Focus Development and Construction Public Company Limited
A N N U A L
REPORT 2010
C O N T E N T Our Mission Our Business Alliance Company is The leading middle class companies that provide the construction contractor service that are aiming to be responsible and creating satisfaction for hirer and response to the change of technology and environment.
2 3 4 5 6 8 9 22
Our company realized about the importance of development for the secured progress.
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Our company with all of our persons should posses Good Corporate Governance and make appropriate result for all participants.
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33 63
Message from Chairman Audit Committee Explanation General Information Financial Information and Structure of Revenues Risk Factors List of Shareholders Management Structure Details of Directors and Executives Connected transaction Explanation and Analysis of Financial Position and Operating Performance Audit Report of Certified Public Accountant Financial Statements and Notes to Financial Statements Remuneration for Auditors
Message from Chairman
In the year 2010, the overall image of construction business had still faced various risk factors, for ex: political uncertainty. Moreover, the construction business had to face the problem of material cost being increased according to the direction of gasoline and physical commodity prices. This includes the important problems, such as lack of labor, both engineers and low-level labor, thus causing the Company’s operating results in the previous year not being in accordance with the expectation. The recognized income of the large project was less than estimated since the large project construction was more delayed than anticipated and works fee withdrawal in the first period was not of high value. This is because they were only structure and ground works. And the Company was unable to acquire more new works as targeted, resulting in the operating results not having reached the breakeven point. The construction works on hand were not adequate to clearly yield profits since the competition in construction industry sector was fierce. However, in 2011, the construction industry tends to continuously expand from the previous year. It is expected that the government sector construction would fairly expand and would be the supporting factor for the overall construction business. This is due to the government’s construction of many large projects has made more progress under the framework of 2011 expenditure budget, causing various project constructions happening at the same time, for instance: various electric train projects and small projects: road works and various basic utility systems. Besides, works fee withdrawal of large project will be made in the bigger amount in this year than in the previous year because the works have higher value than those of last year. The Company expects that the recognized revenue of construction works in 2011 would have the opportunity to more clearly increase than in the previous year. And the backlog at present is likely to be sufficient because of the above-mentioned supporting factors. The Company also expects that work quantity on hand in 2011 would be adequate for creating profits. Moreover, in order to decrease the fluctuation arisen from depending solely on the construction business, the Directors have also started to expand the business into real estate sector and to increase the potential of making profit. During the 4th quarter of 2010, the Company had debuted its first real estate project under the name “Focus on Saladaeng” which is situated on Silom Road, Bangrak District, Bangkok, and it was well received by the public. The Company has the policy on furthering enlarging investment in this field together with the construction sector. On behalf of the Company’s Directors, I would like to thank the shareholders, customers, trading partners as well as our benefactors, for your regular supports. My thankfulness is also extended to the executives and all-level staffs, for your consistently and favorably united works. Besides, I have believed that the Company has the potential to expand and grow more than being merely general medium size construction contracting company. And I extremely hope that our Company will continually receive your supports and cooperation.
( Mr. Anucha Sihanatkatakul ) Chairperson
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Audit Committee Explanation
Report of the Audit Committee to Shareholders To: Shareholders of Focus Development and Construction Pcl. Audit Committee comprises of 3 members who are independent directors and non-executive are as follows: 1. Mr. Michael de Santiesteban Chairman of Audit Committee 2. Mr. Phasunsook Ayanaputra Audit Director 3. Mr. Pornsanong Tuchinda Audit Director The Audit Committees inspect the performance assigned by the Board of Directors independently to ensure that the company follows the Good Corporate Governance. Audit Committees attended the meeting for four times in year 2010 and committees were in full quorum every time. There was a time that meeting was carried out with auditors and absent of the Management. The result of the meeting submitted to the Board of Directors could be summarized as follows; - Consider quarterly and annual financial statement 2010 which have been reviewed and inspected by certified public accountants prior to submitting the Board of Directors and prior to being publicized to shareholders and general pubic, with the auditor’s explanation for very question. All auditors’ suggestions would be applied in compliance with the law and general accepted accounting standard, together with the adequate disclosure of the information in the financial statement to the shareholders and other related persons. - Reviewing the disclosure of the inter-transaction and any issues that may cause the conflict of interest - Reviewing the appropriation of the internal and assets control system of the Company - Considering, suggesting and advising about the auditing plans of the internal audit department focusing on objectives and scope of auditing that covered risks in each work unit - Reviewing the operation and suggestion of internal auditor, proposed for the management’s implementation - Reviewing the performance of the auditors in their functions during the past year. Recommend to appoint the auditors and fix the remuneration of auditors to the Board of Directors. The Audit Committee had concluded that the company’s financial statement was prepared according to the general accepted accounting standard; the disclosure of the information in the financial statement was accurate. The company had also paid attention to the good corporate governance policy that was responding to the regulations of the Stock Exchange of Thailand and other related laws. Then the internal controlling system of the company was adequate and suitable, affecting the insignificant errors.
( Mr. Michael de Santiesteban ) Chairman of Audit Committee
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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General Information Focus Development and Construction Public Company Limited Company’s Registration Number : Location :
Main contractor :
Registered Capital : Paid-up Capital :
0107545000331 (original number:40854500706) 25, Alma link Building, 9th Floor, Soi Chidlom, Ploenchit Road, Lumpini Sub-district, Patumwan District, Bangkok 10330 Telephone : 0-2650-3063-4, 0-2650-3105-9 Fax : 0-2650-3065-6 E-mail : info@focus-pcl.com www.focus-pcl.com General Construction by conducting businesses as Main contractor,Subcontractor or Joint Venture or Consortium. The construction projects customers include government agencies, state enterprises and private sectors. In the present day our company is developing our own Real Estate. 400,000,000 Baht, dividing into 400,000,000 ordinary shares, at 1 Baht per share 125,000,000 Baht, dividing into 125,000,000 ordinary shares, at 1 Baht per share
Information on Corporation in which the Company holds its shares from 10% or more as of December 31st, 2010 : Name
Location of Head Office
Telephone
Facsimile
Siam Knight Fund Management Securities Co., Ltd (SKFM)
82 Saengthong Thani Building, 32nd fl., North Sathorn Rd., Silom, Bangrak, Bangkok 10500
0-26392-965-6
0-2639-2980
Reference Securities’ Registrar :
Auditor : (as of December 31st 2010)
Legal Consultants :
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Type of business
1. Investment Consultancy 2. Personal Fund Management (personal fund)
Paid-up capital
shareholding Proportion (%)
40,000,000
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Thailand Securities Depository (Thailand) Company Limited 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110 Telephone : 0-2229-2800 Fax : 0-2654-5427 Mr.Bunjong Pichayaprasat, C.P.A. License No. 7147 ANS Audit Company Limited 100/72, 22nd Floor, 100/2 Wong Wanich B Building, Rama IX Road, Huay Kwang District, Bangkok 10310 Telephone : 0-2645-0107-9 Fax : 0-2645-0110 - None –
Financial Information and Structure of Revenues Financial Information (Unit : Million Baht)
2010
2009
2008
Total Assets
274.63
328.49
511.75
Total Liabilities
190.73
190.62
353.41
Total Shareholders’ Equity
83.90
137.87
158.34
Revenue from Construction
225.82
586.72
706.37
Total Revenues
233.03
597.32
715.39
Net loss for the year
(59.22)
(21.65)
(6.40)
Financial Ratio
2010
2009
2008
1.30
0.97
1.08
Net Profit Ratio (%)
(25.41)
(3.62)
(0.89)
ROE (%)
(53.41)
(14.62)
(3.77)
ROA (%)
(28.89)
(5.15)
(1.55)
(0.47)
(0.17)
(0.05)
-
-
-
Debt to Equity Ratio (times)
2.27
1.38
2.23
Book Value Per Share (Baht)
0.67
1.10
1.27
Liquidity Ratio (times)
Basic Net Profit (loss) Per Share (Baht) Dividend Payout Ratio (%)
Structure of Revenues (Million Baht) 2010
Revenues 1.
Revenues from Construction
2.
Other incomes Total
2009
%
Revenues
2008
%
Revenues
%
225.82
96.91
586.72
98.23
706.37
98.74
7.21
3.09
10.60
1.77
9.02
1.26
233.03
100
597.32
100.00
715.39
100.00
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Risk Factors The summary of risk factors which can be occurred and impacted on the Company’s operation is listed as follows; 1.
Business Risk 1.1 Risk of Economic and Political Fluctuation Thai economic has been influenced by risk from both inside and outside the country, such as fuel, commodity, and construction material prices, and also interest rate. Political changes, budget reimburs ement performance and individual trust are also influenced the government and individual development. To reduce this type of risks, activities like income distribution and independent business could be used. For example, independent construction business expands its scope of services to cover the property development such as, the FOCUS ON SALADAENG project, which constructs the eight storey condominium in the area near Saladaeng road, Bang Rak, Bangkok. 1.2 Competition Risk Entrepreneurs have been forced to be unavoidably chosen by the employers. As the result, the business competition becomes highly fierce causing high risk in revenue earning once the job is committed. Construction works management has yet several risk factors which prevent the projects from achieving the targets according to the contract. However, the Company has determined the standard measures to mitigate the damage from the mentioned risk by participating in price bidding or beginning business negotiation for the projects from both government and private sector. Those strategies will help the Company maintain constant operating result and revenue and monitor to keep the cost in accordance with the Company’s budget plan.
2.
Corporate Risk 2.1 Risk of New Employment and Implementation of Agreement The major incomes of the company are from constructions, which implemented on the agreement from main and subcontract with both government and individuals. The amount of contracts depends on economic condition, price competition, etc. Therefore, contract is discrepant from each other due to the time of bidding process and time to select the contractor, then the constructing result is varied on theses time. The amount of income depends on the charges on constructing processes and time for implementing each project. The problem in transferring construction area also affects the income, so the company has made the guideline for reducing this type of risk by establishing the office of employment and administrative committee on the construction for planning, making the decision, and problem-solving in the implementation of agreement. 2.2 Risk of Changes in Construction Material Prices The risk of changes in construction material prices directly affects the costs of the project. Therefore, the company has started the new standard and policy to reduce this type of risk, such as the policy to reduce the changes in material prices by purchasing in large quantities or cash payment to get the discount.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
2.3 Risk from relying on the engineers Construction business relies heavily on knowledge, personal expertise from project director, project manager and project supervising engineer who possess ability in controlling and managing the project to be successful. The loss of quality engineer could surely affect the Company’s capability to acquire the project and operating result in the future prospect. Therefore, the Company has launched policy regarding human resource management and development by considering appropriate job payment to reduce turnover rate and supporting those employees to attend additional training in order to keep these officers working with the Company as long as possible. 2.4 Risk from delayed project which have been caused by two main factors; 2.4.1 The delay results from project owner. The Company is exposed to shoulder burden of the project’s increasing cost such as labor wages and other expenses which cannot claim from customers. Nevertheless, the mentioned impact can be minimized by carefully making contract between the Company and project owner to cover the incident mentioned above. 2.4.2 The project delay is due to the Company’s works behind the schedule. The Company can face risk to pay damage compensation called by project owner because of project delay. The Company has the preventive measure regarding risk by developing the skill of human resources, especially, in project manager position. The training will focus on the follow-up and monitor of team’s and contractor’s works. The Company will hold the tracking meeting to closely check the project progress in order to give construction works unit the opportunity to report arising problems and mutually find the solutions. 3.
Financial Risk 3.1 The risk of the failure in receiving the payment in construction from the principal comes from the financial problem and dissatisfaction with the construction. The company has been aware of this risk, then the contract should be made with the principal who has good financial condition. 3.2 Risk arises from circulating capital. The Company has formulated the measure to prevent the risk from any lacks of liquidity by preparing the project plan, selecting source of capital and type of credit which have been associated with individual project portfolio and collecting the Company’s revenue as prevention regarding lack of liquidity. 3.3 Risk is from unpaid dividend in 2010. As of 31 December, 2010, the Company has accumulated loss at the amount of 21.64 million Baht. As the result, the Company is unable to pay any dividend to shareholders according to laws. In this case, the shareholders could be exposed to risk of not being paid dividend regarding determined dividend payment policy.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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List of Shareholders Structure of Capital Registered Capital The company has the registered capital of 400 million baht, dividing into 400 million ordinary shares with the par value of 1 baht. And the paid-up capital is 125 million baht, dividing into 125 million ordinary shares with the par value of 1 baht per share. Shareholders List of the first 10 major shareholders as of December 17 2010
No.
List of Shareholders
Number of Shares
% of Shareholding
1
Mrs. Naparat Sihanatkathakul
43,385,800
34.71
2
RBS Coutts Bank Ltd, Singapore Branch
10,753,300
8.60
3
Thailand Securities Depository Company (Thailand) Co., Ltd. for Depositors
7,620,500
6.10
4
Mr. Virat Udomsinwattana
6,375,000
5.10
5
UBS AG Singapore, Branch-Pb Securities Client Custody
6,245,000
5.00
6
DBS Vickers Securities (Singapore) PTE LTD
5,967,200
4.77
7
Mr. Theepat Sutabute
4,000,000
3.20
8
Mr. Montree Sihanatkathakul
3,927,500
3.14
9
Mrs. Vijitra Ratanapian
3,000,000
2.40
HSBC Private Bank (Suisse) Sa, Hong Kong Branch
1,940,000
1.56
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Major shareholder who has significant influence on determining company policy or the operation of business Mrs. Naparat Sihanatkathakul is the major shareholder of the company but she does not participate in the management. Her relationship is a sister of Mr. Anucha Sihanatkathakul who participates in the management.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Customer & Investor Relation Affair Department Equipment Control Department
Service Maintenance Department
Legal Department
Quality Assurance & Safety Department
Accounting Department
Estimating Department
Cost Control Department
General Administration, Human Resources & Information Technology Department
Purchasing Department
Finance Department
Business Development Department
Construction Department
Administration Division
Internal Audit Department
Audit Committee
Contract Administration Department
Finance & Accounting Division
Managing Director
Construction Committee
Business Support Division
Executive & Investment Committee
Engineering Division
Remuneration Committee
Board of Directors
Management Structure
Management Structure (Continued) Director Structure of the Company Director Structure of the Company comprises of 5 boards namely Board of Directors, Audit Committee, Remuneration Committee, Construction Committee, and Executive & Investment Committee and, Executive Committee detailed as follow; Board of Directors Board of Directors of the Company as of December 31st, 2010 comprises of 12 members and Board Meeting attendances are summarized on below;
Name - Surname
Position
Attendance (times)
1. Mr. Anucha
Sihanatkathakul
Chairman of the Board
4/4
2. Mr. Jeremy
King
Vice Chairman
4/4
3. Mr. Michael de 4. Mr. Phasunsook 5. Mr. Pornsanong
Santiesteban Ayanaputra Tuchinda
Director and Chairman of Audit Committee Director and Audit Director Director and Audit Director
4/4 4/4 3/4
6. Pol Maj.Gen.Sunthorn Boonruang
Director
4/4
7. Lt.Gen. Thavalya 8. Mr. Thomas C. 9. Mr. Patrick M.
Prapapant Thompson Davenport
Director Director Director
4/4 4/4 3/4
10. Mr. Nontawat
Thongmee
Director and Managing Director
4/4
11. Mr.Tanakorn 12. Mr.Tanavich
Leelasiri Chindapradist
Director Director
4/4 2/4
Secretary of the Board of Directors : Mr. Chalermphat Hongprasertkul Notes : * Directors, who were authorized to perform on behalf of the company, were Mr. Anucha Sihanatkathakul, Mr. Nontawat Thongmee, Mr. Jeremy King. Any two of three may sign together with the company’s seal affixed. * There were 4 directors who retired by rotation as follows; 1.
