INDEX Contents General Information Message from the Chairman The Board of Directors The Management Team Social Policy, Structure, and Activities of Rayong Purifier PCL Financial Highlights / Financial Position and Operating Results Business Operation Performance Report Shareholding and Management Structure Nature of Business Risk Factors Related Transactions Management’s Analytical Report Statement of Board of Directors’ Opinion on Financial Statement Audit Committee’s Report Report of Independent Auditor Financial Statements and Notes to Financial Statements Management and Connected Person Description
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General Information
RPC
Company Name Type of Business
Head Office
Registered Capital Ordinary shares Par value Paid registered capital Company Register No. Telephone No. Fax No. Factory Telephone No. Fax No. Home page
Rayong Purifier Public Company Limited (“Company”) Petroleum business with a 17,000 BPD refining capacity and 3 depots covering the distribution of High Speed Diesel, RONC 91 Gasoline, RONC 95 Gasoline, Chemicals and Fuel Oil through marketing channels including retails. 1010, Shinawatra Tower III, 14th Floor, Viphavadi Rangsit Road, Chatuchak, Bangkok 10900 802,870,229 Baht 529,870,229 Shares 1 Baht 529,870,229 Baht 0107546000202 02-791-1811 02-515-8600 02-791-1818 7/3 Pakorn Songkrohrad Road, Tambol Map-ta-phut, Amphur Muang-Rayong, Rayong Province 21150 (038) 685-816 -9 (038) 685-243 http://www.rpcthai.com
References
Securities Registration Address Telephone No. Auditor (year 2008) Address Telephone No. Fax No.
Thailand Security Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, 4th and 7th Floors Ratchadapisek Road, Klongtoey, Bangkok 10110 02-229-2800 02-654-5599 Ms. Sumalee Reewarabandith Certified Public Accountant (Thailand) No. 3970 Ernst & Young Office Limited33rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road, Klongtoey, Bangkok 10110 02-264-0777 02-661-9190 02-264-0790
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When the Company has lost a major sources of revenue, all expenses have been cutting down and significantly reduced, Company have to utilize the existing properties and to resize organization to fit well with the situation while waiting for the final decision of Arbitration and the final judgment of Civil Court on the cases which are no predetermined periods of time. Company has necessary to lay-off almost of employees, and some of employees will remain on hire to conform to the remaining of works. Nevertheless, Company has completely compensated to the employees as required by laws and has paid the extra money other than required by Labor Laws to remedy sufferings damages of employees as it is possible to be able to do in this crisis. Mr. Satja Janetumnugul Chairman of The Board of Directors
Chairman’s Statement Consequence of termination of the Condensate Residue Purchase Agreement by PTT which is the main component of raw materials for diesel fuel production to distribute to customers. In spite of, the fact that Company has not breached its obligation and such Agreement is a continuous contract has no predetermined end date (Evergreen Basis). Company filed a claim to Thai Arbitration Institute in Year 2009, after that Company filed the civil case to the Civil Court and filed in several cases to Thai Arbitration Institute, and finally on the dated 1 February, 2012. PTT stopped to supply the Condensate Residue (CR) to Company which was deemed as serious default on the performance under Clause 15.5 of the Agreement, due to, the Agreement is clearly specified that during the dispute remains unresolved, the parties shall still be obligated to perform under the Agreement until the final decision of the Arbitration will be issued. PTT does not have the right to stop to supply the Condensate Residue (CR) as the main raw materials to Company. The Suspension of main raw materials supply from PTT has affected to Company’s production which has been stopped for indefinite period since 7 February, 2012 onwards, this circumstance has badly affected to Company’s business, other than to completely stop of production and trading transaction, this suspension has impacted to Company’s subsidiaries which are directly related to Company namely Pure Bio-diesel Limited and Jaturatis Transport Co.,Ltd which owned 100 % of shares by Company and Company is a major purchaser, theses impact has caused the both companies to shutdown their business. 2
Regarding the main business has stopped doing business by seriously affected, uncertainty in lawsuit cases and the unclear future of Company that have affected to the financial statements of Year 2012 which were not required comments of auditor, however, the financial statements of Company are established under Going Concern Assumption, without adjustment of the market value of assets, the outstanding amount to be repaid and arrangement of new account. In case of Company is not doing business under Going Concern Assumption (Going Concern) which has been caused by the results of trade disputes and lawsuit cases are unpredictable. The future course of action of Company, other than fully dedicated to fighting lawsuit cases, after the event has occurred and the current circumstances of fuel business in the country, no one denies that this business has restricted from the major trader group that has occupied the energy market in most parts of the country, this restriction has made unavoidable pressures and risks to the business. Company realizes and gives precedence to seek the other ways of business investment other than fuel business. In this year, Company has invested in the renewable energy business in project of Very Small Power Producer (VSPP) by purchased of the subscription shares of KP Energy Group Co.,Ltd. (KPEG) and holds shares of KPEG 26 %, if the target will be successful, Company plans to expend the additional projects in the future In addition, Company has invested in the real estate business which is growing up fast in the present. Company purchased of the ordinary shares of SAMMAKORN PUBLIC COMPANY LIMITED (SAMCO) from two major shareholders and purchased of the subscription shares, on a proportion of number of shares 25.5 % of the current registered capital of SAMCO, this invest-
ment shall be used to expand collaboration with SAMCO as the business alliance which jointly invested in community mall business for over 5 years to provide comprehensive on the entire real estate business in a wide range. Moreover, Company is preparing feasibility studies and negotiation in other businesses, irrespective of fuel business, management of the renewable energy business and community mall business, including joint venture in the competence company, due to company is now during negotiation, thus, the related information could not be disclosed. On behalf of Board of directors, I would like to express my sincere thankfulness extended to shareholders, directors, partners, customers, executives in all level throughout all employees whom share troubles and happiness with the Company and dedicated to use their fully capacities to solve problems in the rough times crisis for all this year. The directors, employees and I intent to ride out the serious problems in our full capacity to push forward Company maintains a Good Governance concept to shareholders, partners, customers and all level of employees, and could turn profits and remunerations to be worthwhile to shareholders as good as it was previously, which have been considered goodness in the past and I hope this goodness will be continuous in the future.
Mr. Satja Janetumnugul Chairman of The Board of Directors
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Pictures of the Board of Directors as of December 31, 2012
Mr. Satja Janetumnugul Chairman of the Board of Directors
Mr. Suthud Khancharoensuk Director
Mr. Supapong Krishnakan Director
Mr. Suwinai Suwanhirunkul Director
Mr. Tawat Ungsuprasert Director
Dr. Vichit Yamboonruang Independent Director / Chairman of the Audit Committee
Mr. Arnooparp Charmikor Independent Director/ Audit Committee
Mr. Bibit Bijaisoradat Independent Director/ Audit Committee
Picture of the Management
Mrs. Siraporn Krishnakan Mrs. Supannee Tanchaisrinakorn President General Manager–Finance & Administration Function (Acting) 4
Mr.Wasun SutrongGeneral Miss Kallaya Klaithong Manager - Manufacturing General Manager – Business Function Development Function
Public Policy and Corporate Social Responsibility of RPC Social responsibility policy of RPC
Rayong Purifier Public Company Limited and subsidiaries group (RPC Group) by the board of directors and the executives, have the vision and mission to persist of responsibility to social. RPC has determined the social responsibility policy though social activities in all kinds, whether concerned with the Company or not.
The Structure or Social Plan of RPC RPC and its subsidiaries have realized the importance to continue to play a responsible roles in social as follows
Community Relations Rayong Purifier Public Company Limited has continually placed the importance of community and community relation works by making the good understanding and maintains the good relationships with the schools, leader of community and government agencies in the area where the fuel depots or the “PURE” fuel stations are located. The Company has organized the activities; for example, the Children Day, donation and Company has participated the other activities of community are as follows: - To sponsor of the 3rd Kaeng Khoi for memories of World War, of dated April 2-4, 2012 by corroborated with Tourism Authority of Thailand, Lop Buri Office and Kaeng Khoi municipality to organize activities and sponsored of gifts and awards for supporting community tourism. - To sponsor the activities of Phayak Bun Bung Fai Festiva, at the district office of Phayakkaphumphisai, on dated 15-20 May 2012 - To sponsor the activities of Kaset Fair Isantai “Miracle of Water”, during the dated 26 October- 4 November 2012, this year Company sponsored of fuel for trailer services in the fair of 10 days.
Sports Company has the policy to support sport activities and give priority to health of employees by setting up a sports club for all employees to exercise and build up the good relationship between departments, and between the executive and employees. Company used the sport to build up the good relations between company and community such as the Futsal match of dated December 17, 2012 at “PURE” fuel station, Uthumpornpisai branch, Srisaket province, which this supporting will be the one target of Company to participate in developing a better quality of life of community. 5
Social Responsibility RPC Group has supported the educational equipments due to the Children Day to the schools are nearby “PURE” fuel stations, of the scholarships and educational equipments on dated January 12, 2013. This activity made children smile and encourage them to participate in activities and supports them to show their presentation and communication skills that will lead them to be a qualified person in the future.
RPC participated and congratulations on grand opening of Pure Place Community Mall, Ratchaphruek On Saturday 12th May, 2012, the executives of Rayong Purifier Public Company Limited (RPC) participated on the grand opening of Pure Place Community Mall, Ratchaphruek, which is designed for concept of energy saving and utilizing natural. Mr.Dulayadet Watcharasin, a vice governor of Nonthaburi province, as a chairman in the official grand opening ceremony of Mall in concept of “ The Green Living Mall”, in the morning having the activity of “Pure Place Rally for Green Environment” from Bangkok to Ayutthaya, which started at Pure Place Community Mall, Ratchaphruek. There were the participants in rally activities over 100 cars, which the revenue from the activity shall be presented to Her Royal Highness Princess Maha Chakri Sirindhorn.
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Financial Highlights
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Financial Position and Operating Results
(Unit : Million Baht )
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Reports of the Operating Result of Performance Rayong Purifier Public Company Limited (the “Company”) concludes the 2012 performance as follows: In February 2012, PTT is the only one supplier in distribution of raw materials: PTT has stopped to supply raw materials to the Company that affected to Company’s production which has been stopped for indefinite period. This problem leads to serious consequences to the Company and its subsidiaries as follows:
In 2012, the total expenses of the Company and its subsidiaries were 7,056 million Baht; decreased of 71% as compared to 24,092 million Baht in 2011. The expenses can be divided into 2 main categories, which are the cost of sales and sales expenses and administrative expenses. The cost of sales of the Company and its subsidiaries decreased by 16,919 million Baht or decreased by 72% from 23,343 million Baht (average prices of 26.02 Baht per liter) in 2011 to 6,423 million Baht (average prices of 27.74 Baht per liter) in 2012. 1. The Company has to lay-off the employees in phases with The decrease of the cost of sales resulted from reduced full compensation required by Labor Laws and has to do major producing for indefinite period since February which caused downsizing (Down-Sizing) of organization structure to reduce to increase volume of trading and the fuel price was higher than last year. expenditures. 2. Pure Biodiesel Co., Ltd. (“PBC”), the Subsidiary is held by Company of shares 99.99% which engages the business of Bio-diesel (B100) producing, for selling majority of its products to the Company to be blended with petroleum diesel. After losing major customer, PBC has to stop its production for indefinite period and reduced expenditures and maintained proper working capital. PBC has to cut down all expenses, lay-off the employees with full compensation required by Labor Laws and settle long term debt obligations to banks to reduce interest expense. 3. SCT Petroleum Co., Ltd. (“SCT”), the Subsidiary is held by Company of shares 99.99% and its 7 subsidiaries of shares 99.86%, in total of 8 companies which engage the business of wholesaling of fuel products, has to stop their operations for indefinite period and lay-off the employees with full compensation required by Labor Laws as well.
In 2012, the sales expenses and administrative expenses was 522 million Baht; decreased of 12% as compared to 593 million Baht in 2011. In 2012, the Company had a net loss of 134 million Baht, decreased by 305 million Baht or 178%, as compared to the net profit of 171 million Baht in 2011,
Production
In 2012, the Company has shutdown total production from February 2012 for indefinite period, the Company produced 232 million liters or equal to 3.99 KBD, the production capacity was 21.129% from or equal to 17 KBD. This is compared with the fact that in 2011, the Company produced 681 million liters or equal to 11.73 KBD as compared to the production capacity of 62.067% or equal to 17 KBD.. In 2012, the energy consumption for production of Fuel Oil Equivalent Barrels ( FOEB) was 1.80%, increased from 2011, which was The Company has the mainly source of revenue from selling 1.60%. The major products were diesel and the remaining fuel products as Diesel, Gasoline 91, Gasohol 91, Gasohol were petro-chemicals, fuel oil, and other products. 95, petro-chemicals, and fuel oil. In 2012, the revenue from the sale of fuel products and petro-chemicals was 6,654 million Baht; decreased by 73% from 2011 which achieved the Company has project for increasing the remuneration to revenue of 24,212 million Baht. The average selling price per shareholders, Company’s business and liter in 2012 was 28.73 Baht and in 2011 was 26.99 Baht. The Revenues are as follows: total liter of fuel products and petro-chemicals sold was 232 million liters in 2012 as compared to 897 million liters in 2011, 1. Renewable Energy Projects decreased of 74%. This is resulted from reduced producing The Company is interesting in investing in the renewable for indefinite period since February which caused to increase energy projects such as Very Small Power Producer (VSPP), volume of trading and the fuel price was higher than last year. Solar Power Plant Project, and other alternative renewable
Operation Results
Future Plan
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energy projects. This also satisfies to the policy of the government in reducing of fuel petroleum imports from abroad by increasing the usage of domestic agricultural products. 2. Real Estate Projects The Company is interesting in investing in real estate by jointly invested with SAMMAKORN PUBLIC COMPANY LIMITED to established Pure Sammakorn Development Co.,Ltd. (PSDC) for land development in Bangkok and suburbs to be Community Mall on one stop shopping concept under the name called “Pure Place Mall�, this Mall is a modern shopping malls nearby community, at present, Pure Place Mall has opened of 3 branches are Rungsit-Klong 2 branch, Ramkhamhaeng branch and Ratchaphruek branch, and there is a plan to expand the new project. In addition, the Company has expanded the collaboration with the existing business alliance is SAMCO to provide comprehensive on the entire real estate business in a wide range. Company has been recognized profits by purchased of the ordinary shares of SAMCO on November, 2012 of 111.64 million shares or proportion of shares 24.81%, on January 2013, Company purchased the subscription shares in rights offering of 37.21million shares, the proportional of shares which Company held in SAMCO increased from 24.81 % to 25.25% of total shares. SAMCO has planned to expand the projects in future such as condominiums, single houses and expand market to northeastern part and north part, etc.
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Shareholding and Management Structure As of 12 December,2012 , the list of top ten shareholders including related persons as specified in Section 258 of the Securities Act B.E. 2535 is as follows:
Source : List of registered shareholders of Rayong Purifier PLC as of 12 December, 2012. Note : (1) Based on the paid-up capital of 529,870,229 shares
Structure of Rayong Purifier Public Company Limited
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The Management Structure
The Company’s management structure comprises the Board of Directors, Executive Board of Directors, the Audit Committee, and the Nominating and remuneration Committee. Name Position 2. The Board of Directors has the authority to approve 1. Mr. Satja Janetumnugul Chairman of the Board of and change the authorized signatory director(s). Directors 3. The Board of Directors may approve an interim divi2. Mr. Supapong Krishnakan Director dend when the Company has sufficient profits and then 3. Mr. Suwinai Suwanhirunkul Director reports the decision to the shareholders in the next 4. Mr. Tawat Ungsuprasert Director shareholder meeting. 5. Mr. Suthud Khancharoensuk Director 4. The Board of Directors must comply with laws and 6. Dr. Vichit Yamboonruang Independent Director / Chairman the Company’s objectives, Article of Association, as well as the shareholder resolutions. However, in some cases, Of The Audit Committee the Board must get the shareholders’ approvals prior to 7. Mr. Anooparp Vharmikorn Independent Director / implementation i.e., activities that need shareholders’ apAudit Committee proval per law requirement, related party transactions as required by SET’s regulation on acquisition or disposal of 8. Mr. Bibit Bijaisoradat Independent Director / assets, and those activities as required by related govAudit Committee Mrs. Siraporn Krishnakan is the Secretary to the Board of Directors ernment agencies. Mrs. Supannee Tunchaisrinakorn is the Secretary to the Company 5. The Board of Directors must convene meet at least Secretary. quarterly and attended by more than half of the Board members. The Board’s decision is based on majority vote, in which each director has one vote. When the voting is equal, the Chairman of the meeting shall vote for The authorized signatory is composed of : the final decision.
The Authorized Signatory
1. Mr. Satja Janetumnugul, Mr. Supapong Krishnakan, and Mr. Suwinai Suwanhirunkul; two of these three directors jointly sign and stamped with the Company’s seal; or 2. Mr. Satja Janetumnugul, Mr. Supapong Krishnakan, or Mr. Suwinai Suwanhirunkul; one of these three directors jointly sign with Mr. Suthud Khancharoensuk or Mr. Tawat Ungsuprasert, being two persons and stamped with the Company’s seal.
Authority and Responsibilities of the Board of Directors
6.The Board of Directors shall arrange for an annual general meeting of shareholders within four months after the end of the Company’s fiscal year. 7.A director shall immediately inform the Company once he/she has any conflict of interests in a contract(s) executed by the Company executed or when his/her number of shares or debentures in the Company or affiliates that the director holds has increased or decreased. 8.A director shall not conduct any competing business with the Company, be a partner in any business partnership, be an unlimited-liability partner in a limited business partnership, or be a director of any private or public company that is operating competitively in similar business to that of the Company. However, the aforesaid requirements will not be in effect if the shareholders are notified of those conditions prior to appointing the said director to the Board of Directors
1. The Board of Directors may appoint any person to conduct the Company’s business under the Board’s supervision or may delegate authority to that person within the timeframe deemed appropriate. However, the Board may revoke or alter that authority anytime. The Board assigns the Executive Board to conduct business within the scope of authority and responsibility of the Executive Board. However, the authority of the Executive Board or the delegation of authority thereof to the appointed person(s) will exclude the power to approve transactions that may be in conflict of interests with the Company and its affiliated companies, or as specified in the Securities and Exchange Commission’s announcements and regulations, except for transactions that are in accordance 1. Shall not hold more than 1% of total shares with voting with the prescribed policy and criteria previously approved by rights of the company, parent company, subsidiary company, the Board of Directors. associated company or juristic person that may conflict.
Qualification of Independent Directors
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2. Shall neither be the director involving in the management, staff, employee, consultant who receive regular salary, nor a person having control power over the company, parent company, subsidiary company, associated company, subsidiary company in the same level or a juristic person that may conflict. 3. Shall neither be a blood relationship nor relationship from registration in the nature of parent, spouse, brother/sister, child including child’s spouse with the executives, major shareholders or controlling person or a person who will be nominated to be the executive or the controlling person of the company or subsidiary company. 4. Shall neither be the commercial relationship with the company 5. Neither being nor used to be an auditor of the Company, its parent company, subsidiary company, associated company, major shareholder or partner of an audit firm which employs auditors of the Company, its parent company, subsidiary company, associate company major shareholder or controlling person. 6. Neither being nor used to be a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding 2 million baht per year from the Company, its parent company, subsidiary company, associate company, major shareholder or controlling person. 7. Shall not be a director who is appointed as a representative of the director of the company, major shareholders or the shareholders who are the connected person of the company’s major shareholders. 8. Not having any other characteristics which cause the inability to express independent opinions with regard to the Company’s business operations. 9. Not be directors assigned by the Board to make decision in operating business of the company, the parent subsidiary, affiliate, subsidiary at the same level or legal entity which may have conflicting interest and not be director of the parent, subsidiary, or subsidiary at the same level specifically. 10. Having duties in the same manner as prescribed in the announcement of the Securities Exchange of Thailand relating to qualification and scope of duties of the Audit Committee. Name Position 1. Dr. Vichit Yamboonruang Chairman of the Audit Committee 2. Mr. Anooparp Charmikorn Member of the Audit Committee 3. Mr. Bibit Bijaisoradat Member of the Audit Committee Mrs. Supannee Tunchaisrinakorn is the Secretary to the Audit Committee
Authority and Responsibilities of the Audit Committee
The audit committee of the company has the scope of duties and responsibilities to the Board of Director on the following matters: 1. Review the Company’s financial reporting process to financial statement to ensure the accuracy and sufficient; 2. To review the Company’s internal control system and internal audit system to ensure that they are suitable and efficient, to determine an internal audit unit’s independence, as well as to approve the appointment, transfer dismissal and to yearly performance evaluation of the chief of an internal audit unit or any other unit in charge of an internal audit; 3. To review the Company’s compliance with the law on securities and exchange, the Exchange’s regulations, and the laws relating to the Company’s business; 4. To consider, select and nominate an independent person to be the Company’s auditor, and to propose such person’s remuneration, as well as to attend a non-management meeting with an auditor at least once a year; 5. To review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure that they are in compliance with the laws and the Exchange’s regulations, and are reasonable and for the highest benefit of the Company; 6. To prepare, and to disclose in the Company’s annual report, an audit committee’s report which must be signed by the audit committee’s chairman and to ensure that they are in compliance with the laws and the Exchange’s regulations; 7. Review and discuss risk management and internal control systems to Board of Directors to ensure; 8. Review reliability and effectiveness of information technology related to financial reporting and internal control; 9. Review the audit plans to ensure that generally accepted principles are in practiced; 10. Review the appropriateness of the Audit Committee Charter and the Internal Audit Charter; 11. The Committee, if necessary, might seeks independent opinion from experts in other profession at the expense of the company with the Board of Director’ approval. The hiring procedure should conform to the company policy; 12. To perform any other act as assigned by the Company’s board of directors, with the approval of the audit committee.
