Annual Report 2015 Buriram Sugar Public Company Limited
Message from the Board of Directors
(Mr. Prachuab Chaiyasan) (Mr. Anant Tangtongwechakit) Chairman of the Board of Director Chief Executive Officer
A decade of the Company operation has been In addition, at the end of 2015, Office of the focusing on increasing productivity by adhered to “Sugar Cane and Sugar Board granted the Company 2 new Made in the Field” philosophy to achieve the highest licenses to establish 2 sugar factories in Chamni quality of sugarcane and sugar production. In fact, it is district, Buriram province and Nonnarai district, Surin not just a machinery that matter, but it is actually the Province with production capacity of 20,000 tons management and development of sugarcane agronomy. cane per day for each factory. It is a major milestone The Company pays attention from start, the selection of for future business growth and it is a response to rising sugarcane varieties, soil preparing, nurturing, as well as the demand of sugar in both domestic and abroad. plan for harvesting of sugarcane at the right time. Thus, these practices enabled the Company to increase The overall the turnover for the year 2015 cane volume from 1.77 million tons in 2013/14 to 1.95 was with a net profit of 272.34 million baht which million tons in 2014/15 crop year. The sugar extracted increased 36.03 million baht or 15 percent compared rate up to almost 119 kg/ton cane from 117 kg/ton to net profit of 236.31 million baht of the year 2014. cane the year earlier which was the second highest The key of the increased turnover was due to increasing in the country. In 2015/16 crop year, cane volume sugar and molasses from sugarcane from promoting the was expected to rise to 2.2 million tons. While, the expansion of sugarcane planting to the farmers and quality factory’s crushing capacity was increased from 17,000 control of raw materials that made the Company more tons / day in 2014/15 to 23,000 tons / day in the revenue. Although, the world market price of sugar has 2015/2016 to accommodate more cane. The expansion dropped steadily and hit the lowest in 7 years but the was funded by the issuance and offering of domestic Company was able to retain the ability to make a profit. debenture.
3 Annual Report 2015 Annual Report 2015 For the biomass power business, Buriram Power Co., Ltd.’s power plant (the second power plant of the group) has started selling electricity to PEA in April 2015 and has been promoted by the Board of Investment in the operation as well. And the total turnover of this business increased. In addition, to support raw material (bagasse) increasing in 2015, the Company has established Buriram Power Plus Co., Ltd. and Buriram Super Power Co., Ltd. to run the energy and electricity business in the future, including the establishment of Buriram Agro Energy Co., Ltd. to implement ethanol project which is now under study. Additionally, for social responsibility the Company believes that business development must be carried out together with social development. Through the year 2015 the Company focused on promoting the profession to raise the well-being of people in the community, such as the hand-woven mats of Sokdoo community and the hand-woven red-footed silk of Kubon community. The Company has made the strengthening and educational activities to develop and add value to their products, as well as purchase those from the community to be made for the Company to deliver as presents in the New Year and other occasions. The Company will carry on social works to gain acceptance and trust from communities and society.
Finally, on behalf of the Board of Directors, we would like to extend our sincere thanks to all cane farmers, shareholders, customers, suppliers, employees and all stakeholders for the support and being a part of the Company development to move ahead. The Company will continue adhering to the vision and mission to develop the sugar business and renewable energy for sustainable growth coupled with community and social prosperity.
4 Annual Report 2015 Buriram Sugar Public Company Limited
Board of Director
Mr. Prachuab Chaiyasan Mr. Anant Tangtongwechakit Chairman of the Board of Director Chief Executive Officer, Director (Independent Director) and Chairman of the Risk Management and Chairman of the Audit Committee Committee
Mr. Sirichai Sombutsiri Mrs. Seenual Tasanapant Independent Director Independent Director and Audit Committee and Audit Committee
5 Annual Report 2015 Annual Report 2015 Board of Director
Mrs. Wanphen Punyaniran Mrs. Jirawan Pongpichitkul Director Director, Executive Director and Risk Management Director
Miss Chittima Tangtrongwechakit Director, Executive Director and Risk Management Director
Mr. Sarit Tangtrongwechakij Mr. Adisak Tangtrongweachakit Director, Executive Director Director, Executive Director and Risk Management Director and Risk Management Director
6 Annual Report 2015 Buriram Sugar Public Company Limited
Financial Highlights
Unit : Million Baht
3,954.03 4,295.86 5,385.67 6,762.11
Total Revenue Total Assets
2014 2015 2014 2015
236.31 272.35 3,397.26 4,635.93
Net Income Total Liabilities
2014 2015 2014 2015
1.71 2.18 1,988.40 2,126.17
D/E Ratio Shareholder's Equity
2014 2015 2014 2015
Sales by Geographic 31.76% 68.24 % Domestic Export
7 Annual Report 2015 Annual Report 2015 General Information of Company
Buriram Sugar Public Co., Ltd. (BRR) Buriram Sugarcane Research and Business Type : Conduct business in investment by Development Co., Ltd. (BRD) holding shares in subsidiary Business Type : Research and development to companies (Holding company) which improve efficiency of cane are sugar manufacturing and growing and caring distribution business, by product Head Office/Factory : 237 Moo.2, Hinlekfai, Kumueang, from sugar business, for example, Buriram 31190 electricity business and fertilizer Bangkok Office : 128/77 Phayathai Plaza Building business, and support business 7th Fl., Phayathai Road, which is research and development Ratchathewi, Bangkok 10400 Public Company No. : 0107556000523 Telephone : 04-465-9020, 0-2216-5820-2 Head Office/Factory : 237 Moo.2, Hinlekfai, Kumueang, Fax : 04-465-9020, 0-2216-5823 Buriram 31190 Bangkok Office : 128/77-78 Phayathai Plaza Building 7th Fl., Phayathai Road,Ratchathewi, Buriram Energy Co., Ltd. (BEC) Bangkok 10400 Business Type : Biomass power plant Telephone : 04-465-9020, 0-2216-5820-2 Head Office/Factory : 289 Moo.2, Hinlekfai, Kumueang, Fax : 04-465-9020, 0-2216-5823 Buriram 31190 Website : www.buriramsugar.com Bangkok Office : 128/77 Phayathai Plaza Building 7th Fl., Phayathai Road, Ratchathewi, Bangkok 10400 Subsidiaries Telephone : 04-466-6368, 0-2216-5820-2 Fax : 04-466-6368, 0-2216-5823 Buriram Sugar Factory Co., Ltd. (BSF) Business Type : Manufacture and distribute sugar Buriram Power Co., Ltd. (BPC) Head Office/Factory : 237 Moo.2, Hinlekfai, Kumueang, Business Type : Biomass power plant Buriram 31190 Head Office/Factory : 284 Moo.2, Hinlekfai, Kumueang, Bangkok Office : 128/77 Phayathai Plaza Building Buriram 31190 7th Fl., Phayathai Road,Ratchathewi, Bangkok Office : 128/77 Phayathai Plaza Building Bangkok 10400 7th Fl., Phayathai Road, Ratchathewi, Telephone : 04-465-9020, 0-2216-5820-2 Bangkok 10400 Fax : 04-465-9020, 0-2216-5823 Telephone : 04-466-6368, 0-2216-5820-2 Fax : 04-466-6368, 0-2216-5823
8 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Power Plus Co., Ltd (BPP) Buriram Agro Energy Co., Ltd (BAE) Business Type : Biomass power plant Business Type : Produce and distribute ethanol Head Office/Factory : 317 Moo.2 Hinlekfai, Head Office/Factory : 237 Moo.2, Hinlekfai, Kumueang, Buriram 31190 Kumueang, Buriram 31190 Bangkok Office : 128/80 Phayathai Plaza Building Bangkok Office : 128/77 Phayathai Plaza Building 7th Fl., Phayathai Road, 7th Fl., Phayathai Road, Ratchathewi, Bangkok 10400 Ratchathewi, Bangkok 10400 Telephone : 04-466-6368, 0-2216-5820-2 Telephone : 04-465-9020, 0-2216-5820-2 Fax : 04-466-6368, 0-2216-5823 Fax : 04-465-9020, 0-2216-5823
Buriram Super Power Co., Ltd (BSP) Business Type : Biomass power plant Head Office/Factory : 289 Moo.2 Hinlekfai, Kumueang, Buriram 31190 Bangkok Office : 128/80 Phayathai Plaza Building 7th Fl., Phayathai Road, Ratchathewi, Bangkok 10400 Telephone : 04-466-6368, 0-2216-5820-2 Fax : 04-466-6368, 0-2216-5823
Key Brand Fertilizer Co., Ltd. (KBF) Business Type : Produce and distribute organic fertilizer Head Office/Factory : 237 Moo.2 Hinlekfai, Kumueang, Buriram 31190 Bangkok Office : 128/77 Phayathai Plaza Building 7th Fl., Phayathai Road, Ratchathewi, Bangkok 10400 Telephone : 04-465-9020, 0-2216-5820-2 Fax : 04-465-9020, 0-2216-5823
9 Annual Report 2015 Annual Report 2015 Policy and Overview of Business Operation
Overview of Business Operation Byproduct business Buriram Sugar Public Co., Ltd. and its subsidiaries 1. Buriram Energy Co., Ltd. (BEC) originally are one of the sugar industry pioneers of Northeastern Buriram Ethanol Co., Ltd. was registered on 2005 with region of Thailand which Mr. Vichien Tangtongwechakit 1 million Baht registered capital and increased registered initiated cane growing practices and encouraged farmers capital to 15,600,000 Baht in August 2006 for preparation to grow cane in Buriram Province. The group has of ethanol plant construction. Due to unfavorable operated an integrated business of raw sugar and brown circumstances during that period, the Company has sugar manufacturing and distribution both for domestic postponed its construction plan up until present. In 2010, consumption and export more than 50 years. The the Company changed its name to Buriram Energy Co., Ltd. Company uses byproducts of sugar manufacturing like and raised its registered capital to 135,600,000 Baht in 2011. bagasse, molasses and filter cake (press mud) to further advance the business utterly, including biomass power plant business, organic fertilizer and ethanol business. With its production capacity of 9.9 MW, Buriram Energy Co., Ltd., using bagasse as a main fuel for electricity generation, sells 8 MW of the electric power generated Sugar Business to Provincial Electricity Authority (PEA) and distributes remaining 1.9 MW to the sugar factory. The power plant Buriram Sugar Factory Co., Ltd. (BSF) was registered locates near the Buriram Sugar Factory for convenience on 2003 with THB 1 million registered capital. In 2010 and of bagasse transportation and electric power distribution. 2011, the Company has increased registered capital to In December 30, 2011, BEC has contracted PEA to sell its THB 990,637,000 and THB 1,050,000,000 consecutively. electric power maximum 8 MW at 22,000 volts electric In 2011, BRR has transferred its employees in various potential system and has started its distribution in May departments, its sugar manufacturing and distribution 2012. BEC electricity generation has been promoted and license, factory license, brand, and electricity production invested by The Thai Board of Investment in June 28, and generation to BSF. 2011.
BSF conducts sugar production and distribution 2. Buriram Power Co., Ltd. (BPC) was registered business. The factory locates at 237 Moo.2, Baan Sao-Ae, on 2011. Currently, the Company has 170,000,000 Baht Hinlekfai, Kumueang, Buriram, has authorized production registered capital. BPC has been established to support capability of 17,000 tons per day, and is capable to crush bagasse-based biomass electricity generation project sugarcane 2 million tons per annum. In 2015/16 cane which can utilize other substitutable fuel materials such as crushing season, the production capacity will be increased woodchips, sugar leaves or chaff to generate electricity. to 23,000 tons per day. The distributed products can be The construction of BPC’s power plant has completed. divided into raw sugar and brown sugar and are sold for The power plant is located near the power plant of BEC both domestic customer and international customer. Aside and Buriram Sugar Factory Co., Ltd. for convenience of from sugar production, BSF can generate electricity from bagasse transportation. In April 14, 2013, BPC contracted steam, a byproduct of sugar manufacturing, at 10 MW PEA to sell its electric power maximum 8 MW at 22,000 from 12 MW capacities to use in the sugar factory area. volts electric potential system and distribute to PEA since
10 Annual Report 2015 Buriram Sugar Public Company Limited
April 2015. Moreover, the Company was approved for 6. Buriram Agro Energy Co., Ltd. (BAE) electricity sale from Adder system to Feed in tariff was registered on 2015. Currently, the Company has (FIT). BPC electricity generation has been promoted 10,000,000 Baht paid. BAE is a company established to on investment by The Thai Board of Investment in implement the production and distribution of ethanol January 5, 2015. which is made from molasses but is yet to start the operations. It is the process of applying for permission 3. Buriram Power Plus Co., Ltd. (BPP) to prepare an environmental impact analysis (EIA). was registered on 2015. Currently, the Company has 10,000,000 Baht registered capital that fully paid and held 99.99% by BEC. BPP has been established to Supporting Business support biomass electricity generation project that Buriram Sugarcane Research and Development will use bagasse as main raw materials. BPP is the Co., Ltd. (BRD), originally Buriram Machinery third power plant of the group but the Company has Development Co., Ltd. was registered on 1996 with not started operations currently because it is in the registered capital 1,000,000 Baht and has increased the application process of power generation license from registered capital to 70,880,000 Baht in February 16, the Energy Regulatory Commission (ERC.). 2010 and has changed its name to Buriram Sugarcane Research and Development Co., Ltd. 4. Buriram Super Power Co., Ltd. (BSP) was registered on 2015. Currently, the Company has BRD is a subsidiary company that provide 5,000,000 Baht that fully paid and held 99.99% of raw material to BSF. BRD conducts its business via shareholding by BEC. BSP has been established to encouraging farmers to cultivate sugarcane by contract support biomass electricity generation project that will farming. The implementation helps sustain satisfactory use bagasse as a main raw materials. BSP is the fourth amount of raw material for BSF operation, develop power plant of the Group. Its objective is to set up innovations such as sugarcane variety and sugarcane- to support the growth of the biomass power plant of related machinery, organize farmer system, assist the Company which has not started the operations. sugarcane cultivation, improve efficiency, and increase crop yield which help support quality of farmers’ life. 5. Key Brand Fertilizer Co., Ltd. (KBF) was established in 2011 with the registered capital of fully paid of 15,000,000 Baht. It conducts the production of organic fertilizer and bio-fertilizer, using filter cakes, which is byproduct of sugar production process as main raw materials. KBF have started production and distribution in 2012 and has a production capacity of 30,000 tons per annum. The products will be sold to BRD to resell to the cane grower to enrich soil nourishment, which will help increase the quality of cane.
11 Annual Report 2015 Annual Report 2015 Business Goal of 9.9 MW with the Office of the Energy Regulatory Commission (ERC). The construction of the power Long-term Goal plant will be completed by the third quarter of 2016, The Company strives to maintain the standard which plan to sell electricity to the sugar factory to and is the number one of the management and control accommodate the increasing capacity of the plant. quality of sugarcane productivity to produce sugar products and by-products for maximum efficiency. Personnel Resource Goals The Company understands that the raw material is The Company's personnel resources are highest risk of the business, so if it is well managed crucial in the Company development. The Company and controlled and stable as well as on going must focus on all stages that related to both in terms development, the Company will be able to conduct of personnel to be proper to the job with regard business securely. For the Biomass Power Energy, to the process of recruiting staff from internal and the Company aims to develop the business, coupled outside the organization with the ability to appropriate with the ongoing expansion of the sugar business. The positions and regularly continue monitor and evaluate plan is to increase the capacity of biomass power to of performance in accordance with the standards accommodate the capacity of the various products of specified by the Company and retain the proper the Group in the future and distribution of electricity personnel. to generate the maximum return to the shareholders of the Company, the Company is considering further industrial by-products to increase revenue and to make The task of personnel development is to the business sustainability by studying the investment increase the capacity and potential employees. The plan of ethanol including the technology, which is in Company has set up a process for teaching and training the process of preparing the report of Environmental as appropriate for each line of work comprehensively. Impact Assessment (EIA) as well as other products such Establishes guidelines assignments and result reports as yeast. could lead to operational skills. Moreover, the transfer process and learning within the organization will make a concrete response to the expansion of business and Short-term Goal industry competition more effectively. The Company aims to develop sugarcane production in the next 2-3 years by promoting the There are company regulations and " business expansion of sugarcane plantations up to 250,000 Rai ethics and ethical conduct of the management and to produce more than 3 million tons of sugarcane along employees. " to respect the stakeholders as well as with maintaining quality standards for the highest yield. every personnel in the organization realize its social The Company plans to produce and sell refined sugar responsibility and has been involved in such activities. to add value and supporting increasing sugar quantity by emphasizing on exporting to industrial factory which is now in process of the information study for appropriate technology to produce quality sugar to the consumers. For the Biomass Power Energy Business, the Company is applying for an electric power plants license of the third power plant, which is capacity
12 Annual Report 2015 Buriram Sugar Public Company Limited
Managing with virtue and good governance Goal
1. Operating with transparency 3. Promote Health and Safety The Company sets operating plan and discloses Since health and safety of stakeholders of important information based on appropriate criteria the Company is important, the Company operates to create fairness and promote equality between business in conformance to law related to health shareholders. The Company provides audit system by and safety strictly and aims to improve quality level independent internal and external auditor for fairness of the Company from production to distribution. The and transparency. Company provides production system inspection continuously to ensure confidence of customer on quality of products and factory operation system 2. Social development and support monitoring for safety of the Company’s employee. The Company firmly believes that business development of the Company must be carried out together with social development. The Company has prepared projects for social development by donating and encourage the community to raise the well-being of society. This is the mission of the Company for example of community support such as promoting Sokdoo hand-woven mats of Sokdoo community and the Kubon hand-woven red-footed silk of Kubon community by strengthening the activities of the community and manage educational activities to develop and add value to their products, as well as purchase those from the community to be made for the Company to deliver as presents. As well as promote the unemployed in Hin Lek Fai District. Along with community took part in environmental conservation for example the Green Area for Queen Sirikit was the tree planting in urban areas around the plant, by such activities, it was a collaboration between the companies with local government agencies and the surrounding community. The Company also recognizes the balance of aquatic ecosystems by releasing fish into the river which can also help to improve the well-being of the community as well.
13 Annual Report 2015 Annual Report 2015 Important Background, Change, and Development Buriram Sugar Public Co., Ltd. originally Sahathairungruang Sugar Co., Ltd. (1963) (transfer business from Sahathairungruang Sugar factory limited partnership) registered and established on December 20, 1963 with 2 million Baht registered capital to operate sugar factory business in Buriram. The significant events and developments in the past are as follows:
Year Major events
1963 • Sahathairungruang Sugar Co., Ltd. was established, with 2 million Baht registered capital, to produce raw sugar. The crushing capacity at that time was 3,003 Tons Cane per Day (TCD). Major shareholder groups were Mr. Vichien Tangtongwechakit group, Mr. Somchai Siripanumat group, and Mr. Pichai Lianggobgij group.
1980 • The Company increased its registered paid-in capital to 15 million Baht.
1986 • Mr. Somchai Siripanumat group and Mr. Pichai Lianggobgij group sold all shares to Tangtongwechakit family group and changed the Company name to Buriram Sugar Co., Ltd. to conduct raw sugar and white sugar manufacturing business under “Double Keys” brand.
1990 • Received approval to expand the factory 2nd time in October 10, 1990. The capacity increased to 7,700 TCD.
1991-1994 • Continuously, increased its registered paid-in capital to 200 million Baht. • Received approval to increase the capacity to 8,991 TCD without increased equipment horsepower in October 1994
1996 • Established Buriram Sugarcane Research and Development Co., Ltd. (BRD) to support academic aspect and cane management to stabilize agricultural products and improve life quality of farmers. • Received approval to increase the capacity to 12,000 TCD without increased equipment horse power in February 1996
1997 • The Company started facing financial problems due to national economic crisis.
2001 • BRD started using MIS (Management Information System) and GIS (Geographic Information System) to manage operation for the first time in July, 2001
2003 • Established Buriram Sugar Factory Co., Ltd. (BSF) to conduct sugar trade business.
2005 • Established Buriram Energy Co., Ltd. (BEC) for support energy business in the future. • The Company started debt restructuring and entered business rehabilitation plan.
14 Annual Report 2015 Buriram Sugar Public Company Limited
Year Major events
2009 • Acquire approval to increase its capacity from 12,000 TCD to 17,000 TCD in September, 2009. • BRD used drip irrigation system for the first time to regulate appropriate amount of water supply to sugarcane plot of member farmers for maximizing yield. • BRD started using online plot system on October 1, 2009, to survey and monitor sugarcane plot of member farmers.
2010 • Buriram Sugar Co., Ltd. made a future contract to sell its assets and business licenses to Buriram Sugar Factory Co., Ltd. in conformance to the business rehabilitation plan which has affected the Company as follows: - BRR has transferred its employees in department of production, procurement, marketing, and loan to BSF and its employees in department of material procurement, as well as fertilizer, medicine, and equipment loan to BRD for efficiency in managing personnel and experts. The department of operation and support (except department of loan) are under management of the Company. The main reason to firstly transfer personnel to the subsidiaries because the Company has not received approval to transfer the licenses from the Office of the Cane and Sugar Board. Since, period of cane crushed was near, the Company had to transfer personnel first to be able to operate work uninterruptedly. - BRR leaved the business rehabilitation plan
2011 • BRR sold its assets as well as sugar manufacturing and distribution license and factory business license to BSF. • BRR changed its operating business to Holding company while BSF operates sugar manufacturing and distributing business. • BEC have had equipped capacity 9.9 MW and made a trading contract with PEA amounted 8 MW and distributed remaining 1.9 MW to use in the factory and receive Investment Promotion Card no.2003(1)/2554 • Established Buriram Key Brand Fertilizer Co., Ltd. (KBF) to conduct organic fertilizer production and distribution business. • Established Buriram Power Co., Ltd. (BPC) for support expansion of biomass electric energy business due to expansion of amount of cane sent to crush which increase the amount of bagasse correspondingly. BPC have had equipped capacity 9.9 MW and made a trading contract with PEA
2012 • BRR increased its registered paid-in capital to 320 million Baht. • BEC started distributing electricity to PEA in May, 2012. • KBF stated production and distribution of organic fertilizer and had production capacity 30,000 tons per annum • BRR has participated in “New share, proud of province” project, a project of the Securities and Exchange Commission, which allow the Company to gain several privileges, for example, capital market workshop, advise from related organization, plague of honor, etc.
15 Annual Report 2015 Annual Report 2015 Year Major events
2013 • Buriram Sugar Co., Ltd. has converted to Buriram Sugar Public Co., Ltd. • BRR has increased its registered capital to 676,750,000 Baht to support IPO which consists of - Capital increase ordinary shares amounted 180,800,000 shares offered to existing shareholders at specified value price - Capital increase ordinary shares amounted not exceeding 6,767,500 shares offered to directors, executives, and employees at 2.70 Baht per share - Capital increase ordinary shares amounted not exceeding 169,182,500 shares offered to public • BEC participated in “Thai power love Thai energy” broadcast on Thai News Network on July 22, 2013. • BRD had more 872 farmers and own more 8,153.92 Rai of cane growing area in production year 2012/2013 totaled 7,133 farmers and 129,516.73 Rai of cane growing area. BRD finished creating UAV for cane farm survey and initialized flight in January 2013. The UAV operating time is 20 minutes at altitude 300 meters.
2014 • BSF increased its capacity to 17,000 TCD • BEC participated in “Electalon Passion Life” broadcast on Royal Thai Army Television station on August 4, 2014 • BRD had more 2,754 farmers and own more 38,857.92 Rai of cane growing area in production year 2013/2014 totaled 9,877 farmers and 168,374.65 Rai of cane growing area. • BRR has registered in The Stock Exchange of Thailand in November 6, 2014.
2015 • Established Buriram Agro Energy Co., Ltd. (BAE), which is held 99.99 per cent of shareholding by BRR. The objectives are produce and sell ethanol. Recently is yet to start operations. • Established Buriram Power Plus Co., Ltd. (BPP) for producing biomass power. Currently, there has not started business operation because there is asking for license to produce electricity from the Energy Regulatory Commission (ERC). • Established Buriram Super Power Co., Ltd. (BSP) which is held 99.99 per cent of shareholding by BEC for supporting the operation of the energy in the future. Currently, there has not started business operation. • The resolution of Extraordinary General Meeting of Shareholders No. 1/2015 approved the issuance and offering of debentures of 2,000 million baht to expand production capacity to 23,000 cane tons per day and / or general working capital of the Company. • End of the year 2015, there was approved by the Office of the Cane and Sugar Board to set 2 sugar factories in the area of Chamni district, Buriram province and Nonnarai district, Surin Province with production capacity of 20,000 cane tons per day of each factory.
16 Annual Report 2015 Buriram Sugar Public Company Limited
Shareholding Structure of the Company group The Company is holding company consisted of 8 subsidiaries, 5 operational companies and 3 companies that have still not operated, as follows:
Nature of Registered Investment Size of Subsidiary Business regarding Name of Company Capital proportion Nature of Business to the Holding definition of the (%) Company* (Million Baht) SEC Sugar Business Buriram Sugar Factory 1,050.00 99.90 Manufacture and distribute Company that 80.00* Co., Ltd. sugar (core business) conduct core (74.00)** business Byproduct Business Buriram Energy Co., Ltd. 135.60 99.99 Biomass power plant Subsidiary 3.18* (7.00)** Buriram Power Co., Ltd.*** 170.00 99.99 Biomass power plant Subsidiary 3.32* (10.00)** (Started to operate in quarter 2 of year 2015 Buriram Power Plus Co., Ltd.*** 10.00 99.99 Biomass power plant (in Subsidiary N.A.**** process to ask for ERC***** (Currently, there has approval on the energy not started business industry operation) license) Buriram Super Power Co., Ltd.*** 5.00 99.99 Biomass power plant (To Subsidiary N.A.**** support future project (Currently, there has of biomass electricity not started business generation) operation) Key Brand Fertilizer Co., Ltd. 15.00 99.99 Produce and distribute Subsidiary 8.81* organic fertilizer (2.00)** Buriram Agro Energy Co., Ltd. 10.00 99.99 Produce and distribute Subsidiary N.A.**** ethanol (in process to do (Currently, there has EIA report) not started business operation) Support Business Buriram Sugarcane Research and 70.88 99.99 Research and Subsidiary 4.69* Development Co., Ltd. development to improve (7.00)** efficiency of cane growing and caring
17 Annual Report 2015 Annual Report 2015 Remark : * Sizes of Subsidiary to the Holding Company are calculated using revenue of subsidiary’s core business divided by 2015 total revenue instead of categorize by asset size, since the Company believes that revenue method capable to show operating performance and return from investment of subsidiaries more accurately than asset method. ** Sizes of Subsidiary to the Holding Company calculated using asset criteria by divide total asset of subsidiary after deducted connected transaction with total asset of the Holding Company at the end of 2015 *** To hold the shares by Buriram Energy Co., Ltd. **** In the year 2015, the subsidiary has not started business operation. Therefore it is unable to calculate the size of subsidiary for the Holding Company. ***** ERC is Energy Regulatory Commission
Subsidiary Structure of Buriram Sugar Public Company Limited
Buriram Sugar Public Company Limited
99.90% 99.99% 99.99% 99.99% 99.99%
Buriram Sugar Factory Buriram Sugarcane Research Buriram Energy Co., Ltd. Key Brand Fertilizer Buriram Agro Energy Co., Ltd. and Development Co., Ltd (Biomass Power Co., Ltd. Co., Ltd. (Sugar Business) (Promote cane growing) Plant 9.9 MW) (Organic Fertilizer Business) (Ethanol Business)
99.99% 99.99% 99.99%
Buriram Power Co., Ltd. Buriram Power Plus Co., Ltd. Buriram Super Power Co., Ltd. (Biomass Power Plant 9.9MW) (Biomass Power Plant 9.9MW) (Power Plant)
Relationship of major shareholders with the business group -None-
18 Annual Report 2015 Buriram Sugar Public Company Limited
Nature of Business
The Company’s revenue structure Revenue structure of the Company and its subsidiaries are as follows:
2013 2014 2015 Company and Subsidiaries Million Million Million % % % Baht Baht Baht 1. Revenue from sugar and molasses sales 1.1Revenue from domestic BSF 886.64 22.25 908.37 22.97 961.78 22.39 brown sugar sales 1.2 Revenue from international BSF 2,188.11 53.42 2,129.35 53.85 2,110.52 49.13 raw sugar sales 1.3 Revenue from domestic BSF 293.59 7.32 290.32 7.34 358.09 8.33 molasses sales Total revenue from sugar and 3,368.34 82.66 3,328.04 84.17 3,430.39 79.85 molasses sales 2. Revenue from byproduct business 2.1 Revenue from electricity BEC,BPC 132.62 3.31 182.53 4.62 279.00 6.49 sales 2.2 Revenue from fertilizer KBF 275.13 6.86 285.04 7.21 378.30 8.81 sales 2.3 Revenue from other sales BSF,BRD 202.78 6.22 124.71 3.15 138.96 3.23 Total revenue from byproduct 610.53 16.39 592.28 14.98 796.26 18.53 sales 3. Other revenues * BRR,BSF, 29.93 0.75 23.92 0.60 63.26 1.47 BRD,BEC,BPC
4. Revenus (loss) on foreign BSF (24.24) (0.60) 9.79 0.25 6.12 0.14 exchange rate Total revenue 3,984.56 100.00 3,954.03 100.00 4,295.85 100.00
Remark *Other revenues are profit from asset selling, bad debt recovery, interest received, etc.
19 Annual Report 2015 Annual Report 2015 Manufacture and distribute sugar business: Operated by BSF
Natures of products and services BSF was awarded ISO 9001: 2008 certificate in 2001 for quality management, “QMS” (“Quality Management System”) which ensures customer satisfaction, “GMP“ (“Good Manufacturing Practice”), HACCP which help managing hazard analysis and critical control points which certificates for our good quality sugar, and Halal which ensure product permission for Muslims. Sugar produced by BSF can be divided into two categories according to their type and level of purity which are: raw sugar and brown sugar.
A quantity of sugar production is shown below.
2013 2014 2015
Ton % Ton % Ton %
Raw Sugar 142,825.69 75.43 152,947.00 76.00 167,499.00 76.68 Brown Sugar 46,511.23 24.57 48,265.00 24.00 50,916.00 23.32 Total 189,336.92 100.00 201,212.00 100.00 218,415.00 100.00
1. Raw Sugar 2. Brown Sugar Raw sugar is the sugar from the initial Brown sugar is purified sugar without processing production process by boiling and crystallizing its color value; so it becomes gold with the color value sugarcane. Raw sugar has a color value higher than lower than 1,000 ICUMSA. The Company manufactures 1,500 ICUMSA. It is dark brown, and has a high dirt brown sugar with 401-1,000 ICUMSA (the 3rd grade), 0.1% index and a low purity index. Raw sugar crystal tends moisture to sell to distributors in community and nearby to stick together and not crumbly. This type of sugar areas in Buriram, and up-country areas. The variety of cannot be consumed until it is refined or purified, package is provided for customer satisfaction as follows: turning into white sugar or refined sugar. Transfer is (Quality control results) done in bulk without the use of sacks to export. - 1kg per package High polarization sugar is partly purified raw - 50kg per package sugar. High pol sugar has a color value between 1,000 - 1kg per package in 50kg sack and 1,500 ICUMSA. It is yellow blend with brown. It can - 500g per package be consumed without any further process needed. To distribute, BSF packs high polarization sugar in sacks - 500g per package in 25kg sack before export to international market. - 1kg per package in 25kg sack
20 Annual Report 2015 Buriram Sugar Public Company Limited
Aside from sugar from sugar manufacturing, 14,000 tons - Filter cake of sugarcane, which BSF can process to 1,500 tons of Sugarcane filter cake (press mud) is a byproduct from sugar, also provides other byproducts which are 600 sugarcane juice filtration. Composing of various nutrients, tons of molasses, 3,500 tons of bagasse, and 600 tons e.g. protein and other minerals, the layer of filter cake of filter cake. The physical characteristics and utility of protects the soil against erosion, adjusts pH, improves byproducts are as follows: water retention, ameliorates physical and biological soil properties, and is an important source of plant nutrients. Filter cake can also be used as animal food or biochemical - Molasses gas production. Byproduct of sugar production, molasses is dark and sweet syrup left over from the centrifuge process. Most of molasses composition is uncrystallised sucrose. BSF currently distributes its filter cake to Key A ton of sugarcane processed in sugar factories provides Brand Fertilizer Co., Ltd. (KBF) which is one of the 40-45 kilograms of molasses as a byproduct. subsidiary companies of BRR. KBF then use the filter cake as a main component to produce organic fertilizer and sell it to BRD to support farmers in the plantation Molasses can be used as food and beverage area by improving soil fertility and increasing amount of production material like liquor, yeast, MSG, vinegar and sugarcane per area. sauce, including organic fertilizer and ethanol production as well. Moreover, steam from sugar production can be utilized to propel machineries and generate electricity. - Bagasses BSF has an electric generation capacity of 12 MW and Bagasse is the remained fibrous residues after currently generates 10 MW for usage in the sugar factory. sugarcane stalks are crushed to extract their juice. It The additional generation helps reduce electricity cost contains carbon, hydrogen, oxygen, and nitrogen and can and manage existed resource sustainably. be used as an effective biofuel for electricity generation after being dry in the sun. Aside from biofuel, it can also be used for making paper, fiber board, particle board, or cellulose fibers production.
Currently, Buriram Energy Co., Ltd. (BEC) and Buriram Power Co., Ltd. (BPC) are both of subsidiary companies of BRR, conducts biomass electricity generation business with capacity up to 9.9 megawatts of each plant, using bagasse as a biofuel. Surplus electricity amount 8 megawatts of each plant are sold to Provincial Electricity Authority and remaining 1.9 megawatts of each plant are supplied to the factory. The remaining bagasse is sold to other biomass power plants.
21 Annual Report 2015 Annual Report 2015 Market and Competition - Have an excellent understanding of cane types and varieties suitable for plantation area and appropriate Competitive Strategy time to harvest cane, for example, cane harvested at Accumulating experience and expertise more the end of monsoon season that are highest in quantity than 50 years, the Company has developed its sugar and quality is planted at the end of October to January. business consistently via inventive activities such as Proper age of the cane is 12 to 13 months. While cane new research and development on sugarcane variety, harvested at the beginning of monsoon season has tool and machinery used in sugar production business, disadvantages that are: low products and quality, high sugarcane cultivation extension, and sugarcane plantation cost, lots of weeds, and risk from flood. And stump cane management system. The execution ensures that the which is cane that grow from cut cane cost lower and may Company operates its business in accordance with provide more or less products compare to new-grown its own vision which is “Excellence in knowledge and cane depended on caring. management to ensure raw materials security and better living conditions for cane growers.”. The competitive - Improve soil and fertilizer constantly via strategies that the Company has utilized are as follows: collaboration with Suranaree University of Technology, Nakhon Ratchasima to develop fertilizer composition that suitable for every sugarcane plot which will increase • Suitability of sugarcane plantation area products and reduce cost of farmers. From statistical data of sugarcane growing area in 2015/ 2016, the northeastern region of Thailand produced the highest quantity of sugarcane to factories thanks to rainfall and - Control spread of disease and insect by natural climate suitable for cane growing. From 2015/2016 means, for example, breeding Trichogrammas to control report, Buriram sugarcane growing area covered 200,941 stem borers, breeding green fungus to control stem boring Rai (ranked 8th compared to other provinces in the grubs, and etc. to ensure safety of raw material. northeastern region) and produced cane 11.09 tons/rai. - Have cane growing promotion department to ensure required quantity and quality of cane. • Strength of Research and Development Cane growing will be supported closely by promoters (Operated by Buriram Sugarcane Research and dispatched to every area totaled 10 branch offices. Each Development Co., Ltd.) promoter is responsible for 30,000-50,000 tons of cane or From the notion “Sugar is made in farm. The factory is 200-250 farmers by using online information technology, only a cane extractor”; hence Buriram Sugarcane Research geographic information system, and GPS to survey and & Development Co., Ltd. or BRD which is responsible manage cane growing area systematically. for promotion of sugarcane growing is essential for the Company’s business. Distinctive points of BRD are: - Promote use of water system to increase cane products which results in increasing time of cane growing outside ordinary season as well as distribution of fertilizer via the water system. By utilizing the system, the production can increase from normally 10-20 tons/rai to 30-40 tons/rai.
22 Annual Report 2015 Buriram Sugar Public Company Limited
- Organize workshop to create understanding of appropriate production technology and divide farmers by success level of cane growing to simplify development.
- Arrange study trip both domestic and international to develop and apply experience suitable for each farmer’s farm.
- Utilize strong farmer group system to ensure planning, controlling, and monitoring cane management systematically and timely with suitable equipments and sufficient services.
• Raw material procurement capability and quality material Because the Company recognizes the importance of cane farmers, the Company concentrates on the academic development and loan for cane farmers which are well-received. The participated cane farmers increase gradually every year from 5,600 farmers in 2010 to 12,500 farmers in 2015 and cane growing area is increase from 118,000 Rai in 2010 to 200,000 Rai in 2015. Most of cane farmers are skillful in cane growing, proficient in occupation, and ready to develop themselves together with the factory which resulted in an increase of an amount of sugarcane crushed. The Company manages its sugarcane procurement via contract farming. By providing fund, fertilizer, chemical, sugarcane variety, or other agricultural machinery, the Company is able to secure future sugarcane ownership in 50 kilometers area around the factory before cane crushing season. Additionally, the Company aims to keep good relationship with farmers by sending 10 teams of agricultural extension officers to make a field research at each plot, recommend suitable sugarcane variety, manage soil and water condition, and help take care of each cultivation period from growing to harvest and distribution. The actions make certain that farmers can produce quality sugarcane, gain more crop yield, receive steady revenue, and become respectable alliance with the Company. Through indicated management, BSF has never faced scarcity of sugarcane in cane crushing season. Moreover, zoning among sugar factories in the areas of Buriram, Surin, and Nakhon Ratchasima has been established to prevent purchasing competition between the sugar factories.
23 Annual Report 2015 Annual Report 2015 Table shown cane growing area, amount of cane crushed, and number of contractor which receive support
2015/16 2010/11 2011/12 2012/13 2013/14 2014/15 (estimated) Growing area (Rai) 118,000 107,900 129,000 168,000 176,000 189,000 Amount of Cane crushed 1.58 1.48 1.75 1.77 1.95 2.20 (million ton) Number of contractor 5,600 6,000 9,000 15,000 15,500 16,000 (person)
• Production efficiency and sweet quality The Company places importance from area selection, cane variety preparation, soil analysis, growing and caring, and quality harvest (proper age, variety, and freshness). The caring of cane from receiving support until growth cause farmer to be able to produce high quality cane. BSF is capable of producing sugar more efficiently compared to industry average as shown below:
Propotion of sugar per ton cane (kg per 1 ton cane) 2015/16 2010/11 2011/12 2012/13 2013/14 2014/15 (estimated) BSF 101.91 109.55 105.00 117.66 118.60 119.00 Industry average 101.17 101.33 100.28 100.93 106.64 N.A.
Aside from fine cane, the Company also focuses on improving efficiency of machines which are controlled by computer system, from transport cane for crushing to sugar packing. The Company also inspects quality of each process and appoints international food quality inspection firms to inspect quality of sugar in the last process before distribution. Additionally, cumulative experience and expertise more than 50 years make the Company capable to produce high-class sugar.
24 Annual Report 2015 Buriram Sugar Public Company Limited
• Resourceful sugarcane farm management • Create satisfaction and maintain good BRD use online information system and satellite system relationship with customers to survey cane growing area. The information can be The Company places importance on customer satisfaction accessed through mobile phone or website including via surveying sugar market in each area, studying all cane growing activities and plot management, from popularity of each sugar brand, researching customer plot area measuring to queueing which make promotion behavior and demand in each area, being open for work correct and fast as well as receive fine cane. The suggestion and complain, as well as provide satisfaction Company’s promoters also monitor and solve farmers’ questionnaire every 3 months to improve, amend, and problem to help farmers gain more product at required develop products and services continuously to ensure quality. that customers can have confidence and trust in the Company’s efficient production processes and services.
Nature of customers and distribution channel BSF distributes sugar to both domestic and international customers, brown sugar for domestic distribution and primarily raw sugar for international market. In the previous 4 years, proportions of revenues from domestic and international market are as follows:
Revenues from Domestic and International market
2013 2014 2015 Million Million Million % % % Baht Baht Baht Domestic Brown sugar 886.64 28.84 908.37 29.90 961.78 31.30 International Raw sugar 2,188.11 71.16 2,129.35 70.10 2,110.52 68.70 total 3,074.75 100.00 3,037.72 100.00 3,072.30 100.00
25 Annual Report 2015 Annual Report 2015 Target customer and distribution channel
1. Domestic sales (Quota A) BSF distributes brown sugar to domestic customers via distributor or sells directly to consumers in local community and nearby areas in Buriram and other upcountry province under “Double Key” brand. Buyers obtain products in front of the factory.
Distributors are likely to buy 50kg sugar from BSF to resell to consumers. Since this sugar distribution channel is very competitive, BSF’s sales department monitors sugar demand constantly, conducts customer satisfaction surveys every 3 months, and initiate sales promotion to maintain market share for this customer group. Distributor may request product 3-4 days in advance or receive orders from customer daily. Thanks to strong relationship between BSF and its customers, current customers are long-time customers who have confidence in quality and on-time delivery of the products. To expand sales and customer base, BSF try to reach new customers who have potential to efficiently obtain and distribute products in each area via market survey in various provinces to seek major distributors continuously.
Following table shown ratio of domestic distribution channels
2013 2014 2015 Million Million Million % % % Baht Baht Baht Distributor 886.64 100.00 908.37 100.00 961.78 100.00 Total revenue 886.64 100.00 908.37 100.00 961.78 100.00 2. International sugar trade (Quota B and C) In sugar export, Quota B is the raw sugar in the amount that The Office of the Cane and Sugar Board decides and exports via Thai Cane and Sugar Co., Ltd. Quota C is the remaining sugar from Quota A and B by which BSF can export through seven authorized exporting companies. The Company associated with other 19 sugar factories found The Thai Sugar Trading Co., Ltd. to be a representative for sugar export of BSF. The Thai Sugar Trading Co., Ltd. has responsibilities as follows:
- The Thai Sugar Trading Co., Ltd. delivers products, provided necessary documents for export and Customs procedures, as well as collects money from BSF’s customer.
- The Thai Sugar Trading Co., Ltd. signs loan contract for BSF export with a commercial bank on behalf of The Thai Sugar Trading Co., Ltd. for financial support.
- The Thai Sugar Trading Co., Ltd. will transfer amount of money received from export loan with the commercial bank to BSF. BSF then issues promissory note to The Thai Sugar Trading Co., Ltd. as evidence on transaction. The interest rate that BSF pay to The Thai Sugar Trading Co., Ltd. in the promissory note is same as interest rate that The Thai Sugar Trading Co., Ltd. pay to the commercial bank.
26 Annual Report 2015 Buriram Sugar Public Company Limited
For international trading of Quota C, BSF will make a contract for each transaction. A contract last approximately 3 months and specify a quantity of sugar required to deliver without specific price. The price of products delivered will be set later based on world market price at delivering date. Most customers of BSF are large international wholesaler like Bunge Louis Dreyfus Sucden, Olam Wilmar, and etc. who have good financial position. The inspection of customers’ financial position will be performed through The Thai Sugar Trading Co., Ltd.
Pricing policy
1.Domestic sales (Quota A) Two Thai ministries are responsible for determining domestic sugar price. Ministry of Industry by Office of The Cane and Sugar Board set sugar price for selling at factories’ front while Ministry of Commerce by Central Board on Prices of Goods and Services set sugar price for retail. The announcement of Central Board on Prices of Goods and Services on January 26, 2015 determine sugar price for each delivering place and selling area as follows:
1.1 Wholesale price (including sac) delivered at factory every area of Thailand
Refined sugar per sac (net sugar quantity 50kg) 1,070.00 Baht White sugar grade 1 and 2 per sac 1,016.50 Baht (net sugar quantity 50kg) White sugar grade 3 per sac (net sugar quantity 50kg) 1,016.50 Baht
1.2 Wholesale price (including sac and distributution since 6 sacs or 300 kgs.) delivered at wholesellers’ store every area of Thailand
Refined sugar per sac (net sugar quantity 50kg) 1,104.75 Baht White sugar grade 1 and 2 per sac 1,051.25 Baht (net sugar quantity 50kg) White sugar grade 3 per sac (net sugar quantity 50kg) 1,038.00 Baht
1.3 Retail price in Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, and Samut Sakhon
Refined sugar per kg (net sugar quantity 1kg) 22.85 Baht White sugar grade 1 and 2 per kg 21.85 Baht (net sugar quantity 1kg) White sugar grade 3 (brown sugar) per kg (net sugar 21.35 Baht quantity 1kg
Source : Office of The Cane and Sugar Board 27 Annual Report 2015 Annual Report 2015 If there’s separation of sugar to 1kg package, price of the package can not exceed 0.70 Baht per kg and 0.75 Baht per kg for wholesale and retail correspondingly, for example, selling price of refined sugar in 1kg package in Bangkok equal to 22.85+0.75 = 23.60 Baht and 23.50 Baht in other areas.
2. International sales (Quota B and C) Selling price of Quota B International sugar sales volume of Quota B is determined by The Office of the Cane and Sugar Board and Thai Cane and Sugar Co., Ltd. is the organization that decide export sugar price. The Company also sets policy on sales proportion, selling price, and exchange rate approximated to Thai Cane and Sugar Co., Ltd. to reduce risk from fluctuating of sugar price and exchange rate. Selling price of Quota C The Company set policy on international sugar selling price based on world market, for example, New York Sugar No.11 future price and London Sugar No.5 future price.
