TASCO: Tipco Asphalt Public Company Limited | Annual Report 2013

Transcription

MISSION
A well-recognized leading asphalt focused
company in Asia Pacific
VISION
To distribute 2 million tons of asphalt products by
2015 and be the key contributor to the success
of all stakeholders while maintaining the highest
Corporate Social Responsibility standards at all times
MOVING TOWARDS TO BE A
WELL-RECOGNIZED LEADING
ASPHALT FOCUSED COMPANY
IN ASIA PACIFIC
INTRODUCTION TO TIPCO ASPHALT
PUBLIC COMPANY LIMITED
Tipco Asphalt Public Company Limited was established in
1979. The Company, its subsidiaries and associated companies
(“Tipco Asphalt Group”) are the leading manufacturers and
distributors of asphalt products in Thailand and Asia-Pacific
region.
Tipco Asphalt products are used for building and maintaining
roads, highways and airport runways. The Group also sells
non-asphalt products, such as Naphtha, Gas Oil and Fuel Oil
from crude refining processes to traders, road contractor
and manufacturing companies in Thailand and countries in
Southeast Asia.
With the cooperation of one of its major shareholders,
Colas S.A. of France (the world’s leading road construction
company), Tipco Asphalt Group is able to deliver the highest
quality and innovative products to its customers.
Despite the challenges in the world of commodity market,
the Group shall continue to focus its long term strategies in
order to drive the Group forward in achieving its Vision of two
million tons of asphalt sales in 2015.
CONTENT
4
6
8
20
Financial Highlights
Message from the
Chairman
Board of Directors
Organization Structure
24
25
30
36
Major Shareholders
Revenue Structure
Business Performance
Risk Management and
Risk Factors
54
62
67
73
Corporate Governance
Report
Social Responsibility
Policy
Internal Controls and
Internal Audit
Related Transactions
74
79
80
133
Management Discussion
and Analysis
Report and consolidated
financial statements
Statement of financial
position
Company Information
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
(Unit : Million Baht)
2013
2012
2011
2010
2009
Financial Highlights
Total Revenue
34,140.37
38,414.29
23,053.76
26,303.34
14,186.43
Gross Profit
1,739.97
1,101.45
1,214.40
1,615.34
1,385.59
EBITDA
1,789.49
1,503.80
1,394.91
1,837.12
776.68
831.45
642.27
735.57
1,007.67
493.82
Assets
20,273.52
18,669.76
15,520.51
10,748.61
12,513.83
Liabilities
14,382.58
13,627.06
11,077.57
7,120.60
9,660.63
5,241.71
4,424.67
3,849.95
3,046.15
2,224.48
152,580,868
152,548,068
152,548,068
152,547,663
152,547,663
34.35
29.01
25.24
19.97
14.58
Earnings per share (Baht)
5.45
4.21
4.82
6.61
3.24
Dividends per share (Baht)
1.00
1.25
-
-
-
Net profit margin (%)
2.44
1.67
3.19
3.83
3.48
Return on equity (%)
17.20
15.52
21.33
38.24
25.03
Return on assets (%)
4.27
3.76
5.60
8.66
4.61
Debt to Equity Ratio
2.44
2.70
2.49
1.96
3.39
Net Profit
Financial Overview
Balance Sheet
Shareholders' Equity
Financial Ratio
Total number of shares issued (shares)
Book value per share (Baht)
4
ANNUAL REPORT 2013
Tipco Asphalt Public Company Limited
34,140
TOTAL
REVENUE
1,739
(MILLION BAHT)
(MILLION BAHT)
EBITDA
NET PROFIT
(MILLION BAHT)
(MILLION BAHT)
831
1,008
2010
2013
831
494
2009
2013
1,789
2013
642
1,504
2012
2012
1,395
2011
736
1,837
2010
2011
777
MILLION BAHT
2009
MILLION BAHT
1,739
1,101
1,386
2009
2012
34,140
2013
1,214
38,414
2012
2011
23,053
2011
1,615
26,303
2010
1,789
2010
14,186
MILLION BAHT
2009
MILLION BAHT
GROSS
PROFIT
ANNUAL REPORT 2013
5
MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CHAIRMAN
It is my great pleasure to report that Tipco Asphalt Group has recorded yet another impressive
achievement with the second highest ever revenue of Baht 34 billion (or exceeding USD 1
billion) in 2013. More importantly, the Group has achieved an impressive operating net profit
attributable to equity shareholders of Baht 831 million or 29.4% increment, compared to
Baht 642 million in the corresponding period 2012. The return on equity has also improved
to 17.2% from 15.5% in 2013.
6
ANNUAL REPORT 2013
The Group shall continue to focus on its long
term strategies on human capital investment and
Enterprise Risk Management, in order to drive the
Group forward in achieving its Vision of two million
tons of asphalt sales in 2015
Thailand GDP’s growth was strong in the early part of
2013, but the economy lost its growth momentum rapidly
to a very slow pace at 1.3% and 0.6 % during Quarter 3
and Quarter 4 respectively, comparing to a 6.5% growth
in 2012. As a result, sales volume in domestic market was
slightly lower than 2012. The consensus GDP forecast for
2014 is 2.8% due to the prolonged political uncertainties
and falling Agriculture prices. We believe the impact
to the Group’s domestic sale should not be material
as the lagging demand will catch up after the political
uncertainties subsided. At the international level, we
expect the competition becoming more intense with
demand remain stable but driven by more supply. Being
an asphalt focused company, our Group is well equipped
and keen to defend its market presence.
to weak economy outlook for US and China. The Group
is now well experienced in managing this risk and I
am pleased to highlight that our hedging strategy has
contributed a significant turnaround with a positive impact
of Baht 85 million to this year result as compared to a cost
of Baht 806 million in the corresponding year 2012. The
Group is confident that the currently employed hedging
strategy protects it’s crude oil procurement in the highly
volatile commodity market.
In 2013, the refinery processed 6.6 million barrels of crude
oil, representing 73% of the total refining capacity. Many
improvement projects were implemented throughout
the year to improve efficiency and increase production
capacity of the refinery. One of the projects was the
conversion from fuel oil to natural gas heating which
resulting in significant cost saving and better efficient
use of clean energy in line with the Group’s CSR strategy.
We will continue to invest in our refinery to improve its
operation efficiency and quality of the products.
In conclusion, on behalf of the Board of Directors, I would
like to thank our shareholders, customers and suppliers for
their continuing support. The year 2013 was a challenging
but successful year and the “Prudence” is the third core
value of the Group that has been enshrined in the desired
behavior of our business and social relationship. I would
like to express my sincere appreciation to the management
and staff for their high team spirit and integrity in
performing their duties and responsibilities.
Another challenging task of the Group is the crude and
inventory working capital management. Rapid fluctuation
in crude oil prices during the first half of 2013 was one of
the challenges, attributable to the geopolitical tension
caused by US sanction against Iran and Syria. The world
crude market responded with Brent crude price went up
to USD 118 per barrel in early February 2013 and then
touched a low USD 97 per barrel in April 2013 attributable
Similarly, the Group shall continue to focus on its long term
strategies on Human Capital Investment, and Enterprise
Risk Management, in order to drive the Group forward in
achieving its Vision of two million tons of asphalt sales in
2015.
Laksana Supsakorn
Chairman
ANNUAL REPORT 2013
7
BOARD OF DIRECTORS
BOARD OF DIRECTORS
MS. LAKSANA SUPSAKORN
CHAIRMAN,
AUTHORIZED DIRECTOR
MR. JACQUES PASTOR
VICE CHAIRMAN,
MEMBER OF THE NOMINATION AND
REMUNERATION COMMITTEE,
AUTHORIZED DIRECTOR
MR. SOMCHIT SERTTHIN
CHIEF EXECUTIVE OFFICER,
EXECUTIVE DIRECTOR,
AUTHORIZED DIRECTOR
8
ANNUAL REPORT 2013
MS. LAKSANA SUPSAKORN
CHAIRMAN
Age 61
Education
Related Experience
• M.B.A. Wharton Business School, University of Pennsylvania, USA
• Bachelor Degree in Accounting (Honor), Chulalongkorn
University
2013 - Present
2013 - Present
2013 - Present
2012 - Present
2012 - Present
2011 - Present
2003 - Present
Seminars on Director Roles and Responsibilities/
Thai Institute of Directors
• Director Accreditation Program (DAP)
• General Member of Thai Institute of Directors
Chairman of the Board, Tipco Asphalt PLC.
Chairman of the Board, Tipco Foods PLC.
Chairman of the Board, Tipco F&B Co., Ltd.
Director, Siam Container Terminal Co., Ltd.
Director, Peyanarongwit Co., Ltd.
Director, Vanichapark Co., Ltd.
Director, Thanomwongse Service Co., Ltd.
Shareholding in Company
• 1,478,000 shares (0.969%)
Family Relationship with Management
Sister of Mr. Sitilarb Supsakorn and sister-in-law of
Mr. Somchit Sertthin
MR. JACQUES PASTOR
VICE CHAIRMAN
Age 59
Education
Related Experience
• Advanced Management Program (AMP), Harvard Business
School, MA, USA
• Ecole Nationale Superieure d’ Arts et Metiers
2013 - Present
2004 - Present
2000 - 2013
1993 - Present
Vice Chairman, Tipco Asphalt PLC
Director, Thai Slurry Seal Co., Ltd.
Executive Director, Tipco Asphalt PLC
Asia Area Manager, COLAS S.A.
• 2013 Director Accreditation Program (DCP)
• 2013 Director Certification Program (DAP)
Shareholding in Company Family Relationships with Management in Company -
MR. SOMCHIT SERTTHIN
CHIEF EXECUTIVE OFFICER
Age 61
Education
Related Experience
• B.S. Business Administration Babson College, MA, USA
2001 - Present 2005 - Present 1986 - Present 1980 - 1986 Seminars on Director Roles and Responsibilities/
• 2013 Director Certification Program (DCP)
• 2003 Director Accreditation Program (DAP)
CEO, Tipco Asphalt PLC
Director, Tipco Foods PLC
Vice President and Country Corporate Manager,
Chase Manhattan Bank, Taipei Branch
2,530,016 shares (1.658%)
Family Relationships with Management
Brother-in-law of Ms. Laksana Supsakorn and
Mr. Sitilarb Supsakorn
ANNUAL REPORT 2013
9
BOARD OF DIRECTORS
MR. CHAIWAT SRIVALWAT
MANAGING DIRECTOR,
MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE
AUTHORIZED DIRECTOR
MR. HERVÉ LE BOUC
DIRECTOR,
AUTHORIZED DIRECTOR
MR. JACQUES LEOST
DIRECTOR,
AUTHORIZED DIRECTOR
10
ANNUAL REPORT 2013
MR. CHAIWAT SRIVALWAT
MANAGING DIRECTOR
Age 54
Education
Related Experience
• B.Eng. (Engineering), Liverpool University, England
2002 - Present Managing Director, Tipco Asphalt PLC
1996 - 2002 Marketing Director, Tipco Asphalt PLC
1990 - 1996 Senior Operations Manager , Tipco Asphalt PLC
• 2003 Director Certification Program (DCP)
Shareholding in Company Family Relationships with Management -
MR. HERVÉ LE BOUC
DIRECTOR
Age 62
Education
Related Experience
• Ecole Superieure des Travaux Publics
2008 - Present Director, Tipco Asphalt PLC
2007 - Present Chairman and Chief Executive Officer,
COLAS Group
2002 - 2007 Chairman and Chief Executive Officer,
SAUR Group
2001 - 2002 Chief Operating Officer, BOUYGUES
CONSTRUCTION
1998 - 2002 Chairman and Chief Executive Officer,
BOUYGUES OFFSHORE
Thai Institute of Directors Shareholding in Company Family Relationships with Management -
MR. JACQUES LEOST
DIRECTOR
Age 62
Education
Related Experience
• Engineering Degree from Ecole Centrale Lille
2011 - Present Director, Tipco Asphalt PLC
2010 - Present International Managing Director,
COLAS Group
2002 - 2010 Chairman and CEO, SAIPEM SA
2001 CEO, Bouygues Offshore
1996 - 2000 COO, Bouygues Offshore
1994 - 1995 Vice President (Africa, North Sea and Mexico),
Petromar
1989 - 1993 Vice President (Africa), Petromar
ANNUAL REPORT 2013
11
BOARD OF DIRECTORS
MR. NIPHON SUTHIMAI
INDEPENDENT DIRECTOR,
CHAIRMAN OF THE AUDIT COMMITTEE
MRS. ANNE-MARIE MACHET
MEMBER OF THE NOMINATION AND REMUNERATION
COMMITTEE,
MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE
MR. KOH BAN HENG
INDEPENDENT DIRECTOR
12
ANNUAL REPORT 2013
MR. NIPHON SUTHIMAI
Age 56
Education
Related Experience
• Master Degree in Operational Research, London School of
Economics, UK
• Licence de Droit (Law), Universite de Droit, Lyon, France
2006 - Present
2012 - Present
2005 - Present 1999 - Present 2007 - 2013
Independent Director, Tipco Asphalt PLC
Vice President - People, Nok Airlines PLC
Consultant, Thai Air Cargo Co., Ltd.
Associate Director, Geodis Overseas Co., Ltd.
Managing Partner, CLY International Limited
• 2006 Audit Committee Program (ACP)
MRS. ANNE-MARIE MACHET
Age 58
Education
Related Experience
• MBA Finance, ESCP-EAP
• Bachelor Degree in Math and Science
• International Coaching Academy - Accredited Coach in 2008
2010 - Present Independent Director, Tipco Asphalt PLC
2009 - Present Vice President of Franco, Thai Chamber of Commerce - in charge of HR Committee
2008 - 2009 President of French International School of Bangkok
2007 - 2008 Executive Advisor and Team Motivator,
FP Coaching to Lead (Thailand)
MR. KOH BAN HENG
Age 65
Education
Related Experience
• Post-Graduate Diploma in Business Administration, University
of Singapore
• Bachelor’s Degree in Applied Chemistry
2013 - Present Director, Linc Energy Limited
2013 - Present Director, Keppel Infrastructure Holdings Pte. Ltd.
2011 - Present Senior Advisor, Singapore Petroleum Company (SPC)
2000 - Present Director, Singapore Refining Company Private Limited
2003 - Present Chairman, Singapore Petroleum Venture Private Limited
2009 - 2013
Director, Keppel Energy Pte. Ltd
2003 - 2011
Chief Executive Officer, Singapore Petroleum Company (SPC)
ANNUAL REPORT 2013
13
BOARD OF DIRECTORS
MR. NOPPORN THEPSITHAR
MEMBER OF THE AUDIT COMMITTEE,
CHAIRMAN OF THE NOMINATION AND
REMUNERATION COMMITTEE
MR. PHIRASILP SUBHAPHOLSIRI
CHAIRMAN OF THE CORPORATE GOVERNANCE
COMMITTEE
MR. PARNCHALERM SUTATAM
MEMBER OF THE NOMINATION AND REMUNERATION
COMMITTEE
14
ANNUAL REPORT 2013
MR. NOPPORN THEPSITHAR
Age 60
Education
Related Experience
• Bachelor Degree in Electrical Engineering, Chulalongkorn
University
2012 - Present
2009 - 2013
2004 - 2011
2000 - 2001
• 2012 Audit Committee Effectiveness Seminar
Independent Director, Tipco Asphalt PLC
Chairman of Global Logistics Committee,
Thai National Shippers’ Council (TNSC)
Member of Executive Committee and Senior, Vice President - Logistics, Siam City Cement PLC
Executive Director, TCC Holding Co., Ltd.
MR. PHIRASILP SUBHAPHOLSIRI
Age 61
Education
Related Experience
• B.A., Business Administration,
Yokohama National University, Japan
2009 - Present Chairman, Food and Drinks PLC
1998 - 2008 President, BankThai PLC
1993 - 1998 President, Krungthai Thanakit PLC (KTT)
MR. PARNCHALERM SUTATAM
Age 60
Education
Related Experience
• M.B.A., University of Bridgeport, CT, USA
• Bachelor Degree, Accounting, Babson College, MA, USA
1987 - Present Director, Boonmitra Building Co., Ltd.
• 2006 Audit Committee Program (ACP)
ANNUAL REPORT 2013
15
BOARD OF DIRECTORS
MR. JACQUES MARECHAL
EXECUTIVE DIRECTOR,
MEMBER OF THE CORPORATE GOVERNANCE
COMMITTEE,
AUTHORIZED DIRECTOR
MR. SITILARB SUPSAKORN
EXECUTIVE DIRECTOR,
AUTHORIZED DIRECTOR
MR. HUGUES DE CHAMPS
CHIEF OPERATING OFFICER - INTERNATIONAL,
EXECUTIVE DIRECTOR,
AUTHORIZED DIRECTOR
16
ANNUAL REPORT 2013
MR. JACQUES MARECHAL
EXECUTIVE DIRECTOR
Age 48
Education
Related Experience
• Corporate Finance Dauphine University
2012 - Present Executive Director, Tipco Asphalt PLC
2000 - 2011 International Finance Manager, COLAS SA, Paris, France
1996 - 2000 Deputy International Finance Manager,
COLAS SA, Paris, France
Seminars on Director Roles and Responsibilities /
MR. SITILARB SUPSAKORN
EXECUTIVE DIRECTOR
Age 63
Education
Related Experience
• B.S. Business Administration, Babson College, MA, USA
2001 - Present 2012 - Present 1997 - Present 1996 - Present
Director, Tipco Foods PLC
Director, Siam Container Terminal Co., Ltd.
Director, Thanomwongse Service Co.,Ltd.
1,000,000 shares (0.66%)
Family Relationships with Management
Brother of Ms. Laksana Supsakorn and elder brother-in-law of
MR. HUGUES DE CHAMPS
EXECUTIVE DIRECTOR
Age 45
Education
Related Experience
• Master degree in Public and Maritime Works
• Civil Engineering Option, University of Technology Degree
2014 - Present Chief Operating Officer - International,
Tipco Asphalt PLC
2011 - 2013
Director - Joint Ventures, Tipco Asphalt PLC
2011 - Present Operations Manager, COLAS Asia area
2004 - 2011 Managing Director, COLAS South Africa (Pty) Ltd.
1995 - 2004 Operations Manager, COLAS Asia area
1993 - 1994 Project Manager, COLAS India
1992 - 1993 Project Manager, COLAS Morocco, GTR Company
ANNUAL REPORT 2013
17
EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
MR. KOH LAI HUAT
CHIEF FINANCIAL OFFICER
Age 54
Education
• Chartered Association of Certified Accountant (UK)
• M.B.A. International Marketing
Thai Institute of Directors Shareholding in Company Family Relationships with Management Related Experience
2014 - Present Chief Financial Officer, Tipco Asphalt PLC
2010 - 2013 Director - Accounting and Budgeting,
Tipco Asphalt PLC
2009 - Present Chief Financial Officer,
Kemaman Oil Corporation Sdn. Bhd.
2004 - 2008 Chief Financial Officer, Seloga Holdings Bhd.
MR. CHAYONGSAK PISITPONG (RETIRED)
CHIEF DIRECTOR-FINANCE
Age 56
Education
• M.B.A. North West Missouri State University, USA
• M.A. Economics, University of Kansas, USA
• B.A. Business Administration, Benedictine College, KA, USA
• 2003 : Director Accreditation Program (DAP)
Shareholding in Company Family Relationships with Management Related Experience
2009 - 2013 1995 - 2009 1981 - 1995 Chief Director - Finance, Tipco Asphalt PLC
Chief Financial Officer, Tipco Asphalt PLC
Vice President, Chase Manhattan Bank, Bangkok
Branch
MS. AUCHCHA RATTRAKULTIP
2002 - Present Director - Finance, Credit and Legal,
Tipco Asphalt PLC
2001 - 2002 Senior Manager, Tipco Asphalt PLC
MR. KASIDIS CHAREANCHOLWANICH
CHIEF OPERATING OFFICER - THAILAND
Age 53
Education
• M.B.A. Finance and Marketing, George-August University,
Gottingen, Germany
• B.A. Business Administration, Marketing, Assumption
University
• Bachelor Degree of Law, Ramkhamhaeng University
2014 - Present Chief Operating Officer - Thailand, Tipco Asphalt PLC
2008 - 2013 Director - Business and Support, Tipco Asphalt PLC
2006 - 2007 Director - Domestic Marketing and Sales,
Tipco Asphalt PLC
2000 - 2005 Sales Director, ICI Paints (Thailand) Co., Ltd.
MR. PRAVEEN PENMANEE
DIRECTOR - OPERATIONS
Age 56
Education
• M.B.A., National Institute of Development Administration
(NIDA)
• Electrical Engineering, King Mongkut Institute of Technology Ladkrabang Campus
Education
• Mini M.B.A. Economics, Business Administration
• Mini M.B.A. Commerce and Accounting, Business
Administration Kasetsart University
2010 - Present Director - Operations, Tipco Asphalt PLC
2002 - 2009 Production Division Manager, Guardian
Industries Rayong Co., Ltd.
DIRECTOR - FINANCE, CREDIT AND LEGAL
Age 67
18
ANNUAL REPORT 2013
MR. LOUIS - FREDERIC SACHS
MR. ISMAIL BIN ABDUL HAMID
Age 39
Age 51
Education
Education
• Master’s Degree in Nautical Science, Antwerp Maritime
Academy, Antwerp, Belgium
• Bachelor in Business Administration, NEOMA B.S., Reims,
France
• Masters Degree (MSc), Highway Management & Engineering,
University of Birmingham, UK
• Civil Engineering Degree (BSc), Western Kentucky University,
USA
2013 - Present Director - Marine Group, Tipco Asphalt PLC
2008 - 2013 Regional Marine Risk Manager - Asia,
AXA Corporate Solutions
2005 - 2008 Chief Officer LNG Tankers, Gazocean GDF SUEZ
1996 - 2005 Deck Officer, EXMAR
2011 - Present Director - International Sales and Marketing,
Tipco Asphalt PLC
2006 - 2011 General Manager, Sales & Marketing,
Kemaman Bitumen Company Sdn Bhd,
1990 - 2006 Sales, Marketing, Product Development and
Technical Services, Shell Company
DIRECTOR – MARINE GROUP
MRS. UDOMPORN PUNPATCH
DIRECTOR - HUMAN RESOURCES
Age 53
Education
• Master Degree in Human Resources Management, College of
Management, Mahidol University, Bangkok.
• Mini-Master of Business Administration, Thammasat
University, Bangkok.
• Bachelor of Industrial Psychology, Chaingmai University,
Chiangmai
Thai Institute of Directors Shareholding in Company
921 shares (0.006%)
Family Relationships with Management Related Experience
2011 - Present Director - Human Resources, Tipco Asphalt PLC
2007 - 2010 Senior Manager - Human Resources,
Tipco Asphalt PLC
2000 - 2006 Group Manager - Human Resources,
Tipco Asphalt PLC
DIRECTOR - INTERNATIONAL SALES AND MARKETING
MR. PORNSATIAN SAOWAPAKSOONTORN
COMPANY SECRETARY
Age 42
Education
• Certified Public Accountant (Thailand)
• MS. (Accounting), Thammasat University
• Company Secretary Program (CSP)
Shareholding in Company Family Relationships with Management Related Experience
2011 - Present Company Secretary and Group Manager Accounting & Budgeting, Tipco Asphalt PLC
2008 - 2011 Senior manager of Finance and Accounting,
Mermaid Maritime PLC
2007 - 2008 Corporate Accounting Assistant Director,
Bangkok Dusit Medical Services PLC
2006 - 2007 System Project Director, Minor Corporation PLC
ANNUAL REPORT 2013
19
ORGANIZATION STRUCTURE
ORGANIZATION STRUCTURE
At 1st January 2014
Board of Directors
Nomination and
Remuneration Committee
Committee
Executive Committee
Audit Committee
Chief Executive Officer
Managing Director
Chief Operating
Officer - Thailand
Chief Financial Officer
Chief Operating
Officer - International
Director - Domestic &
Marketing
Director - International
Sales and Marketing
Director Operations
Director Marine Group
Director - Finance
and International
Legal Affairs
Director - Human
Resources
Senior Manager Internal Audit
Board of Directors
At 31st December 2013
Nomination and
Director - Finance
Credit Control and
Legal
Committee
Audit Committee
Executive Committee
Managing Director
Chief Director Finance
Director Finance Credit
Control and Legal
Director - Finance
and International
Legal Affairs
Director Accounting
and Budgeting
Director Joint Ventures
and Subsidiaries
Director Marine Group
Director Operations
Director International Sales
and Marketing
Director Business and
Support
Director Human Resources
Senior Manager Internal Audit
20
ANNUAL REPORT 2013
ANNUAL REPORT 2013
21
PRODUCTION FACILITIES, OIL AND ASPHALT TERMINALS
PRODUCTION FACILITIES,
OIL AND ASPHALT TERMINALS
Lang Fang (Hebei province)
Zhen Jiang (Jiangsu province)
Bahadurgarh
Jhansi
Baroda
Haldia
Xin Hui (Guangdong province)
Vashi
Visakh
Phitsanulok
Nakhonratchasima
Mangalore
Chennai
Phrapradaeng
Rayong
Poipet (Cambodia)
Keo Phos (Cambodia)
Suratthani
Kemaman Bitumen Company Sdn. Bhd.