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The Nominating and Remuneration Committee
1. Oversee and supervise the Company’s routine operation 2. Oversee the process of recruitment, appointment, promotion, As of December 31, 2012, the Nominating and Remunera- and salary adjustment, based primarily on the pre-approval of the tion Committee comprises 4 directors as follows: related authority in each department Name Position 3. Consider and approve the purchase of fixed assets with the amount not exceeding Baht 10 million. The approval must be Dr. Vichit Yamboonruang Chairman of the Committee complied with the Stock Exchange of Thailand’s regulation on the Mr. Tawat Ungsuprasert Member of the Committee acquisition and disposal of assets of the listed companies or reMr. Suthud Khancharoensuk Member of the Committee lated party transactions or regulations of related authorities. Mr. Bibit Bijaisoradat Member of the Committee 4. Prepare and propose the Company’s policy, business plan, and Authority and Responsibilities of the Nominat- budget to the Board of Directors for approval and report the progress thereof to the Board of Directors on the quarterly basis. ing and Remuneration Committee 5. Execute the policy, business plan, and budget, which have been 1. Propose the remuneration of Directors and Managing Director thereof to the Board of Director for consideration approved by the Board of Directors. The above authority of the President shall not be valid if, in exercising such authority, the and approval 2. Nominate Directors and Managing Director and propose President may receive benefits or have potential conflict of interest with the Company. to the Board of Director for consideration and approval 3. Perform other tasks assigned by the Board of Directors
The Appointment of Directors and Management
The Company sets up the Nominating and Remuneration Committee to be responsible for the appointment of directors and As of December 31, 2012 the Company’s managements are management. In this regard, an individual who is eligible to be appointed as director and management of the Company must posas follows: sess the qualifications as specified in the Public Company Act B.E. 2535, Section 68 and the Company’s requirement, and shall not Name Position be disqualified per the SEC announcement dated March 22, 2000 on request for approval and Approval to offer new shares. The Mrs. Siraporn Krishnakarn President Mrs. Supannee Tanchaisrinakorn General Manager-Finance appointment process is as follows: & Administration Function (Acting) Appointment of the Board of Directors Mr. Wasun Sutrong General ManagerThe Board of Directors must comprise at least 5 members but not Manufacturing Function exceed 15 members. The directors shall be elected by the shareMiss Kallaya Klaithong General Manager-Business holders in the shareholder’s meeting. At least half of the directors Development Function must have permanent residence in Thailand. According to the Company’s Articles of Associations, the shareholder’s meetings shall elect the directors per the following principles and methods: shareholder has one vote for one share held. Authority and Responsibilities of the President 1.2. One Each shareholder can use all of his/her eligible votes to elect The President has the authority and responsibilities to cononly one or many director(s) but cannot split his/her votes erratiduct business in accordance with the Board of Directors’ cally. assignment and shall follow strictly and ethically the Com3. An individual in receipt of the highest number of votes and pany’s business plan or budget that has been approved by those in order of descent shall be elected as Directors as per the the Board of Directors. The Managing Director shall also act required number. In case that two or more individuals receive an diligently to protect the Company’s and the shareholders’ equal number of votes which exceed the available positions, the best interests. The authority and responsibilities of the PresiChairman of the meeting shall make the final decision. dent are described as follows:
The Management
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At every Annual General Shareholder’s Meeting, one-third of the directors shall resign. In case that the number of directors cannot be equally divided into three parts, the number nearest to one-third shall resign. Those outgoing directors may be re-elected. The authorized signatory comprises the joint signatures from any two directors and stamped with the Company’s seal.
Appointment of the Executive Board
The Board of Directors elects and appoints the Executive Board by electing from the Company’s directors.
Appointment of the Audit Committee
The Board of Directors appoints at least 3 persons who are qualified per the SET’s announcements to be the members of the Audit Committee with three-year term.
Remunerations for the Directors and Management
1. Financial remuneration n 2011, the fee for 10 directors totaled Baht 36.60 million, paid for the meeting allowances in congruence with the Company’s performance. The fee for 15 Executive Directors and Managements totaled Baht 38.51million, paid for salary and bonus in congruence with the Company’s performance. In 2012, the fee for 9 directors totaled Baht 2.49 million, paid for the meeting allowances in congruence with the Company’s performance. The fee for 6 Executive Directors and Managements totaled Baht 18.90 million, paid for salary and bonus in congruence with the Company’s performance. The details of remuneration for individual directors are as follows: Name 1. Mr. Satja Janetumnugul 2. Mr. Suwinai Suwanhirunkul Suwanhirunkul 3. Mr. Sumit Chanmatee 4. Mr. Supapong Krishnakan 5. Mr. Suthud Khancharoensuk 6. Mr. Tawat Ungsuprasert 7. Dr. Vichit Yamboonruang 8. Mr. Anooparp Vharmikorn 9. Mr. Bibit Bijaisoratat 10 Mr.Viravat Cholvanich Total
Payment (Baht) 2011 4,160,872 3,677,797 3,677,797 3,677,797 3,717,797 3,707,797 3,827,797 3,752,797 3,797,797 2,600,500 36,598,750
Payment (Baht) 2012 352,500 235,000 240,000 240,000 257,500 247,500 320,000 290,000 310,000 0 2,492,500
2. Other forms of remuneration 2.1 Others In 2011, the Company’s provident fund contribution for 15 Executive Directors (excluding Independent Directors) and Management was Baht 3.15 million. In 2012, the Company’s provident fund contribution for 6 Executive Directors (excluding Independent Directors) and Management was Baht 1.25 million.
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Corporate Governance The Company perceives the importance to enforce the corporate governance practices in accordance with the Corporate Governance Policy across all levels of employees, the Management, and the Board of Directors. These practices are to ensure operating transparency, promote managerial integrity effectiveness, and efficiency across the firm, for the benefits of shareholders, customers, investors, and the general public.
1. Right of shareholders
The Company’s Board of Directors perceives the significance of good corporate governance, the internationally standardized operation, the compliance with SET’s regulations, the rights of shareholders and the promotion of their rights thereof. The Audit Committee was set up to supervise the business in various aspects so as to promote favorable corporate culture and corporate governance. This effort is a key factor encouraging the Company to achieve its desirable performances and targeted business objectives. As a result, the shareholders will reap the highest benefit out of this practice. In this regard, the Company aims that the Directors and the employees of all levels hold on to the following values: • Perform each task with their best knowledge and capability, along with professional practices, honesty, and morality • Formulate cooperative solidarity in workplace • Hold firmly to rules and regulations and perform for the benefit of the Company, the country and the society as a whole • Create mutual interactions and be readily responsive to any circumstances. In 2003, the company registered in the Stock Exchange of Thailand and became a public company. The firm has a policy to send the inviting letters for a meeting and accompanying documents to the shareholders at least 7 days earlier, in order to reach the minimum period determined by the law. Moreover, the company has a policy to treat all the shareholders equally. That is, a shareholder can vote independently to elect the board of directors, partake in resolution making, opining, and enquiring the meeting as per the meeting’s agenda and proposed issue. Every shareholder has the right and equity to receive correct, well-rounded, and updated information, of which he/she can also check for its verity. The company has a policy to provide more alternatives for the shareholders by permitting an independent director to be entrusted by a shareholder, in the event the latter cannot attend the meeting.
2. The equity of the shareholders
In 2003, the company registered in the Stock Exchange of Thailand and became a public company. The firm has a policy to send the inviting letters for a meeting and accompanying documents to the shareholders at least 7 days earlier, in order 16
to reach the minimum period determined by the law. Moreover, the company has a policy to treat all the shareholders equally. That is, a shareholder can vote independently to elect the board of directors, partake in resolution making, opining, and enquiring the meeting as per the meeting’s agenda and proposed issue. Every shareholder has the right and equity to receive correct, well-rounded, and updated information, of which he/she can also check for its verity. The company has a policy to provide more alternatives for the shareholders by permitting an independent director to be entrusted by a shareholder, in the event the latter cannot attend the meeting. In the past years, the company’s directors and management have been considering about the eradication of the interests’ conflict with prudence, honesty, and independence under the frame of decent morality. This effort is to achieve the overall benefits of the company, transparency, and protection of personal interest through exploitation. The company is in the process of initiating an instruction bill forbidding the directors, management, and operational staffs not to use the firm and its subsidiary’s internal data which are significant and confidential for the pursuit of personal benefits. Besides, if there is any interrelated program, the firm will be complied with the criterion and method notified by the Stock Exchange of Thailand.
3. The roles of stakeholders
The company is attentive to the right of the beneficiaries in all groups, be they the internal beneficiaries like staffs and the Company’s and its subsidiaries’ executives, or the external beneficiaries like competitors, creditor, the governmental authority and other related agents. The company actually conducts its operation in compliance with the provisions of law and other relevant regulations in order to maintain the appropriate care of these beneficiaries. Also, in the past years, the company has treated all of its staffs equally and fairly by providing appropriate amount of income. The purchase of products and services from the trade partners are done in accordance with the conditions mutually determined in the signed contract. The customers have been well taken care of with responsibility and confidentiality. Also, the company’s conduct has specified the deeds of fair competition by not securing competitors’ confidential data in the inappropriate manner. Finally, the firm has a policy to do business in regard to mutual development and prosperity with the community.
4. Information Disclosure and Transparency
The Board of Director is responsible for the Company’s and its subsidiaries’ financial statement and informa-
tion as appearing in the annual report. They also oversee the effective internal control system to ensure that the accounting records be thorough, accurate, and adequate to maintain the property, and to be notified of possible weaknesses to assure that the financial statements are free of material misstatements.
Investor Relations
After being registered in the Stock Exchange of Thailand, the Company has a policy to nominate a person to be in charge of investor relations. This particular individual will make sure that the disclosure of general and financial information, as well as significant data affecting the price of the Company’s stock, be accurate, complete, transparent, and thorough. Such information will be distributed to investors and the public via the following channels: 1) The Stock Exchange of Thailand •List of annual data (Form 56-1) •Annual report (Form 56-2) •Electronic media (SCP Client) 2) Newspaper 3) Magazine 4) Television 5) Company website 6) Shareholder journal 7) Face-to-face interview 8) Trip to meet domestic and international investors 9) Meeting with stock analysts
5. Responsibilities of the Board of Directors
The company’s board of directors is composed of wellversed, experienced directors who settle policies, vision, strategy, goal, mission, business plan, and the firm’s budget. They also govern the management to operate the works effectively and efficiently as per the determined policy, within the boundary of law, the company’s provisions, and the resolution of shareholders’ meeting, with honesty, responsibility, and prudence; for the utmost economic value of the enterprise and supreme security of the shareholders. Besides, the company is highly attentive to an internal control system, internal auditing, appropriate method of risk management, including a checking system in order to enable the operation to be in compliance with the law, to make the utmost effectiveness and efficiency out of the internal control system. Moreover, the board of directors has considered about the settlement and separation of duty and responsibility between the board of directors, the audit committee, the executive board, and the managing director.
Conflict of interests
In the past years, the company’s directors and management have been considering about the eradication of the interests’ conflict with prudence, honesty, and independence under the frame of decent morality. This effort is to achieve the overall benefits of the company, transparency, and protection of personal interest through exploitation. The company is in the process of initiating an instruction bill forbidding the directors, management, and operational staffs not to use the firm and its subsidiary’s internal data which are significant and confidential for the pursuit of personal benefits. Besides, if there is any interrelated program, the firm will be complied with the criterion and method notified by the Stock Exchange of Thailand.
Business ethics
The company has stood firmly on doing correct deeds in its business path. The directors, management, and all the staffs of the company have their own parts in doing the duty with honesty, under the law’s boundary and their own responsibilities. They shall also exercise the prudent consideration in trading and treatment to others; abstaining from any conduct which will riskily lead to the company’s infamy or damage, though that action seems to be beneficial to the company’s business. However, the company is preparing the Bills of Staff Conduct and Business Conduct for all the personnel to be complied with.
The board of director’s check and balance
The company’s board of directors consists of 8 persons, who are: • Directors who are the executives – 3 persons. • Directors who are not the executives – 2 persons. • Directors who are independent – 3 persons or 38 % of the whole board.
Unification or separation of rank
The chairman of the board of directors will not be the same person with the firm’s managing director, in order to give check and balance in administration. More than half of the company’s board of directors is consisted of a coalition of non-executive directors and the independent directors.
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Remuneration for directors and management
The firm has clearly settled the policy on the directors and management’s remuneration. However, the consideration of the directors’ remuneration is under the approval of the shareholder’s meeting, whereas the management’s remuneration is under the approval of the board of directors. This consideration will be as high as that of the industry to maintain the highly-qualified directors and management with the firm. The board of director’s meeting The company has a policy to send the inviting letters for a meeting with accompanying documents to the directors’ consideration at least 7 days earlier, in order to reach the minimum period determined by the law. In 2012, the board of directors had 10 meetings with the written record, and the approved meeting report was kept for the checking by directors and related persons.
The subcommittee
The board of directors has appointed the subcommittee board to support on corporate governance, as follows: • The Audit committee with a 3-year term in office. The committee’s body consists of 3 persons, all are the independent directors. • The Nominating and Remuneration Committee with a 3-year term in office. The committee’s body consists of 4 persons, all are not the Executive Board and the committee’s chairman must be the independent director.
Internal control and audit system
The firm has clearly settled mission, duty, and operational authority of the operational staffs and executives in a form of writing, along with the use of the company’s property for beneficial purposes and the job segmentation of operational staffs, control staffs, and assessment staffs; in order to create check and balance. The company has an internal audit office that will do the checking to assure the efficiency and compliance of the firm’s main operation and major financial activities with the law and provisions related to the company. The internal audit office is independent, so it can do fully the check and balance. The internal audit office can directly report the audit result to the audit committee.
Control of the Use of Internal Information
The Company has informed all executives and management of each division about their duties to report the number of shares or securities of the Company that are held by them, their spouse and minor children as well as every change of securities holding occurring as a result of any purchase, sale, transfer or acknowledgement of transfer of securities to the Securities and Exchange Commission according to Clause 59 and Clause 275 of the Securities and the Stock Exchange Act B.E. 2535. If any directors, executives or employees violates the Company’s policy on the sale and purchase of securities by using internal information, those persons shall be punished or disciplined according to the Company’s rules and regulations which include warning letter, pay cut, temporary forced leave without pay or employment termination. The level of disciplinary action shall depend on the degree of the violation. 18
Human Resources
1. Human Resources As of 31 December 2012, the Company and its subsidiaries had 520 employees, which can be broken down by function as follows:
*
*
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2. Remuneration
2.1 Financial Remuneration Total remuneration to the Company’s staff including salaries, overtime, fringe benefits, bonuses and provident fund contribution for the year 2011 and 2012 were Baht 372.23 million and Baht 192.35 million respectively and benefits on termination of employment.
3. Human Resource Development Policy
The Company’s policy to promote the advancement of employees. The direction of the development staff. And employees at all levels. It was developed under the direction of such a system. And continued to function effectively in the current page. And are ready to take up higher in the future. With regard to the use of human resources for maximum benefit. And the merit system (Merit System) in salary and promotion. And promoted Based on skills, knowledge, abilities and potential of each employee’s individual compound. Corporate Value consists of : Initiatives. Accountability. Synergy Sustainable.
Internal Control System
According to the Board meeting no. 1/2013 held on February 18, 2013, the Audit Committee concluded that the Board of Directors and the Executives have paid a continuous and considerable attention to the internal control system. They have directed their efforts to formulate the internal control system that is sufficient and appropriate with the Company’s business operation. In this regard, proper attentiveness is geared toward asset maintenance, error and damage minimization, financial management, risk management, operation inspection, as well as efforts to promote compliance to existing legal requirements, along with rules and regulations. These measures are to achieve maximum job efficiency, and build up confidence in the Company’s business capability to achieve its determined goals and heighten up its added values. In order that the internal control system be efficient, the Board of Directors has focused the Company’s internal control system to the following 5 sections:
1. Organization and Environment
The Company has formulated its business goal and objectives on a clear, possible, and measurable basis. In this regard, it has modified the organizational structure to facilitate job efficiency and flexibility, as well as to correspond with incessantly changing business environments. Hence, the Company has set regulations and penalty rules to prevent the management and employees from engaging in a conflict of interest with the Company. In addition, the policy and operational rules regarding financial transactions, selling, purchasing, and managing were also framed on the basis of fairness to all parties concerned.
2. Risk management
The Company’s executives have set up a risk policy and an organization to be in charge of risk management. In this aspect, the risk management committee was founded along with a risk coordinator in each work unit. In addition to providing constant training to the employees on knowledge about risk management, the Company also assigns a person in charge of risk in each work unit, sets a plan and a measure for risk management, evaluates potentially threatening risk factors, formulates a measure for risk reduction, and follows up on risk management procedures of every work unit. The risk management committee will subsequently report its performance to the Audit Committee to be continually forwarded to the Company’s management team. 20
3. Controlling of the Management
The Company has distinctly delineated the scope of authority and responsibility of both the management team and the employees of all levels. The approval scope of each management level is clearly and appropriately determined, and the operations of subsidiaries and affiliated companies are continuously and constantly supervised to comply with the existing legal requirements.
4.Information Technology and Communication System
The Company has utilized the ERP information technology system to efficiently manage purchasing, selling, accounting system, inventory, and permanent assets, so that the IT database be made efficient and handy for the executive’s decision making. Moreover, additional developments have been brought in to advance the existing IT system, e.g. the systems for gas station management, close-circuit TV, and video conferencing. These developments aim prominently to facilitate work coordination and supervision, to cover extensive IT usage among employees, and to increase efficiency of communication channels between the Company and its subsidiaries and affiliated firms.
5. Monitoring System
The Board of Directors has conducted a thorough consideration and monitoring on the performance of the Management team. If any deviation from the preset goal is detected, the Board of Directors will have the Executives correct it immediately. In this regard, the Internal Control Committee will report directly to the Audit Committee in due time, especially when those deviations are critical. A report on correction process and progression should also be filed.
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NATURE OF BUSINESS
COMPANY BACKGROUND AND MAJOR DEVELOPMENT Rayong Purifier Plc (RPC) was established in 1995 by a joint venture between Thai businessmen with extensive experiences in the petroleum and the petrochemical businesses and Petro-Instruments Co., Ltd. RPC’s main business is to refine Condensate Residual (CR), which is a by product from the production process of PTT Global Chemical Public Company Limited (PTTGC) (formerly known as PTT Aromatics and Refining Public Company Limited (PTTAR) , into high quality petroleum and petrochemical products such as high-speed diesel oil, fuel oil, and petrochemical products for the wholesale and retail businesses. In addition, RPC is granted an fuel-trading license, according to Article 7 of Fuel Trade Act, B.E. 2543 (2000).
Summary of the company history and major developments
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1997 • Completed plant construction in September 1998 • Rent oil depot at Payuhakhiri district, Nakornsawan province to support the company’s expansion 1999 • Grand opening the first ‘PURE’ gas station at the 202nd Km Pha holyothin road, Nakornsawan province in February • Introduced the quality management program ISO 9002 to its plant 2000 • Production process was awarded ISO 9002 certification by Bureau Veritas Quality International (BVQI) • Rent Sathupradit oil depot and Thonburi oil depot to reduce the disadvantage of not having its own port for exports. 2001 • Export intermediate chemical products to Nanging, China • Open the second “PURE” service station at Maptaput Industrial Estate in Rayong • Operate an oil depot in Pakthongchai district, Nakornrachasima province to support expansion and to service clients in the North eastern region 2002 • Received international standard certificates on safety from three organizations, namely OHSAS 18001, BS 8800 and TIS 18001 • Increased registered capital by Baht 150 million to a total of Baht 300 million. • Open the third corporate-owned “PURE” service station in Pak thongchai district, Nakornrachasima province
2003
2004
2005
• Increased investment in Yothin Petroleum Company Limited to support the expansion of retail business. • Increased production capacity from 12,600 barrels/day to 17,000 barrels/day • Rent oil depot in Juksamet, Sattahip district, Chonburi province to be used as export base of the company’s products while terminating the rental of Thonburi and Sathupadit oil depots. • Awarded ISO 14001 • Increased registered capital to Baht 336.40 million, divided into 3.364 million ordinary shares with a par value of Baht 100 per share fully paid up on 24th July 2003 • Converted into Public Company on 1st August 2003 and increased registered capital to Baht 415.55 million, divided into 83.11 million shares with a par value of Baht 5 per share, of which Baht 336.40 million, divided into 67.28 million ordinary shares with a par value of Baht 5 per share were fully paid up. • Offered 15,830,000 new ordinary shares to the public. Subscription period was on 12nd-14th November 2003. • Registered the Baht 79.150 million capital increase from Baht 336.40 million to Baht 415.55 million, divided into 83.11 million ordinary shares with a par value of Baht 5 per share with Department of Business Development, Ministry of Commerce on 18th November 2003. • RPC’s shares started trading on the Stock Exchange of Thailand on 24th November 2003. • Upgraded ISO 9002 international quality system from Version 1994 to ISO 9001 Version 2000 • Registering the value change of ordinary share on November 26th, 2004 from 5 Baht per share to 1.00 Baht per share with the registered capital of Baht 415.55 million , all are ordinary shares which amount to 415,550,000 shares. • The company’s Ordinary shares have been traded in the Stock Exchange of Thailand for the price of 1.00 Baht per share on December 1st, 2004. • Founded RPC Asia Co., Ltd. on July 27th, 2004 • Increased shareholding portion in VTN-P from 20% to 60% on April 15th, 2004. • Increased shareholding portion in SCT Petroleum Co., Ltd. from 30% to 99.99% • Registered the 8.49 million capital increase from Baht 415.55 million to Baht 424.04 million, divided into 8.49 million ordinary shares reserved to exercise warrant with a par value of Baht 1 per share with Department of Business Development, Ministry of Commerce on 18th April 2005. • Increase paid up capital from Baht 415.55 million to Baht 418,372,686 according with exercise ESOP-01, No.1/3 on December 8th, 2005.2006 • Yothin Petroleum Co., Ltd changed its name to Pure Thai Energy Co., Ltd on March 31st, 2006 • Increase paid-up capitals from Baht 424.04 million to Baht 530.04 million by offering 106,008,171 new ordinary shares with a par value of Baht 1 per share reserved to stock dividends and ESOP No.2/3 with Department of Business Development, Ministry of Commerce on April 7th, 2006.
