ANNUAL REPORT 2005
PATKOL Plc.
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Comparative Data
PAGE 1
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Comparative Data
PAGE 2
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Message from Chairman
The year 2005 was the year that Patkol have had a great loss due to the decease of Dr. Vira Susangokorakarn, our Company’s Chairman who had lead the company through the economy crisis years. He was Thailand role model of government civil servant who, even after over 15 years of retirement from government post, still dedicated his entire life in doing good work for the country. Dr. Vira Susangkorakarn was the one who had introduced Patkol to the alternative energy business, by entering the contract to fabricate some of machineries for ethanol plant for Thai Agro Energy Co., Ltd., the company he set up so that Thailand would have its own formula for alternative energy. He was the investor who owned the minimum shares in Thai Agro Energy Co., Ltd. but was the major force to push for the project to start, in which Patkol received the full benefits as, nowadays, the company is in the Ethanol Turnkey Project business. In the year 2005, Patkol had made some profits for the shareholders. However, Patkol’s management is still trying their best to increase the Company’s profit so as to give full dividend to the shareholders for the year 2006. For the year 2005 Patkol was not in the position to grant full dividend to its shareholders as Patkol is under the expansion of its second factory in Petchaburi in order to obtain the tax exemption. However, upon finishing the factory expansion at the end of 2006, Patkol would save on income tax of around 15% of the total group income. I wish to thank the shareholders for their trust in the management and confirm that all the company’s directors will try to increase the company’s income in order to give a full dividend to our shareholders. Also, I wish to thank all Patkol’s staff for their hard work dedication.
Rachanee Chongvatana Termporary Chairman
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Message from the President and Chairman of Management Committee Dear The Shareholders, At the moment, Patkol is well accepted in the industrial and engineering circles as the engineering firm and not just a firm who manufacture only refrigeration or food processing machineries. This, as Patkol Turnkey Projects are well known to all the investors that it could reduce the stress of the investors’ management from working with several sub-contractors and, at the same time, could have good control of construction schedule.
Nowadays, Patkol’s expansion work on Turnkey Projects is growing steadily. Together with the government free policy on the set up of Ethanol Plant, Patkol expects to be able to make a sale for 2 projects in the year 2006, at the cost of Baht 500 million each. I am sure that for the year 2006, we will have a high growth and should be able to make a good profit as we are well aware of the fluctuation of raw materials prices thus having better cost control. In 2006, Patkol will push for the increase of export as it makes good profit. At the moment, all of the company’s business units had set up its special sales force for international sales in order to reach the set goal.
On the development section, Patkol had put its efforts to strengthen the Research and Development Department which had yielded new products for each business units over the set goal of one product per unit, enable the company to expand the market further. I wish to assure our shareholders that, for the year 2006, Patkol would expand its export market as targeted which would result in good business operation.
Mr. Piya Chongvatana President and Chairman of Management Committee
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Board of Directors 1
Name Position Highest Education Record Working Record
Engineering License
2
Name Position Highest Education Record Working Record Engineering License
3
Name Position Highest Education Record
Working Record
Engineering License
Mr. Vira Susangkarakarn Chairman Master’s Degree in Engineering (Civil), University of Illinois Former : 2 Times as the Deputy Minister of Ministry of Industry Present : 1. Chairman, Saving and Energy Increase Efficiency the Engineering Institute of Thailand. 2. Chairman of the Executive Board of T.S.B. Trading Co.,Ltd. 3. Chairman of Board of Director, Thai Agro Energy Co.,Ltd. 4. Chairman of Board of Director, Hydro Energy Co.,Ltd. 5. Director, Prachin Traffic Products Co.,Ltd. 6. Director of Siam Strip Mill Plc. 7. Director of Poenix Pulps & Paper Plc. 8. President, Jet Sports Boating Association of Thailand Civil Senior Professional Engineer
Miss Ratchanee Chongvatana Vice Chairman Bachelor’s Degree in Electrical Engineering, Chulalongkorn University Present : Chairman, Board of Directors, Prepac Thailand Co.,Ltd. Electrical Senior Professional Engineer (Power)
Mr.Piya Chongvatana Director - Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin, USA. - Bachelor’s Degree in Mechanical Engineering, Chulalongkorn University Present : 1. President, Patkol Plc. 2. Director, Prepac Thailand Co.,Ltd. 3. Chairman, Siam Patkol Co.,Ltd. Mechanical Senior Professional Engineer
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Annual Report 2005 As at 31 December 2005
4
Name Position Highest Education Record Working Record
5
Name Position Highest Education Record
Working Record
Engineering License
PATKOL Public Company Limited
Mrs. Vipa Chulajata Director Bachelor’s Degree M.A. (Honours) in Modern Languages, Edinburgh University Former : 1. Government official in Ministry of Education 2. Lecturer, Faculty of Liberal Arts, Thammasart University Present : 1. Director, Prepac Thailand Co.,Ltd. 2. Director, Patkol Plc. 3. Director, Siam Patkol Co.,Ltd.
Mr. Sangchai Chotechuangchutchaval Director -Bachelor’s Degree in Electrical Engineering, King Mongkut’s Institute of Technology North Bangkok -Master Degree of Public Administration -Defense College Present : 1. Director, Patkol Plc. 2. Vice President, Sales and Marketing, Patkol Plc. Electrical Professional Engineer (Power)
6
Name Position Highest Education Record
Asso.Prof. Noppavan Chongvatana Director - University of Hawaii (By Ford Foundation Scholarship) Master’s Degree, Library Studies and Demography - Master’s Degree in Demography, Chulalongkorn University
7
Name Position Highest Education Record
Mr. Paradon Chulajata Director Master’s Degree in Business Administration, Faculty of Finance, Eastern Michigan University, USA. Former : 1. Investment Banking Officer, Phatra Thanakij Plc. 2. Vice President Financial, Patkol Plc. Present : 1. Audit Committee’s Consultant, Patkol Plc. 2. Managing Director, Prepac Thailand Co.,Ltd.
Working Record
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Annual Report 2005 As at 31 December 2005
8
Name Position Highest Education Record Working Record
9
Name Position Highest Education Record Working Record
Engineering License
10 Name Position Highest Education Record Working Record
11 Name Position Highest Education Record Working Record
12 Name Position Highest Education Record
PATKOL Public Company Limited
Mr. Suchart Sooksumitr Director - Bachelor’s Degree of Law, Thammasart University - Barrister at Law Former : Judge, Ministry of Justice (26 years) last position, Judge of the Supreme Court of Thailand Present : 1. Director and Chairman of Audit Committee, Patkol Plc. 2. Legal Advisor Mr. Virachai Srikajon Director Master’s Degree in Business Administration, South Eastern University, Washington DC, USA. Present :1. Director and Audit Committee, Patkol Plc. 2. Managing Director, Chiangmai Medical Services Plc. 3. Managing Director, Thai Storage Battery Plc. Mechanical Professional Engineer
Mr. Preecha Chantarangkul Director Bachelor’s Degree in Business Administration, Faculty of Management, Thammasart University Present : Director and Audit Committee, Patkol Plc.
Miss Nongluck Sakdakrai Director Master’s Degree in Perfect Management, Georage Washington University Present : Vice President, Thai Ice Club Limited
Mrs. Anongsiri Chaiyakul 1. Member of Management Committee 2. Assistant President, Patkol Plc. Bachelor’s Degree in Accounting, Thammasart University
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Management Committee 1
Name Position Highest Education Record
Engineering License
2
Name Position Highest Education Record
Engineering License
3
Name Position
Highest Education Record
4
Name Position
Highest Education Record Engineering License
Mr.Piya Chongvatana 1. Chairman of Management Committee 2. President, Patkol Plc. - Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin, USA. - Bachelor’s Degree in Mechanical Engineering, Chulalongkorn University Mechanical Senior Professional Engineer
Mr. Sangchai Chotechuangchutchaval 1. Vice Chairman of Management Committee 2. Vice President Sales and Marketing, Patkol Plc. - Bachelor’s Degree in Electrical Engineering, King Mongkut’s Institute of Technology North Bangkok - Master Degree of Public Administration - Defense College Electrical Professional Engineer (Power)
Asso.Prof. Noppavan Chongvatana 1. Member of Management Committee 2. Vice President Human Resource and General Management - University of Hawaii (By Ford Foundation Scholarship) Master’s Degree, Library Studies and Demography - Master’s Degree in Demography, Chulalongkorn University
Mr. Sumet Jeambutr 1. Member of Management Committee 2. Vice President Technical and Development, Patkol Plc. Bachelor’s Degree in Mechanical Engineering, King Mongkut’s Institute of Technology North Bangkok Mechanical Senior Professional Engineer
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Annual Report 2005 As at 31 December 2005
5
Name Position Highest Education Record
6
Name Position Highest Education Record Engineering License
7
Name Position
Highest Education Record
8
Name Position
Highest Education Record Engineering License
9
Name Position Highest Education Record
PATKOL Public Company Limited
Mrs. Anongsiri Chaiyakul 1. Member of Management Committee 2. Assistant President, Patkol Plc. Bachelor’s Degree in Accounting, Thammasart University
Mr. Sombatt Srichainont 1. Member of Management Committee 2. Vice President Manufacturing, Patkol Plc. Bachelor’s Degree in Mechanical Engineering, King Mongkut’s Institute of Technology North Bangkok Mechanical Associate Engineer
Mrs. Somnuk Taepanit 1. Member of Management Committee 2. Vice President Financial and Accounting, Patkol Plc. Master’s Degree in Accounting, Thammasart University
Mr. Neramit Ponyuttapoom 1. Member of Management Committee 2. Assistant Vice President Sales and Marketing, Patkol Plc. Bachelor’s Degree in Mechanical Engineering, King Mongkut’s Institute of Technology North Bangkok Mechanical Associate Engineer
Mr. Amarin Thepsiriamnuay 1. Member of Management Committee 2. Vice President Supply Chain Patkol Plc. Bachelor’s Degree in Pharmacy, Chiang Mai University
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Major events and developments Major events in the past 6 years -
In 2000 signed debt restructuring contracts with banks and financial institutions due to the result of the economy crisis as well as expanding business into turnkey projects, obtaining a contract to design and construct tuna processing plant for Princes Food in Mauritius. Launched new product, Tube Ice Maker, capacity 1.5 tons/day.
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In 2001 received Prime Minister’s Export Award on Thai Owned Brand in which in 1999 the company received Prime Minister’ Export Award for own design category.
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In 2002 set up a new business unit to support the work on system automation control. Received permission from shareholders to issue debenture bond to exit from all debt restructuring contracts.
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In 2003 Signed a long term contract for the amount of ฿312 million and exited from all the debt restructuring contracts with creditors before due date. Launched new products in ice maker line, the nugget ice for consumption, capacity 60 and 200 Kgs./day and scale ice for sea food processing , capacity 2,500 Kgs./day. Set up new business unit “Special Project Unit” to support the government enterprises business.
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In 2004. y Set up new factory at Petchburi Province under the name of “Patkol Manufacturing Co., Ltd.” with registered capital of ฿70 million and the company own 99.99% of shares. This new company is under BOI. privileges with 8 years income tax exemption. The budget for land, buildings and machineries of new factory is set at ฿200 million and expected to be in operation by June 2005. In April 2004, set up a new company Patkol R&D Co., Ltd, with registered capital of ฿5 million, and Patkol Plc. own 99.99% of shares. This company will concentrate on the technical and development of new products. y On October 19, 2004. Mr. Piya Chongvatana the company’s President received the 2004 Outstanding Technologist Awards from HRH Princess Maha Chakri Sirindhorn.
