Separate financial statements - Energy Earth Public Company Limited

Transcription

Energy Earth Annual Report 2012
Company Information
Company Name: Energy Earth Public Company Limited (“Earth”)
Company Registration No: 0107538000240
Type of Business:
Coal importation by utilizing its rights to various mining facilities
and concessions abroad aimed at distributing coal products to
customers from the domestic and international markets.
Registered Capital:
Common Shares with value of Baht 3,027,615,570
Paid-Up Capital:
2,605,495,683 Common Shares at par value of Baht 1.00 per
share with the total amount of Baht 2,605,495,683.00 as of 31
December 2012
Head Office Address:
889 Thai CC Tower Floor 12 Room 125-12 South Sathorn
Road, Sathorn, Bangkok, Thailand 10120
Contact Details:
Telephone: +66 (0)2673-9631-3
Fax: +66 (0)2673-9634
Website: www.energyearth.co.th
Investor Relations Contact Person: Dir. Thanawat Pratoomsuwan
Email: [email protected]
Other Investments: Earth holds 99.99% of the common shares of Energy Perfect Company
Limited (“Energy Perfect”) which has a registered capital of
Baht 200,000,000. Energy Perfect provides sorting and logistics
services to Earth’s customers, while distributing coal products
to customers in the domestic and international markets.
Energy Perfect has its own factory located 706/4 Moo1,
Nongkam, Sriracha, Chonburi.
Telephone: +66 (0)2673-9631-3 Fax: +66 (0)2673-9634
Other Investments:
TRI TUNGGAL PITRIATI (“TTP”), a company registered in
Indonesia with rights of mining concessions in Indonesia. The
head office address is located at Banjarmasin, Indonesia. The
registered capital is Rp. 8,521,000,000 or the equivalent of
USD 1,000,000 and the shares held by EARTH is no more than
100% of the paid-up capital.
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Securities Registrar:
Thailand Securities Depository Co., Ltd.
Registrar
of Securities Department, Capital Market Academy 7 Floor 62
Ratchadaphisek Road Khlong Toei, Bangkok, 10110
Telephone: (66) 2229-2000, Fax: (66) 2654-5649
Auditor:
Ms. WimolsriJongudomsombut
Certified Public Accountant Registration No. 3899
Karin Audit Company Limited
6 Fl., Room B1, Boonmitr Building, 138 Silom Road, Bangrak,
Bangkok 10500
Telephone: +66 (0)2634-2484-6 Fax: +66 (0)2634-2668
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Nature of the Business
Marketing, Strategy, and Competitive Analysis
1. Competitive Strategy
1.1 Coal Sourcing and Supply Chain
Own mining is an essential target of our company because we need to change our
position from trading to miner. In 2011, Company Group has increased the registered capital
to purchase mines in Indonesia to secure supply for customers. With the reserved amount of
7.4 million tons in the purchased mines, Company Group can guarantee to deliver coal to
customers punctually as per contracts signed with customers. In 2012, the company sells
such coal for amount of 1.85 million tons and remains 5.5 million tons. In addition, all
supply in such mine already sold out. The company will deliver them on time based on the
contracts. The processes of own mining are as follows:
x On 23 November 2012, Energy Earth PCL signed the Joint Operating
Agreement with East Star Company Limited
o Concession: East Star Company Limited acquires a coal concession
including area of 1,262 Rai at Dawei, Myanmar.
o Mining and Distribution: Energy Earth Company Limited is a mining
and distributive company
o Investment: Energy Earth Company Limited has its own
investment.
o Coal Reserve: At the beginning, the company expects to have at
least 40 million tons of coal reserve. Energy Earth Company
Limited will hire a Third party to do the job research and issue a
Joint Ore Reserves Committee (JORC). If this mine has a coal
reserve less than 40 million tons, East Star Company Limited will
seek other resource to cover the remaining.
o This mining operates by the joint operating agreement, so the
company does not pay any compensation to East Star Company
Limited. According to the joint operating agreement, the company
will be responsible for all operating expenses during these
transactions. The return will be divided as per the participating
interest ratio, which is the company being 70%, and East Star
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Company Limited being 30%. The concession is expected to be
operational in March 2013.
x On 21 December 2012, Board of Directors’ meeting of Energy Earth
Company Limited number 5/2012 approved to buy all of the common
shares of PT. HaryNiaga from their shareholders of not more than 1,000
shares and buying not more than 3,694,800 baht per share with the total
value of not more than 3,694,800,000 from HARY’s shareholders. A par
value is 1.00 baht per share of the private placement at the offering price
of 8.13 baht per share. The assets of HARY subject of the swapping of
shares will be the mineable coal reserves of not more than 40 million
tons at East Kalimantan, Indonesia. However, to ascertain the official coal
reserves, the Company has appointed an independent appraiser to
determine their accuracy, and produce the JORC (Joint Ore Reserves
Committee). The report should finish by the end of June 2013. The
number of shares to be swapped by EARTH to HARY will based on the
calculation of coal reserves by the independent appraiser. On the other
hand, the Company will register the increase of capital and enforce the
Extraordinary General Meeting of the shareholders No. 1/2013. The
General Meeting of the shareholders will consider and approve to
increase the capital for officially acquiring the mining.
Acquiring mine at this time can guarantee to our customers that the
Company Group has plenty coal reserve to deliver to our customers on
time.
In the trading section, the Company Group purchases products from other
mines. The Company Group always explores a quality of products in each
mine by hiring licensed professionals, who must have the technical
expertise to evaluate coal resources, carbon levels,moisture ratios, ash
levels, sulfur dioxide levels, and coal reserve of each mine. If such mine
passes a standard level, the Company Group will order products from its.
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1.2 Relationship Management and Servicing
Company Group realizes the importance of sourcing and its key success for this type
of business. Company Group uses relationship managing policy to create good relationship
with mine owners in Indonesia. Such policy requires Company Group to send our employee
to cooperate with the mines to set complete preparation before each shipment. The
Company Group also has closer relationship with distributors so it helps to trade and deliver
products smoothly and conveniently under high quality products and services.
Our sales team and distributors have highly knowledge skills and expertise in coal
industry. They provide excellence services and advise to customers in the case that
customers have trouble using our products. Our executive directors often visit clients’ power
plant. On the other hand, we invite them to stop by our mine in Indonesia in order to
ensure our coal reserve and quality of products.
1.3 Production and Transportation
Company Group’s coal aggregating factory operates 24/7 days a week. Our
employees are always ready to take orders from customers daily and nightly, which result in
us being able to deliver coal according to customers’ need at all time. The Company Group
hires various trucking companies to support logistics 24 hours, and to reduce the risk of
relying too much on certain trucking companies.
The Company Group always sets up delivery plans with the international customers. We
have maintained good relationship with cargo ship routes. In our experience, the Company
Group always delivers products to ports or docks on time. In addition, the company has an
insurance to protect all damages, which can occur to products in any cases. We have been
never fined on delay delivery or damage products.
1.4 Customer Quality Speculation
Company Group has created customer database by speculating qualifications of
customers in both financial status and past payment results. Having a meeting, discussing
with customers directly, and consulting with others who are in the same field are parts of
the procedure to collect information before the credit term approval for each customer.
Most of the customers’ credit term is 30 days, only a very few customers whose credit term
is 45 days due to competitive conditions proposed by competitors.
1.5 Management within the Organization
Company Group uses online and modern communicating system to manage and
follow up works in every area. All employees must report working progress from product
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transporting from Indonesia to delivering product to customers’ factories via online
communicating system set by Company Group. Such system will let every member of
Company Group know the working progress in every section related instantly.
1.6 Expanding market share to customers, who located nearby factories
Many industrial factories, who located nearby our factories Sriracha, Chonburi and
Nakornluang, Ayutthaya, use fuel oil or natural gas. The Company Group seeks an
opportunity to move into these factories because it helps to decrease logistic costs.
2. Competition and Industry Trends
2.1 Domestic Coal Industry Status
Import Volume:
The growing global economy has resulted in higher world market price for oil and
natural gas. Therefore, many industrial factories have decided to use boilers that can
consume coal as their fuel because coal is a good alternative energy. Its heating value is as
high as oil or natural gas and the cost is much lower when comparing by using price per
heating value (Baht per Kilo Calorie). From the table below, we mayfind that import volume
in 2012 is greater than in 2011 with the ratio of 63.37%.
Table Showing Thailand’s import in 2011 and 2012
Coal
Anthracite
Volume (Metric
Tons)
2011
2012
%
Change
210,701
138,063
-34.47
Bituminous 4,484,690 7,326,828
Total
4,695,391 7,464,891
Value (Million
Baht)
2010
1,407
63.37
58.98
2011
%
2011 2012
Change
808
-42.57
6,678 5,852
12.37
51.90
2,916 2,711
7.03
42.72
N/A
13,077 19,864
14,484
Price (Baht per
ton)
20,672
N/A
%
Change
N/A
Source: Customs Department of Thailand
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Trends of Coal Industry
Coal demand in both domestic and world market still have a tendency to grow
continuously due to better global economy and higher oil price. Thailand currently has
approximately 7,000 industrial factories. If the price of oil and natural gas still remain high,
many factories may take chance to use coal as their energy source instead, which will result
in rapid growth of coal industry.
2.2 Trends of Coal Industry in the Global Market
Top Coal Exporters in the world
Source: Data from World Coal Association (2011 in Million Tons)
World coal export is increasing significantly. In 2011, Indonesia ranks as the number
one coal exporters in the world with 309 million tons per year, followed by Australia with
284 million tons per year, Russia, and the United States of America,respectively.
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Top Coal Importers in the World
Source: Data from World Coal Association (2011 in Million Tons)
World coal import is rising dramatically. In 2011, China is the number one coal
importer in the world with 190 million tons per year, followed by Japan with 175 million
tons per year. South Korea is ranked in Third and India is Fourth. Most of our products sell to
China and India, respectively. Japan and South Korea are our target market in the future.
Customer Characteristics and Target Customers
Company Group sells coal product both domestically and internationally with a ratio
of domestic customers to international customers at 16:84percent. Most of international
sales are distributed through traders, which dispose directly to the other international end
users. Some products are traded directly to power plants in China (end users) and the ratio
is increasing. Most domestic customers are bituminous coal users, which include small
factories to extremely large factories in various industries such as cement, paper, food, and
textile, etc…
Most of domestic customers are located on the East Thailand, including Chonburi,
Rayong, and other provinces around. Customers in Central and West Thailand locate near
our factories at SrirachaChonburi and Nakornluang Ayutthaya.
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Main target customers are divided into two groups as follows:
x End user: The Company Group sells products to various domestic factories such as
cement, paper, food, and textile, etc. The Company Group import large amount of
coal for sorting sizes out to meet customers’ need. Nowadays, the Company Group
deals with power plants in China directly. The Company Group signs a future contract
to sell 8.5 million tons of coal to a power plant in India within 3 years starting from
2013 and also plans to expand customers to other countries such as South Korea,
Taiwan, and Japan.
x Trader: The Company Group has traders, who locate in international. Our sales
model disposes directly distributors from the port in Indonesia without sorting coal.
Seeking mines and coal supply:
Most of our mining is bituminous because it matches the customers’ need. The main
characteristic of candidate mines is the port location. The port should not far from the dock
in Thailand because it helps to save logistic costs. After choosing the candidate mines, the
Company Group will send out expertise to do a job report in order to test a quality of coal
in the laboratory and check a ability of drilling and maintaining coal from other
contaminates such as soil, sand, and rocks. In 2011, the Company Group acquired a mine by
swapping shares with PT. TRI TUNGGAL PITRIATI. Thus, the Company Group has 7.4 million
tons of coal reserve. In 2012, the Company Group signed the Joint operating Agreement with
the Eaststar Company Limited in Myanmar. Moreover, Board of Director approved to
purchase common stocks of PT. HaryNiaga, which has a coal concession in Indonesia in order
to increase the confidence on coal reserve.
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Company Structure
Vision
“Becoming a coal industrial leader in Thailand and Asia with full supply-chain
management and supportive modern technologies, maintaining an international level of
service, environmental care, and stepping forward to the world class market”
Mission
x Manage sufficient supply by searching for more mines each year for
customers’ satisfaction
x Strive to be coal industrial leader for satisfaction of customers.
x Create worldwide coal trading network both domestically and internationally.
x Improve quality and service continuously.
x Be creative and responsible for society and environment.
Corporate Culture
The Company defines 4 corporate cultures as follows:
1.
7 x 24: Ability to be work attentively regardless of time and Place
2.
Speed of Thought: Execute accurate, precise, prompt decisions and
operations for any situations encountered.
3.
Digital Nervous System: Perceive data and information effectively via
communication System and reflect or respond to the obtained information
promptly
4.
Flat Organization: Consult, advice, and share opinions freely regardless or
positions and seniority.
Company Background
Energy Perfect Company Limited (EPCL) is founded on 5 January 2007 with paid-up
capital of 20 million Baht. ECPL imports Bituminous Coal from Indonesia to sort out into
requested sizes and sell to domestic and international customers.
EPCL’s current registered and paid up capital is 200 million Baht, with coal storing and
aggregating plant in Sriracha, Chonburi.EPCL sorts out coal and provides logistic services for
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Energy Earth Company Limited. The company also distributes products to domestic and
international customers.
Summarized Background and Major Development of EPCL
2007
Founded on 5 January 2007, operated coal importing and distributing
business with paid-up capital of Baht 20 million.
April 2007, Sriracha plant was operational.
2008
September 2008, EPCL increased its registered capital to Baht 160 million.
2010
18 February 2010, EPCL increased its registered capital again to Baht 200
million.
On 13 December 2010, EPCL shareholders sold 99.99% shares to Energy Earth
Public Company Limited (former Advance Paint and Chemical Thailand Public
Company Limited) by swapping shares, which automatically make EPCL the
subsidiary of Energy Earth PCL (EARTH). The mentioned activity was
categorized as an indirect way of getting listed in the Stock Market (Back Door
Listing).
Summarized Background and Major Development of EARTH
2010
- On 2 December 2010, the Extraordinary General Meeting approved as
follows:
1. Acquiring common shares of EPCL in the amount of 20,000,000
shares, with price of 10 baht per share by exchanging shares
2. Increasing registered capital of 2,000,000,000 shares to allocate with
EPCL’s shareholders, price of 0.10 baht per share. As conditions on
acquiring EPCL’s common shares in amount of 20,000,000 shares at
exchange rate of 1 share of EPCL per 100 new shares of company, so
the company’s registered capital is 2,222,712,675 shares, with the
value of 1 baht per share and the company owns 99.99% of EPCL
shares.
3. Transferring assets, including lands, buildings, machines, and
equipment to pay off a creditor
- On 13 December 2010, the Company accomplished all agendas from
shareholders’ meeting resolutions successful which resulted in changes of the
Company’s structure as follows:
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Before the Structural Change
EARTH’s Existing
Shareholder
Structure (After 8 December 2010)
EPCL’s Existing
Shareholders
EARTH’s Existing
Shareholders
10.02%
89.98%
100.00%
Advance Paint and Chemicals
(Thailand) Public Limited
Company (APC)
Energy Earth Public Company Limited
(EARTH)
99.99%
Energy Perfect Company Limited
(EPCL)
2011 - On 18 May 2011, The Stock Exchange of Thailand approved EARTH to resume
trading in MAI.
- On 15 September 2011, the Extraordinary General Meeting approved to
increase capital from THB 2,222,712,675 to THB 3,027,615,570, or an increase of
THB 804,902,895 with an issuance of 804,902,895 ordinary shares at a par value
of THB 1. The EGM approved the allotment of shares as follows:
1. The amount of 444,542,535 shares (Four hundred forty-four million five
hundred forty-two thousand five hundred and thirty-five shares) to support
the exercise of the Company’s warrant
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2. The amount of 331,457,770 shares (Three hundred thirty-one million
four hundred fifty-seven thousand seven hundred and seventy shares) of the
capital increased ordinary shares for private placement for PT TRI TUNGGAL
PITRIATI’s existing shareholders
3. The amount of 28,902,590 shares (Twenty-eight million nine hundred
two thousand five hundred and ninety shares) to support the exercise of the
Company’s warrant regarding of the future amendment of the warrant
TTP’s Existing
shareholders
87.02%
12.98%
Energy Earth PCL
(EARTH)
99.99%
Energy Perfect
Co., Ltd.
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PT. TRI
TUNGGAL
PITRIATI (TTP)
Exercise Price per 1 share (THB) =1.466
Exercise Ratio (warrant: share) 1 : 1.023
First day of exercise 15 March 2012
Last day of exercise 15 September 2012
- Energy Earth PCL signed the Joint Operating Agreement with East Star Company Limited to
operate a coal mine that expect coal reserve at least 40 million tons in
Myanmar. The company does not pay any compensation to East Star
Company Limited. The operation is expected to start in 2013.
- On 21 December 2012, Board of Directors’ meeting allowed the
Extraordinary Generally Meeting to consider these following on 30 August
2013:
Ļǰ "QQSPWFEǰ UPǰ CVZǰ BMMǰ PGǰ UIFǰ DPNNPOǰ TIBSFTǰ PGǰ 15ǰ )BSZ/JBHBǰ
(“HARY”), which is a company registered in Indonesia has a concession
type Izin Usaha PertambanganEksplorasi (“IUP Exploration”) from the
Government of Indonesia to mine coal in Indonesia. HARY will receive
payment by swapping shares.
Ļǰ "QQSPWFEǰ UPǰ JODSFBTFǰ UIFǰ DPNQBOZĴTǰ SFHJTUFSFEǰ capital without
paying in cash for warrant (EARTH-W4). The ratio is 3 ordinary shares to
1 warrant without a charge of payment. Thus, 1 unit of warrant will be
entitled to purchase 1 newly-issued ordinary share at an exercise price
of 8.13 baht per share during a period of not more than 2 years as
seen in EARTH-W4.