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2007
2008
2009
2010
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• Paid-up capital increased to Baht 526.26 million on November 2006 by exercised ESOP No.2/3 of 3,294,677 shares with a par value of Baht 1 per share, registered with Department of Business Development, Ministry of Commerce on December 4th, 2006 • Completed Test-run of VTN-P, a refinery in Vietnam during February 13th February 28th, 2006 • Increased number of gas stations from 32 to 56 • Start operating Pure Sammakorn Development Co.,Ltd. on June 8th, 2007 • Changed the name of RPC Asia Co.,Ltd., in which the Company holds 99.99% of shares, to Pure Bio-Diesel Co.,Ltd. (PBC), in which the regis tered capital increased to Baht 200 million • PBC received investment promotion certificate from BOI. Its income from net profit will be exempted for 8 years. • RPC and PBC received the loan of Baht 400 million from Kasikorn Thai Bank to invest in and construct of the Bio-Diesel project, with the production capacity of 100,000 tons per year. • Paid-up capital increased to Baht 529.87 million on November, 2006 by ex ercised ESOP of 3.6 million shares, with par value of 1 Baht per share, totaling to Baht 3.6 million, registered with the Ministry of Commerce on December 4th, 2007 • Increased number of gas stations from 56 to 72 • Pure Thai Energy Co., Ltd. (PTEC) acquired 15,300 ordinary shares of SCT Petroleum Co., Ltd. (SAP) at 100 baht per share; representing 51 per cents of total shares in January 2008. • SCT Sahaphan Co., Ltd. (SAP) increased shares by 20,000 shares at Baht 100 per share and has registered the capital increase with the Ministry of Commerce on February 12th, 2008.. • RPC paid stock dividends for the 6 months operation period at 0.17 Baht per share on 4th September 2008. • Pure Biodiesel Company Limited (PBC) received license from the Department of Energy Business in August 2008. • VTN-P made a 2.9 million U.S. dollars long-term loan payment to Exim Bank. • VTNP registered its liquidation in February 2009. • Pure Sammakorn Development Co.,Ltd. increased its registered capital to 225 million Baht and registered the capital increase with the Ministry of Commerce in February 2009. • Pure Biodiesel Company Limited (PBC) has increased its registered capital to 280 million Baht and registered the capital increase with the Ministry of Commerce in September 2009 • Pure Thai Energy Co., Ltd. (PTEC) increased its registered capital to 140 million Baht and registered the capital increase with the Ministry of Commerce in January 2010. • On 5 March 2010, the Extraordinary General Meeting of Shareholders no. 1/2553 passed the resolution that the capital of the Company be increased from 529.87 million Baht to 802.87 million Baht by issuing new ordinary shares of 273 million shares at 1 Baht per share, that such newly issued shares be allotted in the offering of Taiwan Depository Receipts (“TDR”) in the Republic of China (Taiwan), that the repur chased shares be completely disposed of and that the offer price of the
newly issued shares be set at not less than 90% of the average market price for the past 15 days before the Board of Directors passes the resolution to specify the details in relation to the allotment. The objectives of the increase of capital are to expand the C ompany’s business and to be used as a working capital. The Company registered the increase of capital with the Ministry of Commerce on 19 March 2010. • On 10 August 2010, the Board of Directors passed the resolution that the repurchased shares of 46,706,900 shares be disposed of by way of public offering at 2.55 Baht per share. And in September 2010 the Company completely disposed of the repurchased shares, the total value of which was 119 million Baht. 2011 • In March 2011, the Board resolved and approved to cancel the Board Resolution regarding establishment of RPC Energy Co., Ltd. • In April 2011 approved from the shareholders meeting to extension for placement of common share rising in the form of Taiwan Depository Receipt (TDR). • In May 2011 approved the TDR issuance and trading either at GreTai Securities Market (GTSM) at Public of China (Taiwan) or Taiwan Stock Exchange Corporation (TWSE) by allotting from increased common shares of 170,000,000 shares and outstanding common shares of 30,000,000 shares and the approval TDR Offering Plan for submitting to GreTai Securities Market (GTSM) or Taiwan Stock Exchange Corporation (TWSE) at Public of China (Taiwan). • In August 2011, the Board of Directors approved the increase of Registered Capital of Pure Sammakorn Development Co., Ltd. (PSDC), the Company’s 51% Subsidiary. PSDC’s registered capital will be increased from 225 Million Baht to 260 Million Baht through the issuance of 350,000 additional Ordinary Shares at par value of 100 Baht per share, in total of 35 Million Baht. The Company’s Board of Directors passed a resolution not to invest in these additional shares. As a result, the Company’s shareholding in PSDC will decrease from 51% to 44% and approved the increase of Registered Capital of SCT Petroleum Company Limited (SCT), the Company’s 100% Subsidiary. SCT’s registered capital will be increased from 10 Million Baht to 36 Million Baht through the issuance of 260,000 additional Ordinary Shares at par value of 100 Baht per share, in total of 26 Million Baht. The shares will be allocated to the shareholders in accordance with their existing proportion of the share holding. • In September 2011, the Board acknowledged the result of the issuance of TDR in TWSE at Republic of China (Taiwan), whereby TWSE returned the Company’s application and resolved that the TDR Offering Plan in relation to 170,000,000 new shares and 30,000,000 existing ordinary shares, including all TDR Offering Plan related t ransactions be ceased to proceed and the Board resolved that the support in issuing and offering of TDR for the existing shareholders of 30,000,000 shares be cancelled, and resolved that two Independent Directors be appointed as authorized person to urgently deal with the return of 30,000,000 shares to the existing shareholders which are currently under the custody of the Company’s Custodian. 2012 • In February 2012, PTT has stopped supplying raw materials to the Company, which is in breach of clause 15.5 of the Agreement. This problem leads to the Company has to do the Total Plant Shutdown for the unknown period of time. • In April 2012, the Board resolved and approved to sell 30% Ordinary Shares of RPC Management Co.,Ltd. “RPCM” (previously called Mitsumphan Petroleum Co.,Ltd.) to Khong-Charoen Transportation Co.,Ltd. RPCM has the registered capital of Baht 500,000, representing 5,000 shares with par value of Baht 100 per share. • In April 2012, the Board resolved and approved to purchase 100% Ordinary Shares of Globalization Economic and Promotion Network Co., Ltd. (“GEPN”), a registered 25
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company in Hong Kong for trading and investing businesses. GEPN has the registered capital of HK$ 10,000 representing 10,000 shares at HK$ 1.00 per share. The acquisition price will be HK$ 3.00 per share. After share acquisition, it will be renamed RPC Global Co., Ltd. In August 2012, the Company approved Pure Thai Energy Company Limited (PTEC), the Company’s 100% Subsidiary to establish a Joint Venture company with Super Central Gas Company Limited to jointly enhance in energy businesses. The name of this Joint Venture shall be Super Pure Gas Company Limited with Registered Capital of 20 million Baht, representing 200,000 shares at 100 Baht per share. In October 2012, the Board resolved to increase its shareholding position in SCT Sahaphan Co., Ltd. (“SAP”), the subsidiary of RPC, from 78% to 100%. In November 2012, the Company to jointly invest in a Very Small Power Plant (VSPP) business by purchasing of 6,702 Additional Common Share in KP Energy Group Company Limited (“KPEG”), the juristic person having no connection with the Company in electricity generation business supplying to government and private sectors, at 1,200 Baht per share. The Registered Capital of KPEG is 18.411 Million Baht, 26% shareholding. In November 2012, the Board resolved and approved the Company to acquire shares of Sammakorn Public Company Limited (“SAMCO”) totaling 99 million shares at the acquisition price of THB 2.60 per share and subscription of the right offering, with the ration of 3 existing shares for 1 newly issued share at the offering price of THB 2.20 per share.
Overview of the Business Operation of RPC and Subsidiaries Rayong Purifier Public Company Limited (RPC) RPC is engaged in the distillation of condensate residue (CR), a by-product from the production process of PTT Global Chemical Public Company Limited (PTTGC) (formerly known as PTT Aromatics and Refining Public Company Limited (PTTAR), to produce high quality petroleum and petrochemical products, e.g. high-speed diesel B5, fuel oil and other petrochemical products. RPC’s refinery has a maximum capacity of 17,000 barrels per day or 80 million liters per month. Moreover, RPC also procures unleaded gasoline 91 & 95, gasohol 95 and high-speed diesel from other refineries to satisfy the increased consumers demand. Besides, RPC also operates three oil depots in Rayong, Nakornsawan and Juksamet, to expedite the purchasing and delivery process. RPC has stopped the production for indefinite period since February 2012, RPC’s conduct its operations through its subsidiaries are as follows:
RPC’s subsidiaries 1. Pure Thai Energy Company Limited (PTEC)
PTEC is a subsidiary which held by RPC 99.99% of shares, the registered capital of PTEC is 140 million Baht, divided into ordinary shares of 1,400,000 shares at par value of 100 Baht per share. All shares are fully paid-up. PTEC engages in retail distribution business of high-speed Benzene 91 and Gasohol 95 through “PURE” fuel stations. As of 31 December 2009, PTEC now operates 74 PURE fuel stations nationwide, which are categorized into 2 types of operation: 1) Company operated stations (Company Operate: CO), and 2) Franchised stations (Franchise). Moreover, PTEC has developed the plaza services in fuel station; the first plaza is opened in PURE fuel station located at Amata Nakorn, Chonburi Province.
2. SCT Sahaphan Co., Ltd. (SAP)
SAP is a subsidiary which held by RPC of shares 78% of the registered capital shares of 20 million Baht by issued of ordinary shares of 20,000 shares at par value of 100 Baht. per share. SAP engages in selling of fuel stations equipments and repairing services business. In October 2012, RPC purchased the ordinary shares of SAP from the shareholder of 44,000 shares, at the booked value price as on the date September 30, 2012, total amount of 6,000,000 Baht. Thus, RPC holds the proportion of increased shares of 78% to 100%.
3. Pure Bio-diesel Limited (PBC)
PBC is a subsidiary which held by RPC of shares 99.99%, the registered capital of PBC is 280 million Baht, at par value of 100 Baht per share which divided into 2,800,000 shares. The objectives of PBC are: 1) to produce bio-diesel (B100) from
domestic palm oil which its production capacity of 300,000 liters per day or 100,000 tons per year for blending B100 into diesel fuel, referred to as Diesel B3 and Diesel B5 which are the renewable energies according to the government’s policy, and (2) to produce glycerin with production capacity of 10,000 tons per year, for usage as a raw materials in cosmetics and medical supplies. PBC obtains a BOI Promotion Certificate by which it receives an 8-year corporate income tax exemption. PBC constructed the production plant in 2008 and has received of the certificate for distribution and stocking of fatty acid methyl ester biodiesel was granted by the Department of Energy Business on 30 December 2008. PBC began its production and distribution in January 2009 onwards. PBC has stopped the production for indefinite period since February 2012.
4. SCT Petroleum Co., Ltd. (SCT)
SCT is a subsidiary which held by RPC of 99.99% of shares, the registered capital of SCT is 36 million Baht, divided into 7,200,000 ordinary shares at par value of 5 Baht per share, and all shares are fully paid up. SCT engages in the business as an oil wholesale trader or jobber for trading all kinds of fuel products with major and minor dealers in nationwide such as, high-speed diesel, Benzene 91, Gasohol 95, and fuel oil. SCT has stopped all trading transactions since February 2012.
5. RPC Management Co., Ltd. (RPCM) (formerly known as Mitsampan Petroleum Co., Ltd) RPCM is a subsidiary which held by SCT of shares 99.86%, the registered capital of RPCM is 500,000 Baht, divided into 5,000 ordinary shares at par value of 100 Baht per share, and all shares are fully paid up. RPCM engages in the business as an oil wholesale trader or jobber for trading all kinds of fuel products with major and minor dealers in nationwide such as, high-speed diesel, Benzene 91, Gasohol 95, and fuel oil. RPCM has stopped all trading transactions since February 2012. In April 2012, RPCM adjusted its ordinary share structure which is held by SCT, RPCM became the largest direct shareholder of shares 99.86%, at the booked value price as on the date March 31, 2012. In July, 2012, RPCM sold its ordinary shares to Kongcharoen Transport Co.,Ltd of 1,500 shares, at the value of price 116.21 Baht per share, in the total amount of 174,315 Baht, the proportion of shares is held by RPCM decreased from 99.86 % to 70%, for supporting the systems management services business. 27
6. Tossatis Logistics Co.,Ltd. (TTL) (formerly known as Metro Petroleum Co., Ltd.)
has stopped all trading transactions since February 2012. In April 2012, PSM adjusted its ordinary share structure which TTL is a subsidiary which held by SCT of shares 99.86%, the is held by SCT, PSM became the largest direct shareholder registered capital of TTL is 500,000 Baht, divided into 5,000 of shares 99.86%, at the booked value price as on the date ordinary shares at par value of 100 Baht per share, and all March 31, 2012, for supporting Silica mining business. shares are fully paid up. TTL engages in the business as an oil wholesale trader or jobber for trading all kinds of fuel products 10. Jatuchak Oil Co.,Ltd. (JJO) with major and minor dealers in nationwide such as, high- JJO is a subsidiary which held by SCT of shares 99.86%, the speed diesel, Benzene 91, Gasohol 95, and fuel oil. TTL has registered capital of JJO is 500,000 Baht, divided into 5,000 stopped all trading transactions since February 2012. In April ordinary shares at par value of 100 Baht per share, and all 2012, In April 2012, TTL adjusted its ordinary share structure shares are fully paid up. JJO engages in the business as an oil which is held by SCT, TTL became the largest direct share- wholesale trader or jobber for trading all kinds of fuel products holder of shares 99.86%, at the booked value price as on the with major and minor dealers in nationwide such as, highdate March 31, 2012. speed diesel, Benzene 91, Gasohol 95, and fuel oil. JJO has all trading transactions since February 2012. In April 7. Pure Intertrade Co.,Ltd. (PIN) (formerly known stopped 2012, JJO adjusted its ordinary share structure which is held as Isan Rungreang Petroleum Co.,Ltd.) by SCT, JJO became the largest direct shareholder of shares PIN is a subsidiary which held by SCT of shares 99.86%, the 99.86%, at the booked value price as on the date March 31, registered capital of PIN is 500,000 Baht, divided into 5,000 2012. ordinary shares at par value of 100 Baht per share, and all shares are fully paid up. PIN engages in the business as an oil 11. Jaturatis Transport Co.,Ltd. (JTC) wholesale trader or jobber for trading all kinds of fuel products with major and minor dealers in nationwide such as, high- JTC is a subsidiary which held by SCT of shares 99.86%, speed diesel, Benzene 91, Gasohol 95, and fuel oil. In April the registered capital of JTC is 30 Million Baht, divided into 2012, In April 2012, PIN adjusted its ordinary share structure 300,000 ordinary shares at par value of 100 Baht per share, which is held by SCT, PIN became the largest direct share- and all shares are fully paid up. JTC engages in the business holder of shares 99.86%, at the booked value price as on the as an oil wholesale trader or jobber for trading all kinds of fuel date March 31, 2012. PIN has stopped all trading transactions products with major and minor dealers in nationwide such as, high-speed diesel, Benzene 91, Gasohol 95, and fuel oil. JTC since February 2012. has stopped all trading transactions since February 2012. In 8. Thai Quartz Mining Co.,Ltd. (TQM) (formerly April 2012, JTC adjusted its ordinary share structure which known as Burapha Rungroch Petroleum Co., Ltd.) is held by SCT, JTC became the largest direct shareholder of shares 99.86%, at the booked value price as on the date TQM is a subsidiary which held by SCT of shares 99.86%, the March 31, 2012. registered capital of TQM is 500,000 Baht, divided into 5,000 ordinary shares at par value of 100 Baht per share, and all 12. Pure Sammakorn Development Co.,Ltd. (PSDC) shares are fully paid up. TQM engages in the business as an oil wholesale trader or jobber for trading all kinds of fuel prod- PSDC is jointly invested by RPC which holds of shares 44.31% ucts with major and minor dealers in nationwide such as, high- and Sammakorn Public Company Limited (“SAMCO”) holds speed diesel, Benzene 91, Gasohol 95, and fuel oil. TQM has of shares 55.87%. The registered capital of PSDC is 260 milstopped all trading transactions since February 2012. In April lion Baht, divided into 2.6 million of ordinary shares at par 2012, In April 2012, TQM adjusted its ordinary share structure value of 100 Baht per share, and all shares are fully paid up. which is held by SCT, TQM became the largest direct share- PSDC engages in the business of land development for rent, holder of shares 99.86%, at the booked value price as on the for example, department stores, office building, apartment etc. date March 31, 2012, for supporting quartz mining business. At present, PSDC has developed and managed of 3 shopping malls and PSDC is studying the possibility of the new projects 9. Pure Silica Mining Co.,Ltd. (PSM) (formerly known in the future.
as Benja Petroleum Co., Ltd.)
PSM is a subsidiary which held by SCT of shares 99.86%, the registered capital of PSM is 500,000 Baht, divided into 5,000 ordinary shares at par value of 100 Baht per share, and all shares are fully paid up. PSM engages in the business as an oil wholesale trader or jobber for trading all kinds of fuel products with major and minor dealers in nationwide such as, high-speed diesel, Benzene 91, Gasohol 95, and fuel oil. PSM 28
13. Thai Good Petroleum Co., Ltd. (TGP)
TGP is a joint venture company with Hong Kong investor, which it is not related-person transaction, the registered capital of TGP is 300,000 US Dollar; TGP is located in Hong Kong Special Administrative Region of the People’s Republic of China. TGP holds of shares 31.67% and all shares are fully paid up. This Joint venture engages the business of selling engine lubricant product in Hong Kong SAR and the Macau SAR.
Liter
Liter
Liter
29
Risk Factors In carrying out the business, Company has to face risks arising from a variety of factors which it is necessary to develop the risks handling plans as objectives are as follows:
Risks from fluctuation in fuel price
In spite of, Company has the revenue structure from products distribution and its cost structure which used of the fuel price in Singapore as reference. Nevertheless, Company has to face risks from fluctuation in fuel price in Singapore and world markets which arise from the uncontrollable external factors are: The economic and political in world change, including the regional level,especially in Middle East, which conducts the natural gas business and crude oil. Implementing and maintaining of production capacity and price of natural gas and crude oil by Organization of Petroleum Exporting Countries (OPEC) and the other petroleum production country Demand and supply of natural gas, crude oil and other petroleum products in regional and world Regulations of the government authorities inside and out side country Weather atmosphere World Economic Crisis In the meanwhile, the product price of Company and its subsidiaries is based on the domestic price which is referred from the daily average price of Mean of Platt Singapore (MOPS) as of the date of selling the fuel products. Risks from Government intervention in fuel products pricing This risks arises from the possibility of Government may intervene in price determination of fuel products in the country, especially in fluctuation in fuel price on the world market which focus on controlling inflation and sustainability economics and social of country. The said intervention may affect to business, financial status and turnover of Company and subsidiaries. Nevertheless, Company has considered the risks from intervention in price determination by Government may not affect to Company. The intervention rule is used as temporary policy by Government when fuel price in world market is increased, Government shall lower the price to consumers and entrepreneur, by compensated the actual amount to the fuel refinery companies which have been affected from the said intervention. Thus, profit of refinery was not affect from intervention and Company has maintained our inventories in reducing the risks with the fewest effects. 30
Risks from lawsuit cases This risks arise from the dispute of the black case index no. 114/2552, the dispute of the black case index no. 100/2554, the dispute of the black case index no. 78/2555 of The Thai Arbitration Institute, the civil case of black case index no. 3162/2553 of the Civil Court and the labor case of the black case index no. ror.yor. 303-338/2555 which the event occurred from PTT Public Company Limited (PTT) notified to terminate the Condensate Residue Purchase Agreement (CR) and completely stopped to supply the Condensate Residue (CR) as raw materials, this dispute is processed for consideration of The Thai Arbitration Institute. And the civil case filed to the Court is processed in court hearing procedure, the judgment and the result of lawsuit case would not have been predictable, depending on justice procedure in the future. (Details of the disputes)
Risks of the future business The risks of future business has arisen from PTT Public Company Limited (PTT) who is the only one supplier in distribution of raw materials, failed to perform the obligations under the Agreement without default in performances by Company. The Purchase Agreement is made on a longterm basis with no predetermined end date, and does not specify the period of termination (Evergreen Basis). This issues caused Company filed the case to Arbitration and Civil Court, respectively. During the arbitration hearing, PTT Public Company Limited (PTT) stopped to supply the raw materials to the Company since the date February 1, 2012 onwards, which it is considered in default under Clause 15.5 specified that even if the dispute between the parties has not been resolved, PTT Public Company Limited (PTT) as the party, has obligated to perform its obligations under the Agreement until the final arbitration award will be made by the Arbitrators. These issues have caused the Company to stop its production for the indefinite period and lost the main income. To compensate for loss of the main income, Company is preparing feasibility studies of any projects, whether fuel business and other businesses. At present, Company invested in Very Small Power Producer, the renewable energy business and has invested in real estate project. (Details of the future projects)
Related Transaction
Related transactions of the Rayong Purifier Public Company Limited (the “Company”) and its Subsidiaries with the connected persons in 2011 and 2012 are as follows: Related transactions between the Company and Jazzy Creation Co., Ltd. (“Jazzy”)
31
-
Related transactions of the Company’s subsidiaries with Mongkol Chaipattana Co.,Ltd.
32
33
Management’s
Analytical Report
Rayong Purifier Public Company Limited (the “Company”) and its subsidiaries had a Net Loss of 134 million Baht in 2012 compared to the Net Profit of 171 million Baht in same year 2011, decreased by 305 million Baht or 178%. This loss is due to the fact that PTT has stopped supplying raw materials to the Company since February 1, 2012, which is in breach of clause 15.5 of the Agreement that clearly stipulates that while the matter is under the arbitration proceeding, the parties must continue to comply with its obligations under the Agreement until there is a final decision from the arbitrators, and the case is now in the middle of arbitration procedure. The Company has to shutdown total production for the unknown period of time. This problem leads to serious consequences to the Company and its subsidiaries. The above mention problem drives the Total Sales Revenue for the year of 2012 to be as low as 6,800 million Baht compared to 24,407 million Baht of the previous year; decrease of 17,607 million Baht or 72%. However, the Cost of Sales also decreased 72% to 16,965 million Baht compare to the previous year. Selling and Administrative Expenses and Executives Compensations in 2012 decrease by 71 million Baht or 12%. The reduction was from the lay-off of employees and major DownSizing of the Company’s Organization Structure to reduce expenditures as PTT has stopped delivering the raw material to the Company. As of 31 December 2012, the Company and its subsidiaries hold Total Assets of 2,690 million Baht; Total Liabilities of 1,797 million Baht; and Shareholders Equity of 893 million Baht. Statement of Board of Directors’ Opinion on Financial Statement The Board of Directors is responsible for the financial statement and information of Rayong Purifier Public Co., Ltd. and its subsidiaries as appeared in the annual report. The financial statement was prepared according to the generally accepted accounting standards using appropriate accounting policies with consistent practices. The judgment thereof was exercised cautiously with the best applicable estimates and adequate disclosure of important information in the financial remarks. The Board of Directors has provided and maintained the efficient internal control system, to assure that the accounting re34
cords be thorough, accurate, and adequate to keep all assets, and to be notified of possible weaknesses to assure that the financial statements are free of material misstatements. In this aspect, the Board of Directors has authorized the Audit Committee comprising non-executive committees to supervise the quality of financial statement, and the internal control system. Their opinion thereof appears in the report of Audit Committee. The Board of Directors perceived that the Company’s overall internal control system is in the acceptable and reliable level as appearing in the financial statement of the Company and its subsidiaries as of 31st December, 2012.
