2013 Annual Report Thai Wah Starch Public Company Limited Annual Report
Thai Wah Starch Public Company Limited 21/59,21/63-64 Thai Wah Tower 1, 20 th - 21st Floor, South Sathorn Road, Thungmahamek, Sathorn, Bangkok 10120 Thai Wah Starch Public Company Limited Tel : 02-285-0040 Fax : 02-285-0270 E-mail : [email protected] Home Page : http://www.thaiwah.com
Annual Report Contents
Message from the Management 3 Financial Highlights 5 Management Discussion and Analysis (MD&A) 8 Board of Directors and Managements of the Company 12 Details of Position of Directors and Executives 19 Abbreviation 21 Policy and Business Overview 22 Subsidiaries or Related Companies in which the Company has shareholdings exceeding 10 percent 25 Nature of the Business 31 Risk Factors 36 General Information 38 Major Shareholders 39 Dividend Payment Policies and Remuneration Policy 40 Management 41 Corporate Governance 48 Corporate Social Responsibility 59 Internal Control and Risk Management 64 Opinion of the Board of Directors on the Company’s Internal Control 67 Report of the Audit Committee 68 Board of Directors’ Responsibilities for the Company’s Financial Statements 70 Financial Statements 72 Persons with Mutual Interest and Connected Transactions 120 Reference 124 Annual Report 2013 Message from Management
2013 was a very challenging year for the Company; its market-oriented pricing mechanism. China’s demand for business was carried out in unfavourable circumstances the Company’s products declined during the first half of including, for instance, a global economic slowdown, the year because of the economic slowdown which fluctuations in the strength of the Baht and an increase increased again in the third quarter of the year. in the cost of key raw materials caused by a decline in Meanwhile, the export price of cassava starch from the volume of cassava roots distributed to the market Vietnam was higher. These factors caused an increase and the Thai Government’s price intervention policy. The in the price of cassava starch. Company was also affected by a shortage in the water supply used in its manufacturing process caused by With its vision to become the leading manufacturer and severe nationwide droughts which were far worse than exporter of good-quality cassava starch in ASEAN, the previously experienced, especially in the north-eastern Company has committed itself to regularly maintaining part of Thailand. Large dams had a decrease in their a quality standard of product by running a quality water reserves and many parts of the country were control system throughout the manufacturing procedure, announced as drought-affected areas. This had a direct starting from the selection of raw materials until the last impact on the Company’s manufacturing activities stage of the process from which the finished products especially at its factory in Kalasin province to such an are made. Using state-of-the-art technology, the extent that the factory had to temporarily close down Company can better control the quality of its products during the second quarter of the year because of as well as increase its production efficiency. The the shortage of water, the core component in Company has strongly adhered to punctuality in delivery the manufacturing procedure. In spite of these in order to provide the best service possible and satisfy uncontrollable events, the Company made a profit of its customers. In recognition of the importance of the Baht 323 million, a slight decrease of 5% compared to Company’s product quality and integrity in doing the previous year. With its vast experience in this business over the past 67 years, the products carrying industry, the Company could prepare itself to tackle the “Rose” logo have always been a favourite choice these unexpected situations and achieved satisfactory for consumers and are widely recognised for their results in the end. In summary of the operating results in quality in the cassava starch industry, both locally and 2013, the Company had a net income of Baht 251 abroad. million, a decrease of 19% compared to the previous year. Such a decrease was mainly due to the decrease Increasing production capacity is another key mission for in transactions not related to the Company’s ordinary the Company so that it can expand its customer and business, for example the Company had profits from manufacturing bases in ASEAN by first increasing the debt restructuring and from the reversion of a loss from production capacity of cassava starch products at the land depreciation in 2012. Company’s local factories in the Udonthani, Kalasin and Nakhon Ratchasima provinces. This commitment is In 2013, the Company had sales revenue of Baht 3,362 expected to be fulfilled at the end of 2016. In regards million, a slight decrease of 6% against the previous to its long-term prospects, the Company is looking for year, although the factory at Kalasin province an opportunity to grow its footprint in other countries in suspended its manufacturing activities in the second ASEAN, in addition to its existing manufacturing base in quarter of 2013. The export price of cassava starch from Vietnam. Thailand in 2013 rose by an average of 4% compared to the previous year, which was consistent with the
THAI WAH STARCH PUBLIC COMPANY LIMITED In relation to the development of the Company as an The Company foresees that many external factors may organisation, the Company has continued to improve affect its operating results in 2014, for instance, the the performance of its staff members across all national political uncertainty and the potential drought departments by setting performance standards and that may affect the volume of fresh cassava roots in incorporating the use of computer systems in various the market and the Company’s production capacity. parts of its operations. Human resources and labour skill However, the Company expects to see positive factors developments have also been promoted to ensure that too, for example. economic recovery in its key importer, employee competitiveness and growth are on the same China, and the anticipated devaluation of the Baht track as the organisation’s development. which will enhance the Company’s pricing competitiveness in the world market. In the light of its The Company recognises that, to ensure sustainable experience in this industry and the strong commitment growth, the growth of its organisation must involve of its management, coupled with the dedication and environmental and social improvement. The Company is collaboration of all of its staff members, the Company installing an additional biogas system at its factory in will be able to achieve its goals and overcome any Nakhon Ratchasima province after completing the difficulties. installation of biogas systems at its factories in Udonthani and Kalasin provinces in 2013. The biogas system was The Board of Directors has resolved to propose the first introduced in the Company’s factory in Vietnam in payment of dividends for the year 2013 at Baht 2 per 2011. The system reduces not only air pollution caused share, representing a dividend pay-out rate of 71.68% by the smell of wastewater treatment ponds but also against net income. The dividend payment requires greenhouse gas emissions. Biogas, as a substitute for approval from the Annual General Meeting of furnace oil in the manufacturing procedure, is an shareholders to be held on 23 April 2014. energy-saving alternative which enables the most cost- efficient use of resources. The Company also has a On behalf of the Board of Directors of the Company, I policy to improve nearby farmers’ knowledge of would like to thank all stakeholders and business cassava plantation by educating them about the partners for their support and confidence in us, as well varieties of cassava seedlings and suggesting pesticide as all executives and employees for their devotion in methods. In 2013, Thai Nam Tapioca Company Limited, performing their duties, resulting in the Company’s a subsidiary of the Company, received an honourable continued success. We are expecting to expand our award for its corporate social responsibility standards business and engage in social, community and from the Ministry of Industry of Thailand. environmental development activities at the same time to ensure our sustainable growth.
Ms. Pinyada Viriya Mr. Umnad Sukprasongphol Chairman of the Board Joint Managing Director
Annual Report 2013 Financial Highlights
Information from Consolidated Financial Statement
(Unit: Million Baht) 2013 2012 2011 (restated) (restated)
Total current assets 1,580 1,455 1,486 Total non-current assets 1,044 967 810 Total Assets 2,624 2,422 2,297 Total current liabilites 222 180 306 Total non-current liabilites 82 73 61 Total Liabilities 304 253 367 Total Shareholders’ equity 2,320 2,169 1,930
Sales 3,362 3,582 3,364 Dividend income 4 3 294 Gain on debt restructuring - 16 1,254 Share of gain from investments in associated companies - 11 88 Reversal of an impairment loss for investment property - 19 - Total revenues 3,451 3,683 5,098 Cost of sales 2,784 2,916 2,690 Total expenses 3,124 3,310 3,389 Operating profit 323 338 428 EBITDA 361 417 1,730 Earnings before finance cost and income tax expense 327 392 1,709 Finance cost 2 - 81 Income tax expense 74 83 55 Net profit for the year 251 309 1,573 Net profit attributable to non-controlling interest 32 33 39 Net profit attributable to equity holders of the Company 219 276 1,534
Other information Earnings Per Share (Baht) 2.79 3.52 19.53 Dividend Per Share (Baht) *2.00 1.00 - Book Value Per Share (Baht) 29.54 27.62 24.58
Remark : * To be considered and approve during the Annual General Meeting
THAI WAH STARCH PUBLIC COMPANY LIMITED Financial Ratios
2013 2012 2011 (restated) (restated)
Profitability ratio Gross profit margin (%) 17 19 20 Operating profit ratio (%) 10 9 13 Other income ratio (%) 0.12 1.47 25.12 Cash to operating profit ratio (%) 49 88 89 Return on Total Revenue (%) 7 8 31 Return on Total Equity (%) 11 15 151
Efficiency ratio Return on Total Assets (%) 10 13 49 Return on fixed assets ratio (%) 54 85 573 Assets turnover ratio (times) 1.37 1.56 1.58
Liquidity ratio Liquidity ratio (times) 7 8 5 Quick liquidity ratio (times) 5 6 4 Cash flow liquidity ratio (times) 0.79 1.23 0.18 Average collection period (day) 35 36 46 Average Sale period (day) 39 31 34 Average payment period (day) 4 4 5 Cash cycle (day) 71 63 75
Financial policy ratio Debts to equity ratio (times) 0.13 0.12 0.19 Interest coverage ratio (times) 163 850 6 Repayment ability ratio (cash basis) (times) 0.67 1.20 0.44 Dividend payout ratio (%) 72 28 -
Annual Report 2013 Sales Revenue (Unit: Million Baht) 4,000 3,364 3,582 3,500 676 3,362 702 19% 765 3,000 21% 23% 2,500 Sales of the company 2,000 in Vietnam 2,662 2,906 1,500 81% 2,597 1,000 79% 77% Sales of the companies in Thailand 500 0 2011 2012 2013 Sales portion of the companies in Thailand 2011 2012 2013
27% 26% 22% 73% 74% 78%
Total 2,662 million Baht Total 2,906 million Baht Total 2,597 million Baht Domestic sales Export sales
Statements of Financial Position (Unit: Million Baht) 3,000 35 2,500 269 67 253 2,000 300 1,531 1,409 1,500 1,457 1,000 1,930 2,169 2,320 537 521 500 529 311 476 572 0 Asset Liabilities and Asset Liabilities and Asset Liabilities and equity equity equity 2011 2012 2013 Asset Liabilities and equity Working capital Loan and accrued interest Other asset Account payables and other liabilities Property, Plant and Total Equity Equipment
THAI WAH STARCH PUBLIC COMPANY LIMITED Management Discussion and Analysis (MD&A)
Overview of operations In 2013, the Company and its subsidiaries in Thailand had In 2013, the Company was affected by various external an operating profit of Baht 219 million, which was close factors, i.e. drought in the North-Eastern part of Thailand to the previous year’s amount of Baht 220 million, that affected the agricultural sector, fluctuations in the Baht, although the Group were affected by the following: (i) and the Thai Government’s price intervention policy that drought that led to a decrease in sales volume, and (ii) a caused an increase in the cost of raw materials. 10% increase in the cost of raw materials due to the Notwithstanding those effects, the Group had sales of reduced volume of fresh cassava roots in the market and Baht 3,362 million, a slight decrease of 6% compared to the Thai Government’s price intervention policy. On the the previous year. The Group’s net income was Baht contrary, the Group’s selling and administrative expenses 251 million, a decrease of Baht 58 million or 19%, which decreased by 13%, which was mainly due to a decrease in was mainly due to a decrease in transactions not the freight and transportation expenses. In addition, the related to the ordinary business by Baht 50 million, Company had an increase in foreign earnings caused by whereas, the operating profit decreased by Baht 16 the depreciation of the Baht in the second half of the million or 5%. This table shows details of the operating year. As a result, the operating profit generated by the results of the Group, both in Thailand and Vietnam. Company and its subsidiaries in Thailand was close to the previous year. Unit: Baht million Operating Sales Operating Operating results in Vietnam results revenue % profit % Tayninh Tapioca Company Limited had sales revenues of Thailand 2,596 77 219 68 Baht 766 million, an increase of 13% compared to the Vietnam 766 23 104 32 previous year. This was due to a 26% increase in the sales volume of glucose products arising from a growing Total 3,362 100 323 100 demand for glucose products in Vietnam caused by the expansion of the customer’s production capacities. Operating results in Thailand However, the selling price of glucose products The Group had sales revenue of Baht 2,596 million, a decreased by 2% due to price competition in the decrease of 11% compared to the previous year, which Vietnamese market as a result of the growing number was due to the temporary suspension of manufacturing of competitors. activities at the factory in the Kalasin province because of a shortage in water supply caused by drought. As a For the starch business in Vietnam in year 2013, a result, the sales volume of cassava starch dropped by 19%. shortage in fresh cassava roots led to a decrease in the Considering that drought is an external factor beyond its sales volume of starch of Tayninh Tapioca Limited, while control, the Group has set up measures to alleviate any the cost of raw materials increased. All of these brought contingent impact by planning to construct additional about a decrease in the overall operating profit compared to the year 2012. reservoirs. In addition, the Group is now studying and improving the machinery and manufacturing procedure to Tayninh Tapioca Company Limited had an operating reduce the use of water and recycle the used water. profit of Baht 104 million, a decrease of 12% compared The export selling price of cassava starch rose by 5% to the previous year. This was mainly due to a 20% compared to the previous year was due to market- increase in the cost of raw materials arising from the oriented pricing mechanisms and the higher offering shortage in fresh cassava roots in Vietnam. Also, price of cassava starch exported by Vietnam because the selling and administrative expenses increased by of a shortage in raw materials. 24% because of the expansion of its customer base for glucose products in Vietnam.
Annual Report 2013 Profits not related to the ordinary business • Trade accounts receivable and other accounts In 2013, the Group had profits not related to the receivable ordinary business of Baht 4 million, a decrease of Most trade accounts receivable were settled Baht 50 million or 93% compared to the previous year. according to the normal credit term. The average The profits not related to the ordinary business consisted debt collection period was 35 days. The results of of the following: debt collections were close to the previous year. • Gain on a reversion of an impairment loss for • Inventory investment property decreased by Baht 19 million Finished products accounted for 85% of the because the newly assessed price of land in 2012 inventory. The turnover period of inventory was was higher than the previous recorded book value approximately 39 days, which was close to the and, therefore, the impairment loss was reversed. previous year. • Gain on debt restructuring decreased by Baht 16 million • Capital expenditure because there remained only one tranche of creditors Property, plant and equipment increased from the under the debt restructuring scheme in 2012 after previous year by Baht 96 million or 20%. The increase the majority of debt had been restructured in 2011. was mainly due to an increase in investment in biogas system installations at the Company’s Financial position of the Company factories in Udonthani and Kalasin provinces, which were completed in 2013. There were also expenses Assets for replacing old machinery and equipment used in As at 31 December 2013, the Group had total assets of the Company’s factories to improve production Baht 2,624 million, which consisted of the following key efficiency. The biogas system installation at the components: cash and cash equivalents of Baht 770 factory in Udonthani was financed by loans from million (accounting for 29%), trade accounts receivable and financial institutions, while the replacement of other accounts receivable of Baht 346 million (accounting machinery and equipment was supported by the for 13%), inventory of Baht 420 million (accounting for Company’s cash balance. 16%), and property, plant, equipment and investment property of Baht 752 million (accounting for 29%). Security collaterized against the restructured debt was completely redeemed on 28 February 2013 and Total assets increased from the previous year by Baht all outstanding legal claims relating to that debt 202 million or 8%, which was mainly due to a 40% were dismissed by the court’s orders. increase in inventory resulting from the production and storage of finished products waiting for sale in the • Source of funds following quarter. In addition, there was an increase in As at 31 December 2013, the debt to equity ratio of capital expenditure relating to: (i) the replacement of the Group was 0.13 times, which was close to the old machinery in order to improve the production previous year. The interest coverage ratio was efficiency, and (ii) investments in biogas systems for 163 times as the Group had sufficient cash flow from energy saving and efficient use of resources. operating activities to pay interest. Liabilities relating • Cash and cash equivalents The Group’s balance of cash and cash equivalents to the Company’s ordinary business formed a major as at 31 December 2013 was Baht 770 million, which part of total liabilities. They consisted of the consisted of cash held by Thai Wah Starch Public following: trade accounts payable and other Company Limited and its subsidiaries. The starch accounts payable accounting for 48%, provisions for business requires an adequate amount of cash to be employees’ benefits according to Accounting used as working capital during the manufacturing Standard No.19 accounting for 18%, and loans season. granted to the subsidiaries from financial institutions
THAI WAH STARCH PUBLIC COMPANY LIMITED accounting for 12%. Total liabilities increased from Crucial factors that may affect the Group’s operations or the previous year by Baht 51 million, which was financial condition in the future mainly due to an increase in loans granted to the The factors that may affect the Group’s operations in subsidiaries to invest in the biogas system installation. 2014 are set out as follows: The shareholders’ equity was Baht 2,320 million, an • From an analysis of trends in the economy in 2014 increase of Baht 151 million from the previous year, conducted by the Office of Agricultural Economics, which was mainly due to an increase in net income there is a forecast that the volume of cassava in 2013, offset with dividends paid by the Company products will drop, which is consistent with the results and its subsidiaries. of the last survey conducted on 12 December 2013 by four associations (the Thai Tapioca Trade Liquidity Association, the Association of Thai Tapioca Product Cash flow Factories, the Association of Tapioca Manufacturers The cash flow received from operating activities of the in the North-Eastern Part of Thailand and the Thai Group was Baht 159 million, while the operating profit Tapioca Starch Association). The volume of fresh was Baht 323 million. The difference of Baht 164 million cassava roots in 2014 is expected to decrease to resulted largely from an investment in inventory of 26 million tons, while the previous survey suggested Baht 122 million which was carried out in order to that the annual volume would be 28.7 million tons. create an increased stock of products at the end of The Company predicts that droughts, climate 2013 for sale in the following quarter which were being change and pest outbreaks may cause a decrease covered by forward contracts. The net cash flow used in the volume of fresh cassava roots in the market. in investing activities of Baht 123 million constituted cash Therefore, the shortage in fresh cassava roots is payments to acquire assets for the biogas systems and expected to have a continued impact in 2014. to replace old machinery and equipment in order to improve production efficiency. The net cash flow used in • Considering that the shortage in the water supply financing activities was Baht 74 million, which was caused by droughts may affect the volume of mainly due to the dividends paid by the Company and production, the Company intends to cushion such its subsidiaries, net of the receipt and repayment of impact by constructing additional reservoirs and is loans by its subsidiaries during the period. The Group now studying improvements to machinery and had cash balance of Baht 765 million as at manufacturing procedure that will reduce the use of 31 December 2013 for use to support its operations in water. the following year. • The proceeds in US dollars derived from the export Key liquidity ratios of starch form a substantial part to the Company’s The liquidity ratio and the quick ratio as at revenues. Therefore, the foreign exchange rate 31 December 2013 were 7 times and 5 times, fluctuations may directly affect its revenues, including respectively, which was close to the previous year. These its revolving cash flow. Taking into account this issue, figures indicate that the Company has maintained high the Company has entered into the contracts to liquidity and a stable financial position. hedge against the foreign exchange rate risk.
10 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED 11 Board of Directors As at 31 December 2013 Ms. Pinyada Viriya* Mr. Umnad Sukprasongphol* Chairman 40 Years Director 50 Years
Highest Educational Background/Director Certificate Program Highest Educational Background/Director Certificate Program ๐ Master of Accounting, Chulalongkorn University ๐ Master of Business Administration, ๐ Certified Public Accountant of Thailand Central State University ๐ New Role of the Chairman under Globalization - 2012 (Current name is University of Central Oklahoma) Thai Institute of Directors Association (IOD) ๐ Director Certification Program (DCP) - Class 15/2011, ๐ Director Accrediation Program (DAP) - Class 70/2008, Thai Institute of Directors Association (IOD) Thai Institute of Directors Association (IOD) Percentage of Shareholding in the Company Percentage of Shareholding in the Company ๐ 0.10% (79,700 Shares) ๐ 0.14% (108,700 Shares) Family Relation between Management Family Relation between Management ๐ No relation ๐ No relation Working Experiences for the Past 5 years Working Experiences for the Past 5 years Present Present ๐ Director ๐ Chairman Joint Managing Director (Business Operation) Joint Managing Director (Corporate & Finance) Thai Wah Starch Public Company Limited Nomination and Remuneration Committee Member ๐ Director Thai Wah Starch Public Company Limited Subsidiaries and associated companies ๐ Director of Thai Wah Starch Public Company Limited Subsidiaries and associated companies ๐ Secretary General - Board of Executive Committee of Thai Wah Starch Public Company Limited The Thai Tapioca Trade Association (TTTA) 2003-2011 ๐ Financial Controller Thai Wah Food Products Public Company Limited
Remark: * Authorized directors of the Company according to the Affidavit
12 Annual Report 2013 Ms. Tawiratt Narasuj Mr. Somchai Towiwat Independent Director 38 Years Independent Director 58 Years
Highest Educational Background/Director Certificate Program Highest Educational Background/Director Certificate Program ๐ Bachelor of Accounting, ๐ Master of Business Administration, Thammasat University Chulalongkorn University ๐ Director Accrediation Program (DAP) - Class 70/2008, Percentage of Shareholding in the Company Thai Institute of Directors Association (IOD) ๐ None Percentage of Shareholding in the Company Family Relation between Management ๐ None ๐ No relation Family Relation between Management Working Experiences for the Past 5 years ๐ No relation Present Working Experiences for the Past 5 years ๐ Independent Director Present Audit Committee Member ๐ Independent Director Nomination and Remuneration Committee Chairman Audit Committee Chairman Thai Wah Starch Public Company Limited Thai Wah Starch Public Company Limited 1989-Present ๐ Accounting Manager ๐ Managing Director Thaicom Public Company Limited Artivat Company Limited 2009-2011 ๐ Accounting and Finance Manager Fujitsu Systems Business (Thailand) Limited 2007-2009 ๐ Accounting and Finance Manager True Fitness Company Limited
THAI WAH STARCH PUBLIC COMPANY LIMITED 13 Mr. Teerawut Charoensuk Ms. Sirivan Skulkerevathana* Independent Director 45 Years Director 57 Years
Highest Educational Background/Director Certificate Program Highest Educational Background/Director Certificate Program ๐ Master of Business Administration, ๐ Master of Business Administration, Chulalongkorn University Indiana University, USA ๐ Internal Control over Financial Reporting, ๐ Director Accrediation Program (DAP) - Class 80/2009, The Stock Exchange of Thailand Thai Institute of Directors Association (IOD) Percentage of Shareholding in the Company Percentage of Shareholding in the Company ๐ None ๐ None Family Relation between Management Family Relation between Management ๐ No relation ๐ No relation Working Experiences for the Past 5 years Working Experiences for the Past 5 years Present Present ๐ Independent Director ๐ Director Audit Committee Member Senior Assistant Vice President - Finance Nomination and Remuneration Committee Member Thai Wah Starch Public Company Limited Thai Wah Starch Public Company Limited ๐ Director ๐ Engineer 8 Senior Assistant Vice President - Finance Industrial Estate Authority of Thailand Thai Wah Food Products Public Company Limited ๐ Director Platinum Enterprise Limited ๐ Director Tapioca Starch Limited 2008-2012 ๐ Senior Assistant Vice President - Finance Company Secretary Laguna Resorts & Hotels Public Company Limited 2001-2012 ๐ Director Certain related companies of Laguna Resorts & Hotels Public Company Limited
Remark: * Authorized directors of the Company according to the Affidavit
14 Annual Report 2013 Mr. Ariel P Vera* 1 Mr. Thawan Petchlawlian* Director 61 Years Director 35 Years
Highest Educational Background/Director Certificate Program Highest Educational Background/Director Certificate Program ๐ Master of Business Administration, ๐ Bachelor of Accounting, National University of Singapore Kasetsart University ๐ Bachelor of Science in Business Administration, ๐ Role of the Nomination and Governance University of the East, Philippines Committee (NGC) - Class 1/2011, ๐ Certified Public Accountant of Philippines Thai Institute of Directors Association (IOD)
Percentage of Shareholding in the Company ๐ Director Accrediation Program (DAP) - Class 70/2008, Thai Institute of Directors Association (IOD) ๐ 0.07% (70,000 Shares) Percentage of Shareholding in the Company Family Relation between Management ๐ 0.00% (100 Shares) ๐ No relation Family Relation between Management Working Experiences for the Past 5 years Present ๐ No relation ๐ Director Working Experiences for the Past 5 years Thai Wah Food Products Public Company Limited Present ๐ Director ๐ ๐ Director Laguna Resorts & Hotels Public Company Limited Thai Wah Starch Public Company Limited and certain related companies ๐ Financial Controller ๐ Director Thai Wah Food Products Public Company Limited Thai Wah Starch Public Company Limited 2009-2012 ๐ Group Managing Director / Director ๐ Joint Managing Director (Corporate and Finance) Banyan Tree Holdings Limited Universal Starch Public Company Limited** ๐ Chairman / Director 2007-2012 Certain related companies of Banyan Tree ๐ Director Holdings Limited Subsidiaries and Associated Companies ๐ Director of Universal Starch Public Company Limited** ICD (HK) Limited 2007-2009 ๐ Senior Accounting Manager Universal Starch Public Company Limited**
Remark : * Authorized directors of the Company according to the Affidavit ** Current name is Thai Wah Starch Public Company Limited (1) Mr. Hwee Liang Tee has resigned from his directorship in the Company with effect from April 29, 2013 and the Board of Directors’ meeting of the Company has approved the appointment of Mr. Ariel P Vera, a new director of the Company, to replace Mr. Hwee Liang Tee with effect from August 14, 2013
THAI WAH STARCH PUBLIC COMPANY LIMITED 15 Ms. Manee Lueprasert* Director 48 Years
Highest Educational Background/Director Certificate Program ๐ Master of Business Administration, Thammasat University ๐ Corporate Secretary Development Program, Thai Listed Companies Association ๐ Fundamental Practice for Corporate Secretary 18 (FPCS 18), Thai Listed Companies Association and Thai Company Secretary Club
Percentage of Shareholding in the Company ๐ 0.10% (78,100 Shares) Family Relation between Management ๐ No relation Working Experiences for the Past 5 years Present ๐ Director Senior Finance Manager Company Secretary Thai Wah Starch Public Company Limited ๐ Director Subsidiaries and associated companies of Thai Wah Starch Public Company Limited
Remark: * Authorized directors of the Company according to the Affidavit
16 Annual Report 2013 Management and Company Secretary as at 31 December 2013 1 Ms. Pinyada Viriya Joint Managing Director (Corporate & Finance) 2 Mr. Umnad Sukprasongphol Joint Managing Director (Business Operation) Profile as shown in the section of “Board of Directors as at 3 Ms. Sirivan Skulkerevathana 31 December 2013” Senior Assistant Vice President - Finance
4 Ms. Manee Lueprasert Senior Finance Manager
5 Mr. Chalermkeit Chalermpronkit 6 Mr. Chainarong Chimchan Senior Operation Manager Age (Years) 45 Senior IT Manager Age (Years) 49
Highest Educational Background/Director Certificate Program Highest Educational Background/Director Certificate Program ๐ Bachelor Degree in Business Administration - ๐ Bachelor Degree in Computer Sukhothai Thammathirat Open University Chandrakasem Rajabhat University
Percentage of Shareholding in the Company Percentage of Shareholding in the Company ๐ 0.01% (10,000 shares) ๐ 0.10% (79,800 shares) Family Relation between Management Family Relation between Management ๐ No relation ๐ No relation Working Experiences for the Past 5 years Working Experiences for the Past 5 years Present Present ๐ Senior Operation Manager ๐ Senior IT Manager Thai Wah Starch Public Company Limited Thai Wah Starch Public Company Limited 1997-2013 1997-2013 ๐ General Director / Sales & Marketing Manager ๐ Senior Manager - Technical Support Tay Ninh Tapioca Company Limited Laguna Resorts & Hotels Public Company Limited
