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L.V. TECHNOLOGY Public Company Limited Annual Report 2011

Analysis of Business Operation in 2011 Operation Outlook

A broad view of the Company’s operation in 2011 reveals that the Company had a significant increase of works and service agreements. More than 95 percent of revenues over the year were generated from service agreements, 99 percent of which represented agreements concluded with customers overseas. In comparison with 2010, the Company had an increase by 87 percent of the works involved with improvement of efficiency in the production process of cement plants and new plants, as indeed reflected in the sales volume throughout 2011. Despite its ensuing loss, part of such loss resulted from the recognition of the costs incurred in the completion of one particular project in respect of which the Company is claiming such costs against the customer. The Company also set aside an additional fund as the allowance for doubtful accounts in case of bad debt uncollected from contract accounts receivable. The sum currently under the claiming process and the additional fund set aside as mentioned above will reflect an actual profit (or loss) only after the negotiation with the customer is finalised. In the following year, the Company plans to put in place a clear and more precise policy in managing work performance under agreements secured by the Company in an endeavour to achieve optimal efficiency and effectiveness, based on good corporate governance and full compliance with its management policy.


In 2011, the Company had revenues from service agreements in an amount of 2,949.5 million Baht – an increase from the last year figure by 2,166.9 million Baht. This rising figure was due to the increase of over 4,500 million Baht in the work orders secured by the Company in late 2010 and throughout 2011. Part of such works is capable of recognition in 2011 whilst the remainder will be recognised in the following year. In fact, main revenues for 2011 were generated from 4 large-scale projects – 2 in Brazil and the other 2 in Malaysia. Such revenues indeed met the Company’s anticipated target. The Company had a profit share from investments in the associate companies in the amount of 62.8 million Baht (in comparison with the sum of 38.7 million Baht in 2010), hence an increase from the previous-year figure by 24.1 million Baht or indeed 62.3 percent, as a result of the profit share received from LNV Technology (India) and LV Technology Engineering Limited (China) in the amount of 43.4 million Baht and 23.0 million Baht respectively. Also, the Company had the loss 3.6 million Baht from the investment in BLVT.

Costs and Expenses

The Company’s total costs incurred in the operation of service agreements in 2011 appeared in the total amount of 2,790.2 million Baht. Such rising costs were engendered by the progress made in each project. This increase also led to a rising ratio of contract costs to incomes from service agreements. Such ratio turned out to be at 94.6 percent (when compared with 96.2 percent in 2010). The cost increase indeed resulted from the recognition of costs incurred in one particular project with unresolved issues, in respect of which the Company is claiming part of such costs against the customer and it is expected that such claimed costs are recoverable upon completion of the commissioning process. With respect to expenses incurred in sales, the Company had a rising figure in comparison with that of the previous year. This increase corresponded to the increase in revenues from service agreements. In 2011, the Company suffered no impacts from the fluctuation from the exchange rate simply because the Company pursued the administration policy based upon the natural hedge-related principle in an attempt to guard itself against undesirable effects of exchange rate fluctuation. Moreover, where transactions of different currencies were unavoidably made, the Company would employ other financial instruments to minimise risks associated with exchange rate fluctuation.


LVT : Annual Report 2011  
LVT : Annual Report 2011  

Annual Report 2011