsidiaries As at 31 December 2011 and 2010


77

First line


(Unit: in Baht)



Note 2011 2010 2011 2010


Income

Revenues from hotel operations

Rental of units in buildings and

service income

Gain on disposal of Ploenchit Center

Net foreign exchange gain

Dividend income

Interest income

Other income

5

16

5

5

5, 27

3,536,263,159

219,280,684

664,330,168

2,568,225

-

6,180,234

58,609,269

2,929,914,482

391,333,097

-

3,573,512

982,813

411,737

38,112,615

1,779,980,257

178,537,866

664,330,168

-

-

65,880,663

54,760,908

1,545,898,978

384,011,760

-

1,232,838

18,085,498

39,065,891

35,810,011

Total income 4,487,231,739 3,364,328,256 2,743,489,862 2,024,104,976

Expenses

Cost of hotel operations

Cost of rental of units in buildings

and service

Depreciation and amortisation

Selling expenses

Administrative expenses

Finance costs

5

28

5, 29, 30

5, 32

1,700,519,759

89,284,570

645,511,741

250,743,365

810,805,775

406,682,214

1,488,413,277

154,922,380

683,504,716

214,081,725

702,081,688

360,761,571

788,462,200

66,843,864

352,611,758

143,427,913

415,900,378

267,486,417

705,452,776

159,636,076

404,735,841

118,441,023

375,311,892

245,184,988

Total expenses 3,903,547,424 3,603,765,357 2,034,732,530 2,008,762,596

Profit (loss) before income

tax expense

Income tax expense 33

583,684,315

(53,469,379)

(239,437,101)

(19,866,597)

708,757,332

-

15,342,380

-

Profit (loss) for the year 530,214,936 (259,303,698) 708,757,332 15,342,380

Statements of comprehensive incomeThe Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010


7878

(Unit: in Baht)



Note 2011 2010 2011 2010


Other comprehensive income (loss)

Net change in fair value of

available-for-sale investments 163,316 (405,505) 52,234 (296,893)

Other comprehensive income (loss)

for the year, net of income tax 163,316 (405,505) 52,234 (296,893)

Total comprehensive income (loss) for the year 530,378,252 (259,709,203) 708,809,566 15,045,487

Profit (loss) attributable to:

Equity holders of the Company


491,324,648

38,890,288

(275,016,542)

15,712,844

708,757,332

-

15,342,380

-

Profit (loss) for the year 530,214,936 (259,303,698) 708,757,332 15,342,380

Total comprehensive income (loss)

attributable to:

Equity holders of the Company


491,487,964

38,890,288

(275,422,047)

15,712,844

708,809,566

-

15,045,487

-

Total comprehensive income (loss) for the year 530,378,252 (259,709,203) 708,809,566 15,045,487

Earnings (loss) per share

Basic earnings (loss) per share (in Baht) 34 0.22 (0.12) 0.32 0.01

Diluted earnings per share (in Baht) 0.22 - 0.32 -

Statements of comprehensive income (Continued) The Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se fin

anci

al s

tate

men

ts.

79


Stat

emen

ts o

f ch

ange

s in

equ

ityTh

e Er

awan

Gro

up P

ublic

Com

pany

Lim

ited

and

its S

ubsi

diar

ies

For t

he y

ears

end

ed 3

1 D

ecem

ber 2

011

and

2010

(Uni

t: in

Bah

t)

Not

e

Con

solid

ated

fina

ncia

l st

atem

ents

Issu

ed a

nd

paid

-up

shar

e

capi

tal

Shar

e

prem

ium

Empl

oyee

stoc

k

optio

ns

Reta

ined

ear

ning

sO

ther

co

mpo

nent

s of

eq

uity

Equi

ty

attri

buta

ble

to

equi

ty h

olde

rs

of th

e

Com

pany

Non

-

cont

rollin

g

inte

rest

s

Tota

l equ

ity

Lega

l

rese

rve

Una

ppro

-

pria

ted

Unr

ealis

ed

surp

luse

s

(defi

cits

) of

fair

valu

e ch

ange

s

on in

vest

men

t

Bala

nce

at 1

Jan

uary

201

0 C

ompr

ehen

sive

inc

ome

(loss

) fo

r th

e ye

ar

Profi

t (lo

ss)

O

ther

com

preh

ensi

ve lo

ssD

ivid

end

Tran

sfer

to le

gal r

eser

ve35

25

2,24

4,77

9,00

1 - - - -

358,

142,

539 - - - -

- - - - -

78,8

40,0

00 - - -

768,

000

724,

826,

403

(275

,016

,542

) - -(7

68,0

00)

(191

,098

) -(4

05,5

05) - -

3,40

6,39

6,84

5

(275

,016

,542

)(4

05,5

05) - -

132,

562,

362

15,7

12,8

44 -

(6,3

00,0

12) -

3,53

8,95

9,20

7

(259

,303

,698

)(4

05,5

05)

(6,3

00,0

12) -

Bala

nces

at

31 D

ecem

ber

2010

2,24

4,77

9,00

1

358,

142,

539

-79

,608

,000

449,

041,

861

(596

,603

)3,

130,

974,

798

141,

975,

194

3,27

2,94

9,99

2

Bala

nce

at 3

1 D

ecem

ber

2010

- a

s re

porte

d Im

pact

of c

hang

es in

acc

ount

ing

polic

ies

32,

244,

779,

001 -

358,

142,

539 -

- -79

,608

,000

-44

9,04

1,86

1 (3

8,77

3,70

0)(5

96,6

03) -

3,13

0,97

4,79

8 (3

8,77

3,70

0)14

1,97

5,19

4 -3,

272,

949,

992

(38,

773,

700)

Bala

nce

at 1

Jan

uary

201

1 -

rest

ated

Em

ploy

ee s

tock

opt

ions

Co

mpr

ehen

sive

inco

me

(loss

) fo

r th

e ye

ar

Profi

t

Oth

er c

ompr

ehen

sive

inco

me

Tran

sfer

to le

gal r

eser

ve

24 25

2,24

4,77

9,00

1 - - - -

358,

142,

539 - - - -

-4,

920,

510 - - -

79,6

08,0

00 - - -

35,5

00,0

00

410,

268,

161 -

491,

324,

648 -

(35,

500,

000)

(596

,603

) - -16

3,31

6 -

3,09

2,20

1,09

8 4,

920,

510

491,

324,

648

163,

316 -

141,

975,

194 -

38,8

90,2

88 - -

3,23

4,17

6,29

2 4,

920,

510

530,

214,

936

163,

316 -

Bala

nce

at 3

1 D

ecem

ber

2011

2,24

4,77

9,00

135

8,14

2,53

94,

920,

510

115,

108,

000

866,

092,

809

(433

,287

)3,

588,

609,

572

180,

865,

482

3,76

9,47

5,05

4

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se fin

anci

al s

tate

men

ts.

8080

Stat

emen

ts o

f ch

ange

s in

equ

ity (

Con

tinue

d)Th

e Er

awan

Gro

up P

ublic

Com

pany

Lim

ited

and

its S

ubsi

diar

ies

For t

he y

ears

end

ed 3

1 D

ecem

ber 2

011

and

2010

(Uni

t: in

Bah

t)

Not

e

Sepa

rate

fina

ncia

l st

atem

ents

Issu

ed a

nd

paid

-up

shar

e

capi

tal

Shar

e pr

emiu

mEm

ploy

ee s

tock

optio

ns

Reta

ined

ear

ning

sO

ther

co

mpo

nent

s of

eq

uity

Tota

l equ

ity

attri

buta

ble

to

equi

ty h

olde

rs

of th

e C

ompa

nyLe

gal r

eser

veU

napp

ropr

iate

d

Unr

ealis

ed

surp

luse

s (d

efici

ts) o

f fai

r va

lue

chan

ges

in in

vesm

ents

Bala

nce

at 1

Jan

uary

201

0 C

ompr

ehen

sive

inc

ome

(loss

) fo

r th

e pe

riod

Pr

ofit

O

ther

com

preh

ensi

ve lo

ss

Tran

sfer

to le

gal r

eser

ve25

2,24

4,77

9,00

1 - - -

358,

142,

539 - - -

- - - -

66,8

90,0

00 - -

768,

000

1,71

5,31

2,33

9

15,3

42,3

80 -

(768

,000

)

(108

,143

) -(2

96,8

93) -

4,38

5,01

5,73

6

15,3

42,3

80

(296

,893

) -

Bala

nces

at

31 D

ecem

ber

2010

2,24

4,77

9,00

135

8,14

2,53

9-

67,6

58,0

00

1,72

9,88

6,71

9 (4

05,0

36)

4,40

0,06

1,22

3

Bala

nce

at 3

1 D

ecem

ber

2010

- a

s re

porte

dIm

pact

of c

hang

es in

acc

ount

ing

polic

ies

32,

244,

779,

001 -

358,

142,

539 -

- -67

,658

,000

-1,

729,

886,

719

(1

6,27

9,06

0)(4

05,0

36) -

4,40

0,06

1,22

3(1

6,27

9,06

0)

Bala

nce

at 1

Jan

uary

201

1 -

rest

ated

Em

ploy

ee s

tock

opt

ions

C

ompr

ehen

sive

inco

me

for

the

perio

d

Profi

t

Oth

er c

ompr

ehen

sive

inco

me

Tran

sfer

to le

gal r

eser

ve

24 25

2,24

4,77

9,00

1 - - - -

358,

142,

539 - - - -

-4,

920,

510 - - -

67,6

58,0

00 - - -

35,5

00,0

00

1,71

3,60

7,65

9 -

708,

757,

332 -

(35,

500,

000)

(405

,036

) - -52

,234

-

4,38

3,78

2,16

34,

920,

510

708,

757,

332

52,2

34 -

Bala

nce

at 3

1 D

ecem

ber

2011

2,24

4,77

9,00

135

8,14

2,53

94,

920,

510

103,

158,

000

2,38

6,86

4,99

1 (3

52,8

02)

5,09

7,51

2,23

9


81


(Unit: in Baht)



2011 2010 2011 2010


Cash flows from operating activities

Profit (loss) for the year

Adjustments for


Doubtful debts expense (reversal)

Unrealised (gain) loss from increase in

value of investment in related company

Employee benefit obligations

Employee stock options

Loss on non-refundable withholding tax

deducted at source

Transfer rental deposits and deferred

income to income

Transfer advance received from customers to income

Dividend income

Interest income

Gain on sale of Ploenchit Center

(Gain) loss on disposal of property, plant and

equipment, intangible assets and leasehold rights

Finance costs

Income tax expense

530,214,936

645,511,741

331,466

89,011

6,754,843

4,920,510

376,795

(951,500)

(560,950)

-

(6,180,234)

(664,330,168)

14,788,536

406,682,214

53,469,379

(259,303,698)

683,504,716

717,106

(18,638)

-

-

3,794,537

(5,343,191)

(1,368,177)

(982,813)

(411,737)

-

(286,337)

360,761,571

19,866,597

708,757,332

352,611,758

101,432

-

3,405,062

4,920,510

-

(951,501)

(560,951)

-

(65,880,663)

(664,330,168)

3,424,534

267,486,417

-

15,342,380

404,735,841

(914,539)

-

-

-

3,302,220

(5,343,191)

(1,368,177)

(18,085,498)

(39,065,891)

-

(200,787)

245,184,988

-

991,116,579 800,929,936 608,983,762 603,587,346

Statements of cash f lowsThe Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010


82

First line

(Unit: in Baht)



2011 2010 2011 2010


Changes in operating assets and liabilities

Trade accounts receivable

Inventories

Advances - construction

Value added tax refundable


Deposits for lease of land, building, and equipment


Trade accounts payable

Employee benefit obligations paid


Deposits from lessees

13,199,848

20,076,625

(22,620,467)

11,262,430

7,030,448

(6,283,969)

(14,598,129)

(36,562,187)

(2,256,547)

60,624,065

(58,085,426)

(4,284,401)

5,349,251

19,593,673

147,376,418

(6,267,833)

26,998,281

15,790,124

(18,786,899)

-

(3,245,963)

3,770,476

4,282,143

18,815,452

(22,620,467)

-

(740,203)

(3,013,733)

14,245,875

(8,353,046)

(1,832,244)

