TWS: Thai Wah Starch Public Company Limited | 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 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 013 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 3 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 013 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

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