Enclosure 2
Power Solution Technologies Public Company Limited
Information Memorandum (2) on the Acquisitions of Assets
Transactions presented for shareholder’s consideration Transaction 1 Investment by Power Solution Technologies Public Company Limited in the solar power plant project with Muang Sakaeo Agricultural Cooperative Limited on the premises of Sakaeo Province with the production capacity of 5 megawatts (MW) and the investment of not exceeding Baht 321.9 million. Transaction 2 Investment by PST Energy 2 Company Limited in the solar power plant project with Maeklong Fishery Cooperative Limited on the premises of Samutsongkhram Province with the production capacity of 5 megawatts (MW) and the investment of not exceeding Baht 337.5 million.
For the Extraordinary General Meeting of Shareholders No. 1/2016 30 August 2016
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25 July 2016
Subject Information Memorandum on the Acquisitions of Assets To Director and Manager The Stock Exchange of Thailand
Pursuant to the Board of Directors Meeting of Power Solution Technologies Public Company Limited No. 6/2016 on 11 July 2016 which approved the following transactions: Transaction 1 The investment in the solar power plant project pursuant to the Power Sale Rights Agreement of the Company and Mueang Sakaeo Agricultural Cooperative with the production capacity of 5 megawatts (MW) which is located in Baankang Sub-District, Mueang Sakaeo District, Sakaeo Province. This project has the investment costs of not exceeding Baht 321.9 million. Transaction 2 The investment by the Subsidiary in the solar power plant project pursuant to the Power Sale Rights Agreement and Maeklong Fishery Cooperative with the production capacity of 5 megawatts (MW) which is located in Yisan Sub-district, Amphawa District, Samutsongkhram Province. This project has the investment costs of not exceeding Baht 337.5 million. Both transactions 1 and 2 above have been carried out pursuant to the Regulation of the Energy Regulatory Commission regarding power purchase from the ground-mounted solar power plant project for government sector and agricultural cooperative B.E. 2558 (published in the government gazette on 13 March 2015) which stipulates that government agencies and agricultural cooperatives (which means an entity that has registered as an agricultural cooperative, a land settlement cooperative, and a fishery cooperative pursuant to the laws concerning cooperatives) must be a project applicant applying for the Ground-mounted solar project in accordance with the rules and conditions as set out by the Managing Committee on Power Generation from the Administrative Committee on Promotion Measures for Power Generation from Renewable Energy (“RE Committee”). The Company and PST Energy 2 Company Limited will act as the projects’ sponsors and will be responsible for procurement of materials and equipment for the construction of the projects, the entry into power purchase agreement with the Provincial Electricity Authority (PEA) and the management of such projects pursuant to the conditions of the Power Sale Rights Agreement. The acquisitions above are not considered a related party transaction pursuant to the Notification of the Capital Market Supervisory Board No. TorChor. 21/2551 Re: Rules on Connected Transactions and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003 (the “Related Party Transaction Rules”).
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However, considering the sizes of the above acquisitions based on the consolidated financial statements of the Company as of 31 March 2016 reviewed by the Company’s auditor, the transactions are considered as a significant acquisition transaction under the Notification of the Capital Market Supervisory Board Notification No. TorChor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposition of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re : Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004 (the “Major Transaction Rules”), and when combining the sizes of transactions #1 and #2 in accordance with the total value of consideration criteria, the combining value equals 37.12 per cent of the Company’s total assets. However, in this connection, when combining with all prior acquisition transactions entered into by the Company within the past six months, the combining transaction size equals 84.69 per cent of total assets of the Company based on the calculation of the total value of consideration. Hence, the transactions are classified as Class 1, of which the size is equivalent to or higher than 50 per cent but less than 100 per cent. Therefore, the Company is required to prepare and submit an information memorandum in this regard, and hold a shareholders’ meeting to obtain affirmative resolution by the votes of not less than three-fourths of the shareholders attending and eligible to vote thereat, excluding those interested shareholders. The Company shall deliver to its shareholders a notice of the Shareholders’ Meeting, which shall contain minimum information as specified in the Notification together with opinions of an independent financial advisor no less than 14 days prior to the meeting. The Company has appointed Discover Management Company Limited as its independent financial advisor to provide an opinion to the shareholders in relation to the acquisitions of assets transactions. The Company’s Board of Directors resolved to propose the investments for the shareholders’ consideration at the Extraordinary General Meeting of Shareholders No. 1/2016 on 30 August 2016 at 14:00, at the Jitposhana Restaurant meeting room. Details of the investments in solar power plants transactions are as follow:
(1) Information Memorandum (1)
Transaction 1: The investment in the solar power plant project pursuant to the Power Sale Rights Agreement of the Company and Mueang Sakaeo Agricultural Cooperative with the production capacity of 5 megawatts (MW) in Sakaeo Province The Company will invest in the ground-mounted solar power plant project pursuant to the Power Sale Right Agreement with Mueang Sakaeo Agricultural Cooperative on the premises of Mueang Sakaeo Agricultural Cooperative (“Mueang Sakaeo Agricultural Cooperative”) with the production capacity of 5 megawatts (MW) which locates in Baankang Sub-District, Mueang Sakaeo District, Sakaeo Province. This project has the investment costs of not exceeding Baht 321.9 million.
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1. Date / Month / Year of the Transaction The Company will enter into this transaction after an approval from the Extraordinary General Meeting of Shareholders No. 1/2016 on 30 August 2016 (the “ EGM No. 1/2016”) and the Company has complied with the relevant conditions which is expected to take place within December 2016.
2. Involved Parties and Relationship with the Company 2.1 The agreement permitting the sponsor of the ground-mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 to sell power under the project owner’ s rights. Project Owner : Mueang Sakaeo Agricultural Cooperative Project’s Sponsor : The Company Involved party (Project Owner) bears no relationship and is not a related person of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003
2.2 The consent for land use 2.2.1 The consent for land use entered into by and between Mr. Payap Rordprasert and Mueang Sakaeo Agricultural Cooperative dated, 16 June 2016. Consent grantor : Mr. Payap Rordprasert (A member of cooperative) (Title holder) Consent grantee : Mueang Sakaeo Agricultural Cooperative (Project Owner) Involved parties (Title Holder and Project Owner) bear no relationship and are not related persons of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003 2.2.2 The consent for land use entered into by and between Mueang Sakaeo Agricultural Cooperative and the Company, dated 16 June 2016 Consent grantor : Mueang Sakaeo Agricultural Cooperative (Project Owner) Consent grantee : Power Solution Technologies Public Company (Project’s Sponsor) Limited
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Involved party (Project Owner) bears no relationship and is not a related person of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003
2.3 Power purchase agreement with the Provincial Electricity Authority (PEA) The Company received a letter from the PEA Number MorTor 5303.12/27206 dated 27 June 2016 notifying the Company of the approval of Energy Regulatory Commission (“ERC”) allowing PEA to accept the power purchase from the ground-mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 and requesting the Company to prepare supporting documents for the entry into the power purchase agreement with the PEA, detail of power grid expenses and others. The Company has delivered such documents to the PEA and the power purchase agreement is currently under consideration of the PEA.
3. General Characteristics of the Transaction The Company will invest in the ground-mounted solar power plant project for government agencies and agricultural cooperatives on the premises of Mueang Sakaeo Agricultural Cooperative with the production capacity of 5 megawatts (MW) which locates in Baankang Sub-District, Mueang Sakaeo District, Sakaeo Province. Transaction activities include the execution of a Power Purchase Agreement (PPA) with the PEA, relevant license applications such as Factory Act, Building Control Act, Town Planning Act, Energy Development and Promotion Act and The Energy Industry Act, procurement of construction machinery & equipment and land use rights, together with the construction, renovation and installation of electricity-generating equipment and any requests for a business operation permit. Additionally, the Company has entered into the Power Sale Rights Agreement with Mueang Sakaeo Agricultural Cooperative on 16 June 2016 as a project’ s sponsor. In this connection, the Company is required to proceed with the project pursuant to the Ground-mounted solar Regulation and the letter Number SorKorPor 5502/ Wor 4541 dated 29 April 2016 which indicates that Mueang Sakaeo Agricultural Cooperative shall have right to sell electricity for the period of 25 years as from a schedule commercial operation date (SCOD). The Company has delivered such documents to the PEA and the power purchase agreement is currently under consideration of the PEA. However, pursuant to relevant ERC resolutions, the Company shall commence its schedule commercial operation (SCOD) within 30 December 2016.
4. Calculation of the Transaction Size The calculations of transaction size, subject to the Major Transaction Rules, applies four methods as detailed:
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Criteria of Calculation Formula of Calculation Transaction Value Net tangible Assets (NTA) (NTA of the acquiring assets) Not applicable, as assets are –––––––––––––––––––––––––––– newly established. (NTA of the Company) Net Profit (Net profit from the acquiring assets) Not applicable as the project is –––––––––––––––––––––––––––––––––––– newly established, and not yet (Total net profit of the Company) generate earnings. Total Value of Consideration (Book value of the acquiring assets) 18.12 percent –––––––––––––––––––––––––––––––––––– (Total asset of the Company) Value of Securities (Total number of shares issued as consideration) Not applicable as there is no –––––––––––––––––––––––––––––––––––––– issuance of securities in exchange (Number of total issued and fully paid-up shares of the Company) Highest Value 18.12 percent
According to auditor’s report for the three months ended 31 March 2016, the Company has total assets of Baht 1,776.1 million. Calculation of the Transaction Size during the past six months Total Value of Consideration 6 months before Transaction1 Total Per cent 47.57 18.12 65.69
The acquisitions above are not considered a related party transaction pursuant to the Notification of the Capital Market Supervisory Board No. TorChor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003 (the “Related Party Transaction Rules”). However, when considering the size of the above acquisition pursuant to each calculation method prescribed under the Major Transaction Rules and based on the consolidated financial statements of the Company as of 31 March 2016 reviewed by the Company’s auditor, the transaction size is of the highest value when calculated in accordance with the value of consideration basis which equals 18.12 percent of the total assets of the Company and the Subsidiary. In this connection, when combining all prior acquisition transactions entered into by the Company within the past six months together with Transaction item 1, the combining transaction size equals 65.69 per cent of total assets of the Company based on the criteria of the total value of consideration. Hence, the transactions are classified as Class 1 of which the size is equivalent to or higher than 50 per cent but less than 100 percent.
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Therefore, the Company is required to prepare and submit an information memorandum in this regard to the SET and hold a shareholders’ meeting to obtain affirmative resolution by the votes of not less than three-fourths of the shareholders attending and eligible to vote thereat, excluding those interested shareholders. The Company shall deliver to its shareholders a notice of the Shareholders’ Meeting, which shall contain minimum information as specified in the Notification together with opinions of an independent financial advisor no less than 14 days prior to the meeting. The Company has appointed Discover Management Company Limited as its independent financial advisor to provide an opinion to the shareholders in relation to the acquisitions.
5. Details of the Assets 5.1 The agreement permitting the sponsor of the ground-mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 to sell power under the project owner’ s rights Agreement Number : PST.COOP.002/2559 Date : 16 June 2016 Project Owner : Mueang Sakaeo Agricultural Cooperative Project’s sponsor : Power Solution Technologies Public Company Limited Term of Agreement : 25 years as from the schedule commercial operation date (SCOD) 5.2 The consent for land use The Company has received the consent for land use to construct the solar power plant project pursuant to conditions of the Power Sale Rights Agreement. The consent for land use entered into by and between Mr. Payap Rordprasert and Mueang Sakaeo Agricultural Cooperative. Title deed number : 33292 and 33293 (total land of 60 Rais) Location : Baankang Sub-District, Mueang Sakaeo District, Sakaeo Province Date : 16 June 2016 Title Holder : Mr. Payap Rordprasert (A member of cooperative) Consent grantee : Mueang Sakaeo Agricultural Cooperative Term of Agreement : 26 years as from 16 June 2016
The consent for land use entered into by and between Mueang Sakaeo Agricultural Cooperative and the Company Title deed number : 33292 and 33293 (total land of 60 Rais) Location : Baankang Sub-District, Mueang Sakaeo District, Sakaeo Province Date : 16 June 2016 Consent grantor : Mueang Sakaeo Agricultural Cooperative Consent grantee : The Company Term of Agreement : 26 years as from the date the Cooperative receives the power purchase agreement (PPA) - 7 -
6. Total Value of the Consideration Total value of the consideration shall not exceed Baht 321.9 million which consists of Investing Transactions Value (Million Baht) Equipment costs 91.5 Construction costs 117.6 Payment of electricity selling to Co operative 109.4 Project management cost 3.4 Total 321.9
7. Method Used for Determination of the Total Value of the Consideration Consideration for this investment is made and determined pursuant to the mutual agreement of the Company and Sakaeo Agricultural Cooperative under the Power Sale Rights Agreement which the Company shall procure construction machinery and equipment, construct, renovate and install electricity- generating equipment as well as apply for any permits in relation to the business operation and the project management.
8. Value of Acquired Assets With the investment value of not exceeding Baht 321.9 million, the Company estimated the project’ s expected return by calculating an internal rate of return (IRR) based on the project’s profitability to determine future cash flows. The Company also estimated future cash inflow and outflow from the generation and supply of power to the PEA during the terms of power purchase agreement which is calculated based on the Feed-in Tariff (FiT) at Baht 5.66 per unit (for the capacity portion produced within the range prescribed by the PEA) and at Baht 3.6885 per unit (for additional portion) together with estimated expenses which will result in the Company having the IRR from Power Sale Rights Agreement with Mueang Sakaeo Agricultural Cooperative at the rate of 10.84 percent.
9. Expected Benefits to the Company Investment in the solar power plant is in accordance with the Company’s plans, strategies and aiming the business towards alternative energy business. The entering into long term power purchase agreement under which power unit and price are fixed for a specific each period of time, will provide the Company with a stable income, a reduction in business risk and greater potential in the future.
10. Source of Fund for the Acquiring Assets The Company will use cash flow or working capital from the operation of the Company and/or bank loan. - 8 -
11. Conditions of the Transaction The Company must seek approval from the EGM No. 1/2016, by obtaining affirmative resolution by the votes of not less than three-fourths of the shareholders attending and eligible to vote there at, excluding those interested shareholders.
