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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Message from the Chairman Board of Director Executive Board Managements Team Financial Highlights Corporate Social Responsibility Report of the Audit Committee Capital Structure Management Structure Details of the Board of Directors and Executives General Information Nature of Business Industry Overview and Competition Risk Factors Corporate Governance Report Internal Control Related Transactions Summary of Financial Statements Management Discussion and Analysis Board of Directors’ Responsibility for Financial Reporting Independent Auditor’s Report Referenced Purson

2 4 6 8 10 14 25 27 29 61 77 79 90 100 106 107 109 134 144 158 159 161

Gunkul Engineering Public Company Limited




1. Message from the Chairman

To : Shareholders of Gunkul Engineering Public Company Limited As for Thai economy in the previous year, Thai government endeavored to stimulate economy through adopting series of measures to increase national income, encourage spending, and reduce corporate tax that is aimed at boosting domestic investments. In the meantime, the government is well aware of the continuous rise in energy demand to support the economic growth target, as seen from the government’s actions to promote and maintain the policies that motivate private sector to invest in renewable energy power plants such as wind and biomass, together with the investment in solar energy power plants. Another through-provoking topic to which various government and private entities paid special attention is organizational preparation for the launch of the ASEAN Economic Community (AEC). Gunkul Engineering Public Company Limited is one of the companies that recognizes the favorable business opportunity from this forthcoming changes. At present, we are in the process of seeking for opportunities to expand our business presence and investments in ASEAN countries, thanks to our extensive knowledge and experience at the regional level for more than 10 years. Our investment decision will be made by prudently selecting investment options and exercising good financial discipline, coupled with our great focus on human resource development in order for us to stay competitive and achieve sustainable growth. Furthermore, in order to support the changing circumstances, we have developed our corporate vision to be concise, modern as well as reflect great care for environment. The language “Smart Energy” means the smart generation of power that also helps preserve the environment. Thus, the phrase “Smart Energy in Action!” that is our new corporate slogan means our intention and commitment to take all necessary steps required to assume the leadership position in the renewable energy space. In 2013, we will continue our participation in generating power from renewable energy resources, coupled with the participation in developing electrical systems both in Thailand and nearby countries.



Smart Energy in Action


Regarding our 2012 operating performance, we have grown according to our target, having total revenue of 4,836.72 million baht, increasing by 660.25 million baht or by 15.81%, when compared with that of the year 2011. 2012 net profit was recorded at 643.18 million baht or Earnings per Share (EPS) of 1.46 baht per share, increasing from 0.86 baht per share in 2011. As the Chairman of Gunkul Engineering Public Company Limited, I would like to represent the Company in extending thanks to shareholders, investors, financial institutions, business partners customers, and all stakeholders for constant confidence, trust and support. Appreciation also goes to the management and all employees who work devotedly, honestly and prudently toward the Company’s success as desired. We are committed to undertake business with good corporate governance for the interest of all stakeholders, society and the environment to attain the corporate vision of “becoming Thailand’s number one manufacturer and provider of equipment for electrical systems and renewable energy systems that meet and satisfy customers’ need and concurrently maximize stakeholders’ return.”

Best Regards,

(Mr. Gunkul Dhumrongpiyawut)

Chairman

25 February 2013

Chairman of the Board of Directors.

Gunkul Engineering Public Company Limited




2. Board of Directors Mr. Gunkul Dhumrongpiyawut Chairman of the Board Mr. Sathaporn Kotheeranurak Independent Director Chairman of the Audit and Corporate Governance Committee Member of the Risk Management Committee Pol. Maj. Gen. Visit Sukarasep Independent Director Chairman of the Nomination and Remuneration Committee Member of the Audit and Corporate Governance Committee Mr. Sombat Santijaree Independent Director Member of the Audit and Corporate Governance Committee



Smart Energy in Action


Miss Sopacha Dhumrongpiyawut Director Chief Executive Offiecr Chairman of the Risk Management Committee Mr. Somboon Aueatchasai Director Executive Offiecr Managing Director

Miss Naruechon Dhumrongpiyawut Director Executive Director Mr. Chaloempon Sricharoen Director Executive Director Mrs. Areewan Roonpraphan Director Executive Director

Gunkul Engineering Public Company Limited




3. Executive Committee

Miss Sopacha Dhamrongpiyawut Chief Executive Officer Mr. Somboon Aueatchasai Managing Director



Smart Energy in Action

Miss Naruechon Dhumrongpiyawut Executive Director


Mr. Chaloempon Sricharoen

Mrs. Areewan Roonpraphan

Executive Director

Executive Director

Gunkul Engineering Public Company Limited




4. Managements Team Miss Sopacha Dhumrongpiyawut Chief Executive Officer

Mr. Somboon Aueatchasai Managing Director

Mrs. Areewan Roonpraphan Senior Vice President, Factory

Mrs. Somluk Kanuenghet Senior Vice President,

The Office of Managing Director

Mr. Papangkorn Sakulvorakan

Senior Vice President, Business Support



Smart Energy in Action


Mr. Worathep Luangsirapornchai

Mr. Thamrong Chankraithong

Senior Vice President, Sales & Marketing

Mr. Phongsakorn Damnoen

Senior Vice President, Business Development & Special Project

Mr. Phudis Triwilaskul

Senior Vice President, Internal Audit

Vice President, Logistics

Miss Naruechon Dhumrongpiyawut Vice President, Strategic & Investment

Miss Suttirat Tangnorakul

Accounting Manager

Gunkul Engineering Public Company Limited




5. Financial Highlights Unit : Baht

31 Dec 2012*

Total Assets Total Liabilities Shareholders Equity Paid up Share Capital Revenue Net Profit / Loss Net Profit / Assets (%) Net Profit / Shareholders Equity (%) Net Profit Margin (%)

31 Dec 2011*

6,958,270,551.41 5,539,779,609.30 1,789,712,321.23 4,813,704,395.68 4,356,175,992.80 657,506,962.85 2,144,566,155.73 1,183,603,616.50 1,132,205,358.38 439,999,984.00 400,000,000.00 400,000,000.00 4,763,886,359.16 2,668,698,269.54 1,298,071,881.11 779,555,495.28 89,524,765.12 123,175,999.14 11.06 1.62 6.88 35.89 7.56 10.88 16.15 3.35 9.49

Remarks * Consolidated Financial Statements

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31 Dec 2010*

Smart Energy in Action

31 Dec 2009*

31 Dec 2008*

856,998,776.50 1,051,362,621.35 351,789,417.26 428,169,328.33 505,209,359.24 623,193,293.02 300,000,000.00 240,000,000.00 873,001,715.66 1,383,000,470.82 53,660,741.73 123,011,252.10 6.26 11.70 10.62 19.74 6.15 8.89


Private and Construction segments have been taking turns as a major contributor to GUNKUL’s revenue Revence Breakdown by Type of Customer 4,722

THB mn

416

4,000 2,651

3,000 2,000

1,366

1,000

362 285 719

2008

0

Government Private

1,288

864

449 73 1,368

1,765 169 604 1,323

164 249 451

600 240 448

487 274

445

2009

2010

2011

2012

Foreign

Electricity Construction disposal of investment

% Revenue Breakdown by Type of Customer 445 (10.33%)

1,765 (40.99%)

169 (3.93%)

Government

1,323 (30.72%)

604 (14.03%)

Private

Foreign

Electricity Construction

Gunkul Engineering Public Company Limited

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Proportion Revenue Breakdown by type of customer in Year 2011 and Year 2012 THB mn 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

1,765 1,368

1,323

274

604

487

445

449 73

Government

Private

Foreign 2011

169

Electricity

Customers

Construction

2012

Revenue vs. Overall Gross Margin THB mn

Margin%

4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

28.14 24.1

25.5

25 21.44

22.98 2,446

20 15

831

10

987 535

2008

406 458

2009

Rev.from Trading & Construction

12

30

4,016

Smart Energy in Action

706 302

2010 Rev.from Manu

205

2011

2012 Gross Margin (%)-RHS

5 0


Net Profit vs. Net Profit Margin THB mn

900 800 700 600 500 400 300 200 100 0

Margin %

18 16 14 12 10 8 6 4 2 0

16.15

9.55

10.29

6.2

447.61

3.35 54

2009

123

89

2010

2011

Net Profit

769.6

2012

Net Profit Margin (%)

2012

Excluded Gain Included Gain From sale GPS from sale GPS

Balance Sheet Unit : THB mn

Total Asset 6,958.27 Total Asset 5,539.78 Current Asset

Non Current Asset

1,716.51

2,546.77

3,180.85

Current Liabilities

1,632.86

Non Current Liabilities

2,144.56

Shareholders’ Equity

3,440.00

3,823.27

916.18 1,183.60

As of Dec 31, 2011

4,411.50

As of Dec 31, 2012

Gunkul Engineering Public Company Limited

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6. Corporate Social Responsibility

Gunkul Engineering Public Company Limited has realized the importance of social responsibility for many years. The Company has employed corporate governance and social responsibility with concerns on all related parties including shareholders, trading partners, customers, employees and society with aim to create sustainable growth prospects. Besides good corporate governance, the Company also helps and supports society and employees by donating educational supplies on the Children Day for youth to improve learning skills, awarding scholarship to youth and employees’ descendants, giving financial supports along with sports equipment and computer equipment to communities and government agencies, taking part in cultural conservation activities, as well as engaging in environmental and social activities etc. In 2012, the Company honored H.M. the King’s 84th Anniversary and celebrated the commemorative year of Buddhism by donating money and solar cell panels to “Alternative Energy: Robe Offering on Buddhajayanti 2600 Years” project of the Department of Alternative Energy Development and Efficiency. The Company also adopted the King’s philosophy regarding global warming by encouraging the use of natural alternative energy and undertaking social and environmental activities. Significant activities in 2012 could be summarized as follows:-

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Smart Energy in Action


Responsibility to society, neighboring communities and environment GUNKUL is determined to undertake business with social responsibility in order to “be the leading producer of electrical power from renewable energy resources, as well as manufacturer and provider of equipment for electrical systems that meet and satisfy customer’s need and concurrently maximize stakeholders’ return.” GUNKUL also believes that, apart from good management and personnel development, business success is achieved through a proper balance of corporate social responsibility on all 3 dimensions, namely economic, social and environment. Good corporate governance and corporate social responsibility transparency will lead to sustainable business and the well-being of Thai society. In 2012, GUNKUL carried out activities as follows:-

Gunkul Engineering Public Company Limited

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1. Projects for community and society The Company’s policy on community and environment encourages community engagement and attaches importance to education, sports and the “collaborative� co-existence with community. It also promotes development and strength of community for the sustainable and good quality of life, conservation and restoration of local culture, as well as conservation and restoration of environment for the equilibrium of nature and life.

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Smart Energy in Action


Scholarships for students in community schools and employees’ children Since 2006, the Company has awarded scholarships to employees’ children and also needy students with good performance and good conduct every May, in order to promote education and better life quality of youth in neighboring communities. This year, the Company awarded 50 scholarships to students (kindergarten to primary education levels) of Wat Sawaswaree Srimaram school, 20 scholarships to students (secondary education levels) of Wat Noi Noppakun school.

Donation and sports/computer equipment to neighboring communities and government agencies The Company also sponsors sports event for Wat Sawaswaree Srimaram community and Noen Po Municipal Office. The Company gave computer equipment to Wat Phraya Krai Police Station to support its database work, donated money to Wat Sawaswaree Srimaram elderly community, and offered money to support goodwill activity of Pornwarin Nutrawong, the nurse tutor with “volunteer spirit” of Wachira Hospital. Gunkul Engineering Public Company Limited

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Buddhism support and cultural conservation activities The Company takes part in conserving and restoring local culture and traditions on various occasions, such as Songkran festival and the Elderly Day, and joins Tak Bat Devo, the food offering ceremony, on the end of the Buddhist Lent. Since 2012 was the auspicious year both as the “Buddhajayanti: 2600 Years of Lord Buddha’s Enlightenment” and as the “84th Anniversary of H.M. King Bhumibol,” the Company marked the occasion by giving donation and 36 140-watt solar cell panels to the Department of Alternative Energy Development and Efficiency in support of its “Alternative Energy: Robe Offering on Buddhajayanti 2600 Years” project. 18

Smart Energy in Action


Gift awards on Children Day for surrounding communities

The Company’s surrounding communities consist of Wat Sawaswaree Srimaram school, Wat Sawaswaree Srimaram community, Wat Kae community, Nakorn Chaisee community, Samsen police station, and 11 th army area (Rab 11). GUNKUL thus awards gifts to these communities on Children Day with aim to forward happiness and smiles to the youth.

Gunkul Engineering Public Company Limited

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Activities to raise social responsibility awareness In 2012, GUNKUL kept pursuing the policy toward employees’ voluntary participation in social activities. “Volunteer Spirit” activities were organized for employees, e.g. big cleaning day at Wat Sawaswaree Srimaram one day before the end of Buddhist Lent as a meritorious action toward people who attended the food offering ceremony. This activity has been carried out every year since 2007.

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Smart Energy in Action


In addition, the Company has also arranged activities to raise volunteer spirit and tighten relationship among GUNKUL employees, for example merit making on birthdays at the Priest Hospital, giving luncheon and donation to Thailand Association of the Blind, donating things and money to HIV-positive patients at Phrabatnampu temple.

Gunkul Engineering Public Company Limited

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2. Projects for environment and income generation for communities surrounding the power plant GUNKUL pays great attention to environmental management process from the beginning to the end, since pre-construction, between-construction and during generation of power from renewable sources. All processes are done under legal framework, government policy and international standard with aim to prevent, control and solve any problems that may occur from the power generation. The Company also has campaign to rehabilitate and preserve natural resources and environment by giving knowledge to surrounding communities via following activities:-

Environment study project

The Company has conducted environmental impact analysis (EIA) with focus on evaluation on health, society and surrounding communities. In 2012, the Company got permission for 5 projects, namely power generation from renewable energy at Wichienburi branch, Petchaboon province, at Buengsampun branches 1&2, Petchaboon province, at Noen Po branch, Pichit province, and at Sri Chula branch, Nakhon Nayok province.

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Smart Energy in Action


Stakeholder participation and income generation for communities GUNKUL has always recognized the significance of stakeholders’ participation and comments. Before constructing power plant, the Company does the public hearing to get feedback from surrounding communities for its environmental impact analysis, in order to develop public understanding of the project, possible impacts as well as to its benefits to communities such as job and wealth creation for the locals. By this, people in surrounding communities can participate in every steps of the project, so as to achieve clear understanding and mutual benefit of the power plant construction. Environmental and social management of constructing renewable energy power plant GUNKUL is well aware of the importance and seriousness of global warming, greenhouse gas and CO2 emission. It has therefore set the anti-global warming campaign as one of its missions to accomplish, by generating clean energy from renewable resources like solar cell and wind. With unvarying social responsibility throughout its 30 years of operations, the Company has made its power plant projects environmentally-friendly and ready for the ever-changing climate. Gunkul Engineering Public Company Limited

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Honorable rewards Mr. Gunkul Dhumrongpiyawut, Chairman of Gunkul Engineering Group, received the Golden Bell Certificate Somdej Phra Maha Racha Mangkalajarn and the Golden Bell Trophy from Privy Councillor General Pichit Kullavanija. The award representation ceremony was organized by the Broadcaster and Journalist’s Assembly of Thailand on 25th July 2012 at the Public Relations Department.

Corporate Slogan Smart Energy in Action ! 24

Smart Energy in Action


7. Report of the Audit Committee

Dear Shareholders of Gunkul Engineering Public Company Limited, The Audit and Corporate Governance Committee of Gunkul Engineering Public Company Limited consists of three independent directors which are Mr. Sathaporn Kotheeranurak as Chairman of the Audit and Corporate Governance Committee, Pol. Maj. Gen. Visit Sukarasep and Mr. Sombat Santijaree as Audit and Corporate Governance Committee. During the year 2012, the Board of Directors’ Meeting at no.7/2012 on November 9th, 2012 has appointed Mr. Sathaporn Kotheeranurak as Chairman of the Audit and Corporate Governance Committee and has appointed Mr. Sombat Santijaree to become a member of the Audit and Corporate Governance Committee instead of Dr.Ekaporn Rakkwamsuk, who already resigned, with effective date of November 9th, 2012. The Audit Committee acts as assigned from the Board of Directors in accordance with duties and responsibilities as defined in “Audit Committee Charter” which complies with guidelines and best practices for Audit Committee of the Stock Exchange of Thailand, Re: Qualifications and Scope of Work of the Audit Committee, 2008. In 2012, the Audit and Corporate Governance Committee arranged five meetings and arranged a meeting between the Audit and Corporate Governance committee and the Auditors without management in attendance. The meetings were attended by all directors of Audit Committee, the management as well as the company’s Internal Auditor Department and External Auditor in order to share information, comments and give suggestions which were benefit to administration proposes. The results of each meeting were presented to the Board of Directors of the Company and the company’s subsidiaries. During past year, the Audit Committee had carried out important activities, which could be summarized as follows. 1. In reviewing the financial statements, the Audit Committee has asked for the accuracy and completeness of the quarterly and annual separated financial statements and consolidated financial statements. With the explanation from the management and auditor, the quarterly and annual separated financial statements and consolidated financial statements are prepared in accordance with the legal requirements and generally accepted accounting principles before presenting to the Board of Directors. 2. In reviewing the internal control system, the Audit Committee in cooperation with the auditors and the internal auditors has asked for the internal control system. The Audit Committee is of the opinion that the company has adequate and suitable internal controls in the acceptable criteria. Gunkul Engineering Public Company Limited

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3. In reviewing the internal auditing plans, the Audit Committee has asked and considered the internal auditing plans to ensure that the internal auditing plans has been adjusted and been consistent with current situation for more effective work. 4. In reviewing the risk management, the Audit Committee has asked risk management plan in order to ensure that the risk has been managed properly in the acceptable criteria. The company has focused and developed Risk Management System by appointing Risk Management Committee in order to set risk management regulations and policies. Because of that, the company has effectively managed the risk in accordance with the company’s target. As the result of reviewing, The Audit Committee is of the opinion that the company has adequate and suitable the risk management. 5. In reviewing the related party transactions, the Audit Committee has considered and asked for the transactions that may have conflicts of related party transactions. As the result of reviewing, the majority of the transactions between the company and subsidiaries were normal commercial transaction in accordance with good corporate governance. 6. The Securities and Exchange Commission Law and Regulations, the Audit Committee has preformed the full scope of authority set forth in the Charter of the Audit Committee in compliance with the Securities and Exchange Commission Law and Regulations. 7. In consideration of determining, selecting, nominating and recommending remuneration of annual external auditor for year 2013, the Audit and Corporate Governance Committee had nominated SP Audit Co., Ltd. as External Auditor of the company and the company’s subsidiaries. The total remuneration of annual external auditor of the company and the company’s subsidiaries is THB 2,375,000. Part of THB 2,375,000 was the remuneration of annual external auditor of the company which was THB 892,000. The Audit and Corporate Governance Committee already presented this proposal to the Board of Directors to propose to the shareholders in the Annual General Meeting. In conclusion, the Audit Committee has opinion that the consolidated and separated financial statements of the company and its subsidiaries have presented fairly, sufficiently, completely in accordance with general financial reporting standard. The internal control has enough efficiency and effectiveness to control any frauds by separating authorization. The company and its subsidiaries have operated businesses in accordance with the Securities and Exchange Act, Stock Exchange of Thailand Act or any related laws.

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(Mr. Sathaporn Kotheeranurak) Chairman of the Audit Committee February 25, 2013 Smart Energy in Action


8. Capital Structure 8.1 Capital

As of December 31, 2012, the Company had registered capital of 440,000,000 baht and had paid-up capital of 439,999,984 baht divided into 439,999,984 shares at par value of 1.00 baht.

8.2 Shareholders Top ten major shareholders of the Company as of January 24, 2013, the latest closing date of share registration book is as the following. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Shareholder Name Dhumrongpiyawut Family Group - Gunkul Group Company Limited - Mr. Gunkul Dhumrongpiyawut - Miss Naruechon Dhumrongpiyawut Total Number of Share Holding by Dhumrongpiyawut Family Group Mr. Chatree Taweepreechachart Mr. Supart Sujivarodom Mr. Khanaphat Jirakasemphong Mr. Yudhana Sitthimahachaikul Miss Nanpapatr Piyapootinun Thai NVDR Co., Ltd. Mr. Pongsathorn Siritham Mr. Charoen Aekudomsin Mr. Vichai Aekudomsin Total

Number of Share Percentage 263,847,100 130,240 22,000 263,999,340 11,455,110 11,020,110 11,000,110 11,000,110 10,110,100 9,195,429 5,832,150 4,635,400 4,380,000 342,627,859

59.97% 0.03% 0.01% 60.00% 2.60% 2.50% 2.50% 2.50% 2.30% 2.09% 1.33% 1.05% 1.00% 77.88%

Gunkul Group Company Limited is the holding company with paid-up capital of 110.00 million baht as of December 31, 2012. Major shareholder is Dhumrongpiyawut family with 99.64% stake in Gunkul Group. Gunkul Engineering Public Company Limited

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No. 1. 2. 3.

Name Dhumrongpiyawut Family Group 1.1 Mr. Gunkul Dhumrongpiyawut 1.2 Miss Naruechon Dhumrongpiyawut 1.3 Mr. Pawich Dhumrongpiyawut 1.4 Miss Sopacha Dhumrongpiyawut 1.5 Master Arpakorn Dhumrongpiyawut Mr. Chaloempon Sricharoen Miss Nanpapatr Piyapootinun Total

Number of Share Percentage 254,000 211,000 211,000 210,000 210,000 3,000 1,000 1,100,000

23.09 19.18 19.18 19.09 19.09 0.27 0.09 100.00

8.3 Dividend Payment Policy The Company has dividend payout ratio of at least 40% of net profit of the Company only (unconsolidated basis) in which net profit is after deducting corporate tax, legal reserve and other reserves. However, the Company may pay dividend less than mentioned above if necessity i.e. more working capital required, aggressive expansion plan, or else. The board resolution on dividend payment is needed to propose to shareholders’ meeting for approval, except interim dividend in which board can go ahead and report to shareholders later. The Company’s subsidiaries also has dividend payout ratio of at least 40% of net profit after deducting corporate tax, legal reserve and other reserves. There are another four factors, cash flow analysis, financial status, liquidity and expansion plan, taking into account on how much dividend to pay.

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Smart Energy in Action


Gunkul Engineering Public Company Limited

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Sr.Vice President Mr. Worathep L.

Sr.Vice President Mrs. Somluk K.

The Office of Managing Director

Audit & Corporate Governance Committee

Nomination & Remuneration Committee

Risk Management Committee

9.1 Corporate Structure

Executive Committee

Board of Directors

Sr.Vice President Mr. Papangkorn S.

Sr.Vice President Mr. Thamrong C.

Sales & Marketing

Sr.Vice President Mr. Phongsakorn D.

Business Development & Special Project

Managing Director Mr. Somboon Aueatchasai

Miss Sopacha Dhumrongpiyawut - Chief Executive Officer Mr. Somboon Aueatchasai - Executive Director Miss Naruechon Dhumrongpiyawut - Executive Director Mr. Chaloempon Sricharoen - Executive Director Mrs.Areewan Roonpraphan - Executive Director

Business Support

1. 2. 3. 4. 5.

9. Management Structure

Sr.Vice President Mr. Phudis T

Logistics

Ms. Chantra J.

Factory

Sr.Vice President Mrs. Areewan R.

Company Secretary


9.2 Management Structure The Company’s management structure comprises of Board of Directors and executives in which Board of Directors comes from independent directors, non-executive directors and executive directors. Independent directors represent one third of board of directors. The Board of Directors has five sub-committees which are the Audit and Corporate Governance Committee, Executive Committee, Nomination and Remuneration Committee, Risk management Committee and Managements Team. The Board of Directors determines that the Company’s Chairman, Chairman of audit committee and all directors in Audit and Corporate Governance Committee are independent directors. 1) Board of Directors As of December 31, 2012, board of directors comprised of nine persons as follow;

Name

Position

Gunkul Dhumrongpiyawut Chairman of the Board 1. Mr. 1)

2. Mr. Sathaporn Kotheeranurak 3. Pol. Maj. Gen. Visit Sukarasep 4. Mr. Sombat Santijaree 2) 5. Miss Sopacha Dhumrongpiyawut

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Smart Energy in Action

Independent Directors Chairman of the Audit and Corporate Governance Committee Member of the Risk Management Committee Independent Directors Chairman of the Nomination and Remuneration Committee Member of the Audit and Corporate Governance Committee Independent Directors Member of the Audit and Corporate Governance Committee Director Chief Executive Officer Chairman of the Risk Management Committee


Name

6. Mr. Somboon Aueatchasai 7. Miss Naruechon Dhumrongpiyawut 8. Mr. Chaloempon Sricharoen 9. Mrs. Areewan Roonpraphan

Position Director Executive Director Managing Director Secretary of board of directors Director Executive Director Director Executive Director Director Executive Director

Mr. Gunkul Dhumrongpiyawut was appointed a Chairman of the Board from Board of Directors meeting No.7/2012 on November 9, 2012 replace Dr. Ekaporn Rakkwamsuk has resignation on October 1, 2012 2) Mr. Sombat Sarntijaree was appointed a director from Board of Directors meeting No.7/2012 on November 9, 2012 1)

Authorized Directors Authorized director who can sign documents that will have impact to the Company is Mr. Gunkul Dhumrongpiyawut or Miss Sopacha Dhumrongpiyawut or Miss Naruechon Dhumrongpiyawut gives signature together with another two signatures from Mr. Somboon Aueatchasai or Mrs. Areewan Roonpraphan or Mr. Chaloempon Sricharoen and then gets the Company’s stamp. Or Mrs.Areewan Roonpraphan, Mr.Chaloempon Sricharoen and Mr. Somboon Aueatchasai all sign their names and get the Company’s stamp. Scope of Authority of Board of Directors 1) Supervise and determine key policies related to core operations, finances, fund raisings, capital management and risk management 2) Consider investment regarding investment budget for investment projects and monitor those projects to be in line as planned 3) Monitor the Company’s operations to meet or to exceed its goal and set solutions to solve problems if any 4) Report general and financial information to shareholders, stakeholders and general investors properly, timely and legally. Gunkul Engineering Public Company Limited

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5) Acknowledge audited reports from audit committee and or internal control units including accounting audit and advisors and propose solutions if there is any problem 6) Review the Company’s internal control and risk management 7) Prepare process to select top management in accordance with succession plan 8) Appoint audit committee and give audit committee the scope of power 9) Appoint director(s) to be as the Company’s representative from board of directors. Representative, however, has no power to approve transactions that representative or person that may have conflict (“person that may have conflict” is the same definition as mentioned in Stock Exchange Commission regulation) may have conflict of interest with the Company or the Company’s subsidiaries. This is an exception for transaction that gets approval from shareholders’ meeting. Director or person who may have conflict of interest who approves this transaction will not have right to vote on following subjects; • • •

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Subject that is required approval from shareholders’ meeting Transaction that is required by law to get approval from shareholders’ meeting Moreover, the following transactions are needed to have approval from board of directors’ meeting and shareholders’ meeting by gaining at least three forth of total voting rights in the meeting. - Sell or transfer whole or partial business to other persons - Do, correct or stop contract to rent the whole or partial business to others. Assign other people to manage business or to merge business with others with aim to share profit and loss - Issue new shares to creditors on the debt-to-equity plan - Reduce registered capital by reducing number of shares or reducing par value - Capital increase, capital reduction, debenture issuance, acquisition or divestment - Other subjects that are required by law

Smart Energy in Action


2) The Audit and Corporate Governance Committee 1) As of December 31, 2012, the Audit and Corporate Governance Committee comprised of three persons as follow;

Name

1. Mr. Sataporn Kotheeranurak 2) 2. Pol. Maj. Gen. Visit Sukarasep 3. Mr. Sombat Sarntijaree

Position Chairman of the Audit and Corporate Governance Committee Member of the Audit and Corporate Governance Committee Member of the Audit and Corporate Governance Committee

the Board of Directors No.1/2013 On January 15, 2013 to change the name. “The Audit and Corporate Governance Committee” to “The Audit Committee” and appointed “The Corporate Governance Committee” for more additional committee. 2) Audit Committee who has knowledge and experience in auditing the Company’s financial statements 1)

Scope of Authority of the Audit and Corporate Governance Committee 1) Review and disclose financial statements by coordinating with external auditor and company management with aim to report financial reports on quarterly and yearly basis 2) Review internal control and internal audit systems to make it more efficiently and effectively by reviewing with internal and external auditors (if any) and consider the independence of internal audit department or other departments which involves in internal audit 3) Review company operations to be in tandem with rules and regulations from Stock Exchange of Thailand or related agencies 4) Select and appoint company auditor and pay proper compensation to auditor based on reliability, resources required and experience and attend meeting with auditor without having management team participation for at least once a year 5) Consider related transactions or transactions that may have conflict of interest to comply with rules and regulations set by Stock Exchange of Thailand to make sure that those transactions are reasonable and best to the Company 6) Report activities of audit committee by disclosing on company annual report in which this report is signed by chairman of audit committee. Gunkul Engineering Public Company Limited

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7) 8) 9) 10) 11) 12) 13) 14)

34

This report includes; • Opinions on process of conducting and disclosing company financial statements on reliability and accuracy basis • Opinions on company internal control system • Opinions on practices complied with Stock Exchange of Thailand or related rules • Reasons on proper auditor • Opinions on transactions that may have conflict of interest • Number of audit committee meetings and number of meeting participations of each audit director • Opinions or overall notices that audit committee gets from charter operations • Other reports that audit committee thinks that shareholders and general investors should know under scope of duty and responsibility assigned by board of directors Proposed guidelines for good corporate governance to the Board of Directors. To advise the Board on matters of corporate governance as well. The operations of the Board and management to the principles of good corporate governance. Review of the principles of good corporate governance by comparison with the practice of international practice and present to the Board of Directors. The corporate governance policies of the company for working group. The policies and practices with Corporate Social Responsibility To monitor the implementation of the CSR and report to the Board of Directors. To introduce to the Board concerning the good corporate governance. Implement other jobs assigned by board of directors under supervision of audit committee like reviewing financial management and risk management policy, reviewing business code of conduct, reviewing together with company management on significant reports that are needed to report to public as per required by law i.e. management analysis report.

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To make great efficiency of audit committee, audit committee may search for independent opinions from other advisors (if necessity) and company will support such expense. Qualifications of Audit Committee and Independent Directors 1. Hold shares of less than 1% of total shares that have voting right of the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest. In this case, it counts shares held by persons who have relationship with independent directors too. 2. Not or used to be company director who has management authority, employee, salary-based advisor or authorized person who manage the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest. An exception comes when they are out of that position for at least two years before taking this position. 3. Not a person who has blood relationship or law relationship in form of father/mother, spouse, brother/sister, son/daughter including spouse of child of management, major shareholder, authorized person or person who is nominee to be management or authorized person of the Company or subsidiary 4. Not or used to have business relationship with the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest that may have impact to independent decision. Not or used to be major shareholder, director or management of person who has business relationship with the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest. An exception comes when they are out of that position for at least two years before taking this position. 5. Not or used to be auditor of the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest. And not or used to major shareholder, director, management or partner of auditing firm whose auditor is hired as auditor of parent company, subsidiaries, related companies or companies that may have conflict of interest. An exception comes when they are out of that position for at least two years before taking this position. Gunkul Engineering Public Company Limited

35


6. Not or used to be professional service provider including legal advisor or financial advisor who gets compensation of over two million baht a year from the Company, parent company, subsidiaries, related companies or companies that may have conflict of interest. In case that professional service provider is juristic person, it covers major shareholder, director, management or partner of professional service firm too. An exception comes when they are out of that position for at least two years before taking this position. 7. Not a director who gets appointment to be representative for the Company, major shareholder or shareholder who has relationship with major shareholder 8. Not to do similar business with aim to compete perfectly with the Company or subsidiaries. Not be partner, director, employee, salarybased advisor or shareholder (having more than 1% of voting right) of company who has similar business and competes with each other 9. Not have any character which may have impact to give independent opinions on company’s operations 3) Executive Committee As of December 31, 2012, executive committee comprised of five persons as follow;

Name

1. Miss Sopacha Dhumrongpiyawut 1) 2. Mr. Somboon Aueatchasai 3. Miss Naruechon Dhumrongpiyawut 4. Mr. Chaloempon Sricharoen 5. Mrs. Areewan Roonpraphan

Position Chief Executive Officer Executive Director Executive Director Executive Director Executive Director

Mr. Gunkul Dhumrongpiyawut has resignation of Chief Executive Officer On November 8, 2012 by Ms. Sopacha Dhumrongpiyawut appointment Chief Executive Officer from Board of Director No.7/2012 on November 8, 2012

1)

Scope of authority of executive committee

1) Have authority to make decision on the Company’s key operations by setting scope, type, size, objective and policy of business as well as 36

Smart Energy in Action


2) 3)

4) 5) 6) 7)

supervising overall operations, production, customer relationship and responsibility to board of directors Consider investment expansion and fixed asset acquisition and then propose this to board of directors Have authority to act and show as company representative to outside people in related activities and having benefit to company Consider fund raising to propose to board of directors Approve the appointment of necessary advisors who can help company Do general management Approve plan of each department and approve request of each department that is beyond department authority

Regarding assignment of authority and responsibility, person who get such authority will not have authority to approve transaction that such person or related person that may have conflict of interest (“person that may have conflict of interest� is defined by Stock Exchange of Thailand) to company or subsidiaries. Approval of such transaction is needed to propose to meeting of board of directors and/or meeting of shareholders. An exception comes from transaction regarding normal operations of company in line with rules and regulations set by board of director. 4) The Nomination and Remuneration Committee As of December 31, 2012, the Nomination and Remuneration Committee comprised of four persons as follow;

Name

1. Pol. Maj. Gen. Visit Sukarasep 2. Mr. Decha Chooligorn 3. Mr. Charan Lerththeerapoj 4. Mrs. Somluk Kanuenghet

Position Chairman of the Nomination and Remuneration Committee Member of the Nomination and Remuneration Committee Member of the Nomination and Remuneration Committee Member of the Nomination and Remuneration Committee & Secretary

Remark Board of Directors Meeting No. 7/2012 on November 9, 2012 with the appointment of the Nomination and Remuneration Committee set.

Gunkul Engineering Public Company Limited

37


Scope of Authority of the Nomination and Remuneration Committee 1) Propose remuneration plan and method to pay remuneration & benefit to board of directors and sub-committees appointed by board of directors 2) Consider comments regarding remuneration and benefit payment based on duty and responsibility of president and management executives and consider criteria and evaluation to determine annual compensation 3) Review structure and criteria of remuneration payment based on 1) and 2) to make it fit with responsibility, company operations and market environment 4) Consider overall budget regarding salary hike, bonus and other benefits of employees 5) Review and propose scope of authority, duty and responsibility of remuneration committee to make it fit with current circumstance 6) Prepare report to board of directors for at least once a year 7) Operate other jobs assigned by board of directors In order to make tasks done by remuneration committee efficient, remuneration committee should invite management department or head of each department to attend meeting so remuneration committee can declare or send related documents. Remuneration committee may hire advisor and expense belongs to company. 5) The Risk Management Committee As of December 31, 2012, risk management committee comprised of four persons as follow;

Name

1. Miss Sopacha 2. Mr. Sathaporn 3. AVM. Dr. Pian 4. Mr. Papangkorn

Dhumrongpiyawut Kotheeranurak Torarong Sakulvorakarn

Position Chairman of the Risk Management Committee Director of the Risk Management Committee Director of the Risk Management Committee Director of the Risk Management Committee & Secretary

Remark Board of Directors Meeting No. 7/2012 on November 9, 2012 with the appointment of the Risk Management Committee set.

38

Smart Energy in Action


Scope of Authority of Risk Management Committee 1) Set policy and scope of risk management framework, set roles and responsibility and participate to set company goals 2) Supervise and support risk management to make it successful on enterprise wide risk management� and increase level of risk awareness of each factor into consideration in resource allocation and process management 3) Consider key risks and manage them efficiently and effectively, promote capacity in enterprise wide risk management and risk management technique and combine risk management with company business plan and other management activities 4) Prepare risk management language to be the same language used in organization and measure chance to happen, impact and type of risk to share 5) Give convenience to department managers to develop new reporting rules including upper and lower end on both qualitative and quantitative analysis and supervise reporting process 6) Report to executive head on progress of risk management and outliers and propose necessary suggestions 6) Executives As of December 31, 2012, there were 11 executives as follow;

Name

1. Miss Sopacha Dhumrongpiyawut 2. Mr. Somboon Aueatchasai 3. Mrs. Areewan Roonpraphan 4. Mrs. Somluk Kanunghet 5. Mr. Papangkorn Sakulvorakarn 6. Mr. Worathep Luengsirapornchai 7. Mr. Thamrong Chankraithong 8. Mr. Phongsakorn Damnoen 9. Mr. Phudis Traivilassakul 10. Miss Naruechon Dhumrongpiyawut 11. Miss Suttirat Tangnorakul

Position Chief Executive Officer Managing Director Senior Vice President, Factory Senior Vice President, The Office of Managing Director Senior Vice President, Business Support Senior Vice President, Internal Audit Senior Vice President, Sales and Marketing Senior Vice President, Business Development & Special Project Vice President, Logistics Vice President, Strategic & Investment Manager, Accounting Department

Gunkul Engineering Public Company Limited

39


Scope of Authority of Executive Management 1) Control and supervise operations/general management 2) Do as per policy set to meet budget approved by board of directors or executive commitee 3) Have authority to approve disbursement budget for acquiring assets and services that will have benefit to company in which such authority is for general transaction on trade with limited budget set by board of directors 4) Have authority to set order, rule, announcement and memorandum to make things done accordingly to company policy, benefit and rules & regulations 5) Have authority to do and to show as company representative to outside persons to handle task that is useful to company 6) Approve appointment of necessary advisors 7) Get assignment to manage company to be in line goal, rules & regulations, policy, announcement, resolutions from shareholders’ meeting and/or resolutions from board of directors’ meeting Regarding authority assignment to managing director and other authority assignment done by managing director, this does not include authority and/or authority assignment to approve transaction that managing director or related persons may have conflict of interest (based on rules from Stock Exchange of Thailand) to company and/or subsidiaries. Above transaction is needed to propose to board of directors’ meeting and/or shareholders’ meeting for consideration and approval to be in line with rules and regulations. An exception comes from general trade transaction set by company’s policy and criteria. Financial Budget Approval Board of directors has power to approve financial budget as follow; 1. Executive committee has power to approve financial budget to purchase finished goods, raw materials and services and has power to sign contract with trade and financial obligations worth at most 300.00 million baht. Executive committee also has power to approve financial budget worth at most 200.00 million baht for acquiring and transferring of assets. 40

Smart Energy in Action


2. President of executive committee has power to approve financial budget to purchase finished goods, raw materials and services and has power to sign contract with trade and financial obligations worth at most 200.00 million baht. President also has power to approve financial budget worth at most 100.00 million baht for acquiring and transferring of assets. 3. Managing director has power to approve financial budget to purchase finished goods, raw materials and services and has power to sign contract with trade obligation worth at most 100.00 million baht and with financial obligation worth at most 50.00 million baht. Managing director has power to approve financial budget worth at most 20.00 million baht for acquiring and transferring of assets. Company Secretary Board of directors’ meeting (13/2551) dated October 27, 2008, approved appointment of Miss Chantra Jongjamareeseethong as Company Secretary, effective since October 27, 2008. Such person has education, knowledge, experience and responsibility to do secretary job with aim to make things done in line with rules & regulations and corporate governance. Scope of authority of company secretary 1. Coordinate to make meetings of company and shareholders in tandem with corporate governance and rules & regulations like Stock Exchange of Thailand Act and Public Company Act Por Sor 2535. 2. Respond to information disclosure of company to comply with rules from Stock Exchange of Thailand, Stock Exchange Commission and other related authorities 3. Give basic advice to board of directors and management executives on things to comply with rules from Stock Exchange of Thailand, Stock Exchange Commission and other related authorities 4. Prepare and keep significant documents like director register, board of directors’ meeting letter, board of directors’ report, company’s annual report, shareholders’ meeting letter, shareholders’ meeting report and conflict of interest report by directors and executives Gunkul Engineering Public Company Limited

41


5. Monitor board of directors’ activities to make things done effectively, efficiently and best to company 6. Coordinate to make resolutions from board of directors and shareholders’ meeting fulfilled 7. Do other jobs assigned by board of directors In addition, with focus on corporate governance, the Company sent Miss Chantra Jongjamareeseethong to take Company Secretary Program (28/2008) and Effective Minute Taking-EMT Course (12/2008) held by Thai Institute of Directors (IOD).

9.3 Director Search Though the Company doesn’t have director search committee, the company’s board of directors handles that job by using following criteria, knowledge, capability, experience, vision, creditability and perfect qualification (no ban manner), to select director and then propose to shareholders’ meeting for approval. The Company sets key criteria for director search as follow; 1. Board of directors comprises of at least five persons in which at least half of that must have residence in Thailand and directors must have qualifications as law said 2. Director search by shareholders’ meeting is based on majority vote as follow; 2.1 One shareholder has voting right equivalent to one share, one vote 2.2 Shareholder votes director on one-on-one basis 2.3 Director search is based on highest-scored ranking. In the case that qualified persons get same scores and exceed number of directors required, chairman of meeting has final decision. 3. In every annual shareholder meeting, one third of directors are required to resign. If total directors can’t be dividend by three, use close amount of directors to resign. Directors who are required to resign in the first year and second year use lucky draw technique. For the following years after that, directors who are in position for the longest period have to resign. However, directors who resign may be selected again. 42

Smart Energy in Action


4. Director has right to get compensation from company in term of reward, meeting fee, pension fund, bonus or other compensations as defined by rules or resolution from shareholders’ meeting either in term of fixed amount or general concept. Moreover, director also gets allowance and fringe benefit on top of normal benefits like salary and bonus as employee. 5. Director who wants to resign sends resignation form to company. It will be effective once company accepts. Director may give resignation notice to register person. 6. In case that director position is vacant due to extra reasons (not term expired), board of directors can select qualified person with no banned manner as replacement director in next meeting of board of directors, except director’s term has less than two months left. Such replacement director will be in the position for time equivalent to remaining term of previous director. This resolution from board of director requires at least three fourth of remaining directors. 7. If shareholders want director to resign, it needs to get vote from shareholders’ meeting of at least three fourth of total shareholders attending the meeting and total voting right. 8. Board of directors select a director to be chairman, while there will be one or more to serve as deputy chairman. Selection of Audit Committee/Independent Directors

Board of directors or shareholders’ meeting will select persons to be a

committee in selecting audit committee in which such committee must have at least three persons from audit committee by selecting from independent directors. Audit committee has tow-year term but may get renewal from board of directors or shareholders’ meeting. Among audit committee, there is at least one person who has knowledge and experience in financial & accounting background, so he/she can do financial statement review.

