TMB Asset Management co., Ltd. Luxury Real Estate Investment Fund Annual Report 2013

Transcription

1 TMB Asset Management co., Ltd. Luxury Real Estate Investment Fund Annual Report 2013 From July 1, 2012 to June 30, 2013

2 Contents Luxury Real Estate Investment Fund Letter to Unitholders...1 Analysis of...3 Property Details of Luxury Real Estate Investment Fund... 9 Details of additional Investment from July 1 st, 2012 to June 30 th Report on tourism industry in 2012 and the fundûs performance Details of Investment...15 Expenses Collected from the Fund...16 Mutual Fund Supervisor Opinion...17 Audit Report of Certified Public Accountant...18 Connected Persons Report...38 Name list of Property Fund Manager...38 Soft Commission Report...38

3 September 20 th, 2013 To All Unitholders, (çtmbamé) on behalf of the Management Company of the Luxury Real Estate Investment Fund (the çfundé) would like to submit the Fundûs 2013 Annual Report for the financial period commencing from July 1 st, 2012 to June 30 th, 2013 to all unitholders. During the past financial year, there was an important milestone which affected the Fundûs management, i.e., the execution of the Lease Agreement with Sustainable Luxury Hospitality (Thailand) Co., Ltd. (çslhé) which was the bidding winner for a lease of the properties according to the resolution adopted at the unitholderûs meeting no. 2/2012 held on June 22 nd, 2012 after negotiations and conclusion of the Agreement on December 19 th, In 2012, Thai economy recovered from the flooding disaster during late Together with strategic adjustment in several business sectors in the country for entering into ASEAN Economic Community (AEC) in the next two years, this also supports the expansion of Tourism Industry of Thailand. The value for money along with outstanding tourist attractions in Thailand are still the key factors that contribute to the continuous expansion of tourism industry in Thailand. As Thailand is still a popular destination for most of European and American tourists, and the number of Asian tourists and Russian tourists is growing continuously, these benefit the hotel business of the Fundûs new lessee. As a result, apart from the fixed rental income specified in the project, the Fund additionally received variable rental income from the lessee in this year. For the financial year 2012 (commencing from July 1 st, 2012 to June 30 th, 2013), is the special case where the Management Company also reduced the Fundûs expenses burden by waiving the management fees as informed the unit-holders.

4 As of June 30 th, 2013, the Fundûs net asset value was Baht 2,009,787, or net asset value per unit of Baht For the operating results of the 5 th financial year commencing from July 1 st, 2012 to June 30 th, 2013, the Fundûs total revenue was Baht 75,669, and its total expenses were Baht 11,330, The net income from its investment was Baht 64,338, The Fund paid two dividend payments on February 20 th, 2013 and August 30 th, 2013 for a combined dividend of Baht 0.30 per unit, or a total sum of Baht 58,950, which accounted 91.62% of net income from investment. As the Management Company, TMBAM remains resolute in upholding the Fund and the unit-holders best interest. We are grateful of the trust that the unit-holders have placed with the Luxury Real Estate Investment Fund. Fund Management Team 2

5 Analysis Report by, as the Fund Manager of the Luxury Real Estate Investment Fund In 2012, Thai economy recovered from the flooding disaster during late Together with strategic adjustment in several business sectors in the country for entering into ASEAN Economic Community (AEC) in the next two years, this also supports the expansion of Tourism Industry of Thailand. Although there have been unstable situations, especially in 3 provinces of the southern part of Thailand, and a prolonged political instability in Thailand, these do not have a huge impact on the tourism sector in the macro perspective. This can be noted from an increase in the number of tourists in However, since the beginning of 2013, the tourism industry has been affected from both internal factors and external factors. The internal factors are an increase in the minimum wage to Baht 300 and an appreciation in Thai baht in relative to the worldûs major currencies in the first quarter of In addition, the external factors are European economic crisis and fiercer competition in tourism industry from several countries in the same region. Nevertheless, value for money along with outstanding tourist attractions in Thailand are still the key factors that contribute to the continuous expansion of tourism industry in Thailand since late The hotel business has been directly and indirectly affected by an increase in the minimum wage to Baht 300, depending on the level of the hotel. For lower tier hotels, they have been affected obviously from this policy because most of their employeesû wages are based on the minimum wage policy. Therefore, they have to increase the wages in accordance with the government policy, thereby increasing their operating cost while they are unable to make a dramatic price increase in the prices of each room. For mid-end and high-end tier hotels, they have not been affected significantly from this policy since most of their employeesû wages are above of the official minimum wages. On the other hand, the indirect effect is a concern for all level of hotels which is a rise in the price of hotelsû supplies as a result of rising production cost; however, most of the hotels still maintain their policy of holding the prices of each room to be close to the previous yearûs prices in order to preserve their customersû base and forward price that the hotels have already dealt with tourist agents. Therefore, the hotels assume the additional expenses of operation. 3