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Transaction 2: The investment in solar power plant project pursuant to the Power Sale Rights Agreement by PST Energy 2 (“PST 2”) Company Limited and Maeklong Fishery Cooperative with the production capacity of 5 megawatts (MW) in Samutsongkhram Province PST Energy 2 Company Limited is a Subsidiary, in which the Company holds shares of approximately 99.99 percent, will invest in the ground-mounted solar power plant project pursuant to the Power Sale Rights Agreement with Maeklong Fishery Cooperative (“Maeklong Fishery Cooperative”) with the production capacity of 5 megawatts (MW) which locates in Yisan Sub-district, Amphawa District, Samutsongkhram Province. This project has the investment cost of not exceeding Baht 337.5 million.
12. Date / Month / Year of the Transaction PST2 will enter into the transaction after receive an approval from the EGM No. 1/2016 on 30 August 2016 (the “EGM No. 1/2016”) and PST 2 has complied with the relevant conditions which is expected to take place within December 2016.
13. Involved Parties and Relationship with the Company 2.1 The agreement permitting the sponsor of the ground-mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 to sell power under the project owner’ s rights Project Owner : Maeklong Fishery Cooperative Project’s Sponsor : PST 2 Involved party (Project Owner) bears no relationship and is not a related person of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003.
2.2 The consent for land use 2.2.1 The consent for land use entered into by and between Mr. Damrong Prasertlaksana and Maeklong Fishery Cooperative, dated 13 May 2016. Consent grantor : Mr. Damrong Prasertlaksana (A member of the cooperative) (Title holder) Consent grantee : Maeklong Fishery Cooperative (Project Owner) Involved parties (Title Holder and Project Owner) bear no relationship and are not related persons of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the - 10 -
Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003. 2.2.2 The consent for land use entered into by and between Maeklong Fishery Cooperative and PST 2, dated 13 May 2016 Consent grantor : Maeklong Fishery Cooperative (Project Owner) Consent grantee : PST 2 (Project’s Sponsor) Involved party (Project Owner) bears no relationship and is not a related person of the Company pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003.
2.3 Power purchase agreement with the Provincial Electricity Authority (PEA) PST 2 received a letter from the PEA Number MorTor 5303.12/27299, dated 27 June 2016, notifying PST2 of the approval of ERC allowing PEA to accept the power purchase from the ground- mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 and requesting the PST 2 to prepare supporting documents for the entry into the power purchase agreement with the PEA, details of power grid expenses and others. PST2 has delivered such documents to the PEA and the power purchase agreement is currently under consideration of the PEA.
14. General Characteristics of the Transaction PST 2 will invest in the ground-mounted solar power plant project for government agencies and agricultural cooperatives on the premises of Maeklong Fishery Cooperative with the production capacity of 5 megawatts (MW), which locates in Yisan Sub-district, Amphawa District, Samutsongkhram Province. Transaction activities include the execution of a power purchase agreement ( PPA) with the PEA, relevant license applications such as Factory Act, Building Control Act, Town Planning Act, Energy Development and Promotion Act and The Energy Industry Act, procurement of construction machinery & equipment and land use rights, together with the construction, renovation and installation of electricity-generating equipment and any requests for a business operation permit. Additionally, PST 2 has entered into the Power Sale Rights Agreement with Maeklong Fishery Cooperative on 9 June 2016 as a project’s sponsor. In this connection, PST 2 is required to proceed with the project pursuant to the Ground-mounted solar Regulation and the letter Number SorKorPor 5502/ Wor 4541 dated 29 April 2016 which indicates that Maeklong Fishery Cooperative shall have right to sell electricity for the period of 25 years as from a schedule commercial operation date (SCOD). PST 2 has delivered such documents to the PEA and the power purchase agreement is currently under the consideration of the PEA. The ERC resolutions determined that PST 2 shall commence its schedule commercial operation (SCOD) within 30 December 2016. - 11 -
15. Calculation of the Transaction Size The calculation of transaction size, subject to the Major Transaction Rules, applies four methods as detailed:
Criteria of Calculation Formula of Calculation Transaction Value Net tangible Assets (NTA) (NTA of the acquiring assets) Not applicable, as assets are –––––––––––––––––––––––––––– newly established. (NTA of the Company) Net Profit (Net profit from the acquiring assets) Not applicable as the project is –––––––––––––––––––––––––––––––––––– newly established, and not yet (Total net profit of the Company) generate earnings. Total Value of Consideration (Book value of the acquiring assets) 19.00 percent –––––––––––––––––––––––––––––––––––– (Total asset of the Company) Value of Securities (Total number of shares issued as consideration) Not applicable as there is no –––––––––––––––––––––––––––––––––––––– issuance of securities in exchange (Number of total issued and fully paid-up shares of the Company) Highest Value 19.00 percent
According to auditor’s report for the three-month ended 31 March 2016, the Company has total assets of Baht 1,776.1 million. Calculation of the Transaction Size during the past six months Total Value of Consideration 6 months before Transaction#1 Transaction#2 Total Percent 47.57 18.12 19.00 84.69
The acquisitions above are not considered a related party transaction pursuant to the Notification of the Capital Market Supervisory Board No. Tor Chor. 21/2551 Re: Rules on Connected Transactions, and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions, 2003 (the “Related Party Transaction Rules”). However, when considering the size of the above acquisition pursuant to each calculation method prescribed under the Major Transaction Rules and based on the consolidated financial statements of the Company as of 31 March 2016 reviewed by the Company’ s auditor, the transaction size is of the highest value, using the value of consideration criteria, which equals 19.00 percent of the total assets of the Company. However, when combining all prior acquisition transactions entered into by the Company within the past six months, with Transaction item 1 and item 2, the combined transaction size yields the highest value of 84.69 percent of total assets of the Company, based on the criteria of the total value of consideration.
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Hence, the transactions are classified as Class 1, of which the size is equivalent to or higher than 50 percent but less than 100 percent. Therefore, the Company is required to prepare and submit an information memorandum in this regard to the SET, and hold a shareholders’ meeting to obtain affirmative resolution by the votes of not less than three-fourths of the shareholders, attending and eligible to vote thereat, excluding those interested shareholders. The Company shall deliver to its shareholders a notice of the Shareholders’ Meeting, which shall contain minimum information, as specified in the Notification, together with opinions of an independent financial advisor no less than 14 days prior to the meeting. The Company has appointed Discover Management Company Limited, as its independent financial advisor, to provide an opinion to the shareholders in relation to the acquisitions.
16. Details of the Assets 16.1 The agreement permitting the sponsor of the ground-mounted solar power plant project for government agencies and agricultural cooperatives B.E. 2558 to sell power under the project owner’ s rights Agreement Number : PSTE2-001-2559 Date : 9 June 2016 Project Owner : Maeklong Fishery Cooperative Project’s sponsor : PST Energy 2 Company Limited Term of Agreement : 25 years as from the schedule commercial operation date (SCOD)
16.2 The consent for land use PST 2 has received the consent for land use to construct the solar power plant project pursuant to conditions of the Power Sale Rights Agreement. The consent for land use entered into by and between Mr. Damrong Prasertlaksana and Maeklong Fishery Cooperative. Title deed number : 14583, 14589 and 14200 (total land of 52 Rais 69 squarewahs) Location : Yisan Sub-district, Amphawa District, Samutsongkhram Province Date : 13 May 2016 Title Holder : Mr. Damrong Prasertlaksana (A member of cooperative) Consent grantee : Maeklong Fishery Cooperative Term of Agreement : 26 years as from 1 July 2016 (following the date specified in the land lease agreement)
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The consent for land use entered into by and between Maeklong Fishery Cooperative and PST 2. Title deed number : 14583, 14589 and 14200 (total land of 52 Rais 69 squarewahs) Location : Yisan Sub-district, Amphawa District, Samutsongkhram Province Date : 16 May 2016 Consent grantor : Maeklong Fishery Cooperative Consent grantee : PST Energy 2 Company Limited Term of Agreement : 26 years as from 1 July 2016 17. Total Value of the Consideration Total value of the consideration shall not exceed Baht 337.5 million, which consists of Investing Transactions Value (Million Baht) Equipment costs 91.5 Construction costs 113.1 Payment of electricity selling to Co operative 125.0 Project management cost 7.9 Total 337.5
18. Method Used for Determination of the Total Value of the Consideration Consideration for this investment is made and determined pursuant to the mutual agreement of PST 2 and Maeklong Fishery Cooperative under the Power Sale Rights Agreement, which, PST 2 shall procure construction machinery and equipment, construct, renovate and install electricity-generating equipment as well as apply for any permits in relation to the business operation and the project management.
19. Value of Acquired Assets With the investment value of not exceeding Baht 337.5 million, PST 2 estimated the project’ s expected return by calculating an internal rate of return (IRR) based on the project’s profitability to determine future cash flows. PST 2 also estimated future cash inflow and outflow from the generation and supply of power to the PEA during the terms of power purchase agreement which is calculated based on the Feed-in Tariff (FiT) at Baht 5.66 per unit (for the capacity portion produced within the range prescribed by the PEA) and at Baht 3.6885 per unit (for additional portion) together with estimated expenses which will result in PST 2 having the IRR from Power Sale Rights Agreement with Maeklong Fishery Cooperative at the rate of 10.52 percent.
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20. Expected Benefits to the Company Investment in the solar power plant is in accordance with the Company’s plans, strategies and aiming the business towards the alternative energy business. The entering into long term power purchase agreement, under which power unit and price are fixed for a specific each period of time, will provide the Company with a stable income, a reduction in business risk and greater potential in the future.
21. Source of Funds for the Acquiring Assets PST 2 will use cash flow or working capital from the operation of PST 2 and/or bank loan.
22. Conditions of the Transaction The Company must seek approval from the EGM No. 1/2016, by obtaining affirmative resolution by the votes of not less than three-fourths of the shareholders attending and eligible to vote thereat, excluding those of interested shareholders. (a) Opinion of the Board of Directors regarding the transactions The Board of Directors’ Meeting No. 6/2016 on 11 July 2016 which consists of directors’ names as follows: 1. Mr. Panu Seetisarn; 2. Mr. Pranai Kungwalrut; 3. Ms. Anong Panicharoennan; 4. Mr. Unnop Pumkumarn; 5. Mr. Suwit Singhachan; 6. Mr. Phitayatorn Maruetusatorn; 7. Mr. Vorapong Jamjod; and 8. Mr. Kampol Tatiyakavee Has considered that the transactions are appropriate and beneficial to the Company and its shareholders as the transactions increase the potential in alternative energy business of the Company and also add value to shareholders in long term. Therefore, the Board of Directors’ Meeting has resolved to approve the transactions.
(b) Opinion of the Directors and/ or the Audit Committee which are different from the opinion of the Board according to item (a) -None-
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Information Memorandum on the Acquisitions of Assets (2) of Power Solution Technologies Public Company Limited
(1) Nature of business and business prospects of the Company, Subsidiary and Affiliates. Nature of business 1. Design, Distribution and Installation of Power Backup System and Power and Environment Monitoring Solution Power Solution Technologies Public Company Limited (“The Company”) was established on 25 June 2001 to distribute and provide services of Telecommunication Power Backup Solution with high quality and standard to both government agencies and private enterprises as well as Renewable Energy Solution Business, both in Solar Power, Bio-energy Power, Biomass Power, Municipal solid waste Power and Wind Power which is operated by the Subsidiary and Associates. The nature of the 4 types of business is detailed below: 1.1. Power Backup Solution The Company’s Power Backup Solution are divided into 2 main types, which are which is direct current power backup system and alternating current power backup system with details as follow: a. Direct current power backup system The Company mainly sells and services direct current power backup system for telecommunication equipments and systems due to the demand of the telecom system for system continuity. Also, the system equipments are expensive, if there were to be any abnormality of the electrical system, it could cause direct damage to the equipment as well as indirect damage from the system being unable to operate. The backup system equipment has been designed to a compact size, light weight and can be separated into Modules which can be conveniently extended for further use in the future. The equipment can also be used in parallel to increase redundancy and can be remotely controlled through computer networks, making the system especially suitable for telecommunication systems. The components of the system for each project will be different in which the Company will assess the needs of customers, provide advices and design for efficient and suitable telecommunication power backup system according to the customer needs. Also, the Company will select the appropriate equipment in which the main equipment is as follow: o Rectifier o Battery o Inverter o Converter o Monitoring and Control equipment - 16 -
b. Alternating current power backup system The main equipment for alternating current power backup systems is the Uninterruptible Power Supply or UPS which consists of a Rectifier, Battery, and an Inverter. During normal electrical current, electricity will be transmitted into the electrical equipments as needed and will also transmit into the Rectifier and be backed up into the battery. When there is no electricity, the system will switch for the battery to transmit direct current electricity to the Rectifier and to the electrical equipment until the power returns to normal, or until the battery runs out. However, the backup system and stabilizer will be different accordingly to the specified use such as the battery capacity; Some types do not have an internal battery due to the need to be able to connect a battery externally, some may have a stabilizer to stabilize the electricity current to be in the appropriate level that is safe for the equipment, some are suitable for different sources of power input such as single phase electric power or three- phase electric power. The Company is the importer and dealer of "DELTA" power backup and stabilizer system in Thailand from Delta Electronics Company Limited (Taiwan) which is one of the world’s leading companies in power management system, power backup and stabilizer system, electronic equipment and electronic parts for various industries. Moreover, the Company also sells other equipment related to power backup systems such as power backup containers and other equipment that are a part of the power backup system. The Company will design the system to be suitable for use in the telecommunication system. The main target customers of the Company are telecommunication companies or organizations, or companies that need stable electric current for their operation such as banks and other financial institutions.
