FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Statements of Ananda Development Public Company Limited

1.  Independent Auditors who audited or reviewed the Company’s financial
    statement

  ------------------- ------------------- -------------------------------
  Financial           Company             Auditor
  Statements                              

  Audited financial   Ananda Development  Mr. Chayapol Supasetthanont, a
  statements for the  Co., Ltd. and its   certified public accountant,
  fiscal year ended   subsidiaries        registration no. 3972, from
  2010                                    Ernst & Young Office Limited

  Audited financial   Ananda Development  Mr. Chayapol Supasetthanont, a
  statements for the  Public Company      certified public accountant,
  fiscal year ended   Limited and its     registration no. 3972, from
  2011                subsidiaries        Ernst & Young Office Limited

  Audited financial   Ananda Development  Mr. Chayapol Supasetthanont, a
  statements for the  Public Company      certified public accountant,
  fiscal year ended   Limited and its     registration no. 3972, from
  2012                subsidiaries        Ernst & Young Office Limited
  ------------------- ------------------- -------------------------------

2.  Auditors’ Report

The reports of the certified public accountant on the audit of the
financial statements of Ananda Development Public Company Limited for
the years 2010, 2011 and 2012, is summarized as follows:

+---------------------+------------------------------------------------+
| Financial           | Auditor's Report                               |
| Statements          |                                                |
+=====================+================================================+
| Audited financial   | In my opinion, based on my audits and the      |
| statement as at and | report of other auditors, the financial        |
| for the fiscal year | statements referred to above present fairly,   |
| ended 2010          | in all material respects, the financial        |
|                     | position of Ananda                             |
|                     |                                                |
|                     | Development Company Limited and its            |
|                     | subsidiaries and of Ananda Development Company |
|                     | Limited as at 31 December 2010 ad 2009 and the |
|                     | results of their operations, and cash flows of |
|                     | the years then ended in accordance with        |
|                     | generally accepted accounting principles.      |
+---------------------+------------------------------------------------+
| Audited financial   | In my opinion, the financial statements        |
| statement as at and | referred to above present fairly, in all       |
| for the fiscal year | material respects, the financial position of   |
| ended 2011          | Ananda Development Public Company Limited and  |
|                     | its subsidiaries and of Ananda Development     |
|                     | Public Company Limited as at 31 December 2011  |
|                     | and 2010 and the results of their operations,  |
|                     | and cash flows for the years and then ended in |
|                     | accordance with generally accepted accounting  |
|                     | principles.                                    |
|                     |                                                |
|                     | Without qualifying my opinion on the           |
|                     | aforementioned financial statements, I draw    |
|                     | attention to Note 3 and Note 5 to the          |
|                     | financial statements. During the current year, |
|                     | the Company adopted a number of revised and    |
|                     | new accounting standards as issued by the      |
|                     | Federation of Accounting Professions, and      |
|                     | applied them in the preparation and            |
|                     | presentation of its financial statements.      |
+---------------------+------------------------------------------------+
| Audited financial   | In my opinion, the financial statements        |
| statement as at and | referred to above present fairly, in all       |
| for the fiscal year | material respects, the financial position of   |
| ended 2012          | Ananda Development Public Company Limited and  |
|                     | its subsidiaries and of Ananda Development     |
|                     | Public Company Limited as at 31 December 2012, |
|                     | and their financial performance and cash flows |
|                     | for the year then ended, in accordance with    |
|                     | Thai Financial Reporting Standards.            |
+---------------------+------------------------------------------------+

Summary tables of the financial conditions and results of operations
presented in the consolidated financial statements of the Company as at
December 31, 2010, 2011, and 2012

[TABLE]

* The cost of real estate sold, other expenses, and corporate income tax
included amortization of valuation surplus of the fair value of assets
from an acquisition in 2010

** Other revenues in 2010 were derived from excess of interest in the
net fair value of subsidiary that over purchase (negative goodwill),
representing the cost of Baht 101.06 million.

  ------------------------------- ------------- ------------- -------------
  Cash Flow Statements (Million   Dec 31, 2010  Dec 31, 2011  Dec 31, 2012
  Baht)                                                       

  Liquidity Ratios                                            

  Current Ratio (times)           0.94          1.09          4.23

  Quick Ratio (times)             0.06          0.02          1.08

  Cash Flow Liquidity Ratio       0.27          0.07          0.39
  (times)                                                     

  Account Receivable Turnover     9.71          35.60         82.09
  (times)                                                     

  Average Collection Period       37.06         10.11         4.39
  (days)                                                      

  Inventory Turnover (times)      0.42          0.61          0.52
  ^(/1)                                                       