6 International Tourist Arrivals to Thailand (Estimated) Million P Source: Department of Tourism and Sport, 2013 figured forecasted by Kasikorn Rexearch Center In 2012, the number of tourist arrivals into Thailand amounted to 22.3 million people 1, an increase of 15.98% over The growth registered in 2012 mainly resulted from an expansion of Asian economy which encouraged an upward trend of travelling within the region by Asian tourists; beside, Thailand is one of the main tourist attractions in Asia as well. Furthermore, Chinese government has provided a greater support on tourism between Thailand and China, such as more direct flights from China to Thailand. Then, it is noticeable that there was an increase in the number of Chinese tourist arrivals to Thailand. Although Thailand is still a popular destination for most of European and American tourists, their travelling patterns and time duration have changed as a result of the economic conditions of those countries. However, the growth rate of the number of tourists around 15.98% in 2012 was still less than the 20.72% growth rate in This was resulted from a shrink in the number of tourists in the beginning of 2012 which was a continual consequence from the flooding disaster in late Therefore, some tourists who planned to travel in Thailand during early 2012 changed their plans 2. 1 Source: Ministry of Tourism and Sports 2 Source: Tourism Review 2012, Tourism Authority of Thailand 4

7 Million Tourist Arrivals to Thailand from January 2009 to June Fiscal Year 2010 July - June Fiscal Year 2011 Fiscal Year (Remark: adjusted period July - June July - June 0.00 for analytical purpose) Source : Ministry of tourism and sport Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Nevertheless, a rising trend of travelling in Asia, and supportive activities in Thailand tourism industry from the government, resulted in a rise in the number of tourist arrivals to Thailand in the second half of 2012, which amounted to million people. This was an increase of 9.98% when compared to the figure of million arrivals in the first half of Furthermore, the Thai tourism industry itself continued to improve with million arrivals recorded during the period from January to June 2013, an increase of 20.28% over the same period in Kasikornbank Research Centre has forecasted that Thailand may see 25.4 million tourist arrivals in 2013, an increase of 13.6% over û000 tourists Foreign Occ % Guest arrivals at Phuket Hotel and Accommodation from Q Q ,200 1, Q % Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q % 55.8% 68.1% 85.4% 61.6% 67.9% 71.7% 80.8% 63.7% 77.5% 82.3% 88.4% Source : Ministry of Tourism and Sport, Thai Hotels Association Southern Chapter 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 3 Source: Department of Tourism 5

8 The tourism industry in Phuket expanded satisfactorily in Particularly, the number of Asian tourists (such as Chinese, Korean, and Malaysian tourists) and Russian tourists was growing continuously. Hotel occupancy levels for Phuket hotels in 2012 increased from 63.7% in the 2 nd quarter to 77.5% and 82.3% in the 3 rd quarter and 4 th quarter, respectively. In 2013, hotel occupancy in Phuket increased to 88.4% in the 1 st quarter, a typically peak tourist season. For 2012 as a whole, the number of tourists staying in Phuket hotels amounted to million, up 13.45% from 2.67 million for Average Occupancy Rate Phuket, Phang Nga and Krabi by Quarter from Q to Q % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Phuket Phang Nga Krabi Q % 64.00% 71.83% Phuket Phang Nga Krabi High Season High Season High Season Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q % 55.80% 68.10% 85.40% 61.60% 67.90% 71.70% 80.80% 63.70% 77.50% 82.30% 88.40% 68.30% 18.92% 11.25% 38.31% 83.89% 20.75% 15.17% 58.33% 88.66% 26.00% 20.00% 38.27% 71.97% 18.33% 18.66% 23.08% 45.22% 77.66% 34.25% 24.17% 55.00% 80.33% 34.00% 40.67% 58.67% 86.40% 44.67% Source : Thai Hotel Association Southern Chapter In comparison among the hotel occupancy levels in Phuket, Krabi, and Phang Nga, it is noticeable that the average hotel occupancy rates of Phuket were higher and more stable than those of Krabi and Phang Nga, which are tourist attractions along the Andaman coast. However, in the high season from November to April, the hotels in these three provinces had nearby occupancy rates among themselves. This showed that the demand for accommodations by the tourists in these provinces is still high, especially during the high season. 6

9 Average Occupany rate of hotels and accommodations in Phuket vs Thailand Q to Q % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Phuket Thailand Q Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Source : Ministry of Tourism and Sport, Thai Hotels association Southern Chapter Phuket Thailand Moreover, the business prospects of hotels in Phuket which may be assessed by comparing the average hotel occupancy levels of Phuket with the nationwide average, reveals that Phuketûs average occupancy levels have been still higher than the nationwide average. Yet, the gap between the average hotel occupancy levels of Phuket and the nationwide average was wider; in addition, this trend has continued until In 2011, the Phuketûs average hotel occupancy level was 71.65% while the nationwide figure was 58.21%. It showed the difference of 13.44%. In 2012, the Phuketûs average occupancy level strengthened to 76.08% while the nationwide average rose up to 60.88%. The difference was 15.2%. Therefore, it is noticeable that the hotel occupancy level in Phuket increased more than the nationwide average. It may be concluded that the tourism in Phuket has expanded continuously because of an increasing trend of travelling in Asia, a great support from several governments, and an increase in flight operations, both domestic and international. Therefore, Phuket and other provinces along the Andaman coast can maintain their leader position of tourist attractions and accommodations continually. 7