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In 2005. y Patkol Manufacturing Co., Ltd started the production as per privileges received from B.O.I. y Paid back long terms loan of 100 million baht on schedule, part of the payment came from the business operation, the rest was from loan from various financial institutions. y Patkol R&D Co., Ltd, an affiliated firms, was listed at No. 98 of the Notice from the Ministry of Finance regarding the income tax (No. 44) as the firm to carry out the research and development, effective as from February 4, 2005. y Siam Patkol Co., Ltd terminated the rental of factory premises and moved to Patkol Public Company Limited factory at King Kaew Road, thus saving the rental fee ฿ 6 Million a year. PAGE 10
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
General Information Registered No. Company set up Types of Business
Head office Telephone Fax Homepage E-mail Registered Capital Past Record 12 February 1992 3 March 1992 28 June 1992
: Bor Mor Jor 132 : 28 November 1965 by the Chongvatana families. : 1) Manufacturer of tube ice maker, Block Ice Plant and small ice maker. 2) Machineries and system for refrigeration industry. 3) Machineries and processor for liquid food (milk and beverage) 4) Machineries and equipment for food processing industry. 5) Turnkey Project. 6) Industrial automation. : 348 Chalerm Prakiat Rama 9 Rd., Nongbon, Pravate, Bangkok 10250, Thailand. : 662 3281032-49 : 662 328-1058 , 662 328-1245 : www.patkol.com : sales@patkol.com : ฿320 million with paid up capital of ฿238.5 million, divided into 238.5 million shares. - Changed its name from Patanakolkarn Co., Ltd. To Patkol Co., Ltd. - Registered for public company with the Security Exchange of Thailand. - Registered as Public Company and changed its name to Patkol Public Co., Ltd.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Other References Auditors 1. Mrs. Yongyoo Krasaesindhuwanond CAP No. 2517 Bunchikij Co.,Ltd. 9th Floor, 87 Modern Town Building, Ekamai Soi 3, Sukhumvit 63 Rd., Wattana District, Bangkok 10110. Tel : 02 382 0414 Fax : 02 381 5849, 02 382 0417
2. Mrs. Suwanee Kittipanya-Ngam CAP No. 2899 Bunchikij Co.,Ltd. 9th Floor, 87 Modern Town Building, Ekamai Soi 3, Sukhumvit 63 Rd., Wattana District, Bangkok 10110. Tel : 02 382 0414 Fax : 02 381 5849, 02 382 0417
Registrar Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, 4, 6-7 Floor, Ratchadapisek Rd., Kongteaw, Bangkok 10110. Tel : 02-359-1200-49 Fax : 02-359-1259
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Business Operation Patkol Public Company Limited
1) Ice Making Machine: there is tube ice making machines 1.5-80 tons, nugget ice machine 60-450 kgs. and block ice plant 50-3,000 cans. The ice machine business was still growing well in 2005 for domestic and abroad. We exported our machines to over 27 countries, majority in the Middle East. Our machines are manufactured order the ASME (American Society of Mechanical Engineering) standard.
2) Machines and systems for Industrial Refrigeration: which are divided into cold rooms for large and small industries, IQF freezer Air Blast Freezer including spare parts. There are also the heat exchanger units, in which Patkol was the first firm in the world who manufactured stainless steel evaporative condenser since 1990. Patkol is also supplying “Bonnet” refrigeration Show-cases with wellknown standard all over the world.
3) Liquid Food Machine: divided into machine and system for machine for dairy and beverage industries. Patkol could design, manufacture and install the whole system as well as providing spare parts for milk Plant, beverage industries in both alcohol and non-alcohol including stainless steel tank with CIP system. Patkol could also design, manufacture and install systems and machine for liquid chemicals, or providing only stainless steel tank and piping works; most of the major parts are manufactured at the Company’s factory under ASME standard.
4) Machines and systems for Food Processing: divided into frozen food industry for meat, seafood, vegetable and fruit and canning industry for tuna, vegetable and fruit. Pakol could design conveyor units, install the system and providing spare parts to suit customers’ enquiry, with efficient productivity and friendly to environment. Most of the machine parts are manufactured at the Company’s factory with hygienic design and safety standards.
5) Turnkey Project, Patkol had a lot of experience in the construction of food processing plant as turnkey project for both local market an aboard. With a team of 160 engineers in every branches, the Company could design, carry out construction work, manufacture machines and supported work in 3 different fields; civil construction, machineries for production and support and project management The Company had constructed an alcohol plant project with the cooperation from Katzen International on technology side.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
6) Electrical System and Automation: the company could provide the design and installation of electrical system and automation . The electrical system is divided into 2 types of work; manufacture the Switch Board or Main Distribution Board (MDB) and providing electrical system for machineries of other business units as well as for the turnkey projects. For the automation, the company could design, install, set up program and testing the automatic control of machines as well as acting as consultant for modernizing the old system to meet the international standard.
7) Services & Maintenance, Patkol found that the maintenance and service could be greatly expanded as most customers begin to realize the importance of system maintenance and the small service provider could not give good program. The work of our Service Department has expended and it also gave us an opportunity to increase our sale as well.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Income structure Income structure of business groups (local and abroad)
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Risk Factors Business Risk 1) Depending on customers or large distributors. As Company has a large quantity of customers in several types of business, therefore, there was no risk on depending on customers or distributors. The company did not have any customer who would buy more than 15% of annual sales. Company’s big customers are in the investment project and this has been changed each year in several business sectors 2) Risk on Production The company calculated cost of raw materials on the offered date, therefore, there was no risk on the price variation. In 2005, even though prices of raw material varied a great deal but the company had good planning and better cost control so able to earn more profit than the previous year. The company has no risk on machineries as most of them are standard machines. 3) Management Risk We have risks on the department manager level which requires special skill in their work. We reduced the risk by using the Technical & Development Department manpower. We assigned one of the engineers in T&D to back up the technology in the business unit and the man will be our support if we should loss a department manager. For high level executive, all has long services with the company and our top and second from top executive are our board of directors and major shareholders of our company. 4) Financial Risk 4.1 Risk on exchange rate The company has export sales at the value closed to the payment for the imported goods. Also the company has protected the risk on exchange rate by booking forward cover for imported materials. 4.2 Risk on investment on warrants. Risk on time valve of warrant. The company adjusted the exercise price and exercise ratio along the exercise period of warrant according to the right adjustment clause. The first date to exercise right was 25 November 2004 and the last date is 21 December 2007. and there was no one who want to exercise his right on the first date of 2004. However, such adjustment take into account only exercise price and exercise ratio on the adjustment date without considering the time value of the warrants. As the time value of warrant is to be declined as the exercise period is shorten, in case the company offers new warrants or convertible securities in the future, the warrant holders may receive less benefit after the right adjustment.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Risk on the adjustment price that is lower than the par value of ordinary share. In case the adjustment of the exercise price and exercise ratio according to the right adjustment clause, caused the exercise price to be lower than the par value of ordinary share, such adjusted price is to be applied unless prohibited by law. In case the law prohibited the issue of new shares at lower price than the par value, the new exercise price will be at the par value, thus the warrant holders will receive less benefit. 5) Risk on the ratio of shares owned by shareholders. The company did not have any restriction on the payment of dividend. In obtaining loan, the company could pay for interest and installments per agreement contract. The dividend would be paid according to the company policy with restriction of not over 70% of the net profit after tax. The company will consider paying suitable dividend (Please see more details on item 2.8, section 5 policy on dividend payment.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Management 1) Management Structure
2) List of Company Management as at 31 December 2005. The Company’s Board of Directors :1. Mr. Vira Susangkarakarn 2. Miss Ratchanee Chongvatana 3. Mr.Piya Chongvatana 4. Mrs. Vipa Chulajata 5. Mr. Sangchai Chotechuangchutchaval 6. Mr. Paradon Chulajata 7. Mr. Suchart Sooksumitr 8. Mr. Virachai Srikajon 9. Mr. Preecha Chantarangkul 10. Miss Nongluck Sakdakrai 11. Asso.Prof. Noppavan Chongvatana 12. Mrs. Anongsiri Chaiyakul
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Chairman Vice Chairman Director Director Director Director Director Director Director Director Director Director
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Management Directors as at 31 December 2005 :1. Mr.Piya Chongvatana - Chairman of Management Committee - President, Patkol Plc. 2. Mr. Sangchai Chotechuangchutchaval - Vice Chairman of Management Committee - Vice President Sales and Marketing, Patkol Plc. 3. Asso.Prof. Noppavan Chongvatana - Member of Management Committee - Vice President Human Resource and General Management 4. Mr. Sumet Jeambutr - Member of Management Committee - Vice President Technical and Development, Patkol Plc. 5. Mrs. Anongsiri Chaiyakul - Member of Management Committee - Assistant President, Patkol Plc. 6. Mr. Sombatt Srichainont - Member of Management Committee - Vice President Manufacturing, Patkol Plc. 7. Mrs. Somnuk Taepanit - Member of Management Committee - Vice President Financial and Accounting, Patkol Plc. 8. Mr. Neramit Ponyuttapoom - Member of Management Committee - Assistant Vice President Sales and Marketing, Patkol Plc. 9. Mr. Amarin Thepsiriamnuay - Member of Management Committee - Vice President Supply Chain, Patkol Plc.
Audit Committee as at 31 December 2005. 1. Mr. Suchart Sooksumitr 2. Mr. Virachai Srikajon 3. Mr. Preecha Chantarangkul
Chairman Director Director
Election Committee as at 31 December 2005. 1. Mr. Virachai Srikajon 2. Mr. Sangchai Chotechuangchutchaval 3. Asso.Prof. Noppavan Chongvatana
Chairman Director Director
Remuneration Committee as at 31 December 2005. 1. Mr. Vira Susangkarakarn 2. Mr. Virachai Srikajon 3. Mr. Preecha Chantarangkul 4. Miss Nongluck Sakdakrai
Chairman Director Director Director
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Auditors Selecting Committee as at 31 December 2005 1. Mr. Suchart Sooksumitr Chairman 2. Mr. Virachai Srikajon Director Auditors Selecting Committee 3. Mr. Preecha Chantarangkul Director Auditors Selecting Committee 4. Mrs. Somnuk Taepanit Director Auditors Selecting Committee
Scope of work of the Company’s Board of Directors. At present there are 12 directors, comprising of independent directors, representative of major shareholders and directors from the internal management. In order that the directors would work efficiently, it was set that at least in one year there shall be 5 directors’ meeting. The agenda of each meeting shall be set up in advance and shall be sent to all the directors prior to each meeting. All the meeting consideration would be for the benefit of the shareholders with fairness and just to all involved. Each director would be allowed to give his opinion freely and between each agenda there would be sufficient time allowed for freely discussion. The Chairman would look after the meeting to make sure of the appropriate time.
The Board of Directors’ duty are :1) Set up the vision, missions and strategy on business operation for the company’s prosperity and stability as well as continuously increase the value for shareholders. 2) Dedicate himself and his time for the Company, shall not seek self benefits and commit any conflict of interest. 3) Shall consider the operation plan and develop the company ability to be compatible internationally. 4) Check and follow up on the operation of business group and the company. There should be the regular reports as well as giving policy to develop and adjust the business operation and company personnel. 5) Look after the risk management including the good governance policy to make sure that they meet the international standard. 6) Act according to the law, company’s objectives and regulations and resolution of the shareholders with honest for the benefits of shareholders at present and in the long run. 7) Act according to the good governance and good practice for the director of the listed company as stipulated by the Stock Exchange of Thailand and Securities and Exchange Commission. 8) Evaluate the company’s operation and work performance of the high level management staff. 9) Support the ethic and moral of employees in all levels and realize the important of the internal control system which would help reducing the risk on fraud, the over exercising of power as well as illegal practices. 10) Protecting the benefits of shareholders large and small according to their right and just. The shareholders should be able to exercise their right in protecting their benefits as well as receiving correct, complete, transparency and disclose information that could be checked.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
11) The Board of Directors authorized the directors, Management Committee, sub-committees and any person or jurisdiction individually or jointly carry out any function according to the Company’s objective at remuneration set by the Board of Directors. The Board of Directors has the right to change or revoke the authority given as well as to replace with more suitable person. The newly appointed person should carry out his study according to the order, regulation as well as the policy set by the Board of Directors. Scope of work of Management Committee. The Management Committee is responsible for all general duty; from planning as well as follow up and analysis. However, the major decisions such as increase or reducing of investment, the investment, the investment in other companies, etc. the Management Committee has to ask the Board of Directors for their decision. Scope of work of the Managing Director. The Managing Director has to manage the Company’ s general business which covers :y Looking after the overall operation of the Company to meet the Company’s objectives. y Consider and screening all types of investment before presenting them to the Board of Directors. y Consider, prepare and provide the annual budget to be presented to the Board of Directors. y Authorized the payment to projects that meet the approval of the Board of Directors. y Authorized the appointment of various consultants deemed necessary for the business operation as well as carry out other duties as authorized by Board of Director or directors, case by case. “However, the Managing Director is not allowed to approve any business that he, himself or conflict person may gain or loss, or causing the conflict of interest to the company on its affiliated firms. Unless it was approved by the Company’s Board of Directors who had thoroughly considered the matter.”
Management Personnel. The Managing Director is the Company’s highest management personnel and shall act as Chairman of the Management Committee, comprising of 8 persons (including the Managing Director). This 8 Management Committee will manage, look after and be responsible on the company’s business operation as well as set up budget, controlling the expenses as well as put up policy on personnel under the agreement of the Company’s Directors.