Mr. Pornsanong
Tuchinda
2. 3. 4.
Mr. Phasunsook Mr. Michael de Mr. Patrick M.
Ayanaputra Santiesteban Davenport
Resolution of Annual General Meeting of Shareholders for year 2010 on 30 April 2010 approved the re-election of 4 directors retiring by rotation as directors for another term.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Roles and Responsibilities of Board of Directors 1. 2. 3. 4.
Director must perform the duties in accordance with laws, objectives, and regulations of the company, including resolutions of Shareholders’ Meetings. Director must not be one of the shareholders in partnerships or one of the Boards members of private companies, which conduct similar business and compete with the company except that director has informed in Shareholders’ Meeting before appointment. Director must inform the company immediately in case that director has any interests in the contract done with the company or in case that director holds increasing or decreasing number of shares or debentures of the Company or subsidiaries. Board of Directors has power to delegate the authorities to or appoint certain number of directors to be directors in certain committee in order to perform one or more duties. However, Board of Directors may empower authorized directors to act on behalf of the company to perform any duties for the company except the following duties which could be done after the approval from Shareholders’ Meeting. (1) Anything that could be done after the approval from Shareholders’ Meeting according to laws. (2) Transactions that director has conflict of interest and those are in the scope of laws or regulations of Securities and Exchange Commission that requires the approval from Shareholders’ Meeting.
Except for the following cases that must be approved from the Board’s Meeting and Shareholders Meeting with the votes no less than three out of four of total voting rights of shareholders attended the meeting, namely, increase of capital, decrease of capital, issuance of debentures, sale or transfer of parts or all of businesses of the company to other persons, purchase or receipt of businesses of other companies to be parts of the company, and amendment of memorandum of association or article of association of the company, etc. However, for transactions that director or any person has conflict, interest, or conflict of interest with the company, such director does not have any authority to approve the undertaking of such transactions. Audit Committee Audit Committee as of December 31st, 2010 comprises of 3 members and Audit Committee Meeting attendances in 2010 are summarized on below; Name - Surname
Position
Attendance (times)
1. Mr.Michael de
Santiesteban
Chairman of Audit Committee
4/4
2. Mr.Phasunsook 3. Mr.Pornsanong
Ayanaputra Tuchinda
Audit Director Audit Director
4/4 3/4
Term of Audit Committee Term of Audit committee is 2 years, Audit Committee must be held at least 4 times a year.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Roles and Responsibilities of Audit Committee 1. 2. 3. 4. 5. 6. 7.
To review that the Company has accurate and adequate financial reporting. To review that the Company has suitable and efficient internal control system and internal audit system. To determine independence of an internal audit office including agreement of appointment, transfer and dismissal of the chief of the internal audit office or any other unit in charge of internal audit. To review that the Company comply with laws concerning securities and exchange, regulations of the Stock Exchange of Thailand, and other laws related to the Company’s business. To consider, select and nominate independent persons to be the Company’s auditor, and propose such person’s fees, as well as to attend a non-management meeting with the auditor at least once a year. To consider that connected transactions or transactions that may have conflicts of interests are complied with the laws and the regulations of the Stock Exchange of Thailand in order to ensure that they are reasonable and for the best benefit of the Company. To prepare the Audit Committee’s Report and have it disclosed in the Company’s Annual Report, to which must be signed by the Audit Committee’s Chairperson and consist of at least the following information; a. b. c. d. e. f. g. h.
An opinion on the accuracy, completeness and reliability of the Company’s financial report. An opinion on the adequacy of the Company’s internal control system. An opinion on compliance with the laws concerning securities and exchange, the regulations of the Stock Exchange of Thailand, or other laws related to the Company’s business. An opinion on the suitability of the auditor. An opinion on transactions that may have conflicts of interests. The number of the Audit Committee meetings, and its attendance record of each committee member. An opinion or overview comment that the Audit Committee perceived from its performance under the charter. Other transactions that the shareholders and general investors should know under its scope of duties and responsibilities assigned by the Board of Directors.
8. In carrying out the Audit Committee’s duties, if it found or has any suspects that there are transactions or the following doings which may have a considerable impact on the Company’s financial status and performance; it should report them to the Board of Directors in order to correct them within a suitable time frame set by the Audit Committee; a. Transactions causing conflicts of interests. b. Fraud or irregularity or have key mistakes in the internal control system c. Breach of laws concerning securities and exchange, regulations of the Stock Exchange of Thailand, and other laws related to the Company’s business If the Board of Directors or its executives failed to arrange to have them corrected within due course, any member of the Audit Committee may report such transactions or doings to the Securities and Exchange Commission or the Stock Exchange of Thailand. 9. 10. 11.
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To support and follow up that the Company has effective risk management system. To improve the Charter of the Audit Committee and present it to the Board of Directors for approvals. To perform any other matters as assigned by the Board of Directors with the Audit Committee’s agreement under the Company’s Articles of Association and laws.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Independent Directors The company currently has 12 directors of which 6 qualified as independent. The number of independent directors is not less than one-third (1/3) of total directors and compile with the notification of the Stock Exchange of Thailand. Details as follows; Name-Surname
1. 2. 3. 4. 5. 6.
Mr.Michael de Mr.Phasunsook Mr.Pornsanong Pol.Maj.Gen Sunthorn Lt.Gen. Thavalya Mr.Tanavich
Santiesteban Ayanaputra Tuchinda Boonruang Prapapant Chindapradist
Definition’s Independent Director The definition of independent director of the Company according to the notification of the Stock Exchange of Thailand regarding Qualifications and Scope of Work of the Audit Committee (No.1), 1999. An independent director and / or a member of the Audit Committee of the Company shall possess the qualification as follows; (a) Not hold shares in excess of one percent of the total number of voting shares of the Company or the Company’s parent company, subsidiary, associated company, major shareholder, or any person having controlling power over the Company, whilst the number of shares held by any related person of such an in independent director must also be counted. (b) Not be and have not been a director participating in management role of the Company, or an employee or an officer of the Company, or an advisor of the Company which receives regular salary from the Company, and not be and have not been a person having controlling power over the Company or the Company’s parent company, subsidiary, or associated company, or a subsidiary of another company in the same level of the Company, unless such an independent director has not been a person referred to above for at least two years prior to the date on which the application for being an independent director is filed with the SEC, provided always that such restriction or prohibition shall not apply to an independent director who has been a governmental officer or an advisor of a government authority, which is the major shareholder of the Company or the person having controlling power over the Company. (c) Not be a person having relationship either through blood or lineage or legal registration as a father, mother, spouse, sibling or child, including as a spouse of a child of any management person or major shareholder of the Company or the Company’s subsidiary, or of any person having power to control the Company or the Company’s subsidiary, or of the person being nominated to be a management person of or a person having power to control the Company or the Company’s subsidiary.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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(d) Not have and have not had any business relationship with the Company or the Company’s parent company, subsidiary, associated company, or major shareholder, or with the person having power to control the Company that may have conflict of interest, in the manner in which his/her independent discretion might be affected, and not be and have not been a substantial shareholder of or a person having power to control the person that has business relationship with the Company, or the Company’s parent company, subsidiary, associated company, or major shareholder, or the person having power to control the Company unless such an independent director has not been a person referred to above for at least two years prior to the date on which the application for being an independent director is filed with the SEC. Business relationship referred to in the first paragraph above shall mean to include any ordinary course of business or trade for business engagement purpose, any lease taking or lease out of any property, any transaction relating to asset or service, any financial support or acceptance of financial support by way of either borrowing, lending, guaranteeing or collateral providing or any other manner similar thereto that could result to an obligation required to be performed by the applicant or the party thereto in an amount of three percent or more of the net tangible asset value of the applicant or twenty million baht or more, whichever is lesser. In light of this, the method for calculation of the value of connected transaction pursuant to the Capital Market Supervising Committee’s Notification, Re: Regulations in respect of an Entering into a Connected Transaction shall be applied mutatis mutandis for the purpose of calculation of such amount of debt of the applicant, provided that the amount of debt incurred during the past one year prior to the date on which such a business relationship with such person exists. (e) Not be and have not been an auditor of the Company or the Company’s parent company, subsidiary, associated company, or major shareholder, or of any of the person having power to control the Company, and not be and have not been a substantial shareholder of, a person having power to control over, or a partner of any auditing firm or office in which the auditor of the Company, or the Company’s parent company, subsidiary, or major shareholder, or the person having power to control the Company is working, unless such an independent director has not been a person referred to above for at least two years prior to the date on which the application for being an independent director is filed with the SEC. (f) Not be and have not been a professional advisor, including legal or financial advisor who obtains fee more than two million baht a year from the Company or the Company’s parent company, subsidiary, associated company, or major shareholder, or from the person having power to control the Company, and not be and have not been a substantial shareholder of, a person having power to control over, or a partner of any of such professional service provider firm or office, unless such an independent director has not been a person referred to above for at least two years prior to the date on which the application for being an independent director is filed with the SEC. (g) Not is a director appointed as a representative of a director of the Company, a representative of a major shareholder of the Company, or a representative of a shareholder of the Company which is a related person of the major shareholder of the Company. (h) Not have any characteristics by which his/her independent comment or opinion on the Company’s operation may be affected. If a person having qualifications stated in (a) to (g) above is appointed as an independent director of the Company, such appointed independent director may be assigned by the Company’s Board of Directors to make decision in respect of business operation of the Company, or the Company’s parent company, subsidiary or associated company, or a of subsidiary another company in the same level of the Company, the major shareholder of the Company, or the person having controlling power over the Company, provided that such decision making by such appointed independent director must always be made on a collective decision basis.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Remuneration Committee Remuneration Committee as of December 31st, 2010 comprises of 3 members as follow; Name - Surname
Position
1.
Mr. Phasunsook
Ayanaputra
2. 3.
Mr. Pornsanong Mr. Michael de
Tuchinda Santiesteban
Chairman of the Remuneration Committee Remuneration Director Remuneration Director
Attendance (times)
2/2 2/2 2/2
Qualifications and Constituents of Remuneration Committees 1. 2. 3. 4.
The members of Remuneration Committees shall be the company’s directors who have been appointed by the Company Committees. The number of Remuneration Committees shall consist of at least 3 people and consist of no less than half of its total members who are qualified as independent committees, in which the Chairman of Remuneration Committees shall also be the independent committee. The Remuneration Committees shall be qualified as Non-Executive Directors in order to prevent the conflict of interest and devote themselves for the duty of remuneration committees. The Remuneration Committees shall nominate any member of Remuneration Committees or any employee to be the secretary of Remuneration Committees.
Term of Remuneration Committee Term of Remuneration Committee is 3 years, the term commencing from May 9th, 2008 to May 9th, 2011. Scope of Power and Authority of Remuneration Committees 1.
Providing the guideline and reviewing any method of remuneration payment, including the annual bonus and the meeting allowance, whether it is monetary or not, any fringe benefits provided to any committee, managing director, chief executive officer and any sets of subcommittees appointed by the Board of Committees and offering it to the Board of Committees for consideration.
2. Determining the criteria for assessing the performance of the Chairman, managing director for purpose of setting their remuneration before offering to the Board of Committees for annual consideration. 3. Considering any conditions if there are any securities (or share subscription warrant) offered to any committee and officer, including considering the appropriateness and giving the resolution if any committee or officer is allocated the securities more than 5% of total allocated securities, provided no any member of the Remuneration Committees shall be allocated the securities more than 5% and then they are entitled to pass any resolution. 4. Reporting any progress and performance to the Board of Committees all the times after holding the Remuneration Committees’ meeting and reporting the performance of the last year to the shareholders through the Company’s annual report and the annual ordinary shareholder meeting. 5. Reviewing the Charter of the Remuneration Committees and offering it to the Board of Co mittees for the approval for purpose of proper adjustment and update. 6. Performing of any other duties assigned by the Board of Committees; According to the duty performance under the scope of their power and authority, the Remuneration Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Committees are able to invite the Management Division, heads of any working units or relevant officers to give their opinion, related and necessary information in the meeting. Besides, for performing the duties under the scope of their power and authority specified herein, the Remuneration Committees can ask for any advice from the independent consultants or other specialists if, in their opinion, it is necessary and proper to do so. However, the Company shall be responsible for all expenses. Executive & Investment Committee Executive & Investment Committee as of December 31st, 2010 comprises of 5 members as follow; Name – Surname
1. 2. 3. 4. 5.
Mr. Anucha Mr. Jeremy Mr. Nontawat Mr. Tanakorn Mrs.Wilaiporn
Position
Sihanatkathakul King Thongmee Leelasiri Siripoorikan
Chairman of the Executive & Investment Vice Chairman of the Executive & Investment Executive & Investment Director Executive & Investment Director Executive & Investment Director
Investment Committee’s Responsibility 1. 2. 3. 4. 5. 6.
Set forth method and strategy on investment. Consider and approve investment on instruments and securities of each type under the Investment Procedure required by company. Consider and select the instruments and security that are invest able in accordance with the Investment Procedure required by company. Consider acquisition and distribution of the invest able securities under the Investment Procedure required by company Handle report on investment situation. Handle other matters as assigned.
Scope of Investment Committee 1. 2. 3.
Make an investment on short-term security or trading portfolio amounted not exceeding THB 25 million under amount limit of not exceeding THB 50 million. Make an investment on long-term security or stock security amounted not exceeding THB 25 million or accounted for 5% of paid-up capital under amount limit of not exceeding THB 50 million. Make an investment on large-scale and costly properties under make amount limit of not exceeding THB 50 million.
Construction Committee Construction Committee as of December 31st, 2010 comprises of 4 members as follow; Name - Surname
1. 2. 3. 4.
16
Mr. Anucha Mr. Nontawat Mr. Tanakorn Mrs. Wilaiporn
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Position
Sihanatkathakul Thongmee Leelasiri Siripoorikan
Chairman of the Construction Managing Director Assistant Managing Director Assistant Managing Director
Roles and Responsibilities of Executive Committee Board of Directors delegated the authorities to Executive Committee as an authorized person, to work on behalf of the company within the scope and conditions as follow; 1. To operate and manage the company’s operation in accordance with the objectives, rules, and resolutions undertaken at Shareholders Meeting and Management Committee Meeting in all cases. 2. To examine and authorize general operations of the company, for example, purchase of vehicles, sales of properties, and to approve of purchase of disposable office stationary, equipments with the value exceeding 100,000 baht, as well as to make decisions on engagement in such obligations as construction contracts, hire purchase contracts, or other contracts with the value exceeding 1,000,000 baht. 3. To authorize the approval of project operations with the value exceeding 50 million baht such as construction contracts including approval of projects, purchase of construction materials, and hire of sub-contractors. 4. To set organization, management and Executive Committee structure to cover all details of selection, training, recruitment, and lay off of engineers and other employees of the company. 5. To prepare, propose, and recommend business directions and strategies of the company to Board of Directors for approval. 6. To set business plans and management authority, to approve annual budget and expenditure for business operation, to implement business plans and strategies in accordance with the policies and business directions approved by Board of Directors. 7. To undertake any duties as assigned by the Board of Directors at any certain time. 8. Executive Committee does not have authority to approve or to involve in or to undertake any businesses or transactions that the executive committee member or other persons may have any conflicts, interests, or conflicts of interests with the company. Management Team Management Team as of December 31st, 2010 comprises of 4 members as follow; Name - Surname
1. 2. 3. 4.