10 The Fundûs operating results for the period from July 1 st, 2012 to June 30 th, 2013 showed total revenue of Baht 75,669,663.25, comprising rental income of Baht 75,050,084.93, interest income and other income of Baht 619, The Fundûs total expenses were Baht 11,330,634.26, comprising trustee fees of Baht 642,711.55, registrar fees of Baht 2,142,371.86, professional fees of Baht 224,310.00, accrued expenses of Baht 2,199, and other operating expenses of Baht 6,121, The fund had net income from its investment amounting to Baht 64,338, Financial year 2012 (commencing from July 1 st, 2012 to June 30 th, 2013), is the special case where the Management Company also reduced the Fundûs expenses by waiving the management fees as informed the unit-holders at the unit-holdersû meeting no. 1/2012, held on February 15 th, As of June 30 th, 2013, the Fundûs net asset value was Baht 2,009,787, or net asset value per unit of Baht For the operating results of the 5 th financial year commencing from July 1 st, 2012 to June 30 th, 2013, the Fund made two dividend payments on February 20 th, 2013 and August 30 th, 2013 for a combined dividend of Baht 0.30 per unit, or a total sum of Baht 58,950, which accounted 91.62% of net income from investment. (Note: For the 10 th dividend payment corresponding to the operating results of the second half of the 5 th financial year for a period commencing from January 1 st, 2013 to June 30 th, 2013, the Fund already paid a dividend of Baht per unit, or a total sum of Baht 32,383,200 on September 27 th, 2013.) 8

11 Property Details of Luxury Real Estate Investment Fund Luxury Real Estate Investment Fund (LUXF) invested in land, buildings and movable properties including furniture, tools and equipments and facilities of Six Senses Yaonoi. The details on buildings, ownerships rights, investment costs, valuation price can be summarized as follows: Name of Property Six Senses Yaonoi Location 55 Moo 5, Tambon Koh Yao Noi, Amphur Koh Yao, Phang Nha Type of Property Resort Hotel Type of Ownership Freehold with title deeds and Nor Sor 3 Kor 1.1 Building and Area details A. Land area of Six Senses Yaonoi Project including infrastructure i.e. water pipe lines, waste water pipe lines. The ownership rights of subject land and property include title deed and Nor Sor 3 Kor as follows: Title Deed Lot No. Survey Tambon Amphur Province Area No./Nor No. (Rai-Ngan-Sq. Sor 3 Kor No. Wah) Koh Yaonoi Koh Yao Phung Nga Koh Yaonoi Koh Yao Phung Nga III 85 Koh Yaonoi Koh Yao Phung Nga Total B. All buildings and constructions on the subjected land in A. including infrastructure, facilities and engineering systems and all attachments i.e. air conditioners, water treatment system. Buildings and constructions of Six Senses Yaonoi Project are as follows: (1) Villa with private swimming pool 56 units including Pool Villas, Deluxe Pool Villas, Pool Villa Suites, The Retreat, Hill Top Reserve with typical usable areas ranging from 161-1,402 Sq.m., total area 13,060 Sq.m. (2) 10 Staff-house buildings, administration building, office and engineering office buildings, laundry building, total area 4,100 Sq.m. 9

12 (3) Supporting facilities building and common facilities including Restaurant, Spa, Sauna, Gym room, Tennis court, library and entertainments, total area 4,130 Sq.m. All areas include walkway, corridor and swimming pool 1.2 Movable property LUXF purchased and received the transferred of the movable properties for operating the subjected project including furniture, tools and equipments, facilities for accommodations i.e. beds, wardrobes, cabinets, sanitary wares, TV, DVD & stereo system, wine cellars and etc. Also, furniture and facilities for common areas and services for hospitality operation in Six Senses Yaonoi project include ovens, kitchenware, electronic equipments, golf carts and etc. 2. Date and value of investment LUXF invested in land, buildings and constructions, furniture, tool and equipments, facilities equipments and all movable assets of Six Senses Yaonoi on 26 th May 2008 with total investment value of 1,958,000,000 Baht ( One thousand nine hundreds and fifty eight million Baht only) Details Value (Baht) Land and buildings, Transfer expenses 1,812,603, Moveable properties 135,884, VAT on movable properties 9,511, Total investment 1,958,000, Fund Set Up expenses 7,000, Grand total 1,965,000,

13 3. Valuation review The annual asset valuation review by Income Approach method is described as following: Appraisal Firm TAP Valuation Co., Ltd. Type of Assets Location Valuation approach Income Approach Cash-flow projection period 10 Years Date of inspection and valuation 24 February 2013 Open Market Value Land and Building 56 Moo 5 Ban Pa Sai - Ban Tha Khao Road, Koh Yao Noi Sub District, Koh Yao District, Phang Nga Province 1,965,000,000Baht (One thousand Nine hundred and sixty five million Baht)* *Note: The above Open Market Value took into account the existing contracts in generating revenue from the asset by Luxury Real Estate Investment Fund (Lease Contract) as a part of valuation assumption under the announcement of Securities and Exchange Commission No. Nor (Wor) 22/2011 dated 22 July 2010 Re: çvaluation and Valuation Review of Property Fundé Note: The value of the property by The Depreciated Replacement Cost was appraised by appraiser at 1,280,135,750 (One thousand two hundred an eighty million one hundred thirty five thousand seven hundred and fifty Baht) 11