1.2. Power and Environment Monitoring Solution The Power and Environment Monitoring Solution monitors, evaluates and collects data of the surrounding environment such as the status of equipments and systems including pressure, electrical current, battery capacity, moisture, temperature, smoke and will also monitor whether there is any trespassers on the site. The system can also be remotely controlled through communication channels and send alters to related parties via the internet or SMS on mobile devices making the Power and Environment Monitoring Solution able to prevent damages that may occur from abnormalities in a timely manner, whether it is due to power outage, fire, or electrical malfunction. The solution can also help save costs in the part of employees that will be needed to control and monitor the system. The Power and Environment Monitoring Solution consists of 3 main components: a. Monitoring and Display Unit b. Sensor Unit c. Monitoring Software - 17 -
The equipments such as pressure sensors and temperature sensors will measure and report the results to the data storage and display component which will analyze the data and transmit the data to the control center through various networks. The data will be recorded, analyzed and displayed or alerted on mobile devices or by email. The monitoring software was developed by the Company and was designed to be able to be used with data storage and display equipment of more than 1,000 units per system. The Company emphasizes monitoring systems service for organizations that demand close control and monitoring of their equipment such as companies or organizations in the telecommunication industry. Moreover, the Company has modified the monitoring system to be usable with other target groups such as the monitor system kit in which the Company designed for use in universities to be a learning tool for university students studying electric systems and monitoring systems so they can learn essential knowledge on the control system of electrical equipments and the effects of various environmental factors. 1.3. Renewal Energy The Company designs and distributes Renewal Energy equipment by providing services in Engineering Procurement and Construction or EPC in the type of Turnkey Project for both On-grid System and Off- Grid System in which the electricity will be transmitted to the system of the customer such as telecom antennas. The Company will evaluate the electricity need of the equipment, then design and select the appropriate components for the use and light or wind in the surrounding area. The Company may also incorporate a power backup system as appropriate and according to the demand of the customer. Currently, the Company provides Renewal Energy services as follow: 1.3.1. Solar Cell: The solar power equipment that the Company provides is in the form of solar cell which converts solar light into electricity (Photovoltaics). Currently, the solar cell that the Company sells and services is the Amorphus Thin Film and Mono Crystaline or Poly Crystaline solar cells. 1.3.2. Wind Turbine: The turbine power generating system produces electricity by using wind power to turn the wind turbine propellers. The size of the wind turbine depends on the equipment, wind power in the area and the customer’s demand. The wind turbines that the Company sells and services are Low Wind Speed Turbines that are suitable for wind in Thailand. The wind turbines are imported from overseas. 1.3.3. Hybrid System: The hybrid system produces electricity from both solar and wind power. The advantages are that the electrical current produced will have more continuity than having just one source of power, whether solar or wind. The hybrid system can allow electricity to be produced when the environment is not suitable for either one of the sources such as during night time or during rain and storm when solar power cannot be produced, or during days with little wind making, the wind turbine unable to produce electricity. Moreover, the renewal energy electricity producing system can also be equipped with a battery to store the power when electricity cannot be produced.
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1.4. Energy Saving Solutions and other systems Nowadays, energy costs have risen continuously while energy saving technologies have seen great advancement and with low costs. Therefore, many organizations have turned their interests towards energy saving solutions which not only will the system help reduce energy costs but also create a good image for that organization. Therefore, the Company has expanded its business to the energy saving solutions business in 2013. Currently, the Company emphasizes providing energy saving services (electricity energy) focusing on companies and organizations that have large energy costs such as hotel businesses, commercial buildings, shopping malls or industrial buildings. The Company will study and evaluate the power usage of the customer, design, select equipments and deliver energy saving solutions suitable to the customer’s needs such as automatic on-off systems for equipments, LED lights or Heat Pumps. Also, the Company sells and services other systems such as high-speed network systems and internal TV broadcast systems in which the Company is the sub-contractor for projects of the public sector.
2. Renewable Energy Power Plants Business The Renewable Energy Power Plants Business that the Company operates consists of: 2.1. Solar Power Plants operated by Type of renewal Contract Commercial Name of company Location Capacity energy counterparty Operation Date Kanha Solar Power Solar power Sang Khom 998 KW PEA 15 August 2011 Co., Ltd. District, Udonthani Solar power Sang Khom 998 KW PEA 22 August 2011 District, Udonthani Solar Go Green Co., Solar power Mueang District, 997 KW PEA 8 May 2014 Ltd. Samutsongkhram Power We Green Solar power Sai Noi District, 980 KW MEA* 10 October 2014 Co., Ltd. Nonthaburi Power Solution Solar power Khao Yoi District, 995 KW PEA 28 December Technologies PCL. Phetchaburi 2015 Power Solution Solar power Mueang District, 5MW PEA In the process of Technologies PCL Sakaeo PEA consideration PST Energy 2 Co., Solar power Amphawa District, 5MW PEA In the process of Ltd. Samutsongkhram PEA consideration * Metropolitan Electricity Authority
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2.2. Bio-energy Power Plants operated by Type of Contract Commercial Name of company Location Capacity renewal energy counterparty Operation Date Nawarat Beverest Biogas Ban Mai Chai Phot 995 KW PEA May 2012 Co., Ltd. District, Buriram Aran Power Co., Ltd. Biogas Samchuk District, 4.0 MW PEA March 2014 Suphanburi Settheesuphan Biogas Muang District, 2.0 MW PEA October 2015 Biogreen Power Co., Suphanburi Ltd.
2.3. Biomass Power Plants operated by Type of Contract Commercial Name of company Location Capacity renewal energy counterparty Operation Date Bio Go Green Co., Biomass Thung Song 990 KW PEA PPA received Ltd. District, Nakhon Si (FiT) Thammarat Biomass Phanat Nikhom 990 KW PEA PPA received District, Chonburi (FiT) Biomass Si Nakhon District, 990 KW PEA PPA received Sukhothai (FiT) Biomass Khlong Khlung 990 KW PEA PPA received District, Kamphaeng (FiT) Phet Biomass Nong Mamong 990 KW PEA PPA received District, Chainat (FiT) Biomass Sawang Daen Din 990 KW PEA PPA received District, Sakon (FiT) Nakhon Biomass Prajak Silpakom 990 KW PEA PPA received District, Udon Thani (FiT) Well Korat Energy Biomass Nong Ki District, 8.0 MW PEA July 2015 Company Limited Buriram
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2.4. Waste energy Power Plants operated by Name of Type of renewal Contract Location Capacity Commercial Operation Date company energy counterparty Bio Go Green Waste energy Sangkha 8 MW PEA Submitting application Company (heat energy) District, Surin (Has signed a memorandum Limited of cooperation for municipal waste disposal) PST (Ubon Waste energy Ubon 8 MW PEA Submitting application (Has Ratchathani) (heat energy) Ratchathani signed a memorandum of Company cooperation for municipal Limited waste disposal)
3. Name of Subsidiaries and Affiliates % shares held by Subsidiaries Type of business the Company 1. Kanha Solar Power Company Limited Solar power electricity production 100 2. Solar Go Green Company Limited Solar power electricity production 100 3. Wind Go Green Company Limited Wind power electricity production 100 4. Bio Go Green Company Limited Biomass electricity production 100 5. Power We Green Company Limited Solar power electricity production 100 6. PST (Ubon Ratchathani) Company Limited Waste energy electricity production 100 7. PST Energy Company Limited Invest in other companies 100 8. PST Energy 1 Company Limited Renewal energy electricity production 100 9. PST Energy 2 Company Limited Renewal energy electricity production 100 10. PST Energy 3 Company Limited Renewal energy electricity production 100 11. PST Energy 4 Company Limited Renewal energy electricity production 100 12. PSTC Engineering Company Limited Power plant Construction 100 13. Nawarat Beverest Company Limited Biogas electricity production 51 14. Aran Power Company Limited Biogas electricity production 100 15.Settheesuphan Biogreen Power Company Limited Biogas electricity production 100 16. PST Energy 7 Company Limited Renewal energy electricity production 100 17. PST Energy 8 Company Limited Renewal energy electricity production 100 18. Well Korat Energy Company Limited Biomass electricity production 100
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% shares Affiliates Type of business held by the Company 1. Triple S Eco Company Limited Renewal energy electricity production 15.00 2. PV Green Company Limited Solar power electricity production 19.99 3. Samart Solar To Power Company Limited Renewal energy electricity projects 20.00 4. Mega Solar Power Company Limited Solar power electricity production 29.99 4. Business objectives The Company places great emphasis and precision in all operational processes from providing advice to customers, designing, procuring equipments and develop products according to the needs of the market. The Company also provides after-sales service for the Company’s sustainable growth with trust from customers along with the development of employees and staff to have expertise and develop products to match customer’s needs. Also, the Company has continuously expanded investments in the renewal energy business to enable the Company to gain revenue stability and profit growth. 5. Competitive strategy The Company’s competitive strategy focuses on being the expert in designing and managing electric systems and renewal energy. The strategies are detailed as follow: 1) Product quality The Company places importance on the quality of the systems the Company provides to customers. The Company designs and modifies the system to suit the customer’s needs and use by sending engineer teams to design the system in detail together with the customer starting from project proposal. Also, the Company has quality control in all operational processes emphasizing on the quality of products used and high standard monitoring systems in which the Company has received the certificate of Quality Management System Standards ISO 9001:2008. 2) Service quality Since the system provided by the Company relates to the continuity of the work, any abnormalities from system malfunction may cause direct damage to the equipment as well as indirect damage from the system being unable to operate. The Company, therefore, places great importance on quality and timely service as well as efficient after-sales services by engineers all day 24-hours under the name “Smile Care” and a hotline number which is available to customers when there are any problems or malfunctions at all times. 3) Quality Staff The Company places great importance in its people. The Company holds trainings and seminars for employees to enhance their knowledge and skills in each line of work. Trainings are conducted both at the Company as well as other places. The Company also sends employees to be trained overseas and has an annual training plan and budget. Also, the Company provides competitive compensation plans and benefits to attract and keep employees that have knowledge and skills with the Company for the long-term. - 22 -
4) Good customer relationship The Company emphasizes in building a good relationship with customers and target customers from management level to operational level to create trust that they will be given good service, to be able to fully know and understand their needs, as well as to build customer base for future business. 6. Key developments Year Key developments 2001 - Power Solution Technologies Company Limited was registered with initial registered and paid- up capital of Baht 5 million to operate the business of distributing and providing services of Telecommunication Power Backup Solutions. - M.V.T. Communications (Thailand) Company Limited made a joint investment in the Company in the proportion of 60 per cent, along with Mr. Pranai Kanwalrat and Mr. Kasian Sukeemok holding 10 per cent and 30 per cent of the registered and paid-up capital respectively. 2003 - The Company started to expand its business to designing, distributing and installing Power Monitoring and Management Solutions. - The Company increased its registered capital to Baht 10 million(offered in proportion to shareholding proportions) 2004 - M.V.T. Communications (Thailand) Company Limited purchased the Company’s ordinary shares from other shareholders, resulting in the ordinary shares holding of 99.99 per cent of registered and paid-up capital. - The Company received the certificate of Quality Management System Standards ISO 9001:2008, certified by S.J.S. United Kingdom Company Limited. 2005 - The Company started to expand its business to operate the business of design, distribution and installation of Solar cell systems. 2007 - The Company moved its office to PST Building 325/1, Moo 6, Phaholyothin Road, Sai Mai Sub- district, Sai Mai District, Bangkok 10220, which the Company rent the land and buildings from MVT. - The Company increased its registered capital to Baht 25 million. 2008 - The Company made a joint investment in Prapai Technology Company Limited to operate the business of wind power generation systems, equal to 34.99 per cent of the total registered and paid-up capital, co-investing with the other group of shareholders who has knowledge and expertise in low-speed wind-turbine technology which is appropriate to the wind current in Thailand. 2010 - The Company expanded to Solar Power Plants Business by investing in Kanha Solar Power Company Limited which the Company held 99.97 per cent of the registered and paid-up capital. 2011 - Kanha Solar Power Company Limited started the solar power plant Commercial Operation for the PEA. - 23 -
Year Key developments 2012 - The Company increased its registered capital from Baht 50 million to Baht 175 million by issuing 1,250,000 ordinary shares (par value of Baht 100 per share). - Kanha Solar Power Company Limited increased its registered capital to Baht 57 million resulting in the Company holding 99.99 per cent of the registered and paid-up capital. 2013 - The Company expanded its business to the business of designing, distributing and installing Energy Saving Solution focusing on providing equipment or systems which enhance efficiency or reduce energy losses resulting in energy saving. - Green Bio Mahasarakham Company Limited started its Commercial Operation for the PEA. - The Company incorporated 3 subsidiaries to operate the business of generating and selling electricity from solar energy and other renewable energy, which are Wind Go Green Company Limited (to operate Wind Power Plant Business), Solar Go Green Company Limited (to operate Solar Power Plant Business), and Bio Go Green Company Limited (to operate Biomass Power Plant Business) which the Company holds 99.97 per cent of the paid-up registered capital. - The Company purchased PSTC office building, together with the land, which is located on 325/1, Moo 6, Phaholyothin Road, Sai Mai Sub-district, Sai Mai District, Bangkok from MVT Communications Public Company Limited to use as the Company’s head quarter office. 2014 - The Extraordinary General Meeting of Shareholders No. 1/2557 passed the resolutions to convert to a public company limited, increase its registered capital to Baht 225 million (par value of Baht 100 per share), and to have the Company’s ordinary shares registered as a listed company on the Market for Alternative Investment. And on December 19, 2014, the Company’s shares were traded on the Market for Alternative Investment. - The Company invested in Power We Green Company Limited to operate the solar rooftop power plant business. - The Company invested in PV Green to operate Solar PV Rooftop Power Plant Business. - Solar Go Green Company Limited started its Commercial Operation for the PEA from the solar rooftop power plant. 2015 - The Company incorporated PST Energy Company Limited to operate the business of investment, production and distribution of electricity from renewal energy and contract construction of power plants with registered and paid-up capital of Baht 1 million in which the Company held 99.97 per cent of the registered and paid-up capital. - Approved PST Energy Company Limited’s investment in two joint venture companies which are Triple S Eco Company Limited (to evaluate the feasibility in the production of electricity from wind or other renewal energy) and Solar Leasing Company Limited (to operate import, export, distribution, lease equipment and machinery for solar power production businesses). - Approved the capital increase of PST Energy Company Limited to Baht 15 million to invest in Triple S Eco Company Limited and Solar Leasing Company Limited. - 24 -
Year Key developments - The Company invested in the shares of Mega Solar Power Company Limited to operate the investment or production and distribution of electricity business in solar power plant projects, in which the Company held 29.99 per cent of the registered and paid-up capital. - Approved the incorporation of 5 subsidiaries to support business expansion in investment or production and distribution of electricity from renewal energy sources or for contract construction of power plants. - Approved the joint venture with Samart U-Trans Company Limited in incorporating Samart Solar To Power Company Limited in which the Company held 20 per cent of the registered and paid- up capital. - Approved the Company’s investment in all registered and paid-up capital of Aran Power Company Limited which operates Biogas power plant business from sewage water with capacity of 4 megawatts. - Approved the Company’s investment in all registered and paid-up capital of Settheesuphan Biogreen Power Company Limited which operates Biogas power plant business from sewage water with capacity of 2 megawatts. 2016 - The Company increased shares from 2,245,677,500 shares (which was decreased from 2,250,000,000 shares) to 4,925,975,333 shares at par value of 0.10 Baht. The registered and paid-up capital increased from 2,211,419,375 shares to 4,422,676,824 shares from the Company’s Right Offering. - In February 2016, the Company invested in 100 per cent of the registered and paid-up capital of Aran Power Company Limited and Settheesuphan Biogreen Power Company Limited in the amount of Baht 405 million and Baht 196.99 million accordingly. - Approved the capital increase in Triple S Eco Company Limited which shares were held by PST Energy Company Limited, in the proportion of shares held in the amount of Baht 3 million. - In May 2016, the Company approved PST Energy Company Limited, a subsidiary, to invest in Well Korat Energy Company Limited in the amount of 15,400,000 shares or about Baht 150 million in which the Company held 55 per cent shares. Also, to repay loans from the former share owners of Well Korat Energy Company Limited in the amount of about Baht 200 million. Well Korat Energy Company Limited is the right owner of assets related to the production and distribution of Biomass electricity from 1 Biomass power plant in Buriram Province according to the PPA with the PEA in the amount of 8 megawatts at maximum. - In June 2016, the Company approved PST Energy Company Limited to invest an additional 45 per cent or about Baht 85 million in Well Korat Energy Company Limited resulting in PST Energy Company Limited to hold 100 per cent shares and approved the incorporation of 2 subsidiaries to support expansion of the renewal energy business.