Ļǰ 5IFǰ #PBSEǰ PGǰ %JSFDUPSTǰ NFFUJOHǰ BQQSPWFEǰ UIFǰ JODSFBTFǰ PGǰ UIFǰ
Company's registered capital from THB 3,027,615,570 (THB
2,605,495,683 paid) to THB 4,500,000,000 by an issuance of no more
than THB 4,500,000,000 new ordinary shares at the par value of THB
1.00. These shares would offer to a private placement in order to buy
HARY’s stock without cash payment.
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2013
- On February, the company was listed in Frankfurter Wertpapierborse (FWB®,
the Frankfurt Stock Exchange) as secondary listing.
Summary of PT. TRI TUNGGAL’s Background and Development
PT. TRI TUNGGAL PITRIATI registered in Indonesia on 17 December 2007 as CV.
TRI TUNGGAL MANDITI (Partnership), changed to PT. (equals to Company Limited) and
changed the name to PT. TRI TUNGGAL PITRIATI on 27 December 2010
Currently, PT. TRI TUNGGAL PITRIATI has paid-up capital the amount of USD
1,000,000 (about Baht 29.81 million), has 1 coal mining concession with the reserve
amount of 1.80 million tons, and 1 coal mining exclusive rights with the reserve
amount of 5.60 million tons. The 2 mines together have approximately 7.40 million
tons and the Company’s main office is located at Banjarmasin, South Kalimantan,
Indonesia. In 2012, PT TRI TUNGGAL PITRIATI drills approximately 1.85 million tons from
such mine.
Overall Business of the Company and Subsidiaries
The Company imports Bituminous Coal from Indonesia to domestic and
international customers by sourcing through coal mines of Company Group in
Indonesia through TTP, whose 99.99 of shares are held by the Company and through
trading with other mine owners in Indonesia through EPCL, whose 99.99% of total
shares are also held by the Company. The Company is then able to deliver goods to
customers via vessels conveniently. Some of the Coal shall be sold to foreign
customers directly while the rest are transported to Thailand to aggregate sizes for
needs and requirements of domestic customers. Most international customers are
traders and large power plants (End User) in China. Most domestic customers are coal
consumers whose factories are located nearby our plant in Sriracha, Chonburi and also
storage areas, which are located in NakhonLuang, Ayutthaya. Their industrial factories
consist of small, medium, large industries and power plants that have high demand of
coal consumption as energy generator. Company Group’s main customers are
cement, paper, textile, and food industrial groups, etc.
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Share Holding and Business Structure of Company
Energy Earth Public Limited
Sell coal to domestic and international
customers
99.99%
Energy Perfect Company Limited
x Import, sizing, and sell to
domestic and international
customers
x Purchase and distribute products
to international customers
PT TRI TUNGGAL PITRIATI
Coal mining and export to EARTH and
EPCL
In the business structure, Company Group purchases products from Indonesia.
Then, EARTH distributes products to both domestic and international clients, while
EPCL is in charge of selling to only international customers as well as sorting coal sizes
for domestic customers. Moreover, TTPL responds for coal mining and sell to EARTH
and EPCL.
Revenue Structure from Coal Sales
Revenue structure from coal sales in the past are as follows:
2009
2010
2011
Revenue Type
Baht%
Baht%
Baht%
Million
Million
Million
Revenue from coal sales
Domestic
330.62 18.84% 926.65 19.78% 1,649.95 15.86%
Foreign
1,424.62 81.16% 3,758.47 80.22% 8,756.33 84.14%
Total revenues
1,755.24
100% 4,685.12
100% 4,685.12
100%
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In 2010, the Company Group paid closer attention to do marketing on
customers who are direct customers to reduce risks of relying on a few very large
customers and to ensure continuous growth of the Company, which resulted in an
increase of domestic sales revenue. However, the international sales revenue is also
increased along with the domestic sales revenue.
In 2011, the Company Group expanded customers both domestically and
internationally. Because of the Oil market crisis, coal was chosen as a primary
alternative energy which resulted in the Company Group’s 166.92% increased revenue
from the year 2010
In 2012, Company Group is very successful on expanding business
internationally. Most international customers are power plants in China and new clients
in India. Moreover, the Company Group rapidly increases domestic customers so the
sales are increasing 122.11% from 2011.
Company’s Goal
In 2012, the Company Group sets the mission as “5 years, 5 mines, and 5
countries.” The Company Group must have at least five mines in the next five years
and each mine has to have approximately 30-40 million tons of coal reserve.
In 2011, the Company Group acquired coal mine in Indonesia with 7.4 million
tons of coal reserve. In November 2012, EARTH signed the Joint Operating Agreement
with Eaststar Company Limited to operate a coal mine in Myanmar with the expected
coal reserve of 40 million tons. In December 2012, Board of Directors considered and
approved to purchase common stocks of PT. HaryNiaga (“HARY”), which is an
Indonesian company by swapping shares. In addition, the Company also aims to
purchase more mines to ensure more security to the Company and customers, and
has enough coal reserve to make the commitments.
The Company Group pays close attention to logistics process. The Company Group
has chosen high standard logistics companies to cooperate with in order to enhance
the product’s quality and punctuality.
The Company Group gives close heed to customers. Our targets are not only reliance on
major customers. We have expanded sales to other customers in order to reduce risks from
reliance on major customer. Moreover, the Company Group also plans
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Risk Factors
The Company Group aims to focus on certain quality of product by aiming to
cooperate with power plant groups and coal users.
1. Risk from coal supply for sale
In coal business, one of the most important factors is sourcing ability, which has the
following risks:
1.1 Risk from reliance on Indonesia suppliers
The Company Group’s total sales were 5.44 million tons last year from our own
mining. The remaining was ordered from Kalimantan or Borneo, Indonesia only because it
had plenty of bituminous that could be used in the next ten years. In addition, Kalimantan is
not far from Thailand so we can slash other competitors. However, Indonesia sometimes
encounters with weather conditions, so the Company Group might have enough supply.
Fortunately, Kalimantan has never ever suffered with a violent natural disaster since 2007.
Kalimantan’s total area is approximately 0.58 million square kilometres, while Thailand’s
total area is approximately 0.51 million square kilometres. Thus, the possibility of natural
disaster is very small. On November 2011, the company signed the Joint Operating
Agreement with Eaststar Company Limited for mining bituminous in Dawai, Myanmar. The
Company imports coal for distributes in domestic. Moreover, we are planning to sell to India
by second quarter of 2013. This mine helps to reduce risk from reliance on major suppliers.
1.2 Risk from reliance on major customer
Most of coal trading in Indonesia deals with brokers and/or directly owners. However,
purchasing products from brokers are more expensive than from owner. However, buying
from brokers has some advantages. For example, they can provide either credit lines or
letter of credit (L/C), while owners accept cash only.
In order to reduce such risk, the Company Group acquired the mine in Indonesia by
swapping shares with PT. TRI TUNGGAL PITRIATI since 2011. The Company Group has 99.99%
shareholding. The coal reserve is 7.4 million tons. In 2012, the Company Group signed the
Joint Operating Agreement with Eaststar Company Limited for mining in Myanmar. The coal
reserve should not less than 40 million tons. Thus, the Board of Directors approved to buy
whole common shares of PT. Hary Niaga, which had a concession. Total of our coal reserve
is approximately 70- 80 million tons, which support the demands in the next ten years. We
are planning to acquire more mines in order to follow our mission, which is 5 years, 5 mines,
and 5 countries.
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1.3 Risk from transporting and shipping by sea
Company Group imports its coal supply from Indonesia and oceanic shipping is
adopted for transporting. Oceanic shipping consists of some risks including lack of barge,
natural disasters and loss of coal during transfer at substandard port.
Oceanic disaster may cause major damage to barges and coal. To prevent such event,
Company Group has set a highly standard for quality and integrity examination of
barge along with insuring for natural disaster during shipping.
The port standard is crucial for oceanic shipping. Company Group concerns for
every process of transportation including transferring at port. Company Group selected
standardizes port and deploy its agent to the port for controlling the standard and
reducing the transferring time. Moreover, the Company Group has a strategy to
purchase yearly coal in advance and maintain products in safely warehouse. Thus, we
have plenty of products to meet customers’ satisfaction.
1.4 Risk from domestic transportation
Our businesses are reliable on transportation facilities and fluctuations in
transportation costs in order to supply coal to customers. The company depends upon
truck transportation systems and we do not own a transportation company. However, the
Company Group has high volume, so we have a power to negotiate with major logistic
companies, which have capability and honest. The Company Group can manage shipping
costs and also supply them with gasoline/diesel. Thus, we have never encountered with
these risks.
1.5 Risk from changes in politics and Laws in Indonesia
In 2011, the Company Group had purchased a coal mine in Indonesia by share swapping
method with PT. TRI TUNGGAL PITRIATI which is a foreign company registered in Indonesia.
We must follow the Indonesian law such as DMO (Domestic Market Obligation) which was
publicly used since 31 December 2009. Such law states domestic and international sales
ratio in Indonesian coal mines. However, this law hasn’t had any effects with the Company
Group because domestic sales usually uses market price. The Company Group also has
excellent relationship with local Indonesians which make it easier for us to make
appropriate adjustments with such new laws.
Government regulation of the Republic of Indonesia Number 24 year 2012
Article 97 stated that foreign capital investment must divest its shares gradually within
5 years of production. The ownership of Indonesian participants in each year after the
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end of the fifth year as of its production shall not be less than the following
percentages:
x Sixth year 20 percent
x Seventh year percent
x Eighth year 37 percent
x Ninth year 44 percent
x Tenth year 51 percent of the total shares
Within ten years, foreign companies could not own more than 49%. Company’s
strategies are seeking coal mines that each mine has approximately 40 million tons in order
to operate within 10 years before company’s share less than 49%.
2. Risk from new competitors
Importers and exporters of coal business tend to increase because oil and gas price
uptrend causes coal to be a replacement source. Increasing of competitors would obviously
affect Company Group business.
Although, there is a trend that new competitors will enter into the business, but there are
some important supporting factors for a business to success such as the ability to procure
quality of coal for sell. Even when new competitors can be able to procure coal; most
procurement would be through brokers who result in higher purchased price and inability to
control coal quality. Many new entrepreneurs do not successful in this industry because of
many reasons. They are lack of experience and buy products from brokers, which cost
higher than other competitors.
New competitors will have to compete with the existing coal business companies to
ravish market share. Good relationship and trust between existing companies, customers,
and suppliers would be the major barrier for new competitors to sell its coal to the existing
customers. Lower price strategy will not be an advantage for new competitors because of a
higher purchase coal price from broker. Nowadays, we have our mines, so we can reduce
the risk from new competitors.
31
3. Risk from price fluctuation of coal
According to the chart above, coal prices were decreasing sharply in second
quarter of 2012, so it affected the coal prices. The Company Group sets up policies
about coal prices based on capital plus margins. Thus, these policies help to reduce
the risk of price fluctuation. However, the global coal consumption trend is increasing
because of the world economic expansion. The Company Group has an inventory
levels amount to approximately four months. Thus, the Company Group has 7.4
million tons of coal consumption. In 2011 – 2012, the Company Group signed the
Joint Operating Agreement with the Eaststar Company Limited. In addition, the Board
of Directors approved to acquire PT. Hary Niaga, which has a concession in Indonesia
and observes approximately 30-40 million tons.
4. Risk from environmental impacts and community protest
4.1 Affecting areas near industrial factories or power plants
Coal is classified into four main ranks, included lignite, subbituminous, bituminous, and
anthracite, depending on the amounts and types of carbon it contains and on the amount
of heat energy it can produce. The chart is shown below:
Types of Coal
Heat Energy
moisture
Ash
Sulfur dioxide
Anthracite
High
Low
Low
Low
Bituminous
High
Low
Low
Low
Subbituminous
Moderate - High
Moderate
Moderate
Moderate
Lignite
Low - Moderate
High
High
Low - High
Source: Ministry of Energy website
32
Whenever coal is burned, the sulfur in coal combines with oxygen to form sulfur
dioxide, which can be a major source of air pollution and harmful to humans. According to
the chart, lignite has the highest sulfur, so it is unpopular for using in factories. On the other
hand, the Company Group distributes bituminous coal, which produces low sulfur dioxide.
Today, boiler technology has been reduced the quantity of pollutants resulting from coal
combustion significantly. Thus, risk from affecting area near industrial factories and power
plants are low.
4.2 Affecting area near sorting out factories
Sorting and storing coal can cause an environmental impact. The Company Group
controls and solves these problems by building grate around the factories and warehouses.
The Company Group also set up several sprinkle to help catch up dust. In addition, the
Company Group has a good relationship with communities and hires them to work in our
factories.
Chao Praya Surasak Municipality issues a sorting license to our company since 2007 and
the license has to continue every year. In 2012, we already received the license.
5. Risk from Financial Factors
5.1 Risk from foreign exchange rate fluctuation
Coal import from Indonesia is purchasing in United States Dollar. In 2010-2012, revenue from
coal sell in Thai Baht is in ratio of 35.45%, 17.95% and 15.85% of total revenue sales
respectively. Foreign exchange rate fluctuation is, therefore, one of the risks that will
certainly affect the operation of Company Group. Since 2010-2012, the Company Group has
been made a profit from exchange rate with a ratio of 33.80, 15.98, and 29.37 million baht,
respectively.
Nowadays, financial institution has approved foreign exchange forward contract facility to us.
The Company Group have never utilized such facility because coal sell portion which
settled in United States Dollar could, at some level, hedge the fluctuation of foreign
exchange rate resulting from raw material purchasing which settled in United States Dollar.
However, if foreign sell portion decreases, the Company Group would be able to utilize the
approved forward contract in appropriate amount to mitigate this risk. Management of
Company Group continuously follows exchange rate movement and could utilize the
forward contract appropriately.
33
Major Shareholders
Major Shareholders’ names that appear in the share register book as of 31 December
2012
Name
No. of Shares
%of paid-up capital
1. Phihakendr Family Group 1/
2. Khamdee Family Group 2/
3. UBS AG HONG KONG BRANCH
4. Dechavibul Family Group 3/
1,246,380,503
311,299,501
100,000,000
47.84
11.95
3.84
76,570,404
2.94
5. Ittiwittayathorn Family Group 4/
70,247,000
2.70
6. Thai NVDR Company Limited
69,777,367
2.68
7. Mr. MaethaRungsiyawaranont
20,271,600
0.78
8. Mr. SakrapolChatmongkollert
19,832,200
0.76
9. DEUTSCHE BANK AG SINGAPORE-PWM
18,447,978
0.71
10. Mr. SurachaiAnsirimongkol
16,731,600
0.64
655,937,530
2,605,495,683
25.18
100
11. Other Shareholders
Total
1/
Phihakendr Family Group consists of
Name
No. of shares
% of paid-up
capital
1. Mr. Phisudhi Phihakendr
154,942,950
5.95
2. Mr. Phiroon Phihakendr
309,885,901
11.89
3. Mr. Phipat Phihakendr
309,885,901
11.89
4. Mr. Phiboon Phihakendr
309,885,901
11.89
5. Mrs. VoranuchPhihakendr
154,942,950
5.95
6,836,800
0.26
1,246,380,503
47.84
6. Mr. Piriya Phihakendr
Total
34
2/
Khamdee Family Group consists of
Name
1. Mr. Khajohnpong Khamdee
No. of shares
% of paid-up
capital
309,885,901
11.89
2. Mr. Wisit Khamdee
3. Mr. Amnuai Khamdee
100,000
1,198,600
0.00
0.05
4. Ms. Kawisra Khamdee
5 Ms. Vilaiporn Khamdee
100,000
15,000
0.00
0.00
Total
311,299,501
11.95
3/
Dechavibul Family Group consists of
1. Mr. KritsakornDechavibul
2. Mrs. RoongnapaDechavibul
Total
75,970,404
2.92
600,000
0.02
76,570,404
2.94
4/
IttiwittayathornFamilyGroup consists of
Name
No. of shares
% of paid-up capital
1. Ms. KarnchanaIttiwittayathorn
44,700,000
1.72
2. Ms. ViyadaIttiwittayathorn
25,547,000
0.98
Total
70,247,000
2.70
35
Dividend Policy
The Company has a policy to pay out dividend off at least 40% of its net profit
after deducting other reserves as per the Company’s Articles of Association and
governing law. This dividend payment is only made if there are no other financial
needs by the company and the payment does not significantly affect the Company’s
normal operating activities.
The subsidiary company has a policy to pay out dividend to shareholders according to
the Company, in which the subsidiary’s board of directors shall together consider the
dividend based on its performance, investment plans, needs and other suitability that
the board of directors have agreed on.
36
Management Structure
1. Organization Chart
2. Management Structure
Board of Directors
Audit Committee
Executive Committee
Managing Director
Internal Audit
Deputy Managing Director
AMD
Production
AMD
Sales and International
AMD
Finance andAccounting
Management structure of Energy Earth Public Company Limited is consisted of 3
committees including The Board of Directors, Audit Committee, Board of Executive Directors
and Managing Director. And for Energy Perfect Company Limited, the management structure
is consisted of The Board of Directors and Managing Director. Details of which are as follows:
2.1 Board of Directors
(1) Energy Earth Public Company Limited
The Board of Directors consists of 13 directors as follows:
Name
Mr. Phisudhi Phihakendr
Mr. Parada Bunnag
Mr. Khajohnpong Khamdee
Mr. Phiroon Phihakendr
Position
Chairman
Vice Chairman/Independent Director
Director
Director
37
Mr. Phipat Phihakendr
Mr. Phiboon Phihakendr
Ms. Kanchana Chakvichitsopon
Mr. Thanawat Pratoomsuwan
Mr. Nugoon Sri-in
Mr. SomkiatSukdheva
Mr. Suriyaporn Bunchai
Mr. EknarinThammaraks
Mr. Thongchai Waatanasoponwong
Director
Director
Director
Director
Director
Independent Director/Chairman of the
Audit Committee
Independent Director/Audit Committee
Authorized Directors to sign on behalf of the Company
The authorized directors are Mr. Khajohnpong Khamdee, Mr. Phiroon Phihakendr, Mr.
Phipat Phihakendr, Mr. Phisudhi Phihakendr, Mr. Phiboon Phihakendr, Ms.
