SCG Packaging Public Company Limited First 10 major Shareholders (As of December 31, 2019)
Company Profile No. of Ordinary Percent of Shareholders Shares Total Shares Registration No. 0107537000921 (Issued and Paid-up)
Head Office Address 1 Siam Cement Road, Bangsue, Bangkok 10800 1. The Siam Cement Public Company Limited 3,095,882,660 99.037
Business Type The Company generates revenue from holding shares in other 2. Mr. Taewan Tantichattanont 2,320,000 0.074 companies (Holding Company), operating core business for 3. Randery Burahmakan Company Limited 1,872,000 0.060 packaging solutions provider which are organized into two main 4. Ms. Orapin Thidarat 1,634,000 0.052 operating segments: integrated packaging chain and fibrous chain, also other relating businesses. 5. Mr. Man Nana 1,563,200 0.050
Initial Registered Capital (as at the registration date of conversion into the Public Limited 6. Roman Catholic Mission of Bangkok 1,068,960 0.034 Company on March 24, 1994) 7. Mr. U-thane Tantichattanont 1,000,000 0.032 Registered Capital: 1,000 Million Baht 8. Mr. Somsak Nana 931,440 0.030 Paid-up Capital: 1,000 Million Baht Issued and paid up ordinary shares of: 100 Million shares 9. Mr. Pipatpong Israsena Na Ayudhya 528,880 0.017 Issued and paid up preference shares: - None - 10. Mr. Yuph Nana 499,440 0.016 Par value of 10 Baht per share 11. Other Shareholders 18,699,420 0.598 Present Registered Capital Registered capital: 4,500 Million Baht Total 3,126,000,000 100.000 Paid-up capital: 3,126 Million Baht Issued and paid up ordinary shares of: 3,126 Million shares Issued and paid up preference shares: - None - Par value of 1 Baht per share
Website www.scgpackaging.com
Share Registrar Tel: +66 2586 2894 Fax: +66 2586 3007 E-mail: [email protected]
Investors can find further information regarding the Company from the Registration Statement for Securities Offering (Form 69-1) and Prospectus which has been disclosed at www.sec.or.th or www.scgpackaging.com. CONTENTS
Financial overview SCG Packaging SCG Packaging Public Company Limited Public Company Limited and Its Key Subsidiaries and its Subsidiaries 5 2
Message from the Board The Audit Committee’s The Governance and of Directors Report Nomination Committee’s Report 6 8 10
The Remuneration Committee’s Report 11
2019 Operating Results Sustainable Development A Sustainable World through SCG Packaging Performance 2019 Circular Economy Public Company Limited and its Subsidiaries 16 20 12
Management Structure 22
2019 Consolidated 2019 Financial Statements Financial Statements of of SCG Packaging SCG Packaging Public Company Limited Public Company Limited and its Subsidiaries 153 45
Holding Company in Subsidiaries, Associates, and Other Companies 218 Annual Report 2019 2 SCG Packaging Public Company Limited
Financial Overview SCG Packaging Public Company Limited and its Subsidiaries
Unit : Million Baht
Profit Before Finance Costs, Income Tax Expense, Profit Attributable to Owners of the Parent Depreciation and Amortization - EBITDA
1 0 2 9
2019 2019
Total Assets Revenue from Sales
1 9 1 9 0 0
2019 2019 3
Financial Overview SCG Packaging Public Company Limited and its Subsidiaries
Unit : Million Baht 2019 2018 2017 2016 2015
Statements of Income1
Revenue 89,911 87,770 82,862 75,128 71,598 Costs and expenses 83,024 79,661 76,888 70,799 67,114 1 0 EBITDA 15,036 14,566 12,082 10,554 10,499 2 9 5,269 Profit attributable to owners of the parent 6,066 4,425 3,285 3,225 Statements of Financial Position Assets 139,513 93,246 91,312 85,369 83,218 Liabilities 76,697 39,986 35,661 32,617 34,892 Total equity attributable to owners of the parent 42,952 40,441 42,891 40,402 38,339
2019 2019 Total shareholders’ equity 62,816 53,260 55,651 52,752 48,326 Share Information Total number of shares issued2 (Million 3,126 3,126 3,126 3,126 3,126 Shares) Book value per share2 (Baht) 13.74 12.94 13.72 12.92 12.26 Basic earnings per share2 (Baht) 1.69 1.94 1.42 1.05 1.03 Proposed dividends per share2, 3 (Baht) 0.98 0.50 2.50 0.25 0.25 1 9 1 9 0 0 Financial Ratio Dividends payout ratio (%) 57.9 25.8 176.6 23.8 24.2 Profit on revenue from sales (%) 5.9 7.0 5.4 4.4 4.5 Return on assets (%) 4.5 6.6 5.0 3.9 4.1 Return on equity attributable to owners of the parent (%) 12.6 14.6 10.6 8.3 8.7
Remarks: 1 Included financial performance of Fajar since July 2019 and Visy (Thailand) since September 2019 2 In 2019, there is a change to par value of the ordinary shares of the company and an issuance of stock dividend. This has caused the number of the ordinary shares increase from 156.3 million shares to 3,126 million shares. The numbers of the ordinary shares used in financial calculation during 2015-2018 period are adjusted to reflect those changes as if the change in par value of the ordinary share and the issuance of stock dividend had occurred since the beginning of the respective reporting period. 3 2019 2019 The proposed full year dividend of 0.98 baht per share is calculated from 1) Interim dividend in an amount of 1.11111111 baht per share on 1,563 million ordinary shares 2) Final dividend in an amount of 0.42 baht per share on 3,126 million ordinary shares
5
SCG Packaging Public Company Limited and Its Key Subsidiaries
Integrated Packaging Chain
1. Fiber-Based Packaging 2. Performance and Polymer Packaging • Thai Containers Group Co., Ltd. • Conimex Co., Ltd. • D-In Pack Co., Ltd. • TC Flexible Packaging Co., Ltd. • Dyna Packs Co., Ltd. • Prepack Thailand Co., Ltd. • Tawana Container Co., Ltd. • Visy Packaging (Thailand) Limited • Thai Containers Khonkaen Co., Ltd. • SCGP-T Plastics Co., Ltd. • Thai Containers Rayong Co., Ltd. • SCGP Rigid Plastics Co., Ltd. • Precision Print Co., Ltd. • Tin Thanh Packing Joint Stock Company (Vietnam) • SCGP Solutions Co., Ltd. • Orient Containers Co., Ltd. 3. Packaging Paper • Alcamax Packaging (Vietnam) Co., Ltd.(Vietnam) • Thai Cane Paper Public Company Limited • AP Packaging (Hanoi) Co., Ltd. (Vietnam) • Siam Kraft Industry Co., Ltd. • New Asia Industries Co., Ltd. (Vietnam) • PT Dayasa Aria Prima (Indonesia) • Packamex (Vietnam) Co., Ltd. (Vietnam) • PT Fajar Surya Wisesa Tbk. (Indonesia) • PT Indocorr Packaging Cikarang (Indonesia) • SCGP Solutions (Singapore) Pte. Ltd. (Singapore) • PT Indoris Printingdo (Indonesia) • United Pulp and Paper Co., Inc. (Philippines) • PT Primacorr Mandiri (Indonesia) • Vina Kraft Paper Co., Ltd. (Vietnam) • TCG Rengo (S) Ltd. (Singapore) (on process of liquidation)
Fibrous Chain
1. Forestry Business 2. Pulp and Paper Products • The Siam Forestry Co., Ltd. • Thai Union Paper Public Company Limited (on process of liquidation) • Thai Paper Co., Ltd. • Phoenix Pulp & Paper Public Company Limited • Phoenix Utilities Co., Ltd. • Interpress Printers Sendirian Berhad (Malaysia)
Other Businesses
• Invenique Co., Ltd. • SKIC International Co., Ltd. • SCG Paper Energy Co., Ltd. • SCGP Excellence Training Center Co., Ltd. Annual Report 2019 6 SCG Packaging Public Company Limited
Message from the Board of Directors SCG Packaging Public Company Limited
The economies of Southeast Asia continue to grow at a strong the export sector slowed due to the prolonged US-China trade and healthy pace, relative to other regions, while the global war, and the appreciation of the Thai Baht. economy has recently encountered dramatic challenges such as the US-China trade war, oil prices fluctuations, and volatility The company continues to focus on expanding its investments of the capital markets and currency rates. in the Southeast Asia region, and works towards improving the organization’s efficiency to respond to quick pace of changes The packaging industry in Southeast Asia witnessed healthy through more competitive supply chain offerings such as growth in 2019, driven by competitive product and service integrated packaging solutions. With the company’s efforts, exports, favorable demographics with increased purchasing total revenue from sales in 2019 registered at 89,070 million power of the working class, and other lifestyle changes. All of baht, representing a 2% increase from last year, in which sales these factors have led to the growth of packaging offering for the from Southeast Asia (excluded Thailand) was accounted for variety of consuming behaviors, namely convenient packaging, 30% of the total revenue. Earnings was 5,269 million baht, environmentally friendly packaging, and transportation packaging a 13% decrease from last year, attributed to lower selling especially for E-Commerce industry. Moreover, industrial factors, price of the fibrous chain and the adjustment of employee such as the growth of the electronics and electric appliance benefits as a result of the amendment to the Thai Labor Law sector in Vietnam, the vibrant food, beverage and consumer of 338 million baht. goods industries, as well as the growing footwear and textile industries in Indonesia, have all played important roles. Another factor behind these growths has been the relocation of Chinese Maintained Market-Leading Position by Continuously manufacturing base to Southeast Asia. Expanding Investment in the Region Domestic packaging demand within Thailand in 2019 slightly The company expanded its investment through the acquisition increased, attributed to the resilient growth of consumer of the 55% stakes in PT. Fajar Surya Wisesa Tbk. (“Fajar”), products, the emerging E-Commerce business, as well as the a leading paper packaging business in Indonesia, with the increasing need for environmentally friendly packaging, while investment valued at 20,817 million baht and the acquisition 7
of the 80% stakes in Visy Packaging (Thailand) Company Limited show the company’s commitment to offer quality packaging (“Visy (Thailand)”), the high technology thermoformed food solutions that meet our customers’ differentiated needs. packaging company supplying to world class food companies, with the investment valued at 4,305 million baht. Human Resources, Society, and Environment
Accelerating Growth with the Initial Public The company continues to place its tremendous focus on Offering (IPO) developing its personnel’s skills to competitively deliver the integrated packaging solutions and fostering strong organizational The company has submitted its filings to the Securities and culture, as well as improving the work processes for maximum Exchange Commission to issue and offer new shares through efficacy through the use of Artificial Intelligence (AI) and automation the Initial Public Offering (IPO) at the amount of not exceeding technologies. There is also the emphasis on the increasing use 30% of the company’s total paid up capital after its capital of environmentally friendly energy through the conversion of increase. The net proceeds from the IPO will be used for business waste from the manufacturing process into electricity for internal expansion for continued growth within the region, for financial use, as is the case with the “Ban Rang Plub Community Model”, restructuring that will allow future business expansion, as well which the company has been providing supports for the past as for providing better agility in business management. 5 years and has been awarded the first prize at the national Zero Waste Community Project Contest 2019, organized by the Department of Environmental Quality Promotion. Knowledge Innovative Products and Services as Integrated from this project will be transferred to other communities to Packaging Solutions promote further cooperation and the eventual growth of trash management networks at district levels. The company continues to focus on developing new products, services and technologies that delivers a variety of packaging The Board of Directors would like to express our gratitude to solutions to enhance our customers’ brand perception. This is all shareholders and other relevant parties for the continued in addition to the efficient supply chain offerings that fulfill the trust and support you have placed with the company. We consumer’s behaviors in an environmentally friendly manner. would like to assure that the company will continue to develop An example of this is OptiBreathTM, a packaging solution that its organization effectiveness and drive towards success with prolongs shelf-life of fresh fruits and vegetable through the strong adherence to good governance, furthering the company’s use of film technology that controls the flow of air and vapor prosperity, maintaining its leading position in the Southeast Asia which is suited to different type of fruits and vegetables. region, as well as to embed the Circular Economy principle Another example is Fest, an environmentally friendly food safety into the work processes throughout the supply chain as the packaging made from eucalyptus pulp, which can be heated in a key foundation to build sustainable business growth for the microwave and is biodegradable within 60 days. These examples company.
Bangkok, January 28, 2020
(Mr. Prasan Trairatworrakul) (Mr. Wichan Jitpukdee) Chairman Chief Executive Officer Annual Report 2019 8 SCG Packaging Public Company Limited
The Audit Committee’s Report SCG Packaging Public Company Limited
According to the resolution of the Board of Directors made on 21 effectiveness of good governance. The body concluded June 2019, the Audit Committee was formed to independently that the directors, the management and employees strictly perform its duties, in accordance to the Audit Committee Charter. complied with the policy by having the Board of Directors In 2019, the Audit Committee convened eight times, with the and the management as the role model. This commitment 100% attendance rate of its members. The key highlights of was further extended to the suppliers of SCGP through these meetings are summarized as follows: the supplier Code of Conduct as guidelines. The aim is to encourage our suppliers to behave as good citizens and 1. Review of the Financial Statements: The Audit Committee conduct their businesses in such a way that they address reviewed both the quarterly and 2019 annual financial societal and environmental concerns that are beyond the statements of SCG Packaging Public Company Limited (or basic legal requirements. “SCGP”), and the consolidated financial statements of SCGP and its subsidiaries. These financial statements were prepared 4. Review of Risk Management Assessment System: The in accordance to the Thai Financial Reporting Standards, Audit Committee reviewed the efficiency and effectiveness which conforms to the International Financial Reporting of SCGP’s risk management process, and assigned SCGP standards. The Committee reviewed material issues and Risk Management Committee to roll out the structures, special items, and obtained sufficient clarification from the core working team, policies, strategies, risk management external auditors and the management to confirm that frameworks, and risk management plans, in addition to the financial statements and the noted disclosures in the the review of risk profile and nationwide risk management financial statements complies with the relevant laws and monitoring. financial reporting standards. The Audit Committee then endorsed the financial statements reviewed and audited 5. Review of Internal Control System: The Audit Committee by SCGP’s external auditors without reservation. reviewed the results of the internal control assessment, both operational and information technology systems, as 2. Review of Connected Transactions or Potential Conflict reported by the Internal Audit Office and prescribed by of Interest: The Audit Committee outlined the scope of its charter. The assessment was in compliance with the connected transactions and reviewed connected transactions sufficiency internal control assessment recommended and other transactions that may result in conflict of by the Securities and Exchange Commission (SEC). The interest. The results suggested that SCGP’s transactions Committee concluded that SCGP had sufficient internal are in line with the policies of connected transaction and controls that are appropriate for the company’s business the outlined scope. operations. The management focused on creating employee awareness to promote moral principles, ethical behavior, 3. Review of Corporate Governance: SCGP continues code of conduct and anti-corruption activities by building to conduct its business in accordance with sustainable the proactive preventive system. The domain comprises development and corporate governance principles, with Ethics e-Testing, e-Policy e-Testing, risk management and reference to international standards including Organization control practices in accordance with “Three Lines of Defense” for Economic Co-operation and Development (OECD), model. Workshops were organized for the business units to Thailand Securities and Exchange Commission (SEC), Stock equip staffs at all levels to better understand all relevant Exchange of Thailand (SET), and Thai Institute of Directors aspects of risks, impacts, and key internal controls. Association (IOD). The Audit Committee reviewed the policies and governance guidelines, the efficiency and 9
6. The Internal Audit: The Audit Committee conducted its also reviewed measures and formulated preventive anti- annual review of the Audit appointed Charter and the corruption measures for possible frauds across systems, Internal Audit office Charter, and appointed the Audit standard-based corruption investigations, risk assessment Office Director. In 2019, the Audit Office scrutinized, both are appropriated with continuous business operation. operational and information technology systems for 45 projects in total. The findings concluded that there are 8. Appointment of the External Auditor and Review of no material issue concerns. Furthermore, the Audit Office the Audit Fee for 2020: KPMG Phoomchai Audit Ltd. introduced digital technology related projects such as Data has been selected and appointed as the external audit Analytics Robotic Process Automation (RPA) for use in data firm of SCGP from 2018 to 2022. Based on the satisfactory creation and analysis. The Audit Office created the internal results of their performance appraisal and their qualification control documents entitled “System Development and as independent auditors, the external auditors possess Outsourcing System Development with Agile Methodology”, professional expertise, knowledge, capability and experience and provided consultation for risk management and key in auditing SCGP’s businesses, and share knowledge related area controls for companies that use new application in to business in addition to auditing. Therefore, the Audit operation systems, etc. Quality Assurance Review (QAR) Committee recommended the Board of Directors to seek was assessed by an independent expert. approval at the shareholders’ meeting for the appointment of Mr. Wairoj Jindamaneepitak, Certified public Accountant 7. Review of Complaint and Whistleblowing Investigations: SCGP Registration No. 3565; or Miss Thanyalux Keadkaew, Certified developed the Whistleblowing System to enable employees public Accountant Registration No. 8179; or Miss Dusanee and external parties to report non-compliance. External Yimsuwan, Certified public Accountant Registration No. 10235, parties may complain non-compliance directly to www. of KPMG Phoomchai Audit Ltd. as the Company’s auditors scgpackaging.com. This is in addition to contacts through phone for the year 2020. calls, e-mails and letters to the Independent Committee, the Audit Committee, the Internal Audit Office, and the Corporate Secretary Office. Findings from the investigation were taken into consideration for determination of future procedure and preventive guidelines. The Audit Committee
On behalf of the Audit Committee
(Mrs. Khaisee Nuengsikhaphean) Chairman of the Audit Committee Annual Report 2019 10 SCG Packaging Public Company Limited
The Governance and Nomination Committee’s Report SCG Packaging Public Company Limited
The Board of Directors resolved to appoint the Governance confidence and trust in all stakeholders, and sustainably and Nomination Committee, effective November 25, 2019, enhance the company’s competitive capability. These have thereby extricating it from the Nomination, Remuneration, and been compiled and included in the Corporate Governance Governance Committee, previously established to fulfill the Handbook, which is regularly reviewed and updated, and the roles and responsibilities prescribed by the Board of Directors, policies approved by the Board of Directors are published which included proposing governance policies and guidelines on the company’s website. and nominating qualified candidates for directorship. 2. Review of the structure and composition of the Board In 2019, the Governance and Nomination Committee convened of Directors and the qualifications of directors a total of two meetings, with an attendance record of 100%. Reviewed the structure and composition of the company’s The significant duties performed by the Committee, which Board of Directors and Sub-committees, including the were in line with its scope of responsibilities defined in the number and qualifications of directors appropriate for the Governance and Nomination Committee Charter, in 2019 can company’s business management and the qualification be summarized as follows: requirements of independent directors, which were more 1. Recommendations of policies and guidance with regard stringent than those stipulated by the Capital Market to the Corporate Governance of SCG Packaging Supervisory Board. In 2019, the Board of Directors resolved to approve the 3. Nomination of candidates to fill additional director recommendations of the Governance and Nomination positions and replace retiring directors in 2020 Committee to establish and review the governance policies Nominated a list of qualified candidates for directorship and guidance of SCG Packaging, both in preparation for the and independent directorship to be reviewed and proposed Initial Public Offering (IPO) and the listing of its common shares to the General Meeting of Shareholders by the Board of in the Stock Exchange of Thailand (SET) and in an effort to Directors for appointment as directors to fill additional foster awareness and promote adherence to SCG Packaging director positions and replace retiring directors in 2020, Corporate Governance Principles and Code of Conduct among in compliance with the Corporate Governance Codes for the employees. Relevant initiatives included the following: listed companies set forth by SET and SEC as well as other • Adopted the Corporate Governance Code for Listed relevant international principles. In addition, the Committee Companies 2017 (CG Code), issued by the Securities and also promoted a greater breadth and diversity of knowledge, Exchange Commission (SEC), as practical and valuable experience, perspective, and business vision in the Board to the business context of SCG Packaging to ensure composition to stay in keeping with the strategies and sustainable value creation. The duties of the Board of business conduct of SCG Packaging. Directors stipulated in the CG Code were also included in the Board of Directors Charter. On behalf of the Governance and Nomination Committee • Established the core values, code of conduct, and governance structure of SCG Packaging, drew up charters for the Board of Directors and all Sub-committees, defined the roles and responsibilities of the CEO, and formulated policies, measures, (Mr. Chalee Chantanayingyong) and guidelines relevant to organizational management in Chairman of the Governance and Nomination Committee accordance with corporate governance principles, with the goal of providing guidance for the directors, executives, and employees in pursuing fair and transparent business conduct and management, enabling them to generate returns and create long term value for shareholders, foster 11
The Remuneration Committee’s Report SCG Packaging Public Company Limited
The Remuneration Committee performed their duties as prescribed in the Charter of the Remuneration Committee by the Board of Directors with prudence, fairness, and rationality. In doing so, the Committee considered and compared the remunerations of other listed companies and leading corporations within similar industries or comparable size.
In 2019, the Committee convened three times, with the 100% attendance rate of its directors. Their primary aim was to consider the remuneration of the Board of Directors and Sub-committees, before proposing the findings to the Board and the Shareholders’ Meeting for approval. The Committee also considered the remuneration of the Company’s CEO and top executives, in order to align each respective package with the performance of each executive and SCG’s operating results, while retaining SCG’s leadership within the industry.
Furthermore, the Remuneration Committee also provided their views and recommendations to the Management of the company, with regard to human resources management, in the efforts to foster increased morale while retaining highly capable employees with the company.
On behalf of the Remuneration Committee
(Mr. Chumpol Nalamlieng) Chairman of the Remuneration Committee Annual Report 2019 12 SCG Packaging Public Company Limited
2019 Operating Results SCG Packaging Public Company Limited and its Subsidiaries
Operating Results In 2019, total revenue from sales of SCG Packaging Public Company Limited amounted to 89,070 million baht, an increase of 2% from 2018. EBITDA was 15,036 million baht, an increase of 3% from the previous year, mainly from the consolidation of the operating results of PT Fajar Surya Wisesa Tbk. and Visy Packaging (Thailand) Ltd. Profit for the year 2019 was 5,269 million baht, 13% decrease from the previous year attributed to lower selling price of the fibrous chain and the adjustment of employee benefits as a result of the amendment to the Thai Labor Law of 338 million baht.
Integrated Packaging Chain: Total revenue from sales was 72,006 million baht, an increase of 5% compared to the previous year and EBITDA was 13,758 million baht, an increase of 13%, mainly due to higher export volume and the consolidation of Fajar’s and Visy Packaging Thailand’s operating results.
Fibrous Chain: Total revenue from sales was 18,794 million baht, a 9% decrease from the previous year, and EBITDA was 1,208 million baht, a 46% decrease from the previous year, mainly due to lower selling price of printing and writing paper and pulp.
Business Growth and Investment Expanded our investment through the acquisition of 55% stakes in PT Fajar Surya Wisesa Tbk., a leading paper packaging business in Indonesia, with the investment valued at 20,817 million baht. The aquisition of major stakes in Fajar will help propel the expansion of packaging business in Southeast Asia region, especially in Indonesia, which has ample growth opportunity in the future.
Acquired 80% stakes in Visy Packaging (Thailand) Ltd., the high- technology thermoformed food packaging company supplying to world class food companies, with the investment valued at 4,305 million baht, for a more variety of packaging products to better meet customer’s requirements. Market and Competition In 2019, the packaging industry in Thailand slightly expanded Restructured our rigid polymer packaging business, with Toppan compared to the last year, due to the growth of food, beverage Printing Company Limited, a Japanese packaging company, and consumers products, E-Commerce industry and increasing investing in SCGP-T Plastics Company Limited, a holding demand for environmentally-friendly packaging, while the company in the rigid polymer packaging business which holds export segment still slowed down because of the prolonged 75% stakes in Conimex Company Limited. Toppan’s high skills trade war between the US and China and continuous surging and expertise in production techniques will help strengthen of Thai baht. The demand in the printing and writing paper the operation as well as expand the customer base. industry slightly lessened compared to the last year, since the consumer’s behavior shifted to digital technology. The company has submitted its filings to the Securities and Exchange Commission to issue and offer new shares through the Initial Public Offering (IPO) at the amount of not exceeding 13
30% of the company’s total paid-up capital after its capital increase. The net proceeds from the IPO will be used for business expansion for continued growth within the region, for financial restructuring that will allow future business expansion, as well as for providing better agility in business management.
Human Resources Development Adjusted organizational structure and assign responsibilities to executives and employees, mainly considering the organization’s competency in responding to the customer’s needs, as well as encourage the people capability enhancement, both in concept idea and expertise, to make employees in all levels understand the operational concept, focusing on customer centricity and meeting their needs accurately and quickly.
Improved the processes, methods and models using Artificial Intelligence (AI) and automation technologies, as well as developed skills for the related employees to understand how to work with the machines and technologies completely and safely, leading to the organizational effectiveness.
Planned the talent management and development system consistent to the succession plan to make the future executives prepared in the aspects of business, expertise and influential speaking, and being a role model by supporting learning from experienced people in the organization and focusing on self- • Developed “Fest Bio” in the environmentally friendly packaging learning. brand of Fest. The product is made of natural pulp, can be heated and cooled and is biodegradable within 60 days. Reinforced the cross-cultural management through strong corporate culture reflected behavior encouragement for all • Developed polymer packaging in the brand of “OptiBreathTM” levels of employees to recognize and comply with the SCG’s that prolongs the freshness of fruits and vegetables, business operation ideology in consideration off the cultural with the film technology controlling the level of gas and diversity and see the importance of diversity. vapor passing in and out proper for each type of fruits and vegetables, such as coconuts, mangoes and orchids, Product, Service and Solution Development lessening the wastes and transportation limitations. Also, The company focuses on innovative solutions development to co-developed “Spout Pouch” with Mahidol University to meet the various requirements comprehensively according to the store liquid foods for people with swallowing difficulty. changed consumer behaviors while still being environmentally It took two years in researching and testing before it proceeds friendly. Its main developing products are as follows: with the manufacture and distribution processes. Moreover, developed “Retort Packaging” that can stand the heat • Developed “Fest Chill” in the environmentally friendly from high temperature sterilization process to prolong the packaging brand of Fest. The product is made of natural foods without refrigeration and is easy to use, suitable for pulp and coated with strengthening agents. It can be heated fast-paced consumer lifestyle in the present. and cooled, and recycled in accordance with the Circular Economy. Annual Report 2019 14 SCG Packaging Public Company Limited
• Developed digital printing packaging. The printing system the closed-loop system to encourage the packaging that used is direct printing from the work data, skipping the meets the consumer’s usage requirements and solves the conventional mold preparation and lessening the production environmental problems at the same time, according to time. It can be printed on a variety of material, giving sharp SCG Circular Way. images and avoiding the minimum limits.
• Developed lighter-weighed paper, while the strength remains the same or higher, using Nano Technology. It lessens the resources used in the manufacturing process and increases the ratio of recycled pulp used in the process.
Production Process Development Installed Solar Farms and Solar Floating to generate solar electricity, reducing fossil fuel energy consumption and
greenhouse gas emission about 9,800 ton CO2e/year, and reused the treated wastewater in some kinds of activities, such as washing machinery and watering trees, reducing water usage up to 1,550,000 m3/year for the maximum energy utilization.
Awards and Achievement in 2019 SCG Packaging Public Company Limited and Thai Containers Group Co., Ltd. received awards as following:
• Co-developed packaging solutions to S&P for the second consecutive year in designing special packaging for moon cakes with the concept of “Lamps in the Moonlight”, being made of beautifully designed and strong material containing recycled paper. The packages are reusable and brought into the recycling process for the maximum resource utilization.
• Co-developed packaging solutions to Tesco Lotus, offering the service to collect and take the used paper packaging from Tesco Lotus to recycle and manufacture reusable paper bags as an integrated program. It aims to create 2019 Operating ResultsSCG Packaging Public Company Limited and its Subsidiaries 15
Thai Cane Paper Public Company Limited, Kanchanaburi Plant and Prachinburi Plant received The Prime Minister’s Industry Award 2019, in the category of Social Responsibility, organized by the Ministry of Industry.
Thai Cane Paper Public Company Limited, Kanchanaburi Plant and Prachinburi Plant received CSR-DIW Continuous Award 2019, organized by the Ministry of Industry.
Thai Cane Paper Public Company Limited, Kanchanaburi Plant received The Award Ceremony for Outstanding Establishment Labour Relations and Labour Welfare 2019, organized by the Ministry of Labour.
Siam Kraft Industry Co., Ltd., Wangsala Plant was awarded first runner-up prize in ASEAN Coal Awards in the category of Excellence Coal Management, organized by the Ministry of Energy.
• Global contest: WorldStar Packaging Awards 2019 from World Packaging Organization (WPO) in 3 awards: - Luxury Packaging 1 award - Food Packaging 1 award - Point of Purchase 1 award
• Regional contest: AsiaStar Packaging Awards 2019 from Asian Packaging Federation (APF) in 5 awards: - Consumer Packaging 2 awards - Point of Purchase 2 awards - Eco Packaging 1 award
• National contest: ThaiStar Packaging Awards 2019 from the Department of Industrial Promotion, Ministry of Industry in 10 awards:. - Consumer Packaging 3 awards - Point of Purchase 5 awards - Eco Packaging 2 awards Annual Report 2019 16 SCG Packaging Public Company Limited
Sustainable Development Performance 2019
SCG Packaging has established the operational policy according to the sustainable development method, in consideration of risks and opportunities in the sustainable work improvement for the organization. The business operation strategy is set to ensure business growth in the fast changing situations. Short-term and long-term demands and expectations of all stakeholders are also taken into consideration to create economic, social and environmental balance.
SCG Packaging Sustainable Supply Chain SCG Packaging adheres to the development plan throughout the supply chain to create sustainability for the business operation, society and environment, with steps as follows:
G een anu actu ing
p t eam Supply C ain o n t eam Supply C ain
Su tainable e elopment Suppo t
1. Green Manufacturing Process • Join the Green Industry Support and Development Program • Improve the manufacturing process effectively and by the Ministry of Industry and Eco Factory Program by efficiently for Operational Excellence, by defining indicators the Federation of Thai Industries, according to Thailand’s and goals of each issue, both in short-term and long-term, industry development policy, towards the economic, and applying the management system and standards, social and environmental balance in the concept of such as Environmental Management System (ISO 14001), sustainable development. Occupational Health and Safety Management System • Commit to develop employees and business partners. (ISO 45001), Energy Management System (ISO 50001), In 2015, SCG set up SCG Learning Council to create Guidance on Social Responsibility (ISO 26000), Total more effective learning system. Then, the system and Quality Management, Total Productive Maintenance standards have been applied to its business expansion and Integrated Business Excellence (IBE). There are also to Southeast Asia Region for sustainable development Environmental Performance Assessment Program (EPAP) up to the same standard. and Safety Performance Assessment Program (SPAP) organized by SCG to boost confidence in stakeholders related to environmental, occupational health and safety operations. 17
2. Upstream Supply Chain Management Improvement Sustainable Development • Perform environmentally-friendly procurement operation In order to properly manage the sustainable development, and business partner security warranty to strengthen the as well as to get the organization and society prepared, SCG business partners’ sustainable development. Packaging collects and prioritize the sustainable development 3. Value Addition for Manufacturers and Downstream Supply in relation to its business operation, referring to the Global Chain Reporting Initiative (GRI) standards and using the cooperation • Provide value-added, environmentally-friendly products procedure in prioritize the sustainable development. Thus, and services to sustainably meet the customer’s the issue management appropriately meets the stakeholder’s requirements. requirements. 4. Sustainable Development Method Promotion Support • With “Commitment to Social Responsibility” as its ideology, SCG Packaging provides assistance and support methods for stronger society even though it does not directly involve or relate.
Sustainable Development ssue valuation Steps
Gather the sustainable development • SCG Sustainable Development Practice issue throughout the supply chain • International Practice (GRI, DJSI, WBCSD and others) 1 (raw material supply/manufacture/ • Public meeting with expert in various fields transportation and distribution/product Employee satisfaction survey and service usage) • Community satisfaction survey Organization image survey • Whistleblowing channels Organizational risk evaluation
Hold a workshop with representatives from all the Evaluate the importance of the issue departments related directly to each group of 2 by the impact to stakeholders stakeholders to assess the impact levels. Hold a sub-meeting with each department to review the importance level analyzed from the viewpoint of the outside stakeholders.
Evaluate the importance of the issue Hold a workshop with representatives from all the by the impact to the Company departments and experts to analyze and prioritize the importance from SCG Packaging’s viewpoint and the possible impacts or business opportunities.