Mr. Satja Janetumnugul Chairman of the Board of Directors
Monday 18, 2013 Subject: Performance report of the Audit Committee 2012 as per the scope of duties and responsibilities To: The Board of Directors of Rayong Purifier Public Company Limited The Audit Committee (the “Committee”) performed its duties in accordance with the scope of duties and responsibilities set forth in the Audit Committee Charter, which complies with the regulations of The Stock Exchange of Thailand and authorized by the Board of Directors (the “Board”). For the accounting period of 2012, the Committee has performed its duties independently. The Committee met five times during the year with the management, external auditor, and internal auditor as appropriate to discuss the following issues: 1. Financial Statement and accounting practice according to the International Accounting Standards: The Committee reviewed Rayong Purifier Public Company Limited’s (the “Company”) quarterly and yearly financial statements for the accounting period of 2012 with management and external auditor. The Committee reviewed the opinion of the external auditor on the Company’s financial statements and the disclosure of essential information and concured that the financial statements were prepared according to the compliance with the International Financial Reporting Standards (IFRS) and that the disclosure of essential information was adequate. The Committee also met with the external auditors without the presense of the Company’s management to consider the system of internal controls and the 2012 external audit plan of the Company and its subsidiaries. 2. Related Transactions: The Committee considered the disclosure of Related Transactions and other transactions that may cause a conflict of interest, which the external auditor had expressed an opinion that the Company’s transactions with related companies are disclosed in the Financial Statements and recorded in the notes to the Financial Statements. The Committee agreed with the opinion of the external auditor. Furthermore, the Committee expressed that the transactions were of sound business practices and for the best interest of the Company; and the disclosures were accurate, adequate, and in compliance with related laws and the regulations of the Stock Exchange of Thailand. 3. System of internal controls and independence of the internal audit function: The Committee reviewed the internal
audit reports and the progress of the implementation of the approved Annual Audit Plan quarterly. Furthermore, the Committee advised the internal audit function to continue to perform effectively and efficienly, and diligently conducts follow-up reviews to ensure that material issues were corrected and the system of internal controls is adequate and effective. The Committee also reviewed the risk management policies in accordance with appropriately to the company situation and also reviewed the risk from lawsuit cases and the risk of the company’s business in the future and agreed that the risk management process was appropriate and effective, and that the internal audit function was adequately independent. 4. Compliance with applicable laws and regulations: The Committee reviewed the compliance with the Securities and Exchange Acts, the regulations of the Stock Exchange of Thailand (SET), and other laws relevant to the business practices of the Company. The Committee concluded that the Company’s operation complied with all applicable laws and regulations and no issue existed. 5. Appointment of the external auditors and their remuneration: The Committee considered that the performance, the reputation, the scope of work, and the independency of the external auditors of the previous year to be appropriate. For the year 2012, the Committee recommended that the Board propose to the Shareholders, the appointment of the auditors from ERNST & YOUNG to serve as the Company’s external auditor for the year 2012. 6. Good Corporate Governance: The Company recognized the importance of and continued to operate within the Good Corporate Governance principles. The Committe ensured that the Company accurately and adequately disclosed relavant information and promoted good corporate governance, transparency, and ethics; thus creating confidence among of shareholders, investors, employees and other parties. The Committee also reviewed the method of reporting the interest of the Company’s directors and management in ac-
35
cordance with the Securities and Exchange Act. In summary, the Committee has performed duties as described in the Audit Committee Charter which was approved by the Board. Furthermore, the Committee considered that the Company recognized the importance of good corporate governance which resulted in adequate and effective system of internal controls without any defects; appropriate and effective risk management process; and the Company’s Financial Statement and information disclosure were accurate, completed, and in accordance with generally accepted accounting principles. The Company accurately and completely disclosed information concerning related transactions that might lead to conflict of interest; and adhered to related laws, rules, regulations, and other related requirements. Please be informed accordingly.
On behalf of the Audit Committee
(Dr. Vichit Yamboonruang) Chairman of the Audit Committee Rayong Purifier Public Company Limited
36
Independent Auditor’s Report
To the Shareholders of Rayong Purifier Public Company Limited I have audited the accompanying consolidated financial statements of Rayong Purifier Public Company Limited and its subsidiaries, which comprise the consolidated statement of financial position as at 31 December 2012, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and have also audited the separate financial statements of Rayong Purifier Public Company Limited for the same period.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
However, with respect to the matter discussed in the basis for disclaimer of opinion paragraph, there is currently still no evidence to provide a basis for my audit opinion.
Basis for Disclaimer of Opinion
As discussed in Notes 1.2 and Note 37.4 a) to the financial statements, in 2009 and 2010 the Company became involved in a significant commercial dispute and outstanding litigation with its major raw material supplier. At present, the commercial dispute is under formal arbitration proceedings, and the outstanding litigation is being considered by the Civil Court, meaning their outcomes cannot be determined and depend on the future judicial process. As a consequence of the dispute, the major raw material supplier stopped delivering raw materials to the Company in February 2012, and this forced the Company to cease production, since it has been unable to find new suppliers of these raw materials, while some of its subsidiaries that operate in a related business have had to cease operation. This matter raises substantial doubt about the ability of the Company and some of its subsidiaries to continue as going concerns, and this depends on the outcome of the commercial dispute and outstanding litigation, efforts to find a new source of raw materials, as well as the feasibility of relocating the plant to be close to this new source, the sale of assets and the search for new business opportunities. I did not express an opinion on the consolidated financial statements and separate financial statements for the year 2011. In the current year, the issue has not been resolved, the outstanding litigation is still being considered by the Court and the core operations of the Company and its subsidiaries are still suspended.
Material misstatement
1) As discussed in Note 17 to the financial statements, the stated values of the Company and its subsidiary’s factory buildings, machinery and factory equipment, amounting to Baht 788 million in the consolidated statement of financial position as at 31 December 2012 and Baht 381 million in the separate statement of financial position, are in accordance with the recoverable amounts
37
for the property, plant and equipment that the Company and its subsidiary arranged to be appraised by an independent professional appraiser in 2012. The reappraised values of the factory buildings, machinery and factory equipment are a total of Baht 37 million higher than their net book values in the consolidated financial statements (Separate financial statement: Baht 7 million). Therefore, the Company and its subsidiary have not recorded allowance for impairment of the factory buildings, machinery and factory equipment. However, the basis of revaluation, using the depreciated replacement cost approach, is not compliant with TAS 36 (revised 2009) Impairment of Assets. This standard requires entities to estimate the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use. I have been unable to perform audit procedures to satisfy myself as to the amount of any allowance for impairment because the Company and its subsidiary did not apply the basis of revaluation stipulated in the accounting standard. 2) As at 31 December 2012, the Company estimated the recoverable amounts of short-term loan to a subsidiary and investment in that subsidiary as presented in the separate statement of financial position, amounting to Baht 322 million and Baht 280 million, respectively. The reappraised values of the short-term loan to subsidiary and investment in subsidiary were a total of Baht 104 million lower than their net book values. However, the Company has not recorded allowance for impairment for these accounts. Moreover, the recoverable amounts depend mostly on the value of property, plant and equipment which, as discussed in paragraph 1), the subsidiary arranged to have an independent professional appraiser determine the recoverable amount using a revaluation basis that was not compliant with TAS 36 (revised 2009) Impairment of Assets. Consequently, I have been unable to perform audit procedures to satisfy myself as to the amount of allowance for impairment that should be additionally recorded because the subsidiary did not determine the recoverable amount of property, plant and equipment using a revaluation basis stipulated in the standard.
Disclaimer of Opinion
Because the matter described in the Basis for Disclaimer of Opinion paragraph materially affects the consolidated financial statements of Rayong Purifier Public Company Limited and its subsidiaries and the separate financial statements of Rayong Purifier Public Company Limited for the year ended 31 December 2012, I do not express
Sumalee Reewarabandith Certified Public Accountant (Thailand) No. 3970 Ernst & Young Office Limited Bangkok: 18 February 2013
38
 Rayong Purifier Public Company Limited and its subsidiaries Statement of financial position As at 31 December 2012
(Unit: Baht) Consolidated financial statements Note
2012
2011
Separate financial statements 2012
2011
Assets Current assets Cash and cash equivalents
6
618,176,180
523,807,608
555,721,879
420,383,176
Current investments
7
228,994,798
90,408,602
133,320,663
90,408,602
Trade and other receivables
8, 9
107,724,649
620,533,279
14,587,324
668,088,809
Inventories
10
73,467,043
1,064,370,091
4,898,054
977,154,389
11
400,000
3,100,000
400,000
3,100,000
9
-
1,577,525
353,988,439
16,577,525
Short-term loans to and interest receivable from unrelated parties Short-term loans to related parties Current portion of long-term loans to unrelated parties
12
487,227
886,987
-
427,595
Other current assets
13
24,485,217
157,291,047
5,608,623
94,230,362
1,053,735,114
2,461,975,139
1,068,524,982
2,270,370,458
Total current assets Non-current assets Pledged deposits at banks
14
87,303,714
97,780,291
81,200,000
90,000,000
Long-term loans to unrelated parties
12
2,646,073
3,064,649
1,000,000
931,349
Investments in associates
15
421,338,201
125,649,604
426,946,265
132,355,892
Investments in subsidiaries
16
-
-
481,134,443
431,849,079
Property, plant and equipment
17
1,077,309,445
1,319,883,158
544,525,075
601,974,986
Intangible assets
18
10,207,295
12,840,441
6,936,737
9,040,858
Other non-current assets
19
37,930,231
46,305,330
28,922,006
32,829,818
Total non-current assets
1,636,734,959
1,605,523,473
1,570,664,526
1,298,981,982
Total assets
2,690,470,073
4,067,498,612
2,639,189,508
3,569,352,440
The accompanying notes are an integral part of the financial statements.
39
 Rayong Purifier Public Company Limited and its subsidiaries Statement of financial position (continued) As at 31 December 2012
(Unit: Baht) Consolidated financial statements Note
2012
2011
Separate financial statements 2012
2011
Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions Trade and other payables
20
-
275,000,000
-
-
1,770,599,268
1,596,404,294
1,538,996,916
1,575,913,399
22
1,690,000
12,690,000
-
1,000,000
23
-
140,000,000
-
-
Current portion of long-term loans from unrelated parties24
-
24,000,000
-
24,000,000
Current portion of long-term loans from related parties
-
207,000,000
-
207,000,000
2,944,009
44,704,673
737,618
2,085,686
139,728
19,135,055
-
17,376,549
Short-term loans from unrelated parties
9, 21
Current portion of long-term loans from financial institution
Current portion of liabilities under finance leases
9 17, 25
Income tax payable Provision for termination benefits
26
-
80,855,209
-
63,173,938
Other current liabilities
27
15,257,248
46,604,346
762,789
17,737,990
1,790,630,253
2,446,393,577
1,540,497,323
1,908,287,562
17, 25
3,551,362
69,903,301
1,233,470
3,629,174
26
3,063,855
2,717,299
-
-
-
394,576
-
-
6,615,217
73,015,176
1,233,470
3,629,174
1,797,245,470
2,519,408,753
1,541,730,793
1,911,916,736
Total current liabilities Non-current liabilities Liabilities under finance leases Provision for long-term employee benefits Rental deposits Total non-current liabilities Total liabilities
40
 Rayong Purifier Public Company Limited and its subsidiaries Statement of financial position (continued) As at 31 December 2012
(Unit: Baht) Consolidated financial statements Note
2012
2011
Separate financial statements 2012
2011
Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions Trade and other payables Short-term loans from unrelated parties
-
275,000,000
-
-
1,770,599,268
1,596,404,294
1,538,996,916
1,575,913,399
22
1,690,000
12,690,000
-
1,000,000
23
-
140,000,000
-
-
20 9, 21
Current portion of long-term loans from financial institution
Current portion of long-term loans from unrelated parties24
-
24,000,000
-
24,000,000
Current portion of long-term loans from related parties
-
207,000,000
-
207,000,000
2,944,009
44,704,673
737,618
2,085,686
139,728
19,135,055
-
17,376,549
Current portion of liabilities under finance leases
9 17, 25
Income tax payable Provision for termination benefits
26
-
80,855,209
-
63,173,938
Other current liabilities
27
15,257,248
46,604,346
762,789
17,737,990
1,790,630,253
2,446,393,577
1,540,497,323
1,908,287,562
17, 25
3,551,362
69,903,301
1,233,470
3,629,174
26
3,063,855
2,717,299
-
-
-
394,576
-
-
6,615,217
73,015,176
1,233,470
3,629,174
1,797,245,470
2,519,408,753
1,541,730,793
1,911,916,736
Total current liabilities Non-current liabilities Liabilities under finance leases Provision for long-term employee benefits Rental deposits Total non-current liabilities Total liabilities
41
 Rayong Purifier Public Company Limited and its subsidiaries Statement of financial position (continued) As at 31 December 2012
(Unit: Baht) Consolidated financial statements Note
2012
2011
Separate financial statements 2012
2011
Shareholders' equity Share capital Registered 802,870,229 ordinary shares of Baht 1 each
802,870,229
802,870,229
802,870,229
802,870,229
Issued and paid-up 529,870,229 ordinary shares of Baht 1 each Premium on ordinary shares
529,870,229
529,870,229
529,870,229
529,870,229
335,065,699
335,065,699
335,065,699
335,065,699
Retained earnings Appropriated Statutory reserve - the Company
28
80,304,817
80,304,817
80,304,817
80,304,817
- the subsidiary
28
-
50,000
-
-
(235,072,543)
400,669,993
(22,419,001)
516,857,307
Other components of shareholders' equity
Unappropriated (deficit)
174,636,971
195,337,652
174,636,971
195,337,652
Equity attributable to owners of the Company
884,805,173
1,541,298,390
1,097,458,715
1,657,435,704
8,419,430
6,791,469
-
-
893,224,603
1,548,089,859
1,097,458,715
1,657,435,704
2,690,470,073
4,067,498,612
2,639,189,508
3,569,352,440
Non-controlling interests of the subsidiaries Total shareholders' equity Total liabilities and shareholders' equity The accompanying notes are an integral part of the financial statements.
42
 Rayong Purifier Public Company Limited and its subsidiaries Income statement
For the year ended 31 December 2012
(Unit: Baht) Consolidated financial statements Note
Separate financial statements
2012
2011
2012
2011
6,653,567,583
24,211,666,064
2,521,850,798
19,267,878,633
Revenues Sales Service income Other income
30
Total revenues
146,989,600
195,779,911
-
-
135,340,258
44,951,495
207,664,852
96,190,043
6,935,897,441
24,452,397,470
2,729,515,650
19,364,068,676
6,423,424,320
23,342,811,240
2,457,865,953
18,472,506,793
110,230,190
156,082,819
-
-
Expenses Cost of sales Cost of services Selling expenses Administrative expenses
63,254,462
120,611,012
23,284,191
164,173,053
459,428,441
472,613,525
247,408,010
289,612,471
-
-
33,577,042
-
7,056,337,413
24,092,118,596
2,762,135,196
18,926,292,317
Loss on impairment of investments Total expenses Profit (loss) before share of loss from investments in associates, finance cost and income tax expenses Share of loss from investments in associates
(120,439,972) 15
Profit (loss) before finance cost and income tax expenses Finance cost
(12,764,794)
Profit (loss) before income tax expenses Income tax expenses
(2,076,676) (122,516,648)
(135,281,442) 32
Profit (loss) for the year
(216,864)
360,278,874 (4,623,038) 355,655,836 (67,360,773) 288,295,063 (115,301,443)
(32,619,546) (32,619,546) (4,455,327) (37,074,873) -
437,776,359 437,776,359 (30,483,074) 407,293,285 (108,291,708)
(135,498,306)
172,993,620
(37,074,873)
299,001,577
(133,591,101)
170,732,464
(37,074,873)
299,001,577
(1,907,205)
2,261,156
(135,498,306)
172,993,620
(0.07)
0.56
Profit (loss) attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
0 Basic earnings per share
0
33
Profit (loss) attributable to equity holders of the Company
(0.25)
0.32
The accompanying notes are an integral part of the financial statements.
43
 Rayong Purifier Public Company Limited and its subsidiaries Statement of comprehensive income
For the year ended 31 December 2012
(Unit: Baht) Consolidated financial statements 2012 Profit (loss) for the year
2011
(135,498,306)
172,993,620
Separate financial statements 2012
2011
(37,074,873)
299,001,577
Other comprehensive income: Exchange differences on translation of financial statements in foreign currency
-
(1,477,378)
-
-
Other comprehensive income for the year
-
(1,477,378)
-
-
Total comprehensive income for the year
(135,498,306)
171,516,242
(37,074,873)
299,001,577
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
44
(133,591,101)
169,255,086
(1,907,205)
2,261,156
(135,498,306)
171,516,242
(37,074,873)
299,001,577
45
-
-
Dividend paid to non-controlling interests of the subsidiaries
the subsidiaries
The accompanying notes are an integral part of the financial statements.
Balance as at 31 December 2012
the subsidiaries
Acquisitions of investments from non-controlling interests of
335,065,699 -
-
-
-
-
-
-
-
-
529,870,229
-
-
-
Acquisitions of investments by non-controlling interests of
-
the related companies
Dividend paid (Note 36)
Restructured the ordinary shareholdings of
-
Amortisation of revaluation surplus on assets (Note 29)
-
335,065,699
529,870,229
-
335,065,699
-
-
-
529,870,229
-
Total comprehensive income for the year
Balance as at 1 January 2012
Balance as at 31 December 2011
Dividend paid (Note 36)
to statutory reserve (Note 28)
Unappropriated retained earnings transferred
-
Lost control of a subsidiary
-
-
-
-
Total comprehensive income for the year
335,065,699
ordinary shares
share capital
529,870,229
Premium on
paid-up
Issued and
Amortisation of revaluation surplus on assets (Note 29)
Balance as at 1 January 2011
For the year ended 31 December 2012
Statement of changes in shareholders' equity
Rayong Purifier Public Company Limited and its subsidiaries
-
-
80,304,817
-
-
-
-
-
-
-
80,304,817
80,304,817
-
27,300,000
-
-
-
53,004,817
The Company
-
-
-
-
-
-
-
(50,000)
-
-
50,000
50,000
-
-
-
-
-
50,000
The subsidiary
Appropriated - statutory reserve
Retained earnings
-
-
(235,072,543)
-
-
-
(522,902,116)
50,000
20,700,681
(133,591,101)
400,669,993
400,669,993
(21,194,738)
(27,300,000)
-
21,074,889
170,732,464
257,357,378
(deficit)
Unappropriated
3/7/13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,477,378)
1,477,378
in foreign currency
financial statements
translation of
differences on
income - exchange
Other comprehensive
174,636,971
-
-
-
-
-
(20,700,681)
-
195,337,652
195,337,652
-
-
-
(21,074,889)
-
216,412,541
assets
surplus on
Revaluation
-
-
174,636,971
-
-
-
-
-
(20,700,681)
-
195,337,652
195,337,652
-
-
-
(21,074,889)
(1,477,378)
217,889,919
equity
shareholders'
components of
Total other
Other components of shareholders' equity
Equity attributable to owners of the Company
Consolidated financial statements
Total equity
-
-
884,805,173
-
-
-
(522,902,116)
-
-
(133,591,101)
1,541,298,390
1,541,298,390
(21,194,738)
-
-
-
169,255,086
1,393,238,042
of the Company
shareholders
attributable to
-
-
8,419,430
(5,625,768)
9,174,215
(13,281)
-
-
(1,907,205)
6,791,469
6,791,469
-
-
(125,192,979)
-
2,261,156
129,723,292
subsidiaries
interests of the
to non-controlling
Equity attributable
-
-
893,224,603
(5,625,768)
9,174,215
(13,281)
(522,902,116)
-
-
(135,498,306)
1,548,089,859
1,548,089,859
(21,194,738)
-
(125,192,979)
-
171,516,242
1,522,961,334
equity
shareholders'
Total
(Unit: Baht)
46 -
-
The accompanying notes are an integral part of the financial statements.
