Padaeng Industry Public Company Limited
Annual Report 2005
Contents
Message from the Board of Directors
3
Highlights for the year 2005
4
Key figures and ratios
5
The year in review
6
• Industry conditions • Operations • Mineral resources and exploration Sustainable development
14
• Environment and safety • Overview of the environmental performance indicators • Environment in Mae Sot - update • Personnel • Community relations Management report, analysis of financial status and operating performance Risk factors
20 22
Board of Directors, Strategic Committee, Audit Committee and Nomination and Remuneration Committee 2005
25
Audit Committee’s statement
31
Financial statements
32
Corporate governance
67
Shareholders and management
70
Vision
PDI will be a low cost producer of high quality zinc, able to compete in its markets with world class producers, providing valued services to customers and giving great importance to the environment.
Background --->
Padaeng Industry was established on April 10, 1981 with the original registered capital of Bt20 million invested by the Thai public (Ministry of Finance) and private investors, and a private company from Belgium. The company has since engaged in mining and refining businesses with the objective to produce zinc metal and zinc alloys to serve the demand of our customers. The company’s mine is located in Mae Sot district, Tak province, the zinc smelter is located in Muang district of the same province and the roaster plant is located in Rayong. The company has also engaged in zinc ore exploration programs both in Thailand and in neighbouring countries. The company was listed on the Stock Exchange of Thailand on July 21, 1987 and was converted into a public company limited on February 4, 1994. In 1996, the company increased its registered capital to Bt 2,260 million, which was fully paid in 2000.
Annual Report 2005 Padaeng Industry 2 Public Company Limited
Annual Report 2005 Padaeng Industry 3 Public Company Limited
Message from the Board of Directors
--->
We are very pleased to announce the results of 2005
case around Mae Sot that proved to originate from natural
as the best of the last 11 years. Supported by the world zinc
sources as well as from human activities. In line with its
price, the company achieved a spectacular improvement that
commitment to the community, the company assumed an
translates now into a very healthy balance sheet.
active role in the process of defining the extent of the problem
The zinc price evolution surprised particularly in
and to stimulate the cooperation of the numerous concerned
the last quarter of the year and generated confusion and
parties in order to develop to a well understood and shared
perturbations both on the supply and demand sides. It pushed
action plan. The company has set up a Fund to support
the income of the company drastically upwards, even if the
community that will promote and assist projects to improve
locked-in forward price has somewhat limited the upside.
the living conditions of the population.
Nevertheless, the positive impact on the income obliterated
Throughout the year, the company also proceeded
several negative factors that would otherwise have impacted
with plans for continuous improvement in terms of safety and
on the profitability of the company, namely the reduction of the
the environment. After the Rayong plant was recertified in
import duty of zinc to 5.5% and the steady increase of
2004, Tak and Mae Sot have also entered the ISO 14001
electricity and diesel prices.
certification process.
Another reason for satisfaction is that after several
On behalf of the Board, we wish to express our
years of delay, exploration licences have been granted at last
appreciation to our employees commitment. We equally value
and the company has embarked on a substantial exploration
the continued support of our customers, shareholders and
program aimed at finding additional local resources. In the
financial institutions. We will continue to conduct our business
current supply conditions of imported concentrates, it is a
with good corporate governance to achieve the best possible
company priority to increase the share of local sources.
results to fully justify your trust and belief in us.
On the environmental side, many resources and intense efforts were devoted to help progress in the cadmium
Mr. Bernard Tonnon Managing Director
Mr. Pinit Vongmasa Chief Executive Officer
Mr. Arsa Sarasin Chairman
Annual Report 2005 Padaeng Industry 4 Public Company Limited
Highlights for the year 2005
--->
Average zinc price in 2005 rose significantly to US$1,382 per mt, a 32% increase compared to the previous year
--->
The company turnover amounted Bt6,151 million, an increase of Bt477 million or 8.4% despite lower sale volumes and reduction of import duty from 7.75 to 5.5%
--->
Net profit of Bt561 million compared with a 2004 net profit of Bt217 million
--->
Net earnings-per-share of Bt2.48 versus Bt0.96 in 2004
--->
Debt-to-equity ratio down to 0.47
--->
YTD ROCE of 16.4%
--->
Total sales of 102,034 mt
--->
Metal production of 101,186 mt
--->
Several exploration licences have been granted in year 2005
--->
Outstanding award for good performance metallurgical plant and mining from the Department of Primary Industries and Mines, Ministry of Industry
--->
Outstanding energy conservation award from Ministry of Energy
--->
Outstanding award for labour relations and welfare from the Ministry of Labour
--->
Outstanding award of Safety and Occupational Health at a national level from the Ministry of Labour
--->
Calcine plant succeeded in zero accidents for seven consecutive years
Annual Report 2005 Padaeng Industry 5 Public Company Limited
Key figures and ratios
Consolidated
End of year
2005
2004
2003
Total revenues
(Million Baht)
6,180
5,715
4,932
Gross profit
(Million Baht)
1,297
769
430
Net profit (loss)
(Million Baht)
561
217
0.0
(Baht)
2.48
0.96
0.00
%
9.1
3.8
0.0
Total assets
(Million Baht)
5,172
4,905
5,125
Total liabilities
(Million Baht)
1,655
1,903
2,290
Shareholders’ equity
(Million Baht)
3,517
3,002
2,835
Return on assets
%
11.1
4.3
0.0
Return on equity
%
16.0
7.1
0.0
Return on capital employed
%
16.4
6.7
1.0
(Times)
0.47
0.61
0.81
Book value per share
(Baht)
15.56
13.29
12.54
Dividend per share
(Baht)
1.10
0.40
-
Net profit (loss) per share Net profit (loss) per total revenue
Debt-to-equity ratio
Annual Report 2005 Padaeng Industry 6 Public Company Limited
The year in review
F igure 1
--->
Industry conditions
LME zinc prices and stock levels during the past 10 years
Zinc demand in the world market inc reas ed, especially in C hina, which reverted to being a net importer
Metric ton
US $
from its pos ition as a net exporter. Moreover, increas ing competition and s hortage of c onc entrates forc ed s ome
800, 000
refineries to reduce or end their production, increasing the gap
700, 000
between production and demand. Falling stocks and increased interest from investment funds drove an increase in the zinc
1, 500 1, 350
600, 000 1, 200
500, 000
price by US $334 per metric ton (pmt) up to US $1,382 in 2005. B y the end of fourth quarter in 2005, the price of zinc metal jumped to US $1,915 pmt, hitting a 16-year record high. It was
300, 000
foreseen that the world demand for zinc metal would reach
200, 000
10.69 million metric tons (mt), a slight increase of 2.3% from
100, 000
2004, mainly in C hina, India and S outh K orea. The demand is
0
expected to increase 4.0% to 11.12 million mt in 2006, based
1, 050
400, 000
900 750 0 1996 1997 1998 1999 2000
on sustained growth in demand from C hina.
2001 2002 2003 2004 2005
LME stock
On the local market, zinc-related industries slowed
Average LME price
down amid a gloomy domestic economy. Total zinc metal consumption was limited to 114,000 mt, an 9.4% decrease from 2004 due to the following factors: - C ontinuously rising oil price; - R ising production costs not translated immediately into selling prices; - Imports of finished products from C hina competing with our customersÕproducts; - C oncerns surrounding bird flu and violence in the south; and,
- R educ ed buying power of c ons umers after droughts and floods. T he negative fac tors mentioned led to higher production costs in various industries while shaking consumer confidence. However, zinc consumption in some sectors such as zinc oxide and auto parts rose significantly in spite of the sluggish economy.
Annual Report 2005 Padaeng Industry 7 Public Company Limited
F igure 2
F igure 3
Zinc consumption in Thailand from 2001-2005
Sales volume of zinc metal and alloys from 2001-2005 Metric ton 120, 000
Metric ton 130, 000
100, 000 80, 000
120, 000 60, 000 40, 000
90, 000
20, 000 60, 000
0 2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
Zinc metal (S HG) Zinc alloy
Zinc sales volumes Domestic sales accounted for 87,137 mt, a 10% drop
Korea are sold in Thailand. This trend should intensify following Government-supported reduction of import duties.
from 2004. The export ratio was kept at about 15% of total
These reductions have severely hit the company
sales, although the total exports of 14,897 mt decreased 11.5%
income and will unfortunately outlast the historical peak of the
compared to 2004 as higher-margin sales were given priority.
zinc price. However, to cope effectively with these new threats,
C hina, Taiwan and Asean countries, such as Indonesia and
the company relies on:
Vietnam, were the main export markets.
- its product quality meeting world-class standards; - the speedy delivery that reduces customersﾃ不tock
Competition in the industry C ompeting imports originating in Australia, C hina and
burden; and, - its efficient technical services.
Annual Report 2005 Padaeng Industry 8 Public Company Limited
F igure 4
F igure 5
Sales value of zinc metal and alloys from 2001-2005
Sales volume of zinc metal from 2001-2005
Million B aht
Metric ton
7, 000
120, 000
6, 000
100, 000
5, 000 80, 000 4, 000 60, 000 3, 000 40, 000
2, 000
20, 000
1, 000
0
0 2001
Operations Flow chart
2002
2003
2004
2005
2001
2002
2003
2004
2005
Zinc metal (S HG)
Domestic sales
Zinc alloy
E xport sales
Annual Report 2005 Padaeng Industry 9 Public Company Limited
Mining During 2005, the Mae Sot mine produced a total of
mine closures and capacity reductions. Secondly, freight costs remained at very high levels.
175,000 dmt of zinc silicate ore at an average zinc content of
Some materials were also purchased locally.
27%, to feed the Smelter in Tak province. The production was
Despite the company’s policy to procure more of such
noticeably higher than in 2004, in particular in the first half of
“regional� materials, they represented in 2005 less than 10%
the year where advantage could be taken of a particularly
of the equivalent total zinc metal production, mainly because
optimal mine-front geology.
of the non-performance of a major contract with a third-party project in Vietnam. Imported sulphides could only partially
Raw materials
compensate for the lacking materials.
As primary source of raw material, the Smelter in Tak received ore and concentrate from the Mae Sot mine for
Calcine plant At the Calcine plant in Rayong province, zinc sulphide
197,276 dmt containing about 51,012 mt of zinc metal. In addition, 92,781 dmt of concentrates, mainly imported sulphides were purchased. Those concentrates are usually zinc sulphide concentrates from South America and Australia, which are
concentrate is converted into calcine prior to being sent to the refinery in Tak for further processing, together with zinc silicate ore to produce zinc metal. A by-product of the calcine process is 98.5% sulphuric acid.
delivered to the Roaster in Rayong. All sulphides delivered in 2005 were imported. In 2005, the cost of zinc sulphide concentrates raised rapidly because of 2 factors. Firstly, the availability of zinc concentrate declined globally due to the increasing number of
Production in mt
2005
2004
2003
Calcine
74,605
98,773
98,743
Acid
78,401
101,994
98,063
Annual Report 2005 Padaeng Industry 10 Public Company Limited
Calcine production was 24% lower than in 2004, in
on Zn and acidity at appropriate frequency so that the
line with the Tak refinery’s reduced consumption. While lower
cell-room operators can control the electrolysis process
demand was alleviated by the world’s increasing shortage of concentrates, the latter materialised in irregular supply and blending issues, which affected the running of the plant.
steadily and efficiently. - Installation of an additional cathode-stripping machine which allows for a faster stripping process. - Modification of the existing SO2 scrubber at the acid
Zinc smelter
plant to facilitate the recycling of SO2 from tail gases
In 2005, Tak zinc refinery produced 99,708 mt of
back into the acid-production process.
cathode zinc, 88.1% of total capacity (113,200 mt). A total of 7,044 mt of zinc ingot was imported for the production of
Value-added products
value-added zinc alloy products.
- Installation of a small copper cathode production facility
The production of zinc metal products could be split
for re-treating the copper cake generated in the Zn purification process. The line will be operational in 2006
as follows:
and will produce about 500 mt in Cu cathodes a year - SHG
60,866 mt
(60.1 % of total products)
- Zinc alloys
40,320 mt
(39.9 % of total products)
Production improvement & modification - Installation of an on-line analyzer at the main cell house. The equipment can provide real-time analysis results
until consumption of the stock falls to 180 mt per year.
Annual Report 2005 Padaeng Industry 11 Public Company Limited
Mineral resources and exploration
The mineral resources can be converted to reserves of about 3,237,000 dmt at 12.9% zinc. At the current pace of
Padaeng mineral resources
extraction at about 400,000 dmt of ore per year, Padaeng
1. Padaeng mine
Mine has sufficient reserves to sustain mining operations for
As of December 31, 2005, the total mineral resource of the Padaeng Mine at Mae Sot was 3,863,000 dmt at 12.3%
about 8 years. 2. Hualon deposit
or about 475,000 mt of zinc metal. The mineral resource
The company has reapplied for its lease on Hualon
was calculated using a cut-off grade of 3% zinc as shown in
(Mining lease application number 1/2547), an area separate
Table 1.
from but close to the Padaeng Mine. On December 31, 2005, total mineral resources at the Hualon Mine in Mae Sot were
Table 1: Mineral resources at Padaeng mine on December
295,000 dmt at 6.0% zinc (zinc-sulphide). A secondary
31, 2005
zinc resource of 44,000 dmt at 7.1% zinc has also been demarcated.
Category Low grade ore stockpile
Dry metric tons
Zinc grade
(dmt)
(%)
Exploration
440,000
7.1
•
Mae Sot area 1. Existing mining leases
Measured resource
1,446,000
13.1
Indicated resource
1,636,000
12.8
During 2005, no new exploration within the existing
341,000
13.0
pit has been carried out. The existing leases still
3,863,000
12.3
Inferred resource Total
Annual Report 2005 Padaeng Industry 12 Public Company Limited
represent excellent potential for additional zinc silicate
of the Copper deposits at PUT 1 and PUT 2. At
ore extraction, so additional exploratory drilling will be
PUT 1, current resources are 80 million dmt at 0.5%
conducted in 2006. Reserves will be reassessed after
Copper at a cut-off grade of 0.1% . At PUT 2, current
the drilling.
resources run at 32 million dmt at 0.4% Copper at
2. Special prospecting licences (SPL)
a 0.1% Copper cut-off.
Exploration within the SPL2-3/2548 during 2005 has
In June 2004, the Thai Cabinet approved to ease
progressed only technically. None of the targets
the 1A watershed for the feasibility study and issued
warrant the resource-definition stage.
“in-principle” approval for the mining application subject to Environmental Impact Assessment terms
•
Regional exploration
to be defined by the Ministry of Natural Resources
1. Zinc exploration projects outside Mae Sot
and Environment. However, the file has not
After more than two years of indecision, several SPL’s
progressed any further in 2005.
were finally approved during the last year. Exploration
2. Lao People’s Democratic Republic
within the SPL’s outside Mae Sot has progressed,
Mining activities have stopped at the Kaiso Zinc
though most projects remain at the target-testing
Mine concession and rehabilitation continues.
stage.
Padaeng (Laos) Company Limited has applied for
1. Loei copper project
a new exploration area covering 2,000 square
PDI’s affiliate, Puthep Company Limited, has joined Pan Australian Resources of Australia in development
kilometres for five years.
Annual Report 2005 Padaeng Industry 13 Public Company Limited
Table 2: Summary of mining and exploration tenements Licence number
Area (Ha)
Date granted
Expiry date
20780/13286
Type* ML
14
18/10/1982
17/10/2007
20781/13285
ML
11
18/10/1982
17/10/2007
20782/13287
ML
14
18/10/1982
17/10/2007
25697/14388
ML
1
30/04/1991
29//04/2008
30769/15525
ML
39
11/07/2002
10/07/2017
1/2547
MLA
48
Pending
1/2548
SPL
1,042
1/04/2005
2/2548
SPL
787
20/06/2005
19/06/2010
3/2548
SPL
1,328
20/06/2005
19/06/2010
4/2548
SPL
1,520
20/06/2005
19/06/2010
5/2548
SPL
1,485
20/06/2005
19/06/2010
6/2548
SPL
662
20/06/2005
19/06/2010
7/2548
SPL
1524
20/06/2005
19/06/2010
8/2548
SPL
1569
20/06/2005
19/06/2010
18/2548
SPL
162
31/10/2005
30/10/2010
1/2546
SPLA
1,474
Pending
4/2547
SPLA
1,600
Pending
5/2547
SPLA
1,600
Pending
6/2547
SPLA
1,600
Pending
7/2547
SPLA
1,600
Pending
8/2547
SPLA
1,600
Pending
9/2547
SPLA
1,523
Pending
10/2547
SPLA
1,492
Pending
1/2548
SPLA
480
Pending
2/2548
SPLA
1,576
Pending
3/2548
SPLA
1,548
Pending
* Note:
ML
30/03/2010
= Mining lease
MLA = Mining lease application at Hualon, applied since March 2004 SPL
= Special prospecting licence
SPLA = Special prospecting licence application
Annual Report 2005 Padaeng Industry 14 Public Company Limited
Sustainable development
--->
Environment and safety • The mining industry has been subjected to negative
• The smelter completed several small investments aimed at improving its environmental stewardship.
press in recent years, with even remote cases generating
• The Rayong Plant has upgraded its environment
bad perceptions in the public mind. Therefore, the
management system to the new version of ISO14001
company is following a strict policy of legal compliance
:2004 and managed a zero-accident result for the
and complete transparency towards the authorities and
seventh year in a row.
stakeholders. The company has invited government
• The mine developed its water management
agencies, financial institutions, media and local villagers
programme further (investing more than Bt12 million
to visit the facilities. Consequently, the overall impression
in 2005) and demonstrated its water systems were fully
of our activities in people’s minds has greatly improved.
compliant throughout the rainy season. Water monitoring
• The company also aims at developing best-practice
was performed on a shift basis, and pond levels were
management systems adapted to its specific situation
also under tight controls. Staff took regular samples
as a mining and smelting company. In 2005, management
from the creek, which consistently showed that water
has focused on consolidation of environmental
flowing upstream from the mine already contained Zn
management and has submitted all sites to an external
and Cd minerals, and that the rainwater released from
compliance audit. Conclusions and suggestions are
the mine area was of a better quality than the natural
now being considered and implemented in the more
flow. In order to further improve the system, the mine
general frame of the ongoing ISO14001 certification
will build another pond in 2006 at a budget of Bt15
process for both the Tak Smelter and the Mae Sot Mine
million.
