Contents
Message from the President 2
Report of the Audit Committee For the Year 2013 3
Report of the Risk Management Committee 4
Organization Chart 5
Policy and Business Overview 6
Nature of Business 9
The Review of Construction Operations for 2013 12
Risk Factors 16
Marketing and Competition 22
Corporate Information and Other Information 24
Shareholders 28
Dividend Policy 29
Management Structure 30
Corporate Governance 34
Corporate Social Responsibility Report (CSR) 49
Board of Directors and Board of Management 53
Number of Shares Held by ITD Directors and Directors Remuneration as of December 21, 2013 61
Internal Control and Risk Management 62
Related Party Transactions 63
Summary of Financial Information 68
Management’ s Discussion and Analysis of Results of Operations and Financial Condition as at December 31, 2013 69
The Board of Director’s Report on their Responsibilities for Financial Reports for the year 2013 75
Report of Independent Auditor 76
Financial Statement 78
*Investors can study further information of the Issuing Company from the Annual Registration Statement (Form 56-1), posted on www.sec.or.th or the Company’s Website www.itd.co.th.
Annual Report 2013 1 Message from the President
The Company’s most important new achievements that occurred in 2013 are the winning bids of two megaprojects as follows: 1. The Water Management Project worth Baht 350,000 million, for which nine modules were invited for bidding. ITD Power China Joint Venture (Italian-Thai Development Plc. and Power China Co., Ltd.) has won five of the nine modules of the state flood and water management scheme, valued at Baht 106,800 million. The project framework is to improve the water management system of the country which will consequently lead to solving the problems of the lack of water for general usage and consumption in the dry season and the prevention of flooding occurring in the rainy season. The project’s contract signing process with the Government is ongoing. 2. The construction and operation of the deep sea port and the railway from Moatize to Macuse in Mozambique, worth USD 4,000 million (approximately Baht 120,000 million) with a 30-year concession period. The project scope of work is to construct a 530 kilometers railway linking Macuse to Moatize and the deep sea port at Macuse for shipping coal, with the capacity of 25 million tonnes a year. The project will contribute to the income flow into the Company for several decades throughout its concession period. The ongoing projects being closely followed by the Company are as follows: 1. The concession for the Dawei Deep Sea Port and Industrial Estate Development Project in Myanmar was transferred from the Company to the cooperation between Thai and Myanmar Governments on behalf of Dawei SEZ Development Co., Ltd., or SPV (Special Purpose Vehicle) with 50% shareholding agreed by both parties (Myanmar and Thailand Governments). The SPV will call for new bids from interested parties with high capability to jointly invest in the Dawei project, which is divided into the following seven sub-projects: deep sea port, trans-border corridor link between Dawei project and Thailand’s border at Baan Nam Phu Ron in Kanchanaburi Province, industrial estate, electricity system, water supply system, telecommunications infrastructure and residential housing and shopping complex. As far as the Company is concerned, switching the concession to the DSEZ is beneficial to the Company since the Company will not carry the risk burden from the investment. In addition, the Company will be fully compensated, including interest, for its earlier investment in the project. Regarding the upcoming bidding of the Dawei project in 2014, the Company has successfully teamed up with Rojana Industrial Park to bid for industrial estate development (Initial Phase) as well as public utilities for which construction must be urgently started in 2014. 2. The Potash Mining Project in Udonthani, for which the report of environmental impact analysis has been recently approved in January 2014 by the committee responsible for the Project, and the potash mining permit application from the Government is in progress. The project is expected to provide benefit to both the local area and to the country. 3. The Bauxite Slaco Mine Project, Lao PDR, for which the incorporated company of Sino-Lao Corporation Limited in cooperation with Yunnan Aluminium Company Limited in China, an experienced company with high technological potential will jointly develop and implement the project for the smelting and refining of aluminum ore. The significant projects targeted by the Company for bidding in the short term include: 1. The Suvarnabhumi Airport Phase 2, worth Baht 62,000 million, which the Airports of Thailand Public Company Limited (AOT) will put up for auction in April 2014, and the auction results will be announced in August 2014. 2. The Mass Transit Master Plan in Bangkok which comprises of eight lines in the metropolitan areas and red line suburban railway, valued at Baht 400,000 to 500,000 million. In the near future, the Mass Rapid Transit Authority of Thailand will find financial sources in country for the project implementation. 3. Five Dual-Track Railway Lines Project which is an urgent project covering a length of 797 kilometers with a total investment worth Baht 118,034 million. Meanwhile, the State Railway of Thailand will utilize the budget amount of Baht of 1.76 million as approved by the Cabinet in 2010 for the operation. 4. Power Plant Development Project, for example the Coal-Fired Power Plant in Dawei and Mong Kok and the hydroelectric dam both in Lao PDR and Myanmar. I would like to conclude by recognizing that our success in 2013 was due to the dedication and hard work of our staff and management and to the good cooperation with our shareholders, customers, banks and suppliers. With the Company’s ongoing projects and upcoming projects in the future, I firmly believe in its potential of being the leading largest contractor in Thailand.
Premchai Karnasuta
2 Italian-thai Development Public Company Limited Report of the Audit Committee For the Year 2013
The Audit Committee of Italian Thai Development Public Company Limited was duly appointed by the resolution of the Annual General Meeting of Shareholders on 29th April 2013. The three members of the Audit Committee have been appointed for a three-year term, comprising: Pol.Lt. Chartachai Bunya-Ananta as Chairman, Dr. Krisorn Jittorntrum and Mr. William Lee Zentgraf as Committee Members. In addition, Mr. Withit Ouaysinprasert, the manager of Internal Audit Division, serves as secretary of the Audit Committee.
In 2013, four Audit Committee Meetings were held, each of which was attended by all members, except the first meeting where the Chairman was absence due to sickness. The significant activities undertaken by the Audit Committee, assigned by the Company’s Board of Directors in the year 2013, were as follows:
1. Review and approval of the Quarterly Financial Statements, Annual Financial Statements, Certified Public Accountant’s Report, Financial Status Report and Company’s Performance Report for 2013.
2. Review of the Company’s Internal Control Systems and the 2013 Audit Plan of the Internal Audit Division. Also, review of the 2013 Audit Report and Follow Up of Operation Improvement Report.
3. Review of legal compliance, the laws and regulation relating to the Stock Exchange of Thailand and other laws concerning the Company business.
4. Review of the connected transactions and those of conflicts of interest disclosed by the responsible executives in full and correct compliance with the law and regulations of the Stock Exchange of Thailand.
5. Review of the risk assessment of increasing costs that may be caused by potential increases in the price of main materials in 2013, and the measures to protect against a direct impact to the Company.
6. Selection and recommendation for the appointment of the Certified Public Accountant of the Company, including holding an official meeting with the Certified Public Accountant once a year.
The Audit Committee’s opinion states that the Financial Report is accurate and reliable in its substance in accordance with the Generally Accepted Accounting Principles. Also the disclosure of sufficient information was carried out. The Internal Control Systems were adequate and proceeded without any substantial errors. The Company has been in full compliance with the laws and regulations of the Stock Exchange of Thailand and other related laws. The connected transactions are accurate and reliable and fairly priced according to the market price index. Finally, the Audit Committee’s opinion states that Mrs. Sumalee Chokedeeanant, Certified Public Accountant no. 3322 and Mr. Kosol Yamleemoon, Certified Public Account no. 4575 and Mrs. Sunsanee Poolsawat, Certified Public Accountant no. 6977 and Mr. Teerasak Chuasrisakul, Certified Public Accountant no. 6624 from Grant Thornton Limited are qualified to be the Company’s auditor for 2013.
(Pol.Lt. Chartachai Bunya-Ananta) Audit Committee Chairman 18 March 2014
Annual Report 2013 3 Report of the Risk Management Committee
To the Shareholder
The Risk Management Committee was established by resolution of the Board of Directors Meeting No. 1/9/2010, held on September 2, 2010. This Committee comprises of eight members that have risk management knowledge. The Board of Directors has appointed Dr. Krisorn Jittorntrum, the Independent Director, to be the Chairman of the Risk Management Committee.
This Committee has the responsibility to review the Company’s risk management policy and framework, which covers all the major risks; namely financial risk, investment risk, operational risk, and corporate reputation risk. The Committee is also responsible for setting appropriate risk management measures to support the decisions of the Board of Directors or the Management, especially the investment activities which may significantly affect the business and financial status of the Company or the risky investment that the Board of Directors provide the Risk Management Committee to review.
In 2013, the Risk Management Committee held a meeting and invited other persons, who are involved with or are responsible for any matters related to the meetings’ agenda, to participate in the meetings. The Committee has overseen, reviewed, provided recommendations and monitored the progress of four investment projects of the Company, namely the Dawei Project in Myanmar, Bauxite Mining Project in Laos PDR, Mai Khot Power Plant Project in Myanmar and the Potash Mining Project, Udon Thani Province, Thailand.
The Risk Management Committee has also considered and provided recommendations for enhancing the Company’s profitability. Some recommendations have been implemented, for example the improving of the accuracy of construction cost estimation and the incentive scheme for motivating productivity, efficiency and profitability of the construction projects.
The Risk Management Committee will maintain effective working within the scope of its responsibilities to ensure that risk assessment and risk management are being properly implemented and sufficient to balance the growth and productivity of the Company’s business at an acceptable risk level.
Dr. Krisorn Jittorntrum Chairman of the Risk Management Committee March 6, 2014
4 Italian-thai Development Public Company Limited TION ANIES & TION attanalaowit CONTROL W ADMINISTR A OF COM P
ADVISORS awee Changpetch FINANCE T Thanin Bumrungsap ACCOUNTING MANAGER MANAGER MANAGER
. . Pairach Supavivat . . Nattawuth Udayasen ACCOUNTING . Chatichai Chutima . Suchart Sirithanawut VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT M r M r M r D r . Somkiat J/ V ADMINISTR A M r . Damrong Ngamsangiam Mr. Sumate Surabotsopon . Jakkaphan Udthayananond M r Ms. Kanchana Charoenyot EQUIPMEN T M r EXECUTIVE VICE PRESIDENT M r Mrs. Pienghathai Pongsuwan MAINTENANCE CENTER M r ITD GROU P CONTRAC T OR VICES T allasiri Y V ongthuaythong AUDI T
YSIS W TE SE R PURCHASING BUDGETING T COMMITTEE SALA R Thanu Suvarnin A R MANAGER ANA L ithit Ouaysinprasert MANAGER MANAGER MANAGER YSIS & CONTROL . Mr. Piyachai Karnasuta INSURANCE . Sompop Pinijchai L/C & IMPO R W oravudh Hiranyapaisansakul CONTROL, COMPUTER . EXECUTIVE VICE PRESIDENT . Surasak Leelavorakul M r VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT Mrs. Nararat . Nantachai Nontananant M r AUDI T W INTERNA L ENGINEERING COST ARE P . M r M r PROJEC T & CORPOR A ANA L M r S P M r Mrs. Kitipabha COS T TE DESIGN & LEGAL & ESTIM A PURCHASING Mr. Chatichai Chutima DESIGN GROUP EXECUTIVE VICE PRESIDENT TRAINING MANAGER MANAGER MANAGER . Kasin Pongsuwan Atipat Kaivalchatchaval VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT M r . VICE PRESIDENT . Prasart Kosarussawadee . Prinya Supanugoolsamai OR & SENIOR . Nuttawood Sirinuntananon PERSONNE L Ms. Natalita Suansamnieng M r M r M r M r COMPUTER CIVI L TECHNICA L TURNKE Y ENGINEERING PROCUREMENT & GENERA L awatchai Suthiprapha T . DIREC T M r T EXECUTIVE YS A WORKS ansakol Mr. Anan Amarapala T TION T EXECUTIVE VICE PRESIDENT & MINERAL M R VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT MANAGER itavas Kunapongsiri . Peravute . Jatuporn Chootapa V EXPLOR A TUNNELLING & . Sakchai Puetpaiboon . ORS M r M r Thanomsak Kietanabumrung M r ROADS & HIGH W M r . GEOLOG Y UNDERGROUND SENIOR SENIOR SENIOR SENIOR CONSTRUCTION SUPPO R M r VICE PRESIDENT OR & SENIOR PRESIDENT CHAIRMAN . Premchai Karnasuta Mr. Virat Kongmaneerat WORKS TIONS M r
DIREC T TION BOARD OF DIREC T EXECUTIVE VICE PRESIDENT Mrs. Nijaporn Charanachitta TS Pol. Lt. Chatrachai Bunya-Ananta EXECUTIVE PROJECTS ABRIC A F VICE PRESIDENT unchai Demake VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT AIRPO R V . Somsak Nualyai anchai Kunapramote . Prayong Jongrak . W . Mongkol Suvahkhan M r M r . M r SPECIA L STEE L M r M r SENIOR TELECOMMUNIC A SENIOR SENIOR SENIOR SENIOR PIPELINE & UTILIT Y EXECUTIVE VICE PRESIDENT Mr. Taweesilp Pattanakitchamroon & VICE PRESIDENT WORKS
OR & SENIOR asuvantaga PLANTS-1 PLANTS-2 V WORKS . Pathai Chakornbundit MINING VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT . Prasert Sanor DIREC T M r . Danai Bhumiwat ELECTRICA L M r . Ruj Bunduwongse Akapong MARINE . M r EXECUTIVE D r . Sakchai Lertprasertpongs MECHANICA L INDUSTRIA L INDUSTRIA L M r SENIOR SENIOR SENIOR SENIOR SENIOR M r Mr. Prachaya Karnasuta EXECUTIVE VICE PRESIDENT & Y YS ichachol Mr. Peeti Karnasuta A T WORKS
W ongsathuaythong DEVELOPMENT DAMS ASSISTANT TO PRESIDENT W VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT . Pipat Lorach TER SUPP L RAI L T Y ichien Roongrujirat TED STRUCTURES . Chuan A A M r . Prasit Ratanaramig W UTILIT Y W . M r M r . Jariya M r SENIOR ELE V SENIOR SENIOR SENIOR SENIOR Mr. Peeti Karnasuta M r PROPE R EXECUTIVE VICE PRESIDENT Y A R SECRE T Charanachitta AN Y COMMITTEE VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT BRIDGES . Krisana Jinda . Jirawat Malai BUILDINGS 1 BUILDINGS 2 BUILDINGS 3 BUILDINGS 4 oravudh Hiranyapaisansakul M r uthachai Ratnavimokh M r W . Kriengsak Kovadhana COM P Y . . THE RISK MANAGEMENT M r M r SENIOR SENIOR SENIOR SENIOR SENIOR M r Mr. Thiraphol Santirojprapai Mr. Yutachai EXECUTIVE VICE PRESIDENT Organization Chart
Annual Report 2013 5 Policy and Business Overview
The Company was formed on 15th August 1958 with a registered capital of Baht 2,000,000 under the name “ITALIAN-THAI DEVELOPMENT CORPORATION COMPANY LIMITED” (ITD), when the founders, Dr. Chaijudh Karnasuta (a Thai) and Mr. Giorgio Berlingieri (an Italian) had the objective to establish a Thai construction company.
The Royal Seal of The Garuda was awarded to the Company by His Majesty the King on 23rd December 1985. The Royal Seal of the Garuda is the highest and most honourable achievement under the Royal Patronage of His Majesty the King.
The Company registered as a Public Company Limited on 24th March 1994 and was listed on the Stock Exchange of Thailand on 9th August 1994. The Company has achieved an excellent performance with high quality work for private clients and government authorities. The Company’s high standard of construction quality has been recognized by the Company being awarded ISO-9001: the standard for the Quality Management Systems including design, installation, and servicing, ISO-14001: the standard for the Environmental Management Systems and TIS 18001: the standard for the Occupational Health and Safety Management Systems.
To maximize the benefit of all stakeholders and shareholders from the Company operation, the Board of Directors has set the vision, mission, motto and operating strategy of the Company as follows:
1.1 Vision
“To be the leading contractor in Southeast Asia”
1.2 Mission
To be an integrated construction firm with wide experiences and expertise in all construction activities.
To have the potential and readiness to undertake large construction projects by using advanced technological construction with competitive tendering.
To have responsibility for the construction by delivering an international quality standard of work, on time and within the scope of budget.
To maintain a reputation of leadership.
To create supreme satisfaction to customers.
To use the company’s capacity to expand its construction business throughout Asia and beyond.
1.3 Motto
“Commitment, Reliability, Quality”
1.4 Strategy
Build credibility and trust of the Company through quality.
On-time delivery with high quality work.
Develop and innovate construction technology by using advanced techniques.
Develop and enhance the management of the organization while continually modernizing its human resources.
1.5 Significant Change and Development
The resolution of the Board of Directors’ meeting No. 4/7/2013 dated 4th July 2013 approved the allocation of 666,794,830 newly issued ordinary shares at the par value of Baht 3 per share with the ratio of ordinary shares to newly issued shares of 1:0.159. The subscription date was set 1st and 2nd and 5th to 9th of August 2013. Furthermore, the Company approved the increase of registered capital on 19th August 2013 with the Department of Business Development and has currently its paid-up capital in the total of Baht 4,860,473,010.
6 Italian-thai Development Public Company Limited 1.6 Shareholding Structure of the Company
The business lines of the Company’s subsidiary companies, associated companies and joint venture as of 31st December 2013 can be divided into three lines as below:
1. Lines of construction and public utilities work including a line of construction support and line of oversea investments
2. Lines of the Company investment in other sectors, e.g., real estate business, construction material and raw material products, and concession businesses
3. Lines of Joint Venture, which is the cooperation with other experienced companies to gain knowledge in new technologies for the Company’s operations especially for public utility work
Italian-Thai Development Public Company Limited
99.99% 99.80% Siam Concrete & Brick Products 99.99% Myanmar ITD Co., Ltd. Co., Ltd. First Dhaka Elevated Expressway Co., Ltd.
99.99% Italian-Thai International Co., Ltd. 98.05% Khunka Palang Thai Co., Ltd. 99.99% Bhaka Bhumi Development Co., Ltd.
99.99% PT Thailindo Bara Pratama Co., Ltd. 92.59% Italthai Marine Co., Ltd. 99.93% Asia Logistics Development Co., Ltd.
99.99% 90.94% 99.93% Asia Industrial and Port Corporation Thai Pride Cement Co., Ltd. Italthai-Trevi Co., Ltd. Co., Ltd.
99.99% 80.00% Italian - Thai Development 60.00% Italian-Thai Land Co., Ltd. Vietnam Co., Ltd. APPC Holdings Co., Ltd.
99.99% Italian-Thai Power Co., Ltd. 74.93% Palit Palang Ngan Co., Ltd. 20.00% Rama 9 Square Co., Ltd.
99.99% Italian-Thai International SDN.BHD 69.90% Asian Steel Product Co., Ltd.
99.99% ITD Construction SDN.BHD 69.57% ITD Cementation India Co., Ltd.
99.99% Nhapralarn Crushing Plant Co., Ltd. 50.96% Thai Maruken Co., Ltd.
99.99% ITD Bangladesh Co., Ltd. 49.00% Ato-Asia Turnouts Ltd.
99.98% ITD Madagascar S.A. 46.69% Siam Pacific Holding Co., Ltd.
99.97% Italian-Thai Hongsa Co., Ltd. 34.00% Sino-Lao Aluminium Corporation Ltd.
99.95% 24.00% MCRP Construction Corporation Myanmar Italian-Thai Power1 Co., Ltd. Co., Ltd.
99.94% Palang Thai Kaowna Co., Ltd. 24.00% MCRP Holdings Corporation Co., Ltd.
99.93% Saraburi Construction Technology Co., Ltd.
Annual Report 2013 7 The Company’s investment in Joint Venture Companies as of 31st December 2013:
Italian-Thai Development Public Company Limited
Joint Venture Company Joint Venture Company invested 50 percent or more. invested less than 50 percent.
65.00% ITD-ETF Joint Venture 40.00% ITO Joint Venture
60.00% ITD-NCC Joint Venture (NT-2) 40.00% IOT Joint Venture
60.00% ITD-NAWARAT LLC 40.00% ITD-SMCC Joint Venture
60.00% ITD-ITD CEM (Consotium) Joint Venture 25.00% Joint Venture Evergreen-Italian-Thai-PEWC
60.00% ITD-UNIQUE Joint Venture 24.00% SUMSUNG-ITD Joint Venture
55.25% ITD ETF-MVM Joint Venture 20.00% ITD and ITD Cementation India Joint Venture
55.00% ITD-EGC Joint Venture
51.00% IN Joint Venture
51.00% ITD-ITD CEM Joint Venture
50.00% ITD-SQ Joint Venture
50.00% SQ-ITD Joint Venture
8 Italian-thai Development Public Company Limited Nature of Business
Business of the Company - Italian-Thai Development Public Company Limited Only
At present, the business operations of ITD can be divided into nine major activities: 1. Buildings (office buildings, condominiums, skyscrapers and hotels) 2. Industrial Plants 3. Pipelines and Utility Works (oil, gas and water transmission pipelines, conduit and manhole systems and storage tanks) 4. Highways, Railways, High Speed Rails, Viaducts, Trackworks, MRT Systems, Bridges and Expressways 5. Airports, Ports and Marine Works 6. Dams, Tunnels and Power Plants 7. Steel Structures 8. Telecommunications 9. Mining
Subsidiary Companies, Joint Ventures and Associated Companies
The business lines of the Company’s subsidiary companies, associated companies and joint ventures as of 31st December 2013 can be divided into three lines as below: 1. Lines of construction and public utilities work including a line of construction support and a line of overseas investments 2. Lines of the Company investment in other sectors, e.g. real estate business, construction material and raw material products and concession businesses 3. Lines of Joint Ventures which is the cooperation with other experienced companies to gain knowledge in new technologies for the Company’s operations especially for public utility work
Sales Structure of Italian-Thai Development Public Company Limited
2013 2012 2011 Sales Structure (Baht) Million % (Baht) Million % (Baht) Million % 1. Large-scale Building Construction 10,147.95 20.97 7,752.31 15.19 11,154.28 23.68 2. Industrial Plants and Facilities 625.45 1.29 555.11 1.09 247.49 0.53 3. Pipelines and Tank Farms 1,467.25 3.03 6,704.33 13.14 2,452.14 5.21 4. Highways, Railways, Bridges and Expressway 16,050.81 33.17 13,391.95 26.25 8,338.40 17.70 Systems 5. Airports, Jetties, Deep-sea Ports and Marine Works 4,170.85 8.62 5,556.16 10.89 8,417.22 17.87 6. Multi-purpose Hydro-electric Dams, Tunnels and 2,387.01 4.93 1,702.75 3.34 2,394.26 5.08 Power Plants 7. Steel Structures 1,000.77 2.07 468.69 0.92 436.61 0.93 8. Telecommunications 1,164.68 2.41 2,855.29 5.60 177.68 0.38 9. Mining 2,185.08 4.52 2,252.84 4.42 2,930.14 6.22 10. Miscellaneous 7,818.54 16.16 8,956.66 17.54 9,556.26 20.28 11. Others 1,368.91 2.83 828.89 1.62 1,006.72 2.12 Total Sales 48,387.30 100.00 51,024.98 100.00 47,111.20 100.00 Sale Growth (Decline) (5.17%) 8.31% 15.18% Related Party Transactions from Construction 1,413.77 2,357.00 810.75 Related Party Transactions from Miscellaneous 1,691.54 1,548.23 1,046.46 Others 380.31 149.76 308.65 Total Net after Provisions 44,901.68 46,969.99 44,945.34 Growth (Decline) (4.40%) 4.50% 14.82%
Annual Report 2013 9 Sales Structure of Subsidiary Companies, Associated Companies & Joint Ventures
1. Lines of construction and public utilities work including a line of construction support and a line of overseas investments
Company Name % 2013 2012 2011 (Unit : Thousand Baht) of Holding Sales % Sales % Sales % Subsidiary Companies 1. Myanmar ITD Co., Ltd. 99.99 ------2. Italian-Thai International Co., Ltd. 99.99 96,506 0.53 273,835 1.34 633,210 2.69 3. PT Thailindo Bara Pratama Co., Ltd. 99.99 86,929 0.48 142,496 0.70 785,561 3.34 4. Thai Pride Cement Co., Ltd. 99.99 1,392,070 7.66 1,247,304 6.09 1,238,601 5.27 5. Italian-Thai Land Co., Ltd. 99.99 ------6. Italian-Thai Power Co., Ltd. 99.99 - - - - 71,250 0.30 7. Italian Thai International SDN.BHD. 99.99 ------8. ITD Construction SDN.BHD. 99.99 - - 19,850 0.10 413,675 1.76 9. NhaPralan Crushing Plant Co., Ltd. 99.99 30,108 0.17 34,896 0.17 46,707 0.20 10. ITD Bangladesh Co., Ltd. 99.99 ------11. ITD-Madagascar S.A. 99.98 3,787 0.02 10,053 0.05 6,365 0.03 12. Italian-Thai Hongsa Co., Ltd. 99.97 ------13. Myanmar Italian-Thai Power 1 Co., Ltd. 99.95 ------14. Palang Thai Kaowna Co., Ltd. 99.94 ------15. Saraburi Construction Technology Co., Ltd. 99.93 81,217 0.45 118,201 0.58 17,835 0.08 16. Siam Concrete Brick & Products Co., Ltd. 99.80 527,312 2.90 589,081 2.87 198,485 0.84 17. KhunkaPalangthai Co., Ltd. 98.05 ------18. Italthai Marine Co., Ltd. 92.59 255,300 1.40 891,104 4.35 920,599 3.92 19. ItalthaiTrevi Co., Ltd. 90.94 1,051,055 5.78 562,907 2.75 641,508 2.73 20. Italian - Thai Development Vietnam Co., Ltd. 80.00 ------21. PalitPalanguan Co., ltd. 74.93 ------22. Asian Steel Products Co., Ltd. 69.90 177,633 0.98 317,386 1.55 308,151 1.31 23. ITD Cementation India Co., Ltd. 69.57 8,294,310 45.62 9,505,413 46.39 11,065,824 47.06 24. Thai Maruken Co., Ltd. 50.96 501,210 2.76 481,960 2.35 362,464 1.54 Associated Companies 1. ATO Asia Turnouts Co., Ltd. 49.00 234,877 1.29 104,321 0.51 51,762 0.22 2. Siam Pacific Holding Co., Ltd. 46.69 ------3. Sino Lao Aluminum Corporation Co., Ltd. 34.00 ------4. MCRP Construction Co., Ltd. 24.00 ------5. MCRP Holding Corporation Co., Ltd. 24.00 ------
2. Lines of the Company investment in other sectors, e.g. real estate business, construction material and raw material products and concession businesses
Company Name % 2013 2012 2011 (Unit : Thousand Baht) of Holding Sales % Sales % Sales % Subsidiary Companies 1. First Dhaka Elevated Expressway Co., Ltd. 99.99 ------2. BhakaBhumi Development Co., Ltd. 99.99 557,796 3.07 219,936 1.07 409,409 1.74 3. Asia Logistics Development Co., Ltd. 99.93 ------4. Asia Industrial Port Corporation Co., Ltd. 99.99 ------5. APPC Holdings Co., Ltd. 60.00 ------
10 Italian-thai Development Public Company Limited Company Name % 2013 2012 2011 (Unit : Thousand Baht) of Holding Sales % Sales % Sales % Associated Companies 1. Praram 9 Square Hotel Co., Ltd. 20.00 ------
3. Lines of Joint Ventures which is the cooperation with other experienced companies to gain knowledge in new technologies for the Company’s operations especially for public utility work
Company Name % 2013 2012 2011 (Unit : Thousand Baht) of Holding Sales % Sales % Sales % Joint Ventures 1. ITD-ETF Joint Venture 65.00 ------2. ITD - NCC Joint Venture (NT-2) 60.00 - - 242,128 1.18 - - 3. ITD-Nawarat LLC 60.00 ------4. ITD – ITD Cem (Consortium) Joint Venture 60.00 431,666 2.37 1,223,820 5.97 2,493,795 10.61 5. ITD – UNIQUE Joint Venture 60.00 86,759 0.48 35,568 0.17 152,624 0.65 6. ITD-ETF-MVM Joint Venture 55.25 532,771 2.93 1,003,376 4.90 128,036 0.54 7. Italian-Thai-EGC Joint Venture 55.00 31,061 0.17 288,965 1.41 1,178,469 5.01 8. IN Joint Venture 51.00 (2,310) (0.01) - - - - 9. ITD-ITD Cem Joint Venture 51.00 1,440,882 7.92 1,274,927 6.22 1,051,128 4.47 10. ITD SQ Joint Venture 50.00 909,519 5.00 962,936 4.70 1,224,940 5.21 11. SQ ITD Joint Venture 50.00 782,600 4.30 609,600 2.97 105,978 0.45 12. ITO Joint Venture 40.00 ------13. IOT Joint Venture 40.00 ------14. ITD-SMCC Joint Venture 40.00 594,985 3.27 329,160 1.61 - - 15. Joint Venture Evergreen - Italian-Thai – PEWC 25.00 ------16. SUMSUNG-ITD Joint Venture 24.00 83,880 0.46 - - - - 17. ITD Cementation Joint Venture 20.00 (44) - 535 - 5,889 0.03 18,181,879 100.00 20,489,758 100.00 23,512,265 100.00
Annual Report 2013 11 The Review of Construction Operations for 2013
Early in 2013, the public and the private sector continued to be the driving force of construction projects: the public sector focused on road network expansion both in Bangkok and upcountry, as well as refurbishment of railway lines by using a larger rail and concrete sleepers to strengthen the rail system; at the same time the private sector conducted further expansion into the country, especially in the growing business and investment areas, to such centers as Udonthani, Suratthani and Chiangrai. However, the growth of multiple construction projects in the meantime conversely put much pressure on contractors due to the high demand of construction materials, especially cement, for which the price was increasingly adjusted. Moreover, the Company had to face a labor shortage and/or shortage of skilled labor that consequently required providing training of professional workers or employing immigrant workers instead. Even though the Government’s megaprojects have been slowed down as the result of political turmoil at the end of the year, the Company took advantage from this situation to undertake the problems of the issue of the materials and the labor shortage, to be more ready in future. Nevertheless, the Government must urgently put forward infrastructure development projects for implementation to keep up with the AEC liberalization starting in 2017.
At the end of 2013, the Company was granted a 30-year concession for the construction and operation of the deep sea port at Macuseand the railway from Moatize to Macusein Mozambique, worth USD 4,000 Million or approximately Baht 120,000 Million. The project scope is to construct the 530 kilometers railway linking Macuse to Moatize and the deep sea port at Macusefor shipping coal, with the capacity of 25 million tonnes a year.
Airports
The Company and its subsidiary ITD Cementation India Limited, a listed company on the Stock Exchange of India, is undertaking the Kolkata Airport Passenger Terminal Building worth Rupees 18,693 Million. The main works have been delivered and the inauguration ceremony was officially held on January 23, 2013. The President of India presided over the ceremony. The Company still performs additional work for the project owner.
In terms of domestic airport projects, in April 2014 the Airports of Thailand Public Company Limited completed the design in preparation for the tender for the construction of the Suvarnabhumi Airport Phase 2, valued at Baht 62,000 million. The Company believes that we have a high chance of winning through our wide experience as we constructed Suvarnabhumi Phase 1, and have since continuously worked on the project.
In terms of the overseas airports, the Company is interested in the Kuwait Airport Expansion Project worth over 100 billion Baht, for which the bidding will be held in April 2014.
Building
The building projects which were completed in 2013 include: Watergate Pavilion worth Baht 1,325 million, the Central Plaza Suratthani worth Baht 944 million and Official Center Ampornsatarn Palace worth Baht 423 million.
The ongoing projects include: the Center of Excellence Building of Thai Red Cross Society worth Baht 6,587 million which is 96% complete, the Siriraj Center of Excellence in Biomedical Research worth Baht 6,001 million which is 97% complete, the Mahidol Dentistry Building (Phase 1-2-3) for 50th Anniversary of HRH Princess Maha Chakri Sirindhorn worth Baht 1,667 million which is 97% complete, the Bell Avenue worth Baht 1,582 million which is 87% complete, the Central Festival Hatyai worth Baht 1,197 million which is 95% complete, the Ramathibodi Toward Leading Medical School in Asia, Bangpli worth Baht 4,794 million which is 25% complete, the Star View Condominium worth Baht 1,860 million which is 25% complete and the Residence for the Office of Rachawonlop Royal Guards Department, Phase 2 worth Baht 1,541 million which is 44% complete.
Expressways, Highways, Railways and Bridges
The completed construction projects in 2013 include: the Improvement of Railway Embankment, Sub-ballast Replacement, Ballast Placing and Tamping, Embankment Widening and Concrete Slope Protection from Don Muang to Tha Lo Station worth Baht 890 million, the Installation of Steel Railway Project worth Baht 447 million, the Fencing Work along SRT Right of Way from Kaeng Sue Ten Station to Bua Yai Junction km. 185+130 to km. 214+500 under the Lamnarai Permanent Way Inspector worth Baht 140 million and the Supply of Steel Railway Bridges Including Modification of Abutments and Piers, between Bueng Boraphet and Nakhon Sawan Stations worth Baht 126 million.
The ongoing projects include: the Chao Praya River Crossing Bridge at Nonthaburi I Road undertaken on behalf of ITD-SMCC Joint Venture (Italian-Thai Development Plc. and Sumitomo Mitsui Construction Co., Ltd.), the project is worth Baht 3,896 million which is 58% complete, the Track Rehabilitation Project (phase 5) worth Baht 7,542 million which the main work is already completed and is on the process of delivery, the Railway Track Strengthening Phitsanulok-Chiangmai worth Baht 2,853 million; being constructed on behalf of ITD-SDP Joint Venture (Italian-Thai
12 Italian-thai Development Public Company Limited Development Plc. and Sakdaporn Co., Ltd.), which is 88% complete, the Construction of Underpass at Highway Route No.402 and No.4020 Intersection (Darasamut Intersection), Phuket, worth Baht 560 million which is 56% complete, the Design, Manufacture and Delivery of Concrete Sleepers for Roy Hill Infrastructure Pty., Ltd. Australia in the amount of 616,300 units, worth Baht 2,531 million which is 14% complete, the Construction of Ramps for Chalerm Maha Nakhon Expressway at At Narong Interchange worth Baht 123 million which is 62% complete and the Elevated U-Turn at Km.78+850.00 Highway Route Nor.1 Amphur Wangnoi, PhraNakhon Si Ayutthata worth Baht 82 million which is 33% complete.
New projects include: the Track Strengthening Project (Ban Dara Junction-Sawankalok Station) worth Baht 341 million and the Track Strengthening Project, Ban Tung Po Junction-Kiriratnikom Station worth Baht 325 million.
The completed overseas works include: the National Highway Route NH-31C, Contract NO.WB1 - EW2 West Bengal, India worth Rupee 2,684 million and the Hauling Road Construction Project, Palembang South Sumatera, Indonesia worth USD 11 million.
The ongoing overseas works include: the Bangalore Metro Rail Project worth Rupee 2,802 million which is 88% complete, Jaipur Metro Package No. C-2 worth Rupee 3,017 million which is 98% complete, the Delhi Metro CC-26R worth Rupee 7,520 million which is 12% complete and the 25-year Concession Management Project for Dhaka Elevated Expressway, Bangladesh worth Baht 38,095 million which is on the process of construction line modification to be more appropriate in order to minimize the expropriation and impact on the community.
Industrial Plants
The completed industrial plant projects in 2013 include: the Flood Recovery project of Navanakorn Industrial Estate worth Baht 744 million, the solar cell power plant in Lopburi Province worth Baht 207 million, the Solar Cell Power Plant in Kamphaeng Phet and Ubon Ratchathani Province worth Baht 305 million, the Concrete Foundation for Mitre-Phol Factory in Loei Province worth Baht 238 million, the 80,000 Ton Raw Sugar Warehouse worth Baht 91 million and the 40,000 and 80,000 Ton Raw Sugar Warehouses worth Baht 221 million.
The ongoing projects include: the Expansion of Maha Sawat Water Treatment plant for Metropolitan Water Work Authority Phase 4 worth Baht 450 million which is 99% complete, the Flood Prevention Wall for Rojana Industrial Park worth Baht 2,072 million which is 99% complete, the Mitr Phol Group Sugar Refinery Plant worth Baht 387 million which is 97% complete, the North Bangkok Combined Cycle Power Plant worth Baht 2,699 million which is 26% complete, the Thai Namthip Flood Prevention, Pathumthani worth Baht 157 million which is 61% complete and the Warehouse for Mitr Phu Viang Sugar Refinery Plant worth Baht 136 million which is 92% complete.
The latest project is the SSP Photovaltaic Solar Power Project, Lopburi Province worth Baht 1,093 million.
Mining
The ongoing projects included: the production and delivery of limestone to Electricity Generating Authority of Thailand (EGAT) for eliminating sulfur dioxide resulting from the operation of Mae Moh Mine which is worth Baht 1,006 million which is 75% complete. On behalf of ITD-SQ Joint Venture (Italian-Thai Development Plc. and Sahakol Equipment Co., Ltd.), the Company is working on the Mae Moh Mine Phase 7 Project worth Baht 21,833 million which is 42% complete. Moreover, the Company is managing and operating the Mae Moh Mine Phase 7/1 on behalf of ITD-SQ Joint Venture. The project is worth Baht 5,266 million and is 63% complete.
The ongoing overseas projects include: the Hongsa Mine in Laos PDR worth Baht 25,282 million for which the public utility building construction is in progress, as well as machinery supply. In addition, the Company is waiting for the mining license of the Sakoa coal project in Madagascar.
Pipeline and Utility Works
The completed pipeline and utility works for 2013 include: the Installation of Trunk Mains and Related Works Contract No.735 worth Baht 185 million, the Pig Trap Modification at Block Valve 20 and Block Valve 22 worth Baht 93 million and the Butadiene Pipeline for BV Offsite Area Package 2 & 4 of PTTGC which is worth Baht 215 million.
The ongoing projects include: the Construction of the Pumping Station and Water Distribution System from Chanthaburi to Rayong Province worth Baht 1,684 million which is 69% complete, the Transmission Tunnel Rehabilitation and Related Works of Metropolitan Waterworks Authority (Thailand) worth Baht 850 million which is 96% complete and the Myanmar Gas Pipeline (Zawtika) to BVW1 Project worth Baht 97 million which is 97% complete. Also, the latest project which the Company is to start construction is the RA#6 Gas Mixing Station which is worth Baht 1,187 million.
Annual Report 2013 13 Ports, Jetties, River Protection, Dredging & Reclamation and Marine Works
The completed projects in 2013 include: the construction of a reinforced concrete water gate on the Ping River and demolition of 3 local rock dams, Saraphi and Muang District, Chiangmai worth Baht 434 million, the Renovation of the Flood Prevention System for Phananchoeng worth Baht 139 million and the Construction of Approach Bridge Impact Protection Dolphins of Kerry Siam Seaport at AoUdom worth Baht 45 million.
The ongoing projects include: the KhlongYai Multipurpose Jetty in Trat Province worth Baht 739 million which is 47% complete, the Rock Top Up for Klong-Dan Erosion Protection Project worth Baht 272 million which is 83% complete, the Construction of Flood Prevention System, Pa Sang - Ban Paen Phase 1 worth Baht 182 million which is 84% complete, the prevention project for Mae Chan District in Chiang Rai Province worth Baht 140 million which is 55% complete, the prevention project for Muang District in Chiang Mai Province worth Baht 233 million which is 3% complete, the Thai Tank Terminal, New Berth 2B, Map Ta Phut, Rayong worth Baht 208 million which 75% complete, the Expansion of LPG Facilities of PTT worth Baht 1,490 million which is 13% complete and the latest project is the Construction of Concrete Retaining Wall at Klong Sakaengam worth Baht 400 million.
Dams and Hydroelectric Power
The ongoing overseas project is the 800-MW Kol Dam hydropower project in India worth Rupees 10,382 million which is 99% complete and is expected to produce electricity by the end of this year. Regarding the construction of dams in Thailand and floodways in the East and the West of Chao Phraya River, the Company is awaiting for the clarification of the water management policies and strategies from the Government. Also, two mega-dam projects; the Mae Wong Dam and the Kaeng Sue Ten Dam, are to be constructed for water retention and storage. The Company is confident in its capabilities to carry out the aforementioned projects.
Mass Rapid Transit Systems
The ongoing projects include: the MRT Extension Phase 1– Blue Line (Hua Lamphong to Sanam Chai) worth Baht 10,697 million, which is 51% complete and the construction of the Mass Transit System Project in Bangkok (Red Line) (I) Contract 2: Civil Works for Bang Sue – Rungsit Railway worth Baht 21,102 million which is 3% complete. For the Red Line Project, the State Railway of Thailand has a policy to increase construction costdue to the added platform structuresand high-speed rail tracks, and is waiting up for a new Government’s approval. Moreover, to solve traffic problems of Bangkok and metropolitan area in the long run, the Mass Rapid Transit Authority of Thailand (MRTA) will invite tenders for the Green Line routing from Mor Chit to Saphan Mai and Ku Kot 18.2 kilometers in distance under four contracts, worth Baht 26,642 million.
The ongoing overseas projects include: the Kolkata Metro Rail Project (UG-2), Construction of Metro Station worth Rupees 7,915 million which is 67% complete, the Elevated Road & Metro Viaduct: Jaipur Metro Package No.C-2 worth Rupees 3,017 million which is 98% complete, the Delhi Metro Rail Project Contract CC-26R worth Rupees 5,460 million which is 15% complete and the Delhi Metro Rail Project Contract CC-32 (UG 3) worth Rupees 7,520 million which is 12% complete. India is growing rapidly and the mass rapid transit systems are targeted by the Company as future projects.
Steel Fabrication
The Company’s structural steel fabrication facilities at Wihan Daeng in Saraburi has provided important support to many ITD projects, especially the projects that have a limited construction site area. The steel supply of this factory has saved time and improved effectiveness of the construction in many projects. Last year the total production volume was 4,161 tons which mainly supported ITD’s projects including: the MRT Blue Line Project, the Star View Condominium, the Clubhouse for Nikanti Golf Club, steel railway bridges, the North Bangkok Combine Cycle Power Plant Phase 2 and the Mass Transit System Project in Bangkok (Red Line) (I) Contract 2. The Company also provided services to external entities, including the steel structures for the Kowloon Electric Train Station.
Telecommunications
The completed telecommunications projects in 2013 include: the undersea electric cable 115 kV (Circuit No.3) worth Baht 3,580 million, the installation of the undersea electric cable for CAT Telecom Public Company Limited worth Baht 199 million and the network to 3G mobile Service for CAT Telecom Public Company Limited worth Baht 289 million
The ongoing projects include: the checking and repairing of fiber optic worth Baht 111 million which is 99% complete
The installation of the undersea electric cable to the islands is preferred since its cost is lower than the installation of high voltage electricity poles and also not visible and reduces environmental impact. The project which the Company has been targeting is the undersea electric cable 33 kV 45 kilometers in distance to Koh Tao worth Baht 1,804 million.
14 Italian-thai Development Public Company Limited Outside Thailand
The concession for the Dawei Deep Sea Port and Industrial Estate Development Project in Myanmar was transferred from the Company to the cooperation between Thai and Myanmar Governments in order to develop the Dawei Economic Zone and adjacent area. As a result, the Company will be fully compensated for its earlier investment in the project. However, the Company shall participate in the new round of bidding ofthe Dawei project, which is divided into the following seven sub-projects: deep sea port, trans-border corridor link between Dawei project and Thailand’s border at Baan Nam Phu Ron in Kanchanaburi Province, industrial estate, electricity system, water supply system, telecommunications infrastructure and residential housing and shopping complex.
