Form 56-1 As at 31 December 2015 Eastern Water Resources
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Form 56-1 As at 31 December 2015 Eastern Water Resources Development and Management Public Company Limited EASTW Contents Page PART 1 : BUSINESS OVERVIEW PART 1 1. Policy and Business Overview 1 2. Business Overview 3 3. Risk Factors 51 4.Operating Assets 54 5. Litigation 73 6. General Information and Other Information 75 PART 2 : Management and Corporate Governance PART 2 7. Securities and shareholders 1 8. Organizational Structure 4 9. Corporate Governance 20 10. Social Responsibility 47 11.Internal Control and Risk Management 48 12. Connected Transaction 83 PART 3 : Comprehensive Financial Statements and Operational PART 3 Performance 13. Key Financial Information 1 14. Management Discussion and Analysis 12 Verification for information accuracy Attachment Attachment 1 Profiles of Board of Directors, Executive and Corporate Secretary of Eastern Water Resources Development and Management Public Company Limited Attachment 2 List of Subsidiary companies’ Directors Attachment 3 Profiles of the President of Internal Audit and Corporate Governance Attachment 4 Details of Assets Appraisal (Property Valuation) Eastern Water Resources Development and Management Public Company Limited. Form 56-1 2015 PART 1 Business Overview 1. Policy and Business Overview 1.1. Business Strategy The Board of Directors reviewed business strategy of the Company to support future business growth, strengthen current business expansion and determine to improve the management system and enhance the transparency in corporate governance to meet international standard. Moreover, the Board also attempted to control the business operation with risk management, ethical practices and good corporate governance. The Vision and Mission of the Company are revised accordingly as follow: Vision Being leader in sustainable water management that grows in accordance with the country’s economy and expands to ASEAN region. Mission 1. To expand the investment and develop the water business as well as other relevant businesses for continuous and sustainable growth. 2. To increase the competitiveness with the right and up-to-date technology and innovation. 3. To develop the competency of the staff and improve its structure to be more appropriate. 4. To manage the business with efficiency and transparency according to the good governance principles. 5. To be responsible for communities, societies and environment and maintain good relationships with the stakeholders. Strategy Business strategy covers in 5 areas: 1. Grow business efficiently and develop value added product. 2. Continually develop new business to support the future growth in both short term and long term plan. 3. Manage financial and business investment plan with high efficiency. 4. Develop competency of personnel, manage know-how, technology and new innovation. The Company is truly focused on quality of business services and environmental awareness. The Company has improved and expanded water pipelines network to the customers in service areas and to ensure sufficiency and sustainability for future growth of water consumption and business, including water, energy and environmental business development. The Company continually supports local communities, societies and environment, which significantly drive the company forward to sustainability growth in the future. A recent report from Thai Institute of Directors awarded “Excellent” to the Company on the Corporate Governance practice. Moreover, TRIS Rating affirms Company Rating of “EASTW” at “A+” with “Stable” Outlook. The recent announcement confirmed continuality of the Company’s strong financial position and operation performance. Part 1 Page 1 Eastern Water Resources Development and Management Public Company Limited. Form 56-1 2015 1.2 Relationship with major shareholders of the Company The Company is founded by the Cabinet Resolutions on September 12th, 1992 assigned the Provincial Waterworks Authority (PWA) to establish “Eastern Water Resources Development and Management Public Company Limited” (“the Company”), to develop and operate major water pipelines system in the Eastern region covering Chonburi, Rayong, Chachoengsao, Prachinburi, Sakaeo, Chantaburi and Trat. The Provincial Waterworks Authority owned 100 percent of the Company’s total share. In 1996, the Company registered as a public company limited. Afterward, the Company had initial public offering and registered in the Thai Stock Exchange of Thailand in 1997. The Provincial Waterworks Authority is the major shareholder held 40.2 percent of total registered paid-up capital before initial public offered. However, the Company’s business operation is not significantly depending or competing with the Provincial Waterworks Authority