• Prepare the table of importance levels of the issue from Prioritize the importance of the issue the viewpoint of the stakeholders. in the overview • Hold a clarification meeting with every department to hear opinions and review the prioritization result for the sustainable development issue. • Present the prioritization result to SCG Packaging’s Sustainable Development Committee. Annual Report 2019 18 SCG Packaging Public Company Limited
SCG Packaging Materiality Matrix Environmental Conservation Projects • Energy and climate change management
Sa ety The company is committed to reduce energy consumption and greenhouse emission, aiming to achieve the goal ne gy anagement by improving the efficiency of energy consumption in manufacturing process and increasing the proportion of Climate C ange t ic ate anagment nteg ity renewable and alternative energy to lessen the fossil fuel P oduct Ste a d ip dependency. Moreover, it reviewed the ways to reduce Labo P actice Community uman ig t ngagement impact from waste and looked for the way to utilize the Cu tome mi ion ngagement company’s typical raw material, i.e., waste rejects paper
ccupational ealt (RCP) sorting, black liquor from pulp manufacturing process uman Captial iodi e icity e elopment and biogas from wastewater treatment system are being co y tem used as fuel for company power generation. ecycling Supply C ain St ategy anagment Priority for Stakeholders Priority for a te anagment • Water management
The company continuously improved water utilization efficiency by analyzing water balance and sought to improve
company’s water usage, such as manufacturing process ai a adjustment, machinery modification and new equipment installation. In addition, by improving the wastewater treatment process to recycle treated water. Modern and high-tech Priority for Business biological treatment systems are effectively selected and Sa ety conomic installed to assure treatment efficiency prior to recycling P oduct Ste a d ip C n i onment treated wastewater in manufacturing process and providing ne gy anagement Social to neighboring community to help lessen cultivation costs ate anagement Cu tome ngagement and make income for farmers, and also to support the Community ngagement community during water scarcity period or drought situation. The company’s Water Management for Agriculture Project has delivered the treated wastewater to agricultural areas Sustainable Development Projects in 2019 in Ratchaburi, Kanchanaburi and Prachinburi Provinces. Social and Community Development Project • The Challenge - Packaging Design Contest • Ban Pong Circular Economy Community Project The company organized “The Challenge - Packaging Design According to the Circular Economy, the company provided Contest 2018” consecutively since 2016 to provide a stage knowledge and equipment regarding waste management to for young designers to showcase their packaging design Ban Rang Plub Community, which received the first prize in talents and to equip them with insights into customer- the National Zero Waste Community Project Contest 2019, centric marketing, which can be adopted as a design concept organized by the Department of Environmental Quality. It to meet the requirements of the package users. Leading also extended the knowledge about waste management customers also cooperate in determining the topic of the to other communities in Ban Pong district with the purpose contest and judge the contest. The winning design will be for community members to be knowledgeable and able further developed for use in the market. to manage waste in their own communities, leading to cleanliness and order in the area for the people’s health Community Economy, Job and Income Creation Project and hygiene and environment; to promote cooperation • Local community’s job and income creation project and establish the district community waste management The company encouraged a sustainable income for network in which its members participate in solving the communities surrounding the plants through training of basket waste management problems of Thailand. weaving from paper band; waste from paper manufacturing processes which can be designed into bags, baskets and decorative items, as well as provided multiple channels for sales, adding values to waste and promoting communities’ economic growth sustainably. Sustainable Development Performance 2019 19
Important SD Operating Results Year 2019
Green Procurement Business partners who % of non-hazardous/hazardous Purchase passed the environmental, waste landfilled social and governance risk assessment (of suppliers with procurement spending over 1 million baht.) million ba t
GHG Emission Reduction Energy Consumption Reduction
ton o ca bon dio ide peta oule e ui alent Alternative Energy (compared with BAU at the base (compared with BAU at the base year of 2007) year of 2007)
Water Withdrawal Reduction Environmental Expense and Investment
million cubic mete million ba t Recycled Water
(Compared with BAU at of revenue from sales the base year 2014)
"SCG eco value" Research and Lost Time Injury Frequency Rate Products and Services Innovation Spending (Employee/Contractor)
million ba t p oduct cases per 200,000 man-hours Sharing Opportunities, Drawing the Future Support community products Scholarship Program Program ba t p o ect c ola ip in c ool
Support community for jobs and income from weaving handicraft products
ba t C eck am
Number of Career Support municipal Development Center waste management in community program in community Tree Plantation cente communitie t ee Annual Report 2019 20 SCG Packaging Public Company Limited
A Sustainable World through Circular Economy
Circular Economy The economic system revolves around a cycle of renewal for end-of-life materials and energy with appropriate processes to circulate resources within the system. Thus, the Circular Economy is not just about repeatable recycles, but comprehensive models which starting at planning and designing for natural resources, manufacturing, consumption, waste management, to reusing in order to restore or repurpose materials in their life cycles instead of being discarded at the end of consumption. In addition, this can also provide sustainability for society, economy, and environment.
Re le ro u t e Re our e e
ple entat on Ra o r ular ono ater al
n t e o pan
e n tr ute
ro u e
SCG Packaging and Sustainable Principles of Circular Economy The company conducts business in accordance with Circular Economy principles while aiming to continuously become a regional leading company on Circular Economy. 21
Product Design Process Storage and Recycling Process • Develop and implement Lightweight G Technology to • Develop a platform for collection and distribution of improve resource efficiency and eco-friendly aspects. information to upgrade storage capacity for returned • Develop micro flute to reduce quantity of paper. packaging from end users. The company has cooperated • Develop recyclable paper bags from recycled paper. with Doozy Pack and Tesco Lotus to promote and increase • Produce paper food packaging in order to satisfy customers used packaging collecting point from customers. who start to be green conscious than ever. • Join with Tesco Lotus in encouraging consumers to recycle used plastic PET. Used paper packaging in Tesco Lotus’s Manufacturing Process distribution center is also collected. • Focus on delivering efficiency and sustainability in • Launch “Paper-X” application on smartphones to enable manufacturing process, for example, using more consumers and retailers to schedule the company to renewable energy, reusing production waste, collect recycled paper to be processed at the company’s reducing overall waste and materials used in the recycling center. manufacturing process, and using recycled paper in a higher ratio. Implementation Process • Increase utilization of renewable energy or green energy in • Produce “OptiBreathTM” flexible packaging which helps manufacturing process, for example, starting to use biogas preserve humidity to prolong freshness of vegetables and from anaerobic treatment system and biomass energy as fruits, reduce number of food garbage in households and an alternative energy source in manufacturing plants. stores, and reduce greenhouse gas (Carbon Footprint). • Produce energy from biomass, for example, tree bark • Produce “Fest” as alternative eco-friendly food from paper mills. packaging. • Utilize solar energy system installed on building’s roofs as an alternative energy source in plants as well as energy for biomass production. 22 Management Structure
Organization Chart (as from February 1, 2020) The Board of Directors SCG Packaging Public Company Limited
emune ation e Go e nance and udit Committee omination Committee Committee
nte nal udit SCG Packaging PublicCompany Limited Annual Report 2019 Chief Executive Officer
i k anagement Committee
C ie C ie C ie Operating Officer - C ie Operating Officer - Operating Officer - Pe o mance Operating Officer - C ie C ie Packaging Con ume and ndu t ial and Polyme Packaging ib ou u ine Regional Officer Financial Officer Pape u ine Packaging u ine u ine
nteg ated Packaging C ain ib ou C ain The Board of Directors SCG Packaging Public Company Limited
emune ation e Go e nance and udit Committee omination Committee Committee
nte nal udit
Chief Executive Officer
i k anagement Committee
C ie C ie C ie Operating Officer - C ie Operating Officer - Operating Officer - Pe o mance Operating Officer - C ie C ie Packaging Con ume and ndu t ial and Polyme Packaging ib ou u ine Regional Officer Financial Officer Pape u ine Packaging u ine u ine
nteg ated Packaging C ain ib ou C ain - Directorsnumber4and6areknowledgeable highlycompetenttoberesponsibleforreviewingthecompany’sfinancialstatements. - Remarks: The Sub-committees - Directornumber10isanExcutiveDirector. - Directorsnumber19areNon-excutive. - Thedirectorsauthorizedtosignforandwithbindingeffectonthecompanyareanytwojointlytheirnamestogether. Remarks: comprises thefollowing10members: Composition ofthe Board ofDirectors The Board ofDirectors the CapitalMarketSupervisoryBoard. Directors number1,3,4,5,6and7meetallthe requirementsspecifiedinthecompany’slistofqualificationsanindependentdirector,which aremorestringentthanthequalificationsstipulatedby 10. Mr.WichanJitpukdee 9. Mr.ThammasakSethaudom 6. Mrs.PongpenRuengvirayudh 5. Mr.ChaleeChantanayingyong 4. Mrs.KaisriNuengsigkapian 3. Mr.ChumpolNaLamlieng 2. Mr.CholanatYanaranop 8. Mr.Tanawong Areeratchakul 7. 10. Mr.WichanJitpukdee 9. Mr.ThammasakSethaudom 8. Mr.Tanawong Areeratchakul 7. ProfessorKitipongUrapeepatanapong 6. Mrs.PongpenRuengvirayudh 5. Mr.ChaleeChantanayingyong 4. Mrs.KaisriNuengsigkapian 3. Mr.ChumpolNaLamlieng 2. Mr.CholanatYanaranop 1. Mr.PrasarnTriratvorakul Directors 1. Mr.PrasarnTrairatvorakul Urapeepatanapong Professor Kitipong Directors The Audit Committee (3 members) Chairman Member Member ------Chief ExecutiveOfficer Director Director Independent Director Independent Director Independent Director Independent Director Independent Director Vice Chairman Chairman andIndependentDirector Position Nomination Committee The Governance and (3 members) Chairman Member Member ------
The Remuneration Committee (3 members) Chairman Member Member ------23 Annual Report 2019 24 SCG Packaging Public Company Limited
Board of Director’s Profile
Mr. Prasarn Trairatvorakul Age 67 years Director qualified as an Independent Director (From August 26, 2019) Position Chairman Independent Director
Date of Appointment as a Director Position in Other Company/Organization/Institution (14) June 21, 2019 Since 2019 Chairman, Central Retail Corporation Public Company Limited Education/Training Since 2018 Chairman, Equitable Education Fund • Doctor of Business Administration, Harvard University, Since 2018 Director, Siam Sindhorn Co., Ltd. Massachusetts, USA Since 2018 Director, CPB Equity Company Limited • Master in Business Administration, Harvard University, Since 2018 Director, Prince of Songkla University Massachusetts, USA Since 2018 Distinguished Scholar, Faculty of Commerce • Master of Engineering in Industrial Engineering and and Accountancy, Chulalongkorn University Management, Asian Institute of Technology, Thailand Since 2017 Member, Asset Management Committee of • Bachelor of Engineering in Electrical Engineering (First Class Vajiravudh College Honors), Chulalongkorn University Since 2017 Member, Committee on King’s Scholarships for • Honorary Doctor of Philosophy, National Institute of Thai Buddhist Monks Development Administration Since 2017 Chairman of the Council of Trustees and the • Honorary Doctor of Economics, Chulalongkorn University Board of Directors, Thailand Development • Honorary Doctor of Economics, The University of the Thai Research Institute (TDRI) Chamber of Commerce Since 2016 Senior Advisor, CENTRAL Group • Honorary Doctor of Economics, Khon Kaen University Since 2016 Member, Property Management Committee, • Honorary Doctor of Business Administration, Rajamangala Chulalongkorn University University of Technology Suvarnabhumi Since 2016 Advisor, Board of Investment Expertise Since 2015 Advisor, Crown Property Bureau • Business or Core Industries of Other Large Industries Since 1998 Director, Thai Red Cross Society • Administration and Large Organization Management 5-year Past Experiences and/or Remarkable Positions • Economics, Investment, Policy Setting and Strategic Planning 2017 - 2019 Chairman, Economic Reform Committee • Marketing, Accounting and Finance 2017 - 2019 Director, Education Reform Committee • Corporate Governance and Risk Management 2017 - 2019 Chairman, Public Procurement Committee Director Training 2015 - 2019 Director, National Anti-Corruption • The Role of the Chairman Program (RCP) 2/2001, Thai Commission Institute of Directors Association 2015 - 2019 Director, Committee to Enhance • Director Certification Program (DCP) 21/2002, Thai Institute Competitiveness of the Nation of Directors Association 2014 - 2019 Director, State Enterprise Supervisory Board • Ethical Leadership Program (ELP) 2/2015, Thai Institute of 2010 - 2015 Governor, The Bank of Thailand Directors Association 2004 - 2010 President, KASIKORNBANK Public Company • Board Nomination and Compensation Program (BNCP) Limited 5/2018, Thai Institute of Directors Association 1999 - 2003 Secretary-General, The Securities and Exchange Board Member/Management of Other Listed Company Commission, Thailand in Thailand (2) Shareholdings (Ordinary Shares) (as at December 31, 2019) Since 2019 Chairman, Pruksa Holding Public Company Held personally: - None - Limited (Director qualified as an Independent Held by spouse or minor children: - None - Director effective from 2016) Since 2017 Independent Director, The Siam Cement Public Family Relationship among Directors and Executives Company Limited (Director qualified as an - None - Independent Director effective from August 26, 2019) Management Structure 25
Mr. Cholanat Yanaranop Age 60 years Positions Vice Chairman Member of the Governance and Nomination Committee Member of Remuneration Committee
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 1, 2019 2017 - 2019 Executive Vice President, The Siam Cement Public Company limited Education/Training 2015 - 2016 Vice President, Community Partnerships • Master of Chemical Engineering, Imperial College London, UK Association • Bachelor of Environmental Chemical Engineering, (Second 2014 - 2016 Senior Vice President, The Siam Cement Public Class Honours), Salford University, Manchester, UK Company Limited • Advanced Management Program (AMP), Harvard Business 2013 - 2015 President, Community Partnerships School, USA Association • Inno-Leadership Program, INSEAD 2012 - 2019 Chairman, Thai Plastic and Chemicals Public • Top Executives Program, Class 16, Capital Market Academy Company Limited • TEA 5, Thailand Energy Academy 2011 - 2019 Commissioner, PT Chandra Asri Petrochemical Expertise Tbk., Indonesia* • Business or Core Industries of Other Large Industries 2008 - 2019 Authorized Representative at the Members • Administration and Large Organization Management Council, Long Son Petrochemicals Company • Economics, Investment, Policy Setting and Strategic Planning Limited, Vietnam • Marketing, Accounting and Finance 2007 - 2019 President, Chemicals Business • Corporate Governance and Risk Management 2007 - 2008 President, The Thai Institute of Chemical Director Training Engineering and Applied Chemistry • Directors Accreditation Program (DAP) 39/2005, Thai 2005 - 2010 Director, PTT Chemical Public Company Institute of Directors Association Limited • Role of the Chairman Program (RCP) 38/2016, Thai Shareholdings (Ordinary Shares) (as at December 31, 2019) Institute of Directors Association Held personally: - None - Board Member/Management of Other Listed Company in Held by spouse or minor children: - None - Thailand Family Relationship among Directors and Executives - None - - None - Position in Other Company/Organization/Institution (11) Since 2019 Advisor, PT Chandra Asri Petrochemical Tbk., Indonesia* Since 2018 Director, SENFI Swiss GmbH Since 2017 Director, SENFI UK Limited Since 2016 Director, Siam Bioscience Company Limited Since 2016 Director, Apexcela Company Limited Since 2014 Director, SENFI Norway AS (Norner Holding AS) Since 2009 Advisor, Thai Institute of Chemical Engineering and Applied Chemistry Since 2008 Director, Long Son Petrochemicals Company Limited Since 2006 Director, BST Elastomers Company Limited Since 2006 Director, Bangkok Synthetics Company Limited Since 2006 Director, Petroleum Institute of Thailand
Remark: *Listed in the Stock Exchange of Indonesia Annual Report 2019 26 SCG Packaging Public Company Limited
Mr. Chumpol NaLamlieng Age 72 years Director qualified as an Independent Director (From June 21, 2019) Positions Independent Director Chairman of the Remuneration Committee
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 21, 2019 2012 - 2017 Director, Kempinski International SA 2007 - 2016 Independent Director and Chairman of the Education/Training Nomination, Compensation and Corporate • MBA, Harvard Business School, USA Governance Committee, The Siam Commercial • B.S. Mechanical Engineering, University of Washington, USA Bank Public Company Limited Expertise 2005 - 2009 Director, British Airways Public Company • Business or Core Industries of SCG and Other Large Limited Industries 2004 - 2011 Chairman, Singapore Telecommunication • Administration and Large Organization Management Company Limited • Economics, Investment, Policy Setting and Strategic 1993 - 2005 President, The Siam Cement Public Company Planning Limited • Foreign Affairs • Law Shareholdings (Ordinary Shares) (as at December 31, 2019) • Marketing, Accounting and Finance Held personally: - None - • Information Technology Held by spouse or minor children: - None - • Corporate Governance and Risk Management Family Relationship among Directors and Executives Director Training - None - • Role of the Chairman Program (RCP) 2/2001, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand (1) Since 2014 Independent Director and Chairman of the Remuneration Committee, The Siam Cement Public Company Limited Position in Other Company/Organization/Institution (3) Since 2017 Director, CPB Equity Company Limited Since 2012 Director, Kempin Siam Company Limited Since 2010 Director, Siam Sindhorn Company Limited Management Structure 27
Mrs. Kaisri Nuengsigkapian Age 58 years Director qualified as an Independent Director (From June 1, 2019) Positions Independent Director Chairman of the Audit Committee
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 1, 2019 2018 - 2019 Independent Director and Member of the Audit Committee, SCG Ceramics Public Education/Training Company Limited • Master of Business Administration, Thammasat 2016 - 2017 Advisor, The Securities and Exchange University Commission, Thailand • Bachelor of Accounting, Thammasat University 2010 - 2014 Director, The Stock Exchange of Thailand • Certified Public Accountant 2003 - 2015 President, KPMG Phoomchai Holdings Expertise Company Limited • Administration and Large Organization Management Shareholdings (Ordinary Shares) (as at December 31, 2019) • Accounting and Finance Held personally: - None - • Corporate Governance and Risk Management Held by spouse or minor children - None - Director Training • Director Certification Program (DCP), Class 0/2000, Thai Family Relationship among Directors and Executives Institute of Directors Association (IOD) - None - • The Role of The Chairman Program (RCP), Class 30/2013, Thai Institute of Directors Association (IOD) • The Role of the Compensation Committee Program (RCC), Class 16/2013 Thai Institute of Directors Association (IOD) • Advanced Audit Committee Program (AACP), Class 35/2019, Thai Institute of Directors Association (IOD) Board Member/Management of Other Listed Company in Thailand (1) Since 2016 Chairman of the Board of Directors and Chairman of Executive Committee, Mc Group Public Company Limited Position in Other Company/Organization/Institution (5) Since 2019 Chairman, Buono (Thailand) Company Limited Since 2018 Directors, Thai Institute of Directors Association Since 2016 Member of Corporate Governance Committee, The Bank of Thailand Since 2016 Director and Treasurer, Rakkaew Foundation Since 2016 Director, TOP T 2015 Company Limited Annual Report 2019 28 SCG Packaging Public Company Limited
Mr. Chalee Chantanayingyong Age 63 years Director qualified as an Independent Director (From June 21, 2019) Positions Independent Director Chairman of the Governance and Nomination Committee Member of the Audit Committee
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 21, 2019 2017 - 2018 Chairman, Audit Committee, The Bank of Education/Training Thailand • Master in Business Administration (Finance), Texas A&M 2015 - 2018 Member, Corporate Governance Committee, University, USA The Bank of Thailand • Bachelor of Business Administration (Money and Banking), 2015 - 2018 Director, The Bank of Thailand Thammasat University 2009 - 2015 Deputy Secretary-General, The Securities and • Top Executive Program, Class 5, Capital Market Academy Exchange Commission, Thailand • Top Executive Program in Commerce and Trade, Class 5, Shareholdings (Ordinary Shares) (as at December 31, 2019) Commerce Academy, University of the Thai Chamber of Held personally: - None - Commerce Held by spouse or minor children: - None - Expertise Family Relationship among Directors and Executives • Supervision in Listed Companies, Financial Advisory, Auditor, - None - Asset Management Company and Good Governance • Supervision in Commercial Bank and Financial Institutions Director Training • Director Certification Program (DCP) 7/2001, Thai Institute of Directors Association • Facilitator for Director Accreditation Program (DAP) and Audit Committee Program (ACP), Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution (6) Since 2019 Chairman, Disciplinary Sub-Committee, Thailand Clearing House Company Limited Since 2019 Chairman, Appealing Committee, Thailand Futures Exchange Public Company Limited Since 2019 Member, Appealing Committee, The Stock Exchange of Thailand Since 2018 Member, Equitable Education Fund Since 2017 Member, Financial Institutions Policy Committee, The Bank of Thailand Since 2013 Member, the Anti-Corruption Organization of Thailand Management Structure 29
Ms. Pongpen Ruengvirayudh Age 64 years Director qualified as an Independent Director (From June 21, 2019) Positions Independent Director Member of the Audit Committee Member of the Remuneration Committee
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 21, 2019 2018 Director, Board of Directors, Government Savings Bank Education/Training 2015 - 2016 Governor’s Advisor, The Bank of Thailand • Master of Business Administration (Finance), Katholieke 2013 - 2017 Member, The 19th National Wage Committee, University, Belgium Ministry of Labour • Master of Accounting Program (Accounting), Thammasat 2012 - 2015 Director, Board of Directors, Government University Pension Fund • Bachelor of Accounting (Accounting), Thammasat 2012 - 2015 Director, Board of Directors, The Bank of University Thailand • Advanced Management Program, Wharton School of Member, Monetary Policy Committee, Management, USA The Bank of Thailand • Top Executives Program, Class 3, Capital Market Academy Member, Financial Institutions Policy • Thammasat Leadership Program, Class 3, Thammasat Committee, The Bank of Thailand University Deputy Governor, Monetary Stability, The Bank • Programs related to International Portfolio Investment, of Thailand Risk Management, Monetary Policy and Central Bank 2010 - 2011 Assistant Governor, Financial Markets Expertise Operations Group, The Bank of Thailand • Accounting and Finance 2009 - 2010 Senior Director, Risk Management Policy • Investment and Investment Strategy Department, Financial Institutions Policy • Risk Management Group, The Bank of Thailand Director Training 2005 - 2009 Senior Director, Financial Markets and Reserve • Director Certification Program (DCP) 262/2018, Thai Management Department, Financial Markets Institute of Directors Association Operations Group, The Bank of Thailand Board Member/Management of Other Listed Company Shareholdings (Ordinary Shares) (as at December 31, 2019) in Thailand Held personally: - None - - None - Held by spouse or minor children: - None - Position in Other Company/Organization/Institution (5) Family Relationship among Directors and Executives Since 2019 Chairman, Sub-Committee on Investment - None - Seeking Benefits from Money and Assets Supervision, Equitable Education Fund Since 2018 Member, Risk Management Sub-Committee, Government Pension Fund Since 2017 Chairman, Supervisory Board of The ABF Thailand Bond Index Fund, The Bank of Thailand Since 2016 Member, Investment Management Sub-Committee, Social Security Fund Since 2016 Chairman, Sukhumvit Asset Management Company Limited Annual Report 2019 30 SCG Packaging Public Company Limited
Professor Kitipong Urapeepatanapong Age 64 years Director qualified as an Independent Director (From August 21, 2019) Positions Independent Director Member of the Governance and Nomination Committee
Date of Appointment as a Director Position in Other Company/Organization/Institution (13) August 21, 2019 Since 2019 Member of the Professional Expert of Steering Committee, Office of the National Higher Education/Training Education, Science, Research and Innovation • LL.M., The University of British Columbia, Canada Policy Council • Master of Laws, Chulalongkorn University Since 2019 Director, The Stock Exchange of Thailand • Admitted as Thai Barrister-at-law Since 2019 Director, Rachakarn Asset Management • Bachelor of Laws (Second Class Honors), Chulalongkorn Company Limited University Since 2018 Director, Thai Institute of Directors Association • Top Executive Program in Commerce and Trade, Class 1, Since 2018 Member, the Professional Expert Committee, Commerce Academy, University of the Thai Chamber of National Commission for Justice Administration Commerce Development • Senior Executives Program, Class 4, Capital Market Since 2017 Chairman, Cheevamitr Social Enterprise Academy Company Limited • Director Executive Program, School of Management, Yale Since 2017 Director, The Hub 99 Company Limited University Since 2017 Vice President, National Reform Committee on • Certificate of Completion on Company Directors, Legal Australian Institute of Company Directors Since 2012 Chairman, Tax and Regulatory Commission, • Certificate Executive Program, Kellogg School of Thai Chamber of Commerce Management, Northwestern University Since 2009 Chairman, Baker & McKenzie Company Limited Expertise Since 1999 Director, Siam Piwat Retail Holding Company Limited • Capital Market Law, Tax Law, Merger and Acquisition, Since 1999 Executive Director, Siampiwat Company Limited Restructuring and Family Business Since 1993 Director, Business Strategic Holding Company Director Training Limited • Role of the Chairman Program (RCP) 21/2009, Thai 5-year Past Experiences and/or Remarkable Positions Institute of Directors Association 2014 - 2015 Member, National Reform Council Board Member/Management of Other Listed Company 1999 Independent Director, Krung Thai Bank Public in Thailand (1) Company Limited Since 2019 Independent Director and Member of the Shareholdings (Ordinary Shares) (as at December 31, 2019) Enterprise Risk Management Committee, Held personally: - None - Pruksa Holding Public Company Limited Held by spouse or minor children: - None - Family Relationship among Directors and Executives - None -
Remark: In taking the directorship post of Professor Kitipong Urapeepatanapong, who currently are the Chairman, Director and Shareholder of Baker & McKenzie Ltd. (BM), which is the company providing legal services to the company and its affiliates with the receipt for such service fees exceeding Baht 2 million per annum, the Board of Directors, excluding Professor Kitipong Urapeepatanapong, has extensively and thoroughly considered the principle of Fiduciary Duty and duties with responsibilities, care, and loyalty of directors under Section 89/7 of the Securities and Exchange Act, B.E. 2535 (as amended), and thus agreed that his current engagement has no effect on neither the performance as an independent director nor the duty to independently render his opinion; and his proven strong legal knowledge, expertise and extensive experience in tax law, corporate law, securities law, business law and other regulations relating to the company’s businesses, could be essential to support the company’s operation, future expansion, business management to be in compliance with laws onwards, as well as to benefit and strengthen the professionalism to perform duties as the company’s director. Management Structure 31
Mr. Tanawong Areeratchakul Age 56 years Position Director
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions March 23, 2015 2015 - 2019 Chairman, Thai Cane Paper Public Company Limited Education/Training 2015 - 2019 Chairman, Phoenix Pulp & Paper Public • Bachelor of Engineering, Electrical Engineering, King Company Limited Mongkut’s University of Technology Thonburi 2015 - 2019 Chairman, Thai Containers Group Company • Advanced Management Program (AMP), Harvard Business Limited School, USA 2015 - 2019 President, Packaging Business, The Siam Expertise Cement Public Company Limited • Business or Core Industries of Other Large Industries 2015 - 2017 Committee, Thai Listed Companies Association • Administration and Large Organization Management 2014 - 2018 Executive Director, the Electronic Transactions • Economics, Investment, Policy Setting and Strategic Development Agency (Public Organization) Planning 2012 - 2015 Vice President - Corporate Administration, • Marketing, Accounting and Finance The Siam Cement Public Company Limited • Corporate Governance and Risk Management Shareholdings (Ordinary Shares) (as at December 31, 2019) Director Training Held personally: - None - • Director Accreditation Program (DAP) 149/2018, Thai Held by spouse or minor children: - None - Institute of Directors Association Family Relationship among Directors and Executives Board Member/Management in Other Listed Company (1) - None - Since 2019 President, Chemicals Business, The Siam Cement Public Company Limited Position in Other Company/Organization/Institution (2) Since 2019 President Commissioner, PT Fajar Surya Wisesa Tbk., Indonesia* Since 2018 Sub-committee, Royal Project Foundation Chairman and Director of SCG’s subsidiaries, associates, and other companies which are non-listed in the Stock Exchange of Thailand, as assigned
Remark: *Listed in the Stock Exchange of Indonesia Annual Report 2019 32 SCG Packaging Public Company Limited
Mr. Thammasak Sethaudom Age 50 years Position Director
Date of Appointment as a Director Position in Other Company/Organization/Institution (2) October 1, 2018 Since 2019 Director, Thai Listed Companies Association Education/Training Since 2018 Commissioner, PT Chandra Asri Petrochemical • Master of Business Administration, London Business Tbk., Indonesia* School, United Kingdom (Distinction) Director of SCG’s subsidiaries, associates, and other companies • Bachelor of Engineering, Electrical Engineering, which are non-listed in the Stock Exchange of Thailand, as Chulalongkorn University assigned • Management Development Program, The Wharton School of the University of Pennsylvania, USA 5-year Past Experiences and/or Remarkable Positions • Executive Development Program, Columbia University, USA 2012 - 2018 General Director, Long Son Petrochemicals • Change Management, GE Company Limited • Total Quality Management for Executive, JUSE, Japan 2008 - 2012 Deputy General Director, Long Son • Marketing for Management, Kellogg School, USA Petrochemicals Company Limited • Leadership Coaching, APM Group 2004 - 2010 Business Development and Corporate Planning • Innovation Management Program, Dupont, USA Director, Chemicals Business • Orientation Course – CFO Focus on Financial Reporting 2000 - 2004 eCommerce and eBusiness Manager, Class 3/2018 Chemicals Business • Advanced Management Program (AMP), Harvard Business Shareholdings (Ordinary Shares) (as at December 31, 2019) School, USA Held personally: - None - Expertise Held by spouse or minor children: - None - • Business or Core Industries of Other Large Industries Family Relationship among Directors and Executives • Administration and Large Organization Management - None - • Economics, Investment, Policy Setting and Strategic Planning • Marketing, Accounting and Finance • Corporate Governance and Risk Management Director Training • Director Certification Program (DCP) 159/2019, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand (1) Since 2018 Vice President - Finance and Investment & CFO, The Siam Cement Public Company Limited
Remark: *Listed in the Stock Exchange of Indonesia Management Structure 33
Mr. Wichan Jitpukdee Age 53 years Positions Director Chief Executive Officer
Date of Appointment as a Director 5-year Past Experiences and/or Remarkable Positions June 1, 2019 2019 President, Packaging Business, The Siam Cement Public Company Limited Education/Training 2018 - 2019 Managing Director, Thai Containers Group • Bachelor in Industrial Engineering, Chiang Mai University Company Limited • Diploma in Pulp & Paper Technology, The University of 2017 - 2018 President, The Thai Pulp and Paper Industries Auckland, New Zealand Association • Advanced Management Program (AMP), Harvard Business 2014 - 2019 Managing Director, Siam Kraft Industry School, USA Company Limited • Top Executive Program in Commerce and Trade (TEPCoT#10), 2011 - 2014 President & CEO, United Pulp and Paper University of the Thai Chamber of Commerce Company Limited, the Philippines • Top Executives Program, Class 29, Capital Market Academy 2011 Director, Procurement Office, Siam Kraft Expertise Industry Company Limited • Business or Core Industries of SCG and Other Large Industries 2010 - 2011 Director, Corporate Sustainable Development, • Administration and Large Organization Management SCG Paper Public Company Limited • Economics, Investment, Policy Setting and Strategic Planning 2007 - 2010 Vice President - Manufacturing, United Pulp and • Marketing and Finance Paper Company Limited, the Philippines • Corporate Governance and Risk Management Shareholdings (Ordinary Shares) (as at December 31, 2019) Director Training Held personally: - None - • Director Accreditation Program (DAP), Thai Institute of Held by spouse or minor children: - None - Directors Association Family Relationship among Directors and Executives Board Member/Management of Other Listed Company - None - in Thailand - None - Position in Other Company/Organization/Institution (1) Since 2019 Director, Thai Chamber of Commerce Since 2019 President Commissioner, PT Fajar Surya Wisesa Tbk., Indonesia* Other Position in SCG Packaging • Chairman and Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed in the Stock Exchange of Thailand, as assigned by the company
Remark: *Listed in the Stock Exchange of Indonesia Annual Report 2019 34 SCG Packaging Public Company Limited
Report of Changes in Securities Holdings of Directors
SCG Packaging Affiliated Public Company Limited Companies
Ordinary Shares Ordinary Shares Debentures (Shares) (Shares) (Units) Increase/ Increase/ Increase/ (decrease) (decrease) (decrease) As at As at during As at As at during As at As at during January 1, December financial January December financial January December financial Directors 2019 31, 2019 year 1, 2019 31, 2019 year 1, 2019 31, 2019 year 1. Mr. Prasarn Triratvorakul ------5,000** 5,000** - 2. Mr. Cholanat Yanaranop - - - 33,500* 33,500* - 49,000** 51,000** 2,000** 3. Mr. Chumpol NaLamlieng - - - 201,000* 201,000* - 51,000** 20,000** (31,000**) 4. Mrs. Kaisri Nuengsigkapian ------5. Mr. Chalee Chantanayingyong ------6. Mrs. Pongpen Ruengvirayudh ------7. Professor Kitipong ------2,000** 2,000** - Urapeepatanapong 8. Mr. Tanawong Areeratchakul ------9. Mr. Thammasak Sethaudom ------10. Mr. Wichan Jitpukdee ------Remarks: According to the Public Limited Companies Act, an “affiliated company” means a public limited company with a relationship to a private company, a public limited company, or companies in the following manners: - Any company that has the authority to control the appointment and removal of directors with full management authority or that has majority management authority. - Holds more than 50% of issued shares. * Ordinary Shares of The Siam Cement Public Company Limited ** Debentures of The Siam Cement Public Company Limited Management Structure 35
Management Structure SCG Packaging Management Committee
Composition of Management Committee as at February 1, 2020, comprises the following 7 members:
Names Position 1. Mr. Wichan Jitpukdee Chief Executive Officer 2. Mr. Sangchai Wiriyaumpaiwong Chief Operating Officer - Packaging Paper Business 3. Mr. Suchai Korprasertsri Chief Operating Officer - Consumer and Industrial Packaging Business 4. Mr. Karan Tejasen Chief Operating Officer - Performance and Polymer Packaging Business 5. Mr. Wichan Charoenkitsupat Chief Operating Officer - Fibrous Business 6. Mr. Danaidej Ketsuwan Chief Regional Officer 7. Mr. Kulachet Dharachandra Chief Financial Officer Annual Report 2019 36 SCG Packaging Public Company Limited
Management Committee’s Profile
Mr. Wichan Jitpukdee Age 53 years Positions Director Chief Executive Officer
Education/Training 5-year Past Experiences and/or Remarkable Positions • Bachelor of Engineering (Industrial Engineering), Chiang Mai 2019 President, Packaging Business, The Siam Cement University Public Company Limited • Diploma in Pulp & Paper Technology, The University of 2018 - 2019 Managing Director, Thai Containers Group Company Auckland, New Zealand Limited • Advanced Management Program (AMP), Harvard Business 2017 - 2018 President, The Thai Pulp and Paper Industries School, USA Association • Top Executive Program in Commerce and Trade (TEPCoT#10), 2014 - 2019 Managing Director, Siam Kraft Industry University of the Thai Chamber of Commerce Company Limited • Top Executives Program, Class 29, Capital Market Academy 2011 - 2014 President & CEO, United Pulp and Paper Company Limited, the Philippines Expertise 2011 Director, Procurement Office, Siam Kraft • Business or Core Industries of Other Large Industries Industry Company Limited • Administration and Large Organization Management 2010 - 2011 Director, Corporate Sustainable Development, • Economics, Investment, Policy Setting and Strategic Planning SCG Paper Public Company Limited • Marketing, Accounting and Finance 2007 - 2010 Vice President - Manufacturing, United Pulp and • Corporate Governance and Risk Management Paper Company Limited, the Philippines Director Training Shareholdings (Ordinary Shares) • Director Accreditation Program (DAP) 163/2019, Thai Institute (as at December 31, 2019) of Directors Association Held personally: - None - Held by spouse or minor children: - None - Board Member/Management of Other Listed Company in Thailand Family Relationship among Directors and Executives - None - - None - Position in Other Company/Organization/Institution (2) Since 2019 Director of Executive Board, Thai Chamber of Commerce Since 2019 President Commissioner, PT Fajar Surya Wisesa Tbk., Indonesia* Other Position in SCG Packaging • Chairman and Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company
Remark: *Listed in the Stock Exchange of Indonesia Management Structure 37
Mr. Sangchai Wiriyaumpaiwong Age 57 years Positions Chief Operating Officer - Packaging Paper Business Managing Director, Siam Kraft Industry Co., Ltd.