14 Details of additional Investment from 1 st July 2012 to 30 th June 2013 The fund did not invest in any additional property apart from the subjected property within this period. Report on tourism industry in Financial Year 2012 and the funds performance Situation of Tourism Industry for the Financial Year 2012 In 2012, the number of tourist arrivals into Thailand amounted to 22.3 million people 1, an increase of 15.98% over The growth registered in 2012 mainly resulted from an expansion of Asian economy. However, the growth rate of the number of tourists in 2012 was still less than the 20.72% growth rate in This was a continual consequence from the flooding disaster in late Therefore, some tourists who planned to travel in Thailand during early 2012 changed their plans 2. Kasikorn bank Research Centre has forecasted that Thailand may see 25.4 million tourist arrivals in 2013, an increase of 13.6% over The tourism industry in Phuket expanded satisfactorily in 2012 whereby most of the tourists came from Asian markets such as Chinese, Korean, and Malaysian tourists including Russian tourists. For 2012 as a whole, the number of tourists staying in Phuket hotels amounted to million, up 13.45% from 2.67 million for The average hotel occupancy rates of Phuket grew continuously in the past year from 63.7% in the 2 nd quarter of 2012 to 77.5%, 82.3% and 88.4% in the 3 rd quarter, the 4 th quarter of 2012 and the 1 st quarter of 2013, respectively. In addition, the average hotel occupancy rates of Phuket were higher than the nationwide average. In 2011, the Phuketûs average hotel occupancy rate was 71.65%, compared with the nationwide average at the same period of time which was 1 Source: Ministry of Tourism and Sports 2 Source: Tourism Review 2012, Tourism Authority of Thailand 3 Source: Department of Tourism 12

15 58.21%, or it was approximately 13.44% higher. In 2012, the Phuketûs average occupancy level strengthened to 76.08% which was higher than the nationwide average of 60.88%, or approximately 16.80% higher. It may be concluded that the tourism in Phuket has expanded continuously because of an increasing trend of travelling in Asia, a great support from several governments, and an increase in flight operations, both domestic and international. Therefore, Phuket and other provinces along the Andaman coast can maintain their leader position of tourist attractions and accommodations continually. Operating Results of Luxury Real Estate Investment Fund During the past financial year, there was an important milestone which affected the Fundûs management, i.e., the execution of the Lease Agreement with Sustainable Luxury Hospitality (Thailand) Co., Ltd. (çslhé) which was the bidding winner for a lease of the properties according to the resolution adopted at the unit-holdersû meeting no. 2/2012 held on June 22 nd, 2012 after negotiations and conclusion of the Agreement on December 19 th, The progress thereof had been reported by the Fund Manager to the unit-holders from time to time. In the past financial year, SLH as the new lessee paid rental on time. The hotel business also showed signs of improving. Moreover, due to satisfactory results of management by the lessee, the Fundûs income from variable rental received from the new lessee was approximately Baht 5,050, for this financial year. As a result, the total sum of the Fundûs rental income was higher than the fixed rental income specified in the project. The Fundûs operating results for the period from July 1st, 2012 to June 30th, 2013 showed total revenue of Baht 75,669,663.25, comprising rental income of Baht 75,050,084.93, interest income and other income of Baht 619, The Fundûs total expenses were Baht 11,330,634.26, comprising trustee fees of Baht 642,711.55, registrar fees of Baht 2,142,371.86, professional fees of Baht 224,310.00, accrued expenses of Baht 2,199, and other operating expenses of Baht 6,121, The fund had net income from its investment amounting to Baht 64,338,

16 Financial year 2012 (commencing from July 1 st, 2012 to June 30 th, 2013), is the special case where the Management Company also reduced the Fundûs expenses by waiving the management fees as informed the unit-holders at the unit-holdersû meeting no. 1/2012, held on February 15 th, As of June 30 th, 2013, the funds net asset value was Baht 2,009,787, or net asset value per unit of Baht For the operating results of the 5 th financial year commencing from July 1 st, 2012 to June 30 th, 2013, the Fund made two dividend payments on February 20 th, 2013 and August 30 th, 2013 for a combined dividend of Baht 0.30 per unit, or a total sum of Baht 58,950, which accounted 91.62% of net income from investment. (Note: For the 10 th dividend payment corresponding to the operating results of the second half of the 5 th financial year for a period commencing from January 1 st, 2013 to June 30 th, 2013, the Fund already paid a dividend of Baht per unit, or a total sum of Baht 32,383,200 on September 27 th, 2013.) 14