(The Rayong Plant is already certified).
Annual Report 2005 Padaeng Industry 15 Public Company Limited
1
2
3
4
5
7
6
8
1. Villagers visit the company’s facilities and environmemtal measures • 2. The Mae Sot mine’s water management system • 3.-4. Staff regularly take water samples from a creek • 5.-6. Vetiver planting replenishes land after mining and prevents soil erosion • 7. Signs promote safety awareness at work • 8. A sound meter measures ambient noise in work areas
Annual Report 2005 Padaeng Industry 16 Public Company Limited
Overview of the environmental performance indicators (EPI) Indicator
Measurement
Zinc Smelter
Unit
2005
2004
Calcine Plant 2003
2005
2004
2003
INPUT INDICATORS Total materials used
metric tons / y
290,839
305,247
310,270
84,899
111,463
109,377
gigajoule
1,741,779
1,966,306
1,973,251
16,593
19,546
20,721
1,000 m / y
2,024
1,638
1,597
173
215
204
wet metric tons / y
572,598
600,779
635,688
370
571
464
%
99.72
100
99.997
95.3
91.8
83
1,000 m3/ y
503
180
786
39
54
41
Total energy consumption
3
Total water consumption OUTPUT INDICATORS Produced waste Total waste produced Disposal Emissions to water Total emitted process waters Total emitted metals Total metal toxic unit load
kg / y
76
43
117
57
84
83
toxic unit kg
4,071
1,566
6,620
1,149
1,493
1,493
kg / y
1,117
1,362
612
11
18
127 145
Emissions to air Total emitted metals Total metal toxic unit load
toxic unit kg
1,131
1,375
623
126
55
metric tons / y
390
344
280
105
181
165
103 acid equivalents
13,122
11,726
11,644
3,356
5,779
5,257
Total emitted SOx Total acid deposition emissions
ENVIRONMENTAL PERFORMANCE INDICATORS Compliance & incidents Violations
number
1
2
1
1
1
0
Reported incidents
number
0
0
0
1
0
0
Landfills Landfill covered / landscaped in reporting year %
100
100
100
0
0
0
Cumulative landfill covered / landscaped
%
44
38.25
32.42
0
0
0
Complaints about noise
number
0
0
0
0
0
0
Complaints about odour
number
0
0
1
1
0
0
Total nuisance complaints
number
0
0
1
1
0
0
SOCIETAL INDICATORS
FINANCIAL INDICATORS Environmental investment and operating costs Total environmental investment costs
(million baht)
29
52
29
7.6
0.9
0
Total environmental operating costs
(million baht)
108
92
80
11.1
8.9
12
Indicator
Measurement Unit
Zinc Smelter 2005
2004
Calcine Plant 2003
2005
2004
Mae Sot Mine 2003
2005
2004
2003
SAFETY INDICATORS Frequency rate
accidents / million working hours
0.83
3.36
2.54
0
0
0
1.62
3.36
2.36
Severity rate
lost days / million working hours
29.80
24.35
24.55
0
0
0
8.11
6.71
7.07
number
567
559
542
92
90
93
286
283
284
No of employees na : not available
0 : measured or calculated
Annual Report 2005 Padaeng Industry 17 Public Company Limited
1
2
1. Trial project of flowering plants 2.-3. Trial project of oil palm and rubber plants 3
Environment in Mae Sot-update
• The company has been supportive and active in all
• Studies performed in 2005 concluded that contamination
discussions. Padaeng has provided assistance to all
in the Mae Tao Basin had emanated from natural
bodies, has delivered to the task force any technical
sources and human activities of all kinds that aggravate
information required, such as geological and
the natural process, including industry, deforestation,
geographical mapping and resources for sampling and
forestry firing, farming and other settlement.
analysis. Also, the company has continued to help the
• In the meantime, the authorities have banned farmers
community through donations of medical equipment
from growing edible crops in the cadmium-contaminated
(bone-quality detector) and financial support for the
area.
non-edible-plant cultivation project.
• Due to widespread concerns voiced by many sections
• In the area of public health, the company has sponsored
of society, all parties (authorities, local villagers,
a joint project with King Chulalongkorn Memorial and
community leaders and the private sector) accepted a
Mae Sot Hospitals to study the amount of cadmium
proposal to regroup under the Tak Governor to hasten
uptake from food and water by the local risk group.
the decision process. This is a major achievement and
• Padaeng also established the Mae Tao Basin Community
a critical step in the mediation process.
Development fund, which is being used exclusively
The task force is now preparing a plan to:
to benefit the community around the mine. The fund
- Rehabilitate Cadmium contaminated areas
supports various development projects and assists the
- Control and prevent pollution
community wherever and whenever it is needed.
- Promote economic development that emphasises quality of life and health - Make the Mae Tao management more efficient
Annual Report 2005 Padaeng Industry 18 Public Company Limited
Outstanding award for labour relations and welfare from the Ministry of Labour
Personnel
Community relations
The company realises that human resources
To make a positive contribution to a better and a
development is a key factor determining business growth,
stronger Thai society, from the smallest hamlet to the country
particularly in an era of unsurpassed globalisation. Therefore,
as a whole, has been Padaeng’s unwavering commitment since
Padaeng provides full support for employees occupying
our business started. Every year, the company provides
positions at all levels to build on their work and management
children and youth with opportunities for higher education by
skill sets, and as a result, their performance and work quality,
granting more than 500 academic scholarships, and donating
by continually providing a wide range of training activities and
educational materials and funding for school lunch projects.
development programmes. These are crucial to aligning
Furthermore, the company embarks on activities that improve
goals between and among management and staff, and to
people’s quality of life in the community in areas such as
implementing good corporate governance.
professional, health and local traditions. The company
The company’s total workforce is built on 766
recognises that advancing the quality of life within our society
employees. The majority of employees live in Tak province and
is very important objective that needs co-operation from
the northern region of the country, where the smelter plant
everyone. As a member of the community, the company
and mine are located. The average age of employees is 39
assumes this responsibility as a vital part of its ongoing agenda.
years, while the average service tenure is 13 years. Employee
Here are some details of our efforts:
turnover rate equalled 3.13%.
Annual Report 2005 Padaeng Industry 19 Public Company Limited
1. Renovating school’s playground 2.-3. Donating medical equipments
1
2
3
Education
• As members of the “Padaeng Volunteer Group”, company
• Awarded annual academic scholarships, school
employees worked alongside local villagers to renovate
uniforms and learning materials to students in Tak
school buildings, playgrounds and public utilities at
province
many schools in Tak province
• Donated computer packages for learning and 1
The teams:
satellite television set to 6 impoverished schools in Tak
- Paved concrete roadways
province
- Built multi-purpose fields and reconditioned their
• Funded school lunch projects at 10 local schools in Tak province, the finance of which helped plant vegetable gardens and breed chickens safely
edges - Renovated a pavilion • Financed sporting events at local schools and within the community to encourage exercise and physical
Public health and welfare
fitness among young people and local villagers
• Donated electrocardiogram heart monitoring
• Supported programmes to train villagers in the
equipment to the King Taksin Maharaj Hospital in Tak
making of decorative items from local textiles at Pa
province
Dae village in Mae Sot
• Donated a pesticide fogging machine to the Primary
• Supported and promoted Buddhism by making
Public Health Centre at North Mae Ku village in Mae
charitable contributions and participating in merit-
Sot district, to prevent malaria in the area
making ceremonies with local villagers
Annual Report 2005 Padaeng Industry 20 Public Company Limited
Management report, analysis of financial status and operating performance
--->
Compared to the previous year, 2005 was marked by a limited and irregular supply of concentrates and a weak
electricity costs for the smelter could be lowered thanks to increased off-peak production.
and unsteady demand on the local market. Fortunately, those
Total costs of sales and services amounted to
negative impacts were more than compensated by continuously
Bt4,849 million (Bt4,853 million consolidated) or a decrease
rising Zinc prices, an effect positively sustained by the higher
of Bt51 million from 2004.
production from the fully owned and operated mine.
Sales and Administrative expenses increased mainly
The consolidated net profit for the year more than
due to the superior number of days offline-primarily at the
doubled to reach Bt561 million, compared to Bt217 million in
calcine plant-and higher transportation and delivery expenses.
2004. Equity grew 15% and the company’s borrowing position
Some additional charges were booked at that level:
improved drastically leading to a very healthy balance sheet.
•
Sales revenue
•
Downward adjustment in the accounting value of the prepayment made on a failed project in Vietnam
Despite lower sales volume, company turnover,
•
supported by increasing zinc prices, increased 8.5% to Bt6,138
Non-recoverable capitalised exploration expenses Allocation of a fund for the Mae Sot Community Development
million (Bt6,151 million consolidated). The rise was nevertheless
•
Employee termination and retirement benefits
restricted by strategic hedges and the reduction of duty from
•
Following above mentioned items, selling and
7.75% to 5.5%. The proportion of domestic sales (85%) and
administrative expenses increased by Bt143 million
of high-value alloys (40%) remained similar to the previous year.
to Bt502 million (Bt499 million consolidated)
Sulphuric acid sales generated revenue of Bt150 million, a 20% drop compared to last year, weighed down by
•
Pushed mostly by higher sales price, royalty expenses increased by Bt60 million to Bt226 million
less activity in calcine production. The company operating profit totalled Bt567 million
Profitability
from Bt247 million one year earlier. Following the reduction of
Despite the higher zinc prices, the cost of goods
financial charges, the net profit of the company for the year
decreased thanks to increased consumption of ore and
amounts to Bt554 million, or Bt332 million higher than 2004.
concentrate from our own mine and fewer metal imports. Also,
The consolidated profit after attribution to minorities was Bt561
the impact of the several increases of Ft charges on the
million or Bt2.48 per share.
Annual Report 2005 Padaeng Industry 21 Public Company Limited
parties decreased Bt120 million to Bt902 million. With long-term loans limited to Bt80 million, a major shift of Bt468 million from the long-term portion to the current portion was seen. During the final quarter, the company updated its accounting policy to recognise provisions for termination and retirement benefits in accordance with Thai Labour Laws. The effect of the update has been accounted for retroactively by restating the 2004 balance sheet with an additional opening provision of Bt51 million. Total closing provisions stated here, with provisions for restoration expenses, are up Bt22 million to Bt101 million. Shareholder’s equity The net equity of the company progressed Bt463 million to Bt3,471 million. After apportionment to the legal reserve of Bt28 million, retained earnings total Bt571 million. The Board of Directors will propose a dividend of Bt1.10 per share for a total of Bt248.6 million to the shareholders. Cash flow & capital expenditure Cash flow from operations before changes in operating assets and liabilities rose to Bt999 million (consolidated Bt999 million), from Bt626 million in 2004. On top of depreciation expenses (Bt336 million), main items reintegrated into the cash flow were the charges mentioned at the level of Selling & Administrative expenses. Total net cash provided by operating activities was Bt643 million (consolidated Bt649 million), from Bt672 million
Balance sheet Assets & liabilities
a year earlier. The company paid Bt187 million for fixed-asset
The company assets totalled Bt5,293 million; a 6%
investments, mining intangibles and capitalised exploration
or Bt302 million on-year increase. This reflects an improved
expenses, amounting to a Bt44 million decrease compared to
cash and deposits position (+Bt364 million) and value added
the figure for 2004. An additional Bt42 million was invested by
to inventories (+Bt221 million). Property, plant and equipment
a related company in exploration at the Puthep copper project,
show net depreciation of Bt178 million. Consolidated assets
pushing the total consolidated investments to Bt230 million.
include Bt42 million of additional capitalised exploration expenses for the Puthep copper project.
Subsidiaries
Liabilities dropped Bt161 million to Bt1,822 million,
PNA (Puthep) Proprietary Limited of Australia
Current trade liabilities fell Bt185 million to Bt229 million
obtained through a capital increase a 20.66% ownership
on-year. Total borrowings from financial institutions and related
interest in Puthep Company Limited.
Annual Report 2005 Padaeng Industry 22 Public Company Limited
Risk factors Protecting our competitiveness Until recently, the Thai government imposed an import duty of 10% on zinc, protecting the company to some degree from foreign competitors, who have a lower cost base than exists in Thailand. However, further government implementation of current market liberalisation measures in this sector reduced the import duty on zinc metal to 5.5% in 2005, and to 3.25% in 2006, which will lead to a significant reduction in the company’s revenue. This measure will decrease our protection against better-protected Asian producers. Nevertheless, the company holds the ambition to maintain its position as leader in the domestic market and to
--->
The company makes every effort to manage its
continue expanding its market share in the region. It will
businesses efficiently so as to protect itself from internal and
therefore take advantage of its own raw material sources, and
external exposure to risk, which may affect operations or
customer-driven marketing.
financial status. Some initiatives include reducing investment in activities of subsidiaries, which are non-core businesses,
Risk involving investments in subsidiaries The company has one significant investment in a
leading to greater financial stability for the company.
subsidiary under a Participation Agreement with an Australian
Changes in zinc prices and exchange rates
company. As in 2004, the project has been idle for the whole
Any fluctuations in zinc prices - as quoted daily on
year waiting for a breakthrough in the approval process
the London Metal Exchange - and exchange rates, would be
for land access to conduct further ore sampling prior to a
key areas of exposure for the company, having a real impact
feasibility study. The study must determine if the resources
on the company’s revenues, as both purchase and selling
are economically recoverable.
prices are linked to the LME price and are expressed in US currency. Such variations in the price of zinc on the LME and
Risk involving mining licences The company is applying for the extension of the
the US$/Baht exchange rate are considered the main structural risks for the company. In order to reduce the exposure to such factors, the company is hedging purchases and sales in US dollars. The company has also since the fourth quarter of
existing mining leases that will expire in October 2007. Considering the lengthy procedure, uncertainty around the timely approval of such leases forms the basis of risk in this area.
2004 implemented a policy of reducing its exposure to zinc-price fluctuations by strategic hedging. While these hedging
Environmental risks
transactions will prevent the company from taking advantage
In case of industrial pollution, clean up costs or
of any further upside on the tonnage hedged, the company
personal class action liability are potential risks. The company
will, in any case, lock-in an acceptable return for its shareholders
is monitoring its emissions very closely and has a system of
and be protected against future drops in the price of zinc
water management in place to ensure no contamination is
and/or a strengthening of the Thai Baht. This strategy is
generated by the mining operations.
non-speculative through forward sales of metal on the London
The company has also proceeded with an external
Metal Exchange. As the transactions are conducted in US
audit of compliance to H&S regulations and is actively
dollars, the underlying currency risk is covered by simultaneous
implementing improvements to reach best management
forward sales of US dollars.
practices.
Annual Report 2005 Padaeng Industry 23 Public Company Limited
Revenue structure
The company’s total revenue for the consolidated financial statement can be classified by types of product (2003 - 2005) 2005
% of
2004
% of
2003
% of
Revenue
Total
Revenue
Total
Revenue
Total
Million Baht
revenue
Million Baht
revenue
Million Baht
revenue
Zinc metal (SHG)
3,356.2
54.3
3,133.1
54.8
2,720.7
55.2
Zinc alloy
2,570.4
41.6
2,262.7
39.6
1,822.6
37.0
Sulphuric acid
149.8
2.4
187.9
3.3
100.7
2.0
Other revenue
103.3
1.7
131.3
2.3
288.2
5.9
6,179.7
100.0
5,715.0
100.0
4,932.1
100.0
Total revenue
Policy for investment in subsidiary companies To be consistent with the company’s business goals, our policy is to support only those subsidiaries related to core businesses, such as joint ventures in exploration and mining projects. Therefore, the company limits involvement in activities not directly related to our core businesses. Such subsidiaries will continue to operate their daily businesses independently from the group. The current proportion of total investment in subsidiaries represents 6.8% of the group’s total assets.
Annual Report 2005 Padaeng Industry 24 Public Company Limited
Overall business operations of its subsidiary companies and affiliated companies
The company holds shares in the following groups of companies: Subsidiary companies
Nature of business
Paid up
Shareholding
capital
%
(Baht) 1. Padaeng Properties Co., Ltd.
- Land development and real estate with the Industrial Estate Authority of Thailand
2. Puthep Co., Ltd.
100.00
183,575,800
79.34
5,000,000
100.00
- Prospecting and mining for copper and other base metals in EPL No. 3, Loei province
3. Padaeng Industry (Laos) Co., Ltd.
80,000,000
- Prospecting and mining for base metals in Laos
(US$ 200,000)
4. Padaeng International Mining Co., Ltd.
- Investing in exploration and mine development project in Vietnam
5. Sila Enterprise Co., Ltd.
- Marketing of aggregate limestone
6. Padaeng Poongsan Metals Co., Ltd.
- Manufacturing of copper and brass sheet/strip
100,000
100.00
9,000,000
55.00
250,000,000
61.98
200,000,000
100.00
coin blank and case cup N.B. Ceased operation since February 1999 and in process of liquidation and is not consolidated into the financial statement Other affiliated companies 1. South East Asia Metals Co., Ltd.
- Distributing base metals and other by-products
Future projects Striving for constant improvement, the company invests essentially in projects that reduce costs or increase efficiency. But, in the current context of raw materials shortages and the soaring costs of foreign concentrates, the firm will also be placing a high priority on developing the local potential for mining and diversification projects in the Asean region, such as joint ventures in mining and exploration.