THAI WAH STARCH PUBLIC COMPANY LIMITED 17 7 Ms. Dhitirat Makepoowadol* Accounting Manager Age (Years) 44
Highest Educational Background/Director Certificate Program ๐ Master of Accounting Chulalongkorn University ๐ Executive Financial Management, The faculty of Economics Chulalongkorn University ๐ CFO Certificate Program 15 - Federation of Accounting Professions under the Royal Patronage of His Majesty The King
Percentage of Shareholding in the Company ๐ None Family Relation between Management ๐ No relation Working Experiences for the Past 5 years Present ๐ Accounting Manager Thai Wah Starch Public Company Limited 2007-2009 ๐ Accounting Manager G Steel Public Company Limited
Remark : * Promoted to Senior Accounting Manager with effect January 1, 2014
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(1) = Chairman = Vice Chairman = Vice = Independent Director = Audit Committee Chairman X V ID ACC ACC : Mr. Hwee Liang Tee has resigned from his indirectorship the Company with effect from April 29, 2013 and the Board of meetingDirectors’ of the Company has the approved appointment of Mr. Ariel P a Vera, new August 14, 2013 with effect from Tee Liang Mr. Hwee replace of the Company, to director Mr. Nguyen Thanh Ha has from resigned his indirectorship the Company with effect 1, from November 2013 and the Board of meetingDirectors’ of the Company has the appointment of Mr. Vo Dong Giang, a new 1, 2013 November Thanh Ha with effect from Mr. Nguyen replace of the Company, to director Mr. Pinai has Wanicharat from resigned his indirectorship the Company with effect 1, from November 2013 and the Board of meetingDirectors’ of the Company has the appointment of a Ms. Sirivan Skulkerevathana, January 1, 2014 with effect from Mr. Pinai Wanicharat replace of the Company, to director new Mr. Tran Canh Lac Mr. Tran Supratya Mr. Surapon Saittagaroon Mr. Sretsei Charoenpatchayakul Ms. Orawan Ms. Sudjai Keeratirat Mr. Paitoon Benjarit Mr. Paitoon Mr. Nam Chitdeechai Chalermpronkit Mr. Chalermkeit Mr. Somchai Towiwat Mr. Chainarong Chimchan Mr. Chainarong Charoensuk Mr. Teerawut Makepoowadol Ms. Dhitirat Narasuj Ms. Tawiratt Thi Phuc Mr. Nguyen Ms. Manee Lueprasert Petchlawlian Mr. Thawan Mr. Umnad Sukprasongphol Ms. Pinyada Viriya Mr. Ariel P Vera Skulkerevathana Ms. Sirivan Dong Giang Mr. Vo Details of Position Directors and Executives Remark
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THAI WAH STARCH PUBLIC COMPANY LIMITED 19
------/ / / / W1 Company ------/ / / / MJ ------/ / / TWRL ------/ / / TWRF ------/ / / TWMS ------/ / / TWAS ------/ / / TW6 ------/ / / TTL = Managing Director Commission the definition of the Securities Exchange to according = Executive = None ------/ / / // E - TS1989 Subsidiaries ------/ / / TOC ------/ / / / / / / X V TNT ------/ / / / TN1 December 2013 st ------/ / / / TN As at 31 ------/ / / L2 = Audit Committee Member = Nomination and Remuneration Committee Chairman and Remuneration = Nomination = Nomination and Remuneration Committee Member and Remuneration = Nomination = Director ------/ / / TMS AC
NRCC NRC /
(3)
(2) Name List
(1) = Chairman = Vice Chairman = Vice = Independent Director = Audit Committee Chairman X V ID ACC ACC : Mr. Hwee Liang Tee has resigned from his indirectorship the Company with effect from April 29, 2013 and the Board of meetingDirectors’ of the Company has the approved appointment of Mr. Ariel P a Vera, new August 14, 2013 with effect from Tee Liang Mr. Hwee replace of the Company, to director Mr. Nguyen Thanh Ha has from resigned his indirectorship the Company with effect 1, from November 2013 and the Board of meetingDirectors’ of the Company has the appointment of Mr. Vo Dong Giang, a new 1, 2013 November Thanh Ha with effect from Mr. Nguyen replace of the Company, to director Mr. Pinai has Wanicharat from resigned his indirectorship the Company with effect 1, from November 2013 and the Board of meetingDirectors’ of the Company has the appointment of a Ms. Sirivan Skulkerevathana, January 1, 2014 with effect from Mr. Pinai Wanicharat replace of the Company, to director new Mr. Tran Canh Lac Mr. Tran Supratya Mr. Surapon Saittagaroon Mr. Sretsei Charoenpatchayakul Ms. Orawan Ms. Sudjai Keeratirat Mr. Paitoon Benjarit Mr. Paitoon Mr. Nam Chitdeechai Chalermpronkit Mr. Chalermkeit Mr. Chainarong Chimchan Mr. Chainarong Ms. Manee Lueprasert Makepoowadol Ms. Dhitirat Mr. Somchai Towiwat Charoensuk Mr. Teerawut Narasuj Ms. Tawiratt Thi Phuc Mr. Nguyen Mr. Umnad Sukprasongphol Petchlawlian Mr. Thawan Ms. Pinyada Viriya Mr. Ariel P Vera Skulkerevathana Ms. Sirivan Dong Giang Mr. Vo Details of Position Directors and Executives Remark
(1) (2) (3)
20 Annual Report 2013 Abbreviation
Abbreviation Name
ADP Architrave Design & Planning Company Limited BE Business Evolution Company Limited BNPD Bangna Property Development Company Limited BPT Bangpakong Turakij Company Limited BT5 Bang Thao (5) Company Limited BT6 Bang Thao (6) Company Limited BT7 Bang Thao (7) Company Limited CSL Chiang Saen Land Company Limited DI DI Company Limited L2 Laguna (2) Company Limited MCL Mae Chan Land Company Limited MHSL Mae Hong Son Land Development Limited MJ Mae Joe Land Company Limited PNR Phang Nga Resorts Limited RPD Ratchada Property Development Company Limited TMS Thai Modified Starch Company Limited TN Thai Nam Tapioca Company Limited TN1 Thai Nam Tapioca (1) Company Limited TNT Tay Ninh Tapioca Company Limited TOC Thai Ongkarak Company Limited TRL Tropical Resorts Limited TS1989 Thai Sin Tapioca (1989) Company Limited TTL Tha Thungna Land Company Limited TW6 Thai Wah (6) Company Limited TWAS Thai Wah Alpha Starch Company Limited TWMS Thai Wah Marketing Services Limited TWRF Thai Wah Rice Flour Company Limited TWRL Thai Wah Realty Limited
THAI WAH STARCH PUBLIC COMPANY LIMITED 21 Policy and Business Overview Background Thai Wah Starch Public Company Limited (originally In October 2007, the Company’s Extraordinary General known as Thai Wah Co., Ltd.) (the “Company”) was Meeting of Shareholders resolved to change the incorporated in Thailand on February 26, 1947 to initially Company’s name to “Universal Starch Public Company export minerals to the US and Europe prior to Limited” to reflect its main business of producing and expanding into an agribusiness. In 1952, the Company distributing tapioca starch to customers worldwide. started producing and exporting tapioca starch by However, due to its long-established reputation over setting up the first tapioca starch factory with the most more than 60 years for producing a variety of quality sophisticated machines and production process in tapioca products, traditionally under the name “Thai Wah” Chonburi province. As the production kept expanding, especially in relation to tapioca starch which is its main the firm finally opened several large and highly product, although the name was changed to Universal sophisticated factories producing tapioca starch in the Starch Public Company Limited, customers were still northeastern region of Thailand. Its “Rose Brand” tapioca looking for tapioca starch under the name “Thai Wah”. starch is widely known as a quality product and highly Therefore, the Company decided to change its name recognized by international customers. The Company once again to “Thai Wah Starch Public Company was also the first to start producing alpha starch in Limited” pursuant to the resolution approved at the 2013 Thailand. At present, the factory, which is located at Annual General Meeting of Shareholders. The new Nakhon Ratchasima Province, is operated by Thai Wah name effectively reflects the Company’s high-quality Alpha Starch Company Limited and produces alpha tapioca starch products. starch widely used in the industries of aquatic animal feeds, mosquito repellent, incense and packaging. Vision To be the leader in manufacturing and exporting of On December 16, 1985 the Company was approved for good quality tapioca starch in the ASEAN region. listing in the Stock Exchange of Thailand (SET). Subsequently, in early 1993, the Company expanded Mission the business by investing in the ordinary shares of To produce good quality products and to deliver in a Laguna Resorts & Hotels Public Company Limited (“LRH”) timely manner in order to meet our customers’ and Thai Wah Food Products Public Company Limited expectations. (“TWFP”) for a total of 17.7% and 42.1%, respectively. However, in 2011, the Company transferred its ordinary The Company is a leader in the production and export shares in LRH and TWFP as a means of debt of quality tapioca starch in ASEAN. The business extends repayments to the creditors. As a result of those share to cover production and export of tapioca-based transfers, the Company’s shareholding in LRH and TWFP products; namely, sago (or tapioca pearls) and Alpha was reduced to 2.1% and 5.0% of the total paid-up starch. The products distributed under the “Rose Brand” capital of each company, respectively trademark have been widely recognized by domestic and overseas customers especially in relation to its In 1994, the Company started expanding its production quality and on-time delivery. The Board of Directors will base to Vietnam by collaborating with a Vietnamese review and approve the Company’s vision and mission state-owned enterprise to set up Tay Ninh Tapioca at least once every 5 year. Company Limited (“TNT”), a joint venture company in which it holds 70% stake to produce tapioca starch for domestic and export sales. In October 2000, TNT officially unveiled its glucose factory to produce glucose, a product derived from tapioca starch, thanks largely to demands from Vietnam’s booming economy.
22 Annual Report 2013 companies which conduct business other than the Significant Events tapioca product business in order to diversify the Following an official notification of the Baht float policy Company’s business risks. Additionally, the Company on July 2, 1997, the Company was adversely affected in invests in real property. A number of quality land plots the same manner as other companies in Thailand which are held by the Company and its subsidiaries. caused the Company’s USD loans, for working capital and investments in its real property business purposes, to The Company’s business can be divided into three increase after currency conversion (i.e. the original segments as follows: amount of Baht 2,908 million increased to Baht 4,795 million). Considering the condition of its normal business 1. Agribusiness operations at such time, the Company could not The Company has conducted its core business of generate sufficient profits to pay the substantial increase manufacturing tapioca products for local and in its debts, making it necessary to file a petition for international distribution for more than 50 years. This business rehabilitation with the Central Bankruptcy Court. business is managed by the Company itself and its On August 21, 2000, the Central Bankruptcy Court issued subsidiaries, namely Thai Nam Tapioca Company an order allowing the Company to enter the Limited, D I Company Limited, Thai Wah Alpha Starch rehabilitation proceedings and approved the Company’s Company Limited, and Tay Ninh Tapioca Company rehabilitation plan on February 14, 2001. Subsequently, Limited. The agricultural products produced by the during the same year, the Stock Exchange of Thailand Company includes tapioca starch, alpha starch and (SET) declared that the Company had become subject sago (tapioca pearls). to the criteria for possible delisting because its 2. Investment in ordinary shares shareholders’ equity was negative, and prohibited the The Company has invested in the ordinary shares of trading of the Company’s shares until the date of its LRH, TWFP, and Tropical Resort Limited and is currently release from the delisting criteria as well as classified its holding 2.1%, 5.0%, and 19.8% of the total paid-up securities in the Non-Performing Group. In 2007, the capital of each company, respectively. The purpose of Central Bankruptcy Court ordered the termination of the investing in these non-agribusiness companies is to Company’s business rehabilitation process because the diversify the Company’s business risks. By investing in time limit for implementing the Plan had expired, but such ordinary shares, the Company expects to derive the business rehabilitation had not yet been completed returns in the form of dividend. pursuant to the Plan. However, the Company had still conducted its core business which continuously 3. Investment in real property generated an increase in its operating revenues. Apart The Company and its subsidiaries have invested in real from this, the Company was able to negotiate debt property by possessing many pieces of land with great restructurings with most of the creditors of the Company investment prospects in almost all regions of Thailand, and fully settle its debts to the creditors in May 2012. As i.e. in the north, upper part of the northeast, middle a result of fully debt settlement, the Company has no part, east, and west. Land investment represents less outstanding restructured debts and is free of all legal risks than investment in other assets because land in disputes among itself and its creditors at the moment. itself is unlikely to depreciate. The Company expects to derive returns from a higher selling price which is Shareholding Structure of the Group expected to increase in the future according to the The Company’s core business is to manufacture tapioca improvement in Thailand’s economy. Currently, the products for local and international distribution, which is Company has no development plans on such property. managed by the Company itself and its subsidiaries. The Company also invests in ordinary shares of various
THAI WAH STARCH PUBLIC COMPANY LIMITED 23 Thai Wah Starch Public Company Limited
Shareholding Structure as at December 31, 2013
TWS
Investment in Agribusiness Investment in real property ordinary shares
19.8% 99.9% DI TRL 99.9% BPT 99.9% BT5 99.4% L2* 99.9% TWAS 5.0% TWFP 99.9% CSL 99.9% PNR 99.3% BT7* 83.3% 2.1% TWRF* 99.9% 99.9% 94.6% LRH MCL TS1989 TMS* 70.0% TNT 99.9% TOC 99.9% TW6 84.9% MHSL 69.9% TN 99.9% TTL 99.9% TWRL 79.9% TWMS*
99.9% 99.8% 69.9% BT6 ADP* TN1
49.9% 99.9% RPD 99.9% BNPD MJ
49.9% BE 49.8% 29.9% W1
Remark * = Dormant
24 Annual Report 2013 Subsidiaries or Related Companies in which the Company has shareholding exceeding 10 percent
COMPANY TYPE OF BUSINESS REGISTERED PAR VALUE PAID-UP CAPITAL SHAREHOLDING CAPITAL (BAHT) (BAHT/SHARE) (BAHT) PROPORTION (DIRECT+INDIRECT)(%) Tropical Resorts Limited Resort investment USD 21,000,000 USD 1 USD 21,000,000 19.8 22nd Floor, Man Hing Commercial Building, and development 79-83 Queen’s Road Central, Hong Kong Tel. (65) 6849 5888 Fax. (65) 6849 5713
D I Company Limited Manufacture of 10,000,000 1,000 10,000,000 99.93 21st Floor Thai Wah Tower 1 tapioca starch 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Thai Nam Tapioca Company Limited Manufacture of 86,600,000 100 86,600,000 70 21st Floor Thai Wah Tower 1 tapioca starch 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Thai Wah Alpha Starch Company Limited Manufacture of 18,000,000 100 18,000,000 99.99 21st Floor Thai Wah Tower 1 alpha starch 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Thai Wah Rice Flour Company Limited Dormant 30,000,000 100 30,000,000 83.33 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Tay Ninh Tapioca Company Limited Manufacture of USD 4,900,000 USD 4,900,000 70.0 Tan Binh Hamlet, Hoa Thanh District, tapioca starch, Tay Ninh Province, Vietnam glucose and candy
THAI WAH STARCH PUBLIC COMPANY LIMITED 25 COMPANY TYPE OF BUSINESS REGISTERED PAR VALUE PAID-UP CAPITAL SHAREHOLDING CAPITAL (BAHT) (BAHT/SHARE) (BAHT) PROPORTION (DIRECT+INDIRECT)(%) Thai Modified Starch Company Limited Dormant 40,000,000 1,000 10,000,000 94.62 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Rachada Property Development Company Limited Holding Company 162,000,000 100 162,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Thai Wah Marketing Services Limited Dormant 40,000,000 100 20,000,000 80 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Laguna (2) Company Limited Dormant 100,000 100 100,000 99.4 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Bang Tao (5) Company Limited Landholding 1,000,000 100 250,000 99.93 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Bang Tao (6) Company Limited Landholding 21,500,000 100 21,500,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
26 Annual Report 2013 COMPANY TYPE OF BUSINESS REGISTERED PAR VALUE PAID-UP CAPITAL SHAREHOLDING CAPITAL (BAHT) (BAHT/SHARE) (BAHT) PROPORTION (DIRECT+INDIRECT)(%) Bang Tao (7) Company Limited Dormant 100,000 100 25,000 99.3 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Bangna Property Development Company Limited Holding Company 28,145,000 100 28,145,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Thai Nam Tapioca (1) Company Limited Landholding 1,000,000 100 1,000,000 69.95 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Chiang Saen Land Company Limited Landholding 75,000,000 100 75,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Thai Sin Tapioca (1989) Company Limited Landholding 5,000,000 100 5,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Mae Chan Land Company Limited Landholding 15,000,000 100 15,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
THAI WAH STARCH PUBLIC COMPANY LIMITED 27 COMPANY TYPE OF BUSINESS REGISTERED PAR VALUE PAID-UP CAPITAL SHAREHOLDING CAPITAL (BAHT) (BAHT/SHARE) (BAHT) PROPORTION (DIRECT+INDIRECT)(%) Mae Hong Son Land Development Limited Landholding 2,000,000 100 2,000,000 84.97 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Thai Wah (6) Company Limited Landholding 29,000,000 100 29,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Mae Joe Land Company Limited Landholding 3,000,000 100 3,000,000 50 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Thai Ongkarak Company Limited Landholding 4,000,000 100 4,000,000 99.98 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Tha Thungna Land Comoany Limited Landholding 15,000,000 100 15,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Architrave Design & Planning Company Limited Dormant 500,000 100 500,000 99.88 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
28 Annual Report 2013 COMPANY TYPE OF BUSINESS REGISTERED PAR VALUE PAID-UP CAPITAL SHAREHOLDING CAPITAL (BAHT) (BAHT/SHARE) (BAHT) PROPORTION (DIRECT+INDIRECT)(%) Phang Nga Resorts Limited Landholding 1,000,000 100 1,000,000 99.93 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Bangpakong Turakij Company Limited Landholding 91,000,000 100 91,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 Thai Wah Realty Limited Property development 100,000,000 1,000 100,000,000 99.99 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271 The Walon (1) Company Limited Landholding 1,000,000 100 1,000,000 29.9 21st Floor Thai Wah Tower 1 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 02719 Business Evolution Compamy Limited * Not yet commenced 100,000 100 100,000 99.70 21st Floor Thai Wah Tower 1 Operation 21/63-64 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand Tel. 66 (0) 2285 0040 Fax. 66 (0) 2285 0271
Remark : * Indirect held by 2 subsidiaries since April 7, 2010
THAI WAH STARCH PUBLIC COMPANY LIMITED 29
Nature of Business
Revenue Structure
The Company’s revenue structure of the sale and services to the third party are descriped as follows:- (Unit: Million Baht) 2013 2012 2011 Products/Services Revenue Revenue Revenue Million Baht % Million Baht % Million Baht % Agricultural business - Tapioca Starch 2,659 77 3,006 82 2,790 55 - Thai 2,371 69 2,720 74 2,436 48 - Vietnam 288 8 286 8 354 7 - Pearl - Thai 225 6 186 5 227 4 - Glucose - Vietnam 478 14 390 10 347 7 Investment in securities - Dividend 4 - 3 - 294 6 - Share of gain from investments in associates - - 11 - 88 2 - Gain on reclassification of investment in associates - - - - 22 - Investment properties - Rental income 7 - 6 - 6 - Other income - Gain on exchange 20 1 - - - - - Gain on debt restructuring - - 16 1 1,254 24 - Other income 58 2 65 2 70 2 Total 3,451 100 3,683 100 5,098 100
3% 3% 14% 10% 5% 34% 6% 2013 2012 2011
77% 82% 7% 55% 4%
Tapioca Starch Pearl Glucose Other income apart from agricultaral business
THAI WAH STARCH PUBLIC COMPANY LIMITED 31 Nature of the Business
1. Agricultural Products markets being Japan and Taiwan. Currently, TWAS Thai Wah Starch Public Company Limited (the has placed much importance on improvement and Company) and its subsidiaries has operated in development of its product quality and researching agricultural products business for over half a century methods for manufacturing new products to and the Company possesses expertise and experience satisfy the market needs. Furthermore, TWAS also as a true market leader, maintaining its status as a has the capability to manufacture alpha starch major producer and exporter of tapioca starch according to the chemical formula requirements products in Thailand. Products across its network are specific to each industry with recognized classified as follows: standards. This will increase exports, both in terms of volume and value. • Tapioca starch Tapioca starch is a product derived from cassava • Sago roots. Apart from direct consumption, tapioca Sago is another food product derived from starch has many other uses in the food industry tapioca starch, which is widely popular among such as seasoning powder (MSG) and sweetener consumers both locally and in other Asian products, as well as uses in other industries countries such as China and Taiwan because it including paper and textile. can be used in cooking both savory dishes as well as desserts, thus providing sago consumption The Company have 4 factories for manufacturing a continually upward trend. tapioca starch scattered among various regions in Thailand, all having ISO 9001:2008 certification Currently, the Company has further developed for quality management systems, as well as GMP sago products in order to provide more variety, (Good Manufacturing Practice), HACCP (Hazard producing Roselle sago as well as Pandanus sago Analysis and Critical Control Points), HALAL and into the market and allowing consumers the KOSHER certifications. opportunity to select from products that are new and different. Furthermore, new recipes were In addition to its local manufacturing, the developed for both savory and dessert dishes in Company also jointly invested with a state order to recommend consumers to use sago with enterprise in the Socialist Republic of Vietnam to more variety, convenience and speed. Examples manufacture tapioca starch for local and of new recipes include boiled sago pork international export. This joint venture is called dumplings instead of traditional method of Tay Ninh Tapioca Company Limited (TNT) located steaming, tapioca pearls mixed with coriander in Tay Ninh, Socialist Republic of Vietnam. roots, garlic and pepper, the jade pearls and the sea pearls, all of which are savory dishes that • Alpha Starch use large sago pearls for preparation. Alpha Starch is a type of modified tapioca starch using physical modification process which Separately, the Company has further developed is widely used in the aquatic animal feed, sago products in another variation known as tiny mosquito repellent and metal casting industries. pearls that are easily cooked simply by immersing Thai Wah Alpha Starch Company Limited (TWAS), in hot water for approximately 5 minutes. These are a subsidiary of the Company, manufactures and suitable for using as ingredients in breakfast dishes distributes alpha starch products, with the main or mixing with sausage products to add texture.
32 Annual Report 2013 The Company’s factory for manufacturing sago 3. Investment in property products has been awarded ISO 9001 The Company and its subsidiaries invested in certification for quality management systems, property, holding investment quality land dispersed in GMP (Good Manufacturing Practice), HACCP various regions including the Northern, upper part of (Hazard Analysis Critical Control Points), and the Northeast, Central, Eastern and Western parts of HALAL certification, which can assure customers the country. Investment in land poses less investment of the Company’s product quality. risk than investing in other types of assets, as the state of property does not depreciate. The Company • Glucose Syrup anticipates that it will benefit from the return on its Glucose syrup is a type of product made from future sales price, which is seen as being on an hydrolysis of starch with the characteristic of upward trend in line with the improving economy of vicious sticky, slightly sweet and colorless. It is the country. Currently, the Company and its used as an ingredient in many food products subsidiaries has no development plans on such such as candy, toffees, jam, juice powder, ice property. cream, creamer and other beverages, which are manufactured by TNT, a subsidiary of the Marketing and Competition
Company located in Tay Ninh, Socialist Republic Target Customers of Vietnam. TNT’s glucose product are widely recognized and trusted by consumers for its The Company’s tapioca products are distributed both quality and product standard. Furthermore the locally and internationally where direct sales accounts factory has been awarded ISO 9001 for quality for 30% of sales revenue and distribution through dealers management systems, HACCP (Hazard Analysis or traders accounts for 70%. The classifications of Critical Control Points) and HALAL certification. customers are set out as follows: 1. Tapioca starch • Tapioca Chips and Tapioca Pellets Tapioca products are exported to several countries Tapioca chips and tapioca Pellets are another around the world, including the People’s Republic of variety of products derived from tapioca starch China, Japan, Taiwan, Singapore, United States of which serves as ingredients in animal feed as America and European regions under the “Rose well as raw materials in the manufacturing of Brand” trademark. Some part of this product is also alcohol and citric acid. distributed locally. 2. Alpha starch 2. Investment in Ordinary shares Alpha starch are also distributed to several The Company has invested in ordinary shares of international countries such as Japan, Europe and Laguna Resorts and Hotels Public Company Limited Taiwan as well as distributed locally. (LRH), Thai Wah Food Products Public Company Limited (TWFP) and Tropical Resort Limited (TRL), with 3. Sago its current shareholdings at 2.1%, 5.0% and 19.8% of This product is mainly distributed to Asian countries the total paid-up capital of each company, such as the People’s Republic of China, Philippines respectively. Such investments represent the and the Republic of Indonesia. However some of the investment in ordinary shares of other companies products are distributed to Europe and the United that operate in businesses other than agricultural States of America, as well as locally distributed. product business in order to mitigate business risk 4. Tapioca chips and Tapioca pellets and allowing the Company to receive return on The main market for this product is the People’s investment in the form of dividend payments. Republic of China and Taiwan.
THAI WAH STARCH PUBLIC COMPANY LIMITED 33 Product Distribution Channel tapioca starch increased by 10.4%. Some contribution to Marketing of tapioca products: In the previous year, the the increase in export volume also comes from the Company’s marketing activities focused on the food decrease in tapioca export volume in Vietnam in 2012 industry, instead of the paper and textile industries to approximately 314,000 tons **. because of the higher pricing in the food industry than the other two industries. Local sales accounts for Not only does the Company need to compete with the approximately 30% of sales revenues while export private sectors but also have to compete with the accounts for approximately 70%. government mortgage schemes, which carries out a pricing intervention policy under the pledging scheme Regarding distribution channels, the Company directly by proposing the purchase price of fresh cassava roots exports its products to food manufacturers. Some higher than the market price. In the meantime, the products were indirectly sold through local dealers in Company must compete with the government to sell the importing countries. the tapioca starch, while the government’s proposed selling price is lower than the market price. Competition Nowadays, competition in international markets is quite Production policy intense. In addition to local competitors, the Company The production process of the Company depends upon also have to compete with foreign manufacturers in the availability of raw materials. The Company will ASEAN countries such as Socialist Republic of Vietnam, maximize production capacity during the harvest season Kingdom of Cambodia, and Laos which have the (when farmers dig out the cassava roots to sell), which advantage of lower costs when compared to Thailand. falls during the period October - April every year. During However, the Company focuses on markets which prefer such harvest period, the price of cassava roots are consistent quality rather than lower prices. relatively low compared to other seasons, which means, the Company would step up production in order to Condition of competition: In the previous year, there produce the maximum amount which can either be were 5-6 competitors whose capacity was equal to or sold to customers or stored for future sales throughout greater than the Company’s. While the competitors the year. Towards the end of harvest season, the price adopted the competitive pricing strategies, the for fresh cassava roots will increase. In the event that Company still pursued the strategy of quality and orders are continuously being placed, and the profit punctuality of delivery, which was very important in the margin remains at a satisfactory level, the Company will international markets. The Company’s strengths included continue its production for as long as possible. its reputation, quality, and punctuality of delivery, including the “Rose brand” which has been well Production capacity and quantity recognised in the food industry particularly in Taiwan The Company and its subsidiaries has a total of five and China. manufacturing plants of tapioca products, four of which are in Thailand and the other one is in Socialist Republic Trend of industry and market competition: In spite of the of Vietnam. The four plants in Nakhon Ratchasima, stagnant economy, demand for tapioca starch in the Kalasin, Udonthani, and Kampaengpetch have an global market remains great. This can be seen from the aggregate production capacity of 300,000 tonnes per quantity of Thai exports for tapioca starch which year and the capacity utilization rate is approximately increase approximately by 10% each year, i.e., from 60 percent. As for the factory in Vietnam, the 3.08* million tons in 2012 export for tapioca starch aggregate production capacity is 40,000 tonnes per increased to 3.34* million tons in 2013, representing a year and the capacity utilization rate is approximately 8.5%* increase in export volume and value of exports of 75 percent of production capacity per year.