Sugar Industry’s Market Situation 1) Overall picture of World’s Sugar Industry
1.1) World Sugar Supply and Demand
Unit: Million Ton1 World Sugar’s Production Consumption and Stock (October – September) 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/162 Production 166.520 151.615 158.451 165.201 174.575 184.098 181.347 181.729 176.903 Consumption 161.042 161.968 162.567 162.774 168.425 172.461 175.997 178.851 181.658 Stock 70.517 71.533 60.048 55.951 57.130 63.684 72.787 77.491 78.444 Source: World Sugar Balances 2006-07 – 2015/16 F.O. Licth’s International Sugar and Sweetener Report, 05.02.2016 Remarks: 1. Metric ton raw value 2. Estimated
2014/15 crop year was volatile due to the change of weather condition. It had an effect on sugar production all over the world. Meanwhile, many research offices announced that the world is starting to enter deficit era where demand of sugar is higher than supply of around 500,000 tons. It is also predicted that the trend will be higher in 2015/2016 crop year. However, the amount of stock in countries with high consumption of sugar such as China and India is still in a high level. Therefore, the price of sugar has not become higher.
28 Annual Report 2015 Buriram Sugar Public Company Limited
1.2) World Sugar Industry Unit: Million Ton1 Sugar Production (October - September) Big Players 2011/12 2012/13 2013/14 2014/15 2015/162 Brazil 35.2 41.1 39.5 34.7 38.8 India 28.6 27.3 26.5 29.0 26.0 China 12.5 14.2 14.4 11.4 9.2 European Union (EU) 19.0 17.4 17.1 19.0 14.9 USA 7.7 8.1 7.6 7.8 8.1 Thai 10.5 10.3 11.6 11.3 10.3 Australia 3.6 5.0 4.0 5.1 4.8 Source: 1. World Sugar Balances 2006-07 – 2015/16 F.O. Licth’s International Sugar and Sweetener Report, 05.02.2016 2. India Sugar Millers Association (ISMA) 3. Sucden 4. Office of the Cane and Sugar Board, Ministry of Industry Thailand Remark: 1. Metric ton raw value 2. Estimated
Important production countries have less sugar production because of the effect from El Nino phenomenon, especially in India and China. It is, therefore, expected that in 2016, the world will short of sugar at approximately 4 – 5 million tons. In China’s alone, sugar production significantly dropped due to the problems of drought and decreasing cultivated area.
1.3) World’s Key Sugar Consumers Unit: Million Ton1 Consumption (October – September) Key Sugar Consumers 2011/12 2012/13 2013/14 2014/15 2015/162 India 24.5 25.3 26.2 27.2 27.7 European – Union (EU) 19.0 19.0 19.2 19.3 19.3 China 15.3 15.7 16.1 16.6 17.1 Brazil 12.6 12.7 12.6 12.4 12.4 USA 10.2 10.6 11.1 10.9 10.9 Indonesia 5.6 5.9 6.3 6.5 6.7 Source: 1. World Sugar Balances 2006-07 – 2015/16 F.O. Licth’s International Sugar and Sweetener Report, 05.02.2016 2. Indian Sugar Mills Association (ISMA) 3. Office of the Cane and Sugar Board, Ministry of Industry Thailand Remarks: 1. Metric ton raw value 2. Estimated 29 Annual Report 2015 Annual Report 2015 Due to the growing rates of economy and population, India and China are countries that have very high sugar consumption ratio. The trend of sugar consumption in the world has been continuously growing at 2% per year. Asia continent is the area that has the highest shortage. In the present time, the world consumes around 180 million tons of sugar a yearly and it is predicted that the rate will increase to 200 million tons in the next 3 – 4 years. Asia and Africa have high level of growth while America and Europe has a stable growth. This is, therefore, an important opportunity for Thailand as Asia’s No. 1 of sugar exporter to play a role as a sugar manufacturer.
1.4) World’s Key Sugar Exporters Unit: Million Ton1 Exports (October – September) Key Sugar Exporter 2011/12 2012/13 2013/14 2014/15 2015/162 Brazil 22 29.6 24.7 23.7 25.4 Thai 7.2 7 7.3 8 7.9 Australia 2.6 3.1 3.2 3.6 3.6 Guatemala 1.7 2 1.8 2.5 2.2 India 3.8 1 2.7 2.6 2 Other Countries 23.1 24.1 24.7 24.6 24.9 Source: 1. World Sugar Balances 2006-07 – 2015/16 F.O. Licth’s International Sugar and Sweetener Report, 05.02.2016 2. Sucden 3. Office of the Cane and Sugar Board, Ministry of Industry Thailand Remarks: 1. Metric ton raw value 2. Estimated
Although Thai’s sugar export volume is 3 times behind Brazil, Thailand’s role in the world’s sugar market is increasingly significant according to the rising amount of exported sugar. However, the effect of climate change especially El Nino phenomenon is another important factor that affects the balance of the world’s sugar.
Our company in 2015 has the total numbers of sugar export of 160,000 tons. The 5 most important markets are South Korea, Indonesia, Taiwan, Mozambique and China.
30 Annual Report 2015 Buriram Sugar Public Company Limited
1.5) World Important Sugar Importers Unit: Million Ton1 Imports (October – September) Sugar Importers 2011/12 2012/13 2013/14 2014/15 2015/162 Indonesia 2.8 4.2 3.8 3.1 4.2 USA 3.3 2.9 3.2 3.3 2.9 China 4.3 3.7 4 5 4.5 United Arab Emirate 2.1 2.2 2.5 1.9 2.2 Malaysia 1.9 1.9 2 2 2 Others 46.4 49.4 48.3 47.7 48.4
Source: 1. World Sugar Balances 2006-07 – 2015/16 F.O. Licth’s International Sugar and Sweetener Report, 05.02.2016 2. Office of the Cane and Sugar Board, Ministry of Industry Thailand Remarks: 1. Metric Ton Raw Value 2. Estimated
From the effect of climate change and the entry into force of ASEAN Economic Community (AEC), as well as the enforcement of commitments under ASEAN Trade in Goods Agreement (ATIGA), Thailand stands to gain from the opening up of market access for sugar.
In 2016, Indonesia’s sugar imported tariff is lower for ASEAN sugar origin, therefore Thai sugar has comparative advantage over other competitors outside the group.
Analysis 2015 had high level of fluctuation including a drop of world sugar price to the lowest point in 8 years on 24th August 2015 at the rate of 10.39 cent/pound and the price gradually rose to 15.58 cent/pound on 3rd December 2015. The main reasons that affect price movement consist of:
1) It was the first year that the world's sugar production is lower than demand after 5 consecutive years of world’s sugar surplus. However, sugar stock in some manufacturing countries and major importers is still high, which makes world sugar price still fluctuated by the role of funds and speculators.
2) Brazil economy, which is the world’s number 1 sugar manufacturer and exporter, was declining recently. The value of Real was down from 2.55 Real per one US dollar to the level of 4.20 Real per one US dollar in late September, 2015, more than 50% weakness, making Brazilian sugar more competitive over sugar from other origins.
31 Annual Report 2015 Annual Report 2015
Source: Bloomberg Business
3) The crude price in the world market has fallen continuously pressing the price of other commodities. 4) The recession or downturn of China economy is affecting the world economy. 5) The changes of the Earth's climate, especially the El Nino phenomenon, directly affect to all major sugar-producing countries like Brazil, China, India and Thailand. 6) The roles of the funds and the speculators. 7) Change of the economic policy of the major countries.
2) Thailand and World Sugar Market Thailand has long been Asia and ASEAN’s number one sugar exporter. On the world scale, Thailand is second after Brazil. With its geographical location in Asia, the world biggest deficit region of around 10 million tons a year, Thailand has some advantage over its main rival, Brazil and Australia. Nonetheless, it has been forecasted that in 2020 gab between demand and supply will reach 15 million tons. This provides opportunity for Thai sugar exporters to fulfill the rising demand
Although there are a lot of opportunities to produce sugar to meet the demand in Asia’s market, Thailand still encounters many challenges such as the climate change, the fluctuation of the price that is effected by different factors, the shortage of irrigation system and the lack of research, etc.
32 Annual Report 2015 Buriram Sugar Public Company Limited
2.1) Thailand’s Sugar Export Destinations (January -December) Unit: Ton Export Volume Countries 2014 2015 2016 2015 Indonesia 1,898,087 1,781,115 1,746,594 1,861,232 Japan 847,580 754,252 752,211 634,719 Cambodia 599,571 651,578 546,950 490,904 China 965,491 262,678 704,382 876,871 Malaysia 448,081 326,163 676,875 497,805 Others 2,723,936 2,785,941 2,894563 3,604,974 Total 7,482,746 6,561,727 7,321,575 7,966,505 Source: Office of the Cane and Sugar Board, Ministry of Industry Thailand 2.2 ) Sugar Price Record New York No. 11 Sugar Price on December 2014 – December 2015 Unit: Cent/Pond
Source: F.O. Lichts’ International Sugar & Sweetener Report, January 5, 2016, Vol. 148 No. 1
On February 2, 2011, New York No. 11 sugar price hit 36 cent/pound, the highest record in decade. Since the price hike, sugar producing nations had expanded their capacities and cane growers had also increased their cane acreages leading to big global surplus. As a result, the price gradually fall and touched 14 cent/pound in late 2014.
However, several research houses have recently predicted that sugar demand is to set to exceed supply in 2016. World sugar will enter deficit period from next year and price is expected to rise accordingly.
33 Annual Report 2015 Annual Report 2015 The sugar price was decreased as a result of for smooth transition to ASEAN Economic Community the expansion of sugar cane cultivation area and sugar (AEC) in early 2016. As a more comprehensive legal production capacity of the country's major manufacturers instrument, ATIGA’s commitments and tariffs reduction that cause oversupply in the market. While the demand framework are stricter than CEPT in order to prevent of sugar consumption growth only 2% per year, however, members, particularly the six original members from during the year 2016, several research houses have evade their obligations, while providing some flexibility recently predicted that sugar demand is to set to exceed for new members or CLMV. supply and World sugar will enter deficit period from next year and price is expected to rise accordingly. After The opening up of markets under AFTA then the sugar price decreased to the level of 10.13 cents per ATIGA for Thailand, if succeed , would greatly benefit pound during the month of August 2015, it again changed Thai cane growers and sugar industry as a whole rather the price up to 15.24 cents per pound in December 2015 than harmful. The objective of ASEAN trade liberalization is to create single production base for Asia in parallel 2.3) Thai Sugar Industry Commitments under FTAs with the building of social and cultural harmony among As world No. 2 sugar exporter and its geographical members. If ASEAN become a production base for food, proximity to Asia, the biggest sugar consuming region beverage and other sugar related businesses, it will with ap- proximately 10 million tons of sugar demand strengthen regional cane and sugar industry. Besides, over supply, Thailand has some comparative advantages extension businesses include bio-energy, bio-chemical over its main rivals, namely Brazil and Australia. Besides, and bio-plastic would add values and attract investment the entry into force of several bilateral, regional and to ASEAN. multilateral free trade agreements, the Thai government has committed with others to liberalize as well as Under the obligation of ASEAN trade liberalization, enhance its economic sector competitiveness, is the main cane growers and sugar mills have to enhance their mechanism for sugar markets expansion per se. Important efficiency to ensure their competitiveness. Cane growers FTAs include need to understand the changing business environment in the region. They should focus their effort on cane 2.3.1) ASEAN Economic Community (AEC) growing development to reduce cost and increase yield in Established in 1992 by ASEAN’s head of states, comparison to high standard sugar exporting nations-Brazil ASEAN Free Trade Agreement (AFTA) was formed to and Australia. Sugar mills have to upgrade their production enhance ASEAN members’ competitive advantage as standard to match their rivals in parallel with the effort an integrated production and market base. The main to preserve national resources and environment. They objective is to liberalize trade through the elimination both have to monitor the movement of sugar market of intra-regional tariffs and non-tariff barriers (NTBs) and and the progress of technology. the restructuring of customs duty to facilitate intra-ASEAN trade using Common Effective Preferential Tariff (CEPT) Challenging factor for Thai’s cane and sugar Agreement as a tool. industry is the need to restructure its sugar regime especially the domestic quota and price management In 2007, CEPT was reviewed and finally changed in consistent with obligation under ATIGA. However, to ASEAN Trade in Goods Agreement (ATIGA) which any changing policy must address the benefits of all entered into force in May 2014 with the aim to cover concerned parties-consumers, cane growers and sugar every aspect of trade issues to prepare ASEAN members mills.
34 Annual Report 2015 Buriram Sugar Public Company Limited
Cane growers and sugar mills may also have to take risk from the fluctuation of world sugar price despite the fact that the chance of low sugar price barely exists due to Asian economic growth and strong sugar consumption demand. ASEAN Economic Community poses both opportunity and challenge to Thai’s cane and sugar industry. As Asia’s No. 1 and World No. 2 sugar exporter, the industry has to adjust to change to stay ahead of its competitors.
2.3.2) ASEAN-South Korea Free Trade Agreement The reduction of raw sugar tariffs under ASEAN-South Korea FTA benefits Thailand the most as South Korea is one of Asia major raw sugar importers. Each year, South Korea imports around 1.6 million tons of raw sugar and 500-20,000 tons of white sugar In the year 2016, the Republic of Korea imported sugar from Thailand with the total of 527,895 tons. The tax reduction for the raw sugar item will benefit Thailand over other competitor countries.
2.4) Domestic Sugar Industry Domestic sugar industry was governed by Cane and Sugar ACT 1984, the Cane and Sugar Board determines the quantity of sugar for the domestic distributor. In each year, they will estimate the domestic consumption and will regulate a quota for every plant to produce and distribute. Meanwhile, sugar retail price is to be determined by Ministry of Commerce according to Price of Goods and Services Act 1992. In 2014/15 crushing season, Thailand has 51 sugar mills with crushing capacity of 110 million tons/year. Over 11.3 million tons of sugar were produced during the crushing season starting from November to April.
Thai Sugar Groups and Companies
Group No. of Factory Sugar Production (Ton) Share (%) Mitr Phol 6 2,304,306 20.32 Thai Roong Ruang 7 1,595,595 14.07 KTIS 3 991,570 8.74 KSL 5 919,648 8.11 Wangkanai 4 565,676 4.99 Korach 2 645,006 5.69 Banpong 2 438,302 3.87 Erawan 2 641,393 5.66 Kumphawapi 2 407,521 3.59 Chonburi 4 539,306 4.76 Thai Sugar Mill 2 328,395 2.90 Mitr Kasetr Industry 2 250,458 2.21 BRR 1 231,408 2.04 Other 9 1,480,495 13.06 Total 51 11,339,085 100 Source: Thai Sugar Millers Corporation Limited (TSMC)
35 Annual Report 2015 Annual Report 2015 By-Product Business Biomass Power Plant Business operated by BEC, BPC The quality of the products and services – Biomass Power Plant Business Operated by BEC, BPC Buriram Energy Company Limited (BEC) BEC has operated its business by producing biomass power, and the Company has installed the production capacity of 9.9 MW by using the bagasse as its fundamental fuel and can also use a cane leaf, chopped woods, and rice husk as the raw materials to produce the electricity. Besides, the Company also sells the electricity to the Provincial Electricity Authority (PEA) at a number of 8 MW and uses a 1.9 MW within the plant. The power plant is located in a nearby Buriram Sugar Factory in order that it is easy to bring the bagasse from the sugar production process to use as the fuel and comfortable to sell the electricity and steam to BSF.
Buriram Power Company Limited (BPC) BPC registered and operated its company in the year 2011. At present, the BEC has its authorized capital of 170 million baht. From this, the Company holds shares at 99.99% and runs the biomass power plant business. The Company claims or determines its capacity at 9.9 MW, and the Company can also use the cane leaves, chopped woods and rice husk as its raw materials in the electricity production process. That the power factory is located in the nearby location of the BEC Power Plant and Buriram Sugar Factory is to facilitate the bagasse transportation, which is the main fuel for producing the electricity. Another time, the Company can also sell its electricity to the Provincial Electricity Authority (PEA). With this, the BPC signs a contract of sales in buying the electricity with PEA. By this, PEA agrees to buy the electricity with the quantity of 8 MW. Decisively, BPC has begun to sell the electricity to PEA in April 2015. The details of the contract of sales that BEC and BPC did sign with the PEA are as follows:
Company Buriram Energy Company Limited Burriam Power Company Limited
A contract No. VSPP-PEA 044/2011 VSPP-PEA 008/2013 A date of singing the December 2011 4 April 2013 contract Capacity The 8 megawatts of the maximum power quantity at 22,000 volts voltage level. Period of Time 5 years and 5 years at a time continuously and automatically. 20 years from the date of the start of commercial supplier. Price The electricity rates sold to PEA are at the pressure level of 11-33 The power rates sold to the EGAT are KVs in compliance with the declaration of the Electricity Generating in compliance with the statement of Authority of Thailand combined with the Fuel Adjustment Charge the Corporate Governance Committee on (at the given time) (Ft), and it is expected to increase the buying Energy on the issues: buying the renewable power (Adder) at 0.3 baht per KW per hour for a period of 7 years power (the sun power is not included) in the from the date of the purchase and sale the electricity to the Electric era of changing from Adder to Feed-in Tariff Generating Authority of Thailand. (FiT).
In addition, the Company has established two subsidiaries to run the biomass power production to support the expansion of the sugar business and the increase of the bagasse. In summary, the details are as follows:
36 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Power Plus Company Limited (“BPP”) The Company has been registered in the year 2015 with its authorized capital of 10,000,000 baht with the full payment. Officially, the BEC holds shares at 99.99%. This company is established to implement biomass power production business by using bagasse as the primary fuel. Additionally, this is the 3rd power plant of the group of the by-products production. The Company, at present, does not yet operate its business because it is under the process asking for the permission from The REGULATORY GUIDELINES OF THE ENERGY REGULATORY COMMISSION (RGERC).
Buriram Superpower Company Limited (“BSP”) BSP is registered in the year 2015 with the authorized capital of 5,000,000 baht with its full payment. The BEC holds shares at 99.99%. This company is established to implement biomass power production business by using bagasse as the primary fuel. Also, this is the 4th power plant of the business circulation of the by-products production. The main objective of this running this company is to accommodate the growth of the biomass power plant business of the Company. At present, the business operation has not been started yet.
The Marketing and the Competition Situation
The Competition Strategies With the lower production costs and efficient resource management, it makes the BEC and the BPC be able to produce the biomass power by using the bagasse, which is a by-product of the sugar production of the BSF. Consequently, one part of the power products manufactured from these two companies will be returned to use in the sugar mills, and another part will be sold to the Provincial Electricity Authority of Thailand (EGAT). This is one of the ways to benefit the bagasse, which is a by-product of BSF, and it is regarded as the effective resource management. What’s more, there is no payment for the freight of buying those raw materials from BSF. Another thing is that the power gained from the production process can be returned to use in the sugar factory.
The Customer Features and Trading Channels BEC and BPC company produces and sells the biomass power with an installed capacity total 0f 7.8 megawatts. From this, the 16 megawatts of the electricity will be sold to the only one customer, namely, the Provincial Electricity Authority, following the contrast of sales dated on December 30, 2011, and April 4, 2013, while the remaining 3.8 megawatts will be stored for use within the Company group.
The Pricing Policy The BEC and BPC have sold the electricity to the EGA following the declared price from the policy of the Small Power Plant Project under the price issue of the power sales.
37 Annual Report 2015 Annual Report 2015 The Industry Situation and Competition The Ministry of Energy in cooperation with the Electricity Generating Authority of Thailand has considered the development plan of the country's electricity capacity of Thailand B.E. 2558-2579 (2015 – 2036) (PDP2015 plan) with an emphasis on enhancing the stability of the electrical system with the distribution of the fuel to produce electricity. In addition, it is to decrease reliance on the natural gas, increase the proportion of electricity generated from coal, a clean technology, supply more electricity from other countries, and upsurge the proportion of electricity produced from renewable energy sources; this also includes the development of power transmission systems, and power distribution systems to support the renewable energy development and enter the ASEAN Economic Community (AEC).
The Production Data and the Power Consuming of Thailand The Power Development Plan of Thailand in the years B.E. 2558-2579 (PDP2015) has a brief summary as follows: At the end of the plans and at the end of B.E. 2579, there will be a total net capacity of electricity by 70,335 megawatts with the power capacity at the end of the year 2014 equaling to 37,612 MW combined with the new power plant capacity of the total 57,459 MW. Also, there are some expiration power plants (stopped operating) during the years 2015 – 2036, which means there will be 24,736 megawatts disappeared from the system. These are the power capacities during the year 2015 – 2036: - Electric Capacity at December 2014 37,612 megawatts - New Electric Capacity during 2015 – 2036 57,459 megawatts - Electrical Capacity Detaching from the system during 2015 – 2036 -24,736 megawatts - Total of Electric Capacity at the end of the year 2036 70,335 megawatts
Electricity Demand Forecasting The maximum power demand of the running system in January occurred on January 20, 2016, at 19.00 p.m., which was equal to 25,312.30 MW. It was 410.00 MW, or 1.59% decrease, comparing to the last month.
Reference: Information Technology and Organization Communications Section, Electricity Generating Authority (EGA)
38 Annual Report 2015 Buriram Sugar Public Company Limited
From the preparation of the electricity demand forecasts of the country, the government officer has estimated the likely long-term gross domestic product (GDP) 2014-2036, which is in the average of 3.94% per year. For this estimation, the average rate of the population increase, which is in 0.03% per year, is engaged, and also the Energy Efficiency Development Plan (EEDP) has been applied with the aim to reduce the power consumption in the year 2036, which is equal to 89,672 million units. The officer also considers the framework of the Alternative Energy Development Plan (AEDP) for the manufacturing sector in the year 2036, which will have the capacity of electricity from renewable energy sources into the system with the number of 19,634.4 MW.
For the electricity demand forecast, which was used in the preparation of the PDP2015 plan, when the summation of the energy conservation plan, the renewable energy development plan, and the alternative energy has been counted, during the years 2014-2036, the total net electric power demand of the country will upsurge to the rate of 2.67% per year. In the year 2036, the total net electricity power demand (Energy) and the total maximum power (Peak) of the country will approximately be at 326,119 million units and 49,655 and MW.
PDP2010 Rev3 PDP2015 Changing rate (%) Maximum Maximum Maximum B.E. Electric Energy Electric Energy Electric Energy Electric Energy Electric Energy Electric Energy (Million Units) (Million Units) (Million Units) (Megawatts) (Megawatts) (Megawatts) 2559 31,809 210,619 30,218 197,891 -1,591 -12,728 2569 46,003 304,548 40,791 267,629 -5,212 -36,919 2573 52,256 346,767 44,424 291,519 -7,832 -55,248 2579 - - 49,655 326,119 - -
Reference: The Power Development Plan of Thailand, B.E. 2558 – 2579 (2015 – 2036) (PDP2015)
In the past, both the government and the relevant departments have given the priority to the development of the renewable energy more seriously. Consequently, the government encourage the use of the domestic resources effectively, especially the renewable energy because it is the clean energy and can be used continuously. What’s more, all of the raw materials used in the electric production is of low-cost. Also supporting the renewable energy can reduce the reliance on electricity from commercial power, which can reduce the costs of importing fuel from abroad, reduce the environmental impact, and help lessen the financial burden of the State investment in the electricity production and distribution system.
Supply of Raw Materials. Obviously, BEC and BPC employs the bagasse as the fuel in the electric production. Currently, bagasse is a by-product of sugar production of BSF, and it has brought into the production process, which is sufficient to make the biomass power plant in generating the electricity according to the capacity. However, the biomass power plant has also been designed to accommodate other raw materials, such as hacked wood and rice husk. Anyway, if there is not enough bagasse to produce electricity, BPC and BEC can use other raw materials to produce the electricity.
39 Annual Report 2015 Annual Report 2015 Organic Fertilizer Production Business, performed by KBF
The quality of the products and services The Fertilizer Company Limited or KBF registered in the year 2011, and currently, the 15 million baht of its registered capital has already paid up. KBF has operated its production business and sold the organic fertilizer on December 2012 by using the decomposed filter product, which is a by-product of the sugar production of the circulation group as the raw material in the production of organic fertilizer. That the KBF factory is located in the nearby area to Buriram Sugar Factory is to facilitate the transport of raw materials, a left-over product, which is the main product in manufacturing the fertilizer and to save money on the freight. KBF's product is mainly the organic fertilizer, both the powder and granular type. Presently, 95% of the KBF’s products of organic fertilizer has sold through the BRD. From this, the BRD will subsequently sell it to the sugarcane farmers through campaigns or other promotions so that they can lower their investment. At the same time, with this fertilizer, their production per rai is high and with the good quality, and also, this will make them be able to bring their products to the factory to compensate the prepaid money supported from the BRD, which is beneficial to both the Company and the sugarcane farmers. In addition, approximately 5% of the organic fertilizer will be available to any third party, which will be another business expansion in the future.
Marketing and Competition Situation
Competition Strategy The main goal of running this business of KBF is to provide the sugarcane-farmer the best fertilizer and appropriate price so as to reduce the capital in manufacturing of the farmers and to value the production per rai, which will make the sugarcane farmers gain more money per the product they can produce.
1. Good Products and Suitability for Each Piece (Plantation) From the focus on the growing of the sugar cane and the increase of the products per rai in the high rate, KBF has carried out the research and development to research and develop the production of the fertilizer, which makes the Company be able to produce the fertilizers in a variety of formulas, and the Company can also control the quality of the fertilizer every sack with a low-cost. On the other hand, it can be applied to various kinds of economic plants: appropriate and consistent with the sugarcane area (in an individual piece). In fact, before distributing this product to the farmer, the Company did perform research with the sample pieces to study the response to the growth of the sugar cane. When it is found that it is effective, it is then introduced to the sugarcane farmers. Throughout the past period, the Company's products are found to give good results on the growth of the sugarcane. It is also of the quality standards of accountability, Act of the fertilizer, B.E. 2518 and it is also low cost, making it well-known among the farmer.
40 Annual Report 2015 Buriram Sugar Public Company Limited
2. Establishing Distribution Centers in Every Campaign (Operation) Area. KBF has conjoined BRD establishing the goods distribution center across the campaign area in order to facilitate the farmers to get support from the Company, which is another way of supporting business affiliates. This is because when the farmer has the facility to purchase travel and get the fertilizer, they can improve the soil in the right time, causing the better growth of the sugar cane.
3. The Educational Field Trip (to the Sugar Cane Plantation) KBF expands its know-how by visiting other sugar cane plantations, which use the product from the sugar cane factory (the same business) so as to strengthen the self-confidence of the KBD’s products.
The Customer Features and Distribution Channels At present, mainly 95% of the KBF’s products has sold to BRD, and the BRD will resell it to the sugarcane farmer through campaigns or other promotions. Distribution will be based on the location that is used to promote the Company's District Office. As follows:
Promotion Promotion The Company’s District Areas The Company’s District Areas Zones Zones 1 Saw Ae Village, Khu Muang District 6 Na Sri Nuan Village, Lam Plai Mas District 2 Nong Khrue Village, Muang District 7 Nong Pai Village, Stuek District 3 None Khaw village, Khaen Dong District 8 Samet Village, Stuek District 4 La Gor Village, Stuek District 9 Kra Deung Village, Nang Rong District 5 Lam Ta Men Chai District 10 Ban Dan Sub-district, Ban Dan District
A policy to set up the price Since the chemical fertilizer and organic fertilizer are one of the factors that BRD uses to set up the campaign for the farmers, specifying the fertilizer’s price is divided into 2 cases; the prices of the instant chemical fertilizers, which are purchased in to sell out, will follow the price of the general market, while the prices of the organic fertilizer produced by the Company itself are decided by considering from the production capital (Cost Plus Method). This is to provide the farmer the better quality fertilizer with the formula to suit their needs in the growth of the sugar cane, with the cheap price, and in reducing the capital for the farmer.
41 Annual Report 2015 Annual Report 2015 Trading Supporting Section KBF, together with BRD, a partner company, has regularly organized many kinds of campaigns by designing the business plan and also performing the trading supporting activity together. The KBF’s trading supporting team will work together with its partner company in each area to study the cultivated area, learn on-site problems, solve the problems together and also adjust the decided plan suiting the needs of each area. Besides, KBF has the plan to broadcast its products through the local cable TVs, community radios, and local newspapers. Additionally, the trading supporting team will evaluate or follow the growth of the sugar cane periodically to make the products be recognized and to grasp the farmer the product’s symbol; this is to make the product be more dependable, which will emphasize the farmer to trust the products of the Company.
Industry Situation and Competition Obviously, the chemical fertilizer industry is one of the most important industries of the country because Thailand, as we all know, is the agricultural country since the fertilizer plays an important role in increasing the agricultural products. However, Thailand cannot produce enough fertilizers to suit the farmers’ needs because its producing capital is very high, so mostly importing those fertilizers from overseas is the best solution. The Table Showing the Quantity and the Imported Value of the Chemical Fertilizer (the Chief Formula), in the years 2010 - 2014
(Values : Million Baht) (Values : Million Baht)
2010 2011 2012 2013 2014 FS* Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Single or Straight Fertilizers 46-0-0 2,121,342 21,824 2,087,879 27,758 2,153,690 30,240 2,170,237 24,483 2,132,266 23,770 18-46-0 481,343 7,997 395,044 7,939 536,806 10,198 550,257 8,606 553,592 8,753 0-0-60 517,828 6,940 755,120 10,895 586,155 9,825 657,578 8,798 690,656 7,712 Total 3,120,514 36,760 3,238,042 46,592 3,276,650 50,263 3,378,072 41,886 3,376,514 40,235
21-0-0 350,023 1,893 276,558 2,047 282,782 2,266 191,674 1,154 104,386 480 16-20-0 494,393 5,187 571,528 7,147 549,688 7,587 575,112 6,885 466,321 5,034 16-16-8 10,795 122 42,736 616 71,223 1,050 102,488 1,345 61,589 752 15-15-15 409,488 5,513 379,906 5,691 400,776 6,511 534,378 7,483 466,529 6,208 Others 787,495 11,736 1,070,410 16,807 1,002,157 16,269 857,167 13,505 939,681 13,393 Total 2,052,194 24,451 2,341,138 32,308 2,306,626 33,683 2,260,819 30,372 2,038,506 25,868 Net Total 5,172,708 61,211 5,579,181 78,899 5,583,276 83,947 5,638,891 72,259 5,415,020 66,103
*Fertilizer Formulas Reference: Chemical Fertilizer Section, Office of Agricultural Plants and material control, Department of Agriculture (updated on May 7, 2015)
42 Annual Report 2015 Buriram Sugar Public Company Limited
The Ministry of Agriculture and Cooperatives continue to educate farmers in the use of the chemical fertilizer and organic fertilizer to cause the balance and suitability of the soil conditions and encourage the farmers to mix the chemical fertilizers themselves. This is to promote the farmers to benefit the left-over products (farm wastes) as their own fertilizers. Furthermore, the Ministry of Agriculture promotes the integrated use of fertilizers, that is to say, the farmers can use in conjunction with the chemical fertilizer, organic fertilizer, and/ or bio-fertilizers at an appropriate rate suiting to each plant. Additionally, the use of the mixed fertilizers can reduce the use of chemical fertilizers and it also helps add other organic objects in the soil, making it more naturally plentiful. Actually, this is one of the measures in place to help reduce production costs for farmers because, as we all know, the chemical fertilizer is one of the important production factors that affect the farmer's production costs.
Fertilizer’s Price Because Thailand is not yet able to produce the chemical fertilizers to support the farmers’ needs across the country. So, it is required to import from the country that can manufacture the chemical fertilizer. However, the Ministry of Agriculture and Cooperatives will have to keep track of the fertilizer’s prices to make sure that they are suitable for the farmers and also to protect them from such exploitation.
Supplying The KBF has used the decompose filter, which is a by-product of the sugar production from the BSF as its raw materials to produce the fertilizer production. In addition, the decompose filter is accounted for about 5% of the quantity of the sugar cane in the production of each year operation.
43 Annual Report 2015 Annual Report 2015 Risk Factors Risk from business operation of the Company Business of the Company and its subsidiaries are as follows:
1. Raw sugar and brown sugar manufacturing and distribution operated by Buriram Sugar Factory Co., Ltd. (“BSF”) 2. Byproduct business as follows: - Biomass power plant operated by Buriram Energy Co., Ltd. (“BEC”) and Buriram Power Co., Ltd. (“BPC”) and - Organic fertilizer manufacturing and distribution business operated by Key Brand Fertilizer Co., Ltd. (“KBF”) 3. Supporting business operated by Buriram Sugarcane Research and Development Co., Ltd. (“BRD”)
Risk from business operation of Buriram Sugar Factory Co., Ltd. (“BSF”) 1. Risk Factors from Raw Material Sourcing The Company’s business is to run factories to product raw sugar and brown sugar which use sugarcane as raw material. To allocate sufficient sugarcane for crushing is the most important factor affecting the operations and the performance of the Company. The quantity of sugarcane available each season is depended on these main factors:
(a) Changes in the acreage under sugarcane plantation may depend on the price agreed for the cane and whether it is worthwhile for the farmers to grow sugarcane compared to other agricultural crops as well as the promotional policies of the government like zoning. However, Buriram is one of the pioneer provinces to switch from rice to sugarcane plantation according to Thailand Ministry of Agriculture and Cooperatives. Additionally, the Company has surveyed and evaluated the fluctuation and has worked out solutions for needed area. Between 2011 and 2015, Buriram sugarcane plantation has increased steadily with more farmer products per acre every year, the detail is as follows;
2011/12 2012/13 2013/14 2014/15 2015/2016(F) Sugarcane Average Sugarcane Average Sugarcane Average Sugarcane Average Sugarcane Average Plantation Production Plantation Production Plantation Production Plantation Production Plantation Production (Rai) (Ton/Rai) (Rai) (Ton/Rai) (Rai) (Ton/Rai) (Rai) (Ton/Rai) (Rai) (Ton/Rai) Buriram 185,356 N/A 188,946 11.09 200,112 11.29 200,941 11.09 210,941 11.09 Province All area in 8,998,286 N/A 9,487,320 11.32 10,078,025 11.24 10,530,927 11.08 11,033,731 11.10 Thailand
Source : Office of the Cane and Sugar Board
44 Annual Report 2015 Buriram Sugar Public Company Limited
(b) Climate, rainfall, irrigation, soil fertility, sugarcane varieties, and other sugarcane disease altogether affect the crop yield of sugarcane. The fluctuation of each factor can cause agricultural output diminution. The Company has supported sugarcane watering during dry season through drip irrigation system in sugarcane farm. Via cooperation with The Office of the Cane and Sugar Fund, the Company has offered long-term loan with 2% interest rate per annum for irrigation development.
(c) Risk from soil fertility quality, the Company has in place a policy that focus on soil improvement in sugarcane plantation area, for example, harvesting without setting fire to preserve organic matter, adjusting pH for fertilizer efficiency, and using filter cake-based fertilizer which is a byproduct of sugar production. Since the policy implementation, the agricultural output of sugarcane increase gradually from 8-9 tons/Rai during 2004-2010 to 12-13 tons/Rai during 2011-2015.
(d) Risk from sugarcane varieties the Company has carefully chosen sugarcane variety that appropriate for the plantation area, has had sugarcane testing area, has selected new sugarcane variety to replace deteriorated variety, and has chosen sugarcane variety that provides more sugar per ton cane and offer farmer higher return.
(e) Local sugarcane purchasing competition, if nearby sugar factory offers higher sugarcane price than BSF’s price to a farmer, the farmer may trade their sugarcane to that factory instead. This reduces amount of BSF’s sugarcane crushed. BRD manage sugarcane procurement via contract. By providing fund, fertilizer, chemical, sugarcane variety, or other agricultural machinery, the Company is able to secure future sugarcane ownership in 50 kilometers area around the factory before cane crushing season. Additionally, BRD aims to keep good relationship with farmers by sending 17 teams of agricultural extension officers to make a field research at each plot, recommend suitable sugarcane variety, manage soil and water condition, and help take care of each cultivation period from growing to harvest to distribute to BSF by using online and GPS system to ensure that every sugarcane plot is monitored and supported appropriately. The actions make certain that farmers can produce quality sugarcane, gain more crop yield, receive steady revenue, and become respectable alliance with the Company. BRD is also capable to procure sugarcane from out of supporting area. Through indicated management, BSF has never faced scarcity of sugarcane in cane crushing season.
Moreover, zoning among sugar factories in the areas of Buriram, Surin, and Nakhon Ratchasima provinces has been established to prevent purchasing competition between the sugar factories.
45 Annual Report 2015 Annual Report 2015 2. Risk from fluctuating sugar prices in global market For sugar trading in global market, sugar is one of the agricultural products that highly fluctuate compared to other agricultural products. Fluctuation of global sugar price depends on demand and supply of sugar-manufacturing nations, of consuming nations, exporters and importers, speculation of some traders in commodity market, proper climate for cultivation, as well as national policy which may support or restrict export and import of government sugar industry especially for developed nations. Additionally, sugar price currently corresponds to fuel price since cane juice and molasses can be used to manufacture ethanol which can be mixed with oil for automobile fuel. The specified factors result in high fluctuation of global sugar price.
For each Thai sugar factory to export sugar, the export must be accomplished through agency company, according to The Sugarcane and Sugar Act B.E. 2527. And the factory will be allocated the amount of sugar for domestic consumption and export by The Sugar Board and depended on the amount of sugar production capacity in the corresponding season. The regulation causes the export and the domestic sale rate of each sugar factories to be approximate. In 2014 and 2015, the Company had revenues from sugar export account for 77% and 80% of the total revenue consecutively. The export price is primarily based on international sugar price which depend on demand and supply of overall global market. Hence, the Company’s revenue highly depends on the variation of sugar price. In 2015, the average volatility of raw sugar price of New York Sugar is 14.37 cent/pond.
Average price of raw sugar of New York Sugar No. 11 Fiscal year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average price 9.99 14.63 9.9 12.1 17.98 22.28 27.07 21.57 17.47 16.34 14.37 (Cent/pond)
Average price of white sugar of London Sugar No. 5 Fiscal year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average price 279.63 421.66 309.55 351.59 487.39 616.49 706.07 587.74 496.58 439.30 419.37 (US$/ton) Source : Bloomberg and CitiCommodities/Agricultural
Since primary cost of sugar manufacturing is sugarcane price which depends on the Company’s revenue (The cane and sugar industry in Thailand is regulated under a 70:30 revenue sharing scheme between sugarcane farmers and sugar mills.). Hence, if international sugar price drops, cost of sugarcane purchasing from farmers will fall in parallel. Therefore, it reduces the impact of sugar prices at a certain level.
However, the Company decided to invest in some related projects, e.g. bagasse-based power plant and organic fertilizer plant; hereafter, the Company anticipates that the operating results would be less affected by the global sugar prices.
46 Annual Report 2015 Buriram Sugar Public Company Limited
3. Risk of Bad Debts Arising from Credit Given to Farmers (Advance Credit) BRD/BSF supports the sugarcane farmers to grow the sugarcane to be supplied to the factory via advance credit for each plot and growth activity of sugarcane. The Company uses database system and Global Positioning System (GPS) to survey the sugarcane plantation areas, which allow every area to be tracked, monitored, and aided according to real condition.
The support is in the form of post-dated cheque to let the farmers invest in sugarcane variety, land, irrigation, machine and equipment or fertilizer. The credit support helps reserve sugarcane for crushing. After the sugarcane crop is ready for harvesting and the sugar factory is ready to start crushing the cane, the farmers harvest the cane and send it to the sugar factory and receive payment for the value of the cane supplied after the advance credit and other financial support given is deducted. The risks that are generated from such sugarcane credit can come from reduced production in any year due to drought conditions, losses from crop disease and pestilence, etc. Such liabilities, arising from advance credit, can undesirably affect the BSF’s operation performance requiring higher amounts of provisioning for bad debts. During 2011 to 2015, the Company estimates allowance for doubtful account as follows:
(Unit: Million Baht)
2011 2012 2013 2014 2015 Allowance for doubtful account 6.41 - 20.33 1.05 3.44 Farmers account receivable 560.61 975.21 1,135.29 880.68 989.21 Percentage of doubtful account 1.14 - 1.79 0.11 0.34
The ratio of allowance for doubtful account during 2011 to 2015 is approximately 0.66% of farmers account receivable at the end of the accounting period. The Company has valued the risk management of advance credit; so it is controlled, starting from to specify qualification of borrower, the process of granting the credit line to the debt collection system, as well as to make the approving advance loan system by giving advance credit to sugarcane farmers who can achieve by paying on periodic of each work installments including the securities and the guarantor.The Company has regularly sent agricultural extension officers to attend to sugarcane farmers who receive the advance credit granted by the Company. A Global Positioning System (GPS) has been used to survey and measure the sugarcane planting areas in order to get the accurate information about sugarcane planting process, and to help detect and solve problems in time.
47 Annual Report 2015 Annual Report 2015 4. Foreign exchange risk The Company recognizes approximately 71% and 77% of its sugar export revenue as US$, ergo the Company’s revenue fluctuates according to the exchange rate of Thai Baht and US$.
However, the Company has applied risk avoidance measure by signing future foreign exchange contract based on exchange rate of Thai Cane and Sugar Co., Ltd. for Quota B., but the method depends on the Board of Directors’ discretion and exchange rate forecasting. And such risk preventive measure might not be able to prevent the risk if Thai Bath appreciates for long duration.
5. Risk from government control
5.1 Risk from Government Policy The sugarcane and sugar industry in Thailand is under the supervision and control of the Office of the Cane and Sugar Board under the Cane and Sugar Act B.E.2527. The Board regulates the management of sugarcane plantation area, the amount of sugar produced by a quota system (Quota A for domestic sales, Quota B and C for sugar exports), controls the domestic price, regulates on the ratio of distribution of revenue from the sugar business between the farmers and sugar factories, with the revenues sharing in the ratio of 70:30, etc.
The 70:30 revenues sharing system is specified by the Cane and Sugar Board international price (Quota B) which is a standard price, for calculating sugar export revenue of whole country to be included on the income distribution of sugar and molasses in sugar industry's total revenue. Then, the deduct the cost of production and distribution for forecasting earnings of the industry. After that there will be split in the ratio of 70:30. The 70 percent will be divided by the volume of cane production to be used to determine the price of sugarcane that will be purchased the plant. So the 70:30 system would lead to industry instability. There is production price risk of raw sugar prices reduction in the country, because the cane price based on the price of sugar cane has sold.
It is evident that the Minister of Industry, the Minister of Agriculture and Cooperative and the Minister of Commerce are responsible for maintaining the regulatory compliance. In case, changes in the domestic sugar prices or changes in regulation of entire sugar industry, it will have a definite impact on the operations of performance of the Company and other companies in the sugar industry.
There is possible risk from diminution of restriction to emancipate cane and sugar industry in accordance with obligation between Thai and other nations such as ASEAN FTA, Bilateral FTA, Regional Comprehensive Economic Partnership, as well as multilateral framework like WTO. Encompassing FTA is both an opportunity and a challenge for cane and sugar industry which should be monitoring closely.
48 Annual Report 2015 Buriram Sugar Public Company Limited
The sugarcane and sugar industry is a precursor of the food and processed food industries. Also cane sugar is a commodity product that has been exported throughout the world. Hence, the Company realizes the importance of government policies in shaping directions of cane and sugar industry and believes that the policies and its future change exist to provide a positive impact for the industry, farmers, and sugar factories themselves.
5.2 Risk of the Fluctuating Income from Sugar Sales Normally, the sugarcane harvesting period in Thailand starts from November to April. Consequently, the factory usually starts selling sugar products from December up to the end of the harvesting period. However, the Company will distribute sugar for domestic consumption (Quota A) in succession in 52 weeks. For international trade (Quota C), the Company always considers various factors in its sugar sales, such as inventory, expected production, Cane and Sugar Board international price (Quota B), and world sugar prices to be used as a standard for determining the Company export price. Since the Company’s sugar sales for each quarter are not constant, the revenue from the Company’s sugar distribution for each quarter may rise or decline depending on the previously specified factors and sales quantity in each quarter.
6. Risk from raw material cost The cane and sugar industry in Thailand is regulated under a 70:30 revenue sharing scheme between sugarcane farmers and sugar mills. The sugarcane prices are regularly calculated by the Cane and Sugar Board to allocate 70 % of the sugar industry lump sum revenue to the sugarcane farmers. So if TCSC sells sugar at high price, the raw material price are probably high as well but on the other hand, if the TCSC sell sugar at lower price, the raw material price will be reduced accordingly which the volatility of raw material prices will affect margins.
To reduce the risk, the Company needs to sell sugar at a higher price than the average selling price of TCSC so the Company has not been loss of raw material increases price. The Company sets up the risk management by closely monitoring the period and sales volume of Thai Cane & Sugar Co., Ltd. to ensure that the Company sells some sugar at an appropriate rate compared to Thai Cane and Sugar Co., Ltd.