-
-
335,065,699
-
Dividend paid (Note 36)
-
-
335,065,699
335,065,699
-
-
-
-
529,870,229
-
Amortisation of revaluation surplus on assets (Note 29)
Balance as at 31 December 2012
-
529,870,229
Balance as at 1 January 2012
Total comprehensive income for the year
529,870,229
-
Balance as at 31 December 2011
Dividend paid (Note 36)
to statutory reserve (Note 28)
-
-
Amortisation of revaluation surplus on assets (Note 29)
Unappropriated retained earnings transferred
-
335,065,699
ordinary shares
share capital 529,870,229
statutory
Premium on
paid-up
-
-
80,304,817
-
-
-
80,304,817
80,304,817
-
27,300,000
-
-
53,004,817
reserve
Appropriated -
-
-
(22,419,001)
(522,902,116)
20,700,681
(37,074,873)
516,857,307
516,857,307
(21,194,738)
(27,300,000)
21,074,889
299,001,577
245,275,579
(deficit)
Unappropriated
Retained earnings
174,636,971
-
(20,700,681)
-
195,337,652
195,337,652
-
-
(21,074,889)
-
216,412,541
assets
surplus on
-
-
174,636,971
-
(20,700,681)
-
195,337,652
195,337,652
-
-
(21,074,889)
-
216,412,541
equity
shareholders'
components of
Total other
shareholders' equity
Other components of
Revaluation
Separate financial statements
Issued and
Total comprehensive income for the year
Balance as at 1 January 2011
For the year ended 31 December 2012
Statement of changes in shareholders' equity (continued)
 Rayong Purifier Public Company Limited and its subsidiaries
-
-
1,097,458,715
(522,902,116)
-
(37,074,873)
1,657,435,704
1,657,435,704
(21,194,738)
-
-
299,001,577
1,379,628,865
equity
shareholders'
Total
(Unit: Baht)
 Rayong Purifier Public Company Limited and its subsidiaries Statement of cash flows
For the year ended 31 December 2012
(Unit: Baht) Consolidated financial statements 2012
2011
Separate financial statements 2012
2011
Cash flows from operating activities Profit (loss) before income tax expenses
(135,281,442)
288,295,063
(37,074,873)
407,293,285
162,124,009
170,046,179
68,381,455
64,042,621
(2,073,059)
16,720,113
-
(250,811)
7,876,730
-
(14,345,773)
(642,471)
(14,078,615)
(491,376)
(588,715)
(108,787)
(418,518)
(108,787)
(67,270,868)
(733,322)
(85,335,873)
Adjustments to reconcile profit (loss) before income tax expenses to net cash provided by (paid from) operating activities: Depreciation and amortisation Bad debts and allowance for doubtful debts (reversal) Reduce cost of inventories to net realisable value (reversal) Gains on sales of current investments Gains on the change in value of current investments Losses (gains) on sales of equipment
(679,321) 8,032,394
806
Provision for termination benefits and provision for long-term employee benefits Unrealised exchange loss (gain)
16,111,951 1,148,197
59,689,754 (154,400)
10,018,028 1,148,197
41,579,063 (154,400)
Loss on impairment of investments
-
-
33,577,042
-
Dividend income from a subsidiary
-
-
(44,207,975)
-
Interest income
(21,238,635)
(5,863,630)
(39,027,258)
(6,743,976)
Interest expense
9,852,305
63,407,427
4,198,613
27,226,442
Share of loss from investments in associates
2,076,676
4,623,038
-
-
-
1,122,896
-
Loss (gain) on recognising investment retained in the former subsidiary at fair value
(14,431,392)
Profit (loss) from operating activities before changes in operating assets and liabilities
(40,059,222)
577,357,877
(78,222,934)
518,212,286
Operating assets (increase) decrease Trade and other receivables
515,504,931
10,675,188
653,806,734
89,465,482
Inventories
982,870,654
317,350,047
964,379,605
209,565,962
Other current assets
135,715,856
(448,940)
87,706,796
609,313
8,375,099
(628,106)
3,907,812
208,742
Other non-current assets
47
 Rayong Purifier Public Company Limited and its subsidiaries Statement of cash flows
For the year ended 31 December 2012
(Unit: Baht) Consolidated financial statements 2012
2011
Separate financial statements 2012
2011
Operating liabilities increase (decrease) Trade and other payables
174,681,412
Cash paid for termination benefits
(96,620,604)
Other current liabilities
(31,361,503)
(85,099,768)
(394,576)
(9,227,491)
Other non-current liabilities Cash from operating activities Cash paid for interest expense Cash received from income tax refunded Cash paid for income tax Net cash from operating activities
1,648,712,047
162,491,721
(36,823,805)
181,772,503
-
(73,191,966)
-
972,470,528
(16,975,201)
(88,802,030)
-
-
1,504,587,041
911,032,258
(9,069,516)
(46,900,878)
(4,291,291)
(27,302,811)
3,150,675
7,677,863
3,150,675
5,025,962
(24,178,541)
(99,820,290)
(18,517,930)
(90,915,159)
1,618,614,665
833,427,223
1,484,928,495
797,840,250
Cash flows from investing activities Decrease (increase) in pledged deposits at banks
10,476,577
(7,780,291)
8,800,000
-
Interest received
18,556,632
5,488,734
36,336,873
6,369,080
-
-
44,207,975
-
(2,678,310,000)
(1,936,000,000)
(1,688,300,000)
(1,269,000,000)
2,554,658,292
1,890,342,471
1,659,885,072
1,190,191,376
-
-
(79,861,821)
-
-
174,315
-
-297,765,273
Dividend received from a subsidiary Cash paid for purchases of current investments Proceeds from sales of current investments Net cash paid for acquisitions of investments in subsidiaries (Note 16) Proceed from sale of investment in a subsidiary (Note 16)
(26,000,615) -
Net cash paid for acquisitions of investments in associates (Note 15) Decrease (increase) in short-term loans to unrelated parties
-297,765,273 2,700,000
Increase in short-term loans to related parties Decrease in long-term loans to unrelated parties Proceeds from sales of equipment
818,336
841,961
358,944
408,815
3,888,424
151,028,051
9,510
-
-
187,030,509 (36,090,469)
(52,574,725)
(7,000)
(204,820)
(237,932,396)
(132,014,976)
The accompanying notes are an integral part of the financial statements.
48
(33,916,730)
(353,988,439)
(2,100,000)
-
Acquisitions of intangible assets Net cash used in investing activities
2,700,000
-
Acquisitions of investment properties Acquisitions of property, plant and equipment
(2,100,000)
(32,943,109) (549,367,412)
(12,000,000)
(2,092,485) (23,750) (114,238,069)
 Rayong Purifier Public Company Limited and its subsidiaries Statement of cash flows
For the year ended 31 December 2012
(Unit: Baht) Consolidated financial statements 2012
2011
Separate financial statements 2012
2011
Cash flows from financing activities Decrease in short-term loans from financial institutions Increase (decrease) in short-term loans from unrelated parties
(275,000,000)
(199,954,746)
(11,000,000)
10,100,000
(1,000,000)
(213,235,036) -
Increase in short-term loans from related parties
-
300,000
-
-
Cash receipt from long-term loans from financial institution
-
30,265,389
-
-
(59,164,529)
-
-
Repayment of long-term loans from financial institution Repayment of long-term loans from unrelated parties
(140,000,000) (24,000,000)
-
(24,000,000)
-
Repayment of long-term loans from related parties
(207,000,000)
(85,000,000)
(207,000,000)
(85,000,000)
Repayment of liabilities under finance leases
(108,691,925)
(39,238,247)
(45,320,264)
(2,118,113)
Acquisitions of investments by non-controlling interests of the subsidiaries
9,174,215
-
-
-
Acquisitions of investments from non-controlling interests of the subsidiaries
(5,625,768)
-
-
-
-
(13,281)
-
-
-522,902,116
-21,194,738
(1,254,822)
(17,101,166)
(1,286,313,697)
(380,988,037)
Decrease in cash placed against guarantee - related party Dividend paid to non-controlling interests of subsidiaries Dividend paid to shareholders by the Company Cash paid for interest expense Net cash used in financing activities Net increase in cash and cash equivalents
-
(522,902,116) -
(6,240,000) (21,194,738) -
(800,222,380)
(327,787,887)
94,368,572
320,424,210
135,338,703
355,814,294
Cash and cash equivalents at beginning of year
523,807,608
203,383,398
420,383,176
64,568,882
Cash and cash equivalents at end of year
618,176,180 -
523,807,608 -
555,721,879 -
420,383,176 -
Supplemental cash flows information: Non-cash transactions Decrease in other payables from purchases of equipment
-
-
579
-
76,916,455
41,576,492
-
20,700,681
21,704,889
20,700,681
21,074,889
-
76,507,278
-
-
Acquisitions of vehicles by finance leases Amortisation of revaluation surplus on assets
(12,190,753)
Increase in investment properties due to change in fair value The accompanying notes are an integral part of the financial statements.
49
Rayong Purifier Public Company
Limited and its subsidiaries
Notes to consolidated financial statements For the year ended 31 December 2012
1. General information 1.1 Corporate information Rayong Purifier Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the manufacture and trading of fuel oil and petrochemical products. The registered office of the Company, which is the head office, is located at 14th Floor, Shinawatra Tower 3, 1010 Viphavadi Rangsit Road, Khwang Chatuchak, Khet Chatuchak, Bangkok. The Company’s branch, which is the plant, is located at 7/3 Pakorn Songkrohrad Road, Map-ta-phut, Muang Rayong, Rayong. In addition, the Company has 3 branches, which are oil depots, in Nakhonsawan, Chonburi and Rayong province. The Company’s major shareholder is Petro-Instruments Company Limited, a limited company under Thai laws, which as at 31 December 2012 and 2011 held 29.87% of the issued and paid-up capital of the Company.
the dispute, the major raw material supplier has stopped delivering raw materials to the Company since February 2012, which has forced the Company to cease production since it has been unable to find new suppliers of these raw materials. However, the Company is in the process of seeking out new business opportunities. This matter raises substantial doubt about the Company’s ability to continue as a going concern and to realise assets and settle liabilities in the ordinary course of business, with uncertainty regarding the results of the commercial dispute and outstanding litigation, the ability to find a new source of raw materials, the possibility of relocating the plant to be close to this new source, the sale of assets and the search for new business opportunities. Therefore, the Company’s financial statements have been prepared on the going concern basis, without making the adjustments to assets to their net realisable values and adjustments to liabilities to the amounts to be paid that would need to be made in the accounts if the Company were not be able to continue as a going concern.
On 30 March 2012, the 2012 Annual General Meeting of shareholders passed resolutions approving the cancellation of the allotment of 273 million additional ordinary shares through the issue of Taiwan Depositary Receipts (TDR) in the 2. Basis of preparation Republic of China (Taiwan), and approving the allotment of 2.1 The financial statements have been prepared in accorthese shares by private placements. dance with accounting standards enunciated under the AcAs a consequence of the impact of cessation of the deliv- counting Professions Act B.E. 2547 and their presentation ery of raw materials to the Company in February 2012, the has been made in compliance with the stipulations of the Company has laid off employees and paid compensation in Notification of the Department of Business Development dataccordance with Labour Law, in order to downsize its busi- ed 28 September 2011, issued under the Accounting Act ness and reduce costs. In addition, Pure Biodiesel Co., Ltd. B.E. 2543. (“PBC”) shut down its plant since it had no orders from its customers and lacked liquidity to operate its business, while The financial statements in Thai language are the official statuJaturatis Transport Co., Ltd. (“JTC”), SCT Petroleum Co., Ltd. tory financial statements of the Company. The financial state(“SCT”) and its 6 subsidiaries have ceased providing service ments in English language have been translated from the and trading. PBC, JTC and SCT have laid off their employees Thai language financial statements. while paying compensation in accordance with Labour Law. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the account1.2 Fundamental accounting assumptions As discussed in Note 37.4 a) to the financial statements, the ing policies. Company is involved in a significant commercial dispute and outstanding litigation with its major raw material supplier. At present, these are under formal arbitration proceedings and litigation, meaning their outcomes cannot be determined and depend on the future judicial process. As a consequence of
50
2.2 Basis of consolidation a) The consolidated nfi ancial statements include the nfi ancial statements of Rayong Purifier Public Company Limited (“the Company”) and the following subsidiaries (“the subsidiaries”). Company’s name
Pure Biodiesel Co., Ltd.*
Nature of business
Place of
Percentage of
incorporation
shareholding 2012
2011
%
%
Manufacture and distribution of biodiesel (B100) and crude glycerin
Thailand
100
100
Pure Thai Energy Co., Ltd. Trading of fuel oil
Thailand
100
100
SCT Petroleum Co., Ltd.*
and its subsidiary
Trading of fuel oil
Thailand
100
100
SCT Sahaphan Co. Ltd.
Distribution and maintenance Thailand
100
78
of gas station equipment Jaturatis Transport Co., Ltd.*
Oil transportation
Thailand
100
-
Pure Intertrade Co., Ltd.
Trading of fuel oil
Thailand
100
-
Trading of fuel oil
Thailand
70
-
Trading of fuel oil
Thailand
100
-
Trading of fuel oil
Thailand
100
-
Trading of fuel oil
Thailand
100
-
Rungroch Petroleum Co., Ltd.”) Trading of fuel oil
Thailand
100
-
Hong Kong
100
-
RPC Management Co., Ltd. (formerly known as“ Mitsumphan Petroleum Co., Ltd.”) Tossatis Logistics Co., Ltd. (formerly known as “Metro Petroleum Co., Ltd.”) Jatuchak Oil Co., Ltd. Pure Silica Mining Co., Ltd. (formerly known as “Benja Petroleum Co., Ltd.”) Thai Quartz Mining Co., Ltd. (formerly known as “Burapha RPC Global Co., Ltd.
Trading of fuel oil and
(formerly known as
petrochemical products
“Globalization Economic and
and investment
Promotion Network Co., Ltd.”) * Business suspended as at 31 December 2012
b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company. d) The assets and liabilities in the financial statements of overseas subsidiary are translated to Baht using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of “Exchange differences on translation of financial statements in foreign currency” in the statements of changes in shareholders’ equity. 51
e) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. f) Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated statement of financial position. 2.3 The separate financial statements, which present investments in subsidiaries and associates presented under the cost method, have been prepared solely for the benefit of the public. 3. New accounting standards not yet effective The Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2013. Accounting Standards: TAS 12 Income Taxes TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates Financial Reporting Standard: TFRS 8 Operating Segments Accounting Standard Interpretations: SIC 10 Government Assistance - No Specific Relation to Operating Activities SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders The Company’s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied. In addition, the Federation of Accounting Professions has issued Notification No. 30/2555 - 34/2555, published in the Royal Gazette on 17 January 2013, mandating the use of accounting treatment guidance and accounting standard interpretations as follows. Effective date Accounting Treatment Guidance for Transfers of Financial Assets 1 January 2013 Accounting Standard Interpretation: SIC 29 Service Concession Arrangements: Disclosures 1 January 2014 Financial Reporting Standard Interpretations: TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014 TFRIC 12 Service Concession Arrangements 1 January 2014 TFRIC 13 Customer Loyalty Programmes 1 January 2014 The Company’s management has assessed the effect of these standards and believes that they are not relevant to the business of the Company.
52
4. Significant accounting policies 4.1 Revenue recognition Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances. Revenue from transportation service Revenue from transportation service is recognised on an accrual basis when service has been rendered. Revenues from construction services Revenues from construction services are recognised when services have been rendered taking into account the stage of completion. The stage of completion measured by the proportion of actual construction cost incurred up to the end of the year and the total anticipated construction cost to be incurred to completion. Provision for the total anticipated loss on construction projects will be made in the accounts as soon as the possibility of loss is ascertained. Revenues from rental and service Revenues from rental and service are recognised on a straight-line basis over the lease term. Management fee income Management fee income is recognised on an accrual basis in accordance with the terms and conditions specified in the contracts. Interest income Interest income is recognised on an accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 4.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 4.3 Trade receivables Trade receivables are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging.
4.5 Investments a) Investments in securities held for trading are stated at fair value. Changes in the fair value of these securities are recorded in the income statement. b) Investments in associates are accounted for in the consolidated financial statements using the equity method. c) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method. The fair value of unit trusts is determined from their net asset value. The weighted average method is used for computation of the cost of investments. On disposal of an investment, the difference between net disposal proceeds and the carrying amount of the investment is recognised in the income statement. 4.6 Property, plant and equipment and depreciation Land is stated at revalued amount. Plant and equipment are stated at cost or revalued amount less accumulated depreciation and allowance for loss on impairment of assets (if any). Land, factory buildings, machinery and factory equipment are initially recorded at cost on the acquisition date, and subsequently revalued by an independent professional appraiser to their fair values. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the end of reporting period. Differences arising from the revaluation are dealt with in the financial statements as follows. - When an asset’s carrying amount is increased as a result of a revaluation of the Company’s assets, the increase is credited directly to the other comprehensive income and the cumulative increase is recognised in equity under the heading of “Revaluation surplus on assets” in other components of shareholders’ equity. However, a revaluation increase is recognised as income to the extent that it reverses a revaluation decrease in respect of the same asset previously recognised as an expense.
- When an asset’s carrying amount is decreased as a result of a revaluation of the Company’s assets, the decrease is recognised in the income statement. However, the revaluation decrease is charged to the other comprehensive income to the extent that it does not exceed an amount already held in respect of the same asset in “Revaluation surplus on as4.4 Inventories Inventories are valued at the lower of average cost and net sets” in other components of shareholders’ equity. realisable value. Cost of finished goods produced includes Depreciation of plant and equipment is calculated by reference to their costs or the revalued amount, on the straightraw materials, direct labour and production overheads. line basis over the following estimated useful lives.
53
Building improvements 5 - 30 years Buildings 20 - 40 years Machinery and equipment 5 - 20 years Office furniture, fixture and equipment 3 - 5 years Motor vehicles 5 years Depreciation is included in determining income. No depreciation is provided on land and construction in progress. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised. 4.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.8 Intangible assets and amortisation Intangible assets acquired are recognised at cost on the date of acquisition. Following the initial recognition, the intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses (if any). Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to the income statement. The useful lives of software are 5 and 10 years. 4.9 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Company’s operations. 54
4.10 Long-term leases Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership to the lessee are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in long-term payables, while the interest element is charged to the income statement over the lease period. The assets acquired under finance leases is depreciated over the useful life of the asset. Leases of property, plant or equipment which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. 4.11 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of reporting period. Gains and losses on exchange are included in determining income. 4.12 Impairment of assets At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment and intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in the income statement. However in cases where property, plant and equipment were previously revalued and the revaluation was taken to equity, a part of such impairment is recognised in equity up to the amount of the previous revaluation.
4.13 Employee benefits Short-term employee benefits Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred.
Forward exchange contracts Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling at the end of reporting period. Unrecognised gains and losses from the translation are included in determining Post-employment benefits income. Premiums or discounts on forward exchange conDefined contribution plans tracts are amortised on a straight-line basis over the contract The Company, its subsidiaries and its employees have jointly periods. established a provident fund. The fund is monthly contributed by employees and by the Company and its subsidiaries. 5. Significant accounting judgments and estimates The fund’s assets are held in a separate trust fund and the The preparation of financial statements in conformity with fiCompany’s and its subsidiaries’ contributions are recognised nancial reporting standards at times requires management to as expenses when incurred. make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates Defined benefit plans affect reported amounts and disclosures; and actual results The Company and its subsidiaries have obligations in re- could differ from these estimates. Significant judgments and spect of the severance payments it must make to employ- estimates are as follows. ees upon retirement under labor law. The Company and its subsidiaries treat these severance payment obligations as a Leases defined benefit plan. In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to The obligation under the defined benefit plan is determined use judgment regarding whether significant risk and rewards by a professionally qualified independent actuary based on of ownership of the leased asset has been transferred, taking actuarial techniques, using the projected unit credit method. into consideration terms and conditions of the arrangement. Termination benefits The Company and its subsidiaries have obligations in respect of the termination of employment of employees before the normal retirement date. Termination benefits are immediately recognised as an expense. For the first-time adoption of TAS 19 Employee Benefits in 2011, the Company elected to recognise the transitional liability, which exceeds the liability that would have been recognised at the same date under the previous accounting policy, retrospectively as though the Company and its subsidiaries initially recorded these employee benefit expenses.
Allowance for doubtful debts In determining an allowance for doubtful debts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.
Property, plant and equipment and depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and residual values of the plant and equipment and to review estimate useful lives and residual values when there are any changes. The Company measures land, factory buildings, machinery and factory equipment at revalued amounts. Such amounts are determined by the independent valuer using the market 4.14 Provisions approach for land and the depreciated replacement cost apProvisions are recognised when the Company and subsidiar- proach for factory buildings, machinery and factory equipies have a present obligation as a result of a past event, it is ment. The valuation involves certain assumptions and estiprobable that an outflow of resources embodying economic mates. benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 4.15 Income tax Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation. 4.16 Derivatives 55
In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Post-employment benefits under defined benefit plans The obligation under the defined benefit plan is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate. Litigation The Company has contingent liabilities as a result of litigation. The Company’s management has used judgement to assess of the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the end of reporting period. 6. Cash and cash equivalents
(Unit: Thousand Baht)
Cash Bank deposits Bills of exchange Total
Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
20,957
14,107
235
271
597,219
103,701
555,487
14,112
-
406,000
-
406,000
618,176
523,808
555,722
420,383
As at 31 December 2012, bank deposits in savings accounts and fixed accounts carried interests between 0.63% and 3.40% per annum (2011: bank deposits in savings accounts and bills of exchange between 0.13% and 3.25% per annum).
56
7. Current investments (Unit: Thousand Baht) Consolidated financial statements 2012 Cost
2011
Fair value
Cost
Fair value
Deposits in fixed-term bank accounts 100,000
100,000
-
-
100,000
100,000
-
-
128,406
128,995
90,300
90,409
589
-
109
-
Investment units in mutual fund - net
128,995
128,995
90,409
90,409
Total current investments - net
228,995
228,995
90,409
90,409
Maturing within six-months Total deposits in fixed-term bank accounts Investment units in mutual funds Cost Add: Unrealised gain
(Unit: Thousand Baht) Separate financial statements 2012 Cost
2011
Fair value
Cost
Fair value
Deposits in fixed-term bank accounts Maturing within six-months
50,000
50,000
-
-
50,000
50,000
-
-
82,902
83,321
90,300
90,409
419
-
109
-
83,321
83,321
90,409
90,409
133,321
133,321
90,409
90,409
Total deposits in fixed-term bank accounts Investment units in mutual funds Cost Add: Unrealised gain Investment units in mutual fund - net Total current investments - net
As at 31 December 2012, bank deposits in fixed accounts carried interest at 3.40% per annum (2011: nil).
57
8. Trade and other receivables (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
Trade receivables - related parties Aged on the basis of due dates Not yet due Not over 3 months
67
77
-
270,422
-
470
-
-
67
547
-
270,422
63,839
589,452
-
383,864
3 - 6 months
1,017
573
-
-
6 - 12 months
2,058
329
-
-
Over 12 months
4,426
9,629
617
617
Total
71,340
599,983
617
384,481
Less: Allowance for doubtful debts
(4,679)
(9,145)
(617)
(617)
Total trade receivables - unrelated parties, net
66,661
590,838
-
383,864
5,271
2,287
10,805
11,407
30,571
20,855
3,394
1,899
7,868
10,066
388
3,910
Total
43,710
33,208
14,587
17,216
Less: Allowance for doubtful debts
(2,713)
(4,060)
-
(3,413)
Total other receivables - net
40,997
29,148
14,587
13,803
107,725
620,533
14,587
668,089
3 - 6 months Total trade receivables - related parties Trade receivables - unrelated parties Aged on the basis of due dates Not yet due Not over 3 months
Other receivables Advances - related parties Accrued income Others
Total trade and other receivables, net
58
9. Related party transactions The relationship between the Company and related parties are summarised below. Name Pure Biodiesel Co., Ltd. Pure Thai Energy Co., Ltd. (“PTEC”) SCT Petroleum Co., Ltd. SCT Sahaphan Co., Ltd. Jaturatis Transport Co., Ltd. Pure Intertrade Co., Ltd. RPC Management Co., Ltd. Tossatis Logistics Co., Ltd. Jatuchak Oil Co., Ltd. Pure Silica Mining Co., Ltd. Thai Quartz Mining Co., Ltd. RPC Global Co., Ltd. Super Pure Gas Co., Ltd. Pure Sammakorn Development Co., Ltd. Thai Good Petroleum Co., Ltd. Sammakorn Plc. KP Energy Group Co., Ltd. Petro-Instruments Co., Ltd. Jazzy Creation Co., Ltd. Blue Planet Travel Co., Ltd. Alt Energy Co., Ltd. Humankind Co., Ltd. Mongkholchai Pattana Co., Ltd. World Entertainment Television Co., Ltd. Honest and Efficient Co., Ltd.