Annual Report 2005 Padaeng Industry 25 Public Company Limited
Board of Directors, Strategic Committee, Audit Committee and Nomination and Remuneration Committee 2005
Mr. Arsa Sarasin Chairman Education • B.A. (Business Administration), Boston University, U.S.A. Training • Director Accreditation Program (DAP), Thai Institute of Directors Association Current position • Chairman, Padaeng Industry Public Company Limited • Chairman, Thai Asia Pacific Brewery Company Limited • Chairman, Siam Makro Public Company Limited • Chairman, Amata City Company Limited • Chairman of Advisors, Thai-Lao Association for Friendship • The Honorable Chairman of the TOA Group of Companies • Director Thai Pure Drinks Company Limited • Director Thai Tapioca Development Institute • Director and Member of the Governance and Nomination Committee, The Siam Cement Public Company Limited • Independent Director and Audit Committee Member of Charoen Pokphand Foods Public Company Limited • Advisor to the Board of Directors of Bangkok Bank Public Company Limited Working experience • Chief Executive Officer, Padaeng Industry Public Company Limited • Director-General, Department of Political Affairs, Ministry of Foreign Affairs • Director-General, Department of Economic Affairs, Ministry of Foreign Affairs • Thai Ambassador to Belgium & Chief of Mission to the European Community • Thai Ambassador to the U.S.A • The Permanent Secretary of the Ministry of Foreign Affairs • The Minister of Foreign Affairs • Chairman of the Asia-Europe Business Forum II • Vice Chairman of the Board of Directors, Bangkok Bank Public Company Limited • Member of the Board of Director, Vinythai Public Company Limited • Chairman of the Thai-Laos Association
Mr. Paron Israsena Independent Director, Audit Committee Member and The Nomination and Remuneration Committee Chairman Education • Master of Science (M.E.), Massachusetts Institute of Technology (MIT), U.S.A. Training • The Board’s Role in Setting Effective Compensation Policy, Thai Institute of Directors Association • The Audit Committee...The Expectation Increase and The Responsibility Expansion, Stock Exchange of Thailand • Director Accreditation Program (DAP), Class 4/2003, Stock Exchange of Thailand and Thai Institute of Directors Association Current position • Director, Member of the Audit Committee and Chairman, The Governance and Nomination Committee, Siam Cement Public Company Limited • Director and Chairman of the Audit Committee, Summakorn Public Company Limited • Chairman, Shin Satellite Public Company Limited • Member, Thailand Industrial Standard Institute, Ministry of Industry • Director, The National Competitiveness Development Board • Academic Director, The National Economic and Social Development Board Working experience • President, Siam Cement Public Company Limited • Chairman, The Federation of Thai Industries • Senator and Member of National Legislative Assembly • Chairman, Committee on Economics & Industry of the Senate Academic Director, Thailand Productivity Institute
Mr. Kosit Panpiemras Director Education • M.A. (Economics), University of Maryland, U.S.A. Current position • Director and Executive Chairman, Bangkok Bank Public Company Limited • Member of the National Economic and Social Development Board Working experience • The Minister of Finance • The Minister of Industry
Annual Report 2005 Padaeng Industry 26 Public Company Limited
Mr. Vinai Vamvanij Independent Director, Audit Committee Chairman and Strategic Committee Member Education • Professional Accountancy, CPA, Australia Training • Thai Institute of Directors Association - DCP Refresher Course, Directors Certification Program 2001, Chairman 2000, Creating a Strategic Direction Current position • Independent Director and Audit Committee, Christiani & Neilsen (Thai) Public Company Limited • Director, Continental Petrochemical (Thailand) Co. Ltd. Working experience • Executive Director, Thonburi Automotive Assembly Plant Company Limited • President, Continental Petrochemical (Thailand) Co. Ltd. • Chief Executive Officer, Aquastar Group
Mr. Aswin Kongsiri Independent Director, Audit Committee Member and The Nomination and Remuneration Member Education • B.A. (Hons.) in Philosophy, Politics and Economics, Oxford University, England Training • Banff School of Advanced Management, Alberta, Canada • The National Defend Course for the Joint StatePrivate Sectors, Class 6, National Defend College • Directors Certification Program, Class 11/2001, Thai Institute of Directors Association (IOD) and Australian Institute of Company Directors (AICO) • Chairman 2000, Class 5/2001, Thai Institute of Directors Association (IOD) and Australian Institute of Company Directors (AICO) Current position • Chairman of the Executive Committee, Electricity Generating Public Company Limited • Director, Chairman of Risk Management Committee and Chairman of Nominating Committee, Bangkok Aviation Fuel Services Public Company Limited • Director and Executive Director, Krung Thai Bank Public Company Limited • Director and Audit Committee Member, Tris Rating Company Limited • Director, Thai-German Ceramic Industry Public Company Limited • Director and Chairman of Audit Committee, The Oriental Hotel (Thailand) Public Company Limited • Director, Audit Committee Member and Chairman of Nominating and Remuneration Committee, Thai Reinsurance Public Company Limited • Director, Audit Committee Member, Risk Management Committee and Chairman of Nominating and Remuneration Committee, Muang Thai Life Assurance Company Limited • Director, Ch. Karnchang Public Company Limited Working experience • President, The Industrial Finance Corporation of Thailand
Mrs. Sirinuj Bisonyabut Director Education • M.B.A., Thammasart University • B. Sc., Chulalongkorn University • Certificate of Senior Executive of Office of the Civil Service Committee (Class 28) • Certificate of National Defense College (Class 44) • Certificate of King Prajadhipok’s Institute (Class 3) Training • Directors Certification Program, Class 56/2005 • Thai Institute of Directors Association Current position • Chief of Inspector, Ministry of Finance • Board of CAT Telecom Public Company Limited Working experience • Deputy Director-General, Excise Department
Mr. Karel Vinck Director Education • Master’s Degree in Electrical and Mechanical Engineering, Katholieke Universiteit Leuven (KUL), Belgium • Master of Business Administration, Cornell University, U.S.A. Current position • Chairman, Umicore, Belgium • Chairman, Cumerio, Belgium Working experience • Chief Executive Officer, Eternit, Belgium • Chief Executive Officer, Bekaert Group, Zwevegem • Chief Executive Officer, Union Miniere, Belgium • Chief Executive Officer, NMBS/SNCB (Belgian Railways), Belgium
Annual Report 2005 Padaeng Industry 27 Public Company Limited
Dr. Jean-Luc Deleersnyder Director, Strategic Committee Member and The Nomination and Remuneration Member Education • Master’s Degree in Electromechanical Engineering and Ph.D. in Operations Management, Rijksuniversiteit Gent. (RUG), Belgium Current position • Executive Vice President (Zinc), Umicore, Belgium Working experience • Corporate Vice-President HR & Strategy, Umicore, Belgium • Management Consultant, McKinsey & Company, Belgium
Mr. Pinit Vongmasa Director, Chief Executive Officer and Strategic Committee Member Education • B.Eng. (Electrical Engineering), Chulalongkorn University • M.S. (Ind. Mgt.), Oklahoma State University, U.S.A. • Advance Management Program, Harvard University, U.S.A. Training • Directors Certification Program 2001, Thai Institute of Directors Association Current position • Chief Executive Officer, Padaeng Industry Public Company Limited Working experience • President and Chief Executive Officer, Padaeng Industry Public Company Limited • President, The Siam Kubota Industry Co., Ltd. • Managing Director, The CPAC Concrete Products Company Limited
Mr. Bernard Tonnon Director, Managing Director and Strategic Committee Member Education • Master’s Degree in Mining Engineering, Universite Libre de Bruxelles, Belgium Training • Directors Certification Program, Class 57/2005 • Thai Institute of Directors Association Current position • Managing Director, Padaeng Industry Public Company Limited Working experience • Business Line Manager, Umicore, Angleur, Belgium • Head of Activity Zn Wire & Dust, Umicore, Angleur, Belgium
Board of Directors (Resigned during the year) 1. Mr. Michel Moser Director Education • Master’s Degree in Commercial Engineering, Ecole de Commerce Solvay (ULB), Belgium • Post graduat en commerce international, Ecole de Commerce Solvay (ULB), Belgium • Finance for Executives, INSEAD, Fontainebleau Current position • Member of the Umicore Executive Committee, Belgium • Vice President Corporate Development, Umicore, Belgium Working experience • Managing Director, Sogemin Metals Ltd., London, England • Chief Financial Officer, Sogem s.a., Brussels, Belgium • Managing Director, Sogem Far East Ltd., Hong Kong • Executive Vice-President, Sogem Afrimet Inc., New York, U.S.A.
Annual Report 2005 Padaeng Industry 28 Public Company Limited
Products and their uses --->
Padaeng Industry products comprise special high-grade (SHG) zinc and value-added zinc alloys. Their main applications are described as follows:
SHG Zinc: is used predominantly in the field of corrosion protection, whereby steel is galvanised with a zinc coating on its surface. Subsequently, the zinc layer protects the steel substrate in two ways. First, when the coating is intact, zinc forms a barrier covering steel to protect it from corrosive media and hence provides barrier protection for the steel surface. Second, having a lower electrochemical potential than steel, zinc becomes a “sacrificial anode”, while the steel assumes the role of a cathode. When the coating is damaged, the zinc is sacrificed as it corrodes preferentially to the steel. This interaction is called “cathodic protection”. Galvanising thereby offers a surface better protection than painting, which provides only barrier protection. Galvanised steel will offer long-term and maintenance-free corrosion resistance to structures.
Annual Report 2005 Padaeng Industry 29 Public Company Limited
Zinc alloys: Pressure die-casting zinc alloys are used to produce near-finished cast products for the construction, automotive, toy and audiovisual appliances industries. In zinc-aluminum-magnesium alloys, aluminum helps to increase tensile and creep strength as well as toughness and castability, while magnesium provides protection against inter-granular corrosion.
Zinc die-casting products: require a minimum of finishing steps and may be further subjected to painting and baking and electroplating.
Annual Report 2005 Padaeng Industry 30 Public Company Limited
Other applications of zinc
Zinc chemicals: While special grades of zinc powder are used in alkaline batteries and button cells, zinc oxide finds application in vulcanisation, ceramics, paints, animal feed and even in medical ointments and sun blocks.
Brasses: By combining zinc and copper in different concentrations, various grades of brass are obtained for varied applications, including bathroom accessories, valves, decorative statues and brass tubes.
Annual Report 2005 Padaeng Industry 31 Public Company Limited
Audit Committeeûs statement
Dear shareholders,
--->
The Audit Committee comprises three independent
continue striving for improvement of the internal control system
directors, Mr. Vinai Vamvanij as Chairman, Mr. Aswin Kongsiri,
with the aim to cut down redundant work procedures, to boost
and Mr. Paron Israsena.
efficiency & effectiveness and to identify weaknesses in the system and implementation of solutions to eliminate them.
In 2005, the Audit Committee has met quarterly with the external auditor, the internal auditor and the management
The Audit Committee has recommended to the Board
to review the consolidated and company financial statements
of Directors to propose to the shareholders to reappoint
to ensure conformity with the regulations of SEC, SET and
Certified Public Accountants of PricewaterhouseCoopers
with the generally accepted accounting principles of Thailand
ABAS Ltd. to conduct the audit of financial statements for the
before submission to the board. The Audit Committee has
company and its subsidiaries for the year 2006.
also held meetings with the internal auditor and management to assess the company’s internal control and risk management with emphasis on such issues as connected party transactions and proper disclosure of information in such areas, for transparency and good corporate governance. In this respect, the Audit Committee is of the opinion that the company’s operations have been appropriate and has found no significant weaknesses in its business conduct. The committee’s focus for 2006 will be on the overall
(Mr. Vinai Vamvanij)
risk management of the company and devising an early
Chairman of the Audit Committee
warning risk system. At the same time the company will
23 February 2006
Annual Report 2005 Padaeng Industry 32 Public Company Limited
Financial statements
Padaeng Industry Public Company Limited
Annual Report 2005 Padaeng Industry 33 Public Company Limited
AuditorĂťs report
To the shareholders and the Board of Directors of Padaeng Industry Public Company Limited
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a
--->
reasonable basis for my opinion. I have audited the accompanying consolidated and company balance sheets of Padaeng Industry Public Company
In my opinion, the consolidated and company financial
Limited and its subsidiaries and of Padaeng Industry Public
statements referred to above present fairly, in all material
Company Limited as at 31 December 2005 and the related
respects, the consolidated and company financial position as
consolidated and company statements of income, changes in
at 31 December 2005 and the consolidated and company
shareholders’ equity and cash flows for the year ended 31
results of operations, and cash flows for the years then ended
December 2005. The company’s management is responsible
of Padaeng Industry Public Company Limited and its subsidiaries
for the correctness and completeness of information in these
and of Padaeng Industry Public Company Limited in accordance
financial statements. My responsibility is to issue a report on
with generally accepted accounting principles.
these financial statements based on my audit. The consolidated and company financial statements for the year ended 31 December 2004 of Padaeng Industry Public Company Limited and its subsidiaries and of Padaeng Industry Public Company Limited, were audited in accordance with generally accepted auditing standards by another auditor in the same firm as myself whose report dated 4 February 2005, expressed an unqualified opinion on those statements. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I
NATTAPORN PHAN-UDOM Certified Public Accountant (Thailand) No. 3430 PricewaterhouseCoopers ABAS Limited
plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
Bangkok 23 February 2006
Annual Report 2005 Padaeng Industry 34 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries As at 31 December 2005 and 2004
Balance sheets Consolidated
Notes
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
Assets Current assets Cash and cash equivalents
3
600,395,622
441,677,104
568,843,310
325,879,711
Deposit
4
121,314,837
-
121,314,837
-
5
241,744,163
235,095,679
235,211,850
228,096,854
27 (iv)
51,345,585
22,578,804
54,143,601
23,168,198
Trade accounts receivable-net - other parties - related parties Short-term loans and advances to related parties-net Inventories-net
27 (v) 6
Value added tax receivable Other current assets
7
Total current assets
-
-
1,848,263
10,934,667
1,528,612,615
1,307,118,547
1,528,612,615
1,307,060,824
49,265,663
95,302,256
46,152,125
95,271,095
18,373,230
86,148,573
17,860,532
85,873,927
2,611,051,715
2,187,920,963
2,573,987,133
2,076,285,276
-
-
361,933,979
358,934,364
Non-current assets Investment in subsidiaries-net
8, 27 (i)
Property, plant and equipment-net
9
2,248,200,005
2,427,094,495
2,251,245,733
2,429,905,770
Exploration and acquisition costs
10
306,219,748
277,032,327
100,130,543
113,114,836
Other non-current assets
11
6,057,527
12,983,853
6,002,527
12,928,853
Total non-current assets
2,560,477,280
2,717,110,675
2,719,312,782
2,914,883,823
Total assets
5,171,528,995
4,905,031,638
5,293,299,915
4,991,169,099
Director......................................... (Pinit Vongmasa)
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 35 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries As at 31 December 2005 and 2004
Balance sheets (Continued) Consolidated
Notes
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
175,719,606
283,819,241
175,719,606
283,819,241
223,154,352
412,997,555
222,610,236
412,984,821
5,964,825
813,981
6,028,377
923,691
Liabilities and shareholders’ equity Current liabilities Loans from financial institutions
12
Trade accounts payable - other parties - related parties
27 (iv)
Current portion of payable for land use compensation Current portion of long-term loans
14
-
11,061,405
-
11,061,405
15
467,500,000
102,500,000
467,500,000
102,500,000
Current portion of hire purchase payable
1,919,873
1,893,022
1,919,873
1,893,022
Advance from related party
27 (vi)
2,951,967
-
-
-
Short-term loans from related parties
27 (vii)
-
-
180,000,000
90,000,000
1,187,096
1,864,844
1,187,096
1,864,844
-
-
166,438
157,808
Accrued electricity expenses
160,437,037
186,941,582
160,437,037
186,941,582
Royalty payable
177,847,780
122,108,581
177,847,780
122,108,581
Accrued interest expenses - other parties - related parties
Other current liabilities
27 (vii)
13
Total current liabilities
252,014,186
145,142,433
244,099,250
135,879,514
1,468,696,722
1,269,142,644
1,637,515,693
1,350,134,509
Non-current liabilities Long-term loans
15
80,000,000
547,500,000
80,000,000
547,500,000
Provisions for restoration expense
16
42,257,061
21,543,364
40,748,738
21,543,364
17
60,804,526
57,814,474
60,804,526
57,814,474
Provision for employee termination/retiarement benefits Others non-current liabilities Total non-current liabilities Total liabilities
3,095,445
6,546,437
3,095,445
6,546,437
186,157,032
633,404,275
184,648,709
633,404,275
1,654,853,754
1,902,546,919
1,822,164,402
1,983,538,784
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 36 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries As at 31 December 2005 and 2004
Balance sheets (Continued) Consolidated
Notes
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
2,260,000,000
2,260,000,000
2,260,000,000
2,260,000,000
2,260,000,000
2,260,000,000
2,260,000,000
2,260,000,000
602,413,600
602,413,600
602,413,600
602,413,600
Shareholders’ equity Share capital Authorized share capital 226,000,000 ordinary shares of Baht 10 each
18
Issued and paid-up share capital 226,000,000 ordinary shares of Baht 10 each, fully paid Premium on share capital Retained earnings (deficit) Appropriated-legal reserve
37,486,820
9,791,560
37,486,820
9,791,560
569,685,839
126,436,817
571,235,093
135,425,155
3,469,586,259
2,998,641,977
3,471,135,513
3,007,630,315
47,088,982
3,842,742
-
-
Total shareholders’ equity
3,516,675,241
3,002,484,719
3,471,135,513
3,007,630,315
Total liabilities and shareholders’ equity
5,171,528,995
4,905,031,638
5,293,299,915
4,991,169,099
Unappropriated retained earnings (deficit) Total company shareholders’ equity Minority interest
19
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 37 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of income Consolidated
Notes Revenues from sales and services
29
Cost of sales and services Gross profit Selling and administrative expenses
20
Royalty expenses Profit from sales and services Other revenues Gain (loss) on exchange rate Inventory revaluation gain Impairment expenses
6 9,20
Directors’ remuneration Other expenses Profit from operations
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
6,150,696,571
5,673,841,586
6,138,518,881
5,663,727,552
(4,853,391,642)
(4,904,783,584)
(4,849,355,713)
(4,900,113,919)
1,297,304,929
769,058,002
1,289,163,168
763,613,633
(499,040,318)
(366,323,475)
(501,696,002)
(358,879,842)
(226,449,236)