Gunkul Engineering Public Company Limited

43


Selection of Executive Committee Board of directors appoints executive committee in which executive committee comprises of three at least and five at most by selecting from directors or employees or capable persons who are no audit committee. Executive committee has responsibility to manage company as per assignment from board of directors. Executive committee directly reports to board of directors.

9.4 Remuneration 9.4.1 Cash Remuneration (1) Remuneration for Directors and Meeting The Company has clear and transparent policy on remuneration for directors. Remuneration committee will consider and propose directors’ remuneration to board of directors and then to shareholders’ meeting for approval. Remuneration paid here is competitive compared to that with other listed companies in energy sector. Director who gets assignment to be in audit committee and executive committee will get more compensations as more works loaded. Remuneration for directors and sub-committee comprises of meeting fee and annual compensation details are as follow;

44

Smart Energy in Action


Remuneration Audit and Nomination Corporate and Board of Governance Executive Risk Remuneration Position Directors Committee Committee Management Committee 1. Chairman 2. Member 3. Secretary of Committee

20,000 17,000 5,000

20,000 17,000 5,000

7,500 5,000 -

7,500 5,000 3,000

7,500 5,000 3,000

Remark : Incase the independent directors have been appointed as Chairman of the Board. To be eligible for payment of meeting fee only one location in each of the top position.

Annual Compensation Audit and Nomination Corporate and Board of Governance Executive Risk Remuneration Position Directors Committee Committee Management Committee 1. Chairman 2. Member 3. Secretary of Committee 4. Company Secretary

240,000 200,000 50,000 100,000

240,000 200,000 50,000 -

500,000 200,000 - -

100,000 50,000 25,000 -

100,000 50,000 25,000 -

Remark : Incase the independent directors have been appointed as Chairman of the Board. To be eligible for payment of annual compensation only one location in each of the top position.

Board of Directors and sub-committees have scheduled meetings throughout the year, usually on a quarterly and and special meetings as necessary. The agenda setting clear and sent notice of the meeting and the agenda for the Board of Directors at least seven days, and the meeting prior to the Board of Directors have the adequate information before the meeting. Chairman made responsible for allocating sufficient time to present the document and information management is an important issue for discussion. The quarterly meeting the majority also attending, unless it is an urgent mission.

Gunkul Engineering Public Company Limited

45


46

Smart Energy in Action

Remuneration for 2011 2) (meeting fee and annual compensation)

Remuneration for 2012 2) (meeting fee and annual compensation)

-

12

5 Ms Sopacha Dhumrongpiyawut 5) 7) 27 October 2008

27 October 2008

9 November 2012

27 October 2008

9 November 2012

9 November 2012

9 Mrs. Areewan Roonpraphan

10 AVM.Dr.Pian Torarong 5) 6)

11 Mr. Papangkorn Sakulvorakarn

12 Mr. Decha Chooligorn 5) 6)

13 Mr. Charan

14 Mrs. Somluk Kanuenghet

27 October 2008

27 October 2008

8 Mr. Chaloempon Sricharoen

Lerththeerapoj 5) 6)

7 May 2010

27 October 2008

6 Mr. Somboon Aueatchasai 5) 7)

7 Ms Naruechon Dhumrongpiyawut

12

-

-

12

-

12

12

12

12

12

16 March 2009

9 November 2012

4 Mr. Sombat

Santijaree 5) 6)

3 Pol. Maj. Gen. Visit Sukarasep 5) 6)

12

12

27 October 2008

Dhumrongpiyawut 5) 7) 27 October 2008

2 Mr. Sathaporn Kotheeranurak 5) 6)

1 Mr. Gunkul

12

2

2

12

2

12

12

12

12

12

2

12

12

12

8/8

8/8

8/8

8/8

8/8

-

8/8

8/8

8/8

9/9

9/9

9/9

9/9

9/9

3/3

9/9

9/9

9/9

-

4/4

4/4

2/2

5/5

5/5

17/17

17/17

17/17

17/17

17/17

17/17

16/16

16/16

16/16

16/16

16/16

16/16

2/2

-

2/2

2/2

-

2/2

2/2

1/1

1/1

2/2

1/1

1/1

2/2

-

-

2/2

-

2/2

2/2

1/1

1/1

-

1/1

-

- 119,000.00 367,794.00 598,636.00 966,430.00

119,000.00

119,000.00

119,000.00

154,000.00

119,000.00

-

79,962.00

62,962.00 142,924.00

-

-

-

-

-

-

-

-

-

-

83,000.00

12,241.00

12,241.00

83,000.00

12,241.00

83,000.00

12,241.00

12,241.00

83,000.00

12,241.00

- 119,000.00 353,000.00 200,000.00 553,000.00

- 119,000.00 353,000.00 200,000.00 553,000.00

- 119,000.00 353,000.00 200,000.00 553,000.00

- 154,000.00 448,000.00 242,760.00 690,760.00

- 119,000.00 353,000.00 350,945.00 703,945.00

336,000.00 268,000.00 604,000.00 353,000.00 306,981.00 659,981.00

336,000.00 268,000.00 604,000.00 353,000.00 309,035.00 662,035.00

119,000.00

Attending meetings of the various committees Audit and Corporate Nomination and Number of Board of Governance Executive Risk Remuneration 1) months served. Directors Committee Committee Management Committee Start 2011 (8 2012 (9 2011 (4 2012 (5 2011 (17 2012 (16 2011 (2 201 (2 2011 2012 (2 Board of Sub- Total Board of Sub- Total No. Name position 2011 2012 (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) Directors 3) committee 4) Remuneration Directors 3) committee 4) Remuneration Board of Directors

For 2011 and 2012 the total remuneration 2,677,000.00 Bath and 6,356,078.00 Bath respectively, the details of the remuneration and the attendance of each director. Summarized as follows.


Gunkul Engineering Public Company Limited

47

Remuneration for 2011 2) (meeting fee and annual compensation)

Remuneration for 2012 2) (meeting fee and annual compensation)

2) 3) 4)

10

6/6

4/4

3/3

2/2

1/1

2/2

2/2

1/1

1/1

- -

- -

- -

85,520.00 42,760.00

85,520.00 42,760.00

1,821,000.00 856,000.00 2,677,000.00 3,313,756.00 3,042,322.00 6,356,078.00

-

-

400,000.00 320,000.00 720,000.00 300,000.00 240,000.00 540,000.00

In 2012, as a resolution of the Board of Directors No.1/2013 on January 15, 2013, to change the name of “The Audit and Corporate Governance Committee” to “The Audit Committee” and also appointed one additional committee as “The Corporate Governance Committee”. As the Remuneration will be paid one time per year, therefore, for remuneration of 2012 will be paid in the year of 2013 and for remuneration of 2013 will be paid in 2014. To be the remuneration of meeting fee and annual compensation that paid for the Board of Directors Committee, however, the 6 executive directors who as directors of the Board have intention to not get the 2011 annual compensation in the total amount of THB 1,250,000.00. To be the remuneration of meeting fee and annual compensation that paid for the Member of the sub-committees, however, the 9 executive directors who as director of the Committee have intention to not get the 2011 meeting fee and annual compensation in the total amount of THB 2,774,500 and also not get the 2012 meeting fee in the total amount of THB 604,500.00 The List of directors who are appointed by the Board of Directors No. 7/2012 on November 9, 2012 as details: - Mr.Gunkul Dhumrongpiyawut Take a position of Chairman of the Board of Directors - Mr. Sataporn Kotheeranurak Take a position of Chairman of the Audit and Corporate Governance Committee Member of the Risk Management Committee - Pol. Maj. Gen. Visit Sukarasep Take a position of Chairman of the Nomination and Remuneration Committee Member of the Audit and Corporate Governance Committee - Mr. Sombat Santijaree Take a position of Independent Directors (In the year 2013, has appointed to be Chairman of the Corporate Governance Committee) - Ms. Sopacha Dhumrongpiyawut Take a position of Chief Executive Officer / Chairman of the Risk Management Committee - Mr. Somboon Aueatchasai Take a position of Managing Director - AVM.Dr.Pian Totarong Take a position of Member of the Risk Management Committee - Mr. Decha Chooligorn Take a position of Member of the Nomination and Remuneration Committee - Mr. Charan Lerththeerapoj Take a position of Member of the Nomination and Remuneration Committee

12

12

8/8

5) Remark : * - As the resolution of the Board of Directors No. 1/2013 on January 15, 2013, Mr. Sombat Sarntijaree has been appointed to Chairman of the Corporate Governance Committee. - As resolution of the Board of Directors No. 2/2013 on 25 February 2013, Mr. Phongthep Thitapan and Mr Somchai Trairatanapirom have been appointed to Member of Corporate Governance committee. - The appointment of the Chairman and member of all committees including key executive positions has been passed a resolution for approval by the Remuneration and Nomination Committee prior to submission to the Board of Directors’ consideration and appointment. 6) To be Independent Director / Member of the Committee who not related or as any executive position in the Company. 7) List of the directors who resigned during the year 2012 - Dr. Ekaporn Rakkwamsuk Resigned from Director/Chairman of the Board and Member of the Audit committee/Chairman of the Audit committee on October 1, 2012 - Mr. Gunkul Dhumrongpiyawut Resigned from Member/Chairman of the Risk Management and Member/Chairman of The Nomination and Remuneration Committee on November 8, 2012 - Ms Sopacha Dhumrongpiyawut Resigned from Member of The Nomination and Remuneration Committee, on November 8, 2012 - Mr. Somboon Aueatchasai Resigned from Member of the Risk Management on November 8, 2012 - Mr. Thamrong Chankraithong Resigned from Member of the Risk Management and Member of The Nomination and Remuneration Committee, on November 8, 2012 - Mr. Phongsakorn Damnoen Resigned from Member of The Nomination and Remuneration Committee, on November 8, 2012

1)

3 Mr. Phongsakorn Damnoen 7)

25 May 2009

11 February 2011

2 Mr. Thamrong Chankraithong 7) 10

9

27 October 2008

12

Directors who resigned during the year 2554 - 2555 has been paid.

1 Dr. Ekaporn Rakkwamsuk 7)

Attending meetings of the various committees Audit and Corporate Nomination and Number of Board of Governance Executive Risk Remuneration months served. Directors Committee 1) Committee Management Committee Start 2011 (8 2012 (9 2011 (4 2012 (5 2011 (17 2012 (16 2011 (2 201 (2 2011 2012 (2 Board of Sub- Total Board of Sub- Total No. Name position 2011 2012 (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) (Time/Year) Directors 3) committee 4) Remuneration Directors 3) committee 4) Remuneration


(2) Remuneration for Management Executive In 2011, the Company had 11 executives, 4 were executives and directors and 7 were executives only. In 2012, the Company had 11 executives, 4 were executives and directors and 7 were executives only. Remuneration payment is as follow; (Unit : Baht) Remuneration to management

Executives and Directors 2011

Executive Only

2012

2011

2012

No. of No. of No. of No. of persons Remuneration persons Remuneration persons Remuneration persons Remuneration

salary Total Total bonus Total

4 4 4

8,605,955 1,075,838 9,681,793

4 4 4

7,676.133 2,533,940 15,727,887

7 7 7

7,100,770 1,561,029 8,661,799

7 7 7

8,051,754 1,319,931 3,853,871

9.4.2 Non-cash remuneration - None -

9.5 Corporate Governance Board of directors focuses on systematic management and corporate governance and uses this as guideline to run business. Board of directors approved corporate governance policy in the board of directors’ meeting (13/ 2551) on October 27, 2008, as the latest. The Company has also provided to have self Appraisal by the Board and CEO & Managing Director’s performand appraisal by the Board. Details of operations under corporate governance principle in 2011 based on corporate governance principle of Stock Exchange of Thailand for listed companies in 2006 are as follow;

48

Smart Energy in Action


1. Shareholder Right The Company has policy to support and promote shareholders to use their right as follow; 1. Give date, time, place, meeting agenda and other related data to shareholders in advance, so they have time to study. Company will send letter of shareholders’ meeting together with related documents to shareholders for at least seven days or fourteen days in advance before meeting takes place. Company also publishes this on newspaper for at least three days in advance. Moreover, it posts information on company’s website, so shareholders can reach and understand. 2. Send proxy together with letter of meeting to support voting right in case shareholders are not available to be at the meeting by themselves. 3. Give shareholders a chance to show opinions and questions in ahead of the meeting 4. Give shareholders a chance to show opinions and questions on the meeting date 5. Require at least half of board of directors to attend shareholders’ meeting, so they can answer questions raised by shareholders. At least one audit committee is required to attend the meeting too. 6. Require chairman of the meeting to explain on voting procedure in which shareholders who have conflict of interest will not have no voting right on that subject. 7. Prepare meeting report with full information involved including questions from shareholders and answers from directors 8. Publish meeting report via electronic media of Stock Exchange of Thailand and company’s website, so shareholders can check without having official report on hands. In 2012, the Company held general shareholders’ meeting for the year 2012 dated April 10, 2012, at Siam City Hotel at Kamolthip Ballroom, 2nd Fl, 477 Si Ayuthaya Road, Bangkok 10400. There were every director Gunkul Engineering Public Company Limited

49


of committee, Director, Executive, Secretary of every committee and secretary of company Auditor representative of financial advisor and representative of Lawyer participate total 28 directors and management executives participating to explain meeting agenda and answer questions from shareholders. The Company assigned Thailand Securities Depository as registrar to send letter of shareholders meeting and related documents to shareholders for at least 20 days in advance before meeting takes place. The Company also published letter of shareholders meeting and related documents via company’s website, www.gunkul.com, for at least 23 days in advance, so shareholders can reach related information regarding shareholders’ meeting as convenient and as quick as possible. For registering and voting, the Company uses barcode system and provides revenue stamp for shareholders to send proxy to company with aim to make it fast and convenient to shareholders. In the meeting, the Company explains voting criteria before meeting starts and gives shareholders opportunity to express their opinions and raise questions. In addition, the Company also welcomes questions from shareholders sent in ahead of the shareholders meeting for the year 2013 during October 29, 2011 to January 14, 2013. However, there were no questions raised. 2. Equivalent Treatment among Shareholders The Company has policy to create equivalent among shareholders both executive shareholders and non-executive ones as well as minority shareholders and foreign shareholders as follow; 1. Publish information regarding shareholders meeting to keep all shareholders informed equivalently and not add special agenda without any notice 2. Give shareholders who can’t attend meeting by themselves to give proxy to others as representative 3. Give chance to all shareholders to propose opinions and to raise questions in ahead of and during the meeting 50

Smart Energy in Action


4. Give chance to shareholders to vote director on one-on-one basis 5. Require shareholders who are directors or executives to disclose information that may have conflict of interest and those shareholders have no right to vote on that subject 6. Tell board of directors and management to know their task on reporting a change in holding of securities to Stock Exchange Committee based on article 59 of Securities and Stock Exchange of Thailand Act Por Sor 2535 7. Require board of directors, executives or employees who have inside information not to disclose such information to public and are banned for securities trading of the Company’s stocks for one month before financial statements published 3. Stakeholders Role The Company has policy to promote cooperation between company and all stakeholders including shareholders, bankers, customers, trade partners, employees, and surrounding communities with aim to encourage the Company’s operations and to create long-term sustainable growth. Besides realizing the importance of right of stakeholders by law, the Company also has policy to take care all stakeholders equivalently as follow; Employee : Company treats employees equally, gives them proper compensations and creates quality working environment. Partner : Company treats trade partners fairly and in line with trade contract and has policy to create and develop relationship with trade partners continuously. Customer : Company has responsibility to customers by maintaining quality and standard of goods and services as well as reacting to customers’ need perfectly and completely to maximize customer satisfaction in the long run. Competitor : Company operates business along with fair competition and develops market to grow for mutual benefit of industry.

Gunkul Engineering Public Company Limited

51


Creditor : Company complies with contract condition and gives information to creditors as per request. Society : Company has responsibility to monitor its operations not to hurt environment and society and complies with rules and regulations. Company also has program on corporate social responsibility (CSR) by supporting creative activities continuously and allocating budget to do CSR with focus activities regarding education, environment and youth. In 2011, the Company donated things to improve learning skill of youth on the Children Day, awarded scholarship to youth and employees’ children, supported White Heart Project of Wat Prabaht Nampuu Foundation and helped victims from natural disasters like earth quake, flood etc. In addition, company encourages employees for all levels to have social responsibility with aim to build good corporate culture forever. To make sure that all stakeholders are equally protected and treated, the Company provides communication channels via company’s website www.gunkul.com, so shareholders and stakeholders have chance to express their opinions and to complain directly to company’s board of directors in case of unfair treatment or having troubles with company. In addition, the Company provides employees channels to consult or inform directly to Executive Office when it finds suspect actions that are illegal or break “business code of conduct” that may have impact to employees, stakeholders and company itself. Executive Office will find out fact and report to internal audit committee and audit committee for further consideration. This data informed will be kept secret. 4. Leadership and Vision Board of directors recommends company to have vision, mission, goal, policy, operational direction, long-term strategy and plan & annual budget by assigning executive management to present and board of directors to comment and discuss to get common agreement before 52

Smart Energy in Action


approval. Board of directors appoints president of executives to develop and implement business strategy. Role, duty and responsibility of board of directors, sub-committee and executive committee are needed to be identified.

5. Conflict of Interest

The Company is serious on banning directors, executives and employees to use position to find benefit, so it includes this subject into company’s business code of conduct. Directors, executives and employees are required not to do related transaction that may create conflict of interest to company. In case it is the must to do that transaction, pricing and conditions have to be the same as that done with outside person. Directors or employees who have benefit in that project must not have right to approve. Related transactions under Stock Exchange of Thailand Act are required to strictly follow the rules on principle, method and information disclosure. In addition, board of directors also bans not to use inside information to find its own benefit and to compete business with company. It also requires not to use inside information for securities trading or not to tell others for insider trading. In case that executives or employees participate in special task in which information is a secret and may have impact to company share price, such executives or employees are needed to sign confidentiality agreement with company until company discloses information to Stock Exchange of Thailand (SET) and Stock Exchange Committee (SEC). 6. Business Code of Conduct Apart from corporate governance, board of directors has policy to operate business with aim to maximize benefit of shareholders by setting up goal and procedures to meet that goal. The Company provides written code of conduct in which board of directors agreed and approved the latest code of conduct in shareholders’ meeting (13/2551) dated October 27, 2008. In code of conduct, it comprises of company goal, Gunkul Engineering Public Company Limited

53


vision, mission, ideology, corporate value, corporate governance policy and regulation with aim to provide clarity and convenience to directors, executives and employees to understand company standard and direction in which involves all stakeholders like employees, shareholders, customers, partners, creditors, competitors and society. Directors, executives and all employees have to acknowledge, understand and implement the Company’s policy and regulations as mentioned in code of conduct. Regular meeting, public relation and creative activity are required to make employees informed and understood the importance of business code of conduct. Apart from business code of conduct, the Company also has “Corporate Shared Values” project to create shared corporate culture. 7. Position Consolidation or Power Split Board of directors sets that chairman of board is not the same person as chairman of executives by having divided role, authority and responsibility with aim to create balance between management and corporate governance. 8. Directors and Executives Remunerations Board of directors assigns remuneration committee to review structure of remuneration system and proper compensation to management executives based on task, duty, responsibility and performance. Such remuneration should be competitive when compares to industry and be able to create motivation to work effectively. Directors’ remuneration comprises of two parts, annual compensation and meeting fee. Remuneration payment to directors is required approval from shareholders’ meeting. The Remunerations details has been mentional on items 9-4

54

Smart Energy in Action


9. Board of Directors’ Meeting Board of directors requires to have meeting at least once a quarter, while extra meeting will be held if necessary. In the meeting, agenda have to be clear and related documents have to be provided and sent to directors for at least seven days in ahead of meeting, so directors have time to study. In case there is new agenda to add after documents sent, it can do only on emergency and is needed to get approval from chairman of board of directors. All directors have chance to discuss and comment openly and chairman of board is responsible to make meeting conclusion. In case director has conflict of interest in that subject, such director has to walk out from the meeting. Meeting report is in written form. After getting acknowledgement from meeting, all documents require acknowledgement from chairman of board and secretary of board. There are two sets of meeting documents, original one and copy one (so directors and related persons can use it easily). In addition, meeting documents are kept in electronics file. 10. Sub-committee Board of directors appoints four sub-committees to help monitor business. 1). Audit sub-committee comprises of independent directors for three persons with term of three years at most. 2). Executive sub-committee comprises of directors and executives for five persons. 3). Remuneration sub-committee comprises of executives for four persons. 4). Risk management sub-committee comprises of executives for four persons. Board of directors may appoint other sub-committee as per necessity. Scope of authority of each sub-committee has to be clear and specific as sub-committee should be close to issue or problem than others. Gunkul Engineering Public Company Limited

55


11. Internal Control and Internal Audit Board of directors sets internal control system covering accounting, finance, operations, regulations, audit and check & balance with aim to protect shareholders’ capital and company’s assets. Internal audit office must have independency and report directly to board of directors to make sure that internal audit and internal control system is the key driving mechanism to support long-term sustainable growth. Internal audit reviews internal control activities and give advice and suggestion regarding internal control and risk management to improve operational efficiency to cope with growing business and changing economic environment. 12. Directors’ Report Board of directors is responsible for reporting consolidated financial statements of the Company and subsidiaries and financial information in annual report. That report is based on Thailand’s general accounting standard by selecting the proper one and use it consistently. Audit committee and accounting audit will together consider proper accounting standard to use in financial report. Board of directors emphasizes persons who do report to have cautious judgment and to disclose sufficient information on financial notes. Board of directors assigns audit committee to respond for quality of financial report and internal control. Comments from audit committee on this subject are shown in audit committee report and in annual report too. Board of directors comments that financial report of the Company and its subsidiaries as of December 31, 2012, is right, sufficient and reliable. 13. Information Disclosure and Transparency Board of directors has policy on disclosure of information, financial data and business operations with creditability and reliability to show true operational and financial status and business future by setting rules and 56

Smart Energy in Action


regulations regarding information disclosure based on Stock Exchange of Thailand Act. In 2011, the Company disclosed following information; • Report financial and general information to shareholders and general investors and report board of directors’ responsibility on financial report together with audited report in annual report • Report corporate governance policy and policy related to environment and society and implementation via different channels like annual report and company website • Roles and responsibility of board of directors and sub-committee, number of meetings attended, number of directors participated meetings last year, and directors’ opinions • Remuneration policy to directors and executives

Apart from information disclosure as per required by Stock Exchange of Thailand Act, the Company also communicates with shareholders and investors via investor relations department as company representative to directly contact with shareholders, investors, securities analysts (both local and foreign ones), and corporate communications department to publish information to shareholders, investors and public via mass media and other medias (both local and international ones). In 2012, the Company held four times of analyst meetings to discuss about quarterly and yearly results to investors and analysts. Press release is used once company has investment and or business activity. In addition, information disclosure is done via company website www.gunkul.com both in Thai and English so all stakeholders can participate. If interested, you can contact investor relations department at telephone no. 0-2242-5867 and 0-2242-5861 facsimile no. 0-2242-5878 or e-mail chantra@gunkul.com. and nichanun@gunkul.com

Gunkul Engineering Public Company Limited

57


9.6 Inside Information The Company emphasizes on information disclosure and transparency by not allowing directors and executives to use inside information to find their benefits and for securities trading as follow; - Require directors and executives to report holding of securities of themselves, spouse, underage children to Stock Exchange Commission and Stock Exchange of Thailand Article 59 and punishment Article 275 of Stock Exchange of Thailand Act Por Sor 2535 - Require management to report change in securities holding to Stock Exchange Commission and Stock Exchange of Thailand Act 59 Por Sor 2535 and send copy of this report to company on the same day that sent to Stock Exchange Commission - Require directors, executives or employees who know inside information not to disclose information to outsiders or to persons who are not involved in this subject and not to do securities trading for at least one month before announcement of financial statements and at least 24 hours after announcement Company sets discipline punishment for person who finds benefit for itself by using inside information to disclose until it hurts company. Discipline punishment starts from verbal warning, written warning, probation and layoff.

9.7 Personnel 1. Total employees of the Company and subsidiaries as of December 31, 2012 - Permanent employees 351 persons - Temporary employees 102 persons 2. Employee remuneration - In 2012, cash remuneration of employees of the Company and subsidiaries comprised of salary, bonus and Pension fund money with combined amount of 124,268,329.50 baht

58

Smart Energy in Action


Unit : baht

Salary Bonus Pension fund money Total

2011

2012

79,357,392.84 7,893,119.62 1,158,890.83 88,409,403.29

97,706,372.35 21,563,510.37 4,998,446.78 124,268,329.50

3. Labor dispute over the past three years - None - 4. Personnel development policy The Company has policy to develop staff with aim to support them to grow in the organization and require staff to work happily so they can create productivity which is good to company for sustainable growth. The Company sets human resources development plan by using competency and KPIs as data to set training course to improve working skill. Followings are training courses provided to various levels of staff; - Management Company wants management to clearly understand corporate management, vision, and strategy, so they can set up integrated corporate strategy for company resulting in competitive advantage by providing training courses on planning, strategy and management for top executives. - Dept. Head Company wants to create skill on preliminary management and job responsibility so head of department can fulfill corporate strategic plan and use this skill to manage controlee. Training courses involve leadership, teamwork and basic management skill to head of department so they can apply to use with employees. - Employee Company wants employees to have knowledge and understand their roles and responsibility so they can improve their performance. Training courses focus on

Gunkul Engineering Public Company Limited

59


operating skill and working environment like primary work, presentation suggestion and rules and regulations. On management structure policy, the Company group has policy to promote on annual basis for capable employees in accordance with career path policy. In addition, the Company group also supports employees to participate in sustainable quality development like expressing opinions to develop work and having skill test. For directors and top executives, the Company group supports them to participate training courses held by Thai Institute of Directors (IOD) and others to improve understanding of roles, responsibility and skill in management as being company directors and executives.

60

Smart Energy in Action


1. Dr. Ekaporn Rakkwamsuk Chairman of the Board of Directors Chairman of the Audit Committee Independent Directors (Resigned on October 1, 2012)

Working Experience during the Past 5 Years

Percentage

Share Holding

(%) Relationship Period Position Company 52 - PH.D. in Public Administration - None 2008-2012 Chairman of the Board of Director/ Gunkul Engineering Public Company Ramkhamhaeng University Chairman of the Audit Committee/ Limited - Diploma of Politics and Governance Independent Director in Democratic Systems for Executive 2002-Present Committee of the parliament/Program Western University Class 4, King Prajadhipok’s Institute Director/ Director of the education center - M.A. in Political Science, 2002-Present Special lecturer in political science and Ramkhamhaeng University/Ubon Thammasat University public administration Ratchathani University - Barrister-at-Law 2002-Present Special lecturer in political science and Krirk University/Sakon Nakhon - Bachelor of Law, Thammasat public administration Rajabhat University University 2002-Present President Village School Foundation - Director Accreditation Program 1988-Present Deputy Minister of Labor and Social Ministry of Labour/Parliament (DAP) 77/2009 Welfare Thai Institute of Director (IOD) 1996 Assistant Secretary to the Minister of Ministry of Commerce of Thailand - Leader Program No.12, Capital Commerce Market Academy Member of the House Representative Parliament, Sakonnakhon Province President President Uthai Phimjaichon Foundation Consultant for Private sector organizational Migrant worker organization development in labor subject Chairman Parliamentary Committee for Drafting Labor Law Director Social Science Association of Thailand

Age Name-Surname (Year) Educational Qualifications

10.1 Details of Directors and Executives

10. Details of the Board of Directors and Executives

Gunkul Engineering Public Company Limited

61


62 Position

Smart Energy in Action

2012-Present Audit Committee/Independent Director 2008-2012 Audit Committee/Independent Director 2009-Present Audit Committee/Independent Director

Husband of 2012-Present Chairman of the Board of Directors Miss Sopacha Dhumrong 1982-2012 President piyawut and Father 2009-Present Director of Miss 1993-2010 Director Naruechon 1991-Present Director Dhumrong 1996-Present Director piyawut 2000-Present Director 1994-Present Director None 2012-Present Chairman of the Audit and Corporate/ Governance Committee/Independent Directors 2012-Present Risk Management Committee/Director

(%) Relationship Period

Limited Kaset Thai International Sugar Corporation Public Company Limited Gunkul Engineering Public Company Limited Surapon Foods Public Company Limited

Gunkul Engineering Public Company

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Gunkul Powergen Company Limited K.N.P. Supply Company Limited Gunkul Group Company Limited Gunkul Marine Line Company Limited Gunkul Engineering (2000) Company Limited G.M. Supply and Construction Company Limited Gunkul Engineering Public Company Limited

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

2. Mr. 57 - Honorary Master of Engineering 0.03 Gunkul Dhumrongpiyawut Western University Director wih Authority to - Leader Program 15/2012 sign on behalf of the Capital Market Academy Company - Director Certification Program (DCP) Chairman of the 111/2008 Board of Directors Thai Institute of Director (IOD) Director - Director Accreditation Program (DAP) 70/2008 Thai Institute of Director (IOD) - Managing Finance for Business Owners by Peter Ho - Secrets to Doubling Your Sales, Productivity & Profits 3. Mr. Sathaporn 56 - Master of Business Administration - Kotheeranurak Chulalongkorn University Independent Directors - Diploma in Auditing Chairman of the Audit Thammasat University and Corporate - Bachelor in Accounting Governance Committee Rajamangala University of Member of the Risk Technology Thanyaburi Management Committee - Certified Public Accountant - Certified Professional Internal Auditor - Degree in WorPorOr.2005, National Defense College

Age Name-Surname (Year) Educational Qualifications


Position

2005-Present Audit Committee/Independent Director 2011-Present Sub-Committee for Anti-Corruption Research Strategy 2010-2014 2011-Present Expert Committee 2011-Present Arbitrator 2008-Present Acting Committee 2007-Present Evaluation Committee 2005-Present Treasury Director and Chairman of Accounting and Finance Group 2005-Present Vice Chairman of Audit Committee 1993-Present Director 1991-Present Director 1999-Present Director 1993-Present Present Partner 1993-Present Managing Director 1995-Present Managing Director 1993-Present President 2010-2011 Sub-Committee for Internal Audit and Evaluation

- Royal Thai Army War College Program 44 Institute of Advanced Military Studies - Diploma in higher PorSorSor 1, PorRorMor 1 and PorPorRor 1 King Prajadhipok’s Institute - Diploma in SorJorVor 81 Applied Psychology Institute - Diploma BorRorOr 1 Royal Thai Police - Director Accreditation Program (DAP) 35/2009 Thai Institute of Director (IOD)

3. Mr. Sathaporn Kotheeranurak (Continued)

(%) Relationship Period

Star Sanitaryware Public Company Limited Office of the National Anti-Corruption Commission Faculty of Business Administration Rajamangala Court of Justice Bureau of Corruption Prevention in the State Enterprises and The Thailand Research Fund The Thailand Chamber of Commerce and Board of trade of Thailand The Thailand Chamber of Commerce and Board of trade of Thailand Sungora Company Limited S.V. Evergreen Company Limited SMEs Committee of Thai Chamber of Commerce Sathaporn Accounting Office DBMT Company Limited Sahaporn & Co Company Limited Institute of the Development in Business Managhement and Taxation Thailand Convention and Exhibition Bureau

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

Age Name-Surname (Year) Educational Qualifications

Gunkul Engineering Public Company Limited

63


64 (%) Relationship Period

Position

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

3. Mr. 2009-2011 Chairman of Audit Committee/ Interlink Communication Public Sathaporn Kotheeranurak (Continued) Independent Director Company Limited 2009-2009 Director Thai Investors Association 2006-2011 Expert Committee of tax Ministry of finance, Compensation Committee 2006-2009 Chairman of Audit Committee/Independent Asia Fiber Public Company Limited Director 2005-2010 Associated Judge The Central Intellectual Property and International Trade Court 2005-2006 Chairman of Audit Committee Thailand Management Association 2002-2006 Committee of Tax and Law Department The Federation of Thai Industries 1998 Committee of the House of Representatives, Professional for Accountancy Act Parliament 4. Pol.Maj.Gen. 57 - Bachelor Degree in Public - None 2012-Present Chairman of the Nomination and Gunkul Engineering Public Company Visit Sukarasep Administration Remuneration Committee Limited Independent Directors Royal Police Dadet Academy 2009-Present Member of Audit and Corporate Gunkul Engineering Public Company Member of Audit and - Management Course for Higher Governance Committee/Independent Limited Corporate Governance Rank Police 28 Director Committee - Course for Superintendent 31 2012-Present Commander Administrative and Civil Affair Division, Chairman of the - Director Accreditation Program , Royal Thai Police Nomination and (DAP) 78/2009 2006-2012 Deputy Commander Administrative and Civil Affair Division, Remuneration Committee Thai Institute of Director (IOD) Royal Thai Police 2005-2006 Superintendent Administrative and Civil Affair Division, Royal Thai Police

Age Name-Surname (Year) Educational Qualifications

Smart Energy in Action


-

None

Superintendent (Disciplinary Development) Deputy Superintendent (Penalty Solicitor) Deputy Superintendent Chief of Police

Position

Disciplinary Division, Royal Thai Police Disciplinary Division, Royal Thai Police Nongyasai District Provincial Police Station, Supanburi Province Nongyasai District Provincial Police Station, Supanburi Province

Company

2012-Present Member of Audit and Corporate Governance Gunkul Engineering Public Company Committee/Independent Director Limited 2012-Present Appointed Member, Board of Director Thai Industrial Standards Institute 2011-Present Appointed Member, Board of Director Energy Fund Administration Institute 2008-Present Appointed Member Kasetsart University Kasetsart University Council 2010-2012 Chairman of Audit Committee/ PTT Chemical Public Company Independent Director Limited 2008-2012 Board of Corruption Prevention in State Office of the National Anti-Corruption Enterprises and the Private Sector Commission 2008-2009 Chairman of Board of Director Ratchburi Electricity Generating Holding Public Company Limited 2008-2009 Chairman EGAT International Company Limited 2007-2009 Governor Electricity Generation Authority of Thailand 2006-2007 Deputy Governor-Generation Electricity Generation Authority of Thailand

2000-2005 1998-2000 1994-1998 1992-1994

5. Mr. Sombat Sarntijaree 62 - Master Degree in Mechanical, Independent Directors Engineering Lamar University,Texas, Member of Audit and U.S.A., 1975 Corporate Governance - Bachelor of Mechanical Engineering Committee Kasetsart University, 1971 Chairman of Corporate - Senior Executive Development Governance Committee Program-1 GE, U.S.A. 2005 - Director Certification Program (DCP), 59 Thai Institute of Director (IOD) - Leader Program, No. 6 Capital Market Academy - Role of the Chairman Program, 21/2009 Thai Institute of Director (IOD) - Public Administration and Public Law Program 4 King Prajadhipok’s Institute

4. Pol.Maj.Gen. Visit Sukarasep (Continued)

(%) Relationship Period

Working Experience during the Past 5 Years

Percentage

Share Holding

Age Name-Surname (Year) Educational Qualifications

Gunkul Engineering Public Company Limited

65


66 (%) Relationship Period

Position

Smart Energy in Action

Gunkul Engineering Public Company Limited Integrated Management Consultant Co.,Ltd. Thai Rung Union Car Public Company Limited Advance Power Supply Public Company Limited

Electricity Generation Authority of Thailand Electricity Generation Authority of Thailand Electricity Generation Authority of Thailand Gunkul Engineering Public Company Limited Italthai Industry Company Limited Quality and Safety Company Limited

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

5. Mr. 2005-2006 Deputy Governor-Operation and Sombat Sarntijaree - Executive Program 84, Institute of (Continued) Security Phychology Maintenance 2000-2005 Assistant Governor-Power Plant 1 1995-2000 Director of Wangnoi Power Plant 6. Mr. Charan 53 - Master of Science (Major HROD) - None 2012-Present Member of the Nomination and Lerththeerapoj National Institute of Development Remuneration Committee Member of the Nomination Administration, 2004 1996-Present Vice President and Remuneration - Bachelor of Arts. (General 1994-1997 The Lecturer. Committee Management). Rajamangala University of Technology Thonburi, 1990 - Safety officer course in the professional level Safety Institute - The game to the course. HR Center Company Limited 7. Mr.Decha Chooligorn 50 - MBA Marketing and Finance - None 2012-Present Member of the Nomination and Member of the Nomination Case Western Reserve University, Remumeration Committee and Remumeration USA Year 1988 2005-Present Managing Director Committee - BA Economics, Thammasat University 2003-2005 Asistant Manaing Director - Director Certification Program (DCP) 26/2003 2001-2003 Deputy Managing Director Thai Institute of Director (IOD)

Age Name-Surname (Year) Educational Qualifications


Position

Gunkul Engineering Public Company Limited

2012-Present Member of The Risk Management Committee 2012-2013 Advisor (Quality System Development) 2003-2011 Director of National Institute of Metrology (Thailand) 2001-2003 Director of Science & Technology R&D Division 1997 - 2001 Director of Communication & Electronic R&D Division

None

(%) Relationship Period

Military R&D Center, Supreme Command HQ Military R&D Center, Supreme Command HQ

Gunkul Engineering Public Company Limited Food and Drug Quality Control Center, Ministry of Public Health, Lao PDR Ministry of Science and Technology

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

7. Mr.Decha Chooligorn - Secrets to Doubling Your Sales, (Continued) Productivity & Profits - Key to Success in Organization Redesign - Effective Managers Program - Project Finance 8. AVM.Dr.Pian Totarong 59 - Ph.D.in Electrical Engineering - Member of The Risk University of Pittsburgh, USA. Management Committee (Supreme Command HQ Scholarship) - M.S. in Electrical Engineering, Ohio University, USA. (Supreme Command HQ Scholarship) - B.Sc. (Honours) in Physics Mahidol University (Ministry of Defence Scholarship) - Air War College, Royal Thai Air Force, Class No. 31 - National Defence College, Class No. 48 - Director Certification Program (DCP 120/2009) Thailand Institute of Director (IOD) - Advanced Defence Management, Class No. 1 Association of National Defence College

Age Name-Surname (Year) Educational Qualifications

67


68 Position

Wife of 2012-Present Chief Executive Officer Mr.Gunkul Dhumrong 1998-2012 Managing Director piyawut 2009-Present Director 2000-2010 Director 2008-Present Director 2000-Present Director 2010-Present Director 2000-Present Director 2002-Present Director Daughter of 2008-Present Director Mr.Gunkul Dhumrong 2012-Present Director piyawut 2011-Present Assistant Vice President 2004-Present Director 2010-Present Senior Associate 2006-2007 Management Trainee

(%) Relationship Period

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Gunkul Powergen Company Limited K.N.P. Supply Company Limited G.K. Assembly Company Limited G.K. Power Product Company Limited G-Power Sourse Company Limited Future Electrical Control Company Limited Gunkul Trading and Agency Company Limited Gunkul Engineering Public Company Limited Wind Energy Development Company Limited Finansa Securities Company Limited Noppakun Company Limited Kasikorn Securities Public Company Limited Gunkul Engineering Public Company Limited

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

9. Miss 46 - Bachelor of Nurse - Sopacha Dhumrongpiyawut Srinakharinwirot University Director wih Authority to - Director Certification Program sign on behalf of the (DCP) 111/2008 Company Thai Institute of Director (IOD) Chief Executive Officer - Director Accreditation Program Chairman of Risk (DAP) 70/2008 Management Committee Thai Institute of Director (IOD) - Managing Finance for Business Owners by Peter Ho - Secrets to Doubling Your Sales, Productivity & Profits - Effective Senior Manager course - Role of Chairman 21/2009 Thai Institute of Director (IOD) 10. Miss Naruechon 29 - Master of Business Administration 0.01 Dhumronpiyawut Boston University USA. Director wih Authority to - Master of Management sign on behalf of the Harvard University USA. Company - Bachelor of Engineering Director/Executive Director Chulalongkorn University Vice President, Strategic - Director Accreditation Program and Investment (DAP) 70/2008 Thai Institute of Director (IOD) - Effective Senior Manager course

Age Name-Surname (Year) Educational Qualifications

Smart Energy in Action


Company Gunkul Engineering Public Co., Ltd. Gunkul Engineering Public Company Limited Wind Energy Development Co., Ltd. Gunkul Engineering Public Company Limited G-Power Sourse Company Limited Gunkul Engineering Public Company Limited Gunkul Powergen Company Limited Integrated Management Consultant Company Limited Thai Rung Union Car Public Company Limited Seangunithai LPG Company Limited

Position

2012-Present Managing Director 2010-Present Director 2012-Present Director 2010-2012 Deputy Managing Director 2012-Present Director 2007-2010 Assistant Managing Director, Business Support 2009-Present Director 2005-2007 Financial Consultant 2004-2005 Assistant General Manager of Office of Executive 2008-Present Director

(%) Relationship Period

Working Experience during the Past 5 Years

Percentage

Share Holding

11. 42 - Master in Managerial Accounting - None Mr. Somboon Aueatchasai Thammasat University Director wih Authority to - Diploma in Auditing sign on behalf of the Thammasat University Company - Bachelor in Accounting Director/Executive Director Rajamangala University of Managing Director Technology Phra Nakhon - Director Certification Program (DCP) 139/2011 Thai Institute of Director (IOD) - Director Accreditation Program (DAP) 84/2010 Thai Institute of Director (IOD) - Certificate Program in International Tax Law, Class 1 Thai Bar Association - Diploma in certified internal auditor, class 1 Chulalongkorn University and The institute of internal auditors of Thailand

Age Name-Surname (Year) Educational Qualifications

Gunkul Engineering Public Company Limited

69


70 Position

Company

Smart Energy in Action

13. Mrs. Areewan 43 - Bachelor’s degree in Accounting - None 2000-Present Director Roonpraphan Dhurakij Bundit University Director wih Authority to - Director Accreditation Program 2010-Present Senior Vice President, Factory sign on behalf of the (DAP) 70/2008 Company Thai Institute of Director (IOD) 2009-Present Director Director/Executive Director - Effective Senior Manager course 2009-Present Director Senior Vice President, 2008-2010 Assistant General Manager, Logistics Factory 2007-2008 Assistant General Manager, Factory 2003-2007 Accounting Manager 1997-2003 Accounting Supervisor

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited G.K. Assembly Company Limited G.K. Power Product Company Limited Gunkul Engineering Public Company Limited G.K. Power Product Company Limited G.K. Power Product Company Limited Gunkul Engineering Public Company Limited

Brother of 2000-Present Director Gunkul Engineering Public Company Miss Limited Sopacha 2008-2009 Assistant General Manager of Private Sales Gunkul Engineering Public Company Dhumrong Limited piyawut 2001-2007 Private Sales Manager Gunkul Engineering Public Company Limited 2010-Present Director K.N.P. Supply Company Limited 2009-Present Director Future Electrical Control Company Limited 2008-Present Director Jaraslut Pattana Electricity Company Limited

(%) Relationship Period

Working Experience during the Past 5 Years

Percentage

Share Holding

1 2. 43 - Bachelor of Arts - Mr. Chaloempon Sricharoen Ramkhamhaeng University Director wih Authority to - Director Accreditation Program sign on behalf of the (DAP) รุ่นที่ 70/2009 Company Thai Institute of Director (IOD) Director/Executive Director - Effective Senior Manager course - Managing Finance for Business Owners by Peter Ho - Secrets to Doubling Your Sales, Productivity & Profits

Age Name-Surname (Year) Educational Qualifications


(%) Relationship Period

Position

15. Mr. Worathep 57 - Bachelor’s degree in Accounting - None 2010-Present Senior Vice President, Internal Audit Luangsirapornchai Ramkhamhaeng University Senior Vice President - Audit Committee Program (ACP) 2008-2010 Assistant General Manager, Internal Audit Internal Audit 24/2008 Secretary of Audit Thai Institute of Director (IOD) 2003-2008 Manager, Internal Audit and Corporate - Monitoring of the Quality of Financial Governance Committee Reporting (MFR) 7/2009 1997-2002 Accounting Manager Thai Institute of Director (IOD) - Monitoring of the Internal Audit Function (MIA) 4/2008 Thai Institute of Director (IOD) - Monitoring of the System of Internal Control and Risk Management Risk Management 5/2009, Thai Institute of Director (IOD)

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Union Property Company Limited

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

Mr. Papangkorn 14. 53 - Bachelor’s degree in Accounting - None 2010-Present Senior Vice President, Business Support Sakulvorakarn Ramkhamhaeng University Member of Risk 2006-2010 Assistant General Manager, Management Committee Business Support Senior Vice President 2003-2005 Manager, Accounting Department Business Support 1997-2003 Manager, Accounting Department

Age Name-Surname (Year) Educational Qualifications

Gunkul Engineering Public Company Limited

71


72

Smart Energy in Action

47

- Bachelor of Arts Srinakharinwirot University - Effective Senior Manager course - Performance Appraisal by Balance Scored Card course - Career Planning & Development & Sucession Planning course - Salary Administration for Line Manager course - Effective Techniques for Job Analysis & Job Description course - Effective Techniques for Job Evaluation & Salary Survey course

(%) Relationship Period Position - None 2010-Present Senior Vice President, Executive Office 2010-Present Director 2010-Present Director 2006-2010 General Manager, Executive Office 2003-2008 Manager, Human Resources Department 1993-2002 Manager, Human Resources Department

Company Gunkul Engineering Public Company Limited G.K. Assembly Company Limited G.K. Power Product Company Limited Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Packlink (Thailand) Co.,Ltd.