19,571,515

(32,349,811)

(2,735,763)

5,747,357

867,392

78,120,621

1,952,884

25,907,656

12,906,147

14,982,351

-

344,593

3,743,384

Cash generated from operating activities

Income tax paid

962,903,270

(34,943,819)

987,223,063

(52,837,616)

596,989,243

(19,493,080)

745,423,968

(14,450,821)

Net cash from operating activities 927,959,451 934,385,447 577,496,163 730,973,147

Cash flows from investing activities

Investments in other related parties

Investments in subsidiary

Short-term loans to a subsidiary

Proceeds from short-term loans to a subsidiary

Long-term loans to subsidiaries

Proceeds from long-term loans to subsidiaries

Acquisition of property, plant and equipment

Acquisition of leasehold rights for land and buildings

Acquisition of intangible assets

Net proceeds from sale of Ploenchit Center

Proceeds from sales of property, plant and

equipment, and intangible assets

Dividend received

Interest received

158,409

-

-

-

-

-

(537,963,906)

(700,859)

(5,484,071)

1,352,047,347

1,295,972

-

6,180,234

347,271

-

-

-

-

-

(488,502,754)

(156,279,790)

(8,544,905)

-

3,850,275

982,812

411,737

115,176

(1,999,990)

-

-

(348,218,296)

37,989,571

(399,806,077)

-

(2,388,829)

1,352,047,347

1,438,404

-

63,337,920

252,494

-

(184,861,134)

184,861,134

(457,451,218)

123,433,352

(170,188,057)

(150,000,000)

(3,511,734)

-

6,299,303

18,085,498

38,055,372

Net cash from (used in) investing activities 815,533,126 (647,735,354) 702,515,226 (595,024,990)

Statements of cash f lows (Continued)The Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010


83

First line


Statements of cash f lows (Continued)The Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010

(Unit: in Baht)



Note 2011 2010 2011 2010


Cash flows from financing activities

Repayment of short-term loans from financial institutions

Finance lease payments

Short-term loans from a subsidiary

Repayment of short-term loans from a subsidary

Long-term loans from a subsidiary

Repayment of long-term loans from a subsidary

Long-term loans from financial institutions

Repayment of long-term loans from financial institutions

Finance costs paid

Dividend paid to non-controlling interests

(119,600,000)

(3,733,312)

-

-

-

-

-

(980,350,000)

(409,997,318)

-

(11,500,000)

(1,130,340)

-

-

-

-

209,200,000

(168,650,000)

(365,373,909)

(6,300,012)

(119,600,000)

(3,733,312)

143,470,578

(143,470,578)

85,466,073

(78,889,036)

-

(845,350,000)

(271,100,982)

-

43,500,000

(1,130,340)

11,027,304

(11,027,304)

31,646,562

(47,917,357)

139,000,000

(162,400,000)

(246,574,309)

-

Net cash used in financing activities (1,513,680,630) (343,754,261) (1,233,207,257) (243,875,444)

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at 1 January

229,811,947

220,384,384

(57,104,168)

277,488,552

46,804,132

93,907,272

(107,927,287)

201,834,559

Cash and cash equivalents at 31 December 6 450,196,331 220,384,384 140,711,404 93,907,272

Non-cash transactions

Offsetting rental deposit received from lessees with accounts receivable

Vehicles purchased under hire purchase contract

Acquisition of plant and equipment, intangible assets and leasehold rights for land and buildings for which payment has yet to be made

121,429

7,469,000

(37,630,162)

4,016,134

1,449,000

38,086,089

121,429

7,469,000

(40,433,608)

4,016,134

1,449,000

18,911,350

Notes to the financial statements848484

Name of the entity Type of businessCountry of

incorporation

Ownership interest (%)

2011 2010

Direct subsidiariesErawan Hotel Public Company Limited

Erawan Chaophraya Company Limited

Erawan Rajdamri Company Limited

Erawan Phuket Company Limited

Erawan Samui Company Limited

Erawan Naka Company Limited

The Reserve Company Limited

Erawan Commercial Management

Company Limited

Hotel

Hotel

Hotel

Hotel

Hotel

Land owner

Real estate development

Management

service

Thailand

Thailand

Thailand

Thailand

Thailand

Thailand

Thailand

Thailand

72.59

95.77

99.99

99.99

99.99

99.99

99.99

99.99

72.59

95.77

99.99

99.99

99.99

99.99

99.99

-

Indirect subsidiariesErawan Hotel Public Company Limited


Hotel

Hotel

Thailand

Thailand

1.05

4.22

1.05

4.22

AssociateRajprasong Development Company Limited Service Thailand 48.00 48.00

Notes to the f inancial statementsThe Erawan Group Public Company Limited and its SubsidiariesFor the years ended 31 December 2011 and 2010

These notes form an integral part of the financial statements.

The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved and authorised for issue by the Board of Directors on 28 February 2012.

1. General information

The Erawan Group Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office at 2 Sukhumvit Road, Klong Toey Subdistrict, Klong Toey District, Bangkok. The Company has 10 branches in Bangkok, Cholburi, Phuket, Surathani and Prajuabkirikhan.

The Company was listed on the Stock Exchange of Thailand in June 1994.

The principal businesses of the Company are engaged as a holding company with investments in various companies, engaged in hotel business, and in building rental business. Details of the Company’s subsidiaries and associate as at 31 December 2011 and 2010 were as follows:

Notes to the financial statements 85


85


TFRS Topic

TAS 1 (revised 2009)








TAS 19



TAS 26









TFRS 2

TIC 31

Presentation of Financial Statements

Inventories

Statement of Cash Flows

Accounting Policies, Changes in Accounting Estimates and Errors

Events after the Reporting Period

Property, Plant and Equipment

Leases

Revenue

Employee Benefits

Borrowing Costs

Related Party Disclosures

Accounting and Reporting by Retirement Benefit Plans

Consolidated and Separate Financial Statements

Investments in Associates

Earnings per Share

Interim Financial Reporting

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Intangible Assets

Investment Property

Share-based Payment

Revenue - Barter Transactions Involving Advertising Services

2. Basis of preparation of the f inancial statements

(a) Statement of compliance

The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS) and guidelines promulgated by the Federation of Accounting Professions (“FAP”), applicable rules and regulations of the Thai Securities and Exchange Commission.

During 2010 and 2011, the FAP issued the following new and revised TFRS relevant to the Group’s operations and effective for accounting periods beginning on or after 1 January 2011:


The adoption of these new and revised TFRS has resulted in changes in the Group’s accounting policies.The effects of these changes are disclosed in note 3.

In addition to the above new and revised TFRS, the FAP has issued during 2010 a number of other new and revised TFRS which are expected to be effective for financial statements beginning on or after 1 January 2013 and have not been adopted in the preparation of these financial statements. These new and revised TFRS are disclosed in note 40.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) Presentation currency

The financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest million unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes:

Note 23 Measurement of defined benefit obligations

3. Changes in accounting policies

(a) Overview

From 1 January 2011, consequent to the adoption of new and revised TFRS as set out in note 2, the Group has changed its accounting policies in the following areas:

• Presentation of financial statements• Accounting for property, plant and equipment• Accounting for employee benefits



87


(b) Presentation of financial statements

From 1 January 2011, the Group has adopted TAS 1 Presentation of Financial Statements (Revised 2009).Under the revised standard, a set of financial statements comprises:

• Statement of financial position;• Statement of comprehensive income;• Statement of changes in equity;• Statement of cash flows; and• Notes to the financial statements.

As a result, the Group presents all owner changes in equity in the statement of changes in equity and all non-owner changes in equity in the statement of comprehensive income. Previously, all such changes

were included in the statement of changes in equity.

Details of the new accounting policies adopted by the Group and the impact of the changes on the

financial statements are included in notes 3(b) to 3(d) below. Other new and revised TFRS did not have any

impact on the accounting policies, financial position or performance of the Group. The impact of the changes

on the financial statements for the years ended 31 December 2011 is summarized as follows:

(Unit: in thousand Baht)

Consolidatedfinancial statements

Separatefinancial statements

Note 2011 2011

Statement of financial position

Equity at 31 December 2010 - as reported

TAS 19 Employee benefits 3(d)

3,272,950

(38,774)

4,400,061

(16,279)

Equity at 1 January 2011 3,234,176 4,383,782

Statement of comprehensive income for the year ended

31 December 2011

Decrease in profit before income tax as a result of the

adoption of:

TAS 19 Employee benefits 3(d)

(6,754)

(3,404)

Increase in income tax expense - -

(Decrease) in profit (6,754) (3,404)

For the year ended 31 December 2011


Comparative information has been re-presented so that it also is in conformity with the revised standard.

Since the change in accounting policy only impacts presentation aspects, there is no impact on reported

profit or earnings per share.

(c) Accounting for property, plant and equipment

From 1 January 2011, the Group has adopted TAS 16 (revised 2009) Property, Plant and Equipment in

determining and accounting for the cost and depreciable amount of property, plant and equipment.

The principal changes introduced by the revised TAS 16 and affecting the Group are that;

(i) the depreciation charge has to be determined separately for each significant part of an asset.

(ii) in determining the depreciable amount, the residual value of an item of property, plant and

equipment has to be measured at the amount estimated receivable currently for the asset if the

asset were already of the age and in the condition expected at the end of its useful life.

Further more, the residual value and useful life of an asset have to be reviewed at least at each

financial year-end.

The changes have been applied prospectively in accordance with the transitional provisions of the

revised standard, which no material impact on the profit and earnings per share for the year ended

31 December 2011.

(d) Accounting for employee benefits

From 1 January 2011, the Group has adopted TAS 19 Employee Benefits.

Under the new policy, the Group’s obligation in respect of post-employment benefits is - retirement benefit

recognised in the financial statements based on calculations performed annually by a qualified actuary using

the projected unit credit method. Previously, this obligation was recognised as and when payments were made.

The Group’s and the Company’s liability for retirement benefit employee benefit obligations as at

1 January 2011 has been determined to be Baht 39 million and Baht 16 million, respectively. The Group

has opted to record the entire amount of this liability as an adjustment to retained earnings as at 1 January

2011, in accordance with the transitional provisions of TAS 19. The impact on the 2011 financial statements

was as follows:



89





2011 2011

Statement of financial position as at 1 January 2011(Increase) in employee benefit obligations (38,774) (16,279)

(Decrease) in unappropriated retained earnings (38,774) (16,279)

Statement of comprehensive income for the year ended 31 December 2011Increase in employee expenses resulting in:

(Increase) in cost of hotel operations and cost of rental of units in buildings and service

(Increase) in selling expenses

(Increase) in administrative expenses

(3,044)

(410)

(3,300)

(1,568)

(71)

(1,765)

(Decrease) in profit (6,754) (3,404)

(Decrease) in earnings per share:

- Basic earnings per share (in Baht)

(0.0030)

(0.0015)

4. Signif icant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements except as explained in note 3, which addresses changes in accounting policies.

(a) Basis of consolidation

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interests in associate.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Losses applicable to non - controlling interests in a subsidiary are allocated to non - controlling interests even if doing so causes the non - controlling interests to have a deficit balance.


Associate

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

Investments in associates are accounted for in the consolidated financial statements using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of associates, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associate are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency transactions

Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss.

(c) Cash and cash equivalents

Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments.

(d) Trade and other accounts receivable

Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.



91


(e) Inventories

Inventories are stated at the lower of cost (the weighted average method) and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

(f) Investments

Investments in subsidiaries and associate

Investments in subsidiaries and associate in the separate financial statements of the Company are accounted for using the cost method.

Investment in associate in the consolidated financial statements is accounted for using the equity method.

Investments in equity securities

Marketable equity securities, other than those securities held for trading or intended to be held to maturity, are classif ied as being available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses on available-for-sale monetary items, are recognised directly in equity. Impairment losses are recognised in prof it or loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in profit or loss.

(g) Property, plant and equipment

Recognition and measurement

Owned assets

Lands are stated at cost. Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised

net within other income in profit or loss.


Leased assets

Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are

classified as finance leases. Equipment and vehicles acquired by way of finance leases is capitalised at the

lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less

accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges

and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the

liability. Finance charges are charged directly to the profit or loss.