49 Annual Report 2015 Annual Report 2015 Risk from Byproduct Business Operation Biomass Power Plant Business operated by Buriram Energy Co., Ltd. (BEC) and Buriram Power Co.,Ltd. (BPC) 1. Risk from insufficiency of fuel material the risk from scarcity of fuel material can be competently for electricity generation controlled. Nevertheless, use of substitute fuel materials may result in rise of cost of electricity generation which Currently, Buriram Sugar Factory Co., Ltd. or in turn affects the Company’s net profit. BSF provides of bagasse which is a byproduct of sugar manufacturing to BEC and BPC to be used as a biofuel for electricity generation. As a result, if an amount of seasonal 2. Risk from Environmental Impact sugarcane is low, an amount of bagasse delivered to the The Company’s electricity generation business is power plant will be affected. The scarcity risk may result in compliance with environmental laws and regulations in an interruption of the electricity generation. Presently, which covered pollution control procedures in land, bagasse from the Company’s sugar manufacturing water, and air. From past to present, the Company accounts for 26% of weight of sugarcane crushed. In has put in place measures to ensure the prevention of 2014/2015, the Company possess byproduct bagasse environmental impact such as substance drainage system, approximately 520,000 tons which the sugar factory uses substance control system, wastewater management 250,000 tons to generate heat for sugar manufacturing system, and waste elimination system. The Company also process and the both of 9.9 MW power plants demand provides green space or open space reserve in the power 430 tons/day or 130,000 tons/year to generate electricity plant project in 25 Rai areas, utilizes wet scrubber system sufficiently. However, the demand is going to increase to reduce dust particle and monitors environmental from additional power plant construction of BPP which impact to assure that the electricity generation process is is the third power plant. Approximately, bagasse demand in consistence with environmental laws and regulations. will raise about 640,000 tons/year to generate electricity
29.7 MW of three power plants. If an amount of cane crushed is less than 2,300,000 tons, bagasse quantity may In July 2012, Buriram Energy Co., Ltd. was not be sufficient for full capacity electricity generation. awarded Green Activity Level 2 Certification and also in July 2015 Buriram Power Co., Ltd. was awarded Green Commitment Level 1 Certification under Green Industry Additionally, the Company’s machineries Project, hosted by the Ministry of Industry Thailand which can utilize other substitutable fuel materials such as displayed an excellence in systematically environment woodchips or chaff to generate electricity and in the management of the Company. Also there’s continuous 2015/2016, the Company purchases sugarcane leaves evaluation program to ensure unceasing development from the sugarcane famers more than 20,000 families from the provincial Office of Industry and provincial to use as fuel material to generate electricity. Since industry colony. sugarcane leaves have lower moisture than bagasse making it can be used as fuel to produce electricity. Hence
50 Annual Report 2015 Buriram Sugar Public Company Limited
Organic Fertilizer production and distribution business operated by Key Brand Fertilizer Co. Ltd. (KBF)
1. Risk from existing consumption 2. Risk from Environmental Impact behavior KBF’s fertilizer production and distribution Key Brand Fertilizer Co. Ltd. or KBF start producing business conducting is in accordance with laws and organic fertilizer for farmers in December 2012. Most of Fertilizer ACT B.E. 2518 Revised by Fertilizer ACT (No. 2) the customers are farmers who have little knowledge of B.E. 2550 about quality control to preserve benefits of soil improvement by organic matter which help enhance farmers and agriculture. The laws and act covers pollution chemical fertilizer and adjust physical and chemical control of land, water, air, and pollutant, trash and waste condition of soil. Also, plant reacts to organic fertilizer elimination, health and safety in the workplace, and slower than chemical fertilizer and organic fertilizer usage dangerous material handling. However, the laws and act is more complicated; hence, Key Brand Fertilizer Co. Ltd. is intricate, constantly unstable, and highly dependent has cooperated with Buriram Sugarcane Research and on subjective interpretations of related organizations. Development Co., Ltd. to inform about organic fertilizer, create sample plot to simulate organic fertilizer usage KBF has been authorized to build a factory and with the development of machinery and transportation produce organic fertilizer legally according to related design of bagging the Big Bag. Then, the fork lift will lift laws and regulations. The Company also provides the bag to the fertilizer machine so the cane farmers can preventive measures to avoid environmental impacts be easily take the powder fertilizer into farmland nearby. to the employee and the communities near the factory, However, the Company also provides knowledge about for example, utilizing dust collector chamber, using wet organic fertilizers and provide study of sample vegetable scrubber system, using water cannon vehicle around plots used organic fertilizer and distribute supported the factory, providing soundproof headband to reduce academic data to create a change of farmer behaviors. acoustic impact and taking part in the CSR activities to develop the community and social sustainably. Because KBF’s factory locates far from communities, KBF assure that risk from environmental impacts is low.
51 Annual Report 2015 Annual Report 2015 Other Risks 1. Risk from high Debt to Equity ratio 2. Risk from the Company’s Major In December 31, 2015 and 2014, the Company’s Shareholders influence in administrative D/E ratios are 2.18 and 1.71 consecutively. However, policies setting since the Company is a holding company, loan contracts Tangtrongwechakit family group and Buriram with Siam Commercial Bank are signed by operating Capital Co., Ltd., which the group is a major shareholder, subsidiaries such as BSF, BEC and BPC etc. which each hold the Company shares totaled 74.32% of registered subsidiary maintain D/E ratio separately. In December 31, capital issued and paid after offering of these ordinary 2015, D/E ratios of BSF, BEC and BPC are in compliance shares. The Tangtrongwechakit family group is also with loan contracts with Siam Commercial Bank. The members of executive directors and directors who are Company has raised capital from the issuing debentures authorized. The Company and/or the minor shareholders of two years maturity redemption of SET made the ratios may risk to be influenced by the major shareholders. The of debt to equity shareholders of the Company increased major shareholders may freely set policy direction, control from the year 2014. However, the rate is still remained the policy and management, and direct the approval of above the statutes. The Company has a risk management shareholder meeting resolutions except some resolutions plan to monitor the ratio of debt to shareholders on a that require 3 out of 4 of total vote from the meeting in quarterly basis for report to the Board Risk Management accordance with laws or the Company regulation; hence Committee. other shareholders may not be able to gather vote to inspect or balance power of the major shareholders.
However, for the Company’s transparency and power balancing, the Company has provided the internal audit department (In-House) which consisted of audit committee, internal audit officer and outsourced audit company for checking the operations of the Company, balancing decision power, and considering agendas before present to shareholders’ meeting to prevent potential conflicts of interest and ensure transparency of the Company’s operation. Also the Company has set up the risk management unit is under the command of the risk management committee for checking and control the Company’s risk, as well as to do the risk management plan
52 Annual Report 2015 Buriram Sugar Public Company Limited
Shareholding Structure
As of December 2015, Buriram Sugar Public Company Limited has THB 676,750,000 registered capital by dividing into 676,750,000 ordinary shares, par value THB 1 per share and the Company has a fully-paid registered capital of THB 676,750,000.
1. Major Shareholder The Company’s number of shareholder as shown in the share register book on December 28, 2015 as follows;
Number of Amount of Percent of Share Shareholder Share Thai Shareholders 2,701 676,750,000 100 Foreign Shareholder 0 0 0 Total 2,701 676,750,000 100
List of Top Ten Major Shareholders by dividing into groups as follows;
Name of Shareholder Number of Share Percent of Share 1. Tangtrongwechakit Group 503,793,600 74.32 Buriram Capital Co., Ltd. 338,380,000 50.00 Mr. Anant Tangtongwechakit 27,507,500 4.06 Mrs. Wanphen Punyaniran 27,407,500 4.05 Mrs. Jirawan Pongpichitkul 27,407,500 4.05 Miss Chittima Tangtrongwechakit 27,407,500 4.05 Mr. Sarit Tangtrongwechakij 27,407,500 4.05 Mr. Adisak Tangtrongweachakit 27,407,500 4.05 Mr. Piyawit Srisawat 37,000 0.01 Mrs. Sureewan Tangtongwechakit 21,100 0.00 Miss Kornkanok Punyaniran 9,000 0.00 2. Sareewiwatthana Group 40,526,200 5.99 Mrs. Waranee Sareewiwatthana 17,326,200 2.56 Mr. Paiboon Sareewiwatthana 13,200,000 1.95 Miss Pimsiri Sareewiwatthana 5,000,000 0.74 Miss Pitsinee Sareewiwatthana 5,000,000 0.74
3. Mr. Sutthipong Veswarut 8,256,300 1.22 4. Mr. Nattaphat Khahanurak 6,414,600 0.95
53 Annual Report 2015 Annual Report 2015 Name of Shareholder Number of Share Percent of Share 5. Mr. Pairoj Siwapornchai 6,274,450 0.93 6. Shartpinyo Group 6,597,800 0.97 Miss Jutirat Shartpinyo 4,417,800 0.65 Mr. Utain Shartpinyo 2,180,000 0.32 7. Mr. Dusit Wongsuthiroj 3,875,000 0.57 8. Mr. Amnat Klawkla 3,380,000 0.50 9. Miss Pannita Anantakul 3,372,000 0.50 10. Mr. Pornsin Kraisakdawat 2,940,000 0.43 Total 585,429,950 86.38
Remarks : Buriram Capital Co., Ltd. is a holding company that has THB 339,380,000 registered capital by dividing into 3,393,800 ordinary shares, par value THB 100 per share. Shareholder name list on December 31, 2015 is as follows;
Name of Shareholder Number of Share Percent of Share
1 Mr. Anant Tangtongwechakit 576,945 17.00 2 Mrs. Wanphen Punyaniran 563,371 16.60 3 Mrs. Jirawan Pongpichitkul 563,371 16.60 4 Miss Chittima Tangtrongwechakit 563,371 16.60 5 Mr. Sarit Tangtrongwechakij 563,371 16.60 6 Mr. Adisak Tangtrongweachakit 563,371 16.60 Total 3,393,800 100.00
54 Annual Report 2015 Buriram Sugar Public Company Limited
2. Major Shareholder of the Company’s Subsidiaries
2.1 Buriram Sugar Factory Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share
1 Buriram Sugar Public Company Limited 10,490,000 99.904 2 Mr. Anant Tangtongwechakit 1,666 0.016 3 Mrs. Wanphen Punyaniran 1,666 0.016 4 Mrs. Jirawan Pongpichitkul 1,666 0.016 5 Miss Chittima Tangtrongwechakit 1,666 0.016 6 Mr. Sarit Tangtrongwechakij 1,666 0.016 7 Mr. Adisak Tangtrongweachakit 1,666 0.016 8 Mrs. Pakinee Tangtrongweachakij 4 0 Total 10,500,000 100
2.2 Buriram Sugarcane Research and Development Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share
1 Buriram Sugar Public Company Limited 708,794 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Wanphen Punyaniran 1 0 4 Mrs. Jirawan Pongpichitkul 1 0 5 Miss Chittima Tangtrongwechakit 1 0 6 Mr. Sarit Tangtrongwechakij 1 0 7 Mr. Adisak Tangtrongweachakit 1 0 Total 708,800 100
55 Annual Report 2015 Annual Report 2015 2.3 Buriram Energy Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share
1 Buriram Sugar Public Company Limited 1,355,993 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Wanphen Punyaniran 1 0 4 Mrs. Jirawan Pongpichitkul 1 0 5 Miss Chittima Tangtrongwechakit 1 0 6 Mr. Sarit Tangtrongwechakij 1 0 7 Mr. Adisak Tangtrongweachakit 1 0 8 Mrs. Pakinee Tangtrongweachakij 1 0 Total 1,356,000 100
2.4 Buriram Power Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share
1 Buriram Energy Co., Ltd. 1,699,994 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Wanphen Punyaniran 1 0 4 Mrs. Jirawan Pongpichitkul 1 0 5 Miss Chittima Tangtrongwechakit 1 0 6 Mr. Sarit Tangtrongwechakij 1 0 7 Mr. Adisak Tangtrongweachakit 1 0 Total 1,700,000 100
56 Annual Report 2015 Buriram Sugar Public Company Limited
2.5 Key Brand Fertilizer Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share 1 Buriram Sugar Public Company Limited 149,994 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Wanphen Punyaniran 1 0 4 Mrs. Jirawan Pongpichitkul 1 0 5 Miss Chittima Tangtrongwechakit 1 0 6 Mr. Sarit Tangtrongwechakij 1 0 7 Mr. Adisak Tangtrongweachakit 1 0 Total 150,000 100
2.6 Buriram Power Plus Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share 1 Buriram Energy Co., Ltd. 99,995 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Jirawan Pongpichitkul 1 0 4 Miss Chittima Tangtrongwechakit 1 0 5 Mr. Sarit Tangtrongwechakij 1 0 6 Mr. Adisak Tangtrongweachakit 1 0 Total 100,000 100
2.7 Buriram Super Power Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share 1 Buriram Energy Co., Ltd. 49,995 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Jirawan Pongpichitkul 1 0 4 Miss Chittima Tangtrongwechakit 1 0 5 Mr. Sarit Tangtrongwechakij 1 0 6 Mr. Adisak Tangtrongweachakit 1 0 Total 50,000 100
57 Annual Report 2015 Annual Report 2015 2.8 Buriram Agro Energy Co., Ltd.’s shareholder name list is as follows;
Name of Shareholder Number of Share Percent of Share 1 Buriram Sugar Public Company Limited 99,995 100 2 Mr. Anant Tangtongwechakit 1 0 3 Mrs. Jirawan Pongpichitkul 1 0 4 Miss Chittima Tangtrongwechakit 1 0 5 Mr. Sarit Tangtrongwechakij 1 0 6 Mr. Adisak Tangtrongweachakit 1 0 Total 100,000 100
Agreement of Major Shareholders There is no any agreement among the major shareholders on matters that affect the issuance and offering of securities and the management of the Company.
Issuance of Other Securities The Extraordinary General Meeting of Shareholders No. 1/2015 on September 18, 2015 approved the issuance and offering the 2,000 Million Baht of domestic debentures to use for the project of capacity increasing to 23,000 TCD and other related projects, as well as working capital. The detail of the issuance and offering debentures as of February 25, 2015 is as follows;
• 250 million Baht of Buriram Sugar Public Company Limited’s debentures No.1/2015 (Yield to Maturity in 2017) was offered to Land and House Fund Management Co., Ltd.
• 600 million Baht of Buriram Sugar Public Company Limited’s debentures No.2/2015 (Yield to Maturity in 2017) was offered to public.
The Company issued the debentures in total 850 million Baht and remains 1,150 million Baht.
58 Annual Report 2015 Buriram Sugar Public Company Limited
Corporate Social Responsibility Our Corporate Social Responsibility Policy
With our determination to develop the business sustainably and improve living condition of cane farmers and neighboring communities as well as the organization’s personnel to recognize social responsibilities and involve in such activities. The Company has set and directed CSR policy based on the original principle which is “Growth in Business, Sound in Environment and Sustainability in Community Development” under determination framework as follows:
“G C E C S Governance, Commitment, Environment, Community and Sustainable”
G – Governance “Conduct Business with Transparency”
C - Commitment “Determination to Responsibility”
E - Environment “Environmental Preservation”
C - Community “Go Along with Community”
S – Sustainable “Stay Sustainability”
59 Annual Report 2015 Annual Report 2015 Mission
We strongly valued importance of business development together with community and social development sustainability. Then the Company has established an important mission for achieving the goal as follows;
1. Enhance working model on business development under good governance and business ethics. 2. Support and Develop environment-friendly technology to be used in manufacturing process throughout supply-chain. 3. Encourage and Enhance community members and staffs’ standard of living via projects or activities whose staffs take part in. 4. Determine to raise staffs’ efficiency and knowledge on social and environmental works to reach business sustainable development outcome. 5. Give Priority to individual rights and a fairly treat of staff, customers and shareholders. 6. Support and Develop community education. 7. Prevent and Solve issues on child labor.
CSR Operation Strategy
5 core strategies are as follows:
1. Create public mind awareness among staffs and encourage them to participate in Company’s Public service projects. 2. Emphasis and apply “Sugar Made in the Field” philosophy on every CSR activities or projects. 3. Initiate joint-projects with tradition and not-tradition opinion leaders government agencies, non-governmental organizations (NGOs) and surrounding communities. 4. Use sugar production’s by-products in CSR projects for society and business benefits.
In the present, the Company’s CSR project and activity has developed strongly and continuously with regard to social and all stakeholders responsibility both internal and external organization namely;
1. Internal organization : Executive, employee and shareholder 2. External organization : Community, environment, customer, trading partner, debtor, creditor, business competitor and other related private and government sector
We are pleased to present the CSR projects and activities in 2015 in the sustainability report 2015 as attachment.
60 Annual Report 2015 Buriram Sugar Public Company Limited
Management Structure
Board of Directors
Company Secretary
Risk Management Audit Committee Committee
Risk Management Internal Audit Office Department
Executive Committee
Managing Director
Investor Relation
Vice Managing Vice Managing Vice Managing Vice Managing Vice Managing Assistant Director: Director: Director: Director: Director: Managing Domestic Investment Domestic Investment Domestic Investment International Investment Finance & Operation Director: (Agricultural business) (Energy business) (Commercial) International Affair
Assistant Managing Director: Finance Assistant Managing & Operation Director: Financial Management
61 Annual Report 2015 Annual Report 2015 Management Structure Management Structure of the Company consists of Terms the Board of Directors and 3 Sub-Committees which are Audit Committee, Risk Management Committee and In an annual general meeting, one third of the Executive Committee. directors are required to resign. If the total number of directors does not allow such division, the number of directors to resign should be at the closest to one third of The Board of Directors the total. In the first and the second year after registering, the directors required to resign will be selected via lot. As of 31 December 2015 the Board of Directors consists For following years, directors who have stayed the longest of 9 members are included: with the Board shall exit. The directors whose terms have Name Position completed may be reelected to the Board. 1. Mr. Prachuab Chaiyasan Chairman of the Board of Directors (Independent Director) Scope of Duties and Responsibilities of the 2. Mr. Anant Tangtongwechakit Director Board of Directors 3. Mrs. Wanphen Punyaniran Director 1. To undertake and manage the Company 4. Mrs. Jirawan Pongpichitkul Director responsibly, carefully, trustworthily, and in conformity 5. Miss Chittima Director with any and all related laws, objectives, and Articles of Tangtrongwechakit Association of the Company, as well as resolutions of the 6. Mr. Sarit Tangtrongwechakij Director meetings of shareholders. 7. Mr. Adisak Tangtrongweachakit Director 8. Mrs. Seenual Tasanapant Directors 2. To consider and approve any significant (Independent Director) matters related to the Company’s business operations, 9. Mr. Sirichai Sombutsiri Directors (Independent Director) e.g. vision, mission, policies, business strategies, goals and operating plans, financial targets, and budget of the Miss Patcharee Kosanam was appointed as Company and its subsidiaries. the Company Secretary in the meeting of the Board of Directors No.8/2015 held on November 12, 2015 3. To govern and care for the normal business The authorized directors are: operations of the Company; and to have the Management 1. Mr. Anant Tangtongwechakit work efficiently and proficiently to be in line with the 2. Mrs. Wanphen Punyaniran determined vision, mission, policies, business strategies, 3. Mrs. Jirawan Pongpichitkul goals and operating plans, financial targets, and budget of the Company. 4. Miss Chittima Tangtrongwechakit 5. Mr. Sarit Tangtrongwechakij 6. Mr. Adisak Tangtrongweachakit “Any two authorized directors co-sign their names and affix the Company’s seal.”
62 Annual Report 2015 Buriram Sugar Public Company Limited
4. To provide the accounting system, financial 10. To recruit and appoint a person with reports and auditing; and to care for the internal control knowledge, competence and experience that the Board system, the internal audit system, the risk management of Directors deems appropriately, and with all other system, and the misconduct prevention, as well as qualifications required by related laws and regulations to provide monitoring measure on operation performance hold a position of directorship in case any director vacate of the Company, its subsidiaries, and its joint ventures his office due to other reasons apart from the expiration in order to ensure that they are all efficient and proficient of the term of office.
5. To prepare the annual reports of the Company 11. To recruit a person with knowledge, and/or the Board of Directors in accordance with all competence, experience and all other qualifications related laws and regulations required. required by related laws and regulations to hold a position of directorship, and such person shall be nominated for the meeting of shareholders’ consideration. 6. To care for and provide a governing mechanism to prevent the potential conflicts of interest between any stakeholders and the Company, its subsidiaries, and its 12. To appoint or nominate person to be director joint ventures. or executive in the subsidiaries and/or joint venture in proportion of shareholding in the subsidiaries and joint venture. Such appointed or nominated director 7. To consider, approve, consider and give or executive shall be legally qualified for duties and opinions for consideration and approved by the meeting responsibilities as well as not possess any characteristics of shareholders in case of making any transactions prohibited in accordance with announcement of the significantly to the Company or any connected Securities and Exchange Commission. transactions in accordance with the procedure, conditions, legal process and related rules and regulations and/or obligations required by the Company, its subsidiaries, and 13. To consider annual dividend payment and its joint ventures. interim dividend payment of the Company and its subsidiaries. 8. To appoint any of the Company’s directors as the chairman of the board; and to appoint some directors 14. To consider and set up the criteria of subject to the number of the Board of Directors deems remuneration payment to the Company’s directors and appropriately as the vice chairman. top management.
9. To determine and amend the authorized 15. To consider appropriate amount of directors of the Company. remuneration for directors of the Company in line with the criteria of remuneration payment set up by the Board of Directors which shall be proposed to the meeting of shareholders for consideration and approval.
63 Annual Report 2015 Annual Report 2015 16. To evaluate the work performance of the 23. To set up and amend any matters prescribed Managing Director and Top Management; to consider and in the regulations and Articles of Association of the set up the remuneration for the Top Management in line Company. with the criteria of remuneration payment set up by the Board of Directors. 24. To engage other power, duties and responsibilities as required by laws and other related 17. To appoint any sub-committees; to recruit regulations, Articles of Associations of the Company, and and appoint the directors or persons having engaged the the resolutions of the meetings of shareholders. knowledge, competence and experience as the Board of Directors deems appropriately to hold positions in those In case that the Board of Directors or their sub-committees; and to lay down the scope of authority, authorized representative must carry out or enter into duties and responsibilities of those sub-committees. any transaction which may cause potential conflict of interest with the Company and/or its subsidiaries 18. To appoint any of executive board members and/or related companies, the Board of Directors or as the Managing Director; and to determine the scope their authorized representative will have no power to of authority, duties and responsibilities of the Managing approve the specified transaction except the approval Director. is in accordance with the policies and regulations which the Board of Directors and/or shareholder’s meeting (case by case) has considered and approved under laws, 19. To appoint a director or person having regulations, objectives, or the Articles of Association of engaging the qualifications, knowledge, competence and the Company. experience as the Board of Directors deems appropriately as the Company Secretary.
20. To appoint and/or empower one or several directors or persons to take any acts under the scope of directorship power and as the Board of Directors deems appropriately. However, such empowerment may be suspended, cancelled or altered.
21. To provide and care for the communication channels to connect with each group of shareholders and stake holders of the Company appropriately.
22. To care for the accuracy, completion, timing and transparent disclosure of important information related to the Company via fair and creditably accessible channels.
64 Annual Report 2015 Buriram Sugar Public Company Limited
Audit Committee 2. To provide some advice to the Board of Directors and the Management on the improvement As of 31 December 2015 the Audit Committee of the Company’s working processor system in order consists of 3 members are included: to reduce related risks to ensure that the financial Name Position statements of the Company are accurate and efficiently utilized. 1. Mr. Prachuab Chaiyasan Chairman of the Audit Committee 2. Mrs. Seenual Tasanapant Audit Committee 3. To consider, recruit, and nominate 3. Mr. Sirichai Sombutsiri Audit Committee an independent person to be the Company’s auditor; to propose the remuneration for such an auditor; and to Remark : - Mrs. Seenual Tasanapant and Mr. Sirichai have the meetings with the auditor at least once a year Sombutsiri are directors who possess knowledge and without the attendance of the Management. experience sufficient to be able to review credibility of financial statement. - Ms. Porntip Winyupakorn was the secretary 4. To advise the Board of Director and executive of the Audit Committee. to improve working process and system efficiently to reduce the risk for making financial report correctly and usefully. Terms The Audit Committee’s term lasts 3 years. Audit 5. To review the internal control system and Committee whose terms have ended may be reelected internal audit system of the Company to ensure that to the Board. In case of a vacant position due to causes they are run appropriately and proficiently; to verify the other than term completion, the Board must appoint independence of the Internal Audit Department; and to qualified and lawful candidates as replacement Audit give approval of the appointment, removal and dismissal Committee to maintain a number of Audit Committee of the Head of Internal Audit Department or those of required by the Board of Directors. Each replacement other departments which is responsible for the internal shall serve in such position only for his/her predecessor’s audit activities of the Company. remaining term. 6. To control and monitor the operation of the Scope of Duties and Responsibilities of the internal audit office according to the internal audit office charter Audit Committee 1. To review the financial statements of the 7. To verify and advise on adequacy, propriety Company to ensure that they are disclosed accurately and and efficiency of risk management adequately by coordinating with the external auditor and the Management who are responsible for the preparation of quarterly and yearly financial statements. The Audit Committee may have the auditor review or audit any transactions necessarily or importantly while auditing the Company’s account.
65 Annual Report 2015 Annual Report 2015 8. To consider any connected transactions h) Other information that deems appropriate for or those with potential conflicts of interest to be in shareholders and investors to know under conformity with laws on securities and stock exchange, scope of duties and responsibilities assigned and regulations of the Stock Exchange of Thailand in by the Board of Directors. order to ensure that such transactions are reasonable and enhance the best benefit for the Company; and 11. In performing duties, if the Audit Committee to consider to ensure the Company’s disclosure of finds or suspects, the following transactions may have connected transactions or those possibly causing the the material impact on the financial status and operation conflicts of interest which is accurate and adequate. results of the Company, the Audit Committee shall report them to the Board of Directors prior to the improvement 9. To verify that the Company conforms to laws within the timeframe of the Audit Committee who deems on securities and stock exchange, regulations of the Stock appropriately : Exchange of Thailand and any other laws on the business of the Company. a) Transactions causing conflicts of interest b) Dishonest or irregularity or important defect 10. To disclose the reports of the Audit in the internal control system Committee, which signed by the Audit Committee c) Violation of laws on securities and stock Chairman, in the annual reports of the Company which exchange, regulations of the Stock Exchange including the minimum information as follows: of Thailand or laws on the business of the Company. a) Opinion on fairness, completeness, and reliability of financial statements of
the Company.
b) Opinion on adequacy of internal control system of the Company. If the Board of Directors or the Management of the Company fails to remedy such within the timeframe c) Opinion on legal conformance to Securities specified in paragraph one, any of the Audit Committee and Exchange Act, regulations of the Stock members may report the transaction or act stated in Exchange of Thailand, or any laws related paragraph one to the Securities and Exchange Commission with business of the Company. or the Stock Exchange of Thailand. d) Opinion on appropriateness of the auditor. e) Opinion on transaction that may cause 12. The Audit Committee may seek for potential conflict of interest. an independent opinion from other professional advisors f) Number of meeting of the Audit Committee if it deems necessarily under the Company’s expense. and attending of each Audit Committee. g) Opinion or general remark that Audit 13.To perform other duties specifically assigned Committee receive from compliance with by the Board of Directors with consent of the Audit charter. Committee.
66 Annual Report 2015 Buriram Sugar Public Company Limited
Risk Management Committee Scope of Duties and Responsibilities of the As of December 31, 2015, the Risk Management Risk Management Committee. Committee consists of 5 members are included: 1. Present and supportive Board of Directors to set risk management policies and acceptable risk levels Name Position to the Company. 1. Mr. Anant Tangtongwechakit Chairman of the Risk Management Committee 2. Mrs. Jirawan Pongpichitkul Risk Management Director 2. Present an overview of the Company risk, how 3. Miss Chittima Tangtrongwechakit Risk Management Director to manage and to monitor risks to the Board of Directors. 4. Mr. Sarit Tangtrongwechakij Risk Management Director 5. Mr. Adisak Tangtrongweachakit Risk Management Director 3. Review the risk management report and implemented to ensure that risk management is adequate Miss Kaynica Tanawechayasiri was the secretary and appropriate to manage the risks to an acceptable of the Risk Management Committee. level.
Term of position 4. Coordinated with the Audit Committee by exchanging knowledge and information about the risks 1. The Risk Management Committee shall hold and internal controls that affect or may affect the the position for a term of three years from the date the Company. Board of Directors has approved the appointment.
5. Decide and make recommendations on critical 2. Risk Management Committee who retired by issues that arise in the risk management process. rotation may be appointed back into position again if it is approved by the Board of Directors. 6. Encourage a culture of risk management in organizations. 3. Moreover, when retired by rotation, the Risk Management Committee will be retired when 7. Evaluate the performance of the Risk Management Committee and report on the annual • dead assessment to the Board of Directors. • resign • Disqualified or prohibited under the Companies 8. Review the appropriateness of charter yearly. Act 1992 and the Securities Exchange Act of This is to ensures that the content of the charter is 1992 (including any amendments). consistent with the objectives and strategies for risk • The Board of Directors' resolution dismissed. management of the Company. • The court has ordered dismissed.
67 Annual Report 2015 Annual Report 2015 9. Review the risk and the Company's risk 3. To set up the organization structure and management approach according to the risk agency management policy of the Company as well as policies evaluate, including provide suggestions for improvement. of recruitment, training, employment and termination of employment for the Company’s employees. The Managing Director and/or the Director to the Human 10. Oversee the effectiveness of the risk Resources Department may be authorized to sign management processes of the Company on track and signature in the employment contract. review continuously.
4. To conduct the feasibility studies on Executive Committee investment in new projects, and to be empowered to As of December 31, 2015 the Executive consider and approve the Company for an investment Committee consist of 5 members are included; or a joint venture with an individual, juristic person or any other business organization in the investment form Name Position the Executive Committee deems appropriately in order 1. Mr. Anant Tangtongwechakit Chairman of Executive to operate the business subject to the Company’s Committee objectives, and to consider and approve the Company’s 2. Mrs. Jirawan Pongpichitkul Executive Director expenditure for such investment, business contracts and/or 3. Miss Chittima Tangtrongwechakit Executive Director any related acts to complete such matter for the amount 4. Mr. Sarit Tangtrongwechakij Executive Director of investment from Baht 10 million up to Baht 50 million. 5. Mr. Adisak Tangtrongweachakit Executive Director
5. To consider and approve financial transactions Miss Patcharee Kosanam is the secretary of to be made with any financial institutions in respect with the Executive Committee. the opening of account, taking out of loans and credit line, pledge, mortgage, guarantee and other matters as well as selling and purchase, and registration for any Scope of Duties and Responsibilities of the ownership of land in accordance with the Company’s Executive Committee objectives in order to benefit the business operations of 1. To consider and prepare the policies, business the Company; and to take any legal acts, make contracts strategies, operating goals and plans, financial targets, and/or perform other acts related to such matters until and budget of the Company by appropriately regarding it is completed, in the amount from Baht10 million up various business factors to be proposed for the Board of to Baht1,000 million for each transaction but must not Directors’ approval. exceeding annum budget approved by the Board of Directors.
2. To govern, inspect, and monitor the Company’s business operations to ensure that they are efficiently and proficiently carried out in line with the policies, business strategies, operating goals and plans, financial targets, and budget of the Company as approved by the Board of Directors.
68 Annual Report 2015 Buriram Sugar Public Company Limited
6. To consider and approve of entering into 12. To have any power, duties and responsibilities a contract and financial instruments, e.g. future contract as per assignments or policies given by the Board of for the right in sugar sales and purchases, foreign Directors. currencies exchange forward contract, etc. in order to prevent the Company’s financial risks. In case that the Executive Committee or their authorized representative must carry out or enter into 7. To consider and provide advice or opinions any transaction which may cause potential conflict of to the Board of Directors about any projects, proposals interest with the Company and/or its subsidiaries and/ or entering into transactions related to the Company’s or related companies, the Executive Committee or operations, which need the operating amount greater their authorized representative will have no power to than the permitted amount and/or required by any approve the specified transaction except the approval related laws and regulations or Articles of Association is in accordance with the policies and regulations which of the Company that must be considered and approved the Board of Directors and/or shareholder’s meeting by the meeting of shareholders or that of the Board of (case by case) has considered and approved under laws, Directors. regulations, objectives, or the Articles of Association of the Company. 8. To consider and approve of the rules, regulations, management policies and business operations of the Company or any other acts binding the Company.
9. To empower the Managing Director to operate the business of the Company in accordance with the scope of power, duties and responsibilities as designated and governed by the Executive Committee.
10. To appoint and/or assign the Executive Director or a person or several persons to take any acts under the scope of power given to the Executive Committee and as the Executive Committee deems appropriately. The Executive Committee may suspend, cancel or alter such power.
11. To consider and approve of the Empowered Operation Manual to enable the appointed and/ or authorized persons to be aware of the scope of responsibilities and given power, and such that shall be a working manual for further working reference and to make the working procedure in order.
69 Annual Report 2015 Annual Report 2015 Executive 2. To consider, negotiate, and approve for engaging into any juristic acts and/or taking actions, which As of December 31, 2015 the executives consist involve some money for not more than Baht 10 million, of 9 following members. relatedto the Company’s day-to-day operations and/or Name Position management but must not exceeding annum budget approved by the Board of Directors. 1. Mr. Anant Tangtongwechakit Managing Director 2. Mrs. Jirawan Pongpichitkul Senior Vice Managing Director 3. To consider the engagement into any juristic (Domestic Investment) acts, and/or to negotiate for any contracts related to 3. Miss Chittima Senior Vice Managing any operations or undertaking in connection with the Tangtrongwechakit Director Company’s day-to-day operations and/or management, (Domestic Investment) which involve some money higher than the determined 4. Mr. Adisak Tangtrongweachakit Senior Vice Managing amount, in order to provide some opinions and propose Director (Domestic Investment) such matter to the Board of Directors and/or the Executive Committee for further screening and finding out the 5. Mr. Sarit Tangtrongwechakij Senior Vice Managing Director (International solutions. Investment) 6. Mr. Vorathep Vice Managing Director 4. To conduct the feasibility studies on Lertchaiudomchok of Finance & Operation investment in new projects, and to be empowered to 7. Mr. Pitak Chaosoun Assistant Senior consider and approve the Company for an investment Managing Director of Finance & Operation or a joint venture with an individual, juristic person or any other business organization in the investment form 8. Mr. Pattarapong Pongsawasdi Assistant Senior Managing Director of the Executive Committee deems appropriately in order International Affair to operate the business subject to the Company’s 9. Mr.Adul Suravudhikul Assistant Senior objectives, and to consider and approve the Company’s Managing Director of expenditure for such investment, business contracts Financial Management and/or any related acts to complete such matter for the amount of investment up to 10 million Baht per Scope of Duties and Responsibilities of the transaction. Managing Directors 1. To be responsible for the Company’s 5. To consider and approve transactions with day-to-day operations and/or management, as well as for banks and financial institutions involving account opening, supervising general operations to be in line with policies, borrowing, pawning, mortgages, guarantees, and other business strategy, goals and operating plans, financial activities including property trading and land ownership targets and budgets of the Company as approved by the registration according to specified objectives in order to Board of Directors. facilitate the Company’s operation as well as any juristic acts and/or any related acts to complete such matter for the amount of money up to 10 million Baht per transaction.
70 Annual Report 2015 Buriram Sugar Public Company Limited
6. To set up certain trading conditions, e.g. line of credit, period of payment, entering into a contract of sale, changes of trading terms, etc. and such transactions involve some money not more than Baht 10 million. but must not exceeding annum budget approved by the Board of Directors.
7. To recruit, appoint, remove, transfer, dismiss, and set up the scope of authority, duties and appropriate benefits for employees of the Company, who hold position of the Department Manager or lower according to the policies settled by the Executive Committee.
8. To appoint some advisors in any fields necessary for the Company’s day-to-day operations and/or management.
9. To appoint and/or empower any person or persons to take acts under the scope of authority of the Managing Director as the Managing Director considers it is appropriate whereas such empowerment may be cancelled, revoked or revised by the Managing Director.
10. To have any authority, duties and responsibilities as assigned or subject to policies given by the Board of Directors and/or the Executive Committee.
In case that the Managing Director or their authorized representative must carry out or enter into any transaction which may cause potential conflict of interest with the Company and/or its subsidiaries and/or related companies, the Managing Director or their authorized representative will have no power to approve the specified transaction except the approval is in accordance with the policies and regulations which the Board of Directors and/or shareholder’s meeting (case by case) has considered and approved under laws, regulations, objectives, or the Articles of Association of the Company.
71 Annual Report 2015 Annual Report 2015 Company Secretary In the meeting of the Board of Directors No.8/2015 held on November 12, 2015, the Board of Directors has resolved to appoint Miss Patcharee Kosanam as Company Secretary in conformance to Section 89/15 of Securities and Exchange Act BE 2535 (Including amended).
Miss Patcharee Kosanam was trained from the Thai Institute of Director (IOD) on following courses;
• Company Secretary Program (CSP), Class 50/2013 • Effective Minute Taking (EMT), Class 25/2013 • Board Reporting Program (BRP), Class 10/2013 • Company Reporting Program (CRP), Class 5/2013
Scope of duties and responsibilities of Company Secretary are as follows: 1. To maintain efficiency of the operation of the Board of Directors and the Executives in conformance to the Company’s articles of association and related laws and regulations.
2. To organize Board and shareholders’ meetings according to rules and applicable laws.
3. To record minutes of the shareholder’s meetings and minutes of the Board of Directors’ meeting. Coordinate and follow up the shareholders’ and Board’s resolutions.
4. To prepare and maintain all documents relating to the Company’s statutory register of directors, Annual Reports, notices and minutes of the meetings of the Board of Directors as well as notices and minutes of the shareholders’ meetings.
5. To maintain and keep a record of vested interests as reported by directors and executives and send copies reporting vested interests of directors and executives or related persons to the Chairman of the Audit Committee within seven days of the receipt of each report.
6. To perform other duties as required by the regulations of the Capital Market Supervisory Board.
Details of the directors of the subsidiaries. Names of directors in each subsidiaries, only the significantly company with total revenue of over 10 percent of total revenue on the consolidated income statement of the last fiscal year include Buriram Sugar Factory Co., Ltd. (BSF). Details about the directors of Buriram Sugar Factory Co., Ltd. are as follows:
72 Annual Report 2015 Buriram Sugar Public Company Limited
Organization of Buriram Sugar Factory Co., Ltd. (“Core Business”)
Board of Director
Board of Executive Director
Managing Director
Senior Vice Managing Senior Vice Managing Vice Managing Director of Production Director of Procurement Director of Operation Mr. Sarit Tangtrongwechakij and Domestic Sale Mr. Vorathep Lertchaiudomchok Miss Chittima Tangtrongwechakit
Vice Managing Director of Production
Assistant Managing Director of Production Assistant Managing Director of Operation
Production Manager Quality Control Manager Domestic Sale Manager Credit Manager
73 Annual Report 2015 Annual Report 2015 Buriram Sugar Factory Co., Ltd. (BSF)
Board of Director Executive As of December 31, 2015 the Board of Director As of December 31, 2015 the Executive consists consists of the following 5 members; of the following 7 members;
Name Position Name Position 1. Mr. Anant Tangtongwechakit Chairman of the Board of 1. Mr. Anant Tangtongwechakit Managing Director Director 2. Miss Chittima Senior Vice Managing 2. Mrs. Jirawan Pongpichitkul Director Tangtrongwechakit Director of Procurement 3. Miss Chittima Director and Domestic Sale Tangtrongwechakit 3. Mr. Sarit Tangtrongwechakij Senior Vice Managing 4. Mr. Sarit Tangtrongwechakij Director Director of Production 5. Mr. Adisak Director 4. Mr. Vorathep Vice Managing Director of Tangtrongweachakit Lertchaiudomchok Operation 5. Mr. Yanyong Vice Managing Director of Kittithatphongphon Production 6. Mr. Nopanant Phoolsap Assistant Managing Director Executive Committee of Production As of December 31, 2015 the Executive 7. Mr. Pitak Chaosoun Assistant Managing Director Committee consists of the following 5 members; of Operation
Name Position Duties and Responsibilities Scope of the 1. Mr. Anant Tangtongwechakit Chairman of the Executive Committee Subsidiaries’ Board of Directors 2. Mrs. Jirawan Pongpichitkul Executive Director The Board of Directors Meeting No. 6/2014 held 3. Miss Chittima Executive Director on August 22, 2014 has approved the scope and functions Tangtrongwechakit of the Board are as follows. 4. Mr. Sarit Tangtrongwechakij Executive Director 5. Mr. Adisak Executive Director Tangtrongweachakit 1. Manage the subsidiaries business operations to be the best for shareholders. For the subsidiary operations, the Board of Directors of the subsidiaries are to perform their duties with honesty, responsibility and carefully with compliance with laws and regulations of the company and the resolutions of the shareholders' meeting as well as the resolution of the Board of Directors.
74 Annual Report 2015 Buriram Sugar Public Company Limited
2. Supervise the normal business operations 10. Evaluate the performance of the Managing of the subsidiaries and supervise the management to Director and senior executives and consider the senior perform according to the vision, mission, policies, business executives’ remuneration in accordance with the strategies, business goals, action plans, financial goals and remuneration guidelines specified by the Board of budgets of major company. Directors.
3. Provide accounting system, financial reporting 11. Appoint and / or authorize the Board of and auditing including monitoring the internal control Directors or any or several persons to take any action system, Risk Management System and anti-corruption within the Commission's powers as the Board see including the measures to tracking the subsidiaries appropriate. The Board of Directors may terminate or company's operating provide an effective and tightened change these authorities. enough. 12. Disclose information about financial position 4. Supervise and provide a supervision mechanism and operating results of the connected transactions of for prevent conflicts of interest between the company's subsidiaries as well as the acquisition or disposition of stakeholders. assets and / or items significance to the Company with correctly informed and within a reasonable time set by the Company. 5. Appoint one appropriate person of directors to be president and a vice chairman. 13. Disclose and deliver their interests and personal information that is relevant to the Board of 6. Define and / or change the authorized Directors of the Company to identify relationships and signatory’s directors of Subsidiaries Company. transactions with the company or its parent company that may cause a conflict of interest within a reasonable 7. Consider and determine the criteria for the time set by the Company. remuneration of directors and senior executives. 14. Report the business plan, business growth, 8. Nominate individuals with knowledge, skills, large investment projects as approved by the Company, experience and qualified according to law and relevant as well as joint investment with other operators to the regulation to propose to the shareholders meeting to Company. Through the monthly operating reporting consider and appoint as the Director. period and to clarify and / or submission of documents in case of requested by Company. 9. Consider the amount of remuneration of Directors remuneration guidelines of the Board of 15. Clarify and / or submission of documents in Directors to propose to the shareholders meeting to case of requested by Company. consider and approve.
75 Annual Report 2015 Annual Report 2015 16. Clarify and / or submission of documents in case of requested by Company in the case of the Company found any significant issues.
17. Is authorized, duties and responsibilities of any other specified in the law and relevant regulation Articles of Association and resolution of the shareholders meeting.
However, any acting of the Board of Directors or any person authorized by the Board of Directors, stakeholders who may have a conflict of interest with the Company or any related company. The Board of Directors or the person authorized by the Board of Directors are not authorized for those action in the matter. Except the approval which based on policies and guidelines, the Board of Directors of the parent company and / or the shareholders meeting of the parent company. (Considered by case) To consider and approved change. On the basis of the laws and regulations of the company.
Financial Amount Approval Definition Buriram Sugar Public Company Limited and its subsidiaries defined authority to approve limits for operating a normal transaction, the Company's Board of Directors is authorized to approve committee delegates (the chairman of the executive committee, executive director and managing director who are directors of the Company) and the delegates are authorized employees as they see appropriate. It can be summarized as follows: Senior Vice Managing Assistant Managing Approval Executive Committee Managing Director Director / Vice Director Managing Director 1. Expenses - Expenses associated with The amount exceeding operating and general 20,000 - 100,000 Baht 100,000 baht expenses. 2. Purchasing Approved aside from The amount exceeding - Purchase of fixed assets Not exceeding 100,000 budget 100,000 baht - The signing of the various The amount exceeding Not exceeding 1,000,000 Not exceeding 500,000 purchase document. 1,000,000 baht 3. Finance - The advancing disbursement The amount exceeding 20,000 - 100,000 baht at a time. 100,000 baht 4. General The amount exceeding Without authority to Without authority to - The sale of other assets Not exceeding 100,000 100,000 baht approve approve The amount exceeding Without authority to Without authority to - Building renovation Not exceeding 500,000 500,000 baht approve approve
76 Annual Report 2015 Buriram Sugar Public Company Limited
Remuneration of Directors and Executives Remuneration in Cash The Annual General Meeting of shareholders on April 21, 2015 passed a resolution approving of the Remuneration Director of the Company in 2015, which Board of Directors approve remuneration from the financial results of the company including the operations and responsibilities of Director by comparison with the same type of business or industry or close to the company And reference remuneration of directors and executives of listed companies in 2012, which was prepared by the Stock Exchange of Thailand.