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(2) Explanations and analysis of the financial status and performance for the past 3 years and the latest quarter.
1. Summary of financial status and performance
Power Solution Technologies Public Company Limited and Subsidiaries Statement of financial status Unit : Thousand baht
Consolidated financial statements 31 Dec 13 31 Dec 14 31 Dec 15 31 Mar 16
Amount % Amount % Amount % Amount %
Assets Current assets Cash and cash equivalents 15,247 2.31 267,845 29.59 53,742 5.62 100,904 5.68 Current investments - - 210 0.02 61,833 6.47 362,576 20.41 Trade and other receivables 140,462 21.29 120,851 13.35 177,998 18.61 126,909 7.14 Inventories 98,224 14.89 60,157 6.65 46,621 4.87 75,776 4.27 Restricted bank deposits with maturity within one year ------9,092 0.51 Other current assets 8,572 1.30 5,716 0.63 13,858 1.45 54,412 3.06 Total current assets 262,505 39.79 454,778 50.24 354,051 37.02 729,669 41.08 Non-current assets Restricted bank deposits 33,513 5.08 50,042 5.53 44,724 4.68 44,784 2.52 Long-term loans to related parties - - 7,596 0.84 - - - - Investments in associates - - - - 9,846 1.03 3,708 0.21 Other investments - - 3,598 0.40 9,598 1.00 12,598 0.71 Property, plant and equipment 339,567 51.47 358,901 39.65 418,079 43.72 874,695 49.25 Intangible assets 448 0.07 1,910 0.21 40,488 4.23 71,536 4.03 Deferred tax assets 1,089 0.16 3,871 0.43 3,996 0.42 2,103 0.12 Other non-current assets 22,562 3.42 24,567 2.71 75,547 7.90 37,011 2.08 Total non-current assets 397,178 60.21 450,486 49.76 602,278 62.98 1,046,435 58.92 Total assets 659,683 100.00 905,264 100.00 956,330 100.00 1,776,104 100.00
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Power Solution Technologies Public Company Limited and Subsidiaries
Statement of financial status (Continued) Unit : Thousand baht
Consolidated financial statements 31 Dec 13 31 Dec 14 31 Dec 15 31 Mar 16 Amount % Amount % Amount % Amount %
Liabilities and shareholders' equity
Current liabilities Bank overdrafts and short-term loans from financial institutions 186,845 28.32 131,662 14.54 116,140 12.14 54,133 3.05 Liabilities under agreements assigning rights of claim - - 13,920 1.54 - - - - Trade and other payables 72,189 10.94 58,608 6.47 103,003 10.77 87,880 4.95 Current portion of long-term loans 28,831 4.37 30,387 3.36 35,936 3.76 35,477 1.99 Long-term loans classified as current liabilities 67,832 10.28 62,004 6.85 32,692 3.42 52,342 2.95 Current portion of liabilities under hire purchase and financial lease agreements 612 0.10 620 0.07 1,784 0.19 1,534 0.09 Short-term loans from unrelated parties - - - - 5,000 0.52 9,459 0..53 Advances received from customers 23,070 3.50 2,016 0.22 2,520 0.26 8,633 0.49 Deferred gain on sales of investment in subsidiary - - 11,500 1.27 11,500 1.20 - - Other current liabilities 4,918 0.74 2,957 0.33 3,103 0.32 7,263 0.41 Total current liabilities 384,298 58.25 313,673 34.65 311,678 32.59 256,721 14.45 Non-current liabilities
Long-term loans, net of current portion 79,417 12.04 71,111 7.86 95,512 9.99 79,415 4.47 Liabilities under hire purchase and financial lease agreements, net of current portion 789 0.12 369 0.04 1,330 0.14 1,046 0.06 Provisions for long-term employee benefits 2,395 0.36 3,730 0.41 5,293 0.55 5,727 0.32 Total non-current liabilities 82,601 12.52 75,210 8.31 102,135 10.68 86,188 4.85 Total liabilities 466,898 70.78 388,883 42.96 413,811 43.27 342,909 19.31
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Power Solution Technologies Public Company Limited and Subsidiaries Statement of financial status (Continued) Unit : Thousand baht Consolidated financial statements 31 Dec 13 31 Dec 14 31 Dec 15 31 Mar 16 Amount % Amount % Amount % Amount %
Shareholders' equity Share capital Registered capital 175,000 225,000 225,000 492,598 Issued and paid-up capital 175,000 26.53 220,000 24.30 221,142 23.12 442,268 24.91 Share premium - - 239,806 26.49 243,432 25.45 899,943 50.67 Capital reserve for share-based payment transactions - - 185 0.02 620 0.06 1,554 0.09 Retained earnings Appropriated - statutory reserve The Company 3,325 0.50 4,854 0.54 5,335 0.56 5,335 0.30 Subsidiaries - - - - 1,646 0.17 1,646 0.09 Unappropriated 14,460 2.19 51,536 5.69 47,884 5.01 60,868 3.43 Equity attributable to owners of the Company 192,785 29.22 516,381 57.04 520,059 54.38 1,411,614 79.48 Non-controlling interests of the subsidiary - - - - 22,460 2.35 21,581 1.21 Total shareholders' equity 192,785 29.22 516,381 57.04 542,519 56.73 1,433,195 80.69 Total liabilities and shareholders' equity 659,683 100.00 905,264 100.00 956,330 100.00 1,776,104 100.00
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Power Solution Technologies Public Company Limited and Subsidiaries Statement of comprehensive income Unit : Thousand baht Consolidated financial statements
2013 2014 2015 Ending 31 Mar 16
Amount % Amount % Amount % Amount %
Revenues Sales income 316,343 71.17 242,269 54.05 295,804 61.11 45,633 40.09 Sales of electricity income 55,015 12.38 66,646 14.87 59,059 12.20 22,536 19.80 Revenue from power plant construction service - - 89,850 20.05 2,168 045 - - Services income 65,940 14.84 25,196 5.62 122,966 25.40 33,336 29.29 Gain on sale of investment in subsidiary - - 20,297 4.53 - - - - Dividend income ------Gain on sale of investment in subsidiary ------10,814 9.50 Gain on exchange - - 1,655 0.37 - - - - Other income 7,178 1.61 2,298 0.51 4,084 0.84 1,499 1.32 Total revenues 444,477 100.00 448,211 100.00 484,080 100.00 113,818 100.00 Expenses Cost of sales 274,402 61.74 176,638 39.41 239,786 49.53 37,147 32.64 Cost of electricity sold 15,113 3.40 19,553 4.36 16,565 3.42 8,879 7.80 Cost of power plant construction service - - 70,247 15.67 2,289 0.47 - - Cost of services 21,727 4.89 13,416 2.99 86,829 17.94 16,057 14.11 Selling expenses 8,517 1.92 5,512 1.23 5,105 1.05 2,157 1.90 Administrative expenses 81,438 18.32 91,121 20.33 103,210 21.32 30,682 26.96 Loss on exchange 254 0.06 - - 584 0.12 151 0.13 Total expenses 401,451 90.32 376,488 84.00 454,368 93.86 95,073 83.53 Profit before share of loss from investments in associates finance cost and income tax expenses 43,026 9.68 71,722 16.00 29,711 6.14 18,745 16.47 Share of loss from investments in associates - - - - (229) (0.05) (138) (0.12) Profit before finance cost and income tax expenses 43,026 9.68 71,722 16.00 29,483 6.09 18,607 16.35 Finance cost (26,750) (6.02) (28,493) (6.36) (15,169) (3.13) (4,609) (4.05) Profit (loss) before income tax expenses 16,276 3.66 43,229 9.64 14,313 2.96 13,998 12.30 Income tax expenses (1,947) (0.44) (4,624) (1.03) 115 0.02 (1,893) (1.6) Profit (loss) for the period 14,329 3.22 38,605 8.61 14,429 2.98 12,105 10.64 Other comprehensive income:
Other comprehensive income for the period ------Total comprehensive income for the period 14,329 3.22 38,605 8.61 14,429 2.98 12,105 10.64 Basic earnings per share (Unit: Baht) 0.01 0.022 0.007 0.0036
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Power Solution Technologies Public Company Limited and Subsidiaries Cash flow statement Unit : Thousand baht
Consolidated financial statements Ending 2013 2014 2015 31 Mar 16 Cash flows from operating activities Profit (loss) before tax 16,276 43,229 14,313 13,998 Adjustments to reconcile profit (loss) before tax to net cash provided by (paid from) operating activities: - - - - Depreciation and amortization 20,400 24,860 21,046 7,698 Amortization of discount/premium from forward foreign exchange contracts - - 137 (20) Reversal of provision for doubtful accounts 834 (70) 1,734 - Reduce cost of inventories to net realizable value (121) 1,150 (3,292) 661 Share of loss from investments in associates - - 229 138 Unrealized gain on change in value of current investments 632 1,334 1,563 - Provision for long-term employee benefits - 185 4,060 435 Share-based payment transactions - (20,297) - 934 Loss (gain) on sales of equipment (26) 574 812 (157) Unrealized gain on exchange 625 (342) 280 (907) Dividend income - - - - Interest income (560) (951) (859) (161) Interest expenses 23,296 25,365 12,321 3,646 Profit (loss) from operating activities before changes in operating assets and liabilities 61,356 75,038 52,343 26,265 Operating assets decrease (increase) Trade and other receivables (33,736) 6,038 (59,008) 49,892 Inventories (38,322) (17,003) 16,828 (29,817) Other current assets (3,232) 2,860 (7,268) (37,453) Other non-current assets 1,056 (4,609) (47,486) 50,565 Operating liabilities increase (decrease) Trade and other payables (32,509) (14,322) 26,956 (13,960) Advances received from customers 22,959 (54) 504 6,114 Other current liabilities 1,045 (1,660) 90 3,936 Cash flows from operating activities (21,383) 46,287 (17,040) 55,542 Cash paid for income tax (2,959) (7,634) (3,980) (2,857) Net cash flows from operating activities (24,342) 38,653 (21,020) 52,685
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Power Solution Technologies Public Company Limited and Subsidiaries Unit : Thousand Cash flow statement (Continued) baht Consolidated financial statements Ending 31 2013 2014 2015 Mar 16 Cash flows from investing activities
Increase in current investments - (210) (61,623) (300,743) Increase in restricted bank deposits (13,063) (19,204) 5,317 (9,152) Increase in short-term loans to related parties - - - - Decrease in long-term loan to related party - (7,596) 7,596 - Purchases of investments in subsidiaries - (132) (13,704) (472,237) Sales of investments in subsidiaries - 45,641 - - Cash received from decrease in share capital of investments in - - (10,075) 6,000 associates Increase in share capital of other investments - (3,598) (6,000) (3,000) Purchases of property, plant, equipment and intangible assets (64,909) (64,697) (53,710) (46,144) Proceeds from sales of equipment 28 103 20 227 Dividend received - - - - Interest income 441 705 1,099 61 Net cash flows used in investing activities (77,504) (48,988) (131,080) (824,988) Cash flows from financing activities
Decrease in bank overdrafts and short-term loans from financial 29,530 (51,774) (15,519) (61,766) institutions Decrease in liabilities under agreements assigning rights of claim (3,948) 13,920 (13,920) - Cash received from long-term loans 71,583 70,000 31,219 10,781 Repayment of long-term loans (24,388) (28,083) (30,582) (7,686) Repayment of liabilities under hire purchase and financial lease (526) (412) (731) (532) agreements Increase in short-term loans from unrelated parties - - (5,000) 4,459 Decrease in short-term loans from related parties - - - - Interest expenses (23,665) (25,524) (12,332) (3,427) Cash received from right exercise of warrants - - 1,142 - Cash received from increase share capital 50,191 284,806 - 877,636 Dividends paid - - (16,279) - Net cash flows from (used in) financing activities 98,776 262,934 (62,003) 819,465 Net increase (decrease) in cash and cash equivalents (3,069) 252,598 (214,103) 47,162 Cash and cash equivalents at beginning of period 18,316 15,247 267,845 53,742 Cash and cash equivalents at end of period 15,247 267,845 53,742 100,904
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2. Key financial ratios Power Solution Technologies Public Company Limited and Subsidiaries Consolidated financial statements Unit 2013 2014 2015 31/3/16
Liquidity Ratio Current ratio times 0.68 1.45 1.14 2.84 Quick ratio times 0.41 1.24 0.94 2.30 Account receivables turnover times 3.53 3.24 3.21 2.66 Account receivables days days 103.46 112.49 113.63 137.05 Inventory turnover times 3.94 3.53 6.47 4.06* Inventory conversion period days 92.65 103.28 56.41 89.95 Account payables turnover times 3.51 4.28 4.28 2.60* Account payable days days 103.91 85.30 85.37 140.28 Cash cycle days 92.19 130.47 84.66 86.72 Profitability Ratio Gross profit % 28.83 33.99 28.03 38.84 Operating profit % 8.26 11.20 5.46 6.49 Net profit % 3.22 8.61 2.98 10.64 Return on equity % 8.91 10.89 2.73 4.90* Efficiency Ratio Return on assets % 2.41 4.93 1.55 3.54* Financial Policy Ratio Debt to equity ratio times 2.42 0.75 0.76 0.24 *Annualized
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3. Management discussion and analysis Analysis of financial performance 3.1. Revenue from sales and service In 2013, the Company and subsidiaries had total revenue of 444.48 million baht, increased 9.31 million baht or 2.14% from 2012 due to the business expansion of the Company’s renewal energy business from the Company’s investment in the solar power plant of Green Bio Mahasarakham Company Limited which has production capacity of 952 kilowatts. The power plant started its commercial operations in transmitting electricity to the PEA in February 2013 increasing Sales of electricity income 19.13 million baht or 53.30% from the previous year. Also, revenue from designing, distributing and installing Power and Environment Monitoring Solution in 2013 decreased 10.60 million baht from 2012 or 2.70% due to the Company’s target customers were affected by the political situation, halting investments and affecting the Company’s revenue. In 2014, the Company and subsidiaries had total revenue of 448.21 million baht, increased 3.73 million baht or 0.84% from 2013 due to the Power and Environment Monitoring Solution business in 2014 decreased from 2013 24.97 million baht or 6.53% due to projects of the public sector postponed the contract signing to quarter 4 of 2014. The postponement resulted in the Company’s revenue to be delayed from the expected period which was the first half of 2015. Also, the renewal energy business in 2014 increased from 2013 11.64 million baht or 21.16% from 2013 since the Company recognized revenue from the solar power plant of Solar Go Green Company Limited and Power We Green Company Limited. Moreover, the Company has increased the efficiency of solar power plants of Kanha Solar Power Company Limited to allow for more efficient electricity production. In 2015, the Company and subsidiaries had total revenue of 484.08 million baht, increased 35.87 million baht or 8.00% from 2014 due to the Power and Environment Monitoring Solution business in 2015 increased from 2014 63.64 million baht or 17.81% because of increase in public sector investment. Also, the renewal energy business in 2015 decreased from 2014 by 7.59 million baht or 11.39%, since in 2014 the Company has sold the solar power plant of Green Bio Mahasarakham Company Limited. As for the first 3 months of 2016 ending 31 March 2016, the Company and subsidiaries have total revenue of 113.82 million baht increased from the same period of the previous year by 21.21 million baht or 22.90% due to the revenue from sales and services in quarter 1/2016 of 78.97 million baht which increased from the same period of 2015 in the amount of 5.17 million baht or 7.01% from the solar power plant project of the government military forces. Moreover, the revenue from sales of electricity income for quarter 1/2016 was 22.54 million baht, increased from the same period of 2015 in the amount of 8.07 million baht or 55.77% due to the recognition of revenue from the 2 bio-energy power plant projects in Suphanburi Province and the solar power plant project in Phetchaburi Province.