KanchanaChakvichitsopon, Mr. Thanawat Pratoomsuwan, and Mr. Nugoon Sri-in. Two of
eight committees need to countersign and affix the company’s seal.
Duties and Responsibilities of the Board of Directors are as follows:
1. The Board of Directors has authorities and responsibilities according to the
association of company which are defined to be of the Board of Directors.
2. The Board of Directors have authorities and duties to establish important
policies of the Company as follows:
2.1 Business conduct policy
2.2 Financial policy
2.3 Funding policy
2.4 Funds management policy
2.5 Risk management policy
3. The Board of Directors has authorities and duties for the Company investments as
follows:
3.1 Consider and approve budget plans
3.2 Consider investment plans of the Company
3.3 Supervise and manage projects to establish as planned.
4. The Board of Directors has authorities and duties to supervise and manage the
Company’s performance to:
38
4.1 Ensure that the Company’s performance shall be established as
planned.
4.2 Set resolutions in the case of problems and troubles to achieve the
planned goals or better.
5 The Board of Directors have authorities and duties to establish general
information and financial reports to shareholders and investors accurately
and in accordance with regulation of laws.
6 The Board of Directors have authorities and duties to acknowledge the
important report of the Audit Committee or Internal Audit, as well as Auditor
and the Company’s consultants. The Board of Directors is required to
establish resolutions in the case of significant defects found.
7 The Board of Directors has authorities and duties to collate sufficiency and
appropriation of the internal control and risk management of the Company.
8 The Board of Directors has authorities and duties to establish high level
management structure and the Company’s succession plan.
9 The Board of Directors have authorities and duties to appoint Audit
Committee and establish authorities and responsibilities of the Audit
Committee.
10 Appoint one of the directors or many of the directors or other individuals to
act on behalf of the Board of Directors. For the delegation, the delegated
individuals must not have authorities to approve items which involve such
individuals or individuals who may have conflicts of interests with the
Company and its subsidiaries.
Exception for the followings can be made only upon approval by the
shareholders’ meeting. If committees or connected persons are related to the
transaction that may create any conflicts of interests with the Company, the related
committees are not permitted to vote on that transaction.
•
Act that the law requires the resolution of the shareholders’
meeting. Transaction that involves a committee who may have conflicts
of interests, or required by laws or regulations of the Stock Exchange of
Thailand to have approval of the resolution of the shareholders’
meeting.
39
•
The following events must be approved by The Board of
Directors’ Meeting and the shareholders’ meeting with a three-quarter
(3/4) vote of eligible shareholders present at the meeting.
- The sale of transfer of the whole of important parts of the business.
- The purchase or acceptance of transfer to other companies or private
companies.
- The signing, amending or terminating of contracts with respect to the
leasing of the whole or important parts of the business, the assignment of
the management of the business of the company to other persons or
business merger/acquisition with the purpose of profit and loss sharing.
- The amendment of memorandum of association or articles of
association.
- The increase of decrease in capital.
- The merger/acquisition and wind up of the Company.
Others that are required by laws
40
Details of Directors and Management as of 31 December 2012
No.
Name/Position Age
Education
Relationship
with
Executives
Shares
holding in
Company
Working Experience within 5 years
Time
Period
Position/Company
(%)
1. Mr. Phisudhi
62
Undergraduate
Father of Mr.
Phihakendr
Business
Phiroon
Chairman
Management
Phihakendr, Mr.
University of
Phipat
Memphis
Phihakendr and
Mr. Phiboon
Phihakendr
11.89
2011 – Chairman
Present
PT. TRI TUNGGAL PITRIATI
2011 – Director
Present
WTEC Co., Ltd.
2010 – Chairman
Present
Energy Earth Public Company
Limited
2007 – Chairman
Present
Energy Perfect Company
41
Limited
2007 – Director
Present
Energy Mining Company
Limited
2006 – Director
Present
Snack Shack Company Limited
2.
Mr. ParadaBunnag
50
Undergraduate
Vice Chairman and
Management
Independent
Western Michigan
Director
University
-
-
2010 – Vice Chairman/Independent
Present Director
Limited
1993 – Director
Present
D. BunnagChromiam Plating
42
Co., Ltd
1993 – Director
Present
Brother Auto Parts &
Engineering Co. ltd.
3.
Mr. Khajohnpong
41
Undergraduate
Khamdee
Accounting
Director
Rajabhat
Rajanagarindra
University
-
11.89
2011 – Director
Present
2010 – Exectutive Director
Present
Limited
2008 – Director
Present
WTEC Co., Ltd.
2007 – Managing Director
Present
Limited
43
2007 – Director
Present
Limited
4.
Master
Son of Mr.
Phihakendr
Computer Science
Phisudhi
Director
New York University
Phihakendr
Mr. Phiroon
36
Undergraduate
Computer-Science
New York University
11.89
2011 – Director
Present
Zinneken’s Co., Ltd.
2010 – Director
Present
Limited
2008 – Director
Present MM Alliance Co., Ltd.
2007 – Director
Present
44
Limited
2007 – Director
Present
Limited
2007 – Director
Present
Upsara Valley Winery Co., Ltd.
2005 – Director
Present
Bangkok Beer & Beverage Co.,
Ltd.
2003 – Director
Present
WTEC. Co., Ltd.
5.
Mr. Phipat
Phihakendr
34
Master
Son of Mr.
Management
Phisudhi
11.89
2011– Director
Present
45
Director
University of
Phihakendr
2010– Director
Present
Limited
Southern California
Undergraduate
2007 – Director
Present
Limited
Music Industry
University of
2007 – Director
Present
Limited
Southern California
2003 – Director
Present
WTEC Co., Ltd
2008 –
2010
6.
Mr. Phiboon
46
29
Master
Son of Mr.
11.89
Market Development Manager
Coca-Cola (Thailand) Ltd
2011 – Director
Present
Phihakendr
Linguistics
Phisudhi
Director
Fudan University
Phihakendr
Undergraduate
Music Composition
California Institute of the Arts
Limited
2010 – Director
Present
Limited
20102010
General Manager
Limited
47
7.
Ms. Kanchana
61
Undergraduate
Chakvichitsopon
Economics
Director
Chiangmai University
Director
-
0.23
2010 - Energy Earth Public Company
Present Limited
2007 - Executive Director
Present
Limited
8.
Mr. Thanawat
42
Master
Pratoomsuwan
Public Administration
Director
National Institute of
-
0.15
2012 - Director
Present
Limited
Development
Administration
Undergraduate
2010 – Director
Present
Limited
Business
Management-
48
1994 -
Marketing
2010
University of the Thai
Team Manager
Kasikornbank
Chamber of
Commerce
9.
Mr. Nugoon Sri-in
Director
56
Undergraduate
Mechanical
Engineering
Saint Louis University
Philippines
0.29
2011 - Director
Present
Limited
2011 - Director
Present
49
10. Mr. SomkiatSukdheva 68
Chairman of the
Audit
Committee and
Master
Management
Sasin of Chulalongkorn
University
-
-
2011 - Chairman of the Audit
Present Committee and Independent
Director
Limited
Independent Director
2002 – Chairman of the Nomination
Present Committee, Chairman of the
Remuneration Committee, and
Director of Audit Committee
Thanachart Capital Public
Company Limited
Undergraduate
50
2003 – Chairman of
Present
Korvac (Thailand) Company
Economics
Limited
Thammasat
Universtiy
2006 –
2009
Chairman of Thaimart Land
Company Limited (name
changed to Thaimart Retails
Group Company Limited
2002 –
2008
Director, Chairman of Audit
Committee, Executive Director
Diploma
High ManagementAdvanced Audit
Committee Program
NakhonLuang Thai Bank Ltd.
(name changed to Scib, PCL)
Class 7/2012
11. Mr. Eknarin
Thammaraks Audit
Committee and
Independent
Director
36
Undergraduate
Business Science
-
-
2011– Director
Present
Zinneken’s Co., Ltd.
Professional Tennis
Management
Ferris State University
2011– Director
Present
Miceman Company Limited
51
2011– Director
Present
Miniature Gallery Partnership
Ltd.
2010 – Audit Committee /
Present Independent
Director
Limited
2010– Director
Present
BeccofinoTrattoria(Chiangmai)
2007– Director
Present
International Travel
Consultants
2005– Director
Present
Lampang River Lodge Hotel Co,
52
Ltd.
2005– Director
Present
The Legend Resort & Spa Co,
Ltd.
2005– Director
Present
Hmong Hilltribe Lodge Co, Ltd.
12. Mr. Suriyaporn
44
Bunchai
UndergraduateaccountingRamkhamhaen
g
-
-
University
Audit Committee and
Independent
2010– Audit Committee /
Present Independent
Director
Limited
Director
2005– Owner of
Present
Bunchai Net and Com
13. Mr. Thongchai
Watanasoponwong
35
Master
Computer Science
-
-
2010– Audit Committee /
Present Independent
53
Audit Committee and
Independent
Director
The George
Director
Washington University
Limited
Undergraduate
2010– Director
Present
Choomporn Ice Company
Limited
Electrical Engineering
Thammasat
University
14. Mr.
39
PaiboonAssawasiriwo
ng
Assistant Managing
Director
Master
Business Administration Assumption
University
Undergraduate
Business Administration
54
2008– Business Director
Present
IBM Thailand Company Limited
-
0.08
2010– Assistant Managing Director
Present
Limited
2008–
2010
Assistant Managing Director
Limited
Thammasat
University
2007 2008
Lecturer,
2003 2007
Managing Director
2000 2003
General Manager,
1995 2000
Area Sales Manager,
Burapha University
Venture Plus Co., Ltd.
WinStore Co., Ltd.
Tri Petch Isuzu Sales Co., Ltd.
Remark: Includes common shares held in trust
55
4. Compensation for Management
The Board of Directors Meeting No. 1/2012 held on 28 February 2012 resolved to
define compensation for Board of Directors, Audit Committee and Board of Executive
Directors for the year 2012 as follows:
(1) For collating financial statements quarterly
Compensation (Baht per 1
Committee
Appearance)
Chairman
60,000
Vice Chairman
50,000
Director and Independent Director
20,000
Company Secretary
10,000
Chairman of the Audit Committee
60,000
Audit Committee
Secretary of the Audit Committee
30,000
30,000
(2) For other meetings for different agendas, compensation rate is Baht 10,000
per one person / one appearance.
(3) Executive Directors receive Baht 20,000 per month.
(4) Compensate traveling cost for directors who leave in other provinces that are
not Bangkok.
(5) The Annual General Meeting of the year 2012 held on 30 April 2012 had
resolved in defining compensation for the Company’s Board of Directors,
Audit Committees and Executive Directors for the year 2012. The total value
is no more than 5 million Baht per the year 2012.
Compensation in 2012 is total of 3,560,000 baht as follows:
Items
2012
Directors
Compensation details
Meeting Compensation
Baht
1,460,000
Audit Committees
Meeting Compensation
660,000
Executive Directors
56
Remuneration
1,440,000
Total
3,560,000
5. Corporate Governance
The Company is committed to the good corporate governance (Code of Best Practices) to
apply in the Company’s operation for the benefit and transparency of the Company
business, as well as enhance effectiveness of management team, which will create
confidence in shareholders, investors and all related parties. Good corporate governance is
categorized into 5 principles as follows:
5.1 Rights of Shareholders
The company values the importance of shareholders’ right, therefore, the company
assures that company’s shareholders shall have the same basic right, namely rights to buy,
sell, or transfer shares, rights to obtain adequate information, rights to participate and vote
in the shareholders’ meeting on significant issues and rights to share in the profits of the
company.
The details are as follows:
1. The Company holds Annual General Meeting yearly, each year within 4
months after the end of accounting period, sends meeting notices and
agendas to shareholders 7 days before the meeting day and announce in
newspaper 3 consecutive days no less than 3 days before the meeting day.
Each agenda shall also have opinions of the Board of Directors
2. The Company regularly disseminates information to shareholders via The
Stock Exchange of Thailand’s channel, media and publications, including its
website.
3. In the case that shareholders cannot attend the meeting themselves, the
Company shall let shareholders give proxies to independent directors or
individuals to act on behalf of them. This is to support voting rights of
shareholders and can be done by using proxy that the company attaches
with the invitation letter.
4. Before the meeting, shareholders may send comments, opinions and
questions via email addresses of investor relation and secretary of the
board.
5. In the meeting, The Company allocates a suitable period of time for the
meeting, conducts each meeting suitably and transparently, allowing
57
5.2
58
through expression of views and queries before each ballot round and
summarizes meeting resolutions on each agenda. If the shareholders have
inquiries about certain areas, the Company shall provide suitable specialist
to answer all questions under responsibilities of the Board of Directors.
6. All directors attend each shareholder meeting. Directors are required to
address relevant questions and concerns, posed by shareholders (if any).
Equality Treatment of Shareholders
The company values and treats all shareholders fairly through the following
actions:
1. Conduct and facilitate all shareholders equally and do not take any actions
that restrict or violate rights of shareholders.
2. Determine the right to vote in the meeting according to number of shares
held by shareholders, one share equals one vote.
3. Ensure that independent directors are responsible for minor shareholders’
rights. Minor shareholders may state opinions or complaints to
independent directors and independent directors will review considerately
in each case. If they are complaints, independent directors shall perform
speculation and strive for best resolutions. If they are opinions and
independent directors agree to their importance to overall stakeholders or
the Company, independent directors shall propose such matters to the
shareholders’ meeting to consider and state in agendas of the shareholders’
meeting.
4. Establishing the Board of Directors’ measurements to control the usage and
prevent the misuse of internal information (insider trading) for personal
benefit of concerned persons, including the Board of Directors, executives
and staff in related department (including spouses and minor child of
concerned persons), as well as determine penalty for internal information
disclosure, the misuse of internal information, explain to the Board of
Directors and Management The duty of securities holding reporting to
Securities and Exchange Commission (SEC) under Section 59 of the
Securities and Exchange Act. 2535, and inform announcement regulations o
SEC and The Stock Exchange of Thailand to The Board of Directors and
Management of the Company regularly.
5.3
The Roles of Stakeholders
The Company realizes the rights of all stakeholders related to the Company,
including internal stakeholders such as shareholders, employees, and management of the
Company, or external stakeholders, such as competitors, partners, and customers, etc. The
Company understands that support and relationship management to all stakeholders are
beneficial to the Company’s performance in the future and the Company shall treat every
parties equally according to laws and regulations as follows:
Ð Shareholders: Besides the basic rights of shareholders and the rights
stipulated by the laws and the company’s article of association, such as rights to
attend the shareholders’ meetings and vote at the meeting , rights to freely
express opinions at the shareholders’ meetings, and rights to receive an
appropriate return. The company gives shareholders the right, as the owner of the
company, to make suggestions and comments on the company’s affairs through
the independent directors. Each comment and suggestion will be carefully
considered and presented to the Board of Directors.
Ð Employees: The Company believes that employees are the most valuable
assets. The company always develops competence of every employee to support
business expansion plan. Furthermore, the company treats its employees in such
a way that they feel happy to perform their assigned tasks, improve working
environment to ensure safe, modern and healthy welfare appropriately.
Ð Trading partners: The Company purchases products and services according to
commercial terms including perform the contracts with partners fairly.
Ð Competitors: Competitors will be treated fairly under normal competitive
term and without any illegal practices to destroy them.
Ð Customers: The Company takes care and responses to all customers by
providing standard quality products as well as keeps their confidential data.
Ð Communities: The Company is responsible to environment of community and
society
The Company has established guidelines to reflect needs of all stakeholders clearly
in “Code of Conduct”, as well as support The Board of Directors, Management, employees
to respect “Code of Conduct” as if it is part of their important responsibilities.
5.4 Information Disclosure and Transparency
59
The Company realizes the importance of information disclosure and transparency in
both financial information reports and general reports in accordance to regulations of
information disclosure of Securities and Exchange Commission and The Stock Exchange of
Thailand, as well as other essential information that may affect stock prices, investors or
stakeholders’ decisions.
The Company shall disclose information of the Company to shareholders, investors,
and public via communication system set up by Securities and Exchange Commission and
The Stock Exchange of Thailand and the Company website, http://www.energyearth.co.th
About investor relations, the Company hasn’t organized such particular team. However, the
Company has assigned Assistant Managing Director (Finance and Accounting) to be the
contact point with investors, shareholders, analysts, and related public organizations.
Shareholders and investors may contact this contact point at Mr. Thanawat Pratoomsuwan,
Assistant Managing Director (Finance and Accounting), Telephone No. 02-673-9631 or Email
address: [email protected]
5.5 Responsibilities of the Board of Directors
Director Structure
The Board of Directors of the Company consist of knowledgeable, skillful and
experienced persons who can contribute to the Company and play important roles in
setting up policies, strategies as well as follow up overall performance every quarter. The
Board of Directors also needs to pay serious attention on internal control and internal audit
for the best benefit of the Company and shareholders.
There were 13 directors in the Company, consisting of 5 Non Managing Directors with
qualification of being independent directors no less than one-third of total directors. Their
duties are to review and collate matters and management of the Management Team for the
best benefit of the Company.
The Board of Directors had appointed 2 sub-committees to help supervise the Company’s
business. The 2 sub-committees are Audit Committee and The Board of Executive
Committee. The Company had divided duties and responsibilities of The Board of Directors,
Audit Committee and The Board of Executive Directors to shareholders clearly for
independency in decision making and vision proposals as already mentioned above in
section “Management Structure”.
60
Independent Directors
and Audit Committee
Company has 5 independent directors, 4 of which are
audit Committee to perform particular duties and
propose important matters to The Board of Directors to
acknowledge within scope and authorities assigned.
The Board of Executive
Directors
The Company has 6 executive directors to perform duties
effectively within scope and authorities assigned.
The Company also has policies to divide position of chairman and position of
managing director to be different persons in order to protect unlimited authorities for one
person. The Board of Directors shall assign authorities, duties and appoint individuals to
take such positions.
The Company has company secretary who has duties to advise rules and regulations that
The Board of Directors are required to acknowledge. The secretary also monitors The Board
of Directors’ activities and ensure that The Board of Directors’ meeting resolutions are
performed accordingly.