India is an important target of the Company. ITD Cementation India Ltd., which is a subsidiary of the Company, affords the Company a strategic business base in India to develop its competitiveness. Tax privileges, which can help to reduce costs, are an essential component in achieving a competitive edge in this country, such as the Delhi Metro Rail Project Contract CC-32 (UG 3) worth Rupees 7,520 million.
In Bangladesh, the Company was granted a 25-year concession to develop the Dhaka Elevated Expressway PPP Project in order to mitigate the traffic congestion in Bangladesh. After being studied for environment and society impacts, Bangladesh government changedthe construction line to minimize the impact on residents in the path of construction. Moreover, funding for the project is currently being processed.
In Laos PDR., the Company was granted the 15-year concession for the Hongsa Mining Project for which the accommodation and public utility construction is in progress as well as machinery supply. Moreover, the Company is preparing for the Improvement of National Highway Route 18A (LAO PDR.) worth Baht 2,870 million.
In Mozambique, the Company was granted a 30-year concession for the construction and operation of the deep sea port and the railway linking Moatize to Macuse from the Government of Mozambique worth USD 4,000 million or approximately Baht 120,000 million.
Annual Report 2013 15 Risk Factors
1. Risks related to business 1.1 Our revenues and our potential revenue growth are highly dependent on Thai public sector contracts, Government policy and the Thai economy.
We conduct a substantial portion of our operations in Thailand. In 2013, we generated 75.8% of our construction service revenues in Thailand. The Thai economy had been expanded in 2013. Real GDP in Thailand grew 2.9% in 2013, 6.5% in 2012 and 0.1% in 2011. Real GDP of the construction industry increased 1.2% in 2013, 7.8% in 2012 and -5.1% in 2011 (Source: NESDB). We cannot predict how long the current economic expansion will continue, if at all, or whether another financial or economic crisis will occur in the future. Factors that may adversely affect the Thai economy include:
Decreases in business, industrial, manufacturing or industrial activity in Thailand or in the region or in global;
Discontinue of pushing economic system by the government’s monetary and fiscal policy in local or in global;
Scarcity of credit or other financing, resulting in lower demand for products and services provided by companies in the region;
Exchange rate and oil price fluctuations;
A prolonged period of inflation or increase in regional interest rates;
Changes in taxation;
A re-emergence of Severe Acute Respiratory Syndrome (commonly known as SARS), avian influenza (commonly known as the bird flu), or the emergence of another highly infectious disease in Thailand or in other countries in the region;
Political instability, terrorism or military conflict in countries in the region or globally;
A continuation of or increases in the level of unrest in southern Thailand and Other regulatory, political or economic developments in or affecting Thailand
Natural calamity and other calamities
Any economic recession or other deterioration in Thailand’s economy, or decline in business, industrial, manufacturing or financial activity in Thailand, could adversely affect our business financial condition, financial covenants in the loan agreements and, terms and condition of bonds, results of operations and our prospects.
In addition to our business concentration in Thailand, our business is also highly dependent on Thai public sector spending. Our major customers are the government and its state-owned enterprises, such as the State Railway of Thailand, the Mass Rapid Transit Authority of Thailand, the Electricity Generating Authority of Thailand, Mahidol University and Chulalongkorn Hospital. Our Thai public sector customers accounted for 60.7% and 66.1% of our construction revenues in 2013 and 2012, respectively, and 89.1% and 89.3% of the Company and portion of the Company backlog as of December 31, 2013 and 2012, respectively.
While published government plans for Thailand provide for increased government expenditure on capital infrastructure projects, any significant budgetary reductions by the Thai government would adversely impact the amount of new public sector construction contracts awarded and either this or any disruption of our relationship with the Government for any reason, would materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.2 The infrastructure projects that we undertake involve significant risks that could adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations and prospects.
A significant portion of our revenues, particularly those relating to large infrastructure projects, are derived from contracts with governments, government-related entities or private companies holding concessions from government agencies within and outside Thailand. This exposes us to certain risks not associated with other types of construction projects. For example, many of these large infrastructure projects are high profile, which can result in increased political and public scrutiny of our work. In addition, these projects tend to be relatively complex, which requires us to commit a significant amount of resources and working capital to these projects. Such types of projects are also subject to delay or modification due to environmental considerations.
Because these projects are publicly funded, changes in government budget and policy considerations could result in delays or changes to these projects. Payments to construction companies providing services to these projects, including us, may also be delayed as a result of disputes with government agency or lenders to the projects. Delays in payments to us would adversely affect our cash flows and any disputes and changes in budget and policy considerations could affect our reputation and the availability of financing for future projects, all of which would adversely
16 Italian-thai Development Public Company Limited affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.3 If we are unable to accurately estimate the overall risks, revenues or costs on our contracts, or fail to agree to the pricing of work done pursuant to unapproved change orders, we may incur lower than anticipated profit or incur a loss on the contracts.
Substantially all of our construction contracts are either fixed price or fixed unit price contracts. The terms of these contracts require us to guarantee the price of our services on a fixed price or a fixed unit price basis and assume the risk that the costs associated with our performance will not be greater than we anticipated. As a result, we will only realize a profit on these contracts if we have successfully estimated costs and avoid cost overruns. Cost overruns, whether due to inefficiency, inaccurate estimates or other factors, result in a lower profit or a loss on a project. Our project cost estimates are subject to a number of assumptions. Although we anticipate increased labor costs and materials costs in our bids, the revenue, cost and gross profit realized on a fixed price or fixed unit price contract may vary from the estimated amounts because of many factors, including changes in job condition, variations in labor and equipment productivity over the term of the contract and unexpected increases in costs of materials and labor.
Some of our construction contracts contain an escalation formula to accommodate unexpected increases in materials and labor costs. However, we are typically required to bear some portion of the increase before we can make a claim under the escalation formula. In any event, the escalation formula may not cover the full increase in cost for our materials or labor. If our estimates of the overall risk, revenues or costs prove inaccurate, or circumstances change, or if the escalation formula in our contracts does not cover the full increase in costs, we may incur a lower profit or a loss on our contracts, which could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
We are frequently required to perform extra or “change order” work as directly by the customer even if the customer has not agreed in advance on the scope or price of the work to be performed. This process may result in disputes over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work qualifies as extra work, the price the customer is willing to pay for the extra work. Even when the customer agrees to pay for the extra work, we may be required to fund the cost o such work for a lengthy period of time until the change order is approved and funded by the customer. Also, these unapproved change orders, contract disputes or claims result in costs to us that cannot be billed for a period of time and, therefore, are reflected as “unbilled receivables” in our balance sheet. We cannot assure you that we will be able to invoice or recover the cost and profit margin for the extra or change order work in full or at all, which may lead to business disputes or may otherwise adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.4 We are reliant on a small number of clients.
We generally target large government entities as clients. As a result, at any point in time a small number of clients may account for a substantial portion of our revenues and backlog as the State Railway of Thailand, the Mass Rapid Transit Authority of Thailand, the Electricity Generating Authority of Thailand, Mahidol University and Chulalongkorn Hospital accounted for 32.7% and 26.8% of our construction revenues in 2013 and 2012, respectively, and 42.0% and 34.5% of our backlog as of December 31, 2013 and 2012, respectively. If any of these clients ceases to provide us with new work or if there are any significant disputes relating to any of our contracts with any of these clients, this could temporarily disrupt our business, which could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.5 We may face intense competition, which could reduce our market share and profits.
The construction business in Thailand and throughout Asia is highly competitive. New project awards are typically determined through a competitive bidding process, and after potential bidders pre-qualify to bid on a project, the principal competitive consideration is the price of the bid. There is increasing competition for construction projects in Thailand and other parts of Asia from both Thai and foreign construction companies, particular from China, Japan and Korea, some of whom have financial and operational resources greater than ours. As a result, we may need to accept lower profit margins or make other concessions in order for us to be able to successfully compete. If we are unable to compete successfully, our relative market share and profits would be reduced, which would materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.6 Our participation in joint ventures exposes us to liability for failures of our joint venture partners.
We sometimes enter into joint venture arrangements with outside partners on a joint and several basis so that we can jointly bid on and execute a particular project when we require specialized experience or technology, when we want to upgrade our bidding eligibility or when we
Annual Report 2013 17 want to reduce our financial or operational risk with respect to such projects. Success on these joint venture projects depends in large part on our ability to operate effectively with our joint venture partners and on whether our joint venture partners perform their contractual obligations. If one of our joint venture partner fails to perform or is financially unable to bear its portion of required capital contributions, we could be required to make additional investments and provide additional services to make up for our partner’s shortfall. In addition, if the owner of a project is entitled to damages or penalties under a joint venture contract for any reason, we could be required to bear our joint ventures’ shares of the damages or penalties if our joint venture partner fails to pay its share. Furthermore, if we are unable to adequately address our partner’s performance issues, the project owner may terminate the project, which could result in legal liability to us, harm our reputation and reduce our profit on a project, which cold materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
1.7 Our construction projects outside Thailand exposes us to political and economic risks in those countries.
We are seeking to increase the portion of our business that we undertake in countries outside Thailand even though our work outside Thailand accounted for 24.2% and 28.0% of our construction revenues in 2013 and the 2012, respectively and 45.7% and 50.9% of the Company backlog as of December 31, 2013 and 2012, respectively including projects in Laos, Myanmar, Indonesia, Vietnam, Malaysia, Bangladesh, India, Madagascar, Australia, Mozambique and Taiwan. We also expect to bid and be awarded for new construction contracts in these and other countries.
The political, economic and security situations in some of these countries has been unstable from time to time in the past, and the governments of some of these countries have occasionally intervened in the economies, and made significant changes in policies, of these countries. An example of an act of intervention is an imposition of currency controls by a country in which we have a project, which could affect our ability to repatriate our earnings arising from the project out of that country. Any future political instability or economic slowdown or recession in these countries could affect our existing contracts and/or result in slower growth in the number and size of larger infrastructure and construction projects, which could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors. As our construction service business increases in these countries in these countries, our exposure to the political, economic and security risks in these countries will also increase.
1.8 Our results of operations depend on the timing of new contract awards and the timing of the performance of these contracts.
At any point in time, we may derive a substantial portion of our revenues directly or indirectly from a limited number of large construction contracts. The amount of work to be done under a contract, and therefore the timing and amount of revenue that we recognize, varies depending on the project duration and on the stage of the construction that is being performed at any particular time. There is typically less construction work at the beginning and at the end of a construction project, resulting in our recognizing less revenue at these stages, compared with the amount of work that we perform in the middle of a construction project, when we recognize more revenues. Therefore, our results of operations tend to fluctuate depending on the duration and stage of our contracts at any particular time and the composition of contracts within our portfolio at any one time. We cannot predict whether or when we will receive awards of new contracts which frequently involve a lengthy and complex bidding and selection process, which is affected by a number of factors, including market conditions, financing arrangements and governmental approvals. The timing of the revenues and cash flows from our projects can be delayed by a number of factors, including availability of labor, weather conditions, delays in receiving material and equipment from suppliers and changes in the scope of work to be performed. These delays, if they occur, could have an adverse effect on our operating results for a particular period. As a result of the foregoing, our results of operations and cash flows can fluctuate significantly from period to period.
2. Risks related to production 2.1 Our failure to meet schedule requirements of our contracts could require us to pay liquidated damages.
Substantially all of our contracts are subject to specific completion schedule requirements with liquidated damages charged to us if we do not achieve the construction schedules. Liquidated damages are typically levied at the rate of 0.05%-0.1% of the contract value for each day of delay that is deemed to be our responsibility, subject to a maximum liability of 10% of the contract value. Any failure to meet our schedule requirements of our contracts could cause us to pay significant liquidated damages, which could adversely affect our liquidity and cash flows and have a material adverse effect on our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
2.2 Our projects expose us to potential liability claims.
We construct many projects where design, construction or systems failures can result in substantial hazards or property damages to third parties. The mistakes of such projects subsequent to their completion can result in similar hazards and damage or environmental impacts and
18 Italian-thai Development Public Company Limited pollution in noise, dust, smoke spreading, collapse or cracking of nearby buildings during construction or after construction. Litigation arising from any of these occurrences may take us to be defendant in lawsuits asserting large claims or subject us to significant regulatory penalties. Although we maintain insurance policies with coverage to the extent and in amounts we believe prudent to protect us from these potential claims, we cannot assure you if our insurance coverage will be sufficient or the conditions in the insurance policy cover all circumstances or against all damages to which we may be liable. A successful claim against us or any of our subsidiaries, associated companies or joint ventures could result in significant liabilities for us and could have a material adverse effect on our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
2.3 We may not be able to fully realize the contract value of our projects or the value of our backlog.
We use our backlog as a general indicator of our level of work to be completed. Backlog represents our estimate of the contract value of work that remains to be completed at any given time under our executed project contracts. The contract value of a project represents the amount that we expect to receive under the terms of the contract if the contract is performed in accordance with its terms. The Company and portion of the Company backlog amounted to Baht 94,104 million and Baht 86,283 million as of December 31, 2013 and December 31, 2012, respectively. We may not realize the contract value of our projects or the revenue we expect to receive from our backlog or, if we realize revenue, it may not result in profits. For example, if a project reflected in our backlog is terminated, suspended or reduced in scope, it would result in a reduction to our backlog, which would reduce, potentially to material extent, the revenue, cash flows and operating profit we actually receive from the contracts we include in backlog. If a customer cancels a project, we may be reimbursed for certain costs, but we typically would have no contractual right to the total revenues reflected in our backlog. Significant cancellations or delays of projects in our backlog could have a material adverse effect on our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
2.4 We are dependent upon the availability and cost of materials, labor and sub-contractors.
Materials used in our construction projects typically represent approximately 30% to 40% of our total project costs. These materials are global commodities, and their availability and prices depend on local and global market conditions. If there is a shortage of these materials, particularly cement and steel, we may find it difficult to obtain the amounts of these materials that we require at a price which we believe is commercially acceptable or at all, which may materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
Our ability to control labor costs and to manage large infrastructure projects is dependent upon our ability to attract and retain qualified engineers, architects and technicians with sufficient experience in the engineering, design and construction of such projects. We have employed, and we expect to continue to employ, sub-contractors to perform some of our construction activities. We and our sub-contractors are dependent upon the availability of workers, particularly when the level of activity in the construction industry is high. If there is a shortage of trained engineers, architects, technicians and other workers in Thailand, we may have difficulty hiring adequate numbers of skilled personnel and other workers, directly or through sub-contractors, in the future. We also cannot assure you that the costs of retaining or employing skilled personnel or other workers will not exceed our estimates, which may materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
3. Risks related to finance 3.1 Our inability to obtain bonds and other financing could limit the number of projects we are able to pursue.
It is customary in the construction industry, and we are typically required, to provide surety bonds to bid for and to secure our performance under construction contracts. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past performance, management expertise and other external factors, including the overall financial capacity of the surety companies and banks. Surety companies and banks consider these factors in relation to their risk management policies and underwriting standards, which may change from time to time. During the Asian financial crisis and our reorganization, some providers of surety bonds required us to pledge cash deposits or provide other forms of security with them to secure our contingent obligations under the bonds. The pledges of cash affected our liquidity and working capital resources. Since the completion of our business reorganization, providers of surety bonds have generally not required us to pledge cash deposits. While we have not had an material difficulties in obtaining surety bonds after our business reorganization, we cannot assure you that we will continue to be able to obtain the bonds required for us to operate our business either on a secured or unsecured basis, on commercially reasonable terms or at all, which would materially and adversely affect our business, financial condition results of operations, prospects and returns of investors.
We may also require additional financing to provide needed additional working capital to finance start-up costs of projects (including the
Annual Report 2013 19 purchase of materials and equipment) before we receive payment under a contract. Our ability to arrange for financing will depend, in part, upon factors outside our control, such as a financial institution’s lending policy and prevailing market conditions, as well as upon our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations and prospects. Our inability to obtain adequate financing to fund our working capital requirements could adversely affect our ability to perform our obligations under existing contracts and our ability to obtain new contracts, which could have a material adverse effect on our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, prospects and returns of investors.
3.2 We have significant contingent liabilities that could materialize, which, if they materialize, could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations and prospects.
We have significant contingent liabilities that could arise under the terms of our business reorganization plan, under the surety bonds that we procure for our construction projects and under the terms of our guarantees of our subsidiaries and under the terms of certain of our construction projects. Surety Bonds and Guarantees.
Our contingent liabilities under surety bonds amounted to Baht 42,187 million Baht 29,813 million as of December 31, 2013, and December 31, 2012, respectively, and our contingent liabilities under guarantees that we issued to financial institution to secure credit facilities granted by those financial institutions to our subsidiaries, associated companies and joint ventures amounted to Baht 3,803 million and Baht 3,066 million as of December 31, 2013 and December 31, 2012, respectively. A call on some of these bonds by a project owner would result in the financial institutions providing the bonds claiming the amounts paid under the bonds from us. In addition, a claim on some of these guarantees by a financial institution could subject us to liabilities under the guarantees. These factors may adversely affect our liquidity, which could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
3.3 We may need to establish additional provisions for doubtful receivables and recognize additional losses on the diminution in value of our investments which, if they materialize, could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations and prospects.
Historically, we incurred significant amounts of trade receivables from related and non-related parties and loan receivables from related parties. In addition, we also had significant amounts of investments in related and other parties.
We had the net trade account receivable, the current portion of financial lease receivable and the retentions receivable due within one year amounting to Baht 10,953 million and Baht 10,759 million as of December 31, 2013 and December 31, 2012, respectively, and had the investment amounting to Baht 1,430 million and Baht 1,387 million, respectively and had the land lease concession and project under development, in the Dawei project, amounting to Baht 6,031 million and Baht 3,398 million, respectively.
In addition, future non-payments of our trade and loan receivables and a diminution in the value of our investments may result in our having to establish provisions equal to the amount of such non-payment or the amount of such diminution in the future, which could materially and adversely affect our business, financial condition, financial covenants in the loan agreements and the terms and condition of bonds, results of operations, prospects and returns of investors.
4. Risks related to the impact of rights or investment of security holders 4.1 Risks from the Company had major shareholders over than 25%.
As of February 21, 2014 the Thailand Securities Depository Co., Ltd. reported the share distribution of major 20 shareholders including the directors, the managements and related persons totaled 1,729,581,987 shares or 35.58% of the paid-up capital (common share only). The major shareholders were capable to have the right of objection or to disapprove the vote in the shareholders’ meeting concerning the articles of association or related regulations which require approval of not less than 3 out of 4 of the whole existing shareholders in such meeting with the right to vote.
4.2 Risks in dividends payout
According to the Company’s Articles of Association under Article 39 the first paragraph stated “No dividends shall be paid from any type of funds other than from the profits. In case the Company has sustained any accumulated loss, no dividend shall be paid.” and the Public Limited Companies Act, B.E. 2535 (1992) under Section 115 the first paragraph stated “No dividends shall be paid otherwise than out of profits. In the case
20 Italian-thai Development Public Company Limited where a company has incurred accumulated loss, no dividends may be paid.”, as at December 31, 2013, the Company had the retained deficit Baht 541 million and might not be capable to pay dividends.
4.3 Risks from the Company had resolution to offer share significantly. (Dilution effect)
As April 30, 2013, the Annual General Meeting of Shareholders in 2013 approved an extension of the period for the allotment of new ordinary shares under a General Mandate by allotting new ordinary shares of not exceeding 1,528,103,454 shares on offer for sale to current shareholders in proportion to the number of shares already held by each shareholder and allotting new ordinary shares of not exceed 419,367,818 shares to specific persons via private placement. Up to December 31, 2013, the Company did not approve the resolution to allotting new ordinary shares of not exceed 419,367,818 shares to specific persons via private placement. In case, the Company allotted the whole amount of the said ordinary shares, the right and proportion of current shareholders might decrease by 7.94%.
The Company shall completely allocate the newly issued shares either by the date of the next annual general meeting or by the date required by law to fix the date of the next annual general meeting, whichever comes first.
Annual Report 2013 21 Marketing and Competition
Competition in the local construction industry is intense. New project awards are typically determined through a competitive bidding process, and after potential bidders pre-qualify to bid on a project, the principal competitive consideration is the price of the bid. This increase in competition for construction projects has led to price competition and a general decrease in contract prices.
Clients
We classify our clients in two ways – by the type of client and by the location of client. The type of client is determined by whether the public sector (including state-owned enterprises), or the private sector. The location of the client is either domestic or international and is determined by whether the work we perform for the client is in Thailand or outside Thailand. As of December 31, 2013, the public sector accounted for approximately 89.1% of the Company and portion of the Company backlog, while the private sector accounted for approximately 10.9%. Domestic clients accounted for approximately 54.3% of the Company and portion of the Company backlog as of December 31, 2013, while international clients accounted for approximately 45.7%.
As of December 31, Backlog by Client Classification 2013 2012 2011 Public Sector Backlog 89.1 89.3 84.4 Private Sector Backlog 10.9 10.7 15.6 Total 100.0 100.0 100.0 Domestic 54.3 49.1 46.3 International 45.7 50.9 53.7 Total 100.0 100.0 100.0 Prior to the Asian financial crisis that began in 1997, the public sector accounted for approximately 60% of our work and the private sector accounted for approximately 40% of our work. During the Asian financial crisis, we experienced significant non-payment of amounts owed to us from our private sector property developer clients. As a result, and because the public sector has generally been more active than the private sector in the construction industry since the Asian financial crisis, we have focused on obtaining public sector work in Thailand and have been more active in pursuing public sector work outside of Thailand.
Partly because of the foregoing, as well as our focus on large infrastructure projects, a substantial portion of our work is attributable to a limited number of government enterprises. We generally target large, high-profile contracts from public sector entities. As a result, at any point in time a small number of clients may account for a major portion of our revenues and backlog. The State Railway of Thailand, the Mass Rapid Transit Authority of Thailand, the Electricity Generating Authority of Thailand, the Mahidol University and the Chulalongkorn University together accounted for 32.7% of our construction revenues in 2013 and 42.0% of our backlog as of December 31, 2013.
Competition
There are more than 500 companies operating in the construction business who are members of the Thai Contractors Association, including Thai companies, foreign companies and joint ventures between Thai and foreign companies. Competition is mainly based on price, but a key factor that affects the ability to price a bid competitively is the sourcing of materials. The fluctuation of the price of materials has an impact upon the construction industry because the value of materials typically represents approximately 30 to 40% of the entire project cost. Other than the availability of materials, significant competitive factors include the expertise and experience of employees and subcontractors, as well as joint venture formation for technological support and business alliances.
Thai public sector agencies typically only allow contractors who meet certain criteria to bid for contracts. Construction contractors may be divided into classifications by level of expertise, technical knowledge and resource availability. Contractors who are classified in the highest level typically pre-qualify to bid for all types of contracts, while contractors who are not classified in the highest level are typically excluded from bidding on contracts which require higher levels of expertise. We believe that many public sector clients in Thailand have classified us in the highest level.
22 Italian-thai Development Public Company Limited The following table sets forth the construction contractors in Thailand that are listed on the SET and their reported revenues of each for 2013:
Revenues Company Name % of Total (million Baht) Italian-Thai Development Public Company Limited 44,901.7 23.87 CH. Karnchang Public Company Limited 42,010.0 22.33 Sino-Thai Engineering Public Company Limited 22,947.9 12.20 Toyo-Thai Corporation Public Company Limited 15,464.6 8.22 Christiani & Neilsen (Thai) Public Company Limited 9,043.9 4.81 Power Line Engineering Public Company Limited 8,689.6 4.62 Nawarat Pattanakan Public Company Limited 6,820.8 3.63 Unique Engineering and Construction Public Company Limited 6,814.4 3.62 Syntec Construction Public Company Limited 6,239.1 3.32 Pre-Built Public Company Limited 6,035.3 3.21 STP&I Public Company Limited 5,950.0 3.16 BJC Heavy Industries Public Company Limited 3,928.9 2.09 Sriracha Construction Public Company Limited 2,694.9 1.43 TRC Construction Company Limited 2,558.0 1.36 EMC Public Company Limited 1,645.0 0.87 SEAFCO Public Company Limited 1,323.0 0.70 PAE (Thailand) Public Company Limited 1,055.1 0.56 Total 188,122.2 100.00 Source: Stock Exchange of Thailand Note: Excluded Ascon Construction Public Company Limited and Thai Polycons Public Company Limited because of no financial statements in 2013.
There are not only Thai companies, but also foreign construction companies operating in Thailand. However foreign construction companies are restricted from the bidding in the government projects because the government’s regulation requires that the bidders must be Thai juristic person (i.e. the juristic person who has Thai nationality shareholders more than 50% of shares). The foreign construction companies cannot set up a company or a branch in Thailand without Thai nationality shareholders to bid government projects except for the duration of the specific and approved projects. Generally, this is only possible for projects undertaken by the public sector or with Government support. Therefore, most foreign construction companies must be registered to undertake general construction business in Thailand as a company in which Thai nationals own the majority of the shares and contribute the majority of the capital, which effectively restricts their participation in the Thai construction sector.
As a result of the above restrictions, many foreign construction companies form joint ventures, or act in consortium with, Thai construction companies. These arrangements often provide greater access for foreign companies to the Thai market and allow Thai companies, including our Company, to benefit from the technical expertise and, in some case, financial strength of the foreign companies. These arrangements tend to be project-specific and usually are dissolved when the project is completed. Our Company has formed several such ventures for strategic reasons and in fields where we seek to gain experience.
We also bid for projects in neighboring countries and other countries in Asia. Creditable financial institutions, such as the Asian Development Bank, Work Bank or JBIC, financially support some of the major infrastructure projects on which we bid. These projects are open to international bidders with high qualification standards. In the past, particularly in India, a large market instead of China in the future, most local contractors in these countries failed to meet the required qualifications. The majority of our competitors were joint ventures between local contractors and foreign contractors from countries such as China, Taiwan, Korea, Australia, Japan or countries in Europe.
Annual Report 2013 23 Corporate Information and Other Information
General Information (1) Corporate Information Company Name Italian-Thai Development Public Company Limited Type of Business Contractor: Civil and Infrastructure Construction and Development Head Office 2034/132-161 Italthai Tower, New Petchburi Road, Bangkapi, Huaykwang, Bangkok 10310, Thailand Registration No. 0107537000939 Telephone +66(0)2716-1600 Facsimile +66(0)2716-1488 Homepage www.itd.co.th Email [email protected] Registered Capital Baht 5,871,149,452 (Five Thousand Eight Hundred and Seventy One Million, One Hundred and Forty-Nine Thousand, Four Hundred and Fifty-Two Baht) Paid-up Capital Baht 4,860,473,010 (Four Thousand Eight Hundred and Sixty Million, Four Hundred and Seventy Three Thousand, and Ten Baht) Ordinary Shares Shares 5,871,149,452 (Five Thousand Eight Hundred and Seventy One Million, One Hundred and Forty-Nine Thousand, Four Hundred and Fifty-Two Baht) Par Value Baht 1.00 (Baht One)
(2) Information on Related Companieswith Investment Exceeding 10%
ITD’s investment in Related Companies, in excess of 10% of the paid-up capital as of 31st December, 2013 is reported below:
Lines of construction and public utilities work including a line of construction support and a line of overseas investments
Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding Subsidiary Companies 1. Myanmar ITD Co., Ltd. Myanmar (951) 525-970 (951) 525-970 Service agent for ITD 1,483 100 99.99 2. Italian-Thai International Bangkok 0-2716-1600 0-2716-1418 Holding Company and ship charter 100,000 100 99.99 Co., Ltd. ext. 4201 300,000 75 3. PT Thailindo Bara Pratama Indonesia 001-628-522- 001-625-4177- Coal digestion services 25,250 100 99.99 Co., Ltd. 3158 1166 (Million IDR) 4. Thai Pride Cement Co., Ltd. Bangkok 0-2716-0750 0-2716-0750 Manufacture and distribution 1,300,000 100 99.99 of cement 5. Italian-Thai Land Co., Ltd. Bangkok 0-2716-1600 Not yet operational 10,000 100 99.99 ext. 4201 6. Italian-Thai Power Bangkok 0-2716-1160-4 0-2716-1169 Production and distribution 100,000 100 99.99 of electricity 7. Italian-Thai International Malaysia 603-2284- 603-2284- Not yet operational 1 20 99.99 SDN. BHD. 1370 1370 (Million MYR) 8. ITD Construction Malaysia 603-2284- 603-2284- Construction in Malaysia 0.75 75 99.99 SDN.BHD. 1370 1370 (Million MYR) 9. Nah Pralan Crushing Plant Saraburi 0-3635-1155 0-3635-1155 Rock quarrying, processing 11,000 100 99.99 Co., Ltd. and distribution 10. ITD Bangladesh Company Bangladesh 009-88-02- 009-88-02- Construction services 4 100 99.99 Limited 988-6543 988-6543 in Bangladesh (Million BDT) 11. ITD-Madagascar S.A Madagascar (261) 20 22 (261) 20 22 Mining business 20 100 99.98 Co., Ltd. 019 61 019 60 (MillionAriary) 12. Italian-Thai Hongsa Bangkok 0-2716-1600 0-2716-1556 Coal digestion services 250 25 99.97 Co., Ltd. ext. 1800
24 Italian-thai Development Public Company Limited Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding 13. Myanmar Italian-Thai Bangkok 0-2716-1600 0-2716-1418 Not yet operational 250 25 99.95 Power 1 Co., Ltd. ext. 4201 14. Palang Thai Kaowna Bangkok 0-2716-1600 0-2716-1418 Not yet operational 1,000 100 99.94 Co., Ltd. ext. 4201 15. Saraburi Construction Bangkok 0-2716-1600 0-2716-1418 Manufacturing, distribution and 250 25 99.93 Technology Co., Ltd. ext. 4201 installation of concrete panels 16. Siam Concrete and Brick Pathumthani 0-2501-2281-2 0-2501-2280 Manufacturing, distribution and 126,000 100 99.80 Products Co., Ltd. installation of concrete products for real estate 17. KhunkaPalang Thai Bangkok 0-2716-1600 0-2716-1418 Not yet operational 17,000 100 98.05 Co., Ltd. ext. 4201 18. Italthai Marine Co., Ltd. Samutprakarn 0-2387-1056 0-2387 -1056 Production and sale of vessels 810,000 100 92.59 and equipment 19. ItalthaiTrevi Co., Ltd. Bangkok 0-2716-1600 Foundation and piling work 80,000 100 90.94 ext. 6076 services 20. Italian-Thai Development Vietnam 84-8-382- 84-8-382- Not yet operational 6,000 100 80.00 Vietnam Co., Ltd. 79182 79184 (Million VND) 21. PalitPalangNgan Co., Ltd. Bangkok 0-2716-1600 0-2716-1418 Not yet operational 1,000 100 74.93 ext. 4201 22. Asian Steel Product Rayong 0-3860-6024 0-3860-6114 Manufacture and distribution of 20,000 50 64.90 Co., Ltd. steel pipes for civil construction 23. ITD Cementation India Bangkok 001-91-226- 001-91-226- Construction services in India 115 100 69.57 Co., Ltd. 768-0600 768-0841 24. Thai Maruken Co., Ltd. Bangkok 0-2231-2226-9 0-2231-2230 Leasing/selling of sheet piles 20,000 100 50.96 and beams Associated Companies 1. ATO Asia Turnouts Co., Ltd. Bangkok 0-3636-5311- 0-3636-5311- Production and distribution of 5,000 100 49.00 20 20 turnouts for railway projects 2.Siam Pacific Holdings Bangkok 0-2745-6118 0-2745-6118 Holding company 58,625 100 46.69 Co., Ltd. 3. Sino Lao Aluminum Laos 001-85-620- Bauxite mine business 32 100 34.00 Corporation Limited 680-8288 (Million USD) 4. MCRP Construction Philippines 001-632-788- 001-632-788- Construction contractor in 25 25 24.00 Corporation CO., Ltd. 0770 0141 the Philippines (Million Peso) 5. MCRP Holding Corporation Philippines 001-632-788- 001-632-788- Holding company in 5 100 24.00 Co., Ltd. 0770 0141 the Philippines (Million Peso)
Lines of the Company investment in other sectors, e.g., real estate business, construction material and raw material products, and concession businesses
Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding Subsidiary Companies 1. First Dhaka Elevated Bangladesh 009-88-02- 009-88-02- Concession for constructing 308 100 99.99 Expressway Co., Ltd. 988-6543 988-6543 elevated expressway in (Million BDT) Bangladesh 2. BhakaBhumi Development Bangkok 0-2716-1600 0-2716-1600- Real Estate development 10 100 99.99 Co., Ltd. ext. 5057 1464 4,975 25 3. Asia Logistics Development Bangkok 0-2716-1600 0-2716-1418 Not yet operational 1,000 100 99.93 Co., Ltd. ext. 4201 4. Asia Industrial and Port Bangkok 0-2716-1600 0-2716-1418 Not yet operational 1,000 100 99.93 Corporation Co., Ltd. ext. 4201 5. APPC Holding Co., Ltd. Bangkok 0-2716-1600 0-2716-1418 Holding company 3,795,987 100 60.00 ext. 4202
Annual Report 2013 25 Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding Associated Companies 1. Praram 9 Square Co., Ltd. Bangkok 0-2246-2323 0-2716-0541 Developer of shopping center 101 100 99.99 and commercial areas, etc. Other Companies 1. Bangkok Steel Wire Bangkok 0-2716-1600 Production and distribution of 313,000 100 19.98 Co., Ltd. ext. 5808 P.C. Wire and P.C. Strand 2. Imperial Technology Bangkok 0-2651-4105 0-2651-4105 Initiation and establishment of 882,3500 100 19.83 Management Asia University of Science and Technology, etc. 3.Oriental Residence Co., Ltd. Bangkok 0-2319-1031 0-2319-1031 Real Estate Development 313,000 100 15.00 4. Thai Rent All Co., Ltd. Bangkok 0-2740-2680-7 0-2740-2688 Construction Machinery Rental 25,000 100 15.00 5. Charoong Thai Wire and Bangkok 0-2745-6118 0-2745-6118 Manufacture and distribution of 1,999,288 100 12.90 Cable Plc. enamel coated wire and cable 6. M-Home SPV 3 Co., Ltd. Bangkok 0-2677-3000 0-2677-3200 Real estate development 100 100 11.54 7.Siam Fiber Optic Co., Ltd. Bangkok 0-2745-6118 Manufacture and distribution of 24,000 100 10.00 optic fibers 8. Lao Metal Industry Bangkok 0-2716-1600 Manufacture steel wires and 10,000 100 10.00 Co., Ltd. ext. 1904 steel rod
Lines of Joint Venture which is the cooperation with other experienced companies to gain knowledge in new technologies for the Company’s operations especially for public utility work
Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding Joint Venture 1. ITD-ETF Joint Venture Bangkok 0-2716-1600 0-2716-1418 Track Doubling Contractor - - 65.00 ext. 4201 2. ITD - NAWARAT L.L.C United Arab 001-97-143- 001-97-143- Construction Services in 300,000 100 60.00 Emirates 383-200 387-311 United Arab Emirates (Thousand AED) 3. ITD-NCC (NT-2) Laos 0-2716-1600 0-2716-1418 Construction of Nam Theun 2 - - 60.00 ext. 4201 Hydroelectric Dam 4. ITD-ITD CEM Joint India 001-91-332- 001-91-332- Construction of an airport terminal - - 60.00 Venture (Consortium) 511-2866 511-2866 in India 5. ITD-Unique Joint Venture Bangkok 0-2716-1600 0-2716-1418 Construction of Multi-purpose Port - - 60.00 ext. 4201 at KlongYai in Trat Province 6. ITD-ETF-MVM Joint Bangkok 0-2716-1600 0-2716-1418 Contractor for the Track 55.25 Venture ext. 4201 Rehabilitation Project Phase 5 7. ITD-EGC Joint Venture Taiwan 0-2716-1600 0-2716-1418 Construction of underground - - 55.00 ext. 4201 electrical train station in Taiwan 8. IN Joint Venture Bangkok 0-2716-1600 0-2716-1418 Construction of water drainage - - 51.00 ext. 4201 tunnel 9. ITD-ITD CemJoint Venture India 001-91-226- 001-91-226- Construction Service in India - - 51.00 768-0600 768-0841 10. ITD-SQ Joint Venture Bangkok 0-2716-1600 0-2716-1418 Contractor for the overburden - - 50.00 ext. 4201 and lignite removal services at Mae Moh Mine 11. ITD-SQ Joint Venture Bangkok 0-2716-1600 0-2716-1418 Contractor for the overburden - - 50.00 ext. 4201 and lignite removal services at Mae Moh Mine Phase 7.1 12. ITO Joint Venture Bangkok 0-2716-1600 0-2716-1418 Terminal and Concourse - - 40.00 ext. 4201 Construction for Suvarnabhumi Airport 13. IOT Joint Venture Bangkok 0-2716-1600 0-2716-1418 Airfield Pavement Construction for - - 40.00 ext. 4201 Suvarnbhumi Airport
26 Italian-thai Development Public Company Limited Paid-up Capital % of Company Name Head Office Tel. Fax. Nature of Business Amount % Holding 14. ITD-SMCC Joint Venture Bangkok 0-2716-1600 0-2716-1418 Contractor of Chao Praya River - - 40.00 ext. 4201 Crossing Bridge at Nonthaburi I Road 15. Evergreen-Italian-Thai- Taiwan 001-886- 001-886- Construction High Speed-Rail - - 25.00 PEWC 22788-2966 22788-5053 in Taiwan 16. Samsung-ITD Joint Venture Bangkok 0-2716-1600 0-2716-1418 Contractor of LPG Facilities of - - 24.00 ext. 4201 PTT, KhaoBorYa, Chonburi 17. ITD-ITD Cementation India 001-91-226- 001-91-226- Construction services in India - - 20.00 India Joint Venture 768-0600 768-0841
(3) References
Register of Common Stock
Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Telephone +66 (0) 2359-1200, +66 (0) 2596-9307 or Facsimile +66 (0) 2359-1262-3, +66 (0) 2832-4994-6
Auditor
Ms. Sumalee Chokedeeanant certified auditor No. 3322 Mr. Kosol Yamleemoon certified auditor No. 4575 Ms. Sunsanee Poolsawat certified auditor No. 6977 Mr. Teerasak Chuasrisakul certified auditor No. 6624
Grant Thornton Limited, 18th floor Capital Tower, All Seasons Place, 87/1 Wireless Road, Lumpini, Phatumwan, Bangkok 10330, Thailand Telephone +66 (0) 2654-3330 or Facsimile +66 (0) 2654-3339
Legal Advisor
Weerawong, Chinnavat and Peangpanor Ltd. 540 Mercury Tower, 22nd Floor, Ploenchit Road, KwaengLumpini, KhetPathumwan, Bangkok 10330, Thailand
Financial Advisor
-None-
Management Advisor
-None-
Other Significant Information
-None-
Annual Report 2013 27 Shareholders
10 Major Shareholders as at February 21, 2014:
Name of Major Shareholders Number of Shares Percent of Shares (%) 1. Mr. Premchai Karnasuta and family 1,004,831,852 20.673 2. Mrs. Nijaporn Charanachitta and family 587,922,604 12.096 3. Thai NVDR Co., Ltd. 160,024,722 3.292 4. Mr. Jessada Lertnantapanya 142,995,156 2.942 5. STATE STREET BANK EUROPE LIMITED 78,950,550 1.624 6. Mr. Chanchai Kultavarakorn 57,900,000 1.191 7. Mr. Chaiya Sakulchaiwanich 48,504,150 0.998 8. Mr. Prawit Phansaichue 47,244,100 0.972 9. Mr. Wichai Aekudomsin 43,000,089 0.885 10. Mr. Taweechart Churangkoon 34,479,500 0.715
Major shareholders who have significant influence on the Company’s policy
- None -
28 Italian-thai Development Public Company Limited Dividend Policy
The Company’s dividend policy
The Board of Directors plans to propose at the Shareholders’ Meeting a dividend payout to each shareholder, with expected rates to be paid based on performance, of not less than 40% of net profit after tax, providing that there is no need for funds by any other event and that the dividend will not significantly affect the operations of the Company.
Subsidiary’s dividend policy
Regarding the dividend policy of subsidiaries, the Board of Directors shall consider the subsidiary’s cash flow compared to its investment, without determining the exact payout ratio. If there is sufficient cash flow which has legally been reserved, the Board of Directors shall consider the dividend of case by case, and has set a dividend policy of not less than 30% of net profit before tax.Thai Maruken Company Limited will not be considered for a dividend.
Annual Report 2013 29 Management Structure
The Board of Director and the Board of Management conscientiously carry out their duties for the maximum benefit of the Company and shareholders through clearly a defined management structure as follow:
1. The Board of Directors recognizes their roles and responsibilities toward the shareholders, and they ensure that they can perform the duties.
2. The Board of Directors and the Board of Management must be properly instituted and counterbalanced as follows:
a) Audit Committee, consisting of an Independent Audit Committee functioning in accordance with the stipulations of the Stock Exchange of Thailand, and having the expertise to review the reliability of financial statement as well as other duties as an audit committee.
b) Clear separation of duties between the Chairman of the Board of Directors and the Chairman of the Board of Management according to the information disclosed in the corporate governance of the Company.
Board of Directors
As at December 31, 2013, the Board of Directors consists of nine persons as listed below:
Directors Meetings Name-Surname Position Total Number of Number of Meeting Attendance 1. Pol.Lt. Chartachai Bunya-Anata Chairman of the Board of Directors 4 4 Chairman of the Audit Committee Independent Director 2. Mr. Premchai Karnasuta Executive Director 4 4 3. Mrs. Nijaporn Charanachitta Executive Director 4 4 4. Dr. KrisornJittorntrum Chairman of the Board of the Risk Management 4 4 Committee Audit Committee Independent Director 5. Mr. Pathai Chakornbundit Executive Director 4 4 Executive Vice President of the Risk Management Committee 6. Mr. Yuthachai Charanachitta Non-Executive Director 4 3 Risk Management Committee 7. Mr. Tawatchai Suthiprapha Executive Director 4 4 8. Mr. William Lee Zentgraf Audit Committee / Independent Non-Executive 4 4 Director 9. Mr. Peeti Karnasuta Non-Executive Director 4 4 Risk Management Committee
Directors
Board of Management
As at December 31, 2013, Board of Management of the company consists of eleven persons as listed below:
Name-Surname Position 1. Mr. Premchai Karnasuta Director and President 2. Mrs. Nijaporn Charanachitta Director and Senior Executive Vice President 3. Mr. Pathai Chakornbundit Director and Senior Executive Vice President 4. Mr. Tawatchai Suthiprapha Director and Senior Executive Vice President 5. Mr. William Lee Zentgref Executive Vice President 6. Mr. Taweesilp Pattanakitchamroon Executive Vice President 7. Mr. Chatichai Chutima Executive Vice President
30 Italian-thai Development Public Company Limited Name-Surname Position 8. Mr. Virat Kongmaneerat Executive Vice President 9. Mr. Sumate Surabotsopon Executive Vice President 10. Mr. Piyachai Karnasuta Executive Vice President 11. Mr. Sompop Pinijchai Vice President
The management announced by the Securities and Exchange Commission
As at December 31, 2013, the management of the company consists of eleven persons as listed below:
Name-Surname Position 1. Mr. Premchai Karnasuta President 2. Mrs. Nijaporn Charanachitta Director and Senior Executive Vice President 3. Mr. Pathai Chakornbundit Director and Senior Executive Vice President 4. Mr. Tawatchai Suthiprapha Director and Senior Executive Vice President 5. Mr. Anan Amarapala Executive Vice President 6. Mr. Taweesilp Pattanakitchamroon Executive Vice President 7. Mr. Virat Kongmaneerat Executive Vice President 8. Mr. Sumate Surabotsopon Executive Vice President 9. Mr. Piyachai Karnasuta Executive Vice President 10. Mr. Chatichai Chutima Executive Vice President (Finance) 11. Ms. Kanchana Charoenyot Vice President (Accounting)
The Company’s management diagram is shown on Annual Report together with the Education Qualification, Work Experience, and Curriculum Vitae of Directors. The subsidiary director list is also shown in this annual statement.
