ENERGY EARTH รายงานประจำป 2557 ANNUAL REPORT 2014
Driving the Earth’s Future
Vision Becoming a coal industrial leader in Thailand and Asia with full supply-chain management and supportive modern technologies, maintaining an international level of service, environmental care, and stepping forward to the world class market.
Message from the Chairman Message from the Managing Director Board of Directors and Management Team Financial Highlights Policy and Business Overview The Operations of Each Product Line Risk Factors General and Other Important Information Securities and Shareholder Information Management Organization Corporate Governance Corporate Social Responsibilities : CSR Internal Control and Risk Management Connected Transactions Financial Statements and Overall Outlook Management’s Discussion and Analysis (MD&A)
02 03 04 08 09 19 28 36 39 42 47 61 80 82 87 97
Energy Earrth Annual Report 2014
Messaage from the Chairman Althhough the co al price recovery in 2014 was delayedd, due to the fact that the demand of coal usage was slowing down uponn the world economy recoovery with fragile and the excessive supply from the excessive prodduction capaacity affects the t global cooal pricing ha s been increased in a narrrow range. HHowever, thee Company’s growth bothh in terms of o income and profit was still in a goood shape continuously c because there were purcchase orderss from custoomers both domestic aand foreign countries reguularly, which the main customers c weere from Ch ina, India, annd South Koreea, and alsoo the new customers c from the sam me region which w was expected to starrt to send purrchase orderss in the next yyear. Morreover, in reggional industry, coal remains the maiin fuel becauuse of its low costt, resulting inn the demandd trend to usse coal has been b grown up continuouusly in the loong term. This gavee good impaccts on the Coompany’s bussiness expanssion. Regarding to having our o own minees, this madee our custom mers to be coonfident in ouur capacity and ability to have sufficient reserves continuuously. Also,, it needs to control coal quality to seerve customers’ needs by the CCompany’s mission in term ms of commercial still aimed to create business growwth with susttainability and prodduce coal with w good quaality. There are businesss networks too do coal trrading and distributing widely bboth in domeestic and foreeign countriess, with qualityy developmeent and innovvation by being aware of team participation and environm mental care aat most. The Com mpany is awarre that as an entrepreneuur, the corporrate social ressponsibility iss important and as the duty thaat the Compaany needs too have and ooperate seriously. The Coompany not only aimed to do its business as the said guidelines but also emphhasizes on thhe good mannagement un der the fram mework of the princciples of good governancee. This aimeed to operatee the business with transpparency, being able to audit together with to promote the activitiees of corporrate social reesponsibility (CSR) by haaving CSR activities with its business operatioons in order tto enhance thhe well-beingg of the socieety and qualitty of life. mpany’s Boarrd of Directorrs, Managemeent team, andd every Emplloyees, I wouuld like to On behaalf of the com thank too the sharehholders, bothh domestic aand foreign customers, financial f instiitutions, and also all involved parties whoo always trust and suppoort the company always. Hope that eeveryone is confident that the Company opperates its buusiness careffully in order to maximizee the benefitt for shareholders and all the innvolved partiees.
Phisudhi Phihakkendr Chairman
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Energy Earth Annual Report 2014
Messaage from Managinng Directoor During the year 22014, the worrld economic has faced thee volatile envvironment m of the yeaar, the announncement of the end of suchh as oil price drop in the mid the quantitative eeasing program m (QE) by thee U.S., and Ch ina’s econom my slowing dow wn, having imppact on suppply chain in otther regions eeffecting the economic grow wth and recovvery slowing down. d These negative ffactors had im mpacts continnuously on eentrepreneurss in every secttor including tthe Companyy which operates its busineess in coal, whhose price movves slowly. However, thhis did not give an impacct on the Coompany’s perfformance at all because the Compaany still empphasized on the cost mannagement an d liquidity management m which are vvery importannt for its busiiness growth, being able too control risks to be at the appropriate level with the situation in oorder to meett customers’ needs n as its m major goal, whhich there has beenn purchase ordders continuoously coming iin. According to the efficcient cost maanagement, tthe Companyy’s performannce in the yeear 2014 has shown a continuoous growth esppecially beingg able to mainntain the ratee of gross proffit to be at thhe percentagee of 14.90. Also, sincce the Comppany focused on distributiing coal to reetail domestic customers, it become to t be the number oone distributoor to retail customer in Thaailand. The Company C is coonfident that the business growth in energy seector will be in a good trennd and believves that in 2015, coal indusstry will be baack to show the t better growth raate. Moreoveer, the Compaany still followws its Mission “5 Years 5 Miines 5 Marketss” to be a leaading coal distributoor who is reliaable for domeestic and foreeign customerss, to be able to lay the buusiness foundaation with growth aand sustainabbility, to be an entrepreneeur sourcing and a distributinng coal both domestic annd foreign countriess, which is integrated from upstream to downstream with new tecchnologies as well as environmental care and standardizedd services. Thhe Company’ss strategies foocus on the expansion e of ccustomer basse both in domesticc and foreign countries. Cuurrently, theree are customers in China, India, South KKorea. Meanw while, the companyy still acquiress more mines continuouslyy. To mainttain its leaderrship in this business with ssustainability, apart from thhe Company runs the busiiness with good govvernance andd transparenccy, it even treeats its stakeeholders equaally with fairnness by takinng care of communnity and having activities for society and environmentt (CSR) continuuously. Also, the Company is ready to use thhis business cooncept togethher with its buusiness operattions in the fuuture. Lastly, onn behalf of thhe Board of Diirector, I woulld like to thannk the management team and all the employees who devote themselvves on their duuty with full eeffort as well as all sharehoolders who suupport the company to grow andd operate wiith stability. The Compa ny confirmedd and is confident on its professional business operationns in order too grow sustainnably with goood governancce. Moreover,, it is hoped tthat the Company gets honor, trust, and suppport from you all as ever inn the future.
Khajohnpong Kam mdee Managing M Direcctor
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Energy Earth Annual Report 2014
Board of Directors and Management Team Parada Bunnag Vice Chairman Age 52 Undergraduate Degree Management Western Michigan University
Phisudhi Phihakendr Chairman Age 64 Undergraduate Degree Business Management University of Memphis Current Position of Director / Management in Other Companies • 2013–Present – Fly Digital Media Co., Ltd. • 2013–Present – Fly Entertainment Co., Ltd. • 2013–Present – Ploenjit Media Co., Ltd. • 2013–Present – Earth Power Plants Co., Ltd. • 2011–Present – PT TRI TUNGGAL PITRIATI Co., Ltd. • 2011–Present – WTEC Co., Ltd. Currently named as PartnerLink Network Co., Ltd. • 2007–Present – Energy Perfect Co., Ltd. • 2007–Present – Energy Mining Co., Ltd. • 2006–Present – Snack Shack Co., Ltd.
Current Position of Director / Management in Other Companies • 1993-Present – Brother Auto Parts & Engineering Co. Ltd. • 1993-Present – D. Bunnag Chromiam Plating Co., Ltd. Work Experience • 1987-1989 – Almond Inc. • 1989-1993 – SGV Na Talang, Lucky Gold Star and Seagate Technology.
Work Experience • 1971-1976 – Marketing Manager, 3M Thailand • 1977-1979 – Manager, Levi’s Thailand • 1980-1998 – Executive Vice Chairman and President, Robinson Department Store • 1980-1998 – Chief Information Officer, Central Retail Corp. • 1999-2006 – Executive Director, Thai Mart Retail Company Directors and Executive Directors Certification
Somkiat Sukdheva Chairman of the Audit Committee
Sloan School M.I.T., USA - Senior Executive Program (SEP) Thai Institute of Directors - DirectorsCompensation Survey 2012 - Role of Modern Directors with Value-Added and sustainable organizations - Financial Statement and Corrupton in Capital Market - Certificate of Advance Audit Committee Program (AACP) Generation 7/2012 - Certificate of Monitoring the System of Internal Control and Risk Management (MIR) Generation 12/2012 - Certificate of Role of the Nomination and Governance Committtee (RNG) Generation 1/2011 - Certificate of Financial Institutions Governance Program (FGP) Generation 3/2011 - Certificate of Monitoring Fraud Risk Management (MFM) Generation 6/2011 - Certificate of Monitoring the internal Audit Function (MIA) Generation 13/2011 - Certificate of Role of the Chairman Program (RCP) Generation 25/2011 - Certificate of Role of the Compensation Committee (RCC) Generation 6/2008 - Certificate of Audit Committee Program (ACP) Generation 3/2004 - Certificate of Director Certification Program (DCP) Generation 40/2004 Capital Market Academy, the Stock Exchange of Thailand - Certificate of Advance Management Course Generation 6/2008
Age 70 Undergraduate Degree in Economics Thammasat University Master Degree in Management Sasin of Chulalongkorn University
Current Position of Director / Management in Other Companies • 2003-Present – KORVAC (THAILAND) CO.,LTD. • 2009-Present –Thanachart Capital Public Company Limited. Working Experience • 1958-2002 – Assistant Managing Director, KasikornBank Public Company Limited • 2002-2008 – Chairman of the Audit Committee, Siam City Bank Public Company Limited
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Energy Earth Annual Report 2014
Board of Directors and Management Team Phiroon Phihakendr Director
Khajohnpong Khamdee Director Age 43 Undergradute Degree Accounting Rajabhat Rajanagarindra University
Age 38 Undergraduate Degree in Computer Science New York University Master Degree in Computer Science New York University
Current Position of Director / Management in Other Companies • 2013–Present – Fly Digital Media Co., Ltd. • 2013–Present – Fly Entertainment Co., Ltd. • 2013–Present – Ploenjit Media Co., Ltd. • 2013–Present – Earth Power Plants Co., Ltd. • 2011–Present – PT TRI TUNGGAL PITRIATI Co., Ltd. • 2008–Present – WTEC Co., Ltd. Currently named as PartnerLink Network Co., Ltd. • 2007–Present – Energy Perfect Co., Ltd. • 2007–Present – Energy Mining Co., Ltd.
Current Position of Director / Management in Other Companies • 2013–Present – Fly Digital Media Co., Ltd. • 2013–Present – Fly Entertainment Co., Ltd. • 2013–Present – Ploenjit Media Co., Ltd. • 2013–Present – Earth Power Plants Co., Ltd. • 2008–Present – MM Alliance Co., Ltd. • 2007–Present – Energy Perfect Co., Ltd. • 2007–Present – Energy Mining Co., Ltd. • 2005–Present – Bangkok Beer and Beverage Co., Ltd. • 2003–Present – WTEC Co., Ltd. Currently named as PartnerLink Network Co., Ltd.
Working Experience • 1993-1994 – Chief Accountant, Hong Aue Co., Ltd. • 1995-2003 – Assistant Managing Director, Brother Auto Parts & Engineering Co., Ltd. • 2004-2005 – Vice President, Thai Mart Store Co., Ltd. • 2006-2006 – Director of Financial and Accounting, Thailand Anthracite Co., Ltd.
Working Experience • 1997-1999 – Web Developer, Morgan Stanley Dean Witter, New York, USA • 1999-2001 – Business Technology Manager, Time Inc., New York, USA • 2001-2003 – General Manager of IT Development, WinStore Co., Ltd.
Phipat Phihakendr Director
Phiboon Phihakendr Director
Age 36 Undergraduate Degree in Music Industry University of Southern California Master Degree in Management University of Southern California
Age 31 Undergrate Degree in Music Composition California Institute of the Arts Master Degree in Linguistics Fudan University, China
Current Position of Director / Management in Other Companies • 2013–Present – Fly Digital Media Co., Ltd. • 2013–Present – Fly Entertainment Co., Ltd. • 2013–Present – Ploenjit Media Co., Ltd. • 2013–Present – Earth Power Plants Co., Ltd. • 2013–Present – WTEC Co., Ltd. Currently named as PartnerLink Network Co., Ltd. • 2011–Present – Energy Perfect Co., Ltd.
Current Position of Director / Management in Other Companies • 2013–Present – Fly Digital Media Co., Ltd. • 2013–Present – Fly Entertainment Co., Ltd. • 2013–Present – Ploenjit Media Co., Ltd. • 2013–Present – Earth Power Plants Co., Ltd. • 2011–Present – PT TRI TUNGGAL PITRIATI Co., Ltd. • 2007–Present – Energy Perfect Co., Ltd. • 2007–Present – Energy Mining Co., Ltd. • 2003–Present – WTEC Co., Ltd. Currently named as PartnerLink Network Co., Ltd.
Working Experience • 2010-2010 – General Manager of Business Development, Energy Perfect Co., Ltd.
Working Experience • 2004-2005 – Marketing Manager, WTEC Co., Ltd. • 2005-2008 – Brand Manager, Diageo Moet Hennessy (Thailand) Co., Ltd. • 2008-2010 – Market Development Manager, Coca-Cola (Thailand) Ltd. 5
Energy Earth Annual Report 2014
Board of Directors and Management Team Thanawat Pratoomsuwan Director
Kanchana Chakvichitsopon Director Age 63 Undergraduate Degree Economics Chiangmai University
Age 44 Undergraduate Degree in Business Management University of the Thai Chamber of Commerce Master Degree in Public Administration National Institute of Development Administration
Current Position of Director / Management in Other Companies • 2007–Present – Energy Perfect Co., Ltd.
Current Position of Director / Management in Other Companies • • 20010–Present – Energy Perfect Co., Ltd.
Working Experience • 1979-1998 – General Manager-Cash Management, Robinson Department Store Thailand • 1999-2005 – Assistant Managing Director, WinStore Co., Ltd.
Working Experience • 1994-2010 – Team Manager-Credit Customer, KasikornBank PCL
Nugoon Sri-in Director Age 58 Undergraduate Degree Mechanical Engineering Saint Louis University, Philippines
Suriyaporn Bunchai
Independent Director / Audit Committee
Age 46 Undergraduate Degree Business Management Accounting Ramkhamhaeng University
Current Position of Director / Management in Other Companies • 2011– Present - PT TRI TUNGGAL PITRIATI Co., Ltd.
Current Position of Director / Management in Other Companies • 2005-Present – Bunchai Net and Com
Working Experience • 1984-1992 - Maintenance Manager, Thai rayon Co., Ltd. • 1990-1995 - Maintenance Manager, PPG Siam Silica Co., Ltd. • 1995-1999 - Maintenance Manager, Advance Agro PLC. • 1999-2000 - Board of Director, Bangpakong Transport Co., Ltd. • 1999-2000 - Board of Director, Leardnapha Transport Co., Ltd. • 1999-2002 - Chief Executive Officer, Interlink Logistic and Distribution Co., Ltd.
Working Experience • 1993-1995– Accountant, Thai David Co., Ltd. • 1995-2003 – Financial and Accounting Manager, Intelligent Systems Management Co., Ltd.
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Energy Earth Annual Report 2014
Board of Directors and Management Team Thongchai Watanasoponwong
Eknarin Thammaraks
Independent Director / Audit Committee Age 37 Undergraduate Degree in Electrical Engineering – SIIT, Thammasat University Master Degree in Computer Science The George Washington University
Independent Director / Audit Committee-
Age 38 Undergraduate Degree Professional Tennis Management Ferris State University
Current Position of Director / Management in Other Companies • 2010-Present – Chumpon Ice Co., Ltd.
Current Position of Director / Management in Other Companies • 2007-Present – International Travel Consultants Co, Ltd. • 2005-Present – The Legend Resort & Spa Co, Ltd. • 2005 Present – Hmong Hilltribe Lodge Co, Ltd. • 2005-Present – Lampang River Lodge Hotel Co, Ltd. • 2010-Present – Beccofino Trattoria Chiangmai • 201-Present – Miniature Gallery Partnership Limited. • 2011-Present – Miceman Co., Ltd.
Working Experience • 2001-2003– System Engineer, HopOne Internet Corporation • 2003-2006 – pSeries Sales Specialist, IBM Thailand Company Limited • 2006-2008 – eServer Manager, IBM Thailand Company Limited • 2008-2010 – Country Brand Manager, IBM Thailand Company Limited
Working Experience • 2000-2002 – Account Manager, BBDO Bangkok • 2003-2007 – Deputy Manager, Diethelm Travel
Paiboon Assawasiriwong Assistant Managing Director
Age 42 Undergraduate Degree in Business Administration – Thammasat University Master Degree in Business Administration Assumption University
Current Position of Director / Management in Other Companies • None Working Experience • 1995–2000 – Area Sales Manager, Tri Petch Isuzu Sales Co., Ltd. • 2000–2003 – General Manager, WinStore Co., Ltd. • 2003–2007 – Managing Director, Venture Plus Co., Ltd. • 2007–2008 Lecturer, Burapha University • 2008-2010 – Assistant Managing Director Energy Perfect Co., Ltd.
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Energy Earth Annual Report 2014
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Financial Highlights (Unit : Million Baht) Year 2012 Performance Revenue from sales Total Revenue Gross Profit from Sales Net Profit (Loss)
Year 2013
Year 2014
10,451.91 10,474.21 2,162.81 1,324.40
13,509.71 13,522.15 2,227.17 1,110.60
14,910.92 14,917.29 2,221.26 1,042.11
20.69 12.64 60.04 20.49
16.49 8.21 30.91 9.94
14.90 6.99 21.65 6.62
Total Assets
8,808.29
13,536.60
17,940.93
Total Liabilities
5,951.42
9,206.49
12,643.91
Shareholders’ Equity
2,856.87
4,330.11
5,297.02
Financial Ratio Gross Profit Margin Net Profit Margin Return on Average Equity Return on Average Assets
(%) (%) (%) (%)
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Policy and Business Overview 1.
Energy Earth Annual Report 2014
Policy and Business Overview
Vision, Mission, Business Strategies and Business Goal
Vision To be an entrepreneur distributing coal in domestic and international market completely from upstream to downstream with the new technology, the environmental care and the international standard services.
Mission Having sufficient coal reserves supply for customers. Having coal trading networks both in domestic and international market. Managing under the corporate governance with a sense of responsibility to customers, shareholders, business partners, society, environment, and the nation.
Business Strategies and Business Goal
The group set a goal “5 years 5 Mines 5 Markets” for the operations in 2013-2017, aiming to have its own coal mine at least 5 mines, which one of each has coal reserves of around 30-40 million tons. Also, the group set a goal to do coal retail business which has already been successful in Thailand to at least 5 countries which are ready and appropriate. These two goals will support the company’s stability, customers’ confidence on the coal’s good quality, and sufficient coal supply to be served the customers’ need. From the year 2011, the group has bought the coal mine in Indonesia which has the reserve of 7.4 million tons. Then, in 2013, the group by PT TRI TUNGGAL PITRIATI (“TTPL”) bought the rights to do coal mining as an exclusive coal offtake from PT JHOSWA MAHAKAM MINERAL (“JMM”). This made The group acquiring the reserve of 43.0 million tons, worth at 3,820.65 million baht. This mine is an open pit mine type, located at Kenoban, Desa Teluk Bingkai, Kecamatan Kenoban, Kabupaten, Kutai Kartanegara, Provinsi East Kalimantan with the area of 25,106 rai, which can be count as the first mine as its goal “5 years 5 Mines 5 Markets” of the group. Currently, the group is waiting for the coal assessment report (JORC) from the independent evaluator in order to use to calculate the exact amount of shares to be swapped with PT. Hary Niaga (“HARY”), who is the mine owner. The mine is located at Tabang Lama Kutai Kartanegara, Provinsi East Kalimantan. This share swapping will be approved by the company’s shareholders, expected to be in a shareholders’ meeting during the first half of the year 2015. This mine acquisition can be count as the second mine as its goal “5 years 5 Mines 5 Markets” of the group, with the estimated coal reserve of at least 40 million tons. For its marketing goal, currently, the group has already sold to Thailand, China, India, and South Korea, totally 4 countries. Also, it planned to expand to the new market like Philippines, Hong Kong, and Taiwan, Next, there will be 5 its own mines with distribution to all the target markets within 2017, as its goal.
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Energy Earth Annual Report 2014
The group concerns the importance of product delivery to customers by selecting the high standard transportation company and aims to build a good relationship with the transportation companies for the customers getting the product on time and in good condition. The group concerns its customers by setting a goal of servicing a variety of customers in various industry and many customers to reduce the risks of being rely on major customers. Moreover, the group emphasizes on its product by setting a goal to expand the business with the collaboration with the customers to expand vertically; for example, power plants group or coal users. History of the Company and its subsidiaries
Energy Earth Company Public Limited (“Company” or “EARTH”) Energy Earth Public Company Limited, formerly named Advance Paint and Chemical (Thailand) Public Company Limited which was registered in 1992 with the registered capital of 50 million baht and was listed in the Stock Exchange of Thailand in 1996. The company produced and distributed the paints, industrial paints and paint related products under the trade mark “Seven Stars”, “New Confident”,and “Climate Guard”. Currently, the company has sold all the fixed assets including land, building, factory, and , machines related to the paints business to be able to pay the creditors, has stopped the paints production and distribution, and has changed to be a coal producer and a coal distributor to the customers who needs to use the coal in their production. History and importance development of the company can be briefly stated as follows: Year 1992
- Estabilshment of Advance Paint and Chemical (Thailand) Company Limited with the registered capital of 50 Million Baht
Year 1995
- The company was converted to the public company on April 28, 1995.
Year 1996
- The company was listed in the Stock Exchange of Thailand with the registered capital of 70 million Baht.
Year 2001
- On October 10, 2001, the company requested to do the business rehabilitation process to the bankruptcy court. - On November 5, 2001, The court ordered the petition for rehabilitation.
Year 2002
- On July 5, 2002, the rehabilitation plan was apprived by the bankruptcy court. The company decreased and increased its capital according to the rehabilitation plan, then the register capital and paid up capital at the amount of 1,674,800,250 Baht, at 167,480,025 shares at par value of 10 Baht.
Year 2004
- The company decreased the capital by reducing the value of the registered capital and paid up capital from par value of 10 Baht with 222,453,175 shares at the amount of 2,224,531,750 Baht to be par value of 1 Baht with 222,453,175 shares at the amount of 222,453,175 Baht. The decreased capital of 2,002,078,575 Baht was compensated with the share discount at 1,970,758,350 Baht and the rest at
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Energy Earth Annual Report 2014
31,320,225 Baht was compensated for the company’s retained loss. Year 2005
- On November 14, 2005, the Stock Exchange of Thailand determined to suspend trading with the symbol “SP” for the company because the Stock Exchange determine to suspend trading to any registered company in the rehabco group at once the registered company has the shareholding less than 0 or the company’s performance shows net loss after revenue adjustment and expenses of normal business. It is the fact that the company’s performance as the financial statements at September 30, 2005 represented net loss. Then, the Stock Exchange determined to suspended trading or use the symbol “SP” until the company’s account was cancelled and move back to the normal trading.
Year 2006
- On July 3, 2006, the Stock Exchange cancelled the rehabco group and delisted the company out of the board and move to the Non-Performing Group. (NPG)
Year 2010
- The company proceeded to remove the clauses of the Stock Exchange delisting by attempting to improve the business of production and distribution of paints which is the orginal business. But, it was not successful. The company therefore use the improvement methods of the financial status and business performance by acquiring the shares of Energy Perfect Company Limited (EPCL) and change the authority of the company. This is actually the back door listing, this caused the company to request the Stock Exchange to approve it to re-apply. - On December 2. 2010, the Extraordinary General Meeting of shareholders’ meeting has important resolutions described as follows: 1. It was approved to acquire the common shares of EPCL of 2,000,000 shares at the par value of 10 Baht by share swapping method. 2. There was the capital increase of 2,000,000,000 shares to be allocated to EPCL’s shareholders at the price of 0.10 Baht as the agreement to acquire the common shares of EPCL of 2,000,000 shares, by using a swap ratio of 1 share of EPCL to 100 new shares of the company. This made the company have registered capital and paid up capital of 2,222,712,675 shares at the par value of 1 Baht and the company has become the shareholder of EPCL with 99.99%. 3. It was approved to transfer all the fixed assets such as land, factory, building, machine, and equipment to pay one of the creditors of the company.
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Energy Earth Annual Report 2014
As of December 13, 2010, the company has complied with the resolutions of the shareholders' meeting completely. Then, the company’s structure has changed as follows: Before Restructuring
Structure (After December 8, 2010)
Company’s Existing Shareholders
Company’s Existing
100.00%
EPCL’s Existing Sharedolders
10.02%
Advance Paint and Chemical (Thailand) Company Limited (APC)
89.98%
Energy Earth Public Company Limited (EARTH) 99.99% Energy Perfect Public Company Limited (EPCL)
Year 2011
- On May 18, 2011, the Stock Exchange approved EARTH to be able to trade in the Market for Alternative Investment (MAI). - On September 15, 2011, the Extraordinary General Meeting of Shareholders approved the capital increase as the registered capital from 2,222,712,675 Baht to be 3,027,615,570 Baht, which the increased capital of 804,902,895 Baht was increased by issuing the new common shares of 804,902,895 shares at the par value of 1 Baht per share, and approved to allocate the shares as follows: 1. 444,542,535 shares (Four hundred forty-four million five hundred forty-two thousand five hundred thirty-five shares) for the rights to exercise the warrants of the company. 2. 331,457,770 shares (Three hundred and thirty-one million four hundred fifty-seven thousand seven hundred seventy shares) for the private placement , which is the shareholders of PT TRI TUNGGAL PITRIATI 3. 28,902,590 shares (Twenty-eight million nine hundred ninety-two thousand five hundred shares) for the rights to exercise the warrants of the company, of which the adjustment of the rights to exercise the future warrants. As a result, the structure of the company as follows:
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Energy Earth Annual Report 2014
November 2011 Existing shareholder of EARTH
Existing shareholder of TTPL
87.02%
12.98%
Energy Earth Public Company Limited (EARTH) 99.99% PT TRI TUNGGAL PITRIATI (TTPL)
Energy Perfect Company Limited (EPCL) -
On October 17, 2011, the warrants to buy common shares (EARTH-W3) of 444,519,122 units was started to be traded in the Market for Alternative Investment (mai), which details are as follows: Exercise Price per 1 common share (Baht) 1.466 Exercise Ratio (warrant : share) 1 : 1.023 Date First Exercise : March 15, 2012 Date Last Exercise : March 15, 2016
Year 2012 - Energy Earth Public Company Limited signed the Joint Operating Agreement with Eaststar Company Limited to do the coal mining in Myanmar with the expected reserve of not less than 40 million tons and expected to start the production in 2013. - On December 21, 2013, the Board of Directors’ Meeting has the resolution to approve and to propose to the Extraordinary General Meeting of Shareholders No. 1/ 2013 on August 30, 2013 to consider as follows: Approved to acquire all the common shares of PT. Hary Niaga (“HARY”) which is the company, in Indonesia, having the concession typed Izin Usaha Pertambanhan Eksplorasi (“IUP Exploration”) from the government, to be able to do coal mining in Indonesia, by share swapping. Approved to issue and allocate the warrants to buy common shares of the company (EARTH-W4) to the existing shareholders at the ratio of 3 common shares per 1 unit of warrant with no offering price. Also, 1 warrant can be exercised to buy 1 common share at the price of 8.13 Baht per share, not later than 2 years 13
Energy Earth Annual Report 2014
from the issuance date. Approved to increase the capital of the company from the registered captal of 3,027,615,570 Baht and the paid up capital of 2,605,495,683 Baht to be the registered capital of not more than 4,500,000,000 Baht by issuing the new common shares not more than 4,500,000,000 shares at the par value of 1 Baht for offering to the private placement in order for the company to be able to acquire the common shares of HARY by not paying in cash and for the rights to exercise the warrants of the company.
Year 2013 - In February, the company has been listed in the Frankfurt Stock Exchange/Frankfurter Wertpapierbörse (FWB®) as being listed in two markets (Secondary Listing) - On June 7, 2013, the Board of Directors’ Meeting No. 4/2013 has a resolution for the company to invest in the subsidiary named Earth Power Plants Company Limited (EPPL) with the purpose of the project investing in the power plants by having the registered capital of 10,000,000 Baht, divided into 10,000,000 shares with a par value of 1 Baht. The company has become the shareholder of Earth Power Plants Company Limited with 99.00%. On December 21, 2013, the Board of Directors’ Meeitng of the Energy Earth Public Company Limited No. 7/2013 has approved that PT. TRI TUNGGAL PITRIATI, which owned by the company 99.99%, buy the Exclusive Coal Offtake from PT. JHOSWA MAHAKAM MINERAL. This made the company getting the coal reserve of 43,000,000 tons at the value of USD 2.75 per ton, totally of USD 118,250,000 (or 3,820,657,500 Baht, at the 15 days average exchange rate before this meeting date, according to the Bank of Thailand’s announcement, equal to 32.31 THB/USD). The mine is open pit mine type and located at Kenoban,Desa Teluk Bingkai,Kecamatan Kenoban,Kabupaten Kutai Kartanegara,Provinsi East Kalimantan with the area of 25,106 rai. Year 2014 - On January 2, 2014, the Stock Exchange of Thailand approved to move the Company’s stock from Market for Alternative Investment to be traded in the Stock Exchange of Thailand (SET) in the sector of Energy and Utilities under the industry group of Resources by using the stock quote named “EARTH”. - On February 2, 2014, the Board of Directors’ Meeting No. 1/2014 has a resolution for the company to establish the new subsidiary named Energy Earth (Hong Kong) Company Limited (“EEHK”) with the purpose of the market expansion to do international coal business. EEHK has its registered capital of 1,000,000 Hong Kong dollars, divided into 1,000,000 shares with a par value of 1 Hong Kong dollar. The company has become the shareholder of Energy Earth (Hong Kong) Company Limited with 100.00%. On June 24, 2014, the Extraordinary General Meeitng of the Energy Earth Public Company Limited No. 1/2014 has important resolutions as follows: Approved to issue and allocate the warrants to buy common shares of the company no. 4 (“EARTH-W4”), not more than 1,411,487,567 units, to the existing 14
Energy Earth Annual Report 2014
shareholders at the ratio of 2.1 common shares per 1 unit of warrant with no offering price. Also, 1 warrant can be exercised to buy 1 common share at the price of 7 Baht per share, not later than 5 years 3 months from the issuance date. Approved to increase the capital of the company from the registered captal of 3,027,615,570 Baht and the paid up capital of 2,964,123,889 Baht to be the registered capital of 4,439,103,137 Baht by issuing the new common shares 1,411,487,567 shares at the par value of 1 Baht for the rights to exercise the warrants of the company. - On October 8, 2014, the Board of Directors’ Meeting No. 5/2014 has a resolution to approve and will propose to the Extraordinary General Meeting No. 2/2014 on November 14, 2014 as follows: o Approved to issue and offer Taiwan Depository Receipts (“TDR”) of the company at the amount of not more than 200,000,000 units to the institutional investors and the public in the People’s Republic of China (Taiwan) by offering at the price of not less than 6.37 Baht per share. o Approved to increase the capital of the company from the registered captal of 4,439,103,137 Baht and the paid up capital of 2,971,513,474 Baht to be the registered capital of 4,639,103,137 Baht by issuing the new common shares 200,000,000 shares at the par value of 1 Baht for TDR. o Approved to allocate the company’s share of 200,000,000 shares at the par value of 1 Baht, as percentage of 6.75, in order to offer to the public who is not the persons who are related in the People’s Republic of China (Taiwan) as TDR. o On November 14, 2014, the company has announced of the establishment of its subsidiary in China named Guangdong Energy Earth Company Limited (“GECL”), for the purpose of expanding the market channels which is operating the coal business in China and internationally with its 10,000,000 Chinese Yuan Renminbi, fully owned by the company.
History of Energy Perfect Company Limited Energy Perfect Company Limited (EPCL) was registered on January 5, 2007 with the registered capital of 20 million Baht, as an importer, sizing, and distributing bituminous coal to both domestic and foreign coal users by direct importing from the coal mines in Indonesia. Currently, EPCL has a registered and paid up capital of 200 million Baht, having a factory to store, crush, and screen coal at Sriracha district, Cholburi province. EPCL provides size screening and also taking care of distribution for domestic customers for Energy Earth Public Company Limited, and sells coal to both domestic and foreign customers.
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Energy Earth Annual Report 2014
History and the important development of EPCL can be summarized as follows: Year 2007
- Year 2007, On January 5, 2007, It was established to do the business of importing, distributing coal with the registered capital of 20 million Baht. - April 2007, it was the time to start the operations at the factory to do size screening at Sriracha district, Cholburi province.
Year 2008
- In September 2008, EPCL has increased the registered capital from 20 million Baht to 160 million Baht.
Year 2010
- On February 18, 2010, EPCL has increased the registered capital again to be 200 milion Baht. - On December 13, 2010, the shareholders of EPCL has sold 99.99% shares to Energy Earth Public Company Limited, formerly named Advance Paint and Chemical (Thailand) Company Limited by share swapping. This made EPCL become the subsidiary of EARTH with EARTH’s ownership of 99.99% and made the change of authority to control internally. This transaction can be the indirect registration with the Stock Exchange (Back Door Listing).
History of PT TRI TUNGGAL PITRIATI (TTPL) PT TRI TUNGGAL PITRIATI was registered and located in Indonesia on December 17, 2007 under the name CV Tri Tunggal Mandiri (partnership). Then, it’s status was changed from the partnership to be the company on December 27, 2010 and was named as PT TRI TUNGGAL PITRIATI.
Currently, PT TRI TUNGGAL PITRIATI has the registered and paid up capital of USD 1,000,000, owned by Energy Earth Public Company Limited 99.99%, owning the coal concession of 1 site with the reserve of 1.80 million tons and the rights to do coal mining in another 1 site with the reserve of 5.60 million tons, the total reserve of 7.40 million tons (As of December 31, 2014, there was no reserve balance). Its office is located in Banjarmasin, Sount Kalimantan, Indonesia, doing the coal trading. On December 21, 2010, TTPL has owned the rights to do coal mining in another 1 site, which is exclusive offtake from PT. JHOSWA MAHAKAM MINERAL (“JMM”) with the reserve of 43.0 million tons (As of January 31, 2014, there is still 43.0 million tons), which is open pit type, located at Kenoban,Desa Teluk Bingkai,Kecamatan Kenoban,Kabupaten Kutai Kartanegara,Provinsi East Kalimantan, with the area of 25,106 rai, totally 3 mines.
History of Earth Power Plants Company Limited Earth Power Plants Company Limited was registered on July 24, 2013 with the registed capital of 10 million Baht, doing the business of producing and distributing the electricity, ashes, and all kinds of ashrelated products. Currently, this company has not started to do any business yet.
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Energy Earth Annual Report 2014
History of Energy Earth (Hong Kong) Company Limited (“EEHK”) Energy Earth (Hong Kong) Company Limited was registered on March 31, 2014 with the registered capital of 1,000,000 Hong Kong dollars, doing international coal trading business to expand international markets. In September 2014, EEHK has already started its coal trading business with its customers.
History of Guang Dong Energy Earth Company Limited (“GECL”) Guang Dong Energy Earth Company Limited was registered on June 23, 2014 with the registered capital of 10,000,000 Chinese Yuan Renminbi, operating the coal business in China and internationally with the purpose of expanding the retail business in China and international markets. In December 2014, GECL has already started doing coal trading with customers in China. Shareholding Structure of the company and its subsidiaries The group has operated the business of bituminous coal production and distribution to both domestic and foreign customers as a core business by sourcing coal either from coal mines of its subsidiary and from others’ coal mines, currently based in Indonesia as one source. TTPL, which is 99.90% owned by the company, will operate coal mining from its own mines or others’ mines and distribute to EARTH, EPCL and EEHK, then delivering to customers both in domestic and international markets. Moreover, EPCL has been hired by EARTH or other customers to do coal sorting as per customers’ purposes. Also, coal will be delivered to foreign customers via shipping directly from Indonesia, while some coal is delivered to the factory of EPCL in Thailand for size screening as per each domestic customer’s request and objective before delivery. Overview of the shareholding structure and the business of the Group Energy Earth Public Company Limited Sourcing and distributing coal to domestic and foreign customers
Energy Perfect Company Limited
Earth Power Plants Company Limited
- Sorting, Stockpiling, and Delivery coal to EARTH’s domestic customers - Sourcing and distributing coal to domestic and foreign customers
(Not operated yet)
Energy Earth (HongKong) Company Limited Sourcing and distributing coal internationally
PT TRI TUNGGAL PITRIATI
Guangdong Energy Earth Company Limited
Coal mining and export, sourcing and distributing for EARTH EPCL และ EEHK
Coal trading in China and internationally
Domestic Coal Business 17
Energy Earth Annual Report 2014
In 2014, the company imported coal from TTPL’s mines, which has finally been shut down at the year end, due to the coal reserve has been depleted. Nevertheless, the Company has still imported coal from other mines in Indonesia in order to distribute to domestic customers nationwide, either wholesale or retail, by direct sale and delivery to customers and by keeping as stock at both two screening factories at Sriracha district, Cholburi province and Nakornluang district, Ayudhaya province, which are the great locations for delivery to customers quickly and throughout nationwide in order to serve customers’ needs. Domestic coal using in 2013 mainly used in the industry of cement producer as 70% and other industries as 30%. It is expected that coal using, with the price per unit of heating value less than other fuel, will expand continuously in the future. Domestic customer base of the Company covering various industries such as cement industry, paper industry, food industry, textile industry, power plants, and other industries that use coal. Although the world coal price has been dropped since the beginning of the year, the Company still can offer a good service to customers because of good management to provide good services, standard stockpiling, sufficient stock for large amount of customers as per their needs. Foreign Coal Business The company invested in coal mines in Indonesia by importing the coal from TTPL’s mines in Indonesia and distributing to domestic customers and to customers in other countries, especially in China mainly to the Chinese government’s big power plants (End Users). Some coal was distributed via traders in foreign countries and India. In 2014, the company has already started to deliver coal to new customers in South Korea. The Company has set up Energy Earth Hong Kong Company Limited to take care of coal selling to customers in foreign countries with the expansion plan to sell to foreign countries like Philippines, Hong Kong, Taiwan. The Group forecasts its sales to the target countries within 2017 as its goal. Also, the Company has set up Guang Dong Energy Earth Company Limited to do coal trading in China and expand the business to other countries.