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying

amount of the item if it is probable that the future economic benefits embodied within the part will flow to the

Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The

costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other

amount substituted for cost, less its residual value.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each

component of an item of property, plant and equipment. The estimated useful lives are as follows:

Building and improvements 5 - 40 years

Furniture, fixtures and equipment 5 - 10 years

Vehicles 5 years

See Note 37 to the financial statements for changes in the estimated useful lives from 1 January 2010.

No depreciation is provided on freehold land or assets under construction.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and

adjusted if appropriate.

Operating equipment consists of linen, crockery, glass, silver and kitchen utensils purchased to meet the

normal requirements of the hotel operations have been regarded as a base stock and subsequent purchases

are expended when incurred.



93


(h) Leasehold rights

Leasehold rights are stated at cost less accumulated amortisation and impairment losses.

Amortisation

Leasehold rights are amortised on a straight-line basis over the terms of the leases.

(i) Intangible assets

Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally is recognised in profit or loss as incurred.

Amortisation

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

The estimated useful lives for the current and comparative periods are as follows:

Computer softwares 5 - 10 years

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(j) Impairment

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence


that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.

Calculation of recoverable amount

The recoverable amount of available-for-sale financial assets is calculated by reference to the fair value.

The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised in other comprehensive income.

Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(k) Trade, construction and other accounts payable

Trade, construction and other accounts payable are stated at cost.

(l) Employee benefits

Provident fund

The Group has a provident fund for its employees. The Group’s contributions are made to match with the contributions from employees and are recorded as expenses on an accrual basis.

Short-term employee benefits

The Group recognized the commitments of short-term employee benefits as expenses when employee rendered services.

Provision for retirement benefits



95


The Group’s net obligation in respect of long-term employee benefits (Legal Severance Payment) is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on government bonds. The calculation is performed using the projected unit credit method.

Share-based payments

The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions are expected to be met.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expenses in profit or loss.

(m) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(n) Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

Revenue from hotel operations

Hotel revenues from room, food and beverages and other services are recognised when the rooms are occupied, food and beverages are sold and the services are rendered.

Rental and services income

Rental and services income from units in office buildings and shopping center are recognised in profit or loss on an accrual basis.

Dividend income

Dividend income is recognised in profit or loss on the date the Group’s right to receive payments is established.

Interest income

Interest income is recognised in profit or loss as it accrues


(o) Deferred income

The Company recognises deferred rental income as income on a straight-line basis over the terms of the leases.

(p) Finance costs

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration, losses on disposal of available-for-sale financial assets, dividends on preference shares classified as liabilities, fair value losses on financial assets at fair value through profit or loss, impairment losses recognised on financial assets (other than trade receivables), and losses on hedging instruments that are recognised in profit or loss.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

(q) Lease payments

Payments made under operating leases are recognised in profit or loss on a systematic basis over the term of the lease and on a straight-line method for leases begin on or after 1 January 2008 unless another systematic basis is more representative of the time pattern of the user’s benefit. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(r) Income tax

Income tax expense on the profit or loss for the year comprises current tax. Current is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

(s) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all potential dilutive ordinary shares, which comprise convertible notes and share options granted to employees.

5. Related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.



97


Name of entitiesCountry of

incorporation/ nationality

Nature of relationships

Erawan Hotel Public Company LimitedErawan Chaophraya Company LimitedErawan Rajdamri Company LimitedErawan Phuket Company LimitedErawan Samui Company LimitedErawan Naka Company LimitedThe Reserve Company LimitedErawan Commercial Management Company LimitedRajprasong Development Company Limited

Rajprasong Square Company LimitedChai Talay Hotel Company Limited

Panel Plus Company LimitedPetro Green Company LimitedMitr Phol Sugar Company LimitedPhu Khieo Bio-Energy Company LimitedBanpu Public Company LimitedThe Syndicate of Thai Hotels & Tourists Enterprises Limited

Kiatnakin Bank Public Company LimitedPacific World (Thailand) LimitedEastern Sugar and Cane Company Limited

ThailandThailandThailandThailandThailandThailandThailandThailand

Thailand

ThailandThailand

ThailandThailandThailandThailandThailandThailand

ThailandThailandThailand

Subsidiary, 72.59% direct shareholding Subsidiary, 95.77% direct shareholding Subsidiary, 99.99% direct shareholding Subsidiary, 99.99% direct shareholding Subsidiary, 99.99% direct shareholding Subsidiary, 99.99% direct shareholding Subsidiary, 99.99% direct shareholding Subsidiary, 99.99% direct shareholding

Associate, 48.00% direct shareholding, some common directorsRelated company, 23.29% direct shareholdingRelated company, director is closed relative to a Company’s directorRelated company, some common directorsRelated company, some common directorsRelated company, some common directorsRelated company, some common directorsRelated company, some common directorsRelated company, some common directors

Related company, some common directorsRelated company, some common directorsRelated company, some common directors

The pricing policies for particular types of transactions are explained further below:

Relationships with related parties were as follows:

Transactions Pricing policies

SubsidiariesInterest income

Dividend incomeUtilities incomeRental and service expensesInterest expenses

At the rate of 4.84% - 5.48% per annum (2010: at the rate of 4.15% - 4.53% per annum) According to the shareholders’ approvalContractually agreed pricesBaht 17 million per annumAt the rate of 4.84% - 5.48% per annum (2010: at the rate of 4.15% - 4.53% per annum)



Year ended 31 December



2011 2010 2011 2010

Subsidiaries

Interest income

Dividend income

Utilities income

Rental and service expenses

Interest expenses

-

-

-

-

-

-

-

-

-

-

62,521

-

2,348

16,376

3,134

38,940

17,350

1,918

16,264

1,874

Other related parties


Utilities income

Other service income

Land rental

Management fee

15,467

1,163

14,037

12,519

1,000

45,551

4,264

5,667

10,920

1,000

11,165

1,163

9,981

-

1,000

43,082

4,264

5,073

-

1,000

Key management personnel compensation

Short-term employee benefit

Post-employment benfits

Share-based payment

37,604

618

2,584

35,154

-

-

36,029

618

2,584

33,354

-

-

Total key management personnel compensation 40,806 35,154 39,231 33,354

Significant transactions for the years ended 31 December 2011 and 2010 with related parties were as follows:

Transactions Pricing policies

AssociateManagement fee



Utilities income

Other service income

Land rental

At cost - allocated in proportion to shareholding

Baht 350 - 560 per square meter per month

(2010: Baht 308 - 583 per square meter per month) depending on location

Contractually agreed prices

Fair price under the best conditions

Baht 14 million per annum



99


Balances as at 31 December 2011 and 2010 with related parties were as follows:




2011 2010 2011 2010

Trade accounts receivable from related parties

Subsidiaries

Erawan Hotel Public Company Limited




-

-

-

-

-

-

-

-

154

1,556

608

56

126

880

328

-


Mitr Phol Sugar Company Limited

Banpu Public Company Limited

Petro Green Company Limited

Panel Plus Company Limited

Phu Khieo Bio-Energy Company Limited

Chai Talay Hotel Company Limited

Pacific World (Thailand) Limited

Eastern Sugar and Cane Company Limited

Other companies

743

333

260

-

-

449

652

-

-

986

442

63

727

19

243

438

292

55

743

333

260

-

-

-

444

-

-

986

342

63

727

19

-

438

-

55

Total 2,437 3,265 4,154 3,964

Other receivable - related partySubsidiary

Erawan Chaophraya Company Limited - - 598 746

Prepaid expense - related partyOther related party

The Syndicate of Thai Hotels & Tourists

Enterprises Limited 7,060 5,460 - -



Loans to related parties



2011 2010 2011 2010

Short-term loansSubsidiary

At 1 January

Increase

Decrease

-

-

-

-

-

-

-

-

-

-

184,861

(184,861)

At 31 December - - - -

Long-term loansSubsidiaries

At 1 January

Increase

Decrease

-

-

-

-

-

-

1,080,774

348,218

(35,447)

745,746

457,451

(122,423)

At 31 December - - 1,393,545 1,080,774

Movements during the years ended 31 December 2011 and 2010 of loans to related parties were as follows:

(Unit: % per annum) (Unit: in thousand Baht)

Loans to related partiesInterest rate



2011 2010 2011 2010 2011 2010

Long-term loans Subsidiaries


Erawan Naka Company Limited



Erawan Commercial Management

Company Limited

The Reserve Company Limited

5.48

5.48

5.48

5.48

5.48

5.48

4.53

4.53

4.53

4.53

-

4.53

-

-

-

-

-

-

-

-

-

-

-

-

114,354

19,798

854,522

238,709

3,779

162,383

79,316

20,036

598,568

228,740

-

154,114

- - 1,393,545 1,080,774






2011 2010 2011 2010

Trade accounts payable - related parties

Subsidiaries



Erawan Hotel Public Company Limited


-

-

-

-

-

-

-

-

10

125

281

543

-

-

257

30

- - 959 287

Other payable - related partyErawan Commercial Management

Company Limited


-

-

-

-

309

45

-

23

- - 354 23


Loans from a related partyInterest rate



2011 2010 2011 2010 2011 2010

Long-term loans Subsidiary

Erawan Rajdamri Company Limited 5.48 4.53 - - 45,438 38,861





2011 2010 2011 2010

Cash on hand

Cash at banks

Highly liquid short-term investments

8,499

236,298

205,399

7,559

194,741

18,084

3,183

130,199

7,329

3,684

90,223

-

Total 450,196 220,384 140,711 93,907

Cash and cash equivalents of the Group as at 31 December 2011 and 2010 were denominated in Thai Baht.

6. Cash and cash equivalents

Movements during the years ended 31 December 2011 and 2010 of loans from related parties were as

follows:


Loans from a related party



2011 2010 2011 2010

Short-term loans Subsidiary

At 1 January

Increase

Decrease

-

-

-

-

-

-

-

143,471

(143,471)

-

11,027

(11,027)

At 31 December - - - -

Long-term loansSubsidiary

At 1 January

Increase

Decrease

-

-

-

-

-

-

38,861

85,466

(78,889)

55,132

31,646

(47,917)

At 31 December - - 45,438 38,861



7. Trade accounts receivable


Note



2011 2010 2011 2010

Related parties

Other parties

5 2,437

134,229

3,265

146,722

4,154

71,867

3,964

76,460

Total

Less allowance for doubtful accounts

136,666

(2,272)

149,987

(1,941)

76,021

(1,318)

80,424

(1,216)

Net 134,394 148,046 74,703 79,208

Doubtful debts expenses (reversal) for the year 331 717 101 (914)




2011 2010 2011 2010

Related parties

Outstanding:

Less than 3 months

3 - 6 months

6 - 12 months

2,430

5

2

3,265

-

-

4,147

5

2

3,964

-

-

2,437 3,265 4,154 3,964

Other parties

Outstanding:

Less than 3 months

3 - 6 months

6 - 12 months

Over 12 months

126,337

7,009

815

68

141,574

4,127

949

72

69,252

1,732

815

68

73,482

1,957

949

72

Less allowance for doubtful accounts

134,229

(2,272)

146,722

(1,941)

71,867

(1,318)

76,460

(1,216)

131,957 144,781 70,549 75,244

Net 134,394 148,046 74,703 79,208

Aging analyses for trade accounts receivable were as follows:

Trade accounts receivable of the Group as at 31 December 2011 and 2010 were denominated in Thai Baht.