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Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Remuneration for Directors and Management. 1) Remuneration for Company’s Board of Directors for the year 2005 was
฿
3,800,000.- being salaries, bonuses and meeting perdiem. Remarks :
This amount did not include the remuneration paid to Management Committee who were not on the Board.
2) The total remuneration paid to the Management Committee for the year 2005 was ฿28,890,888.27.- being salaries, bonuses, provident fund and others. Remarks :
The paid remuneration were paid to :- Company’s directors who were the Management Committee. - Management who were the Management Committee.
Records of the Director’s meeting Name
Audit Committee
1. Mr. Vira Susangkarakan 2. Miss Ratchanee Chongvatana 3. Mr. Piya Chongvatana 4. Mrs. Vipa Chulajata 5. Mr.Sangchai Chotechuangchutchaval 6. Mrs. Noppavan Chongvatana 7. Mr. Paradorn Chulajata 8. Mr. Suchat Suksumitr 9. Mr. Veerachai Srikajorn 10. Mr. Preecha Jantrarangkul 11. Miss. Nongrak Sakdakrai 12. Mrs. Anongsiri Chaiyakul
10/10 10/10 9/10 -
Meeting / Participants Ordinary Extraordinar Meeting y Meeting 3/6 0/16 6/6 6/10 6/6 9/10 6/6 9/10 6/6 10/10 6/6 10/10 5/6 10/10 5/6 10/10 5/6 10/10 5/6 7/10 6/6 10/10 6/6 10/10
Total 3/16 12/16 15/16 15/16 16/16 16/16 15/16 16/16 16/16 12/16 16/16 16/16
Management Operation The Company’s management team had acted according to the 15 Codes of Best Practices of Security Exchange of Thailand as per following details :1) Policy on corporate governance. The Company management team realized the importance of good corporate governance which had made the Company’s trust worthy firm and gained trust from shareholders, customers, employees as well as society. The main practices of the company are :y Treated all the shareholders fairly and in accordance with global standard business operation. y Established the good workforce in order to yield the highest value to the Company’s products in order to gain trust from customers. y Set up the operation target with clear strategy for the steady growth of business. PAGE 22
Annual Report 2005 As at 31 December 2005
y y y
PATKOL Public Company Limited
Set up the employee’s etiquette, however, while preparing this etiquette the employees should keep strictly the Company’ s motto which is sincere and intent Arranged to have suitable internal control and constantly analyzing the management risks to make sure that the Company has certain risk in accordance to the situation. The company will disclose the correct information to the shareholders and manage the transparency business.
2) Shareholders rights. In 2005, the company held one ordinary shareholders meeting. The meetings was held at the Company’s premises for the convenience of the shareholders. Also, the company had sent the notice of the meeting and relevant documents to all the shareholders not less than 7 days before the meeting date. The company also provided the proxy form in case the shareholders were not able to participate.
3) Right of various groups of stakeholders. The Company are well aware that its operation involved various groups of stakeholders and had ensured that their rights are protected and treated with care such as :1) The management and all the staff are trust worthy and would use their ability at the fullest. All the decisions are transparency and will yield the benefits to shareholders, customers, debtors and the public. 2)
The management and staff will not disclose the company’s inside information to the public for their own benefits.
3)
The management and staff will not do anything that would cause conflict of interest, without the Company’s permission.
4)
The Company has disclosed sufficient financial information basing on the accounting standard, security codes and Security Exchange Committee.
5)
The Company has disclosed the Company’s operation and be fair to all the shareholders and customers.
6)
It is the Company’s policy to carry out a fair share to all the company’s competitors.
7)
The company will not wrongly obtain inside information or secret of the competitors.
8)
The Company is strictly responsible to all the agreements made with suppliers and debtors.
9)
The Company gives suitable salary to all their staff basing on each individual knowledge, capability and responsibility.
10) The Company has continuously supported the personnel development to ensure the sound standing of its staff. PAGE 23
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
11) The Company has followed all the rules and regulations of the labour laws and workman compensation. 12) The Company supported the public and community activities. 13) The Company will refrain from wrong doing that may damage the country reputation, natural resources and environments. 14) The Company will not support any individual who may commit the outlaw business, doing harm to the public or the country’s stability.
4) Shareholders Meeting According to the 1992 Public Company’ s Law, the Company would held General Shareholders’ meeting at least once a year to consider various matters as stipulated by law. During the meeting, the Company gave the right to shareholders to view their opinions and answer their queries. In each meeting, the Company’s directors, auditor and legal advisor were participated in order to give answers to the shareholders. In each meeting the Company’s Managing Director, as Chairman of the meeting had given sufficient time for each meeting agenda for shareholders queries.
5) Leadership and Vision. The Company’s directors perform their role in determining the Company’s policies, goals and budgets and follow up to ensure that all are efficiently practiced in order to yield the fullest benefits for shareholders. The directors had set up internal audit committee for internal checking and set up efficient risk management with proper follow up during the directors meeting.
6) Conflict of Interest The Company has an adequate plan to avoid the conflict of interest (see detail on Part 2 of the Management of Internal Information and Connected Transaction) for the benefits of the Company, the shareholders and the public. However, the connected transactions are completely disclosed in the yearly report.
7) Business Ethic The Company has a written code of ethics in the compliance manual, item 4, the code of Corporate ethics, which was given to all its staff so that they could conduct the business accordingly.
PAGE 24
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
8)
Balance of power in the Board of Directors Out of the 12 directors, 4 of them are Management directors and 4 are the independent directors, 3 of them, who hold the position of audit committee as well. Therefore, there are only 4 independent directors or 33.3% of the board.
9)
Aggregation or segregation of positions The Company’s Chairman of the Board is independent and does not hold the position of managing director. The authority of the board’s chairman and head of management team are clearly separated.
10) Directors and Management Remuneration The nominated directors for considering remuneration submitted their policy and scheme on remuneration to be paid to the company’s directors and management and had been adopted by the shareholders’ meeting. The remuneration paid for the year 2005 is shown in part 2 remuneration for directors and management.
11) Board of Directors’ Meetings The Board of Directors meetings were set well in advance each year. The meetings were held every 3 months, the Company will send the meeting agenda 7 days before each meeting date. The Audit Committee’s meeting was held once a month and the date was set well in advance, the relevant documents were sent 7 days prior the meeting date.
12) Special Committees. The Company’s management set up special committee for particular matters such as audit committee, sub-committee for selecting auditors, sub-committee for remuneration. These special committees should report their work to the company’s management.
System Control and Internal Auditing. The Company has set up regulations to control the working procedures as well as having internal audit committee to recheck the work to ensure the work efficiency and constant internal check up in all process. The audit committee was allowed to work independently and in accordance to the global standard and reported directly to the Managing Director.
PAGE 25
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Directors’ Report The Company’s directors are responsible for the consolidated financial statements of the Company and its affiliated firms as well as yearly reports. The Audit Committee together with the independent auditors, are responsible for the balance sheets of the Company and its affiliated firms to make sure that those balance sheets are according to the acceptable accounting standard as stipulated by the Security Exchange Committee and Security Exchange Board. Investors Relation The Managing Director’ office acted as center of public relation and communication to and from shareholders and investors as well as the interested public. Personnel As at December 31, 2005, there were 1,080 employees, divided according to the main business lines as follows :-
Department
Engineers
Workers
Others
Total
-
-
18
18
Refrigeration (RF)
23
137
15
175
Ice Machine (IM)
12
137
18
167
Liquid processing (FD)
22
49
13
84
Food processing (FPE)
10
11
14
35
Turnkey (TK+SPJ)
17
9
18
44
Services (SV)
-
19
-
19
Finance & Accounting (AF+AC)
-
-
28
28
Purchasing / Admin. / Personnel
-
-
113
113
Technical & Development
33
-
3
36
Factory Personnel
31
212
62
305
Electrical Automation
5
1
1
7
153
575
352
1,080
Management (E1-E3)
Total
PAGE 26
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Policy on Personnel Department. 1. Develop, improve and modernize the Organization’ human resources management and its work could be efficiently appraised and measured. 2. Select knowledgeable staff, suitable for each position. 3. Keep the selected ones by giving them fair, motivated and competitive remuneration. 4. Build good relation between employers and between the company and employers. Improve working environment, provide safety precaution, reducing accident as well as granting suitable fringe benefits. 5. Develop on workers skill through in-house and outside training.
PAGE 27
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Internal Control The Company’s Board of Directors had appointed the Audit Committee from the independent directors who had no benefits on the Company’s shares; being Mr. Suchart Sooksumitr as Chairman of the Audit Committee, Mr. Virachai Srikajon and Mr. Preecha Chantarangkul as the audit committee. The Audit Committee had worked independently from the Company’s directors and management and, upon request, there were no limitation on information given, on the use of resources as well as on staff cooperation. For the year 2005, the Audit Committee agreed that the Company had carried out its business according to the accounting standard of the Federation of Accounting Professions as well as the Stock Exchange of Thailand. Also, in checking its quarterly financial statements and Balance Sheet for 2005, had found no significance performance not according to the good governance regulations, The company had internal Control system suitable to its business and found no significance weak point (Details as shown in the report of Audit Committee Section 2, Page 29)
PAGE 28
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Report of the Audit Committee for the year 2005. Throughout the year, the Audit Committee had an average meeting once a month, had performed its duty in compliance with the suggestion of the Stock Exchange of Thailand on good corporate governance and reported to the Board of Directors. Hereunder are details of its performance. 1) Reviewed the Company’ conducts in business under good governance. Upon checking with the 15 regulations of good governance of the Stock Exchange of Thailand, found that the Company carried out its business accordingly. In 2005 the Company had a written good governance policy as shown in 56-1. 2) Reviewed the quarterly and annual financial statements and Balance Sheet for the year 2005 to make sure that the financial statement were done in accordance with the Stock Exchange of Thailand and Civil and Commercial Laws. Also reviewed the extent of disclosure of the Company data that it was sufficient and in time and the financial statements were ready for each quarterly and annual check up prior to the time set by the Stock Exchange of Thailand. The auditors had checked the Company Balance Sheet and there was no significance correction. 3) Reviewed management risk on debts, cash flow and loan, through the monthly adjustment on each risk factors, chances and the affection from those risk as well as suggestions on how to manage them. However, the Audit Committee had not found any significance risk. 4) Analyzed the internal control and found that their works were in accordance to the Auditors’ expectations for each quarterly and annually and had no significance omission. 5) Review the work of internal auditors Had constantly checked their work in order to make sure that they work efficiently. 6) Appointment of Auditors, the Audit Committee and the Board of Directors had appointed DIA Co., Ltd. as the Company’s auditor for the year 2006 and had specified the suitable remuneration.
Mr. Suchart Sooksumitr (Chairman of the Audit Committee)
PAGE 29
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Major Shareholders List of names and ratio of shares owned of the first 10 major shareholders (information from the report on shares distribution as at December 31, 2005) No. 1 2 3 4 5 6 7 8 9 10 11
Name of person / Private Co.,
No. of shares Thailand Securities Depository Company 84,811,671 Mr. Piya Chongvatana 31,316,844, Mrs. Vipa Chulajata 29,116,475 Miss Ratchanee Chongvatana 28,879,942 Mr. Sangchai Chotchuangchutchaval 25,773,303 Mrs. Noppavan Chongvatana 11,374,151 Mrs. Chanthipha Chotchuangchutchaval 4,000,000 Thailand Securities Depository Company ‌ 3,725,000 Swee Cheng Investment Pte. Ltd. 3,3,650,339 Mrs. Panet Chongvatana 3,285,608 Miss Thitikarn Chongvatana 2,037,505 Total 227,970,838
PAGE 30
Percentage of shares 35.56 13.13 12.21 12.11 10.81 4.77 1.68 1.56 1.53 1.38 0.85 95.59
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Transactions with Related Parties It is normal to carry out the transactions with related parties as general business and the receivable and payable were done on the like business and at fair prices by adding 5-10% profit. Majority of related transactions were the buying / selling of goods, services and loans as shown in Parts 4 and 7 of the balance sheet. The permitting of connected transaction were done under the Company’s clear authorization considering the balance of the general business and sufficient internal control, constantly checked by the Company’s audit committee. Also the connected transactions were done as general business considering the highest business yield to the group and the Company had received the fair prices.
PAGE 31
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Result of Business Operation In 2005 the Company had the growth on sales and services 13% more than the year 2004 which was closed to the target. This was due to the spreading of products into all groups of business. The company emphasized on the sale of its main products such as industrial cold rooms, ice making machines, food and dairy industry equipment and food processing machineries. The company has set a target for the turnkey business as well.