Mr. Anucha Mr. Nontawat Mr. Tanakorn Mrs. Wilaiporn
Position
Sihanatkathakul Thongmee Leelasiri Siripoorikan
Chairman of Executive Director Managing Director Assistant Managing Director of Administration Division Assistant Managing Director of Financial and Accounting Division
Roles and Responsibilities of Managing Director Managing Director has authority as manager to manage and control normal business operation of the company and has authority to approve normal transactions of the company. However, the approval of bidding of construction projects must be in accordance with scope of authority under authority table, which is approved by Board of Directors of the company. Besides, Managing Director also has authorities to perform any duties that are assigned by according to the company’s structure. Managing Director is able to assign other persons who are considered appropriate to undertake necessary and appropriate management or operation duties for Managing Director according to judgment of Managing Director. However, Managing Director or any persons authorized by Managing Director do not have authority to approve or to involve in or to undertake any businesses or transactions that Managing Director or other persons may have any conflicts, interests, or conflicts of interests with the company.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
17
Director and Executive Nomination The company did not have Nominating Committee to recruit any candidates for the posts of Directors of the Company. However, the company’s Board was in charge for considering candidates based on experience, knowledge, capability and qualification according to the law of Public Company Limited B.E. 2535 and notifications of Securities and Exchange Commission as well as other relevance regulation. The name list of director candidates was proposed by Shareholders Meeting. However, the company’s Board was responsible for the operation of the company under control of Shareholders Meetings and regulations of the company. The selection and appointment criteria of the company are as follow; 1. One shareholder has voting right according to number of shares hold, as one share is eligible for one vote. 2. The selection of Director may vote of each individual director for one time or vote of more of directors for one time depending on the resolution of Shareholders Meeting at each time of vote. Each shareholder has the voting right of one person for one vote and transferring the vote to any person is not acceptable. 3. The appointment of Director is conducted by the majority votes. In case that there is an equal vote, the chairman of the meeting will make the final decision. Remuneration for Directors and Executive
Monetary Remuneration Remuneration for Company’s Directors, Audit Committee and Remuneration Committee The Company’s committees consists of 12 members and the Company determines the monetary remuneration for its directors, audit committee and remuneration committee for 2010 as briefly mentioned below;
Name-Surname
Board of Director Meeting Fee
Position
1.
Mr.Anucha
Sihanatkathakul
Chairman of the Board
2.
Mr.Jeremy
King
Vice Chairman
3.
Mr. Michael de
Santiesteban
4.
Phasunsook
5.
Mr.Pornsanong
6.
Pol. Maj.Gen.Sunthorn Boonruang
7.
Lt.Gen. Thavalya
8.
Mr. Thomas C.
Audit Committee Meeting Fee
Remuneration committee Meeting Fee
Director Bonus
50,000
-
-
-
-
-
-
-
Director and Chairman of Audit Committee
40,000
47,500
20,000
-
Ayanaputra
Director and Audit Director
40,000
40,000
25,000
-
Tuchinda
Director and Audit Director
30,000
32,500
20,000
-
Director
40,000
-
-
-
Prapapant
Director
40,000
-
-
-
Thompson
Director
40,000
-
-
-
Mr. Patrick M.
Davenport
Director
30,000
-
-
-
Mr.Tanakorn
Leelasiri
Director
40,000
-
-
-
11. Mr.Tanavich
Chindapradist
Director
20,000
-
-
-
12.
Thongmee
Director and Managing Director
40,000
-
-
-
9. 10.
Mr. Nontawat
Total
410,000
120,000
65,000
-
1. Resolution of the Annual General Meeting of Shareholders for year 2010 approved Directors Bonus as a whole totaling not more than THB 3,500,000.00. However, the Board of Directors’ meeting held on February 24 th, 2011 passed the resolution to omit directors’ bonus for the year 2010. 2. Mr.Jeremy King Vice Chairman refuse to accept the Board of Director Meeting Fee.
18
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Total Remuneration for Executive Directors and Executives In 2009, the remuneration for Chairman of Executive Committees and Executives, totaling 6 persons were in the amount of THB 8,155,660.Other Remuneration Allocation of ESOP Warrant The Company was approved by the Extraordinary General Meeting of shareholders no. 1/2008 to allocate the warrant to its directors, executives and employees for 12,500,000 units (offering price was THB 0.00 per unit), at the exercise price which was valued at THB 3.00 per unit. By the way, a warrant is eligible to subscribe an ordinary share and the warrant was valid for 5 years of the date issuing and offering
Objectives
Providing the opportunity to any directors, executives and employees to jointly own the company, motivating, and rewarding their performance and benefits provided to the Company by them. Qualification of Company’s directors and employees who were to be allocated Warrants 1. 2. 3.
Any directors and/or regular employees of the Company, excluding any contract employees. Any exception other than clause 1, shall be offered to the Management Team and/or the Remuneration Committees for consideration as the special case. Number of warrants allocated to each of the Company’s committees and/or officers under the Management Team determination do not have to be equal, however it depends on: - - - -
Position work experience Working performance and potential Benefits contributed to the Company
Details of Warrant to purchase ordinary shares of the company to directors and employees; - Date of warrant offered June 16th, 2009 - The first exercise date July 31st, 2010 - The last exercise date June 15th, 2014 Offering Period - At the end of the 1st year, the accumulated conversion rights amount not to exceed 20%. - At the end of the 2nd year, the accumulated conversion rights amount not to exceed 40%. - At the end of the 3rd year, the accumulated conversion rights amount not to exceed 60%. - At the end of the 4th year, the accumulated conversion rights amount not to exceed 80%. - At the end of the 5th year, the accumulated conversion rights amount not to exceed 100%.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
19
Number of allocate warrants to directors Name - surname
Number of allocate warrant
Position
Mr. Anucha
Sihanatkathakul
Chairman of the Board
2,080,000
Mr. Jeremy
King
Vice Chairman
2,080,000
Mr. Nontawat
Thongmee
Managing Director
1,080,000
Pol.Maj.Gen. Sunthorn
Boonruang
Director
480,000
Lt.Gen. Thavalya
Prapapant
Director
480,000
Mr. Pornsanong
Tuchinda
Director
480,000
Mr. Phasunsook
Ayanaputra
Director
480,000
Mr. Michael De
Santiesteban
Director
280,000
Mr. Thomas C.
Thompson
Director
280,000
Mr. Patrick M.
Davenport
Director
280,000
Number of allocate warrants to executives Name - surname
Position
Mr. Tanakorn
Leelasiri
Mrs. Wilaiporn
Siripoorikan
Assistant Managing Director of Administration Division Assistant Managing Director of Finance and Accounting Division
Number of allocate warrant
800,000 800,000
Note: Two executives, namely Mr. Anucha Sihanatkathakul (Chairman of the Board) and Mr. Nontawat Thongmee (Managing Director) are allocated the warrant which will be provided to any directors. Corporate Governance The company had policy to comply with guideline on corporate governance for directors of listed company set by the Stock Exchange of Thailand (Attach 3 follow details) and the Committee of the company shall be understood roles and responsibilities. For example, director had to comply with laws and regulations of the company, had integrity and responsibility to shareholders, and had intention to continuous conducting the business. Director had to set policies and business directions of the company, and was responsible for the preparation of financial reports for the control of management to efficiently and effectively operate the business under determined policies. In addition, the company appointed the Remuneration Committee to determine the reasonable reward, but appointing the Nominating Committee remained undone by company, considers that, currently, the consideration and decision making of this issue could effectively be conducted by The Company’s Board and Executive Board of the company. However, the company has Independent Committee and Audit Committee to help monitoring internal control system of the Company in order for the company operation to be transparent and for the highest profits to the company and shareholders. In addition, a criterion for the selection of Independent Director was in accordance with regulation of Stock Exchange of Thailand on the qualification of Independent Director. Examples of criteria are that independent director shall not hold position as management or full-time employee of the company, shall
20
Annual Report 2010 Focus Engineering and Construction Public Company Limited
not be managing director or manager who has authority to take action on behalf of the company, and shall be independent from major shareholders, management, and related parties. Control of the Use of Inside Information The company passed the policies to protect the use of inside information by director or executive for their own benefits as follow; 1. Prohibit the director, executive, including spouse and children who are not yet of legal age, using the inside information to purchase, sell, transfer, or receive the company’s securities before those information is disclosed to public especially within 1 month before financial statements are disclosed to public. Besides, after the information is disclosed to public, the aforementioned persons would not purchase or sell securities until the public has acknowledged that information for a certain appropriate period of time. 2. Acknowledge the director and executive, the responsibility to report their ownership of the company’s securities, including those of the spouse and children who are not yet of legal age and regarding the report of the company’s shares holder by director, management, including spouse and children who are not yet of legal age, that may have any chances to purchase, sell, transfer, or receive securities of the company as prescribed in notification of Securities and Exchange Commission. Personnel As of December 31st, 2010 the Company has 115 employees as listed below: Description Engineer Architect Head Office Field Total
Regular Employee (person)
Contract Employee (person)
31
4
Total (person) 35
3
-
3
31
2
33
37
7
44
102
13
115
Note: As of December 31st, 2010 the Company has 297 daily paid workers; For the last 3 years, the Company has no any significant labor disputes. The total remuneration for 2008, 2009 and 2010 provided to the employees was in the amount of THB 41.94 million, THB 54.01 million and THB 49.38 million respectively. The said remuneration consists of salary, overtime, bonus and other payment. The Company’s policy enhances to continuously improve its personnel of all levels regarding the aspects of knowledge and competence, both engineer and any staff of other positions. Moreover, the Management Division is aware that its personnel are deemed as a value and vital resource, so that the Company’s policy determines to enhance and support its personnel at all levels to the improvement of knowledge, skill and positive attitude towards their working. Previously, the Company sent its personnel to attend the training courses in various fields which conform to their function, both inside and outside of the Company, whether they are provided by the public or private agency, such as the project of construction danger acknowledging enhancement and protection measures under the law regarding working safety, project of construction risk management for reducing any loss, and construction planning and period determination project, etc. Accordingly, such projects can increase the competence and effectiveness for their working, decrease any mistakes or trial and error, and enhance any personnel to gain more knowledge, vocational progress and working satisfactoriness leading to the corporate development and achievement of the operative objectives under the state of technology change and strong business competition. Annual Report 2010 Focus Engineering and Construction Public Company Limited
21
22
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Mr. Anucha Sihanatkathakul Chairman of the Board (Director who is authorized of the company)
Mr. Jeremy King Vice Chairman (Director who is authorized of the company)
Mr. Nontawat Thongmee Managing Director (Director who is authorized of the company)
1.
2.
3.
Name - Surname Position
Age
48
48
52
(year)
Directors Certification Program (DCP), Thai Institute of Directors (IOD) 44/2004
B.B.A. Campbell University U.S.A.
M.B.A., Southeastern University U.S.A.
Law Degree,Nottingham University
Directors Certification Program (DCP), Thai Institute of Directors (IOD) 4/2000
(Fellow Member), Thai Institute of Directors (IOD) 2/2001
B.A. (Accounting & Management), Houston Baptist University, Texas, U.S.A.
M.B.A (Finance), University of Houston, Texas, U.S.A.
Education Background
-
-
Percent of Share holding in the company (%)
-
-
Family Relationship
Director and Managing Director Director
2003 - present
Vice Chairman Executive Vice Chairman Chairman and CEO. Chief Executive and Managing Director Director Executive Director Director
Director Director Director Director and Chairman of the Audited Committee Director Director Executive Chairman Director Director Director Executive Vice Chairman Executive Chairman Director Special Advisor Advisor Specialist Director Director
Position
2004 - present
2007 – 2008 2002 – 2006 2001 – 2006
1996 - present 1996 - present
2008 – present
2007 - present 2006 - present 2003 - present 2002 - present 1998 - present 1989 - present 2007 - 2009 2003 - 2007 1999 - 2006 2005 - 2006 2004 - 2006 2004 - 2005 2001 - 2005 2001 - 2005
2008 - present 2008 - present 2008 - present 2007 - present
Period
Focus Environmental Co., Ltd. / Construction
Focus Development and Construction Pcl. / Construction
Knight Asia Co., Ltd. Siam Knight Fund Management Securities Co., Ltd. Focus Engineering and Construction Pcl. / Construction Raimon Land Pcl. / Real Estate Development Brooker Group Pcl. / Research and Real Estate Advisor
Focus Development and Construction Pcl. / Construction
Amata (Vietnam) Co., Ltd. / Industrial Estate Pong Kamol Co., Ltd / Investment Focus Development and Construction Pcl. / Construction Focus Environmental Co., Ltd. / Construction Capital Focus Co., Ltd. / Investment Advisor Moon Dance Development Co., Ltd. / Estate Development Syrus Securities Pcl. / Securities Syrus Securities Pcl. / Securities PTTEP Exploration and Production Pcl. / Exploration and Production The Committee on finance, banking and financial institutions The Senate Sub Committee on banking and financial institutions The Senate The Committee on finance, banking and financial institutions The Senate Thai Oil Power Co., Ltd. / Electricity Factory Nava Leasing Pcl. / Car Leasing
Amata Power Co., Ltd. / Electricity Generating Amata Water Co., Ltd. / Water Distribution Pipelines Amata Hong Kong Co., Ltd. / Investment Amata Corporation Pcl. / Industrial Estate Development
Name of Unit / Company
Work experience during the past 5 years
st
Details of Directors, Executives and Company’s Authorized Office (As of December 31 , 2010)
Annual Report 2010 Focus Engineering and Construction Public Company Limited
23
Pol.Maj.Gen.Sunthorn Boonruang Director
Mr. Pornsanong Tuchinda Director and Chairman of Audit Committee
5.
6.
Age
49
74
76
(year)
Audit Committee Program (ACP), Thai Institute of Directors (IOD)
Director Certification Program (DCP), Thai Institute of Directors (IOD)
Directors Accreditation Program (DAP), Thai Institute of Directors (IOD) 29/2004 (year 2004)
Directors Accreditation Program (DAP), Thai Institute of Directors (IOD) 8/2004 (year 2004)
M.P.A., Indiana University U.S.A.
Bachelor of Political Science, Royal Police Cadet Academy
Directors Accreditation Program (DAP), Thai Institute of Directors (IOD) 8/2004 (year 2004)
Bachelor of Civil Engineering Worcester Polytechnic Institute, MA, U.S.A.
Royal Thai Army War College, Institute of Advanced military Studies
Army Engineer Curriculum for Colonel, Army Engineer School, Bhanurangsi Camp, Ratchaburi
Education Background
*0.32
*0.525
-
Percent of Share holding in the company (%)
-
-
-
Family Relationship
2004 – 2005
2005 – 2006
Mar. 05 - May 08 2007 - Sep. 10 Dec. 08 - Nov. 09 2005 – Feb. 08
May 08 - Feb. 10
Mar. 05 - present Mar. 10 - present May 08 - present
Jan. 10 – present Feb. 07 - Dec. 09
Nov. 09 - present Nov. 07 - present Feb. 10 - present
2006 - present 2003 - 2006
2003 - present 1997- present
Period
(As of December 31st, 2010)
Position
Chairman of Director Director Executive Committee Member Head of Transformation Member of Nominating and Remuneration Committee Independent Director Audit Director Member of Nominating and Remuneration Committee Chairman of Audit Committee Audit Director Chairman of Director Chairman of Director Independent Director and Audit Director Independent Director and Chairman of Audit Committee Chairman of Director
Director Director and Audit Director
Nava Leasing Pcl. / Car Leasing
GE Money Retail Bank Pcl. / Commercial Bank
Triple P Development Co., Ltd. Ayudhya Fund Management Securities Co., Ltd Syrus Securities Pcl. / Securities
Focus Development and Construction Pcl. / Construction
Ayudhya Securities Pcl. / Securities Bank of Ayudhya Pcl. / Commercial Bank
Focus Development and Construction Pcl. / Construction Focus Engineering and Construction Pcl. / Construction
Focus Development and Construction Pcl. / Construction Intech Co., Ltd. / Machinery Sales Agent Business
Name of Unit / Company
Work experience during the past 5 years
Director Advisor to Executive Director
* Mrs. Lawan Boonruang (Pol.Maj.Gen.Sunthorn Boonruang’s spouse) holds the company shares of 0.52 * Mrs. Paranin Tuchinda (Mr.Pornsanong Tuchinda’s spouse) holds the company shares of 0.32%
Lt.Gen Thavalya Prapapant Director
4.