such as granting or receiving financial support, technical support, cooperative sourcing and procurement and branding. Part 1 Page 2 Eastern Water Resources Development and Management Public Company Limited. Form 56-1 2015 2. Business Overview 2.1 Company History and Milestones September 1992 The Cabinet Resolutions (September 12th, 1992) concluded that the Royal Irrigation Department shall be the main government agency responsible for water resources development and reservoirs, and assigned the Provincial Waterworks Authority (PWA) to establish “Eastern Water Resources Development and Management Company Limited” to develop and operate water pipelines in the Eastern region by transferring existing assets and liabilities of the pipeline system to the Company. As a result, the Company is eligible to trade raw water from government agency to public in the responsible areas, and also qualified to joint venture with other private sectors. October 1992 The Company was registered on October 15th, 1992 (registration No. 13571/2535) with authorized capital of THB 10,000,000, which is separated into 100,000 ordinary shares with par value of THB 100 per share. The Provincial Waterworks Authority (PWA) held 100 percent of shares. August 1996 The Cabinet Resolution (August 6th, 1996) agreed with the proposal to raise fund and increase the Company’s authorized capital by partnering with the Industrial Estates Authority of Thailand (IEAT). September 1996 The Company increased the authorized capital to THB 490,000,000, held by the Provincial Waterworks Authority (PWA) 43,999,870 shares (89.80% of total paid up share capital) and the Industrial Estates Authority of Thailand (IEAT) 5,000,000 shares (10.20% of total paid up share capital). November 1996 The Company registered as a public company limited (registration No. 632) under the name “Eastern Water Resources Development and Management Public Company Limited” (“the Company”). July 1997 The Company increased its authorized capital by initial public offering of 51,000,000 shares in the capital market with par value of THB 10 per share. Consequently, the Company had total paid up capital of THB 1,000,000,000. The Company’s common stock started trading in the Stock Exchange of Thailand under the name “EASTW”. January 2004 The Company raised its authorized capital to THB 1,050,000,000 or 105,000,000 ordinary shares with par value of THB 10 per share. With the Company’s paid up capital of THB1,000,000,000 an additional of 5,000,000 ordinary shares were issued as stock warrants and offered to the Company’s employees, executives and directors, the Board’s advisors. Part 1 Page 3 Eastern Water Resources Development and Management Public Company Limited. Form 56-1 2015 June 2004 The Company increased the authorized capital to THB 1,665,000,000, which included 166,500,000 ordinary shares at par value of THB 10 per share. The issuance of 61,500,000 shares responded to new common stock issuance and stock warrants of the Company. May 2005 The Company adjusted the par value of THB 10 to THB 1 per share in accordance with the resolutions of the Extraordinary Meeting of the Shareholders No. 1/2005. January 2008 The authorized capital was decreased to THB 1,663,730,000, or 1,663,730,000 ordinary shares with par value of THB 1 per share due to the expired non-exercise warrants. In December 2015, the authorized capital stands at THB 1,663,725,149 with total paid up stocks valued of THB 1,663,725,149 and its major shareholders are the Provincial Waterworks Authority (40.20%), the Electricity Generating Public Company Limited (18.72%), NORBAX Inc., 13 (6.38%), the Industrial Estate Authority of Thailand (4.57%) and the public (30.13%) 2.2 Business Overview The core business of the Company is to develop and manage the main raw water distribution pipeline system in the area of Eastern Seaboard to meet the demand of consumers in the region. Currently, the raw water transmission facilities covers sufficiently in the three main Eastern provinces; Chachoengsao, Chonburi and Rayong. In addition, the Company also invests in related business as below: 1) To provide engineering consulting services in clarified water system, water pipeline and distribution system, maintenance service for water pipeline system including associated equipment and providing other equipment and spare parts for water pipelines system. 2) To expand the Company’s business or to develop and manage new water resources or other associated business in the new development area. Furthermore, the Company also expand to tap water and water treatment business as shown in Diagram 2.2 Part 1 Page 4 Eastern Water Resources Development and Management Public Company Limited. Form 56-1 2015 Chachoengsao. Water Supply100%* Co. Ltd. 99%* Bang. P akong Water Supply100%* Co. Ltd. 99%* Nakornsawan. Water