Working Experience during the Past 5 Years

Percentage

Share Holding

17. Mr. Thamrong 41 - M.Sc. (Information Technology) - None 2010-Present Senior Vice President, Sales and Marketing Gunkul Engineering Public Company Chankraithong King Mongkut’s Institute of Limited Senior Vice President Technology Ladkrabang 2011-Present Director/Senior Vice President, K.N.P. Supply Company Limited Sales & Marketing - B.Sc. (Applied Physics) Sales and Marketing King Mongkut’s Institute of 2008-2010 Assistant General Manager, Gunkul Engineering Public Company Technology Ladkrabang Public Sector and International Limited - Director Certification Program 1997-2007 Manager, Public Sector Gunkul Engineering Public Company (DCP) 149/2011, Limited Thai Institute of Director (IOD) 1995-1997 Assistant Manager, Public Sector Gunkul Engineering Public Company - Secrets to Doubling Your Sales, Limited Productivity & Profits course 1993-1995 Engineer Thanarak Co.,Ltd.

1 6. Mrs. Somluk Kanuenghet Senior Vice President Executive Office Member of Remuneration and Compensation Committee

Age Name-Surname (Year) Educational Qualifications


- Substation & Transmission Line & Building Base Concept course - Stringing Equipments by TEMA, Italy - Meter Training Program by General Electric Co., USA - Meter Testing Equipments by ZERA Electric, Germany - Energy Conservation for Factory - Business Opportunities in Marketing Energy Efficiency

(%) Relationship Period

Position

Gunkul Engineering Public Company Limited Wind Development Company Limited Gunkul Powergen Company Limited G-Power Source Company Limited Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Jun (Thailand) Company Limited

Company

Working Experience during the Past 5 Years

Percentage

Share Holding

1 8. Mr. Phongsakorn 35 - M.Sc. (Electrical Engineering) - None 2010-Present Senior Vice President, Business Damnoen Hannover University, Germany Development and Special Project Senior Vice President - B. Eng. (Telecommunication) 2012-Present Director Business Development & Rajamangala University of Technology 2009-Present Director Special Project - FTTx Technology course Korea 2010-Present Director - RF & Optical Repeater for Mobile 2009-2010 Manager, Business Development and Network course Korea Special Project - Optical Fiber Cable Quality 2007-2009 Supervisor, Business Development and Control course Special Project People Republic of China 2005-2007 Solution Manager - Optical Fiber Cable Specification course People Republic of China

17. Mr. Thamrong Chankraithong (Continued)

Age Name-Surname (Year) Educational Qualifications

Gunkul Engineering Public Company Limited

73


74

Smart Energy in Action

Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited Kim Chong Him Trading Company Limited Wattanasuk International Company Limited Suttithom Group law and accounting office

Company Gunkul Engineering Public Company Limited Gunkul Engineering Public Company Limited L.V. Technology Public Company Limited Siam Fibre Cement Company Limited

Working Experience during the Past 5 Years

Percentage

Share Holding

(%) Relationship Period Position 18. Mr. Phongsakorn - Wind Turbine Technology course Damnoen (Continued) People Republic of China - PV Conference Japan - Biomass Conference USA. 19. Mr. Phudis Triwilaskul 40 - Bachelor’s degree in Accounting - None 2011-Present Vice President, Logistics Vice President Dhurakij Bundit University Logistics - SAP User Interface Team of Siam 2007-2010 Manager, Purchasing Cement Group (Module : MM) - Essential Knowledge for Purchasing 2005-2007 Manager, Sourcing Department Professionals - Oversea Purchasing Techniques 1993-2005 Purchasing Superviosr - Purchasing Knowledge for Cost Saving - Self Certification Scheme - Supply Chain & Logistices Management 20. Miss Suttirat 39 - Degree Master of Business - None 2012-Present Accounting Manager Tangnorakul Administration Accounting Manager Ramkhamhaeng University 2011-2012 Project Accounting Manager - Degree Bachelor’s Degree (accounting) 2005-2007 Assistant Account Ramkhamhaeng University 1999-2005 Bookkeeper 1997-1998 Assistant Auditor

Age Name-Surname (Year) Educational Qualifications


Gunkul Engineering Public Company Limited

75

I - I

Roonpraphan

Mr. Phongsakorn Damnoen 3)

Kanuenghet

Chankraithong

Mrs. Areewan

Mrs. Somluk

Mr. Thamrong

-

I

-

I

-

-

-

X, I

-

I

-

-

-

X, I

-

-

-

-

-

I

-

-

-

I

I

X, I

Remark 1) Mr. Somboon Aueatchasai, elected as a Director of Wind Energy Development Co.,Ltd. on May 15, 2012 X = Presidnet 2) Miss Naruechon Dhumrongpiyawut, elected as a Director of Wind Energy Development Co.,Ltd. on May 15, 2012 I = Director 3) Mr.Phongsakorn Damnoen, elected as a Director of Wind Energy Development Co.,Ltd. on JUne 16, 2012

-

-

Mr. Chaloempon Srichaloen

- -

Aueatchasai

X, I

-

Miss Naruechon Dhumrongpiyawut 2)

Mr. Somboon

Dhumrongpiyawut

Miss Sopacha

1)

Dhumrongpiyawut

Mr. Gunkul

K.N.P. Supply Co.,Ltd.

-

-

I

-

-

I

I

-

Gunkul Powergen Wind Energy Co.,Ltd. Development Co.,Ltd.

G.K. Power Products Co.,Ltd.

Name

G.K. Assembly Co.,Ltd.

10.2 Details Position Titles of Directors in Subsidiary Companies


Smart Energy in Action

Remark 1) X = Chairman, President I = Director II = Executive Director III = Audit Committee / Independent Director V = Executive

Rakkwamsuk 1) 2. Mr. Gunkul Dhumrongpiyawut 2) 3. Mr. Sathaporn Kotheeranurak 4. Pol.Maj.Gen Visit Sukarasep 5. Mr. Sombat Sarntijaree 6. Miss Sopacha Dhumrongpiyawut 7. Miss Naruechon Dhumrongpiyawut 8. Mr. Somboon Aueatchasai 9. Mr. Chaloempon Sricharoen 10. Mrs. Areewan Roonpraphan 11. Mr. Papangkorn Sakulvorakarn 12. Mr. Worathep Luangsirapornchai 13. Mrs. Somluk Kanuenghet 14. Mr. Thamrong Chankraithong 15. Mr. Phongsakorn Damnoen 16. Mr. Phudis Triwilaskul 17. Miss Suttirat Tangnorakul

1. Dr. Ekaporn

Nane

G.K.Assembly Co.,Ltd. 1) 2) 3)

I,V I, V I I I, V I I, V

I

I

I I

I

I

I

I

I

I

DBMT Co., Ltd. Interlink Communication Public Co., Ltd. Surapon Foods Public Co., Ltd. Star Sanitaryware Public Co., Ltd. Sahaporn and Co Co., Ltd.

I

บริษัทที่เกี่ยวข้อง S.V. Evergreen Co., Ltd. I

I

I

Kaset Thai International Sugar Corporation PLC. Sanguthai Gas LPG Co., Ltd.

Ekaporn Rakkwamsuk has resignation from director on October 1, 2012 Mr. Gunkul Dhumrongpiyawut was appointed a Chairman of the Board from Board of Directors meeting No.7/2012 on November 9, 2012 replace Dr. Ekaporn Rakkwamsuk เอกพร รักความสุข ที่ลาออกเมื่อวันที่ 1 ตุลาคม 2555 Mr. Sombat Sarntijaree was appointed a director from Board of Directors meeting No.7/2012 on November 9, 2012

I I, V

Gunkul Powergen Co.,Ltd. Wind Energy Development Co.,Ltd. Gunkul Group Co.,Ltd. Future Electrical Control Co., Ltd. Gunkul Trading and Agency Co., Ltd.

X,I,V I, V I, V I, V

บริษัทย่อย

G.K.Power Products Co.,Ltd.

X, I,III X. I I, III I, III I, III I, II, V X,I,V X,I,V I, II, V I, II, V I, II, V I, II, V I, V I, V V V V I, V I, V V V V V

Gunkul Engineering PCL

บริษัท K.N.P.Supply Co.,Ltd.

Kulnatee Co., Ltd. Gunkul Engineering (2000) Co., Ltd. Gunkul Marine Line Co., Ltd. Jaraslat Pattana Electrical Co., Ltd. G.M. Supply and Construction Co., Ltd.

10.3 Details Position Titles of Directors and Managements Sungora Co., Ltd.

76


11. General Information

11.1 General Information Company’s Name Stock Quote Company Registration Head Office Address Telephone Number Fax Number Website Email Type of Business Sector Industry Type of Issued Shares Registered Capital Paid-up Capital Par Value

: Gunkul Engineering Public Company Limited : GUNKUL : 0107552000146 : 1038-1046 Nakornchaisri Road, Nakornchaisri, Dusit Bangkok 10300 : 0-2242-5800 : 0-2242-5818-9 : www.gunkul.com : gk_irrelation@gunkul.com : Manufacturing and supplying electrical products & renewable energy products, Generating electrical power from renewable energy resources. : Energy & Utilities : Resources : Common shares : 440,000,000.00 Baht : 439,999,984.00 Baht : 1 Baht

Gunkul Engineering Public Company Limited

77


11.2 Subsidiaries Company Name

Type of Business

1. G.K. Assembly Co., Ltd. Manufacturing (GKA) Electrical Products 2. G.K. Power Products Manufacturing Co., Ltd. (GKP) Electrical Products 3. K.N.P. Supply Co., Ltd. Supplying (KNP) Electrical Products 4. Gunkul Powergen Co., Ltd. Generating (GPG) Electrical Power 5. Wind Energy Development Generating Co., Ltd. (WED) Electrical Power

Registered Paid-up Holding % Capital Capital Par Value Capital of (Baht) (Share) (Baht) (Share) Holding 200,000,000 2,000,000 100,000,000 100,000 50,000,000 500,000 992,000,000 9,920,000 179,900,000 17,990,000

100 1,999,998 1,000 99,998 100 499,998 100 9,919,995 10 12,592,998

99.99 99.99 99.99 99.99 70.00

11.3 Joint Venture Company Name

Type of Business

Registered Paid-up Holding % Capital Capital Par Value Capital of (Baht) (Share) (Baht) (Share) Holding

1. G-Power Source Co., Ltd. Manufacturing 930,000,000 9,300,000 (GPS) Electrical Products

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Smart Energy in Action

100 3,719,998

40.00


12. Nature of Business

12.1 Changes and Development of the Company and its subsidiaries are as follows: Year 1982 - Gunkul Engineering Co., Ltd. founded with registered capital of 1.00 million baht to import and distribute products for the electrical equipment. (Current registered capital : 440 million baht) Year 1992 - Establishment of G.K. Assembly Co.,Ltd with registered capital of 2.00 billion baht to produce equipment to assemble the electricity grid and equipment for street lamps, distributing to customers within the country and abroad. (Current registered capital : 200 million baht) - Establishment of G.K. Power Product Co., Ltd. (formerly known as Kerney (Thailand) Co., Ltd.), with registered capital of 2.60 million baht, producing equipment for safety and control of the grid system, distributing to customers, both domestically and abroad. (Current registered capital : 100 million baht) Year 1993 - Establishment of K.N.P.Supply Co., Ltd. with registered capital of 1.00 million baht, to be a distributor of electrical products to government agencies. (Current registered capital : 50 million baht) Year 2009 - The companies restructured as a group holding company with the Gunkul Engineering Company Limited acquiring 99.99% of shares in G.K. Power Product Co., Ltd., G.K. Assembly Co., Ltd., and K.N.P.. Supply Co., Ltd. - Gunkul Engineering Co., Ltd. increased its registered capital from 300 million baht to 400 million baht and changed the par value of ordinary shares from 100 baht per share to 1 baht per share. - The company transformed into a public company and changed its name to “Gunkul Engineering Public Company Limited (PCL)�. - Establishment of Gunkul Powergen Co., Ltd. With registered capital of 100 million baht to produce and sell electricity from renewable energy. (Current registered capital : 992 million baht) - The Company was appointed by the Shanghai Electric Wind Power Equipment Company Limited as the sole distributor of wind turbines in Thailand, Myanmar and Laos.

Gunkul Engineering Public Company Limited

79


Year 2010 - On 11-13 October 2010, the company opened to the public for share sales (Initial Public Offering) of 100,000,000 shares representing 25.00 percent of the total number of 400,000,000 ordinary shares with par value of Baht 1 per share sale price, sold at 5.40 baht per share. - On October 15, 2010, The Stock Exchange of Thailand added GUNKUL securities as new securities on the Stock Exchange of Thailand. - On October 19, 2010, GUNKUL securities traded on the Stock Exchange for the first day (First Day Trade). - On November 19, 2010 the Company acquired the common stock of G Power Source Co.,Ltd., which operates in the production and distribution of electricity from solar energy and is a party to the Provincial Electricity Authority (PEA). The company has power purchase agreements of four contracts for a total of 26 MW and has received support from the electrical section (Adder) 8 baht per unit, by the Company to purchasing ordinary shares of 9,898 shares at 6,500 baht per share totalling 64,337,000 baht, or 98.98 percent stake of the registered share capital 1 million baht (Current registered capital : 750 million baht) - Gunkul Powergen Co., Ltd. signed 5 contracts of power purchasing agreements with the Provincial Electricity Authority for the solar power system, totalling the size of 30.9 mw for a period of 25 years. The project will benefit from the sale of electricity while gaining the additional cost from power purchase (Adder) from the Provincial Electricity Authority of 8 baht per unit for a period of 10 years, including such projects to benefit the investment promotion agency of the Board of Investment (BOI), with the project details as follows. Project

Size (MW).

Place of project (Where applied for permit).

Expected to distribute electricity

3.0 4.4 8.0 8.0 4.5 3.0

A. Chondaen, Phetchaboon A. Chondaen, Phetchaboon A. Srichula, Nakhon Nayok A. Wichian Buri, Phetchaboon A.Noen Po, Phichit A.Buengsampun, Phetchaboon*

January 2011 October 2011 Within March 2013 Within March 2013 Within March 2013 Within March 2013

1 2 3 4 5

*

The relocation from Noungsue District, Pathumthani because of severe flooding on the year 2012.

80

Smart Energy in Action


Year 2011 - O n March 25, 2011, the Company signed a letter of intent to begin construction of 8 MW solar power plant. Supplying solar panels as the foundation, selection of appropriate technology and installation of all systems that will supply electricity to the system (To produce electricity from solar energy in the Suphan Buri Province), with Solarta Co., Ltd. (a joint venture between Yanhee Solar Power Co.,Ltd, and Ratchaburi Electricity Generating Holding Public Company Limited with the contract value of approximately 752 million baht. - On June 13, 2011, the company signed the Solar Power Plant construction contract of 8 MW (consisting of 5 MW contract, 2 MW contract and 1 MW contract) with Solarta Co.,Ltd. With the contract value as above mentioned Letter of Intent signed on March 25, 2011 - On September 1, 2011, the Company signed a letter of intent to begin construction of 8 MW solar power plant, to supply solar panels to the foundation, selection of appropriate technology and installation of all systems that can supply electricity to the system (solar power generation projects in the province of Buri Ram) with the Company, C.K. and Sun Energy (Thailand) Ltd., a contract value about 752 million baht. - On June 6, 2554, G Power Source Co.,Ltd. supported a credit line from Tisco Bank Limited, amounting to 4,403.60 million baht for the construction of a 26 MW solar power plant. - September 22, 2011 Gunkul Powergen Co., Ltd. received support for the facility from Siam Commercial Bank Public Company Limited for the amount of 2.4358 billion baht for the construction of a 30.9 MW solar power plant. - On November 2, 2011 the Company signed a Memorandum of Understanding on the 1000 MW Development of Wind Energy with the Department of Energy. Myanmar. Study Location is Mon State, Kayin State and Tanintharyi State in Myanmar. - G-Power Source Co., Ltd., which has a power purchase agreement with the Provincial Electricity Authority including four contracts, totaling 26 MW, has completed four projects with details as follows:

Gunkul Engineering Public Company Limited

81


Project

1 2 3 4

Size (MW).

Place of project (Where applied for permit).

6.5 6.5 6.5 6.5

A.Banphot Phisai, Nakhon Sawan A.Banphot Phisai, Nakhon Sawan A. Sankhaburi, Chai Nat A.Buengsampun, Phetchaboon*

Expected to distribute electricity March 2012 March 2012 March 2012 February 2013

* The relocation from Klongluang District, Pathumthani because of severe flooding on the year 2012.

Year 2012 - On 30 March 2012, the Company sold 4,500,000 common shares of G-Power Sources Co., Ltd., to Electricity Generating Public Co., Ltd. for an amount of 629,92 million baht, or equal to 60% of 750.00 million baht registered capital. G-Power Sources undertakes business of producing and selling solar-based electricity is a contractual party of 4 electricity sale agreements with the Provincial Electricity Agency, total capacity of 26 mw, and eligible for an adder subsidy of 8 baht kWh.

- On 15 May 2012, the Company bought 5,460,000 common shares of Wind Energy Development Co., Ltd. from Impact Energy Asia Ltd. at the price of 95.60 baht/share, totaling 522 million baht, equivalent to 70.00% of the then 78.00 million baht registered capital (current registered capital is 179.90 million baht). Wind Energy Development undertakes business of producing and selling wind-based electricity, is a contractual party of 3 electricity sale agreements with the Provincial Electricity Agency, total capacity of 60 mw, and eligible for an adder subsidy of 3.5 baht kWh

- On 2 May 2012, G-Power Sources Co., Ltd. increased its capital from 750.00 million baht to 930.00 million baht.

- In July 2012, the Company launched Napier grass demonstration plot for energy utilization, focusing on attaining maximum benefit from the land of its wind energy project as well as generating income for farmers around the project. This activity also supported the government policy concerning Napier grass planting in Thailand.

- On 28 September 2012, Wind Energy Development Co., Ltd. increased its capital from 78.00 million baht to 179.90 million baht.

82

Smart Energy in Action


12.2 Business Structure Perspective of the group business structure. The Thai power system consists of two main components: 1. Electricity Production 2. Transmission and distribution The transmission of electricity from power plants to consumers must go through the various sub-systems including the high voltage grid, power station system, the distribution system, and underground cables, as shown in the diagram below. Diagram show electric transmission and distribution system of Thailand

Gunkul Engineering Co., Ltd Group (PCL), the leading supplier of equipment for power systems and renewable energy systems, covering in all stages of transmission and distribution of electricity from power plants to consumers with goods. More than 5,000 items to meet the needs and characteristics of the different customer groups. Both the household level to the macro level of government, the Group has expanded its business into the manufacture and sale of electricity from renewable energy as well. The Group comprises the Company and its subsidiary companies as follows: 6. Gunkul Engineering Public Company Limited

83


1) Gunkul Engineering Public Company Limited : GUNKUL. Providing and distributing equipment for electrical systems and related systems, including accessories for power generation from renewable energy, for distribution to the group of customers of the company. The products that the company distributes are manufactured both by the Group and produced by other operators, both locally and abroad. And, renewable energy power plant construction. The Company has a total registered capital of 440.00 million baht. 2) G.K. Assembly Company Limited: GKA Street lighting equipment and accessories such as handling transmission lines (Preformed), cable spacers, and hardware Including production of Mounting Structure for the solar plant under the different brands of the Group, GUNKUL, GK, ZIMLUG, PIGMAN, TOPWELD and ZIMTAP. To distribute to Gunkul Engineering Public Company Limited and K.N.P.Supply Co., Ltd. with a current total registered capital of 200.00 million baht. 3) G.K. Power Products Company Limited : GKP Production of equipment and control systems for power transmission and distribution lines under the the Group’s brands “GUNKUL” and “GK”. By focusing on the safety equipment and joining systems such as electrical wiring, fuses and switches to distribute to Gunkul Engineering Public Company Limited and K.N.P.Supply Co., Ltd. with current total registered capital of 100.00 million baht. 4) K.N.P. Supply Company Limited: KNP Distribution of electrical system equipment and other systems related to public sector customers directly. Acting as a contactor and participating in the bidding for the procurement of the various customer segments. The main customers being the PEA and MEA, with a total registered capital of 50.00 million baht.

84

Smart Energy in Action


5) Gunkul Powergen Company Limited: GPG The production and distribution of electricity from renewable energy using renewable solar energy. For distribution to the PEA. There are a total registered capital of 992.00 million baht. 6) Wind Energy Development Company Limited : WED The production and distribution of electricity from renewable energy using renewable Wind energy. For distribution to the PEA. There are a total registered capital of 179.90 million baht. The company’s products can be classified into five categories based on the usage as follows: 1) Protection and transmission system control equipment and and distribution lines including power cut switch (Disconnecting Switch), load break switches, gas switches (SF6 Gas Load Break Switch), and air brake switch, transformer fuse fuse cut-out, Surge Arrester, Live part cover and Grounding system. 2) Transmission and distribution lines equipment including cables (Cable), to hold the line pieces (Preformed) cable spacers (Cable Spacer), connector device (Connector), device on the cable (Cable Termination), a cable connection (Cable Splicing), electrical insulators (Insulator). 3) Tools and equipment including safety belts, electrical rubber gloves, industrial gloves, helmets, instrumentation and testing equipment. 4) Street lighting equipment, including street lamps, control switches (Photo Control Switch) and a street light control relays (Street Lighting Control Relay). 5) Group of equipment for the system of renewable energy, including wind turbines, solar energy equipment and solar cells, hydro turbine, generator, transformer, control equipment etc.

Gunkul Engineering Public Company Limited

85


Diagram shows business conduct structure of the group of companies 1) Business to produce, supply and sell equipment for electrical system and alternative energy system

Produce for sell

Supply for sell

GKA GKP Ä KNP Sell Product Ä Ä Public Sector Customers

Produces of equlpment for electrical system Ä

Ä

Ä

Private Sector Customers

Oversea Customers

2) Business to produce and distribute electricity from renewable energy resources Produce electricty from renewable energy resources Sell electricity

Ä

Electricity Authority

3) Business to construct alternative energy power plant Producers of equipment Sub-Contractor Electrical System Ä

Ä

Power Plant Owner

86

Smart Energy in Action

Engineering Consultants


The diagram shows the structure of the business of the Group suggesting that the Group’s core business is divided into three parts as follows. 1) Production and supply of equipment for power systems and renewable energy systems. 2) Manufacture and sale of electricity generated from renewable energy resources. 3) Construction of renewable energy power plants. The customer group is divided into three groups including, public sector clients, private client group and international customers. Each group can be structured as follows. The revenue of the company by the business. Type of income

20101) Million baht %

20111) Million baht %

20121) Million baht %

1. Income from production and supply of equipment for power systems and renewable energy 1.1 Provisions for distribution. 986.76 76.02 1,763.88 66.10 1,099.66 23.08 1.2 Production for sale. 302.00 23.27 365.29 13.68 706.24 14.82 Total 1,288.76 99.08 2,129.17 79.78 1,805.90 37.91 2. Income from production and sale of electricity from renewable energy - Manufacture and sale of electricity from solar energy - - 72.50 2.72 168.81 3.54 3. Income from construction of renewable energy plants - - 449.84 16.86 2,318.06 48.66 2) Other revenues 9.31 0.92 17.19 0.64 471.11 9.89 Total revenue 1,298.07 100.00 2,668.70 100.00 4,763.88 100.00 Data from the Group’s consolidated financial statements as of December 31, 2012 with Gunkul Engineering Public Company Limited holding shares in G.K. Assembly Co., Ltd., G.K, Power Products Co., Ltd., K.N.P.Supply Co., Ltd., and Gunkul Powergen Co., Ltd. of 99.99 percent and holding shares and holding shares of Wind Energy Development of 70 percent. 2) Other income, including interest and profit on disposal of assets, foreign exchange profits, gain on sale of scrap etc. 1)

Gunkul Engineering Public Company Limited

87


The revenue of the company by customers Income

20101) Million baht %

1. Public sector clients 1.1 Revenue from electricity and renewable energy equipment 2. Private client group 3. Foreign customers Total revenue

448.44 239.96 600.36 1,288.76

20111) Million baht %

34.80 417.07 18.62 866.62 46.58 1,367.82 100.00 2,651.51

20121) Million baht %

15.73 581.84 32.68 3,107.06 51.59 603.87 100.00 4,292.77

13.55 72.38 14.07 100.00

Data from the Group’s consolidated financial statements as of December 31, 2011 with Gunkul Engineering Public Company Limited holding shares in K.N.P.Supply Co., Ltd., G.K, Power Products Co., Ltd., G.K. Assembly Co., Ltd., and Gunkul Powergen Co., Ltd. of 99.99 percent and holding shares in Wind Energy Development Co., Ltd. of 70 percent.

1)

Business Goals. In 2012, the Company aims to conduct business defined as follows. 1. Retain key customers, including the Provincial Electricity Authority, Metropolitan Electricity Authority, Electricity Generating Authority of Thailand, Private businesses, both domestically and internationally with the Power Authority of the Union of Myanmar, Lao People’s Democratic Republic, Malaysia And Vietnam. 2. Expand customer base, both domestic and internationally to increase market share 3. Provide new products to meet customer needs 4. Expansion of renewable energy, including the acquisition of the power purchase agreement, joint ventures with other operators who have contracts to supply electricity or renewable energy consultation. 5. To build solar power plant to be completed by the power purchase agreements made with the Provincial Electricity Authority 6. The construction of power plants and wind power, both within and outside the country 88

Smart Energy in Action


7. The study and construction of power plants, biomass and biogas. Of Napier grass. In Thailand. And its neighbors. 8. Implementation of renewable energy investments in neighbouring countries 9. Add business partners to enhance business security 10. Enhanced functionality to support the expansion of business by the introduction of advanced technology applications such as networking in the enterprise information system, through video conferencing 11. Develop staff ability to keep pace with the growth of the company 12. Increase the Corporate Social Responsibility (CSR) of the company

Business Goals in 3-5 years Industrial power systems, both at home and abroad are likely to increase due to the recovery after the economic crisis. With awareness about renewable energy, which is supported by investment from the private sector and government agencies involved in the industry including the Ministry of Energy and the Electricity Generating Authority of Thailand and the Provincial Electricity Authority. For this reason the company has a policy to expand the use of renewable energy to meet the government’s budget, focusing on renewable energy, solar energy and wind power as the main types. In addition to this, increasing the readiness of the company, it’s finances, reliability and it’s potential. After being a company listed on the Stock Exchange of Thailand, the company has received interest from several investors. Management’s policy is to keep the plants within the company, developing new products for the electrical equipment under its own brand, Gunkul, to increase its competitiveness in the market for high voltage equipment. The company also has a policy of expanding the market to supply electricity to other countries. Our main focus is to supply quality products from the factories under the company brand GUNKUL that will be tested in accordance with international standards. The company’s goal is to build the brand GUNKUL to be accepted in other countries as having products of good quality, reliable and cost-effective. In order to avoid price competition with products from other countries where potential costs and wages in manufacturing are lower, such as China, India or Vietnam, the implementation of these policies will be implemented in conjunction with the development of human resources, taking into account the principles of good governance and social responsibility as being highly important. Gunkul Engineering Public Company Limited

89


13. Industry overview and competition

Industry overview • Overview of the Electricity System in Thailand Parties involving in the industry of electrical power and system production in Thailand can be divided into 3 main groups as follows:- 1) Power producers Manufacturers of electrical systems in Thailand can be divided into 6 groups, i.e. the Electricity Generating Authority of Thailand, major independent power producers (IPP), small power producers (SPP), very small power producers (VSPP), other producers including government agencies like the Department of Energy and Energy Conservation that produce electrical power from small hydropower dams, and the import of power from foreign countries. The Electricity Generating Authority of Thailand (“EGAT”) serves as the country’s largest power producer, the largest purchaser of electrical power produced by other manufacturers, as well as the importer of electricity from neighboring countries, namely Laos and Malaysia. EGAT determines the amount of power each power plant has to supply to national transmission system to meet the electricity demand in each period. 2) Power suppliers The Electricity Generating Authority of Thailand is the supplier of electrical power to 2 state enterprises, i.e. the Metropolitan Electricity Authority (“MEA”) and the Provincial Electricity Authority (“PEA”) that are responsible for distribution of electricity to industrial sector, business sector and household sector around the country. EGAT supplies electrical power directly to some customers as well. In electricity transmission from power plants to MEA and PEA requires, the voltage must be regulated to reduce any power loss during long-distance transmission of electricity. Then MEA and PEA transmit electricity to users through the voltage transmission system. MEA is responsible for electricity transmission in Bangkok, Nonthaburi and Samut Prakan. PEA is responsible for electricity transmission to areas other the 3 provinces. In electricity transmission to end users, the voltage must be reduced to level suitable for use. 90

Smart Energy in Action


3) Consumers Consumers consist of industrial sector, business sector and residential users, etc. In 2012, peak demand for electricity in EGAT system was at 2.30 p.m. on 26 April 2012, at 26,121.1 mw, increasing from 23,900.2 mw peak demand in 2011 by 2,220.9 mw or by 9.24%. Net demand of EGAT electricity for the first 5 years of 2012 (January - May) amounted to 71,698.4 million units, increasing by 6,146.4 million units or by 9.38% from 65,552.0 million unit of net demand in 2011. According to forecast by the Office of the National Economic and Social Development Board (NESDB), economy was to expand by 5.5% due to accelerating domestic demand, particularly higher household spending that corresponded to higher income, and economic stimulus measure like the first car policy. In this regard, the Energy Policy and Planning Office (EPPO) reported that national energy consumption had increased, with total value of 2.129 trillion baht, increasing from 1.947 trillion baht of last year’s consumption by 9.4%. Consumption of oil increased by 6%, of electricity by 16.3%, or natural gas by 26.3%, of lignite and peat by 5.1%, and of renewable energy by 3.9%. Concerning national electricity production, installed generating capacity in 2012 was at 32,290 mw, 47% of which was by EGAT, 39% by IPPs, 7% by SPPs, and another 7% by import and exchange. The Peak demand was at 2.30 p.m. on 26 April, at 26,121.10 mw, increasing by 9.24% when compared to last year. National electricity consumption totaled 161,500 kw per hour, increasing by 8.5% because of torrid weather in April along with recovery of large-scale business sector and household sector after late-2011 flood. Consumption in MEA areas increased by 8.7%, in PEA areas by 8% and by direct clients of EGAT by 5.7%. As for consumption according to type of users, consumption for household increased by 10.5%, for business sector by 7.9% and for industrial sector by 8% as a result of post-flood economic recovery. FT charges in 2012 improved from 0 satang/unit in early 2012 to 48 satang/unit in September-December in line with the rise in fuel prices. Source : The Energy Policy and Planning Office, Ministry of Energy Source : www.thanonline.com

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• Overview of electricity system in related private sector The Company’s private sector clients related to electrical systems are generally a diverse group of clients, e.g. companies in the construction of the power system, public transport industry, electrical and telecommunications industry. However, when considering only large private sector projects, it was founded that projects by big private sector related to or supported by government. The government’s stimulus plan, especially investment in state-initiated infrastructures such as BTS and BRT projects, with a total investment of more than 800,000 million baht within 20 years, has influenced the private sector involved in such investments. These private companies involving in such investment are to increase their investments . The Company itself sees window of opportunities in providing electrical equipment related to power transmissions to the rail system, for example, electrical protection devices, cable termination equipment and cable connecting sets, equipment grounding systems and other equipment related to the supply of electricity electric rail systems. • Overview of Electrical System of Myanmar Gunkul Engineering Public Company Limited has been supplying electrical equipment for substation system, transmission line system, distribution line system to clients in the Union of Myanmar since 1997, totaling 16 years. Most of its clients are government agencies, e.g. the Ministry of Electric Power, Yangon Electricity Supply Board and Water Resource Utility Development. The Company’s sales volume amounts to approximately 110 million US dollar. In doing business with Myanmar government agencies, the Company has prevented risks from foreign exchange by dealing transactions in foreign currencies like dollar and euro, which are also used in purchase of goods. The Company obtains letters of credit directly from government agencies, thus bearing no risks of unsuccessful collection. After Myanmar under the democratic government of President Thein Sein became open for trade and investment and has been visited by leaders of the superpowers like the US and European nations that once boycotted the country, investors from many countries have confidence in Myanmar. Although its regulations concerning investment are not completely clear, the government is keen to amend related laws and regulations to encourage more investments. 92

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Myanmar’s demand for electricity has risen because of greater inflow of investments after the opening up to outside world. At present, the country’s electricity generating capacity is about 3,000 mw, which is 9 times lower than Thailand that has comparable number of population. In addition to insufficient generating capacity in the future, Myanmar government gives priority to expansion and improvement of substation system, transmission line system and distribution line system.

Outlook for power generation industry and electrical system in Thailand Thailand Power Development Plan for 2012-2030 (Revision 3) has been formulated within the framework of national energy policies as follows:- 1) The 20-Year Energy Efficiency Plan, which targets to “reduce the ratio of energy consumption to GDP by 25% within 20 years (2011-2030),” resulting in projections of declining power demand of the country due to energy conservation scheme and energy efficiency promotion. 2) The 10-Year Alternative Energy Development Plan (AEDP 2012-2021), which targets to “use renewable energy and alternative energy instead of fossil fuels by at least 25% within 10 years,” resulting in replacement of some power plants that are based on fossil fuels, such as coal and natural gas, by renewable energy power plants. In addition, the government has policies to stimulate economy, causing the growth rate projection or GDP expansion of Thailand to improve. However, net peak power demand in 2030 is forecast to be approximately 52,256 mw, decreasing from that of the previous edition by 3,494 mw or 6.27%. Added power generating capacity during 2012-2030 can be summarized as follows:- - Total capacity as of December 2011 32,395 mw - Total added capacity during 2012-2030 55,130 mw - Total retired capacity during 2012-2030 -16,839 mw - Grand total capacity as of 2030 year-end 70,686 mw

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Power demand forecast based on national economic growth or GDP assumptions for 2011-2030 by the National Economic and Social Development Board dated 29 November 2011, which has also taken into account the government economic stimulus policy along with the effects of the great flood in late 2011, can be summarized as follows:- Table: Economic forecast for 2011-2030 Year

2011 2012

2013 2014

2015

2016 2017

2018 2019

2020

GDP

1.5

5.1

6.0

5.1

4.1

4.3

Year

2021 2022

2023 2024

2025

2026 2027

2028 2029

2030

GDP

4.2

4.0

4.0

4.0

3.9

3.8

5.0 4.1

5.7 4.0

4.7 3.9

4.2 3.8

With the government policy targeting on increasing the share of renewable energy and alternative energy instead of fossil fuel by 25% within the next 10 years, Thailand Power Development Plan has added in it the renewable energy power plants of 14,580.4 MW. When include the said capacity to existing capacity of 6,340.2 mw and deductible by retired capacity of 374.3 mw, the net electricity generation from renewable energy at the end of the plan in 2030 will be 20,546.3 mw, accounting for 29% of total system capacity, divided into domestic renewable energy of 13,688.30 mw and renewable energy from neighboring countries of 6,858 mw, as follows:-

Type (unit : mw)

power Solar Wind power Hydropower (domestic and import) Biomass Biogas Solid waste Total

2012-2021

2022-2030

1,806.4 1,774.3 3,061.4 2,378.7 22.1 334.5 9,377.4

1,995.7 199.4 2,742.5 223.5 24.1 17.8 5,203.0

Source : The Energy Policy and Planning Office, Ministry of Energy

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The added power generating capacity during 2012-2030 will be 55,130 mw, classified by types of power plants as follows:-

1) 2) 3) 4)

Renewable energy power plants 14,580 mw - Domestic 9,481 mw - Purchased from abroad 5,099 mw Cogeneration power plants 6,476 mw Combined cycle power plants 25,451 mw Thermal power plants 8,623 mw - Clean-coal power plants 4,400 mw - Nuclear power plants 2,000 mw - Gas turbine power plants 750 mw - Purchased from abroad 1,473 mw Total 55,130 mw

Overview of the business • Business of electrical equipment Growth of the Company’s business is directly related to the expansion of transmission and distribution of electricity, which depend on the demand for and supply of electrical power generation in Thailand. Related agencies, such as EGAT and EPPO, are responsible for forecasting future electricity demand of the country in the future and setting framework of the capacity development plan in order to support further planning of various development projects to accommodate increasing demand for electricity in the future. Information of electricity system development and expansion portrays the government’s keen and continual investments electricity projects that worth more than a hundred billion baht. As a result, the electrical equipment business in Thailand is on a growing trend according to the policies. The electrical equipment business in the Company’s main export markets, the Union of Myanmar in particular, tends to grow continually as well. This is contributed by construction of infrastructure and utilities for electricity manufacturing and distribution in order to support national economic expansion during 1985-2008. In this regard, the Union of Myanmar has invested in 21 projects of multi-scale voltage distribution systems with total distance of 1,946 Gunkul Engineering Public Company Limited

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kilometers, and 12 projects of substation construction with total production and distribution capacity of 1,450 mega volt ampere. In addition, Myanmar government plans to expand electricity production and distribution to other parts of the country by making additional investments in 41 projects of multiscale voltage distribution systems with total distance of 8,454 kilometers and 8 projects of substation construction with total production and distribution of 4,000 mega volt ampere in the near future. As a result, demand for electrical system equipment in the Union of Myanmar is on a steadily growing trend.

• Business of renewable energy equipment

Growth of the Company’s renewable energy equipment business is directly related to the renewable energy investment promotion of government sector. In the past 2-3 years, the government has been supporting renewable energy businesses through various policies, for example the Adder subsidy for purchase of electricity generated by renewable energy and the addition of electricity-generating mega wind turbine installation project in the 10th Thailand Power Development Plan for 2010-2030, etc. As a result of government’s support and promotion of renewable energy business, the renewable energy equipment is on a growing trend, with government sector being the leader and supporter of investment. • Business of producing and slinging electricity generated by renewable energy Trend in production and sale of electricity from renewable energy in Thailand is in the same direction as renewable energy equipment business. However, it must rely on the government’s investment because the cost of generating electricity from renewable energy is higher than electricity generation from other fuels. Electricity generation from solar energy costs as high as 8-10 baht per unit, so the production and sale of electricity from renewable energy are not worth investing. The production of electricity from renewable energy in the past was thus done by using waste materials such as solid waste, rice husks, or bagasse which were of lower costs. The capacity is quite low and sufficient just for limited use, so the electricity of this kind was commercially 96

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produced for sale. However, the government’s supportive schemes, especially the 2009 Plan’s Adder subsidy for purchase of electricity generated from renewable energy, have made electrical power producers and various business sectors become more interested in investing in electricity generation from renewable or alternative energies, with aim to produce for sale to government agencies that have purchasing quotas for electricity generated from renewable energy. As for production and sale of electricity from solar energy, Thailand Power Development Plan for 2012-2021 shows that solar-based electricity under Thailand’s electricity objectives is as high as 20% of the total 9,377.4 mw electricity from renewable energy, or equal to 1,806.4 mw capacity. Moreover, Thailand is a country that has the potential to produce quite high amounts of solar-based electricity, since it is located near the equator and exposed to the sun throughout the year. With these factors, solar-based electricity production and selling business tends to grow steadily in the future. • Business of construction of renewable energy power plants The government’s promotion of electricity from renewable energy including Thailand’s potential to produce electricity from renewable energy have attracted the interest of domestic and oversea companies to invest in the business of producing electricity from renewable energy. Therefore, the Company’s renewable energy power plant construction business will grow in line with sizes and quantities of such renewable energy power plants. As mentioned above, production of electricity from renewable energy in Thailand is still in its infancy and will grow more extensively owing to Thailand Power Development Plan for 2010-2030 (Revision 3).