Name - Surname Position
Details of Directors, Executives andCompany’s Authorized Office
24
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Mr. Thomas C. Thompson Director
9.
Mr. Michael de Santiesteban Director and Audited Director
Mr. Patrick M. Davenport Director
8.
10.
Mr. Phasunsook Ayanaputra Director and Chairman of Remuneration Commitee
7.
Name - Surname Position
46
59
45
51
(year)
Age
Directors Accreditation Program (DAP), Thai Institute Of Directors (IOD) 74/2008 (year 2008)
Master’s Public Policy, Minor Statistics, Georgetown University Presidential Scholar
Directors Accreditation Program (DAP),Thai Institute Of Directors (IOD) 74/2008 (year 2008)
BA Economics Columbia University 1978, USA
Msc Economics London School of Economics 1979
Director Certification Program (DCP), Thai Institute of Directors (IOD) 123/2009 (year 2009)
Bachelor of International Relation with a minor in Asian History, James Madison College, Michigan State University
Directors Accreditation Program (DAP), Thai Institute of Directors (IOD) 81/2009 (year 2009)
Bachelor of Law, Chulalongkorn University
Thai Barrister at Law , BAR Association
Master of Law Program (LLM), University of Iowa, U.S.A.
Education Background
-
-
-
-
Percent of Share holding in the company (%)
-
-
-
-
Family Relationship
Feb. 08 - present May.08 - present 2007 – present 2004 - 2007
Feb. 08 - present 1998 - present
Sep.08 - present 2004 - present Aug.02 - present Aug.02 - present 1997 - present
1992 - present
May.08 - present 2006 - present
Period
(As of December 31st, 2010)
Director and Audit Director Director of Remuneration Managing Director Senior Advisor Executive Director
Director Partner
Director Director Director Director Director
Chairman of Remuneration Committee Independent Director and Audit Director Partner
Position
Focus Development and Construction Pcl. / Construction Focus Development and Construction Pcl. / Construction Bank Julius Baer UBS AG Singapore
Focus Development and Construction Pcl. / Construction ACH Investment Pte, Ltd
Focus Development and Construction Pcl. / Construction Knight Asia Co., Ltd. Relish Fine Foods Co.Pvt.Ltd., Khyber Rugby Supply Co.Pvt.Ltd., Zaurus Investments Limited
Siam Premier International Law Office Limited
Focus Development and Construction Pcl. / Construction Focus Development and Construction Pcl. / Construction
Name 0f Unit / Company
Work experience during the past 5 years
Details of Directors, Executives andCompany’s Authorized Office
Annual Report 2010 Focus Engineering and Construction Public Company Limited
25
Mrs. Wilaiporn Siripoorikan Assistant Managing Director Finance and Accounting Division
Mr. Tanavich Chindapradist Director
12.
13.
Mr. Tanakorn Leelasiri Director and Assistant Managing Director of Administration Division
11.
Name - Surname Position
43
41
51
(year)
Age
M.B.A., Business Finance, University of Thai Chamber of Commerce
Bachelor Degree of Science in Mathematics, King Mongkut University of Technology Thonburi
Master Degree of Science in Administration, Boston University
Master Degree of Science in Business Economics, Bentley College
Ph.D. in Public Administration, Suan Dusit University
Mini MBA. Certificate, Faculty of Business Administration, Kasetsart University, No.33, 2004
Directors Certification Program (DCP), Thai Institute of Directors (IOD) 44/2004 (year 2004)
Bachelor Degree of Political Science, Public Administration, Thammasat University
Master Degree of Sociology, Thammasat University
Education Background
0.0002
-
0.0002
Percent of Share holding in the company (%)
-
-
-
Family Relationship
2002 - 2005
2005 - present
Oct.09 - present Sep.93 - present Apr.97 - present Jan.01 - present Jan.01 - present Jan.02 - present Jan.06 - present Oct.06 - Sep.07 Jan.04 - Jan.05
2001 - 2005
2005 - 2007
Oct.09 - present 2007 - present
Period
(As of December 31st, 2010)
Assistant Managing Director Finance and Accounting Division Manager of Finance and Accounting Department
Director Managing Director Special instructor Special instructor Special instructor Special instructor Writer Specialist on National Energy Planning Advisor to the Vice Minister
Director Assistant Managing Director of Administration Division, Acting Manager of General Administration, Human Resources and Information Technology Department, Acting of Manager of Equipment Control Department and Acting of Manager of Purchasing Department Director, Assistant Managing Director of Business Support Division, Secretary to the Board of Directors, Acting Manager of General Administration, Human Resources and Information Technology Department Assistant Managing Director of Support Division And Acting Manager of General Administration, Human Resources and Information Technology Department
Position
Focus Engineering and Construction Pcl. / Construction
Focus Development and Construction Pcl. / Construction
Focus Development and Construction Pcl. / Construction Atwise Consulting Co., Ltd. Kasetsart University Burapha University Chiangmai University RamKhamHaeng University Logistics Time Magazine Strategic and Planning Office, Ministry of Energy Ministry of Education
Focus Development and Construction Pcl. / Construction
Focus Development and Construction Pcl. / Construction
Focus Development and Construction Pcl. / Construction Focus Development and Construction Pcl. / Construction
Name 0f Unit / Company
Work experience during the past 5 years
Details of Directors, Executives andCompany’s Authorized Office
Details of Director, Executive Director and Executive Position in other related (as of December 31st, 2010)
Focus Development and Construction Public Company Limited
1.
Mr. Anucha
Sihanatkathakul
2.
Mr. Nontawat
Thongmee
3.
Mr. Jeremy
King
4.
Lt.Gen. Thavalya
Prapapant
5.
Pol.Maj.Gen. Sunthorn Boonruang
#, /, ♠, ● /, ♦ , ● ★, / / /
6.
Mr. Pornsanong
Tuchinda
/ , +, ❖
7.
Mr. Phasunsook
Ayanaputra
8.
Mr. Patrick M.
Davenport
9.
Mr. Thomas C.
Thompson
10. Mr. Michael de
Santiesteban
11. Mr. Tanakorn
Leelasiri
12
Chindapradist
Mr. Tanavich
13. Mrs. Wilaiporn
Siripoorikan
Remark
26
Annual Report 2010 Focus Engineering and Construction Public Company Limited
# ★ ♠ / ♦ ++ + ● ✧ ❖
Focus Environmental Company Limited
Capital focus Company Limited
/
/
/,+,✧ / / /, ++ , ❖ /,● / ●
Chairman of the Board Vice Chairman Chairman of Construction Committee Director Managing Director Chairman of Audit Committee Audit Director Executive Chairman of Remuneration Committee Remuneration Director
/
Annual Report 2010 Focus Engineering and Construction Public Company Limited
27
Ms. Annie Guat Khuan Chew
Mr. Anucha Singhanatkathakul
4.
6.
Night Assets (Thailand) Co. Ltd.
3.
Mr. Thanakorn Srilasiri
Siam Knight Fund Management Co., Ltd. (formerly named “Seamico Knight Fund Management Co.,Ltd.”)
2.
5.
Focus Environmental Company Limited
1.
Persons who may have conflict of interest
Ms. Annie Guat Khuan Chew married with Mr. Thomas C. Thomson, who is Focus’ committee.
Mr. Thanakorn Srilasiri is Focus’s executive and committee.
Mr. Anucha Singhanatkathakul is Focus’s executive and signature authority.
Mr. Patrick Michael Kaffenpot is Focus’s committee and both of them are executives and signature authority of Night Assets (Thailand) Co. Ltd.
Mr. Jeremy Lechmere King or Mr. Jeremy King is Focus’s signature authority in Focus.
Both of them are the directors and authorized persons of Siam Knight Fund Management Securities Co., Ltd.
Mr.Patrick Michael Darf Entport is the director of Focus Development and Construction (Public) Co., Ltd.
Mr. Jeremie King is an authorized director of Focus Development and Construction (Public) Co., Ltd.
2. Mr. Nontawat Thongmee
Common directors, namely, 1. Mr. Anucha Sihanatkathakul and common major shareholders
Relationship
Ms. Annie Guat Khuan Chew bought two rooms in “Focus on Saladaeng” condominium, which was the company’s condominium. The first room was 127,500 baht per square meter and its total price was 5,640,600 baht. The second room price is 130,000 baht per square meter. Total price is 5,743,400 baht
Mr. Thanakorn Srilasiri bought a room in “Focus on Saladaeng” condominium, which was the company’s condominium. The price per square meter was 97,500 baht and the total price was 3,103,425 baht.
Mr. Anucha Singhanatkathakul bought two rooms in “Focus on Saladaeng” condominium, which was the company’s condominium. There first room was 128,500 baht per square meter and its total price was 6,877,320. The second room was 140,000 baht per meter and its total price was 6,665,400 baht.
The company bought a room in “Focus on Saladaeng” condominium, which was 107,500 baht per square meter. Total price was 6,118,900 baht.
On the 29th of May, 2009, the Board of Directors Meeting had the resolution to buy more shares of Siam Knight Fund Management Securities Co., Ltd. or SKFM with the amount of 8 million baht in order to keep up the same ratio of shares holding as previous percentage of total shares and the Company has paid for the value of shares equal to 25% or 2 million baht, total 4 million baht
The Company has bought the ordinary shares of Siam Knight Fund Management Securities Co., Ltd. or SKFM (Previous Name: Seamico Knight Fund Management Securities Co., Ltd.) which operates its business as a fund management securities company for the amount of 200,000 shares, THB10.00 per share, with total value of 2 million baht or as equal to 10% of total shares.
The company had signed Inter-guarantee contract without any monetary compensation with Focus Environmental Company Limited for the loan on the purchase of promissory note at discount - by using money of Apec - Focus Consortium and Thai Military Bank (Public Company Limited) at the amount of 25 million baht. The credit line of such loan was the previous credit line and was fully guaranteed by outside party (which was the previous shareholders), which was continuously guaranteed until now. Besides, as of October 31, 2008. The Focus Environment Co.,Ltd. entered the agreement for debt restructuring with Thai Military Bank Public Ltd. According to that agreement The payment The Focus Environment Co.,Ltd. paid in accordance with make the Payment in full.
Type / size of transaction
Ms. Annie Guat Khuan Chew bought a room at the same rate as the other customers.
Mr. Thanakorn Srilasiri bought a room at the same rate as the other customers.
Mr. Anucha Singhanatkathakul bought a room at the same rate as the other customers.
Night Assets (Thailand) Co. Ltd. bought a room at the same rate as the other customers.
The Company expects the return of such investment transaction in term of dividend, including the expansion of customer approaches at the high level of such company.
As the company and Focus Environmental Company Limited had coordinated in form of joint venture to construct water treatment system at Samutprakarn province. Thus, the application for loan from banks shall be done in the name of Apec - Focus Consortium. Although, there was a guarantee from outside party, banks still required the company to guarantee Focus Environmental Company Limited.
Necessity and reasonability of the transaction
Connected transactions with the persons who may have the conflict of interest for the year ended December 31st, 2009 as follow;
Connected transactions
Explanation and Analysis of Financial Position and Operating Performance Explanation and analysis of financial status and operating results Operating Performance The construction industry during the first half of 2010 had been fairly expanded despite the political unrest situation. However, during the year’s second half, the construction sector had been decelerated. The political factors must still be closely followed up since they would affect the government sector’s construction project as well as the efficiency of budget disbursement and the private sector’s confidence. These would also continuously decrease the investment of the private sector’s construction business. In 2010, the Company had suffered net loss of 59.22 million Baht, resulting from the income recognized in 2010 having decreased in the amount of 364.28 million Baht or at the rate of 60.99% (compared with 2009). The turnover thus could not reach the break-even point. The income recognized for large size project which was still under construction was not much. This is because it was only ground and structure works which the customer had provided the principle materials. Besides, the Company had increased the estimated cost of completed projects as well as there was fierce competition of construction price; the Company thus was, in 2010, awarded the projects of not-so-high value. However, the Company, which is medium size contractor, still emphasizes its potential development, both in the quality of work and personnel. This is in order to develop the operating results according to the international standard (with qualified personnel) to give standard services and to be able to deliver the work in time. This also includes creating internal business type to be more diversified and can support various kinds of construction works. At present, the Company still emphasizes on acquiring works from both government and private sector. The Company will consider various risks in receiving works and payment ability of each customer, in order to support the decision in receiving construction works (to decrease the risk which may arise from being unable to collect money). Other than the business of construction contracting, the Company had also started the real estate business. During the fourth quarter of 2010, the Company had debuted the first project and implemented the construction under the project name “Focus on Saladaeng” which is an 8-story condominium located in Silom area. This would render the Company with income from one more channel of real estate business without depending solely on the business of construction contracting. Revenue The Company is classified in the medium size construction contractors group, giving services of construction contracting and general construction engineering, for instance: designing, construction contracting of structure and architecture, construction engineering system works, and environmental engineering system works (ex: construction of office buildings, hotels, resorts, hospitals, housings, schools, dormitories, industrial plants, roads, bridges, piping works, water treatment system works, railroad tracks, railway stations, and other public utilities. The Company’s income would depend on the type and quantity of works the Company having been awarded in each period. The Company has the policy to work for both government and private sector, by considering mainly the works rendering suitable return rate and the customer having good financial status. For the revenue recognized, the Company will recognize the income according to the completed work ratio which is estimated by the project’s engineers. The construction duration of both government and private agencies is about 1-2 years of over, depending on work values of each project. In 2010, the Company had total income of 233.03 million Baht, 364.28 Baht or 60.97% decreased (compared with the year 2009 = 597.31 million Baht). For the income structure of 2010, approx. 97% of income was derived from construction contracting which was varied according to the characteristics of the work awarded. At this, the income derived from construction contracting was decreased from 2009 in the amount of 360.90 million Baht or 61.51%. Since in 2010, the Company had been awarded construction work of each project of not-so-high values, and for the large size project during construction, it was only ground and structure works (which the customer had provided principle materials), the project’s major income was merely labor costs. Other income was derived from the interest gained, land lease fee (prior to land development), construction equipment rental fee, etc. Expenditures The Company’s expenses comprise the construction contracting costs, management expenses, the executives’ remuneration, and financial costs. The financial cost in construction contracting consists of construction materials, subcontract wages, and construction worker wages, etc.