(166,579,883)
(226,449,236)
(166,579,883)
571,815,375
236,154,644
561,017,930
238,153,908
17,401,202
18,854,234
15,682,629
15,808,313
1,525,217
18,252,913
1,443,449
18,296,547
-
207,492
-
207,492
(5,581,400)
(21,218,479)
(5,581,400)
(21,218,479)
(4,522,063)
(3,593,913)
(4,522,063)
(3,593,913)
(386,990)
(447,831)
(386,990)
(447,831)
580,251,341
248,209,060
567,653,555
247,206,037
-
-
2,926,173
1,840,717
580,251,341
248,209,060
570,579,728
249,046,754
(16,256,469)
(26,525,533)
(16,674,530)
(27,417,205)
Share of gain (loss) from subsidiaries on equity method
8
Profit before finance costs and income tax Finance costs-net
22
Income tax Profit before minorities (Profit) attributable to minorities Net profit for the year
(1,576,065)
(3,672,852)
-
-
562,418,807
218,010,675
553,905,198
221,629,549
(1,074,525)
(983,984)
-
-
561,344,282
217,026,691
553,905,198
221,629,549
2.48
0.96
2.45
0.98
Earnings per share Net profit for the year
23
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 38 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of changes in shareholders没 equity
Consolidated Issued and
Premium
paid up
Retained earnings (deficit)
on share capital Appropriated
share capital Notes
Beginning balance 2005 Retrospective adjustments
Appropriated legal reserve Increase in share capital
interest
Baht
Baht
Total
legal reserve
Baht
Baht
Baht
Baht
2,260,000,000
602,413,600
9,791,560
177,051,291
3,842,742
3,053,099,193
-
-
-
(50,614,474)
-
(50,614,474)
17
Beginning balance after correction
Minority
Unappropriated
2,260,000,000
602,413,600
9,791,560
126,436,817
3,842,742
3,002,484,719
19
-
-
27,695,260
(27,695,260)
-
-
27 (i)
-
-
-
-
42,171,715
42,171,715
-
-
-
561,344,282
1,074,525
562,418,807
Net profit Dividends paid Ending balance 2005
-
-
-
(90,400,000)
-
(90,400,000)
2,260,000,000
602,413,600
37,486,820
569,685,839
47,088,982
3,516,675,241
Consolidated Issued and
Premium
paid up
Retained earnings (deficit)
on share capital Appropriated
share capital
Retrospective adjustments
17
Beginning balance after correction Appropriated legal reserve Net profit Ending balance 2004 (Restated)
19
interest
Baht
Baht
Total
legal reserve
Baht
Beginning balance 2004
Minority
Unappropriated
Baht
Baht
Baht
2,260,000,000
602,413,600
-
(30,183,840)
2,858,758
2,835,088,518
-
-
-
(50,614,474)
-
(50,614,474)
2,260,000,000
602,413,600
-
(80,798,314)
2,858,758
2,784,474,044
-
-
9,791,560
(9,791,560)
-
-
-
-
-
217,026,691
983,984
218,010,675
2,260,000,000
602,413,600
9,791,560
126,436,817
3,842,742
3,002,484,719
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 39 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of changes in shareholders没 equity (Continued)
Company Issued and
Premium
paid up
Retained earnings (deficit)
on share capital Appropriated
share capital Notes
Beginning balance 2005 Retrospective adjustments
Appropriated legal reserve
Baht
Baht
Total
Baht
Baht
Baht
2,260,000,000
602,413,600
9,791,560
186,039,629
-
3,058,244,789
-
-
-
(50,614,474)
-
(50,614,474)
2,260,000,000
602,413,600
9,791,560
135,425,155
-
3,007,630,315
-
-
27,695,260
(27,695,260)
-
-
-
553,905,198
-
553,905,198
(90,400,000)
-
(90,400,000)
571,235,093
-
3,471,135,513
19
Net profit
-
-
Dividends paid
-
-
2,260,000,000
602,413,600
Ending balance 2005
interest
legal reserve
Baht
17
Beginning balance after correction
Minority
Unappropriated
37,486,820
Company Issued and
Premium
paid up
Retained earnings (deficit)
on share capital Appropriated
share capital
Beginning balance 2004 Retrospective adjustments
17
Beginning balance after correction Appropriated legal reserve Net profit Ending balance 2004 (Restated)
19
Unappropriated
Minority interest
Total
legal reserve
Baht
Baht
2,260,000,000
602,413,600
Baht
Baht Baht
-
Baht
(25,798,360)
-
2,836,615,240
-
-
-
(50,614,474)
-
(50,614,474)
2,260,000,000
602,413,600
-
(76,412,834)
-
2,786,000,766
-
-
9,791,560
(9,791,560)
-
-
-
-
-
221,629,549
-
221,629,549
2,260,000,000
602,413,600
9,791,560
135,425,155
-
3,007,630,315
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 40 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of cash flows Consolidated
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
561,344,282
217,026,691
553,905,198
221,629,549
-
-
(2,926,173)
(1,840,717)
(1,719,257)
(512,421)
-
-
-
-
11,390,294
-
6
(4,858,811)
5,500,088
(4,858,811)
5,500,088
7
39,635,411
-
39,635,411
-
17
2,990,052
7,200,000
2,990,052
7,200,000
2,403,690
600,000
2,403,690
600,000
-
(207,492)
-
(207,492)
(1,531,119)
(1,531,119)
(1,531,119)
(1,531,119)
-
440,540
-
224,485
336,267,102
337,724,334
336,017,392
337,453,734
(1,758,594)
929,243
(1,758,594)
929,243
5,581,400
21,218,479
5,581,400
21,218,479
Notes Cash flows from operating activities Net profit Items to reconcile net income to net cash: Share of (gain) loss from subsidiaries
8
Allowance for doubtful debts-other trade accounts receivable (reversal) - other parties - related parties
27 (v)
Allowance for shortage, slow-moving and obsolete stocks (reversal) Allowance for unrecoverable advances to supplier Provision for employee termination/ retirement benefits Provision for annual leave Inventory revaluation (gain) Amortization of deferred gain on hire purchase Withholding tax written-off Depreciation expenses
9
(Gain) loss on disposal of property, plant and equipment Impairment expenses
9
Property, plant and equipment written-off
9
Other assets written-off Other assets write-down (reversal) Other assets amortization expenses Provisions for restoration expense
16
248,029
1,941,652
248,029
1,941,652
6,213,470
38,512,731
6,213,470
38,512,731
6,000,000
(10,877,389)
6,000,000
(10,877,389)
12,901,884
12,619,575
12,901,884
12,619,575
34,657,914
10,702,136
33,149,591
10,702,136
Unrealized foreign currency exchange (gain) loss
(717,226)
(17,824,250)
(717,226)
(17,824,250)
Minority interest in net profit of subsidiaries
1,074,525
983,984
-
-
998,732,752
624,446,782
998,644,488
626,250,705
Cash flows from operations before changes in operating assets and liabilities
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 41 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of cash flows (Continued) Consolidated
Notes
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
(121,314,837)
-
(121,314,837)
-
(4,871,030)
3,045,100
(7,056,799)
5,344,239
(28,739,809)
4,754,465
(30,948,431)
4,861,629
Operating assets (increase) decrease Deposit Trade accounts receivable - other parties - related parties Short-term loans to related parties Inventories
-
-
(2,377,333)
(329,665)
(216,635,256)
220,372,282
(216,692,980)
220,350,559
Value added tax receivable
46,036,593
44,804,154
49,118,970
44,700,729
Other current assets
25,636,613
(64,582,724)
25,874,666
(64,481,862)
9,074,815
11,209,801
9,074,815
11,209,801
(189,227,154)
(88,312,034)
(189,758,538)
(87,982,662)
5,150,844
(10,049,562)
5,104,686
(93,913,767)
(677,748)
(224,140)
(677,748)
(224,140)
Other non-current assets
Operating liabilities increase (decrease) Trade accounts payable - other parties - related parties Accrued interest expenses - other parties - related parties
-
-
8,630
(78,904)
2,951,967
-
-
-
(26,504,545)
20,173,475
(26,504,545)
20,173,475
55,739,199
52,610,659
55,739,199
52,610,659
107,356,835
(38,054,115)
108,704,820
(37,479,588)
(13,944,217)
(29,306,937)
(13,944,217)
(29,306,937)
648,765,022
750,887,206
642,994,846
671,704,271
14
(11,061,405)
(11,061,405)
(11,061,405)
(11,061,405)
9
(164,284,068)
(189,653,571)
(164,268,811)
(189,554,011)
Advance from related party Accrued electricity expenses Royalty payable Other current liabilities Provision for restoration expenses (use of)
16
Net cash provided by operating activities Cash flows from investing activities Cash paid for land compensation Cash paid for purchase of property, plant and equipment Cash received from sales of property, plant and equipment Exploration and acquisition costs (increase) Net cash used in investing activities
2,840,622
3,256,776
2,840,622
3,256,776
(54,302,776)
(30,394,494)
(12,131,061)
(30,394,494)
(226,807,627)
(227,852,694)
(184,620,655)
(227,753,134)
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 42 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Statements of cash flows (Continued) Consolidated
Notes
Company
2005 Baht
Restated 2004 Baht
2005 Baht
Restated 2004 Baht
(108,099,635)
(517,961,223)
(108,099,635)
(517,961,223)
-
-
90,000,000
-
Cash flows from financing activities Loans from financial institution (decrease) Short-term loans from related parties increase
12 27 (vii)
Dividend payment
(90,239,264)
-
(90,239,264)
-
Proceeds from long-term borrowings
15
-
200,000,000
-
200,000,000
Payment on long-term borrowings
15
(102,500,000)
-
(102,500,000)
-
(4,572,481)
5,760,000
(4,572,481)
5,760,000
Account payable hire purchase (payment) Proceeds from issue of ordinary shares of subsidiary
42,171,715
-
-
-
(263,239,665)
(312,201,223)
(215,411,380)
(312,201,223)
788
(423,984)
788
(423,984)
Net increase (decrease) in cash and cash equivalents
158,718,518
210,409,305
242,963,599
131,325,930
Cash and cash equivalents at beginning of the year
441,677,104
231,267,799
325,879,711
194,553,781
Cash and cash equivalents at end of the year
600,395,622
441,677,104
568,843,310
325,879,711
21,220,045
21,042,539
21,668,810
26,091,805
1,066,130
2,889,038
199,283
78,682
-
5,760,000
-
5,760,000
Net cash (used in)/from financing activities Effects from changes in exchange rate for cash and cash equivalents
Supplementary information for statements of cash flows Cash paid during the year: Interest paid Tax paid Non-cash items Hire purchase payable
The notes to the consolidated and company financial statements on pages 43 to 66 are integral part of these financial statements.
Annual Report 2005 Padaeng Industry 43 Public Company Limited Padaeng Industry Public Company Limited and Subsidiaries For the years ended 31 December 2005 and 2004
Notes to the consolidated and company financial statements
1. General information Padaeng Industry Public Company Limited (the “Company”) was established on April 10, 1981 and has been listed on the Stock Exchange of Thailand since July 21, 1987. The company’s head office is at CTI Tower, 26th-27th floor, 191/18-25 Ratchadaphisek road, Khlong Toei district, Bangkok. The company operates a silicate mine and a zinc smelter located in Tak province and a calcine plant located in Rayong province. The principal business operations of the company and its subsidiaries are summarised as follows: Company Padaeng Industry Public Co., Ltd.
Principal activities Mining and refining of zinc, the main products are zinc ingot and zinc alloy
Subsidiaries
Principal activities
Padaeng Properties Co., Ltd.
Providing services
Puthep Co., Ltd.
Copper exploration
Padaeng Industry (Laos) Co., Ltd.
Zinc exploration and mining in Laos
Padaeng International Mining Co., Ltd.
Minerals exploration in Vietnam
Sila Enterprise Co., Ltd.
Distribution of limestones
South East Asia Metals Co., Ltd.
Distribution of various base metals and their by-products
During the year 2005 , the company employed 766 employees (2004: 746 employees). These consolidated and company financial statements have been approved for issue by the Board of Directors on 23 February 2006.
2. Significant accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below. 2.1
Basis of preparation The consolidated and company financial statements have been prepared in accordance 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 Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The accounting principles applied may differ from Generally Accepted Accounting Principles adopted in other countries and jurisdictions. The accompanying consolidated and company financial statements are therefore not intended to present the financial position and results of operations and cash flows in accordance with jurisdictions other than Thailand. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. As a result of the Federation of Accounting Profession (FAP) approval of three new accounting standards on 12 May 2005, the company has adopted TAS 52, ‘Events After Balance Sheet Date’, TAS 53, ‘Provisions, Contingent Liabilities, and Contingent Assets’ and TAS 54, ‘Discontinuing Operations’ since the second quarter of 2005. There is no significant impact to the financial statements from the adoption of these standards.
Annual Report 2005 Padaeng Industry 44 Public Company Limited
An English version of the consolidated and company financial statements has been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail. 2.2
Changes in accounting policy In 2005, the company changed its accounting policy to start recognising provisions for employee termination/
retirement benefits in accordance with Thai Labor laws. The effect of this change in accounting policy has been accounted for retrospectively. Accordingly, the comparative statements for 2004 have been restated to reflect adoption of the new policy. The company has recognised Baht 8.2 and 7.2 million in employee termination/retirement benefits for 2005 and 2004 respectively. Additionally, Baht 50,614,474 has been recognised in the opening 2004 retained earnings balance representing the costs to be recognised for prior periods (see Note 2.19 and Note 17). There is no requirement under Thai Accounting Standards to record these costs. 2.3
Use of estimates 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 disclosures 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. 2.4
Revenue recognition Sales are recognised when title to the goods sold passes to the buyer, which is at the time when the goods are
delivered to the customer or as contractually agreed. 2.5
Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid
investments, and bank overdrafts. Cash and cash equivalents denominated in foreign currencies are translated at the exchange rate ruling at the end of the year. 2.6
Trade receivables Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based
on a review of all outstanding amounts at the year-end. Bad debts are written off during the year in which they are identified. 2.7
Inventories Inventories are stated at the lower of cost or net realisable value. Cost is calculated on the weighted average cost
basis. The cost of work in progress and finished goods comprise raw materials costs (zinc sulphide concentrates and zinc silicates), direct conversion costs, and a proportion of manufacturing overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less estimated conversion costs and the estimated costs incurred to make the sale. Where net realisable value is less than cost, an allowance for the diminution in value of inventories has been provided. Spare parts and consumables are valued on the weighted average cost basis. Provisions are made, where necessary, for obsolete, slow moving and defective inventories based on a review of all outstanding amounts at the year-end. 2.8 Investments in subsidiaries Investments in subsidiaries are accounted for in the company (non-consolidated) financial statements by the equity method. Subsidiaries are those entities over which the company has over 50% of the voting rights, or over which the company exercises control. When necessary, provisions are recorded for any impairment in value of these investments. Equity accounting involves recognising in the income statement the company’s share of the subsidiary’s profit or loss for the year. The company’s interests in the subsidiaries are carried in the balance sheet at an amount that reflects its shares of the net assets of the subsidiaries and includes goodwill, if any, on acquisition. Additionally, all intercompany transactions, balances and unrealised gains are eliminated unless the loss cannot be recovered.
Annual Report 2005 Padaeng Industry 45 Public Company Limited
2.9
Consolidation Subsidiary undertakings, which are those companies in which the company, directly or indirectly, has over 50%
of the voting rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated (see Note 27(i)). Subsidiaries are consolidated from the date on which effective control is transferred to the company and are no longer consolidated from the date control ceases. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the company. Separate disclosure is made for minority interests in the consolidated balance sheet and consolidated income statement. The SET guideliness dated 8 May 1998, specify that the equity method is to be used to account for investments in subsidiaries that have accumulated losses exceeding their share capital, and that the consolidated financial statements recognise the full amount of a subsidiary’s losses (excluding the minority interest to the extent that they do not exceed the minority shareholders’ equity), that exceed the company’s investment in such subsidiaries. In the company (non-consolidated) financial statements, the company’s share of losses in subsidiaries are generally recognised only to the extent of the amount of the investment in the subsidiaries except where the company has a commitment and/or guarantees on behalf of the subsidiaries. The resumption of recognition of the company’s equity in profit will begin when the profit in such subsidiaries exceeds the company’s shares of previously unrecognised losses in excess of investment. Accordingly, the consolidated and the company’s financial statements do not present the same net income (loss) and shareholders’ equity. 2.10 Related companies Related companies are holding companies, subsidiaries, fellow subsidiaries, associates and other companies that are in the same company, including companies that are related by way of common directors, key management or shareholders. Transactions with related companies have been disclosed in Note 27. 2.11 Property, plant and equipment Carrying value: Property, plant and equipment are recorded at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. In the case of self-constructed assets, the cost of construction consists of the materials, direct labour and other expenses attributable to the construction which are allocated to the assets on a systematic basis. Property, plant and equipment, except land, are presented in the balance sheet at cost less accumulated depreciation. Land is not depreciated. Depreciation is calculated on a straight line method to write off the cost of each asset, or its revalued amount, to their residual values over their estimated useful life as follows: Years Land improvement Building Machinery and heavy equipment Equipment, furniture and fixtures and vehicles
5-20 20 - 25 8-20 5
Mining concession fees and expenses
5-16
Other structures
8-25
Residue ponds brought into operation after 1 January 2001 are amortised on units of production basis using the capacity volume of the residue ponds. Finance lease assets are recorded as assets and depreciated over their estimated useful life. When the company disposes of property, plant and equipment, the company will write-off both the asset and its related accumulated depreciation, and recognise any gain or loss from disposal of the assets through the statement of income.
Annual Report 2005 Padaeng Industry 46 Public Company Limited
Capital expenditures which result in the acquisition of assets, or results in an increase in capacity, useful life or improves the operating efficiency of existing assets and that are expected to provide future economic benefits, are capitalised. Where the carrying amount of an asset exceeds its estimated recoverable amount, it is written down immediately to its recoverable amount through recording an impairment charge. 2.12 Exploration costs Exploration is accumulated separately for each area of interest and accounted using the successful efforts basis of accounting for such costs. Under this basis, accumulated costs of exploration are capitalized and carried forward on the balance sheet where one or both of the following conditions are met: -
Costs are expected to be recouped through successful development and exploitation of each area of interest or by sale of the area of interest; and/or
-
Exploration activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence of economically recoverable reserves and exploration activities are continuing in the area of interest.