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3.2. Other income In 2014, 2015 and quarter 1/2016, the Company and subsidiaries have other income of 24.25 million baht, 4.08 million baht, and 12.31 million baht accordingly which accounts for 5.41%, 0.84%, and 1.32% of total revenue respectively. Other income of the Company and subsidiaries consist of interest income and other income as follow: (Unit : Million baht) 2014 2015 Quarter 1/2016 Other income Amount % Amount % Amount % Interest income 0.95 3.92 0.86 21.08 0.16 1.30 Gain from sales of investments in 20.30 83.71 - - 10.81 87.81 subsidiaries Gain on exchange 1.65 6.80 - - - - Gain on sales of assets ------Other income 1.35 5.57 3.22 78.92 1.34 10.89 Total 24.25 100.00 4.08 100.00 12.31 100.00
In 2014, other income increased 17.06 million baht or 237.27% from 2013 due to the gain from sales of investments in subsidiaries in the amount of 20.30 million baht while other income decreased 5.20 million baht. In 2015, other income decreased 20.17million baht or 83.18% from 2014 due to the gain from sales of investments in subsidiaries in the amount of 20.30 million baht while other income increased 0.13 million baht. In quarter 1/2016, the Company realized gain from sale of Green Bio Mahasarakham Company Limited in the amount of 10.81 million baht. 3.3. Cost of sales and gross profit In 2014 and 2015, the Company and subsidiaries have cost of sales and services totaling 279.85 million baht and 345.47 million baht accordingly which accounts for 66.01% and 71.97% of revenues from sales and services accordingly. This resulted in the Company having gross profit margin in 2014 and 2015 of 34.00% and 28.03% respectively, the decline was attributed from the high competition of the business, thus reducing the Company’s gross margin. In quarter 1/2016, the Company and subsidiaries have cost of sales and services totaling to 62.08 million baht which accounts for 61.16% of revenue from sales and services accordingly. This resulted in the Company having gross profit margin in quarter 1/2016 of 38.84% in the amount of 39.42 million baht, increased from the same period of 2015 12.44 million baht or 48.09% due to the Company’s ability to manage costs to be more efficient.
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3.4. Selling and administrative expenses Selling and administrative expenses of the Company and Subsidiaries in 2014 and 2015 amount to 96.63 million baht and108.32 million baht accordingly which accounts for 21.56% and 22.38% of total revenue accordingly. For quarter 1/2016, the selling and administrative expenses of the Company and Subsidiaries amount to 32.84 million baht or 28.86% of total revenue. The selling and administrative expenses are as follow: (Unit : Million baht) Selling and administrative 2014 2015 Quarter 1/2016 expenses Amount % Amount Amount % Amount Selling expenses 5.51 5.70 5.11 4.72 2.16 6.58 Administrative expenses 91.12 94.30 103.21 95.28 30.68 93.42 Total 96.63 100.00 108.32 100.00 32.84 100.00
The main selling expenses of the Company and Subsidiaries consist of employee commission fees, transportation and entertainment expenses etc. In 2014 and 2015, the selling expenses of the Company and Subsidiaries amount to 5.51 million baht and 5.11 million baht accordingly which accounts for 1.23% and 1.05% of total revenue accordingly. As for quarter 1/2016, the selling expenses of the Company and Subsidiaries amount to 2.16 million baht or 1.90% of total revenue which increased from the same period of 2015 by 0.81 million baht or 60.45% due to after-sales expenses for products with warranties. In 2014, the selling expenses decreased 35.33% as compared to 2013 due to the decrease in entertainment expenses. In 2015, the selling expenses decreased 7.26% as compared to 2014 from the decrease in after- sales expenses for products with warranties and late delivery penalties since products of major projects that still have warranties had gone through maintenance and equipment change in 2014. The administrative expenses of the Company and Subsidiaries amount to 91.12 million baht and 103.21 million baht accordingly which accounts for 20.33% and 21.32% of total revenue accordingly. The main components are employee salary and benefits which are fixed costs, advisory expenses and transportation expenses. As for quarter 1/2016, administrative expenses of the Company and Subsidiaries amount to 30.68 million baht or 26.96% of total revenue which increased from the same period of 2015 4.89 million baht or 18.98% due to the increase in employees to support the expansion of the bio-energy and biomass power plant business. In 2014, the administrative expenses increased 11.89% as compared to 2013 due to the annual salary increase and increase benefits for employees. In 2015, the administrative expenses increased 13.26% as compared to 2014 due to the increase in employees to support the expansion of the bio-energy and biomass power plant business.
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3.5. Financial costs Financial costs for 2014 and 2015 consist of interest expenses from loans from financial institutions and vehicle hire purchase. Total financial costs of the Company and subsidiaries amount to 28.49 million baht and 15.17 million baht accordingly which accounts for 6.36% and 3.13% of total revenues accordingly. For 2015, the Company and subsidiaries have total financial costs of 15.17 million baht which accounts for 3.13% of total revenue. The decrease in financial costs is due to the fresh capital from the Company’s issuance of new shares in the Stock Exchange of Thailand (on December 15, 2014). For quarter 1/2016, the Company and subsidiaries have total financial costs of 4.61 million baht accounting for 4.05% of total revenue.
3.6. Net profit margin The net profit in 2013 increased 11.52 million baht as compared to 2012 due to the decrease in costs of sales and services, selling expenses and tax affecting the gross and net profit accordingly. The net profit in 2014 amounts to 38.61million baht, increased 169.44million baht as compared to 2013 due to the increased gross profit and the decrease in costs of sales and services, selling and administrative expenses resulting in an increase in net profit. The net profit in 2015 amounts to 14.43 million baht or decreased 61.62% as compared to 2014 due to the decrease in gross profit from the increase in costs of sales and services because of high competition and the increase in selling and administrative expenses from the increase in employees to support the expansion of the bio- energy and biomass power plant business, thus, reducing the net profit. Also, in 2014, the Company has gains from sales of investment in subsidiaries and sales of the solar power plant of 1 MW in Mahasarakham Province. In quarter 1/2016, the Company and subsidiaries have net profit of 12.11 million baht as compared to the same period of 2015 which had net loss of 2.21 million baht due to an increase in gross profit attributed from an increase in revenues and an decrease in costs of sales and services.
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Analysis of financial status
3.7. Assets The Company and subsidiaries have total assets as of 31 December 2014, 2015 and 31 March 2016 in the amount of 905.26 million baht, 956.33 million baht, and 1,776.10million baht accordingly. The details of the assets of the Company and subsidiaries are as follow: Current assets as at 31 December 2014, 2015 and 31 March 2016 were 454.78 million baht, 354.05, and 729.67 million baht accordingly, accounting for 50.24%, 37.02%, and 41.08% of total assets respectively. The main current assets of the Company and subsidiaries consist of account receivables and other receivables, and inventories which is the nature of the Company’s business that current assets will be varied with sales. The Company and subsidiaries have non-current assets as of 31 December 2014, 2015 and 31 March 2016 in the amount of 450.49 million baht, 602.28 million baht, and 1,046.44 million baht or 49.76%, 62.98%, and 58.92% of total assets accordingly. The main increase in non-current assets of the Company and subsidiaries is from the increase in fixed-assets. 3.8. Account receivable sand provision for doubtful accounts As of 31 December 2014, 2015 and 31 March 2016, the Company and subsidiaries have account receivables amounting to 120.85 million baht, 178.00 million baht, and126.91 million baht accordingly. The increase and decrease in account receivables during the stated period is in accordance to the sales revenue of the Company and subsidiaries. In 2014, 2015 and quarter 1/2016, the Company and subsidiaries have account receivables days of 96.95 days, 113.63days, and 137.05days accordingly. The Company has a policy to allow a certain amount of time for payment from customers by considering from past financial performances, order volume, and pervious payment records. In 2014, the Company has increased account receivables days from 2013 due to the political situation during the end of year 2013 to the end of year 2014. As for 2015 and quarter 1/2016, the Company has quite high account receivable days but not exceeding the credit terms given. This is a result of the payment postponement from public sector customers. (Baht Million) Receivable aging 31 Dec 14 31 Dec 15 31 Mar16 (Consolidated financial statements) Amount % Amount % Amount % Not due 53.45 44.23 88.41 49.67 78.00 61.46 Not exceeding 3 m. 16.96 14.03 45.77 25.71 20.85 16.43 More than 3 m. but not exceeding 6 m. 12.69 10.50 9.42 5.29 3.66 2.89 More than 6 m. but not exceeding 12 m. 5.18 4.29 0.64 0.36 - - More than 12 m. 0.90 0.74 2.38 1.34 3.02 2.38 Total 89.18 73.79 146.62 82.37 105.53 83.15 Total other account receivables 32.51 26.90 33.94 19.07 23.95 18.87 Less provision for doubtful accounts (0.84) (0.69) (2.57) (1.44) (2.57) (2.02) Total (Net) 120.85 100.00 177.99 100.00 126.91 100.00
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From the receivable aging table, it is shown that the majority of receivables of the Company and subsidiaries are in the group that payments are not due yet and the group of no more than 3 months overdue. In 2014, 2015 and quarter 1/2016, the Company and subsidiaries have receivables that are overdue but not exceeding 3 months accounting for 14.03%, 25.71%, and 16.43% of total account receivables (net) respectively. In 2014, the proportion of account receivables that are over 3 months past due amount to 18.77 million baht or 15.53% of account receivables (net) consisting of receivables that are more than 3 months but not exceeding 6 months in the amount of 12.69 million baht due to the fact that the customer received goods and services in instalment, the customer will pay full amount once all products have been received, while the Company has issued an invoice according to the shipment schedule. Receivables that are more than 12 months past due are due to a delayed payment of one academic institution. In 2015, the proportion of account receivables that are over 3 months past due amount to 12.44 million baht or 6.99% of account receivables (net) consisting of receivables that are more than 3 months but not exceeding 6 months in the amount of 9.42 million baht due to a delayed payment of the public sector and receivables that are more than 12 months past due are due to a receivable that the Company was not able to collect money from. This case is undergoing legal measures and the Company has made a full provision. In quarter 1/2016, the proportion of account receivables that are over 3 months past due amount to 6.68 million baht or 5.26% of account receivables (net) consisting of receivables that are more than 3 months but not exceeding 6 months in the amount of 3.66 million baht due to one customer has changed its authorized persons, resulting in the need to make amendments to the financial documents. In 2014 and 2015, the Company has booked provisions for doubtful accounts in the amount of 0.84 million baht and 2.57 million baht accordingly or 0.69% and 1.44% of account receivables (net) accordingly. In quarter 1/2016, the Company has no additional provisions for doubtful accounts.