AE and PMA Production Facility
Oil and Asphalt Terminal
22
ANNUAL REPORT 2013
SHAREHOLDING STRUCTURE OF THE GROUP
SHAREHOLDING STRUCTURE
OF THE GROUP
TIPCO ASPHALT GROUP
Asphalt Business
Tipco Asphalt PLC
TASCO Shipping Co., Ltd
(99.99%)
Thai Bitumen Co., Ltd
(99.99%)
Alpha Maritime Co., Ltd
(99.99%)
Raycol Asphalt Co., Ltd.
(41.44%)
Delta Shipping Co., Ltd.
(99.99%)
Vessel Business
Asphalt Group in China
TASCO Int’l (Hong Kong) Ltd.
(100%)
Langfang Tongtai Road Material Co.,Ltd.
(51%)
Bitumen Marine Co., Ltd.
(99.99%)
Colasie Co., Ltd.
(40%)
Zhenjiang Tipco Asphalt Co.,Ltd.
(51%)
Tipco Asphalt (Xinhui) Co., Ltd.
(100%)
Tipco Maritime Co., Ltd.
(99.97%)
Asphalt Refinery
Kemaman Oil Corporation Sdn. Bhd. (63.12%)
KBC Energy Pte. Ltd.
(100%)
(44.80%)(54.50%)
Asphalt Group in Cambodia
Tipco Asphalt (Cambodia) Co., Ltd.
(100%)
Kemaman Bitumen Company Sdn Bhd
RELATIONSHIP BETWEEN THE MAJOR SHAREHOLDER’S BUSINESS GROUPS
There are 2 major shareholder groups in the Company. The first is the Tipco Foods Pcl and the Supsakorn
family, the founding shareholders. The other group is Colas S.A. of France, a world leading road and highway
construction and maintenance company. Colas became a 22.7 strategic shareholder in the Company in 2000.
The shareholding currently stands at 32.13%. Through a Technical Assistance Agreement, the Company receives
unlimited assistance on asphalt technology from Colas which include access to the latter’s central asphalt
research and development center in France as well as all specialty asphalt products formulations and application
techniques.
ANNUAL REPORT 2013
23
MAJOR SHAREHOLDERS
MAJOR SHAREHOLDERS
as at 27th December 2013
NO.
SHAREHOLDERS SHARES
NO. OF ORDINARY SHARES
%
1.
BNP PARIBAS SECURITIES (ASIA) PTE LTD-FOR COLAS
49,024,804
32.130
2.
Tipco Foods PLC.
37,113,166
24.324
3.
Supsakorn Family
11,532,828
7.559
4.
Thai NVDR Co., Ltd.
10,928,251
7.162
5.
AIA Company Limited-APEX
3,000,000
1.966
6.
Dr. Pichit Lerttamrapth
1,800,000
1.180
7.
Mr. Kittipong Patrachaikul
1,520,000
0.996
8.
AIA Company Limited-TIGER
1,500,016
0.983
9.
Mr. Viwat Kowitsophon
1,417,800
0.929
10.
Mr. Thanathip Pichedvanichok
1,173,700
0.769
11.
Others
33,570,303
22.002
152,580,868
100.000
Total
DIVIDEND POLICY
The Company has a policy to pay dividends of not less than 60% of its Company alone net profit of each fiscal year.
However, the actual dividend payment depends on cash flow, investment plans of the Company and its subsidiaries,
terms and conditions of agreements entered into by the Company.
24
ANNUAL REPORT 2013
REVENUE STRUCTURE
REVENUE STRUCTURE
During 2013, 76% of total revenue derived from the sale of asphalt products. Domestic and international sales contributed
approximately 27% and 73% of total sales, respectively.
Based on the Company’s consolidated financial statements for the years 2011, 2012 and 2013, revenues categorized by
business units are as follows:
(UNIT: MILLION BAHT)
PRODUCT LINE/ BUSINESS CATEGORY
2013
SHAREHOLDING
(%)
REVENUE
2012
%
REVENUE
2011
%
REVENUE
%
1. Asphalt Business
Tipco Asphalt PLC
26,257.39
77.01
30,687.44
79.96
6,183.23
26.86
Surat Bitumen Co., Ltd.
99.99
-
-
-
-
262.05
1.14
Thai Bitumen Co., Ltd.
99.99
1,303.78
3.82
1,584.37
4.13
12,088.12
52.51
41.44
992.84
2.91
1,259.65
3.28
734.19
3.19
100.00
524.84
1.54
599.74
1.56
428.83
1.86
8.73
2,606.52
94.02 36,737.72
6.79
868.45
3.77
95.72 20,564.87
89.34
Kemaman Oil Corp. Sdn. Bhd.
63.12
2,977.78
32,056.63
Total
2. Vessel Business
99.97
31.80
0.09
31.48
0.08
4.46
0.02
99.99
66.49
0.20
121.10
0.32
104.82
0.46
Alpha Maritime Co., Ltd.
99.99
68.39
0.20
66.78
0.17
64.78
0.28
99.99
302.36
0.89
301.59
0.79
264.23
1.15
Tasco Shipping Co., Ltd.
99.99
352.06
1.03
217.28
0.57
98.96
0.43
(746.25)
(2.19)
(727.61)
(1.90)
(476.34)
(2.07)
74.85
0.22
10.62
0.03
60.90
0.26
1,803.43
1,803.43
5.29
5.29
914.80
2.38
1,678.04
7.29
914.80
2.38
1,678.04
7.29
33,934.91
99.53
37,663.14
98.13
22,303.81
96.89
159.25
0.47
715.81
1.87
715.99
3.11
Elimination
Total
3. Holding Companies
Tasco International
(Hong Kong) Ltd.
100.00
Total
Total Sales and Services
Other Revenue
Total Revenue
34,094.16 100.00 38,378.95 100.00 23,019.80 100.00
Note: Excluded of share of profit (loss) from investment in associate.
ANNUAL REPORT 2013
25
PRODUCTS AND THAILAND DOMESTIC MARKET
PRODUCTS AND
THAILAND DOMESTIC MARKET
TYPES OF PRODUCTS PRODUCED
BY THE GROUP INCLUDE:
•
Asphalt Cement (AC) accounted for more than 80% of
asphalt sales in 2013. The Group refines its own AC from
heavy crude oil in addition to AC purchased from other
local and international suppliers.
•
Asphalt Emulsion (AE) is a mixture of Asphalt Cement,
water and chemicals.
•
28
Cutback Asphalt is a mixture of Asphalt Cement and
petroleum solvents. It is used mainly for prime coating.
Today it has become less popular because it is costly
and unfriendly to the environment.
ANNUAL REPORT 2013
•
Polymer Modified Asphalt (PMA) is a mixture of
polymer and Asphalt Cement. It is a durable binder
with elastic characteristic to ensure higher rutting
resistance on highways. This special property extends
the useful life of highways and airport runways.
•
Premix is a ready-mix product that is sold in bags. This
product is made from readily mixed Asphalt Emulsion
and selected aggregates with proper gradation. It is
best for small road surface repairs.
PRODUCTS FOR WHICH THE GROUP
IS A DISTRIBUTOR ARE:
•
AC purchased from local and international suppliers.
•
Diesel and bunker oil purchased from oil refineries and
brokers.
TYPES AND SOURCES OF PRODUCTS
AND RAW MATERIALS
AC is a product from refining of crude oil and processing
of base lubricating oil. AC is used as the raw material
for manufacturing Asphalt Emulsion, Polymer Modified
Asphalt and Cutback Asphalt. Currently, the Group
produces AC from its own asphalt refinery in Malaysia
as well as from other refineries, both locally and
internationally, to reduce the risk of relying on a single
source and to control the cost of raw materials for
manufacturing.
OTHER RAW MATERIALS
The Group imports approximately 35% of the raw materials
it requires for use in the Asphalt Emulsion and Polymer
Modified Asphalt manufacturing process. The remaining
65% of raw materials is sourced through local suppliers.
•
•
Tipco Joint Sealer and Tipco Joint Primer are Asphalt
Cement mixed with additives, which is durable for
extreme hot and cold weather conditions. It is highly
flexible and adheres to joint components. It is used for
sealing joints between concrete slabs.
Atmospheric Gas Oil (AGO), Vacuum Gas Oil (VGO),
Kerosene and Naphtha are byproducts from Tipco
Asphalt refinery. The Group sells these products to local
and regional customers.
THE TWO TYPES OF RAW MATERIAL
REQUIRED ARE AS FOLLOWS:
•
Solvents: The price of solvents varied depending on oil
price. It is purchased from local suppliers and there is
no shortage of this raw material in the market.
•
Emulsifiers: There are several kinds of emulsifiers,
which can be purchased locally or from international
suppliers through their sales agents. The price of
emulsifiers is quite stable.
ANNUAL REPORT 2013
29
BUSINESS PERFORMANCE
The Company remains the market leader for asphalt products in Thailand by achieving strong
customer loyalty; which, in turn, is built through exceptional product quality, superior customer
services and on-time deliveries.
DOMESTIC MARKET
Domestic market asphalt consumption in Thailand during
2013 was 704,000 tons, which consisted of 598,000 tons
of Asphalt Cement and 106,000 tons of Asphalt Emulsion
and other products (such as Polymer Modified Asphalt and
Cutback Asphalt). The consumption of 704,000 tons was
11% less than 2012. However, 2012 was an exceptional
year, as there was additional government funding for
the repair and reconstruction of roads damaged from
widespread flooding across Thailand in late 2011.
30
ANNUAL REPORT 2013
The Company remains the market leader for asphalt
products in Thailand with strong customer loyalty; which,
in turn, is built through exceptional product quality,
superior customer services and on-time deliveries. During
2013, we further reinforced our market leadership position
through the supply of a new type of Polymer Modified
Asphalt for runway repairs at the Suvarnabhumi Airport.
Additionally, the Company had also supplied the following
new techniques to some key projects;
In 2013, international asphalt
sales for the Group exceeded
900,000 tons and represented
another year of good
performance
MICRO SURFACING TECHNIQUE
•
Don Muang Tollway
•
Buraphawithi Expressway (Bangna - Chonburi)
•
Kanjanapisek Expressway (Bang Plee - Suksawad)
COLORED ASPHALT TECHNIQUE
•
Department of Rural Road
# 3176 Bangtaboon Laemsing District, Petchaburi
# 3201 Ban Bangjak Patill District, Chumporn
PREMIUM GRADE ASPHALT TECHNIQUE
•
Ultra-thin Friction Course (UTFC) technique on the
Chaloem-maha-nakorn Expressway (Dindaeng Bangna)
•
Porous Asphalt on the Srinagarindra Road
•
Special Designed Method of track pavement for test
driving, Nissan Motor Asia Pacific (Thailand)
The Company has manufacturing facilities and asphalt
terminals located in the center of every region of the
country, such as Nakhonratchasima, Phitsanulok, Rayong
and Suratthani. With these four domestic manufacturing
facilities strategically covering all regions, the Group can
promptly deliver asphalt products to domestic customers,
as well as to neighboring countries via our own fleet of
300 road tanker trucks. This unique logistic capability is
key to Tipco Asphalt’s dominance in the domestic market.
The Company also owns and operates 7 ocean-going
asphalt vessels which significantly expand our presence in
the export market. These vessels also import asphalt into
Thailand when there is a shortage in domestic supply.
Our domestic marketing and sales teams served more
than 550 contractors and customers across Thailand. With
a track record of more than 30 years of solid service, our
committed sales teams are well-trained to provide quality
services and technical advice to customers. Furthermore,
our sales teams are also backed by dedicated technical
support teams who have extensive experience and
knowledge of new techniques in road maintenance and
are ready to provide on-site support to our customers.
The Group also has a Customer Relationship Management
(CRM) team to study the complex requirements of each
group of customers in order to devise effective sales and
service plans.
INTERNATIONAL MARKET
In 2013, international asphalt sales exceeded 900,000
tons and represented another good year of performance
for the Group. The main reasons for the high sales were
the combined effect of higher demand in the region,
including China, Australia, Malaysia and Indonesia - the
key markets for our international sales, and tighter
asphalt availability following reduction of production in
both Thailand and Singapore. Tipco Asphalt refinery in
Kemaman, Malaysia continued to produce and supply
significant volume of the Group’s asphalt requirement.
The Group also secured the balance of the asphalt
supplies from other regional refineries, in supporting
our international sales by providing wider product
grades and utilization of our bitumen vessels.
ANNUAL REPORT 2013
31
Indonesia is still one of our largest export destination, with
sales volume representing about 30% of total international
sales. The Indonesian market continued its strong demand
supported by increase in public spending, and lower
volume of asphalt production at the local refinery, resulting
in an increase in the requirement of asphalt imports.
Indonesia is likely to remain a strong contributor to our
international business over the next few years.
Vietnam is another key market for the Group. Our presence
in this market is still significant with support from our
regular and new customers in that country. We have
managed to take away some of the competitors’ volume
and customers with better supply and efficient delivery
logistics. However, the number of new players, supply
alternatives and traders in the Vietnamese market had
increased during 2013, causing higher competition and
tension in the market. With the continued support from
associate companies of Colas, better supply coordination
and focusing on our loyal customers, the Group will
continue to be a major player in Vietnam .
32
ANNUAL REPORT 2013
Sales to China showed significant growth of 16% compared
with 2012 and reached its highest ever historical level for
the Group. This was achieved under fierce competition
while the market was kept under margin pressure from
the 2nd quarter until the end of the year. Meanwhile, the
total import asphalt market in China remained steady
at about 3 million tons per annum. Most of this growth
occurred in North China where the Group’s market share
is not significant due to competitiveness of Korean origin
supplies.
Our subsidiaries in China performed significantly better in
2013, thanks to increased business and better cost controls.
In a highly competitive environment, sales volume
surged by 50% driven mainly by our subsidiary in Jiangsu
province.
Similar to China, the Australian market were amongst
those markets where 2013 sales increased compared
to the previous year. The Group remained a key partner
of Colas’ subsidiary in Australia and remained as the 4th
largest destination for our international trade. The Group
faced new import players in our sales to Australia, where
the downstream business changed hands in several parts
of Australia. Oil traders took over several import terminals
previously owned by the oil majors. This situation
represents both opportunity and threat to our marketing
effort to this market. Being one of the big import markets,
Australia remains a key market to grow our international
sales in the years to come.
Sales to Laos and our Cambodian subsidiary Tipco Asphalt
Cambodia (TAC) remained steady throughout the year,
and then slowed down during the rainy season. This
was amplified by the completion of major contracts,
slow payment process to contractors and lesser new
investment by the Government. Within the above difficult
environment, TAC still managed to remain as the leader in
its market with above 80% market share.
Sales by our Malaysian subsidiary, Kemaman Bitumen
Company Sdn. Bhd. (KBC), recorded another record high
which represented an increase of 18% compared to 2012.
The increase was due to more consistent supply from our
refinery in Kemaman, customer focus and the growth
in local demand, including the paving of a few major
sections of the new East Coast Expressway, paving of the
new airport runway for KLIA2, and new Penang Bridge 2.
The KBC sales team supported by the head office technical
team also managed to convince Malaysian project owners
and contractors to utilize polymer - modified asphalt and
high quality emulsion sourced from Thailand.
Other than the above mentioned markets, the international
sales group sells to 10 other countries which include
the Philippines, South Africa, New Zealand, Bangladesh,
Reunion Island, Mauritius, Fiji and Tahiti.
CONTINUOUS UPGRADING OF
PRODUCTION PROCESSES IN LINE WITH
CORPORATE SOCIAL RESPONSIBILITY
INITIATIVES
There has been researches and studies to improve the
quality of asphalt with new techniques by using natural
rubber (Para Asphalt Cement or Natural Rubber Modified
Asphalt Cement). Natural rubber is an agricultural product
and has been thoroughly tested before gaining acceptance
as the standard requirements of the Department of
Highways. This has contributed to an increase in demand
for domestic natural rubber; which particularly benefits
local farmers during periods of low demand for natural
rubber in the global market. Put simply, this results in
the use of an organic, renewable substance to serve as a
substitute raw material to improve the quality of traditional
asphalt (Polymer Modified Asphalt, or “PMA”). Such quality
improvement process requires less petroleum polymers
obtained from refining of fossil crude oil and thereby
reducing emissions of greenhouse gases and effect of
global warming. In addition, the Company had launched
a new prime coat emulsion in 2013 which uses less than
half the amount of oil which is needed to produce cutback
asphalt. This product has reduced the release / evaporation
of oil vapor into the atmosphere.
In addition, we have converted from using fuel oil to
liquefied petroleum gas (LPG) at our manufacturing
plants. The latter is a clean fuel and provides complete
combustion with limited emissions to the atmosphere,
especially sulfur oxides.
ANNUAL REPORT 2013
33
Fuel savings have also been achieved through repairs and
change of insulation material and removing carbon scales
on the surface of the heat transferring pipes at our asphalt
storage terminal. These initiatives contribute towards fuel
savings through more efficient heat exchanges.
The Group is also replacing the use of firewood with
liquefied petroleum gas (LPG) as the fuel for heating
asphalt transported in our road tankers. LPG is a superior
fuel produces no smoke. The use of LPG greatly reduced
the environmental effects caused by the use of firewood.
The Company makes use of a Safety Index as a key
corporate KPI. This is intended to reduce accidents,
increase safety standards and prioritize the safety of
employees (particularly for those involved in production
processes). CCTV cameras are being installed in all our
road tankers in Thailand. The CCTV surveillance cameras,
in conjunction with the real-time GPS tracking system
(which is already installed in all our trucks) acts to provide
addition safeguard for safety of our truck drivers and the
general public.
34
ANNUAL REPORT 2013
THE MARINE GROUP
The Marine Group is a key component of our supply
chain for the transportation of our products across the
Asia Pacific/ Indian Ocean region. It consists of two major
activities:
•
A full in-house vessel management function responsible
for the operation of our 7 Asphalt/ Bitumen Tankers of
22,450 tons carrying capacity, and
•
A chartering department responsible for commercial
fleet activities.
Our vessels are operated by an in-house vessel management
team under strict tanker quality management systems.
The vessel management team follows leading industry
practices and strives to achieve KPIs as per the TMSA (Tanker
Management Self-Assessment) guidelines. The Chartering
activities achieved a high utilization of vessels in 2013 which
greatly supported the sales growth in Asia Pacific.
During 2013, the Group ordered a new built vessel from
Japan with a delivery date of July 2014. The addition of this
new asphalt tanker of 3,900 tons of cargo carrying capacity
will strengthen the Company’s presence on long ton-mile
destinations in the Asia Pacific region.
ASPHALT REFINERY IN MALAYSIA
Tipco Asphalt operates a refinery in Kemaman, Malaysia
through its subsidiary, Kemaman Bitumen Company Sdn.
Bhd. (Tipco Asphalt refinery). The refinery is located on 40
hectares (250 rais) of land in the Telok Kalong Industrial
Estate. It has a nameplate refining capacity of 25,000
barrels of heavy crude oil per day or the equivalent of 9
million barrels or 1.4 million tons of crude oil per year. This
translates into production of about one million tons of
asphalt per year. The refinery processed 6.65 million barrels
of crude in 2013. The amount of asphalt produced in 2013
was 719,000 metric tons.
During 2013, the refinery undertook several capital
expenditure projects to improve efficiency and safety of its
operations. The main projects were;
of Marine Loading Arms was completed in October 2013
and has immediately resulted in major benefit by reducing
the loading/unloading time. More importantly, the Marine
Loading Arms significantly reduce the risk of oil spills,
making our operation extremely environment friendly
and supporting our efforts to progressively improve our
sustainability.
3.SCRUBBER
In yet another initiative to improve our environmental
friendliness, KBC installed 2 Scrubbers at the bitumen tank
and waste water holding basin areas. These advanced
units, with a design duly approved by the Department of
Environment, will help reduce volatile organic compounds
(VOC) emissions into the atmosphere.
1. CONVERSION OF STEAM BOILER AND
PROCESS HEATER FROM SINGLE FUEL FIRING
BURNER (FO) TO DUAL FUEL (FO AND NG)
KBC successfully converted the Boilers and Process Heaters
in the Refinery to dual-fuel configuration - the equipment
can now use Fuel Oil as well as Natural Gas depending
upon the requirement and availability. Use of Natural Gas
as the primary fuel is highly environmentally friendly as it is
expected to reduce by as much as 26% the emission of CO2
and CO. In addition, this would help the refinery to have
significant reduction in the heating cost.
2. MARINE LOADING ARMS (MLA)
KBC has been proactively upgrading the marine oil transfer
facilities to meet the world class refinery requirements
for safe marine operations at all times. It had initiated the
Marine Loading Arms installation project in 2012, with
a view to ensure that our group business activities are
carried out in the safest possible manner. The installation
ANNUAL REPORT 2013
35
RISK MANAGEMENT AND RISK FACTORS
RISK MANAGEMENT
The Group has remained focused in strengthening the framework of enterprise risk
management (ERM) amidst significant strides made in terms of growth in 2013. The aligning
of objectives within the various business units of the Group has assisted in formulating a 2
tier risk management system. In line with the Group’s strategy, Risk Management Committee
remains proactive by focusing on continuous improvements in managing risk in all areas of
business and creating risk awareness culture within the organization.
The challenges of enterprise risk management amidst
diverse nature of the Group business from oil refining
and shipping to the sale of oil products and asphalt
in the infrastructure industry are being countered
by implementing comprehensive risk management
programs covering specific areas of business operations.
The Risk Management Committee has been functioning
in compliance with the Principles of Good Corporate
Governance. The risk management policy is formulated
to ensure that all stakeholders follow prudent risk
management practices and are fully prepared for all
possible scenarios.
36
ANNUAL REPORT 2013
DUTIES AND RESPONSIBILITIES
1. To implement the scope or framewor k of r isk
management;
2. To m o n i to r d e ve l o p m e nt o f t h e s co p e o f r i s k
management, the risk indication process and risk
assessment;
3. To assess and approve the risk management plan; and
4. To report to the Board of Directors concerning potential
risks, as well as, on their management and also to
communicate with the Audit Committee about these
issues as appropriate.
In managing risks, the Risk Management Committee has
created risk management team of managers headed by a
Risk Officer to carry out day-to-day operations on behalf of
the committee. Such team will adhere to risk management
policies, scope or framework and process and render
support, advice or guidance on risk management to all
units.
Such team will also report to the Risk Management
Committee on a monthly basis about foreseeable risks
in their respective departments, along with remedies
and opportunities. Follow-up meetings with the Risk
Management Committee will be planned monthly to
review corporate risks, receive feedback and work towards
continuous improvement.
RISK FACTORS
RISKS RELATED TO FINANCE
The Group’s business activities are exposed to various
financial risks, including those related to credit, liquidity,
foreign currency, interest rate and oil prices. The Group
utilizes various financial instruments to manage the
identified financial risks. The Group does not use financial
instruments for trading or speculative purposes.
