MD & A

In 2018 the Company continued to invest in high end property with the official launch of Baan Issara Bangna and the preparation for Baan Issara Residence Rama 9 in early 2019. In spite of the new loan consideration measure from the Bank of Thailand and the economic slowdown the Company’s revenue has grown from that of 2017 by 40%

By the end of 2017 two new hotels namely Baba Beach Club Hua Hin and Baba Beach Club Phuket had been completed and operational. At the end of 2018 the Company had sold Baht 530 million of operational assets in Baba Beach Club Hua Hin to Sripanwa Real Estate Investment Trust (Sripanwa REIT) thereby earned the Company a profit of Baht 187 million which was a cash flow received for investment in the main hotel section of Baba Beach Club Hua Hin in the following year.

As a result of the Company’s past investments in new project developments, the Company had to source fund for investment on a continued basis. In the fiscal year 2018 the Company had issued a set of debenture worth Baht 300 million for investment in several businesses. In addition, there was an increase of capital through a general mandate of 266.917 million shares in total of which 20% or 177.945 million shares went to existing shareholders and 10% or 88.97 million shares were sold through private placement. The Company able to issue 176.78 million new shares at Baht 1.42 per share making up a total receivable of Baht 251.03 million from the capital increase.

In 2018 the Company has Debt to Equity ratio (D/E Ratio) of 1.78 and Interest Burden Liability to Equity (IBD/E Ratio) of 1.31, both of which had been decreased when compare to that of the same period in 2017 which were 2.12 and 1.57 respectively.

For assets, liabilities and capital including detailed operating results, they can be summarized as follow;

Financial Position

Total assets

The Company had total assets as at December 31, 2018 of Baht 7,766 million which was a decrease from that of December 31, 2017 by Baht 117 million or 1.5% as a result of following material changes:

  1. Cost of property development for sale of Baht 4,011 million which represent 52 % of total assets had decreased by Baht 574.1 million as a result of title transfers in property projects sold to customers.
  2. Property plant and equipment had decreased by Baht 166 million as a result of assets sale at Baba Beach Club Hua Hin to Sripanwa REIT by a subsidiary company.
  3. Other current assets had increased by Baht 79 million which derived from the deposition made in new land acquisition for future development.

Total Liabilities

The Company had total liabilities as at December 31, 2018 of Baht 4,968 million which was a decrease from that of December 31, 2017 (Baht 5,359 million) by Baht 391 million, the decrease of which was caused by following material changes:

  • Debenture had increased by Baht 398 million due to the issuance of Baht 700 million debentures to repay part of the debentures which had been matured by Baht 300 million.
  • Long term loan from financial institution had decreased by Baht 735 million due to long term loans repayments to financial institutions after property title transfers to customers in several project and the sale of hotel operating assets at Baba Beach Club Hua Hin from a subsidiary company to Sripanwa REIT.
  • Booking fees and deposition received from property sales had decreased by Baht 207 million following the continued transfer of title in various projects.

Total shareholder’s equity

The Company had total shareholder’s equity as at December 31, 2018 of Baht 2,798 million which was an increase from that of December 31, 2017 (Baht 2,525 million) by Baht 273 million as a result of capital increase through general mandate with right offering to existing shareholders and private placement. Total shareholder’s equity of 2018 was Baht 1,759 million and Baht 1,039 million for non-controlling interests.

Operating Results

Revenue

In 2018 Charn Issara Development Public Company Limited and its subsidiary earned a revenue from their operations of Baht 3,188 million, an increase from that of 2017 by Baht 870 million equivalent to an increase of 38%. That change came primarily from its 3 main businesses and other revenues as follows:

  1. Revenue from property sale in 2018 was Baht 2,069 million an increase from that of 2017 by Baht 592 million or equivalent to 40%. This revenue increase was a result of continued title transfer to customers in Issara Residence Rama 9, a super luxury single detached house, and from the previous year sales in other projects.
  2. Revenue from hotel operation in 2018 was Baht 699 million, an increase from that of 2017 by Baht 127 million or 22 %. This increase of revenue came from Sripanwa hotel and two other newly open hotels towards the end of 2017.
  3. Revenue from rental and services in 2018 was Baht 80 million which was relatively close to that of the previous year.
  4. In addition to those 3 businesses mentioned above, at the end of 2018 Issara United Development Co.,Ltd. which is a subsidiary company had sold its hotel operating assets in Baba Beach Club Hua Hin to Sripanwa Real Estate Investment Trust which made the Company gained a profit from that sale of assets by Baht 187 million.