Competition • Businesses of manufacturing, supplying and selling equipment for electrical system and renewable energy system The Company’s main clients are government agencies, state enterprises and large private companies. In general, customers will set criteria for qualifications of the operators who attend project biddings as well as consider Gunkul Engineering Public Company Limited

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the potential and experience of each bidder in supplying equipment for projects. The Company’s management estimates that there are 8-10 operators considered as bidding competitors, some of them have assorted product categories. However, no operators have competitively full-range products as the Company and its subsidiaries. Being supplier and distributor of a wide variety of products, the Company therefore has these operators as its business partners. urthermore, electrical system is one of the country’s main infrastructures. The government thus recognizes the importance of continual investment every year. As a result, the total market value of the business has been growing steadily in line with the government’s investment policy. In the meantime, there are a few new operators entering the business because they must rely on funding and the ability to supply products that meet customers’ requirements both in terms of quality and quantity. The competition in this business is therefore not severe. The Company’s group is renowned for product quality and variety. Being in business for over 30 years has contributed to the Company’s expertise in procuring quality products from various trade partners both locally and abroad. The Company’s manufacturing plants enable it to provide quality products under better cost control and thus outperform other operators who do not own manufacturing plants with flexibility of stocks that can be readily supplied to customers. The Group also seeks to fulfill varying needs of customers by focusing on product quality and constant research and development. Products manufactured by the Group’s plants are not only listed with the Ministry of Industry and certified for industrial standards, thereby making the Group to have good relationships and win the trust of customers who have given the Group all-time patronage. • Business of producing and selling electricity Investing in projects of commercial production of solar-based electricity, private companies is bound by terms and conditions of electricity purchase agreements to produce and sell all the electricity to agencies related to electricity. As the Company gains revenue from selling all electricity produced to PEA, there is no competition in its electricity sale business. 98

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Upon entering this business, operators or investors of electricity generation for sale to electricity agencies must initially meet the qualifications specified by said electricity agencies and the Ministry of Energy. Other technical information will be taken into consideration before sale agreements with electricity agencies are approved. Operators of this business require quite a large sum of investment for power plant construction. Consequently, the competition in the business of producing and selling solar-based electricity is not so intense. In addition, the PEA has postponed the acceptance of application for solar-based and wind-based electricity selling projects from VSPPs for the time being, and also reviewed the ratio of Adder subsidy for purchase of electricity, making it difficult for new operators to compete in this business. • Business of construction of renewable energy power plants At present, many construction companies, including those in overseas, have competed in the construction biddings. The Group is not only among the first to build both solar- and wind-based power plants in Thailand, but also own power plants, thereby having quite a high bargaining power with manufacturers of solar cell panels, wind turbines and other power plant equipment. Moreover, the Company has developed products and equipment for use in its own renewable energy power plants. All these give the Company a big advantage in terms of construction cost s over other competitors, especially those from overseas who have to bear higher costs of hiring subcontractors in Thailand. The Company can also process the application of various permits necessary for power plant construction such as BOI and factory permit, and coordinate with electricity agencies and relevant government agencies, etc. Power plant operators are provided with convenient and smooth operations when choosing the Company’s services.

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14. Risk Factors

14.1 Dependence on client risks • Risk of dependence on government sector clients Due to the main customers of the Company and its subsidiaries, being the government electricity agencies such as Provincial Electricity Authority, Metropolitan Electricity Authority, and The Electricity Generating Authority of Thailand, which have a proportion of about 9% of the sales revenue of the Company and its subsidiaries in 2012. The revenue from sales to these customers is based on the government’s budget for electricity. If the government changed its electricity investment policy, or if the company is not selected in the auction it may result in the company losing of revenue from these customers. Investment in electricity is regarded as investment in basic public infrastructure that grows continually. In times of economic expansion, the government sector needs to expand its public utilities to support such growth and the increase of population and households. On the contrary, in times of economic slowdown, the government sector usually uses the public investment in infrastructure as a mechanism to stimulate economic recovery. So it can be said that the risks arising from the change of investment policy in the government power sector is quite low. As for the bids for government projects, the auctions are generally divided according to product groups. The company’s products are not only of great variety, but also endorsed by quality standards like ISO, TISI and guaranteed by the tests of independent institutes, both domestically and internationally. Some of the products are also listed by the Office of Industrial Standards (TIS) in order to support sales to government agencies and state enterprises. Therefore, the risk that the company may not be selected in a project bid of any type is low as well. • Risk of dependence on large clients In 2012, the company sold products to approximately 180 PEA offices in different areas for the value of 609.38 million baht or equal to 100

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13.53% of the company’s sale income according to consolidated financial statements. Major customers of the company are regular customers who have maintained contact and business with the company for a long time and have a good relationship. Maintaining good standards of goods and services quality for over 30 years, the company is confident that it will continue to gain trust of customers. However, the company has a policy to reduce risk of dependence on any particular customer in each market, by constantly seeking new customers in order to expand customer base and to create more business opportunities and development of new products. • Risk of dependence on revenue from Myanmar In 2012, the Group had revenue from sales of equipment to Myanmar of 595 million baht, decreasing by 55% from 1,323 million baht volume in 2011, due mainly to the change of procurement policy from using foreign currencies to Myanmar currency. The company considers that procurement according to this new policy has a risk of exchange rate uncertainty of Kyat, which is highly volatile. Therefore, the Group undertakes businesses carefully by focusing on projects under foreign currency deals only. However, the Group plans to seek a long-term solution to meet the changing procurement policy, and is studying the feasibility of setting a branch in Myanmar. In order to reduce dependence on revenue from Myanmar, the Group has a policy of market expansion into neighboring countries, such as Lao PDR, Vietnam, Cambodia and Malaysia. Moreover, the Group has a policy to undertake the business of power generation from renewable energy sources and the business of power plant construction, both in Myanmar and Thailand. In this regard, the Group gains the trust of Myanmar government and is thus assigned to conduct a feasibility study of wind power development project. So, the Group believes that its policy can reduce the risk of dependence on revenue from Myanmar. However, the Group has a policy to prevent risk of dependence on any particular customer, by expanding customer base in public and Gunkul Engineering Public Company Limited

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private sector clients, including in export segment in order to soften the impact of possible decrease of purchase orders from any segment. The proportion of goods sold to each segment would vary from period to period. The company would consider factors that might affect order placements of each segment, such as electricity budget, related industrial circumstance and economic situation of Thailand and of customer countries, etc, in order to set an appropriate marketing policy for conditions in each period of time. For example, when the budget approval of government sector is slow, orders from customers in this sector will drop, and the Group will maintain its revenue size by focusing more on private sector and oversea clients. On the other hand, when private sector decreases investment, the Group will have orders from oversea customers and also government sector customers who use their budget to stimulate the economy. Therefore, diversification of customer segments can reduce risk of dependence on any single customer group, enabling the Group to maintain revenue scale in each period of time.

14.2 Risk of exchange rate fluctuation As the nature of business of the Group involves export to and import from foreign countries, which are paid mostly in US dollar or euros, the Group might be affected by the fluctuation of exchange rates. It might have gains or losses on exchange rates if the date of purchase or sale is different from the date of the delivery or payment. However, as the Group both makes import and export in foreign currency, it can reduce risk of exchange rate fluctuation on an extent. In case the dollar or euro is strong against baht, the Group will have increased income from foreign deals when the payment is converted into baht, yet the cost of imported raw materials will rise. Conversely, in case the dollar or euro weakens against baht, the Group will have decreased income from foreign deals upon currency conversion, and the cost of imported raw materials will drop. The above characteristics bring a natural hedge against fluctuations in exchange rates by planning ordering and delivery. The company will have a deposit account in foreign currency when the payment or sale is in foreign 102

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currency. When the Group has to pay for imported raw materials in the short term, the company’s management team will be assigned to monitor changes in exchange rates and use the information to plan the purchase of raw materials and deliveries that are paid or received in a foreign currency, to help reduce the risk of exchange rate (Natural Hedge). In addition, for the foreign currency that is left over in the balance by using Natural Hedge, the Group has a policy to reduce the risk by making sales contracts in foreign currencies beforehand (Forward Contract) in approximately 30% - 50% of foreign debt. In the year 2012 the Group had total sales in foreign currencies of 595 million baht, representing 14% of the revenue from total sales of the Group in that period, respectively. The purchase of raw materials and goods from foreign countries totaled 1,172.96 million baht, as a proportion representing 40.42% of value of raw materials and products of the Group during the same period. As of 31 December 2012 the Group made a contract to buy foreign currency beforehand, with the contract ending within one year, an amount equal to 77.11 million baht.

14.3 Possible risks to the power generation and supply business • Risk of power generation performance The ability to generate electricity of a solar power plant depends on two main parts, i.e. the quality of the solar panels and the amount of losses incurred in the electricity generation system. To prevent such risks, the Group uses solar panels from the top well-known companies such as Solar Frontier, K.K. (“SF”), Wuxi Suntech Power Co., Ltd. (“Suntech”) etc. which is regarded as one of the best manufacturers of quality solar panels recognized around the world. For the construction and installation of various electrical system equipment, the Group has employed Schneider (Thailand) Limited (cSFe), a company under the Schneider group of France which is recognized for its experience and expertise in the field of electrical engineering equipment and installation of electronic control systems as well, to take care of the task so as to prevent problems in the power generation Gunkul Engineering Public Company Limited

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system of the Group that may affect the ability to produce electricity. In order to build confidence and prevent any possible risks, the Group has entered into quality guarantee agreements with the parties involved, either in the provision of solar panels or the construction of power plants, to guarantee the efficiency and the ability to produce electricity according to the agreement. • Risk of power supply The Group has signed a power purchase agreement with PEA for distribution of power at the amount specified in each contract. The contract is a Non-Firm type for reasons that in the generation of solarbase power, the amount of power generated each time cannot be specifically controlled. According to the agreement, the PEA will purchase all electricity produced by quantities specified for each project. The contract is five years from the date of signing the contract and automatically continues for a period of five years. The PEA does not have the right to terminate the agreement as long as the company complies with the conditions specified in the contract. Due to the said conditions and the contract party being a government agency, it is considered that the Group has no risk from the inability to generate and supply electrical power, or the inability to collect payments. • Risk of failure to construct power plants in the future The Group has signed a power purchase agreement with PEA, with a capacity of 30.9 mw. Power plants under the first project, in phase 1 sized 3.0 mw and phase 2 sized 4.4 mw in Chon Daen district of Phetchaboon province, were completely constructed and began creating revenue from early January 2011 and October 2011 respectively. Power plants under the remaining 4 projects, with total capacity of 23.5 mw, are expected to be complete and be in production by the first quarter of 2013. The above agreement is of Non-Firm type and does not have a requirement for the amount of power delivery. Therefore, if the Group is unable to construct power plants of other projects in a determined period, 104

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The Company have permission to postpone. The company plans to complete the construction of all power plants by the first quarter of 2013. • Risk of flood or natural disasters In late October 2011, many provinces in Thailand including areas in Bangkok, Nonthaburi, Pathum Thani were badly affected by flood. The Group also suffered the flooding at its plants despite thorough preparation and measure. Although its machineries were not damaged, the plants had to temporarily cease operations because employees were cut off by flood. As a result, the company could not supply some items as planned and lost the revenue from sales of products produced by the plants for that period. However, the company has developed a precautionary plan against flood in the long term in order to reduce future risk of income loss due to natural disasters. Storage shelves for equipment, raw materials and goods have been elevated. The plants’ electrical and drainage systems, the test rooms, and the surrounding areas have been improved into a more appropriate conditions against flooding in the future.

14.4 Risks from economic and political factors Thailand’s economy in 2012 showed a high growth of gross domestic product (GDP). However, circumstance of the manufacturing factor was still uncertain, large investments were slowed down, accompanied by political unrest that impacted investment decisions. The alternative energy business segment like solar-based power plant (solar farm) and wind-based power plant (wind power) continue to grow. The government should make a clear indication about the support for investors. The company is expected to gain more income because it has been working on the aforementioned projects and is ready to take part in these projects either in terms of financial support, personnel, or equipment and technology for power plant construction. Political stability and disputes among people will remain critical factors that impede economic expansion, either in investment or industrial development. Gunkul Engineering Public Company Limited

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15. Corporate Governance Report

The Company’s Board of Directors trusts that good corporate governance is a crucial factor that represents efficient, transparent and accountable management system of the organization, thus securing confidence and trust of shareholders, investors, stakeholders and all related parties. For this reason, the Board is resolute in doing business with business code of conduct, good corporate governance principle and corporate social responsibility (CSR), and also in compliance with code of best practice of the Stock Exchange of Thailand as well as governing regulations of the Securities and Exchange Commission and the Capital Market Supervisory Board, in effort to achieve performance that always meets international standards, efficient management system and sustainable growth of the business. The Company’s corporate governance policy is set by four sub-committee including audit committee, executive committee, compensation committee and risk management committee. Such policy involves role and responsibility of the Company’s committee and sub-committee, right of shareholders, equal treatment among shareholders, benefit of all stakeholders, information disclosure and transparency, related transaction policy, inside information control, internal control and risk management, and business code of conduct. This policy is needed to be reviewed and adjusted consistently in order to cope with changing business environment and roles and regulations from Stock Exchange of Thailand or other related agencies. Moreover, to encourage equal treatment among shareholders and stakeholders, in 2012, the Company’s board of directors has prepared new way for minority shareholders to participate shareholders’ meeting by proposing meeting agenda in advance and/or proposing nominees to be board of directors via facsimile and/or company’s website. In 2013, the Company’s board of directors has resolved to segregate the Corporate Governance Committee from the Audit Committee in order to conform to good corporate governance policy, to encourage improvement and enhancement of good corporate governance policy, and to enable appropriate and continual disclosure of corporate governance performance. This will not only reflect the organization’s efficient, transparent and ethical management, along with responsibility to society and the environment, but also establish trust of the shareholders, investors and all stakeholders in the Company.. (Mr. Gunkul Dhumrongpiyawut) Chairman of the Board February 25, 2013 106

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(Mr. Sathaporn Kotheeranurak) Chairman of the Audit and Corporate Governance Committee February 25, 2013


16. Internal Control

The Company’s Board of Directors has appointed Audit and Corporate Governance Committee comprising three independent directors who are not the Company’s employees. Responsibilities are reviewing and auditing financial statements, supervising internal control, complying with rules and regulations and preventing any conflict of interests that may happen. The Company sets up its own internal audit department with aim to check and evaluate the internal control system of the Company and its subsidiaries. The Company prepares business code of conduct so called work book, implements the Key Performance Indicator (KPI) to control and evaluate the Company’s operations and incorporates risk assessment based guidance from COSO (The Committee of Sponsoring Organization of Treachery Commission). Internal audit department will report the auditing results and comments to audit committee and board of directors on quarterly basis. In the Board of Directors’ meeting 2/2013 dated February 25, 2013, Audit and Corporate Governance Committee (three independent directors), management and internal audit participated in this meeting. Following is the conclusion from the meeting regarding internal control system covering five areas;

1. Corporate and environment 2. Risk management 3. Internal control and operations 4. Information technology and communication system 5. Follow-up report

Both Board of Directors and Audit and Corporate Governance Committee agree with internal audit department that the Company and its subsidiaries have good efficient and proper internal control system. We found no error on the Company’s internal control system that can have significant negative impact on accuracy and reliability of the financial reports. Internal control also involves in checking the transactions between company and major shareholders, directors, management and/ or related persons. Gunkul Engineering Public Company Limited

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Audit and Corporate Governance Committee and management have continuously paid attention on corporate governance, internal control and risk management with aim to have good corporate governance, efficient internal control, acceptable risk management, reliable accounting and financial reports, and straightforward rules and regulations.

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17. Related Transactions

17.1 Summary of relationship between the Company, subsidiaries and related companies/persons Company

Group Co., Ltd. Gunkul (GKG) G.K. Assembly Co., Ltd. (GKA) G.K. Power Products Co., Ltd. (GKP) K.N.P. Supply Co., Ltd (KNP) Gunkul Powergen Co., Ltd. (GPG) G-Power Source Co., Ltd. (GPS)

Type of Business

Relationship

Holding - GKG is major shareholder of GUNKUL with 59.97% stake. company - GKG is held by Dhumrongpiyawut family at 99.64 and has shared director with GUNKUL named Mr.Gunkul Dhumrongpiyawut Producing - As of December 31, 2012, GUNKUL was major shareholder of transmission GKA for 99.99% stake. Shared directors between GKA and GUNKUL are Mr. Gunkul Dhumrongpiyawut holding 0.00005% equipment stake in GKA, Miss Sopacha Dhumrongpiyawut and Mrs.Areewan Roonprapan. Producing - As of December 31, 2012, GUNKUL was major shareholder of transmission GKP for 99.99% stake. Shared shareholder between GKP and equipment GUNKUL is Mr. Gunkul Dhumrongpiyawut holding 0.001% stake in GKP. Shared directors between GKP and GUNKUL are Miss Sopacha Dhumrongpiyawut and Mrs. Areewan Roonprapan. Distributing - As of December 31, 2012, GUNKUL was major shareholder of transmission KNP for 99.99% stake. Shared shareholder between KNP and equipment GUNKUL is Mr. Gunkul Dhumrongpiyawut holding 0.0002% stake in KNP. Shared director between KNP and GUNKUL is and Mr. Chaloempon Sricharoen. Producing - As of December 31, 2012 GUNKUL was major shareholder of GPG for 99.99% stake. Dhumrongpiyawut family holds 0.0005% electricity for sale stake in GPG. Shared directors between GPG and GUNKUL are Mr. Gunkul Dhumrongpiyawut, Miss Sopacha Dhumrongpiyawut and Mr.Somboon Aueatchasai. Producing - As of December 31, 2012, GUNKUL was major shareholder of GPS for 40.00% stake. Shared directors between GPS and electricity for sale GUNKUL are Miss Sopacha Dhumrongpiyawut and Mr. Somboon Aueatchasai.

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Company

Type of Business

Relationship

Energy Wind Producing - As of December 31, 2012, GUNKUL was major shareholder of WED for 70.00% stake. Shared shareholder between WED and Development Co., Ltd. electricity (WED) for sale GUNKUL is Mr.Gunkul Dhumrongpiyawut holding 0.001%. Shared directors between WED and GUNKUL are Ms. Naruechon Dhumrongpiyawut, daughter of Mr.Gunkul Dhamrongpiyawut, Mr. Somboon Aueatchasai. Shared directors between GPG and GPS is Mr. Somboon Aueatchasai. Future Electrical Contractor - FEC has jointed major shareholder with GUNKUL which is GKG Control Co., Ltd. (FEC) and Co., Ltd. and Dhumrongpiyawut family by holding 95.00% and 3.60% respectively. Shared directors between FEC and GUNKUL are Miss Sopacha Dhumrongpiyawut and Mr. Chaloempon Sricharoen. Previously, FEC was importer of transmission equipment to sell to GUNKUL. Now FEC has changed its business objective to contractor, while transmission equipment business was terminated since 2008. Gunkul Trading & International - GKT is held by Dhumrongpiyawut family, major shareholding of Agency Co., Ltd. (GKT) marine GKG. Dhumrongpiyawut family holds 66.00% stake in GKT. transport Shared director between GUNKUL and GKT is Miss Sopacha Dhumrongpiyawut. Kunnatee Co., Ltd. Marine - Major shareholder of KNT is Sricharoen family holding 97.93% (KNT) transport in stake. Sricharoen family is family of Miss Sopacha Asian region Dhumrongpiyawut. Gunkul Marine Line Operating - GML is held by Dhumrongpiyawut family for 97.00% stake. Co., Ltd. (GML) Closed Shared director between GML and GUNKUL is Mr.Gunkul Dhumrongpiyawut. Joint venture between Contractor - Joint venture between Sri-U-Thong and Future Electric Control Sri-U-Thong and has FEC as partner to do contracting business. Future Electric Control (JV-Sri & FEC) - GK2000 has Dhumrongpiyawut family as major shareholder for Gunkul Engineering Rental 76.00% Limited (GK2000) stake. Shared director between GK2000 (2000) (GK2000) and GUNKUL is Mr.Gunkul Dhumrongpiyawut. G.M. Supply & Rental GMS has Dhumrongpiyawut family as major shareholder for 98.00% Construction stake. Co., Ltd. Shared director between GK2000 and GUNKUL is Co., Ltd. (GMS) Mr.Gunkul Dhumrongpiyawut. 110

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Company

Type of Business

Joint venture between Contractor FEC and SAC (JV-FEC & SAC) P.M. Audit Co., Ltd. Audit Firm (PM) G.E.S. Logistics International Thailand) Co., Ltd. (GES) Marine Mr.Gunkul Director Dhumrongpiyawut Miss Sopacha Mr.Gunkul Dhumrongpiyawut Dhumrongpiyawut’s wife Miss Naruechon Director Dhumrongpiyawut Mr.Pavich Mr.Gunkul Dhumrongpiyawut Dhumrongpiyawut’s wife Mr. Chaloempon Director Sricharoen

Relationship

- Joint venture between FEC and SAC has FEC as partner to do contracting business. - P.M. Audit Co., Ltd. has a brother of Mr.Gunkul Dhumrongpiyawut as a director. - G.E.S. Logistics (Thailand) Co., Ltd. has a sister of Mr.Gunkul Dhumrongpiyawut as a director. Mr. Gunkul Dhumrongpiyawut and family holds 59.97% stake in GKG which is major shareholder of GUNKUL. He is GUNKUL’s president. - Miss Sopacha Dhumrongpiyawut is Mr. Gunkul Dhumrongpiyawut’s wife. She is Gunkul’s managing director. - Miss Naruechon Dhumrongpiyawut is Mr. Gunkul Dhumrongpiyawut’s daughter. She is Gunkul’s director. - Mr. Pavich Dhumrongpiyawut is Mr. Gunkul Dhumrongpiyawut is Mr. Gunkul Dhumrongpiyawut’s son. - Mr. Chaloempon Sricharoen is Miss Sopacha Dhumrongpiyawut ‘s brother. He is Gunkul’s director.

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GES

GKT

Marine transpot KNT

Transportation 3.1 mb

Goods & Services 0.02 mb GKP

GKA

ผลิตสินค้า

Selling

GPS

GPG

Rental land and Rental assets GMS GK2000

Power producer

KNP

GKE

จำหน่ายสินค้า

Selling electricity

Selling Goods/Services

PEA

JV FEC & SAC

JV-Sri & FEC

Contracting 305 mb

Contractor FEC

Total rental paid 8.20 mb

Sub-renting land and

GKE Group

Total rental 0.69

17.2 Summary of related transactions ended 31 December 2012 Mr.Gunkul and Ms.Sopacha Dhumrongpiyawut

Smart Energy in Action

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17.3 Summary of related transactions in 2011 and 2012 (1) Sales of goods and rendering of services Related Type of Company companies transaction

GUNKUL

Size 2011 2012 (million (million baht) baht) Reason and necessity

GKP Sale of goods 51.21 Account receivables - KNP Sale of goods 39.03 Account receivables 17.06 GKA Sale of goods 17.08 Account receivables 0.90 FEC Sale of goods 0.13 JV- Sri Sale of goods 0.69 & FEC KNT Sale of goods 0.07 Account receivables 0.00 JV- FEC Sale of goods 0.07 & SAC Account receivables 0.08 GPS Construction of 1,747.88 power plants Account receivables 882.68 Unearned revenue 176.47 Advanced - construction revenue Service revenue - Unearned - service revenue

4.10 0.42 35.37 1.67 1.76 2.78 0.42 - 0.02 - - - 784.53 304.13 17.04 3.61

GUNKUL sells raw material to GKP on cost plus 5-30% profit, for production of finished goods. GUNKUL sells finished goods to public sector clients on cost plus 5-30% profit. GUNKUL sells raw material to GKA on cost plus 5-30% profit, for production of finished goods. GUNKUL sells finished goods to FEC for use in contraction, FEC’s core business, on cost plus 5-30% profit which is comparable to other clients. GUNKUL sells finished goods to JV-Sri & FEC for use in contraction on cost plus 5-30% which is comparable to other clients. GUNKUL sells finished goods to KNT for use in marine transport on cost plus 5-30% which is comparable to other clients. GUNKUL sells finished goods to JV-Sri & SAC for use in contraction on cost plus 5-30% which is comparable to other clients. GUNKUL signs contract agreement to sell solar panel equipment to GPS including construction of 4 26-mw solar power plants on cost plus 5-16.27% profit.. Total contract is worth 2,938.13 million baht.

15.45 13.64

GUNKUL signs contract agreement worth 111.60 million baht to render power plant maintenance service to GPS. Term of contract is 6 years, from 1 March 2012 - 28 February 2018. Service fee is charged to GPS since 1 April 2012 - 31 December 2012 at a rate of 300,000 baht per month.

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Related Type of Company companies transaction

GKA GKP

GPG KNP GKP GPG FEC KNP

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Smart Energy in Action

Construction of power plants Unearned revenue Account receivables - construction work Account receivables - work guarantee Advanced construction revenue Sale of goods Account receivables Sale of goods Account receivables Sale of goods Account receivables Sale of goods Service revenue Account receivables Advanced revenue Sale of goods Account receivables

Size 2011 2012 (million (million baht) baht) Reason and necessity - 1,166.19 - 0.03 - 92.67 - 68.83 89.35 66.55 18.14 2.86 22.92 2.91 1.90 2.03 26.66 3.66 22.27 7.61 112.54 12.96

28.06 0.06 30.24 17.75 - - 168.76 24.83 92.55 7.61 24.12 0.56

GUNKUL signs contract agreement worth 1,450 million baht to construct 4 23.5-mw solar power plants and other construction works for GPG on cost plus 5.16.27% profit.

GKA sells finished goods to KNP and KNP resells the goods to public sector clients on cost plus 5.35%. GKA sells raw materials to GKP on cost plus 5.35%, for production of finished goods. GKA sells finished goods to GPG on cost plus 5-35%, for use in construction of solar power plants. GKA manufactures metal parts and render services to FEC on cost plus 15-35% with advanced deposit paid by FEC. FEC uses the goods for construction of steel structure of solar cell panels and EPC construction works.. GKP sells finished goods to KNP on cost plus 5-35%, KNP resells the goods to public sector clients.


(2) Purchase of goods and taking of services Related Type of Company companies transaction

GKP GUNKUL GKA KNP FEC G.E.S.

Purchase of goods Account payables Service fee Accrued expenses Purchase of goods Account payables Service fee Accrued expenses Purchase of goods Account payables Sales operation fee Accrued expenses Construction/service fee Account payables Retention payable from contractor Advanced payment for construction Maintenance expenses Accrued expenses Transportation/ service fee Accrued service expenses

Size 2011 2012 (million (million baht) baht) Reason and necessity 44.75 46.88 - - 142.34 9.48 - - 12.35 6.36 - - - - - -

167.55 112.09 0.22 0.24 260.11 66.52 0.82 0.51 13.96 10.29 0.15 0.16 304.30 29.50 37.16 109.97

GUNKUL buys finished goods from GKP to sell to GUNKUL’s clients. Prices of goods are based on cost plus 5-30% profit, and services fees by GKP are on cost plus 15-20% profit. GUNKUL hires GKP to render electrical equipment testing service for power plant projects, on cost plus 15-20% profit. GUNKUL buys finished goods from GKA on cost plus 5-35% profit to sell to GUNKUL’s clients. GUNKUL hires GKA on moving of supplies and equipment into construction site and repair work in power plant projects, on cost plus 15-20% profit. GUNKUL buys finished goods from KNP on cost plus 5-30% profit to sell to GUNKUL’s clients. GUNKUL pays consideration to KNP for selling goods to government sector, according to mutually agreed criteria. GUNKUL signs contracts with FEC to construct power stations and utilities systems for solar power plants, total contractual value is 672.71 million baht.

- -

0.93 0.21 2.92 0.04

GUNKUL hires FEC to repair paintwork for steel structure of solar cell panels at power plant at Bankluai, Petchaboon province. GUNKUL uses shipping service from G.E.S. Logistic, of which a sister of Mr. Gunkul Dhumrongpiyawut is a shareholder. The fees are comparable to other service providers.

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Related Type of Company companies transaction

GKA GKP GPG GPS

GKP FEC KNP FEC G.E.S. FEC

Purchase of goods Account payables Service fee Purchase of goods Construction fee Transportation/ service fee Construction fee

116

Smart Energy in Action

Size 2011 2012 (million (million baht) baht) Reason and necessity 0.28 0.82 GKA buys prefabricated raw materials from GKP 0.16 1.03 on cost plus 5-35% profit to produce finished goods. - 0.00 GKA hires FEC to repair paintwork for steel structure of solar cell panels at power plant in Buriram province. 0.20 - GKP buys prefabricated raw materials from KNP on cost plus 5-35% to produce finished goods. 59.95 1.16 GPG signs a contract with FEC to construct solar power plant and civil works for 1st project phase 2, capacity of 4.4 mw, at Chon Daen district, Petchaboon province. Contractual value is 59.95 million baht, and construction fee is lower than the contractual value when compared to the construction fee of phase 1 plant by Schnider (Thailand) Co., Ltd. In 2012, GPG hires FEC for additional construction of steel structure for solar cell panels, drainage system, concrete floor, and repair of paintwork, value of 1.16 million baht. - 0.18 GPG uses shipping service from G.E.S. Logistic, of which a sister of Mr. Gunkul Dhumrongpiyawut is a shareholder. The fees are comparable to other service providers. - 27.55 GPS signs 3 contracts with FEC to construct flood protection system, rainwater work, and stone flooring, total value of 33.46 million baht.


(3). Acquisition and divestment of assets and rental Related Type of Company companies transaction

GKA GUNKUL GK2000 GPG PM GKA GKP FEC

Sale of assets Purchase of assets Rental Sale of assets Purchase of assets Rental income Unreceived rental income Purchase of assets

Size 2011 2012 (million (million baht) baht) Reason and necessity 0.02 - 5.60 0.02 - 1.20 0.10 0.74

0.39 0.00 5.60 - 0.60 1.20 0.10 0.01

GUNKUL sells 1 2.5-cc Isuzu pick-up truck, year 2003, license plate no. ษค-8376, to GKA for internal use at a comparable market price. GUNKUL buys 1 harddisk from GKA for use in the company at a price of 3,198.38 baht, based on book value of the asset. GK2000 rents land and building from Mr.Gunkul Dhumrongpiyawut and then re-rent it to GUNKUL to use as warehouse (Ruamjit) and warehouse (Pichai) with three-year contract starting from July 1, 2012 to June 30, 2015, at average rental rate of 328,000 baht/month or 79.43 baht/ sq.m. for land and building (average rental calculated from average rental to premise space) and 139,000 baht/month or 249.10 baht/ sq.wah for land. This rental rate is close to rate that is appraised by independent appraiser, Noble Property Company Limited, at 79.51 baht/ sq.m. for Ruamjit and 248.33 baht/sq.wah for Pichai. GUNKUL sells 13 chairs and 3 meeting tables to GPG at prices based on asset book values. GUNKUL buys Toyota Harrier, license plate ภท-8884, year 2000, aged 12 years, from PM Audit at comparable market price. PM Audit has a brother of Mr.Gunkul Dhumrongpiyawut as a shareholder. GKA rents manufacturing building to GKP to use for goods assembly, with 3-year contract starting from 1 July 2012 - 30 July 2015 at rental rate of 100,000 baht/month. GKA buys 1 coating thickness meter from FEC at 13,573.75 baht for use in coated metal inspection at construction site.

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Related Type of Company companies transaction

GPG GKP

Director FEC Director GMS

118

Smart Energy in Action

Sale of assets Other payables Rental Unpaid rental Purchase of assets Purchase of assets (land) Rental Unpaid rental

Size 2011 2012 (million (million baht) baht) Reason and necessity 0.00 0.51 GKA sell 1 Toyota Vigo 2.5, year 2007, license 0.00 - plate ตษ- 8675, with GPS to FEC for use in the company at comparable market price. - 0.69 GKA signs a contract to rent land, 3,472 sq.m. on - 0.23 2 title deeds, from Mr.Gunkul Dhumrongpiyawut for use as supplies and goods storage. The land is located at Plaibang road, Mahasawat subdistrict, Bangkruai district, Nonthaburi province, which is near GKA plant. The term of the contract is 6 month, from 1 January 2012 - 30 June 2012, with renewal for further 3 years from 1 July 2012 - 30 June 2015 at rental rate of 57,800 baht/month or 16.66 baht/sq.m., which is close to rental rate as appraised by an independent appraiser, Thai Surveyor & Advisory Co., Ltd., at 16.66 baht/sq.m. 0.34 - GPG buys 1 ISUZU D MAX SPACECAB 2.5 SLX, license plate ปท -5887, from FEC for use in the company, at comparable market price. - 31.19 GPG buys land on title deed no. 5657, no.48, area of 60 rai at Bungkasam district, Nongsue district, Pathumthani province, as approved by the Board of Directors Meeting no.4/2012, for power plant construction, at appraised price by Thai Surveyor & Advisory Co., Ltd., an independent appraiser. 1.54 1.54 GMS rents land and building from Mr. Gunkul 0.13 0.13 Dhumrongpiyawut and re-lets them to GKP for use as office, testing building and warehouse. The term of rent agreement is 3 years starting from 1 July 2012 - 30 June 2015 at rental rate of 42,000 baht/month or 49.41 baht/sq.m., which is close to rental rate as appraised by Noble Property, an independent appraiser, at 49.75


Related Type of Company companies transaction

KNP

GK 2000 Rental

Size 2011 2012 (million (million baht) baht) Reason and necessity 1.06

1.06

baht/sq.m. GMS who rents a land of about 5 rai from Ms. Sopacha Dhumrongpiyawut re-lets the land to GKP for use as parking space and staff residence. Renew the term of contract is 6 months starting from 1 July 2012 - 31 Dec 2012 at rate of 86,000 baht/month or 41.61 baht/sq.wah which is close to rental rate as appraised by Noble Property, an independent appraiser, at 41.67 baht/sq.wah. GK2000 who rents land and warehouse (Ratchaneekorn) from Mr. Gunkul Dhumrongpiyawut re-lets the land and warehouse (Ratchaneekorn) to KNP for use as office, testing building and warehouse. The term of contract is 3 years from 1 July 2012 - 30 June 2015 at total rental rate of 88,500 baht/month. When calculating only rental for head office building, the rental rate is 83.33 baht/month and the rental rate for warehouse (Ratchaneekorn) is 135.71 baht/sq.m. which are close to rental rates as appraised by Noble Property, an independent appraiser, at 82.75 baht/sq.m. and 135.89 baht/sq.m. respectively.

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(4) Financial aids Related Type of Company companies transaction

GUNKUL GKA KNP GPG

120

Short term lending Lending Payment Balance Interest income Short term lending Lending Payment Balance Short term lending Lending Payment Balance Short term borrowing Borrowing Payment Balance Interest expense Unpaid interest Short term borrowing Borrowing Payment Balance Interest income Unreceived interest

Smart Energy in Action

Size 2011 2012 (million (million baht) baht) Reason and necessity 2.00 (2.00) - 0.02 3.00 (3.00) - 1.72 (1.72) -

- GUNKUL lends money to GKA for working - capital by issuing promissory notes with 5.975- - 6.1813% p.a. interest. The interest rates are - mutually agreed. - GUNKUL lends money to GKA for working - capital by issuing promissory notes with 3% p.a. - interest. The interest rate is mutually agreed. GUNKUL lends money to KNP for working - capital by issuing promissory notes with 5.7563- - 6.1818% p.a. interest. The interest rates are - mutually agreed.

18.45 (18.45) - 0.19 - 52.07 (33.00) 19.07 1.38 1.29

41.65 GUNKUL borrows money from KNP for working (12.50) capital by issuing promissory notes with 5.763- 29.15 6.1813% p.a. interest. The interest rates are 0.82 mutually agreed. 0.82 46.97 GUNKUL lends money to GPG for working (46.97) capital by issuing promissory notes with 5.7563-. - 6.1813% p.a. interest. The interest rates are 0.68 mutually agreed -


Related Type of Company companies transaction

GKA

GPS GKG WED GKP

Short term borrowing Borrowing Payment Balance Interest income Unreceived interest Allowance Interim Balance Short term lending Lending Payment Balance Interest expense Other borrowing Borrowing from related persons and related companies Borrowing Payment Balance Interest expense Unpaid interest

Size 2011 2012 (million (million baht) baht) Reason and necessity

249.18 382.51 (92.10) (353.27) 157.08 29.24 1.55 6.21 1.55 7.65 1.02 - 1.02 - 3.05 - - (3.05) - - 0.00 - - 0.05

GUNKUL lends money to GPS for working capital by issuing promissory notes with 5.7563- 6.1813% p.a. interest. The interest rates are mutually agreed. GUNKUL sets allowance for GPS as expense to import solar cell equipment. GUNKUL borrows money from GKG for working capital by issuing promissory notes with 3% p.a. interest. The interest rate is mutually agreed and is lower than borrowing rate from financial institutions, which charge 7.125-8.950 p.a. interest. GUNKUL sets allowance for WED as miscellaneous expenses.

GKA borrows money from GKP on short term 35.06 46.16 for working capital by issuing promissory notes (3.90) (14.00) with 3% p.a. interest. The interest rate is 31.16 32.16 mutually agreed. 0.15 1.08 0.14 1.18

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Related Type of Company companies transaction

GPS

KNP Mr. Gunkul Dhumr ongpiy awut

Size 2011 2012 (million (million baht) baht) Reason and necessity

Borrowing from related persons and related companies GKA borrows money from KNP on short term Borrowing 2.00 2.00 for revolving capital by issuing promissory notes Payment - (2.00) with 3% p.a. interest. The interest rate is Balance 2.00 - mutually agreed. Interest expense 0.01 - Unpaid interest 0.01 - Allowance Forward amount 0.20 - GPS disburses money from Mr. Gunkul - Dhumrongpiyawut, director, for use as guarantee Interim (0.20) Balance - - deposit for power sale agreement with Provincial Electricity Authority, in which director charged nothing on this.

5). Other items Related Type of Company companies transaction

GUNKUL GKA

122

Dividend income Unreceived dividend income

Smart Energy in Action

Size 2011 2012 (million (million baht) baht) Reason and necessity 2.76 2.76

1.68 -

GUNKUL gets dividend, by December 2012, from GKA at rate of 0.841 baht/share for 1,999,998 shares held (par value 100.00 baht each), totaling 1.68 million baht. The payment is according to resolution of 2012 annual general shareholders meeting on 27 April 2012.


Related Type of Company companies transaction

GKP KNP

Dividend income Unreceived dividend income Dividend income Unreceived dividend income

Size 2011 2012 (million (million baht) baht) Reason and necessity 9.83 8.61 GUNKUL gets dividend, by December 2012, - - from GKP at rate of 86.10 baht/share for 999,998 shares held (par value 1,000.00 baht each), totaling 8.61 million baht. The payment is according to resolution of 2012 annual general shareholders meeting on 27 April 2012 7.25 15.28 GUNKUL gets dividend, by December 2012, - - from KNP at rate of 19.56 baht/share for 499,998 shares held (par value 1,000 baht each), totaling 9.78 million baht. The payment is according to resolution of 2012 annual general shareholders meeting on 26 April 2012. As resolution of the Boards of Directors no. 3/2555 on October 18, 2012 had approved for interim dividend payment as performance as of June 30, 2012 from unappropriated Retained earnings THB 11.00 per share in the total anount of 5.50 THB m/n and expected to pay in October 2012.

Opinions of audit committee on related transactions between the Company and subsidiaries • Transactions between GUNKUL and GKA, GKP, KNP, GPG, WED and GPS take place as normal business practice and benefit the Company’s operations. As of 31 December 2012, GUNKUL holds 99.99% stakes in GKA, GKP, KNP and GPG, its subsidiaries, 70% stake in WED, its subsidiary, and 40% in GPS, its associated company. Therefore, these transactions do not pose any conflict of interest in the future.

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Opinions of audit committee on related transactions between the Company and subsidiaries, associated companies, and related persons and companies • Buy/sell transactions benefit the Company’s operations, are reasonable and have normal trade conditions. • Rental contracts between the Company and subsidiaries and related persons during 1 July 2009 to 30 June 2012 are made under rental contracts and re-let contracts to match with rates appraised by independent appraiser, Noble Property Valuation Co., Ltd, on 23 June 2009. The Company and subsidiaries and related persons have extend these contracts for a further 3-year, starting from 1 July 2012 - 30 June 2015. Hence, these rental and re-let contracts by the Company’s group have conditions and rental rates which are comparable to others and are reasonable and necessary. • Rental of land between the Company and subsidiaries from 1 July 2012 to 30 June 2015 are made under rental contracts to match with rates appraised by independent appraiser, Thai Surveyor & Advisory Co., Ltd, on 20 July 2012. Hence, these rental contracts have conditions and rental rates which are comparable to rental with a third party and are reasonable and necessary. • The Group made solar power plant construction contracts, on part of civil works and steel structure for solar cell panels, with related companies at prices lower than those of solar power plant construction in the initial phase, and comparable to construction contract made with a company on the same site. Moreover, after being a SET-listed company, the Company must comply with rules on connected transactions of the SET. If such transactions are consider not as “normal business” of the Group (details in “Manual of Listed Companies” under connected transaction section) and the transaction size is more than 1 million baht or 0.03% of NTA, the Company must seek approval from the Board of Directors meeting or the shareholders meeting (depending on transaction size) beforehand. • Asset acquisitions from related persons and companies to use for operation are necessary for and benefit the Company’s operation. Conditions and prices of these acquisitions are comparable to acquisitions from a third party. • All borrowing transactions between the Group companies and related companies are based on 5.975-6.1813 p.a. interest charges. Such interest rates 124

Smart Energy in Action


are averagely close to or slightly lower than interest charges on borrowings from financial institutions. These borrowings are necessary and reasonable and benefit the Company’s operations. • All lending transactions between the Group companies and related companies are based on 5.975-6.1813 p.a. interest charges. Such interest rates are averagely close to or slightly higher than interest rates of financial institutions. These lendings are necessary and reasonable and benefit the Company’s operations. As of 31 December 2012, the Company got credit lines from 4 commercial banks for total amount of 6,377.00 million baht. Details are as follows:- - Overdraft of 20.00 million baht, - Letter of credit/trust receipt of 665.00 million, in which GKA and GKP can share for 130.00 million baht and 40.00 million baht respectively, - Bank guarantee of 345.00 million baht, in which KNP and GKA can share for 50 million baht and 180 million baht respectively, - Letter of guarantee and letter of credit/trust receipt (Multi) of 1,536.50 million baht, in which GKA, GKP, KNP, GPG and GPS can share for 1,536.50 million baht, - Short term credit line of 2,169.00 million baht, - Credit line for foreign exchange forward contracts of 1,641.50 million baht, in which GKA and GKP can share for 5.00 million baht and 4.00 million baht respectively. All these credit lines are guaranteed by the right to claim the Company’s deposit, mortgages of land and buildings of the Company’s and subsidiaries’ directors (details in 5.1 Operating fixed assets), collaterals by the Company’s subsidiaries, and collaterals by the Company’s directors - Mr.Gunkul Dhumrongpiyawut and Ms.Sopacha Dhumrongpiyawut, and pledge of GUNKUL shares held by GKG.

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Related companies/persons

Relationship

Gunkul 1. Mr. President Dhumrongpiyawut 2. Ms. Sopacha Chairman of Dhumrongpiyawut Executive Directors 3. G.K. Assembly Subsidiary Co., Ltd. 4. K.N.P. Supply Subsidiary Co., Ltd. 5. G.K. Power Products Subsidiary Co., Ltd.