Upon commencement of development and production, these costs are amortised using the straight line basis over the period that it is expected to provide economic benefits. Expenditure which no longer satisfies the above policy is written-off or an allowance raised against such expenditure where management is of the opinion that the carried forward net cost may not be recoverable. 2.13 Environmental restoration costs Expenditures relating to ongoing environmental restoration programs are charged against earnings as incurred. Where future costs relating to environmental liabilities have arisen as a result of past events, the company establishes a provision over the period in which the obligation is incurred, which is over the useful life of the related asset. These provisions are made on an undiscounted basis. Hence, the estimated restoration costs of the Mae Sot mine are accrued over the life of the mine. The estimated restoration costs for the residue ponds located at the Tak zinc smelter facility are accrued over the useful life of the residue ponds. 2.14 Provisions Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. 2.15 Deferred income taxes The company does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. The accounting standard for deferred income taxes is currently not in effect in Thailand. 2.16 Foreign currency transactions Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Such balances are translated at year-end exchange rates. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets, and liabilities denominated in foreign currencies, are recognised in the statement of income. 2.17 Financial instruments Financial assets and liabilities carried on the balance sheet include cash and cash equivalents, trade accounts receivable, related party receivables and payables, bank overdraft, trade accounts payable, accrued expenses and loans. The company enters into derivative financial instruments that reduce its exposure to fluctuations in foreign currency exchange rates with respect to recognised foreign currency assets or liabilities. The derivative instruments comprise forward foreign exchange contracts, protecting the company from movements of foreign currency exchange rates
Annual Report 2005 Padaeng Industry 47 Public Company Limited
by establishing the rate at which a foreign currency asset or liability will be realised or settled. Such forward contracts are recorded initially on the balance sheet at cost. Subsequently, they are measured at fair value and any related gains or losses (realized or unrealized) are recognised in current period income. The fair values of the contracts are based on closing exchange quotations. The company also enters into forward derivative contracts to protect the company from movements in zinc metal prices and foreign exchange rate changes related to forecasted production, purchases and sales of zinc. Those instruments comprise forward contracts for the sale and purchase of zinc metal and foreign currencies to enable the company to establish the prices of forecasted zinc metal sales and purchases. Such derivatives are not recognised on balance sheet at inception, since they relate to future transactions (or underlyings) which are not yet reflected in the financial statements. Gains and losses on those derivative contracts are recognised in the financial statements upon settlement of the transactions (see Note 30). 2.18 Leases-where a group company is the lessee Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease 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 to the statement of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.19 Provision for employee termination/retirement benefits In 2005 the company began recognising the costs of employee termination/retirement benefits payable in accordance with Thai Labor law. The amount of termination/retirement benefits are recorded based on an actuarial valuation completed based on employee wages, turnover, retirement ages, mortality, length of service and other factors in place at the end of the period. (The effect of adoption of this policy is shown in Note 2.2 and Note 17)
3. Cash and cash equivalents Cash and cash equivalents as at 31 December 2005 and 2004 comprise: Consolidated
Company Restated
2005 Cash on hands and deposits with banks Promissory note/bill of exchange Total
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
600,395,622
336,677,104
568,843,310
220,879,711
-
105,000,000
-
105,000,000
600,395,622
441,677,104
568,843,310
325,879,711
The average interest rates on deposits and short-term investments are in the range of 0.25% - 3.55%.
4. Deposit The company has on deposit Baht 121,314,837 with commodity brokers to support the company’s hedging activities on the London Metal Exchange. The company earns the prevailing short-term market interest rate on these US dollar deposits (see Note 30).
Annual Report 2005 Padaeng Industry 48 Public Company Limited
5. Trade accounts receivable-net Consolidated
Company Restated
2005 Trade accounts receivable Less : Allowance for doubtful accounts Trade accounts receivable, net
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
242,894,492
238,081,163
235,211,850
228,212,752
(1,150,329)
(2,985,484)
-
(115,898)
241,744,163
235,095,679
235,211,850
228,096,854
6. Inventories-net Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Raw materials
853,331,805
253,334,062
853,331,805
253,334,062
Spare parts and consumables
243,007,464
232,605,769
243,007,464
232,605,769
Goods in transit
2,405,399
330,372,305
2,405,399
330,372,305
Work in process
234,447,785
286,353,641
234,447,785
286,353,641
Finished goods
227,206,282
241,097,701
227,206,282
241,039,978
1,560,398,735
1,343,763,478
1,560,398,735
1,343,705,755
(31,786,120)
(36,644,931)
(31,786,120)
(36,644,931)
1,528,612,615
1,307,118,547
1,528,612,615
1,307,060,824
Less : Allowance for obsolete and slow moving inventories Inventories, net
7. Other current assets Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
- principal
35,071,032
37,719,189
35,071,032
37,719,189
- interest
4,564,379
1,827,400
4,564,379
1,827,400
Advances to supplier
Import tax Others Allowance for doubful accounts Total
363,274
28,817,579
363,274
28,817,579
18,009,956
17,784,405
17,497,258
17,509,759
58,008,641
86,148,573
57,495,943
85,873,927
(39,635,411)
-
(39,635,411)
-
18,373,230
86,148,573
17,860,532
85,873,927
Annual Report 2005 Padaeng Industry 49 Public Company Limited
8. Investments in subsidiaries-net Subsidiaries
Consolidated
Company Restated
Opening net book amount
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
-
-
358,934,364
357,093,647
Share of results before tax
-
-
3,947,232
5,513,569
Share of tax
-
-
(1,021,059)
(3,672,852)
Net share of results
-
-
2,926,173
1,840,717
Increase in share capital (Note 27(i))
-
-
73,442
-
Closing net book amount
-
-
361,933,979
358,934,364
Net equity in principal subsidiary companies are shown in Note 27 (i).
9. Property, plant and equipment-net Consolidated Building and Land and
Machinery
Equipment,
land
and heavy
furniture,
machinery Other
under
improvement
Building
equipment
and fixtures
Vehicles
structures construction
Baht
Baht
Baht
Baht
Baht
Baht
Baht
Total Baht
447,288,523
626,603,845
1,226,066,188
32,549,376
35,455,686
9,699,847
49,431,030
2,427,094,495
At 31 December 2004 Net book amount Year ended 31 December 2005 Opening balance
447,288,523
626,603,845
1,226,066,188
32,549,376
35,455,686
9,699,847
49,431,030
2,427,094,495
Additions
-
-
-
1,892,705
-
-
162,391,363
164,284,068
Transfers
11,805,782
6,777,494
100,349,783
20,163,259
23,494,121
Disposals
-
-
(512,093)
(38,616)
(531,318)
Write-offs Closing book amount
18,000 (162,608,439) -
-
(1,082,027)
-
-
-
(42,753)
(205,276)
-
-
(248,029)
459,094,305
633,381,339
1,325,903,878
54,523,971
58,213,213
9,717,847
49,213,954
2,590,048,507
(19,613,069)
(71,267,184)
(208,818,545)
(20,860,871)
(10,671,706)
(5,035,727)
-
(336,267,102)
Less: Depreciation expense
Provision for impairment (formed) released
-
-
(5,373,052)
53,188
(261,536)
-
-
(5,581,400)
Closing net book amount 439,481,236
562,114,155
1,111,712,281
33,716,288
47,279,971
4,682,120
49,213,954
2,248,200,005
1,567,263,230
4,487,863,842
365,716,633
194,361,605
30,910,695
49,213,954
7,369,684,534
At 31 December 2005 Cost
674,354,575
Less: Accumulated depreciation
(231,564,595) (1,005,036,689) (3,211,508,282) (327,814,654)
(146,636,977) (26,228,575)
- (4,948,789,772)
Accumulated provision for impairment Net book amount
(3,308,744)
(112,386)
(164,643,279)
(4,185,691)
(444,657)
-
-
(172,694,757)
439,481,236
562,114,155
1,111,712,281
33,716,288
47,279,971
4,682,120
49,213,954
2,248,200,005
Annual Report 2005 Padaeng Industry 50 Public Company Limited
Company Building and Land and
Machinery
Equipment,
land
and heavy
furniture,
machinery Other
under
improvement
Building
equipment
and fixtures
Vehicles
Baht
Baht
Baht
Baht
Baht
structures construction Baht
Baht
Total Baht
450,798,461
626,603,845
1,226,066,188
32,274,232
35,032,167
9,699,847
49,431,030
2,429,905,770
At 31 December 2004 Net book amount Year ended 31 December 2005 Opening balance
450,798,461
626,603,845
1,226,066,188
32,274,232
35,032,167
9,699,847
49,431,030
2,429,905,770
Additions
-
-
-
1,877,448
-
-
162,391,363
164,268,811
Transfers
11,805,782
6,777,494
100,349,783
20,163,259
23,494,121
Disposals
-
-
(512,093)
(38,616)
(531,318)
Write-offs
18,000 (162,608,439) -
-
-
(1,082,027)
-
-
-
(42,753)
(205,276)
-
-
(248,029)
462,604,243
633,381,339
1,325,903,878
54,233,570
57,789,694
9,717,847
49,213,954
2,592,844,525
(19,613,069)
(71,267,184)
(208,818,545)
(20,783,984)
(10,498,883)
(5,035,727)
-
(336,017,392)
-
-
(5,373,052)
53,188
(261,536)
-
-
(5,581,400)
Closing net book amount 442,991,174
562,114,155
1,111,712,281
33,502,774
47,029,275
4,682,120
49,213,954
2,251,245,733
677,864,513 1,567,263,230
4,487,863,842
364,132,487
192,670,737
30,910,695
49,213,954
7,369,919,458
Closing book amount Less: Depreciation expense
Provision for impairment (formed) released
At 31 December 2005 Cost Less: Accumulated depreciation
(231,564,595) (1,005,036,689) (3,211,508,282) (326,444,023)
(145,196,804) (26,228,575)
- (4,945,978,968)
Accumulated provision for impairment Net book amount
(3,308,744)
(112,386)
(164,643,279)
(4,185,691)
(444,657)
-
-
(172,694,757)
442,991,174
562,114,155
1,111,712,281
33,502,773
47,029,276
4,682,120
49,213,954
2,251,245,733
Provision for asset impairment Asset impairment charges represent a write-down in the book value of assets which exceed their estimated recoverable amount based on a review of each asset’s respective value in use. Changes in impairment provision movement are shown as follows: Consolidated
Company Restated
Opening balances Provision for impairment Reversal from disposals/write-off’s Ending balances
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
167,113,357
145,894,878
167,113,357
145,894,878
5,634,588
21,846,336
5,634,588
21,846,336
(53,188)
(627,857)
(53,188)
(627,857)
172,694,757
167,113,357
172,694,757
167,113,357
Annual Report 2005 Padaeng Industry 51 Public Company Limited
10. Exploration and acquisition costs Exploration and acquisition costs balance comprise: Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
175,134,679
178,599,198
28,203,698
31,668,217
Exploration costs Opening balance for the year
66,407,670
30,551,531
24,235,956
30,551,531
Expenditure charged to the statement of income (12,104,895)
Expenditure incurred during the year
(21,136,981)
(12,104,895)
(21,136,981)
Expenditure transferred to mine properties Expenditure written-down Ending balance of the year (Note 10 (i))
-
-
-
-
(12,213,470)
(12,879,069)
(12,213,470)
(12,879,069)
217,223,984
175,134,679
28,121,289
28,203,698
60,000,000
100,900,000
60,000,000
100,900,000
-
(40,900,000)
-
(40,900,000)
(13,333,344)
(6,666,672)
(13,333,344)
(6,666,672)
46,666,656
53,333,328
46,666,656
53,333,328
16,986,510
16,986,510
-
-
9,730,567
11,434,795
9,730,567
11,434,795
Mining acquisition costs Capitalized deferred cost Opening balance for the year Acquisition cost write-off Accumulative depletion Ending balance for the year Special prospect licence fee Land use compensation Other capitalized expenditure
15,612,031
20,143,015
15,612,031
20,143,015
Ending balance for the year
88,995,764
101,897,648
72,009,254
84,911,138
306,219,748
277,032,327
100,130,543
113,114,836
Total i)
Exploration costs Exploration costs are mainly related to those incurred by a subsidiary, Puthep Co., Ltd. At the date of these
statements, exploration activities had not established whether economically recoverable resources existed in the area. In accordance with the company’s accounting policy for exploration, such costs will remain capitalized until final determination of whether economically recoverable resource exists. On 21 August 2000, the company and Puthep Co., Ltd. entered into a Participation Agreement (the “Agreement”) with Pan Australian Resources N.L. and PNA (Puthep) Pty Limited of Australia (“PNA”) to undertake exploration and mining of Puthep Copper Project. Under the Agreement, PNA has the right to a 51% working interest in the Puthep Project in north-east Thailand by completing a feasibility study to a bankable standard. The Agreement also includes further options for PNA to acquire a total interest of either 60% or 70%. PNA completed the expenditure requirements of the First Earning Period of the Participation Agreement (US$ 1 million or Baht 42 million) in April 2003 and has complied with all other requirements under the Participation Agreement. Accordingly, in June 2005, PNA obtained, through a capital increase, a 20.66% ownership interest in Puthep Co., Ltd. (Note 27 (i)) PNA must spend a further US$ 1 million to attain approximately a further 15% interest in Puthep Co., Ltd.
Annual Report 2005 Padaeng Industry 52 Public Company Limited
11. Other non-current assets Other non-current assets as at 31 December 2005 and 2004 comprise: Consolidated
Company Restated
Deposits Others
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
774,311
1,230,511
719,311
1,175,511
5,283,216
11,753,342
5,283,216
11,753,342
6,057,527
12,983,853
6,002,527
12,928,853
Deposits and installment payments for condominium units
74,932,723
74,932,723
-
-
Less: Allowance for doubtful accounts
(74,932,723)
(74,932,723)
-
-
6,057,527
12,983,853
6,002,527
12,928,853
Total
Deposits and installment payment for condominium units A subsidiary has provided an allowance of Baht 75 million with respect to deposit and installment payments for certain condominium units whose construction was suspended due to unfavorable economic conditions. Others The company has long-term investments in the amount of Baht 14,451,626 that have been fully written down in value.
12. Loans from financial institutions Loans from financial institutions as at 31 December 2005 and 2004 comprise: Consolidated
Company Restated
Promissory notes Trust receipts Total
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
175,719,606
-
175,719,606
-
-
283,819,241
-
283,819,241
175,719,606
283,819,241
175,719,606
283,819,241
The company has entered into short-term financing arrangements to fund its operations with various financial institutions. The interest rates, the company is paying on the promissory notes and trust receipts, are in the range of 5.22% - 5.25%
13. Other current liabilities Other current liabilities as of 31 December 2005 and 2004 comprise: Consolidated
Company Restated
2005 Accrued expenses Accrued inventory purchases Others Total
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
24,515,881
26,934,993
24,515,881
26,934,993
164,582,245
65,942,840
164,582,245
65,942,840
62,916,060
52,264,600
55,001,124
43,001,681
252,014,186
145,142,433
244,099,250
135,879,514
Annual Report 2005 Padaeng Industry 53 Public Company Limited
Accrued inventory purchases represents changes in liability for unpriced raw material inventory shipments due to fluctuations in the quoted market price of the inventory.
14. Payable for land use compensation The company is required to compensate the Department of Forestry an amount of Baht 58 million as compensation for the use of forest areas. An amount of Baht 25 million was paid during the year 2002. The outstanding balance of Baht 33 million is being repaid annually since January 2003. The final payment was paid in May 2005. As at 31 December 2005 and 2004, outstanding amounts due for land use compensation comprise: Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Due within one year
-
11,061,405
-
11,061,405
More than one year
-
-
-
-
Total
-
11,061,405
-
11,061,405
Consolidated
Company Restated
Payable for land use compensation Less: Payment during the year Total
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
11,061,405
22,122,810
11,061,405
22,122,810
(11,061,405)
(11,061,405)
(11,061,405)
(11,061,405)
-
11,061,405
-
11,061,405
15. Long-term loans Long-term loans as at 31 December 2005 and 2004 comprise: Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Due within one year
467,500,000
102,500,000
467,500,000
102,500,000
More than one year
80,000,000
547,500,000
80,000,000
547,500,000
547,500,000
650,000,000
547,500,000
650,000,000
Total
The movements in the borrowings can be analyzed as follows: Consolidated
Company Restated
For the year ended 31 December Opening amount New loan agreements Repayment of loans Closing amount
2005
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
650,000,000
450,000,000
650,000,000
450,000,000
-
200,000,000
-
200,000,000
(102,500,000)
-
(102,500,000)
-
547,500,000
650,000,000
547,500,000
650,000,000
Annual Report 2005 Padaeng Industry 54 Public Company Limited
In August 2003, the company entered into unsecured 3-years bill of exchange agreements for Baht 200 million through a local bank. In November 2003, the company entered into 2 unsecured loan agreements for the total amount of Baht 600 million with two local banks to refinance existing long-term loans. The repayment schedules are up to 3 years from the drawdown date of the loans. These facilities have been contracted at a market rate of interest which is in the range of 2.5% to 3%. i)
Financing arrangements available Consolidated
Company Restated
Bank overdraft Promissory notes/short-term loans Bank guarantee Packing credit Long-term loans Total ii)
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
60,000,000
60,000,000
60,000,000
60,000,000
1,882,619,000
1,888,240,000
1,882,619,000
1,888,240,000
568,873,000
523,810,000
568,873,000
523,810,000
-
60,000,000
-
60,000,000
650,000,000
650,000,000
650,000,000
650,000,000
3,161,492,000
3,182,050,000
3,161,492,000
3,182,050,000
At balance sheet date, the following had been drawn down under the above facilities: Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
175,719,606
-
175,719,606
-
-
283,819,241
-
283,819,241
Long-term loans
547,500,000
650,000,000
547,500,000
650,000,000
Total
723,219,606
933,819,241
723,219,606
933,819,241
Promissory notes Trust receipts
16. Provisions for restoration expense Consolidated
Company Restated
Balance at the beginning of the year
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
21,543,364
40,148,165
21,543,364
40,148,165
Additional provisions charged to the statement of income Amounts utilised Balance at the end of the year
34,657,914
10,702,136
33,149,591
10,702,136
(13,944,217)
(29,306,937)
(13,944,217)
(29,306,937)
42,257,061
21,543,364
40,748,738
21,543,364
Annual Report 2005 Padaeng Industry 55 Public Company Limited
The provision for restoration costs represent amounts provided for the estimated costs of restoration of residual ponds at Tak and the tailing dam and rehabilitation of the mined area in Mae Sot in accordance with government regulations and creation of a community fund as per decision of the Board. In line with its previously announced community service commitments, the company has set aside a fund for the Mae Sot community development in the amount of Baht 10 million. That fund will be used exclusively for the benefit of the community around the mine by supporting various development projects.