Directors’ remuneration
The Company reported directors’ remuneration clearly and in compliance with the
announcement of Securities and Exchange Commission. The mentioned remuneration must
be approved in Annual General Meeting every year. In the case that directors of the
Company are assigned to perform more duties, such as also take the position of audit
committee, directors will receive appropriate remuneration depending on the Company’s
status.
Policy on Corporate Governance
The Board of Directors had set policy on corporate governance on The Board of
Directors Meeting No. 3/2011 held on 10 February 2011. The policy was approved in the
meeting.
The Company realized the importance of the policy of corporate governance since it will be
very much beneficial to the performance, as well as enhance stability of the Company.
About establishing performing guidelines, the Company pays high attention to internal
control and internal audit. The Board of Directors will have assessment of internal control
every year starting from year 2011 for good corporate governance according to regulations
of the Stock Exchange of Thailand.
61
The Board of Directors collates and performs duties according to the stated policies. The
Company shall operate business in compliance with laws and regulations of SEC and The
Stock Exchange of Thailand.
Conflicts of interest
The Board of Directors established policies on conflicts of interest based on that any
acts and decisions must be made upon the best benefit of the Company and one should
avoid any acts involved conflicts of interests. Any individuals related to connected
transactions or items who may have conflicts of interest must inform the Company about
their relationship with such transactions and do not have the right to vote or approve such
activities.
The Audit Committee shall propose The Board of Directors about the related and
connected transactions and collate them carefully. The Company had complied with laws
and regulations of The Stock Exchange of Thailand strictly about pricing and other
conditions with individuals who may have conflicts of interest as if they are outsiders. Such
transactions are disclosed in financial statements, annual report and Form 56-1.
Report of the Board of Directors
The Board of Directors is responsible for financial reports of the Company and its
subsidiaries, as well as information disclosed in annual report, 56-1, and financial
statements collated by Audit Committee. Directors are also responsible for internal
control, and adequacy of information disclosure in Notes of Finance Statements which are
presented to The Board of Directors quarterly. Financial statements are audited by certified
auditor approved by SEC and have disclosed important information both financial
information and non-financial information accurately.
The Board of Directors Meeting
The Company holds The Board of Directors Meeting at least every quarter, and
Extraordinary General Meeting depending on the necessities by stating clears agendas in
advance and must monitor progress of the performance. The company secretary shall be
responsible for preparing agendas for the meeting and sending out meeting invitation paper
to The Board of Directors no less than 7 days before the meeting day, so that directors may
have time to consider and study agendas sufficiently. The company secretary is also
responsible for keeping reports that are approved by The Board of Directors systematically
for related parties to speculate.
62
In considering agendas, The Chairman shall allow directors to state opinions freely.
Voting in the meeting shall be counted on majority. One director has one vote, directors
who may be stakeholders are not allowed to attend the meeting, or not allowed to vote on
such matters. If the votes are equal, Chairman will make the decisive vote.
In 2012, the Company held 13 Board of Directors Meeting, attendance of each director is as
follows:
Number
Name
Attendance
2012
1.
5
2.
Mr. ParadaBunnag
5
3.
5
4.
5
5.
5
6.
5
7.
Ms. KanchanaChakvichitsopon
5
8.
5
9.
Mr. Nugoon Sri-in
5
10. Mr. SomkiatSukdheva
5
11. Mr. SuriyapornBunchai
5
12. Mr. EknarinThammaraks
5
13. Mr. ThongchaiWatanasoponwong
3
In 2012, Energy Perfect Company Limited held 13 Board of Directors Meeting, attendance of
each director is as follows:
Number
Name
Attendance
2012
1.
2.
3.
13
13
13
63
4.
5.
6.
13
13
12
Remarks: The resolution of Board of Directors Meeting No. 1/2012 appointed Mr. Thanawat
Pratoomsuwan as Director on 4 January 2012.
Internal Control and Internal Audit
The Company realizes the importance of internal control both in management and
operating level. For the most effective performance, the Company has set duties and
authorizes for employees and management clearly with handwritten signatures. Company’s
assets must be controlled and used effectively for the best benefit of the Company. The
Company also assigned internal audit to collate internal control to ensure that the
Company’s internal control is adequate, effective, financially controlled, effectively
accomplished as well as supervising acts concerning laws and regulations relating to the
Company. The internal audit result shall be reported directly to Audit Committee.
6. Policies and Practices of the Use of Inside Information
The Company has policies and methods to protect directors and management to
gain personal profitability by the use of inside information of the Company that has not yet
been disclosed to public as follows:
• Give more knowledge to directors and management about duties to report
securities holding of individuals, spouses, minor child to SEC and The Stock
Exchange of Thailand.
• The Company determines Management to report change of securities holding
to SEC and the Stock Exchange of Thailand and send out copies of the
report to the Company on this same day.
• The Company prohibits directors, management, employees who have
information to disclose information to outsiders, or unrelated individuals. All
should not purchase or sell stocks of the Company before financial
statements are about to be published, must not disclose the Company’s
status or other important information and should wait at least 24 hours after
information already disclosed to public before trading stock
64
Connected Transaction
Connected Transactions with Companies or persons who may have conflicts of interests
During the year 2011-2012, Company Group had connected transactions with people who may have conflicts of interests which were stated in
auditors’ notes as follows:
Connected
Party
1. WTEC Co.,
LTD (“WTEC”)
Business
“Computer
system retails
and
consultant”
Relationship
Group Company’s
directors: Mr.
Khajohnpong Khamdee,
Mr. Phiroon Phihakendr,
Mr. Phipat Phihakendr,
and Mr. Senee
Hongsubchat are also
the directors of WTEC
The Company’s
shareholders: Mr.
Phiroon Phihakendr, Mr.
Khajohnpong Khamdee,
Mr. Phipat Phihakendr,
and Mr. Phiboon
Type of
Connected
Transaction
Equipment
Purchases
Transaction Value
2011
221,350
2012
Audit Committee’s Comments /
Necessity/Rationale
344,527 Cost for IT and system equipment for Company Group to benefit control and
communication between departments within Company Group. The price and condition
are regular and such price already includes post sales service.
Audit Committee’s Comments
The audit committee considered and opined that EPCL has the necessity to purchase
the equipment with reasonable prices.
The price has a reference market price. Purchasing the equipment from WTEC is
convenient for after sales service because WTEC is located near the Company.
However, if there is similar transaction in the future, the price and condition received
must be competitive to other companies.
65
2. Energy
Perfect
Company
Limited
Share directors and
shareholders
666,979,206 217,848,243 Purchase coal from subsidiary at 5 and 15%lower than the regular price subsidiary sells
to other customers. đßŠćǰRent vehicle from subsidiary at 12,000 – 29,000 Baht
1,530,000 1,992,000 Purchase equipment from subsidiary in agreed price
Vehicle rental
348,940 1,951,000 Pay for goods advance payment to subsidiary, so subsidiary can use the advance
Equipment
payment to reserve goods for Company Group
purchase
- Outstanding of vehicle rental from December 2011
Goods advance 24,398,701
The Company gives loans to subsidiary without charging interests
payment
181,900 1,107,180 Audit Committee’s Comments
-Value at the
203,000,000 1,016,199 The Audit Committee considered that the Company has necessity to purchase, rent
end of year
Accrued
vehicles and equipment from subsidiary with rational price.
Subsidiary has necessity to get loan from the Company as working capital, in which the
Expenses -Value
Company did not charge for interests, and the subsidiary had already paid back.
at the end of
year
Coal Purchase
Measures and Procedures for the Approval of Connected Transactions
The Board of Directors have considered and unanimously resolved that in the case of connected transactions with persons who may
have conflicts of interests in the future, each case must be proposed to the Board of Directors Meeting for consideration and final approval.
The meeting also requires the presence of audit committees to ensure that the transactions are transparent, appropriate, have reasonable
pricing policies and generate the best profitability for the Company. The persons who may have conflicts of interests shall not have voting
rights in the transactions. In the event that the audit committees do not possess the required knowledge or specialization to speculate such
transactions, the Company shall assign individuals with the required knowledge or special expertise, such as the Auditor of the Company, the
independent appraisers, to comment on such transactions to the Board of Directors or the Shareholders, depending on each case. However,
the Company shall perform this procedure in accordance with laws and regulations of the Stock Exchange of Thailand and Securities and
Exchange Commission. All connected transactions are to be disclosed in the auditor’s notes to financial statements, the Annual Report, and
Form 56-1.
66
Financial Analysis and Operating Results
Financial Analysis and Operating Results
1. Analysis and Operating Results
1.1 Overall Outlook of Past Performance
The Company Group’s revenue and net profit have been increasing continuously. In
2011-2012, the sales revenue was 4,685.12 and 10,406.28 million baht and net profit was
395.68 and 1,162.03 million baht, respectively.
Overall performance outlook of Company Group was still growing because of
the followings:
Fuel Price in the world marketing is still increasing,
consumers who used oil and natural gas as their energy source
started to switch to use coal as alternative energy. Thus, the
Company Group has more revenue from coal sales in both
domestic and international.
The Company Group continuously expands customers both
domestic and international. International marketing was an
excellent to increase revenue because international consumers
have great amount of demand for coal, while domestic
marketing will lower the risk of relying too much on few large
customers.
Growing sales volume and total revenue in each year
resulted in better gross profit and net profit.
1.2
Past Performance
Revenue
Revenue Types
Financial Statement of the Company Group
2012
2011
Increase/(Decrease)
Million
Baht
%
Million
Baht
%
Million
Baht
%
1,649.95
15.80
926.64
19.68
723.31
78.06
Revenue from Sales
Domestic
67
International
8,756.33
83.83 3,758.47 79.81
4,997.86
132.98
Total Income from Coal Sales
10,406.28 99.63 4,685.11 99.49
5,721.17
122.11
Income from Exchange Rate
29.37
0.28
15.98
0.34
13.39
83.79
Other Income
9.19
0.09
8.18
0.17
1.01
12.35
Total Income
10,444.84 100.00 4,709.27 100.00 5,735.57
121.79
During 2011-2012, the Company Group had increasing revenues from 4,709.28
million baht in 2011 to 10,444.84 million baht in 2012, which represents a growth rate of
121.79%. Majority of income came from total income of coal sales, which are 99.49% in
2011 and 99.63% in 2012.
Coal sales revenue increased from 4,685.11 million baht in 2011 to
10,406.28 million baht in 2012, which represents a growth rate of 122.11%. The
increased revenue during the certain period occurred as followings:
1. The Company Group expanded to both domestic and
international markets because oil prices rise and many industrial
factories turned to use coal as their alternative energy.
2. In 2012, the Company Group was very successful expanding into
international markets, especial end users such as power plants
in China.
Profit
Net profit during the year 2011-2012 is 395.68 million baht and 1,280.44 million baht
respectively. The net profit in 2012 is increasing significantly because of the better economic
situation, higher coal price and increasing sales.
2. Company’s Financial Status
2.1
Assets
Total Assets of Company Group are growing continuously during the year 20112012, the amount at the end of each accounting period are shown in the following table.
68
Asset Types
Financial Statement of the Company Group
2012
2011
Increase
(Decrease)
Million
%
Million
%
Million
%
Baht
Baht
Baht
Current Assets
6,996.91 79.39 2,088.54 50.91 4,908.37 235.01
Non-Current Assets
1,816.31 20.61 2,013.97 49.09 (197.66) (9.81)
Total Assets
8,813.22 100.00 4,102.51 100.00 4,710.71 114.83
Growth Rate of Current
Assets
Growth Rate of Non-Current
Assets
Growth Rate of Total Assets
235.01
198.59
(9.81)
218.17
114.83
207.89
Total assets of Company Group are increasing from 4,102.51 million baht in
2011 to 8,813.22 million baht in 2012. In 2011-2012, current assets are 2,088.54
and 6,996.91 million baht with the ratio of 50.91% and 79.39% of total current
assets respectively. The current assets are increasing dramatically because of
increasing in trade accounts, inventory, and advance payment from purchase of
goods.
Advance payments from purchase of goods in amount of 1,909.49 million
baht in 2012 are the advance coal payment to mine owners in Indonesia. Each
time the coal is imported; such amount will be deducted until the value is
complete. The Company Group had necessity to do the advance payments to
secure steady coal supply for customers.
Non-current assets also have a tendency to decrease continuously.
Main assets compound with four groups, including fixed asset, inventory,
mining property rights, and trade accounts. In 2012, such group compares with
total assets and the ratios are 2.79%, 6.62%, 9.46%, and 49.18%, respectively.
69
Moreover, fixed asset is added to fifth group. Trade account and inventory details
are shown below:
(a) Trade accounts and notes receivables (Net)
Trade accounts receivable of Company Group in 2011-2012 can be categorized
by aging in the following table:
Trade Account Receivables Details
Financial Statement of Company
Group
2012
2011
Million
Baht
Not Overdue
%
3,876.69 91.18
Million
Baht
%
68.95
5.35
Overdue
Less than 3 months
354.46
8.34
3 – 6 months
15.95
0.38
0.60
0.05
6 – 12 months
0.16
0.00
0.40
0.03
More than 12 months
4.37
0.10
10.49
0.81
Total
Less, Allowance for Obsolescence Inventories
Trade Account Receivables (Net)
1,209.18 93.76
4,251.63 100.00 1,289.61 100.00
(4.22)
(0.10)
(8.87)
(0.69)
4,247.41 99.90 1,280.74 99.31
The Company Group has a policy to give credit terms to most domestic customers
30-90 days. Foreign customers must follow the letter of credit term, which based on many
considerate factors such as past performance, purchasing volume, or competitive market
during that certain period.
Account receivables, who are still not overdue had increased from 5.35% in 2011 to
91.18% in 2012, while account receivables, who are less than 3 months overdue decreased
dramatically from 93.76% in 2011 to 8.34% in 2012 because customers request to extend
payment periods from 30 days to 90 days. Account receivables, who are more than 3 - 6
months, 6 - 12 months, and more than 12 months overdue, are 0.05%, 0.03%, and 0.81%, in
2011 respectively. In 2012, these ratios are decreasing with 0.38%, 0.00%, and 0.10%,
70
respectively. We can negotiate term of payments with customers. In addition, we have
ability and efficiency to choose high class customers.
Inventory
The Company Group has inventory at the end of each accounting period are shown
below.
Financial Statements of the
Company Group
2012
2011
Inventories
Million
Baht
%
Million
Baht
%
531.24
23.11
174.81
16.14
Gasoline
0.89
0.04
0.56
0.05
Finished Goods
0.00
0.00
5.23
0.48
Goods in Transit
52.48
0.68
15.69
1.45
Total
584.61
196.29
Less, Allowance for Obsolescence Inventories
(1.11)
(1.11)
Raw Materials
Net
583.50
195.18
Remark: term of inventory = [360/ (cost of sales/inventory of each category)]
Details of each inventory are shown below:
Raw Materials: Coal is imported from Indonesia and stored in sorting factories to screen sizes.
Gasoline: The Company Group sells gasoline to truck companies, which transport products
for us. We try to provide accommodate and saving time to them. The Company Group does
not gain any profit for selling gasoline.
Finished Goods: The finished goods are ready to deliver to customers. Our policies are to
store enough products without more reserve because we do not want to add expenses.
Goods in Transit: Coal is in transit before go to Sriracha factory. We hire inventory expertise
to check our stock.
71
Liquidity
In 2011 – 2012, liability structure is shown below:
Items
Company Group (Unit = Million
Baht)
2012
2011
Million
Baht
Total Current Liabilities
Total Non-Current Liabilities
Total Liabilities
Increase Current Liabilities Ratio
Increase Non-Current Liabilities Ratio
Increase Total Liabilities Ratio
%
Million
Baht
%
5,700.81 64.68 2,210.86 53.89
36.16
0.41
52.68
1.28
5,736.97 65.10 2,263.54 55.17
157.85
138.67
(31.36)
(20.87)
153.45
127.97
Current Liability
Most of liability structure of the Company Group is a current liability, which
is increasing significantly. Trade account payables are decreasing from 128.16
million baht in 2011 to 72.21 million baht in 2012. Thus, the current liability
increases because sales increase.
At 31 December 2012, the Company Group has overdrafts facilities, packing
credits, and the short-term loans from financial institutions amounting to 6,582.00
million baht (As at 31 December 2011: amounting to 735.00 million baht). The
loans charged interest at the rate of floating interest rate.
The overdrafts facilities and the short-term loans from financial institutions
facilities are secured over deposits from financial institutions. In consolidated and
72
separate financial statements, the Company Group and EARTH have deposits from
financial institutions in the amount of 525.30 million baht and 335.63 million baht,
respectively at 31 December 2012 (2011: 426.08 million baht and 70.79 million
baht, respectively). These deposits are secured over overdrafts from financial
institutions and guarantee of electricity.
Property, plant, and machineries assets do not use in operations
guaranteed by the Company and subsidiary, partial of directors’ shares and
directors.
Under the terms of the loan agreement, the Company Group must comply
with the terms and conditions of certain loan agreements such as secured over
current ratio etc.
2.2
Liquidity
Cash Flow Statement
Items
Baht)
2555
2554
1.1 Profit (Loss) before changing in assets and
liabilities activities
1.2 Account Receivable & Inventory (Increase)
Decrease
1.3 Other Operating Assets Activities (Increase)
Decrease
1.4 Other Operating Liability Activities (Increase)
Decrease
Total cash receiving (payment) from operating
activities
2.1 Interest payment
2.2 Income tax payment and income withholding
tax
2,034.48
630.05
(3,408.36)
(1,005.13)
(1,521.63)
(269.74)
11.87
(142.57)
(2,883.61)
(787.39)
(82.91)
(60.31)
(244.71)
(87.89)
Total cash flow gain (loss) from operating activities
(3,211.25)
(935.59)
Net Profit
1,280.44
395.68
73
Cash flow statements are used to consider liquidity in 2011 – 2012 as follows:
In 2011, the Company Group increases many investing asset of operating activities
(main activities are account receivable and inventory, which equal to 1,005.13 million baht).