28
Annual Report 2010 Focus Engineering and Construction Public Company Limited
In 2010 and 2009, the Company had total expenses (compared with total income) in the ratio of 125.41% and 103.62% respectively. In 2010, the Company had total expenses of 292.25 million Baht which was decreased in the amount of 326.71 million Baht (or 52.78%) compared with 2009 (having total expenses of 618.96 million Baht). Since in 2010, the Company had decreased income (from the previous year) in the amount of 364.28 million Baht (which the decreased construction cost was in accordance with the recognized decreased income). However, construction cost had increased from the rate of 97.13% or 569.87 Baht in 2009 to 104.63% or 236.28 Baht in 2010. This is because the Company had increased the estimated construction cost according to the existing truth for the completed project. The management expenses in 2010 were 43.97 million Baht, increased 9.29 million Baht or 26.97% from in 2009 (which were 34.68 million Baht). This is because the Company had expenses on delayed delivery in the amount of 1.61 million Baht, on advertising and publicizing for sale of the project’s condominium “Focus on Saladaeng” in the amount of 1.70 million Baht. Besides, the expenses had arisen from allocating the depreciation of some assets not being used in the construction project, which was increased from the previous year in the amount of 2.90 million Baht. In 2010, the Company had total expenses on the executives’ remuneration in the amount of 8.16 million Baht. And in 2009, the expenses on 6 executives’ remuneration were in the amount of 8.84 million Baht. The 2010 remuneration was reduced at 0.68 million Baht (compared with the previous year). In 2010, the company had paid bonus to the executives and staffs; however, in 2009 the bonus payments were suspended. In 2010, the company had financial costs in the amount of 3.84 million Baht, and in 2009, 5.57 million Baht. These resulted from borrowing from local commercial banks and financial institutions in order to be used as revolving funds. The company had loan amount both in the short and long term, for ex: overdrawn amount at the MOR and fixed rate of +1.5% per year, the project credit amount (promissory notes type), and promissory notes amount for being used as revolving funds (MLR interest rate per year), etc. Net Profit (Loss) The Company had incurred a loss from the net operating results for the year ended 31 December 2010 in the amount of 59.22 million Baht or 25.41% of total income. This was compared with the accounting period which was ended 31 December 2009 - the net loss was 21.64 million Baht or 3.62% of total income. In 2010, the net loss had increased in the amount of 37.58 million Baht or 173.66% due to the following important changes: 1) The income from construction contracting was decreased in the amount of 360.90 million Baht. This is because in 2010, the Company had been awarded construction works in each project of not-so-high values, and for the large size project during construction, it was only ground and structure works (which the customer had provided principle materials), thus the project’s major income was merely labor costs. 2) The Company had increased construction cost rate. In 2010, the Company had the construction cost rate of 104.63% (compared with major income) or 225.82 million Baht. And in 2009, the Company had the construction cost rate of 97.13% (compared with major income) or 586.72 million Baht. These affected the primary profit making capability. In 2010, the primary loss was 10.46 million Baht or 4.63%, that means the increased loss was in the amount of 27.31 million Baht or 162.13%. However, when compared with 2009, the primary profit was 16.85 million Baht or 2.87%. This resulted from the incremental of estimated construction cost according to the existing fact for the completed project. 3) The management expenses in 2010 were increased from the previous year. This is because the Company had expenses on delayed delivery in the amount of 1.61 million Baht, on advertising and publicizing for sale of the project’s condominium “Focus on Saladaeng” in the amount of 1.70 million Baht. Besides, the expenses had arisen from sharing the depreciation of some assets not being used in the construction project (being recorded in the management expenses) which were increased from the previous year in the amount of 2.90 million Baht. Financial Status The Company’s financial status in 2010 was compared with in 2009, the following important changes had been made: 1. Asset Analysis The Company had total assets at 31 December 2010 in the amount of 274.63 million Baht, decreased from 2009 in the amount of 51.44 million Baht or 15.77% (when compared with the total assets of 326.07 million Baht at 31 December 2009).
In 2010, the Company had current assets of 195.07 million Baht or 71.03% of total assets, with the following important items: Annual Report 2010 Focus Engineering and Construction Public Company Limited
29
1.1 Trade debtors and finished work values which had not yet been collected, in the total amount of 65.41 million Baht or 33.53% of current assets. This was divided into trade debtors: 33.30 million Baht and finished work values which had not yet been collected: 32.11 million Baht. These figures were decreased from the previous year in the amount of 14.50 million Baht or 18.14%, since in 2010, the Company had decreased income from the previous year in the amount of 360.90 Baht. For the trade debtors in the amount of 33.30 million Baht in 2010, they were the debtors of not over 3-month period (for the whole amount) and the debt collection period in 2010 was 72 days. 1.2 The cost of real estate development in the amount of 80.34 million Baht, resulted from the Company having bought the land plot in Saladaeng area in 2008 which was recorded as the land waiting to be developed (in the type of non-current assets) which was in the amount of 65.70 million Baht. However, the land plot was under obligation on the matter of lease agreement of the said land plot until September 2010, and in October 2010, the Company had formally debuted and sold the condominium under the name “Focus on Saladaeng”. Immediately after that the Company had started the construction, thus increasing real estate development cost in the amount of 14.64 million Baht. The Company had mortgaged the said project’s land plot together with the existing buildings at present as well as the future buildings to be used as collateral in applying for credit from bank in the amount of 131.50 million Baht. 1.3 Other current assets were in the amount of 17.65 million Baht. The amount was decreased from 2009 in the amount of 12.24 million Baht or 40.95%. This is because in 2010, the Company had been returned the withholding tax of 2009 from the Department of Revenue in the amount of 18.46 million Baht. In 2010, the Company’s income had been tax-withheld in the amount of 5.47 million Baht, thus resulting in other current assets being increased from the previous year. 1.4 Non-current assets were in the amount of 15.80 million Baht. The amount was decreased in the amount of 24.76 million Baht or 61.05% compared with the previous year. This is because of retention which the customer had deducted at the rate of 5-10% of the construction value collected by the Company. The project being under construction was decreased in the amount of 22.81 million Baht because of the finished project, and because of the project being in the guaranteeing process or in the process of request for retention return, and these would be classified in the retention receivables (current assets type) in the amount of 18.42 million Baht in 2010 and 1.45 million Baht in 2009. 2. Liabilities Analysis At 31 December 2010, the Company had total current assets of 190.72 Baht, increased from 2009 in the amount of 2.52 million Baht or 13.4%, with the following important items: 2.1 Trade account payables were in the amount of 23.23 million Baht, decreased 16.81 million Bath or 41.98% when compared with 2009 (which was in the amount of 40.04 million Baht). The estimated construction cost in 2010 was 23.23 million Baht which was increased in the amount of 8.03 million Baht or 43.08% when compared with 2009 (which was 40.04 million Baht). This is because of the decrease in the amount of order or contracting wages, which was in accordance with the decreased amount of income and construction cost. 2.2 Deposit and advance income were in the amount of 25.77 million Baht. This resulted from the Company having sold the condominium units of the project “Focus on Saladaeng”, and at 31 December 2010, the Company had transaction value which had already made into sale contract at the rate of 93.64% of total sales volume (which some part of deposit and installment money according to the contract had already been received). 2.3 The overdrawn amount and short-term loan from financial institution was 3.50 million Baht, decreased from 2009 in the amount of 37.09 million Baht. And long-term loan from financial institution in the amount of 40 million Baht in 2010, was the loan from the project “Focus on Saladaeng” to be used to repay short-term loan from the other local financial institution (for the whole amount). 3. Shareholder’s Equity Analysis The Company had the shareholder’s equity at 31 December 2010 in the amount of 83.90 million Baht, which decreased 53.96 million Baht or 39.14% when compared with the shareholder’s equity at 31 December 2009. The following important changed items are: 1. The Company had accumulated deficit in the amount of 80.86 million Baht. This is because in 2010, the Company had the net loss operating results of 59.22 million Baht, and had accumulated deficit in 2009 in the amount of 21.64 million Baht. 2. The Company had loss results (which had not arisen) of investment in available-for-sale securities in the amount of 13.20 million Baht, decreased from the previous year 5.26 million Baht or 28.49%, due to the assets’ price changes. 30
Annual Report 2010 Focus Engineering and Construction Public Company Limited
4. Cash Flow Analysis Cash flow budget shows the fluctuated cash flow occurred from the operating activities, investment activities, and moneymaking activities at the end of an accounting year, and shows cash and cash-equivalent items balance at 31 December 2010 in the amount of 5.67 million Baht (which was decreased from the previous year in the amount of 10.96 million Baht), as follows: 4.1 Net cash flow used in the operating activities was in the amount of 4.18 million Baht. This occurred from the return of retention to the due contractors, and from complying with the agreements specified in the contract. 4.2 Net cash flow used in the investment activities was in the amount of 0.89 million Baht. It was the payment for buying construction materials. 4.3 Net cash flow used in the moneymaking activities was in the amount of 5.90 million Baht. It was derived from repaying long-term loan from financial institution in the amount of 6.70 million Baht. At this, the Company had mortgaged the investment in available-for-sale securities at 31 December 2010. The said assets had fair value of 13.63 million Baht. And it was also derived from the Company having mortgaged the land plot of the project “Focus on Saladaeng” in the amount of 131.50 million Baht. At 31 December 2010, the Company had withdrawn from the said amount (40 million Baht) to repay the short-term loan from another local financial institution. And in 2010, the Company had paid the interest in the amount of 3.84 million Baht. 5. Financial Ratio Analysis In 2010, the Company had the significant financial ratios, as follows: 5.1 Liquidity ratio in 2010 equaled 1.30-fold (which was better than in 2009), resulting from the Company having been paid the deposit and installment from the customers who had made sales contract of the project “Focus on Saladaeng” in the amount of 25.77 million Baht, and the Company having the cost to develop the said project in the amount of 14.64 million Baht. These had resulted in the credit balance occurred from real estate business in the amount of 11.13 million Baht, in order to boost liquidity for the construction contracting business. Even though in 2010, the money collection from the customers of construction contracting business would be more delayed than in 2009, having period of average debt collection of 72 days and 61 days respectively. While the Company had to repay the debtors according to the conditions of order which had the period of debt payment average of 49 days (which was not different from 2009). These resulted in the Company having ratio of cash flow liquidity in 2010 = 0.02 times, and in 2009 = 0.34 times. 5.2 Ratio showing profit-making capability. In 2010, the ratio was decreased from 2009 since the Company having suffered loss operating results, resulting from the incremental of estimated construction cost according to the existing fact for the completed project. Main factors and influence which may affect the operating results or the future financial status. Industry Conditions Factor Since the construction contracting business is a type of service-giving business, so the factors influencing the Company’s operation in the future is the customer’s need of service. This depends on the government and private sector’s investment policy which determines the amount of construction work. However, the important factor in the company’s business operation relies on the capability of the directors and executives in acquiring new construction works. At this, the work amount and the value of construction project which the Company has implemented must relate to the revolving funds which the Company has earned. The Company’s principle capital sources are the Company’s capital and loans from commercial banks and financial institutions. Besides, the Company must control the construction contracting cost, for ex: construction materials, transportation, labor, and management expenses as well as financial costs to be also at the suitable level. Change of Major Shareholder’s Group Even though the Company had established in 1989, the Company had later changed the major shareholder’s group to be the group of Mrs. Naparat Sihanatkatakul. This was made together with changing the executives and the policy of management and construction work receipt since 2000. The Company has the policy of not emphasizing on receiving construction contracting works in any particular industries, thus it had unsteady income proportion in the last period. Yet, the Company has planned to participate in the bidding or make construction contracting with the private sector which has good payment ability as well as the Company having the suitable return rate. The Company has the construction ability and the possibility of being hired. This is because the Company’s engineers have good skills in various construction works. Moreover, the Company’s executives and engineers have given suggestions on designing, finding funds resources, using construction materials, and construction techniques which could save the construction cost as well as being able to render quality and acceptable works, resulting in receiving confidence occurred from some of these project operations. Annual Report 2010 Focus Engineering and Construction Public Company Limited
31
Audit Report of Certified Public Accountant
To the Board of Directors and Shareholders of Focus Development and Construction Public Company Limited I have audited the balance sheet of Focus Development and Construction Public Company Limited as at December 31, 2010, and the related statements of income, changes in shareholders’ equity and cash flows for the year then ended. The Company’s management is responsible for the correctness and completeness of the information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of Focus Development and Construction Public Company Limited for the year ended December 31, 2009, which have been presented herewith for comparative purposes, were audited by another auditor in the same office, whose report dated February 25, 2010, expressed an unqualified opinion on those financial statements. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain a reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Focus Development and Construction Public Company Limited as at December 31, 2010, the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles.