Monthly Remuneration Position Annual Bonus (Baht) (Baht/month) Chairman of the Board of Directors 15,000 400,000 Director 10,000 150,000
Monthly Remuneration Position Annual Bonus (Baht) (Baht/month) Chairman of Audit Committee 15,000 150,000 Audit Director 10,000 100,000
Monthly Remuneration Position Annual Bonus (Baht) (Baht/month) Chairman of Risk Management Committee 15,000 400,000 Risk Management Director 10,000 150,000
Monthly Remuneration Position Annual Bonus (Baht) (Baht/month) Chairman of Executive Committee 15,000 150,000 Executive Director 10,000 100,000
77 Annual Report 2015 Annual Report 2015 In 2014 and 2015, the Company remunerated the directors as following detail;
Remuneration Name Position 2014 2015 Chairman of the Board of Directors, 880,000 910,000 Mr. Prachuab Chaiyasan Independent Director, and Chairman of the Audit Committee
Mr. Anant Tangtongwechakit Director, CEO and Chairman of Risk 743,750 930,000 Management Committee Mrs. Wanphen Punyaniran Director 260,000 270,000
Mrs. Jirawan Pongpichitkul Director, Executive Director 630,000 710,000 and Risk Management Director
Miss Chittima Tangtrongwechakit Director, Executive Director 630,000 710,000 and Risk Management Director
Mr. Sarit Tangtrongwechakij Director, Executive Director 630,000 710,000 and Risk Management Director
Mr. Adisak Tangtrongweachakit Director, Executive Director 620,000 710,000 and Risk Management Director
Mr. Amnuay Patise Independent Director 535,000 - and Audit Committee
Mrs. Seenual Tasanapant Independent Director 122,500 490,000 and Audit Committee
Mr. Sirichai Sombutsiri Independent Director 350,000 490,000 and Audit Committee Total 5,521,250 5,930,000
Remark : 1. Mr. Prachuab Chaiyasan was appointed on September 18, 2012 2. Mr. Amnuay Patise was appointed on October 15, 2012 and resigned on October 2, 2014 3. Mr. Sirichai Sombutsiri was appointed on January 1, 2013 4. Mrs. Seenual Tasanapant was appointed on October 3, 2014
78 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Sugar Factory Co., Ltd. In 2014 and 2015, the Company remunerated the Board of Directors as following detail;
Remuneration (THB) Name Position 2014 2015 Mr. Anant Tangtongwechakit Chairman 580,000 580,000 Mrs. Jirawan Pongpichitkul Director 270,000 270,000 Miss Chittima Tangtrongwechakit Director 270,000 270,000 Mr. Sarit Tangtrongwechakij Director 270,000 270,000 Mr. Adisak Tangtrongweachakit Director 270,000 270,000 Total 1,660,000 1,660,000
In 2014 and 2015, the Company remunerated the Executive Committee as following detail;
Remuneration (THB) Name Position 2014 2015 Mr. Anant Tangtongwechakit CEO 330,000 330,000 Mrs. Jirawan Pongpichitkul Executive Director 220,000 220,000 Miss Chittima Tangtrongwechakit Executive Director 220,000 220,000 Mr. Sarit Tangtrongwechakij Executive Director 220,000 220,000 Mr. Adisak Tangtrongweachakit Executive Director 220,000 220,000 Total 1,210,000 1,210,000
Remuneration of Executive In 2014 and 2015, the Company remunerated the Executives including salary, bonus and benefits as following detail;
BRR BSF 2014 2015 2014 2015 Amount of Executive 8 9 5 7 Amount of remuneration 20,767,459 22,691,592 11,801,695 14,661,000
Other Remuneration - None -
79 Annual Report 2015 Annual Report 2015 The superintendent oversees the (A) The Company Annual Dividend Payment and operations of its subsidiaries the Interim Dividend (if any). (B) The Company Articles of Association Buriram Sugar Public Co., Ltd. overseeing and Amendments managing the affairs of the company including monitoring of its compliance with the measures and mechanisms (C) The Company Annual Budget Approval that can be defined as a unit of the company itself and The items (D) to the (L) is considered significant according to company policy, Buriram Sugar Public Co., items if the company transact, it will have a significant Ltd.. for maintaining interest of investments and for the impact on the financial position and results of operations maximum benefit to the Company in the overall Buriram of the Company by the rules prescribed by the relevant Sugar Public Co., Ltd. has a mechanism to oversee the notifications of the Capital Market Commission and the implementation of the company the as follows: Notification of the Stock Exchange of Thailand. The acquisition or disposition of assets and / or the transaction (Considered by case) shall be compliant for a case that 1. The company will appoint or nominate when calculating the size of the list of transactions candidates as directors or manager of subsidiaries and / or compared to the size of the company in accordance with associated companies, at least in proportion of their the above. The criteria to be considered for approval shareholding in subsidiaries and associated companies. by the Board of Directors of the Company. The list is as The directors and executives nominated by the Company follows. or appointed by judgment in assessing vote of the meeting of the Board Directors of subsidiaries and / or its associate (D) If the Company entered into a transaction or in relation to the general management and the normal related to the acquisition or disposition of assets. business of the subsidiary and / or joint promotion as the (E) Transfer or relinquish benefits including directors and management of the subsidiaries and / or a waiver claim on the damage of the company. associates have been agreed for the benefit of directors (F) The sale or transfer of all or a substantial part or management accordingly roles and responsibilities to any other person. must be qualified. (G) The purchase or business transfer of another company by the company. 2. In following case, there need to be approved (H) The business operation, amendment or by the Board of Directors of the Company or the termination of contracts relating to the leasing business of shareholders meeting of the major company (Considered the Company or a substantial part, assignment for other by case) before approval by the Board of Directors or person with business management of the company or the shareholders meeting of the Company (Considered enterprise integration with another party. by case). (I) Renting or leasing all or part of the business or assets of the company's significant. (1) If there is case needs of approval by the Board (J) Loans, Lending, Crediting and credit of Directors of the Company or the shareholders meeting guaranteeing for transactions binding the Company to of the major company (Considered by case) before the increase the financial burden or providing financial help company transactions the to another person in any other way, is not the Company's normal business of the company.
80 Annual Report 2015 Buriram Sugar Public Company Limited
(K) Going out of Business reduced to less than 50 percent of the total votes of (L) Any other matters that are not normal companies in a transaction besides the normal business business. The list will affect the company significantly. transactions of the company. (D) Going out of Business of the Major Company (2) Subject need approval by the shareholders (E) Any other transaction that are not normal meeting of the parent company before the company business of the major Company and which affects the operate the transaction however, it has to follow the company significantly. rules defined by the relevant notifications of the Capital (F) The amendment of the regulations of the Market Supervisory Board and the Board of the Stock company could impact significantly on the financial Exchange of Thailand. This must be the case that when position and results of operations of Company. This calculating the size of the list of transactions compared includes, but is not only, amendments of company to the size of the company in accordance with those regulations that affect the rights of the company to already mentioned must be approved by a shareholders nominate or to appoint a director or executives of the meeting of the major company as well. company proportionally to their shareholding in company. The vote of the directors who are nominated or appointed by the Company, the Board of Directors of major (A) If the Company entered into a connected Company. Voting at the meeting of major company's transaction or related to the acquisition or disposition major shareholder and / or payment of dividends on the of major company assets. Company. (B) The capital increase by issuance of new shares and the allocation of shares of the company including the reduction capital of the Company which 3. Board, Executive Director and Administrators is not in proportion of the existing shareholdings of the of the subsidiaries are responsible for the following: shareholders, which will result in the proportion of voting rights of the Company. The direct and / or indirect, in the (A) Disclosure the financial and operating meeting of the shareholders of the company, whether results of the connected transaction of the company as in any descend fell more than 10 percent of the total well as the acquisition or disposition of assets and / or votes of companies or as a result, the proportion of voting items of significance to the company with the correct rights of the Company both directly and / or indirectly to and complete information within a reasonable time the shareholders meeting of the Company that are not determined by the Company. Incidentally, the Board in any descend reduced to less than 50 percent of the of Company Directors are to consider the enter into a total number of major companies. connected transaction, the acquisition or disposition of a (C) Any other action which is a result of the significant asset of the company by the rules prescribed proportion of the voting rights of the Company both by the relevant notifications of the Capital Market direct and / or indirect of the shareholders meeting of the Supervisory Board and the Board of the Stock Exchange Company that are not in any descend decreased more of Thailand to apply mutatis mutandis. than 10 percent of the total votes of major companies or (B) And disclose their interests and personal as a result of the proportion of voting rights of the major information that is relevant to the Board of Directors Company direct and / or indirect in the shareholders of the Company to understand the relationships and meeting of the company, whether in any descend transactions with the company or its parent company that
81 Annual Report 2015 Annual Report 2015 may cause conflict of interest and avoid transactions that (F) Clarify and / or transmit of data or documents may cause conflict of interest with the company or its related to the company if the company detects any parent company. The Board of Directors is responsible for significant issues. informing the Board of Directors of the Company informed (G) Responsible for the company's internal by setting the time limit for the judge to consider or control system, risk management system and anti-fraud approve any considerations that take into consideration system appropriately, effectively and strong enough to the overall interests of the company. ensure that the operation of the company will adhere to the policy of the company, Laws and regulations in However the directors of the company must not announcement of the corporate governance of listed participate in the self-interest or a conflict of interests, companies by Capital Market Commission, the Securities both directly and indirectly as well. and Exchange Commission and the Stock Exchange of Thailand including of work arrangement which clearly show that the company has sufficient disclosure Incidentally, any Director, Executives or person information to public in accordance with significantly who is related with the company get the benefit procedure the continuous and reliable transaction. financially other than they normally would or cause the There must be a channel for Directors and Executives of Company or its parent company the damaged will be major company to get the information of the Company presumed that the action is inconsistent with the interests to monitor the operating results and financial position. of the company significantly. The transaction between the Company's directors, Executive Director and company Executives and significant (A) The transaction between the Company and corporate transactions efficiently in addition to providing the Board of Directors, executives or individuals who are a mechanism to monitor the system in such a major not related by the rules of the transaction. company. The team of internal auditors and independent directors of major company can access information (B) The use of information of the company unless directly and manage a reporting system to monitor and the information is already publicly available. report to directors and executives of major company to (C) The use of the property or the business ensure that the Company regularly follow the conducted opportunity of the Company in the same way that big system. companies do and violation of rules or a general practice, according to the Capital Market Commission's Notification. 4. Prohibiting any of Directors, Executive (D) Report the business plan, business growth, Director, Executives, officers, employees or assignees of large investment projects as approved by the company the company including spouses and underage of those as well as investment joint with other operators to the persons use the internal information of company both company through the monthly reporting and to clarify derived from duty act or in any other way that are or the operating results and / or submission of supporting may be affected significantly to the Company and / or documents in the case when the company requested. to benefit themselves or others, whether directly or (E) Clarify the operating results and / or indirectly and whether they get returns or not. submission of supporting documents in the case when the company requested.
82 Annual Report 2015 Buriram Sugar Public Company Limited
5. Directors, Executives Director or a related person of the Company is about to do business with the company, the transaction will be approved by the Board of Directors and / or the Board of Executives of the Company and / or the shareholders of the Company and / or the shareholders meeting of the company (Consider by case) As the transaction was calculated by the rules prescribed by the relevant notifications of the Capital Market Supervisory Board and the Board of the Stock Exchange of Thailand. The acquisition or disposition of assets and / or the connected transaction. (Consider by case) shall apply mutatis mutandis. However, unless the transaction is a commercial agreement in the same way that a person would be conducted with the parties in the same situation, the bargaining power of trade without influence in their status as Directors. Executive Director, Executives of the company or any relative (Consider by case) The trade agreements that have been approved by the Board of Directors of the Company or adhere to the principle of the committee which already approved.
Personnel 1. Amount of Employee and Employee’s Remuneration
2012 2013 Permanent Daily Total Remuneration Permanent Daily Total Remuneration Employee Worker Employee (Million THB) Employee Worker Employee (Million THB) BRR 91 46 137 40.57 99 68 167 50.93 BSF 237 537 774 73.72 265 632 897 130.28 BEC 58 14 72 8.62 69 3 72 15.51 KBF 23 45 68 2.84 22 41 63 10.38 BRD 128 67 195 31.17 129 55 184 39.94 BPC ------Total 537 709 1,246 156.91 584 799 1,383 247.04
83 Annual Report 2015 Annual Report 2015 2014 2015 Permanent Daily Total Remuneration Permanent Daily Total Remuneration Employee Worker Employee (Million THB) Employee Worker Employee (Million THB) BRR 112 74 186 61.52 129 72 201 76.71 BSF 300 739 1,039 155.56 277 790 1067 179.87 BEC 70 - 70 17.68 71 0 71 19.42 KBF 22 55 77 11.22 41 42 83 16.71 BRD 132 47 179 41.84 142 49 191 46.42 BPC 42 - 42 1.88 50 0 50 12.82 Total 678 915 1,593 289.80 710 953 1,663 351.95
2. Provident Fund The Company appointed SCB Asset Management Co., Ltd. (SCBAM) to be as the provident fund manager of the Company and its subsidiaries since August 22, 2013.
3. The personnel development of the company The company personnel development is as follow:
• Collaboration with external organizations to develop employees. The company has partnerships with external organizations such as the Skill Development Center to train employees If the employees are be able to pass the Department of Skill Development standard, It will be based on the minimum salary rates that the Department of Skill Development has determined. In addition, each year, every department will have a budget for training employees to third parties to develop and / or update their professional knowledge.
• The scholarship, the company provides scholarship for further education employees in tertiary education and graduate students under the conditions employees to return capital to the company.
84 Annual Report 2015 Buriram Sugar Public Company Limited
Director and Executive Profile
% OF WORK EXPERIENCE NAME/POSITION EDUCATION BACKGROUND SHARES PAST 5 YEARS - PRESENT 1. Mr. Prachuab Chaiyasan - Bachelor of Political Science, 0.05 - Chairman of the Board of Buriram Sugar Public (71 years old) Thammasat University Director Company Limited - Chairman of the Board - Independent Director of Director - Doctor of Philosophy, Honorary - Chairman of the Audit Degree in Political Science, Committee - Independent Director Ramkhamhaeng University - Director Thai Ethanol Power - Chairman of the Audit - Chairman of Audit Public Company Limited Committee - Director Accreditation Program Committee (DAP) class 54/2006, Thai Institute - Director Taiping Ethanol Co., Ltd. of Directors (IOD) - Director Thai Nguan Metal Public - Chairman of Audit Company Limited - Director Certification Program Committee (DCP) class 83/2007 Thai Institute of Directors (IOD) - Chairman of Council Ramkhamhaeng Ramkhamhaeng University University
- Director Paksong Capital Co., Ltd. 2. Mrs. Seenual Tasanapant - Bachelor of Law, - - Independent Director Buriram Sugar Public (70 years old) Thammasat University - Audit Committee Company Limited - Independent Director - Independent Director The Steel Public - Bachelor of Accounting, - Audit Committee - Audit Committee Company Limited Thammasat University - Director Taiping Ethanol Co., Ltd. - Advisor of Administrative Mahidol University - Director Accreditation Program Director Savings and Credit (DAP) class 55/2006 Thai Institute Co-Operative Limited of Directors (IOD) - Manager Mahidol University Savings and Credit - Director Certification Program Co-Operative Limited (DCP) class 79/2007 Thai Institute of Directors (IOD)
- Audit Committee Program (ACP) class 17/2007 Thai Institute of Directors (IOD)
- Certified Public Accountant No. 2974
85 Annual Report 2015 Annual Report 2015 % OF WORK EXPERIENCE NAME/POSITION EDUCATION BACKGROUND SHARES PAST 5 YEARS - PRESENT
3. Mr. Sirichai Sombutsiri - Bachelor of Business Administration 0.05 - Independent Director Buriram Sugar Public (62 years old) in Accounting (Honor), - Audit Committee Company Limited Thammasat University - Independent Director - Vice President of Siam Commercial Bank - Audit Committee Business Customer Public Company Limited - Master of Business Administration in Finance, University of Southern - Vice President of Siam Commercial Bank California, USA Big Customer Public Company Limited - Director OHTL Public Company - Advanced Management Program, - Independent Director Limited Harvard Business School, USA - Director Land and Houses Bank - Executive Director Public Company Limited - Certificate, The Joint State Private Sector Regular Course of the National Defense College Class 15
- Director Accreditation Program (DAP) class 25/2004 Thai Institute of Directors (IOD)
- Capital Market Academy Leadership Program class 5, Capital Market Academy
86 Annual Report 2015 Buriram Sugar Public Company Limited
EDUCATION % OF WORK EXPERIENCE NAME/POSITION BACKGROUND SHARES PAST 5 YEARS - PRESENT
4. Mr. Anant Tangtongwechakit - Bachelor of Business 4.06 - Chairman of Executive Committee Buriram Sugar Public (51 years old) Administration (Marketing), - Director Company Limited Assumption University - Chairman of Executive - Chairman of Risk Management Committee Committee - Director - Master of Art (Political - Managing Director Science, Politics and - Chairman of Risk - Chairman of the Board of Directors Buriram Sugar Factory Government), Management Committee Co., Ltd. Ramkhamhaeng University - Chairman of Executive Committee - Managing Director - Managing Director - Certificate of Sugar - Chairman of the Board of Directors Buriram Sugarcane Research Technology class 1, - Chairman of Executive Committee and Development Co., Ltd. Faculty of Agro-Industry, Kasetsart University - Chairman of the Board of Directors Buriram Energy Co., Ltd. - Chairman of Executive Committee - Director Accreditation - Chairman of the Board of Directors Key Brand Fertilizer Program (DAP) class - Chairman of Executive Committee Co., Ltd. 99/2012, Thai Institute of - Chairman of the Board of Directors Buriram Power Co., Ltd. Directors (IOD) - Chairman of Executive Committee - Director Thai Sugar Producers - Capital Market Academy Association Leadership Program class 15, Capital Market - Director The Thai Sugar Trading Academy Co., Ltd. - Chairman of the Board of Directors BRS Train Terminal Logistics Co., Ltd. - Diploma, The National - Chairman of Executive Committee Defense Course of the - Director Taksin Pattana Co., Ltd. National Defense College - Director Suriwan Enterprise Co., Ltd. Class 56 - Director A Team Intertrade Co., Ltd. - Director Siphandone Bolaven - Chairman of Executive Committee Co., Ltd. - Director T Plus Property Co., Ltd. - Chairman of the Board of Directors Buriram Power Plus - Chairman of Executive Committee Co., Ltd. - Chairman of the Board of Directors Buriram Super Power - Chairman of Executive Committee Co., Ltd. - Chairman of the Board of Directors Buriram Agro Energy - Chairman of Executive Committee Co., Ltd.
87 Annual Report 2015 Annual Report 2015 % OF WORK EXPERIENCE NAME/POSITION EDUCATION BACKGROUND SHARES PAST 5 YEARS - PRESENT
5. Mrs. Wanphen Punyaniran - Secondary school grade 2, 4.05 - Director Buriram Sugar Public (49 years old) Marywitthaya Prachinburi School Company Limited - Director - Director Key Brand Fertilizer Co., Ltd. - Director Accreditation Program - Executive Director (DAP) class 98/2012, Thai Institute - Managing Director of Directors (IOD)
6. Mrs. Jirawan Pongpichitkul - Bachelor of Science 4.05 - Director Buriram Sugar Public (48 years old) (Nursing and Midwifery), - Executive Director Company Limited Mahidol University - Director - Risk Management Director - Executive Director - Senior Vice Managing - Master of Public and Private - Risk Management Director Management, National Institute of Director (Domestic - Senior Vice Managing Development Administration Investment : Agricultural Business) Director (Domestic - Director Buriram Sugar Factory Investment : Agricultural - Director Accreditation Program - Executive Director Co., Ltd. Business) (DAP) class 98/2012, Thai Institute of Directors (IOD) - Director Buriram Sugarcane Research - Executive Director and Development Co., Ltd. - Managing Director - Director Buriram Energy Co., Ltd. - Director Key Brand Fertilizer Co., Ltd. - Executive Director - Director Buriram Power Co., Ltd. - Director Buriram Power Plus Co., Ltd. - Director Buriram Super Power Co., Ltd. - Director Buriram Agro Energy Co., Ltd.
88 Annual Report 2015 Buriram Sugar Public Company Limited
EDUCATION % OF WORK EXPERIENCE NAME/POSITION BACKGROUND SHARES PAST 5 YEARS - PRESENT
7. Miss Chittima Tangtrongwechakit - Bachelor of Business 4.05 - Director Buriram Sugar Public (45 years old) Administration (Marketing) - Executive Director Company Limited - Director Buriram Rajabhat University - Risk Management - Executive Director Director - Risk Management Director - Director Accreditation Program - Senior Vice Managing (DAP) class 98/2012, Thai - Senior Vice Managing Director (Domestic Institute of Directors (IOD) Investment : Commercial) Director (Domestic Investment : Commercial) - Director Buriram Sugar Factory - Executive Director Co., Ltd. - Senior Vice Managing Director (Purchasing) - Director Buriram Sugarcane Research and Development Co., Ltd. - Director Buriram Energy Co., Ltd. - Director Key Brand Fertilizer Co., Ltd. - Director Buriram Power Co., Ltd. - Director Buriram Power Plus Co., Ltd - Director Buriram Super Power Co., Ltd. - Director Buriram Agro Energy Co., Ltd.
89 Annual Report 2015 Annual Report 2015 EDUCATION % OF WORK EXPERIENCE NAME/POSITION BACKGROUND SHARES PAST 5 YEARS - PRESENT
8. Mr. Sarit Tangtrongwechakij - Bachelor of Business 4.05 - Director Buriram Sugar Public (45 years old) Administration (Management), - Executive Director Company Limited Buriram Rajabhat University - Director - Risk Management - Executive Director Director - Master of Art (Political - Risk Management Director - Senior Vice Managing Science, Politics and Director - Senior Vice Managing Government), (International Investment) Ramkhamhaeng University Director - Director Buriram Sugar Factory (International Investment) - Executive Director Co., Ltd. - Director Accreditation - Senior Vice Managing Program (DAP) class 98/2012, Director (Production) Thai Institute of Directors (IOD) - Director Buriram Sugarcane - Executive Director Research and Development Co., Ltd. - Director Buriram Energy - Executive Director Co., Ltd. - Director Key Brand Fertilizer Co., Ltd. - Director Buriram Power - Executive Director Co., Ltd. - Director Buriram Power Plus - Executive Director Co., Ltd. - Director Buriram Super Power - Executive Director Co., Ltd. - Director Buriram Agro Energy - Executive Director Co., Ltd. - Director Siphandone Bolaven - Executive Director Co., Ltd. - Director World International Network Co., Ltd - Director Buriram Premier Bike Co., Ltd.
90 Annual Report 2015 Buriram Sugar Public Company Limited
EDUCATION % OF WORK EXPERIENCE NAME/POSITION BACKGROUND SHARES PAST 5 YEARS - PRESENT
9. Mr. Adisak Tangtrongweachakit - Bachelor of Business 4.05 - Director Buriram Sugar Public (43 years old) Administration (Marketing), - Executive Director Company Limited University of the Thai Chamber - Director of Commerce - Risk Management - Executive Director Director - Senior Vice Managing - Risk Management Director - Master of Business - Senior Vice Managing Administration (Management), Director (Energy Business) Director (Energy Business) Bellevue University, USA - Director Buriram Sugar Factory - Executive Director Co., Ltd. - Director Accreditation Program - Director Buriram Sugarcane (DAP) class 98/2012, Research and Development Thai Institute of Directors (IOD) Co., Ltd. - Director Buriram Energy Co., Ltd. - Executive Director - Managing Director - Director Key Brand Fertilizer Co., Ltd. - Director Buriram Power Co., Ltd. - Executive Director - Managing Director - Director Buriram Power Plus - Executive Director Co., Ltd. - Managing Director - Director Buriram Super Power - Executive Director Co., Ltd. - Managing Director - Director Buriram Agro Energy - Executive Director Co., Ltd. - Director BRS Train Terminal Logistics - Executive Director Co., Ltd. - Managing Director - Vice Chairman of The Federation of the Board of Directors Buriram Industries
91 Annual Report 2015 Annual Report 2015 Corporate Governance
Company focus on operating under good governance. The Board of Directors is committed to follow the principles of good corporation. It will also enhance the transparency and efficiency of the management. This will build trust to the shareholders, investors and all concerned parties. The Board of Directors Meeting No. 1/2012 on February 27, 2012. The Board of Directors has approved a policy of good governance. According to the Stock Exchange of Thailand It covers the 5 principles of good corporate governance as follow:
Category 1 : Rights of Shareholders The Board of Directors is always concerned and valued the rights of the Company’s shareholders such as stockbrokerage, stock transfer, corporate information provision, shareholder meeting attendance and vote,etc. ;Therefore, the corporate governance policy is placed by regarding with the basic rights and convenience of all shareholders. The relevant important polices are described below.
1. The Company lays down a policy of providing 4. The Chairman of the meeting of the the information, adequacy and timing, to all of its shareholders should allocate sufficient time to the shareholders about the date, time, venue, agendas of shareholders. Some shareholders may equally submit each meeting of the shareholders, as well as all other their questions relating to any of the meeting agendas associated issues for any decision-making in the meetings during the meeting. The Board of Directors will participate of shareholders as required by laws. in the meeting to answer the interrelated question if any.
2. Should a shareholder not be able to physically 5. To provide correct and complete meeting present at a meeting, they may appoint their proxy or minutes for shareholder to access. an independent director as their proxy to attend and vote in the meeting via proxy form as provided in the 6. To publish news and information regularly via Attachment. the Company’s website, the SET, and the SEC.
3. Prior to the meeting date, The Company may inform the shareholders of the procedure of voting for resolution as stated in the Company’s regulation.
92 Annual Report 2015 Buriram Sugar Public Company Limited
Category 2 : Equitable Treatments of Shareholders
To ensure fair and equitable treatments of shareholders, the Company has policy as follows:
1. The Company allows its shareholders to propose matters to be included in a meeting’s agenda or nomination of candidates for corporate directors, prior to the meeting, with requirements and procedures.
2. In the Annual General Meeting, The majority of shareholders, who are the Company’s executives, shall not propose other additional agendas, particularly some important agendas, without notifying the shareholders in advance to ensure that every shareholder has sufficient time for data investigation before making decisions on voting.
3. The Company has a policy of encouraging the shareholders to use the proxy to enable the shareholders to determine the direction of voting. At least one independent director should be proposed for the shareholders’ proxy.Such proxy form shall be delivered by the Company, along with the name(s) of independent director.
4. The Company has a policy of using the ballot tickets for any significant agendas, e.g. connected transactions, acquisition or disposal of significant assets, etc. for the transparency and verification of voting in case of any arguments. And in the appointment of directors, the Company encourages the shareholders to exercise their right in appointing each director.
5. The Company issues the written guidance on retention and prevention of the use of the internal information. This guidance is informed to all employees in the organization for their compliance. Every director and executive has a duty of reporting his interest or stake to the Company as required by laws.
93 Annual Report 2015 Annual Report 2015 Category 3: Role of Stakeholders
The Company realizes the significance of other stakeholders contributing to its financial stability and sustainability. These stakeholders include, for instance, customers, employees, trading partners, creditors, and the surrounding community. The Company has always ensured integrity and fair treatment for each stakeholder through its established business ethics policies as follows:
: The Company focuses on ethical operation and discloses important information such as financial SHAREHOLDERS statement and other related information to shareholders transparently, accurately, completely and timely. : The Company gives importance to customers with the highest responsibility through quality control CUSTOMERS of products and services under fair conditions. All customers’ information is clandestine and will not be disclosed or unethically used. : The Company ensures fair and equal treatment for all employees. Employees are entitled to benefits, safety EMPLOYEES policy, and suitable working environment according to their positions without discrimination. Provident fund has been set for corporate employees’ security. The Company also encourages its employees’ knowledge and skill development through in-house and outside training. : The Company adheres to integrity, equality, and rights of benefits. The Company always respects its trading TRADING PARTNERS partners’ legal rights and rights as specified in agreements.
COMPETITORS : The Company supports the principles of fair competition and operates its business with integrity without any legal or ethical wrongdoings. : The Company has always been responsible to the society and environment via promoting social activities that bring COMMUNITY, sustainable development to the community. The Company also strictly complies with applicable environmental SOCIETY, AND laws and develops preventive strategy to control environmental impact consistently. ENVIRONMENT
94 Annual Report 2015 Buriram Sugar Public Company Limited
Category 4: Disclosure of Information and Transparency The company ensures that corporate information is provided correctly, accurately, on time, and transparently to The Stock Exchange of Thailand, The Securities and Exchange Commission, and related organization through following corporate practices: 1. To disclose financial statement and other 3. To disclose roles and duties of the Board of information that correlated to business accurately, Directors and committees, number of meeting attended truthfully and completely. The Company’s financial for each director, and the director and executive statements must fairly present in accordance with remuneration policy as disclosed in the 2014 annual generally accepted accounting principle and receive statements (Form 56-1) and the 2014 annual report. approval from the Audit Committee and the Board of Directors before disclose to The Stock Exchange of For investor relation, the Company found a team Thailand, shareholders and related organization. to coordinate communications between the Company, investors, shareholders, and related organization which 2. To disclose the Company’s information via is Mr. Pattarapong Pongsawasdi the channels provided by the SET, the SEC, and via the Company’s website to ensure provision of information services for shareholders and associated individuals. Category 5: Responsibilities of the Board The Board of Directors shall take care of the Company’s working system to ensure that all of the Company activities are done according to laws, objectives, regulations of the Company, and the resolution of shareholder meeting ethically. 1. Board of Directors As of 31 December 2015 the Board of Directors consists of 9 members are included: The numbers of directors are 9 persons totally. Each director’s term is according to the Company’s Article Name-Surname Position of Association section 15 which stated that in an annual 1. Mr. Prachuab Chaiyasan Chairman of the general meeting, one third of the directors are required to Board of Directors resign. If the total number of directors does not allow such (Independent Director) division, the number of directors to resign should be at 2. Mr. Anant Tangtongwechakit Director the closest to one third of the total. The directors whose 3. Mrs. Wanphen Punyaniran Director terms have completed may be reelected to the Board. 4. Mrs. Jirawan Pongpichitkul Director The Board of Directors shall comprise of 6 Executive 5. Miss Chittima Director Directors and 3 Non-executive Directors which are legally Tangtrongwechakit qualified as the Independent Directors conforming to the Director SEC regulation. The structure is in accordance with the SEC 6. Mr. Sarit Tangtrongwechakij ACT B.E. 2535 which stated that of registered company 7. Mr. Adisak Tangtrongweachakit Director must have Independent Directors more than or equal to 8. Mrs. Seenual Tasanapant Directors (Independent 1 out of 3 members of board of directors. Director) 9. Mr. Sirichai Sombutsiri Directors (Independent Director) 95 Annual Report 2015 Annual Report 2015 The Board of Directors appointed the Company of the Company, its subsidiaries, and its joint ventures in secretary that has the role and responsibilities of the order to ensure that they are all efficient and proficient Board of Directors and shareholders, such as holding meeting, recording and doing minutes of meeting and 5. To prepare the annual reports of the Company coordination and monitoring compliance with the and/or the Board of Directors in accordance with all resolution of the Board of Directors and shareholders. As related laws and regulations required. well it is vital to care to advise the committee on rules and administration, to practice the storage of important documents of the Company. 6. To care for and provide a governing mechanism to prevent the potential conflicts of interest between any stakeholders and the Company, its subsidiaries, and its Scope of Duties and Responsibilities of the joint ventures. Board of Directors
1. To undertake and manage the Company 7. To consider, approve, consider and give responsibly, carefully, trustworthily, and in conformity opinions for consideration and approved by the meeting with any and all related laws, objectives, and Articles of of shareholders in case of making any transactions Association of the Company, as well as resolutions of the significantly to the Company or any connected meetings of shareholders. transactions in accordance with the procedure, conditions, legal process and related rules and regulations and/or 2. To consider and approve any significant obligations required by the Company, its subsidiaries, and matters related to the Company’s business operations, its joint ventures. e.g. vision, mission, policies, business strategies, goals and operating plans, financial targets, and budget of the 8. To appoint any of the Company’s directors as Company and its subsidiaries. the chairman of the board; and to appoint some directors subject to the number of the Board of Directors deems 3. To govern and care for the normal business appropriately as the vice chairman. operations of the Company; and to have the Management work efficiently and proficiently to be in line with the 9. To determine and amend the authorized determined vision, mission, policies, business strategies, directors of the Company. goals and operating plans, financial targets, and budget of the Company. 10. To recruit and appoint a person with knowledge, competence and experience that the Board 4. To provide the accounting system, financial of Directors deems appropriately, and with all other reports and auditing; and to care for the internal control qualifications required by related laws and regulations to system, the internal audit system, the risk management hold a position of directorship in case any director vacate system, and the misconduct prevention, as well as his office due to other reasons apart from the expiration provide monitoring measure on operation performance of the term of office.
96 Annual Report 2015 Buriram Sugar Public Company Limited
11. To recruit a person with knowledge, 17. To appoint any sub-committees; to recruit competence, experience and all other qualifications and appoint the directors or persons having engaged the required by related laws and regulations to hold a position knowledge, competence and experience as the Board of of directorship, and such person shall be nominated for Directors deems appropriately to hold positions in those the meeting of shareholders’ consideration. sub-committees; and to lay down the scope of authority, duties and responsibilities of those sub-committees. 12. To appoint or nominate person to be director or executive in the subsidiaries and / or joint venture 18. To appoint any of executive board members in proportion of shareholding in the subsidiaries and as the Managing Director; and to determine the scope joint venture. Such appointed or nominated director of authority, duties and responsibilities of the Managing or executive shall be legally qualified for duties and Director. responsibilities as well as not possess any characteristics prohibited in accordance with announcement of the 19. To appoint a director or person having Securities and Exchange Commission. engaging the qualifications, knowledge, competence and experience as the Board of Directors deems appropriately 13. To consider annual dividend payment and as the Company Secretary. interim dividend payment of the Company and its subsidiaries. 20. To appoint and/or empower one or several directors or persons to take any acts under the scope of 14. To consider and set up the criteria of directorship power and as the Board of Directors deems remuneration payment to the Company’s directors and appropriately. However, such empowerment may be top management. suspended, cancelled or altered.
15. To consider appropriate amount of 21. To provide and care for the communication remuneration for directors of the Company in line with channels to connect with each group of shareholders the criteria of remuneration payment set up by the Board and stake holders of the Company appropriately. of Directors which shall be proposed to the meeting of shareholders for consideration and approval. 22. To care for the accuracy, completion, timing and transparent disclosure of important information 16. To evaluate the work performance of the related to the Company via fair and creditably accessible Managing Director and Top Management; to consider and channels. set up the remuneration for the Top Management in line with the criteria of remuneration payment set up by the 23. To set up and amend any matters prescribed Board of Directors. in the regulations and Articles of Association of the Company.
97 Annual Report 2015 Annual Report 2015 24. To engage other power, duties and Scope of Duties and Responsibilities of the responsibilities as required by laws and other related Audit Committee regulations, Articles of Associations of the Company, and the resolutions of the meetings of shareholders. 1. To review the financial statements of the Company to ensure that they are disclosed accurately and adequately by coordinating with the external auditor and In case that the Board of Directors or their the Management who are responsible for the preparation authorized representative must carry out or enter into of quarterly and yearly financial statements. The Audit any transaction which may cause potential conflict Committee may have the auditor review or audit any of interest with the Company and/or its subsidiaries transactions necessarily or importantly while auditing the and/or related companies, the Board of Directors or Company’s account. their authorized representative will have no power to approve the specified transaction except the approval is in accordance with the policies and regulations which 2. To provide some advice to the Board of the Board of Directors and/or shareholder’s meeting Directors and the Management on the improvement (case by case) has considered and approved under laws, of the Company’s working processor system in order regulations, objectives, or the Articles of Association of to reduce related risks to ensure that the financial the Company. statements of the Company are accurate and efficiently utilized. 2. Subcommittees 3. To consider, recruit, and nominate Management Structure of the Company consists an independent person to be the Company’s auditor; to of the Board of Directors and 3 Sub-Committees which propose the remuneration for such an auditor; and to are Audit Committee, Risk Management Committee and have the meetings with the auditor at least once a year Executive Committee according to the good corporate without the attendance of the Management. governance.
4. To advise the Board of Director and executive 2.1 Audit Committee to improve working process and system efficiently to As of December 31, 2015, the Audit Committee reduce the risk for making financial report correctly and has 3 members that the Chairman of the Audit Committee usefully. and the two audit directors are independent directors to ensure transparency and independence in the 5. To review the internal control system and performance of duties, the detail is as follows; internal audit system of the Company to ensure that they are run appropriately and proficiently; to verify the Name Position independence of the Internal Audit Department; and to 1. Mr. Prachuab Chaiyasan Chairman of the Audit give approval of the appointment, removal and dismissal Committee of the Head of Internal Audit Department or those of 2. Mrs. Seenual Tasanapant Audit Committee other departments which is responsible for the internal 3. Mr. Sirichai Sombutsiri Audit Committee audit activities of the Company.
98 Annual Report 2015 Buriram Sugar Public Company Limited
6. To control and monitor the operation of the e) Opinion on transaction that may cause internal audit office according to the internal audit office potential conflict of interest. charter f) Number of meeting of the Audit Committee and attending of each Audit Committee. 7. To verify and advise on adequacy, propriety g) Opinion or general remark that Audit and efficiency of risk management Committee receive from compliance with charter. 8. To consider any connected transactions h) Other information that deems appropriate for or those with potential conflicts of interest to be in shareholders and investors to know under conformity with laws on securities and stock exchange, scope of duties and responsibilities assigned and regulations of the Stock Exchange of Thailand in by the Board of Directors. order to ensure that such transactions are reasonable and enhance the best benefit for the Company; and 11. In performing duties, if the Audit Committee to consider to ensure the Company’s disclosure of finds or suspects, the following transactions may have connected transactions or those possibly causing the the material impact on the financial status and operation conflicts of interest which is accurate and adequate. results of the Company, the Audit Committee shall report them to the Board of Directors prior to the improvement 9. To verify that the Company conforms to laws within the timeframe of the Audit Committee who deems on securities and stock exchange, regulations of the Stock appropriately : Exchange of Thailand and any other laws on the business of the Company. a) Transactions causing conflicts of interest b) Dishonest or irregularity or important defect 10. To disclose the reports of the Audit in the internal control system Committee, which signed by the Audit Committee c) Violation of laws on securities and stock Chairman, in the annual reports of the Company which exchange, regulations of the Stock including the minimum information as follows: Exchange of Thailand or laws on the business of the Company. a) Opinion on fairness, completeness, and If the Board of Directors or the Management of reliability of financial statements of the the Company fails to remedy such within the timeframe Company. specified in paragraph one, any of the Audit Committee b) Opinion on adequacy of internal control members may report the transaction or act stated in system of the Company. paragraph one to the Securities and Exchange Commission c) Opinion on legal conformance to Securities or the Stock Exchange of Thailand. and Exchange Act, regulations of the Stock Exchange of Thailand, or any laws related 12. The Audit Committee may seek for with business of the Company. an independent opinion from other professional advisors d) Opinion on appropriateness of the auditor. if it deems necessarily under the Company’s expense.
99 Annual Report 2015 Annual Report 2015 13. To perform other duties specifically assigned 5 Decide and make recommendations on critical by the Board of Directors with consent of the Audit issues that arise in the risk management process. Committee. 6. Encourage a culture of risk management in 2.2 Risk Management Committee organizations. As of December 31, 2015, the Risk Management Committee consists of 5 members are included: 7. Evaluate the performance of the Risk Management Committee and report on the annual Name Position assessment to the Board of Directors. 1. Mr. Anant Tangtongwechakit Chairman of the Risk Management Committee 8. Review the appropriateness of charter 2. Mrs. Jirawan Pongpichitkul Risk Management yearly. This is to ensures that the content of the charter Director is consistent with the objectives and strategies for risk 3. Miss Chittima Tangtrongwechakit Risk Management management of the company. Director 4. Mr. Sarit Tangtrongwechakij Risk Management 9. Review the risk And the Company's risk Director management approach according to the risk agency Risk Management 5. Mr. Adisak Tangtrongweachakit evaluate, including provide suggestions for improvement. Director
The scope and authority of the Risk Management 10. Oversee the effectiveness of the risk Committee. management processes of the company on track and 1. Present and supportive Board of Directors to review continuously. set risk management policies and acceptable risk levels to the company. 2.3 Executive Committee 2. Present an overview of the company risk, how As of December 31, 2015 the Executive to manage and to monitor risks to the Board of Directors. Committee consist of 5 members are included;
3. Review the risk management report and Name Position implemented to ensure that risk management is adequate 1. Mr. Anant Tangtongwechakit Chairman of and appropriate to manage the risks to an acceptable Executive Committee level. 2. Mrs. Jirawan Pongpichitkul Executive Director 3. Miss Chittima Tangtrongwechakit Executive Director 4. Coordinated with the Audit Committee by 4. Mr. Sarit Tangtrongwechakij Executive Director exchanging knowledge and information about the risks 5. Mr. Adisak Tangtrongweachakit Executive Director and internal controls that affect or may affect the Company.
100 Annual Report 2015 Buriram Sugar Public Company Limited
Scope of Duties and Responsibilities of the Executive 5. To consider and approve financial transactions Committee to be made with any financial institutions in respect with 1. To consider and prepare the policies, business the opening of account, taking out of loans and credit strategies, operating goals and plans, financial targets, line, pledge, mortgage, guarantee and other matters as and budget of the Company by appropriately regarding well as selling and purchase, and registration for any various business factors to be proposed for the Board of ownership of land in accordance with the Company’s Directors’ approval. objectives in order to benefit the business operations of the Company; and to take any legal acts, make contracts and/or perform other acts related to such matters until 2. To govern, inspect, and monitor the Company’s it is completed, in the amount from Baht10 million up business operations to ensure that they are efficiently and to Baht1,000 million for each transaction but must not proficiently carried out in line with the policies, business exceeding annum budget approved by the Board of strategies, operating goals and plans, financial targets, Directors. and budget of the Company as approved by the Board of Directors. 6. To consider and approve of entering into a contract and financial instruments, e.g. future contract 3. To set up the organization structure and for the right in sugar sales and purchases, foreign management policy of the Company as well as policies currencies exchange forward contract, etc. in order to of recruitment, training, employment and termination prevent the Company’s financial risks. of employment for the Company’s employees. The Managing Director and/or the Director to the Human Resources Department may be authorized to sign 7. To consider and provide advice or opinions signature in the employment contract. to the Board of Directors about any projects, proposals or entering into transactions related to the Company’s operations, which need the operating amount greater 4. To conduct the feasibility studies on than the permitted amount and/or required by any investment in new projects, and to be empowered to related laws and regulations or Articles of Association consider and approve the Company for an investment of the Company that must be considered and approved or a joint venture with an individual, juristic person or by the meeting of shareholders or that of the Board of any other business organization in the investment form Directors. the Executive Committee deems appropriately in order to operate the business subject to the Company’s objectives, and to consider and approve the Company’s 8. To consider and approve of the rules, expenditure for such investment, business contracts regulations, management policies and business operations and/or any related acts to complete such matter for the of the Company or any other acts binding the Company. amount of investment from Baht 10 million up to Baht 50 million. 9. To empower the Managing Director to operate the business of the Company in accordance with the scope of power, duties and responsibilities as designated and governed by the Executive Committee.
101 Annual Report 2015 Annual Report 2015 10. To appoint and/or assign the Executive 3. Roles, Duties and Responsibilities of the Director or a person or several persons to take any Board of Directors acts under the scope of power given to the Executive Committee and as the Executive Committee deems The shareholder meeting has defined roles, appropriately. The Executive Committee may suspend, duties, and responsibilities of the Board of Directors to cancel or alter such power. ensure that business operation is conforming to laws, objectives, and regulation of the Company, as seen in 9.2. 11. To consider and approve of the Empowered Operation Manual to enable the appointed and/or authorized persons to be aware of the scope of The Board of Directors separates roles, duties, responsibilities and given power, and such that shall be and responsibilities of supervised policy resolution and a working manual for further working reference and to daily management clearly. The President Director is not make the working procedure in order. the same person as the Executive Directors and does not involved in the daily management of the Company but provides support and advice in business operation 12. To have any power, duties and responsibilities via the Executive Directors regularly, while the Executive as per assignments or policies given by the Board of Directors are responsible for the Company management Directors. under the resolution of the Board of Directors.
In case that the Executive Committee or their authorized representative must carry out or enter into any transaction which may cause potential conflict of interest with the Company and/or its subsidiaries and/or related companies, the Executive Committee or their authorized representative will have no power to approve the specified transaction except the approval is in accordance with the policies and regulations which the Board of Directors and/or shareholder’s meeting (case by case) has considered and approved under laws, regulations, objectives, or the Articles of Association of the Company.
102 Annual Report 2015 Buriram Sugar Public Company Limited
4. Meetings of the Board of Directors 4.1) The Company holds board meetings at least one meeting per three months. Extraordinary board meeting shall be commenced if deemed necessary. In each board meeting, the agenda is clearly decided in advance.
4.2) The Company Secretary delivers meeting documents to directors in advance. The document has been prepared concisely as possible. The Chairman will allocate sufficient time for such discussion and vote.
4.3) The Company records written minutes and collects previous minutes approved by the Board of Directors which can be inspected as required.
In the year 2014-2015, the following committee members attended each committee’s meetings as follows;
NUMBER OF ATTENDING MEETING 2014 2015 DIRECTOR NAME Board of Audit Risk Board of Audit Risk Director Committee Management Director Committee Management Committee Committee 1. Mr. Anant Tangtongwechakit 8/10 - 1/1 8/8 - 3/4 2. Mrs. Wanphen Punyaniran 9/10 - - 7/8 - - 3. Mrs. Jirawan Pongpichitkul 9/10 - 0/1 7/8 - 3/4 4. Miss Chittima 10/10 - 1/1 7/8 - 3/4 Tangtrongwechakit 5. Mr. Sarit Tangtrongwechakij 10/10 - 1/1 7/8 - 4/4 6. Mr. Adisak Tangtrongweachakit 9/10 - 1/1 7/8 - 3/4 7. Mr. Prachuab Chaiyasan 10/10 9/9 - 8/8 7/7 - 8. Mr. Amnuay Patise 7/7 6/6 1/1 - - - 9. Mr. Sirichai Sombutsiri 8/10 8/9 - 6/8 7/7 - 10. Mrs. Seenual Tasanapant 2/2 2/2 - 8/8 7/7 -
103 Annual Report 2015 Annual Report 2015 5. Self-assessment of the Board of Directors Since the Company has registered in the Stock Exchange of Thailand, the Board of Directors organize self-assessment annually to assess operation performance and enhance operation efficiency of the Board of Directors in following years.