17 Details of Investments Luxury Real Estate Investment Fund As at June 30, 2013 Type of Investment Amount Areas Cost Fair Value % of (Baht) (Baht) NAV Investments in property Land including property and other assets in çsix Senses Yao Noi Projecté 56 villa 79 Rai, 55 and 56 Moo 5 Koh Yao Noi Subdistrict, units 3 Ngan, Koh Yao District, Phang Nga Province, 60.5 Square Thailand. Wah 1,958,000, ,965,000, Cost of lease agreement 2,000, ,000, Total investments in property 1,960,000, ,967,000, Investments in securities Bank of Thailand Bond 1/182/56 Maturity Date 11/7/ ,000 units 9,992, ,992, Bank of Thailand Bond 4/363/55 Maturity Date 1/8/ ,000 units 13,968, ,969, Bank of Thailand Bond 4/182/56 Maturity Date 1/8/2013 5,000 units 4,988, ,988, Bank of Thailand Bond 13/182/56 Maturity Date 3/10/2013 5,000 units 4,964, ,968, Bank of Thailand Bond 15/182/56 Maturity Date 17/10/ ,000 units 15,882, ,881, Total investments in securities 49,796, ,800, Cash at banks 4,549, Interest receivable Compensation receivable 5,136, Investment in subsidiary company 99, Total Assets 2,026,587, Liabilities Accrued expenses 667, Other liabilities 16,132, Total Liabilities 16,799, Net Assets 2,009,787, Total outstanding investment units (units) 196,500,000 Net assets per unit

18 Table: Fees and Expenses Collected from the Fund Luxury Real Estate Investment Fund For the period July 1, 2012 through June 30, 2013 Fees collected from the Fund Amount Unit: Thousand Baht % of NAV 1 Management fee Trustee fee Registrar fee 2, Advisory fee Property Management Fee Professional fee Amortisation of deferred expenses 2, Other operating expenses 6, Total Expenses 11, Note 1. Daily average net asset value (NAV) calcuated from July 1, 2012 to June 30, 2013 equals 2,002,538, bahts 16

19 Dear The Unitholders of the Luxury Real Estate Investment Fund Mutual Fund Supervisor Opinion We, The Kasikornbank Public Company Limited, as the Mutual Fund Supervisor of the Luxury Real Estate Investment Fund by the TMB Asset Management Company Limited from July 1, 2012 until June 30, 2013 would like to inform you that the TMB Asset Management Company Limited has well performed and fully completed its duties pursuant to its project and Securities and Exchange Act B.E Mutual Fund Supervisor July 2,

20 Auditorûs Report To the Unitholders of Luxury Real Estate Investment Fund I have audited the financial statements of Luxury Real Estate Investment Fund, which comprise the balance sheet and the details of investments as at June 30, 2013, and the statement of income, statement of changes in net assets, statement of cash flows and significant financial information for the year then ended, and a summary of significant accounting policies and other explanatory information. Managementûs Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditorûs Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorûs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the fundûs preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the fundûs internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 18

21 I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of Luxury Real Estate Investment Fund as at June 30, 2013, and its financial performance, changes in its net assets, cash flows and significant financial information for the year then ended in accordance with Thai Financial Reporting Standards. Prawit Viwanthananut Certified Public Accountant Registration Number 4917 ANS Audit Co., Ltd. Bangkok, July 23,

22 BALANCE SHEETS LUXURY REAL ESTATE INVESTMENT FUND AS AT JUNE 30, 2013 Baht Note Assets 3 Investments at fair value (at cost Baht 2,010 million in 2013 and Baht 1,958 million in 2012) 4, 10, 11 2,016,800, ,961,000, Investment in security 8, Cash at bank 6 4,549, ,947, Interest receivable Rental receivable 9-65,683, Compensation receivable 9 5,136, ,736, Deferred expenses - 1,199, Investment in subsidiary company 9, 10 99, Total Assets 2,026,587, ,037,566, Liabilities Accrued expenses 9 667, , Other liabilities 9 16,132, , Total Liabilities 16,799, , Net Assets 2,009,787, ,036,589, Net Assets: Capital received from unitholders 1,965,000, ,965,000, Retained earnings 5 44,787, ,589, Net Assets 2,009,787, ,036,589, Net assets per unit Total outstanding investment units at the end of the year (units) 196,500, ,500, The accompanying notes are an integral part of these financial statements. 20

23 THE DETAILS OF INVESTMENTS LUXURY REAL ESTATE INVESTMENT FUND AS AT JUNE 30, 2013 Type of Investments Amount Baht Areas Cost Fair Value Balance as at June 30, 2013 Investments in property Land including property and other assets in çsix Senses Yao Noi Projecté 56 villa 79 Rai, 55 and 56 Moo 5 Koh Yao Noi Subdistrict, units 3 Ngan, Koh Yao District, Phang Nga Province, 60.5 Square Thailand. Wah 1,958,000, ,965,000, Cost of lease agreement 2,000, ,000, Total investments in property 1,960,000, ,967,000, Investments in securities Bank of Thailand Bond 1/182/56 Maturity Date 11/7/ ,000 units 9,992, ,992, Bank of Thailand Bond 4/363/55 Maturity Date 1/8/ ,000 units 13,968, ,969, Bank of Thailand Bond 4/182/56 Maturity Date 1/8/2013 5,000 units 4,988, ,988, Bank of Thailand Bond 13/182/56 Maturity Date 3/10/2013 5,000 units 4,964, ,968, Bank of Thailand Bond 15/182/56 Maturity Date 17/10/ ,000 units 15,882, ,881, Total investments in securities 49,796, ,800, Total investments 2,009,796, ,016,800, Type of Investments Amount Baht Areas Cost Fair Value Balance as at June 30, 2012 Investments in property Land including property and other assets in çsix Senses Yao Noi Projecté 56 villa 79 Rai, 55 and 56 Moo 5 Koh Yao Noi Subdistrict, units 3 Ngan, Koh Yao District, Phang Nga Province, 60.5 Square Thailand. Wah 1,958,000, ,961,000, The accompanying notes are an integral part of these financial statements. 21