Education/Training 5-year Past Experiences and/or Remarkable Positions • Bachelor of Chemical Engineering, King Mongkut’s University 2018 - 2019 Managing Director, Thai Cane Paper Public of Technology Thonburi Company Limited • Advanced Management Program (AMP), Harvard Business 2018 - 2019 Managing Director, Siam Kraft Industry School, USA Company Limited 2014 - 2018 Managing Director, Vina Kraft Paper Company Expertise Limited, Vietnam • Business or Core Industries of Other Large Industries • Administration and Large Organization Management Shareholdings (Ordinary Shares) (as at December 31, 2019) • Economics, Investment, Policy Setting and Strategic Held personally: - None - Planning Held by spouse or minor children: - None - • Marketing, Accounting and Finance • Corporate Governance and Risk Management Family Relationship among Directors and Executives - None - Director Training • Director Accreditation Program (DAP) 168/2020, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution (1) Since 2019 Commissioner, PT Fajar Surya Wisesa Tbk., Indonesia* Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company
Remark: *Listed in the Stock Exchange of Indonesia Annual Report 2019 38 SCG Packaging Public Company Limited
Mr. Suchai Korprasertsri Age 52 years Positions Chief Operating Officer - Consumer and Industrial Packaging Business Managing Director, Thai Containers Group Co., Ltd.
Education/Training 5-year Past Experiences and/or Remarkable Positions • Master of Business Administration, Thammasat 2017 Corporate Marketing Director, SCG Packaging Public University Company Limited • Bachelor of Engineering (Industrial Engineering), 2017 Marketing Director and Domestic Marketing Director Chulalongkorn University (Assignment), Siam Kraft Industry Company Limited • Advanced Management Program (AMP), Harvard Business 2016 Domestic Marketing Director, Siam Kraft Industry School, USA Company Limited 2015 General Manager - TCPB/TCCB, Thai Containers Expertise Group Company Limited • Business or Pulp, Paper and Packaging Industries 2013 Regional Operations Director, Thai Containers • Administration and Large Organization Management Group Company Limited • Economics, Investment, Policy Setting and Strategic Planning • Marketing, Accounting and Finance Shareholdings (Ordinary Shares) (as at December 31, 2019) • Corporate Governance and Risk Management Held personally: - None - Held by spouse or minor children: - None - Director Training • Director Accreditation Program (DAP) 86/2010, Thai Family Relationship among Directors and Executives Institute of Directors Association - None - • Director Certification Program (DCP) 141/2011, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution - None - Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company Management Structure 39
Mr. Karan Tejasen Age 51 years Positions Chief Operating Officer - Performance and Polymer Packaging Business Managing Director, TC Flexible Packaging Co., Ltd.
Education/Training 5-year Past Experiences and/or Remarkable Positions • Master of Business Administration (Finance), Sasin 2013 Business Integration Director, Thai Containers Graduate Institute of Business Administration of Group Company Limited Chulalongkorn University 2012 Director-Regional Operations, Thai Containers • Bachelor of Engineering (Electrical Engineering), Group Company Limited Chulalongkorn University 2010 Director and General Manager, Thai Containers • Advanced Management Program (AMP), Harvard Business Group Company Limited School, USA 2009 Marketing Director, Siam Kraft Industry Company Limited Expertise • Business or Core Industries of Other Large Industries Shareholdings (Ordinary Shares) (as at December 31, 2019) • Administration and Large Organization Management Held personally: - None - • Economics, Investment, Policy Setting and Strategic Planning Held by spouse or minor children: - None - • Marketing, Accounting and Finance • Corporate Governance and Risk Management Family Relationship among Directors and Executives - None - Director Training • Director Accreditation Program (DAP) 167/2019, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution (2) • Director and Treasurer, Plastic Industry Club, The Federation of Thai Industries • Director, Thailand Institute of Packaging and Recycling Management for Sustainable Environment, The Federation of Thai Industries Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company Annual Report 2019 40 SCG Packaging Public Company Limited
Mr. Wichan Charoenkitsupat Age 55 years Positions Chief Operating Officer - Fibrous Business Managing Director, Phoenix Pulp & Paper Public Company Limited
Education/Training 5-year Past Experiences and/or Remarkable Positions • MSC., Paper Science and Engineering, Western Michigan 2014 President & CEO, United Pulp and Paper, University, USA the Philippines • Bachelor of Science (Chemical Engineering), Chulalongkorn 2013 Director, Wang Sala Plant, Siam Kraft Industry University Company Limited • Bachelor of Economics (Human Resource Economics), 2010 Managing Director, Thai Union Paper Industry Ramkhamhaeng University Company Limited • Advanced Management Program (AMP), IMD business 2006 Director, Product & Technology Development Center, school (IMD), Switzerland SCG Packaging Public Company Limited Expertise Shareholdings (Ordinary Shares) (as at December 31, 2019) • Business or Core Industries of Other Large Industries Held personally: - None - • Administration and Large Organization Management Held by spouse or minor children: - None - • Economics, Investment, Policy Setting and Strategic Planning • Production, Research and Development, Marketing, Accounting Family Relationship among Directors and Executives and Finance - None - • Corporate Governance and Risk Management Director Training • Director Accreditation Program (DAP) 168/2020, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution - None - Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company Management Structure 41
Mr. Danaidej Ketsuwan Age 47 years Positions Chief Regional Officer President & CEO, United Pulp and Paper Co., Inc., the Philippines
Education/Training 5-year Past Experiences and/or Remarkable Positions • Master of Business Administration, Sloan School of Management, 2013 - 2018 Director, Business Planning Office, SCG Packaging Massachusetts Institute of Technology, USA Public Company Limited • Bachelor of Science, Mechanical Engineering, University of California, Berkeley, USA Shareholdings (Ordinary Shares) (as at December 31, 2019) Held personally: - None - Expertise Held by spouse or minor children: - None - • Business or Core Industries of Other Large Industries • Administration and Large Organization Management Family Relationship among Directors and Executives • Economics, Investment, Policy Setting and Strategic Planning - None - • Marketing, Accounting and Finance • Corporate Governance and Risk Management Director Training • Director Accreditation Program (DAP) 168/2020, Thai Institute of Directors Association Board Member/Management of Other Listed Company in Thailand - None - Position in Other Company/Organization/Institution - None - Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company, including Country Director for the Philippines Annual Report 2019 42 SCG Packaging Public Company Limited
Mr. Kulachet Dharachandra Age 46 years Position Chief Financial Officer
Education/Training 5-year Past Experiences and/or Remarkable Positions • Bachelor of Engineering (Chemicals Engineering), 2016 - 2019 Vice President Director and Chief Operating Chulalongkorn University Officer, PT. Chandra Asri Petrochemical Tbk., Indonesia* Expertise 2013 - 2016 Director, Corporate Planning Office, The Siam • Business or Core Industries of Other Large Industries Cement Public Company Limited • Administration and Large Organization Management 2012 - 2013 Director, Finance and Investment Office, SCG • Economics, Investment, Policy Setting and Strategic Planning Chemicals Company Limited • Marketing, Accounting and Finance 2010 - 2012 Director, Business Development Office, SCG • Corporate Governance and Risk Management Chemicals Company Limited • Overseas assignment 2009 - 2010 Deputy Manager, Business Development Office, SCG Chemicals Company Limited Director Training 2005 - 2009 Coordination Manager, Iran Project, SCG - None - Chemicals Company Limited Board Member/Management of Other Listed Company Shareholdings (Ordinary Shares) (as at December 31, 2019) in Thailand Held personally: - None - - None - Held by spouse or minor children: - None - Position in Other Company/Organization/Institution Family Relationship among Directors and Executives - None - - None - Other Position in SCG Packaging • Director of SCG Packaging’s subsidiaries, associates and other companies which are non-listed as assigned by the company
Remark: *Listed in the Stock Exchange of Indonesia Management Structure 43
Remuneration of the Board of Directors and Executives
Remuneration of the Board of Directors The 1/2019 Extraordinary General Meeting of Shareholders on June 21, 2019 resolved to remunerate the Board of the Directors and the sub-committees in the form of fixed monthly and annual fees and meeting allowance, effective June 1, 2019 onwards, as follows:
Fixed fee Meeting (Baht) allowance (Baht/person/ Board of Directors/Sub-committees Position Monthly Annual meeting) The Board of Directors Chairman 150,000 - - (1 Chairman / 9 Directors) Director 100,000 - - The Audit Committee Chairman - 150,000 45,000 (1 Chairman / 2 Members) Member - 100,000 30,000 The Nomination, Remuneration, and Governance Committee* Chairman - 120,000 30,000 (1 Chairman / 3 Members) Member - 100,000 20,000 Remark: *The remuneration rates for the Nomination, Remuneration, and Governance Committee were in effect until November 24, 2019. To enhance the efficiency and effectiveness of the nomination of qualified candidates to replace directors due to retire and leaving office under other circumstances; the determination of remuneration for the Board of Directors, the sub-committees, and the top executives of the company; and the recommendation of governance policies and guidelines for the company and its subsidiaries, the Board of Directors Meeting No. 214 (10/2019) on October 26, 2019 resolved to appoint two sub-committees, namely the Governance and Nomination Committee and the Remuneration Committee, in place of the Nomination, Remuneration, and Governance Committee. The meeting also agreed to propose the same rate of remuneration for the two sub-committees to the General Meeting of Shareholders for approval, effective November 25, 2019 onwards or until the General Meeting of Shareholders resolved to change it as proposed by the Nomination, Remuneration, and Governance Committee. The 2/2019 Extraordinary General Meeting of Shareholders on November 25, 2019 resolved to approve the following rates as proposed by the Board of the Directors: Chairman: Fixed annual fee of 120,000 Baht and meeting allowance of 30,000 Baht per meeting Member: Fixed annual fee of 100,000 Baht and meeting allowance of 20,000 Baht per meeting/person The remuneration for the Board of Directors and the Audit Committee was maintained at the rates approved by the 1/2019 Extraordinary General Meeting of Shareholders on June 21, 2019. As of November 25, 2019, the remuneration for the Board of Directors and the sub-committees is as follows.
Fixed Fee Attendance (Baht) Fee (Baht/person/ Directors Position Monthly Yearly meeting) Board of Directors Chairman 150,000 - - (1 Chairman / 9 Directors) Member 100,000 - - The Audit Committee Chairman - 150,000 45,000 (1 Chairman / 2 Members) Member - 100,000 30,000 The Governance and Nomination committee Chairman - 120,000 30,000 (1 Chairman / 2 Members) Member - 100,000 20,000 The Remuneration committee Chairman - 120,000 30,000 (1 Chairman / 2 Members) Member - 100,000 20,000 Annual Report 2019 44 SCG Packaging Public Company Limited
The Remuneration for the Board of Directors and the Sub-committees in 2019 (January 1 - December 31, 2019)
The Nomination The Governance The Remuneration The Board of The Audit and Nomination Remuneration and Governance Directors Committee Committee* Committee* Committee** Total Director (11 members) (3 members) (3 members) (3 members) (4 members) (Baht) 1. Mr. Prasarn Triratvorakul 940,000 - - - - 940,000 2. Mr. Cholanat Yanaranop 700,000 - 30,054 50,054 50,435 830,544 3. Mr. Chumpol NaLamlieng 633,333 - - 72,065 66,522 771,920 4. Mrs. Kaisri Nuengsigkapian 700,000 443,767 - - - 1,143,767 5. Mr. Chalee Chantanayingyong 633,333 291,096 42,065 - 50,435 1,016,929 6. Mrs. Pongpen Ruengvirayudh 633,333 291,096 - 50,054 50,435 1,024,918 7. Professor Kitipong Urapeepatanapong 435,484 - 30,054 - - 465,538 8. Mr. Tanawong Areeratchakul 700,000 - - - - 700,000 9. Mr. Thammasak Sethaudom 700,000 - - - - 700,000 10. Mr. Wichan Jitpukdee 700,000 - - - - 700,000 11. Mr. Roongrote Rangsiyopash 115,000 - - - - 115,000 Total 6,890,483 1,025,959 102,173 172,173 217,827 8,408,616 Remarks: 1. Director number 1 assumed the Chairmanship since June 27, 2019 (assumed membership of the Board of Directors during June 21 - 26, 2019) 2. Director number 3 assumed the Chairmanship of the Remuneration Committee since November 25, 2019 (assumed the Chairmanship of the Governance, Nomination and Remuneration Committee during August 5 - November 24, 2019) 3. Director number 4 assumed the Chairmanship of the Audit Committee since June 27, 2019 (assumed membership of the Audit Committee during June 1 - 26, 2019) 4. Director number 5 assumed the Chairmanship of Governance and Nomination Committee since November 25, 2019 (assumed the membership of the Nomination, Remuneration and Governance Committee during August 5 - November 24, 2019) 5. Director number 11 assumed the directorship and the Chairmanship of the Board of Directors until June 23, 2019, therefore, he received remuneration paid during June 1 - 23, 2019. 6. The Board of Directors Meeting No. 214 (10/2019), held on October 26, 2019, passed resolutions as follows: * Appointed two Sub-committees, namely the Governance and Nomination Committee and the Remuneration Committee, in place of the Nomination, Remuneration and Governance Committee, effective from November 25, 2019 onwards. ** Dissolved the Nomination, Remuneration and Governance Committee [established on August 5, 2019 by a passed resolution from the Board of Directors Meeting No. 211 (7/2019), effective from November 25, 2019 onwards.]
Top Executive Remuneration 2019 Benefit-in-cash For the year ended December 31, 2019, the total remuneration of 85,936,508 Baht was paid in cash to the Top Executives (exclude from remuneration paid for being the Directors), comprised monthly salary, bonus, and variable pay. Benefit-in-kind For the year ended December 31, 2019, the company made contributions of 7,543,638 Baht to the provident fund for the executives as the employees of the company. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries Annual Report 2019 46 SCG Packaging Public Company Limited
Independent auditor’s report To the Shareholders of SCG Packaging Public Company Limited
Opinion
I have audited the consolidated financial statements of SCG Packaging Public Company Limited and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2019 and 2018, the consolidated income statement and statements of comprehensive income, changes in shareholders’ equity and cash flows for years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
In my opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2019 and 2018, its financial performance and cash flows for years then ended in accordance with Thai Financial Reporting Standards (TFRSs).
Basis for Opinion
I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of my report. I am independent of the Group in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions that is relevant to my audit of the consolidated financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Other Information
Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and my auditor’s report thereon.
My opinion on the consolidated financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the consolidated financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 47
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Annual Report 2019 48 SCG Packaging Public Company Limited
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2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 49
Consolidated statement of financial position SCG Packaging Public Company Limited and its Subsidiaries 31 December Assets Note 2019 2018 (in thousand Baht) Current assets Cash and cash equivalents 6 4,393,845 2,095,349 Current investments 565,508 803,011 Trade and other current receivables 5, 7 15,198,020 13,704,103 Advance payment for assets 1,715,782 131,654 Short-term loans to related parties 5 4,601 127,152 Current portion of long-term loan to related party 5 - 92,738 Inventories 8 13,276,136 12,894,256 Other current assets 229,431 226,011 Total current assets 35,383,323 30,074,274 Non-current assets Investments in associates 9 770,754 729,740 Other long-term investments 16,192 16,192 Other non-current receivables 5 980,633 768,513 Investment property 11 187,400 185,575 Property, plant and equipment 12 82,863,567 58,378,647 Goodwill 13 17,612,266 2,289,836 Other intangible assets 14 814,032 307,716 Deferred tax assets 15 744,955 378,649 Others non-current assets 139,923 117,043 Total non-current assets 104,129,722 63,171,911 Total assets 139,513,045 93,246,185 For and on behalf of the Board of Directors
(Prasarn Trairatvorakul) (Wichan Jitpukdee) Chairman Chief Executive Officer
The accompanying notes are an integral part of these financial statements. Annual Report 2019 50 SCG Packaging Public Company Limited
Consolidated statement of financial position SCG Packaging Public Company Limited and its Subsidiaries 31 December Liabilities and shareholders' equity Note 2019 2018 (in thousand Baht) Current liabilities Bank overdrafts and short-term borrowings from financial institutions 17 7,131,509 4,312,464 Trade and other current payables 5, 18 10,058,564 8,573,666 Current portion of long-term borrowings from financial institutions 17 2,183,635 151,996 Current portion of finance lease liabilities 19 87,801 13,823 Short-term borrowings from related parties 5 33,827,196 23,415,700 Current income tax payable 604,793 529,798 Short-term provisions 120,546 194,026 Total current liabilities 54,014,044 37,191,473
Non-current liabilities Long-term borrowings from financial institutions 17 16,318,425 587,129 Finance lease liabilities 19 35,337 15,327 Deferred tax liabilities 15 2,873,568 216,694 Non-current provisions for employee benefits 20 3,375,357 1,905,638 Other non-current liabilities 80,319 70,193 Total non-current liabilities 22,683,006 2,794,981
Total liabilities 76,697,050 39,986,454
The accompanying notes are an integral part of these financial statements. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 51
Consolidated statement of financial position SCG Packaging Public Company Limited and its Subsidiaries 31 December Liabilities and shareholders' equity Note 2019 2018 (in thousand Baht) Shareholders' equity Share capital 21 Authorized share capital - Ordinary share 4,500,000 1,563,000 Issued and paid share capital - Ordinary share 3,126,000 1,563,000 Share premium 22 1,935,000 1,935,000 Retained earnings Appropriated Legal reserve 22 218,600 156,300 General reserve 3,000 3,000 Unappropriated 41,929,779 40,145,205 Other components of shareholders' equity (4,260,330) (3,361,868) Total equity attributable to owners of the parent 42,952,049 40,440,637 Non-controlling interests 10 19,863,946 12,819,094
Total shareholders’ equity 62,815,995 53,259,731
Total liabilities and shareholders' equity 139,513,045 93,246,185
The accompanying notes are an integral part of these financial statements. Annual Report 2019 52 SCG Packaging Public Company Limited
Consolidated income statement SCG Packaging Public Company Limited and its Subsidiaries Year ended 31 December Note 2019 2018 (in thousand Baht) Revenue from sales 5 89,069,867 87,254,869 Cost of sales 5 (71,651,345) (69,074,282)
Gross profit 17,418,522 18,180,587
Gain on exchange rate 127,474 151,930 Other income 5, 12 713,740 363,021 Profit before expenses 18,259,736 18,695,538
Distribution costs 5, 24 (4,800,607) (4,964,650) Administrative expenses 5, 25 (4,425,364) (4,582,826) Employee benefit expense from the amended severance pay of the Labor Law 20 (527,368) - Total expenses (9,753,339) (9,547,476)
Profit from operations 8,506,397 9,148,062 Finance costs 5 (1,618,817) (1,039,637) Share of profit (loss) of associates 9 52,728 (14,603) Profit before income tax 6,940,308 8,093,822
Tax expense 27 (1,049,048) (1,267,522)
Profit for the year 5,891,260 6,826,300
Profit attributable to: Owners of the parent 5,268,511 6,065,539 Non-controlling interests 10 622,749 760,761
5,891,260 5,891,260 6,826,300 Basic earnings per share (in Baht) Attributable to owners of the parent 29 1.69 1.94
The accompanying notes are an integral part of these financial statements. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 53
Consolidated statement of comprehensive income SCG Packaging Public Company Limited and its Subsidiaries Year ended 31 December Note 2019 2018 (in thousand Baht) Profit for the year 5,891,260 6,826,300
Other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss Exchange differences on translating financial statement (1,146,562) (319,990)
Components of other comprehensive income that will not be reclassified to profit or loss Defined benefit plan actuarial losses 20 (200,672) (343,227) Share of other comprehensive income of associate 9 118 (519) Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss 27 38,683 66,578 Total components of other comprehensive income that will not be reclassified to profit or loss (161,871) (277,168)
Other comprehensive income for the year, net of tax (1,308,433) (597,158)
Total comprehensive income for the year 4,582,827 6,229,142
Total comprehensive income attributable to Owners of the parent 4,332,205 5,557,199 Non-controlling interests 250,622 671,943 4,582,827 4,582,827 6,229,142
The accompanying notes are an integral part of these financial statements. 54 Consolidated statement of changes in shareholders' equity SCG Packaging Public Company Limited and its Subsidiaries
Retained earnings Other components of shareholders' equity Appropriated Unappropriated Total equity Issued Translation of Changes in other attributable to Non- Total and paid Share Legal General financial components owners of controlling shareholders' Note share premium reserve reserve statement from shareholders the parent interests equity (in thousand Baht) Year ended 31 December 2018 Balance at 1 January 2018 1,563,000 1,935,000 156,300 3,000 42,129,342 (1,809,896) (1,085,484) 42,891,262 12,759,334 55,650,596 Transactions with owners, recorded directly in shareholders’ equity Contributions by and distributions to owners of the parent Dividends 30 - - - - (7,815,000) - - (7,815,000) (254,454) (8,069,454)
Total contributions by and distributions to SCG Packaging PublicCompany Limited Annual Report 2019 owners of the parent - - - - (7,815,000) - - (7,815,000) (254,454) (8,069,454) Changes in ownership interests in subsidiaries Changes that do not result in a loss of control ------(192,824) (192,824) (447,193) (640,017) Changes that result in an acquisition or a loss of control 4 ------89,464 89,464
Total changes in ownership interests in subsidiaries ------(192,824) (192,824) (357,729) (550,553) Total transactions with owners, recorded directly in shareholders’ equity - - - - (7,815,000) - (192,824) (8,007,824) (612,183) (8,620,007) Comprehensive income for the year Profit or loss - - - - 6,065,539 - - 6,065,539 760,761 6,826,300 Other comprehensive income - - - - (234,676) (273,664) - (508,340) (88,818) (597,158) Total comprehensive income for the year - - - - 5,830,863 (273,664) - 5,557,199 671,943 6,229,142 Balance at 31 December 2018 1,563,000 1,935,000 156,300 3,000 40,145,205 (2,083,560) (1,278,308) 40,440,637 12,819,094 53,259,731
The accompanying notes are an integral part of these financial statements. 2019 Consolidated Financial Statementsof SCG Packaging Public Company Limited and its Subsidiaries Consolidated statement of changes in shareholders' equity SCG Packaging Public Company Limited and its Subsidiaries
Retained earnings Other components of shareholders' equity Appropriated Unappropriated Total equity Issued Translation of Changes in other attributable to Non- Total and paid Share Legal General financial components owners of controlling shareholders' Note share premium reserve reserve statement from shareholders the parent interests equity (in thousand Baht) Year ended 31 December 2019 Balance at 1 January 2019 1,563,000 1,935,000 156,300 3,000 40,145,205 (2,083,560) (1,278,308) 40,440,637 12,819,094 53,259,731 Transactions with owners, recorded directly in shareholders’ equity Contributions by and distributions to owners of the parent Transfer to legal reserve - - 62,300 - (62,300) - - - - - Stock dividends 21, 30 1,563,000 - - - (1,563,000) - - - - - Dividends 30 - - - - (1,736,667) - - (1,736,667) (230,850) (1,967,517) Total contributions by and distributions to owners of the parent 1,563,000 - 62,300 - (3,361,967) - - (1,736,667) (230,850) (1,967,517) Changes in ownership interests in subsidiaries Changes that do not result in a loss of control ------(84,126) (84,126) 95,267 11,141 Changes that result in an acquisition or a loss of control 4 ------6,929,813 6,929,813 Total changes in ownership interests in subsidiaries ------(84,126) (84,126) 7,025,080 6,940,954 Total transactions with owners, recorded directly 1,563,000 - 62,300 - (3,361,967) - (84,126) (1,820,793) 6,794,230 4,973,437 Comprehensive income for the year Profit or loss - - - - 5,268,511 - - 5,268,511 622,749 5,891,260 Other comprehensive income - - - - (121,970) (814,336) - (936,306) (372,127) (1,308,433) Total comprehensive income for the year - - - - 5,146,541 (814,336) - 4,332,205 250,622 4,582,827 Balance at 31 December 2019 3,126,000 1,935,000 218,600 3,000 41,929,779 (2,897,896) (1,362,434) 42,952,049 19,863,946 62,815,995 55
The accompanying notes are an integral part of these financial statements. Annual Report 2019 56 SCG Packaging Public Company Limited
Consolidated statement of cash flows SCG Packaging Public Company Limited and its Subsidiaries
Year ended 31 December Note 2019 2018 (in thousand Baht) Cash flows from operating activities Profit for the year 5,891,260 6,826,300 Adjustments for Tax expense 1,049,048 1,267,522 Depreciation and amortization 5,990,773 5,381,693 Bad debt and doubtful debts expenses 32,264 42,556 Loss on inventories devaluation 93,441 170,457 Employee benefit expense 849,854 239,433 Unrealized gains on foreign currency exchange (164,169) (9,060) Share of loss (profit) of associates 9 (52,728) 14,603 Loss on sales of investments and other - 9,500 Impairment losses on property, plant and equipment and other intangible assets 36,623 24,126 Loss (gain) on sales of property, plant and equipment and other intangible assets (277,002) 16,357 Dividend income - (10,762) Interest income (114,132) (61,135) Interest expense 1,650,495 988,501 Cash flows generated from operations before changes in operating assets and liabilities 14,985,727 14,900,091 Decrease in operating assets Trade and other current receivables 2,421,719 169,792 Inventories 2,199,320 292,545 Other current assets and other non-current assets 57,185 113,974 Net decrease in operating assets 4,678,224 576,311
The accompanying notes are an integral part of these financial statements. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 57
Consolidated statement of cash flows SCG Packaging Public Company Limited and its Subsidiaries
Year ended 31 December Note 2019 2018 (in thousand Baht) Increase (decrease) in operating liabilities Trade and other current payables (1,979,544) (286,597) Provision for employee benefits (151,434) (172,760) Other current liabilities and other non-current liabilities 55,121 8,268 Net decrease in operating liabilities (2,075,857) (451,089)
Net cash flows generated from operations 17,588,094 15,025,313 Income tax paid (1,573,937) (773,180)
Net cash flows provided by operating activities 16,014,157 14,252,133
Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired 4 (24,022,251) (451,470) Proceeds from sales of investment - 257,309 Current investments (715,963) (555,809) Proceeds from sales of property, plant and equipment and other intangible assets 520,723 151,256 Acquisition of property, plant and equipment (7,914,253) (6,870,171) Acquisition of investment property - (64,411) Acquisition of other intangible assets (87,290) (77,220) Proceeds from (repayment of) short-term loans to related parties 114,156 (126,341) Proceed from current portion of long-term loan to related party 92,738 - Dividends received 11,832 26,634 Interest received 110,056 51,080 Net cash flows used in investing activities (31,890,252) (7,659,143)
The accompanying notes are an integral part of these financial statements. Annual Report 2019 58 SCG Packaging Public Company Limited
Consolidated statement of cash flows SCG Packaging Public Company Limited and its Subsidiaries
Year ended 31 December Note 2019 2018 (in thousand Baht) Cash flows from financing activities Proceeds from change in ownership interests in subsidiaries that do not result in a loss of control 193,777 - Payments of changes in ownership interests in subsidiaries that do not result in a loss of control 4 (192,187) (640,017) Proceeds from (payments of) borrowings Increase (decrease) in bank overdrafts and short-term borrowings from financial institutions 36,317 (933,029) Increase in short-term borrowing from related parties 10,415,065 7,919,137 Proceeds from long-term borrowings from financial institutions 13,136,727 351,489 Payments of long-term borrowings from financial institutions (1,576,976) (3,307,059) Payments of finance lease liabilities (65,136) (140,960) Net increase in borrowings 21,945,997 3,889,578 Dividends paid Dividends paid to owners of the parent (1,736,667) (7,815,000) Dividends paid to non-controlling interests (221,294) (254,454) Total dividends paid (1,957,961) (8,069,454) Interest paid (1,732,722) (1,012,063)
Net cash flows provided by (used in) financing activities 18,256,904 (5,831,956)
Net increase in cash and cash equivalents 2,380,809 761,034 Effect of exchange rate changes on cash and cash equivalents (82,313) (49,322) Cash and cash equivalents at beginning of the year 2,095,349 1,383,637 Cash and cash equivalents at end of the year 4,393,845 2,095,349
The accompanying notes are an integral part of these financial statements. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 59
Consolidated statement of cash flows SCG Packaging Public Company Limited and its Subsidiaries
Year ended 31 December 2019 2018 (in thousand Baht) Supplementary information for cash flows Non-cash transactions Account payables from purchase of assets 978,808 538,639 Accrued investments 961,368 181,783 Stock dividends 1,563,000 -
The accompanying notes are an integral part of these financial statements. Annual Report 2019 60 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Note Contents
1 General information 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Acquisitions of business and changes in ownership interests in subsidiaries 5 Related parties 6 Cash and cash equivalents 7 Trade and other current receivables 8 Inventories 9 Investments in associates 10 Non-controlling interests 11 Investment property 12 Property, plant and equipment 13 Goodwill 14 Other intangible assets 15 Deferred tax assets (deferred tax liabilities) 16 Changes in liabilities arising from financing activities 17 Bank overdrafts and borrowings from financial institutions 18 Trade and other current payables 19 Finance lease liabilities 20 Non-current provisions for employee benefits 21 Share capital 22 Reserves and other components of shareholders’ equity 23 Business segment information 24 Distribution costs 25 Administrative expenses 26 Employee benefit expenses 27 Income tax 28 Promotional privileges 29 Basic earnings per share 30 Dividends 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 61
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Note Contents
31 Agreements 32 Financial instruments 33 Commitments and contingent liabilities 34 Capital management 35 Others 36 Events after the reporting period 37 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective Annual Report 2019 62 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
These notes form an integral part of the consolidated financial statements.
The consolidated financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English languages, and were approved and authorized for issue by the audit committee, as appointed by the Board of Directors of the Company, on 18 February 2020.
1 General information
SCG Packaging Public Company Limited, the “Company”, is a company incorporated in Thailand.
The head office of the Company is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand.
The parent company is The Siam Cement Public Company Limited. It was incorporated in Thailand.
The Company and its subsidiaries, the “Group” are mainly engaged in the manufacturing of packaging paper, packaging, pulp and printing and writing paper.
Details of the Company’s subsidiaries, which have significant operations and were included in the consolidated financial statements, are as follows:
2019 2018 Direct / Indirect Holding (%) Registered in Thailand Siam Kraft Industry Co., Ltd. 100 100 SCGP Excellence Training Center Co., Ltd. 100 100 SCG Paper Energy Co., Ltd. 100 100 SCGP Solutions Co., Ltd. 100 100 SCGP Rigid Plastics Co., Ltd. 100 - Thai Cane Paper Public Company Limited 98.20 98.20 Visy Packaging (Thailand) Limited 80 - Precision Print Co., Ltd. 75 75 Thai Containers Group Co., Ltd. 70 70 Thai Containers Khonkaen Co., Ltd. 70 70 Thai Containers Rayong Co., Ltd. 70 70 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 63
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
2019 2018 Direct / Indirect Holding (%) Dyna Packs Co., Ltd. 70 70 Orient Containers Co., Ltd. 70 70 D-In Pack Co., Ltd. 70 70 Phoenix Pulp & Paper Public Company Limited 69.58 69.58 Phoenix Utilities Co., Ltd. 69.58 69.58 Thai Paper Co., Ltd. 69.58 69.58 The Siam Forestry Co., Ltd. 69.58 69.58 Thai Union Paper Public Company Limited* 69.55 69.55 TC Flexible Packaging Co., Ltd. 52.50 52.50 SCGP-T Plastics Co., Ltd. 51 100 Tawana Container Co., Ltd. 50.40 50.40 Conimex Co., Ltd. 38.25 75 Prepack Thailand Co., Ltd. 37.80 37.80
Registered in Philippines United Pulp and Paper Co., Inc.** 99.70 99.70 Paperlink Inter-Trade Corporation** - 99.70
Registered in Vietnam Vina Kraft Paper Co., Ltd. 70 70 New Asia Industries Co., Ltd. 70 70 Alcamax Packaging (Vietnam) Co., Ltd. 70 70 AP Packaging (Hanoi) Co., Ltd. 70 70 Packamex (Vietnam) Co., Ltd. 70 70 Tin Thanh Packing Joint Stock Company 47.24 47.24
Registered in Singapore SCGP Solutions (Singapore) Pte. Ltd. 100 100 TCG Rengo (S) Limited* 70 70
* Currently in the liquidation process. ** Paperlink Inter-Trade Corporation amalgamate with United Pulp and Paper Co., Inc. which has already been completed on 25 November 2019. Annual Report 2019 64 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
2019 2018 Direct / Indirect Holding (%) Registered in Indonesia PT Indocorr Packaging Cikarang 70 56 PT Indoris Printingdo 69.97 69.97 PT Primacorr Mandiri 67.90 67.90 PT Fajar Surya Wisesa Tbk. 55.24 - PT Dayasa Aria Prima 55.23 -
Registered in Malaysia Interpress Printers Sendirian Berhad 68.30 68.30
Most of the above subsidiaries were established in Thailand unless otherwise stated. There was no material change in the percentage of holding from 2018, except as discussed in note 4.
During 2019, the Group acquired the ordinary shares of PT Fajar Surya Wisesa Tbk. and subsidiary, which is incorporated in Indonesia, and Visy Packaging (Thailand) Limited, which is incorporated in Thailand. These companies are included in the Group’s consolidated financial statements, as discussed in note 4.
2 Basis of preparation of the financial statements
(a) Statement of compliance
The consolidated financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRSs”) and guidelines promulgated by the Federation of Accounting Professions.
The new and revised TFRSs are effective for annual accounting periods beginning on or after 1 January 2019. The initial application of these new and revised TFRSs has resulted in no material impact on the Group’s accounting policies, calculation method, financial performance and position.