6. Remuneration of Directors and Executives The Company has specified the necessary and appropriate remuneration for directors at the rate used within the industry which is sufficient to maintain quality directors with the Company. The remuneration for the management must be approved by the Company’s shareholder meeting and is in accordance with the Company’s operational performance and performance of the individuals.
The remuneration compensation of the directors must be considered by a meeting of shareholders of the Company. In terms of executive compensation will be based on the principles and policies set by the Board of Director which is based on the obligations, the responsibilities, the performance of each executive as well as results of operations of the Company.
7. Development of Directors and Executives The Company supports and facilitates development of Directors and Executives via several workshops to improve operation efficiency unceasingly. All Directors have been through director curriculum from Thai Institute of Directors Association: IOD.
104 Annual Report 2015 Buriram Sugar Public Company Limited
Nomination of Directors and Elements and appointment of Independent Management Directors Elements of the Board of Directors Assignment Board of Directors will consider the introduction of a common qualifications of the person to be appointed The selection and appointment of directors is as independent directors based on qualifications and according to the methods specified in the Articles of disqualification of directors under the Public Law on Association. The Board will consider the candidates with the Securities and Exchange Commission Notification of experience and knowledge related to the Company's the Capital Market Commission, including relevant rules, business including qualified and not disqualified by law regulations and / or regulations of the Board will also who must be approved by the shareholders' meeting. consider an independent of qualified, work experience It can be summarized as follows: and the other suitability. It will then be proposed to the shareholders meeting to appoint directors to the 1. Board of Directors Consists of at least five Company's policy to appoint independent directors, at directors and not less than one-half of the directors must least one in three of its members and shall consist of no be resident in the Kingdom. less than three persons. The qualifications of independent directors must comply with the announcement of Securities and Exchange Commission No. Tor Jor 28/2551 2. At the meeting of shareholders elect directors for Permission and Grant of Permission to Offer Newly under the rules and procedures below: Issued Shares dated December 15, 2008. (Including any (1) Each shareholder has one share per one vote. amendments) as follows: (2) Each of shareholders is be able to use all his votes under (1) to elect one or more directors 1. Holding no more than one percent of the shares but the vote cannot divided the votes among of total voting rights of the Company, its subsidiaries or the candidates. associated companies, major of shareholders authorized (3) The persons receiving the highest votes in the Company shall be inclusive of the shareholding of ranking order will be elected as Director. If the the relevant independent Director as well. person elected in descending order of votes has equal to the number of members they have. The Chairman has the final vote. 2. Not be or was a directors who have monthly salary or be the consultant who has control the Company, its subsidiaries, affiliates, major shareholder or the 3. In every Annual General Meeting, the first authority's company controller unless it is clear from the third Directors are to retire at the time. If the number aforementioned for then at least two years before the cannot divided is three parts, then the number nearest date of submission of the application to the Securities and to one third of the Directors must retire in the first year Exchange Commission. The prohibition does not include and the second year after company registration, acast an independent director that used to be a government lots will be the solution to select the retired directors. official or advisor of a government which is a major The subsequent years, the directors who were longest shareholder or controlling person of the Company. in charge shall be retired. The directors who retired by agendas may be re-elected back to the position.
105 Annual Report 2015 Annual Report 2015 3. There is not being or was a person who relate is affiliated unless it is clear from the aforementioned for by blood or legal registration as father, mother, spouse, then at least two years before the date of submission sibling and child, including spouse of the children of of the application to the Securities and Exchange executives, major of shareholders that control authority Commission. or person can get proposed as executive or controlling persons of the Company or its subsidiaries. 7. Not being or having been a professional services which include serving as a legal advisor or financial advisor 4. There is no having or have ever had a business which has been charged exceeded 2 million baht per relationship with the Company, its subsidiaries or year from its parent company, subsidiaries, affiliates, associated companies, major of shareholders authorized shareholders or Controlling Shareholders of the Company the Company's control that may interfere with their and Not be shareholder has a controlling or partnership independent judgment from the aforementioned unless of providers. professional service with unless it is clear it is clear from the aforementioned for then at least two from the aforementioned for then at least two years years before the date of submission of the application before the date of submission of the application to the to the Securities and Exchange Commission. Securities and Exchange Commission.
5. Business relationship including the commercial 8. Not being a director appointed as transactions that do business for the rental or lease of a representative of Director company's major of real estate transactions relating to assets or services or to shareholders or shareholders who are related to the make or receive financial assistance with obtaining loans major shareholders. or guarantees, assets pledged as collateral for liabilities as well as other similar circumstance as a result of or 9. Do not operate the same nature and in the counterparties has obligations payable to the other competition with the business of the Company or its party at least 3 percent of the net tangible assets of subsidiaries or be significant partners in a partnership, the Company from 20 million baht or more whichever employee or consultant who receive monthly salary or is lower. The debt obligation is calculated according to holding more than 1 per cent of the shares with voting the method of calculating the value of the transaction rights of any other company operating business which has was announced by the Capital Market Supervisory Board the same nature and in competition with the business of concerning rules on the Connected Transaction mutatis the Company or its subsidiaries. mutandis to the valuation of such indebtedness shall be counted. Total debt was incurred during the year prior to a business relationship with the person. 10. There is no any other condition that makes it impossible to provide an independent opinion about the Company's operations. 6. Not being or having been an auditor of the Company, its subsidiaries, affiliates of shareholders, major shareholders or controlling person of the Company, 11. Not being a director appointed by the Board a controlling or partner of the Auditing Office which of Directors to decide on the operations of the Company, has auditor of the Company, its subsidiaries, affiliates of its subsidiaries, affiliates, subsidiaries, same major of shareholders, major or controlling person of the Company shareholders or controlling person of the Company.
106 Annual Report 2015 Buriram Sugar Public Company Limited
Elements of the Appointment of Audit Elements and appointment of the Executive Committee Committee. The Audit Committee consists of at least three The Executive Committee must be Directors independent directors, who shall be in a position for and / or executives of company, which was appointed a term of three years. The Company has a policy of by the Board of Directors The number of Directors as the recruiting / Audit Committee corresponding with the Board deems appropriate agreement. Accordingly, the Capital Market Supervisory Board No. Tor Jor 28/2551 Board of Directors will appointment executive director for Permission and Grant of Permission to Offer Newly who is executive chairman. Issued Shares dated December 15, 2008 (including any amendments), which must follow the guidelines below. Elements and appointment of the President.
1. Appointed by the Board of Directors or the In recruiting President The Nomination and shareholders meeting. (As applicable) Compensation Committee will consider the preliminary screening of candidates with the required qualifications, knowledge, skills and experience to benefit the operations 2. Being the independent directors who was of the Company and understand the Company's business qualified as independent directors and mentioned above. very well and can be administered to achieve the (1) Not being a director appointed by the Board objective, the goals defined by the Board of Directors of Directors to decide on the operations of and presented to the Board of Directors to approve. the Company, its subsidiaries, affiliates, subsidiaries, same major of shareholders or controlling person of the Company. Business ethics and ethical (2) Not being a director of a subsidiary or conduct of managers and subsidiaries of the same level of listed employees. company. 3. Being acknowledgeable and experienced enough to be able to act as Audit Committee Business ethics and there is at least one person who is The Board of Directors see tangible benefits in the knowledgeable and experienced enough adoption of corporate governance is a major in Business to be able to serve on the review of the Administration. Because the business practices that reliability of financial statements. adhere to response all of stakeholder parties including to benefits to society and the nation to a sustainable future together. The Board of Directors Meeting No. 1/2012 on February 27, 2012. The Meeting resolved to approve the business ethics and the ethical conduct of managers and employees.
107 Annual Report 2015 Annual Report 2015 Significant corporate governance which the Board upheld and agreed to encourage Executives and 4. Aimed at promoting of excellence principles employees to have the knowledge and understand of in Organization. policy included the following 6 ways: Aimed to bringing excellence operational which worked with other departments and utilized to be suitable 1. To treat all stakeholders fairly. with conditions of the Company. It also continues to Aimed to treat all parties involved fairly, promote the excellence of the personals by pushing including customers, shareholders, owners, employees, every department to develop themselves to strive for government creditors and overall social fairly in addition, excellence at all times. companies must perform equally among all shareholders or owners whether large or small, or any nation, because 5. Providing sustainable returns to owners or all shareholders are important to the Company. shareholders. Companies should realize the value creation of 2. Disclosure and transparency can be examined. the organization in the long term, not only the short-term The confidence of investors, creditors and value creation as well as improving the more dynamic stakeholders depends on the transparency in the operations management efficiency . This means efforts to returns of companies that can be examined including the disclosure consistently and sustainably to the owner or shareholder. of accurate, clear and timely to those who involved. The information disclosed must be consistent, well 6. Corporate Social Responsibility and Nation prepared and correctly recorded with the rules and As part of the society and the nation, the standards and can be compared with information from Company should return to the community through various other sources. charitable activities as appropriate as well as participate in the environment preservation activity and support any 3. Reducing the risk activity that contributes to lasting benefits for the nation as Although the Company has a clearly defined a substantial. planning purpose and implementation processes as well as monitor the operation strictly, however, it still requires With responsibility for all the stakeholders, a risk management process and consistently implemented the Board of Directors is responsible for supervising the the risk analysis of business operations. Then set management and the management is responsible for the priority level of risk control measures and strict overseeing the operations of others department. procedures to reduce the risk to a minimum.
Therefore, in order to adhere the policy of good corporate governance, the Board agreed to encourages ethical conduct for managers and employees to guide to good behaviour.
108 Annual Report 2015 Buriram Sugar Public Company Limited
Ethical Conduct of Executives and Employees 1.3.2 Spend time, office equipment and the of the Company Company's assets for the benefit of the Company and secure not to damage or loss, and does not apply to 1. The general practice benefit themselves or others. 1.1 Self-general practice 1.3.3 Do not use the authority of their own or 1.1.1 Maintain the integrity and objectivity and allow others to use theirs either directly or indirectly ethics in business (Honesty and integrity) benefit for themselves and others. 1.1.2 Perform the duty in a responsible, 1.3.4 Do not make demand or agree to receive thoughtful, dedicated thought to work by holding the anything valuable, money or other benefits from a third benefit of the Company. party or from one who has a business relation to the Company whether directly or indirectly and do not 1.1.3 Perform duties with diligence including ways get involved in such a joint venture financial trade. In to develop and always reorganize the work for more accordance with traditional custom of giving gifts, report capability. to manager in case of receive a gift worth more than 1.1.4 Maintain their honor to be accepted in normal from the relevant business. society. 1.3.5 Do not perform other functions unrelated to the Company's work specifically in the same manner 1.2 General practice treated to investors, clients, of duty. stakeholders and the public. 1.3.6 Prohibit the use of information obtained 1.2.1 willingly facilitate and treat visitors with from active duty to seek benefits for themselves or for equality without delay and with full capacity. other wrongfully 1.2.2 Welcome comments or suggestions from 1.3.7 Do not recommend or give an opinion to others and be ready to clarify the information that is others including relatives regarding any securities or the required by the state of their own. purchase or sale of securities that are recognized in the 1.2.3 Appreciate the others. Treat others with securities unless the securities are to be released to the equality and always respect each other. general public. 1.2.4 Involved in the creation and development 1.3.8 Do not get involved in the action, or any of the society to progress without causing damage to the action that might conceal a conflict of interest with the task and the image of the Company Company or may not perform their duties with justice or to participate in any action to conceal an illegal. 1.3.9 Must maintain the confidentiality of 1.3 General practice to companies company by carefully prevent documents or confidential 1.3.1 Ignore or avoid commenting on the third information to be revealed and may cause damage to party or media on matters related to the Company with the Company. no involved authority by themselves or comment on any 1.3.10 Do not disclose the information to others matter that may affect the reputation and operations of and the media about the Company from what received the Company from duty and any other information that may affect the reputation of the Company includes information about
109 Annual Report 2015 Annual Report 2015 the Company which has not determine the policy or 2.2.5 Do not disclose confidential information of guidelines conclusively. others wrongfully especially to the competitors. 1.3.11 Never share or transfer of technology 2.2.6 Provide information and necessary which is regarded as a good coverage of the Company explanations information for the auditors. to others regardless, such as data transmission through 2.2.7 Do not use or disclose internal information the Internet, E-mail, fax, etc. that affects the price of securities which did not disclose the investors for self-benefit or others. 2. General practice of Executives In performing their duties as Executives of the 2.3 General practice for Customers. Company in addition to the general practices already 2.3.1Response for determining and maintaining upheld. Executives should conduct further as follow: the quality of customer service standards, customer 2.1 General practice to Company satisfaction. 2.1.1 Executives response for the dissemination 2.3.2 Response for maintaining a system of of ethical operation and ensure that all employees disclosure of securities information and the risks that understand the Company in of such conduction. customers may not know completely accurate by themselves without any distortion. 2.1.2 Response for the Company complied ethical conduction of the Company. 2.3.3 Provide a system to receive customer complaints about the quality of its services and respond 2.1.3 concern the necessary for the fulfillment to customer needs quickly. of ethical conduct of the persons in the Company. 2.3.4 Focus on the importance of maintaining 2.1.4 Manage with minimum costs and the confidentiality of customer information very seriously appropriately as possible and need to maintain the quality and consistently and do not be used such information of the work to a high standard at all times. for the benefit of themselves or others.
2.2 General practice to the owner or shareholders. 2.4 General practice to Creditors and partners. Executives must have integrity, any decision 2.4.1 Executives should make it in the best way taken in good faith and fairness to shareholders, both in purchasing from the Company's partners as follow: major and minor for the overall benefits. - Do not demanding, receiving or paying bribes 2.2.1 Conduct under the jurisdiction and interests to partners and report the partner companies about of the Company. intending to bribe or how to bribe employees of partner 2.2.2 Serve with the ability and carefulness like companies. those with experience and skillfully conducted - Stop trading with bribing partners. 2.2.3 Manage not to lose the value of any - Ensure that there is no bribing employees of Company’s property. corporate partners. 2.2.4 Report fully operating result regularly and 2.4.2 Company’s executives is to ensure that report both positive and the negative trend aspects of regulatory obligations with suppliers are based on companies on the basis of reasonable and reliable with commercial terms including loans as follows. sufficient support information. 110 Annual Report 2015 Buriram Sugar Public Company Limited
- Maintain and comply with the conditions of employees’ life and property. including the adequacy the creditors both in terms of repayment, collateral of tools and appropriate supervision. management and other conditions, including not using 2.6.4 Not forbid employees about their other the funds from the loan in contrary way to the purpose professional practice which is not in competition with of the agreement with the lender. companies without valid reasons. - Operate the Company in a way that does not 2.6.5 The position appointment, transfer increase the risk to creditors of the Company without or promotion of employees as well as reward and reasonable cause. punishment, must act in good faith based on knowledge, - Report the financial position of the Company competence and suitability of employees. to creditors with integrity. - Not punish employees by bullying. - Consider the interests of creditors in case of - Provide chance for potential employees who extended the period of repayment. might be limited opportunities from having no ethics - Report creditors in advance if cannot fulfill the violated or social punishment. obligations in the agreement and jointly find solutions. - Acknowledge the efforts and the willingness of the employees to perform their duties with justice and 2.5 General practice to business competitors. adequate compensation. Company executives must 2.6.6 Listen to employees’ opinion and suggestions of involving duty. 2.5.1 Abide by the rules of the competition. 2.6.7 Protect employees from being physically, 2.5.2 Not allege of a business competitors or mentally and emotionally hurt. a competitor's service with dishonesty and deprived of the truth 2.6.8 Compliance with labor laws regulations and other related regulations. 2.5.3 Not access to confidential information of competitors with dishonest methods or in other ways that 2.6.9 Publish Ethical Conduct for all employees are not appropriate, such as inquiries from employees of and reiterated insight on general practices and the a competitor. employees role. 2.6.10 Not manage in the risks way that for the stability in the work of the employees without reason. 2.6 General practice to employees. 2.6.11 Provide opportunity for employees to Company executives must report wrongdoing by the Company. 2.6.1 Treat employees with equally respect. Pay attention to the details of the Company's culture on their life and respect for the individuality and dignity of the 2.7 General practices to society. person. Executives will conduct the business of the Company. 2.6.2 Emphasize on training the knowledge and 2.7.1 Consider the impact on the overall business ability of employees development regularly. environment, natural resources and public interest. 2.6.3 b Provide a safe working environment for 2.7.2 Not savings cost without regarding to the well-being of society.
111 Annual Report 2015 Annual Report 2015 2.7.3 Participate in projects that help raise the For guidelines on implementation of the community where company operates. anti-corruption policy of the Group consists are 3. General practices to employees. In addition of working as employees, upheld 1. It is prohibited that the directors, executives conduction is generally mentioned above. Employees and employees of the Group operate or accept or must treat supervisors and colleagues according to the support any form of corruption and set to be review guidelines below. the compliance operation with this policy against corruption usually as well as reviewed policy guidelines 1.1 Enhance teamwork by supporting each other. in accordance with regulatory requirements, regulations, For the benefit of the whole company. notifications and laws.
1.2 Supervisors must conduct themselves to 2. Define the principles of giving or receiving be respected by his subordinates as a good model for gifts or entertainment as a part of the ethical duties of subordinates. company, the directors, executives, and employees must not offer, accept or agree to accept any money, meals 1.3 Treat supervisors with great respect. Treat and entertainment or other benefits which may result in colleagues with kindness and respect for the dignity of doubt in the habit of bribery and corruption. However, others. for each position to receive a gift, it must be worth not exceeding the following price; 1.4 Do not take the work of others to impersonate of oneself. Staff Level Maximum Value (THB) - Director 20,000.00 1.5 Avoid giving valuable gift to supervisors or - Managing Director receive valuable gift from subordinates. - Vice Managing Director - Senior Assistant Managing Director Guidelines on Prevention of Involvement in - Manager 10,000.00 the Corruption - Assistant Manager 8,000.00 Policy of Anti-Corruption - Staff Level 8 According to the Company and its subsidiaries - Head of Department/ 5,000.00 (hereinafter called “the Group”) has focused on the Staff Level 6-7 anti-corruption and operated business based on good governance, business ethics and follow the law at all It should not receive cash or cash equivalents times. The Group set the policy of anti-corruption as well and have always recognized that any act required under as has taken public relations communications to create transparent conditions, fairness and accountability. a better understanding of the importance of such policies with company personnel for the personnel involved in the implementation of the policy and policies of the Company to achieve practical result. 112 Annual Report 2015 Buriram Sugar Public Company Limited
3. Operate an effective system of internal audit • E-Mail notifications to employees to inform the that covers finance, accounting, record-keeping and other channels for reporting frauds and complaints. tasks related to finance and accounting that to ensure that financial transactions follow the operated purpose 7. The Group has established a mechanism to of approval to conduct business with transparency. protect those who report frauds. To prevent adverse effects may occur with the whistleblower by requiring 4. The Audit Committee serves monitoring data such as the name of the whistleblower currency and reviewing the Group’s corporate governance that address, telephone number, etc., kept secret with the adequately comply with policies and related regulations. audit committee and internal audit manager. If the Audit Committee has found or suspected of any transactions or actions that may impact the result of transparency in the operations of the Group or any acts in Control of the use of inside an implied that supports corruption, the Audit Committee information. is responsible for reporting the findings to the Board of The Company has a policy and procedure that Directors in order to resolve those in a timely manner. Executives and employees use the information within the Company for their own benefit as follows: 5. There are penalties for directors, executives and employees in case there is evidence that acts of (1) Prohibit Directors, Executives Officers and operates or acceptance or sponsorship the corruption. The Employees of the Company bring confidential and / or Group will take disciplinary action to consider sanctions information within the Company to disclose or seek as appropriate to the case, such as written warning, work benefits for themselves or for the benefit of any other suspension, termination, and wage reduction until legal person whether directly or indirectly and whether they proceedings. receive remuneration or not.
6. The Group has established channels of clue (2) Educate Executives, directors including the report or complaints to the Audit Committee. In case of executives level position in accounting or finance or the action was found to fraud indicate or misconduct of equivalent level manager about the duty to prepare and directors, executives and employees of the Group. The submits the report of securities holding their spouses frauds can be reported complaint or details with evidence and minor children to the Securities and Exchange via the suggestion box which is opened in the Office of Commission pursuant to Section 59 and Section 275 of Internal Audit Department by Internal Audit Manager. the punishments under the Securities Exchange Act of Moreover, the Group will inform one of the channel to 1992. the employees by
(3) Require Executives Committee including • Public notice board Executive positions in accounting or finance manager • The meeting arranged by Human Resources level and above or equivalent and related workers must Department announce to the manager of each suspend purchases and / or sales of securities of the department to inform officers of the units of each agency. Company during the first month before the Company
113 Annual Report 2015 Annual Report 2015 will publish information on the results of operations and Auditor’s Remuneration financial position or that the important information that The auditors from PricewaterhouseCoopers ABAS affects the stock price changes until the company will Ltd. still have been the auditors of the Company since discloses such inside information to the public. 2011 to present. In 2013, the auditors’ remuneration of the Company and subsidiaries was the amount of (4) Require Executives committee including THB 2,685,000 remunerated to PricewaterhouseCoopers executive positions in accounting or finance manager level ABAS Ltd. There were no other fees that were required and above or equivalent prepare and submit the securities to remunerate to auditors, audit firm or any individuals holding reports of such person including their spouses and or organization associated to the auditors and the audit underage children to the Company Secretary to prepare firm. and submit within 30 days after the inauguration after the inauguration and report every time to the Office of the In 2014, the Group paid the remuneration Securities and Exchange Commission. When the purchase of the auditors in the amount of 2,910,000 baht for or sale of securities within three days, according to the PricewaterhouseCoopers ABAS Ltd. in addition to improve Securities and Exchange Act 1992 and submit a copy of the closing process and the preparation of financial the report to the Company Secretary on the same day reports to be more effective. The Company has assigned that reports to the Securities and Exchange Commission. PricewaterhouseCoopers ABAS Ltd. to carry out such additional. Since PricewaterhouseCoopers ABAS Ltd. has Directors, executives and employees who violate been informed that the Company has been operating for the policy on the use of insider information must face a long time which will be able to understand and improve disciplinary proceedings and / or law proceedings by those subjects with the fee budget of 1,111,000 baht considering the intent of the act and the seriousness of from the service. The Company has no other fees to be the offense itself. paid to the auditor or audit firm where auditor affiliated and the other parties related to the auditor or audit firm where auditor affiliated.
For the year 2015, the Group paid the remuneration of the auditors in the review and audit of the Company and its subsidiaries’ financial statements of a total of 3,430,000 baht, with total audit fee of 180,000 baht more from the original number 3,250,000 baht due to the size of the business has grown from increasing subsidiaries. In addition, the Company has no other fees to be paid to the auditor or audit firm where auditor affiliated and the other parties related to the auditor or audit firm where auditor affiliated.
114 Annual Report 2015 Buriram Sugar Public Company Limited
Dividend Payment Policy
The Company places a policy of dividend payment to every shareholder for not less than 50% of net profit declared in the financial statements of each company after the deduction of corporate income tax, statutory reserve and any other reserves. Whereas dividend payment might be less than specified rate regarding the operating performance, financial condition, cash flow, liquidities, and investment plan at a particular time.
The subsidiaries of the Company places a policy of dividend payment to every shareholder for not less than 50% of net profit declared in the financial statements of each subsidiary after the deduction of corporate income tax, statutory reserve and any other reserves. Whereas dividend payment might be less than specified rate regarding the operating performance, financial condition, cash flow, liquidities, and investment plan at a particular time.
115 Annual Report 2015 Annual Report 2015 Internal Control and Risk Management
Internal Control
The Company values strong internal control system that can adequately protect the interest of all its stakeholders including but not limited to shareholders, employees, supplier, customers, social and other related person. The suitable internal control is covered financial and operational control, as well as, execution of laws and the Company’s rule and also corporate governance to ensure that the company can achieve its corporate goals effectively and efficiently.
Internal audit is a vital part of internal control system, the audit committee appointed the internal audit manager of the Company who has experience in the internal audit field. The manager is qualified as shown in the attachment 3 of form 56-1.
Risk Management
The Company’s Risk Management Committee set the risk management policy and procedure for the management to execute. The department of Risk Management is responsible for defining and work system design including identification of risk factors, which planned operations or performance by considering the risk factors, the management can develop a better business model and control system that will enable it to manage risk at an acceptable level as detailed in risk factors section. The risk management principles will follow the COSO-ERM (The Committee of Sponsoring Organizations of the Treadway Commission: Enterprise Risk Management), which combine the main eight keys component aspects as follow:
(1) Internal Environment (2) Objective Setting (3) Event Identification (4) Risk Assessment (5) Risk Response (6) Control Activities (7) Information and Communication (8) Monitoring
The Risk Management Committee aware of risk management and appointed a risk management bureau acts as an authorities risk management based on COSO-ERM and provides awareness to all employees across the organization in line with the objectives of the organization and each department.
116 Annual Report 2015 Buriram Sugar Public Company Limited
Connected Transactions
Persons that may cause potential conflict of interest consist of shareholders and/or executives of the Company or Related companies which are the companies that may consist of potential conflict from directors or shareholders of the companies as detailed below:
No. Potentially conflicted persons Nature of Relationship 1. Mr. Anant Tangtongwechakit is a director of the Company and holds 4.06% of the Company’s shares. 2. Miss Chittima Tangtrongwechakit is a director of the Company and holds 4.05% of the Company’s shares. 3. Mr. Sarit Tangtrongwechakij is a director of the Company and holds 4.05% of the Company’s shares. 4. Mr. Adisak Tangtrongweachakit is a director of the Company and holds 4.05% of the Company’s shares. 5. Mrs. Jirawan Pongpichitkul is a director of the Company and holds 4.05% of the Company’s shares. 6. Mrs. Wanphen Punyaniran is a director of the Company and holds 4.05% of the Company’s shares. 7. Mr. Prasit Punyaniran is a spouse of Mrs. Wanphen Punyaniran. 8. Police General Charnchai Pongpichitkul is a spouse of Mrs. Jirawan Pongpichitkul. 9. Mr. Pond Rattanapunsak is a spouse of Miss Chittima Tangtrongwechakit. 10. Mrs. Pakinee Tangtrongweachakij is a spouse of Mr. Sarit Tangtrongweachakij. 11. Mr.Phakphoom Pongpichitkul is a son of Mrs. Jirawan Pongpichitkul. 12. Miss Jidapha Pongpichitkul is a daughter of Mrs. Jirawan Pongpichitkul. 13. BRS Train Terminal Logistics Co., Ltd. consists of persons no. 1-6 as shareholders and has 2 co-directors with the Company which are Mr. Anant Tangtongwechakit and Mr. Adisak Tangtrongweachakit. 14. The Thai Sugar Trading Co., Ltd. has 1 co-director with the Company which is Mr. Anant Tangtongwechakit and the Company holds 4.26% of the shares. 15. Buriram Capital Co., Ltd. has 6 co-directors with the Company which are persons number 1-6 and also holds 50.00% of the Company’s shares.
117 Annual Report 2015 Annual Report 2015 Connected transaction with potential conflict parties
Amount Potentially conflicted The nature of the transactions 2015 Rationale of the Transaction company and persons of the Company (Baht) 1. The Thai Sugar Transaction with the Company - The Company appoints TSTC. Licensed by the Cane and Trading Co., Ltd. - Revenue from sales 2,066,154,468.93 Sugar Board to export sugar under the Cane and Sugar Act, as the Company’s agent for sugar exports
- Selling and administrative 6,687,452.22 - The Thai Sugar Trading Co., Ltd. founded via collaboration of expenses 22 sugar factories. Each company hold shares in proportion (Export agent charge, Financial respective to their export quantity. The Directors of The Thai instruments trading agent charge, Sugar Trading Co., Ltd. consists of representatives from each Transportation at sea port fee, company for powerbalancing. Export documents and customs - In sugar export, the Company contact customers by itself. procedures operation fee) The Thai Sugar Trading Co., Ltd. provides service in product handling and export document operation only. - Trade receivables / Other 6,657,202.93 receivable - Product handling and export cost that the Company paid to The Thai Sugar Trading Co., Ltd. is at the standard rate which The Thai Sugar Trading Co., Ltd. equally charge to - Trade payables 104,660.91 other companies.
- The Thai Sugar Trading Co., Ltd. signs loan contract for BSF export with a commercial bank on behalf of The Thai Sugar Trading Co., Ltd. for financial support. The Thai Sugar Trading Co., Ltd. will transfer amount of money received from export loan with the commercial bank to BSF. BSF then issues promissory note to The Thai Sugar Trading Co., Ltd. for money receipt. The interest rate that BSF pay to The Thai Sugar Trading Co., Ltd. in the promissory note is same as interest rate that The Thai Sugar Trading Co., Ltd. pays to the commercial bank.
Opinion of the Audit Committee - To appoint TSTC to be an export agent and to receive support loan for export from a commercial bank through TSTC is necessary for business according to related laws. - Export service expense and connected interest rate are reasonable.
118 Annual Report 2015 Buriram Sugar Public Company Limited
Amount Potentially conflicted The nature of the transactions 2015 Rationale of the Transaction company and persons of the Company (Baht) 2. Six Directors which are 6 Directors are loan guarantor of 15 - The hire purchase is for the administration and Mr. Anant Tangtongwechakit, cars and machinery used of moving operation of the company. material of the company group six Mr. Adisak Tangtrongwechakit, cars in total with 21 commercial Opinion of the Audit Committee Mr. Sarit Tangtrongwechakij, banks and leasing companies - The loan guarantee is a regular condition of the hire Mrs. Jirawan Pongpichitkul, of amount total guarantee of. purchase. It is necessary in business operations and 16,871,387.23 baht. Miss Chittima there is no fee is charged for the guarantee so that Tangtrongwechakit, and the Company does not waste benefit from such an Mrs. Wanphen Punyaniran operation.
3. Buriram Power Co., Ltd. BPC had purchased land of 13 rai 4,133,250.00 - Because the land is the location of the second power Mr. Adisak Tangtrongwechakit 3 ngan 11 square wah from one plant and is collateral for loans of the company, and the director. trading price at the price close of trading. This transaction has been approved to operate on the Audit Committee Meeting No. 2/2014. Opinion of the Audit Committee - The purchase of land is purchased for using in assembling plan to increase capacity of the Company's core business and traded it for a reasonable price close to the market price.
4. Five Directors which are The guarantee loan facility of the - Loan facility for working capital in manufacturing and Mr. Anant Tangtongwechakit, Company and its subsidiaries to a loan to purchase property in the operations of its the bank is 1,339.40 million baht subsidiaries is non fee charged for the guarantees. Mr. Adisak Tangtrongwechakit, worth of guarantees. Mr. Sarit Tangtrongwechakij, Opinion of the Audit Committee Mrs. Jirawan Pongpichitkul - The loan guarantee is a regular condition of the hire and purchase. It is necessary in business operations and Miss Chittima there is no fee is charged for the guarantee so that Tangtrongwechakit, the Company does not waste benefit from such an operation.
119 Annual Report 2015 Annual Report 2015 Amount Potentially conflicted company The nature of the transactions 2015 Rationale of the Transaction and persons of the Company (Baht) 5. Six Directors which are Farmer receiveable – advance - To provide advance credit to farmers for liquidity Mr. Anant Tangtongwechakit, credit of cane growing to ensure cane procurement is an ordinary operation of general sugar factory. The Miss Chittima Tangtrongwechakit, In production year 2014/2015, 2015/2016 and 2016/2017 price and condition applied to the directors and Mr. Sarit Tangtrongwechakij, BSF has provided advance credit their relatives are as same as normal farmers’s. Mr. Adisak Tangtrongwechakit, to the directors and their close Mrs. Jirawan Pongpichitkul, and relatives which due when delivering - Cane procurement is an ordinary business process cane to the factory as detailed Mrs. Wanphen Punyaniran and of the Company. The cane price purchasing from below: close relatives of directors which the directors and their close relatives are as same are Police General as other farmers’. Charnchai Pongpichitkul, - Beginning Loans 19,882,757.33 Opinion of the Audit Committee - Loans during the period 52,451,751.08 Mr. Pond Rattanapunsak, - To give advance credit and cane procurement is an Mrs. Pakine Tangtrongweachakij, - Total Loan 72,334,508.41 ordinary operation of sugar factory business. Mr.Phakphoom Pongpichitkul and - Paid during the period (13,242,684.03) Miss Jidapha Pongpichitkul - Accounts receivable balances 59,091,824.38 - Other receivables 872,455.69 - The purchase of sugarcane 11,588,989.22 - Value of fertilizers and inputs 2,199,219.40 suppliers.
120 Annual Report 2015 Buriram Sugar Public Company Limited
Amount Potentially conflicted The nature of the transactions 2015 Rationale of the Transaction company and persons of the Company (Baht) 6. BRS Train Terminal The Company appoints BRS Train - For delivery their product to customers, the Company Logistics Co., Ltd. Terminal Logistics Co., Ltd. to has hired BRS to deliver the product to the customers. transport products of the Company. BRS Train Terminal Logistics Co., - For the convenience of taking care of the shipping, Ltd. rent the Company’s area the BRS has rent a part of the Company to orperate as office for an office of the same rental fee of others.
45,338,065.95 - Revenue from lost Sugar fines of lost sugar during transport, - Transporation fee will be accounted in the retail price of 20 baht per kg by the - Warehouse rental fee 2,398,110.40 record of sugar loss during transportation, which is equal to 19 - Office rental fee 240,000.00 baht per kilogram and in the remaining one baht per kilogram is the cost is estimated to compensate for operational documents. - Lost sugar fine revenue 45,385.50
- Trade payables at end of period 974,947.48 - Because of B. R. S. Trainterminal is rail way transportation and - Other trade payables at end of 7,835,722.00 warehouse business, which are at higher risk due to short-term period lease contracts. If the contract is terminated, all assets will become property of the State Railway of Thailand. Moreover, BRS is able to perform their transport and storage facilities business without BRR, so administrators do not take BRS in the business.
- For commissioning BRS in the future there will be offered the price comparison from at least four contractors and inform the compare results to the Audit Committee. The Company does not hire BRS for transporting sugar exceeds 30 percent of sugar exported. Opinion of the Audit Committee. - The BRS does not join the Company because the business is not essential to the operation of the Company. In addition, the business of BRS is under high uncertainty, which the no participating of BRS is minimize the risk of business operation.
- Hiring another person to manage the transporting is regular activity of the Company. The business imperative price of hiring B.R.S Train Terminal Logistics Co., Ltd. is comparable to hiring other company.
- Renting space is to support the operations of the Company. The rental rate is also comparable to rental prices in the neighborhood.
121 Annual Report 2015 Annual Report 2015 Amount Potentially conflicted The nature of the transactions 2015 Rationale of the Transaction company and persons of the Company (Baht) 7. One director which is Property Rental - Buriram Power Co., Ltd. has contracted a land lease Mr. Adisak Tangtrongwechakit Buriram Energy Co., Ltd. has rental for 25 years for construction of the power plant from contract of 30 rai of land – ngan bagasse which is a byproduct of sugar production, with 37 square wah from the director rental prices of 10 baht per square wah per year, paid of the Company. two times a year. By the year 2015, the company had paid the rent in January and recorded as the second half of the rent paid in advance for the month of June - Rental fee 147,925.00 to be the cost of the first six months of 2015 already. Opinion of the Audit Committee. - The long-term land lease to be used for construction of the plant is part of the business. The rental rate is close to the rate of land rent in the neighborhood.
122 Annual Report 2015 Buriram Sugar Public Company Limited
Measures for approval of The review of transactions connected transaction The internal auditor will investigate the Normal business transactions including product transaction by trade, raw material trade, service providing, or advance credit for farmers can be conducted with potentially 1. Checking the completeness of the list, the conflicted persons if the conditions of such transactions list of person who may have a conflict, compared to are sufficiently ordinary that person of ordinary prudence individual accounts. would conduct and the conditions of such transactions are 2. Bringing the detected list to determine if the without any special bargaining power that occurred from money has conditions for entry documentation and influence of being a director, an executive, or any related approval procedures according to company policy or not. persons. The Company will summarize the transactions to the Audit Committee for acknowledgement in every 3. Preparing an examining the report to present quarter that such transactions occurred. to Audit Committee a quarterly basis.
The company has set a transaction policy of For the hiring process of sugar transporting with money on a person who may have a conflict with the the B.R.S. Trainterminal Logistics Co., Ltd., a person who follow supervisories: may have a conflict. Requiring the action as follows: 1. The scope of authority 2. The review of transactions 1. Needs to provide for bids from at least four providers. 2. Need obvious scope of services, for example The scope of authority origin and destination location, year of production or Supporting money for farmers in the production, other services. including the planting cost, cost of the seed, fertilizer and 3. Arrange a contract that specifies the obvious agro-chemicals, the land rental, the cost for sugarcane, price and terms. a drip irrigation system, the cost of the land for planting 4. Summerize the conclusion for choosing the sugarcane, the agricultural machinery, tractors, and service providers compared with those who had not been harvesters trucks. selected to report to the Audit Committee. 5. Company and its subsidiaries can not hire BRS Executives will not approve the money that to transport Sugar exceeded than 30 percent of the sugar does not support planting sugar cane. The purchase of company and its subsidiary exported. However in the sugar cane does not count as a support cane planting year 2015, the company has hired BRS to transport up in addition to the money that is paid or sponsored to 40 percent due to freight rates cheaper than general sugarcane. The Audit Committee must give approval Contractors. before submission to the Board of Directors or shareholder approval depending on the size of the list by the rules prescribed by the relevant notifications effected by the Capital Market Supervisory Board and the Board of the Stock Exchange of Thailand. 123 Annual Report 2015 Annual Report 2015 Before undertaking, other connected transactions Loan contract guarantee that happen between aside from normal business transactions must be the Company or its subsidiaries and persons that may reviewed and approved by the Audit Committee who will cause potential conflict of interest shall exist because provide opinion about necessity of such transactions and of necessity of loan request from financial institute to appropriateness of price to be ensured that they will be procure raw material, promote farmers’ cane growing, carried out in conformance to normal market practice at as well as provide financial liquidity which is normal fair and reasonable price. For entering other transactions conditions of a commercial bank to provide commercial between the Company or its subsidiaries and potentially loan. The Company or its subsidiaries shall not have conflicted person, the transactions must be reviewed expense from the guarantee. by the Audit Committee and must be approved by the Board of Directors before undertaking. The directors Loan to persons that may cause potential who involve in such potential conflict of interest shall conflict of interest shall occur for business operation in not attend the meeting in those agendas. In case that respect of the necessity and appropriateness of such the Audit Committee and/ or the Board of Directors transactions. The Company shall provide loan contract have no expertise in any of the connected transaction, and set clear conditions mainly concerning about the Company shall appoint independent expert or the benefit to the Company. Additionally, the Company and Company’s auditor to provide their opinion on such its subsidiary do not have any policies on loan providing or transaction for the Audit Committee and/or the Board debt guarantee, aside from cane growing support money, of Directors and/or the shareholders as appropriate. to persons that may cause potential conflict of interest.
The Board of Directors must supervise the For any connected transaction that may cause Company to act in accordance with laws, regulations, potential future conflict of interest, the Board of Directors announcements, orders, or rules of the Stock Exchange shall govern the Company’s operation to ensure that of Thailand or of the Securities and Exchange Commission they are in compliance with the securities laws and or of the Capital Market Supervisory Board. Additionally, the regulations of the SET including the regulation with the Company shall disclose connected transaction in regard to the information disclosure of the Connected each channel in conformance to regulations of the Stock Transaction and the Acquisition and Dispositions of assets Exchange of Thailand and related organizations. of the Company or the subsidiary.
Policy on connected transaction Future connected transactions between the Company and connected companies will be conducted as part of the normal course of business, for example, cane procurement and cane growing support money. The price of products purchased will be clearly set in agreement and or linked to market prices with no special favors and no transfer of benefits. The transactions will be primarily based on the Company’s benefits and always reviewed by Audit Committee.
124 Annual Report 2015 Buriram Sugar Public Company Limited
Report of the Risk Management Committee
To : All Shareholders of Buriram Sugar Public Company The risk management has established a policy Limited on risk management and control effective activities to cover the major operations that are essential to business operations and report the risk management to the Audit Buriram Sugar Public Co., Ltd. has been aware of Committee to ensure that it could achieve the defined the gravity of risk management which may significantly objectives with the following agenda of the meeting in affect goals and accomplishments of the operations of the 2015. Company and its subsidiaries; hence, the Company has set a clear policy of treasuring sustainable risk management and appointed the Risk Management Committee consisted 1. Risk Management Plan of 2015 of the Chairman of Risk Management Committee, Mr. Anant Risk Management Committee allow the Risk Tangtongwechakit, and 4 Risk Management Committees Owner to report on the progress in risk management plans which are Mrs. Jirawan Pongpichitkul, Miss Chittima for each program and results of each risk management Tangtrongwechakit, Mr. Sarit Tangtrongwechakij, and operation activity planned. Mr. Adisak Tangtrongweachakit.
In 2015, the risk management committee had 2. Risk Management meeting totaled 4 meetings. The details of the risk Risk Management Committee proposed management committee attendant are as follows; amendments to the Risk Owner for more effectively risk management.
Number of Name List Meeting 3. Monitor and Supervise the Risk Management 1 Mr. Anant Tangtongwechakit 3/4 Plan. 2 Mrs. Jirawan Pongpichitkul 3/4 Risk Management Committee arranged for a risk 3 Miss Chittima Tangtrongwechakit 3/4 management office to monitor risk management plan 4 Mr. Sarit Tangtrongwechakij 4/4 and arrange a meeting every quarter to report on the 5 Mr. Adisak Tangtrongweachakit 3/4 progress of the risk management plan.
125 Annual Report 2015 Annual Report 2015
4. Establish a Working Group on Risk Management The Risk Management Committee realizes and recognizes the importance of managing the risks that arise so there approved the establishment of an enterprise risk working group to achieve the planned risk management for tracking and reporting risk management plan to be more effective in order to create awareness about the risks to all employees in the organization.
According to above, the Committee is responsible for overseeing risk management in order to develop a risk management system to be appropriate for the long-term benefits to the Company and business groups and to ensure in business operations. The Risk Management Committee expected the continued development and led the Company and its subsidiaries will be able to achieve the purpose of executing the business plan required. It is considered to build and maintain the value of the organization to deliver to the shareholders and stakeholders of the Company and the subsidiaries.
126 Annual Report 2015 Buriram Sugar Public Company Limited
Report of the Audit Committee
To: All shareholders of Buriram Sugar Public Company • Reviews of financial statements Limited The Audit Committee has reviewed the Company’s quarterly financial statements, yearly financial statement, the The Board of Directors of the Company has disclosure of material information in the footnotes to financial appointed the Audit Committee responsible for report statements, and the connected accounting transaction for year reviews, which involved 3 independent directors as listed 2015 which have been reviewed and audited by the auditor. below: The Committee deemed that the financial reports for 2015 were accurate, adequate, reliable, and in line with generally accepted accounting standards. 1. Mr. Prachuab Chaiyasan Chairman of the Audit Committee 2. Mr. Sirichai Sombutsiri • Reviews and Evaluation of internal control system adequacy the Audit Committee The Audit Committee has reviewed the adequacy 3. Mrs. Seenual Tasanapant of the Company’s internal control system with the auditor the Audit Committee and the internal audit office. It has been deemed that the Company’s internal control system is sufficient and In 2015, the Audit Committee had meeting with the can reasonably establish confidence in the Company’s management team, the internal audit office and the auditor achievements in term of efficient and effective operations totaled 7 meetings. The details of the audit committee and compliance with applicable rules and policies. attendant are as follows; Additionally, the Audit Committee considers and approves the appliance of COSO - Internal Control Integrated Framework 2013 to evaluate 2015 internal control system Name List Number of Meeting and promote internal control advancement. 1 Mr. Prachuab Chaiyasan 7/7 2 Mr. Sirichai Sombutsiri 7/7 3 Mrs. Seenual Tasanapant 7/7
A summary of the important work performed by the Audit committee and its opinions are as follows;
127 Annual Report 2015 Annual Report 2015 • Compliance with the law and regulations • Reviews of good corporate governance The Audit Committee verified the Company’s The audit committee has always valued the compliance with applicable laws. No matters of management in accordance with the good corporate importance indicating that the Company had violated any governance and constantly reviewed to ensure the laws, rules and requirements of the Securities & Exchange regarding policy implementation. Commission, the SET regulations, and the laws related to the Company’s operation were found.
• Reviews of risk management • Suitability of the auditors The Audit Committee has considered and The Audit Committee deemed that the reviewed the criteria of enterprise risk assessment performance of the auditor from PricewaterhouseCoopers correspondingly with COSO-ERM to unceasingly assess risk ABAS Ltd. was independent and appropriate according to factors that may affect the Company’s operation both the auditing standards. Ergo, the committee has agreed to short-term and long-term. The Company has disclosed propose to the Board that the shareholder’s meeting to significant risk factors in topic ‘Risk Factors’ in 2015 Annual continue appointing PricewaterhouseCoopers ABAS Ltd. Report. as its auditor for 2015.