  Inventory Days                  846.59        590.04        695.31

  Account Payable Turnover        14.56         20.21         19.40
  (times)                                                     

  Account Payable (days)          24.72         17.82         18.55

  Cash Cycle (days)               858.93        582.33        681.14

  Profitability Ratios                                        

  Gross Profit Margin (%)         18.46         21.35         32.42

  Operating Profit Margin (%)     5.51          3.59          0.96

  Other Profit Ratios (%)         -             -             -

  Cash Flow to Income Ratio (%)   1,074.99      268.71        3,529.83

  Net Profit Margin (%)           5.51          (5.58)        (5.59)

  Return on Equity (%)            60.02         N.A.^(/3)     (11.96)

  Efficiency Ratios                                           

  Return on Total Assets (%)      2.39          (3.43)        (3.14)

  Return on Fixed Assets (%)      64.47         (14.43)       36.29

  Total Assets Turnover (times)   43.32         61.51         56.17

  Financial Policy Ratios                                     

  Debt to Equity Ratio (times)    36.34         N.A.^(/3)     0.9

  Interest Coverage Ratio (times) 21.30         2.54          6.06

  Debt Service Coverage Ratio     0.96          0.19          0.27
  (times)                                                     

  Dividend Payout Ratio (%)       38.80 ^(/4)   N.A.^(/2)     0
  ------------------------------- ------------- ------------- -------------

¹ Inventories of the Company are “Real Estate Development Cost.”

^(/2) Calculation cannot be made because the net profit shows negative
value.

^(/3) Calculation cannot be made because the shareholders’ equity shows
negative value.

^(/4) Calculation is based on the payment of dividends of Baht 50.00
million out of the net profit of Baht 128.88 million in 2010 (as
presented in the consolidated financial statements). Next dividend
payment will be paid in accordance with the Company’s dividend payment
policy.

Discussion and Analysis of Financial Conditions and Results of
Operations

1.  Results of Operations

Revenue from the Sale of Real Estate

Revenue from the sale of real estate in 2010, 2011 and 2012 amounted to
Baht 1,755.88 million, Baht 5,483.31 million and Baht 4,960.21 million
respectively, which represented an increase of 212.29% and a decrease of
9.54%.

In 2010, revenue from the sale of condominium units of 8 AD2 projects,
namely, “Ideo Ladprao 17”, Ideo Ladprao 5”, “Ideo Mix Phaholyothin”,
“Ideo Sathorn-Taksin”, “Ideo Mix Sukhumvit 103”, “Ideo Q Phayathai”,
“Ideo Ratchada-Huaykwang” and “Ideo BluCove Sathorn” was consolidated
under sale of real estate in the Company’s consolidated financial
statements following the acquisition of AD2 in November 2010.
Consequently, revenue from the sale of real estate increased
significantly in 2010.

In 2011, the Company continued to recognize revenue from the transfer of
ownership of units of condominium projects which were completed in the
previous year. In addition, the Company commenced the recognition of
revenues from the transfer of ownership of condominium units in “Ideo
Verve Sukhumvit”. Over the course of the year, the Company transferred
ownership of 1,455 condominium units, the majority of which were from
the “Ideo Verve Sukhumvit” and “Ideo Q Phayathai” projects. These
projects represented 33.13% and 33.11% of the total revenue derived from
the sale of real estate in 2011, respectively. Revenue from the sale of
real estate in 2010 and 2011 amounted to 75.02% and 96.43% of the total
revenue of the Company.

In 2012, revenue from the sale of real estate amounted to Baht 4,960.21
million or 96.53% of the total revenue of the Company. Revenue from the
sale of real estate during this period was mainly derived from the
transfer of ownership of 1,259 units in AD2’s condominium projects. The
majority of revenue recognized during this period was attributed to the
“Ideo Verve Ratchaprarop” and “Ideo BluCove Sukhumvit” projects, of
which transfer of ownership commenced in the second quarter of the year.
The revenue recognized from the transfer of ownership in these 2
projects amounted to 58.35% of the total revenue from sale of real
estate during this period. In addition, the transfer of ownership in the
“Ideo Morph 38” project commenced in the third quarter of the year.
Revenue from the sale of real estate decreased as compared to 2011,
which amounted to Baht 5,483.31 million. This decrease was partly due to
the transfer of ownership of units in the three abovementioned projects
in which commenced in late April and July 2012. In comparison, there
were several condominium projects for which transfer of ownership took
place from the beginning of 2011. In addition, ownership of a
significant number of units in the “Ideo Q Phayathai” and “Ideo Verve
Sukhumvit” projects were transferred and at a high price.