3.9. Inventory Key components of inventory of the Company and subsidiaries are as follow: (Unit : Million baht) 31 Dec 14 31 Dec 15 31 Mar16
Amount % Amount Amount % Amount Finished goods 47.63 79.17 34.00 72.93 56.76 74.03 Work in process 14.57 24.22 12.62 27.07 18.92 24.97 Goods in transit 1.25 2.08 - - 0.76 - Total 63.45 105.47 46.62 100.00 75.78 100.00 Reduce cost to net realisable value (3.29) (5.47) - - (0.66) - Inventory (Net) 60.16 100.00 46.62 100.00 75.78 100.00 As at 31 December 2014, 2015 and 31 March 2016, the Company and subsidiaries have inventories (net) in the amount of 60.16 million baht, 46.62 million baht, and 75.78 million baht accordingly.
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In 2014, the Company has decreased inventories (net) from 2013 in the amount of 38.06 million baht or 38.75% because as of 31 December 2013, the Company has work in process and goods in transit for the construction of the solar rooftop power plant of Solar Go Green Company Limited. In 2015, the Company has decreased inventories (net) in the amount of 13.54 million baht or 22.51% because as of 31 December 2014, the Company has bought Battery and DC Power Supply for sales and installation work at various public and private projects. In quarter 1/2016, the Company has increased inventories (net) in the amount of 29.15 million baht or 62.50% because of increases in inventory orders to support the projects’ operations according to the PPA. The Company’s inventory turnover in 2014, 2015 and quarter 1/2016 is 3.53 times, 6.47 tines and 4.06 times accordingly which is equivalent to inventory days of 101.87 days, 56.41 and 89.95 days accordingly. The main reason for extention in inventory days was due to an increase of stock of equipment, supply systems for telecommunication systems, since some oversea distributers take a long time to ship the products. However, the Company has improved the inventory management in 2015 reducing the inventory days as compared to the past year. In 2014, the Company has booked an impairment of inventories by 3.29 million baht or 5.47% of inventories (net). As for 2015 and quarter 1/2016, the Company has no additional provision.
3.10. Investment in subsidiaries As of 31 December 2014, 2015 and 31 March 2016, the Company has investment in subsidiaries in the amount of 99.25 million baht, 185.14 million baht and 792.11 million baht accordingly, consisting of: Investment in subsidiaries (Unit : Million baht) Company 31 Dec 14 31 Dec 15 31 Mar 16 Kanha Solar Power Company Limited 57.00 57.00 57.00 Solar Go Green Company Limited 20.00 20.00 20.00 Wind Go Green Company Limited 1.00 1.00 1.00 Bio Go Green Company Limited 1.00 18.10 18.10 Power We Green Company Limited 20.00 20.00 20.00 PST (Ubon Ratchathani) Company Limited - 0.25 0.25 PST Energy Company Limited - 14.99 14.99 PST Energy 1 Company Limited - 24.99 24.99 PST Energy 2 Company Limited - 5.00 5.00 PST Energy 3 Company Limited - 0.03 0.03 PST Energy 4 Company Limited - 0.03 0.03 PSTC Engineering Company Limited - 0.03 0.03 Nawarat Beverest Company Limited - 23.72 23.72 Aran Power Company Limited - - 405.00 Settheesuphan Biogreen Power Company Limited - - 196.99 Total 99.25 185.14 792.11 - 39 -
In February 2016, the Company has invested in 100 per cent of the common shares of Aran Power Company Limited and Settheesuphan Biogreen Power Company Limited in the amount of 405.00 million baht and 196.99 million baht accordingly.
Assets and liabilities value (as at the date of investment) Unit : Thousand baht Aran Power Co., Ltd. Settheesuphan Biogreen Assets / Liabilities Power Co., Ltd. Fair value Book value Fair value Book value Cash and cash equivalents 13,998 13,998 46,765 46,765 Trade and other receivables 7,028 7,028 3,174 3,174 Property, plant and equipment - Net 320,897 320,897 116,174 116,174 Intangible assets 20,847 - 10,846 - Other assets 9,695 9,695 2,557 2,557 Total assets 372,465 351,618 179,516 168,670 Trade and other payables 2,462 2,462 16,126 16,126 Other liabilities 253 253 140 140 Total liabilities 2,715 2,715 16,266 16,266 Total assets- Net 369,750 348,903 163,250 152,404
3.11. Other investments The Company invested in PV Green Company Limited in the amount 3.598 million baht. PV Green Company Limited operates solar power plant business to produce and sell electricity to the PEA. Currently, PV Green Company Limited has 18 million baht in total issued and paid-up capital in which the Company holds 19.99 of the total issued and paid-up shares. The Company investment was in form of a joint venture with the owner of the building, where, the solar rooftop project is on. In March 2015, a subsidiary (PST Energy Company Limited) invested in Triple S Eco Company Limited in the amount of 6 million baht accounting for 15% of the total issued and paid-up shares. In March 2016, PST Energy Company Limited was given approval to increase investments in Triple S Eco Company Limited in the amount of 3 million baht to maintain its shareholding proportion of 15% in that company.
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Consolidated financial statements Paid-up capital Investment proportion Cost (Thousand baht) (%) (Thousand baht) 31 Dec 15 31 Mar 16 31 Dec 15 31 Mar 16 31 Dec 15 31 Mar 16 PV Green Company Limited 18,000 18,000 19.99 19.99 3,598 3,598 Triple S Eco Company Limited 40,000 60,000 15.00 15.00 6,000 9,000 Total 9,598 12,598
3.12. Property, plant and equipment As at 31 December 2014, 2015 and 31 March 2016, the Company and subsidiaries have Property, plant and equipment in the amount of 358.90 million baht, 418.08 million baht, and 874.69 million baht accordingly accounting for 39.64%, 43.72% and 49.25% of total assets accordingly. The Company and subsidiaries have investments in Property, plant and equipment in 2014, 2015 in the amount of 63.18 million baht and 118.30 million baht accordingly. As for quarter 1/2016, the Company has an increase in purchases for the period of 26.59 million baht and increase from buying investments in subsidiaries of 437.07 million baht. The key changes in Property, plant and equipment of the Company and subsidiaries are as follow: - In 2014, the Company invested in the rooftop power plant of Solar Go Green Company Limited in the amount of 57.77 million baht and Power We Green Company Limited in the amount of 60.89 million baht. Also, the Company has sold assets and land of the power plant of Green Bio Mahasarakham Company Limited from the sale of investments in this subsidiary to non-related persons of the Company and subsidiaries. - In 2015, the Company has invested in the bio-energy power plant of Nawarat Beverest Company Limited in the amount of 49.17 million baht and invested in the solar power plant of the Company in Phetchaburi Province in the amount of 43.80 million baht. The subsidiary also bought land to use in the renewal energy business amounting to 16.34 million baht. - In February 2016, the Company acquired 100% shares of Aran Power Company Limited and Settheesuphan Biogreen Power Company Limited. The consolidated financial statements have included the financial status as of 31 March 2016 and performance of those companies from the investment date to the period ending 31 March 2016. Moreover, the Company has booked the net assets using the fair value on the date of acquisition.
Unit : Thousand baht Date of investment Value of Property, plant and equipment Fair value Book value Aran Power Company Limited 320,897 320,897 Settheesuphan Biogreen Power Company Limited 116,174 116,174 Total 437,071 437,071 - 41 -
As at 31 March 2016, the Company and subsidiaries have vehicles and equipment under lease contract with book value of approximately 5.4 million baht.
4. Risk factors that may affect the Company’s performance Risk factors that may majorly impact the Company’s operations and performance, which the Company has prepared preventive and control measures for such risks, are summarized below. 4.1. Risk factors that may affect the Company’s profits 4.1.1. Risk from projects that the Company invested in via acquisition 4.1.1.1. Risk from rate of return not being as forcast Since the amount of electricity that is produced from biogas and biomass depends on the amount of raw material, if there is insufficient and uncontinuous supply of raw material, it may cause the production fall under the full capacity. Therefore, the Company may not receive income and a rate of return as expected. However, the Company has already studied the sufficiency of raw material supplies around the area of the plant sites and came up with the plan that will enable the Company to foresee the problems that may occur and be able to correct or adjust the operational processes in a timely manner to reduce the effects of this risk. 4.1.1.2. Risk in project management and efficiency of power plants Managing biogas power plants require eligible personnel with knowledge and skills. If the Company cannot recruit and maintain those such experts, the Company might experience inefficiency in managing the projects. However, the Company has a scheme to motivate and retain potential employees as well as provide continuous training, thus maintain the retention and reduce the risk in the management and efficiency of power plants. 4.1.2. Risk associated with subsidiaries operating biomass power plants. 4.1.2.1. The risk of failure to operate on the Scheduled Commercial Operation Date as stipulated in the PPA. Before constructing the biomass power plant, the subsidiary must obtain related permits such as construction permit, permits for factory operation (Ror.Ngo.4 Permit) and must conduct a referendum before submitting for a construction permit etc. The EPC Contractor must also construct the project according to schedule. If the construction is off schedule, production and operations for the PEA would not be done according to the SCOD specified in the PPA resulting in the delay in revenue recognition of the subsidiaries. Therefore, the Company has conducted a study on the process of obtaining such permits, the preparation of required documents, the selection of well-known contractors that have experience and expertise in the construction of power plants and a well planning and monitoring of the progress to ensure that the permit application process and construction process are on schedule. However, the subsidiaries are able to extend SCOD with the PEA, stating the reason and reporting the progress of the project to the PEA, which in this case, is not considered as a breach of the agreement. 4.1.2.2. Risk of capital for the construction of the biomass power plant project If the Company or subsidiaries are not able to find a source of fund for the construction of the biomass power plant project, whether by equity or borrowings, there will be a risk that the project will not be conducted
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as planned. However, the Company has already made preliminary negotiations with a financial institution for a Project Finance loan for the power plant project. Moreover, the Company plans to use the proceeds, about 33 million baht, from the Company’s capital increase that the was approved by the Extraordinary General Shareholders Meeting No. 1/2016 on 23 December 2015, and the Company’s operating cash flow to invest in this project. The Company also has planned to operate the size of power plant that fit with the source of funds. Therefore, the Company is positive that the Company will be able to obtain sufficient funds for the biomass power plant project. 4.1.2.3. Risk in project management and efficiency of power plants Managing biomass power plants require eligible personnel with knowledge and skills. If the Company cannot recruit and maintain those such experts, the Company might experience inefficiency in managing the projects. However, the Company has a scheme to motivate and retain potential employees as well as provide continuous training, thus maintain the retention and reduce the risk in the management and efficiency of power plants. 4.1.2.4. Risk from rate of return not being as expected Since the amount of electricity that is produced from biomass depends on the amount of raw material, if there is insufficient and uncontinuous supply of raw material, it may cause the Company in not being about to produce to the full capacity. Therefore, the Company may not receive income and a rate of return as expected. However, the Company has evaluated the amount raw material and has made an agreement with the raw material supplier. Also, the Company has planned to order raw materials in advance according to each plant’s operations, along with close contact with the raw materials suppliers. This will enable the Company to foresee the problems that may occur and be able to correct or modify operational processes in a timely manner to reduce the effects of this risk. 4.2. Risk from unstable income during the year Part of the Company’s revenues is from designing, distributing and installing Power Monitoring and Management Solutions business, in which government agencies are main targets such as CAT Telecom Public Company Limited. These quasi-government or government agencies has a fiscal budget starting in October of each year and they will require certain periods to prepare for procurement and bidding and it also takes about 3 - 6 months to complete the project and collects money. This may cause revenues in each quarter fluctuate seasonally. 4.3. Risk of depending on the telecommunication industry Major shares of the Company’s revenues derived from designing, distributing and installing Power Monitoring and Management Solutions business, in which main target customers are public and private companies in the telecom business. The Company may has a risk of downtrend in the telecom industry. The recession may come from various factors such as government agencies’ investment policy in relation to the telecom systems or change of concession policy for communication systems in the future etc. To prevent such risk of dependency, the Company has expanded its customer base to include other sectors such as hotels, commercial buildings etc. Also, the Company has expanded into the renewal energy business which can generate stable income in each quarter. This will enhance the diversification of of revenues from each sector and lessen the dependency on specific customers.
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(3) Current and future obligations 1. Total amount of debentures issued and not issued according to the resolution of the shareholder’s meeting. - None - 2. Total amount of term loans Consolidated financial statements Unit : Thousand baht Interest rate Outstanding debt Principal repayment conditions (% per year) 31 Dec 15 31 Mar 16 1 Monthly principal repayment of 83,400 baht, to be completed within 60 months from date of loan MLR 1,414 1,164 withdrawal. 2 Monthly principal repayment of 16,700 baht, to be completed within 60 months from date of loan MLR 299 248 withdrawal. 3 Monthly principal and interest repayment of 1.4 million baht and for the last month 1.3 million baht, MLR -1.25 50,629 46,339 to be completed within 7 years 6 months from date of loan withdrawal. 4 Monthly principal and interest repayment of 0.5 million baht according to the contract to be MLR -1.25 18,575 17,405 completed within 7 years from date of loan withdrawal. 5 Monthly principal and interest repayment of 0.3 - 0.4 million baht according to the contract to be MLR 36,204 35,328 completed within 10 years from date of loan withdrawal. 6 Monthly principal and interest repayment of 0.35 million baht according to the contract to be 5.75 25,800 24,750 completed within 7 years from date of loan withdrawal. 7 Monthly principal and interest repayment of 0.545 million baht to be completed within 7 years from MLR-2.025 31,219 42,000 date of loan withdrawal. Total 164,140 167,234
Long-term loans of the Company and subsidiaries have collateral as follow: 1) Mortgage of land and building of the Company and subsidiaries. 2) Mortgage of solar Cell and related equipment of the Company and subsidiaries.