2011 2010 2011 2010

Food and beverage

Operating suppliess

Real estate for sale

Others

31,242

12,225

-

9,355

32,801

15,365

17,684

7,048

7,108

1,583

-

539

9,118

989

17,684

254

Total 52,822 72,898 9,230 28,045

8. Inventories


Note



2011 2010 2011 2010

Other advances

Prepaid expenses

Other receivables

Undue input value added tax

Others

5

5

526

26,401

1,522

5,618

22,827

1,240

24,009

1,577

9,735

12,976

326

9,158

681

4,964

4,139

322

9,083

843

3,843

1,792

Total 56,894 49,537 19,268 15,883

9. Other current assets



(Uni

t: %

)(U

nit:

in m

illion

Bah

t)(U

nit:

in th

ousa

nd B

aht)

Sepa

rate

fina

ncia

l st

atem

ents

Ow

ners

hip

Inte

rest

Paid

-up

capi

tal

Cos

t met

hod

Impa

irmen

tAt

cos

t - n

etD

ivid

end

inco

me

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Com

pany

’s n

ame

Eraw

an H

otel

Publ

ic Co

mpa

ny L

imite

d

Eraw

an C

haop

hray

a Co

mpa

ny L

imite

d

Eraw

an R

ajdam

ri Co

mpa

ny L

imite

d

Eraw

an P

huke

t Com

pany

Lim

ited

Eraw

an S

amui

Com

pany

Lim

ited

Eraw

an N

aka

Com

pany

Lim

ited

The

Rese

rve

Com

pany

Lim

ited

Eraw

an C

omm

ercia

l Man

agem

ent

Co

mpa

ny L

imite

d

72.5

9

95.7

7

99.9

9

99.9

9

99.9

9

99.9

9

99.9

9

99.9

9

72.5

9

95.7

7

99.9

9

99.9

9

99.9

9

99.9

9

99.9

9 -

119.

50

71.0

0

450.

00

550.

00

330.

00

7.50

1.00

2.00

119.

50

71.0

0

450.

00

550.

00

330.

00

7.50

1.00

-

819,

710

68,0

00

451,

291

582,

001

376,

858

300

1,00

0

2,00

0

819,

710

68,0

00

451,

291

582,

001

376,

858

300

1,00

0 -

- - - - - - - -

- - - - - - - -

819,

710

68,0

00

451,

291

582,

001

376,

858

300

1,00

0

2,00

0

819,

710

68,0

00

451,

291

582,

001

376,

858

300

1,00

0 -

- - - - - - - -

17,3

50

- - - - - - -

Tota

l2,

301,

160

2,29

9,16

0-

-2,

301,

160

2,29

9,16

0-

17,3

50

10.

Inve

stm

ents

in s

ubsi

diar

ies

Inve

stm

ents

in s

ubsi

diar

ies

as a

t 31

Dec

embe

r 201

1 an

d 20

10, a

nd d

ivid

end

inco

me

from

thos

e in

vest

men

ts fo

r the

yea

rs th

en e

nded

wer

e as

follo

ws:

Dur

ing

the

first

qua

rter o

f 201

1, th

e C

ompa

ny in

vest

ed in

99.

99%

of E

raw

an C

omm

erci

al M

anag

emen

t Com

pany

Lim

ited

as a

sub

sidi

ary

com

pany

.


(Uni

t: %

)(U

nit:

in m

illion

Bah

t)(U

nit:

thou

sand

Bah

t)

Con

solid

ated

fina

ncia

l st

atem

ents

Ow

ners

hip

inte

rest

Paid

-up

capi

tal

Cos

t met

hod

Equi

ty m

etho

dIm

pairm

ent

At e

quity

- n

etD

ivid

end

inco

me

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Asso

ciat

e

Rajp

raso

ng D

evel

opm

ent

C

o., L

td.

48.0

048

.00

1.00

1.00

338

338

338

338

--

338

338

--

(Uni

t: %

)(U

nit:

in m

illion

Bah

t)(U

nit:

thou

sand

Bah

t)

Sepa

rate

fina

ncia

l st

atem

ents

Ow

ners

hip

inte

rest

Paid

-up

capi

tal

Cos

t met

hod

Impa

irmen

tAt

cos

t - n

etD

ivid

end

inco

me

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Asso

ciat

e

Rajp

raso

ng D

evel

opm

ent

Co.

, Ltd

.48

.00

48.0

01.

001.

0033

833

8-

-33

833

8-

-

11.

Inve

stm

ent

in a

ssoc

iate

Dur

ing

the

year

, the

Com

pany

did

not

rec

ord

its s

hare

s in

the

oper

atin

g re

sult

of in

vest

men

ts in

ass

ocia

te in

the

cons

olid

ated

fina

ncia

l

stat

emen

ts b

ecau

se it

fou

nd t

hat

the

amou

nt w

as im

mat

eria

l.

Inve

stm

ents

in a

ssoc

iate

as

at 3

1 D

ecem

ber 2

011

and

2010

, and

div

iden

d in

com

e fro

m th

e in

vest

men

t for

the

year

s th

en e

nded

wer

e as

follo

ws:



12. Investments in other related parties

The following summarised financial information on associated company which have not been accounted

for using the equity method but have not been adjusted for the percentage of ownership held by the Group:

(Unit: %) (Unit: in thousand Baht)

Ownership interest

Total assets

Total liabilities

Total revenues

Net loss

2011

Rajprasong Development Co., Ltd. 48.00 2,233 228 2,000 (482)

2010

Rajprasong Development Co., Ltd. 48.00 1,772 248 2,005 (477)


Equity interestConsolidated

financial statements

2011 2010 2011 2010

Related companiesRajprasong Square Co., Ltd.

The Asia Recovery 2 Fund

Less allowance for change in value

23.29

0.26

23.29

0.17

206

2,784

(503)

206

2,942

(577)

Total 2,487 2,571


Equity interestSeparate


2011 2010 2011 2010

Related companiesRajprasong Square Co., Ltd.

The Asia Recovery 2 Fund

Less allowance for change in value

23.29

0.13

23.29

0.13

206

2,060

(353)

206

2,174

(405)

Total 1,913 1,975


(Uni

t: in

thou

sand

Bah

t)

Con

solid

ated

fina

ncia

l st

atem

ents

Land

Build

ing

and

impr

ovem

ents

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Cos

t

At 1

Jan

uary

201

0

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,55

2,98

9

3,22

4 - -

(3,0

14)

9,39

2,29

3

48,9

54

(1,1

38)

337,

909

(6,2

49)

2,00

9,40

5

33,7

31

(287

)

62,0

91

(25,

029)

33,8

64

2,96

8 - -

(1,3

57)

215,

494

6,91

6 -

7,67

1 -

142,

830

354,

801

(5,2

16)

(411

,077

) -

13,3

46,8

75

450,

594

(6,6

41)

(3,4

06)

(35,

649)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,55

3,19

9 - - - -

9,77

1,76

9

18,5

03

(2,0

32)

47,5

28

(1,0

47,2

30)

2,07

9,91

1

36,0

03

1,44

3

22,4

28

(28,

090)

35,4

75

7,95

3 -

2,71

8

(4,5

34)

230,

081

1,02

7 -

13,9

61

(8,6

60)

81,3

38

522,

977

(3,1

52)

(88,

367) -

13,7

51,7

73

586,

463

(3,7

41)

(1,7

32)

(1,0

88,5

14)

At 3

1 D

ecem

ber

2011

1,55

3,19

98,

788,

538

2,11

1,69

541

,612

236,

409

512,

796

13,2

44,2

49

13.

Prop

erty

, pla

nt a

nd e

quip

men

t



(Uni

t: in

thou

sand

Bah

t)

Con

solid

ated

fina

ncia

l st

atem

ents

Land

Build

ing

and

impr

ovem

ents

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Dep

reci

atio

n

At 1

Jan

uary

201

0

Dep

reci

atio

n ch

arge

for

the

year

Adju

stm

ents

Dis

posa

ls

- - - -

2,23

4,86

9

334,

008

(12)

(5,0

71)

1,15

6,39

9

235,

641 -

(22,

707)

14,4

99

5,96

9 -

(1,2

93)

- - - -

- - - -

3,40

5,76

7

575,

618

(12)

(29,

071)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Dep

reci

atio

n ch

arge

for

the

year

Adju

stm

ents

Dis

posa

ls

- - - -

2,56

3,79

4

297,

880

(181

)

(380

,160

)

1,36

9,33

3

239,

604

187

(23,

801)

19,1

75

7,40

7 -

(4,0

39)

- - - -

- - - -

3,95

2,30

2

544,

891 6

(408

,000

)

At 3

1 D

ecem

ber

2011

-2,

481,

333

1,58

5,32

322

,543

--

4,08

9,19

9


(Uni

t: in

thou

sand

Bah

t)

Con

solid

ated

fina

ncia

l st

atem

ents

Land

Build

ing

and

impr

ovem

ents

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Net

boo

k va

lue

At 1

Jan

uary

201

0

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,55

2,98

9 -

7,15

7,42

4 -

852,

956 50

19,3

65

-

215,

494 -

142,

830 -

9,94

1,05

8 50

1,55

2,98

97,

157,

424

853,

006

19,3

6521

5,49

414

2,83

09,

941,

108

Tran

sact

ions

elim

inat

ed o

n co

nsol

idat

ion

365,

383

10,3

06,4

91

At 3

1 D

ecem

ber

2010

and

1 J

anua

ry 2

011

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,55

3,19

9 -

7,20

7,97

5 -

710,

578 -

15,0

44

1,25

6

230,

081 -

81,3

38

-

9,79

8,21

5

1,25

6

1,55

3,19

97,

207,

975

710,

578

16,3

0023

0,08

181

,338

9,79

9,47

1

Tran

sact

ions

elim

inat

ed o

n co

nsol

idat

ion

352,

148

10,1

51,6

19

At 3

1 D

ecem

ber

2011

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,55

3,19

9 -

6,30

7,20

5 -

526,

372 -

12,7

90

6,27

9

236,

409 -

512,

796 -

9,14

8,77

1

6,27

9

1,55

3,19

96,

307,

205

526,

372

19,0

6923

6,40

951

2,79

69,

155,

050

Tran

sact

ions

elim

inat

ed o

n co

nsol

idat

ion

338,

510

9,49

3,56

0



(Uni

t: in

thou

sand

Bah

t)

Con

solid

ated

fina

ncia

l st

atem

ents

Not

eLa

ndBu

ildin

g an

d im

prov

emen

ts

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Dep

reci

atio

n fo

r th

e ye

ar

2010

Elim

inat

ed

575,

618

13,0

24

588,

642

2011

Elim

inat

ed

544,

891

13,6

39

558,

530

Fina

nce

cost

s ca

pita

lised

Fina

nce

cost

s ca

pita

lised

dur

ing

2010

Rate

s of

inte

rest

cap

italis

ed d

urin

g 20

10

(M

LR-1

.50

% p

er a

nnum

)

Fina

nce

cost

s ca

pita

lised

dur

ing

2011

Rate

s of

inte

rest

cap

italis

ed d

urin

g 20

11

(M

LR-1

.50

% p

er a

nnum

)

32 32

- -

- -

- -

- -

- -

4,26

4

3,41

3

4,26

4

3,41

3

The

gros

s am

ount

of t

he G

roup

’s fu

lly d

epre

ciat

ed p

lant

and

equ

ipm

ent t

hat w

as s

till i

n us

e as

at 3

1 D

ecem

ber 2

011

amou

nted

to B

aht 1

,106

milli

on (

2010

: Bah

t 924

.7 m

illion

).