On December 31, 2012, the Company completed the transfer of ownership of
100% of condominium units to customers in the “Ideo Ladprao 17”, “Ideo
Ladprao 5”, “Ideo Mix Phaholyothin”, “Ideo Q Phayathai”, “Ideo
Ratchada-Huaykwang” and “Ideo BluCove Sathorn” projects, and of 99% in
the “Ideo Verve Sukhumvit” project. Revenue from the sale of real estate
classified by project is outlined below:

Revenue from Sale and Services

  ---------------------------- --------- -------- --------- -------- --------- -------- --
                               Dec 31,            Dec 31,            Dec 31,            
                               2010               2011               2012               

                               Million   %        Million   %        Million   %        
                               Baht               Baht               Baht               

  Revenue from project         313.15    68.52    62.51     35.21    20.40     14.30    
  management services                                                                   

  Revenue from commission      79.94     17.49    -         -        -         -        

  Revenue from services        41.28     9.03     83.58     47.09    94.01     65.92    

  Revenue from the sale of     22.64     4.95     31.42     17.70    28.21     19.78    
  food and beverages                                                                    

  Total Revenue from Sale and  457.02    100.00   177.51    100.00   142.61    100.00   
  Services                                                                              
  ---------------------------- --------- -------- --------- -------- --------- -------- --

In 2010, the majority of revenue from sale and services were derived
from project management of AD2 and ADO and revenue from commission
derived from the sale of AD2’s condominium projects. After the Company
invested in AD2 in November 2012 and ADO in December 2012, respectively,
the Company recorded no commission income in its financial statements.

Service Income refers to revenue earned from the provision of services
from other subsidiaries of the Company. This includes revenue derived
from the provision of juristic persons management services by Works,
real estate agency services by Agent, the operation of a fitness center
by BD, the operation of a car racing circuit and go-kart race track
business by BCO and BK, etc. In 2010, 2011 and 2012, the Company’s
service income was Baht 41.28 million, Baht 83.58 million, and Baht
94.10 million respectively, which increased by 102.47% and 12.47% and
represented 1.76%, 1.47% and 1.83% of the Company’s total revenues,
respectively. In 2011 and 2012, revenue from service income increased
due to an expansion of the Company’s real estate business, which led to
a corresponding increase in the provision of juristic persons management
services and real estate agency services. Additionally, revenue derived
from the sale of membership in a fitness center operated by BD
increased.

Revenue from the Sale of Food and Beverages is derived from Bacco, a
restaurant operated by BD, of which services were provided to customers
of BD’s fitness center since 2010. Revenue from the sale of food and
beverages in 2010, 2011 and 2012 was Baht 22.64 million, Baht 31.42
million and Baht 28.21 million, representing 0.97%, 0.55% and 0.55% of
the Company’s total revenue, respectively. The increase in such revenue
in 2011 was due to an increased volume of customers. In 2012, revenue
from the sale of food and beverages represented a reduction in sales
volumes in January 2012 due to severe flooding in Bangkok during the
second half of 2011. Nevertheless, revenue from the sale of food and
beverages gradually increased to comparable levels seen in the same
period of the previous year.

Cost of Real Estate Sold

As a result of the acquisition of AD2, the difference between the fair
value and the book value of the acquisition will be amortized and
reflected in the statement of comprehensive income under cost of real
estate sales. As such, cost of real estate sold for the condominium
units that contain excess fair value will increase because the excess of
the fair value will be added to the construction costs, resulting in a
decrease of profit in the consolidated statements of comprehensive
income.

Cost of real estate sold comprises items such as land costs, land
development costs, design fees, public utility expenses, construction
costs, costs of borrowing, costs of project management services, and
amortization expense on the excess of the fair value.

In 2010 and 2011, cost of real estate sold in relation to landed housing
projects was Baht 5.36 million and Baht 19.79 million, representing cost
ratios of 96.93% and 96.54%, respectively. Cost of real estate sold in
relation to condominium projects was Baht 1,536.82 million and Baht
4,314.02 million representing cost ratios of 87.80% and 78.97%,
respectively. The cost ratio of condominium projects in 2011 increased
substantially from 2010 primarily as a result of the transfer of
ownership of units in the “Ideo Verve Sukhumvit” project commencing in
2011, which represented 33% of the Company’s total revenue from sales.
Among all AD2 condominium projects of which ownership of units was
transferred in 2010, the “Ideo Verve Sukhumvit” project had the lowest
cost ratio as the impact from amortization expense on the excess of the
fair value was substantially lower than the other projects which were
transferred in 2010.