Relationship Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary of PTEC Associate Associate Associate Associate 29.87% of shares held in the Company Common directors Common directors Common directors Common directors Common directors Common directors Common directors
During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties.
59
(Unit: Million Baht) Consolidated
Separate
financial statements
financial statements
2011
2012
2012
2011
Transactions with subsidiaries (Eliminated from the consolidated financial statements) Sales
-
-
222
8,807
Management fee income
-
-
11
11
Dividend income
-
-
44
-
Interest income
-
-
19
2
Other income - other services
-
-
5
39
Purchases of goods
-
-
2
595
Service fee expense
-
-
2
8
Transportation expense
-
-
17
134
Purchases of motor vehicles
-
-
72
-
Other expenses
-
-
11
-
Other expenses
-
1
-
-
Land rental expense
2
-
-
-
Sales
1
1
-
-
Service income
-
1
-
-
Other expenses
1
2
-
1
Land rental expense
-
2
-
-
Interest expense
1
15
1
15
Transactions with associates
Transactions with related parties
Transfer pricing policy for significant business transactions with related parties are summarised below. Transactions Sales
Management fee income
60
Transfer pricing policy The selling price is set out based on the market price with discount for oil wholesale business, provided according to the volumes of order. The selling price is set out based on the market price with the fixed rate marketing margin discount for oil retail business. The selling price is set out based on the market price for oil transportation business.The selling price is set out based on the market price with discount for manufacture and distribution of biodiesel business, provided according to the contract. Calculation based on quantities of products sold for oil wholesale business. Contract price and at actual costs for oil retail business, oil transportation business, manufacture and distribution of biodiesel business, property rental and service business and distribution and maintenance of gas station equipment business.
Transactions Dividend income Interest income
Other income Purchases of goods
Purchases of motor vehicles Service fee expense Transportation expense Other expenses Interest expense
Transfer pricing policy
As declared 2.35% - 7.00% per annum (2011: 4.18% - 5.77% per annum) and the prime rate plus 3% per annum Contract price Guarantee fee at a rate of 1% per annum The purchase price is set out based on the market price with discount for oil wholesale business, providing according to the volumes of order. The purchase price is set out based on the market price for manu facture and distribution of biodiesel business and maintenance of gas station equipment business. At net book value Contract price Contract price Contract price 5.75% per annum (2011: 4.95% - 5.75% per annum)
tion to terminate of not less than 1 month. During the year Significant agreements with related parties Purchases and sales of petroleum products agreements 2012, the Company terminated the agreement. In April 2010, the Company entered into purchases and sales of petroleum products agreements with two subsidiaries for trading of oil products. The selling price was set based on the market price with a discount applied in accordance with the agreements. The agreements were to continue in force until either party terminated them with written notice of the intention to terminate provided to the other party not less than 1 month in advance. During the year 2012, the Company terminated the agreement. Management and administration agreements In January 2012, the Company entered into management and administration agreements with various subsidiaries to provide consultation relating to human resources, administration, information technology, law and coordination with the government. The service fees were stipulated in the agreements, which were for a period of 1 year, ended in December 2012. Guarantee agreements The Company entered into the agreements with various subsidiaries to guarantee bank credit facilities of subsidiaries amounting to Baht 70 million. The guarantees are effective for as long as the underlying obligations have not been discharged by the subsidiaries. The Company charges a guarantee fee at a rate of 1% per annum.
Transportation service agreement In June 2011, the Company entered into an agreement with a subsidiary whereby the subsidiary was to provide oil transportation services. Oil transportation service fees were charged in accordance with the rate stipulated in the agreement, which was effective from 1 June 2011 to 31 January 2012, and was to continue in force until terminated by either party with written notice of its intention to terminate of not less than 60 days. During the year 2012, the Company terminated the agreement. Sales management agreement In January 2011, the Company entered into a sales management agreement with a subsidiary whereby the subsidiary was to provide sales management services and source customers. A service fee was charged in accordance with the rate stipulated in the agreement, which was to continue in force until terminated by either party with written notice of its intention to terminate of not less than 1 month. During the year 2012, the Company terminated the agreement.
Brand using agreement In January 2012, the Company entered into a memorandum with a subsidiary, whereby the subsidiary was to sell oil under “Pure� brand. The service fee was as stipulated in the agreement, which was for a period of 1 year, ended in December 2012. Rental of oil depots agreement In August 2009, the Company entered into an agreement with a As at 31 December 2012 and 2011, the balances of the acsubsidiary to provide oil depot rental services. Monthly service counts between the Company and those related companies fees were stipulated in the agreement, which was for a period are as follows. of 3 years (from 20 August 2009 to 19 August 2012). The agreement was to continue in force for period of 3 months each time until terminated by either party gave with written notice of inten61
(Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2011
2012
2012
2011
Trade and other receivables - related parties (Note 8) Trade receivables - related parties Subsidiaries
-
-
-
270,422
Associates
12
18
-
-
Related companies (common directors)
55
60
-
-
-
469
-
-
67
547
-
270,422
-
-
5,788
11,077
460
494
213
287
7
1,793
-
43
5,000
-
5,000
-
5,467
2,287
11,001
11,407
Related person (The Company's director) Total trade receivables - related parties Other receivables - related parties Subsidiaries Associates Related companies (common directors) Related person (The Company's director) Total other receivables - related parties Less: Allowance for doubtful debts
(196)
-
(196)
-
Total other receivables - related parties, net
5,271
2,287
10,805
11,407
-
-
368,988
15,000
1,524
1,578
1,524
1,578
1,524
1,578
370,512
16,578
Short-term loans to related parties Subsidiaries Associate Total short-term loans to related parties Less: Allowance for doubtful debts
(1,524)
-
(16,524)
-
Total short-term loans to related parties, net
62
-
1,578
353,988
16,578
(Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2011
2012
2012
2011
Trade and other payables - related parties (Note 21) Trade payables - related parties Subsidiaries Total trade payables - related parties
-
-
-
24,306
-
-
-
24,306
-
-
11,444
16,698
128
21
-
-
57
348
12
308
-
292
-
282
185
661
11,456
17,288
-
101,500
-
101,500
-
105,500
-
105,500
-
207,000
-
207,000
Other payables - related parties Subsidiaries Associates Related companies (common directors) Related person (The Company’s director) Total other payables - related parties Current portion of long-term loans from related parties Related companies (common directors) Related persons (Related with the Company’s directors) Total current portion of long-term loans from related parties
Loans to related parties and loans from related parties
As at 31 December 2012 and 2011, the balance of loans between the Company and those related parties and the movements are as follows.
63
64
As at 31 December 2012, short-term loans to subsidiaries totaling Baht 369 million (2011: Baht 15 million) are in the form of unsecured promissory notes with maturities of 6 months, carrying interest at rates of 3.40% - 5.13% per annum (2011: 5.05% per annum). As at 31 December 2012, short-term loan to an associate amounting to Baht 1.52 million, or USD 0.05 million (2011: 1.58 million, or USD 0.05 million) is in the form of an unsecured loan with a maturity of 1 year and carries interest at the prime rate plus 3% per annum. The principal and its interest are to be repaid in full within November 2011. Subsequently, in January 2012, the Company received a letter requesting an extension of the loan term to December 2012. However, as at 31 December 2012, the Company had not received repayment of the loan, and therefore set up allowance for doubtful debt for the full amount of the loan and interest receivable. As at 31 December 2011, long-term loans from related parties totaling Baht 207 million were in the form of unsecured loans with maturities of 2 years, carrying interest at rate of 5.75% per annum and payable quarterly. The principal was to be repaid in full within September 2012. In February 2012, the Company repaid the whole balance of long-term loans. Management benefit expenses During the years ended 31 December 2012 and 2011, the Company and its subsidiaries had employee benefit expenses payable to their directors and management as below. (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012 Short-term employee benefits
2011
23,955
Post-employment benefits
100,677
-
2012
2011
17,092
78,484
(10,507)
-
(10,507)
Termination benefits
10,560
34,011
9,968
28,027
Total
34,515
124,181
27,060
96,004
10. Inventories (Unit: Thousand Baht) Consolidated financial statements Reduce cost to net Cost 2012 Finished goods Raw materials Supplies Total
realisable value 2011
2012
Inventories - net
2011
79,239
840,346
(8,569)
-
221,090
-
2,797
3,471
-
82,036
1,064,907
(8,569)
2012
(537)
2011
70,670
839,809
-
-
221,090
-
2,797
3,471
73,467
1,064,370
(537)
(Unit: Thousand Baht)
65
Separate financial statements Reduce cost to net Cost 2012 Finished goods
Total
2011
9,979
756,053
-
217,630
2,797
3,471
12,776
977,154
Raw materials Supplies
realisable value 2012
Inventories - net
2011
(7,878)
2012
2011
-
2,101
756,053
-
-
-
217,630
-
-
2,797
3,471
-
4,898
977,154
(7,878)
Inventories as at 31 December 2012 included oil of Baht 1 million reserved in accordance with the Ministry of Commerce regulations (2011: Baht 707 million).
11. Short-term loans to and interest receivable from unrelated parties (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012 T.C.S. Oil Co., Ltd. Others Total Less: Allowance for doubtful debts
2011
2012
2011
21,317
21,317
21,317
21,317
400
3,100
400
3,100
21,717
24,417
21,717
24,417
(21,317)
(21,317)
(21,317)
(21,317)
Short-term loans to and interest receivable from unrelated parties - net
400
3,100
400
3,100
On 14 January 2006, the Company entered into a Petroleum Product Business Joint Venture Agreement with T.C.S. Oil Co., Ltd. (“TCS�) for the purpose of the joint oil business in Cambodia. The agreement is effective for a period of 15 years, expiring in 2020. The Company is obliged to provide fuel and a Baht 35 million loan to TCS. The loan is subject to fixed interest rate at 5% per annum and payable on a monthly basis. The repayment of loan principal is stipulated in the agreement. The Company will receive share of profit from the operating results of TCS, as specified in the agreement, upon receipt of full loan repayment. TCS was unable to commence its operations as originally planned, and the Company therefore ceased accrual of interest income from 1 January 2010.
66
12. Long-term loans to unrelated parties (Unit: Thousand Baht) Consolidated
Separate
financial statements 2012
financial
statements
2011
2012
2011
Credit line of Baht 3.50 million
2,133
2,593
-
-
Credit line of Baht 1.90 million
-
1,359
-
1,359
Others
1,000
-
1,000
-
Total
3,133
3,952
1,000
1,359
Less: Current portion Non-current portion
(487) 2,646
(887) 3,065
-
(428)
1,000
931
The long-term loan facility of Baht 3.50 million represents a loan to an unrelated party to repay debt on behalf of a client, who has transferred a title deed of land to the subsidiary as collateral. The subsidiary has entered into a contract to sell the land back to the client when the client has repaid all debt. The loan and its interest are scheduled to be repaid in 86 monthly installments of Baht 50,000 each, ending in December 2016. The long-term loan facility of Baht 1.90 million was an unsecured loan that carried interest at a rate of 4.50% per annum. The principal and its interest were scheduled to be repaid in 52 monthly installments of Baht 40,000 each, ending in December 2014. In June 2012, the Company received full settlement of the balance of this loan. 13. Other current assets (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
Refund receivable from the Oil Stabilization Fund
-
46,391
-
42,302
-
2,886
-
2,886
Value added tax refundable
1,739
34,575
904
33,578
Prepaid corporate income tax
6,575
4,759
1,141
3,151
12,344
21,801
2,391
10,626
-
41,997
-
-
3,827
4,882
1,173
1,687
24,485
157,291
5,609
94,230
Prepaid excise tax
Prepaid expenses Advances for purchases of inventories Others Total other current assets
67
14. Pledged deposits at banks These represented fixed deposits pledged with the banks to secure credit facilities and as bonds in lawsuits with the court. 15. Investments in associates 15.1 Details of associates (Unit: Thousand Baht)
Company’s name
Thai Good Petroleum Co., Ltd. Pure Sammakorn Development Co., Ltd. Sammakorn Plc.
Nature of
Country of
Shareholding
business
incorporation
percentage
Separate financial statements
Carrying amounts
Carrying amounts
based on equity method
based on cost method
2012
2011
(%)
(%)
Hong Kong
31.67
31.67
3,175
3,175
-
-
3,175
3,175
Thailand
44.13
44.13
129,181
129,181
122,410
125,650
129,181
129,181
Thailand
24.81
-
289,723
-
291,038
-
289,723
-
Thailand
26.00
-
8,042
-
7,890
-
8,042
-
430,121
132,356
2012
2011
2012
2011
2012
2011
Distribution of lubricant oil Real estate rental and service Real estate development
KP Energy Group
Cost
Consolidated financial statements
Production and
Co., Ltd.
distribution of electricity
Total investments in associates
421,338
125,650
Less: Allowance for impairment
-
-
Investments in associates - net
421,338
125,650
68
(3,175) 426,946
132,356
Sammakorn Plc.
KP Energy Group Co., Ltd.
RPC
The Company’s Board of Directors meeting held on 22 November 2012 approved a resolution to purchase 99 million of the ordinary shares of Sammakorn Plc. (“SAMCO”) at Baht 2.60 per share, or a total cost of Baht 257.40 million from the existing shareholders. The Company invested in such company in November 2012, using its working capital to finance the investment. In addition, during November to December 2012, the Company purchased a further 12,639,600 shares at an average price of Baht 2.44 per share, or a total cost of Baht 30.83 million, through the Stock Exchange of Thailand. The Extraordinary General Meeting of SAMCO’s shareholders held on 13 December 2012 approved a resolution to increase its registered capital from Baht 450 million to Baht 650 million through the issue of 200 million additional ordinary shares (par value of Baht 1 each), a total of Baht 200 million, and allocate up to 150 million shares to the existing shareholders pro rata to their shareholding (rights offering) at a price of Baht 2.20 per share, in a ratio of 1 new share for every 3 existing shares. Up to 50 million shares plus the shares remaining from the allotment to the shareholders under the rights offering will be allocated to specific persons by private placement at prices that are not to be lower than either the price at which SAMCO’s ordinary shares were offered to existing shareholders of SAMCO (rights offering) or 90% of the market price, pursuant to the relevant notifications of the Capital Market Supervisory Board. In January 2013, SAMCO offered a total of 139,410,340 shares, of which 37,213,200 were purchased by the Company. As a result, the Company’s shareholding in SAMCO increased from 24.81% to 25.25%. SAMCO is principally engaged in the real estate development.
The Company’s Board of Directors meeting held on 7 November 2012 approved a resolution to purchase 6,702 of the additionally issued ordinary shares of KP Energy Group Co., Ltd. (“KPEG”) at Baht 1,200 per share, or a total cost of Baht 8.04 million. KPEG increased its registered capital from Baht 18.41 million to Baht 25.78 million through the issue of 7,369 additional ordinary shares (par value of Baht 1,000 each), a total of Baht 7.37 million. The Company invested in such company in November 2012, using its working capital to finance the investment. KPEG is principally engaged in the production and distribution of electricity.
69
15.2 Share of loss and dividend received During the years, the Company has recognised its share of loss from investments in associates in the consolidated financial statements and dividend income in the separate financial statements as follows. (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
Share of profit (loss) from investments in associates
Dividend received
during the year
during the year
Company’s name
2012
2011
Thai Good Petroleum Co., Ltd.
-
2012
2011
(1,092)
-
-
(3,531)
-
-
-
-
-
-
-
-
-
-
Pure Sammakorn Development Co., Ltd.
(3,239)
Sammakorn Plc.
1,314 (152)
KP Energy Group Co., Ltd.
(4,623)
(2,077)
Total
15.3 Summarised financial information of associates The financial information of the associates is summarised below. (Unit: Thousand Baht)
Company’s name
Total revenues for the
Profit (loss) for the
Paid-up capital
Total assets
Total liabilities
years ended
years ended
as at 31 December
as at 31 December
as at 31 December
31 December
31 December
2012
2011
2012
2012
2011
10,026
10,026
14,966
11,742
6,757
260,000 450,000
25,780
2011
2012
2011
2012
2011
6,060
(4,905)
(7,353)
Thai Good Petroleum Co., Ltd.*
5,367
7,210
260,000
552,887
504,296
363,703
307,772
113,348
26,563
(7,340)
(8,002)
-
3,113,262
-
1,252,056
-
123,047
-
5,299
-
-
22,376
-
1,201
-
67
-
(585)
-
Pure Sammakorn Development Co., Ltd. Sammakorn Plc. KP Energy Group Co., Ltd.
* Investment in Thai Good Petroleum Co., Ltd. was determined on the basis of financial information as at 30 September 2012 and for the nine-month period ended 30 September 2012 provided by this company’s management, that was unaudited by its external auditor. However, the value of the investment is immaterial. 15.4 Investment in an associate with capital deficit The Company recognised share of loss from investment in an associate until the value of the investment approached zero. Subsequent loss incurred by this associate has not been recognised in the Company’s accounts since the Company has no obligations, whether legal or constructive, to make any payments on behalf of this associate. The amount of such unrecognised share of loss is set out below. 70
(Unit: Thousand Baht) Unrecognised share of loss Company's name
Share of loss
Cumulative share of loss up to
For the nine-month period ended
For the year ended
30 September
31 December
30 September 2012
31 December 2011
2012
2011
Thai Good Petroleum Co., Ltd.
(1,553)
(1,237)
(2,790)
(1,237)
16. Investments in subsidiaries Details of investments in subsidiaries as presented in the separate financial statements are as follows. (Unit: Thousand Baht) Shareholding Company
Paid-up capital
Dividend received
percentage
2012
2011
280,000
280,000
140,000
Cost
2012
2011
%
%
100
99,995
36,000
36,000
SCT Sahaphan Co., Ltd.
20,000
Jaturatis Transport Co., Ltd.
30,000 500
Pure Biodiesel Co., Ltd.
during the year
2012
2011
2012
2011
100
279,999
279,999
-
-
100
100
140,000
99,994
-
-
100
100
36,000
36,000
44,208
-
20,000
100
78
21,481
15,856
-
-
-
100
-
30,402
-
-
-
-
100
-
654
-
-
-
Pure Thai Energy Co., Ltd. and its subsidiary SCT Petroleum Co., Ltd.
Pure Intertrade Co., Ltd. RPC Management Co., Ltd.
500
-
70
-
406
-
-
-
Tossatis Logistics Co., Ltd.
500
-
100
-
579
-
-
-
Jatuchak Oil Co., Ltd.
500
-
100
-
652
-
-
-
Pure Silica Mining Co., Ltd.
500
-
100
-
658
-
-
-
Thai Quartz Mining Co., Ltd.
500
-
100
-
581
-
-
-
-
124
-
-
-
Total investments in subsidiaries
511,536
431,849
44,208
-
Less: Allowance for impairment
(30,402)
RPC Global Co., Ltd.
Investments in subsidiaries - net
41
-
100
481,134
431,849
As a consequence of the impact of cessation of the delivery of raw materials to the Company in February 2012, a meeting of the Company’s Board of Directors held on 3 April 2012 approved a restructuring of the ordinary shareholding of 7 companies held by SCT Petroleum Co., Ltd., a 100%-held subsidiary of the Company, so that they are all 100% directly held by the Company. The share acquisition prices were the net book values as at 31 March 2012, or a total of Baht 34 million. 16.1 Pure Biodiesel Co., Ltd. In early 2012, Pure Biodiesel Co., Ltd. (“PBC”) shut down its plant since it had no orders from its customers and lacked liquidity to operate its business. PBC has laid off its employees while paying compensation in accordance with Labour Law. PBC has received promotional privileges from the Board of Investment for the manufacture of bio-diesel, pursuant to the promotion certificate No. 1840(9)/2550 issued on 30 August 2007. Subject to certain imposed conditions, the privileges include an exemption from corporate income tax on net income from the promoted operations for a period of eight years from the date the promoted activity commenced generating revenues (from 12 January 2009 to 11 January 2017).