The Company Secretary
The resolution of the Board of Director’s Meeting No.5/6/2008 dated June 9, 2008 appointed
Mr. Woravudh Hirunyapaisansa-kul to be the Company Secretary according to Securities and Exchange Act (No. 4) B.E. 2551. He is responsible for establishing the meetings of the Board of Directors and the meetings of the shareholders, coordinating with other parties to comply with the resolutions of these meetings, advising the Directors on laws and regulations, supporting the Director’s activities and other duties according to the notification of the Capital Market Supervisory Board.
The Education Qualification, Work Experience and Curriculum Vitae of the Company Secretary is given in this annual statement (Attachment 1).
Remuneration of Directors and Management Staff
The policy for the remuneration of Directors and the Management is as follows:
1. Remuneration of Directors
The Company has determined the Remuneration of Directors clearly and transparently based on comparable industry levels and for the performance required of the Directors. Directors assigned to be on the Audit Committee receive additional remuneration for full discharge of their Audit Committee duties. In any case, the amount of remuneration to be paid to Directors must be finally approved by a meeting of the shareholders.
2. Remuneration of the Board of Management
The remuneration of the Board of Management members follows the principles and policy determined by the Board of Directors and depends on the corporate and individual achievement.
Annual Report 2013 31 (1) Financial Remuneration
(A) Remuneration of Directors, Audit committee, and Risk Management Committee in 2013
Remuneration (Baht/Year) Directors Risk Management Directors Audit Committee Committee** 1. Pol.Lt. Chartachai Bunya-Ananta 750,000 535,000* - 2. Mr. Premchai Karnasuta 580,000 - - 3. Mrs. Nijaporn Charanachitta 580,000 - - 4. Dr. Krisorn Jittorntrum 580,000 415,000* 15,000** 5. Mr. Pathai Chakornbundit 580,000 - 10,000** 6. Mr. Yutachai Charanachitta 580,000 - 10,000** 7. Mr. Tawatchai Suthiprapha 580,000 - - 8. Mr. William Lee Zentgraf 580,000 415,000* - 9. Mr. Peeti Karnasuta 580,000 - - Total 5,390,000 1,365,000 35,000 Remark: * including special remuneration / ** The meeting attendance allowance per time
(B) Total Remuneration and Number of Directors and Board of Management
The remuneration of the Board of Management members follows the principles and policy determined by the Board of Directors and depends on the corporate and individual achievement.
- The 11 members of the Board of Management received, in total, remuneration amounting to Baht 70,651,085 for the full discharge of their respective duties.
- The 9 members of the Board of Directors [not including Vice President (Finance) and Vice President (Account)] received, in total, remuneration amounting to Baht 64,923,085 for the full discharge of their respective duties.
(2) Other remuneration (If any)
Other Remuneration of Board of Management
Provident Fund
The Company has provided a provident fund at the rate of 2 percent of the salary. In 2013, the 11 members of the Board of Management received, in total, provident fund amounting to Baht 971,020.
Human Resources
Total Number of Employees as of 31st December 2013 was 28,318 persons
Number of Employees by Major Categories
Categorized by job classification:
- Engineers = 1,660 Persons - Accountants = 224 Persons - Administrators = 245 Persons - General Employees = 26,189 Persons Total = 28,318 Persons
32 Italian-thai Development Public Company Limited Categorized by the Company’s nine business categories: 1) Buildings = 13,374 Persons 2) Industrial Plants = 3,825 Persons 3) Pipelines and Utility Works = 2,990 Persons 4) Highways, Railways, High Speed Rails, Viaducts, Track Works, MRT Systems, Bridges and Expressways = 3,125 Persons 5) Airports, Ports, Jetties, River Protection, Dredging & Reclamation, Marine Works = 1,140 Persons 6) Dams, Tunnels, and Power Plants = 1,274 Persons 7) Steel Structures = 324 Persons 8) Telecommunications = 107 Persons 9) Mining and = 1,173 Persons Miscellaneous = 344 Persons 10) Head Office and Foreigner = 642 Persons
Total = 28,318 Persons
Changing employee number in the last three years - Total number of employees as of 31st December 2011 = 22,318 Persons - Total number of employees as of 31st December 2012 = 24,278 Persons - Total number of employees as of 31st December 2013 = 28,318 Persons
Major labor disputes during the past three years
- None
Employee benefits for the year 2013
- Baht 8,993,987,000 (Salary and provident fund)
Employee Skill Development Policy
Since the employee’s skills are very important to the Company’s performance, in the year 2013, the company provided 27 courses to develop skills in various fields of competency, with an average training of 9 hours/employee. The training was separated into three fields:
Construction Field: The programs provided developing knowledge and skills. There were eight courses: Professional Project Management, the Occupational Safety-Health and Work Environment Committee, Safety Officer for Supervisors, Update Safety Course for Trainers, Accident Investigation Techniques, Successful Construction Project Management, Knowledge of Store System Accountant Systems and Purchasing Systems for Engineers, Negotiation Skills and Techniques for Engineers.
Construction and Support Field: The programs provided developing knowledge and skills. There were six courses: Professional Accountant, Accountant Seminars, Store Supervisor Seminars, Accountant Trainee, Professional Store Negotiation and Basic Store Job Skills.
Construction for Job-Specialists and Operational Level Field: The programs provided developing knowledge and skills. There were thirteen courses: Cost Saving Awareness for Officers, Anti-Corruption and Corporate Governance for Executives, Anti-Corruption and Honesty Awareness for Supervisors, Honesty, Honesty Awareness, Recruitment and Selection Technique, Microsoft Office 2013, Systematic Thinking, Supervisory Skills, Corporate Social Responsibility (Engagement), Effective Coordination and Orientation for new employees.
Culture Building and Honesty Awareness, Awareness Building and Integrity Development, and Behavioral Integrity Development are three significant courses which are guided by the Company’s anti-corruption policy. The courses are aimed to encourage employee’s ethical behavior in compliance with the Corporate Governance, according to the regulations of the Securities and Exchange Commission.
In addition to the Head Office Training Division, the project sites provide In-house training. The Company has a safety training program for laborers, to motivate safe working practices on site and to develop skills.
Annual Report 2013 33 Corporate Governance
Recognition of the importance of good corporate governance is essential in creating value-added efficiency of the organization which affects stakeholder’s confidence. Pursuant to the meeting of the Board of Directors, the Board of Directors has approved and officially announced “ITD Corporate Governance Handbook” which contains philosophies, policies and the code of conduct for corporate governance of the Company. It provides guidelines and a progress report for corporate governance practices which lead to evaluation and improvement procedures.
The Policy of the Corporate Governance must be reviewed every year. In 2013, the Board of Directors reviewed the Policy and suggested to add more risk management and anti-corruption policies which was exhibited on the company website (http://www.itd.co.th/files/CG56-thai.pdf).
Policy of Corporate Governance
The Company has realized the importance of good corporate governance. We therefore implemented their policy as follows:-
The Rights of the Shareholders 1. The Company shall respect the right of shareholders according to the law. 2. The remuneration of the Directors shall be proposedat the shareholder’s meeting for consideration. 3. When electing Directors, the Company shall propose the candidate for the consideration and vote bythe shareholders. 4. The Company shall give in advance the shareholders an opportunity to propose the agenda for the Annual General Meeting of Shareholders. 5. The Company shall recognize the importance of the shareholder’s meeting invitation notice and the minutes of that meeting. 6. The Board of Director and the President must participate in the shareholder’s meeting, except in the case of force majeure preventing attendance.
The Treatment to the Shareholders with Equality 1. Each shareholder has as many votes as he/she owns shares. 2. The Company shall establish an effective inside information control system. 3. The Related Transactions of the Company shall comply with the rules and regulations of the Stock Exchange of Thailand and the Securities and Exchange Commission. 4. A proxy form shall be send together with the shareholder’s meeting invitation notice and care taken to ensure that the shareholders have sufficient and complete information to understand the proxy method and meeting procedure for maintain their rights 5. The Company shall announce in advance the shareholder’s meeting invitation notice, with important details, on the Company’s website.
The Rights of the Stakeholders 1. The Company shall set up clearly the policy relating to the welfare, safety, benefit and training of the employeesthrough project site orientation or seminars. 2. The Company shall implement a policyregarding the treatment of stakeholders and its corporate social responsibility. 3. The Company shall provide a communication channel for all stakeholders to enable the exchange of information, opinions, and advicethrough direct mail to the Independent Director of the Corporate Service Department.
Information Disclosure and Transparency 1. The shareholding structure of the Company shall be transparently disclosed. 2. The information disclosed in the Annual Report must correct and clear. 3. The Related Party Transaction and the Management’s trading of the Company’s stock shall comply with the rules and regulations of the Stock Exchange of Thailand and the Securities and Exchange Commission. 4. The Company shall appoint the independent auditors who are qualified by the Securities and Exchange Commission. 5. The Company shall provide several communication channels to the investor such as the Annual Report, website, analyst meetings and press releases.
The Responsibilities of the Directors
1. Director
The Director and Independent Director may take office as a director in not more than five other listed companies
34 Italian-thai Development Public Company Limited 2. Sub-committees
To appoint various sub-committees to study in detail and filter of the work according to its necessities and suitability, as follows: - Board of Management - Audit Committee - Risk Management Committee
To implement limits and responsibilities of sub-committees and report the results of the Sub-Committees at every Board of Directors’ meeting.
3. Balance of Power of Non-Executive Directors
The structure of the Company Directors consists of Directors appointed by the shareholders, Independent directors and Executive Directors. A balance of power of the Directors is achieved by assigning an Independent Director, which accounts for 1 in 3 of the total number of Directors on the Board, to get involved with the Sub-committees. The appointment of Directors will be made during shareholder’s meetings.
4. Aggregation and Segregation of Positions
The titles and authority of the Board’s chairman and head of management team shall be clearly separated.
5. Board of Directors’ Meetings
To maintain regular Board of Directors’ meetings, they shall be held at least once every quarter, in order to follow and monitor the results of the Company’s business operations and other related issues. All Directors should attend all Board of Directors’ meetings, or inform the Secretary of the Company in writing in case of inability to attend a meeting. Each Director’s attendance record is disclosed in the Company’s Annual Report.
The number of Directors’ attendance shall constitute the quorum for every meeting of the Board of Directors, being not less than two-thirds of the total number of Directors at that time.
6. Leadership and vision
There is a clear separation of duties and responsibilities between the Board of Directors and the Board of Management so as to demonstrate their leadership and vision in decision making for the utmost benefit of the Company and shareholders.
7. Conflicts of interest
The Directors, the Management and the shareholders shall solve problems of conflict of interests carefully, honestly, reasonably and independently within the code of ethics and fully disclose information for the benefit of the Company.
8. The Board’s Remuneration
Remuneration of the Directors shall be disclosed. Remuneration to other sub-committees e.g. Audit Committee shall be increased according to the resolution of the Annual General Meeting of Shareholders.
9. The Self-Assessment of the Directors
The Board of Directors shall conduct an annual self-assessment of the effectiveness of their performances.
10. Continuous Knowledge Development
The Company promotes training of staff at all levels in various coursesto develop its personnel to be knowledgeable and up to date with current developments, for example SET, CSR Club, IOD and so on.
11. The Secretary of the Company
The Company shall appoint a person to be the secretary of the Company who shall be responsible to advise the Directorson laws and regulations, support the Director’s activities, and coordinate with other entities to comply with the resolutions of the Board of Directors’ meeting.
Annual Report 2013 35 Sub-Committees
The executive structure of the Company is made up of boards; namely the Board of Directors, the Audit Committee, the Board of Management, and the Risk Management Committee. The Authority and Responsibility of each Board is as follows:
a) Board of Directors
As at 31st December 2013, the Board of Directors consists of nine directors as listed below:
Name-Surname Position 1. Pol.Lt. Chatrachai Bunya-Ananta Chairman and Independent Director 2. Mr. Premchai Karnasuta Director 3. Mrs. Nijaporn Charanachitta Director 4. Dr. Krisorn Jittorntrum Independent Director 5. Mr. Pathai Chakornbundit Director 6. Mr. Yuthachai Charanachitta Director 7. Mr. Tawatchai Suthiprapha Director 8. Mr. William Lee Zentgraf Independent Director 9. Mr. Peeti Karnasuta Director
Authority and Responsibility 1. To set the Company’s vision, mission, strategy, policy and conductthe Company’s business execution in an efficient and effective manner for preserving the Company’s interest. 2. The Board of Directors has the overall authority and responsibility to direct, manage and supervise the operations of the Company, all in accordance with the Law, the Company objectives, the regulations of the Company and the resolutions of the Shareholders of the Company. 3. To monitor the operations of the Board of Managementin compliance with the Company’s policies and regulations. 4. To appointthe Executive Directors, the Audit Committees, the Risk Management Committee and other suitable committees to take charge of Company business and management system for the maximum benefit according to the Company policy. 5. Pursuant to the Company’s regulations, the Board of Directors has the authority to decide upon and oversee the operations of the Company, except for the following assignments that shall only be executed with the consent of a meeting of the Shareholders of the Company: 5.1 Matters the Law shall only be performed upon the resolution of the Shareholders of the Company; 5.2 Certain business matters as stipulated by the Stock Exchange of Thailand; and 5.3 Buying or selling of assets having a value equal to or greater than fifty percent (50%) of the total value of the assets of the Company, as stipulated by the Stock Exchange of Thailand.
b) Board of Management
As at 31st December 2013, the Board of Management consists of eleven persons as listed below:
Name - Surname Position 1. Mr. Premchai Karnasuta Director and President 2. Mrs. Nijaporn Charanachitta Director and Senior Executive Vice President 3. Mr. Pathai Chakornbundit Director and Senior Executive Vice President 4. Mr. Tawatchai Suthiprapha Director and Senior Executive Vice President 5. Mr. Anan Amarapala Executive Vice President 6. Mr. Taweesilp Pattanakitchamroon Executive Vice President 7. Mr. Chatichai Chutima Executive Vice President 8. Mr. Virat Kongmaneerat Executive Vice President 9. Mr. Sumate Surabotsopon Executive Vice President 10. Mr. Piyachai Karnasuta Executive Vice President 11. Mr. Sompop Pinijchai Vice President
36 Italian-thai Development Public Company Limited Authority and Responsibility 1. Determine ultimate goals and operational direction of the Company to accord with the current and forecasted economic and market conditions. 2. Determine policies and procedures for the operation of the Company. 3. Determine the policy, consider and decide on the selection of relevant projects in which the Company should participate, tender and execute. 4. Consider and approve the appointment, transfer and discharge of staff at division head level and above. 5. Consider and approve the adjustment of salaries, wages and remuneration, including consideration and recognition of employee meritorious service. 6. Appoint a person or persons to act on behalf of the Board of Management for any assignment. 7. Consider and approve expenses on buying assets and other expenses of the Company. 8. Review, consider and comment on all matters related to Company operations. 9. Review, consider and comment on all matters involving the performance of the Company’s various operating segments, and direct and control their management to ensure efficient, economical and well-timed operations, including compliance with all contractual obligations to clients 10. Undertake all Company affairs not delegated to other Company segments 11. Undertake all other matters as directed by the Board of Directors. c) Audit Committee
As at 31st December 2013, the Audit Committee consists of three persons as listed below (This position carries a 3 year term from 2011 – 2014.):
Name - Surname Position 1. Pol.Lt. Chatrachai Bunya-Ananta* Audit Committee Chairman 2. Dr. Krisorn Jittorntrum Audit Committee 3. Mr. William Lee Zentgraf Audit Committee
Mr. Withit Ouaysinprasert; Manager of Internal Auditor, is the Secretary of the Audit Committee. Remarks: * He has adequate expertise and experience to review the creditability of the financial reports.
Authority and Responsibility 1. To review the Company’s financial reporting process to ensure that it is accurate and adequate. 2. To review the Company’s internal control system and internal audit system to ensure that they are suitable and efficient, to determine an internal audit unit’s independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit. 3. To review the Company’s compliance with the law on securities and exchange, the Stock Exchange of Thailand’s regulations, and the laws relating to the Company’s business. 4. To consider, select and nominate an independent person to be the Company’s auditor, and to propose such person’s remuneration, as well as to attend a non-management meeting with the auditor at least once a year. 5. To review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure that they are in compliance with the laws and the Stock Exchange of Thailand’s regulations, and are reasonable and for the highest benefit of the Company. 6. To review the efficiency and sufficiency of the risk management and discuss with the Internal Audit Division and the Independent Auditor. 7. To prepare, and to disclose in the Company’s annual report, the Audit Committee’s report which must be signed by the Audit Committee’s chairman and consist of at least the following information: 7.1 An opinion on the accuracy, completeness and creditability of the Company’s financial report, 7.2 An opinion on the adequacy of the Company’s internal control system, 7.3 An opinion on the compliance with the law on securities and the Stock Exchange of Thailand, the Exchange’s regulations, and the laws relating to the Company’s business, 7.4 An opinion on the appropriateness of the Independent Auditor, 7.5 An opinion on the transactions that may lead to conflicts of interests,
Annual Report 2013 37 7.6 The number of the Audit Committee meetings, and the attendance of such meetings by each committee member, 7.7 An opinion or overview comment received from the Audit Committee on its performance of duties in accordance with the charter, and 7.8 Other transactions which, according to the Audit Committee’s opinion, should be known to the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Company’s Board of Directors. 8. To perform any other act as assigned by the Company’s Board of Directors, with the approval of the Audit Committee.
d) Risk Management Committee
As at 31st December 2013, the Risk Management Committee consists of eight persons as listed below (This position carries a 3 year term from 2013 – 2016.):
Name - Surname Position 1. Dr. Krisorn Jittorntrum Chairman of the Risk Management Committee 2. Mr. Pathai Chakornbundit Vice Chairman of the Risk Management 3. Mr. Chatichai Chutima Risk Management Committee 4. Mr. Sompop Pinijchai Risk Management Committee 5. Mr. Yuthachai Charanachitta Risk Management Committee 6. Ms. Penpan Riengthonglang Risk Management Committee 7. Mr. Peeti Karnasuta Risk Management Committee 8. Mr. Woravudh Hiranyapaisarnsakul Risk Management Committee, Secretary of Risk Management Committee
Authority and Responsibility 1. Review the Company’s risk management policy and framework, which would cover all the major risks (Key Risks); namely financial risk, investment risk, operational risk and corporate reputation risk, before proposing them to the Board of Directors for approval. 2. Formulate risk management strategies and framework in compliance with the Company’s risk management policy. The Committee shall assess, monitor and control risk at the appropriate level. 3. Monitor and ensure that risk management activities are in line with the Company’s policy and framework approved by the Board of Directors’ meeting. 4. Set risk measurement criteria and limit at the acceptable level. 5. Set appropriate risk management measures for different situations. 6. Review the sufficiency and effectiveness of risk management policy and system. 7. Report regularly to the Board of Directors about the management, operation, risk status, changes and areas of improvement to keep risk management in line with the Company’s policy and strategy. 8. Appoint a risk management working group if necessary and support the risk managing working group in terms of personnel, budget and other necessary resources under the scope of responsibilities of the working group.
Selection and Nominationof Directors and Chief Executives (1) Independent Directors
Rules and Regulations in selection of Independent Directors
Independent Director’s Qualification
The resolution of the Board of Director’s meeting No. 9/3/2009 approved to modify the definition of the Independent Director to comply with the regulations of the SEC as follows; 1. Holding shares not exceeding one (1) percent of the total shares with voting rights of the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company (to be calculated by including the shares held by any related person of such Independent Director); 2. Never been or not being a director engaging in management, employee, staff, advisor, who receives salary, or Controlling Person of the Company, its Parent Company, its Subsidiary, its Affiliate and entities equivalent to its Subsidiary, Major Shareholder or unless the possession of such characteristic hasbeen discontinued for a period of not less than two years; controlling person of the Company, unless the holding of the aforementioned positions has been discontinued for at least two years. However, such prohibition
38 Italian-thai Development Public Company Limited shall not apply in the case where such independent director has been a government official or consultant of the government sector which is a major shareholder or controlling person of the applicant. The requirement of two-year discontinuity for possession of the said characteristics shall take effect from the Annual General Meeting of the year 2011 onwards; 3. Not being a person related by blood or registration under laws, as father, mother, spouse, sibling, and child, including spouse of a child, of its Executive, its Major Shareholder, its Controlling Person, or the person who will be nominated to take up the position of Executive or Controlling Person of the Company or its Subsidiary; 4. Not having, or not having had, any business relationship with the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company in a manner which may obstruct its independent judgment, and not being or not having been a substantial shareholder or Controlling Person of a person who has a business relationship with the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company, unless such business relationship has been discontinued for at least two years prior to being appointed as the independent director. The requirement of two-year discontinuity for possession of the said characteristics shall take effect from the Annual General Meeting of the year 2011 onwards; The aforementioned business relationship shall include the entering into of commercial transactions in the manner of normal business operation, transactions regarding rental or lease of real estate, transactions relating to assets or service, provide or receipt of financial assistance whether by receiving or providing a loan, guarantee, providing assets as collateral, as well as other similar matters which give rise to the Company or the parties having an obligation in an amount from three (3)% of the net tangible assets of the Company or from Baht twenty (20) million, whichever is lower. The calculation of obligations shall be in compliance with the method of calculation of connected transaction as stipulated in the Notification of SEC Re: Connect Transaction. In this regard, the calculation of obligations shall be assessed by including aggregate obligations during one year before the date of having any business relationship with the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company; 5. Not being, or not having been, an auditor of the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company, and not being a substantial shareholder, Controlling Person or Partner of an audit company for which the auditor of the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company has worked therein, unless the holding of the aforementioned positions has been discontinued for at least two years prior to being appointed as the independent director. The requirement of two-year discontinuity for possession of the said characteristics shall take effect from the Annual General Meeting of the year 2011 onwards. 6. Not being or not having been a professional service provider, including service provided as legal counsel or financial advisor which is retained for a fee exceeding Baht two (2) million per annum from the Company, its Parent Company, its Subsidiary, its Affiliate, Major Shareholder or Controlling Person of the Company, and not being a substantial shareholder, Controlling Person or Partner of such professional service provider, unless such holding of the aforementioned positions has been discontinued for at least two years prior to being appointed as the independent director. The requirement of two-year discontinuity for possession of the said characteristics shall take effect from the Annual General Meeting of the year 2011 onwards. 7. Not being a Director nominated to be a representative of a Director of the Company, Major Shareholder or shareholder who are related persons to the Major Shareholder; 8. Not undertaking business of the same nature as and materially competing with that of the business of the Company or its Subsidiary or not being a Partner of the partnership or a Director who participates in the management, an employee, a staff member, or advisor who receives a regular salary or holds shares exceeding one (1)% of the total shares with voting right of other companies which undertakes business of the same nature as and materially compete with that of the business of the Company or its Subsidiary; and 9. Having no other qualifications causing any inability to express independent judgment in respect of the Company’s business operation.
Nomination Process
The Board of Directors will consult together to form the Independent Director’s qualifications and to select the person who would be useful to be a Company Independent Director from his/her experience, ability and education and not a person whose character would prohibit him/her from being approved at a Shareholder’s Meeting.
Annual Report 2013 39 (2) Selection of Directorsand Chief Executive
The Company has set up a transparent procedure to select Directors, although it does not have a Nominating Committee. The incumbent Board of Directors performs the initial selection and evaluation of candidates for vacated or newly created positions on the Board of Directors. The Board of Directors jointly scrutinizes the qualifications of all appropriate candidates in compliance with Section 68 of the Public Company Limited Act, B.E. 2535 by consideration of the profile, experience, expertise in different careers and performance in the role of directorship in the past. The candidate’squalification shall also be subject to the prohibitions set out by the Announcement of the Securities and Exchange Commission No. GorJor 5/2548, which gives the requirements relating to the qualifications of executives of a company that issues securities.
The Company announced on December 17, 2013 to February 1, 2013 that a person who was nominated by the Shareholders as a candidate to be appointed a Director would be considered for election at the Ordinary General Meeting of Shareholders 2012. For Shareholders to be eligible to nominate a person as a Director they shall, individually or as a group, hold not less than five percent of the total number of ITD’s ordinary shares.
The incumbent Board of Directors’ approved candidates for any vacant or new directorship shall then be nominated to the shareholders at the Shareholders’ Meeting, for approval by a majority of votes of the Shareholders attending the said meeting and eligible to vote.
Corporate Governance of Subsidiaries and Associated Companies
The Board of Directors has established policies for subsidiaries and associated companies’ good corporate governance with regard to management practices which is responsible, controllable, and detectable for all stages. Especially, it must preserve the maximum benefit of the subsidiaries and associated companies, thus a qualified person shall be appointed to be a representative of the Company as a Director/an Executive or an authority depending on the nature of business and the approval from the Board of Directors’ meeting.
The Directors, the Management or the authority, as a representative of the Company and Management Division, shall jointly establish significant policies to monitor the operation of subsidiaries and associated companied taking into account the nature of business, and also prescribe regulations in disclosure of financial status, operation result, transaction between subsidiaries/associated companies and concerned person, acquisition and distribution of asset including other significant transactions that must be in compliance of the rule of the Securities and Exchange Commission. In addition, all data and information of subsidiaries and associated companies must be stored and recorded so the Company could determine and collect data for the consolidated financial statements on time.
The subsidiaries and associated companies shall jointly evaluate the Internal Control System to see whether it is appropriate and concise, by reporting to the Board of Audit Committees’ meeting and the Board of Directors’ meeting.
Internal Information Control
The Board of Directors has implemented measures to control the use of internal information according to good corporate governance, which are posted on the Company’s website and shall be given to the Directors, the Executives, and all employees on the first day of working. The policy summary, such as restricting confidential knowledge only to the highest possible levels, and informing the employees only as necessary, at the same time clarifying that the information is confidential. The employee who violates or does not follow the rules shall be disciplined, beginning with a written warning, cutting wages, cutting benefits, temporary suspension without pay or removal from office. However, the punishment shall be varied depending on the seriousness of the breach of confidentiality.
Furthermore, the Directors and the Management have the duty to submit the above-mentioned report to the Securities and Exchange Commission.
Nevertheless, the Company disclosed securitiesholdings of the committees and the Management and the change in the number of shares during the fiscal year is given in every annual report.
Regarding the transaction which may cause the conflict of interest, the Company strictly complies with the regulations of the Stock Exchange of Thailand, Securities and Exchange Commission, and the Capital Market Supervisory Board, and disclose the mentioned report in the annual report.
40 Italian-thai Development Public Company Limited Auditor’s Remuneration
For auditor’s remuneration,the financial year ended on December 31, 2013
1. Audit Fee The Company or its subsidiaries paid an annual audit fee to: - The external auditor, amounting to Baht 12,213,000 Baht - The audit firm of the auditor, connected person/enterprise of the auditor and his/her firm the amount of nil Baht.
2. Non-Audit Fee In 2013, the Company paid a non-audit fee for other services to 1. To audit a specific item 2. As a Consultant for theimplementation plan for specific item to - The external auditor, amounting to - Baht, and must pay in the future for incomplete service the amount of nil Baht - The audit firm of the auditor, connected person/enterprise of the auditor and his/her firm the amount of 912,988 Baht and must pay in the future for incomplete service the amount of nil Baht.
Corporate Governance Practice
The corporate governance principles are considered a key element to the success of the Company’s business. The Board of Directors has monitored the effectiveness of the Company’s corporate governance practices and has approved any necessary changes, as required, according to the changes in business, economic and social conditions. The policies related to corporate governance have been disclosed in the Company’s website in the section “Corporate Governance”.
In 2013, the Company has conducted its activities according to the Corporate Governance Principles for the Listed Company which are: 1) Rights of Shareholders 2) Equitable Treatment of Shareholders 3) Role of Stakeholders 4) Disclosure and Transparency 5) Board Responsibilities
1) Rights of Shareholders
The Company recognizes the shareholders have the right to control the operation of the Company through the appointment of the Board of Directors. They also have the right to make the decisions regarding the significant changes of the Company in the Meeting of the Shareholders, for example the dividend payment, the remuneration of the Directors, sub-committees, and share repurchase.
The Company has organized fair and proper Shareholders Meetings which facilitated equitable rights among shareholders and arranged the various steps for the meetings, calling for the meeting, dispatching documents, notifying of the meeting agenda, and the minutes of the shareholders’ meeting, according to legal requirements.
1.1 Itinerary for Shareholders’ 2013Meeting
The Company held the Ordinary Meeting of Shareholders for the year 2013 on 30 April 2013 at 14.00, using a venue at the Head Office in Italthai Tower, New Petchburi Road.
1.2 The 2013 Meeting Announcement
The Company started to prepare the meeting agendas and invitation notice with details of the agenda together with supporting documents from early April 2013.
All the meeting agendas, invitation notices, details of the agenda, proxy guidelines, and the meeting procedures and guidelines were approved by the President and the Board of Directors in order to ensure that the shareholders had sufficient and complete information for decisions in voting and also to understand the proxy method and meeting procedure to maintain their rights.
The Company delivered the meeting invitation notice with details of the agenda together with supporting documents fourteen days in advance and announced the meeting on the Company’s website. The Company also announced the meeting in the newspapers three days in advance. The shareholders therefore had reasonable time to thoroughly study such documents. Additionally, the shareholders could make enquiries about the meeting agenda before the meeting to Corporate Services Department on telephone +66 (0) 2716-1600 extension 3800-4, or www.itd.co.th or by e-mail at [email protected].
Annual Report 2013 41 1.3 The Procedure of the 2013 Meeting
The shareholders could register to participate in the meeting and check the accuracy of necessary documents two hours before the meeting commencement. The proxies representing a shareholder could send proxy documents to the Company for checking their accuracy via facsimile any day before the meeting day.
At the beginning of the meeting, the Chairman of the Meeting advised the shareholders of the method of vote casting (one share for one vote), the right to make enquiries and how to express their opinions in each agenda. Pol. Lt. Chatrachai Bunya-Ananta (Chairman of the Board of Directors), Mr. Premchai Karnasuta, Mrs. Nijaporn Charanachitta, Mr. Pathai Chakornbundit, Dr. Krisorn Jittorntrum, Mr. Tawatchai Suthiprapha, the Vice President of Finance Division (Mr. Chartchai Chutima), the Company Secretary (Mr. Woravudh Hiranyapaisarnsakul), the legal advisor and the independent auditor joined the meeting. However, Mr. William Lee Zentgraf and Mr. Yutachai Charanachitta were absent the Meeting.
The meeting proceeded in the presence of 708 shareholders and or their proxies holding 1,843,914,151 shares (representing 43.97% of total shares). After the meeting commenced, there were additional shareholders that registered to attend this meeting. Therefore, the total number of the shareholders attended the meeting were 1,007 persons by holding 1,933,048,682 shares (representing 46.09% of total shares) including:
Shareholders who were present in person 510 persons by holding 1,410,013,228 shares, equivalent to 33.62% of total shares.
Proxies representing a shareholder 497 persons by holding 523,035,454 shares, equivalent to 12.47% of total shares.
All proposed agenda items were considered according to the meeting invitation notice without change or amendment and were approved by the shareholdersin about three hours. The Company also properly recorded the vote counting, questions, and comments from shareholders in the meeting to ensure transparency. The shareholders also had equal opportunity and reasonable time to make enquiries and to express their opinions. The Directors, the Audit Committee and the Management also had suitable time to answer questions and explain important details.
For the agendas in the Shareholders’ Meeting for which the shareholders had any objections, the Company used the vote casting card to ensure the transparency and accountability. In the agenda to appoint the Directors, the shareholders had an opportunity to vote pursuant to their intention for the whole set of Directors.
1.4 Resolution of the 2013 Meeting Disclosure
After the meeting was adjourned, the Company prepared the minutes of the shareholders’ meeting with clarity and then submitted it to the Stock Exchange of Thailand on the shareholders’ meeting day or the next business day before 9.00 a.m. Also, the Company published the minutes on the Company’s website within fourteen days after the date of the meeting as an option for shareholders who were unable to attend the actual meeting to know meeting approvals.
2) Equitable Treatment of Shareholders
The Company recognizes the importance of proper conduct to ensure equality of treatment for all type of shareholders, majority shareholders, minority shareholders and foreign investors.
2.1 An Opportunity to Propose the Agenda and to Nominate Persons to be Appointed as Directors at the Annual General Meeting of Shareholders
In 2013, the Company gave the shareholders an opportunity to propose the agenda or enquiry and to nominate persons to be appointed as Directors at the Annual General Meeting of Shareholders in advance via mail, E-mail: [email protected], and the Company’s Website. The shareholders who are eligible to do so must hold shares not less than five (5)% of the Company’s ordinary shares.
Independent Directors will consider the shareholders’ proposals and further pass them to the Board of Directors for their consensus. If the Board agrees that any issues are significant or beneficial to the Company or the shareholders, the Board will put the said issues in the meeting agenda remarked as “Agenda from shareholders” in the notice to shareholders or clarify them at the Shareholders’ Meeting.In addition, to facilitate the shareholders’ proposals vetting process, the shareholders are requested to provide necessary details as follows:
42 Italian-thai Development Public Company Limited Name, address and telephone number of proposing shareholder for the Company to acquire any further information as well as evidence indicating status of consecutive holding of shares such as share certificate or official declaration from broker.
Purpose and proposal in detail including other useful information for the Board’s consideration such as relevant facts and data, reason, concerned issues and expected benefit for the Company.
In case of nomination of persons to be appointed as Directors at the Annual General Meeting of Shareholders, the shareholders are requested to attach curriculum vitae, working experience and contact address in support of the Audit Committee to consider and further pass the matter to the Board of Directors for final decision.
For the Annual General Meeting of Shareholders 2013, the Company announced the procedure and invitation to propose the agenda and to nominate persons to be appointed as Directors at the Annual General Meeting of Shareholders in the website and to the Stock Exchange of Thailand during December 19, 2012 to February 1, 2013. However, there were no proposals from the shareholders.
2.2 Facilitating the Shareholders to Participate the Annual General Meeting of Shareholders
For the Annual General Meeting of Shareholders 2013, there were sufficient officers to service the shareholders. The shareholders could register to participate in the meeting and check the accuracy of necessary documents two hours before the meeting commencement. The Company used the computer system to process the recorded votes and instantly show the results of each agenda. After the finish of the Meeting, the shareholders could request to check details of the voting results.
2.3 The Proxy Form
The proxy form gives the opportunity for the shareholders not attending the Meeting to cast their vote at the Shareholders’ Meeting according to their decisions. The Board of Directors assigns not less than one Independent Director to be the proxy. The Company announced the proxy form and guidelines the Company’s website thirty days in advance.
2.4 Measures to Prevent the Internal Abuse of Confidential or Privileged Information and the Conflict of Interest
The Company has implemented measures to prevent the internal abuse of confidential or privileged information by limiting its distribution to top executives and Company officers on a “need to know” basis until it is released publicly. Employees are also advised of the confidential nature of the information and the restrictions applying to its use, including a prohibition on the purchase or sale of Company securities on the basis of such confidential information. Staff who failed to practice according to these rules would be penalized under the Company’s rules and regulations. Furthermore, the Directors and senior executives have the duty to report their holdings and each transaction of purchase, sale or transfer of their security holdings in the Company to the Securities Exchange Commission and the Board of Director’s meeting. Such requirement is considered an important measure to effectively help control the use of inside information.
The Company disclosed the Director’s and the management’s securities holding and the change in the number of shares during the financial year in every Annual Report.
The connected transactions complied with rules and regulations of the Stock Exchange of Thailand and the Securities Exchange Commission and those transactions are revealed in the Annual Report every year.
2.5 The Minority Shareholders Treatment
The Independent Directors have an important role to take care the rights of minority shareholders. The minority shareholders are able to deliver their advice, opinions or complaints to the Independent Directors via email [email protected] for them to consider and to take proper action.
Incidentally, prior to the Annual General Meeting of Shareholders, the minority shareholders are able to propose the Meeting agenda and nominate a person to be a Director according to the rules notified on the Company’s website.
3) Role of Stakeholders
The Board of Directors recognizes the rights of all stakeholders; such as shareholders, employees, customers, partners, business competitors and the general public, and they also pay attention to the communication with all stakeholders in order to exchange information, opinions and advice for the sustainable sharing of benefits. The Board of Director has implemented the policy for dealing with the stakeholders, which is disclosed in the Company’s website including; the Policy on Stakeholders Treatment, (However, the
Annual Report 2013 43 agenda related to the stakeholders shall be excluded from the meeting agenda.) the Policy on Occupational Safety, Health, and Working Environment and the Policy on Corporate Social Responsibility.
This year, the Securities and Exchange Commission (SEC) shall amend the Notice of Corruption Disclosure to encourage listed Companies to reveal the information of the anti-corruption scheme, and a person who is in charge of corporate governance practices.
The Company has recognized this matter as of prime importance; therefore, in 2013 the Directors, the Company Secretary and the Internal Audit Division jointly implemented the policy of anti-corruption scheme in “Corporate Governance Italian-Thai 2013” posted on the Company’s website for the acknowledgement of the employees and public.
Incidentally, the Company has the procedure to assess the risk of corruption in working, conducted by the Internal Audit Divisionby gathering information to present to the Audit Committee for evaluating risk of fraud, leading toanti-corruption monitoring and supervision guidelines, and then to be followed up the implementation according to the anti-corruption policy.
In October 2013, the Company organized threetraining courses as follows: 1. Behavioral Integrity Development; 2. Awareness Building and Integrity Development; 3. Integrity Awareness Building and Development. The courses aim to provide educationof the anti-corruption policy and practice in order to prevent and reduce the risk of corruption that may occur, and to reduce the Company’s losses to a minimum.
The Code of Ethical Conduct has the compliance rules for executives and employees toward the shareholders, clients, partners and/or creditors, competitors and the public. The Management has continuously monitored and controlled their actions according to these policies.
The Company has provided notification channels for treating the stakeholders fairly and equally according to the corporate governance, and when any misconduct, fraudulent act or corruption is found by the stakeholders, they may report directly to Independent Directors through Corporate Service Division, telephone +66 (0) 2716-1600 extension 3800-4, or via email at [email protected] .
All information received by the Company shall be kept strictly confidential, safe and secure in order to protect against the potential negative impact of any disclosure. Any such occurrence shall be investigated by the Company Secretary and the Internal Audit Division which shall authorize further action.
Shareholders: The Company has strived to achieve growth for long term benefits. The Company has also disclosed complete, true and timely information.
Employees: The Company has realized the importance of staff as the main mechanism to promote continuous growth. The Company has rewarded staff and improved their welfare and security for long term value creation, for example, by the establishment of a pension fund, providing a healthcare service (including a medical room and a doctor on active service at Head Office), supporting the scholarships for employee’s children who show a good study performance, offering urgent loans, and improving the environment of their workplace, implementing the 5S project to improve the workplace organization and standardization for productivity and safety. All levels of staff participated this project.
The Company has treated its employees strictly according to labor legislation, and no labor lawsuits have occurred in recent years.
Since the employee’s skills are very important to the Company’s performance, in the year 2013, the Company provided 27 courses, under the Employee Skill Development, to develop staff skills for fields of competency
Customers: The Company has provided a good quality and a high standard of construction services. The customers were provided with sufficient information and effective procedures to deal with customer complaints for a timely response to correct all complaints.
Partners and Creditors: The Company has standard procedures for partner screening and selection through three qualities; reliability, responsibility, and on time working. Besides, the Company has treated the partners and creditors according to the conditions of the agreements.
Business Competitors: The Company always competes in government and private sector bidding with honesty, knowledge, and transparency. There were no disputes with competitors during the year 2013.
44 Italian-thai Development Public Company Limited Society: As the Company is the construction business for which occupational health, safety and environmental management is very significant, the Company has established measures to prevent society and the environment from negative construction impact, for example wastewater treatment, odor control, oil spill and contamination control, vibration control, dust control, waste segregation campaign, energy saving and so on. However, in case the Company receives any complaints from the community, the Company shall immediately send staff to investigate and carry out further necessary action.
Corporate Social Responsibility report is on topic 10 for further consideration
4) Disclosure and Transparency of the Company
The Board of Directors is deeply concerned to disclose sufficient, complete, reliable and timely information covering the Company’s financial, important and general information, which reflects the asset value and performance of the Company, via the Stock Exchange of Thailand and the Company’s website, especially in the section “Investor Relations”. On October 11, 2013, the Company conducted an Analyst Meeting at the meeting room on floor 37 at ITD Head Office to announce correct Company information and answer the questions of all participating analysts on the project progression and investment plans.
Furthermore, the Company has disclosed in the Annual Report important information of Company such as the report of good corporate governance practices, the report from the Board of Directors, role and responsibilities of the Board of Directors and sub-committee, the Directors’ Meetings attendance, the remuneration of the Directors and the Management, the structure of the shareholders, the nature and the risk of business, etc.
The investors, shareholders, analysts and the public that require further information can contact the Corporate Services representatives on telephone +66 (0) 2716-1600 extension 3800-4, or www.itd.co.th or by e-mail at [email protected].
5) Board Responsibilities
5.1 Structure of the Board of Directors
In 2013 the Board of Directors consisted of nine members who were knowledgeable and with diverse experiences which were of benefit to the Company. The Director positions were: - Executive Directors 4 Directors (45%) - Non-Executive Director 2 Directors (22%) - Independent Director 3 Directors (33%)
Each Director was able to express his/her opinions independently regarding the operation of the Company and its annual strategic plan, without intervention, for the benefit of all shareholders and other stakeholders. The Directors may take office as a director in not more than five other listed companies according to the Company’s policy
In addition, the structure of the Board consisted of three Independent Directors which accounted for a third of the total number of Directors on the Board and they were appointed as the Audit Committee. The Chairman of the Audit Committee was also appointed as the Chairman of the Board of Directors, thereby providing balance of power and proper verification of the operations.
The structure and the definition of the Independent Directors of the Company complied with the rules and regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand.***
Furthermore, the Chairman of the Board of Directors is an Independent Director who is not the same person as the President (Managing Director) and responsiblefor checking and balancing the Management of the Company. The authorities of the Chairman and the President are clearly defined as follows:
The Chairman: Taking the role as the leader of the Board of Directors and the Chairman the Directors’ Meetings and Shareholders’ Meetings.
The President: Taking the role as the leader of the Board of Management and being authorized by The Board of Directors to direct and control the management staff for achieving the Company’s goals.
According to the Board of Director’s meeting on 18th December 2013, the Company has set the vision, mission, motto, and business operation strategy which will be reviewed every five years.
Annual Report 2013 45 5.2 The Subcommittees
Audit Committee
The Board of Directors appointed the Audit Committee as the subcommittee to assist with the corporate governance practice and the effectiveness of internal control systems. The Audit Committee comprises of three members, they are all Independent Directors. The Manager of the Internal Audit Division is the Secretary of the Audit Committee.
The Audit Committee held four meetings during the year 2013. Agendas were sent to the Committee members to study at least seven days in advance and all members of the Committee attended the meetings, all of which lasted 2 to 3 hours. The resolution of the meeting of the Audit Committee were implemented and monitored. Conclusions regarding the performance of the Audit Committee are reported in this Annual Report.