So, the Company Group has cash flow from profit before changing in assets and liabilities in
the amount of 630.05 million baht. In addition, cash flow from other operating liabilities is
increasing in the amount of 142.57 million baht. In 2011, the Company Group has cash flow
from operating activities in the amount of 787.39 million baht. After deducting cash flow
from interest and income tax, net cash flow from operating activities is negative 935.59
million baht.
In 2012, the Company Group increases several investing asset of operating activities
(main activities are account receivable and inventory, which equal to 3,020.04 million baht).
So, the Company Group has cash flow from profit before changing in assets and liabilities in
the amount of 2,034.48 million baht. Cash flow from operating activities equals to negative
2,883.63 million baht. After deducting cash flow from interest and income tax, net cash flow
from operating activities is negative 3,211.25 million baht
Current ratio
The Company Group’s current ratio is 0.94 times, and 1.23 times during 2011 – 2012,
respectively. In 2010 - 2012, current assets and non-current assets have increased. Our cash
flow has come from current liabilities, which are short-term loans and account payable.
However, if the fixed deposit is pledged in short-term loans, pluses current assets, ratio of
current assets to current liabilities would be 1.14 times in 2011 and 1.32 times in 2012 as
follows:
Financial Statement of the
Company Group
Liquidity Ratio (Unit: Times)
2012
2011
Ratio of current assets to current liabilities
1.23
0.94
Ratio of current assets to current liabilities (for
adjusted)1/
1.32
1.14
Ratio of speed liquidity
0.79
0.66
Ratio of cash flow
(0.81)
(0.60)
Remarks: 1/ the case if the fixed deposit is pledged in loans, it will be shown in
current assets instead of non-current assets in the financial statement.
74
A liquidity ratio in 2011 is 0.66 times because of lower in accounts receivable. In
2012, the liquidity ratio is 0.79 times because of higher in accounts receivable.
Expenditure
The Company Group had capital expenditure in 2011-2012 as shown below:
Financial statement of the
Investment Items
Baht)
2012
2011
Property, plant, and equipment
2.22
65.53
Mines in Indonesia
1,104.11
The Company Group expensed in land, property, equipment, machines, and vehicles
in the amount of 65.53 million baht in 2011 and 2.22 million baht in 2012.
On November, 2011, the Company Group had acquired a mine in Indonesia by
swapping shares with PT. TRI TUNGGAL PITRIATI at 1,000 shares with the value of 1,104.11
million baht. The balance is 833.90 million baht since 2012.
75
Financial Statements
Report of the Board of Directors’ responsibility on financial reports
Energy Earth Public Company Limited’s Board of Directors are responsible
for financial statements, financial information of the Company and its
subsidiaries that appear in the Annual Report. The financial statements are
in accordance with the general accounting standards, and disclose
substantial information about financial status and overall performance
accurately, as well as monitoring a good information disclosing system in
the notes to financial statements for the best benefit of shareholders and
investors.
The Board of Directors had appointed the Audit Committee to be
responsible for monitoring and speculating financial reports to be
presented accurately, sufficiently and in compliance with business
accounting standard, as well as providing appropriate and effective internal
control. Comments of the Audit Committee are also shown in the report
of the Audit Committee in the annual report.
The Board of Directors resolved that the Company has a sufficient internal
control and can deliver reliable financial statements of the Company and
its subsidiaries as of 31 December 2012, in which the auditor of the
Company had audited in accordance with the general auditing standards,
and the result was accurate and satisfactory.
(Mr. Phisudhi Phihakendr)
Chairman
76
(Mr. Khajohnpong Khamdee)
Managing Director
Report of the Audit Committee for the year 2012
Dear Shareholders of Energy Earth Public Company Limited
In the accounting period of the year 2012, the Audit Committee of Energy Earth
Public Company Limited and its subsidiaries have performed the duty and responsibility
which have been assigned by the Board of the Directors in accordance with the laws and
regulations of the Stock Exchange of Thailand.
Every member of the Audit Committee have consulted and held meetings with the
auditor to review the finance statements which have been prepared by the management
team. In the meeting with the auditor, we have invited the management team to explain
details and facts about important business information, which are summarized as follows:
1. Review of the Financial Statements of the year 2012
The audit committee had inquired facts and asked for clarification and procedures
about the Company’s business from the executives and the auditor to ensure that the
financial statements and disclosed information are complete, accurate and transparent in
accordance with the laws and regulations of the Stock Exchange of Thailand.
The Audit Committee have reviewed and resolved that the financial statements for
the year ended 31 December 2012 are complete and accurate in accordance with the
general accounting standards.
2. Evaluation of the Internal Control
The Audit Committee have evaluated the internal control in accordance with the
regulations stated by Securities and Exchange Commission, and resolved that the Company
has the internal control system and risk management that are appropriate to the status of
the Company and efficient enough according to Good Corporate Governance, in which take
into account the benefits and fairness of all concerned parties.
3. Review of Compliance with the Stock Exchange of Thailand Act, Laws and
Regulations Related to Business
The Company has a secured system to protect insider trading, and the regulations
supervise the management to report holding of securities of the Company in According with
laws. The Company pays high attention to the information disclosure in financial statements
and other reports that they are complete, correct, reliable, and comply with laws relating to
business operation as strictly as possible.
77
4.
Review and Comments on Connected Transactions, or Transactions that may
have Conflicts of Interests
The Company has disclosed all items required by regulations of the Stock Exchange of
Thailand and Securities and Exchange Commission, and has also shown such items in
financial statements and notes to financial statement completely and accurately.
5.
Selection of the Independent Auditor for the year 2012
The Audit Committee has considered an appointment the auditor based on the
followings:
5.1Reliance and reputation of the auditor’s company, its past performance, and meets
all the criteria specified by the Stock Exchange of Thailand.
5.2 Independency, duty responsibility and reliable investigating performance.
The Audit Committee has resolved to assign Mr. Boonlert Kaeophetpruk, Certified
Public Accountant Registration No. 4165 and/or Mr. Narit Saowaluxsakul, Certified Public
Accountant Registration No. 5369 of BPR Audit and Advisor, and DR. Achmad Rodi
Kartamulia, Certified Public Accountant Registration No. 0102 of ACHMAD, RASYID, HISBULLAH
& JERRY REGISTERED PUBLIC ACCOUNTANTS to be the auditor for the year 2012. In the
accounting period of the year 2012, the Board of Directors recognized the importance of
good governance, management, morality, ethical principals in doing business transparently,
properly and had no substantial defectiveness.
On Behalf of the Audit Committee
(Mr. Somkiat Sukdheva)
Chairman of the Audit Committee
78
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Energy Earth Public Company Limited
I have audited the accompanying consolidated and separate financial statements of Energy
Earth Public Company Limited and its subsidiaries, and of Energy Earth Public Company
Limited, respectively, which comprise the consolidated and separate statement of financial
position as at December 31, 2012, the consolidated and separate statements of
comprehensive income, changes in equity and cash flows statements for the year then
ended, and a summary of significant accounting policies and other notes.
Management's Responsibility for the Consolidated and Separate Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
and separate financial statements in accordance with Thai Financial Reporting Standards,
and for such internal control as management determines is necessary to enable the
preparation of consolidated and separate financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
My responsibility is to express an opinion on these consolidated and separate financial
statements based on my audit. I conducted my audit in accordance with Thai Standards on
Auditing. Those standards require that I comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated and
separate financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
79
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a
basis for my audit opinion.
Opinion
In my opinion, the consolidated and separate financial statements referred to above fairly, in
all material respects, the financial position as at December 31, 2012, and the financial
performance and cash flows for the year then ended of Energy Earth Public Company
Limited and its subsidiaries, and of Energy Earth Public Company Limited, respectively, in
accordance with Thai Financial Reporting Standards.
(Ms.Wimolsri Jongudomsombut)
Certified Public Accountant
Registration No. 3899
Karin Audit Company Limited
Bangkok
February 27, 2013
80
ENERGY EARTH PUBLIC COMPANY LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012
AND INDEPENDENT AUDITOR’S REPORT
EXPRESSED IN THAI BAHT
STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2012 AND 2011
Baht
Notes
Consolidated
Separate
financial statements
2012
2011
2012
2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents
9
147,878,545
174,142,351
123,314,512
9,974,367
Trade and other accounts receivable - net
10
4,334,677,532
1,309,987,092
1,441,885,915
99,381,404
583,496,344
195,180,818
Inventories - net
Loans and accrued interest income to related companies
8,11
8
Advance payment from purchase of goods
1,909,496,488
Other current assets
Total current assets
389,908,882
583,496,344
2,445,844,452
883,346,465
108,279,416
21,362,757
19,322,544
17,656,361
386,758
6,996,911,666
2,088,541,687
5,495,544,049
218,021,945
525,303,970
426,079,487
NON-CURRENT ASSETS
Deposits from financial institutions pledged as collateral
12
Investments in subsidiaries
13
-
-
335,633,131
70,789,501
1,302,650,620
1,302,650,620
3,746,988
1,936,456
Property, plant and equipment - net
14
246,109,784
266,420,487
Assets not used operations
15
173,465,888
179,831,291
-
Mining property rights - net
16
833,901,279
1,104,108,666
-
-
36,478,256
36,478,256
-
-
Goodwill
Other non-current assets
Total non-current assets
TOTAL ASSETS
-
1,047,348
1,046,725
305,396
267,113
1,816,306,525
2,013,964,912
1,642,336,135
1,375,643,690
8,813,218,191
4,102,506,599
7,137,880,184
1,593,665,635
The accompanying notes to financial statements are an integral part of these financial statements.
81
STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2012 AND 2011
Baht
Notes
Consolidated
Separate
2012
2011
2012
2011
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdrafts and short-term loans from financial institutions
17
5,142,088,868
1,896,567,096
3,278,679,290
247,105,807
Trade and other accounts payable
18
233,473,077
180,063,764
624,788,665
10,043,748
Short-term loans and accrued interest expenses
from related company
8
Current portion of long-term loans from financial institutions
19
Current portion of liabilities under hire-purchase agreements
20
Income tax payable
Other current liabilities
8
Total current liabilities
14,194,221
14,129,696
1,016,199
-
-
2,200,772
3,288,085
330,460
304,976,892
113,649,774
124,442,082
278,254
3,880,950
3,154,757
1,790,974
298,859
5,700,814,780
2,210,853,172
4,031,047,670
257,726,668
-
NON-CURRENT LIABILITIES
Long-term loans from financial institutions - net
19
30,617,704
44,812,531
Liabilities under hire-purchase agreements - net
20
3,618,803
6,324,883
620,169
950,629
Employee benefit obligations
21
1,034,271
Total non-current liabilities
TOTAL LIABILITIES
-
-
1,926,816
1,547,436
1,260,812
36,163,323
52,684,850
1,880,981
1,984,900
5,736,978,103
2,263,538,022
4,032,928,651
259,711,568
3,027,615,570
3,027,615,570
3,027,615,570
3,027,615,570
2,605,495,683
2,554,170,445
2,605,495,683
2,554,170,445
796,214,166
772,296,604
796,214,166
SHAREHOLDERS' EQUITY
Common shares
Authorized shares - Baht 1 per value
3,027,615,570 common shares
Issued and paid-up common shares
2,605,495,683 common shares
as at December 31, 2012 and 2,554,170,445
common shares as at December 31, 2011
22
Share premium
Share discount
Adjustment of equity interests under reverse acquisition
22
Total
Appropriated - legal reserve
Retained earnings (deficit)
Other components of shareholders' equity
Equity attribuable to owners of Company
Non-controlling interests
23
(1,800,000,000)
(1,800,000,000)
(186,616,802)
(186,616,802)
(1,800,000,000)
-
1,415,093,047
1,339,850,247
1,601,709,849
95,200,000
2,950,000
75,200,000.00
1,619,327,968
431,143,864
1,428,041,684
(54,234,922)
3,075,386,093
63,920,615
1,837,864,726
3,104,951,533
1,526,467,049
(192,512,982)
1,333,954,067
853,995
1,103,851
TOTAL SHAREHOLDERS' EQUITY
3,076,240,088
1,838,968,577
3,104,951,533
1,333,954,067
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
8,813,218,191
4,102,506,599
7,137,880,184
1,593,665,635
82
-
772,296,604
(1,800,000,000)
-
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
Baht
Notes
Sales
Consolidated
Separate
2012
10,406,279,275
Cost of sales
8
Gross profit
(8,278,771,286)
2,127,507,989
2011
2012
4,685,117,913
3,370,047,225
2011
(3,898,669,202) (2,618,192,428)
786,448,711
751,854,797
773,210,614
(666,976,367)
106,234,247
Other incomes
Devidend income
13
Profit on foreign exchange rate
Other incomes
29,374,458
8
Total other incomes
Profit before expenses
15,982,305
1,140,000,000
-
-
9,192,214
8,183,838
309,185,408
462,117
38,566,672
24,166,143
1,449,185,408
462,117
2,166,074,661
810,614,854
2,201,040,205
106,696,364
188,586,784
89,551,118
163,771,030
10,189,682
102,917,180
64,939,940
82,909,826
43,903,107
18,410,000
15,293,926
18,410,000
14,057,926
Expenses
Selling expenses
Administrative expenses
8
Managements' remuneration
Other expenses
-
Total expenses
Profit before finance costs and income tax
Finance costs
8
Profit before income tax
14,216,616
8,579,633
309,913,964
184,001,600
273,670,489
68,150,715
1,856,160,697
626,613,254
1,927,369,716
38,545,649
(139,773,237)
1,716,387,460
Income tax
(435,945,661)
Net income
1,280,441,799
Translation adjustments
(67,882,338)
558,730,916
(163,417,803)
395,313,113
(113,539,309)
Surplus on revaluation of land
365,877
(4,873,779)
Total comprehensive income
-
(70,615,769)
1,856,753,947
(160,999,281)
1,695,754,666
-
-
(7,054,874)
31,490,775
31,490,775
-
1,162,028,711
395,678,990
1,695,754,666
31,490,775
1,280,434,104
395,313,382
1,695,754,666
31,490,775
1,695,754,666
31,490,775
Profit for the years attributable to:
Owner of the Company
7,695
(269)
1,280,441,799
395,313,113
1,162,278,567
395,678,893
Profit and comprehensive income for the years:
Owner of the Company
(249,856)
97
1,162,028,711
395,678,990
Earnings per share
Basic earnings - Equity holders of the parent company
24
0.50
0.17
0.66
0.01
Diluted earnings - Equity holders of the parent company
24
0.45
0.16
0.59
0.01
83
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Baht
Equity attributable to owners of Company
Other component of sharesholders' equity
Adjustment of
Note
Balance as at January 1, 2011
equity interests
paid-up
under reverse
Appropriated -
acquisition
Legal reserve
common shares
2,222,712,675
Increase in common shares
Retained earnings
Issued and
Share discount
-
331,457,770
1,800,000,000
-
Share premium
-
-
772,296,604
186,616,802
2,950,000
-
-
Non-controlling interests in subsidiary
-
-
-
-
-
Profit and comprehensive income for the year
-
-
-
-
-
Balance as at December 31, 2011
22
35,830,482
Translation
revaluation of land
adjustment
63,555,104
-
-
-
-
395,313,382
-
-
Non-controlling
Total
Total
interests
63,555,104
-
-
338,431,459
-
1,103,754,374
1,103,754
1,103,754
365,511
365,511
97
395,678,990
-
1,800,000,000
772,296,604
-
186,616,802
2,950,000
431,143,864
63,555,104
365,511
63,920,615
1,103,851
1,838,968,577
2,554,170,445
-
1,800,000,000
772,296,604
-
186,616,802
2,950,000
431,143,864
63,555,104
365,511
63,920,615
1,103,851
1,838,968,577
51,325,238
-
23,917,562
-
Appropriated - Legal reserve
-
-
-
-
-
-
-
-
2,605,495,683
-
1,800,000,000
84
Unappropriated
2,554,170,445
Other comprehensive income
Surplus on
796,214,166
-
186,616,802
92,250,000
95,200,000
(92,250,000)
-
-
-
-
75,242,800
-
1,280,434,104
(4,873,779)
(113,281,758)
(118,155,537)
(249,856)
1,162,028,711
1,619,327,968
58,681,325
(112,916,247)
(54,234,922)
853,995
3,076,240,088
SEPARATE STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Baht
Retained earnings
Issued and
Note
paid-up
Share
common shares
discount
2,222,712,675
(1,800,000,000)
331,457,770
Premium on
common shares
-
-
-
772,296,604
-
Appropriated Legal reserve
-
Unappropriated
(224,003,757)
-
-
31,490,775
Net
198,708,918
1,103,754,374
31,490,775
2,554,170,445
(1,800,000,000)
772,296,604
-
(192,512,982)
1,333,954,067
2,554,170,445
(1,800,000,000)
772,296,604
-
(192,512,982)
1,333,954,067
23,917,562
-
22
Legal reserve
23
51,325,238
-
-
-
-
-
-
-
2,605,495,683
(1,800,000,000)
796,214,166
75,200,000
75,200,000
(75,200,000)
75,242,800
-
1,695,754,666
1,695,754,666
1,428,041,684
3,104,951,533
85
STATEMENTS OF CASH FLOWS
Baht
Consolidated
Separate
2012
2011
2012
2011
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
1,716,387,460
558,730,916
1,856,753,947
31,490,775
Adjustments to:
Bad debts and doubtful debts (reversal of)
(4,649,414)
2,388,821
Depreciation
25,447,138
23,829,825
Loss on write-off assets
Amortization of mining property rights
629,907
192,537
426,010
-
-
-
267,433,837
-
-
-
Gain on disposal of fixed asset
-
(185,572)
-
-
Loss from sale and leaseback
-
50,260
-
-
Loss on obsolescence inventories
-
-
(Profit) loss on impairment of fixed assets
Employee benefit expenses
Unrealized (gain) loss on foreign exchange rate
Translation adjustments
Dividend income
Interest expenses
Profit before changes in operating assets and liabilities
(2,200,000)
11,777,535
379,380
460,187
19,612,892
(26,562,872)
(113,539,309)
-
-
-
1,109,628
226,541
4,373,332
(1,140,000,000)
222,438
-
125,183,573
59,560,712
61,196,931
6,875,403
2,034,481,567
630,049,812
784,290,286
38,781,153
Decrease (increase) in operating assets
Trade and other accounts receivable
Inventories
Advance payment from purchase of goods
Other current assets
Other non-current assets
(3,020,041,026)
(1,005,412,006)
(1,342,504,511)
(98,902,852)
(388,315,526)
(5,880,439)
(584,605,972)
(1,519,587,606)
(261,993,412)
(775,067,049)
(108,279,416)
(2,040,213)
(941,638)
(17,269,603)
(370,475)
(1,284)
(638,153)
(38,283)
(267,113)
-
Increase (decrease) in operating liabilities
Trade accounts payable and other accounts payable
Other current liabilities
Cash paid from operating activities
Cash paid for interest expenses
11,139,514
(138,175,610)
611,744,200
8,994,781
726,193
(4,399,882)
1,492,115
80,566
(2,883,638,381)
(787,391,328)
(1,321,958,817)
(159,963,356)
(82,913,774)
(60,313,905)
(58,196,214)
(6,839,647)
(244,710,207)
(87,888,016)
(36,557,199)
(660)
(3,211,262,362)
(935,593,249)
(1,416,712,230)
(166,803,663)
Cash paid for income tax and
withholding tax deducted at source
Net cash used in operating activities
86
STATEMENTS OF CASH FLOWS
Baht
Note
Consolidated
Separate
2012
2011
2012
2011
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in deposits pledged as collateral
(99,224,483)
(235,588,985)
(264,843,630)
Proceeds from disposal of investment in a subsidiary
-
-
-
Proceeds from dividends- subsidiary company
-
-
1,140,000,000
-
(2,445,844,452)
(70,639,277)
1,103,754
-
Repayment for short-term loan
and accrued interest income to related company
Cash paid for purchase of property, plant and equipment
Proceeds from disposal of equipment
Net cash used in investing activities
7
(1,870,820)
(61,067,766)
-
1,409,011
(101,095,303)
(295,247,740)
(2,440,439)
-
(673,053)
-
(1,573,128,521)
(70,208,576)
3,027,200,151
247,105,807
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in overdraft and short-term loans
from financial institutions
Increase in short-term loans from related company
3,228,774,754
1,378,204,155
-
-
Cash paid for long-term loans from financial institutions
(14,130,302)
(15,961,259)
Cash paid for liabilities under hire-purchase agreements
(3,793,393)
(4,377,884)
1,016,199
(278,254)
(119,201)
Proceeds from increase in share capital
75,242,800
1,103,754
75,242,800
Net cash provide by financing activities
3,286,093,859
1,358,968,766
3,103,180,896
246,986,606
128,127,777
113,340,145
9,974,367
Increase in cash and cash equivalents - net
Exchange gain from cash and cash equivalents
Cash from acquisition of investment in a subsidiary
(26,263,806)
-
1,087,174
32,458
-
-
-
-
-
Cash and cash equivalents, beginning of years
174,142,351
44,894,942
9,974,367
Cash and cash equivalents, end of years
147,878,545
174,142,351
123,314,512
9,974,367
87
Analysis of Financial Statements
1. GENERAL INFORMATION
Energy Earth Public Company Limited is listed on the Market for Alternative Investment
of Thailand (MAI) on January 15, 1996, The principal business operations principally
engaged in the manufacture and distribution of coal.