In 2012, cost of real estate sold was Baht 3,355.82 million,
representing a cost ratio of Baht 10.24 miilion of total revenue from
the sale of landed housing projects and in relation to condominium
projects was Baht 3,345.58 million, representing a cost ratio of 35.97%
and 67.84% respectively. The cost ratio for condominium projects in this
period increased substantially as compared to the same period in 2010
and 2011 due to revenue derived from the transfer of ownership of units
in three newly completed projects, namely, “Ideo Verve Ratchaprarop”,
“Ideo BluCove Sukhumvit” and “Ideo Morph 38”. These projects had a
substantially lower impact on amortization expense on the excess of the
fair value than the projects that were transferred in 2010 and 2011.

Cost of real estate sold for AD2’s condominium projects, which were
presented in the Company’s consolidated financial statements for 2010,
2011 and 2012 comprised actual costs and the amortization expense on the
excess of the fair value. Amortization expense on the excess of the fair
value is merely an accounting transaction presented in the statements of
comprehensive income (non-cash item) and has no effect on the Company’s
cash flow.

As of December 31, 2012, amortization expense on the excess of the fair
value from the item “Cost of real estate development”, which will be
amortized as the cost of real estate sold, was Baht (11.52) million.
The cost-to-income ratio of each landed housing project fluctuates
because the income derived from the sale of each landed housing project
varies. The Company currently has no plans to continue development of
the landed housing projects. In addition, costs in relation to the sale
of remaining show houses in some of these landed housing projects have
exceeded revenue from sales as they were sold at a discounted price.
The cost-to-income ratio of condominium projects in 2010 reflects the
effects from the amortization expense on the excess of the fair value as
a result of the acquisition in 2010 only from November 16, 2010 (the
acquisition date) to December 31, 2010. Costs of sales in 2011 and 2012
continued to be affected by the amortization expense on the excess of
the fair value, but at a lower rate. The other projects for which
transfer of ownership has commenced in 2012 was “Ideo Verve
Ratchaprarop”, “Ideo BluCove Sukhumvit” and “Ideo Morph 38”. These
projects are affected by the amortization expense on the excess of the
fair value at a slightly lower rate. On this basis, the Company’s gross
profit margin for 2012 has increased in comparison to 2011.

Cost of Sale and Services

  ---------------------------- --------- -------- --------- -------- --------- -------- -- --
                               Dec 31,            Dec 31,            Dec 31,               
                               2010               2011               2012                  

                               Million   %        Million   %        Million   %           
                               Baht               Baht               Baht                  

  Cost of project management   220.24    84.00    49.93     42.20    14.48     15.61       
  services                                                                                 

  Cost of services             29.52     11.26    53.69     45.38    66.36     71.53       

  Cost of sale of food and     12.43     4.74     14.69     12.42    11.93     12.85       
  beverages                                                                                

  Total Cost of Sale and       262.20    100.00   118.32    100.00   92.77     100.00      
  Services                                                                                 
  ---------------------------- --------- -------- --------- -------- --------- -------- -- --

In 2010, the majority of revenue from sale and services were derived
from project management of AD2 and ADO and revenue from commission
derived from the sale of AD2’s condominium projects. After the Company
invested in AD2 in November 2012 and ADO in December 2012, respectively,
the Company recorded no project management services income in its
financial statements.
The cost of services in 2012 has increased to Baht 12.67 million
compared to 2011 due to the increased costs concerning personnel which
is considered as a direct wage of The Agent (Property Expert) Co., Ltd.,
Blue Deck Co., Ltd. and Bira Circuit One and Bira Kart Co., Ltd.
Selling and Administrative Expenses

  ------------------------ --------- ------- --------- ------- ---------- ------- -- -------
                           Dec 31,           Dec 31,           Dec 31,               
                           2010              2011              2012                  

                           Million   %       Million   %       Million    %          
                           Baht              Baht              Baht                  

  Selling expenses         135.71    6.13    427.82    7.56    745.39     14.61      

  Administrative expenses  272.62    12.32   370.71    6.55    545.55     10.69      

  Total selling and        408.34    18.45   798.53    14.11   1,290.94   25.30      
  administrative expenses                                                            
  ------------------------ --------- ------- --------- ------- ---------- ------- -- -------

Selling Expenses mainly consist of commission expenses, marketing
expenses, sales promotion expenses, ownership transfer fees, specific
business tax and other expenses.

