MD&A Q3/2021 30 September 2021

			Document Quick Link
Central Pattana PCL
	Major Events
Management's Discussion and Analysis (MD&A)
	Performance
Consolidated Financial Results: 3Q21
	Business Plan

Executive Summary

In 3Q21, Thailand economy was impacted by the 4th wave of coronavirus disease (COVID-19) which demonstrated a high number of daily infected cases resulting in economic indicator shrinkage. Hence, Thailand economic in 3Q21 declined from the same period of previous year mainly due to a lower household and private consumption as pandemic concerns, private and government investment decelerated while tourism which is the driving force of Thailand economy, was still impacted although allow non-infected tourists who pass and meet COVID-19 standard entering to Phuket since July 2021. However, The COVID situation improved in several countries allows an export sector to recover in line with the recovery of trading countries. Thailand public sector, together with private sector, commenced the vaccine roll-out plan to help businesses resume activities as well as stimulus measures to support certain COVID-19 impacted group. By having considered COVID outbreak situation, the Bank of Thailand lowered the Thai economy growth outlook in 2021, from an increase of 1.8% to an increase of 0.7% and maintain the policy rate at 0.5% to stimulate the economic momentum and stabilized financial system.

The performance of Central Pattana Public Company Limited ("The Company" or "Central Pattana") in 3Q21 shows total revenue of THB 5,103 mn, a decrease of 32.9% YoY and net profit stood at THB 229 mn, a decrease of 90.8% YoY (for the first nine months of 2021, the Company reported total revenue of THB 20,995 mn, a decrease of 11.6% YoY, and net profit of THB 5 ,332 mn, an increase of 29.3 % YoY. Excluding the non-recurringitems and impact of financial reporting standards, total revenue stood at THB 4,808 mn and net loss stood at THB 199 mn (for the first nine months of 2021, total revenue stood at THB 17,389 mn and net profit stood at THB 1,687 mn) mainly due to impact from lockdown measures resulting in temporary close shopping malls in high risky area approximately two months compare to the same period of previous year which all shopping malls opened as usual and rapidly recovered from the 1st wave of COVID-19 outbreak. However, the Company implemented an effective cost saving initiatives as planned to minimize impact on business performance and protect interests of all stakeholders.

As a result, The Company was impacted by the 3rd and 4th wave of COVID-19 outbreak which representing a higher number of infected cases hence, the government announced the measurement to control an outbreak in specific areas. The Company strictly comply with government provisions by temporary close shopping malls located in BMA and highly control provinces even though still provide an essential service to facilitate customers. The Company has strictly concerned to all stakeholders and initiated the policy of efficiency management in terms of maximizing cost saving and resource allocation together with manage a cashflow adequacy to operate business during uncertainty circumstance. The Company currently manages 34 shopping malls with the net leasable area (NLA) of approximately 1.8 mn sqm. In 3Q21, the average occupancy rate for all domestic retail properties stood at 91%.

Central Pattana Public Company Limited	Page 1
Management's Discussion and Analysis (MD&A)