24 STATEMENTS OF INCOME LUXURY REAL ESTATE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2013 Baht Note Investment Income 3 Rental income 9, 12 75,050, ,683, Rental compensation income 9-59,341, Compensation income 9-20,488, Interest income 599, , Other income 19, ,461, Total Income 75,669, ,096, Expenses 3 Management fee 7, 9-2,179, Trustee fee 7 642, , Registrar fee 7, 9 2,142, ,169, Professional fee 224, , Amortization of deferred expenses 2,199, ,359, Other operating expenses 6,121, ,610, Total Expenses 11,330, ,173, Net income from investments 64,338, ,923, Net gain from investments 3 Net realized gain on investments Net unrealized gain on investments 4,003, ,000, Total net realized and unrealized gain on investments 4,004, ,000, Increase in net assets resulting from operations 68,343, ,923, The accompanying notes are an integral part of these financial statements. 22

25 STATEMENTS OF CHANGES IN NET ASSETS LUXURY REAL ESTATE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2013 Baht Increase in net assets from operations during the year Net income from investments 64,338, ,923, Net realized gain on investments Net unrealized gain on investments 4,003, ,000, Increase in net assets resulting from operations 68,343, ,923, Distribution to unitholders (Notes 3 and 13) (95,145,300.00) (137,550,000.00) Increase(decrease) in net assets during the year (26,802,272.99) 1,373, Net assets at the beginning of the year 2,036,589, ,035,216, Net assets at the end of the year 2,009,787, ,036,589, Units Changes in number of investment units (Baht 10 per unit) Investment units at the beginning of the year 196,500, ,500, Investment units at the end of the year 196,500, ,500, The accompanying notes are an integral part of these financial statements. 23

26 STATEMENTS OF CASH FLOWS LUXURY REAL ESTATE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2013 Baht Cash flows from operating activities Increase in net assets from operations 68,343, ,923, Adjustments to reconcile increase in net assets from operations to net cash provided by operating activities Amortization of deferred expenses 2,199, ,359, Purchase of investments (132,732,626.37) - Sale of investments 83,456, Amortization of discount on debt instruments (519,851.25) - Decrease in restricted deposits at bank - 25,187, (Increase)decrease in interest receivable (414.07) 1, (Increase)decrease in rental receivables 65,683, (16,379,484.14) Decrease in compensation receivable 2,599, ,903, Decrease in other receivable - 59, Decrease in prepaid expenses - 39, Increase in cost of lease agreement (3,000,000.00) - Increase(decrease) in accrued expenses 237, (350,307.04) Decrease in guarantee payable for compensation - (25,187,686.88) Increase in other liabilities 15,485, , Net realized gain on investments (777.24) - Net unrealized gain on investments (4,003,250.78) (1,000,000.00) Net cash provided by operating activities 97,747, ,006, Cash flows from financing activities Distribution to unitholders (95,145,300.00) (137,550,000.00) Net cash used in financing activities (95,145,300.00) (137,550,000.00) Net increase(decrease) in cash at bank 2,602, (6,543,001.54) Cash at bank at the beginning of the year 1,947, ,490, Cash at bank at the end of the year 4,549, ,947, The accompanying notes are an integral part of these financial statements. 24

27 SIGNIFICANT FINANCIAL INFORMATION LUXURY REAL ESTATE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2013 Baht ** Operating Information (per unit) Investment units initially offered Net asset value at the beginning of the year Income from investing activities Net investment income Net unrealized gain (loss) on investments (0.0407) (0.4173) Total income from investing activities Less Distribution to unitholders (0.4842) (0.7000) (0.6752) (0.6269) (0.3600) Net asset value at the end of the year Ratio of net profit to average net asset value during the year (%) Significant financial ratio and additional information Net asset value at end of the year (Thousands Baht) 2,009,788 2,036,590 2,035,216 2,038,344 2,115,800 Ratio of total expenses to average net asset value during the year (%) Ratio of total investment income to average net asset value during the year (%) Ratio of portfolio turnover to average net asset value during the year (%) * Supplementary information * This is not included cash at banks, investment in promissory notes, certificates of deposit and trading investments should be the independent trading transactions which are not included repurchase agreements or resale agreements. ** Significant financial information for the period 2009 are not comparable with other period due to the accounting period was longer than one year. The accompanying notes are an integral part of these financial statements. 25