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Energy Earth Annual Report 2014
The Operations of Each Product Line The Revenue Structure of Coal Selling, according to the consolidated finanacial statements
Type of Revenue 1) Revenue from Coal Selling Domestic Foreign 2) Other Revenue Other Revenue Total
Operated By
2012 Million % Baht
2013 Million % Baht
2014 Million % Baht
EARTH,EPCL EARTH,EPCL
1,867.79 8,584.12
3,624.13 9,885.58
5,227.59 9,582.56
EARTH,EPCL
17.83 81.96
22.30 0.21 10,474.21 100.00
26.80 73.11
12.44 0.09 13,522.15 100.00
35.28 64.67
6.37 0.04 14,816.52 100.00
In 2012, the group’s revenue was from domestic coal selling of 1,867.79 million Baht, the revenue from foreign coal selling of 8,584.12 million Baht, and, the other revenue of 22.30 million Baht, calculated as 17.83, 81.96, and 0.21% respectively. In 2013, the group’s revenue was from domestic coal selling of 3,624.13 million Baht, the revenue from foreign coal selling of 9,885.58 million Baht, and, the other revenue of 12.44 million Baht, calculated as 26.80, 73.11, and 0.09% respectively. In 2014, the company’s revenue was from domestic coal selling of 5,227.59 million Baht, calculated as 35.28%. The revenue from foreign coal selling of 9,582.56 million Baht, calculated as 64.67%. Also, the other revenue of 6.37 million Baht, calculated as 0.04%. The revenue from domestic coal selling has been increased continuously because the group was successful in expanding the new domestic customer base by having customers in all over the country and was able to expand to sell to the cement industry. Also, the company can still maintain the existing customer base. This can reduce the dependency on the foreign coal selling. Characteristics of Products and Services Coal is a sedimentary rock that can be ignited, mainly composed of carbon of not less than 50% by weight or 70% by quantity. Coal is made up from the deposition of dead plants and decayed in the area of water basins many million years ago. Changes occur naturally on earth; for example, earthquakes, volcanic eruptions or sediment caused by the deposition of plants, resulting in more pressure, combined with the heat from inside the earth's surface, the deposition making changes into coal types. The physical characteristics of coal is in the solid state, formless and with colors ranging from brown to black with the properties of coal of being able to be ignited, to be used as an energy source for industrial and power plants. Many ways to classify coal are different as the purpose of use. However, the current popular way to classify is American Society for Testing and Materials (ASTM) by clasiifying into 4 types based on the amount of carbon from most to least such as Anthracite, Bituminous, Sub-Bituminous, and Lignite.
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Energy Earth Annual Report 2014
Genereal characteristics of each coal type are as follows: 1.
Anthracite is the highest quality black and shiny coal, composed of carbon with more than 90%, very low moisture, high heating value, and the ignition temperature is high. Mostly, it is used as a fuel source for the glass industry, chemical Industry, and steel industry.
2. Bituminous is the black shiny coal, composed of approximately 80% - 90% carbon. This coal type is used to be fuel, as an alternatives to fuel oil for boilers in many industrial factories; for example, food production industry, paper industry. 3. Sub-Bituminous is the coal colored range from dark brown to black. The coal texture is soft like wax, composed of approximately 71% - 77% carbon, with the moiseture of 10% - 20% (World Coal Institute. 2004b. On-line). This coal type is mostly used in producing electricity. 4. Lignite is the coal still remaining plants with colored range from dark brown to black, composed of very low quantity of carbon, with the high moisture. It can be used as the fuel for industries, but it is not popular because of low heating value and high sulfer, which has an impact on the environment. Table of a comparison of each coal type Coal 1. Anthracite 2. Bituminous 3. Sub-Bituminous 4. Lignite
Heating Value High High Medium - High Low – Medium
Moisture Low Low Medium High
Ash Low Low Medium High
Sulfur Low Low Medium Low – High
The coal type that the group imports to distribute is Bituminous which is the coal type with the high heating value, low moisture, low ash, and low sulfur. This has a little impact on the environmental and together with the continuous increasing price trend of fuel oil and natural gas, making the industrial change to use coal instead of alternative fuel.
Mining Rights and Concessions
PT TRI TUNGGAL PITRIATI (“TTPL”) has the registered capital and paid up capital of 1,000,000 US dollar, which is owned by the company in the proportion of 99.90%. It owns a mining concession, which has the coal reserves of around 1.83 million tons, and another mining concession which has the coal reserves of 5.63 million tons, totally of 7.46 milllion tons (as of December 31, 2014, no reserves anymore). Its office is located at Banjarmasin, South Kalimantan, Indonesia. On December 21, 2013, the company’s Board of Directors had a resolution to approve TTPL to buy an Exclusive Coal Offtake from PT JHOSWA MAHAKAM MINERAL (“JMM”), making the company to get the coal reserves of 43.00 million tons, at the value of 118,250,000 US dollars (or 3,820,657,500 Baht, calculated by using the average exchange rate of 15 business days before the date of the Board of Directors’ meeting, which is announced by the Bank of Thailand, equally to 32.31 THB/USD). This mine is open pit type, located at Kenoban,Desa Teluk 20
Energy Earth Annual Report 2014
Bingkai,Kecamatan Kenoban,Kabupaten Kutai Kartanegara,Provinsi East Kalimantan with the area of 25,106 rai. On December 31, 2014, the group has the existing coal reserves of 43.0 million tons (Reference to the existing coal reseves and the value per ton as shown in JORC), which has terms and agreements as follows: Name of Coal Mine
Owner/Operator Type of Business
1. Angsana, the district of Tanah Bambu, South Kalimantan *
PT Tri Tunggal Pitriati
2. Simpang Empat, PT Tri Tunggal the district of Tanah Pitriati Bambu, South Kalimantan ** 3. Kecamatan Kenoban, the district of Kabupaten Kutai Kartanegara, East Kalimantan ***
Number of Registration/ Coverage Period Country of Registration
Concession
Mining License (545/013/IUPOP/D.PF/2010) in Indonesia
15/1/10 - 15/1/15
Mining Rights
Mining License (545/106/IUPOP/D.PF/2010) in Indonesia
Till the coal reserves in the mine are all depleted.
Mining License (540/2295/IUP-Er/MB.PBAT/VIII/2010) in Indonesia
Till the coal reserves in the mine are all depleted.
Mining Rights PT JHOSWA Mahakam Mineral (“JMM”)
Angsana, having the coal reserves according to JORC at the amount of 1.83 million tons in the period of 5 years, depleted on June 30, 2014 Simpang Empat having the coal reserves according to JORC at the amount of 5.63 million tons, depleted on June 30, 2014 Kecamatan Kenoban, having the coal reserves according to JORC at eh amount of 43.00 million tons, currently having 43.0 million tons
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Energy Earth Annual Report 2014
The Marketing and the Competition 1) The Marketing Policy The company emphasizes on the importance of the sustainable growth by providing regularly the good quality of coal upon the customers’ request with on time delivery. Moreover, the company has continuously expanded the customer base both in domestic and foreign market. For the domestic market, it is planned to expand to retail customers with the goal to be a leader in distributing coal to domestic retail customers. For the foreign market, the company has expanded to more markets by finding new markets with high import rate. In 2014, the company firstly distributed to South Korea and has established Energy Earth (Hong Kong) Company Limited in order to increase accessibility to customers. Additionally, for the market expansion in trading, there has been an establishment of a Chinese company as its subsidiary named “Guangdong Energy Earth Company Limited, which has already started the business operations in 2014.
Distribution and Channel of Distribution The current market share of the group is to sell to both domestic and foreign customers, with the proportion of domestic and foreign customers is at 35:65. Distribution channels can be divided into: Foreign Market : 1) Selling via the middleman who sells coal directly to the end users in foreign countries. 2) Selling directly to the government’s big power plants in China and the power plants and paper industry in India (End User). - Domestic Market : Most are direct selling. Customers mostly are bituminous coal users to use in generating energy in their production line such as small industrial factories to big ones and in various industries; for example, cement industry, paper industry, food industry, dyeing industry, etc. which is located nationwide. Target Customers Main Target Customers can be divided into two groups as follows: -
1. Direct Coal Users (End User) The group sells coal to domestic customers who is the producers in various industries such as cement industry, paper industry, dyeing industry and food industry. Selling coal to these customers, the group much import big sized coal and do size screening as per each customer’s request. For the foreign customers, currently, the group sells coal directly to the government’s big power plants in China and the company has a project to expand to other industries of the end users; for example, Cement industry, paper industry, etc., and has a plan to expand to other countries like South Korea, Taiwan, Japan.
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Energy Earth Annual Report 2014
2. Middleman (Trading Arm) The group has an end user customers who work via middlemen located in foreign country by selling directly from the port of origin in Indonesia, no need to do size screening at all. 2) Market Conditions and Competition Global economic growth and expansion has increased has caused the increase of the price of oil and natural gas. Industrial factories have switched to use boilers which can use coal as fuel instead because coal is a substitute material that can be used to heat even close to oil or natural gas. Also , the price is cheaper when compared to the price per the amount of heat. (Baht per kilocalories) . 
Domestic Coal Industry Outlook
Table of Thailand’s quantity of coal imported Amount (Million Baht) No Country 2012 2013 2014 1 Indonesia 36,082.97 30,438.45 36,448.09 2 Australia 7,411.70 8,697.67 9,236.90 3 Phillippines 166.94 596.57 597.58 4 Vietnam 742.57 485.25 794.03 5 Laos 434.94 358.35 -
Growth (%) 2012 2013 2014 16.56 -15.64 16.49 21.38 17.35 5.84 12.98 257.35 0.17 -45.04 -34.65 38.89 14.94 -17.61 -100
Proportion (%) 2012 2013 2014 78.34 73.83 73.43 16.09 21.1 18.61 0.36 1.45 1.20 1.61 1.18 1.60 0.94 0.87 -
Source: Customs Department The coal demand both from domestic and foreign markets and even the world market has the continuously increasing growth based upon the economic recovery and the increasing price of oil. Currently, Thailand has total industrial factories of approximately 7,000 factories. Therefore, if the price of oil and natural gas still maintains in high level, it is likely that the industrial factories turn to use coal as a source of energy, which results in continuously expanding the domestic coal industry.
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Energy Earrth Annual Repport 2014
W World Coal Industry I Outtlook
Top Coaal Exporters in i the Worldd (Million Tonns) 25542011 25556 2012
2013 2
500 400 300 200 100 0 IIndonesia
Australia
Russia
USA
Colombia
South Affrica
Canada
Source: W World Coal Association A For the year 2011 – 2013, export voluume of coal in i the world market has sstill been likeely to rise steadily. Indonesia,, Australia, Russia are tthe three coountries being the worlld's largest exporters respectivvely. Indonesia had the export e volum me of 383 million tons in 2012, increaased from 20011 by 74 million toons, as a perrcent of 24, and a had the export volum me of 426 million tons inn 2013, increaased from 2012 by 43 million toons, as a perrcent of 11. The second largest is Auustralia, with the export volume v of 301 million tons in 2012, increaseed from 20111 by 17 millioon tons, as a percent of 66, and had thhe export volume oof 336 millionn tons in 20113, increased from 2012 by 35 million tons, as a peercent of 12. The next exporter is Russia, witth the exportt volume of 1134 million tons in 2012, increased froom 2011 by 10 1 million tons, as a percent of 8, and had the export voolume of 141 million tons in 2013, incrreased from 2012 2 by 7 million ttons, as a peercent of 5. The group has coal mines in Indonnesia, which is a base too sell and distributee coal to its customers. c Top Coaal Importers in the Worldd (Million tonns) 25554 2011 2555
2556 2012
20013
350 300 250 200 150 100 50 0 China
Japan
India
South Korrea
Source: W World Coal Association A
24
Taiwan
Germaany
UK U
Energy Earth Annual Report 2014
For the year 2011 – 2013, import volume of coal in the world market is increasing steadily by the year 2012. China is the world's # 1 importer, with the import volume of 289 million tons in 2012, increased from 2011 by 99 million tons, as a percentage of 52, and had the import volume of 327 million tons in 2013, increased from 2012 by 38 million tons, as a percentage of 13. The next one is Japan, with the import volume of 184 million tons in 2012, increased from 2011 by 9 million tons, as a percentage of 5. The next one is India, with the import volume of 160 million tons in 2012, increased from 2011 by 31 million tons, as a percentage of 24, and had the import volume of 180 million tons in 2013, increased from 2012 by 20 million tons, as a percentage of 13. The Group has sold coal to China as # 1 and followed by India. For South Korea, they are in the goals in expanding the foreign markets for the group in the future. Product Sourcing
Finding the products
Currently, the Group’s sourcing coal from foreign country totally from mines in Indonesia only one source because Indonesia has a lot of coal resources which has good quality as per the company’s customers’ need. Moreover, it is worth when consider the transporation cost from the origin to the company’s target customers. The group emphasizes on selecting mainly on bituminous coal mines because it is the type which meets the customers’ needs. Moreover, the location of the shipping port of coal will be the primary criteria in the selection process; that is, the location of the coal shipping ports will be located not far from the port of receiving in Thailand, in order to save on shipping costs. When the group selects the coal mine to meet the above criteria, the group will send experts to inspect coal mines to collect samples of each mine, to measure the quality of the coal in the laboratory, Including monitoring the efficiency of extraction and storage of coal additives whether there is a lot of sand, rock, or soil additives or not. Procedures of coal sourcing and delivery are as follows: 1. The group will send the team to work in the coal mine and the shipping port in Indonesia in order to take care and control the quality of coal transportation from the warehouse in the mine to the shipping port in Kalimantan Island, Indonesia. 2. Coal will be transported via conveyor or may be using a tractor to transport the coal to the Barge (ships with the capacity approximately 8,000 - 10,000 tons per ship per trip) until a ship fulled or.loading to the Vessel (ship with the capacity approximately 30,000-100,000 tons), which mostly used to deliver to the end user in China. 3. Ships transporting coal will spend the total journey time from Indonesian port to the port of Sriracha about 14 days (if the Vessel, takes about 7 days or 8-10 days for China and India). In 2011, the group has increased the specific registered capital to invest in acquiring the coal mine in Indonesia. Such mine has the coal reserve of totally 7.4 million tons. Now, the coal reserve of this mine has already been depleted.
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Energy Earth Annual Report 2014
In 2012, the group has sourced for additional coal mines as follows: 1. On November 23, 2012, Energy Earth Public Company Limited has signed the Join Operating Agreement with Eaststar Company Limited, which has details as follows: 1.1 Concession: Eaststar Company Limited is the one who get the coal concession in the area of 1,262 rai at Dawei, Myanmar. 1.2 Period: No specifying about the expiration date of the Joint Operating Agreement. 1.3 The mining and distribution: Energy Earth Public Company Limited is the one who operates the mining and distribution of coal. 1.4 Investment: Energy Earth Public Company Limited is the one who sourcing the investment fund for mining. 1.5 The Coal Reserve: The preliminary estimated coal reserves of not less than 40 million tonnes, which Energy Earth Public Company Limited will hire the third party to survey by drilling coal reserves (Joint Ore Reserves Committee: JORC). If the survey reveals that coal reserves are less than 40 million tons, Eaststar Company Limited will find more concessions to get the coal reserves of not less than 40 million tons. 1.6 This coal mining is a Joint Operating Agreement which the company will not pay any compensation to Eaststar Company Limited. However, in terms of operating together, the company will be responsible for all costs of operations. The profit sharing percentage is 70% for Energy Earth Public Company Limited and 30% for Eaststar Co., Ltd. 2. On December 21, 2012, Energy Earth Public Company Limited’s Board of Directors’ Meeting No.5/2012 had a resolution to approve the Company to enter into the acquisition of assets through the acquisition of all shares of PT. Hary Niaga ("HARY"), totally not more than 1,000 shares at not more than 3,694,800 Baht per share, at the total purchase amount of PT.Hary Niaga’s common shares not more than 3,694,800,000 Baht. The Company will make the payment by means of issuance of not more than 454,464,945 shares with a par value of Baht 1.00 per share, offering at THB 8.13 per share on the private placement basis. This made the company have the coal reserve of 40 million tons in East Kalimantan, Indonesia by share swapping. EARTH issued the shares to offer to Hary at the value of the estimated coal reserve value by an independent valuer. It was expected that JORC report would represent the final purchase value. However, the company needed to increase its capital. Then, the Extraoridary General Meeting of shareholders needed to be held in order to get an approval from the shareholders to increase the capital to acquire a mine, which is expected to be completed in the first half of 2015. Currently, it is on process of waiting for the assessment of the coal reserve (JORC) from an independent valuer in order to calculate the exact number of shares to be swapped with PT.HaryNiaga (“HARY”). In 2013, the group has provided the additional reserves. On December 21, 2013, Energy Earth Public Company Limited’s Board of Directors’ Meeting No.7/2013 has approved d PT. TRI TUNGGAL PITRIATI (“TPP”), which the Company owns 99.90% shares, to buy the mining rights (EXCLUSIVE COAL OFFTAKE) from PT. JHOSWA MAHAKAM MINERAL with the coal reserve of 43,000,000 tons at the value of USD 2.75 per ton, totally of USD 118,250,000 (or 3,820,657,500 Baht, calculated by using the Bank of Thailand’s average exchange rates of 15 business days before this meeting date of EARTH, which is equal to 32.31 THB/USD).
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Energy Earth Annual Report 2014
Providing the additional mine this time can ensure the customers that the group have enough supply to be deliver to customers on time and as per agreed conditions in the contracts. For trading part, the group purchases coal from other mines by doing a survey of the coal quality from each mine by hiring the expert to verify the coal quality in such areas as the amount of carbon, moisture, ash, and sulfur dioxide and also the coal reserve of each mine. If the survey results meet the criteria, the group will then agree to purchase from the mine. 
Environmental Effect
Sorting operations and coal storage of the group may cause the dust spreading out around the factory. Thus, the group recognizes significantly in taking care of the environment around the plant as well by having the preventive plan as follows: 1. Build 10 metre screens and planting high trees around the plant 2. Provide water spray curtains and sprinklers at various locations in the plant to trap the dust. 3. Build a puddle to clear the lower wheels of every truck before leaving the coal screening plant. 4. Make canal around the plant in order to screen the coal dust. 5. Provide staffs to clean up the plant including the front road of the plant and its neighbored area. Additionally, the company is compliance with the law strictly by getting approval of a yearly license of the business operations which may be harmful to health by the Municipal of Chao Praya Surasak, Cholburi Province. The Company has already been approved to renew the license continuously till present time. On December 31, 2014, there is no any disputes or lawsuits related to environment at all. 2.4
Undelivered Tasks. None.
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Energy Earth Annual Report 2014
Risk Factors Risk factors and other detailed information appeared on this report does not cover all the risks that could happen. So, there may be other risks not expected. Moreover, the information in this report does not cover the expected risks that is no impact significantly to the Company and its subsidiaries (“the group”) at this current moment, which could be am impact to the group in the future. Risks from doing business The group has been the coal producer and distributor, selling to the coal users both in domestic and foreign countries. The coal, which the group distributes, mainly is from foreign country, that is both from its own mine and others’ mines. So, the risk from doing this business is the risks related to the coal business. 1. Risks of the coal supply to be distributed In the coal business, the most important factor is the ability to find the coal supply to be distributed, which the related risks are as follows: a) Risks of buying coal only from Indonesia as one source Last year, the group has sold coal totally of 8.387 million tons, some of which was from its own mine. The group ordered coal from the coal mines in Kalimantan island or Borneo island, Indonesia, only one source because it is the source having a lot of the bituminous typed coal reserve, can be excavated for many years. Moreover, Kalimantan island is located not far from Thailand, resulted in the cost of coal of the group can be in the competitive level. Due to a lot of Indonesia’s natural disaster, the group may be impacted on not being able to buy enough coal to supply during that event. Since the group started to do the coal business in 2007, Kalimantan island has never been faced with the natural disaster, which has a severely effect causes the mine closed more than 2 weeks. The area of Kalimantan island in Indonesia is very huge up to 0.58 million square kilometers. (Thailand has an area of 0.51 million square kilometers.) Therefore, there will be very few opportunity that the natural disaster happened covering all the island. b)
Risks of having a few distributors
In general, coal trading in Indonesia are both trading via brokers or traders and buying directly from mine owners. Buying via brohers or traders mostly appears higher price than buying directly from mine owners. However, there is a positive point that trading via brokers not giving credit term but accepting a Letter of Credit (L/C) while buying directly from mine owners need to pay in cash. To minimize the above risks, the group has bought a mine in Indonesia in 2011 by share swapping with PT.TRI TUNGGAL PITRIATI, 99.90% owned by the company. This mine has the coal reserve of 7.4 million tons.
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Energy Earth Annual Report 2014
In 2013, the company minimized this risk. On December 21, 2013, the Board of Directors’ Meeting of Energy Earth Public Company Limited No. 7/2013 approved PT.TRI TUNGGAL PITRIATI, which 99.90% owned by the company, to buy the mining rights (Exclusive Coal Offtake) from PT. JHOSWA MAHAKAM MINERAL. Then, the company has another 43 million tons of coal reserve at the value of USD 2.75 per ton, totally of USD 118,250,000 (or 3,820,657,500 Baht). This mine is open pit type, located at Kenoban,Desa Teluk Bingkai,Kecamatan Kenoban,Kabupaten Kutai Kartanegara,Provinsi East Kalimantan with the area of 25,106 rai. The total coal reserve is around 70-80 million tons or can accommodate the purchase order till 10 years. Also, in the next years, the group has a plan to buy the additional mines up to 5 mines as stated in the Mission “5 Years 5 Mines 5 Markets”, which can help reduce risks on a few suppliers. c)
The Risks from the Operations of transporting coal through the vessel
The group imported the coal from Indonesia and needed to transport coal to the vessel. Transporting goods by ship has some risks; for example, the number of ships is not adequate to meet the demand, facing the natural disaster or the delayed unloading coal, which has an impact on the coal loss, due to the shipping port is not standard. The occurrence of natural disasters by sea is difficult to predict. When it happens, it affects the delayed coal transportation. Moreover, if facing with such a large hurricane, it could damage the vessels that transport coal. Therefore, to prevent this kind of circumstance, the group select famous and reliable shipping companies by considering their profiles of having been working together. Moreover, the group has provided the insurance policy to cover the damage that may occur to every boat trip. The standard of the shipping port is very important for the marine transportation. The group emphasizes on every steps of transporting coal both from the port of origin and destination, by selecting the shipping port which is efficient and standard as well as sending its staff to be at the port of origin and destination to control closely the efficiency and the timing of coal transportation. d)
Risk of domestic transportation
The business of domestic coal distribution needs to reply on the transportation by trucks, while the group has not own trucks. However, the company and its subsidiaries has a strategy in managing the cost of transportation and the continuity of transportation by considering to choose a good quality transporation company with its good profile before operating. The company also do cost saving efficiently by providing gas for some selected transportation company, registered as its supplier.
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Energy Earth Annual Report 2014
e)
Risk of political and legal in Indonesia
In 2011, the group has bought a mine in Indonesia by share swapping with TTPL which is the foreign company registered in Indonesia, requested to act as the new law about the New Indonesian Mining Law No. 4/2009 article 34. It is said that domestic coal producers have to distribute coal domesticly in proportion with the total production plan to serve sufficiently to the domestic demand (Domestic Market Obligation), announced on December 31, 2009. This also defines the quota of any mines in Indonesia having to the specific ratio of domestic coal distribution and foreign coal distribution. However, the law does not impact on the company at all because the domestic selling price is market price. Since the company has a good relationship with local people in Indonesia, the company can adjust itself to comply the new law immediately. So, there is no effect on normal business operations. Also, the new law about the mineral and mining business, Government Regulation of the Republic of Indonesia, dated on November 24, 2012, article 97, assigned the foreign investors who get the concession of coal mining that within 5 years after the production starts the foreign company needs to distribute shares to Indonesian as follows: Year 6 Need to distribute not less than 20% of the total registered capital Year 7 Need to distribute not less than 30% of the total registered capital Year 8 Need to distribute not less than 37% of the total registered capital Year 9 Need to distribute not less than 44% of the total registered capital Year 10 Need to distribute not less than 51% of the total registered capital It can be seen that within 10 years, the foreign company will have to own not more than 49% shares. The company then has a strategy to provide a mine with the coal reserve around 40 million tons per mine in order to finish mining within 10 years before reducing the shareholding percentage to not more than 49%. 2. Risk of entering of a new entrepreneur The importer and distributor of coal has been expected to increase in the future, as upon the business trend, which is likely to grow as the price of oil and natural gas, expected continuously increasing. The increase of the entrepreneur makes more severe business competition, affecting the group’s business operations. Although there is an increase of entrepreneurs interesting in coal business in the future, being successful still needs significant factors supporting the business; for example, the ability to provide coal in good quality needs experiences, specialization of the entrepreneur, and the good relationship with mine owners. This can be the important barrier to the new entrepreneur’s operations. In the past, many coal entrepreneurs occur but not successful because of no experience in the business and not being able to 30
Energy Earth Annual Report 2014
provide coal to be delivered. Or, to provide coal to be delivered mostly is the contract with the brokers causing the higher price when compared to other competitors. Also, there is no ability to control the coal quality as requested. The new entrepreneurs have to compete with the old entrepreneurs by grabbing the market share. The good relationship and trust between coal users and coal distributors, created long time, can be a significant barrier to convince the coal users changing to buy from the new entrepreneurs. The strategy to sell at a lower price to grab a market share may be hard to do because the new entrepreneurs always get the higher cost of coal than the old entrepreneurs. This is because of having the trading contract with brokers. Currently, the group got its own mines to minimize the risk of entering of the new entrepreneurs. 3. Risks from the coal price varied upon world market price
Indonesia Coal Report 2014 US$/T
80 70 60 50 40 30 20 10 0
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
US$/T 71.05
70.13
68.41
67.95
68.55
66.67
64.59
63.28
61.65
60.69
60.73
59.05
According to the coal price information in 2013, it represents the gradually decreasing coal price and sharply fell in quarter 3 of 2013. This contiuous fell of coal price resulted in pricing the coal to align with the change of the coal price in world market. Therefore, the group has a policy to define the coal price by calculating the cost of coal plus the desired profit. This policy helps minimize the risk of fluctuating coal price in the world market. The company has a policy to keep the stock not more than 4 months. Since the demand of coal is likely to increase steadily due to the economic expansion. The demand of coal is more than the supply. Then, if the coal price in the world market is decreasing, the group is not be able to plus the profit as much as when the coal price in the world market is increasing,
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Energy Earth Annual Report 2014
Therefore, having our own mines which offering the lower cost will help correct the fluctuation of the selling price, which is the company’s Mission “5 Years 5 Mines 5 Markets”. 4. Risk of Environmental Impact and Resistance from the Community (1)
The effect on community around the industrial factory or the power plants using coal
The coal, that is used as fuel in the process of generating heat, can be defined in 4 types such as Anthracite, Bituminous, Sub-bituminous, and Lignite. All this 4 types have different carbon and sulfur as follows: Coal
Heating Value
Moisture
Ash
Sulfur
Anthracite High Bituminous High Sub Bituminous Medium-High Lignite Low-Medium Source : www.energy.go.th
Low Low Medium High
Low Low Medium High
Low Low Medium Low–High
When coal burns, the reaction of the oxygen in the air with sulfur in the coal creates sulfurdioxide, which is toxic gas to human body. As shown in the above table, lignite is the coal with high sulfur, not being popular to be used in the industrial factory. However, the coal that the group distributes is bituminous type, creating low sulfurdioxide and also the boiler that uses coal can efficiently trap the toxic gas from the combustion. This results in expecting low environmental effect and low resistance of the community around the industrial factory or the power plants using bituminous. (2) The effect on the community around the sorting plants of the group Sorting and storage coal at the sorting plant of the group may impact the environment nearby. The group has laid down measures to control and solve this problem, by building high screen around the plant, by storing coal in the warehouse, and also watering the area around the plant to reduce coal dust. Moreover, the group also has a policy of building a good relationship with the community nearby, by hiring workers from the community nearby and paying attention to the problems of the communities arising from the business operations of the group urgently. The operations of the sorting plant needs to get an approval from the government, with renewing yearly. The group’s sorting plant has got the license to operate the business that is harmful to the health from Praya Surasak Municipality since 2007, when the sorting plant was started the operations. In 2014, the group has already been approved to renew the license.
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Energy Earth Annual Report 2014
Financial Risks 1)
Risk of the fluctutation of the foreign exchange rate
Buying coal from foreign country and selling to both domestic and foreign countries has been mainly done by using US dollar; as a result, the group has to do accouting by recording in US dollar currency as the accouting standards No. 21, on the article of the impact on the change from currency exchange. All the transactions will be booked in US dollar on the transaction date, and they will be translated from US dollar to be Thai Baht in order to provide the financial statements at the end of period. Then, the translation of currency will have an impact on the financial statements showing in Thai Baht. For the transaction of buying and selling coal in foreign countries, the group uses US dollar for the transactions and do the accounting by recording using US dollar, making no risks on currency exchange rate. Additionally, the group has transactions in domestic and other domestic expenses which is Thai Baht. These transactions will be translated into US dollar to do the accounting and affect the gain and loss on exchange rate as shown in the company’s financial statements. Gain and loss on the exchange rate occurs when the group sells coal to customers and recognizes the revenue of selling coal at the same time of recognizing account recievables, due to the group offers credit term to customers. This kind of booking needs to do currency translation from Thai Baht to US dollar on the transaction date without having payment yet. Because from the date of accrued revenue from customers till the date of payment, the US dollar may be fluctuated, affecting on gain and loss from exchange rate occuring on the date of receipt. In case of US dollar appreciation, the group will book loss on exchange rate on the date of receipt from customers who get credit term because the receipt is done by Thai Baht at the amount as agreed but the Thai Baht depreciation after the currency translation into US dollar for accounting. Therefore, the above loss is the loss only in term of accounting. In term of management, the group having two currencies will manage by using the same currency it receives to pay expenses without currency exchange. So, this will not affect to the company’s actual gain and loss on the currency exchange as shown in the financial statements.
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Energy Earth Annual Report 2014
Exchange rate reference to US dollar for the Year (Thai Baht per US Dollar) 2012 - 2014 34.00 33.00 32.00 31.00 30.00 29.00 28.00 27.00 ธ.ค. ต.ค. ส.ค. มิ.ย. เม.ย. ก.พ. ธ.ค. ต.ค. ส.ค. มิ.ย. เม.ย. ก.พ. ธ.ค. ต.ค. ส.ค. มิ.ย. เม.ย. ก.พ. 2557 2557 2557 2557 2557 2557 2556 2556 2556 2556 2556 2556 2555 2555 2555 2555 2555 2555
Source: The Bank of Thailand Moreover, in 2012, the group had loss on the exchange rate at the amount of 18.63 million Baht, as 1.41 percent of the net profit, and in 2013, the group had more loss on the exchange rate at the amount of 180.13 million Baht, as 16.22 percent of the 2013 net profit because of the US dollar appreciation when compared to Thai Baht in 2012. For the year 2014, the group had loss on the exchange rate at the amount of 63.28 million Baht, as 6.07percent of the 2014 net profit, resulting from the US dollar appreciation continuously when compared to Thai Baht. The group has a policy to follow up the news and movement of the currecncy exchange closely and have a policy to protect this risk by using the foreign exchange forward contract at the appropriate amount and having credit line to protect currency exchange with financial institution. 2)
Risk from financial liquidity
The group has been doing coal business by producing coal from its subsidiary’s mine or the minig rights and distribute coal to customers mostly having been offered credit term instead of cash payment, affecting the group to have quite a long term cash cycle. By calculating from the financial statements of 2014, there was 260.14 days including account receivable days of 123.91 days, average selling days of 35.18 days, the term of payment of 5.39 days, as well as advanced payment day of 106.44 days respectively. This affects the group to have high working capital which may lead to a problem of liquidity if it cannot find sufficient source of fund. Moreover, the group has a plan to do the budgeting on revenue, expenses in advance as well as it has a plan keep track on the actual revenue and expenses regularly in order to be in consideration of liquidity of the group. Additionally, the group has a short term loan and overdraft credit line with financial
34
Energy Earth Annual Report 2014
institution. On December 31, 2014, the group has short term loan at total amount of 12,041.00 million Baht including overdraft of 85.00 million Baht, L/C T/R and promissory note credit line of 11,956.00 million Baht, and has the outstanding overdraft and short term loan at the amount of 10,698.79 million Baht, with the available credit line to support its liquidity of 1,342.21 million Baht. Also, it believes that according to its planning and its careful revenue and expenses forecast will affect the group to be able to project the need of cash flow in advance and has time to provide the source of fund or loan in advance appropriately. 3)
Risk from giving customers’ credit
The company sells coal to customers mainly not getting paid in cash but in credit by offering the credit term to customers of around 30-90 days, resulting that it has a finanicial risk from not being able to get collection from customers. However, the company considers the financial history of the customers, financial status of customers in order to approve the credit term and credit line, which the company control on the credit line continuously in order to reduce risk from not being paid by customers. Also, for the company’s foreign customers, the company accept Letter of Credit mainly. When the company sells products to customers as upon the trading agreement shown on the Letter of Credit, the company can get paid by the bank issuing the Letter of Credit immediately. The company has no risk on not being able to get collection. To prevent this risk, the company consider customers’ credit and also the sell by using Letter of Credit for foreign customers. The company reduces the effect of not getting paid by customers by considering and setting up the provision for doubtful debt with the consideration of the quality and outstanding amount at the end of every period. Risk that affects the rights or the investment of securities holders Risk from the company having major shareholders >50% On December 24, 2014, the Phihakendr group has the company’s shares of 1,541,995,707 shares, as 51.88% of the total issued shares of the company. Then, the phihakendr group can almost control the resolutions of the shareholders’ meeting not only directors’ appointment but also other matters that required the majority of the vote of the shareholders’ meeting. Exception of enforcing its laws or regulations requiring it to be a 3 out of 4 of the shareholders’ meeting. So, other shareholders may not have enough votes to check and balance on the major shareholder offer.
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Energy Earth Annual Report 2014
General and Other Important Information General Information 1.
Company’s Details
Thai Company Name
:
บริษัท เอ็นเนอร์ยี่ เอิร์ธ จํากัด (มหาชน)
English Company Name :
Energy Earth Public Company Limited (“EARTH”)
Head office
43 Thai CC Tower 12th Floor, Room No.125-128, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Telephone: +66 (0) 2673-9631-3 Fax: +66 (0) 2673-9634
:
Website : www.energyearth.co.th Business Type
: Coal Miner and coal distributor by providing from own mines and importing from foreign country to distribute to domestic and foreign customers.
Company Registration No :
0107538000240
Registered Capital
:
4,639,103,137 shares at the par value of 1 Baht, totally of 4,639,103,137.00 Baht (Four thousand six hundred thirty nine million one hundred three thousand one hundred thirty seven Baht only)
Paid-Up Capital
:
2,971,513,474 shares at the par value of 1 Baht, totally of 2,971,513,474.00 Baht (Two thousand nine hundred seventy one million five hundred thirteen thousand four hundred seventy four Baht only) as of December 31, 2014
Investor Relations
:
Thanawat Pratoomsuwan Email Address : thanawat@energyearth.co.th
:
Thanyakamol Tritrakarn Email Address : thanyakamol@energyearth.co.th
2. 2.1
Details of the entity which the company holds 10 percent or more of the total shares sold. Energy Perfect Company Limited
Thai Company Name : Englishi Company Name : Location : Business Type
:
Company Registration No : Registered Capital : Paid-Up Capital : Shareholding Percentage :
บริษัท เอ็นเนอร์ยี่ เพอร์เฟค จํากัด Energy Perfect Company Limited (“EPCL”) Branch Office at 706/4 Moo 1, Nong Kham, Sriracha, Cholburi Telephone: +66 (0) 2673-9631-3 Fax: +66 (0) 2673-9634 Provide a service of coal sorting including coal transportation to domestic customers for Energy Earth Public Company Limited and distributing coal to both domestic and foreign customers 0105550001003 20,000,000 shares at the par value of 10 Baht, totally of 200,000,000 Baht 200,000,000 Baht (Two hundred million Baht only) Energy Earth Public Company Limited (“EARTH”) holds the shares of 99.99% 36
Energy Earth Annual Report 2014
2.2
PT TRI TUNGGAL PITRIATI (“TTPL”)
English Company Name : Location : Business Type : Company Registration No: Registered Capital : Paid-Up Capital
:
Shareholding Percentage : 2.3
Earth Power Plants Company Limited (Currently not operated)
Thai Company Name : English Company Name : Location : Business Type : Company Registration No : Registered Capital : Paid-Up Capital : Shareholding Percentage : 2.4
PT TRI TUNGGAL PITRIATI (“TTP”) GEDUNG KALIMANTAN POST LT.2, JL. DI PANJAITAN NO.67, BANJARMASIN 70115,KALIMANTAN SELATAN, INDONESIA Telephone: +62 511 3372 112 Fax: +62 511 33572 112 Having the concession from the government to do coal mining in Indonesia 01673/1/PPM/PMA/2011 Rp.8,521,000,000, equivalent to USD 1,000,000 (Approximately 29.81 Million Baht) Rp.8,521,000,000, equivalent to USD 1,000,000 (Approximately 29.81 Million Baht) Energy Earth Public Company Limited (“EARTH”) holds the shares of 99.99%
บริษัท เอิร์ธ พาวเวอร์ แพลนท์ส จํากัด Earth Power Plants Company Limited (“EPPL”) 43 Thai CC Tower 12th Floor, Room No.125-128, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Telephone: +66 (0) 2673-9631-3 Fax: +66 (0) 2673-9634 Power Plant 0105556116953 1,000,000 shares at the par value of 10 Baht, totally of 10,000,000 Baht 3,250,000 Baht (Three Million two hundred fifty thousand Baht only) Energy Earth Public Company Limited (“EARTH”) holds the shares of 99.99%
Energy Earth (Hong Kong) Company Limited
English Company Name : Location : Business Type : Company Registration No : Registered Capital : Paid-Up Capital : Shareholding Percentage :
Energy Earth (Hong Kong) Company Limited Rooms 1009-1012, 10/F., K.Wah Centre, 191 Java Road, North Point, Hong Kong Coal Trading 2073882 1,000,000 Hong Kong dollars 1,000,000 Hong Kong dollars Energy Earth Public Company Limited (“EARTH”) holds the shares of 100%
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Energy Earth Annual Report 2014
2.5 Guang Dong Energy Earth Company Limited English Company Name : Guang Dong Energy Earth Company Limited Location : Rooms 1002-1003, Longan Century Mansion, Time Square, Shantou City, Guanddong Business Type : Coal Trading in China and internationally Company Registration No : 440500400016935 Registered Capital : 10,000,000 Chinese Yuan Renminbi Paid-Up Capital : 10,000,000 Chinese Yuan Renminbi Shareholding Percentage : Energy Earth Public Company Limited (“EARTH�) holds the shares of 100% 3. Details of Reference Securities Registrar :
Auditor
:
Thailand Securities Depository Company Limited Registrar of Securities Department, 7th Floor, the Stock Exchange of Thailand Building, 62 Ratchadapisek Road, Klongtoey, Bangkok 10110 Telephone:+66 (0) 2229-2000 Fax: +66 (0) 2654-5642 Mr. Boonlert Kaewpunpruek Certified Public Accountant Registration No. 4165 B.P.R. Audit and Advisory Company Limited 152 Chartered Square, 12A Floor, Suite 08, North-Sathorn Rd., Silom, Bangkok 10500 Telephone: +66 (0) 2634-5398 Fax: +66 (0) 2634-5399 Email Address: boonlert@bpraudit.co.th
Other Important Information Not any.