71
The PBC’s operating revenues for the years 2012 and 2011 are below shown divided according to promoted and non-promoted operations. (Unit: Thousand Baht) Promoted operations 2012
2011
Non-promoted operations 2012
2011
Total 2012
2011
Sales and services Domestic sales and services Export sales Total
23,742
1,627,353
9,829
886,200
33,571
2,513,553
-
31,109
-
-
-
31,109
23,742
1,658,462
9,829
886,200
33,571
2,544,662
16.2 Pure Thai Energy Co., Ltd. In July 2012, Pure Thai Energy Co., Ltd. called up the remaining share capital, amounting to Baht 40 million, and the Company paid in this amount. The Company’s Board of Directors meeting, held on 9 August 2012, approved a resolution to establish Super Pure Gas Co., Ltd., a joint investment between Pure Thai Energy Co., Ltd. (“PTEC”) and Super Central Gas Co., Ltd., principally engaged in distribution of LPG and CNG gas. The joint investment company is to have a registered capital of Baht 20 million (200,000 ordinary shares with par value of Baht 100 each), with PTEC holding 55% and the investment is to be financed from the working capital of PTEC. PTEC acquired the shares of that company in August 2012. 16.3 SCT Sahaphan Co., Ltd. In October 2012, the Company increased its investment in SCT Sahaphan Co., Ltd., a 78%-held subsidiary of the Company, to a 100% holding, by purchasing 44,000 shares from the existing shareholders at their net book value as at 30 September 2012, for a total of Baht 6 million. The increase in the Company’s investment is in accordance with a resolution of the Company’s Board of Directors meeting held on 9 October 2012. 16.4 RPC Management Co., Ltd. The Company’s Board of Directors meeting, held on 3 April 2012, approved the sell of 1,500 shares of the investment in RPC Management Co., Ltd. (RPCM), a 100%-held subsidiary of the Company, to Khong-Charoen Transportation Co., Ltd., an unrelated company, at Baht 116.21 per share, or a total of Baht 174,315. The price is the net book value as at 31 March 2012. RPCM has a registered share capital of Baht 500,000 (5,000 ordinary shares with a par value of Baht 100 per share). The Company sold the investment and received the proceeds in July 2012. As a result of the sale, the Company’s shareholding in that subsidiary decreased from 100% to 70%. 16.5 Thai Quartz Mining Co., Ltd. The Company’s Board of Directors meeting, held on 3 April 2012, approved an increase in the Company’s investment in Thai Quartz Mining Co., Ltd. (“TQM”), whereby that company’s registered capital will increase from Baht 0.5 million to Baht 10 million through the issue of 95,000 additional ordinary shares (par value of Baht 100 each), a total of Baht 9.5 million. The purpose of the increase in share capital is to provide funds for use as working capital. 16.6 RPC Global Co., Ltd. In May 2012, the Company purchased all ordinary shares of RPC Global Co., Ltd. (“RPCG”) at HKD 3 per share, for a total of HKD 30,000, or at cost of Baht 123,939. RPCG, a company incorporated in Hong Kong, is principally engaged in the trading of fuel oil and petrochemical products and investment. RPCG has a registered share capital amounting to HKD 10,000 (10,000 ordinary shares with a par value of HKD 1 per share). The share purchase was approved by the Company’s Board of Directors meeting, held on 3 April 2012. 72
73
17. Property, plant and equipment
74
During 2008, the Company and its subsidiaries arranged for an independent professional valuer to appraise the value of certain assets on an asset-by-asset basis. The revaluation was concluded on 4 December 2008 and the basis of the revaluation was as follows. a) Land and factory buildings were revalued using the market approach and the depreciated replacement cost approach, respectively. b) Machinery and factory equipment were revalued using the depreciated replacement cost approach. The reappraised value of the land, factory buildings, machinery and factory equipment was Baht 261 million more than their carrying amount. The Company and its subsidiaries recognised the increase of asset value in shareholders’ equity under the heading of “Revaluation surplus on assets”. Had the land, factory buildings, machinery and factory equipment been carried in the financial statements based on historical cost, their net book values as of 31 December 2012 and 2011 would have been as follows. (Unit: Thousand Baht)
Land Factory buildings and improvements Machinery and factory equipment
Consolidated
Separate
financial statements
financial statements
2012
2011
2012
2011
140,366
137,706
102,909
102,909
81,705
88,159
29,777
32,058
567,529
631,951
212,446
242,110
During the year 2012, the Company and its subsidiaries arranged for their property, plant and equipment to be appraised the value by an independent professional appraiser. The basis of the revaluation was as follows. a) Land was revalued using the market approach. b) Factory buildings, machinery and factory equipment were revalued using the depreciated replacement cost approach. c) Gas station equipment was revalued using the discounted cash flow approach. The stated values of the Company and its subsidiary’s factory buildings, machinery and factory equipment, amounting to Baht 788 million in the consolidated statement of financial position as at 31 December 2012 and Baht 381 million in the separate statement of financial position, are in accordance with the recoverable amounts for the property, plant and equipment that the Company and its subsidiary arranged to be appraised by an independent professional appraiser in 2012. The reappraised values of the factory buildings, machinery and factory equipment are a total of Baht 37 million higher than their net book values in the consolidated financial statements (Separate financial statement: Baht 7 million). Therefore, the Company and its subsidiary have not recorded allowance for impairment of the factory buildings, machinery and factory equipment. However, the basis of revaluation, using the depreciated replacement cost approach, is not compliant with TAS 36 (revised 2009) Impairment of Assets. This standard requires entities to estimate the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use. As at 31 December 2012, the Company and its subsidiaries had vehicles under finance lease agreements with net book values amounting to Baht 7 million (2011: Baht 136 million), and in the separate financial statements of Baht 2 million (2011: Baht 6 million). As at 31 December 2012, certain plant and equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation) of those assets amounted to Baht 177 million (2011: Baht 153 million) in the consolidated financial statements and Baht 76 million (2011: Baht 96 million) in the separate financial statements. Pure Biodiesel Co., Ltd. had mortgaged its land with structures thereon and pledged machinery, with a total net book value as at 31 December 2011 of Baht 391 million, as collateral to secure a bank credit facility (2012: nil since the subsidiary already repaid the whole amount of loans and redeemed all collateral). As at 31 December 2012, the Company and its subsidiaries have temporarily ceased using their property, plant and equipment amounting to Baht 957 million (Separate financial statements: Baht 522 million). 75
18. Intangible assets The net book value of intangible asset which is computer software as at 31 December 2012 and 2011 is presented below. (Unit: Thousand Baht)
Cost Less: Accumulated amortisation Net book value
Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
26,964
26,957
21,791
21,791
(16,757)
(14,117)
(14,854)
(12,750)
10,207
12,840
6,937
9,041
A reconciliation of the net book value of intangible assets for the years 2012 and 2011 is presented below. (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2011
2012 Net book value at beginning of year
15,985
9,041
11,524
7
205
-
24
(2,640)
(3,085)
10,207
(2,104)
(265)
-
Lost control of a subsidiary Net book value at end of year
2011
12,840
Acquisition of computer software Amortisation
2012
12,840
(2,507)
-
-
6,937
9,041
Amortisation for the year was included in administrative expenses.
19. Other non-current assets (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012
2011
2012
2011
26,711
26,711
26,711
26,711
Land and gas station leasehold rights
2,481
5,904
-
1,468
Prepaid expenses
4,035
4,917
-
-
Deposits
3,317
5,440
1,240
2,035
-
1,353
-
1,353
1,386
3,333
971
2,616
37,930
47,658
28,922
34,183
The compensation for loss
Long-term loan and interest receivable Others Total other non-current assets Less: Allowance for doubtful debts Other non-current assets - net
76
37,930
(1,353) 46,305
28,922
(1,353) 32,830
The compensation for loss is the compensation receivable because, in the third quarter of 2006, a raw material supplier delivered raw materials of a quality different to that specified in the relevant purchase agreement, with characteristics that differed from those of deliveries made to the Company under the agreement in the past. Therefore, the Company had additional cost for product improvement and compensation amounting to Baht 136 million. Based on the negotiation with the supplier, the Company will receive compensation of Baht 53 million. The difference represents inventory loss as a result of continuous and substantial falls in the prices of inventories and raw materials (inventory loss). Since this loss was a result of global market conditions with neither the Company nor the supplier could avoid, the supplier requested that each part bear responsibility for its own share of the inventory loss. The Company therefore recorded the compensation for loss in full as a deduction against cost of sales in 2006. The partial balance of Baht 26 million was paid by a credit note in November 2006 and the supplier will inform the Company of the method in payment for the remaining Baht 27 million later. 20. Short-term loans from financial institutions As at 31 December 2011, these represented notes which a subsidiary issued to the banks. The loans carried interest at the rate of 6.25% per annum and were repayable within one year (2012: nil). The Company and its subsidiaries have overdraft and short-term loan facilities from various banks. Details of the facilities are as follows. (Unit: Million Baht)
Credit facilities which are not drawn down
Secured by
2011
2012 The Company
Pledge of fixed deposits and factoring trade
80
1,183
-
74
30
35
8
12
40
30
receivables of the Company Pure Biodiesel Co. Ltd. ("PBC")
Mortgage of PBC's land with existing and future structures thereon, pledge of the PBC’s machinery
SCT Petroleum Co., Ltd.
Guaranteed by the Company
SCT Sahaphan Co., Ltd.
Pledge of SAP's fixed deposits and guaranteed by
(“SAP”) Pure Thai Energy Co., Ltd. (“PTEC”)
the Company Pledge of PTEC's fixed deposits and guaranteed by the Company
21. Trade and other payables (Unit: Thousand Baht)
Trade payables - related parties
Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
-
-
-
24,306
1,743,117
1,512,931
1,518,109
1,476,296
185
661
11,456
17,288
Other payables - unrelated parties
13,875
40,355
8,528
26,882
Accrued expenses
10,852
39,708
904
31,141
Retention payables
2,570
2,749
-
-
1,770,599
1,596,404
1,538,997
1,575,913
Trade payables - unrelated parties Other payables - related parties
Total
77
22. Short-term loans from unrelated parties As at 31 December 2012, these represented promissory notes which the subsidiary issued to another individual. The loans carried interest at the rates of 2.79% - 3.00% per annum (2011: 3.00% - 5.75% per annum) and were repayable within one year. 23. Long-term loans from nfi ancial institution On 22 August 2007, Pure Biodiesel Co., Ltd. (“PBC”) entered into a loan agreement with a local commercial bank granting a loan amounting to Baht 200 million for use in construction and the import of machinery for manufacturing of the bio-diesel project, on which interest was charged at a rate no higher than the Minimum Loan Rate and repayable monthly. The principal was repayable in quarterly installments of Baht 8 million from December 2008 until December 2013 and Baht 16 million from March 2014 onwards, and was to be repaid in full within June 2014. On 30 September 2009, PBC entered into an additional loan agreement with the bank granting a loan amounting to Baht 80 million for use in improving the plant for its bio-diesel project and investment in machinery. Interest was charged on the loan at a rate no higher than the Minimum Loan Rate and repayable monthly, while principal was repayable in quarterly installments of Baht 4 million from December 2009 until September 2014. The above loan agreements stipulated certain conditions as specified in agreements, such as that the Company’s equity interest in the subsidiary must be not less than 51%, restrictions on the payment of dividends, creating lien over assets and covenants to maintain certain nfi ancial ratios according to the agreements. The credit facilities were secured by the mortgage of the subsidiary’s land with existing and future structures thereon and the pledge of the subsidiary’s machinery. In February 2012, the subsidiary repaid the whole balance of long-term loans from banks. As at 31 December 2012 and 2011, the Company and its subsidiaries have no long-term credit facilities that they have yet to draw down. 24. Long-term loans from unrelated parties As at 31 December 2011, this represented promissory notes which the Company issued to unrelated parties. The loans carried interest at a rate of 5.75% per annum and payable quarterly. The principals were to be repaid in full within September 2012. In February 2012, the Company repaid the whole balance of long-term loans. 25. Liabilities under finance leases
Liabilities under finance leases Less: Deferred interest expense Total Less: Portion due within one year Non-current portion
(Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012
2012
7,025 (530)
2011 120,848 (6,240)
6,495
114,608
(2,944)
(44,705)
3,551
69,903
2,132 (161) 1,971 (738) 1,233
2011 6,254 (539) 5,715 (2,086) 3,629
The Company and its subsidiaries entered into the finance lease agreements with leasing companies for rental of motor vehicles for use in their operations, whereby they are committed to pay rental on a monthly basis. The terms of the agreements are generally between 4 and 5 years.
78
Future minimum lease payments required under the finance lease agreements were as follows. (Unit: Thousand Baht) 2012 Separate financial statements
Consolidated financial statements Less than
1-5
1 year
years
Less than
1-5
1 year
years
Total
Total
Future minimum lease payments
3,288
3,737
7,025
835
1,297
2,132
Deferred interest expense
(344)
(186)
(530)
(97)
(64)
(161)
2,944
3,551
6,495
738
1,233
1,971
Present value of future minimum lease payments
(Unit: Thousand Baht) 2011 Consolidated financial statements Less than
1-5
1 year
years
Total
Separate financial statements Less than
1-5
1 year
years
Total
Future minimum lease payments
48,146
72,702
120,848
2,393
3,861
6,254
Deferred interest expense
(3,441)
(2,799)
(6,240)
(307)
(232)
(539)
44,705
69,903
114,608
2,086
3,629
5,715
Present value of future minimum lease payments
26. Provision for termination benefits and provision for long-term employee benefits Provision for termination benefits and provision for long-term employee benefits as at 31 December 2012 and 2011, which is compensations on employees’ retirement, were as follows. (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
Termination
Long-term
Termination
Long-term
benefits
employee benefits
benefits
employee benefits
As at 1 January 2011
-
24,298
-
21,595
Current service cost
-
2,721
-
1,460
Interest cost
-
1,142
-
746
Termination benefits Lost control of a subsidiary As at 31 December 2011
80,855
(25,028)
63,174
-
(416)
-
(23,801) -
80,855
2,717
63,174
-
Current service cost
-
751
-
-
Interest cost
-
222
-
-
10,018
-
(73,192)
-
Termination benefits Utilised As at 31 December 2012
15,765 (96,620) -
(626) 3,064
-
-
During the year 2011, the Company and two subsidiaries made plans to terminate the employment of their employees before the normal retirement date. The Company and the subsidiaries reversed the related provision for long-term employee benefits and immediately recognised provision for the termination benefits as an expense.
79
Termination benefits and long-term employee benefit expenses included in administrative expenses in the income statements for the years ended 31 December 2012 and 2011 are as follows. (Unit: Thousand Baht)
Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
Termination benefits
15,139
55,827
10,018
39,373
Current service cost
751
2,721
-
1,460
Interest cost
222
1,142
-
746
16,112
59,690
10,018
41,579
Total
Principal actuarial assumptions at the valuation date were as follows. Consolidated
Separate
financial statements
financial statements
2011
2012
2012
2011
(% per annum) (% per annum) (% per annum) (% per annum) Discount rate
4.75
4.75
4.75
4.75
Future salary increase rate
5.00
5.00
5.00
5.00
0.00 - 22.92
0.00 - 22.92
0.00 - 22.92
0.00 - 22.92
Staff turnover rate
Amounts of defined benefit obligation for the current and previous three years are as follows. (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
Year 2012
3,064
-
Year 2011
2,717
-
Year 2010
24,299
21,595
Year 2009
20,666
19,552
27. Other current liabilities (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2011
2012 Accrued excise tax Value added tax payable Advance received from customers Others Total
80
2012
2011
-
5,275
-
5,275
1,160
11,133
-
-
11,990
20,750
518
5,746
2,107
9,446
245
6,717
15,257
46,604
763
17,738
28. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve at least 5% of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution. Under Section 1202 of the Thai Civil and Commercial Code, the subsidiaries are required to set aside a statutory reserve equal to at least 5% of its net profit each time the subsidiaries pay out a dividend, until such reserve reaches 10% of their registered share capital. The statutory reserve can neither be offset against deficit nor used for dividend payment. 29. Revaluation surplus This represents surplus arising from revaluation of land, factory buildings, machinery and factory equipment. The surplus is amortised to retained earnings on a straight-line basis over the remaining useful life of the related assets. (Unit: Thousand Baht) Consolidated financial statements / Separate financial statements 2012
2011
Balance - beginning of year
195,338
216,413
Less: Amortised during the year
(20,701)
(21,075)
Balance - end of year
174,637
195,338
The revaluation surplus can neither be offset against deficit nor used for dividend payment. 30. Other income (Unit: Thousand Baht)
Management fee income
Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
335
-
10,998
11,464
-
-
44,208
-
3,395
18,696
3,395
18,549
67,271
-
85,336
-
-
-
-
14,431
Interest income
21,239
5,864
39,027
6,744
Other income
43,100
20,391
24,701
45,002
135,340
44,951
207,665
96,190
Dividend income Gain on exchange rate Gain on sales of equipment Gain on recognising investment retained in the former subsidiary at fair value
Total
81
31. Expenses by nature Significant expenses by nature are as follows. (Unit: Thousand Baht) Consolidated
Separate
financial statements
financial statements
2012
2012
2011
2011
Salary, wages and other employee benefits
175,307
312,543
57,119
130,633
16,112
59,690
10,018
41,579
162,124
170,046
68,381
64,043
1,692,927
17,065,575
1,692,927
15,498,032
761,107
91,891
746,074
14,589
3,945,207
5,032,104
5,955
2,818,706
-
-
33,577
-
Termination benefits and long-term employee benefits Depreciation and amortisation Raw materials and consumables used Changes in finished goods Cost of merchandise inventories Loss on impairment of investments
32. Income tax No corporate income tax was payable for the year 2012, since the Company had a net taxable loss. 33. Basic earnings per share Basic earnings per share is calculated by dividing profit (loss) for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year. 34. Segment information The Company and its subsidiaries’ business operations involve four principal segments: (1) manufacturing and trading of fuel oil and petrochemical products, (2) manufacturing and trading of biodiesel products (3) oil transportation business and (4) providing management services. These operations are mainly carried on in Thailand. Below is the consolidated nfi ancial information of the Company and its subsidiaries for the years ended 31 December 2012 and 2011 by segment.
82
83
Transfer prices between business segments are as set out in Note 9 to the nfi ancial statements.
35. Provident fund The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both the Company or its subsidiaries and employees contributed to the fund monthly at the rates of 5% 10% of basic salary. The fund, which is managed by BBL Asset Management Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2012, the Company and its subsidiaries contributed Baht 5 million (2011: Baht 11 million) to the fund. 36. Dividends Dividends declared by the Company during the years 2012 and 2011 consist of the followings. Dividend
Approved by
Total
Dividend
dividends
per share
(Thousand Baht) Final dividends for 2010
Annual General Meeting of the shareholders on 7 April 2011
Total dividend for 2011 Final dividends for 2011
21,195
0.04
21,195
0.04
26,493
0.05
496,409
0.94
522,902
0.99
Annual General Meeting of the shareholders on 30 March 2012
Interim dividends for 2012
(Baht)
Extraordinary General Meeting of the shareholders on 10 May 2012
Total dividend for 2012
37. Commitments and contingent liabilities 37.1 Capital commitments As at 31 December 2012, capital commitments of a subsidiary totaling Baht 3 million were in respect of the construction of gas stations (2011: Baht 2 million). 37.2 Operating lease and service agreement commitments The Company and its subsidiaries entered into several operating lease and service agreements in respect of the leases of land, building, oil depots, gas stations, vehicles and equipment. The terms of the agreements are generally between 1 and 25 years. Future minimum payments required under these agreements were as follows.
(Unit: Million Baht) Consolidated
Separate
financial statements
financial statements
2012
2011
2012
2011
in up to 1 year
18
43
8
20
In over 1 and up to 5 years
60
72
11
5
In over 5 years
71
140
-
9
Payable within
84
37.3 Long-term purchase and sale commitments In November 2007, a subsidiary (Pure Biodiesel Co., Ltd.) entered into an agreement with PTT Utility Co., Ltd. (“PTTUT”) to purchase steam in a quantity and at a price stipulated in the agreement, which is for a period of 15 years commencing from the facility commercial operation date or 1 October 2008. The agreement can be extended for another 5 years. On 26 December 2011, the subsidiary entered into a memorandum with PTTUT, whereby PTTUT will construct a pipe rack and bridge to install a steam pipeline, with a construction price of Baht 58 million, and will compensate the subsidiary an amount of Baht 23 million, for the impact of its inability to supply steam as agreed. This is treated as part of the delay penalty and deducted from construction cost. The construction cost and all interest are to be paid to PTTUT on a monthly basis, beginning on the rfi st of the 37th month and to be completed within 72 months after the date PTTUT commences supplying steam. The construction cost carries interest at a rate equal to MLR of a bank. 37.4 Litigation and commercial dispute a) On 8 August 1995, the Company entered into a purchase agreement with PTT Public Company Limited (“PTT”) to purchase condensate residue raw materials that are produced by PTT Global Chemical Public Company Limited (“PTTGC”) (formerly known as “PTT Aromatics and Refining Public Company Limited”) in a quantity and at a price stipulated in the agreement. The agreement is on an evergreen basis, meaning that there is no specified termination date, and after the primary period of 15 years ends in 2012 it automatically renews for a second period. The agreement stipulated that the Company had to provide a bank guarantee of a certain amount as security against payment for goods purchased. The security will be returned to the Company upon either parties agree to expire the agreement or PTT defaults the agreement. On 30 September 2009, PTT sent a letter informing the Company of the cancellation of the condensate residue raw materials purchase agreement, and requesting termination of the agreement upon completion of the 15-year term (Primary period) in 2012 even though the Company did not breach the agreement and the cancellation was contrary to the purpose of the agreement. The Company and the Company’s legal advisor are of the opinion that the agreement cannot be terminated since it is a long-term reciprocal agreement, and it stipulates the requirement that the Company invest in the construction of a plant to refine condensate residue of a specification that would be sourced only from PTT, and not to resell the raw materials in the same condition they are received from PTT. The agreement therefore includes a stipulation that the agreement is made on an evergreen basis, meaning that there is no specified termination date and the agreement will automatically remain in force upon completion of the first 15-year term (Primary period) and the
following periods. In addition, the agreement can only be terminated with the consent of both counterparties or in the event that either party breaches the agreement. The Company has not breached any conditions of the agreement. On this basis, the Company is confident that the agreement cannot be terminated, while PTT has a different opinion. The Company has held discussions with PTT in order to seek a resolution that would be fair to both parties, but no resolution could be found. Consequently, to maintain the rights of the shareholders guaranteed and protected by law, the Company used the judicial process to make a nfi al determination on the matter, and submitted a petition to the Arbitration Office on 3 December 2009. On 27 August 2010, the Company lodged a lawsuit against PTT and PTTGC with the Civil Court, demanding PTT and PTTGC comply with the agreement with no specified termination date. Alternatively, if forcing PTT and PTTGC to comply with the agreement is impossible for any reason, then PTT and PTTGC should pay compensation to the Company totaling Baht 13,805,648,806.91. Consequently, the Company submitted a petition to amend the amount of the claim, to request additional compensation, totaling Baht 29,368,397,797.76. The Arbitration Office allowed the request. At present, the commercial dispute is under formal arbitration proceedings and the outstanding litigation is being considered by the Civil Court. Their outcomes cannot be determined and depend on the future judicial process. Subsequently, on 30 November 2011, during the formal arbitration proceedings, the Company received a raw material delivery plan from PTT, which is part of the normal business cooperation process between the Company and PTT, and found that such plan specified that raw materials would only be delivered until January 2012. PTT has stopped delivering raw materials to the Company since February 2012 in breach of clause 15.5 of the agreement, which specifies that PTT should comply with the agreement until a nfi al arbitration judgment is made. This has forced the Company to cease production since it had no supply of its main raw materials from PTT. Subsequently, the Company submitted a request to cancel its demand to force PTT to comply with the agreement. On 5 July 2012, the Arbitration Office allowed the Company to cancel such issue.