(Unit: Baht million)
Revenue Description 2018 2017 Increase/(Decrease) % Change
Revenue from property sales 2,069 1,477 592 40
Revenue from rental and services 80 81 (1) (1)
Revenue from hotel operation 699 572 127 22
Revenue from management fees and other services 43 24 19 79
Other revenue 297 164 133 81
Total Revenue 3,188 2,317 871 38


Gross profit

The Company had gross profit from property sales in 2018 of around 30.19% which was a decrease from that of 2017 when gross profit was 38.73 %. This decrease due to the fact that in 2018 there was a sale promotion and discount to activate sales and clear the stock. On office buildings rental and services in the office condominium Charn Issara Tower 1 and 2 and the residential condominium Issara Ladprao, gross profit was 49.22 % which was an increase from that of 2017 when its gross profit stood at 46.24 %. This increase of gross profit was a result of rental escalation. The hotel operation in 2018 earned a gross profit of 4.58% which was relatively close to 4.79% in 2017. This showed that the Company able to master the cost control in hotel operation efficiently.

Details of gross profit in each business are shown in the following table

(Unit : Million Baht)
Gross Profit 2018 2017 increase/(decrease)
From property sales 30.19% 38.73% (8.54%)
From rental and services 49.22% 46.24% 2.98%
From hotel operation 4.58% 4.79% (0.21%)
Total gross profit 24.44% 29.90% (5.47%)


Expenses

  1. Sales and administrative expenses in 2018 was Baht 866 million equivalent to 27.15 % of total revenue, the ratio of which decreased by 3.69% when compare to that of 2017. In 2017 the Company had sales and administrative expenses of Baht 714 million equivalent to 30.84% of total revenue. The expenses came mainly from sales expenses increase from that of previous year due primarily to specific business tax and transfer fees which went in the same direction of sales revenue which had increased from the previous year.
  2. Financial expenses in 2018 had increased from that of the year 2017 by Baht 32 million due to fund raising through issuing of debenture to support investment in land acquisition for new projects and expand business in the future.
  3. Income tax expenses in 2018 was Baht 39 million which was an increase from that of 2017 by Baht 4 million

Net profit/ (loss)

The Company had operating profit in the year 2018 of Baht 125 million of which Baht 82 million was net profit attributable to the Company’s equity holders equivalent to Baht 64 million increase or 342% increase from that of the same period in previous year when net profit attributable to shareholders was Baht 0.80 per share.

Important financial ratios

  1. Earnings before interest, tax, depreciation and amortization in the year 2018 was 11.45 % of which net profit attributable to the Company’s equity holder was 2.6 % in correspondence with the change in revenue as mentioned above
  2. Debt service capability (EBITDA/Interest Expenses) in the year 2018 was 2.24 times represented an increase from 1.87 times in the year 2017.
  3. Liquidity ratio in the year 2018 was 2.27 times, a relatively close to 2.29 times in 2017.
  4. Debt to equity ratio was 1.78 times represented a reduction from 2.12 times in 2018. When taking into account only interest burden liability to equity (IBD/E) the ratio in 2018 came down to only 1.31 times compare to 1.57 times in 2017 represented a reduced liability due to the long-term loan repayments to financial institutions following continued transfer of property titles in various projects and the sale of hotel operating assets in Baba Beach Club Hua Hin from a subsidiary company to Sripanwa Real Estate Investment Trust. In addition, the Company had increased its capital by Baht 251 million from issuing new ordinary shares through general mandate with the right offering to existing shareholders and public placement
  5. Book value per share in 2018 was Baht 1.65 per share, an increase from 2017 when book value per share was Baht 1.63 due to an improved operating results and the issuing of new ordinary shares by the year end as mentioned above.