Business Operation. y Overall pictures of the past operation. Total sale of the year 2005 was ฿2,761 million, 13% higher than the previous year which was reported at ฿2,442 million. The total sale was closed to the target set while the net profit shown was ฿67 million, higher than the previous year which was reported at ฿ 53 million, please see following details :-
PAGE 32
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
Major factors that affected the company’s operation were :y Outside Factors. - World price of oil had increased constantly. - General interest rates were up - The growth of China demanded the import of various products particularly steel and stainless steel causing the shortage of the said raw materials. y Domestic Factors. The return of the avian flu and the terrorist problems in the 3 provinces in the south had halt the sales to those parts.
New Products and Services. The company has a plan to expand the turnkey project on ethanol plant as Thailand needed to find a substitute fuel. In 2004, the Company had built some parts of ethanol plant, being the fermented tanks, distilled towers and electrical wiring for Thai Agri Energy Co., Ltd. a plant with capacity of 185,000 liter/day, situated at Dan Chang, Supanburi Provice. The company is convinced that with its experience together with the cooperation on technological side from an expert firm in the United States, the Company could increase its income greatly. Result from each products line or business unit 1) Income from sales or services Total Income Million Baht
Ice Making Machineries for Machine and Liquid and food processing Industrial Refrigeration
Turnkey
Services and Other
Total
2548 Income Profit (Loss) from operation % of profit per total sales
1,280 140 11%
618 93 15%
696 38 5%
131 35 27%
2,725 306 11%
% sales per total sales 2547 Income Profit (Loss) from operation % of profit per total sales
47%
23%
26%
5%
100%
1,489 175 12%
476 49 10%
317 6 2%
111 34 31%
2,393 264 11%
62%
20%
13%
5%
100%
-14%
30%
120%
18%
14%
% sales per total sales % ……………
PAGE 33
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
The company income from major products such as ice making machines and refrigeration industry as well as liquid and food processing machineries was ฿1,898 million, 70% of the total income. Profit from the business operation of the above products was ฿233 million, 12% of total sales of these products and 76% of total profit. The turnkey projects had a growth of 120% with an income of ฿ 696 million, 26% of total income. However, as turnkey projects had high cost and fierce competition, therefore, could make profit of around 5% of project income. Total profit for turnkey project was ฿ 38 million, 12% of total profit, which was much higher than previous year and could be considered as company’s success.
2) Other Income– comprising interest gain from customers and income from the rental of premises, export tax return and from rate of exchange.
3) Cost and expenses on sales and services. y Costs of each product were lower as we had better cost control. y The Company has specific policy for making allowance on bad debt and doubtful accounts in order to control the debtors closely. In 2005 the Company had received payments from several debtors, therefore, there were adjustments on bad debts and reduction of doubtful accounts. y The Company had paid higher amount of interest due to higher stock of raw materials and more customers on installed payments. Investment Policy y For normal capital expenditure, the Company will invest in the same ratio set for the increase of sale in order to support the future expansion. Majority of them were for replacement of machineries and equipment as well as development of new products. y For affiliated firms, the Company will invest in the expertise business in both up stream and down stream as well as in supporting business that would yield benefits to the group. The Company will contribute in the major decision making in order to operate business in relevant to the Company’s main business.
The control of affiliated firms. The Company would invest in business in which it has expertise and quite close to the Company’s business. The Company’s management would send a management team to exercise the close control on policy, budget, marketing plan and production. The sharing of useful information would also support the overall operation of the group.
PAGE 34
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED
PAGE 35
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED
PAGE 36
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED
PAGE 37
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED
PAGE 38
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
PAGE 39
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
PAGE 40
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
PAGE 41
Annual Report 2005 As at 31 December 2005
PATKOL Public Company Limited
FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
PAGE 42
Financial Statements
PATKOL Public Company Limited
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT 1 JANUARY 2005 TO 31 DECEMBER 2005
Report of the Certified Public Accountant To the Shareholders of PATKOL PUBLIC COMPANY LIMITED I have audited the consolidated balance sheets of PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES and the balance sheets of PATKOL PUBLIC COMPANY LIMITED as at 31 December 2005 and 2004, and the related consolidated and the Company statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimated made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES, and of PATKOL PUBLIC COMPANY LIMITED, as at 31 December 2005 and 2004, and the results of their operations and cash flows for the years then ended in conformity with generally accepted accounting principles.
(Yongyoo Krasaesindhuwanond) Certified Public Accountant No. 2517 Bunchikij Co., Ltd. Bangkok 22 February 2006
-1-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS As at 31 December 2005 and 2004 Unit : Baht ASSETS Consolidated Note
2005
2004
The Company 2005 2004
CURRENT ASSETS
Cash and cash equivalents 3.1 106,487,227 Current investments 10,173 Trade accounts receivable - net 5 594,410,848 Accounts receivable - related parties 4 811,495 Installments receivables - net 6 156,657,530 Unbilled revenues from sales and services - net 462,098,593 Short-term loans to related parties 7 0 Inventories - net 8, 15 428,019,283 Other current assets Retentions 54,152,802 Advance for purchases of inventories and to subcontractors 8,490,898 Revenue Department receivable - VAT 22,578,179 Others 19,710,579 Total current assets 1,853,427,607 NON-CURRENT ASSETS Installments receivables 6 19,392,713 Investments for using the equity method 9 0 Restricted investments 10 11,295,429 Property, plant and equipment - net 11, 15, 18 746,421,446 Intangible assets - net 12 7,505,796 Other non-current assets Land not used in operations - net 13 19,247,500 Land for sale 14 23,212,325 Others 9,344,570 Total non-current assets 836,419,779 Total assets 2,689,847,386 Notes to financial statements are an integral part of these statements.
176,335,909 10,123 605,154,773 1,094,004 203,962,590 493,977,695 0 269,655,814
97,648,767 0 564,266,559 162,720,732 156,657,530 441,324,215 17,882,150 251,183,328
125,145,080 0 579,240,344 15,006,520 203,962,590 482,305,171 3,504,603 223,626,958
16,277,761 22,056,898 1,969,732 19,881,521 1,810,376,820
53,781,001 7,873,638 5,139,949 15,809,184 1,774,287,053
16,277,761 19,327,749 0 18,224,463 1,686,621,239
22,239,728 0 2,377,767 597,127,735 2,768,584
19,392,713 144,332,592 9,964,465 517,905,938 6,747,338
22,239,728 195,542,524 1,054,682 491,219,555 2,764,329
18,138,500 0 14,740,419 657,392,733 2,467,769,553
19,247,500 0 7,739,268 725,329,814 2,499,616,867
18,138,500 0 7,988,106 738,947,424 2,425,568,663
-2-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (Continued) As at 31 December 2005 and 2004 Unit : Baht LIABILITIES AND SHAREHOLDERS' EQUITY Consolidated Note 2005 2004
The Company 2005 2004
CURRENT LIABILITIES
Bank overdrafts and short-term loans from financial institutions Trade accounts payable Accounts payable - related parties Short-term loans from related parties Current portion of liabilities under hire purchase agreements Current portion of liabilities under financial lease agreements Current portion of long-term loans Current portion of debentures Income tax payable Collections in excess of earned revenues Other current liabilities Accrued expenses Retention Others Total current liabilities NON-CURRENT LIABILITIES Liabilities under hire purchase agreements - net Liabilities under financial lease agreements - net Long-term loans - net Debentures Total non-current liabilities Total liabilities
11, 15 4 7
804,239,850 395,964,243 390,182 0
689,597,569 421,727,478 224,368 0
761,153,555 308,538,896 90,106,213 31,716
679,759,253 369,210,197 45,089,767 50,662
16
1,478,483
405,625
1,274,731
0
10,216,039 48,400,000 100,000,000 1,310,171 153,246,125
5,719,505 45,000,000 100,000,000 2,987,746 96,272,015
8,976,379 48,400,000 100,000,000 0 152,330,441
5,546,593 45,000,000 100,000,000 0 101,334,639
31,851,843 18,678,746 39,920,016 1,605,695,698
44,173,883 5,085,569 30,179,991 1,441,373,749
25,918,212 18,523,746 35,823,383 1,551,077,272
31,646,006 5,085,569 27,334,081 1,410,056,767
1,519,448 28,686,293 270,351,296 0 300,557,037 1,906,252,735
0 19,333,602 191,682,456 100,000,000 311,016,058 1,752,389,807
1,164,422 24,591,516 150,351,296 0 176,107,234 1,727,184,506
0 18,723,928 191,682,456 100,000,000 310,406,384 1,720,463,151
17 11, 18 19
16 17 11, 18 19
Notes to financial statements are an integral part of these statements.
-3-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (Continued) As at 31 December 2005 and 2004 Unit : Baht LIABILITIES AND SHAREHOLDERS' EQUITY (Continued) Consolidated Note 2005 2004
The Company 2005 2004
SHAREHOLDERS' EQUITY
Share capital Authorized share capital 320,000,000 Ordinary shares of Baht 1 each Issued and paid-up share capital 238,486,000 Ordinary shares of Baht 1 each Additional paid - in capital Revaluation surplus on land Retained earnings Appropriated Legal reserve Unappropriated Total company shareholders' equity Minority interest Total shareholders' equity Total liabilities and shareholders' equity
20 320,000,000
320,000,000
320,000,000
320,000,000
238,486,000
238,486,000
238,486,000
238,486,000
11
260,240,615
260,240,615
260,240,615
260,240,615
22
32,000,000 241,705,746 772,432,361 11,162,290 783,594,651 2,689,847,386
23,848,600 182,530,297 705,105,512 10,274,234 715,379,746 2,467,769,553
32,000,000 241,705,746 772,432,361 0 772,432,361 2,499,616,867
23,848,600 182,530,297 705,105,512 0 705,105,512 2,425,568,663
Notes to financial statements are an integral part of these statements.
-4-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME For the years ended 31 December 2005 and 2004 Unit : Baht The Company 2005 2004
Consolidated REVENUES
Sales and services income Other income Reversal of doubtful accounts Share of profits from investments for using the equity method Total revenues EXPENSES Cost of sales and services Selling and administrative expenses Director's remuneration Bad debt and doubtful accounts Share of losses from investments for using the equity method Total expenses INCOME BEFORE INTEREST EXPENSES AND INCOME TAX INTEREST EXPENSES INCOME TAX INCOME AFTER INCOME TAX NET INCOME OF MINORITY INTEREST NET INCOME
Note 4
2005
2004
2,725,503,559 23,459,910 12,110,993
2,392,501,244 40,865,256 9,138,322
2,754,330,078 23,228,662 10,161,272
2,246,096,520 31,047,106 5,420,530
0 2,761,074,462
0 2,442,504,822
10,472,080 2,798,192,092
9,770,078 2,292,334,234
2,442,794,785 162,441,858 5,136,000 6,532,290
2,168,634,308 155,171,175 4,840,000 4,623,439
2,504,118,461 136,258,228 5,136,000 4,608,937
2,050,728,230 124,856,601 4,840,000 544,359
0 2,616,904,933
0 2,333,268,922
11,771,227 2,661,892,853
9,876,681 2,190,845,871
144,169,529 50,491,338 24,812,071 68,866,120 1,539,271 67,326,849
109,235,900 38,073,834 16,385,670 54,776,396 2,088,637 52,687,759
136,299,239 47,672,522 21,299,868 67,326,849 0 67,326,849
101,488,363 38,094,138 10,706,466 52,687,759 0 52,687,759
4
BASIC EARNINGS PER SHARE
3.18
0.28
0.23
0.28
0.23
Weighted average number of ordinary shares (Shares)
3.18
238,486,000
234,069,333
238,486,000
234,069,333
Notes to financial statements are an integral part of these statements.
-5PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the years ended 31 December 2005 and 2004 Consolidated
Note Balance as at 1 January 2004 Net income Issuance of common stock Revaluation surplus of land Legal reserve Cash dividends Stock dividends Dividend paid to minority interest Issuance of ordinary shares of subsidiary Decrease in capital of subsidiary company Purchase of investment in subsidiary from minority interest Sale of investment in subsidiary company Net income of minority interest Balance as at 31 December 2004 Net income Legal reserve Dividend paid to minority interest Decrease in capital of subsidiary company Net income of minority interest Balance as at 31 December 2005
20 11 22 23 23
Issued and paid-up Revaluation share capital surplus on land 106,000,000 140,000,000
Unit : Baht Minority interest 10,041,238
132,486,000 120,240,615 13,248,600
238,486,000
260,240,615
22
Notes to financial statements are an integral part of these statements.