The office is located on 889, 12th Floor Thai CC Tower, Room 125-128, South Sathorn Road,
Yannawa, Bangkok.
On January 29, 2013, The Frankfurt Stock Exchange - Open Market has approved the
Company’s common shares to list in the Frankfurt Stock Exchange - Open Market in
form of Secondary listing. The Company has used existing 1,276,692,885 common shares
(49% of the paid-up share capital) without increasing share capital to trade.
2. BASIS OF FINANCIAL STATEMENTS PREPARATION
2.1 BASIS OF FINANCIAL STATEMENTS
The financial statements are prepared in accordance with Thai Financial Reporting
Standards (“TFRS”) including related interpretations and guidelines promulgated by
the Federation of Accounting Professions (FAP); applicable rules and regulations of
the Thai Securities and Exchange Commission; and with generally accepted
accounting principles in Thailand.
The financial statements issued for Thai statutory and regulatory reporting purposes
are prepared in the Thai language. These English language financial statements have
been prepared from the Thai language statutory financial statements.
2.2 BASIS OF FINANCIAL STATEMENTS
a)
88
The consolidated financial statements for the year ended December 31, 2012,
has been included the financial statements of Energy Earth Public Company
Limited and subsidiary and oversea subsidiary (PT. Tri Tunggal Pitriati) after
eliminated significant inter-company transactions. The financial statements for
such oversea subsidiary reflect total assets as of December 31, 2012 amount of
Baht 1,769.71 million (equivalent to 0.20% of total assets in the consolidated
financial statements), total liabilities amount of Baht 1,991.85 million
(equivalent to 0.34% of total liabilities in the consolidated financial statements)
and net loss for the year then ended amount of Baht 7.70 million (equivalent to
0.60% of net profit in the consolidated financial statements)
b)
“The Company” represents Energy Earth Public Company Limited, while “The
Group” represents Energy Earth Company Limited and subsidiaries as follows :
Country of
Percentage of
holding
Companies
Subsidiaries
registration
2012
2011
Type of business
Energy Perfect Co., Ltd.
Thailand
100.00
100.00
Manufacture and
distribution of coal.
PT. Tri Tunggal Pitriati
Indonesia
99.90
99.90
Mining of coal.
The significant transactions between the Company and the subsidiary have been
eliminated in the consolidated financial statements.
c)
d)
e)
Subsidiaries are fully consolidated as from the date of acquisition, being the
date on which the Company obtains control, and continue to be consolidated
until the date when such control ceases.
The assets and liabilities in the financial statements of oversea subsidiary are
translated to Baht using the exchange rate prevailing on the statement of
financial position date, and revenues and expenses translated using monthly
average exchange rates. The resulting differences are shown under the caption
of “Translation adjustments” in the shareholders’ equity.
Material balances and transactions between the Company and its subsidiaries
have been eliminated from the consolidated financial statements.
89
f)
g)
Non-controlling interests represent the portion of net income or loss and net
assets of the subsidiary that are not held by the Company and are presented
separately in the consolidated statement of comprehensive income and within
equity in the consolidated statement of financial position.
The excess of the cost of investment in a subsidiary over the Company's
interest in the fair value of the identifiable assets, liabilities and contingent
liabilities of the subsidiary acquired as at the investment date has been shown
as “Goodwill” and included in other non-current assets in the consolidated
statement of financial position and is measured at cost less any accumulated
impairment losses.
2.3 Basis of measurement
The financial statements have been prepared on the historical cost.
2.4 Presentation currency
The financial statements are prepared and presented in Thai Baht. All financial
information presented in Thai Baht has been rounded to the nearest thousand or
million unless otherwise stated.
3. NEW ACCOUNTING STANDARDS NOT YET EFFECTIVE
The following new accounting standards, amendments to accounting standards, new
financial reporting standard and new interpretation are mandatory, but the Company
has not early adopted them.
Effective for the periods beginning on or after 1 January 2013
90
TAS 12
Income Taxes
TAS 20 (Revised 2009)
Accounting for Government Grants and Disclosure of
Government Assistance
TAS 21 (Revised 2009)
The Effects of Changes in Foreign Exchange Rates
TFRS 8
Operating Segments
TSIC 10
Government Assistance - No Specific Relation to Operating
Activities
TSIC 21
Income Taxes - Recovery of Revalued Non-Depreciable Assets
TSIC 25
Income Taxes - Changes in the Tax Status of an Entity or its
Shareholders
Effective for the periods beginning on or after 1 January 2014
TFRIC 4
Determining whether an Arrangement contains a Lease
TFRIC 12
Service Concession Arrangements
TFRIC 13
Customer Loyalty Programmes
TSIC 29
Service Concession Arrangements: Disclosure
The Company’s management has determined that the new accounting standards,
amendments to accounting standards, new financial reporting standard and new
interpretation will not significantly impact the financial information being presented, except
for TAS 12 Income Taxes and TAS 21 The Effects of Changes in Foreign Exchange Rates
which the management is currently assessing the impact of applying this standard.
4. SIGNIFICANT ACCOUNTING POLICIES
4.1
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with financial
institutions, other short-term highly liquid investments with maturities of three
months or less from the date of acquisition.
4.2
Current investments
Current investments are bill of exchange with an original maturity of over one year
after the acquisition date.
91
4.3
Trade accounts receivable
Trade accounts receivable are carried at original invoice amount less allowance for
doubtful receivables based on a review of all outstanding amounts at the year end.
The amount of the allowance is the difference between the carrying amount of the
receivable and the amount expected to be collectible. Bad debts are written off
during the year in which they are identified.
4.4
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is
determined the first in - first out method (FIFO). The cost of purchase comprises
both the purchase price and costs directly attributable to the acquisition of the
inventory, such as import duties and transportation charges, less all attributable
discounts, allowances or rebates. The cost of finished goods comprises raw
materials, direct labour, other direct costs and related production overheads, the
latter being allocated on the basis of normal operating activities. Net realisable
value is the estimate of the selling price in the ordinary course of business, less the
costs of completion and selling expenses.
4.5
Investment in subsidiary
Subsidiary, which are those entities in which the Company has power to govern the
financial and operating policies, are consolidated. Subsidiary is consolidated from the
date on which controls is transferred to the Company and are no longer consolidated
from the date that control ceases.
Investment in subsidiary is reported by using the cost method of accounting in the
separate financial statements.
A test for impairment is carried out when there is a factor indicating that an
investment might be impaired. If the carrying value of the investment is higher than
its recoverable amount, impairment loss is charged to the statement of
comprehensive income.\
4.6
92
Property, plant and equipment
Land is stated at revalued amount. Building and equipment are stated at historical
cost less accumulated depreciation and impairment of asset (if any).
Land are initially recorded at cost on the acquisition date, and subsequently
revalued by an independent professional appraiser to their fair values. Revaluations
are made with sufficient regularity to ensure that the carrying amount does not
differ materially from fair value at the statement of financial position date.
When an asset’s carrying amount is increased as a result of a revaluation of the
Group’s assets, the increase is credited directly to equity under the heading of
“Surplus on revaluation of land”
Depreciation is calculated on the straight line method to write off the cost, except
for land which is considered to have an indefinite life, to its residual value over the
estimated useful life as follows:
Building and building improvement
Office equipment and fixtures
Computer equipment
Machineries and equipment
Vehicles
5 - 20 years
5 years
3 - 5 years
5 - 10 years
5 years
Where the carrying amount of an asset is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount. Estimated
recoverable amount is the higher of the anticipated discounted cash flows from the
continuing use of the asset and the amount obtainable from the sale of the asset
less any costs of disposal.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company, and its cost
93
can be measured reliably. The carrying amount of the replaced part is
derecognised. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
Interest costs on borrowings to finance the construction of assets are capitalized as
part of cost of the asset, during the period of time required to complete and prepare
the property for its intended use. The borrowing costs include interest on long-term
borrowing net of amortization of related deferred financial cost.
Gains and losses on disposals are determined by comparing proceeds with the
carrying amount and are included in operating profit.
4.7
Assets not used in operations
Assets are stated at revalued amount.
Land and land improvement are initially recorded at cost on the acquisition date,
and subsequently revalued by an independent professional appraiser to their fair
values. Revaluations are made with sufficient regularity to ensure that the carrying
amount does not differ materially from fair value at the statement of financial
position date.
When an asset’s carrying amount is increased as a result of a revaluation of the
Company’s assets, the increase is credited directly to equity under the heading of
“Revaluation surplus on assets”.
4.8
Mining property rights
Mining property rights represent the excess of the cost of an acquisition over the fair
value of net assets, which in managements’ view represents future economic
benefits attributable to the mining rights held by subsidiary. Mining property rights
are amortised using the units of coal production.
4.9
Goodwill
At the acquisition date, the Company recorded goodwill in the business
combination (Reverse Acquisition), which is the excess of the cost of the business
94
combination over the Company’s equity in the net fair value of the identifiable
assets, liabilities and contingent liabilities.
Goodwill is carried at cost less any impairment losses. Goodwill is tested for
impairment annually and when circumstances indicate that the carrying value may
be impaired.
4.10
Impairment of assets
The carrying amounts of the Company’s assets are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication
exists, the assets’ recoverable amounts are estimated. For intangible assets that
have indefinite useful lives or are not yet available for use, the recoverable amount
is estimated each year at the same times.
An impairment loss is recognised if the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. The impairment loss is recognised
in profit or loss unless it reverses a previous revaluation credited to equity, in which
case it is charged to equity.
4.11
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value
in use and fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate cash inflows largely
independent of those from other assets, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
4.12
Reversals of impairment
Impairment losses recognised in prior periods in respect of other non-financial
assets are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount
95
does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
4.13
Leases
Leases of assets which substantially transfer all the risks and rewards of ownership
are classified as finance leases. Finance leases are capitalised at the inception of
the lease at the lower of the fair value of the leased property or the present value
of the minimum lease payments. Each lease payment is allocated to the principal
and to the finance charges so as to achieve a constant rate on the finance balance
outstanding. The outstanding rental obligations, net of finance charges, are included
in other long-term payables. The interest element of the finance cost is charged to
the statement of comprehensive income over the lease period so as to achieve a
constant periodic rate of interest on the remaining balance of the liability for each
period. The assets acquired under finance leases is depreciated over the useful life
of the asset.
Leases not transferring a significant portion of the risks and rewards of ownership to
the lessee are classified as operating leases. Payments made under operating leases
(net of any incentives received from the lessor) are charged to the statement of
comprehensive income on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired any
payment required to be made to the lessor by way the penalty is recognised as an
expense in the period in which the termination takes place.
4.14
Provision
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will
be required to settle the obligation, and a reliable estimate of the amount can be
made. Where the Group expects a provision to be reimbursed, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually
certain.
4.15
96
Employee benefits
Post-employment benefit plan other than a defined contribution plan. The
Company’s obligation in respect of post employment benefits under defined
benefit plans recognized in the financial statements based on calculations by the
independent actuary using the projected unit credit method estimating the amount
of future benefit that employees have earned in return for their service in the
current and prior periods; that benefit is discounted to determine its present value.
The Company recognises all actuarial gains and losses arising from defined benefit
plans in other comprehensive income and all expenses related to defined benefit
plans in profit or loss.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash
bonus if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee, and the obligation
can be estimated reliably.
4.16
Revenue recognition
Revenue comprises the invoiced value for the sale of goods and services net of
value-added tax, rebates, discounts and transportation. Revenue from sales of
goods is recognised when significant risks and rewards of ownership of the goods
are transferred to the buyer.
Sales of coal are quantified by weight at the front mine. The increment or
reduction of coal values as a result of quality and weight noticed by customers will
be recorded in the month of goods delivery.
Other income is recognized on an accrual basis.
4.17
Foreign currency translation
Foreign currency transactions are translated into Thai Baht using the exchange rates
prevailing at the date of the transaction. Monetary assets and liabilities
denominated in foreign currency are translated to Thai Baht at the exchange rate
97
prevailing at the statement of financial position date. Gains and losses resulting
from the settlement of foreign currency transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are recognised in
the statement of comprehensive income.
Statements of comprehensive income and cash flows of foreign entities are
translated into Thai Baht at the weighted average exchange rates for each month
and statement of financial position are translated at the exchange rates ruling on
the end of reporting period. Currency translation differences arising from the
retranslation of the net investment in foreign entities are taken to shareholders’
equity. On disposal of such foreign entity, accumulated currency translation
differences are recognised in the consolidated statement of comprehensive income
as part of the gain or loss on disposal.
4.18
Income tax
The Group records income tax based on the actual amount currently payable
according to the tax legislation.
4.19
Basic earnings per share
Basic earnings per shares are calculated by dividing the net profit attributable to
shareholders by the weighted average number of common shares during the year.
4.20
Diluted earnings per share
Diluted earnings per share is calculated by dividing net profit for the year by the
number of ordinary shares and the number of equivalent ordinary shares (Warrant)
by weighted according to the period of time as if there were conversion of ordinary
shares at the issued date of issuance of equivalent ordinary shares.
4.21
Financial instruments
Financial assets carried on the statement of financial position include cash and cash
equivalents, trade and other accounts receivables, loans, investment, restricted
deposits at financial institutions and some other current assets. Financial liabilities
carried on the statement of financial position include bank overdrafts and shortterm loans from financial institutions, trade and other accounts payables and long-
98
term loans and some other current liabilities. The particular recognition methods
adopted are disclosed in the individual policy statements associated with each
item.
4.22
Related parties
Enterprises and individuals that directly, or indirectly through one or more
intermediaries, control, or are controlled by, or are under common control with,
the company, including holding companies, subsidiaries and fellow subsidiaries are
related parties of the company. Associates and individuals owning, directly or
indirectly, an interest in the voting power of the company that gives them significant
influence over the enterprise, key management personnel, including directors and
officers of the company and close members of the family of these individuals and
companies associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the
substance of the relationship, and not merely the legal form.
5. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of financial statements in conformity with TFRS requires management to
make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. Actual results may differ
from estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which estimates are revised and in
any future periods affected.
99
Information about significant areas of estimation uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amount
recognised in the financial statements is included in the following note:
Note 21 Discount rate, estimation of salary increase rate, employee turnover rate and
mortality rate.
6. CAPITAL RISK MANAGEMENT
The Group objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount
of dividends paid to shareholders, issue new shares or sells assets to reduce debt.
