Management Discussion & Analysis (MD&A)
Golden Land Property Development Public Company Limited (“the Company”) would like to report the financial result of 2nd quarter ending 31st March, 2020 of the Company and its subsidiaries. The Company recorded net profit Baht 351.29 million, a decrease of Baht 305.45 million or 46.5%. For the 6-month period ending 31th March, 2020 net profit was Baht 712.72 million, a decrease of Baht 400.51 million or 36.0% decrease from the same period last year. The result was mainly from the following factors:
- The Company recognized the revenue for the 2nd quarter 2020 at Baht 3,993.58 million, a decrease of Baht 891.03 million or 18.2% from the same period last year, and earned the revenue of Baht 8,008.93 million for 6 months 2020, a decrease of Baht 1,111.59 million or 12.2% from the same period last year.
- The main revenue declined was from the sales of real estate at Baht 838.60 million or 19.1% decrease for 2nd quarter 2020, and a decrease of Baht 1,048.61 million or 12.9% decrease for 6 months 2020. The number of transferred units went down by 76 units or 7% during 2nd quarter 2020 and by 20 units or 1% for 6 months 2020, compared to same period last year. This was due to the prolong of home buyer’s decision during the uncertainties of COVID-19. In addition, the number of transferred units in 2nd quarter 2019 was resulted from home buyer making a spontaneous buying decision to avoid Bank of Thailand (BOT)’s new mortgage lending measures. To emphasize 6-month period, the number of transferred units slightly went down because transferred units in 1st quarter 2020 was higher than the same period last year. However, the number of transferred units from newly launched projects was drop compared to same period last year. For further detail, the decrease of 11% in price per unit was occurred by the low numbers of transferred units of single detached houses and semi-detached houses which have a higher price than other product segments. Such decrease was an aftermath of economic situation and BOT’s tightening mortgage measures. Location-wise, despite the decrease of revenue from residential projects in Bangkok and vicinity area, increase of revenue from upcountry projects was presented from the new project expansion.
- An increase of Baht 11.97 million or 5.1% from revenues from rental and services for 2nd quarter 2020 and an increase of Baht 24.79 million or 5.2% for 6 months 2020, were mainly drove by higher occupancy and rental rate of FYI Center office building. In contrast, rental revenue from venues was substantially plummet since the mid of quarter.
- A decrease of Baht 39.18 million or 25.6% for 2nd quarter 2020 and a decrease of Baht 39.63 million or 13.3% for 6 months 2020 from hospitality’s revenue, were primary from decreasing occupancy and average daily rate, resulting from COVID-19 effect that prohibited tourist inbound since late January 2020. Although most hotels decided to temporarily close in April, the Company’s hotels remained operating. Fortunately, both Company’s serviced apartments still maintained long-stay guests, minimizing the COVID-19 impact compared to other properties. However, COVID-19 has been considered the most impactful business incident to both properties.
- An increase of Baht 2.63 million or 5.4% for 2nd quarter 2020 and an increase of Baht 7.45 million or 7.7% for 6 months 2020 from Management fee income were recorded according to increasing rate of property management and new projects’ management fees.
- A decrease of Baht 8.06 million for 2nd quarter 2020 and a decrease of Baht 35.52 million for 6 months 2020 of other income were resulted from the reversal of litigation provision of subsidiary due to court order to dismiss the case. In addition, the Company had gain from the sales of investment in subsidiary at Baht 18.06 million in the same period last year.
- The Company had the total expenses Baht 3,488.70 million, a decrease of Baht 615.51 million or 15.0% for 2nd quarter 2020; and the total expenses for 6 months 2020 were Baht 6,971.03 million, a decrease of Baht 805.99 million or 10.4% from the same period last year. The decrease of expenses was proportionated to the decline of revenue by
- A decrease of costs of sales of real estate Baht 530.56 million or 17.5% and a decrease of gross profit margin at 1.3% for 2nd quarter 2020 due to higher portion of sales from upcountry segment, which has lower gross profit margin. Compared to same period last year, a decrease of cost for 6 months 2020 at Baht 759.56 million or 13.4% was led to a stable gross profit margin.
- A stable cost of rental and services was realized in 2nd quarter 2020 and only 2.1% increase for 6 months 2020. Cost of rental and service was consisted of mostly fixed costs and small portion of variable costs. This contributed to insignificant change in overall cost.