Summary Borrowing collaterals, total value of 1,135.00 million baht Borrowing collaterals, total value of 900.00 million baht Borrowing collaterals, total value of 410.00 million baht Borrowing collaterals, total value of 410.00 million baht Borrowing collaterals, total value of 490.00 million baht

Reason and necessity - Banks asked Mr. Gunkul Dhumrongpiyawut to place collateral for borrowings as he is a major shareholder and director. - Banks asked Ms. Sopacha Dhumrongpiyawut to place collateral for borrowings as she is a major shareholder and director. - Banks asks GKA to place collateral for borrowings as it is a subsidiary and an owner of collateral assets. - Banks asks KNP to place collateral for borrowings as it is a subsidiary, an owner of collateral assets, and shares the borrowing amount. - Banks asks GKP to place collateral for borrowings as it is a subsidiary, shares the borrowing amount.

Notes : Incuding credit line for foreign exchange forward contracts.

Opinion of audit committee : These transactions benefit the Company, and the persons and subsidiaries have placed their assets as collaterals without asking for any return. As of 31 December 2012, K.N.P. Supply Co., Ltd., a subsidiary, got credit lines from 4 commercial banks, for total amount of 1,667.92 million baht. Details are as follows:-

126

Smart Energy in Action


- - - -

Letter of credit/trust receipt of 15.00 million baht, Promissory notes of 10.00 million baht, Credit line for foreign exchange forward contracts of 15.42 million baht, Letter of guarantee of 1,627.50 million baht, 1,586.50 million of which is a part of the 1,716.50-million-baht credit line given to GUNKUL.

All these credit lines are guaranteed by pledges of the subsidiary’s deposit and promissory notes, collaterals by the parent company and its subsidiaries, and collaterals by the company’s directors - Mr.Gunkul Dhumrongpiyawut and Ms. Sopacha Dhumrongpiyawut. Related companies/persons

Relationship

1. Mr. Gunkul Dhumrongpiyawut 2. Ms. Sopacha Dhumrongpiyawut

President Chairman of Executive Directors

Summary Borrowing collaterals, total value of 65.42 million baht Borrowing collaterals, total value of 81.42 million baht

Reason and necessity - Banks asked Mr. Gunkul Dhumrongpiyawut to place collateral for borrowings as he is the company’s director. - Banks asked Ms. Sopacha Dhumrongpiyawut to place collateral for borrowings as she is the company’s director.

Notes : Incuding credit line for foreign exchange forward contracts.

Opinion of audit committee : These transactions are reasonable as they are guarantees for a subsidiary, and the persons have placed collaterals for the subsidiary’s borrowing without asking for any return. As of 31 December 2012, Gunkul Powergen Co., Ltd., a subsidiary, got credit lines from 2 commercial banks, for total amount of 3,131.10 million baht. Details are as follows:- - Long term credit line of 2,347.10 million baht, - Currency hedge contract of 828.00 million baht.

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All these credit lines are guaranteed by the right to claim the subsidiary’s deposit, pledges of deposit account of the subsidiary, mortgages of land, buildings and equipment of the subsidiary, and pledge of GUNKUL shares held by GKG. Note : Including foreign exchange forward contract and excluding currency hedge contract.

Opinion of audit committee : These transactions are reasonable as they are guarantees for a subsidiary, and the said company has placed collaterals for the subsidiary’s borrowing without asking for any return. As of 31 December 2012, G.K. Power Products Co., Ltd., a subsidiary, got credit lines from 2 commercial banks, which are joint credit lines with the parent company. Details are as follows:- - Letter of credit/trust receipt of 40.00 million baht, which is a part of 390million-baht credit line given to GUNKUL, - Letter of guarantee of 1,536.50 million baht, which is the same as 1,536.50million-baht credit line given to GUNKUL, - Foreign exchange forward contracts of 4.00 million baht, which is a part of 10.00-million-baht foreign exchange forward contracts given to GUNKUL. All these credit lines are guaranteed by the parent company, and Mr.Gunkul Dhumrongpiyawut and Ms. Sopacha Dhumrongpiyawut, the company’s directors. Opinion of audit committee : These transactions are reasonable as they are guarantees for a subsidiary by the parent company and persons without asking for any return. As of 31 December 2012, G.K. Assembly Co., Ltd., a subsidiary, got credit lines from 2 commercial banks, which are joint credit lines with the parent company. Details are as follows:- - Letter of credit/trust receipt of 130.00 million baht, which is a part of 1,375million-baht credit line given to GUNKUL, - Letter of guarantee of 1,716.50 million baht, which is the same as 1,716.50million-baht credit line given to GUNKUL, 128

Smart Energy in Action


- Foreign exchange forward contracts of 5.00 million baht, which is a part of 20.00-million-baht foreign exchange forward contracts given to GUNKUL. All these credit lines are guaranteed by the parent company, and Mr. Gunkul Dhumrongpiyawut and Ms. Sopacha Dhumrongpiyawut, the company’s directors. Opinion of audit committee : These transactions are reasonable as they are guarantees for a subsidiary by the parent company and persons without asking for any return. As of 31 December 2012, Wind Energy Development Co., Ltd., a subsidiary, got a credit line from 1 commercial bank in the form of borrowing of 348.00 million baht. Details are as follows:- - Short term credit line of 348.00 million baht for purchase of land. This credit line is guaranteed by the mortgage of land, pledge of share certificate of the company, and pledge of GUNKUL’s shares held by GKG. Opinion of audit committee : This transaction is reasonable as its guarantees are made by placing the company’s assets as collaterals. As of 31 December 2012, G-Power Source Co., Ltd., an associated company, got credit lines from 2 commercial banks, in the form of borrowings of 3,921.40 million baht in total. Details are as follows:- - Letter of guarantee of 1,540.40 million baht, - Long term credit line of 205.74 million baht for purchase of land and project reserve, - Long term credit line of 2,175.26 million baht for power plant construction. All these credit lines are guaranteed by mortgages of the company’s land and buildings, pledges of machinery and equipment, pledges of the company’s share certificate and pledges of the company’s deposit.

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Opinion of audit committee : This transaction is reasonable as the guarantees are made by placing the company’s assets as collaterals.

17.4 Policy and procedure of related transaction approval Related transactions between the Company and its subsidiaries and related companies/persons depend on reason, necessity and benefit to the Company as a whole. Price has to be fair or equivalent to normal business condition and in compliance with rules and regulations. The Company sets procedures and steps of approving such related transactions by not allowing management or related persons who have conflict of interest in that transaction to participate in the approval process. In case this transaction involves related person who may have conflict of interest, the Company will propose it to the audit committee for consideration. In case that the audit committee has no experience in that field, the Company may hire an independent expert or the Company’s auditor to give opinions on that deal and then propose the transaction to the board of directors or shareholders meeting for approval. The Company’s board of directors has complied with Securities and Exchange Act and other related rules and regulations, including criteria on related transactions and acquisition and disposal of material assets of the Company and its subsidiaries, in order to avoid any conflict of interest and to create maximum benefit to all shareholders.

17.5 Policy and trend to do related transactions in the future 1. Trend of related transactions with persons with possible conflict of interest • K.N.P. Supply Co., Ltd., G.K. Assembly Co., Ltd. and G.K. Power Products Co., Ltd. : The Company will continue to have related transactions with these subsidiaries, which are purchase/sale of goods, purchase/sell of assets, lending/borrowing including guarantees of loans, and taking pledges of the subsidiaries’ assets for the Company’s loans.

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• Gunkul Powergen Co., Ltd. and Wind Energy Development Co., Ltd. : operate electricity power production and selling business. Therefore, the Company and the subsidiaries may have related transactions constantly, which are sale of goods, purchase/sale of assets, lending/borrowing including guarantees of loans, and taking pledges of the subsidiaries’ assets for the Company’s loans. • G-Power Source Co., Ltd. : operates electricity power production and selling business. Therefore, the Company and the associated company may have related transactions constantly, which are sale of goods, purchase/sale of assets, lending/borrowing, all of which would be done according to necessity and on a normal business practice. • Gunkul Group Co., Ltd. : Being the major shareholder of the Company, it has given the Company some financial supports such as loans and credit guarantees. After the successful debt restructuring, GUNKUL will seek less financial support from this company. • Future Electrical Control Co., Ltd., JV Sri-U-Thong & FEC, and JV FEC & SAC : As the Company and those JVs are in construction business for civil and system works, related transactions happens as usual like purchase of goods or hire to produce finished goods etc. Such related transactions are necessary and based on normal business practice to support the Company’s operations. The Company, however, has no policy to sell its products to JVs for any other purpose, such as for re-reselling, except for its core business. The Company also has no policy to give financial aids or guarantee/pledge to JVs. • Gunkul Marine Line Co., Ltd. : GUNKUL will no long give financial aids to this company. • Gun Natee Co., Ltd., and Gunkul Trading & Agency Co., Ltd. : After successful debt restructuring with financial institutions, it is expected that the Company will no longer borrow money from these company. • Gunkul Engineering (2000) Co., Ltd., and G.M. Supply and Construction Co., Ltd. : As these two companies rent land and buildings which belong to Mr. Gunkul Dhumrongpiyawut during 1 July 2009 - 30 June 2012 and extend the rental for another 3 years from 1 July 2012 - 30 June 2015. So the Gunkul Engineering Public Company Limited

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Company has to sub-rent such land and buildings from these companies for use in business operations. • Jaraslut Patanakarn Electricity Co., Ltd. : The Company no longer has transactions with this company as it has ceased operations for dissolution. • G.E.S. Logistics (Thailand) Co., Ltd. : operates shipping and international liner business. The Company will continue to have related transaction with this company, which is shipping of merchandise. • Mr.Gunkul Dhumrongpiyawut and Ms.Sopacha Dhumrongpiyawut : One subsidiary has signed a land lease contract with Mr.Gunkul Dhumrongpiyawut for use as goods and equipment storage. Guarantees of credit line and use of the directors’ assets for loan collateral will continue. 2. Policy on related transactions in the future If the Company has to do related transactions between persons who may have conflict of interest, the Company has policy to request the audit committee to give opinions on necessity and suitability of the transaction. In case the audit committee has no experience on that field, the Company will hire independent expert or internal auditor to give opinions on that transaction and then propose this to board of directors or shareholders. Policy on related transactions is classified as follows:- • Normal practice transactions and transactions in support of normal business include buy/sell goods and/or hiring to produce finished goods. The Company has policy to let audit committee to consider and give opinions on reason and necessity of transaction. Pricing & trade conditions should be fair and have no conflict of interest involved. The Company has policy to let audit committee to consider and give opinions on that transaction on reason and necessity on quarterly basis and to comply with Securities and Exchange Act and related rules and regulations including disclosure of related transaction. • Other transactions apart from normal transactions and transactions in support of normal business include sell/buy other assets or other services or giving/taking financial aids. The Company has policy to request the audit committee to consider and give opinions on reason and necessity of that 132

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transaction and comply with Securities and Exchange Act and other related rules and regulations including disclosure of related transaction as well as the acquisition and disposal of material of the Company and subsidiaries. The Company, however, has no policy to lend money to person with conflict of interest for use in doing business for the Company

The Company’s board of directors will comply with Securities and Exchange Act and other related rules and regulations including disclosure of related transactions as well as the acquisition and disposal of material assets of the Company or subsidiaries, in order to prevent such transactions from posing any conflict of interest and to create maximum wealth to shareholders. The Company discloses related transactions in its annual report and in the notes to the audited financial statements.

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18. Summary of Financial Statements

Financial Statements (1) Accounting Audit Report • The report of the accounting auditor for the company’s financial statements and the consolidated financial statements for the company and its subsidiaries for the years 2010 and 2009, which were audited by Mr. Somyot Wiwatapinai, Certified Public Accountant (Thailand) No. 5476 from SP Audit Company Limited, who expressed his unbiased opinion that the above financial statements show the consolidated financial status on 31 December 2010 and 2009; the consolidated business performance and consolidated cash flow for the years ending 31 December 2010 and 2009 for the company and its subsidiaries; the separate financial statements showing the financial status on 31 December 2010 and 2009; the company’s business performance and cash flow for the years ending 31 December 2010 and 2009 as being properly accurate in terms of relevant content and in compliance with generally accepted accounting principles. • The report of the accounting auditor for the company’s financial statements and the consolidated financial statements for the company and its subsidiaries for the years 2011 and 2010, which were audited by Mr. Somyot Wiwatapinai, Certified Public Accountant (Thailand) No. 5476 from SP Audit Company Limited, who expressed his unbiased opinion that the above financial statements show the company’s consolidated financial status on 31 December 2011 and 2010; the consolidated business performance and consolidated cash flow of the company and its subsidiaries for the years ending 31 December 2011 and 2010; the separate financial statements showing the financial status on 31 December 2011 and 2010; the company’s business performance for cash flow for the years ending 2011 and 2010 as being properly accurate in terms of relevant content and in compliance with generally accepted accounting principles.

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• The report of the accounting auditor for the company’s financial statements and the consolidated financial statements for the company and its subsidiaries for the years 2012 and 2011, which were audited by Miss Susan Eiamvanicha, Certified Public Accountant (Thailand) No. 4306 from SP Audit Company Limited, who expressed her unbiased opinion that the above financial statements show the company’s consolidated financial status on 31 December 2012 and 2011; the consolidated business performance and consolidated cash flow of the company and its subsidiaries for the years ending 31 December 2012 and 2011; the separate financial statements showing the financial status on 31 December 2012 and 2011; the company’s business performance for cash flow for the years ending 2012 and 2011as being properly accurate in terms of relevant content and in compliance with generally accepted accounting principles.

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Description Current Assets Cash & Cash Equivalents Trade and Other Account Receivables - Net Unbilled Receivables – Related Parties Deposit for Purchase of Goods Advance payments to subcontractor Receivable from Revenue Department Inventories Construction in Progress Short-Term Loans to Related Parties Other Current Assets Total Current Assets Fixed Deposits and bill of exchange pledged as collateral Investments in associate Investments in subsidiaries Investment property Property, Plant and Equipment - Net Intangible Assets –Net Retention Receivables Other Non-Current Assets Total Fix Assets Total Assets

20121) Million Baht 581.93 1,254.79 17.06 10.67 146.96 37.71 412.59 55.82 29.25 - 2,546.78 605.17 321.41 - 31.19 2,763.89 681.50 - 8.33 4,411.49 6,958.27

20103) Million Baht 214.80 409.76 - 54.52 - 11.17 342.80 - - 2.18 1,035.23

163.34 - - - 505.42 66.58 - 19.14 754.48 1,789.71

Consolidated 20112) Million Baht 314.96 644.03 - 60.45 23.23 140.95 382.59 150.30 - - 1,716.51

493.90 - - - 3,243.47 66.05 - 19.85 3,823.27 5,539.78

259.18 383.19 1,816.85 - 46.53 0.07 68.83 0.65 2,575.30 4,653.21

143.06 - 1,378.36 - 26.70 0.19 - 0.47 1,548.78 4,653.02

113.04 - 449.36 - 18.54 0.31 - 0.51 581.76 1,368.12

Separate Financial Statements 2012 2011 2010 Million Baht Million Baht Million Baht 396.92 265.71 196.40 1,191.29 1,413.61 371.77 17.09 176.47 - 5.88 60.45 44.65 146.96 23.23 - - - - 234.70 180.08 166.43 55.82 808.54 - 29.25 176.15 4.95 - - 2.16 2,077.91 3,104.24 786.36

(2) Table Summary of Financial Statements Gunkul Engineering Public Company Limited & Subsidiaries Financial Statements for 31 December 2010 - 2012


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Consolidated Separate Financial Statements 20121) 20112) 20103) 2012 2011 2010 Description Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht Liabilities and Shareholders’ Equity Current Liabilities Bank Overdrafts & Short-Term Loans from Financial in Situations 1,686.25 2,572.45 247.81 1,231.78 2,552.22 82.31 Trade and Other Accounts Payable – Net 879.21 446.77 180.05 1,028.14 533.45 221.51 Advances Received from Employers and Construction Revenue in Advance 3.45 225.33 - 3.45 225.32 - Payable for purchase shares of subsidiary 92.36 - - 92.36 - - Assets Payable 246.09 35.98 177.00 - - 57.90 Payable to Revenue Department 10.84 12.30 1.29 6.30 10.09 - Current Portion of Obligation under Finance Lease 114.11 53.57 37.31 101.36 40.76 22.48 Current Portion of Long-Term Loans 4.79 5.19 3.16 3.97 4.81 2.65 Short-Term Loans from Related Parties & Businesses 122.17 85.75 - - - - Provision for sales return 19.41 - - 19.41 - Provision for Warranty 2.17 2.67 1.35 1.63 1.64 0.08 Investments in Subsidiaries Payable - - 2.05 29.15 - 7.65 Other Current Liabilities - - 1.45 - - 0.80 Total Current Liabilities 3,180.85 3,440.01 651.47 2,517.55 3,368.29 395.38


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20121) Million Baht

Consolidated Separate Financial Statements 20112) 20103) 2012 2011 2010 Million Baht Million Baht Million Baht Million Baht Million Baht Non-Current Liabilities Payable for purchase shares of subsidiary 172.50 - - 172.50 - - Obligation under Finance Lease 16.10 8.57 3.41 12.41 6.75 3.41 Long-Term Loans from Financial Institutions 1,363.69 896.66 - - - - Provision for Warranty 0.23 0.56 2.01 0.08 0.39 1.89 Employee Benefit Obligation 7.29 6.62 - 5.14 4.51 - Retention payables 69.28 3.15 - 69.28 - - Other Non-Current Liabilities 3.77 0.62 0.62 0.62 0.62 0.62 Total Non-Current Liabilities 1,632.86 916.18 6.04 260.03 12.27 5.92 Total Liabilities 4,813.71 4,356.19 657.51 2,777.58 3,380.56 401.30 Shareholders’ Equity Authorized Share Capital 440.00 400.00 400.00 440.00 400.00 400.00 Issued & Paid Up Share Capital 440.00 4) 400.00 400.00 440.00 4) 400.00 400.00 Premium on Share Capital 425.12 425.12 425.12 425.12 425.12 425.12 Surplus from Reorganization under Common Control 93.62 93.62 93.62 - - Accrued Profit (Loss) 964.42 264.85 213.46 1,010.52 447.34 141.70 Subsidiary Shareholders’ Equity 221.40 - - - - - Total Shareholders’ Equity 2,144.56 1,183.59 1,132.20 1,875.64 1,272.46 966.82 Total Liabilities & Shareholders 6,958.27 5,539.78 1,789.71 4,653.22 4,653.02 1,368.12

Description


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Consolidated Separate Financial Statements 20121) 20112) 20103) 2012 2011 2010 Description Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht Sales 4,305.52 2,651.52 1,288.76 4,646.97 4,145.75 1,192.84 Income Other Income 458.36 17.19 9.31 189.75 30.72 2.83 Total Income 4,763.88 2,668.71 1,298.07 4,836.72 4,176.47 1,195.67 Cost of Sales 3,235.96 2,006.12 922.15 3,689.02 3,390.00 938.36 Sales & Administrative Expenses 339.98 328.31 160.66 228.46 243.20 117.82 Finance cost 103.77 57.16 6.69 47.52 41.85 6.33 Share of loss from investments in associates 37.97 23.12 25.69 31.70 19.17 22.40 Share of loss from investments in associates (48.67) - - - - Income tax 227.92 164.47 59.71 196.85 140.20 34.80 Total comprehensive income for the period 769.61 89.53 123.17 643.17 342.05 75.96 Equity holders of the Company 779.56 89.53 643.17 342.05 Non-controlling interests of the subsidiaries (9.95) - - - Number of weighted ordinay shares 400.00 321.92 440.00 4) 400.00 321.92 (Milion share) 440.00 4) Remarks : 1) Consolidated financial statements at the year ending 2010 whereby Gunkul Engineering Public Company Limited held shares in K.N.P.Supply Co., Ltd., G.K.Power Products Co., Ltd., G.K.Assembly Co., Ltd. and Gunkul Powergen Co., Ltd. at a proportion of 99.99 percent, and in G-Power Source Co., Ltd. at a proportion of 98.98 percent. 2) Consolidated financial statements at the year ending 2011 whereby Gunkul Engineering Public Company Limited held shares in K.N.P.Supply Co., Ltd., G.K.Power Products Co., Ltd., G.K.Assembly Co., Ltd, Gunkul Powergen Co., Ltd. and G-Power Source Co., Ltd. at a proportion of 99.99 percent. 3) Consolidated financial statements at the year ending 2012 whereby Gunkul Engineering Public Company Limited held shares in K.N.P.Supply Co., Ltd., G.K.Power Products Co., Ltd., G.K.Assembly Co., Ltd. and Gunkul Powergen Co., Ltd. at a proportion of 99.99 percent. and held shares in Wind Energy Development Co.,Ltd. at a proportion of 70 percent. 4) Issued and Paid up Capital is in the amount of 439,999,984 shares.

Gunkul Engineering Public Company Limited & Subsidiaries Profit-Loss Statements for the Years Ending 31 December 2010 - 2012


Gunkul Engineering Public Company Limited & Subsidiaries Statements of Cash Flow for the Years Ending 31 December 2010 - 2012 Separate Financial Consolidated Statements 2010 2011 2012 2010 2011 2012 Million Million Million Million Million Million Description Baht Baht Baht Baht Baht Baht

Cash Flow from Operating Net Profit (Loss) before Tax 1) Cash Receipt-Payment Adjustments Affecting Net Profit (Loss) Bad Debts & Doubtful Accounts (Reversal) Unrealized (Profit) Loss from Exchange Rates Losses from Product Discounts (Reversal) Loss on impairment Writen off expense Other Income Dividends Receivable Depreciation & Amortization Costs Profits (Losses) from Asset Sales Income from Long-Term Creditor Amortization Product Warranty Estimated Liabilities Provision for sales return Estimated Employee Benefit Liability Gain on disposal of investments in subsidiary Share of loss from investments in associates Intragroup profit recognised in fixed assets Share of loss of non controling interest Interest Receivable Interest Expenses Profit from Operations before Changes in Assets & Operating Liabilities (Increase) Decrease in Trade Accounts Receivable (Increase) Decrease in Deposits on Goods-Net (Increase) Decrease in Advance Contractor Payments (Increase) Decrease in Revenue Department Receivable (Increase) Decrease in Inventory-Net (Increase) Decrease in Other Current Assets

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182.89 254.00 1,007.48 110.76 482.26 840.02 (0.53) 0.82 1.90 (0.63) 62.91 6.91 2.71 5.76 25.55 - - 1.38 - - 6.62 (1.67) (0.68) - - - - 23.84 32.62 47.99 (0.01) 0.03 (.97) - - - 0.35 (0.13) (.83) - - 19.42 - 1.03 1.03 - - (416.22) - - 48.67 - - (8.32) - - (9.94) (1.65) (11.94) (15.93) 6.69 57.15 103.74

(0.53) (0.71) 0.80 - - - - 7.15 (0.01) - (0.72) - - - - - - (1.34) 6.33

0.36 1.02 62.26 7.59 (1.08) 17.82 - - - - (0.53) - (19.84) (25.57) 3.90 4.76 - (.81) - - 0.07 (.31) - 19.42 0.63 0.63 - (141.53) - - - - - - (8.18) (11.12) 41.85 47.52

211.99 401.57 818.48 121.73 561.70 759.43 (179.40) (212.37) 769.08 (142.19) (1,195.51) 414.79 (42.27) (7.86) 49.78 (32.46) (15.80) 54.57 - (23.23) (123.72)

- (23.23) (123.72)

(11.05) (129.78) (15.27) (1.89) 2.01 - (79.93) (45.32) (56.32) (20.56) (334.81) (72.45) (2.06) - - (0.16) - -


Separate Financial Consolidated Statements 2010 2011 2012 2010 2011 2012 Million Million Million Million Million Million Description Baht Baht Baht Baht Baht Baht

(Increase) Decrease in Ongoing Construction Costs according to Contract - (150.30) 358.03 - (486.30) 752.72 (Increase) decrease in construction in progress - - 66.13 - - 0.45 (Increase) Decrease in Other Non-Current Assets (5.05) 2.97 0.88 1.66 0.04 (.19) Increase (Decrease) in Trade Accounts Payable 88.81 258.11 426.70 46.12 301.17 491.35 (Increase) Decrease in Revenue Department Accounts Payable (5.34) 11.02 (1.46) (3.86) 10.09 (3.79) (Increase) Decrease in Construction Work Advance Payments - 225.33 (221.88) - 225.33 (221.88) Increase (Decrease) in Other Current Liabilities 0.05 - - (0.24) 9.00 - Increase (Decrease) in Other Non-Current Liabilities - 3.15 3.15 - - - Cash Employee Benefits Payable - (2.54) (.36) - (2.54) - Cash Interest Receivable 0.81 11.99 8.28 0.57 6.15 6.31 Cash Interest Payable (6.61) (58.69) (94.18) (5.80) (40.60) (43.68) Cash Juristic Person Income Tax Payable1) (41.41) (152.21) (167.22) (25.37) (121.93) (136.24) Net Cash Gained from (Used) Operations Activities (67.34) 131.84 1,820.10 (62.13) (1,105.23) 1,877.67 Cash Flow from Investing Activities Cash paid for shares payable - (57.90) - - (57.90) (7.64) Cash paid for investments in associate - - (57.60) - - (57.60) Cash Payable from Investments in Subsidiaries (5.44) - (218.41) (81.43) (929.00) (979.98) Cash received from sale of investment - - 594.82 - - 594.92 Cash Received from Dividends - - - - 17.08 28.33 (Increase)decrease in short-term loans to related parties - - (29.25) 1.28 (171.20) 146.91 Cash paid for investment property (32.57) Cash paid for purchase of property, plant and equipment and payable for purchase of assets (218.73) (2,832.22) (1,194.03) (2.51) (2.43) (15.43) Cash Received from Asset Sales 0.38 0.07 2.81 0.06 0.06 1.27 (Increase) Decrease in Bank Deposits with Guarantee Obligations (129.71) (330.68) (419.98) (104.98) (30.02) (116.11) Cash Payable for Purchasing Intangible Assets (0.58) (0.11) (.23) - - Net Cash Gained from (Used) in Investing Activities (354.08) (3,220.84) (1,354.44) (187.58) (1.173.41) (405.33)

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Separate Financial Consolidated Statements 2010 2011 2012 2010 2011 2012 Million Million Million Million Million Million Description Baht Baht Baht Baht Baht Baht

Flow from Financing Activities Cash Increase (Decrease) in Overdrafts & Short-Term Loans 221.35 2,243.96 (1,237.89) 67.23 2,389.88 (1,324.48) Proceeds from long-term loans from banks - 982.41 937.53 - - - Increase (Decrease) in Short-Term Loans from Associated Persons & Businesses (104.11) (2.05) 157.08 (102.89) (7.65) 29.15 Cash Payable Liabilities under Financial Leases (3.45) (4.28) (5.46) (2.41) (3.54) (4.68) Cash Payable Interest under Financial Leases (0.57) (0.88) (1.35) (0.52) (0.74) (1.12) Dividends Payable (111.30) (30.00) (48.61) (111.30) (29.99) (40.00) Cash Gained by Increasing Capital 525.12 - - 525.12 - - Net Cash Gained from (Used) Financing Activities 527.04 3,189.16 (198.70) 375.23 2,347.96 (1,341.13) Increase (Decrease) in Net Cash & Deposits in Financial Institutions 105.62 100.16 266.96 125.52 69.32 131.21 Cash & Deposits at Financial Institutions at Beginning of Period 109.18 214.80 314.97 70.87 196.39 265.71 Cash & Deposits at Financial Institutions at End of Period 214.80 314.96 581.93 196.39 265.71 396.92 Remarks : 1) Accounting standards effective after 1 January 2008 stipulate that the net profits before income tax be used in calculating cash flow from operating activities.

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(3) Table Showing Key Financial Ratios Consolidated Description 2010 2011 2012

Liquidity Ratios Liquidity Ratio (equal) Quick Liquidity Ratio (equal) Cash Flow Liquidity Ratio (equal) Trade Accounts Receivable Turnover (equal) Average Collection Period (days) Inventory Turnover (equal) Average Sales Period (days) Payable Turnover (equal) Credit (days) Cash Cycle (days) Profitability Ratios Gross Profit Margin (%) Operating Profit Margin (%) Net Profit Margin (%) Return on Equity (%) Efficiency Ratios Return on Assets (%) Return of Fixed Assets (%) Asset Turnover (equal) Financial Ratios Debt to Equity Ratio (equal) Interest Coverage Ratio (equal) Dividend Payout (%) Other Ratios Earnings Per Share (baht) 1) Basic Earnings Per Share (baht) 2) Book Value Per Share (baht) 2)

1.59 1.06 (0.01) 4.13 88.45 3.03 120.46 8.11 45.01 163.90 28.45 13.78 9.47 15.05 9.31 42.21 1.10 0.58 28.36 N/A 0.38 0.31 2.83

0.50 0.34 0.09 5.09 71.66 4.58 79.66 5.32 68.59 82.73 24.34 11.74 3.35 7.56 1.62 2.76 0.82 3.68 3.44 0.34 0.22 0.22 2.96

0.80 0.65 0.18 4.49 81.21 6.46 56.47 4.78 76.30 61.38 24.84 23.33 16.36 36.35 11.20 27.84 1.72 2.24 8.71 1.77 1.77 4.87

Separate Financial Statements 2010 2011 2012

0.92 0.83 0.55 0.55 0.08 0.16 4.25 3.32 85.89 109.90 5.87 7.27 62.18 50.24 8.89 3.83 41.05 95.28 107.02 64.86 21.33 18.23 20.61 9.58 12.64 18.35 6.35 8.19 13.30 11.22 26.88 34.29 6.98 7.,35 13.82 3.99 1,280.92 1,382.36 0.98 155.25 103.95 0.42 2.66 1.48 18.51 10.52 16.68 N/A 0.09 0.24 0.86 1.46 0.19 0.86 1.46 2.42 3.18 4.26

1.99 1.57 (0.16) 4.06 89.84 5.99 60.93 5.18 74.60 80.31

Remarks : 1) Earnings Per Share: Calculate with the number of all average weighted common shares which have been paid up. 2) Basic Earnings Per Share and Book Value Per Share: Calculate with the total number of all paid up common stocks at the end of the period by using the par value of the shares at 1 baht/share to be used for comparison.

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19. Management Discussion and Analysis

Performance • Overall Past Performance Gunkul Engineering Public Company Limited (“the company” or “GUNKUL”) and its subsidiaries, namely K.N.P. Supply Co., Ltd. (“KNP”), G.K. Assembly Co., Ltd. (“GKA”) and G.K. Power Product Co., Ltd. “GKP”), operate the business of manufacturing, procuring and selling electrical equipment and the business of procuring and selling equipment for renewable power to customers in government and private sectors. GUNKUL Group reorganized its shareholding structure by holding 99.99% of registered capital of KNP, GKA and GKP in order to eliminate conflict of interest issue and to increase management efficiency. The reorganization of such structure was completed on 30 June 2009 and the Company turned public on 10 August 2009. On 11 December 2009, the Company set up a subsidiary, Gunkul Powergen Co., Ltd. (“GPG”) to undertake the business of generating and selling electrical power to the Provincial Electricity Authority. The Company holds a 99.99% stake in GPG registered capital. Subsequently in 2010, the Company purchased common shares of G-Power Source Co., Ltd., core business of which involved generating and selling solar-based power, and held 98.98% of G-Power Source’s registered capital. In 2011, the Company increased its investment in G-Power Source and its shareholding increased to 99.99% of the total registered capital. On 30 March 2012, the Company sold 4,500,000 common shares of G-Power Source Co., Ltd. or equal to 60.00% of total registered capital of said company, totaling 629.92 million baht, to the Electricity Generating Public Company Limited. On 15 May 2012, the Company purchased 5,460,000 common shares of the Wind Energy Development Co., Ltd. or equal to 70.00% of total registered capital of said company at the price of 95.60 baht per share, totaling 522.00 million, from said company’s shareholder who had no relationship with the 144

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Company. As a result, the Company had control over the Wind Energy Development Co., Ltd., which undertook business of generating and selling wind-based power. The Company aimed to take part in development of more clean energy power plants.

• Performance Revenue Main revenue of the Group during 2010-2012 was from 3 main sources, namely business of manufacturing, procurement and sale of equipment for electrical systems, renewable power systems, and construction of renewable energy power plants. Revenue from the business of procurement and sale accounted for approximately 25.61%, business of manufacturing for sale accounted for approximately 16.46%, business of renewable energy electricity generation and sale accounted for 3.94%, and business of renewable energy power plant construction accounted for approximately 53.99% of total sale revenue of the Group in 2012. According to the consolidated financial statements, revenue from sale of the Group in 2012 was 4,305.22 million baht, increasing by 62.38% when compared to sale revenue of 2,651.51 million baht in 2011. The increased amount was from new sources of alternative energy either as the product manufacturer which amounted to 96.31 million baht, or as the construction operator and seller of renewable power plants for non related companies or subsidiaries which amounted to 1,868.22 million baht. Revenue from existing oversea trade decreased by 763.95 million baht and increased from domestic revenue by 372.22 million baht. The decreased amount of oversea trade of 763.95 million baht was due to price competition and monetary policy of the Union of Myanmar.

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Revenue structure by product line Revenue type

1. Revenue from manufacturing, procurement and sale of equipment for electrical systems and renewable power systems 1.1 Procurement for sale - Safety and control equipment - Accessory equipment - Equipment and instruments - Street light equipment - Wind turbine equipment Total 1.2 Manufacturing for sale - Safety and control equipment - Accessory equipment - Equipment and instruments - Street light equipment Total 2. Revenue from generation and sale of power from renewable energy - Generation and sale of solar-based power 3. Revenue from construction of renewable energy power plant Total revenue

2010 MB %

2011 MB %

199.44 15.48 430.26 747.83 58.03 1,248.40 21.61 1.68 46.64 17.88 1.39 38.58 - - 986.76 76.58 1,763.88 101.38 7.87 78.61 190.87 14.81 279.20 2.14 0.17 1.66 7.50 0.58 5.82 301.89 23.43 365.29

-

-

2012 MB %

16.22 75.19 47.08 986.15 1.76 28.22 1.46 10.10 66.52 1,099.66 2.96 353.16 10.53 298.93 0.06 3.17 0.22 50.98 13.78 706.24

1.75 22.97 0.65 0.24 25.61 8.23 6.97 0.08 1.18 16.46

72.50 2.73 168.81 3.94

- - 449.84 16.97 2,318.06 53.99 1,288.65 100.00 2,651.51 100.00 4,292.77 100.00

The Group sold products to domestic and international markets, where revenue from domestic sale was approximately 45-80% of total sale revenue during 2010-2012. Main customers were both domestic and foreign state agencies, as well as customers in business of power generation from renewable energy.

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Revenue structure by customer segment Revenue

2010 MB %

sector customers State - Revenue from sale of equipment for electrical systems and renewable power systems - Revenue from sale of power Private sector customers - Revenue from sale of equipment for electrical systems and renewable power systems - Revenue from power plant construction Foreign customers Total revenue

2011 MB %

2012 MB %

448.44 34.80 344.57 13.00 413.03 9.63 - - 72.50 2.73 168.81 3.94 239.96 18.62 416.78 15.72 789.00 18.38 - - 449.84 16.96 2,318.06 53.99 600.36 46.58 1,367.82 51.59 603.87 14.06 1,288.76 100.00 2,651.51 100.00 4,292.77 100.00

In 2011, revenue from sales according to consolidated financial statement totaled 2,651.51 million baht, increasing from 2010 by 1,362.75 million baht or by 105.74%. The increased amount was from revenue from renewable energy, the new business, which comprised 72.50 million from power manufacturing and 449.84 million baht from construction of renewable energy power plants for non-related companies or subsidiaries, revenue from existing oversea trade business which increased by 761.33 million baht and increased from domestic deals by 79.08 million baht. Cost of sales and gross profit According to the consolidated financial statements, the Group had gross profit of 28.45%, 24.34% and 24.84% for 2010, 2011 and 2012 respectively. The trend of said profit was in the same direction as the increase in revenue from outsourced manufacturing and procurement for sales and from renewable energy business, in response to changing market demands. Sales and administrative expenses The Company’s sales and administrative expenses account for approximately 10.00-15.00% of total revenue of the Group, and differ under a flexible budget control. Gunkul Engineering Public Company Limited

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The Group’s sales and administrative expenses in 2010, 2011 and 2012 were 189.05 million baht, 341.42 million baht and 377.95 million baht respectively, equal to 14.53%, 13.17% and 7.93% of total revenue. Such ratio varied according to sales volumes, expenses in business expansion, and accounting standards. Net profit The Company’s net profit for 2012 according to the consolidated financial statements was 769.61 million baht, increasing by 680.04 million baht when compared to 2011 that registered net profit of 89.52 million baht, due to increase in revenue from building contractor business which was 1,868.22 million baht, revenue from sale of investment which was 416.22 million baht. Revenue from service rendered and gain on exchange rate increased by 12.75 and 13.14 million baht respectively. Financial costs for 2012 amounted to 103.77 million, increasing from 57.16 million baht in 2011 by 46.61 million baht or by 81.54% because of interest payable on loans with financial institutions for use in developing solar-based power projects of the Company. Financial status Total assets The Company’s total assets at ending 2012, 2011 and 2010 according to consolidated financial statements were 6,958.27 million baht, 5,539.77 million baht and 1,789.71 million baht respectively. Main circulating assets were trade receivables and inventory which varied according to sales volumes, construction of renewable energy power plants for third parties, the ability to collect payments from customers, increase in investment in subsidiaries, including cash flow reserved for investment, operations and dividend payment. Main noncirculating assets were buildings and equipment, in which the Group invested for higher power generating productivity. In mobilizing funds for use as revolving capital and investment in fixed assets, the Group obtained funding from increase of registered capital, borrowings from financial institutions, and divestments. As a result the Group’s debt to equity ratio according to the consolidated financial statements 148

Smart Energy in Action


decreased to 2.24 times, 3.68 times and 0.58 times at ending 2012, 2011 and 2010 respectively. Trade receivables The Company and its subsidiaries have policy to grant credit to customers by considering their financial status, payment history, ordering frequency and order value. Average credit terms are 60 days for private and state sector customers and 90-120 days for overseas customers. According to the consolidated financial statements, the Group’s trade receivables (excluding receivables for construction, other items and bad debt allowance) at ending 2010, 2011 and 2012 were 398.18 million baht, 617.51 million baht and 1,169.76 million baht respectively, with average collection period at respective year-ends of 88 days, 71 days and 81 days. The Company had higher outstanding of trade receivables due to trade receivablesconstruction of G-Power Source Co., Ltd. of 304 million baht was not yet due, and trade receivables-construction of other companies under DLC agreements of 298 million baht. Terms of the Group’s trade receivables are as follows:- Trade receivables for related businesses

Not yet due Overdue - 3 months or less - 3-6 months - 6-12 months - Over 12 months Total trade receivables Less Bad debt allowance Total trade receivables

2010 MB %

1.31 43.95 1.68 56.37 - - - - - - 2.98 100.00 - - 2.98 100.00

2011 MB %

2012 MB %

0.08 0.35 400.88 97.69 22.27 99.65 9.45 2.31 - - - - - - 22.35 100.00 410.33 100.00 - - - - 22.35 100.00 410.33 100.00

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149


Trade receivables for other companies

Not yet due Overdue - 3 months or less - 3-6 months - 6-12 months - Over 12 months Total trade receivables Less Bad debt allowance Total trade receivables

2010 MB %

2011 MB %

2012 MB %

337.64 85.66 49.15 12.47 7.75 1.96 0.03 - 0.63 0.15 395.20 100.27 (1.06) (0.27) 394.13 100.00

312.18 52.62 176.57 29.76 103.77 17.49 1.66 0.27 0.97 0.16 595.15 100.31 (1.88) (0.31) 593.27 100.00

533.53 70.57 181.62 24.01 40.28 5.32 2.29 0.30 1.71 0.22 759.43 100.42 (3.21) (0.42) 756.22 100.00

Inventory According to the consolidated financial statements, the Group’s inventory at ending 2010, 2011 and 2012 were 366.08 million baht, 411.29 million baht and 467.60 million baht respectively.

materials Raw Products in manufacturing Readymade products Products en route Total Less Allowance for product devaluation Net inventory

2010 MB %

2011 MB %

2012 MB %

105.88 28.92 46.23 12.63 205.01 56.00 8.96 2.45 366.08 100.00 (23.28) (6.36) 342.80 93.64

131.63 32.00 46.34 11.26 214.52 52.15 18.80 4.57 411.29 100.00 (28.70) (6.97) 382.59 93.03

88.06 18.83 63.74 13.63 288.37 61.67 27.43 5.87 467.60 100.00 (55.01) (11.76) 412.59 88.24

The Group has a policy to set allowances for devaluation of degenerated products, outdated products and old-stock inventory by considering conditions of each product. The Company’s products are generally used for infrastructure electrical systems in countries where technology is rarely changed, thereby enabling the Company’s products to be sold continually without becoming outdated. However, the Group has set devaluation allowance for readymade 150

Smart Energy in Action


products older than 3 years at a rate of 40% of the product value amounting to 23.28 million baht, 28.70 million baht and 55.01 million baht at ending 2010, 2011 and 2012 respectively. The Company had average product sale periods of 120 days, 79 days and 56 days in 2010, 2011 and 2012 respectively. Most of them were products relating to procurement for sale and for construction of solar-based power plant construction Investments in subsidiaries and associated companies The Company has an investment structure as follows:- Paid-up capital Company 2012 2011

Investment proportion (%) 2012 2011

Cost method Dividend (thousand baht) (thousand baht) 2012 2011 2012 2011

Power Product Co., Ltd. G.K. G.K. Assembly Co., Ltd. K.N.P. Supply Co., Ltd. Gunkul Powergen Co., Ltd. Wind Energy Development Co., Ltd. G-Power Source Co., Ltd. Total

100.00 100.00 100.00 100.00

80,425 163,188 41,408 992,000

100,000 200,000 50,000 992,000

100,000 200,000 50,000 280,000

100.00 100.00 100.00 100.00

80,425 8,610 163,188 1,682 41,408 15,280 280,000 -

2,760 9,830 7,250 -

103,475 - 70.00 - 539,832 - - - - 750,000 - 100.00 - 813,337 - - 1,816,853 1,378,358 25,572 19,840

Land, buildings and equipment Offices and warehouse of the Company are on land sub-let from Mr. Gunkul Dhumrongpiyawut. The Company had buildings and equipment with net worth equal to 18.54 million baht, 26.70 million baht and 46.53 million baht 2010, 2011 and 2012 respectively. The Company did not significantly make additional investments in buildings and equipment, except in more vehicles in 2012 for use in the Company’s operations. Land, buildings and equipment according to the consolidated financial statements of the Group for the years ended 2010, 2011 and 2012 equated to 505.42 million baht, 3,243.47 million baht and 2,763.89 million baht respectively. Gunkul Engineering Public Company Limited