Major Events in 3Q21

Mitigation plan for businesses during COVID-19 pandemic situation

• Strictly comply with government restriction to control COVID-19 outbreak in high risky area and keep providing vaccination centers within shopping malls nationwide
• • 
    During July 2021 the government announced lockdown measurement to control and reduce an outbreak in specific areas, The Company strictly comply with government provisions by temporary close shopping malls located in BMA and highly control provinces starting from July 12 until August 31, 2021. For shopping malls where temporary close still provide some certain essential business such as Supermarket, drug stores and vaccination area while restaurants were not allowed dine-in. Delivery services and take away were impacted by stringent measures for certain period. The shopping malls in such areas had adjusted opening hour compatible with the restriction and refrain all marketing activities. The government announce easing lockdown on September 1, 2021, allowed shopping mall to resume its business with a limit operating hour as well as easing restriction for a specific business such as allowed 50% of total seats dine-in which appear a gradual recovery. In 3Q21 overall traffic was impacted directly particular on shopping malls in BMA however, upcountry shopping mall had a limit impact due to operate as usual and has a strong customer base. The Company closely monitors situation and promptly adjust management strategy to operate shopping malls to attract domestic customers. In addition, the Company continue put in to practice the
    "Central's Hygiene and Safety Plan" to enhance cleanliness and highest safety measures to ensure customers' confident after lockdown easing and minimize the risk to response a "New Normal" lifestyle.
    Tenant's sales performance recovery was in line with traffic level. Furthermore, the Company allocated common area or Convention Hall of 23 shopping malls nationwide, accumulating to over 40,000 sq.m. of area, to act as vaccination centers for the citizens which in turn helps accelerate the distribution of vaccines in all regions as quickly as possible and help resuming business activities.
  • Continue to provide support for impacted tenants and business partners including announcement of new business model to emphasize business ecosystem
  • 1. 
       The Company continued tenant's relief measures by considering provide rent waiver during lockdown period for tenants who directly impacted and unable to operate their usual business and rent discount after easing lockdown by considering a proper rate depending on how much of the impact. The relief measures are considered based on mall traffic recovery, impacted business type and sales performance. Moreover, the Company assists tenants to access omnichannel platform namely Chat & Shop, Drive-Thru and Delivery service during lockdown.
       The Company recently announced new business model to incorporate with business partners comprising;
    2. Sustain a business or enable to scale up your business via Fully Integrated Mixed-use development and increase brand exposure to uplift and strengthen regular traffic 2) Provide and facilitate hygiene and safety common area to customers (Excellent services and facilities) together with CRM Marketing (Retail academy, CPN Lead to support SME and initiate new disruptive sales channels such as Chat & Shop, Central Kitchen
    1. Attract shops to incorporate The 1 ecosystem or empower with Big Data via The 1 Biz platform to assist tenants to better understand The 1 customer's behavior which encourage a new marketing campaign for direct target customers and expand customer base at the same time.
  • Exercise rigid cost control measures to retain company's profitability and sufficient cashflow
  • 
    The Company remains variable cost reduction initiatives constituted utilities, outsource service as well as reduce unnecessary costs at organization levels to mitigate the impact on revenue and profitability as plan under the situation that has yet to fully recover to normal levels. Furthermore, in light of the COVID-19 situation, the Company has entirely prepared its cashflow sufficiency, maintain liquidity and proper capital structure amidst uncertainty circumstance.

Central Pattana Public Company Limited	Page 2
Management's Discussion and Analysis (MD&A)

Diversification into Mixed-use Development Projects

In 3Q21, the Company has developed totaling of 19 residential projects by emphasizing on development of condominium project in area close to existing shopping mall which well received a good response in terms of booking. This enhances company's leadership in Mixed-used development to sustain its revenue growth. In addition, the Company continuously develops high potential low-rise projects to response customer's New Normal lifestyle given more personal space, locate in good location, close to shopping mall with full facilities. There was a plenty demand of customers to come and visit residential projects including online virtual tour. The Company lately is on process of developing NIRATI Donmuang which opened for booking since 3Q21 and starting transfer in 4Q21 onwards. Currently, the Company prepare to launch 3 new residential projects by the end of the year.

All 18 residential projects in 3Q21 comprise of;

• 6 Condominium projects completely transferrednamely 1) ESCENT RAYONG 2) ESCENT CHIANGMAI 3) ESCENT KHONKAEN 4) ESCENT NAKHONRATCHASIMA 5) ESCENT VILLE CHIANGRAI and 6) ESCENT VILLE CHIANGMAI
• 6 Low-riseprojects under selling and transfer processnamely 1) ESCENT TOWN PHITSANULOK, townhome projects 2) NINYA KALLAPAPRUEK, twin home projects 3) NIRATI CHIANGRAI 4) NIRATI BANGNA 5) NIRATI DONMUANG 6) NIYHAM BOROMRATCHACHONNANI, which are single house projects. Each project is accumulated ample interest in terms of visitor number from potential customers both site visit and online format.
• 4 Condominium projects completely built and under transfer processnamely 1) ESCENT UBONRATCHATHANI 2) ESCENT PARK VILLE CHIANGMAI 3) PHYLL PHAHOL 34 and 4) Belle Grand Rama 9
• 3 Condominium projects under constructionnamely 1) ESCENT KORAT 2) ESCENT RAYONG II and 3) ESCENT HATYAI which well received attentions and booking continue to increase.