34 Annual Report 2013 Procurement of products and services lagooning treatment met the criteria set out by the The core element of raw materials used in the Environment Division, Ministry of Industry. Throughout its manufacturing process is the locally grown fresh cassava many years of operations, the Company has never had roots that are purchased directly from the farmers. any record of offence related to the environment. Movement in the price of fresh cassava roots depends on the demand and supply, while the selling price of Furthermore, the Company also has great concern over the finished goods increase or decrease depends on the quality of the environment; thereby initiating the the cost of the raw materials. installation of a biogas system at the manufacturing plant of its subsidiary in Vietnam. This was completed in Raw materials and suppliers 2011. Presently in 2013 the Company has already Movement in the price of fresh cassava roots depends implemented the biogas system at its plant in Kalasin on the demand and supply, while the selling price of province and at a subsidiary’s plant in Udonthani the finished goods increases or decreases depends on province, which are the main bases of manufacturing the cost of cassava roots. In 2012, the average activities. Due to this system, biogases that are derived purchasing price of fresh cassava roots for the group in from the treatment ponds can be used as a substitute Thailand was Baht 2,250-2,550 per tonne while for the for furnace oil in the manufacturing procedure. Biogas is company in Vietnam was Baht 2,620-3,300 per tonne, an energy-saving and the most effective alternative for respectively. the consumption of natural resources. Using biogas can reduce the amount of greenhouse gas emitted into the The Company will purchase the majority of its fresh atmosphere and minimise pollution caused by the smell cassava roots directly from farmers, while the remainder from wastewater treatment ponds that could affect the will be purchased from the cassava markets. Where the environment of the surrounding local communities. amount of cassava roots available within the areas Currently, the Company is constructing the biogas close to the plant is not sufficient, the Company will system at the factory located in Phimai, Nakorn purchase cassava roots from cassava markets in the Ratchasima province. Project completion has been nearby province in order to make up for the shortfall in expected to be in January 2015. the amount requested for production. Remark * : the information from Association of Thailand Environmental impact tapioca and customs department. During the manufacturing process of tapioca starch, ** : the Information from the Socialist Republic of wastewaters are discharged from the washing of fresh Vietnam customs department. tapioca roots and starch, which may adversely impact the environment and disturb the surrounding local communities. With great concern over the impact this may cause, the Company established a wastewater treatment system which uses the LAGOONING technique that are designed by certified engineers. The lagooning system consists of an anaerobic pond and an oxidation pond. As a result the wastewater discharged after the
THAI WAH STARCH PUBLIC COMPANY LIMITED 35 Risk factors
1. Risk relating to fluctuations in the costs of income if the US Dollar appreciates against the Thai raw materials Baht. During April and May 2013, the Thai Baht The Company manufactures and distributes products appreciated against the US Dollar which made it made from cassava and the key raw material used difficult to export tapioca starch since the Company in the manufacturing activities is fresh cassava roots, had to compete with the exporters in Vietnam, who which accounts for approximately 70% of the total had relatively stable currencies against the US manufacturing cost. The prices of fresh cassava roots Dollars. However later on during the end of the fluctuate up and down seasonally, depending on year, the Thai Baht depreciated resulting in an the demand and supply in the market, the climate advantage for Thai exporters. and the quantity based on seasonal production. On the grounds that these factors are beyond the The Company has entered into currency forward control, the Company faces risk relating to the contracts and regularly monitors the movement of projections of cost of raw materials and the selling the foreign exchange rate. Other appropriate price of finished products, including management of financial instruments have also been used to inventories, which would directly impact the minimise this risk. However, a currency forward Company’s financial position and operating results. contract is not an assurance that the Company will be able to manage the risk and obtain better yields Therefore in order to prevent and minimise the risks than the market rate because the future currency resulting from such fluctuations, the Company is rate is naturally unpredictable at the time of closely monitoring the market situation for the raw entering into such contracts. materials, surveying the cultivation of sources in Thailand, Vietnam, Laos and Cambodia and 3. Risk relating to the government’s price exchanging information and knowledge with other intervention policy cassava manufacturers in Thailand and other In 2011-2012, the government implemented a policy countries as well as with other organizations related to intervene in the price of tapioca products. The to cassava business etc., focusing mainly on government proposed the purchase price of fresh procuring the raw materials during the peak period cassava roots higher than the market rate which for large supply to the market while the prices are kept on increasing monthly throughout the term of low, and cemented good relationships with local the policy. This constitute as a factor that had farmers. This way, the Company will be able to caused the price of raw materials to deviate from receive good input and forecast on the market the market price leading to the Company’s trend for raw materials which will help for further manufacturing costs to increase and its purchasing planning and better management. power in the market to decline. In the past, the government released their tapioca starch stock, by 2. Risk relating to fluctuations in the foreign government to government selling schemes where exchange rate the selling prices were always unclear. This has Since the Company’s products are mainly exported impacted the normal trade for the Company and to other countries, most of its income is principally other cassava manufacturers. Thus the government’s linked to the US dollar. As such, the Company may intervention policy has become an additional risk face risk relating to the fluctuation in the foreign factor affecting the Company’s profitability, which is exchange rate, which is caused by the conversion beyond the Company’s control. of its sales income denominated in the US Dollar into the Thai Baht. The downside risk occurs when The Company has carried out risk management to the US Dollar depreciates against the Thai Baht, mitigate the impact of this risk by closely monitoring resulting in a decrease in the income to be the market situation and the raw materials situation, received in Thai Baht. On the contrary, the exchanging information and knowledge with other Company may obtain an increase in the value of cassava manufacturers in Thailand and other countries
36 Annual Report 2013 as well as with other organizations related to cassava The Company’s major income derives from exports. business etc., so that the Company is able to assess the In the past due to the Europe debt crisis combined situation and prepare for any crisis that may occur with economic slowdown in the United States of in the future in order to ensure that its finished America that affected the economies of other products bear competitive costs and generate profits countries and consequently lead to a diminishing for the Company impact on the buying power of consumers, especially China, the largest market for tapioca 4. Risk relating to an offshore investment products. However recently the world economy as The Company has entered into an agribusiness joint well as the economy in other developed countries venture in Vietnam. Offshore investment is usually including China has shown signs of improving, exposed to the possible risks relating to the change resulting in the prospect of export for agricultural in political conditions, laws and foreign exchange products to expand further in the year 2014, rates and economical situation of the relevant country especially for China where the demand for tapioca in which the investment has been made. Therefore if starch has been expected to increase. This however such event occur, this could adversely impact the depends on the reasonable price. Company’s business in such country, and could result in the income and profit from the operation of The Company has put in place policies to improve its foreign business to miss the expected target. cost and production management to maximize efficiency and effectiveness of production, and has The Company is aware of the above risk and as a established the objective to open up new markets result closely monitors news information related to with the aim to avoid over reliance on its operation Vietnam and the areas nearby and also exchanges in any particular country. information on a timely basis about the market situation, with other cassava manufacturers in 7. Risk relating to the climate change Thailand and other countries as well as with other Due to global warming over the past years resulting organizations related to cassava business etc., in the change of the climate conditions to be very Furthermore the Company has sent a team of its unseasonable, leading to various forms of natural executives to supervise the business management at disasters such as drought and flood. In 2013, its subsidiary’s plant in Vietnam and a report on the Thailand experienced drought in the upper east operating results are required to be submitted to the region, which affected the quantity of cassava roots head office in Thailand on a monthly basis. since there was lack of sufficient water supply for the Company’s production process. During the dry 5. Risk relating to shareholding structure season, the Company’s factory located in the Due to the Company’s investment in various Kalasin province, had been impacted by the lack of companies with cross-shareholding in those sufficient water supply for production for 2 months companies, it may be difficult for retail investors to period. As for the cassava plantation areas, it also inspect the Company’s interests in those companies faced with the spread of mealy bugs and other and the Group’s members. Therefore in order to pesticides while other areas suffered from flooding. support the investor’s decision, the information All of the above are risk factors affecting the relating to the shareholding structure of the quantity of cassava roots which is the Company’s Company and other members of the Group, its main raw material. interests and control in those entities and connected party transactions has been disclosed in full in the The Company has taken measures to reduce the Company’s audited financial statements and annual impact of such risks. Currently the Company has report form, which has been done in accordance to been conducting a study on the method of reusing the applicable regulations of the Stock Exchange of the waste water from the production process and Thailand. also improving the production system to reduce the amount of water used in order to minimize the 6. Risk relating to the world’s economic recession impact of drought and water shortage.
THAI WAH STARCH PUBLIC COMPANY LIMITED 37 General Information
Company Type of Major Business Thai Wah Starch Public Company Limited or “TWS” Agribusiness
Head Office Corporate Registration Number 21/59, 21/63-64 Thai Wah Tower I, 20th-21st Floor, 0107536000951 (Former: Bor Mor Jor. 169) South Sathorn Road, Tungmahamek Sub-District, Sathorn District, Bangkok 10120 Registered Capital Telephone: 66 (0) 2285 0040 Baht 787,500,000 Facsimile: 66 (0) 258 0268, 285 0270-1 Home page: http://www.thaiwah.com Paid-up Capital Baht 785,360,380 Divided into 78,536,038 ordinary shares, Branches at par value Baht 10 per share Branch (1) 76 Moo 3 Sukhumvit (Saikao) Road, Thakham Sub-District, Bangpakong District, Foreign Limit Chachoengsao Not exceeding 49 percent of total issued and paid-up Branch (2) 87 Moo 3 Sukhumvit (Saikao) Road, shares of the Company Thakham Sub-District, Bangpakong District, Chachoengsao Percentage allowed for Thai Trust Fund Branch (3) 2 Moo 2 Sukhumvit (Saikao) Road, Thakham -None- Sub-District, Bangpakong District, Chachoengsao Total Employees Branch (4) 301 Moo 8 Phimai-Huai Thalaeng Road, 761 employees (Only employees employed by the Naimueang Sub-District, Phimai District, Company as at December 31, 2013) Nakhonratchasima Branch (5) 136 Moo 12 Natal Sub-District, Thakhantho District, Kalasin
Remark : Investers can further view information related to the issuing Company in Form 56-1 which can be accessed at www.sec.or.th or the Companys website.
38 Annual Report 2013 Major Shareholders
As at December 27, 2013*
Name of Shareholders No. of Total No. of % of Shares Held Shares Held Shareholding 1. Mrs. Ho Lienfung Group 15,947,940 20.31 • Mrs. Ho Lienfung 2,602,740 • Chang Fung Company Limited 1 9,967,690 • Li-Ho Holdings (Private) Limited 2 3,377,510 2. Laguna Resorts & Hotels Public Company Limited 3 12,775,406 12,775,406 16.27 3. Mr. Somchai Limsirivilai 2,899,243 2,899,243 3.69 4. Mr. Sumruang Manoonpol 2,108,600 2,108,600 2.68 5. Mr. Ho Kwon Ping 1,945,800 1,945,800 2.48 6. International Commercial Development Company Limited 4 1,805,200 1,805,200 2.30 7. Ms. Nathathai Maeta 1,800,000 1,800,000 2.29 8. Mr. Phitak Boonpojanasoontorn 1,566,700 1,566,700 2.00 9. Bangkok Bank Public Company Limited 5 911,628 911,628 1.16 10. Deutsche Bank AG, London Prime Brokerage 6 906,161 906,161 1.15 Other Minority Shareholders 35,869,360 35,869,360 45.67 Total 78,536,038 78,536,038 100.00
Remark: * As at the latest book closing date. 1 General investment business with 100% shareholdings by Mrs. Ho Lien Fung and family 2 Investment Holding business with 100% shareholdings by Mrs. Ho Lien Fung and family 3 Listed on the Stock Exchange of Thailand as a hotel and property development business 4 Register in Thailand as property rental business 5 Listed on the Stock Exchange of Thailand as banking business 6 Company registered overseas, contact address : Deutsche Bank AG, Thailand Branch No. 63, 27th Floor, Athenee Tower, Wireless Road, Lumpini, Pathumwan, Bangkok, 10330.
THAI WAH STARCH PUBLIC COMPANY LIMITED 39 Dividend Payment Policy
Company’s dividend policy Subsidiaries’ dividend policy
The Company’s dividend policy to be distributed to the The subsidiary’s dividend policy is subject to the shareholders is considered based on the consolidated discretion of the Board of Directors of the Company net profit but excluding unrealized foreign exchange and each subsidiary in consideration of available cash gains or losses and not exceeding the retained earnings funds after taking into account main capital reported in the financial statements of the Company expenditures and debt repayment agreements in only. However, the dividend payment is subjected to subsequent years. the discretion of the Board of Directors and must be approved by the shareholders’ meeting.
Remuneration Policy
Employees’ Remuneration
The Company’s remuneration policy is built on a executive are taken into consideration. Furthermore transparent appraisal system and formulated to drive senior executives who are assigned with additional tasks performance of the employees, who are its most shall be entitled to an increase in the level of important asset. The objective of the Company’s remuneration as deemed appropriate. remuneration policy is to attract, motivate, reward and retain qualified staff. The typical compensation package Directors’ Remuneration for employees comprises basic salary, bonus, employee’s provident funds and other benefits. Payment of bonus is The fees for the directors reflect the scope and extent based on the annual performance of the Company as of a director’s responsibilities and obligations. They are well as the performance of each individual employee. measured against the industry benchmarks and are competitive. The Nomination and Remuneration In regard to the remuneration of the Company’s senior Committee will consider and recommend annually the executives, the aim is to motivate them to achieve the proper director’s remuneration to the Board of Directors Company’s annual and long-term goals and to ensure to be proposed for shareholders’ approval at the that they are aligned with the shareholders’ interests. In Annual General Meeting (“AGM”). determining the composition of the package for the senior executives, market standard of the same industry, Remuneration paid to Board of Directors and Executives as well as experience, duties, roles and responsibilities in 2013 are disclosed in the Company’s 2013 Annual along with potential benefits gained from each report and Form 56-1 under the section “Directors’ and Executives’ Remuneration”.
40 Annual Report 2013 Management
Committee Structure 3. To supervise and approve major initiatives, annual budgets, major investments, and decisions on the The Company’s organizational structure consists of three Company’s capital; committees, namely: 4. To ensure that the sufficiency of the Company’s 1. Board of Directors internal control is regularly revised and evaluated; 5. To approve nominations for members of the The Board of Directors comprises 9 directors, 3 of Board of Directors and appointments for various whom serve as independent directors. Details of the committees; independent director are further described under the 6. To take responsibility for good governance; and heading “Corporate Governance” in Form 56-1 and 7. To approve the Audit Committee and the in the Company’s 2013 Annual Report and Form 56-1. Nomination and Remuneration Committee Charter in order to clearly define the scope of duties Name Position and responsibilities of the Audit Committee and 1 Ms. Pinyada Viriya Chairman of the Board the Nomination and Remuneration Committee. 2 Mr. Umnad Sukprasongphol Director 3 Ms. Tawiratt Narasuj Independent Director The Board of Directors may discharge the above- 4 Mr. Somchai Towiwat Independent Director mentioned duties either directly or through the 5 Mr. Teerawut Charoensuk Independent Director various committees which have been set up, 6 Ms. Sirivan Skulkerevathana Director primarily the Audit Committee and the Nomination 7 Mr. Ariel P Vera* Director and Remuneration Committee. The practice of granting the Board of Directors’ power to the 8 Mr. Thawan Petchlawlian Director committees allows the Board of Directors to function 9 Ms. Manee Lueprasert Director efficiently by giving the committees authority to Remark: * Mr. Hwee Liang Tee has resigned from his directorship make decisions within the scope of authority and in the Company with effect from April 29, 2013 and duties specified while exercising control over the the Board of Directors’ meeting of the Company policies and major decisions. has approved the appointment of Mr. Ariel P Vera, a new director of the Company, to replace Term of office Mr. Hwee Liang Tee with effect from August 14, 2013 The term of office of a Director of the Board shall be 3 years. A Director of the Board who vacates Duties and Responsibilities of the Company’s Board of his/her office by rotation may be re-appointed. Directors The Board of Directors has a duty to determine the In assuming the position of Director and/or Independent Company’s policies and overall strategies, as well as Director, each director will receive all important efficiently supervise the management of the information about the Company, along with Articles Company’s business operation. In addition to the of Association of the Company related to the roles specified duties, responsibilities of the Board of and responsibilities of the Board of Directors, as well Directors also include the following: as advice concerning the laws, rules, regulations and 1. To formulate and approve the overall financial conditions related to being a Director of a listed policies, strategies and objectives of the company on the Stock Exchange of Thailand. The Company; person will also receive an orientation of the 2. To review financial performance and be Company’s business for them to have the responsible for the Company’s financial knowledge and better understanding of the statements; Company’s business.
THAI WAH STARCH PUBLIC COMPANY LIMITED 41 2. Audit Committee c) an opinion on the compliance with the law The Audit Committee comprises of 3 Independent on securities and exchange, the Exchange’s Directors of the Company as follows: regulations, or the laws relating to the Company’s business, Name Position d) an opinion on the suitability of an auditor, 1 Ms. Tawiratt Narasuj Chairman e) an opinion on the transactions that may lead 2 Mr. Teerawut Charoensuk Member to conflicts of interests, f) the number of the Audit Committee 3 Mr. Somchai Towiwat Member meetings, and the attendance of such meetings by each committee member, Ms. Tawiratt Narasuj, the Chairman of the Audit g) an opinion or overview comment received by Committee, has adequate expertise and experience the Audit Committee from its performance of to review the creditability of the financial reports. duties in accordance with the charter, and h) other transactions which, according to the Duties and Responsibilities of the Audit Committee Audit Committee’s opinion, should be known 1. To review the Company’s financial reporting to the shareholders and general investors, process to ensure that it is accurate and e) subject to the scope of duties and responsibilities adequate; assigned by the Company’s Board of Directors; 2. To review the Company’s internal control system 7. To perform any other act as assigned by the and internal audit system to ensure that they are Company’s Board of Directors, with the approval suitable and efficient, to determine an internal of the Audit Committee; audit unit’s independence, as well as to approve 8. To report the activities of the Audit Committee to the appointment, transfer and dismissal of the the Board of Director; chief of an internal audit unit or any other unit in 9. To review and oversee the Company’s practice charge of an internal audit; of good corporate governance; 3. To review the Company’s compliance with the 10. In performing the duty of the Audit Committee, if law on securities and exchange, the Exchange’s there is a transaction or any of the following acts regulations, and the laws relating to the Company’s which may materially affect the Company’s business; financial condition and operating results: 4. To consider, select and nominate an independent a) a transaction which causes a conflict of person to be the Company’s external auditor, interest; and to propose such person’s remuneration, as b) any fraud, irregularity, or material defect in well as to attend a non-management meeting an internal control system; or with an external auditor at least once a year; c) an infringement of the law on securities and 5. To review the connected transactions, or the exchange, regulations of the Stock Exchange transactions that may lead to conflicts of of Thailand or the laws relating to the interests, to ensure that they are in compliance business of the Company with the laws and the Exchange’s regulations, and are reasonable and for the highest benefit of the Company; the Audit Committee shall report such transaction 6. To prepare, and to disclose in the Company’s or act to the Board for rectification within the Annual Report, an Audit Committee’s report which period of time that the Audit Committee thinks must be signed by the Audit Committee’s Chairman fit. If the Board or management fails to make a and consist of at least the following information: rectification within such period of time, any Audit a) an opinion on the accuracy, completeness and Committee member may report on such creditability of the Company’s financial report, transaction or act to the Office of the Securities b) an opinion on the adequacy of the Company’s and Exchange Commission or the Stock Exchange internal control system, of Thailand, and
42 Annual Report 2013 11. To investigate and report the preliminary result to the and Nomination and Remuneration Committee; Office of the Securities and Exchange Commission 5. To review and if necessary, propose changes or and the external auditor within 30 days upon receipt additions to senior management welfare, benefit of the fact from the external auditor in relation to (such as employee stock options and other any suspicious circumstance that the director, employee welfare allowances, subsidies and manager or any person responsible for the operation schemes), salary increment and bonus policies. of the Company commits an offence under the law The emolument of individual employees shall be on securities and exchange. determined by the management of the Company; 6. To establish criteria for Board membership; Term of office 7. To formulate a standard and transparent process The term of office of a member of the Audit for the selection of directors; Committee shall be 3 years. A member of the Audit 8. To propose and/or evaluate directorial candidates Committee who vacates his/her office by rotation and Board committee members for consideration may be re-appointed. by the Board when there is a vacancy; 9. To assess independent directors to identify if the In the case of any vacancy occurring in the Audit independence of any is compromised and if Committee otherwise than by rotation, the Board of new independent directors are required under Directors of the Company shall appoint a fully-qualified the Board’s policy; person to be a director in order that the Audit 10. To inform the Board of the names of directors Committee reaches the full number stipulated by the and Board committee members who are retiring Board of Directors of the Company. The person by rotation and make recommendations to the replacing an Audit Committee member shall remain in Board as to whether the Board should support office for the period of time which the Audit Committee the renomination of those retiring directors and member, whom he or she replaces, is entitled. committee members; 11. To review the Committee charter at least once a 3. Nomination and Remuneration Committee year and recommend modifications to the Board The Nomination and Remuneration Committee of Directors as needed; and comprises of 3 members, 2 of whom are Independent 12. To report to the Board of Directors on the Directors as follows: Committee’s activities and findings.
Name Position Term of Office 1 Mr. Somchai Towiwat Chairman The term of office of a member of the Nomination and 2 Mr. Teerawut Charoensuk Member Remuneration Committee shall be 2 years. A member of 3 Ms. Pinyada Viriya Member the Nomination and Remuneration Committee who vacates his/her office by rotation may be re- Duties and Responsibilities of the Nomination and appointed. Remuneration Committee 1. To propose guidelines and make broad In the case of any vacancy occurring in the recommendations for the annual salary increment Committee otherwise than by rotation, the Board of and bonus policies for the Company; Directors of the Company shall appoint a qualified 2. To review and award the bonus, salary increment person to be a committee member in order that the and incentives of the Company’s Chairman and committee reaches the full number stipulated by the his relatives who are employees of the Company; Board of Directors of the Company. The person 3. To review and approve the expense claims of replacing a committee member shall remain in the Company’s Chairman; office for the period of time which the committee 4. To review and if necessary, propose changes to member whom he/she replaces is entitled. the remuneration of the Company’s directors serving on the Board of Directors, Audit Committee
THAI WAH STARCH PUBLIC COMPANY LIMITED 43 Nomination of Directors and Executives Removal of Directors Appointment and removal of directors of the Company 1. At each Annual General Meeting, one-third of the shall conform to the Company’s Articles of Association, directors shall retire from office. In case the number which stipulate the following: of total directors does not permit it to be divided into 3, the number of directors to retire shall be the Appointment of Directors closest number possible to one-third. A retiring 1. The Company’s Board of Directors shall consist of no director shall be eligible for re-election. fewer than 5 directors, more than half of whom shall 2. In addition to retirement due to expiration of the term reside in the Kingdom of Thailand. of office, the term of directorship shall end when: a) a director dies; 2. Directors shall be elected by the meeting of shareholders. b) a director resigns; In voting, it shall be deemed that one share represents c) a director lacks a qualification or is prohibited one vote. Each shareholder shall exercise all of his/ pursuant to Article 68 of the Public Company Act her votes as per paragraph one. Shareholders may B.E. 2535; vote to choose one person or more as director or d) the shareholder’s meeting passes a resolution to directors. Voting rights, however, may not be divided. remove a director; or e) the court orders a director to resign. Persons who receive the most votes, in descending order, shall be elected directors as per the number A resolution of a shareholders’ meeting to remove a of directors required or to be elected at that time. director prior to the end of the term of directorship In case the persons in the subsequent orders receive shall require no less than three-fourths of the votes of an equal number of votes and the number of such the shareholders present who have voting rights and persons exceeds the number of directors required or whose shares in the aggregate represent no less to be elected at that time, the chairman shall have than one-half of the shares held by the shareholders the casting vote. who are present and have voting rights.
3. Should a position of director become vacant due to Managements of the Company any reasons other than expiration of the term of office, the committee shall select a person who has all the As at December 31, 2013, the Company’s Management required qualifications and is not prohibited pursuant consists of 7 personnel as follows: to Article 68 of the Public Company Act B.E. 2535 as Name Position director, in the next committee meeting. However, if Ms. Pinyada Viriya Joint Managing Director the remaining term of directorship is less than 2 (Corporate & Finance) months, a replacement is not required. The person Mr. Umnad Sukprasongphol Joint Managing Director appointed as replacing director shall serve only for the (Business Operation) remaining term of the director whom he/she replaces. Ms. Sirivan Skulkerevathana Senior Assistant Vice President - Finance Should the number of the remaining directors not Ms. Manee Lueprasert Senior Finance Manager constitute a quorum owing to vacancies, the Mr. Chalermkeit Chalermpronkit Senior Operation Manager remaining directors may act on behalf of the Mr. Chainarong Chimchan Senior IT Manager committee only to hold a shareholders’ meeting in Ms. Dhitirat Makepoowadol * Accounting Manager order to elect replacements for the vacant directorship positions. Remark : * Promoted to Senior Accounting Manager with effect January 1, 2014. Such shareholders’ meeting held for the purpose of The names and qualifications of the Company’s electing replacements for vacant directorship Management are disclosed under the heading “Details positions shall be arranged within 1 month from the of position of Director and Executives as at day when the number of the remaining directors 31 December, 2013” in the Company’s 2013 Annual fails to constitute a quorum. Report and Form 56-1.
44 Annual Report 2013
Organization Chart
Board of Directors
Audit Nomination & Committee Remuneration Committee
Internal Audit Manager Joint Managing Director Joint Managing Director Business Operation Corporate and Finance
SAVP Finance
Senior Senior Senior IT Senior Operation Finance Manager Accounting Manager Manager Manager
Operation Sales & Export Purchasing & Management Accounting Factory Marketing Q.C. Administration HR Account Manager Managers* Manager Manager Manager Manager Manager Manager Manager**
Remarks * Factory Managers - Bangpakong Plant, Phimai Plant and Thakhantho Plant ** Promoted to Senior Accounting Manager with effect January 1, 2014.
Company Secretary Directors’ and Executives’ Remuneration
The Board of Directors appointed Ms. Manee Lueprasert Monetary Remuneration as the Company Secretary as at August 27, 2008, as A. Directors: appeared under the section “Details of position of Monetary remuneration was paid to 10* directors of Directors and Management as at 31 December 2013” in the Board for the 12 months ended December 31, the Company’s 2013 Annual report and Form 56-1. 2013 in the total amount of Baht 6,163,450.
THAI WAH STARCH PUBLIC COMPANY LIMITED 45 (1) Monetary Remuneration
Remuneration and other benefits of the Directors during the year 2013
Director’s Remuneration (Baht) Audit Nomination Name Position Board Committee and Total Remuneration Committee Ms. Pinyada Viriya Chairman and Nomination and Remuneration Committee Member 1,011,000 - 27,000 1,038,000 Mr. Umnad Sukprasongphol Director 606,000 - - 606,000 Ms. Tawiratt Narasuj Independent Director and Audit Committee Chairman 606,000 171,600 - 777,600 Mr. Somchai Towiwat Independent Director, Audit Committee Member and Nomination and Remuneration Committee Chairman 606,000 105,600 44,400 756,000 Mr. Teerawut Charoensuk Independent Director, Audit Committee Member and Nomination and Remuneration Committee Member 606,000 105,600 27,000 738,600 Ms. Sirivan Skulkerevathana Director 606,000 - - 606,000 Mr. Hwee Liang Tee* Director 202,000 - - 202,000 Mr. Ariel P Vera Director 227,250 - - 227,250 Mr. Thawan Petchlawlian Director 606,000 - - 606,000 Ms. Manee Lueprasert Director 606,000 - - 606,000 Total 5,682,250 382,800 98,400 6,163,450
Remark: * Mr. Hwee Liang Tee has resigned from his directorship in the Company with effect from April 29, 2013 and the Board of Directors’ meeting of the Company approved the appointment of Mr. Ariel P Vera as a new director of the Company, to replace Mr. Hwee Liang Tee with effect from August 14, 2013.