The Group has initially applied TFRS 15 Revenue from Contracts with Customers (“TFRS 15”) since 1 January 2019. TFRS 15 establishes a comprehensive framework for determining how much and when revenue is 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 65
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
recognized. It replaced TAS 18 Revenue (“TAS 18”), TAS 11 Construction Contracts (“TAS 11”) and related interpretations.
Under TFRS 15, the Group recognizes revenue when a customer obtains control of the goods or services in an amount that reflects the consideration to which the Group expects to be entitled to. In addition, judgment is required in determining the timing of the transfer of control for revenue recognition - at a point in time or over time. The Group has a timing of revenue recognition mainly from sales of goods which is recognized at a point in time.
In addition, the Group has not early adopted a number of new and revised TFRS which are not yet effective for the current period in preparing these financial statements. Those new and revised TFRSs that are relevant to the Group’s operations are disclosed in note 37.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statements of financial position:
• contingent consideration assumed in a business combination are measured at fair value. • biological assets are measured at fair value less cost to sell. • defined benefit obligations are measured at the present value of non-current provisions for defined benefit plans.
(c) Functional and presentation currency
The consolidated financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated.
Annual Report 2019 66 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
(d) Use of estimates and judgments
The preparation of financial statements in conformity with TFRSs requires management to make judgments, estimates and assumptions that affect the application of the Group’s accounting policies. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about significant areas of estimation uncertainty and critical assumptions in applying accounting policies that have the most significant effect on the amount recognized in the financial statements is included in the following notes:
Note 4 Acquisition of subsidiary: fair value of the consideration transferred (including contingent consideration) and fair value of the assets acquired and liabilities assumed; Note 9, 11, 12, 13 and 14 Impairment test: key assumptions underlying recoverable amounts; Note 7, 8, 9, 11, 12, 13 and 14 Measurement of the recoverable amounts of each asset and cash- generating units; Note 15 and 27 Recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilized; Note 20 Measurement of non-current provision for defined benefit plans: key actuarial assumptions; and
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 67
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The Group has an established framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which these valuations should be classified.
Significant valuation issues are reported to the Group’s Audit Committee.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs are unobservable inputs for the asset or liability.
If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 4 Acquisitions of business and changes in ownership interests in subsidiaries; • Note 11 Investment property; and • Note 32 Financial instruments. Annual Report 2019 68 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
3 Significant accounting policies
The accounting policies set out below have been consistently applied to all periods presented in these financial statements.
(a) Basis of consolidation
The consolidated financial statements relate to the Group and the Group’s interests in associates.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income or expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Non-controlling interests
At the acquisition date, the Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 69
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Loss of control
When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates.
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Interests in associates are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence ceases.
Business combinations
The Group applies the acquisition method for all business combinations when control is transferred to the Group, as described in subsidiaries section, other than those with entities under common control.
The acquisition date is the date on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining whether control is transferred from one party to another.
In a business combination achieved in stages, the Group shall remeasure its previously held equity interest of investment in the acquiree to its acquisition-date fair value and recognize the resulting gain or loss in profit or loss.
Annual Report 2019 70 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Goodwill is measured as the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree, less the fair value amount of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Any gain on bargain purchases is recognized in profit for the period immediately.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.
Transaction costs that the Group incurs in connection with a business combination, such as legal fees, and other professional and consulting fees are expensed as incurred.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
(b) Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the foreign exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated to the functional currencies at the exchange rates at that date. Foreign exchange differences are recognized in profit or loss. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 71
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Non-monetary assets and liabilities which include those arising from the payment or receipt of advance consideration measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.
Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to the functional currency at the exchange rates at the dates on which the fair value was measured.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Thai Baht at the exchange rates at the end of reporting period.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are stated at exchange rates at the date of the transaction for acquisition occurred before the date 1 January 2013, and stated at exchange rates at the end of reporting period for acquisition beginning on or after 1 January 2013.
The revenues and expenses of foreign operations are translated to Thai Baht at rates approximating the exchange rates at the dates of the transactions and using the weighted average method.
Foreign exchange differences arising on translation are recognized in other comprehensive income and presented in other components of equity until disposal of the foreign operation, except to extent that the translation difference is allocated to non-controlling interests.
When a foreign operation is disposed of in its entirety or partially such that control or significant influence is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of an associate while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary Annual Report 2019 72 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
item are considered to form part of a net investment in a foreign operation and are recognized in other comprehensive income, and presented in other components of equity until disposal of the foreign operation.
(c) Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
In addition, bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
(d) Trade and other receivables and contract assets
A receivable is recognized when the Group has an unconditional right to receive consideration. If revenue has been recognized before the Group has an unconditional right to receive consideration, the amount is presented as a contract asset.
A receivable and a contract asset are measured at fair value less allowance for doubtful accounts which are assessed on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.
(e) Inventories
Inventories are measured at the lower of cost and net realizable value.
Cost is calculated using the following formula:
Finished goods - at standard costs which approximate actual production costs Merchandise - at average cost Goods in process - at standard cost Raw materials, spare parts, stores, supplies and others - at average cost
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 73
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and goods in process, cost includes an appropriate share of overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.
(f) Non-current assets classified as held for sale
Non-current assets (or disposal groups comprising assets and liabilities) are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use which are available for immediate sale and measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets and deferred tax assets. Impairment losses on initial classification as held for sale or held for distribution and subsequent gains and losses on remeasurement are recognized in profit or loss.
Once non-current assets classified as held for sale are no longer depreciated or amortized, and any equity-accounted investee is no longer equity accounted.
(g) Biological assets
Biological assets are measured at fair value less costs to sell (the incremental cost directly attributable to the disposal of a biological asset), except for the case where the fair value cannot be measured reliably, there are measured at cost less accumulated depreciation and impairment losses. Gain or losses on changes in fair value less costs to sell are recognized in profit or loss.
Annual Report 2019 74 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
(h) Investments
Investments in associates
Investments in associates in the consolidated financial statements are accounted for using the equity method.
Investments in other debt and equity securities
Equity securities which are not marketable are stated at cost less any accumulated impairment losses.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognized in profit or loss.
If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying amount of the total holding of the investment.
(i) Investment property
Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Investment properties are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labor, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalized borrowing costs of a qualifying assets.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 75
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each property. The estimated useful lives are as follows:
Land improvements 20 years Buildings and structures 5, 20 years
Reclassification to property, plant and equipment
When the use of an investment property changes such that it is reclassified as property, plant and equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.
(j) Finance lease
The Group recognized finance leases as assets and liabilities in the consolidated statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to the periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
(k) Property, plant and equipment
Owned assets
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self- constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalized borrowing costs of a qualifying asset. Licensed software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
Annual Report 2019 76 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
When parts of an item of property, plant and equipment have different consumption patterns and useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in profit or loss.
Leased assets
Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalized at the lower of its fair value or the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and accumulated impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss.
Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, its carrying amount is recognized and reclassified as investment property.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment, including major inspections, is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
Depreciation
Depreciation is calculated based on the depreciable amount, which is the cost of property, plant and equipment, or other amount substituted for cost, less its residual value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows:
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 77
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Land improvements 5 - 33 years Buildings and structures 5 - 40 years Machinery and equipment 3 - 30 years Furniture, fixtures and office equipment 3 - 20 years Transportation and equipment 3 - 10 years
For three particular subsidiaries, Phoenix Pulp & Paper Public Company Limited, The Siam Forestry Co., Ltd. and Thai Cane Paper Public Company Limited, depreciation of property, plant and equipment has been computed by the following methods over the periods as follows:
- Phoenix Pulp & Paper Public Company Limited
Depreciation method Land improvements 5 - 30 years Straight-line Buildings and structures - Acquired prior to 1 January 2002 30 years Sinking Fund - Acquired from 1 January 2002 5 - 40 years Straight-line Machinery and equipment 15 years Sinking Fund Certain machinery and equipment 5 - 25 years Straight-line Furniture, fixtures and office equipment 3, 5 years Straight-line Transportation and equipment 5 years Straight-line Bearer plant 5 years Straight-line
- The Siam Forestry Co., Ltd.
Depreciation method Bearer plant Actual production in each month
Annual Report 2019 78 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
- Thai Cane Paper Public Company Limited
Depreciation method Land improvements 5 - 20 years Straight-line Buildings and structures 5 - 20, 40 years Straight-line Production machinery - Kanchanaburi Mill Estimated production capacity of 1.92 million tons - Prachinburi Mill Estimated production capacity of 5.25 million tons Machinery and equipment 5 - 25 years Straight-line Furniture and fixtures 5 - 10 years Straight-line Transportation and equipment 5, 10 years Straight-line
The effect of using the above different depreciation methods on the consolidated financial statements is insignificant.
Depreciation for the finance lease assets is charged as expense for each accounting period. The depreciation method for leased assets is consistent with that for depreciable assets that are owned.
No depreciation is provided on freehold land or assets under construction.
Depreciation methods, useful lives and residual values are reviewed at each reporting period and adjusted if appropriate.
(l) Goodwill and other intangible assets
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. The measurement of goodwill at initial recognition is described in note 3 (a). Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any assets. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 79
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labor, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalized borrowing costs of a qualifying asset. Other development expenditure is recognized in profit or loss as incurred.
Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses.
Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Amortization
Amortization is calculated based on the cost of the asset, or other amount substituted for cost, less its residual value.
Annual Report 2019 80 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Amortization is recognized in profit or loss on a straight-line basis and units of production over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives are as follows:
Depreciation method Software licenses and others 3 - 10 years Straight-line Technology licenses and knowhow 15 years Straight-line Customer contracts and relationship 5 years Contractual agreement
No amortization is provided on assets under development.
Amortization methods, useful lives and residual values are reviewed at each reporting period and adjusted if appropriate.
(m) Impairment
The carrying amounts of the Group’s assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognized in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 81
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Reversals of impairment
An impairment loss in respect of financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognized in profit or loss.
An impairment loss in respect of goodwill is not reversed. Impairment losses recognized in prior periods in respect of other non-financial assets are assessed at each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or accumulated amortization, if no impairment loss had been recognized.
(n) Trade and other payables
Trade and other payables are stated at cost.
(o) Contract liabilities
A contract liability is the obligation to transfer goods or services to the customer. A contract liability is recognized when the Group receives or has an unconditional right to receive non-refundable consideration from the customer before the Group recognizes the related revenue.
(p) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Annual Report 2019 82 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Defined benefit plans
The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount.
The calculation of defined benefit obligations is performed by a qualified actuary using the projected unit credit method which is based on actuarial valuation method.
Remeasurements of the net defined benefit liability, actuarial gain or loss are recognized in other comprehensive income. The Group determines the interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 83
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(q) Provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.
(r) Revenue
Revenue is recognized when a customer obtains control of the goods or services in an amount that reflects the consideration to which the Group expects to be entitled, excluding those amounts collected on behalf of third parties, value added tax or other sales taxes and is after deduction of any trade discounts and volume rebates.
Sale of goods and rendering of services
Revenue from sales of goods is recognized when a customer obtains control of the goods, generally on delivery of the goods to the customers. For contracts that permit the customers to return the goods, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Therefore, the amount of revenue recognized is adjusted for estimated returns, which are estimated based on the historical data.
Revenue for rendering of services is recognized as services are provided on the basis of stage of completion of the transaction.
For bundled packages, the Group accounts for individual products and services separately if they are distinct (i.e. if a product or service is separately identifiable from other items and a customer can benefit from it) or the multiple services are rendered in different reporting periods. The consideration received is allocated Annual Report 2019 84 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
based on their relative stand-alone selling prices which are determined based on the price list at which the Group sells the products and services in separate transactions.
Granting options to purchase additional goods or services
The consideration received are allocated based on the relative stand-alone selling price of the products and the loyalty points. The amount allocated to the loyalty points is recognized as contract liabilities and revenue is recognized when loyalty points are redeemed, the likelihood of the customer redeeming the loyalty points becomes remote or option expire. The stand-alone selling prices of the points is estimated based on discount provided to customers and the likelihood that the customers will redeem the points, and the estimate shall be reviewed at the end of the reporting period.
Interest and dividend income
Interest income is recognized in profit or loss using the effective interest method. Dividend income is recognized in profit or loss on the date the Group’s right to receive payments is established.
Royalty fee income
Royalty fee income is recognized throughout the royalty period.
(s) Expenses
Operating leases
Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognized in profit or loss as an integral part of the total lease expense, over the term of lease.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 85
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognized at an amount equal to the fair value of the underlying asset. Subsequently, the liability is reduced as payments are made and an imputed finance charge on the liability is recognized using the Group’s incremental borrowing rate.
Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration, and dividends on preference shares classified as liabilities.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.
Early retirement expense
The Group offered certain qualifiable employees the option to take early retirement from the Group. Eligible employees who accept the offer are paid a lump sum amount which is calculated based on a formula using their final month’s pay, number of years of service or the number of remaining months before normal retirement as variables. The Group records expenses on early retirement upon mutual acceptance.
(t) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognized in profit or loss except to the extent that they relate to items recognized directly in equity or in other comprehensive income.
Annual Report 2019 86 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of the reporting period.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 87
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
(u) Derivative financial instruments
Financial assets and financial liabilities carried on the statement of financial position include cash and cash equivalents, trade and other receivables and payables, long-term receivables, loans, investments, and borrowings.
The Group operates internationally and is exposed to risks from changes in foreign exchange rates. The Group uses derivative financial instruments to mitigate those risks. All gains and losses on hedge transactions are recognized in profit or loss in the same period as the exchange differences on the items covered by the hedge.
(v) Business segment reporting
Segment results that are reported to the Group’s Chief Operating Decision Maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Annual Report 2019 88 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
4 Acquisitions of business and changes in ownership interests of subsidiaries
Year 2019
(a) Acquisitions
During the year 2019, the Group acquired significant businesses as follows:
(1) PT Fajar Surya Wisesa Tbk. and its subsidiary, Indonesia
On 28 June 2019, a subsidiary company in Packaging Business acquired 55.004% of ordinary shares of PT Fajar Surya Wisesa Tbk. (“Fajar”), which is a leading Indonesian packaging paper company and which is also listed on the Indonesia Stock Exchange, for a total consideration of Rupiah 9.6 trillion equivalent to approximately Baht 20,817 million.
Obtaining control in Fajar will allow the Group to enhance its ASEAN growth platform, especially in Indonesia that provides tremendous future growth opportunity for Packaging business.
(2) Visy Packaging (Thailand) Limited, Thailand
On 30 August 2019, a subsidiary company in Packaging Business acquired 80% of ordinary shares of Visy Packaging (Thailand) Limited (“Visy Thailand”). Visy Thailand is Asia’s leading producer of thermoformed barrier food packaging which is also recyclable, serving established global brand owners that require high quality packaging products. Also, the acquired company possesses global scale with a highly-automated production facility, including proprietary technology to produce packaging that can preserve food and fruit, as well as an integrated process to minimize waste, for a total consideration of Baht 4,305 million.
Obtaining control in Visy Thailand further reinforces the Group’s continued growth and capabilities as a total packaging solution provider, especially in the Asian food and fruit segments where the world’s major plantations are based.
With respect to the above acquisitions, the Group has engaged independent appraisers to determine the fair values of net assets and liabilities acquired. As at 31 December 2019, the determination of the fair values has been completed, and the assets acquired and liabilities assumed were recognized accordingly. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 89
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The Group has continuously determined its review of fair values of the business acquired within one year from the acquisition date, taking into accounts additional information, facts as well as circumstances that existed at the acquisition date. Consequently, the adjustments on accounting transaction of such acquisition will be made.
Assets acquired and liabilities assumed at the acquisition date were as follows:
Note Fair Value Visy Fajar Thailand Total (in million Baht) Cash and cash equivalents 295 23 318 Trade and other current receivables 3,932 263 4,195 Inventories 2,594 235 2,829 Investment property 11 - 44 44 Property, plant and equipment 12 22,550 1,406 23,956 Other intangible assets 14 3 528 531 Deferred tax assets 15 38 - 38 Non-current assets 745 19 764 Interest-bearing borrowings 16 (9,421) (75) (9,496) Trade and other current payables (3,167) (154) (3,321) Deferred tax liabilities 15 (2,523) (163) (2,686) Non-current liabilities (586) (10) (596) Net identifiable assets and liabilities 14,460 2,116 16,576 Less non-controlling interests (6,506) (423) (6,929) Recognized value of net assets acquired 7,954 1,693 9,647 Goodwill 13 12,863 2,612 15,475 Total consideration transferred 20,817 4,305 25,122 Cash acquired (318) Net cash outflows 24,804 Less cash in escrow account (922) Net cash outflows in 2019 23,882 Annual Report 2019 90 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Cash in escrow account amounting to Baht 922 million are presented net of accrued investment and will be released when certain conditions are met within March 2020.
The assets, liabilities and operating results since acquisition date of those subsidiaries have been included in the Group’s consolidated financial statements for the year ended 31 December 2019. The subsidiaries contributed revenue from sales of Baht 9,044 million and profit for the period of Baht 637 million to the Group’s operating results. If the acquisition had occurred on 1 January 2019, management estimates that consolidated revenue from sales would have been Baht 99,831 million and consolidated profit for the period would have been Baht 6,275 million.
The Group incurred acquisition costs totaling Baht 43 million which have been included in administrative expenses in the consolidated income statement.
(b) Change in ownership interests in subsidiaries
• In the second quarter of 2019, the Group has restructured its stake in rigid packaging business by having Toppan Printing Company Limited, a Japanese packaging company, join in SCGP-T Plastics Company Limited (“SCGP-T”), a holding company for the rigid packaging business. With this portfolio adjustment, a transaction valued of Baht 194 million, the Group’s investment in SCGP-T has decreased from 100% to 51%. The Group recognised an increase in non-controlling interests of Baht 200 million, SCGP-T has remained a consolidated subsidiary of the Group.
• During the year 2019, the Group increased its interest in PT Indocorr Packaging Cikarang (“Indocorr”) from 80% to 100% and its interest in PT Fajar Surya Wisesa Tbk. (“Fajar”) from 55.004% to 55.235%.
The following summarizes the effect of the change in the Group’s ownership interests:
(in million Baht) Carrying amount of non-controlling interests acquired 113 Less Consideration paid to non-controlling interests (192) Decrease in equity attributable to owners of the Group from additional investments in subsidiaries (79) 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 91
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Year 2018
(a) Acquisitions
During the year 2018, the Group acquired the significant business as follows:
Interpress Printers Sendirian Berhad, Malaysia
On 19 January 2018, a subsidiary company in Packaging business acquired 68% of shares in Interpress Printers Sendirian Berhad (“IPSB”), which is a sector-leading food-grade paper packaging company, highly accredited and vetted by the global leading fast food restaurant chain, located in Malaysia, for a total consideration of Ringgit 63 million or equivalent to approximately Baht 511 million.
Obtaining control in IPSB emphasizes the Group’s commitment in becoming a total packaging solutions provider in ASEAN countries and will further enhance the overall portfolio while exhibiting its potential to serve the burgeoning region’s fast food consumption, evolving lifestyle and preferences of consumers.
According to the above acquisitions, the Group has engaged an independent appraiser to determine the fair values of net assets and liabilities acquired. As at 31 December 2018, the determination of the fair values has been completed, and the carrying amount of the assets acquired and liabilities assumed were recorded accordingly.
The Group has continuously determined its review of fair values of the business acquired within one year from the acquisition date, taking into accounts additional information, facts as well as circumstances that existed at the acquisition date. Consequently, the adjustments on accounting transaction of such acquisition will be made.
Annual Report 2019 92 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Assets acquired and liabilities assumed at the acquisition date were as follows:
Fair Value IPSB (in million Baht) Cash and cash equivalents 2 Trade and other current receivables 161 Inventories 57 Property, plant and equipment 347 Interest-bearing debts (244) Trade and other current payables (28) Other non-current liabilities (13) Net identifiable assets and liabilities 282 Less non-controlling interests (89) Recognized value of net assets acquired 193 Goodwill 318 Total consideration transferred 511 Cash acquired (2) Net cash outflows 509 Less accrued investments (88) Net cash outflows in 2018 421
The Group has agreed to pay a total consideration of Baht 88 million to the former shareholder. The remaining balance of Baht 39 million will be released when certain conditions are achieved within May 2021.
The assets, liabilities and operating results since acquisition date of those subsidiaries have been included in the Group’s consolidated financial statements for the year ended 31 December 2018. The subsidiaries contributed revenue from sales of Baht 502 million and loss for the period of Baht 4 million to the Group’s operating results. If the acquisition had occurred on 1 January 2018, management estimates that consolidated revenue from sales would have been Baht 87,304 million and consolidated profit for the period would have been Baht 6,069 million.
The Group incurred acquisition costs totalling Baht 9 million which have been included in administrative expenses in the consolidated income statement. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 93
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
(b) Change in ownership interests in a subsidiaries
During the year 2018, the Group had purchased additional shares in Dyna Packs Co., Ltd. and Orient Containers Co., Ltd. increasing its stake from 75% to 100%, in PT Primacorr Mandiri increasing its stake from 90% to 97%, in PT Indoris Printingdo increasing its stake from 90% to 99.95% and in Thai Cane Paper Public Company Limited increasing its stake from 94.54% to 98.20%.
The following summarizes the effect of the change in the Group’s ownership interests:
(in million Baht) Carrying amount of non-controlling interests acquired 401 Less consideration paid to non-controlling interests (639) Decrease in equity attributable to owners of the Group from additional investments in subsidiaries (238)
5 Related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa.
Relationships with related parties were as follows:
Name of entities Country of Nature of relationships incorporation /nationality The Siam Cement Public Company Limited Thailand Ultimate parent company SCG International Corporation Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited (Formerly SCG Trading Corporation Co., Ltd.) SCG International Vietnam Co., Ltd. Vietnam A subsidiary of The Siam Cement Public Company Limited (Formerly SCG Trading Vietnam Co., Ltd.) PT SCG International Indonesia Indonesia A subsidiary of The Siam Cement Public Company Limited (Formerly PT SCG Trading Indonesia) The Siam Fibre-Cement Group Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Ceramics Public Company Limited Thailand A subsidiary of The Siam Cement Public Company Limited Annual Report 2019 94 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Name of entities Country of Nature of relationships incorporation /nationality Nawa Plastics Industries Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Sosuco Ceramic Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Siam Sanitary Ware Industry Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Prime Group Joint Stock Company Vietnam A subsidiary of The Siam Cement Public Company Limited SCG Logistics Management Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited The Siam Fibre-Cement Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Cement-Building Materials Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Marketing Philippines, Inc. Philippines A subsidiary of The Siam Cement Public Company Limited SCG Chemicals Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited The Concrete Products and Aggregate Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Cement Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited PT SCG Indonesia Indonesia A subsidiary of The Siam Cement Public Company Limited SCG International (Philippines) Corporation Co., Ltd. Philippines A subsidiary of The Siam Cement Public Company Limited (Formerly SCG Trading Philippines Inc.) SCI Eco Services Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Performance Chemicals Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG International USA Inc. USA A subsidiary of The Siam Cement Public Company Limited (Formerly SCG Trading USA Inc.) Rayong Olefins Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Vietnam Co., Ltd. Vietnam A subsidiary of The Siam Cement Public Company Limited Nawa Intertech Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Siam Toppan Packaging Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited Siam Nippon Industrial Paper Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited Saha Green Forest Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited P&S Holding Corporation Philippines An associate of SCG Packaging Public Company Limited The Siam Gypsum Industry (Saraburi) Company Limited Thailand An associate of The Siam Cement Public Company Limited The Siam Gypsum Industry (Songkhla) Company Limited Thailand An associate of The Siam Cement Public Company Limited Thai MFC Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited Siam Polyethylene Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 95
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Name of entities Country of Nature of relationships incorporation /nationality Siam Synthetic Latex Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited IT One Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited Nippon Paper Industries Co., Ltd. Japan Common directors with Phoenix Pulp & Paper Public Company Limited Rengo Co., Ltd. Japan Common directors with Thai Containers Group Co., Ltd. Asia Cement Public Company Limited Thailand Common directors with The Siam Cement Public Company Limited
On 31 May 2018, SCG Packaging Public Company Limited (a subsidiary of The Siam Cement Public Company Limited) sold 19,567,240 ordinary shares of Thai British Security Printing Public Company Limited (17.79% of total issued and paid-up shares capital of the Company) to Miss Suthida Mongkolsuthi.
Annual Report 2019 96 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The pricing policies for particular types of transactions are explained further below:
Transactions Pricing policies Revenue from sales Market price Purchases Market price Intellectual properties fees Percentage of revenue from sales Expenses Market price and contract rate Dividends income Upon declaration Interest expense Contract rate
Significant transactions for the years ended 31 December with related parties were as follows:
2019 2018 (in thousand Baht) Parent Revenue from sales 16,538 15,505 Intellectual properties fees 271,616 299,044 Interest expense 1,255,622 777,839 Expenses 882,335 922,360 Associates Revenue from sales 669,084 979,015 Dividends income 11,832 15,872 Purchases 294,741 356,275 Others Revenue from sales 3,508,031 3,499,653 Purchases 7,264,188 7,368,578 Expenses 2,893,051 2,804,819 Dividend income - 10,762
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 97
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Balances as at 31 December with related parties were as follows:
Trade receivables 2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 1,712 1,849 Associates Siam Toppan Packaging Co., Ltd. 30,572 39,313 Siam Nippon Industrial Paper Co., Ltd. 15,042 40,323 Saha Green Forest Co., Ltd. 867 1,801 Others SCG International Corporation Co., Ltd. 82,065 85,077 SCG International Vietnam Co., Ltd. 73,252 22,975 The Siam Gypsum Industry (Saraburi) Co., Ltd. 41,786 97,469 PT SCG International Indonesia 31,126 49,795 Siam Fibre Cement Group Co., Ltd. 17,567 1,520 The Siam Gypsum Industry (Songkhla) Co., Ltd. 10,681 15,753 Asia Cement Public Company Limited 10,434 23,186 SCG Ceramics Public Company Limited 8,973 6,222 Nawaplastic Industries Co., Ltd. 8,550 5,192 Sosuco Ceramics Co., Ltd. 5,354 5,104 Thai MFC Co., Ltd. 4,967 13,269 Siam Sanitary Ware Industry Co., Ltd. 4,374 5,876 Siam Polyethylene Co., Ltd. 4,204 4,173 Prime Group Joint Stock Company 3,633 5,268 SCG Logistics Management Co., Ltd. 509 10,205 The Siam Fibre-Cement Co., Ltd 21 24,389 Others 23,448 25,894 Total 379,137 484,653
Annual Report 2019 98 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Other current receivables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 59,658 51,618 Associates Siam Nippon Industrial Paper Co., Ltd. 40,662 28,672 P&S Holdings Corporation 11,305 1,608 Saha Green Forest Co., Ltd. 419 4 Siam Toppan Packaging Co., Ltd. 129 128 Others SCG Cement-Building Material Co., Ltd. 2,341 4,047 SCG Marketing Philippines, Inc. 2,275 768 SCG Chemicals Co., Ltd. 1,638 1,339 SCG International Corporation Co., Ltd. 1,469 1,205 Nawaplastic Industries Co., Ltd. 1,188 521 The Concrete Products and Aggregate Co., Ltd. 682 1,565 SCG Cement Co., Ltd. 401 2,433 PT SCG International Indonesia 257 1,373 Nippon Paper Industries Co., Ltd. - 4,230 Others 6,803 9,112 Total 129,227 108,623
Short-term loans
2019 2018 (in thousand Baht) Others PT SCG Indonesia 4,601 3,502 SCG Marketing Philippines, Inc. - 123,650 Total 4,601 127,152 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 99
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Long-term loan
2019 2018 (in thousand Baht) Other Mariwasa-Siam Ceramic, Inc. - 92,738
Movements during the years on loans to related parties were as follows:
2019 2018 (in thousand Baht) Short-term At 1 January 127,152 811 Increase 17,539 128,867 Decrease (140,090) (2,526) At 31 December 4,601 127,152
Long-term At 1 January 92,738 98,333 Decrease (92,738) (5,595) At 31 December - 92,738
Advance payment from software licence fee, long-term receivable and deposit shown under other non- current receivables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 256,585 291,041 Associate P&S Holdings Corporation 111,428 115,860 Total 368,013 406,901
Annual Report 2019 100 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Trade payables
2019 2018 (in thousand Baht) Associates Siam Nippon Industrial Paper Co., Ltd. 17,382 17,111 Siam Toppan Packaging Co., Ltd. 6,256 6,587 Others SCG International Corporation Co., Ltd. 386,822 596,313 SCG Logistics Management Co., Ltd. 237,412 230,901 SCG International Vietnam Co., Ltd. 180,987 143,002 SCG International (Philippines) Corporation Co., Ltd. 49,499 53,049 SCI Eco Services Co., Ltd. 25,150 32,334 Rengo Co., Ltd. 22,575 74,560 Siam Synthetic Latex Co., Ltd. 18,626 25,222 SCG Performance Chemicals Co., Ltd. 18,022 24,735 PT SCG International Indonesia 12,543 69 SCG International USA Inc. 9,120 74,178 IT One Co., Ltd. 8,211 8,802 Rayong Olefins Co., Ltd. 5,829 22,467 Others 22,433 26,994 Total 1,020,867 1,336,324 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 101
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Other current payables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 127,888 205,254 Associates Siam Toppan Packaging Co., Ltd. 4,340 1,805 P&S Holdings Corporation 1,064 1,058 Siam Nippon Industrial Paper Co., Ltd. 67 3,299 Others Nippon Paper Industries Co., Ltd. 38,998 40,499 SCG Ceramics Public Company Limited 15,020 - Siam Sanitary Ware Industry Co., Ltd. 7,590 1,380 SCG Vietnam Co., Ltd. 3,312 - Nawa Intertech Co., Ltd. 2,517 120 SCG International Corporation Co., Ltd. 2,149 148 SCI Eco Services Co., Ltd. 2,140 88 Others 6,878 3,473 Total 211,963 257,124
Short-term borrowings
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 33,756,240 23,309,752 Others PT SCG Indonesia 70,956 105,948 Total 33,827,196 23,415,700
Annual Report 2019 102 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Movements during the years on short-term borrowings from related parties were as follows:
2019 2018 (in thousand Baht) At 1 January 23,415,700 15,496,563 Increase 36,476,305 27,174,575 Decrease (26,064,809) (19,255,438) At 31 December 33,827,196 23,415,700
The Board of Directors and key management compensation 2019 2018 (in thousand Baht) For the years ended 31 December Short-term employee benefits 94,414 121,160 Post-employment benefits 18,354 10,584 Total 112,768 131,744
The Board of Directors and key management compensation comprises the remuneration paid to the directors of SCG Packaging Public Company Limited under the articles of the Company and the remuneration paid to the management as staff expenses in terms of salary, bonus, variable pay, others and contribution to defined contribution plans.