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Energy Earth Annual Report 2014
Securities and Shareholder Information Registered and Paid-Up Capital The company’s registered capital of 4,639,103,137.00 Baht is all the common shares and has been paid-up of 2,971,513,474.00 Baht at the par value of 1 Baht. Shareholder Group Name of Major Shareholders Top 10 major shareholder groups As appeared on the share register book as of December 24, 2014 as follows: Name 1. Phihakendr Family Group1/ 2. Dr. Yanyong Panwongklom 3. Thailand Securities Depository Co., Ltd. 4. Mr. Kasemsan Kunchayangkul 5. Mr. Patchawat Kunchayangkul 6. Mr. Kritsakorn Techawiboon 7. Ms. Varaporn Panwongklom 8. Thai NVDR Company Limited 9. DEUTSCHE BANK AG SINGAPORE-RWM 10. Mr. Maetha Rungsiyawaranont 11. Other Shareholders Total Source: Thailand Securities Depository Co., Ltd. Phihakendr Group 1/ includes: Name 1. Mr. Khajohnpong Khamdee 2. Mr.Phipat Phihakendr 3. Mr. Phiroon Phihakendr 4. Mr. Phiboon Phihakendr 5. Mr. Phisudhi Phihakendr 6. Mrs. Voranuj Phihakendr 7. Mr. Thanawat Pratoomsuwan 8. Ms. Kanchana Chakvichitsopon Total
No of Shares 1,541,995,707 72,523,500 71,961,000 69,299,060 62,382,500 50,015,100 49,801,512 47,845,855 38,715,712 31,458,100 935,515,428 2.971,513,474
No of Shares 341,538,202 304,538,202 225,038,202 270,338,202 234,519,099 162,519,200 2,504,600 1,000,000 1,541,995,707
Percentage 51.89 2.44 2.42 2.33 2.10 1.68 1.66 1.61 1.30 1.06 31.48 100.00
Percentage 11.49 10.25 7.57 9.10 7.89 5.47 0.08 0.03 51.89
Remarks: Phihakendr Group means that the persons who has intentions to the office that they are the same ones who acquire or dispose to act under Section 246 and Section 247.
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Energy Earth Annual Report 2014
The Issuance of Other Securities The warrant No. 3 (EARTH-W3) issued for the existing shareholders of 444,519,122 units, expired on September 15, 2016, which can be exercises every 15th of March and 15th of September of each year throughout the term of the warrant. The first and the last to exercise date are March 15, 2012 and September 15, 2016. Exercise Price per 1 common share 1.466 Baht Exercise Ratio 1 unit of warrant per 1.023 shares The number of units not exercised 36,559,136 units (as of December 31, 2014) The warrant No. 4 (EARTH-W4) issued for the existing shareholders of 1,409,631,502 units, expired on September 15, 2019, which can be exercises every 15th of March and 15th of September of each year throughout the term of the warrant. The first and the last to exercise date are March 15, 2016 and September 15, 2019. Exercise Price per 1 common share 7 Baht Exercise Ratio 1 unit of warrant per 1 shares The number of units not exercised 1,409,631,502 units (as of December 31, 2014)
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Energy Earth Annual Report 2014
Dividend Policy The company has a policy to pay dividend at the rate of not less than 40% of the net profit shown in the financial statements after deducting the reserve as per the law and the other reserves except the case that the company invests in other assets. However, dividend payment also needs to be upon the company’s cash flow. For the subsidiaries or the joint venture of the company has a policy to pay dividend to the shareholders with accordance to the company, by the Board of Directors of the subsidiaries ot the joint venture consider to pay dividend upon the performance, investment plan, the need and other appropriateness, as upon the the Board of Directors of the subsidiaries ot the joint venture’s agreement. Table of the comparison of dividend payment for the end of the year as on December 31, 2011-2014 Details of Dividend Year 2014 Year 2013 Year 2012 Year 2011 Dividend Amount (Baht) 297,151,347.40 100,522,712.78 260,549,568.30 No Dividend per share (Baht) 0.10 0.034 0.10 No Dividend Pay Out Ratio* 43.49% 9.25% 14.96% No Dividend Pay Out Ratio** 28.51% 9.05% 19.67% No Number of Shares 2,971,513,474 2,956,550,376 2,605,495,683 No entitled to receive dividend * Calculated by net profit of the company from the company’s financial statements for the year ended on December 31, 2012 ** Calculated by net profit of the company from the consolidated financial statements for the year ended on December 31, 2012 Remarks: The Board of Directors’ meeting No.1/2015 on February 27, 2015 has a resolution to pay dividend at 0.10 Baht per share, which is the dividend payment from the performance of 2014 for the period of January 1, 2014 - December 31, 2014. There was the interim dividend paymentfor the performance of the period of January 1, 2014 – September 30, 2014 at 0.05 Baht per share on December 12, 2014. Therefore, the remaining of dividend payment for the year 2014 is at 0.05 Baht per share. The dividend payment is upon company’s dividend policy and all th dividend payment will be deducted by withholding tax according to the law, as shown in the above table and will be proposed in the Annual General Meeting of shareholders of 2015 on April 30, 2015 for approval.
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Energy Earth Annual Report 2014
Management Organization 1) The Board of Directors The Board of Directors consists of 13 people, 5 of which are independent directors of the company, representing 39% of the total directors. The directors’ name list are as follows: Name Mr. Phisudhi Phihakendr Mr. Parada Bunnag Mr. Khajohnpong Kamdee Mr. Phiroon Phihakendr Mr. Phipat Phihakendr Mr. Phiboon Phihakendr Ms. Kanchana Chakvichitsopon Mr. Thanawat Pratoomsuwan Mr. Nugoon Sri-In Mr. Somkiat Sukdhewa Mr. Suriyaporn Bunchai Mr. Eknarin Thammarak Mr. Thongchai Wattanasoponwong
Position Chairman Vice Chairman and Independent Director Director Director Director Director Director
Shareholding Percentage 13.36 11.49 7.57 10.25 9.10 0.03
Director
0.08
Director Independent Director and Chairman of the Audit Committee Independent Director Audit Committee Independent Director Audit Committee Independent Director Audit Committee
0.03 -
Remarks: 1. Mr. Suriyaporn Bunchai is the director who has knowledge and experience on auditing the financial statements of the company. 2. The shareholding percentage includes shares held by spouse and children who are minors. Directors who have authority as in the company certificate. “Mr. Khajohnpong Kamdee, Mr. Phiroon Phihakendr, Mr. Phipat Phihakendr, Mr. Phisudhi Phihakendr, Mr. Phiboon Phihakendr, Ms. Kanchana Chakvichitsopon, Mr. Thanawat Pratoomsuwan, Mr. Nugoon Sri-In Two out of Eight directors signed with the company seal.”
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Energy Earth Annual Report 2014
In 2014, the company arranged meetings which the summary of each meeting are as follows: Directors
Meeting The Board of The Audit Directors Committee
Annual General The Executive Meeting of Committee Shareholders 2014 The number of attendance / the number of meeting in 2014 Mr. Phisudhi Phihakendr 3/3 6/6 7/7 Mr. Parada Bunnag 3/3 6/6 Mr. Khajohnpong Kamdee 3/3 6/6 7/7 Mr. Phiroon Phihakendr 3/3 6/6 7/7 Mr. Phipat Phihakendr 3/3 6/6 7/7 Mr. Phiboon Phihakendr 3/3 6/6 7/7 Ms. Kanchana Chakvichitsopon 3/3 6/6 7/7 Mr. Thanawat Pratoomsuwan 3/3 6/6 Mr. Nugoon Sri-In 2/3 4/6 Mr. Somkiat Sukdhewa 3/3 6/6 4/4 Mr. Suriyaporn Bunchai 3/3 6/6 4/4 Mr. Eknarin Thammarak 3/3 6/6 4/4 Mr. Thongchai 3/3 5/6 3/4 Wattanasoponwong Remarks: Directors did not attend the meeting because of travelling abroad.
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Energy Earth Annual Report 2014
2)
Management
Board of Directors Audit Committee Executive Committee
Managing Director
Internal Audit Office
Assistant Managing Director
Assistant Managing Director Production
Assistant Managing Director Sales and International
Assistant Managing Director Finance
The Management of the company consists of 5 persons as follows: Mr. Mr. Mr. Mr.
Name Khajohnpong Kamdee Phiroon Phihakendr Nugoon Sri-In Paiboon Assawasiriwong
Position Managing Director Deputy Managing Director Assistant Managing Director – Production Assistant Managing Director – Sales and International Assistant Managing Director – Finance
Mr. Thanawat Pratoomsuwan
(The profile of the Management as in the attachment 1) 3)
Company Secretary
The Board of Directors has a resolution to appoint Ms. Kanchana Chakvichitsopon to be the company secretary since December 24, 2010, which the criteria of one who take a position of the company secretary shown in the attachment 1.
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4) Remuneration for Directors and Management 1. Monetory Remuneration (a) Remuneration for the directors includes meeting allowance, gratuity, according to the financial statements of 2014, is totally at 3,008,000; as follows: Directors
Position
Mr. Phisudhi Phihakendr Mr. Parada Bunnag Mr. Mr. Mr. Mr. Mr. Mr. Ms.
Khajohnpong Kamdee Phiroon Phihakendr Phipat Phihakendr Phiboon Phihakendr Thanawat Pratoomsuwan Nugoon Sri-In Kanchana Chakvichitsopon
Mr. Somkiat Sukdhewa Mr. Suriyaporn Bunchai Mr. Eknarin Thammarak Mr. Thongchai Wattanasoponwong
Chairman Vice Chairman And Independent Director Director Director Director Director Director Director Director and Company Secretary Chairman of Audit Committee and Independent Director Audit Committee and Independent Director Audit Committee and Independent Director Audit Committee and Independent Director
Director Remuneration (Baht) Board of Audit Total Directors Committee 430,000 430,000 358,000 358,000
Total
110,000 110,000 110,000 110,000 110,000 70,000 170,000
-
110,000 110,000 110,000 110,000 110,000 70,000 170,000
220,000
280,000
500,000
190,000
140,000
330,000
190,000
140,000
330,000
165,000
105,000
270,000
2,343,000
665,000
3,008,000
(b) The remuneration for 6 executive directors and 5 Managements as shown in the financial statements of 2014 is totally at 10,230,000 Baht as follows: executive directors and Managements executive directors Managements
Remuneration Meeting Allowance Salary and Bonus Total
Year 2013 Amount (Baht) 1,440,000 8,790,000 10,230,000
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Energy Earth Annual Report 2014
2.
Other compensation for the management The company set up the provident fund for the management, which the company contributes 4%-5% of salary of the year 2014. The company paid to contribute to the provident fund for the 5 managements, totally at 417,500 Baht on December 31, 2014. 5) Personnel The company has total employees of 137 persons. In 2014, the company paid the compensation to the employees, totally of 59,753,671.03 Baht, including salary, overtime, living allowance, bonus, special allowance, social security, and provident fund. Moreover, the subsidiaries paid the compensation for the same items, totally of 12,883,365.88 Baht. The number of employees and compensation as at December 31, 2014 as follows: Year 2014 Energy Earth Energy Perfect PT TRI Energy Guang Public Company Company TUNGGAL Earth Dong Limited Limited PITRIATI (Hong Energy (“TTPL”) Kong) Earth Company Company Limited Limited 49 43 17 Employee – Operations and Services (person) Employee 5 1 5 1 1 Management (person) Employee – Head 83 7 1 Office (person) Total (Person) 137 44 29 29 Compensation 59,753,671.03 7,250,886.85 5,568,256.23 64,222.80 (Baht) Remark 1. The employees’ compensation (Baht) for the year 2014 of PT TRI TUNGGAL PITRIATI (“TTPL”) is the amount of IDR 1,975,750,000 or 5,568,256.23 Baht, calculating to Thai Baht by using the exchange rate at December 30, 2014 of the Bank of Thailand, equivalent to 2.8182 Baht per 1,000 IDR. Remark 2. The employees’ compensation (Baht) for the year 2014 of Guang Dong Energy Earth Company Limited is the amount of CNY 12,000 or 64,222.80 Baht, calculating to Thai Baht by using the exchange rate at December 30, 2014 of the Bank of Thailand, equivalent to 5.3519 Baht. Policy of Employee Development The group has a policy to arrange employee training at least once a year in order to do personnel development and build the stability to the group.
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Energy Earth Annual Report 2014
Corporate Governance 1)
Corporate Governance Policy
The Board of Directors Meeting No.3/2011 on February 10, 2011 set up a policy to apply the principle and code of best practices as the company’s operations in order to benefit the company’s operations and strengthen the transparency in the operations, as well as to increase the efficiency of the management. This results in the confidence of shareholders, investors, and every related party, which the good corporate governance of the company includes 5 principles as follows: a) The Rights of Shareholders and Roles of Stakeholders The Rights of Shareholders The company awares and emphasizes on the rights of shareholders, by not only taking any action that violate or lessen the rights of shareholders but also encouraging the shareholders to us their rights. The basic rights of shareholders are the rights to trade or to transfer the shares, the rights to get sufficient company news and information, the rights to share the profit of the business, the rights to vote and remove the subcommittee and to agree with the independent auditor appointment, the rights to attend and vote in the shareholders’ meeting in order to make a decision in such issues of the company. For example, dividend payment, defining or revising the company regulations and memorandum, capital decrease or increase, and special approvement. Apart from the above basic rights, the company has a policy to support and facilitate for using the rights of shareholders as follows: The company arranges the Annual General Meeting of Shareholders every year within 4 months from the ending date of the fiscal year for each year by sending the invitation and information for the meeting’s agendas to shareholders 7 days before the meeting date. Also, the announcement will be posted in a newspaper informing the meeting date three consecutive days and informing at least three days in advance before the meeting date, which the agenda of the meeting will include the comments from the Board of Directors as attachment. The company distributes the information for the meeting’s agendas in advance on the web site of the company and also inform the rights of the shareholders to attend the meeting and their vote for the resolution. In case that the shareholders cannot attend the meeting by themselves, the company gives a chance to the shareholder to give a proxy to any independent director or anyone to attend the meeting on their behalf, in order to support the rights of the shareholders by using any kind of proxy that the company sends out with the invitation for the meeting. Before the meeting, the company allow the shareholders to send opinions, suggestions, questions in advance before the meeting date via email address of Investor Relations and email address of the company secretary. In the meeting, the company allocates the appropriate period of time and allows the shareholders to give opinions, suggestions, or ask questions in any issue independently before any resolution finalized, in order for the shareholders to give enough details of such issue for any decision making. In the agenda that the shareholders having questions, the company
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prepares the personnel who can answer under the responsibility of the Board of Directors of the company. Every director needs to attend the meeting in order for the shareholders to be able to ask for details in any related issue. To treat shareholders equally The company has a policy to create fairness for the every shareholders and every group equally including the shareholders who are management, the shareholders who are not management, the foreign shareholders, and minor shareholders, as follows: To treat and facilitate the shareholders equally and not taking any action to limit, violate or lessen the rights of shareholders. To accept the vote in the meeting upon the number of the shareholders by one share for one vote. The company allows the independent directors taking care of minor shareholders by the minor shareholders can give opinions or complaints to the independent directors. The independent directors are the ones who consider to operate appropriately; for example, if there is a claim, the independent director will examine the truth and find the way to solve appropriately. Or, if there is a suggestion which the independent director considers that it is important and affect the stakeholder as a whole or affect the company’s business, the independent director will propose the suggestion to the shareholders’ meeting to consider putting in the agenda of the meeting in the shareholders’ meeting. The Board of Directors has set a measure to prevent the insider trading of related party including directors, management, employees, and workers of the group, who are related to the information (including their spouse and child). It has also set the punishment of the disclosure of the company information or using the company information for personal benefit, as the policy to prevent insider trading. It has been informed that the Board of Directors and management are responsible for reporting about their holding securities to the Securities and Exchange Commission (SEC), as a clause 59 of the Securities and Exchange Act of 2010 as well as to inform the news and regulations of SEC and the Stock Exchange of Thailand to the Board of Directors and management regularly. Role of Stakeholders The company awares of the rights of every stakeholder group related to the company, both internal stakeholder like shareholders, employees, and the management of the company or the external stakeholders like competitors, business partners, customers. The company awares that supporting, accepting opinions from, and keeping a good relationship with every stakeholder group benefit the operations and develop the business growth and business expansion in the future. The company provide the rights to every group equally and with fairness, by comply the related regulations and rules as follows: Shareholders: The company is the representative of shareholders doing the business by considering the growth of the company value in the long term, including the internal control and audit. Employees: The company awares that the employees is one of the main resources which is important to develop the growing organization. The company then support to develop capability of personnel in order to maximize benefit for the company, as well as encouraging teamwork to increase the versatility of functions and 48
Energy Earth Annual Report 2014
arrangement for the safe working environment for employees as well as treating every employees equally and fairly with the appropriate compensation. Business Partners: The company treats the business partners with honest competition by complying the conditions in the trade contract and strictly give a commitment to the business partners. Competitors: The company treats the competitors with a good business governance with good rules of competition by avoiding the unfair competition. Customers: The company commited to product the good quality products and services for customers by trading with customers with honest and fairness. Society: The company emphasizes on environmental care of the community nearby the company’s office location. The company has established guidelines to response to the needs of each stakeholder group apparently in “the business ethics”, and also to promote and campaign for the Board of Directors, the management, and the operator using the guidelines to perform in the operations, being as the important duties of everyone. b) Information disclosure and transparency The company awares of the significant of the information disclosure which represents the accuracy, all information, and transparency of both the financial reports and general information, according to the measurement of the information disclosure of SEC and SET and any information affecting the company’s stock price, which has an impact on the decision making of the investor and stakeholder of the company. The company publicizes the information of the company to shareholders, investors, and the public via channels of publication of SEC and SET as well as the company’s web site: http://www.energyearth.co.th. For the investor relations, the company did not yet set up a specific department, working on communicating with investors, shareholders, analysts, and the government. Shareholders and investors can contact the department at phone number 02 673 9631-3 for Khun Thanawat Pratoomsuwan E-mail address: thanawat@energyearth.co.th or Khun Thanyakamol Tritrakarn Email Address : thanyakamol@energyearth.co.th c) The Resposibility of the Board of Directors The Structure of the Board of Directors The Board of Directors including persons who have knowledge and experience which benefit the the company by having these people being as a major role in setiing up policy, business planm and quarterly performance evaluation. Moreover, they emphasizes on internal control and internal audit for the benefit of the company and shareholders. The Board of Directors consists of 13 people such as 5 directors who are not management who have qualifications of independent directors not less than 1 out of 3 of the total directors, in order to balance the vote in considering any issue and also to audit the management’s performance to maximize the benefit of the company.
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Energy Earth Annual Report 2014
The Board of Directors has set up two committees to assist in corporate governance such as the audit committee and the executive committee. The company divided the duties and responsibilities of the Board of Directors, the audit committee, and the executive committee for the shareholders clearly in order to be free when decision making and present the vision as the following details under the title of management structure. The Board of Independent : The company has totally 5 independent directors, 4 of which also Directors and The Audit are the audit committee, to be on duty of specific issue and Committee propose to the Board of Directors’ consideration or to be acknowledge as the authority. The Executive Committee
: The company has totally 6 executive directors to work with versatility, by having the authority assigned from the Board of Directors. Moreover, the company has a policy to divide the responsibilities of chairman and managing director as different persons to prevent anyone having the unlimited authority. The Board of Directors of the company defines the authority and responsibility and selects the person to be appointed in the positions. Also, the company has a company secretary who is responsible for giving the suggestions concerning the rules and regulations which the Board of Directors need to be informed and is on the duties of taking care of the Board of Directors’ activities as well as coordinating to perform as the resolution of the Board of Directors. Authority of the Board of Directors 1. The Board of Directors has an authority and duties as defined in the company’s regulation. 2. The Board of Directors has an authority and duties on monitor and setting up the significant policy as follows: 2.1. Business Policy 2.2. Financial Policy 2.3. Funding Policy 2.4. Capital Management Policy 2.5. Company Risk Management Policy 3. The Board of Directors has an authority concerning the investment as follows: 3.1. Considering and approving the budget 3.2. Considering the investment project of the company 3.3. Supervising the project to be operated as plan 4. The Board of Directors has an authority supervising the the company’s operations for: 4.1. Achieving the goal or better than the defined goal 4.2. Defining the guidelines of solutions in case of having obstruction to achieve the goal or better than the defined goal 50
Energy Earth Annual Report 2014
5. The Board of Directors has an authority to provide general reports and financial reports to report to the shareholders and the stakeholders or any investors accurately, updated, and according to the law. 6. The Board of Directors has an authority to be informed of the significant audit report of the audit committee or the internal audit including the auditor and the financial advisor of the company, and to be on duty of setting guidelines of solutions in case of significant defect. 7. The Board of Directors has an authority to audit the adequate and appropriateness of the internal control and the company’s risk management. 8. The Board of Directors has an authority and a duty on facilitating the process of creating the top management of the company in order to substitute continuously (Succession Plan). 9. The Board of Directors has an authority to appoint the audit committee and to approve the authority of the audit committee. 10. The Board of Directors has an authority to appoint any one person or many or others to act as the Board of Directors. For the authorization, the proxy does not have an authority to approve any issue which the person or a person who may have conflicts (“person who may have conflicts” has a meaning as the announcement of SEC and SET) has the interest or conflict of benefit with the company or the subsidiaries. Exception of the following issues, which will be done when getting the approval from the shareholders’ meeting. It is defined that the issue that the person or a person who may have conflicts has the interest or conflict of benefit with the company or the subsidiaries cannot vote for the issue. The law requires to have a resolution of the shareholders’ meeting. Any transaction that directors have interests and in the legal or regulations of the Stock Market needs to be approved from the shareholders’ meeting. Moreover, in the following cases need to be approved from the Board of Directors’ meeting and the shareholders’ meeting with the vote not less than 3 of 4 of the total vote of the shareholders who attend the meeting and have a rights to vote. - Selling or transfer the business of the company in total or some parts which is important to other persons - Purchasing or acquiring the business of other public companies or private companies to the company. - Creating, editing, or cancelling the contract concerning leasing the business of the company in total or some parts which is important. To authorize other persons to manage the business of the company or the merger by having a purpose of profit sharing. - Editing the company’s memorandum or the company’s regulations. - Increasing or decreasing the capital of the company - The merger or the company closing down - Other issues according to the law
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Energy Earth Annual Report 2014
The Remuneration of the directors and the management The company reports clearly on the remuneration of the directors according to the announcement of the Securities and Exchange Commission (SEC), which has been approved by the Annual General Meeting of shareholder (AGM) every year. If the directors of the company are assigned more duties and responsibilities; for example, being also the audit committee, they will be receive the appropriate remuneration with the duties and responsibilities assigned additionally by considering the capability of the company too. The report of the Board of Directors The Board of Directors is responsible for the financial report of the company and the subsidiaries including the information appeared on the annual report, disclosure and the financial statements which the audit committee audits the quality of the financial report, internal control, and sufficient information disclosure to be in the notes in the financial statements. The reports are proposed to the Board of Directors every quarter. To provide the audited financial statements by the auditor who is approved by SEC and according to the generally accepted accounting standard in Thailand. The information disclosure which is important including both monetary and non monetary is done based upon the accuracy, complete, reliable, and reasonable use of appropriate accounting policies. The Board of Directors’ meeting The company arranges the meeting of the Board of Directors regularly at least every quarter and the extraordinary meeting additionally upon the necessity by defining the clear agendas in advance including the agenda of monitoring company performance regularly. In every Board of Directors’ meeting, there is a company secretary who provides the agendas of the meeting and sends out the meeting documents to the Board of Directors at least 7 days in advance in order for the directos to have enough time to consider and study the information as well as keeping the minutes of meeting in the past which was approved systematically from the Board of Directors and is ready for the Board of Directors and related party to audit. To consider any issue, the chairman of the company is responsible for the chairman of the meeting to allow the directors to give opinions freely. A resolution of the Board of Directors is from a vote of the majority. One Director has one vote. Directors having an interest wiil not attend the meeting or will not vote for the issue. If the vote is equal, the chairman of the meeting will have one vote to get the resolution. In 2013, the company has arranged 7 meeting of the Board of Directors, each of which has the company directors attended as per the management structure. d)
Risk Control and Management Internal Control and internal audit system
The company emphasizes on the internal audit for the management level and operation level. To operate efficiently, the company defines the duties and authority of the operator and management in written clearly. The company control and manage the use of assets of the company for the benefit. The duty and responsibility is allocated to operator and monitoing controller separately. Moreover, the
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Energy Earth Annual Report 2014
company provides the internal auditor to audit the internal control and internal audit efficiently as well as auditing the operations according to law and requirements associated with the company. The audit result will be reported to the Board of Directors to approve as a copy for the managing director. e)
Business Ethics
The company set the guidelines concerning the ethics of the Board of Directors, management, and employees in order for the related parties use to perform on their duty with honest, integrity and fairness when treating to every stakeholder group. Also, the company announced to the employees and every management being informed to use the guidelines strictly. Conflict of Interest The Board of Directors set up a policy concerning the conflict of interest based on the concept that any decision making on business operations will have to be done for the maximum benefit of the company only and should avoid the action which creates the conflict of interest, which the persons who are related to the issue being considered need to inform the company about the relationship or the connection of them and the issue, and not to participate in the consideration as well as to have an authority to approve any transaction. The audit committee proposes the Board of Directors about the related transactions and the conflict of interest which is considered the appropriateness deliberately. The company has complied with the rules of the Stock Exchange of Thailand regulations strictly in terms of pricing and other conditions with the persons who may have a conflict of interest by virtually deal with the third parties, sending the reports as period of time defined by SET and publicizing in the financial statements and annual report and the annual report (56-1 type). 2) The Committees The company including two sets of the committees such as the audit committee, the executive committee, by having the name list and the authority as follows: a) The audit committee has 4 people consisting of Directors’ Names Mr. Somkiat Sukdhewa Mr. Suriyaporn Bunchai Mr. Eknarin Thammarak Mr. Thongchai Wattanasoponwong Mr. Suriyaporn Bunchai is the audit auditing the financial statements of the company.
53
Position Chairman of the audit committee Audit Committee Audit Committee Audit Committee committee who has knowledge and experience in
Energy Earth Annual Report 2014
The authority of the Audit Committee 1. To audit the company to provide the accurate financial report and disclose the sufficient and reliable information. 2. To audit the company to have the appropriate and efficient internal control and internal audit with the consideration of the freedom of the internal audit as well as to approve the appointment, transfer, terminate the head of internal audit or any other department related to the internal audit. 3. To audit the company according to the law of securities and the stock exchange, the regulations of the stock exchange, and the related law. 4. To consider, select, and appoint the persons who have a freedon to be responsible for the auditor of the company and to propose the compensation of the persons as well as to attend the meeting with the auditor without the management at least once a year. 5. To consider the transaction related to or the transaction that may be conflict of interest according to the law and the regulations of the Stock Exchange in order to ensure the transaction being reasonable and maximize the company’s benefit. 6. The transaction needs to signed by the chairman of the audit committee and need to have information at least as follows: (a) The opinion concerning the accuracy, complete, reliable of the financial report of the company (b) The opinion concerning the sufficient internal audit system of the company (c) The opinion concerning the complying the law of securities and the stock exchange, the regulations of the stock exchange or the related law. (d) The opinion concerning the appropriateness of the auditor (e) The opinion concerning the transaction that may have conflict of interest (f) The number of the meetings of the audit committee and the attendance of each of the audit committee (g) The opinion or comment in general that the audit committee get from their operation according to the rules. (h) Other transactions that shareholders and investors should acknowledge under the the scope of duties and responsibilities assigned by the Board of Directors 7. Any assignments from the Board of Directors with the agreement from the audit committee
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Energy Earth Annual Report 2014
2. Executive committee has 6 people consisting of Director’s Name Mr. Phisudhi Phihakendr
Position Chairman of the Executive Committee Executive Director Executive Director
Mr. Khajohnpong Kamdee Ms. Kanchana Chakvichitsopon Mr. Phiroon Phihakendr Mr. Pipat Phihakendr Mr. Phiboon Phihakendr
Executive Director Executive Director Executive Director
The cope of duty and responsibility of the executive committee 1. To have an authority to approve to apply for a loan or any credit application of the company within the credit line of each transaction not over 300 million Baht or equivalent. 2. To have an authority to approve the operation for the normal business transaction of the company; for example, to provide merchandise, vehicle, material, equipment, appliance, to approve the expenses, to approve the write-off, within the credit line of each transaction without limit, and to operate any other transactions like the project to invest for an expansion approved the credit line not over 80 million Baht 3. To have an authority to manage the business of the company according to the purpose, regulations, resolutions of the shareholders’ meeting and resolutions of the Board of Directors’ meeting. 4. To set up the organization structure, management, executive committee by covering all the details of selecting, training, hiring, and terminating the employee of the company. 5. To have an authority to provide, suggest, and define the business policy and the business strategy of the company to the Board of Directors for an approval. 6. To set up the business plan, management authority, approval the annual budget for the business and the annual budget of expenses, and to implement the business plan and strategies aligned with the business policies and business directions which the Board of Directors approved. 7. To have an authority to do financial transactions in terms of opening the account with banks, financial institutes and applying for a letter of guarantee from banks or financial institutes. 8. To perform other duties as assigned in each period of time by the Board of Directors For the authorization, the proxy does not have an authority to approve any issue which the person or a person who may have conflicts (“person who may have conflicts” has a meaning as the announcement of SEC and SET) has the interest or conflict of interest with the company or the subsidiaries. To approve such issue needs to propose to the Board of Directors’ meeting and/or the shareholders’ meeting to consider and approve the issue according to the regulations of the company or the related law except for the approval of the transaction which is normal business practice as policies and measurement that the Board of Directors approved.
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Energy Earth Annual Report 2014
Scope of duty and responsibility of the chairman 1. To manage normal business tasks of the company. 2. To consider and screen the investment in order to propose to the Board of Directors ro approve. 3. To give a policy of budgeting annually to propose to the Board of Directors of the company to approve 4. To have an authority to approve the operation for the normal business transaction of the company; for example, to provide merchandise, vehicle, material, equipment, appliance, to approve the expenses, to approve the write-off, within the credit line of each transaction not over 200 million Baht or equivalent, and to operate any other transactions like the project to invest for an expansion approved the credit line not over 40 million Baht 5. To have an authority to perform on behalf of the company to other third party in the related business and to be benefit for the business 6. To perform other duties as assigned by the Board of Directors case by case For the authorization, the proxy does not have an authority to approve any issue which the person or a person who may have conflicts (“person who may have conflicts” has a meaning as the announcement of SEC and SET) has the interest or conflict of interest with the company or the subsidiaries. To approve such issue needs to propose to the Board of Directors’ meeting and/or the shareholders’ meeting to consider and approve the issue according to the regulations of the company or the related law except for the approval of the transaction which is normal business practice as policies and measurement that the Board of Directors approved. 3)
Recruitment and appointment of directors and top management.
a)
Independent Directors
Independent means the director from outside who can take the role of protect the benefit of every shareholder equally and can help supervise of no occurance of the conflict of interest between the company and the related persons and the qualifications are as follows: 1. To hold the share not over 1% of the total shares, that can vote, of the company, holding company, subsidiaries, associated company, major shareholders, or the person who have the authority of the company, by counting the shareholding of the related person of the independent director. 2. Never been the directors who participate in the management, worker, employee, consultant who get monthly payment or the person who has the authority of the company, the holding company, the subsidiaries, the associated company, same level of subsidiaries, major shareholders or of the person who has the authority of the company, except for not being the formerly stated for not less than 2 years. This does not include the case that the independent director has ever been government officer or the consultant to the government who is the major shareholder or the controlling person of the company. 3. Not being the person related by blood or registration under laws such as father, mother, spouse, sibling, and child and also spouse of the children, of executives, major shareholders, controlling person or person being nominated to be executive or controlling person of the company or the subsidiaries.
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4. Not having a business relationship with the company, its holding company, subsidiary, associated company, major shareholder, or controlling person, in the manner which may interfere with his independent judgment, and neither being nor having been a principle shareholder, or controlling person of any person having business relationship with the company, its holding company, subsidiary, associated company, major shareholder, or controlling person of the company unless the foregoing relationship has ended not less than two years. 5. Neither being nor having been an auditor of the company, its holding company, subsidiary, associated company, major shareholder, or controlling person of the company, and not being a principle shareholder, controlling person, or partner of an audit firm which employs auditors of the company, its parent company, subsidiary, affiliate, major shareholder, or controlling person of the company unless the foregoing relationship has ended not less than two years. 6. Not being nor having been any professional advisor including legal advisor or financial advisor who receives an annual service fee exceeding two million Baht from the company, its holding company, subsidiary, associated company, major shareholder, or controlling person of the company, and not being a principle shareholder, controlling person, and partner of such professional advisor unless the foregoing relationship has ended not less than two years. 7. Not being a director who has been appointed as a representative of the company’s director, major shareholder, or shareholders who are related to the company’s major shareholder; 8. Not operate any business which has the same nature as and is in principle competition with the business of the company or subsidiary, or not being a principle partner in any partnership, or not being an executive director, employee, staff, or advisor who receives salary, or holding shares not exceeding one percent of the total number of voting rights of any other company operating business which has the same nature as and is in significant competition with the business of the company or subsidiary; 9. Not having any characteristics which make him incapable of expressing independent opinions with regard to the company’s business. The company defined the meaning of the independent director of the company as equivalent to the criteria of SEC ot the Stock Exchange in terms of shareholding of the company’s share, not being employee, consultant with monthly payment or the controlling person of the company and not related in business. b) Recruitment of directors and top management Director For Selecting and appointing the persons to be in the Board of Directors, although the company has no the Nomination Committee, the nomination of directors will be done by the directors who formulate the rules about knowledge, capability, experience, vision, and reliability as well as being the qualified person by not having characteristics not approved by the law to propose to the shareholders’ meeting to consider the appointment, which the company has significant rules and method. 1. The Board of Directors consists of the directors not less than 5 people, electing by the shareholders’ meeting with the directors who are the audit committee not less than 3 people. Not less than half of the directors has been located in Thailand.
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2. The shareholders’ meeting elects the directoes according to the rules and method as follows: (1) One shareholder has one vote per one share. (2) Each shareholder uses all his votes as (1) to elect a person or many to be as directors. In case that electing many persons to be directors, the votes cannot be allocated to one more than others. (3) The person who gets the maximum votes and all runner ups will be elected to be directors at the amount of the directos to be elected that time. In case that the number of persons who are elected with all runner ups having the same votes is more than the number of directors required that time, the chairman of the meeting will be the one who finalizes. 3. In the Annual General Meeting of shareholders every year, one-third of the directors will be retired. If the number of the directors cannot absolutely divided into three parts, the number of directors to be retired is nearly to one-third. Directors who have to be retired in the first year and second year after the company registered can draw lots. For the following years, directors who have been in the position the longest need to be retired. The directors who are retired may be selected to be back to be appointed again. 4. Any director will resign from the position by sending the resignation letter to the company. The resignation will be effective from the date when the letter delivered to the company. 5. To finalize the resolution to approve one director retired before his term to be retired, the number of votes is not less than four-third of the number of shareholders who attend and have the rights to vote and the number of shares totally is not less than half of the number of shares holding by the shareholders attending the meeting and having the rights to vote. Audit Committee The audit committee of the company has to be the independent director who is elected from the Board of Directors or from the shareholders’ meeting and the qualification according to the law of securities and stock exchange and also the announcement, regulations, and/or the rules of the stock exchange, with not less than 3 people. At least one director has to be the one who has knowledge about accounting and finance. Executive Committee The Board of Directors proposes to appoint the executive committee by selecting the directors and/or the management at the appropriate amount and the Board of Directors appoints one executive director to be the chairman of the executive committee. Top Management For the nomination of the person who is in the position of the managing director or the chairman of the management, the Board of Directors is the one who primarily considers. In the screening process of nominating the person who has the complete qualification with the capability and skills and experiences which are benefit to the company’s operations and understand thoroughly about the business and can manage in order to achieve the goal which the Board of Directors defined, the person will be proposed to the Board of Directors later.
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4)
The Supervision of the Operations of the subsidiaries and associated company
In the past, to propose and exercise the votes to elect the person to be director in the subsidiaries and the associated company was done by the management. From 2014 onward, the company has set up the rules of proposing and exercising the votes by having to get approval from the Board of Directors, too. The appointed directors in sunsidiaries or associated companies are responsible for operate fot the maximum benefit to the sunsidiaries or associated companies. The company requires the appointed person to have been approved from the Board of Directors before the resolution or exercing the votes in the same level of significant issue which needs the approval from the Board of Directors. Also, sending directors to be representative in the subsidiary or associated company according to the shareholding proporation of the company. Moreover, in case of the subsidiary, the company set the rules that the appointed person have to take care of the regulations of the subsidiary about the related transactions, acquisition and disposition of the assets, or any important transactions of the company to be accurate and complete. By using the measurement of information disclosure and the transactions same as the company’s measurement as well as supervising to keep the information. The subsidiary’s accounting has to be monitored, audited, able to make the consolidated financial statements on time. 5)
Policy and Treatment of inside information
The company has a policy and method to take care of directors and management to use the inside information of the company which is not announce to the public for their personal benefit including securities trading as follows: a) To acknowledge directors and management in different departments about the responsibility to report their securities holding and also their spouse’s and child’s securities holding to SEC and SET according to the clause 59 and the punishment according to the clause 275 of the act of securities and the stock exchange B.E.2535 b) The company requests the management to report the change of their securities holding to SEC and SET as the clause 59 of the act of securities and stock exchange B.E. 2535 and requests the management to sending a copy to the company on the same date of sending the report to SEC and SET c) The company does not allow the Board of Directors, management, or operators who know the inside information to disclose the information to outsiders or others not related to, and does not allow to do securities trading within 30 days before the publication of the financial statements or of the status of the company including other information and should wait for at least 24 hours after the information disclosure to the public and before trading the securities. The company set the punishments for the person seeking for benefit themselves by using the insider information, or for the information disclosure till the company has been damaged. The case to be punished such as warning verbally, warning in written, probation and termination of being an employee.