B. Executives of the Company: B. Executives of the Company: Monetary remuneration comprising of salaries and • Provident fund payment bonus was given to 7** management (including The Company has established a provident fund Accounting Manager) in 2013 in the total amount of for the management and employees of the Baht 17,209,090. Company in the ratio of 5 percent of their salary. In 2013, the Company contributed a fund (2) Non-monetary Remuneration of total Baht 670,632 for the 7 Management. A. Directors: -None-
46 Annual Report 2013 • Employee’s benefits Human Resources Employee’s benefits such as medical expenses, The Group has a total of 1,459 employees out of which life & health insurance, etc. were given to 7** 761 are employed by Thai Wah Starch Public Company management (including Accounting manager) in Limited and 698 are employed by its subsidiaries. As at 2013 in the total amount of Baht 1,258,519. December 31, 2013 employee’s benefits was paid in terms of welfare equivalent to Baht 287,230,222 which Remark: comprised of salary, overtime, car allowance, bonus, ** During the first quarter of the year 2013, there were 5 social security, provident fund, medical expenses and management in the Company. However 2 were promoted Life & health insurance, etc., during the second quarter of 2013, therefore increasing the number of management to be 7 in total.
Details of the employee’s benefits as seen below:
2013 Thai Wah Starch Public Subsidiaries *** Total Company Limited Direct labor (person) 625 624 1,249 Indirect labor (person) 79 68 147 Head office employee (person) 57 6 63 Total (person) 761 698 1,459 Employee Benefit (Baht) 176,112,504 111,117,718 287,230,222
Remark: *** Subsidiaries companies include Thai Nam Tapioca Company Limited, DI Company Limited, Thai Wah (6) Company Limited and Tay Ninh Tapioca Company Limited.
THAI WAH STARCH PUBLIC COMPANY LIMITED 47 Corporate Governance
The Company is committed to developing an efficient and • At each shareholders’ meeting, the Company transparent administrative and management system in always arranges for legal advisors to examine the order to gain the confidence of shareholders, investors and registration process before the meeting, the all others involved. The Company’s Board of Directors counting of shareholders, proxies for shareholders and Executives never cease in attempting to strengthen and shares of shareholders present, and the the Company’s governance. For this reason, various vote-counting procedure for each agenda item, principles have been adopted and applied to suit the in order to ensure that the Company proceeds in Company’s circumstances, details as shown below: accordance with relevant laws and regulations. • On the date of the meeting, the Company 1. Rights of Shareholders provides an electronic system for the The Company recognizes the importance of convenience of the shareholders, which helps to shareholders’ rights and has always acted in speed up the registration process. Furthermore compliance with the stipulations of the laws. In 2013, the barcode will show each shareholder’s the Company’s Annual General Meeting was held reference number which is included in the proxy on April 19, 2013 where all shareholders had the form. In addition, for every vote, the Company same voting rights, based on the proportion of their will collect the ballot paper from the shareholder holding in the Company’s shares. in order to calculate the result of the vote. • The Company has assigned Thailand Securities • Not only does the Company adhere strictly to Depository Company Limited, which is the the laws, but it also attempts to conduct Company’s share registrar, to distribute the notice meetings appropriately and transparently. The and agenda of the Annual General Meeting to Chairman of the meeting always offers the shareholders at least 10 days prior to the shareholders opportunities to express their views meeting. The meeting documents also include the and pose questions about issues concerning the facts and rationales, opinions of the Board as well agenda of the meeting, before concluding the as other information relating to the agenda items resolution for each agenda item. such as information on the persons nominated for • All shareholders have the same basis and rights election as directors, auditors’ profiles, the part of in the casting of votes at meetings and the the Company’s Articles of Association that relates receipt of dividends when declared by the to the shareholders’ meeting, map to the venue of Company. These are calculated based on their the shareholdings’ meeting convenient for respective shareholding in the Company. attendance, proxy forms, documents and evidence • At every shareholders’ meeting, shareholders are of entitlement to attend the meeting, etc., This is given the right to approve important matters to enable shareholders to prepare themselves for such as election of directors (shareholders can the meeting. In addition, the notice of the elect directors individually), directors’ remuneration, shareholders’ meeting will be advertised in the appointment of auditors and dividend payment, etc., press, all information contained in the meeting • The Company also does not invite the minority documents will also be posted on the Company’s shareholders to nominate their own candidates website (www.thaiwah.com) at least 1 month prior to be appointed as the Company’s director’s to the meeting. Moreover, shareholders are always head of the meeting. This is because the invited to register at least 1 hour before the Company already gives all shareholders an meeting begins. opportunity to nominate their own candidates
48 Annual Report 2013 (who meet the requirements under the Public to be present at the shareholders’ meeting in Limited Companies Act) and to vote for order to assist the Board in addressing queries candidates at the shareholders’ meeting. raised by the shareholders. The Company also invites • Before the start of every shareholder’s meeting, its legal counsels from a leading international law the Company Secretary will explain the voting firm to attend the meeting in case a legal methodology to shareholders. A team of legal question requiring clarification arises during the counsels from a leading international law firm is meeting. Furthermore, the Company provides a invited to verify the registration procedure before professional translator to be present at the the Chairman of the meeting announces to the meeting to assist shareholders and the Board to shareholders, the number of shareholders and communicate more effectively in English and Thai. proxy holders present at the meeting and the At the previous 2013 Annual General Meeting, 8 number of shares held by them. The legal out of total 9 directors were present at the counsels also verify the vote counting procedure Meeting, comprising the Chairman of the Board, in respect of each agenda item before the votes the Chairman of the Audit Committee, the are announced as resolution of the shareholders’ Chairman of the Nomination and Remuneration meeting. Shareholders may verify the detailed Committee, and other directors. Details of their results of the vote of each agenda item at the names are stated in the minutes of the 2013 end of each meeting. The same results and a Annual General Meeting. summary of questions from shareholders will also • Any shareholders who arrive at the meeting after be included in the minutes of the meeting which the meeting has begun are still entitled to vote on are accurately and completely documented in the agenda items that are still under consideration all material aspects and will be sent to all and have not been voted upon. shareholders for their review prior to the following • News and information relating to the Company is meeting. disseminated through the Company’s website • The Company’s policy in conducting shareholders’ (www.thaiwah.com), which includes information meetings is not only to meet all legal such as the resolutions of the Company’s Board requirements but to also provide a platform and of Directors on important matters, resolutions of opportunity for shareholders to communicate their the shareholders’ meetings, financial information, views and ask the directors and the management information which may affect the Company’s questions regarding matters affecting the Company. share price, Annual Report, etc., The Chairman allocates appropriate time for discussion and encourages the shareholders to 2. Equal Treatment of Shareholders express their opinions and ask questions related to The Company is well aware of its duty to treat the Company’s operation. In addition, to facilitate shareholders fairly in order to ensure the equality of shareholders in protecting their rights, shareholders shareholders’ rights and benefits. Thus, the Company who have any questions that require the Company’s follows the procedures below: clarification during the meeting may send their • For shareholders who are unable to attend a questions to the Company in advance at meeting in person, the Company provides “[email protected]” or fax them to 66 (0) 2285 0268. opportunity for such shareholders to appoint • Apart from the external auditor who will attend another person as proxy to attend the meeting the Annual General Meeting, the Chairman of the on their behalf by using proxy form B sent by the Board, the Chairman of the Audit Committee and Company. Proxy form B is one of the forms the Chairman of the Nomination and Remuneration prescribed by the Ministry of Commerce which Committee, and all of the Company’s Directors will allow shareholders to make voting directions. also endeavor as far as reasonably practicable Moreover, the Company provides opportunity for
THAI WAH STARCH PUBLIC COMPANY LIMITED 49 shareholders to appoint the Company’s Shareholders: The Board of Directors is committed independent director as proxy to undertake proxy to performing its duties honestly, voting on behalf of shareholders who are unable transparently and diligently in the best to attend the meeting. The name of the interest of all its shareholders in order independent director is provided in the proxy to preserve and enhance long-term forms, together with the profile of that shareholder value. All important independent director who have been given information which may have an impact proxy to vote on behalf of shareholders that are on the Company’s share price and/or unable to attend the meeting, all of which are shareholders decisions are fully disclosed attached as part of the meeting documents. on a timely manner. • Any director or management who has an interest Employees: The Company is committed to its policies in, or is related to, any transaction between the and observes the regulations regarding Company and an interested or related person human resource management and will not participate in the decision making employment. All operations of the process involving such transaction. The Company Company conform to the labor laws. has disclosed and strictly followed the procedures To boost a sense of pride in their work, on such transaction in accordance with the all employees are treated fairly and regulations of the SET and notification of the without discrimination or double Capital Market Supervisory Board. standards, and also adhering to not • The Company ensures that directors and management are aware of their duty to report a taking any actions that would violate change in their holding of the Company’s the human rights. Additionally, the securities to the SEC within 3 business days, in Company provides its employees a accordance with the Securities and Exchange safe, hygienic and conducive working Act. The securities holding report is also included environment and a provident fund. in the agenda of the Board meeting for the Furthermore, the Company also Board’s acknowledgment once every 3 months. encourages its employees to attend • The Company has formulated a Code of Business training courses related to their lines of Conduct to provide guidelines for the Board, work in order to broaden their senior management and employees of all levels knowledge and sharpen their skills. to comply with. The Statement includes the Customers: The Company strives to achieve prohibition on the improper use of insider customer satisfaction by providing information for personal benefit or to benefit quality products and prompt delivery. others. Additionally, the Board approved the Competitors: The Company believes in fair business policy on dealing in securities of the Company competition and therefore avoids any which prohibits the dealing in the Company’s actions that may prevent, obstruct or shares while in possession of unpublished discourage potential competitors from confidential and price-sensitive information during entering the market in which the the “Embargo Period”. There has been no Company operates in. Furthermore the violation of the policy found during 2013. Company will not engage in any fraudulent act to violate or obtain 3. Roles of Stakeholders competitors’ trade secrets. The Company realizes the importance of rights of all Society and The Company is committed to caring for groups of stakeholders and conducts its operations environment: the society by ensuring that the fairly and strictly in compliance with all laws, rules Company’s manufacturing processes does and regulations. not cause harm to the environment.
50 Annual Report 2013 Suppliers: The Company strives to forge long-term • Individual investors, shareholders, stock analysts business relationships with its suppliers and state agencies may contact the Company and therefore has the policy to always through the Company Secretary at telephone give a fair profit to its suppliers and to number 66 (0) 2285 0040 or at [email protected]. respect payment terms and conditions. • The Company’s financial statements contain In addition, in selecting its suppliers, accurate and complete information and are the Company gives all suppliers an prepared in accordance with generally equal opportunity to propose their bid. accepted Accounting Standards. In addition, they are audited/ reviewed by auditors from a 4. Disclosures and Transparency well known auditing firm (currently DIA The Company realizes the importance of disclosing International Audit Company Limited) and are essential information related to the Company. The approved by the Company’s Audit Committee Company accurately and adequately disclosed and Board before being disclosed through the general information, financial information and SET. The information relating to the “Board of information which might affect investors. Such Directors’ Responsibility for the Company’s information are reliable and in accordance with Financial Statements” is available in the specifications of the office of the Securities and Company’s Annual Report. In 2013, the Exchange Commission. The distributions of such Company’s quarterly and annual financial information are made through the Stock Exchange statements were certified unconditionally from the of Thailand in order for the Company’s shareholders auditor. and stakeholders to have equal access to the • In 2013, the Company made full disclosure of information. information within the time frame specified in the • Each of the Directors and Executives of the regulations of the SET and the SEC. In addition, Company has filed with the Company a report neither the SET nor the SEC challenged that the covering his interest or his related person’s Company had failed to comply with any interest in relation to management of the disclosure requirement. Company or its subsidiaries in accordance with • The Company wishes to refer the following the criteria and procedures as specified in the matters to the disclosure made in other places: notification of the Capital Market Supervisory a) The name of directors and the scope of the Board and has updated and filed with the powers, duties and responsibilities of the Company within 30 days should there be any Board and other committees are detailed change in the report. Such report is also under the heading “Management” in the included in the agenda of the Board meeting for Company’s 2013 Annual Report and Form 56-1. the Board’ acknowledgment once every 3 b) The professional experience of the directors months. and members of other committees is detailed • In the previous year, the Company disclosed all in Attachment 1 to Form 56-1 and under the general and financial information as well as heading “Board of Directors and Management” information which may affect the price of the in the Company’s 2013 Annual Report. Company’s securities correctly, completely, c) The number of Board meetings held and the transparently and on a timely manner, in number of Board meetings attended by each accordance with the rules and regulations of the director in 2013 are detailed under the SEC and the SET. All information is communicated heading: “Meeting of the Board and Sub- to investors, shareholders and relevant sectors Committee” in the Company’s 2013 Annual through the channels of the SET and the Report and Form 56-1. Company’s website (www.thaiwah.com). d) The performance of the Audit Committee in the past year is detailed in Attachment 3 to
THAI WAH STARCH PUBLIC COMPANY LIMITED 51 Form 56-1, and under the heading “Report of parent company, subsidiary, affiliate, the Audit Committee” in the Company’s 2013 same-level subsidiary or juristic person Annual Report. who may have conflicts of interest e) The performance of the Nomination and unless the foregoing status has ended Remuneration Committee in the past year is not less than two years; detailed in Attachment 4 to Form 56-1. c) not being a person related by blood or f) The remuneration for directors and management registration under laws, such as father, is detailed under the heading “Directors’ and mother, spouse, sibling, and child, Executives’s Remuneration” the Company’s including spouse of the children, 2013 Annual Report and Form 56-1. executives, major shareholders, controlling persons, or persons to be 5. Responsibilities of the Board of Directors nominated as executive or controlling 5.1 Board of Directors Structure persons of the company or its subsidiary; 5.1.1 Composition of the Board of Directors d) not having a business relationship with The shareholder’s meeting decided that the the company, its parent company, Company’s Board of Directors would subsidiary, affiliate or juristic person who comprise of 9 members, 3 of whom would may have conflicts of interest, in the be Independent Directors namely Ms. manner which may interfere with his Tawiratt Narasuj, Mr. Teerawut Charoensuk and independent judgment, and neither Mr. Somchai Towiwat. These independent being nor having been a major directors shall independently pose questions, shareholder, non-independent director or express opinions or disagree in case there executive of any person having business are conflicting views on issues which affect relationship with the company, its parent shareholders’ or stakeholders’ interests. company, subsidiary, affiliate or juristic person who may have conflicts of 5.1.2 Definition of “Independent Director” interest unless the foregoing relationship “An independent director” is defined as a has ended not less than two years. person who has all the required qualifications and is independent pursuant to the The term ‘business relationship’ specifications prescribed by the Office of aforementioned under paragraph one the Securities and Exchange Commission. includes any normal business transaction, rental or lease of immovable property, The foregoing specifications are as follows: transaction relating to assets or services a) holding shares not exceeding 1% of the or grant or receipt of financial assistance total number of voting rights of the through receiving or extending loans, company, its parent company, guarantee, providing assets as collateral, subsidiary, affiliate or juristic person including any other similar actions, which may have conflicts of interest, which result in the applicant or his including the shares held by related counterparty being subject to persons of the independent director; indebtedness payable to the other party b) neither being nor having been an in the amount of 3% or more of the net executive director, employee, staff, or tangible assets of the applicant or Baht advisor who receives salary, or a 20 million or more, whichever is lower. controlling person of the company, its The amount of such indebtedness shall
52 Annual Report 2013 be calculated according to the h) not having any characteristics which calculation method for value of make him incapable of expressing connected transactions under the independent opinions with regard to the Notification of the Board of Governors of company’s business affairs. the Stock Exchange of Thailand Re: Disclosure of Information and Act of After having been appointed as independent Listed Companies Concerning the director with qualifications complying with the Connected Transactions mutatis mutandis. criteria under (a) to (h) of paragraph one, The combination of such indebtedness the independent director may be assigned by shall include indebtedness taking place the Board of Directors to take part in the during the course of 1 year prior to the business decision of the company, its parent date on which the business relationship company, subsidiary, affiliate, same-level with the person commences; subsidiary or juristic person who may have e) neither being nor having been an conflicts of interest on the condition that auditor of the company, its parent such decision must be a collective one. company, subsidiary, affiliate or juristic person who may have conflicts of 5.1.3 Nomination of Directors interest, and not being a major Firstly any candidate being nominated as shareholder, non-independent director, the Company’s directorship must have all executive or partner of an audit firm the required qualifications as prescribed by which employs auditors of the company, the Stock Exchange of Thailand, the SEC its parent company, subsidiary, affiliate and the Public Company Act. or juristic person who may have conflicts of interest unless the foregoing When appointing a new candidate to the relationship has ended not less than 2 Board, the Nomination and Remuneration is years; responsible for the selection and the f) neither being nor having been any screening of the individuals to ensure that professional advisor including legal they are qualified under the Articles of advisor or financial advisor who receives Association of the Company, as well as an annual service fee exceeding Baht 2 taking into consideration the nature of million from the company, its parent business and future plans of the Company company, subsidiary, affiliate or juristic in order to obtain professional and person who may have conflicts of diversified individuals. The candidate must interest, and neither being nor having also possess direct experience with the been a major shareholder, non- requirements of the Company. The independent director, executive or Nomination and Remuneration Committee partner of the professional advisor unless will also review the structure, size and the foregoing relationship has ended not composition of the Board of Directors less than 2 years; before suggesting appropriate changes to g) not being a director who has been the Board for consideration and subsequent appointed as a representative of the approval from the shareholders. company’s director, major shareholder or shareholders who are related to the company’s major shareholder;
THAI WAH STARCH PUBLIC COMPANY LIMITED 53 The criteria of appointment of the Board of 5.2 Sub-committees Directors by the Shareholders’ meeting are The Board approved the establishment of two as follows: sub-committees to assist the Board in screening 1. Directors shall be elected in the details in order to achieve operational efficiency shareholders’ meeting, with regard to as follows: voting, shareholders shall have vote 5.2.1 Audit Committee equaling to the number of shares held The Audit Committee comprises of 3 by each of them or one share is Independent Directors, all of whom have entitled to one vote. been appointed to oversee certain issues in 2. Each shareholder may exercise all the various areas within the scope of power, votes he or she has to elect one or duties and responsibilities assigned to them several persons as directors, but may not by the Board of Directors. The Audit allot his or her votes to any person at Committee reports the results of its each any number. meeting to the Board of Directors’ meeting. 3. The persons who received the highest Furthermore the Chairman of the Audit votes in their respective order of the Committee has adequate expertise and votes shall be elected as directors until experience in reviewing the creditability of all of director positions that the the financial reports. The members and the Company may have or that are to be elected at such meeting are filled. scope of duties and responsibilities of the Where the votes cast for candidates in Audit Committee have been disclosed under descending order are tied, which would the heading “Management” in the otherwise cause the number of directors Company’s 2013 Annual Report and From to be exceeded, the Chairman of the 56-1. meeting shall have a casting vote. 5.2.2 Nomination and Remuneration Committee If any vacancy occurs in the Board of The Nomination and Remuneration Committee Directors other than by rotation, the Board comprises of 3 members, all of whom have of Directors shall elect another person who been appointed to oversee the nomination is qualified and has not been prohibited by of directors, executives including determine Section 68 of the Public Limited Company the remuneration for such persons The Act. B.E. 2535 to be a director for the next Nomination and Remuneration Committee directors’ meeting, except when the period also reports the results of its each meeting of office for the vacating director is less to the Board of Directors’ Meeting. The than 2 months, it is then not necessary to members and the scope of duties and appoint any new director. The appointed responsibilities of the Nomination and person shall stay in office for the remaining Remuneration Committee have been period of the vacating director. The disclosed under the heading resolution of the Board of Directors for the “Management” in the Company’s 2013 above shall not be less than three-fourths of Annual Report and Form 56-1. the remaining directors. 5.3 Roles, Duties and Responsibilities of the Board of The appointment of the Board of Directors Directors by the Shareholders’ Meeting shall be in 5.3.1 Roles and Duties of the Board of Directors accordance to the Company’s articles of The Board of Directors has a significant duty association as disclosed under the heading to supervise the Company’s administration “Management” in the Company’s 2013 to ensure that it meets the objectives and Annual Report and Form 56-1.
54 Annual Report 2013 follows the prescribed strategies. The Board regulations of the subsidiary related to of Directors continuously follows and connected transactions, acquisition and evaluates the Company’s performance to disposal of assets or any other significant ensure transparency and maximum benefit corporate transactions are complete and for shareholders and all groups of accurate and the disclosure of such stakeholders. The Board of Directors also transactions are made on arm’s length oversees the Company’s operation to basis, similar to that of the Company. ensure its effectiveness and efficiency. Moreover the Company also needs to Details of the Board scope of duties and monitor the filing and recording of responsibilities have been disclosed under documents, so that the Company may use the heading “Management” in the the information for review and preparation Company’s 2013 Annual Report and Form of the consolidated financial statement in a 56-1. timely manner.
5.3.2 Corporate Governance 5.3.3 Code of Business Conduct The Board of Directors has a significant duty The Company holds strongly to the belief to supervise the Company’s administration that good business ethics is one of the key to ensure that it meets the objectives elements for sustainable growth. To protect strategies and plans that have been the interest of all stakeholders and in the approved by the Board. In order to achieve interest of promoting and advocating good maximum benefit to the Company and all business ethics throughout the organization, of its stakeholders; the Board of Directors the Company has adopted the Code of has delegated its authority and responsibility Business Conduct, approved by the Board to the management clearly. of Directors and communicated to the directors, executives and employees In addition the Board of Directors also throughout the organization in order to controls the management and the business understand and to strictly adhere to the operations of the Company’s subsidiaries Code accordingly. and associated companies in order to maintain the benefits of the Company’s 5.3.4 Conflicts of Interest investments in those subsidiaries and The Board of Directors gives great attention associated companies. Furthermore the to issues related to conflicts of interest. Company’s management are represented Considerable efforts have been made to as directors and management in those prevent directors, executives and employees subsidiaries and associated companies at from reaping personal benefits through their least in the proportion of shares held by the positions as directors, executives or Company. The nominated management employees. Business transactions which may that are representing the Company must lead to conflicts of interest are considered perform their duties in the best manner that by the Audit Committee and the Board of would benefit the subsidiary and associated Directors, where stakeholders are excluded company, which must also be approved by from the decision making process. the Company’s Board prior to the vote on significant matters that are in the same The Board of Directors closely supervises the level as the Company’s matters. In addition, disclosure method to ensure that it fully the Company also needs to check the complies with the specifications, regulations
THAI WAH STARCH PUBLIC COMPANY LIMITED 55 and procedures concerning disclosure of The Company has notified the Board of information which may cause conflicts of Directors and Executives in regard to the interest. All connected transactions are announcement of the SEC that requires the disclosed clearly and accurately. Details are directors and executives to report changes further described under the heading in their holdings of securities to the SEC “Connected Transactions” in the Company’ s under Section 59 of the Securities Exchange 2013 Annual Report and Form 56-1. Commission Act of 2535 within 3 days, should there be any changes to their holdings. In addition, the Board of directors 5.3.5 Internal Audit and Control and executives are also required to notify • Internal Control the Company Secretary in order for the The Company realizes the significance changes to be recorded and summary of of effective system of control, such as each director’s and executive officers’ Standard Operating Procedures, security can be presented to the upcoming particularly in management and board meetings. The Board of Directors and operations. Hence, the duties and Executives officers are also informed of responsibilities of the employees and the the penalties in case of violation or management are clearly defined. non-compliance with such requirements. • Internal Audit Internal audit is an independent function The Company has taken measures to within the Company which reports prevent the use of inside information (Insider directly to the Audit Committee on Trading). Board of directors, management audit matters and to the Managing and employees, regardless of rank, are prohibited from disclosing confidential and Director on administrative matters. price-sensitive corporate information or Internal audits are performed to assist dealing in the Company’s shares during the the Board and Management in the Embargo period which includes 2 weeks discharge of their corporate governance before and up to the date of the responsibilities and to improve and announcement of results for each of the promote effective and efficient business first three quarters and 1 month before and processes within the Company. The up to the date of the announcement of internal auditor plans its internal audit results of the full - year financial results schedules annually in consultation with, respectively. The Company Secretary will but independent of, Management and inform clearly 1 week in advance regarding its plans are submitted to and approved the blackout period to the Directors, by the Audit Committee. The Audit management and employees. Committee reviews the activities of the internal auditors on a quarterly basis. As such the above guidelines have been approved by the Board of Directors. 5.3.6 Internal Audit and Control In the interest of good governance 5.3.7 Remuneration of the Auditors practice, the Company uses the Code of • Audit’s Fee Business conduct to guide the use of inside The Company and its subsidiaries paid a information which is announced to all the total audit’s fee of Baht 3,024,000 to the directors, executives and employees audit firm for the fiscal year 2013, details as below: throughout the organization for them to understand and is encourage complying with.
56 Annual Report 2013 Company Audit’s fee (Baht) During the meetings, the Chairman of the Board Company Baht 983,000 would preside over and duly conduct the 26 subsidiary companies Baht 2,041,000 meetings. All the members of the Board are Total Baht 3,024,000 allowed to express their opinions freely. The resolutions are passed with a majority vote,
• Non Audit Fees providing that one director is eligible for one -N/A- vote. The director with any interest in the issue under consideration or the director ineligible to 5.4 Meetings of the Board and Sub-committees vote is excused and to be absent during voting. The Board of Directors The Company conducts regular Board meetings The Audit Committee in order to closely follow the Company’s In 2013, the Company conducted 4 Audit performance. Additional meetings are also Committee’s meetings, and each Audit Committee members attended the meetings as follows: convened as and when the circumstances warrant. Throughout the year 2013, a total of 6 Name No. of Attendance Board of Directors’ meetings was held. At each meeting, the Company would inform the Board Ms. Tawiratt Narasuj 4 of directors in advance so that they could Mr. Teerawut Charoensuk 4 manage their time and could attend the Mr. Somchai Towiwat 4 meetings. In addition, the Board of directors would receive the agendas and the supporting The Chairman of the Audit Committee allotted documents in advance to study before attending sufficient amount of time to allow the the meeting. management to present information and the members of the Audit Committee to discuss The details of attendance of the Directors for important issues in great depth. Additionally, 2013 are as follows: when the Company’s financial statements were Board of Directors No. of Attendance reviewed, the Company’s auditor from DIA International Audit Company Limited was asked Ms. Pinyada Viriya 6 to attend the meeting. The Audit Committee has Mr. Umnad Sukprasongphol 6 the absolute right to participate in an inspection Ms. Tawiratt Narasuj 6 or request cooperation from the management of Mr. Somchai Towiwat 6 the Company. The Audit Committee has the Mr. Teerawut Charoensuk 6 absolute discretion to request a director or a Ms. Sirivan Skulkerevathana 6 Mr. Tee Hwee Liang* - senior executive to attend a meeting. In Mr. Ariel P Vera - addition, in 2013, the Audit Committee attended Mr. Thawan Petchlawlian 6 one non-management meeting with the external Ms. Manee Lueprasert 6 auditor to deliberate accounting approaches and audit plans. Remark: * Mr. Hwee Liang Tee has resigned from his directorship in the Company with effect from The Nomination and Remuneration Committee April 29, 2013 and the Board of Directors’ meeting of the Company has approved the In 2013, the Company conducted 2 Nomination appointment of Mr. Ariel P Vera, a new and Remuneration Committee meeting and each director of the Company, to replace Mr. Hwee Nomination and Remuneration Committee Liang Tee with effect from August 14, 2013. members attended the meetings as follows:
THAI WAH STARCH PUBLIC COMPANY LIMITED 57 Name No. of Attendance Minutes of the meetings of the Board of Directors and other sub-committees are well recorded and Mr. Somchai Towiwat 2 correctly detail all important issues in full, Mr. Teerawut Charoensuk 2 including opinions and questions of directors. All Ms. Pinyada Viriya 2 meeting minutes and other documents related to the meetings are systematically stored in a safe The Chairman of the Nomination and place. Remuneration Committee allotted sufficient amount of time to allow the members of the 5.6 Development of Directors and Managements Nomination and Remuneration Committee to The Company constantly encourages its directors, discuss important issues in great depth in order to executives and employees to develop their consider the nomination of the directors, knowledge and skills by attending various executives, and determine the remuneration in seminars and training programs offered by appropriate. Including other agendas related to relevant organizations, such as the Stock the duties and responsibilities of the Nomination Exchange of Thailand, the Office of the Securities and Remuneration Committee. and Exchange Commission, etc. Furthermore the Company also distributes relevant information to 5.5 Board of Directors’ Report the directors and executives of the Company in Financial Reports order to keep them abreast of latest The Board of Directors has responsibility to developments that will enable them to make shareholders for the consolidated financial informed decisions which will contribute to the statements of the Company and its subsidiaries, efficiency and effectiveness of their work. as well as financial information which appears in the Annual Report. Such financial statements are 5.7 Orientation prepared in accordance with the generally The Company has provided information on the accepted Accounting Principles, and the business of the Company and other information quarterly financial statements are reviewed every related to the operations of the Company to the quarter by an audit firm which also thoroughly new directors. Such materials are useful for them audits the annual financial statements. Essential in performing their duties as directors of the information related to the financial statements is Company. disclosed clearly and in full in the notes to financial statements.