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When compared to the separate financial statements, the increase in net land, buildings and equipment according to the consolidated financial statements was very high due to consolidation of values of land, buildings and equipment owned by 4 subsidiaries, especially G.K. Assembly Co., Ltd., which had land and buildings of its own, while another 2 subsidiaries operated businesses on land sub-let from Mr. Gunkul Dhumrongpiyawut the Company did. Details of land, buildings and equipment of subsidiaries are as follows:- - Gunkul Powergen Co., Ltd. In 2010, the Company purchased land for operating power plant business at the price of 20.10 million baht. It had solar power plant and machinery under construction with a value of 312.59 million baht. Said solar power plant was operational in 2011. In 2011, construction of solar power plant, value of 460.17 million baht, was completed in the fourth quarter. The Company bought land for further construction of power plant project at the price of 11.91 million baht. In 2012, there were 4 solar power plants and machineries under construction, value of 1,646.32 million and capacity of 23.5 mw. The plants were expected to become operational in March 2013. - G-Power Source Co., Ltd. In 2012, the Company sold 4,500,000 common shares of G-Power Source Co., Ltd., totaling 629.92 million baht or equal to 60.00% of total registered capital of said company, to the Electricity Generating Public Company Limited. As a result, investment in subsidiaries item was now recorded as investment in associated companies. Therefore, 2012 consolidated financial statements did not included assets of 1,974.57 million baht. Total liabilities According to the consolidated financial statement, the Company’s total liabilities for the years ended 2010, 2011 and 2012 were 651.46 million baht, 3,440.00 million baht and 3,180.85 million baht respectively. In 2011, the Group 152

Smart Energy in Action


had increased consolidated liabilities as compared to 2010 because the Company’s exports had increased, and the Company and its subsidiaries launched construction of solar power plants, thereby causing the Company to require short- and long-term loans with trust receipts payable to support the aforementioned increases in exports and construction in 2011, including in 2012. Almost all of the Company’s total liabilities were circulating liabilities. Main categories included overdrafts and short-term loans from financial institutions at a rate of approximately 15-55% of the Group’s consolidated liabilities, trade payables at a rate of approximately 10-30% of the Group’s consolidated liabilities, and long-term loans at a rate of 15-20% of consolidated liabilities. The Company used these 4 categories above as sources of funds for providing raw materials and trade credit, and for construction of solar power plants of Gunkul Powergen Co., Ltd., a subsidiary, and of the customers that used the Company’s renewable energy power plant construction services. The Group had liquidity ratios according to the consolidated financial statements in 2010-2012 amounting to 1.59 times, 0.50 times and 0.80 times respectively. Quick liquidity ratios were equal to 1.06 times, 0.28 times and 0.65 times. Average debt payment periods were 45 days, 67 days and 76 days, while cash cycles of the Group were 163 days, 83 days and 61 days. When compared to the Group’s cash cycles, the shorter trend of the Group’s cash cycle resulted from sales expansion and more circulating products as seen from the product sale periods of 120 days, 79 days and 56 days against the debt collection periods of 88 days, 71 days and 81 days. Most payments were made and received through servicing systems of financial institutions which were subject to conditions of longer periods, thereby causing the Company’s cash cycles to decrease. In 2011, the Company mobilized money through loans and constant increase of registered capital of subsidiaries in preparation for business expansion. Consequently, the Company’s consolidated financial statements registered increasing debt to equity ratios, which were 0.58 times, 3.68 times and 2.24 times in 2009, 2010 and 2011. Gunkul Engineering Public Company Limited

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Shareholders’ equity The Company’s shareholders’ equity was 966.82 million baht, 1,272.46 million baht and 1,875.64 million baht at ending 2010, 2011 and 2012 respectively. As for the consolidated financial statements for the years ended 2010, 2011 and 2012, the Group had total shareholders’ equity amounting to 1,132.20 million baht, 1,183.60 million baht and 2,144.57 million baht respectively. The increase in the consolidated shareholders’ equity in 2010, 2011 and 2012 as compared to separate financial statements was a result of the inclusion of assets, liabilities and operating results of subsidiaries along with surplus of capital from merger of business under single control, which was caused by differences between the acquisition costs of subsidiaries and net asset book values of subsidiaries. The consolidated shareholders’ equity in 2011 increased due to net profits from taxes, which were profits from constructing solar power plants for third parties and from sale of investments in subsidiaries to third parties. Non-controlling interest of subsidies amounted to 221.41 million baht, derived from acquisition of control over a subsidiary (Wind Energy Development Co., Ltd.). Cash flow According to consolidated financial statements for 2010, the Group’s cash flow from net operating profits decreased by 67.32 million because of higher sales volumes in 2010, especially sales to foreign customers. This resulted in increasing cash flows from trade receivables and merchandise deposits. Total net cash flow used in investment activities amounted to 354.09 million baht due to investments in subsidiaries of 5.42 million baht, purchase of assets of 218.73 million baht, and deposits with guarantee obligations of 129.72 million baht, all of which incurred from the use of cash flow in aforesaid operations and investments. The Company’s net mobilized funds for management amounted to 527.03 million baht, derived from cashed generated from capital increase in the Stock Exchange of Thailand and increases in cash overdrafts and short-term loans 154

Smart Energy in Action


amounting to 221.35 million baht. At the same time, the Group repaid shortterm loans from related persons and businesses amounting to 104.11 million baht in order to restructure the Group’s financial management. Balance of net capital was 214.80 million baht. The Company’s cash flow from normal business operations in 2011 was higher than 2010 by 199.10 million baht. However, the Company had already paid 2,832.22 million baht for supplies and equipment needed for construction solar-based power plants, and made reserve for procurement of products for sales. Therefore, the Company mobilized additional funds for the amount of 3,226.37 million baht in 2011 and paid dividend for 2010 performance for the amount of 29.99 million baht. Cash flow available for 2012 was 314.96 million baht. In 2012, the Company’s net cash flow generated from operations was over 1,000 million baht owing to higher revenue especially from construction services, higher debt collection of 769.07 million baht, increase in credit for procurement of products and supplies for sales and construction of 850.77 million baht. Despite cash flow paid for main items such as taxes and interest, the Company had remaining net cash flow from operations of 1,820.09 million baht. Still, the Company had to use cash flow for investment activities, e.g. investments in subsidiaries and associated companies of 276.07 million baht, purchase of the Group’s products and deposits with guarantee obligations of 5.42 million baht, 1,194.03 million baht and 419.98 million baht, and other items of 59.23 million baht. The Company obtained 594.82 million baht from divestments, and had to pay net investments of 1,354.43 million baht. Therefore, the Company sought additional financial supports from financial institutions amounting to 937.53 million baht and from related persons and businesses amounting to 157.08 million baht. Meanwhile, it had already paid 1,237.89 million baht for debts incurred from funding, 48.60 million baht for dividends and 8 million baht for other obligations. The Company had a cash flow of 581.93 million baht for 2013 business management.

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155


Auditor fee (for each company) In 2010, 2011 and 2012, audit fees for the Company and subsidiaries comprises annual audit fee and audit fees for the 3 quarters, as per following details:- Gunkul G.K. G.K. Power K.N.P. Gunkul G-Power Wind Audit fee Engineering Assembly Product Supply Powergen Source 1) Source 2) 2010 2011 2012

Total

800,000.00 350,000.00 300,000.00 210,000.00 120,000.00 15,000.00 - 1,795,000.00 850,000.00 350,000.00 300,000.00 230,000.00 250,000.00 230,000.00 - 2,210,000.00 850,000.00 350,000.00 300,000.00 230,000.00 280,000.00 230,000.00 160,000.00 2,380,000.00

Notes : 1) On 30 March 2012, the Company sold common shares of G-Power Source Co., Ltd., accounting for 60.00% of the registered capital, to the Electricity Generating Public Company Limited. 2) On 15 May 2012, the Company bought common shares of the Wind Energy Development Co., Ltd., accounting for 70.00% of the registered capital.

Persons or businesses related to auditors or audit office, which was SP Audit Co., Ltd., was not related person or business of the Company. Factors and influence that may affect operations or financial status in the future 1. Because the Company sells products to customers who are primarily government agencies, it may be subject to significant impacts on revenue and business performance in case the government sector changes policies of electricity investment, or in case the Company does not win biddings. Furthermore, the Company exports many products to the Union of Myanmar. There are possible serious impacts on the Company’s income and business performance in case the Company cannot deliver its products to the Union of Myanmar (see details in Clause 15.1 : Dependence on client risks). 2. The Company is at risk of exchange rate fluctuation because it derives income from export of products for distribution in foreign countries, and also imports raw materials from foreign countries. The Company is therefore exposed to risks of volatile exchange rates, which may cause 156

Smart Energy in Action


the Company to make a loss on exchange rates (see details in Clause 15.2 : Risk of exchange rate fluctuation). 3. The Group founded Gunkul Powergen Co., Ltd. to operate the business of production and sale of electricity. In this regard, it has applied for sale of solar power to the Provincial Electricity Authority according to the project for purchase of power from very small power producers (VSPPs), with a total production capacity proposed for sale of 30.9 megawatts. Its Project 1, Phase 1, capacity of 3.0 mw has been operational since early 2011, while Project 1, Phase 2, capacity of 4.4 mw started distributing electrical power in late 2011. All the remaining projects, with total capacity of 23.5 mw are in the process of construction and expected to realize income since 2013 onwards. Expansion of electricity generating and selling business will affect the Company’s future financial status and business performance in 3 manners, i.e. income structure, investment structure and cash flow, as follows:- • The Group will receive higher income from the sale of electricity which is proportional to the amount of electricity sold, leading to changes in the Group’s future income structure. The aforementioned income fluctuations depend on the Company’s capacity to generate electricity. • The Company has obtained investment funds for the power plant projects, capacities of 3.0 mw and 4.4 mw, at Petchaboon province by incurring debts, which can be calculated at a debt to equity ratio of approximately 2.5-3.0 times. In the initial period of this investment, the debt to shareholder equity may change from the current ratio, with the liability ratio being increased. Construction of solar power plants will require an investment of approximately 100-120 million baht per 1 mw of capacity. • As most expenses of the project are depreciations while realization of income from electricity sale is paid in cash, the Group’s cash flow generated from operations tends to increase in the future.

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20. Board of Directors’ Responsibility for Financial Reporting The Board of Directors is responsible for Gunkul Engineering Public Company Limited’s financial statements and Gunkul Engineering Public Company Limited and its subsidiaries’ consolidated financial statements, including the financial information presented in this annual report. The aforementioned financial statements are prepared in accordance with generally accepted accounting principles, using careful judgment and the best estimation. Important information is adequately and transparency disclosed in the notes to financial statements for the Company shareholders and investors. The Board of Directors has provided and maintained risk management system and appropriate and efficient internal controls to ensure that accounting records are accurate, reliable and adequate to protect its assets and uncover any weakness that may be present in order prevent fraud or materially irregular operations. In this regard, the Board of Directors has appoints an Audit Committee to be responsible for reviewing the accounting policy financial reports, review internal controls, internal audit and risk management system. The Audit Committee has also reviewed a disclosure of related party transactions. All their comments on these issues have included in the Audit Committee Report, which presented in this annual report. The financial statements of the Company and the consolidated financial statements of Company and its subsidiaries have been examined by an external auditor, SP Auditor Co., Ltd. To conduct the audits and express an opinion in accordance with generally accepted auditing standards, the auditor was provided with all of the Company’s records and related data as requested. The auditor’s opinion is presented in the auditor’s report as part of this annual report. The Board of Directors considers the Company’s overall internal control system satisfactory and provides credibility and reliability to Gunkul Engineering Public Company Limited and its subsidiaries’ consolidated financial statements for the year ended December 31, 2012. The Board of Directors also believes that all these financial statements have been prepared in accordance with generally accepted accounting principle and related regulations. 158

(Mr. Gunkul Dhumrongpiyawut) Chairman of the Board February 25, 2013 Smart Energy in Action


21. Independent Auditor’s Report

To the Shareholders of Gunkul Engineering Public Company Limited I have audited the accompanying consolidated and separate financial statements of Gunkul Engineering Public Company Limited and its subsidiaries and of Gunkul Engineering Public Company Limited, which comprise the consolidated and separate statements of financial position as at December 31, 2012, and the related consolidated and separate statements of comprehensive income, statements of changes in shareholders’ equity and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit Gunkul Engineering Public Company Limited

159


also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the consolidated and separate financial statements referred to above present fairly, in all material respects, the consolidated and separate financial position of Gunkul Engineering Public Company Limited and its subsidiaries and of Gunkul Engineering Public Company Limited as at December 31, 2012, and its consolidated and separate financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. Other matter The consolidated and separate financial statements of Gunkul Engineering Public Company Limited and its subsidiaries and of Gunkul Engineering Public Company Limited for the year ended on December 31, 2011 were audited by other auditor in the same firm who expressed an unqualified opinion on these financial statement in his report date February 28, 2012 and drawing attention to the Company and its subsidiaries adopted the new and revised financial reporting standards issued by the Federation of Accounting Professions in preparation and presentation of the financial statements. SP Audit Company Limited

(Miss Susan Eiamvanicha)

Certified Public Accountant (Thailand) No. 4306

Bangkok February 25, 2013 160

Smart Energy in Action


STATEMENTS OF FINANCIAL POSITION GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES AS AT DECEMBER 31, 2012 AND 2011

Notes

Consolidated 2012 2011

(Unit : Baht) Separate financial statements 2012 2011

ASSETS Current Assets Cash and cash equivalent 581,932,818.58 314,963,736.25 396,915,264.53 265,709,067.14 Trade and other receivable - related parties 5.1,6 417,983,693.65 22,356,314.69 423,014,071.69 906,319,388.83 Trade and other receivable - third parties 7 836,805,204.67 621,670,414.40 768,286,391.95 507,285,378.80 Unbilled receivables 8 17,060,967.27 - 17,088,550.59 176,469,389.82 Deposit for purchase of goods 10,669,542.20 60,450,685.65 5,881,464.93 60,450,685.65 Advance payments to subcontractor 146,955,478.65 23,234,109.47 146,955,478.65 23,234,109.47 Receivable from Revenue Department 37,710,854.35 140,949,189.88 - - Inventories 9 412,590,503.10 382,586,586.23 234,704,904.32 180,075,310.37 Construction in progress 55,822,510.70 150,301,512.14 55,822,510.70 808,542,623.38 Short-term loans to related parties 5.1 29,245,658.91 - 29,245,658.91 176,153,240.00 Total Current Assets 2,546,777,232.08 1,716,512,548.71 2,077,914,296.27 3,104,239,193.46 Non-Current Assets Fixed deposits and bill of exchange pledged as collateral 10 605,167,149.86 493,900,421.71 259,174,638.01 143,063,780.45 Investments in associate 11 321,406,043.05 - 383,194,800.00 - Investments in subsidiaries 3,12 - - 1,816,853,489.01 1,378,357,991.51 Investment property 13 31,190,000.00 - - - Property, plant and equipment 14 2,763,895,126.95 3,243,468,240.30 46,527,516.94 26,703,706.39 Intangible assets 15 681,500,732.57 66,051,043.23 72,899.29 191,908.89 Retention receivables - - 68,827,686.23 - Other non-current assets 16 8,334,266.90 19,847,355.35 650,173.10 464,145.12 Total Non-Current Assets 4,411,493,319.33 3,823,267,060.59 2,575,301,202.58 1,548,781,532.36 TOTAL ASSETS 6,958,270,551.41 5,539,779,609.30 4,653,215,498.85 4,653,020,725.82 Notes to financial statements are an integral part of these financial statements

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STATEMENTS OF FINANCIAL POSITION (CONTINUED) GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES AS AT DECEMBER 31, 2012 AND 2011

(Unit : Baht) Separate financial statements 2012 2011

Consolidated Notes 2012 2011 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Bank overdrafts and short-term loans from financial institutions 17 1,686,248,892.33 2,572,447,739.06 1,231,783,763.08 2,552,220,051.56 Trade and other payable - related parties 5.1,18 41,160,893.54 7,733,004.68 290,506,141.20 152,061,830.17 Trade and other payable - third parties 19 838,051,055.31 439,042,033.91 737,626,186.52 381,385,550.94 Advances received from employers and construction revenue received in advance - third parties 20 3,445,098.84 225,325,703.66 3,445,098.84 225,325,703.66 Payable for purchase shares of subsidiary 12 92,357,500.00 - 92,357,500.00 - Payable for purchase of assets 246,093,767.95 35,976,059.70 - - Payable to Revenue Department 10,838,745.74 12,301,672.33 6,301,150.74 10,086,743.97 Accrued income tax payable 114,108,774.79 53,567,712.64 101,361,574.68 40,757,251.81 Current portion of obligation under finance lease 21 4,790,440.65 5,191,595.07 3,967,476.70 4,807,469.41 Current portion of long-term loans 22 122,170,971.74 85,745,115.48 - - Provision for sales return 19,413,456.58 - 19,413,456.58 - Provision for warranty 23 2,168,708.51 2,671,608.27 1,632,620.03 1,643,854.92 Short-term loans from related parties 5.1 - - 29,146,966.57 - Total Current Liabilities 3,180,848,305.98 3,440,002,244.80 2,517,541,934.94 3,368,288,456.44 Non-Current Liabilities Payable for purchase shares of subsidiary 12 172,500,000.00 - 172,500,000.00 - Obligation under finance lease 21 16,096,202.30 8,567,121.47 12,409,560.38 6,751,711.60 Long-term loans from financial institutions 22 1,363,687,722.71 896,663,305.51 - - Provision for warranty 23 231,368.23 557,705.43 84,024.63 392,141.05 Employee benefit obligation 24 7,290,657.98 6,618,112.98 5,143,323.00 4,512,746.00 Retention payables 69,282,635.87 3,148,931.94 69,282,635.87 - Other Non-Current Liabilities 3,767,502.61 618,570.67 618,570.67 618,570.67 Total Non-Current Liabilities 1,632,856,089.70 916,173,748.00 260,038,114.55 12,275,169.32 TOTAL LIABILITIES 4,813,704,395.68 4,356,175,992.80 2,777,580,049.49 3,380,563,625.76 Notes to financial statements are an integral part of these financial statements

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STATEMENTS OF FINANCIAL POSITION (CONTINUED) GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES AS AT DECEMBER 31, 2012 AND 2011

Notes

Shareholders’ Equity Share Capital 25 Authorised share capital 440,000,000 ordinary shares of Baht 1 each 400,000,000 ordinary shares of Baht 1 each Issued and paid up share capital 439,999,984 ordinary shares of Baht 1 each 400,000,000 ordinary shares of Baht 1 each Premium on share capital Surplus from reorganisation under common control Retained earnings Appropriated Legal reserve 26 Unappropriated Equity attributable to owners of the Company Non-controlling interests of the subsidiary Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

Consolidated 2012 2011

440,000,000.00

(Unit : Baht) Separate financial statements 2012 2011

- 440,000,000.00

- 400,000,000.00 439,999,984.00

-

- 400,000,000.00

- 439,999,984.00

-

- 400,000,000.00 - 400,000,000.00 425,120,000.00 425,120,000.00 425,120,000.00 425,120,000.00 93,622,449.53 93,622,449.53

-

-

44,000,000.00 40,000,000.00 44,000,000.00 40,000,000.00 920,416,662.25 224,861,166.97 966,515,465.36 407,337,100.06 1,923,159,095.78 1,183,603,616.50 1,875,635,449.36 1,272,457,100.06 221,407,059.95 - - - 2,144,566,155.73 1,183,603,616.50 1,875,635,449.36 1,272,457,100.06 6,958,270,551.41 5,539,779,609.30 4,653,215,498.85 4,653,020,725.82

Notes to financial statements are an integral part of these financial statements

Gunkul Engineering Public Company Limited

163


STATEMENTS OF COMPREHESIVE INCOME GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011

Notes

Consolidated 2012 2011

(Unit : Baht) Separate financial statements 2012 2011

Revenues Revenues from construction services Sales of goods Service income Dividend income Gain on exchange rate Gain on disposal of investment Other income Total revenues Expenses Cost of construction services Cost of sales Cost of service Selling expenses Administrative expenses Loss on exchange rate Management benefit expense Finance cost Total expenses

5.3

2,318,058,621.73 449,837,000.00 3,102,590,441.80 2,197,719,860.35 1,974,713,255.21 2,201,675,735.84 1,531,632,138.71 1,948,024,085.31 12,750,000.00 - 12,750,000.00 - - - 25,571,765.00 19,839,771.64 13,141,644.65 - 6,130,689.08 - 416,221,998.33 - 141,525,150.00 - 29,000,839.24 17,185,533.70 16,523,333.67 10,884,868.27 4,763,886,359.16 2,668,698,269.54 4,836,723,518.26 4,176,468,585.57 1,755,408,420.55 402,979,071.22 2,358,000,079.70 1,860,731,602.75 1,475,629,611.36 1,603,138,307.88 1,326,099,041.33 1,529,269,498.44 4,918,680.00 - 4,918,680.00 - 36,771,730.54 79,978,194.70 35,192,035.14 76,865,585.41 303,214,985.21 184,098,150.08 193,269,788.82 108,413,489.27 - 64,231,062.24 - 57,918,168.61 37,971,268.98 23,116,407.83 31,702,790.87 19,167,472.31 103,771,517.54 57,159,100.77 47,516,805.63 41,845,116.58 3,717,686,214.18 2,414,700,294.72 3,996,699,221.49 3,694,210,933.37

Share of loss from investments in associates Net profit before income tax Income tax Total comprehensive income for the period

(48,670,867.60) - - - 997,529,277.38 253,997,974.82 840,024,296.77 482,257,652.20 (227,923,507.86) (164,473,209.70) (196,845,931.47) (140,205,152.38) 769,605,769.52 89,524,765.12 643,178,365.30 342,052,499.82

Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries Basic earnings (loss) per shares Number of weighted ordinay shares (Unit : share)

779,555,495.28

89,524,765.12 643,178,365.30 342,052,499.82

(9,949,725.76) 769,605,769.52

- - - 89,524,765.12 643,178,365.30 342,052,499.82

28

1.77

0.22

1.46

0.86

440,000,000

400,000,000

440,000,000

400,000,000

Notes to financial statements are an integral part of these financial statements

164

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Gunkul Engineering Public Company Limited

165

400,000,000.00 425,120,000.00 93,622,449.53 35,000,000.00 170,335,351.85 1,124,077,801.38 - 1,124,077,801.38 - - - 5,000,000.00 (5,000,000.00) - - - - - - - (29,998,950.00) (29,998,950.00) - (29,998,950.00) - - - - 89,524,765.12 89,524,765.12 - 89,524,765.12 400,000,000.00 425,120,000.00 93,622,449.53 40,000,000.00 224,861,166.97 1,183,603,616.50 - 1,183,603,616.50 39,999,984.00 - - - - 39,999,984.00 - 39,999,984.00 - - - - - - 231,356,785.71 231,356,785.71 - - - 4,000,000.00 (4,000,000.00) - - - - (80,000,000.00) (80,000,000.00) - (80,000,000.00) - - - - 779,555,495.28 779,555,495.28 (9,949,725.76) 769,605,769.52 439,999,984.00 425,120,000.00 93,622,449.53 44,000,000.00 920,416,662.25 1,923,159,095.78 221,407,059.95 2,144,566,155.73

Notes to financial statements are an integral part of these financial statements

Balance as at January 1, 2011 Change in equity for the year Legal reserve Dividend paid Total comprehensive income for the year Balance as at December 31, 2011 Change in equity for the year Increase from increment of capital Increase from acquisiton of subsidiary Legal reserve 26 Cash dividends and stock dividends 29 Total comprehensive income for the year Balance as at December 31, 2012

(Unit : Baht) Parent’s Shareholders’ Equity Surplus from Retained earnings Issued and reorganisation Total Non-controlling paid-up Premium on under Appropriated equity holder interests of Notes share capital share capital common control legal reserve Unappropriated of the company the subsidiary Total

GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


SEPARATE STATEMNTS OF CHANGES IN SHAREHOLDERS’ EQUITY GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011

(Unit : Baht)

Issued and Retained earnings paid-up Premium on Appropriated Total Notes share capital share capital legal reserve Unappropriated

Balance as at January 1,2011 400,000,000.00 425,120,000.00 35,000,000.00 100,283,550.24 960,403,550.24 Change in equity for the year Legal reserve - - 5,000,000.00 (5,000,000.00) - - - - (29,998,950.00) (29,998,950.00) Dividend paid Total comprehensive income for the year - - - 342,052,499.82 342,052,499.82 Balance as at December 31, 2011 400,000,000.00 425,120,000.00 40,000,000.00 407,337,100.06 1,272,457,100.06 Change in equity for the year Increase from increment of capital 39,999,984.00 - - - 39,999,984.00 Legal reserve 26 - - 4,000,000.00 (4,000,000.00) - Cash dividends and stock dividends 29 - - - (80,000,000.00) (80,000,000.00) Total comprehensive income for the year - - - 643,178,365.30 643,178,365.30 Balance as at December 31, 2012 439,999,984.00 425,120,000.00 44,000,000.00 966,515,465.36 1,875,635,449.36

Notes to financial statements are an integral part of these financial statements

166

Smart Energy in Action


STATEMENTS OF CASH FLOWS GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011 Cash Flow from Operating Activities Net profit before income tax Adjustments to reconcile net profit for cash received (used) from operations Bad debts and doubtful debts Unrealized loss on exchange rate Loss on diminutions in the value of inventories (reversal) Loss on impairment Writen off expense Other inome Dividend income Depreciation and amortisation (Gain) loss from disposal of fixed assets Provision for warranty (reversal) Provision for sales return Provisions for employee benefits Gain on disposal of investments in subsidiary Share of loss from investments in associates Intragroup profit recognised in fixed assets Share of loss of non controling interest Interest income Interest expenses

Notes

Consolidated 2012 2011

(Unit : Baht)

Separate financial statements 2012 2011

1,007,479,003.14

253,997,974.82

840,024,296.77

482,257,652.20

1,895,240.89 6,909,549.91

822,812.82 62,905,237.40

1,015,823.69 7,593,140.80

361,517.37 62,261,971.65

25,548,942.53 5,758,719.86 17,822,327.23 (1,082,138.99) 1,382,545.00 - - - 6,615,822.08 - - - - (684,642.47) - (529,000.00) - - (25,571,765.00) (19,839,771.64) 47,993,344.81 32,618,576.99 4,761,159.21 3,904,349.04 (974,148.19) 33,378.45 (810,355.97) (9,783.05) (829,236.96) (128,850.15) (319,351.31) 72,785.03 19,413,456.58 - 19,413,456.58 - 1,032,425.00 1,029,815.98 630,577.00 629,171.00

(416,221,998.33)

48,670,867.60 (8,324,142.18) (9,949,725.76) (15,930,564.96) 103,771,517.98

- (141,525,150.00)

-

- - - - - - - - - (11,937,857.96) (11,122,680.23) (8,175,371.25) 57,159,100.77 47,516,805.63 41,845,116.58

Notes to financial statements are an integral part of these financial statements

Gunkul Engineering Public Company Limited

167


STATEMENTS OF CASH FLOWS (CONTINUED) GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011

Notes

Net profit before changes in operating assets and liabilities (Increase)decrease in trade and other receivable - related parties (Increase)decrease in trade and other receivable - third parties (Increase)decrease in unbilled receivables (Increase)decrease in deposit for purchase of goods (Increase)decrease in advances payment to subcontractors (Increase)decrease in receivable from Revenue Department (Increase)decrease in inventories (Increase)decrease in construction in progress Cash Flow from Operating Activities (continued) (Increase)decrease in retention receivables (Increase)decrease in other non-current assets Increase(decrease) in trade and other payable - related parties Increase(decrease) in trade and other payable - third parties Increase(decrease) in advances received from employers and construction revenue received in advance - third parties Increase(decrease) in payable to Revenue Department Increase(decrease) in retention payables

Consolidated 2012 2011

(Unit : Baht)

Separate financial statements 2012 2011

818,482,899.14

401,574,266.51

759,428,284.40

970,038,181.05

(19,367,398.97)

485,405,770.15 (849,972,955.65)

561,696,497.94

(183,900,624.88) (193,006,702.46) (230,009,045.32) (169,070,910.13) (17,060,967.27) - 159,380,839.23 (176,469,389.82)

49,781,143.45

(7,857,432.28)

54,569,220.72

(15,798,817.54)

(123,721,369.18)

(23,234,109.47)

(123,721,369.18)

(23,234,109.47)

(15,274,093.85) (129,779,396.48) (56,316,686.14) (45,315,357.36)

- 2,013,731.68 (72,451,921.18) (334,805,762.24)

358,026,426.84 (150,301,512.14)

752,720,112.68 (486,302,705.38)

-

- (68,827,686.23)

-

879,700.11

2,970,983.51

(186,027.98)

44,375.00

33,427,888.86

7,405,004.68

137,621,713.60

72,538,884.98

393,276,046.81

250,703,424.91

353,729,773.11

237,637,672.13

(221,880,604.82)

225,325,703.66 (221,880,604.82)

225,325,703.66

(1,462,926.59) 66,133,703.93

11,015,948.49 -

10,086,743.97 -

Notes to financial statements are an integral part of these financial statements

168

Smart Energy in Action

(3,785,593.23) 69,282,635.87


STATEMENTS OF CASH FLOWS (CONTINUED) GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011 Increase(decrease) in non - current liabilities Cash paid for employee benefits Cash generated from operations Cash received from interst income Cash paid for interst expenses Cash received for income tax Cash paid for income tax Net Cash Provided (used) from Operating Activities Cash Flow from Investing Activities Cash paid for shares payable Cash paid for investments in associate Cash paid for investments in subsidiaries Cash received from sale of investment Dividend income (Increase)decrease in short-term loans to related parties Cash paid for investment property Cash paid for purchase of property, plant and equipment and payable for purchase of assets Proceed from disposal of property, plant and equipment (Increase) decrease in fixed deposits and bill of exchange pledged as collateral Cash paid for purchase of intangible assets Net Cash Provided (used) from Investing Activities

Notes

Consolidated 2012 2011

(Unit : Baht)

Separate financial statements 2012 2011

3,148,931.94 3,148,931.94 - - (359,880.00) (2,539,260.00) - (2,539,260.00) 2,073,217,769.40 330,743,094.54 2,051,276,101.82 (948,850,300.87) 8,279,059.80 11,985,821.84 6,308,860.98 6,150,631.41 (94,180,245.77) (58,694,659.55) (43,680,719.51) (40,597,588.40) 459,013.63 - - - (167,684,053.59) (152,209,380.88) (136,241,608.60) (121,926,752.30)

1,820,091,543.47

- (57,903,300.00) (7,642,500.00) (57,903,300.00) (57,600,000.00) - (57,600,000.00) - (218,407,146.47) - (979,982,497.50) (929,000,000.00) 594,823,147.93 - 594,917,350.00 - - 28,331,762.24 17,079,774.40

(29,245,658.91) (32,572,545.00)

131,824,875.95 1,877,662,634.69 (1,105,224,010.16)

- 146,907,581.09 (171,203,240.00) - - -

(1,194,034,560.40) (2,832,216,090.13)

(15,428,635.35)

(2,428,438.69)

66,523.80

1,270,180.69

58,230.85

(419,979,671.08) (330,681,852.69)

(116,110,857.56)

(30,020,186.87)

2,809,230.41

(227,680.00)

(105,350.00)

(1,354,434,883.52) (3,220,840,069.02)

-

-

(405,337,616.39) (1,173,417,160.31)

Notes to financial statements are an integral part of these financial statements

Gunkul Engineering Public Company Limited

169


STATEMENTS OF CASH FLOWS (CONTINUED) GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES FOR THE YEAR ENDED ON DECEMBER 31, 2012 AND 2011

Notes

Cash Flow from Financing Activities Increase(decrease) in bank overdrafts and short-term loans from financial institutions Proceeds from long-term loans from banks Cash paid for long-term loans from banks Increase(decrease) in short-term loans from related parties Repayment of obligation under finance lease Repayment of interest-obligation under finance lease Dividend paid Net Cash Provided (used) from Financing Activities Net Increase (decrease) in Cash and Cash Equivalent Cash and Cash Equivalent at the Beginning of the Year Cash and Cash Equivalent at the End of the Year

Consolidated 2012 2011

(Unit : Baht)

Separate financial statements 2012 2011

(1,237,886,055.28) 2,243,962,832.26 (1,324,483,054.23) 2,389,875,866.21 1,012,575,816.47 988,200,507.45 - - (75,050,455.35) (5,792,086.46) - -

157,083,240.00

(2,050,000.00)

29,146,966.57

(7,647,973.86)

(5,459,223.13)

(4,278,453.62)

(4,679,293.47)

(3,543,979.97)

(1,348,892.69) (48,602,007.64)

(879,225.32) (29,986,016.93)

(1,111,432.14) (39,992,007.64)

(740,277.79) (29,986,421.93)

(198,687,577.62) 3,189,177,557.38 (1,341,118,820.91) 2,347,957,212.66

266,969,082.33

100,162,364.31

131,206,197.39

69,316,042.19

314,963,736.25

214,801,371.94

265,709,067.14

196,393,024.95

30.1

581,932,818.58

314,963,736.25

396,915,264.53

265,709,067.14

Notes to financial statements are an integral part of these financial statements

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NOTES TO FINANCIAL STATEMENTS GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES DECEMBER 31, 2012 AND 2011

1. General information Gunkul Engineering Public Company Limited (“the Company”) is a public limited company and is incorporated in Thailand. The address of the Company’s registered office is 1038-1046 Nakornchaisri Road, Nakornchaisri, Dusit, Bangkok. The principal activities of the Company and subsidiaries (“the Group”) involve manufacture, distribution and importation and exportation of electrical hard ware and equipment including generate and sell electricity.

2. Basis of preparation of financial statements The consolidated and separate financial statements are presented in Thai language and Thai Baht, and in conformity with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Capital Market Supervisory Board under the Securities and Exchange Act B.E. 2535 (or 1992). The consolidated and separate financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Actual results may differ from those estimates. Although the management has most well prepared the figures of estimation from the understanding of events and the things that have been done presently. Gunkul Engineering Public Company Limited

171


The financial statements issued for Thai report purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. The Federation of Accounting Profession has notified to apply the following financial reporting standards to the financial statements in the future periods.

Effective date TFRS No. 8 Operating Segments January 1, 2013 TAS No. 12 Income Taxes January 1, 2013 TAS No. 20 Accounting for Government Grants and Disclosure of Government Assistance (revised 2009) January 1, 2013 TAS No. 21 The Effects of Changes in Foreign Exchange Rates (revised 2009) January 1, 2013 TSI No. 10 Government Assistance - No Specific Relation to Operating Activities January 1, 2013 TSI No. 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets January 1, 2013 TSI No. 25 Income Taxes - Change in the Tax Status of an Entity or its Shareholders January 1, 2013 Guide to Accounting Practice : Transfer and Transferred of Financial Assets January 1, 2013 TFRI No. 4 Determining whether an Arrangement contains a Lease January 1, 2014 TFRI No. 12 Service Concession Arrangements January 1, 2014 TFRI No. 13 Customer Loyalty Programmes January 1, 2014 TSI No. 29 Service Concession Arrangements : Disclosures January 1, 2014

The Group has not early adopted such financial reporting standards having the effective date to the financial statements on the future periods before the effective dates. The management assesses the impact of the financial reporting standards having an effective date in year 2013 and believes that they will not have any significant impact on the financial statements for the period in which they are initially adopted except the following accounting standards; TAS 12 Income Taxes, which stipulates that the Group is required to recognize the deferred tax liabilities or the deferred tax assets when the temporary difference between the tax base and the carrying amount of the asset or the liability is occurred, however, the Group presently doesn’t recognize such transaction. The Group is required to apply the retrospective application to the financial statements for 2013in accordance with the requirement of the accounting standard when the Group adopts such the accounting standard in 2012. The management assesses the impact on the Company’s financial statements for 2012, as follows: 172

Smart Energy in Action


(Unit : Baht)

Statements of Financial Position Consolidated financial statements Separate financial statements As at December 31, January 1, December 31, January 1, 2012 2012 2012 2012

Increase in deferred tax assets Increase in intangible assets Increase in deferred tax liabilities Increase in retained earnings

68,561,977.32 170,196,244.63 174,810,488.62 63,947,733.33

4,378,735.03 - 275,422.88 4,103,312.15

(Unit : Baht) Statements of Comprehensive Income Consolidated financial Separate financial statements statements For the year ended on December 31, 2012

Increase (decrease) in income tax expense Increase (decrease) in total comprehensive income Increase (decrease) in basic earnings per share

72,821,778.75 12,665,094.96 19,415,584.42 - 21,523,590.48 913,234.39 70,713,772.69 11,751,860.57

6,766,039.36 (6,766,039.36)

(7,648,548.42) 7,648,548.42

(0.0154)

0.0174

The management is currently assessing the impact on the financial statements for the financial reporting standards having effective date in year 2014.

3. Principles of consolidation financial statements The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Subsidiaries, which are those entities in which the Group has power to govern the financial and operating policies, are consolidated. The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Gunkul Engineering Public Company Limited

173


Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred for acquisition is measured at the sum of the fair value of the assets given, the liabilities incurred, and equity instruments issued by the Group at the date of exchange. Acquisition-related costs are accounted as expenses in the period in which the costs are incurred. The excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the fair value of the net identifiable assets of the subsidiary acquired is recognized as goodwill and to be tested for impairment annually. If, after reassessment, the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) is less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognized in profit or loss as a bargain purchase gain. Acquisitions of subsidiaries under common control are accounted for using the similar to pooling of interest method. The cost of business combination under common control are the sum of the fair value of the assets given, the liabilities incurred, and equity instruments issued by the Group at the date of exchange. The costs related to the business combination under common control are accounted as expenses in the period in which the costs are incurred. The excess of the costs related to the business combination under common control over or under the carrying amount of the net assets of the subsidiary acquired is recorded as “Surplus from reorganization under common control” in the consolidated financial statements. Related party transactions, balances and unrealized gains on transactions between the Company and its subsidiaries are eliminated; unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. The consolidated financial statements for the year ended December 31, 2012 and 2011 have been prepared by including the financial statements of Gunkul Engineering Public Company Limited and subsidiaries after eliminate the significant related party balances and transactions. The percentage directly and indirectly owned by the Company as follows:- 174 Smart Energy in Action


Percentage of Country of shareholding incorporation 2012 2011 Name of subsidiaries Nature of business G.K. Power Product Co., Ltd. Manufacture electrical hardware and equipment G.K. Assembly Co., Ltd. Manufacture electrical hardware and equipment K.N.P. Supply Co., Ltd. Import-export electrical hardware and equipment Gunkul Powergen Co., Ltd. Generating and selling electricity Wind Energy Development Generating and selling electricity Co., Ltd. G-Power Source Co., Ltd. Generating and selling electricity

Thailand 100.00 Thailand 100.00 Thailand 100.00 Thailand 100.00 Thailand 70.00

100.00 100.00 100.00 100.00 -

Thailand 40.00

100.00

On March 30, 2012, the Company disposed investment in ordinary shares of G-Power source Co., Ltd. to other company as per mentioned in the note no. 12. As a result, such company is no longer regarded as subsidiary of the Company since the Company has no power to control such subsidiary. As a result, the consolidated statement of financial position as at December 31, 2012 did not combine statement of financial position of such subsidiary. However, the consolidated statement of comprehensive income for the year ended on December 31, 2012 has consolidated the result of operation of such company from January 1, 2012 to March 30, 2012. The financial statements of the subsidiaries are prepared for the same reporting periods as the Company and using consistent significant accounting policies. The non-controlling interest is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

4. Accounting policies 4.1 Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits with banks and other short-term highly liquid investments with original maturities of three months or less and free from restrictions. Gunkul Engineering Public Company Limited

175


4.2 Trade account receivable Trade account receivable are carried in the statement of financial position at the amount expected to be collectible. Allowance for doubtful receivables are estimated by percentage of accounts receivable which is assessed primarily on analysis of payment histories and review of all outstanding amounts at the end of the reporting period. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified. 4.3 Inventories Inventories are stated at the lower of cost or net realisable value. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts, allowances or rebates. The cost of finished goods and work in process comprise raw materials, direct labor, other direct costs and related production overheads, the latter being allocated on the basis of normal operating activities. Costs of inventories are calculated as the follow method:-

Finished goods - FIFO method Work in process - FIFO method Raw material and supplies - FIFO method

The Group estimates the net realisable value by using the selling price in the ordinary course of business less selling expenses. The Group makes the allowance for diminutions in the value of obsolete, defective or slow-moving inventories.

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4.4 Investments Investments in associates An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Investments in associates are accounting for using the cost method of accounting in the separate financial statements less allowance for impairment investment (if any). Investments in associates are accounted for using the equity method in the consolidated financial statements. Under the equity method, the investment in an associate is initially recognized at cost and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the investee after the date of acquisition. The Group’s share of the profit or loss of the investee is recognized in the Group’s profit or loss. Where necessary, accounting policies of associates have been changed to ensure consistency with the policies adopted by the Group. The financial statements of the associates are prepared for the same reporting periods as the Company. Investments in subsidiaries Investments in subsidiaries are reported by using the cost method of accounting in the separate financial statements less allowance for impairment investment. 4.5 Investment property Investment property, which is property held to earn rentals and/or for capital appreciation is measured initially at its costs, including transaction cost. Subsequent to initial recognition, investment property is measured at the cost method net from the allowance for impairment (if any).