Risk Management Committee
The resolution of the Board of Director’s Meeting No. 1/9/2010 on 2 September 2010 approved the establishment of the Risk Management Committee. Dr. KrisornJittorntrum, the Independent Director, is the Chairman of the Risk Management Committee. This Committee has the responsibility to review the Company’s risk management policy and framework, which covers all the major risks; namely financial risk, investment risk, operational risk, and corporate reputation risk, before proposing the policy to the Board of Directors for approval. The Committee is also responsible for setting appropriate risk management measures to support the decisions of the Board of Director or the Management, especially the investment activities which may significantly affect the financial status of the Company or the risky investment that the Board of Directors provided to the Risk Management Committee for reviewing. In 2013, the Risk Management Committee has held three meetings to consider, review, and makes recommendations for the investment in six projects and has reported to the Board of Directors.
The Company does not yet have a Remuneration Committee or a Nominating Committee, but the Board of Directors has set up a transparent procedure to determine appropriate levels of remuneration by comparisons with other companies of similar size in the same industries, and partly by the performance of the Company. In any case, the amount of remuneration to be paid to Directors must be finally approved by a meeting of the shareholders.
The Company has set up a transparent procedure to select Directors, although it does not have a Nominating Committee. The incumbent Board of Directors performs the initial selection and evaluation of candidates for vacated or newly created positions on the Board of Directors. The Board of Directors jointly scrutinizes the qualifications of all appropriate candidates in compliance with Section 68 of the Public Company Limited Act, B.E. 2535 by consideration of the profile, experience, expertise in different careers and performance in the role of directorship in the past. The candidate’s qualification shall also be subject to the prohibitions set out by the Announcement of the Securities and Exchange Commission No. GorJor 5/2548, which gives the requirements relating to the qualifications of executives of a company that issues securities.
The nominated director will then receive the ITD Corporate Governance Handbook from the Company’s secretary.
The Company announced on December 17, 2013 to February 1, 2014 that a person who was nominated by the Shareholders as a candidate to be appointed as a Director would be considered for election at the Ordinary General Meeting of Shareholders. For Shareholders to be eligible to nominate a person as a Director they shall, individually or as a group, hold not less than five percent of the total number of the Company’s ordinary shares.
The incumbent Board of Directors’ approved candidates for any vacant or new directorship shall then be nominated to the shareholders at the Shareholders’ Meeting, for approval by a majority of votes of the shareholders attending the said meeting and eligible to vote.
5.3 Policy of Corporate Governance
Recognition of the importance of good corporate governance is essential in creating value-added efficiency of the organization which affects stakeholder’s confidence. Pursuant to the meeting of the Board of Directors, the Board of Directors has approved and officially announced “ITD Corporate Governance Handbook” which contains philosophies, policies and the code of conduct for corporate governance of the Company. It provides guidelines and a progress report for corporate governance practices which lead to evaluation and improvement procedures.
46 Italian-thai Development Public Company Limited Besides, the Policy of the Corporate Governance must be reviewed every year in accordance with the current condition. However, in 2013, the Board of Directors considered two more policies, as follows: 1. Risk Management Policy 2.Anti-Corruption Policy, posted on the Company’s website (www.itd.co.th).
The Directors and the Management are required to report of their gains and losses, and inform to the Company’s secretary for submittingthese details to the Chairman of the Board of Directors. The report shall be kept at Corporate Service Division on 38th Floor, Italthai Tower. In case there are any changes, the Directors and the Management are responsible for the amendment and to inform the Company’s Secretary afterward.
5.4 Code of Ethical Conduct
The Company has announced a code of ethical conduct for the Board of Directors, Management and Staff to perform their duties with honesty and integrity for the Company and every group of stakeholders. The code of conduct is on the Company’s intranet and website.
Furthermore, the Company provides a code of ethical conduct and employees’ rules and regulations to all new staff on their orientation day. The management of the Company must be the model of good practice and also be responsible for proper care of all staff to make sure that these rules and regulations are all strictly observed and practiced.
5.5 Conflict of Interest
The Company has established the policy to manage conflict of interest and has implemented measures to prevent the internal abuse of confidential or privileged information. The said policy and measures have been disclosed on the Company intranet and website.
The Board of Directors knows the rules and requirements relating to conflicts of interest between related business entities. Where such conflicts have arisen they are shown in the table Related Party Transactions and in all cases have been addressed in accordance with the Stock Exchange Regulations, such that prices and conditions of procurement are the same as would apply in normal third party “arm’s length” transactions. The Related Party Transactions Table provides details of the parties concerned, contract value, reason/ necessity for relationship.
5.6 Directors Meetings
The Board of Directors schedules regular meetings every three months. The meeting agendas clearly state the matters for acknowledgement or approval. The Company serves the meeting notices including the agenda and attached documents on each Director at least seven days in advance of the meeting so that they have enough time to review and study them. Normally, each meeting takes about 2 to 3 hours. The chairman allots adequate and appropriate time for discussion on all agenda, which are prioritized in terms of significance.
After the finish of the Meeting, the Minutes of Meeting are prepared by the Company Secretary and are proposed to the next Meeting of the Board of Directors for them to consider. After inspection by the executives and Directors, all such documents are duly signed by the Directors and are classified as confidential documents and kept in the Company Secretary’s office. They are available both in hard copies and soft files for review by any interested persons. There were four Board of Directors’ Meeting held in 2013.
5.7 Self-Assessment of the Directors
In 2013, The Board of Directors conducted the annual self-assessment of the effectiveness of their performances and they suggested that this assessment benefited their work.
5.8 Remuneration of Directors and Management Staff
5.8.1 Remuneration of Directors
The Company has determined the Remuneration of Directors clearly and transparently based on comparable industry levels and for the efficiency required of the supervising Directors. Directors assigned to be the Audit Committee receive additional remuneration for full discharge of their Audit Committee duties. In any case, the amount of remuneration to be paid to Directors must be finally approved by a meeting of the shareholders.
Annual Report 2013 47 5.8.2 Remuneration of the Board of Management
The remuneration of the Board of Management members follows the principles and policy determined by the Board of Directors and depends on the corporate and individual achievement.
5.9 Director Further Development
The Directors of the Company have passed the training programs provided by the in-house training division and the organizations of the government. Furthermore, Pol.Lt. Chatrachai Bunya-Ananta passed the Role of the Chairman Program 32/2013. For the IOD training programs, the Directors of the Company have passed the training programs as follows;
a) Pol.Lt. Chatrachai Bunya-Ananta - Role of the Chairman Program 32/2013
b) Mrs. Nijaporn Charanachitta
- Director Certification Program (DCP)
c) Mr. Pathai Chakornbundit
- Director Certification Program (DCP)
d) Mr. Yutachai Charanachitta
- Director Certification Program Class 34/2003 - Director’s Registration System and Director Manual - Direct Finance the Skill Update Program for Director
e) Mr. Tawatchai Suthiprapha
- Director Accreditation Program (DAP) - Finance for Non Finance Director - Finance Instruments for Directors: FID 2/2012
f) Mr. Chatichai Chutima
- Director Accreditation Program Class 67/2007 - Successful Formulation & Executive of Strategy Class 12/2011
48 Italian-thai Development Public Company Limited Corporate Social Responsibility Report (CSR)
The Company was founded on the 15th August 1958, having a registered capital of Baht 2,000,000 and has grown continuously until currently has a registered capital of more than Baht 5,871.14 million through the dedication of all employees to work effectively according to the Company’s principles “Commitment, Reliability, Quality”. These principles have governed the Company’s corporate social responsibility, for which it has given priority throughout its construction business operations including its investment in diversified businesses. In addition, the Company has consistently studied and developed economic, social and environmental information to prepare for the upcoming investments in the future. The corporate social development aims to build a better quality of life by focusing on employees, customers, community, society, stakeholders and the Management including the agencies in foreign countries, so that they can take part in activities that are beneficial to society, and to follow the regulations related to the consumers as well as place importance to sustainable development of society and country. Corporate Social Responsibility Policy The Company has laid out policies to demonstrate its social responsibility as follows: 1. Good corporate governance The Company’s management system is transparent and verifiable in order to create the confidence of all shareholders, stakeholders and related persons for sustainable growth of business. 2. Fair business operation. The Company believes that its business operation must be fair to instil confidence to the customers which will be profitable to the Company for its long-term operations. Thus the Company shall run its business ethically and legitimately. 3. Respect of human rights and fair treatment of labor Since human resources are the key business factor in productivity and value-adding, the Company strives to achieve an optimal working atmosphere for the employees’ well-being, so that they can bring out their full potential as well as developing working skills for good performances. 4. Consumer responsibility As the construction business is highly competitive at present, the successful completion of each project and customer satisfaction become significant factors to help the Company in maintaining its position in business competition. Thus, the Company shall establish its working standards in compliance with the commitment, and benefit society at the same time. 5. Participation in social development A healthy society with sustainable development is significant in advocating business operations, thus the Company has organized various social activities to strengthen both the community and society, such as education promotion, human resources development, employment promotion, social development projects and so on. 6. Environmental conservation Since the environmental conservation is considered to be important nowadays, the Company is aware of the need to protect the environment by establishing measures and environmental protection plans for its project operations according to the law. This will help the Company to smoothly carry on its construction on time. The Company also joins in holding activities of environmental quality improvement with other agencies. 7. Social and environmental report The Company discloses in the Annual Report information which reflects its corporate social responsibility practices (CSR). The above-mentioned policies can be referred to on the Company’s website under “Corporate Governance”. Corporate Social Responsibility Operation The Company has implemented its business with regard to corporate social responsibility according to the Corporate Governance of the Stock Exchange of Thailand. For the Company’s Corporate Governance policies, please refer to the Company’s website www.itd.co.th as it is disclosed under “Corporate Governance”. Italian-Thai Development Public Company Limited has valued social responsibility along with its core business operations, which is the construction business. Besides, the quality and standard specification of the construction, the Company also realizes the importance of occupational health, safety and environmental management by establishing the measures for the construction sites. Furthermore, the Company provides environmental management to reduce any negative impacts that may occur, for example the quality control of air and noise around the work site and nearby areas, solid waste management and traffic and transportation management.
Annual Report 2013 49 The Relation between the Company and Stakeholders The Company takes into account all stakeholders both inside and Clients Partners outside the Company as follows: Shareholders 1. Shareholders 2. The Management and Employees 3. Clients Creditors Environment 4. Partners and Creditors 5. Trade Competitors The Management Employees 6. Community and Society 7. Environment Community/Society Trade Competitors Corporate Social Responsibility Guidelines The Company conducts the activities with regard to social responsibility principles of the Stock Exchange of Thailand as follows: 1. Operating the business with fairness 2. Anti-corruption 3. Respecting human rights 4. Labor practices 5. Consumer responsibility 6. Environmental conservation 7. Participation in social development 8. Innovation promotion The information disclosed by the Company is as follows: 1. Operating the business with fairness The Company has established measures of anti-collusion and unfair competition, such as bid rigging, production cuts, hoarding, and cronyism including price cutting competition which is a disadvantage for small businesses. Moreover, the Company has set a conflict of interest policy to maintain the maximum benefit of the Company and shareholders alike, covering two matters which are related transactions and any other situations leading to conflict of interest. These policies are included in “Corporate Governance”. 2. Anti-corruption The Company realizes the significance of anti-corruption and previously set the practical way of business ethics for the Directors, the Management and all Employees to follow, as disclosed in “Corporate Governance” under the topic of “Anti-Corruption policy”. Furthermore, the Company has announced the rules and regulations for the acknowledgement and practice of Employees which cover the investigation to uphold justice and to set out the punishment according to its regulations. The Company also provides the Employees with anti-corruption awareness training, which is included in the Awareness Building and Integrity Development course during the year with 49 participants, Behavioral Integrity Development course with 40 participants, and Cultural Building and Awareness Development course with 32 participants. These courses are considered as the beginning of building Employees’ integrity awareness. 3. Respecting Human Rights and Labor Practices The Company pays much attention to the respect of human rights. Since Employees are the Company’s most valuable resource, the Company provides fair social welfare and remuneration, and encourages the Employees’ potential through valuable training courses which will be recorded for the annual performance appraisal. Moreover, the Company also provides a provident fund to support its Employees for the costs of vehicles, allowances, accommodation, as well as the regulation of overtime wage, vacation leave and an annual medical examination. Incidentally, the Company has a policy of disabled Employees employment promotion, and places considerably emphasis on safety and occupational health policy to protect the Employees and outsiders from all accidents and property damage. 4. Consumer responsibility The Company has implemented guidelines to prevent the violation of stakeholders’ rights. This is a part of the Corporate Governance to ensure that all stakeholders will be treated fairly (Rights and Equality of the Shareholders Policy and Stakeholders Treatment Policy) Furthermore, the Company has operation standards for each division, taking into account the safety and the risk that may happen in order to build the reliability of all stakeholders, employees, and public.
50 Italian-thai Development Public Company Limited During operating a construction business, the Company has always undertaken its responsibilities by delivering a high quality standard of work, on time. There is an opportunity for both the contractor and client to consider and sign at contract on construction ethics prior to the operation. In addition, the inspection of equipment and mechanical machines during operations is necessary as it helps prevent accidents that may occur. The Company provides check-list forms, covering water, air, environment, mechanical machines, traffic management around construction site in the operation including environmental and community restoration, which in included in operation report made by safety staff of each division to be submitted to the Department of Labour Protection and Welfare. 5. Environmental Conservation The Company places significant emphasis on caring of the environment and the environmental management at the work sites and nearby areas. Also, for example, there are the improvements of landscape covering construction sites through 5S activities. During construction, the Company provides environmental control for each division to prevent or minimize negative impacts, and to encourage effective resource utilization to reduce energy consumption as well as to protect environmental pollution caused by dust, noise, waste, waste oil, wire, old tire, empty oil tank, copper scrap, and so on. Besides, the Company has the policies on equipment storage, waste segregation and disposal, dust and noise monitoring as well as wastewater emission protection. 6. Community and Society Development The Company undertakes community development in the community that is affected by the Company’s operations. To minimize the problem between the Company and community, the Company has promoted employment in the community and has organized various activities, for example public utility development volunteering, environmental restoration, sport campaign, and religious ceremonies. The Company’s Disclosure Style Policy and overview Along with valuing its responsibility to society in general, the Company is aware that a sustainable environment is an essential part of the general business operations (In-Process), thus the Board of Directors has always followed the performance of its policy as well as assessing and amending such policy to keep up with a changing economy and society. All policies related to corporate social responsibility are disclosed on the Company’s website www.itd.co.th under “Corporate Governance”. Operation and report According to the Corporate Social Responsibility reporting process, the Company takes into account all stakeholders, therefore the emphasis on corporate social responsibility in its business process (CSR-in-process) is highly placed, and in accordance with the Stock Exchange of Thailand’s Corporate Governance. Earlier in this Report on Corporate Social Responsibility, the Company disclosed information about its eight principles of social responsibility. With the adherence of its motto: commitment, reliability, and quality, the Company places importance on construction business which is its main business. Apart from the practice of occupational health and safety regulation, the Company also takes into consideration the environment, the local communities, and suitable resource utilization. Earlier in this report, the Company established anti-corruption measures, the respect for the rights of stakeholders, as well as assessing the risks that occur with Company’s projects, and the fair valuation of the well-being of personnel and employees. Business operation effect toward corporate social responsibility As of December 31, 2013, the ongoing dispute involving the Company as a party to litigation that may significantly impact the assets of over 5% of shareholders of the Company, is disclosed in the Annual Registration Statement (Form 56-1) of the Company under “Legal Disputes”. Corporate Social Responsibility Activities The Company believes that a good business must be developed with due regard to the development of society and sustainable environment, therefore the Company has operated its business under the principles of Corporate Social Responsibility (CSR) by continuing to support various activities that are beneficial to the society, and providing budget from the Company’s revenue to execute the activities as follows: 1. Education Dr. Chaijudh Karnasutra for Education Fund Project has established since 2006 for the purpose of supporting scholarships for Employee’s children who show a good study performance Asia Pacific Potash Corporation (APPC), the Company’s subsidiary, has established APPC Youth Project and has continuously operated since 2007 to enhance and encourage the education of vocational training students in Udon Thani province by providing 250 scholarship per year in the amount of THB 5,000 a scholarship.
Annual Report 2013 51 The Company supports various activities that are beneficial to youth development via public agencies, state agencies as well as private agencies and foundations, for example Royal school buildings, Children’s day promotion, charity promotion, and so on. In 2012, the Corporate Service Division publicized for donation of electric appliances, such as printers, CPU’s, monitors, fax machines, fans, and so on to support orphans’ education. The donated electric appliances were passed to the Future Group Organization who runs the project, on 4th July 2013.
The Company has established the Puen Chuay Puen Project to raise funds for the Employee who has an accident from working, in addition to the Company’s Social Security cover from compensation and medical fees. 2. Environment The Company supported the activity of the Asian Institute of Technology by providing a budget for the purchase of trees for the tree planting program on 6th February 2013.
3. Culture, Religion, and Disaster
Italian-Thai Development Public Company Limited and Asia Pacific Potash Corporation Co., Ltd. held the annual occasion of the Tod Pha Pa ceremony at Sriwattanaram and Wiwekwararam temples, Nongtakai village, Udonthani, on Sunday 10 November 2013 to raise funds for the purchase of an incinerator to be used for the Buddhist cremation ceremonies.
The Company raised funds for helping the Employees of work unit J.1958 who suffered from a fire in November 2013 through the Puen Chuay Puen Project. Donations were received through the good cooperation from the Management and Employees to support fellow Employees in trouble.
The Puen Chuay Puen Project is one of the Company’s good projects that demonstrate care and generosity of fellow employees when one of them is in need. The project has received a good cooperation from the employees from both the Company headquarters and from other units.
52 Italian-thai Development Public Company Limited Board of Directors and Board of Management
Experience of Board of Directors and Board of Management 1 Pol.Lt. Chatrachai Bunya-anata Age: 81 years Education: Director Position B.A. Economics Accountancy, Wales, UK Date of the first appointment: March 24, 1994 Advanced Management Program Harvard University , U.S.A Date of the latest appoinment: April 27, 2012 National Defense College Program, Bangkok Chairman the Board of Directors: Italian-Thai Development Plc. Board of Governors Bangkok Pattana School Italian-Thai International Co., Ltd. Italian-Thai Land Co., Ltd. Royal Orchid Sheraton Hotel Chairman of the Audit Committee: Italian-Thai Development Plc. Director: Dusit Thani Group General Prem Tinsulanonda Foundation Hon Advisor: Dusit Thani College Independent Director: MBK Property and Development Company Limited
2 Mr. Premchai Karnasuta Age: 59 years Education: Director Position Master of Business Administration Date of the first appointment: March 24, 1994 University of Southern California U.S.A Date of the latest appoinment: April 27, 2012 B.S. in Mining Engineering: Colorado School of Mines, U.S.A. President: Italian-Thai Development Plc. Bangkok Steel Wire Co., Ltd. Chairman the Board of Directors: First Dhaka Elevated Expressway Co., Ltd. Thai Maruken Co., Ltd. Director: Italian-Thai Development Plc. Charoong Thai Wire & Cable Plc. Imperial Technology Management Services Plc. ITD Cementation India Co., Ltd. Kanika Co., Ltd. Khun Ka Palang Thai. Co., Ltd. Siam Machinery and Equipment Co., Ltd. Chantaburi Country Co., Ltd. C.P.K. International Co., Ltd. Southern Industry Co., Ltd. (1996) Nahathai Co., Ltd. Dithee Co., Ltd. Palang Hgan Sakol Co., Ltd. Tayakee Co., Ltd. Tridayuk Co., Ltd. Tongkrai Co., Ltd. Thai Nippon Steel Engineering & Construction Corp. Co., Ltd. Saraburi Coal Co., Ltd. Myanmar ITD Co., Ltd. Takolkiat Co., Ltd. Nipa Lodge Co., Ltd. Thai Rent All Co., Ltd. Panoot Co., Ltd. Bhantuwong Co., Ltd. Praram 9 Square Co., Ltd. Praram 9 Square Hotel Co., Ltd. Palangthai Kaona Co., Ltd. Bangkok Steel Wire Co., Ltd. PT Thailindo Bara Pratama Co., Ltd. Metropolitan Water and Services Co., Ltd. Bhum Jai Thai Cement Co., Ltd. Palit Palangngan Co., Ltd. Siam Pacific Holding Co., Ltd. Phannin Co., Ltd.
Annual Report 2013 53 Siam Fiber Optics Co., Ltd. Bhaka Bhumi Development Co., Ltd. Amari Co., Ltd. Italian - Thai Development PTE LTD. Amari Orientel and Resort Co., Ltd. Lasalle Co., Ltd. Italthai Real Estate Co., Ltd Siam Concrete Brick and Products Co., Ltd. Italthai Engineering Co., Ltd. Sarithorn Co., Ltd. Italthai Trevi Co., Ltd. Chantaburi Farm Co., Ltd. Italian-Thai Land Co., Ltd. Amari Orchid Lodge Co., Ltd. Asia Pacific Potash Corporation Co., Ltd. Italian-Thai International Co., Ltd. Orientel Residence Bangkok Co., Ltd. Italthai Holding Co., Ltd. MCRP Holding Corporation Ltd. ATO Asia Turnout Co., Ltd. Auo Siam Marine Co., Ltd. MCRP Holding Corporation Co., Ltd. Saraburu Construction Technology Co., Ltd. Asian Steel Product Co., Ltd. Italian-Thai Power Co., Ltd. Nhapralarn Crushing Plant Co., Ltd. Koh Kong Power Light Co., Ltd. Italthai Industrial Sino Lao Aluminum Co., Ltd. Italthai Marine Co., Ltd. Italian-Thai Hongsa Co., Ltd. ITD-EGC Joint Venture ITD Bangladesh Co., Ltd. Sin Rae Muang Thai Co., Ltd. Italian - Thai International SDN.BHD. Asia Logistics Development Co., Ltd. Wildemere Co., Ltd. Asia Industrial and Port Corporation Co., Ltd. Lao Metal Industry Co., Ltd. ITD Almoayyed Contracting W.L.L.
3 Mrs. Nijaporn Charanachitta Age: 62 years Education: Director Position M.B.A. (Finance) University of Wisconsin (Madison), U.S.A Date of the first appointment: March 24, 1994 B.A. (Faculty of Art) Chulalongkorn University Date of the latest appoinment: April 26, 2012 Director Certification Program (DCP) (Thai Institute of Directors Association (IOD)) Chairman: Amari Hotel & Resort Co., Ltd. Chao Phraya Development Corporation Co., Ltd. Amari Co., Ltd. OHTL Plc., (Mandarin Oriental, Bangkok) Oriental Residence Bangkok Co., Ltd. Sakdi Sin Prasit Co., Ltd. Italthai Industrial Co., Ltd. Director and Senior Executive Vice President: Italian-Thai Development Plc. Director and Member of the Nomination and Compensation Committee Charoong Thai Wire & Cable Plc. Director: Italian-Thai Development Plc. Khunka Palangthai Co., Ltd. Kanika Co., Ltd. Siam Machinery & Equipment Co., Ltd. Chantaburi Country Club Co., Ltd. Thai Barge Container Services Co., Ltd. CPK International Co., Ltd. Nahathai Co., Ltd. Tongkrai Co., Ltd. Dithee Co., Ltd. Tridayuk Co., Ltd. Tayakhee Co., ltd. Bangkok Steel Wire Co., Ltd. Lasalle Co., Ltd. Lao Metro Industry Co., Ltd. Toyo-Thai Corporation Plc. Praram 9 Square Co., Ltd. Thai Maruken Co., Ltd. Palangthai Kaona Co., Ltd. Thai Rent All Co., Ltd.
54 Italian-thai Development Public Company Limited Bhaka Bhumi Development Co., Ltd. Bhantuwong Co., Ltd. Napralan Crushing Plant Co., Ltd. Panoot Co., Ltd. Siam Concrete Brick and Product Co., Ltd. Palit Palanguan Co., Ltd. Aquathai Co., Ltd. Praram 9 Square Hotel Co., Ltd. Italthai Trevi Co., Ltd. Bhum Jai Thai Cement Co., Ltd. Asia Industrial and Port Corporation Co., Ltd. Myanmar ITD Co., Ltd. Italian-Thai International Co., Ltd. PT Thai Lindo Bara Pratama Co., Ltd. Asian Steel Product Co., Ltd. Asia Pacific Potash Corporation Co., Ltd. Siam Steel Syndicate Co., Ltd. ATO Asia Turn-out Co., Ltd. Takolkiat Co., Ltd Italthai Power Co., Ltd. Sino Lao Aluminum Co., Ltd. Saraburi Construction Technology Co., Ltd. Sankyu Thai Co., Ltd. ITD-ETF Joint Venture Siam Sightseeing Co., Ltd. Myanmar Italian-Thai Power 1 Co., Ltd. Phanin Co., Ltd. Siam Pacific Holding Co., Ltd. Chantaburi Farm Co., Ltd. Sarithorn Co., Ltd. Italthai Marine Co., Ltd. Koh Kong Power Light Co., Ltd. Italthai Real Estate Co., Ltd. Italthai Holding Co., Ltd. Sin Rae Muang Thai Co., Ltd. Wildemere Co., Ltd. Asia Industrial and Port Corporation Co., Ltd. Asia Logistics Development Co., Ltd. Palang Ngan Sakol Co., Ltd. Saraburi CoalCo., Ltd. First Dhaka Elevated Expressway Co., Ltd. ITD Bangladesh Co., Ltd.
4 Dr. Krisorn Jittorntrum Age: 60 years Education: Director Position Ph.D. Computing Research Group, Institute of Advance Studies, Date of the first appointment: March 26, 1994 The Australia National University Date of the latest appoinment: April 27, 2012 B.S. (Faculty of Sciences), First honor, Chiang Mai University Independent Director and Audit Committee: Italian-Thai Development Plc. Chairman of the Risk management Committee: Italian-Thai Development Plc. Associate Professor: Faculty of Sciences, Chiang Mai University Director: Information Technology Service Centre, Chiang Mai University Chairman of working Group on Law and Digital signature: Consulting Committee of Electronic Commerce Project ASEAN Coordinating Committee on Electronic Commerce President of Strategic Plan for the Development of Upper North Region Study (1998-2008) Office of the National Economic and Social Development Board Advisor to the Minister: Ministry of Labor Director: Asia Pacific Potash Corporation Co., Ltd.
Annual Report 2013 55 5 Mr. Pathai Chakornbundit Age: 71 years Education: Director Position B.Eng (Civil), Chulalongkorn University Date of the first appointment: March 21, 1994 Director Certificate Program, the Institute of Directors (IOD) Date of the first appointment: April 30, 2013 Director and Senior Executive Vice President: Date of the latest appoinment: April 26, 2012 Italian-Thai Development Plc. Vice President of Risk Management Committee: Italian-Thai Development Plc. Director: Myanmar Italian-Thai Power 1 Co., Ltd. ITD Cementation India Co., Ltd. Khunka Palangthai Co., Ltd. Khunka Faifa Thai Co., Ltd. Asia Industrial and Port Corporation Co., Ltd. Koh Kong Power Light Co., Ltd. Thai Nippon Steel Engineering & Construction Co., Ltd. Palit Palanguan Co., Ltd. Thai Maruken Co., Ltd. Palangthai Kaona Co., Ltd. PT Thailindo Bara Pratama Co., Ltd. Bhaka Bhumi Development Co., Ltd. Thai Pride Cement Co., Ltd. Myanmar ITD Co., Ltd. Aquathai Co., Ltd. Sarithorn Co., Ltd. Sin Rae Muang Thai Co., Ltd. Italthai Trevi Co., Ltd. Italian - Thai International SDN.BHD. Italthai Marine Co., Ltd. First Dhaka Elevated Expressway Co., Ltd. Asia Pacific Potash Corporation Co., Ltd. Italian-Thai Hongsa Co., Ltd. ITD-EGC Joint Venture Asia Logistics Development Co., Ltd. IOT Joint Venture
6 Mr. Yuthachai Charanachitta Age: 35 years Education: Director Position Bachelor Degree in Economics, Hamilton College, USA. Date of the first appointment: March 21, 1994 Director certification Program (DCP) Date of the latest appoinment: April 26, 2012 - Direct Finance the Skill Update Program for Director (Thai Institute of Directors Association (IOD)) Executive Director: Italthai Industrial Co., Ltd. Risk Management Committee: Italian-Thai Development Plc. Director: Italian-Thai Development Plc. OHTL Plc., (Mandarin Oriental, Bangkok) Chao Phraya Development Corporation Co., Ltd. Baan Krating Co., Ltd. Riverside Auction House Co., Ltd. Muanjai Co., Ltd. Oriental Residence Bangkok Co., Ltd. Amari Hotel and Resort Co., Ltd. Sakdi Sin Prasit Co., Ltd. Amari Asset Co., Ltd. Amari Co., Ltd. Italthai Engineering Co., Ltd. Italian-Thai Power Co., Ltd. Saraburi Coal Co., Ltd. ITD Madagascar S.A Co., Ltd. Italthai Hospitality Co., Ltd.
56 Italian-thai Development Public Company Limited 7 Mr. Tawatchai Suthiprapha Age: 70 years Education: Director Position B.Eng (Civil), Chulalongkorn University Date of the first appointment: March 24, 2005 Director Accreditation Program (DAP) Date of the latest appoinment: April 29, 2011 Finance for Non Finance Director (Thai Institute of Directors Association (IOD)) Director and Senior Executive Vice President: Italian-Thai Development Plc. Director: Siam Steel Tower Co., Ltd. Sarithorn Co., Ltd Italian-Thai ITD - ETF Joint Venture ATO Asia Turn-Out Co., Ltd. ITO Joint Venture Italian-Thai ITD - ETF-MVM Joint Venture Saraburi Construction Technology Co., Ltd. Bhaka Bhumi Development Co., Ltd. Asia Logistics Development Co., Ltd. Asia Industrial and Port Corporation Co., Ltd. Thai Maruken Co., Ltd. Thai Pride Cement Co., Ltd.
8 Mr. William Lee Zentgraf Age: 73 years Education: Director Position A.B.(cum laude) Harvard College Date of the first appointment: March 24, 2005 Independent Director:, Audit Committee Member: Date of the latest appoinment: April 29, 2011 Italian-Thai Development Plc. Director: OHTL Plc., (Mandarin Oriental, Bangkok)
9 Mr. Peeti Karnasuta Age: 30 years Education: Director Position Applied Economics, University of Saint Andrews Date of the first appointment: March 24, 2008 Date of the latest appoinment: April 26, 2010 Executive Director: Auo Siam Marine Co., Ltd. Managing Director: Suvarnabhumi Entertainment Co., Ltd. 3B Holding Co., Ltd. Risk Management Committee: Italian-Thai Development Plc. Director: Italian-Thai Development Plc. Saraburi Coal Co., Ltd. Italian-Thai Power Co., Ltd. P3 Global Energy Co., Ltd. ITD Madagascar S.A Co., Ltd. Myanmar Italian-Thai Power 1 Co., Ltd. International Shipping Corporation Co., Ltd.
Annual Report 2013 57 10 Mr. Chatichai Chutima Age: 53 years Education: Master of Economics from Ohio University, U.S.A. Director Accreditation Program Class 67/2007 Successful Formulation & Executive of Strategy Class 12/2001 (Thai Institute of Directors Association (IOD)) Executive Vice President (Finance): Italian-Thai Development Plc. Risk Management Committee: Italian-Thai Development Plc. Director: Siam Pacific Electric Wire & Cable Co., Ltd. ITD Bangladesh Co., Ltd. Siam Steel Syndicate Co., Ltd.
11 Mr. Anan Amarapala Age: 67 years Education: B.Eng (Civil), Chulalongkorn University Executive Vice President: Italian-Thai Development Plc.
12 Mr. Taweesilp Pattanakitchamroon Age: 68 years Education: B.Eng (Civil), Chulalongkorn University Executive Vice President: Italian-Thai Development Plc.
13 Mr. Virat Kongmaneerat Age: 59 years Education: B.Eng (Civil), KMUTT Executive Vice President: Italian-Thai Development Plc.
14 Mr. Piyachai Karnasuta Age: 38 years Education: Civil Engineering, Waseda University Executive Vice President: Italian-Thai Development Plc. Director: Siam Machinery & Equipment Co., Ltd.
15 Mr. Sumate Surabotsopon Age: 50 years Education: M.Eng (Civil), KMUTT B.Eng (Civil), KMUTT Executive Vice President: Italian-Thai Development Plc. Director: ITD Bangladesh Co., Ltd. First Dhaka Elevated Expressway Co., Ltd.
58 Italian-thai Development Public Company Limited 16 Mr. Sompop Pinijchai Age: 56 years Education: M.B.A. (Finance), NIDA Vice President (Cost Engineering Analysis): Italian-Thai Development Plc.
17 Miss Kanchana Chaaroenyot Age: 51 years Education: M.B.A. Finance and Banking, Ramkhamhaeng University Vice President (Accounting): Italian-Thai Development Plc.
18 Mr. Woravudh Hiranyapaisarnsakul Age: 52 years Education: MBA, Thammasart University (Company Secretary Program) Effective Minute Taking, the Institute of Directors (IOD) Company Secretary: Italian-Thai Development Plc. Director and Secretary of Risk Management Committee: Italian-Thai Development Plc. Manager: Asia Pacific Potash Corporation Co., Ltd.
* Please refer to the attachment for the Company Secretary’s Qualification
Annual Report 2013 59 Attachment 1
Authority and Responsibil ty of the Company Secretary
The Company Secretary is required to performhis/her dutieswith responsibility, caution, and integrity in compliance with the laws, objectives and regulations of the Company, and the resolution of the Board of Directors and Shareholders as defined in Securities and Exchange Act (No.4) B.E. 2551, Section 89/15 and 89/16, which is effective on 31st August 2008. The Company Secretary is responsible for the following proceedings:
1. Preparing and keeping the following documents:
a) A register of Directors
b) Notices calling for the Directors’ Meetings, minutes of Board of Directors’ Meetings, and the Annual Reports
c) Notices calling for Shareholders’ Meetings and minutes of Shareholders’ Meetings
2. Keeping a report on activities reported by the Directors or the Management, and submitting a copy of report according to Section 89/14 to the Chairman of the Board and Audit Committee Chairman for acknowledgement within seven days from the date the report is received.
3. Performing other duties as prescribed by the Capital Market Supervisory Board
Qualification of the Company Secretary
1. To have a comprehensive knowledge and understanding of the Company’s business, including the roles and duties related to the work of the Company’s secretary, for instance, duties of the Board and the Company, having sound knowledge of related laws and regulations, including the continuous pursuit of knowledge, and the follow-up of data and information for the development of work implementation.
2. The performance of duties in accordance with laws, rules and the Company’s regulations, with responsibility, caution, integrity and determination, including lending support for the Company’s operations, based on the Company’s principles of good corporate governance and code of ethics, so that the Company may fulfill its goal.
3. To strictly adhere to virtue and morality, as well as take into account the interests of all groups of stakeholders, while not acting in a way that will cause damage to the Company’s reputation and good image.
4. Not to promote self-interest through the Company’s business opportunities, and to strictly maintain the Company’s confidential details.
5. Have good human relations and an ability to coordinate with other work units or agencies both inside and outside the Company.
60 Italian-thai Development Public Company Limited Number of Shares Held by ITD Directors and Directors Remuneration as of December 21, 2013
Name Position Share Amount Change during the Year Remuneration (Unit : Baht) 1. Pol.Lt. Chartachai Bunya-Ananta Chairman of the Board of Directors 13,908 1,908 750,000.00 Chairman of the Audit Committee *535,000.00 2. Mr. Premchai Karnasuta Director 937,793,726 117,309,256 580,000.00
3. Mrs. Nijaporn Charanachitta Director 451,411,640 (13,182,000) 580,000.00
4. Dr. Krisorn Jittorntrum Independent Director - 0 - - 0 - 580,000.00 Audit Committee Member *415,000.00 Chairman of the Risk Management **15,000.00 Committee 5. Mr. Pathai Chakornbundit Director 69,540 9,540 580,000.00 Vice Chairman of the Risk **10,000.00 Management Committee 6. Mr. Yuthachai Charanachitta Director - 0 - - 0 - 580,000.00 Risk Management Committee **10,000.00 7. Mr. Tawatchai Suthiprapha Director - 0 - - 0 - 580,000.00
8. Mr. William Lee Zentgraf Director - 0 - - 0 - 580,000.00 Audit Committee Member *415,000.00
9. Mr. Peeti Karnasuta Director 400 - - 0 - 580,000.00 Risk Management Committee * -
Remark: * Including Bonus **The meeting attendance allowance
Annual Report 2013 61 Internal Control and Risk Management
The Company has recognized the significance of an Internal Control System, for the assessment of operations both at the managerial level and operative level, following up the Board of Directors’ decision to ensure that the Company has an appropriate and sufficient Internal Control System for its operations.
According to the Board of Director’s Meeting No. 9/3/2557 on 18th March 2014, there were three Audit Committee Directors present at the meeting. Moreover, the Board of Directors has assessed the adequacy of the Internal Control System by requesting the Management for information in various fields as follows:
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring Activities
The Board of Directors and Audit Committee’s opinions state that the Company’s Internal Control System is appropriate, sufficient, and consistent with Adequacy Assessment Form for the Internal Control System of the Securities and Exchange Commission. In addition, the Company has sufficient personnel to effectively operate and monitor the governance of its subsidiaries in protecting the assets of the Company and its subsidiaries from being abused by the Directors and Executives, including the transactions with those who may have a conflict of interest and related parties.
Regarding Accounting Internal Control of the Company, the Audit Committee, in expressing an opinion on financial statement, states that no defects were found to have a significant impact against the Company.
62 Italian-thai Development Public Company Limited Transactions Connected Necessity and Reasonableness of Normal business transaction. Spare parts, machines, Back Hoe rental and services are based on market pricing and length basis. arm’s Normal business transaction. length The transactions are based on arm’s basis. Occasional transactions depend on the Auo Siam Marine Co., Ltd. orders of Normal business transaction. Spare parts, machines, Back Hoe rental and services are based on market pricing and length basis. arm’s Normal business transaction. The transactions are based on market length basis. pricing and on arm’s Normal business transaction. The transactions are based on market length basis. pricing and on arm’s are actual cost pricing. Utility charges The transactions are based on cost plus length basis. pricing and on arm’s margin Normal business transaction. The transactions are based on market length basis. pricing and on arm’s Scrap-iron price are based on market length basis. pricing and on arm’s – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
Transactions
Details of The Company provided the worker and equipment services with 30-60 days of credit term. 30-60 days of credit term. DDC and Italian-Thai Hongsa purchased machines, parts and maintenance services from Italthai Industrial Co., Ltd. with The Company purchased machines, parts and maintenance services from Italthai Industrial Co., Ltd. with 30-60 days of credit term. Italthai Industrial Co., Ltd. paid for office rental, furniture rental Siam Steel Syndicate Co., Ltd. paid for office rental, common area services and utilities for an amount of Baht 289,800 The term of contract is 3 years per month. terminating on Oct 31, 2015. The Company sold scrap-iron and provided construction services with 30-60 days of credit term. The Company purchased the products from Siam Steel Syndicate Public Company Limited Italthai Marine Co., Ltd. sold scrap-iron to With Siam Steel Syndicate Co., Ltd. 30-60 days of credit term. – – – – – – – – – – – – – – – –
of Value ending Dec 31, 2013 The Transactions Baht 6.60 million Baht 8.35 million Baht 6.45 million Baht 3.44 million Baht 37.87 million Baht 50.08 million Baht 62.15 million Baht 67.93 million Baht 13.06 million Baht 56.40 million Baht 31.97 milliom Baht 242.49 million
Transactions Account receivable (provisioned for doubtful account) Account payable Account Payable Machine purchase Cost of machines and parts expenses, Back Hoe rental, maintenance expenses, and other services expenses. Account payable Building and furniture rental income Product cost Account payable Revenue from services Revenue from office rental, common area services and utilities, and sale of billet, scrap-iron and construction services Account receivable – – – – – – – – – – – – – – – – – – – – – – – –
Description of Relations A connected company A Premchai The Directors of the Company (Mr. Karnasuta ) held a total of 99.99% the Auo Siam Marine Co., Ltd. outstanding shares of Premchai The Director of the Company (Mr. Auo Siam Marine Karnasuta ) is a Director of Co., Ltd. The company purchased machines, parts and maintenance services The company purchased machines, parts and maintenance services The Directors of the Company (Mr. Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta and Charanachitta) and related persons Yuthachai Mr. of the Directors held a total 8.37% outstanding shares of Italthai Industrial Co., Ltd. Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta and Charanachitta) are the Directors of Yuthachai Mr. Italthai Industrial Co., Ltd. Sale of scrap-iron connected company A A connected company A The Company held a total of 1.15 % the outstanding shares of Siam Steel Syndicate Co., Ltd. Premchai The Directors of the Company (Mr. Charanachitta and Yuthachai Karnasuta, Mr. Peeti Karnasuta) and related persons of the Mr. Directors held a total of 89.27 % the outstanding shares of Siam Steel Syndicate Co., Ltd. – – – – – – – – – – – – – – – – – – – – – – – –
Transactions Company Auo Siam Marine Co., Ltd. (Oil Operation) Italthai Industrial Co., Ltd. Trading) (Machines & Parts Siam Steel Syndicate Co., Ltd. (Steel Bar Production) Dawei Development Co., Ltd. (DDC) Italian-Thai Hongsa Co., Ltd. – – 3. Transaction with the subsidiaries Transaction – – Transaction with the subsidiaries Transaction Italthai Marine Co., Ltd. 2. 1. Related Party
Annual Report 2013 63 Transactions Connected Necessity and Reasonableness of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin The transactions are based on market length basis. pricing and on arm’s are actual cost pricing. Utility charges Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Thai Nippon Steel Engineering orders of and Construction Corporation Co., Ltd. Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Auo -Po Grand Marina Co., Ltd. orders of Normal business transaction. The transactions are based on approximate length basis. market pricing and on arm’s Occasional transactions depend on the orders of Italthai Engineering Co., Ltd. Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the orders of Italthai Engineering Co., Ltd. Financial support to a connected company which is unable to be financed by other resources. – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
Transactions Details of The Company provided the exploration of tin and felspar in Dawei, Myanmar. the rental including The Company charges the rental rights, services and utilities of Baht 77,850 per month. The rental contract is 3 years starting on May 1, 2010 with 30-60 days of Credit term. The Company provided the construction Development III Yard services of BPK (Bangpakong Industrial Plant Phase III and provided land the equipment rental with 45 days Credit term. The Company provided jetty construction Auo-Po, Phuket Province with services at 30-60 days of credit term. The Company employed Italthai Engineering Co., Ltd. to install mechanical and electrical systems the construction. The Company provided the construction services of Lopburi Solar Power Plant. The credit term is 30-60 days. Sarithorn was financially supported by This loan was no interest the Directors. charge. – – – – – – – – – – – – – – – –
of Value ending Dec 31, 2013 The Transactions Baht 41.81 million Baht 13.28 million Baht 31.74 million Baht 70.01 million Baht 95.88 million Baht 13.19 million Baht 74.19 million Baht 44.07 million Baht 215.98 million Baht 101.47 million Transactions Account Receivable Revenue from construction services, land and equipment rental Account receivable Account receivable (allowance for doubtful account for receivable more than 12 months in amount of Baht 38.66 million) Revenue from the services Cost of the services Account payable Revenue from the services Account receivable Loan from Directors – – – – – – – – – – – – – – – – – – – –
Description of Relations Co., Ltd. since July 21, 2008 A connected company A Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta, Charanachitta and Mr.Peeti Yuthachai Mr. Karnasuta) are the Directors of Saraburi Coal A connected company A Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta) held a total of 5.99% the outstanding shares Thai Nippon Steel Engineering and Construction Corporation Ltd. Premchai The Directors of the Company (Mr. Pathai Chakornbundit) are the Karnasuta and Mr. Thai Nippon Steel Engineering and Directors of Construction Corporation Ltd. A connected company A Premchai The Director of the Company (Mr. Karnasuta) indirectly held a total of 90% the Auo-Po Grand Co., Ltd. total outstanding shares of via 3 B Holding Co., Ltd. Premchai The Director of the Company (Mr. Auo-Po Grand Marina Karnasuta) is a Director of Co., Ltd. Prasit Co., Ltd. The Directors of the Company (Mrs. Nijaporn Charanachitta) Yuthachai Charanachitta and Mr. are the Directors of Italthai Engineering Co., Ltd. A connected company A Premchai The Directors of the Company (Mr. Charanachitta) and Yuthachai Karnasuta, Mr. Peeti Karnasuta) and related persons of the Mr. Directors held a total of 95.53% the outstanding shares of Italthai Engineering Co., Ltd. via Italthai Holding Co., Ltd. and Sak Di Sin Co., Ltd. (a Subsidiary of the Company) A Subsidiary of Bhaka Bhumi Development A – – – – – – – – – – – – – – – – – – – – – – – –
Company Italthai Engineering Sarithorn Co., Ltd. Saraburi Coal Co., Ltd. Trading) (Coal Thai Nippon Steel Engineering and Construction Corporation Ltd. (Contractor) Auo -Po Grand Marina Co., Ltd. (Hotel and Resort) Co., Ltd. (Construction and Installation of Gas and Air Conditioning Systems) (Real Estate) 7. 6. 5. 4. 8.