(Uni

t: in

thou

sand

Bah

t)

Sepa

rate

fina

ncia

l st

atem

ents

Not

eLa

ndBu

ildin

g an

d im

prov

emen

ts

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Cos

t

At 1

Jan

uary

201

0

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,23

7,56

3 - - -

(3,0

13)

5,68

3,18

3

36,0

67

(904

)

63,7

12

(6,2

34)

953,

878

22,3

18

(287

)

7,03

0

(16,

841)

15,2

49

1,45

0 - -

(1,2

46)

111,

648

2,72

0 -

35

-

63,7

12

80,8

09

(5,2

15)

(70,

804) -

8,06

5,23

3

143,

364

(6,4

06)

(27)

(27,

334)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,23

4,55

0 - - - -

5,77

5,82

4

7,69

5 -

675

(1,0

47,2

25)

966,

098

18,3

54

-

646

(22,

543)

15,4

53

7,50

7 - -

(3,9

13)

114,

403

660 - -

(668

)

68,5

02

414,

261

(3,1

53)

(1,3

21) -

8,17

4,83

0

448,

477

(3,1

53) -

(1,0

74,3

49)

At 3

1 D

ecem

ber

2011

1,23

4,55

04,

736,

969

962,

555

19,0

4711

4,39

547

8,28

97,

545,

805

Dep

reci

atio

n

At 1

Jan

uary

201

0

Dep

reci

atio

n ch

arge

for

the

year

Adju

stm

ents

Dis

posa

ls

- - - -

1,15

3,24

6

208,

943

(12)

(5,0

64)

444,

701

136,

320 -

(14,

928)

7,66

9

2,29

9 -

(1,2

46)

- - - -

- - - -

1,60

5,61

6

347,

562

(12)

(21,

238)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Dep

reci

atio

n ch

arge

for

the

yea

r

Dis

posa

ls

- - -

1,35

7,11

3

167,

220

(380

,157

)

566,

093

134,

296

(18,

664)

8,72

2

3,50

0

(3,9

07)

- - -

- - -

1,93

1,92

8

305,

016

(402

,728

)

At 3

1 D

ecem

ber

2011

-1,

144,

176

681,

725

8,31

5-

-1,

834,

216



(Uni

t: in

thou

sand

Bah

t)

Sepa

rate

fina

ncia

l st

atem

ents

Not

eLa

ndBu

ildin

g an

d im

prov

emen

ts

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Cos

t

At 1

Jan

uary

201

0

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,23

7,56

3 - - -

(3,0

13)

5,68

3,18

3

36,0

67

(904

)

63,7

12

(6,2

34)

953,

878

22,3

18

(287

)

7,03

0

(16,

841)

15,2

49

1,45

0 - -

(1,2

46)

111,

648

2,72

0 -

35

-

63,7

12

80,8

09

(5,2

15)

(70,

804) -

8,06

5,23

3

143,

364

(6,4

06)

(27)

(27,

334)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Addi

tions

Adju

stm

ents

Tran

sfer

s

Dis

posa

ls

1,23

4,55

0 - - - -

5,77

5,82

4

7,69

5 -

675

(1,0

47,2

25)

966,

098

18,3

54

-

646

(22,

543)

15,4

53

7,50

7 - -

(3,9

13)

114,

403

660 - -

(668

)

68,5

02

414,

261

(3,1

53)

(1,3

21) -

8,17

4,83

0

448,

477

(3,1

53) -

(1,0

74,3

49)

At 3

1 D

ecem

ber

2011

1,23

4,55

04,

736,

969

962,

555

19,0

4711

4,39

547

8,28

97,

545,

805

Dep

reci

atio

n

At 1

Jan

uary

201

0

Dep

reci

atio

n ch

arge

for

the

year

Adju

stm

ents

Dis

posa

ls

- - - -

1,15

3,24

6

208,

943

(12)

(5,0

64)

444,

701

136,

320 -

(14,

928)

7,66

9

2,29

9 -

(1,2

46)

- - - -

- - - -

1,60

5,61

6

347,

562

(12)

(21,

238)

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Dep

reci

atio

n ch

arge

for

the

yea

r

Dis

posa

ls

- - -

1,35

7,11

3

167,

220

(380

,157

)

566,

093

134,

296

(18,

664)

8,72

2

3,50

0

(3,9

07)

- - -

- - -

1,93

1,92

8

305,

016

(402

,728

)

At 3

1 D

ecem

ber

2011

-1,

144,

176

681,

725

8,31

5-

-1,

834,

216

(Uni

t: in

thou

sand

Bah

t)

Sepa

rate

fina

ncia

l st

atem

ents

Land

Build

ing

and

impr

ovem

ents

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Net

boo

k va

lue

At 1

Jan

uary

201

0

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,23

7,56

3 -

4,52

9,93

7 -

509,

127 50

7,58

0 -

111,

648 -

63,7

12

-

6,45

9,56

7 50

1,23

7,56

34,

529,

937

509,

177

7,58

011

1,64

863

,712

6,45

9,61

7

At 3

1 D

ecem

ber

2010

and

1

Janu

ary

2011

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,23

4,55

0 -

4,41

8,71

1 -

400,

005 -

5,47

5

1,25

6

114,

403 -

68,5

02

-

6,24

1,64

6

1,25

6

1,23

4,55

04,

418,

711

400,

005

6,73

111

4,40

368

,502

6,24

2,90

2

At 3

1 D

ecem

ber

2011

Ow

ned

asse

ts

Asse

ts u

nder

fina

nce

leas

es

1,23

4,55

0 -

3,59

2,79

3 -

280,

830

-

4,45

3

6,27

9

114,

395 -

478,

289 -

5,70

5,31

0

6,27

9

1,23

4,55

03,

592,

793

280,

830

10,7

3211

4,39

547

8,28

95,

711,

589


(Uni

t: in

thou

sand

Bah

t)

Sepa

rate

fina

ncia

l st

atem

ents

Not

eLa

ndBu

ildin

g an

d im

prov

emen

ts

Furn

iture

, fix

ture

s an

d eq

uipm

ent

Vehi

cles

Ope

ratin

g eq

uipm

ent

Asse

ts

unde

r co

nstru

ctio

nTo

tal

Fina

nce

cost

s ca

pita

lised

Fina

nce

cost

s ca

pita

lised

dur

ing

2010

Rate

s of

inte

rest

cap

italis

ed d

urin

g 20

10

(M

LR -

1.5

0 %

per

ann

um)

32-

--

--

1,79

91,

799

Fina

nce

cost

s ca

pita

lised

dur

ing

2011

Rate

s of

inte

rest

cap

italis

ed d

urin

g 20

11

(M

LR -

1.5

0 %

per

ann

um)

32-

--

--

3,41

33,

413

The

gros

s am

ount

of

the

Com

pany

’s f

ully

dep

reci

ated

pla

nt a

nd e

quip

men

t th

at w

as s

till i

n us

e as

at

31 D

ecem

ber

2011

am

ount

ed t

o Ba

ht

431

milli

on (

2010

: Bah

t 411

.7 m

illion

).






2011 2010 2011 2010

Land cost

Development expense

95,382

8,855

95,382

8,825

-

-

-

-

Total 104,237 104,207 - -



Leasehold rights for land

Leasehold rights for buildings

Total

Cost

At 1 January 2010

Additions

Disposals

Adjustment

1,021,781

150,000

-

5,237

1,210,828

3,279

(768)

(1,483)

2,232,609

153,279

(768)

3,754

At 31 December 2010 and 1 January 2011

Additions

Disposals

1,177,018

-

(191,540)

1,211,856

700

-

2,388,874

700

(191,540)

At 31 December 2011 985,478 1,212,556 2,198,034

Amortisation

At 1 January 2010

Amortisation for the year

Disposal

Adjustment

301,833

26,875

-

1,998

212,858

47,884

(768)

-

514,691

74,759

(768)

1,998



Disposal

330,706

19,887

(69,671)

259,974

48,285

-

590,680

68,172

(69,671)

At 31 December 2011 280,922 308,259 589,181

14. Land held for development

15. Leasehold rights for land and buildings






Total

Cost

At 1 January 2010

Additions

845,645

150,000

278,481

-

1,124,126

150,000


Disposal

995,645

(191,540)

278,481

-

1,274,126

(191,540)

31 December 2011 804,105 278,481 1,082,586





Total

Net book value

At 1 January 2010

Eliminated

719,948 997,970 1,717,918

(4,992)

1,712,926


Eliminated

846,312 951,882 1,798,194

(4,542)

1,793,652

At 31 December 2011

Eliminated

704,556 904,297 1,608,853

(4,091)

1,604,762







Total

Amortisation

At 1 January 2010


210,689

22,776

56,299

20,366

266,988

43,142



Disposal

233,465

15,612

(69,671)

76,665

20,366

-

310,130

35,978

(69,671)

31 December 2011 179,406 97,031 276,437

Net book value

At 1 January 2010


At 31 December 2011

634,956

762,180

624,699

222,182

201,816

181,450

857,138

963,996

806,149


Consolidated


Separate


2011 2010 2011 2010


Less Capitalised amortisation

Eliminated

68,172

-

(450)

74,759

(381)

(450)

35,978

-

-

43,142

-

-

Amortisation included in statements of income 67,722 73,928 35,978 43,142

16. Sale of Ploenchit Center to property fund

On 1 April 2011, the Company sold and transferred Ploenchit Center Building including fixtures and

equipments and leasehold right for land where the building is located with remaining lease of approximately

13 years 10 months to Prime Office Leasehold Property Fund at the price of Baht 1,423.1 million. Costs of

leasehold right for land, building, equipment, net other assets and selling expenses amounting to Baht 758.8

million. The net profit is included in the statement of comprehensive income of Baht 664.3 million.



Computer software



2011 2010 2011 2010

Cost

At 1 January

Additions

Transfers

Disposals

Adjustments

150,775

3,731

1,733

(8,946)

-

143,189

5,115

3,322

(44)

(807)

102,680

2,389

-

(8,946)

-

99,233

3,556

25

(44)

(90)

At 31 December 147,293 150,775 96,123 102,680

Amortisation

At 1 January

Amortisation charge for the year

Disposals

89,941

19,259

(8,390)

69,049

20,936

(44)

62,935

11,617

(8,390)

48,947

14,032

(44)

At 31 December 100,810 89,941 66,162 62,935

Net book value

At 1 January

At 31 December

60,834

46,483

74,140

60,834

39,745

29,961

50,286

39,745

17. Intangible assets




2011 2010 2011 2010

Advance payment

Withholding tax deducted at source

59,194

34,866

45,647

29,542

-

33,903

-

28,656

Total 94,060 75,189 33,903 28,656

18. Other non-current assets




Note



2011 2010 2011 2010

Current

Short-term loans from financial institutions

secured

Current portion of long-term loans from

financial institutions secured

Current portion of hire purchase payable

76,100

695,250

1,718

195,700

573,750

819

76,100

515,250

1,718

195,700

403,750

819

773,068 770,269 593,068 600,269

Non-currentLong-term loans from financial

institutions secured

Long-term loans from related parties

unsecured

Hire purchase payable

5

6,727,667

-

3,458

7,829,517

-

621

4,357,900

45,438

3,458

5,314,750

38,861

621

6,731,125 7,830,138 4,406,796 5,354,232

Total 7,504,193 8,600,407 4,999,864 5,954,501

19. Interest - Bearing liabilities

The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities and hire purchase payable, as at 31 December were as follows:




2011 2010 2011 2010

Within one year

After one year but within five years

After five years

771,350

4,323,000

2,404,667

769,450

4,192,250

3,637,267

591,350

3,255,938

1,147,400

599,450

3,151,111

2,202,500

Total 7,499,017 8,598,967 4,994,688 5,953,061


Under the loan agreements, the Group has to comply with certain covenants and restrictions e.g. the percentage of shareholding of the major shareholders, changes in directors, guarantees to loans of aval to promissory notes of any persons or any companies, dividend payments, merger or consolidation with any companies, and maintenance of certain financial ratios.

During the year 2010, the Company and certain subsidiaries were approved by various financial institutions to extend the due date of principal loan repayment which fall due in 2010 to commence in 2011. In addition, the Company and certain subsidiaries were approved by those financial institutions to extend the principal loan repayment period for another 1 - 6 years.

Secured interest-bearing liabilities as at 31 December were secured on the following assets:

As at 31 December 2011 the Group and the Company had unutilised credit facilities of totalling Baht

1,011.3 million and Baht 900 million, respectively (2010: Baht 441.3 million and Baht 250 million, respectively).




2011 2010 2011 2010

Property, plant and equipment - net

Leasehold rights for land - net

7,886,399

686,942

8,611,172

677,546

4,891,501

624,698

5,541,237

612,180

Total 8,573,341 9,288,718 5,516,199 6,153,417

20. Trade accounts payable

Trade accounts payable of the Group as at 31 December 2011 and 2010 were denominated entirely in Thai Baht.