6 Cash and cash equivalents
2019 2018 (in thousand Baht) Cash on hand 61,574 133,004 Cash at banks - current accounts 1,660,516 529,971 Cash at banks - saving accounts 1,128,059 745,684 Highly liquid short-term investment 1,543,696 686,690 Total 4,393,845 2,095,349
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 103
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
7 Trade and other current receivables
Note 2019 2018 (in thousand Baht) Trade receivables Related parties 5 379,137 484,653 Other companies 13,406,949 12,203,668 Less allowance for doubtful accounts (156,835) (152,948) Net 13,250,114 12,050,720 13,629,251 12,535,373 Other current receivables Related parties 5 129,227 108,623 Other companies 1,439,542 1,060,107 1,568,769 1,168,730 Total 15,198,020 13,704,103
For the year ended 31 December Bad and doubtful debts expenses 32,264 42,556 Bad debts recovery (3,772) (3,269)
Annual Report 2019 104 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
2019 2018 (in thousand Baht) Trade receivables Related parties Within credit terms 363,840 460,006 Overdue: Less than 3 months 15,287 24,647 3 - 6 months 10 - Total 379,137 484,653
Other companies Within credit terms 11,774,041 11,186,863 Overdue: Less than 3 months 1,444,297 823,613 3 - 6 months 37,913 38,279 Over 6 - 12 months 6,275 6,229 Over 12 months 144,423 148,684 13,406,949 12,203,668 Less allowance for doubtful accounts (156,835) (152,948) Net 13,250,114 12,050,720 Total 13,629,251 12,535,373
The normal credit term granted by the Group is 30 - 90 days. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 105
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
8 Inventories
2019 2018 (in thousand Baht) Finished goods 4,128,493 3,975,384 Goods in process 966,692 749,897 Raw materials 4,031,065 3,834,292 Spare parts, stores, supplies and others 3,605,673 2,940,161 Goods in transit 977,173 1,759,412 Total 13,709,096 13,259,146 Less allowance for decline in value (432,960) (364,890) Net 13,276,136 12,894,256
Cost of inventories recognized as an expense in cost of sales: 71,543,307 69,089,513 Write-down to net realizable value 178,733 48,532 Reversal of write-down (71,872) (64,795)
Changes in inventories of finished goods and goods in process (369,904) 114,345 Raw materials and supplies used 35,238,582 30,161,119
9 Investments in associates
Movements for the years ended 31 December in investments in associates accounted for using the equity method were as follows:
2019 2018 (in thousand Baht) At 1 January 729,740 760,734 Share of net profit (loss) of investments - equity method 52,728 (14,603) Share of other comprehensive income of investment - equity method 118 (519) Dividend income (11,832) (15,872) At 31 December 770,754 729,740 106
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Investments in associates as at 31 December and dividend income from these investments for the years then ended at the same date, were as follows:
Total direct/ indirect holding Paid-up capital Cost method Equity method Dividend income 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 (%) (in thousand Baht) SCG Packaging PublicCompany Limited Annual Report 2019 Associates Siam Toppan Packaging Co., Ltd. 49 49 500,000 500,000 245,000 245,000 430,231 426,446 9,457 11,122 Siam Nippon Industrial Paper Co., Ltd. 31.31 31.31 1,100,000 1,100,000 495,000 495,000 268,307 239,402 - -
Saha Green Forest Co., Ltd. 17.40 17.40 190,000 190,000 47,500 47,500 72,216 63,892 2,375 4,750 P&S Holding Corporation 40 40 262,588 262,588 105,121 105,121 - - - - Total 2,052,588 2,052,588 892,621 892,621 770,754 729,740 11,832 15,872
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 107
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Immaterial associates
The following is summarized financial information for the Group’s interest in immaterial associates based on the amounts reported in the Group’s consolidated financial statements:
2019 2018 (in thousand Baht) Carrying amount of interests in immaterial associates 770,754 729,740 Group’s share of: - Profit (loss) for the year from continuing operations 52,728 (14,603) - Other comprehensive income for the year 118 (519) - Total comprehensive income for the year 52,846 (15,122)
10 Non-controlling interests
The following table summarizes the information relating to each of the Group’s subsidiaries that has a material non-controlling interest, before any intra-group eliminations:
Phoenix Pulp & Thai PT Fajar Paper Public Containers Surya Wisesa Company Limited Group Co., Ltd. Tbk.* (in thousand Baht) Non-controlling interests at 31 December 2019 Non-controlling interest percentage 30.42% 30.00% 44.76% Current assets 6,854,079 4,675,657 6,007,852 Non-current assets 19,153,282 11,289,766 14,703,278 Current liabilities (3,548,932) (5,661,055) (8,153,703) Non-current liabilities (1,093,064) (630,549) (5,014,272) Net assets 21,365,365 9,673,819 7,543,155 Carrying amount of non-controlling interest 6,499,344 2,902,146 3,376,316
Annual Report 2019 108 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Phoenix Pulp & Thai PT Fajar Paper Public Containers Surya Wisesa Company Limited Group Co., Ltd. Tbk.* (in thousand Baht) For the year ended 31 December 2019 Revenue 6,992,032 16,864,353 8,570,868 Profit (loss) for the year (249,762) 548,191 553,552 Other comprehensive income for the year (14,197) (47,807) (12,589) Total comprehensive income for the year (263,959) 500,384 540,963
For the year ended 31 December 2019 Profit (loss) for the year: - Attributable to owners of the parent (173,784) 383,734 305,324 - Attributable to non-controlling interest (75,978) 164,457 248,228 Other comprehensive income for the year: - Attributable to owners of the parent (9,878) (33,465) (6,936) - Attributable to non-controlling interest (4,319) (14,342) (5,653) (263,959) 500,384 540,963
Cash flows from operating activities 445,662 1,494,862 (2,955,508) Cash flows from investing activities 439,060 (1,213,413) (903,683) Cash flows from financing activities (795,387) (292,976) 3,786,729 Net increase (decrease) in cash and cash equivalents 89,335 (11,527) (72,462)
Dividends to non-controlling interest 66,630 41,520 -
* Income statement for the six-month period during June - December 2019.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 109
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Phoenix Pulp & Paper Public Thai Containers Company Limited Group Co., Ltd. (in thousand Baht) Non-controlling interests at 31 December 2018 Non-controlling interest percentage 30.42% 30.00% Current assets 7,324,709 4,565,757 Non-current assets 19,600,435 10,754,705 Current liabilities (4,017,396) (5,603,232) Non-current liabilities (1,059,278) (405,395) Net assets 21,848,470 9,311,835 Carrying amount of non-controlling interest 6,646,305 2,793,551
For the year ended 31 December 2018 Revenue 8,031,725 16,374,743 Profit for the year 614,454 918,575 Other comprehensive income for the year (47,858) (58,634) Total comprehensive income for the year 566,596 859,941
For the year ended 31 December 2018 Profit for the year: - Attributable to owners of the parent 427,537 643,003 - Attributable to non-controlling interest 186,917 275,572 Other comprehensive income for the year: - Attributable to owners of the parent (33,300) (41,044) - Attributable to non-controlling interest (14,558) (17,590) 566,596 859,941
Cash flows from operating activities 1,071,094 898,191 Cash flows from investing activities 191,364 (1,020,446) Cash flows from financing activities (1,191,954) 126,355 Net increase in cash and cash equivalents 70,504 4,100 Dividends to non-controlling interest 55,392 124,560 Annual Report 2019 110 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
11 Investment property
Land and land Note improvements (in thousand Baht) Cost At 1 January 2018 129,670 Acquisitions through business combinations 4 64,411 Transfer from property, plant and equipment 12 32,352 Transfer to other current assets (12,753) At 31 December 2018 213,680 Acquisitions through business combinations 43,681 Transfer to property, plant and equipment 12 (38,305) At 31 December 2019 219,056
Accumulated depreciation At 1 January 2018 23,389 Depreciation charge for the year 4,716 At 31 December 2018 28,105 Depreciation charge for the year 3,551 At 31 December 2019 31,656
Carrying amount As at 31 December 2018 185,575 As at 31 December 2019 187,400
Investment property was revalued as at 31 December 2019 at open market values on an existing use basis. The fair value was Baht 506 million (2018: Baht 480 million).
The fair value measurement for investment property has been categorized as a Level 3 fair value based on the inputs to the valuation technique used, which are discounted cash flows and market approach.
Notes to the financial statements 2019 Consolidated Financial Statementsof SCG Packaging Public Company Limited and its Subsidiaries SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
12 Property, plant and equipment Furniture, Land and Machinery fixtures and Transportation land Buildings and and office and Construction improvements structures equipment equipment equipment in progress Bearer plant Total (in thousand Baht) Cost At 1 January 2018 4,129,832 17,127,820 109,187,582 1,770,322 445,930 6,206,727 11,213 138,879,426 Acquisition through business combinations - 16,311 501,573 12,588 2,508 - - 532,980 Additions 164,279 246,060 1,969,391 65,749 417 4,234,194 7,665 6,687,755 Disposals/written off (2,044) (15,863) (1,662,926) (105,396) (29,233) (3,056) - (1,818,518) Transfer to investment property (32,352) ------(32,352) Transfer to other current assets - (224,840) (2,866) (3,904) - - - (231,610) Transfers in (out) 89,160 624,173 4,663,673 61,578 11,983 (5,481,951) 4,509 (26,875) Currency translation differences (35,315) (58,468) (360,440) (6,351) (1,211) (546) - (462,331) At 31 December 2018 4,313,560 17,715,193 114,295,987 1,794,586 430,394 4,955,368 23,387 143,528,475 Acquisition through business combinations 3,520,309 1,773,589 24,566,269 158,872 181,017 1,494,695 - 31,694,751 Additions 31,234 269,797 2,062,393 70,626 11,435 4,745,672 281 7,191,438 Disposals/written off (1,821) (23,238) (847,070) (20,370) (33,219) (4,922) - (930,640) Transfer from investment property 38,305 ------38,305 Transfer to other current assets - - (6,395) - - - - (6,395) Transfers in (out) 64,035 497,277 2,996,050 50,396 3,989 (3,369,468) 18,016 260,295 Currency translation differences (40,439) (155,720) (981,281) (6,097) (4,820) (62,617) - (1,250,974) At 31 December 2019 7,925,183 20,076,898 142,085,953 2,048,013 588,796 7,758,728 41,684 180,525,255
111 112 Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Furniture, Land and Machinery fixtures and Transportation land Buildings and and office and Construction improvements structures equipment equipment equipment in progress Bearer plant Total (in thousand Baht) Accumulated depreciation and accumulated impairment losses At 1 January 2018 1,081,603 9,002,688 69,956,357 1,388,192 301,617 - 6,127 81,736,584 Acquisition through business combinations - 13,913 161,034 11,133 485 - - 186,565 SCG Packaging PublicCompany Limited Annual Report 2019 Depreciation charge for the year 102,891 527,834 4,487,521 141,438 41,355 - 3,394 5,304,433 Impairment losses - 9,688 14,438 - - - - 24,126 Disposals/written off (193) (13,988) (1,504,690) (103,272) (28,838) - - (1,650,981) Transfer to other current assets - (145,764) (2,718) (3,569) - - - (152,051) Currency translation differences (2,980) (32,789) (251,185) (11,080) (814) - - (298,848) At 31 December 2018 1,181,321 9,361,582 72,860,757 1,422,842 313,805 - 9,521 85,149,828 Acquisition through business combinations - 670,534 6,836,129 94,471 137,628 - - 7,738,762 Depreciation charge for the year 99,122 620,844 4,958,239 147,325 48,211 - 3,457 5,877,198 Impairment losses - - 34,033 - - 2,590 - 36,623 Disposals/written off (121) (21,229) (782,226) (19,766) (29,593) - - (852,935) Transfer to other current assets - - (5,670) - - - - (5,670) Transfers in (out) (13,228) 36,575 267,745 7,038 (797) - 327 297,660 Currency translation differences (2,025) (59,783) (509,758) (4,492) (3,720) - - (579,778) At 31 December 2019 1,265,069 10,608,523 83,659,249 1,647,418 465,534 2,590 13,305 97,661,688
2019 Consolidated Financial Statementsof SCG Packaging Public Company Limited and its Subsidiaries Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Furniture, Land and Machinery fixtures and Transportation land Buildings and and office and Construction improvements structures equipment equipment equipment in progress Bearer plant Total (in thousand Baht)
Carrying amount At 31 December 2018 3,132,239 8,353,611 41,435,230* 371,744 116,589 4,955,368 13,866 58,378,647 At 31 December 2019 6,660,114 9,468,375 58,426,704* 400,595 123,262 7,756,138 28,379 82,863,567
* These include machinery acquired under financial lease with carrying amount Baht 1,644 million at 31 December 2019 (2018: Baht 50 million).
In 2019, the Group capitalized borrowing costs relating to the acquisition of the property, plant and equipment were capitalized as part of the cost of construction in progress, amounting to Baht 81 million (2018: Baht 25 million), rates of interest capitalized at 1.95% - 5.45% per annum (2018: 1.90% - 5.65% per annum).
During 2019, the Group had income from sales of some assets in Singapore from a business which was terminated in June 2018. The group recognized a gain on sale of fixed assets amounting to Baht 260 million in the consolidated income statement for the year ended 31 December 2019.
For the purpose of impairment testing of property, plant and equipment of the Group where indicators occurred, the recoverable amount was based on its value in use, determined by discounting the future cash flows which included estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on the long-term compound annual EBITDA growth rate estimated by management. Discount rate was determined by using weighted average cost of capital of the Group. 113 Annual Report 2019 114 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
13 Goodwill
Note 2019 2018 (in thousand Baht) At 1 January 2,289,836 1,994,878 Acquisitions through business combinations 4 15,475,019 318,504 Currency translation differences (152,589) (23,546) At 31 December 17,612,266 2,289,836
For the purpose of impairment testing of goodwill of the Group, the recoverable amount was based on its value in use, determined by discounting the future cash flows which included estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on the long-term compound annual EBITDA growth rate estimated by management. Discount rate was determined by using weighted average cost of capital of the Group.
14 Other intangible assets
Technology Customer Software licenses and contracts and licenses knowhow relationship Total (in thousand Baht) Cost At 1 January 2018 936,393 - - 936,393 Additions 77,220 - - 77,220 Disposals/written off (4,371) - - (4,371) Transfers in 26,875 - - 26,875 Currency translation differences (331) - - (331) At 31 December 2018 1,035,786 - - 1,035,786 Acquisition through business combinations 67,948 374,341 153,597 595,886 Additions 75,313 - - 75,313 Disposals/written off (9,610) - - (9,610) Transfers in 10,108 - - 10,108 Currency translation differences (2,928) - - (2,928) At 31 December 2019 1,176,617 374,341 153,597 1,704,555
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 115
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Technology Customer Software licenses and contracts and licenses knowhow relationship Total (in thousand Baht) Accumulated amortization At 1 January 2018 659,983 - - 659,983 Amortization charge for the year 72,544 - - 72,544 Disposals/written off (4,295) - - (4,295) Currency translation differences (162) - - (162) At 31 December 2018 728,070 - - 728,070 Acquisition through business combinations 64,403 - - 64,403 Amortization charge for the year 77,624 24,081 8,319 110,024 Disposals/written off (9,598) - - (9,598) Currency translation differences (2,376) - - (2,376) At 31 December 2019 858,123 24,081 8,319 890,523
Carrying amount At 31 December 2018 307,716 - - 307,716 At 31 December 2019 318,494 350,260 145,278 814,032
15 Deferred tax assets (deferred tax liabilities)
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, and are included in the consolidated statements of financial position as follows:
2019 2018 (in thousand Baht) Deferred tax assets 744,955 378,649 Deferred tax liabilities (2,873,568) (216,694) Net (2,128,613) 161,955
Annual Report 2019 116 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Movements in total deferred tax assets and liabilities during the year were as follows:
Credited (charged) to other Increase At 1 profit comprehensive through Currency At 31 January or loss income business translation December 2018 (Note 27) combinations differences 2018 (in thousand Baht) Deferred tax assets Loss carry forward 83,863 (56,067) - - - 27,796 Trade receivables 28,748 (8,144) - - - 20,604 Inventories 54,453 34,927 - - - 89,380 Property, plant and equipment 39,137 (12,310) - - (134) 26,693 Provisions for employee benefits 309,125 18,824 65,805 - (1,708) 392,046 Others 859 (5) - - (2) 852 Total 516,185 (22,775) 65,805 - (1,844) 557,371
Deferred tax liabilities Property, plant and equipment 339,317 35,285 - 13,435 (173) 387,864 Others 41,891 (34,339) - - - 7,552 Total 381,208 946 - 13,435 (173) 395,416
Net 134,977 (23,721) 65,805 (13,435) (1,671) 161,955
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 117
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Credited (charged) to other Increase At 1 profit comprehensive through Currency At 31 January or loss income business translation December 2019 (Note 27) combinations differences 2019 (in thousand Baht) Deferred tax assets Loss carry forward 27,796 221,119 - 38,618 (335) 287,198 Trade receivables 20,604 6,454 - - (1) 27,057 Inventories 89,380 15,255 - 6,241 (43) 110,833 Property, plant and equipment 26,693 (4,686) - - 116 22,123 Provisions for employee benefits 392,046 137,085 38,139 144,303 (2,237) 709,336 Others 852 2,681 - - (71) 3,462 Total 557,371 377,908 38,139 189,162 (2,571) 1,160,009
Deferred tax liabilities Property, plant and equipment 387,864 55,489 - 2,727,285 1,603 3,172,241 Other intangible assets - (32) - 106,011 (3) 105,976 Others 7,552 (741) - 3,599 (5) 10,405 Total 395,416 54,716 - 2,836,895 1,595 3,288,622
Net 161,955 323,192 38,139 (2,647,733) (4,166) (2,128,613)
Annual Report 2019 118 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The deductible temporary differences and unused tax losses that the Group have not been recognized as deferred tax assets (liabilities) are as the following items:
2019 2018 (in thousand Baht) Temporary differences - Trade receivables 46,848 57,417 - Inventories 622 5,522 - Provisions for employee benefits 92,159 96,368 - Property, plants and equipment 3,328 22,624 - Others 67,957 29,058 Unused tax losses 449,646 140,677 Total 660,560 351,666
The deductible temporary differences do not expire under current tax legislation and the tax losses which would be expired within 2024. The Group has not recognized these items in deferred tax assets.
As at 31 December 2019 and 2018, no deferred tax liability has been recognized in respect of temporary differences associated with investments in subsidiaries, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such difference will not reverse in the foreseeable future.
16 Changes in liabilities arising from financing activities
Bank overdrafts and Finance short-term Long-term lease Note borrowings borrowings liabilities Total (in thousand Baht) Balance at 1 January 2019 27,728,164 739,125 29,150 28,496,439 Changes from financing cash flows 10,451,382 11,559,751 (65,136) 21,945,997 Changes arising from obtaining subsidiaries 4 2,923,100 6,412,714 160,282 9,496,096 The effect of changes in foreign exchange rates (143,941) (209,530) (1,158) (354,629) Balance at 31 December 2019 40,958,705 18,502,060 123,138 59,583,903 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 119
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
17 Bank overdrafts and borrowings from financial institutions
2019 2018 (in thousand Baht) Current Bank overdrafts and short-term borrowings from financial institutions Unsecured 7,131,509 4,312,464 Total 7,131,509 4,312,464
Current portion of long-term borrowings from financial institution Secured 2,037,784 - Unsecured 145,851 151,996 Current portion of long-term borrowings 2,183,635 151,996 9,315,144 4,464,460
Non-current Long-term borrowings from financial institutions Secured 3,405,857 - Unsecured 12,912,568 587,129 16,318,425 587,129
Total 25,633,569 5,051,589
The currency denomination of interest-bearing debts, as at 31 December 2019 were as follows:
2019 2018 (in thousand Baht) Thai Baht 14,462,270 3,171,799 US Dollars 7,677,933 514,189 Indonesian Rupiah 2,051,454 - Vietnamese Dong 899,652 1,036,250 Malaysian Ringgit 426,313 329,351 Philippines Peso 115,947 - Total 25,633,569 5,051,589 Annual Report 2019 120 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities, as at 31 December 2019 were as follows:
2019 2018 (in thousand Baht) Within one year 9,315,143 4,464,460 After one year but within five years 15,597,076 527,656 After five years 721,350 59,473 Total 25,633,569 5,051,589
As at 31 December 2019, bank overdrafts and short-term borrowings from financial institutions of the Group has an average interest rate from 1.28% to 9.75% per annum (31 December 2018: 1.58% to 5.70% per annum).
As at 31 December 2019, long-term borrowings from financial institutions of the Group has an average interest rate from 2.40% to 12.11% per annum (31 December 2018: 3.50% to 6.97% per annum).
The collateral of the secured interest-bearing liabilities from the business acquisition in Indonesia as at 31 December 2019 consists of property, plant and equipment with a carrying value of Baht 9,633 million. The Group has to comply with certain covenants. As at 31 December 2019, the Group is in compliance with all the terms and conditions of the loans agreement. The Group has already signed facility agreement for unsecured long-term borrowings from financial institutions with principal amount totaling US Dollars 180 million and Indonesian Rupiah 700,000 million to refinance existing loans.
As at 31 December 2019, the Group had unutilized credit facilities totaling Baht 15,125 million.
In January 2020, the Company has drawn-down under loan agreements for Baht 14,500 million.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 121
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
18 Trade and other current payables
Note 2019 2018 (in thousand Baht) Trade payables Related parties 5 1,020,867 1,336,324 Other parties 6,436,244 5,484,711 7,457,111 6,821,035 Other current payables Related parties 5 211,963 257,124 Other parties 2,389,490 1,495,507 2,601,453 1,752,631 Total 10,058,564 8,573,666
19 Finance lease liabilities
Subsidiaries entered into leased machinery and equipment agreements. Lease terms are for a period of 3 - 5 years. Finance lease liabilities as at 31 December are as follows:
Principal Interest Payments (in thousand Baht) Year 2019 Within one year 87,801 8,998 96,799 After one year but within five years 35,337 1,663 37,000 Total 123,138 10,661 133,799
Year 2018 Within one year 13,823 1,050 14,873 After one year but within five years 15,327 666 15,993 Total 29,150 1,716 30,866
Annual Report 2019 122 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
20 Non-current provisions for employee benefits
The Group operates defined benefit plans based on the requirement of the Thai Labor Protection Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on pensionable remuneration and length of service.
The defined benefit plans expose the Group to actuarial risks, such as longevity risk, current risk, interest rate risk and market (investment) risk.
Non-current provisions for employee benefits in consolidated statement of financial position as at 31 December
2019 2018 (in thousand Baht) Post-employment benefits Legal severance payments plan 3,248,040 1,800,293 Pension 46,027 41,682 Other long-term employee benefits 92,437 86,224 Total non-current provisions for defined benefit plans 3,386,504 1,928,199 Other employee benefits 10,552 - Total 3,397,056 1,928,199 Less plan assets of foreign subsidiaries (21,699) (22,561) Total non-current provisions for employee benefits - net 3,375,357 1,905,638
Movement in the present value of non-current provisions for defined benefits plans
2019 2018 (in thousand Baht) Non-current provisions for defined benefit plans at 1 January 1,928,199 1,508,125
Included in profit or loss Current service costs 165,863 88,992 Interest on obligation 109,898 54,128 Actuarial losses 15,472 9,029 Transfer of employee benefit obligations from related party 13,547 - Past service cost from the amended severance pay of the Labor Law 527,368 - 832,148 152,149 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 123
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
2019 2018 (in thousand Baht) Included in other comprehensive income Actuarial losses 200,672 343,401 Currency translation differences (11,926) (12,054) 188,746 331,347
Others Benefits paid (139,803) (71,668) Acquisition through business combinations 577,214 - Others - 8,246 437,411 (63,422) Non-current provisions for defined benefit plans at 31 December 3,386,504 1,928,199
On 5 April 2019, the Labor Protection Act has already been announced in Royal Gazette that became effective on 5 May 2019 to include a requirement that an employee who is terminated after having been employed by the same employer for an uninterrupted period of twenty years or more, receives severance payment of 400 days of wages at the most recent rate, which is increased from the maximum rate of 300 days. The Group recognized the effect of this change as the expense amounted to Baht 527 million in consolidated income statement, resulting in the decrease in net profit amounted to Baht 338 million.
Movements in the fair value of plan assets of foreign subsidiaries
2019 2018 (in thousand Baht) Plan assets at 1 January 22,561 26,184 Contributions paid into the plan 7,315 4,786 Benefits paid (7,315) (8,211) Expected return on plan assets - 1,261 Actuarial gains - 174 Currency translation differences (862) (1,633) Plan assets at 31 December 21,699 22,561
Annual Report 2019 124 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Actuarial losses (gains) recognized in other comprehensive income as of the end of the reporting period arising from:
2019 2018 (in thousand Baht) For the years ended 31 December Demographic assumptions (1,348) 69,614 Financial assumptions 158,479 21,726 Experience adjustment 43,541 251,887 Total 200,672 343,227
Actuarial assumptions
Principal actuarial assumptions as of the end of the reporting period
2019 2018 (%) For the years ended 31 December Discount rate * - Thailand 1.46 - 1.90 2.67 - 3.51 - Vietnam 4.01 5.10 - Indonesia 7.5 - 8.05 5.40 - 8.60 - Philippines 5.50 6.17 Salary increase rate 2.00 - 8.00 3.00 - 7.00 Employee turnover rate ** 2.00 - 50.00 0.00 - 30.00 Mortality rate *** 50.00, 100.00 50.00, 100.00 of TMO2017 of TMO2017
* Market yields on government’s bonds for legal severance payments plan and pension ** Upon the length of service *** Reference from TMO2017: Thai Mortality Ordinary Table 2017
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 125
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Sensitivity analysis
Reasonably possible changes at the end of the reporting period to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the non-current provisions for defined benefit plans by the amounts shown below.
Effect on the non-current provisions for defined benefit plans at 31 December
Increase (decrease) 2019 2018 (in thousand Baht) Discount rate 0.50% increase (147,956) (90,188) 0.50% decrease 161,670 98,360 Salary increase rate 1.00% increase 322,451 193,545 1.00% decrease (276,639) (166,651) Employee turnover rate 10.00% increase (74,066) (44,674) 10.00% decrease 77,347 46,603
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
Plan assets of foreign subsidiaries
2019 2018 (%) For the years ended 31 December Discount rate 5.50 6.17 Annual Report 2019 126 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
21 Share capital
2019 2018 Par Number Number Value of shares Value of shares Value (in Baht) (in thousand shares / thousand Baht) (in thousand shares / thousand Baht) Authorized At 1 January - ordinary shares 10 - - 156,300 1,563,000 Reduction in par value - ordinary shares 1 1,563,000 1,563,000 - - Increase of new shares - ordinary shares 1 2,937,000 2,937,000 - - At 31 December - ordinary shares 10 - - 156,300 1,563,000 - ordinary shares 1 4,500,000 4,500,000 - -
Issued and paid-up At 1 January - ordinary shares 10 - - 156,300 1,563,000 Reduction in par value - ordinary shares 1 1,563,000 1,563,000 - - Increase of new shares - ordinary shares 1 1,563,000 1,563,000 - - At 31 December - ordinary shares 10 - - 156,300 1,563,000 - ordinary shares 1 3,126,000 3,126,000 - -
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 127
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
On November 25, 2019, at the extraordinary general meeting of shareholders of the Company, shareholders approved as follows;
1. Reduction in par value of the Company’s shares, from Baht 10 per share, totaling 156,300,000 shares to Baht 1 per share, totaling 1,563,000,000 shares. As a result, the number of authorized shares, and issued and paid-up shares increased by 1,406,700,000 shares. The authorized share capital and issued and paid-up share capital of the Company remain unchanged. The Company completed the registration of the change with the Ministry of Commerce on 25 November 2019.
2. Increasing of authorized share capital of the Company from Baht 1,563 million to Baht 4,500 million by issuing stock dividends of 1,563,000,000 shares at par value of Baht 1 per share in the ratio of 1 current share per 1 dividend share and issuing new ordinary shares of 1,374,000,000 shares at par value of Baht 1 per share. The Company completed the registration of the change with the Ministry of Commerce on 25 November 2019.
22 Reserves and other components of shareholders’ equity
Share premium
Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorized capital. The legal reserve is not available for dividend distribution.
Currency translation differences
The currency translation differences account within equity comprises all foreign currency differences arising from the translation of the financial statements of the Group’s foreign operations until disposal of investment. Annual Report 2019 128 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
23 Business segment information
Segment information is presented in respect of the Group’s business segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.
Segment assets, revenues and results of operations include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Business segments
The Group comprises the following main business segments:
Integrated Packaging Chain Manufacture and sale of packaging paper, various types of packaging, including fiber-based packaging and performance and polymer packaging (flexible packaging and rigid packaging);
Fibrous Chain Manufacture and sale of pulp, dissolving pulp, printing and writing paper and food service products; and
Other Holding company
The business segment information is used by management to evaluate the performance of segments and to allocate resources. The Group evaluates operating performance based on EBITDA.
Information relating to business segments for years ended 31 December was as follows:
2019 Consolidated Financial Statementsof SCG Packaging Public Company Limited and its Subsidiaries
NotesNotes toto the the financial financial statements statements SCGSCG PackagingPackaging Public Public Company Company Limited Limited and and its itsSubsidiaries Subsidiaries ForFor thethe year year ended ended 31 31 December December 2019 2019 and and 2018 2018
OperatingOperating results results of of business business segments segments
IntegratedIntegrated Packaging Packaging IntersegmentIntersegment ChainChain FibrousFibrous Chain Chain Other Other EliminationElimination ConsolidatedConsolidated 20192019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 (in thousand(in thousand Baht) Baht) InformationInformation from from statementstatement of of financial financial position position CurrentCurrent assets assets 29,893,363 29,893,363 24,124,767 24,124,767 5,881,566 5,881,566 6,498,144 6,498,144 34,339,430 34,339,430 18,084,206 18,084,206 (34,731,036) (34,731,036) (18,632,843) (18,632,843) 35,383,323 35,383,323 30,074,274 30,074,274 Investments in associates - - 340,523 303,294 430,231 426,446 - - 770,754 729,740 Investments in associates - - 340,523 303,294 430,231 426,446 - - 770,754 729,740 Investments and long-term loans 823,150 823,150 477 - 34,447,438 28,398,365 (35,254,396) (29,205,323) 16,669 16,192 Investments and long-term loans 823,150 823,150 477 - 34,447,438 28,398,365 (35,254,396) (29,205,323) 16,669 16,192 Property, plant and equipment 63,651,687 38,324,652 18,739,416 19,573,153 213,341 225,595 259,123 255,247 82,863,567 58,378,647 Property, plant and equipment 63,651,687 38,324,652 18,739,416 19,573,153 213,341 225,595 259,123 255,247 82,863,567 58,378,647 Others non-current assets 19,324,145 3,165,457 982,059 720,722 430,603 420,444 (258,075) (259,291) 20,478,732 4,047,332 Others non-current assets 19,324,145 3,165,457 982,059 720,722 430,603 420,444 (258,075) (259,291) 20,478,732 4,047,332 Total assets 113,692,345 66,438,026 25,944,041 27,095,313 69,861,043 47,555,056 (69,984,384) (47,842,210) 139,513,045 93,246,185 Total assets 113,692,345 66,438,026 25,944,041 27,095,313 69,861,043 47,555,056 (69,984,384) (47,842,210) 139,513,045 93,246,185 Short-term borrowings 41,463,749 19,980,949 1,961,047 2,466,280 33,907,033 23,343,402 (34,101,688) (17,896,648) 43,230,141 27,893,983 OtherShort-term current borrowings liabilities 9,418,073 41,463,749 8,009,172 19,980,949 1,728,494 1,961,047 1,857,949 2,466,280 266,581 33,907,033 152,864 23,343,402 (629,245) (34,101,688) (722,495) (17,896,648) 10,783,903 43,230,141 9,297,490 27,893,983 Long-termOther current borrowings liabilities 3,987,801 9,418,073 274,829 8,009,172 365,961 1,728,494 327,627 1,857,949 12,000,000 266,581 - 152,864 - (629,245) - (722,495) 16,353,762 10,783,903 602,456 9,297,490 OtherLong-term non-current borrowings liabilities 5,318,259 3,987,801 1,474,455 274,829 704,891 365,961 550,471 327,627 306,094 12,000,000 167,599 -- - - - 6,329,244 16,353,762 2,192,525 602,456 TotalOther liabilities non-current liabilities 60,187,882 5,318,259 29,739,405 1,474,455 4,760,393 704,891 5,202,327 550,471 46,479,708 306,094 23,663,865 167,599 (34,730,933) (18,619,143) - 76,697,050 - 6,329,244 39,986,454 2,192,525 Shareholders’Total liabilities equity 53,504,463 60,187,882 36,698,621 29,739,405 21,183,648 4,760,393 21,892,986 5,202,327 23,381,335 46,479,708 23,891,191 23,663,865 (35,253,451) (34,730,933) (29,223,067) (18,619,143) 62,815,995 76,697,050 53,259,731 39,986,454 TotalShareholders’ liabilities equity and shareholders' equity 113,692,345 53,504,463 66,438,026 36,698,621 25,944,041 21,183,648 27,095,313 21,892,986 69,861,043 23,381,335 47,555,056 23,891,191 (69,984,384) (35,253,451) (47,842,210) (29,223,067) 139,513,045 62,815,995 93,246,185 53,259,731 Total liabilities and shareholders' equity 113,692,345 66,438,026 25,944,041 27,095,313 69,861,043 47,555,056 (69,984,384) (47,842,210) 139,513,045 93,246,185 129
130 Notes to the financial statements NotesSCG Packaging to the Public financial Company Limitedstatements and its Subsidiaries SCGFor thePackaging year ended Public 31 Company December Limited 2019 and and its 2018 Subsidiaries For the year ended 31 December 2019 and 2018
Integrated Packaging Intersegment Integrated PackagingChain Fibrous Chain Other IntersegmentElimination Consolidated 2019Chain 2018Fibrous 2019 Chain 2018 2019Other 2018Elimination 2019 2018Consolidated 2019 2018 2019 2018 2019 2018 2019(in thousand 2018 Baht) 2019 2018 2019 2018 Information from income statement (in thousand Baht) InformationRevenue from from sales income statement Revenue External from customers sales 71,625,219 68,233,478 17,444,648 19,021,391 - - - - 89,069,867 87,254,869 ExternalIntersegment customers 71,625,219 380,587 68,233,478 349,065 17,444,648 1,349,383 19,021,391 1,724,599 -- - - - (1,729,970) - (2,073,664) 89,069,867 87,254,869 -- SCG Packaging PublicCompany Limited Annual Report 2019 Total Intersegment revenue from sales 72,005,806 380,587 349,065 68,582,543 1,349,383 18,794,031 1,724,599 20,745,990 -- - - (1,729,970) (1,729,970) (2,073,664) (2,073,664) -- 89,069,867 87,254,869 TotalCost revenueof sales from sales 72,005,806 (56,245,390) 68,582,543 (53,766,607) 18,794,031 (17,483,358) 20,745,990 (17,648,388) -- - - (1,729,970) 2,077,403 (2,073,664) 2,340,713 89,069,867 (71,651,345) 87,254,869 (69,074,282) CostGross of profit sales (56,245,390) 15,760,416 (53,766,607) 14,815,936 (17,483,358) 1,310,673 (17,648,388) 3,097,602 -- - - 2,077,403 347,433 2,340,713 267,049 (71,651,345) 17,418,522 (69,074,282) 18,180,587 GrossOther profit income 15,760,416 914,179 14,815,936 614,117 1,310,673 222,953 3,097,602 139,907 - 3,154,113 -9,515,791 347,433 (3,450,031) 267,049 (9,754,864) 17,418,522 841,214 18,180,587 514,951
OtherProfit incomebefore expenses 16,674,595 914,179 614,117 15,430,053 222,953 1,533,626 139,907 3,237,509 3,154,113 3,154,113 9,515,791 9,515,791 (3,450,031) (3,102,598) (9,754,864) (9,487,815) 841,214 18,259,736 514,951 18,695,538 ProfitOperating before expenses expenses 16,674,595 (7,600,011) 15,430,053 (7,137,719) 1,533,626 (2,080,158) 3,237,509 (2,534,738) 3,154,113 (1,631,573) 9,515,791 (1,374,205) (3,102,598) 1,558,403 (9,487,815) 1,499,186 18,259,736 (9,753,339) 18,695,538 (9,547,476) Operating expenses (7,600,011) (7,137,719) (2,080,158) (2,534,738) (1,631,573) (1,374,205) 1,558,403 1,499,186 (9,753,339) (9,547,476) Profit before finance cost and income tax 9,074,584 8,292,334 (546,532) 702,771 1,522,540 8,141,586 (1,544,195) (7,988,629) 8,506,397 9,148,062 Profit before finance cost and income tax 9,074,584 8,292,334 (546,532) 702,771 1,522,540 8,141,586 (1,544,195) (7,988,629) 8,506,397 9,148,062 Finance cost (1,237,271) (757,416) (82,462) (86,917) (299,440) (195,404) 356 100 (1,618,817) (1,039,637) Finance cost (1,237,271) (757,416) (82,462) (86,917) (299,440) (195,404) 356 100 (1,618,817) (1,039,637) Profit before income tax 7,837,313 7,534,918 (628,994) 615,854 1,223,100 7,946,182 (1,543,839) (7,988,529) 6,887,580 8,108,425 Profit before income tax 7,837,313 7,534,918 (628,994) 615,854 1,223,100 7,946,182 (1,543,839) (7,988,529) 6,887,580 8,108,425 Tax expense (1,222,821) (1,210,871) 155,075 (69,690) 22,548 (21,188) (3,850) 34,227 (1,049,048) (1,267,522) Tax expense (1,222,821) (1,210,871) 155,075 (69,690) 22,548 (21,188) (3,850) 34,227 (1,049,048) (1,267,522) ProfitProfit after after income income tax tax 6,614,492 6,614,492 6,324,047 6,324,047 (473,919) (473,919) 546,164 546,164 1,245,648 1,245,648 7,924,994 7,924,994 (1,547,689) (1,547,689) (7,954,302) (7,954,302) 5,838,532 5,838,532 6,840,903 6,840,903 ShareShare of of profit profit (loss) (loss) of of associates associates -- - - 39,485 39,485 (31,754) (31,754) 13,243 13,243 17,151 17,151 -- - - 52,728 52,728 (14,603) (14,603) ProfitProfit for for the the periods periods 6,614,492 6,614,492 6,324,047 6,324,047 (434,434) (434,434) 514,410 514,410 1,258,891 1,258,891 7,942,145 7,942,145 (1,547,689) (1,547,689) (7,954,302) (7,954,302) 5,891,260 5,891,260 6,826,300 6,826,300
2019 Consolidated Financial Statementsof SCG Packaging Public Company Limited and its Subsidiaries
NotesNotes toto the the financial financial statements statements SCGSCG PackagingPackaging Public Public Company Company Limited Limited and and its itsSubsidiaries Subsidiaries ForFor thethe year year ended ended 31 31 December December 2019 2019 and and 2018 2018
IntegratedIntegrated Packaging Packaging IntersegmentIntersegment ChainChain FibrousFibrous Chain Chain Other Other EliminationElimination ConsolidatedConsolidated 20192019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 (in thousand(in thousand Baht) Baht) ProfitProfit (loss) (loss) attributable attributable to: to: Owners of the parent 6,152,564 5,928,024 (429,430) 516,375 1,258,891 7,942,145 (1,713,514) (8,321,005) 5,268,511 6,065,539 Owners of the parent 6,152,564 5,928,024 (429,430) 516,375 1,258,891 7,942,145 (1,713,514) (8,321,005) 5,268,511 6,065,539 Non-controlling interests 461,928 396,023 (5,004) (1,965) - - 165,825 366,703 622,749 760,761 Non-controlling interests 461,928 396,023 (5,004) (1,965) - - 165,825 366,703 622,749 760,761 6,614,492 6,324,047 (434,434) 514,410 1,258,891 7,942,145 (1,547,689) (7,954,302) 5,891,260 6,826,300 6,614,492 6,324,047 (434,434) 514,410 1,258,891 7,942,145 (1,547,689) (7,954,302) 5,891,260 6,826,300 Interest income 102,149 59,872 2,709 1,235 29 28 - - 104,887 61,135 DepreciationInterest income and amortization 4,355,649 102,149 3,811,622 59,872 1,603,528 2,709 1,537,420 1,235 40,535 29 41,647 28 (8,939) - (8,996) - 5,990,773 104,887 5,381,693 61,135 Depreciation and amortization 4,355,649 3,811,622 1,603,528 1,537,420 40,535 41,647 (8,939) (8,996) 5,990,773 5,381,693 Other non-monetary items: Other- Impairment non-monetary losses onitems: inventories 8,867 113,497 84,574 56,960 - - - - 93,441 170,457 -- ImpairmentImpairment losses losses on on plants inventories and 36,623 8,867 24,126 113,497 - 84,574 - 56,960 ------36,623 93,441 24,126 170,457 -equipment Impairment losses on plants and 36,623 24,126 ------36,623 24,126 equipment
R evenue from sales of integrated packaging chain including packaging paper 58%, fiber-based packaging 34%, and performance and polymer packaging 8%. Revenue from sales of integrated packaging chain including packaging paper 58%, fiber-based packaging 34%, and performance and polymer packaging 8%.