64 Italian-thai Development Public Company Limited
Transactions Connected Necessity and Reasonableness of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the orders of Saraburi Coal International Co., Ltd. Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Venture orders of NWR-SBCC Joint Normal business transaction. The transactions are based on approximate length basis. market pricing and on arm’s Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Amari Huahin Co., Ltd. orders of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Amari Estate Co., Ltd. orders of – – – – – – – – – – – – – – – – – – – – – – – – – – – – Transactions Details of The Company provided the coal exploration services for Mai Khot Project in Myanmar with 30-60 days of credit term. The Company performed the machinery repairing and moving for Mae Moh Project, Lampang with 30-60 days of credit term. The company purchsed the machinery Venture from NWR - SBCC Joint The Company provided the project management and control for the hotel construction project. The Company provided the construction The Contract Amari Huahin. services of value is Baht 353.98 million with 30-60 days of credit term. The Company provided the construction Amari Residences Hua Hin. services of The Company provided the project management and control for the Amari Residences construction project of Hua Hin with 30-60 days of credit term. – – – – – – – – – – – – – – of Value ending Dec 31, 2013 The Transactions Baht 5.04 million Baht 40.11 million Baht 40.11 Baht 12.63 million Baht 45.52 million Baht 53.42 million Baht 13.61 million Baht 18.94 million Baht 34.77 million Baht 795.50 million
Transactions Account Receivable Consultant Fee, and machine selling Account Receivable Other Receivable Cost of the Services Revenue from construction services Account Receivable Revenue from construction services Account Receivable – – – – – – – – – – – – – – – – – –
Description of Relations A connected Company A Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) held a total of 90% the outstanding shares Saraburi Coal International Co., Ltd. Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta, Peeti Charanachitta and Mr. Yuthachai Mr. Karnasuta ) are the Directors of Saraburi Coal International Co., Ltd. Mr. Yuthachai Charanachitta and Mr. Peeti Charanachitta and Mr. Yuthachai Mr. Karnasuta) are the Directors of Saraburi Coal Co., Ltd. since July 21, 2008 A connected Company (Saraburi Coal Co., Ltd. A invest in the amount of 50% NWR-SBCC Joint ) Venture Premchai The Directors of the Company (Mr. Karnauta, Mrs. Nijaporn Charanachitta, A connected Company A The Directors of the Company (Mrs. Nijaporn Charanachitta) Yuthachai Charanachitta and Mr. and related persons of the Directors indirectly held a total of 69.28% the outstanding shares Amari Co., Ltd. and Amari Huahin Co., Ltd.via of Baan Rao Holding Co., Ltd. The Directors of the Company (Mrs. Nijaporn Charanachitta) Yuthachai Charanachitta and Mr. Amari Huahin Co., Ltd. are the Directors of A connected Company A The Directors of the Company (Mrs. Nijaporn Charanachitta) Yuthachai Charanachitta and Mr. and related persons of the Directors indirectly held a total of 99.99% the outstanding shares Amari Estate Co., Ltd. via Sakdi Sin Prasit Co., Ltd. Yuthachai Mr. The Director of the Company, Amari Estate Charanachitta is a Director of Co., Ltd. – – – – – – – – – – – – – – – – – – – – – –
Company Saraburi Coal International Co., Ltd. (Holding Company) NWR-SBCC Joint Venture Venture NWR-SBCC Joint (Coal Extraction and Overburden Excavation ) Amari Huahin Co., Ltd. (Hotel ) Amari Estate Co., Ltd. (Real Estate) 12. 11. 10. 9.
Annual Report 2013 65 Transactions Connected Necessity and Reasonableness of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the SA. COAL SAKOA orders of PAN Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Amari Estate Phuket Co., Ltd. orders of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the Thai Mining Co., Ltd. Asia orders of Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the African Mining Corp. orders of Pan – – – – – – – – – – – – – – – – – – – – – – – – Transactions Details of ITD Madagascar provide consulting service for coal mining project of PAM in Madagascar. SA COAL SAKOA The Company provided the construction Amari Residences Phuket with services of 30-60 days of credit term. Asia Thai Mining Co., Ltd. paid for office Asia rental, common area services and utilities and servey collect data services of Cambodia. geology, Thai Pride Cement Co., Ltd. provide consulting service for coal mining project Thai Mining Co., Ltd. Asia of Asia Pacific Potash Corporation Co., Ltd. provide consulting service for coal mining Thai Mining Co., Ltd. Asia project of The Company provided the project Coal management services for SAKOA Mine Project in Madagasgar with 30-60 days of credit term. – – – – – – – – – – – – of Value ending Dec 31, 2013 The Transactions Baht 2.86 million Baht 5.98 million Baht 5.91 million Baht 48.73 million Baht 20.78 million Baht 90.04 million Baht 179.13 million Baht 101.05 million
Transactions Revenues from service Account Receivable Account Receivable Account Receivable (provisioned for doubtful account Baht 5.98 million) Account Receivable Account Receivable Revenue from services Account Receivable – – – – – – – – – – – – – – – –
Description of Relations A connected Company A The Directors of the Company (Mrs. Nijaporn Charanachitta) Yuthachai Charanachitta and Mr. and related persons of the Directors indirectly held a total of 99.98% the outstanding shares Amari Estate Amari Estate Phuket Co., Ltd. via of Co., Ltd.and Sakdi Sin Prasit Ltd. The Directors of the Company (Mrs. Nijaporn Charanachitta) are Yuthachai Charanachitta, Mr. Amari Estate Phuket Co., Ltd. the Directors of A connected Company A Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) indirectly held a total of 89.73% the SA COAL SAKOA outstanding shares of PAM Thai Mining Co., Ltd. Asia via Yuthachai The Directors of the Company (Mr. Peeti Karnasuta) are the Charanachitta and Mr. SA COAL SAKOA Directors of PAM A connected Company A Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) indirectly held a total of 90% the Thai Mining Co., Ltd. Asia outstanding shares of via Saraburi Coal Co., Ltd. and Palang Ngan Sakol Co., Ltd. Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta, Peeti Charanachitta and Mr. Yuthachai Mr. Thai Asia Karnasuta) are the Directors of Mining Co., Ltd. Mr. Yuthachai Charanachitta and Mr. Peeti Charanachitta and Mr. Yuthachai Mr. African Karnasuta) are the Directors of Pan Mining Corp. A connected Company A Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) indirectly held a total of 90% the African Mining Corp outstanding shares of Pan Thai Mining Co., Ltd. Asia via Premchai The Directors of the Company (Mr. Karnasuta, Mrs. Nijaporn Charanachitta, – – – – – – – – – – – – – – – – – – – – – – – –
Company Amari Estate Phuket Co., Ltd. (Real Estate) PAM SAKOA COAL SA COAL SAKOA PAM with the Transaction subsidiaries Asia Thai Mining Co., Ltd. Asia Transaction with the Transaction subsidiaries Pan African Mining Corp. Pan (Holding Company) 16. 15. 14. 13.
66 Italian-thai Development Public Company Limited
Transactions Connected Necessity and Reasonableness of Normal business transaction. The transactions are based on approximate length basis. market pricing and on arm’s Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the orders of Siam Machinery Equipment Co., Ltd. Normal business transaction. The transactions are based on cost plus length basis. pricing and on arm’s margin Occasional transactions depend on the orders of Lao Metal Industry Co., Ltd. – – – – – – – – – – – – – – – – – – – – Transactions Dated 18 March 2014 Audit Committee Chairman Details of (Pol. Lt. Chartachai Bunya-Ananta) The company purchsed the products from LNG Plus International Co., Ltd. (Hong Kong) with 30-60 days of credit term The Company provided the Construction of Power Plant with 30-60 days credit term The Company provided the Construction with 30-60 days Wall of Flood Protection of credit term. The Company provided the exploration drilling for coal mining with 30 days of credit term. – – – – – – – – of Value ending Dec 31, 2013 The Transactions Baht 9.36 million Baht 9.39 million Baht 39.97 million Baht 36.64 million Baht 71.24 million Baht 50.41 million
Transactions Cost of services Account payable Revenues from service Account Receivable Revenues from service Account Receivable – – – – – – – – – – – –
Description of Relations A connected Company A The related persons of the Director Company Premchai Karnasuta) are Directors of LNG (Mr. Plus International Co., Ltd. (Hong Kong) Co., Ltd. A connected Company A Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) related persons of the Directors held a total 53.75% of the total outstanding shares Siam Machinery Equipment Co., Ltd. Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) are the Directors of Siam Machinery Equipment A connected Company A The Company held a total of 10% the outstanding shares of Lao Metal Industry Co., Ltd. Premchai The Directors of the Company (Mr. Karnasuta and Mrs. Nijaporn Charanachitta) are the Directors of Lao Metal Industry Co., Ltd. – – – – – – – – – – – – – – – –
Company The Audit Committee considered The Audit the Committee necessity considered of and the appropriateness connected transactions, listed 1-19 above, normal which business were transactions arranged and with were the price and terms based on market pricing and on arm’s length term relationship. and on arm’s Lao Metal Industry LNG Plus International Co., Ltd. (Hong Kong) (Production and distribution of electricity) Siam Machinery Equipment Co., Ltd. (Casting and Machine) Co., Ltd. (Manufacture steel wires) 19. 18. 17. Remark:
Annual Report 2013 67 Summary of Financial Information
Financial Statement of The Company Only Description Unit 2013 2012 2011 Total Assets Million Baht 49,260 44,521 37,907 Share Capital Million Baht 4,860 4,194 4,194 Shareholder’s Equity Million Baht 11,831 10,131 9,338 Revenues from Construction Work, Sales and Services Million Baht 29,071 29,811 23,298 Net Profit after Tax Million Baht 88 224 (1,362) EPS Baht 0.02 0.05 (0.32) Book Value Baht 2.43 2.42 2.23 Par Value Baht 1 1 1 DPS Baht 0.00 0.00 0.00 DPS x 100 % 0.00 0.00 0.00 EPS Consolidated Financial Statements As of 31st December 2013 Unit 2013 2012 2011 Total Assets Million Baht 65,151 58,513 52,404 Total Liabilities Million Baht 52,767 48,998 43,522 Total Shareholder’s Equity Million Baht 12,383 9,516 8,882 Revenues from Construction Work, Sales and Services Million Baht 43,913 46,291 44,247 Total Revenues Million Baht 44,902 46,970 44,945 Gross Profit Million Baht 4,655 5,126 3,158 Net Profit * Million Baht 907 126 (1,698) Financial Ratios and Results of Operations of the Company and its Subsidiaries for 3 years 2013 2012** 2011 Consolidated F/S Separate F/S Consolidated F/S Separate F/S Consolidated F/S Separate F/S Current Ratio Current Ratio 1.00 0.99 1.06 1.04 1.23 1.31 Quick Ratio 0.32 0.34 0.37 0.39 0.51 0.49 A/R Turnover 3.97 3.27 4.04 3.70 3.87 3.45 Collection Period 90.61 110.12 89.18 97.18 92.94 104.35 Inventory Turnover 9.70 13.10 9.30 12.44 10.53 12.55 Return on Sales 37.12 27.49 38.72 28.94 34.18 28.69 A/P Turnover 4.04 3.81 4.46 4.33 5.18 4.37 Payment Period 89.10 94.37 80.68 83.12 69.49 82.32 Cash Cycle 38.64 43.23 47.22 43.00 57.63 50.73 Profitability Ratio Gross Profit (%) 10.60 8.53 11.07 9.23 7.14 2.85 Net Profit (%) 2.02 0.30 0.27 0.74 (3.78) (5.84) Return on Equity (%) 8.29 0.80 1.37 2.30 (16.54) (13.05) Efficiency Ratio Return on Assets (%) 1.47 0.19 0.23 0.54 (3.29) (3.71) Return on Fixed Assets (%) 22.49 15.64 15.63 17.79 0.98 (10.79) Assets Turnover 0.73 0.63 0.85 0.74 0.87 0.63 Financial Ratio Analysis Debt to Equity 4.26 3.16 5.15 3.39 4.90 3.06 Interest Coverage 3.67 2.80 2.02 0.58 2.96 2.65 Dividend Payout Ratio (%) 0.00 0.00 0.00 0.00 0.00 0.00 Debt to Equity (Under Terms and 2.17 1.73 2.84 2.00 2.43 1.65 Conditions of Bond Issuer and Bond Holders) Data per Share and Growth Ratio of Business Growth Ratio Total Assets (%) 11.34 10.64 11.66 17.45 3.11 6.70 Total Liabilities (%) 7.69 8.84 12.58 20.37 11.10 19.49 Revenues from Construction Services (%) (5.14) (2.48) 4.62 31.65 22.65 28.70 Cost of Services (%) (4.63) (1.74) 0.18 23.01 22.01 27.86 Net Earning (%) 619.21 (60.82) 107.43 116.45 (670.10) (315.09) Data per Share Book Value 2.55 2.43 2.27 2.42 2.12 2.23 EPS* 0.20 0.02 0.03 0.05 (0.41) (0.32) Dividend per Share* 0.00 0.00 0.00 0.00 0.00 0.00 Note: * Weighted average number of ordinary shares, year 2013- 6M2013 = 4,193,678 (thousand shares), year 2013 = 4,440,301 (thousand shares) **Data based on financial statement for the year (not restated version)
68 Italian-thai Development Public Company Limited Management’ s Discussion and Analysisof Results of Operations and Financial Condition as at December 31, 2013
Results of Operations 1. Overview Market share 23.87% in 2013 ITD is considered to be the largest civil engineering and construction firm Market Share on the Stock Exchange of Thailand as measured by total revenues of construction 100% companies listed on the Stock Exchange of Thailand (SET) The Company’s market 75% share of the total construction industry revenues was 23.87% and 35.54% in 2013 and 2012 respectively. In 2013, the total revenue of the Company was Baht 44,902 50% million which was mainly the revenue from construction services, and the total 25% expenses was Baht 43,995 million, resulting in net income in the portion of the 33.54 23.87 Company’s shareholders in the amount of Baht 907 million. 0% 2012 2013 As at December 31, 2013 the Company’s backlog was Baht 94,104 million, ITD Others compared to Baht 86,283 million in December 31, 2012, of which over 89.07% comprised public sector infrastructure development and 54.31% comprised work in Thailand. In addition to the Company’s backlog at December 31, 2013, as at February 25, 2014 the Company has signed new contracts valued at Baht 2,752 Backlog Baht 94,104 million as of December 31, 2013, public sector 89.07% and in Thailand 54.31% million and has been awarded, but has yet to sign, contracts for a further Baht 179,678 million. The Company’s current backlog, therefore, has an accumulated value of Baht 276,534 million.
2. Previous Year Operations Results
Revenues from construction work, sale and services Baht Revenues from Construction Work, Sales and Services 43,913 million in 2013, decreased 5.14% y-o-y Revenues from construction work, sales and services were Baht 43,913 Revenues from Construction, million in 2013, a decrease of Baht 2,378 million from 2012, or by approximately Sale and Services (MB) 5.14%, partially from the decrease of overseas revenues. 50,000
25,000 46,291 43,913 0 2012 2013
Costs of construction work, sales and services Baht 39,258 Costs of Construction Work, Sale and Service million in 2013 decreased 4.63% y-o-y The costs of construction work, sales and services were Baht 39,258 Costs of Construction, million in 2013, a decrease of Baht 1,907 million from 2012, or by approximately Sale and Services (MB) 4.63%. 50,000
25,000 41,165 39,258 0 2012 2013
Gross Profit Baht 4,655 million and Gross Profit Margin In 2013, the Company’s gross profit was Baht 4,655 million, a decrease 10.60% in 2013 when compared to 2012 for which the gross profit was Baht 5,126 million. While <-)4>(SPTT1SPÇU .# the Company’s gross profit margin in 2013 was 10.60%, a decrease when compared BOE<3)4>(1. to 2012 for which the gross profit margin was 11.07%. 6,000 12.0% 4,000 8.0% 2,000 5,126 4,655 4.0% 0 0.0% 2012 2013 (SPTT1SPÇU (SPTT1SPÇU.BSHJO
Annual Report 2013 69 Interest Income Interest Income Baht 195 million in 2013 increased 62.33% y-o-y The Company’s interest income in 2013 was Baht 195 million, an increase of Baht 75 million from 2012, or by approximately 62.33%, partially from the Interest Income (MB) increase of the interest income of subsidiaries and joint ventures on the release of 200 the deducted revenues by clients. 100 195 Reversal of Allowance for Impairment of Investment 120 0 The Company’s reversal of allowance for impairment of investment in 2013 2012 2013 was Baht 162 million because a company under the other long-term investment had a better performance and had positive equity.
Other Income Other income Baht 580 million in 2013 increased 11.37% y-o-y The Company’s other revenues in 2013 were Baht 580 million, an increase of Baht 59 million from 2012, or by approximately 11.37%. Other Income (MB) 1,000
500 520 580 0 2012 2013
Administrative Expenses Administrative expenses Baht 2,018 million in 2013 decreased 18.01% y-o-y In 2013, the Company’s administrative expenses were Baht 2,018 million, a decrease of Baht 443 million from 2012, or by approximately 18.01%, partially Administrative Expenses (MB) from the decrease of the administrative expenses in overseas business. 3,000 1,500 2,461 2,018 0 2012 2013
Reversal of Allowance (Allowance) for Doubtful Accounts Reversal of allowance for doubtful accounts Baht 131 million in 2013 increased 125.70% y-o-y In 2013, the Company reversed the allowance for doubtful accounts to Baht 131 million, an increase when compared to 2012 which set up the allowance for Reversal of Allowance for doubtful accounts to Baht 510 million or an increase by approximately 125.70% Doubtful Accounts (MB) because in 2013, the Company reversed the allowance for doubtful accounts from 300 the payment received from the overseas projects. 0 131 -300 -510 -600 2012 2013
Loss on Exchange Rate Loss on exchange Baht 162 million in 2013 decreased 17.14% y-o-y In 2013, the Company’s loss on exchange rate was Baht 162 million, a decrease of Baht 34 million from 2012 or by approximately 17.14% Loss on Exchange (MB) 200
100 195 162 0 2012 2013
70 Italian-thai Development Public Company Limited Share of gain from investments accounted for by equity Share of Gain from Investments Accounted for by Equity Method method Baht 22 million in 2013 gain increased 202.41% y-o-y The Company had a gain from investment of Baht 22 million in 2013 from investments accounted for by equity method, an increase of Baht 15 million, Share of Gain from or by approximately 202.41% when compared to 2012. The main reason was the Investments Accounted (MB) increase of gain of associated companies. 30
15 22.3 7.4 0 2012 2013
Financial costs Baht 2,204 million in 2013 decreased Financial Costs 3.57% y-o-y The Company’s financial costs were Baht 2,204 million in 2013, a decrease Financial Costs (MB) of Baht 82 million from 2012, or by approximately 3.57%. 3,000
1,500 2,286 2,204 0 2012 2013
Income tax Baht 124 million in 2013 increased 58.65% Income Tax y-o-y Income tax was Baht 336 million in 2013, an increase of Baht 124 million Income Tax (MB) from 2012, or by approximately 58.65%. The income tax was mainly from the 400 Company’s subsidiaries and joint ventures.
200 212 336 0 2012 2013
Net income in the portion of the Company’s shareholders Net Income in the Portion of the Company’s shareholders Baht 907 million in 2013 income increased 575.67% y-o-y As a result of the foregoing, in 2013, the net income in the portion of the Net Income Attributable to the Company’s shareholders was Baht 907 million, an increase of income of Baht 773 Company's Shareholders (MB) million from 2012, or by approximately 575.67% 1,000
500 907
0 134 2012 2013
Annual Report 2013 71 Financial Statement
1. Total Assets Total assets Baht 65,151 million at the year ended 2013 increased 10.46% y-o-y The Company’s total assets were Baht 65,151 million in 2013, an increase of Baht 6,168 million from 2012, or by approximately 10.46% because, in 2013, Total Assets (MB) the Company’s current assets was Baht 35,414 million, an increase of Baht 1,987 70,000 million from 2012, or by approximately 5.94%. It was mainly from the increase of the earned revenues not yet billed, the trade accounts receivable-related parties 35,000 58,983 65,151 and the advances for sub-contractors. At the year ended 2013, the Company’s 0 non-current assets were Baht 29,737 million, an increase of Baht 4,181 million 2012 2013 from 2012, or by approximately 16.36% according to the increase of the land lease concession and project under development, the advances for purchases of machinery and the property, plant and eqiupment.
The gross trade accounts receivable-unrelated parties as at December 31, 2013 was Baht 7,971 million. The Company already set up the allowance for doubtful account Baht 965 million and the net trade accounts receivable-unrelated parties was Baht 7,007 million, a decrease of Baht 356 million from 2012, or approximately 4.84%. It was partially from the payment received from the large projects such as the track rehabilitation group 5 project, the Navanakorn-Rangsit natural gas pipeline project, the Nava Nakorn flood recovery project, and the Siriraj toward Medical Excellence in Southeast Asia project.
For the receivable aged more than 12 months as at December 21, 2013 was Baht 2,536 million, an increase of Baht 386 million, or approximately 17.96% mainly because of the pending payment of the oversea subsidiaries’ accounts receivable.
2. Liquidity
Summary of Cash Flow Statement (Expressed in thousand Baht) 2013 2012 2011 Net cash provided from (used in) operating activities 5,541,224 2,100,265 4,040,213 Net cash provided from (used in) investing activities (4,715,275) (4,155,575) (1,676,875) Net cash provided from (used in) financing activities (1,413,433) 2,222,241 (1,820,782) Translation adjustment on foreign currency financial statement 146,606 (30,441) (520,664) Cash and cash equivalents at beginning of year 2,027,177 2,067,385 2,045,493 Adjustment cash and cash equivalents - (176,698) - Cash and cash equivalents at end of year 1,586,299 2,027,177 2,067,385
As shown in the table above, in 2013 the cash flow provided from operating activities was at Baht 5,541 million because the increase of the gain before taxation, the decrease of operating assets such as the trade accounts receivable-unrelated parties and the inventories and work in process, and the increase of operating liabilities such as the advances from customers under construction contracts and the receipts in excess of contracted work in progress.
In 2013, cash flow used in investing activities amounted to Baht 4,715 million mainly from the purchase of assets including the equipment and machines for construction and the cash paid for land lease concession and project under development.
The Company’s net cash used in financing activities were mainly for the interest payment and the repayment of the loans for projects finance and long term loan for investment.
The Company’s current ratios were about 1.00 times and 1.06 times at year ended 2013 and 2012, respectively, and quick ratios were 0.32 times and 0.37 times at year ended 2013 and 2012, respectively. The decrease of the said ratios, according to the increase of the current portion of debentures which was under the generally accepted accounting principles.
72 Italian-thai Development Public Company Limited 3. Cost of Investment
The Company intends to invest in other business related to construction services i.e. manufacturing and providing construction materials, real estate development, power business, mine business and logistic business.
4. Financial Resources
4.1) Short-term Debt: The Company’s short-term debt consists of
1) general working capital; and
2) project specific loans in Thailand and Internationally.
It was the Company’s practice to advance funds to its joint ventures for working capital. The Company’s short-term debt was incurred at the parent Company level and Branch levels in other countries.
At December 31, 2013 and 2012 the Company, on a consolidated basis, had Baht 8,358 million and Baht 9,579 million, respectively, outstanding in bank overdrafts and loans from financial institutions. On a stand-alone basis, the Company’s corresponding amounts were Baht 3,872 million and Baht 4,651 million, respectively. This kind of project tied debt will normally be repaid as the projects progress, with full repayment being achieved at project completion.
4.2) Long-term Debt: The Company’s long-term debt consists of
1) long-term foreign loans for investing in assets, project finance and working capital; and
2) long-term Thai Baht loans for purchasing equipment and project financing and working capital.
The Company has used long-term loans for supporting the Company’s long term projects. As of December 31, 2013 and 2012 the Company had outstanding long-term loans of Baht 17,500 million and Baht 17,294 million respectively.
4.3) Guarantees
As at December 31, 2013 and 2012, there were outstanding guarantees of approximately Baht 42,187million and Baht 29,813 million, respectively, issued by financial institutions on behalf of the Company, subsidiaries and its joint ventures in respect of certain performance bonds required in the normal course of business of the Company, subsidiaries and its joint ventures.
As at December 31, 2013 and 2012, there were guarantees of approximately Baht 3,803 million and Baht 3,066 million, respectively, issued by the Company to financial institutions and its ventures to secure credit facilities granted by those financial institutions and ventures to subsidiaries, associated and related companies and joint ventures. The Company had issued guarantees in proportion to its shareholding, except for Italthai Trevi Co., Ltd., Italthai Marine Co., Ltd., Aquathai Co., Ltd., Sarithorn Co., Ltd., Asian Steel Product Co., Ltd. and ITD Cementation India Limited, for which the Company issued full guarantees for the credit facilities. Such guarantees were necessary for regular operation of the Company, its subsidiaries and its joint ventures.
4.4) Covenant of Debt to Equity Ratio
As at December 31, 2013 and 2012, the debt to equity ratio from the Company’s consolidated financial statement were 2.17 times and 2.84 times, respectively. The Company was consented to waiver of the debt to equity ratio under bonds’ conditions from bondholders meeting for the 2nd quarter end of June 30, 2012 and the year end of 2012.
Annual Report 2013 73 Auditors’ Report and Consolidated Financial Statements of Italian-thai Development Public Company Limited and its subsidiaries and joint ventures For the Years Ended 31 December 2013
74 Italian-thai Development Public Company Limited The Board of Director’s Report on their Responsibilities for Financial Reports for the year 2013
The Financial Statements for Italian-Thai Development Public Company Limited and its subsidiaries have been prepared in accordance with the policy of the Board of Directors which requires the compliance with generally accepted accounting principles and careful book-keeping to reflect the accurate performance of the Company.
The Financial Statements provide for the significant disclosure of additional substantial information as shown in the notes attached to the Financial Statements, as well as explanations and analysis for the benefit of the shareholders and general investors.
The Company’s Board of Directors recognizes the importance of the Financial Statements by auditing the input financial data. In this regard, the Board of Directors has appointed the Audit Committee comprising independent and non-executive members of the Board to oversee the quality of financial reports. Their opinion is shown in the Report of Audit Committee included in this Annual Report.
Based on the management structure and internal audit system as mentioned above, as well as the Audit Report produced by the certified public auditor, the Board of Directors is convinced that the Financial Statements for the Company and its subsidiaries as at 31st December 2013 reasonably represent an accurate statement of the financial status, business performance and cash flow of the Company in accordance with generally accepted accounting principles.
(Mr. Premchai Karnasuta) (Mrs. Nijaporn Charanachitta) President Senior Executive Vice President
Annual Report 2013 75 Grant Thornton Limited 18th Floor Capital Tower All Seasons Place 87/1 Wireless Road Lumpini Pathumwan Bangkok 10330 Thailand
T + 66 2 205 8222 F + 66 2 654 3339 Report of Independent Auditor www.grantthornton.co.th To the shareholders of Italian-Thai Development Public Company Limited
I have audited the accompanying consolidated financial statements of Italian-Thai Development Public Company Limited and its subsidiaries and joint ventures which comprise the consolidated statement of financial position as at 31 December 2013, the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information. I have also audited the separate financial statements of Italian-Thai Development Public Company Limited which comprise the separate statement of financial position as at 31 December 2013, the related separate statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
The Company’s management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards and for such internal control as management determines to be necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of 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 Company’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 Company’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 that I have obtained is sufficient and appropriate to provide a reasonable basis for my qualified audit opinion.
Basis for Qualified Opinion
The consolidated financial statements as at 31 December 2013 include the financial statements of two overseas joint ventures with total assets of Baht 223.10 million, and total revenues for the year then ended of Baht 32.15 million, and include investments in associated companies accounted for under the equity method of Baht 623.94 million, and share of loss under the equity method for the year then ended of Baht 3.63 million. Those financial statements are based on financial information compiled by the management of such joint venture and associated companies which have not been audited by their auditors because those joint ventures and associated companies are not under the control of the Company’s management.
The consolidated financial statements as at 31 December 2013 include earned revenues not yet billed of a joint venture, based on the proportionate ownership of the Company of Baht 463.22 million, which represents the recognized revenues for work performed for a local government enterprise some years ago but have not been certified to accept the work beyond the normal period of certification. As a result, the joint venture has not been able to determine the age of collection which may impact trade accounts receivable, earned revenues not yet billed and long-term loans and advances to the joint venture in the separate financial statements.
The consolidated financial statements as at 31 December 2013 include trade accounts receivable and un-billed work in progress of an overseas subsidiary company of Baht 587.03 million and Baht 1,349.07 million, respectively, which represent a number of variation order claims recognized some years ago based on the terms and conditions implicit in the contracts. These claims are technical in nature and subject to arbitration and litigation. The subsidiary company has assessed the realization of these claims based on information from the dispute resolution board, the arbitration tribunal, high court orders and legal opinion from an independent counsel and the Company has not provided allowance for doubtful accounts for such matter in the accounts.
76 Italian-thai Development Public Company Limited Qualified Opinion
In my opinion, except for the effects on the consolidated financial statements for the year ended 31 December 2013 of the matter discussed in the first paragraph of the Basis for Qualified Opinion and except for the impact (which may occur and cannot be currently assessed) of the matters discussed in the second and third paragraphs of the Basis for Qualified Opinion which depend on the judicial process in the future, the acceptance by the customer and the customers compliance with their commitments which are unable to be assessed currently, the financial statements referred to above present fairly, in all material respects, the consolidated financial position as at 31 December 2013 and the consolidated results of operations and cash flows for the year then ended of Italian-Thai Development Public Company Limited and its subsidiaries and joint ventures, and the separate financial position as at 31 December 2013 and its results of operations and cash flows for the year then ended of Italian-Thai Development Public Company Limited in accordance with Thai Financial Reporting Standards.
Emphasis of Matter
As discussed in Note 14 to the financial statements, the Company has land lease concessions and projects under development in the Dawei Special Economic Zone with investment costs amounting to Baht 6,031 million. This project is dependent on the cooperation of the governments of Thailand and Myanmar as the new concessionaires and promoter of the Dawei Project. The Company has the right to reimburse its investment costs of the Dawei Project from Special Purpose Vehicle after the completion of the due diligence work performed by the consultants of the two governments.
As discussed in Note 15 to the financial statements, a subsidiary company has potash mining rights and an application for potash mining concessions in process. The subsidiary company’s management believes that this project will generate benefits both for the nearby mining areas and for the country, and that the project will be approved by the government and will become operational as planned in the near future, since the Ministry of Finance has jointly invested in this project for 10% of the total registered capital.
My opinion is not qualified in respect of the matters above.
Other matter
The consolidated financial statements of Italian-Thai Development Public Company Limited and its subsidiaries and joint ventures, and the separate financial statements of Italian-Thai Development Public Company Limited for the year ended 31 December 2012 (before restatement), were audited by Mr. Kosol Yamleemul, a former auditor in the same office as mine, who issued his report dated 1 March 2013 expressed a qualified opinion thereon with exception for 1) investments in associated companies and the share of profit accounted for under the equity method based on the financial information compiled by the management of associated companies which have not been audited by their auditors, 2) trade accounts receivable and earned revenues not yet billed of a joint venture, which represent the recognized revenues for work performed for a local government enterprise but have not been certified to accept the work beyond the normal period of certification, and 3) the effect of the collection of trade accounts receivable of an overseas subsidiary which has been long outstanding under the judicial process. The report also emphasized on 1) the notification from The National Assets Examination Committee to investigate the Company and a local Joint Venture involvement in the procurement of a baggage-handling system and the CTX bomb scanners for Suvarnabhumi Airport and 2) the Company’s investment in a potash mine project for which the acquisition of concessions is still being processed by the government.
Mr. Teerasak Chuasrisakul Certified Public Accountant Registration No. 6624
Bangkok, Thailand 28 February 2014
Annual Report 2013 77 STATEMENTS OF FINANCIAL POSITION
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES AS AT 31 DECEMBER Consolidated F/S Separate F/S 2012 2011 2012 2011 2013 2013 (Unit : Thousand Baht) Notes (Restated) (Restated) (Restated) (Restated) ASSETS CURRENT ASSETS Cash and cash equivalents 1,586,299 2,027,177 2,067,385 589,034 444,826 1,170,074 Fixed deposits less than 1 year 275,240 197,743 105,180 168,000 110,834 94,440 Restricted deposits with banks 5 80,253 61,148 247,621 20,106 1,259 106,972 Current investments 102 88 707 88 88 83 Trade accounts receivable - unrelated parties - net 6 7,006,522 7,362,545 6,695,790 3,939,163 4,651,593 2,659,906 Trade accounts receivable - related parties - net 7 2,396,313 1,825,909 2,443,986 3,501,867 2,675,475 3,103,215 Current portion of finance lease receivable - related party - net 8 6,026 - 35,213 12,052 - 70,427 Short - term loans and advances to subsidiaries and related parties - net 10 69,735 43,540 220,372 1,742,378 2,235,428 1,387,398 Earned revenues not yet billed 15,333,212 13,223,872 10,667,617 9,121,285 6,937,092 5,614,216 Retentions receivable due within one year 1,549,861 1,570,487 1,447,173 1,214,280 1,045,168 1,122,676 Inventories and work in process - net 11 3,675,730 3,959,275 4,107,816 1,875,743 2,184,943 2,165,990 Costs of property development projects - net 12 522,422 460,614 327,262 - - - Income tax withheld at sources 906,568 1,045,413 1,056,878 584,847 562,019 551,287 Refundable value added tax 859,164 766,045 350,471 28,012 29,463 37,205 Advances for purchases of construction materials 61,673 121,795 727,317 15,934 33,163 491,564 Advances for sub-contractors 636,886 242,569 357,556 582,711 187,119 241,994 Other current assets 447,824 518,753 366,478 190,756 153,590 81,329 Total Current Assets 35,413,830 33,426,973 31,224,822 23,586,256 21,252,060 18,898,776 NON - CURRENT ASSETS Finance lease receivable - related party - net 8 111,027 98,654 154,096 222,055 197,308 308,192 Environmental and other guarantee deposits - 8,184 16,368 - 8,184 16,368 Other receivables - related parties 9 245,192 368,932 510,832 436,969 594,449 788,249 Retentions receivable due after one year 225,587 143,936 128,136 - - - Investments in subsidiaries, associated companies, and joint ventures - net 13 680,813 633,543 543,054 7,284,050 8,785,394 8,654,377 Other long - term investments - net 13 1,430,428 1,386,569 764,660 1,264,776 1,348,968 739,973 Land lease concession and project under development 14 6,031,020 3,397,799 911,200 3,731,608 2,288,596 911,200 Potash mining right 15 2,293,489 2,293,489 2,293,489 - - - Deferred exploration and development costs 16 930,352 922,212 795,274 - - - Long - term loans and advances to subsidiaries and related parties - net 17 - - - 4,974,678 3,133,728 1,588,687 Land awaiting development - net 19 782,917 782,937 832,987 474,846 474,846 474,846 Investment properties - net 20 1,363,733 1,363,733 1,380,693 740,614 740,614 757,574 Advances for purchases of machinery 667,646 - - - - - Property, plant and equipment - net 21 13,098,799 12,562,319 11,908,369 6,272,691 5,395,673 4,613,808 Goodwill 22 942,112 942,112 942,112 - - - Deferred concession cost 23 394,124 165,502 105,291 164,717 - - Deferred tax assets 32 233,070 187,456 177,170 - - - Other non - current assets 306,622 298,378 351,421 106,293 124,478 154,987 Total Non - Current Assets 29,736,931 25,555,755 21,815,152 25,673,297 23,092,238 19,008,261 TOTAL ASSETS 65,150,761 58,982,728 53,039,974 49,259,553 44,344,298 37,907,037
The accompanying notes form an integral part of the financial statements.
78 Italian-thai Development Public Company Limited STATEMENTS OF FINANCIAL POSITION
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES AS AT 31 DECEMBER Consolidated F/S Separate F/S 2012 2011 2012 2011 2013 2013 (Unit : Thousand Baht) Notes (Restated) (Restated) (Restated) (Restated) LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Bank overdrafts and short - term loans from financial institutions 24 8,357,561 9,579,573 7,052,495 3,871,933 4,651,400 3,098,254 Current portion of liabilities under trust receipts 1,155,463 891,029 691,666 689,609 722,652 451,488 Trade accounts payable - unrelated parties 8,315,566 8,559,673 7,834,750 5,028,353 5,244,534 4,677,592 Trade accounts payable - related parties 25 1,377,913 1,178,764 877,589 2,010,239 1,658,359 915,784 Receipts in excess of contracted work in progress 641,822 341,337 495,853 341,312 222,601 491,736 Short-term loans and advances from related parties 26 57,436 58,202 113,127 65,175 70,144 281,322 Customer advances under construction contracts - due for revenue recognition within 1 year 5,540,666 3,560,961 3,209,323 3,940,439 3,143,188 2,695,374 Current portion of finance lease payable - related party 27 66,194 17,898 69,163 - - - Current portion of finance lease payable - unrelated parties 28 433,614 426,856 313,390 392,866 249,955 87,373 Current portion of long - term loans 29 2,049,163 1,668,429 1,208,226 1,313,901 622,177 608,141 Current portion of debentures 30 4,992,532 2,496,183 - 4,992,532 2,496,183 - Income tax payable 97,748 182,712 122,466 - - - Value added tax payable 99,831 238,289 213,312 60,022 205,763 177,240 Accrued expenses 962,920 1,053,805 1,915,744 390,927 382,595 286,830 Accounts payable for purchase of investments - related parties 62,484 62,484 62,484 56,809 56,809 56,809 Retentions payable 682,534 620,989 568,001 506,389 487,736 418,235 Loans from directors 33 44,072 64,943 85,040 - - - Other current liabilities 33 503,246 401,983 594,033 163,482 193,046 207,030 Total Current Liabilities 35,440,765 31,404,110 25,426,662 23,823,988 20,407,142 14,453,208 NON - CURRENT LIABILITIES Advances from customers under construction contracts - net 3,972,479 2,513,663 2,727,395 2,896,255 1,272,323 1,118,815 Finance lease payable - related party - net 27 314,459 327,315 338,881 - - - Finance lease payable - unrelated parties - net 28 959,129 732,881 327,395 929,256 696,753 138,093 Long - term loans - net 29 3,484,736 3,672,743 2,075,547 2,058,496 1,948,501 442,565 Debentures - net 30 6,973,631 9,456,854 11,927,117 6,973,631 9,456,854 11,927,117 Allowance for losses on contingent liabilities - related parties - - - - - 24,245 Allowance for losses on construction projects 34 4,476 7,737 96,026 2,300 6,891 96,026 Employee benefits obligation 31 610,452 508,120 464,535 502,134 418,621 356,450 Deferred tax liabilities 32 787,939 741,351 618,240 234,042 219,901 111,215 Other non - current liabilities 219,268 197,626 138,112 8,811 6,124 12,800 Total Non - Current Liabilities 17,326,569 18,158,290 18,713,248 13,604,925 14,025,968 14,227,326 TOTAL LIABILITIES 52,767,334 49,562,400 44,139,910 37,428,913 34,433,110 28,680,534
The accompanying notes form an integral part of the financial statements.
Annual Report 2013 79 STATEMENTS OF FINANCIAL POSITION
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES AS AT 31 DECEMBER Consolidated F/S Separate F/S 2012 2011 2012 2011 2013 2013 (Unit : Thousand Baht) Notes (Restated) (Restated) (Restated) (Restated) LIABILITIES AND SHAREHOLDERS’ EQUITY (Continued) SHAREHOLDERS’ EQUITY Share capital - ordinary share at Baht 1 par value Registered - 5,871,149,452 shares 40 5,871,149 5,871,149 4,921,678 5,871,149 5,871,149 4,921,678 Issued and fully paid - up - 31 December 2013 : 4,860,473,011 shares (31 December 2012 : 4,193,678,180 shares) 40 4,860,473 4,193,678 4,193,678 4,860,473 4,193,678 4,193,678 Share premium 6,848,952 5,515,363 5,515,363 6,848,952 5,515,363 5,515,363 Retained earnings (deficit) Appropriated - statutory reserve 37 465,689 459,026 459,026 451,021 451,021 451,021 Unappropriated (335,116) (1,168,164) (1,264,726) (540,764) (561,249) (755,532) Other components of shareholders’ equity (285,867) (395,917) (860,405) 210,958 312,375 (178,027) Equity attributable to the Company’s shareholders 11,554,131 8,603,986 8,042,936 11,830,640 9,911,188 9,226,503 Non - controlling interests 829,296 816,342 857,128 - - - Total Shareholders’ Equity 12,383,427 9,420,328 8,900,064 11,830,640 9,911,188 9,226,503 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 65,150,761 58,982,728 53,039,974 49,259,553 44,344,298 37,907,037
The accompanying notes form an integral part of the financial statements.