Retained earnings Appropriated Unappropriated Legal reserve 10,600,000 276,899,138 52,687,759
23,848,600 8,151,400
238,486,000
260,240,615
32,000,000
(13,248,600) (27,822,000) (105,986,000)
182,530,297 67,326,849 (8,151,400)
241,705,746
(1,039,000) 225 (450) (809,346) (7,070) 2,088,637 10,274,234
(650,765) (450) 1,539,271 11,162,290
Total 543,540,376 52,687,759 132,486,000 120,240,615 0 (27,822,000) (105,986,000) (1,039,000) 225 (450) (809,346) (7,070) 2,088,637 715,379,746 67,326,849 0 (650,765) (450) 1,539,271 783,594,651
-6PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued) For the years ended 31 December 2005 and 2004 The Company Unit : Baht
Note Balance as at 1 January 2004 Net income Issuance of common stock Revaluation surplus of land Legal reserve Cash dividends Stock dividends Balance as at 31 December 2004 Net income Legal reserve Balance as at 31 December 2005
20 11 22 23 23
Issued and paid-up Revaluation share capital surplus on land 106,000,000 140,000,000 132,486,000 120,240,615
13,248,600
238,486,000
260,240,615
23,848,600
238,486,000
260,240,615
8,151,400 32,000,000
22
Notes to financial statements are an integral part of these statements.
Retained earnings Appropriated Unappropriated Legal reserve 10,600,000 276,899,138 52,687,759
(13,248,600) (27,822,000) (105,986,000) 182,530,297 67,326,849 (8,151,400) 241,705,746
Total 533,499,138 52,687,759 132,486,000 120,240,615 0 (27,822,000) (105,986,000) 705,105,512 67,326,849 0 772,432,361
-7-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS For the years ended 31 December 2005 and 2004 Note Cash flows from operating activities Net income Adjustment to reconcile net income to net cash from operating activities: Depreciation Amortization Bad debt and doubtful accounts (reversal) Allowance for decline in value of inventories (reversal) (Gain) loss on sale of investments (Gain) loss on sale of fixed assets Fixed assets written off and transferred to expenses (Gain) loss on sale of intangible assets Unrealized (gain) loss from exchange rate Share of (profits) losses from investments for using the equity method Net income of minority interest Net income from operating activities before changes in operating assets and liabilities (Increase) decrease in operating assets Trade accounts receivable Accounts receivable - related parties Installments receivables Unbilled revenues from sales and services Inventories Other current assets Other non-current assets - others Increase (decrease) in operating liabilities Trade accounts payable Accounts payable - related parties Income tax payable Collection in excess of earned revenues Other current liabilities Net cash from operating activities Notes to financial statements are an integral part of these statements.
2005
Consolidated
2004
Unit : Baht The Company 2005 2004
67,326,849
52,687,759
67,326,849
52,687,759
47,842,892 1,512,681 (5,578,703) 297,288 0 (383,042) 14,244,587 (16,078) (275,327)
38,011,208 1,264,890 (4,514,883) (1,148,626) (105,366) (1,521,432) 5,662,277 0 1,724,747
39,549,010 1,319,773 (5,552,335) 301,951 0 (1,716,409) 15,064,166 (16,078) (254,555)
31,031,156 1,135,656 (4,876,171) 183,893 (18,528,294) (2,445,508) 5,647,348 0 1,472,127
0 1,539,271
0 2,088,637
1,299,147 0
106,603 0
126,510,418
94,149,211
117,321,519
66,414,569
21,853,595 282,509 39,761,114 35,961,142 (158,732,189) (44,746,546) 95,354
(235,706,039) (725,644) (67,010,931) (96,025,667) (75,214,948) (12,839,903) (6,192,134)
26,056,253 (147,714,212) 39,761,114 45,062,996 (27,929,752) (28,773,799) (464,388)
(238,921,159) (14,102,970) (67,334,699) (92,078,734) (64,458,208) (15,599,587) (6,025,374)
(25,758,620) 165,814 (1,677,575) 56,974,110 (34,236,790) 16,452,336
86,941,372 (44,942) (7,369,138) 61,560,797 7,999,144 (250,478,822)
(60,667,552) 45,016,446 0 50,995,802 16,199,685 74,864,112
115,683,552 (44,241,183) (7,873,203) 68,172,861 3,236,952 (297,127,183)
-8-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) For the years ended 31 December 2005 and 2004 Note Cash flows from investing activities (Increase) decrease in current investments (Increase) decrease in short-term loans to related parties Dividend received Proceed from sales of investments Proceed from sales of fixed assets Purchase of fixed assets (Increase) decrease in restricted investments Purchase of land not used in operations 13 Proceed from return of capital Purchase of investment in subsidiary company from minority interest Proceed from sales of intangible assets Purchase of intangible assets (Increase) decrease in other non-current assets Net cash from investing activities Cash flows from financing activities Increase (decrease) in bank overdrafts and short - term loans from financial institutions Received (repayment) of short - term loans from related parties Redemption of debentures 19 Proceed from long-term loans Repayment of long-term loans Increase (decrease) in liabilities under hire purchase agreements Repayment of liabilities under financial lease agreements Proceed from issuance of share capital 20 Proceed from issuance of share capital from minority interest Cash payment for capital reduction to minority interest Cash dividends payment Net cash from financing activities Effect of change in exchange rate on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 3.1 Notes to financial statements are an integral part of these statements.
2005
Consolidated
2004
Unit : Baht The Company 2005 2004
(50) 0 0 0 4,668,865 (171,405,528) (8,917,662) (170,000) 0 0 111,500 (455,300) (100,000) (176,268,175)
(50) 0 0 105,366 5,611,293 (89,845,408) 2,857,088 0 0 (809,346) 0 (465,288) (2,330,034) (84,876,379)
0 (14,377,547) 48,411,235 0 3,465,359 (70,863,150) (8,909,783) (170,000) 1,499,550 0 111,500 (16,000) (100,000) (40,948,836)
0 (3,504,603) 7,999,400 105,366 27,219,133 (42,564,640) 2,863,220 0 32,999,550 (2,444,775) 0 (460,988) 536,550 22,748,213
115,168,904 0 (100,000,000) 127,068,840 (45,000,000) 1,756,671 (7,959,087) 0 0 (450) (650,765) 90,384,113 (416,956) (69,848,682) 176,335,909 106,487,227
505,712,817 0 0 3,230,456 (59,500,000) (1,845,700) (3,678,859) 26,500,000 225 (450) (28,861,000) 441,557,489 (321,914) 105,880,374 70,455,535 176,335,909
81,893,113 (18,946) (100,000,000) 7,068,840 (45,000,000) 2,318,645 (7,265,025) 0 0 0 0 (61,003,373) (408,216) (27,496,313) 125,145,080 97,648,767
507,909,048 (87,287,593) 0 3,230,456 (59,500,000) (956,347) (3,633,277) 26,500,000 0 0 (27,822,000) 358,440,287 (321,914) 83,739,403 41,405,677 125,145,080
-9-
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) For the years ended 31 December 2005 and 2004 Consolidated Note Supplemental disclosures of cash flows information : Cash paid during the year for Interest expenses Income tax (including income tax deducted at sources) Non-cash transactions Purchases fixed assets by credit Purchases fixed assets under hire purchase agreements Purchases fixed assets under financial lease agreements Obtain land from the settlement of debt Transferred land from operation to land for sale Stock dividend payment Re-appraisal of land
14
Notes to financial statements are an integral part of these statements.
2005
2004
Unit : Baht The Company 2005 2004
48,405,582 28,858,949
46,660,377 30,044,188
44,113,241 21,764,256
46,835,562 24,605,043
45,247,952 835,635 21,808,312 939,000 23,212,325 0 0
0 0 28,731,966 0 0 105,986,000 120,240,615
0 120,508 16,562,399 939,000 0 0 0
0 0 27,903,798 0 0 105,986,000 120,240,615
- 10 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements As at 31 December 2005 and 2004 1. General information Patkol Public Company Limited is a public company limited under Thai laws and is a listed company in the Stock Exchange of Thailand. The Company is engaged in the trading and services of engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order. The Company’s office is located at 348 Chalermprakiat Rama 9 Road, Pravate, Bangkok 10250. 2. Basis for preparation and presentation of financial statements 2.1 The financial statements have been prepared in conformity with accounting standards and practices generally accepted in Thailand. Except those which are disclosed in the respective accounting policies, the financial statements have been prepared under the historical cost convention. 2.2 Basis of consolidation The consolidated financial statements include the financial statements of Patkol Public Company Limited and the following subsidiaries : Percentage of Shareholdings 2005 2004 Patkol Manufacturing Co., Ltd. 99.99 99.99 Siam Patkol Co., Ltd. 99.98 99.98 PK Business Solution Co., Ltd. 99.98 99.99 Patkol (1984) Co., Ltd. 99.98 99.98 Patkol R&D Co., Ltd. 99.98 99.98 Kaset Phet Co., Ltd. 98.78 99.70 PKB Enterprise Co., Ltd. 80.00 80.00 Riple Plate (Thailand) Co., Ltd. 99.94 99.94 Balances and significant transactions between the Company and its subsidiaries, cost of investments in subsidiaries, and the shareholder’s equity of the subsidiaries have been eliminated from the consolidated financial statements.
- 11 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 2. Basis for preparation and presentation of financial statements (Continued) 2.2 Basis of consolidation (Continued) The financial statements of a subsidiary company, PK Business Solution Co., Ltd., which were included in the consolidated financial statements were audited by other auditor who expressed an unqualified audit opinion. Those statements reflected the total assets as at 31 December 2005 of Baht 0.36 million, and total revenues for the year then ended of Baht 0.004 million and net loss of Baht 0.01 million. (31 December 2004 : reflected the total assets of Baht 2.18 million, and total revenues for the year then ended of Baht 0.75 million and net profit of Baht 0.61 million) 3. Significant accounting policies 3.1 Cash and cash equivalents Cash and cash equivalents include cash on hand, deposit at financial institutions and short-term, highly liquid investments that are readily convertible to known amounts of cash with an original maturity of three months or less and free from commitments and that are subject to an insignificant risk of change in value. 3.2 Trade accounts receivable / Allowance for doubtful accounts Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is provided for the estimated collection losses that may be incurred in the collection of all receivables. The estimated losses are based on collection experience together with a review of current financial position of the existing receivables. 3.3 Inventories Inventories are stated at cost or net realizable value, which ever is the lower. The value of cost is calculated by the method of followings: Finished goods and work in process - standard cost which approximates actual costs Spareparts and supplies - moving average method Own manufactured parts - the actual cost 3.4 Investments Investment in subsidiaries and associates are stated under the equity method. Long-term investment which are held as other investments are valued at cost.
- 12 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 3. Significant accounting policies (Continued) 3.5 Property, plant and equipment / Depreciation Land is initially recorded at cost and subsequently is revalued by an independent appraiser to its fair value. Revaluations are to be made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at the balance sheet date. The revaluation surplus on land is shown under “Shareholders’ Equity� in the balance sheet. Plant and equipment are stated at cost less accumulated depreciation. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of income. Depreciation of plant and equipment is calculated by the straight-line method over the estimated useful lives of the assets as follows : Building and building improvements 5 - 20 Years Machinery, tool and equipment 5 - 10 Years Machinery for lease 8 Years Furniture, fixtures and office equipment 3 - 5 Years Vehicles 5 Years No depreciation is provided for land and assets in progress. 3.6 Capitalization of borrowing costs Borrowing costs are capitalized to the extent that the Company and subsidiaries have incurred borrowing costs on assets that require a period of time to get them ready for their intended use. 3.7 Intangible assets / Amortization Intangible assets are amortized by the straight-line method over the period of 5 years. 3.8 Land not used in operation Land not used in operation is valued at cost and make the adjustment to devalue this assets when there is an impairment. 3.9 Impairment of assets The Company and subsidiaries review the impairment of assets whenever event indicate that the carrying value of an asset exceeds its recoverable amount. The review is made for individual assets or for the cash-generating unit. In case that the carrying value of an asset exceeds its recoverable amount, the Company and subsidiaries recognize the impairment losses by reducing the carrying value of the asset to be at its recoverable amount and recording the devaluation in the statement of income, or reduce the revaluation surplus in case that those assets were previously revalued. The reversal of impairment losses recognized in prior years is recorded as part of other income or as a revaluation surplus when there is an indication that the impairment losses recognized for the assets no longer exist or are decreased.