Bunjong Pichayaprasat Certified Public Accountant Registration Number 7147 ANS Audit Co., Ltd. Bangkok, February 24, 2011
32
Annual Report 2010 Focus Engineering and Construction Public Company Limited
FINANCIAL STATEMENTS
BALANCE SHEETS FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED AS AT DECEMBER 31, 2010 AND 2009 (Baht) Note
2010
2009
5
5,666,649
16,630,682
4, 6
33,299,437
53,817,158
Retention receivables - net
7
18,418,011
1,450,801
Work in progress
19
7,587,252
15,885,163
Unbilled receivables
19
32,112,404
26,092,085
Cost of property development
8
80,340,758
-
Other current assets - net
9
17,647,213
29,893,197
195,071,724
143,769,086
ASSETS
3
CURRENT ASSETS Cash and cash equivalents Trade accounts receivable - net
Total Current Assets NON-CURRENT ASSETS Restricted bank deposits
10
23,873,558
34,754,527
Long-term investments
11
17,834,623
10,577,466
Land held for development
12
-
65,701,164
Building and equipment - net
13
22,049,903
30,707,839
4, 14
15,799,914
40,559,427
79,557,998
182,300,423
274,629,722
326,069,509
Other non-current assets Total Non-Current Assets TOTAL ASSETS
Annual Report 2010 Focus Engineering and Construction Public Company Limited
33
BALANCE SHEETS FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED AS AT DECEMBER 31, 2010 AND 2009 (Baht) Note
LIABILITIES AND SHAREHOLDERS’ EQUITY
2010
2009
3
CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts payable Current portion of liabilities Estimated construction cost Retention payables Advances received from construction Deposits and unearned revenues Accrued expenses Other current liabilities Total Current Liabilities NON-CURRENT LIABILITIES Long-term loans from financial institutions Long-term liabilities under finance lease Total Non-Current Liabilities Total Liabilities SHAREHOLDERS' EQUITY Authorized share capital: 400,000,000 ordinary shares, Baht 1 par value Issued and paid-up share capital: 125,000,000 ordinary shares, Baht 1 par value Premium on ordinary shares Unrealized loss from investments Deficit Total Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
34
Annual Report 2010 Focus Engineering and Construction Public Company Limited
15
3,497,699
40,589,886
23,233,958
40,040,616
1,332,555
4,802,484
26,671,915
18,640,668
6,802,829
13,042,522
19
53,687,649
56,287,995
4
25,774,714
-
5,483,474
4,989,061
3,897,361
7,976,348
150,382,154
186,369,580
16
40,000,000
1,158,920
17
342,957
672,756
40,342,957
1,831,676
190,725,111
188,201,256
400,000,000
400,000,000
125,000,000
125,000,000
52,973,155
52,973,155
(13,202,014)
(18,459,171)
(80,866,530)
(21,645,731)
83,904,611
137,868,253
274,629,722
326,069,509
18
20
STATEMENTS OF INCOME FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED FOR EACH OF THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Baht) Note
2010
2009
3
Revenues from construction Cost of construction
19 19, 22
Gross profit (loss) Other income
21
Profit (loss) before expenses
225,817,957
586,715,569
(236,285,674)
(569,867,481)
(10,467,717)
16,848,088
7,215,215
10,597,175
(3,252,502)
27,445,263
Administrative expenses
22
(43,969,359)
(34,681,674)
Management benefit expenses
4
(8,155,860)
(8,838,940)
Total expenses
(52,125,219)
(43,520,614)
Loss before finance cost
(55,377,721)
(16,075,351)
(3,843,078)
(5,570,380)
(59,220,799)
(21,645,731)
Finance cost Net loss
Loss per share Basic loss per share
3
(0.47)
(0.17)
Weighted average number of ordinary shares (Shares)
3
125,000,000
125,000,000
Annual Report 2010 Focus Engineering and Construction Public Company Limited
35
36
Annual Report 2010 Focus Engineering and Construction Public Company Limited
Ending balance as at December 31, 2010
Total recognized income (expenses) for the year
Net loss
Total income recognized directly in equity
Unrealized gain from investments
Ending balance as at December 31, 2009
Total recognized income (expenses) for the year
Net loss
Total income recognized directly in equity
Unrealized gain from investments
Premium on ordinary shares for reduction of deficit
Beginning balance as at January 1, 2009
11
11
20
Note
125,000,000
-
-
-
-
125,000,000
-
-
-
-
-
125,000,000
Issued and paidup share capital
52,973,155
-
-
-
-
52,973,155
-
-
-
-
(31,145,372)
84,118,527
Premium on ordinary shares
(13,202,014)
5,257,157
-
5,257,157
5,257,157
(18,459,171)
1,173,128
-
1,173,128
1,173,128
-
(19,632,299)
Unrealized loss from investments
FOR EACH OF THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(80,866,530)
(59,220,799)
(59,220,799)
-
-
(21,645,731)
(21,645,731)
(21,645,731)
-
-
31,145,372
(31,145,372)
Deficit
Total
(Baht)
83,904,611
(53,963,642)
(59,220,799)
5,257,157
5,257,157
137,868,253
(20,472,603)
(21,645,731)
1,173,128
1,173,128
-
158,340,856
FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
STATEMENTS OF CASH FLOWS FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED FOR EACH OF THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Baht) 2010
2009
CASH FLOWS FROM OPERATING ACTIVITIES Net loss
(59,220,799)
(21,645,731)
9,558,381
9,357,239
Reversal of doubtful accounts
-
(2,497,699)
Provisions
-
3,893,500
(734,855)
-
Utilization of prior year withholding tax
-
236,813
Gain on sale of investment
-
(1,699,249)
(15,590)
81,184
(259,030)
(376,54 9)
Dividend income
-
(399,860)
Interest expenses
3,843,078
5,570,380
(46,828,815)
(7,479,972)
-
6,763,664
20,517,721
83,765,756
Retention receivables
5,842,382
(2,861,631)
Work in progress
8,297,911
17,943,067
(6,020,319)
89,393,504
(14,639,594)
-
(703,443)
10,426,236
Restricted bank deposits
10,880,969
(14,517,117)
Other non-current assets
(50,079)
(1,430,679)
(16,806,658)
(75,722,055)
8,031,247
(37,497,815)
Retention payables
(6,239,693)
(3,816,687)
Advances received from construction
(2,600,346)
36,585,178
Deposits and unearned revenues
25,774,714
-
Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation
Reversal of estimate cost overun
(Gain) loss on sale and written off assets Interest income
Loss from operating activities before change in operating assets and liabilities Change in operating assets (increase) decrease Current investments Trade accounts receivable
Unbilled receivables Cost of property development Other current assets
Change in operating liabilities increase (decrease) Trade accounts payable Estimated construction cost
Annual Report 2010 Focus Engineering and Construction Public Company Limited
37
STATEMENTS OF CASH FLOWS FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED FOR EACH OF THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(Baht) 2010
Accrued expenses
2009
496,558
780,431
(3,344,132)
(3,547,258)
(17,391,577)
98,784,622
18,460,137
12,195,610
Interest received
221,572
441,659
Income tax paid
(5,473,252)
(18,460,137)
(4,183,120)
92,961,754
-
399,860
(924,953)
(8,593,438)
Proceeds from sale of equipment
40,098
1,479,574
Net cash used in investing activities
(884,855)
(6,714,004)
(658)
(1,877,402)
(37,091,529)
(82,542,846)
Proceed from long-term loans from financial institutions
40,000,000
6,700,000
Repayment of long-term loans from financial institutions
(4,551,562)
(6,263,002)
(407,086)
(513,502)
(3,845,223)
(5,555,881)
(5,896,058)
(90,052,633)
(10,964,033)
(3,804,883)
16,630,682
20,435,565
5,666,649
16,630,682
Other current liabilities Cash generated from (used in) operations Withholding tax refund
Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Dividend received Purchase of equipment
CASH FLOWS FROM FINANCING ACTIVITIES Decrease in bank overdrafts Decrease in short-term loans from financial institutions
Repayment of liabilities under finance lease Interest paid Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of years Cash and cash equivalents at end of years
Non-Cash item In year 2009 1.) The Company purchased vehicles in the amount of Baht 0.94 million by cash payment in the amount of Baht 0.19 million and by entering into a finance lease agreement for the remaining. 2.) The Company purchased office equipment in the amount of Baht 0.27 million by entering into a finance lease agreement. In year 2010 1.) The Company transferred land held for development to cost of property development in amount of Baht 65.70 million. 38
Annual Report 2010 Focus Engineering and Construction Public Company Limited
NOTES TO THE FINANCIAL STATEMENTS FOCUS DEVELOPMENT AND CONSTRUCTION PUBLIC COMPANY LIMITED FOR EACH OF THE YEARS ENDED DECEMBER 31, 2010 AND 2009
1. GENERAL INFORMATION Focus Development and Construction Public Company Limited, “the Company” was incorporated in Thailand under the Civil and Commercial Code on March 30, 1989, and engages as a construction contractor. On November 4, 2002, the Company was incorporated as a juristic company under the Public Limited Company Act. On October 5, 2004, the Company was listed in the Market for Alternative Investments (MAI) on the Stock Exchange of Thailand. The registered office of the Company is located at 25, 9th Floor, Alma Link Building, Soi Chidlom, Ploenchit Road, Lumpini, Patumwan, Bangkok. 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) and Thai Financial Reporting Standards (“TFRS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) in conformity with generally accepted accounting principles in Thailand. The accompanying financial statements of the Company have been prepared in the Thai language and expressed in Thai Baht. Such financial statements have been prepared for domestic reporting purposes. For the convenience of the readers not conversant with the Thai language, an English version of the financial statements has been translated from the Thai version of the financial statements. The Company operates mainly as a construction contractor in Thailand and the Company has not yet earned income from development of real estate. Therefore, the Company is not required to disclose further segment information. The preparation of financial statements in conformity with Thai accounting standard requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources. Accordingly, subsequent actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised, if the revision affects only that year, and in the year of the revision and future years, if the revision affects both current and future years.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
39
During 2010, the Federation of Accounting Professions has issued a Notification, re-numbering of the following Thai Accounting Standards (“TAS�) as follows: Former TAS no.
Re-numbering TAS no.
Topic
TAS 11
TAS 101
Doubtful Accounts and Bad Debts
TAS 26
TAS 102
Income Recognition For Real Estate Business
TAS 103
Disclosures in the Financial Statements of Banks and Similar Financial Institutions
TAS 34
TAS 104
Accounting for Troubled Debt Restructuring (revised 2002)
TAS 40
TAS 105
Accounting for Investments in Debt and Equity Securities
TAS 42
TAS 106
Accounting For Investment Companies
TAS 48
TAS 107
Financial Instruments Disclosure and Presentation
TAS 27
Adoption of new and revised Thai Accounting Standards, Thai Financial Reporting Standards and Thai Financial Reporting Interpretation During 2010, the Federation of Accounting Professions has issued Notifications, mandating the use of new and revised Framework for the Preparation and Presentation of Financial Statements, Thai Accounting Standards (TAS), Thai Financial Reporting Standards (TFRS) and Thai Financial Reporting Interpretation (TFRI) as follows: a) Framework for the Preparation and Presentation of Financial Statements (revised 2009) which is immediately effective for the current year. The management of the Company has assessed the effects of this framework and believes that it does not have any significant impact on the financial statements for the current year. b) TAS, TFRS and TFRI which are effective for the financial statements for the period beginning on or after January 1, 2011 of totalling 28 standards. TAS/TFRS/TFRI
40
Topic
TAS 1 (revised 2009)
Presentation of Financial Statements
TAS 2 (revised 2009)
Inventories
TAS 7 (revised 2009)
Statement of Cash Flows
TAS 8 (revised 2009)
Accounting Policies, Changes in Accounting Estimates and Errors
TAS 10 (revised 2009)
Events After the Reporting Period
TAS 11 (revised 2009)
Construction Contracts
TAS 16 (revised 2009)
Property, Plant and Equipment
TAS 17 (revised 2009)
Leases
Annual Report 2010 Focus Engineering and Construction Public Company Limited
TAS/TFRS/TFRI
Topic
TAS 18 (revised 2009)
Revenue
TAS 19
Employee Benefits
TAS 23 (revised 2009)
Borrowing Costs
TAS 24 (revised 2009)
Related Party Disclosures
TAS 26
Accounting and Reporting by Retirement Benefit Plans
TAS 27 (revised 2009)
Consolidated and Separate Financial Statements
TAS 28 (revised 2009)
Investments in Associates
TAS 29
Financial Reporting in Hyperinflationary Economies
TAS 31 (revised 2009)
Interests in Joint Ventures
TAS 33 (revised 2009)
Earnings per Share
TAS 34 (revised 2009)
Interim Financial Reporting
TAS 36 (revised 2009)
Impairment of Assets
TAS 37 (revised 2009)
Provisions, Contingent Liabilities and Contingent Assets
TAS 38 (revised 2009)
Intangible Assets
TAS 40 (revised 2009)
Investment Property
TFRS 2
Share – Based Payments
TFRS 3 (revised 2009)
Business Combinations
TFRS 5 (revised 2009)
Non-current Assets Held for sale and Discontinued Operations
TFRS 6
Exploration for and Evaluation of Mineral Resources
TFRI 15
Agreements for the Construction of Real Estate
The management of the Company has assessed the effects of these TAS, TFRS and TFRI, and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied except for TAS as follows: TAS 16 (revised 2009) – Property, Plant and Equipment The main changes of TAS 16 (revised 2009) and affecting the Company as follows: (1) (2) (3)
The costs of dismantlement, removing the item and restoring the site, on which it is located and incurred from the obligation, have to be included as asset costs and subject to annual depreciation. The depreciation charge has to be determined separately for each significant part of an asset. The residual value of an item of property, plant and equipment has to be measured at the amount estimated receivable currently for disposal of the asset if the assets were already of the age and in the condition expected at the end of its useful life. Furthermore, the residual value and useful life of an asset have to be reviewed at least at each financial year-end.
Presently, the management of the Company is assessing the impact on the financial statements of the main change of TAS 16 (revised 2009) from January 1, 2011. Annual Report 2010 Focus Engineering and Construction Public Company Limited
41
TAS 19 – Employee Benefits TAS 19 includes the requirements to recognize and measure employee benefits costs of post-employment benefits under defined benefit plans, other long-term employee benefits and termination benefits in the period in which the service is performed. The requirements require actuarial assumptions to measure the obligation and expense. Moreover, the obligations are measured on a discounted basis using the Projected Unit Credit Method because they may be settled many years after the employees render the related service. The management of the Company has determined that such liability incurred from the employee benefit as at January 1, 2011 for post-employment benefits is the amount of Baht 3 million. c) TAS which are effective for the financial statements for the period beginning on or after January 1, 2013 are as follows: TAS/TFRS/TFRI
Topic
TAS 12
Income Taxes
TAS 20 (revised 2009)
Accounting for Government Grants and Disclosures of Government Assistance
TAS 21 (revised 2009)
The Effects of Changes in Foreign Exchange Rate
The management of the Company is assessing the impacts of these standards on the financial statements for the year in which they are initially applied. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The measurement bases used in preparing the financial statements Other than those disclosed in other outlines in the summary of significant accounting policies and other notes to the financial statements, the financial statements are prepared on the historical cost basis. Revenues Revenue excludes value added taxes or other sales taxes and is arrived at after deduction of trade discounts. Property development projects Sales of residential condominium units are recognised as revenue when the construction works are completed and the significant risks and rewards of ownerships have been transferred to the buyer. Revenues from construction Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognised in the statement of income in proportion to the stage of completion of the contract. The stage of completion is assessed by reference to surveys of work performed. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognized immediately in the statement of income. The completed part of construction, which has not yet been delivered for acceptance or for billing, is recorded as unbilled receivables.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Work in progress Work in progress is stated at cost less allowance for impairment losses (if any). Rental income Rental income under operating leases is recognized in the statement of income on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income. Contingent rentals are recognized as income in the accounting period in which they are earned. Other income and interest income are recognized as it accrues. Expenses Expenses are recognized in the statement of income as it accrues. Operating leases Payments made under operating leases are recognized in the statement of income on a straight line basis over the term of the lease. Lease incentives received are recognized in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income in the accounting period in which they are incurred. Finance costs Interest expenses and similar costs are charged to the statement of income in the period in which they are incurred, except to the extent that they are capitalized as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. The interest component of finance lease payments is recognized in the statement of income using the effective interest rate method. Cash and cash equivalents Cash and cash equivalents are cash on hand, call deposits and short-term investments with high liquidity net of restricted bank deposits. Trade and other accounts receivable Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts. Allowance for doubtful accounts is an estimation of those amounts, which may prove to be uncollectible, based on historical collection experience and review of the current status of existing receivables. Bad debts are written off when incurred. Investments Marketable equity securities held for trading are stated at fair value, with any resultant gain or loss recognized in the statement of income. Long-term investments in marketable equity securities represent available-for-sale securities and are stated at fair value. Gain and loss on valuation of securities is included in the shareholders’ equity. Equity securities which are not marketable securities are stated at cost less impairment losses (if any). The moving average method is used to determine the cost of each security at the time of sale.