Th e G ro u p’s Fi n a n ce D e p a r t m e n t o p e r a te s a s a
service center providing treasury advice, funding, risk
management assistance, coordinates access to financial
markets and manages financial risks relating to the Group’s
overall operations to ensure that Tipco Asphalt’s strategic
objectives are met. The use of financial instrument is
strictly controlled by policies approved by the Group’s
Board of Directors. The policies provide specific direction
in relation to financial risk management including
commodity hedging, foreign currency, interest rate, credit
and liquidity risk.
The Group has ample unsecured
short term trade and working
capital financing facilities with
reputable local and international
banks that have combined limits
of over USD 1.2 billion
CREDIT RISK
Credit policy is regularly reviewed and the exposure to
credit risk is monitored on an ongoing basis. Credit review
and evaluations are performed on all customers while
credit approvals are based on delegated limits of authority.
There was no significant exposure to any customer group
in 2013. Credit risk related to financial instruments is
minimized by using reputable local and international
banks and other counterparty.
LIQUIDITY RISK
The Group operates under unsecured short term trade and
working capital facilities arrangement with reputable local
and international banks that have combined limits of over
USD 1.2 billion. Financing associated to crude purchase is
self-liquidating and short term in nature with short asset to
cash conversion cycle.
CURRENCY RISK
The Group is exposed to foreign currency risk. This occurs
as the result of purchases of raw materials and export
revenue. This risk is adequately mitigated with financing
and exporting revenue in the same currency. There are
also forward contracts booked for known foreign currency
expenses which all have maturities of less than six months.
ANNUAL REPORT 2013
37
INTEREST RATE RISK
The Group entered into interest swap to achieve fixed
interest rate borrowing on the long-term loans. There
are more opportunities for the subsidiaries to enter into
interest swap in the future.
RISKS RELATED TO OIL PRICE
FLUCTUATION
Petroleum product markets have been extremely volatile
during the year due to the US’ sanction against Iran and
blockage supply of Libya crude production. The Group’s
hedging policy is effective in managing these market risks.
In order to address and mitigate price fluctuation risks for
both crude oil and finished products at all times, the Group
evaluates carefully its hedging strategy for each crude
cargo.
RISKS RELATED TO SOURCING
HEAVY CRUDE OIL
The Company’s refinery has been designed to process
heavy crude oils as it is the best suited for the company’s
business model. Due to the geographical distribution of
heavy crude oil in terms of commercially viable sources
of supply, the crude oil availability is crucial to keep the
refinery operative and for the company to meet its asphalt
supply obligations.
The company continues to make efforts on three important
fronts to address the crude oil availability related risk,
38
ANNUAL REPORT 2013
1. To diversify its crude oil supply sources by evaluating
crude oil assays from different sources to ascertain their
suitability for the refinery
2. To work on a firm mid-to-long term agreement with
one of the key suppliers that would ensure continuous
and timely supplies to the refinery and allow for better
operational planning
3. To make continuous upgradation in the refinery
infrastructure to improve its ability to store and process
different types of crude oils and produce commercially
acceptable products to meet the market demand.
RISK RELATED TO REFINERY
OPERATIONS
The Group has continued its focus on managing the overall
Business Risk relating to the operations of its Refinery.
The recommendations of the technical integrity study are
being implemented in a phased manner, depending in
line with the local statutory approvals and the operating
schedule. The Refinery is also taking up a detailed firefighting infrastructure study and a waste water treatment/
handling study in order to develop a robust philosophy
and design for both these important activities. The refinery
team also continues to engage with the local authorities
like the Department of Health and Safety, the Fire
Department and the Department of Environment to ensure
their advice and recommendations are taken into account
while designing and implementing any key equipment
and/or technology. The refinery continues to upgrade the
skills and competency of its personnel and to ensure all key
positions are manned by well qualified and experienced
professionals.
RISKS RELATED TO ASPHALT
CEMENT SUPPLY
Markets such as China, Indonesia, Malaysia, Australia and
Vietnam were heavily relied upon in 2013 and will continue
to be the pillars of our international sales for the Group.
Fluctuations in raw material prices posed a major risk to the
Group. The Group continuously seeks to mitigate supply
risk by maintaining good long-term relationships with all
refineries in Asia, which is accomplished through regular
supply contracts and enquiries. As of now, supply risk is
mitigated by the ability to source Asphalt Cement from
the Group’s own subsidiary asphalt refinery in Malaysia.
Expanding collaborative networks with key partners helps
the Group to identify new sources of supply at competitive
prices.
Within this market conditions, the risk of credit with
some customers was identified in some areas and were
addressed accordingly. Meanwhile, the emergence of new
supply sources from far distances, and new competitors
entering the game, the market became more aggressive,
customers having more choices and indeed the risk of
losing customers was identified. The Company addressed
the risk by increasing focus on customer relationship, term
sales contracts or multiple cargoes between 3-6 months
and strengthening internal communication to optimize
supply, logistics, deliveries, and sales operations support.
RISKS RELATED TO DOMESTIC
MARKET
The domestic market still relies mainly on government
budgets. The instability of the political situation then
affected total demand in the domestic market. As the
result, fierce price competition tremendously took place,
which caused by the over-supply situation of asphalt in
the market.
RISKS RELATED TO INTERNATIONAL
MARKET
In 2013, TIPCO Asphalt product sales to the international
market contracted by 4% year-on-year basis, although
remaining close to its historical high. Difficult market
conditions in some specific countries, along with more
competition, did not create conditions in favor of another
year of growth.
RISKS RELATED TO SHIPPING
The Group owns 7 Asphalt/Bitumen tankers. The Group is
focused to maintain a quality tonnage which is managed
by prudent sale and purchase activities. In 2014, new
Japanese built Asphalt/Bitumen tanker Tasco Nirand
will join the fleet to bring the average age of the fleet to
12 years which is well below the industry average. The
young quality tonnage maintained by the Group suitably
supports increased sales activities in the Asia PacificAustralia range.
All ship owning companies in the Group operate with the
mission of zero accidents, zero injuries and zero oil spills.
The Group ensures that all subsidiary-owned asphalt
tankers are insured by first class risk coverage to protect
assets against damages and also protect from third-party
claims.
The biggest challenge facing the industry is shortage of
well-trained personnel. Group has made serious efforts
to train and prepare shipping personnel to face industry
challenges.
ANNUAL REPORT 2013
39
RESPONSIBILITIES OF THE BOARD
BOARD OF DIRECTORS
QUALIFICATIONS FOR DIRECTORS
The members of the Board of Directors of Tipco Asphalt
PLC are as follows:
To serve as members of the Board of Directors, individuals
must meet the following qualifications:
1. Ms. Laksana Supsakorn
Chairman
2. Mr. Jacques Pastor Vice Chairman
3. Mr. Nopporn Thepsithar Independent Director
4. Mr. Phirasilp Subhapholsiri
Independent Director
5. Mr. Parnchalerm Sutatam Independent Director
6. Mr. Niphon Suthimai Independent Director
7. Mrs. Anne-Marie Machet Independent Director
8. Mr. Koh Ban Heng Independent Director
9. Mr. Hervé Le Bouc Director
10. Mr. Jacques Leost Director
11. Mr. Hugues de Champs Executive Director
12. Mr. Jacques Marechal Executive Director
13. Mr. Sitilarb Supsakorn Executive Director
14. Mr. Somchit Sertthin Chief Executive Officer
15. Mr. Chaiwat Srivalwat
Managing Director
DIRECTORS WITH AUTHORITY TO
SIGN ON BEHALF OF THE COMPANY
The authorized Directors who can bind the Company
consist of two groups of Directors. To bind the Company
requires one Director from Group A and another Director
from Group B to jointly sign and affix the Company’s seal.
The Directors in Group A are Mr. Jacques Pastor, Mr. Hugues
de Champs, Mr. Hervé Le Bouc and Mr. Jacques Marechal.
The Directors in Group B are Ms. Laksana Supsakorn, Mr.
Somchit Sertthin, Mr. Sitilarb Supsakorn and Mr. Chaiwat
Srivalwat.
1. Possess an unblemished record.
2. Apply both vision and a broad business perspective.
3. Exhibit good interpersonal skills, a sense of justice and
an amenable personality.
4. Apply effective communication skills.
5. Demonstrate systematic business thinking and decision
making.
6. Understand financial matters, commerce or industry,
and show business management experience.
7. Have prior experience as a director of a company or
state enterprise.
GUIDELINES FOR SELECTION
OF DIRECTORS
1. Individual candidates must possess the qualifications as
specified above.
2. Overall, the Board of Directors should be comprised of
persons with a variety of skills that are of benefit to the
determination of corporate direction and guidance.
TERM OF OFFICE FOR DIRECTORS AND
EXECUTIVE DIRECTORS OF THE BOARD OF
DIRECTORS
1. The term of office for Directors of the Board of Directors
1.1 Retirement age is 75.
1.2 A member will be allowed to retain his/her
directorship after his/her 75th birthday and remain
as Director until his/her three-year term expires.
2. The term of office for Executive Directors
2.1 Retirement age is 55.
2.2 After the age of 55, the term of service can be
extended (by the Board of Directors) to the age of
70 with the first extension running for four years
maximum; subsequent extensions are for a period
of two years each.
42
ANNUAL REPORT 2013
The Company has determined the roles, duties and
responsibilities of the Board of Directors. The Board
defines the Company’s vision and strategies clearly,
covering marketing, production, management, human
resources, finance and budgeting in order to measure their
performance against the Key Performance Indicators (KPI)
and budget.
Furthermore, operations are periodically audited by the
internal audit team, whose report of significant findings
is scrutinized, and any corrective measures determined,
under the close supervision of the Audit Committee and
Board of Directors.
SCOPE OF AUTHORITY OF THE
BOARD OF DIRECTORS
1. The Board of Directors must conduct the business
according to the Company’s bylaws, objectives,
regulations and shareholders’ resolutions with honesty
and in accordance with the Company’s best interest.
2. Each Director has to inform the Company promptly
if there is any conflict of interest with the Company,
or if he or she holds, acquires or divests shares or
debentures in the Company or its subsidiaries.
3. The Board of Directors has authority to set policies
and to scrutinize investment plans of the Company.
The Chief Executive Officer is authorized to control
the operations of all departments to conform to the
Company’s policies in order to maximize efficiency in
the business and for the shareholders.
REQUIREMENT FOR APPOINTMENT
TO THE BOARD OF DIRECTORS
In selecting persons to be appointed as the Company’s
Directors, the Nomination and Remuneration Committee
is empowered to select and screen qualified persons.
H owe ve r, t h e p e r s o n s w h o w i l l b e a p p o i nte d a s
the Company ’s Directors must have the necessar y
qualifications under Section 68 of the Public Companies
Act B.E. 2535 (including its amendments) and the
Company’s Articles of Association. The requirements,
nomination, appointment and dismissal of the Company’s
Directors are summarized as follows:
1. The number of Directors is fixed by a shareholders’
meeting resolution. The total number of Directors
must not be less than 10 persons but not more than
15 persons. One half of the number of Directors must
reside in Thailand. The Board of Directors may authorize
one or more persons to perform any act on behalf of
the Board of Directors but cannot authorize any other
person to perform any act as a Director. Any act carried
out by such authorized person will be deemed to have
been performed by the Board of Directors and the
Company will be bound by such an act. In performing
their duties, the Board of Directors is entitled to
remuneration which will be paid in the form of salary,
meeting fees, bonus and allowance.
2. A shareholders’ meeting resolution, having not less
than three-fourths of the total attending and eligible
shareholders’ votes for the Board of Directors’ meeting
resolution, has the power to determine the names
of the authorized Directors. The authorized Directors
who can bind the Company comprises of two groups
of Directors and to bind the Company requires one
Director from the first group and another Director
from the second group to jointly sign and affix the
Company’s seal.
ANNUAL REPORT 2013
43
3. The shareholders’ meeting must elect the Directors in
accordance with the following procedures and rules:
3.1 The shareholders’ meeting must vote to elect
Directors one person at a time
3.2 In exercising the voting rights for election of each
Director, each shareholder will have voting rights
according to the number of shares held with one
share equal to one vote.
3.3 In exercising the voting rights for the election
of each Director, the person who obtains the
highest votes and received not less than threefourth of the total votes of attending and eligible
shareholders will be elected as a Director.
4. At every Annual General Meeting of the Shareholders,
one-third of the Directors, or if it is not, a multiple of
three, then the number nearest to one-third must
retire from office. There must be a drawing by lots
to determine the Directors who will retire in the first
and second years following the registration of the
Company. In each subsequent year, the Directors who
occupy the position for the longest period must retire.
A retiring Director is eligible for re-election.
5. Any Direc tor wishing to resign must submit a
resignation letter to the Company which will become
effective on the date the Company receives the letter.
A Director who resigns as described above may notify
the Public Companies Registrar of his/her resignation.
6. If there is any vacancy among Directors other than
retirement by rotation, the Board of Directors may at
its next meeting elect a person who is qualified and is
not subject to any restriction imposed under Section
68 of the Public Companies Act B.E. 2535 to fill the
vacancy except where the remaining term of the vacant
directorship is less than two months. The term of a new
Director replacing a vacant directorship will be equal
to the remaining term of that vacant directorship. The
resolution of the Board of Directors as specified above
must be passed by three-fourths or more of the votes
cast by the remaining Directors.
44
ANNUAL REPORT 2013
7. A shareholders’ meeting may remove any Director
before the expiration of his/her term by passing a
resolution having the approval of not less than threefourths or more of the total attending and eligible
number of shareholders and such shareholders must
hold in aggregate 75% or more of the total number of
shares held by attending and eligible shareholders.
BALANCE OF NON-EXECUTIVE
DIRECTORS
The Board of Directors has 15 members, consisting of:
Executive Directors Non-executive Directors Independent Directors 6
3
6
SEPARATION OF POSITION
The positions of Chairman of the Board of Directors and
Chief Executive Officer are not held by the same individual.
BOARD MEETINGS
Board meetings are scheduled to be held a minimum
of four times per year. Invitation letters were sent with
complete agenda details and related documents for
consideration prior to the meetings. The minutes of each
Board of Directors meeting is recorded in writing and
arranged for the safe keeping of such certified minutes
at 25th Floor, Tipco Tower, 118/1 Rama 6 Rd., Samsen Nai,
Phayathai, Bangkok 10400. Directors approved these
minutes and they are made available for review.
Attendance of Board of Directors Meetings, Audit
Committee Meetings and Nomination and Remuneration
Committee Meetings for 2013 by the Direc tors is
summarized as follows:
NUMBER OF MEETINGS ATTENDED (TIMES)
NAME
TITLE
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
NOMINATION
AND
REMUNERATION
CORPORATE
GOVERNANCE
COMMITTEE
Ms. Laksana Supsakorn 1
Chairman
1/1
-
-
-
Mr. Jacques Pastor
Vice Chairman
5/5
-
4/5
-
Mr. Niphon Suthimai
Independent Director (Chairman of
the Audit Committee)
5/5
8/9
-
-
Mr. Parnchalerm Sutatam 3
5/5
9/9
-
-
Mr. Nopporn Thepsithar
Independent Director (Chairman
of Nomination and Remuneration
Committee)
5/5
8/9
5/5
-
Mr. Phirasilp Subhapholsiri 2 Independent Director (Chairman of
Corporate Governance Committee)
2/2
6/6
-
1/1
Mrs. Anne-Marie Machet
4/5
-
5/5
1/1
Mr. Koh Ban Hang
5/5
-
-
-
Mr. Hervé Le Bouc
Director
0/5
-
-
-
Mr. Jacques Leost
Director
2/5
-
-
-
Mr. Hugues de Champs
Executive Director
5/5
-
-
-
Director
5/5
-
-
-
5/5
-
5/5
-
Mr. Chaiwat Srivalwat
Managing Director
5/5
-
-
1/1
Mr. Jacques Marechal 5
Executive Director
5/5
-
-
1/1
1,4
4
Remarks:
1. The Board of Directors meeting No. 4/2013 held on
14 th August 2013 passed the resolution to appoint
Ms. Laksana Supsakorn as the Company’s Director
replacing Mrs. Anurat Tiamtan who resigned from
the position, effective on 15th August 2013. And Ms.
Laksana Supsakorn was also appointed as a Chairman
and Mr. Jacques Pastor was appointed as Vice Chairman at a Board of Directors’ Meeting No.5/2013
held on 15th November 2013.
2. The Board of Directors meeting No. 3/2013 held on 13th
May 2013 passed the resolution to appoint Mr.Phirasilp
Subhapholsiri as Director, Independent Director and
Member of the Audit Committee replacing Mr. Chainoi
Puankosoom who resigned from the position.
3. The Board of Directors meeting No. 5/2013 held
on 15 th November 2013 passed the resolution to
appoint Mr. Parnchalerm Sutatam as Nomination
and Remuneration Committee replacing Mr. Somchit
Sertthin.
4. Mr. Jacques Leost and Mr. Jacques Pastor joined
a Board of Directors meeting No. 3/2013 via video
conference on 13th May 2013.
5. Mr. Jacques Marechal joined a Board of Directors
meeting No. 4/2013 video conference on 2013 held on
14th August 2013.
The Board of Directors has recorded the minutes of each
meeting in writing and arranged for the safe keeping of
such certified minutes at 25 th Floor, Tipco Tower, 118/1
Rama 6 Rd., Samsen Nai, Phayathai, Bangkok 10400.
ANNUAL REPORT 2013
45
POSITIONS IN SUBSIDIARIES AND ASSOCIATED COMPANIES
X
/
/
X
/
/
/
THAI SLURRY SEAL CO., LTD.
KEMAMAN BITUMEN COMPANY SDN BHD
KEMAMAN OIL CORPORATION SDN BHD
TIPCO ASPHALT (CAMBODIA) CO., LTD.
TASCO INTERNATIONAL (HONG KONG) LTD.
TASCO SHIPPING CO., LTD.
RAYCOL ASPHALT CO., LTD.
BITUMEN MARINE CO., LTD.
THAI BITUMEN CO., LTD.
ALPHA MARITIME CO., LTD.
DELTA SHIPPING CO., LTD.
TIPCO F & B CO., LTD
/
SIAM CONTAINER TERMINAL CO., LTD.
Mr. Nopporn Thepsithar
THANOMWONGSE SERVICE CO., LTD.
X
OTHERS
THE TIPCO FOODS PCL.
Ms. Laksana Supsakorn
TIPCO MARITIME CO., LTD.
NAME
TIPCO ASPHALT PUBLIC COMPANY LIMITED
SUBSIDIARIES
COLASIE CO., LTD.
ASSOCIATED
Company officers holding management and authorized positions in subsidiaries, associated companies or other
companies are as follows:
Mr. Phirasilp Subhapholsiri /
Mr. Panchalerm Sutatam
/
Mr. Niphon Suthimai
/
/
Mr. Koh Ban Heng
/
Mr. Hervé Le Bouc
/
Mr. Jacques Leost
/
Mr. Jacques Pastor
//
/
/
/
/
//
/
/
/
/
//
/
/
/
/
/
Mr. Chaiwat Srivalwat
//
/
/
/
/
/
/
/
/
Mr. Hugues de Champs
//
/
/
/
/
/
/
/
/
Mr. Jacques Marechal
//
/
/
/
/
Mr. Chayongsak Pisitpong
/
/
/
Ms. Auchcha Rattrakultip
/
/
/
/
X
/
/
/
/
/
/
/
46
X = Chairman
ANNUAL REPORT 2013
/
/
/
/
/
// = Executive Director
/
/
/
/
/
/
/ = Director
/
/
/
Mr. Koh Lai Huat
Note:
/
/
INDEPENDENT DIRECTORS
The Board of Directors has six Independent Directors as
follows:
1. Mr. Nopporn Thepsithar
3. Mr. Parnchalerm Sutatam
4. Mr. Niphon Suthimai
5. Mrs. Anne-Marie Machet
6. Mr. Koh Ban Heng
GUIDELINES FOR SELECTION OF
INDEPENDENT DIRECTORS
All Independent Directors have been appointed according
to the Guidelines of SEC.
1. Candidates must possess the requisite qualifications as
stated by the Company. A Director should perform his
or her duties and express opinions using independent
judgment and integrity by taking into consideration
the benefit of the Company as a pr ior it y. The
individual should not consider the interests of majority
shareholders, individual shareholders or himself or
herself.
2. A candidate must possess the complete set of
characteristics specified by the Stock Exchange of
Thailand and Tipco Asphalt’s Code of Good Conduct, as
follows:
2.1 Does not have shareholding in excess of 1% of
the total number of shares with voting rights in
the Company, businesses in the Group, associated
companies or with persons with possible conflict
of interest (including connected persons as per
Measure 258 of the Securities Act);
2.2 Does not have any involvement in Company
management, is not an employee or consultant
receiving a regular monthly salar y, nor an
individual with controlling authority in the
Company, nor have businesses within the Group
or associated companies. This extends to persons
who may have possible conflict of interest, and
candidates must have had no interest or stake as
aforementioned for a period of not less than two
years;
2.3 The nominee may not have any business relation;
have no interest or stake-whether direct or
indirect-in financial or management matters of the
Company, businesses within the Group, associated
companies or persons with a possible conflict
of interest of a nature that may compromise
independence;
2.4 The nominee must not be a close relative of
management members, majority shareholders in
the Company, those doing business within the
Group, associated companies or persons with
possible conflict of interest, nor may the individual
be an appointee to maintain the interest of
Directors or major shareholders;
2.5 The individual is obliged to disclose any relations
to the Board of Directors which may compromise
independence.
TIPCO ASPHALT’S DEFINITION OF
The Company adopts the above guidelines recommended
by the SEC.
Th e Co m p a ny h a s 6 I n d e p e n d e n t D i re c t o r s. A n
Independent Director is a Director holding not more
than 1 percent of paid - up capital of the Company; does
not take part in the management of the Company; is not
an employee, staff member or advisor who receives a
regular salary from the Company or controlling persons
or conflict persons; who have no business related to the
Company such as customer, supplier, creditor, debtor; who
has no direct or indirect benefit or interest in finance and
management of the Company; who is not appointed as
a representative to safeguard the interests of a Company
director, majority shareholders or shareholders who are
related to the Company’s majority shareholders.
THE COMPANY SECRETARY
The Board of Direc tors appointed M r. Pornsatian
Saowapaksoontorn, Group Manager - Corporate Affairs and
Planning, on 24th November 2011 as Company Secretary to
take responsibility as set forth by law.
The Company Secretary reports functionally to the
Chaiman of the Board of Directors and perationally to the
Managing Director. The curriculum vitae of the company
secretary has been included the curriculum vitae of the
directors and management.
ANNUAL REPORT 2013
47
ROLES AND DUTIES OF COMPANY
SECRETARY
Corporate Secretary has the important roles as follows:
•
•
•
•
•
Act as a Consultant and Secretary of board of directors
and other committees.
Act as a Corporate Governance and Compliance Officer.
Act as a Corporate Communication Officer by being
the center of communication among the Company’s
directors, management and stakeholders.
Act as a Controller of Management Functions in
following up on all the resolutions of board of director
into practice.
Act as a Co-ordinator with Thailand Security Depository
Co., Ltd. the Company’s registrar.
DUTIES OF CORPORATE SECRETARY:
•
•
•
•
•
•
•
•
To adhere to good corporate governance.
To plan meetings and propose relevant agenda
To manage the Board of Directors’ meeting and
coordinate with the minutes recorder in conducting
the meeting in a proper manner and in line with the
Company’s regulations
To administer the Shareholders’ meeting in line within
the legal framework
To give advises on legal matters, Public Companies Act
and all other rules and regulations of listed companies,
the Company’s affidavits aiming at full compliance with
relevant laws
To make sure that the resolutions of Board of Directors
are adhered to
Become a contact point providing information to
Directors and third parties
All matters concerning the Company’s registrar and
related document in safe keeping
THE BOARD OF DIRECTORS’
SUB-COMMITTEES
The Board has appointed Board committees to study and
review specific matters. At present, Tipco Asphalt has
four committees appointed by the Board of Directors:
the Executive Committee; the Audit Committee; the
Nomination and Remuneration Committee and the Risk
Management Committee.