17. Provision for employee termination/retirement benefits Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Balance at the beginning of the year
57,814,474
-
57,814,474
-
Retrospective provision adjustments
-
50,614,474
-
50,614,474
57,814,474
50,614,474
57,814,474
50,614,474
8,244,672
7,200,000
8,244,672
7,200,000
A current period provision Provision used
(5,254,620)
-
(5,254,620)
-
Severance provision at year end
60,804,526
57,814,474
60,804,526
57,814,474
In 2005, the company has begun recording the costs of employee termination/retirement benefits in accordance with Thai Labor laws. The amount of provision recognised is based on an actuarial valuation computed using factors based on employee wages, turnover, retirement ages, mortality, length of service and others. The company has applied this policy retrospectively and accordingly opening retained earnings of 2004 have been adjusted to reflect the restatement of previously issued financial statements.
18. Share capital and premium on share capital Number of As at 31 December 2004
Ordinary
Shares
shares
premium
Total
shares
Baht
Baht
Baht
226,000,000
2,260,000,000
602,413,600
2,862,413,600
Movement during the year
-
-
-
-
As at 31 December 2005
226,000,000
2,260,000,000
602,413,600
2,862,413,600
As at 31 December 2005, the total authorized number of ordinary shares is 226,000,000 shares (2004: 226,000,000 shares) with a par value of Baht 10 per share (2004: Baht 10 per share). All issued shares are fully paid.
Annual Report 2005 Padaeng Industry 56 Public Company Limited
19. Legal reserve Consolidated
Company Restated
As at 31 December 2004
2005
2004
Baht 9,791,560
Restated 2005
2004
Baht
Baht
Baht
-
9,791,560
-
Appropriation during the year
27,695,260
9,791,560
27,695,260
9,791,560
As at 31 December 2005
37,486,820
9,791,560
37,486,820
9,791,560
Under the Public Companies 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 reaches 10% of the registered capital.
20. Selling and administrative expenses The following expenditures, classified by nature, have been charged against the selling and administrative expenses: Consolidated
Company Restated
2005
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
77,554,955
65,139,177
77,554,955
65,139,177
Impairment expenses (Note 9)
5,581,400
21,218,479
5,581,400
21,218,479
Bad debt expense (reversal)
(115,898)
-
(115,898)
-
-
-
11,390,295
-
39,635,411
-
39,635,411
-
(4,858,811)
5,500,089
(4,858,811)
5,500,089
8,244,672
7,200,000
8,244,672
7,200,000
Freight and transportation costs
Write off receivable from related companies Allowance for doubtful account expenses (advance to supplier) Allowance for obsolete and slow moving inventories (reversal) (Note 6) Provision for employee termination/retirement benefits (Note 17)
21. Dividend On 26 April 2005 the shareholders at the Annual General Meeting passed a resolution to declare a dividend for the year 2004 Baht 0.40 per share totalling Baht 90,400,000 for the shareholders as at the closing date on 9 May 2005. The dividend was paid on 25 May 2005.
22. Finance costs-net Finance costs relate to the following: Consolidated
Company Restated
For the year ended 31 December
2005
2004
Restated 2005
2004
Baht
Baht
Baht
Baht
9,992,961
4,088,462
10,032,297
4,078,691
Interest expense
(26,249,430)
(30,613,995)
(26,706,827)
(31,495,896)
Total finance costs-net
(16,256,469)
(26,525,533)
(16,674,530)
(27,417,205)
Interest income
Annual Report 2005 Padaeng Industry 57 Public Company Limited
23. Basic earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Consolidated
Company Restated
For the year ended 31 December
Restated
2005
2004
2005
2004
561,344,282
217,026,691
553,905,198
221,629,549
226,000,000
226,000,000
226,000,000
226,000,000
2.48
0.96
2.45
0.98
Net profit attributable to common shareholders (Baht) Weighted average number of ordinary shares on issue (Shares) Basic earnings per share (Baht)
There are no potential dilutive ordinary shares in issue for the years presented and no diluted earning per share is presented.
24. Bank guarantee issued by banks As at 31 December 2005 the company and subsidiaries have given letters of guarantee in the ordinary course of business issued by banks of approximately Baht 375.83 million (2004: Baht 231.36 million).
25. Capital expenditure and commitments As at 31 December 2005 and 2004, the company has the following commitments for the acquisition of plant and equipment that have been contracted but not recorded as liabilities: Consolidated
Company Restated
Not later than 1 year Later than 1 year Total
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
5,767,384
52,375,405
5,767,384
52,375,405
-
-
-
-
5,767,384
52,375,405
5,767,384
52,375,405
As at 31 December 2005 and 2004, the company has the following commitments for the purchase of raw materials that have been contracted but not recorded as liabilities: Consolidated
Company Restated
Not later than 1 year Later than 1 year Total
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
2,630,146,241
1,578,974,225
2,630,146,241
1,578,974,225
-
573,220,954
-
573,220,954
2,630,146,241
2,152,195,179
2,630,146,241
2,152,195,179
26. Segment information The company produces a single product produced in Thailand for both domestic and export markets, utilizing the same assets. The company does not present segment information as it considers its business operations to be in one segment.
Annual Report 2005 Padaeng Industry 58 Public Company Limited
27. Related party transactions The company’s major shareholder is Umicore in Belgium which owns approximately 46.90% of the company’s outstanding shares. The remaining shares are widely held. i)
Investments in subsidiaries Details of investments in subsidiaries are as follows: Company
Company
31 December 2005
31 December 2004 (Restated)
Paid up
%
Carrying
Paid up
%
capital
Ownership
Cost
value
capital
Ownership
Cost
Carrying value
Baht
investment
Baht
Baht
Baht
investment
Baht
Baht
Co., Ltd.
80,000,000
100
80,000,000
33,865,582
80,000,000
100
80,000,000
33,050,737
Puthep Co., Ltd.
183,575,800
79.34
145,650,772
162,205,203
145,584,742
100
145,584,742
161,926,604
5,000,000
100
5,000,000
-
5,000,000
100
5,000,000
-
100,000
100
100,000
-
100,000
100
100,000
-
9,000,000
55
4,950,000
5,944,613
9,000,000
55
4,950,000
4,696,684
200,000,000
100
200,000,000
159,918,581
200,000,000
100
200,000,000
159,260,339
435,700,772
361,933,979
435,634,742
358,934,364
Subsidiaries Padaeng Properties
Padaeng Industry (Laos) Co., Ltd. Padaeng International Mining Co., Ltd. Sila Enterprise Co., Ltd. South East Asia Metals Co., Ltd.
All subsidiaries are incorporated in Thailand except Padaeng Industry (Laos) Co., Ltd. On 18 March 2005, the shareholders at the Extraordinary Shareholders’ Meeting passed a resolution to approve an increase in the authorised share capital of Puthep Co., Ltd. from 2,348,142 ordinary shares with a par value of Baht 62 per share to 2,960,900 ordinary shares with a par value of Baht 62 per share. On 28 June 2005, Puthep Co., Ltd. received subscriptions of 612,759 additional shares at Baht 62 par value at a price of Baht 68.82 per share. As a result, the paid-up share capital and premium on share capital totalled Baht 37,991,058 and Baht 4,254,099, respectively. Puthep Co., Ltd. registered the increased share capital with the Ministry of Commerce on 29 June 2005 see Note 10 (i). The impact of this transaction to minority shareholder was Baht 42,171,715. In August 2005, the Board of Directors passed a resolution to complete the liquidatation process of Padaeng International Mining Co., Ltd.
Annual Report 2005 Padaeng Industry 59 Public Company Limited
ii)
Sales of goods and services Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Sales of goods and services: Sila Enterprise Co., Ltd. Umicore
-
-
10,066,304
8,536,508
518,461,054
402,547,355
518,461,054
402,547,355
-
31,876,530
-
31,876,530
140,330,849
68,267,322
140,330,849
68,267,322
-
1,283
-
1,283
Umicore Marketing Services (Far East) Ltd. Umicore Marketing Services (Thailand) Co.,Ltd. Umicore Precious Metal (Thailand) Co., Ltd.
Sales to related companies are based on industry market price. iii) Purchases of goods and services Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
-
-
1,386,714
1,524,141
Purchases of goods and services: Padaeng Properties Co., Ltd. Padaeng Industry (Laos) Co., Ltd. Umicore
-
-
3,595,455
2,956,839
12,096,723
677,921
12,096,723
677,921
38,597,361
22,441,907
38,597,361
22,441,907
-
1,154,474
-
1,154,474
1,673,003
-
1,673,003
-
Umicore Marketing Services (Thailand) Co.,Ltd. Umicore Marketing Services (Far East) Ltd. Umicore Enginerring S.A.
Purchases from the subsidiary company are based on industry market price.
Annual Report 2005 Padaeng Industry 60 Public Company Limited
iv) Outstanding balances arising from sales/purchases of goods and services Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Receivables from related parties: Sila Enterprise Co., Ltd. Umicore
-
-
2,798,016
589,394
32,401,827
9,786,330
32,401,827
9,786,330
-
12,792,474
-
12,792,474
18,943,758
-
18,943,758
-
51,345,585
22,578,804
54,143,601
23,168,198
Umicore Marketing Services (Far East) Ltd. Umicore Marketing Services (Thailand) Co.,Ltd. Total
Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
-
-
63,552
109,710
981,037
418,682
981,037
418,682
Payables to related parties: Padaeng Properties Co., Ltd. Umicore Umicore Marketing Services (Thailand) Co.,Ltd. Total v)
4,983,788
395,299
4,983,788
395,299
5,964,825
813,981
6,028,377
923,691
Short-term loans and advances to related parties-net Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
Padaeng Industry (Laos) Co., Ltd.
-
-
11,390,294
9,012,962
Puthep Co., Ltd.
-
-
1,650,063
1,723,505
Padaeng International Mining Co., Ltd.
-
-
244,800
244,800
-
-
13,285,157
10,981,267
-
-
(11,436,894)
(46,600)
-
-
1,848,263
10,934,667
Less: Allowance for doubtful accounts Short-term loans and advances to related parties, net
The outstanding balance from Padaeng Industry (Laos) Co., Ltd. totalling Baht 11.3 million mainly comprises a Baht 7.0 million loan advance which bear an interest rate of MLR plus 5%. The remaining Baht 4.3 million comprises accrued interest.
Annual Report 2005 Padaeng Industry 61 Public Company Limited
vi) Advance from related party Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
PNA (Puthep) Pty Limited of Australia Begining balance
-
-
-
-
Advance increases during the year
2,951,967
-
-
-
Ending balance
2,951,967
-
-
-
vii) Loans from related parties Consolidated
Company Restated
Restated
2005
2004
2005
2004
Baht
Baht
Baht
Baht
South East Asia Metals Co., Ltd. Beginning balance
-
-
90,000,000
90,000,000
Loans increase during the year
-
-
90,000,000
-
Ending balance
-
-
180,000,000
90,000,000
Accrued interest expenses
-
-
166,438
157,808
As at 31 December 2005, the above mentioned loan from South East Asia Metals Co., Ltd. is an unsecured 1 month term promissory note at an interest rate of 2.8125 % .
28. Investment promotion certificates The company has been granted certain rights and privileges as a promoted industry under the Investment Promotion Act of B.E. 2520 (1977). Under these privileges, the company has received exemption from certain taxes and duties as detailed in the certificates including exemption from corporate income tax for a period of 8 years from the commencement of commercial operations or as specified in the certificate. The following certificates are in force: Zinc Ingot : Investment Promotion certificate No. 1575/2539 (1996) As a promoted industry, the company must comply with the terms and conditions as specified in the promotion certificates. Shareholders of the company will be exempt from tax on the dividends received during the period in which the company is granted exemption from corporate income tax.
29. Revenue reporting of a promoted industry Based on the Announcement of the Board of the Investment No. PO 14/2541 (1998) dated December 30, 1998 regarding revenue reporting of a promoted industry, the company is required to report revenue from local sales and export sales separately and to report separately promoted and non-promoted business. The required information is as follows:
Annual Report 2005 Padaeng Industry 62 Public Company Limited
Company For the year ended December 31, 2005
Promoted
Non-promoted
business
business
Total
Baht
Baht
Baht
-
842,914,315
842,914,315
3,272,968
5,292,331,598
5,295,604,566
3,272,968
6,135,245,913
6,138,518,881
Income Income from export sales Income from local sales Total income from sales Interest income
-
10,032,297
10,032,297
Other income
-
18,608,802
18,608,802
Total income
3,272,968
6,163,887,012
6,167,159,980
For the year ended December 31, 2004
Promoted
Non-promoted
business
business
Total
Baht
Baht
Baht
125,904,670
631,722,595
757,627,265
Company
Income Income from export sales Income from local sales Total income from sales
861,008,834
4,045,091,453
4,906,100,287
986,913,504
4,676,814,048
5,663,727,552
Interest income
-
4,078,691
4,078,691
Other income
-
17,649,030
17,649,030
986,913,504
4,698,541,769
5,685,455,273
Total income
30. Risk management policy for assets and liabilities in foreign currencies 30.1 Significant assets and liabilities in foreign currencies As at 31 December 2005: Term of
Consolidated
Company
Amount
Amount
receipt/ payment Cash at banks Accounts receivable-foreign
(days)
USD
Baht
USD
Baht
-
5,863
240,273
5,863
240,273
15
Deposit
1,174,119
48,118,449
1,174,119
48,118,449
2,960,155
121,314,837
2,960,155
121,314,837
Forward contract payable
30-120
3,228,556
132,528,934
3,228,556
132,528,934
Forward contract receivable
30-120
2,935,908
120,639,626
2,935,908
120,639,626
Trust receipts/promissory notes
30-130
4,246,549
174,849,956
4,246,549
174,849,956
30-90
3,080,127
126,822,997
3,080,127
126,822,997
30
6,071,450
236,729,822
6,071,450
236,729,822
30
6,071,450
249,812,954
6,071,450
249,812,954
Accounts payable Realized forward contract payable for zinc metal price Realized forward contract receivable for zinc metal price
Annual Report 2005 Padaeng Industry 63 Public Company Limited
Term of
Amount
receipt
EUR
Baht
EUR
Baht
Forward contract receivable
30-60
55,851
2,712,768
55,851
2,712,768
Accounts payable
30-90
46,978
2,299,577
46,978
2,299,577
Payment Accounts payable
Amount
SGD
Baht
SGD
Baht
30-90
594
14,747
594
14,747
Amount
Amount
(days)
AUD
Baht
AUD
Baht
30-90
22,849
693,624
22,849
693,624
Payment Accounts payable
Amount
(days)
Payment Accounts payable
Amount
Amount
Amount
(days)
GBP
Baht
GBP
Baht
30-90
7,280
517,991
7,280
517,991
As at 31 December 2004: Term of
Consolidated
Company
receipt/ payment (days) Cash at banks
Amount USD
Amount Baht
USD
Baht
-
5,765
224,920
5,765
224,920
Accounts receivable-foreign
15
926,633
36,152,309
926,633
36,152,309
Forward contract receivable
30-180
5,014,455
195,896,842
5,014,455
195,896,842
Forward contract payable
10-180
2,540,812
99,202,872
2,540,812
99,202,872
Trust receipts
30-130
7,239,825
283,819,240
7,239,825
283,819,240
30-90
8,330,752
326,586,305
8,330,752
326,586,305
Accounts payable
Term of Forward contract receivable
Amount
receipt
EUR
Baht
EUR
Baht
1-30
107,168
5,696,224
107,168
5,696,224
Payment Accounts payable
Amount
Amount
Amount
(days)
SEK
Baht
SEK
Baht
30-90
110,880
652,751
110,880
652,751
Foreign currency amounts are translated by using the reference rate quoted by the Bank of Thailand and Commercial Bank as at 31 December 2005 and 2004, respectively.