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Cost of property development Cost of property development is stated at cost net of allowance for impairment of asset (if any) and presented netted after written-off to cost of sales. Project cost consists of acquisition cost of land, development expenses, materials, wages and direct expenses of the project including interest expense occurring from borrowing to finance the project development before the project is completed. Cost of property development is stated at the lower of cost or net realizable value. In determining the cost of residential condominium units sold, the anticipated total development costs (taking into account actual costs incurred to date) are attributed to residential condominium units sold on the basis of the salable area. Selling expenses directly associated with projects, such as specific business tax and transfer fee are recognized when sale incurred. Land held for development Land held for development which is to be developed in the future is stated at cost net of allowance for impairment of assets (if any). Cost consists of cost of land and related expenses. Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and allowance for impairment (if any). Depreciation Depreciation is computed by the straight–line method based on the estimated useful lives of assets as follows: Years
Construction
5
Machinery
5
Technician’s tools and equipment
5
Furniture and office equipment
5
Vehicles and equipment
5
Depreciation is included in determining income and no depreciation is provided to construction in progress. Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Company. Major renovations are depreciated over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing the proceeds with carrying amount and are included in operating profit. The direct expenses concerned with the assets include interest paid from the borrowing for the acquisitions of the above assets before completion of the assets are recognized as cost of the assets.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Impairment of assets The Company will consider the impairment of assets when there are incidents or changes in the environment which indicate that the book value of the assets is higher than the recoverable amount (the higher of net selling price of the particular assets or its value in use). The impairment review, will consider the impairment of an individual asset or a “cash generating unit�. In the case that the book value of the asset is higher than its recoverable amount, the Company will recognize the loss from impairment of the asset in the statement of income. The Company then will reverse the loss from impairment of assets previously recognized when there are indications that impairment will discontinue or will diminish by such recording in other income. The loss from the revision, however, must not exceed the book value of the assets (net of depreciation and amortization) as if the Company has never before recognized loss from impairment of assets in the previous year. Finance lease Leases which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period. The property, plant or equipment acquired under finance leasing contract is depreciated over the shorter of the useful life of the asset or the lease term. Provisions A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Significant judgements and estimates are as follows: Commercial disputes and litigation The Company has contingent liabilities as a result of commercial disputes and litigation. The Company’s management has used judgment to assess of the results of the commercial disputes and litigation and believes that no loss will be occurred. Therefore no provision is recorded as at the balance sheet date. However, actual results could differ from the estimates. Estimated construction project costs The Company estimates costs of construction projects based on details of the construction work, taking into account the volume and value of construction materials to be used in the project, labour costs and other miscellaneous costs to be incurred to completion of service, taking into account the direction of the movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the figures used in the original estimates. Provision for losses on construction projects Management applied judgement in estimating the loss they expect to be realised on each construction project, based on estimates of anticipated costs that take into account the progress of the project and actual costs incurred to date, together with fluctuations in costs of construction materials, labour and the current situation.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Provision for penalty from delay delivery The Company has provision incurred from delay delivery. The management applied judgement in estimating the penalty based on contract rate and the period of delay project work. The Company has recorded provision for penalty from delay delivery in the financial statements. However, actual results could differ from the estimates. Income tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Basic loss per share Basic loss per share for each of the years ended December 31, 2010 and 2009 is calculated by dividing net loss for each of the years by the weighted average number of ordinary shares outstanding during the year. Diluted loss per share Diluted loss per share for each of the years ended December 31, 2010 and 2009 is calculated by dividing the net loss of ordinary shareholders by the sum of the weighted average number of ordinary shares outstanding during the year plus the weighted average number of shares to be issued for the exercise of all dilutive potential ordinary shares into ordinary shares, without any consideration. The calculation assumes that the holders will exercise dilutive potential ordinary share into ordinary shares when the exercise price is lower than fair value of ordinary shares. However, the fair value of the Company’s ordinary shares for each of the years ended December 31, 2010 and 2009 is lower than the exercise price. The effect is the Company does not include the result of equivalent ordinary shares for calculating diluted loss per share. The basic loss per share and the diluted loss per share are as follows: For each of the years ended December 31, 2010 and 2009
Baht
Shares
Baht per share
Netloss
Weighted average number of ordinary shares
Loss per shares
2110
2009
2110
2009
2110
2009
(59,220,799)
(21,643,731)
125,000,000
125,000,000
(0.47)
(0.17)
-
-
-
-
-
-
(59,220,799)
(21,643,731)
125,000,000
125,000,000
(0.47)
(0.17)
Loss per shares Basic loss per shares Effect of dilutive potential ordinary shares Diluted loss per share
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
4. TRANSACTIONS AND BALANCES WITH RELATED PARTIES The Company had transactions with related parties. These parties were related through common shareholders and/or directorships. The significant transactions with related parties as included in the financial statements are determined at the prices in line occurring in the normal course of business based on the market price in general or the price as stipulated in the agreement if no market price exists. The significant balances of assets, liabilities, and other transactions that occurred with those parties are shown as follows: The significant related party transactions for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) 2010
2009
Directors’ remuneration Director
595,000
772,500
The significant balance of asset with related parties as at December 31, 2010 and 2009 were as follows: (Baht) 2010
Advance for subscription Siam Knight Fund Management Securities Company Limited
2009
-
2,000,000
100,000
-
1,565,000
-
934,000
-
137,000
-
Deposits and unearned revenues Knight Assets (Thailand) Limited Director Related person Trade accounts receivable Related person
The Company opened a presale condominium Focus on Saladaeng and has reserved and entered into a sales contract as at December 31, 2010 with 3 related persons with the sale amount and price condition as follows: In Thousands Baht Value of contract Advance received 28,030
2,499
Price Condition Same price and condition as general customers
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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Agreement with related party Interguarantee contract The Company signed an interguarantee contract for the loan on the purchase on discount of promissory note of Focus Environmental Company Limited with a financial institution in the amount of Baht 25 million. Focus Environmental Company Limited is part of Apec – Focus Consortium for the Samut Prakarn Wastewater Management Project. The credit line of such loan was the previous credit line and was fully guaranteed by third party. Besides, as of October 31, 2008. Focus Environmental Company Limited entered into the agreement for debt restructuring with a financial institution. The payment for principal sum and interest was paid on entering date of agreement, in the amount of Baht 6.79 million (Baht 5.42 million principal sum and Baht 1.37 million interest). The residual debt in the amount of Baht 19.58 million will be paid in accordance with installment Principal sum of Baht 0.42 million excluded interest from October 2008 to September 2009 and principal sum of Baht 1.25 million excluded interest from October 2009 to September 2010. Besides, As at October 28, 2010, Focus Environmental Company Limited had fully paid the debt and released the guarantee with this financial institution. Nature of relationship Name
Focus Environmental Company Limited Siam Knight Fund Management Securities Company Limited Knight Assets (Thailand) Limited
Country
Relation
Type of relation
Thailand
Related company
Co-director
Thailand
Related company
Co-director
Thailand
Related company
Co-director
Bases of measurement for inter company revenues and expenses Pricing Polices Directors' remuneration
As determined at the rate approved by the directors and the shareholders
5. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2010 and 2009 consisted of:
(Baht) 2010
Cash Saving deposit accounts
2009
252,920
322,925
5,319,976
16,215,571
Current deposit accounts
20,000
19,000
Fixed deposit with maturities not over 3 months
73,753
73,186
5,666,649
16,630,682
Total
Cash and cash equivalents of the Company as at December 31, 2010 and 2009 were denominated entirely in Thai Baht.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
6. TRADE ACCOUNTS RECEIVABLE - NET As at December 31, 2010 and 2009, the Company had outstanding balances of trade accounts receivable aged by number of months as follows: (Baht) 2010
Less than or equal to 3 months More than 3 to 6 months
2009
33,299,437
29,819,551
-
15,664,354
More than 6 to 12 months
-
10,076,809
Over 12 months
-
693,574
33,299,437
56,254,288
-
(2,417,130)
33,299,437
53,837,158
Total Less Provision from late construction Trade accounts receivable - net
Movement of provision from late construction for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) 2010
Beginning balance Less Write off provision from late construction
2009
2,417,130
-
(2,417,130)
2,417,130
-
2,417,130
Ending balance
During the year 2008, outstanding balance of a trade account receivable overdue 12 months in the amount of Baht 2.24 million. The Company entered into a memorandum with such account receivable by agreeing to pay by installment on a monthly basis of Baht 0.50 million until such account receivable is completely repaid. However, that account receivable postponed payment to monthly basis of Baht 0.10 million. At present, this trade account receivable had fully paid the debt. 7. RETENTION RECEIVABLES - NET Retention receivables as at December 31, 2010 and 2009 consisted of: (Baht) 2010
Retention receivables Less Allowance for doubtful accounts Retention receivables - net
2009
31,725,749
14,758,539
(13,307,738)
(13,307,738)
18,418,011
1,450,801
Annual Report 2010 Focus Engineering and Construction Public Company Limited
49
Movements of allowance for doubtful accounts for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) 2010
Beginning balance
13,307,738
15,789,331
-
(2,481,593)
13,307,738
13,307,738
Less Reversal of doubtful accounts Ending balance
2009
Retention receivables are warranty monies deducted retention by the customers at the rate of 5% - 10% of the contract amount. Retention for completed project will be returned to the Company as stated in the contract. A retention receivable in the amount of Baht 13.31 million is the retention receivable from the Samut Prakarn Wastewater Management Project, and the Company was advised that the project agreement of the engagement party is under prosecution. Therefore, the Company has set up an allowance for doubtful debts of the retention receivable for the full amount. 8. COST OF PROPERTY DEVELOPMENT Costs of property development as at December 31, 2010 were as follows: Baht
Condominium Project - Focus on Saladaeng Land (see Note 12)
65,701,164
Cost of property development
14,639,594
Total
80,340,758
The Company’s land of Focus on Saladaeng project including existing construction and to be constructed in the future was mortgaged to secure bank overdraft in the amount of Baht 5 million, long-term loan in the amount of Baht 116.50 million and letter of guarantee facilities in the amount of Baht 10 million (see Notes 15 and 16). As at December 31, 2010, the amounts of the sale according to the sale’s contracts were as follows:
The amount of the sale according in agreement to buy and sale Project Focus on Saladaeng
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Amount
% Per total sale 267.72
(Unit: In Million Baht) Total sale of project
93.64
285.89
9. OTHER CURRENT ASSETS - NET Other current assets as at December 31, 2010 and 2009 consisted of:
(Baht) 2010
2009
Other receivables
6,786,038
11,560,249
Advance payment to contractors
5,017,770
293,796
Deposit for goods
4,551,118
2,207,127
Withholding tax
5,473,252
18,460,137
Others
2,225,554
3,778,407
Total
24,053,732
36,299,716
Less Allowance for doubtful debts
(6,406,519)
(6,406,519)
Other current assets - net
17,647,213
29,893,197
Movements of allowance for doubtful accounts for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) Beginning balance Less Reversal of doubtful accounts Ending balance
2010
2009
6,406,519
6,422,625
-
(16,106)
6,406,519
6,406,519
10. RESTRICTED BANK DEPOSITS Restricted bank deposits with obligation as at December 31, 2010 in the amount of Baht 23.87 million (In year 2009: Baht 34.76 million), were pledged as collateral for credit lines from financial institution as follow (see Note 15). 1) 2) 3)
Bank overdraft facilities in the amount of Baht 3 million. Projects’ facilities of promissory note in the amount of Baht 69.50 million (In year 2009: Baht 304 million). Letter of guarantee facilities in the amount of Baht 307.38 million (In year 2009: Baht 767.89 million).
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11. LONG-TERM INVESTMENTS Long-term investments as at December 31, 2010 and 2009 consisted of: Baht Cost 2110
Fair Value 2009
2110
Unrealized Loss 2009
2110
2009
Equity securities Available-for-sale securities General investment Total
27,036,637
27,036,637
13,834,623
8,577,466
(13,202,014)
(18,459,171)
4,000,000
2,000,000
4,000,000
2,000,000
-
-
31,036,637
29,036,637
17,834,623
10,577,466
(13,202,014)
(18,459,171)
Unrealized loss from change in valuation of investments For each of the years ended December 31, 2010 and 2009, movements of unrealized loss from change in fair value were as follows: (Baht) 2010
2009
Beginning balance
18,459,171
19,632,299
Less Change in revaluation on invesment during the year
(5,257,157)
(1,173,128)
Ending balance
13,202,014
18,459,171
The Board of Directors’ meeting held on May 29, 2009, a resolution was passed to purchase the increase of share capital investment in Siam Knight Fund Management Securities Company Limited in the amount of Baht 8 million in order to retain the same proportionate holding of 10% of registered capital. Such company called share subscription in 25% of par value. On August 5, 2010, Siam Knight Fund Management Securities Company Limited has registered the increase in authorized share capital with the Ministry of Commerce. As at December 31, 2010 and 2009, available-for-sale securities are stated at fair value in the amount of Baht 13.83 million (In year 2009: Baht 8.58 million), were pledged to secure loans with a financial institution (see Note 16). 12. LAND HELD FOR DEVELOPMENT Land held for development as at December 31, 2010 consisted of: Cost As at January 1, 2010 Increase Transfer out to cost of property development (see Note 8) As at December 31, 2010 Net Book value As at December 31, 2009 As at December 31, 2010
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Baht 65,701,164 (65,701,164) -
65,701,164 -
The Company entered into land held for development and building rendering rental agreement with a company for the period 2 years since August 1, 2008 to July 31, 2010 with the monthly payment for the first year at the rate of Baht 0.11 million and the second year at the rate of Baht 0.13 million. On June 10, 2010, the Company entered into a memorandum for extending period for moving the asset of the lessee until September 30, 2010. The Company’s land of Focus on Saladaeng project including existing construction and to be constructed in the future in the amount of Baht 65.70 million was mortgaged to secure short-term loan facilities by issuance of promissory note in the amount of Baht 40 million with a financial institution. During the year 2010 the Company transferred land held for development to cost of property development. On December 8, 2010, the Company has released the mortgage of that land and pledged such land to secure for credit facilities of Focus on Saladaeng project with a financial institution (see Note 15). 13. BUILDING AND EQUIPMENT - NET Building and equipment - net as at December 31, 2010 and 2009 consisted of: Baht Construction
Cost As at January 1, 2009 Purchases Disposals As at December 31, 2009 Purchases Disposals Write off As at December 31, 2010 Accumulated depreciation As at January 1, 2009 Depreciation Disposals As at December 31, 2009 Depreciation Disposals Write off As at December 31, 2010 Net book value Owned assets Assets under finance leases As at December 31, 2009 Owned assets Assets under finance leases As at December 31, 2010
Technician’s tools and equipment
Machinery
Furniture and office equipment
Vehicles and equipment
Total
751,087
39,016,128
16,239,242
8,143,225
5,714,435
69,864,117
-
5,264,785
2,100,612
1,299,630
948,056
9,613,083
-
(1,588,785)
(9,787)
(190,294)
-
(1,788,866)
751,087
42,692,128
18,330,067
9,252,561
6,662,491
77,688,334
-
-
726,079
198,874
-
924,953
-
-
-
(2,990)
(325,234)
(328,224)
-
-
-
(645,251)
-
(645,251)
751,087
42,692,128
19,056,146
8,803,194
6,337,257
77,639,812
475,550
24,375,380
5,293,587
3,790,942
3,915,905
37,851,364
150,217
3,891,539
3,097,835
1,384,277
833,371
9,357,239
-
(104,468)
(1,070)
(122,570)
-
(228,108)
625,767
28,162,451
8,390,352
5,052,649
4,749,276
46,980,495
125,319
4,167,301
3,166,035
1,357,366
742,360
9,558,381
-
-
-
(231)
(325,233)
(325,464)
-
-
-
(623,503)
-
(623,503)
751,086
32,329,752
11,556,387
5,786,281
5,166,403
55,589,909
125,320
14,529,677
9,939,715
3,954,317
495,502
29,044,531
-
-
-
245,595
1,417,713
1,663,308
125,320
14,529,677
9,939,715
4,199,912
1,913,215
30,707,839
1
10,362,376
7,499,759
2,824,518
508,576
21,195,230
-
-
-
192,395
662,278
854,673
1
10,362,376
7,499,759
3,016,913
1,170,854
22,049,903
Annual Report 2010 Focus Engineering and Construction Public Company Limited
53
(Baht) 2010
2009
Depreciation for each of the years ended December 31 was included in Cost of propety development
44,170
-
Cost of construction
3,511,046
6,257,074
Administrative expenses
6,003,165
3,100,165
Total
9,558,381
9,357,239
32,135,738
28,839,248
As at December 31, 2010 and 2009 the carrying amount before accumulated depreciation which have been depreciated and still in use
As at December 31, 2010 Service rate per month
Office rental and service agreement
Lessor
Period
(In Million Baht)
Note
Third party
3 years
0.30 - 0.31
-
14. OTHER NON - CURRENT ASSETS Other non-current assets as at December 31, 2010 and 2009 consisted of: (Baht) Note
2010
2009
1,774,460
1,724,381
-
2,000,000
Retention receivables
14,025,454
36,835,046
Total
15,799,914
40,559,427
Deposit Advance for subscription
4
Retention receivables are warranty monies deducted retention by the customers at the rate of 5% - 10% of the contract amount. Retention for the not completed construction project will be returned to the Company after the Company completed the work and upon expiry of the warranty period as stated in the contract.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
15. BANK OVERDRAFTS AND SHORT–TERM LOANS FROM FINANCIAL INSTITUTIONS Bank overdrafts and short–term loans from financial institutions as at December 31,2010 and 2009 consisted of: (Baht) 2010
2009
Bank overdrafts
-
658
Promissory notes
-
17,000,000
Promissory notes - against payment
3,497,699
23,589,228
Total
3,497,699
40,589,886
The Company has credit facilities with financial institutions consisted of:
(Baht)
Facilities (Million Baht)
Referred interest rtate (% per annum)
2010
2010
2009
Bank overdrafts Letter of guarantee Promissory notes Total
2009 33.00
28.00
MOR, Fixed deposit
MOR, Fixed deposit
604.50
823.08
-
-
89.50
344.00
MLR, MOR
MLR, MOR
727.00
1,195.08
As at December 31, 2010 the Company has collateral as follow: Type
Bank overdrafts
Letter of guarantee
Promissory notes
Facilities (Million Baht)
Collateral
3.00
Company’s fixed deposit (see Note 10).