1. EXECUTIVE COMMITTEE
The Company established an Executive Committee
to assume full executive responsibilities on behalf of
the Board of Directors in order to have flexibility in
management and operations. Members of the Executive
Committee are as follows:
1. 2. 3. 4. 5. 6. 7. Mr. Somchit Sertthin Mr. Jacques Pastor Mr. Chayongsak Pisitpong Mr. Chaiwat Srivalwat Mr. Koh Lai Huat Mr. Hugues de Champs Mr. Jacques Marechal Chairman
Member
Member (Retired)
Member
Member
Member
Secretary
The Executive Committee has responsibilities as
established by the Board of Directors. The Chairman of
the Executive Committee has the highest authority to
set operational policies related to the Company, while
the Chief Executive Officer has the highest authority for
implementation
SCOPE OF AUTHORITY OF THE EXECUTIVE
COMMITTEE
The Executive Committee, pursuant to the resolutions of
the Board of Directors of the Company, is responsible for
the following:
1. Proposing agenda for meetings of the Board of
Directors and counseling the Board of Directors on
major decisions.
2. Establishing the policies and operating procedures of
the Company.
3. Managing, making decisions and directing the business
and affairs of the Company.
2. AUDIT COMMITTEE
The Company has a process that inspects and controls the
business by appointing four Independent Directors to the
Audit Committee.
1. 2. 3. 4. Mr. Niphon Suthimai Mr. Parnchalerm Sutatam Mr. Nopporn Thepsithar Mr. Phirasilp Subhapholsiri Mr. Joseph Soosay Chairman
Member
Member
Member
Secretary
All members of the Audit Committee have adequate
expertise and experience to review creditability of the
financial reports.
48
ANNUAL REPORT 2013
TERMS OF OFFICE OF THE AUDIT COMMITTEE
The Audit Committee directly reports to the Board of
Directors. The Audit Committee has a three-year term and
new members will be appointed by the Board of Directors
at the end of the term.
SCOPE OF AUTHORITY OF THE AUDIT
COMMITTEE
The role of the Audit Committee, as assigned by the
Company Board of Directors, is as follows:
1. Review the reporting of the Company’s financial
statements for their accuracy and adequacy.
2. Review the suitability and effectiveness of the
Company’s internal control system, internal audit
function and the independence of the Internal Audit
Department, while providing concurrence to the
appointments, transfers, and terminations of the
Head of the Internal Audit Department or any other
department responsible for performing internal audit
responsibilities.
3. Review the Company’s compliance to any regulations
on securities, the regulations of the SET and any other
regulations relevant to the Company’s business.
4. Consider, propose and select the independent external
auditor to the Company Board of Directors with
recommendation on his remuneration. In addition, the
Audit Committee participates in the meeting with the
external auditor at least once a year without presence
of the Company Management.
5. Consider the Company’s business transactions with
related parties or any transaction that may lead to
potential conflicts of interest in compliance with the
relevant rules and regulations of the SET to ensure their
rationality and maximum benefit to the Company.
6. Issue a report of the Audit Committee, to be signed by
the Chairman of the Audit Committee and disclosed in
the Company’s Annual Report, and shall at least contain
comments in the following areas:
6.1 Accurac y, adequac y and credibility of the
Company’s financial statements.
6.2. Adequacy of the Company’s internal control
system.
6.3. Compliance to any regulations on securities,
the regulations of the SET and other regulations
relevant to the Company’s business.
6.4. Appropriateness of the external auditor.
6.5. Transactions of possible conflicts of interests.
6.6. M e e t i n g s o f t h e Au d i t Co m m i t te e a n d
contributions of members.
6.7. Overall comments from performing in accordance
to this Charter.
6.8. Other transactions that shareholders or other
investors should be aware of in accordance to the
role and responsibility assigned by the Company
Board of Directors.
7. Perform any other task as assigned by the Company’s
Board of Directors with the approval of the Audit
Committee.
8. Pe r fo r m d u t i e s i n e n s u r i n g t h e s u cc e s s a n d
effectiveness of the Company’s operations, as well
as overseeing the management of enterprise risks of
the Company (which will include advising the Board
of Directors, management, and the Risk Management
Committee on matters related to enterprise risk
management).
REQUIREMENTS FOR APPOINTMENT OF THE
AUDIT COMMITTEE
1. The Board of Directors may appoint at least three
Independent Directors as the Audit Committee,
provided that one of the members of the Audit
Committee must have accounting knowledge. The
Audit Committee must elect one of the members to be
the Chairman.
2. The term of an Audit Committee member is three years.
3. The Audit Committee must be independent in carrying
out the work and will be directly responsible to the
Board of Directors.
4. The status of the Audit Committee member will cease
upon any member’s death, resignation, dismissal or
retirement by rotation.
5. The Audit Committee’s remuneration will be decided by
the Board of Directors.
6. There must be at least four Audit Committee meetings
each year, with results reported to the Board of
Directors.
ANNUAL REPORT 2013
49
3. THE NOMINATION AND REMUNERATION
COMMITTEE
The Nomination and Remuneration Committee consists of
four directors of whom one director is an Executive Director
and three directors are Independent Directors. One of the
Independent Director is appointed as Chairman of the
Nomination and Remuneration Committee. Members of
Nomination and Remuneration Committee are as follows;
1. 2. 3. 4. Mr. Nopporn Thepsithar Mrs. Anne-Marie Machet Mr. Parnchalerm Sutatam Mr. Jacques Pastor Chairman
Member
Member
Member
The Board of Directors meeting No. 5/2013 held on 15th
November 2013 passed the resolution to appoint Mr.
Parnchalerm Sutatam as Nomination and Remuneration
Committee replacing Mr. Somchit Sertthin.
SCOPE OF AUTHORITY OF THE NOMINATION AND
REMUNERATION COMMITTEE
The Nomination and Remuneration Committee’s functions
are:
1. To screen and select the appropriate persons as
members of the Board of Directors and to present the
selected individuals to the Board of Directors, who
then submit names to the shareholders’ meeting for
approval.
2. To screen and select appropriate qualified persons to
be nominated as the Chief Executive Officer, Managing
Director and Executive Director and then propose their
names to the Board of Directors for approval.
3. To screen the remuneration of the Company’s Directors
to the Board of Directors and to further propose same
to the shareholders’ meeting for approval.
4. To propose the remuneration packages for the Chief
Executive Officer, Managing Director and Executive
Directors and then make proposals to the Board of
Directors for approval.
of Good Corporate Governance for listed companies,
consisting of four directors (of which two are independent
directors and the other two are executive directors) as
follows:
1. 2. 3. 4. Mr. Phirasilp Subhapholsiri Mrs. Anne-Marie Machet Mr. Jacques Marechal Mr. Chaiwat Srivalwat
Chairman
Member
Member
Member
ROLES AND RESPONSIBILITIES OF THE
CORPORATE GOVERNANCE COMMITTEE
1. Propose corporate governance (CG) guidelines to the
Board.
2. Advise the Board on CG matters.
3. Ensure that the duties and responsibilities of directors
and the management conform to CG principles.
4. Revise guidelines for Tipco Asphalt’s CG against
those of international organizations and present its
recommendations to the Board.
5. Delegate corporate governance policies to the
management to promote and implement
GOOD CORPORATE GOVERNANCE SELF
ASSESSMENT
The Company has undertaken the Corporate Governance
Self Assessment Based on the Principles of Good Corporate
Governance, relying on the Stock Exchange of Thailand
(SET ), as a vital tool for reviewing and improving the
Company’s performance and providing reference data for
corporate governance rating.
The exercise also helps to increase the operational
effectiveness of the Company when the assessment
results are analyzed and evaluated to indicate the level
of achievement of objectives and opportunities for
improvement.
BOARD SELF ASSESSMENT
4. CORPORATE GOVERNANCE COMMITTEE
The Committee appointed the Corporate Governance
Committee to improve corporate governance practices
of the Company in order to comply with the Principles
50
ANNUAL REPORT 2013
The Board Self Assessment form provided by the SET is for
consideration by the boards of listed companies. The main
objective of the self assessment form is to evaluate the
performance of the board, as a team, and of Directors, as
a collective body, in light of recognized best practices and
principles of good corporate governance.
The six categories covered by the Board Self Assessment
Form are as follows:
1.
2.
3.
4.
5.
6.
Structure and characteristics of the board
Roles and responsibilities of the board
Conduct of board meetings
The board’s performance of duties
Relationship with management
S elf- development of Direc tors and executive
development
The company scored 2.5 out of 4 rating on the Board Self
Assessment evaluation.
DIRECTOR’S ORIENTATION
For new Directors, the Company arranges orientation
program to inform him/her of its business policies, capital
structure, shareholding structure, business performance,
information systems and related laws and regulations.
Moreover, each Director receives a Director’s Handbook
and other information. The new Director will also receive
briefing from the CEO and/or Managing Director on the
Company policies, relevant information (including the
capital structure, shareholders, performance, and processes
in use at the Company), laws, regulations, a marketing/
operational overview, and update on performance.
SUCCESSION PLAN
The Nomination and Remuneration Committee has been
assigned by the Board to be responsible for a succession
plan, especially to ensure that the Company has an
appropriate succession plan in place for the positions of
the CEO, MD and other senior executives, and to make
recommendations to the Board for approval. Nomination
for appropriate leaders has been recognized as a priority
by the Board in order to strengthen the Company’s
management and ensure continued progress.
EXECUTIVE OFFICERS
The Company’s executive officers are as follows:
1. Mr. Somchit Sertthin 2. Mr. Jacques Pastor
3. Mr. Chaiwat Srivalwat 4. Mr. Kasidis Chareancholwanich 5. Mr. Hugues de Champs 6. Mr. Koh Lai Huat 7. Mr. Chayongsak Pisitpong (Retired)
8. Mr. Sitilarb Supsakorn 9. Mr. Jacques Marechal 10.Ms. Auchcha Rattrakultip 11.Mr. Praveen Penmanee 12.Mr. Louis - Frederic SACHS
13.Mr. Ismail Bin Abdul Hamid 14.Mrs. Udomporn Punpatch Chief Executive Officer
Vice Chairman
Managing Director
Chief Operating
Officer - Thailand
Chief Operating
Officer - International
Chief Financial Office
Chief Director
Finance
Executive Director
Director - Finance and
International Legal
Affairs
Director - Finance, Credit Control and Legal
Director - Operations
Director - Marine
Group
Director - International
Sales and Marketing
Director - Human
Resources
PERFORMANCE ASSESSMENT OF
TOP EXECUTIVES
The Nomination and Remuneration Committee assesses
the performance of the CEO based on the Company’s
operating results, implementation of the Board’s
policies, BSC (Balanced Scorecard) performance and the
overall socio-economic circumstances. The Nomination
and Remuneration Committee will then consider the
appropriate remuneration for the Executive Directors and
propose such amount to the Board for approval.
POLICY ON DIRECTORSHIPS AT OTHER LISTED
COMPANIES
The Board of Directors has established guidelines that
none of the Company’s Directors and Executives Directors
may hold directorships at more than 5 listed companies in
addition to serving on the Board of Tipco Asphalt PLC.
ANNUAL REPORT 2013
51
REMUNERATION FOR THE BOARD AND EXECUTIVES
REMUNERATION FOR THE BOARD
AND EXECUTIVES
1. Total cash remuneration in 2013 for the Board of Directors, Audit Committee and the Nomination and Remuneration
Committee was Baht 4,556,000
NAME
1. Ms. Laksana Supsakorn
2. Mr. Niphon Suthimai
3. Mr. Nopporn Thepsithar
4. Mr. Parnchalerm Sutatam
6.
7.
8.
9.
Mr. Koh Ban Heng
Mr. Hervé Le Bouc
Mr. Jacques Pastor
10. Mr. Jacques Leost
11. Mr. Hugues de Champs
12. Mr. Sitilarb Supsakorn
13. Mr. Jacques Marechal
14. Mr. Somchit Sertthin
15. Mr. Chaiwat Srivalwat
POSITION
Chairman
Independent Director Chairman of
the Audit Committee
Audit Committee Member
Chairman of the Nomination and
Director
Executive Director
Nomination and Remuneration
Committee Member
Director
Executive Director
Executive Director
Executive Director
Executive Director Nomination
and Remuneration Committee
Member
Executive Director
2013 (BAHT)
FIXED
VARIABLE
50,000
50,000
590,000
200,000
2012 (BAHT)
FIXED
VARIABLE
530,000
200,000
532,000
200,000
318,000
150,000
512,000
200,000
488,000
200,000
260,000
100,000
-
-
220,000
200,000
200,000
220,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
220,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
220,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
200,000
150,000
220,000
200,000
200,000
200,000
150,000
200,000
200,000
200,000
200,000
200,000
300,000
252,000
-
400,000
318,000
400,000
150,000
4,556,000
2,750,000
4,504,000
3,050,000
RETIRED DIRECTORS 2013
16. Mrs. Anurat Tiamtan
17. Mr. Chainoi Puankosoom
52
ANNUAL REPORT 2013
Chairman
Total
Note : •
Ms. Laksana Supsakorn was appointed as Director on 15th August 2013, replacing Mrs. Anurat Tiamtan and
appointed as Chairman on 15th November 2013.
•
Mr. Phirasilp Subhapholsiri was appointed as Director on 14th May 2013, replacing Mr. Chainoi Puankosoom.
•
The remuneration of total Baht 552,000 was paid to 2 Directors prior to their retirements.
•
Variable Remuneration payments not exceeding one time of the total annual fixed remuneration to all the
Board of Director members shall be considered and paid by the Company on condition that the Company is
profitable. As the Company was profitable in 2012, the variable remuneration of Baht 2,750,000 was paid in
2013.
2. There was no non-financial remuneration for Directors in 2013.
3. Other remuneration-None
4. Total remuneration in 2012 and 2013 for 14 Executive Directors and Executive Offices, which included salary, bonus,
retirement fund and provident fund was Baht 96 Million and Baht 96 Million respectively.
LITIGATION AGAINST THE BOARD OF DIRECTORS
There is no record of litigation against the Board of Directors during the past 14 years.
ANNUAL REPORT 2013
53
CORPORATE GOVERNANCE REPORT
The Board of Directors recognizes the critical importance of corporate governance in supporting
the Company’s sustainable growth, creating shareholder value, and securing trust from all
stakeholders, including shareholders, customers, employees, and the general public. Thus, they
have determined to adhere to good corporate governance practices, for which the Company
has been awarded a “very good” corporate governance rating by the Thai Institute of Directors.
Such rating was based on OECD Principles of Corporate Governance and was awarded for 5
years consecutively (2009 to 2013).
CORPORATE GOVERNANCE
POLICY
The Board of Directors of the Tipco Asphalt Group
(“Group”) continuously strives for regulating good
corporate governance practices in order to maintain
sustainable development of the Group with respect to the
interests of all stakeholders and to observe ethical business
practices with transparency and traceability. The Group has
established the following corporate governance policy for
the Board of Directors, the directors, and the employees to
abide by:
54
ANNUAL REPORT 2013
1. The Board of Directors shall take the lead in the matter
of business ethics by setting the code of conduct to
manage and monitor the Group’s operations to ensure
all business activities are conducted in accordance with
the applicable laws and ethical standards.
2. The Board of Directors shall play an important role
to develop and govern strategies, policies and action
plans, taking into consideration the involved risk
factors in order to set the appropriate management
guidelines for the best interests of the Group.
Good Corporate Governance is essential
to establish relationships between
a company’s board of directors, its
management, and shareholders in order
to have a common vision and goal.
3. The Board of Directors shall strive to add value to
the business in the long run as well as manage the
business with prudent practices in order to maximize
shareholders’ returns, while maintaining the highest
standards of social responsibility at all times.
4. The Board of Directors shall encourage shareholders to
be aware of their rights as the owners of the Group and
exercise their rights through the process of appointing
the Company’s Board of Directors to act as their
representatives. Shareholders are also eligible to make
decisions on any significant changes of the Group.
5. The Board of Directors shall treat all shareholders,
including minority shareholders, fairly and equally.
6. The Board of Directors shall create the optimal balance
between the existing needs and future expectations of
the Company and all stakeholders respectively based
upon the sustainable mutual benefits.
7. The Board of Directors shall disclose the information,
both financial and non-financial, correctly, adequately,
transparently and traceably through the proper
two-way communication channels for the benefit of
stakeholders’ decision making.
Company e.g. the election of directors, approval of
significant transactions influencing the direction of the
Company, amendment of Articles of Association and
regulations of the Company, etc. Shareholders have the
right to vote at meetings according to the number of
shares owned by each shareholder, whereby one share is
for one vote and no particular share allows them privilege
to limit the rights of other shareholders.
A p a r t f ro m t h e a b ove m e n t i o n e d r i g h t s o f t h e
shareholders, Tipco Asphalt has carried out additional tasks
to encourage and facilitate shareholders in the exercising
of their rights.
• Providing essential, clear and up-to-date information
for shareholders regarding the Company’s business.
Even though some information is not required to be
disclosed by law, if Tipco Asphalt considers that it is
of significance to the shareholders, the Company will
notify shareholders of the information through Tipco
Asphalt’s website and SET.
•
All shareholders will receive significant and sufficient
detailed information concerning the date and the
agenda prior to the date of the shareholders’ meeting.
Such information will be posted on Tipco Asphalt’s
website around two months before the related
documents are submitted to shareholders at least
than 14 days prior to the meeting. The shareholders’
right to attend the meetings and the right to vote on
resolutions will be clearly stated in the notice of the
meeting submitted by the Company.
•
In a case where shareholders are unable to attend a
meeting, they are entitled to appoint a representative
e.g. an independent director or a person to act as their
proxy, using any proxy form attached to the notice of
RIGHTS OF SHAREHOLDERS
Tipco Asphalt ensures that shareholders, both as investors
and as owners of the Company, are entitled to all basic
rights at acceptable and trusted standards, which include
the right to freely trade or transfer their own shares, the
right to receive dividends from the Company, the right to
attend the shareholders’ meeting, the right to propose the
agenda of the meeting, the right to nominate a person to
be a director, the right to express opinions independently,
the right to make decisions on important affairs of the
ANNUAL REPORT 2013
55
the meeting. The Company has prepared the proxy
forms in compliance with the specifications defined by
the Ministry of Commerce in which the shareholders
can exercise their voting rights as wished. These forms
can also be downloaded from Tipco Asphalt’s website.
In addition, Tipco Asphalt provides shareholders
with the duty stamp to be sealed on the proxy form
for their convenience. Shareholders who arrive after
the meeting has commenced are able to vote on
the agenda item being considered provided that a
resolution is not yet made. They will constitute part of
the quorum starting from the agenda item that they
are in attendance and may exercise their voting rights
unless the meeting states otherwise.
•
•
56
Prior to the Annual General Meeting No. 1/2014,
shareholders of the Company have the right to suggest
issues to be included in the agenda of the ordinary
general meeting of shareholders for the year 2013.
Shareholders have been allowed to exercise such right
from 1st November 2013 to 20th January 2014 for the
consideration of the Board of Directors. Should the
proposed issue be included on the meeting agenda,
the Company will specify in the notice of the meeting
that such agenda was proposed by a shareholder.
However, in case the proposed issue is rejected, the
Company will inform shareholders of the reasons at the
ordinary general meeting of shareholders. Moreover,
any shareholder is entitled to nominate any qualified
candidates for the election as a Board member
in advance. The Nomination and Remuneration
Committee will consider the proposed nominees
together with other nominated persons according to
the Company’s criteria for the nomination of directors.
The committee then presents the nominees to the
Board for consideration before proposing them to the
shareholders’ meeting for approval.
On the date of the meeting, the Company uses the
barcode system for registration to ensure convenience
of shareholders as each reference number is already
included in the registration form and proxy form. In
ANNUAL REPORT 2013
addition, for each agenda, the Company will collect
the ballot paper from the shareholders who vote
“disapprove” or “abstain” in order to deduct the votes
from the total entitled voting rights. The Company also
applies the barcode system to perform the calculation
in order to ensure immediate voting results promptly
for announcement right after the end of each agenda.
Shareholders are entitled to verify each voting result
after the meeting.
• One-third of the directors must retire from office on
a rotation basis in each ordinary general meeting of
shareholders and the election of directors to replace
the retired directors takes place during the meeting.
However, if the numbers of candidates exceed the
number of directors required, each candidate is then
elected individually. During the meeting, shareholders
are entitled to freely propose the name of an individual
for directorship of the Company.
• At the meetings, shareholders are allowed to freely
express their opinions, give suggestions, and raise
questions on any agenda item before casting votes
to ensure that shareholders have sufficient detailed
information on the matter. Should shareholders have
questions or inquiries, specialists in specific fields are
available to answer queries under the responsibility of
the Board.
• An agenda on the Board’s remuneration is included
to inform the shareholders of the amount and type
of remuneration received by each director including
meeting allowance and the Board’s bonus.
EQUITABLE TREATMENT OF
SHAREHOLDERS
The Company provides equitable treatment to every
individual shareholder, major or minor, as well as
institutional or foreign investors. To that effect, Tipco
Asphalt strives to find means to ensure equality especially
for minor shareholders. These means are:
INTERNAL INFORMATION CONTROL
The Board of Directors has established measures to control
the usage and prevent the misuse of internal information
(insider trading) for the personal benefit of the concerned
person, namely the Board of Directors, Tipco Asphalt top
executives and employees working in related departments
(including their spouses and children who are minors).
All concerned persons are recommended to refrain from
trading the Company shares for a one-month period prior
to the release of the Company’s quarterly and annual
financial statements (blackout period). In addition, the
Board of Directors will monitor all required actions in
accordance with the related standards. Any changes in
shareholding of directors must be reported in the Board of
Directors’ meetings.
In this regard, it will be included in the agenda of the Board
of Directors meeting on a quarterly basis.
CONFLICT OF INTEREST PREVENTION
The Board has established policies and measures as
follows:
1. Tipco Asphalt has a clear and transparent shareholder
struc ture. There is no cross-holding of major
shareholders, thereby, preventing any conflict of
interests or transfer of benefits to one party or another.
The shareholder structure of Tipco Asphalt and its
subsidiaries is published in the Company’s annual
report, also the Board member’s ordinary shares.
2. There is a clear separation of duties and responsibilities
of the Board, the management, and shareholders,
thereby, ensuring no overlapping of their duties and
responsibilities. The directors or executives who may
have interests in any agenda under consideration must
not attend the meeting nor vote on such an agenda.
This is to ensure that the Board and executives make
decisions in a fair manner for the utmost benefit of
shareholders.
3. The Company has an established policy governing the
use of internal information and has incorporated it into
employee regulations with penalties for the executives
or employees in the event the internal information is
disclosed to the public or used for personal benefit.
4. Tipco Asphalt Code of Conduct includes the additional
guidelines that prohibit employees from using the
Company’s assets or spending working hours to search,
contact or conduct share-trading activities on a regular
basis for personal gain or for others without justifiable
reasons and not for Tipco Asphalt’s interests.
The Company will treat all shareholders equally and
in a proper manner. By law, shareholders are provided
with adequate information at least seven days before
the meeting date with accurate, detailed information
on the various agenda items along with a proxy form.
The Company provides shareholders with proxy form
to appoint another individual or one of the Company’s
Independent Directors to attend and vote on their
behalf. Any opinions and questions relevant to the
agenda from minority shareholders can be made directly
to the Chairman of the Audit Committee via email to
ind_dir@tipcoasphalt.com.
THE ROLE OF STAKEHOLDERS IN
CORPORATE GOVERNANCE
Company Directors place great emphasis on appreciating
the contributions of all stakeholders: shareholders,
employees, customers, suppliers, creditors, business
partners and even competitors. All stakeholders are invited
to work with the Company toward shared goals and
mutual benefits, while making Tipco Asphalt a competitive
and successful business.