- 13 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 3. Significant accounting policies (Continued) 3.10 Financial lease – where the Company and subsidiaries are the lessee Leases of assets where the Company and subsidiaries have substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized 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 between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance cost is charged to the income statement over the lease period. The asset acquired under finance lease is depreciated over the useful life of the asset. 3.11 Operating lease – where the Company and subsidiaries are the lessee Leases of asset under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under an operating lease are recognized as an expense on straight-line basis, over the lease term. 3.12 Operating lease – where the Company and subsidiaries are the lessor The Company and subsidiaries present assets for lease under operating lease contract in the balance sheets according to the nature of assets. Income from operating lease is recognized as income over the lease term. 3.13 Foreign currency transactions Transactions in foreign currencies are translated into Baht at rates prevailing at the date of transactions. Assets and liabilities denominated in foreign currencies at the balance sheet dates are translated into Baht at the prevailing bank rates at those dates. Gains or losses from the translation are credited or charged to operations. 3.14 Income and cost recognitions The Company and subsidiaries recognize income from sales based on value of delivered goods and from the service contracts by the percentage of completion method. Earned revenues are based on the percentage that incurred costs to date bear to total estimated costs after giving effect to the most recent estimates of total costs, coupled with the consideration of the physical completion estimated by the engineer. Other income are recognized on the accrual basis. Costs of sales and services are recognized on the accrual basis. 3.15 Income tax The provision for income tax of the Company and subsidiaries are based on the amount currently payable according to the Revenue Code.
- 14 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 3. Significant accounting policies (Continued) 3.16 Financial instruments The Company and subsidiaries do not speculate in or engage in the trading of any derivative financial instruments. The accounting policies on recognition and measurement of financial assets and liabilities are disclosed in the respective accounting policies. 3.17 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles in certain circumstances requires management to make estimates and assumptions that affect amounts reported in the financial statements and notes thereto. Actual results may differ from these estimates. 3.18 Earnings (loss) per share Basic earnings (loss) per share are computed by dividing the net income (loss) for the year by the weighted average number of ordinary shares outstanding during the year, after adjusting the number of ordinary shares in proportion to the change in the number of shares as a result of the change in par value as discussed in Note 20. Diluted earnings (loss) per share are computed by dividing the net income (loss) for the year by the total sum of the weighted average number of ordinary shares in issue during the year and the weighted average number of ordinary shares to be issued for conversion of all dilutive potential ordinary shares into ordinary shares. No effect of dilutive potential ordinary shares as the exercise price of warrant was greater than the average fair value of the ordinary share. 4. Transactions with related parties A portion of the Company’s and subsidiaries’ assets, liabilities, income, costs and expenses arose from transactions with related parties. These parties are related through common shareholdings and/or directorship. The effects of these transactions are reflected in the financial statements on the normal and ordinary course of business as follows : Sales/Purchases of goods and services : Cost plus 5% - 20% Commission expense : 1% - 5% of contract price Rental income : Contract price
- 15 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 4. Transactions with related parties (Continued) Significant transactions with related parties for the years ended 31 December, are as follows : Consolidated Sales of goods and services Purchases of goods and services Consultant and commission fee Rental income and others Interest income Interest expenses
2005 1,042,567 1,275,595 0 1,954,752 0 0
2004 1,226,371 1,249,104 0 1,942,752 0 0
Unit : Baht The Company 2005 2004 195,569,946 29,267,507 140,597,666 92,802,445 0 1,102,641 3,126,552 3,110,552 315,901 111,452 586,124 834,576
The outstanding balances with related parties are as follows : Consolidated 2005 Accounts receivable Patkol Manufacturing Co., Ltd. Siam Patkol Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Riple Plate (Thailand) Co., Ltd. Prepack Thailand Co., Ltd. Total Accounts payable Patkol Manufacturing Co., Ltd. Siam Patkol Co., Ltd. Patkol (1984) Co., Ltd. Kaset Phet Co., Ltd. PKB Enterprise Co., Ltd. Riple Plate (Thailand) Co., Ltd. Prepack Thailand Co., Ltd. Total
2004
Unit : Baht The Company 2005 2004
0 0 0 0 0 811,495 811,495
0 0 0 0 0 1,094,004 1,094,004
158,440,554 114,006 3,712,538 57,085 0 396,549 162,720,732
13,910,000 172,013 10,560 196,294 543,560 174,093 15,006,520
0 0 0 0 0 0 390,182 390,182
0 0 0 0 0 0 224,368 224,368
48,062,465 215,370 14,892,722 0 26,588,915 0 346,741 90,106,213
0 246,105 901,684 17,841,730 25,335,554 599,200 165,494 45,089,767
- 16 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 5. Trade accounts receivable - net The Company and subsidiaries have outstanding balance of trade accounts receivable which are classified by aging as follows: Unit : Baht Consolidated The Company 2005 2004 2005 2004 Not yet due 315,369,100 405,066,012 300,859,493 390,612,475 Overdue : Up to 3 months 201,116,622 146,150,846 195,434,528 137,766,791 Over 3 months to 6 months 27,528,269 42,625,650 21,265,533 39,796,906 Over 6 months to 12 months 46,313,222 14,590,553 42,563,329 14,494,188 Over 12 months 16,230,605 8,014,162 15,901,209 7,466,330 Under legal action 17,170,339 36,594,541 15,778,376 32,581,817 Total 623,728,157 653,041,764 591,802,468 622,718,507 29,317,309 47,886,991 27,535,909 43,478,163 Less Allowance for doubtful accounts Net 594,410,848 605,154,773 564,266,559 579,240,344 6. Installments receivables - net Consolidated Due within one year Under legal action Total Less Allowance for doubtful accounts Net Due more than one year Total installments receivables - net
2005 162,239,740 22,151,842 184,391,582 27,734,052 156,657,530 19,392,713 176,050,243
2004 204,116,195 17,717,424 221,833,619 17,871,029 203,962,590 22,239,728 226,202,318
Unit : Baht The Company 2005 2004 162,239,740 204,116,195 22,151,842 17,717,424 184,391,582 221,833,619 27,734,052 17,871,029 156,657,530 203,962,590 19,392,713 22,239,728 176,050,243 226,202,318
- 17 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 7. Short-term loans to / loans from related parties Unit : Baht
Consolidated
2005 Loans from director Total
As at 1 Jan. 2005
0 0
Movement during the year Addition Settlement
35,000,000 35,000,000
35,000,000 35,000,000
As at 31 Dec. 2005
0 0
Unit : Baht
The Company
2005 Loans and Interest Receivable Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. Total Loans and Interest Payable Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. Total
As at 1 Jan. 2005
Movement during the year Addition Settlement
As at 31 Dec. 2005
Loans from director Total
22,031,040 60,771,598 82,802,638
19,198,068 49,227,023 68,425,091
6,337,575 6% - 6.5 % p.a. 11,544,575 6% - 6.5 % p.a. 17,882,150
0 50,662 50,662
14,352,299 161,262,055 175,614,354
14,352,299 161,281,001 175,633,300
0 6% - 6.5 % p.a. 31,716 6% - 6.5 % p.a. 31,716 Unit : Baht
As at 1 Jan. 2004
0 0
Movement during the year Addition Settlement
7,000,000 7,000,000
7,000,000 7,000,000
As at 31 Dec. 2004
0 0
Loans and Interest Receivable Patkol Manufacturing Co., Ltd. Siam Patkol Co., Ltd. Patkol R&D Co., Ltd. Total Loans and Interest Payable Patkol Manufacturing Co., Ltd. Siam Patkol Co., Ltd. Patkol (1984) Co., Ltd. Total
Interest policies No interest charged
Unit : Baht
The Company
2004
Interest policies
3,504,603 0 3,504,603
Consolidated
2004
Interest policies No interest charged
As at 1 Jan. 2004
Movement during the year Addition Settlement
0 0 0 0
27,806,955 1,030,000 21,000 28,857,955
24,302,352 1,030,000 21,000 25,353,352
70,002,227 11,500,000 5,836,028 87,338,255
69,768,179 39,699 218,830,334 288,638,212
139,770,406 11,539,699 224,615,700 375,925,805
As at 31 Dec. 2004
Interest policies
3,504,603 3.25% - 6% p.a. 0 6% p.a. 0 No interest charged 3,504,603 0 0 50,662 50,662
3.25% p.a. 6% p.a. 6% p.a.
- 18 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 8. Inventories - net Unit : Baht The Company 2005 2004
Consolidated 2005 2004
Consist of Finished goods, manufactured parts, parts and equipment Work in process Equipment and supplies in transit Total Less Allowances for decline in value of inventories Net
326,054,779 88,306,791 22,924,666 437,286,236 9,266,953 428,019,283
220,310,570 34,130,573 24,184,336 278,625,479 8,969,665 269,655,814
197,441,823 40,644,419 22,283,967 260,370,209 9,186,881 251,183,328
179,649,419 30,286,038 22,576,431 232,511,888 8,884,930 223,626,958
9. Investments for using the equity method This account consists of the direct and indirect investments in ordinary shares of subsidiary companies as follows: Company
Type of Business
Patkol Manufacturing Co., Ltd. Manufacture and sale of food related processing equipment and cooling equipment Siam Patkol Co., Ltd. Manufacture and sale the cooling system equipment PK Business Solution Co., Ltd. Sale computer hardware and software and computer system service Patkol (1984) Co., Ltd. Manufacture and sale the electric system equipment Patkol R&D Co., Ltd. Research and development in applied technology and related fields Kaset Phet Co., Ltd. Consultant and brokerage PKB Enterprise Co., Ltd. Manufacture and import foam plate and equipment for cold room business Riple Plate (Thailand) Co., Ltd. Manufacture and sale, riple plate
Paid up capital (Million Baht) Percentage of shareholding
2005
2004
2005
2004
70.00
70.00
99.99
99.99
2.50
2.50
99.98
99.98
0.25
1.00
99.98
99.99
3.00
3.00
99.98
99.98
1.25
1.25
99.98
99.98
0.50 10.00
2.00 10.00
98.78 80.00
99.70 80.00
0.25
1.00
99.94
99.94
- 19 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 9. Investments for using the equity method (Continued) The balance of investments are as follows: Consolidated 2005 Patkol Manufacturing Co., Ltd. Siam Patkol Co., Ltd. PK Business Solution Co., Ltd. Patkol (1984) Co., Ltd. Patkol R&D Co., Ltd. Kaset Phet Co., Ltd. PKB Enterprise Co., Ltd. Riple Plate (Thailand) Co., Ltd. Total
2004 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
Unit : Baht The Company 2005 2004 64,184,491 66,555,912 16,911,943 47,288,048 364,264 2,156,403 6,224,240 14,436,246 1,142,800 1,184,197 9,616,797 20,105,588 45,421,049 41,715,847 467,008 2,100,283 144,332,592 195,542,524
On 9 December 2005, Riple Plate (Thailand) Co., Ltd., the subsidiary company, decreased its authorized share capital from Baht 1 million to Baht 250,000. On 14 December 2005, PK Business Solution Co., Ltd., the subsidiary company, decreased its authorized share capital from Baht 1 million to Baht 250,000. On 25 August 2004, Kaset Phet Co., Ltd., the subsidiary company of Siam Patkol Co., Ltd., which was the Company’s wholly owned subsidiary company decreased its authorized share capital from Baht 8 million to Baht 2 million and on 14 December 2005, decreased its authorized share capital from Baht 2 million to Baht 500,000. On 25 August 2004 and 23 December 2004, Siam Patkol Co., Ltd., the subsidiary company of Patkol (1984) Co., Ltd., which was the Company’s wholly owned subsidiary company decreased its authorized share capital from Baht 40 million to Baht 10 million and Baht 10 million to Baht 2.5 million, respectively. 10. Restricted investments Restricted investments are deposits at bank and financial institutions which have been pledged as collateral for credit facilities extended by local banks, bearing interest at the rate 0.50% - 2.50% per annum (The Company : 2.50% per annum).
