MD&A Q3/2005

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Nov 17, 2005



Central Pattana Public Company Limited
          Management's Discussion and Analysis
          Consolidated Financial Results : Quarter 3/2005
         

          OVERALL PERFORMANCE
                      Central Pattana Plc., reported consolidated net
          profit in Q3/2005 of 2,173.6 MB, an increase of 1,793.3 MB,
          or 471.6% from Q3/2004. This was mainly came from the gain
          of 2,766.7 MB (or 1,937 MB net of tax) from financial lease
          (1) of its building and utility system of Central Plaza Rama
          2 and Rama 3 to CPN Retail Growth Property Fund "CPNRF".
          However, the Company has made a provision for losses on
          impairment of its land bank of 406.6 MB (or 285 MB net of
          tax). Excluding the gain from financing lease with CPNRF of
          2,766.7 MB, the impairment provision of 406.6 MB, the impact
          to income tax (2) of 708.0 MB and the share of loss in
          subsidiaries attributed to minority interests of 113.9 MB
          from such provision, CPN's net profit from normal operation
          totaled 407.6 MB, an increase of by 27.4 MB or 7.2% over
          Q3/2004. This increase came mainly from the increase of
          rental income from The Offices at Centralworld and Central
          Town Rattanathibet, which completed its expansion in August.
          Moreover, CPN also received property management fee and
          profit sharing of 33% from CPNRF in this quarter which was
          11.0 MB and 35.9 MB respectively.
                      On 15th and 16th August 2005 CPN completed a
          lease transaction of Central Plaza Rama2 and Rama3 to CPNRF
          creating the largest retail property fund in Thailand with
          net asset value of 11,023.9 MB as at September 30, 2005. The
          proceed from the establishment of CPNRF has strengthened
          CPN'S financial position by allowing CPN to repay a portion
          of its loan and retain a high balance of cash of 5,000 MB to
          finance its future investment. As a result, net interest
          bearing debt to equity declined substantially from 0.9x in
          Q2/2005 to 0.4x in Q3/2005 still lower than the company's
          policy of 1.0x.
                      Central Town Rattanathibet was officially
          relaunched with the grand opening ceremony on September 15,
          2005. The building's interior & exterior have been completely
          renovated & modernized, and salable area increased
          approximately 25,000 sq.m. for the new cinemas, restaurants
          and other retail shops. Robinson Department store also opened
          on the first and second floor. So far, this project has
          received very good responses from customers. Therefore, CPN
          believe it can increase its revenue and profit in the long
          run.
         

          Revenues
                      Rental & service and food & beverage income for
          Q3/2005 were 1,674.1 MB, a Y-o-Y increase of 202.2 MB or
          13.7%. Although revenue of Central Plaza Rama 2 and Rama 3
          were partially transferred to CPNRF. The increase in rental
          revenue from The Offices at Centralworld and the relaunch of
          Central Town Rattanathibet.
                      In Q3/2005, other income was 2,878.4 MB, an
          increase of 2,798.4 MB, or 3,497.9% over Q3/2004. The
          increase mainly came from the gain from the financial lease
          of building and system with CPNRF which amounted to 2,766.7
          MB. In addition, CPN also received property management fee
          from CPNRF which amounted to 11.0 MB.
         

          Cost and Administrative expenses
                      In Q3/2005, Cost of rental & service and food &
          beverage were 875.1 MB, Y-o-Y increase of 95.3 MB, or 12.2%.
          The main attributes were higher operating costs and
          depreciation of The Offices at Centralworld and Central Park
          Rama2, land lease fee of Central World project, and higher
          utility cost due to increases in electricity expense.
                      Selling and administration expenses in Q3/2005
          was 633.1 MB, a Y-o-Y increase of 463.1 MB, or 272.5%. The
          principle increase came from the provision for losses on
          impairment of its land bank of 406.6 MB. and higher
          advertising and promotion expenses due to more activities in
          all shopping centers such as the public relation campaign of
          Central World  and the relaunch of Central Town Rattanathibet.
         