Note 2011 2010 2011 2010

Related parties

Other parties

5 -

175,335

-

211,897

959

80,771

287

89,796

Total 175,335 211,897 81,730 90,083






2011 2010 2011 2010

Management, royalty, marketing

and other fees payable - hotel business

Retention

Advances from customers

Value added tax payable

Accrued expenses

Income tax payable

Deposits received - hotel business

Others

19,098

58,619

18,973

11,547

124,350

42,506

87,330

53,245

25,358

65,957

23,709

14,852

100,542

9,468

56,656

50,518

9,230

15,350

4,477

5,565

70,228

-

36,374

29,269

10,099

13,457

6,775

8,160

58,569

-

24,232

30,083

Total 415,668 347,060 170,493 151,375

21. Other current liabilities




2011 2010 2011 2010

Leasehold rights - building,

service and equipment - other parties

Less accumulated amortisation

28,000

(1,518)

56,720

(41,399)

28,000

(1,518)

56,720

(41,399)

Net book value 26,482 15,321 26,482 15,321

Amortisation included in statements of income

for the year 1,518 2,814 1,518 2,814

22. Deferred income



Consolidated financial statements Separate financial statements

31 December 2011 31 December 2010 31 December 2011 31 December 2010


obligations for:

Long-term employee benefits 43,272 - 17,543 -

43,272 - 17,543 -


For the years ended 31 DecemberConsolidated financial statements Separate financial statements

2011 2010 2011 2010

Statement of comprehensive income charge:

Long-term employee benefits

6,754 - 3,404 -

6,754 - 3,404 -

The Group adopted TAS 19 - Employee Benefits with effect from 1 January 2011; the effect on the financial statements is discussed in note 3 (d).

The Group recorded the entire amount of the transitional obligation as at 1 January 2011, totaling Baht 39 million for the Group and Baht 16 million for the Company, as an adjustment to retained earnings as at 1 January 2011.

Long-term employee benefits

The Group operate defined benefit plans based on the requirement of Thai Labour Protection Act B.E. 2541 (1998) to provide retirement benefits to employees based on pensionable remuneration and length of service.

Movement in the present value of the defined benefit obligations: (Unit: in thousand Baht)


2011 2010 2011 2010

Defined benefit obligations at 1 January

Benefits paid

Current service costs and interest

Transferred to subsidiary

38,774

(2,256)

6,754

-

-

-

-

-

16,279

(1,832)

3,404

(308)

-

-

-

-

Employee benefit obligations at 31 December 43,272 - 17,543 -

23. Employee benef it obligations





2011 2010 2011 2010

Cost of hotel operations and cost of rental

of units in buildings and service

Selling expenses


(3,044)

(410)

(3,300)

-

-

-

(1,508)

(73)

(1,823)

-

-

-

Total (6,754) - (3,404) -

The expense is recognised in the following line items in the statement of comprehensive income:

(Unit: %)

Consolidated/Separate financial statements

31 December 2011

Discount rate

Future salary increases

4.7

3.5 – 5.0

Principal actuarial assumptions at the reporting date:

Assumptions regarding future mortality are based on published statistics and mortality tables.

(Unit: thousand shares / in thousand Baht)

Par value per share (in Baht)

2011 2010

Number Amount Number Amount

AuthorisedAt 1 January

ordinary shares

increase in shares capital

1

1

2,244,779

260,221

2,244,779

260,221

2,244,779

-

2,244,779

-

At 31 December

ordinary shares 1 2,505,000 2,505,000 2,244,779 2,244,779

Issued and paid-up

At 1 January

ordinary shares 1 2,244,779 2,244,779 2,244,779 2,244,779

At 31 December

ordinary shares 1 2,244,779 2,244,779 2,244,779 2,244,779

24. Share capital


At the annual general meeting of the shareholders of the Company held on 26 April 2011, the shareholders approved the following matters;

(a) The issuance of new warrants to existing shareholders not exceeding 224,477,900 units and the issuance of ordinary shares to reserve for the conversion of the warrants.

(b) The issuance and offering of 35,743,099 ordinary shares to employees of the Group.

(c) To increase the authorised share capital by issuing ordinary shares of not exceeding 260,220,999 shares at a par value of Baht 1 each to reserve for the conversion of warrants and for the rights to purchase ordinary shares, in the Company by the employees of the Group.

(d) Dividend omission for the year 2010 as a result of loss from operation for the year 2010 of the Group.

Increase in authorised shares capital

The Company registered increased authorised share capital of Baht 260,220,999 with the Ministry of Commerce on 6 May 2011.

Employee Stock Option Plan (ESOP)

During the year 2011, the Company issued stock option plan of 32,093,099 share options for the Group’s employees. The period of the plan shall not exceed 5 years from grant date on 10 June 2011. The offering shall be completed within 30 December 2015.

The Company has recorded the approximate fair value of the rights granted through the plan based on the binomial model. The fair value was separately calculated into 4 vesting periods as follows:

No. Exercise period Number of exercised share Exercise price

1

2

3

4

1 January 2012 - 30 December 2015




10% of total allocated share




2.90

3.00

3.10

3.20

Based on the assumptions, the share price of Baht 2.44 at grant date, volatility rate of 24.7%, 5-year term of plan and risk free interest rate of 3.75%, the average fair value of the stock options among the 4 periods was from Baht 0.42 to Baht 0.51 per unit.

The Company recorded the fair value of Baht 4.92 million over the period that the employees become entitled to the options in the statements of comprehensive income for the year ended 31 December 2011 and in equity as at 31 December 2011.



25. Additional paid-in capital and reserve

Share premium

Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription

monies received in excess of the par value of the shares issued to a reserve account (“share premium”).

Share premium is not available for dividend distribution.

Reserves comprise:

Appropriations of profit and/or retained earnings

Legal reserve

Section 116 of the Public Companies Act B.E. 2535 Section 116 requires that a public company shall

allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve

account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised

capital. The legal reserve is not available for dividend distribution.

Other components of equity

Currency translation differences Fair value changes in available-for-sale investments

The fair value changes in available-for-sale investments account within equity comprises the cumulative

net change in the fair value of available-for-sale investments until the investments are derecognised or

impaired.

26. Segment reporting

Segment information is presented in respect of the Group’s business and geographic segments. The

primary format, business segments, is based on the Group’s management and internal reporting structure.

Inter-segment pricing is determined on mutually agreed terms.

Warrant

During the year 2011, the Company issued warrants to existing shareholders, with details as follows:

Number of warrants 224,477,528 units Conversion ratio The existing shareholders at the ratio of 10 ordinary shares per 1 unit of warrant Exercise price Baht 2.80 Term of warrant 2 years and 7 months (18 May 2011 - 17 December 2013)


Segment results, assets and liabilities include items directly attributable to a segment as well as those

that can be allocated on a reasonable basis. Unallocated items mainly comprise interest or dividend-earning

assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Business segments

The Group comprises the following main business segments:

Segment 1 Building rental business

Segment 2 Hotel business

Geographic segments

Management considers that the Group operates in a single geographical area, namely in Thailand, and

has, therefore, only one major geographical segment.

Business segments results in the consolidated financial statements for the years ended 31 December

2011 and 2010 were as follows:

(Unit: in million Baht)

Building rental business

Hotelbusiness Eliminations Total

2011 2010 2011 2010 2011 2010 2011 2010

Revenues from external

Inter - segment revenues

219

21

391

20

3,536

-

2,930

-

-

(21)

-

(20)

3,755

-

3,321

-

Total revenues 240 411 3,536 2,930 (21) (20) 3,755 3,321

Segment profit

Unallocated income and expenses:

Other income


Selling expenses


Finance costs

Income tax

Net profit attribute to

non-controlling interests

91 138 280 41 (13) (13) 358

732

(6)

(3)

(91)

(407)

(53)

(39)

166

43

(7)

(1)

(80)

(361)

(20)

(15)

Profit (loss) for the year 491 (275)





Hotelbusiness

Unallocated assets

Eliminations Total

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

Inventories Property, plant and equipment Leasehold rights for land and buildings Land held for development Other assets

-

21

181

-

712

326

53

9,103

1,494

55

9,070

1,547

-

68

-

18

55

-

-

302

(71)

-

315

(79)

53

9,494

1,604104983

73

10,152

1,794104826

Total assets 12,238 12,949

Business segment financial position in the consolidated financial statements as at 31 December 2011 and 2010 were as follows:



Hotelbusiness

Unallocated assets

Eliminations Total

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

Interest-bearing borrowings Account payable for land leasehold rights Other liabilities

-

-

475

180

8,631

180

8,976

180

307

-

268

-

(1,439)

-

(1,120)

-

7,499

180789

8,599

360717

Total liabilities 8,468 9,676




2011 2010 2011 2010

Income from property tax Gain from sale of fixed assets Others

2,789549

55,271

7,834286

29,993

2,708253

51,800

7,704201

27,905

Total 58,609 38,113 54,761 35,810

27. Other income





2011 2010 2011 2010

Employee benefit expenses Management and other fee Repair and maintenance expenses Others

306,825173,061

70,838260,082

269,640168,299

39,358224,785

194,69999,61527,83193,755

183,82995,20121,32874,954

Total 810,806 702,082 415,900 375,312




2011 2010 2011 2010

ManagementSalaries, wages and other benefits Employee stock option plan

38,2222,584

35,154-

36,6472,584

33,354-

40,806 35,154 39,231 33,354

Other employeesSalaries, wages and other benefits Employee stock option plan

926,1902,337

779,388-

444,3112,337

387,693-

928,527 779,388 446,648 387,693

Total 969,333 814,542 485,879 421,047

29. Administrative expenses

30. Employee benef it expenses

28. Selling expenses (Unit: in thousand Baht)



2011 2010 2011 2010

Marketing expenses Employee benefit expenses

164,60586,138

155,61158,471

112,40631,022

101,79816,643

Total 250,743 214,082 143,428 118,441






2011 2010 2011 2010

Salaries and wages and other employee benefits Costs of food and beverage Rental expenses

969,333556,040

44,150

814,542462,068

47,037

485,879257,434

20,143

421,047231,104

31,326


Note



2011 2010 2011 2010

Interest expense: Related parties Financial institutions Amortisation of transaction costs capitalised

5 -410,095

-

-363,477

1,549

3,134267,765

-

1,874245,080

31

410,095 365,026 270,899 246,985

Less: amounts included in the cost of qualifying assets: - capitalised as cost of assets under construction 13 (3,413) (4,264) (3,413) (1,800)

Net 406,682 360,762 267,486 245,185

32. Finance costs

Defined contribution plans

The defined contribution plans comprise provident funds established by the Group for its employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at rates ranging from 3 % to 10 % of their basic salaries and by the Group at rates ranging from 3 % to 10 % of the employees’ basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities

and are managed by a licensed Fund Managers.

31. Expenses by nature

The financial statement includes an analysis of expenses by function. Expenses by nature disclosed in

accordance with the requirements of various TFRS were as follow:


(Unit: in thousand Baht / thousand shares)



2011 2010 2011 2010

Profit (loss) attributable to ordinary

shareholders of the Company (basic) 491,325 (275,017) 708,757 15,342

Weighted average number of ordinary shares

outstanding (basic) 2,244,779 2,244,779 2,244,779 2,244,779

Earnings (loss) per share (basic) (in Baht) 0.22 (0.12) 0.32 0.01

33. Income tax expense

Income tax reduction - current

Royal Decree No. 387 B.E. 2544 dated 5 September 2001 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the five consecutive accounting periods beginning on or after enactment. Listed companies that received income tax reduction under this Royal Decree are also eligible to continue the period of tax reduction under Royal Decree No. 475 but not beyond the 2010 accounting period ending on or after 31 December 2010.

The current tax expense in the consolidated and separate statements of comprehensive income is not equal the amount determined by applying the Thai corporation tax rate to the accounting profit for the year principally because:

(a) unutilised tax losses brought forward from previous years have been utilised during the year to set-off against the current year’s tax charge.

(b) the different treatment for accounting and taxation purposes of certain items of income and expenses.

(c) losses suffered by certain subsidiaries cannot be set-off against the profits of other subsidiaries for tax purposes.