Minutes of the Meeting After the meeting, the Company Secretary is responsible for preparing the minutes, and sending the certified copies to the directors. The minutes must then be approved at the following Board’s Meeting, where the directors may make comments, corrections, or additions to ensure the greatest accuracy and completeness.
58 Annual Report 2013 Corporate Social Responsibility
The Group commits itself to conducting its business with of stakeholders, including its employees, accountability to social communities, the environment counterparties, social communities, business and stakeholders by practising the principle of competitors and creditors, through any acts or corporate social responsibility (CSR) as a guideline to decisions made. The Company also has an anti- doing business. In a bid to protect all stakeholders’ piracy policy. interests, the Company’s code of business conduct approved by the Board of Directors applies. This focuses Supply chain management on integrity, transparency, corporate governance and To recognise the importance of supply chain social ethics to maintain the Group’s sustainable growth. management, the Company has drawn up The code of business conduct has been disseminated guidance on the performance of duties by the to the senior management and staff members of the senior management and staff members to ensure Group so that they can use it as guidance on the collaboration between the Company and various performance of their duties. stakeholders in a bid to enhance the Company’s sustainable wealth and growth. 1. Fair conduct Fair competition 2. Anti-corruption The Company recognises the importance of equal The Company’s Board and senior management and fair treatment of its counterparties by taking the comply with the code of business conduct relating following actions: to anti-corruption by: • providing correct and adequate information and • dealing with a conflict of interest in a careful, advice in a timely manner to ensure their proper honest, fair and independent manner to best knowledge of our products and services; benefit the Company; and • clearly stating the terms and conditions of each • establishing and maintaining the internal audit sale and purchase transaction and strictly and control system relating to finance, operations complying with those provisions; and compliance. Given there is an emphasis on • delivering good quality products that have fair signalling an alert in relation to any irregularities, prices and meet the customer’s requirements; the internal audit and control system should be and implemented along with risk management. • appointing a procurement committee responsible for implementing the bidding procedure in 3. Respect of human rights relation to any transactions worth more than one Respecting human rights is one of the Company’s million baht, so that all information in the concerns, which is incorporated into its code of proposals will be reviewed by the committee to business conduct. Under this code, the Board of promote fairness. Directors and senior management must recognise
Respect of others’ property the value of the Company’s human resources by To recognise the importance of the property rights of offering them reasonable remuneration in order to others, the Company has established a policy motivate and retain high-performing employees, and applicable to the senior management and staff treating all employees fairly and equally, free of bias. members. Under this policy, senior management must Each individual’s rights and freedom must be prevent the Company from violating any legal rights respected. The Board of Directors and senior
THAI WAH STARCH PUBLIC COMPANY LIMITED 59 management are responsible for ensuring the Company provides training to its employees on Company’s business is managed in such a manner environmental and occupational health and safety, that does not involve violation of human rights. All ISO 9001:2008 quality management, personal employees are free to submit a written complaint to healthcare, factory sanitation and the GMP their supervisors. If an employee commits a certification standards. The purpose of such training wrongdoing, the Company applies its review is to enhance the employee’s morale, stability, and procedure that promotes fairness. quality of working conditions, as well as to improve 4. Fair labour treatment their leadership and commitment to the Company Employment and labour relations as an organisation. The Company has a policy to employ legal labour, free of discrimination based on gender, race, religion On account of the Company’s continued campaign or sexual orientation. Hiring forced labourers or child to minimise accidents in the workplace, the rate of labourers (under the age of 18 years old) is work-related accidents has decreased. There have prohibited. Disabled persons are given employment been no records of death or severe accidents in the opportunities for any suitable positions to improve the Group’s manufacturing factories. These factories quality of their lives. joined with a government campaign for an award of excellence in environmental and occupational The employment conditions, working conditions and health and safety, launched by the Welfare and fringe benefits are well managed in compliance with Labour Protection Department and Ministry of labour law on the basis of fairness, social ethics and Labour. The objective of the campaign was to transparency. The nomination, selection and promote employee alertness on this issue, work appointment procedure of Company personnel is of discipline, compliance with safety measures, and great importance. The Company’s key considerations cooperation in preventing work-related accidents. when hiring are a candidate’s knowledge, ability, 5. Responsibility to consumers experience, and suitability for the relevant job Consumer health and safety position. These requirements will also be taken into All staff members are encouraged to recognise the account for determining the employee’s wages and importance of safety at all stages of the reviewing their job promotion. The Company provides manufacturing procedure. The Company operates various fringe benefits and facilities, including an efficient reverse examination system that can medical expenses, accident insurance, recreation prove the manufacturing procedure through a facilities, internal and external training courses, to scientific method using standard and advanced improve the quality of its employees’ working technology equipment. It aims to make food conditions. products using the food safety management system according to the HACCP and GMP standards, to Occupational health and safety control against any hazards and to comply with laws The Company promotes continuous training and and regulations relating to food safety applicable in development to develop its employees’ skills, Thailand and other countries in which the knowledge and ability, and to prepare them for counterparties operate. The Company’s their future careers. The training and development organisational procedure has been continuously places particular emphasis on building team spirit, as improved to manage the clear disclosure of well as promoting environmental and occupational complete and correct information to all relevant health and safety. In relation to the latter, the parties.
60 Annual Report 2013 The Company has a policy to produce good quality The biogas system was first introduced into the and high standard products using state-of-the-art factories of the Company and its subsidiaries in 2013 technology, and maintains a quality control system to replace the furnace oil in the manufacturing covering all stages of its manufacturing procedure. procedure. The generating volume of biogas was The Company’s products have won awards for the 5,390,000 cubic metres*, which substituted for following international standard certifications: ISO 2,919,000 litres* of furnace oil. 9001:2008, Good Manufacturing Practice (GMP), Remark : * based on information collected from February 2013 Hazard Analysis Critical Control Point (HACCP), to December 2013. KOSHER and Halal. Prevention and mitigation of pollution Marketing communications and customer’s privacy To carry out the biogas project to replace the The Company commits itself to producing good furnace oil with biogas, the Group uses the covered quality and clean food products and punctual lagoon bio reactor (CLBR) technology, which delivery so as to satisfy consumer requirements. The incorporates in itself the advancements, high Company continuously improves its manufacturing capacity and stability and carries the low cost of quality control system to ensure it meets international quality control. The CLBR technology has dual standards. The Company’s 2013 customer survey function both in biogas generation and waste water results revealed 96.40% of customers are satisfied with treatment. In addition to producing benefits in the the Company’s products and service. This result form of cost reductions, the biogas project efficiently reflects the Company’s sound business performance, assists in environmental management. The benefits in and serves as a benchmark for further improvement respect of mitigating environmental effects are as of its products and services. follows:
6. Environmental care • Quality of discharged water: After the waste Sustainable use of resources water passes the CLBR system, the concentration In the present day, energy use is one of the key value of organic compounds will reduce to factors in economic improvement. Greater demand 96.45%. Subsequently, the waste water enters the for energy arising from economic expansion and the open treatment system, which is the original worsening crisis of energy costs alerted the system used by the factory that meets Company to the importance of sustainable energy applicable standards of the Department of use. The Company has put energy preservation and Industrial Works. alternative energy sources into action by installing a system to generate biogas from waste water • Reduction in greenhouse gas emissions: Methane released from its factories. Biogas is used as a fuel in is a type of greenhouse gas that produces 21 generating thermal energy, which substitutes for times harsher effects than carbon dioxide. furnace oil in the manufacturing procedure of Reducing methane emissions into the atmosphere cassava starch. In addition to the direct benefit that by reusing it as a source of energy can also the Company and its subsidiaries obtain from cost reduce the emission of carbon dioxide. reductions, the biogas system also brings about a decrease in greenhouse gas emissions.
THAI WAH STARCH PUBLIC COMPANY LIMITED 61 In 2013, the year in which the CLBR system was the year. In addition, this programme implants a first launched; greenhouse gas emissions hard-working sprit in the local students, and decreased by not less than 30,000 tons imparts knowledge to them that can be applied
equivalent to carbon dioxide (tCO2e). The to support their families in the future. Company expects this rate to grow in 2014 when the CLBR system will become fully operational. • The cassava farmers suffered a decline in crop The installation of the biogas system at the volume, affecting the volume of fresh cassava Company’s other factories is part of the roots - a key raw material of the Company’s Company’s future plan. manufacturing activities. This problem was caused by poor crop rotation practices where farmers • Smell: The CLBR system assists in eliminating the failed to use proper methods of improving unpalatable smell of waste water discharged deteriorated soil in the plantations of cassava from the manufacturing procedure by using a and sugarcane for long periods of time. In close-covering system. response, the Company launched a programme “to promote growing varieties of beans to serve • Sanitary condition of the Company’s employees as green manure to improve deteriorated soil”. and local communities: The cause of the problem The objective of this programme was to will be solved in the manner that the encourage the farmers to use natural fertilisers unpalatable smell and waste discharged from (as opposed to chemical fertilisers) to improve soil the manufacturing procedure will be eliminated. quality. In collaboration with government authorities and local community leaders, the 7. Social and community development Company has campaigned to educate farmers Role in the market and job creation by organising tutorial sessions, distributing fact The Company and its subsidiaries have always sheets, and distributing leaflets inviting the recognised the importance of improving the quality farmers to sell their cassava crops to the of life of local communities by participating in social Company. This programme is expected to resolve and community development for sustainable growth the problem relating to soil deterioration, which as follows: will in turn reduce manufacturing costs and increase crop volume. • Mushroom farming in local schools: Soil remnants and cassava peels left from the manufacturing procedure are used in mushroom farming at local schools. This encourages students, whose parents are employed by the Company, to gain knowledge for potential future careers. The practice of farming also generates income to benefit local communities. Field trip budgets, raw materials procurement, and the establishment of farming facilities are sponsored by the Company. Each school may prepare lunches for the students using the mushrooms, or sell them to local customers at a cheaper price throughout
62 Annual Report 2013 Participation in local community In 2013, the Company and its subsidiaries donated The Group emphasises cooperating with local money, labour, and general necessities to the local communities and other organisations in economic communities, corporate entities, government bodies and social development activities. The objective is to and organisations to improve the well-being of local promote strong and sustainable development of communities. This included: local communities. The Group has played its role in tackling social issues and joining social improvement • Excavation of a canal near the Koke Sa-ard activities as follows: Community at Koke Sa-ard sub-district, Muang district, Udonthani province; • In response to an outbreak of mealybugs causing damage to cassava planters’ crops, the Group • Maintenance of roads leading to the Huay launched a programme “to raise and breed Luang reservoir and to the Koke Sa-ard Village at parasitic wasps and pinkish mealybugs” in Koke Sa-ard sub-district, Muang district, Udonthani a laboratory of the Company’s factory. The goal province; was to eventually release the wasps to the farm to eradicate the mealybugs. In addition to • Assisting in a campaign to plant a mangrove coping with the outbreak of mealybugs, the forest and gather garbage by working with the objectives of this programme were to encourage youth and the elderly at Koh Nok, Thakham sub- farmers to eradicate pests using natural methods, district, Bangpakong district, Chachoengsao minimise the use of chemical substances, and province; reduce the cost of cassava plantation. The Company has transformed the lessons of this • Assisting in a campaign with the Nakhon programme into tangible pieces of knowledge Ratchasima Industrial Division to prevent the and advice, and provided them to local farmers catastrophic flooding at Muang Pimai by sending and the public. volunteers and bulldozers to build the barriers at Pimai National Museum; and • A site survey of agricultural areas revealed that the farmers were pumping water to cultivate their • Assisting in a campaign run by the Department plantations during the dry season, and thus of Industrial Works to enhance the industrial incurring significant fuel costs. As a result, the factories’ potential for corporate social Company sponsored the construction of spillways development (CSR-DIW for Beginners). to keep a sufficient reserve of water for agricultural use.
THAI WAH STARCH PUBLIC COMPANY LIMITED 63 Internal Control and Risk Management
The Company’s Board of Directors recognizes the Risk management: Board of Directors analyzed and importance and assesses the internal control system evaluated factors that may cause risk to the Company annually by inquiring from management based on the for determining the control for these risk factors. guidelines for evaluating the adequacy of internal controls as set out by The Securities and Exchange Control activity: Board of Directors have determined the Commission. Furthermore, the Board of Directors has segregation of duty, operation practice explicitly, level determined the standard operating procedure and of authority, responsibility and defined the standard practice for internal control and risk management operating procedure to ensure that the operation is based on the guidelines of COSO (The Committee of correct and appropriate. Sponsoring Organization of the Treadway Commission). This also includes the establishment of internal audit Information system and communications: Board of department for auditing, reviewing, assuring and Directors has given utmost importance to the reporting directly to the Audit Committee. The Board of information system and data communications by Directors also recognizes the importance of planning for establishing information technology department that risk management to include risks that are either caused regulates and continuously develop the system so that by external factors (inherent risks) and risks caused by communication and work operation can run accurately internal factors (control risks), which may impact the and up to date. Furthermore the information system business operations to include only acceptable level of allows important information to be communicated to risks or impacts that are immaterial. Additionally, management within reasonable period in order for adequacy and appropriate controls are in place for business decisions to be made effectively. Apart from subsidiaries and connected transactions. With an this, the Board has also established policies based on effective internal control system, the Company may the laws of Computer Related Crime Act to govern the operate effectively and efficiency by meeting its target use of sensitive information and Company’s other with financial reports that are correct and reliable. equipments. Information, documentation and other Below are the internal control and risk management announcements are communicated within the based on the COSO guidelines: organization via channels such as email and intranet to the employees. Control Environment: Board of Directors have provided management system and set up organizational chart Monitoring: Board of Directors and Audit Committee that are apparent, independent and practical which organize meeting once each quarter in order to have been communicated efficiently. In order to analyze, evaluate and summarize performance to achieve the Company’s success, targets and policies ensure that business targets are being met. And also have been implemented such as the policies related to plan and improve business performance by tracking and good corporate governance, business ethics and code fixing any inaccuracies that may occur. of business conduct for all the management and employees. So that all the business operations are The Board of Directors has assessed the Company’s carried out with transparency and fairness to the internal control system by inquiring from the Company and other individuals. management and relying on the Audit Committee’s
64 Annual Report 2013 report. The Board of Directors is of the opinion that the several training courses of internal audit by The Institute Company’s internal control system, comprising of 5 of Internal Auditors of Thailand. He also has experience components namely control environment, risk in auditing and reviewing financial statements of other assessment, control activities, information & enterprises which can be applied in his practice. communication and monitoring activities, is adequate Mr. Narupon has full understanding of the Company’s with sufficient personnel to conduct the system processes and procedures. Overall, the Audit Committee efficiently and that no material weaknesses were found is satisfied with the appointment of Mr. Narupon as the in the Company’s internal control system. This also head of internal audit and believes that he has full includes the internal control system to monitor the ability in performing his role. operations of its subsidiaries to ensure that the assets of the Company and its subsidiaries are protected and not The appointment, transfer and dismissal of the head of misused by directors or management. In addition, the internal audit of the Company must be approved by internal control system in regard to entering into the Audit Committee. Further details on the connected transactions were also adequate. qualifications of the head of internal audit can be seen in Attachment 3 to Form 56-1, and under the heading Head of internal audit “Profile of the Head of Internal Audit Unit” in the The Audit Committee meeting had appointed Company’s 2013 Annual Report. Mr. Narupon Wuttichai to be the head of the internal audit department base on his qualifications, knowledge and his abilities to perform the tasks. He has attended
THAI WAH STARCH PUBLIC COMPANY LIMITED 65 Profile of the Head of Internal Audit Unit
Name : Mr. Narupon Wuttichai
Age : 31 Years
Educational Background : • Bachelor of Accounting, Bangkok University • Certified Public Accountant No. 10419 • Cooperative Auditor in Thailand No. 10395
Experience : • 2012 - Present Internal Audit Manager, Thai Wah Starch Public Company Limited • 2011 - 2012 Audit Manager, Marzars Limited • 2004 - 2011 Audit Manager, KPMG Phoomchai Audit Ltd.
Training and Seminar : • Skill for New Auditor In-Charge, The Institute of Internal Audit • Risk Assessment of Internal Control COSO, ERM by function • TFRS & IFRS
66 Annual Report 2013 Opinion of the Board of Directors on the Company’s Internal Control
The Board of directors has assessed the Company’s efficiently and that no material weaknesses are found in internal control system by inquiring from the the Company’s internal control system. This also includes management and relying on the Audit Committee’s the internal control system to monitor the operations of report. The board of directors is of the opinion that the its subsidiaries to ensure that the assets of the Company Company’s internal control system, comprising of 5 and its subsidiaries are protected and not misused by components namely control environment, risk directors or management. In addition, the internal assessment, control activities, information & control system in regard to entering into the connected communication and monitoring activities, is adequate transactions is also adequate. with sufficient personnel to conduct the system
(Ms. Pinyada Viriya) Chairman of the Board
THAI WAH STARCH PUBLIC COMPANY LIMITED 67 Report of the Audit Committee
The Audit Committee of Thai Wah Starch Public Review and evaluation of the Internal Control Company Limited comprises of 3 independent directors The Audit Committee reviewed the internal control namely Ms. Tawiratt Narasuj as the Chairman of system of the Company and its subsidiaries which the Audit Committee, Mr. Somchai Towiwat and follows the internal control framework as set out by Mr. Teerawut Charoensuk as members of the Audit COSO (The Committee of Sponsoring Organization of Committee. the Treadway Commission) comprising of 5 components namely control environment, risk assessment, control In 2013, the Audit Committee held 4 meetings with 100% activities, information & communication and monitoring attendance of its members. The Company’s senior activities. The Audit Committee is satisfied that the management, internal and external auditors were also Company’s and its subsidiaries’ internal control is both present during the meeting for the appropriate items of sufficient and appropriate to support the business the agenda. Summaries from each meeting were operations. The Company has established an internal presented to the Board of Directors. audit department where the officer in chief has adequate knowledge and experience in auditing The Audit Committee carried out all its duties within the financial statements of various businesses including limitations as delegated by the Board of Directors of the attending training courses and seminars related to the Company and in accordance with the regulations of practice of internal audit provided by the Association of Thai Wah Starch Public Company Limited. Under its Internal Auditors of Thailand. The Audit Committee scope of authority and responsibilities, which is in made recommendations on certain aspects to the conformance with the regulations as set forth by the internal audit team to be in line with the auditing Stock Exchange of Thailand, the Audit Committee standards on internal controls. Additionally, an addressed the following areas: assessment was made jointly with the auditors on the Company’s internal control who are of the opinion that Review of the quarterly, 2013 annual financial statements, no significant issues or material weaknesses were found and consolidated financial statements of the Company in the internal control, concluding that the Company to assure that they have been prepared according to internal control is adequate and effective. the generally accepted accounting standards and the 2004 Accounting Act as well as the applicable rules, Transactions with related parties regulations and announcements of the Stock Exchange The Audit Committee made an assessment of transactions of Thailand and the Securities Exchange Commission, between the Company and its subsidiaries to assure including adequate disclosure of financial information that the Company carried out the transactions and timely preparation. In addition, the Audit according to normal conditions in operating the Committee had held 1 meeting with the auditors business and made full and sufficient disclosure. without the presence of the Company’s executive officer to determine the course plan of the audit.
68 Annual Report 2013 Good Corporate Governance Policy topics, it can be summarized that the efficiency and The Company places importance on managing with appropriateness of internal control, administrative good governance and supervision to maintain management and corporate governance practices are transparency and good ethics for bolstering the adequate and transparent. In addition, the Company confidence of related parties. has continuously improved its auditing system to be effective and suitable to the business environment. All Consideration for the Appointment of Auditors for 2014 relevant information with materiality has been sufficiently Due consideration and agreement was given for disclosed in the Notes to the financial statements in appointing D.I.A. International Audit Company Limited, accordance to related regulations. with Ms. Vilairat Rojnuckarin, Certified Public Accountant No. 3104 and/or Ms. Somjintana Pholhirunrat, Certified Public Accountant No. 5599 as auditors of Thai Wah Starch Public Company Limited for the year 2014 to be proposed to the Board of Directors for further consideration and approval at the 2014 Annual Shareholders Meeting.
In 2013, the Audit Committee has performed its duties (Ms. Tawiratt Narasuj) prudently and independently and issued its opinion for Chairman of the Audit Committee the benefit of the company, receiving information, 12 February 2014 resources and cooperation from management without exception. From the review and supervision under the scope of responsibilities in the aforementioned
THAI WAH STARCH PUBLIC COMPANY LIMITED 69 Board of Directors’ Responsibilities for the Company’s Financial Statements
The Board of Directors is responsible for the Company’s The Board of Directors is therefore able to conclude that financial statements including the notes to the financial the financial statements for the year ended 2013 have statements. been prudently prepared in accordance with generally accepted accounting principles to give a correct and In its review of the financial statements, the Board of complete presentation, in all material aspects, the Directors has relied upon the reports and work financial position of the Company. performed by the Company’s external auditors, D.I.A. International Audit Company Limited, and the Company’s Audit Committee which has carried out extensive discussions with management of the Company. The Board has also satisfied itself that there is no material weaknesses in the Company’s internal accounting controls, internal control system and standard operating procedures.
On behalf of the Board Thai Wah Starch Public Co., Ltd.
(Ms. Pinyada Viriya) Chairman of the Board
(Ms. Pinyada Viriya) (Mr. Umnad Sukprasongphol) Joint Managing Director Joint Managing Director
70 Annual Report 2013 Biogas pond
THAI WAH STARCH PUBLIC COMPANY LIMITED 71 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES FINANCIAL STATEMENTS AS AT DECEMBER 31, 2013
72 Annual Report 2013 AUDITOR’S REPORT
To the Shareholder’s of Thai Wah Starch Public Company Limited
I have audited the accompanying consolidated and separate financial statements of Thai Wah Starch Public Company Limited and its subsidiary and of Thai Wah Starch Public Company Limited, which comprise consolidated and separate statements of financial position as at December 31, 2013, consolidated and separate statements of comprehensive income, consolidated and separate statements of changes in shareholders’ equity, and consolidated and separate statements of cash flows for the year then ended, including notes of summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud of error.
Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with standards on auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’ s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’ s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
THAI WAH STARCH PUBLIC COMPANY LIMITED 73
Opinion In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Thai Wah Starch Public Company Limited and its subsidiary and of Thai Wah Starch Starch Public Company Limited as at December 31, 2013, and their financial performance and cash flows for the year then ended in accordance with the financial reporting standards.
Emphasis of Matter Without qualifying my opinion, I draw attention to notes 3 and 4 to the financial statements describing the result of the Company’s adoption of Thai Accounting Standard 12 Income Taxes and the restatement of the financial statements in connection with the reclassification of investments.
D I A International Audit Co., Ltd.
(Mrs. Suvimol Krittayakiern) C.P.A. (Thailand) Registration No. 2982
February 27, 2014
74 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate Assets Note December 31, December 31, January 1, December 31, December 31, January 1, 2013 2012 2012 2013 2012 2012 (Restated) (Restated) (Restated) (Restated)
Current assets Cash and cash equivalents 7 765,464,083 797,740,874 734,475,295 447,333,111 458,679,285 348,056,379 Temporary investments 4,082,112 - - - - - Trade and other receivables 8 346,159,394 312,064,197 403,516,373 327,619,896 297,425,020 399,877,900 Short-term loans to related companies 6 - - - 95,455,172 78,809,172 67,781,172 Inventories 9 419,544,937 299,307,009 318,721,163 241,546,839 176,749,098 185,408,468 Other current assets 44,464,098 45,801,018 29,548,852 23,290,629 35,025,516 18,540,791 Total current assets 1,579,714,624 1,454,913,098 1,486,261,683 1,135,245,647 1,046,688,091 1,019,664,710 Non-current assets Available-for-sale investments 10 194,485,900 200,320,850 238,161,400 194,485,900 200,320,850 238,161,400 Investments in associated companies 11 388,575 390,948 - 299,200 299,200 299,200 Investments in subsidiary companies 12 - - - 572,254,310 568,140,259 566,770,110 Investment property 14 179,811,682 179,811,682 160,597,565 504,000 504,000 504,000 Property, plant and equipment 15 572,489,859 476,367,050 311,448,023 196,587,135 152,597,162 71,725,397 Land use right 16 3,846,223 3,985,953 4,495,909 - - - Deposits at financial institutions subject to restrictions 17 70,763,000 85,625,000 81,077,000 61,028,000 64,000,000 64,000,000 Deferred tax assets 22 16,233,341 13,456,792 11,152,673 10,395,451 8,210,186 4,827,717 Other non-current assets 6,071,661 7,258,549 3,562,658 1,924,980 5,138,941 2,610,480 Total non-current assets 1,044,090,241 967,216,824 810,495,228 1,037,478,976 999,210,598 948,898,304 Total assets 2,623,804,865 2,422,129,922 2,296,756,911 2,172,724,623 2,045,898,689 1,968,563,014
The accompanying notes are an integral part of the financial statements.
THAI WAH STARCH PUBLIC COMPANY LIMITED 75 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF FINANCIAL POSITION (Cont.) AS AT DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate Liabilities and shareholders’ equity Note December 31, December 31, January 1, December 31, December 31, January 1, 2013 2012 2012 2013 2012 2012 (Restated) (Restated) (Restated) (Restated)
Current liabilities Bank overdrafts and short-term loan from financial institution 18 7,446,296 - - - - - Trade and other payables 19 145,523,682 141,042,072 192,130,420 97,622,631 119,633,210 153,878,955 Defaulted debts from restructuring - - 62,924,538 - - 62,924,538 Current portion of long-term loan 20 20,040,000 - - - - - Short-term loan from related company 2,510,936 - - - - - Income tax payable 36,087,712 23,445,643 32,260,576 30,699,893 12,780,576 3,614,827 Accrued interest expense - 5,975,137 10,022,195 - - 4,047,058 Other current liabilities 10,295,989 9,700,524 8,163,714 428,679 131,167 55,117 Total current liabilities 221,904,615 180,163,376 305,501,443 128,751,203 132,544,953 224,520,495 Non-current liabilities Long-term loans and advances from related companies - - 20,785 - - 25,841,150 Long-term loan from financial institutions 20 5,340,000 - - - - - Employee benefit obligations 21 54,805,732 52,110,920 34,550,804 39,402,868 38,050,928 23,614,286 Deferred tax liabilities 22 18,785,467 17,597,419 23,528,126 16,625,329 16,704,674 23,455,136 Other non-current liabilities 3,218,191 3,204,421 3,084,053 626,500 626,500 626,500 Total non-current liabilities 82,149,390 72,912,760 61,183,768 56,654,697 55,382,102 73,537,072 Total liabilities 304,054,005 253,076,136 366,685,211 185,405,900 187,927,055 298,057,567
The accompanying notes are an integral part of the financial statements.