Retail-led Mixed use development project has recently launched on October 27, 2021 namely Central Si Racha which received a good response while Central Ayutthaya will be launched on November 30, 2021, respectively.

Siam Future Development share acquisition

• In July 2021, Central World Company Limited, a subsidiary which the Company own 100% stake both direct and indirect has announced to entered into an agreement to purchase of common shares in Siam Future
  Development Public Company Limited ("SF") from Major Cineplex Group Public Company Limited and a group of major shareholders at the purchase price of THB 12.00 per share, amounting to THB 13,341 mn in total. The transactions had completely done on August 30, 2021, which the Company has share ownership in SF at 56.26% of the total outstanding shares.
• After the completion of the transactions, the Company proceed a mandatory tender offer for the remaining shares in SF during September 10, 2021 to October 10, 2021 at the purchase price of THB 12.00 per share with an approximate amount of THB 11,191 mn. The Company received a tender share 39.98% of all issued and sold SF shares at tender period ended. The Company therefore own SF stake at 96.24% according to announcement to the Stock Exchange of Thailand on October 20, 2021.
• As a result of SF acquisition, the Company recognizes an increase in total assets of THB 33,474 mn and increase in liabilities of THB 8,044 mn ((see details of acquisition in the Notes to Financial Statements No. 3). This investment is objectively to expand business potential into a small new retail format as well as a high potential regional mall in the long run which enhance company's competitiveness and contribute long-term shareholders' return.

Central Pattana Public Company Limited	Page 3
Management's Discussion and Analysis (MD&A)

Asset Enhancement Initiatives to enhance long-term competitiveness

The ex-ISETAN department store area at CentralwOrld is currently under the renovation process by developing to multi-destination zone format, comprising a mixture of anchor and retail tenants along with new magnet brands to capture all customer demands. The Company expects the renovation to be completed and ready to open by end of 2 0 2 1 to serve demand from domestic and tourist customers. Currently is under the process of negotiation with tenants who potentially interested this area.

In addition, the Company continuously renovates existing shopping malls namely, Central Rama2 under "Destination Concept" including Food zone, Family zone, Sport zone, Fashion plus and arrange various interesting activities reflect customer's Center of Life by emphasizing new safety and hygiene experiences compatible with the "New Normal" lifestyle in current situation. The renovation area partially completed and inline as plan.

Financial and Operating Performance in 3Q21

Table 1: Summary of net leasable area and occupancy rate
	Number of projects and net leasable/salable area under CPN management as of 3Q 2021
		Total		CPN		(1)		(2)
			CPNREIT	CPNCG
	No.		sq.m.	No.	sq.m.	No.	sq.m.	No.	sq.m.
Retail properties
Shopping malls - BMA		15	929,152	15	780,289	3	148,863
Shopping malls - Provinces	(3)	18	793,058	18	695,018	4	98,040
Total domestic retail properties	33	1,722,210	33	1,475,307	7	246,903
Shopping malls - International	1	83,639	1	83,639
Total retail properties		34	1,805,849	34	1,558,946	7	246,903
Non-core businesses
Office buildings		9	246,966	4	53,474	4	111,820	1	81,672
Hotels		2	563 rooms	1	257 rooms	1	306 rooms
Residential (high rise)		12	5052 units	12	5052 units
Residential (low rise)		6	1127 units	6	1127 units
Assets under GLAND
Office buildings		1	67,604	1	67,604
Residential (high rise)		1	1991 units	1	1991 units
Retail space in buildings			24,936		24,936
Assets under SF
Shopping malls under JV		1	160,242	1	160,242
Retail space in buildings		17	204,641	17	204,641