34. Earnings (loss) per share

Basic earnings (loss) per share

The calculations of basic earnings (loss) per share for the years ended 31 December 2011 and 2010 were based on the profit (loss) for the year attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding during the years as follows:



35. Dividends

At the annual general meeting of the shareholders of a subsidiary held on 5 April 2010, the shareholders approved the appropriation of dividends of Baht 0.30 per share, amounting to Baht 23.9 million. The dividend was paid to shareholders on 4 May 2010

(Unit: in thousand Baht / thousand shares)



2011 2010 2011 2010

Profit attributable to ordinary

shareholders of the Company (basic)

Effect of warrant

Effect of ESOP

491,325

-

-

-

-

-

708,757

-

-

-

-

-

Profit attributable to ordinary shareholders of

the Company (diluted) 491,325 - 708,757 -

Weighted average number of ordinary

shares outstanding (basic)

Effect of warrant

Effect of ESOP

2,244,779

-

-

-

-

-

2,244,779

-

-

-

-

-

Weighted average number of ordinary

shares outstanding (diluted) 2,244,779 - 2,244,779 -

Loss per share (diluted) (in Baht) 0.22 - 0.32 -

Diluted earnings per share

The calculations of diluted earnings per share for the year ended 31 December 2011 were based on the profit for the year attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding during the periods after adjusting for the effects of all dilutive potential ordinary shares as follows:




Effective interestrate

Within1 year

After 1 year but within 5 years

After5 years

Total

2011Loans receivable - related parties 5.48 - 1,393,545 - 1,393,545

2010Loans receivable - related parties 4.53 - 1,080,774 - 1,080,774

36. Financial instruments

Financial risk management policies

The Group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group does not hold or issue derivative financial instruments for speculative or trading purposes.

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding non-controlling interests and also monitors the level of dividends to ordinary shareholders.

Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows because loan interest rates are mainly floating or fixed. The Group is primarily exposed to interest rate risk from its borrowings (Note 19). The Group mitigates this risk by ensuring that the majority of its borrowings are close to the market rate.

The effective interest rates of loans receivable as at 31 December and the periods in which the loans receivable mature or re-price were as follows:





Effective interest rate

Within1 year


After5 years

Total

2011Loans payable - financial institutions

5, MLR-1.50, MLR- 2.00, 6-month fixed deposit rate + 2.00 771,350 5,501,500 1,226,167 7,499,017

2010Loans payable - financial institutions

5, MLR-1.50, MLR- 2.00, 6-month fixed deposit rate + 2.00 769,450 4,192,250 3,637,267 8,598,967



Effective interest rate

Within1 year


After5 years

Total

2011Loans payable - related party Loans payable - financial institutions

5.48 5, MLR-1.50, MLR- 2.00, 6-month fixed deposit rate + 2.00

-

591,350

45,438

4,116,500

-

241,400

45,438

4,949,250

Total 591,350 4,161,938 241,400 4,994,688

2010Loans payable - related party Loans payable - financial institutions

4.53 5, MLR-1.50, MLR- 2.00, 6-month fixed deposit rate + 2.00

-

599,450

38,861

3,112,250

-

2,202,500

38,861

5,914,200

Total 599,450 3,151,111 2,202,500 5,953,061

The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature or re-price were as follows:


During the year 2011, the Company entered into interest rate swap contracts with a local financial institution for long-term loans in Baht with principal amounts of totaling Baht 2,512 million, which will swap interest at float interest rates to fixed interest rates as stipulated in the contracts. The terms of each contract are approximately 4 years, expiring on 31 December 2014.

Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on an interest rate swap contract is recognised as a component of finance costs over the period of the contract.

The fair values of interest rate swap contracts as at 31 December 2011 and 2010 are as follows:

Foreign currency risk

The Group operates mainly in Baht currency. Accordingly, the Company does not have material foreign currency risk.

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group as and when they fall due.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. However, due to the large number of parties comprising the Group’s customer base, Management does not anticipate material losses from its debt collection.

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.

Determination of fair values

For financial assets and liabilities which have short-term maturity and long-term loans which carrying interest approximate to the market rate, their carrying amounts in the balance sheet approximate their fair value. The Company and its subsidiaries do not consider the fair value of financial assets and liabilities which have fixed interest rate over 1 year which is not significant when compare to the total loan amount.


Consolidated and Separate financial statements

Fair values

31 December 2011 31 December 2010

Interest rate swap contracts 15,656 16,479



A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

37. Changes in estimates

Starting from 1 January 2010, the Company and certain subsidiaries have changed estimated useful lives of their building and building improvements from 30 years to 40 years. The effect of the change on the financial statements of the Group and the Company for the year ended 2010 was to decrease loss for the period by Baht 20.09 million. (Separate financial statements: increase profit Baht 6.71 million) respectively, and loss per share decreased by Baht 0.008 per share (Separate financial statements: earnings per share

increased by Baht 0.002 per share).

38. Commitments with non-related parties(Unit: in million Baht)



2011 2010 2011 2010

Capital commitmentsContracted but not provided 603.1 305.1 541.8 248.2

Operating lease commitmentsWithin one year After one year but within five years After five years

16.312.9

0.3

33.82.8

-

7.94.4

-

13.20.9

-

Total 29.5 36.6 12.3 14.1

Long-term lease commitmentsWithin one year After one year but within five years After five years

32.6155.8

1,853.8

46.5213.9

2,669.5

12.974.1

1,567.0

27.3135.5

1,852.9

Total 2,042.2 2,929.9 1,654.0 2,015.7

Other commitmentsGuarantee for bank credit facilities Bank guarantees

75023.2

75030.1

75014

75021.5

Total 773.2 780.1 764.0 771.5


Long-term agreements

The Company and its subsidiaries have entered into several long-term lease agreements and several service agreements with third parties, local companies, overseas companies, and Government organizations as follows:

Long-term lease agreements

Erawan Rajdamri Company Limited entered into a building lease agreement with a Government organisation covering a term of thirty years, commencing 1 July 1987, whereby the subsidiary has to pay monthly rental at the rate for each year as specified in the agreement. However, on 9 January 2006 the subsidiary entered into the Building Renovation and Land and Renovated Building Lease Agreement. Under the terms of this agreement, the subsidiary is to pay remuneration of Baht 70.0 million, which had already been paid to the lessor, and monthly rental at the rate stipulated for each year, for a term of thirty years commencing 1 January 2008.

Erawan Hotel Public Company Limited has an agreement with a related company to lease land for a term of thirty years up to the year 2021, renewable for another twenty years. The subsidiary is to pay land rental charges of Baht 14.1 million per annum (2010: 10.9 million per annum), and the land rental charge may be adjusted every ten years. Upon the expiration of the agreement, the ownership of buildings and building improvements on the leased land, including equipment, furniture and tools necessary for hotel operations, will be transferred to the lessor.

Erawan Ploenchit Company Limited entered into two lease agreements for the leasehold rights to land on which its hotel building and office building are situated from the lessor. Ownership of all structures constructed on the leased land, including that of equipment, furniture and tools which are vital to the project’s operation, will be transferred to the lessor upon the termination of the agreements. The subsidiary is to pay land rental charges of Baht 24.3 million (for the year 2005 - 2014) per annum and the land rental charge may be adjusted every ten years. The term of the leases is a period of 30 years up to the year 2025. Under the terms of the lease agreements, the subsidiary shall assume obligation to pay the following leasehold rights and deposits for rental.

1. Leasehold rights amounting to Baht 360.0 million. The subsidiary will pay this amount within the 30th

year of the lease and is recorded as part of “Accounts payable for land leasehold rights” in the balance sheets.

2. Deposits for rental amounting to Baht 180.0 million. The subsidiary has made the full payment of the deposits, which will be refunded in the 30th year and are presented as part of “Deposits for lease of land, building and equipment” in the balance sheets.

As at 24 December 2002, Erawan Ploenchit Company Limited entered into an agreement to lease part of the land on which the hotel building is located for extend the period of agreement which allows the lessee to extend the term of the lease upon expiration of the agreement. The subsidiary was granted an extension of the term of the lease by 20 years as from 24 January 2025 to 23 January 2045 and is to pay rental of Baht 216.1 million, which had already been paid to the lessor.



In addition to the above mentioned rental, the subsidiary also has a commitment to make the following rental payments:

Rental from 2025 to 2034 at the greater of Baht 44.7 million per annum or an amount determined based on an average of the consumer price index of Thailand.

Rental from 2035 to 2045 at the greater of Baht 89.4 million per annum or an amount determined based on an average of the consumer price index of Thailand.

On 1 January 2008, the subsidiary has transferred all commitments according to these agreements to the Company.

On 1 April 2002, Erawan Ploenchit Company Limited entered into a land lease agreement with third party for periods of 22 years and 10 months up to the year 2025. Under the agreement, the subsidiary agrees to pay rental totaling Baht 32.8 million, in three installments. The subsidiary had already paid the first and second installments of Baht 23.2 million and the remaining Baht 9.6 million will be repaid in 2025. In addition, the subsidiary is to pay a land rental charge of Baht 0.8 million per annum for the first three years, and such charge is then to be adjusted every ten years. Upon the expiration of the agreement, the ownership of all structures erected on the leased land, together with equipment, furniture and tools which are vital to the operation, are to be transferred to the lessor. On 1 January 2008, the subsidiary has transferred all commitments according to this agreement to the Company. On 1 April 2011, the Company sold and transferred Ploenchit Center Building to Prime Office Leasehold Property Fund.

Erawan Chaophraya Company Limited entered into an agreement to lease land from a foundation for the purpose of land development and building construction. Under the terms of the agreement, the subsidiary is to pay rental charges of Baht 100,000 per month commencing 1 November 2004, and the rental charge may be adjusted every 10 years. The term of the lease is a period of 30 years up to the year 2034. The agreement is renewable upon its termination. In this regard, the subsidiary will have to give notice of its intention in writing to the lessor at least 1 year, and not more than 2 years in advance. Ownership of buildings and all structures constructed on the leased land will be transferred to the lessor upon the termination of the agreement.

On 9 June 2006, the Company entered into a land lease agreement with an unrelated party for a period of 30 years up to the year 2038. Under the terms of this agreement, the Company is to pay lease remuneration of Baht 25.0 million. The Company had already paid this remuneration. In addition, the Company is to pay a land rental charge of Baht 1.2 million per annum for the first three years, and such charge is then to be adjusted every 3 years. Upon the expiration of the agreement, the ownership of all constructures erected on the leased land, together with equipment which are unremovable, are to be transferred to the lessor.

On 29 March 2007, the Company entered into a land lease agreement with an unrelated party for a period of 30 years up to the year 2039. Under the terms of this agreement, the Company is to pay lease remuneration of Baht 53.0 million. The Company had already paid this remuneration. In addition, the Company is to pay a land rental charge of Baht 0.4 million per annum for the first three years, and such charge is then to be adjusted every 3 years. Upon the expiration of the agreement, the ownership of all constructures erected

on the leased land, together with equipment which are unremovable, are to be transferred to the lessor.


On 19 March 2010, the Company entered into a land lease agreement with 2 local companies for a period of 30 years up to the year 2043. Under the term of this agreement, the Company is to pay lease remuneration of Baht 150.0 million. The Company had already paid this remuneration. Upon the expiration of the agreement, the ownership of all constructures erected on the leased land, together with equipment which are unremovable, are to be transferred to the lessor.

Hotel management agreements

On 24 February 1988, Erawan Hotel Public Company Limited entered into agreements with various companies in the Hyatt International Corporation Limited Group (HYATT) whereby HYATT will provide necessary hotel construction and management services to the subsidiary. Under the terms of the agreements, the subsidiary is committed to pay a management fee, license fee, and a share of marketing expenses to HYATT, at the rates indicated in the agreements. The term of the management agreement is for twenty years, counting from commencement of hotel operations, to be extended for at least 10 years, dependent upon certain conditions as specified in the agreement.

On 29 October 2010, Erawan Hotel Public Company Limited entered into amendment agreement with Hyatt to amend certain conditions in the agreement. The subsidiary agreed to extend the term of the management agreement for another 9.5 years and extended for at least 10 years, dependent upon certain conditions as specified in the agreement.

On 3 February 1994, Erawan Ploenchit Company Limited entered into an agreement with Marriott Worldwide Corporation Group (“Marriott”) to appoint the Marriott as management of the subsidiary’s hotel.The subsidiary also made agreements with Marriott relating to the hotel operations. Under the terms of the agreements, the subsidiary is committed to pay remuneration to Marriott at the rates, terms and basis specified in the agreements. The hotel management agreement will be terminated on 31 December 2032. On 1 January 2008, the subsidiary transferred all commitments under these agreements to the Company.

On 4 July 2005, Erawan Rajdamri Company Limited and Erawan Samui Company Limited entered into management agreements with Marriott Group (“Marriott”), to appoint the Marriott to manage the subsidiaries’ hotel as a standardised Courtyard by Marriott and Renaissance hotel. Under the terms of the agreements, the subsidiaries are committed to pay remuneration to Marriott in accordance with the rates, terms and basis specified in the agreements. The terms of the hotel management agreements is to be for 30 years, counting from commencement of hotel operations, and is to be extendible for a further period of at least 10 years, dependent upon the fulfillment of certain conditions specified in the agreements.