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6)
The remuneration of the auditor 1. The audit fee The company and subsidiaries pay the audit fee to the auditor of the company and the subsidiaries in 2014 as follows: - The audit fee is for the company in Thailand, totally of 3,070,000 Baht. - The audit fee for the company in foreign country, totally of approximately 517,487 Baht 2. Other fee (Non-audit fee) - The special audit fee, totally of 2,519,560 Baht.
7)
Other corporate governance principles Not any
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Corporate Social Responsibilities : CSR
Overview of Policy The objectives for doing business are not only focusing on return on investments and profits, but also maintaining stability and growth. In order to ensure that business growth is sustained, Energy Earth Public Company Limited has to consider ways for giving back the benefits it receives back to our society. The Company has firmly applied the principles about conducting business in a manner that balances corporate growth and promotion of social interests. Thus, the Company has made it its responsibility to balance corporate growth with promotion of social interests to ensure sustained business growth by having a policy of corporate social responsibility (CSR, Corporate Social Responsibility), under the ethics and good governance, in order to be successful. With the Company’s goal to employ a complete supply-chain from upstream to downstream using the latest available technologies for protecting the environment in accordance with international standards, the Company gave much attention to improving its operations in order to reduce environmental pollution for attaining a better quality of life for concerned societies. The Company further coordinated CSR meetings with other listed companies in order to look for better solutions in reducing environmental pollution. Addtionally , the Company has already attended the meetings with other companies about CSR to have a mutual business plan. The Company has aligned its visions, targets, strategies and risk-management mechanisms in doing business in order to fit an operational performance structure called “CSR-In-Process” or “Business for Society”, which means that the social responsibility being in the business operations or doing business that is profitable with responsibility; for example, preventing and eliminating pollution in production line by not affecting the community, producing high-quality products with standard, and having a system in place for compensating customers in case of unforeseen eventualities by employees. It is worthy to note that the CSR-In-Process is an integral part of regular work activities of the Company. 1.
Business Operations in Accordance with a Code of Responsible Conduct
The Company is a firm adherent of conducting business along the principles of fair and free trade, transactional transparency, being responsible, and no policy to have trade competition via any illegal and unethical. The Company also conducts the business straightforwardly with ethics and transparency, which helps create international management standards, being able to guarantee stability, credibility, and transparency to business partners, customers, and employees as well as organizations related to corporate governance and society.
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2.
Anti-corruption Policies
Every Director, executive and employee of the Company at every level are prohibited engaging in or accepting any form of corruption directly or indirectly covering both local and overseas businesses and all relevant work units, by arranging for regular inspection and review of the work in compliance with the anticorruption policy, as well as reviews of the rules and regulations on any practices to conform with changes in business conduction, relevant rules, regulations and legal provision, to be practiced as follows : 1) The Company’s directors, executives, and employees follow the anti-corruption policies, and business good governance by not involving in any corruption, neither directly nor indirectly. 2) Every employee of the Company at every level do not ignore or neglect, when seeing any actions, involving to corruption in the Company, by informing supervisor and participating in the audit process. If there is any questions, it is suggested to consult with supervisor or the person, who the Company assigns to be responsible for executing good governance policies via defined way of communication. 3) The Company is fair and protects its employees, who inform the corruption in the company by having a policy of protecting the appellant or one who cooperates with reporting the corruption as per the Company’s policy. 4) The ones who do corruption which is unethical will be considered the punishments as per the company’s regulations. Moreover, he/she will be punished by law. 5) The Company is aware of the importance of publishing the knowledge and make understanding with the ones who is on duty relating to anti-corruption policy of the company. 6) For any actions involving in the high risks for the corruption, directors, exectives, and employees of the company at every level will comply carefully as follows: i. Receiving or giving gift, assets, or any benefits upon the company policy. ii. Receiving or giving the charity or sponsoring needs to be transparent and legal by making sure that the donation or sponsoring is not be an excuse for a bribe.
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The responsibilities/duty in compliance with the policy of anti-corruption 1) The Board of Directors has a duty and responsibility to set up a policy and regulations to create a system of supporting the anti-corruption effectively and efficiently, in order to make the executives value the anti-corruption as a company culture. 2) The Audit Committee has a duty and responsibility to audit the accounting and financial system, internal audit system, and risk management to ensure in accordance with the international standard with effectiveness, efficiency, and appropriateness. 3) The Executive Committee, the Chairman, and all executives have duties and responsibilities to set up the system and support the anti-corruption policy by communicating to all employees and related parties and review the appropriateness of the system and regulations in order to align with business change, rules and regulations and related law. 4) The internal audit office has a duty and responsibility in auditing and reviewing the operations whether it is proper as the policy, guidelines, rules, and approval as well as by related law or not in order to ensure the system is appropriate and enough for the risk of corruption that may happen. This has to be reported to the Board of Directors directly. 5) Risk Management Committee has duty to evaluate the risk of corruption that may happen in each procedures regularly, including proposing the proper solutions by proposing to the Executive Committee or the Board of Directors of the Company to consider and review the practices to be compliance with reducing the potential risk. Whistle Blowing The Board of Directors of the Company set up a policy regarding whistle blowing of the stakeholders according to the good governance in order to have a mechanism of participating of the stakeholders as follows: 1) Giving an Opportunity for Stakeholders to do Whistle Blowing Any stakeholder who wishes to contact the Board of Directors of the Company directly to give an opinion about business including whistle blowing; for example, wrong or inappropriate action, illegal or unethical work or corruption. It can be directly forwarded to the Audit Committee as follows: By Mail to Chairman of the Audit Committee 43 Thai CC Tower Room No. 125-128 Flr. 12 South Sathorn Road, Yannawa Sathorn, Bangkok 10120  By E-Mail Address : internal@energyearth.com 63
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2) Protection for the Whistleblower The stakeholder who makes whistleblowing or complaints according to (1) above does not need to disclose his/her name. 3) Procedure after Whistleblowing or Complaints The Audit Committee is assigned to investigate the information or facts informed by the whistleblower according (1) above and directly presents the matter or the Board of Directors for acknowledgment and consideration. 4) Correction Measures and Compensation In case the stakeholder has been damaged from the violation of right according to the laws, the Company is willing to listen to opinion or complaint and will urgently correct the fault and impact without delay including finding measures to the prevent recurrence of the event and will consider making appropriate compensation to the damaged person based on cause and effect on a case-by-case basis. Receiving or Giving of Gifts, Assets and/or Other Benefits The Board of Directors of the Company wishes to build consciousness for all the Directors, executives and employees at every level to realize about the anti-corruption and create correct value by not accepting, not giving, not condoning any actions which indicate immoral act or wrongful act of finding benefit which will negatively or adversely impact business operation and reputation of the Company, having practice guidelines as follows : (1)
Every Director, executive and employee at every level are strictly prohibited from demanding or receiving gifts, assets and /or any benefits from the customer, trading partner and/or person with related business with the Company regardless whether it is personal or for other persons which may cause unfair decision, bias or difficulty which might create conflict of interest.
(2)
Receiving or giving gift on occasions or festivals of good tradition must be of little value not exceeding appropriate value or too much value such as souvenirs or marketing promotional gifts or general gifts, etc. Every employee can use own judgment whether or not the gift is appropriate. If in doubt, the employee should consult with the superior in the chain of command for advice, by considering the intention of the giver and receiver whether or not it its appropriate.
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(3)
Receiving or giving gift in the form of cash, cheque, cash coupon, gold, jewelry or other valuables is deemed inappropriate and should not be done. It should first be presumed that this action indicates wrongful doing or finding benefit due to the responsible duty.
(4)
If it is found that any employee is involved in wrongful action and/or in finding benefit or for oneself of for other person, the Company shall deem that the employee seriously violate discipline and the Company shall consider disciplinary action according to the Company’s regulation strictly without any exception
Respect for Human Rights The Group has a policy to uphold the human rights of employees, treat them with dignity and respect their individualism and integrity as human beings. In every country where the Group is present, employees are required to be older than what is stated in a regulation governing child labor of a relevant country. Respect for Employee Rights and Fair Labor Practices The Company gives a premium to the development of its human resources by abiding with a code of good conduct for management in order to preserve and consistently develop the skills and capabilities of its employees; and undertaking measures for building morale and for improving quality of life, in areas such as employee welfare, adherence with labor laws, environmental safety, equipment safety, good relations, and provision of health insurance, including annual health-checks. Since the commencement of the Company’s operations, it treasures the fact that no serious injuries or accidents had befallen any of its employees. As an example of the Company’s dedication to promoting the welfare of its employees, In the year 2010, an employee of the Company unfortunately had a non-work related motorcycle accident resulting to his physical incapacity for the rest of his life. Notwithstanding the circumstances, the Company paid his medical fees in full, and had ever since been extending monthly assistance to him to this day. The Company’s code of good conduct encompasses a system for providing benefits to its employees based on merit and performance, appointing deserving employees to posts and responsibilities matching their respective skills and inclinations, and training employees for long-term career paths with the Company. The Company employs an objective system for evaluating employee performance, with the ultimate goal of improving the overall quality of life of its employees.
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The Company honors the privacy rights of its employees, and protects their sensitive and confidential information whether related to the employees’ compensations, medical records or personal data. The Company does not restrict or curtail the rights of its employees to join communities or organizations which do have commercial conflicts of interest with that of the Company. Responsibility to Customers The Company is fully dedicated to its business of supplying high-quality Indonesian coal according to the specifications of its domestic and international customers, with the capability for ensuring strict quality control of its products, sufficient product supply and availability 24 hours a day, and efficient sales team. Environmental Care An important challenge for the coal mining and power businesses is how to maintain business growth while pursuing social responsibility and safeguarding environmental quality. The Company conducts risk and environmental impact assessments for every project so as to effectively plan production and put in place appropriate measures to protect and reduce possible environmental impacts. Based on its assessments, environmental issues that the Company confronts include energy conservation, climate change, legal compliance, land use and biodiversity. Details of its actions in each area can be further read in the Sustainability Report. Community Development The Company puts much effort for CSR activities related, including CSR programs for education, health, and community development. These activities had provided chances for the Company to build excellent relationship with many communities such as Nhong-Kor health care sector, Chao Praya Surasak Municipal. The Company also has projects to support by donating drinks for Nhong-Kor community, scholarship for outstanding students in Ban Wang Kor school, Khao Din school, Bang Nhong-Prue school, Wad Nhong-Kor community school, The Company had also donated winter accessories The Company focuses on bringing a better quality to the community and reducing negative effects on society and environment because we believe that this will result in a strong and steady growth of the business tangibly, responsibly, culturally and philosophically.
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Innovation and promoting of innovation resulted from responsibility to society, environment and stakeholders The Company always listens to all comments from every public organization and ensure that public area surrounding the storage area is properly managed with the “5 Walls” project: -
High wall surrounding the storage area
-
High trees surrounding the high walls
-
Plastic crops over the storage walls
-
Install the water spraying system around storage area
-
Truck washing system when entering and exiting storage area
Such project is done parallel with improving society and public community surrounding the storage, which results in receiving a good cooperation from the society. Business Operation and Reporting The Company places an importance upon the disclosure of important information of the Company with accuracy, completeness, sufficiency, timely, transparency, and compliance to the regulations of the Securities Exchange Commissions and the Stock Exchange of Thailand. As a result, the shareholders and the stakeholders and the stakeholders will equally receive the news and information of the Company. The Company’s channels for information disclosure include: 1)
The SET Community Protal (SCP) – for the dissemination of the periodic reports such as Financial Statements, the Annual Registration Statement (Form 56-1), the Annual Report (Form 56-2), etc., and the non-periodic reports such as the acquisition/ disposal of the assets, related transaction, dividend payment, etc.
2)
Other public media – newspapers, magazines, and the Company’s press release.
3)
The Company’s website www.energyearth.co.th which are displayed in both Thai and English.
4)
Information for the analysis and the investors upon visiting the Company.
The Board of Directors of the Company is responsible for the financial report to ensure its accuracy, completeness, and transparency in order to maintain the assets as a prevention of any loss or usage of other persons with no authority, to prevent any corruption or abnormal operation, following the general accepted accounting standard, and laws and related notifications which lead to the stakeholders’ confidence in the financial report. The Board of Directors assigns the Audit Committee to review. 67
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The Company has no record of amendment of the financial statements from the SEC and it always discloses the annual report and quarterly report to the shareholders and investors prior to the due date. After – Process CSR Activities in 2014 The Company has visions, targets, strategies and risk management in doing business, which can be reflected in the operational performance called “CSR-In-Process”, which means to make profit responsibly, such as preventing pollution, producing products with good quality, compensations to customers damaged done by employees. These are usually considered as regular work hour activities. The Company also has CSR-After-Process policy, which is usually done separately from the business, such as helping community effected by natural disasters, volunteering for public good activities. These are usually considered as of work hour activities. Mr. Khajohnpong Khamdee, the managing director of Energy Earth Public Company Limited (EARTH) together with the management team gave a warm welcome to investors for their visit at the factory and the port at Sriracha, Chonburi
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Mr. Khajohnpong Khamdee, the managing director of Energy Earth Public Company Limited (EARTH) together with employees gave the library with books for learning at the value of 450,000 Baht to students at Ban Thung Kae School, Mae Jam, Chiangmai in order to enhance the educational opportunity to youth who is growing and will be the energy for the nation in the future
Educational and Sport The Company representative gave the scholarship to the students of schools Nhong-Kor Community Chonburi provincial organization, Nong Kham, Sriracha, Chonburi.
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The Company gave gifts to children on Children’s day and offered them lunch at Wang Khor School, M.6, Bandan 4, Sriracha, Chonburi.
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For the sports, the Company hoted the football competition among 4 schools on November 15, 2014 such as Ban Wang Khor School, Ban Nong Prue School, Ban Khao Din School, and Wat Nong Khor School, by using the name “Energy Earth Football Cup No. 4”.
Ban Wang Kor School
Bang Nhong-Prue School
Khao Din School
Wad Nhong-Kor School
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Football Energy Earth Cup the forth for 2014 at Ban Wang Kor School
The Company arranged the football competition for friendly relationship between the Company and teacher team for the year 2014 at Ban Wang Khor School.
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Community Relations team by woman community team of the Company and the loacal people who live at the factory area have join the sports competition for good relationship and harmony in order for good health and good relationship with the community.
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EARTH Nong Khor football team was created by selecting students from 4 schools such as Ban Wang Khor school, Ban Nong Prue school, Ban Khao Din School, and Wat Nong Khor School. This team will be sent to any competition.
EARTH Nong Khor football team got the first winner of men football with age at 12 under the competition to anti-drug “Brown Soccer League”, which was set up at Ban Pan Sadet School, M.4, Ban Pan Sadet Nai, Bor Win, Sriracha, Chonburi.
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The Company gave the sports equipment such as socks, shoes, shirts, to Wat Nong Khor School for the competition.
Religion, Culture, and Traditions The Company and the community of Chao Praya Surasak gave for charity to reconstruc the hall of Buddha at Nong Yai Bu temple, Surasak, Sriracha, Cholburi, on March 15, 2014, and also arranged food and drink for this event.
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 The Company gave donations to Wat Nong Khor, Sriracha, Chonburi.
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Community Development The Company created the volunteer program “Volunteer for developing temple” at Wat Khao Tum, Nong eroon, Banbung, Chonburi.
Community Relations The Company donated to build a house “Curry production house in community” at the area around the factory.
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 The Company arranged to have an activity of planting trees around the factory to increase green area and reduce the environmental problem.
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Trees in front of the factory
Trees at the side of the factory
The Company arranged to have a training session to announce the policy of environmental care.
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Internal Control and Risk Management In the Board of Directors’ meeting no. 1/2015 held on February 27, 2015, which was attended by 4 Independent Directors and 3 members of the Audit Committee, the Company’s Directors evaluated the performance of the Company’s Internal Control, and approved the management’s evaluation report, and the Audit Committee’s report. In conclusion, after evaluating the Company’s Internal Control by using 5 criteria as follows: 1) Providing the environment of adequate internal control (Control Environment), by defining as a duty and responsibility of management in every level. They need to audit and do internal control for operations of their own departments efficiently and followed as per the company’s rules and regulations. 2) Providing the adequate procedures of evaluation and risk assessment (Risk Assessment), by having each department do risk assessment for their own tasks under their responsibility and attempt to control to reduce the impact or the chance for the risks. The Company aimed that its employees in every level participate in the risk assessment and control in order to prevent the damage, which may occur. 3)
Providing adequate control activities (Control Activities). Each department needs to set up standard working system and adequate internal control in order to be able to control risk at the appropriate level.
4) Providing the information system and communications (Information and Communications). The Company needs to provide the adequate information system and communication system which is reliable and up to date by improving and developing the efficient information system with information security, protecting from internal and external threats. 5) Providing the system to monitor and evaluate sufficiently (Monitoring and Evaluation)by defining as a duty and responsibility of management in every level to take care and internal audit their own operations efficiently and as the Company’s rules and regulations. The internal audit office is the supporter of the management in every department to provide the system of internal audit regularly. The Board of Directors concluded that the Internal Control system was both appropriate and adequate. These findings indicate the Internal Control had the sufficient human resources to systematically and efficiently conduct its operations. These findings further indicate that the Internal Control sufficiently can monitor the operations of its subsidiaries and can prevent its assets to be misused by any Director, or any unauthorized person for that matter of no authority or inappropriately use any power of the Company and of its subsidiaries, as well as any business with the persons who may have conflict of interests. For the internal control, the Board of Directors agreed that the internal control is adequate. The Company has a policy to outsource the internal audit professional service provider. In the Board of Directors’ meeting on October 15, 2010, the Company appointed Accounting Specialist Company Limited, as an internal audit of the company since November 1, 2010. Accounting Specialist Company 80
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Limited delegated Dr. Surapa Thaibanguay, as a managing director, to be responsible for internal auditor of the company. The Board of Directors has already verified the qualifications of Accounting Specialist Company Limited and Dr. Surapa Thaibanguay and agreed that it is suitable enough to do this task because of their capability of independently performing its duty and experiences in internal audit in other companies in the same business for 5 years, having ever taken training course related to the internal audit operations such as the certified Professional Internal Audit of Thailand (CPIAT) from the institutes of internal audit of Thailand and the Company appointed Mr. Thanawat Pratoomsuwan (Assistant Managing Director – Finance) to be responsible for coordinating with the internal auditor. It was noted that the any action for the evaluation, approval, appointment and removal of the Head of the Internal Auditor needs to be approved by the Audit Committee, and that the qualifications of the Head of the Internal Auditor is shown in the attached Document No. 3.
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Connected Transactions 1. Information on Connected Transactions 1.1 Connected Transactions with Persons or Companies that may have Conflicts of Interests Connected Party
Relationship
The Company’s Directors (i.e., Mr. Khajohnpong Khamdee, Mr. Phisudhi Phihakendr, Mr. Phiroon Phihakendr, Mr. Phipat Phihakendr, and Mr. Phiboon Phihakendr) are also Directors of PartnerLink Network Co., Ltd.. The Company’s shareholders (i.e., Mr. Phiroon Phihakendr, Mr. Khajohnpong Khamdee, Mr. Phisudhi Phihakendr, Mr. Phipat Phihakendr, and Mr. Phiboon Phihakendr) are also shareholders of PartnerLink Network Co., Ltd holding a total of 53.5% shares. 2. Fly Digital Media The Company’s Directors (i.e., Mr. Khajohnpong Khamdee, Mr. Company Limited Business Phisudhi Phihakendr, Mr. Phiroon Phihakendr, Mr. Phipat Type Phihakendr, and Mr. Phiboon Digital media 1. PartnerLink network Company Limited Business Type “Computer system retail and consultancy”
Type of Connected Transaction Computer Equipment Purchases including computer system to benefit the control and coordination among departments in the organization. There are normal business deals with general business conditions with the price including after sales service fee.
Transaction value Audit Committee’s Comments/ (Million THB Unit) Necessity/Rationale 2013 2014 0.39 0.37 Audit Committee’s Comments The Audit Committee reviewed the purchase of the IT and systems equipment, and opined that such purchase was necessary for the Company and made at reasonable prices. The prices for such purchase had reference market prices. Furthermore, it is convenient for the Company to purchase these equipment from PartnerLink Network Company Limited because ParnerLink Network Co., Ltd. is located near the location of the Company. However, the Audit Committee recommended that if there will be transactions similar to such purchase in the future, the prices and the condition of equipment must be competitive to those offered by other companies.
The Company has purchased the calendar and movie pass in order to give as gifts to all business
-
82
0.33 Audit Committee’s Comments The Audit Committee reviewed the purchase of the movie pass with calendar, and opined that such purchase was beneficial to the Company and made at reasonable prices. The Company purchased the movie pass with calendar to be
Energy Earth Annual Report 2014
Connected Party system for entertainment
Relationship
Type of Connected Transaction
Transaction value (Million THB Unit) 2013 2014
Phihakendr) are also Directors of partners. Fly Digital Media Co., Ltd.. The Company’s shareholders (i.e., Mr. Phiroon Phihakendr and Mr. Khajohnpong Khamdee) are also shareholders of Fly Digital Media Co., Ltd holding a total of 0.02% shares.
Audit Committee’s Comments/ Necessity/Rationale used as the new year gifts for all business partners which cost less than other kinds of gift baskets.
As of December 31, 2014, the group got loan from 6 financial institutions, totally of 12,284.81 million Baht and 40.00 million US dollars, guaranteed by company directors, management, and related persons as follows: Transaction value Type of Connected Audit Committee’s Comments/ (Million THB Unit) Connected Party Relationship Transaction Necessity/Rationale 2013
1. Mr. Khajohnpong Company’s Director with Guarantee to Khamdee authorized signatory, Managing group’s loan director, and Major shareholder
the
9,700.81
83
2014
11,100.81 The financial institutions has requested for guarantor and personal assets as guarantee with no charge of guarantee fee. Audit Committee’s Comments The Audit Committee reviewed the guarantee, and opined that such guarantee was beneficial to the business operations of the group and was necessary and reasonable because there is no any compensation.
Energy Earth Annual Report 2014
Connected Party
Relationship
Type of Connected Transaction
Transaction value (Million THB Unit) 2013
2014
Audit Committee’s Comments/ Necessity/Rationale
2. Mr. Phiroon Phihakendr
Guarantee to Company’s Director with authorized signatory, and Major group’s loan shareholder
the
9,700.81
11,100.81 The financial institutions has requested for guarantor and personal assets as guarantee with no charge of guarantee fee. Audit Committee’s Comments The Audit Committee reviewed the guarantee, and opined that such guarantee was beneficial to the business operations of the group and was necessary and reasonable because there is no any compensation.
3. Mr. Phisudhi Phihakendr
Company’s Chairman, Director with authorized signatory, and Major shareholder
Guarantee to group’s loan
the
330.00
330.00 The financial institutions has requested for guarantor and personal assets as guarantee with no charge of guarantee fee. Audit Committee’s Comments The Audit Committee reviewed the guarantee, and opined that such guarantee was beneficial to the business operations of the group and was necessary and reasonable because there is no any compensation.
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1.2 Connected Transactions between the Company and its Subsidiaries The connected transactions between the Company and its subsidiaries, including the pricing policies for these connected transactions, are shown in the Notes of Financial Statements No. 29. 2.
Measures and Procedures for the Approval of Connected Transactions
The Board of Directors have considered and unanimously resolved that in case of connected transactions with persons who may have conflicts of interests in the future, each case must be proposed to the Board of Directors during its meeting for its consideration and final approval. Such meeting requires the presence of the Audit Committee to ensure that such transactions are appropriate, engaged under reasonable pricing policies, and undertaken with enhancing the profitability of the Company in mind. The persons who may have any conflict of interest under consideration shall not have voting rights in approving the transactions. In the event that members of the Audit Committee do not possess the required knowledge or specialization for evaluating such transactions, the Company shall designate individuals with the required knowledge or expertise, such as the Auditor of the Company or any independent appraiser, to comment on such transactions for the information of the Board of Directors or the Shareholders, as the case may be. However, the Company shall perform such procedure for evaluating the transactions in accordance with laws and regulations of the Stock Exchange of Thailand, and of the Securities and Exchange Commission. All connected transactions shall be disclosed in the Auditor’s Notes to the Financial Statements, the Annual Report, and Form 56-1. 3.
Policies and Guidelines for Connected Transactions in the Future
The Board of Directors had approved policies governing connected transactions between the Company and persons who may have conflict of interests, such that connection transactions may only be properly executed if they fall under any the following applicable categories:
Such transactions are made between parties that may have conflicts of interests, but nevertheless, the products or services subject of these transactions have standard prices and conditions that may be compared for purposes of transparency to those offered by other parties. Such transactions are made between parties that may have conflicts of interests, and the subject of these transactions involve specialized products or services with difficult to find price comparisons, but nevertheless, it can be proven that the gross profit generated from such profits are at appropriate and standard levels. The terms and conditions for these products and services must also include regular upkeep in accordance with good codes of conduct. Such activities involving leasing or asset leasing to Directors, management or persons who may have conflicts of interest must be under a lease term of not more than 3 years, and be no more than 1 million Thai Baht in cumulative leasing value for every period of 12 months. The terms and conditions of the connected transactions must be in accordance with good codes of conduct, as if the agreements for the connected transactions were made by parties in good faith without any prejudices.
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For future connected transactions if any, such transaction must be transparent, falls under any of the foregoing applicable categories, and approved by the Audit Committee without votes from persons who may have conflict of interest. At all times, the Company must follow the regulations of the Stock Exchange of Thailand and SEC on connected transactions, which are summarized in Form 56-1 and in the Annual Report (56.2).
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Financial Statements and Overall Outlook 1.
Financial Statements Energy Earth Public Company Limited was registered as a listed company in the Stock Exchange of Thailand with the import and supply of coal as its main business. The head office of the Company is located at Thai CC Tower Fl.12 Room 125-128, South Sathorn road, Yannawa, Sathorn, Bangkok 10120. On January 29, 2013, the Company was approved to list in The Frankfurt Stock Exchange – Open Market under Secondary Listing. This listing allowed 49 percent of the Company’s existing ordinary shares of the paid-up capital to trade without increasing capital. The Company was listed in the Market for Alternative Investment. Then, on January 2, 2014, the Company was approved to be traded in the Stock Exchange of Thailand (SET). This Financial Statement is provided and issued using US Dollars, which is covered by Accounting Standard No. 21 regarding the effects of currency exchanges. However, the SET and the Department of Business Development directed the Company to provide the Financial Statement in Thai Baht. The consolidated Financial Statement, including the Company and its subsidiaries which the Company has control or either direct or indirect shareholding as of 31 December 2013 and 2012 is shown below:
Name of the Company Energy Perfect Co., Ltd. PT. Tri Tunggal Pitriati Earth Power Plants Co., Ltd. Energy Earth Hong Kong Co., Ltd. Guang Dong Energy Earth Co., Ltd.
Percentage of Shares held by the Company 2014 2013 100.00 100.00 99.90 99.90 100.00 100.00 100.00 100.00 -
Country of Incorporatio n Thailand Indonesia Thailand Hong Kong Republic of China
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Type of Business Import and Supply of Coal Coal Mining Power Plant Investments International Coal Trading Import and Supply of Coal
Energy Earth Annual Report 2014
2.
Report Summary of the Licensed Auditor
The consolidated financial statement of Energy Earth Public Company Limited and the subsidiaries for the year ended on 31 December 2013 Auditor: Summary of Auditor’s Comments:
Mr. Boonlerd Kaewpanpruek, a licensed auditor with license number 4165 from BPR Audit and Advisory Co., Ltd. The auditor had audited on 31 December 2013 the consolidated Financial Statement of Energy Earth Public Company Limited and its subsidiaries, including the consolidated statement of financial position ended December 31, 2013, consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity, and consolidated statement of cash flow for the year ended on the same date, as well as the remarks about important accounting policies and other remarks. The auditor also audited the separated financial statements of Energy Earth Public Co., Ltd., which includes statements of financial position ended December 31, 2013, statement of comprehensive income, statement of changes in shareholders’ equity and statement of cash flow for the year ended on the same date, as well as the remarks about important accounting policies and other remarks. The auditor concluded that as of December 31, 2013, the consolidated Financial Statement of the Company and its subsidiaries, including the consolidated overall outlook and the consolidated cash flow statement, as well as statement of financial position of Energy Earth Public Co., Ltd. as of December 31, 2014 for the year ended the same date and the overall outlook and cash flow statement are accurate and sufficient in accordance with Financial Statement standard reporting standards. The Company had also revised its goodwill record in the consolidated Financial Statement as of 31 December 2012 in relation to the Company’s backdoor listing in 2010. The revision of the previous year’s Financial Statement was found to be in accordance with Financial Statement standard reporting standards, and the auditor accordingly concluded that such revision was appropriately, accurately and properly done. The auditor had made a comment in the Notes to the Financial Statement No. 4 relating to changes in Accounting Policies No. 12 (Income Tax) and No. 21 (Effects on Currency Exchange) indicating that these changes were made without requiring any prerequisite conditions.
88
Energy Earth Annual Report 2014
The consolidated financial statement of Energy Earth Public Company Limited and the subsidiaries for the year ended on 31 December 2014 Auditor: Summary of Auditor’s Comments:
Mr. Sudwin Panyawongkhanti, a licensed auditor with license number 3534 from PricewaterhouseCooper ABAS Co., Ltd. The auditor had audited on 31 December 2013 the consolidated Financial Statement of Energy Earth Public Company Limited and its subsidiaries and also of separated for Energy Earth Public Company Limited, including the consolidated statement of financial position and the separated statement of financial position of the Company ended December 31, 2014, consolidated statement of comprehensive income and separated statement of comprehensive income of the Company, consolidated statement of changes in shareholders’ equity and separated statement of changes in shareholders’ equity of the Company, and consolidated statement of cash flow and separated statement of cash flow of the Company, for the year ended on the same date, as well as the remarks about important accounting policies and other remarks. The auditor concluded that the consolidated Financial Statements and separated Financial Statements of the Company, representing consolidated financial position and separated financial position of Energy Earth Public Co., Ltd. as of December 31, 2014 and the consolidated overall outlook and separated overall outlook of the Company and consolidated cash flow statement and separated cash flow statement of the Company for the year ended the same date are accurate in accordance with Financial Statement standard reporting standards.
89
Energy Earth Annual Report 2014
3.