- 20 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
Notes to Financial Statements (Continued) 11. Property, plant and equipment - net
Unit : Thousand Baht
Consolidated
2005 Cost At 1 January 2005 Cost Revaluation surplus (in 2001) Revaluation surplus (in 2004) Total Purchases Disposals Transfers in (out) Written off and transfer to expenses At 31 December 2005 Accumulated depreciation At 1 January 2005 Depreciation Disposals Transfers in (out) Written off and transfer to expenses At 31 December 2005 Net book value At 31 December 2005 Consolidated
2004 Cost At 1 January 2004 Cost Revaluation surplus (in 2001) Total Revaluation surplus (in 2004) Purchases Disposals Transfers in (out) Written off and transfer to expenses At 31 December 2004 Accumulated depreciation At 1 January 2004 Depreciation Disposals Written off and transfer to expenses At 31 December 2004 Net book value At 31 December 2004
Factory buildings and Improvement
Land
Machinery, tools and equipment
Machinery for lease
Furniture, fixtures and office equipment
Vehicles
Assets in progress
Total
105,101 140,000 120,241 365,342 0 0 (23,212) 0 342,130
186,820 0 0 186,820 310 0 90,037 0 277,167
200,888 0 0 200,888 24,236 (24,797) 76,043 (446) 275,924
16,346 0 0 16,346 0 0 6,224 0 22,570
90,592 0 0 90,592 8,714 (6,652) (177) (1,001) 91,476
51,623 0 0 51,623 23,207 (3,111) 1,964 0 73,683
66,472 0 0 66,472 187,584 0 (179,570) (14,174) 60,312
717,842 140,000 120,241 978,083 244,051 (34,560) (28,691) (15,621) 1,143,262
0 0 0 0 0 0
120,083 10,125 0 0 0 130,208
152,736 17,699 (21,740) 0 (377) 148,318
6,222 3,599 0 0 0 9,821
78,456 6,614 (6,464) (306) (999) 77,301
23,458 9,805 (2,070) 0 0 31,193
0 0 0 0 0 0
380,955 47,842 (30,274) (306) (1,376) 396,841
342,130
146,959
127,606
12,749
14,175
42,490
Factory buildings and Improvement
Machinery, tools and equipment
Machinery for lease
Land
Furniture, fixtures and office equipment
Vehicles
60,312 746,421 Unit : Thousand Baht Assets in progress
Total
80,634 140,000 220,634 120,241 24,467 0 0 0 365,342
186,002 0 186,002 0 79 0 739 0 186,820
195,304 0 195,304 0 11,653 (8,561) 3,049 (557) 200,888
10,819 0 10,819 0 0 0 5,527 0 16,346
85,115 0 85,115 0 6,195 (427) 0 (291) 90,592
29,912 0 29,912 0 26,228 (4,517) 0 0 51,623
34,281 0 34,281 0 49,956 0 (12,214) (5,551) 66,472
622,067 140,000 762,067 120,241 118,578 (13,505) (2,899) (6,399) 978,083
0 0 0 0 0
111,172 8,911 0 0 120,083
143,570 14,339 (4,677) (496) 152,736
4,178 2,044 0 0 6,222
72,914 6,178 (396) (240) 78,456
21,261 6,539 (4,342) 0 23,458
0 0 0 0 0
353,095 38,011 (9,415) (736) 380,955
365,342
66,737
48,152
10,124
12,136
28,165
66,472
597,128
- 21 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES
Notes to Financial Statements (Continued) 11. Property, plant and equipment - net (Continued)
Unit : Thousand Baht
The Company 2005 Cost At 1 January 2005 Cost Revaluation surplus (in 2001) Revaluation surplus (in 2004) Total Purchases Disposals Transfers in (out) Written off and transfer to expenses At 31 December 2005 Accumulated depreciation At 1 January 2005 Depreciation Disposals Written off and transfer to expenses At 31 December 2005 Net book value At 31 December 2005 The Company
2004 Cost At 1 January 2004 Cost Revaluation surplus (in 2001) Total Revaluation surplus (in 2004) Purchases Disposals Transfers in (out) Written off and transfer to expenses At 31 December 2004 Accumulated depreciation At 1 January 2004 Depreciation Disposals Written off and transfer to expenses At 31 December 2004 Net book value At 31 December 2004
Factory buildings and Improvement
Land
Machinery, tools and equipment
Machinery for lease
Furniture, fixtures and office equipment
Vehicles
Assets in progress
Total
41,828 140,000 120,241 302,069 0 0 0 0 302,069
167,755 0 0 167,755 260 0 1,618 0 169,633
127,788 0 0 127,788 12,138 (2,666) 8,520 (446) 145,334
31,346 0 0 31,346 0 0 12,224 0 43,570
82,216 0 0 82,216 5,804 (422) 0 (1,001) 86,597
42,598 0 0 42,598 17,697 (1,941) 244 0 58,598
50,314 0 0 50,314 51,647 0 (27,103) (14,993) 59,865
543,845 140,000 120,241 804,086 87,546 (5,029) (4,497) (16,440) 865,666
0 0 0 0 0
112,910 8,250 0 0 121,160
101,227 10,302 (1,308) (377) 109,844
9,222 6,974 0 0 16,196
71,144 5,998 (287) (999) 75,856
18,364 8,025 (1,685) 0 24,704
0 0 0 0 0
312,867 39,549 (3,280) (1,376) 347,760
302,069
48,473
35,490
27,374
10,741
33,894
Factory buildings and Improvement
Machinery, tools and equipment
Machinery for lease
Land
Furniture, fixtures and office equipment
Vehicles
59,865 517,906 Unit : Thousand Baht Assets in progress
Total
65,214 140,000 205,214 120,241 0 (23,386) 0 0 302,069
166,937 0 166,937 0 79 0 739 0 167,755
115,093 0 115,093 0 11,564 (1,361) 3,049 (557) 127,788
19,819 0 19,819 0 0 0 11,527 0 31,346
76,573 0 76,573 0 6,086 (374) 0 (69) 82,216
18,097 0 18,097 0 24,941 (440) 0 0 42,598
46,281 0 46,281 0 27,798 0 (18,214) (5,551) 50,314
508,014 140,000 648,014 120,241 70,468 (25,561) (2,899) (6,177) 804,086
0 0 0 0 0
104,820 8,090 0 0 112,910
93,543 8,260 (80) (496) 101,227
5,303 3,919 0 0 9,222
66,037 5,483 (343) (33) 71,144
13,449 5,279 (364) 0 18,364
0 0 0 0 0
283,152 31,031 (787) (529) 312,867
302,069
54,845
26,561
22,124
11,072
24,234
50,314
491,219
- 22 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 11. Property, plant and equipment - net (Continued) Capitalization of borrowing costs As at 31 December 2005, a subsidiary company capitalized cost of borrowing on loans for the factory construction and machinery and equipment Baht 1.4 million as part of cost of assets in progress. As at 31 December 2005, the Company and the said subsidiary company have a commitment to pay cost of construction and machinery as prescribed in the agreement approximately Baht 2.3 million. Depreciation Depreciation expenses for the years ended 31 December 2005 and 2004 amounted to Baht 47.84 million and Baht 38.01 million, respectively (The Company : Baht 39.55 million and Baht 31.03 million, respectively). Restriction on property, plant and equipment Land and certain construction including machinery of the Company and subsidiaries with net book value (appraisal value) of approximately Baht 555 million have been mortgaged as collateral for credit facilities and long-term loans granted by banks. Appraisal of property In 2001, the Company engaged an independent appraiser, Tobtavee Appraisal and Services Co., Ltd., to appraise the Company’s land which its appraised value is higher than the value appraised by one of the lender banks. For conservative purpose, the Company applies the lower amount of appraisal value to revalue the land. The revaluation surplus on land amounted to approximately Baht 140 million is presented as “Revaluation surplus on land” under “Shareholders’ Equity” in the balance sheets. The revaluation surplus is not available for dividend distributions. In 2004, The Company engaged an independent appraiser, Tobtavee Appraisal and Services Co., Ltd., to re-appraise all of land for operation in order to state the fair value of these land. Based on the appraisal reports dated 13 and 14 November 2004, the market approach method was applied to the revaluation, reflecting the fair market value of the Company’s land for operation in the amount of Baht 260.24 million which higher than the 2001’s appraisal value by approximately Baht 120.24 million. The Company recorded the difference between the historical cost and new appraisal value in the “Revaluation surplus on land” under “Shareholders’ Equity” in the balance sheets. 12. Intangible assets - net Consolidated Computer software Intellectual property Less Accumulated amortization Net Amortization for the year
2005 33,303,599 5,310,772 38,614,371 31,108,575 7,505,796
2004 32,209,323 0 32,209,323 29,440,739 2,768,584
1,512,681
1,264,890
Unit : Baht The Company 2005 2004 32,045,204 32,205,023 5,310,772 0 37,355,976 32,205,023 30,608,638 29,440,694 6,747,338 2,764,329 1,319,773
1,135,656
- 23 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 13. Land not used in operations - net Land not used in operation of the Company amounting to Baht 18,138,500 is stated at cost net of impairment loss of Baht 1.6 million, according to the appraisal report dated 31 March 2005 prepared by Year Appraisal Co., Ltd. The market approach method was applied to determine the appraised values for those assets. During the year 2005, the Company obtained land of an account receivable from the auction in the amount of Baht 170,000 (the transfer of land title deed is in the process). In addition the Company obtained land from the settlement of debt of an account receivable in the amount of Baht 939,000 (appraisal value Baht 2,025,900). The said land have been mortgaged to secure loans of the Company from banks. 14. Land for sale On 16 December 2005, a subsidiary company entered into a contractual agreement to buy and to sell a plot of land at Chachoengsao province to a third party at the price of Baht 25.5 million (at cost of Baht 23,212,325). The payment of land in the amount of Baht 25.4 million (net of deposit Baht 100,000) will be paid upon the buyer get the approval of credit facilities from the commercial banks. The land title deed will be transferred on the date that the subsidiary company received all the money. The said land has been mortgaged to secure loans of the Company from banks. As at 31 December 2005, the subsidiary company classified the said land from land for operation to land for sale. 15. Bank overdrafts and short-term loans from financial institutions Consolidated Bank overdrafts Discounted promissory notes Bill of exchange Trust receipts Packing credit Liabilities under discounted post dated cheques Total
2005 35,165,595 599,228,763 0 52,646,136 51,375,000 65,824,356 804,239,850
2004 7,409,861 211,328,900 380,000,000 37,729,972 13,873,000 39,255,836 689,597,569
Unit : Baht The Company 2005 2004 3,855,527 0 592,018,193 211,328,900 0 380,000,000 48,080,479 35,301,518 51,375,000 13,873,000 65,824,356 39,255,835 761,153,555 679,759,253
The Company and subsidiaries have credit facilities from banks of Baht 1,904 million and USD 3 million (The company : Baht 1,593 million and USD 1.5 million) which are collateralized by the mortgages of land and certain construction including machinery. Under the term of the trust receipts agreements with the banks, certain imported inventories have been released to the Company and subsidiaries in trust for the banks. The Company and subsidiaries are accountable to the banks for the trusteed inventories or their sales proceeds.