In 2011, selling expenses steadily increased, which was consistent with
the continued sale of AD2’s condominium projects and the corresponding
increase in revenue from the sale of real estate. The main selling
expenses of the Company were sales promotion expenses, ownership
transfer fees and specific business tax incurred from the transfer of
ownership of condominium units in AD2’s projects to customers.
In 2012, selling expenses have increased due to sales promotion expenses
and marketing expenses from the grand opening of 4 Ideo Mobi projects in
February 2012, which amounted to more than Baht 100 million and from the
grand opening of the “Ideo Verve Ratchaprarop”, “Ideo BluCove Sukhumvit”
and “Ideo Mix Sukhumvit 103” projects in this period, which amounted to
over Baht 200 million. The ratio of selling expenses to income from real
estate sale in this period increased significantly, as the selling
expense was instantly recognized upon the grand opening and, in
contrast, revenue will only be recognized upon the commencement of the
transfer of ownership. This practice is normal for the launch of new
condominium projects, or during periods where the Company would
undertake aggressive marketing to stimulate sales growth when transfer
of ownership commences.

Administrative Expenses comprise employee salaries, public utility
expenses, miscellaneous expenses, depreciation, and other expenses.

In 2011, administrative expenses increased mainly due to an increase in
employees’ salaries as more employees were recruited to support the
expansion of the Company’s business and development of projects. In
particular, new employees were recruited to join the office staff team,
the engineering team and the quality control team. Consultant fees
comprise fees incurred in relation to services provided by legal
advisors, financial advisors, auditors and other consultants, which were
increased in line with the expansion of the Company’s business
operations. The main portion of miscellaneous expenses is non-taxable.
For example, expenses in relation to facilitating occupants’ relocation
from land acquired by the Company for property development is
non-taxable. Other examples include expenses in relation to repair and
maintenance of common areas in the Company’s condominium and landed
housing projects and rent-related expenses. In 2011, an increase in
other expenses was mainly due to recognition of losses from the
impairment of investments in associated companies and interests arising
from the payment of corporate income tax in installments.

In 2012, administrative expenses increased due to depreciation, which
increased by approximately Baht 68.32 million due to the amortization of
show units of Ideo Mobi projects launched at the beginning of 2012, as
well as employee salaries, which increased by approximately Baht 42.43
million from the same period in the previous year as more employees were
recruited to support the expansion of the Company’s business and
development of projects. Finally, administrative expenses in relation to
credit card fees were incurred in relation to moneys deposited by
customers for the acquisition of units in the 4 Ideo Mobi projects.

Other Expenses

In 2010, the Company recorded expenses derived from amortization expense
on the excess of the fair value of agreements to buy and to sell
condominium signed with customers as other expenses, which was a result
of estimated fair value following the acquisition in of AD2 in 2010. In
2010 and 2011, the amortization expense amounted to Baht 6.03 million
and Baht 232.22 million, respectively. In 2011, the amortization expense
experienced an increase due to the fact that the “Ideo Verve Sukhumvit”
project was less affected by the amortization expense on the excess of
the fair value as compared to the projects for which ownership was
transferred in 2010. In 2012, the amortization expense amounted to Baht
349.74 million. As at December 31, 2012, amortization expense on the
excess of the fair value of agreements to buy and to sell condominium
signed with customers amounted to Baht 122.69 million. The majority of
said amortization expense will be deducted according to the ownership
transfer of three remaining projects, namely “Ideo BluCove Sukhumvit,”
“Ideo Verve Ratchaprarop” and “Ideo Morph 38” in 2013.

Corporate Income Tax

Corporate income tax comprises (1) income tax calculated on taxable
profits; and 2) amortization of the income tax liability on acquisition
of an entity.

The item “Income tax liability on acquisition of an entity” in the
Company’s statements of financial position was determined based on the
application of the rate of 30% of the difference between the fair value
of the costs of real estate development and intangible assets
(agreements to buy and to sell condominium unit signed with customers)
and its book value on the acquisition date. This item will be amortized
(added-back) upon the transfer of ownership of condominium units to
customers. As at December 31, 2012, total amortization expense under the
item “Income tax liability on acquisition of an entity” which had not
been added back was Baht 27.55 million.

Gross Profit and Gross Profit Margin

The Company’s gross profit in 2010, 2011 and 2012 was Baht 408.51
million and Baht 1,208.70 million and Baht 1,654.24 million,
respectively, representing a gross profit margin of 18.46%, 21.35% and
32.42%, respectively. Such gross profit calculations included the
effects of amortization which arose from the purchase price allocation
process in relation to the acquisition in 2010. In 2011, the Company’s
gross profit margin increased from 2010 as the gross profit margin of
the “Ideo Verve Sukhumvit” project, revenue of which was recognized in
2011, was higher than all other projects of which ownership was
transferred in 2010. This was primarily because the “Ideo Verve
Sukhumvit” project was less affected by the amortization expense on the
excess of the fair value as compared to the projects for which ownership
was transferred in 2010. In 2012, the Company’s gross profit margin
increased over the same period in 2011 as the gross profit margin for
“Ideo Verve Ratchaprarop”, “Ideo BluCove Sukhumvit” and “Ideo Morph 38”
projects was higher than the gross profit margin for all projects for
which ownership was transferred in 2011 – similar to the “Ideo Verve
Sukhumvit” project, these 3 projects were less affected by the
amortization expense on the excess of the fair value.