Summary of financial Statements (1) Table of Financial Statements
Items
2012 Million THB
Consolidated Financial Statements 2013 2014 %
Million THB
%
Million THB
2012 %
Million THB
Separated Financial Statement 2013 %
Million THB
%
2014 Million THB
%
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Loans and accrued interest income to related companies Advance payment from purchase of goods VAT Other current assets Total current assets NON-CURRENT ASSETS Deposits from financial institutions pledged as collateral Investments in subsidiaries Property for Investment Property, plant and equipment Assets not used operations Mining property rights Deferred tax assets Other non-current assets Total non-current assets TOTAL ASSETS
148.55
1.69
233.62
1.73
527.80
2.94
123.31
1.73
192.35
1.80
428.63
2.64
4,279.92
48.59
5,913.86
43.70
4,352.81
24.26
1,446.04
20.32
1,387.92
12.97
1,330.08
8.19
570.80
6.48
1,029.34
7.61
1,450.55
8.09
570.80
8.02
1,058.02
9.88
1,220.31
7.51
-
-
-
-
-
-
2,417.55
33.97
467.49
4.37
126.85
0.78
1,964.14
22.30
1,225.11
9.05
6.278.87
35.00
883.35
12.41
5,819.36
54.36
11,377.14
70.03
70.46
0.80
83.58
0.62
144.54
0.81
40.91
0.57
40.87
0.38
86.46
0.53
4.75
0.05
5.75
0.04
3.04
0.02
0.88
0.01
0.16
-
-
-
7,038.62
79.91
8,491.26
62.75
12,757.61
71.11
5,482.84
77.04
8,966.17
83.76
14,569.47
89.69
525.30
5.96
423.92
3.13
290.15
1.62
335.63
4.72
341.72
3.19
206.59
1.27
-
-
-
-
-
-
1,288.51
18.10
1,384.57
12.93
1,454.88
8.96
163.10
1.85
174.83
1.29
175.39
0.98
-
-
-
-
-
-
242.04
2.75
242.44
1.79
800.99
4.46
3.72
0.05
10.00
0.09
10.95
0.07
0.16
-
1.77
0.01
3.02
0.02
0.08
-
1.73
0.02
3.02
0.02
825.37
9.37
4,180.63
30.89
3,897.87
21.73
-
-
-
-
-
-
12.81
0.15
16.49
0.12
15.62
0.09
6.15
0.09
-
-
-
-
0.89
0.01
0.89
0.01
0.28
-
0.23
-
0.23
-
0.24
-
1,769.67
20.09
5,040.97
37.25
5,183.32
28.89
1,634.32
22.96
1,738.25
16.24
1,675.68
10.31
8,808.29
100.00
13,532.23
100.00
17,940.93
100.00
7,117.16
100.00
10,704.42
100.00
16,245.15
100.00
90
Energy Earth Annual Report 2014
Items
CURRENT LIABILITIES Bank overdrafts and shortterm loans from financial institutions Trade and other payables Short-term loans from related company Current portion due within one year Current portion of long-term loans from financial institutions Current portion of liabilities under hire-purchase agreements (Net) Income tax payable Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term loans from financial institutions Liabilities under hire-purchase agreements (net) Employee benefit obligations Deferred tax liabilities Total non-current liabilities TOTAL LIABILITIES
2012
Consolidated Financial Statements 2013 2014
2012
Separated Financial Statement 2013
2014
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
5,142.09
58.38
8,470.43
62.59
10,698.79
56.63
3,278.68
46.07
5,685.31
53.11
7,810.16
48.08
233.30
2.65
384.25
2.84
515.18
2.87
624.79
8.78
253.35
2.37
1,906.22
11.73
-
-
-
-
-
-
1.02
0.01
-
-
-
-
14.19
0.16
13.88
0.10
185.37
1.03
-
-
-
-
171.99
1.06
2.20
0.02
2.81
0.02
2.71
0.02
0.33
-
1.11
0.01
1.65
0.01
304.80
3.46
206.21
1.52
67.98
0.38
124.44
1.75
151.23
1.41
63.82
0.39
3.79
0.04
2.34
0.02
17.87
0.10
1.79
0.03
1.69
0.02
17.75
0.11
5,700.37
64.72
9,079.92
67.10
11,487.90
64.03
4,031.05
56.64
6,092.69
56.92
9,971.59
61.38
30.62
0.35
16.75
0.12
1,113.71
6.21
-
-
-
-
1,110.65
6.84
3.62
0.04
3.75
0.03
3.16
0.02
0.62
0.01
2.48
0.02
2.92
0.02
1.93
0.02
2.32
0.02
8.41
0.05
1.26
0.02
1.41
0.01
7.32
0.05
214.88
2.44
99.83
0.73
30.73
0.17
-
-
20.73
10.29
0.06
251.05
2.85
122.20
0.90
1,156.01
6.44
1.88
0.03
24.62
0.23
1,131.18
6.96
5,951.42
67.57
9,202.12
68.00
12,643.91
70.48
4,032.93
56.66
6,117.31
57.15
11,102.77
68.35
91
0.19
Energy Earth Annual Report 2014
Items
SHAREHOLDERS' EQUITY Paid-up Capital Premium on shares capital Discount on shares capital Adjustment of equity interests under reverse acquisition Total share capital
2012
Consolidated Financial Statements 2013
2014
Separated Financial Statement 2013
2012
2014
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
2,605.50
29.58
2,956.55
21.85
2,971.51
16.56
2,605.50
36.61
2,956.55
27.62
2,971.51
18.29
796.21
9.04
959.81
7.09
966.78
5.39
796.21
11.19
959.81
8.97
966.78
5.95
(1,800.00)
(20.44)
(1,800.00)
(13.30)
(1,800.00)
(10.03)
(1,800.00)
(25.29)
(1,800.00)
(16.82)
(1,800.00)
(11.08)
(186.62)
(2.12)
(186.62)
(1.38)
(186.62)
(1.04)
-
-
-
-
-
-
1,415.09
16.07
1,929.74
14.26
1,951.67
10.88
1,601.71
22.50
2,116.36
19.77
2,138.29
13.16
95.20
1.08
155.20
1.15
191.20
1.07
75.20
1.06
135.20
1.26
171.20
1.05
1,370.72
15.56
2,160.78
15.97
2,918.10
16.27
1,478.01
20.77
2,244.22
20.97
2,642.73
16.27
(25.26)
(0.29)
83.26
0.62
234.84
1.31
(70.69)
(0.99)
91.33
0.85
190.16
1.17
2,855.75
32.42
4,328.98
31.99
5,295.81
29.52
3,084.23
43.34
4,587.11
42.85
5,142.38
31.65
1.12
0.01
1.13
0.01
1.21
0.01
-
-
-
-
-
-
2,856.87
32.43
4,330.11
32.00
5,297.02
29.52
3,084.23
43.34
4,587.11
42.85
5,142.38
31.65
8,808.29
100.00
13,532.23
100.00
17,940.93
100.00
7,117.16
100.00
10,704.42
100.00
16,245.15
100.00
Retained earnings Appropriated for legal reserve Unappropriated Other components of shareholders' equity Equity attribuable to owners of the parent company Non-controlling interests TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
92
Energy Earth Annual Report 2014
(2) Summary Tables of Profit and Loss Statements
Items
2012
Consolidated Financial Statements 2013
2014
Separated Financial Statement 2013
2012
2014
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
Million THB
%
10,451.91
99.79
13,504.68
99.91
14,910.92
99.96
3,381.34
70.00
8,230.84
96.95
9,086.56
99.04
(8,289.10)
(79.14)
(11,277.52)
(83.43)
(12,689.66)
(85.07)
(2,601.13)
(53.85)
(6,439.39)
(75.85)
(7,398.66)
(80.64)
2,162.81
20.65
2,227.16
16.48
2,221.26
14.89
780.21
16.15
1,791.45
21.10
1,687.90
18.40
22.30
0.21
12.44
0.09
6.37
0.04
1,449.19
30.00
258.86
3.05
87.90
0.96
2,185.11
20.86
2,239.60
16.57
2,227.63
14.93
2,229.40
46.15
2,050.31
24.15
1,775.80
19.36
(188.76)
(1.80)
(236.09)
(1.75)
(302.03)
(2.02)
(163.77)
(3.39)
(236.09)
(2.78)
(302.03)
(3.29)
(121.37)
(1.16)
(167.33)
(1.24)
(302.03)
(2.02)
(102.43)
(2.12)
(125.48)
(1.48)
(282.79)
(3.08)
(18.63)
(0.18)
(180.13)
(1.33)
(63.28)
(0.42)
(14.18)
(0.29)
(120.55)
(1.42)
(25.02)
(0.27)
REVENUES Revenue from sales Cost of sales Gross Profit Other income Profit before Expenses Selling expenses Administrative expenses Gain(Loss) on exchange rate Total Expenses
328.76
3.41
583.55
4.32
667.34
4.47
252.02
5.22
482.12
5.68
609.84
6.65
Profit Before Finance Cost and Income Tax Finance costs
1,856.35
17.72
1,656.05
12.25
1,560.29
10.46
1,977.38
40.94
1,568.19
18.47
1,165.96
12.71
(154.66)
(1.48)
(292.68)
(2.17)
(378.94)
(2.54)
(70.62)
(1.46)
(196.96)
(2.32)
(301.54)
(3.29)
PROFIT BEFORE INCOME TAX Income tax expense
1,701.69
16.25
1,363.37
10.09
1,181.35
7.92
1,906.76
39.47
1,371.23
16.15
864.42
9.42
(377.28)
(3.60)
(252.76)
(1.87)
(139.25)
(0.93)
(165.40)
(3.42)
(284.49)
(3.35)
(181.21)
(1.98)
1,324.41
12.64
1,110.61
8.22
1,042.10
6.99
1,741.36
36.05
1,086.74
12.80
683.21
7.45
(0.01)
-
(0.01)
-
(0.08)
-
-
-
-
-
-
-
1,324.40
12.64
1,110.60
8.22
1,042.02
6.99
1,741.36
36.05
1,086.74
12.80
683.21
7.45
PROFIT FOR THE YEAR Non-controlling interests Profit for the year attributable to owner of the parent company
93
Energy Earth Annual Report 2014
(3) Summary of Cash Flows Statements Items
Consolidated Financial Statements 2012 2013 2014
Separated Financial Statement 2012 2013 2014
CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax
1,701.69
1,363.37
1,181.36
1,906.76
1,371.24
864.43
Depreciation
23.25
22.99
24.37
0.63
1.22
3.03
Amortization
0.07
0.08
0.07
0.02
0.04
0.03
268.64
536.98
299.70
-
-
-
-
-
(0.47)
-
-
-
0.43
-
0.19
-
-
0.01
(4.65)
8.00
129.21
-
9.10
129.40
-
(1.11)
40.44
1.11
(1.11)
40.44
(2.20)
(2.20)
(2.20)
-
-
-
Employee benefit expenses
0.38
0.39
6.09
0.23
0.14
5.91
Unrealized gain (loss) on foreign exchange rate
7.63
(92.93)
21.85
4.31
(78.05)
17.37
Dividend income
-
-
-
(1,140.00)
-
-
Interest Income
-
(8.94)
(5.10)
-
(202.83)
(28.84)
125.18
274.94
368.79
61.20
183.51
292.65
2,122.62
2,103.77
2,066.50
834.26
1,283.26
1,324.43
(2,988.20)
(1,240.74)
1,507.22
(1,302.81)
136.82
(9.55)
(372.54)
(387.19)
(446.09)
(571.91)
(413.86)
(190.68)
(1,573.95)
818.67
(5,068.64)
(775.34)
(4,531.56)
(5,525.82)
(27.18)
(7.50)
(59.35)
(39.70)
2.77
(44.59)
Other current assets
(2.10)
(0.58)
2.71
(17.26)
0.76
0.15
Other non-current assets
(0.06)
0.06
0.60
(0.05)
0.02
-
Trade and other payables
52.12
114.03
128.13
611.76
(387.20)
1,625.92
0.63
(1.68)
14.26
1.49
(0.32)
14.75
(2,788.66)
1,358.84
(1,854.66)
(1,259.56)
(3,909.31)
(2,805.39)
-
8.94
5.43
-
254.46
86.73
(124.05)
(265.65)
(392.61)
(58.20)
(181.50)
(314.07)
(246.51)
(285.00)
(398.69)
(36.56)
(259.84)
(303.76)
(3,159.22)
857.13
(2,640.53)
(1354.32)
(4,096.19)
(3,336.49)
Adjustments to
Amortization of mining property rights Profit from selling fixed assets Loss on written-off assets Doubtful debts (Reversal of) Loss on obsolete inventories (Reversal of) Reversal of loss on impairment of fixed assets
Interest expenses Decrease (Increase) in operating assets Trade and other receivables Inventories Advance payment from purchase of goods VAT
Other current liabilities Cash generated (paid) from operations Cash Received from Interest Income Cash paid for interest expenses Cash paid for income tax and withholding tax deducted at source Net Cash Provided by (Used in) Operating Activities
94
Energy Earth Annual Report 2014
Items CASH FLOWS FROM INVESTING ACTIVITIES (Increase) Decrease in deposits at financial institutions pledged as collateral
Consolidated Financial Statements 2012 2013 2014
Separated Financial Statement 2011 2012 2013
(99.22)
158.59
135.53
(264.84)
39.70
135.99
Cash paid for investment in subsidiary Cash Received – Short term loan for related company Cash Paid – Short term loan for related company
-
-
-
-
(3.25)
(52.89)
-
-
-
724.56
15,493.31
4,521.49
-
-
-
(3,142.12)
(13,543.25)
(4,180.86)
Cash received from assets selling Cash paid for purchase of property, plant and equipment
-
-
0.47
-
-
-
(1.87)
(4.16)
(575.65)
(2.44)
(3.95)
(1.61)
Cash paid for purchase of intangible assets Cash paid for acquisition of mining property rights
-
(1.69)
(1.29)
-
(1.69)
(1.29)
-
(3,864.15)
-
-
-
-
Dividends received Net Cash Provided by (Used in) Investing Activities
-
-
-
1,140.00
-
-
(101.09)
(3,711.41)
(440.94)
(1,544.84)
1,980.87
420.83
3,239.39
2,778.93
2,187.98
3,025.44
2,048.19
2,087.12
-
-
-
(340.15)
-
773.39
-
-
-
341.15
(1.00)
(773.39)
-
-
1,280.64
-
-
1,280.64
(15.63)
(16.35)
(45.91)
-
-
(31.73)
(3.79)
(2.62)
(3.20)
(0.28)
(0.51)
(1.53)
75.24
514.65
21.94
75.24
514.65
21.94
-
(260.42)
(248.71)
-
(260.42)
(248.71)
Net Cash Provided by Financing Activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
3,295.21
3,014.19
3,192.74
3,101.40
2,300.91
3,107.73
34.90
159.91
111.27
202.24
185.59
192.07
Difference from currency translation Cash and cash equivalents, beginning of year
(60.95)
(74.84)
182.91
(88.92)
(116.53)
44.21
174.61
148.55
233.62
9.97
123.31
192.37
Cash and cash equivalents, end of year
148.56
233.62
527.80
123.29
192.37
428.65
CASH FLOWS FROM FINANCING ACTIVITIES Increase in bank overdraft and short-term loans from financial institutions Cash Received – Short term loan for related company Cash Paid - Short-term loans for related company Cash Received – Long term loan from financial institution Cash paid for long-term loans from financial institutions Cash paid for liabilities under hire-purchase agreements Proceeds from increase in share capital Dividends paid
95
Energy Earth Annual Report 2014
13.4 Important Financial Ratios Item
Consolidated Financial Statements 2012 2013 2014
Separated Financial Statement 2012 2013 2014
Liquidity Ratio Liquidity Ratio (times)_ Quick Liquidity Ratio (times)_ Cash flow ratio (times) Account Receivables turnover ratio (times) Average Collecting Period (days) Inventory Turnover Ratio (times) Average Selling Period (days) Account payables turnover ratio (times) Repayment Period (days) Advance payment for purchase of goods ratio (times) Advance Payment for purchase of goods period (days) Cash Cycle (days)
1.23
0.94
1.11
1.36
1.47
1.46
0.77
0.67
0.42
0.22
0.23
0.17
(0.80)
0.12
(0.26)
(0.63)
(0.81)
(0.42)
3.77
2.66
2.91
7.99
8.25
7.22
95.43
135.35
123.91
45.05
43.64
49.89
21.56
14.10
10.23
9.11
7.91
6.49
16.70
25.54
35.18
39.50
45.53
55.43
82.82
90.88
85.81
10.99
24.04
8.42
4.35
3.96
4.20
32.75
14.97
42.74
7.04
7.07
3.38
5.25
1.92
0.86
51.12
50.90
106.44
68.60
187.36
418.37
158.91
207.88
261.34
120.41
261.56
480.95
20.69
16.49
14.90
23.07
21.77
18.58
17.55
12.17
10.42
15.20
15.91
11.86
0.21
0.09
0.04
30.00
3.05
0.96
(172.25)
52.15
(169.93)
(263.48)
(312.85)
(309.49)
12.64
8.22
6.99
36.05
12.80
7.45
60.04
30.91
21.65
78.33
28.33
14.04
20.49
9.94
6.62
39.82
12.20
5.07
508.87
467.97
204.42
60,380.94
15,859.48
6,551.22
1.62
1.21
0.95
1.10
0.95
0.68
2.08
2.13
2.39
1.31
1.33
2.16
(23.87)
1.06
(8.34)
(22.52)
(23.24)
(12.67)
(148.39)
0.21
(3.02)
(497.91)
(15.28)
(9.92)
-
23.45
23.87
-
23.96
36.40
Profitability Ratio Gross Profit Ratio ( % ) Gross Profit Ratio from Operations ( % ) Other Gross Profit Ratio ( % ) Cash to Profitibility Ratio ( % ) Net Profit Ratio ( % ) Return on Equity Ratio( % ) Efficiency Ratio Return on Assets Ratio( % ) Return on Fixed Assets Ratio ( % ) Assets Turnover Ratio (Times) Financial Policy Ratio Debt to Equity Ratio (times) Interest Coverage Ratio (times) Obligation Coverage Ratio (Times) Dividend Payout Ratio ( % )
96
Energy Earth Annual Report 2014
Management’s Discussion and Analysis (MD&A) 1.
Management’s Discussion and Analysis of Financial Conditions and Overall Performance. Overall Outlook and Previous Performance
Energy Earth Public Company Limited and its subsidiaries started importing and supplying Bituminous coal since 2005. In 2011, the Company invested in a coal company which owns a mine as its subsidiary. In 2013, the Company decided to purchase another coal mine in Indonesia which resulted in having more coal reserves to be able to serve more customers and increase in cost efficiency. The Company is consistently growing. In 2014, the Company had revenue of 14,911 million Baht. When compared to 2013, the Company had revenue of 13,505 million Baht, which represents an increase at a percentage of 10. This is caused by the expansion of domestic customer base by selling to big customers; for example, cement producer. For the international sales, it looked slightly decreased because the global price of the fuel dropped. However, for the international sales, the Company mostly sold to China and India. In 2014, the Company expanded its international markets to South Korea and opened its subsidiaries in China to increase market channel. Moreover, the Company mostly do international sales, which in 2014, its international sales revenue was 65% of the total revenue (73% in 2013), and its domestic sales revenue was 35% of the total revenue in 2014 (27% in 2013). The Company generated a gross profit of 2,221 million baht in 2014 and 2,227 in 2013, which the gross profit was dropped by 6 million Baht, with the gross profit percentage per revenue for 2014 and 2013 shown at 15% and 17%, respectively. This decrease was caused by the global coal price dropped when compared to the previous year. This resulted in the Company sold the coal at the lower price, but the cost decreased at the lower rate of the price. Then, the Company’s gross profit reduced. However, because the Company could control its cost from its own mines, it was able to manage its expenses and logistic costs with its partners. The Company generated a net profit of 1,042 in 2014 and 1,110 million baht in 2013, which represent 7% net profit in 2014 and 8% net profit in 2013. The profit decrease of 69 million baht was because the Company’s selling and administrative expenses increased from the increase of expenses on employees, domestic logistics cost when sales increased as well as the increased allowance for bad debt and increased financial costs for various loans from financial institutions for the working capital.
97
Energy Earth Annual Report 2014
1.1 Overall Performance Analysis Revenue
Description
Consolidated Financial Statement 2014 2013 Increase(Decrease) Million baht
% Million baht
%
Million baht
%
Revenue From sales Domestic
5,228
35
3,624
27
1,604
44
International
9,683
65
9,881
73
(198)
(2)
14,911
100
13,505
100
1,406
10
Other Income
6
0
12
0
(6)
(52)
Total Income
14,917
100
13,517
100
1,400
10
Total Income from Coal Sales
The Company generated revenue in the amount of 14,917 million baht in 2014, which represents an increase of 1,400 million baht or a 10% increase from the previous year, which can be broken down into an increase of 1,406 million baht from coal sales or a 10% increase, and decrease of 6 million baht from other income or a 52% decrease. The increase of revenue in the amount of 1,406 million baht from coal sales is explained by the following facts: 1. In 2014, the Company had increased domestic sales in the amount of 1,604 million baht or 44% from the previous year due to increased sales by 48%, while maintaining the average selling price similar to those in the previous year. During the year of 2014, the Company also increased its customer base across industries which use coal as main fuel source, and had more big customers that purchase coal on whole-vessel basis rather than on retail volume. 2. In 2014, the Company had decreased international sales in the amount of 198 million baht or 2% from the previous year, which is slightly decrease. However, the Company expanded its international markets to South Korea and opened its subsidiary in China in order to increase market channel in China. The Other Income decreased by 6 million baht or 52% from the previous year mainly due to lower interest income from the financial institution by reducing the guaranteed loans.
98
Energy Earth Annual Report 2014
Cost of Sales
Description
Consolidated Financial Statement 2014 2013 Increase(Decrease) Million baht
% Million baht
%
Million baht
%
Cost of Sales Domestic
4,690
37
3,151
28
1,539
49
International
7,999
63
8,126
72
(127)
(2)
12,689
100
11,277
100
1,412
13
Total Cost of Sales
Total Cost of Coal Sales in 2014 was 12,689 million Baht, which represents an increase of 1,412 million Baht or 13% from the previous year, which was the same trend as the Revenue. However, the Company was able to manage and control costs effectively by using coal from the Company’s own mines. Moreover, the cost is mainly consisted of variable cost which included raw coal materials and freights costs, while the rest were port charges, in-land logistics, labor, maintenance, depreciation and others. Expenses - The selling expenses of the Company mainly were the selling expenses for domestic market, represented in 2014 at the amount of 302 million baht, which increased of 66 million baht or 28% from the previous year. Such increase also happened the same way as the domestic sales volume of the Company. However, the selling expenses increased at the lower rate than the domestic sales. The domestic sales increased a lot so that the Company was able to negotiate with logistic partners. - The administration expense of 2014 were shown at the amount of 302 million Baht, which represents an increase of 135 million Baht or 80% from the previous year. Such increase was due to the provision of doubtful accounts during the year, higher costs of hiring more employees, higher traveling expenses to expand the business. - Total loss from the currency exchange in 2014 was 63 million baht, which represents a decrease of 117 million baht or 65% from the previous year, due to the fluctuating currency exchange during that year. - Finance Cost in 2014 was 379 million baht, which represents an increase of 86 million baht or 29% from the previous year, due to an increase of loans from financial institutions for the Company’s operations during the year. - Income tax expense in 2014 was 139 million baht, which represents a decrease of 114 million baht or 45% due to lower profit from operations.
99
Energy Earth Annual Report 2014
Ability to Generate Profit The Company’s gross profit was 2,221 million Baht in 2014 and 2,227 million Baht in 2013. The gross profit decreased 6 million baht, effecting gross profit per coal sales ratio for 2014 and 2013, shown at 16.49% and 20.69%, respectively. The decrease was due to the decreased coal price in the global coal market when compared to the previous year, which resulted to the Company’s sales price dropped. However, the cost decreased at the lower rate when compared to the sales price. Therefore, the Company’s gross profit decreased. However, the Company managed to control costs by using coal from its own mine and that of its subsidiaries, and by negotiating better coal purchase terms with partners in exchange with significant increase in sales volume. The Company’s earnings before interest and tax was 1,560 million Baht in 2014, and 1,656 million Baht in 2013, representing a profit at a percentage of 10% in 2014, and 12% in 2013. The earnings before interest and tax decreased by 96 million baht or 6%, compared to that of 2013, because the Company’s selling and administrative expenses increased and its personnel growth which requires increased costs for employees’ compensation, and also increase in domestic logistic cost due to the increase in sales volume as well as the provision of doubtful accounts. The Company’s net profit was 1,042 million baht in 2014, and 1,111 million baht in 2013 respectively, which represented net profit percentage of 7% in 2014 and 8% in 2013, which the net profit decreased 69 million Baht or at a percentage of 6% from the previous year, because of the decreased gross profit mentioned above and higher financial costs occurred from loans for working capital from financial institutions. Return on Equity From the Net Profit in 2014 and in 2013, the Company’s return on equity was 22% and 31%, respectively, which was due to decreased Net Profit of 69 million Baht. While the shareholders’ equity increased because of the capital increase due to the exercise of warrants for conversion into ordinary shares, which resulted to an increase of 15 million baht paid-up capital and premium share amount of 7 million baht as well as the Company did pay dividend in 2014 at the amount of 249 million Baht.
100
Energy Earth Annual Report 2014
1.2 Financial Analysis Assets The Total Assets of the Company consistently grew from 13,532 million baht in 2013 to 17,941 million baht in 2014, which represents 33% from that of 2013. The respective figures of the year ended for these 2 years are as follows: Consolidated Financial Statement 2014 2013 Increased (Decreased) Million Million Baht Million % Baht Baht
Description
Current Assets Cash and cash equivalents
527.80
233.62
294.18 152.92
Trade and Other Receivables
4,352.81
5,913.86
(1,561.05) (26.40)
Inventory
1,450.55
1,029.34
Advance Payment for Purchase of Goods
6,278.87
1,225.11
144.54
83.58
Other Current Assets
3.04
5.74
Total Current Assets
12,757.61
8,491.25
Total Non-Current Assets Deposits from financial institutions pledged as collateral
290.15
423.92
Property for investment (Net)
175.39
174.83
Property, plant and equipment (Net)
800.99
242.44
3.02
1.77
1.25
70.62
3,897.87
4,180.63
(282.76)
(6.76)
15.62
16.49
(0.87)
(5.28)
0.28
0.89
5,183.32
5,040.97
142.35
2.82
17,940.93
13,536.22
4,408.71
32.58
Value Added Tax
Intangible Assets (Net) Mining property rights (Net) Deferred tax assets Other non-current assets Total non-current assets Total Assets
421.21
40.92
5,053.76 412.51 60.96
72.94
(2.70) (47.04) 4,266.36
50.24
(101.38) (19.30) 0.56
0.32
558.55 230.39
(0.61) (68.54)
The Company’s current assets value increased from 8,491 million baht in 2013 to 12,758 million baht in 2014, which represents an increase of 4,266 million baht. The respective increases represent 63% and 71% of the Total Assets for 2013 and 2014. The increase in the current assets of the Company was due to the advance payment for the coal in Indonesia to ensure the sufficient coal reserve to supply in the future.
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Energy Earth Annual Report 2014
The Company’s non-current assets value increased from 5,040 million baht in 2013 to 5,183 million baht in 2014, which represents an increase of 142 million baht. The respective increases represent 37% and 29% of the Total Assets for 2013 and 2014. The increase in the non-current assets of the Company was due to the invest in capital expenditure such as machine and equipment for mining at the mine in Indonesia. Accounts Receivables and other Receivables (Net) The Company’s accounts receivables during the year 2014-2013 can be categorized in accordance with the aging as shown below:
Description
2014 Million baht
Not yet due
Consolidated Financial Statement 2013 Increase (Decrease) %
Million baht
%
Million baht
%
4,052.58
93.10
2,916.77
49.32
1,135.81
38.94
253.31
5.82
2,659.31
44.97
(2,406.00)
(90.47)
-
-
310.18
5.24
(310.18)
(100.00)
6-12 months
12.74
0.29
17.08
0.29
(4.34)
(25.41)
more than 12 months
39.11
0.90
3.56
0.06
35.55
998.60
Total Allowance For Provision of Doubtful Accounts
4,537.74 100.11
5,906.90
99.88
(1,549.16)
(26.23)
(41.14)
(0.95)
(12.23)
(0.21)
(28.91)
236.39
Total Accounts receivable
4,316.60
99.17
5,894.67
99.68
(1,578.07)
(26.77)
Other Receivable
0.58
0.01
7.86
0.13
(7.28)
(92.62)
Advance Payment
35.63
0.82
11.33
0.19
24.30
214.47
5,913.86 100.00
(1,561.05)
(26.40)
Overdue Within 3 months 3-6 months
Total
4,352.81 100.00
The Company has a policy of providing the credit term of 30-90 days to most domestic customers, and the Letter of Credit (L/C) for international customers. The period of the credit term is determined in accordance with various factors to be considered such as previous transactions and industry competitiveness along different time frames. The Company has a policy of setting doubtful accounts by taking into account the due date of the accounts receivable. Customers who have established credibility by paying on time are not included in the list of doubtful accounts. The total value of the doubtful accounts was 12 million baht in 2013 and 41 million baht in 2014, respectively. Most of these doubtful accounts are now subject of legal processes under appropriate legal advisor.
102
Energy Earth Annual Report 2014
Most of the accounts receivable involve accounts that are not yet due and those that are less than 3 months overdue, and these accounts make up 94% of the total accounts receivable in 2013, and 99% in 2014. However, on 31 December 2014, the total of the less than 3 months overdue accounts receivable was 253 million baht which represents 6% of total accounts receivable and other receivables, while the total of the more than 6 months overdue accounts was 13 million baht, and the total of the more than 12 months overdue accounts was 39 million baht. Most of the Company’s advance payment was for service and insurance payments. In 2014, the total advance payments was 36 million baht, which represents a increase of 24 million baht or 214% from 2013, as a result of advance payments for imports of its subsidiary in China. Inventory (Net) The Company had an inventory as of 31 December 2014 and 2013 with the following categories:
Description
Consolidated Financial Statement 2013 Increase (Decrease)
2014 Million baht
%
Million baht
%
Million baht
%
Finished Goods
587.14
40.48
263.29
25.58
323.85
123.00
Raw Material
513.37
35.39
765.18
74.34
(251.81)
(32.91)
0.12
0.01
0.87
0.08
(0.75)
(86.21)
390.35
26.91
-
-
390.35
100.00
1,490.98
102.79
1,029.34
17.41
461.64
44.85
(40.43)
(2.79)
-
-
(40.43)
(100.00)
1,450.55
100.00
1,029.34
100.00
421.21
40.92
Crude Oil Goods in Transit Total Allowance for Damaged Goods Net
The inventory can be categorized in details as follows: Finished Goods refer to coal that are size screened and ready for delivery to customers. The Company has a policy of producing finished goods in volumes just sufficient for selling without having to store excessive amounts in stock. This policy avoids added unnecessary costs. The inventory for finished goods as of 31 December 2014 increased valued of 587 million Baht which had been increased by 324 million Baht or at a percentage of 123% from the year 2013 to ensure sufficient delivery of supply to customers for the 1st quarter of 2015. Raw Material refers to the raw coal that is imported from Indonesia and stocked in the Company’s storage areas for size screening processes. Crude Oil refers to the fuel oil which is used by the Company’s trucks which load and unload coal.
103
Energy Earth Annual Report 2014
Goods in Transit refer to the coal that is in transit to the storage. Consolidated Financial Statement 2014 2013 Trade Receivables Turnover Ratio (times) 14.10 10.23 Collection Period (Days) 25.53 35.18 Remarks : 1/ Inventory Period = (360/ (Cost of Sales/Each Type of Inventory) Important Financial Ratios
The Company had increased its average sales period from 25.53 days in 2013 to 35.18 days in 2014 because of the Company’s sales growth, which requires the Company to stock more in inventory to ensure sufficient delivery for high volume customers. Nevertheless, the Company still managed to keep the average inventory period be no more than 60 days with its well planned by coordinating among the procurement, production and sales teams. Advance Payment for Goods (Net) The Company had advance payments for goods as of December 31, 2014 and 2013 at the amount of 6,279 million baht and 1,225 million baht respectively, which represents an increase of 5,054 million baht or 413%. The advance payment ratio is at 3.38 times and the advance payment period is at 106 days and 51 days in 2014 and 2013 respectively. Such increase in the advance payment for goods because the Company has sufficient coal quantity to be sold in 2015. Deposit in the Financial Institutions with Collateral The Company has deposit in the financial institutions as of December 31, 2014 and 2013 at the amount of 290 million Baht and 424 million Baht respectively, which decreased from the year 2013 by 134 million Baht because the Company redeemed some of the fixed deposit typed collateral as guarantee the loan from financial institution. Property, Building, and Equipment (Net) Property, Building, and Equipment (Net) as of December 31, 2014 is at the amount of 801 million Baht, increased by 559 million Baht, due to the investment in machine and equipment at the coal mine in Indonesia.
104
Energy Earth Annual Report 2014
Coal Mining Concessions Rights (Net) Balance as at 1 January 2013 Acquisitions during the year – at Cost Amortization - Coal Mining Concessions Rights Exchange Differences on Conversion of the financial statements. Balance as at 1 January 2013 Amortization - Coal Mining Concessions Rights Exchange Differences on Conversion of the financial statements. Balance as at 31 December 2014
Million Baht 825.37 3,864.15 (536.97) 28.08 4,180.63 (299.70) 16.94 3,897.87
As of 31 December 2014, the Company had rights of mining concessions at the amount of 3,898 million baht, which decreased from 2013 by 283 million baht because the amortization of 300 million Baht and the difference on conversion of the financial statements of 17 million Baht.
105
Energy Earth Annual Report 2014
Total Liabilities As of December 31, 2014 and 2013, the Company’s total liabilities was at 12,644 million baht at 9,202 million baht respectively. The total liability increased by 3,442 million baht or 37%, and the debt to equity ratio was 2.39 in 2014 and 2.13 in 2013. In 2014, the debt to equity ratio was slightly higher as most of the liabilities are current liabilities, of which overdraft and short term loans from financial institutions representing 85% in 2014 and 92% in 2013. Moreover, the Company has got long term loan from financial institution during the year 2014 at the amount of 40 million US dollars. Total Liabilities consist of the followings:
Description
Consolidated Financial Statement 2014 2013 Increased (Decreased) Million Baht
Million Baht
Million Baht
%
Current Liabilities Overdrafts and Short Term Loans from Financial Institutions Trade and Other Accounts Payable
10,698.79
8,470.43
2,228.36
26.31
515.18
384.25
130.93
34.07
-
-
-
-
185.37
13.88
171.49 1,235.52
2.71
2.81
(0.10)
(3.56)
Income Taxes Payable
67.98
206.21
(138.23)
(67.03)
Other Current Liabilities
17.87
2.34
15.53
663.68
11,487.90
9,079.92
2,407.98
26.52
Non-current liabilities Long Term loans with financial institutions
1,113.71
16.75
Liabilities under hire-purchase agreement
3.16
3.75
(0.59)
(15.73)
Employees Benefit Obligations
8.41
2.32
6.09
262.50
30.73
99.37
(68.64)
(69.08)
1,156.01
122.19
1,033.82
846.08
12,643.91
9,202.11
3,441.80
37.40
Short Term loans from related company Portions due within one year -Long term loan from financial institution -Liabilities under hire-purchase agreement
Total Current Liabilities
Deferred Tax Liabilities Total Non-Current Liabilities Total Liabilities
106
1,096.96 6,549.01
Energy Earth Annual Report 2014
Current Liabilities Most of the Company’s liabilities are current liabilities which are consistently increasing, wherein overdraft and short term loans from financial institutions increased by 2,228 million baht from 2013. The Company used these loans for its cash flow for operations. Interest-bearing Liabilities Consolidated Financial Statement 2014 Million % baht
Description
2013 Million % baht
Increase (Decrease) Million % baht
Interests-Bearing Liabilities Current Liabilities Overdrafts Promissory Notes Trust Receipts Creditor of the Discounted Loans for Export Total Overdrafts and Short Term Loans from Financial Institutions Long Term Loans with Financial Institutions Portions due within one year Liabilities under hire-purchase agreements Portions due within one year Total Current Interest-Bearing Liabilities Non-Current Liabilities Liabilities under hire-purchase agreements Net from portions loan within one year Liabilities under hire-purchase agreements Net from portions loan within one year Total Non-Current Interests-Bearing Liabilities Total Interests-Bearing Liabilities Shareholders' Equity Ratio of Interests-Bearing Liabilities to Shareholders' Equity
0.01 2,065.99 5,115.17 20.47 3,497.14
0.00 17.21 42.61 0.17 29.13
26.01 564.70 3,541.55 7.92 4,330.25
0.31 6.64 41.63 0.09 50.90
(26.00) 1,501.29 1,573.62 12.55 (831.11)
(99.96) 265.86 44.43 158.49 (19.24)
10,698.78
89.13
8,470.43
99.56
2,228.35
26.31
185.37
1.54
13.88
0.16
171.49
1,235.52
2.71 10,886.86
0.02 90.70
2.81 8,487.12
0.03 99.76
(0.10) 2,399.74
(3.56) 28.28
1,113.71
9.28
16.75
0.20
1,096.96
6,549.01
3.75 0.04 20.50 0.24 8,507.62 100.00 4,330.11
(0.59) 1,096.37 3,496.11 966.91
(15.73) 5,348.15 41.09 22.33
3.16 0.03 1,116.87 9.30 12,003.73 100.00 5,297.02 2.27
1.96
The Company’s interests-bearing liabilities are based on overdrafts, promissory notes, trust receipts, short term loans, and leasing liabilities. The Company’s interests-bearing liabilities as of 31 December 2014 and 2013 were at 12,004 million baht and 8,508 million baht, respectively. The interests-bearing liabilities to equity ratio were at 2.27 times in 2014 and 1.96 times in 2013, respectively. The higher figures were due to loans from financial institutions which support the Company’s growth and liquidity for performing its business. The significant items of the interests-bearing liabilities are overdrafts and loans from financial institutions. 107
Energy Earth Annual Report 2014
Overdraft and Loans from Financial Institutions As of 31 December 2014 and 2013, the Company’s over draft and short term loans were 10,699 million baht and 8,470 million baht respectively. The long term loans from financial institutions were 1,299 million baht in 2014 and 31 million baht in 2013. The total was 99.9% of the total interests-bearing liabilities, wherein most of them were loans under trust receipt contracts and loans for export. The Company’s loan under trust receipt contracts in 2014 and 2013 were 5,115 million baht and 3,542 million baht, respectively, representing 42% to total interests-bearing liabilities for 2 years. Loans for export use in 2014 and 2013 were 3,497 million baht and 4,330 million baht, respectively, representing 29% and 51% to total interest-bearing liabilities respectively. Most of the loans were used for production to support the Company’s higher sales growth. As of 31 December 2014, the Company’s overdraft, credit facilities for export and short term loans were 12,201 million baht (12,621 million baht as of 31 December 2013). Such amounts had floating interest rates. The Company’s long term loans from financial institutions were 31 million baht in 2013 and 45 million baht in 2012. The decrease of 14 million baht occurred due to clearings between periods. The details of the Company long term loans from financial institutions are as follows: As of December 31, 2014 and 2013, there were long term loans from financial institutions of 1,299 million Baht and 31 million Baht respectively, increased by 1,268 million Baht, due to the additional loan of 40 million US dollars. Trade Account Payables and Other Account Payables As of 31 December 2014 and 2013, the Company had trade account payables and other account payables, as follows:
Description
2014 Million baht
Consolidated Financial Statement 2013 Increase (Decrease) %
Million baht
%
Million baht
%
Trade Accounts Payable
119.61
23.22
176.15
45.84
(56.54)
(32.10)
Expenses Payable
301.95
58.61
201.90
52.54
100.05
49.55
93.62
18.17
6.20
1.61
87.42
1,410.00
384.25 100.00
130.93
34.07
Other Accounts Payable Total
515.18 100.00
As of December 31, 2014 and 2013, the company’s trade accounts payable was 120 million baht and 176 million baht, which represent a decrease of 56 million baht or 32%. The accounts payable turnover ratio was 86 times in 2014, and 91 times in 2013, or an average payment period of 4 days for both years.
108
Energy Earth Annual Report 2014
As of December 31, 2014 and 2013, the Company’s accrued expenses amounted to 302 million baht and 202 million baht, which represent an increase of 100 million baht or 50%, wherein the main accrued expenses consist of higher logistics cost and expenses related to imports, in the same way as its revenue from coal selling. As of December 31, 2014 and 2013, the Company’s other accounts payable were 93 million baht and 6 million baht, which represent an increase of 87 million baht due to higher customers’ advance payments pursuant to a policy for preventing risks from delayed payments. Shareholders’ Equity Components of Shareholders’ Equity
Consolidated Financial Statement 2014 2013 Increased (Decreased) Million Million Baht Million % Baht Baht
Description
SHAREHOLDERS' EQUITY Paid-up Capital
2,956.55
2,956.55
14.96
0.51
Premium on shares capital
966.78
959.81
6.97
0.73
Discount on shares capital
(1,800.00)
(1,800.00)
-
-
Adjustment of equity interests under reverse acquisition
(186.62)
(186.62)
-
-
Total share capital
1,951.67
1,929.74
21.93
1.14
191.20
155.20
36.00
23.20
2,918.10
2,160.78
757.32
35.05
234.84
83.26
151.58
182.06
5,295.81
4,328.98
966.83
22.33
1.21
1.13
0.08
7.08
5,297.02
4,330.11
966.91
22.33
Retained earnings Appropriated for legal reserve Unappropriated Other components of shareholders' equity Equity attributable to owners of the parent company Non-controlling interests TOTAL SHAREHOLDERS' EQUITY
As of December 31, 2014 and 2013, the Company’s shareholders’ equity was 5,297 million baht and 4,330 million baht, which represent an increase of 967 million baht or 22%. Such as increase was due to the following reasons: -
Share capital increased by 22 million baht, because of the addition of 15 million baht from exercised warrants and 7 million baht from premium on share capital. 109
Energy Earth Annual Report 2014
-
Legal reserve increase of 36 million baht from the allocation of net profit after accumulated deficit brought forward (if any). Higher accumulated profit of 757 million baht from the 1,042 million baht of net profit, with additional allocations of 36 million baht of legal reserve and 249 million baht of dividend. Other components of shareholders’ equity increased by 152 million baht because the difference of currency exchange for operations.
Liquidity Statement of Cash Flow The Company’s cash flow of the year 2014-2013 is as follows: (Unit: Million baht) Consolidated Financial Statement 2014 2013 Cash flow from operations before changes in operating assets and liabilities Increased Accounts Receivables and Inventory Other (Increased) Decreased Operated Assets (Increased) Decreased Operated Liabilities Total Cash Generated (Used) in Operating Activities Cash Received from Interest Income Cash Paid for interest Expenses Cash paid for income tax Net Cash Flow from Operating Activities Net Cash Flow from Investing Activities Net Cash Flow from Financing Activities Net increase (decrease) Cash and Cash Equivalents Gain (Loss) on foreign exchange of cash and cash equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year
2,066.50 1,061.13 (5,124.68 142.39 (1,854.66) 5.43 (392.61) (398.69) (2,640.53) (440.94) 3,192.74 111.27 182.91 233.62 527.80
2,103.77 1,627.93 810.65 112.35 1,398.84 8.94 (265.65) (286.00) 857.13 (3,771.41) 3,014.19 159.91 (74.84) 148.55 233.62
Components of the cash flow statements are as follows: The Company’s cash flow from operations before changes in assets and liabilities was 2,067 million baht in 2014. There were 2,641 million baht of cash flow from operated activities in 2014, because of the decrease in accounts receivable and inventory by 1,061 million baht. There was an increase in advance payment for goods by 5,068 million baht. Cash paid for the interest expenses was at 393 million Baht and cash paid for the income tax was at 399 million Baht. The Company’s cash flow used for investing activities in 2014 were 441 million baht because of the purchase of machine and equipment for coal mining in Indonesia from the acquisition of additional mine in
110
Energy Earth Annual Report 2014
2013. There were 576 million Baht for the purchase of vehicle and equipment and 135 million Baht for the fixed deposit as collateral decrease. Cash flow from financing activities in 2014 was 3,193 million baht, wherein the figures were from cash from loans with financial institutions which increased by 2,998 million baht, capital increase by 515 million baht and the dividend payment of 260 million Baht. Liquidity Ratio Consolidated Statement 2014 2013 Current Assets to Current Liabilities Ratio 1.11 0.94 Current Assets to Current Liabilities Ratio (Restated Case) * 1.14 0.98 Quick Liquidity Ratio 0.42 0.67 Cash Flow Ratio (0.26) 0.12 * It is a case wherein deposits from financial institutions pledged as collateral and show as noncurrent assets were moved into current assets. Liquidity Ratio (Unit : Times)
The Company’s liquidity is determined by the ratio of current assets to current liabilities, which was 0.94 times and 1.11 times in 2013 and 2014 respectively. In 2014, the Company’s current assets to current liabilities ratio increased because in 2013 the Company purchased a coal mine in December 2013 by cash of 3,864 million Baht. Quick liquidity ratios for 2014 and for 2013 were 0.42 times and 0.67 times, respectively. Cash flow liquidity ratios were -0.26 times and 0.12 times for 2014 and for 2013, respectively. Quick liquidity ratio was low due to the fact that the Company mainly relied on loans from financial institution, advance payments for goods while offering credit terms for customers, which resulted in a low rate of quick liquidity ratio. Capital Expenditure For investments in 2014, the Company had purchased 5.76 million baht worth of fixed assets, mainly for machines and equipments for coal mining for the mine in Indonesia that was acquired in the previous year. For the investment in 2013, the Company had purchased 4 million Baht worth of fixed assets and paid for the mining rights for coal mining in another mine in Indonesia by cash at the amount of 3,864 million Baht.