         

          Financial Position as at September 30, 2005
          * Assets
                      As at September 30, 2005, the consolidated assets
          were 31,572.2 MB, an increase of 3,565.6 MB, or 12.7% over
          June 30, 2005. A large component came from the increase in
          cash from the lease and/or sub-lease of some properties of
          Central Plaza Rama2 and Rama3 of CPNRF and the gain
          associated with such lease. Consolidated assets also
          increased due to the increase in property and equipment from
          the construction and renovation of Central World Plaza and
          Central Town Center Rattanathibet and the purchase of land
          for new projects. Moreover, CPN consolidated 40% of Rama3's
          assets from the purchase of shares of Central Pattana Rama3
          Co., Ltd. from Rodamco Thailand B.V. Currently, CPN holds
          100% shares of the company as mentioned.
         

          * Liabilities
                      As at September 30, 2005, the consolidated
          liabilities were 20,238.4 MB, an increase of 1,889.1 MB or
          8.0% over June 30, 2005. The increase was attributed to the
          increase in deferred income tax from the gain of the
          transactions with CPNRF, the impairment provision which
          amounted to 708.0 MB, the increase in unearned rental income
          from operating lease of land with CPNRF, and consolidation of
          40% liabilities of Central Pattana Rama3 Co., Ltd.
          Furthermore, the Company also repaid loan of Central Pattana
          Rama 2 and Rama 3 amounted to 1,035 MB.
         

          * Shareholders' Equity
                      Shareholders' equity as at September 30, 2005 was
          11,333.7 MB, 2,070.9 MB or 22.4% higher than June 30, 2005.
          The increase came from net income from Q3/2005 of 2,173.6 MB.
         

         

         

          Financial Ratio Analysis
          * Profitability
                      In Q3/2005 gross profit margin was 47.7%, a
          slight increase from the same period of last year due to
          increase  revenue from The Offices at Centralworld which has
          started to cover its costs, especially depreciation expense.
          However, this ratio will further improve in the next quarter
          due to higher occupancy rate of The Offices at Centralworld
          and the opening of expansion of Central World Plaza in the
          mid of 2006.
                      Net profit margin and Return on equity (ROE) in
          Q3/2005 were 47.7% and 80.2%, which increased Y-o-Y from
          24.0% and 18.7% respectively. This was due to the gain from
          lease of building and utility system to CPNRF as mentioned
          above.
         

          * Financial Policy
                      Interest coverage ratio was 16.7x, which
          increased Y-o-Y from 7.5x. This was due to the increase of
          cash flow from operation (from the increase in revenue and
          cash inflow from lease/sublease of land of Central Plaza
          Rama2 and Rama3) and the decrease of long term borrowing from
          the repayment of loan of Rama 2 and Rama 3 projects of
          1,035 MB.
                      Net interest bearing debt to equity ratio
          decreased from 0.9x in Q3/2004 to 0.4x in Q3/2005.
                      As at September 30, 2005, interest bearing debt
          comprised of 89% fixed and 11% floating interest rate. The
          weighted average interest rate was 4.8%.
         

         

         

          Key Ratio                                    Q3/2005  Q3/2004
         

          LIQUIDITY RATIO
             Current Assets/Current Liabilities (Times)   1.4     0.9
             Accounts Receivable Turnover       (Days)     3       7
         

          PROFITABILITY RATIO
             Gross Profit Margin (%)                     47.7%   47.0%
             Net Profit Margin   (%)                     47.7%   24.0%
             Return on Equity    (%)                     80.2%   18.7%
         

          EFFICIENCY RATIO
             Return on Assets (%)                        27.5%    5.7%
         

          FINANCIAL POLICY RATIO
             Net Interest Bearing Debt to Equity (Times)  0.4     0.9
             Interest Coverage                   (Times) 16.7*    7.5
         

          Note :  *Cash flow included cash from operating lease and/or
          sub-lease of land for Central Plaza Rama 2 and Rama 3
          project.
         

         

          (1) Two types of leasing contract  are as follow;
              1. Financial Lease : realize a one time gain on the
          agreement date gain from the lease of building and utility
          system to CPNRF .
              2. Operating Lease : amortize revenue from the
          lease/sublease of land to CPNRF throughout the period of
          lease agreement.
          (2) Income tax on the gain from the financial lease with
          CPNRF and the impairment provision  :  CPN recorded income
          tax on such 2 transactions according to deferred income tax
          principle that meaned income tax of 30% on these transactions
          were recorded in this quarter.  Tax on the gain from
          financial lease was 830.1 MB (30% of 2,766.7 MB)  and tax on
          the impairment provision was  (122.0) MB  ( 30% of 406.6
          million baht).  So; net income tax from these transactions
          was 708.0 MB.