7. SUPPLEMENTARY INFORMATION OF CASH FLOWS STATEMENTS
Supplementary information of cash flows statement for the years ended December 31,
2012 and 2011 is as follow :
Baht
Consolidated
2012
Purchase of property, plant and
equipment
Adjust Increase in payable from
acquisition of assets
Increase in liabilities under
hire-purchase
agreements
Cash paid for purchase of property,
plant and equipment
100
(1,870,820)
2011
(65,530,658)
Separate
2012
(2,440,439)
2011
(2,128,993)
-
107,856
-
107,856
-
4,355,036
-
1,348,084
(1,870,820)
(61,067,766)
(2,440,439)
(673,053)
8. RELATED PARTIES TRANSACTIONS
Relationships
2012
2011
Subsidiaries
Direct shareholding, shareholders Direct shareholding, shareholders
and directorship
and directorship
PT.TRI TUNGGAL PITRIATI
Direct shareholding, shareholders Direct shareholding, shareholders
and directorship
and directorship
Related Companies
WTEC Co., Ltd.
Directorship
Directorship
Shareholder and director
Shareholder and director
Related persons
Khun Nugoon Sri-In
The pricing policies between the Group with related parties are as follows:
Price policy
101
Price policy
Purchase of goods
- Local
- Abroad
Purchase of oil
Factory rental
Coal processing service
expense
Income from management
Interest income
Transportation expenses
Rental expenses
Interest expense
Purchase of equipment
5% and 15% discount from
lli Cost
i th
b idi
ld
plust Smargin
5% and 15% discount from
lli
i th t- S b idi
ld
Mutually agreed price
200,000 per month
Baht 160 per ton
-
(Less than 50,000 tons)
Baht 140 per ton
5% from International sales of
Interest at the rate of 7.7% per
Cost plus margin
Baht 12,000 - 29,000 per month
Interest at the rate of 7.7% per
No interest charge
Baht 12,000 - 29,000 per month
No interest charge
Outstanding balance between the Group with related parties
Outstanding balance between the Group with related parties as at December 31, 2012
and 2011, are as follows:
Baht
Consolidated
102
Separate
2012
2011
-
-
638,774,326
-
-
-
52,475,638
-
-
-
1,084,684,900
-
-
-
1,332,867,495
-
Total
-
-
2,417,552,395
-
-
-
9,522,790
-
-
-
18,769,267
-
Total
-
-
28,292,057
-
-
-
2,445,844,452
-
-
-
-
2012
2011
Other account receivable
Goods in transit
Short-term loan to and
accrued interest income
Short-term loan to
Accrued interest income
Total short-term loan to and
accrued interest income
Advance payment for goods
24,398,701
Trade accounts payable
103
Baht
Consolidated
Separate
2012
2011
2012
2011
-
-
24,414,240
-
-
-
422,697,262
-
Total
-
-
447,111,502
-
-
-
1,000,000
-
-
-
16,199
-
Short-term loan from and
accrued interest expense
-
-
1,016,199
-
-
-
1,107,180
181,900
-
107,856
Short-term loan from and
accrued interest expense
Short-term loan from
Accrued interest expense
Accrued expenses
Payable from acquisition of
assets
WTEC Co., Ltd.
Other account payable
104
-
107,856
Baht
Separate
Consolidated
2012
2011
-
-
2012
2011
195,929
-
The movement of short-term loans to related company in the separate financial
statements for the year ended December 31, 2012 is as follow :
Baht
As at
As at
January 1,
2012
Movement
Increase
Decrease
December
31,
2012
Short-term loans to related
company
Total
-
1,519,335,600 (434,650,700) 1,084,684,900
1,622,781,473 (289,913,978) 1,332,867,495
3,142,117,073 (724,564,678) 2,417,552,395
The movement of short-term loans from related company in the separate financial
Baht
105
As at
As at
Movement
January 1,
2012
Increase
Decrease
-
341,150,300
(340,150,300)
December
31,
2012
Short-term loans from related
company
1,000,000
The movement of short-term loan from related person in the consolidated financial
Baht
As at
As at
Movement
January 1,
2012
Increase
Decrease
December
31,
2012
Short-term loan from
Khun Nugoon Sri-In
-
5,290,774
(5,290,774)
-
Transactions between the company and related parties.
Revenues and expenses transactions with related parties for the years ended December
31, 2012 and 2011 are as follows :
Baht
Consolidated
106
Separate
2012
2011
2012
2011
-
-
217,848,243
666,979,026
-
-
932,199,103
-
-
-
1,150,047,34
6
666,979,026
-
-
1,640,866
-
-
-
78,665,780
-
-
-
1,800,000
-
-
-
268,728,904
-
-
-
11,305,540
-
-
-
18,785,704
-
Total
-
-
30,091,244
-
-
-
11,037,816
-
Purchase of goods
Total
Purchase of oil
Coal processing service
expense
Factory rental
Income from management
fee
Interest income
Transportation expenses
107
Baht
Consolidated
2012
2011
-
Separate
2012
2011
-
1,992,000
1,530,000
-
-
1,731,954
-
-
-
1,951,000
348,940
WTEC Co., Ltd.
344,527
221,350
344,527
100,800
Total
344,527
221,350
2,295,527
449,740
Vehicle rental
Interest expenses
Purchase of equipment
and vehicle
9. CASH AND CASH EQUIVALENTS
Baht
Cash
Deposits at financial
108
Consolidated
Separate
2012
256,657
2011
85,915
2012
20,000
2011
18,715
147,619,877
174,056,436
123,292,501
9,955,652
institutions - at call
Fixed Deposit (3 months)
Total
2,011
147,878,545
-
2,011
174,142,351
-
123,314,512
9,974,367
10. TRADE AND OTHER ACCOUNTS RECEIVABLE - NET
Baht
Consolidated
2012
2011
Separate
2012
2011
Trade accounts receivable net
In due
506,301,313
68,919,78
2
354,458,525
1,209,180,96
1
226,106,650
28,206,34
9
15,953,205
595,534
15,953,205
595,534
161,062
397,189
161,062
31,011
4,373,834
10,493,58
2
-
-
3,876,687,050
68,947,595
Over due
Up to 3 Months
Over 3 - 6 Months
Over 6 - 12 Months
Over 12 Months
Total
Less Allowance for doubtful
4,251,633,676 1,289,614,861
(8,873,248
97,752,67
6
748,522,230
-
-
109
accounts
Net
(4,223,834)
)
4,247,409,842
1,280,741,61
3
97,752,67
6
748,522,230
Other accounts receivable
- related companies
-
-
638,774,3
26
-
- others companies
55,984,221
27,907,896
24,971,919
1,156,935
Prepaid expenses
31,283,469
1,337,583
29,617,440
471,793
Total other accounts receivable
87,267,690
29,245,479
693,363,685
1,628,728
1,309,987,09
2 1,441,885,915
99,381,40
4
Total trade and other
accounts
receivable
4,334,677,532
As at December 31, 2012 and 2011 the Company has trade accounts receivable to make
factoring with financial institution amounting to Baht 219.59 million and Baht 15.37
million, respectively.
11. INVENTORIES – NET
Baht
Consolidated
Raw Materials
110
2012
531,238,403
2011
174,809,422
Separate
2012
531,238,403
2011
-
Gasoline
891,931
Finished goods
-
Goods in transit
Total
Less Allowance for
obsolescence
inventories
Net
562,055
5,225,347
891,931
-
-
-
52,475,638
15,693,622
52,475,638
-
584,605,972
196,290,446
584,605,972
-
(1,109,628)
(1,109,628)
(1,109,628)
-
583,496,344
195,180,818
583,496,344
-
12. DEPOSITS FROM FINANCIAL INSTITUTION PLEDGED AS COLLATERAL
As at December 31, 2012, the consolidated and separate financial statements, the
Group and the Company held deposits with financial institutions amounting to Baht
525.30 million and Baht 335.63 million respectively, (As at December 31, 2011 : Baht
426.08 million and Baht 70.79 million, respectively) which were pledged as collateral for
credit facilities from financial institutions (Note 17) and collateral for the usage of
electricity.
111
13. INVESTMENTS IN SUBSIDIAIESIES
Separate financial statements
Baht
Paid-up capital (Million)
% Holdings
Currency
2012
2011
2012
2011
Baht
200
100
100
100
Rupiah
8,521
8,521
99.9
99.9
Cost Method
2012
2011
Dividend income for the
nine-month periods ended
2012
2011
(Import coal and trading coal)
200,000,000
200,000,000
1,102,650,620
1,102,650,620
1,302,650,620
1,302,650,620
1,140,000,000
-
(Mining of coal)
Total
112
1,140,000,000
-
Dividends payment of subsidiary
At the resolution of the Board of Directors’ meeting of Energy Perfect Co., Ltd. on March 11, 2012, the board of directors approved the
resolution to pay
the interim dividend for 20,000,000 shares at Baht 17.00 per share. The Company earned the dividend by Baht 340.00 million.
At the resolution of the Board of Directors’ meeting of Energy Perfect Co., Ltd. on November 14, 2012, the board of directors approved the
resolution to pay the interim dividend for 20,000,000 shares at Baht 35.00 per share. The Company earned the dividend by Baht 700.00
million
At the resolution of the Board of Directors’ meeting of Energy Perfect Co., Ltd. on December 14, 2012, the board of directors approved the
resolution to pay the interim dividend for 20,000,000 shares at Baht 5.00 per share. The Company earned the dividend by Baht 100.00
million
113
14. PROPERTY, PLANT AND EQUIPMENT - NET
Consolidated financial statements
Baht
Building and
Land and
building
land
Improvement Improvement
Office
Equipment
and Fixtures
Computer
Equipment
Machineries
and
equipment
Vehicles
Machineries
In Progress
Total
As at December 31, 2010
Cost/Revalued amount
Less Accumulated depreciation
Net book value
235,964,000
89,235,391
1,692,611
1,688,100
92,116,575
15,504,888
-
436,201,565
(1,475,527)
(543,982)
(590,444)
(12,761,707)
(3,227,726)
-
(18,599,386)
235,964,000
87,759,864
1,148,629
1,097,656
79,354,868
12,277,162
-
417,602,179
235,964,000
87,759,864
1,148,629
1,097,656
79,354,868
12,277,162
-
417,602,179
39,331,291
2,139,020
195,763
197,426
250,109
6,136,297
-
-
-
-
Transactions during the year ended
December 31, 2011
Opening net book value
Add Purchase
Transfer in (out)
118
-
17,092,775
-
17,280,752
(17,092,775)
65,530,658
-
Transfer from land not used in
operations
Less Disposals
(179,831,291)
-
Depreciation
-
Reversal of surplus on revaluation
of land
-
Ending net book value
-
-
-
-
-
-
-
-
(8,571,110)
-
(336,406)
-
(267,314)
-
(11,014,470)
(11,777,535)
-
-
(179,831,291)
(1,273,699)
-
(1,273,699)
(3,640,525)
-
(23,829,825)
-
(11,777,535)
-
95,464,000
81,327,774
1,007,986
1,027,768
73,905,747
13,499,235
187,977
266,420,487
95,464,000
91,374,411
1,689,819
1,755,188
109,455,810
20,071,185
187,977
319,998,390
(10,046,637)
(681,833)
(727,420)
(23,772,528)
(6,571,950)
-
(41,800,368)
-
(11,777,535)
187,977
266,420,487
Loss on impairment of fixed
assets
Net book value
-
95,464,000
81,327,774
1,007,986
1,027,768
(11,777,535)
73,905,747
13,499,235
115
Consolidated financial statements
Baht
Land and
Building and
land
building
Improvement Improvement
Office
Equipment
and Fixtures
Computer
Equipment
Machineries
and
equipment
Vehicles
Machineries
In Progress
Total
95,464,000
-
assets
-
Net book value
91,374,411
1,689,819
1,755,188
109,455,810
20,071,185
187,977
319,998,390
(10,046,637)
(681,833)
(727,420)
(23,772,528)
(6,571,950)
-
(41,800,368)
-
(11,777,535)
-
-
-
(11,777,535)
-
95,464,000
81,327,774
1,007,986
1,027,768
73,905,747
13,499,235
187,977
266,420,487
95,464,000
81,327,774
1,007,986
1,027,768
73,905,747
13,499,235
187,977
266,420,487
December 31, 2012
Add Surplus on revaluation of land
Purchase
116
1,491,625
-
-
-
-
-
324,115
215,902
1,031,935
-
-
1,491,625
298,868
-
1,870,820
Reversal of loss on impairment
of fixed assets
Less write-off
Depreciation
-
-
-
-
-
-
-
-
-
2,200,000
-
-
-
2,200,000
(426,010)
-
(426,010)
-
(25,447,138)
(8,698,479)
(320,210)
(308,001)
(12,350,947)
(3,769,501)
96,955,625
72,629,295
1,011,891
935,671
64,786,734
9,602,592
187,977
246,109,784
96,955,625
91,374,411
2,013,934
1,971,090
110,487,745
18,086,518
187,977
321,077,300
(18,745,116)
(1,002,043)
(1,035,421)
(36,123,475)
(8,483,926)
-
(65,389,981)
-
(9,577,535)
assets
Net book value
-
96,955,625
72,629,295
1,011,891
-
(9,577,535)
935,671
64,786,735
9,602,592
187,977
246,109,784
117
Baht
Office
Equipment
and Fixtures
Computer
Equipment
Vehicles
Total
-
-
-
-
Add Purchase
312,945
192,418
1,623,630
2,128,993
Less Depreciation
(45,624)
(12,626)
(134,287)
(192,537)
267,321
179,792
1,489,343
1,936,456
Cost
312,945
192,418
1,623,630
2,128,993
(45,624)
(12,626)
(134,287)
(192,537)
267,321
179,792
1,489,343
1,936,456
Vehicles
Total
December 31, 2011
Baht
Office
Equipment
and Fixtures
Machineries
Computer
and
Equipment equipment
118
Cost
312,945
192,418
-
1,623,630
2,128,993
(45,624)
(12,626)
-
(134,287)
(192,537)
267,321
179,792
-
1,489,343
1,936,456
Transactions during the year
ended December 31, 2012
267,321
179,792
1,489,343
1,489,343
1,936,456
Add Purchase
262,627
205,812
21,000
1,951,000
2,440,439
Less Depreciation
(81,282)
(60,176)
(608)
(487,841)
(629,907)
448,666
325,428
20,392
2,952,502
3,746,988
575,572
398,230
21,000
3,574,630
4,569,432
(126,906)
(72,802)
(608)
(622,128)
(822,444)
448,666
325,428
20,392
2,952,502
3,746,988
Cost
Leased assets included above, where the Group is a lessee under hire purchase agreements,
are as follows:
Baht
Consolidated
Cost
Net book value
2012
2011
13,358,504
17,371,284
( 5,967,575)
(4,814,663)
7,390,929
12,556,621
Separate
2012
2011
1,602,634
( 453,128)
1,149,506
1,623,630
(134,287)
1,489,343
As at December 31, 2012 the Subsidiary has fully depreciated of fixed assets which are still in
use, the cost of such assets has amounted to Baht 2.68 million (As at December 31, 2011:
Baht 0.36 million).
As at December 31, 2012 and 2011, Property, plant and machineries of the Group in the
consolidated financial statements amounting net book value of Baht 179.29 million and Baht
119
188.70 million, respectively is mortgaged as collateral for short-term loans and long-term
loans from financial institutions (Notes 17 and 19).
The subsidiary’s land and land not use in operation were revalued on December 19 and 21,
2012 by independent appraiser. Valuations were made on the basis of Market Approach.
The book values of the land were adjusted to the revalued amounts and the surplus on
revaluation of land decreased in amounting of Baht 4.87 million.
The subsidiary recorded surplus on revaluation of land in shareholders’ equity.
15. ASSETS NOT USED IN OPERATIONS
Baht
Consolidated
2012
Land
Land improvement
Total
2011
64,058,239
70,423,642
109,407,649
109,407,649
173,465,888
179,831,291
As at December 31, 2012 and 2011, The Subsidiary has land not use in operations amounting
of Baht 173.47 million and Baht 179.83 million, respectively is mortgaged as collateral for
short-term loans and long-term loans from financial institutions (Notes 17 and 19).
120
16. MINING PROPERTY RIGHTS
Movements of mining property rights for the years ended 31 December 2012 are as follows:
Baht
Consolidated
Separate
For year ended December 31, 2012
Beginning net book value
1,104,108,666
-
Less Amortization of mining property rights
(267,433,837)
-
Translation adjustment
(2,773,550)
-
833,901,279
-
121
17. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS
Baht
Interest rates (%) of per
annum
Consolidated
Separate
2012
2012
2012
2011
Overdrafts
6.875 - 8.000
6.875 - 8.000
52,991,504
24,165,939
28,584,837
-
Promissory notes
3.750 - 7.625
3.750 - 7.625
899,466,883
535,017,918
849,466,883
148,917,918
Trust receipts
3.200 - 7.000
3.411 - 5.450 2,204,259,153
990,991,712 1,932,048,386
84,354,535
Accounts payable
factoring
7.625 - 8.125
7.125 - 7.875
197,629,463
13,833,354
197,629,463
Packing Credit
3.250 - 3.650
3.291 - 7.400 1,787,741,865
332,558,173
270,949,721
Total
5,142,088,868
2011
1,896,567,096 3,278,679,290
2011
13,833,354
247,105,807
As at December 31, 2012, The Group has overdrafts facilities, packing credits and the shortterm loans from financial institutions amounting to Baht 6,582.00 million. (As at December
31, 2011: amounting to Baht 735.00 million.) The loans charged interest at the rate of
floating interest rate.
The overdrafts facilities and the short-term loans from financial institutions facilities are
secured over deposits from financial institutions (Note 12), property, plant and machineries
(Note 14), assets not use in operations (Note 15) guaranteed by the Company and subsidiary,
partial of directors’ shares and directors.
Under the terms of the loan agreement, the Group must comply with the terms and
conditions of certain loan agreements such as secured over current ratio etc.