2. Financial Condition

Assets

In 2010, 2011 and 2012, the Company’s total assets were Baht 9,534.49
million, Baht 8,952.86 million and Baht 9,343.59 million respectively,
representing a decrease of 6.10% and increase of 4.36% respectively. In
2012, the Company’s total assets have increased from cash and its
equivalent value. Details of the Company’s key assets are as follows:

Trade and Other Receivables

The Company’s policy is to recognize revenue from the sale of real
estate upon transfer of ownership of condominium units to customers.
Advances, deposits and contractual payments are not recognized as
revenue, but are recorded as advance payment from customers.
Accordingly, there are no trade receivable on revenue from the sale of
real estate. Existing trade receivable refer to the pending collection
of project management fees, the majority of which are connected
transactions.

In 2010, 2011 and 2012, the Company’s trade and other receivables were
Baht 213.67 million, Baht 95.12 million and Baht 21.12 million
respectively, or 2.24%, 1.06% and 0.23% of the Company’s total assets,
respectively. The major component is the trade receivable with related
parties in relation to project management services provided to ADO and
AD2. In 2010 and 2011, the Company’s trade and other receivables with
related parties were Baht 200.52 million and Baht 73.84 million,
respectively. In 2012, the Company did not have trade receivable with a
related party.

Real Estate Development Costs

Real estate development costs which are incurred before transfer of
ownership is completed are reflected in the Company’s statements of
financial position under “real estate development costs” and are
recognized in the statements of comprehensive income when the transfer
of ownership is completed.

In 2010, 2011 and 2012, the net real estate development costs was Baht
7,291.35 million, Baht 6,958.46 million and Baht 6,014.88 million,
representing 76.47%, 77.72% and 64.37% of the Company’s total assets,
respectively. In 2011, real estate development costs decreased from the
end of 2010 due to an increase in the transfer of ownership of
condominium units in existing projects, which resulted in this item
being amortized as cost of sales. In 2012, there was a decrease from
2011 as the transfer of ownership commenced for several new condominium
projects.

Investment Properties

From 2010 to 2011, the Company did not reflect an “investment
properties” entry. As at June 30, 2012, the Company renamed “real estate
development cost”, which referred to the area leased out to retail shops
in AD2’s condominium projects, to “investment properties”. As at
December 31, 2012, the value of investment properties was Baht 108.84
million, which represented real estate development cost in its entirety.
Property, Buildings and Equipment

In 2010, 2011 and 2012, the Company’s net property, buildings and
equipment was Baht 258.77 million, Baht 443.48 million and Baht 420.89
million, respectively, representing an increase of 71.39% and a decrease
of 5.05% respectively. In 2011, the main increase in assets was from the
transfer of the “land held for development” to “land for use”. As at
December 31, 2012, net property, buildings and equipment experienced a
decrease due to depreciation.

Intangible Assets

In 2010, 2011 and 2012, the Company’s intangible assets were Baht 770.82
million, Baht 525.02 million and Baht 154.80 million, respectively,
representing a decrease of 31.89% and 70.52%. Intangible assets
comprised computer software and assets under installation. However, in
2010, the Company included the fair value of agreements to buy and sell
condominium units made with customers as a result of the acquisition of
AD2, which resulted in a substantial increase in the value of the
Company’s intangible assets. Agreements to buy and sell condominium
units signed with customers will be amortized as expenses upon the
transfer of ownership of condominium units to customers. In 2012, the
said item decreased as it was amortized as expenses for the transfer of
ownership of condominium units to customers. Intangible assets are
detailed below:

Liabilities

In 2010, 2011 and 2012, the Company’s total liabilities was Baht
9,279.18 million, Baht 9,064.85 million and Baht 4,429.94 million
representing a decrease of 2.31% and 51.20%, respectively. In 2012, the
Company’s total liabilities decreased slightly as a result of the
receipt of advances received from customers in relation to the transfer
of ownership of condominium units. As at December 31, 2012, the
Company’s total liabilities are detailed as follows:

Short-Term Loans from Financial Institutions

In 2010 and 2011, short-term loans from financial institutions was Baht
4,551.49 million and Baht 17.96 million, representing 47.74% and 0.20%
of the Company’s total liabilities and shareholders’ equity,
respectively. In 2010, the Company obtained short-term loans from
financial institutions to further invest in Ananda Development Public
Company Limited amounted to the credit facility of Baht 4,800.00 million
at an interest rate of MLR + 2% per annum. Pursuant to the terms of the
loan facility, the loan would become due for repayment on the earlier of
the date that the increase in paid-up capital from an IPO has been
registered or September 30, 2011. The loan repayment was guaranteed by
the mortgage of land and construction in progress of AD2’s condominium
projects, a pledge of shares of the Company and its subsidiaries, and a
cross-guarantee by directors and subsidiaries.