- 24 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 16. Liabilities under hire purchase agreements - net Consolidated 2005 2,997,931 1,478,483 1,519,448
Liabilities under hire purchase agreements Less Portion due within one year Net
2004 405,625 405,625 0
Unit : Baht The Company 2005 2004 2,439,153 0 1,274,731 0 1,164,422 0
The current portion due within one year is presented under current liabilities in the balance sheets. 17. Liabilities under financial lease agreements - net
2005 43,643,498 4,741,166 38,902,332
2004 28,138,451 3,085,344 25,053,107
Unit : Baht The Company 2005 2004 37,562,326 27,260,913 3,994,431 2,990,392 33,567,895 24,270,521
10,216,039 28,686,293
5,719,505 19,333,602
8,976,379 24,591,516
Consolidated Liabilities under financial lease agreements Less Deferred interest expense Less Portion due within one year (net of deferred interest expense) Net
5,546,593 18,723,928
The Company entered into several financial lease agreements to purchase equipments, with interest at the rates ranging from 3.35% – 8.92% per annum. These are repayable in 36 – 48 equal monthly installments. The repayment terms of the liabilities under financial lease agreements are as follows: Unit : Baht Consolidated The Company Deferred Deferred Principal Total Principal Total Interest Expense Interest Expense 2006 10,216,039 2,044,976 12,261,015 8,976,379 1,721,132 10,697,511 2007 10,625,206 1,412,215 12,037,421 9,294,813 1,179,104 10,473,917 2008 11,759,275 1,098,025 12,857,300 10,484,779 955,862 11,440,641 2009 6,301,812 185,950 6,487,762 4,811,924 138,333 4,950,257 Total 38,902,332 4,741,166 43,643,498 33,567,895 3,994,431 37,562,326
- 25 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 18. Long-term loans - net Consolidated Long-term loans Less Portion due within one year Net
2005 318,751,296 48,400,000 270,351,296
2004 236,682,456 45,000,000 191,682,456
Unit : Baht The Company 2005 2004 198,751,296 236,682,456 48,400,000 45,000,000 150,351,296 191,682,456
On 21 April 2005, a subsidiary company was granted long-term loan amounting to approximately Baht 120 million by a local commercial bank for purchase of fixed assets. The loan is repayable by quarterly installments within seven years in various amounts commencing from July 2007, with interest at the rate of MLR minus 0.25% to 2.25% per annum. The said loan is collaterized by the mortgage of the subsidiary company’s land and certain construction including machinery of the subsidiary company, and also guarantee by the Company (See Note 11). On 16 January 2003, the Company was granted long-term loan amounting to approximately Baht 312 million by a local commercial bank for the purpose of refinancing its outstanding balance of restructured debt under the debt restructuring agreement made on 6 July 2000. This loan is repayable in quarterly installments within seven years in various amounts commencing from April 2003, with interest at the rate of MLR minus 0% to 2% per annum. The said loan is collaterized by the mortgage of land and certain construction of the Company (See Note 11). On 18 September 2003, the Company was granted long-term loan amounting to approximately Baht 26 million by a local commercial bank for the purpose of system information improvement. The loan is repayable by quarterly installments within four years in various amounts commencing from January 2005, with interest at the rate of MLR minus 0.5% to 2% per annum. The said loan is collaterized by the mortgage of the Company’s land and certain construction (See Note 11). 19. Debentures On 20 October 2003, the Company issued the unsubordinated and unsecured debentures without trustee in the amount of Baht 200 million to an investment institution which are as follows : 1. Debentures No. 1/2003 Due 2005 of Patkol Public Company Limited in an amount of Baht 100 million, 100,000 units, with a maturity of 2 years and interest at the fixed rate of 3.3% per annum, payable semi-annually. These debentures were redeemed in October 2005. 2. Debentures No. 2/2003 Due 2006 of Patkol Public Company Limited in an amount of Baht 100 million, 100,000 units, with a maturity of 3 years and interest at the float rate (1 year fixed deposit rate quoted by SCB plus 2% per annum), payable semi-annually.
- 26 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 20. Share capital On 19 January 2004, the extraordinary general meeting of the Company’s shareholders number 1/2004 approved the follow resolutions: 1. To change the par value of the registered share from 10.6 million ordinary shares of Baht 10 par value to 106 million ordinary shares at Baht 1 par value. (The Company registered the change of the par value with the Ministry of Commerce on 22 January 2004). 2. Increased the registered share capital of the Company from Baht 106 million to Baht 320 million by issuing 214 million new ordinary shares of Baht 1 par value each, totaling Baht 214 million. (The Company registered the change of registered capital with the Ministry of Commerce on 23 January 2004). 3. To allot the new ordinary shares of 26.5 million shares of Baht 1 par value each, totaling Baht 26.5 million to the existing shareholders whose names appear in the share register book on 28 January 2004 at the subscription ratio of 4 existing shares to 1 new ordinary share at the offering price of Baht 1 each. (On 16 February 2004, the said increase share capital have been issued to the existing shareholders at the price of Baht 1 each. Such shares were fully paid. The Company registered the change of the paid-up share capital of Baht 238,486,000 with the Ministry of Commerce on 4 March 2004). 4. To issue and offer of 53 million warrants to the existing shareholders who purchase new ordinary shares of the Company under item 3 in a ratio of 1 new share per 2 units of warrant. No value is to be charged for the warrants upon issue. The warrants have an exercise price of Baht 5 per share and are exercisable at the ratio of 1 warrant per 1 ordinary share, for a period of 3 years from the issuance date as stated on the warrants. 5. To allot the increased share capital of 214 million shares at Baht 1 par value each as follows: 5.1 To allot the new ordinary shares of 106 million shares at the par value of Baht 1 each for dividend payment to the existing shareholders under Note 23. 5.2 To allot the new ordinary shares of 26.5 million shares at the par value of Baht 1 each to offer by way of the rights issue to the existing shareholders under item No.3. 5.3 To allot the new ordinary shares of 28.5 million shares at the par value of Baht 1 each to offer by way of private placement in accordance with the Office of the Securities and Exchange Commission No. Kor Jor 12/2543. 5.4 To allot the new ordinary shares of 53 million shares at the par value of Baht 1 each for exercise of warrants issued to the existing shareholders under item No.4. The terms, conditions and offering details of the above increase shares and warrants including reasons for which new shares must be reserved for the adjustment to the exercise price or the exercise ratio of the warrants or both will be determined at the discretion of the Board of Directors.
- 27 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 21. Warrants On 31 August 2004, the Company received approval from the Office of the Securities and Exchange Commission to issue and offer 53 million units of warrant to its existing shareholders with no value to be charged. Subsequently, the Stock Exchange of Thailand has set the warrants to be traded on the Stock Exchange of Thailand commencing from 5 October 2004. The warrants specified the name of the holders and are negotiable with 3 years maturity from the issuance date. One warrant represents the right to buy one ordinary share and are exercisable on every 25 of February, May, August and November. The first exercise date is on 25 November 2004 until 25 August 2007 and the final exercise date will be on 21 September 2007. The exercise price of the warrants are Baht 5 per share. Up to now, no warrant has been exercised. 22. Legal reserve Under the provision of the Limited Public Company Act B.E. 2535, the Company is required to appropriate at lease 5% of its net income for the year after deduction of the deficit brought forward (if any) as reserve fund until the reserve fund reaches 10% of the authorized share capital. The reserve fund is not available for dividend distribution. In 2005, the company made additional appropriation for the legal reserve in the amount of Baht 8,151,400. Presently, the reserve fund is at 10% of the authorized share capital. 23. Appropriation On 27 April 2004, the ordinary shareholders’ meeting approved the dividends payment at Baht 0.05 per share in respect of year 2003 earnings in the total amount of Baht 11.92 million. The payment of dividends were made on 27 May 2004. On 19 January 2004, the extraordinary general meeting of the Company’s shareholders number 1/2004 approved the interim dividend payment in respect of the Company’s retained earnings as of 30 September 2003, as the following: 1. Stock dividend payment (increased share capital) in proportion 1 ordinary share to 1 share of stock dividend totaling the stock dividend 106 million shares at the par value of Baht 1 each, in the total amount of Baht 106 million or at the rate of Baht 1 per share. 2. Cash dividend payment at the rate of Baht 0.15 per share totaling Baht 15.9 million. The payment of the said dividend were made on 12 February 2004. 24. Registered provident fund The Company and subsidiaries have a contributory registered provident fund in accordance with the Provident Fund Act B.E. 2530. Under the plan, the employee contributes an amount equivalent to 3% of their basic salary. The Company and subsidiaries contribute monthly to the fund at an amount equivalent to 3% of its employees’ basic salaries. During the year ended 31 December 2005 and 2004, the Company and subsidiaries contributed to the fund and recorded expenses of Baht 5.06 million and Baht 4.70 million, respectively. (The Company : Baht 4.70 million and Baht 4.60 million, respectively)
- 28 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 25. Employees and related costs Consolidated Number of employees at end of year (include temporary employees) Persons Employee costs for the year Thousand Baht
2005
2004
1,362 363,183
1,236 310,063
The Company 2005 2004 1,080 320,919
1,129 281,775
26. Financial information by segment The Company and the subsidiary companies’ operations involved in the trading and services of engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order. Business unit segment information of the Company and its subsidiary companies for the years ended 31 December 2005 and 2004 are as follows : Unit : Million Baht
Consolidated
Ice machine and Machineries for Industrial Liquid and refrigeration machine food processing
Turnkey project
Service and others
Central management
Total
2005 Sales and services Operating profit (loss) Property, plant and equipment-net
1,280 140 254
618 93 5
696 38 18
131 17 108
0 18 361
2,725 306 746
1,489 175 132
476 49 4
317 6 5
109 10 106
2 24 350
2,393 264 597
2004 Sales and services Operating profit (loss) Property, plant and equipment-net
Unit : Million Baht
The Company
Ice machine and Machineries for Industrial Liquid and refrigeration machine food processing
Turnkey project
Service and others
Central management
Total
2005 Sales and services Operating profit (loss) Property, plant and equipment-net
1,120 112 15
618 93 5
766 33 18
247 17 107
3 18 373
2,754 273 518
1,319 140 12
476 49 4
342 7 5
107 12 105
2 18 365
2,246 226 491
2004 Sales and services Operating profit (loss) Property, plant and equipment-net
- 29 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 27. Disclosures of financial instruments 27.1 Interest rate risk As at 31 December 2005, the Company and subsidiaries had financial assets and financial liabilities exposed to interest rate risk as follows:
Consolidated Financial assets Cash and cash equivalents Current investments Restricted investments Financial liabilities Bank overdrafts and short-term loans - from financial institutions Liabilities under hire purchase agreements Liabilities under financial lease agreements Long-term loans Debentures
The Company
Floating Interest rate
106,369,263 161,799
35,165,595
Fixed interest rate maturing in : 1 year or less
Over 1 to 5 years
117,964 10,173 11,133,630
106,487,227 10,173 11,295,429
769,074,255 1,478,483 10,216,039
804,239,850 2,997,931 38,902,332 318,751,296 100,000,000
1,519,448 28,686,293
318,751,296 100,000,000 Floating Interest rate
Financial assets Cash and cash equivalents 97,573,925 Short-term loans to related parties Restricted investments Financial liabilities Bank overdrafts and short-term loans - from financial institutions 3,855,527 Short-term loans from related parties Liabilities under hire purchase agreements Liabilities under financial lease agreements Long-term loans 198,751,296 Debentures 100,000,000
Total
Fixed interest rate maturing in : 1 year or less
Over 1 to 5 years
Total
Unit : Baht Average interest rate Floating Fixed
%
%
0.57
2.23 2.25 2.42
0.50
6.59
5.46 6.32 6.18
5.05 3.00 Unit : Baht Average interest rate Floating Fixed % %
74,842 17,882,150 9,964,465
97,648,767 17,882,150 9,964,465
0.50
2.50 6.50 2.50
757,298,028 31,716 1,274,731 8,976,379
761,153,555 31,716 2,439,153 33,567,895 198,751,296 100,000,000
6.75
5.45 6.50 6.96 6.13
1,164,422 24,591,516
5.54 3.00
- 30 -
PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) 27. Disclosures of financial instruments (Continued) 27.2 Credit risk Credit risk is the risk that a counterparty is unable or unwilling to meet a commitment that they entered into with the Company and subsidiaries. This risk is controlled by the application of credit approvals, limits and monitoring procedures. Whenever the Company and subsidiaries consider any deal is in risk, the Company will obtain collateral in the form of a customer’s promissory note, which is guaranteed by a bank in approving credit sales. The maximum credit risk exposure is the book value of assets after deduction of allowance for doubtful accounts as presented in the balance sheet. 27.3 Foreign currency risk The Company and subsidiaries have certain foreign currency transactions, giving rise to significant exposure to market risk from changes in foreign exchange rates. However, the management believes that the foreign exchange rate risk is minimum. Hence, the Company and subsidiaries do not use derivative financial instruments to mitigate this risk, except for the forward contract to sales and purchases foreign currency. 27.4 Fair value of financial instruments The Company and subsidiaries use the following methods and assumptions in estimating the fair value of financial instruments. Cash, deposit with financial institutions and loan receivable, bank overdrafts and loan payable The fair value is the amount stated in the balance sheet, since amounts are predominantly subject to market interest rates. Trade accounts receivable and payable The carrying amount approximates fair value because of the short period to maturity of those instruments. Liabilities under hire purchase agreements, Liabilities under financial lease agreements, Long-term loans and debentures The fair value is estimated using a discounted cash flows method based on the average interest - market rate and the remaining period to maturity. 28. Contingent liabilities and commitments As at 31 December 2005, the Company and subsidiaries: a) Have sales and service contracts with the customers for which goods or services have not been delivered or rendered totalling approximately Baht 2,043 million. The Company and subsidiaries do not expect material loss from these contracts. b) Are contingently liable for letters of guarantee issued by banks to customers for its performance guarantees and bidding guarantees totalling approximately Baht 355 million, Euro 36,000 and USD 2,144,487. -------------------------------------------
Check List PAGE
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
Comparative Data Message from the Chairman of the Board Message from the President and Chairman of Management Committee (MC) Board of Directors Management Committee (MC) Major events and developments General Information Other References Type of Business Income Structure of business Group Risk Factors Management Internal Control Major Shareholders Transactions with Related Parties Result from Business Operation Financial Position Financial Statements Check List
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