• Reviews of connected transactions The Audit Committee has considered and reviewed the disclosure of connected transactions made between the Company and its affiliated company and subsidiaries, which possibly caused conflicts of interest. The reviewing results show that the Company’s businesses (Mr. Prachuab Chaiyasan) have been operated under normal business conditions, Chairman of the Audit Committee fairness and rationality. The Audit Committee has also reviewed the information disclosure of connected transaction and the footnotes to financial statements to ensure that it has been complete and adequate by adhering to the notifications of the Stock Exchange of Thailand and the Securities and Exchange Commission Thailand.
128 Annual Report 2015 Buriram Sugar Public Company Limited
Financial Statements
129 Annual Report 2015 Annual Report 2015 AUDITOR’S REPORT depend on the auditor’s judgment, including the assessment of the risks of material misstatement of To the Shareholders of Buriram Sugar Public Company the financial statements, whether due to fraud or Limited error. In making those risk assessments, the auditor I have audited the accompanying consolidated considers internal control relevant to the entity’s and company financial statements of Buriram Sugar preparation and fair presentation of the financial Public Company Limited and its subsidiaries and of statements in order to design audit procedures that Buriram Sugar Public Company Limited, which comprise are appropriate in the circumstances, but not for the the consolidated and company statements of financial purpose of expressing an opinion on the effectiveness position as at 31 December 2015, and the related of the entity’s internal control. An audit also includes consolidated and company statements of comprehensive evaluating the appropriateness of accounting policies income, changes in shareholders’ equity and cash flows used and the reasonableness of accounting estimates for the year then ended, and a summary of significant made by management, as well as evaluating the overall accounting policies and other notes. presentation of the financial statements.
Management’s Responsibility for the Financial I believe that the audit evidence I have Statements obtained is sufficient and appropriate to provide a basis for my audit opinion. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and Opinion for such internal control as management determines In my opinion, the consolidated and is necessary to enable the preparation of financial company financial statements referred to above statements that are free from material misstatement, present fairly, in all material respects, the whether due to fraud or error. consolidated and company financial position of Buriram Sugar Public Company Limited and its subsidiaries and of Buriram Sugar Public Company Auditor’s Responsibility Limited as at 31 December 2015, and its consolidated My responsibility is to express an opinion and company results of operations and cash flows on these financial statements based on my audit. I for the year then ended in accordance with Thai conducted my audit in accordance with Thai Standards Financial Reporting Standards. on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Prasit Yuengsrikul Certified Public Accountant (Thailand) No. 4174 An audit involves performing procedures to PricewaterhouseCoopers ABAS Ltd. obtain audit evidence about the amounts and disclosures Bangkok in the financial statements. The procedures selected 26 February 2016 130 Annual Report 2015 Buriram Sugar Public Company Limited
BURIRAM SUGAR PUBLIC COMPANY LIMITED CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 31 DECEMBER 2015
131 Annual Report 2015 Annual Report 2015 Buriram Sugar Public Company Limited Statement of Financial Position As at 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht Assets
Current assets Cash and cash equivalents 8 213,924,458 348,532,521 11,598,663 223,683,992 Trade and other receivables, net 9, 30 227,944,568 302,873,569 163,766,044 255,203,318 Farmer receivables, net 10 908,499,263 770,792,360 10,900,000 15,641,446 Inventories, net 11 715,206,897 610,541,403 - - Current portion of long-term borrowings to subsidiaries 30 - - 74,000,000 - Other current assets 12 48,705,481 73,368,417 9,474,900 17,261,650
Total current assets 2,114,280,667 2,106,108,270 269,739,607 511,790,406
Non-current assets Other long-term investments, net 14 1,903,650 1,980,470 495,875 572,695 Investment in subsidiaries 13 - - 1,280,477,600 1,270,478,100 Long-term borrowings to subsidiaries 30 - - 3,317,568,630 2,183,190,318 Other receivable - Office of the Cane and Sugar Fund 15 155,848,895 - - - Property, plant and equipment, net 16 4,264,589,304 3,051,997,385 11,564,851 22,238,783 Intangible assets, net 17 17,214,881 12,008,156 - - Deferred tax assets, net 18 201,974,349 211,382,601 11,146,337 12,145,179 Other non-current assets 6,293,592 2,192,630 - - Total non-current assets 4,647,824,671 3,279,561,242 4,621,253,293 3,488,625,075
Total assets 6,762,105,338 5,385,669,512 4,890,992,900 4,000,415,481
Director Date 26 February 2016 The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
132 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Sugar Public Company Limited Statement of Financial Position As at 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht Liabilities and shareholders’ equity
Current liabilities Bank overdrafts 20 8,344 34,435,771 - - Trade and other payables 19, 30 512,263,048 488,659,795 145,203,832 243,334,327 Short-term borrowings from financial institutions 20 1,481,960,256 2,174,930,649 1,365,000,000 1,270,000,000 Current portion of long-term borrowings from financial institutions 20 304,304,422 159,878,070 - - Current portion of hire-purchase liabilities 20 10,566,953 10,150,845 - 10,656 Income tax payable 12,872,312 4,308,534 6,762,888 366,326 Other current liabilities 21 26,908,051 31,489,127 6,127,810 6,694,068
Total current liabilities 2,348,883,386 2,903,852,791 1,523,094,530 1,520,405,377
Non-current liabilities Long-term borrowings from financial institutions, net 20 1,390,186,734 452,901,495 - - Debentures 20 850,000,000 - 850,000,000 - Hire-purchase liabilities, net 20 14,069,629 9,673,567 - - Employee benefit obligations 22 32,793,290 30,837,042 11,969,450 11,748,599
Total non-current liabilities 2,287,049,653 493,412,104 861,969,450 11,748,599
Total liabilities 4,635,933,039 3,397,264,895 2,385,063,980 1,532,153,976
The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
133 Annual Report 2015 Annual Report 2015 Buriram Sugar Public Company Limited Statement of Financial Position As at 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht
Liabilities and shareholders’ equity (Cont’d)
Shareholders' equity Share capital Authorised share capital 676,750,000 ordinary shares at par value of Baht 1 each 676,750,000 676,750,000 676,750,000 676,750,000 Issued and paid-up share capital 676,750,000 ordinary shares fully paid-up of Baht 1 each 23 676,750,000 676,750,000 676,750,000 676,750,000 Premium on ordinary shares 954,665,813 954,665,813 954,665,813 954,665,813 Retained earnings Appropriated - Legal reserve 25 25,669,147 18,096,416 25,669,147 9,439,650 Unappropriated 468,904,450 338,971,884 849,252,872 827,753,498 Other components of shareholders’ equity (408,912) (347,456) (408,912) (347,456)
Equity attributable to owners of the parent 2,125,580,498 1,988,136,657 2,505,928,920 2,468,261,505 Non-controlling interests 591,801 267,960 - -
Total shareholders’ equity 2,126,172,299 1988,404,617 2,505,928,920 2,468,261,505
Total liabilities and shareholders’ equity 6,762,105,338 5,385,669,512 4,890,992,900 4,000,415,481
The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
134 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Sugar Public Company Limited Statement of comprehensive income For the year ended 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht
Revenue from sales and services 4,226,648,347 3,920,315,008 - - Cost of sales and services (3,321,645,151) (3,089,683,579) - Gross profit 905,003,196 830,631,429 - Other income 26 69,206,838 33,713,301 377,859,858 324,396,440 Selling expenses (175,727,418) (160,268,155) - - Administrative expenses (346,944,873) (300,595,379) (126,141,609) (124,062,311) Finance costs (125,488,835) (117,018,179) (60,016,574) (48,556,910) Profit before income tax expense 326,048,908 286,463,017 191,701,675 151,777,219 Income tax expense 28 (53,701,744) (50,153,736) (19,305,702) (3,862,318) Net profit for the year 272,347,164 236,309,281 172,395,973 147,914,901
The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
135 Annual Report 2015 Annual Report 2015 Buriram Sugar Public Company Limited Statement of comprehensive income For the year ended 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht
Other comprehensive income (expense): Items that will not be reclassified to profit or loss - Remeasurements of post-employment benefit obligations 1,113,642 6,382,692 853,623 3,065,944 - Income tax relating to remeasurements of post-employment benefit obligations (222,728) (1,276,538) (170,725) (613,189) 890,914 5,106,154 682,898 2,452,755 Items that will be reclassified subsequently to profit or loss - Change in value of available-for-sale investments (76,820) 70,520 (76,820) 70,520 - Income tax relating to change in value of available-for-sale investments 15,364 - 15,364 - (61,456) 70,520 (61,456) 70,520 Other comprehensive income for the year, net of tax 829,458 5,176,674 621,442 2,523,275 Total comprehensive income for the year 273,176,622 241,485,955 173,017,415 150,438,176 Profit attributable to: Owners of the parent 271,964,585 235,967,740 172,395,973 147,914,901 Non-controlling interests 382,579 341,541 - - 272,347,164 236,309,281 172,395,973 147,914,901 Total comprehensive income attributable to: Owners of the parent 272,793,841 241,142,890 173,017,415 150,438,176 Non-controlling interests 382,781 343,065 - - 273,176,622 241,485,955 173,017,415 150,438,176 Earnings per share Basic earnings per share 29 0.40 0.44 0.25 0.28
The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
136 Annual Report 2015 Buriram Sugar Public Company Limited
273,176,62
Baht Baht
Baht (417,976) 634,650,204 24,709 634,674,913 of shareholders’ Fair value reserve Baht Retained earnings Equity Baht Baht paid-up Premium on Appropriated of available-for-sale Total owners of Non-controlling Total available-for-sale paid-up Premium on Appropriated of 676,750,000 954,665,813 18,096,416 338,971,884 (347,456) 1,988,136,657 267,960 1,988,404,617 507,567,500 11,504,750 1,857,898 114,138,032 share capital ordinary shares Legal reserve Unappropriated investments the parent interests Total investments the parent interests Total Legal reserve Unappropriated shares share capital ordinary 676,750,000 954,665,813 25,669,147 468,904,450 (408,912) 2,125,580,498 591,801 2,126,172,299 676,750,000 954,665,813 18,096,416 338,971,884 (347,456) 1,988,136,657 267,960 1,988,404,617 Buriram Sugar Public Company Limited Statement of Changes in Shareholders’ Equity For the year ended 31 December 2015 Consolidated Other components Issued and Notes Baht 2015 January 1 at as balance Opening (135,350,000) (60,440) (135,410,440) - (135,350,000) 24 - paid Dividend - 7,572,731 (7,572,731) 25 - reserve Legal - -interests -non-controlling -in -Increase - 1,500 1,500 - 272,855,297 (61,456) 272,793,841 382,781 year the for income comprehensive Total Closing balance as at 31 December 2015 2014 January 1 at as balance Opening 23 169,182,500 943,161,063 - 1,112,343,563 shares ordinary of Issuance 24 - (100,264) paid Dividend 25 - 16,238,518 (16,238,518) reserve Legal - -interests -non-controlling -in -Increase - 450 450 - 241,072,370 70,520 241,142,890 343,065 241,485,955 year the for income comprehensive Total Closing balance as at 31 December 2014 The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
137 Annual Report 2015 Annual Report 2015 Total Baht
Baht Baht Equity Shareholders’ Baht Baht Baht - 173,078,871 (61,456) 173,017,415 507,567,500 11,504,750 1,857,898 684,967,594 (417,976) 1,205,4 79,766 676,750,000 954,665,813 25,669,147 849,252,872 (408,912) 2,505,92 8,920 676,750,000 954,665,813 9,439,650 827,753,498 (347,456) 2,468, 261,505 share capital ordinary shares Legal reserve Unappropriated investments Notes 24 - (135,350,000 ) (135,350,000) 25 - 16,229,497 (16,229,497) 25 - 7,581,752 (7,581,752)
Other components of Company ofcomponents Other Issued and Retained earnings Fair value reserve of Paid-up Premium on Appropriated available-for-sale Opening balance as at 1 January 2015 676,750,000 954,665,813 9,439,650 827,753,498 (34 7,456) 2,468,261,505 Dividend paid Legal reserve comprehensive income for the year Total 2015 December 31 at as balance Closing Opening balance as at 1 January 2014 Issuance of ordinary shares 23 169,182,500 943,161,06 3 - 1,112,343,563 Legal reserve comprehensive income for the year - 150,367,656 70,520 150,438,176 Total 2014 December 31 at as balance Closing The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements. Buriram Sugar Public Company Limited Statement of Changes in Shareholders’ Equity For the year ended 31 December 2015
138 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Sugar Public Company Limited Statement of Cash Flows For the year ended 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht Cash flows from operating activities Profit before income tax expense 326,048,908 286,463,017 191,701,675 151,777,219 Adjustments to reconcile profit before income tax to net cash provided by operations: - Depreciation and amortisation 160,525,162 93,128,031 2,567,000 3,540,819 - Interest income 26 (24,707,039) (3,850,748) (163,170,588) (70,065,260) - Dividend income 26 (153,510) (153,510) (96,059,620) (141,049,735) - Reversal of allowance for doubtful accounts 10 (29,018,371) (721,606) (30,456,578) (58,999) - Allowance for declining in value of inventories 11 1,084,254 569,868 - - - Gain on disposals of property, plant and equipment 26 (6,764,172) (495,325) (502,489) (495,325) - Losses on write-off of property, plant and equipment 720,490 7,586,465 486,927 7,461,231 - Financial costs 125,488,835 117,018,179 60,016,574 48,556,910 - Employee benefit expenses 22 3,369,970 4,672,515 1,165,554 1,530,466 Cash flows before changes in operating assets and liabilities 556,594,527 504,216,886 (34,251,545) 1,197,326 Change in operating assets and liabilities - Trade and other receivables 74,929,001 (209,460,775) 191,013,111 (54,696,930) - Farmer receivables (108,688,532) 254,770,044 35,198,024 12,021,171 - Inventories (105,749,748) 55,003,961 - - - Other current assets 24,662,936 (33,775,226) 7,786,750 8,419,098 - Other receivable-Office of the Cane and Sugar Fund (155,848,895) - - - - Other non-current assets (4,100,962) 596,008 - 879,481 - Trade and other payables 18,240,099 (352,700,133) (103,252,413) (2,536,259) - Other current liabilities (4,581,076) (3,390,123) (566,258) 2,129,147 - Employee benefit obligations 22 (300,080) (163,350) (91,080) - Cash generated from (used in) operating activities 295,157,270 215,097,292 95,836,589 (32,586,966) - Income tax paid (35,937,078) (53,651,722) (12,065,659) (2,290,466) - Interest paid (120,125,682) (118,360,125) (54,894,656) (50,804,641) Net cash generated from (used in) operating activities 139,094,510 43,085,445 28,876,274 (85,682,073)
The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
139 Annual Report 2015 Annual Report 2015 Buriram Sugar Public Company Limited Statement of Cash Flows For the year ended 31 December 2015
Consolidated Company 2015 2014 2015 2014 Notes Baht Baht Baht Baht Cash flows from investing activities Interest received 24,707,039 3,850,748 159,654,370 57,094,574 Dividend received 153,510 153,510 - - Long-term borrowings to related parties - - (1,208,378,312) (1,731,789,499) Purchase of investment in a subsidiary - - (9,999,500) - Proceeds from disposals of property, plant and equipment 19,393,014 514,954 8,275,430 514,954 Purchases of property, plant and equipment (1,339,342,135) (1,309,322,802) (152,935) (1,486,239) Capitalised borrowing costs to property, plant and equipment (35,340,141) (50,010,310) - - Net cash used in investing activities (1,330,428,713) (1,354,813,900) (1,050,600,947) (1,675,666,210) Cash flows from financing activities Proceeds from/ (repayments on) short-term borrowings from financial institutions 20 (727,397,820) 694,359,624 95,000,000 870,000,000 Proceeds from long-term borrowings from financial institutions 20 1,709,277,400 - - - Proceeds from issuance of debentures 20 850,000,000 - 850,000,000 - Repayments on long-term borrowings from financial institutions and others 20 (627,565,809) (164,244,553) - - Repayments on hire-purchase liabilities 20 (12,178,691) (15,636,762) (10,656) (1,179,778) Proceeds from issuance of ordinary shares from non-controlling interests 1,500 1,112,344,013 - 1,112,343,563 Repayments on share payable - (999,400) - (999,400) Dividend paid 24 (135,350,000) - (135,350,000) - Dividend paid to non-controlling interests (60,440) - - - Net cash generated from financing activities 1,056,726,140 1,625,822,922 809,639,344 1,980,164,385
Net increase/ (decrease) in cash and cash equivalents (134,608,063) 314,094,467 (212,085,329) 218,816,102 Opening balance 348,532,521 34,438,054 223,683,992 4,867,890 Closing balance 213,924,458 348,532,521 11,598,663 223,683,992
Non-cash transactions Purchases of property, plant and equipment under hire-purchase liabilities 16,990,862 5,100,646 - - The accompanying notes on pages 11 to 50 are an integral part of these consoliated and company financial statements.
140 Annual Report 2015 Buriram Sugar Public Company Limited
Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015
141 Annual Report 2015 Annual Report 2015 1 General information is able to comply with the current and future financial obligations. Therefore, these financial statements are Buriram Sugar Public Company Limited (the prepared on the going concern basis. “Company”) is a public limited company which is listed on the Stock Exchange of Thailand, limited company incorporated and resident in Thailand. The address of 3 Accounting policies the Company’s registered offices are as follows: The principal accounting policies applied in the Head office: Located at 237 moo 2, Tambol Hin preparation of these consolidated and company financial Lek Fai, Amphur Kumueug, Buriram 31190. statements are set out below: The 1st Branch: Located at 128/77-78, 7th floor, Phayathai Plaza Building, Tungphayathai Ratchathewee Bangkok 10400. 3.1 Basis for preparation For reporting purposes, the Company and its The consolidated and company financial subsidiaries are referred to as “the Group”. statements have been prepared in accordance with The principal business operations of the Group Thai generally accepted accounting principles under the are summarised as follows: Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the 1) Manufacturing and distribution of sugar and molasses Securities and Exchange Commission under the Securities 2) Trading agricultural products and Exchange Act. 3) Electricity generation and distribution The consolidated and company financial 4) Other businesses statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The consolidated and company financial The preparation of financial statements in statements were authorised for issue by the Board of conformity with Thai generally accepted accounting Directors on 26 February 2016. principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s 2 Financial status accounting policies. The areas involving a higher degree As at 31 December 2015, the Group and the of judgement or complexity, or areas where assumptions Company have current liabilities greater than current and estimates are significant to the consolidated financial assets of Baht 235 million and Baht 1,253 million, statements are disclosed in Note 5. respectively. However, the Group has obtained additional An English version of the consolidated and long-term credit facilities with a local financial institution company financial statements has been prepared from to settle the current liabilities. The Group has expected the statutory financial statements that are in the Thai to complete the settlement by December 2016. Thus, language. In the event of a conflict or a difference in the Group can continue its operations for a period of next interpretation between the two languages, the Thai 12 months from the date of this report. Also, the Group language statutory financial statements shall prevail.
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3.2 New financial reporting standards and • TAS 21 (revised 2014) revised financial reporting standards The effects of changes in foreign exchange rates a) New financial reporting standards and revised financial • TAS 23 (revised 2014) reporting standards which are effective on 1 January 2015 are as follows: Borrowing costs • TAS 24 (revised 2014) • TAS 1 (revised 2014) Related party disclosures Presentation of financial statements • TAS 26 (revised 2014) • TAS 2 (revised 2014) Accounting and reporting by retirement benefit plans Inventories • TAS 27 (revised 2014) • TAS 7 (revised 2014) Separate financial statements Statement of cash flows • TAS 28 (revised 2014) • TAS 8 (revised 2014) Investments in associates and joint Accounting policies, changes in accounting ventures estimates and errors • TAS 29 (revised 2014) • TAS 10 (revised 2014) Financial reporting in hyperinflationary Events after the reporting period economies • TAS 11 (revised 2014) • TAS 33 (revised 2014) Construction contracts Earnings per share • TAS 12 (revised 2014) • TAS 34 (revised 2014) Income taxes Interim financial reporting • TAS 16 (revised 2014) • TAS 36 (revised 2014) Property, plant and equipment Impairment of assets • TAS 17 (revised 2014) • TAS 37 (revised 2014) Leases Provisions, contingent liabilities and • TAS 18 (revised 2014) contingent assets Revenue • TAS 38 (revised 2014) • TAS 19 (revised 2014) Intangible assets Employee benefits • TAS 40 (revised 2014) • TAS 20 (revised 2014) Investment property Accounting for government grants and • TFRS 2 (revised 2014) disclosure of government assistance Share-based payment
143 Annual Report 2015 Annual Report 2015 • TFRS 3 (revised 2014) • TSIC 32 (revised 2014) Business combinations Intangible assets - Web site costs • TFRS 5 (revised 2014) • TFRIC 1 (revised 2014) Non-current assets held for sale and Changes in existing decommissioning, discontinued operations restoration and similar liabilities • TFRS 6 (revised 2014) • TFRIC 4 (revised 2014) Exploration for and evaluation of mineral Determining whether an arrangement resources contains a lease • TFRS 8 (revised 2014) • TFRIC 5 (revised 2014) Operating segments Rights to interests arising from • TFRS 10 decommissioning, restoration and Consolidated financial statements environmental rehabilitation funds • TFRS 11 • TFRIC 7 (revised 2014) Joint arrangements Applying the restatement approach under TAS29 (revised 2014) • TFRS 12 Financial reporting in hyperinflationary Disclosure of interests in other entities economies • TFRS 13 • TFRIC 10 (revised 2014) Fair value measurement Interim financial reporting and impairment • TSIC 10 (revised 2014) • TFRIC 12 (revised 2014) Government assistance - No specific Service concession arrangements relation to operating activities • TFRIC 13 (revised 2014) • TSIC 15 (revised 2014) Customer loyalty programmes Operating leases - Incentives • TFRIC 14 • TSIC 25 (revised 2014) TAS 19 - The limit on a defined benefit Income taxes - changes in the tax status of asset, minimum funding an entity or its shareholders requirements and their interaction • TSIC 27 (revised 2014) • TFRIC 15 (revised 2014) Evaluating the substance of transactions involving the legal form of a lease Agreements for the construction of • TSIC 29 (revised 2014) real estate Service concession arrangements: • TFRIC 17 (revised 2014) Disclosures Distributions of non-cash assets to owners • TSIC 31 (revised 2014) • TFRIC 18 (revised 2014) Revenue - barter transactions involving Transfers of assets from customers advertising services 144 Annual Report 2015 Buriram Sugar Public Company Limited
• TFRIC 20 • TAS 7 (revised 2015) Stripping costs in the production phase Statement of cash flows of a surface mine • TAS 8 (revised 2015) Accounting policies, changes in accounting The Group has applied the aforementioned estimates and errors financial reporting standards from 1 January • TAS 10 (revised 2015) 2015. However, the application of those financial Events after the reporting period reporting standards has no significant impacts to the financial statements being presented, except • TAS 11 (revised 2015) the following accounting standards: Construction contracts • TAS 12 (revised 2015) TAS 1 (revised 2014), the main change is Income taxes that a requirement for entities to group items • TAS 16 (revised 2015) presented in “other comprehensive income” Property, plant and equipment (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently • TAS 17 (revised 2015) (reclassification adjustments). The amendments Leases do not address which items are presented in OCI • TAS 18 (revised 2015) but the Group must refer to the relevant financial Revenue reporting standards. The Group has reclassified the items in OCI as required by this standard. • TAS 19 (revised 2015) Employee benefits TFRS 13 aims to improve consistency • TAS 20 (revised 2015) and to reduce complexity by providing a precise Accounting for government grants and definition of fair value and a single source of fair disclosure of government assistance value measurement and disclosure requirements • TAS 21 (revised 2015) for use across TFRSs. This standard has no impact The effects of changes in foreign to the group, except for disclosure. exchange rates
• TAS 23 (revised 2015) b) Revised financial reporting standards which are Borrowing costs effective on 1 January 2016 and the Group are not early adopted are as follows: • TAS 24 (revised 2015) • TAS 1 (revised 2015) Related party disclosures Presentation of financial statements • TAS 26 (revised 2015) • TAS 2 (revised 2015) Accounting and reporting by retirement benefit plans Inventories
145 Annual Report 2015 Annual Report 2015 • TAS 27 (revised 2015) • TFRS 6 (revised 2015) Separate financial statements Exploration for and evaluation of mineral • TAS 28 (revised 2015) resources Investments in associates and joint • TFRS 8 (revised 2015) ventures Operating segments • TAS 29 (revised 2015) • TFRS 10 (revised 2015) Financial reporting in hyperinflationary Consolidated financial statements economies • TFRS 11 (revised 2015) • TAS 33 (revised 2015) Joint arrangements Earnings per share • TFRS 12 (revised 2015) • TAS 34 (revised 2015) Disclosure of interests in other entities Interim financial reporting • TFRS 13 (revised 2015) • TAS 36 (revised 2015) Fair value measurement Impairment of assets • TSIC 10 (revised 2015) • TAS 37 (revised 2015) Government assistance - No specific relation Provisions, contingent liabilities and contingent to operating activities assets • TSIC 15 (revised 2015) • TAS 38 (revised 2015) Operating leases - Incentives Intangible assets • TSIC 25 (revised 2015) • TAS 40 (revised 2015) Income taxes - changes in the tax status of Investment property an entity or its shareholders • TAS 41 • TSIC 27 (revised 2015) Agriculture Evaluating the substance of transactions • TFRS 2 (revised 2015) involving the legal form of a lease Share-based payment • TSIC 29 (revised 2015) • TFRS 3 (revised 2015) Service concession arrangements: Disclosures Business combinations • TSIC 31 (revised 2015) • TFRS 4 (revised 2015) Revenue - barter transactions involving advertising services Insurance contracts • TSIC 32 (revised 2015) • TFRS 5 (revised 2015) Intangible assets - Web site costs Non-current assets held for sale and discontinued operations • TFRIC 1 (revised 2015) Changes in existing decommissioning, restoration and similar liabilities
146 Annual Report 2015 Buriram Sugar Public Company Limited
• TFRIC 4 (revised 2015) The Group will apply the aforementioned Determining whether an arrangement contains financial reporting standards from 1 January 2016. The a lease Group’s management assessed and determined that the application of those financial reporting standards has • TFRIC 5 (revised 2015) no significant impact to the financial statements being Rights to interests arising from decommissioning, presented. restoration and environmental rehabilitation funds 3.3 Group accounting - Investments in • TFRIC 7 (revised 2015) subsidiaries Applying the restatement approach under TAS29 (revised 2015) Financial (1) Subsidiaries reporting in hyperinflationary economies Subsidiaries are all entities (including structured • TFRIC 10 (revised 2015) entities) over which the group has control. The group controls an entity when the group is exposed to, or has Interim financial reporting and impairment rights to, variable returns from its involvement with the • TFRIC 12 (revised 2015) entity and has the ability to affect those returns though its Service concession arrangements power over the entity. Subsidiaries are fully consolidated • TFRIC 13 (revised 2015) from the date on which control is transferred to the Group. They are deconsolidated from the date that control Customer loyalty programmes ceases. • TFRIC 14 (revised 2015) TAS 19 - The limit on a defined benefit asset, The Group applies the acquisition method to minimum funding account for business combinations. The consideration requirements and their interaction transferred for the acquisition of a subsidiary is the fair • TFRIC 15 (revised 2015) value of the assets transferred, the liabilities incurred to Agreements for the construction of real estate the former owners of acquiree and the equity interest issued by the Group. The consideration transferred • TFRIC 17 (revised 2015) includes the fair value of any asset or liability resulting Distributions of non-cash assets to owners from a contingent consideration arrangement. Acquisition- • TFRIC 18 (revised 2015) related costs are expensed as incurred. Identifiable assets Transfers of assets from customers acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their • TFRIC 20 (revised 2015) fair values at the acquisition date. On an acquisition- Stripping costs in the production phase of a by-acquisition basis, the Group recognises any non- surface mine controlling interest in the acquiree either at fair value or • TFRIC 21 at the non-controlling interest’s proportionate share of Levies the acquiree’s net assets.
147 Annual Report 2015 Annual Report 2015 If the business combination is achieves in stages, In the Company’s separated financial statements, the acquisition date carrying value of the acquirer’s investments in subsidiaries are accounted for at cost previously held equity interest in the acquiree is re- less impairment. Cost is adjusted to reflect changes measured to fair value at the acquisition date; any gains in consideration arising from contingent consideration or losses arising from such re-measured are recognised amendments. Cost also includes direct attributable costs in profit or loss. of investment.
Any contingent consideration to be transferred A list of the Group’s principal subsidiaries and the by the Group is regcognised at fair value at the acquisition effect from the acquisition and disposal of subsidiaries date. Subsequent changes to the fair value of the have been disclosed in Note 13. contingent consideration that is deemed to be an asset or liability is recognised either in profit or loss or as a change to other comprehensive income. Contingent (2) Transaction and non-controlling interests consideration that is classified as equity is not re- The Group treats transactions with non- measured, and its subsequent settlement is accounted controlling interests as transactions with equity owners of for within equity. the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net The excess of the consideration transferred, the assets of the subsidiary is recorded in equity. Gains or amount of any non-controlling interest in the acquiree losses on disposals to non-controlling interests are also and the acquisition-date fair value of any previous recorded in equity. equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling (3) Disposal of subsidiaries interest recognise and previously held interest measured When the Group ceases to have control, any is less than the fair value of the net assets of the subsidiary retained interest in the entity is re-measured to its fair acquired in the case of a bargain purchase, the difference value, with the change in carrying amount recognised in is recognised directly in profit or loss. profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the Intercompany transactions, balances and retained interest as an associate, joint venture or financial unrealised gains or loss on transactions between Group asset. In addition, any amounts previously recognised in companies are eliminated. Unrealised losses are also other comprehensive income in respect of that entity eliminated. Accounting policies of subsidiaries have been are accounted for as if the Group had directly disposed changed where necessary to ensure consistency with the of the related assets or liabilities. policies adopted by the Group.
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3.4 Foreign currency translation 3.6 Trade and farmer receivables
(a) Functional and presentation currency Trade receivables are recognised initially at the original invoice amount and subsequently measured Items included in the financial statements of each of at the remaining amount less allowance for doubtful the group’s entities are measured using the currency of receivables based on a review of all outstanding amounts the primary economic environment in which the entity at the year end. The amount of the allowance is the operates (‘the functional currency’). The consolidated difference between the carrying amount of the receivable financial statements are presented in Baht, which is the and the amount expected to be collectible. Bad debts are Company’s functional and the group’s presentation written off during the year in which they are identified and currency. recognised in profit or loss within administrative expense.
(b) Transactions and balances Farmer receivables are stated at the net realisable Foreign currency transactions are translated into the value. The Group has policy to set up allowance for functional currency using the exchange rates prevailing at doubtful accounts based on period of overdue balance, the dates of the transactions or valuation where items are payment histories, collaterals and future expectations of re-measured. Foreign exchange gains and losses resulting customer payments. Allowance for doubtful accounts is from the settlement of such transactions and from the provided in full amount (after deducting appraisal value translation at year-end exchange rates of monetary of collateral). Bad debts are written off when incurred. assets and liabilities denominated in foreign currencies are recognised in the profit or loss. 3.7 Inventories
When a gain or loss on a non-monetary item is Inventories are stated at the lower of cost or net recognised in other comprehensive income, any exchange realisable value. Cost of merchandise inventories, finished component of that gain or loss is recognised in other goods and factory supplies are determined by weighted comprehensive income. Conversely, when a gain or loss average method. on a non-monetary item is recognised in profit and loss, any exchange component of that gain or loss is recognised The cost of purchase comprises both the in profit and loss. purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and 3.5 Cash and cash equivalents transportation charges, less all attributable discounts, allowances or rebates. The cost of finished goods and In the consolidated and Company statement work in progress comprises raw materials, direct labour, of cash flows, cash and cash equivalents includes cash other direct costs and related production overheads. in hand, deposits held at call with banks, other short- term highly liquid investments with original maturities of Net realisable value is the estimate of the selling three months or less. In the consolidated and Company price in the ordinary course of business, less the costs statement of financial position, bank overdrafts are shown of completion and selling expenses. Allowance is made, within borrowings in current liabilities. where necessary, for obsolete, slow-moving and defective inventories. 149 Annual Report 2015 Annual Report 2015 3.8 Other investments A test for impairment is carried out when there is a factor indicating that an investment might Investments other than investments in be impaired. If the carrying value of the investment is subsidiaries are classified into two categories: (1) higher than its recoverable amount, impairment loss available-for-sale investments and (2) general is charged to the income statement. investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification On disposal of an investment, the difference of its investments at the time of the purchase and between the net disposal proceeds and the carrying re-evaluates such designation on a regular basis. amount is charged or credited to the profit or loss. When disposing of part of the Group's holding of a particular investment in debt or equity securities, the (1) Investments intended to be held for carrying amount of the disposed part is determined an indefinite period of time, which may be sold in by the weighted average carrying amount of the total response to liquidity needs or changes in interest rates, holding of the investment. are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding the investment for less than 3.9 Property, plant and equipment 12 months from the statement of financial position date or unless they will need to be sold to raise Property, plant and equipment are initially operating capital, in which case they are included in recorded at cost and subsequently stated at historical current assets. cost less accumulated depreciation and allowance for impairment loss. Costs include directly attributable expenses in acquiring such asset. (2) Investments in non-marketable equity securities are classified as general investments. All two categories of investments are initially Subsequent costs are included in the asset’s recognised at cost, which is equal to the fair value of carrying amount or recognised as a separate asset, consideration paid plus transaction cost. as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured Available-for-sale investments are reliably. The carrying amount of the replaced part is subsequently measured at fair value. The fair value derecognised. All other repairs and maintenance are of investments is based on quoted bid price at the charged to profit or loss during the financial period in close of business on the statement of financial position which they are incurred. date by reference to the Stock Exchange of Thailand. The unrealised gains and losses of available for sale investments are recognised in other comprehensive Land is not depreciated. Depreciation on other income. assets is calculated is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful life, as follows: General investments are carried at cost less impairment loss.
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Years 3.11 Impairment of assets Land improvement 10 - 30 years Assets that have an indefinite useful life, for Building and buildings improvement 5 - 40 years example trademark and licences, are not subject to Machinery and tools 5 - 30 years amortisation and are tested annually for impairment. Agriculture equipment and tools 5 years Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances Furniture, fixtures and office equipment 5 years indicate that the carrying amount may not be recoverable. Motor vehicles 5 - 10 years An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable The assets’ residual values and useful lives are amount. The recoverable amount is the higher of reviewed, and adjusted if appropriate, at the end of each an asset’s fair value less costs to sell and value in use. reporting period. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately The asset’s carrying amount is written-down identifiable cash flows. Non-financial assets other than immediately to its recoverable amount if the asset’s goodwill that suffered an impairment are reviewed for carrying amount is greater than its estimated recoverable possible reversal of the impairment at each reporting date. amount. 3.12 Leases - where a Group is the lessee Gains or losses on disposals are determined by Leases in which a significant portion of the risks comparing the proceeds with the carrying amount and and rewards of ownership are retained by the lessor are are recognised within ‘Other (losses)/gains - net’ in profit classified as operating leases. Payments made under or loss. operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line 3.10 Intangible assets basis over the period of the lease.
3.10.1 Computer software Leases of property, plant or equipment where Acquired computer software licences are the Group has substantially all the risks and rewards of capitalised on the basis of the costs incurred to acquire ownership are classified as finance leases. Finance leases and bring to use the specific software. Amortisation is are capitalised at the inception of the lease at the lower calculated using the straight-line method over their useful of the fair value of the leased property or the present life of 5 years. value of the minimum lease payments.
3.10.2 Right to use of assets Each lease payment is allocated between the liability and finance charges so as to achieve Expenditure on right to use of assets which are a constant rate on the finance balance outstanding. transmission lines is capitalised and amortised using the The corresponding rental obligations, net of finance straight-line method over their useful life of 20 years. charges, are included in other long-term payables.
151 Annual Report 2015 Annual Report 2015 The interest element of the finance cost is charged to Fees paid on the establishment of loan facilities profit or loss over the lease period so as to achieve are recognised as transaction costs of the loan to the a constant periodic rate of interest on the remaining extent that it is probable that some or all of the facility balance of the liability for each period. The property, will be drawn down. In this case, the fee is deferred plant or equipment acquired under finance leases is until the draw-down occurs. To the extent that there depreciated over the shorter period of the useful life of is no evidence that it is probable that some or all of the asset or the lease term. the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. 3.13 Leases - where a Group is the lessor
When assets are leased out under a finance lease, Borrowings are classified as current liabilities the present value of the lease payments is recognised as unless the Group has an unconditional right to defer a receivable. The difference between the gross receivable settlement of the liability for at least 12 months after and the present value of the receivable is recognised the end of reporting date. as unearned finance income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. 3.14.1 Borrowings costs Initial direct costs are included in initial measurement of General and specific borrowing costs directly the finance lease receivable and reduce the amount of attributable to the acquisition, construction or production income recognised over the lease term. of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended Assets leased out under operating leases are use or sale, are added to the cost of those assets, until included in property, plant and equipment in the such time as the assets are substantially ready for their statement of financial position. They are depreciated intended use or sale. over their expected useful lives on a basis consistent with other similar property, plant and equipment owned Investment income earned on the temporary by the Group. Rental income (net of any incentives given investment of specific borrowings pending their to lessor) is recognised on a straight-line basis over the expenditure on qualifying assets is deducted from the lease term. borrowing costs eligible for capitalisation.
3.14 Borrowings Borrowing costs comprise: Borrowings and debentures are recognised • Interest arising from long-term borrowings including initially at the fair value of proceeds received, net of related tax transaction costs incurred. Borrowings and debentures are • Amortisation of transaction costs subsequently stated at amortised cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised All other borrowing costs are recognised in profit in the profit or loss over the period of the borrowings. or loss in the period in which they are incurred.
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3.15 Current and deferred income tax Deferred income tax is provided on temporary differences arising from investments in subsidiaries, The tax expense for the period comprises current except where the timing of the reversal of the temporary and deferred tax. Tax is recognised in profit or loss, except difference is controlled by the Group and it is probable to the extent that it relates to items recognised in other that the temporary difference will not reverse in the comprehensive income or directly in equity. In this case, foreseeable future. the tax is also recognised in other comprehensive income or directly in equity, respectively. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset The current income tax charge is calculated current tax assets against current tax liabilities and when on the basis of the tax laws enacted or substantively the deferred income tax assets and liabilities relate to enacted at the end of reporting period in the countries income taxes levied by the same taxation authority on where the Company and its subsidiaries operate and either the same taxable entity or different taxable entities generate taxable income. Management periodically where there is an intention to settle the balances on a evaluates positions taken in tax returns with respect to net basis. situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax 3.16 Employee benefits authorities. Group companies operate various retirement benefits schemes. The Group has both defined benefit Deferred income tax is recognised, using the and defined contribution plans. liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. A defined contribution plan is a retirement plan However, the deferred income tax is not accounted for under which the Group pays fixed contributions into a if it arises from initial recognition of an asset or liability in separate entity. The Group has no legal or constructive a transaction other than a business combination that at obligations to pay further contributions if the fund does the time of the transaction affects neither accounting nor not hold sufficient assets to pay all employees the taxable profit or loss. Deferred income tax is determined benefits relating to employee service in the current and using tax rates (and laws) that have been enacted or prior periods. The Group pays contributions to a separate substantially enacted by the end of the reporting period fund which is managed by an external fund manager and are expected to apply when the related deferred in accordance with the provident fund Act. B.E. 2530. income tax asset is realised or the deferred income tax The Group has no further payment obligations once liability is settled. the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to Deferred income tax assets are recognised only the extent that a cash refund or a reduction in the future to the extent that it is probable that future taxable profit payments is available. will be available against which the temporary differences can be utilised.
153 Annual Report 2015 Annual Report 2015 A defined benefit plan is a retirement plan that is insurance contract, the reimbursement is recognised as not a defined contribution plan. Typically defined benefit a separate asset but only when the reimbursement is plans define an amount of retirement benefit that an virtually certain. employee will receive on retirement, usually dependent on one or more factors such as age, years of service and Where there are a number of similar obligations, compensation. the likelihood that an outflow will be required in settlement is determined by considering the class of The liability recognised in the statement of obligations as a whole. A provision is recognised even if financial position in respect of defined benefit retirement the likelihood of an outflow with respect to any one item plans is the present value of the defined benefit included in the same class of obligations may be small. obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is Provisions are measured at the present value of calculated annually by independent actuaries using the the expenditures expected to be required to settle the projected unit credit method. The present value of the obligation using a pre-tax rate that reflects current market defined benefit obligation is determined by discounting assessments of the time value of money and the risks the estimated future cash outflows using market yield specific to the obligation. The increase in the provision of government bonds that have terms to maturity due to passage of time is recognised as interest expense. approximating to the terms of the related pension liability. The estimated future cash flows shall reflect employee salaries, turnover rate, mortality, and others. 3.18 Government Grants Grants from the government are recognised at Actuarial gains and losses arising from experience their fair value where there is a reasonable assurance that adjustments and changes in actuarial assumptions are the grant will be received and the Group will comply with charged or credited to other comprehensive income in all attached conditions. the period in which they arise. Government grants relating to the compensation Past-service costs are recognised immediately in of costs are deferred and recognised in profit or loss over profit or loss. the period necessary to match them with the costs they are intended to compensate. 3.17 Provisions Provisions (excluding employee benefits) are 3.19 Revenue recognition recognised when the Group has a present legal or Sale of goods and services rendered constructive obligation as a result of past events, it is probable that an outflow of resources will be required Revenue comprises the fair value of the to settle the obligation, and a reliable estimate of consideration received or receivable for the sale of goods the amount can be made. Where the Group expects and service in the ordinary course of the Group’s activities. a provision to be reimbursed, for example under an Revenue is shown net of rebates and discounts, and after eliminating sales within the Group. Revenue from sales
154 Annual Report 2015 Buriram Sugar Public Company Limited
of goods is recognised when significant risks and rewards 4 Financial risk management of ownership of the goods are transferred to the buyer. Service income is recognised as services are provided. 4.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including, exchange rate Interest and dividend income risk, fair value interest rate risk, cash flow interest rate Interest income is recognised using the effective risk and price risk), credit risk and liquidity risk. The interest method. Dividends are recognised when the right Group’s overall risk management programme focuses to receive payment is established. on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Other income Other income is recognised in the statement of 4.1.1 Foreign exchange risk comprehensive income on an accrual basis. The Group operates internationally and is exposed to foreign exchange risk arising from various 3.20 Dividend distribution currency exposures, primarily with respect to US dollar. Foreign exchange risk arises from future commercial Dividend distribution to the Company’s transactions and recognised assets and liabilities. shareholders is recognised as a liability in the Group’s The Group has entered into foreign currency forward financial statements in the period in which the dividends contracts to mitigate risk from exchange rate fluctuation. are approved by the Company’s shareholders.
4.1.2 Interest rate risk 3.21 Segment reporting The Group’s income and operating cash flows Operating segments are reported in a manner are substantially independent of changes in market interest consistent with the internal reporting provided to the chief rates. All interest rate derivative transactions are subject operating decision-maker. The chief operating decision- to approval by the Finance Director before execution. maker, who is responsible for allocating resources and The Group has no significant interest-bearing assets. assessing performance of the operating segments, has The Group is able to raise long-term borrowings at floating been identified as Chief Executive Officer that makes rates. strategic decisions.
4.1.3 Credit risk Segment information is presented in respect of The Group has no significant concentrations of the Group’s business segments which is based on the credit risk. The Group has policies in place to ensure that Group’s management and internal reporting structure sales of products and services are made to customers with (See more information in Note 7). an appropriate credit history. Derivative counterparties and cash transactions are limited to high-credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution. 155 Annual Report 2015 Annual Report 2015 4.1.4 Liquidity risk 2. Allocation of net income generated by the Prudent liquidity risk management implies maintaining system between the cane farmers and the sugar mills sufficient cash and marketable securities, the availability under a benefit sharing arrangement, whereby cane of funding and the ability to manage risk. Due to the farmers receive 70% of the income, which is the cane dynamic nature of the underlying business, the Group’s price, and the sugar mills receive 30%, which is the return treasury aims at maintaining flexibility in funding by on production. keeping committed credit lines available. The net income of the cane and sugar system is 4.2 Pricing risk factors regarding raw materials calculated based on the income from the domestic sugar and products distribution (Quota A) and income from exports (Quota B and Quota C: using the average price of the sugar in Quota 4.2.1 Sugar cane and sugar prices fluctuation risk B and the exchange rate of the actual sales made by TCSC The Group has a fluctuation risk from sugar as the base for calculation of export sales income) less cane and sugar prices. The sugar cane and sugar industry the expenses of the Cane and Sugar Industry. Currently, in Thailand is an industry under the supervision of the ratio of exported sugar to domestically sold sugar is a government agency, the Cane and Sugar Board, under approximately 70:30. the Cane and Sugar Act B.E. 2527, which imposes the following restrictions: 4.3 Accounting for derivative financial instruments 1. A quota system for the allocation of sugar The Group is party to derivative financial in- distribution channels, as follows: struments, which mainly comprise foreign currency forward contracts. Such instruments are not recognised 1.1 Quota A for the sugar produced for domestic in the financial statements on inception. Gain or loss is consumption, recognised in the statement of comprehensive income when the contracts are settled or expired. 1.2 Quota B for the raw sugar identified by the Cane and Sugar Board as for processing by sugar mills for delivery Foreign currency forward contracts protect the to Thailand Cane and Sugar Corporation (“TCSC”) for Group from movements in exchange rates by establishing distribution. This quota is used as a base for setting the the rate at which a foreign currency asset will be realised standard price of raw sugar exports to calculate the or a foreign currency liability settled. Any increase or income of the system, decrease in the amount required to realise the asset or settle the liability is offset by a corresponding movement in the value of the forward exchange contract. The gains 1.3 Quota C for the sugar processed by sugar mills for and losses on the derivative instruments which relate export sales or as raw materials for the manufacture of to borrowings are offset for financial reporting purposes products to be exported. and are recognised as finance costs in the income state- ment, whereas the gains and losses on the derivative instruments which relate to trading business are offset
156 Annual Report 2015 Buriram Sugar Public Company Limited
for financial reporting purposes and are recognised as The Group has policy to set up allowance for other income - net in the income statement. doubtful accounts based on period of overdue balance. Allowance for doubtful accounts is provided in full amount (after deducting appraisal value of collaterals). 4.4 Fair value estimation
Analysis of financial instruments carried at fair 5.2 Property, plant and equipment and value, by valuation method, the different levels have been defined as follows: intangible assets Management determines the estimated useful • Quoted prices (unadjusted) in active markets lives and residual values for the Group’s Property, plant for identical assets or liabilities (Level 1). and equipment and intangible assets. Management will revise the depreciation or amortisation charge where use- • Inputs other than quoted prices included within ful lives and residual values are different to the previously level 1 that are observable for the asset or liability, either estimation, or it will write off or write down technically directly (that is, as prices) or indirectly (that is, derived obsolete or assets that have been abandoned or sold. from prices) (Level 2). The Group reviews for impairment whenever events • Inputs for the asset or liability that are not or changes in circumstances indicate that the carrying based on observable market data (that is, unobservable amount may not be recoverable. inputs) (Level 3). 5.3 Provision for employee benefits 5 Critical accounting estimates, The present value of the provision for employ- assumptions and judgements ee benefits depends on a number of factors that are Estimates, assumptions and judgements are determined on an actuarial basis using a number of continually evaluated and are based on historical ex- assumptions including discount rate, salary increasing perience and other factors, including expectations of rate, dead rate, and turnover rate. Any changes in these future events that are believed to be reasonable under assumptions will impact the carrying amount of pension the circumstances. obligations.
