Summary of the Performance in 2017

2017 was the “Year of Shift” of L.P.N. Development Public Co., Ltd. (L.P.N.), the developer of urban residential condominiums with affordable price targeting middle to lower-middle income earners. Condominium projects are designed and developed following LPN Design concept which focuses on delivering product value to the customers. The Company develops large-scale projects in order to achieve cost advantage and economy of scale. At the same time, the emphasis is put on achieving economy of speed from upstream to downstream stages in project development process so as to reduce the risk of delayed handover. In terms of service value, the uniqueness of the Company lies in the “Vibrant Community” strategy which is implemented by Lumpini Property Management Co., Ltd. (LPP), a subsidiary company. It makes a great impression and create bond with customers and residents of “Lumpini” community who are willing to make referral to others about “Lumpini” brand.

The above direction of business operation has continuously generated income growth for the Company. Anyhow, there have been significant changes during the past few years. Increasing household debt problems resulting in stringent loan approval criteria of financial institutions and economic slowdown have affected the purchase power and confidence of consumers. Both factors have direct impacts on the operation, strategy and project development process of the Company. During the past few years, the income growth target has been unmet and the inventory has increased. As a short-term solution to the problem, the Company has reduced the number of new projects launched since 2015 due to the concerns over the overall economic situation which might lead to another economic recession. The focus is put on solving the problem of a large amount of inventory by reducing inventory level as quickly as possible. As a result of the implementation of the policy, the Company is successful in lowering the inventory level. At the end of 2017, the value of combined inventory was seven billion THB from 6,500 condominium units, equivalent of 50% of the amount and value of the inventory at the beginning of 2017. It is expected that the inventory will be restored to a normal level at the end of 2018. On the other hand, the decreased number of new projects resulted in continual decrease in income of the Company. In 2017, it was recognized that the business of the Company was decelerating. A strategy was established to adjust the business operation direction by expanding the target group of customers to not only include middle to lower-middle income earners but also lower-middle to upper ones. At the same time, the project location was changed from high-density residential area in the suburb to high-potential area in the city center. The projects were also downsized to be consistent with the adjusted target group of customers. As a result of the above adjustments in 2017, the sales volume of the Company increased from 8.5 billion THB to 16 billion THB or 88% higher than that in 2016. The backlog as of the end of 2017 was 7.4 billion THB i.e. 5.9 billion THB in 2018 and 1.5 billion THB in 2019. Apart from adjusting the direction of project development, the Company also expanded the income base by generating extra income from service business. Three subsidiary companies which previously provided services only to internal organizations were starting to provide real estate development and community management services to other entrepreneurs, juristic persons or organizations. In 2017, the services were provided to many other real estate developers, therefore, the income from service business has increased more than 11%.

In 2017, the Company commanded 8% of market share of new projects launched. The Company launched ten new projects with the combined value of 14 billion THB, increasing from 5.4 billion THB in 2016 or nearly 160%. With regards to projects completed in 2017, there were only four projects completed and registered with the combined value of around four billion THB, all of which were still developed mainly for middle to lower-middle income earners. Since the number of complete projects was lower, the income in 2017 was thus decreased significantly. However, the income is increasing in 2018 following the launch of new projects and higher sales volume. In 2017, the Company commanded 6% of market share from 46,000 condominium units completed and registered in Bangkok and peripheral area.

Regarding financial performance, the gross income of the Company and subsidiary companies in 2017 was around 9.655 billion THB or 34% decrease from 2016. The net profit per share was 0.72 THB. As for the financial position of the Company and subsidiary companies, the net asset increased 2.448 billion THB or 13% i.e. from 18.557 billion THB to 21.006 billion THB. It was because the projects under development increased 4.823 billion THB or 72% i.e. from 6.645 billion THB to 11.469 billion THB. The total liabilities increased 2.445 billion THB or 39% i.e. from 6.147 billion THB to 8.592 billion THB as a result of loan for project development and increased downpayment from increased sales volume. As a consequence of increased asset and liabilities, the interest bearing debt to equity ratio and debt to equity ratio have increased from 0.35:1 to 0.49:1 and 0.50:1 to 0.69:1 as of 31st December, 2016 and 2017 respectively.

In parallel with financial performance to generate returns for shareholders, the Company operates the business in adherence to the principles of sustainable development, the balanced performance and the responsibility towards all stakeholders. The importance is also given to risk management, corporate governance and anti-corruption measures. In 2017, the awards received are as follows:

  • From the Thai Institute of Directors:
    • - The Company was ranked Outstanding (5 stars) in corporate governance.
  • From Thai Listed Companies Association:
    • - The Company was granted Sustainability Report Awards 2017 (Recognition)
  • From ThaiPat Institute:
    • - The Company was listed among the top one hundred companies for outstanding performance in terms of environment, social and governance aspects (ESG100) for the third consecutive year.
  • From Private Sector Collective Action Coalition Against Corruption (CAC)
    • - The Company received Level 4 certification (Certified).
  • From Agency for Real Estate Affairs
    • - The Company was awarded “Outstanding Real Estate Project” in the category of affordable residential condominium from the development of Lumpini Ville Sukhumvit 76.

The above demonstrates the commitment of the Company, Board of Directors, staff and business alliances to create and deliver operational value to all stakeholders in accordance with “sustainable development” principles.