We therefore adhere to the principle of fulfilling corporate
social responsibilities as well as contractual obligations
that the Company is a party to, as they pertain to our
stakeholder relationships.
ANNUAL REPORT 2013
57
SHAREHOLDERS
CUSTOMERS
Shareholders have basic rights stipulated by law and by
Company regulations, such as the right to expect a fair
return, to request a determination of the number of shares,
to receive share certificates, and to attend, vote and freely
express their opinions at shareholders’ meetings.
To develop and maintain sustainable relationships, the
Company is determined that customers should enjoy the
maximum benefits in terms of service, quality, and price.
A new Customer Support Office opened in 2012 and
continue doing in 2013 to provide product information,
solve problems, and receive any complaints in a way that
can improve quality and ensure total satisfaction.
Tipco Asphalt also believes that shareholders, as owners
of the Company, have the right to make suggestions
and comments on the affairs of the Company. It is a
responsibility of the Independent Directors to receive
such an input. Each comment and suggestion is carefully
considered and presented to the Board of Directors.
EMPLOYEES
The Company truly believes that employees are Tipco
Asphalt’s most valuable asset and is determined to ensure
that every employee is proud of and confident in the
organization. During 2012, Company activities promoted
a collaborative working environment to drive innovation
and enhance competence by preparing employees to work
globally and cope with volatile economic situations.
At the same time, the Company focuses on promoting a
beneficial workplace with attention to employees’ health,
safety, working conditions and competitive remuneration.
To encourage long-term savings by employees, the
Company joined the Provident Fund Scheme of CIMB Principal Assets management Co., Ltd.
BUSINESS PARTNERS
Operating within a competitive business context requires
building and maintaining trust. Tipco Asphalt strictly
adheres to its Company Code of Conduct, honors its
promises and upholds its commitments to trading partners
in all ways, including quality products and on time delivery
COMPETITORS
The Company also operates within a competitive business
context by being fair and strictly following both laws and
its own Code of Conduct in its dealings in the industry and
market. The Company has never been in any disputes with
its competitors.
CREDITORS
The Company practices business under the terms of its
loans and obligations to creditors and depositors.
The Company, moreover, initiates various measures to
maintain good relations with creditors.
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ANNUAL REPORT 2013
DISCLOSURE AND TRANSPARENCY
Disclosure of the Company ’s general and financial
i n fo r m at i o n i s d o n e a cc u rate l y, co m p l e te l y a n d
transparently in a timely manner. Disclosed information
in the Annual Report and SEC Form 56-1 is reviewed by
the Company’s Directors, executives and members of the
Audit Committee, annotated by the Board of Directors
and the external auditor, and posted on the Company’s
website (www.tipcoasphalt.com). Reports are also made on
major shareholders, shareholding interests of Directors and
Executives, remuneration of Directors and details of board
meetings. The Company prohibits any Directors, executives
or employees from using internal information for personal
gain or benefit.
Realizing the importance of transparent information
disclosure, the Company has set and supervises clear
policies, approved by the Board of Directors, concerning
communication with external parties. For disclosures
on important information, the Company uses various
communication channels and disseminates regularly
through the public media. Other means by which
shareholders and stakeholders are apprised or given access
to Company information include:
• Disclosures filed with the Stock Exchange of Thailand
(SET ) such as financial statements, resignations of
Directors, etc.
• Information is posted on the Company’s website
at www.tipcoasphalt.com, in the Investor Relations
section.
• I nformation is disseminated elec tronically to
employees via e-mail and the Company’s intranet.
• Company visits from shareholders, investors, analysts,
and fund managers are welcomed.
• Information requests, comments and inquiries related
to investor relation should be made by contacting
Mr. Chaiwat Srivalwat (Managing Director) at
tel. +66 2273 6646, fax. +66 2271 3417, or by email at
investors@tipcoasphalt.com
We have been selected from 1 of 20 listed companies by
Stock Exchange of Thailand (“SET”) to participate in the
project aiming to develop Good Corporate Governance for
listed companies in 2013. The project has been arranged
by SET through TRIS Corporation Limited (“TRIS”) in order
to improve good corporate governance of the listed
companies and provide the recommendations in the
following areas:
1. Good Corporate Governance and Board Practices;
2. Risk Management;
3. Internal Control.
We received constructive recommendation by both SET
and TRIS and we are pleased to report that our Company
is recognized as one of the very few well-established listed
companies with the best internal control system.
Good Corporate Governance is essential to establish
relationships between a company’s board of directors,
its management, and shareholders in order to have a
common vision and goal.
ANNUAL REPORT 2013
59
HUMAN RESOURCES
EMPLOYEE DEVELOPMENT POLICY
The Tipco Asphalt Group’s Core Values continue to serve as the foundation for employee
development to support our 2015 Vision. Our core value of “Prudence” served as the focus
area for 2013. This facilitates the building of trust with our stakeholders through openness and
transparency of our business conduct; and builds upon our other Core Values of “Teamwork”
and “Integrity” which were the focus areas in prior years (since 2011).
Indeed, our Core Values forms an integral part of all
employee development activities. Examples include:
•
60
Reinforcement training of our Core Values using
e x p e r i e n t i a l - b a s e d a p p ro a c h - We A re T I P CO
(“Teamwork”, “Integrity”, “Prudence”, “Commitment”
and “Open-mind”). In a two-day experience at the Baan
Jamroong Village, Rayong, groups of staff from Plants
and the Head Office learned and reflected upon the
TIPCO Core Values. This was done through observation
of, and interaction with the village’s self-sufficient
community business practices and concepts. At the
end of 2013, 254 of our staff had joined this training,
which will continue in 2014.
ANNUAL REPORT 2013
•
Workshops and training courses were delivered
to promote “Prudence” in the way of work for
inter-departmental / corporate-wide understanding,
such as Business Concept for Supervisors as well as
Product Knowledge and Plant Visit. At the same time,
specific workshops are held to integrate behaviors
embodied by “Prudence” into technical skills such
as Advanced Defensive Driving for sales functions,
Effec tive Business Presentation, and Essential
Negotiation for various functions.
•
Coaching for executive staffs, groups of management
successors, and high potential employees were
conducted to promote leadership competency.
Furthermore, we conducted workshops such as the “CSR
Day” coaching as well as the “Carbon Footprint of the
Organization” to further reinforce our corporate social
responsibility concepts and tools for all employees.
As a fur ther example of our commitment towards
employee development, the Tipco Asphalt Group has
engaged an external consultant for a two-year (2013
and 2014) employee development project. This project,
entitled the “Immersion of Leadership, Management and
Human Capital Development for the Future”, addresses
key processes such as hiring, development, and succession
planning in order to encourage leadership development
at all levels of the organization from staff to management
level. A wide range of methods is applied for this objective,
such as off-site external training and workshops, on-site
work, as well as special assignments.
Additionally, the Tipco Asphalt Group also continues to
promote language skills and operational excellence as part
of our employee development. The language competency
development scheme was extended in 2013 to cover other
relevant languages in addition to English. Such initiative
will better equip our employees’ competency to meet the
increasing internationalization of our business; especially
in light of the regional economic integration goals of the
ASEAN Economic Community, or “AEC”.
In the area of operational excellence:
•
We have continued our Quality Control Circle (“QCC”)
program for operational excellence;
•
We have also rolled-out the 5S method as the basis
of our efficiency improvement program in all five
manufacturing plants in Thailand as well as our Head
Office; and finally
•
We have continued the Driver Excellence program
by reinforcing development of safety and service
standards for our 200 truck drivers nation-wide. This
program also provides an incentive package for drivers
who can uphold our safety and service targets.
Collectively, the programs above have had a significant
positive impact to the efficiency and effectiveness of the
operations of the Tipco Asphalt Group.
2014DIRECTION IN HUMAN
RESOURCES DEVELOPMENT
In 2014, the focus of our employee development policies
will continue to support the business growth. This will
provide positive career advancement opportunities for
our employees. We will also promote a positive work
environment and improved work processes in preparation
for further evolutions of the Tipco Asphalt Group.
Fundamentally, a three-pronged approach shall be taken
towards the goal of developing our human resources:
1. We will revolutionize our candidate screening and
hiring strategy with the use of the “Right Hire; Right
Match” program. The objective is to screen high caliber
candidates with superb attitudes who fit well with our
corporate culture and business growth objectives.
2. The development of high potential employees in the
“High Potential Development” and “Next Generation”
programs will continue; with the focus of grooming
potential successors for middle and top management
positions. This includes “Talent Calibration” sessions
involved by executives, and various development tools
such as workshops, seminars and e-coaching.
3. The continuing development of leadership and general
management skills of supervisors and managers.
ANNUAL REPORT 2013
61
SOCIAL RESPONSIBILITY POLICY
The Tipco Asphalt Group continuously strives to promote good corporate governance practices
to be the key contributor to the success of all stakeholders while maintaining high standards
of social responsibility at all times. The Group has adopted a social responsibility policy that
aligns to leading international standards to serve as the operating guidelines for the Board of
Directors, the directors and employees in the matters of economy, society and environment:
1. The Group shall manage business under good
corporate governance practices and the code of
business conduct.
2. The Group shall respect and support the human rights
of employees and all stakeholders in the value-chain
of the Group’s business, and refuse to support any
activities that violate such human rights.
3. The Group shall continuously improve the human
resources operations, particularly in matters concerning
health, security, safety, and the environment.
4. The Group shall strategically and continually improve
the capability of environmental operations in order to
minimize the environmental impact of our operations
in a sustainable manner.
5. The Group shall treat all stakeholders fairly by
observing a good code of business conduct.
6. The Group shall treat both current and prospective
customers fairly.
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ANNUAL REPORT 2013
7. Everyone in the Group is encouraged to participate
in community development initiatives and contribute
their talents to facilitate the sustainable environmental
practices advocated by the Group.
8. The Group shall strategically integrate the social
responsibility guidelines into the decision-making
process of the business in order to better define the
value-chain of the Group’s business.
9. The Group shall regularly review and manage its
business impact in line with the expectations of all
stakeholders; and also in accordance with the changes
of environmental conditions.
10.The Group shall communicate its social responsibility
guidelines to employees and all stakeholders clearly
and in a timely manner in order to raise the awareness
and voluntary spirit of social responsibility among
them to better support the value-chain of the Group’s
business.
In late 2012, our Group was the first
asphalt company in Thailand to be
assessed against the international
standard of
ISO 26000:2010
Our Group has participated in the Corporate Social
Responsibility promotion program which has been
run by the Department of Industrial Works (“CSR-DIW”)
continuously since 2008. In late 2012, our Group was the
first asphalt company in Thailand to be assessed against
the international standard of ISO 26000 (Guidance on
Social Responsibility) or TIS 26000-2553 by Management
System Certification Institute (Thailand). This reflects our
commitment towards integrating social responsibility into
our standard work processes and the local communities
for the purpose of achieving a strategic sustainable
development. In 2011, our Phitsanulok Plant had been
selected as one of the outstanding workplaces in Thailand
with regards to health, safety and environmental matters.
We are pleased to mention that we have received this
award for 13 consecutive years.
In 2012, our Group has launched a new asphalt product,
namely, CSS-1P asphalt emulsion (Penetrated Prime Coat),
which is beneficial for the society and the environment as
it helps reducing global warming. It can replace Cutback
asphalt which has substantial toxic mixture of oil or fossil
fuel that causes pollution and harmful to the environment.
In year 2013, we received Merit Award for “Economics
Contribution” from National Innovation Agency, for the
product called Para Asphalt Emulsion or CSS-1h (EMA).
The award was won based on the fact that it benefits the
economy, society and environmental.
ANTI CORRUPTION
In 2013, the Board of Directors of the Company had
adopted the anti-corruption policy in order to prevent
corruption in every activity of the value supply chain and
to have vigilant operations. For instance, the Board of
Directors, executives and staff of the Group are prohibited
from participating in or agreeing to or encouraging
corruption of all forms, either directly or indirectly.
Meanwhile, good internal control system is applied in our
working process to promote anti-corruption measures
in addition to participating in the Listed Companies
Development Project of the Stock Exchange of Thailand
regarding corporate governance of 2013, which was
organized by Trist Corporation Co., Ltd. The purpose is to
apply the survey results and recommendations regarding
internal control according to international standards of
COSO (the Committee of Sponsoring Organization of the
Treadway Commission) in the Group’s development and
improvement of internal control on a continual basis.
RESPONSIBILITY TO THE
STAKEHOLDERS
The Group has established action guidelines for our staff
to interact and respond to each group of stakeholders by
prioritizing for discussion, communicating and assessing
the benefits and desired impact to the local communities.
For example, our plants have been using CSR-DIW’s
processes to review our status, set up dialogues with
communities, plan CSR projects, and follow-up and review
the CSR plans with local communities in surrounding
areas. We also conduct regular surveys of our supplier and
customer satisfaction as a way to improve our response to
the various Stakeholders’ expectations.
ANNUAL REPORT 2013
63
ENVIRONMENT PRESERVATION AND
NATURAL RESOURCE MANAGEMENT
We re co gn i ze t h e i m p o r t a n ce o f p re s e r v i n g t h e
environment, managing natural resources, preventing
pollution, as well as issues pertaining to climate change.
On our part, we have worked relentlessly to improve
the environment, quality of life of our key stakeholders
(including employees, subcontractors and communities
around our plants) in compliance with ISO 26000, such as
to reduce the use of fossil fuel for heating in the production
of asphalt products. In addition, our Group also organizes
trainings and workshops to raise awareness in maintaining
sustainable clean and healthy environment.
We have also embarked on projects to increase the energy
efficiency of our operations. This includes:
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ANNUAL REPORT 2013
•
Reducing solvent content in our products without
impacting the end-product quality;
•
Reducing fuel usage by employing the use of larger
road asphalt tanker and trucks to reduce delivery
trips. The asphalt tankers are also installed with highefficiency insulation to minimize heat loss during
delivery ;
•
Reducing fuel consumption by using GPS technology in
our trucks to optimize transport routes and time;
•
Reducing CO2 emissions by replacing fuel oil with LPG
in heating asphalt products;
•
Reducing energy consumption through better
preventive maintenance of production equipment ;
•
Increasing the use of clean energy by using LPG in
place of fire woods to provide heat for products in road
asphalt tankers.
Though our production process is still unable to achieve
zero discharge pollutant, we are committed towards
further improvement in this area with the waste reduction
hierarchy, as reflected in the following examples:
•
Recycling of treated waste water in producing asphalt
emulsion;
•
Recycling of lubricants and engine oil from asphalt
trucks for use as additives in the asphalt production
process;
•
Regular monitoring of the air quality released from our
plants’ chimneys; and last but not least
•
Reducing nitrogen oxide (NOx) emissions through
the procurement of engines that meet “ Tier II”
specifications for new build ocean going asphalt
tanker.
FUTURE PLANS AND EFFORTS TO
REDUCE GLOBAL WARMING
Our Group has set out the goal for all plants to participate
in a project that promote social responsibility under
the Department of Industrial Works (“CSR-DIW”) and set
targets to reduce the emission of CO2 in our production
process with respect to global warming as well as
upgrading the standard of occupational health and safety
of TISI 18001-2554 to the international standard of OHSAS
18001-2007. We aim to integrate these practices into
working process for further sustainable development in
line with social responsibility guideline of TISI 26000-2553
(ISO 26000:2010).
ANNUAL REPORT 2013
65
CERTIFIED MANAGEMENT SYSTEM
MANAGEMENT SYSTEM
ISO STANDARD
THAILAND STANDARD
CERTIFIED PLANT
Quality
ISO 9001:2008
TIS 9001 - 2552
All plants in Thailand
Environmental
ISO 14001:2004
TIS 14001 - 2548
Health and Safety
TIS 18001 - 2554
Energy
PROMOTION OF ENERGY
CONSERVATION ACT, B.E.
2535 (1992)
TIS 17025 - 2548
Nakhonratchasima Plant Only
CSR-DIW2555
Laboratory
ISO/IEC 17025:2005
Corporate Social Responsibility,
the Department of Industrial
Works
CONSISTENT COMMUNITY
INVOLVEMENT AND DEVELOPMENT
In 2013, our employees both at the Head Office and all
the production plants participated in various strategic
CSR activities involving activities in education, sports,
environment protection, cultural and community services
as well as economic development. Some of these CSR
projects are as follows:
•
•
•
•
Suppor ting sustainable reforestation with the
communities by planting trees in integrated manner of
economic plants and perennial trees as well as making
commitment to continually care for such trees for 5
years until they are perennial in Banna Community in
Surat Thani Province and Wat Bangkrasob Community
in Samut Prakan Province;
•
Contributing to the community in cleaning the beach
at Monica Bay, Malaysia and the river shore at Lu Hu
Ping scenic, China;
Conducting joint research projection conducting
academic research in the development of asphalt
products with the faculty of engineering of Naresuan
University in order to obtain academic excellence,
technology, and innovation which will bring benefits to
the future engineers, universities as well as the country;
•
Joining with school teachers in building Surau at
Sekolah Kebangsaan Bukit Mentok, Malaysia;
•
Participating with community on Sports day at Sekolah
Kebangsaan Teluk Kalong, Malasia and Pitsanulok Plant.
Having recognized the value of education and
maintaining of Thai arts and cultures, our Group has
provided support to Ban Rien Lakorn Moradokmai, the
New Heritage Drama Art School by providing public
relations and organizing plays to generate income.
Besides that, our Group has collaborated with other
parties to construct a dormitory for the school;
HOURS OF COMMUNITY SERVICES
Engaging schools, institutions and local communities,
including inviting them to visit our Plants. We also invite
local teachers, students and the local communities to
participate in our “Safety Week” on a regular basis;
• R e d u c i n g a cc i d e n t s a t wo r k fo r a gr i c u l t u r a l
communities and promoting occupational health
through constructing and controlling the quality
of water for consumption at Baan Nayai School and
Jomthong Buddhist Monastery of Surat Thani Province,
66
construction of barriers are also constructed to
prevent danger from the rotary tillers (Klub) at Baan
Pongmorhao in Pitsanulok Province;
ANNUAL REPORT 2013
Finally, in order to embed volunteering spirit into our
corporate culture, our Group has (since 2011) set a
target for individual staff to achieve at least 16 hours
of community service annually. This target provides an
opportunity for our staff to participate in community
activities and also to foster an improved awareness of CSR.
In 2013, our staffs have recorded a remarkable 17,238 man
hours for community activities, which have far surpassed
our target of 9,742 man hours.
INTERNAL CONTROLS AND INTERNAL AUDIT
INTERNAL CONTROLS AND
RISK MANAGEMENT
INTERNAL CONTROLS
INTERNAL AUDIT
The Company places great importance on internal control
and audit both at the managerial and the operational
levels; supported by good corporate governance and
systematic risk management.
The Company’s Internal Audit Department is committed
to the International Standards for the Professional Practice
of Internal Auditing (‘Standards’) as issued by the Institute
of Internal Auditors. This has been embraced in the
Company’s new Internal Audit Charter (as approved in
2012).
The Company defines and develops an efficient and
effective internal controls system in terms of setting
an appropriate control environment, performing risk
assessments, implementing control practices, making use
of appropriate information technology, communication
systems, and continuous monitoring and assessments. This
control system generally conforms with the internal control
model as advocated by the Committee of Sponsoring
Organisations of the Treadway Commission (or, “COSO”).
The organizational structure is designed to suit a business
plan, with clear responsibility outlines, with the availability
of Procedure Manuals and Approval Authority limits
for each level of operations to enable proper control.
Moreover, the company encourages all employees to
constantly follow the internal controls. These are to be
regularly updated to keep up with the changing business
environment.
The Company’s Internal Audit Department examines
internal controls, operations, security of assets and
adherence to policies and procedures including those of
subsidiaries. The Internal Audit Department establishes
plans consistent with the profile of previous audit
observations as well as the risk profile of the Company.
Internal Audit results are regularly reported (not less than
once a quarter) to the Audit Committee.
ANNUAL REPORT 2013
67
REPORT OF THE AUDIT COMMITTEE
REPORT OF THE AUDIT COMMITTEE
The Audit Committee consists of four independent
directors who are knowledgeable and experienced in
law, business administration, accounting, management
and engineering. The Committee is chaired by Mr. Niphon
Suthimai, with Mr. Parnchalerm Sutatam, Mr. Nopporn
Thepsithar and Mr. Phirasilp Subhapholsiri making up the
remaining three members. Mr. Phirasilp Subhapholsiri
was appointed into the Audit Committee during 2013,
following the resignation of Mr. Chainoi Puankosoomfrom
the Committee).
This year, the Committee had performed its duties as
assigned by the Board of Directors, while adhering to the
Company’s Audit Committee Charter which is aligned
to the regulations of the Stock Exchange of Thailand
(SET ). Given the Company’s strong growth (especially
in international markets), the Committee focused on
conformance to good corporate governance as well as
good internal controls by:
• Focusing on preventive controls as well as the
promotion of leading business practices in audit
reviews to foster improved work performance (and
especially in minimizing errors);
• Promoting a risk-based approach for internal audit
activity at the Company.
During 2013, the Committee held nine meetings, for which
attendance by executives, the external auditor and the
Internal Audit Department can be summarized as follows:
REVIEW OF FINANCIAL REPORTS
Th e Co m m i t te e re v i e we d q u a r te r l y, a n n u a l a n d
consolidated financial statements with Management
and the external auditors. Among other activities, the
Committee held discussions with the external auditor to
ascertain the completeness of accuracy of the presentation
of the Company’s financial statements, key accounting
adjustments, adequacy of accounting methods, scope of
the audit, accuracy and adequacy of disclosures, as well
as the external auditor’s independence. The outcome
of these discussions contributed to the Committee’s
satisfaction that the Company’s financial statements had
complied with all relevant accounting standards and
regulations. Consequently, the Committee was satisfied
that the accounting procedures and financial statements
were both accurate and reliable, and that adequate and
timely information had been disclosed in the financial
statements for the benefit of investors and other users of
the statements.
RISK MANAGEMENT
The current enterprise risk management (“ERM”) process as
employed in the Company was implemented in 2013. This
process includes a formal ERM framework which consists of
an ERM policy as well as related procedures. The Corporatelevel risks as identified and assessed during this process are
a key input into the development of the Annual Internal
Audit Plan for 2014 as reviewed and approved by the Audit
Committee.
Attendance By
Executives
External Auditor
Internal Audit
Department
Monthly Meetings
2
-
5
Quarterly Meetings
3
3
3
Quarterly Meetings (without the presence of Management)
-
1
1
70
ANNUAL REPORT 2013
REVIEW OF INTERNAL CONTROL
EFFECTIVENESS
The Audit Committee has reviewed the adequacy,
appropriateness and effectiveness of the internal control
system from the 2013 audit results of the Internal Audit
Department on the Company and its subsidiaries. The
Audit Committee is satisfied that the internal control
system of the Company and its subsidiaries is adequate
and effective for its business. The Audit Committee also
evaluated the adequacy of the internal control system in
accordance to The Securities and Exchange Commission
and noted that an adequate, appropriate and effective
system of internal control has been implemented.
REVIEW OF GOOD CORPORATE
GOVERNANCE
The Committee has been satisfied that the Company has
complied to the relevant laws, regulations (including
regulations of the SET ) and agreements with external
parties (as necessary). The Committee was also satisfied
that the significant related party business transactions
have been disclosed in the financial statements and the
notes thereon in accordance to the requirements of the
SET and the Securities Exchange Commission. The Audit
Committee agreed with the external auditor that such
transactions conformed to the agreed criteria of normal
business conduct.
OVERSIGHT OF INTERNAL AUDIT
The Audit Committee reviewed the reports of the Internal
Audit Department as well as the completion of planned
projects against the annual internal audit plan. The
Committee was satisfied that the internal audit projects
were generally completed as planned; and where this
was not the case, such projects were duly included into
the audit plan for the subsequent year. The Committee
also focused on the timely and satisfactory completion of
action plans as committed to by management to address
the underlying risks.
APPOINTMENT OF THE EXTERNAL
AUDITOR FOR 2014
The Audit Committee has considered the appointment
of Ernst & Young as the Company’s external auditor for
another year and also reviewed their proposed fees for
2014. Consequently, the Audit Committee proposed these
to the Board for approval by the shareholders at the Annual
General Meeting of 2014.