10.00
Other company and a third party’s land.
15.00
Personal guarantee by a third party.
5.00
Mortgaged by Focus on Saladaeng project (see Note 8).
429.50
Company’s fixed deposit (see Note 10) and/or transferred account receivable rights received from some projects.
10.00
Mortgaged by Focus on Saladaeng project (see Note 8).
165.00
No collateral.
69.50 20.00
Company’s fixed deposit (see Note 10) and/or transferred account receivable rights received from some projects. Transferred deposit rights received as collateral in according to condition of agreement when the credit facilities are withdrawal.
Other company and a third party are guarantee by without compensation.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
55
16. LOANS FROM FINANCIAL INSTITUTIONS Loans from financial institutions as at December 31, 2010 and 2009 consisted of: (Baht) 2010
2009
Loans from financial institutions
41,039,554
5,591,116
Less Current portion
(1,039,554)
(4,432,196)
Long-term loans from financial institutions
40,000,000
1,158,920
The details of loans from financial institutions (Baht)
Facilities (Million Baht) Lenders
2010
2009
Period
Referred interest rate per annum
Bank
6.70
6.70
Oct. 2009 Mar. 2011
MLR - 0.50
Bank
116.50
-
Dec. 2010 Aug. 2012
MLR - 0.50
123.20
6.70
Total
Repayment Monthly principal repayment with interest of Baht 0.40 million Payment of pincipal at 70 percent from sale contract whem transfer right of residental comdominium unit and interest paid on a monthly
Movements of loans from financial institutions for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) 2010
2009
5,591,116
5,154,117
Increase
40,000,000
6,700,000
Decrease
(4,551,562)
(6,263,001)
Ending balance
41,039,554
5,591,116
Beginning balance
Credit facilities for loan from financial institution in the amount of Baht 6.70 million, which pledged investment in available-for-sale securities (see Note 11). Credit facilities for loan from financial institution in the amount of Baht 116.50 million, which mortgaged land on Focus on Saladaeng project (see Note 8).
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
17. LIABILITIES UNDER FINANCE LEASE Liabilities under finance lease as at December 31, 2010 and 2009 consisted of: (Baht)
2010 Year
Present value
Deferred interest
Minimum lease payment
1
293,001
24,685
317,686
2-5
342,957
15,839
358,796
635,958
40,524
676,482
(Baht)
2009 Year
Present value
Deferred interest
Minimum lease payment
1
370,288
36,780
407,068
2-5
672,756
40,506
713,262
1,043,044
77,286
1,120,330
The Company entered into the finance lease agreements for vehicles and office equipment. The payment is on monthly basis in the amount of Baht 0.03 million per month within 48 installments. The current portion of liabilities under the finance lease agreements in the amount of Baht 0.29 million (In year 2009: Baht 0.37 million) was presented under current liabilities (see Note18).
18. CURRENT PORTION OF LIABILITIES Current portion of liabilities as at December 31, 2010 and 2009 consisted of: (Baht) Note
2010
2009
Loan from financial institution
16
1,039,554
4,432,196
Liabilities under finance lease
17
293,001
370,288
1,332,555
4,802,484
Total
Annual Report 2010 Focus Engineering and Construction Public Company Limited
57
19. CONSTRUCTION CONTRACTS As at December 31, 2010 and 2009 construction contracts were as follows: (Baht) 2010
2009
Revenue from construction recognized *
1,522,425,595
1,317,943,927
Cost of construction recognized *
1,493,820,834
1,272,437,034
741,515
1,476,370
27,863,246
44,030,523
Cost of construction incurred in the year **
243,872,926
585,752,644
Cost of construction incurred recognized as contract expenses in the year **
236,285,674
569,867,481
7,587,252
15,885,163
Revenue from construction *
1,522,425,595
1,317,943,927
Progress billings *
1,490,313,191
1,291,851,842
Unbilled revenue from construction
32,112,404
26,092,085
Advances received
53,687,649
56,287,995
225,817,957
586,715,569
1,529,271,332
1,332,352,721
53,687,649
56,287,995
38,958,141
40,500,878
-
-
14,025,454
36,835,046
Expected losses recognized Recognized profit less recognized losses
Cost of construction that relate to future activity recognized as an asset
Revenue from construction recognized as revenue in the year ** Cost of construction incurred and recognized profit (less recognized loss) up to the end of the year * Advances received Gross amount due from customers for contract work presented as an asset Gross amount due to customers for contract work presented as a liability Retentions (see Note 14) Note: The amount presented above is not included value added tax. * Accumulated amount of project recognized up to the end of the year. ** Amount of project recognized during the year.
20. SHARE CAPITAL AND WARRANTS At the Extraordinary General Meeting of Shareholders held on November 5, 2008 (“the meeting�), a resolution was passed in relation to changing the authorized share capital and the issuance of warrants as follows:
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
1) To approve the issuance and sales of warrants of 62,500,000 units to the Company’s existing shareholders at a ratio 2 ordinary shares per 1 unit of warrant. The offering price is Baht 0 per unit. Term of warrants is not exceeding 5 years from the date of issuing of warrants. Exercise price is fixed at Baht 3 per share and exercise ratio of 1 unit of warrant to purchase ordinary shares of 1 share and related conditions with details of the exercise period as follows: -
The exercise period set the warrant holders to exercise on the last business day of January, April, July and October of each year to be fixed by the Board of Directors or the person entrusted by the Board which shall also determine the first exercise date and the last exercise date. However for the last exercise date which is the maturity date, warrants holder must inform its intention to exercise at least 15 days in advance of the last exercise date.
2) To approve the issuance and sales of warrants of 12,500,000 units to the Company’s directors and employees in accordance with the Employee Stock Option Program (ESOP). The offering price is Baht 0 per unit. Term of warrants is not exceeding 5 years from the date of issuing of warrants at the exercise price is fixed at Baht 3 per share and exercise ratio of 1 unit of warrant to purchase ordinary shares of 1 share and related conditions with details of the exercise period as follows: - - - - - -
The first exercise period shall commence on the maturity date of one year from the date of the issuance and sales of warrants. The last exercise date will be on the maturity date. The warrant rights shall be exercised in the proportion as follows: At end of year 1, may exercise right in accumulative amount not to exceed 20%. At end of year 2, may exercise right in accumulative amount not to exceed 40%. At end of year 3, may exercise right in accumulative amount not to exceed 60%. At end of year 4, may exercise right in accumulative amount not to exceed 80%. At end of year 5, may exercise right in accumulative amount up to 100%.
The warrants shall be exercised on the last business day of January, April, July and October of each year. 3) To approve the issuance and sale of ordinary shares to specified investors by way of Private Placement. The total ordinary shares to be issued is 200,000,000 shares. The offering price is Baht 3 per share. At the Extraordinary General Meeting of Shareholders held on October 12, 2009, a resolution was passed to approve the change of its offering price of the new ordinary shares for Private Placement (PP) of 200,000,000 shares from offering price Baht 3 per share to not less than Baht 2 per share. 4) To approve increasing the registered capital of the Company from Baht 125,000,000 to Baht 400,000,000 by issuing 275,000,000 ordinary shares with par value of Baht 1 per share by the allotment as follows: - - -
Amount of 62,500,000 shares to reserve rights to exercise of RO-Warrants for the Company’s existing shareholders (Right Offering Warrants). Amount of 12,500,000 shares to reserve rights to exercise for ESOP-Warrants holder (ESOP). Amount of 200,000,000 shares to offer for the ordinary shares for Private Placement (PP).
The Company registered the change of its capital and the amendment of the Memorandum of Association and the Company certificate with the Ministry of Commerce on November 19, 2008.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
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5) To approve the listing of the warrants to be issued to the Company’s existing shareholders and the listing of the ordinary shares for Private Placement (PP) on the Market for Alternative Investment (MAI). The Ordinary General Meeting of Shareholders held on April 23, 2009, a resolution was passed to approve of offset the premium on ordinary shares with deficit in the amount of Baht 31,145,372. As a result, the outstanding of premium on ordinary shares was in the amount of Baht 52,973,155. The Board of Directors’ meeting held on May 29, 2009, a resolution was passed to approve the date of warrants offered and exercise date for the warrants to purchase ordinary shares to the existing shareholders (Right Offering Warrant) and the warrants to purchase ordinary shares to the Company’s directors and employees (ESOP warrant) as follows: 1) - - -
Warrants to purchase ordinary shares to the existing shareholders (Right Offering Warrant) as follows: Date of warrant offered is June 16, 2009. The first exercise date is July 31, 2009. The last exercise date is June 15, 2014.
2) - - -
Warrant to purchase ordinary shares to the Company’s directors and employees (ESOP Warrant) as follows: Date of warrant offered is June 16, 2009. The first exercise date is July 31, 2010. The last exercise date is June 15, 2014.
On June 16, 2009, the Company allocated the warrants to purchase ordinary shares to the existing shareholders equivalent to 62,499,638 units with 362 units remaining. The Company canceled those remaining warrants. Moreover, the Company allocated the warrants to purchase ordinary shares to directors and employees equivalents to 12,500,000 units. The 62,499,638 warrants were traded on the Market for Alternative Investment (MAI) commencing from July 3, 2009 onwards. As at December 31, 2010, no warrants was exercised. 21. OTHER INCOME Other income for each of the years ended December 31, 2010 and 2009 consisted of: (Baht) 2010
Interest income
259,030
376,549
Dividend income
-
399,860
Reversal of doubtful accounts
-
2,497,699
Gain on sale of investments
-
1,699,249
2,591,982
-
884,211
1,368,421
Others
3,479,992
4,255,397
Total
7,215,215
10,597,175
Forfeited retention payable Rental income (see Note 12)
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2009
Annual Report 2010 Focus Engineering and Construction Public Company Limited
22. EXPENSES BY NATURE Significant expenses by nature for each of the years ended December 31, 2010 and 2009 were as follows: (Baht) 2010
Salary, wage and other welfare Rental and service expense
78,833,730
100,945,547
3,640,540
3,662,923
-
3,893,500
9,558,381
9,357,239
Provisions Depreciation
2009
23. INCOME TAX The Company did not have any income tax payable for each of the years ended December 31, 2010 and 2009 because the Company has loss before income tax after adding back reserve and expenses that are not allowed to hold as an expense in calculating income tax and less of income exempt included as income and the Company had taxable loss. 24 COMMITMENTS AND CONTINGENT LIABILITIES As at December 31, 2010 the Company had commitments and contingent liabilities as follows: 24.1 Letters of guarantee issued by banks of Baht 168.65 million (see Note 15). 24.2 Commitments for payment under agreement as follows: 24.2.1 Payment under office rental and service agreement (see Note 13) as follows: Period
Rental and service expense (In Thousands Baht)
Not more than 1 year
2,350
24.2.2 Payment under construction contract in the amount of Baht 210.66 million. 24.2.3 Payment under property development project in the amount of Baht 0.77 million. 24.2.4 Payment under compensation for sale as specific rate in the contract. 25. DISCLOSURES OF FINANCIAL INSTRUMENTS The Company does not speculate or engage in the trading of any derivative financial instruments. Credit Risk Credit risk is the risk arising from failure of customers or counter parties to meet their contractual obligations. Credit risk occurs when the party fails to fulfill the contractual agreement, which may eventually cause financial losses. The Company has determined a risk protection policy through analysis of the customer and counter parties’s financial status, and also defines the policy for credit approval and debt collection period. Credit of the Company is the credit for construction services and trade provided to the customers that is the general customary trading practice. Interest Rate Risk Interest rate risk is the uncertainty in value of financial assets and liabilities or net interest income as a result of the fluctuation of the market interest rate. Most of the interest rates of financial assets and liabilities of the Company are floating rates, which are based on market rates such as the interest rate for the outstanding clients of a commercial bank, savings interest rate or other benchmark floating rates. Annual Report 2010 Focus Engineering and Construction Public Company Limited
61
Fair Value Fair value is the value which the Company expects to receive from disposing of financial assets, or the value that the Company expects to pay for redemption of financial debt by using the market value or the appraisal value of the general financial market methodology. The fair value of financial assets and liabilities is close to the carrying value in the financial statements (Approximate Carrying Value). 26. LONG TERM LEASE AGREEMENT On August 14, 2008 the Company entered into office rental and service agreement with a company for 3 years until August 14, 2011 with the monthly payment for the first and second year at the rate of Baht 0.30 million and the third year at the rate of Baht 0.31 million. 27. RECLASSIFICATION The Company has reclassified certain accounts in the balance sheet as at December 31, 2009 to conform with the presentation of the financial statements of this year consisted of: (Baht) Before
After
reclassification
Reclassification
reclassification
Trade accounts receivable - net
56,806,273
(2,989,115)
53,817,158
Retention receivables - net
38,285,847
(36,835,046)
1,450,801
Withholding tax
18,460,137
(18,460,137)
-
Other current assets - net
10,861,075
19,032,122
29,893,197
Other non-current assets
3,724,381
36,835,046
40,559,427
Shot-term provision
3,893,500
(3,893,500)
-
Other current liabilities
6,499,978
1,476,370
7,976,348
Long-term liabilities - net
1,831,676
(1,831,676)
-
Long-term loans from financial institutions
-
1,158,920
1,158,920
Long-term liabilities under finance lease
-
672,756
672,756
28. Litigation As at December 31, 2010, the Company, in respect of civil case, was sued for damages in the amount of Baht 0.52 million. At present, the case is being considered by the civil court. However, the Company has not recorded such potential damages since the Management of the Company believes that the Company shall not have to be liable for such damages. 29. APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were authorised for issue by the Company’s Board of Directors on February 24, 2011.
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Annual Report 2010 Focus Engineering and Construction Public Company Limited
Remuneration for Auditors 1. Audit Fee
The Company and its subsidiaries paid the following audit fees: - The Company’s auditor, totaling ..0... Baht in the last financial year. - The Auditor’s Audit firm and individual or firms relating to the Auditor and Audit firm, totaling ......470,000.-..... baht in the last financial year.
2. Non-Audit Fees
Company and its subsidiaries paid for other services, namely : ...None… - The Company’s Auditor, totaling ...0… Baht in the previous financial year, and future payments arising from agreed, but unfinished services in the past financial year totaling ...0... Baht. - The Auditor’s Audit firm and individual or firms relating to the Audit and Audit Company, totaling ...0... Baht in the last financial year, and future payments arising from agreed but unfinished services in the past financial year totaling ...0... Baht.
Annual Report 2010 Focus Engineering and Construction Public Company Limited
63