85
The above dispute between the Company and PTT caused the Company to exercise its right to submit claims for compensation of not less than Baht 29,000 million to the Arbitration Office (Black dispute No.114/2552) and the Civil Court (Black case No. 3162/2553) due to PTT’s breach of agreement, and the Company exercising its rights to undertake court action and arbitration in order to pursue these claims. The Company has exercised lien over the last payment for condensate residue, amounting to Baht 1,518 million (net of bank guarantee) as part of the compensation it is claiming from PTT. In June 2012, the Company was informed by the Dispute Office, Office of the Court of Justice that PTT had submitted the dispute to the Arbitration Office as Dispute Black Case No. 78/2555, requesting the Company to pay principal together with interest totaling Baht 1,555 million to PTT. At present, the Company submitted statements of dispute and the commercial dispute is under formal arbitration proceedings. b) In 2011 and 2012, Jaturatis Transport Co., Ltd. (a subsidiary) was a defendant in labor lawsuits before Sector 2 Labor Court, whereby employees had lodged claims for overtime payments amounting to Baht 9 million together with interest calculated from their termination dates. The cases are in the process of being considered by the Court.
38. Financial instruments 38.1 Financial risk management The Company’s and subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, accounts receivable and payable, loans receivable and payable and investments. The financial risks associated with these financial instruments and how they are managed is described below.
Credit risk
The Company and subsidiaries are exposed to credit risk primarily with respect to trade receivables, loans receivable and other receivables. The Company and subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and subsidiaries do not have 86
Interest rate risk
The Company’s and subsidiaries’ exposures to interest rate risk relate primarily to their deposits at banks, loans receivable and loans payable with interest. However, since most of the Company and subsidiaries’ nfi ancial assets and liabilities bear ofl ating interest rates or xfi ed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant nfi ancial assets and liabilities classified by type of interest rates are summarised in the table below, with those nfi ancial assets and liabilities that carry xfi ed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.
RPC
37.5 Guarantees a) As at 31 December 2012, there were outstanding bank guarantees of Baht 257 million (2011: Baht 49 million) issued by banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of their business. These included letters of guarantee amounting to Baht 250 million (2011: Baht 40 million) to guarantee payments due to a creditor and Baht 7 million (2011: Baht 9 million) to guarantee electricity use, among others. b) The Company has guaranteed bank credit facilities of subsidiaries amounting to Baht 70 million (2011: Baht 70 million).
high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of trade receivables, loans receivable, other receivables and notes receivable as stated in the statement of nfi ancial position.
(Unit: Million Baht) Consolidated financial statements as at 31 December 2012 Fixed interest rates
Floating
Within
interest
Non-interest
rate
bearing
1 year
1-5 years
Effective Total
interest rate (% p.a.)
Financial assets Cash and cash equivalents
-
-
571
47
618
0.63 - 3.40
Current investments
-
-
100
129
229
3.40
Trade and other receivables
-
-
-
108
108
-
87
-
-
-
87
1.62 - 3.45
1
2
-
-
3
5.89 - 7.00
88
2
671
284
1,045
Trade and other payables
-
-
-
1,771
1,771
-
Short-term loans from unrelated
2
-
-
-
2
3.00 - 5.75
3
4
-
-
7
5.85 - 7.87
5
4
-
1,771
1,780
Pledged deposits at banks Long-term loans to unrelated parties
Financial liabilities
parties Liabilities under finance leases
(Unit: Million Baht) Consolidated financial statements as at 31 December 2011 Fixed interest rates
Floating
Within
interest
Non-interest
rate
bearing
1 year
1-5 years
Effective Total
interest rate (% p.a.)
Financial assets Cash and cash equivalents
406
-
104
14
524
0.13 - 3.25
Current investments
-
-
-
90
90
-
Trade and other receivables
-
-
-
621
621
-
Short-term loans to and interest
3
-
-
-
3
5.00
-
-
2
-
2
Prime rate
receivable from unrelated parties Short-term loans to related parties
plus 3.00 Pledged deposits at banks Long-term loans to unrelated parties
98
-
-
-
98
1.87 - 2.50
1
3
-
-
4
4.50 - 5.89
508
3
106
725
1,342
87
(Unit: Million Baht) Consolidated financial statements as at 31 December 2011 Fixed interest rates
Floating
Within
interest
Non-interest
rate
bearing
1 year
1-5 years
Effective Total
interest rate (% p.a.)
Financial liabilities Short-term loans from financial institutions
275
-
-
-
275
Trade and other payables
-
-
-
1,596
1,596
-
13
-
-
-
13
3.00 - 5.75
-
-
140
-
140
Not over MLR
24
-
-
-
24
5.75
207
-
-
-
207
5.75
45
70
-
-
115
2.88 - 7.60
564
70
140
1,596
2,370
Short-term loans from unrelated parties Long-term loans from financial institutions Long-term loans from unrelated parties Long-term loans from related parties
6.25
Liabilities under finance leases
Foreign currency risk
The Company’s and subsidiaries’ exposures to foreign currency risk arise mainly from trading transactions that are denominated in foreign currencies. The Company and subsidiaries reduce this risk by entering into forward exchange contracts when they consider appropriate. Generally, the forward contracts mature within one year. The balances of nfi ancial assets denominated in foreign currencies were summarised below.
Foreign currency
US dollar
Financial assets
Exchange rate
as at 31 December
as at 31 December
2012
2011
(Thousand)
(Thousand)
-
10,447
2012
2011
(Baht per 1 foreign currency unit) -
31.55
As at 31 December 2012, the Company does not have outstanding forward exchange contracts. Forward exchange contracts outstanding at 31 December 2011 were summarised below. Foreign currency US dollar
88
Sold amount
Contractual exchange rate - Sold
(Thousand)
(Baht per 1 foreign currency unit)
7,153
31.05 - 31.72
Contractual maturity date January - March 2012
38.2 Fair values of financial instruments Since the majority of the Company and subsidiaries’ financial instruments are short-term in nature, loans receivable and payable bear interest rates which are close to the market rate, their fair values are not expected to be materially different from the amounts presented in the statement of financial position. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument. 39. Capital management The primary objective of the Company’s capital management is to ensure that it has appropriate capital structure in order to support its business and maximise shareholder value. As at 31 December 2012, the Group’s debt-to-equity ratio was 2.03:1 (2011: 1.61:1) and the Company’s was 1.40:1 (2011: 1.15:1). 40. Approval of financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 18 February 2013.
89
Management and
Connected Person Description
As of JANUARY 1st , 2013
Name-Surname Position (1) Age (Year) Education
Mr.Satja Janetumnugul Chairman of the Board of Directors
90
Mr.Satja Janetumnugul Chairman of the Board of Directors 58 years B.Engineering, King Mongkut’s University of Technology Thonburi - DAP : Directors Accreditation Program: Thai Institute of Directors Association Shareholding Portion (2) & (3) 9,312,375 Shares / 1.76% As December 12nd , 2012 (Share/%) Work experience for the past 5 years Dec.2012-Present Director Sammakorn Public Company Limited 2011-Present Chairman of the Board Rayong Purifier PLC. of Directors 1995-Feb.2012 Executive Director Rayong Purifier PLC. 2006-2010 Director Pure Sammakorn Development Co.,Ltd. 2003-Present Director Pure Silica Mining Co.,Ltd. (formerly: Benja Petroleum Co., Ltd.) 2003-Present Director Jatuchak Oil Co., Ltd. 2003-Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) 2002-Present Director Pure Intertrade Co., Ltd. (formerly: Isan -Rungreang Petroleum Co., Ltd.) 2002-Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) 2001-Present Director Pure Thai Energy Co., Ltd. 2001-Present Director RPC Management Co.,Ltd. (formerly: Mitsumphan Petroleum Co., Ltd.) Present Director SCT Sahaphan Co., Ltd. Present Director Super Pure Gas Co., Ltd. 2007-2009,Present Director Pure Bio-Diesel Co., Ltd 2005-Present Director Jaturatis Transport Co., Ltd. 1995-Present Director SCT Petroleum Co., Ltd. 1998-Present Chairman of the Board Petro-Instruments Corp. Ltd. of Directors
Mr.Supapong Krishnakan Director
Name-Surname Mr.Supapong Krishnakan Position (1) Director Age (Year) 56 years Education - M.S. in Chemical Engineering & Process Control Computer, University of California, Davis, California, USA - M.S.c. Economics / Advance Engineering & Economics, California State Polytechnic University, Pomona, California, USA - B.S. in Chemical Engineering, Chulalongkorn University, Bangkok, Thailand - DAP : Directors Accreditation Program: Thai Institute of Directors Association Shareholding Portion (2) & (3) 8,309,075 Shares / 1.57% As of December 12nd, 2012 (Share/%) Work experience for the past 5 years 1995-Present Director Rayong Purifier PLC. 2003-Feb.2012 Chairman of the Executive Board Rayong Purifier PLC. 2006-Present Director Pure Sammakorn Development Co.,Ltd. 2008-Present Director Pure Silica Mining Co.,Ltd. (formerly: Benja Petroleum Co., Ltd.) 2008-Present Director Jatuchak Oil Co., Ltd. 2008-Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co.,Ltd.) 2008-Present Director Pure Intertrade Co.,Ltd. (formerly: Isan -Rungreang Petroleum Co.,Ltd.) 2008-Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) 2008-Present Director Pure Thai Energy Co.,Ltd. 2008-Present Director RPC Management Co.,Ltd. (formerly: Mitsumphan Petroleum Co., Ltd.) 2008-Present Director Jaturatis Transport Co.,Ltd. 2008-Present Director SCT Petroleum Co.,Ltd. Present Director SCT Sahaphan Co.,Ltd. 2007-2009,Present Director Pure Bio-Diesel Co.,Ltd. 1998-Present Director Honest and Efficient Co.,Ltd.
91
Name-Surname Mr.Suwinai Suwanhirunkul Position (1) Director Age (Year) 57 years Education - MBA, Burapha University - B.Sc. (Chemical Engineering), Chulalongkorn University - DPC : Directors Certification Program: Thai Institute of Directors Association - Finance for Non-Finance Directors Shareholding Portion (2) & (3) - Shares / - % Mr.Suwinai Suwanhirunkul As of December 12nd, 2012 (Share/%) Director Work experience for the past 5 years 2012-Present Director Rayong Purifier PLC. 2003-Feb.2012 Executive Director / Rayong Purifier PLC. Managing Director 2006-Present Director Pure Sammakorn DevelopmentCo.,Ltd. 2005-Present Director Jaturatis Transport Co.,Ltd. 2008-2009,Present Director Pure Silica Mining Co.,Ltd. (formerly: Benja Petroleum Co.,Ltd.) 2008-2009,Present Director Jatuchak Oil Co., Ltd. 2008-2009,Present Director Thai Quartz Mining Co.,Ltd. ( formerly: Burapha Rungroch Petroleum Co.,Ltd.) 2008-2009,Present Director Pure Intertrade Co., Ltd. (formerly: Isan-Rungreang Petroleum Co.,Ltd.) 2008-2009,Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co.,Ltd.) 2008-2009,Present Director RPC Management Co.,Ltd. (formerly: Mitsumphan Petroleum Co.,Ltd.) Present Director SCT Sahaphan Co.,Ltd. 2007-Present Director Pure Bio-Diesel Co.,Ltd 2008-2009,Present Director Pure Thai Energy Co.,Ltd. 2008-2009,Present Director SCT Petroleum Co.,Ltd.
92
Mr.Tawat Ungsuprasert Director
Name-Surname Mr.Tawat Ungsuprasert Position (1) Director Age (Year) 66 years Education - B.Sc. (Chemistry), Chulalongkorn University - DAP : Directors Accreditation Program: Thai Institute of Directors Association Shareholding Portion (2) & (3) 34,035,250 Shares / 6.423% As December 12nd , 2012 (Share/%) Work experience for the past 5 years 1999-Present Director Rayong Purifier PLC. 2005-Present Director Jaturatis Transport Co., Ltd. Present Director SCT Petroleum Co., Ltd. Present Director Pure Silica Mining Co., Ltd. (formerly: Benja Petroleum Co., Ltd.) Present Director Jatuchak Oil Co., Ltd. Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) Present Directo RPC Management Co.,Ltd. (formerly: Mitsamphan Petroleum Co., Ltd.) Present Director Pure Thai Energy Co., Ltd. Present Director SCT Sahaphan Co., Ltd. 2010-Present Director Pure Bio-Diesel Co.,Ltd 1999-Present Director Sherwood Chemical PLC.
93
Mr.Suthud Khancharoensuk Director
94
Name-Surname Mr.Suthud Khancharoensuk Position (1) Director Age (Year) 54 years Education - MBA, Thammasat University - B.Sc., Chulalongkorn University - DAP : Directors Accreditation Program: Thai Institute of Directors Association - Board Performance Evaluation: Thai Institute of Directors Association Shareholding Portion (2) & (3) 425 Shares / 0.00008% As of December 12nd, 2012 (Share/%) Work experience for the past 5 years 1996-Present Director Rayong Purifier PLC. Present Director SCT Petroleum Co., Ltd. Present Director Pure Silica Mining Co., Ltd. (formerly: Benja Petroleum Co., Ltd.) Present Director Jatuchak Oil Co., Ltd. Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) Present Director RPC Management Co.,Ltd. (formerly: Mitsamphan Petroleum Co., Ltd.) 2007 - Present Director Pure Thai Energy Co., Ltd. Present Director SCT Sahaphan Co., Ltd. Present Director Jaturatis Transport Co., Ltd. Present Director Pure Bio-Diesel Co.,Ltd 1991-Present Director Petro-Instruments Corp. Ltd.
Dr.Vichit Yamboonruang Independence Director/ Chairman of The Audit Committee
Name-Surname Dr.Vichit Yamboonruang Position (1) Independence Director/ Chairman of The Audit Committee Age (Year) 71 years Education - Ph.D.School of Public and International Affairs, University of Pittsburgh, USA - MA. (Economics), Columbia University, USA - BA. (Economics), Chulalongkorn University - DAP : Directors Accreditation Program : Thai Institute of Directors Association - DCP : Directors Certification Program : Thai Institute of Directors Association - Audit Committee Program : Thai Institute of Directors Association - The Role of Chairman : Thai Institute of Directors Association Shareholding Portion (2) & (3) - Shares / 0.000% As of December 12nd, 2012 (Share/%) Work experience for the past 5 years 2003-Present Chairman of The Audit Rayong Purifier PLC. Committee Present Director SCT Petroleum Co., Ltd. Present Director Pure Silica Mining Co., Ltd. (formerly: Benja Petroleum Co., Ltd.) Present Director Jatuchak Oil Co., Ltd. Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) Present Director RPC Management Co.,Ltd. (formerly: Mitsamphan Petroleum Co.,Ltd.) Present Director Pure Thai Energy Co.,Ltd. Present Director SCT Sahaphan Co.,Ltd. Present Director Jaturatis Transport Co.,Ltd. Present Director Pure Bio-Diesel Co.,Ltd 2010-2012 Director Pure Sammakorn Development Co.,Ltd. 2000-Present Chairman of The Audit Jasmin International PLC. Committee 1999-Present President Global Bond Industrial Co., Ltd.
95
Mr.Arnooparp Charmikorn Independence Director/ Audit Committee
96
Name-Surname Mr.Arnooparp Charmikorn Position (1) Independence Director/ Audit Committee Age (Year) 58 years Education - M.S. (Chemical Engineering) University of Tennessee (Knoxville), USA - B.Sc. (Chemical Engineering), Chulalongkorn University - DAP : Directors Accreditation Program : Thai Institute of Directors Association - Audit Committee Program : Thai Institute of Directors Association Shareholding Portion (2) & (3) Shares / 0.000% As of December 12st, 2012 (Share/%) Work experience for the past 5 years 2003-Present Audit Committee Rayong Purifier PLC. Present Director SCT Petroleum Co., Ltd. Present Director Pure Silica Mining Co., Ltd. (formerly: Benja Petroleum Co., Ltd.) Present Director Jatuchak Oil Co., Ltd. Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) Present Director RPC Management Co.,Ltd. (formerly: Mitsamphan Petroleum Co.,Ltd.) Present Director Pure Thai Energy Co.,Ltd. Present Director SCT Sahaphan Co.,Ltd. Present Director Jaturatis Transport Co.,Ltd. Present Director Pure Bio-Diesel Co.,Ltd
Name-Surname Position (1) Age (Year) Education
Mr.Bibit Bijaisoradat Independence Director/ Audit Committee
Mr.Bibit Bijaisoradat Independence Director/ Audit Committee 51 years - MBA National Institute of Development Administration - BA International Relations, Chulalongkorn University - DCP : Directors Certification Program : Thai Institute of Directors Association - Audit Committee Program : Thai Institute of Directors Association - CEO Succession & Effective Leadership Development : Thai Institute of Directors Association Shareholding Portion (2) & (3) 106,125 Shares / 0.020% As of December 12nd , 2012 (Share/%) Work experience for the past 5 years 2003-Present Audit Committee Rayong Purifier PLC. 2010-Present Director Pure Thai Energy Co.,Ltd. Present Director SCT Petroleum Co., Ltd. Present Director Pure Silica Mining Co., Ltd. (formerly: Benja Petroleum Co., Ltd.) Present Director Jatuchak Oil Co., Ltd. Present Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co., Ltd.) Present Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co., Ltd.) Present Director RPC Management Co.,Ltd. (formerly: Mitsamphan Petroleum Co.,Ltd.) Present Director SCT Sahaphan Co.,Ltd. Present Director Jaturatis Transport Co.,Ltd. Present Director Pure Bio-Diesel Co.,Ltd 2006-Present Director Pure Sammakorn Development Co.,Ltd. 2002-Present Director Sammakorn PLC. 2002-Present Director Thai Insurance PLC. 2001-Present Director Suvanachad Co., Ltd. Under His Majesty The King’s Royal Patronage 2000-Present Managing Director Mongkolchaipattana Co., Ltd. 2000-Present Assistant Manager H.M. Private Property Office 2000-Present Deputy Director H.M. Private Development Projects
97
Ms. Siraporn Krishnakan President
98
Name-Surname Ms. Siraporn Krishnakan Position (1) President Age (Year) 57 years Education - MBA, California State Polytechnic University, Pomona, USA - B. of Accountancy, Chulalongkorn University Shareholding Portion (2) & (3) 1,000,000 Shares / 0.19% As of December 12nd , 2012 (Share/%) Work experience for the past 5 years Present President Rayong Purifier PLC 1998-2012 Assistant Managing Director Rayong Purifier PLC. Present Director Super Pure Gas Co., Ltd. 2007-Present Director Pure Sammakorn Development Co.,Ltd. 2002-Present Director Pure Intertrade Co., Ltd. (formerly; Isan - Rungreang Petroleum Co.,Ltd.) 2003-2012 Director Pure Silica Mining Co.,Ltd. (formerly: Benja Petroleum Co., Ltd.) 2003-2012 Director Jatuchak Oil Co., Ltd. 2003-2012 Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co.,Ltd.) 2002-2012 Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co.,Ltd.) 2001-2012 Director RPC Management Co.,Ltd. (formerly: Mitsumphan Petroleum Co.,Ltd.) 2001-2012 Director Jaturatis Transport Co.,Ltd. 1999-2012 Director SCT Petroleum Co.,Ltd. 1988-Present Director Honest and Efficient Co., Ltd.
Name - Surname Mrs.Supannee Tanchaisrinakorn Position (1) General Manager – Finance & Administration Function ( Acting ) Age (Year) 46 years Education - MBA, Finance, Ramkhamhaeng University - Bachelor of Accounting, Ramkhamhaeng University Shareholding Portion (2) & (3) - Shares / - % As of December 12, 2012 (Share/%) Mrs.Supannee Tanchaisrinakorn Latest 5 years work experience General Manager – Finance & Present GM-Finance & Administration Function (Acting) / Rayong Purifier PLC. Administration Function ( Acting ) Finance & Accounting Dept. Manager 2010-2012 MD.Office Manager / Internal Audit Dept. Rayong Purifier PLC. Manager (Acting) 2008-2010 MD.Office Manager (Acting) / Rayong Purifier PLC. Internal Audit Dept. Manager 2002-2007 Accounting Dept. Manager Rayong Purifier PLC.
Name-Surname Position (1) Age (Year) Education
Mr.Wasun Sutrong General Manager-Manufacturing Function
Mr.Wasun Sutrong General Manager-Manufacturing Function 43 years Bachelor’s of Industrial of Technology in Material Handling Technology, King Mongkut’s Industrial of Technology, North Bangkok. Shareholding Portion (2) & (3) 25,000 Shares / 0.005% As of December 12nd, 2012 (Share/%) Work experience for the past 5 years 2007-Present GM- Manufacturing Function Rayong Purifier PLC.
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Name - Surname Miss Kalaya Klaithong Position (1) General Manager – Business Development Function Age (Year) 44 years Education - Master of Engineering, Chulalongkorn University - Bachelor of Science ( Chemical Engineering ), Chulalongkorn University Shareholding Portion (2) & (3) - Shares / - % As of December 12, 2012 (Share/%) Latest 5 years work experience Miss Kalaya Klaithong GM-Business Development Rayong Purifier PLC. General Manager – Business Present Function Development Function 2010-2012 Managing Director SCT Petroleum Co.,Ltd. 2008-2010 GM-Commercial Function Rayong Purifier PLC 2008–2012 Director SCT Petroleum Co.,Ltd. 2008-Present Director Pure Intertrade Co., Ltd. (formerly: Isan Rungreang Petroleum Co.,Ltd.) 2008-2012 Director Pure Silica Mining Co.,Ltd. (formerly: Benja Petroleum Co., Ltd.) 2008-2012 Director Jatuchak Oil Co., Ltd. 2008-2012 Director Thai Quartz Mining Co.,Ltd. (formerly: Burapha Rungroch Petroleum Co.,Ltd.) 2008-2012 Director Tossatis Logistics Co.,Ltd. (formerly: Metro Petroleum Co.,Ltd.) 2008-2012 Director RPC Management Co.,Ltd. (formerly: Mitsumphan Petroleum Co.,Ltd.) Remark (1) The authorized signatory comprises 1.) Mr. Supapong Krishnakan, Mr. Satja Janetumnugul, Mr. Suwinai Suwanhirunkul, two out of these three directors jointly sign with the Company’s seal or 2.) Mr. Supapong Krishnakan or Mr. Satja Janetumnugul or Mr. Suwinai Suwanhirunkul, one of these three directors jointly sign with Mr. Suthud Khancharoensuk or Mr. Tawat Ungsuprasert and stamped with the Company’s seal.(2) Including share portion of spouse and children who are under 20 years old. (3) Share portion as of December 12nd, 2012 with Par Value 1.00 Baht per Share. The registered and paid up is 529,870,229 Baht as of December 12nd, 2012
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