Remarks

1. Assets under CPNREIT comprises 1) 7 shopping malls, namely 1) Central Rama 2, Central Rama 3, Central Pinklao, Central Chiangmai Airport and Central Pattaya; 2) 1 hotel, namely Hilton Pattaya and 3) 2 office buildings Pinklao Tower A & B and offices which under the management of GLAND, namely The Ninth Towers Grand Rama 9, Unilever House Grand Rama 9.
2. Assets under CPNCG comprises 1 office building, namely CENTRALWORLD OFFICES
3. Central Phuket, which consists of the Central Phuket Floresta and Central Phuket Festival, is counted as a single project

Central Pattana Public Company Limited	Page 4
Management's Discussion and Analysis (MD&A)

Overview

The Company has 4 business categories under management: 1) Shopping Center and office for rent; 2) Food center services; 3) Hotel; and 4) Residential for sale which includes the properties transferred to CPN Retail Growth Leasehold REIT ("CPNREIT") and CPN Commercial Growth Leasehold Property Fund ("CPNCG") as well as properties of Grand Canal Land PCL ("GLAND"), which is company's subsidiaries and all properties under Siam Future Development ("SF").

In 3Q21 the Company managed 34 shopping centers (15 projects in Bangkok Metropolitan Area (BMA), 18 projects in the provinces, and 1 project overseas), 10 office towers, 30 food centers, 2 hotel properties namely Centara Hotel and Convention Centre Udon Thani, Hilton Pattaya and 18 residential projects consist of 13 high-rise projects and 5 low-rise projects as well as 1 regional mall and 17 community malls under investment through SF.

As of September 30, 2021, the average occupancy rate of the Company's domestic shopping malls stood at 91% , slightly decreased from the same period of previous year at 92%. Most of the shopping malls maintained high level of occupancy rate despite most of tenants were impacted by COVID-1 9 . The Company render an assistance to tenants by implementing remedy measure so that they could re-operate their business which resulting in maintaining mall occupancy rate.

In 3Q21, same store rental revenue increased approximately 74% YoY (for the first six months of 2021, same store rental revenue growth decline to 32.1% (for the first nine month of 2021 decline 8.9% YoY) mainly from COVID- 19 impact by providing rent discount to tenants as well as lower marketing activities and temporary close shopping malls as mentioned above. The same store rental revenue excludes that of malls under renovation during 2020 and 2021, namely CentralwOrld, Central Ladprao, Central Chonburi, Central Chiangrai, Central Phuket Festival, Central Pattaya and Central Rama 2.

Non-recurring items

The Company has non-recurring items in 3Q21 and the first nine months of 2021 compared to the previous year as follows;

• In 1Q21The Company has completed the transaction of lease of assets to CPNREIT namely Central Marina with a lease tenure of 15 years ending 2035 and Central Lampang with a lease tenure of 22 years ending 2041. The Company has recognized the transaction in its consolidated financial statement as follows;
• • Revenue from assets injection to CPNREIT amounted THB 2,667 mn which recognized under other income and THB 533 mn of income tax expense on the revenue recognition.
  • Acquisition fee from CPNREIT amounted THB 84 mn, recognized under other income.
• In 2Q21The Company received rental waiver of Hilton Pattaya from CPNREIT amount THB 115 mn which recognized in other income.
• In 3Q21the Company recognized non-recurring items in other income as follows;
• • The Company received rental waiver of Hilton Pattaya from CPNREIT amount THB 59 mn
  • The Company recognized write-off ROU and lease liability of Lampang project due to the asset transfer transaction earlier this year amount THB 58 mn
  • The Company recognized unrealized gain from exchange rate amount THB 111 mn

Central Pattana Public Company Limited	Page 5
Management's Discussion and Analysis (MD&A)