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Energy Earth Annual Report 2014
2.
Obligated Liabilities and Off-Balance Sheet Management Contractual Obligations The Company had an obligation to pay for leasing agreements in the amount of 6.92 million baht (2013: 1.82 million baht). The Company had an obligation to pay leasing agreements for machineries leasing in the amount of 4.46 million baht (2013: 0.84 million baht) The Company had an obligation to sell coal pursuant to a coal sales contract with both domestic and international customers for totally of 8.53 million tons of coal by using the marketing price index (2013: 8.50 million tons). The Company had an obligation to pay for outsourcing systems development for 0.20 million baht (2013: 0.42 million Baht). Liabilities that may occur The Company had letter of credits that were issued but were not used the mount of 4.69 million US dollars (2013: 2.97 million US dollars) Guarantee
As of December 31, 2014 and 2013, the Company had bank guarantees as follows:
2014 US Dollars
2013 Baht or Equivalent
US Dollars
Baht or Equivalent
Consolidated Financial Statements Guarantee for Buying Stock
-
-
3,000,000
98,848,200
Guarantee for Coal Selling
60,500
1,994,262
110,000
3,624,434
Guarantee for Credit Lines
- 10,849,500,000
Guarantee for Electricity Use
-
405,000
60,500 10,851,899,262
- 8,257,500,000 -
405,000
3,110,000 8,360,377,634
Separated Financial Statements Guarantee for Buying Stock
-
-
3,000,000
98,848,200
Guarantee for Coal Selling
60,500
1,994,262
110,000
3,624,343
Guarantee for Credit Lines
- 10,849,500,000
- 8,257,500,000
60,500 10,851,494,262
3,110,000 8,359,972,634
112
Energy Earth Annual Report 2014
3.
Factors that may affect Financial Situations and Future Performance
The Board of Directors during its meeting held on 21 December 2012 had proposed a resolution for the Extraordinary General Shareholders Meeting held on 30 August 2013 in order to invest in a total of 1,000 ordinary shares at a value of 1,000,000 IDR per share of PT. Hary Niaga’s paid-up capital, wherein the total value of PT. Hary Niaga’s ordinary shares are no more than 3,694,800,000 million baht and with coal reserves of no more than 40 million tons. The Company will pay the aforementioned shares by issuing capital increased shares of no more than 454,464,945 shares at 1 baht per share for a proposed private placement to PT. Hary Niaga’s existing shareholders at 8.13 baht per share. However, on 19 July 2013, the Company had postposed the EGM scheduled on 30 August 2013 and undertook to inform regarding the new date after receiving the JORC REPORT from the independent surveyor. On 31 December 2013, the Company still did not receive such report. However, the Company is certain that such investment will benefit the Company by acquiring more mines and more coal reserves to support the customers’ demand.
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Energy Earth Annual Report 2014
Report of the Audit Committee
Dear Shareholders of Energy Earth Public Company Limited The audit committee of Energy Earth Public Company Limited and its subsidiaries consist of MR. Somkiat Sukdheva as the Chairman of the audit committee, Mr. Suriyaporn Boonchai, Mr. Eknarin Thammaraks, Mr. Thongchai Watanasoponwong as audit committees, Dr. Surapa Taibantuai as the secretary of the audit committee. All the directors are qualified as audit committee according to the regulations and good code of conduct announced by Securities and Exchange Commission and the Stock Exchange of Thailand. Their important responsibility and duty are to review the accuracy and sufficiency of the Company’s financial statement along with the sufficiency of internal control system and the Company’s regulations and good code of conduct.
The Audit Committee had performed their duty required by the Company’s directors, which also comply with the regulations of the Stock Exchange of Thailand. The Company held 4 Audit Committee’s meetings and all Audit Committee had fully attended all of the meetings with the Company’s management and internal audit, of which the important details are as follows:
Review the financial statement of the Company: The Audit Committee had reviewed the financial statement of the Company both quarterly and yearly with the Company’s management and the auditor before presenting to the Company’s directors to ensure the transparency, accuracy, and sufficiency of the accounting data and legal regulations. Notes of the financial statements are also disclosed sufficiently and validated comments are also advised to improve the Company’s future performance. 1. Review the financial statement of the Company quarterly and for the fiscal year 2014. The Audit Committee had inquired and received information from the Company’s management and the auditor about the accuracy of the financial statement and sufficiency of the disclosure, of which the Audit Committee agreed that such financial statements are accurate in information according to the general accounting standard and are sufficient in data disclosure for the benefit of shareholders, investors, or those who use financial statements to make investing decisions.
114
Energy Earth Annual Report 2014
2. Review Operational Performance and Internal Control. To ensure that the performance of the Company is operating sufficiently and reaching the targeted goals by reviewing internal audit report of the year 2014 and evaluating the internal control and risk management according to the international standard COSO-ERM (The Committee of Sponsoring Organizations of the Treadway Commission – Enterprise Risk Management). The Audit Committee had concluded that the Company has sufficient assets management and data disclosure. The internal control is supervised according to a good code of conduct announced by SEC and the Stock Exchange of Thailand and is managed to control the Company’s performance efficiently. 3. Review Internal Audit. To review the job description, range of duty and responsibility of the internal audit. The Audit Committee had concluded that the internal audit system is complied with the good code of conduct of the Stock Exchange of Thailand and had approved the auditing plan of the year 2014, which consist of fundamentals of main management system of the Company and its subsidiaries. The Audit Committee also concluded that the internal audit is sufficient and efficient enough and will ensure that it will keep its standard as an international standard. 4. Review Charter of the Audit Committee The Audit Committee had reviewed charter of the Audit Committee and agreed that charter is complying with the good code of conduct and regulations announced by the Stock Exchange of Thailand and SEC, and there will be no need to make a revision of it. 5. Review Connected Transactions or Transactions that may have Conflicts of Interests To ensure that such transactions are done legally and for the most benefit of the Company. The Audit Committee had concluded that the Management had managed such transactions with transparency with no conflicts of interests for the best benefit of the Company and the shareholders with reasonable price and conditions. The Audit Committee agreed and proposed that such transactions should be disclosed to the Stock Exchange of Thailand publicly. 6. Review the Risk Management The Audit Committee had reviewed the risk management to ensure the sufficient and efficient risk management. The review had shown that the Company’s risk management had been focused, delivered, and improved consistently.
115
Energy Earrth Annual Repoort 2014
7. Selff-Assessment The Audiit Committeee had done seelf-assessmennt, which is too ensure thatt the Audit CCommittee haad performedd its own dduty accordinng to the charrter of the Auudit Committee. The self--assessment had shown that the Auditt Committee had perfoormed their duty effectivelly and sufficieently according to the goood code of coonduct. 8. Revview the Corpporate Governance and tthe Good Coode of Conduct. To ensurre the internaational standaard and suitabbility for the Company’s performance. p 9. Connsider, Propoose to Appoint and Apprrove Compennsation for the t Auditor oof the Fiscal year 2015 To propoose to the Company’s C directors for shhareholders’ approval in the AGM 20014, the Audit Committeee had conssidered to appoint the audditor by conssidering the foollowings: 9.1 Reliability, fam me, previous experience, and qualificaation of the auditor requireed by the Stoock Exchangee oof Thailand. 9.2 Freedom, ressponsibility, and previous performances. The Audit Committeee had agreed to appoint M Mr. Sudawin Panyawongkanti, the lice nsed auditor with licensee number 3534, Ms. Anuthai A Poom msurakul, thee licensed auuditor with license l numbber 3873, orr Mr. Vichienn Gingmontri, the licenssed auditor with w license nnumber 39777 of Price Waater House Cooopers ABS Co., C Ltd., andd Dr. Achm mad Rodi Karttamulia, the licensed l audiitor with licennse number 0102 of ACHMMAD,RASYID,HHISBULLAH & JERRY REEGISTERED PUUBLIC ACCOUNNTANTS to bee the auditorrs for the year 2015. The Auditing Committtee had fullyy input their knowledge, cautiousnesss, and freedoom to review w all financiall statemennts and internnal control, including i enccourage the Company C to perform accoording to a good g code off conduct of a listed company. c Thhe Audit Com mmittee had concluded thhat the direcctors and management off the Com mpany had peerformed theeir duties acccording to a good g code of o conduct too achieve thee Company’ss targets pprofessionallyy. Financial Sttatements, innternal contrrol, internal audit, a and rissk managemeents are alsoo executedd efficiently, accurately, and legally.. Transactioons are done with transsparency and credibility.. Operational performaance is increassing its stand ard to suit thhe business environment cconsistently also. a
(Mr. Somkiat Sukddheva) Chairman of the Audit Committee
116
Eneergy Earth Annuual Report 20144 AUDITOR’’S REPORT To the Shaareholders of Energy Earth Pubblic Company LLimited I have auddited the accom mpanying consollidated and com mpany financial statements of Energy Earth Puublic Company Limited and itss subsidiaries and of Energy Earth E Public Com mpany Limited, wwhich comprise thhe consolidated and company sttatements of finaancial position ass at 31 December 2014, and the related consolidated and coompany statemeents of compreheensive income, cchanges in shareeholders’ equityy and cash fllows for the yeaar then ended, and a a summary oof significant acccounting policiess and other notees. Management’s Responssibility for the Financial Stateements Managemeent is responsible for the prepaaration and fair presentation off these financial statements in aaccordance with Thai Financiall Reporting Standards, and for such internnal control as m management deetermines is neccessary to enabble the preparattion of financiall statementss that are free from f material misstatement, m whhether due to frraud or error. Auditor’s Responsibilityy My responssibility is to expreess an opinion on these financiall statements bassed on my audit. I conducted myy audit in accorddance with Thai Standards on Auditing. Thhose standards require r that I coomply with ethhical requiremennts and plan annd perform the audit to obtainn reasonablee assurance abouut whether the finnancial statemennts are free from m material misstaatement. An audit innvolves performiing procedures to t obtain audit evidence about the amounts and a disclosures iin the financial statements. Thee proceduress selected depend on the audittor’s judgment, including the asssessment of thee risks of materiaal misstatementt of the financiall statementss, whether due to t fraud or error. In making thosee risk assessments, the auditor considers internall control relevannt to the entity’ss preparationn and fair presenntation of the financial statementts in order to deesign audit proceedures that are aappropriate in the circumstances,, but not forr the purpose off expressing an opinion on the efffectiveness of thhe entity’s internnal control. An auudit also includees evaluating thee appropriateeness of accountting policies usedd and the reasonnableness of acccounting estimattes made by maanagement, as well w as evaluatingg the overall presentation of the financial statements. o is sufficcient and approopriate to providde a basis for m my audit opinion. I believe thhat the audit evvidence I have obtained Opinion In my opinnion, the consoolidated and coompany financiaal statements reeferred to abovve present fairlyy, in all materiaal respects, thee consolidateed and comppany financial position of Energy Earth Public Compaany Limited aand its subsiddiaries and off Energy Eartth Public Comppany Limited as at 31 Decembeer 2014, and its consolidated annd company ressults of operatioons and its cashh flows for thhe year then endded in accordannce with Thai Finnancial Reportingg Standards.
Sudwin Paanyawongkhantti Certified PPublic Accountaant (Thailand) No. 3534 PricewaterrhouseCoopers ABAS Ltd. Bangkok 27 February 2015
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Financial Position As at 31 December 2014
Consolidated
Company
31 December
31 December
1 January
31 December
31 December
1 January
2014
2013
2013
2014
2013
2013
Baht
Baht
Baht
Baht
Baht
Baht
Notes Assets Current assets Cash and cash equivalents
6
527,798,988
233,615,506
148,552,060
428,625,875
192,350,771
123,314,512
Trade and other accounts receivable (net)
7
4,352,810,384
5,913,860,362
4,279,916,990
1,330,077,499
1,387,921,903
1,446,040,454
8
1,450,549,747
1,029,339,619
570,796,291
1,220,313,637
1,058,019,421
570,796,286
29 c)
-
-
-
126,854,218
467,489,475
2,417,552,395
6,278,867,063
1,225,111,491
1,964,140,575
11,377,135,265
5,819,355,691
883,346,465
40,871,791
40,910,881
149,121
883,000
Inventories (net) Short-term borrowings to a subsidiary Advance payment for purchase of goods (net)
144,535,299
83,583,676
70,460,213
86,464,753
Other current assets
Value added tax
9
3,037,848
5,735,223
4,753,533
-
Total current assets
12,757,599,329
8,491,245,877
7,038,619,662
14,569,471,247
8,966,158,173
5,482,843,993
Non-current assets Restricted deposits at financial institutions
10
290,150,798
423,917,460
525,303,974
206,593,314
341,720,463
335,633,131
Investments in subsidiaries
11
-
-
-
1,454,880,541
1,384,569,082
1,288,510,295
Investment property (net)
12
175,390,753
174,830,425
163,102,397
-
Property, plant and equipment (net)
13
800,991,705
242,439,517
242,036,581
10,954,058
9,998,181
3,721,282
Intangible assets (net)
14
3,019,378
1,768,831
159,596
3,019,376
1,728,236
73,206
Mining property rights (net)
15
3,897,874,750
4,180,626,337
825,366,458
-
-
Deferred tax assets
16
15,616,893
16,485,621
12,814,348
-
-
286,579
890,680
888,106
236,881
230,580
233,028
5,183,330,856
5,040,958,871
1,769,671,460
1,675,684,170
1,738,246,542
1,634,315,372
17,940,930,185
13,532,204,748
8,808,291,122
16,245,155,417
10,704,404,715
7,117,159,365
Other non-current assets Total non-current assets Total assets
Director _________________________________________
-
Director ____________________________________
(Mr. Khajohnpong Khamdee)
(Mr. Thanawat Patoomsuwan)
118
-
6,144,430
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Financial Position (Cont’d) As at 31 December 2014
Consolidated
Company
31 December
31 December
1 January
31 December
31 December
1 January
2014
2013
2013
2014
2013
2013
Baht
Baht
Baht
Baht
Baht
Baht
17
10,698,785,389
8,470,431,499
5,142,088,765
7,810,158,588
5,685,307,680
3,278,679,290 624,788,665
Notes Liabilities and shareholders’ equity Current liabilities Bank overdrafts and short-term borrowings from financial institutions Trade and other accounts payable Short-term borrowings from a subsidiary
18
515,184,128
384,247,695
233,299,175
1,906,218,317
253,347,412
29 d)
-
-
-
-
-
19
185,373,410
13,877,901
14,194,214
171,993,410
-
1,016,199
Current portions of - long-term borrowings from a financial institution
-
- liabilities under finance lease 2,706,552
2,810,730
2,200,776
1,649,246
1,110,159
330,460
Accrued income tax
agreements (net)
20
67,981,311
206,205,778
304,802,724
63,823,258
151,226,204
124,442,082
Other current liabilities
17,866,188
2,336,302
3,790,680
17,746,518
1,690,195
1,790,975
11,487,896,978
9,079,909,905
5,700,376,334
9,971,589,337
6,092,681,650
4,031,047,671
19
1,113,712,082
16,746,882
30,617,703
1,110,647,082
-
-
20
3,161,745
3,747,810
3,618,788
2,919,577
Total current liabilities Non-current liabilities Long-term borrowings from a financial institution Liabilities under finance lease agreements (net)
2,480,101
620,169 1,260,812
Employee benefit obligations
21
8,408,712
2,316,687
1,926,795
7,317,041
1,405,122
Deferred tax liabilities
16
30,728,920
99,378,510
214,882,965
10,291,142
20,730,723
1,156,011,459
122,189,889
251,046,251
1,131,174,842
24,615,946
1,880,981
12,643,908,437
9,202,099,794
5,951,422,585
11,102,764,179
6,117,297,596
4,032,928,652
Total non-current liabilities Total liabilities
Director _________________________________________
Director ____________________________________
(Mr. Khajohnpong Khamdee)
(Mr. Thanawat Patoomsuwan)
119
-
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Financial Position (Cont’d) As at 31 December 2014
Consolidated
Company
31 December
31 December
1 January
31 December
31 December
1 January
2014
2013
2013
2014
2013
2013
Baht
Baht
Baht
Baht
Baht
Baht
3,027,615,570
3,027,615,570
Note Liabilities and shareholders’ equity (Cont’d) Shareholders’ Equity Share capital Authorised share capital 4,639,103,137 ordinary shares of par Baht 1 each
4,639,103,137
4,639,103,137
3,027,615,570 ordinary shares of par Baht 1 each
3,027,615,570
3,027,615,570
2,971,513,474
-
-
2,971,513,474
-
-
-
2,956,550,376
-
-
2,956,550,376
-
-
-
2,605,495,683
-
-
2,605,495,683
Premium on share capital
966,778,471
959,805,667
796,214,166
966,778,471
959,805,667
796,214,166
Discount on share capital
(1,800,000,000)
(1,800,000,000)
(1,800,000,000)
(1,800,000,000)
(1,800,000,000)
(1,800,000,000)
(186,616,802)
(186,616,802)
(186,616,802)
-
-
-
191,200,000
155,200,000
95,200,000
171,200,000
135,200,000
75,200,000
2,918,098,197
2,160,783,234
1,370,716,041
2,642,734,897
2,244,223,437
1,478,012,420
234,836,393
83,255,340
(25,257,873)
190,164,396
91,327,639
(70,691,556)
5,295,809,733
4,328,977,815
2,855,751,215
5,142,391,238
4,587,107,119
3,084,230,713
1,212,015
1,127,139
1,117,322
-
-
-
5,297,021,748
4,330,104,954
2,856,868,537
5,142,391,238
4,587,107,119
3,084,230,713
17,940,930,185
13,532,204,748
8,808,291,122
16,245,155,417
10,704,404,715
7,117,159,365
Issued and fully paid-up share capital 2,971,513,474 ordinary shares of par Baht 1 each 2,956,550,376 ordinary shares of par Baht 1 each 2,605,495,683 ordinary shares of par Baht 1 each
Adjustment of equity interest under reverse acquisition Retained earnings Appropriated - legal reserve
23
Unappropriated Other components of shareholders’ equity Total parent’s equity Non-controlling interests Total shareholders’ equity Total liabilities and shareholders’ equity
Director _________________________________________
Director ____________________________________
(Mr. Khajohnpong Khamdee)
(Mr. Thanawat Patoomsuwan)
120
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Comprehensive Income For the year ended 31 December 2014
Consolidated 31 December 31 December 2014 2013 Baht Baht
Company 31 December 31 December 2014 2013 Baht Baht
14,910,917,522 (12,689,655,701)
13,504,679,441 (11,277,518,154)
9,086,560,792 (7,398,660,959)
8,230,844,941 (6,439,387,891)
2,221,261,821 6,372,957
2,227,161,287 12,439,716
1,687,899,833 87,903,482
1,791,457,050 258,863,203
Profit before expenses
2,227,634,778
2,239,601,003
1,775,803,315
2,050,320,253
Selling expenses Administrative expenses Net loss on exchange rate
(302,026,242) (302,025,799) (63,278,780)
(236,090,029) (167,331,715) (180,126,110)
(302,026,242) (282,793,240) (25,018,863)
(236,090,029) (125,475,702) (120,554,689)
Total expenses
(667,330,821)
(583,547,854)
(609,838,345)
(482,120,420)
1,560,303,957 (378,943,867)
1,656,053,149 (292,682,279)
1,165,964,970 (301,536,248)
1,568,199,833 (196,964,448)
1,181,360,090 (139,250,209)
1,363,370,870 (252,757,322)
864,428,722 (181,207,220)
1,371,235,385 (284,487,830)
Profit for the year Surplus from land revaluation Exchange differences on translating financial statement
1,042,109,881 151,581,053
1,110,613,548 2,095,725 106,417,488
683,221,502 98,836,757
1,086,747,555 162,019,195
Total comprehensive income for the year
1,193,690,934
1,219,126,761
782,058,259
1,248,766,750
1,042,025,005 84,876
1,110,603,731 9,817
683,221,502 -
1,086,747,555 -
1,042,109,881
1,110,613,548
683,221,502
1,086,747,555
1,193,606,058 84,876
1,219,116,944 9,817
782,058,259 -
1,248,766,750 -
1,193,690,934
1,219,126,761
782,058,259
1,248,766,750
Notes Revenues from sales Cost of goods sold Gross profit Other income
25
Profit before finance costs and income tax Finance costs Profit before income tax Income tax
27
Profit for the year attributable to: Owers of the parent Non-controlling interests
Total comprehensive income attributable to: Owers of the parent Non-controlling interests
Earnings per share for profit attribute to owners of the parent Basic earnings per share
28 a)
0.35
0.39
0.23
0.38
Diluted earnings per share
28 b)
0.35
0.38
0.23
0.37
Director _________________________________________ (Mr. Khajohnpong Khamdee)
121
Director ____________________________________ (Mr. Thanawat Patoomsuwan)
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Changes in Shareholders’ Equity For the year ended 31 December 2014
Authorised, issued and fully paid-up Notes share capital
Premium on share capital
Adjustment of equity interests Discount under on share reverse capital acquisition (1,800,000,000) (186,616,802)
Opening balance as at 1 January 2013 Changes in shareholders’ equity for the year Increase in ordinary share capital Dividend payment 24 Legal reserve 23 Total comprehensive income for the year
2,605,495,683
796,214,166
351,054,693 -
163,591,501 -
Closing balance as at 31 December 2013 Changes in shareholders’ equity for the year Increase in ordinary share capital Dividend payment 24 Legal reserve 23 Total comprehensive income for the year
2,956,550,376
959,805,667
14,963,098 -
6,972,804 -
Closing balance as at 31 December 2014
2,971,513,474
966,778,471
-
Consolidated (Baht) Attributable to owners of the parent Other components of shareholders’ equity Other comprehensive income Exchange Total differences other Retained earnings Surplus on translating components of Appropriated from land financial shareholders’ legal reserve Unappropriated revaluation (net) statement equity
-
(1,800,000,000) (186,616,802)
-
-
(1,800,000,000) (186,616,802)
Total Nonowners of controlling the parent interests
95,200,000
1,370,716,041
44,849,335
(70,107,208)
(25,257,873)
2,855,751,215
60,000,000 -
(260,536,538) (60,000,000) 1,110,603,731
2,095,725
106,417,488
108,513,213
514,646,194 (260,536,538) 1,219,116,944
155,200,000
2,160,783,234
46,945,060
36,310,280
83,255,340
36,000,000 -
(248,710,042) (36,000,000) 1,042,025,005
-
151,581,053
191,200,000
2,918,098,197
46,945,060
187,891,333
Director _________________________________________ (Mr. Khajohnpong Khamdee)
-
2,856,868,537
9,817
514,646,194 (260,536,538) 1,219,126,761
4,328,977,815
1,127,139
4,330,104,954
151,581,053
21,935,902 (248,710,042) 1,193,606,058
84,876
21,935,902 (248,710,042) 1,193,690,934
234,836,393
5,295,809,733
1,212,015
5,297,021,748
Director ____________________________________ (Mr. Thanawat Patoomsuwan)
122
1,117,322
Total
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Changes in Shareholders’ Equity (Cont'd) For the year ended 31 December 2014
Company (Baht)
Notes Opening balance as at 1 January 2013 Changes in shareholders’ equity for the year Increase in ordinary share capital Dividend payment Legal reserve Total comprehensive income for the year Closing balance as at 31 December 2013 Changes in shareholders’ equity for the year Increase in ordinary share capital Dividend payment Legal reserve Total comprehensive income for the year Closing balance as at 31 December 2014
24 23
24 23
Authorised, issued and fully paid-up share capital
Premium on share capital
Discount on share capital
2,605,495,683
796,214,166
(1,800,000,000)
75,200,000
1,478,012,420
Other components of shareholders’ equity Other comprehensive income Exchange differences on translating financial statement . (70,691,556)
351,054,693 -
163,591,501 -
-
60,000,000 -
(260,536,538) (60,000,000) 1,086,747,555
162,019,195
514,646,194 (260,536,538) 1,248,766,750
2,956,550,376
959,805,667
(1,800,000,000)
135,200,000
2,244,223,437
91,327,639
4,587,107,119
14,963,098 -
6,972,804 -
-
36,000,000 -
(248,710,042) (36,000,000) 683,221,502
98,836,757
21,935,902 (248,710,042) 782,058,259
2,971,513,474
966,778,471
(1,800,000,000)
171,200,000
2,642,734,897
190,164,396
5,142,391,238
Director _________________________________________ (Mr. Khajohnpong Khamdee)
Retained earnings Appropriated legal reserve Unappropriated
Director ____________________________________ (Mr. Thanawat Patoomsuwan)
123
Total 3,084,230,713
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Cash Flows For the year ended 31 December 2014
Notes Cash flows from operating activities Profit before income tax Adjustments: Depreciation charge Amortisation charge Amortisation of mining property rights Gain on disposal of fixed assets Loss on write-off of fixed assets Allowance for doubtful accounts Allowance for inventories cost in excess of net realisable value (reversal) Employee benefit obligations Net (gain) loss on unrealised exchange rate Interest income Finance costs
13, 26 14 15, 26
21 25
Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
1,181,360,090
1,363,370,870
864,428,722
1,371,235,385
24,370,605 67,364 299,699,706 (465,976) 194,953 129,212,174
22,988,354 83,822 536,975,123 8,004,923
3,029,625 29,179 6,977 129,396,051
1,215,010 35,162 9,100,819
40,435,872 6,094,269 21,854,848 (5,103,859) 368,793,362
(1,109,628) 389,892 (92,927,720) (8,935,730) 274,940,156
40,435,872 5,911,919 17,370,060 (28,844,779) 292,649,927
(1,109,628) 144,310 (78,051,757) (202,825,764) 183,506,743
2,066,513,408
2,103,780,062
1,324,413,553
1,283,250,280
Changes in working capital - Trade and other accounts receivable - Inventories - Advance payment for purchase of goods - Value added tax - Other current assets - Other non-current assets - Trade and other accounts payable - Other current liabilities
1,507,215,690 (446,085,857) (5,068,636,403) (59,347,184) 2,707,355 603,002 128,131,356 14,234,078
(1,240,738,431) (387,188,717) 818,670,280 (7,497,428) (594,971) 57,045 114,026,945 (1,688,056)
(9,545,225) (190,684,883) (5,525,823,376) (44,579,002) 148,225 (4,190) 1,625,924,708 14,753,076
136,821,671 (413,861,792) (4,531,563,062) 2,768,040 741,579 17,870 (387,196,467) (309,415)
Cash receipts from (used in) operating activities before interest income received, finance costs paid and income tax paid Interest income received Finance costs paid-interest expense Income tax paid
(1,854,664,555) 5,433,103 (392,612,023) (398,687,649)
1,398,826,729 8,935,730 (265,648,602) (285,001,487)
(2,805,397,114) 86,727,883 (314,069,837) (303,758,734)
(3,909,331,296) 254,457,225 (181,499,971) (259,839,665)
Net cash generated (payments) from operating activities
(2,640,531,124)
857,112,370
(3,336,497,802)
(4,096,213,707)
Director _________________________________________ (Mr. Khajohnpong Khamdee)
124
Director ____________________________________ (Mr. Thanawat Patoomsuwan)
Energy Earth Annual Report 2014 Energy Earth Public Company Limited Statement of Cash Flows (Cont’d) For the year ended 31 December 2014
Notes Cash flows from investing activities Decrease in restricted deposits at financial institutions Cash payments to invest in subsidiaries Cash received from short-term borrowings to related parties Cash payments for short-term borrowings to related parties Cash received from sales of assets Cash payments for purchase of property, plant and equipment Cash payments for purchase of intangible assets Cash payments for purchase of mining property right
29 c) 29 c)
Net cash receipts (payments) from investing activities Cash flows from financing activities Increase in bank overdrafts and short-term borrowings from financial institutions Cash received from short-term borrowings from a related party Cash payments for short-term borrowings from a related party Cash received from long-term borrowings from financial institutions Cash payments for long-term borrowings from financial institutions Cash payments for liability under finance lease agreements Cash received from increase in share capital Dividend payments
29 d) 29 d) 19 19
24
Net cash receipts from financing activities Net increase in cash and cash equivalents Exchange differences on translating financial statements Cash and cash equivalents - opening balance Cash and cash equivalents - closing balance
6
Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
135,534,223 467,291 (575,645,728) (1,291,500) -
158,588,481 (4,156,296) (1,686,759) (3,864,149,850)
135,993,938 (52,892,000) 4,521,492,675 (4,180,857,418) (1,607,509) (1,291,500) -
39,695,610 (3,250,000) 15,493,309,810 (13,543,246,890) (3,946,324) (1,686,759) -
(440,935,714)
(3,711,404,424)
420,838,186
1,980,875,447
2,187,983,447 1,280,636,000 (45,906,266) (3,200,198) 21,935,902 (248,710,042)
2,778,934,195 (16,348,266) (2,621,332) 514,646,194 (260,418,411)
2,087,117,068 773,392,411 (773,392,411) 1,280,636,000 (31,726,483) (1,531,391) 21,935,902 (248,710,042)
2,048,191,908 (1,000,000) (511,434) 514,646,194 (260,418,411)
3,192,738,843
3,014,192,380
3,107,721,054
2,300,908,257
111,272,005 182,911,477 233,615,506
159,900,326 (74,836,880) 148,552,060
192,061,438 44,213,666 192,350,771
185,569,997 (116,533,738) 123,314,512
527,798,988
233,615,506
428,625,875
192,350,771
Non-cash transactions: Purchase vehicles under finance lease agreements
2,509,954
Director _________________________________________ (Mr. Khajohnpong Khamdee)
125
-
2,509,954
Director ____________________________________ (Mr. Thanawat Patoomsuwan)
-
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
1
General information
Energy Earth Public Company Limited (“the Company”) is incorporated as a public company in Thailand on 28 April 1995. th The office is located on 43, 12 Floor Thai CC Tower, Room 125-128, South Sathorn Road, Yannawa, Sub-District, Sathorn District, Bangkok, Thailand. The principle business operations of the Company and its subsidiaries engaged in the import and distribution of coal. For reporting purposes, the Company and its subsidiaries are referred to as the “Group”. On 29 January 2013, The Frankfurt stock Exchange-Open Market has approved the Company’s common shares to list in the Frankfurt stock Exchange - Open Market in form of Secondary listing. The Company has used 49% of the paid-up share capital without increasing share capital to trade. The Company was listed on the Market for Alternative Investment of Thailand (MAI). However, on 2 January 2014, the Company obtained an approval to trade ordinary shares of the Stock Exchange of Thailand. These consolidated and company financial statements have been approved by the Board of Directors on 27 February 2015.
2
Accounting policies
The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below:
2.1
Basis of preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Financial Reporting Standards issued under the Accounting Profession Act B.E.2547, and the financial reporting requirements of the Securities and Exchange Commission under Securities and Exchange Act. The consolidated and company financial statements have been prepared under the historical cost convention except land revaluation and employee benefit obligations as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and company financial statements are disclosed in Note 4. An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail. In accordance with Thai Accounting Standard No. 21 “The Effects of Changes in Foreign Exchange Rate”. The Company had determined its functional currency to be the US Dollar. However, the Stock Exchange of Thailand and the Department of Business Development requires all entities to present its financial statements in Thai Baht. A reporting of the Company’s financial statement in its functional currency is presented in Note 32.
126
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.1
Basis of preparation (Cont’d) Comparative figures have been adjusted to conform with changes in presentation in the current year as follows: Consolidated As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of financial position as at 31 December 2013 Assets Trade and other accounts receivable (net) Value added tax Other current assets Intangible assets (net) Other non-current assets
5,959,286,059 43,897,730 2,659,511
(45,425,697) 83,583,676 (38,162,507) 1,768,831 (1,768,831)
5,913,860,362 83,583,676 5,735,223 1,768,831 890,680
2,340,830
(4,528)
2,336,302
Liabilities Other current liabilities
Company As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of financial position as at 31 December 2013 Assets Trade and other accounts receivable (net) Short-term borrowings to a subsidiary Value added tax Other current assets Intangible assets (net) Other non-current assets
1,310,751,767 547,412,994 38,272,058 1,958,816
77,170,136 (79,923,519) 40,871,791 (38,122,937) 1,728,236 (1,728,236)
1,387,921,903 467,489,475 40,871,791 149,121 1,728,236 230,580
1,694,724
(4,529)
1,690,195
Liabilities Other current liabilities
Consolidated As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of comprehensive income for the year ended 31 December 2013 Revenues from sales Cost of goods sold
13,509,707,311 (11,282,546,024)
(5,027,870) 5,027,870
13,504,679,441 (11,277,518,154)
Company As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of comprehensive income for the year ended 31 December 2013 Revenues from sales Cost of goods sold
8,235,872,811 (6,444,415,761)
127
(5,027,870) 5,027,870
8,230,844,941 (6,439,387,891)
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.1
Basis of preparation (Cont’d) Comparative figures have been adjusted to conform with changes in presentation in the current year as follows: (Cont’d) Consolidated As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of financial position as at 1 January 2013 Assets Trade and other accounts receivable (net) Value added tax Other current assets Intangible assets (net) Other non-current assets
4,333,520,153 21,610,583 1,047,702
(53,603,163) 70,460,213 (16,857,050) 159,596 (159,596)
4,279,916,990 70,460,213 4,753,533 159,596 888,106
Company As previously reported Baht
Reclassification Baht
After reclassification Baht
Statement of financial position as at 1 January 2013 Assets Trade and other accounts receivable (net) Short-term borrowings to a subsidiary Value added tax Other current assets Intangible assets (net) Other non-current assets
1,441,885,914 2,445,844,452 17,656,364 306,234
128
4,154,540 28,292,057 40,910,881 (16,773,364) 73,206 (73,206)
1,446,040,454 2,417,552,395 40,910,881 883,000 73,206 233,028
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d) 2.2
New financial reporting standards, interpretations and amendments to new accounting standards and new financial reporting standards 2.2.1 Amendments to accounting standards and new financial reporting standards and related interpretations which are effective for the periods beginning on or after 1 January 2014 are as follows: TAS 1 (revised 2012) TAS 7 (revised 2012) TAS 12 (revised 2012) TAS 17 (revised 2012) TAS 18 (revised 2012) TAS 19 (revised 2012) TAS 21 (revised 2012) TAS 24 (revised 2012) TAS 28 (revised 2012) TAS 31 (revised 2012) TAS 34 (revised 2012) TAS 36 (revised 2012) TAS 38 (revised 2012) TFRS 2 (revised 2012) TFRS 3 (revised 2012) TFRS 5 (revised 2012) TFRS 8 (revised 2012) TFRIC 1 TFRIC 4 TFRIC 5 TFRIC 7 TFRIC 10 TFRIC 12 TFRIC 13 TFRIC 17 TFRIC 18 TSIC 15 TSIC 27 TSIC 29 TSIC 32
Presentation of financial statements Statement of cash flows Income taxes Leases Revenue Employee benefits The effects of changes in foreign exchange rates Related party disclosures Investments in associates Interest in joint ventures Interim financial reporting Impairment of assets Intangible assets Share-based payment Business combinations Non-current assets held for sale and discontinued operations Operating segments Changes in existing decommissioning, restoration and similar liabilities Determining whether an arrangement contains a lease Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds Applying the restatement approach under TAS 29 financial reporting in hyperinflationary economies Interim financial reporting and impairment Service concession arrangements Customer loyalty programmes Distributions of non-cash assets to owners Transfers of assets from customers Operating leases - incentives Evaluating the substance of transactions in the legal form of a lease Service concession arrangements: Disclosure Intangible assets - Web site costs
Commencing on 1 January 2014, the Group has applied the aforementioned amendments to accounting standards and new financial reporting standards and related interpretations. However, the application of those standards has no significant impacts to the financial statements being presented.
129
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.2
New financial reporting standards, interpretations and amendments to new accounting standards and new financial reporting standards (Cont’d) 2.2.2 New financial reporting standards, revised accounting standards and financial reporting standards and related interpretations which are effective for the periods beginning on or after 1 January 2015. The Group is not early adopted these standards: Accounting standards and financial reporting standards and related interpretations with significant changes are as follows: TAS 1 (revised 2014) TAS 16 (revised 2014) TAS 19 (revised 2014) TAS 27 (revised 2014) TAS 28 (revised 2014) TAS 34 (revised 2014) TFRS 10 TFRS 11 TFRS 12 TFRS 13 TFRIC 14 (revised 2014) TFRIC 20
Presentation of financial statements Property, plant and equipment Employee benefits Separate financial statements Investments in associates and joint ventures Interim financial reporting Consolidated financial statements Joint arrangements Disclosure of interest in other entities Fair value measurement TAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction Stripping costs in the production phase of a surface mine
TAS 1 (revised 2014), the main change is that a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. The Group’s management assessed that the revised standard has no impact to the Group. TAS 16 (revised 2014) indicates that spare part, stand-by equipment and servicing equipment are recognised as PPE when they meet the definition of PPE. Otherwise, such items are classified as inventory. The Group’s management assessed that the revised standard has no impact to the Group. TAS 19 (revised 2014), the key changes are (a) actuarial gains and losses are renamed ‘remeasurements’ and will be recognised immediately in ‘other comprehensive income’ (OCI). Actuarial gains and losses will no longer be deferred using the corridor approach or recognised in profit or loss; and (b) past-service costs will be recognised in the period of a plan amendment; unvested benefits will no longer be spread over a future-service period. The Group’s management assessed that the revised standard has no impact to the Group. TAS 27 (revised 2014) provides the requirements relating to separate financial statements. The Group’s management assessed that the revised standard has no impact to the Group. TAS 28 (revised 2014) provides the requirements for investment in associates and joint ventures accounted by equity method. The Group’s management assessed that the revised standard has no impact to the Group. TAS 34 (revised 2014), the key change is the disclosure requirements for operating segment. An entity shall disclose information of a measure of total assets and liabilities for a particular reportable segment if such amounts are regularly provided to the chief operating decision maker and if there has been a material change from the amount disclosed in the last annual financial statements for that reportable segment. The Group’s management assessed that the revised standard has no impact to the Group.