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177


4.6 Property, plant and equipment Land and assets under construction held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their historical cost less accumulated impairment losses (if any). Buildings and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their historical cost less accumulated depreciation and accumulated impairment losses (if any). The cost of an item of asset comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and the borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. The Group’s depreciation is calculated on the straight-line method to write off the cost of each asset, except for land and assets under construction, to their residual values over their estimated useful life as follows:

Buildings and power plant 25 - 30 years Machinery and factory equipment 5 - 25 years Tools and equipments 5 years Fixtures and office equipments 5 years Motor vehicles (Including vehicle under lease agreements) 5 years

The residual value, the useful life and the depreciation method of an asset will be reviewed at least at each financial year-end. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. 178

Smart Energy in Action


4.7 Intangible assets Intangible assets with finite useful lives which the Group acquired are stated at historical cost less accumulated amortization and impairment loss (as if). The Group’s amortisation is calculated on the straight-line method over their estimated useful life as follows:

Computer software Copyright

5 years 3 - 5 years

Power purchase agreement acquired in a business combination is initially recognized at their fair value at the acquisition date which is regarded as their cost and amortized over the period of power purchase agreement. 4.8 Impairment of assets The carrying amounts of the Group’s assets and also intangible assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. The Group will recognize impairment losses in profit or loss, or reduce the revaluation increment in assets in case that those assets are previously revalued. The reversal of impairment losses will be recognized in profit or loss or as a revaluation increment in assets when there is an indication that the impairment losses are no longer exist or decreased. 4.9 Loans from financial institutions Loans from financial institutions are initially measured at fair value, including transaction costs directly attributable to the issue of the loans. And after initial recognition, the loans from financial institutions are subsequently measured at amortized cost, using the effective interest method. Gunkul Engineering Public Company Limited

179


4.10 Accounting for leases Where the Group is the lessee Long term leases which substantially transferred all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged in profit or loss over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The assets acquired under finance leases while depreciation is carried throughout the useful life of leased asset. However, if there is uncertainty in the right of ownership when the contract is terminated, depreciation is carried according to useful life of leased assets or life of leased contract whichever the period is lower. Long term leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged in profit or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place. Where the Group is the lesser Operating leases Assets leased out under operating leases are included in property, plant and equipment in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with other similar property, plant and equipment owned by the Group. 180 Smart Energy in Action


4.11 Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. 4.12 Revenue recognition Sales are recognized on the delivery of goods or on customer acceptance. Sales are shown net of sales taxes and discounts. Revenues from construction shall comprise the initial amount of revenue agreed in the contract and a claim collect from third parties are recognized on a percentage of completion basis. The percentage of completion is measured based on comparison of the completion of a physical proportion of the contract work at the end of the reporting period and the total contract work surveyed by the engineer project manager. In case, it is probable that the total construction costs will exceed the total construction income, the expected foreseeable loss is immediately recognized as an expense in profit or loss. The recognized revenue which is not yet due per the contracts has been presented under the caption of “Unbilled receivables” in the statement of financial position. The unrecognized revenue which is due per the contracts has been presented under the caption of “Advances received from employers and construction revenue received in advance - third parties” in the statement of financial position. Service income is recognized when services have been rendered. Rental income is recognized as income over the lease period. Interest income is recognized using the effective interest method. Other income is recognized on an accrual basis.

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4.13 Foreign currency transactions The Group translates foreign currency transactions into Baht using the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities at the end of the reporting period denominated in foreign currencies are translated into Baht at the exchange rate prevailing at that date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss as incurred. 4.14 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. 4.15 Employee benefits Defined contribution plan The Group operates a provident fund which is funded by payments from employees and by the Group. The assets for which are held in a separate trust fund. Contributions to the provident fund are recognized in profit or loss in the period in which they are incurred. Defined benefit plan The Group has the employee benefit obligation in case of retirement or termination under the labor law. The Group hires an actuary to calculate 182

Smart Energy in Action


on an actuarial technique the said employee benefit obligation. The said employee benefit obligation is discounted using the projected unit credit method by reference to an interest rate of a government bond to determine the present value of the employee benefit obligation, related past service cost and current service cost. All actuarial gains and losses are recognized immediately in profit or loss.

4.16 Corporate income tax

Income tax expense is calculated from taxable income and recorded based on tax paid and accrued for the year. 4.17 Segment information Business segments provide products and services that are subject to risks and returns that are different from those of other business segments. Geographic segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those of components operating in other economic environments. Segment information is presented by business segments of the Group’s operations. 4.18 Financial instruments Financial assets and liabilities carried on the statement of financial position include cash and cash equivalents, investment in equity securities, trade and other receivables, trade and other payables, and loan receivables and payables. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in this Note. Forward contracts are carried at fair value and presented in other current assets or other current liabilities. Unrealized gains or losses on changes in fair value are recognized in profit or loss.

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Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on interest rate swap contracts is recognised as a component of interest expenses in statement of comprehensive income. 4.19 The important accounting estimation, supposition and judgment application Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Plant, equipment and intangible assets Management determines the estimated useful lives and residual values for the Group’s plant, equipment and intangible assets. Management will revise the depreciation charge where useful lives and residual values are different to previously estimated, or its will write off or write down technically obsolete or assets that have been abandoned or sold. Financial lease/ Operation lease The Group has entered into lease agreements for rental vehicle and equipment. The Group has determined, based on an evaluation on terms and conditions of the arrangements, that the lease transfers ownership of these assets to the lessee, and so accounts for the contracts as financial leases. Estimated construction project costs The Group estimate costs of construction projects based on details of the construction work, taking into account the volume and value of construction materials to be used in the project, labour costs and other miscellaneous costs to be incurred to completion of service, taking into account the direction of the movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the figures used in the original estimates. 184 Smart Energy in Action


5. Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. Gunkul Group Co., Ltd. is a major shareholder, holding 59.97% of the share capital of the Gunkul Engineering Public Co., Ltd. The principal shareholder of the Company’s major shareholder is Dhumrongpiyawut family. Transactions related to companies in which the Dhumrongpiyawut family is the principal shareholders or directors are recognized as related parties to the Company. The Company has transactions with related persons and companies for the year ended on December 31, 2012 and 2011 as follows: 5.1 Inter-assets and liabilities

Trade account receivable G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Future Electrical Control Co., Ltd. Kulnatee Co., Ltd. FEC & SAC Joint venture Total

Consolidated 2012 2011

- - - - - - 92,552,793.71 22,274,098.62 - 4,173.00 - 78,043.07 92,552,793.71 22,356,314.69

(Unit : Baht) Separate financial statement 2012 2011 2,780,984.97 896,152.25 419,386.50 - 1,673,155.45 17,063,239.73 - - - 4,173.00 - 78,043.07 4,873,526.92 18,041,608.05

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Consolidated 2012 2011

Other receivable G-Power Source Co., Ltd. Wind Energy Development Co., Ltd. Future Electrical Control Co., Ltd. Construction receivable G-Power Source Co., Ltd. Gunkul Powergen Co., Ltd. Accrued dividend G.K. Assembly Co., Ltd. Accrued receivable Gunkul Powergen Co., Ltd. G-Power Source Co., Ltd. Total trade and other receivable - related parties Unbilled receivables G-Power Source Co., Ltd. Gunkul Powergen Co., Ltd. Total Advance payments to subcontractor Future Electrical Control Co., Ltd. Short-term loans to related parties G.K. Assembly Co., Ltd. Beginning balance Addition Repayment Ending balance

186

(Unit : Baht) Separate financial statement 2012 2011

Smart Energy in Action

13,642,500.00 - 3,947.83 13,646,447.83 304,132,391.35 - 304,132,391.35

- 13,642,500.00 - 46,631.00 - - - 13,689,131.00

- - - -

- 304,132,391.35 882,679,542.03 - 92,666,961.66 - - 396,799,353.01 882,679,542.03

-

-

-

2,759,997.24

- 7,652,060.76 7,652,060.76

- - -

- 7,652,060.76 7,652,060.76

1,288,534.81 1,549,706.70 2,838,241.51

417,983,693.65 22,356,314.69 423,014,071.69 906,319,388.83 17,036,723.56 - 17,036,723.56 109,967,548.57 - - - -

- 17,036,723.56 176,469,389.82 - 27,583.32 - - 17,064,306.88 176,469,389.82 - 109,967,548.57 - - - -

-

- - - 2,000,000.00 - (2,000,000.00) - -


(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

K.N.P Supply Co., Ltd. Beginning balance Addition Repayment Ending balance

- - - -

- - - -

- - - 1,717,520.42 - (1,717,520.42) - -

Gunkul Powergen Co., Ltd. Beginning balance Addition Repayment Ending balance

- - - -

- 19,070,000.00 4,950,000.00 - 27,900,000.00 47,120,000.00 - (46,970,000.00) (33,000,000.00) - - 19,070,000.00

G-Power Source Co., Ltd. Beginning balance Addition Repayment Ending balance Total

- 382,514,506.37 (353,268,847.46) 29,245,658.91 29,245,658.91

- 157,083,240.00 - 225,431,266.37 - (353,268,847.46) - 29,245,658.91 - 29,245,658.91

- 249,183,240.00 (92,100,000.00) 157,083,240.00 176,153,240.00

Disposal of property, plant and equipment G.K. Assembly Co., Ltd. Gunkul Powergen Co., Ltd. Future Electrical Control Co., Ltd. Total

- - 512,328.74 512,328.74

- - 2,500.00 2,500.00

390,395.89 - - 390,395.89

18,527.32 15,030.31 - 33,557.63

Purchase of property, plant and equipment G.K. Assembly Co., Ltd. Future Electrical Control Co., Ltd. P.M. Audit Co., Ltd. Total

- 13,573.75 600,000.00 637,216.20

1,918,527.32 338,317.76 - 2,413,910.38

3,198.38 - 600,000.00 626,840.83

- - - 157,065.30

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(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

Purchase of property, plant and equipment jointing ownership with director Retention receivable Gunkul Powergen Co., Ltd.

31,190,000.00 -

-

-

-

- 68,827,686.23

-

Trade account payable G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Future Electrical Control Co., Ltd. Total

- - - 29,503,281.20 29,503,281.20

Advances received from customers under construction contracts G-Power Source Co., Ltd. Gunkul Powergen Co., Ltd. Total

3,607,407.66 - 3,607,407.66

Advance received for goods Future Electrical Control Co., Ltd.

7,605,004.68

7,605,004.68

-

-

-

-

822,597.43

-

- - - 214,000.00 - 231,200.00 445,200.00

- - - - 128,000.00 - 128,000.00

513,600.00 235,400.00 160,500.00 214,000.00 - - 1,123,500.00

- - - - - - -

Accrued interest payable K.N.P Supply Co., Ltd. Accrued expenses G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Future Electrical Control Co., Ltd. G.M. Supply and Construction Co., Ltd. Director Total Total trade and other payable - related parties

188

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41,160,893.54

- - - - -

66,516,163.66 112,087,898.15 10,293,031.48 29,503,281.20 218,400,374.49

9,479,165.06 46,876,291.74 6,356,559.62 - 62,712,016.42

- 3,607,407.66 89,349,813.75 - 66,552,261.62 - - 70,159,669.28 89,349,813.75

7,733,004.68 290,506,141.20 152,061,830.17


Retention payable. Future Electrical Control Co., Ltd.

(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

37,161,982.64

- 37,161,982.64

-

Short-term loans from related parties G.K. Assembly Co., Ltd. Beginning balance Addition Repayment Ending balance

- - - -

- - - -

- - - 3,000,000.00 - (3,000,000.00) - -

K.N.P Supply Co., Ltd. Beginning balance Addition Repayment Ending balance

- - - -

- - 5,597,973.86 - 41,646,966.57 12,848,270.06 - (12,500,000.00) (18,446,243.92) - 29,146,966.57 -

Short-term loans from related parties (Continued) Gunkul Group Co., Ltd. Beginning balance Addition Repayment Ending balance Total

- 2,050,000.00 - 2,050,000.00 - 1,000,000.00 - 1,000,000.00 - (3,050,000.00) - (3,050,000.00) - - - - - - 29,146,966.57 -

As at December 31, 2012, the Group constitutes loans to and loans from related parties. Such inter-loan is in form of promissory note, at call and interest is carried by the rate of 3.00% - 6.1813% per annum.

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5.2 Inter-revenue and expenses

(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

Sales of goods G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Future Electrical Control Co., Ltd. Kulnatee Co., Ltd. Sri - Uthong and Future Electrical Control Joint venture FEC & SAC Joint venture Total Revenues from construction services G-Power Source Co., Ltd. Gunkul Powergen Co., Ltd. Total Service income G-Power Source Co., Ltd.

- - 1,761,525.90 17,026,078.41 - - 4,107,044.75 51,207,173.00 - - 35,374,926.74 39,035,290.22 169,184,017.28 26,794,363.86 422,143.28 132,344.46 17,850.00 71,814.20 17,850.00 71,814.20 - 685,847.95 - 685,847.95 - 72,937.45 - 72,937.45 169,201,867.28 27,624,963.46 41,683,490.67 108,231,485.69 1,166,189,746.74 - 1,562,825,770.17 15,450,000.00

- 1,166,189,746.74 1,747,882,860.35 - 784,526,279.10 - - 3,028,327,662.91 1,747,882,860.35 - 15,450,000.00

-

Other income Future Electrical Control Co., Ltd.

1,469,520.00

-

-

-

Interest income G.K. Assembly Co., Ltd. Gunkul Powergen Co., Ltd. G-Power Source Co., Ltd. Total

- - 6,206,304.13 6,206,304.13

- - - -

- 681,178.96 6,206,304.13 6,887,483.09

22,153.43 1,379,070.01 1,549,706.72 2,950,930.16

Dividend income G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Total

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- - - -

- 1,682,000.00 2,759,997.24 - 8,610,000.00 9,829,803.40 - 15,280,000.00 7,249,971.00 - 25,572,000.00 19,839,771.64


(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

Purchase of goods and service G.K. Assembly Co., Ltd. G.K. Power Product Co., Ltd. K.N.P Supply Co., Ltd. Total Cost of construction service Future Electrical Control Co., Ltd.

- - - -

- - - -

304,303,965.00

260,112,096.06 167,554,686.00 13,962,775.92 441,629,557.98

142,341,099.89 44,750,004.00 12,353,659.78 199,444,763.67

- 304,303,965.00

-

Transportation and service fee G.E.S. Logistics (Thailand) Co., Ltd.

3,097,492.00

157,065.30

2,915,000.00

157,065.30

Office, warehouse and land rental fee Gunkul Engineering (2000) Co., Ltd. G.M. Supply and Construction Co., Ltd. Director Total

6,666,000.00 1,536,000.00 693,600.00 8,895,600.00

6,666,000.00 1,536,000.00 - 8,202,000.00

5,604,000.00 - - 5,604,000.00

5,604,000.00 - - 5,604,000.00

932,800.00

-

932,800.00

-

- - -

- 4,471.23 4,471.23

822,597.43 - 822,597.43

187,366.60 4,471.23 191,837.83

Maintenance expense Future Electrical Control Co., Ltd. Interest expense K.N.P Supply Co., Ltd. Kulnatee Co., Ltd. Total

5.3

Management benefit expenses

Short-term employee benefits Post-employment benefits

Consolidated 2012 2011

(Unit : Baht) Separate financial statement 2012 2011

37,651,819.98 22,877,024.82 31,429,116.87 18,966,818.31 319,449.00 239,383.01 273,674.00 200,654.00 37,971,268.98 23,116,407.83 31,702,790.87 19,167,472.31

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191


5.4 Pricing policies

Trading Transaction Sales and purchase of goods Maintenance service Interest income and expenses Rental Sales and purchase of assets Purchase of land Construction expense

Pricing Policy Cost price plus 5% to 30% Market price plus 65% Interest rate equal to interest rate of loan from financial institution Refer with the appraisal value by independent appraiser Net book value Nearby book value or the appraisal value by independent appraiser Market price plus 5% to 16%

5.5 Commitments with related parties As at December 31, 2012, the Company has performed leased contract of land plus property in one contract with one related company for the period of 3 years with option to renew. The Company constitutes obligation commitment that has to repay leased fee by Baht 467,000.00 per month. As at December 31, 2012, one subsidiary has performed the sublet contract of land plus property in one contract with a subsidiary for the period of 3 year with option to renew. The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 100,000.00 per month. As at December 31, 2012, one related company has performed the sublet contract of land plus property in 2 contracts with a subsidiary for the period of 3 years with option to renew. The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 42,000.00 and Baht 86,000.00 per month. As at December 31, 2012, one related company has performed the sublet contract of land plus property in one contract with subsidiary for the period of 3 years with option to renew. The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 88,500.00 per month. 192

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As at December 31, 2012, one subsidiary has performed the sublet contract of land plus property in one contract with director for the period of 3 year with option to renew the appraisal of an independent appraiser. The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 57,800.00 per month. As at December 31, 2012, a subsidiary has used of property of the Company in order to use as factory and operate related business while does not charge inter-leased fee. As at December 31, 2012, two subsidiaries and two directors with land plus buildings of one subsidiary as collateral against credits that the Company has received from a commercial bank in amount of Baht 410.00 million. As at December 31, 2012, one director with his land plus building as collateral against credits that the Company has received from one commercial bank in amount of Baht 235.00 million. As at December 31, 2012, one subsidiary and two directors with land plus building of one director as collateral for against credits that the Company has received from a commercial bank in amount of Baht 490.00 million. As at December 31, 2012, two directors of the Company with fixed deposit of one subsidiary as collateral against credits that such subsidiary has received from a commercial bank in amount of Baht 56.00 million and amount of USD 0.50 million. As at December 31, 2012, one director of the Company with bill of exchange of one subsidiary as collateral against credits that such subsidiary has received from a commercial bank in amount of Baht 10.00 million. As at December 31, 2012, the Company has pledged a subsidiary’s ordinary shares, which the ownership belongs to the Company, together with land plus buildings, machinery and deposits of one subsidiary as collateral against credits that such subsidiary has received from one commercial bank in amount of Baht 2,347.10 million.

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193


As at December 31, 2012, the Company has pledged an associate’s ordinary shares, which the ownership belongs to the Company, together with land plus property, land leasehold right, machine and equipmentduring-installation and bank deposit of the said associate for jointly offer the collateral for the credit facilities the associate received from a commercial bank at the credit line of Baht 2,384.90 million. As at December 31, 2012, the Company has mortgaged land plus building which the ownership belongs to two directors of the Company as collateral against credits that the Company has received from a commercial bank in amount of USD 100.00 million. As at December 31, 2012, one subsidiary has mortgaged land of them and has pledged the ordinary shares of the Company, which the ownership belongs to Gunkul Group Co., Ltd. offer the collateral for the credit facilities of the one subsidiary received from a commercial bank at the credit line of Baht 348.00 million. As at December 31, 2012, the Company has pledged the ordinary shares of the Company, which the ownership belongs to Gunkul Group Co., Ltd., offer the collateral for the credit facilities the Company received from a commercial bank at the credit line of Baht 2,169.00 million As at December 31, 2012, the Company has entered into the construction contract with one related company to perform the infrastructure work and paving stones which has the value in amount of Baht 45.33 million. As at December 31, 2012, such the Company had outstanding commitments totaling approximately Baht 11.18 million As at December 31, 2012, one subsidiary entered into a solar power plant construction and civil works in 4 contracts with the Company. Such the construction contract price was in amount of Baht 1,450.03 million. As at December 31, 2012, such subsidiary had outstanding commitments totaling approximately Baht 665.52 million. As at December 31, 2012, one associate has entered into the construction contract and civil works with the Company for constructing flood protection system, water drainage system and paving stones which has the value in amount of Baht 1,224.02 million. As at December 31, 194

Smart Energy in Action


2012, such associate had outstanding commitments totaling approximately Baht 41.09 million As at December 31, 2012, one associated entered into a power plant service and maintenance agreement with the Company for the period 6 years. The contractual amount is Baht 111.60 million. As at December 31, 2012, such associate’s outstanding obligation remains at Baht 98.85 million. As at December 31, 2013, one associated entered into construction agreements for flood protection system, storm drainage system and additional paving and building stone pathways. The contractual amount is Baht 33.46 million. As at December 31, 2012, such associate’s outstanding obligation remains at Baht 5.91 million. 5.6 Relationship

Company Relationship Gunkul Group Co., Ltd. The majority shareholder G.K. Assembly Co., Ltd. Common directors and direct shareholding G.K. Power Product Co., Ltd. Common directors and direct shareholding K.N.P Supply Co., Ltd. Common directors and direct shareholding Gunkul Powergen Co., Ltd. Common directors and direct shareholding Wind Energy Development Co., Ltd. Common directors and direct shareholding G-Power Source Co., Ltd. Common directors and direct shareholding Gunkul Trading and Agency Co., Ltd. Common directors BE - FEC Joint venture Common directors Sri - Uthong and Future Electrical Control Joint venture Common directors FEC & SAC Joint venture Common directors G.M. Supply and Construction Co., Ltd. Common directors Gunkul Engineering(2000) Co., Ltd. Common directors Future Electrical Control Co., Ltd. Common directors Gunkul Marine Line Co., Ltd. Holding by the director Kulnatee Co., Ltd. Holding by close relative of a director P.M. Audit Co., Ltd. Holding by close relative of a director G.E.S. Logistics (Thailand) Co., Ltd. Holding by close relative of a director Gunkul Engineering Public Company Limited

195


6. Trade and other receivable - related parties Outstanding trade receivable - related parties can be aged as follows:

Consolidated 2012 2011

Trade account receivable Within credit term Overdue 1 month to 3 months Overdue 3 months to 6 months Overdue 6 months to 12 months Overdue over 12 months Total Other receivable Total

(Unit : Baht) Separate financial statement 2012 2011

400,882,409.82 82,216.07 412,647,774.03 17,363,040.30 9,445,275.24 22,274,098.62 599,108.25 22,882,914.81 - - 528,666.03 860,475,194.97 - - 861,263.87 - - - 678,567.75 - 410,327,685.06 22,356,314.69 415,315,379.93 900,721,150.08 7,656,008.59 - 7,698,691.76 5,598,238.75 417,983,693.65 22,356,314.69 423,014,071.69 906,319,388.83

7. Trade and other receivable - third parties Consisted of:-

Consolidated 2012 2011

Trade account receivable Post dated cheques Trade receivable Returned cheques receivable Construction receivable Total Less Allowance for doubtful debts Total of trade receivable Other receivables Suspense input tax Less Allowance for doubtful debts Net

196

Smart Energy in Action

52,484,953.42 407,381,568.81 987,142.65 298,578,676.54 759,432,341.42 (3,215,511.17) 756,216,830.25 55,622,750.56 25,192,739.07 (227,115.21) 836,805,204.67

(Unit : Baht) Separate financial statement 2012 2011

17,682,692.19 51,770,009.74 15,819,675.44 550,372,215.38 358,816,168.51 448,192,678.93 1,092,952.44 987,142.65 1,092,952.44 26,012,004.84 298,578,676.54 26,012,004.84 595,159,864.85 710,151,997.44 491,117,311.65 (1,886,731.52) (2,298,670.97) (1,700,551.52) 593,273,133.33 707,853,326.47 489,416,760.13 26,088,352.48 41,779,111.11 16,993,671.66 2,387,286.80 18,732,312.58 953,305.22 (78,358.21) (78,358.21) (78,358.21) 621,670,414.40 768,286,391.95 507,285,378.80


Outstanding trade account receivable - third parties can be aged as follows:

Within credit term Overdue 1 month to 3 months Overdue 3 months to 6 months Overdue 6 months to 12 months Overdue over 12 months Total Less Allowance for doubtful debts Net

Consolidated 2012 2011

(Unit : Baht) Separate financial statement 2012 2011

533,530,611.62 312,180,834.49 181,616,212.63 176,574,396.51 40,287,522.42 103,765,423.87 2,292,353.33 1,662,923.92 1,705,641.42 976,286.06 759,432,341.42 595,159,864.85 (3,215,511.17) (1,886,731.52) 756,216,830.25 593,273,133.33

495,193,191.88 230,542,322.21 174,870,384.79 154,542,715.59 37,404,942.42 103,765,423.87 1,497,000.93 1,290,563.92 1,186,477.42 976,286.06 710,151,997.44 491,117,311.65 (2,298,670.97) (1,700,551.52) 707,853,326.47 489,416,760.13

The movement of allowance for doubtful debts - trade account receivable third parties for the year ended of December 31, 2012 and 2011 is as follows:

Opening balance Allowance increased during the year Collected during the year Ending balance

Consolidated 2012 2011

(1,886,731.52) (2,586,107.62) 1,257,327.97 (3,215,511.17)

(Unit : Baht) Separate financial statement 2012 2011

(1,063,918.70) (1,700,551.52) (1,063,918.70) (2,502,621.28) (1,855,447.42) (1,845,641.28) 1,679,808.46 1,257,327.97 1,209,008.46 (1,886,731.52) (2,298,670.97) (1,700,551.52)

The movement of allowance for doubtful debts - other receivables for the year ended of December 31, 2012 and 2011 is as follows:

Opening balance Allowance increased during the year Collected during the year Ending balance

Consolidated 2012 2011

(78,358.21) (148,757.00) - (227,115.21)

(78,358.21) - - (78,358.21)

(Unit : Baht) Separate financial statement 2012 2011 (78,358.21) - - (78,358.21)

(78,358.21) - - (78,358.21)

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8. Unbilled receivables and construction revenue received in advance Consisted of :-

Consolidated 2012 2011

Unbilled receivables : Value of contract Revenue recognised on percentage of completion basis Less Value of contract billed Unbilled receivables Construction revenue received in advance : Value of contract Value of contract billed Less Revenue recognised on percentage of completion basis Construction revenue received in advance

(Unit : Baht) Separate financial statement 2012 2011

4,269,331,008.44

- 5,539,520,382.44 2,203,138,026.00

4,233,377,242.33 (4,216,316,275.06) 17,060,967.27

- 5,009,559,062.40 1,747,882,860.35 - (4,992,470,511.81) (1,571,413,470.53) - 17,088,550.59 176,469,389.82

304,936,879.00 470,000,000.00 484,774,358.00 470,000,000.00 282,414,512.59 666,625,226.28 290,764,512.59 666,625,226.28 (282,406,481.09) (449,837,000.00) (290,750,940.12) (449,837,000.00) 8,031.50 216,788,226.28 13,572.47 216,788,226.28

The additional data of construction are as follow :

Consolidated 2012 2011

Cost of construction and gain are recognized (less loss are recognized) until present Less Value of contract billed Amount of the Company has authority from employer(customer) for construction be regarded as assets/liabilities Unbilled receivables Construction revenue received in advance

198

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(Unit : Baht) Separate financial statement 2012 2011

4,515,783,723.42 449,837,000.00 5,300,310,002.52 2,197,719,860.35 (4,498,730,787.65) (666,625,226.28) (5,283,235,024.40) (2,238,038,696.81) 17,052,935.77 (216,788,226.28) 17,074,978.12 (40,318,836.46)

17,060,967.27

- 17,088,550.59 176,469,389.82

(8,031.50) (216,788,226.28) (13,572.47) (216,788,226.28) 17,052,935.77 (216,788,226.28) 17,074,978.12 (40,318,836.46)


9. Inventories Consisted of:- Cost Finished goods Work in process Raw materials Supplies Goods in transit Total

(Unit : Baht) Consolidated 2012 2011 Allowance for Allowance for diminution in diminution in value of value of inventory Net Cost inventory Net

288,373,023.43 (41,878,933.61) 63,740,127.08 (3,697,506.14) 83,248,386.80 (9,055,533.85) 4,823,813.40 (379,995.18) 27,417,121.17 - 467,602,471.88 (55,011,968.78)

246,494,089.82 60,042,620.94 74,192,852.95 4,443,818.22 27,417,121.17 412,590,503.10

214,527,628.55 46,339,261.39 131,631,789.19 4,487,838.90 14,414,112.08 411,400,630.11

(19,885,713.81) (1,564,460.38) (7,085,190.03) (278,679.66) - (28,814,043.88)

194,641,914.74 44,774,801.01 124,546,599.16 4,209,159.24 14,414,112.08 382,586,586.23

(Unit : Baht) Separate financial statement 2012 2011

Finished goods Goods in transit Total Less Allowance for diminutions in value of inventories Net

265,496,345.85 182,915,105.51 3,641,610.15 13,770,929.31 269,137,956.00 196,686,034.82 (34,433,051.68) (16,610,724.45) 234,704,904.32 180,075,310.37

The movement of allowance for diminutions of inventories for the year ended on December 31, 2012 and 2011 is as follows:

Opening balance Allowance increased during the year Allowance reversal during the year Ending balance

Consolidated 2012 2011

(Unit : Baht) Separate financial statement 2012 2011

(28,814,043.88) (23,284,190.28) (16,610,724.45) (17,692,863.44) (27,398,385.37) (7,710,541.35) (17,822,327.23) - 1,200,460.47 2,180,687.75 - 1,082,138.99 (55,011,968.78) (28,814,043.88) (34,433,051.68) (16,610,724.45)

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For the years ended on December 31, 2012, the costs of inventories recognized as expenses are Baht 1,425.02 million and Baht 1,308.28 million in the consolidated and separate financial statement, respectively. For the years ended on December 31, 2012, the Group has reversed allowance for diminutions in the value of inventories in amount of Baht 1.20 million in the consolidated As at December 31, 2012, the some inventories with the carrying amount of Baht 112.53 million in the consolidated financial statement and Baht 83.18 million in the separate financial statement, respectively, are expected to be sold more than twelve months after the reporting period.

10. Fixed deposits and bill of exchange pledged as collateral As at December 31, 2012 and 2011, the bank deposits and bill of exchange that equipped with guarantee burden of the Group, has been pledged as surety against credit facility that one subsidiary company receives from finance institutes and letter of guarantee that issued by banks in order to use in business operation.

11. Investments in associate Name of Nature of Country of (Unit :’000 Baht) Percentage (Unit :’000 Baht) company business incorporation Paid-up capital % of holding Equity Method Cost Method 2012 2011 2012 2011 2012 2011 2012 2011

G-Power Source Generating Co., Ltd. and selling electricity

Thailand 894,000

200

Smart Energy in Action

- 40.00%

- 321,406

- 383,195

-


The financial information of the associate can be summarized as follows:

(Unit : Baht) As at December 31, 2012 2011

Total assets Total liabilities Net assets

3,244,248,009.66 2,220,592,416.04 2,275,891,106.90 1,478,263,967.08 968,356,902.76 742,328,448.96 (Unit : Baht) For the year ended on December 31 2012 2011

Total revenues

293,656,624.52 2,636,394.18

Total comprehensive income for the period

82,028,453.80 (7,663,071.86)

12. Investments in subsidiaries The nature and carrying value of investment in subsidiaries in the separate financial statement can be summarised as follows: Name of subsidiary

G.K. Power Product Co., Ltd. G.K. Assembly Co., Ltd. K.N.P Supply Co., Ltd. Gunkul Powergen Co., Ltd. Wind Energy Development Co., Ltd. G-Power Source Co., Ltd. Total

Paid-up capital Investment portion Cost method (‘000 Baht) (%) (‘000 Baht) 2012 2011 2012 2011 2012 2011

100,000 200,000 50,000 992,000

100,000 200,000 50,000 280,000

100.00 100.00 100.00 100.00

100.00 100.00 100.00 100.00

80,425 163,188 41,408 992,000

Dividends (‘000 Baht) 2012 2011

80,425 8,610 163,188 1,682 41,408 15,280 280,000 -

2,760 9,830 7,250 -

103,475 - 70.00 - 539,832 - - - - 750,000 - 100.00 - 813,337 - - 1,816,853 1,378,358 25,572 19,840

Regarding to the resolution of the Gunkul Powergen’s Board of Director Meeting 3/2012 held on March 6, 2012, the meeting has approved the 4th payment of increase share capital from the Company in amount of Baht 8.00 Gunkul Engineering Public Company Limited

201


202

per share from 3,000,000 shares which has total amount equal to Baht 24.00 million. The total paid-up share capital until now is equal to Baht 68.00 per share. Regarding to the resolution of the Gunkul Powergen’s Board of Director Meeting 5/2012 held on April 2, 2012, the meeting has approved the 5th payment of increase share capital from the Company in amount of Baht 32.00 per share from 3,000,000 shares which has total amount equal to Baht 96.00 million. The total paid-up share capital until now is equal to Baht 100 per share. Regarding to the Extra-ordinary Shareholder Meeting No.1/2012 on April 10, 2012 of Wind Energy Development Co., Ltd. the meeting has approved to raise registered capital of the said company from Baht 52.00 million to Baht 78.00 million by allotment 2,600,000 new common shares to Impact Energy Asia Pacific Ltd which has value equal to Baht 10.00 per share. which has total amount equal to Baht 26.00 million and paid-up share capital totally. Regarding to the Extra-ordinary Shareholder Meeting No.1/2012 on May 15, 2012 of Gunkul Powergen Co., Ltd. the meeting has approved to raise registered capital of the said company from Baht 400.00 million to Baht 660.00 million by allotment 2,600,000 new common shares to the Company which has value equal to Baht 100.00 per share. The meeting has also approved the payment of share capital increase in amount of Baht 25.00 per share which has first payment of increase share capital equal to Baht 65.00 million. Regarding to the Extra-ordinary Shareholder Meeting No.2/2012 on July 10, 2012 of Gunkul Powergen Co., Ltd, the meeting had the resolution to increase the registered capital from 660.00 million baht to 785.00 million baht by making allotment in the number of 1,250,000 shares in amount of 100.00 baht per share to the Company and calling the payment of increase capital in amount of 25.00 baht per share. The total first payment of increased capital is in amount of 31.25 million baht. Regarding to the Extra-ordinary Shareholder Meeting No.3/2012 on July 27, 2012 of Gunkul Powergen Co., Ltd., the meeting had the resolution to increase the registered capital from 785.00 million baht to 880.00 million baht by making allotment in the number of 950,000 shares in amount of 100.00 baht per share to the Company and calling the payment of increase capital in amount of 25.00 Smart Energy in Action


baht per share. The total first payment of increased capital is in amount of 23.75 million baht. Regarding to the resolution of the Wind Energy Development’s Extra-ordinary Shareholders Meeting 4/2012 held on September 28, 2012, the meeting has approved to raise registered capital of the said company from Baht 78.00 million to Baht 179.90 million by allotment 7,132,999 new common shares to the Company and allotment 3,057,000 share to Impact Energy Asia Limited and 1 share to Mr.Gunkul Dhumrongpiyawut which has value equal to Baht 10.00 per share. The meeting has also approved the payment of share capital increase in amount of Baht 2.50 per share which has total first payment of increase share capital equal to Baht 25.48 million. Regarding to the resolution of the Gunkul Powergen’s Board of Director Meeting 21/2012 held on November 1, 2012, the meeting has approved the 2nd payment of increase share capital from the Company in amount of Baht 75.00 per share from 4,800,000 shares which has total amount equal to Baht 360.00 million. Regarding to the Extra-ordinary Shareholder Meeting No.4/2012 on December 17, 2012 of Gunkul Powergen Co., Ltd. the meeting has approved to raise registered capital of the said company from Baht 880.00 million to Baht 992.00 million by allotment 1,120,000 new common shares to the Company which has value equal to Baht 100.00 per share. The meeting has also approved the payment of share capital increase in amount of Baht 25.00 per share which has total first payment of increase share capital equal to Baht 28.00 million and approved the payment of share capital increase in amount of Baht 75.00 per share the fully paid up capital in amount of Baht 84.00 million. On March 30, 2012, the Company sold 4,500,000 common shares of G-Power Source Company Limited (“GPS”) to Electricity Generating Public Company Limited (“ECGO”) which represents 60.00% of GPS’s registered shares at the total selling price of Baht 629.92 million where the Company recognized the gain on disposal of subsidiary in amount of Baht 416.22 million and Baht 141.53 million in the consolidated and separate financial statements, respectively. The Company had already received the first payment of Baht 594.92 million on March 30, 2012 and the remaining payment of Baht 35.00 Gunkul Engineering Public Company Limited

203


million will be made when the 4th power plant starts selling the electricity commercially to the PEA. (On February 1, 2013, the power plant comments to sell electricity). In the event that the 4th power plant can sell electricity before December 1, 2012, EGCO agrees to increase the payment at the rate of Baht 8,900.00 per MW per day. However, if the commercial operation date is extended beyond December 1, 2012, the Company agrees to receive a lesser payment at the same rate mentioned above. However, the Company’s managements expect the 4th power plant will sell electricity commercially at any given time. For the year ended on December 31, 2012, the Company recognized such penalty in the statement of comprehensive income at an amount of 3.59 million Baht because the Company estimates that the 4th power plant sells electricity later than the plan. Information concerning the gain from disposal of investment in subsidiary in amount of Baht 416.22 millions in the consolidated financial statement is as follows: (Unit : Baht) Consolidated

Fair value of consideration received Cash Receivable from disposal of investment in subsidiary Fair value of residual interest Less Carrying amount of net assets Gain from disposal of investment in subsidiary

594,917,350.00 35,000,000.00 629,917,350.00 304,152,768.47 934,070,118.47 (517,848,120.14) 416,221,998.33

The gain from disposal of investment in subsidiary in the amount of Baht 416.22 million in the consolidated financial statement had included the portion of gain recognized from the investment remained in the former subsidiary at its fair value at the date when control is lost in the amount of 97.01 million is as follows: 204

Smart Energy in Action


(Unit : Baht) Consolidated

Fair value of residual interest Less 40% of carrying amount of net assets Portion of Gain arising from recognized from the investment remained

304,152,768.47 (207,139,248.06) 97,013,520.41

On May 15, 2012, the Company purchased 5,460,000 ordinary shares in Wind Energy Development Co., Ltd. at Baht 95.60 per share, totaling Baht 522.00 million from the former shareholder of such company which there no relationship with the Company, equivalent to proportion of 70.00% of the whole registered capital of such. It results that the Company has power to control such subsidiary. Wind Energy Development Co., Ltd.’s principal activities involve generate and sell wind energy electricity. The reason for purchase of such shares is that the Company wishes to be a significant participant to encourage the clean power plant. The Company repays share subscription fee as follows :- (Unit : Baht) 249,500,000.00 272,500,000.00 522,000,000.00

Consideration for business combination Cash paid Account payable** Total consideration for business combination

1st payment in amount of Baht 100.00 million, the when receiving financial support to develop 10 MW March 31, 2013), during 2012 the Company has balance of Baht 92.36 million. 2nd payment in amount of Baht 172.50 million, the when receiving financial support to develop 50 MW September 30, 2014)

transaction will be made Wind Power Plant (within partial paid outstanding transaction will be made Wind Power Plant (within

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205


The amounts of the assets acquired and liabilities assumed were as follow :- Cash on hand and cash at bank Other receivable Other current assets Advance payment for purchasing land Equipment Power purchase agreement*** Other payable Other current liabilities Non-controlling interest Net Asset

(Unit : Baht) 31,092,853.53 4,590.28 960,698.67 30,000,000.00 3,873,444.67 680,784,978.53 (1,000,863.00) (1,416.97) (223,714,285.71) 522,000,000.00

***Power Purchase Agreement is agreement selling 60 megawatts wind energy electricity to the Electricity Generating Authority of Thailand (“EGAT”) and the Provincial Electricity Authority (“PAE”) for 5 years and renew automatically 5 years whereas such agreement receives the financial support from EGAT and PAE in the rate of Baht 3.50 per kilowatt for 10 years. For the year period ended on December 31, 2012, the Company recognized the acquisition-related costs in the amount of Baht 4.23 Million as the administrative expense in the statement of comprehensive income. The consolidated statement of comprehensive income for the year ended on December 31, 2012 had included the revenue and profit (loss) of Wind Energy Development Co., Ltd. from May 15, 2012, as follows: Revenues Profit(loss)

206

Smart Energy in Action

(Unit : Baht) 147,093.95 (33,165,752.55)


If the business combination is made on January 1, 2012, The consolidated statement of comprehensive income for the year ended on December 31, 2012 will be included the revenue and profit (loss) of Wind Energy Development Co., Ltd. from January 1, 2012, as follows: (Unit : Baht) 147,093.95 (37,838,209.51)

Revenues Profit(loss)

13. Investment property Consisted of:-

Cost : As at January 1 Purchase As at December 31 Accumulated impairment losses : As at January 1 Increase As at December 31 Net book value As at December 31

(Unit : Baht) Consolidated 2012 2011 - 32,572,545.00 32,572,545.00 (1,382,545.00) (1,382,545.00) 31,190,000.00

- - - - - - -

For the year 2012, the appraisal has appraised market prices method (Market Approach) the market value of land is in amount of Baht 31.19 million.