80 Italian-thai Development Public Company Limited STATEMENTS OF COMPREHENSIVE INCOME
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES FOR THE YEAR ENDED 31 DECEMBER Consolidated F/S Separate F/S 2013 2012 2013 2012 (Unit : Thousand Baht) Notes (Restated) (Restated) REVENUES Revenues from construction work 33 41,452,844 44,467,369 29,071,394 29,810,662 Revenues from sales and services 33 2,460,234 1,823,493 - - Total revenues 43,913,078 46,290,862 29,071,394 29,810,662 COSTS Costs of construction work 33, 36, 39 37,396,939 39,707,153 26,590,753 27,060,284 Costs of sales and services 33, 39 1,861,280 1,457,643 - - Total costs 39,258,219 41,164,796 26,590,753 27,060,284 Gross income 4,654,859 5,126,066 2,480,641 2,750,378 Dividend income and share of profit from joint ventures 52,001 38,546 219,535 61,148 Interest income 195,132 120,205 106,500 99,517 Reversal of allowance for impairment of investment 161,920 - 26,694 - Other income 38 579,552 520,374 155,304 355,221 Income before expenses 5,643,464 5,805,191 2,988,674 3,266,264 Selling expenses 39 (29,036) (23,967) - - Administrative expenses 33, 39 (2,017,697) (2,460,782) (861,857) (845,655) Reversal of allowance (allowance) for doubtful accounts 131,149 (510,376) (877,097) (781,528) Gain (loss) on exchange rate (161,975) (195,485) 151,521 (96,449) Penalty expenses - (15,807) - - Loss on impairment of assets (55,631) - - - Loss from devaluation of investment - - - (33,481) Total expenses (2,133,190) (3,206,417) (1,587,433) (1,757,113) Income from operations 3,510,274 2,598,774 1,401,241 1,509,151 Equity in net income of associated companies 22,348 7,390 - - Income before financial costs and income tax 3,532,622 2,606,164 1,401,241 1,509,151 Financial costs (2,204,412) (2,285,960) (1,277,169) (1,285,174) Income before income tax 1,328,210 320,204 124,072 223,977 Income tax (336,095) (211,847) (36,318) 13,113 Income for the year 992,115 108,357 87,754 237,090
The accompanying notes form an integral part of the financial statements.
Annual Report 2013 81 STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES FOR THE YEAR ENDED 31 DECEMBER Consolidated F/S Separate F/S 2013 2012 2013 2012 (Unit : Thousand Baht) (Restated) (Restated) OTHER COMPREHENSIVE INCOME Unrealised gain (loss) on changes in value of investments (94,447) 497,486 (88,708) 487,196 Translation adjustments for foreign currency financial statements 166,702 (56,935) (12,709) 3,206 Non - controlling interests in subsidiaries decrease during the year - 24,161 - - Actuarial losses (68,891) (35,696) (67,269) (42,807) COMPREHENSIVE INCOME (LOSS) FOR THE YEAR 995,479 537,373 (80,932) 684,685 ALLOCATION OF INCOME (LOSS) Portion of the Company’s shareholders 907,373 134,293 87,754 237,090 Portion of non-controlling interests 84,742 (25,936) - - 992,115 108,357 87,754 237,090 ALLOCATION OF COMPREHENSIVE INCOME (LOSS) Portion of the Company’s shareholders 949,761 561,050 (80,932) 684,685 Portion of non-controlling interests 45,718 (23,677) - - 995,479 537,373 (80,932) 684,685 BASIC EARNINGS PER SHARE Income (Baht per share) 0.204 0.032 0.0198 0.0565 Weighted average number of ordinary shares 4,440,301 4,193,678 4,440,301 4,193,678 (Unit : Thousand shares)
The accompanying notes form an integral part of the financial statements.
82 Italian-thai Development Public Company Limited 17,629 (17,109) (95,197) (32,764) Total 537,373 995,479 8,882,435 8,900,064 9,420,328 9,515,525 9,420,328 2,000,384 12,383,427 - 30,160 37,789 45,718 (17,109) (23,677) (32,764) 826,968 857,128 816,342 778,553 816,342 829,296 Non - interests controlling - - (12,531) 561,050 949,761 (132,986) holders’ equity of 8,055,467 8,042,936 8,603,986 8,736,972 8,603,986 2,000,384 11,554,131 11,554,131 Total share - the Company - - - (65,580) 110,050 110,050 Total 464,488 (794,825) (860,405) (395,917) (202,071) (193,846) (395,917) (285,867) ------47,096 47,096 47,096 47,096 47,096 47,096 company dilution of subsidiary Surplus on investment in - - - (11,644) (32,998) (15,528) 204,497 (951,785) financial currency (1,111,640) (1,123,284) (1,156,282) (1,140,754) (1,156,282) statements for foreign Translation adjustments - - - Other components of shareholders’ equity gain (53,936) (94,447) 269,719 215,783 497,486 713,269 891,587 713,269 618,822 (178,318) value of (loss) on changes in Unrealised investments - - - 53,049 96,562 60,860 833,048 (335,116) (1,317,775) (1,264,726) (1,168,164) (1,229,024) (1,168,164) Unappropriated
------Equity attributable to the Company’s shareholders 6,663 459,026 459,026 459,026 459,026 459,026 465,689 Reserve Statutory Retained earnings (Deficit) ------EQUITY Share 5,515,363 5,515,363 5,515,363 5,515,363 5,515,363 1,333,589 6,848,952 premium ------share 666,795 capital paid-up 4,193,678 4,193,678 4,193,678 4,193,678 4,193,678 4,860,473 Issued and 2 2 40 Notes CHANGES IN SHAREHOLDERS’ - as previous reported accounting policy for income tax - restated - as previous reported accounting policy for income tax OF STATEMENTS ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES AND JOINT LIMITED, SUBSIDIARIES PUBLIC COMPANY THAI DEVELOPMENT - ITALIAN YEAR ENDED 31 DECEMBER THE FOR Thousand Baht) (Unit : Consolidated F/S Balance as at 1 January 2012 The accompanying notes form an integral part of the financial statements. Cumulative effect adjustment from changed Cumulative effect Balance as at 1 January 2012 - restated Comprehensive income (loss) for the year Dividend paid from subsidiary Balance as at 31 December 2012 - restated Balance as at 1 January 2013 Cumulative effect adjustment from changed Cumulative effect Balance as at 1 January 2013 - restated Increase share capital during the year Comprehensive income (loss) for the year Dividend paid from subsidiary Balance as at 31 December 2013
Annual Report 2013 83 (80,932) 684,685 Total (111,215) (219,901) 9,911,188 9,911,188 9,911,188 9,911,188 2,000,384 9,337,718 9,226,503 11,830,640 11,830,640 10,131,089 - (53,084) 210,958 312,375 312,375 487,258 490,402 Total (101,417) (174,883) (124,943) (178,027) - - - 3,206 (12,709) (399,865) (387,156) (387,156) (387,156) (390,362) (390,362) financial statements Translation adjustments for foreign currency - (88,708) (53,084) 610,823 699,531 699,531 874,414 487,196 265,419 212,335 (174,883) Other components of shareholders’ equity in value of investments Unrealised gain (loss) on changes - 20,485 (45,018) (58,131) 194,283 (540,764) (561,249) (561,249) (516,231) (697,401) (755,532) Unappropriated - - - - - 451,021 451,021 451,021 451,021 451,021 451,021 Reserve Retained earnings (Deficit) Statutory - - - - (CONTINUED) 6,848,952 5,515,363 1,333,589 5,515,363 5,515,363 5,515,363 5,515,363 Share premium - - - - EQUITY 666,795 4,860,473 4,193,678 4,193,678 4,193,678 4,193,678 4,193,678 paid-up Issued and share capital 2 2 40 Notes CHANGES IN SHAREHOLDERS’ policy for income tax policy for income tax Balance as at 31 December 2013 Balance as at 1 January 2013 - restated Cumulative effect adjustment from changed accounting Cumulative effect Comprehensive income (loss) for the year Increase share capital during the year Balance as at 31 December 2012 -as restated Balance as at 1 January 2013 - previous reported Cumulative effect adjustment from changed accounting Cumulative effect Comprehensive income for the year - restated Separate F/S Balance as at 1 January 2012 - previous reported Balance as at 1 January 2012 - restated OF STATEMENTS VENTURES AND JOINT LIMITED, SUBSIDIARIES PUBLIC COMPANY THAI DEVELOPMENT - ITALIAN YEAR ENDED 31 DECEMBER THE FOR Thousand Baht) (Unit : The accompanying notes form an integral part of the financial statements.
84 Italian-thai Development Public Company Limited STATEMENTS OF CASH FLOWS
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES FOR THE YEAR ENDED 31 DECEMBER Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Cash flows from operating activities Gain before taxation 1,328,210 320,204 124,072 223,977 Adjustments to reconcile to cash income :- Depreciation and amortisation 1,977,620 1,785,821 824,728 666,300 Unrealised gain on exchange rate (133,082) (24,915) (122,779) (11,659) Dividend and shares of profit from the joint ventures (52,001) (38,546) (219,535) (61,148) Equity in net income of associated companies (22,348) (7,390) - - Allowance (reversal of allowance) for doubtful accounts (131,149) 510,376 877,097 781,528 Allowance (reversal of allowance) for impairment of investment (161,920) 24,161 (26,694) 33,481 Allowance (reversal of allowance) for impairment of inventories 3,797 (4,694) 3,797 - Allowance for impairment of assets 55,631 - - - Gain from disposal of assets (13,134) (58,854) (21,221) (113,636) Reversal of provision for loss on construction project (3,261) (88,289) (4,591) (89,135) Employee benefits obligation expense 44,021 49,022 28,218 23,339 Penalties expense - 15,807 - - Interest expense 2,204,412 2,285,960 1,277,169 1,285,174 Income from operating activities before changes in 5,096,796 4,768,663 2,740,261 2,738,221 operating assets and liabilities Decrease (increase) in operating assets :- Trade accounts receivable - unrelated parties 504,686 (1,191,117) 747,150 (2,027,971) Trade accounts receivable - related parties (450,187) 891,182 (689,173) 710,131 Loans and advances to subsidiaries and related parties 121,304 117,482 (560,529) (2,996,867) Earned revenues not yet billed (2,109,340) (2,556,255) (2,184,193) (1,322,876) Retentions receivable (61,492) (139,114) (169,138) 77,508 Inventories and work in process 279,748 203,285 305,403 (18,953) Costs of property development projects (61,808) (133,352) - - Refundable value added tax (93,119) (415,574) 1,451 7,742 Advances for purchases of machinery and construction materials (607,524) 605,522 17,229 458,401 Advances for sub - contractors (394,317) 114,987 (395,592) 54,875 Other current assets 61,947 (151,988) (44,575) (71,389) Other non - current assets (12,470) 49,294 13,959 26,760 Increase (decrease) in operating liabilities : Trade accounts payable - unrelated parties (276,035) 679,197 (218,802) 594,116 Trade accounts payable - related parties 207,878 317,650 351,880 742,575 Receipts in excess of contracted work in progress 300,485 (154,516) 118,711 (269,135) Advances from customers under construction contracts 3,440,706 137,906 2,421,183 601,322 Value added tax payable (138,458) 24,977 (145,741) 28,523 Accrued expenses (90,885) (869,805) 8,332 95,765 Retentions payable 61,545 52,988 18,653 69,501 Other current liabilities 37,505 (96,732) (25,556) 25,637 Employee benefits obligation (31,295) (56,721) (29,987) (18,117) Other non-current liabilities 21,642 59,513 2,687 (30,921) Cash received from (used in) operations 5,807,312 2,257,472 2,283,613 (525,152) Income tax refund 513,715 458,931 491,327 443,230 Income tax payment (779,803) (616,138) (514,155) (453,962) Net cash provided from (used in) operating activities 5,541,224 2,100,265 2,260,785 (535,884)
The accompanying notes form an integral part of the financial statements.
Annual Report 2013 85 STATEMENTS OF CASH FLOWS (CONTINUED)
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES FOR THE YEAR ENDED 31 DECEMBER Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Cash flows from investing activities Decrease (increase) in fixed deposits and restricted deposits with banks (96,616) 93,910 (76,013) 89,319 Sale (purchase) of current investments - 578 - (5) Purchases of Land awaiting development 20 - - - Disposal of investment property - 13,200 - 13,200 Disposal of capital assets 1,194,916 948,709 569,275 455,275 Purchases of capital assets (2,995,613) (2,477,563) (1,584,453) (861,070) Increase in investments in subsidiaries, associated companies and joint ventures - (99,207) (17,051) (314,498) Cash received from dividend and shares of profit from the joint ventures 52,001 38,546 219,535 61,148 Cash paid for land lease concession and project under development (2,633,221) (2,486,599) (1,443,012) (1,377,396) Cash paid for deferred concession cost (228,622) (60,211) (164,717) - Increase in deferred exploration and development costs (8,140) (126,938) - - Net cash used in investing activities (4,715,275) (4,155,575) (2,496,436) (1,934,027) Cash flows from financing activities Interest payment (2,082,600) (2,297,246) (1,227,420) (1,244,488) Increase (decrease) in bank overdrafts and short - term loans from financial institutions (1,222,012) 2,527,078 (779,467) 1,553,146 Decrease in loans and advances from related parties (766) (54,925) (4,969) (211,178) Increase in long - term loans 165,805 2,061,256 774,797 1,523,829 Decrease in liabilities under finance leases payable (470,672) (352,777) (322,506) (150,487) Increase (decrease) in liabilities under trust receipts 264,434 199,363 (33,043) 271,164 Decrease in loans from directors (20,871) (20,097) - - Proceed from issuance of common shares 2,000,384 - 2,000,384 - Proceed from issuance of debentures 2,485,629 - 2,485,629 - Payment for debentures redemption (2,500,000) - (2,500,000) - Dividend paid from subsidiary company (32,764) (17,109) - - Net cash provided from (used in) financing activities (1,413,433) 2,045,543 393,405 1,741,986 Translation adjustment on foreign currency financial statements 146,606 (30,441) (13,546) 2,677 Net increase in cash and cash equivalents (440,878) (40,208) 144,208 (725,248) Cash and cash equivalents at beginning of year 2,027,177 2,067,385 444,826 1,170,074 Cash and cash equivalents at end of year 1,586,299 2,027,177 589,034 444,826
Supplemental cash flows information Non cash transactions:- Unrealised gain (loss) on changes in value of investments (118,060) 621,868 (110,885) 608,995 Purchase assets under finance lease agreements 732,855 947,773 697,920 871,729 Increase in investments in subsidiary company - - (3,795,987) - Decrease in investments in subsidiaries company - - 5,314,382 - Increase in loans and advances to subsidiaries and related parties - - (1,518,395) -
The accompanying notes form an integral part of the financial statements.
86 Italian-thai Development Public Company Limited NOTES TO FINANCIAL STATEMENTS
ITALIAN - THAI DEVELOPMENT PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES 31 DECEMBER 2013
1. GENERAL INFORMATION Italian - Thai Development Public Company Limited (“the Company”) is incorporated and domiciled in Thailand. The Company is principally engaged in the construction business. The Company has 3 overseas branches and 2 project offices. Its registered office address is 2034/132-161, New Petchburi Road, Kwaeng Bangkapi, Khet Huaykwang, Bangkok.
2. BASIS OF FINANCIAL STATEMENT PREPARATION AND PRINCIPLES OF CONSOLIDATION 2.1 Basis of financial statement preparation The accompanying financial statements have been officially prepared in Thai in accordance with the Accounting Act B.E. 2543 and Thai Financial Reporting Standards issued under the Accounting Professions Act B.E. 2547 and the financial reporting requirements promulgated by the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The translation of these financial statements to other language must be in compliance with the official report inThai. The financial statements have been prepared on a historical cost basis, except as otherwise disclosed specifically. The Federation of Accounting Professions has announced the application of accounting standards, the financial reporting standards that were amended in 2012 and 2013, and the interpretation of accounting standards and reporting standards, effective for fiscal years beginning on or after 1 January 2014. The Company’s management has considered the impact to the financial statement when these accounting and financial reporting standards are initially applied. Effective 1 January 2013, the Company adopted TAS 12 Income taxes as follows: TAS 12 : Income taxes This accounting standard requires the Company to identify temporary differences between the carrying amounts of assets or liabilities under the accounting basis and corresponding amounts under the tax basis, in order to recognize the tax effects as deferred tax assets or liabilities subject to certain recognition criteria. Effective 1 January 2013, the Company has adopted such accounting policy and restated the prior year financial statements, presented for comparative information, as if it had recognized the income tax effects as deferred tax assets or liabilities in the previous years. The income tax expense recognized in profit or loss for the year comprises deferred income taxes and current income tax not recognized in other comprehensive income or directly in equity. Current income tax Current income tax is the expected tax payable or claimable on the taxable profit or loss for the year, which is different from profit or loss in the financial statements, using income tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to income tax payable in respect of previous years. Deferred income tax Deferred income taxes are calculated using temporary differences between the accounting amounts of assets and liabilities and the amounts used for tax computation purposes. Deferred income taxes are calculated at the income tax rates that are expected to be applied to the temporary differences when they reverse, using income tax rates enacted or substantively enacted at the end of the reporting period. A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred income tax assets are reviewed by management at the end of each reporting period and reduced to the extent that it is no longer probable that the related income tax benefit will be realized. The effect from adoption of new accounting policy The effects from the adoption of this new accounting policy are reflected in the financial statements for the year 2013 as follows :
Consolidated F/S (Unit : Thousand Baht) 31 December 2012 1 January 2012 Statements of financial position Increase in deferred income tax liabilities (553,895) (441,070) Increase in goodwill 458,699 458,699 Decrease in deficit 60,860 53,049 Increase in non - controlling interests 37,789 30,160 Decrease in other components of equity (193,846) (65,580)
Separate F/S (Unit : Thousand Baht) 31 December 2012 1 January 2012 Statements of financial position Increase in deferred income tax liabilities (219,901) (111,215) Increase in deficit (45,018) (58,131) Decrease in other components of equity (174,883) (53,084)
Annual Report 2013 87 Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Statements of comprehensive income Increase (decrease) in income tax expense 17,329 (16,884) 36,318 (13,113) Decrease (increase) in unrealised gain on changes in value of (23,612) 124,382 (22,177) 121,799 investments Translation adjustments for foreign currency financial statement 9,611 4,959 - - Decrease in actuarial losses (2,353) (369) - - Increase (decrease) in basic earnings per share (Baht per share) (0.0039) 0.0040 (0.0082) 0.0031 2.2 Basis of consolidation The consolidated financial statements include the financial statements of Italian-Thai Development Public Company Limited, its subsidiaries, and its jointly controlled joint ventures (proportionately consolidated) as follows :-
Percentage of investment Country of Name of Entity by the Company incorporation 2013 2012 Overseas subsidiaries Myanmar ITD Co., Ltd. Myanmar 99.99 99.99 PT. Thailindo Bara Pratama Indonesia 99.99 99.99 ITD Cementation India Limited India 69.57 69.57 ITD-Madagascar S.A. Madagascar 99.98 99.70 Italian Thai International SDN. BHD Malaysia 99.99 99.99 ITD Construction SDN. BHD Malaysia 99.99 99.99 First Dhaka Elevated Expressway Co., Ltd. Bangladesh 99.99 99.99 ITD Bangladesh Company Limited Bangladesh 99.99 99.99 Italian-Thai Development Vietnam Co., Ltd. Vietnam 80.00 80.00 Italian-Thai Development Pte Ltd. Singapore - 100.00 Local subsidiaries Italian-Thai International Co., Ltd. Thailand 99.99 99.99 Bhaka Bhumi Development Co., Ltd. Thailand 99.99 99.99 Thai Pride Cement Co., Ltd. Thailand 99.99 99.99 Sin Rae Muang Thai Co., Ltd. Thailand - 99.99 Nha Pralan Crushing Plant Co., Ltd. Thailand 99.99 99.99 Siam Concrete and Brick Products Co., Ltd. Thailand 99.80 99.80 Italthai Marine Co., Ltd. Thailand 92.59 92.59 Italthai Trevi Co., Ltd. Thailand 90.94 90.94 Asian Steel Product Co., Ltd. Thailand 69.90 69.90 Thai Maruken Co., Ltd. Thailand 50.96 50.96 Italian Thai Land Co., Ltd. Thailand 99.99 99.99 Khunka Palangthai Co., Ltd. Thailand 98.05 98.05 Palit Palangngan Co., Ltd. Thailand 74.93 74.93 Palang Thai Kaowna Co., Ltd. Thailand 99.94 99.94 Italian Thai Power Co., Ltd. Thailand 99.99 99.99 Saraburi Construction Technology Co., Ltd. Thailand 99.93 99.93 Asia Logistics Development Co., Ltd. Thailand 99.93 99.93 Asia Industrial and Port Corporation Co., Ltd. Thailand 99.93 99.93 Wildemere Co., Ltd. Thailand - 99.99 Myanmar Italian – Thai Power 1 Co., Ltd. Thailand 99.95 99.95 Italian-Thai Hongsa Co., Ltd. Thailand 99.97 99.97 APPC Holding Co., Ltd. Thailand 60.00 - Indirect overseas subsidiaries Italian-Thai Development (BVI) Co., Ltd. British Virgin Islands 99.99 99.99 Ayeyarwady Multitrade Co., Ltd. Myanmar 99.99 99.99 ITD Cementation Projects India Limited India 99.99 99.99 Koh Kong Power Light Co., Ltd. Cambodia 93.00 93.00 ITD Vertex Consortium SDN. BHD Malaysia 70.00 70.00
88 Italian-thai Development Public Company Limited Percentage of investment Country of Name of Entity by the Company incorporation 2013 2012 Dawei Development Company Limited (BVI) British Virgin Islands 75.00 75.00 Dawei Development Company Limited (Myanmar) Myanmar 75.00 75.00 Future Prosperity Investment Company Limited Mauritius 99.99 99.99 Thai Port Development Company Limited Hong Kong 99.99 99.99 Thai Road Link Development Company Limited Hong Kong 99.99 99.99 Thai Power Development Company Limited Hong Kong 99.99 99.99 Thai Water Development Company Limited Hong Kong 99.99 99.99 Thai Telecom Development Company Limited Hong Kong 99.99 99.99 Thai Integrated Steel Development Company Limited Hong Kong 99.99 99.99 Thai Refinery Development Company Limited Hong Kong 99.99 99.99 Thai Petrochemical Development Company Limited Hong Kong 99.99 99.99 Thai International Industrial Estate Development Company Limited Hong Kong 99.99 99.99 Dawei Port Holding Company Limited Hong Kong 99.99 99.99 Dawei Road Link Holding Company Limited Hong Kong 99.99 99.99 Dawei Power Holding Company Limited Hong Kong 99.99 99.99 Dawei Green Power Holding Company Limited Hong Kong 99.99 99.99 Dawei Electricity Distribution Holding Company Limited Hong Kong 99.99 99.99 Dawei LNG Terminal Holding Company Limited Hong Kong 99.99 99.99 Dawei Water Holding Company Limited Hong Kong 99.99 99.99 Dawei Telecom Holding Company Limited Hong Kong 99.99 99.99 Dawei Intregrated Steel Holding Company Limited Hong Kong 99.99 99.99 Dawei Refinery Holding Company Limited Hong Kong 99.99 99.99 Dawei Petrochemical Holding Company Limited Hong Kong 99.99 99.99 Dawei International Industrial Estate Holding Company Limited Hong Kong 99.99 99.99 APPC Hong Kong Company Limited Hong Kong 100.00 - Italian-Thai Development Company Limited Hong Kong 100.00 - Indirect local subsidiaries Aquathai Co., Ltd. Thailand 99.99 99.99 Sarithorn Co., Ltd. Thailand 99.99 99.99 Southern Industries (1996) Co., Ltd. Thailand 99.99 99.99 Asia Pacific Potash Corporation Limited Thailand 90.00 90.00 Lasalle Company Limited Thailand 99.30 99.30 Tongkrai Company Limited Thailand 99.40 99.40 Tayakhee Company Limited Thailand 99.40 99.40 Dithee Company Limited Thailand 99.40 99.40 Panoot Company Limited Thailand 99.40 99.40 Phannin Company Limited Thailand 99.40 99.40 Takolkiat Company Limited Thailand 99.40 99.40 Tridayuk Company Limited Thailand 99.40 99.40 Bhantuwong Company Limited Thailand 99.40 99.40 Nahathai Company Limited Thailand 99.40 99.40 Kanika Company Limited Thailand 99.40 99.40 Sin Rae Muang Thai Co., Ltd. Thailand 99.99 - Wildemere Co., Ltd. Thailand 99.99 - APPC Holding Co., Ltd. Thailand 40.00 - Overseas joint ventures (proportionate consolidation) : ITD – NCC Joint Venture (NT-2) Laos 60.00 60.00 ITD – EGC Joint Venture Taiwan 55.00 55.00 Joint Venture Evergreen – Italian-Thai – PEWC Taiwan 25.00 25.00 Joint Venture between Italian-Thai Development Plc. India 20.00 20.00 and ITD Cementation India Limited ITD-Nawarat (L.L.C) United Arab Emirates 60.00 60.00 ITD-ITDCEM JV India 51.00 51.00 ITD-ITDCEM JV (Consortium) India 60.00 60.00
Annual Report 2013 89 Percentage of investment Country of Name of Entity by the Company incorporation 2013 2012 Local joint ventures (proportionate consolidation) : ITD – ETF Joint Venture Thailand 65.00 65.00 IN Joint Venture Thailand 51.00 51.00 ITO Joint Venture Thailand 40.00 40.00 IOT Joint Venture Thailand 40.00 40.00 ITD – SQ Joint Venture Thailand 50.00 50.00 ITD – Unique Joint Venture Thailand 60.00 60.00 SQ – ITD Joint Venture Thailand 50.00 50.00 ITD – ETF- MVM Joint Venture Thailand 55.25 55.25 ITD – SMCC Joint Venture Thailand 40.00 40.00 ITD – Samsung Joint Venture Thailand 24.00 - 2.3 Significant changes during the year 2013 are as follows : -- The Company paid BDT 32.55 million for share capital of First Dhaka Elevated Expressway Co., Ltd. -- The Company and Samsung C & T Corporation. entered into a Joint Venture Agreement under the name of “SAMSUNG - ITD Joint Venture” to engage in the construction of The Expansion of LPG Facilities project. The Company’s portion in the joint venture is 24%. -- The Company, Power Construction Corporation of China, China Gezhouba Group Company Limited, China International Water & Electric Corp. and Panya Consultants Co., Ltd. entered into a Joint Venture Agreement under the name of “ITD-POWERCHINA JV” to engage in the construction of Water and Flood Management Commission. -- The Company paid for a share capital increase in ITD-Madagascar S.A. of Baht 4.20 million. This increases the percentage of shareholding in such subsidiary from 99.70% to 99.98%. -- The Company invested in APPC Holding Co., Ltd. of Baht 3,796 million for 99.99% of share capital by swapping all share capital of Sin Rae Muang Thai Co., Ltd. and Wildemere Limited of Baht 3,796 million. The Company sold investment in APPC Holding Co., Ltd. of Baht 1,518 million for 40% of share capital to APPC Hong Kong Company Limited which hold share by a subsidiary company. -- The Company registered the liquidation of Italian-Thai Development Pte Ltd. in Singapore. 2.4 Significant changes during the year 2012 are as follows : -- The Company established a 99.99% owned subsidiary, ITD Bangladesh Company Limited, with registered share capital of BDT 4 million, engaging in construction business in Bangladesh. -- The Company established a 100% owned subsidiary, Italian-Thai Development Pte Ltd., with registered share capital of USD 1, engaging in business management and consultancy services in Singapore. -- The Company paid BDT 124.21 million for share capital of First Dhaka Elevated Expressway Co., Ltd. -- The Company and Sumitomo Mitsui Construction Co., Ltd. entered into a Joint Venture Agreement under the name of “ITD-SMCC Joint Venture” to engage in the construction of a crossing chaoppaya bridge at Nonthaburi. The Company’s portion in the joint venture is 40%. -- The Company paid Baht 0.25 million for a 99.97% stakeholding in share capital of Italian-Thai Hongsa Co., Ltd., engaging in coal mining contracting in Laos. -- The Company paid Baht 16 million for a share capital increment in Khunka Palang Thai Co., Ltd. to increase its stakeholding from 66.86% to 98.05%. -- The Company paid Baht 150 million for a share capital increment in Italthai Marine Co., Ltd. to increase its stakeholding from 90.91% to 92.59%. -- The Company paid Baht 115.54 million for a share capital increment in associated company, Sino Lao Aluminium Corporation Limited -- A subsidiary company invested 99.99% in Future Prosperity Investment Company Limited, to hold 99.99% of share capital of all newly established subsidiaries in Hong Kong. 2.5 The Company does not include the financial statements of Siam Pacific Holding Company Limited, which was established for the purpose of a joint venture with a foreign partner company of which 46.69 percent and 4.30 percent (totaling 50.99 percent) of its shares are respectively held by the Company and its subsidiary because the Company has no control over such company and such company is not considered as a subsidiary. There is no material effect on the consolidated financial statements by such exclusion. 2.6 The financial statements of the overseas project offices, branches, subsidiaries and joint ventures are translated into Thai Baht using exchange rates at the statement of financial position date for assets and liabilities, and using the monthly average exchange rates for revenues and expenses. The resultant differences are shown under the caption “Translation adjustment for foreign currency financial statements” under shareholders’ equity. 2.7 Material transactions with subsidiaries and joint ventures balances and transactions have been eliminated from the consolidated financial statements, except for intercompany profit in inventories at the end of the year, which has insignificant effect to the consolidated financial statements.
90 Italian-thai Development Public Company Limited 2.8 Non-controlling interests represent the portion of subsidiary companies’ profit or loss and net assets that are not held by the Company. 2.9 All subsidiaries and joint ventures have a reporting date of 31 December and have been prepared with the same accounting policies as for the separate financial statements for the same accounting transactions or accounting events. 2.10 Dilution gains that arise on shares issued by subsidiaries and sold to third parties are recognised as surplus on dilution of investment in subsidiary companies, which is presented in shareholders’ equity in the consolidated financial statements. 2.11 The Company’s financial statements for the years ended 31 December 2013 and 2012 include the audited financial statements of two overseas project offices, three overseas branches, seven overseas subsidiaries (2012 : eight overseas subsidiaries), and six joint ventures with aggregate assets and revenues in Baht equivalent as follows :-
2013 2012 (Unit : Million Baht) Total Assets Total Revenues Total Assets Total Revenues KOLDAM project office 1,292 227 1,390 634 West Bengal Project office 118 37 224 142 Italian-Thai Development Public Co., Ltd. – Philippines Branch 86 21 103 14 Italian-Thai Development Public Co., Ltd. – Taiwan Branch 55 15 53 91 Italian-Thai Development Public Co., Ltd – India Branch 176 18 221 3 ITD Cementation India Limited 10,033 8,560 10,003 9,658 PT. Thailindo Bara Pratama 942 90 1,190 162 ITD Madagascar S.A. 167 7 58 12 ITD Construction SDN. BHD - - - 20 First Dhaka Elevated Expressway Co., Ltd. 238 - 185 - ITD Bangladesh Company Limited 2 - 2 - Italian-Thai Development Vietnam Co., Ltd. 5 - 8 - ITD-Cemindia JV 94 4 96 1 ITD-ITDCEM JV 1,767 1,531 1,350 1,282 ITD-ITDCEM JV (Consortium) 317 441 594 1,227 ITD – EGC JV 220 32 342 291 EIP JV 3 - 3 - ITD-Nawarat (L.L.C) - 20 3 - Total 15,515 11,003 15,825 13,537 2.12 The consolidated financial statements as at 31 December 2013 include the financial statements of two overseas joint ventures with total assets of Baht 223.10 million, and total revenues for the year then ended of Baht 32.15 million, and include investments in associated companies accounted for under the equity method as at 31 December 2013 and 2012 of Baht 623.94 million and Baht 115.42 million, and share of loss under the equity method of Baht 3.63 million and share of profit under the equity method of Baht 8.85 million, respectively. Those financial statements are based on financial information compiled by the management of such joint venture and associated companies which have not been audited by auditors because the joint venture and associated companies are not under the control of the Company’s management. However, the management of the Company believes that there will be no significant variances had the financial statements of those joint venture and associated companies been audited by their auditors. 2.13 The consolidated financial statements as at 31 December 2013 and 2012 and for the years ended 31 December 2013 and 2012 include the proportion of the assets, liabilities, revenues and expenses of the joint ventures as follows :
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Current assets 6,507,444 6,272,396 Non-current assets 3,192,338 3,291,208 Current liabilities 4,822,216 4,711,564 Non-current liabilities 1,462,782 1,891,761
For the years ended 31 December (Unit : Thousand Baht) 2013 2012 Revenues 7,054,366 8,198,289 Expenses 6,193,725 7,575,626
3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Revenues recognition Revenues from construction work Revenues from construction work are recognized when services have been rendered taking into account the stage of completion measured by the proportion of actual construction costs incurred up to the end of the year and the total anticipated costs to complete the construction. Provision for the total anticipated loss on construction projects is made in the accounts as soon as the possibility of loss is ascertained.
Annual Report 2013 91 Revenue from sales Revenue from sales are recognized when the significant risks and rewards of ownership of the goods have passed to the buyers. Sales are presented at invoiced values, excluding value added tax, of goods supplied after deducting discounts and allowances. Revenue from services Revenue from services are recognized when the services have been rendered. Interest income Interest income is recognized over time – period on an accrued basis. (Interest income on finance leases is recognised as income over the period of the underlying agreement, using the effective rate method.) Dividend income Dividend income is recognized when the right to receive the dividends is established. 3.2 Cash and cash equivalents Cash and cash equivalents consist of cash on hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 3.3 Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. The Company, its subsidiaries and joint ventures provide allowance for doubtful accounts for the estimated losses that may occur in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging, and the likelihood of settlement of debt, on a specific account basis. Finance lease receivables are carried at contracted amounts reduced by unearned financial income and allowance for doubtful accounts. 3.4 Earned revenues not yet billed/receipt in excess of contract work in progress The recognized revenues which are not yet due as per contracts are presented as “Earned revenues not yet billed” in the statement of financial position. The instalment amounts due and received according to the contracts but not yet recognized as revenue is presented as “Receipt in excess of contract work in progress” in the statement of financial position. 3.5 Inventories and work in process Inventories and work in process are valued at the lower of weighted average cost and net realizable value and are charged to production costs whenever consumed. Management periodically review and provide allowance for obsolete inventories. 3.6 Costs of property development projects Costs of property development projects are presented at costs or net realizable value whichever is lower. Project development costs include land cost, construction costs and expenses directly related to the development projects, including interest expense incurred from related loan interest. These will be amortized to cost of sales based on the percentage of sold area of each project. 3.7 Borrowing costs Interest expenses incurred on loans to finance the acquisition and development of the project is capitalized as a cost of each project. It will cease the capitalization of interest when the project is completed, or if suspended, until development is resumed. 3.8 Investments a) Investments in available-for-sale securities are presented at fair value. Gains or losses arising from changes in the value of such investments are separately presented as part of shareholders’ equity under the caption “Unrealised gain/loss on changes in value of investments”. When the securities are sold, the change is included in determining comprehensive income. b) Investments in non-marketable equity securities, which the Company classifies as other investments, are presented at cost net of allowance for impairment (if any). c) Investments in subsidiaries, associated companies and joint ventures are accounted for by the cost method in the separate financial statements. Investments in associated companies are accounted for by the equity method in the consolidated financial statements. The fair value of available-for-sale securities is based on the latest bid price of the last working day of the year as quoted on the Stock Exchange of Thailand. The weighted average method is used for computation of the cost of investments. The Company, its subsidiaries and joint ventures record impairment losses (if any) on investments in available-for-sale securities and other investments in determining comprehensive income when the carrying amount exceeds its recoverable value. 3.9 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 directing of the Company’s operations. Subsidiaries Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
92 Italian-thai Development Public Company Limited Associates Associated companies are those companies in which the Company has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Company’s share of the total recognized gains or losses of associated companies by the equity accounting method, from the date that significant influence commences until the date that significant influence ceases. When the Company’s share of losses exceeds its interest in an associate, the Company will account for the share of losses not exceeding its investments and further losses are no longer accounted for, except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associated company. Joint venture A joint venture entity is an entity over which activities are jointly controlled, established by contractual agreement. The consolidated financial statements include the Joint Venture’s assets, liabilities, revenues and expenses proportionately with items of a similar nature on a line by line basis, from the date that joint control commences until the date that joint control ceases. 3.10 Land awaiting development Land awaiting developments are valued at cost or net realisable value whichever is lower. 3.11 Investment properties Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, the Company and subsidiaries are stated investment properties at fair value. Any gains or losses arising from changes in the value of investment properties are recognised in the statement of comprehensive income. On disposal of investment properties, the Company and subsidiaries are recognised the difference between the net disposal proceeds and the carrying amount of the asset is recognised in the statement of comprehensive income in the period when the asset is derecognised. 3.12 Property, plant and equipment, and depreciation Property, plant and equipment are presented at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and to bring it to the location and condition necessary for its intended use. Plant and equipment are presented at cost less accumulated depreciation and allowance for impairment of assets (if any). The Company and subsidiaries depreciate its buildings and equipment by the straight – line method over their estimated useful lives of the assets based on the segregation of components of assets, if each part is significant with different useful lives. Estimated useful lives of the assets are as follows :
Buildings 20 years Machinery and equipment 3 – 25 years Furniture, fixtures and office equipment 3 – 7 years Vehicles 5 – 12 years Site office and temporary camps 5 – 12 years Expenditures for expansion, renewal and betterment are capitalized. Repair and maintenance costs are recognized as expenses when incurred. 3.13 Goodwill Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the share of the identifiable net assets which the Company acquired. Goodwill is measured at cost less allowance for impairment. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. 3.14 Potash mining right Potash mining right represents the excess of the cost of investment over the fair value of the subsidiary’s net assets which, in managements’ view, represents future economic benefits attributable to the potash mining rights. Potash mining right will be amortised using the units of potash production over the estimated potash reserve from the start of production. 3.15 Deferred exploration and development costs All costs incurred in relation to the exploration for mineral reserves and expenses for the application of the mining concession are recorded as deferred exploration and development costs until the commencement of the commercial production or the abandonment of the project. These costs will be amortized based on the proportion of the units of production and the total estimated proven and probable recoverable reserves, from the commencement of the commercial operations. When the project is proven not commercially feasible and the property is abandoned or becomes worthless, these costs will be recorded as expenses. 3.16 Advances from customers under construction contracts Advances from customers under construction contracts will be deducted from the bill of work over the period as indicated in the construction agreement. Advances from customers under construction contracts spanning more than 1 year are classified as non - current liabilities. 3.17 Debentures Debentures are recognized initially at fair value less attributable transaction charges. Subsequent to initial recognition, debentures are presented at amortized cost with any difference between cost and redemption value being recognized in the statement of comprehensive income over the period of the borrowing on an effective interest basis. Gains or losses on early redemption are recognized in the statement of comprehensive income upon redemption.
Annual Report 2013 93 3.18 Lease – where the Company, subsidiaries and joint ventures are the lessees Leases of equipment where the Company, subsidiaries and joint ventures assume substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the fair value of the leased assets or estimated present value of the underlying lease payments, whichever is lower. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the outstanding finance balance. Lease payments deducted by financial charges are recognized as liabilities under finance lease agreements. The financial expense is charged to the statement of comprehensive income over the lease period. Assets acquired under finance lease agreements are depreciated over the useful lives of the assets. Leases of assets in which all the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on the straight – line basis over the lease period. When an operating lease is terminated before expiry date of the lease period, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place. 3.19 Leases – where the Company, subsidiaries and joint ventures are the lessors Assets leased out under operating leases are included in building and equipment in the statement of financial position. Depreciation is calculated over their estimated useful lives on a basis consistent with other similar assets. Rental income is recognized on a straight – line basis over the lease period. Leases which transfer substantially all the risks and rewards of ownership to lessees are classified as finance leases. Amounts due from lessees under finance leases are recorded as receivables at the amount of the Company’s net investment in leases. Finance lease income is recognized using effective rate over the lease period. 3.20 Hire purchases payable These represent hire purchases payable less deferred interest. The repayment sub-schedules of the hire purchase contracts are for 24 – 60 months. The fixed assets acquired under hire purchase agreements are recorded as assets of the Company at their cash prices and will be registered in the name of the Company upon the completion of payments. Interest on hire purchases payable is recognized as an expense in the statement of comprehensive income. 3.21 Impairment The Company, subsidiaries and joint ventures assess whether there is an indication that any assets may be impaired. If any such indication exists, the Company, subsidiaries and joint ventures make an estimate of the assets 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 recoverable amount is the higher of fair value less cost to sell and value in use. 3.22 Income tax The income tax expense recognized in profit or loss for the year comprises deferred income taxes and current income tax not recognized in other comprehensive income or directly in equity. Current income tax Current income tax is the expected tax payable or claimable on the taxable profit or loss for the year, which is different from profit or loss in the financial statements, using income tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to income tax payable in respect of previous years. Deferred income tax Deferred income taxes are calculated using the liability method on temporary differences between the accounting amounts of assets and liabilities and the amounts used for tax computation purpose. Deferred income taxes are calculated at the income tax rates that are expected to be applied to the temporary differences when they reverse, using income tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or when tax assets and liabilities will be realized simultaneously. In accordance with Royal Decree No. 530 dated 21 December 2011, the income tax rate will be reduced from 30 percent to 23 percent in 2012, and will be further reduced to 20 percent in 2013 and 2014. 3.23 Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Financial assets and liabilities, denominated in foreign currencies, which are outstanding at the reporting date, are translated into Baht at the exchange rates ruling on the reporting date. Gains and losses on exchange are included in determining comprehensive income. 3.24 Employee benefits Short-term employment benefits Salaries, wages, bonuses, contribution to the social security and provident fund, are recognised as expenses when incurred on the accrual basis. Post-employment benefits (Defined contribution plan) The Company and its subsidiaries, and their employees have jointly established a provident fund plan whereby monthly contributions are made by employees and by the Company and subsidiaries. The fund’s assets are held in a separate trust fund from the Company and subsidiaries’ assets. The Company’s and subsidiaries’ contributions to the fund are recognised as expenses when incurred.
94 Italian-thai Development Public Company Limited Post-employment benefits (Defined benefit plan) The Company and its subsidiaries have obligations in respect of the severance payments they must make to employees upon retirement under the labour law. The Company and subsidiaries treat these severance payment obligations as a defined benefit plan. The obligations under the defined benefit plan are determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method. Actuarial gains or losses for the computation of post-employee benefits are presented under shareholders’ equity. The defined benefits liability comprises the present value of the defined benefit obligation, fair value of plan assets and actuarial gains (losses). 3.25 Segment reporting Segment results that are reported to the Group’s executive committee (the chief operating decision makers) include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 3.26 Dividend payment Dividend payment is recorded in the financial statements in the year in which they are approved by the Shareholders or Board of Directors. 3.27 Basic earnings per share Basic earnings per share is determined by dividing income for the year by the weighted average number of common shares outstanding during the year. 3.28 Derivatives Forward exchange contracts Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling on the reporting date. Unrealized gains and losses from the translation are included in the statement of comprehensive income. Cross currency and interest rate swap agreements Receivables and payables arising from the cross currency swap agreements are translated into Baht at the rates of exchange ruling on the reporting date. Unrealized gains and losses from the translation are included in the statement of comprehensive income. The differences under interest rate swaps are recorded as adjustments to the interest expense relating to the hedged financial obligations in the statement of comprehensive income. Currency option agreements Currency option agreements are contracts between two parties whereby the seller grants the buyer a future option to buy (call option) or to sell (put option) foreign currency at an exchange rate stipulated in the agreement. The Company entered into such agreements in order to manage foreign exchange risk. The notional amounts of cross currency option agreements utilized by the Company to manage foreign exchange risk are not recognized as assets or liabilities upon inception of the agreement, but fees to be received or paid by the Company in respect of such agreements are amortized on a straight-line basis over the term of the agreement. 3.29 Use of accounting estimates The preparation of financial statements in conformity with accounting standards requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes disclosure. Actual results could differ from these estimates. 3.30 Provision for liabilities and expenses, and contingent assets The Company, subsidiaries and joint ventures recognised provision for liabilities and expenses in the financial statements when the Company, subsidiaries and joint ventures have present legal or constructive obligations as a result of past events with probable future outflows of resources to settle the obligation, and where a reliable estimate of the amount can be made. The contingent asset will be recognized as a separate asset only when the realization is virtually certain.
4. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTION AND JUDGEMENT AND CAPITAL RISK MANAGEMENT 4.1 Critical accounting estimates, assumption and judgments 1. Construction revenues The stage of completion of any construction contract is assessed by management by taking into consideration all information available at the reporting date. In this process, management carries out significant judgements about milestones, actual work performed and the estimated costs to complete the work. Significant assumptions are required to estimate the total contract costs and the recoverable variation works that will affect the stage of completion. Actual outcomes in terms of actual costs or revenues may be higher or lower than estimated at reporting date, which would affect the revenue and profit recognised in future years as an adjustment to the amounts recorded to date. 2. Claims income A claim is an amount that the Company, subsidiaries and joint ventures seek to collect from their customers or another party as reimbursement for costs not included in the contract price. A claim may arise from, for example, customer caused delays, errors in specifications or design, and disputed variations in contract work. The measurement of the amounts of revenue arising from claims is subject to a high level of uncertainty and often depends on the outcome of negotiations. Therefore, the Company, subsidiaries and joint ventures recognised claims for contract revenue when: (a) Negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and (b) The amount that is probable to be accepted by the customer can be measured reliably.
Annual Report 2013 95 3. Allowance for project losses The Company, subsidiaries, and joint ventures review its construction work-in-progress to determine whether there is any indication of foreseeable losses. Identified foreseeable losses are recognised immediately in the statement of comprehensive income when it is probable that total contract costs will exceed total contract revenue as determined by the management. 4. Impairment of receivables The Company, subsidiaries, and joint ventures account for allowance for doubtful accounts equal to the estimated collection losses that may incur in the collection of receivables. The estimated losses are based on historical collection experience coupled with a review of outstanding receivables at reporting date. 5. Allowance for obsolete, slow-moving and defective inventories The Company, subsidiaries, and joint ventures provide allowances for obsolete, slow-moving and defective inventories to reflect impairment of inventories. The allowance is based on consideration of inventory turnover and deterioration of each category. 6. Allowance for diminution in value of cost of property development projects and land held for development The Company and subsidiaries treat cost of property development projects and land held for development, as diminution when the management judges that there have been significant or prolonged declines in the fair value below their cost. The management determines the devaluation of such cost of property development projects and land held for development based on net realisable value. The determination of what is “significant” and such devaluation requires the management to exercise judgment. 7. Impairment of investments The Company, subsidiaries, and joint ventures treat investments as impaired when there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires management judgment. 8. Impairment of goodwill The Company annually reviews goodwill from investments in subsidiary companies to determine whether it is impaired or not. The recoverable amounts of cash-generating units are determined based on value-in-use calculations. These calculations require the use of management estimates. 9. Property, plant and equipment and intangible assets Management determines the estimated useful lives and residual values for plant and equipment and intangible assets of the Company, subsidiaries, and joint ventures. Management will revise the depreciation and amortization charge where useful lives and residual values previously estimated have changed or subject to be written off for their technical obsolescence or if they are no longer in use. 10. Impairment of assets The Company, subsidiaries, and joint ventures consider an allowance for impairment of assets when there is an indication that an asset may be impaired. If any such indication exists when there has been a significant decline in the fair value below their cost, the Company, subsidiaries, and joint ventures make an estimate of the assets recoverable amount. The determination of recoverable amount requires management judgment. 11. Post-employment benefits under defined benefit plans Obligation under defined benefit plans is determined based on actuarial techniques. Inherent within these calculations are assumptions as to discount rates, future salary increases, mortality rates and other demographic factors. In determining the appropriate discount rate, management selects an interest rate that reflects the current economic situation. The mortality rate is based on publicly available mortality table for the country. Actual post-retirement costs may ultimately differ from these estimates. 12. Deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s future taxable income against which the deductible temporary differences can be utilised. In addition, management judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions. 13. Leases In determining whether a lease is to be classified as an operating lease or finance lease, management is required to use judgment regarding whether significant risks and rewards of ownership of the leased asset have been transferred, taking into consideration terms and conditions of the arrangement. 14. Litigation The Company, subsidiaries, and joint ventures normally have contingent liabilities as a result of disputes and litigation. Management use judgment to assess the results of the disputes and litigation and recognize reasonable provision for losses in the accounts at the reporting date. However, actual results could differ from the estimates. 4.2 Capital risk management The objectives of the Company and subsidiaries in the management of capital are to safeguard their ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to minimise the cost of capital. In addition, the Company and subsidiaries are required to maintain a debt to equity ratio as stipulated in loan facility agreements. In order to maintain or adjust the capital structure, the Company and subsidiaries may adjust the dividend payment to shareholders, issue new shares or issue new debentures to finance debts or sell assets to reduce debts.
96 Italian-thai Development Public Company Limited 5. RESTRICTED DEPOSITS WITH BANKS As at 31 December 2013, savings and fixed deposits of the Company, subsidiaries and joint ventures totaling approximately Baht 59.65 million (2012 : Baht 59.39 million) have been pledged with banks as collaterals for loans obtained by the Company, subsidiaries and joint ventures to finance specific projects, and savings deposits of approximately Baht 19.91 million (2012 : Baht 1.04 million) have been pledged with the banks and fixed deposits amounting to Baht 0.69 million (2012 : Baht 0.72 million) have been pledged as required in the normal course of businesses of the Company, subsidiaries, joint ventures, and the overseas branches. Most of these restricted deposits with banks are turned over within one year so they are classified as current assets.
6. TRADE ACCOUNTS RECEIVABLE – UNRELATED PARTIES The aging of outstanding trade accounts receivable balances as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S Receivable Ages (Unit : Thousand Baht) 2013 2012 2013 2012 Less than 3 months 4,476,223 4,994,792 3,525,868 4,229,657 3 – 6 months 532,419 644,125 195,829 173,299 6 – 12 months 426,619 537,813 58,975 87,664 More than 12 months 2,535,808 2,149,638 668,743 697,761 Total 7,971,069 8,326,368 4,449,415 5,188,381 Less : Allowance for doubtful accounts (964,547) (963,823) (510,252) (536,788) Net 7,006,522 7,362,545 3,939,163 4,651,593 The Company sets up a full allowance for doubtful accounts for receivables from major private customers that have been overdue for more than 12 months and at 50 percent for those accounts overdue for more than 6 months, except as stated below: The consolidated financial statements as at 31 December 2013 include earned revenues not yet billed based on proportion of the Company of Baht 463.22 million. As at 31 December 2012, trade account receivable and earned revenue not yet billed of a joint venture, based on the proportion of the Company of Baht 505.22 million, which represents the recognized revenues for work performed for a local government enterprise some years ago but which have not been certified beyond the normal period of certification. As a result, the joint venture has not been able to determine the age of the collection. However, the joint venture is rectifying the situation to make the full debtor by filing a claim for payment to the arbitrator and believes that there will be no indemnification for this part. At present, the joint venture and the government enterprise have hired an independent committee to make an assessment of the damage which the negotiation has been finalized and in the process for preparation of compromise agreement and believe that no any damage in this part. The consolidated financial statements as at 31 December 2013 include trade accounts receivable and un-billed work in progress of an overseas subsidiary company of Baht 587.03 million and Baht 1,349.07 million, respectively, (2012 : Baht 488.45 million and Baht 486.16 million, respectively), representing a number of variation order claims recognized some years ago based on the terms and conditions implicit in the contracts. These claims are technical in nature and subject to arbitration processes. The subsidiary company has assessed the realization of these claims based on information from the dispute resolution board, the arbitration tribunal, high court orders and legal opinion from an independent counsel. On the basis of such assessment, management is of the opinion that the claims of the subsidiary are tenable and would be realized in full, and accordingly no adjustments have been made in these financial statements.
7. TRADE ACCOUNTS RECEIVABLE – RELATED PARTIES The outstanding balances as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Subsidiaries and Joint Ventures (eliminated from consolidated financial statements) ITO Joint Venture - - 11,565 49,978 ITD – SQ Joint Venture - - 710,188 532,597 ITD-ETF-MVM Joint Venture - - 100,854 209,712 Asia Industrial and Port Corporation Co., Ltd. - - 121,980 121,980 Asian Steel Products Co., Ltd. - - 338 6,742 Thai Pride Cement Co., Ltd. - - 10,830 29,629 ITD – NCC Joint Venture (NT-2) - - - 82,778 ITD – ETF Joint Venture - - 136,711 48,673 PT. Thailindo Bara Pratama - - 9,833 8,553 IN Joint Venture - - 5,046 4,820 Italthai Marine Co., Ltd. - - 11,344 28,938 Bhaka Bhumi Development Co., Ltd. - - 4,726 13,852 ITD-Nawarat (L.L.C) - - 74,249 74,249 Aquathai Co., Ltd. - - 11,458 14,564 Nha Pralan Crushing Plant Co., Ltd. - - 32,416 30,325 Italthai Trevi Co., Ltd. - - 70,632 20,439
Annual Report 2013 97 Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Italian-Thai Land Co., Ltd. - - 8,205 8,205 Italian-Thai Power Co., Ltd. - - 78,408 72,876 Thai Maruken Co., Ltd. - - 16,954 3,951 ITD Cementation India Limited - - 29,409 6,568 ITD Construction SDN. BHD. - - 2,753 2,753 Asia Pacific Potash Corporation Limited - - 32,109 29,128 ITD – Madagascar S.A. - - 98,621 5,217 Italian-Thai Hongsa Co., Ltd. - - 73,189 - First Dhaka Elevated Expressway Co., Ltd. - - 79,991 67,214 ITD – UNIQUE Joint Venture - - 48,146 46,743 SQ – ITD Joint Venture - - 29,099 18,776 TREVI-ITT Joint Venture - - 11,716 90,326 Italian Thai International Co., Ltd. - - 31,534 31,534 ITD-SMCC Joint Venture - - 80,145 42,053 Siam Concrete and Brick Products Co., Ltd. - - 1,587 37,456 Samsung-ITD Joint Venture - - 106,842 - Saraburi Construction Technology Co., Ltd. - - 29,946 24,824 Others - - 627 1,096 Total - - 2,071,451 1,766,549 Less : Allowance for doubtful accounts - - (240,668) (254,790) Net - - 1,830,783 1,511,759 Associated companies MCRP Construction Corporation, Philippines 687,707 687,707 635,836 635,836 Oriental Residence Bangkok Co., Ltd. - 41,779 - 41,779 Sino Lao Aluminum Corporation Limited 140,866 29,977 140,866 29,977 Bangkok Steel Wire Co., Ltd. 591 19,962 591 19,962 Praram 9 Square Co., Ltd. 18,113 - 18,113 - ATO-Asia Turnouts Co., Ltd. 161,724 60,228 161,528 60,228 Total 1,009,001 839,653 956,934 787,782 Less : Allowance for doubtful accounts (687,707) (687,707) (635,836) (635,836) Net 321,294 151,946 321,098 151,946 Related parties NWR – SBCC Joint Venture 797,886 659,061 795,499 659,061 Italthai Engineering Co., Ltd. 74,787 20,637 74,194 20,601 Siam Steel Syndicate Plc. 13,059 7,309 13,059 7,309 Italthai Industrial Co., Ltd. 373 2,816 373 2,816 Ao Siam Marine Co., Ltd. 6,605 7,143 6,605 6,605 Ao Po Grand Marina Co., Ltd. 101,472 89,839 101,472 89,839 Suvarnnabhumi Entertainment Co., Ltd. 56,108 56,108 56,108 56,108 Saraburi Coal Co., Ltd. 41,806 41,343 41,806 41,343 Saraburi Coal International Co., Ltd. 12,626 12,448 12,626 12,448 PAN AFRICAN MINING CORP. 90,046 84,137 90,046 84,137 Asia Thai Mining Co., Ltd. 29,631 41,538 2,865 2,493 Amari Estate Co., Ltd. 34,771 29,760 34,771 29,760 Amari Huahin Co., Ltd. 40,111 22,071 40,111 22,071 Amari Estate Phuket Co., Ltd. 101,052 24,687 101,052 24,687 PAM SAKOA COAL SA. 48,735 36,088 - - Sahakol Equipment Co., Ltd. 22,490 13,014 - - Lao Metal Industry Co., Ltd. 50,413 49,746 50,413 49,746 Thai Nippon Steel & Sumikin Engineering & Construction Co., Ltd. 13,279 - 13,279 - Others 17,799 4,478 17,079 4,118 Total 1,553,049 1,202,223 1,451,358 1,113,142 Less : Allowance for doubtful accounts (109,744) (101,372) (101,372) (101,372) Net 1,443,305 1,100,851 1,349,986 1,011,770
98 Italian-thai Development Public Company Limited Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Outstanding balances and portion of other Joint venture partners. ITD – SQ Joint Venture 355,094 266,299 - - TREVI – ITT Joint Venture 11,131 85,810 - - ITD-ETF-MVM Joint Venture 45,132 93,846 - - ITO Joint Venture 6,939 29,987 - - ITD – UNIQUE Joint Venture 19,258 18,696 - - SQ – ITD Joint Venture 14,550 9,388 - - ITD – NCC (NT2) Joint Venture - 24,456 - - ITD – SMCC Joint Venture 48,088 25,232 - - ITD – ETF Joint Venture 47,849 17,036 - - IN Joint Venture 2,473 2,362 - - Samsung-ITD Joint Venture 81,200 - - - Total 631,714 573,112 - - Trade accounts receivable – related parties – net 2,396,313 1,825,909 3,501,867 2,675,475 The ages of outstanding balances of trade receivable – related parties as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S Outstanding Ages (Unit : Thousand Baht) 2013 2012 2013 2012 Less than 3 months 794,925 531,996 1,176,455 888,839 3 – 6 months 106,440 80,135 274,284 132,442 6 – 12 months 145,280 123,718 262,140 205,409 More than 12 months 2,147,119 1,879,139 2,766,864 2,440,783 Total 3,193,764 2,614,988 4,479,743 3,667,473 Less : Allowance for doubtful accounts (797,451) (789,079) (977,876) (991,998) Net 2,396,313 1,825,909 3,501,867 2,675,475
8. FINANCE LEASE RECEIVABLE – RELATED PARTY
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Finance lease receivable Not over 1 year 11,267 - 22,534 - Over 1 year but not over 5 years 163,374 146,473 326,749 292,947 Over 5 years - 28,168 - 56,336 Total 174,641 174,641 349,283 349,283 Less : Unearned finance income (57,588) (75,987) (115,176) (151,975) 117,053 98,654 234,107 197,308 Less : Current portion (6,026) - (12,052) - Net 111,027 98,654 222,055 197,308 The Company has a lease agreement for machinery and equipment with a Joint Venture for the period of 9 years. During the year 2012, such joint venture made a rental prepayment for 29 months. Therefore, there is no current portion of finance lease receivable as at 31 December 2013.
9. OTHER RECEIVABLE – RELATED PARTY The balance as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Joint Venture (eliminated from consolidated financial statements) ITD - SQ Joint Venture - - 383,553 451,033 Related party NWR – SBCC Joint Venture 53,416 143,416 53,416 143,416
Annual Report 2013 99 Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Outstanding balance and portion of other joint venture partner ITD - SQ Joint Venture 191,776 225,516 - - Total 245,192 368,932 436,969 594,449 The Company sold some equipment to a related company and a joint venture with deferred payment terms for the year 2014 to 2019.
10. SHORT - TERM LOANS AND ADVANCES TO SUBSIDIARIES AND RELATED PARTIES - NET
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Subsidiaries and Joint Ventures (eliminated from consolidated financial statements) PT. Thailindo Bara Pratama - - 2,099,122 1,714,558 Italthai Marine Co., Ltd. - - 232,685 232,685 ITD – EGC Joint Venture - - 318,901 319,107 ITD-Nawarat (L.L.C.) - - 187,141 330,767 SQ – ITD Joint Venture - - 352,000 352,000 Bhaka Bhumi Development Co., Ltd. - - 259,309 263,468 First Dhaka Elevated Expressway Co., Ltd. - - 16,484 14,630 ITD Cementation India Limited - - 12,676 13,413 Italthai Trevi Co., Ltd. - - - 1,690 Aquathai Co., Ltd. - - 7,200 - ITD – POWERCHINA JV - - 214 - ITD - ITDCEM JV - - 4,672 4,672 Total - - 3,490,404 3,246,990 Less : Allowance for doubtful accounts - - (1,770,017) (1,032,074) Net - - 1,720,387 2,214,916 Associated company Sino-Lao Aluminum Corporation Limited 21,991 20,512 21,991 20,512 Bangkok Steel Wire Co., Ltd. 9,360 - - - Total 31,351 20,512 21,991 20,512 Related companies Sahakol Equipment Co., Ltd. 12,500 15,900 - - Unique Engineering and Construction Pcl. 7,128 7,128 - - Others 18,756 - - - Total 38,384 23,028 - - Short - term loans and advances to related parties - net 69,735 43,540 1,742,378 2,235,428 Significant movements in the short - term loans and advances to subsidiaries and related parties for the year ended 31 December 2013 are as follows :
1 January During the year 31 December (Unit : Thousand Baht) 2013 Increase Decrease 2013 Subsidiaries and Joint Ventures PT. Thailindo Bara Pratama 1,714,558 384,564 - 2,099,122 Italthai Marine Co., Ltd. 232,685 - - 232,685 ITD - EGC Joint Venture 319,107 - 206 318,901 ITD-Nawarat (L.L.C.) 330,767 5,720 149,346 187,141 SQ – ITD Joint Venture 352,000 - - 352,000 Bhaka Bhumi Development Co., Ltd. 263,468 - 4,159 259,309 First Dhaka Elevated Expressway Co., Ltd. 14,630 1,854 - 16,484 ITD Cementation India Limited 13,413 - 737 12,676 Italthai Trevi Co., Ltd. 1,690 - 1,690 - Aquathai Co., Ltd. - 12,700 5,500 7,200 ITD – POWERCHINA JV - 214 - 214 ITD – ITD CEM JV 4,672 - - 4,672 Total 3,246,990 405,052 161,638 3,490,404
100 Italian-thai Development Public Company Limited 1 January During the year 31 December (Unit : Thousand Baht) 2013 Increase Decrease 2013 Associated company Sino Lao Aluminum Corporation Limited 20,512 1,479 - 21,991 Total 3,267,502 406,531 161,638 3,512,395
11. INVENTORIES AND WORK IN PROCESS
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Work in process 234,884 99,558 - - Materials 3,456,270 3,880,795 1,875,743 2,184,943 Total 3,691,154 3,980,353 1,875,743 2,184,943 Less : Allowance for obsolete inventories (15,424) (21,078) - - Net 3,675,730 3,959,275 1,875,743 2,184,943 During the years 2013 and 2012, movements in the allowance for obsolete inventories are as follows :
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Balance as at 1 January 21,078 25,772 Add : Additional allowance 12 3,137 Less : Reversal of allowance (5,666) (7,831) Balance as at 31 December 15,424 21,078
12. COSTS OF PROPERTY DEVELOPMENT PROJECTS – NET
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Land 666,903 571,439 Cost of property development project for sale 1,192,357 906,974 Utilities installation 60,312 14,974 Capitalized borrowing costs 32,069 16,260 Total 1,951,641 1,509,647 Less Accumulated amounts transferred to cost of sales (1,428,897) (1,043,367) Less Allowance for devalue of assets (322) (5,666) Net 522,422 460,614 As at 31 December 2013 and 2012, the above land and constructions have been pledged as collaterals for overdraft, loan and credit facilities with local banks as discussed in Note 29. During the years 2013 and 2012, the Company capitalized interest amounting to Baht 15.81 million and Baht 1.56 million, respectively, to the cost of property development project. The capitalization rates of interest are based on the borrowing costs as discussed in Note 29. The changes in cost of property development for the years ended 31 December 2013 and 2012 are as follows :
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Balance as at 1 January 460,614 330,642 Add Cost of construction 442,489 253,749 Less Cost of sales (380,681) (123,777) Balance as at 31 December 522,422 460,614
Annual Report 2013 101 13. INVESTMENTS IN RELATED PARTIES - NET 13.1 Investments in subsidiaries, associated companies and joint ventures Investments in subsidiaries and joint ventures Movements in investments in subsidiaries and joint ventures for the years ended 31 December 2013 and 2012 are as follows :
Separate F/S (Unit : Thousand Baht) 2013 2012 Balance as at 1 January 8,087,431 8,055,621 Add : Additional allowance during the year 2,294,643 215,291 Less : Deposal (3,795,987) - Less : Allowance for impairment - (183,481) Balance as at 31 December 6,586,087 8,087,431 Investments in subsidiaries and joint venture as at 31 December 2013 and 2012 comprise investments as follows :-
Percentage Separate F/S Paid-up Nature of business of shareholding (%) Cost Capital (Unit : Thousand Baht) 2013 2012 2013 2012 Investments in subsidiaries Italian-Thai International Co., Ltd. Holding company 400,000 99.99 99.99 400,000 400,000 Less : Allowance for impairment (400,000) (400,000) Net - - Bhaka Bhumi Development Co., Ltd. Construction and real estate 5,075 99.99 99.99 5,075 5,075 Thai Pride Cement Co., Ltd. Manufacture and distribution of cement 1,300,000 99.99 99.99 1,585,000 1,585,000 Sin Rae Muang Thai Co., Ltd. Mining business 3,500,000 - 99.99 - 3,499,999 Nha Pralan Crushing Plant Co., Ltd. Rock quarrying, processing and 11,000 99.99 99.99 10,999 10,999 distribution Less : Allowance for impairment (10,999) (10,999) Net - - Siam Concrete and Brick Products Co., Ltd. Manufacture and distribution of concrete 126,000 99.80 99.80 124,296 124,296 products Italthai Marine Co., Ltd. Production and sale of vessels and 810,000 92.59 92.59 430,000 430,000 equipment Less : Allowance for impairment (430,000) (430,000) Net - - Italthai Trevi Co., Ltd. Foundation and piling work services 80,000 90.94 90.94 84,189 84,189 Asian Steel Product Co., Ltd. Manufacture and distribution of large 20,000 69.90 69.90 7,004 7,004 steel pipes Thai Maruken Co., Ltd. Lease and sale of sheet piles and beams 20,000 50.96 50.96 10,196 10,196 for foundation construction work Italian-Thai Land Co., Ltd. Not yet operational 10,000 99.99 99.99 50 50 Less : Allowance for impairment (50) (50) Net - - Palang Thai Kaowna Co., Ltd. Not yet operational 1,000 99.94 99.94 650 650 Less : Allowance for impairment (650) (650) Net - - Khunka Palang Thai Co., Ltd. Not yet operational 17,000 98.05 98.05 16,271 16,271 Less : Allowance for impairment (16,271) (16,271) Net - - Palit Palang Ngan Co., Ltd. Not yet operational 1,000 74.93 74.93 50 50 Less : Allowance for impairment (50) (50) Net - - Italian Thai Power Co., Ltd. Production and distribution of electricity 100,000 99.99 99.99 100,000 100,000 Saraburi Construction Technology Co., Ltd. Manufacture, distribution and installation 250 99.93 99.93 250 250 of concrete sheet Asia Logistics Development Co., Ltd. Not yet operational 1,000 99.93 99.93 999 999 Asia Industrial and Port Corporation Not yet operational 1,000 99.93 99.93 999 999 Co., Ltd.
102 Italian-thai Development Public Company Limited Percentage Separate F/S Paid-up Nature of business of shareholding (%) Cost Capital (Unit : Thousand Baht) 2013 2012 2013 2012 Wildemere Limited Holding company 101 - 99.99 - 295,988 Myanmar Italthai Power 1 Co., Ltd. Not yet operational 250 99.95 99.95 250 250 Italian - Thai Hongsa Co., Ltd. Coal mining contractor 250 99.97 99.97 250 250 APPC Holding Co., Ltd. Holding company 3,795,987 60.00 - 2,277,592 - Overseas subsidiary companies Myanmar ITD Co., Ltd. Service agent for Myanmar companies 1,483 99.99 99.99 1,483 1,483 Less : Allowance for impairment Thousand Baht (1,483) (1,483) Net - - PT. Thailindo Bara Pratama Coal mining contractor 25,250 99.99 99.99 108,071 108,071 Million IDR ITD Cementation India Ltd. Construction services in India 115 69.57 69.57 2,143,951 2,143,951 Million INR ITD–Madagascar S.A. Mining business 20 99.98 99.70 4,553 354 Million MGA Italian-Thai International SDN.BHD. Not yet operational 1 99.99 99.99 10,169 10,169 Million MYR Less : Allowance for impairment (10,169) (10,169) Net - - ITD Construction SDN.BHD. Construction services in Malaysia 0.75 99.99 99.99 7,312 7,312 Million MYR Less : Allowance for impairment (7,312) (7,312) Net - - First Dhaka Elevated Expressway Co., Ltd. Concession for constructing elevated 308 Million 99.99 99.99 122,706 109,854 expressway in Bangladesh BDT (2012 : 276 Million BDT) ITD Bangladesh Company Limited Construction services in Bangladesh 4 99.99 99.99 1,546 1,546 Million BDT Italian–Thai Development Vietnam Co., Ltd. Not yet operational 6,000 80.00 80.00 9,160 9,160 Million VND Italian–Thai Development Pte Ltd. Not yet operational 1 USD - 100.00 - - Total Investments in subsidiaries - net 6,586,087 8,087,431 Investment in joint venture ITD-Nawarat (L.L.C) Construction services in 300,000 60.00 60.00 977 977 United Arab Emirates UAE Less : Allowance for impairment (977) (977) Net - - Total Investment in joint venture - - Total Investments in subsidiaries and joint venture 6,586,087 8,087,431 Investments in associated companies Movements in investments in associated companies, which are accounted for by the equity method in the consolidated financial statements, for the years ended 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Balance as at 1 January 633,543 543,054 697,963 598,756 Add : Share of profit from associated companies 22,348 5,693 - - Add : Additional investment - 115,537 - 115,537 Less : Disposal investment - (14,633) - (16,330) Add (Less) : Translation adjustment for foreign currency 24,922 (16,108) - - financial statements Balance as at 31 December 680,813 633,543 697,963 697,963
Annual Report 2013 103 Investments in associated companies as at 31 December 2013 and 2012, comprise investments in the following :
Percentage Consolidated F/S Separate F/S Paid-up Nature of business of shareholding (%) Equity Cost Capital (Unit : Thousand Baht) 2013 2012 2013 2012 2013 2012 Investments in associated companies ATO-Asia Turnouts Co., Ltd. Production and distribution of 5,000 49.00 49.00 54,344 28,363 2,450 2,450 turnouts for railway projects Siam Pacific Holding Co., Ltd. Holding company 58,625 46.69 46.69 26,971 27,108 27,373 27,373 Bangkok Steel Wire Co., Ltd. Production and distribution 313,000 19.98 19.98 82,283 48,864 71,603 71,603 of P.C. wire Praram 9 Square Co., Ltd. Shopping center development 1,000,000 20.00 20.00 200,000 200,000 200,000 200,000 Less : Allowance for impairment (200,000) (200,000) (200,000) (200,000) Net - - - - Oriental Residence Bangkok Real estate development 500,000 15.00 15.00 10,209 39,448 75,000 75,000 Co., Ltd. Overseas companies Asia Steel Corporation Manufacture, import and export 20,000 30.00 30.00 7,800 7,800 7,800 7,800 of steel in Philippines Less : Allowance for impairment (7,800) (7,800) (7,800) (7,800) Net - - - - Anamarine Construction Construction contractor 65,000 25.00 25.00 198 198 198 198 SDN. BHD. in Malaysia RM Less : Allowance for impairment (198) (198) (198) (198) Net - - - - MCRP Construction Corporation, Construction contractor 25 24.00 24.00 12,000 12,000 12,000 12,000 Philippines in Philippines Million Peso Less : Allowance for impairment (12,000) (12,000) (12,000) (12,000) Net - - - - MCRP Holding Corporation, Holding company in Philippines 5 24.00 24.00 3,000 3,000 3,000 3,000 Philippines Million Peso Less : Allowance for impairment (3,000) (3,000) (3,000) (3,000) Net - - - - Sino Lao Aluminum Bauxite mine business 32 34.00 34.00 504,481 487,235 521,537 521,537 Corporation Limited in Laos Million USD Total Investments in associated companies – net 678,288 631,018 697,963 697,963 Investments in associated companies held by subsidiaries Natureway Resources Co., Ltd. Holding company 40 30.00 30.00 296,700 296,700 - - Million USD Less : Allowance for impairment (296,700) (296,700) - - Net - - - - Siam Pacific Holding Co., Ltd. Holding company 58,625 4.30 4.30 2,525 2,525 - - Total investments in associated companies held by subsidiaries 2,525 2,525 - - Total Investments in associated companies - net 680,813 633,543 697,963 697,963 Total investments in subsidiaries, associated companies, and joint ventures - net 680,813 633,543 7,284,050 8,785,394 The Company’s and its subsidiaries’ equity interests in the above associated companies are generally determined based on the financial statements compiled by the management of those companies which have not been reviewed by their auditors. However, the Company’s management believes that there will be no significant adjustments to be made to the consolidated financial statements. The Company regularly assesses the values of investments in subsidiary associated companies and joint ventures. An allowance for impairment is promptly taken up when there is a reliable indication that the decline in value can be determined.
104 Italian-thai Development Public Company Limited Significant financial information of the associates in the aggregate amounts are summarized as follows :
For the years ended 31 December Assets Liabilities Revenues Net income (loss) (Unit : Million Baht) 2013 2012 2013 2012 2013 2012 2013 2012 ATO-Asia Turnouts Co., Ltd. 580 289 469 231 486 214 53 5 Bangkok Steel Wire Co., Ltd. 929 770 517 525 1,257 1,435 167 84 Oriental Residence Bangkok Co., Ltd. 3,075 2,103 3,007 1,840 268 214 (195) (51) Sino Lao Aluminum Corporation Limited 403 1,016 65 73 - - - (17) Others 64 68 6 10 - - - - Total 5,051 4,246 4,064 2,679 2,011 1,863 25 21 13.2 Other long - term investments Movements in other long - term investments for the years ended 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Balance as at 1 January 1,386,569 764,660 1,348,968 739,973 Add : Unrealized gain (loss) from changes in value of investments (118,061) 621,909 (110,886) 608,995 Reversal of allowance for impairment 161,920 - 26,694 - Balance as at 31 December 1,430,428 1,386,569 1,264,776 1,348,968 Other long - term investments as at 31 December 2013 and 2012 comprise investments as follows :
Percentage of Consolidated F/S Separate F/S Nature of business Shareholding (%) (Unit : Thousand Baht) 2013 2012 2013 2012 2013 2012 Investments in other companies a) Non-listed companies M-Home SPV 3 Co., Ltd. Real estate development 11.54 11.54 12 12 12 12 Less : Allowance for impairment (12) (12) (12) (12) Net - - - - Siam Steel Syndicate Plc. Manufacture and distribution 1.15 1.15 55,885 55,885 55,885 55,885 for construction Siam Fiber Optics Co., Ltd. Manufacture and distribution 10.00 10.00 24,000 24,000 24,000 24,000 of optic fibers Medical Device Manufacturer Manufacture and distribution 6.95 6.95 50,069 50,069 50,069 50,069 (Thailand) Limited of medical products Less : Allowance for impairment (50,069) (50,069) (50,069) (50,069) Net - - - - Bell Development Co., Ltd. Real estate development 2.29 2.29 47,313 47,313 47,313 47,313 Less : Allowance for impairment - (47,313) - (47,313) Net 47,313 - 47,313 - The Bangkok Club Co., Ltd. Entertainment services 0.44 0.44 3,000 3,000 3,000 3,000 Less : Allowance for impairment (1,985) (1,985) (1,985) (1,985) Net 1,015 1,015 1,015 1,015 Imperial Technology Management Initiation and establishment 19.72 19.72 175,000 175,000 175,000 175,000 Service Plc. of Asian University of Science and Technology Less : Allowance for impairment (139,975) (119,356) (139,975) (119,356) Net 35,025 55,644 35,025 55,644 Nishio Rent All (Thailand) Co., Ltd. Construction machinery Rental 15.00 15.00 7,500 7,500 7,500 7,500 (Formerly : Thai Rent All Co., Ltd.) Lao Metal Industry Co., Ltd. Manufacture steel wires. 10.00 10.00 10,000 10,000 10,000 10,000 Less : Allowance for impairment (6,605) (6,605) (6,605) (6,605) Net 3,395 3,395 3,395 3,395 Total Investment in other non – listed companies – net 174,133 147,439 174,133 147,439
Annual Report 2013 105 Percentage of Consolidated F/S Separate F/S Nature of business Shareholding (%) (Unit : Thousand Baht) 2013 2012 2013 2012 2013 2012 b) Listed companies Charoong Thai Wire and Cable Plc. Manufacture and distribution of 12.90 12.90 308,715 308,715 308,715 308,715 wire and cable Add : Unrealized gain from changes in value of investments 160,928 276,414 160,928 276,414 Net market value 469,643 585,129 469,643 585,129 Toyo-Thai Corporation Plc. Construction services 3.83 3.83 18,400 18,400 18,400 18,400 Add : Unrealized gain from changes in value of investments 602,600 598,000 602,600 598,000 Net market value 621,000 616,400 621,000 616,400 Total Investment in other listed companies – net 1,090,643 1,201,529 1,090,643 1,201,529 Total Investments in other companies - net 1,264,776 1,348,968 1,264,776 1,348,968 Investments held by subsidiaries a) Non-listed companies Premus (Thailand) Co., Ltd. Real estate management services 10.00 10.00 1,250 1,250 - - Bell Development Co., Ltd. Real estate development 13.00 13.00 135,226 135,226 - - Less : Allowance for impairment - (135,226) - - Net 135,226 - - - b) Listed company Charoong Thai Wire and Cable Plc. Manufacture and distribution of 0.80 0.80 19,178 19,178 - - wire and cable Add : Unrealized gain from changes in - - value of investments 9,998 17,173 Net market value 29,176 36,351 - - Total 165,652 37,601 - - Total other long-term investments – net 1,430,428 1,386,569 1,264,776 1,348,968
14. LAND LEASE CONCESSION AND PROJECT UNDER DEVELOPMENT
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Land lease concession 30,198 30,198 - - Project under development 6,000,822 3,367,601 3,731,608 2,288,596 Total 6,031,020 3,397,799 3,731,608 2,288,596 In November 2010, the Company entered into a Framework Agreement with the Myanma Port Authority (MPA), Ministry of Transportation of the Republic of the Union of Myanmar to develop the Dawei Deep Sea Port, Industrial Estate and Road and Rail Link to Thailand Project. The Company has continuously progress with the planning and development of the Deep Sea Port Project and its supporting infrastructure; in particular, the ongoing land preparation work and the construction of the supporting infrastructure and facilities to support the operation of the Initial Phase comprising of construction and progress work of the following : -- Small Port -- Access Road from the Dawei Special Economic Zone (“DSEZ”) to the Thailand Border -- Water Reservoir -- Compensation to the local villagers and the construction of relocation housing Consequently due to its strategic location and economic potential of the Dawei Project to the region, the Company has pushed for the support and cooperation at the government level by involving the governments of the Thailand and Myanmar. With this both governments have established the Thai-Myanmar Joint Coordinating Committee for the Comprehensive Development in the Dawei Special Economic Zone and its Related Projects Area (“JCC”) in 2012 and also the Special Purpose Vehicle (“SPV”) named Dawei SEZ Development Company Limited to promote and manage the development of the Dawei Project in 2013. Moreover, the Myanmar Government established the Dawei SEZ Management Committee (“DSEZMC”) to be the responsible integrated Myanmar Authority to support the SPV’s development plan.
106 Italian-thai Development Public Company Limited On 21 November 2013, SPV, DSEZMC and the Company has signed development plan in 3 relevant agreements as follow : 1. Agreement of Termination between the Company and Myanma Port Authority (“MPA”). Termination of the previous Framework Agreement between the Company and MPA which was signed in November 2010. 2. New Framework Agreement between the DSEZMC and SPV. This agreement gives the right to the SPV to be the promoter and facilitator of the Dawei Project. 3. Tripartite Memorandum between the Company, DSEZ Management Committee and Dawei SEZ Development Co., Ltd. (“SPV”). The agreement also mentions : 3.1 Investment in advance, the Company will receive the settlement from SPV. Consequently, SPV will collect such amount from the company who will development this project by hired consultant to perform due diligence to summarize total investment pay back to the Company fairly. It expected to be finalized in year 2014. 3.2 The Company has the right to continue the Maintenance Work of the existing infrastructure in the Dawei Project. The scope of the Maintenance Work and the agreed budget between the Company and the DSEZMC. It is expected to be finalized mid of year 2014. However, the SPV and the DSEZMC are in the process to open the bidding for the Initial Phase wherein the Company intends to participate in this bidding process accordingly. The Term of Reference (“TOR”) for the Initial Phase is expected to be issue by the SPV and the DSEZMC with in 2014.
15. POTASH MINING RIGHT The Company holds a 90% investment in a potash mine project through a group of subsidiary companies. The Ministry of Finance holds 10% of the registered capital. The application for potash mining concessions from the government is in process. The Environmental Consultant organized the public review meeting to get the public opinions for the draft report on Environment and Health Impact Assessment of the project. Participants included government officers, businessmen, academicians and the general public. The consultant sent the summary of the opinions and recommendations from the participants and also those which were received after the meeting to the related governmental authorities and private sectors. The consultant conducted the study of Environment Impact Assessment Report of the Potash Mine Project which will be submitted to the Office of Natural Resources and Environmental Policy. An environmental consulting firm presented an Environment Impact Assessment Report on the Potash Mine Project to the meeting of Expert Committee on Mining, Smelting and Ore Dressing at the Office of Natural Resources and Environmental Policy and Planning for consideration and approval. In January 2014, Expert Committee on Mining, Smelting and Ore Dressing approve the study of Environment Impact Assessment Report of the Potash Mine Project of the Company. The Company’s management believes that this project will generate benefits both for the neighboring area and for the country, and that the project will be approved by the government and will become operational as planned. The management of the Company believes that there will be no impairment in the value of investment.
16. DEFERRED EXPLORATION AND DEVELOPMENT COSTS All costs incurred in relation to the exploration for mineral reserves and expenses for the application of mining concession are recorded as deferred exploration and development costs until the commencement of the commercial production or abandonment of the project. These costs will be amortized based on the proportion of the units of production and the total estimated proven and probable reserves, from the commencement of the commercial operations. When the project is proven not commercially feasible and the property is abandoned or becomes worthless, these costs will be written off as expenses.
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Exploration expenditures cost Beginning balance 566,570 566,570 Increase during the year - - Ending balance 566,570 566,570 Mining license expenditures cost Beginning balance 355,642 228,704 Increase during the year 8,140 126,938 Ending balance 363,782 355,642 Total deferred exploration and development costs 930,352 922,212
Annual Report 2013 107 17. LONG - TERM LOANS AND ADVANCES TO SUBSIDIARIES AND RELATED PARTIES The outstanding balances as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Subsidiaries and Joint Ventures (eliminated from consolidated financial statements) ITD - NCC Joint Venture (NT-2) - - 1,841,612 1,829,445 Italian-Thai International Co., Ltd. - - 3,682,463 1,738,732 Italian-Thai Land Co., Ltd. - - 556,095 556,046 ITO Joint Venture - - 528,400 528,400 Palang Thai Kaowna Co., Ltd. - - 456,770 456,770 Italian-Thai Power Co., Ltd. - - 453,041 418,441 Thai Pride Cement Co., Ltd. - - 300,303 300,303 ITD Construction SDN. BHD. - - 295,738 295,497 IN Joint Venture - - 119,340 118,012 Palit Palang Ngan Co., Ltd. - - 94,842 94,842 Sin Rae Muang Thai Co., Ltd. - - - 106,950 ITD-UNIQUE Joint Venture - - - 62,500 ITD – Madagascar S.A. - - 72,367 49,979 Italian-Thai Development Vietnam Co., Ltd. - - 33,889 26,136 Myanmar ITD Co., Ltd. - - 12,035 11,787 APPC Holding Co., Ltd. - - 162,197 - Total - - 8,609,092 6,593,840 Less : Allowance for doubtful accounts - - (3,634,414) (3,460,112) Net - - 4,974,678 3,133,728 Significant movements in the long - term loans and advances to subsidiaries and related parties for the year ended 31 December 2013 are as follows :
1 January During the year 31 December (Unit : Thousand Baht) 2013 Increase Decrease 2013 Subsidiaries and Joint Ventures ITD - NCC Joint Venture (NT-2) 1,829,445 12,167 - 1,841,612 Italian-Thai International Co., Ltd. 1,738,732 1,967,767 24,036 3,682,463 Italian-Thai Land Co., Ltd. 556,046 49 - 556,095 ITO Joint Venture 528,400 - - 528,400 Palang Thai Kaowna Co., Ltd. 456,770 - - 456,770 Italian-Thai Power Co., Ltd. 418,441 34,600 - 453,041 Thai Pride Cement Co., Ltd. 300,303 - - 300,303 ITD Construction SDN. BHD. 295,497 241 - 295,738 IN Joint Venture 118,012 1,693 365 119,340 Palit Palang Ngan Co., Ltd. 94,842 - - 94,842 Sin Rae Muang Thai Co., Ltd. 106,950 54,969 161,919 - ITD-UNIQUE Joint Venture 62,500 8,150 70,650 - ITD – Madagascar S.A. 49,979 22,388 - 72,367 Italian-Thai Development Vietnam Co., Ltd. 26,136 8,328 575 33,889 Myanmar ITD Co., Ltd. 11,787 248 - 12,035 APPC Holding Co., Ltd. - 162,197 - 162,197 Total 6,593,840 2,272,797 257,545 8,609,092
18. LOAN AND ADVANCES TO UNRELATED PARTY As at 31 December 2013 and 2012, the Company also has made loans to an unrelated party of Baht 88.61 million for the investment in a foreign company which is under the negotiation process. Currently, there has been no further development in the project because the Electricity Generating Authority of Thailand is in the process of concluding the development plan for the capacity of Power plant. Such loan to unrelated party is to support the acquisition of the concession license from the Government of Cambodia to develop a 3,600 mega watt Coal-Fired Power Plant at Koh Kong. Such loan and advances are refundable should the Power Plant project not materialize. The Company has filed claims for refund of such loan and in the process of consideration by Court. However, the Company recognised full allowance for non refund of such amount.
108 Italian-thai Development Public Company Limited 19. LAND AWAITING DEVELOPMENT
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Land awaiting development 783,541 783,561 474,846 474,846 Less : Allowance for impairment (624) (624) - - Land awaiting development – net 782,917 782,937 474,846 474,846 Land held for development as at 31 December 2013 and 2012 of Baht 282.32 million is the land located in Udonthani province for use in the potash mining project.
20. INVESTMENT PROPERTIES As at 31 December 2013 and 2012, investment properties presented at fair value consist of :
(Unit : Thousand Baht) Consolidated F/S Separate F/S Land 1,347,805 724,686 Building 15,928 15,928 Total 1,363,733 740,614 In the years 2010 and 2011, the Company hired independent appraisers to re-appraise the value of land and building under the market approach.