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3) Mortgage of right of bank savings claim of the Company and subsidiaries. 4) Transfer of right of claim from the Provincial Electricity Authority and Metropolitan Electricity Authority. 5) Guarantee by the Company.
3. Bank overdrafts and short-term loans from financial institutions Consolidated financial statements Unit : Thousand baht Interest rate Type of liability 31 Dec 15 31 Mar 16 (% per year) Bank overdrafts MOR 14 2,417 Promissory note MRR 64,000 50,000 Trust Receipts MLR - 1.5 52,129 1,716 Total 116,140 54,133 1) The bank overdraft is guaranteed by the Company’s and subsidiaries’ fixed savings account and director guarantee of the Company and Thai Credit Guarantee Corporation. 2) Short-term loans from financial institutions guaranteed by Mortgage of land and building of the Company.
4. Trade and other payables Consolidated financial statements Unit : Thousand baht Types of liabilities 31 Dec 15 31 Mar 16 Trade payables 61,905 65,064 Other payables 37,285 7,939 Advance from directors - 10,019 Accrued interests 138 359 Accrued expenses 3,675 4,499 Total 103,003 87,880
5. Short term debentures The Board of Directors Meeting No. 6/2016 on 11 July 2016 approved the issuance and offering of short term debentures in the form of Bill of Exchange (B/E) within the amount (at any point) no more than 500 million baht to be used for investment for business expansion, repayment of debt maturity, and use as working capital. Details of the debenture Date of issuance 13 July 2016 Par value 200 million baht Maturity 184 days Interest rate 4.50% per year Collateral None
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6. Future obligations Obligations in relation to operating leases and service contracts Unit : Thousand baht Details No less than 1 - 5years More than 5 years 1 year Rent according to operating lease contract 3,351.85 10,335.05 54,014.54 Advisor contract 1,380.00 1,200.00 -
Loans for power plant construction Unit : Million baht Project Location Estimated Estimated investment loan amount Biomass Power Plant Projects 610.0 305.0 1. 990 KW Chonburi 125.0 62.5 2. 990 KW Chainat 125.0 62.5 3. 990 KW Nakhon Si 120.0 60.0 Thammarat 4. 990 KW Sukhothai 120.0 60.0 5. 990 KW Udon Thani 120.0 60.0 Solar Power Plant Projects 425.0 365.0 1. Muang Sakaeo Agricultural Cooperative (5MW) Sakaeo 212.5 178.0 2. Maeklong Fishery Cooperative(5MW) Samutsongkhram 212.5 187.0 Total 1,035.0 670.0
(4) Management and top 10 major shareholders 1. Company Directors Company Directors as of 11 July 2016:
Name Position 1. Mr. Panu Seetisarn Chairman of the Board of Directors / Director / Executive Director 2. Mr. Pranai Kungwalrut Director / Chairman of the Executive Board / Chief Executive Officer 3. Miss Anong Panichcharoennam Director / Executive Director / Chief Financial Officer 4. Mr. Unnop Pumkumarn Director / Executive Director / Chief Operating Officer 5. Mr. Suwit Singhachan Independent Director / Chairman ofAudit Committee 6. Mr. Phitayatorn Maruetusatorn Independent Director / Audit Committee 7. Mr. Worapong Jamjod Independent Director / Audit Committee 8. Mr. KampolTatiyakavee Independent Director - 46 -
2. Top 10 major shareholders The top 10 major shareholders as of 15 March 2016: Name No. of shares % (Shares) 1. MVT Communications Public Company Limited 705,820,500 15.96 2. Mr. Sommaphat Traisorat 532,600,000 12.04 3. Mrs. Wallapa Traisorat 510,700,000 11.55 4. Mr. Pranai Kungwalrut 406,696,000 9.20 5. Mr. Pornthep Buranakulpairoj 130,980,000 2.96 6. Mrs. Chutinan Kitsamrej 111,121,300 2.51 7. Mr. Unnop Limprasoet 99,800,000 2.26 8. Mr. Apirat Sirodom 97,817,400 2.21 9. Mr. Wipong Rattanasirivilai 41,120,800 0.93 10. Mrs. Sukanya Wanichjakwong 39,900,000 0.90
(5) Other information that may have material effect on the shareholder’s decision - None –
(6) Opinion of the Company’s Board of Directors regarding the sufficiency of funds In proceeding with these transactions, the Company will use funds from loans from financial institutions, cash flow from the Company and the group’s operations, and the issuance and offering of short-term/long-term debenture according to the resolution of the Company’s Board of Directors Meeting No. 6/2016 on 11 July 2016. Therefore, the Company will have sufficient funds to conduct these transactions.
(7) Ongoing material lawsuits or claims - None –
(8) Benefits or related party transactions between the Company and Directors, management and shareholders holding both directly and indirectly of 10 per cent or more. 1. Nature of relationship The Company has various transactions with related persons. The transactions are with Directors and/or management and/or major shareholder of the Company and related companies in which the related person is a Director and/or shareholder of the company. The relationships are summarized below:
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Related persons Relationship with the Company MVT Communication Public 1. Major shareholder of the Company, holding 15.96% of registered and Company Limited(“MVT”) paid-up capital 2. Mr. Panu Seetisarn which is the authorized director of the company, Chairman of the Board of Directors, and Executive Director is also the authorized director and a major shareholder of MVT, holding 41.29% of registered and paid-up capital. Mr. Panu Seetisarn Is the authorized director of the Company, Chairman of the Board of Directors, and Executive Director and also holds 0.45% shares of the Company and is a major shareholder of MVT holding 41.29% of registered and paid-up capital. Mr. Pranai Kungwalrut Is the authorized director of the Company and subsidiaries, Executive Director, Chief Executive Officer and major shareholder of the Company holding 9.20% of registered and paid-up capital. Mr. Samarn Kungwalrut Mr. Pranai Kungwalrut’s father (Decreased) Mrs. Chutinun Kitsamrej Former authorized director of the Company and subsidiaries, Executive Director and major shareholder of the Company holding 2.51% of registered and paid-up capital. Has resigned from Director position on 26 February 2016. Mr.Unnop Pumkumarn Is the authorized director of the Company and subsidiaries, Executive Director, and management of the Company holding 2.26% of registered and paid-up capital. Mr. Sethawut Boonsanit Is the authorized director of the subsidiaries, Executive Director and management of the Company holding 0.01% of registered and paid-up capital. Miss Anong Is the authorized director of the Company and subsidiaries, Executive Panichcharoennam Director, and management of the Company holding 0.34% of registered and paid-up capital. TCC Luxury Hotels & A company under the control of Mr.Sommaphat Traisorat and Mrs. Resorts Company Limited Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. Concept Land 9 Company A company under the control of Mr. Sommaphat Traisorat and Mrs. Limited Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. TCC Value Hotel Company A company under the control of Mr. Sommaphat Traisorat and Mrs. Limited (now name of the Wallapa Traisorat who are major shareholders of the Company, together company is Value Hotels holding 23.59% of registered and paid-up capital.
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Related persons Relationship with the Company Company Limited) Phanthamaitree Company A company under the control of Mr. Sommaphat Traisorat and Mrs. Limited(now name of the Wallapa Traisorat who are major shareholders of the Company, together company is Thippatana holding 23.59% of registered and paid-up capital. Arcade Company Limited) Imperial Wealth Property A closed-end property fund under the control of Mr. Sommaphat fund and Loan Fund Traisorat and Mrs.Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. Regent gold property fund A closed-end property fund under the control of Mr. Sommaphat Traisorat and Mrs. Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. TCC Hotel collection A company under the control of Mr. Sommaphat Traisorat and Mrs. Company Limited Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. Thai Hotel Investment A closed-end property fund under the control of Mr. Sommaphat Freehold and Leasehold Traisorat and Mrs. Wallapa Traisorat who are major shareholders of the Property Fund Company, together holding 23.59% of registered and paid-up capital. Kalare Night Bazaar A company under the control of Mr. Sommaphat Traisorat and Mrs. Company Limited Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. Thai Retail Investment A closed-end property fund under the control of Mr. Sommaphat Property fund Traisorat and Mrs. Wallapa Traisorat who are major shareholders of the Company, together holding 23.59% of registered and paid-up capital. Iservice and supply Mr, Pornthep Buranakulpairoj who holds 2.96% of the Company’s Company Limited registered and paid-up capital, is the authorized director of Iservice and supply Company Limited a shareholder of Iservice and supply Company Limited holding 99.99% of the Company’s registered and paid-up capital. PV Green Company Limited An associate, operating the rooftop solar power plant business in which the Company holds 19.99% of registered and paid-up capital or 18 million baht through a joint venture with Vee Rubber Corporation Company Limited which is the owner of the building in which the project is installed on and holds 80.01% in PV Green Company Limited.
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2. Related party transactions with persons/juristic persons who may have conflicts of interest in 2015 and the first 3 months of 2016 are as follow:
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business MVTCommunication The Company purchased products The Company purchased computer networking system parts from MVT as for customer’s project Public Company from MVT. - 80,040 with quality specified by customer at price and conditions as transaction Limited.(“MVT”) - The Company purchased Management opinion products - - In quarter 1/2016,The Company purchased products from MVT. Management considered and had - 85,642 given an opinion that the purchase is for normal business operations at price and condition similar - - to those offering to other customers. Beginning balance - 85,642 Audit Committee Opinion Increase Audit committee had considered and given the same opinion as management on this transaction Decrease that it was reasonable and as normal business transaction at price and condition similar to those Ending Balance offering to other customers.
The Company hire MVT to provide The Company hire MVT to provide common service. The Company entered into common service common service such as forklift contract, calculating for service charges and expenses. The service is for forklift rental fee, rental fee, documents and product documents and product delivery fee, and products transporting fee with service charge as stated in delivery fee, and products common service contract, which expire in 1 year period. transporting fee according to 750,948 190,824 common service charge as stated in common service contract. - The Company pay for service
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business The Company rents MVT’s The Company rents MVT’s building and pays utilities fees and maintenance for use in operations. building and pays utilities fees and The rent is specified in the contract in which the contract is for 3 years. maintenance according to the rental contract. Management opinion -The Company pays rent - 25,040 Management considered and had given an opinion that the purchase is for normal business operations at price and condition similar to those offering to other customers. Beginning balance 213,943 197,813 Audit Committee Opinion Increase 803,514 230,974 Audit committee had considered and given the same opinion as management on this transaction Decrease 819,644 204,233 that it was reasonable and as normal business transaction at price and condition similar to those Ending Balance 197,813 224,554 offering to other customers.
Mr. Panu Seetisarn Guarantee on loan, Letter of credit, Mr. Panu guarantee along with MVTCommunication Public Company Limited, Mr.Somsak, and Mr. and/or Trust Receipt Bank Pranai on Bank loan from financial institution for the Company as in accordance with terms and overdraft, Promissory Note, and conditions of financial institution without any guarantee charge. However, the Company may sale and purchase credit for remove such guarantee when the Company receives better conditions from financial institution. The foreign exchange Company is in the process of removing the guarantee. - Credit guarantee Management opinion Baht Currency 70,000,000 70,000,000 Management considered and had given an opinion that the transaction will benefit the Company. Baht Currency - - Also, in accordance with terms and conditions of financial institution, there must be a guarantee for the loan with conditions of guarantee removal when PST is traded on the Stock Exchange of Thailand. Currently there is still a guarantee because it is still under the consideration of the financial institution. - 51 -
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction and propose the Company to consider removing the guarantee according to the conditions made with the financial institution. Mr. Panu is the creditor of Mr. Panu made advance payment for entertainment and office expenses of the Company. He also advance payment of the Company pay for Company’s loan and other fees for the Company with details as follow: - Beginning Balance - - 2015 - Advance payment in period 14,206 - Entertainment expenses -0-baht and office expenses14,206baht. - Repayment 14,206 - First 3 months of 2016 - Ending Balance - - Entertainment expenses -0- baht and office expenses -0- baht. Management opinion Management considered and had given an opinion that the advance payments are essential operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. Mr. Pranai Kungwalrut Guarantee on loan, Letter of credit, Mr.Pranai guarantee along with MVTCommunication Public Company Limited,Mr.Somsak and and/or Trust Receipt Bank Mr.Panu on Bank loan from financial institution for the Company as in accordance with terms and overdraft, Promissory Note, and conditions of financial institution without any guarantee charge. However, the Company may sale and purchase credit for remove such guarantee when the Company receives better conditions from financial institution. The foreign exchange Company is in the process of removing the guarantee. - credit guarantee Management opinion Baht Currency 70,000,000 70,000,000 Management considered and had given an opinion that the transaction will benefit the Company. US Dollar Currency - - Also, in accordance with terms and conditions of financial institution, there must be a guarantee for - 52 -
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business the loan with conditions of guarantee removal when PST is traded on the Stock Exchange of Thailand. Currently there is still a guarantee because it is still under the consideration of the financial institution. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction and propose the Company to consider removing the guarantee according to the conditions made with the financial institution. Mr.Pranai is the creditor of Mr.Pranai made advance payment for operation expense and repayment of loan from financial advance payment of the Company institution for the Company with following details. - Beginning Balance 1,010 - 2015 - Advance payment in period 889,046 42,756 Entertainment expenses 409,679 baht and office expenses 466,277baht. - Repayment 890,056 42,756 First 3 months of 2016 - Ending Balance Entertainment expenses 35,016 baht and office expenses 7,740 baht. - - Management opinion Management considered and had given an opinion that the advance payments are essential operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. Mr. SamarnKungwalrut The Company rent land for The Company rent land from Mrสมาน since February 2012 at rate of Baht 10,000 per month, which warehouse 20,000 - is comparable to market price of neighboring area, to be used for warehouse storing tools and - Rent land and premises - - equipment from flooding area. At the present, the Company uses this land and building as - Ending Balance warehouse for tools and equipment needed for preparation of installation of big project. However, in case that at the Company still need to use this land after the end of the agreement term, the - 53 -
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Company will propose to the Audit Committee to request for an approval to propose to Board of Director to consider and approve for extending the term, in accordance with process of transacting with related party. The contract has now expired and has not been extended.