5.1 Allowance for doubtful accounts of trade The Group determines the appropriate discount receivables and farmer receivables rate at the end of each year. This is the interest rate that should be used to determine the present value of esti- In determining an allowance for doubtful ac- mated future cash outflows expected to be required to counts, management needs to make judgement and settle the employee benefits obligations. In determining estimates based upon, among other things, past collection the appropriate discount rate, the Group considers the history, aging profile of outstanding debts, collaterals and interest rate of government bonds that have terms to the prevailing economic condition. maturity approximating the terms of the related employ- ee benefits liability.
157 Annual Report 2015 Annual Report 2015 Other key assumptions for the provision for employee Chief Operating Decision Maker considers the benefits are disclosed in Note 22. reporting segment as below:
5.4 Raw material costs - Manufacturing and distribution of sugar and molasses The Group purchased sugar cane for the - Trading agricultural products production season 2015/2016 using the initial sugar - Electricity generation and distribution cane price which was announced by the Cane and Sugar - Other businesses Board’s on 12 January 2016 adjusted by sweetness of sugar cane purchased to recognise raw materials and payables for the production season 2015/2016. As at Chief Operating Decision Maker considers the audit report date, the Cane and Sugar Board has not performance of reporting segments from profit from announced the final price of sugar cane for the production operating segments. season 2015/2016 yet since the production season is not ended. The accounting policies for the operating segments are in accordance with the summaries of 6 Capital risk management accounting policies above. Unallocated costs mainly represent corporate expenses. The Group’s objectives of capital management are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and Geographic information benefits for other stakeholders and to maintain an optimal The Group’s revenue from sales external capital structure to reduce the cost of capital. customers approximately 50.45% is mostly the local sales. Revenue attributed to foreign counties are mainly from countries in Asia Pacific. In addition, most non-current In order to maintain or adjust the capital assets of the Group are located in Thailand. structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. Major customers The Group has no revenue from sales transactions 7 Operating segments with a single external customer that amounts to 10% or more of the Group’s revenue. Therefore, the Group does Reporting segment is referred from internal not present the information about major customers. report of the Group which is reviewed by Chief Operating Decision Maker (CODM). CODM is Chief Executive Officer who makes decisions about resource allocation and assesses the segment performance.
158 Annual Report 2015 Buriram Sugar Public Company Limited Consolidated (453) (427) 273 236 Unit : Million Baht (54) (50) (125) (117) entries Total Eliminated Others Trading Electricity Trading 1,423 1,241 755 591 489 202 153 157 2,820 2,191 (688) (400) 2,132 1,791 3,517 3,370 755 591 489 202 153 157 4,914 4,320 (688) (400) 4,226 3,920 593 483 125 136 10 4 - 728 623 (13) 715 610 1,795 5,485 483 364 1,030 613 4,886 51 8,194 6,513 (6,412) (4,790) 1,782 1,723 5,012 7,925 728 616 2,565 1,086 4,898 573 13,203 10,200 (6,441) (4,815) 6,762 5,385
Molasses business products distribution For the years ended 31 December 2015 and 2014 Operating segments of the Group are as follows: 7 Operating segments (Cont’d) Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015 Sugar and agriculture generation 2014 2015 2015 2014 Revenue from sales and services - Local - Overseas 2,094 2,129 Total Profit from operating segments 558 661 88 52 147 109 14 70 807 892 98 (62) 905 830 expenses selling and Administrative Finance costs Income tax expense Net profit for the year As at 31 December Inventories, net (16) (12) 4,265 3,052 2,624 1,957 120 116 1,525 469 12 522 4,281 3,064 net equipment, and plant Property, Other assets, net assets Total
159 Annual Report 2015 Annual Report 2015 8 Cash and cash equivalents
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Cash on hand 400,000 310,000 70,000 70,000 Deposits held at call with banks 213,524,458 348,222,521 11,528,663 223,613,992 213,924,458 348,532,521 11,598,663 223,683,992
As at 31 December 2015, the weighted average effective interest rate of deposits held at call with banks was 0.40% per annum (2014: 0.50% per annum).
160 Annual Report 2015 Buriram Sugar Public Company Limited
9 Trade and other receivables, net
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Trade receivables - third parties, net Current 69,405,952 40,025,449 49,096 4,716 Overdue: Up to 3 months 8,553,512 8,289,685 - - Over 3 months less than 12 months 4,232,270 449,368 - 26,390 Over 12 months 8,594,383 8,889,873 8,250,423 8,250,423 90,786,117 57,654,375 8,299,519 8,281,529 Less Allowance for doubtful accounts (8,250,423) (8,250,423) (8,250,423) (8,250,423) 82,535,694 49,403,952 49,096 31,106 Trade receivables - related parties Current 6,669,397 10,293,402 10,171,741 28,734,529 Overdue: Up to 3 months 491,248 114,800,382 2,268,894 18,290,745 Over 3 months less than 12 months 168,333 419,751 6,064,760 1,335,360 Over 12 months 200,680 232,370 6,685,360 28,807,692 7,529,658 125,745,905 25,190,755 77,168,326 Other receivables Advance payments 2,838,224 2,027,953 1,269,116 6,500 Prepaid expenses 102,633,885 113,674,882 9,624,017 11,131,834 Accrued other income - third parties 32,407,107 8,761,427 - - Accrued interest income - related parties - - 29,323,530 25,807,312 Other receivables - third parties - 3,259,450 - - Other receivables - related parties - - - 8,505 Accrued dividend income - related parties - - 98,309,530 141,049,735 137,879,216 127,723,712 138,526,193 178,003,886 Total trade and other receivables, net 227,944,568 302,873,569 163,766,044 255,203,318
161 Annual Report 2015 Annual Report 2015 10 Farmer receivables, net
CONSOLIDATED COMPANY
2015 2014 2015 2014 Baht Baht Baht Baht Farmer receivables 989,210,595 880,522,063 86,501,469 121,699,493 Less Allowance for doubtful accounts (80,711,332) (109,729,703) (75,601,469) (106,058,047) 908,499,263 770,792,360 10,900,000 15,641,446
Outstanding farmer receivables can be analysed as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Season 2016/2017 236,451,857 - - - Season 2015/2016 618,460,168 44,460,648 - - Season 2014/2015 40,880,969 703,048,637 - - Season 2013/2014 4,486,709 6,868,096 - - Season 2012/2013 1,339,364 3,200,867 - - Season 2011/2012 1,090,059 1,244,322 - - Before season 2011/2012 86,501,469 121,699,493 86,501,469 121,699,493 989,210,595 880,522,063 86,501,469 121,699,493 Less Allowance for doubtful account (80,711,332) (109,729,703) (75,601,469) (106,058,047) 908,499,263 770,792,360 10,900,000 15,641,446
162 Annual Report 2015 Buriram Sugar Public Company Limited
Outstanding farmer receivables - related parties can be analysed as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Season 2016/2017 2,563,549 - - - Season 2015/2016 14,133,297 6,415,582 - - Season 2014/2015 - 13,032,400 - - -Before season 2011/2012 - 413,932 - 413,932 16,696,846 19,861,914 - 413,932
11 Inventories, net
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Raw materials 37,196,022 23,983,518 - - Finished goods 574,317,732 460,402,429 - - Merchandise inventories 63,484,999 84,928,930 - - Work in process 4,670,201 10,849,811 - - Factory supplies 37,293,624 31,048,142 - - 716,962,578 611,212,830 - - Less Allowance for obsolete and damaged (1,755,681) (671,427) - - inventories 715,206,897 610,541,403 - -
The cost of inventories recognised as expenses and included in ‘cost of sales’ amounting to Baht 3,082.10 million (2014: Baht 2,881.54 million).
As at 31 December 2015, the Group has no inventories pledged as a security for borrowings (2014: Baht 57.35 million).
163 Annual Report 2015 Annual Report 2015 12 Other current assets
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Refundable input VAT 32,041,376 44,816,032 207,913 1,196,267 Undued input VAT 12,636,421 22,814,964 8,964,753 15,747,947 Others 4,027,684 5,737,421 302,234 317,436 48,705,481 73,368,417 9,474,900 17,261,650
13 Investments in subsidiaries The movements of investments in subsidiaries for the years ended 31 December 2015 and 2014 are as follows:
COMPANY 2015 2014 Baht Baht Beginning balance 1,270,478,100 1,270,478,100 Acquisitions 9,999,500 - Ending balance 1,280,477,600 1,270,478,100
The details of investments in subsidiaries which are located in Thailand as presented in the Company financial statements are as follows:
Issued and Paid-up share capital % Ownership interest Cost method Dividend income 2015 2014 2015 2014 2015 2014 2015 2014 Million Million Million Million Million Million Company’s Baht Baht Percentage Percentage Baht Baht Baht Baht Buriram Sugar Factory Co., Ltd. 1,050 1,050 99.90 99.90 1,049 1,049 63 105 Buriram Sugarcane Research and Development Co., Ltd 71 71 99.99 99.99 70 70 Buriram Energy Co., Ltd. and subsidiaries 136 136 99.99 99.99 136 136 27 34 - Buriram Power Co., Ltd. 170 170 99.99 99.99 - - - - - Buriram Power Plus Co., Ltd. 10 - 99.99 ------Buriram Super Power Co., Ltd. 5 - 99.99 - - - - - Key brand Fertilizer Co., Ltd. 15 15 99.99 99.99 15 15 6 2 Buriram Agro Energy Co., Ltd. 10 - 99.99 - 10 - - - Total investments in subsidiaries 1,280 1,270 96 141
164 Annual Report 2015 Buriram Sugar Public Company Limited
Changes of investments in subsidiaries for the period ended 31 December 2015 comprises of:
Buriram Power Plus Company Limited On 23 January 2015, Buriram Power Plus Company Limited was registered with the Ministry of Commerce with 100,000 ordinary shares at par value of Baht 100 per share, totalling Baht 10 million. The entity is controlled by Buriram Energy Company Limited which owns 99.99% of the ordinary shares.
Buriram Agro Energy Company Limited On 8 June 2015, Buriram Agro Energy Company Limited was registered with the Ministry of Commerce with 100,000 ordinary shares at par value of Baht 100 per share, totalling Baht 10 million. The entity is controlled by Buriram Sugar Public Company Limited which owns 99.99% of the ordinary shares.
Buriram Super Power Company Limited On 22 June 2015, Buriram Super Power Company Limited was registered with the Ministry of Commerce with 50,000 ordinary shares at par value of Baht 100 per share, totalling Baht 5 million. The entity is controlled by Buriram Energy Company Limited which owns 99.99% of the ordinary shares.
All subsidiaries undertakings are included in the consolidation. The proportion of the voting rights in the subsidiaries undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.
14 Other long-term investments, net
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Marketable equity securities 570,520 500,000 570,520 500,000 - available-for sales Less Allowances for revaluation of investments (76,820) 70,520 (76,820) 70,520 493,700 570,520 493,700 570,520 General investments – equity securities 1,409,950 1,409,950 2,175 2,175 Other long-term investments, net 1,903,650 1,980,470 495,875 572,695
165 Annual Report 2015 Annual Report 2015 Movement of other long-term investments for the year ended 31 December 2015 are as follows:
CONSOLIDATED General Available-for- Total investments sale securities Baht Baht Baht Opening net book amount 1,409,950 570,520 1,980,470 Changes in fair value - (76,820) (76,820) Closing net book amount 1,409,950 493,700 1,903,650
COMPANY General Available-for- Total investments sale securities Baht Baht Baht Opening net book amount 2,175 570,520 572,695 Changes in fair value - (76,820) (76,820) Closing net book amount 2,175 493,700 495,875
The fair value of available-for-sales investments is based on quoted bid price on the statement of financial position date by reference to the Stock Exchange of Thailand. This is a level 1 fair value measurement.
15 Other receivable - Office of the Cane and Sugar Fund Office of the Cane and Sugar Fund receivable is a compensation, which the Group expects to be received from the Office of the Cane and Sugar Fund. Since the Group management expects that the final cane price and the final return on production and distribution of the production season 2014/2015 will be lower than the initial price, the difference will be paid in accordance with Section 56 of the Cane and Sugar Act B.E. 2527. Vice versa, no repayment is required by the farmer.
The Group has recognized such receivable based on the final cane price and the final return on production and distribution of the production season 2014/2015 that was approved by the Cane and Sugar Commission on 20 January 2016. This is a level 2 fair value measurement.
166 Annual Report 2015 Buriram Sugar Public Company Limited
otal otal (384,494,845) - (92,585,259) nstallment and and nstallment Furniture, Consolidated Land Building Agriculture fixtures and Assets under - 79,686,059 3,388,081 1,619,866 1,306,977 (86,000,983) - (40,831) (3,344,927) (273,979) (4,507,410) (3) (8,167,150)
and land building Machinery equipment office Motor i 76,134,788 390,356,401 1,070,753,665 32,880,454 58,396,464 109,023,998 372,482,438 2,110,028,208 76,134,788 356,562,247 873,883,866 25,684,487 39,397,011 56,161,070 372,482,438 1,800,305,907 76,134,788 356,562,247 873,883,866 25,684,487 39,397,011 56,161,070 372,482,438 1,800,305,907 22,024,714 1,901,493 11,310,467 8,297,216 12,305,044 5,274,515 1,291,330,438 1,352,443,887 - (18,107,902) (50,534,682) (6,854,883) (8,741,588) (8,346,204) 98,159,502 420,001,066 834,702,805 28,472,707 39,760,034 53,089,378 1,577,811,893 3,051,997,385 98,159,502 467,240,061 1,078,990,842 41,589,316 61,202,103 111,498,513 1,577,811,893 3,436,492,230 - (47,238,995) (244,288,037) (13,116,609) (21,442,069) (58,409,135) 98,159,502 420,001,066 834,702,805 28,472,707 39,760,034 53,089,378 1,577,811,893 3,051,997,385
16 Property, plant and equipment, net improvement and tools equipment vehicles construction T Baht As at 31 December 2013 Cost Less Accumulated depreciation - (33,794,154) (196,869,799) (7,195,967) (18,999,453) (52,862,928) (309,722,301) Net book amount For the year ended 31 December 2014 Opening net book amount Additions in (out) Transfer Disposals, net Depreciation charge Closing net book amount As at 31 December 2014 Cost Less Accumulated depreciation Net book amount Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015
167 Annual Report 2015 Annual Report 2015
otal otal nstallment and and nstallment Furniture, Consolidated Land Building Agriculture fixtures and Assets under
and land building Machinery equipment office Motor i (1,747,228) (31,349,339) (90,463,052) (10,942,032) (15,087,976) (9,329,977) - (158,919,604) 150,414,098 771,483,339 1,995,753,551 44,584,218 77,664,923 62,335,792 1,162,353,383 4,264,589,304 4,782,960,713 1,162,353,383 115,963,679 109,416,472 67,971,654 2,325,607,950 848,602,372 153,045,203 (518,371,409) - (53,627,887) (31,751,549) (23,387,436) (329,854,399) (77,119,033) (2,631,105) 13,561,894 (13,561,894) - (3,450,575) 150,414,098 771,483,339 1,995,753,551 44,584,218 77,664,923 62,335,792 1,162,353,383 4,264,589,304
Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015 improvement and tools equipment vehicles construction T Baht For the year ended 31 December 2015 Opening net book amount 98,159,502 420,001,066 834,702,805 28,472,707 39,760,034 53,089,378 1,577,811,893 3,051,997,385 Additions 23,392,183 3,501,094 33,286,624 16,257,682 10,182,227 19,185,615 1,287,837,940 1,393,643,365 in (out) 18,726,888 395,736,595 1,223,063,142 11,216,336 49,691,280 - (1,698,434,241) Transfer Disposals, net (1,679,141) - (4,702,271) (3,101,190) (539,498) (10,022,100) Write-off, net - (2,844,183) (133,697) (420,475) (328,877) (69,726) (4,862,209) (8,659,167) Reclassification Depreciation charges Closing net book amount As at 31 December 2015 Cost Less Accumulated depreciation Net book amount institution (2014: Baht 1,414 million) (Note 18). 16 Property, plant and equipment, net (Cont’d)
168 Annual Report 2015 Buriram Sugar Public Company Limited
16 Property, plant and equipment, net (Cont’d) As at 31 December 2015, finance lease liabilities included in property, plant and equipment at the net book value of Baht 47.44 million (2014: Baht 51.28 million).
As at 31 December 2015, the Group has building and equipment which are fully depreciated but still in use with costs value of Baht 26.20 million (2014: Baht 35.80 million).
As at 31 December 2015, property, plant, and equipment at the net book value of Baht 2,096 million are pledged as collaterals for financial institution borrowings from a financial institution (2014: Baht 1,414 million) (Note 18).
Borrowing costs of Baht 35.30 million, arising from financing specifically entered into for the construction of a new factory and machinery, were capitalised during the year and are included in ‘Additions’ with capitalisation rate of 5.90% - 6.75% (2014 : 4.50% - 7.25%).
169 Annual Report 2015 Annual Report 2015 otal otal - 1,108,406 - (7,580,120) (2) (4,235,191) - 764,491 6,778,382 9,739,614 9,287,761 5,968,466 31,774,223 5,968,466 9,287,761 9,739,614 6,778,382 343,915 Company 87,126,581 38,372,015 18,199,878 16,194,029 14,360,659 (7,582,277) (6,454,415) (8,912,117) (32,403,549) (55,352,358) 31,774,223 5,968,466 9,287,761 9,739,614 6,778,382 - (3,344,927) (250,694) (992,405) (859,470) (961,157) (3,063,726) 14,704,574 9,732,658 8,636,860 35,822,015 68,896,107 (7,832,971) (4,330,376) (3,679,269) (30,814,708) (46,657,324) 6,871,603 5,402,282 4,957,591 5,007,307 22,238,783
6,871,603 5,402,282 4,957,591 5,007,307 22,238,783
Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015 16 Property, plant and equipment, net (Cont’d) Furniture, Building fixtures and and building Machinery office Motor improvement and tools equipment vehicles T Baht As at 31 December 2013 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2014 Opening net book amount Additions Disposals, net Depreciation charges Closing net book amount As at 31 December 2014 Cost Less Accumulated depreciation Net book amount
170 Annual Report 2015 Buriram Sugar Public Company Limited 666,953 5,007,307 22,238,783 5,007,307 - (539,497) (8,342,958) (69,726) 430,927) (957,457) (2,567,000) 11,564,851 3,440,627 28,110,913 45,374,655 11,564,851 3,440,627 4,957,591 580,883 (3,101,190) (178,666) (781,973) 1,476,645 2,525,978 (1,049,333) (24,670,286) (33,809,804) 1,476,645 - - - - (566,314) - 6,871,603 5,402,282 - (4,702,271) (48,838) (133,697) (261,256) Company 6,647,579 14,737,764 (8,090,185) 6,647,579 86,070 Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015 improvement and tools equipment vehicles Total Furniture, Building fixtures and and building Machinery office Motor and tools equipment vehicles Total improvement Baht For the year ended 31 December 2015 Opening net book amount Additions Disposals, net Write-off, net Depreciation charges Closing net book amount As at 31 December 2015 Cost Less Accumulated depreciation Net book amount As at 31 December 2015, no finance lease liabilities included in property, plant and equipment (2014: Baht 4.08 million). million). 23.32 Baht (2014: million 16.84 Baht of value costs with use in still but depreciated fully are which equipment and property 2015, December 31 at As 16 Property, plant and equipment, net (Cont’d)
171 Annual Report 2015 Annual Report 2015 16 Property, plant and equipment, net (Cont’d)
Depreciation charge for the years ended 31 December 2015 and 2014 is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Depreciation charge for property, plant and equipment
- Cost of sales 137,058,018 75,844,938 - - - Administrative expenses 21,861,586 16,740,321 2,567,000 3,063,726 158,919,604 92,585,259 2,567,000 3,063,726
172 Annual Report 2015 Buriram Sugar Public Company Limited
17 Intangible asset, net
Consolidated Right to use assets Computer Right to under software use assets construction Total Baht Baht Baht Baht
As at 1 January 2014 Cost - - - - Less Accumulated amortisation - - - - Net book amount - - - -
For the year ended 31 December 2014 Opening net book amount - - - - Additions - - 12,008,156 12,008,156 Closing net book amount - - 12,008,156 12,008,156
As at 31 December 2014 Cost - - 12,008,156 12,008,156 Less Accumulated amortisation - - - - Net book amount - - 12,008,156 12,008,156
For the year ended 31 December 2015 Opening net book amount - - 12,008,156 12,008,156 Reclassification 3,450,575 - - 3,450,575 Additions 2,802,540 - 559,168 3,361,708 Transfer in (out) - 12,567,324 (12,567,324) - Amortisation charge (1,144,182) (461,376) - (1,605,558) Closing net book amount 5,108,933 12,105,948 - 17,214,881
As at 31 December 2015 Cost 6,935,790 12,567,324 - 19,503,114 Less Accumulated amortisation (1,826,857) (461,376) - (2,288,233) Net book amount 5,108,933 12,105,948 - 17,214,881
173 Annual Report 2015 Annual Report 2015 18 Deferred tax assets, net The analysis of deferred tax assets and deferred tax liabilities is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Deferred tax assets: Deferred tax assets to be recovered within 12 351,136 134,285 - - months Deferred tax assets to be recovered more than 215,112,618 224,737,721 11,146,337 12,145,179 12 months 215,463,754 224,872,006 11,146,337 12,145,179 Deferred tax liabilities: Deferred tax liabilities to be settled within 12 - - - - months Deferred tax liabilities to be settled more than (13,489,405) (13,489,405) - - 12 months (13,489,405) (13,489,405) - - Deferred tax assets, net 201,974,349 211,382,601 11,146,337 12,145,179
The gross movement in deferred income tax account is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht At 1 January 211,382,601 234,484,632 12,145,179 13,963,895 Charged/(credited) to profit or loss (9,200,888) (21,825,492) (843,481) (1,205,527) Charged/(credited) to comprehensive income (207,364) (1,276,539) (155,361) (613,189) (At 31 December 201,974,349 211,382,601 11,146,337 12,145,179
174 Annual Report 2015 Buriram Sugar Public Company Limited
(9,200,888) (207,364) 215,463,754 247,974,037 (21,825,492) (1,276,539) 224,872,006
- 224,872,006 479,257 - 479,257 - - - - - 5,937,500 - 5,937,500 ------15,364 15,364 - - 4,900,518 3,403,586 4,900,518 134,285 216,851 (1,496,932) - 351,136 7,800,677 1,836,245 - 134,285 - - Consolidated 10,529,790 (969,599) 9,560,191 12,173,932 (1,644,142) (7,666,392) 3,064,273 10,529,790 Baht 6,167,410 (222,728) 6,335,930 6,542,114 (1,276,539) 6,167,410 - - Allowance Fair value for employee doubtful in inventory carried sale Intangible Deferred 189,380,790 203,140,003
203,140,003 (13,759,213 391,248 219,621,069 (16,481,066) 901,835 Buriram Sugar Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2015 18 Deferred tax assets, net (Cont’d) is as follows: The movement in deferred tax assets and liabilities during the year Provision Allowance for decrease Loss adjustment Depreciation benefits accounts value forward investments assets revenue Baht Deferred tax assets At 1 January 2015 Charged/(credited) to profit or loss Charged/(credited) to comprehensive income At 31 December 2015 At 1 January 2014 Charged/(credited) to profit or loss Credited to comprehensive income At 31 December 2014 Deferred income tax assets are recognised for loss and carry forwards only to the extent that realisation of related benefit through future taxable profits is probable.
175 Annual Report 2015 Annual Report 2015 18 Deferred tax assets, net (Cont’d)
CONSOLIDATED Depreciation Baht Deferred tax liabilities
At 1 January 2015 13,489,405 Charged to profit or loss - At 31 December 2015 13,489,405
Deferred tax liabilities 13,489,405 At 1 January 2014 Charged to profit or loss - At 31 December 2014 13,489,405
COMPANY Fair value Provision Allowance adjustment for employee Total for doubtful available-for- benefits Baht Baht sale investments Baht Baht Deferred tax assets
At 1 January 2015 2,349,719 9,795,460 - 12,145,179 Charged/(credited) to profit or loss 44,171 (887,652) - (843,481) Credited to comprehensive income (170,725) - 15,364 (155,361) At 31 December 2015 2,223,165 8,907,808 15,364 11,146,337
At 1 January 2014 2,656,815 11,307,080 - 13,963,895 Charged/(credited) to profit or loss 306,093 (1,511,620) - (1,205,527) Credited to comprehensive income (613,189) - - (613,189) At 31 December 2014 2,349,719 9,795,460 - 12,145,179
176 Annual Report 2015 Buriram Sugar Public Company Limited
19 Trade and other payables
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Trade payables - third parties 300,961,185 277,566,601 1,564,307 1,304,009 Trade payables - related parties 1,079,608 4,770,117 136,437,972 240,081,581 Accrued expenses - third parties 43,879,927 27,376,513 6,081,802 1,216,911 Accrued expenses - related parties 8,046,427 9,659,590 - - Advance received for goods 25,188,898 144,545,281 180,000 - Deferred revenue from Office of the 2,396,286 - - - Cane and Sugar Fund Other payables - third parties 28,440,109 22,563,216 - - Other payables - related parties 2,270,608 2,178,477 939,751 731,826 512,263,048 488,659,795 145,203,832 243,334,327
177 Annual Report 2015 Annual Report 2015 20 Borrowings
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Current
Bank overdrafts 8,344 34,435,771 - - Short-term borrowings from financial institutions 1,481,960,256 2,174,930,649 1,365,000,000 1,270,000,000 Current portion of long-term borrowings:
- Financial institutions 304,304,422 159,878,070 - - - Hire purchases 10,566,953 10,150,845 - 10,656
Total current borrowings 1,796,839,975 2,379,395,335 1,365,000,000 1,270,010,656
Non-Current portion
Long-term borrowings from financial institutions 1,390,186,734 452,901,495 - - Hire purchases 14,069,629 9,673,567 - - Debentures 850,000,000 - 850,000,000 - Total non-current portion of long-term borrowings 2,254,256,363 462,575,062 850,000,000 -
Total borrowings 4,051,096,338 2,841,970,397 2,215,000,000 1,270,010,656
As at 31 December 2015 and 2014, all borrowings are in Thai Baht currency.
As at 31 December 2015, the Group has no inventories pledged as a security for borrowings (2014: Baht 57.35 million) (Note 10).
As at 31 December 2015, long-term borrowings from financial institutions were secured by pledge of property, plant and equipment at net book value of Baht 2,096 million (2014 : Baht 1,414 million) (Note 15).
Under the long-term borrowing agreements, the Group has to comply with terms and conditions as specified in the agreements, for examples, to maintain shareholdering structure ratio, to manain debt to equity ratio, to maintain debt service coverage ratio, to be listed entity in the Stock Exchange of Thaialnd by the ultimate parent company, etc.
178 Annual Report 2015 Buriram Sugar Public Company Limited
Short-term borrowings As at 31 December 2015, short-term borrowings are bills of exchange and promissiory notes with financial institutions at Baht 1,481.96 million in the consolidated financial statements and Baht 1,365 million in the Company financial statements. These promissory notes bear interest at the rates between 3.40% and 5.50% per annum with 3-6 month period maturities (2014: Baht 2,174.93 million and Baht 1,270 million in the consolidated and company financial statements, respectively, bear interest at the rates between 2.40% and 6.88% per annum with 3-6 month period maturities).
The movements of long-term borrowings (excluded hire-purchase liabilities) for the year ended 31 December 2015 and 2014 is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Opening balance 612,779,565 777,024,118 - - Additions 1,709,277,400 - - - Issuance of debentures 850,000,000 - 850,000,000 - Repayment (627,565,809) (164,244,553) - - Closing balance 2,544,491,156 612,779,565 850,000,000 -
179 Annual Report 2015 Annual Report 2015 Movement of long-term borrowings and debentures during the year ended 31 December 2015 is as follow:
Long-term borrowings
All new long-term borrowings are long-term loans of a subsidiary of the Company entered into with a local financial institution as detailed below.
- On 23 January 2015, the subsidiary entered into a credit facility agreement with a financial institution of Baht 460 million. The loan is guaranteed by the ultimate parent company. The loan bears interest at MLR minus a certain margin per annum. The interest is paid on a monthly basis, where the principal is repaid annually within 6 years at the minimum payable amount of Baht 72 million per year. The remaining principal will be paid in the last year. As at 31 December 2015, the subsidiary has outstanding loan at Baht 460 million.
- On 18 March 2015, the same subsidiary entered into additional credit facility agreement with the financial institution of Baht 300 million. The loan is guaranteed by the ultimate parent company and pledged by property, plant and equipment of the subsidiary. The loan bears interest at MLR minus a certain margin per annum. The interest is paid on a monthly basis, whereas the principal is repaid annually within the 6 years 6 months. The principal is repayable equally at each year, commencing 30 June 2016. As at 31 December 2015, the subsidiary has outstanding loan at Baht 275 million.
- On 28 July 2015, the same subsidiary entered into additional credit facility agreement with the same financial institution of Baht 365 million. The loan is guaranteed by the ultimate parent company. The loan bears interest at MLR minus a certain margin per annum. The interest is paid on a monthly basis, where the principal is repaid annually within 6 years at the minimum payable amount of Baht 60.9 million per year, commencing 2016. As at 31 December 2015, the subsidiary has outstanding loan at Baht 280 million.
Debentures
- On 7 October 2015, the Company issued unsecured and non-subordinated debentures with named holders with a total face value of 250,000 units, with face value of Baht 1,000 each. The debentures bear interest at fixed rate of 4.30% per annum. The interest is payable semi-annually starting from 7 April and 7 October of every year. The debentures will be redeemed on 7 October 2017. The redeemed amount is as same as the face value of Baht 250 million.
- On 26 November 2015, the Company issued unsecured and non-subordinated debentures with named holders with a total face value of 600,000 units, with face value of Baht 1,000 each. The debentures bear interest at fixed rate of 4.50% per annum. The interest is payable semi-annually starting from 26 May and 26 November of every year. The debentures will redeemed on 26 November 2017. The redeemed amount is as same as the face value of Baht 600 million.
180 Annual Report 2015 Buriram Sugar Public Company Limited
The interest rates on the long-term loans and debentures (excluded hire-purchase liabilities) are as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Long-term borrowings and debentures
- At fixed rates 850,000,000 - 850,000,000 - - At floating rates 1,694,491,156 612,779,565 - - Total 2,544,491,156 612,779,565 850,000,000 -
The weighted average effective interest rates at the statements of financial position date were as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 % % % % Bank overdrafts 7.18 7.50 - - Short-term borrowings from financial institutions 4.02 5.00 4.09 5.43 Long-term borrowings from financial institutions 5.37 6.77 - - Debentures 4.44 - 4.44 -
Maturity of long-term borrowings and debentures (excluded hire-purchase liabilities) were as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Within 1 year 304,304,422 159,878,070 - - Later than 1 year but not later than 5 years 1,989,735,412 452,901,495 850,000,000 - Later than 5 years 250,451,322 - - - 2,544,491,156 612,779,565 850,000,000 -
181 Annual Report 2015 Annual Report 2015 Credit facilities As at 31 December 2015, the Group had financial credit limit of long-term borrowings from local financial institutions totaling of Baht 2,145 million with money market interest rate, which have not been drawn down amounting to Baht 229 million.
Hire-purchase liabilities The present value of hire-purchase liabilities as at 31 December 2015 and 2014 is as follows:
CONSOLIDATED AND COMPANY
2015 Within 1 year 2 - 5 years Total Baht Baht Baht Hire-purchase liabilities-minimum payments 11,793,706 15,143,496 26,937,202 Less Deferred interest on hire purchases (1,226,753) (1,073,867) (2,300,620) 10,566,953 14,069,629 24,636,582
CONSOLIDATED AND COMPANY
2014 Within 1 year 2 - 5 years Total Baht Baht Baht Hire-purchase liabilities-minimum payments 11,080,831 10,135,487 21,216,318 Less Deferred interest on hire purchases (929,986) (461,920) (1,391,906) 10,150,845 9,673,567 19,824,412
182 Annual Report 2015 Buriram Sugar Public Company Limited
21 Other current liabilities
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Undued Output VAT 13,136,694 22,589,247 1,647,993 5,048,395 Revenue Department payables - 668,255 - - Withholding tax payables 11,761,887 6,023,400 4,479,817 1,645,673 Others 2,009,470 2,208,225 - - 26,908,051 31,489,127 6,127,810 6,694,068
22 Employee benefit obligations
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Statements of financial position
Retirement benefits 32,793,290 30,837,042 11,969,450 11,748,599 Statements of comprehensive income
Retirement benefits 3,369,970 4,672,515 1,165,554 1,530,466
The movement in the defined benefit obligations over the period is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Beginning balance 30,837,042 32,710,569 11,748,599 13,284,077 Current service costs 2,102,173 3,292,315 708,918 981,862 Interest costs 1,267,797 1,380,200 456,636 548,604 Benefits paid (300,080) (163,350) (91,080) - Actuarial gain (1,113,642) (6,382,692) (853,623) (3,065,944) Ending balance 32,793,290 30,837,042 11,969,450 11,748,599
183 Annual Report 2015 Annual Report 2015 The principal actuarial assumptions used were as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 % % % % Discount rate 4.08% 4.28% 4.08% 4.28% Future salary increases 4.23% 5% 4.23% 5% Mortality rate 100% of 100% of 100% of 100% of TMO 2008 TMO 2008 TMO 2008 TMO 2008 Resignation rate by span of age 0 - 20% 0 - 14% 0 - 20% 0 - 14%
CONSOLIDATED
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 0.5% Decrease by 4.0% Increase by 4.3% Salary growth rate 0.5% Increase by 4.2% Decrease by 4.0%
COMPANY
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 0.5% Decrease by 3.9% Increase by 4.1% Salary growth rate 0.5% Increase by 4.1% Decrease by 3.9%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.
184 Annual Report 2015 Buriram Sugar Public Company Limited
Through its defined benefit retirement benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below: Changes in bond yields • A decrease in Government bond yields will increase plan liabilities. • The weighted average duration of the defined benefit obligation is 24 years. • The Group use the cashflows from operating activities to pay the retirement benefits. • Expected maturity analysis of retirement and other long-term benefits:
CONSOLIDATED Less than a year Between 1-5 years More than 5 years Total Baht million Baht million Baht million Baht million Retirement benefits 7.36 8.39 39.52 55.27
COMPANY Less than a year Between 1-5 years More than 5 years Total Baht million Baht million Baht million Baht million Retirement benefits 3.2 2.5 14.8 20.5
23 Share capital
ISSUED AND FULLY PAID-UP Premium on Authorised Number of Ordinary share share capital number of shares ordinary shares Baht Baht As at 1 January 2014 676,750,000 507,567,500 507,567,500 11,504,750 Issue of shares - 169,182,500 169,182,500 943,161,063 As at 31 December 2014 676,750,000 676,750,000 676,750,000 954,665,813 Issue of shares - - - - As at 31 December 2015 676,750,000 676,750,000 676,750,000 954,665,813
As at 31 December 2015, the total number of authorised ordinary shares is 676,750,000 shares (2014 : 676,750,000 shares) with a par value of Baht 1 per share (2014 : Baht 1 per share). The issued and fully paid-up ordinary shares is 676,750,000 shares.
185 Annual Report 2015 Annual Report 2015 Initial Public Offering In October 2014, the Company offered its common shares to the initial public offering by issuing 169,182,500 common shares. The new shares were sold to the subscribers at price of Baht 6.80 per share (Baht 1 paid in capital and Baht 5.80 share premium) totalling Baht 1,150.44 million. The Company registered the increase in paid-up share capital with the Ministry of Commerce on 3 November 2014 and the shares of the Company begin trading in the Stock Exchange of Thailand on 6 November 2014. Directly attributable expenses of the initial public offering amounted to Baht 38.10 million were deducted from the premium on share capital received from new investors.
24 Dividends At the Annual General Meeting of Shareholders for 2015 held on 22 April 2015, the shareholders approved to pay dividends for the operation of 2014 at Baht 0.20 per share for 676,750,000 ordinary shares, totaling Baht 135,350,000. These dividends were paid to the shareholders on 20 May 2015.
25 Legal reserve
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht At 1 January 18,096,416 1,857,898 9,439,650 1,857,898 Appropriation during the year 7,572,731 16,238,518 16,229,497 7,581,752 At 31 December 25,669,147 18,096,416 25,669,147 9,439,650
Under the Public Limited Company Act., B.E. 2535, the Company is required to set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the registered capital. The legal reserve is non-distributable.
186 Annual Report 2015 Buriram Sugar Public Company Limited
26 Other income
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Interest income 24,707,039 3,850,748 163,170,588 70,065,260 Dividend income 153,510 153,510 96,059,620 141,049,735 Other services income 433,368 601,727 111,623,380 109,268,080 Reversal of allowance for doubtful accounts 5,890,816 727,660 5,890,816 727,660 Gain on disposals of property, plant and equipment 6,764,172 495,325 502,489 495,325 Gain on foreign exchange rate 6,124,926 9,792,503 - - Compensation for breach of sale contract 14,039,115 - - - Others 11,093,892 18,091,828 612,965 2,790,380 69,206,838 33,713,301 377,859,858 324,396,440
27 Expenses by nature The following expenditure items, classified by nature, have been charged in arriving at the operating profit:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Raw materials and supplies used 2,363,393,405 2,414,266,343 227,534 392,551 Depreciation and amortisation 160,525,162 93,128,031 2,567,000 3,540,819 Repair and maintenance expense 183,671,854 78,760,042 912,491 879,476 Transportation expenses 149,787,857 135,787,834 - - Staff costs 386,056,935 306,821,026 93,515,214 76,010,378 Fees paid to the Office of the Cane and Sugar Fund 319,575,472 301,360,238 - -
187 Annual Report 2015 Annual Report 2015 28 Income tax
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Current tax: Current tax on profits for the year 44,021,599 28,328,244 18,462,221 2,656,791 Total current tax 44,021,599 28,328,244 18,462,221 2,656,791 Deferred tax: Origination and reversal of temporary differences 9,680,145 21,825,492 843,481 1,205,527 Total deferred tax 9,680,145 21,825,492 843,481 1,205,527 Total tax expense 53,701,744 50,153,736 19,305,702 3,862,318
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the home country of the Company as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Profit before tax 326,048,908 286,463,017 191,701,675 151,777,219 Tax calculated at a tax rate of 20% 65,209,781 57,292,603 38,340,335 30,355,444 (2014: 20%) Tax effect of: Income not subject to tax (33,040,005) (11,613,397) (23,120,135) (27,293,043) Expenses not deductible for tax purpose 21,531,968 4,474,530 4,085,502 799,917 Total tax expense 53,701,744 50,153,736 19,305,702 3,862,318
188 Annual Report 2015 Buriram Sugar Public Company Limited
29 Basic earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Net profit attributable to shareholders 271,964,585 235,967,740 172,395,973 147,914,901 of the Company (Baht) Weighted average of issued ordinary shares 676,750,000 534,914,808 676,750,000 534,914,808 during the year (Shares) Basic earnings per share (Baht) 0.40 0.44 0.25 0.28
There are no dilutive potential ordinary shares in issue during the year presented.
30 Related party transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. As at 31 December 2015, the Company is controlled by Buriram Capital Co., Ltd., which owns 50% of the Company’s issued shares (2014: 50%).
189 Annual Report 2015 Annual Report 2015 The following material transactions were carried out with related parties: a) Business transactions with related parties
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Related parties : Subsidiaries Dividend income - - 96,059,620 141,049,735 Interest income - - 162,834,530 68,575,030 Other income - - 111,623,380 109,100,000 Administrative expenses - - 1,136,412 1,257,050 Other related parties Revenues from sales and services 2,068,353,688 2,135,044,696 - - Other income 240,000 200,000 - 120,000 Cost of sales and services 11,588,989 16,545,248 - - Selling expenses 54,423,628 99,059,213 - - Administrative expenses - 175,480 - -
During the year 2015, subsidiaries have purchased land from directors amounting to Baht 4.22 million. The payments have been made and assets have already transferred.
190 Annual Report 2015 Buriram Sugar Public Company Limited
b) Outstanding balances arising from sales/purchases of goods/services
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Trade accounts receivables - related parties: Subsidiaries - - 25,190,755 77,168,326 Other related parties 7,529,658 125,745,905 - - 7,529,658 125,745,905 25,190,755 77,168,326 Farmer receivables - related parties Other related parties 16,696,846 19,861,914 - 413,932 Other receivables - related parties Subsidiaries - - 127,633,060 166,865,552 Trade accounts payables - related parties: Subsidiaries - - 136,437,972 240,081,581 Other related parties 1,079,608 4,770,117 - - 1,079,608 4,770,117 136,437,972 240,081,581 Other payables - related parties: Subsidiaries - - - 84,700 Other related parties 10,317,035 11,838,067 939,751 647,126 10,317,035 11,838,067 939,751 731,826
191 Annual Report 2015 Annual Report 2015 c) Long-term loans to subsidiaries
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht - Current portion of long-term loans - - 74,000,000 - - Long-term loans - - 3,317,568,630 2,183,190,318 - - 3,391,568,630 2,183,190,318
As at 31 December 2015, interest rates for long-term borrowings to related parties were between 5.90% and 6.75% per annum (2014 : rates between 6.75% and 6.88% per annum). d) Directors’ and management’s remuneration
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Short-term benefits 49,850,052 47,685,998 23,007,552 22,231,875 Post-retirement benefits 881,979 622,079 417,888 202,263 50,732,031 48,308,077 23,425,440 22,434,138
Director’s and management’s remuneration represents salaries, meeting fees and other benefits. e) Foreign currency forward contracts The Group has entered into foreign currency forward contracts through Kahphol Co., Ltd. which is a related party, contract value amounting to USD 2,500 million (2014 : USD 28.50 million).
192 Annual Report 2015 Buriram Sugar Public Company Limited
31 Fair values of financial assets and liabilities The carrying amounts of cash and cash equivalents, short-term investments, trade receivables, other short-term receivables, trade payables, other short-term payables, short-term loans from financial institutions approximate their fair values due to the short-term maturity period.
The fair values of long-term loans to related parties and long-term loans from financial institutions with floating interest rates approximate their carrying amounts.
The carrying amounts and fair values of debentures in the consolidated and company financial statements are as follows:
CARRYING AMOUNT FAIR VALUE 2015 2014 2015 2014 Baht Baht Baht Baht Fair value 850,000,000 - 850,359,565 -
The fair values of debentures are calculated by applying the latest closing bid price on the statement of financial position date referred from the Thai Bond Market Association. This is a level 2 fair value measurement.
32 Promotion privileges By virtue of provisions of the Industrial Investment Promotion act of B.E 2520, the subsidiaries were granted privileges by the Board of Investment which included exemption from payment of income tax for certain operations for a period of eight years from the date on which the income is first derived from such operation. The details of each privilege are as follows:
First derived Certificate Privilege section Date Nature of privilege business Expiry date income date Generating electricity 2003(1)/2554 25,26,28,31,34,35 17 August 2011 11 May 2012 11 May 2020 from biomass type 7.1 Generating electricity 1006(1)/2558 25,26,28,31,34,35 5 January 2015 7 April 2015 7 April 2035 from biomass type 7.1
In addition, BOI certificate No.2003(1)/2554 and 1006(1)/2558 the subsidiaries receive a 50% reduction in the normal income tax rate on the net profit derived from promoted business for a period of 5 years, as from the expiry date in the table above.