122
18. TRADE AND OTHER ACCOUNTS PAYABLE
Baht
Consolidated
2012
2011
-
-
Separate
2012
2011
- related company
447,111,502
-
Trade account payable
- other companies
Accrued expenses
Other account payable
72,207,481
128,155,398
26,099,320
161,265,596
51,753,716
151,877,543
-
154,650
-
9,707,197
336,551
Total trade and other accounts
payable
233,473,077
180,063,764
624,788,665
10,043,748
19. LONG-TERM LOANS FROM FINANCIAL INSTITUTIONS - NET
Baht
Long-term loans from financial
institutions
Less Current portion
Net
Consolidated
Separate
2012
2011
2012
2011
44,811,925
58,942,227
-
-
(14,194,221)
(14,129,696)
-
-
30,617,704
44,812,531
-
-
123
The first line Loan amounted to Baht 3.81 million, which is monthly repayable within 60
equal installment dues of Baht 0.07 million each. The first payment was paid in December
2009. This loan bears interest at the rate of MLR% per annum.
The second line Loan amounted to Baht 80.00 million, which is monthly repayable within 72
equal installment dues of Baht 1.12 million each. The first payment was paid in May 2010.
This loan bears interest at the rate of MLR% per annum.
The movement of long-term loans
for the year ended December 31, 2012
Beginning balance
58,942,227
Less Repayment of loan during the year
(14,130,302
)
Ending balance
44,811,925
Such credit facilities are guaranteed by property, plant and machineries (Note 14), assets not
used in operations (Note 15) thereon and directors of company.
Under the loan agreement terms, the Subsidiary must comply with the condition of loan
covenants such as maintain the current ratio, debt to equity ratio and debt service coverage
etc.
124
20. LIABILITIES UNDER HIRE-PURCHASE AGREEMENTS - NET
Baht
Consolidated
Separate
2012
2011
2012
2011
Liabilities under hire-purchase
agreements
6,306,207
10,653,1
02
1,071,264
1,439,511
Less Deferred interest
(486,632)
(1,040,134)
(120,635)
(210,628)
5,819,575
9,612,96
8
950,629
1,228,883
(2,200,772)
(3,288,085)
(330,460)
(278,254)
3,618,803
6,324,88
3
620,169
950,629
Less Current portion
Net
125
21. EMPLOYEE BENEFIT OBLIGATIONS
The Group operates a post employment benefit and pension based on the requirement of
Thai Labour Protection Act B.E. 2541 (1998) to provide retirement benefits and other long
term benefit to employees based on pensionable remuneration and length of service.
Movement in the present value of the defined benefit obligations for the year ended
December 31, 2012 and 2011 as follows:
Baht
Consolidated financial
statements
Defined benefit obligations
as at January 1
Current service costs and
interest
Defined benefit obligations
as at December 31
Separate
2012
2011
2012
1,547,436
1,087,249
1,034,271
811,833
379,380
460,187
226,541
222,438
1,926,816
1,547,436
1,260,812
1,034,271
2011
Expense recognised in profit or loss for the year ended December 31, 2012 and 2011 :
Baht
statements
Current service costs
Interest on obligation
Total
Separate
2012
343,295
2011
420,823
2012
206,773
2011
194,641
36,085
39,364
19,768
27,797
379,380
460,187
226,541
222,438
The above expense recognised in the statement of comprehensive income for the year
ended December 31, 2012 and 2011 as follows:
126
Baht
statements
Cost of sales
Selling expenses
Administrative expenses
Total
2012
46,777
2011
42,388
17,009
Separate
2012
2011
87
80
15,396
17,009
15,396
315,594
402,403
209,445
206,962
379,380
460,187
226,541
222,438
Principal actuarial assumptions at the reporting date for the year ended December 31, 2012
and 2011 as follows:
Consolidated and
Discount rate
Salary increase rate
Mortality rate
2012
4.20 %
6.00 - 15.00 %
TMO97 (Thailand Mortality
Table in B.E. 2540)
2011
4.20 %
6.00 - 15.00 %
TMO97 (Thailand Mortality
Table in B.E. 2540)
22. SHARE CAPITAL
On September 15, 2011, At the extraordinary shareholders’ meeting, the shareholders has a
resolution to approve an increase in the registered share capital from Baht 2,222,712,675
(2,222,712,675 common shares with a par value of Baht 1 each) to Baht 3,027,615,570
(3,027,615,570 common shares with a par value of Baht 1 each) by issuing 804,902,895
common shares with a par value of Baht 1.00 each to reserve for :
- 331,457,770 common shares (331,457,770 common shares with a par value of Baht 1.00
each) to statements of PT. Tri Tunggal Pitriati to share swap with 1,000 common shares of
PT. Tri Tunggal Pitriati, resulting in a share premium of Baht 772,296,604.
- 444,542,535 common shares for the exercise of warrants (EARTH-W3) 444,542,535
common shares of the Company are to be reserved for the exercise of warrants issued
127
and offered to the Company’s existing shareholders in a ratio of 5 former common shares
equivalent to 1 warrant at selling price of 0 per unit. A warrant can be used to buy 1 new
common share at the exercise price of Baht 1.50.
- To allot 28,902,590 common shares for the adjustment of exercise of the warrants if any.
The Company registered the corresponding increase with the Ministry of Commerce on
November 1, 2011.
As at 31 December 2011, the Company’s issued and fully paid-up common shares has
increased from Baht 2,222,712,675 (2,222,712,675 common shares with a par value of Baht 1
each) to Baht 2,554,170,445 (2,554,170,445 common shares with a par value of Baht 1 each)
resulting in a share premium of Baht 772,296,604.
In the preparation of the consolidated financial statements for a reverse acquisition, equity
interests, as presented in consolidated financial statements, represent the sum of the issued
equity interests of the legal subsidiaries (accounting acquirers) outstanding before the business
combination, the cost of business combination and the equity interests of the legal parent
company (accounting acquiree) issued after the business combination. The details are as
follows:
Baht
2012
Issued equity interests of the legal subsidiaries outstanding
before the business combination, net of non-controlling
interests due to business combination
2011
200,000,000
200,000,000
36,095,873
36,095,873
Share capital issued during 2010 - 2012
382,783,008
331,457,770
Increase in share premium due to share issue
796,214,166
772,296,604
Cost of business combination
Cost of business combination as at the acquisition date
Equity interests of the legal parent company issued after
the business combination
128
Baht
Equity interests in the consolidated financial statements
2012
2011
1,415,093,047
1,339,850,247
The above transactions are presented as follows in the consolidated financial statements to
reflect the equity structure of the Company which is the legal parent company:
Baht
Issued and fully paid share capital
Share premium
Share discount
2012
2011
2,605,495,683
2,554,170,445
796,214,166
772,296,604
(1,800,000,000) (1,800,000,000)
Adjustment of equity interests under reverse
acquisition
(186,616,802)
(186,616,802)
Total
1,415,093,047
1,339,850,247
Warrants
Warrants to purchase new common shares of the Company issued to the Company’s existing
shareholders (EARTH-W3)
On September 15, 2011, the Extraordinary shareholders’ meeting No. 1/2011 of the
Company’s shareholders passed a resolution to issue the warrants to purchase new ordinary
shares of the Company issued to the Company’s existing shareholders (EARTH-W3) in a ratio
of 1 warrant for every 5 existing ordinary shares
On October 25, 2011 the Company has adjusted the exercise of warrants (EARTH-W3) to
warrant a unit can be used to buy common shares at 1.023 new common shares and
warrant can be used to buy 1 new common share at the exercise price of Baht 1.466
129
Details of warrants are as follows:
Date of grant
September 23, 2011
Contractual lifes
Less than 5 years from the issue date
Exercisable
15 March and 15 September of each years
On October 17, 2011, 444,519,122 share warrants of the Company were approved to be
traded in on the Market for Alternative Investment of Thailand (MAI) and can be exercised on
15 March and 15 September of each years. The first and last exercise dates will be on March
15, 2012 and September 15, 2016, respectively.
Unit
Share warrants (EARTH-W3)
Warrants exercised
As at March 15, 2012
As at September 15, 2012
Warrants had not been exercised
444,519,122
(125,900)
(50,045,400)
394,347,822
On at March 15, 2012, The Company recorded cash receipt from warrants exercise of Baht
188,812. The Company registered the increase in paid-up share capital from such exercise
with the Department of Business Development on March 21, 2012 for 128,794 common
shares. The increase share capital was approved to be traded in on the Market for
Alternative Investment of Thailand (MAI) on March 27, 2012.
On at September 15, 2012, The Company recorded cash receipt from warrants exercise of
Baht 75,053,988. The Company registered the increase in paid-up share capital from such
exercise with the Department of Business Development on September 20, 2012 for
51,196,444 common shares. The increase share capital was approved to be traded in on the
Market for Alternative Investment of Thailand (MAI) on September 25, 2012.
130
23. LEGAL RESERVE
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is
required to set aside to a legal reserve at least 5 percent of its net profit after deducting
accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the
registered capital. The legal reserve is not available for dividend distribution.
24. DILUTED EARINGS PER SHARE
Consolidated financial statement
For the years ended December 31
Weighted average number
Net earnings
(Thousand of Baht)
2012
2011
of common shares
(Thousand of Baht)
2012
2011
Earnings
per share (Baht)
2012
2011
Net earnings
1,280,434
395,313
2,568,679
2,278,107
294,120
278,457
2,862,799
2,556,564
0.50
0.17
0.45
0.16
Effect of dilutive potential
common shares
Warrants
394,347,822 units
-
-
Net earnings of common
shareholders (assuming
conversion of potential
common share)
1,280,434
395,313
131
Separate Financial Statement
For the years ended December 31
Weighted average number
Net earnings
(Thousand of Baht)
2012
of common shares
(Thousand of Baht)
Earnings
per share (Baht)
2011
2012
2011
2012
31,491
2,568,679
2,278,107
294,120
278,457
2,862,799
2,556,564
2011
Net earnings
1,695,755
0.66
0.01
0.59
0.01
Effect of dilutive potential
common shares
Warrants
394,347,822 units
-
-
Net earnings of common
shareholders (assuming
conversion of potential
common share)
132
1,695,755
31,491
25. SEGMENT FINANCIAL INFORMATION
The Group is engaged in the business of trading coal both Thailand and international.
The details of segment information in the Group for the years ended December 31, 2012 and
2011 are as follows.
Million Baht
Thailand
International
Total
For the year ended December 31, 2012
Sales
Cost of sales
Gross profit
1,649.95
8,756.33
10,406.28
(1,119.33)
(7,159.44)
(8,278.77)
530.62
1,596.89
2,127.51
Assets segment as at December 31, 2012
246.11
8,567.11
Other assets
8,813.22
Total
For the year ended December 31, 2011
Sales
Cost of sales
Gross profit
926.64
3,758.47
4,685.11
(837.81)
(3,060.86)
(3,898.67)
88.83
697.61
786.44
Assets segment as at December 31, 2011
Other assets
Total
266.42
3,836.09
4.102.51
133
26. EXPENSES BY NATURE
Expenses by nature for the years December 31, 2012 and 2011 are as follows:
Baht
Consolidated
Changes in finished goods
Raw materials and consumable used
Coal processing service expense
Managements’ remuneration
Staff cost
Transportation expense
Depreciation
Loss from assets revaluation
Bad debt and doubtful debts
2012
5,225,347
2011
17,813,274
8,145,393,985
3,821,601,387
25,852,412
-
Separate
2012
2,618,192,428
104,518,192
2011
666,976,347
-
18,410,000
15,293,926
18,410,000
14,057,926
31,149,347
26,322,060
22,602,913
13,464,882
170,707,307
75,944,511
135,202,445
4,900
25,447,138
23,829,825
629,907
192,537
-
11,777,535
-
-
-
2,388,821
-
-
27. REGISTERED PROVIDENT FUND
The Company established a contributory registered provident fund in accordance with the
Provident Fund Act.B.E. 2530. Under the plan, the Company and employees contribute to
the fund at certain percentage of the employee’s basic salary. The Company appointed a
fund manager to manage the fund in accordance with the terms and conditions prescribed
in the Ministerial Regulation No.2 (B.E. 2532) issued under the Provident Fund Act B.E.2530.
The Company has paid contribution to provident fund for the years ended December 31,
2012 amount of Baht 1.22 million (December 31, 2011 : Baht 0.44 million.)
134
28. FINANCIAL INSTRUMENTS
a) Liquidity risk
Liquidity risk, or funding risk, is the risk that the Group will encounter difficulty in raising
funds to meet commitments associated with financial instruments. Liquidity risk may
result from an inability to sell a financial asset quickly at close to its fair value.
b) Foreign Currency risk
The Group was exposed to the foreign currency risk because of their foreign currency
transactions. The Group does not enter into any foreign currency derivative contract to
hedge the currency risk.
As at December 31, 2012, The Group has monetary assets and liabilities in foreign
currency which are not hedged are as follow :
Cash from financial institution
Trade accounts receivable
Short-term loans to related
company
Accrued interest income
Advance payment from
purchase of goods
Trust receipt
Short-term loans
Consolidated
Separate
financials statements
Currency
Currency
Rupiah
USD
USD
528,085
3,310,227,635
528,085
125,832,264
11,065,769
35,951,137.58
71,619,172
58,086,000
35,455,680
-
43,721,072
-
615,674
260,868,766,626
27,662,854
-
62,774,702
-
8,803,500
2,563,773,164
14,581,970
c) Interest rate risk
The Group was exposed to interest risks because it held deposits to and bank overdraft
and loans from financial institutions. However, such financial assets and liabilities are
135
short-term, The Group believed that the future fluctuation on market interest rate
would not provided significant effect to their operation and cash flow; therefore, no
financial derivative was adopted to manage such risks.
d) Credit risk
The Group was exposed to credit risk. However, due to the large number and diversity
of the entities comprising the Company’s customer base, The Group does not anticipate
material losses from its debt collection. The Group estimated the allowance for doubtful
accounts from the ending balance of accounts receivable. The estimate was made by
considering the customer’s past collection experiences.
e) Fair value of financial instruments
Fair value is defined as the amount that could be exchanged in a current transaction
between knowledgeable willing parties in an arm’s length transaction. Fair values are
obtained from quoted market prices, discounted cash flow models or net asset values
as appropriate.
The following methods and assumptions are used to estimate the fair value of each
class of financial assets and liabilities:
Cash and cash equivalents, trade accounts receivable, deposits pledged as collateral at
financial institutions, trade accounts payable, income tax payable, accrued expenses,
liabilities under hire-purchase agreements and bank overdraft and loans ; the carrying
values approximate their fair values due to relatively short-term maturity of these
financial instruments.
29. COMMITMENTS AND CONTINGENT LIABILITIES
As at December 31, 2012, The Group commitments and contingent liabilities is as follows:
Commitment
x The Company has commitment to pay rental expense agreement amounting of Baht 5.89
million.
x The Company has commitment to pay rental machinery and equipment amounting of
Baht 6.96 million.
136
x The Group and the Company has significant agreement for sale of steam coal with many
foreign companies to sell steam coal in the quantity of 10.94 million metric ton and 8.58
million metric ton respectively.
Contingent liabilities
x The Subsidiary has contingent liabilities for letters of guarantee issued by bank for the
electricity usage and sale and purchase contract of steam coal amounting of Baht 0.41
million and USD 0.05 million respectively.
x The Company and the subsidiary has contingent liability from guarantee credit facilities
from financial institutions amounting of Baht 5,640 million.
30. SIGNIFICANT CONTRACT AND AGREEMENTS
On November 23, 2012 the Company has entered a joint operating agreement with East Star
Co., Ltd. in the coal mining operation and sales under the coal mining concession rights No.
0006/2010 with an area of 1,262 Rai in Dawei, Myanmar.
Oversea subsidiary (PT. Tri Tunggal Pitriati) has significant contract and agreements as follows :
- The rights under a Coal Contract of Work (“CCOW”) mining license (545/013/IUPOP/D.PF/2010) from the Indonesian government to explore for and exploit coal for a
period of five years (From January 15, 2010 till January 15, 2015) in a total survey area of
16.30 hectares in Angsana, Tanah Bambu, Sount Kalimantan, Indonesia.
- The rights to conduct coal mining activities under a Coal Contract of Work (“CCOW”)
mining license (545/106/IUP-OP/D.PF/2010) from the Indonesian government to explore
for and exploit coal until coal reserves in the area is completely mined in a total survey
area of 12.00 hectares in Simpang Empat, Tanah Bumbu, Sount Kalimantan, Indonesia.
31. SUBSEQUENT EVENTS
According to the minutes of Board of directors’ meeting held on December 21, 2012, passed
the resolution to submit the agendas to the extra-ordinary shareholders’ meeting held on
August 30, 2013
137
x To approve the investment in all 1,000 shares at the par value of Indonesian Rupiah
1,000,000 per share of PT. Hary Niaga. Total purchase value is not more than Baht
3,694,800,000 based on coal reserves/resources not more than 40 million tons. The
Company will make the payment by issuance not more than 454,464,945 newly common
shares with a par value of Baht 1 per share at offering at Baht 8.13 per share on the
private placement basis, as the consideration to the shareholders of PT. Hary Niaga.
x To approve the issuance not more than 1,002,971,268 warrants ( EARTH-W4) to purchase
new common shares of the Company issued to the Company’s existing shareholders in a
ratio of 1 warrant for every 3 existing common shares at the exercise price of Baht 8.13.
The contractual life of warrant is 2 years from the issue date.
x To approve an increase in the registered share capital from Baht 3,027,615,570
(3,027,615,570 common shares with a par value of Baht 1 each) to Baht 4,500,000,000
(4,500,000,000 common shares with a par value of Baht 1 each) by issuing 1,472,384,430
common shares with a par value of Baht 1.00 each to reserve for :
- 454,464,945 common shares (454,464,945 common shares with a par value of Baht 1
each) to shareholders of PT. Hary Niaga to share swap with 1,000 common shares of
PT. Hary Niaga.
- 1,002,971,168 common shares for the exercise of warrants (EARTH-W4) issued and
offered to the Company’s existing shareholders in a ratio of 3 former common shares
equivalent to 1 warrant at selling price of 0 per unit. A warrant can be used to buy 1
new common share at the exercise price of Baht 8.13.
- To allot 14,948,317 common shares for the adjustment of exercise of the warrants if
any.
32. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were authorized for issue by the Board of directors on February
27, 2013.
138

Separate financial statements - Energy Earth Public Company Limited

Transcription

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