Treasury Policy for Property Development

1. Objectives and scope

This policy sets the rules for managing cash, liquidity, bank accounts, project loans, customer receipts and financial risks of the company and of the subsidiaries, SPVs and JVs that the company controls. It covers the whole cycle from land acquisition, construction, sales and ownership transfer through to handover to the juristic person, and applies to directors, executives, employees and advisers involved in receiving or paying money.

2. Definitions that must be used consistently

3. Roles and responsibilities

4. Cash and liquidity

Minimum cash

• Corporate: cash and cash equivalents of no less than 3 months of corporate overhead
• Project: a reserve equal to 1 month of average construction cost, to cover the wait for drawdowns
• Standby facility: a standby revolving credit line scaled to the size of the group. The source document uses THB 200 million or 5% of total development cost, whichever is higher; this suits large developers and should be scaled down to fit the business.
• When below the threshold: the Treasurer reports to the CFO within 1 business day, and the CFO proposes a plan within 5 business days

For calculation details, see the Liquidity Reserve page

Forecast

Prepare 3 cases: Base, Best (fast take-up) and Worst (slow take-up combined with a 10% cost overrun). If the Worst case shows negative cash within 6 months, the CFO must report to the CEO immediately and put a plan to the board within 7 days.

Account structure

Transfers between accounts

• Balances above the threshold in Corporate Operating may be transferred to a money market fund or the DSRA.
• Project Receipt may be transferred to Project Disbursement of the same project, in line with a plan approved by the CFO.
• Project A's money must not be used to pay Project B's costs, even if the same owner holds both projects.
• Money moved between group companies requires an agreement and arm's-length interest rates. See the Intercompany page.

Petty cash

Example limits: head office no more than THB 100,000; each sales office no more than THB 30,000; no more than THB 5,000 per transaction. The cash custodian must not be the person who records the accounts, and someone else must count the cash at least once a month.

5. Banks, credit and drawdowns

Approved Bank List

Use only banks approved by the board: Thai commercial banks or licensed foreign bank branches that have project lending experience and credit ratings meeting the criteria. The source document uses a minimum of A-. If the company's main banks are rated lower, set new criteria that can work in practice. Spread business across at least 3 main banks, with a cap of 40% per bank, and the CFO reviews the list every year.

Borrowing purposes

Borrowing is permitted for land purchases, project development, working capital and refinancing. Borrowing outside the formal banking system is prohibited. Loans from directors or shareholders must be approved and documented by an agreement.

Financial criteria (examples)

The thresholds in the loan agreement prevail over internal thresholds. If the agreement's thresholds are stricter, follow the agreement.

Draw Down

• Drawdown notice signed by the CFO and the CEO
• Progress report certified by the project manager and an independent engineer acceptable to the bank
• Invoices, BoQ and payment certificate
• Cost-to-complete against budget
• Latest sales take-up, and a check of Presale conditions against covenants
• Latest updated project cash flow
• Keep original documents for the company's retention period. The source document uses no less than 10 years.

Do not draw down more than actual expenses over the next 30 days, to avoid negative carry. Funds drawn for one project must not be used for another project or as corporate working capital.

Covenant

Prepare reports every quarter at both corporate and project level, covering both financial and non-financial covenants. If a covenant is within 10% of its threshold, notify the CFO immediately. If a covenant is breached, the CFO must notify the bank as the agreement requires and put a plan to the board within 7 days.

Guarantee letters

• Maintain a guarantee register and review it every quarter.
• LGs guarantee the maintenance of public utilities under the land allotment law. Use the amount and period set by the current notification, and check with the Land Allocation Committee before submitting.
• Example: require security from contractors on contracts above THB 50 million, at 5–10% of the contract value.
• Guaranteeing the debts of parties outside the group is prohibited.

Prepayment and refinancing

Loans are normally repaid from transfer proceeds at a release price, for example 70–80% of the selling price per unit. Any early repayment must compare the prepayment fee against the interest saved and the effect on liquidity. The CFO reviews the cost of debt every 6 months.

6. Sales and project-level cash flow

• Set a monthly sales take-up plan with ±20% sensitivity before the project launch.
• Compare actual against plan every week. If sales are below plan for 3 consecutive months, propose a plan to stimulate sales and adjust the cash flow.
• Show monthly cumulative cash and identify the point of maximum funding requirement.
• Set the default rate assumption from each project's actual data. The source document uses 3–5% of sales.

7. Customer money and juristic person funds

Customer money goes only into the Project Receipt account of that project. For details, see Protecting customer money and separating project accounts

The initial juristic person fund and advance common area fees are money held on behalf of the juristic person. They must be kept in a Juristic Holding Account, must not be used for the company's activities, and must be handed over together with the project documents and written evidence of acceptance.

8. Internal control

• Separate the preparer, the approver and the person who records the accounts.
• The person who looks after the customer money account must not be an authorised signatory for payments from the same account.
• The person certifying progress must not be the contractor, and an independent engineer must co-certify.
• The person who reconciles must not be an authorised signatory.
• e-Banking uses a two-level maker-checker process. Holding another person's token or password is prohibited.
• Transactions of THB 500,000 or more require 2 joint signatories.
• Review user access rights every 6 months, and revoke access within 1 business day when a person changes duties or leaves.
• Back up data daily and test restoration once a year

All approval limits are set out in the group delegation of authority table

9. Reporting cycle

10. Compliance and review

Policy breaches must be reported to the CFO, Internal Audit or the Audit Committee. Whistleblowers acting in good faith must be protected. The CFO reviews the policy at least once a year, covering limits, laws, accounting standards and loan conditions. Amendments must be approved by the Board of Directors and communicated to employees within 14 days.

Related templates

Project Life Cycle Cash Flow

Bank Reconciliation

• Pull the statements for every account at month-end, including the Project, Escrow, DSRA and Juristic Holding accounts
• Reconcile against the accounting system
• Identify unrecorded items, uncleared cheques, fees and interest
• Adjust the accounts
• Preparer and reviewer sign off