76 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF FINANCIAL POSITION (Cont.) AS AT DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate Liabilities and shareholders’ equity (cont.) Note December 31, December 31, January 1, December 31, December 31, January 1, 2013 2012 2012 2013 2012 2012 (Restated) (Restated) (Restated) (Restated)
Shareholders’ equity Share capital Registered 78,750,000 ordinary shares of Baht 10 each 787,500,000 787,500,000 787,500,000 787,500,000 787,500,000 787,500,000 Issued and paid-up 78,536,038 ordinary shares of Baht 10 each 785,360,380 785,360,380 785,360,380 785,360,380 785,360,380 785,360,380 Premium on share capital 177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 Retained earnings Appropriated - statutory reserve 23 78,750,000 78,750,000 65,100,000 78,750,000 78,750,000 65,100,000 Unappropriated 1,227,346,574 1,071,861,658 822,227,745 1,012,673,461 878,658,412 675,958,866 Other components of equity (74,848,943) (78,244,607) (42,834,230) (66,927,741) (62,259,781) (33,376,422) Equity attributable to Company’s shareholders 2,194,070,634 2,035,190,054 1,807,316,518 1,987,318,723 1,857,971,634 1,670,505,447 Non-controlling interests 125,680,226 133,863,732 122,755,182 - - - Total shareholders’ equity 2,319,750,860 2,169,053,786 1,930,071,700 1,987,318,723 1,857,971,634 1,670,505,447 Total liabilities and shareholders’ equity 2,623,804,865 2,422,129,922 2,296,756,911 2,172,724,623 2,045,898,689 1,968,563,014
The accompanying notes are an integral part of the financial statements.
THAI WAH STARCH PUBLIC COMPANY LIMITED 77 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate Note 2013 2012 2013 2012 (Restated) (Restated)
Sales 3,362,208,574 3,581,825,963 2,479,234,337 2,781,422,552 Cost of sales (2,783,856,986) (2,916,022,835) (2,129,150,829) (2,366,073,382) Gross profit 578,351,588 665,803,128 350,083,508 415,349,170 Dividend income 4,014,025 3,340,400 66,665,005 73,997,603 Gain on debt restructuring - 15,557,318 - 15,557,318 Reversal of an impairment loss for investment property - 19,214,117 - - Other income 29 84,429,965 71,081,000 70,550,090 55,740,766 Profit before expenses 666,795,578 774,995,963 487,298,603 560,644,857 Selling expenses (172,621,513) (221,215,762) (117,369,581) (157,219,330) Administrative expenses (167,310,530) (172,356,307) (120,345,645) (127,499,551) Profit before share of gain from investment in associated companies, finance costs and income tax expenses 326,863,535 381,423,894 249,583,377 275,925,976 Share of gain (loss) from investment in associated companies (2,373) 11,153,172 - - Profit before finance costs and income tax expenses 326,861,162 392,577,066 249,583,377 275,925,976 Finance costs (1,436,645) (450,153) (96,595) (450,153) Profit before income tax expenses 325,424,517 392,126,913 249,486,782 275,475,823 Income tax expenses 22 (74,221,575) (83,293,016) (37,088,395) (47,648,234) Net profit for the year 251,202,942 308,833,897 212,398,387 227,827,589
The accompanying notes are an integral part of the financial statements.
78 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF COMPREHENSIVE INCOME (Cont.) FOR THE YEAR ENDED DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate Note 2013 2012 2013 2012 (Restated) (Restated)
Other comprehensive income (loss) Unrealized loss on fair value changes on investment (4,667,960) (28,962,859) (4,667,960) (28,962,859) Reclassification adjustments relating to sales and transfer available - for - sale investment under debt restructuring - 79,500 - 79,500 Currency translation differences of subsidiary 11,519,463 (9,324,311) - - Defined benefit plan actuarial loss - (13,742,097) - (11,478,043) Other comprehensive income (loss) for the year 6,851,503 (51,949,767) (4,667,960) (40,361,402) Total comprehensive income for the year 258,054,445 256,884,130 207,730,427 187,466,187
Net profit attributable to: Equity holders of the Company 219,123,941 276,471,057 212,398,387 227,827,589 Non - controlling interests 32,079,001 32,362,840 251,202,942 308,833,897
Total comprehensive income attributable to: Equity holders of the Company 222,519,605 227,873,536 207,730,427 187,466,187 Non - controlling interests 35,534,840 29,010,594 258,054,445 256,884,130 Basic earnings per share (Baht) 24 Net profit attributable to equity holders of the Company 2.79 3.52 2.70 2.90
The accompanying notes are an integral part of the financial statements.
THAI WAH STARCH PUBLIC COMPANY LIMITED 79 - - - (2,123,613) (4,359,611) 258,054,445 256,884,130 (26,850,420) (17,902,044) (78,383,338) (12,639,291) (Unit : Baht) 1,930,071,700 2,169,053,786 2,169,053,786 1,942,710,991 2,173,413,397 2,319,750,860 - - - - 1,309,557 1,108,212 35,534,840 29,010,594 122,755,182 133,863,732 133,863,732 121,445,625 132,755,520 (26,850,420) (17,902,044) (16,867,926) 125,680,226 - - - - -
equity 14,744,313 (5,467,823) 222,519,605 227,873,536 (78,383,338) (13,948,848) 2,194,070,634 1,807,316,518 2,035,190,054 2,035,190,054 1,821,265,366 2,040,657,877 - - - - - 3,395,664 55,878,543 55,372,581 (74,848,943) (35,410,377) (42,834,230) (78,244,607) (23,403,422) (16,036,231) (78,244,607) (75,309,351) (117,580,957) ------
8,063,624 (7,921,202) (6,527,018) (9,457,808) (9,457,808) (15,984,826) (15,984,826) (15,984,826) - - - - - Consolidated of equity Other component income Other comprehensive Total 55,878,543 55,372,581 (4,667,960) (66,927,741) (28,883,359) (33,376,422) (62,259,781) (23,403,422) (16,036,231) (62,259,781) (65,851,543) (101,596,131) - - 9,454,574 14,744,313 10,568,408 219,123,941 263,283,913 822,227,745 868,651,714 (78,383,338) (55,878,543) (55,372,581) (13,650,000) 1,227,346,574 1,071,861,658 1,071,861,658 1,116,665,831 ------78,750,000 65,100,000 78,750,000 78,750,000 65,100,000 78,750,000 13,650,000 ------177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 ------785,360,380 785,360,380 785,360,380 785,360,380 785,360,380 785,360,380
capital share capital share reserve earnings on investment differences of equity Company interests equity
Issued and paid-up on Premium Statutory earnings Retained Retained changes value translation (loss) on fair components Currency of the other Total equity holders Non-controlling gain Unrealized Total attributable to to equity holders of the Company Attributable 25 4.2 4.2 4.1 4.1 Note
interests non-controlling to interests non-controlling to associated company to subsidiary company subsidiary company to associated income the year (loss) for comprehensive Total (Restated) income the year (loss) for comprehensive Total company subsidiary by paid Dividend Dividend paid to shareholders of the Company shareholders to paid Dividend Dividend paid by subsidiary company subsidiary by paid Dividend Gain (loss) on changes infrom the status of investment accounting policy - Income tax accounting policy accounting policy - Income tax accounting policy Unappropriated retained earnings transfer to statutory reserve statutory to transfer earnings retained Unappropriated Balance as at December 31, 2013
Changes during the year Changes during the year The accompanying notes are an integral part of the financial statements. The accompanyingare notes Balance as at January 1, 2012 (Restated) Balance as at January 1, 2013 (Restated) of investment effect of the reclassification Cumulative of investment effect of the reclassification Cumulative Cumulative effect of the change in Cumulative Cumulative effect of the change in Cumulative Balance as at December 31, 2012
COMPANIES LIMITED AND SUBSIDIARY PUBLIC COMPANY STARCH THAI WAH STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2013 Balance as at January 1, 2012 Balance as at January 1, 2013
80 Annual Report 2013 - - - (8,494,488) 207,730,427 187,466,187 (78,383,338) (18,627,419) (Unit : Baht) 1,987,318,723 1,857,971,634 1,857,971,634 1,670,505,447 1,689,132,866 1,866,466,122 - - 54,679,117 17,843,164 (4,667,960) (66,927,741) (62,259,781) (28,883,359) (62,259,781) (33,376,422) (64,652,117) (64,066,714) (23,403,422) (16,036,231) on investment Total 4,776,003 7,541,743 64,652,117 64,066,714 878,658,412 212,398,387 216,349,546 878,658,412 675,958,866 606,530,746 807,049,955 (78,383,338) (13,650,000) 1,012,673,461 ------Separate 78,750,000 78,750,000 13,650,000 78,750,000 65,100,000 65,100,000 78,750,000 ------
177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 177,462,623 ------785,360,380 785,360,380 785,360,380 785,360,380 785,360,380 785,360,380 capital share capital share reserve earnings 25 4.2 4.2 4.1 4.1 Note
Issued and paid-up on Premium Statutory earnings Retained Retained changes value on fair (loss) gain Unrealized
income the year (loss) for comprehensive Total reserve statutory earningsto retained transfer Unappropriated paid Dividend (Restated) income year (loss) for comprehensive Total Balance as at December 31, 2013
Balance as at December 31, 2012 The accompanying notes are an integral part of the financial statements. The accompanyingare notes
Changes during the year Changes during the year Balance as at January 1, 2012 (Restated) Balance as at January 1, 2013 (Restated) of investment effect of the reclassification Cumulative of investment effect of the reclassification Cumulative Cumulative effect of the change in - Income tax accountingCumulative policy effect of the change in - Income tax accountingCumulative policy
COMPANIES LIMITED AND SUBSIDIARY PUBLIC COMPANY STARCH THAI WAH STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Cont.) FOR THE YEAR ENDED DECEMBER 31, 2013 Balance as at January 1, 2012 Balance as at January 1, 2013
THAI WAH STARCH PUBLIC COMPANY LIMITED 81 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate 2013 2012 2013 2012
Cash flows from operating activities Net profit for the year attributable to equity holders of the Company 219,123,941 276,471,057 212,398,387 227,827,589 Adjustments to reconcile net profit to net cash provided by (used in) operating activities: Profit attributable to non-controlling interests 32,079,001 32,362,840 - - Depreciation and amortization 34,529,271 24,512,001 16,102,193 12,076,169 Doubtful accounts 1,925,496 357,078 3,399,758 1,918,456 Loss on inventory devaluation 2,222,884 - 2,222,884 - Interest income (14,639,064) (20,237,558) (15,181,901) (18,567,871) Dividend income (4,014,025) (3,340,400) (66,665,005) (73,997,603) Gain from sales of assets (29,107) (1,508,523) (450,074) (557,014) Gain on debt restructuring - (15,557,318) - (15,557,318) Loss on from sales of investment - 53,050 - 53,050 Gain from sales of investment in subsidiary - - (3,247) - Realized gain on exchange rate from loan payment - (1,559,872) - (1,559,872) Realized gain on exchange rate from dividend income - - (4,717,020) (691,693) Unrealized (gain) loss on exchange rate (4,762,880) 6,401,405 (5,676,423) 6,373,376 Reversal loss on impairment of investment in subsidiaries - - (4,126,464) (1,370,148) Reversal of an impairment loss of investment property - (19,214,117) - - Share of (gain) loss from investments in associates 2,373 (11,153,172) - - Provisions for employee benefit obligations 5,664,156 4,890,816 3,885,803 3,614,556 Income tax expenses 74,221,575 83,293,016 37,088,395 47,648,234 Finance costs 1,436,645 450,153 96,595 450,153 Profit from operating activities before changes in operating assets and liabilities 347,760,266 356,220,456 178,373,881 187,660,064
The accompanying notes are an integral part of the financial statements.
82 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF CASH FLOWS (Cont.) FOR THE YEAR ENDED DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate 2013 2012 2013 2012
Changes in operating assets and liabilities Trade and other receivables (31,257,813) 84,693,693 (20,405,157) 103,442,514 Inventories (122,460,812) 19,414,154 (67,020,625) 8,659,370 Other current assets 1,451,091 (16,252,164) 11,734,887 (16,484,725) Deposits at financial institutions subject to restrictions 14,862,000 (4,548,000) 2,972,000 - Other non-current assets (1,145,084) (2,554,049) 1,473,273 (3,041,420) Trade and other payables 17,417,813 (44,454,064) (15,559,926) (39,539,818) Other current liabilities (4,415,964) 1,125,920 1,018,455 (70,051) Employee benefit obligations (2,969,343) (4,518,758) (2,533,863) (3,525,467) Other non-current liabilities 2,368,808 1,556,852 1,087,645 616,729 Income tax paid (62,919,891) (91,679,819) (20,266,698) (38,319,144) Net cash provided by operating activities 158,691,071 299,004,221 70,873,872 199,398,052 Cash flows from investing activities Interest received 14,639,064 20,237,558 7,668,847 9,286,405 Increase in temporary investments (4,082,112) - - - Decrease in short-term loans to subsidiary companies - - (16,646,000) (11,028,000) Increase in cash on changes in the status of investment from associated company to subsidiary company 224,172 - - - Purchases of property, plant and equipment (138,809,139) (198,393,807) (67,119,581) (88,299,334) Cash received from sales of property, plant and equipment 1,328,142 2,134,881 958,936 1,183,364 Cash received from sales of investment - 1,536,950 - 1,536,950 Cash received from sales of investment in subsidiary company - - 15,660 - Dividend received from subsidiary companies - - 67,368,000 60,586,672 Dividend received from related companies 4,014,025 14,102,624 4,014,025 14,102,624 Net cash used in investing activities (122,685,848) (160,381,794) (3,740,113) (12,631,319)
The accompanying notes are an integral part of the financial statements.
THAI WAH STARCH PUBLIC COMPANY LIMITED 83 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENTS OF CASH FLOWS (Cont.) FOR THE YEAR ENDED DECEMBER 31, 2013
(Unit : Baht)
Consolidated Separate 2013 2012 2013 2012
Cash flows from financing activities Interest paid (1,436,645) - (96,595) - Cash received short-term loan from bank 7,446,296 - - - Cash paid for defaulted debts from restructuring - (50,302,677) - (50,302,677) Cash received from long-term loan from financial institutions 43,750,000 - - - Cash paid for long-term loan from financial institutions (18,370,000) - - - Increase (decrease) in long-term loans and advances from related companies 61,189 (20,785) - (25,841,150) Dividend paid to shareholders of the Company (78,383,338) - (78,383,338) - Dividend paid by subsidiary companies to non-controlling interests (26,850,420) (17,902,044) - - Net cash used in financing activities (73,782,918) (68,225,506) (78,479,933) (76,143,827) Effect of exchange rate change 5,500,904 (7,131,342) - - Net increase (decrease) in cash and cash equivalents (32,276,791) 63,265,579 (11,346,174) 110,622,906 Cash and cash equivalents at beginning of year 797,740,874 734,475,295 458,679,285 348,056,379 Cash and cash equivalents at end of year 765,464,083 797,740,874 447,333,111 458,679,285
The accompanying notes are an integral part of the financial statements.
84 Annual Report 2013 THAI WAH STARCH PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
1. GENERAL INFORMATION Thai Wah Starch Public Company Limited (Formerly name Universal Starch Public Company Limited), (“the Company”), is a public company incorporated and domiciled in Thailand and listed in the Stock Exchange of Thailand on September 16, 1985. The Company and its subsidiary companies operate their businesses in Thailand, except for one subsidiary company which operates in Vietnam. The Company and its subsidiary companies are principally engaged in the manufacture and distribution of tapioca products. The Company’s registered address, which is the head-office, is 21/59, 21/63-64 Thai Wah 1 Bldg., 20th - 21st Floor, South Sathorn Road, Tungmahamek, Sathorn, Bangkok.
On June 20, 2006, the Company received a letter from the Stock Exchange of Thailand (SET) informing it that because the Company’s security has been classified by the SET for delisting since March 12, 2001, the SET removed the Company’s security from the trading board and transfer it into the Non-Performing Group, effective July 3, 2006. Later, on September 20, 2013, the Company has requested the Stock Exchange of Thailand to approve share trading resumption in stock market, because the Company has considered that it has met qualifications in accordance with the SET’s requirements for resolving the delisting grounds. Then on October 21, 2013, the SET removed cause of possible delisting of the Company’s securities and resumes its trading from October 31, 2013 onwards.
On April 19, 2013, the shareholder’s meeting approved the changing of the Company’s name to “Thai Wah Starch Public Company Limited”. The Company registered to change its company name with the Ministry of Commerce on April 22, 2013.
2. BASIS OF PREPARATION OF CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS The financial statements have been prepared in conformity with the financial reporting standards principles enunciated under the Accounting Professions Act B.E. 2547 and presented in accordance with the notification of Department of Business Development by Ministry of Commerce dated September 28, 2011 regarding the condensed form should be included in the financial statements B.E. 2554 and the regulation of the Securities and Exchange Commission regarding the preparation and presentation of the financial reporting under the Securities and Exchange Act B.E. 2535.
The consolidated and separate financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies.
An English version of the consolidated and separate financial statements have 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.
THAI WAH STARCH PUBLIC COMPANY LIMITED 85 The consolidated financial statements include the financial statements of Thai Wah Starch Public Company Limited and the following subsidiaries: (Unit: percent) Assets as a Revenues as a percentage percentage to the to the consolidated consolidated total Country of Percentage total assets revenues for the years Company’s name Nature of business incorporation of shareholding as at 31 December ended 31 December 2013 2012 2013 2012 2013 2012 Thai Wah Alpha Starch Company Limited Manufacture of alpha Thailand 99.99 99.99 1.17 1.26 0.61 0.63 starch DI Company Limited Manufacture of tapioca Thailand 99.93 99.93 2.94 2.71 2.42 3.62 starch Thai Wah Rice Flour Company Limited Dormant Thailand 83.33 83.33 0.41 0.46 0.01 - Tay Ninh Tapioca Company Limited Manufacture of tapioca Vietnam 70.00 70.00 10.48 11.22 22.22 18.45 starch, glucose and candy Thai Nam Tapioca Company Limited Manufacture of tapioca Thailand 70.00 70.00 11.25 9.05 1.17 0.39 starch Thai Wah Realty Limited Property development Thailand 99.99 99.99 2.45 2.66 - 0.28 Bangna Property Development Company Holding company Thailand 99.99 99.99 1.24 1.31 0.03 0.02 Limited Rachada Property Development Holding company Thailand 99.99 99.99 6.09 6.45 0.13 0.11 Company Limited Bangpakong Turakij Company Limited Landholding Thailand 99.99 99.99 3.45 3.73 - - Chiang Saen Land Company Limited Landholding Thailand 99.99 99.99 1.42 1.54 - 0.17 Thai Wah (6) Company Limited Landholding Thailand 99.99 99.99 1.41 1.39 0.14 0.13 Bang Thao (6) Company Limited Landholding Thailand 99.99 99.99 0.81 0.88 - - Mae Chan Land Company Limited Landholding Thailand 99.99 99.99 0.58 0.63 - - Tha Thungna Land Company Limited Landholding Thailand 99.99 99.99 0.29 0.31 - 0.03 Thai Sin Tapioca (1989) Company Limited Landholding Thailand 99.99 99.99 0.19 0.20 - - Thai Ongkarak Company Limited Landholding Thailand 99.98 99.98 0.71 0.77 - - Mae Hong Son Land Development Limited Landholding Thailand 84.97 84.97 0.31 0.34 - 0.04 Thai Nam Tapioca (1) Company Limited Landholding Thailand 69.95 69.95 0.05 0.05 - - Laguna (2) Company Limited Dormant Thailand 99.40 99.40 - - - - Bang Thao (7) Company Limited Dormant Thailand 99.30 99.30 - - - - Phang Nga Resorts Limited Landholding Thailand 99.93 99.93 - - - - Bang Thao (5) Company Limited Landholding Thailand 99.93 99.93 - - - - Thai Modified Starch Company Limited Dormant Thailand 94.62 94.62 0.30 0.32 0.01 - Architrave Design & Planning Company Dormant Thailand 99.88 99.88 - - - - Limited Thai Wah Marketing Services Limited Dormant Thailand 80.00 80.00 0.16 0.17 - - Business Evolution Company Limited Not commenced operation Thailand 99.70 99.70 - - - - (indirect held by 2 subsidiaries) Mae Joe Land Company Limited Dormant Thailand 49.99 49.99 0.01 - - -
The financial statements of the overseas subsidiary company are translated to Thai Baht at the average closing exchange rate as to assets and liabilities, and at the monthly average exchange rate applying during the year for revenues and expenses. The resultant difference has been shown under the caption of “Currency translation differences” in the shareholders’ equity.
86 Annual Report 2013 The financial statements of the overseas subsidiary company were audited by its auditor overseas.
Outstanding balance between the Company and subsidiary companies and significant intercompany transactions are eliminated from the consolidated financial statements.
The Company has had to reclassify Mae Joe Land Company Limited from an associated company to subsidiary company since the Company has the control over such company. The effects of reclassification were increase in equity holders of the Company amounting to Baht 14.74 million and decrease in Non- controlling interests amounting to Baht 16.87 million in the consolidated financial statements.
3. APPLICATION OF NEW ACCOUNTING STANDARDS The Federation of Accounting Professions issued the following accounting standards, financial reporting standard, accounting standard interpretations and accounting treatment guidance that are effective for fiscal years beginning on or after January 1, 2013. Accounting Standards TAS 12 Income Taxes TAS 20 (Revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rate Financial Reporting Standard TFRS 8 Operating Segments Accounting Standard Interpretations TSIC 10 Government Assistance-No Specific Relation to Operating Activities TSIC 21 Income Taxes-Recovery of Revalued Non-depreciable Assets TSIC 25 Income Taxes-Changes in the Tax Status of an Enterprises or its Shareholders
Accounting Treatment Guidance for Transfers of Financial Assets These accounting standards, financial reporting standard, accounting standard interpretations and accounting treatment guidance do not have any significant impact on the financial statements, except for the following accounting standard.
TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences arising from differences between the carrying amount of an asset or liability in the statement of financial position and its tax base in order to recognise the tax effects as deferred tax assets or liabilities subjecting to certain recognition criteria. The Company and its subsidiary companies have changed this accounting policy in this current period and restated the prior year’s financial statements, presented as comparative information, as though the Company and its subsidiary companies had initially recognised the tax effects as deferred tax assets or liabilities. The cumulative effect of this change in accounting policy has been presented in Note 4 to the financial statements.
New accounting standards issued during the period and not yet effective During the year, the Federation of Accounting Professions has issued notifications, already published in the Royal Gazette, mandating the use of Accounting Standard, Financial Reporting Standard, Accounting Standard Interpretation and Financial Reporting Standard Interpretations as follows.
THAI WAH STARCH PUBLIC COMPANY LIMITED 87 Effective date Accounting Standard TAS 1 (Revised 2012) Presentation of Financial Statements January 1, 2014 TAS 7 (Revised 2012) Statement of Cash Flows January 1, 2014 TAS 12 (Revised 2012) Income Taxes January 1, 2014 TAS 17 (Revised 2012) Leases January 1, 2014 TAS 18 (Revised 2012) Revenue January 1, 2014 TAS 19 (Revised 2012) Employee Benefits January 1, 2014 TAS 21 (Revised 2012) The Effects of Changes in Foreign Exchange Rate January 1, 2014 TAS 24 (Revised 2012) Related Party Disclosures January 1, 2014 TAS 28 (Revised 2012) Investments in Associates January 1, 2014 TAS 31 (Revised 2012) Interests in Joint Venture January 1, 2014 TAS 34 (Revised 2012) Interim Financial Reporting January 1, 2014 TAS 38 (Revised 2012) Intangible assets January 1, 2014 Financial Reporting Standard TFRS 2 (Revised 2012) Share - Based Payments January 1, 2014 TFRS 3 (Revised 2012) Business Combinations January 1, 2014 TFRS 4 Insurance Contracts January 1, 2016 TFRS 5 (Revised 2012) Non-current Asset Held for Sale and Discontinued Operations January 1, 2014 TFRS 8 (Revised 2012) Operating Segments January 1, 2014 Accounting Standard Interpretation TSIC 15 Operating Leases-Incentives January 1, 2014 TSIC 27 Evaluating the Substance of Transactions Involving January 1, 2014 the Legal Form of a Lease TSIC 29 Service Concession Arrangements: Disclosures January 1, 2014 TSIC 32 Intangible Assets-Web Site Costs January 1, 2014 Financial Reporting Standard Interpretations TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities January 1, 2014 TFRIC 4 Determining whether an Arrangement contains a Lease January 1, 2014 TFRIC 5 Rights to Interests arising from Decommissioning, January 1, 2014 Restoration and Environmental Rehabilitation Funds TFRIC 7 Applying the Restatement Approach under TAS 29 January 1, 2014 Financial Reporting in Hyperinflationary Economies TFRIC 10 Interim Financial Reporting and Impairment January 1, 2014 TFRIC 12 Service Concession Arrangements January 1, 2014 TFRIC 13 Customer Loyalty Programmes January 1, 2014 TFRIC 17 Distributions of Non-cash Assets to Owners January 1, 2014 TFRIC 18 Transfers of Assets from Customers January 1, 2014
The management of the Company and its subsidiary companies is presently considering the first-year impact on financial statements of the Company and has yet to reach a conclusion.
88 Annual Report 2013 4. CUMULATIVE EFFECT OF THE CHANGE IN ACCOUNTING POLICIES AND RESTATEMENT OF THE FINANCIAL STATEMENTS IN CONNECTION WITH RECLASSIFICATION OF INVESTMENT 4.1 Change in accounting policy During the year, the Company and its subsidiary companies made the change described in Note 3 to the financial statements to its significant accounting policies, as a result of the adoption of TAS 12 Income Taxes. The cumulative effect of the change in the accounting policies has been separately presented in the statements of changes in shareholders’ equity.
The amounts of adjustments affecting the statements of financial position and the statements of comprehensive income are summarized below. (Unit: Thousand Baht) Consolidated Separate December December January December December January 31, 2013 31, 2012 1, 2012 31, 2013 31, 2012 1, 2012 Statements of financial position Increase in deferred tax assets 15,737 13,237 10,884 10,395 8,210 4,828 Increase in deferred tax liabilities 18,784 17,597 23,523 16,625 16,704 23,455 Decrease in other components of equity (14,869) (16,036) (23,403) (14,869) (16,036) (23,403) Increase in non-controlling interest 832 1,108 1,309 - - - Increase in unappropriated retained earnings 10,990 10,568 9,455 8,639 7,542 4,776
(Unit: Thousand Baht) Consolidated Separate For the year ended December 31, For the year ended December 31, 2013 2012 2013 2012 Statements of comprehensive income Decrease in defined benefit plan actuarial loss - 3,438 - 2,870 Increase in unrealized gain on fair value changes on available-for-sale investments 1,167 7,367 1,167 7,367 Increase (decrease) in income tax expenses (146) 2,533 (1,098) 104 Decrease in profit attributable to non-controlling interest (276) (241) - - Increase (decrease) in profit attributable to equity holders of the Company 422 (2,185) 1,098 (104) Increase (decrease) in basic earnings per shares (Baht) 0.01 (0.03) 0.01 -
4.2 Restatement of the financial statements in connection with the reclassification of investment Pursuant to the amendment by the Federation of Accounting Professions to the Thai Accounting Standard (“TAS”) No.28 (Revised 2009): Investment in Associates, the entity is required to record the fair value of investment as at the date of reclassification (reclassification due to change in the proportionate of investment) and the difference between the fair value and the book value of investment is recognised to profit or loss. Such practice differs from the procedure set out in TAS No.105: Accounting for Investment in Debt and Equity Securities, which the entity is required to record the fair value of investment as at the date of reclassification and the difference between the fair value and the book value of investment is recognised to shareholders’ equity. In compliance with TAS No.28 (Revised 2009), the Company has retrospectively adjusted the reclassification of investment in the prior year’s financial statement presented as comparative information. The effects of the adjustment are summarized below:
THAI WAH STARCH PUBLIC COMPANY LIMITED 89 (Unit: Thousand Baht) Consolidated Separate December January December January 31, 2012 1, 2012 31, 2012 1, 2012 Statements of financial position Increase (decrease) in other components of equity 55,373 55,879 (64,066) (64,652) Increase (decrease) in unappropriated retained earnings (55,373) (55,879) 64,066 64,652
(Unit: Thousand Baht) Consolidated Separate For the year ended For the year ended December 31, 2012 December 31, 2012 Statements of comprehensive income Increase (decrease) in other income 506 (585) Increase (decrease) in reclassification adjustments relating to available-for-sale investments disposal in the period (506) 585
5. SIGNIFICANT ACCOUNTING POLICIES 5.1 Revenue recognition 5.1.1 Revenues from sales of goods Sales of goods are recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting sales return discounts and allowances.