In conclusion, the Audit Committee has comprehensively
performed in accordance to the Audit Committee Charter
approved by the Board of Directors. The Audit Committee
also commented that the Company and its subsidiaries
have properly presented their financial statements,
performed in good business conduct, implemented
an appropriate and effective internal control system
and internal auditing process. The Company and its
subsidiaries have complied with relevant laws, regulations
and agreements while properly disclosing related
party transactions under good governance practices of
transparency and trustworthiness. The Company and its
subsidiaries have also continually improved the internal
system in terms of quality and suitability to its business
environment.
(Niphon Suthimai)
Chairman of the Audit Committee
ANNUAL REPORT 2013
71
AUDIT COMMITTEE’S OPINION OF THE SENIOR MANAGER - INTERNAL AUDIT DEPARTMENT
AUDIT COMMITTEE’S OPINION OF THE SENIOR
MANAGER - INTERNAL AUDIT DEPARTMENT
Senior Management of Tipco Asphalt Group, with the
concurrence of the Audit Committee, appointed Mr. Joseph
Soosay as a Senior Manager - Internal Audit Department
with effect from 16th July 2012.
We hereby express our opinion that the Senior Manager Internal Audit Department of the Company is adequately
experienced to manage the Internal Audit Department. As
FULL NAME
a Certified Internal Auditor, the Senior Manager - Internal
Audit Department is suitably qualified to fulfil his duties
in accordance to the Standards of the Institute of Internal
Auditors. The professional credentials of the Senior
Manager - Internal Audit Department is as included in the
table below;
EDUCATION / PROFESSIONAL
CERTIFICATIONS
Joseph Mugilen Soosay Manickam Certified Internal Auditor (CIA)
Senior Manager - Internal Audit
Department
Chartered Management
Accountant (ACMA)
EXPERIENCE IN 5 YEARS AGO
PERIOD
POSITION - COMPANY
2012 - Present
Senior Manager - Internal Audit
Department; Tipco Asphalt Public
Co., Ltd.
2008 - 2012
Associate Director - Advisory
Services, PricewaterhouseCoopers
FAS Ltd.
The appointment, removal and transfer of The Senior Manager - Internal Audit Department is subject to approval from
Senior Management and the Audit Committee.
Niphon Suthimai
Audit Committee Chairman
72
ANNUAL REPORT 2013
Technical Assistance
Fee Expenses Paid to
Rental and Service
Expenses Paid to
Sales and Services
Provided to
Sales - AC
Freight charge
Colas S.A. (Colas S.A. Sami Bitumen Technology and
Highway Resources)
Colas S.A. (Colas S.A. Sami Bitumen Technology and
Highway Resources)
Office Lease
Food & Beverage
Shipping Costs
Thanomwongse Service Co., Ltd.
Tipco F&B Co., Ltd.
Colas S.A. (Colas S.A. Sami Bitumen Technology
and Highway Resources)
Colas S.A.
Service - Transportation & Customs Clearance
Siam Container Terminal Co., Ltd.
Grand Total Expenses
Technical Assistance Fee Expenses
subtotal
Service - Transportation & Customs Clearance
Ekachai Container Terminal Co., Ltd.
Grand Total Revenue
Sales - Oil
Other Services - Internet Equipment
Sales - AC, Oil and Services
Thai Slurry Seal Co., Ltd.
Tipco Foods PLC
Other Services - Internet Equipment
Tipco Foods PLC
Sales - AC and Oil
RELATED COMPANIES, DETAILS AND AMOUNT
RELATED TRANSACTIONS
42
83
51
96
41
4,845
4,845
2012
41
Market price/
Contract price
Market price/
Contract price
PRICING POLICY
45
6
2
32
3
2
3,707
6
3,442
1
2
140
2
114
2013
Unit: THB Million
RELATED TRANSACTIONS
ANNUAL REPORT 2013
73
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATIONAL ANALYSIS
The Company and its subsidiaries, “the Group” reported a
2013 consolidated net profit of Baht 831 million compared
to a net profit of Baht 642 million in 2012. It was the second
best operational performance records in Tipco’s history.
Sales and services stood at Baht 33.9 billion reflecting a
decrease of 9.9% from the same period last year. Despite
the higher sales in the 4th Quarter, the annual export sales
revenue was lower than 2012 mainly attributable to the
weaker demand in export markets during the first half
year and also lower asphalt price. Domestic sales reported
lower sales revenue due to the extraordinary sales in 2012
attributable to the lagging demand effect from the major
Thailand flooding in 2011. Overall, the Company still
maintains its market shares both in export and domestic
market.
The Group’s consolidated gross profit margin in 2013 was
4.90% compared to 5.07% in 2012, before the allowance
for diminution in value of inventories and hedging gain/
loss. The reduction of its Gross Profit margin was due
to the sales products mix and the sudden increase of
crude cost in the 3rd Quarter of 2013, attributable to the
potential US strike against Syria. We would like to mention
that this GP margin cannot be viewed in isolation but
to include with the FX, hedging and net realisable value
(“NRV”) provision as all these three items of reporting
are concerning with the same crude sales and stock
inventory. The International Financial Reporting Standards
(IFRS) requires these risk management activities of crude
inventory to be reported in separate lines.
The hedging strategy has contributed a significant
turnaround with a positive impact of Baht 85 million gain
to this year result as compared to a cost of Baht 806 million
in the corresponding year 2012. The Company is confident
that its current hedging strategy provide adequate
protections to the crude procurement process under the
highly volatile commodity market conditions. In additions,
the company has marked to market (MTM) and provided
a NRV provision of Baht 8 million on its crude inventory.
74
ANNUAL REPORT 2013
For the year 2013, the Group recorded only FX gain of
Baht 35 million attributable to the weakening of Baht in
the 4 th Quarter and reversing almost all the FX gain in
the first half year. Most of this MTM FX gain/loss is merely
an accounting profit/loss in Thai Baht due to timing
difference in the “stock to cash conversion” cycle of the
working capital. From cash flow prospective, the Group
enjoys natural hedge of "buying and selling in the same
currency".
In 2013, selling and administrative expenses stood at
Baht 126.9 million and Baht 658.4 million, representing
0.37% and 1.94% of sales, respectively. Comparatively,
these expenses in 2012 stood at Baht 108.8 million and
Baht 594.1 or 0.29% and 1.58% of sales. These expenses
increased in the normal course of business and were
tightly controlled.
Financial expense in 2013 was Baht 195 million, a decrease
from Baht 282 million in 2012 due to a reduction in interest
rate and a repayment/decrease in long-term loans.
The Net Profit attributable to Equity holders of the
Company (excluding minority interest) for the year 2013
was Baht 831 million compared to Baht 642 million in 2012,
representing a ROE of 17.2% and 15.5% in 2013 and 2012
respectively.
The earning per share for the full year is Baht 5.45 and Baht
4.21 in 2013 and 2012 respectively.
FINANCIAL ANALYSIS
Financial status of the Group at the end of 2013 can be
summarized as follows;
The management of the Company fully recognizes
the high investment CAPEX and working capital in the
Group’s new refinery business. Effective working capital
management has been one of the key challenges in 2013.
With the higher volume of heavy crude intake in 2013,
efforts were made to shorten “asset to cash conversion”
cycle to reduce trade debt associated with each crude
cargo purchased. As a result, cash flow in 2013 was strong
and the Company continues to manage cash and trade
collection closely in order to minimize external borrowings
and interest expenses. The Group continues to receive full
support from commercial banks in both inventory and
other working capital financing. In order to reduce interest
cost and FX exposure, the Group has switched to USD loan
funding that matching its USD assets and hence, resulting
a lower WACC for the Group.
Despite the increase of crude financing for the higher
crude inventory level at year end, the Group’s consolidated
debt to equity ratio (D/E ratio) has decreased from 2.70 to
2.44. The real D/E ratio (Total Liability/Equity) excluding
crude inventory financing has improved from 1.07 to 0.84
due to the strong EBITDA generated during the year.
KEY FINANCIAL RATIO
Key financial ratio of the Group at the end of 2013 can be
summarized as follows;
•
Net profit margin improved from 2012 at 1.67% to
2.44% in 2013;
•
Return on equity improved from 2012 at 15.52% to
17.20% in 2013;
•
Return on assets improved from 2012 at 3.76% to
4.27% in 2013;
•
Consolidated debt-equity ratio improved from 2.70 to
2.44 in 2013.
CASH FLOW
FINANCIAL POSITION
Cash flow of the Group during year 2013 can be summarized
as follows :
A change in financial position of the Group at the end of
2013 compared to 2012 can be summarized as follows :
•
Net cash used in operating activities of Baht 78 million
was mainly due the higher inventories level despite the
better effort in receivable collections;
•
Net cash used in investing activities of Baht 789
million was mainly due to the increase in acquisition of
equipment in our refinery;
•
Net cash from financing activities of Baht 622 million
was mainly due to the increase of short-term loans
from financial institutions.
•
Decrease in trade and other receivables due to the
improvement in collection days;
•
Increase in inventories due to an increase in crude in
transit at end of the year;
•
Increase in property, plant, and equipment due to an
expansion of our refinery;
•
Increase in short-term loans from financial institutions
due to an increase in crude financing for the higher
crude inventory level at the end of year;
•
Decrease in trade and other payables due to the timing
of crude payment;
•
Decrease in long-term loans from financial institutions
due to loan instalment repayment.
ANNUAL REPORT 2013
75
THE CONFIRMATION FOR THE COMPLETE CORRECTNESS OF THE PAYMENT TO AUDITOR
THE CONFIRMATION FOR
THE COMPLETE CORRECTNESS
OF THE PAYMENT TO AUDITOR
for the year ended 31th December 2013
AUDIT FEE
NO.
COMPANY
AUDIT FEE (BAHT)
1
Ernst & Young Office Limited (by Mr. Supachai
Phanyawattano)
1,970,000
2
Raycol Asphalt Company Limited
Phanyawattano)
520,000
3
Thai Bitumen Company Limited
Phanyawattano)
1,050,000
4
Bitumen Marine Company Limited
Phanyawattano)
310,000
5
Tipco Maritime Company Limited
Phanyawattano)
250,000
6
Alpha Maritime Company Limited
Phanyawattano)
230,000
7
Delta Shipping Company Limited
Phanyawattano)
250,000
8
Tasco Shipping Company Limited
Phanyawattano)
250,000
Total audit fee
76
NAME OF AUDITOR
ANNUAL REPORT 2013
4,830,000
NON-AUDIT FEE
NON-AUDIT FEE
NO.
COMPANY
NON-AUDIT SERVICE
NAME OF COMPANY SERVICE
PAID FOR
PERIOD
FOR PAYMENT IN
THE THE FUTURE
9
Bitumen Marine
Company
Limited
Agreed-upon proceduresErnst & Young Office Limited
Compliance with conditions (By Mr. Supachai
stipulated in the investment Phanyawattano)
promotion certificate
-
40,000
10
Alpha Marine
Company
Limited
Consultant for conversion
to International Financial
Reporting Standards
Ernst & Young Office Limited
(By Mr. Supachai
Phanyawattano)
-
40,000
11
Tasco Shipping
Company
Limited
Agreed-upon proceduresErnst & Young Office Limited
Compliance with conditions (By Mr. Supachai
stipulated in the investment Phanyawattano)
promotion certificate
-
80,000
12
Tipco Asphalt
Public Company
Limited
Tax consult
Ernst & Young Corporate
Service Limited
140,000
-
13
Tipco Asphalt
Public Company
Limited
Consultant for conversion
to International Financial
Reporting Standards
Ernst & Young Corporate
Service Limited
585,000
-
Total non-audit fee
725,000
160,000
ABOVE INFORMATION:
(x) Correct and complete. I hereby confirmed that there was no other service performed to the Company and Subsidiaries
which generated any fee income to the auditing company which I am a partner of and/or from other related individuals
and/or other related parties that I am aware of and is not disclosed in the above information.
( ) Incorrect and incomplete: in amending the above information (if any), I hereby confirm that all the information in this report herewith shows the
compensation for auditing work and other services that the Company and Subsidiaries paid to the undersigned, the
auditing firm which I am
(Mr. Supachai Phanyawattano)
Ernst & Young Auditing Office Limited
The auditor of TIPCO ASPHALT PUBLIC COMPANY LIMITED
ANNUAL REPORT 2013
77
REPORT OF THE BOARD OF DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL STATEMENTS
REPORT OF THE BOARD
OF DIRECTORS’ RESPONSIBILITIES
FOR FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the
consolidated and separate financial statements of Tipco
Asphalt Public Company Limited and other financial
information appears in the Annual Report pertaining to
the Company and its subsidiaries. The financial statements
are prepared in accordance with Thai Financial Reporting
Standards and free from material misstatement, whether
due to fraud or error, while the Accounting Policies
are selected for their appropriateness and consistently
i m p l e m e nte d. Th e f i n a n c i a l s t ate m e nt s a re a l s o
prepared with careful considerations and best possible
estimates while significant information is sufficiently and
transparently disclosed in the notes for the benefits of
shareholders and other investors.
78
(Ms. Laksana Supsakorn)
Chairman
ANNUAL REPORT 2013
The B oard of Direc tors had appointed the Audit
Committee, comprised of independent directors whose
qualifications are in accordance with requirements of the
Stock Exchange of Thailand, to review the accuracy and
sufficiency of the Company’s financial reports and the
disclosures of related transactions and the adequacy and
efficiency of internal control system. Opinion of the Audit
Committee is reported in the Audit Committee’s report
published in this Annual Report.
The Board of Directors is of opinion that the consolidated
and separate financial statements of the Company ended
31 st December 2013, of which audited by the external
auditor and jointly reviewed by the Audit Committee and,
Management had presented fairly, in all material respects,
the financial position and financial performance in
accordance with Thai Financial Reporting Standards.
(Mr. Chaiwat Srivalwat)
Managing Director
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Tipco Asphalt Public Company Limited
I have audited the accompanying consolidated financial statements of Tipco Asphalt Public Company Limited and its
subsidiaries, which comprise the consolidated statement of financial position as at 31st December 2013, and the related
consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then
ended, and a summary of significant accounting policies and other explanatory information, and have also audited the
separate financial statements of Tipco Asphalt Public Company Limited for the same period.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIBILITY
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in
accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
OPINION
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of Tipco Asphalt Public Company Limited and its subsidiaries and of Tipco Asphalt Public Company Limited as at 31st
December 2013, their financial performance and cash flows for the year then ended in accordance with Thai Financial
Reporting Standards.
OTHER MATTER
The financial statements of Tipco Asphalt Public Company Limited and its subsidiaries for the year ended 31st December
2012 were audited by another auditor of our office who, under her report dated 11th February 2013, expressed an
unqualified opinion on those financial statements and drew attention to the change in accounting policy.
Supachai Phanyawattano
Certified Public Accountant (Thailand) No. 3930
Bangkok: 12th February 2014
ANNUAL REPORT 2013
79
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of financial position
As at 31 December 2013
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2013
2012
2013
495,434,890
739,597,042
89,695,844
44,140,952
6, 7
3,966,572,674
5,347,921,360
3,663,366,890
5,442,063,490
Short-term loans to related parties
7
-
-
40,620,582
40,243,540
Inventories
8
9,349,415,454
7,048,482,865
8,651,623,150
6,443,284,016
Price hedging contracts
34
134,593,745
27,359,301
134,593,745
27,359,301
Forward exchange contracts
34
1,625,030
7,801,110
1,562,772
6,650,434
Other current assets
270,943,416
104,971,269
40,638,530
35,455,728
Total current assets
14,218,585,209
13,276,132,947
12,622,101,513
12,039,197,461
9
-
45,423,693
-
-
Investments in subsidiaries
10
-
-
3,829,060,794
3,827,571,247
Investment in associate
11
110,520,585
60,648,740
18,403,580
18,403,580
Investment properties
12
199,432,500
199,432,500
100,651,528
101,197,924
Property, plant and equipment
13
5,246,623,305
4,595,800,707
455,783,574
490,569,772
Goodwill
10
146,293,504
146,293,504
-
-
21,790,227
19,972,993
21,223,020
17,981,683
Note
2012
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Assets held for sales - Vessel
Non-current assets
Other intangible assets - Computer software
Leasehold rights
14
217,812,961
207,872,195
3,874,337
4,102,239
Deferred tax assets - net
26
102,407,897
106,845,698
45,871,803
44,776,746
10,052,516
11,331,624
4,931,288
5,380,932
6,054,933,495
5,348,197,961
4,479,799,924
4,509,984,123
20,273,518,704
18,669,754,601
17,101,901,437
16,549,181,584
Other non-current assets
Total non-current assets
Total assets
The accompanying notes are an integral part of the financial statements.
80
ANNUAL REPORT 2013
Statement of financial position (continued)
(Unit: Baht)
Note
2013
2012
2013
2012
Liabilities and shareholders' equity
Current liabilities
Short-term loans from financial institutions
Trade and other payables
15
9,416,459,737
8,236,833,408
9,164,536,336
8,158,509,798
7, 16
1,611,815,321
2,202,837,490
1,682,324,035
2,212,017,359
7,009,538
8,595,644
5,238,513
4,618,291
688,820,992
596,304,373
352,500,000
322,383,480
13,735,830
69,328,878
1,457,547
38,501,527
Current portion of liabilities under
finance lease agreements
Current portion of long-term loans
from financial institutions
17
Income tax payable
34
119,813,680
12,708,499
119,813,680
12,708,499
34
7,812,219
502,902
6,586,252
492,279
228,942,475
26,039,584
28,568,012
16,776,473
12,094,409,792
11,153,150,778
11,361,024,375
10,766,007,706
8,279,000
13,415,586
7,337,095
9,938,202
17
2,179,870,256
2,364,592,294
772,500,000
1,103,408,346
7
7,950,789
7,227,108
-
-
Interest rate swap contracts
17
22,250,378
19,445,155
21,111,486
19,445,155
Provision for long-term employee benefits
19
69,821,799
69,231,320
55,544,867
56,821,784
2,288,172,222
2,473,911,463
856,493,448
1,189,613,487
14,382,582,014
13,627,062,241
12,217,517,823
11,955,621,193
Other current liabilities
Total current liabilities
Non-current liabilities
Liabilities under finance lease agreements net of current portion
Long-term loans from financial institutions net of current portion
Long-term loan from related party
Total non-current liabilities
Total liabilities
ANNUAL REPORT 2013
81
Statement of financial position (continued)
(Unit: Baht)
Note
2013
2012
2013
2012
Shareholders' equity
Share capital
20
Registered
171,059,929 ordinary shares
(2012: 170,043,729 ordinary shares) of Baht 10 each
1,710,599,290
1,700,437,290
1,710,599,290
1,700,437,290
1,525,808,680
1,525,480,680
1,525,808,680
1,525,480,680
887,824,106
886,112,274
887,824,106
886,112,274
6,237,755
6,237,755
-
-
10
12,904,468
12,904,468
-
-
22
23,254,939
13,140,737
23,254,939
13,140,737
23
162,053,000
140,503,000
162,053,000
140,503,000
2,682,128,935
2,024,808,519
2,289,092,238
2,032,966,638
(58,505,345)
(184,521,435)
(3,649,349)
(4,642,938)
5,241,706,538
4,424,665,998
4,884,383,614
4,593,560,391
649,230,152
618,026,362
-
-
5,890,936,690
5,042,692,360
4,884,383,614
4,593,560,391
Issued and fully paid
152,580,868 ordinary shares
(2012: 152,548,068 ordinary shares) of Baht 10 each
Premium on share capital
Non-controlling interests of subsidiary acquired
by the Company at price lower than book value
Change in the Company's interest in subsidiary
which did not result in a loss of control
Capital reserve for share-based payment transactions
Retained earnings
Appropriated - statutory reserve
Unappropriated
Other components of shareholders' equity
Equity attributable to owners of the Company
Non-controlling interests of the subsidiaries
Total shareholders' equity
Total liabilities and shareholders' equity
20,273,518,704
82
ANNUAL REPORT 2013
18,669,754,601 17,101,901,437 16,549,181,584
Statement of comprehensive income
For the year ended 31 December 2013
(Unit: Baht)
Note
2013
2012
2013
2012
Revenues
Sales and service income
33,934,919,398
37,663,155,183
31,860,052,018
35,898,367,645
Other income
Dividend income from subsidiaries
10
-
-
16,100,000
204,947,351
Dividend income from associate
11
-
-
-
16,789,105
-
-
-
26,659,535
Gain on exchange
34
35,305,530
567,189,427
5,353,351
517,221,811
Compensation received from claims for damages
24
Income from liquidation of subsidiary
-
50,308,840
-
-
123,941,836
98,310,237
127,106,669
72,772,845
34,094,166,764
38,378,963,687
32,008,612,038
36,736,758,292
32,271,716,606
35,754,713,865
30,975,116,488
34,773,472,639
34
(84,606,270)
805,913,511
(84,606,270)
804,611,289
8
7,831,398
1,081,594
1,196,947
560,977
Others
Total revenues
Expenses
Cost of sales and services
(Gain) loss from price hedging contracts
Reduce cost of inventory to net realisable value
32,194,941,734
36,561,708,970
30,891,707,165
35,578,644,905
Selling expenses
126,902,787
108,782,788
65,392,144
60,759,321
Administrative expenses
658,427,546
594,138,146
419,021,660
386,061,700
(19,669,545)
31,475,421
(4,991,993)
(7,227,555)
Other expenses
Allowance for doubtful accounts (reversal)
9
-
4,800,298
-
-
Impairment loss of investment properties
Impairment loss of assets held for sales
12
-
4,767,500
-
-
Impairment loss of equipment
13
Total expenses
1,756,500
20,834,537
-
-
32,962,359,022
37,326,507,660
31,371,128,976
36,018,238,371
1,131,807,742
1,052,456,027
637,483,062
718,519,921
-
-
Profit before share of profit from investment in
associate, finance cost and income tax expenses
Share of profit from investment in associate
46,207,339
35,323,425
Profit before finance cost and income tax expenses
11
1,178,015,081
1,087,779,452
637,483,062
718,519,921
Finance cost
(194,704,205)
(282,340,477)
(131,703,116)
(225,094,917)
Profit before income tax expenses
Income tax expenses
26
Profit for the year
983,310,876
805,438,975
505,779,946
493,425,004
(121,703,983)
(129,589,957)
(75,525,378)
(39,518,542)
861,606,893
675,849,018
430,254,568
453,906,462
148,818,782
(60,204,158)
-
-
1,241,986
1,610,686
1,241,986
1,610,686
(248,397)
(544,569)
(248,397)
(544,569)
149,812,371
(59,138,041)
993,589
1,066,117
1,011,419,264
616,710,977
431,248,157
454,972,579
Other comprehensive income:
Exchange differences on translation of
financial statements in foreign currencies
Change in fair value of interest rate swap contract
Income tax effect
Other comprehensive income for the year
Total comprehensive income for the year
26
ANNUAL REPORT 2013
83
Statement of comprehensive income
(Unit: Baht)
Note
2013
2012
2013
2012
Profit attributable to:
Equity holders of the Company
831,449,384
642,273,946
430,254,568
453,906,462
30,157,509
33,575,072
861,606,893
675,849,018
957,465,474
593,042,917
53,953,790
23,668,060
431,248,157
454,972,579
1,011,419,264
616,710,977
5.45
4.21
2.82
2.98
5.44
4.21
2.81
2.98
Total comprehensive income attributable to:
Equity holders of the Company
Earnings per share
29
Basic earnings per share
Profit attributable to equity holders of the Company
Diluted earnings per share
Profit attributable to equity holders of the Company
84
ANNUAL REPORT 2013
of subsidiaries
of subsidiaries
1,525,808,680
-
-
887,824,106
-
-
-
-
-
1,711,832
886,112,274
886,112,274
-
-
-
-
-
886,112,274
lower than
6,237,755
-
-
-
-
-
-
6,237,755
6,237,755
-
-
-
-
-
6,237,755
book value
12,904,468
-
-
-
-
-
-
12,904,468
12,904,468
-
-
-
-
-
12,904,468
a loss of control
result in
which did not
23,254,939
-
-
-
-
10,114,202
-
13,140,737
13,140,737
-
-
-
-
8,496,085
4,644,652
transactions
payment
for share-base
Retained earnings
Appropriated -
162,053,000
21,550,000
-
-
-
-
-
140,503,000
140,503,000
25,000,000
-
-
-
-
115,503,000
statutory reserve
2,682,128,935
(21,550,000)
831,449,384
-
(152,578,968)
-
-
2,024,808,519
2,024,808,519
(25,000,000)
642,273,946
-
(190,684,210)
-
1,598,218,783
Unappropriated
(3,649,349)
-
993,589
-
-
-
-
(4,642,938)
(4,642,938)
-
1,066,117
-
-
-
(5,709,055)
swap contract
interest rate
Fair value of
subsidiary
at price
differences on
interest in
acquired by
the Company
(54,855,996)
-
125,022,501
-
-
-
-
(179,878,497)
(179,878,497)
-
(50,297,146)
-
-
-
(129,581,351)
foreign currencies
statements in
financial
translation of
Exchange
Other comprehensive income
the Company's
subsidiary
Other components of equity
Change in
Capital reserve
Equity attributable to owners of the Company
interests of
Non-controlling