28 NOTES TO FINANCIAL STATEMENTS LUXURY REAL ESTATE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, NATURE OF LUXURY REAL ESTATE INVESTMENT FUND Luxury Real Estate Investment Fund (çthe Fundé) is a close-ended property fund with no maturity date. The registered value of investment units is Baht 1,965 million (196.5 million units, Baht 10 per unit). The Fund was approved by the Office of the Securities and Exchange Commission (SEC) on May 20, 2008 with the key objective to use the proceeds from the sale of the investment units to invest and earn all benefits in property. TMB Asset Management Company Limited (çthe Management Companyé) serves as the Fundûs manager and Fundûs registrar. Kasikornbank Public Company Limited serves as the trustee of the Fundûs assets and bank account. The Management Company has a policy to allocate dividends to the unitholders not more than twice a year under the following criteria; (1) If the Fund has net income for any period, the Management Company may consider to pay dividends to the unitholders in the amount of not less than 90 percent of the net income excluding unrealized gains from valuation or review the valuation of property or leasehold property for that period. (2) If the Fund has retained earnings for any period, the Management Company may consider to pay dividends to the unitholders from such retained earnings. Payment of dividend as (1) shall not cause the Fundûs deficit increased in the period in which the dividends are paid. 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Fund are prepared in accordance with Thai Financial Reporting Standards (çtfrsé) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (çfapé) in conformity with generally accepted accounting principles in Thailand. In addition, the financial statements have been prepared in accordance with Thai Accounting Standard No. 106 çaccounting for Investment Companiesé. The financial statements of the Fund have been prepared in the Thai language and expressed in Thai Baht. Such financial statements have been prepared for domestic 26

29 reporting purposes. For the convenience of the readers not conversant with the Thai language, an English version of the financial statements has been provided by translating from the Thai version of the financial statements. The preparation of the financial statements in conformity with Thai Financial Reporting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Subsequent actual results may differ from these estimates The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, and in the period of the revision and future periods, if the revision affects both current and future periods. The Fund did not prepared consolidated financial statements for the year ended June 30, 2013, because the subsidiary company has not yet started its operations and its financial statements is not significant to the Fundûs financial statements. Financial information of the subsidiary are as follows: Baht Total assets 100, Total liabilities 30, Shareholdersû equity 69, Total expenses 30, New and revised Thai Financial Reporting Standards not yet effective The Fund has not yet adopted the new and revised Thai Financial Reporting Standards as follows: a) Thai Accounting Standards (çtasé), TFRS, Thai Interpretations (çtié) and accounting guidelines which are effective for the financial statements for the period beginning on or after January 1, 2013 as follows: 27

30 TAS/TFRS/TI/FAPûs Announcement TAS 12 TAS 20 (revised 2009) TAS 21 (revised 2009) TFRS 8 TI 10 TI 21 TI 25 No. 34/2555 Topic Income Taxes Accounting for Government Grants and Disclosures of Government Assistance The Effects of Changes in Foreign Exchange Rate Operating Segments Government Assistance - No Specific Relation to Operating Activities Income Taxes - Recovery of Revalued Non- Depreciable Assets Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders Accounting Guidance for Transfer of Financial Assets b) Thai Financial Reporting Interpretations (çtfrié) and TI which are effective for the financial statements for the period beginning on or after January 1, 2014 as follows: TFRI/TI Topic TFRI 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRI 4 Determining whether an Arrangement contains a Lease TFRI 5 Rights to Interests arising from Decommission, Restoration and Environmental Rehabilitation Funds TFRI 7 Applying the Restatement Approach under TAS 29 Financial Reporting in Hyperinflationary Economies TFRI 10 Interim Financial Reporting and Impairment TFRI 12 Service Concession Arrangements TFRI 13 Customer Loyalty Programmes TI 29 Service Concession Arrangements: Disclosures c) TFRS which is effective for the financial statements for the period beginning on or after January 1, 2016 as follows: TFRS Topic TFRS 4 Insurance Contracts 28

31 The management of the Fund has assessed the effects of these TAS, TFRS, TI, TFRI and accounting guideline, and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied. 3. SIGNIFICANT ACCOUNTING POLICIES Distributions of Income Decreases in retained earnings are recognized at the time the dividend is announced. Investment Measurement Investments are recognized as assets with the cost of investment at the date on which the Fund has the right on investments. The costs of investments are comprised with the purchase price and all direct expenses which the Fund paid to get those investments. - Investment in property is stated at the fair value based upon valuation of an independent appraiser every 2 years and will conduct a review of appraisal every year after the date of the latest appraisal. - Investment in debt instruments are presented at fair value, using the price or the yield rate from the Thai Bond Market Association on the date of investment measurement. - The Fund uses the amortized cost method to determine the fair value of debt instruments due within 90 days since the date of investment without any term for renewal when the fair value of the debt instruments is not significantly different from the amortized cost. - Investment in unlisted equity securities are valued at fair value as determined by the fund manager, based on financial status of the financial instrumentsû issuer. Net unrealized gain or loss arising from their revaluation of investment to be fair value is reflected in the statement of income on the measurement date. The weighted average method is used to determine the cost of each security at the time of sales. Investment in subsidiary company Investment in subsidiary company is accounted for using the cost method less allowance for impairment loss (if any). 29