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208

Smart Energy in Action

(Unit : Baht) Consolidated Building and Power plant and Motor Work in Land improvement equipments vehicles construction Total Cost:- As at January 1, 2012 212,385,535.97 112,774,860.30 888,958,470.70 44,409,173.44 2,167,020,611.89 3,425,548,652.30 Addition 362,052,425.00 - 9,017,872.22 11,718,023.06 1,391,078,294.22 1,773,866,614.50 Increase from acquisition of subsidiary - - 4,600,724.38 - - 4,600,724.38 Transfer in 30,000,000.00 - 16,773,545.03 - 27,958.50 46,801,503.53 Disposal - - (1,451,281.14) (4,313,421.47) - (5,764,702.61) Transfer out - - - - (16,858,502.84) (16,858,502.84) Transfer out to work in process - - - - (738,881,873.17) (738,881,873.17) Decrease from disposal of subsidiary (77,064,623.42) - (4,335.09) - (1,422,353,983.25) (1,499,422,941.76) Write-off - - (1,249,256.34) - - (1,249,256.34) As at December 31, 2012 527,373,337.55 112,774,860.30 916,645,739.76 51,813,775.03 1,380,032,505.35 2,988,640,217.99 Accumulated depreciation:- As at January 1, 2012 - (42,105,721.46) (114,264,085.85) (25,481,738.43) - (181,851,545.74) Depreciation charge - (3,564,282.66) (41,536,774.78) (2,329,318.18) - (47,430,375.62) Increase from acquisition of subsidiary - - (727,279.71) - - (727,279.71) Disposal - - 1,559,844.27 2,576,272.01 - 4,136,116.28 Decrease from disposal of subsidiary - - 490.53 - - 490.53 Write-off - - 1,132,628.79 - - 1,132,628.79 As at December 31, 2012 - (45,670,004.12) (153,835,176.75) (25,234,784.60) - (224,739,965.47) Allowance for impairment:- As at January 1, 2012 - - (228,866.26) - - (228,866.26) Reverse - - 223,740.69 - - 223,740.69 As at December 31, 2012 - - (5,125.57) - - (5,125.57) Net book value:- As at December 31, 2012 527,373,337.55 67,104,856.18 762,805,437.44 26,578,990.43 1,380,032,505.35 2,763,895,126.95 Depreciation in the statements of comprehensive income for the years ended on December 31, 2012 47,430,375.62

Consisted of:-

14. Property, plant and equipments


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209

95,928,901.54 16,652,669.41 193,289.35 - - 112,774,860.30 (38,427,385.14) (3,678,336.32) - - (42,105,721.46) - - - 70,669,138.84

Cost:- As at January 1, 2011 Addition Transfer in Disposal Transfer out As at December 31, 2011 Accumulated depreciation:- As at January 1, 2011 Depreciation charge Transfer in Disposal As at December 31, 2011 Allowance for impairment:- As at January 1, 2011 Addition As at December 31, 2011 Net book value:- As at December 31, 2011

85,676,337.94 29,345,216.76 745,424,107.23 (39,481.14) (98,277.80) 860,307,902.99 (66,922,254.63) (24,369,281.61) - 38,376.38 (91,253,159.86) - (217,535.05) (217,535.05) 768,837,208.08

Tool and equipments

26,723,334.27 3,326,072.45 78,202.80 (1,477,041.81) - 28,650,567.71 (21,435,077.38) (2,999,044.24) (1,505.53) 1,424,701.06 (23,010,926.09) - (11,331.21) (11,331.21) 5,628,310.41

Consolidated Fixture and office equipments

Depreciation in the statements of comprehensive income for the years ended on December 31, 2011

103,305,889.05 109,079,646.92 - - - 212,385,535.97 - - - - - - - - 212,385,535.97

Building and improvement

Land

31,913,994.18 12,520,179.26 - (25,000.00) - 44,409,173.44 (24,569,209.18) (937,527.15) - 24,998.00 (25,481,738.33) - - - 18,927,435.11

Motor vehicles

31,984,189.32

313,223,271.86 656,771,728.84 2,599,438,158.21 2,770,361,943.01 - 745,695,599.38 - (1,541,522.95) (745,640,818.18) (745,739,095.98) 2,167,020,611.89 3,425,548,652.30 - (151,353,926.33) - (31,984,189.32) - (1,505.53) - 1,488,075.44 - (181,851,545.74) - - - (228,866.26) - (228,866.26) 2,167,020,611.89 3,243,468,240.30

Work in construction Total

(Unit : Baht)


210

Smart Energy in Action 32,521,545.38 - - - - 32,521,545.38 (25,425,657.47) (899,887.03) - - - (26,325,544.50) 6,196,000.88

Cost:- As at January 1, 2012 Addition Transfer in Disposal Transfer out As at December 31, 2012 Accumulated depreciation:- As at January 1, 2012 Depreciation charge Transfer in Disposal Transfer out As at December 31, 2012 Net book value:- As at December 31, 2012

2,705,845.87 207,632.50 - (27,383.48) - 2,886,094.89 (2,421,715.37) (138,669.73) - 27,382.48 - (2,533,002.62) 353,092.27

Tool and equipments

15,433,593.05 1,878,354.08 - (470,247.66) - 16,841,699.47 (11,256,192.78) (1,747,449.39) - 582,021.17 - (12,421,621.00) 4,420,078.47

Work in construction

30,614,826.89 - 10,231,626.17 12,608,172.14 - - (2,530,785.95) - - - 38,315,667.11 12,608,172.14 (15,468,539.18) - (1,856,143.47) - - - 1,959,188.72 - - - (15,365,493.93) - 22,950,173.18 12,608,172.14

Separate financial statement Fixture and office Motor equipments vehicles

Depreciation in the statement of comprehensive income for the year ended on December 31, 2012

Building and improvement

4,642,149.62

81,275,811.19 24,925,784.89 - (3,028,417.09) - 103,173,178.99 (54,572,104.80) (4,642,149.62) - 2,568,592.37 - (56,645,662.05) 46,527,516.94

Total

(Unit : Baht)


Gunkul Engineering Public Company Limited

211

Depreciation in the statement of comprehensive income for the year ended on December 31, 2011

21,608,696.05 9,006,130.84 - - - 30,614,826.89 (14,829,467.18) (639,072.00) - - - (15,468,539.18) 15,146,287.71

Separate financial statement Fixture and office Motor equipments vehicles

14,027,630.10 2,795,651.96 78,202.80 (1,467,891.81) - 15,433,593.05 (10,850,973.66) (1,823,457.60) (1,505.53) 1,419,744.01 - (11,256,192.78) 4,177,400.27

32,452,190.28 69,355.10 - - - 32,521,545.38 (24,230,612.26) (1,195,045.21) - - - (25,425,657.47) 7,095,887.91

Cost:- As at January 1, 2011 Addition Transfer in Disposal Transfer out As at December 31, 2011 Accumulated depreciation:- As at January 1, 2011 Depreciation charge Transfer in Disposal Transfer out As at December 31, 2011 Net book value:- As at December 31, 2011

Tool and equipments

2,669,325.28 126,104.53 - (11,381.14) (78,202.80) 2,705,845.87 (2,306,537.41) (127,764.63) - 11,081.14 1,505.53 (2,421,715.37) 284,130.50

Building and improvement

3,785,339.44

70,757,841.71 11,997,242.43 78,202.80 (1,479,272.95) (78,202.80) 81,275,811.19 (52,217,590.51) (3,785,339.44) (1,505.53) 1,430,825.15 1,505.53 (54,572,104.80) 26,703,706.39

Total

(Unit : Baht)


As at December 31, 2012, certain plant and equipment items of the Group have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounted to Baht 85.78 million. As at December 31, 2012, one subsidiary has pledged the land plus property in original cost of Baht 139.05 million to guarantee against credit facility of the Company that receives from a commercial bank in amount of Baht 410.00 million. As at December 31, 2012, one subsidiary has pledged the land plus property, machinery and equipment in original cost of Baht 2,512.83 million to guarantee against credit facility of its subsidiary that receives from a commercial bank in Thai Baht amounting of Baht 3,131.10 million. As at December 31, 2012, one subsidiary has pledged the land in original cost of Baht 378.00 million to guarantee against credit facility of the Company that receives from a commercial bank in amount of Baht 348.00 million Machines and vehicles under finance leases, where the Group are lessee with net book value as at December 31, 2012 of Baht 22.43 million in consolidated financial statements and Baht 19.95 million in the separate financial statements.

15. Intangible assets Consisted of:- Consolidated Computer Power purchase software Copyright agreement Cost :- As at January 1, 2012 2,245,975.00 1,208,445.00 65,000,000.00 Purchase 227,680.00 - - Increase from acquisition of subsidiary - - 680,784,978.53 Disposal - - (65,000,000.00) As at December 31, 2012 2,473,655.00 1,208,445.00 680,784,978.53 Accumulated amortization :- As at January 1, 2012 (1,336,493.28) (1,066,883.49) - Amortization charge (423,966.67) (139,002.52) - As at December 31, 2012 (1,760,459.95) (1,205,886.01) - Net book value :- As at December 31, 2012 713,195.05 2,558.99 680,784,978.53 Amortization charges in statements of comprehensive income for the year ended on December 31, 2012

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(Unit : Baht) Total

68,454,420.00 227,680.00 680,784,978.53 (65,000,000.00) 684,467,078.53 (2,403,376.77) (562,969.19) (2,966,345.96) 681,500,732.57 562,969.19


Cost :- As at January 1, 2011 Purchase As at December 31, 2011 Accumulated amortization :- As at January 1, 2011 Amortization charge As at December 31, 2011 Net book value :- As at December 31, 2011

Consolidated Computer Power purchase software Copyright agreement

2,140,625.00 1,208,445.00 65,000,000.00 105,350.00 - - 2,245,975.00 1,208,445.00 65,000,000.00 (943,794.62) (825,194.48) - (392,698.66) (241,689.01) - (1,336,493.28) (1,066,883.49) - 909,481.72 141,561.51 65,000,000.00

Amortization charges in statements of comprehensive income for the year ended on December 31, 2011

(Unit : Baht) Total

68,349,070.00 105,350.00 68,454,420.00 (1,768,989.10) (634,387.67) (2,403,376.77) 66,051,043.23 634,387.67

(Unit : Baht) Separate financial statements Computer software 2012 2011 595,048.00 595,048.00 - - 595,048.00 595,048.00 (403,139.11) (284,129.51) (119,009.60) (119,009.60) (522,148.71) (403,139.11) 72,899.29 191,908.89

Cost :- As at January 1 Purchase As at December 31 Accumulated amortization :- As at January 1 Amortization charge As at December 31 Net book value :- As at December 31

Amortization charges in statements of comprehensive income for the year ended on December 31

119,009.60

119,009.60

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213


16. Other non - current assets Consisted of:-

Consolidated 2012 2011

Retention fee Prepaid withholding tax Others Total Less Allowance for doubtful debts - prepaid withholding tax Net

8,313,766.78 9,315,225.12 1,796,188.82 12,025,276.25 20,500.00 303,042.80 10,130,455.60 21,643,544.17

(Unit : Baht) Separate financial statement 2012 2011 650,173.10 464,145.12 1,796,188.82 1,796,188.82 - - 2,446,361.92 2,260,333.94

(1,796,188.70) (1,796,188.82) (1,796,188.82) (1,796,188.82) 8,334,266.90 19,847,355.35 650,173.10 464,145.12

17. Bank overdrafts and short-term loans from financial institutions Consisted of:-

Consolidated 2012 2011

Short-term loans Trust receipt payable Total

(Unit : Baht) Separate financial statement 2012 2011

1,426,812,293.28 849,473,240.00 1,054,748,700.00 849,473,240.00 259,436,599.05 1,722,974,499.06 177,035,063.08 1,702,746,811.56 1,686,248,892.33 2,572,447,739.06 1,231,783,763.08 2,552,220,051.56

As at December 31, 2012, the Group held bank overdraft, trust receipt, and letters of credit facilities from several financial institutions in Thai Baht amounting of Baht 3,227.00 million, US Dollar amounting of USD 50.00 million. Interest rate is 1.850% - 7.000% per annum. As at December 31, 2012 and 2011, the Group constitutes important procedure to comply with the loan contract which is specified in the loan contract as follows: - It is determined that the Company and subsidiaries have to maintain proportion of some financial issue in accordance with the determination of those specified in the loan contract. 214

Smart Energy in Action


- It is determined to forbid that subsidiaries guarantee to anyone or cause any obligation without except the bank will consent that operation. - It is determined that the dividend paid of subsidiaries is subject to the terms of the contract. Such credit facility line is pledged by mortgaged register of land plus property of the Group, machinery and equipment of one subsidiary, land plus property of two directors, including fixed deposit of the Company and a subsidiary.

18. Trade and other payable - related parties Consisted of :-

Trade payable Advances received from customers under construction contracts Advances received for goods Accrued expenses Total

(Unit : Baht) Separate financial statement 2012 2011

Consolidated 2012 2011

29,503,281.20

- 218,400,374.49 62,712,016.42

3,607,407.66 7,605,004.68 445,200.00 41,160,893.54

- 70,159,669.28 89,349,813.75 7,605,004.68 - - 128,000.00 1,946,097.43 - 7,733,004.68 290,506,141.20 152,061,830.17

19. Trade and other payable - third parties Consisted of :-

Trade payable Subcontractors payable Accrued expenses Other payable Suspense output tax Total

Consolidated 2012 2011

296,936,192.73 402,165,354.58 88,411,311.57 19,654,107.18 30,884,089.25 838,051,055.31

133,210,392.50 267,319,696.69 13,137,414.35 23,541,701.06 1,832,829.31 439,042,033.91

(Unit : Baht) Separate financial statement 2012 2011 208,112,516.74 434,306,550.73 32,739,131.02 32,804,008.51 29,663,979.52 737,626,186.52

83,230,535.70 273,149,001.36 13,125,942.56 10,060,547.34 1,819,523.98 381,385,550.94

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20. Advances received from employers and construction revenue received in advance - third parties Consisted of:-

Consolidated 2012 2011

Advances received from employers Revenue received in advance Total

3,445,098.84 8,537,477.38 - 216,788,226.28 3,445,098.84 225,325,703.66

(Unit : Baht) Separate financial statement 2012 2011 3,445,098.84 8,537,477.38 - 216,788,226.28 3,445,098.84 225,325,703.66

21. Obligation under finance lease Obligation under finance lease - minimum lease payments:

(Unit : Baht)

Consolidated financial statements

2012 Obligation Deferred under finance finance lease lease charges Net

2011 Obligation Deferred under finance finance lease lease charges Net

Not later than 1 year 6,365,410.20 (1,574,969.55) 4,790,440.65 6,113,816.28 (922,221.21) 5,191,595.07 Later than 1 year but not later than 18,796,150.28 (2,699,947.98) 16,096,202.30 9,965,308.69 (1,398,187.22) 8,567,121.47 5 years Total 25,161,560.48 (4,274,917.53) 20,886,642.95 16,079,124.97 (2,320,408.43) 13,758,716.54 (Unit : Baht) Separate financial statements 2012 2011 Obligation Deferred Obligation Deferred under finance under finance finance lease lease charges Net finance lease lease charges Net Not later than 1 year 5,114,278.20 (1,146,801.50) 3,967,476.70 5,541,304.28 (733,834.87) 4,807,469.41 Later than 1 year but not later than 14,321,495.23 (1,911,934.85) 12,409,560.38 7,826,494.64 (1,074,783.04) 6,751,711.60 5 years Total 19,435,773.43 (3,058,736.35) 16,377,037.08 13,367,798.92 (1,808,617.91) 11,559,181.01

216

Smart Energy in Action


As at December 31, 2012, the Group performs the contract of long term financial leased with several leasing companies so as to lease machines and vehicles by number of 20 contracts. The leased contracts determine leased fee repayment as monthly installment from Baht 4,777.50 to Baht 137,600.00 per month. The leased period is carried from 4 years to 5 years. Such leased contract comprises the Group’s shareholders and directors as guarantors. In addition, ownership of such machines and vehicles will transfer to ownership of the Group when the Group pays the final installment in accordance with the leased contract. The Group amortized the interest according to the financial leased contract for the year ended on December 31, 2012 in the amount of Baht 1.35 million in the consolidated financial statement and Baht 1.11 million in the separate financial statements which was recorded as “Finance cost� in the statement of comprehensive income.

22. Long-term loans from financial institutions Consisted of:

Long-term loans from financial institutions Less Current portion Net

(Unit : Baht) Consolidated 2012 2011 1,485,858,694.45 982,408,420.99 (122,170,971.74) (85,745,115.48) 1,363,687,722.71 896,663,305.51

As at December 31, 2012, the one subsidiary held long-term loans of credit facilities of Baht 2,347.10 million so as to repay for loans (Refinance) and for the construction to power plant, the interest is charged by referring from interest rate of 4.935% - 5.060% per annum, it is determined that the principle and interest are quarter repayable. The first installment is repayable on January, 2012. As at December 31, 2012, the outstanding commitment remain the totaling approximately Baht 1,485.86 million. - It is determined that one subsidiary have to maintain proportion of some financial issue in accordance with the determination of those specified in the loan contract. Gunkul Engineering Public Company Limited

217


- It is determined that the dividend paid of one subsidiary is subject to the terms of the contract. - It is determined to forbid that one subsidiary guarantee to anyone or cause any obligation without the consent that operation from bank. Such credit facility line is guaranteed by mortgaging of land plus property, machines and equipment in progress of one subsidiary as mentioned in the note No. 14 and its deposit accounts opened with the said financial institution, as well as pledging the subsidiary’s ordinary shares which the ownership belongs to the Company. Long-term loans - minimum loan payments:

(Unit : Baht) Consolidated 2012 2011

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years Total

122,170,971.74 85,745,115.48 663,851,483.81 400,320,223.03 699,836,238.90 496,343,082.48 1,485,858,694.45 982,408,420.99

23. Provision for warranty As at December 31, 2012, the provision of Baht 2.40 million and Baht 1.72 million in the consolidated and separate financial statements, respectively, has been recognized for expected warranty claims on products sold to the customers. The Group is expected that the majority of this expenditure will be incurred in the next financial year, and all will be incurred within 1 - 5 years of the balance sheet date. The movement of provision for warranty for the year ended on December 31, 2012 and 2011 is as follows:

Consolidated 2012 2011

As at January 1 Additions Unused amounts reversed As at December 31

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Smart Energy in Action

(Unit : Baht) Separate financial statement 2012 2011

3,229,313.70 3,358,163.85 2,035,995.97 1,892,359.45 802,159.65 1,366,543.13 (2,721,596.41) (931,009.80) (1,685,894.44) 2,400,076.74 3,229,313.70 1,716,644.66

1,963,210.94 107,956.75 (35,171.72) 2,035,995.97


Provision for warranty - minimum payments:

Within 1 year Within 2 years - 3 years Within 4 years - 5 years Total

Consolidated 2012 2011

2,168,708.51 2,671,608.27 142,880.10 510,537.82 88,488.13 47,167.61 2,400,076.74 3,229,313.70

(Unit : Baht) Separate financial statement 2012 2011 1,632,620.03 1,643,854.92 - 364,947.42 84,024.63 27,193.63 1,716,644.66 2,035,995.97

24. Employee benefit obligation As at December 31, 2012, the Group has the employee benefit obligation in case of retirement or termination under the labor law. The Group hires an actuary to calculate on an actuarial technique the said employee benefit obligation. The said employee benefit obligation is discounted using the projected unit credit method by reference to an interest rate of a government bond to determine the present value of the employee benefit obligation, related past service cost and current service cost. As at December 31, 2012, the Group recognizes the employee benefit obligation as the liability in amount of Baht 7.29 million and Baht 5.14 million in the consolidated and separate statements of financial position, respectively. Changes in the present value of the employee benefit obligation as at December 31, 2012 and 2011 are as follows :

Opening defined benefit Current service cost Interest cost Benefit paid Closing defined benefit

Consolidated 2012 2011

6,618,112.98 8,127,557.00 787,224.00 769,215.00 245,201.00 260,600.98 (359,880.00) (2,539,260.00) 7,290,657.98 6,618,112.98

(Unit : Baht) Separate financial statement 2012 2011 4,512,746.00 6,422,835.00 459,094.00 433,349.00 171,483.00 195,822.00 - (2,539,260.00) 5,143,323.00 4,512,746.00

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Principal actuarial assumptions as at December 31, 2012 and 2011 are as follows :

Consolidated 2012 2011

Discount rate at end of year Future salary increase Proportion of employees opting for early retirement

(Unit : Baht) Separate financial statement 2012 2011

3.8% 3.8% 3.8% 3.8% 5.0% - 6.0% 5.0% - 6.0% 5.0% - 6.0% 5.0% - 6.0% 0.0% - 30.0% 0.0% - 30.0% 0.0% - 30.0% 0.0% - 30.0%

25. Share capital The movement of share capital for the year ended on December 31, 2012 and 2011 are as follows:

Number of share Amount (Unit : share) (Unit : Baht)

Registered share capital (Baht 1.00 per share) As at January 1, 2011 Increment of capital As at December 31, 2011 Increment of capital As at December 31, 2012 Issued and paid-up share capital (Baht 1.00 per share) As at January 1, 2011 Increment of capital As at December 31, 2011 Increment of capital As at December 31, 2012

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Smart Energy in Action

400,000,000 400,000,000.00 - - 400,000,000 400,000,000.00 40,000,000 40,000,000.00 440,000,000 440,000,000.00 Number of share Amount (Unit : share) (Unit : Baht)

400,000,000 400,000,000.00 - - 400,000,000 400,000,000.00 39,999,984 39,999,984.00 439,999,984 439,999,984.00


On April 10, 2012, the Annual General Meeting of the Company’s shareholders has resolved to increase of the Company’s registered share capital from Baht 400,000,000.00 to Baht 440,000,000.00 by issuing new 40,000,000 ordinary shares with a par value of Baht 1.00 each. The objective of the capital increase is to reserve shares for stock dividend payment. The Company had registered the capital with the Department of Business Development, Ministry of Commerce, effective on May 2, 2012. The capital management The Group constitutes purpose with respect to capital management in order to remain for ability in the continued operation and ability to appropriately provide remuneration to various group of participating interest while the Group will maintain capital in the level with the least risk. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt obligations.

26. Legal reserve Under the provisions of the Public Company Limited Act B.E. 2535, the Company is required to set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the registered capital. This reserve is not available for dividend distribution. As at 31 December 2012, the Company has appropriated net income in amount of Baht 4.00 millions to the legal reserve.

27. Income tax The corporate income taxed of the Company and subsidiaries for the year ended on December 31, 2012 have been calculated at the rates of 23% on profit before income tax, after adding adjusted transaction in accordance with the Revenue Code which is mainly concerning to loss from declining in value of inventories, depreciation of vehicles for the excess cost from Baht 1, etc. Gunkul Engineering Public Company Limited

221


28. Earnings per share Basic earnings per share are calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

29. Dividend paid In accordance with the annual ordinary general meeting of shareholders of 2012 with held on April 10, 2012, it is resolved to pay dividends to the Company’s shareholders from the operations for the year 2011. The dividend is to be paid as stock dividend in the number of 40,000,000 ordinary shares, with par value of Baht 1.00 each, at a ratio of 10 existing ordinary shares to receive stock dividend of 1 share, with a total amount of not exceed Baht 40.00 million, or equivalent to the dividend of Baht 0.10 per share. In the case of any shareholder with a fraction of the shares after the stock dividend distribution, will be entitled to receive cash dividend at the rate of Baht 0.10 per share. In addition the Company will pay a cash dividend at Baht 0.10 per share, or equivalent to amount of not exceed Baht 40.00 million. Total annual dividend payment in form of cash and stock dividend equal to Baht 0.20 per share, equivalent to Baht 80.00 million. The Company paid such dividend in May 2012.

30. Supplemental disclosures of cash flow information 30.1 Cash and cash equivalents consist of :-

Cash on hand and tax coupon Cash deposits-Saving accounts Cash deposits-Current accounts Fixed deposits not exceeding 3 months Bill of exchange not exceeding 3 months Total

222

Smart Energy in Action

Consolidated 2012 2011

(Unit : Baht) Separate financial statement 2012 2011

600,904.58 381,758.50 256,970,577.50 231,290,596.57 142,328,149.21 82,505,992.15 33,187.29 785,389.03 182,000,000.00 - 581,932,818.58 314,963,736.25

423,338.91 281,566.00 176,429,954.38 185,832,230.75 38,028,873.95 79,562,733.46 33,187.29 32,536.93 182,000,000.00 - 396,915,264.53 265,709,067.14


30.2 Non-cash items are as follows:-

Consolidated 2012 2011

(Unit : Baht) Separate financial statement 2012 2011

Purchase fixed assets but not yet paid 594,723,409.15 35,976,056.70 - Purchase assets by leased 12,587,149.54 11,464,585.80 9,497,149.54 Transfer inventories to property, plant and equipment 32,378.50 - - Transfer other non-current assets to property, plant and equipment 30,000,000.00 - - Transfer property, plant and equipment to construction in progress 263,547,425.40 - - Accrued dividend payables - - 8,008.36 Stock dividend 39,999,984.00 - 39,999,984.00 Purchase investments in subsidiaries but not yet paid - - 264,857,500.00 Disposal investments in associate but not yet received - - 35,000,000.00 Transfer withholding tax to other non-current assets 5,191,708.13 - -

- 9,039,803.74 - - - - - - - -

30.3 Losing control of subsidiary During the year ended on December 31, 2012, the Company sells G-Power Source Co., Ltd. to the other company. The information on losing control of subsidiary is as follow:- Cash and cash equivalent Other receivable Other current assets Property plant and equipment Other non-current assets Power purchase agreement Other payables Current portion

(Unit : Baht) 94,202.07 3,092,233.90 119,367,714.29 1,974,756,408.47 309,135,485.73 65,000,000.00 (1,358,490,463.51) (25,898,130.27)

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223


Loans from related parties Other current liabilities Long-term loans from bank Net assets Gain from disposal of investment in subsidiary Less Fair value of residual interest Fair value of consideration received Less consideration still not received (receivable from sale of investment of subsidiary) Consideration received by cash Less Cash and cash equivalents of subsidiary disposed Cash received from lose of control net of cash disposed

(Unit : Baht) (158,632,946.72) (2,399,426.43) (408,176,957.39) 517,848,120.14 416,221,998.33 934,070,118.47 (304,152,768.47) 629,917,350.00 (35,000,000.00) 594,917,350.00 (94,202.07) 594,823,147.93

30.4 Obtaining control of subsidiary During the year ended on December 31, 2012, the Company purchases “Wind Energy Development Co., Ltd.� from the other company. The information on obtaining control of subsidiary is as follow:- Cash and cash equivalent Other receivable Other current assets Advance payment for purchasing land Equipment Power purchase agreement Other payables Other current liabilities Non-controlling interest Total purchase price Less payable from purchase of investment of subsidiary Less Cash and cash equivalents of subsidiary acquired Cash paid to obtain control net of cash acquired

224

Smart Energy in Action

(Unit : Baht) 31,092,853.53 4,590.28 960,698.67 30,000,000.00 3,873,444.67 680,784,978.53 (1,000,863.00) (1,416.97) (223,714,285.71) 522,000,000.00 (272,500,000.00) (31,092,853.53) 218,407,146.47


31. Employee benefit 31.1 Provident fund For the year ended on December 31, 2012, the Group recognizes as the employee benefit expense for the payment of contribution into the provident fund at the amount of Baht 1.24 million and Baht 0.66 million in consolidated and separate financial statement, respectively. 31.2 Retirement employee benefit For the year ended on December 31, 2012 and 2011, the Group recognizes the employee benefit expense in case of retirement or termination under the labor law, as follows :

Current service cost Interest cost Total

Consolidated 2012 2011

787,224.00 769,215.00 245,201.00 260,600.98 1,032,425.00 1,029,815.98

(Unit : Baht) Separate financial statement 2012 2011 459,094.00 171,483.00 630,577.00

433,349.00 195,822.00 629,171.00

An item of the employee benefit expense in case of retirement or termination under the labor law for the year ended on December 31, 2012 and 2011 are inclusively presented in the line items, as follows :

Cost of sales Administrative expenses Management benefit expenses Total

Consolidated 2012 2011

105,327.00 121,960.97 607,649.00 668,472.00 319,449.00 239,383.01 1,032,425.00 1,029,815.98

(Unit : Baht) Separate financial statement 2012 2011 - 356,903.00 273,674.00 630,577.00

- 428,517.00 200,654.00 629,171.00

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32. Expenses by nature The following expenditure items of expense have been classified by nature :

Consolidated 2012 2011

Change in finished goods and work in process Purchased finished goods Cost of construction services Raw material and supplied used Management benefit expenses Employee benefit Depreciation and amortization expenses Loss for diminution of inventories Transportation expense Project consultant fee Outsource fee

226

Smart Energy in Action

(Unit : Baht) Separate financial statement 2012 2011

(91,246,260.57) 9,625,517.39 (82,581,240.37) 7,759,823.59 798,127,347.64 1,115,544,966.42 1,262,274,187.00 1,350,055,173.77 1,755,408,420.55 - 2,358,000,079.70 - 307,624,035.53 181,891,893.05 - - 37,971,268.98 23,116,407.83 31,702,790.87 19,167,472.31 112,866,784.46 85,112,560.97 42,137,931.08 32,044,767.59 47,993,344.81 32,618,579.99 4,761,159.21 3,904,349.04 25,458,942.53 5,758,719.86 17,822,327.23 (1,082,138.99) 7,092,728.59 7,815,331.19 6,623,385.08 7,747,256.19 99,067,184.60 25,458,884.02 49,969,990.22 2,976,937.00 68,921,880.42 17,557,498.10 - -


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2012

1,222.14 1,028.82 193.32 1,367.81 1,021.36 346.45

2011

Manufacturing and distribution of electrical hardware

Net local sales 1,767.80 Cost of local sales 1,466.02 Local segment operations 301.78 Net export sales 603.87 Cost of export sales 521.42 Export segment operations 82.45 Other income Selling expenses Administrative expenses Management benefit expense Finance cost Share of loss from investment in associates Income tax Net profit The Group’s fixed assets The Group’s liabilities Depreciation and amortization

168.81 50.96 117.85 - - -

2012

72.50 20.54 51.96 - - -

2011

Generating and selling electricity

3,115.34 2,362.92 752.42 - - -

2012

2011

Eliminated

2012

2,197.72 (1,350.30) (2,208.66) 1,860.73 (1,165.36) (1,925.34) 336.99 (184.94) (283.32) - - - - - - - - -

2011

Construction service

Consolidated For the year ended on December 31, Total

3,701.65 2,714.54 987.11 603.87 521.42 82.45 458.36 (36.77) (303.21) (37.97) (103.77) (48.67) (227.92) 769.61 2,763.90 4,813.70 47.99

2012

1,283.70 984.75 298.95 1,367.81 1,021.36 346.45 17.18 (79.98) (248.33) (23.12) (57.16) (48.67) (164.47) 89.52 3,243.47 4,356.18 32.62

2011

(Unit : Million Baht)

The Company and its subsidiaries operates the main business with respect to production, distribution and import - export of electronic appliance and assembly of merchandise while classified according to sector as domestic sale and international sale. The data classified according to sector of the Group for the year ended on December 31, 2012 and 2011 constitutes as follows :-

33. Segment Information


34. Financial instruments The principal financial risks faced by the Group are interest rate risk, credit risk and foreign currency. The Group did not speculate in or engage in trading of any derivative financial instruments. 34.1 Risks from Interest Rates Risk from interest rates is derived from fluctuation of market interest rate in the future which affect upon operating result and cash flow. Risk from interest rates remains due to bank deposit, loans to related parties, credit facilities owing to the commercial bank and related parties. Due to the fact that such financial assets and liabilities constitute interest rates which are always closed to market interest rate; as a result, the Group anticipates of non material risk from interest rates.

Consolidated Amount (Unit : Million Baht) Interest rate per annum (%) 2012 2011 2012 2011

Saving accounts Fixed deposits Bill of exchange Fixed deposits pledged as collateral Loans to related parties Short-term loans from bank Long-term loans from bank

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Smart Energy in Action

256.97 0.03 182.00 605.17 29.25 1,686.25 1,485.86

231.29 0.79 - 493.10 - 2,572.44 982.41

0.0100 - 2.2500 0.5000 - 2.5000 1.7500 - 2.0500 2.0000 - 2.2000 0.5000 - 3.1250 3.0000 - 3.3500 0.7500 - 2.7500 0.8700 - 2.2500 3.0000 - 4.9350 - 7.1250 2.1750 - 3.9006 4.9350 - 5.0600 4.3504 - 5.7563


Separate financial statements Amount (Unit : Million Baht) Interest rate per annum (%) 2012 2011 2012 2011

Saving accounts Bill of exchange Fixed deposits and Bill of exchange pledged as collateral Loans to related parties Short-term loans from bank Short-term loans from related parties

176.43 182.00

185.83 0.0100 - 1.4000 0.7500 - 2.5000 - 0.5000 - 3.1250 -

259.17 29.25 1,231.79 29.15

143.06 0.7500 - 2.2500 0.8700 - 2.2500 176.15 5.7563 - 6.1130 5.9750 - 6.1813 2,552.22 1.8500 - 7.0000 2.1750 - 6.1813 - 3.0000 -

Interest rate swap contracts During the year 2011, the Group’s has entered into interest rate swap contracts for loans from bank. The interest rate has been converted from THB-THB-FIXReuters per annum to fixed rates of 5.70% per annum and repayment every three months starting from November 1, 2011 to July 2, 2020. During the year 2012, the subsidiary entered into interest rate swap contract for loans from bank. The interest rate has been converted from MLR +2.065% per annum to fixed rate of 6% per annum and repayment every 1 month starting from November 1, 2012, December 14, 2012 and June 15, 2013 to November 1, 2022. The net fair values of interest rate swap contracts at the balance sheet date was:

Unfavourable interest rate swap contracts

(Unit : Baht) Consolidated 2012 2011 22,119,389.73 11,640,423.41

Fair values of interest rate swap contracts have been calculated using the information from the financial institutions of the Group as if the contracts were terminated at the end of the reporting period. Gunkul Engineering Public Company Limited

229


34.2 Credit risk The Group does not expose the risk from credit provision in connection to trade receivable most from the sale of goods whose capability is good at debt repayment. The Group has dealt with these clients for a long time therefore, it is anticipated of non risk derived from non-payment of those trade receivable 34.3 Foreign currency risk The Group constitutes material risk from exchange rates in oversea currencies which has been cash at bank, trade receivable, trade payable and trust receipt that are foreign currency. The management has managed risk from exchange rates by performing the forward foreign currencies contract dependent on each case. As at December 31, 2012 and 2011, the significant outstanding balances of the Group’s financial assets and liabilities denominated in foreign currencies are as follow:

USD EURO YEN SGD

Foreign currency

As at December 31, 2012 Consolidated Separated financial statement Assets Liabilities Assets Liabilities

3,768,589.71 12,934,948.86 3,768,589.71 3,169,627.66 1,199.94 4,561,291.64 1,124.65 4,533,892.64 - 1,790,770.00 - 1,790,770.00 493,821.60 - 493,821.60 -

Foreign currency

USD EURO YEN

As at December 31, 2011 Consolidated Separated financial statement Assets Liabilities Assets Liabilities

9,237,115.76 53,600,781.30 5,683,028.44 2,268,417.31 - 1,430,400.00

9,237,115.76 52,526,166.38 5,680,153.44 2,268,417.31 - 1,430,400.00

Forward foreign currencies contracts As at December 31, 2012 and 2011, the Group has performed the forward foreign currencies contract which holds the contract life not exceeding one year as follows: 230

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Consolidated/Separated financial statement 2012 2011

Buying forward foreign exchange contracts Buying forward foreign exchange contracts in USD currency Amount USD 2.52 million at average rate Baht 30.8246 per US dollar (2011 : Amount USD 38.00 million at average rate Baht 31.655 per US dollar) Buying forward foreign exchange contracts in EURO currency (2011 : Amount EURO 1.08 million at average rate Baht 41.02 per EURO) Fair value of buying forward foreign exchange contracts US dollar currencies EURO currencies

77,562,361.53

1,202,890,000.00

-

44,474,166.32

77,105,166.13 -

1,204,987,600.00 44,568,336.45

Buying foreign exchange option As at December 31, 2012, the Group has performed the buying foreign exchange option contract in amount of USD 10.00 million which holds the contract life not exceeding one year is as follows:

Consolidated 2012 2011

Separate financial statement 2012 2011

Buying foreign exchange option contracts Buying foreign exchange option contracts in USD currency 305,000,000.00 371,443,064.32 305,000,000.00 371,443,064.32 Fair value of buying foreign exchange option contracts Buying foreign exchange option contracts in USD currency 302,223,894.00 381,256,619.52 302,223,894.00 381,256,619.52

34.4 Fair value

The carrying amounts of the following financial assets and liabilities approximate to their fair values : cash and cash equivalent, short-term investments, trade receivable and payable, other receivable and payable, loans to and loan from related parties and obligation under financial lease due to the short maturity period. The carrying amounts of long-term loans to and from related parties approximate fair value due to floating interest rate. Gunkul Engineering Public Company Limited

231


232

Smart Energy in Action

Details

1. Promotion certificate No. 1801(1)/2553 1537(1)/2554 1765(1)/2555 1766(1)/2555 2279(1)/2555 2382(1)/2555 2808(1)/2555 2809(1)/2555 2. Promotional privileges for Electricity Electricity Electricity Electricity Electricity Electricity Wind energy Wind energy from from from from from from solar energy solar energy solar energy solar energy solar energy solar energy 3. Significant privileges include: Granted Granted Granted Granted Granted Granted Granted Granted 3.1 Exemption of corporate income tax on net profit for 8 years. In cases where the business incurs a loss during that period of exemption, the loss incurred in such period can be taken as a deduction from net profit of the years after the period of exemption, not exceeding five years. 3.2 Exemption of import duty on machinery as Granted Granted Granted Granted Granted Granted Granted Granted approved by the Board. 3.3 Exemption of income tax on dividends paid Granted Granted Granted Granted Granted Granted Granted Granted from the profit of the promoted operation over the above corporate income tax exemption period.

A Subsidiary has been granted promotional privileges under the Investment Promotion Act B.E. 2520 (or 1977) by the Board of Investment under certain significant conditions. Significant privileges granted to the subsidiary are summarized below.

35. Promotional privileges


Gunkul Engineering Public Company Limited

233

Details

3.4 An allowance of fifty percent of the normal Granted Granted rate of corporate income tax on net profit for a period of five years after the expiry date of the corporate income tax exemption period as described in 3.1) above. 3.5 Permission to deduct double the cost of Granted Granted transportation, electricity and water supply for corporate income tax purpose for a period of ten years commencing from the date of earning operating income. 3.6 Permission to deduct the cost of installation or Granted Granted construction of public utilities at the rate of twenty-five percent in addition to normal depreciation charges. 3.7 Have been granted authorization for export of - - foreign currencies. 4. Date of first earning operating income January 4, October 1, 2011 2011 5. Date of expired privileges January 3, September 30, 2019 2019

Granted

- Not started to used yet Not started to used yet

- Not started to used yet Not started to used yet

Granted

Granted

Granted

Granted

Granted

Not started to used yet Not started to used yet

-

Granted

Granted

Granted

Not started to used yet Not started to used yet

-

Granted

Granted

Granted

Not started to used yet Not started to used yet

Granted

Granted

Granted

Granted

Not started to used yet Not started to used yet

Granted

Granted

Granted

Granted


36. Obligation and contingent liabilities 36.1 As at December 31, 2012, the Group has commitments relating to letters of credit which has been withdrawn in amount of USD 3.53 million. 36.2 As at December 31, 2012, the Group constitutes contingent liability from issuance of guarantee letter of the bank by amount of Baht 321.41 million, amount of USD 0.17 million and amount of EURO 1.92 million in the consolidated financial statement and Baht 282.89 million, amount of USD 0.17 million and amount of EURO 1.80 million in the separate financial statements. 36.3 As at December 31, 2012, the Company has appointed one company in Union of Myanmar to be distribution representative of the Company merchandise including marketing, sale promotion contact and providing various customers service within the Union of Myanmar. The contract constitutes the period of two years and life can be automatically renewable when it is matured. The Company constitutes obligation commitment to repay such service fee in the rate of 5%-10% of merchandise sales. 36.4 As at December 31, 2012, the Company constitutes obligation commitment of power plant from the solar energy agreement and service are as follows :- (Unit : Baht) Consolidated Separated financial statement financial statement

Total value of construction agreements Total revenue from construction Balance

234

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4,574,267,887.44 6,024,294,740.44 (4,498,730,787.65) (5,283,235,024.40) 75,537,099.79 741,059,716.04


The obligation commitment of construction is as follows:-

Consolidated financial statement

Total value of construction agreements Total cost from construction Balance

(Unit : Baht) Separated financial statement

3,666,482,974.66 4,747,660,574.46 (3,558,578,521.49) (4,129,028,984.49) 107,904,453.17 618,631,589.97

36.5 As at December 31, 2012, one subsidiary entered into an advisory contract related with credit carbon project with one company whereas there is value according to contract being amount of Baht 5.55 million. As at December 31, 2012, the Company constitutes outstanding obligation according to contract being amount of Baht 3.94 million. 36.6 As at December 31, 2012, one subsidiary constitutes obligation commitment in mold contract against various company by amount of Baht 0.51 million. 36.7 As at December 31, 2012, two subsidiaries entered into the Power Purchase Agreement with Provincial Electricity Authority (“PEA�) are as follow :- Agreement date

June 28, 2010 June 28, 2010 July 16, 2010 July 16, 2010 July 16, 2010 July 16, 2010 November 23, 2011 July 10, 2012 July 10, 2012

Power electricity size Sell electricity within

3.0 Megawatts 4.4 Megawatts 8.0 Megawatts 8.0 Megawatts 4.5 Megawatts 3.0 Megawatts 50.0 Megawatts 8.0 Megawatts 2.0 Megawatts

November 30, 2011 May 31, 2012 February 3, 2013 February 3, 2013 February 3, 2013 May 31, 2013 September 1, 2016 November 1, 2015 November 1, 2015

Term

5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years 5 yeas/renew automatically 5 years

Gunkul Engineering Public Company Limited

235


36.8 As at December 31, 2012, the Company and one subsidiary were committed the consultant fee to prepare environmental impact reports and engineering feasibility studies. As at December 31, 2012, the subsidiary had outstanding commitments being amount of Baht 11.46 million and amount of AUD 0.006 million 36.9 As at December 31, 2012, the Group has entered into lease and related service agreements with the third parties for the period 1 year. The Group is committed to pay for the rental in amount of Baht 1,250.00 920,100.00 per month. 36.10 As at December 31, 2012, the Company has constitutes obligation commitment in to purchase goods and installment contract with several companies. As at December 31, 2012, the Company constitutes outstanding obligation according to contract being amount of Baht 26.92 million. 36.11 As at December 31, 2012, the Company has constitutes obligation commitment into an advisory contract with the foreign company. Where as there is value according to contract being amount of USD 4.20 million. As at December 31, 2012, the Company constitutes outstanding obligation according to contract being amount of USD 3.30 million. 36.12 As at December 31, 2012, one subsidiary has obligation commitment in hiring the contractor to install steel structure to support solar in amount of Baht 12.96 million. 36.13 As at December 31, 2012, the Company has obligation commitment in hiring the engineer to design service and construction solar power plants with one company in amount of Baht 5.40 million. 36.14 As at December 31, 2012, one subsidiary company has construction agreement’s obligation from a construction agreement entered into with one company. As at December 31, 2012, the subsidiary company’s outstanding obligation remains at Baht 2.75 million.

37. Prosecuted Cases

In 2008, the Company constitutes prosecuted case in number of one case which is civil case of the Civil Court, black case number at 2933/2008, red case number at 700/2009 while the Company is defendant in the subject of 236

Smart Energy in Action


purchasing selling, infringement, damaged fee claimant in capital amount of Baht 8,969,821.12 The Primary Court has adjudicated that the defendant repays amount of Baht 1,533,721.12 plus interest in the rate of 7.50% per annum commenced from the prosecuted date forwards until it will completely repay to the plaintiff and the Company repays charge fees in replacement of the plaintiff. The Company has requested for appeal to dismiss. For the time being, the case in under hearing of the Appeal Court and the Company anticipates that it should win the case finally.

38. Events after the reporting period On February 25, 2013, Board of Director’s Meeting No. 2/2013 of the Company passed the following resolutions: - The resolution to pay dividends to the Company’s shareholders from the operations for the year 2012. The dividend is to be paid as stock dividend in the number of 220,000,000 ordinary shares, with par value of Baht 1 each, at a ratio of 2 existing ordinary shares to receive stock dividend of 1 share, with a total amount of not exceed Baht 220.00 million, or equivalent to the dividend of Baht 0.50 per share. In the case of any shareholder with a fraction of the shares after the stock dividend distribution, will be entitled to receive cash dividend at the rate of Baht 0.50 per share. In addition the Company will pay a cash dividend at Baht 0.06 per share, or equivalent to amount of not exceed Baht 26.40 million. Total annual dividend payment in form of cash and stock dividend equal to Baht 0.56 per share, equivalent to Baht 246.40 million. - The resolution to increase of the Company’s registered share capital from 220,000,000.00 ordinary shares to Baht 440,000,000.00 by issuing new 660,000,000 ordinary shares with a par value of Baht 1 each. The objective of the capital increase is to reserve shares for stock dividend payment.

39. Approval of financial statements

These consolidated and separated financial statements were authorized for issue by the Company’s board of directors on February 25, 2013.

Gunkul Engineering Public Company Limited

237


22. Other References

Regulator Regulator Share Registrar Auditor Legal Advisor

238

The Securities and Exchange Commission, Thailand 93/1 GPF Witthayu Building, Wireless Road, Lumpini, Patumwan, Bangkok 10330, Thailand Tel. 0-2695-9999, 0-2263-6499 Fax. 0-2256-7711 The Stock Exchange of Thailand 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 0-2229-2000, 0-2654-5656 Fax. 0-2229-2030, 0-2654-5649 Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 0-2229-2800 Fax. 0 -2359-1259 SP Audit Company Limited 503/21 12th Floor, K.S.L. Tower, Sriayudhya Road, Phyathai, Ratchathewi, Bangkok 10400 Tel. 0-2642-6172-4 Fax. 0-2642-6253 Weerawong, Chinnavat & Peangpanor Company 540 Mercury Tower, 22nd Floor, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. 0-2264-8000 Fax. 0-2657-2222

Smart Energy in Action


Gunkul 12  

GUNKUL_2012 GUNKUL ENGINEERING PCL Annual Report 2012

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