Trade Payables

In 2010 and 2011, the Company’s trade payables derived from unrelated
parties, in particular, payments to construction contractors. In 2010
and 2011, the Company had trade payables from unrelated parties of Baht
233.14 million and Baht 207.50 million, representing 2.45%, and 2.32% of
the Company’s total liabilities and shareholders’ equity, respectively.
In 2011, trade payables decreased slightly from 2010. As of December 31,
2012, trade payables from unrelated parties amounted to Baht 147.96
million, representing 1.58% of the Company’s total liabilities and
shareholders’ equity.

Advances Received from Customers

Money received from customers before the date of transfer of ownership
of their respective condominium units such as advances, deposits and
contractual payments will be recorded as advances received from
customers, and will be amortized as revenue upon the actual transfer of
ownership. In this regard, advances, deposits and contractual payments
account for approximately 10% to 25% of the selling price, depending on
the policy of each project. As at December 31, 2010 and 2011, the
Company had advances received from customers of Baht 1,321.31 million
and Baht 666.78 million, representing 13.86% and 7.45% of the Company’s
total liabilities and shareholders’ equity, respectively. The
significant increase in the percentage of advances received from
customers in 2010 was due to the change in reflecting such revenue from
“revenue from project management services” to “revenue from sale of real
estate” as a result of the acquisition of AD2.

As at December 31, 2012, the Company had advances received from
customers of Baht 792.51 million, representing 8.48% of the Company’s
total liabilities and shareholders’ equity. The significant increase in
the percentage of advances received from customers in 2012 was due to
moneys deposited by customers for the acquisition of units in the 4 Ideo
Mobi. The advances received from customers were for Mobi and AD2’s
projects, representing Baht 773.82 million.

Long-Term Loan

Long-term loans as at December 31, 2010, 2011 and 2012 were Baht
1,196.33 million and Baht 6,074.21 million and Baht 2149.23 million or
12.55%, 67.85% and 23% of the Company’s total liabilities and
shareholders’ equity, respectively. In 2011, there was an overall
increase in long-term loans due to the conversion of certain short-term
loans to long-term loans for the acquisition of AD2, as explained above
in the section on Short-Term Loans from Financial Institutions.
Additionally, the Company further obtained a long-term loan for the
purposes of financing the development of new real estate projects.
However, as at December 31, 2012, this long-term loan decreased from the
due repayment of the principal.

Shareholders' Equity

Shareholders' equity in 2010 was Baht 255.31 million, respectively,
representing 2.68% of the Company’s total liabilities and shareholders’
equity. Shareholders’ equity as at December 31, 2011 amounted to
negative Baht 111.99 million.

In 2010, the Company reduced its registered and paid-up capital from
Baht 250.00 million (2.5 million ordinary shares with a par value of
Baht 100 each) to Baht 187.50 million, by reducing the par value of each
ordinary share to Baht 75.

However, shareholders’ equity in 2010 increased because the Company had
a profit from its business operations. This in turn resulted in a
decrease in deficits. The Company also had a surplus of Baht 64.81
million from the appraisal of the fair value of the assets transferred
as a result of the acquisition of AD2.
In 2011, the Company changed the par value and the number of its
ordinary shares from 2.5 million shares with a par value of Baht 75 each
to 1,875 million shares with a par value of Baht 0.1 each, and increased
its capital to Baht 366.6 million, or the equivalent of 3,666.3 million
shares. The Company requested that existing shareholders pay up shares
amounting to 125,000,000 shares with a par value of Baht 0.1 each (a
total of Baht 12.5 million). As a result of the foregoing, the Company
currently has a paid up capital of Baht 200 million. Shareholders’
equity as at December 31, 2011 was negative Baht 111.99 million due to
an increase in the Company’s deficits resulting from a net loss
sustained during the year.

As at December 31, 2012, shareholders’ equity was Baht 4,919.64 million,
representing 52.65% of the Company’s liabilities and the total
shareholders’ equity. This corresponds with an increase of shareholders
from the end of 2011 due to an increased sale of ordinary shares which
also resulted in further net loss compared to the same period in 2011.