Annual Report 2005 Padaeng Industry 64 Public Company Limited
30.2 Risk management and hedging instruments The majority of the company’s price quotations of zinc related transactions are based in US dollars. In this respect, the company is exposed to foreign currency fluctuations relating to export sales and to the purchases of imported raw materials, spare parts and capital equipment. When needed, the company uses derivative financial instruments (mainly spot and forward contracts) to reduce the exposure to adverse fluctuations in foreign exchange rates. Also, the company uses derivative financial and commodity instruments (mainly spot and forward contracts) primarily to reduce the exposure to adverse fluctuations in foreign exchange rates and commodity prices on its expected future cash flows. Those risks derive mainly from our exposure to fluctuations in metals prices from our own mining production, on treatment charges and surplus of metals recovered from imported concentrates. Derivative financial and commodity instruments related to future cash flows are not recognized in the financial statements until the underlying cash flows is realized. Accordingly, on these transactions, no “mark to market� mechanism is applied at the time of the balance sheet date to unsettled financial and commodity. In 2004 and the first quarter of year 2005, a total of 50,000 metric tons of zinc forward contracts were entered into relating to cash flows to be realized in 2005 at an average price of Baht 49,892 per metric tons. In addition, in 2005, a total of 30,000 metric tons of zinc forward contracts have been entered into relating to cash flows to be realized in 2006 at an average price of Baht 58,511 per metric ton. Further, a total of 18,275 metric tons of zinc forward contracts have been entered into relating to cash flows to be realized in 2007 at an average price of Baht 68,579 per metric ton. At the end of the year, a balance of 48,275 metric tons of unsettled forward sales remained at a contractual average of USD 1,512 per metric ton which will be settled through purchases from the London Metals Exchange in 2006 and 2007. The total contract value of these unsettled forward contracts at 31 December 2005 is USD 73 million. Additionally, at 31 December 2005, 41,650 metric tons of unsettled metal forwards purchases remained at a closing average of USD 1,836 per metric ton. The contract value of these forward contracts which remain unpriced at period end are estimated at USD 76 million. Consolidated
Company
Amount Fair values
Amount
USD
Baht
USD
Baht
-
-
-
-
72,978,438
3,001,448,281
72,978,438
3,001,448,281
As at 31 December 2005: For off balance sheet contracts Forward contract receivable for the net of zinc and aluminium metal price Forward contract payable for zinc metal price
Annual Report 2005 Padaeng Industry 65 Public Company Limited
Fair values
Consolidated
Company
Amount
Amount
USD
Baht
USD
Baht
748,800
29,168,824
748,800
29,168,824
35,363,864
1,378,323,121
35,363,864
1,378,323,121
As at 31 December 2004: For off balance sheet contracts Forward contract receivable for the net of zinc and aluminium metal price Forward contract payable for zinc metal price
The contract values shown in above reflect the marked to market values of the contracts at year end. The marked to market values are determined on a comparison of the contract rate to the prevailing end of period market rate. (spot-tospot or forward-to-forward depending on the type of contract). The operations carried out on the future markets for reducing both transactional and structural risks as describe here above are not of speculative nature. 30.3 Fair values The carrying amounts at the balance sheet date of cash and cash equivalents, trade accounts receivable, shortterm loans and advances to related parties, value added tax receivable, other receivables, other current assets, investment and certain other assets, loans from financial institutions, trade accounts payable, short-term loans from related parties, payable for land use compensation, accrued interest expenses, accrued electricity expenses, royalty payable, other current liabilities, hire purchase payable, deferred gain on hire purchase and provision for restoration expense approximate their fair values. 30.4 Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the company. As a general rule, the company has a credit risk management policy to obtain collateral from the customers before commencing trade. The collateral may include bank guarantees or cash guarantees. The companyĂs credit risk is spread amongst several customers. 30.5 Interest rate risk Interest rate risk in the balance sheet arises from the potential for a change in interest rates to have an adverse effect on the net interest earnings of the company in the current reporting period and in future years. Management believes that these risks are acceptable. In 2003, the company obtained financing facilities in the amount of Baht 800 million at a fixed rate of interest for a period of 3 years. As of December 31, 2005, the company has drawndown a total of Baht 650 million from which Baht 547.5 million are still not matured (see Note 14).
Annual Report 2005 Padaeng Industry 66 Public Company Limited
31. Provident funds The company established a registered contributory provident fund in accordance with the Provident Fund Act B.E. 2530. Under the plan, the company and employees contribute to the fund at a certain percentage of the employees basic salary. Contributions to the provident fund are charged to the statement of income in the year to which they related.
32. Reclassification Certain items in the balance sheet as at 31 December 2004 and statements of income for the year then ended have been reclassified for comparative purpose to coincide with balance sheet as at 31 December 2005 and statements of income for the year then ended.
33. Restatement As disclosed in Note 2 and Note 17, the prior year financial statements have been restated to reflect the adoption of the recognition of employee termination/retirement benefits.
34. Post balance sheet event On 23 February 2006, the Board of Director decided to propose the payment of a dividend in respect of 2005 operating results of Baht 1.10 per share totalling Baht 248.6 million in the Annual Shareholder’s Meeting in April 2006.
Annual Report 2005 Padaeng Industry 67 Public Company Limited
Corporate governance
--->
1. Policy on corporate governance
proceeded with plans for continuous improvement in terms of
The Board of Directors recognizes the importance of Good
safety and the environment.
Corporate Governance and as such established a policy for
Furthermore, the company has complied with laws and
achieving it, with emphasis on internal controls and internal
regulations set by government agencies including the
auditing. The policy is based on principles of transparency,
Department of Industrial Works, Ministry of Industry. In this
disclosure, risk management, adhering to laws and government
respect, both the Calcine plant and Tak smelter were certified
regulations, minimizing problems of conflict of interest, taxation
with TIS/OHSAS 18001 standard. Moreover the Calcine plant
issues and ensuring efficient management of operations in the
has also received the ISO 14001 certification.
best interest of company shareholders and other stakeholders for the long run.
In addition, the company is concerned for and is responsible to our customers. We provide a standardized and quality product, maintain confidentiality of our customers and have a
2. Rights of shareholders
technical service department, which provides technical advice
In 2005 the company held one annual shareholder’s meeting
to customers. Furthermore, the company promotes a good
on 26 April 2005 at the Sukhothai Hotel. An invitation letter
working environment and encourages teamwork and offers
and agenda of the meeting and related documents were sent
training and skills enhancement for our employees in an effort
to shareholders 7 days prior to the meeting. Topics on the
to best take advantage of human resources.
agenda included the opinion of the Board of Directors and a complete report or minutes of the meeting were recorded in
4. Meeting of shareholders
order to allow shareholders ample time and opportunity to
In holding the shareholders meeting, the company considers
review and consider the topics. In addition, the company made
each shareholder as an equal and stipulates procedures for
every effort to accommodate shareholders by arranging the
the meeting according to the law and in compliance with
meeting in a convenient location with an appropriately sized
guidelines of the Stock Exchange of Thailand.
meeting space and permitted shareholder proxies in the event some shareholders were unable to attend.
During the 2005 annual shareholders’ meeting, a total of 7 directors attended, including the Chairman of the Audit
In addition to the annual shareholders’ meeting, the
Committee. The Chairman of the meeting allowed equal
company will call additional shareholders’ meeting, if necessary,
opportunity for all shareholders to question, comment or give
in the event that specific emergency agenda topics, which are
suggestions regarding conduct of company operations. Notable
vital to the shareholders’ interests or relate to by-laws or
inquiries and opinions were recorded in the minutes of the
regulations require shareholders’ approval.
meeting.
3. Rights of stakeholders
5. Leadership and vision
The company places much significance upon the rights
The Board of Directors has played a part in establishing
of every group of stakeholders, particularly the local community,
the vision, mission, strategy, objectives, business plans and
our customers and our employees. Unwavering commitment
budget of the company with effectiveness and efficiency. In
is given to environmental protection and conservation measures,
addition the Board ensures that the management team conducts
more specifically protecting and treating conditions in water,
operations in accordance with the company’s business plan,
air and soil to ensure maximum safety of nature and the local
to add value to our business and ensure maximum stability for
community. Throughout this past year the company also
our shareholders.
Annual Report 2005 Padaeng Industry 68 Public Company Limited
6. Conflict of interest
9. Aggregation or segregation of positions
To protect against conflict of interest, the Board of Directors
The position of the Chairman of the Board of Directors
investigates any instance which may lead to a dispute and
and the position of the CEO and of MD are kept separate as
has established a policy and guidelines to prevent executives
to ensure a clear distinction between authorities, that of policy
and related persons from using internal company information
making and day to day operations, respectively. The company
for personal gains. Further details are stipulated in section
has clearly defined the authorities and responsibilities of
Controlling the use of internal information.
management on every level.
7. Business ethics
10. Remunerations for directors and management
It is the company’s philosophy to conduct business with
Remuneration for Directors-Remuneration for company
honesty, righteousness, and ethics, with responsibility towards
directors has been determined in a clear manner and is
all stakeholders, namely, our customers, shareholders,
comparable to that of similar companies in the industry. The
employees, society and our country. The company has issued
amount of remuneration has been approved by shareholders.
a Code of ethics, which are guidelines for work conduct and
Directors who have been selected to sit on the Audit Committee,
employee conduct. All related persons are to use this manual
Strategic Committee and Nomination and Remuneration
as a reference for carrying out duties according to the mission
Committee receive additional remuneration reflective of the
of the company.
added work responsibility. Remuneration for Top Executives-Remuneration for top
8. Balance of power for non-executive directors
executives has been determined in accordance with the
The company’s Board of Directors consists of qualified
principles and policy set by the Board of Directors and
directors with a broad realm of experience, totaling 10 members
correspond with overall company performance and that of each
as follows:
individual executive. The management submits remuneration
Executive directors
2 members
of executives to the Board of Directors for consideration and
Directors representing major shareholders
5 members
final approval.
- Umicore of Belgium
holds 3 seats
- Ministry of Finance
holds 1 seat
- Bangkok Bank Public Co., Ltd.
holds 1 seat
Directors on the Audit Committee
3 members
Remuneration for Directors in 2005 is detailed in section Remuneration for executives. 11. Meetings of the Board of Directors
The company’s Board of Directors is responsible for acting
The Board of Directors has regular meetings held every 3
in compliance with by-laws, objectives and guidelines of the
months and may call additional special meetings as needed.
company and resolutions of the shareholders meeting, with
Clear agenda topics and agenda minutes of the meetings are
honesty and prudence in the best interests of the company.
prepared in advance of each meeting and the Board Secretary
Company directors have fixed terms according to company
sends out an invitation letter and relevant documents to board
guidelines, which state that at every annual meeting 1 in 3
members prior to the meeting, so as to allow sufficient time
director(s) will resign.
for review, During 2005, the Board of Directors met 4 times with records of attendance as follows:
Annual Report 2005 Padaeng Industry 69 Public Company Limited
Name
Term appointed
No.of
to office
Excused
meetings
Attendance (times)
1.
Mr. Arsa Sarasin
23 Apr.04-30 Apr.07
4
-
4
2.
Mr. Paron Israsena
26 Apr.06-30 Apr.09
4
1
3
3.
Mr. Kosit Panpiemras
26 Apr.05-30 Apr.08
4
2
2
4.
Mr. Vinai Vamvanij
23 Apr.04-30 Apr.07
4
-
4
5.
Mr. Aswin Kongsiri
23 Apr.04-30 Apr.07
4
1
3
6.
Mrs. Sirinuj Bisonyabut
26 Apr.05-30 Apr.08
4
-
4
7.
Mr. Karel Vinck
26 Apr.05-30 Apr.08
4
-
4
8.
Dr. Jean-Luc Deleersnyder
26 Apr.06-30 Apr.09
4
-
4
9.
Mr. Michel Moser
23 Apr.02-26 Apr.05
1
1
-
10. Mr. Pinit Vongmasa
23 Apr.04-30 Apr.07
4
-
4
11. Mr. Bernard Tonnon
26 Apr.06-30 Apr.09
4
-
4
12. Committees The Board of Directors has established the Audit
accounting principles in Thailand. Important information is
Committee, the Strategic Committee and the Nomination &
sufficiently disclosed in the notes to the financial statements.
Remuneration Committee to help in supervising company
The Board of Directors has set up the Audit Committee,
operations. Each committee has its own members, scope of
made up of independent directors, to supervise and be
work and responsibilities, which are detailed in section
responsible for the integrity of the financial statements and
Management structure.
internal control system. The opinions of the Audit Committee are written in the annual report.
13. Internal controls
The Board of Directors has the opinion that the company
The company recognizes the importance of internal control
maintains adequate internal controls and can reasonably show
systems on both management and operational levels and has
credibility towards its financial statements as of December 31,
created an authority manual as the definitive reference. An
2005.
independent internal audit department, reporting directly to the Audit Committee, works as an internal checks and balances
15. Investor relations
and conducts audits as needed.
The Board of Directors has called for the disclosure of
The company also pays a great deal of attention to the
company information in an accurate, complete, transparent
risk management of the company. The company has set up a
and widespread manner. Financial information as well as general
currency-hedging program to minimize risk arising from the
information about the company, which might impact the value
fluctuation of foreign exchange. The company also provides a
of company stock, is readily available. Shareholders and other
framework to ensure the compliance with laws & regulations
interested parties may locate any such information through
and taxation issue.
the various Stock Exchange of Thailand media outlets or from the company’s website. Although a specific investor relations
14. Report of the Board of Directors
division has not been established, potential investors may
The Board of Directors is responsible for the financial
obtain information by contacting the company directly
statements of the company and its subsidiaries and the financial
at Tel: 02-661-9900 or at www.padaeng.co.th and
information disclosed in the annual report. These financial
www.padaeng.com or e-mail inquiries to info@padaeng.co.th.
statements are prepared in accordance with generally accepted
Annual Report 2005 Padaeng Industry 70 Public Company Limited
Shareholders structure
--->
The company has Baht 2,260 million registered capital, which is fully paid up. It is divided into 226,000,000 ordinary shares at Baht 10 per share. a) List of the top 18 shareholders of Padaeng Industry Public Co., Ltd. As of 9 May 2005, which is the latest date of the close of the shareholders’ register, is as follows:
No. Name 1.
Umicore
2.
Ministry of Finance
No. of shares
% of Total shares
106,002,442
46.90
31,200,000
13.81
3.
Thai NVDR Co., Ltd.
9,037,617
4.00
4.
Mr. Anan Utharntharm
7,380,800
3.27
5.
Bangkok Bank Public Company Limited
7,301,070
3.23
6.
Dr. Pichit Lerttamrab
3,007,100
1.33
7.
Somers (U.K.) Limited
2,617,153
1.16
8.
Mr. Mitree Srinarawat
2,335,500
1.03
9.
Mr. Cheewin Chaicheewinlikit
2,297,450
1.02
1,600,800
0.71
11. Ms. Wararat Waewmaneewan
1,400,000
0.62
12. Kimeng Securities (Thailand) Public Company Limited
1,388,300
0.61
13. Mitsiam International Ltd.
1,220,000
0.54
14. Ms. Thanu Chindarat
1,200,000
0.53
15. Mr. Uttasin Waewmaneewan
1,200,000
0.53
16. Ms. Tuanjai Naree
1,200,000
0.53
17. Thailand Iron Works Public Company Limited
1,170,000
0.52
18. Ms. Ulai Kumteeraj
1,161,600
0.51
10. Gerlach & Co-Dimensional Emerging Markets Value Fund, Inc.
Remark: Investors can look up the present shareholders of the company at www.padaeng.co.th or www.padaeng.com before the 2006 shareholders’ meeting.
Annual Report 2005 Padaeng Industry 71 Public Company Limited
b) Major shareholders No. Name 1.
Umicore
2.
Ministry of Finance
No. of shares
% of Total shares
106,002,442
46.90
31,200,000
13.81
Policy for payment of dividends
shareholders’ meeting on 26 April 2005 for the dividend
Under normal circumstances an amount of at least
payment of 2004 at Baht 0.40 per share to be paid on 25 May
5% of profits after corporate taxes must be put in reserve,
2005 with the company’s share transfer book closing for the
until the total amount in reserve equals at least 10% of the
right to receive the dividend on 9 May 2005 at 12.00 hr.
company’s authorized share capital, the company will then
A subsidiary will pay dividends only from profits
pay dividends up to 50% of profits after corporate taxes. An
generated by the subsidiary company. Each time the
exception can be made if the Board deems necessary for the
subsidiary company pays a dividend; an amount of at least
company to reserve part of the profit to cover the cash needs
5% of profits after corporate taxes must be put in reserve,
in the near future.
until the total amount in reserve equals at least 10% of the
From the company’s total operating results and financial position, the Board proposed and got approval in the
À
subsidiary company’s authorized share capital. There is no fixed dividend payment policy for the subsidiary.
Annual Report 2005 Padaeng Industry 72 Public Company Limited
Organization chart of Padaeng Industry Public Company Limited in the year 2005
Board of Directors Audit Committee
Strategic Committee
Nomination & Remuneration Committee Chief Executive Officer
Managing Director
Internal Audit
Advisor
Board Secretary
Technical Services
Mining & Exploration (Mae Sot)
Calcine Plant (Rayong)
Zinc Plant (Tak)
Finance & Accounting (Bangkok)
Marketing (Bangkok)
Human Resources & Corporate Admin. (Bangkok)
Procurement (Bangkok)
Annual Report 2005 Padaeng Industry 73 Public Company Limited
Management
6.
Padaeng Industry Public Company Limited is made
Director
up of 4 committees. 7. 1)
8. 9.
Manage company operations according to the law,
Mr. Pinit Vongmasa Director and Chief Executive Officer
rules and regulations, mission of the company and 10.
resolutions of the company shareholders
Mr. Bernard Tonnon Director and Managing Director
Determine the amount of dividend to be paid to
and Dr. Surin Tanticharoenkiat
shareholders 3.
Dr. Jean-Luc Deleersnyder Director
Directors are as follows:
2.
Mr. Karel Vinck Director
The Board of Directors The duties and responsibilities of the company’s Board of 1.
Mrs. Sirinuj Bisonyabut
Secretary to the Board of Directors
Determine the amount of compensation or bonus to be awarded to officers or employees or other staff
Remark : During the year 2005, Mr. Michel Moser
working for the company (permanent or temporary employees), not including pension benefits or other
resigned as PDI’s director.
remuneration paid to directors 4.
Review the company’s strategic work plan and
The definition of Independent Director
assessment of operations as submitted by the
1.
company or related company, which shall be inclusive
In carrying out its duties and responsibilities, the Board of
of the shares held by related persons.
Directors may authorize Chief Executive Officer, Managing Director, any director or any other individual to take action on
Holding shares not more than 5% of paid-up capital of the company, affiliated company, associated
Strategic Committee
2.
Being a director who does not take part in the management of the company, affiliated company,
its behalf.
associated company, related company or majority
The company’s Board of Directors consists of 10 members
shareholder of the company. Not being a employee,
as follows:
staff member or advisor who receives a regular salary 1. 2 3.
Mr. Arsa Sarasin
from the company, affiliated company, associated
Chairman
company, related company or majority shareholder
Mr. Paron Israsena
of the company; for example, the Chief Executive
Independent Director
Officer of the company may not be a member of the
Mr. Kosit Panpiemras
Audit Committee because he is directly responsible for the management etc.
Director 4. 5.
Mr. Vinai Vamvanij
3.
Being a director who has no direct of indirect benefit
Independent Director
or interest in finance and management of the company,
Mr. Aswin Kongsiri
affiliated company, associated company or majority
Independent Director
shareholder of the company.