5.1.2 Revenues from rental and services Rental income is recognized over the rent period and services income are recognized when services have been rendered taking into account the stage of completion.
5.1.3 Interest income and dividend income Interest income is recognized on an accrual basis based on the effective interest rate. Dividend income is recognized when the right to receive the dividend is established.
5.2 Cash and cash equivalents Cash and cash equivalents consist of cash on hand, cash at bank, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.
5.3 Trade and other receivables Trade and other receivables are stated at the net realizable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging.
5.4 Inventories Inventories are valued at the lower of cost and net realizable value. Cost is determined by the weighted average method except for factory supplies, the cost of which determined by the first-in, first-out method.
90 Annual Report 2013 The cost of purchase comprises both the purchase price and costs directly attributable to the purchase of the inventory, such as transportation charges, less all attributable discounts, allowances and rebates. The cost of finished goods and work in process comprise raw materials, direct labor, other direct costs and related production overheads, the latter being allocated on the basis of normal operating activities. Net realizable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.
Allowance for stock obsolescence is set up for obsolete, slow-moving and defective inventories.
5.5 Investments Investments in subsidiaries and associated companies presented in separate financial statements are recorded under the cost net of allowance for impairment.
Investments in associated companies presented in consolidated financial statements are recorded at equity method.
Investment in available-for-sale security is carried at fair value less allowance for impairment of investment. The differences between book value and fair value are presented as other comprehensive income (loss) in statement of comprehensive income and unrealized gain (loss) on fair value changes on investment in the shareholders’ equity.
Investment in non-marketable equity security which the Company classifies as other investment, is valued at cost net of allowance for impairment (if any).
Cost of short-term and long-term investments sold during the year were computed by the weighted average method. Gain or loss of those investment sales are stated in the statement of comprehensive income.
5.6 Investment properties Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Investment properties are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalised borrowing costs.
5.7 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and allowance for impairment of assets (if any).
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
THAI WAH STARCH PUBLIC COMPANY LIMITED 91 Depreciation of plant and equipment is calculated by reference to their costs on a straight-line basis (except for assets acquired prior to 1986, for which the declining balance basis is used) over the following estimated useful lives: -
Buildings and buildings improvement 10 - 45 years Machinery and factory equipment 5 - 20 years Office furniture, fixtures, equipment and motor vehicles 3 - 15 years
Depreciation is included in determining income.
No depreciation has been provided for land and construction in progress.
Expenditures for additions, renewals and improvements are capitalized. Repair and maintenance costs are recognized as expenses when incurred.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
5.8 Land use right and amortization Land use right of an overseas subsidiary company is stated at cost less accumulated amortization. Amortization is calculated by reference to cost on a straight-line basis over the expected future period, for which the assets are expected to generate economic benefit for 30 years.
The amortization is included in determining income.
5.9 Long-term leases Leases which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to profit or loss over the lease period. The equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease period.
Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.
5.10 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company.
They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Company’s operations.
5.11 Foreign currencies The consolidated and separate financial statements are presented in Thai Baht which is functional currency of the Company. Items of each entity included in the consolidated financial statements are measured using the functional currency of that entity.
92 Annual Report 2013 Foreign currency transactions are translated into Baht at the rates ruling on the transaction dates. Assets and liabilities in foreign currency outstanding on the statements of financial position date are translated into Baht at the rates ruling on the statements of financial position date.
Gains and losses from the change of foreign exchange rate are included in determining income.
5.12 Impairment of asset The Company and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company and its subsidiaries make an estimate of the asset’s recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognized in the statement of comprehensive income. (An asset’s recoverable amount is the higher of fair value less costs to sell or value in use).
5.13 Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.
Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
Post-employment benefits and other long-term employee benefits The Company and subsidiary companies provide a post-employment benefit obligations, payable to employees under the Thai Labor Protection Act, and other long-term employee benefits. These obligations are determined by a qualified independent actuary based on actuarial techniques, using the projected unit credit method. The present value of the defined benefits obligation is determined by discounting estimated future cash flows using yields on the government bonds which have terms to maturity approximating the terms of related liability. The estimated future cash flows shall reflect employee salaries, turnover rate, length of service and other.
Any actuarial gain and loss arising from post-employment benefits that are recognised in other comprehensive income will be recognised immediately in retained earning.
Any actuarial gain and loss from other long-term employee benefits are recognised in profit and loss.
5.14 Directors’ and management’s remuneration Directors’ remuneration represents the benefits paid to the Company’s directors in accordance with Section 90 of the Public Company Limited Act, exclusive of salaries and related benefits.
Remuneration to management is salaries, remuneration and other benefits to their directors and management, in accordance with the definitions in the notification of the Securities and Exchange Commission. Management under such definition includes a chief executive officer, the next four executive levels immediately below the chief executive officer and all persons in positions comparable to those fourth executive levels.
THAI WAH STARCH PUBLIC COMPANY LIMITED 93 5.15 Income tax Income tax expense represents the sum of corporate income tax currently payable and deferred tax.
Current tax Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.
Deferred tax Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period.
The Company and its subsidiary companies recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised.
At each reporting date, the Company and its subsidiary companies review and reduce the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
The Company and its subsidiary companies record deferred tax directly to shareholders’ equity if the tax relates to items that are recorded directly to shareholders’ equity.
5.16 Provision for liabilities The Company and its subsidiaries recognize a provision for liabilities when an entity has a present legal or constructive obligation as a result of a past event. It is probable that an outflow of economic benefits resources will be required to settle the obligation and reliable estimate can be made of the amount of the obligation.
5.17 Use of accounting estimates Preparation of financial statements in conformity with the financial reporting standards principles required the management to make several estimation and assumption which affect the reported amounts in the financial statements and notes related thereto. Consequent actual results may differ from those estimates.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company and its subsidiaries make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have a risk of causing an adjustment to the carrying amounts of assets within the next financial year relate primarily to allowance for doubtful accounts, allowance for impairment of assets, allowance for stock obsolescence, depreciation of plant and equipment, amortization of land use right and employee benefit obligation. All other estimates mentioned above are further detailed in the corresponding disclosures.
94 Annual Report 2013 6. RELATED PARTY TRANSACTIONS 6.1 Significant transactions with related parties During the years, the Company has significant business transactions with its subsidiary companies, associated companies and related companies (related by way of shareholding or common shareholders and/or directors). Related party transactions for the years ended December 31, 2013 and 2012 are summarized as follows: - (Unit: Million Baht) Consolidated Separate Transaction type Payee Payer 2013 2012 2013 2012 Price policy Rental and service TWS TDC 1.86 1.13 1.86 1.13 Agreement (1.3 and 1.4) TW6 TDC 4.91 4.70 - - Agreement (1.3) TWPL TWS 9.89 9.13 9.89 9.13 Agreement (1.1) Others Others - - 6.30 5.90 Agreement and agreed basis (1.2, 1.5, 1.6 and 1.7) Interest TWS TWRL - - 5.37 6.64 Agreement (2.1) TWS DI - - 1.50 1.49 Agreement (2.1) Others Others - - 2.14 2.46 Agreement (2.1 and 2.2) Trading of goods and TWS TWFP 52.78 37.63 52.78 37.63 Market price supplies TWS TDC 51.10 69.75 51.10 69.75 Market price TDC TWS 54.78 56.18 54.78 56.18 Market price TWS CT 191.14 717.65 191.14 717.65 Market price (USD 6.49 (USD 23.22 (USD 6.49 (USD 23.22 million) million) million) million) VTC TAY 6.08 20.46 - - Market price (VND (VND 4,276 13,731.52 million) million) TN TWS - - 1,050.76 1,128.08 Agreed basis (3.1) TWS DI - - - 8.08 Agreed basis (3.1) TWAS TWS - - 9.59 14.01 Agreed basis (3.1) TWS TWAS - - 11.65 22.45 Agreed basis (3.1) TWS TAY - - - 1.57 Agreed basis (3.1) Others Others - - 0.83 2.76 Agreed basis (3.1) Dividend TWS TAY - - 62.65 41.77 As declared (USD 2.10 (USD 1.38 million) million) TWS TW6 - - - 18.12 As declared TWS TWFP 3.58 3.34 3.58 3.34 As declared TWS LRH 0.44 - 0.44 - As declared TWS WL - - - 10.76 As declared
Abbreviation TWS = Thai Wah Starch Public Company Limited Subsidiaries TN = Thai Nam Tapioca Company Limited TWAS = Thai Wah Alpha Starch Company Limited DI = DI Company Limited TW6 = Thai Wah (6) Company Limited TAY = Tay Ninh Tapioca Company Limited TWRL = Thai Wah Realty Limited THAI WAH STARCH PUBLIC COMPANY LIMITED 95 Associated company WL = The Walon (1) Company Limited Related companies (Related by share holding or common shareholders and/or directors) TWFP = Thai Wah Food Products Public Company Limited TWPL = Thai Wah Plaza Limited TDC = Tapioca Development Corporation Limited LRH = Laguna Resorts & Hotels Public Company Limited CT* = Chungman Trading Company Limited Others = More than one Subsidiary, Associated and Related companies * Since April 29, 2013, there was no common directors which caused Chungman Trading Company Limited to be no longer a related company.
Price policy 1. These transactions relate to: 1.1 Rental and service fee for office space at Thai Wah Tower I are approximately Baht 400 - 550 per square metre per month. Rental and service fee are charged at the rate within the range charged to other non related tenants in Thai Wah Tower I and also within the market rental range of office buildings that are similar quality and location. Other expenses and utility are reimbursed at cost. These are normal course of business. The agreement is effective till April 17, 2015. 1.2 Reimbursement of office expenses such as photocopy expenses, telephone charges and other utility charges are reimbursed at cost. 1.3 Land rental for factory as per co-investment agreement of which period is 30 years will be expired in 2019. Rental rate is charged at 7.5% of the current appraised value of the land and will be revised every three years. The present rate is Baht 698,750 per month charged by TWS and TW6 of Baht 255,000 per month and Baht 443,750 per month, respectively. The rental rate is within the range charged in the market. 1.4 Warehouse rental charges are at Baht 0.75 - 30 per bag per month which depend on size of bag. 1.5 Land rental for factory premise charge is Baht 302,000 per year. 1.6 Land rental for factory premise charge is Baht 627,000 per year. 1.7 Warehouse rental charges for 2 locations are Baht 30,000 per month and Baht 3,500 per month.
2. These transactions relate to: 2.1 Interest charged is at the monthly average of finance costs plus 1 percent per annum. 2.2 Interest charged is at fixed deposit rate.
3. These transactions relate to: 3.1 Selling price is cost plus margin of each type of product.
96 Annual Report 2013 The outstanding balances of related party transactions have been separately shown in the statements of financial position as follows: -
6.2 Trade receivables - related companies (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Trade receivables - subsidiary companies DI Company Limited - - - 154 Thai Wah Alpha Starch Company Limited - - 27,215 28,786 Total trade receivables - subsidiary companies - - 27,215 28,940 Trade receivables - related company Thai Wah Food Products Public Company Limited 4,802 3,459 4,802 3,459 Chungman Trading Company Limited - 147,981 - 147,981 Total trade receivables - related company 4,802 151,440 4,802 151,440 Total 4,802 151,440 32,017 180,380
6.3 Short-term loans to related companies (Unit: Thousand Baht) Separate December During the year December 31, 2012 Increase Decrease 31, 2013 Short-term loans - subsidiary companies Bang Thao (6) Company Limited 935 - - 935 Chiang Saen Land Company Limited 7,755 - - 7,755 DI Company Limited 53,265 102,646 (86,000) 69,911 Mae Chan Land Company Limited 831 - - 831 Mae Hong Son Land Development Limited 1,635 - - 1,635 Thai Ongkarak Company Limited 13,998 - - 13,998 Tha Thungna Land Company Limited 390 - - 390 Total short-term loans - subsidiary companies 78,809 102,646 (86,000) 95,455 Short-term loans - associated company Mae Joe Land Company Limited 8,048 - - 8,048 Less: Allowance for doubtful accounts (8,048) - - (8,048) Total short-term loans - associated company, net - - - - Total 78,809 102,646 (86,000) 95,455
Short-term loans to related companies are unsecured. The loans are repayable within one year and carry interest at the rates of 3.23 - 6.88 percent per annum.
THAI WAH STARCH PUBLIC COMPANY LIMITED 97 6.4 Other receivables - related companies (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Other receivables - subsidiary companies Bang Thao (6) Company Limited - - 1,472 1,433 DI Company Limited - - 193 128 Chiang Saen Land Company Limited - - 10,773 10,323 Thai Wah (6) Company Limited - - 20 - Mae Chan Land Company Limited - - 1,733 1,644 Mae Hong Son Land Development Limited - - 2,988 2,849 Thai Nam Tapioca Company Limited - - 104 - Thai Ongkarak Company Limited - - 19,236 18,732 Thai Wah Alpha Starch Company Limited - - 721 201 Tha Thungna Land Company Limited - - 1,448 1,369 Thai Wah Realty Limited - - 177,448 172,073 Architrave Design & Planning Company Limited - - 6,859 6,555 Bang Thao (5) Company Limited - - 9,684 9,296 Phang Nga Resorts Limited - - 15,337 14,803 Laguna (2) Company Limited - - 621 587 Bang Thao (7) Company Limited - - 373 337 Mae Joe Land Company Limited - - 23,849 - Less: Allowance for doubtful accounts - - (222,159) (197,015) Total other receivables - subsidiary companies, net - - 50,700 43,315 Other receivables - associated company Mae Joe Land Company Limited - 23,557 - 23,557 Less: Allowance for doubtful accounts - (23,557) - (23,557) Total other receivables - associated company, net - - - - Other receivables - related companies Tapioca Development Corporation Limited 403 187 403 187 International Commercial Development Company Limited 20 - 20 - Total other receivables - related companies 423 187 423 187 Total 423 187 51,123 43,502
98 Annual Report 2013 6.5 Long-term loans to subsidiary companies (Unit: Thousand Baht) December During the year December 31, 2012 Increase Decrease 31, 2013 Long-term loans to subsidiary companies Architrave Design & Planning Company Limited 7,413 - - 7,413 Bang Thao (5) Company Limited 6,839 - - 6,839 Phang Nga Resorts Limited 11,161 - - 11,161 Thai Wah Realty Limited 148,325 - - 148,325 Total long-term loans to subsidiary companies 173,738 - - 173,738 Less: Allowance for doubtful accounts (173,738) - - (173,738) Long-term loans to subsidiary companies, net - - - -
Long-term loans to subsidiary companies are unsecured. The loans carry interest at the rates of 3.23 - 6.88 percent per annum.
6.6 Trade payables - related companies (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Trade payables - subsidiary companies Thai Wah Alpha Starch Company Limited - - 1,243 - Thai Nam Tapioca Company Limited - - 31 26,322 Total trade payables - subsidiary companies - - 1,274 26,322 Trade payables - related company Tapioca Development Corporation Limited 16,739 21,634 16,739 21,634 Total trade payables - related company 16,739 21,634 16,739 21,634 Total 16,739 21,634 18,013 47,956
6.7 Short-term loan from related company Short-term loan from related company is the balance of loan which Mae Joe Land Company loaned from International Commercial Development Company Limited. The loan carries interest at the rates of 2.88 - 3.00 percent per annum and is repayable at call.
6.8 Directors and management’s remuneration During the year ended December 31, 2013 and 2012, the Company and its subsidiary companies had employee benefit expenses of their directors and management as follow: (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Short - term employee benefits 25,988 21,219 25,396 20,040 Post - employment benefits 372 143 372 143 Other long - term employee benefits 12 18 12 18 Total 26,372 21,380 25,780 20,201
THAI WAH STARCH PUBLIC COMPANY LIMITED 99 7. CASH AND CASH EQUIVALENTS (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Cash 18,963 8,025 4,214 1,856 Cash at banks - current accounts 17,686 7,060 12,559 4,351 Cash at banks - saving accounts 281,885 216,758 196,053 161,110 Cash at banks - fixed deposits not over 3 months 446,930 565,898 234,507 291,362 Total 765,464 797,741 447,333 458,679
8. TRADE AND OTHER RECEIVABLES Trade and other receivables are aged as follows: - (Unit: Thousand Baht) Consolidated Separate Age of receivables Note 2013 2012 2013 2012 Trade receivables - related companies Not yet due 4,366 151,440 6,663 153,144 Past due Up to 3 months 436 - 4,280 8,963 3 - 6 months - - 3,185 18,273 6 - 12 months - - 4,678 - Over 12 months - - 13,211 - Total trade receivables - related companies 6.2 4,802 151,440 32,017 180,380 Trade receivables - others Not yet due 295,439 133,779 238,226 56,985 Past due Up to 3 months 40,622 23,035 4,445 12,935 6 - 12 months 3,174 - - - Over 12 months 3,659 3,657 3,623 3,623 Total trade receivables - others 342,894 160,471 246,294 73,543 Less: Allowance for doubtful accounts (1,960) (34) (1,814) - Trade receivables - others, net 340,934 160,437 244,480 73,543 Other receivables - related companies 423 187 51,123 43,502 Total other receivables - related companies 6.4 423 187 51,123 43,502 Total trade and other receivables 346,159 312,064 327,620 297,425
100 Annual Report 2013 9. INVENTORIES (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Finished goods 364,765 238,052 216,918 149,298 Raw materials 2,056 7,510 - - Packing materials 12,538 14,541 11,400 14,078 Factory supplies 37,651 35,282 16,844 14,876 Others 11,055 10,147 2,259 2,219 Total inventories 428,065 305,532 247,421 180,471 Less : Allowance for stock obsolescence (8,520) (6,225) (5,874) (3,722) Inventories - net 419,545 299,307 241,547 176,749
For the year ended December 31, 2013 and 2012, inventories recognised as an expense in cost of sales are Baht 2,784 million and Baht 2,916 million, respectively in the consolidated financial statements (separate financial statements : Baht 2,129 million and Baht 2,366 million, respectively).
10. AVAILABLE - FOR - SALE INVESTMENTS (Unit: Thousand Baht) Consolidated and Separate 2013 2012 Investment in securities Equity securities Laguna Resorts & Hotels Public Company Limited 174,010 174,010 Thai Wah Food Products Public Company Limited 72,534 72,534 Total 246,544 246,544 Less: Unrealized loss on fair value changes on investment (52,058) (46,223) Total available - for - sale investments (presented at fair value) 194,486 200,321
11. INVESTMENTS IN ASSOCIATED COMPANIES Percentage of holding Paid-up capital (direct and indirect) Nature of business 2013 2012 2013 2012 Million Baht Million Baht Percent Percent Investments in associated companies Mae Joe Land Company Limited Land rental - 3.00 - 50.0 The Walon (1) Company Limited Land holding 1.00 1.00 29.9 29.9
THAI WAH STARCH PUBLIC COMPANY LIMITED 101 (Unit: Thousand Baht) Consolidated Separate Investments at equity method Investments at cost method 2013 2012 2013 2012 Investments in associated companies Mae Joe Land Company Limited - - - 1,500 The Walon (1) Company Limited 389 391 299 299 Total 389 391 299 1,799 Less: Allowance for impairment of investments - - - (1,500) Investments in associated companies, net 389 391 299 299
The following summarized financial information of associated companies Total assets Total liabilities 2013 2012 2013 2012 Thousand Baht Thousand Baht Thousand Baht Thousand Baht Mae Joe Land Company Limited - 338 - 34,067 The Walon (1) Company Limited 1,311 1,323 12 16
Total revenues Net profit (loss) 2013 2012 2013 2012 Thousand Baht Thousand Baht Thousand Baht Thousand Baht Mae Joe Land Company Limited - 1 - (438) The Walon (1) Company Limited 7 222 8 197
102 Annual Report 2013 12. INVESTMENTS IN SUBSIDIARY COMPANIES
Paid-up capital Percentage of holding Investments at cost method 2013 2012 2013 2012 2013 2012 Million Baht Million Baht Percent Percent Thousand Baht Thousand Baht Investments in subsidiary companies Agricultural business Thai Wah Alpha Starch Company Limited 18.00 18.00 99.99 99.99 17,999 17,999 DI Company Limited 10.00 10.00 99.93 99.93 9,409 9,409 Thai Wah Rice Flour Company Limited 30.00 30.00 83.33 83.33 24,999 24,999 Tay Ninh Tapioca Company Limited 124.13 124.13 70.00 70.00 86,876 86,889 Thai Nam Tapioca Company Limited 86.60 86.60 70.00 70.00 60,620 60,620 Land holding and others Thai Wah Realty Limited 100.00 100.00 99.99 99.99 119,012 119,012 Bangna Property Development Company Limited 28.14 28.14 99.99 99.99 32,000 32,000 Rachada Property Development Company Limited 162.00 162.00 99.99 99.99 161,999 161,999 Bangpakong Turakij Company Limited 91.00 91.00 99.99 99.99 90,999 90,999 Chiang Saen Land Company Limited 75.00 75.00 99.99 99.99 74,999 74,999 Thai Wah (6) Company Limited 29.00 29.00 99.99 99.99 28,999 28,999 Bang Thao (6) Company Limited 21.50 21.50 99.99 99.99 21,499 21,499 Mae Chan Land Company Limited 15.00 15.00 99.99 99.99 14,999 14,999 Tha Thungna Land Company Limited 15.00 15.00 99.99 99.99 14,999 14,999 Thai Sin Tapioca (1989) Company Limited 5.00 5.00 99.99 99.99 4,999 4,999 Thai Ongkarak Company Limited 4.00 4.00 99.98 99.98 3,999 3,999 Phang Nga Resorts Limited 1.00 1.00 99.93 99.93 999 999 Bang Thao (5) Company Limited 0.25 0.25 99.93 99.93 250 250 Laguna (2) Company Limited 0.10 0.10 99.40 99.40 100 100 Bang Thao (7) Company Limited 0.03 0.03 99.30 99.30 25 25 Thai Modified Starch Company Limited 10.00 10.00 94.62 94.62 9,462 9,462 Mae Hong Son Land Development Limited 2.00 2.00 84.97 84.97 1,699 1,699 Thai Nam Tapioca (1) Company Limited 1.00 1.00 69.95 69.95 700 700 Architrave Design & Planning Company Limited 0.50 0.50 99.88 99.88 500 500 Thai Wah Marketing Services Limited 20.00 20.00 80.00 80.00 16,000 16,000 Mae Joe Land Company Limited 3.00 - 49.99 - 1,500 - Total 799,641 798,154 Less: Allowance for impairment of investments (227,387) (230,014) Investment in subsidiary companies, net 572,254 568,140
All subsidiary companies are incorporated and operated in Thailand except for Tay Ninh Tapioca Company Limited, which is incorporated and operated in Vietnam. This subsidiary company is a joint venture in the form of a limited liability company between the Company and a Vietnamese Government Agency engaging in the manufacture and sale of tapioca products. Such join venture has a period of operation for 30 years since January 31, 1994 and can be extend.
THAI WAH STARCH PUBLIC COMPANY LIMITED 103 In 2013, the Company has recorded dividend income from Tay Ninh Tapioca Company Limited amounting to Baht 62.65 million in the separate financial statements.
13. OTHER LONG-TERM INVESTMENT Investment in related company Nature of Country of Percentage Consolidated and Separate business incorporation of holding 2013 2012 Percent Thousand Baht Thousand Baht Ordinary shares Tropical Resorts Limited Holding Hong kong 19.8 45,703 45,703 Less: Allowance for impairment company of investment (45,703) (45,703) Other long-term investment, net - -
14. INVESTMENT PROPERTY (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Land - cost 248,003 248,003 504 504 Less: Allowance for impairment of assets (68,191) (68,191) - - Investment property, net 179,812 179,812 504 504
The appraised value of investment property determined by independent appraisers using comparative method is approximately Baht 398.06 million in the consolidated financial statements and Baht 138.50 million in the separate financial statements.
104 Annual Report 2013 15. PROPERTY, PLANT AND EQUIPMENT (Unit: Thousand Baht) Consolidated Office furniture, Buildings Machinery and fixtures, and buildings factory equipment and Construction Land improvement equipment motor vehicles in progress Total Cost: As at January 1, 2012 132,806 282,362 522,401 139,779 39,509 1,116,857 Purchase/Transfer in - 5,120 47,770 26,668 130,525 210,083 Disposal/Transfer out - - (5,462) (11,083) (18,342) (34,887) Translation adjustment - (2,160) (7,320) (454) - (9,934) As at December 31, 2012 132,806 285,322 557,389 154,910 151,692 1,282,119 Purchase/Transfer in - 74,977 178,902 13,391 84,617 351,887 Disposal/Transfer out - (12,437) (10,379) (54,225) (226,094) (303,135) Translation adjustment - 4,442 17,393 1,188 - 23,023 As at December 31, 2013 132,806 352,304 743,305 115,264 10,215 1,353,894 Accumulated depreciation: As at January 1, 2012 - 220,211 462,182 116,191 - 798,584 Depreciation for the year - 5,605 11,290 7,253 - 24,148 Depreciation on disposal - - (4,926) (10,992) - (15,918) Translation adjustment - (1,688) (5,810) (389) - (7,887) As at December 31, 2012 - 224,128 462,736 112,063 - 798,927 Depreciation for the year - 6,794 19,182 8,195 - 34,171 Depreciation on disposal - (12,008) (9,991) (53,744) - (75,743) Translation adjustment - 3,615 12,734 875 - 17,224 As at December 31, 2013 - 222,509 484,661 67,389 - 774,579 Allowance for impairment: As at December 31, 2012 - 6,825 - - - 6,825 As at December 31, 2013 - 6,825 - - - 6,825 Net book value: As at December 31, 2012 132,806 54,369 94,653 42,847 151,692 476,367 As at December 31, 2013 132,806 122,950 258,644 47,875 10,215 572,490 Depreciation for the year: 2012 (Baht 15.1 million included in manufacturing cost, and the balance in selling and administrative expenses) 24,148 2013 (Baht 25.1 million included in manufacturing cost, and the balance in selling and administrative expenses) 34,171
THAI WAH STARCH PUBLIC COMPANY LIMITED 105 (Unit: Thousand Baht) Separate Office furniture, Buildings Machinery and fixtures, and buildings factory equipment and Construction Land improvement equipment motor vehicles in progress Total Cost: As at January 1, 2012 8,757 159,834 167,935 90,571 7,000 434,097 Purchase/Transfer in - 980 8,863 22,335 67,073 99,251 Disposal/Transfer out - - (3,015) (9,305) (5,677) (17,997) As at December 31, 2012 8,757 160,814 173,783 103,601 68,396 515,351 Purchase/Transfer in - 39,124 70,635 10,891 42,900 163,550 Disposal/Transfer out - (12,109) (7,464) (52,369) (102,949) (174,891) As at December 31, 2013 8,757 187,829 236,954 62,123 8,347 504,010 Accumulated depreciation: As at January 1, 2012 - 131,926 152,811 77,635 - 362,372 Depreciation for the year - 3,722 3,242 5,112 - 12,076 Depreciation on disposal - - (2,479) (9,215) - (11,694) As at December 31, 2012 - 135,648 153,574 73,532 - 362,754 Depreciation for the year - 3,815 6,082 6,205 - 16,102 Depreciation on disposal - (11,831) (7,349) (52,253) - (71,433) As at December 31, 2013 - 127,632 152,307 27,484 - 307,423 Net book value: As at December 31, 2012 8,757 25,166 20,209 30,069 68,396 152,597 As at December 31, 2013 8,757 60,197 84,647 34,639 8,347 196,587 Depreciation for the year: 2012 (Baht 4.6 million included in manufacturing cost, and the balance in selling and administrative expenses) 12,076 2013 (Baht 8.4 million included in manufacturing cost, and the balance in selling and administrative expenses) 16,102
As at December 31, 2013 and 2012, the net book value of plant and equipment acquired before 1986, which are depreciated on the declining balance method, is Baht 8.3 million and Baht 9.0 million, respectively (separate financial statement: Baht 8.3 million and Baht 9.0 million, respectively).
