MK announces Q1/2011 Operating Results

Revenue and profit dropped sharply year-on-year due to transfer ahead of tax privilege expiration last year.  Still there is a sales backlog of  THB 1,200 million.  The company maintains its strength in cost management with gross profit margin at 39.79%.  D/E ratio at 0.29 times

Mr.Chuan Tangmatitham, President of M.K. Real Estate Development Public Company Limited (M.K.), "Chuan Chuen" and "Serene House" project developer, revealed that the company has recognized Bt 405.68 million revenue from sales and services  in Q1/2011, 55.70% decreased YOY from Bt 915.90 million.  As the company had speeded up title deed transfer to customers towards the expiration of tax privileges in March 2010, its revenue in the first quarter of last year was higher than usual.  Main projects contributing to sales revenue were Chuan Chuen Modus Centro, Chuan Chuen Modus Charan-Pinklao, Chuan Chuen Onnuch, Chuan Chuen Petkasem and Chuan Chuen Modus  Chaengwattana.  Sales backlog at the end of Q1/2011 was approximately Bt 1,200 million with 70% to be recognized in 2011.

MK earned Bt 161.44 million in gross profit, 55.82% declined YOY from Bt 365.41 million due to the aforementioned reason.  Meanwhile the company maintained its strength in cost management.  Gross profit margin, at 39.79%,  was comparable to 39.90% of Q1/2010.  Starting this quarter, SG&A expenses included employee benefits under the new accounting policy, resulting in Bt 2.78 million increase in administrative expenses.  In Q1/2011, SG&A expenses stood at Bt 100.37 million, lower than Bt 108.70 million of the same period last year.  After interest and income tax, MK's net income decreased 75.88% YOY to Bt 47.00 million, yielding Bt 0.05 Earning Per Share, while Q1/2010 net income had been Bt 194.90 million or Bt 0.23 per share. Net profit margin was 21.17%, dropped from 11.41% of Q1/2010.

MK's financial position has been continually strengthened.  Debt to equity (D/E) ratio dropped from 0.30 times at the end of last year to 0.29 times. Cash flow from operating activities was Bt 77.54 million in surplus despite land acquisition for future development.  MK's assets and shareholders' equity were at the same level as last quarter's.  Loan decreased by Bt 169.44 million; meanwhile, employee benefit obligations was recorded at Bt 62.91 million under the new accounting policy, resulting in the decrease of total liabilities by Bt 54.55 million.

Consequent to the adoption of new and revised TFRS, accounting for revenue from real estate was changed from a percentage of completion basis to completion of the contract (title deed transfer).  It effected to revenue, earning and earnings per share with decrease in retained earnings amounting Bt 11.88 million and increased profit in Q1/2011 by Bt 5.99 million.  Regarding accounting for employee benefits, the group's obligation in respect of post-employment benefits is recognized in the financial statements based on calculations performed annually by a qualified actuary using the projected unit credit method.  Previously, this obligation was recognized as and when payments were made.  Employee benefit obligations as at January 1, 2011 was Bt 60.13 million and retained earnings decreased by the same amount.  Q1/2011 administrative expenses increased by Bt 2.78 million which effected to decrease in earnings per share of Bt 0.003.