Balance as at 31 December 2013
Appropriation of statutory reserve (Note 23)
-
-
Dividend paid (Note 32)
Dividend paid to non-controlling interests
-
328,000
1,525,480,680
1,525,480,680
-
-
Share-based payment transactions (Note 22)
Increase in share capital (Note 20)
Balance as at 1 January 2013
-
-
Dividend paid to non-controlling interests
-
1,525,480,680
Premium on
share capital
paid-up
share capital
Issued and
Statement of changes in shareholders’ equity
(58,505,345)
-
126,016,090
-
-
-
-
(184,521,435)
(184,521,435)
-
(49,231,029)
-
-
-
(135,290,406)
equity
shareholders'
components of
Total other
5,241,706,538
-
957,465,474
-
(152,578,968)
10,114,202
2,039,832
4,424,665,998
4,424,665,998
-
593,042,917
-
(190,684,210)
8,496,085
4,013,811,206
the Company
shareholders of
attributable to
Total equity
Equity
649,230,152
-
53,953,790
(22,750,000)
-
-
-
618,026,362
618,026,362
-
23,668,060
(6,220)
-
-
594,364,522
the subsidiaries
interests of
non-controlling
attributable to
5,890,936,690
-
1,011,419,264
(22,750,000)
(152,578,968)
10,114,202
2,039,832
5,042,692,360
5,042,692,360
-
616,710,977
(6,220)
(190,684,210)
8,496,085
4,608,175,728
equity
the shareholders'
Total
(Unit: Baht)
ANNUAL REPORT 2013
85
86
ANNUAL REPORT 2013
-
887,824,106
-
-
-
-
1,711,832
886,112,274
886,112,274
-
-
-
1,525,808,680
-
-
328,000
1,525,480,680
Increse in share capital (Note 20)
1,525,480,680
-
-
-
886,112,274
share capital
1,525,480,680
Premium on
share capital
Issued and paid-up
payment
23,254,939
-
-
-
10,114,202
-
13,140,737
13,140,737
-
-
8,496,085
4,644,652
transactions
162,053,000
21,550,000
-
-
-
-
140,503,000
140,503,000
25,000,000
-
-
115,503,000
statutory reserve
Appropriated -
Retained earnings
2,289,092,238
(21,550,000)
430,254,568
(152,578,968)
-
-
2,032,966,638
2,032,966,638
(25,000,000)
453,906,462
(190,684,210)
-
1,794,744,386
Unappropriated
(3,649,349)
-
993,589
-
-
-
(4,642,938)
(4,642,938)
-
1,066,117
-
-
(5,709,055)
contracts
interest rate swap
income
Fair value of
for share-base
comprehensive
(3,649,349)
-
993,589
-
-
-
(4,642,938)
(4,642,938)
-
1,066,117
-
-
(5,709,055)
equity
shareholders'
component of
Total other
Other component of equity
Other
Capital reserve
Statement of changes in shareholders’ equity
4,884,383,614
-
431,248,157
(152,578,968)
10,114,202
2,039,832
4,593,560,391
4,593,560,391
-
454,972,579
(190,684,210)
8,496,085
4,320,775,937
equity
shareholders'
Total
(Unit: Baht)
Cash flow statement
(Unit: Baht)
2013
2012
2013
2012
983,310,876
805,438,975
505,779,946
493,425,004
434,352,337
418,850,240
74,454,840
80,230,131
10,751
1,177,404
-
-
(19,669,545)
31,475,421
(4,991,993)
(7,227,555)
7,831,398
1,081,594
1,196,947
560,977
Dividend income from subsidiaries
-
-
(16,100,000)
(204,947,351)
Dividend income from associate
-
-
-
(16,789,105)
Cash flows from operating activities:
Profit before tax
Adjustments to reconcile profit before tax to
net cash provided by (paid from) operating activities:
Depreciation and amortisation
Write-off withholding tax
Allowance for doubtful accounts (reversal)
Reduce cost of inventory to net realisable value
Income from liquidation of subsidiary
Unrealised (gain) loss on exchange rate
-
-
-
(26,659,535)
249,370,473
(46,386,441)
188,480,393
(22,931,806)
Realised gain on exchange from amendment of
long-term loan agreement
(28,988,684)
-
-
-
Gain on sales of equipment
(8,318,007)
(2,761,185)
(7,773,877)
(3,054,992)
Impairment loss of assets held for sales
-
4,800,298
-
-
Impairment loss of investment properties
-
4,767,500
-
-
Impairment loss of equipment
Share of profit from investment in associate
Share-based payment transactions
Change in fair value of forward exchange contracts
Change in fair value of price hedging contracts
1,756,500
20,834,537
-
(46,207,339)
(35,323,425)
-
-
10,114,202
8,496,085
8,624,655
6,065,341
9,397,208
10,269,170
7,361,043
8,125,296
13,485,397
(17,216,444)
11,181,635
(11,044,004)
(129,263)
25,143,876
(129,263)
25,143,876
3,550,518
22,637,827
2,411,626
11,664,947
179,624,390
250,515,438
122,287,638
204,792,744
1,789,491,212
1,503,800,870
892,783,590
537,353,968
1,415,991,486
(1,737,761,316)
1,834,292,316
(3,815,246,272)
(2,308,969,227)
(1,293,721,153)
(2,214,733,747)
(1,651,200,783)
(210,018,640)
(73,572,920)
(17,507,250)
(23,104,662)
28,338
(93,104,560)
(8,423,075)
9,568,118
(631,176,805)
(1,280,789,497)
(555,965,601)
(621,566,429)
Change in fair value of interest rate swap contract
recognised in profit or loss
Interest expenses
Profit from operating activities before changes in
operating assets and liabilities
(Increase) decrease in operating assets
Inventories
Other current assets
Other non-current assets
Increase (decrease) in operating liabilities
Other current liabilities
Cash flows from (used in) operating activities
194,592,853
(78,364,177)
3,650,270
(35,730,661)
249,939,217
(3,053,512,753)
(65,903,497)
(5,599,926,721)
(210,800,565)
Cash paid for interest expenses
(165,736,319)
(260,374,184)
(105,604,706)
Cash paid for corporate income tax
(162,329,515)
(38,476,765)
(113,912,812)
(20,239,149)
Net cash used in operating activities
(78,126,617)
(3,352,363,702)
(285,421,015)
(5,830,966,435)
ANNUAL REPORT 2013
87
Cash flow statement (continued)
(Unit: Baht)
2013
2012
2013
2012
Cash flows from investing activities:
Decrease in restricted bank deposits
-
66,065,220
-
-
Cash receipt from business transfer to subsidiary
-
-
61,067,790
-
Cash paid for investment in subsidiary
-
-
-
(98,000,000)
Cash receipt from liquidation of subsidiary
-
-
-
968,450
Cash receipt from share capital reduction of subsidiary
-
-
-
800,000,000
Dividend received from subsidiaries
-
-
16,100,000
204,947,351
Dividend received from associate
-
16,789,105
-
16,789,105
Increase in short-term loans to related parties
-
-
-
(15,000,000)
(842,195,847)
(725,051,764)
(63,131,935)
(38,721,697)
Acquisition of computer software
(4,369,546)
(17,212,991)
(4,198,500)
(16,688,664)
Proceeds from sales of equipment and vessel
57,957,383
6,612,691
4,849,510
3,329,9 80
Net cash from (used in) investing activities
(788,608,010)
(652,797,739)
14,686,865
857,624,525
937,729,804
4,483,942,513
771,972,889
5,824,946,986
Acquisition of equipment
Cash flows from financing activities:
Increase in short-term loans from banks
Cash paid under finance lease agreements
Cash drawdown from long-term loans
Repayment of long-term loans
Cash receipt from increase share capital
(8,674,693)
(9,452,812)
(4,465,792)
(4,950,336)
488,288,300
700,128,119
-
-
(622,410,446)
(1,244,331,016)
(300,791,827)
(1,042,383,480)
2,039,832
-
2,039,832
-
(152,466,060)
(190,644,272)
(152,466,060)
(190,644,272)
Dividend paid to non-controlling interests of subsidiaries
(22,750,000)
(6,220)
-
-
Net cash from financing activities
621,756,737
3,739,636,312
316,289,042
4,586,968,898
815,738
3,303,437
-
-
(244,162,152)
(262,221,692)
45,554,892
(386,373,012)
Cash and cash equivalents at beginning of year
739,597,042
1,001,818,734
44,140,952
430,513,964
Cash and cash equivalents at end of year
495,434,890
739,597,042
89,695,844
44,140,952
3,231,432
6,811,771
2,628,700
5,927,191
17,953,938
15,079,974
-
-
-
-
-
125,690,385
Dividend paid to shareholders
Exchange differences on translation of
financial statements in foreign currencies
Net increase (decrease) in cash and cash equivalents
Supplemental cash flows information
Non-cash transactions
Acquistion of assets through finance lease
Accounts payable from purchase of equipment
Settlement of proceed from liquidation of subsidiary
with account payable
88
ANNUAL REPORT 2013
Notes
to consolidated financial statements
1. General information
Tipco Asphalt Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand.
The major shareholders of the Company are Supsakorn family and Colas Group, a company incorporated in French
Republic. The Company is principally engaged in the manufacture and distribution of asphalt and petroleum products
and its registered address is 118/1 Rama 6 Road, Samsen-nai Sub district, Phayathai District, Bangkok.
On 10 August 2012, the Meeting of the Company’s Board of Directors passed a resolution to transfer vessel operation
to its subsidiary. This business transfer was completed on 30 April 2013. The Company transferred assets amounting to
Baht 63.2 million and transferred liabilities amounting to Baht 2.1 million. The Company received cash payment for the
net assets value amounting to Baht 61.1 million, on 30 April 2013 and 17 May 2013.
2. Basis of preparation
2.1
The financial statements have been prepared in accordance with Thai Financial Reporting Standards
enunciated under the Accounting Profession Act B.E. 2547 and their presentation has been made in
compliance with the stipulations of the Notification of the Department of Business Development dated 28
September 2011, issued under the Accounting Act B.E. 2543.
The financial statements in Thai language are the official statutory financial statements of the Company.
The financial statements in English language have been translated from the Thai language financial statements.
The financial statements have been prepared on a historical cost basis except where otherwise disclosed in
the accounting policies.
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90
2.2
ANNUAL REPORT 2013
Company’s name
1,500
Holding company and manufacture and
distribution of asphalt products
Shipping management and agency
Marine transportation
Holding company
Manufacture and distribution of asphalt
products
2012
(Million Baht)
2.10
Million USD
20.00
Million RMB
2.10
Million USD
2.10
Million USD
20.00
Million RMB
2.10
Million USD
products
products
Zhenjiang Tipco Asphalt Co., Ltd.
Tipco Asphalt (Xinhui) Co., Ltd.
30.97
Million HKD
20.00
Million riel
0.01
Million USD
305.55
Million ringgit
151.96
Million ringgit
products
30.97
Million HKD
20.00
Million riel
0.01
Million USD
305.55
Million ringgit
151.96
Million ringgit
290
80
150
18
2
1,500
111
Langfang Tongtai Road Material Co., Ltd.
Subsidiaries incorporated in China (owned by Tasco International (Hong Kong) Ltd.)
Tasco International (Hong Kong) Ltd.
Subsidiary incorporated in Hong Kong
Subsidiary incorporated in Cambodia
KBC Energy Pte. Ltd. (Owned by KOC)
Dormant
products
Kemaman Bitumen Company Sdn Bhd (KBC) (41.98% owned by
the Company, 12.52% owned by Thai Bitumen Co., Ltd. and
44.80% owned by KOC)
Subsidiary incorporated in Singapore
Holding company
Kemaman Oil Corporation Sdn Bhd (KOC) (11.30% owned by the
Company and 51.82% owned by Thai Bitumen Co., Ltd.)
290
80
150
18
2
111
products
Subsidiaries incorporated in Malaysia
Paid-up capital
(Except for other specified currency)
2013
(Million Baht)
Nature of business
a) The consolidated financial statements include the financial statements of the Company and the following subsidiaries:
Basis of consolidation
Subsidiaries incorporated in Thailand
100.00
51.00
51.00
100.00
100.00
63.12
82.77
63.12
99.99
99.99
99.99
99.99
99.97
99.99
41.44
2013
(%)
100.00
51.00
51.00
100.00
100.00
63.12
82.77
63.12
99.99
99.99
99.99
99.99
99.97
99.99
41.44
2012
(%)
Percentage of shareholding
b) Subsidiaries are fully consolidated as from the date on which the Company obtains control and continue to be
c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as
consolidated until the date when such control ceases.
those of the Company.
d) The assets and liabilities in the financial statements of overseas subsidiary companies are translated to Baht
using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated
using monthly average exchange rates. The resulting differences are shown under the caption of “Exchange
differences on translation of financial statements in foreign currencies” in the statement of changes in
shareholders’ equity.
e) Material balances and transactions between the Company and its subsidiaries have been eliminated from the
consolidated financial statements.
Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are
f)
not held by the Company and are presented separately in the consolidated profit or loss and within equity in
the consolidated statement of financial position.
g) The financial statements of Raycol Asphalt Co., Ltd. are included in the consolidated financial statements
even though the Company’s shareholding is 41.44 percent. This is due to the fact that the Company has
control over that company through its board of directors, and it is therefore regarded as a subsidiary.
2.3 The separate financial statements , which present investments in subsidiaries and associate under the
cost method, have been prepared solely for the benefit of the public.
3. New accounting standards
Below is a summary of accounting standards that became effective in the current accounting year and those that will
become effective in the future.
(a) Accounting standards that became effective in the current accounting year
Accounting standards:
TAS 12
Income Taxes
TAS 20 (revised 2009)
Accounting for Government Grants and Disclosure of Government
Assistance
The Effects of Changes in Foreign Exchange Rates
Financial Reporting Standard:
TFRS 8
Operating Segments
Accounting Standard Interpretations:
TSIC 10
Government Assistance - No Specific Relation to Operating
Activities
TSIC 21
Income Taxes - Recovery of Revalued Non-Depreciable Assets
TSIC 25
Income Taxes - Changes in the Tax Status of an Entity or its
Shareholders
Accounting Treatment Guidance for Transfers of Financial Assets
These accounting standards, financial reporting standard, accounting standard interpretations and accounting treatment
guidance do not have any significant impact on the financial statements. However, the Company and its subsidiaries
have early adopted TAS 12 “Income Taxes” before the effective date.
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91
(b)
Accounting standards that will become effective in the future
Effective date
Accounting Standards:
Presentation of Financial Statements
1 January 2014
Statement of Cash Flows
1 January 2014
Income Taxes
1 January 2014
Leases
1 January 2014
Revenue
1 January 2014
Employee Benefits
1 January 2014
The Effects of Changes in Foreign Exchange Rates
1 January 2014
Related Party Disclosures
1 January 2014
Investments in Associates
1 January 2014
Interests in Joint Ventures
1 January 2014
Interim Financial Reporting
1 January 2014
Intangible Assets
1 January 2014
TFRS 2 (revised 2012)
Share-based Payment
1 January 2014
Business Combinations
1 January 2014
TFRS 4
Insurance Contracts
1 January 2016
Non-current Assets Held for Sale and Discontinued Operations
1 January 2014
Operating Segments
1 January 2014
TSIC 15
Operating Leases - Incentives
1 January 2014
TSIC 27
Evaluating the Substance of Transactions Involving the Legal
1 January 2014
TSIC 29
Form of a Lease
Service Concession Arrangements: Disclosures
1 January 2014
TSIC 32
Intangible Assets - Web Site Costs
1 January 2014
TFRIC 1
Changes in Existing Decommissioning, Restoration and
1 January 2014
TFRIC 4
Similar Liabilities
Determining whether an Arrangement contains a Lease
1 January 2014
TFRIC 5
Rights to Interests arising from Decommissioning, Restoration
1 January 2014
TFRIC 7
and Environmental Rehabilitation Funds
Applying the Restatement Approach under TAS 29 Financial
1 January 2014
TFRIC 10
Reporting in Hyperinflationary Economies
Interim Financial Reporting and Impairment
1 January 2014
TFRIC 12
Service Concession Arrangements
1 January 2014
TFRIC 13
Customer Loyalty Programmes
1 January 2014
TFRIC 17
Distributions of Non-cash Assets to Owners
1 January 2014
TFRIC 18
Transfers of Assets from Customers
1 January 2014
Financial Reporting Standards:
Accounting Standard Interpretations:
Financial Reporting Standard Interpretations:
The management of the Company and its subsidiaries believe that these accounting standards, financial reporting standard,
accounting standard interpretations and financial reporting standards interpretations will not have any significant impact on the
financial statements for the year when they are initially applied.
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ANNUAL REPORT 2013
4. Significant accounting policies
4.1 Revenue recognition
Sales of goods
Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to
the buyer. Sales are the invoiced value, excluding value added tax of goods supplied after deducting discounts
and allowances.
Rendering of services
Service revenue is recognised when services have been rendered taking into account the stage of completion.
Vessel operating income consists of time charters and voyage charters. Income from time charters is recognised
when the right to use a vessel is transferred to a lessee for an agreed period of time, while income from voyage
charters is recognised by reference to the stage of completion.
Interest income
Interest income is recognised on an accrual basis based on the effective interest rate.
Dividends
Dividends are recognised when the right to receive the dividends is established.
4.2 Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original
maturity of three months or less and not subject to withdrawal restrictions.
4.3 Trade and other receivables
Trade and other receivables are stated at the net realisable value. Allowance for doubtful accounts is provided
for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on
collection experience and analysis of debt aging.
4.4 Inventories
Finished goods are valued at the lower of cost determined under the weighted average cost method and net
realisable value. Cost of finished goods includes all production costs and attributable factory overheads.
Raw materials, packaging materials, spare parts and factory supplies are valued at the lower of cost determined
under at the weighted average cost method and net realisable value. Raw materials, packaging materials, spare
parts and factory supplies are charged to production costs whenever consumed.
4.5 Assets held for sales - Vessel
Assets held for sales are assets whose carrying amounts will be recovered through a sales transaction rather than
through continuing use. The assets are measured at the lower of carrying amount and fair value less costs to sell,
and they are not depreciated.
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4.6 Investments
a)
Investment in associate is accounted for in the consolidated financial statements using the equity method.
b)
Investments in subsidiaries and associate are accounted for in the separate financial statements using
the cost method less allowance for loss on impairment.
4.7 Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation and allowance for loss on impairment.
Depreciation of investment properties is calculated by reference to their costs on the straight-line basis over
estimated useful lives of 5 and 20 years. Depreciation is included in profit or loss. No depreciation is provided on land.
On disposal of investm ent properties, the difference between the net disposal proceeds and the carrying amount
of the asset is recognised in profit or loss in the period when the asset is derecognised.
4.8 Property, plant and equipment/Depreciation
Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and less allowance
for loss on impairment of assets.
Depreciation of plant and equipment is calculated by reference to their costs less residual value on the straight-line
basis over the following estimated useful lives:
Land improvement
20years
Buildings and complements
20 to 47 years
Building improvements
20 to 30 years
Machinery, tools and equipment
5 to 20 years
Furniture and office equipment
3 to 5 years
Vehicles
5 to 10 years
Vessels
10 to 30 years
Depreciation is included in profit or loss.
No depreciation is provided on land, construction in progress and equipment under installation.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in profit or loss when
the asset is derecognised.
4.9 Borrowing costs
94
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset.
All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds.
ANNUAL REPORT 2013
4.10 Intangible assets - computer software
Computer software is measured at cost. Following initial recognition, computer software is carried at cost less any
accumulated amortisation and allowance for impairment loss (if any).
Computer software with finite life is amortised on a straight line basis over the economic useful life of 5 years and
tested for impairment whenever there is an indication that the software may be impaired. The amortisation period
and the amortisation method of such software are reviewed at least at each financial year end. The amortisation
expense is charged to profit or loss.
4.11 Goodwill
Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value
of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination,
the excess is immediately recognised as gain in profit or loss.
Goodwill is carried at cost less allowance for impairment loss (if any). Goodwill is tested for impairment annually
and when circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the
Company’s group of cash-generating unit that are expected to benefit from the synergies of the combination. The
Company estimates the recoverable amount of each group of cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised in profit or loss and will not be reversed in future periods.
4.12 Leasehold rights
Leasehold rights are stated at cost less accumulated amortisation and less allowance for impairment loss of
leasehold rights (if any). Amortisation is calculated by reference to cost on a straight-line basis over the lease
period.
The amortisation is included in profit or loss.
4.13 Related party transactions
Related parties comprise enterprises and individuals that control, or are controlled by, the Company and its
subsidiaries, whether directly or indirectly, or which are under common control with the Company and its
subsidiaries.
They also include associated companies and individuals which directly or indirectly own a voting interest in
the Company and its subsidiaries that gives them significant influence over the Company and its subsidiaries, key
management personnel, directors and officers with authority in the planning and direction of operations of the
Company and its subsidiaries.
4.14 Long-term leases
Leases of equipment which transfer substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value
of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in long-
term payables, while the interest element is charged to profit or loss over the lease period. The assets acquired
ANNUAL REPORT 2013
95
under finance leases are depreciated over the shorter of the useful life of the assets and the lease period, if the
Company and its subsidiaries expect not to purchase such assets at the end of the lease period.
Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.
4.15 Foreign currencies
The consolidated and separate financial statements are presented in Baht, which is also the Company’s functional
currency. Items of each entity included in the consolidated financial statements of each entity are measured using
the functional currency of that entity.
Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling
at the end of the reporting period.
Gains and losses on exchange are included in profit or loss.
4.16 Impairment of assets
At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of
the property, plant and equipment, investment properties and other intangible assets whenever events or changes
in circumstances indicate that an asset may be impaired. The Company and its subsidiaries also carry out annual
impairment reviews in respect of goodwill. An impairment loss is recognised when the recoverable amount of an
asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying
amount.
An impairment loss is recognised in profit or loss.
In the assessment of asset impairment if there is any indication that previously recognised impairment losses may
no longer exist or may have decreased, such reversal except for that of goodwill, is recognised in profit or loss.
4.17 Employee benefits
Short-term employee benefits
Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred.
Post-employment benefits and other long-term employee benefits
Defined contribution plans
The Company, its subsidiaries, and its employees have jointly established a provident fund. The fund is monthly
contributed by employees and by the Company and its subsidiaries. The fund’s assets are held in a separate trust
fund and contributions of the Company and its subsidiaries are recognised as expenses when incurred.
Defined benefit plans and other long-term employee benefits
The Company and its local subsidiaries have obligations in respect of the severance payments they must make
to employees upon retirement under labor law and other employee benefit plans. The Company and the local
subsidiaries treat these severance payment obligations as a defined benefit plan. In addition, the Company and its
96
ANNUAL REPORT 2013
local subsidiaries provide other long-term employee benefit plan, namely long service awards.