Cash Flow Statements

Cash Flow from Operating Activities

In 2010, the Company had net cash of Baht 1,310.94 million from
operating activities as a result of the acquisition of AD2 in November
2010. Of AD2’s 8 completed condominium projects then, ownership of a
significant number of units was transferred to customers and was
recognized as revenue over the course of the year.

In 2011, the Company had net cash of Baht 545.84 million from
operations. The Company earned a steady income from the continued
transfer of ownership of units in AD2’s condominium projects.
In 2012, the Company had net cash of Baht 1,729.66 million from
operations, most of which was due to the transfer of ownership of
condominium units of 3 newly completed projects. Cash flow from
operating activities significantly differed from net profit because
amortization expenses on the excess of the fair value under
extraordinary items arising from the acquisition of AD2 had no effect on
the Company’s cash flow.

Cash Flow from Investing Activities

Net cash used in the Company’s investing activities in 2010 and 2011 was
Baht 4,604.98 million and Baht 462.98 million, respectively. In 2010 the
Company incurred extraordinary expenses as a result of its acquisition
of AD2. In addition, the Company paid for its investments in cash, and
also had long-term subordinated loans and accrued interest receivable.
The Company also acquired more real estate properties as investments in
the land held for development. In 2011, net cash used for the Company’s
investing activities was Baht 462.98 million, most of which was a result
of the Company’s increased deposits in financial institutions, which
increased guarantee obligations. In 2012, the Company’s net cash used
for the Company’s investing activities was Baht 36.51 million, most of
which was a result of the Company’s decreased deposits in financial
institutions, which correspondingly decreased guarantee obligations.
Cash Flow from Financing Activities

In 2010, the Company had net cash of Baht 3,527.08 million provided by
financing activities. This was primarily due to a short-term loan of
Baht 4,800 million that the Company obtained from a financial
institution for the acquisition of AD2, and a long-term loan repayment
of Baht 1,149 million.

In 2011, the Company had net cash of Baht 327.24 million in financing
activities for long-term loan repayment. In 2012, the Company had net
cash of Baht 230.18 million used in relation to financing activities.
The Company received Baht 5,598.60 million from IPO fund raising and had
spent some to repay loans with financial institutions. The Company has
also borrowed substantial amount of loans to support the Company’s
growth, which requires a material amount of working capital to expand
its real estate development business. However, many projects have been
recognized as income to generate adequate cash flow for loan repayment.

Capital Structure

The Company’s debt-to-equity ratio as at December 31, 2010 was 36.34
times. As at December 31, 2011, the Company had a decrease in total
liabilities but, at the same time, the Company had an increase in
deficits, which led to negative shareholders’ equity. Consequently, the
debt-to-equity ratio of the Company could not be determined in 2011. As
at December 31, 2012, The Company’s debt-to-equity ratio was 0.90 times.
Auditor’s Remuneration

For the accounting period ended December 31, 2012 the total remuneration
of the auditor, Ernst & Young Office Limited, was Baht 1,600, 000 Baht.

Factors Which May Impact the Company’s Operations and Future Finance

Accounting Policy

In 2011, the Company began to implement Standard Accounting Issue 19
which stipiulates that the Company must recognize employee’s benefits as
expenses and record liabilities concerning employee’s benefits after
their retirement. Following this implementation, the Company adjusted
its accounting policy accordingly by decreasing shareholders’ equity for
2011 to Baht 14.1 million and recording it as a long-term employee’s
benefit scheme which amounted to the Company’s non-current liabilities.

Government Policy

The government previously announced plans to invest in basic
infrastructure including an expansion of public transport such as BTS
Skytrain and MRT to alleviate the severity of traffic congestion. The
Company expected to gain advantages from such government policies since
the Company’s core business is developing condominium projects along the
mass transit networks. Another factor is the petrol’s price which
remains high enough for consumers to invest in a condominium in order to
save expenses derived from commuting. Furthermore, the government’s a
tax cut scheme for first-time home buyers which offers a maximum 10% tax
deduction on houses costing up to 5 million baht will boost the sale
since the Company’s condominiums fall in that price range.

In addition, a recently implemented government policy which has
increased minimum daily wages to Baht 300 may also affect labor costs
and future construction costs. However, the Company has evaluated that
the said change will impact no more than 5% of all construction costs.
The change of laws and regulations on zoning and city planning laws may
also affect the costs and expenses of the Company’s landed housing and
condominium projects. All of the Company’s current projects are not
affected by such changes.

Economic Fluctuation

Global economic fluctuation may have effects on Thailand and its
consumers’ confidence. The consumers’ buying power may decrease or
delay. The sale period of the Company’s projects may need to be
extended, which in turn may impact the Company’s results of operations
and financial condition.