131 Annual Report 2019 132 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Geographical segment
The Group has expanded its investment and operating in foreign countries. All significant revenue from sales and non-current assets based on geography is presented in this information. Segment revenue is based on the geographical location of customers and segment non-current assets are based on the geographical location of the assets.
Geographical segment information
Revenue from sales Non-current assets 2019 2018 2019 2018 (in thousand Baht) Thailand 50,800,749 53,239,701 55,042,618 50,809,531 Vietnam 10,543,127 12,588,791 6,618,906 7,157,397 Indonesia 8,594,958 2,248,781 36,821,744 897,276 Philippines 3,447,985 4,532,188 1,899,849 1,166,116 Others 15,683,048 14,645,408 1,094,148 1,131,454 Total 89,069,867 87,254,869 101,477,265 61,161,774
Major customer
The Group has no revenue from one customer for the amount over 10% of the Group’s total revenue from sales for 2019 and 2018.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 133
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
24 Distribution costs
2019 2018 (in thousand Baht) Freight and commission expenses 3,090,286 3,128,160 Salary, welfare and employee expenses 797,842 844,527 Custom, insurance expense and intellectual properties fees 334,694 354,057 Sales promotion and advertising expenses 223,947 277,663 Rent, depreciation and amortization 94,034 120,058 Others 259,804 240,185 Total 4,800,607 4,964,650
25 Administrative expenses
2019 2018 (in thousand Baht) Salary, welfare and employee expenses 2,451,551 2,535,031 Professional and consultant fees 577,981 536,498 Service expenses 344,270 336,352 IT fees 298,308 278,274 Rent, depreciation and amortization 281,932 253,700 Loss from decline in value of inventory - 185,720 Idle costs 68,287 65,111 Others 403,035 392,140 Total 4,425,364 4,582,826
Annual Report 2019 134 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
26 Employee benefit expenses
2019 2018 (in thousand Baht) Salaries and wages 7,811,125 7,235,438 Contribution to defined contribution plans 449,068 420,226 Contribution to defined benefit plans 818,601 152,149 Early retirement expenses 23,705 85,590 Others 922,963 780,059 Total 10,025,462 8,673,462
The Group has provident fund plans to provide retirement and gratuity benefits to employees upon resignation at 5% to 10% of the employee’s salaries, depending on the length of employment.
The defined contribution plans comprise provident funds established by the Group for its employees in addition to the above provident fund. The provident funds were registered with the Ministry of Finance under the Provident Fund Act B.E. 2530. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at 2% to 15% of their basic salaries and by the Company at 5% to 13% of the members’ basic salaries, depending on the length of employment.
27 Income tax
Income tax recognized in profit or loss
Note 2019 2018 (in thousand Baht) Current tax Current tax expense 1,383,451 1,233,316 Under (over) provided in prior years (11,211) 10,485 1,372,240 1,243,801 Deferred tax Movements in temporary differences 15 (323,192) 23,721 Total 1,049,048 1,267,522 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 135
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Income tax recognized in other comprehensive income
2019 2018 (in thousand Baht) Actuarial losses (38,683) (66,578)
Reconciliation of effective tax rate
For the years ended 31 December 2019 and 2018, the Group’s effective tax rate is not equal to the statutory tax rate of 20% under the Revenue Code because income tax expense is calculated from accounting profit adjusted by non-deductible expenses, deducted income or expense exemption under the Revenue Code and utilized the tax losses carried forward from prior years and also had the exempted net profit from the promoted business.
2019 2018 Rate (in thousand Rate (in thousand (%) Baht) (%) Baht) Profit before income tax 6,940,308 8,093,822 Share of loss (profit) of associates (52,728) 14,603 6,887,580 8,108,425 Income tax using the Thai corporation tax rate 20 1,377,516 20 1,621,685 Tax rates in foreign jurisdictions 64,825 73,756 Income not subject to tax (44,567) (5,684) Tax privileges (408,357) (456,352) Expenses deductible at a greater amount (55,233) (57,301) Expenses not deductible for tax purposes and others 182,192 46,302 Prior year revenue subject to tax in current year - 34,638 Tax losses increase (decrease) 267,075 (23,728) Current tax expense 1,383,451 1,233,316 Under (over) provided in prior years (11,211) 10,485 Movement in temporary differences (323,192) 23,721 Income tax expense 15 1,049,048 16 1,267,522 Annual Report 2019 136 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
28 Promotional privileges
By virtue of the provisions of the Investment Promotion Act of B.E. 2520, the Group was granted the following privileges.
50% Deduction Exemption from of normal corporate income corporate income tax for 8 years from tax for 5 years from Thai Containers Rayong Co., Ltd. Manufacture of corrugated paper and cartons 4 January 2009 4 January 2017
Visy Packaging (Thailand) Limited Manufacture of plastics sheet and plastics product 23 September 2009 23 September 2017 Manufacture of plastic containers 18 July 2013 18 July 2021 Manufacture of plastic containers 4 July 2014 4 July 2022 Manufacture of plastic containers 29 August 2015 29 August 2023 Manufacture of plastics sheet and plastics product 6 July 2017 6 July 2025
50% Deduction of normal corporate income tax for 3 years from Thai Containers Group Co., Ltd. Alternative energy (Chonburi) 4 September 2018 Alternative energy (Prachinburi) 4 September 2018
Thai Containers Khonkaen Co., Ltd. Alternative energy 21 August 2019
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 137
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Exemption from corporate income tax for 8 years from Phoenix Utilities Co., Ltd. Manufacture of electricity and steam 1 April 2011
The Siam Forestry Co., Ltd. Eucalyptus forest plantation 19 June 2013
Siam Kraft Industry Co., Ltd. Manufacture of kraft paper 17 March 2011 Manufacture of kraft paper 21 September 2011 Manufacture of kraft paper 15 December 2012
Thai Cane Paper Public Company Limited Manufacture of kraft paper 21 May 2013 Manufacture of kraft paper 21 February 2014
SCG Paper Energy Co., Ltd. Power management 1 November 2017 Electricity production 19 October 2018 Electricity production 1 June 2019
Thai Containers Group Co., Ltd. Manufacture of corrugated paper 3 October 2011 Manufacture of corrugated paper 1 October 2012 Manufacture of corrugated paper 9 June 2017
Precision Print Co., Ltd. Manufacture of printing 10 August 2015
Annual Report 2019 138 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Exemption from corporate income tax for 6 years from Thai Paper Co., Ltd. Manufacture of coated plastic - Hygienic 29 July 2012
Exemption from corporate income tax for 5 years from Thai Paper Co., Ltd. Manufacture of glassine paper 11 April 2017
Prepack Thailand Co., Ltd. Manufacture of printing 7 March 2016
Exemption from corporate income tax for 3 years from Phoenix Pulp & Paper Public Company Limited Manufacture of dissolving pulp 10 February 2015 Manufacture of Pulp 22 July 2017 Manufacture of hygienic food packaging 22 March 2018
Thai Paper Co., Ltd. Manufacture of Pulp 17 February 2016 Manufacture of hygienic food packaging 3 November 2016 Manufacture of hygienic food packaging 2 March 2018
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 139
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Exemption from corporate income tax for 3 years from Siam Kraft Industry Co., Ltd. Manufacture of gypsum paper 21 May 2015 Manufacture of industrial paper bag 22 September 2015
Vina Kraft Paper Co., Ltd. also obtained privileges from a government agency in Vietnam to pay income tax at a reduced rate of 15% of taxable profits for the first 12 years starting from the first year of operation, and exemption from corporate income tax for 3 years from the year that profit is first reported and 50% deduction of the said corporate income tax for 7 years thereafter.
Vina Kraft Paper Co., Ltd. also obtained privileges from a government agency in Vietnam for Expanding capacity project No.2 to pay income tax at a reduced rate of 10% of taxable profits for the first 6 years starting from the first year of operation, and exemption from corporate income tax for 2 years from the year that profit is first reported.
New Asia Industries Co., Ltd. also obtained privileges from a government agency in Vietnam to pay income tax at a reduced rate of 15% of taxable profits until 2021.
Alcamax Packaging (Vietnam) Co., Ltd. also obtained privileges from a government agency in Vietnam to pay income tax at a reduced rate of 15% of taxable profits until 2027.
AP Packaging (Hanoi) Co., Ltd. also obtained privileges from a government agency in to pay income tax at a reduced rate of 10% of taxable profits until 2052.
As promoted companies, the Group must comply with certain conditions and restrictions provided for in the promotional certificates.
Annual Report 2019 140 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
29 Basic earnings per share
The calculations of basic earnings per share for the years ended 31 December was based on the profit for the years attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the years, after adjusting the number of ordinary shares in proportion to the change in the number of shares as a result of the stock split and distribution of stock dividend disclosed in note 21 and 30. The number of ordinary shares used in the calculation are adjusted as if such change had occurred at the beginning of the earliest reporting period as follows:
2019 2018 (in thousand Baht / thousand shares) Profit for the year attributable to ordinary shareholders of the Company 5,268,511 6,065,539 Weighted average number of ordinary shares outstanding at 1 January 156,300 156,300 Effect of reduction in par value 1,406,700 1,406,700 Effect of stock dividend 1,563,000 1,563,000 Weighted average number of ordinary shares outstanding at 31 December 3,126,000 3,126,000
Basic earnings per share (in Baht) 1.69 1.94
30 Dividends
The dividends paid by the Company to the shareholders are as follows: Dividend rate Approval date Payment schedule per share Amount (Baht) (in million Baht) 2019 Annual dividend 2018 26 March 2019 25 April 2019 10.00 1,563 Interim dividend 25 November 2019 6 December 2019 1.11111111 1,737 Total 11.11111111 3,300
2018 Annual dividend 2017 23 March 2018 20 April 2018 50.00 7,815 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 141
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
On 25 November 2019, at the extraordinary general meeting of shareholders of the Company, they passed resolution to approve the interim dividend payment, details are as follows;
1. Pay dividend by ordinary shares of 1,563,000,000 shares at par value of Baht 1 per share, in the ratio of 1 current share per 1 dividend share. 2. Pay dividend by cash at Baht 0.11111111 per share, totaling Baht 174 million.
31 Agreements
As at 31 December, the Group had:
(a) Lease agreements for cars with local companies. The terms of the leases are up to 2020 through 2024 with the annual rental fees of Baht 115 million.
(b) Lease agreements for land, building, structure and others with local companies. The terms of the leases are up to 2020 through 2037 with the annual rental fees of Baht 229 million.
(c) A subsidiary entered into a lease agreement with a government entity for the use of a parcel of land situated at Ubolrat Settlement Area, Khon Kaen Province as its plant site. The agreement is for a period of 3 years (with annual rental of Baht 7 million).
(d) A subsidiary entered into a lease agreement with an associate covering the land where its factory is located. The agreement has a period of 50 years commencing from 2003, renewal for another 25 years with the annual rental fee of Peso 19.2 million.
(e) Land leasehold agreement with a foreign company as its plant site. The agreement has a period of 50 years commencing from January 2007. The Company already paid rental in advance amounting to US Dollars 4.8 million which present included under “Other non-current receivables” in the statement of financial position.
(f) A subsidiary entered into a lease agreement with a foreign company covering the land where its factory is located. The agreement has a period of 25 years commencing from December 1996. The Company already paid rental in advance amounting to US Dollars 1.2 million which present included under “Other non-current receivables” in the statement of financial position. Annual Report 2019 142 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
(g) Three subsidiaries entered into lease agreements with foreign companies covering the land where their factories are located. Agreements have a period of 49 years commencing from April 1997. The Company already paid rental in advance amounting to US Dollars 2.6 million which present included under “Other non-current receivables” in the statement of financial position.
(h) A subsidiary entered into lease agreements with foreign companies covering the land where its factory is located. Agreements have a remaining period of 37 years expiring in the year 2053. The Company already paid rental in advance amounting to Vietnamese Dong 40,241 million which present included under “Other non-current receivables” in the statement of financial position.
(i) A subsidiary has entered into a lease agreement with foreign company covering the land where its factory is located. The agreement has a period of 6 years commencing from 2019, renewal for another 3 years with the annual rental fee of Malaysian Ringgit 2.28 million.
(j) A subsidiary has entered into agreements with a foreign company for the delivery and loading of Woodchips to Vessel. As at 31 December 2019, the subsidiary is committed to sell and deliver the Woodchips in volume equivalent to approximately 48,000 BDMT per year. The agreement period is for 12 years with the commencement date in December 2034.
(k) A subsidiary has entered into agreements with a local company for provide Biofuel to delivery point. As at 31 December 2019, the subsidiary is committed to sell and deliver the Biofuel in volume equivalent to approximately 73,000 tons per year. The agreement period is for 25 years with the commencement date in August 2037.
32 Financial instruments
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 143
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Credit risk
Credit risk arises from the possibility that customers may not be able to settle obligations to the Group as per contracts which may cause financial loss. The Group has a policy to protect this risk by assessing the credit of customers, defining the credit limit, asking for bank guarantees and/or personnel guarantees, credit terms, controlling credit utilization and reviewing collections. Fair value of receivables which are presented in the statement of financial position is the balances net of allowance for doubtful accounts.
Interest rate risk
Interest rate risk arises from the changing of interest rates in the market, which may effect current and future operations of the Group. Management believes that the interest rate risk is minimal, hence, the Group does not have any hedging agreement to protect such risk.
The effective interest rates of loans receivable as at 31 December and the periods in which the loans receivables mature were as follows:
Loans receivable After 1 year Effective interest Within but within After Total rates 1 year 5 years 5 years (% per annum) (in million Baht) 2019 Current Short-term loans 3.50 - 4.30 5 - - 5
2018 Current Short-term loans 3.80 - 4.80 127 - - 127 Long-term loans 3.40 93 - - 93 Total 220 - - 220 Annual Report 2019 144 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature were as follows:
Financial liabilities
After 1 year Effective interest Within but within After Total rates 1 year 5 years 5 years (% per annum) (in million Baht) 2019 Current Bank overdraft and MMR, MLR minus 0.50, short-term borrowings Cost of fund plus from financial (0.50 - 2.00), institutions LIBOR plus (1.25 - 3.00), 1.28 - 9.50 7,132 - - 7,132
Short-term borrowings from related parties 3.50 - 8.70 33,827 - - 33,827
Long-term borrowings MLR minus 2.75, from related parties Cost of fund plus (0.65 - 0.67) LIBOR 3-6 months plus (1.20 - 3.75), VNIBOR plus 0.50, JIBOR plus 4.40, 4.35 - 10.90 2,184 - - 2,184
Finance lease liabilities 3.78, 7.00, 10.25 - 15.00, 21.60 88 - - 88
Non-current Long-term borrowings MLR minus 2.75, from financial Cost of fund plus institutions (0.65 - 3.78), LIBOR 3-6 months plus (1.20 - 3.75), VNIBOR plus 0.50 JIBOR plus 4.40, 1.75 - 10.90 - 15,597 721 16,318
Finance lease liabilities 3.78, 7.00, 10.25 - 15.00, 21.60 - 35 - 35
Total 43,231 15,632 721 59,584
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 145
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
After 1 year Effective interest Within but within After Total rate 1 year 5 years 5 years (% per annum) (in million Baht) 2018 Current Bank overdrafts and MMR, MOR minus 1.75, short-term borrowings Cost of fund plus from financial (0.50 - 0.75), institutions 1.58 - 5.70 4,312 - - 4,312
Short-term borrowings 3.75 23,416 - - 23,416 from related parties
Long-term borrowings MLR minus from financial (0.50 - 2.35), institutions Cost of fund plus 0.75, VNIBOR plus 0.50, 3.65 152 - - 152
Finance lease liabilities 1.04 - 3.78, 6.10, 21.60 14 - - 14
Non-current Long-term borrowings MLR minus from financial (0.50 - 2.35), institutions Cost of fund plus (0.65 - 1.75), VNIBOR plus 0.50, 3.65 - 528 59 587
Finance lease liabilities 1.04 - 3.78, 6.10, 21.60 - 15 - 15
Total 27,894 543 59 28,496
Foreign exchange risk
Foreign currency risk arises from the fluctuation of foreign exchange rates.
The Group has a policy to enter into forward exchange contracts to manage foreign exchange risk related to assets and liabilities denominated in foreign currencies.
Annual Report 2019 146 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Fair values of financial assets and liabilities
The fair value of current portion of financial assets and liabilities are taken to approximate the carrying value due to the relatively short-term maturity of these financial instruments.
The fair value of long-term borrowings carrying a floating rate, which is considered to be market rate, are taken to approximate their fair values.
Other financial assets and liabilities not stated above had the fair and carrying value at 31 December as follows:
2019 2018 Carrying Fair value Carrying Fair value amount Level 2 amount Level 2 (in million Baht) Current Long-term borrowings 12,041 12,041 - - Forward exchange contracts* Forward receivable 1,759 1,748 827 818 Forward payable 1,788 1,755 1,070 1,059
* The fair value of forward exchange contracts were calculated using the rates initially quoted by the Group’s bankers which were based on market conditions existing at the end of the reporting period to reflect current fair values of the contracts.
The Group determines Level 2 fair values for debt securities using a discounted cash flow technique, which uses contractual cash flows and a market-related discount rate.
Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rate for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and counterparty when appropriate. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 147
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
33 Commitments and contingent liabilities
As at 31 December 2019, the Group had:
(a) The purchase and installation of machinery and equipment of Baht 4,571 million (2018: Baht 1,873 million).
(b) The purchase of raw material of Baht 648 million (2018: Baht 35 million).
(c) Outstanding forward exchange contracts for foreign currencies against Thai Baht as follows:
Contract amount Forward Receivable Forward Payable Currency Equivalent to Baht Currency Equivalent to Baht 2019 2018 2019 2018 2019 2018 2019 2018 (in million) (in million Baht) (in million) (in million Baht) US Dollars 57 25 1,715 822 47 24 1,458 769 Yen 93 - 27 - 299 23 85 7 Yuan 3 - 13 - - - 1 - Euro - - 1 - 7 8 241 293 Other 3 5 3 1 Total 1,759 827 1,788 1,070
The above contracts are due within November 2020 (2018: due within December 2019).
(d) Contingent liability for letter of guarantees issued by local banks for the Group to government organizations of Baht 85 million (2018: Baht 67 million).
(e) Contingent liability for borrowings guarantees issued by a local bank for the Group to associate which limit is not exceed Baht 264 million (2018: Baht 330 million).
Annual Report 2019 148 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
34 Capital management
The management of the Group has the capital management policy to maintain a strong capital base by emphasis on planning and determining the operating strategies resulting in good business’s performance and sustained good cash flows management. In addition, the Group considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustained future operations of the business and to maintain shareholders, investors, creditors and others interest’s confidence.
35 Others
On 26 October 2019, The Board of Directors’ Meeting No. 214 (10/2019) has approved the plan to issue and offer newly issued ordinary shares in the Company as an initial public offering (IPO) and to list the ordinary shares in the Company on the Stock Exchange of Thailand. The portion of the shares to be offered for sale in the IPO will not exceed 30% of the Company’s paid-up capital after its capital increase.
On 17 December 2019, the Company submitted to Thai SEC a registration statement and draft prospectus for the IPO. In connection with the IPO, the Company will issue and offer no more than 1,374,000,000 ordinary shares with a par value of 1 Thai Baht per share.
36 Events after the reporting period
(a) At the Board of Directors’ Meeting of the Company held on 28 January 2020, the directors proposed for approval at the Annual General Meeting of Shareholders, the payment of a dividend for 2019 at the rate of Baht 0.42 per share, amounting to Baht 1,313 million and is scheduled for payment on 23 April 2020. The dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 24 March 2020.
(b) On 31 January 2020 United Pulp and Paper Co., Inc. (“UPPC”), a subsidiary has entered into a conditional share subscription agreement with Rengo Co., Ltd. whereby Rengo will subscribe to the newly issued shares at the total value of approximately Baht 2,500 million. The Group’s investment in UPPC will decrease from 99.7% to 74.7%, UPPC will remain consolidated subsidiary of the Group. The transaction is expected to be completed in the second quarter of 2020. 2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 149
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
37 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective
The new and revised TFRSs, which are relevant to the Group’s operations, become effective for the financial statements in annual reporting periods beginning on or after 1 January 2020. The Group does not adopt these TFRSs early. The new TFRSs are as follows:
TFRS Topic TFRS 7* Financial Instruments: Disclosures TFRS 9* Financial Instruments TFRS 16 Leases TAS 32* Financial Instruments: Presentation TFRIC 16* Hedges of a Net Investment in a Foreign Operation TFRIC 19* Extinguishing Financial Liabilities with Equity Instruments
* TFRSs - Financial instruments standards
(a) TFRSs - Financial instruments standards
These TFRSs - Financial instruments standards establish requirements related to definition, recognition, measurement, impairment and derecognition of financial assets and financial liabilities, including accounting for derivatives and hedge accounting. When these TFRSs are effective, some accounting standards, interpretations and guidance which are currently effective will be cancelled. The impact from adoption of TFRSs - Financial instruments depends on the Group’s financial instruments by following TFRSs - Financial instruments as follows:
(1) Classification - Financial assets
TFRS 9 classifies financial assets into three categories: measured at amortized cost, fair value to other comprehensive income (FVOCI) and fair value to profit or loss (FVTPL). The standard eliminates the existing classification of held-to-maturity debt securities, available-for-sale securities, trading securities and general investment as specified by TAS 105. The classification under TFRS 9 will be based on the cash flow characteristics of the financial asset and the business model in which they are managed. Under TFRS 9, derivatives will be measured at FVTPL. It shall replace Annual Report 2019 150 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
current accounting policies of the Group on recognition of revaluation exchange rate at the end of period or when the derivatives were exercised.
The Group made an assessment of classification - Financial assets under TFRS 9. This adoption has no material effect on the consolidated financial statements of the Group.
(2) Measurement at amortized cost
Under TFRS 9, interest income and interest expenses recognized from all financial assets and financial liabilities measured at amortized cost shall be calculated using effective interest rate method. The adoption of TFRS 9 has no material effect on the consolidated financial statements of the Group.
(3) Impairment - Financial assets
TFRS 9 introduces forward-looking Expected Credit Loss (“ECL”) model whereas currently the Group estimates allowance for doubtful account by analyzing payment histories and future expectation of customer payment. TFRS 9 requires consideration about how changes in economic factors affect ECLs, which is determined on a probability-weighted basis.
The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments.
The Group made an assessment of the impairment of financial assets under TFRS 9. This adoption has no material effect on the consolidated financial statements of the Group.
(4) Classification - Financial liabilities
TFRS 9 introduces a new classification and measurement approach for financial liabilities consisting of two principal classification categories: amortized cost and FVTPL. A financial liability is classified as financial liabilities measured at FVTPL if it is held for trading, a derivative or designated as such on the initial recognition.
2019 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries 151
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
The Group classified other financial liabilities which are not held for trading or derivative measured at amortized cost. The adoption of TFRS 9 has no material effect on the group’s consolidated financial statements.
(5) Hedge accounting
TFRS 9 introduces guidance on hedge accounting while current TFRSs are silent. There are three hedge accounting models and the type of model applied depends on the hedged exposures consisting of a fair value exposure, a cash flow exposure or a foreign currency exposure on a net investment in a foreign operation. Under TFRS 9, the Group is required to ensure that hedge accounting relationships are aligned with the Group’s risk management objectives and strategy and to apply a more qualitative and forward-looking approach to assess hedge effectiveness. Accordingly, TFRS 9 provides an option to apply hedge accounting when the transactions are qualified. At the initial date of the first time adoption, the Group has no effect on this matter.
Transition
The Group applied these TFRSs for the first time by adjusting the cumulative impact to retained earnings on 1 January 2020 with no restatement of comparative information.
(b) TFRS 16 Leases
TFRS 16 introduces a single lessee accounting model for lessees. A lessee recognizes a right-of-use asset and a lease liability. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains to the current standard. When this TFRS is effective, some accounting standards and interpretations which are currently effective will be cancelled. Currently, the Group recognizes payments made under operating leases in income statement on a straight-line basis over the term of the lease.
The Group made an assessment of TFRS 16 adoption. On 1 January 2020, the Group recognized the increase in right-of-use assets approximately Baht 1,900 million while the prepaid rental expenses decrease approximately Baht 500 million and affect to increase in lease liabilities approximately Baht 1,400 million. The nature of expenses related to those leases will change as the Group will recognize depreciation of right-of-use assets and interest expenses on lease liabilities. Annual Report 2019 152 SCG Packaging Public Company Limited
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries For the year ended 31 December 2019 and 2018
Transition
The Group applied TFRS 16 for the first time on 1 January 2020 using the modified retrospective approach, by recognizing right-of-use assets and lease liabilities with no restatement of comparative information.
2019 Financial Statements of SCG Packaging Public Company Limited Annual Report 2019 154 SCG Packaging Public Company Limited
Independent auditor’s report To the Shareholders of SCG Packaging Public Company Limited
Opinion
I have audited the financial statements of SCG Packaging Public Company Limited (the “Company”), which comprise the statement of financial position as at 31 December 2019 and 2018, the income statement and statements of comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2019 and 2018, its financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards (TFRSs).
Basis for Opinion
I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Company in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions that is relevant to my audit of the financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Other Information
Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and my auditor’s report thereon.
My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 155
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Annual Report 2019 156 SCG Packaging Public Company Limited
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.