193 Annual Report 2015 Annual Report 2015 33 Commitments and contingent liabilities (a) Capital commitments Capital expenditure contracted for at the statement of financial position date but not recognised in the financial statements is as follows:
CONSOLIDATED COMPANY 2015 2014 2015 2014 Baht Baht Baht Baht Property, plant and equipment 247,492,286 3,897,000 12,076,452 -
(b) Sales commitments As at 31 December 2015, the Group had commitments relating to the sales agreements but not yet delivered amounting to Baht 42 million (2014: Bath 1,535 million).
(c) Commitments under Electricity sale/purchase agreements Buriram Energy Co., Ltd, the subsidiary company has entered into electricity sale/purchase agreement with the Provincial Electricity Authority (PEA) with a term of 5 years from 11 May 2012, and can be extendable for another 5 years. Under the terms of the agreement, the subsidiary and PEA must comply with specified conditions. Buriram Power Co., Ltd, the subsidiary company has entered into electricity sale/purchase agreement with the Provincial Electricity Authority (PEA) with a term of 20 years from 7 April 2015. Under the terms of the agreement, the subsidiary and PEA must comply with specified conditions.
(d) Bank guarantees As at 31 December 2015, a subsidiary had outstanding letters of guarantee of Baht 4.6 million issued by local financial institutions as collaterals of Provincial Electricity Authority for electrical usage (2014: Baht 3.6 million). As at 31 December 2015, a subsidiary had outstanding letter of guarantee of Baht 50 million issued by a local financial institution as a collateral of another local financial institution for loans (2014 : None).
34 Event after the reporting period At the Company’s Board of Directors’ meeting on 26 February 2016, it approved a dividend payment for the operating result of 2015 at Baht 0.22 per share for 676,750,000 ordinary shares, amounting to Baht 148,885,000. However, the approval for the dividend payment shall be proposed to the Annual Shareholders’ Meeting for the year 2016 for further consideration and approval.
194 Annual Report 2015 Buriram Sugar Public Company Limited
Management Discussion and Analysis 1. Overview of Operation Performance
During the year end of December 31, 2013 to December 31, 2015 The details of the change of operations in the past are as follows:
Sugarcane plantations volume including sugarcane farmers who sell to companies has increased every year. Due to the policy of Company focusing on promoting sugarcane farmers in the area around the plant with a high yield of good quality cane. Together with the development of management system to ensure the stability of the productivity and profitability of farmers which led to the increase of sugar production.
Total income of the Company in 2013 and 2014 were 3984.52 million baht and 3954.03 million baht respectively, the lower revenues due to lower world sugar prices has also lowered sugar export price in 2015,total revenue of the Company was 4,295.85 million baht, increase from the previous year because the Company increased manufacturing and distributing of molasses, fertilizer and electricity.
Approximately 70 percent to 85 percent of revenue from sales of sugar was from sugar export to the world market And such prices tied to world prices thus, the price of sugar on the world market thereby directly affecting the Company's revenues which average price of raw sugar of New York No. 11 market decreased from 21.57 cents / lb in 2012 to 17.47 and 16.34 cents / lb in 2013 and 2014 respectively made an income from the sales of sugar decreased from 3074.75 million baht in 2013 to 3037.72 million baht in 2014 and later in 2015, although the average price of raw sugar of New York No. 11 market dropped to 14.37 cents / lb, but the volume sales increased make an income from the sale of sugar has increased to 3072.30 million baht. Sugar's produced and sold increase from 189 000 tons in 2013 to 201,000 tons in 2014 and 226,000 tons in 2015, despite the drop of raw sugar average price, this affected the Company's revenue more than sales volume. In part of byproducts of the business in the year 2012, a subsidiary of company, Buriram Energy Co., Ltd. or BEC has started production and sells electricity commercially to Provincial Electricity Authority (PEA) in May 2012. Moreover, another subsidiary of company, Key Brand Fertilizer Co., Ltd. or KBF the Company added value with by-products by having production and distribution of fertilizer in November of 2014. There were profits and cash flow from operations improved steadily and in 2015. A subsidiary of the Company, Buriram Power Co., Ltd. or BPC has started production and sell electricity commercially from bagasse for the PEA in April 2015. In the years 2014 and 2015, enabling the Company to pay the loan on time and remaining investing amount to increase competitiveness in the long-term future.
195 Annual Report 2015 Annual Report 2015 Net profit of the Company Group in the year 2013, 2014 and 2015 was 205.56 million baht, 236.31 million baht and 272.35 million baht respectively. In 2014 net profit increased compared to the year 2013 due to revenue from the electricity business margin increased for the year 2015, although the average price of sugar was lower. The net profit increased of revenues was from electric power plant, which started the second plant business, BPC which produce and distribute of electricity in the year 2015.
Total assets of December 31, 2013, 2014 and 2015 were 3897.89 million baht, 5,385.67 million baht and 6762.10 million baht respectively. Most of increasing of total assets was the money gave to sugarcane planters with increased volume of production and in property investment of lands, buildings and equipment for capacity expansion. Investment on product is continuing developed such as the production of producing electricity from bagasse and producing organic fertilizer from filter cake. Trade accounts receivable of December 31, 2015 decreased to 227.94 million baht (in the year 2014 was 302.87 million baht) is due to exporting sugar delivery took place during the end of year 2014.
Total liabilities of December 31, 2013, 2014 and 2015 were 3263.21 million baht, 3.397.26 million baht and 4635.93 million baht respectively. The increase in total liabilities mainly due to the increase of short-term loans from financial institutions for paying the rising number of cane farmers.
Shareholders 'equity of December 31, 2013, 2014 and 2015 were 634.67 million baht 1988.40 million baht and 2126.17 million baht respectively. The shareholders' equity increased due to steadily good performance. The capital increased by offering shares to the public especially in 2014.
Due to year 2015, there was a new financial reporting standards agreements to take effect, however it does not impact significantly on the financial statements of the Company.
196 Annual Report 2015 Buriram Sugar Public Company Limited
2. Analysis of Operating Results A. Income
CHECK STATEMENTS FOR THE YEAR ENDED DECEMBER 31 2013 2014 2015 Million Million Million percent percent percent baht baht baht 1. Income from sales and services 1.1 Income from the sale of sugar and molasses 1.1.1 Sugar Domestic Brown sugar 886.64 22.12 908.37 22.97 961.78 22.39 Total Income for the sale of sugar in the country 886.64 22.12 908.37 22.97 961.78 22.39 Abroad Raw sugar 2,188.11 53.42 2,129.35 53.85 2,110.52 49.13 Total Income for the sale of sugar abroad 2,188.11 53.42 2,129.35 53.85 2,110.52 49.13 Total Income for the sale of sugar 3,074.75 75.54 3,037.72 76.82 3,072.30 71.51 1.1.2 molasses Domestic 293.59 7.32 290.32 7.34 358.09 8.33 Total Income for the sale of molasses in the 293.59 7.32 290.32 7.34 358.09 8.33 country Total Income for the sale of sugar and molasses 3,368.34 82.66 3,328.04 84.16 3,430.39 79.85 1.2.1 Income from electricity sales 132.62 3.31 182.53 4.61 279.00 6.49 1.2.2 Income from fertilizer sales 275.13 6.86 285.04 7.20 378.30 8.81 1.2.3 Income from sales and services 202.78 6.22 124.71 3.15 138.96 3.23 Total income from other related businesses 610.53 16.39 592.28 14.97 796.26 18.53 Income from sales and services 3,978.87 99.25 3,920.32 99.15 4,226.65 98.39 2. Other income 29.93 0.75 23.92 0.60 63.08 1.47 3. Profit (loss) on currency exchange (24.24) (0.60) 9.79 0.25 6.12 0.14 Total income 3,984.56 100 3,954.03 100 4,295.85 100
197 Annual Report 2015 Annual Report 2015 Income from sales and services. For the year accounting period ended of December 31, 2012 to December 31, 2014, the Group's income was from sales and services with 3888.03 million baht, 3978.86 million baht and 3920.32 million baht respectively which grossed from sales and services in 2013 increased to 90.84 million baht or equivalent to 2.28 percent due to starting of electricity businesses with the Provincial Electricity Authority (PEA). In the year 2014, the income from sales and services was 3920.32 million baht which reduced from 2013 due to the price of the average sugar sales reduced from sugar prices in the world market. In the year 2015, the income from sales and services was 4,226.65 million baht which increase 306.33 million baht or 7.81 percent as well as the volume of production and sale of fertilizers, molasses and electricity also increased.
1.1 Income from the sale of sugar and molasses. Income from the sale of sugar and molasses is the main income of the Company with 82 to 92 percent of total revenue.
The following table shows the average price and the amount of sugar and molasses distributed by company.
CHECK STATEMENTS FOR YEAR ENDED DEC 31, 2013 DEC 31, 2014 DEC 31, 2015 The average price per ton THB per ton THB per ton THB per ton Domestic brown sugar 19,063 18,820 18,890 Aboard brown sugar - - - Aboard raw sugar 15,320 13,922 12,600 Molasses 3,471 4,013 4,113 Sugar sold volume kiloton kiloton kiloton Domestic brown sugar 46.51 48.26 50.92 Aboard brown sugar - - - Aboard raw sugar 142.83 152.95 167.50 Molasses 84.59 72.36 87.06
198 Annual Report 2015 Buriram Sugar Public Company Limited
1.1.1 Income from the sale of sugar the sale of 8,000 tons since the some of molasses For the year ended of December 31, 2014, produced in the season 2013/2014 was sold in December the Group's income from the sale of sugar was 3037.72 2013. million baht decreased from 2013 37.03 million baht or equivalent to 1.20 percent due to the following factors: For the year ended of December 31, 2558, the Group's income from sale of molasses was 358.09 1. Sugar price in the world market continuously million baht increased from the same period in 2014 67.77 declined, the price of sugar exported decreased. million baht or 23.34 percent due to higher sale volume of approximately 14,700 tons since the Company’s productivity has increased. 2. Sugar sales volume of the Company for the year 2014 was approximately 0.20 million tons due to the number of farmers who sell sugar cane to the 1.2 Income from other related businesses. Group have increased as a result, companies can produce 1.2.1 Income from electricity sale and sell more sugar. For the year ended of December 31, 2014 income of electricity sale was 182.53 million baht increased from Although the Company could export sugar the same period of last year 49.91 million baht, or 37.63 to other countries in greater quantities but because of percent as the manufacture and supply of electricity has the volume of sugar exporting to foreign countries is increased. There was electricity production approximately about 75 percent of the total sales volume of sugar, the 10 months and the unit price of electricity rose higher. impact of world sugar price volatile effected the income from the sale of sugar by the Group in 2014 that slightly decreased from the previous year. For the year ended of December 31, 2015, income from electricity sales was 279.00 million baht increased from the same period of the previous year For the year ended of December 31, 2014, 96.47 million baht or 52.85 percent. The second power the Group's income from the sale of sugar was 3072.30 plants began to produce and sell electricity commercially million baht increased from the same period of 2014 from bagasse to the P.E.A in April 2015. of 34.58 million baht or 1.14 percent due to increased volume sold. Although the average price of sugar sold in 2015 lower than in the same period of 2014. 1.2.2 Income from the sale of fertilizer Company’s Group earns income from sale of fertilizer in a part of the promotion of sugarcane 1.1.2 Income from the sale of molasses. planters. Cane under this promotion scheme is to be For the year ended of December 31, 2013 the supplied to the Group to reduce the risk of raw material Group's income from sale of molasses was 290.32 million for the Group. baht decreased from the year 2556 3.27 million baht
or 1.11 percent although the price of molasses in the year 2014 is increasing but the sale volume decreased For the year 2013, 2014 and 2015, the Group compared to the same period of the previous year due to had income from sale of fertilizer 275.13 million baht,
199 Annual Report 2015 Annual Report 2015 285.04 and 378.30 respectively. The increased income decreased 57.46 million baht due to the bagasse sold was due to the Group had more sugarcane planters to to another person dropped because it is used as fuel attending the Company’s promotion program so the to generate electricity. For the year 2014 the income Company has sold more fertilizer. from the sale of other services decreased due to lower sugarcane cutting service because cane planter could cut and delivered by themselves. 1.2.3 Income from others sales and services. 1.3 Other income Income from sales and services segment consists primarily of the sale of products from sugarcane planting Other income of the Company for the year for example bagasse and other production factors for ended of December 31, 2013, 2014 and 2015, the the sugarcane planter such as diesel fuel for using Company had other income of Baht 29.93 million to in agricultural machinery, weed killer and sugarcane 23.92 million baht and 63.08 million baht respectively, harvesting service revenue and revenue from other sales other income primarily consists of sale of assets gain, bad in 2012 increased from the year 2011 217.52 million baht debt recoveries, interest income, and other income. For due to the Company sold, bagasse to a sugar factory the year 2015, the other income increased 39.34 million of approximately 60 million baht and the Company began baht due to the Company had interest income from the selling diesel fuel for farmers. funds release to planter in amount of 20 million baht and compensation agreement of 14 million baht. For the year 2013 the income from other sales
B. Cost of goods sales and services. 1. The production and distribution of sugar and molasses.
STATEMENTS AUDIT FOR THE YEAR ENDED 31 DEC 2013 31 DEC 2014 31 DEC 2015 Million Million Million (%) (%) (%) baht baht baht Raw material (sugarcane) 2,166.78 75.30 1,981.38 75.18 1,913.92 71.89 The package cost 24.47 0.85 43.36 1.64 43.91 1.65 Direct labor 128.11 4.46 106.12 4.02 139.92 5.25 Cost of production 289.08 10.06 227.37 8.62 270.74 10.17 Cane and Sugar remittance for office 265.80 9.25 277.12 10.52 293.96 11.04 The total cost of producing sugar and molasses. 2,874.24 100.00 2,635.35 100.00 2,662.05 100.00
The cost of raw material for the accounting years 2013, 2014 and 2015 accounted for 75.30 percent, 75.18 percent, and 71.89 percent respectively. Cost of raw material due to the price of sugar cane rarely change keeping prices remained relatively stable by sharing system of 70 to 30 between sugar mills and cane planter.
200 Annual Report 2015 Buriram Sugar Public Company Limited
2. Other related businesses Cost of sales of other related costs consist of the production and distribution of electricity, the cost of production and distribution of fertilizers and cost of other sales.
Main costs of production and distribution of electricity business are bagasse, depreciation of buildings and machinery used to produce electricity.
Costs of production and distribution of fertilizer are two parts. There are chemical fertilizer and chemical organic fertilizer which are purchased for resale and organic fertilizer produce up by the Company. The cost of fertilizer produced by the Company will consist of waste from filter, depreciation of buildings and machinery used in production, and chemical nutrient mix to increase quality of organic fertilizer.
Other cost of goods sold is mainly consists of the cost of agricultural materials such as pesticides, Sugarcane Cultivar which purchased for supporting the cane farmers including diesel fuel sold for cane farmers for using in sugarcane planters and agricultural machinery.
งSTATEMENTS AUDIT FOR THE YEAR ENDED 31 DEC 2013 31 DEC 2014 31 DEC 2015 Million baht (%) Million baht (%) Million baht (%) The cost of Electricity Distribution Raw material 23.61 32.43 31.85 35.78 91.70 47.03 Direct labor 12.21 16.77 12.66 14.22 26.19 13.43 total cost of producing 36.98 50.80 44.50 49.99 77.10 39.54 The total cost of the electricity distribution 72.80 100.00 89.01 100.00 194.99 100 The total cost of fertilizer distribution Raw material 46.00 18.81 126.17 52.36 229.85 68.78 Direct labor 7.63 3.12 8.50 3.53 13.25 3.96 Cost of production 20.78 8.50 18.87 7.83 35.13 10.51 Goods purchased for resale 108.00 44.16 87.44 36.29 55.90 16.72 Other costs 62.13 25.41 - - - - The total cost of fertilizer distribution 244.54 100.00 240.98 100.00 334.19 100.00 The total cost of Other Goods purchased for resale 188.04 89.69 97.12 100.00 97.33 74.63 Other costs 21.62 10.31 27.22 21.89 33.08 25.37 Total cost of other sales 209.66 100.00 124.34 100.00 130.41 100.00
201 Annual Report 2015 Annual Report 2015 C. Gross profit Total Gross profit for the year ended OF December 31, 2013 and 2014 were 765.82 million baht and 830.63 million baht respectively or representing a gross margin of 19.25 percent and 21.19 percent respectively. The increase of gross profit of 2014, the Company's share of income from electricity business revenues increased from sales and services. The power business gross margin was higher than the Company's other business thus making overall gross margin increased.
For the year 2015, gross profit was 905.00 million baht or representing a gross profit of 21.14 percent, the gross margin slightly declined. Although the price of sugar in the world market was decreased, but the Company sold products consistently increased. Moreover the Company’s second power plant was conducted electricity sales since April 2015, making the overall gross profit remained close to the previous year.
Gross profit on income for each type of company.
(%) THE YEAR ENDED 31 DEC 2013 31 DEC 2014 31 DEC 2015 Production and distribution of sugar and molasses. 20.26 20.81 15.87 Production and distribution of electricity 45.11 49.45 30.06 Production of Fertilizer 11.12 15.45 11.66 Other business and services -3.39 0.29 6.15
1. Production and distribution of sugar and molasses.
The gross margin of the production and distribution of sugar are effected from the main three reasons: 1) the price of sugar in the world market, 2) the difference between the selling price of the sugar C quota of the Company, compared with an average sugar B quota., and 3) the amount of sugar produced per ton of cane.
The cost of sugar production is divided into two parts: the cost of raw materials and the cost of cane processing. The sugarcane raw material costs will vary depending on a 70:30 sharing system, if sugar prices rises, sugarcane raw material costs will rise as well. In the meantime, if the price of sugar dropped. Raw material costs are reduced accordingly. But despite the cost of sugar cane processing does not adjust the price of sugar in the world market so if the price of sugar in the world market rises, the gross margin in the sugar business will increase and vice versa, if the price of sugar in the world market dropped. Gross margin in the sugar business will be reduced.
202 Annual Report 2015 Buriram Sugar Public Company Limited
By the 70:30 revenue sharing system, the average sugar selling price of quotas B is used as one determining factor in the calculation formula. This average price represents income from all Thai sugar export, then deduct with the cost of sugar cane processing then divide the remaining 70 percent for the farmers and 30 percent for sugar mills. The 70 percent part of the sugar cane is brought to be the minimum price of sugarcane. This makes the unit price of raw material of the whole industry is equal. However, since mostly of export sugar, about 85 percent are quota C sugar and the remaining 15 percent is quota B sugar, so if the sugar supplier can sell quota C sugar higher price than the average price of quota B sugar, the gross margin would have increased. However, the difference between the prices of quota C sugar as compared to the average price of quota B sugar is uneven distribution of the situation and the decision makers at a time.
Because the amount of sugar produced from a ton of cane is not the same amount every year. It depends on the quality of raw materials but the costs of other processing are not varied along with the quality of sugar so if a company can increase productivity of sugar from one ton of sugar cane, it will result in increased revenue and gross margin as well.
Gross margin for the production and distribution of sugar and molasses in the year 2014 was 20.81 percent slightly increased from the year 2013 from the manufacturing performance of sugar increased. (Sugar produced from one ton of sugar cane). However, the gross margin of the sugar business in 2015 was 15.87 reduced from year 2014. The group of companies sold exported sugar about 70 to 80 percent of all the sugar sold. While the price of sugar in the world market in 2015 dropped lower than the 2014, it made the average selling price of sugar in the Group dropped accordingly. As a result, the gross margin has decreased.
2. Other related businesses
Gross margin for the production and distribution of electricity in 2013 decreased from 2012 due to in 2013, there has stopped generating electricity besides the 2 months of scheduled ordinary maintenance to improve the delivery steam to the sugar mill. The revenue decreased, the gross margin decreased. For the year 2014, the gross margin increased due to rising electricity selling price and the Company has increased the Utilization Rate.
The gross margin rate for the production and distribution of fertilizers are changing due to the business is conducted in both the production of organic fertilizer to resale and purchase and distribution of chemical fertilizers. The production of organic fertilizer has been sold by Cost Plus Method. While the purchase of fertilizers to be resold is a large amount purchase of chemical fertilizer at a time and gradually sold to sugarcane farmers. The price is equal to the price of chemical fertilizers in the market during that period, so in some period the fertilizer may be sold at lower price than cost of chemical fertilizer made a margin of production and distribution of fertilizers uncertainty. However, the production and distribution of fertilizer business was conducted with the main objective to help farmers who have been promoted to increase productivity and quality results in improved production and distribution of sugar and molasses including the Company's productivity for example the efficiency and quality of electricity is increased.
203 Annual Report 2015 Annual Report 2015 D. Cost of sales AUDIT STATEMENTS FOR THE YEAR ENDED 31 DEC 2013 31 DEC 2014 31 DEC 2015 Million baht % Million baht % Million baht % Transportation cost 69.96 48.97 64.04 39.95 45.34 25.80 The cost of exports. 52.27 36.59 63.49 39.60 102.33 58.23 Sugar and molasses deposit cost 11.18 7.82 17.43 10.89 13.17 7.50 Other cost 9.44 6.62 15.33 9.56 14.89 8.47 Total 142.85 100.00 160.29 100.00 175.73 100.00 The cost of sales included transportation and export costs. Factors that affect the transportation rate is the average freight per trip and the amount of sugar sold each year. In the year 2015 the cost of exports increased along with the volume of sugar exports increased.
E. Administrative expenses AUDIT STATEMENTS FOR THE YEAR ENDED 31 DEC 2013 31 DEC 2014 31 DEC 2015 Percent of Percent of Percent of Million baht the cost of Million baht the cost of Million baht the cost of administration. administration. administration. Salaries and employee costs 101.61 35.59 131.08 43.60 159.40 45.94 Professional / consulting fees 6.41 2.24 14.89 4.95 31.64 9.12 The cost of vehicles 16.28 5.70 18.81 6.25 18.59 5.36 Maintenance cost 5.34 1.87 8.51 2.83 7.62 2.20 Consumable Supplies 4.35 1.52 4.41 1.46 8.01 2.31 Asset Depreciation 13.36 4.68 16.96 5.64 22.68 6.54 The cost of research and development. 7.73 2.71 5.69 1.89 12.04 3.47 The charitable donations cost 5.71 2.00 4.81 1.60 7.94 2.29 Allowance for doubtful accounts 20.33 7.12 1.04 0.34 2.62 0.76 Reserve for employees' retirement 19.96 6.99 17.67 5.87 3.37 0.97 Sugar cane and sugar promote Fee 20.88 7.31 10.74 3.57 13.79 3.97 Other amortized cost 7.49 2.62 7.98 2.65 - 0.00 electricity charge 1.13 0.39 10.32 3.43 3.64 1.05 Others 30.72 10.75 47.76 15.89 55.55 16.01 The total cost of administration. 261.29 100.00 300.59 100.00 346.94 100.00
204 Annual Report 2015 Buriram Sugar Public Company Limited
Primarily administrative expenses consist of salaries and employee costs and professional / consulting fees.
For the year 2014, administrative expenses increased from the year 2013 at 39.30 million baht or 15.04 percent due to the following reasons:
1) Salaries and wages and employee costs rose to 131.08 million baht or an increase of 29.99 percent as the Company has to adjust the salary of the employee base and increased headcount in accordance with the expansion of the Company in mid-2014.
2) Professional / consulting fees is to prepare for a listing on the Stock Exchange of Thailand increasing overall 8.48 million baht.
3) The Company's provision for doubtful accounts receivables farmers decreased in 2014 to record a charge reserve for doubtful accounts receivable farmers only 1.04 million baht decreased 19.29 million baht, or 94.88 percent.
For 2015, administrative expenses increased from the year 2014 at 46.35 million baht or 15.42 percent due to the following reasons.
1) Salaries and wages and employee costs rose to 159.40 million baht or 21.60 percent due to the adjustment of salary base of the year 2014 and the Company has additional staff by hiring 32full-time employees.
2) Professional / consulting fees is increased to 31.64 million baht or 112.49 percent as advisory fees charged to the successful outcome of each work of the consultants for to be the listed company, moreover the company has hired experts involved in the project in the future.
Finance costs The financial cost of the Group for the year ended of December 31, 2013, 2014 and in 2015 were 96.94 million baht, 117.02 million baht and 125.49 million baht respectively. The increase of financial costs caused by company group has a short-term loan in order to increase the production of sugar. The use of money to promote increasing lending according to the increased the cultivated area as well.
205 Annual Report 2015 Annual Report 2015 F. Profit before income tax For the year ended of December 31, 2013, 2014 and 2015 the Company had profit before income tax of 270.42 million baht, 286.46 million baht and 326.05 million baht respectively. The increase of profit before income tax was due to the increase in gross profit each year of 765.82 million baht in 2013 to 830.63 million baht in 2014 and to 905.00 million baht in 2015.
G. Corporate Income Tax For the year ended of December 31, 2013 and 2014, the Group had corporate income tax of 64.86 million baht and 50.15 million baht respectively. The reduction of income tax for the year ended of December 31, 2014 due to the profit of the power business, which has increased tax benefits so it made overall Corporate Income axT decreased.
For the year 2015, the Group's corporate income tax of 53.70 million baht, there was slightly increased from the same period of the previous year. The result was a more profitable due to the profitability of the sugar business, which decreased taxable at the earning of the power business which has increased tax benefits. It made the overall corporate income tax decreased.
H. Net profit For the year ended of December 31, 2013 to 2015, the Group had a net profit of 205.56 million baht, 236.31 million baht and 272.34 million baht respectively. The main factor of the increase of net profit is to increase the production and sale of sugar, molasses and other by-product although the price of sugar in the world market has dropped and administrative expenses increased from salaries, wages and employee costs.
206 Annual Report 2015 Buriram Sugar Public Company Limited
Financial Analysis
1. Assets Because sugar business is a business that is quite different from the general business. It is seasonal according the planting and harvesting sugarcane which are planted in October and the next harvest is in November to April of the next year, while sugar factory will purchase only during the harvest season making the Company and other sugar factory do have assets and other do not. The significant item for the sugar business is “receivables farmers”. It means of advance payments paid to farmers to encourage the cultivation of sugar cane in various formats for example the money of fertilizer or agriculture machine. In harvest season of sugarcane, farmers will deliver sugar cane to the factory to deduct the received advance payment. The farmers begin receiving money in advance, since cultivation began.
The Company Group’s total assets at December 31, 2013 2014 and 2015 were 3897.89 million baht, 5385.67 million baht and 6762.11 million baht respectively.
Total assets of the Group of 31 December 2015 increased from total assets of December 31, 2013 of 2864.22, or increased by an average of 36.74 per cent per year with significant changes which was the escalation of fixed assets is increased due to the expansion of sugar cane crushing capacity from 14,000 tons to 20,000 tons per day and a biomass power plant investment company of Buriram Energy Co., Ltd. (BEC) and Buriram Power Co., Ltd. (BPC).
1.1 Current Assets Current assets of the Group of December 31, 2013, 2014 and 2015 were 1858.40 million baht, 2,106.10 million baht and 2114.28 million baht respectively. Most of current assets consist of receivables farmers and inventories. During the years 2013 to 2015 the current assets had increased from an increase of receivables farmers due to provide financial support for farmers to increase sugarcane cultivation planted area by the amount of sugar increased in case of promoting. At the end of 2015, there were accounts receivable increased since the sugarcane plantation, productivity, the greater the expansion of sugar production were increased.
Trade Accounts Receivable The Company has primarily trade receivables. There consists of trade receivables of sugar production and distribution business and other related businesses, including the sale of electricity, most of the Company's major customers are foreign suppliers, enterprises with good financial position. The Company provides regularly monitoring of changes in financial position of the Group's customers so there has not been any problem with bad debt.
207 Annual Report 2015 Annual Report 2015 The average of debt collection period of the Group for the years 2012 and 2013 is 7 days. The average of debt collection period of the Group is compliance with the Company's credit terms which is scheduled for 3 to 7 days for domestic sugar customers, 3 to 15 days for overseas sugar customers and 30 days for the production and distribution of electricity customers because the collection period average is short it makes the value of trade receivables at ended of period depends on the income from sales. Near the end of the period, the trade accounts receivable of December 31, 2013 was 93.41 million baht which increased 22.78 million baht from the previous year due to the sale of sugar near the end of the period higher than the previous year.
For the year 2014, there was the large amount of sugar sale near the end of the year made the debt collection period average of the Group increased to 12 days and the value of trade accounts receivable at the end of the period increased to 302.87 million baht.
Planters receivable - net In the business of manufacturing and sale of sugar, the Company will support the advance payments in order to encourage sugarcane farmers by providing advance payment to sugarcane planters can be a part of such investment. In December 31, 2013, 2014 and 2015 the sugarcane planters accounts receivable - net amounted to 1024.84 million baht 770.79 million baht and 908.50 million baht respectively. By the year 2013, the sugarcane planters accounts receivable - net decrease from the end of the year due to the production. Sugarcane Planters will bring sugar cane to the Company and pay the repayments made accounts receivable sugarcane planters - net decreased, and in 2015, the sugarcane planters accounts receivable – net increased from the expanded of sugarcane plant area and the advance payment. Planter accounts receivables of the Group are divided by aging outstanding debts as follows.
AUDIT STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 31 DECEMBER 2014 31 DECEMBER 2015 Planter Planter Planter accounts accounts accounts Million baht receivables Million baht receivables Million baht receivables (%) (%) (%) production season of 2016/2017 - - - - 236.45 23.90 production season of 2015/2016 - - 44.46 5.05 618.46 62.52 production season of 2014/2015 241.22 21.25 703.05 79.84 40.88 4.14 production season of 2013/2014 739.52 65.14 6.87 0.78 4.49 0.45 production season of 2012/2013 16.60 1.46 3.20 0.36 1.34 0.14 production season of 2011/2012 4.23 0.37 1.24 0.14 1.09 0.11 production season of 2010/2011 133.72 11.78 121.70 13.83 86.50 8.74 Total Planter accounts receivables 1,135.29 100.00 880.52 100.00 989.21 100.00 Allowance for doubtful accounts (110.45) (9.73) (109.73) (12.46) (80.71) (8.16) Planter accounts receivables-net 1,024.84 90.27 770.79 87.54 908.50 91.84
208 Annual Report 2015 Buriram Sugar Public Company Limited
The Company Group has a strict policy of lending determined by several factors, the Group's debt collection experience in the past, including the ability to repay debt. The sugarcane plantations of receivables rate per rai include having employees to monitor the sugarcane plantations of farmer regularly to ensure that the debtor is able to pay the debt. The Group will be set the provision for doubtful debts considering that the planter and other farmer cannot repay the loan, for example, there was outstanding debt two-season period previously or the income of future receivables that the Company estimates those who has not enough profitable incomes that probably cannot repay the debt within a period of five years or those who stop growing sugar cane or other incidents that certainly cannot repay the debt. In the year 2013 there was allowance doubtful accounts set in the amount of 20.33 million baht, the Company expected that the allowance for doubtful accounts for those who cannot completely pay for a refund, in the year 2014 there was no allowance for doubtful debts due to be repaid by the farmer as usual.
Inventories
AUDIT STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 31 DECEMBER 2013 31 DECEMBER 2013
Inventories Inventories Inventories Million baht Million baht Million baht (%) (%) (%) Finished products 575.78 81.66 447.22 73.17 574.32 80.10 Byproduct 5.37 0.76 13.18 2.16 - 0.00 Goods purchased for sale 93.52 13.26 109.17 17.86 63.48 8.85 Inventories – Raw Material 20.01 2.84 13.57 2.22 37.20 5.20 Goods in process 5.85 0.83 10.85 1.78 4.67 0.65 factory supplies 4.58 0.65 17.22 2.82 37.29 5.20 Total inventories 705.11 100.00 611.21 100.00 716.96 100.00 Net of allowance for diminution in value (39.00) (5.53) (0.67) (0.11) (1.76) (0.25) Inventories - net 666.11 94.47 610.54 99.89 715.20 99.75 Sugar is finished good, the byproduct are molasses, bagasse and filter waste which the Group kept as raw material to produce electricity and fertilizer respectively. The goods purchased for sale are fuel for agricultural machinery, chemical fertilizers and pesticides for sale to sugar cane planters in the form of advance payment.
On 31 December 2014 the Group had finished goods of 447.22 million baht lower than the year ended of 2013, due to lower cost of production of sugar from sugar cane price reduction. The value of allowance inventories deduction of 39.00 million baht which the goods have sold out the previous year and there is no more allowance for inventory deductions because the sell price is higher than the cost of production.
At year ended of 2015, the Group had finished goods of 574.32 million baht higher than the year 2014 which was 127.10 million baht or 28.42 percent increased, as the Company can produce more sugar from sugarcane crushing.
209 Annual Report 2015 Annual Report 2015 1.2 Non-current assets Non-current assets of 31 December 2013 were 2039.49 million baht, 31 December 2014 were 3279.56 million baht and 31 December 2015 were 4647.82 million baht. The non-current assets of the Group are mainly land, property and equipment and accounted of 88.27 percent, 93.06 percent and 91.75 percent of total non-current assets respectively.
Land, property and equipment By the 31December 2015, the Land, property and equipment increased due to the Group's purchase of machinery to increase production capacity from the capacity of crushing 17,000 tons of sugar cane per day to 20,000 tons per day and purchase equipment for the power plant of the Buriram Power Co. Ltd. (BPC). A. Sources of the capital. Appropriate of capital structure On December 31, 2012 and 2013, the Group has shareholders' equity ratio was 5.93 times and 5.14 times, respectively, the debt equity ratio is high because the years previous year 2012, the Company has set a policy estimated the use of the machinery in the production of sugar is equal to 10 years, which is shorter than the normal lifespan of approximately 30 years. The depreciation of the year previous year 2012, thus there was high-value of company profits before the year 2012 is lower than it should be made the underperforming for shareholders. But after the estimated lifespan of the equipment by the remaining approximately 20 years, the Company's adjusted earnings increased equity ratio gradually though the capital was increase from the share offering to existing shareholders at 180.80 million baht, and to directors and employees at 18.27 million baht, it had to pay a dividend of 200.89 million baht making the sale of shares does not affect the shareholders' share.
For the year 2014, the shareholders' equity increased to 2125.58 million baht due to the performance of the Company that made the ratios of debt to equity of the Group increased to 2.18 times at the end of 2015 from the issuance of debentures to invest in the expansion of sugar production and related projects.
A. liabilities The Group's total liabilities on December 31, 2013, 2014 and 015 were 3263.21 million bath and 3397.26 million baht and 4,635.93 million baht respectively. Majority of liabilities were trade accounts payable and other payables including short-term loans from financial institutions and long-term loans from financial institutions.
On December 31, 2013, 2014 and 2015, the Company Group had trade payables and other accounts payable of 842.60 million baht, 488.66 million baht and 512.26 million baht respectively. Most of them were payable for the sugarcane raw material, this adjustment of increase or decrease the reduction in payables for the raw material sugar cane will depend on the quantity increased or decreased purchased during the period near the end of each period. This would be changed by amount of cane ready to be harvested, cut and sold to companies.
210 Annual Report 2015 Buriram Sugar Public Company Limited
On December 31, 2013, 2014 and 2015, the Company had short-term loans from financial institutions of 1471.36 million baht, 2,147.93 million baht and 1481.96 million baht respectively. The short-term loans from financial institution that increased in 2014 because there were more farmers attended into the program, the Company has to subsidize the cultivation of sugarcane more, so there had to ask for more loans to spend on such activities including the production of finished products for sale.
On December 31, 2013, 2014 and 2015, the Company had long-term loans from financial institutions of 777.02 million baht, 612.78 million baht and 1694.49 million baht respectively. On December 31, 2015 has detailed below.
Top line Loan Balance Credit line Interest rate (Million baht) (Million baht) 1 460.00 MLR-1.25 458.13 2 300.00 MLR-2.375 275.00 3 365.00 MLR-2.50 280.00 4 270.00 MLR-1.00 215.96 5 440.00 MLR-1.00 440.00 6 30.00 MLR 21.85 7 5.00 MLR-0.50 3.55
A. Part of Shareholders Part of shareholders of December 31, 2013, 2014 and 2015 were 634.67 million baht, 1988.17 million baht and 2125.58 million baht respectively. In the year 2014 part of shareholders had increase. This was mainly due to the share offering to the public and there was profit from the operating results of the Company. B. Liquidity
(unit : million baht) ENDED YEAR 31 DEC. 2013 31 DEC. 2014 31 DEC. 2015 Cash flow before changes in assets. 492.47 504.22 556.59 And operating liabilities Net cash flow (used in) operating activities. 177.40 43.09 139.09 Net cash used in investing activities. (757.55) (1,354.81) (1,330.43) Net cash flow (used in) financing activities. 547.93 1,625.82 1,056.73 Net cash increase (decrease) in net. (32.21) 314.09 (134.61)
211 Annual Report 2015 Annual Report 2015 Net cash flow (used in) operating activities. For the year ended of December 31, 2013 the cash flow before changes in operating assets and liabilities was 492.47 million baht but due to the production of sugar increased from the previous year, the Company needed to use the cash as working capital for finished goods and the amount of sugarcane in the program also increased so the Company had to pay on the increase as the year before. Cash flow from operations is equal to 177.40 million baht.
For the year ended of December 31, 2014 the cash flow before changes in operating assets and liabilities, cash flow from operations was higher than the previous year. The Company's net profit increased from power business while cash flow from operations is lower than the last year. Since the Company has not received a payment from the large quantity sale of sugar near the end of the period.
For the year ended of December 31, 2015 cash flow before changes in operating assets and liabilities, cash flow from operations was higher than the previous year. The Company's net profit increased from the second power business and fertilizer businesses.
Cash used in investing activities. For the year ended of December 31, 2013 the Company spent about 747 million baht in investment to increase crushing capacity of 14,000 tons of sugar cane per day to 17,000 tons of sugar cane per day. For fertilizer plant and construction of the second biomass power plant capacity of 9.9 MW, and in 2014 the Company spent approximately 1300 million baht for investment in ongoing construction projects since the end of 2013 and increasing investment capacity from 17,000 tons of sugar cane per day to 20,000 tons of sugar cane per day and construction of the second biomass power plant in 2015, the Company used the money to invest approximately 1,300 million baht for construction the ongoing projects since the end of 2014 and investment increase sugar production from 17,000 tons of sugar cane per day to 20,000 tons of sugar cane per day and construction of the third biomass power plant.
Cash flow (used in) financing activities. For the year ended of December 31, 2013 the Company received short-term loans from financial institutions 692 million baht more, this short-term loan was for working capital in the purchase of sugarcane and sugar production by the Group and a long-term loan of 36 million baht to build a fertilizer plant.
For the year ended of December 31, 2014 the Company received short-term loans from financial institutions 694.36 million baht more, this short-term loan was for working capital in the purchase of sugarcane and sugar production by the Group and get cash from the share offering to the public 1,112.34 million baht.
212 Annual Report 2015 Buriram Sugar Public Company Limited
For the year ended of December 31, 2015 short-term loans from financial institutions 1,056.73 million baht more long-term loan to expand the investment sugar production for the Group.
Current ratio
ENDED YEAR UNIT 31 DEC 2013 31 DEC 2014 31 DEC 2015 liquidity ratio (times) 0.74 0.73 0.90 Quick liquidity ratio (times) 0.46 0.49 0.57 The collection period average (times) 7 12 6 The sale period average (days) 72 72 72 Repayment period (days) 58 52 71 Cash Cycle (days) -22 -33 -7
For the year ended of December 31, 2013, 2014 and 2015 the Group's liquidity ratio has not changed much since there is no event that has a great impact to the normal operated business for the year 2015, the Group's liquidity ratios improved from the issuance of debentures to repay short-term loans.
Profitability Ratio. For the year ended of December 31, 2013,2014 and 2015 gross profit margin and net profit increased as a result of the proportion of electricity business that had high-margin increases.
The ratio of operating performance. For the year ended of December 31, 2013, 2014 and2015, the Company had assets rotation rate equal to 1.15 times, 0.85 times and 0.69 times respectively. The decrease of the of rotation rate of assets in 2013 and 2014 was the Company was investing to expand sugar production capacity and investments on the biomass power plant made the value of the assets increased while the Company's revenue had not increased much including the price of sugar on the world market has dropped.
In addition, the rate of return on assets, return on fixed assets in 2013 and 2014 decreased from year 2012 with the same reason as the decrease of the rotation rate of assets.
213 Annual Report 2015 Annual Report 2015 Financial policy ratio analysis On December 31, 2012 and 2013, the Group's debt to the shareholders ratio were 5.93 times and 5.14 times respectively. The debt equity ratio is high because the previous years of 2012, the Company has set a policy estimated the use of machinery used in the production of sugar is equal to 10 years, which is shorter than lifespan of approximately 30 years actually, thus it made high-value, so the Company profits before the year 2012 was lower than it should be. It made the shareholders underperforming but after the estimated lifespan of the equipment by the remaining approximately 20 years, the Company profit and equity ratio gradually has adjusted decreased. Though capital increase from the share offering to existing shareholders at 180.80 million baht, and to directors and employees, 18.27 million baht, it still had to pay a dividend of 200.89 million baht making the sale of shares does not affect much on the shareholders.
For the year 2014 the shareholder's equity increased to 1,988.40 million baht due to 1) the shares were offering to the public, 1,112.34 million baht received from the sale of shares and 2) the performance of the Company made Debt/Equity ratios decreased to 1.71 at the end of 2014.
For the year 2015, the shareholder's equity increased to 2,126.17 million baht due to the operating performance and offering the debenture to public for production as a result of Debt/Equity Ratio (D/E) of the Company increased to 2.18 at the end of year.
Potential liabilities obligations. On December 31, 2015, the Company had liabilities that may arise from the use of bank certificate for the purchase of electricity from the PEA of 4.60 million baht and is obliged to sugar exports sells of 42 million baht.
Critical factors that may affect future operating results. Sugar prices in the world market The main income of the Company about 60 percent of total revenue as revenue from sugar exports to foreign countries. Sugar prices in the world market, thereby affecting the Company's sales. The fluctuations in world market prices based on demand and supply in the market. Although sugar prices affect the Company's revenue, to calculate the price of sugarcane as the raw material of sugar production in sugar cane industry in Thailand it follow the 70:30 revenue sharing system, so if the world market price of sugar is low the sugar cane prices is low. If the world market price of sugar is high the sugar cane price is high as well.
Sugarcane costs Sugar cane and sugar industry in Thailand has determined the allocation of benefits between cane farmer and sugar mill at a ratio of 70:30 which sugar factory must pay the sugar cane price calculated by the Office of the Cane and Sugar to share 70 percent benefits from the production of sugar.
214 Annual Report 2015 Buriram Sugar Public Company Limited
Cane and Sugar Board calculated the price for paying to farmers by reference of TCSC. The actual sales of the quota B so it variable on the price of raw materials of Sugarcane and sugar that can be sold by the Thai Cane and Sugar Co., Ltd. and if the Company is sold in the international market, sugar prices were lower than the Company Thai Cane and sugar Co., Ltd. does, the margin of Companies would be declined but if the Company sales price more than the average of the Thai Cane and Sugar Co., Ltd. does, the Company will have profits and margins increased.
However, the Company has to manage such risks by tracking period included sale price of the Thai Cane and Sugar Co., Ltd. closely to plan and ensure that the price of sugar in the quota C is reasonable and not lower than the average of the sale price of Cane and sugar Thailand Co., Ltd.
Raw material supply Factors that impact sugarcane such as.
A. The amount of space in the cultivation of sugarcane changed. This could be caused by cane farmers to plant other crops that yield higher or can be caused by a policy of government promoting policies promoting renewable energy crops such as palm oil and rubber, etc.
B. Climate, rainfall, irrigation system, the integrity of the soil, varieties of sugarcane and other diseases which all effect the amount of cane to be grown per rai. If factors changes could be reduced of cane productivity.
C. Cane poaching in the area, if the sugar factory nearby offers higher price to purchase sugarcane from farmer than BSF offer, the sugarcane planters sugar may sell to a factory with higher price that making the BSF has lower sugarcane.
If sugar cane which is the raw material to produce sugar is reduced, the Company may not be able to produce sugar in sufficient quantities to distributors. Moreover, if the quantity of cane is insufficient production capacity it may result in higher cost of production and thus the net profit decreased respectively.
215 Annual Report 2015 Annual Report 2015 Being controlled by the government The cane and sugar industry in Thailand, the industry is regulated by the Cane and Sugar Board under Cane and Sugar ACT 1984. The law is governing industrial sugar throughout supply-chain process from management in sugarcane, sugar export, sales volumes and allocated sugar quota (Quota A is domestic sale, Quotas B and C is overseas sales). Retail sugar prices in the country as well as the sharing of benefits between sugarcane farmer and sugar factories in a ratio of 70:30 by the Minister of Industry. Minister of Agriculture and the Minister of Commerce are acting according to the law. So, if the policy of sugar price adjustment in the country or if a change in the regulations or policies of such Act, it could affect the financial results of the Company and companies in the sugar industry significantly. exchange rate The Company recognizes income from sugar exports are denominated in US dollars accounted for about 80 percent of revenue from sales of whole sugar and molasses therefore, the risk of fluctuations in exchange rates will affect the results of the Company's operations and revenues of the Company.
Future Plans The Company plans to invest in the one another biomass power plant by using raw materials from bagasse in order to maximize the benefits investment in the production of sugarcane. If the project is successful, it will increase revenue for the Company in the future.
Other information related - none -
216 Annual Report 2015 Buriram Sugar Public Company Limited
Head Office/Factory : 237 Moo.2, Hinlekfai, Kumueang, Buriram 31190 Tel. 04-465-9020-3, Fax 04-465-9020-3 Bangkok Office : 128/77-78 Phayathai Plaza Building 7th Fl., Phayathai Road, Ratchathewi, Bangkok 10400 Tel. 0-2216-5820-2, Fax 0-2216-5823 www.buriramsugar.com