In December 2005, the Company entered into agreement with Intercontinental Hotels Group to manage hotel under the brand Holiday Inn which located at Pattaya. Under the term of the agreements, the Company is committed to pay remuneration in accordance with the rates, terms and basis specifies in the agreements. The terms of the hotel management agreement is to be for 15 years, counting from commencement of hotel operations, and is to be extendible for a further period of at least 5 years, dependent upon the fulfillment of certain as conditions specified in the agreements.



During June 2006 to March 2008, the Company and Erawan Chaopraya Company Limited entered into agreements with Accor Group to manage 10 hotels of the Company and a subsidiary under the brand ibis which located in Thailand. Under the term of the agreements, the Company and a subsidiary are committed to payremuneration in accordance with the rates, terms and basis specifies in the agreements. The terms of the hotel management agreement is to be for 15 years, counting from commencement of hotel operations, and is to be extendible for a further period of at least 5 years, dependent upon the fulfillment of certain conditions specified in the agreements. On 1 July 2009, the contract was extended from 15 to 20 years.

A subsidiary, Erawan Phuket Company Limited agreed with the group of Six Senses Company in termination of their management services agreements in July 2011 and entered into management services agreements with the group of Starwood that will provide resort management services to the subsidiary under the terms of the agreements. The subsidiary is committed to pay management fees at the rates indicated in the agreements. The agreements will be expired in December 2032 with an option to extend for further period, dependent upon certain as conditions specified in the agreements.

39. Contingent liabilities

Litigations and dispute

a) During the year 2008, a customer, who had rented a rental building, sued the Company for the return of a deposit for the lease of a building, which the Company had deducted against overdue payments for electricity amounting to approximately Baht 1.3 million. On 28 December 2010, the first instance court had dismissed the case. At present, the case is in the process of appeal court. However, the Company expects that there will be no significant impact to the Company as a result of the case.

b) In 2009, a subsidiary submitted a statement of claim to the Alternative Dispute Resolution Office, Arbitration Institute to consider the dispute with a contractor to pay for compensation arising from al leged breach of a construction contract. The contractor submitted a statement of defense and counter claim to the Arbitration Institute as well. The dispute is in the arbitration process and has not been finalised. Consequently, the subsidiary cannot estimate the impact as a result of the dispute.

40. Thai Financial Reporting Standards (TFRS) not yet adopted

The Group has not adopted the following new and revised TFRS that have been issued as of the reporting date but are not yet effective. The new and revised TFRS are expected to become effective for annual financial periods beginning on or after 1 January in the year indicated in the following table.

TFRS Topic Year effective

TAS 12TAS 21 (revised 2009)

Income TaxesThe Effects of Changes in Foreign Exchange Rates

20132013

Management is presently considering the potential impact of adopting and initially applying these new and revised TFRS on the consolidated and separate financial statements.


41. Reclassif ication of accounts

Certain accounts in the 2010 financial statements have been reclassified to conform to the presentation in the 2011 financial statements. These reclassifications have principally been made following changes in accounting policies consequent to the adoption of new or revised TFRS as disclosed in note 3. Other significant reclassifications were as follows:

(Unit: in thousand Baht)2010



Before reclass.

Reclass. After reclass.

Before reclass.

Reclass. After reclass.


Property, plant and equipment

Land held for development




10,255,826

-

95,184

30,703

(348,221)

(104,207)

104,207

(45,647)

44,486

1,161

10,151,619

104,207

49,537

75,189

(347,060)

6,242,902

-

15,883

28,656

(151,375)

-

-

-

-

-

6,242,902

-

15,883

28,656

(151,375)

- -

Statement of comprehensive income


Director remuneration

666,928

35,154

35,154

(35,154)

702,082

-

341,958

33,354

33,354

(33,354)

375,312

-

- -

Corporate Information 141


Corporate InformationThe Erawan Group Public Company Limited

The Erawan Group Public Company Limited Registration No. 0107537001943

Head OfficePloenchit Center,6th Floor 2 Sukhumvit Road, Kwang Klongtoey, Khet Klongtoey, Bangkok 10110 ThailandTelephone: 66 (0) 2257 4588Fax: 66 (0) 2257 4577

Branch 1Erawan Bangkok,494 Ploenchit Road, Kwang Lumpini, Khet Phathumwan, Bangkok 10330 ThailandTelephone: 66 (0) 2250 7777Fax: 66 (0) 2250 7788

Branch 2JW Marriott Hotel Bangkok,4 Sukhumvit Road, Kwang Klongtoey, Khet Klongtoey, Bangkok 10110 ThailandTelephone: 66 (0) 2656 7700Fax: 66 (0) 2656 9831

Branch 3ibis Patong Phuket,10 Chalermphrakiat Road, Patong, Kata, Phuket 83150 ThailandTelephone: 66 (0) 7630 3888Fax: 66 (0) 7630 3889

Branch 4ibis Pattaya,463/79 Pattaya Sai 2 Road, Nongprue, Bang Lamung, Chon Buri 20150 ThailandTelephone: 66 (0) 3841 8188Fax: 66 (0) 3841 8189

Branch 5ibis Samui Bophut197 Rob Koh Road, Bophut, Koh Samui, Surat Thani 84320 ThailandTelephone: 66 (0) 7791 4888Fax: 66 (0) 7791 4889

Branch 6ibis Bangkok Sathorn,29/9 Soi Ngam Duphli, Rama IV Road, Kwang Thung Mahamek, Khet Sathorn, Bangkok 10120 ThailandTelephone: 66 (0) 2610 5188Fax: 66 (0) 2610 5189

Branch 7ibis Bangkok Nana,41 Soi Sukhumvit 4, Sukhumvit Road, Kwang KlongToey, Khet KlongToey, Bangkok 10110 ThailandTelephone: 66 (0) 2667 5888Fax: 66 (0) 2667 5889

Branch 8Holiday Inn Pattaya,463/68 Pattaya Sai 1 Road, Nongprue, Bang Lamung, Chon Buri 20150 ThailandTelephone: 66 (0) 3872 5555Fax: 66 (0) 3872 5556

Branch 9ibis Phuket Kata,88/8 Kata Road, Karon, Muang Phuket Phuket 83100 ThailandTelephone: 66 (0) 7636 3488Fax: 66 (0) 7636 3489

Branch 10ibis Hua-Hin,73/5 Moobaan Nongkae, Hua-HinPrachuap Khirikhan 77110 ThailandTelephone: 66 (0) 3261 0388Fax: 66 (0) 3261 0389

Home Pagewww.TheErawan.com

Corporate Information142

Type of Business Invest and develop hotel properties strategically located to match travelers’ different demand.

Company’s Capital as at 31 December 2011 Registered Capital 2,505,000,000 Baht : 2,505,000,000 ordinary shares at par value 1 Baht/share. Paid-Up Capital 2,244,779,001 Baht : 2,244,779,001 ordinary shares at par value 1 Baht/share. Other References

Registrar of Ordinary Shares Thailand Securities Depository Co., Ltd. No. 62 Rachadapisek Road, Klongtoey, Bangkok 10110 Thailand Telephone: 66 (0) 2359 1200-02 Fax: 66 (0) 2359 1259

Auditor Mr. Charoen Phosamritlert Certificate Public Accountant (Thailand) No. 4068

Ms. Vannaporn Jongperadechanon Certificate Public Accountant (Thailand) No. 4098

Mr. Vichien Thamtrakul Certificate Public Accountant (Thailand) No. 3183

KPMG Phoomchai Audit Ltd. 48th Floor, Empire Tower 195 South Sathorn Road, Bangkok 10120 Thailand Telephone: 66 (0) 2677 2000 Fax: 66 (0) 2677 2222

Corporate Information 143


Head Off ice

The Erawan Group Public Company Limited6th Floor, Ploenchit Center, 2 Sukhumvit Road, Kwang Klongtoey, Khet Klongtoey, Bangkok 10110 ThailandTelephone: 66 (0) 2257 4588Fax: 66 (0) 2257 4577www.TheErawan.com

Hotel Business

Grand Hyatt Erawan Bangkok Hotel494 Ploenchit Road, Pathumwan, Bangkok 10330 ThailandTelephone: 66 (0) 2254 1234Fax: 66 (0) 2254 6267www.bangkok.grand.hyatt.com

JW Marriott Hotel Bangkok4 Sukhumvit Road, Soi 2, Klongtoey, Bangkok 10110 ThailandTelephone: 66 (0) 2656 7700Fax: 66 (0) 2656 7711www.marriott.com/bkkdt

Renaissance Koh Samui Resort and Spa208/1 Moo 4, Maret, Laem Nan Beach, Koh Samui, Suratthani 84310 ThailandTelephone: 66 (0) 7742 9300Fax: 66 (0) 7742 9333www.marroitt.com/usmbr

The Naka Island, a Luxury CollectionResort and Spa, Phuket32 Moo 5, Paklok, Thalang, Phuket 83110 ThailandTelephone: 66 (0) 7637 1400Fax: 66 (0) 7637 1401www.nakaislandphuket.com

Courtyard by Marriott Bangkok155/1 Soi Mahadlekluang 1, Rajdamri Road, Bangkok 10330 ThailandTelephone: 66 (0) 2690 1888Fax: 66 (0) 2690 1899www.courtyard.com/bkkcy

Holiday Inn Pattaya463/68 Pattaya Sai 1 Road, Nongprue, Bang Lamung, Chonburi 20150 ThailandTelephone: 66 (0) 3872 5555Fax: 66 (0) 3872 5556www.holidayinn.com/pattaya

ibis Patong Phuket10 Chalermphrakiat Road, Patong, Katu, Phuket 83150 ThailandTelephone: 66 (0) 7630 3888Fax: 66 (0) 7630 3889www.ibishotel.com

ibis Pattaya463/79 Pattaya Sai 2 Road, Nongprue, Bang Lamung, Chonburi 20150 ThailandTelephone: 66 (0) 3841 8188Fax: 66 (0) 3841 8189www.ibishotel.com

ibis Samui Bophut197 Rob Koh Road, Bophut, Koh Samui, Surat Thani 84320 ThailandTelephone: 66 (0) 7791 4888Fax: 66 (0) 7791 4889www.ibishotel.com

Corporate Information144

ibis Bangkok Sathorn29/9 Soi Ngam Duphli, Rama IV Road, Kwang Thung Mahamek, Khet Sathorn, Bangkok 10120 ThailandTelephone: 66 (0) 2610 5188Fax: 66 (0) 2610 5189www.ibishotel.com

ibis Bangkok Nana41 Sukhumvit Soi 4, Sukhumvit Road, Kwang Kloengteoy, Khet Klongtoey, Bangkok 10110 ThailandTelephone: 66 (0) 2667 5888Fax: 66 (0) 2667 5889www.ibishotel.com

ibis Phuket Kata88/8 Kata Road, Karon, Muang Phuket, Phuket 83100 ThailandTelephone: 66 (0) 7636 3488Fax: 66 (0) 7636 3489www.ibishotel.com

ibis Bangkok Riverside27 Soi Charoennakorn 17, Charoennakorn Road, Banglamphulang, Klongsan, Bangkok 10600 ThailandTelephone: 66 (0) 2805 9888Fax: 66 (0) 2805 9889www.ibishotel.com

ibis Hua-Hin73/15 Moobaan Nongkae, Hua-HinPrachuap Khirikhan 77110 ThailandTelephone: 66 (0) 3261 0388Fax: 66 (0) 3261 0389www.ibishotel.com

Rental Property

Erawan Bangkok494 Ploenchit Road, Pathumwan, Bangkok 10330 ThailandTelephone: 66 (0) 2250 7777Fax: 66 (0) 2250 7788www.erawanbangkok.com

The Erawan Group Public Company Limited6 Floor, Ploenchit Center, 2 Sukhumvit Road, Klongtoey, Bangkok 10110, ThailandTel.: 66 (0) 2257 4588 Fax: 66 (0) 2257 4577Reg. No. 0107537001943

www.TheErawan.com

th