(Thanyalux Keadkeaw) Certified Public Accountant Registration No. 8179
KPMG Phoomchai Audit Ltd. Bangkok 18 February 2020 2019 Financial Statements of SCG Packaging Public Company Limited 157
Statement of financial position SCG Packaging Public Company Limited • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 31 December • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may Assets Note 2019 2018 cast significant doubt on the Company’s ability to continue as a going concern. If I conclude that a material (in thousand Baht) uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the Current assets financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based Cash and cash equivalents 8,580 5,673 on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions Other current receivables 4, 5 254,306 193,394 may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, Short-term loans to related parties 4, 23 33,950,895 17,862,997 and whether the financial statements represent the underlying transactions and events in a manner that Other current assets 125,649 22,142 achieves fair presentation. Total current assets 34,339,430 18,084,206
I communicate with those charged with governance regarding, among other matters, the planned scope and timing Non-current assets of the audit and significant audit findings, including any significant deficiencies in internal control that I identify Investments in associates 6 350,121 350,121 during my audit. Investments in subsidiaries 7 34,447,438 28,398,365 I also provide those charged with governance with a statement that I have complied with relevant ethical Other non-current receivables 14,110 11,555 requirements regarding independence, and to communicate with them all relationships and other matters Investment property 8 297,733 299,572 that may reasonably be thought to bear on my independence, and where applicable, related safeguards. Property, plant and equipment 9 213,341 225,595 Intangible assets 10 30,623 30,107 Deferred tax asset 11 59,099 34,602 Other non-current assets 29,038 44,608 (Thanyalux Keadkeaw) Total non-current assets 35,441,503 29,394,525 Certified Public Accountant Registration No. 8179 Total assets 69,780,933 47,478,731
KPMG Phoomchai Audit Ltd. For and on behalf of the Board of Directors Bangkok 18 February 2020
(Mr. Prasarn Trairatvorakul) (Mr. Wichan Jitpukdee) Chairman Chief Executive Officer
The accompanying notes are an integral part of these financial statements. Annual Report 2019 158 SCG Packaging Public Company Limited
Statement of financial position SCG Packaging Public Company Limited
31 December
Liabilities and shareholders’ equity Note 2019 2018 (in thousand Baht) Current liabilities Other current payables 4, 12 249,573 139,425 Short-term borrowings from related parties 4, 23 33,907,033 23,343,402 Current provisions for employee benefits 17,009 13,439 Total current liabilities 34,173,615 23,496,266
Non-current liabilities Long-term borrowings from financial institutes 13, 23 12,000,000 - Non-current provisions for employee benefits 14 295,507 159,578 Other non-current liabilities 10,587 8,021 Total non-current liabilities 12,306,094 167,599
Total liabilities 46,479,709 23,663,865
The accompanying notes are an integral part of these financial statements. 2019 Financial Statements of SCG Packaging Public Company Limited 159
Statement of financial position SCG Packaging Public Company Limited
31 December
Liabilities and shareholders’ equity Note 2019 2018 (in thousand Baht) Shareholders’ equity Share capital 15 Authorized share capital - Ordinary share 4,500,000 1,563,000 Issued and paid share capital - Ordinary share 3,126,000 1,563,000 Share premium 16 1,935,000 1,935,000 Retained earnings Appropriated Legal reserve 16 218,600 156,300 General reserve 3,000 3,000 Unappropriated 18,018,624 20,157,566 Total shareholders’ equity 23,301,224 23,814,866
Total liabilities and shareholders’ equity 69,780,933 47,478,731
The accompanying notes are an integral part of these financial statements. Annual Report 2019 160 SCG Packaging Public Company Limited
Income statement
SCG Packaging Public Company Limited
Year ended 31 December
Note 2019 2018 (in thousand Baht) Dividend income 4, 6, 7 1,566,377 7,824,862 Service income 4, 27 1,532,035 1,462,451 Other income 4, 27 55,197 228,149 Gain on exchange rate 504 329 Total revenues before expenses 3,154,113 9,515,791
Administrative expenses 4, 17 (1,580,778) (1,374,205) Employee benefit expense from the amended severance pay of the Labor Law 14, 18 (50,795) - Total expenses (1,631,573) (1,374,205) Profit before finance costs and income tax 1,522,540 8,141,586
Finance costs 4 (299,440) (195,404)
Profit before income tax 1,223,100 7,946,182
Tax income (expenses) 19 22,548 (21,188)
Profit for the year 1,245,648 7,924,994
Basic earnings per share (in Baht) 20 0.40 2.54
The accompanying notes are an integral part of these financial statements. 2019 Financial Statements of SCG Packaging Public Company Limited 161
Statement of comprehensive income SCG Packaging Public Company Limited
Year ended 31 December
Note 2019 2018 (in thousand Baht) Profit for the year 1,245,648 7,924,994
Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss Defined benefit plan actuarial losses 14 (28,246) (80,963) Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss 19 5,623 16,193 Other comprehensive income for the year, net of tax (22,623) (64,770)
Total comprehensive income for the year 1,223,025 7,860,224
The accompanying notes are an integral part of these financial statements. 162
Statement of changes in shareholders' equity
SCG Packaging Public Company Limited
Retained earnings Issued and Appropriated Unappropriated Total paid Legal General shareholders’ Note share capital Share premium reserve reserve equity (in thousand Baht) Year ended 31 December 2018 Balance at 1 January 2018 1,563,000 1,935,000 156,300 3,000 20,112,342 23,769,642 Transactions with owners,
recorded directly in shareholders' equity SCG Packaging PublicCompany Limited Annual Report 2019 Dividends 21 - - - - (7,815,000) (7,815,000) Total transactions with owners, recorded directly in shareholders' equity - - - - (7,815,000) (7,815,000)
Comprehensive income for the year Profit or loss - - - - 7,924,994 7,924,994 Other comprehensive income - - - - (64,770) (64,770) Total comprehensive income for the year - - - - 7,860,224 7,860,224
Balance at 31 December 2018 1,563,000 1,935,000 156,300 3,000 20,157,566 23,814,866
The accompanying notes are an integral part of these financial statements. 2019 FinancialStatementsof SCG Packaging PublicCompany Limited
Statement of changes in shareholders' equity
SCG Packaging Public Company Limited
Retained earnings Issued and Appropriated Unappropriated Total paid Legal General shareholders’ Note share capital Share premium reserve reserve equity (in thousand Baht) Year ended 31 December 2019 Balance at 1 January 2019 1,563,000 1,935,000 156,300 3,000 20,157,566 23,814,866 Transactions with owners, recorded directly in shareholders' equity Transfer to legal reserve - - 62,300 - (62,300) - Stock dividends 15, 21 1,563,000 - - - (1,563,000) - Dividends 21 - - - - (1,736,667) (1,736,667) Total transactions with owners, recorded directly in shareholders' equity 1,563,000 - 62,300 - (3,361,967) (1,736,667)
Comprehensive income for the year Profit or loss - - - - 1,245,648 1,245,648 Other comprehensive income - - - - (22,623) (22,623) Total comprehensive income for the year - - - - 1,223,025 1,223,025
Balance at 31 December 2019 3,126,000 1,935,000 218,600 3,000 18,018,624 23,301,224 163 The accompanying notes are an integral part of these financial statements. Annual Report 2019 164 SCG Packaging Public Company Limited
Statement of cash flows
SCG Packaging Public Company Limited
Year ended 31 December
2019 2018 (in thousand Baht) Cash flows from operating activities Profit for the year 1,245,648 7,924,994 Adjustments for Tax expenses (income) (22,548) 21,188 Depreciation and amortization 40,533 41,646 Employee benefit expense 127,139 16,062 Bad and doubtful debts expenses 261 16,963 Unrealized losses (gains) on foreign currency exchange (1) 115 Gain on sales of investment - (173,185) Losses (gains) on sales of property, plant and equipment (230) 26 Dividend income (1,566,377) (7,824,862) Interest income (966,849) (582,567) Interest expense 1,266,285 777,944 Cash flows generated from operations before changes in operating assets and liabilities 123,861 218,324
Increase in operating assets
Other current receivables and other non-current receivables (50,703) (54,262) Other current asset (71,800) - Net increase in operating assets (122,503) (54,262)
The accompanying notes are an integral part of these financial statements. 2019 Financial Statements of SCG Packaging Public Company Limited 165
Statement of cash flows
SCG Packaging Public Company Limited
Year ended 31 December Note 2019 2018 (in thousand Baht) Increase (decrease) in operating liabilities Other current payables 101,970 21,572 Provisions for employee benefits (23,860) (2,381) Other non-current liabilities 768 - Net increase in operating liabilities 78,878 19,191
Net cash flows generated from operations 80,236 183,253 Income tax paid (11,100) (6,879) Net cash flows provided by operating activities 69,136 176,374
Cash flows from investing activities Investment in subsidiaries 7 (6,049,073) (1,324,099) Proceeds from sales of property, plant and equipment 5,648 22 Acquisition of investment property - (64,261) Acquisition of property, plant and equipment (23,866) (20,442) Acquisition of intangible assets (11,827) (10,531) Proceeds from sales of other investment - 257,309 Payments of short-term loans to related parties (16,087,898) (6,715,410) Dividends received 1,566,377 7,824,862 Interest received 953,764 578,324 Net cash flows provided by (used in) investing activities (19,646,875) 525,774
The accompanying notes are an integral part of these financial statements. Annual Report 2019 166 SCG Packaging Public Company Limited
Statement of cash flows
SCG Packaging Public Company Limited
Year ended 31 December
2019 2018 (in thousand Baht) Cash flows from financing activities Proceeds from short-term borrowings from related parties 10,563,631 7,884,785 Proceeds from long-term borrowings from financial institutes 12,000,000 - Dividends paid (1,734,869) (7,815,147) Interest paid (1,248,116) (770,816) Net cash flows provided by (used in) financing activities 19,580,646 (701,178)
Net increase in cash and cash equivalents 2,907 970 Cash and cash equivalents at beginning of the year 5,673 4,703 Cash and cash equivalents at end of the year 8,580 5,673
Supplementary information for cash flows Non-cash transactions Account payables from purchases of assets 2,207 5,526 Stock dividends 1,563,000 -
The accompanying notes are an integral part of these financial statements. 2019 Financial Statements of SCG Packaging Public Company Limited 167
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Note Contents
1 General information 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Related parties 5 Other current receivables 6 Investments in associates 7 Investments in subsidiaries 8 Investment property 9 Property, plant and equipment 10 Intangible assets 11 Deferred tax asset (deferred tax liability) 12 Other current payables 13 Borrowings from financial institutes 14 Non-current provisions for employee benefits 15 Share capital 16 Reserves 17 Administrative expenses 18 Employee benefit expenses 19 Income tax 20 Basic earnings per share 21 Dividends 22 Lease agreements 23 Financial instruments 24 Capital management 25 Others 26 Event after the reporting period 27 Reclassification of accounts 28 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective
Annual Report 2019 168 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
These notes form an integral part of the financial statements.
The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English languages, and were approved and authorized for issue by the audit committee, as appointed by the Board of Directors of the Company, on 18 February 2020.
1 General information
SCG Packaging Public Company Limited, the “Company”, is incorporated in Thailand.
The head office of the Company is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand.
The parent company is The Siam Cement Public Company Limited. It is incorporated in Thailand.
The Company is engaged in investment.
2 Basis of preparation of the financial statements
(a) Statement of compliance
The financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRSs”) guidelines promulgated by the Federation of Accounting Professions.
The new and revised TFRSs are effective for annual accounting periods beginning on or after 1 January 2019. The initial application of these new and revised TFRSs has resulted in no material impact on the Company’s accounting policies, calculation method, financial performance and position.
The Company has initially applied TFRS 15 Revenue from Contracts with Customers (“TFRS 15”) since 1 January 2019. TFRS 15 establishes a comprehensive framework for determining how much and when revenue is recognized. It replaced TAS 18 Revenue (“TAS 18”).
Under TFRS 15, the Company recognizes revenue when a customer obtains control of the goods or services in an amount that reflects the consideration to which the Company expects to be entitled to. 2019 Financial Statements of SCG Packaging Public Company Limited 169
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
In addition, judgment is required in determining the timing of the transfer of control for revenue recognition - at a point in time or over time. The Company has a timing of revenue recognition mainly from intellectual property income, management fees for administration and service income which are recognized over time.
In addition, the Company has not early adopted a number of new and revised TFRS which are not yet effective for the current period in preparing these financial statements. Those new and revised TFRSs that are relevant to the Company’s operations are disclosed in note 28.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following material item in the statements of financial position: defined benefit obligations are measured at the present value of non-current provisions for defined benefit plans.
(c) Functional and presentation currency
The financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated.
(d) Use of estimates and judgments
The preparation of financial statements in conformity with TFRSs requires management to make judgements, estimates and assumptions that affect the application of the Company’s accounting policies. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about significant areas of estimation uncertainty and critical assumptions in applying accounting policies that have the most significant effect on the amount recognized in the financial statements is included in the following notes:
Annual Report 2019 170 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Note 5, 6, 7, 8, 9 and 10 Measurement of the recoverable amounts of each asset and cash- generating units; Note 11 and 19 Recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilized; and Note 14 Measurement of non-current provision for defined benefit plans: - key actuarial assumptions.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which these valuations should be classified.
Significant valuation issues are reported to the Company’s Audit Committee.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs are unobservable inputs for the asset or liability. 2019 Financial Statements of SCG Packaging Public Company Limited 171
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 8 Investment property; and • Note 23 Financial instruments.
3 Significant accounting policies
The accounting policies set out below have been consistently applied to all periods presented in these financial statements.
(a) Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to functional currency at the foreign exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated to the functional currencies at the exchange rates at that date. Foreign exchange differences are recognized in profit or loss.
Non-monetary assets and liabilities which include arising from the payment or receipt of advance consideration measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.
(b) Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Annual Report 2019 172 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
In addition, bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
(c) Other receivables and contract assets
A receivable is recognized when the Company has an unconditional right to receive consideration. If revenue has been recognised before the Company has an unconditional right to receive consideration, the amount is presented as a contract asset. A receivable and a contract asset are measured at value less allowance for doubtful accounts which are assessed on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.
(d) Investments
Investment in associates and subsidiaries
Investments in associates and subsidiaries in the financial statements are accounted for using the cost method less any accumulated impairment losses.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount is recognized in profit or loss.
If the Company disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying amount of the total holding of the investment.
(e) Investment property
Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. 2019 Financial Statements of SCG Packaging Public Company Limited 173
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labor, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalized borrowing costs of a qualifying asset.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each property. The estimated useful lives are as follows:
Land improvements 20 years Building and structures 5, 20 years
Reclassification to property, plant and equipment
When the use of an investment property changes such that it is reclassified as property, plant and equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.
(f) Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalized borrowing costs of a qualifying asset. Licensed software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
When parts of an item of property, plant and equipment have different consumption patterns and useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in profit or loss. Annual Report 2019 174 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, its carrying amount is recognized and reclassified as investment property.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment, including major inspections, is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
Depreciation
Depreciation is calculated based on the depreciable amount, which is the cost of property, plant and equipment, or other amount substituted for cost, less its residual value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows:
Land improvements 5, 20 years Building and structures 5, 10, 20 years Machinery and equipment 5, 10, 15, 20 years Transportation equipment 5, 10 years Furniture, fixtures and office equipment 3, 5, 20 years
No depreciation is provided on freehold land or assets under construction.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
2019 Financial Statements of SCG Packaging Public Company Limited 175
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
(g) Intangible assets
Intangible assets that are acquired by the Company, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.
Amortization
Amortization is calculated based on the cost of the asset, or other amount substituted for cost, less its residual value.
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives are as follows:
Software licenses 3, 5, 10 years
No amortization is provided on assets under development.
Amortization methods, useful lives and residual values are reviewed at each reporting period and adjusted if appropriate.
(h) Impairment
The carrying amounts of the Company’s assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ Annual Report 2019 176 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognized in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Reversals of impairment
An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognized in profit or loss.
Impairment losses recognized in prior periods in respect of other non-financial assets are assessed at each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or accumulated amortization, if no impairment loss had been recognized.
(i) Other payables
Other payables are stated at cost.
2019 Financial Statements of SCG Packaging Public Company Limited 177
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
(j) Contract liabilities
A contract liability is the obligation to transfer goods or services to the customer. A contract liability is recognized when the Company receives or has an unconditional right to receive non-refundable consideration from the customer before the Company recognizes the related revenue.
(k) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Defined benefit plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount.
The calculation of defined benefit obligations is performed by a qualified actuary using the projected unit credit method which is based on actuarial valuation method.
Remeasurements of the net defined benefit liability, actuarial gain or loss are recognized in other comprehensive income. The Company determines the interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Annual Report 2019 178 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Other long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.
Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(l) Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
(m) Revenue
Revenue excludes value added taxes.
2019 Financial Statements of SCG Packaging Public Company Limited 179
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Service fee income
Intellectual property income, management fees for administration and service income are recognized throughout the royalty period.
Rental income
Rental income is recognized in profit or loss on a straight-line basis over the term of the rent. Lease incentives granted are recognized as expenses in which they are incurred.
Interest and dividend income
Interest income is recognized in profit or loss using the effective interest method. Dividend income is recognized in profit or loss on the date the Company’s right to receive payments is established.
(n) Expenses
Operating leases
Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognized in profit or loss as an integral part of the total lease expense, over the term of lease.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method. Annual Report 2019 180 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Early retirement expenses
The Company offered certain qualifiable employees the option to take early retirement from the Company. Eligible employees who accept the offer are paid a lump sum amount which is calculated based on a formula using their final month’s pay, number of years of service or the number of remaining months before normal retirement as variables. The Company records expenses on early retirement upon mutual acceptance.
(o) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognized in profit or loss except to the extent that they relate to items recognized directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of the reporting period.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 2019 Financial Statements of SCG Packaging Public Company Limited 181
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Company. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
4 Related parties
Parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa.
Relationships with related parties were as follows:
Name of entities Country of Nature of relationships incorporation / nationality The Siam Cement Public Company Limited Thailand Ultimate parent company Siam Kraft Industry Co., Ltd. Thailand Subsidiary, direct ownership interest Phoenix Pulp & Paper Public Company Limited Thailand Subsidiary, direct ownership interest Annual Report 2019 182 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Name of entities Country of Nature of relationships incorporation / nationality Thai Cane Paper Public Company Limited Thailand Subsidiary, direct ownership interest Thai Containers Group Co., Ltd. Thailand Subsidiary, direct ownership interest Invenique Co., Ltd. Thailand Subsidiary, direct ownership interest United Pulp and Paper Co., Inc. Philippines Subsidiary, direct ownership interest SCGP Excellence Training Center Co., Ltd. Thailand Subsidiary, direct ownership interest SCG Paper Energy Co., Ltd. Thailand Subsidiary, direct ownership interest SCGP Solutions Co., Ltd. Thailand Subsidiary, direct ownership interest SCGP-T Plastics Co., Ltd. Thailand Subsidiary, direct ownership interest SCGP Solutions (Singapore) Pte. Ltd. Singapore Subsidiary, direct ownership interest SCGP Rigid Plastics Company Limited Thailand Subsidiary, direct ownership interest Phoenix Utilities Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Containers Khonkaen Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Containers Rayong Co., Ltd. Thailand Subsidiary, indirect ownership interest The Siam Forestry Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Paper Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Wanabhum Co., Ltd. Thailand Subsidiary, indirect ownership interest Siam Panawes Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panaboon Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panaram Co., Ltd. Thailand Subsidiary, indirect ownership interest Panas Nimit Co., Ltd. Thailand Subsidiary, indirect ownership interest Suanpa Rungsris Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panadorn Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panason Co., Ltd. Thailand Subsidiary, indirect ownership interest Tawana Container Co., Ltd. Thailand Subsidiary, indirect ownership interest Dyna Packs Co., Ltd. Thailand Subsidiary, indirect ownership interest Orient Containers Co., Ltd. Thailand Subsidiary, indirect ownership interest D-In Pack Co., Ltd. Thailand Subsidiary, indirect ownership interest TC Flexible Packaging Co., Ltd. Thailand Subsidiary, indirect ownership interest Prepack Thailand Co., Ltd. Thailand Subsidiary, indirect ownership interest Precision Print Co., Ltd. Thailand Subsidiary, indirect ownership interest 2019 Financial Statements of SCG Packaging Public Company Limited 183
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Name of entities Country of Nature of relationships incorporation / nationality Conimex Co., Ltd. Thailand Subsidiary, indirect ownership interest SKIC International Co., Ltd. Thailand Subsidiary, indirect ownership interest Visy Packaging (Thailand) Limited Thailand Subsidiary, indirect ownership interest Vina Kraft Paper Co., Ltd. Vietnam Subsidiary, indirect ownership interest New Asia Industries Co., Ltd. Vietnam Subsidiary, indirect ownership interest Alcamax Packaging (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest AP Packaging (Hanoi) Co., Ltd. Vietnam Subsidiary, indirect ownership interest Packamex (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest Tin Thanh Packing Joint Stock Company Vietnam Subsidiary, indirect ownership interest TCG Rengo (S) Limited* Singapore Subsidiary, indirect ownership interest Paperlink Inter-Trade Corporation** Philippines Subsidiary, indirect ownership interest PT Primacorr Mandiri Indonesia Subsidiary, indirect ownership interest PT Indoris Printingdo Indonesia Subsidiary, indirect ownership interest PT Indocorr Packaging Cikarang Indonesia Subsidiary, indirect ownership interest PT Fajar Surya Wisesa Tbk. Indonesia Subsidiary, indirect ownership interest Interpress Printers Sendirian Berhad Malaysia Subsidiary, indirect ownership interest Siam Toppan Packaging Co., Ltd. Thailand Associate, direct ownership interest P&S Holdings Corporation Philippines Associate, direct ownership interest Sahagreen Forest Co., Ltd. Thailand Associate, indirect ownership interest Siam Nippon Industrial Paper Co., Ltd. Thailand Associate, indirect ownership interest PT SCG Indonesia Indonesia Subsidiary of The Siam Cement Public Company Limited SCG Vietnam Co., Ltd. Vietnam Subsidiary of The Siam Cement Public Company Limited SCG Legal Counsel Limited Thailand Subsidiary of The Siam Cement Public Company Limited
* Currently in the liquidation process. **Paperlink Inter-Trade Corporation amalgamate with United Pulp and Paper Co., Inc. which has already been completed on 25 November 2019. Annual Report 2019 184 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Significant transactions with related parties for the years ended 31 December and the pricing policies are summarized as follows:
2019 2018 Pricing Policies (in thousand Baht) Parent Rental and service expense 194,986 191,124 Contract rate and percentage of service provided Interest expense 1,255,622 777,839 Contract rate
Subsidiaries Rental income 30,341 28,779 Contract rate Intellectual property income 7,404 7,553 Percentage of net sales Management fee income and 1,522,432 1,451,422 Service provided and percentage of Service charges income net sales Dividend income 1,556,920 7,802,977 Upon declaration Interest income 966,849 582,567 Contract rate Interest expense 392 106 Contract rate
Associates Dividend income 9,457 11,123 Upon declaration
In the income statement for the year ended 31 December 2019, the Company presents finance costs of Baht 289 million (2018: Baht 195 million), which is comprised of interest expense from related parties and finance charges of Baht 1,256 million (2018: Baht 778 million) and interest income from related parties of Baht 967 million (2018: Baht 583 million).
2019 Financial Statements of SCG Packaging Public Company Limited 185
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Balances as at 31 December with related parties were as follows:
Other current receivables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 5,396 3,471
Subsidiaries Siam Kraft Industry Co., Ltd. 77,567 56,992 Thai Containers Group Co., Ltd. 30,399 19,071 Vina Kraft Paper Co., Ltd. 24,822 26,432 Thai Paper Co., Ltd. 15,697 18,494 United Pulp and Paper Co., Inc. 15,003 9,143 SCGP Solutions (Singapore) Pte. Ltd. 13,174 - Phoenix Pulp & Paper Public Company Limited 10,056 12,949 Thai Cane Paper Public Company Limited 8,128 8,824 SCGP Rigid Plastics Company Limited 7,034 - Tin Thanh Packing Joint Stock Company 5,212 - SCGP Excellence Training Center Co., Ltd. 3,134 3,638 The Siam Forestry Co., Ltd. 2,344 1,603 Others 11,065 12,377 Total 229,031 172,994
Annual Report 2019 186 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Short-term loans to related parties
2019 2018 (in thousand Baht) Subsidiaries Siam Kraft Industry Co., Ltd. 29,631,410 13,194,544 Thai Containers Group Co., Ltd. 3,740,011 3,704,207 SCG Paper Energy Co., Ltd. 579,474 826,452 SCGP-T Plastics Co., Ltd. - 137,794 Total 33,950,895 17,862,997
Movements during the years on short-term loans to related parties were as follows:
2019 2018 (in thousand Baht) At 1 January 17,862,997 11,147,587 Increase 42,426,889 32,824,094 Decrease (26,338,991) (26,108,684) At 31 December 33,950,895 17,862,997
Advance payment from software licence fee shown under other non-current receivables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 14,050 11,321
2019 Financial Statements of SCG Packaging Public Company Limited 187
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Other current payables
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 43,035 43,155 Subsidiaries Siam Kraft Industry Co., Ltd. 5,048 3,598 SCGP Excellence Training Center Co., Ltd. 2,152 697 Others SCG Vietnam Co., Ltd. 3,312 3,561 PT SCG Indonesia 1,644 1,768 SCG Legal Counsel Limited 1,162 2,937 Others 2,826 2,925 Total 59,179 58,641
Short-term borrowings from related parties
2019 2018 (in thousand Baht) Parent The Siam Cement Public Company Limited 33,756,240 23,309,751 Subsidiaries SCGP Rigid Plastics Company Limited 98,357 - SCGP Excellence Training Center Co., Ltd. 28,452 27,553 Invenique Co., Ltd. 15,319 5,267 SCGP-T Plastics Co., Ltd. 8,322 - SCGP Solutions Co., Ltd. 343 831 Total 33,907,033 23,343,402
Annual Report 2019 188 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Movements during the years on short-term borrowings from related parties were as follows:
2019 2018 (in thousand Baht) At 1 January 23,343,402 15,458,617 Increase 40,569,245 21,258,580 Decrease (30,005,614) (13,373,795) At 31 December 33,907,033 23,343,402
The Board of Directors and key management compensation
2019 2018 (in thousand Baht) For the years ended 31 December Short-term employee benefits 82,730 94,956 Post-employment benefits 16,556 8,609 Total 99,286 103,565
The Board of Directors and key management compensation comprises the remuneration paid to the directors of SCG Packaging Public Company Limited under the articles of the Company and the remuneration paid to the management as staff expenses in terms of salary, bonus, variable pay, others and contribution to defined contribution plans.
2019 Financial Statements of SCG Packaging Public Company Limited 189
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
5 Other current receivables
Note 2019 2018 (in thousand Baht) Related parties 4 229,031 172,994 Other parties 25,275 20,400 Total 254,306 193,394
Other current receivables as at 31 December were as follows:
2019 2018 (in thousand Baht) Accrued service income 192,409 152,529 Accrued interest income 29,111 16,027 Others 32,786 24,838 Total 254,306 193,394 190
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
6 Investments in associates
Investments in associates as at 31 December and dividend income from these investments for the years then ended at the same date were as follows:
Total holding Paid-up capital Cost method Dividend income 2019 2018 2019 2018 2019 2018 2019 2018
(%) (in thousand Baht) SCG Packaging PublicCompany Limited Annual Report 2019 Siam Toppan Packaging Co., Ltd. 49 49 500,000 500,000 245,000 245,000 9,457 11,123 P&S Holdings Corporation 40 40 262,588 262,588 105,121 105,121 - - Total 762,588 762,588 350,121 350,121 9,457 11,123
2019 Financial Statements of SCG Packaging Public Company Limited 191
- Notes to the financial statements 11,123 11,123 SCG Packaging Public Company Limited
For the years ended 31 December 2019 and 2018 - 9,457 9,457 7 Investments in subsidiaries
Movements for the years ended 31 December in investments in subsidiaries accounted for using the cost 245,000 105,121 350,121 method were as follows:
2019 2018
(in thousand Baht) (in thousand Baht) 245,000 105,121 350,121
At 1 January 28,398,365 27,027,254
Acquisitions and additional investments 6,049,073 1,371,111 At 31 December 34,447,438 28,398,365 500,000 262,588 762,588 In January 2018, the Company registered SCGP Solutions (Singapore) Pte. Ltd. which is virtually owned
100% totaling Ringgit 61 million or equivalent to approximately Baht 492 million.
762,588 In February 2018, the Company had paid-up increased share capital of SCGP-T Plastics Co., Ltd. for 1,480,000 shares at 100 Baht per share totaling Baht 148 million. The Company has already been registered with the Ministry of Commerce on 6 March 2018. (%)
40 40 262,588 49 49 500,000 Total holding Paid-up capital Costmethod Dividend income
2019 2018 2019 2018 2019 2018 2019 2018 In March 2018, the Company had paid-up increased share capital of SCGP Solutions Co., Ltd. for 1,690,000 shares at 100 Baht per share totaling Baht 169 million. The Company has already been registered with the Ministry of Commerce on 23 March 2018.
In March 2018, the Company had paid-up increased share capital of SCGP Solutions (Singapore) Pte. Ltd. for 9,200,000 shares totaling Ringgit 28 million or equivalent to approximately Baht 225 million and in July 2018, for 399,999 shares totaling Singapore Dollar 399,999 or equivalent to approximately Baht 10 million.
In December 2018, the Company had repurchased shares of Thai Cane Paper Public Company Limited (“TCP”) from Sa Ha Sit Import and Export (Thailand) Co., Ltd. and other minority shareholders which consisted of 13,089,234 ordinary shares at Baht 25 per share totaling Baht 327 million. As a result, the Company’s ownership was increased from 94.54% to 98.20%.
Total
P&S HoldingsP&S Corporation SiamToppan Packaging Co.,Ltd. Investments in associates as at December31 and dividend incomefrom these investmentsfor the years thenat ended thesame dateasfollows: were
Notes tothe financial statements Limited Company Public Packaging SCG For the years 31 December 2019 ended and 2018 6 associates in Investments Annual Report 2019 192 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
In February 2019, the Company registered SCGP Rigid Plastics Company Limited (“SCGPRP”) which is virtually owned 100% totaling Baht 1 million. In March 2019, the Company had paid-up increased share capital of SCGPRP for 4,990,000 shares at 100 Baht per share totaling Baht 499 million. The Company has already been registered with the Ministry of Commerce on 27 March 2019.
In April 2019, SCGP-T Plastics Co., Ltd. (“SCGP-T”) sold increased share capital for 1,431,500 shares at 100 Baht per share totaling Baht 143 million to Toppan Printing Co., Ltd. As a result, the Company ownership was decreased from 100% to 51%. In May 2019, the Company had paid-up increased share capital of SCGP-T for 478,125 shares at 100 Baht per share totaling Baht 48 million. The Company has already been registered with the Ministry of Commerce on 16 May 2019.
In June 2019, SCGP Solutions (Singapore) Pte. Ltd. had increased share capital for 927,400,330 shares or approximately Baht 20,888 million. The Company had paid-up increased share capital for 69,400,000 shares totaling United States Dollar 50,000,000 and Singapore Dollar 400,000 or equivalent to approximately Baht 1,598 million. The remaining shares have been purchased by Siam Kraft Industry Co., Ltd.
In August 2019, the Company had initial paid-up increased share capital of SCGP Rigid Plastics Company Limited for 57,400,000 shares at 68 Baht per share totaling Baht 3,903 million. The Company has already been registered with the Ministry of Commerce on 3 September 2019.
2019 FinancialStatementsof SCG Packaging PublicCompany Limited
NotesNotes to to the the financial financial statements statements
SCGSCG Packaging Packaging Public Public Company Company Limited Limited ForFor the the years years ended ended 31 31 December December 2019 2019 and and 2018 2018
InvestmentsInvestments in in subsidiaries subsidiaries as asat at31 31December December and and dividend dividend income income from from these these investments investments for the for years the thenyears ended then endedat the sameat the date same were date as werefollows: as follows:
Accumulated Accumulated TotalTotal holding holding Paid-upPaid-up capital capital Cost methodCost method impairmentimpairment losses losses Net Net Dividend incomeDividend income 20192019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 2018 (%)(%) (in thousand(in thousand Baht) Baht) SiamSiam KraftKraft Industry Industry Co., Co., Ltd. Ltd. 100100 100 100 3,450,000 3,450,000 3,450,000 3,450,000 3,982,680 3,982,680 3,982,680 3,982,680 - - - - 3,982,680 3,982,680 3,982,680 3,982,680 1,069,500 1,069,500 7,107,000 7,107,000 ThaiThai ContainersContainers Group Group Co., Co., Ltd. Ltd. 70 70 70 70 1,384,000 1,384,000 1,384,000 1,384,000 1,013,805 1,013,805 1,013,805 1,013,805 - - - - 1,013,805 1,013,805 1,013,805 1,013,805 96,880 96,880 290,640 290,640 InveniqueInvenique Co., Co., Ltd. Ltd. 100100 100100 70,200 70,200 70,200 70,200 70,200 70,200 70,200 70,200 64,035 64,035 64,035 64,035 6,165 6,165 6,165 6,165 - - - - Phoenix Pulp & Paper Public Company Phoenix Pulp & Paper Public Company Limited 69.58 69.58 2,462,812 2,462,812 13,439,561 13,439,561 - - 13,439,561 13,439,561 152,516 126,811 Limited 69.58 69.58 2,462,812 2,462,812 13,439,561 13,439,561 - - 13,439,561 13,439,561 152,516 126,811 United Pulp and Paper Co., Inc. 77.33 77.33 4,327,982 4,327,982 2,963,899 2,963,899 - - 2,963,899 2,963,899 - - United Pulp and Paper Co., Inc. 77.33 77.33 4,327,982 4,327,982 2,963,899 2,963,899 - - 2,963,899 2,963,899 - - Thai Cane Paper Public Company Limited 98.20 98.20 3,582,537 3,582,537 5,007,375 5,007,375 - - 5,007,375 5,007,375 211,075 254,026 Thai Cane Paper Public Company Limited 98.20 98.20 3,582,537 3,582,537 5,007,375 5,007,375 - - 5,007,375 5,007,375 211,075 254,026 SCGP Excellence Training Center Co., Ltd. 100 100 49,000 49,000 49,000 49,000 - - 49,000 49,000 26,949 24,500 SCGSCGP Paper Excellence Energy Co.,Training Ltd. Center Co., Ltd. 100 100 100 100 890,000 49,000 890,00049,000 890,00049,000 890,000 49,000 - - - - 890,000 49,000 890,000 49,000 - 26,949 - 24,500 SCGPSCG PaperSolutions Energy Co., Co.,Ltd. Ltd. 100100 100 100 170,000 890,000 170,000 890,000 170,000 890,000 170,000 890,000 - - - - 170,000 890,000 170,000 890,000 - - - - SCGP-TSCGP Solutions Plastics Co., Co., Ltd. Ltd. 51100 100100 385,900 170,000 149,000170,000 196,812170,000 149,000 170,000 - - - - 196,812 170,000 149,000 170,000 - - - - SCGPSCGP-T Solutions Plastics (Singapore) Co., Ltd. Pte. Ltd. 10.3451 100 100 21,715,830 385,900 726,880149,000 2,324,941 196,812 726,880 149,000 - - - - 2,324,941 196,812 726,880 149,000 - - - - SCGPSCGP RigidSolutions Plastics (Singapore) Company Pte.Limited Ltd. 100 10.34 - 100 4,403,200 21,715,830 726,880- 4,403,200 2,324,941 - 726,880 - - - - 4,403,200 2,324,941 - 726,880 - - - - TotalSCGP Rigid Plastics Company Limited 100 - 42,891,461 4,403,200 17,262,411 - 34,511,473 4,403,200 28,462,400 - 64,035 -64,035 -34,447,438 4,403,200 28,398,365 - 1,556,920 7,802,977 - - Total 42,891,461 17,262,411 34,511,473 28,462,400 64,035 64,035 34,447,438 28,398,365 1,556,920 7,802,977
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Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
9 Property, plant and equipment
Furniture, Land fixtures and land Buildings and Machinery Transportation and office Construction improvements structures and equipment equipment equipment in progress Total (in thousand Baht) Cost At 1 January 2018 43,016 128,251 321,375 891 62,276 17,260 573,069 Additions - 197 9,354 78 904 9,394 19,927 Disposals - - (3,190) - (14,067) - (17,257) Transfers in (out) - 2,206 8,237 - 1,183 (11,847) (221) At 31 December 2018 43,016 130,654 335,776 969 50,296 14,807 575,518 Additions 175 668 7,980 - 694 11,030 20,547 Disposals - - (2,089) - - (3,605) (5,694) Transfers in (out) - 433 10,508 - 900 (8,170) 3,671 At 31 December 2019 43,191 131,755 352,175 969 51,890 14,062 594,042
2019 FinancialStatementsof SCG Packaging PublicCompany Limited Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
9 Property, plant and equipment
Furniture, Land fixtures and land Buildings and Machinery Transportation and office Construction improvements structures and equipment equipment equipment in progress Total (in thousand Baht) Cost At 1 January 2018 43,016 128,251 321,375 891 62,276 17,260 573,069 Additions - 197 9,354 78 904 9,394 19,927 Disposals - - (3,190) - (14,067) - (17,257) Transfers in (out) - 2,206 8,237 - 1,183 (11,847) (221) At 31 December 2018 43,016 130,654 335,776 969 50,296 14,807 575,518 Additions 175 668 7,980 - 694 11,030 20,547 Disposals - - (2,089) - - (3,605) (5,694) Transfers in (out) - 433 10,508 - 900 (8,170) 3,671 At 31 December 2019 43,191 131,755 352,175 969 51,890 14,062 594,042
195 196
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Furniture, Land fixtures and land Buildings and Machinery Transportation and office Construction improvements structures and equipment equipment equipment in progress Total (in thousand Baht)
Accumulated depreciation SCG Packaging PublicCompany Limited Annual Report 2019 At 1 January 2018 11,849 74,357 190,615 373 55,312 - 332,506 Depreciation charge for the year 10 5,948 24,859 92 3,717 - 34,626 Disposals - - (3,157) - (14,052) - (17,209)
At 31 December 2018 11,859 80,305 212,317 465 44,977 - 349,923 Depreciation charge for the year 12 3,277 25,434 95 2,236 - 31,054 Disposals - - (276) - - - (276) At 31 December 2019 11,871 83,582 237,475 560 47,213 - 380,701
Carrying amount At 31 December 2018 31,157 50,349 123,459 504 5,319 14,807 225,595 At 31 December 2019 31,320 48,173 114,700 409 4,677 14,062 213,341
2019 Financial Statements of SCG Packaging Public Company Limited 197
Notes to the financial statements (276)
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
(17,209) - - 380,701 - - 349,923 10 Intangible assets
Software
- 332,506
licenses Software development licenses cost Total (in thousand Baht)
and office Construction Cost At 1 January 2018 72,549 9,990 82,539
Additions 3,351 7,180 10,531
Transfer in (out) 7,743 (7,522) 221 - - - At 31 December 2018 83,643 9,648 93,291
equipment equipment in progress Total (in thousand Baht) Additions 2,540 9,287 11,827
(276) Transfer in (out) 5,552 (9,223) (3,671)
(3,157) - (14,052) - At 31 December 2019 91,735 9,712 101,447
Accumulated amortization At 1 January 2018 58,003 - 58,003 Amortization charge for the year 5,181 - 5,181
At 31 December 2018 63,184 - 63,184
Furniture, Amortization charge for the year 7,640 - 7,640
At 31 December 2019 70,824 - 70,824
11,849 74,357 190,615 373 55,312 11,871 83,582 237,475 560 47,21 3 11,859 80,305 212,317 465 44,97 7 31,157 31,320 50,349 48,173 123,459 114,700 504 409 5,319 4,677 14,807 14,062 225,595 213,341 Land fixtures and land Buildings and Machinery Transportation Carrying amount - - - - improvements improvements structures equipment and At 31 December 2018 20,459 9,648 30,107 At 31 December 2019 20,911 9,712 30,623
Carrying amount Depreciation charge foryear the Disposals Depreciation charge for 10 year the Disposals 5,948 12 24,859 3,277 25,434 92 3,717 95 - 2,236 - 34,626 31,054 At January1 2018
AtDecember31 2019 Accumulated depreciation depreciation Accumulated AtDecember31 2018 AtDecember31 2018 AtDecember31 2019 Notes tothe financial statements Limited Company Public Packaging SCG For the years 31 December 2019 ended and 2018
Annual Report 2019 198 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
11 Deferred tax asset (deferred tax liability)
Deferred tax asset and liability are offset if there is a legally enforceable right to offset current tax asset and liability, and they relate to income taxes levied by the same tax authority on the same taxable entity, and are included in the statement of financial position as follows:
2019 2018
(in thousand Baht) Deferred tax asset 59,101 34,603 Deferred tax liability (2) (1) Net 59,099 34,602
Movements in total deferred tax asset and liability during the years were as follows:
Credited to At profit other At 1 January or loss comprehensive 31 December 2018 income 2018 (Note 19) (in thousand Baht) Deferred tax asset Provisions for employee benefits 17,842 568 16,193 34,603
Deferred tax liability Unrealized gain on foreign currency exchange (55) 54 - (1)
Net 17,787 622 16,193 34,602
2019 Financial Statements of SCG Packaging Public Company Limited 199
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Credited (charged) to At profit other At 1 January or loss comprehensive 31 December 2019 income 2019 (Note 19) (in thousand Baht) Deferred tax asset Provisions for employee benefits 34,603 18,875 5,623 59,101
Deferred tax liability Unrealized gain on foreign currency exchange (1) (1) - (2)
Net 34,602 18,874 5,623 59,099
The deductible temporary differences and unused tax losses that the Company have not recognized as deferred tax assets are as the following items:
2019 2018 (in thousand Baht) Temporary differences - Other current receivables 16,963 16,963 - Investment in subsidiaries 64,035 64,035 Unused tax losses 333,690 - Total 414,688 80,998
The unused tax losses on which the Company has not recognized deferred tax assets are the tax losses which do not expire under tax legislation and would be expired within 2024. Annual Report 2019 200 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
12 Other current payables
2019 2018 (in thousand Baht) Accrued expenses 88,798 48,486 Withholding tax payable 41,269 43,549 Accrued interest 39,138 20,969 Value added tax payable 6,922 4,768 Account payables from purchases of assets 2,207 5,526 Others 71,239 16,127 Total 249,573 139,425
13 Borrowings from financial institutes
As of 18 November 2019, the Company entered into loan agreements with various local financial institutions for Baht 26,500 million. In 2019, the Company has drawn-down under the loan agreements amounting to Baht 12,000 million. The interest rates were 2.355% and 2.50% per annum.