- Both decreases of cost of hotels Baht 12.88 million or 12.8% for 2nd quarter 2020 and Baht 14.21 million or 7.1% for 6 months 2020, were lower than the decrease of revenue. This originated from minimizing variable costs, i.e. salary reduction of hotel operators, leave without pay policy, and utility saving from closed floors. All was effective since the announcement of international travel ban in February 2020.
- A decrease from distribution cost Baht 70.18 million or 19.5% for 2nd quarter 2020 and a decrease of Baht 99.03 million or 14.6% for 6 months 2020, were mainly drop of special business tax, sale promotion, advertising and marketing expenses which were all in line with sales of real estate.
- A decrease of administrative expenses at Baht 19.50 million or 4.8% for 2nd quarter 2020 but an overall increase of Baht 36.82 million or 4.6% for 6 months 2020, were from the growing personnel expenses and utilities which were correlated to the increasing number of housing projects, central management expenses, an increase of office rental and services, depreciation relating to relocation of head office and other management/consulting fees. In detail, the Company did impose a hiring freeze policy when sales of housing projects showed slow absorption. This resulted in lower administrative expenses in 2nd quarter 2020 compared to the same period last year. However, the administrative expenses of 6 months 2020 were still higher than the same period last year.
- The Company recognized an increase in share loss from investments in associates and joint ventures at Baht 59.49 million for nd quarter 2020 and Baht 132.57 million for 6 months 2020. This mainly led by share loss from investment in joint ventures: the start of operation of Samyan Mitrtown on 20th September 2019. Despite high marketing expenses, occupancy and rental rate were gradually increased. For hotel business, our JV also offer free accommodation for medical personnel.
- Income tax expenses for nd quarter 2020 were Baht 106.33 million in respect of net profit before tax of Baht 457.61 million, equivalent to corporate income tax rate at 23.2% and Baht 224.68 million, equivalent to corporate income tax rate at 24.0% for 6 months 2020. The result was from no deferred tax asset recognition from loss from investments in Joint Ventures at this stage.
From the performance above, The Company generated net profit of Baht 351.29 million, a decrease of at Baht 305.45 million or 46.5% in the nd quarter 2020. To summarize,
- The total revenue was decrease by 18.2% compared to same period last year, mainly causing from a decrease of sales of residential projects, and a loss of revenue from temporarily closure of hospitality, retails and venues in compliance to the government’s order.
- The total expense was fell by 15% compared to same period last year, in which 3.2% lower than the total revenue. This led to an increasing loss of Baht 131.09 million or 20.3% compared to net profit of nd quarter 2019. The marginal decrease of expenses was a result of 1) the Company retaining full renumeration and imposing work-from-home policy; 2) extra cost of maintaining hygiene in all serviced areas.
- Share loss of investments in associates and joint ventures was accounted for 9.1% decrease in net profit.
The net profit was at Baht 712.72 million, decreasing at Baht 400.51 million or 36.0% for 6 months 2020.
- Financial position as of 31st March, 2020
The Company had a total asset of Baht 52,953.37 million, increasing at Baht 5,755.27 million from 30th September 2019. The growth of the asset was driven by an increase of Baht 1,993.40 million cash and cash equivalents for a reserve during COVID-19 uncertainty. Baht 4,106.52 million was from real estate projects under development and from acquisition of new land bank for development, decreasing Baht 153 million in investments in Joint Venture and also decreasing Baht 253.64 million from depreciation of investment properties, leasehold rights, and property, plant and equipment.
- Liabilities and equity
TThe Company had a total liabilities of Baht 36,365.04 million, increasing Baht 6,157.94 million from 30th September 2019 mainly from an increase of loan from financial institutions at Baht 5,518.88 million, a net increase of debenture Baht 1,500 million (issuing debentures Baht 4,500 million repay Baht 3,000 million) to finance the increasing asset, a decrease of trade payable and other payable Baht 639.43 million as a result of lower construction payment according to lower sales.
Equity attributable to owners of the parent company was Baht 16,588.33 million, decreasing Baht 402.67 million from 30th September, 2019. This resulted from net profit of 6 months period less dividend paid at Baht 1,115.39 million.