Be noted that at the present, Mr. SamarnKungwalrut has passed away. Consequently, the beneficiary, receiving lease payment, is Mrs.Sopa Kungwalrut spouse of Mr. SamarnKungwalrut and mother of Mr. Pranai Kungwalrut. Management opinion Management considered and had given an opinion that the Company has not extended the rental contract since the Company already has enough warehouses. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. Mrs. ChutinunKitsamrej Mrs.Chutinun is the creditor of Mrs.Chutinun made advance payment for business operation expense of the Company with details advance payment of the Company as follow. - Beginning Balance - - 2015 - Advance payment in period 15,897 - Entertainment expenses 3,500 baht and office expenses 11,729baht. - Repayment 15.897 - First 3 months of 2016 - Ending Balance - - Entertainment expenses -0- baht and office expenses -0- baht. Management opinion Management considered and had given an opinion that the advance payments are essential operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction.
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Mr.Unnop Pumkumarn Mr.Unnop is the creditor of Mr.Unnop made advance payment for business operation expense of the Company with details as advance payment of the Company follow. - Beginning Balance 2015 - Advance payment in period 12,598 - Entertainment expenses 186,648 baht and office expenses 277,055 baht. - Repayment 470,092 40,444 First 3 months of 2016 - Ending Balance 482,690 40,444 Entertainment expenses39,439 บาท baht and office expenses 1,005 baht. - - Management opinion Management considered and had given an opinion that the advance payments are essential
operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. Mr. SethawutBoonsanit Mr. Sethawut is the creditor of Mr. Sethawut made advance payment for business operation expense of the Company with details advance payment of the Company as follow. - Beginning Balance 1,459 - 2015 - Advance payment in period 414,127 18,208 Entertainment expenses 307,867 baht and office expenses 102,209baht. - Repayment 415,586 18,208 First 3 months of 2016 - Ending Balance - - Entertainment expenses 3,923 baht and office expenses 13,769baht. Management opinion Management considered and had given an opinion that the advance payments are essential operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. Miss Miss Anong is the creditor of Miss Anong made advance payment for business operation expense of the Company with details
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business AnongPanichcharoenna advance payment of the Company as follow. m - Beginning Balance - - 2015 - Advance payment in period 2,030 - Entertainment expenses -0- baht and office expenses 1,897baht. - Repayment 2,030 - First 3 months of 2016 - Ending Balance - - Entertainment expenses -0- baht and office expenses -0- baht. Management opinion Management considered and had given an opinion that the advance payments are essential operating expenses of the Company, and the Company has quickly repaid the advance payments. Audit Committee Opinion Audit committee had considered and given the same opinion as management on this transaction. TCC Luxury Hotels The Company sold and The Company sold and provides Heat Pump service to TCC Luxury Hotels & Resorts Company & Resorts Company provide Heat Pump service Limited at standard price andconditions. Limited - The Company provides - - Management opinion service. Management considered and had given an opinion that the transaction is normal business 220,000 220,000 operations at price and condition similar to those offering to other customers. The outstanding Beginning balance - - receivable is the retention guarantee which is 3 years, ending February 2017. Increase - - Audit Committee Opinion Decrease 220,000 220,000 Audit committee had considered and given the opinion that it was normal business transaction at Ending Balance price and condition similar to those offering to other customers.
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Concept Land The Company sold and provide The Company sold and provide Heat Pump service to Concept 9 Land Company Limited at 9Company Limited Heat Pump service standard price and conditions. - The Company provides - - Management opinion service. Management considered and had given an opinion that the transaction is normal business 523,240 523,240 operations at price and condition similar to those offering to other customers. The outstanding Beginning balance - - receivable is the retention guarantee which is 3 years, ending February 2017. Increase - - Audit Committee Opinion Decrease 523,240 523,240 Audit committee had considered and given the opinion that it was normal business transaction at Ending Balance price and condition similar to those offering to other customers. TCC Value Hotel The Company sold and provide The Company sold and provide Heat Pump service to TCC Value Hotel Company Limited at Company Limited (now Heat Pump service standard price and conditions. name of the company - The Company provide - - Management opinion is Value Hotels service. Management considered and had given an opinion that the transaction is normal business Company Limited) Beginning balance 127,333 127,333 operations at price and condition similar to those offering to other customers. The outstanding Increase - - receivable is the retention guarantee which is 3 years, ending February 2017. Decrease - - Audit Committee Opinion Ending Balance 127,333 127,333 Audit committee had considered and given the opinion that it was normal business transaction at price and condition similar to those offering to other customers. Imperial Wealth The Company sold and provide The Company sold and provide Heat Pump service to Imperial Wealth Property fund and Loan Property fund and Loan Heat Pump service Fund at standard price and conditions. Fund - The Company provide service. - - Management opinion Management considered and had given an opinion that the transaction is appropriate and normal Beginning balance 169,427 169,427 business operations at price and condition similar to those offering to other customers. The - 57 -
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Increase - - outstanding receivable is the retention guarantee which is 3 years, ending February 2017. Decrease - - Audit Committee Opinion Ending Balance 169,427 169,427 Audit committee had considered and given the opinion that it was normal business transaction at price and condition similar to those offering to other customers. Regent gold property The Company sold LED light bulbs The Company sold LED light bulbs to Regent gold property fund at standard price and conditions. fund - The Company sell product - - Management opinion Management considered and had given an opinion that the transaction is appropriate and normal Beginning balance 910,357 867,503 business operations at price and condition similar to those offering to other customers. The Increase - - outstanding receivable is the retention guarantee which is 5years, ending 2019. Decrease 42,854 - Audit Committee Opinion Ending Balance 867,503 867,503 Audit committee had considered and given the opinion that it was normal business transaction at price and condition similar to those offering to other customers.
Thai Retail Investment The Company sold LED light bulbs The Company sold LED light bulbs to Thai Retail Investment Property Fund at standard price and Property Fund - The Company sell product - - conditions. Management opinion Beginning balance 895,590 - Management considered and had given an opinion that the transaction is normal business Increase - - operations at price and condition similar to those offering to other customers. Decrease 895,590 - Audit Committee Opinion Ending Balance - - Audit committee had considered and given the opinion that it was normal business transaction at price and condition similar to those offering to other customers.
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Iservice and supply The Company sold and provide The Company provided service for Backup power supply system for high-speed internet project and Company Limited service to service and supply sold security camera system products to Iservice and supply Company Limited at standard price Company Limited and conditions. - The Company sell products 15,000 - Management opinion - The Company provide service. - - Management considered and had given an opinion that the transaction is normal business Beginning balance operations at price and condition similar to those offering to other customers. Increase - - Audit Committee Opinion Decrease 16,050 - Audit committee had considered and given the opinion that it was normal business transaction at Ending Balance 16,050 - price and condition similar to those offering to other customers. - -
PV Green Company PVG hire the Company to design PVG hire the Company to design and construct Solar Rooftop power plant, as in purchase order Limited and construct Solar Rooftop power dated May 22, 2014, with Baht 51,100,000 total value, excluding VAT,of project, which is now plant completed with gross margin and condition similar to those offering to other customers. - The Company construct Solar - - Management opinion Rooftop power plant Management considered and had given an opinion that the transaction is normal business 5,467,700 - operations at price and condition similar to those offering to other customers. In March 2015, the Beginning balance - - Company has received payment. Increase 5,467,700 - Audit Committee Opinion
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Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Decrease - - Audit committee had considered and given the opinion that it was normal business transaction at Ending Balance price and condition similar to those offering to other customers. - Unearned revenue - - Beginning balance - - Increase - - Decrease - - Ending Balance - -
The Company gave loans to PVG The Company loaned PVG in the proportion of shares held for use as working capital. The for use as working capital repayment is on call at interested rate of 7.50% per year in reference to the loan rate for prime -Loans - - large customers (MOR) of financial institutions. PVG has repaid the loans in March 2015.
Loans 7,596,200 - Management opinion Beginning balance - - Management considered and had given an opinion that the transaction is essential and appropriate Increase 7,596,200 - and the loan is in the proportion of shares held for use as working capital and normal business Decrease - - operations. The interest rate is equal to the interest rate of financial institutions in which PVG has Ending Balance already repaid the loans. 107,699 - -Interest Audit Committee Opinion Audit committee had considered and given the opinion that the transaction is essential and Beginning Balance appropriate which is the same opinion as management. The interest rate is equal to the interest Beginning balance-interest on loan 162,248 - rate of financial institutions. - 60 -
Persons/juristic persons Transaction Value (Baht) who may have conflicts Type and Detail of Rationale for, and Necessity of the Transaction of interest/ Nature of Transaction 31 Dec 15 31 Mar 16 business Increase 92,090 - Decrease 254,338 - Ending Balance
- -
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(9) Material agreements over the last two years 1. Loan agreements with financial institutes 1) The loan agreement, no. L828/034005/2557, dated on 21 November 2014 entered into between Kasikornbank Public Company Limited and Solar Go Green Company Limited, with the loan amount of Baht 40,000,000. 2) The loan agreement, dated on 8 December 2014, entered into between Kasikornbank Public Company Limited and Solar Go Green Company Limited, with the loan amount Baht 30,000,000. 3) The loan agreement, dated on 7 October 2015, entered into between TMB Bank Public Company Limited and Power Solution Technologies Public Company Limited with the loan amount Baht 42,000,000.
2. Power Purchase Agreements Production Contract Company Project Site COD Capacity counterparty Solar Provincial Sang Khom 1 Kanha Solar Power Co., Ltd. Udonthani 998 KW Electricity 15-Aug-11 District Authority. Provincial Sang Khom 2 Kanha Solar Power Co., Ltd. Udonthani 998 KW Electricity 22-Aug-11 District Authority. Provincial 3 Solar Go Green Co., Ltd. Mueang District Samutsongkhram 997 KW Electricity 8-May-14 Authority Metropolitan 4 Power We Green Co., Ltd. Sai Noi District Nonthaburi 980 KW Electricity 10-Oct-14 Authority Provincial Power Solution Technologies 5 Khao Yoi District Phetchaburi 995 KW Electricity 28-Dec-15 PCL Authority Bio-energy Provincial Ban Mai Chai 6 Nawarat Beverest Co., Ltd. Buriram 995 KW Electricity 11-May.-12 Phot District Authority Provincial 7 Aran Power Co., Ltd. Samchuk District Suphanburi 4.0 MW Electricity 19-Mar-14 Authority Provincial Settheesuphan Biogreen 8 Muang District Suphanburi 2.0 MW Electricity 20-Oct-15 Power Co., Ltd. Authority - 62 -
Production Contract Company Project Site COD Capacity counterparty Biomass Provincial Thung Song Nakhon Si 9 Bio Go Green Co., Ltd. 990 KW Electricity 30-Sep-17 District Thammarat Authority Phanat Provincial 10 Bio Go Green Co., Ltd. Nikhom Chonburi 990 KW Electricity 31-Mar-17 District Authority Provincial Si Nakhon 11 Bio Go Green Co., Ltd. Sukhothai 990 KW Electricity 22-Jan-17 District Authority Khlong Provincial 12 Bio Go Green Co., Ltd. Khlung Kamphaeng Phet 990 KW Electricity 30-Sep-17 District Authority Nong Provincial 13 Bio Go Green Co., Ltd. Mamong Chainat 990 KW Electricity 22-Jan-17 District Authority Sawang Provincial 14 Bio Go Green Co., Ltd. Daen Din Sakon Nakhon 990 KW Electricity 31-Dec-20 District Authority Prajak Provincial 15 Bio Go Green Co., Ltd. Silpakom Udon Thani 990 KW Electricity 31-Dec-18 District Authority Provincial Nong Ki 16 Well Korat Energy Co., Ltd. Buriram 8.0 MW Electricity 24-Jul-15 District Authority
3. Projects in process of application for Power Purchase Agreements Production Contract Company Project Site COD Capacity counterparty Solar Provincial Power Solution Technologies Mueang In the process of 16 Sakaeo 5.0 MW Electricity PCL District PEA consideration Authority Amphawa Samutsongkhram Provincial In the process of 17 PST Energy 2 Co., Ltd. District 5.0 MW Electricity PEA consideration Authority Waste heat Provincial Sangkha In the process of 18 Bio Go Green Co., Ltd.* Surin 8 MW Electricity District PEA consideration Authority Provincial PST (Ubon Ratchathani) In the process of 19 Ubon Ratchathani 8 MW Electricity Company Limited* PEA consideration Authority *Has signed a memorandum of cooperation for municipal waste disposal - 63 -
(10) Other reports from experts to present shareholders for consideration The Independent Financial Advisor Report of Discover Management Company Limited The Independent Financial Advisor opines that the acquisition of assets transactions are appropriate as they are investments in potential companies and are in line with the Company’s operations which is focusing on entering into the renewal energy business. The conditions of the Power Purchase Agreement will allow the company to have stable income in the long term, reduce business risk and increase the Company’s potential in the future. Details can be read in the Independent Financial Advisor Report in enclosure no. 3.
(11) Other material information that may affect the shareholder’s decision - None -
(12) Responsibility of the Board of Directors for the information memorandum The Board of Directors of the Company is responsible for information specified in this information memorandum and all documents submitted to shareholder and certifies that the information contained no false information, there is no omission of material facts which are required to be disclosed, and does not contain misleading information. I certify that the information contained in this information memorandum is accurate, complete, contain no false information, does not contain misleading information and there is no omission of material facts which are required to be disclosed.
Please be informed accordingly
Mr. Panu Seetisarn Ms. Anong Panicharoennan Director Director
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