21. PROPERTY, PLANT AND EQUIPMENT
Consolidated F/S Furniture, Site office Machinery Building fixtures and and and equipment Land Total and factories office temporary under (Unit : Thousand Baht) equipment camps installation Cost 1 January 2013 1,299,581 5,567,486 21,918,307 675,369 617,352 30,078,095 Acquisitions/Transfer in 28,807 242,011 2,362,243 428,651 639,339 3,701,051 Disposals/Transfer out - (4,404) (557,811) (15,833) (707,515) (1,285,563) Translation adjustment (47) (1,704) (468,339) (2,615) (2,531) (475,236) 31 December 2013 1,328,341 5,803,389 23,254,400 1,085,572 546,645 32,018,347 Accumulated depreciation 1 January 2013 - 3,273,278 13,771,837 446,499 - 17,491,614 Depreciation for the year - 250,894 1,598,487 122,235 - 1,971,616 Depreciation for disposals - (4,404) (351,868) (1,660) - (357,932) Translation adjustment - (420) (255,137) (2,615) - (258,172) 31 December 2013 - 3,519,348 14,763,319 564,459 - 18,847,126 Less Allowance for impairment 31 December 2012 2,219 1,818 20,125 - - 24,162 31 December 2013 2,219 1,818 68,385 - - 72,422 Net book value 31 December 2012 1,297,362 2,292,390 8,126,345 228,870 617,352 12,562,319 31 December 2013 1,326,122 2,282,223 8,422,696 521,113 546,645 13,098,799 Depreciation for the year 2012 1,781,300 Depreciation for the year 2013 1,971,616
Annual Report 2013 109 Separate F/S Furniture, Site office Machinery Building fixtures and and and equipment Land Total and factories office temporary under (Unit : Thousand Baht) equipment camps installation Cost 1 January 2013 1,100,248 4,068,011 10,554,205 516,366 444,690 16,683,520 Acquisitions/Transfer in 23,807 164,564 1,498,968 424,590 107,587 2,219,516 Disposals/Transfer out - (4,404) (246,924) (120) (422,580) (674,028) Translation adjustment - - (55,798) (2,615) - (58,413) 31 December 2013 1,124,055 4,228,171 11,750,451 938,221 129,697 18,170,595 Accumulated depreciation 1 January 2013 - 2,670,777 8,248,061 369,009 - 11,287,847 Depreciation for the year - 173,218 537,726 109,558 - 820,502 Depreciation for disposals - (4,404) (155,789) (120) - (160,313) Translation adjustment - - (47,517) (2,615) - (50,132) 31 December 2013 - 2,839,591 8,582,481 475,832 - 11,897,904 Net book value 31 December 2012 1,100,248 1,397,234 2,306,144 147,357 444,690 5,395,673 31 December 2013 1,124,055 1,388,580 3,167,970 462,389 129,697 6,272,691 Depreciation for the year 2012 662,551 Depreciation for the year 2013 820,502 As at 31 December 2013 and 2012, subsidiaries have mortgaged and granted power of attorney to mortgage its land with banks with a total value of Baht 4.91 million and Baht 5.40 million, respectively, as collaterals for the issuance of letters of guarantees for subsidiaries. As at 31 December 2013 and 2012, certain building, machinery and equipment items of the Company, subsidiaries and joint ventures have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounted to Baht 10,525.94 million and Baht 7,843.89 million, respectively (Separate F/S : Baht 6,427.97 million and Baht 6,519.58 million, respectively). As at 31 December 2013 and 2012, the Company’s, subsidiaries’ and joint ventures’ machinery, equipment and vehicles with a total net book value of Baht 2,062.59 million and Baht 1,748.76 million, respectively, were acquired under finance lease/ hire purchase agreements.
22. GOODWILL
Consolidated F/S (Unit : Thousand Baht) 2013 2012 Goodwill 958,785 958,785 Less : Allowance for impairment loss (16,673) (16,673) Net book value 942,112 942,112 Management considered that allowance for impairment loss of Baht 16.67 million made for a subsidiary’s goodwill in the year 2010 still unchanged.
23. DEFERRED CONCESSION COST In January 2011, the Company entered into a Concession agreement with Bangladesh Bridge Authority of the Government of People’s Republic of Bangladesh to proceed with the development of the Dhaka Elevated Expressway. The Company shall establish and incorporate in the Republic of Bangladesh a Project Company as the Concessionaire, which will be a limited liability company. In addition, the Company will be appointed as the EPC Contractor for the design, construction and completion of the Dhaka Elevated Expressway. The period of concession agreement is 25 years. Total project development is approximately Baht 38,044.98 million. The Company has signed the Concession agreement with the Ministry of Transportation and Communications, Government of the Republic of Mozambique on 13 December 2013. The Company will hold 60% of project with project value of USD 4,000 million equivalents to Baht 120,000 million and project detail are as follows: 1. Construction of a Heavy Haul Railway Lines from Moatize to Macuse Port, the approximate length of the standard gauge railways is about 530 kilometers. 2. Construction of a Deep Sea Port at Macuse with the starting port capacity, for exporting coal, of 25 million tons annually to the maximum capacity of 100 million tons annually. 3. Operation of the Heavy Haul Railway Lines and Macuse Deep Sea Port on the Concession Agreement of 30 Years (including the Construction) and the Concession period could be extended for another 10 years. The Company will pay USD 5 million within 30 days after signing the concession agreement and USD 5 million will be used in human development program and formation of national framework from the start-up of the project.
110 Italian-thai Development Public Company Limited 24. BANK OVERDRAFTS AND SHORT - TERM LOANS FROM FINANCIAL INSTITUTIONS The outstanding balances of bank overdrafts and short - term loans from financial institutions as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Bank overdrafts 3,366,427 3,285,935 7,432 - Short - term loans from financial institutions 4,991,134 6,293,638 3,864,501 4,651,400 Total 8,357,561 9,579,573 3,871,933 4,651,400 These represent loans obtained from local and overseas financial institutions in the following currencies :
Consolidated F/S Separate F/S (Unit : Million) 2013 2012 2013 2012 Thai Baht 4,536 5,750 3,865 4,651 INR 861 970 - - These loans are subject to interest at domestic market rates for Thai Baht currency loans and at the market rates of India and SIBOR reference rate. As at 31 December 2013 and 2012, part of loans amounting to Baht 1,846.50 million and Baht 1,717.89 million, respectively, have been used to finance certain specific projects (Project Finance). The lending banks had set a condition for the Company to process the cash transactions from the projects through the Company’s accounts with those banks. As at 31 December 2013 and 2012, bank overdrafts and short - term credit facilities that have not been drawn down amounted to Baht 6,376.50 million and Baht 6,778.03 million, respectively.
25. TRADE ACCOUNTS PAYABLE - RELATED PARTIES The outstanding balances as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Subsidiaries and Joint Ventures (eliminated from consolidated financial statements) ITD – ETF – MVM Joint Venture - - 429,706 717,109 Siam Concrete and Brick Products Co., Ltd. - - 162,688 101,205 Thai Maruken Co., Ltd. - - 123,872 84,147 Asian Steel Product Co., Ltd. - - 33,706 86,860 Italthai Trevi Co., Ltd. - - 252,380 53,367 TREVI-ITT Joint Venture - - 18,675 72,260 ITD-NCC (NT-2) Joint Venture - - - 16,380 ITD Cementation India Limited - - 12,803 513 Thai Pride Cement Co., Ltd. - - 43,192 13,264 Aquathai Co., Ltd. - - 1,367 2,271 Italthai Marine Co., Ltd. - - 37 9,306 ITD - ETF Joint Venture - - 96,478 1,751 Nha Pralan Crushing Plant Co., Ltd. - - 4,148 2,068 IN Joint Venture - - 1,669 1,669 ITO Joint Venture - - 232 1,860 Saraburi Construction Technology Co., Ltd. - - 34,033 1,944 ITD – SQ Joint Venture - - 769 769 Italian Thai Power Co., Ltd. - - 49,972 - Samsung-ITD Joint Venture - - 19,324 - Others - - 9,948 11,475 Total - - 1,294,999 1,178,218 Associated companies MCRP Construction Corporation, Philippines 150,047 131,933 150,047 131,933 Bangkok Steel Wire Co., Ltd. 111,276 44,715 85,175 20,754 ATO-Asia Turnouts Ltd. 89,441 28,102 89,441 7,923 Total 350,764 204,750 324,663 160,610
Annual Report 2013 111 Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Related companies Sahakol Equipment Co., Ltd. 138,699 55,997 - - Siam Steel Syndicate Plc. 31,971 106,643 31,971 106,583 Takenaka Corporation 54,885 77,878 - - Italthai Engineering Co., Ltd. 95,914 37,922 95,886 37,922 Italthai Industrial Co., Ltd. 109,174 61,830 62,154 61,456 Nishio Rent All (Thailand) Co., Ltd. 78,001 59,904 74,193 58,101 (Formerly : Thai Rent All Co., Ltd.) Charoong Thai Wire & Cable Plc. 44,758 41,745 39,687 40,006 Obayashi Corporation 14,409 34,084 - - Unique Engineering and Construction Plc. 34,811 34,811 - - Amari Estates Co., Ltd. - 358 - 358 Sumitomo Mitsui Construction Co., Ltd. 33,297 24,063 - - Intrinsic Resources Co., Ltd. - 25,736 - - ETF - Eurovia Travaux Ferroviaires 21,523 13,551 - - Thai Nippon Steel & Sumikin Engineering & Construction Co., Ltd. 1,850 - 1,850 - Praram 9 Square Co., Ltd. 45,114 - 45,114 - LNG PLUS International 36,644 - 36,644 - Samsung C & T Corporatiion 18,420 - - - Others 4,613 22,940 3,078 15,105 Total 764,083 597,462 390,577 319,531 Outstanding balances and portion of joint ventures partners ITD – ETF - MVM Joint Venture 192,294 320,906 - - TREVI-ITT Joint Venture 17,741 43,356 - - ITD – NCC (NT-2) Joint Venture - 6,552 - - ITD - ETF Joint Venture 33,767 613 - - ITO Joint Venture 139 1,116 - - IN Joint Venture 818 818 - - ITD – SQ Joint Venture 384 384 - - ITD – SMCC Joint Venture 1,188 1,156 - - Samsung-ITD Joint Venture 14,686 - - - Others 2,049 1,651 - - Total 263,066 376,552 - - Total 1,377,913 1,178,764 2,010,239 1,658,359
26. SHORT - TERM LOANS AND ADVANCES FROM RELATED PARTIES The outstanding balances as at 31 December 2013 and 2012 are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Subsidiary and Joint Ventures (eliminated from consolidated financial statements) ITD - ITD CEM JV - - - 144 Italian Thai Hongsa Co., Ltd. - - 65,175 - ITD – SMCC Joint Venture - - - 70,000 Total - - 65,175 70,144 Related companies Sumitomo Mitsui Construction Co., Ltd. 55,860 16,202 - - Samsung C&T Corporation 1,576 - - - Total 57,436 16,202 - - Outstanding balances and portion of other joint venture partner ITD - SMCC Joint Venture - 42,000 - - Short - term loans and advances from related parties 57,436 58,202 65,175 70,144
112 Italian-thai Development Public Company Limited Significant movements in the short - term loans and advances from related parties for the year ended 31 December 2013 are as follows :
1 January During the year 31 December (Unit : Thousand Baht) 2013 Increase Decrease 2013 Subsidiary and Joint Ventures (eliminated from consolidated financial statements) ITD - ITD CEM JV 144 - 144 - Italian Thai Hongsa Co., Ltd. - 65,175 - 65,175 ITD – SMCC Joint Venture 70,000 - 70,000 - Total 70,144 65,175 70,144 65,175
27. FINANCE LEASE PAYABLE – RELATED PARTY
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Not over one year 100,345 53,338 - - Over one year but not over five years 334,275 381,282 - - Over five years 71,672 71,672 - - Total 506,292 506,292 - - Less : Deferred interest (125,639) (161,079) - - 380,653 345,213 - - Less : Current portion (66,194) (17,898) - - Net 314,459 327,315 - - The above finance lease is for machinery and equipment leased from a joint venture, with scheduled repayment terms of 9 years.
28. FINANCE LEASE PAYABLE – UNRELATED PARTIES
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Not over one year 501,859 477,544 456,460 294,160 Over one year but not over five years 1,040,946 823,461 1,007,139 783,292 Total 1,542,805 1,301,005 1,463,599 1,077,452 Less : Deferred interest (150,062) (141,268) (141,477) (130,744) 1,392,743 1,159,737 1,322,122 946,708 Less : Current portion (433,614) (426,856) (392,866) (249,955) Net 959,129 732,881 929,256 696,753 The above finance leases payable are for machinery, equipment and vehicles leases with scheduled repayment terms of 2 - 5 years.
29. LONG - TERM LOANS As at 31 December 2013 and 2012, the outstanding balance of long - term loans are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Outstanding balances 5,533,899 5,341,172 3,372,397 2,570,678 Less : Current portion (2,049,163) (1,668,429) (1,313,901) (622,177) Net 3,484,736 3,672,743 2,058,496 1,948,501 Movements in the long - term loans during the years ended 31 December 2013 and 2012 are summarized below :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Balance as at 1 January 5,341,172 3,283,773 2,570,678 1,050,706 Add : Additional borrowings 1,999,343 3,526,366 1,396,974 2,311,970 Less : Repayments (1,769,935) (1,443,221) (622,177) (788,141) Add (Less) : Foreign currency financial statements translation adjustments (36,681) (25,746) 26,922 (3,857) Balance as at 31 December 5,533,899 5,341,172 3,372,397 2,570,678 The Company entered into loan agreements with two banks for credit facilities of Baht 2,790 million. These credit facilities bear interest at the rate of MLR - 0.25% and MLR - 0.75% per annum. In addition, the loan agreement contains covenants relating to various matters such as the payment of dividends and limitations on the execution of new loan obligations and the maintenance of financial ratios.
Annual Report 2013 113 Loans of subsidiaries bear interest at the rate of MLR, 12.00% and 13.50% per annum. The Company’s subsidiary has not been able to maintain some financial ratios as stipulated in the loan agreements with a bank. However, the Company’s subsidiary has negotiated with the banks to waive the covenants of such financial ratios. The Company’s subsidiary obtained letter for the waiver of the covenants from such bank dated 7 February 2014 granting to relieve to all covenant conditions under the loan agreements for the year ended 31 December 2013. A joint venture entered into a refinance agreement with a financial institution for credit facilities of Baht 8,330 million of which Baht 4,165 million is for the portion of the Company. These credit facilities bear interest at the rates of MLR - 0.75 and MOR - 1 per annum. A joint venture entered into a loan agreement with a financial institution for credit facilities of Baht 5,365 million of which Baht 2,683 million is for the portion of the Company. These credit facilities bear interest at the rates of MLR - 1.50 and MOR per annum. Loans of joint venture contain covenants relating to various matters including maintenance of financial ratios, limitations on the execution of new loan obligations and others. Loans are collateralised by the mortgages of machinery, equipment and vehicles, the assignment of the beneficiary of insurance and guarantees by the Company and joint venture partners. As at 31 December 2013, subsidiaries have mortgaged part of land and construction thereon with a net carrying value of Baht 296.53 million (2012 : Baht 114.33 million) as collateral for loans. The subsidiary companies have loan agreements with commercial banks for credit facilities of Baht 100.78 million. These loans bear interest per annum at MLR – 0.25% and MLR – 0.75%. Such long – term loans are collaterized by its land and structure including most present and future thereon, and the guarantee of the Company and subsidiary as described in Note 12. The subsidiary companies will reduce credit facilities when redeemed the mortgage at 70% – 80% of selling price of the projects’ assets as stipulated in the agreements. The payback period for the principals are within 36 – 42 months from agreements date. A subsidiary has loan facilities from local bank of Baht 12,650 million. Such loan guaranteed by the Company, and is collateralized by the mortgage of project’s machinery and equipment.
30. DEBENTURES – NET
Debenture Interest rate Consolidated and Separate F/S Duration Date of issue Maturity date (% p.a.) (Unit : Thousand Baht) 2013 2012 1 5 years 26 June 2009 26 June 2014 6.50 4,992,532 4,977,044 2 3 years 16 September 2010 16 September 2013 5.50 - 1,498,304 3 5 years 16 September 2010 16 September 2015 6.25 997,666 996,298 4 5 years 8 June 2011 8 June 2016 6.72 3,488,311 3,483,512 5 2 years 18 August 2011 18 August 2013 5.00 - 5.25 - 997,879 6 2 years 20 September 2013 20 September 2015 5.80 2,487,654 - Total 11,966,163 11,953,037 Less Current Portion (4,992,532) (2,496,183) Debentures – net 6,973,631 9,456,854 Movements of debentures during the years ended 31 December 2013 and 2012 in the consolidated and separate financial statements are as follows :
(Unit : Thousand Baht) 2013 2012 Balance as at 1 January 11,953,037 11,927,117 Newly issued debentures 2,500,000 - Old redeemed debentures (2,500,000) - Cost of issuing debentures (14,371) - Amortization of costs of issuing debentures 27,497 25,920 Balance as at 31 December 11,966,163 11,953,037 Less : Current Portion (4,992,532) (2,496,183) Total 6,973,631 9,456,854 On 20 September 2013, the Company issued new unsubordinated, unsecured debentures with a principal amount of Baht 2,500 million to specific persons with two-year tenure and with a face value of Baht 1,000. These bear interest at a rate of 5.80 percent per annum which is payable quarterly. The debentures will be due for redemption on 20 September 2015. The Company used the proceeds from this issuance to repay debts and/or for working capital required to fund business expansion. The Company cannot maintain some financial ratios as stipulated in the debentures regulations. However, on 26 July 2012 and 6 August 2012, the debenture shareholders’ meetings approved to relieve the Company from maintaining the debt to equity ratio for the quarter ended 30 June 2012 and for the year ended 31 December 2012. In addition, the debentures were issued with covenants relating to various matters such as the decrease in share capital, the merger, the payment of dividend and limitations on the execution of new loan obligation.
114 Italian-thai Development Public Company Limited 31. EMPLOYEE BENEFITS OBLIGATION
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Present value of employee benefits obligation as at 31 December 675,278 576,226 502,134 418,621 Fair value of plan assets as at 31 December (64,826) (68,106) - - Obligation – net 610,452 508,120 502,134 418,621 Employee benefits obligation Balance as at 1 January 576,226 527,198 418,621 356,450 Current service costs 44,021 49,022 28,218 23,339 Interest on obligation 28,859 23,941 18,850 14,671 Actuarial loss 68,949 47,404 67,269 42,807 Benefit paid (36,162) (66,434) (29,987) (18,117) Translation adjustments for foreign currency financial statements (6,615) (4,905) (837) (529) Balance as at 31 December 675,278 576,226 502,134 418,621 Plan assets Balance as at 1 January 68,106 62,663 - - Expected returns on plan assets 5,713 5,544 - - Contribution 3,941 7,866 - - Benefit paid (4,867) (9,713) - - Actuarial gain (loss) (4,323) 4,151 - - Translation adjustments for foreign currency financial statements (3,744) (2,405) - - Balance as at 31 December 64,826 68,106 - - Plan assets invested with two insurance companies as at 31 December 2013 and 2012 are Baht 64.83 million and Baht 68.11 million, respectively. The management understands that the assets in these portfolios are well diversified and, as such, the long term return thereon is expected to be higher than the rate of return on Government Bonds. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The amount of employee benefits obligation, plan assets, the deficit thereof and the experiences of adjustments on plan assets and plan liabilities of overseas entities for the current and previous three years are as follow :
(Unit : Thousand Baht) 2013 2012 2011 2010 Employee benefits obligation 93,205 96,210 85,421 84,478 Plan assets 64,826 68,106 62,663 72,754 Deficit (28,379) (28,104) (22,758) (11,724) Experience adjustments on plan assets 4,323 (5,237) 7,027 919 Experience adjustment on plan liabilities 9,800 (6,842) (1,818) (7,035) The employee benefit obligations of the Company and subsidiaries are measured using actuarial techniques. The estimated amount is computed by the discounted cash flows for amounts to be paid in the future based on the government bond interest rate with a term to maturity that approximates the term of the related obligation. The estimated future cash outflows are based on employee wages, turnover rate, retirement ages, mortality, length of service and others. The employee benefits expenses are recognised in the statement of comprehensive income to allocate the expenses through the hiring period. Principal actuarial assumptions are as follows :
2013 2012 Discount rates 4.30 – 9.25 percent per annum 4.17 – 8.60 percent per annum Future average salary increment rates 3.54 – 8.69 percent per annum 5.29 – 9.00 percent per annum Mortality rate Thai Mortality Table 2008 Thai Mortality Table 2008 Normal retirement ages 55 - 65 years 55 - 65 years
32. DEFERRED INCOME TAX ASSETS /LIABLITIES AND TAX EXPENSE (INCOME) The analysis of deferred income tax assets and liabilities are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Deferred income tax assets 234,587 188,324 - - Deferred income tax liabilities (789,456) (742,219) (234,042) (219,901) Deferred income tax - net (554,869) (553,895) (234,042) (219,901)
Annual Report 2013 115 The movements in deferred income tax assets and liabilities are as follows :
Consolidated F/S Recognised as income (Expense) Other component 1 January Statement of 31 December of equity 2013 income 2013 Shareholders’ (Unit : Thousand Baht) Equity Deferred income tax assets From allowance for doubtful accounts 30,159 8,572 (1,694) 37,037 From allowance for obsolete inventories 558 2 - 560 From allowance for impairment of assets 444 - - 444 From depreciation of assets 77,567 26,231 (3,724) 100,074 From provision for construction projects 873 (873) - - From provision loss for construction projects 169 (169) - - From employee benefits obligations 29,163 12,640 783 42,586 From liabilities under finance lease agreements 14,000 17,994 - 31,994 From provision for liabilities 18,414 - - 18,414 From other timing differences 16,977 (10,871) (2,628) 3,478 Total 188,324 53,526 (7,263) 234,587 Deferred income tax liabilities From unrealized gain on changes in the value of 178,318 - (23,612) 154,706 Investments From finance lease receivable 1,792 18,782 - 20,574 From liabilities under finance lease agreements 12,381 14,322 - 26,703 From depreciation of machinery 39,822 40,376 (6) 80,192 From debentures 9,392 (2,625) - 6,767 From potash mining right 476,396 - - 476,396 From investment properties 24,118 - - 24,118 Total 742,219 70,855 (23,618) 789,456
Separate F/S Recognised as income (Expense) Other component 1 January Statement of 31 December of equity 2013 income 2013 Shareholders’ (Unit : Thousand Baht) Equity Deferred income tax liabilities From unrealized gain on changes in the value of investments 174,883 - (22,177) 152,706 From finance lease receivable 1,792 18,782 - 20,574 From liabilities under finance lease agreements 12,381 14,322 - 26,703 From depreciation of machinery 21,453 5,839 - 27,292 From debentures 9,392 (2,625) - 6,767 Total 219,901 36,318 (22,177) 234,042
116 Italian-thai Development Public Company Limited Consolidated F/S Recognised as income (Expense) Other component Statement of 31 December 1 January 2013 of equity income 2013 Shareholders’ (Unit : Thousand Baht) Equity Deferred income tax assets From allowance for doubtful accounts 26,078 5,120 (1,039) 30,159 From allowance for obsolete inventories 550 8 - 558 From allowance for impairment of assets 444 - - 444 From depreciation of assets 59,732 20,549 (2,714) 77,567 From provision for construction projects 1,107 (234) - 873 From provision loss for construction projects - 169 - 169 From employee benefits obligations 22,888 7,429 (1,154) 29,163 From liabilities under finance lease agreements 33,335 (19,335) - 14,000 From provision for liabilities 18,414 - - 18,414 From other timing differences 15,616 1,876 (515) 16,977 Total 178,164 15,582 (5,422) 188,324 Deferred income tax liabilities From unrealized gain on changes in the value of 53,936 - 124,382 178,318 investments From finance lease receivable 24,861 (23,069) - 1,792 From liabilities under finance lease agreements 7,948 4,433 - 12,381 From depreciation of machinery 17,397 22,518 (94) 39,821 From debentures 14,577 (5,184) - 9,393 From potash mining right 476,396 - - 476,396 From investment properties 24,118 - - 24,118 Total 619,233 (1,302) 124,288 742,219
Separate F/S Recognised as income (Expense) Other component Statement of 31 December 1 January 2013 of equity income 2013 Shareholders’ (Unit : Thousand Baht) Equity Deferred income tax liabilities From unrealized gain on changes in the value of investments 53,084 - 121,799 174,883 From finance lease receivable 24,861 (23,069) - 1,792 From liabilities under finance lease agreements 7,948 4,433 - 12,381 From depreciation of machinery 10,745 10,707 - 21,452 From debentures 14,577 (5,184) - 9,393 Total 111,215 (13,113) 121,799 219,901 Income tax consist of :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Domestic income tax Current tax 137,875 102,937 - - Overseas income tax Current tax 180,891 125,794 - - 318,766 228,731 - - Deferred income tax Origination and reversal of temporary differences 17,329 (16,884) 36,318 (13,113) Total 336,095 211,847 36,318 (13,113)
Annual Report 2013 117 Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Total current tax and deferred tax recognized in other comprehensive income Decrease (increase) in unrealised gain (loss) on changes in value of investments (23,612) 124,382 (22,177) 121,799 Translation adjustments for foreign currency financial statements 9,611 4,959 - - Decrease in actuarial losses (2,353) (369) - - Total (16,354) 128,972 (22,177) 121,799 Income tax expenses for the years ended 31 December 2013 and 2012 consist of :
Consolidated F/S 2013 2012 (Unit : Thousand Baht) Thailand India Other Total Thailand India Other Total Accounting profit (loss) before income tax 730,927 448,414 148,869 1,328,210 529,637 251,857 (461,290) 320,204 Add Tax effect of income and expenses that are not taxable income or not deductible 342,249 481,888 (475,051) 349,086 814,820 211,821 (3,353) 1,023,288 Less Loss of subsidiary companies and loss carried forward per tax base (859,031) (10,512) (27,578) (897,121) (896,905) (45,781) - (942,686) Income (loss) per tax base 214,145 919,790 (353,760) 780,175 447,552 417,897 (464,643) 400,806 Tax rate (Percentage) 20 30 - 23 30 - - Current income tax rate recognized in profit or loss 42,829 275,937 - 318,766 102,937 125,369 425 228,731
Separate F/S 2013 2012 (Unit : Thousand Baht) Thailand India Other Total Thailand India Other Total Accounting profit (loss) before income tax 504,170 (365,451) (14,647) 124,072 545,195 (361,739) 40,521 223,977 Add Tax effect of income and expenses that are not taxable income or not deductible 597,094 - - 597,094 586,142 - - 586,142 Less Loss carry forward per tax base (1,027,082) - - (1,027,082) (1,837,201) - - (1,837,201) Income (loss) per tax base 74,182 (365,451) (14,647) (305,916) (705,864) (361,739) 40,521 (1,027,082) Tax rate (Percentage) 20 30 - - 23 30 - - Current income tax rate recognized in profit or loss ------Deferred tax assets arising from temporary differences and unused tax losses that have not been recognized in the financial statement are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Temporary differences 1,825,864 1,613,896 1,721,327 1,511,170 Unused loss carried forward 430,841 558,296 61,183 205,417 Total 2,256,705 2,172,192 1,782,510 1,716,587 The tax losses will expire in 2014 to 2018. The deductible temporary differences do not expire under current tax legislation. The Company, subsidiaries and joint ventures have not been recognised deferred tax assets in respect of these items because it is not probable that future taxable profit will be available against which the Company, subsidiaries and joint ventures can utilize the benefits therefore.
33. RELATED PARTY TRANSACTIONS During the year, the Company, subsidiaries and joint ventures had significant business transactions with related parties, which have been conducted on commercial terms and base on agreed upon in the ordinary course of businesses between the Company and those related parties, as follows :
Pricing policy Turn-key construction service income Cost plus margin Construction service income, exclusive the procurements of materials Cost or cost plus margin Land rental income Mutually agreed rate Sales of equipment Cost or mutually agreed prices Sales of investment Market price Purchases of construction materials Approximate market price Turn-key construction expenses Cost plus margin
118 Italian-thai Development Public Company Limited Pricing policy Hire of construction services, exclusive procurements of materials Cost Purchases of investments Approximate net book value Purchases of assets Mutually agreed prices Interest on loans with related parties Mutually agreed rate Rental expense Mutually agreed rate Below are summaries of significant related party transactions during the year :
Consolidated F/S Separate F/S For the years ended 31 December (Unit : Million Baht) 2013 2012 2013 2012 Transactions with subsidiaries and joint ventures Construction services, sales income and other income - - 1,361 1,906 Sales of equipment - - 61 160 Purchases of construction materials and services - - 2,904 3,071 Purchases of equipment - - 1 9 Transactions with associated companies Construction services, sales income and other income 275 112 275 112 Purchases of construction materials and services 396 310 281 170 Transactions with related parties Construction services, sales income and other income 1,355 1,458 677 640 Sales of equipment - 83 - 3 Purchases of construction materials and services 2,085 2,395 430 821 Purchases of equipment 163 215 161 65 Rental expense 14 6 - - Key management personnel compensation Short-term employee benefits 87 79 72 65 Post-employment benefits 4 4 1 3 Furthermore, the Company also has significant transactions with its related parties in respect of loans and advances. The outstanding balances of such transactions are presented as separate items in the statement of financial position. Loans from directors As at 31 December 2013, an indirect subsidiary company has loans from directors amounting to Baht 44.07 million (2012 : Baht 64.94 million). Such loans bear no interest. Accrued rental expense As at 31 December 2013, a subsidiary has accrued rental expense of Baht 40.02 million (2012 : Baht 25.87 million).
34. ALLOWANCE FOR LOSSES ON CONSTRUCTION WORK Movements of allowance for losses on construction work for the years ended 31 December 2013 and 2012 are as follow :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Balance as at 1 January 7,737 96,026 6,891 96,026 Less : Realized loss during the year (3,261) (88,289) (4,591) (89,135) Balance as at 31 December 4,476 7,737 2,300 6,891
35. PROVIDENT FUND The Company and subsidiaries and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company, and subsidiaries, contributed to the fund monthly at the rate of 2.00 - 5.00 percent of basic salary. The fund, which is managed by Finansa Asset Management Limited, will be paid to employees upon termination in accordance with the fund rules. During the years 2013 and 2012, the Company and its subsidiaries contributed Baht 48.44 million and Baht 48.30 million, respectively, to the fund (Separate F/S: Baht 40.99 million and Baht 38.42 million, respectively).
36. COST OF CONSTRUCTION WORK As at 31 December 2013 and 2012, construction costs of the Company, subsidiaries and its proportionate interests in joint ventures, after adjustment to reflect gains or losses recognized for current construction projects, amounted to Baht 258,609.83 million and Baht 233,374.10 million, respectively (Separate F/S : Baht 148,247.68 million and Baht 130,716.72 million, respectively).
Annual Report 2013 119 37. STATUTORY RESERVE Pursuant to Section 116 of the Public Company Act B.E. 2535, the Company is required to set aside as a statutory reserve at least 5% of its net income after deducting accumulated deficit brought forward (if any) until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution.
38. OTHER INCOME Significant other income for the years ended 31 December 2013 and 2012 are as follows:
Consolidated F/S Separate F/S (Unit: Thousand Baht) 2013 2012 2013 2012 Rental income 85,466 128,154 78,558 66,602 Insurance claim 28,889 18,078 1,152 - Reversal allowance for devalue of land deposit 30,000 - - - Gain on disposal of assets 15,623 92,549 21,559 117,396 Service income 80,171 - - - Income from tax refund 16,789 28,721 - - Penalty income 21,010 - - - Others 301,604 252,872 54,035 171,223 Total 579,552 520,374 155,304 355,221
39. EXPENSES BY NATURE Significant expenses by nature are as follows :
Consolidated F/S Separate F/S (Unit : Thousand Baht) 2013 2012 2013 2012 Salaries, wages and other employee benefits 8,993,987 8,021,601 6,690,661 5,502,030 Depreciation 1,971,616 1,781,300 820,502 662,551 Amortisation 6,004 4,521 4,226 3,749 Rental expenses 1,845,052 1,559,489 1,262,951 1,042,486 Materials and supplies used 15,483,996 16,304,987 9,912,532 9,337,076 Subcontract costs 8,730,932 11,636,249 5,461,110 8,172,683 Utilities expenses 971,163 713,106 297,483 228,046 Transportation expenses 705,061 883,948 475,677 465,445 Repair and maintenance expenses 421,371 407,986 95,197 115,109 Prebid expenses 268,765 55,922 268,194 50,183 Professional fee 468,771 717,535 240,453 412,779 Fuel expenses 1,646,576 1,387,933 913,186 985,773
40. SHARE CAPITAL At the Board of Director’s Meeting held on 4 July 2013, the board of directors passed a resolution to approve the allocation of increased share capital in accordance with an ordinary meeting approval of 666,794,830 shares to existing shareholders at a proportion of 1 existing share to 0.159 new shares at an offer price of Baht 3 per share. On 19 August 2013, the Company registered the increased share capital with Department of Business Development. The Company has received the paid - up totally Baht 2,000,348,490. At the General Shareholders’ Meeting No. 1/2012 held on 27 April 2012, the shareholders approved to decrease the Company’s registered share capital by Baht 728 million (728 million common shares at Baht 1 par value) which were reserved for the exercise of the Company’s convertible debentures. Such convertible debentures have been all redeemed and have no rights to convert to the common shares. In addition, the shareholders approved to increase the Company’s registered share capital with general mandate of Baht 1,677.47 million (1,677.47 million common shares at Baht 1 par value) to offer the 1,258.10 million common shares proportionally to the existing shareholders and the 419.37 million common shares for private placement. The Company registered such changes with the Department of Business Development on 11 May 2012.
41. GUARANTEES As at 31 December 2013, the Company, subsidiaries and joint ventures have outstanding guarantees totaling approximately Baht 42,186.59 million issued by financial institutions on behalf of the Company, its subsidiaries, and joint ventures in respect of certain performance bonds required in the normal course of business. The Company does not expect to incur losses from these guarantees. As at 31 December 2013, the Company has outstanding guarantees approximately Baht 3,803.38 million issued to financial institutions and its venture partners to collateralize credit facilities granted by those financial institutions and joint venture partners to subsidiaries, associates, related companies and joint ventures. The Company issued guarantees in proportion to its shareholding (except for Italthai Trevi Co., Ltd., Italthai Marine Co., Ltd., Aquathai Co., Ltd., Sarithorn Co., Ltd, Asian Steel Product Co., Ltd., and ITD Cementation India Limited for which the Company issued full guarantees for the credit facilities).
120 Italian-thai Development Public Company Limited 42. COMMITMENTS 42.1 As at 31 December 2013, the Company, subsidiaries and joint ventures have outstanding commitments with major subcontractors, classified by currencies, as follows :
Baht Equivalent Currency (Unit : Million Baht) Consolidated F/S Separate F/S THB 3,115.73 3,109.37 NTD 16.03 16.03 INR 2,186.93 2,186.93 42.2 As at 31 December 2013, the Company, subsidiaries and joint ventures have the following outstanding commitments, proportionately, for purchases of materials, machinery and software and related services :
Baht Equivalent Currency (Unit : Million Baht) Consolidated F/S Separate F/S THB 213.56 74.72 USD 154.74 131.70 INR 319.32 - NTD 0.55 0.55 AUD 32.26 32.26 EUR 83.77 48.00 SGD 39.35 39.35 42.3 As at 31 December 2013, the Company has outstanding commitments of USD 3.20 million in respect of the uncallable portion of investments in a related company, and seven subsidiary companies of Baht 2.25 million, MYR 4 million, USD 36.75 million, BDT 27,106.67 million and MMK 344.17 million. 42.4 A subsidiary company has a commitment to apply for and to obtain a mining concession from the Government of Thailand prior to the commencement of the potash mining operations. A fee of USD 5 million is payable to the Ministry of Industry upon receipt of the mining concession and an annual fee subsidizing the Education Fund of USD 0.20 million is payable to the Department of Primary Industries and Mines in accordance with an agreement between the Ministry of Industry and the Department of Primary Industries and Mines and the Company. 42.5 A subsidiary company entered into a Land Purchase and Sale Agreement for the land located in the mining project area in Udon Thani Province. The total area of land is approximately 1,239 rais for a total cost of Baht 279 million. The subsidiary company has paid a deposit of Baht 2 million for the land purchase, and the balance will be paid according to the terms of the agreements. 42.6 A subsidiary company has commitments totaling Baht 8.16 million in respect of hiring consultant companies to provide project feasibility studies and the Environmental and Health Impact Assessment Report. 42.7 A subsidiary company has a commitment relating to housing and building construction agreements with several companies of approximately Baht 52.48 million.
43. CONTINGENT LIABILITIES a) In year 1997, the Company and seven other parties were jointly sued for compensation totaling approximately Baht 654.89 million. On 30 December 2005, the Court of First Instance ordered the defendant to pay for damages amounting to Baht 440.03 million, plus interest at the rate of 7.50 percent per annum from 11 June 1992 to the payment date. On 17 March 2006, the Company submitted an appeal and a petition to stay execution to the order of the Court - Chonburi Province defending that the plaintiffs did not file the claims with the Bankruptcy Court within the prescribed period. The Appeal Court had issued a verdict in favour of the Company (co-defendant) whereby the Company has no responsibility to the plaintiff. Currently, such case is in the process of consideration to submit the petition by plaintiff. The Company believes that there will be no damage from such case. The Company therefore, has not set up any provision in its accounts. There has been no progress on this matter during the year. b) Certain customers of the Company have taken legal actions against the Company, subsidiary companies, and joint venture for breaches of service agreements, claiming compensation totaling approximately Baht 3,892.48 million. The cases are currently pending for judgment from the Civil Courts for the claims of Baht 867.01 million and pending for the judgement of arbitrator of Baht 3,025.47 million. Management is of the opinion that such lawsuits are a normal part of businesses and some are brought without proper justifiable grounds, and believes that no material liabilities will be incurred as a result of those lawsuits. Therefore, the Company has not set up provision for those in the accounts.
Annual Report 2013 121 44. SEGMENT REPORTING Consolidated financial statements as at 31 December 2013 and 2012 for the years ended 31 December 2013 and 2012 combined geographic segment reporting as follow :
Consolidated FS Revenues from construction work Non current assets* (Unit : Million baht) 2013 2012 2013 2012 Geographic information Thailand 29,430 29,293 25,815 21,567 India 10,279 12,497 1,873 1,807 Other 1,744 2,677 874 1,052 Total 41,453 44,467 28,562 24,426 * Exclude deferred tax asset and goodwill. Revenues from external customers in the Group, Thailand as well as its major markets, and India, have been identified on the basis of the customer’s geographical location. Non-current assets are allocated based on their physical location. The operations of the Company, its subsidiaries and joint ventures for years ended 31 December 2013 and 2012 are mainly engaged in a single industry segment, construction services, and are conducted in the following geographical segments.
Consolidated F/S For the years ended 31 December Thailand India Other countries Total Eliminate Grand Total (Unit : Million Baht) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Revenue from construction work Gross segment revenues 29,430 29,293 10,279 12,497 1,744 2,677 41,453 44,467 - - 41,453 44,467 Segment revenues 2,146 2,435 148 275 - - 2,294 2,710 (2,294) (2,710) - - Net revenues from third parties 31,576 31,728 10,427 12,772 1,744 2,677 43,747 47,177 (2,294) (2,710) 41,453 44,467 Revenue from sale and service Gross segment revenues 2,456 1,814 - - 4 10 2,460 1,824 - - 2,460 1,824 Segment revenues 812 1,195 - - - - 812 1,195 (812) (1,195) - - Net revenues from third parties 3,268 3,009 - - 4 10 3,272 3,019 (812) (1,195) 2,460 1,824 Gross profit (loss) 4,207 3,970 856 1,302 (422) (175) 4,641 5,097 14 29 4,655 5,126 Other income 580 520 Interest income 195 120 Interest expense (2,204) (2,286) Depreciation and amortization (1,978) (825) Allowance (reversal of allowance) 131 (510) for doubtful accounts Gain (loss) on exchange rate (162) (195) Equity in net income of 22 7 associated companies Income tax expense (336) (212) Income (loss) for the year 992 108
As at 31 December Thailand India Others Total Elimination Grand total (Unit : Million Baht) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Property, plant and equipment - net 10,879 10,057 1,619 1,685 703 935 13,201 12,677 (102) (115) 13,099 12,562 Other assets 52,546 46,565 12,177 12,339 4,933 2,661 69,656 61,565 (17,604) (15,144) 52,052 46,421 Total assets 63,425 56,622 13,796 14,024 5,636 3,596 82,857 74,242 (17,706) (15,259) 65,151 58,983 Major Customer For the year ended 31 December 2013, the company and subsidiaries and joint venture’s revenue come from Government agencies amounting of Baht 27,994.01 million.
122 Italian-thai Development Public Company Limited 45. FINANCIAL INSTRUMENTS Financial risk management The Company’s financial instruments principally comprise cash and cash equivalent pledged deposits at banks, trade accounts receivable, loans, investments, bank overdrafts and short - term loans from financial institutions, loans, finance lease payables, debentures and long-term loans. The financial risks associated with these financial instruments and how they are managed are described below. Credit risk The Company, subsidiaries and joint ventures have exposure to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses since most of the credit grantings are covered with contracts and guarantees. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, and other receivables as presented in the statement of financial position. Interest rate risk The Company, subsidiaries and joint ventures exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts and short-term loans from financial institutions, short-term loans, finance lease payables, debentures and long-term borrowings. However, since most of the Company’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Foreign currency risk The Company, subsidiaries and joint ventures have exposure to foreign currency risk from trading transactions and borrowings that are denominated in foreign currencies. The Company, subsidiaries and joint ventures seek to manage this risk by entering into forward exchange and currency swap contracts when it considers appropriate. Generally, the forward and currency swap contracts mature within one year. The significant balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2013 are summarized below :
Financial Financial Average exchange rate Foreign currency assets liabilities as at 31 December 2013 (Million) (Million) (Baht per 1 foreign currency unit) USD 88 3 32.8136 EUR - 6 45.0217 VND 297 - 0.0016 INR 63 1 0.5289 JPY 266 387 0.313042 Forward exchange contracts which remain outstanding as at 31 December 2013 are summarized below :
Currency Balance (Million) Forward contract exchange rate JPY (sell) 763 0.313357-0.318928 EUR (buy) 2 44.2470 Below is the summary of the Company, subsidiaries and joint ventures significant foreign currency denominated assets and liabilities as at 31 December 2013 which are unhedged.
Consolidated F/S (Net) EUR USD JPY VND INR Million Million Million Million Million Assets - 88 - 297 63 Trade accounts payable - 2 - - - Trade accounts payable - related parties - - 207 - 1 Loan from financial institutions 4 - - - - Finance lease payable - 1 - - - Advance received from customers - - 180 - - In addition, the Company and subsidiaries have foreign currency exposure risk with respect to their investments in subsidiaries, joint ventures and associated companies in overseas which are not covered by the hedges against foreign currency risk. Fair values of financial instruments Since the majority of the Company, subsidiaries and joint ventures financial instruments are short-term in nature, and the significant financial assets and liabilities comprise loans to, loans from and debentures which bear interest at rates close to market rates, the fair value of these financial assets and liabilities are not expected to be materially different from the amounts presented in the statement of financial position. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length basis. 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 the instrument.
Annual Report 2013 123 46. CLAIMS FOR DEBT SETTLEMENT On 13 November 2009, a joint venture filed a statement of claim to the arbitrator for payment and damages in accordance with a construction agreement with a government enterprise amounting to Baht 5,712.70 million and JPY 487.74 million plus interest, of which 40% of this claim is attributable to the Company. At present, the joint venture and the government enterprise have hired an independent committee to make an assessment of the damage which the negotiation has been finalized and in the process for preparation of compromise agreement and believe that no any damage in this part.
47. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorized by the Company’s authorized director on 28 February 2014.
124 Italian-thai Development Public Company Limited