In January 2020, the Company has drawn-down under loan agreements for Baht 14,500 million.
14 Non-current provisions for employee benefits
The Company operates defined benefits plans based on the requirement of the Thai Labor Protection Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on pensionable remuneration and length of service.
The defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market risk.
2019 Financial Statements of SCG Packaging Public Company Limited 201
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Non-current provisions for employee benefits in statement of financial position as at 31 December
2019 2018 (in thousand Baht) Post-employment benefits - legal severance payments plan 288,374 154,350 Other long-term employee benefits 7,133 5,228 Total 295,507 159,578
Movements in the present value of non-current provisions for defined benefit plans
2019 2018 (in thousand Baht) Non-current provisions for defined benefit plans at 1 January 159,578 75,451
Included in profit or loss Current service costs 12,689 4,036 Interest on obligation 7,055 2,679 Actuarial losses 889 1,841 Past service cost from the amended severance pay of the Labor Law 50,795 - Transfer of non-current provisions for employee benefits 46,436 - 117,864 8,556
Included in other comprehensive income Actuarial losses 28,246 80,963
Other Benefits paid (10,181) (5,392) Non-current provisions for defined benefit plans at 31 December 295,507 159,578
Annual Report 2019 202 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
On 5 April 2019, the Labor Protection Act has already been announced in Royal Gazette that became effective on 5 May 2019 to include a requirement that an employee who is terminated after having been employed by the same employer for an uninterrupted period of twenty years or more, receives severance payment of 400 days of wages at the most recent rate, which is increased from the maximum rate of 300 days. The Company recognized the effect of this change as the expense amounted to Baht 51 million in income statement, resulting in the decrease in net profit amounted to Baht 41 million.
Actuarial losses (gains) recognized in other comprehensive income as of the end of the reporting period arising from:
2019 2018 (in thousand Baht) For the years ended 31 December Demographic assumptions (109) 48,181 Financial assumptions 18,069 2,406 Experience adjustment 10,286 30,376 Total 28,246 80,963
Actuarial assumptions
Principal actuarial assumptions as of the end of the reporting period
2019 2018 (%) For the years ended 31 December Discount rate* 1.70 - 1.74 3.02 - 3.09 Salary increase rate 2.00 - 7.00 3.00 - 7.00 Employee turnover rate** 4.00 - 9.00 4.00 - 10.00 Mortality rate*** 100.00 of TMO 2017 100.00 of TMO 2017
* Market yields on government’s bonds for legal severance payments plan ** Upon the length of service *** Reference from TMO2017: Thai Mortality Ordinary Table 2017 2019 Financial Statements of SCG Packaging Public Company Limited 203
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Annual Report 2019 204 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
15 Share capital
2019 2018 Par Number Number Value of shares Value of shares Value (in Baht) (in thousand shares / (in thousand shares / thousand Baht) thousand Baht) Authorized At 1 January - ordinary shares 10 - - 156,300 1,563,000 Reduction in par value - ordinary shares 1 1,563,000 1,563,000 - - Increase of new shares - ordinary shares 1 2,937,000 2,937,000 - - At 31 December - ordinary shares 10 - - 156,300 1,563,000 - ordinary shares 1 4,500,000 4,500,000 - -
Issued and paid-up At 1 January - ordinary shares 10 - - 156,300 1,563,000 Reduction in par value - ordinary shares 1 1,563,000 1,563,000 - - Increase of new shares - ordinary shares 1 1,563,000 1,563,000 - - At 31 December - ordinary shares 10 - - 156,300 1,563,000 - ordinary shares 1 3,126,000 3,126,000 - -
2019 Financial Statements of SCG Packaging Public Company Limited 205
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Annual Report 2019 206 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
17 Administrative expenses
2019 2018 (in thousand Baht) Salary, welfare and personnel expenses 1,080,087 931,991 Service expenses 122,647 114,364 Rent, depreciation and amortization expenses 101,126 90,147 Professional and consultant fees 98,102 75,862 IT fees 59,516 50,472 Others 119,300 111,369 Total 1,580,778 1,374,205
18 Employee benefit expenses
2019 2018 (in thousand Baht) Salary and wages 817,667 749,973 Contribution to defined contribution plans 64,428 55,702 Contribution to defined benefit plans 67,069 8,556 Welfares and others 130,923 117,760 Employee benefit expense from the amended severance pay of the Labor Law 50,795 - Total 1,130,882 931,991
The defined contribution plans comprise provident funds established by the Company for its employees in addition to the above provident fund. The provident funds were registered with the Ministry of Finance under the Provident Fund Act B.E. 2530. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at 2% to 15% of their basic salaries and by the Company at 5% to 13% of the members’ basic salaries, depending on the length of employment.
2019 Financial Statements of SCG Packaging Public Company Limited 207
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
19 Income tax
Income tax recognized in profit or loss
Note 2019 2018 (in thousand Baht) Current tax Current tax - 24,943 Over provided in prior years (3,674) (3,133) (3,674) 21,810 Deferred tax Movements in temporary differences 11 (18,874) (622) Total (22,548) 21,188
Income tax recognized in other comprehensive income
2019 2018 (in thousand Baht) Actuarial losses (5,623) (16,193)
Annual Report 2019 208 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Reconciliation of effective tax rate
For the years ended December 31, 2019 and 2018, the Company’s effective tax rate is not equal to the statutory tax rate of 20% under the Revenue Code because income tax expense is calculated from accounting profit adjusted by non-deductible expenses, deducted income or expense exemption under the Revenue Code.
2019 2018 Rate (in thousand Rate (in thousand (%) Baht) (%) Baht) Profit before income tax 1,223,100 7,946,182 Income tax using the Thai corporation tax rate 20 244,620 20 1,589,236 Income not subject to tax (313,275) (1,562,820) Expenses deductible at a greater amount (21,219) (6,373) Expenses not deductible for tax purposes 25,175 6,422 Prior year expenses deductible for tax purposes (2,039) (1,522) Tax loss 66,738 - Current tax - 24,943 Over provided in prior years (3,674) (3,133) Movement in temporary differences (18,874) (622) Income tax expense (benefits) - (22,548) 0.27 21,188
20 Basic earnings per share
The calculations of basic earnings per share for the years ended 31 December was based on the profit for the years attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the years, after adjusting the number of ordinary shares in proportion to the change in the number of shares as a result of the stock split and distribution of stock dividend disclosed in note 15 and 21. The number of ordinary shares used in the calculation are adjusted as if such change had occurred at the beginning of the earliest reporting period as follows:
2019 Financial Statements of SCG Packaging Public Company Limited 209
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Note 2019 2018 (in thousand Baht / thousand shares) Profit for the year attributable to ordinary shareholders of the Company 1,245,648 7,924,994 Weighted average number of ordinary shares outstanding at 1 January 156,300 156,300 Effect of reduction in par value 15 1,406,700 1,406,700 Effect of stock dividend 15 1,563,000 1,563,000 Weighted average number of ordinary shares outstanding at 31 December 3,126,000 3,126,000
Basic earnings per share (in Baht) 0.40 2.54
21 Dividends
The dividends paid by the Company to the shareholders are as follows:
Dividend rate Approval date Payment schedule per share Amount (Baht) (in million Baht) 2019 Annual dividend 2018 26 March 2019 25 April 2019 10.00 1,563 Interim dividend 25 November 2019 6 December 2019 1.11111111 1,737 Total 11.11111111 3,300
2018 Annual dividend 2017 23 March 2018 20 April 2018 50.00 7,815
On 25 November 2019, at the Extra ordinary general meeting of shareholders of the Company, they passed resolution to approve the interim dividend payment, detail are as follows;
Annual Report 2019 210 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
1. Pay dividend by ordinary shares of 1,563,000,000 shares at par value of Baht 1 per share, in the ratio of 1 current share per 1 dividend share. 2. Pay dividend by cash at Baht 0.11111111 per share, totaling Baht 174 million.
22 Lease agreements
(a) The Company entered into lease agreements with related parties covering the land where its buildings are located. These agreements will be gradually due within October 2022. Under the terms of these agreements, the Company has to pay annual rental as follows:
2019 2018 (in thousand Baht) Within one year 3,749 1,800 After one year but within five years 4,561 - Total 8,310 1,800
(b) The various car lease agreements. These agreements will be gradually due within November 2024. Under the terms of these agreements, the Company has to pay annual rental as follows:
2019 2018 (in thousand Baht) Within one year 15,724 12,325 After one year but within five years 23,733 20,437 Total 39,457 32,762
23 Financial instruments
Liquidity risk
The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.
2019 Financial Statements of SCG Packaging Public Company Limited 211
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Interest rate risk
Interest rate risk arises from the changing of interest rates, which may effect current and future operations of the Company. Management believes that the interest rate risk is minimal, hence, the Company does not have any hedging agreement to protect such risk.
The effective interest rates of loans receivables as at 31 December and the periods in which the loans receivables mature were as follows:
Loans receivable
After 1 year Effective interest Within but within Total rates 1 year 5 years (% per annum) (in thousand Baht) 2019 Current Short-term loans to related parties 3.50 - 3.75 33,950,895 - 33,950,895
2018 Current Short-term loans to related parties 3.75 17,862,997 - 17,862,997
The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature were as follows:
Annual Report 2019 212 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Financial liabilities
After 1 year Effective interest Within but within Total rates 1 year 5 years (% per annum) (in thousand Baht) 2019 Current Short-term borrowings from related parties 0.50 - 3.75 33,907,033 - 33,907,033
Non-current Long-term borrowings from financial institutions 2.355, 2.50 - 12,000,000 12,000,000 Total 33,907,033 12,000,000 45,907,033
2018 Current Short-term borrowings from related parties 0.50 - 3.75 23,343,402 - 23,343,402
Foreign exchange risk
The Company’s exposure to foreign exchange risk relates principally to its receivables and payables which are denominated in foreign currencies. However, as at 31 December 2019 and 2018, the Company does not have material foreign currency risk.
Fair value of financial assets and liabilities
Since the majority of the financial assets and liabilities classified as short-term and loans are bearing interest at rates closed to current market rate, the management believes that as at 31 December 2019 and 2018, the carrying amount of the Company’s financial instruments does not materially differ from their aggregate fair value. 2019 Financial Statements of SCG Packaging Public Company Limited 213
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
24 Capital management
The management of the Company has the capital management policy to maintain a strong capital base by emphasis in planning and determining the operating strategies resulting in good business’s performance and sustain good cash flows management. In addition, the Company considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustain future operations of the business and to maintain shareholders, investors, creditors and others interest’s confidence.
25 Others
On 26 October 2019, The Board of Directors’ Meeting No. 214 (10/2019) has approved the plan to issue and offer newly issued ordinary shares in the Company as an initial public offering (IPO) and to list the ordinary shares in the Company on the Stock Exchange of Thailand. The portion of the shares to be offered for sale in the IPO will not exceed 30% of the Company’s paid-up capital after its capital increase.
On 17 December 2019, the Company submitted to Thai SEC a registration statement and draft prospectus for the IPO. In connection with the IPO, the Company will issue and offer no more than 1,374,000,000 ordinary shares with a par value of 1 Thai Baht per share.
26 Events after the reporting period
At the Board of Directors’ Meeting of the Company held on 28 January 2020, the directors proposed for approval at the Annual General Meeting of Shareholders, the payment of a dividend for 2019 at the rate of Baht 0.42 per share, amounting to Baht 1,313 million and is scheduled for payment on 23 April 2020. The dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 24 March 2020.
Annual Report 2019 214 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
27 Reclassification of accounts
Certain accounts in the 2018 financial statement have been reclassified to conform to the presentation in the 2019 financial statements were as follows:
Before After
reclassification Reclassification reclassification (in thousand Baht) Statement of income For the year ended 31 December 2018 Service income 1,287,578 174,873 1,462,451 Other income 403,022 (174,873) 228,149
28 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective
The new and revised TFRSs, which are relevant to the Company’s operations, become effective for the financial statements in annual reporting periods beginning on or after 1 January 2020. The Company does not adopt these TFRSs early. The new TFRSs are as follows:
TFRS Topic TFRS 7* Financial Instruments: Disclosures TFRS 9* Financial Instruments TFRS 16 Lease TAS 32* Financial Instruments: Presentation TFRIC 16* Hedges of a Net Investment in a Foreign Operation TFRIC 19* Extinguishing Financial Liabilities with Equity Instruments
* TFRS - Financial instruments standards
2019 Financial Statements of SCG Packaging Public Company Limited 215
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
(a) TFRS - Financial instruments standards
These TFRS - Financial instruments standards establish requirements related to definition, recognition, measurement, impairment and derecognition of financial assets and financial liabilities, including accounting for derivatives and hedge accounting. When these TFRS are effective, some accounting standards, interpretations and guidance which are currently effective will be cancelled. The impact from adoption of TFRS - Financial instruments depends on the Company’s financial instruments by following TFRS - Financial instruments as follows:
(1) Classification - Financial assets
TFRS 9 classifies financial assets into three categories: measured at amortized cost, fair value to other comprehensive income (FVOCI) and fair value to profit or loss (FVTPL). The standard eliminates the existing classification of held-to-maturity debt securities, available-for-sale securities, trading securities and general investment as specified by TAS 105. The classification under TFRS 9 will be based on the cash flow characteristics of the financial asset and the business model in which they are managed. Under TFRS 9, derivatives will be measured at FVTPL. It will replace current accounting policies of the Company on recognition of adjustment value at the exchange rate at the end of period or when the derivatives were exercised.
The Company has made assessment of classification - Financial assets under TFRS 9. This adoption has no material effect on the financial statements of the Company.
(2) Measurement at amortized cost
Under TFRS 9, interest income and interest expenses recognized from all financial assets and financial liabilities measured at amortized cost shall be calculated using effective interest rate method. The adoption of TFRS 9 has no material effect on the financial statements of the Company.
(3) Impairment - Financial assets
TFRS 9 introduces forward-looking “expected credit loss” (ECL) model whereas currently the Company estimates allowance for doubtful account by analyzing payment histories and future expectation of Annual Report 2019 216 SCG Packaging Public Company Limited
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
customer payment. TFRS 9 requires consideration about how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis.
The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments.
The Company has made assessment the impairment of financial assets under TFRS 9. This adoption has no material effect on the financial statements of the Company.
(4) Classification - Financial liabilities
TFRS 9 introduces a new classification and measurement approach for financial liabilities consisting of two principal classification categories: amortized cost and FVTPL. A financial liability is classified as financial liabilities measured at FVTPL if it is held for trading, a derivative or designated as such on the initial recognition.
The Company classified other financial liabilities which are not held for trading or derivative measured at amortized cost. The adoption of TFRS 9 has no material effect on the financial statements of the Company.
(5) Hedge accounting
TFRS 9 introduces guidance on hedge accounting while current TFRSs are silent. There are three hedge accounting models and the type of model applied depends on the hedged exposures consisting of a fair value exposure, a cash flow exposure or a foreign currency exposure on a net investment in a foreign operation. Under TFRS 9, the Company is required to ensure that hedge accounting relationships are aligned with the Company’s risk management objectives and strategy and to apply a more qualitative and forward- looking approach to assess hedge effectiveness. Accordingly, TFRS 9 provides an option to apply hedge accounting when the transactions are qualified. At the initial date of first time adoption, the Company has no effect on this matter.
2019 Financial Statements of SCG Packaging Public Company Limited 217
Notes to the financial statements
SCG Packaging Public Company Limited For the years ended 31 December 2019 and 2018
Transition
The Company applied these TFRS for the first time by adjusting the cumulative impact to retained earnings on 1 January 2020 with no restatement of comparative information.
(b) TFRS 16 Leases
TFRS 16 introduces a single lessee accounting model for lessees. A lessee recognizes a right-of-use asset and a lease liability. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains to the current standard. When this TFRS is effective, some accounting standards and interpretations which are currently effective will be cancelled. Currently, the Company recognizes payments made under operating leases in income statement on a straight-line basis over the term of the lease.
The Company made assessment of TFRS 16 adoption. On 1 January 2020, the Company recognized the increase in right-of-use assets approximately Baht 114 million which affect to increase in lease liabilities approximately Baht 114 million. The nature of expenses related to those leases will change because the Company will recognize depreciation of right-of-use assets and interest expenses on lease liabilities.
Transition
The Company applied TFRS 16 for the first time on 1 January 2020 using the modified retrospective approach, by recognizing right-of-use assets and lease liabilities with no restatement of comparative information.
218 Holding Company in Subsidiaries, Associates, and Other Companies (As of December 31, 2019)
Number Issued Number of Shares Total and of Held Direct/ Paid-up Paid-up by the Indirect Principal Business/ Shares Shares Company Holding* Name Products Head Office Telephone Facsimile Type of Shares (Million Baht) (Shares) (Shares) (Percent)
Subsidiaries 1 Siam Kraft Industry Co., Ltd. Packaging Paper 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 3,450 34,500,000 34,499,998 100.00 2 SCG Paper Energy Co., Ltd. Energy and Utilities 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 890 8,900,000 8,899,998 100.00 3 SCGP Solutions (Singapore) Pte. Ltd. Holding Company 8 Marina Boulevard #05-02 Marina Bay - - Ordinary Shares 21,716 961,485,330 99,000,000 100.00 Financial Centre, Singapore 018981 4 SCGP Solutions Co., Ltd. Holding Company 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 170 1,700,000 1,699,998 100.00 5 SCGP Rigid Plastics Company Limited Holding Company 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 4,403 62,400,000 62,399,998 100.00 6 Invenique Co., Ltd. Asset and Intellectual 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 70 702,000 701,998 100.00 Property Management 7 SCGP Excellence Training Co., Ltd. Training 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3876 0 2586 4507 Ordinary Shares 49 1,150,000 1,149,998 100.00 SCG Packaging PublicCompany Limited Annual Report 2019 8 SKIC International Company Limited Holding Company 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.0 10,000 10,000 100.00 9 United Pulp and Paper Co., Inc. Packaging Paper 9th Floor, Fort Legend Tower, 3rd Avenue (63) 2870 0100 (63) 2870 0409 Ordinary Shares 1,082 140,570,863 109,995,290 99.70 corner, 31st Street, Bonifacio Global City, Preference Shares 3,246 840,000,000 648,244,594 Taguig City, the Philippines 10 Thai Cane Paper Public Company Packaging Paper 222 Mu 1, Saeng Xuto Road, Wang Khanai 0 3461 5800 0 3461 5899 Ordinary Shares 3,583 358,253,721 351,791,210 98.20 Limited Sub-district, Tha Muang District, Kanchanaburi
Province 11 Visy Packaging (Thailand) Limited Rigid Packaging 500/54 Mu 3 Hemaraj Eastern Seaboard 0 3895 8200 0 3895 0078 Ordinary Shares 497 4,972,000 - 80.00 Industrial Estate (Freezone), Pluak Daeng District, Rayong Province 12 Precision Print Co., Ltd. Fiber-Based Packaging 30/139 Mu 1, Sinsakhon Industrial Estate, 0 2105 4477 0 3445 2339 Ordinary Shares 33 3,340,000 - 75.00 Khok Kham Sub-district, Mueang Samut Sakhon District, Samut Sakhon Province 13 Vina Kraft Paper Co., Ltd. Packaging Paper D-6A-CN, My Phuoc Industrial Park No.3, (84) 8268 0240-2 (84) 8268 0239 ** 6,069 - - 70.00 Ben Cat District, Binh Duong Province, Vietnam 14 Thai Containers Group Co., Ltd. Fiber-Based Packaging 1 Siam Cement Road, Bangsue, Bangkok 0 2586 5991 0 2586 4723 Ordinary Shares 1,384 13,840,000 9,687,999 70.00 15 Thai Containers Khonkaen Co., Ltd. Fiber-Based Packaging 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 150 150,000 - 70.00 16 Thai Containers Rayong Co., Ltd. Fiber-Based Packaging 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 650 650,000 - 70.00 17 TCG Rengo (S) Limited Fiber-Based Packaging 21, Fourth Chin Bee Road, Singapore (65) 6261 5846 (65) 6265 3144 Ordinary Shares 56 2,400,000 - 70.00 18 New Asia Industries Co., Ltd. Fiber-Based Packaging Lot B3, Road 2, Binh Chieu Industrial Park, (84) 83729 4160 (84) 83729 3028 ** 345 - - 70.00 Binh Chieu Ward, Thu Duc District, Ho Chi Minh City, Vietnam Number Issued Number of Shares Total and of Held Direct/ Paid-up Paid-up by the Indirect Principal Business/ Shares Shares Company Holding* Name Products Head Office Telephone Facsimile Type of Shares (Million Baht) (Shares) (Shares) (Percent) 19 Alcamax Packaging (Vietnam) Co., Ltd. Fiber-Based Packaging No.7, Street 6, Vietnam-Singapore Industrial (84) 0650 374 (84) 0650 378 ** 607 - - 70.00 Park, Thuan An District, Binh Duong Province, 3031 2816 Vietnam 20 AP Packaging (Hanoi) Co., Ltd. Fiber-Based Packaging Lot 6 Nam Sach Industrial Zone, Nam Sach (84) 0320 375 (84) 0320 375 ** 248 - - 70.00 District, Hai Duong Province, Vietnam 3862 2868 21 Packamex (Vietnam) Co., Ltd. Fiber-Based Packaging Lot No. 20, Road B, Lin Trung EPZ, Thu Duc (84) 83 729 1030 (84) 83 729 1031 ** 220 - - 70.00 District, Ho Chi Minh City, Vietnam 22 Dyna Packs Co., Ltd. Fiber-Based Packaging 297/2 Mu 2, Soi Wiroonrat, Setthakit 1 Road, 0 2810 9346-7 0 2810 9103 Ordinary Shares 90 900,000 - 70.00 Om Noi Sub-district, Krathum Baen District, Samut Sakhon Province 23 Orient Containers Co., Ltd. Fiber-Based Packaging 12/5, 12/8 Mu 8, Soi Liab Khlong Chonprathan 0 3488 3422-4 0 3488 3421 Ordinary Shares 260 26,000,000 - 70.00 Suan Som, Rama II Road, Ban Kho Sub-district, Mueang Samut Sakhon District, Samut Sakhon Province 24 D-In Pack Co., Ltd. Fiber-Based Packaging 58/2 Mu 6 Phra Prathon-Ban Phaeo Road, 0 3498 1401-4 0 3498 1406-7 Ordinary Shares 50 5,000 - 70.00 Talat Chinda Sub-district, Sam Phran District, Nakhon Pathom Province 25 PT Indocorr Packaging Cikarang Fiber-Based Packaging Jl. Industri Selatan 2 Block LL-3, Jababeka (62) 21 893 6868 (62) 21 893 6565 Ordinary Shares 298 503,167 - 69.99 Industrial Estate Cikarang, Pasirsari Village, South Cikarang Sub-district, Bekasi Regency, Indonesia 26 PT Indoris Printingdo Fiber-Based Packaging Jl. Raya Serang KM 18.8, Sukanegaka Village, (62) 21 596 (62) 21 596 0774 Ordinary Shares 55 20,000 - 69.96 Rt.003/Rw.01, Cikupa District, Tangerang 0772-3 (62) 21 596 3076 Regency, Banten Province, Indonesia 27 Phoenix Pulp & Paper Public Company Food Service Products/ 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 2,365 236,474,780 164,506,148 69.58 Limited Pulp and Paper Products Preference Shares 98 9,806,380 6,857,036 28 Phoenix Utilities Co., Ltd. Utilities 99 Mu 3, Gud Nam Sai Sub-district, Nam Phong 0 4343 3104-6 0 4343 3101 Ordinary Shares 1,500 15,000,000 - 69.58 District, Khon Kaen Province 29 Thai Paper Co., Ltd. Food Service Products/ 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 7,770 77,700,000 - 69.58 Pulp and Paper Products 30 The Siam Forestry Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 184 1,840,000 - 69.58 31 Panas Nimit Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.5 15,000 - 69.58 32 Thai Panason Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.5 15,000 - 69.58 33 Thai Panadorn Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.5 15,000 - 69.58 34 Thai Panaram Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.5 15,000 - 69.58 35 Suanpa Rungsaris Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1.5 15,000 - 69.58 36 Siam Panawes Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 2.5 25,000 - 69.58 37 Thai Panaboon Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 3.0 30,000 - 69.58 38 Thai Wanabhum Co., Ltd. Forestry Products 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 2.5 25,000 - 69.58 219 220 Number Issued Number of Shares Total and of Held Direct/ Paid-up Paid-up by the Indirect Principal Business/ Shares Shares Company Holding* Name Products Head Office Telephone Facsimile Type of Shares (Million Baht) (Shares) (Shares) (Percent) 39 Thai Union Paper Public Company Pulp and Paper Products 131 Mu 2, Pu Chao Saming Phrai Road, 0 2754 2100-10 0 2754 2118 Ordinary Shares 430 43,000,000 - 69.55 Limited Samrong Klang Sub-district, Phra Pradaeng District, Samut Prakan Province 40 Interpress Printers Sendirian Berhad Food Service Products No.1 Jalan Taylor’s, 47500 Subang Jaya, (603) 5542-1716 (603) 5542-1703 Ordinary Shares 384 47,478,796 - 68.30 Selangor Dural Ehsan, Malaysia Preference Shares 225 28,000,000 41 PT Primacorr Mandiri Fiber-Based Packaging Jl. Raya Serang KM 13.8, Tristate Industrial (62) 21 596 2345 (62) 21 596 2000 Ordinary Shares 294 101,000 - 67.90 Estate, Desa Sukadamai, Kecamatan Cikupa, Kabupaten Tangerang, Provinsi Banten, Indonesia 42 PT Fajar Surya Wisesa Tbk. Packaging Paper Jl. Abdul Muis 30, Jakarta Pusat 10160, (62) 21 344 1316 (62) 21 345 7643 Ordinary Shares 2,713 2,477,888,787 - 55.20 Indonesia 43 PT Dayasa Aria Prima Packaging Paper Jl. Abdul Muis 30, Jakarta Pusat 10160, (62) 21 344 1316 (62) 21 345 7643 Ordinary Shares 547 250,000,000 - 55.20 Indonesia 44 TC Flexible Packaging Co., Ltd. Holding Company 1 Siam Cement Road, Bangsue, Bangkok 0 2586 5991 0 2586 4723 Ordinary Shares 2,108 21,079,194 - 52.50 45 SCGP-T Plastics Co., Ltd. Holding Company 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 386 3,859,000 1,968,124 51.00 46 Tawana Container Co., Ltd. Fiber-Based Packaging 599 Mu 4, Phatthana 1 Road, Phraek Sa 0 2324 0781 0 2324 0079 Ordinary Shares 300 3,000,000 - 50.40 Sub-district, Mueang Samut Prakan District, Samut Prakan Province SCG Packaging PublicCompany Limited Annual Report 2019 47 Tin Thanh Packing Joint Stock Company Flexible Packaging Lot C20, Duc Hoa Ha Plastic Industrial Group, (84) 723 779 747 (84) 723 779 750 Ordinary Shares 422 17,204,201 - 47.24 Binh Tien Hamlet, Duc Hoa Ha Commune, Duc Hoa District, Long An Province, Vietnam 48 Conimex Co., Ltd. Rigid Packaging 40 Mu 12, Soi Sahamit 2, Sukhumvit 77 Road, 0 2738 0305 0 2326 6275 Ordinary Shares 420 4,200,000 - 38.25 Sisa Chorakhe Noi Sub-district, Bang Sao Thong District, Samut Prakan Province
49 Prepack Thailand Co., Ltd. Flexible Packaging 30/145 Mu 1, Khok Kham Sub-district, Mueang 0 3444 0600-5 0 3444 0606-7 Ordinary Shares 322 3,220,000 - 37.80 Samut Sakhon District, Samut Sakhon Province Preference Shares 90 900,000 Associates and Other Companies 50 Siam Toppan Packaging Co., Ltd. Fiber-Based Packaging 543 Mu 4, Phraek Sa Sub-district, Mueang 0 2709 3110-7 0 2324 0336 Ordinary Shares 500 5,000,000 2,450,000 49.00 Samut Prakan District, Samut Prakan Province 51 P&S Holdings Corporation Holding Company 9th Floor, Fort Legend Tower, 3rd Avenue (63) 2870 0100 (63) 2870 0409 Ordinary Shares 263 27,650,000 11,059,998 40.00 corner, 31st Street, Bonifacio Global City, Taguig City, the Philippines 52 Siam Nippon Industrial Paper Co., Ltd. Specialty Paper 1 Siam Cement Road, Bangsue, Bangkok 0 2586 3333 0 2586 2164 Ordinary Shares 1,100 11,000,000 - 31.31 53 Sahagreen Forest Co., Ltd. Energy And Utilities 88 Mu 6, Khui Ban Ong Sub-district, Phran 0 5585 8033 0 5585 8031 Ordinary Shares 190 19,000,000 - 17.40 Kratai District, Kamphaeng Phet Province * Directly and indirectly holding through the company, subsidiaries, associates and other companies. ** No issuance of share for the Limited Liability Company incorporated in Vietnam. The capital contribution is as stipulated in the Holding Company certificate of the invested company. SCG Packaging Public Company Limited First 10 major Shareholders (As of December 31, 2019)
Company Profile No. of Ordinary Percent of Shareholders Shares Total Shares Registration No. 0107537000921 (Issued and Paid-up)
Head Office Address 1 Siam Cement Road, Bangsue, Bangkok 10800 1. The Siam Cement Public Company Limited 3,095,882,660 99.037
Business Type The Company generates revenue from holding shares in other 2. Mr. Taewan Tantichattanont 2,320,000 0.074 companies (Holding Company), operating core business for 3. Randery Burahmakan Company Limited 1,872,000 0.060 packaging solutions provider which are organized into two main 4. Ms. Orapin Thidarat 1,634,000 0.052 operating segments: integrated packaging chain and fibrous chain, also other relating businesses. 5. Mr. Man Nana 1,563,200 0.050
Initial Registered Capital (as at the registration date of conversion into the Public Limited 6. Roman Catholic Mission of Bangkok 1,068,960 0.034 Company on March 24, 1994) 7. Mr. U-thane Tantichattanont 1,000,000 0.032 Registered Capital: 1,000 Million Baht 8. Mr. Somsak Nana 931,440 0.030 Paid-up Capital: 1,000 Million Baht Issued and paid up ordinary shares of: 100 Million shares 9. Mr. Pipatpong Israsena Na Ayudhya 528,880 0.017 Issued and paid up preference shares: - None - 10. Mr. Yuph Nana 499,440 0.016 Par value of 10 Baht per share 11. Other Shareholders 18,699,420 0.598 Present Registered Capital Registered capital: 4,500 Million Baht Total 3,126,000,000 100.000 Paid-up capital: 3,126 Million Baht Issued and paid up ordinary shares of: 3,126 Million shares Issued and paid up preference shares: - None - Par value of 1 Baht per share
Website www.scgpackaging.com
Share Registrar Tel: +66 2586 2894 Fax: +66 2586 3007 E-mail: [email protected]
Investors can find further information regarding the Company from the Registration Statement for Securities Offering (Form 69-1) and Prospectus which has been disclosed at www.sec.or.th or www.scgpackaging.com.