130
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.2
New financial reporting standards, interpretations and amendments to new accounting standards and new financial reporting standards (Cont’d) 2.2.2 New financial reporting standards, revised accounting standards and financial reporting standards and related interpretations which are effective for the periods beginning on or after 1 January 2015. The Group is not early adopted these standards: (Cont’d) Accounting standards and financial reporting standards and related interpretations with significant changes are as follows: (Cont’d)
TFRS 10 has a single definition of control and supersedes the principles of control and consolidation included within the original TAS 27, ‘Consolidated and separate financial statements’. The standard sets out the requirements for when an entity should prepare consolidated financial statements, defines the principles of control, explains how to apply the principles of control and explains the accounting requirements for preparing consolidated financial statements. The key principle in the new standard is that control exists, and consolidation is required, only if the investor possesses power over the investee, has exposure to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns. The Group’s management assessed that the standard has no impact to the Group. TFRS 11 defined that a joint arrangement is a contractual arrangement where at least two parties agree to share control over the activities of the arrangement. Unanimous consent toward decisions about relevant activities between the parties sharing control is a requirement in order to meet the definition of joint control. Joint arrangements can be joint operations or joint ventures. The classification is principle based and depends on the parties’ exposure in relation to the arrangement. When the parties’ exposure to the arrangement only extends to the net assets of the arrangement, the arrangement is a joint venture. Joint operations have rights to assets and obligations for liabilities. Joint operations account for their rights to assets and obligations for liabilities. Joint ventures account for their interest by using the equity method of accounting. The Group’s management assessed that the standard has no impact to the Group. TFRS 12 require entities to disclose information that helps readers of financial statements to evaluate the nature of risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. The Group’s management assessed that the standard has no impact to the Group. TFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across TFRSs. The Group’s management assessed that the standard has no impact to the Group. TFRIC 14 (Revised 2014), this interpretation applies to all post-employment defined benefits and other long-term employee benefits. For the purpose of this interpretation, minimum funding requirements are any requirements to fund a post-employment or other long-term benefit plan. This interpretation explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Group’s management assessed that the revised interpretation has no impact to the Group. TFRIC 20 (Revised 2014), this interpretation sets out the accounting for overburden waste removal (stripping) costs in the production phase of a surface mine. The Group’s management assessed that the interpretation is not relevant to the Group.
131
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d) 2.2
New financial reporting standards, interpretations and amendments to new accounting standards and new financial reporting standards (Cont’d) 2.2.2 New financial reporting standards, revised accounting standards and financial reporting standards and related interpretations which are effective for the periods beginning on or after 1 January 2015. The Group is not early adopted these standards: (Cont’d) Accounting standards and financial reporting standards and related interpretation with minor changes and do not have impact to the Group are as follows: TAS 2 (revised 2014) TAS 7 (revised 2014) TAS 8 (revised 2014) TAS 10 (revised 2014) TAS 11 (revised 2014) TAS 12 (revised 2014) TAS 17 (revised 2014) TAS 18 (revised 2014) TAS 20 (revised 2014) TAS 21 (revised 2014) TAS 23 (revised 2014) TAS 24 (revised 2014) TAS 26 (revised 2014) TAS 29 (revised 2014) TAS 33 (revised 2014) TAS 36 (revised 2014) TAS 37 (revised 2014) TAS 38 (revised 2014) TAS 40 (revised 2014) TFRS 2 (revised 2014) TFRS 3 (revised 2014) TFRS 5 (revised 2014) TFRS 6 (revised 2014) TFRS 8 (revised 2014) TSIC 10 (revised 2014) TSIC 15 (revised 2014) TSIC 25 (revised 2014) TSIC 27 (revised 2014) TSIC 29 (revised 2014) TSIC 31 (revised 2014) TSIC 32 (revised 2014) TFRIC 1 (revised 2014) TFRIC 4 (revised 2014) TFRIC 5 (revised 2014) TFRIC 7 (revised 2014) TFRIC 10 (revised 2014) TFRIC 12 (revised 2014) TFRIC 13 (revised 2014) TFRIC 15 (revised 2014) TFRIC 17 (revised 2014) TFRIC 18 (revised 2014)
Inventories Cash flow statements Accounting policies, changes in accounting estimates and errors Events after the reporting period Construction contract Income taxes Leases Revenue Accounting for government grants & disclosure of government assistance The effects of changes in foreign exchange rates Borrowing costs Related party disclosures Accounting and reporting by retirement benefit plans Financial reporting in hyperinflationary economies Earnings per share Impairment of assets Provisions, contingent liabilities and contingent assets Intangible assets Investment property Share-based payments Business combinations Non-current asset held for sale and discontinued operations Exploration for and evaluation of mineral resources Operating segments Government assistance - No specific relation to operating activities Operating leases - Incentives Income taxes - changes in the tax status of an entity or its shareholders Evaluating the substance of transactions involving the legal form of a lease Service concession arrangements: Disclosures Revenue - barter transactions involving advertising services Intangible assets - Web site costs Changes in existing decommissioning, restoration and similar liabilities Determining whether an arrangement contains a lease Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds Applying the restatement approach under IAS29 Financial reporting in hyperinflationary economies Interim financial reporting and impairment Service concession arrangements Customer loyalty programmes Agreements for the construction of real estate Distributions of non-cash assets to owners Transfers of assets from customers
2.2.3 Revised financial reporting standard which is effective for the period beginning on or after 1 January 2016 is as follow: TFRS 4 (revised 2014)
Insurance contracts
TFRS 4 applies to all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. The Group’s management assessed that the standard is not relevant to the Group.
132
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.3
Group Accounting - Investments in subsidiaries a)
Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than onehalf of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity including the potential voting rights from other companies. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the net value of the Group’s share of the identifiable net assets and liabilities acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. Intercompany transactions, balances and unrealised gains or loss on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. A list of the Group’s principal subsidiaries is set out in Note 11.
b)
Transactions and non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
133
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.4
Foreign currency translation (a)
Functional and presentation currency Items included in the financial statements of each of the Company’s are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Company’s functional currency is US Dollar. However, to comply with the regulation of the Stock Exchange of Thailand and the Department of Business Development, the Company used Thai Baht as its presentation currency.
(b)
Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognised in the profit and loss, any exchange component of that gain or loss is recognised in profit and loss.
(c)
Translation of financial statements The results and financial position of the Group (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: -
2.5
Assets and liabilities for each statement of financial position presented are translated at the average closing rate of buying rate and closing rate at the date of that statement of financial position; Income and expenses for statement of comprehensive income are translated at exchange rates at the dates of transactions; and All resulting exchange differences are recognised as a separate component of equity in the statement of comprehensive income.
Cash and cash equivalents Cash comprises cash on hand, deposit held at call with banks but exclude deposits with banks that are held to maturity, certificates of deposit issued by commercial banks and financial institutions, and restricted deposits. Cash equivalents comprise short-term highly liquid investments with maturities of three months or less from the date of acquisition. In the consolidated and company statements of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.
2.6
Trade accounts receivable Trade accounts receivable are recognised initially at original invoice amount and subsequently measured at the remaining amount less any allowance for doubtful receivables based on a review of all outstanding amounts at the year-end. The amount of the allowance is the differences between the carrying amount of receivable and the amount expected to be collected. Bad debts are recognised in the profit or loss within administrative expense.
134
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.7
Inventories Inventories are presented in the statement of financial position at the lower of cost or net realisable value. Cost is determined on the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts. The cost of finished goods comprises raw materials, direct labour, other directs costs and related production overheads. It excluded borrowing cost. Net realisable value is the estimate of the selling price in the ordinary course of business, less the cost of completion and selling expense. Allowance is made, where necessary, for obsolete, slow-moving and defective inventories.
2.8
Investment Property Property that is held for long-term rental yields or for capital appreciation or both, and that is not in use by the Company in the Group, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property. Investment property is measured initially at its cost, including related transaction costs and borrowing costs. Borrowing costs are incurred for the purpose of acquiring, constructing or producing a qualifying investment property are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway and cease once the asset is substantially complete, or suspended if the development of the asset is suspended. After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods, such as recent prices on less active markets or discounted cash flow projections. Valuations are performed as of the financial position date by professional valuers who hold recognised and relevant professional qualifications and have recent experience in the location and category of the investment property being valued. These valuations form the basis for the carrying amounts in the financial statements. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value. Changes in fair values are recognised in profit or loss. Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in profit or loss within net gain from fair value adjustment on investment property. Changes in fair values are recognised in profit or loss. Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in profit or loss within net gain from fair value adjustment on investment property.
2.9
Property, plant and equipment Land is shown at fair value less allowance for impairment of asset. Fair value is based on valuations from external independent valuers which are conducted every 3 years. Buildings ad equipments are stated at historical cost less accumulated depreciation and allowance for impairment of assets. Initial cost included other direct cost related to assets acquisition. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
135
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.9
Property, plant and equipment (Cont’d) Increases in the carrying amount arising on revaluation are credited to revaluation surplus of asset under the shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus; all other decreases are charged to the statement of comprehensive income. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the statement of comprehensive income) and depreciation based on the asset’s original cost is transferred from revaluation surplus to the retained earnings. Land has not been depreciated. Depreciation of other assets is calculated using the straight-line method to write off the cost of each asset, except land which is considered to have an indefinite useful life, to their residual value over the estimate useful lives as follows: Buildings and buildings improvements Machineries and equipment Furniture, fixtures and office equipment Computer equipment Motor vehicles
5 - 20 years 5 - 10 years 5 years 3, 5 years 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are calculated by comparing net proceeds from disposal of assets with assets’ carrying amount and are taken into other income and other expenses, respectively, in the statement of comprehensive income. On disposal of revalued assets, the related revaluation surplus is transferred to retained earnings.
2.10
Intangible assets Computer software Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group is recognised as intangible assets when the following criteria are met:
it is technically feasible to complete the software product so that it will be available for use; management intends to complete the software product and use or sell it; there is an ability to use or sell the software product; it can be demonstrated how the software product will generate probable future economic benefits; adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an intangible asset in a subsequent period. Computer software development costs recognised as intangible assets are amortised using the straight-line method over their estimated useful lives, which does not exceed 3 years.
136
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d)
2.11
Mining property rights Mining property rights represent cost of purchase for mining rights and the excess of the cost of an acquisition over the fair value of net assets, which in managements’ view represents future economic benefits attributable to the mining rights held by subsidiary. Mining property rights are amortised using the units of coal production.
2.12
Impairment of assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.13
Accounting for long-term leases - where a Group Company is the leasee Finance leases Leases of assets where the lessee has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to principal and to finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance charge is charged to the profit or loss over the lease period. The assets acquired under finance lease is depreciated over the shorter of the useful life of the asset or lease term. Operating leases Leases where the lessor has substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
2.14
Borrowings Borrowings are recognised initially at the proceeds received (net of transaction costs incurred). In subsequent periods, borrowings are stated at amortised cost using the effective yield method. Any difference between proceeds (net transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting date.
137
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d) 2.15
Current and deferred taxes The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period in the countries where the company and subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.16
Employee benefit obligations The Group’s employee benefits comprise of other long-term employee benefits and post-employment benefits both for defined contribution plans and defined benefit plans, determined by periodic actuarial calculations. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. Post-employment benefits -
Defined contribution plans The Group has set up a provident fund, being a defined contribution plan, of which the assets are held in a separate trust fund. The provident fund is funded by payments from employees and by the Group. The Group’s contributions to the provident fund are charged to profit and loss in the years to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
-
Defined benefit plans Under the Labour Law applicable in Thailand and the Group’s employment policy, all employees completing 120 days of service are entitled to severance pay on termination or retrenchment without cause or upon retirement at age 60. The severance pay will be at the rate according to number of years of service as stipulated in the Labor Law which is currently at rate of 300 days of final salary and may be supplemented based on management’s judgement.
138
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d) 2.16
Employee benefit obligations (Cont’d) The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions for defined benefit plans are charged or credited to equity in other comprehensive income in the period in which they arise and for other long-term employee benefits are recognised in profit and loss. Past-service costs are recognised immediately in profit or loss, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.
2.17
Financial assets and financial liabilities Financial assets carried on the statement of financial position include cash and cash equivalents, trade and other accounts receivable, short-term borrowing to a subsidiary, advance payment for purchase of goods, other current assets, restricted deposits at financial institutions and other non-current assets. Financial liabilities carried on the statement of financial position include bank overdrafts, short-term and long-term borrowings from financial institutions, trade and other accounts payable, short-term borrowings from a subsidiary, other current liabilities, liability under finance lease agreements and employee benefit obligations. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.
2.18
Provisions - general Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
2.19
Revenue recognition Revenue comprises the fair value for consideration received or receivable for the sale of goods net of output tax, rebates and discounts. Revenue from sale of goods is recognised when significant risks and reward of ownership of goods are transferred to the buyer. Other revenues earned by the Company are recognised on the following basis: Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group.
139
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
2
Accounting policies (Cont’d) 2.20
Finance costs Finance costs comprise interest expense and fee from short-term and long-term borrowings from a financial institution, interest expense from short-term borrowings from a subsidiary and interest expense from liabilities under finance lease contracts.
2.21
Dividends Dividends and interim dividends are recorded in the consolidated and company’s financial statements in the period in which they are approved by the shareholders and board of directors, respectively.
2.22
Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
3
Financial risk management 3.1
Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by the finance department under policies approved by the Board of Directors. The finance department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and nonderivative financial instruments, and investment excess liquidity. 3.1.1 Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Commencing from 1 January 2013, the Group’s management has determined the US Dollar as the functional currency by considering revenue from and operating expenses use in the primary economic environment in which the entity operates. The Group is exposed to the exchange rate risks from transactions which are denominated in currencies that are not the Company and its subsidiaries’ functional currency. The Group is aware of the risks surrounding financial assets and liabilities denominated in foreign currencies. As a result, the Group has a policy of asset and liability management by which the structure and features of transactions regarding assets, liabilities and shareholders’ equity are aligned with each other. In addition, the Group has considered to manage foreign currency risk with financial derivatives together with the consideration yields and risks arising in each intervals. 3.1.2 Interest rate risk The Group was exposed to interest rate risks because it held deposits to and bank overdraft and short-term and long-term loans from financial institutions. However, the Group believed that the future fluctuation on market interest rate would not provided significant effect to their operation and cash flow; therefore, no financial derivative was adopted to manage such risks.
140
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
3
Financial risk management (Cont’d)
3.1
Financial risk factors (Cont’d)
3.1.3 Credit risk The Group was exposed to credit risk. However, due to the large number and diversity of the entities comprising the Group’s customer base, the Group does not anticipate material losses from its debt collection. The Group estimated the allowance for doubtful accounts from the ending balance of accounts receivable. The estimate was made by considering the customer’s past collection experiences. 3.1.4 Liquidity risk Liquidity risk, or funding risk, is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.
3.2
Fair value estimation When a financial instrument is traded in an active market, its quoted market price provides the best evidence of fair value. The quoted market price for an asset held or liability to be issued is usually the current bid price and, for an asset to be acquired or liability held, it is the current offer or asking price. When the current bid and offer prices are unavailable, the price of the most recent transaction may provide evidence of the current fair value provided that there has not been a significant change in economic circumstances between the transaction date and the reporting date. When the Group has matching asset and liability positions, it may appropriately use mid-market prices as a basis for establishing fair values. When there is infrequent activity in a market, the market is not well established or small volumes are traded relative to the number of trading units of a financial instrument to be valued, quoted market prices may not be indicative of the fair value of the instrument. In these circumstances, as well as when a quoted market price is not available, estimation techniques may be used to determine the fair value with sufficient reliability to satisfy the Group. Techniques that are well established in financial markets include reference to the current market value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. In applying discounted cash flow analysis, an enterprise uses a discount rate equal to the prevailing market rate of interest for financial instruments having substantially the same terms and characteristics, including the creditworthiness of the debtor, the remaining term over which the contractual interest rate is fixed, the remaining term for repayment of the principal and the currency in which payments are to be made. The fair values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group/Company for similar financial instruments.
141
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
4
Critical accounting estimates, assumptions and judgements Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (a)
Deferred tax Deferred tax assets come from the estimation of some temporary difference effects which is probable to utilise tax benefit. Management’s estimation comes from an assumption based on an available future income and any factors or external exposures which might affect the projected future performance. The Group also considered the utilisation of the past tax losses and assessed the estimation on a conservative basis.
(b)
Employee benefit obligations The present value of the employee benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for employee benefits include the discount rate. Any changes in these assumptions will have an impact on the carrying amount of employee benefit obligations. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the employee benefit obligations. In determining the appropriate discount rate, the Group considers the market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related employee benefit liability. Other key assumptions for employee benefit obligations are based in part on current market conditions. Additional information is disclosed in Note 21.
5
Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
6
Cash and cash equivalents Consolidated 2014 Baht Cash on hand Cash at banks - current accounts - savings accounts - 6-month fixed deposits accounts
2013 Baht
Company 2014 Baht
2013 Baht
313,381
232,243
190,000
60,000
33,546,394 492,769,608 1,169,605
13,322,210 220,059,020 2,033
23,954,051 403,312,219 1,169,605
13,268,646 179,021,092 1,033
527,798,988
233,615,506
428,625,875
192,350,771
As at 31 December 2014, cash at banks - savings accounts carry interest at the rates of 0.250% - 0.875% per annum (2013 : 0.125% - 0.875% per annum) As at 31 December 2014, fixed deposits accounts carry interest at the rates of 1.350% - 1.800% per annum (2013 : 1.125%1.550% per annum).
142
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
7
Trade and other accounts receivable (net) Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
Trade accounts receivable - a related company (Note 29 b)) - other companies
4,357,738,895
Less Allowance for doubtful accounts
4,357,738,895 5,906,896,266 1,271,651,302 1,247,064,628 (41,143,307) (12,229,133) (38,198,870) (9,100,819)
Other accounts receivable - related companies (Note 29 b)) - other companies Prepaid expenses Accrued interest income - a related company (Note 29 c))
5,906,896,266
60,737,624 1,210,913,678
1,247,064,628
4,316,595,588
5,894,667,133
1,233,452,432
1,237,963,809
579,849 35,634,947
7,858,541 11,334,688
58,499,433 459,936 15,625,283
53,611,029 6,794,588 9,628,958
-
-
22,040,415
79,923,519
1,330,077,499
1,387,921,903
4,352,810,384
5,913,860,362
Trade accounts receivable classified by aging are as follows: Consolidated 2014 Baht Undue Overdue Up to 3 months Over 3 to 6 months Over 6 to 12 months Over 12 months
2013 Baht
Company 2014 Baht
2013 Baht
4,052,572,360
2,916,771,992
969,429,205
593,179,307
253,314,355 12,739,046 39,113,134
2,659,304,681 310,180,807 17,082,797 3,555,989
253,314,355 12,739,046 36,168,696
613,797,014 22,577,836 17,082,797 427,674
4,357,738,895
5,906,896,266
1,271,651,302
1,247,064,628
As at 31 December 2014 and 2013, the Company has trade accounts receivable that have been factored with a financial institution amounting to Baht 22.75 million and Baht 8.80 million, respectively.
8
Inventories (net) Consolidated 2014 Baht Finished goods Less Allowance for inventories cost in excess of net realisable value Raw materials Fuel Finished goods in transit
587,137,761 (40,435,872)
2013 Baht
263,287,032 -
Company 2014 Baht 587,137,761 (40,435,872)
2013 Baht
263,287,032 -
546,701,889 513,372,218 122,310 390,353,330
263,287,032 765,183,267 869,320 -
546,701,889 436,892,500 122,310 236,596,938
263,287,032 793,863,069 869,320 -
1,450,549,747
1,029,339,619
1,220,313,637
1,058,019,421
143
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
9
Value added tax Consolidated 2014 Baht Undue input tax Value added tax receivables
10
2013 Baht
Company 2014 Baht
2013 Baht
3,253,921 141,281,378
38,162,508 45,421,168
3,235,004 83,229,749
38,122,937 2,748,854
144,535,299
83,583,676
86,464,753
40,871,791
Restricted deposits at financial institutions
As at 31 December 2014, the Group and the Company used the savings accounts and the 3-month to 6-month restricted deposits at financial institutions with interest rate of 0.625% -1.800% per annum (2013 : 0.500% - 1.550% per annum) in the amount of Baht 290.15 million and Baht 206.59 million, respectively (2013 : Baht 423.92 million and Baht 341.72 million, respectively) to secure as collateral for credit facilities from financial institutions (Note 17) and the usage of electricity (Note 31 c)).
144
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
11
Investments in subsidiaries Company Paid-up capital (amount) Type of Business
Incorporated in
Currency
2014
2013
% of holding 2014 2013 % %
Paid-up capital 2014 2013 Baht Baht
Cost method 2014 Baht
2013 Baht
Energy Perfect Co., Ltd.
Import and distribution of coal
Thailand
THB
200,000,000
200,000,000
100.00
100.00
200,000,000
200,000,000
218,670,187
216,778,225
PT. TRI TUNGGAL PITRIATI
Mining of coal
Republic of Indonesia
IDR
8,521,000,000
8,521,000,000
99.90
99.90
1,102,650,620
1,102,650,620
1,174,545,808
1,164,383,490
100.00
Earth Power Plants Co., Ltd.
Investing in Power Plant business
Thailand
THB
3,250,000
3,250,000
100.00
3,250,000
3,250,000
3,437,105
3,407,367
Energy Earth (Hong Kong) Co., Ltd.
International coal trading
Hong Kong
HKD
1,000,000
-
100.00
-
4,210,500
-
4,277,960
-
Guangdong Energy Earth Co., Ltd.
Import and distribution of coal
Republic of China
CNY
10,000,000
-
100.00
-
52,780,000
-
Total
53,949,481
-
1,454,880,541
1,384,569,082
The movement of investments in subsidiaries for the years ended 31 December 2014 and 2013 comprises the following: Company 2014 Baht
2013 Baht
Opening net book value Cash paid for investment in Earth Power Plants Co., Ltd. Cash paid for investment in Energy Earth (Hong Kong) Co., Ltd. Cash paid for investment in Guangdong Energy Earth Co., Ltd. Exchange difference on translating financial statement
1,384,569,082 4,210,500 52,780,000 13,320,959
1,288,510,295 3,250,000 92,808,787
Closing net book value
1,454,880,541
1,384,569,082
The Board of Directors’ Meeting held on 7 June 2013 approved to establish Earth Power Plants Co., Ltd. at the authorised share capital of Baht 10.00 million (1.00 million ordinary shares at Baht 10.00 par value). The Company had already paid in the amount of Baht 3.25 per share, amounting to Baht 3.25 million. The Board of Directors’ Meeting held on 28 February 2014 approved to establish Energy Earth (Hong Kong) Co., Ltd. at the authorised share capital of Hong Kong Dollar 1.00 million (1.00 million ordinary shares at Hong Kong Dollar 1 par value). The Company had already paid in the amount of Hong Kong Dollar 1.00 per share, amounting to Hong Kong Dollar 1.00 million (equivalent to Baht 4,210,500). As at 8 September 2014, Energy Earth (Hong Kong) Co., Ltd. transformed a Company Limited into a Public Company Limited. The Board of Directors’ Meeting held on 1 April 2014 approved to establish Guangdong Energy Earth Co., Ltd. at the authorised share capital of China Yuan 10.00 million. The Company had already paid in the amounting to China Yuan 10.00 million (equivalent to Baht 52,780,000).
145
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
12
Investment property (net)
Land and land improvement As at 1 January 2013 Cost or revalued amount Exchange differences on translating financial statement
140,500,000 (9,812,395)
Opening net book amount For the year ended 31 December 2013 Opening net book amount Exchange differences on translating financial statement Closing net book amount As at 31 December 2013 Cost or revalued amount Exchange differences on translating financial statement
For the year ended 31 December 2014 Opening net book amount Exchange differences on translating financial statement Closing net book amount As at 31 December 2014 Cost or revalued amount Exchange differences on translating financial statement
(551,096)
173,465,888 (10,363,491)
32,414,792
163,102,397
130,687,605
32,414,792
163,102,397
9,397,201
2,330,827
11,728,028
140,084,806
34,745,619
174,830,425
140,500,000
32,965,888
173,465,888
1,779,731
1,364,537
140,084,806
34,745,619
174,830,425
140,084,806
34,745,619
174,830,425
257,082
303,246
560,328
140,341,888
35,048,865
175,390,753
140,500,000
32,965,888
173,465,888
2,082,977
1,924,865
35,048,865
175,390,753
(158,112) 140,341,888
Closing net book amount
32,965,888
Total
130,687,605
(415,194)
Closing net book amount
Consolidated (Baht) Work in progress
As at 31 December 2014 and 2013, investment property represents land, land improvement and construction in progress that are not used in operations of a subsidiary of Baht 175.39 million and Baht 174.83 million, respectively is mortgaged as collateral for short-term borrowings and long-term borrowings from a financial institution (Notes 17 and 19).
146
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
13
Property, plant and equipment (net)
Land As at 31 December 2012 Cost or revalued amount Less Accumulated depreciation Allowance for impairment of assets Exchange differences on translating financial statement
96,955,625 (4,269,691)
Buildings and building improvement 91,374,412 (18,745,116) -
Machineries and equipment
Consolidated (Baht) Furniture, fixtures and office Computer equipment equipment
110,487,744 (36,123,475) (9,577,535)
2,013,936 (1,002,046) -
1,971,091 (1,035,420) -
18,086,518 (8,483,927) (149,532)
Motor vehicles
Work in progress 187,977 -
88,450
321,131
(24,136)
(32,071)
(7,354)
72,717,746 -
65,107,865 3,309,041
987,754 -
903,600 -
9,453,059 -
180,623 -
(3,309,041)
-
-
-
-
Total 321,077,303 (65,389,984) (9,577,535) (4,073,203)
Opening net book amount (before reclassification) Reclassification - accumulated depreciation - allowance for impairment of assets
92,685,934 -
Opening net book amount
92,685,934
72,717,746
65,107,865
987,754
903,600
9,453,059
180,623
242,036,581
For the year ended 31 December 2013 Opening net book amount Additions Depreciation charge (Note 26) Exchange differences on translating financial statement
92,685,934 6,664,675
72,717,746 983,214 (8,696,411) 4,536,609
65,107,865 194,655 (10,013,904) 4,058,737
987,754 778,259 (366,177) 93,463
903,600 595,116 (432,543) 100,167
9,453,059 4,677,000 (3,479,319) 696,401
180,623 12,994
242,036,581 7,228,244 (22,988,354) 16,163,046
Closing net book amount
99,350,609
69,541,158
59,347,353
1,493,299
1,166,340
11,347,141
193,617
242,439,517
96,955,625 -
92,357,626 (27,441,527) -
110,682,399 (42,828,338) (12,886,576)
2,792,195 (1,368,223) -
2,566,207 (1,467,963) -
22,763,518 (11,963,246) -
187,977 -
328,305,547 (85,069,297) (12,886,576)
2,394,984
4,625,059
4,379,868
69,327
68,096
546,869
5,640
12,089,843
99,350,609
69,541,158
59,347,353
1,493,299
1,166,340
11,347,141
193,617
242,439,517
As at 31 December 2013 Cost or revalued amount Less Accumulated depreciation Allowance for impairment of assets Exchange differences on translating financial statement Net book amount
-
-
147
242,036,581 3,309,041 (3,309,041)
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
13
Property, plant and equipment (net) (Cont’d)
Land For the year ended 31 December 2014 Opening net book amount Additions Disposal - cost - accumulated depreciation Write-off - cost - accumulated depreciation Depreciation charge (Note 26) Exchange differences on translating financial statement Closing net book amount As at 31 December 2014 Cost or revalued amount Less Accumulated depreciation Allowance for impairment of assets Exchange differences on translating financial statement Net book amount
Buildings and building improvement
Machineries and equipment
Consolidated (Baht) Furniture, fixtures and office Computer equipment equipment
Motor vehicles
Work in progress
Total
99,350,609 867,097
69,541,158 (8,760,801) (193,088)
59,347,353 562,000 (9,839,664) (574,706)
1,493,299 344,657 (19,050) 12,073 (516,826) (15,109)
1,166,340 440,002 (655,326) (33,275)
11,347,141 3,358,000 (1,188,000) 1,186,685 (4,597,988) (183,731)
193,617 573,451,023 (187,977) 5,096,192
242,439,517 578,155,682 (1,188,000) 1,186,685 (207,027) 12,073 (24,370,605) 4,963,380
100,217,706
60,587,269
49,494,983
1,299,044
917,741
9,922,107
578,552,855
800,991,705
96,955,625 -
92,357,626 (36,202,328) -
111,244,399 (52,668,002) (12,886,576)
3,117,802 (1,872,976) -
24,933,518 (15,374,549) -
573,451,023 -
905,066,202 (108,241,144) (12,886,576)
3,262,081
4,431,971
3,805,162
54,218
34,821
363,138
5,101,832
17,053,223
100,217,706
60,587,269
49,494,983
1,299,044
917,741
9,922,107
578,552,855
800,991,705
148
3,006,209 (2,123,289) -
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
13
Property, plant and equipment (net) (Cont’d)
Land As at 31 December 2012 Cost or revalued amount Less Accumulated depreciation Exchange differences on translating financial statement
Buildings and building improvement
Machineries and equipment
Company (Baht) Furniture, fixtures and office Computer equipment equipment
Motor vehicles
Work in progress
Total
-
-
21,000 (608)
575,573 (126,906)
398,230 (72,802)
3,574,630 (622,129)
-
4,569,433 (822,445)
-
-
(30)
(1,893)
(5,493)
(18,290)
-
(25,706)
Net book amount
-
-
For the year ended 31 December 2013 Opening net book amount Additions Depreciation charge (Note 26) Exchange differences on translating financial statement
-
Closing net book amount As at 31 December 2013 Cost or revalued amount Less Accumulated depreciation Exchange differences on translating financial statement Net book amount
20,362
446,774
319,935
2,934,211
-
3,721,282
983,214 (18,096) 22,268
20,362 (4,199) 1,507
446,774 778,259 (152,644) 60,084
319,935 579,799 (183,127) 63,596
2,934,211 4,677,000 (856,944) 326,182
-
3,721,282 7,018,272 (1,215,010) 473,637
-
987,386
17,670
1,132,473
780,203
7,080,449
-
9,998,181
-
983,214 (18,096)
21,000 (4,807)
1,353,832 (279,550)
978,029 (255,929)
8,251,630 (1,479,073)
-
11,587,705 (2,037,455)
-
22,268
1,477
58,191
58,103
307,892
-
447,931
-
987,386
17,670
1,132,473
780,203
7,080,449
-
9,998,181
149
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
13
Property, plant and equipment (net) (Cont’d)
Land
Buildings and building improvement
Machineries and equipment
Company (Baht) Furniture, fixtures and office Computer equipment equipment
Motor vehicles
Work in progress
Total
For the year ended 31 December 2014 Opening net book amount Additions Write-off - cost - accumulated depreciation Depreciation charge (Note 26) Exchange differences on translating financial statement
-
987,386 (98,321) 5,017
17,670 (4,199) (523)
1,132,473 319,461 (19,050) 12,073 (304,705) (10,641)
780,203 440,002 (414,555) (28,649)
7,080,449 3,358,000 (2,207,845) (90,188)
-
9,998,181 4,117,463 (19,050) 12,073 (3,029,625) (124,984)
Closing net book amount
-
894,082
12,948
1,129,611
777,001
8,140,416
-
10,954,058
-
983,214 (116,417)
21,000 (9,006)
1,654,243 (572,182)
1,418,031 (670,484)
11,609,630 (3,686,918)
-
15,686,118 (5,055,007)
-
27,285
954
47,550
29,454
217,704
-
322,947
-
894,082
12,948
1,129,611
777,001
8,140,416
-
10,954,058
As at 31 December 2014 Cost or revalued amount Less Accumulated depreciation Exchange differences on translating financial statement Net book amount
As at 31 December 2014, the gross carrying amount of fully depreciated plant and equipment that are still in used as included in the consolidated financial statements were Baht 6,998,035 (2013 : Baht 3,692,263).
150
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
13
Property, plant and equipment (net) (Cont’d)
Assets under the financial leasing whereas the Company and the subsidiaries are the lessee which already included in the previous table are the motor vehicles and office equipments as follows : Consolidated 2014 Baht Cost of the assets under the financial leasing Less Depreciation expense Net book amount
2013 Baht
Company 2014 Baht
2013 Baht
20,332,290 (11,734,810)
16,807,000 (7,728,000)
10,036,160 (2,906,699)
6,600,000 (1,017,000)
8,597,480
9,079,000
7,129,461
5,583,000
As at 31 December 2014 and 2013, property, plant and equipment of the Group which has the net book amount of Baht 164.86 million and Baht 168.04 million, respectively are mortgaged to guarantee the credit for short-term and long-term loans from the financial institutions (Note 17 and Note 19).