32 Revenues and Expenses Recognition Fixed rental income is recognized in the statements of income on a straight-line basis. Variable rental income, rental compensation income and compensation income and expenses are recognized on an accrual basis. Initial direct costs of lessor in attributable to negotiating or operating lease are included in the book value of the leased asset and recognized as expenses over the term of the lease the same basis as the recognition of income from lease. The premium (discount) on debt instruments is amortized by the effective rate method. The amortized amount is presented as an adjustment of the interest income. Interest income is recognized as interest accrues, based on the effective rate method. Gain (loss) on trading of securities is recorded as revenues or expenses on trading date. Deferred Expenses Deferred expenses represent expenses from the initial investment units offering are amortized on the straight-line basis over the period of 5 years. 4. INVESTMENT IN PROPERTY The Fund purchased land, property and other assets from Pakoh Hotel Company Limited in the amount of Baht 1,958 million which have detail as follows: - The Land is located on çsix Senses Yao Noi Projecté Koh Yao Noi Subdistrict, Koh Yao District, Phang Nga Province. The area of land is 79 rai, 3 ngan, 60.5 square wah classified by deeds as follows: Area Issues rai - ngan - square wah Land title deed Nor Sor 3 Kor Total Property and other assets included systems, fixtures, utilities and control parts that are located on çsix Senses Yao Noi Projecté No , Moo 5, Koh Yao Noi Subdistrict, Koh Yao District, Phang Nga Province comprises of: 30

33 1. 56 villas with private pools (Pool Villa) which are further segmented as Pool Villas, Deluxe Pool Villas, Pool Villas Suites, The Retreat and Hill Top Reserve. Area of each villa is about 161 to 1,402 square meters, totaling area 13,090 square meters, approximately staff housing units, executive offices, administrative offices, and engineering and support building, totaling area 4,100 square meters, approximately. 3. Supporting and common area facilities include restaurant, spa, sauna, fitness area, tennis courts, library and multimedia libraries, totaling area 4,130 square meters, approximately. - Furniture, equipment and facilities related to the villas, furniture and facilities for use in common area of Six Senses Yao Noi Project. During the year 2013, the Fund provided the independent appraisal company, TAP Valuation Company Limited, appraised the value of investment in property. According to the appraisal report dated March 11, 2013, stated that the method used for appraise the property was Income Approach, the fair value of the property as at February 24, 2013 was Baht 1,965 million. During the year 2012, the Fund provided the independent appraisal company, Brooke Real Estate Company Limited, appraised the value of investment in property. According to the appraisal report dated February 27, 2012, stated that the method used for appraise the property was Discounted Cash Flows Approach, the fair value of the property as at February 24, 2012 was Baht 1,961 million. 5. RETAINED EARNINGS AT THE BEGINNING OF THE YEAR Baht Accumulated net income from investments (accumulated since May 20, 2008) 532,742, ,819, Accumulated net unrealized gain on investments (accumulated since May 20, 2008) 3,000, ,000, Accumulated distribution to the unitholders (accumulated since May 20, 2008) (464,152,650.00) (326,602,650.00) Retained earnings at the beginning of the year 71,589, ,216,

34 6. CASH AT BANKS As at June 30, 2013 and 2012 cash at banks consisted of: Bank Interest Rate Interest Rate Principal per annum Principal per annum (Baht) (%) (Baht) (%) Saving accounts Kasikornbank Public Company Limited 4,549, ,947, MANAGEMENT FEE, TRUSTEE FEE AND REGISTRAR FEE Management fee, trustee fee and registrar fee are as follows: - Management fee is charged at the rate of not exceeding 1 percent per annum of the Fundûs net assets. - Trustee fee is charged at the rate of not exceeding 0.05 percent per annum of the Fundûs net assets. - Registrar fee is charged at the rate of not exceeding 0.20 percent per annum of the Fundûs net assets. These fees are computed on monthly basis (excluding value added tax). The Management Company waives the entire management fee for the period January 1, 2012 through June 30, 2013 in order to reduce the expense of the Fund. 8. INVESTMENT IN SECURITY The Fund invested in 1 ordinary share of E.H.Y. Company Limited, at the par value of Baht 10 per share, totaling in the amount of Baht RELATED PARTY TRANSACTIONS During the year, the Fund had significant transactions with the Management Company and other enterprises, which have the same shareholders and/or directors as the Management Company and/or the Fund. Such transactions for the years ended June 30, 2013 and 2012 were summarized as follows: 32

35 Baht Related Companies Pricing Policy TMB Asset Management Company Limited Management fee - 2,179, The basis stated in the prospectus. Registrar fee 2,142, ,169, The basis stated in the prospectus. Pakoh Hotel Company Limited Rental compensation income - 59,341, As specified in the agreement Compensation income - 20,488, As specified in the agreement E.H.Y. Company Limited Rental income - 65,683, As specified in the agreement TMB Bank Public Company Limited Purchase of investments 9,886, Market price LUXF Yao Noi Company Limited Investment in subsidiary company 99, Cost value As at June 30, 2013 and 2012, the Fund had significant outstanding balances with related companies as follows: Baht TMB Asset Management Company Limited Accrued registrar fee 358, , Advance payments 100, Pakoh Hotel Company Limited Compensation receivable 5,136, ,736, Other liability 969, , E.H.Y. Company Limited Rental receivable - 65,683, Invesments in security LUXF Yao Noi Company Limited Investment in subsidiary company 99,