Annual Report 2005 Padaeng Industry 74 Public Company Limited
Being a director who has no benefit or interest of the said nature during the period of 1 year before his
In 2005 the committee met 4 times and reported to the Board of Directors.
appointment as a director except where the Board
The Audit Committee’s scope of authority is as follows:
of Directors has carefully considered that such
1.
previous benefit or interest does not affect the
any information it sees relevant to its activities from
performance of duties and the giving of independent
the director or any managers of the company.
opinions. 4.
2.
Being a director who is not a related person or close 3.
shareholder of the company.
The Audit Committee will have no executive powers with regard to its findings and recommendations.
Being a director whom is not appointed as a representative to safeguard interests of the company’s directors, majority shareholders of shareholders who are related to the company’s majority shareholders.
6.
The Audit Committee may seek independent professional advice as it considers necessary.
relative of any management member or majority 5.
The Audit Committee shall have the authority to request
3)
Strategic Committee The Strategic Committee has been established on 13 July
2000 and at present consists of 4 members as follows:
Being capable of performing duties, giving opinions or reporting the results of performance of work
1.
according to the duties delegated by the Board of Directors free and clear of the management or the
2.
majority shareholders of the company including related persons or close relatives of the said persons.
jointly sign with the company seal’s affixed.
Mr. Pinit Vongmasa Member
3.
The authorized directors consist of Mr. Arsa Sarasin, Mr. Pinit Vongmasa and Mr. Bernard Tonnon two of whom shall
Mr. Vinai Vamvanij Member
Dr. Jean-Luc Deleersnyder Member
4.
Mr. Bernard Tonnon Member
and Dr. Surin Tanticharoenkiat 2)
Audit Committee
Secretary to the Strategic Committee
The Audit Committee has been established on 22 December 1998 and at present consists of 3 directors as follows:
In 2005 the committee held 4 meetings and reported to the Board of Directors. The Strategic Committee is responsible for preparing and
1. 2. 3.
Mr. Vinai Vamvanij
providing the company’s strategic work plan and assessment
Chairman of the Audit Committee
for consideration by the Board of Directors, as well as giving
Mr. Paron Israsena
recommendations to the Board of Directors. All matters
Audit Committee Member
regarding strategy and planning should be channeled through
Mr. Aswin Kongsiri
the Strategic Committee for presentation and/or recommendation
Audit Committee Member
to the Board of Directors for consideration. Moreover, the
and Dr. Surin Tanticharoenkiat
Strategic Committee acts as an advisor to the Board of
Secretary to the Audit Committee
Directors, but does not have decision-making authority.
Annual Report 2005 Padaeng Industry 75 Public Company Limited
4)
The Nomination and Remuneration Committee
6.
The Nomination and Remuneration Committee has been
Senior Vice President-Marketing
established on 26 February 2005 and at present consists of 3
7.
members as follows: 1.
Mr. Paron Israsena
3.
Mr. Philippe Salmon Senior Vice President-Finance & Accounting
The Selection of company directors and executives
Chairman 2.
Mr. Somluck Toonkumtornchai
The company has set up the Nomination and
Mr. Aswin Kongsiri
Remuneration Committee who will recommend the nomination
Member
of the directors. Of all the company’s directors, five are
Dr. Jean-Luc Deleersnyder
representatives from the top shareholders. Umicore of
Member
Belgium holds a total of 3 seats, the Ministry of Finance holds
and Dr. Surin Tanticharoenkiat Secretary to the Nomination and
1 seat and the Bangkok Bank Public Co., Ltd. holds 1 seat on the Board of Directors.
Remuneration Committee
The appointment of a director requires a majority vote from the eligible voting shareholders present at the
The Nomination and Remuneration Committee is responsible for 1.
shareholder’s meeting. Voting shall be according to the following guidelines:
Recommending new nominees to the Board to
1.
Each shareholder shall have one vote for each share.
fill positions made vacant by directors who
2.
Each shareholder must exercise all the votes he has
complete their terms. The Committee then makes
under item (1) to elect one or several persons to be
recommendations to the Board for ultimate
directors but cannot divide his votes to any person
shareholder approval. 2.
Recommending to the Board of Directors guidelines
particularly. 3.
The candidates shall be ranked in order descending
and methods of payment of remuneration for the
from the highest number of votes received to the lowest,
directors, and committees appointed by the Board.
and shall be elected as directors equivalent to the number of directors who are to be elected.
The executives 1. 2.
4. 5.
If there is a tie in the last to be elected and this exceeds
Mr. Arsa Sarasin
the said number of directors, the presiding Chairman
Chairman
shall have an additional casting vote.
Mr. Pinit Vongmasa Chief Executive Officer
3.
4.
Remuneration for executives consists of:
Mr. Bernard Tonnon
1.
In the form of cash
Managing Director
a)
In the year 2005 the company paid a total of
Mr. Chaiyan Roojnawate
Baht 5,914,285.71 to 11 Directors (one director
Senior Vice President-Zinc Plant Operations
resigned during the year 2005), 4 Strategic Committee
Dr. Kitisil Kalayanakoul
Members and 3 Audit Committee Members as
Senior Vice President-Calcine Plant
directors’ fees and directors’ remunerations, detail as follows:
Annual Report 2005 Padaeng Industry 76 Public Company Limited
Directors
Position
1.
Mr. Arsa Sarasin
Chairman
2.
Mr. Paron Israsena
Remuneration
Director bonus *
(Baht)
For 2005 (Baht)
280,000.00
350,000.00 230,000.00
Independent Director
245,000.00
Member of Audit Committee
200,000.00
3.
Mr. Kosit Panpiemraj
Director
230,000.00
230,000.00
4.
Mr. Vinai Vamvanij
Independent Director
260,000.00
230,000.00
Audit Committee Chairman
200,000.00
Strategic Committee Member 5.
Mr. Aswin Kongsiri
80,000.00
Independent Director
245,000.00
Member of Audit Committee
200,000.00
230,000.00
6.
Mrs. Sirinuj Bisonyabut
Director
260,000.00
230,000.00
7.
Mr. Karel Vinck
Director
260,000.00
230,000.00
8.
Dr. Jean-Luc Deleersnyder
Director
260,000.00
230,000.00
9.
Mr. Michel Moser
Strategic Committee Member
80,000.00
Director
14,285.71
-
260,000.00
230,000.00
(Until 26 April 2005) 10. Mr. Pinit Vongmasa
Director and Chief Executive Officer Strategic Committee Member
11. Mr. Bernard Tonnon
Director and Managing Director
80,000.00 260,000.00
Strategic Committee Member Total
230,000.00
80,000.00 3,494,285.71
2,420,000.00
Remark: Director bonus will be proposed to the 2006 Shareholders’ Meeting for approval. b)
The company paid a total of Baht 36,373,400 to the
Corporate governance
7 executives in the year 2005, as salaries and
The company conducts business in conformity with
bonuses.
guidelines of the Code of Best Practices for Directors of Listed Companies, as set out by the Stock Exchange of Thailand.
2.
In other forms:
By doing so, the company demonstrates its commitment
The company contributed to employees’ provident
to standards and conduct in building confidence of the
fund savings, as a percentage of salary and period of time
shareholders, investors and other related entities or persons.
enrolled in the fund, ranging from 5 to 10%.
Moreover, the Audit Committee, through the internal audit department, supervises financial statements, internal control, and practices of good corporate governance to ensure compliance
Annual Report 2005 Padaeng Industry 77 Public Company Limited
to policies. The company has also enacted a Code of Ethics
Internal control
by which all executives and employees are expected to adhere
During the Board of Director’s meeting, No. 01-2006,
to in conducting business. In addition, to ensure efficient and
held on Thursday 23 February, 2006, the Board assessed the
productive business operations as planned, a Strategic Committee
system of internal control, the organization and external
has been established with the responsibility of forming the
conditions, risk management, method of disseminating,
company’s strategic plan for proposal to the Board of Directors.
communicating and monitoring information, it was determined
Along with the mechanisms described above, the
that the company employs an adequate system of internal
company has taken steps in other areas as well, in an effort to
control regarding transactions with major shareholders,
be accepted by our stakeholders and other related entities, as
directors, management and related persons, as well as internal
having good corporate governance as called for by the Stock
control in other areas.
Exchange of Thailand.
Following is an opinion of the auditor, Mrs. Nattaporn Phan-Udom, Certified Public Accountant, Registration No.
Controlling the use of internal information
3430, PricewaterhouseCoopers ABAS Ltd.
During each Board of Director’s meeting, a summary
In planning and performing our audit of the financial
of company holdings by executives is submitted for review, as
statements of Padaeng Industry Public Company Limited
a mean of monitoring any use of inside information for gains
for the year-ended 31 December 2005, we obtained an
by executives.
understanding of the internal control system in order to determine the nature, timing and extent or our audit procedures, for the
Personnel
purpose of expressing our opinion on the financial statements
At year end, the total number of company employees
and not to provide an opinion on the internal control system.
stood at 766, consisting of 90 employees at the Bangkok
The management of Padaeng Industry Public Company
office, 422 employees at the Smelter plant in Tak province,
Limited are responsible for establishing and maintaining an
162 employees at the Mae Sot mine and 92 employees at the
internal control system to assist in achieving management’s
Calcine plant in Rayong province. In year 2005, compensation
objective of ensuring, as far as practicable, the orderly and
paid to employees as salaries and bonuses. In addition, the
efficient conduct of its business, including adherence to
company contributed to employees’ provident fund savings,
management policies, the safeguarding of assets, the prevention
as a percentage of salary and period of time enrolled in the
and detection of fraud and error, the accuracy and completeness
fund, ranging from 5-10%.
of the accounting records, and the timely preparation of reliable
The company’s total workforce consists of 766
financial information.
employees. Approximately 23% of employees have earned
Because of inherent limitations in any internal control
at least a bachelor’s level degree, while 39% have earned
system, errors or irregularities may nevertheless occur and not
an Associate’s or Vocational level degree. The remaining
be detected. Also, projection of any evaluation of the internal
employees have studied at less than vocational level. The
control system to future periods is subject to the risk that
majority of company employees reside in Tak province and
procedures may become inadequate because of changes in
the northern region of the country, where the smelter plant
conditions or that the effectiveness of the design and operation
and mine is located. The average age of employees is 39 years,
of policies and procedures may deteriorate.
while average tenure of service with the company is 13 years. For the year, employee turnover rate equaled 3.13%.
Annual Report 2005 Padaeng Industry 78 Public Company Limited
Audit fee
However, after consideration of the internal control
Audit fee
system, we noted no matters involving the internal control
1.
system and its operation that we consider to be material
The company and its subsidiaries has paid audit fees
weaknesses under Thai Auditing Standard 400 “Risk
to audit companies, individual auditors or other businesses
assessments and internal control�. Material weaknesses as
relating to the auditors and auditing companies during the
defined in the Auditing Standard are the weaknesses in internal
previous fiscal year totaling Baht 3,500,000. 2.
control that could have a material effect on the financial
Non-audit fee
The company and its subsidiaries has paid non-audit
statements.
fees, which include services such as auditing of financial Related transactions
statements prepared under guidelines other than generally
Look for details of related transactions in notes to
accepted accounting principles and other legal and tax related
financial statement no. 27, Related party transactions.
services, to audit companies, individual auditors or other
The company’s policy on related transactions is
businesses relating to the auditors and auditing companies
based on the principles of free trade, using the world price as
during the previous fiscal year totaling Baht 75,000. An
a reference, and is conducted in the best interest of the company.
additional non-audit fee will be paid in the future for services
In this respect, the internal audit department has also carried
previously agreed upon but not yet provided totaling Baht
out an audit on the related party transaction in year 2004 and
675,000.
will continue doing so on a regular basis.
Annual Report 2005 Padaeng Industry 79 Public Company Limited
Structure of corporate shareholding
Number and
Name
Address
(A) Padaeng Industry Public 191/18-25 CTI Tower, 26th-27th Floor, Company Limited
Nature of business
Mining and smelting of zinc ore and
Number and
types
types
of all the shares
of all the shares
issued and
held by the
paid up
company
No. of
Par value
No. of
ordinary
each
ordinary
% of Total
shares
(Baht)
shares
shares
226,000,000
10
-
-
Land development and real estate
3,200,000
25
3,200,000
100
2,960,900
62
2,349,206
79.34
10,000,000
25
6,197,746
61.98
USD 200,000
-
-
100
1,000
100
1,000
100
100 90,000
55
55
100,100
0.78
Ratchadaphisek road, Khlong Toei district,
concentrate as well as marketing of zinc
Bangkok 10110 Tel. 0-2661-9900
metal and other by-products
Fax 0-2261-1108-10 (B) Affiliated companies 1. Padaeng Properties
191/18-25 CTI Tower, 26th-27th Floor,
Company Limited
Ratchadaphisek road, Khlong Toei district, Bangkok 10110 Tel. 0-2661-9900 Fax 0-2261-1108-10
2. Puthep Company
191/18-25 CTI Tower, 26th-27th Floor,
Prospecting and mining for copper and
Limited
Ratchadaphisek road, Khlong Toei district,
other base metals
Bangkok 10110 Tel. 0-2661-9900 Fax 0-2261-1108-10 3. Padaeng Poongsan
191/18-25 CTI Tower, 26th-27th Floor,
Manufacturing of copper and brass sheet/
Metals Company Limited
Ratchadaphisek road, Khlong Toei district,
strip coin blank and case cup
N.B. Ceased operation
Bangkok 10110 Tel. 0-2661-9900
since February 1999
Fax 0-2261-1108-10
and in process of liquidation and is not consolidated into the financial statement. 4. Padaeng Industry (Laos) 49 Ban Dongmieng, Khum 1, Unit 6,
Prospecting and mining for base metals
Company Limited
in Laos
Chanthabuli, Vientiane, Laos
5. Padaeng International
191/18-25 CTI Tower, 26th-27th Floor,
Investing in exploration and mine
Mining Company Limited
Ratchadaphisek road, Khlong Toei district,
development project in Vietnam
Bangkok 10110 Tel. 0-2661-9900 Fax 0-2261-1108-10 6. Sila Enterprise
68/5-68/6 Asia Highway,
Company Limited
Mae Sot district, Tak
Marketing of aggregate limestone
Tel. 0-5553-3777 Fax 0-5554-7285 (C) Other Companies 1. ASEAN Potash Mining
16th Floor, SG Tower, 161/1
Punblc Company Limited
Soi Mahadlekluang 3, Rajdamri road, Lumpini, Pathumwan, Bangkok 10330 Tel. 0-2650-2711 Fax. 0-2650-2715
Potash mining operation
12,870,000
100
Annual Report 2005 Padaeng Industry 80 Public Company Limited
Other references
Registrar
Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 4 Floor, 62 Ratchadaphisek road, Klong Toei, Bangkok 10110, Thailand Tel. 0-2229-2800 Fax. 0-2359-1259
Auditor
Mrs. Nattaporn Phan-Udom and Ms. Somsri Dhanyacheevee and Ms. Wimon Chiamchittrong and Mrs. Anothai Leekitwattana Certified Public Accountant Registration Nos. 3430, 1905, 3365 and 3442 respectively, PricewaterhouseCoopers ABAS Ltd. 15th Floor Bangkok City Tower 179/74-80 South Sathorn road, Bangkok 10120 Tel. 0-2286-9999 Fax. 0-2286-5050
Legal adviser
Dr. Prajit & Suchinda International Law Office 1793/16 Sirinthon road, Bangplad, Bangkok 10700, Thailand Tel. 0-2424-5693 Fax. 0-2435-8644
Adviser or contractor under management agreement
- None -
Annual Report 2005 Padaeng Industry 81 Public Company Limited
SEC contents in accordance with form 56-2
1. General information 1.1
The company
1.2
Juristic persons in which the company holds more then 10% of shares
79
1.3
References
80
2. Statement by the Chairman of the Board or Board of Directors 3. Statement by the Audit Committee 4. Summary of the company’s financial data 4.1
Data from financial statements
4.2
Financial ratios
1
3 31 5
5. Nature of business 5.1
Business in brief
5.2
Structure of revenues
5.3
Changes during the past year
6. Factors of risk
24 23 6-19 22
7. Shareholders and management 7.1
Shareholders
7.2
Management structure
70
7.3
Selection of directors and executives
75
7.4
Remuneration for executives
75
7.5
Other terms of remuneration
7.6
Corporate governance
7.7
Controlling the use of internal information
77
7.8
Internal control
77
72-75
76 67-69
8. Connected persons and connected transactions
73
9. Management discussion and analysis
20
10. Financial statements
32-66
Annual Report 2005 Padaeng Industry 82 Public Company Limited
PADAENG INDUSTRY PUBLIC COMPANY LIMITED
BANGKOK OFFICE CTI Tower, 26th-27th Floor,191/18-25 Ratchadaphisek road, Khlong Toei district, Bangkok 10110, Thailand Telephone : +66 (0) 2661-9900 Fax.
: +66 (0) 2261-1108-10, (0) 2661-9490
E-mail: info@padaeng.co.th Website: www.padaeng.com, www.padaeng.co.th
TAK OFFICE 94 Moo 1, Ban Klonghuaysai Asian Highway 409-410, Nongbuatai subdistrict, Muang district, Tak 63000, Thailand Telephone : +66 (0) 5551-7444 , (0) 5555-8500 Fax. : +66 (0) 5551-7440 , (0) 5555-8511
MAE SOT OFFICE 13 Moo 4 Phratad Padaeng subdistrict, Mae Sot district, Tak 63110, Thailand (P.O.Box 29 Amphoe Mae Sot Tak 63110) Telephone : +66 (0) 5553-3016-7, (0) 5553-3019 Fax. : +66 (0) 5553-3018
RAYONG OFFICE Padaeng Industrial Estate, 15 Padaeng road, Maptaphut subdistrict, Muang district ,Rayong 21150, Thailand Telephone : +66 (0) 3868-3318-20 Fax. : +66 (0) 3868-3321, (0) 3868-3361
Created & Designed by Graphic Station Co., Ltd. 0-2930-3029
www.padaeng.com info@padaeng.co.th