As at December 31, 2013 and 2012, certain plant and equipment of the Company and its subsidiary companies have been fully depreciated but are still in use. The original cost of those assets amounting to Baht 680.4 million and Baht 735.6 million, respectively (separate financial statement: Baht 262.0 million and Baht 305.5 million, respectively).
Land and construction thereon owned by the Company and certain subsidiaries are mortgaged to secure the credit facilities from financial institution.
The appraised value of land determined by independent appraisers using comparative method is approximately Baht 564.96 million in the consolidated financial statements and Baht 135.40 million in the separate financial statements.
106 Annual Report 2013 16. LAND USE RIGHT (Unit: Thousand Baht) Consolidated Cost: January 1, 2013 10,789 Translation adjustment 654 December 31, 2013 11,443 Accumulated amortization: January 1, 2013 6,803 Amortization for the year 359 Translation adjustment 435 December 31, 2013 7,597 Net book value: January 1, 2013 3,986 December 31, 2013 3,846 Amortization expenses included in the statements of comprehensive income for the year: 2012 364 2013 359
17. DEPOSITS AT FINANCIAL INSTITUTIONS SUBJECT TO RESTRICTIONS As at December 31, 2013 and 2012, deposits at financial institutions in the consolidated and separate financial statements which are subject to restrictive conditions for bank overdrafts, letter of credit and letter of guarantee facilities amount to Baht 70.8 million and Baht 85.6 million, respectively in the consolidated financial statements and Baht 61.0 million and Baht 64.0 million respectively in the separate financial statements.
18. SHORT-TERM LOAN FROM FINANCIAL INSTITUTIONS Short-term loan from financial institution is an unsecured loan of a subsidiary company under credit facilities of Vietnamese Dong 15,000 million with the interest rate of 10% per annum.
19. TRADE AND OTHER PAYABLES (Unit: Thousand Baht) Consolidated Separate Note 2013 2012 2013 2012 Trade payables - related companies 6.6 16,739 21,634 18,013 47,956 Trade payables - others 9,997 5,913 5,341 - Advance receipts from customers 6,731 3,872 6,563 3,793 Other payables 112,057 109,623 67,706 67,884 Total 145,524 141,042 97,623 119,633
THAI WAH STARCH PUBLIC COMPANY LIMITED 107 20. LONG-TERM LOAN FROM FINANCIAL INSTITUTIONS (Unit: Thousand Baht) Consolidated December 31, 2013 Long-term loan 25,380 Less: Current portion of long-term loan (20,040) Long-term loan, net of current portion 5,340
Movements in long-term loan account during the year ended December 31, 2013 are summarized below: (Unit: Thousand Baht) Consolidated Borrowings 43,750 Less: Repayment (18,370) Balance as at December 31, 2013 25,380
A long-term loan of a subsidiary company under credit facilities of Baht 60 million are monthly repaid totaling 36 installments of Baht 1.67 million each. The loan carries interest at a rate of MLR-1.90% per annum.
The loan is secured by the mortgage of the subsidiary’s land and construction thereon.
21. EMPLOYEE BENEFIT OBLIGATIONS The Company and its subsidiary companies pay post-employment benefit and pension based on the requirement of the Thai Labour Protection Act B.E. 2541 (1998) to provide retirement benefits and other long term benefit to employees based on pensionable remuneration and length of service.
Employee benefit obligations in statements of financial position (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Post-employment benefits - Legal severance payment plan 43,083 40,771 32,880 31,448 Other long-term employee benefits 11,723 11,340 6,523 6,603 Total 54,806 52,111 39,403 38,051
Movement in the present value of the defined benefit obligations (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 For the year ended December 31, Employee benefit obligations as at January 1, 52,111 34,551 38,051 23,614 Current service costs and interest 5,664 3,608 3,886 2,104 Benefits paid during the years (2,969) (4,519) (2,534) (3,525) Defined benefit plan actuarial loss - 18,471 - 15,858 Employee benefit obligations as at December 31, 54,806 52,111 39,403 38,051
108 Annual Report 2013 Expense recognised in profit or loss (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 For the year ended December 31, Current service costs 3,862 2,067 2,710 1,207 Interest on obligations 1,802 1,541 1,176 897 Defined benefit plan actuarial loss - 1,283 - 1,510 Total 5,664 4,891 3,886 3,614
The expense is recognised in the following line items in the profit or loss: (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 For the year ended December 31, Cost of sales 3,479 2,352 1,891 1,008 Selling expenses 209 255 209 255 Administrative expenses 1,976 2,284 1,786 2,351 Total 5,664 4,891 3,886 3,614
Recognised in other comprehensive income (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 For the year ended December 31, Actuarial loss - 17,188 - 14,348 Total - 17,188 - 14,348
Principal actuarial assumption at the reporting date :
Consolidated and Separate Discount rate 3.50% (Thailand), 10.00% (Vietnam) Salary increase rate 4.00% - 10.00% Mortality rate 75% of TMO2008
THAI WAH STARCH PUBLIC COMPANY LIMITED 109 22. Income tax Income tax expenses for the year ended December 31, 2013 and 2012 are made up as follows: (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 (Restated) (Restated) Current income tax: Income tax 74,640 80,723 38,186 47,544 Deferred tax: Relating to origination and reversal of temporary differences (418) 2,570 (1,098) 104 Income tax expense reported in the statements of comprehensive income 74,222 83,293 37,088 47,648
Impact of tax income (expense) to component of other comprehensive income for the year ended December 31, 2013 and 2012 are as follows:- (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Actuarial loss - 3,438 - 2,870 Unrealized loss on fair value changes in available-for-sale investment 1,167 7,367 1,167 7,367 Total 1,167 10,805 1,167 10,237
Reconciliation of income tax expenses and the result of the accounting profit multiplied by the income tax rates for the years ended December 31, 2013 and 2012 are as follows:- Consolidated 2013 2012 Tax rate (%) (Thousand Baht) Tax rate (%) (Thousand Baht) Profit before tax 325,425 392,127 Income tax using relating income tax rate 0 - 25 72,645 0 - 25 84,789 Expenses not deductible for tax purpose 2,962 3,431 Addition income for tax purpose 1,586 922 Addition expenses deductible for tax purpose (2,996) (8,729) Loss carry forward (7) (1,133) Current tax 74,190 79,280 Adjustments in respect of prior year 450 1,443 Movement in temporary differences (418) 2,570 Income tax expenses 23 74,222 21 83,293
110 Annual Report 2013 Separate 2013 2012 Tax rate (%) (Thousand Baht) Tax rate (%) (Thousand Baht) Profit before tax 249,487 275,476 Income tax using relating income tax rate 20 49,897 23 63,359 Expense not deductible for tax purpose 639 806 Addition income for tax purpose 1,581 932 Addition expenses deductible for tax purpose (13,931) (17,752) Current tax 38,186 47,345 Adjustments in respect of prior year - 199 Movement in temporary differences (1,098) 104 Income tax expenses 15 37,088 17 47,648
As at December 31, 2013 and 2012, the components of deferred tax assets and deferred tax liabilities are as follows: (Unit: Thousand Baht) Consolidated Separate 2013 2012 2013 2012 Deferred tax assets 16,233 13,457 10,395 8,210 Deferred tax liabilities 18,785 17,596 16,625 16,704
The movements in deferred tax assets and liabilities during the years are as follows: (Unit: Thousand Baht) Consolidated Charged / credited to As at Statement Other As at January of income comprehensive December 1, 2013 income 31, 2013 Deferred tax assets Employee benefit obligations 10,626 515 - 11,141 Profit resulting from intragroup transactions in inventories 1,392 (774) - 618 Others 1,439 3,035 - 4,474 Total 13,457 2,776 - 16,233 Deferred tax liabilities Unrealized gain on fair value changes in available-for-sale investments 16,036 - (1,167) 14,869 Difference depreciation for tax purpose 1,543 2,354 - 3,897 Others 18 1 - 19 Total 17,597 2,355 (1,167) 18,785
THAI WAH STARCH PUBLIC COMPANY LIMITED 111 (Unit: Thousand Baht) Consolidated Charged / credited to As at Statement Other As at January of income comprehensive December 1, 2012 income 31, 2012 Deferred tax assets Employee benefit obligations 7,205 (17) 3,438 10,626 Profit resulting from intragroup transactions in inventories 2,478 (1,086) - 1,392 Others 1,470 (31) - 1,439 Total 11,153 (1,134) 3,438 13,457 Deferred tax liabilities Unrealized gain on fair value changes in available-for-sale investments 23,403 - (7,367) 16,036 Difference depreciation for tax purpose 120 1,423 - 1,543 Others 5 13 - 18 Total 23,528 1,436 (7,367) 17,597
(Unit: Thousand Baht) Separate Charged / credited to As at Statement Other As at January of income comprehensive December 1, 2013 income 31, 2013 Deferred tax assets Employee benefit obligations 7,610 271 - 7,881 Others 600 1,914 - 2,514 Total 8,210 2,185 - 10,395 Deferred tax liabilities Unrealized gain on fair value changes in available-for-sale investments 16,036 - (1,167) 14,869 Difference depreciation for tax purpose 668 1,088 - 1,756 Total 16,704 1,088 (1,167) 16,625
112 Annual Report 2013 (Unit: Thousand Baht) Separate Charged / credited to As at Statement Other As at January of income comprehensive December 1, 2012 income 31, 2012 Deferred tax assets Employee benefit obligations 4,828 (88) 2,870 7,610 Others - 600 - 600 Total 4,828 512 2,870 8,210 Deferred tax liabilities Unrealized gain on fair value changes in available-for-sale investments 23,403 - (7,367) 16,036 Difference depreciation for tax purpose 52 616 - 668 Total 23,455 616 (7,367) 16,704
Income tax reduction Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively.
23. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.
24. BASIC EARNINGS PER SHARE The calculation of basic earning per share for the years ended December 31, were based on the profit for the year attributable to equity holders of the parent (excluding other comprehensive income) and the weighted average number of ordinary shares in issue during the year as follow :
Consolidated Separate 2013 2012 2013 2012 Profit for the year attributable to equity holders of the Company (Thousand Baht) 219,124 276,471 212,398 227,828 Weighted average number of ordinary shares (Thousand share) 78,536 78,536 78,536 78,536 Basic earning per share (Baht) 2.79 3.52 2.70 2.90
25. DIVIDENDS Annual General Meeting of shareholders of the Company held on April 19, 2013 resolved to approve the dividends of Baht 1.00 per share, amounting to Baht 78.54 million. The dividend was paid to the shareholders on May 17, 2013.
THAI WAH STARCH PUBLIC COMPANY LIMITED 113 26. EXPENSES BY NATURE Significant expenses by nature are as follows: (Unit: Million Baht) Consolidated Separate 2013 2012 2013 2012 Changes in finished goods (increase) decrease (123) 24 (68) 13 Salary, wages and employee benefits 292 240 179 143 Depreciation 34 24 16 12 Raw materials and consumables used 2,507 2,668 1,021 1,079 Purchase of goods 347 56 1,081 1,198
27. PROVIDENT FUND The Company and subsidiary companies and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company and subsidiary companies contributed to the fund monthly at the rate of 5 percent of basic salary. The fund, which is managed by The MFC Asset Management Public Company Limited will be paid to employees upon termination in accordance with the fund rules. Total contributions of the Company and subsidiary companies for the years are as follows: - (Unit: Million Baht) Consolidated Separate 2013 2012 2013 2012 Contributions 3.61 2.42 2.36 1.99
28. FINANCIAL INFORMATION BY SEGMENT Operating segment information is reported in a manner consistent with the internal reports that are regularly reviewed by the chief decision maker in order to make decisions about the allocation of resources to the segment and assess its performance.
The operations of the Company and subsidiary companies principally involve the manufacturing and trading of agricultural products which are carried on in two geographic areas of Thailand and Vietnam. The financial information of the Company and subsidiary companies by geographical segment for the years ended December 31, 2013 and 2012 are as follows:
114 Annual Report 2013 (Unit: Million Baht) Consolidated Thailand Vietnam Total 2013 2012 2013 2012 2013 2012 Revenues - Local 570 766 761 673 1,331 1,439 - Export 2,027 2,140 4 3 2,031 2,143 Total revenues 2,597 2,906 765 676 3,362 3,582 Segments income 187 216 103 112 290 328 Unallocated income (expenses): Dividend income 4 3 Other revenues 15 22 Gain on debt restructuring - 16 Reversal of an impairment loss for investment property - 19 Share of gain from investments in associated companies - 11 Administrative expenses (3) (4) Gain (loss) on exchange rate 20 (4) Finance costs (1) - Income tax expenses (74) (83) Profit attributable to non-controlling interests (32) (32) Net profit attributable to equity holders of the Company 219 276 Property, plant and equipment, net 476 397 96 79 572 476 Unallocated assets 1,873 1,753 179 193 2,052 1,946 Total assets 2,349 2,150 275 272 2,624 2,422
Revenues from major customer of the Company and subsidiary companies approximately Baht 692 million for the year 2013 (2012: Revenues from two customers present approximately Baht 1,092 million).
29. OTHER INCOME (Unit: Million Baht) Consolidated Separate 2013 2012 2013 2012 Interest income 14.64 20.24 15.18 18.57 Gain on exchange rate 19.91 - 20.83 - Other income 49.88 50.84 34.54 37.17 Total 84.43 71.08 70.55 55.74
THAI WAH STARCH PUBLIC COMPANY LIMITED 115 30. COMMITMENTS AND CONTINGENT LIABILITIES (Unit: Million Baht) Consolidated Separate 2013 2012 2013 2012 Capital commitments Plant, machinery and equipment 95.84 64.96 88.86 34.27
Non-cancellable operating lease commitments Within one year 3.46 7.09 3.46 6.92 After one year but within five years 0.15 6.97 0.15 6.97 Total 3.61 14.06 3.61 13.89
Other commitments Service agreements 20.01 25.08 11.24 10.61 Bank guarantees and other commitments 27.79 47.04 16.11 12.06 Total 47.80 72.12 27.35 22.67
31. PENDING LAWSUITS In 2002, a subsidiary company of the Company was sued by a lender for payment of interest and penalties on the grounds that the subsidiary company had defaulted on a loan agreement. In 2006, the Administrative Court of First Instance dismissed the case. Subsequently, the plaintiff appealed against the judgment of the Administrative Court of First Instance. The Supreme Administrative Court dismissed the judgment of the Administrative Court of First Instance and return the case to the Administrative Court of First Instance to process further. The Administrative Court of First Instance judged the subsidiary company, defendant, has to pay Baht 2.2 million together with interest to be calculated at 7.5% per annum of principal of Baht 1.9 million from the day following the date of filing the plaint, to the date of repayment. Subsequently, a subsidiary company appealed against the judgment of the Supreme Administrative Court. During the current period, the Supreme Administrative Court judged a subsidiary company has to pay Baht 2.2 million together with interest to be calculated at 7.5% per annum of principal of Baht 1.9 million from the day following the date of filing until payment is made in full. The subsidiary company paid the amount as the Court judged on March 20, 2013.
32. FINANCIAL INSTRUMENTS 32.1 Financial risk management and policies The Company and its subsidiary companies are exposed to risks from changes in market interest rates and currency exchange rates. The Company and its subsidiary companies use derivative instruments as and when they consider appropriate to manage such risks. They do not hold or issue derivative financial instrument for speculative or trading purposes.
32.2 Interest rate risk The interest rate risk is the risk that future movements in market interest rates will affect the Company and its subsidiary companies’ operations and their cash flows. The Company and its subsidiary companies exposure to interest rate risk relate primarily to their deposits at financial institutions, loans to related companies, loan from related company and loans from financial institutions. Most of the Company’s financial assets and liabilities bear floating interest rates or fixed interest rate.
116 Annual Report 2013 Significant financial assets and liabilities as at December 31, 2013 and 2012 classified by type of interest rates are summarized in the table below, with those financial assets and liabilities that carry fixed interest further classified based on the maturity date, or the repricing date (if this occurs before the maturity date).
Consolidated As at December 31, 2013
Fixed interest rates Floating Within Over interest Non-interest Fixed 1 year 1 - 5 years 5 years rate bearing Total interest rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 447 - - 282 37 766 0.50 - 3.10 Temporary investments 4 - - - - 4 2.00 Trade and other receivables - - - - 346 346 Deposits at financial institutions subject to restrictions 71 - - - - 71 1.45 - 2.00 522 - - 282 383 1,187 Financial liabilities Short-term loan from financial institution 7 - - - - 7 10.00 Trade and other payables - - - - 145 145 Short-term loan from related company - - - 3 - 3 2.88 Long-term loan from financial institution - - - 25 - 25 4.98 7 - - 28 145 180
Consolidated As at December 31, 2012
Fixed interest rates Floating Within Over interest Non-interest Fixed 1 year 1 - 5 years 5 years rate bearing Total interest rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 566 - - 217 15 798 0.50 - 9.00 Trade and other receivables - - - - 312 312 Deposits at financial institutions subject to restrictions 86 - - - - 86 1.60 - 2.25 652 - - 217 327 1,196 Financial liabilities Trade and other payables - - - - 141 141 Accrued interest expense - - - - 6 6 - - - - 147 147
THAI WAH STARCH PUBLIC COMPANY LIMITED 117 Separate As at December 31, 2013
Fixed interest rates Floating Within Over interest Non-interest Fixed 1 year 1 - 5 years 5 years rate bearing Total interest rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 234 - - 196 17 447 0.50- 2.45 Trade and other receivables - - - - 328 328 Short-term loans to subsidiaries - - - 95 - 95 3.23 - 6.88 Deposits at financial institutions subject to restrictions 61 - - - - 61 1.88 - 2.00 295 - - 291 345 931 Financial liabilities Trade and other payables - - - - 98 98 - - - - 98 98
Separate As at December 31, 2012
Fixed interest rates Floating Within Over interest Non-interest Fixed 1 year 1 - 5 years 5 years rate bearing Total interest rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 292 - - 161 6 459 0.50 - 3.10 Trade and other receivables - - - - 297 297 Short-term loans to subsidiaries - - - 79 - 79 3.24 - 6.23 Deposits at financial institutions subject to restrictions 64 - - - - 64 1.88 - 2.15 356 - - 240 303 899 Financial liabilities Trade and other payables - - - - 120 120 - - - - 120 120
The Company and its subsidiary companies do not use derivative financial instruments to hedge such risk.
32.3 Foreign currency risk The Company and its subsidiary companies’ exposure to foreign currency risk relate primarily to their receivables and loans which are denominated in foreign currency. In addition to those transaction exposures, the Company is also exposed to foreign exchange movements on their investment in foreign subsidiary company, which currently are not hedged by any derivative financial instrument.
118 Annual Report 2013 Below was the summary of the Company and subsidiary companies’ foreign currency-denominated assets as at December 31, 2013 and 2012 which were not hedged by forward exchange contracts or similar hedging instruments.
(Unit: Million) Consolidated Separate Foreign currency Assets Assets 2013 2012 2013 2012 US dollar 7.9 8.0 7.8 7.6
32.4 Credit risk The Company and its subsidiary companies are exposed to credit risk primarily with respect to trade accounts receivable. However, the Company and subsidiary companies have a policy to enter into financial instruments with credit worthy counterparties, therefore the Company and its subsidiary companies do not anticipate material losses from providing credit.
32.5 Fair value of financial instruments Since financial assets and liabilities of the Company and subsidiary companies are short-term in nature, their fair value is not expected to be materially different from the amounts presented in statements of financial position.
A fair value is the amount for which an asset can be exchanged or liability settle between knowledgable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of instrument.
33. CAPITAL MANAGEMENT The primary objectives of the Company’s and subsidiary companies’ capital management are to maintain their abilities to continue as a going concern and to maintain an appropriate capital structure.
34. EVENTS AFTER THE REPORTING PERIOD On February 11, 2014, the Board of Directors’ meetings of two subsidiary companies passed the resolutions to propose to the shareholders for the liquidation of such subsidiary companies. The liquidations of such subsidiary companies will not have any significant impact to the Company’s financial statements.
35. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorized for issue by the Company’s authorized directors on February 27, 2014.
THAI WAH STARCH PUBLIC COMPANY LIMITED 119
(Table1)
(a) directly
(a,b and c) in the shareholder instead of shareholder Company that such person Reason
.
which could be sold to repay the Company, repay could be sold to which financial hardship and did not have any assets have not and did financial hardship The Company lent some money to MJ for land MJ for to The Company lent some money MJ had experienced however, debt obligations, has been TN1 is the owner of land which by MJ. by total amount of the outstanding loan owed total allowance for doubtful debt in respect of the doubtful debt in for respect allowance Therefore, the Company had set aside an the Company had set aside Therefore, The Company had constantly reminded MJ of its The Company had constantly reminded negative equity remains plus, MJ’s shareholders’ purchase in the past because Company purchase so TN1 needs TN1 lacks of working capital, leased by TN for carrying Since TN for on factory. leased by foresaw the opportunity to generate future future generate to the opportunity foresaw TN. financial assistance from profit. We hold 49.99% share capital in MJ. capital hold 49.99% share We profit.
Common- Common- shareholders shareholders Common-Director Common-Director Common-Director Common-Director Common-Director Common-Director Major shareholders Major shareholders
US US ML ML TWS TWS PNV PNV Ms. U-Hor Sae Chueng Family Jitdeechai of Persons Name plus 1% per annum. plus 1% per annum. Average cost of fund Average cost of fund Average 0.29 0.05 - -
8.05 0.80 MJ TN1 TN TWS
Lender Borrower Principal Interest Amount in Baht million Increase per Rate Interest (Decrease) with Mutual Interest Income Relationship Annum of Transactions and Reasonableness Necessity > 5%) (Shareholder Related Party Transactions Financial Aid Loan and interest Baht Amount in million
120 Annual Report 2013
(Table1)
(a) directly
in the shareholder instead of shareholder that such person Reason Company
Selling of tapioca starch and tapioca pearl and tapioca starch Selling of tapioca consumer. CT who is to products starch Selling of tapioca in importer Taiwan. product a major tapioca products to TWFP for distribution to the final to distribution TWFP for to products Common-Director Common-Director HLT SSK
- 4.80
Mutual Interest 52.78 191.14
Amount in of Name
Price Market Price Market
Receivable balance Receivable Purchases of finished goods Purchases of finished goods Purchases Receivable balance Receivable CT TWFP
TWS TWS
Trading, Rental expenses and Service Income Transactions with Related Companies of finished goods Purchases Payee Payer Detail of Transaction/ Policy Pricing Baht Million Contract with Persons Relationship of Transactions and Reasonableness Necessity > 5 %) (Shareholder
THAI WAH STARCH PUBLIC COMPANY LIMITED 121
(Table1)
(d) directly
in the shareholder instead of shareholder that such person Reason Company
It is the location of the Head Office and it is of the Head Office It is the location with public utilities. with public tenants. actual expenses, which are in line are with other actual expenses, which located in a good commercial area completing area located in a good commercial as charged utilities expenses are Other public
Common- Shareholders
LRH
9.89 0.09
Mutual Interest
Amount in of Name
Expenses at the rate of Expenses at the rate and Services Rental and service rate Rental in lineexpenses are with to if compared rate market the same building in a and Terms similar location. Baht 400-550 /sqm./month. and the market. conditions inconditions the agreement customer other similar to are expenses utilities public Other expenses. collected as per actual
expenses for office at office expenses for and Services Rental store (total area of 1,179 area (total store 1. Tower sqm.) at Thai Wah for Lease Agreement Bankok and document Bankok January 1, from 1-3 years April 17, 2015 2012 to utilities Other public Outstanding balance actual expenses. expenses collected as per USC
TWPL
expenses and Services Rental Payee Payer Detail of Transaction/ Policy Pricing Baht Million Contract with Persons Relationship of Transactions and Reasonableness Necessity > 5 %) (Shareholder
122 Annual Report 2013 Table 1 - Reason that such person (Shareholder>5%) shareholder instead of shareholder in the Company directly
Reference Relationship Reasons (a) TWS holding TWS is carrying on the main business of manufacturing and export of - 2.09% in LRH tapioca products and stakeholder in Hotel and Resort business and - 5.02% in TWFP other business by investment in LRH. Moreover, the other stakeholder - 49.99% in MJ of TWS includes commercial property development (by investment in - 70.00% in TN MJ and TN1) and manufacture of tapioca products (by investment in - 69.95% in TN1 TN) and consumer products (by investment in TWFP) (b) Ms. U-Hor Sae Chueng holding - 12.42% in TN - 15.00% in TN1 (c) Chitdeechai family holding - 15.46% in TN - 15.00% in TN1 (d) LRH holding - 16.27% in TWS - 100% in TWRH - 100% in TWPL through TWRH
Procedures for Approving Related Transaction The entering into the related party transactions between the Company or its subsidiaries and the persons with mutual interest will be reviewed by the Management and proposed to the Audit Committee to opine and express their opinion that the transactions are on normal commercial terms and at arms’ length basis. Once recommended by the Audit Committee, the transaction will be further proposed to the Board of Directors or the Board of Directors and shareholders for approval depending on the nature and size of the transactions in accordance with the requirements of the SET and the SEC, Interested directors do not take part in approving the transactions.
Abbreviations LRH = Laguna Resorts and Hotels Public Company Limited MJ = Mae Joe Land Company Limited TN = Thai Nam Tapioca Company Limited TN1 = Thai Nam Tapioca (1) Company Limited TWS = Thai Wah Starch Public Company Limited TWFP = Thai Wah Food Products Pubilc Company Limited TWPL = Thai Wah Plaza Limited TWRH = TWR - Holdings Limited CT = Chungman Trading Company Limited US = Mr. Umnad Sukprasongphol PNV = Ms. Pinyada Viraya ML = Ms. Manee Lueprasert HLT = Mr. Hwee Liang Tee SSK = Ms. Sirivan Skulkerevathana
THAI WAH STARCH PUBLIC COMPANY LIMITED 123 References
Registrars
• The Stock Exchange of Thailand The Stock Exchange of Thailand Building 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 (0) 2229 2000, 66 (0) 2229 2222 Fax. 66 (0) 2654 5607-8 • Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 4th, 7th Floor 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 (0) 2229 2800, 66 (0) 2229 2888 Fax. 66 (0) 2359 1259
Auditor
• Office of D I A International Auditing By Ms. Suvimol Krittayakiern C.P.A. No. 2982 and/or Ms. Vilairat Rojnuckarin C.P.A. No 3104 316/32 Sukhumvit 22 (Soi Sainumtip) Sukhumvit Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 (0) 2259 5300-2, 66 (0) 2258 2799 Fax. 66 (0) 2260 1553
Legal Counselors
• Allen @ Overy (Thailand) Co., Ltd. Sinthorn Tower 3, 22nd Floor 130-132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel. 66 (0) 2263 7600 Fax. 66 (0) 2263 7699 • Jakkrapong Law Office Co., Ltd. 195 Soi Sannibattesaban, Rachadapisek Road, Chandrakasem, Jatujak, Bangkok 10900, Thailand Tel. 66 (0) 2930 0123 Fax. 66 (0) 2513 6011
Financial Institutions
• United Overseas Bank (Thai) Public Company Limited, Thai Wah Tower Branch • Citibank, N.A. Bangkok Branch • Government Saving Bank Tungmahamek Branch
124 Annual Report 2013 2013 Annual Report Thai Wah Starch Public Company Limited Annual Report
Thai Wah Starch Public Company Limited 21/59,21/63-64 Thai Wah Tower 1, 20 th - 21st Floor, South Sathorn Road, Thungmahamek, Sathorn, Bangkok 10120 Thai Wah Starch Public Company Limited Tel : 02-285-0040 Fax : 02-285-0270 E-mail : [email protected] Home Page : http://www.thaiwah.com
Annual Report