14
Intangible assets (net) Computer software Consolidated Company Baht Baht As at 31 December 2012 Cost Less Accumulated amortisation Exchange differences on translating financial statement Net book amount
270,800 (109,132) (2,072)
105,500 (30,684) (1,610)
159,596
73,206
For the year ended 31 December 2013 Opening net book amount Additions Amortisation charge Exchange differences on translating financial statement
159,596 1,605,000 (83,822) 88,057
73,206 1,605,000 (35,162) 85,192
Closing net book amount
1,768,831
1,728,236
As at 31 December 2013 Cost Less Accumulated amortisation Exchange differences on translating financial statement
1,875,800 (192,954) 85,985
1,710,500 (65,846) 83,582
Net book amount
1,768,831
1,728,236
For the year ended 31 December 2014 Opening net book amount Additions Amortisation charge Exchange differences on translating financial statement
1,768,831 1,291,500 (67,364) 26,411
1,728,236 1,291,500 (29,179) 28,819
Closing net book amount
3,019,378
3,019,376
As at 31 December 2014 Cost Less Accumulated amortisation Exchange differences on translating financial statement
3,167,300 (260,318) 112,396
3,002,000 (95,025) 112,401
Net book amount
3,019,378
3,019,376
151
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
15
Mining property rights (net) Consolidated Baht As at 31 December 2012 Cost Less Accumulated amortisation Exchange differences on translating financial statement
1,103,721,916 (267,433,837) (10,921,621) 825,366,458
Net book amount For the year ended 31 December 2013 Opening net book amount Additions Amortisation charge (Note 26) Exchange differences on translating financial statement
825,366,458 3,864,149,850 (536,975,123) 28,085,152
Closing net book amount
4,180,626,337
As at 31 December 2013 Cost Less Accumulated amortisation Exchange differences on translating financial statement
4,967,871,766 (804,408,960) 17,163,531
Net book amount
4,180,626,337
For the year ended 31 December 2014 Opening net book amount Additions Amortisation charge (Note 26) Exchange differences on translating financial statement
4,180,626,337 (299,699,706) 16,948,119
Closing net book amount
3,897,874,750
As at 31 December 2014 Cost Less Accumulated amortisation Exchange differences on translating financial statement
4,967,871,766 (1,104,108,666) 34,111,650 3,897,874,750
Net book amount 16
Deferred taxes (net) The analysis of deferred tax assets and liabilities (net) as at 31 December 2014 and 2013 are as follows: Consolidated 2014 Baht Deferred tax assets: Deferred tax assets to be recovered within 12 months Deferred tax assets to be recovered after more than 12 months Deferred tax liabilities: Deferred tax liabilities to be settled within 12 months Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities (net)
2013 Baht
Company 2014 Baht
2013 Baht
15,582,415
7,169,950
-
-
39,134,156
13,684,123
37,249,956
2,101,188
54,716,571
20,854,073
37,249,956
2,101,188
-
-
-
-
(69,828,598)
(103,746,962)
(47,541,098)
(22,831,911)
(69,828,598)
(103,746,962)
(47,541,098)
(22,831,911)
(15,112,027)
(82,892,889)
(10,291,142)
(20,730,723)
152
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
16
Deferred taxes (net) (Cont’d)
The Royal Decrees issued on 21 December 2011, announces that a Company uses corporate income tax rate of 20% for two accounting periods beginning on or after 1 January 2013. Subsequently, a Royal Decrees was issued on 1 November 2014, to continue to use the corporate income tax rate of 20% for the accounting period beginning between 1 January 2015 and 31 December 2015. Then, deferred tax expected to be recovered more than 12 months after the fiscal year ended 31 December 2014 have been measured using a tax rate 20%. The movement of deferred tax assets and deferred tax liabilities for the years ended 31 December 2014 and 2013 comprises the following : Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
Opening balance Increase/(decrease) to the statement of comprehensive income (Note 27) Increase/(decrease) to the shareholders’ equity
(82,892,889)
(202,068,617)
(20,730,723)
6,144,428
118,066,122 (50,285,260)
134,453,999 (15,278,271)
35,148,768 (24,709,187)
2,135,960 (29,011,111)
Closing balance
(15,112,027)
(82,892,889)
(10,291,142)
(20,730,723)
The deferred tax assets and liabilities as at 31 December 2014 and 2013 were calculated from temporary difference by using liability method and tax rate of 20%. Consolidated (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 2014 income equity Baht Baht Baht Deferred tax assets: Allowance for doubtful accounts Allowance for declining in inventories Allowance for impairment of assets Employee benefit obligations Accumulated taxable loss for 5 years Unrealised profit in inventories Exchange differences on translating financial statement Total deferred tax assets Deferred tax liabilities: Surplus from revaluation of land Amortisation of mining property rights Exchange differences on translating financial statement Total deferred tax liabilities Deferred tax liabilities (net)
2,445,827 1,475,507 467,225 16,868 7,169,950 9,278,696
25,842,436 8,087,174 (440,000) 1,221,510 17,610 8,412,464 -
20,854,073
43,141,194
(11,736,265) (74,924,928)
74,924,928
(17,085,769)
-
(9,278,696) (9,278,696) -
31 December 2014 Baht 28,288,263 8,087,174 1,035,507 1,688,735 34,478 15,582,414 54,716,571 (11,736,265) -
(41,006,564)
(58,092,333)
(103,746,962)
74,924,928
(41,006,564)
(69,828,598)
(82,892,889)
118,066,122
(50,285,260)
(15,112,027)
153
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
16
Deferred income tax (net) (Cont’d)
The movement of deferred tax assets and deferred tax liabilities for the years ended 31 December 2014 and 2013 comprises the following : (Cont’d) Consolidated (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 2013 income equity Baht Baht Baht Deferred tax assets: Allowance for doubtful accounts Allowance for impairment of assets Allowance for declining in inventories Employee benefit obligations Accumulated taxable loss for 5 years Unrealised profit in inventories Exchange differences on translating financial statement Total deferred tax assets Deferred tax liabilities: Employee benefit obligations Surplus from revaluation of land Amortisation of mining property rights Exchange differences on translating financial statement Total deferred tax liabilities Deferred tax liabilities (net)
971,482 2,202,833 255,214 153,181 -
1,474,345 (727,326) (255,214) 314,044 16,868 7,169,950
9,231,638
-
12,814,348
(308,365) (13,496,705) (201,077,895) -
-
9,278,696
7,992,667
47,058
20,854,073
308,365 126,152,967
1,760,440 -
(11,736,265) (74,924,928)
(17,085,769)
(17,085,769)
-
(214,882,965)
126,461,332
(15,325,329)
(103,746,962)
(202,068,617)
134,453,999
(15,278,271)
(82,892,889)
Deferred tax assets: Allowance for doubtful accounts Allowance for declining in inventories Employee benefit obligations Total deferred tax assets
Total deferred tax liabilities Deferred tax liabilities (net)
2,445,827 1,475,507 467,225 16,868 7,169,950
47,058
Company (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 2014 income equity Baht Baht Baht
Deferred tax liabilities: Exchange differences on translating financial statement
31 December 2013 Baht
31 December 2014 Baht
1,820,164 281,024
25,879,210 8,087,174 1,182,384
-
27,699,374 8,087,174 1,463,408
2,101,188
35,148,768
-
37,249,956
(22,831,911)
-
(24,709,187)
(47,541,098)
(22,831,911)
-
(24,709,187)
(47,541,098)
(24,709,187)
(10,291,142)
(20,730,723)
154
35,148,768
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
16
Deferred income tax (net) (Cont’d)
The movement of deferred tax assets and deferred tax liabilities for the years ended 31 December 2014 and 2013 comprises the following : (Cont’d) Company (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 2013 income equity Baht Baht Baht Deferred tax assets: Allowance for doubtful accounts Allowance for declining in inventories Employee benefit obligations Exchange differences on translating financial statement
255,214 -
1,820,164 (255,214) 281,024
6,179,200
-
6,434,414
Total deferred tax assets Deferred tax liabilities: Surplus from revaluation of land Exchange differences on translating financial statement Total deferred tax liabilities
1,845,974
-
1,820,164 281,024
(6,179,200)
-
(6,179,200)
2,101,188
(289,986)
289,986
-
-
(22,831,911)
(22,831,911)
(289,986)
289,986
(22,831,911)
(22,831,911)
2,135,960
(29,011,111)
(20,730,723)
6,144,428
Deferred tax liabilities (net)
31 December 2013 Baht
-
-
Deferred tax asset and deferred tax liabilities presented by net tax group for the years ended 31 December 2014 and 2013 comprises the following: Consolidated 2014 Baht Deferred tax assets (net) Deferred tax liabilities (net)
17
2013 Baht
Company 2014 Baht
2013 Baht
15,616,893 (30,728,920)
16,485,621 (99,378,510)
(10,291,142)
(20,730,723)
(15,112,027)
(82,892,889)
(10,291,142)
(20,730,723)
Bank overdrafts and short-term borrowings from financial institutions Consolidated 2014 Baht Bank overdrafts Bills of exchange Trust receipts Accounts payable factoring Packing credits Total
2013 Baht
Company 2014 Baht
2013 Baht
14,059 2,065,991,226 5,115,168,448 20,471,393 3,497,140,263
26,009,719 564,695,373 3,541,552,274 7,918,988 4,330,255,145
14,059 2,065,991,226 5,115,168,448 20,471,393 608,513,462
26,009,719 564,695,373 3,541,552,274 7,918,988 1,545,131,326
10,698,785,389
8,470,431,499
7,810,158,588
5,685,307,680
155
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
17
Bank overdrafts and short-term borrowings from financial institutions (Cont’d)
The movement of bank overdrafts and short-term borrowings from financial institutions for the years ended 31 December 2014 and 2013 are as follows:
Bank overdrafts Baht Opening net book amount Addition during the year Repayment during the year Exchange differences on translating financial statement
Bills of exchange Baht
26,009,719 4,676,504,690 (4,702,285,953) (214,397)
Consolidated 2014 Accounts payable Trust receipts factoring Baht Baht
564,695,373 1,624,644,653 (99,383,752) 43,730
3,541,552,274 11,993,960,401 (10,486,635,755) 66,291,528
7,918,988 2,139,473,517 (2,126,921,107) (5)
Packing credits Baht
Total Baht
4,330,255,145 9,757,535,725 (10,634,192,001) 43,541,394
8,470,431,499 30,192,118,986 (28,049,418,568) 109,662,250
Deferred interest expense
14,059 -
2,090,000,004 (24,008,778)
5,115,168,448 -
20,471,393 -
3,497,140,263 -
10,722,794,167 (24,008,778)
Closing net book amount
14,059
2,065,991,226
5,115,168,448
20,471,393
3,497,140,263
10,698,785,389
Consolidated 2013 Accounts payable Trust receipts factoring Baht Baht
Packing credits Baht
Total Baht
Bank overdrafts Baht Opening net book amount Addition during the year Repayment during the year Exchange differences on translating financial statement
Bills of exchange Baht
52,991,504 4,239,833,080 (4,267,029,262) 214,397
412,040,133 727,984,631 (570,024,764) (43,726)
2,297,812,974 8,641,157,264 (7,397,417,964) -
197,629,463 1,848,231,362 (2,037,941,837) -
2,181,614,691 9,024,540,626 (6,984,908,394) 109,008,222
5,142,088,765 24,481,746,963 (21,257,322,221) 109,178,893
Deferred interest expense
26,009,719 -
569,956,274 (5,260,901)
3,541,552,274 -
7,918,988 -
4,330,255,145 -
8,475,692,400 (5,260,901)
Closing net book amount
26,009,719
564,695,373
3,541,552,274
7,918,988
4,330,255,145
8,470,431,499
156
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
17
Bank overdrafts and short-term borrowings from financial institutions (Cont’d)
The movement of bank overdrafts and short-term borrowings from financial institutions for the years ended 31 December 2014 and 2013 are as follows: (Cont’d) Company 2014 Bank overdrafts Baht Opening net book amount Addition during the year Repayment during the year Exchange differences on translating financial statement
Bills of exchange Baht
26,009,719 4,676,504,690 (4,702,285,953) (214,397)
Accounts payable factoring Baht
Trust receipts Baht
564,695,373 1,624,644,653 (99,383,752) 43,730
3,541,552,274 11,993,960,401 (10,486,635,755) 66,291,528
7,918,988 2,139,473,517 (2,126,921,107) (5)
Packing credits Baht 1,545,131,326 3,900,604,805 (4,841,016,857) 3,794,188
Total Baht 5,685,307,680 24,335,188,066 (22,256,243,424) 69,915,044
Deferred interest expense
14,059 -
2,090,000,004 (24,008,778)
5,115,168,448 -
20,471,393 -
608,513,462 -
7,834,167,366 (24,008,778)
Closing net book amount
14,059
2,065,991,226
5,115,168,448
20,471,393
608,513,462
7,810,158,588
Accounts payable factoring Baht
Packing credits Baht
Total Baht
Company 2013 Bank overdrafts Baht Opening net book amount Addition during the year Repayment during the year Exchange differences on translating financial statement
Bills of exchange Baht
28,584,837 4,138,958,276 (4,141,747,791) 214,397
Trust receipts Baht
362,040,133 361,984,631 (154,024,764) (43,726)
2,025,602,207 7,199,437,554 (5,683,487,487) -
197,629,463 1,848,231,362 (2,037,941,837) -
664,822,650 4,256,739,380 (3,376,430,704) -
3,278,679,290 17,805,351,203 (15,393,632,583) 170,671
Deferred interest expense
26,009,719 -
569,956,274 (5,260,901)
3,541,552,274 -
7,918,988 -
1,545,131,326 -
5,690,568,581 (5,260,901)
Closing net book amount
26,009,719
564,695,373
3,541,552,274
7,918,988
1,545,131,326
5,685,307,680
157
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
17
Bank overdrafts and short-term borrowings from financial institutions (Cont’d)
Bank overdrafts and short-term borrowings from financial institutions bear interest as follows: Consolidated and Company Interest rate (% per annum) 2014 2013 7.250 - 7.875 4.500 - 5.000 1.827 - 3.700 7.125 3.050 - 5.830
Bank overdrafts Bills of exchange Trust receipts Accounts payable factoring Packing credits
7.375 - 7.875 4.600 - 5.100 3.200 - 7.000 7.125 2.760 - 7.375
As at 31 December 2014, the Group has overdrafts facilities, packing credits and the short-term borrowings from financial institutions amounting to Baht 12,201 million (2013 : amounting to Baht 12,621 million). The borrowings charged interest at the rate of floating interest rate. The overdrafts facilities and the short-term borrowings from financial institutions facilities are secured with deposits from financial institutions (Note 10), investment property (Note 12), property, plant and equipment (Note 13) of the Group, director and partial of directors’ shares.
18
Trade and other accounts payable Consolidated 2014 Baht Trade accounts payable - related companies (Note 29b)) - other companies Other accounts payable - related companies (Note 29b)) - other companies Accrued expenses - related companies (Note 29b)) - other companies Accrued interest expense
19
2013 Baht
Company 2014 Baht
2013 Baht
203,802,118
176,146,450
1,583,941,050 110,380,543
12,073,770 50,405,951
79,008,196
6,203,450
5,381 1,017,638
6,203,450
327,274 206,863,580 25,182,960
176,743,958 25,153,837
1,076,094 198,895,818 10,901,793
800,180 175,390,143 8,473,918
515,184,128
384,247,695
1,906,218,317
253,347,412
Long-term borrowings from a financial institution Consolidated 2014 Baht Long-term borrowings from a financial institution Less Current portion
2013 Baht
Company 2014 Baht
2013 Baht
1,299,085,492 (185,373,410)
30,624,783 (13,877,901)
1,282,640,492 (171,993,410)
-
1,113,712,082
16,746,882
1,110,647,082
-
158
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
19
Long-term borrowings from a financial institution (Cont’d)
The requirements and conditions for long-term loans comprise the following: Contract no.
Outstanding balance Consolidated 2014 2013 (Million) (Million)
Outstanding balance Company 2014 2013 (Million) (Million)
Borrowing amount
Currency
1
3.81
THB
-
0.8
-
-
MLR
Repayment of principal and interest is due every month end for 60 months with principal amounting to Baht 0.07 million per month. (The first payment is due in December 2009)
2
80.00
THB
16.5
29.8
-
-
MLR
Repayment of principal and interest is due every month end for 72 months with principal amounting to Baht 1.12 million per month (The first payment is due in May 2010)
3
40,00
USD
1,282.6
-
1,282.6
-
LIBOR 3 Month +3.25%
Repayment of principal and interest is due every 3-month for 20 times - Period 1-4 : 1.00 USD - Period 5-20 : 2.25 USD The first payment is due in fourth period.
1,299.1
30.6
1,282.6
-
Total
Interest rate
Repayment terms
The movements of long-term borrowings from a financial institution for the years ended 31 December 2014 and 2013 are as follows: Consolidated 2014 Baht
2013 Baht
Company 2014 Baht 1,280,636,000 (31,726,483)
2013 Baht
Opening balance for the year Addition Repayment of borrowings Exchange differences on translating financial statement
30,624,783 1,280,636,000 (45,906,266)
44,811,925 (16,348,266)
-
33,730,975
2,161,124
33,730,975
-
Closing balance for the year
1,299,085,492
30,624,783
1,282,640,492
-
Such credit facilities are guaranteed by investment property (Note 12), property, plant and equipment (Note 13) of the Group, director and partial of directors’ shares. Under the borrowing agreement terms, the subsidiary must comply with the condition of borrowing covenants such as maintain the current ratio, debt to equity ratio and debt service coverage etc.
159
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
20
Liability under finance lease agreements (net) Consolidated 2014 Baht Liabilities under finance lease agreements Less Deferred interest under finance leases Less Current portion
Company 2014 Baht
2013 Baht
2013 Baht
6,088,371 (220,074)
6,780,181 (221,641)
4,750,362 (181,539)
3,659,539 (69,279)
5,868,297 (2,706,552)
6,558,540 (2,810,730)
4,568,823 (1,649,246)
3,590,260 (1,110,159)
3,161,745
3,747,810
2,919,577
2,480,101
Minimum payment net interest for the above finance lease agreements are as follows: Within 1 year More than 1 year but no longer than 3 years
21
2,840,299 3,248,072
2,974,665 3,805,516
1,748,402 3,001,960
1,162,934 2,496,605
6,088,371
6,780,181
4,750,362
3,659,539
Employee benefit obligations Consolidated 2014 Baht Opening balance for the year Current service cost Interest cost Actuarial loss Exchange differences on translating financial statement
2,316,687 1,456,535 178,377 4,459,357
Closing balance for the year
8,408,712
2013 Baht
Company 2014 Baht
2013 Baht
1,926,795 354,180 35,712 -
1,405,122 1,397,330 168,820 4,345,769
1,260,812 126,106 18,204 -
-
-
-
2,316,687
7,317,041
1,405,122
(2,244)
The amounts recognised in the statement of comprehensive income for the years ended 31 December 2014 and 2013 are as follows: Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
Current service cost Interest cost Actuarial loss
1,456,535 178,377 4,459,357
354,180 35,712 -
1,397,330 168,820 4,345,769
126,106 18,204 -
Total, included in staff costs
6,094,269
389,892
5,911,919
144,310
Principle actuarial assumptions are as follows: Consolidated and Company 2014 2013 Discount rate Expected future salary increase Turnover rate
4.40 - 9.00% 5.00 - 8.00% 0.00 - 15.00%
160
4.20% 6.00 - 15.00% 0.00 - 20.00%
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
22
Warrant
On 17 October 2011, 444,519,122 units of warrants of the Company (EARTH-W3) were approved to be traded in on the Market for Alternative Investment of Thailand (MAI) and can be exercised on every 15 March and 15 September of each year. The first and last exercise dates will be on 15 March 2012 and 15 September 2016, respectively. Unit Share warrants (EARTH-W3) as at 1 January 2012 Warrants exercised as at 15 March 2012 Warrants exercised as at 15 September 2012
444,519,122 (125,900) (50,045,400)
Share warrants (EARTH-W3) had not been exercised as at 31 December 2012 Warrants exercised as at 15 March 2013 Warrants exercised as at 15 September 2013
394,347,822 (335,867,477) (7,294,515)
Share warrants (EARTH-W3) had not been exercised as at 31 December 2013 Warrants exercised as at 15 March 2014 Warrants exercised as at 15 September 2014
51,185,830 (7,403,244) (7,223,450)
Share warrants (EARTH-W3) had not been exercised as at 31 December 2014
36,559,136
On 15 March 2013, the Company recorded a cash receipt from warrants (EARTH-W3) exercise of Baht 503,706,492. The Company registered the increase in paid-up share capital from that exercise with the Department of Business Development on 20 March 2013 for 343,592,408 common shares. The increased share capital was approved to be traded in on the Market for Alternative Investment of Thailand (MAI) on 25 March 2013. On 15 September 2013, the Company recorded a cash receipt from warrants (EARTH-W3) exercise of Baht 10,939,710. The Company registered the increase in paid-up share capital from that exercise with the Department of Business Development on 20 September 2013 for 7,462,285 common shares. The increased share capital was approved to be traded in on the Market for Alternative Investment of Thailand (MAI) on 25 September 2013. On 15 March 2014, the Company recorded a cash receipt from warrants (EARTH-W3) exercise of Baht 11,102,770. The Company registered the increase in paid-up share capital from that exercise with the Department of Business Development on 24 March 2014 for 7,573,513 common shares. The increased share capital was approved to be traded in on the Stock Exchange of Thailand (SET) on 28 March 2014. On 15 September 2014, the Company recorded a cash receipt from warrants (EARTH-W3) exercise of Baht 10,833,132. The Company registered the increase in paid-up share capital from that exercise with the Department of Business Development on 24 March 2014 for 7,389,585 common shares. The increased share capital was approved to be traded in on the Stock Exchange of Thailand (SET) on 24 September 2014. On 17 August 2014, 1,409,631,502 units of warrant of the Company (EARTH-W4) were approved to be traded in on the Stock Exchange of Thailand (SET) and can be exercised on every 15 March and 15 September of each year. The first and last exercise dates will be on 15 March 2016 and 15 September 2019, respectively. 23
Legal reserve
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a legal reserve at least 5 percent of its net profit after deducting accumulated deficit brought forward (if any),until the reserve reaches 10 percent of the registered capital. The legal reserve is not available for dividend distribution.
161
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
24
Dividend payment At the annual general shareholders’ meeting no. 1/2013 on 30 April 2013, the shareholders approved the dividend payment from the operation of the year 2012 for 2,605,495,683 shares at Baht 0.10 per share, totalling Baht 260,549,568 and approved an appropriation of legal reserve totalling Baht 75,200,000. The Company already paid dividend amounting to Baht 260,536,538 to shareholders on 20 May 2013 and there was outstanding dividend payable as at 31 December 2013 amounting to Baht 112,808. At the annual general shareholders’ meeting no. 1/2014 on 30 April 2014, the shareholders approved the dividend payment from the operation of the year 2013 for 2,956,550,376 shares at Baht 0.034 per share, totalling Baht 100,522,713 and approved an appropriation of legal reserve totalling Baht 60,000,000. The Company already paid dividend amounting to Baht 100,430,243 to shareholders on 20 May 2014. At the board of directors’ meeting no. 6/2014 on 13 November 2014, the directors approved the interim dividend payment from the nine-month operation as of 30 September 2014 for 2,971,513,474 shares at Baht 0.05 per share, totaling Baht 148,575,674. The Company already paid dividend amounting Baht 148,279,799 to shareholders on 12 December 2014 and there was outstanding dividend payable as at 31 December 2014 amounting to Baht 1,197,904.
25
Other income For the years ended 31 December Consolidated Company 2014 2013 2014 Baht Baht Baht Management fee income from a subsidiary (Note 29a)) Interest income from a subsidiary (Note 29a)) Interest income from banks Others
26
2013 Baht
-
-
58,407,472
53,554,093
5,103,859 1,269,098
8,935,730 3,503,986
25,465,897 3,378,882 651,231
196,515,500 6,310,263 2,483,347
6,372,957
12,439,716
87,903,482
258,863,203
Expenses by nature The following expenditure items for the years ended 31 December 2014 and 2013, classified by nature, have been charged in profit before finance costs and income tax: For the years ended 31 December Consolidated Company 2014 2013 2014 Baht Baht Baht Changes in finished goods Mining expense Raw material and consumable used Coal processing service expense Management benefit expense Employee benefit expense Transportation expense Depreciation charge (Note 13) Amortisation charge - Mining property rights (Note 15) Bad debt and doubtful debts Others Total
2013 Baht
(495,790,607) 7,876,486,864 4,434,063,642 232,398,090 20,723,000 64,761,884 278,241,325 24,370,605 299,699,706 129,212,174 492,819,839
(247,702,691) 6,769,330,761 4,253,226,274 130,834,486 21,736,000 51,234,372 202,556,036 22,988,354 536,975,123 8,004,923 111,882,370
(317,790,407) 7,396,123,333 292,622,940 20,723,000 48,924,027 278,241,325 3,029,625 129,396,051 157,229,410
(247,702,691) 6,514,108,571 159,249,074 21,736,000 35,941,798 202,556,036 1,215,010 9,100,819 225,303,694
13,356,986,522
11,861,066,008
8,008,499,304
6,921,508,311
162
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
27
Income tax
Reconciliation of income tax expenses for the years ended 31 December 2014 and 2013 comprises: Consolidated 2014 Baht Current income tax on taxable profit for the year Origination of temporary differences (Note 16) Income tax Profit before tax accounting base Tax rate Tax calculated at a tax rate Tax effect of: Expenses not deductible for tax purpose Tax effect of exchanges rate differences Tax losses for which no deferred tax asset was recognised Income tax
28
2013 Baht
Company 2014 Baht
2013 Baht
257,316,331 (118,066,122)
387,211,321 (134,453,999)
216,355,988 (35,148,768)
286,623,790 (2,135,960)
139,250,209
252,757,322
181,207,220
284,487,830
1,181,360,091
1,363,370,870
864,428,721
1,371,235,385
0 - 25% 138,190,231
0 - 25% 234,794,084
20% 172,885,744
20% 274,247,077
(13,148,806) 14,207,848
1,916,285 16,046,953
2,297,779 6,023,697
423,290 9,817,463
-
-
-
936 139,250,209
252,757,322
181,207,220
284,487,830
Earnings per share
28 a) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Consolidated 2014 Profit attributable to shareholders of the parent (Baht) Weighted average number of ordinary shares in issue during the year (Shares)
2013
Company 2014
2013
1,042,025,005
1,110,603,731
683,221,502
1,086,747,555
2,964,467,231
2,877,768,659
2,964,467,231
2,877,768,659
0.35
0.39
0.23
0.38
Basic earnings per share (Baht) 28 b) Diluted earnings per share
The diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has dilutive potential ordinary shares that are warrants (Note 22). The company calculate the number of dilutive potential ordinary shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to outstanding warrant (determined as the average annual market price of the Company’s shares during the year). The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrant. The difference is added to the denominator as an issue of ordinary shares for no consideration. No adjustment is made to earnings.
163
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
28
Earnings per share (Cont’d) 28 b) Diluted earnings per share (Cont’d) Diluted earnings per share of the Company is affected by warrants (EARTH-W3) issuance on 17 October 2011. However, the Company did not include the warrants (EARTH-W4) in calculating the diluted earnings per share because these warrants have a condition that required the Company to issue ordinary shares at price higher than the average market price during the period. Consolidated 2014 Profit attributable to shareholders of the parent (Baht) Weighted average number of ordinary shares outstanding (Shares) Assumed shares issued from exercising warrants (Shares) Weighted average number of ordinary shares for diluted earnings per share (Shares)
Company 2014
2013
1,042,025,005
1,110,603,731
683,221,502
1,086,747,555
2,964,467,231
2,877,768,659
2,964,467,231
2,877,768,659
27,940,301
41,108,990
27,940,301
41,108,990
2,992,407,532
2,918,877,649
2,992,407,532
2,918,877,649
0.35
0.38
0.23
0.37
Diluted earnings per share (Baht) 29
2013
Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control by, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The significant investments in subsidiaries are set out in Note 11. Relationship between company and related parties: The Company’s name
Type of business
Subsidiaries Energy Perfect Co., Ltd.
Import and distribution of coal
PT. TRI TUNGGAL PITRIATI
Mining of coal
Earth Power Plants Co., Ltd.
Investing in Power Plant business
Energy Earth (Hong Kong) Co., Ltd. International coal trading Guangdong Energy Earth Co., Ltd. Related company PartnerLink Network Co., Ltd. (Formerly name WTEC Co., Ltd.) Fly Digital Media Co., Ltd.
Import and distribution of coal
Type of relationship Direct shareholding, shareholders and directorship Direct shareholding, shareholders and directorship Direct shareholding, shareholders and directorship Direct shareholding, shareholders and directorship Direct shareholding, shareholders and directorship
Distribution of computer equipment Shareholders and directorship and computer programs and information and technology advisory Digital entertainment media service Shareholders and directorship provider
164
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
29
Related party transactions (Cont’d)
The following significant transactions were carried out with related parties which summarised as follows:
a)
Sales of goods and services and others for year ended 31 December 2014 and 2013 are as follows: Company 2014 Baht
Consolidated 2014 Baht
2013 Baht
Sales of goods Guangdong Energy Earth Co., Ltd.
-
-
60,334,463
-
Income from management fee Energy Perfect Co., Ltd.
-
-
58,407,472
53,554,093
Interest income Energy Perfect Co., Ltd. PT. TRI TUNGGAL PITRIATI
-
-
25,465,897 -
79,923,519 116,591,981
-
-
25,465,897
196,515,500
-
-
1,570,528,426 3,441,324,403
5,110,269,659
-
-
5,011,852,829
5,110,269,659
Factory rental Energy Perfect Co., Ltd.
-
-
2,400,000
2,400,000
Coal processing service expense Energy Perfect Co., Ltd.
-
-
60,224,850
28,414,588
Vehicle rental Energy Perfect Co., Ltd.
-
-
2,076,000
2,244,000
-
327,274
-
3,198,150
37,658
368,052
388,453
Purchase of goods Energy Earth (Hong Kong) Co., Ltd. PT. TRI TUNGGAL PITRIATI
Miscellaneous expense Fly Digital Media Co., Ltd.
327,274
Interest expense Energy Perfect Co., Ltd. Purchase of equipment PartnerLink Network Co., Ltd.
-
368,052
165
388,453
2013 Baht
-
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
29
Related party transactions (Cont’d)
The following significant were carried out with related parties which summarised as follows: (Cont’d)
b)
Outstanding balance from purchase/sales of goods and services and others as at 31 December 2014 and 2013 are detailed as follows:
Trade accounts receivable (Note 7) Guangdong Energy Earth Co., Ltd. Other accounts receivable (Note 7) Energy Perfect Co., Ltd. Energy Earth (Hong Kong) Co., Ltd.
2013 Baht
-
-
60,737,624
-
-
58,433,508
-
-
65,925
-
-
58,499,433
53,611,029
-
11,377,135,265
5,719,057,691
-
-
1,574,459,730 9,481,320
12,073,770
-
-
1,583,941,050
12,073,770
-
-
5,381
327,274
-
748,820 327,274
800,180 -
327,274
-
1,076,094
800,180
Advance payment from purchase of goods PT. TRI TUNGGAL PITRIATI Accounts payable (Note 18) Energy Earth (Hong Kong) Co., Ltd. Energy Perfect Co., Ltd.
Other accounts payable (Note 18) Energy Perfect Co., Ltd. Accrued expenses (Note 18) Energy Perfect Co., Ltd. Fly Digital Media Co., Ltd.
c)
Company 2014 Baht
Consolidated 2014 Baht
2013 Baht
-
53,611,029 -
-
The movement of short-term borrowings and accrued interest income to a subsidiary for the years ended 31 December 2014 and 2013 comprises: Consolidated 2014 Baht
2013 Baht
Short-term borrowings to a subsidiary Opening balance Additions Repayments
-
-
Closing balance
-
-
166
Company 2014 Baht
2013 Baht
467,489,475 2,417,552,395 4,180,857,418 13,543,246,890 (4,521,492,675) (15,493,309,810) 126,854,218
467,489,475
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
29
Related party transactions (Cont’d) The following significant were carried out with related parties which summarised as follows: (Cont’d) c)
The movement of short-term borrowings and accrued interest income to a subsidiary for the years ended 31 December 2014 and 2013 comprises: (Cont’d) Consolidated 2014 Baht
2013 Baht
Accrued interest income Opening balance Additions Repayments
-
-
79,923,519 25,465,897 (83,349,001)
28,292,057 205,870,516 (154,239,054)
Closing balance (Note 7)
-
-
22,040,415
79,923,519
Company 2014 Baht
2013 Baht
As at 31 December 2014, the outstanding short-term borrowings to a subsidiary were denominated in Thai Baht and bear interest rates at 7.70% per annum (2013: 5.00% - 7.70% per annum). The borrowings will be payable at call. d)
The movement of short-term borrowings from a subsidiary for the years ended 31 December 2014 and 2013 comprises: Consolidated Company 2014 2013 2014 2013 Baht Baht Baht Baht Short-term borrowings from a subsidiary Opening balance 1,000,000 Additions 773,392,411 (773,392,411) (1,000,000) Repayments -
-
-
-
Consolidated 2014 Baht
2013 Baht
Company 2014 Baht
2013 Baht
Accrued interest income Opening balance Additions Repayments
-
-
6,503,937 (6,503,937)
Closing balance
-
-
-
Closing balance
16,200 37,658 (53,858) -
As at 31 December 2014, the outstanding short-term borrowings from a subsidiary were denominated in Thai Baht and bear interest rates at 7.70% per annum (2013 : 5.00% - 7.70% per annum). The borrowings will be payable at call. 30
Segment financial information Segment financial information is presented about products and services in respect of the Company and its subsidiaries’ business segments. Operating segment information is reported in a manner consistent with the internal reports that are regularly reviewed by the chief operating decision maker in order to make decisions about the allocation of resources to the segment and assess its performance. Segment results and operating assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest and income tax expenses and corporate common assets and liabilities. Business segments The Company and its subsidiaries, the principal business operations principally engaged in the coal business.
167
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
30
Segment financial information (Cont’d)
Geographic segments The Company and its subsidiaries comprise 2 main geographic segments as follows: Segment 1 : Domestic Segment 2 : Export Consolidated For the year ended 31 December 2014 Domestic Export Total Baht Baht Baht Revenue from sales Cost of goods sold
5,227,591,201 (4,690,308,180) 537,283,021
Gross profit
9,683,326,321 (7,999,347,521)
14,910,917,522 (12,689,655,701)
1,683,978,800
2,221,261,821
Unallocated income and expenses: Other income Selling expenses Administrative expenses Net loss on exchange rate Finance costs Income tax
6,372,957 (302,026,242) (302,025,799) (63,278,780) (378,943,867) (139,250,209)
Profit for the period Other comprehensive income
1,042,109,881 151,581,053
Total comprehensive income for the year
1,193,690,934
Consolidated For the year ended 31 December 2013 Domestic Export Total Baht Baht Baht Revenue from sales Cost of goods sold
3,624,129,714 (3,151,195,844) 472,933,870
Gross profit Unallocated income and expenses: Other income Selling expenses Administrative expenses Net loss on exchange rate Finance costs Income tax
9,880,549,727 (8,126,322,310)
13,504,679,441 (11,277,518,154)
1,754,227,417
2,227,161,287 12,439,716 (236,090,029) (167,331,715) (180,126,110) (292,682,279) (252,757,322)
Profit for the period Other comprehensive income
1,110,613,548 108,513,213
Total comprehensive income for the year
1,219,126,761
168
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
31
Commitments
As at 31 December 2014, the Group has commitments and letter of guarantees as follows: 31 a) Commitments
The Company has commitment to pay rental expense agreement for factory and office amounting of Baht 6.92 million (2013 : Baht 1.82 million).
The Company has commitment to pay rental machinery and equipment amounting of Baht 4.46 million (2013 : Baht 0.84 million).
The Company has significant agreement for sale of steam coal with many local and oversea companies to sell steam coal in the total quantity of 8.53 million metric tons at the market price (2013 : 8.50 million metric tons).
The Company has commitment to pay service fee for system development agreement amounting of Baht 0.20 million (2013 : Baht 0.42 million).
31 b) Contingent liabilities As at 31 December 2014, the Company has commitments for unused letties of credit of approximately USD 4.69 million (2013 : USD 2.97 million).
31 c) Letter of guarantees As at 31 December 2014 and 2013, the Group has letter of guarantees which issued by financial institutions as follows: Consolidated 2014 Baht or Baht USD equivalent Guarantee for purchase of shares Guarantee for sale contract of steam coal Guarantee for credit facilities Guarantee for electricity usage
-
-
3,000,000
98,848,200
60,500 -
1,994,262 10,849,500,000 405,000
110,000 -
3,624,434 8,257,500,000 405,000
60,500
10,851,899,262
3,110,000
8,360,377,634
Company 2014 Baht or Baht USD equivalent Guarantee for purchase of shares Guarantee for sale contract of steam coal Guarantee for credit facilities
2013 Baht or Baht USD equivalent
-
-
2013 Baht or Baht USD equivalent 3,000,000
98,848,200
60,500 -
1,994,262 10,849,500,000
110,000 -
3,624,434 8,257,500,000
60,500
10,851,494,262
3,110,000
8,359,972,634
169
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
32
Functional currency financial statements
The USD functional currency the statements of financial position as at 31 December 2014 and 2013 and the statements of comprehensive income for the years ended 31 December 2014 and 2013. The USD functional currency the statements of financial position as at 31 December 2014 and 2013 are as follows: Consolidated 2014 USD
2013 USD
Company 2014 USD
2013 USD
Assets Current assets Cash and cash equivalents Trade and other accounts receivable (net) Inventories (net) Short-term borrowings to a subsidiary Advance payment for purchase of goods (net) Value added tax Other current assets
16,011,862 133,894,167 44,005,393 -
7,149,061 180,974,863 31,499,661 -
13,003,242 40,350,622 37,020,709 3,848,382
5,886,283 42,472,929 32,377,315 14,306,027
190,482,271 4,384,774 92,161
37,490,636 2,557,813 175,505
345,148,660 2,623,085 -
178,082,848 1,250,752 4,563
Total current assets
388,870,628
259,847,539
441,994,700
274,380,717
Restricted deposits at financial institutions Investments in subsidiaries Investment property (net) Property, plant and equipment (net) Intangible assets (net) Mining property rights (net) Deferred tax assets Other non-current assets
8,802,318 5,320,837 24,299,722 91,599 118,250,000 1,540,278 8,693
12,972,644 5,350,128 7,419,089 54,129 127,934,755 284,845 27,256
6,267,431 44,136,776 332,314 91,599 1,130,054 7,186
10,457,267 42,370,327 305,963 52,887 64,300 7,056
Total non-current assets
158,313,447
154,042,846
51,965,360
53,257,800
Total assets
547,184,075
413,890,385
493,960,060
327,638,517
Non-current assets
170
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
32
Functional currency financial statements (Cont’d)
The USD functional currency the statements of financial position as at 31 December 2014 and 2013 are as follows: (Cont’d) Consolidated Company 2014 2013 2014 2013 USD USD USD USD Liabilities and shareholders’ equity Current liabilities Bank overdrafts and short-term borrowings from financial institutions (net) Trade and other accounts payable Short-term borrowings from a subsidiary Current portions of - long-term borrowings from a financial institution - liabilities under finance lease agreements (net) Accrued income tax Other current liabilities
324,569,529 15,629,165 -
257,073,922 11,661,751 -
236,937,129 57,829,031 -
5,623,682
421,188
5,217,772
-
82,109 2,062,352 542,009
85,304 6,258,256 70,906
50,033 1,936,209 538,378
33,693 4,589,650 51,297
348,508,846
275,571,327
302,508,552
184,910,246
Long-term borrowings from a financial institution Liabilities under finance lease agreements (net) Employee benefit obligations Deferred tax liabilities
33,786,733
508,261
33,693,750
95,918 255,095 289,183
113,744 70,310 2,707,997
88,571 221,977 -
75,270 42,645 -
Total non-current liabilities
34,426,929
3,400,312
34,004,298
117,915
382,935,775
278,971,639
336,512,850
185,028,161
96,477,592 31,501,912 (59,704,265)
96,014,736 31,286,222 (59,704,265)
96,477,592 31,501,912 (59,704,265)
96,014,736 31,286,222 (59,704,265)
(4,948,126)
(4,948,126)
-
-
6,058,804 93,251,408 1,521,202
4,917,714 65,734,245 1,531,060
5,405,407 83,766,564 -
4,264,317 70,749,346 -
Equity attributable to owners of Company Non-controlling interests
164,158,527 89,773
134,831,586 87,160
157,447,210 -
142,610,356 -
Total shareholders’ equity
164,248,300
134,918,746
157,447,210
142,610,356
Total liabilities and shareholders’ equity
547,184,075
413,890,385
493,960,060
327,638,517
Total current liabilities
172,546,622 7,688,984 -
Non-current liabilities
Total liabilities
-
Shareholders’ equity Share capital Authorised shares capital 4,639,103,137 ordinary shares 3,027,615,570 ordinary shares Issued and fully paid-up share capital 2,971,513,474 ordinary shares 2,956,550,376 ordinary shares Premium on share capital Discount on share capital Adjustment of equity interest under reverse acquisition Retained earnings Appropriated - legal reserve Unappropriated Other components of shareholders’ equity
171
Energy Earth Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2014
32
Functional currency financial statements (Cont’d) The USD functional currency the statements of comprehensive income for the years ended 31 December 2014 and 2013 are as follows: Consolidated Company 2014 2013 2014 2013 USD USD USD USD 460,551,202 (390,423,308)
442,098,699 (375,416,827)
280,262,335 (227,645,628)
268,779,356 (214,660,437)
Gross profit Other income
70,127,894 195,201
66,681,872 404,822
52,616,707 2,703,281
54,118,919 8,419,497
Profit before expenses
70,323,095
67,086,694
55,319,988
62,538,416
Selling expenses Administrative expenses Net gain (loss) on exchange rate
(9,297,602) (9,252,508) 285,662
(7,678,153) (5,710,660) (5,947,183)
(9,297,602) (8,657,818) (770,188)
(7,678,153) (4,083,964) (3,725,485)
Total expenses
(18,264,448)
(19,335,996)
(18,725,608)
(15,487,602)
Profit before finance costs and income tax Finance costs
52,058,647 (11,569,426)
47,750,698 (9,378,955)
36,594,380 (9,261,555)
47,050,814 (6,316,034)
Profit before income tax Income tax
40,489,221 (4,244,844)
38,371,743 (8,345,623)
27,332,825 (5,591,006)
40,734,780 (9,385,451)
Profit for the year Surplus from land revaluation
36,244,377 -
30,026,120 65,830
21,741,819 -
31,349,329 -
Total comprehensive income for the year
36,244,377
30,091,950
21,741,819
31,349,329
Profit for the year attributable to: Owners of the parent Non-controlling interests
36,241,764 2,613
30,025,359 761
21,741,819 -
31,349,329 -
36,244,377
30,026,120
21,741,819
31,349,329
36,241,764 2,613
30,091,189 761
21,741,819 -
31,349,329 -
36,244,377
30,091,950
21,741,819
31,349,329
0.01 0.01
0.01 0.01
0.01 0.01
0.01 0.01
Revenues from sales Cost of goods sold
Total comprehensive attributable to: Owners of the parent Non-controlling interests
Earnings per share for profit attributable to owners of the parent Basic earnings per share Diluted earnings per share 33
Subsequent events At the Board of Directors’ meeting on 27 February 2015, the board of directors approved
The dividend payment from the period 1 January 2014 to 31 December 2014 for 2,971,513,474 shares at Baht 0.10 per share, totalling Baht 297.15 million. The Company had already paid interim dividend at 12 December 2014 in amount of Baht 0.05 per share (remaining Baht 0.05 per share), remaining amount to Baht 148.58 million.
The board of directors approved the increase of the capital in subsidiaries as follows: - Energy Earth (Hong Kong) Co., Ltd; increase in capital from Hong Kong Dollar 1.00 million to 75.00 million. - Guangdong Energy Earth Co., Ltd; increase in capital from China Yuan 10.00 million to 30.00 million.
Investors can find the company’s information related to additional securities from the annual report (56-1 format) of the company which represented in the www.sec.or.th or the company’s website www.energyearth.co.th
172
Energy Earth Public Company Limited 43 Thai CC Tower, Floor 12, Room 125-128 South Sathorn Road, Sathorn, Bangkok, 10120 Tel : +66 (2) 673 9631-3, Fax : +66 (2) 673 9634 www.energyearth.co.th