The obligation under the defined benefit plans and other long-term employee benefit plans is determined by a
professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method.
4.18 Equity-settled share-based payment transactions
The Company and its subsidiaries recognise the share-based payment transactions at the date on which the
options are granted, based on the fair value of the share options. They are recorded as expenses over the
expected life of the share options, and a capital reserve for share-based payment transactions is presented in
4.19 Provisions
Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
4.20 Income Tax
Income tax expense represents the sum of corporate income tax currently payable and deferred tax.
Current tax
Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based
on taxable profits determined in accordance with tax legislation.
Deferred tax
Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their
carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period.
The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they
recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent
that it is probable that future taxable profit will be available against which such deductible temporary differences
and tax losses carried forward can be utilised.
At each reporting date, the Company and its subsidiaries review and reduce the carrying amount of deferred tax
assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred tax asset to be utilised.
The Company and its subsidiaries record deferred tax directly to shareholders’ equity if the tax relates to items
those are recorded directly to shareholders’ equity.
4.21 Derivatives
Forward exchange contracts are presented in the financial statements at fair value. Unrealised gain or loss from
ANNUAL REPORT 2013
97
the forward contracts is recorded in profit or loss.
Forward price hedging contracts and option contracts with banks are presented in the financial statements at fair
value. Unrealised gain or loss from the price hedging contracts is recorded in profit or loss.
Interest rate swap contracts
Interest rate swap contracts are the contracts under which the counter-parties agreed to exchange the amounts
of interest, which are determined based on the pre-determined notional amount and the interest rates over the
periods specified in the contracts. The Company and its subsidiaries recognised, on an accrual basis, the net
amount of interest to be received or paid for each period under the interest rate swap contracts as income/expense
in profit or loss. The interest rate swap contracts are presented in the financial statements at fair value. Unrealised
gain or loss on interest rate swap contract of the Company and its subsidiaries deferred in shareholders’ equity of
the Company and its subsidiaries until realised or recorded in profit or loss.
5. Significant accounting judgments and estimates
The preparation of financial statements in conformity with financial reporting standards accounting principles at times
requires management to make subjective judgments and estimates regarding matters that are inherently uncertain.
These judgments and estimates affect reported amounts and disclosures, and actual results could differ from these
estimates. Significant judgments and estimates are as follows:
Recognition and derecognition of assets and liabilities
In considering whether to recognise or to derecognise assets or liabilities, the management is required to make
judgment on whether significant risk and rewards of those assets or liabilities have been transferred, based on their best
knowledge of the current events and arrangements.
Leases
In determining whether a lease is to be classified as an operating lease or finance lease, the management is required
to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred,
taking into consideration terms and conditions of the arrangement.
Allowance for doubtful accounts
In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon,
among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.
Net realisable value of inventories
The management uses judgment to estimate the net realisable value of inventories taking into consideration the
fluctuation of price or cost directly relating to events occurring after the reporting period.
Fair value of financial instruments
In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are
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ANNUAL REPORT 2013
not readily available, the management exercises judgment, using a variety of valuation techniques and models. The
input to these models is taken from observable markets and includes consideration of liquidity, correlation and longerterm volatility of financial instruments.
Impairment of investments
The Company and its subsidiaries treats investments as impaired when the management judges that there has been a
significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists.
The determination of what is “significant” or “prolonged” requires judgment of the management.
Investment properties
The investment properties are measured at cost less allowance for impairment loss. The carrying value of the assets is
determined based on fair value appraised by an independent valuer. Such valuation is based on certain assumptions
and estimates.
Property plant and equipment/Depreciation
In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives
and residual values of the plant and equipment of the Company and subsidiaries and to review estimate useful lives and
residual values when there are changes.
In addition, the management is required to review property, plant and equipment for impairment on a periodical basis
and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying
cost. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the
review.
Goodwill
The initial recognition and measurement of goodwill, and subsequent impairment testing, require management to make
estimates of cash flows to be generated by the asset and to choose a suitable discount rate in order to calculate the
present value of those cash flows.
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it
is probable that taxable profit will be available against which the temporary differences and losses differences can
be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and level of estimate future taxable profits.
Post-employment benefi ts under defined benefit plans and other long-term employee benefits
The obligation under the defined benefit plan and other long-term employee benefit plans is determined based on
actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary
increase rate, mortality rate and staff turnover rate.
Cost of share-based payment transactions
Estimating the cost of share-based payment transactions requires the determination of the fair value of the options
granted under the transactions which involves appropriate assumptions, including but not limited to the expected life of
the share options, share price volatility and dividend yield.
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99
6. Trade and other receivables
(Unit: Thousand Baht)
2013
2012
2013
2012
Trade receivables - related parties (Note 7)
Aged on the basis of due dates
Not yet due
490,525
453,024
1,269,351
1,139,533
21,051
448,143
279,848
1,019,038
3 - 6 months
-
-
56,375
83,755
6 - 9 months
58
176
-
-
9 - 12 months
61
-
3,272
-
176
-
-
-
511,871
901,343
1,608,846
2,242,326
2,749,017
3,521,307
1,827,445
2,646,853
Up to 3 months
454,089
731,293
152,994
460,384
3 - 6 months
120,295
51,350
22,959
14,881
6 - 9 months
39,668
22,591
669
2,537
9 - 12 months
6,878
70,262
1,824
5,514
115,022
114,826
82,325
92,791
Total
3,484,969
4,511,629
2,088,216
3,222,960
Less: Allowance for doubtful accounts
(115,833)
(132,390)
(76,033)
(81,025)
Total trade receivables - unrelated parties, net
3,369,136
4,379,239
2,012,183
3,141,935
Total trade receivables - net
3,881,007
5,280,582
3,621,029
5,384,261
12,224
7,809
26,409
16,497
5,866
39,410
5,866
39,410
Other receivables
67,476
20,120
10,063
1,895
Total other receivables
85,566
67,339
42,338
57,802
3,966,573
5,347,921
3,663,367
5,442,063
Past due
Up to 3 months
Over 12 months
Total trade receivables - related parties
Trade receivables - unrelated parties
Aged on the basis of due dates
Not yet due
Past due
Over 12 months
Other receivables
Amounts due from related parties (Note 7)
Accounts receivable from price hedging contracts
Trade and other receivables - net
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ANNUAL REPORT 2013
7. Related party transactions
During the years, the Company and its subsidiaries had significant business transactions with related parties. Such
transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial
terms and bases agreed upon between the Company and its subsidiaries and those related parties.
(Unit: Million Baht)
Consolidated
Separate
2013
2013
2012
2012
Transfer Pricing Policy
Transactions with subsidiaries
(eliminated from the consolidated financial
statements)
-
-
5,602
5,211
Cost plus certain margin
Rental and service income
-
-
34
20
Contract price
Technical assistance fee income
-
-
12
12
Contract price
Interest income
-
-
1
-
Dividend income
-
-
16
205
Purchases of goods
-
-
8
535
Rental and service expenses
-
-
1,438
1,766
-
17
-
17
3,703
4,840
3,531
4,633
2.8 percent per annum
Cost plus certain margin
Contract price
Transactions with associate
Dividend income
Transactions with related companies
Rental and service income
Market price / contract price
4
5
4
2
Contract price
Rental and service expenses
45
41
32
35
Contract price
Technical assistance fee expenses
51
42
32
25
Contract price
The balances of the accounts between the Company and its subsidiaries and those related companies as at 31 December
2013 and 2012 are as follows:
Trade and other receivables- related parties (Note 6)
Subsidiaries
2013
2012
-
-
2013
2012
1,154,376
1,364,109
Related companies (common shareholders and directors)
524,095
909,152
480,879
894,714
Total trade and other receivables - related parties
524,095
909,152
1,635,255
2,258,823
-
-
40,621
40,621
40,244
40,244
Subsidiaries
Total short-term loans to related parties
Trade and other payables - related parties (Note 16)
Subsidiaries
-
-
449,778
338,560
Related companies (common shareholders and directors)
45,198
47,273
37,879
35,412
Total trade and other payables - related parties
45,198
47,273
487,657
373,972
7,951
7,951
7,227
7,227
-
-
Long-term loan from related party
Related company (shareholder of subsidiary)
Total long-term loan from related party
ANNUAL REPORT 2013
101
Loans to related parties and loan from related parties
As at 31 December 2013 and 2012, the balances of loans between the Company and those related companies and the
movement are as follows:
Loans to related parties
Related by
Balance as at
Unrealise gain on
Balance as at
31 December 2012
exchange rate
31 December 2013
Subsidiary
35,000
-
35,000
Kemaman Oil Corporation Sdn Bhd
Subsidiary
5,244
377
5,621
40,244
377
40,621
Total
Balance as at
Translation
Balance as at
Related by
31 December 2012
adjustment
31 December 2013
Shareholder
of subsidiary
7,227
724
7,951
7,227
724
7,951
Loans from related parties
Zhenjiang Highway Materials
Company
Total
Directors and management’s benefits
During 2013 and 2012, the Company and its subsidiaries had employee benefit expenses of their directors and
management as below.
Consolidated
Separate
2013
2012
2013
2012
Short-term employee benefits
102
104
86
89
Post-employment benefits
4
4
4
4
6
4
6
3
Total
112
112
96
96
Guarantee obligations with related parties
The Company and its subsidiaries have outstanding guarantee obligations with its related parties, as described in Note
18 to the financial statements.
102
ANNUAL REPORT 2013
8. Inventories
Reduce cost to net
realisable value
Cost
2013
2012
Finished goods
1,419,466
1,487,167
-
Raw materials
2,406,331
2,338,736
101,443
Goods in transit
Total
Packaging materials, spare
parts and factory supplies
2013
Inventories - net
2012
2013
2012
(157)
1,419,466
1,487,010
(7,759)
(730)
2,398,572
2,338,006
110,403
(3,726)
(2,529)
97,717
107,874
5,433,660
3,115,593
-
-
5,433,660
3,115,593
9,360,900
7,051,899
(11,485)
(3,416)
9,349,415
7,048,483
Reduce cost to net
realisable value
Cost
2013
2012
Finished goods
1,287,299
1,353,790
-
Raw materials
1,919,566
1,964,899
15,035
Goods in transit
Total
Packaging materials, spare
parts and factory supplies
2013
Inventories - net
2012
2013
2012
-
1,287,299
1,353,790
-
-
1,919,566
1,964,899
20,926
(3,282)
(2,085)
11,753
18,841
5,433,005
3,105,754
-
-
5,433,005
3,105,754
8,654,905
6,445,369
(3,282)
(2,085)
8,651,623
6,443,284
9. Assets held for sales - Vessel
The vessel held for sales was an asset of Delta Shipping Company Limited. In December 2012, this subsidiary entered
into a contract to sell the vessel, together with tools and instruments on the vessel, to an overseas company for
approximately USD 1.5 million. As a result, the subsidiary reclassified these assets from property, plant and equipment
to vessel held for sale and recorded impairment loss on the assets of approximately Baht 4.8 million as an expense in
profit or loss for 2012.
In January 2013, the subsidiary received payment and transferred the vessel to the buyer.
ANNUAL REPORT 2013
103
10. Investments in subsidiaries
Details of investments in subsidiaries as presented in the separate financial statements are as follows:
Company’s name
Investment cost of the Company
2013
2012
Dividend received during
the year by the Company
2013
2012
Domestic subsidiaries
193,200
193,200
16,100
-
1,499,917
1,499,917
-
187,450
(60,775)
(60,775)
1,999
1,999
-
17,497
17,999
17,999
-
-
149,999
149,999
-
-
79,999
79,999
-
-
289,999
289,999
-
-
130,008
130,008
-
-
115,849
115,849
173,677
173,677
-
-
1,231,719
1,231,719
-
-
165
165
-
-
3,823,755
3,823,755
16,100
204,947
5,306
3,816
3,829,061
3,827,571
Less: Provision for impairment loss of investment
Overseas subsidiaries
Tasco International (Hong Kong) Ltd.
Add: Additional investment cost from the
acquisition of subsidiary under common control
Kemaman Oil Corporation Sdn Bhd (KOC)
(11.30% owned by the Company and 51.82%
owned by Thai Bitumen Co., Ltd.)
Kemaman Bitumen Company Sdn Bhd (KBC)
(41.98% owned by the Company, 12.52% owned
by Thai Bitumen Co., Ltd. and 44.80% owned by
KOC)
Investments in subsidiaries
Cost of share-based payment transactions, under
warrants to purchase new ordinary shares of the
Company issued to the subsidiaries’ employees
(Note 22)
Total investments in subsidiaries
104
The paid-up capital and percentage of shareholding were presented in Note 2.2 to the financial statements.
ANNUAL REPORT 2013
Warrants to purchase new ordinary shares of the Company issued to the subsidiaries’ employees
During 2013, the Company recorded cost of share-based payment transactions, under warrants to purchase new
ordinary shares of the Company issued to the subsidiaries’ employees (Note 22) amounted to Baht 1.5 million (2012:
Baht 2.4 million), as a cost of investments in subsidiaries.
Kemaman Oil Corporation Sdn Bhd (“KOC”) and Kemaman Bitumen Company Sdn Bhd (“KBC”)
After the Company and Thai Bitumen signed the KOC’s shareholder agreement with Seloga Holdings Berhad (“SHB”)
and Aras Jalinan Sdn Bhd (“Aras”) offered to exercise the rights under such agreement on behalf of SHB, the Company
and Thai Bitumen have had disputes with Aras since 2008. In May 2011, the International Chamber of Commerce
Arbitral Tribunal made the final arbitration award relating to the dispute between the Company and Thai Bitumen,
and Aras, which the Company and Thai Bitumen brought to arbitration. The arbitration award denied all the disputed
claims by ARAS, except that KOC shall accept the share acquisition payment amounting to MYR 5 million which was
made by Aras to KOC on 3 March 2008. KOC registered additional capital amounting to MYR 5 million belonging to
Aras in July 2011. As a result, the shareholdings of the Company and its subsidiaries in KOC and KBC decreased by
2.14 percent and 0.96 percent, respectively. The Company recorded the change in the subsidiaries’ interest under the
caption of “Change in the Company’s interest in subsidiary which did not result in a loss of control” over the consolidated
Currently, the Federal Court of Malaysia is considering the appeal against the judgment of the Court of First Instance filed
by Aras regarding the extraordinary general meeting of KOC’s shareholders because the said judgment was in favor of
the Company and Thai Bitumen. The management of the Company and Thai Bitumen believed that the outcome of the
appeal, which has not been reached, would not affect the value of the investments and the equity interests of the Company
and Thai Bitumen in KOC and KBC.
As at 31 December 2013, the value of the Company’s investment costs in KOC and KBC accounted for under the
cost method in the separate financial statements were higher than the Company’s attributable equity interests in these
subsidiaries by Baht 477 million (2012: Baht 553 million). The Company believed that the recoverable benefits from
these investments would exceed their costs. Therefore, no allowance for impairment was made in the account.
11. Investment in associate
11.1 Details of associate:
Company’s name
Colasie Co., Ltd.
Shareholding percentage
2013
2012
(%)
(%)
40
40
Carrying amounts based on equity
method
Cost
2013
2012
2013
2012
18,404
18,404
110,521
60,649
18,404
18,404
110,521
60,649
(Registered under the law of France)
(Holding company)
Total investment in associate
ANNUAL REPORT 2013
105
Company’s name
Shareholding percentage
Colasie Co., Ltd.
2013
2012
(%)
(%)
40
40
Cost
2013
Total investment in associate
Carrying amounts based on cost method
2012
2013
2012
18,404
18,404
18,404
18,404
18,404
18,404
18,404
18,404
11.2 Share of profit and dividend received
During the years, the Company has recognised its share of profit from investment in associate in the consolidated
financial statements and dividend income in the separate financial statements as follows:
Company’s name
Share of profit from investment
in associate during the year
Di vidend received
during the year by the Company
2013
2012
2013
2012
Colasie Co., Ltd.
46,207
35,323
-
16,789
Total
46,207
35,323
-
16,789
11.3 Summarised financial information of associate
Financial information of the associate is summarised below.
(Unit: Million Euro)
Company’s name
Colasie Co., Ltd.
106
ANNUAL REPORT 2013
Paid-up capital
as at
31 December
Total assets
as at
31 December
Total liabilities
as at
31 December
Total revenues
for the year ended
31 December
Profit for the year ended
31 December
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
1.04
1.04
3.04
2.61
0.01
0.01
2.87
2.26
2.83
2.20
12. Investment properties
The net book value of investment properties as at 31 December 2013 and 2012 are presented below.
The Company’s land, buildings
and equipment located at
Petchburi Plant
As at 31 December 2013:
Cost
Land of
Thai Bitumen
Total
268,377
383,608
651,985
(138,692)
-
(138,692)
Less Allowance for diminution in value
Net book value
(95,885)
33,800
(217,975)
165,633
(313,860)
199,433
Cost
Less Accumulated depreciation
Net book value
268,377
(138,692)
(95,885)
33,800
383,608
(217,975)
165,633
651,985
(138,692)
(313,860)
199,433
The Company’s land, buildings
and equipment located at
Petchburi Plant
The Company’s land for rent
located at Suratthani Province
Total
Cost
Net book value
268,377
(138,692)
(95,885)
33,800
76,960
(10,108)
66,852
345,337
(148,800)
(95,885)
100,652
Cost
Net book value
268,377
(138,692)
(95,885)
33,800
76,960
(9,562)
67,398
345,337
(148,254)
(95,885)
101,198
A reconciliation of the net book value of investment properties for 2013 and 2012 is presented below.
Consolidated
2013
Separate
2012
2013
2012
199,433
204,200
101,198
101,745
Depreciation charged during the year
-
-
(546)
(547)
Impairment loss recorded during the year
-
(4,767)
-
-
199,433
199,433
100,652
101,198
Net book value at beginning of year
Net book value at end of year
ANNUAL REPORT 2013
107
The fair values of the investment properties, appraised by an independent professional valuer using the Sales
Comparison Approach, as at 31 December 2013 and 2012 are stated below:
Consolidated
2013
The Company’s land for rent located at Suratthani
Province
The Company’s land, buildings and equipment
located at
Petchburi Plant
Land of Thai Bitumen
Separate
2012
2013
2012
-
-
141,000
141,000
33,800
33,800
33,800
33,800
165,633
165,633
-
-
During the year 2012, Thai Bitumen received a letter from Land Office relating to investigation of revocation of some
title deeds that had been issued illegally. The case currently has not been concluded. However, Thai Bitumen recorded
impairment loss on the land of approximately Baht 4.8 million as an expense in profit or loss for 2012.
108
ANNUAL REPORT 2013
Accumulated depreciation
As at 1 January 2012
Depreciation for the year
Accumulated depreciation on disposal/write-off
Transfer to assets held for sales (Note 9)
Accumulated depreciation on disposal/write-off
Allowance for impairment loss
Increase during the year
Increase during the year
Cost
Additions
Disposals/write-off
Transfer in (transfer out)
Transfer to assets held for sales (Note 9)
Interest capitalized
Additions
Disposals/write-off
Interest capitalized
13. Property, plant and equipment
-
1,183
1,183
373,464
22,823
(993)
395,294
282,113
17,261
299,374
1,183
-
348,491
24,973
-
264,898
17,466
(251)
-
20,835
1,756
22,591
20,835
1,690,599
211,721
(5,805)
1,896,515
1,481,570
217,179
(5,916)
(2,234)
Machinery, tools and
equipment
Buildings, building
improvements and
complements
Land
and land improvement
775,639
11,877
(57,282)
40,074
770,308
737,442
22,955
(33,395)
49,592
(955)
-
Furniture, office
equipment and
vehicles
-
-
609,310
41,975
(55,637)
595,648
601,192
39,161
(30,097)
(946)
Furniture, office
equipment and
vehicles
3,839,114
33,569
(8,091)
315,868
4,180,460
625,460
(1,286)
4,275
628,449
633,720
6,021
639,741
3,777,545
66,693
(6,113)
3,923
(2,934)
-
equipment
618,960
6,500
-
Buildings, building
improvements and
complements
627,369
1,608
(332)
5,075
-
Land
-
-
302,328
91,358
393,686
324,121
77,556
(99,349)
Vessels
1,765,132
54,282
1,819,414
1,185,053
12,266
716,677
(148,864)
-
Vessels
8,019,949
848,553
(66,659)
4,892
8,806,735
7,330,357
866,265
(39,840)
(152,753)
15,920
Total
-
-
-
-
Construction
in progress
and equipment under
installation
22,018
1,756
23,774
1,183
20,835
3,257,814
385,138
(62,435)
3,580,517
3,020,272
376,335
(36,264)
(102,529)
Total
380,884
748,825
(366,238)
4,892
768,363
383,988
762,743
(781,767)
15,920
Construction
in progress
and equipment under
installation
ANNUAL REPORT 2013
109
110
ANNUAL REPORT 2013
16,599
19,744
255,141
252,899
350,424
339,184
-
3,145
-
-
8,916
(5,771)
-
Buildings, building
improvements and
complements
2,288,823
2,027,012
27,469
128,137
(100,668)
(77,077)
(23,591)
equipment
3,177
5,066
Business transfer to subsidiary (Note 1)
443,799
216,625
-
(1,281)
-
Additions
Disposals/write-off
-
644
214,729
63
438,733
-
(332)
Disposals/write-off
5,732
208,353
3,090
435,912
complements
Buildings, building
improvements and
Additions
Cost
Land
Machinery, tools
and equipment
508,240
(1,546)
8,954
(1,844)
2,614
500,062
1,249
(2,881)
7,165
494,529
176,591
165,933
1,931
2,327
(396)
(233)
(163)
Furniture, office
equipment and
vehicles
572,079
(322)
30,901
(31,389)
6,348
566,541
16,796
(22,017)
21,395
550,367
Furniture, office
equipment and
vehicles
2013 (Baht 306 million included in manufacturing cost, and the balance in selling expenses and administrative expenses)
Net book value
Translation adjustments during the year
Translation adjustments during the year
Translation adjustments
Land
-
(96,306)
-
-
-
96,306
-
-
-
96,306
Vessels
1,425,728
1,462,804
-
-
-
-
-
Vessels
385,138
376,335
5,246,623
4,595,801
44,179
188,495
(144,316)
(83,081)
(61,235)
Total
19,181
-
(48,098)
-
60,458
6,821
(18,752)
-
6,821
18,752
Construction
in progress
and equipment
under installation
1,759,924
(98,174)
-
(34,514)
69,420
1,823,192
-
(25,230)
44,203
1,804,219
Total
763,398
334,487
(4,965)
41,432
(46,397)
-
(46,397)
Construction
in progress
and equipment under
installation
1,183
120,131
-
50,885
-
-
-
-
(46,754)
-
-
1,333
45,421
-
4,563
40,858
Vessels
19,181
6,821
-
-
-
-
-
-
-
-
-
-
-
-
Construction
in progress
and equipment
under installation
455,784
490,570
1,183
1,183
1,183
1,302,957
(48,505)
-
(34,114)
54,137
1,331,439
(24,856)
59,116
1,297,179
Total
54,137
25,745
108,228
-
-
-
451,948
(322)
14
(31,280)
25,223
458,313
(21,731)
25,300
454,744
Furniture, office
equipment and
vehicles
46,569
21,941
-
-
-
482,495
(1,429)
534
(1,844)
7,113
478,121
(2,874)
7,594
473,401
Machinery, tools
and equipment
59,116
244,158
52,011
-
-
-
170,056
-
-
(990)
8,328
162,718
-
8,867
153,851
complements
Buildings, building
improvements and
250,684
1,183
Net book value
1,183
198,458
-
(548)
Allowance for impairment loss
Business transfer to subsidiary (Note 1)
-
12,140
Accumulated depreciation on disposal/ write-off
186,866
(251)
12,792
174,325
Accumulated depreciation on disposal/ write-off
Accumulated depreciation
Land
ANNUAL REPORT 2013
111
During the year 2013, an overseas subsidiary assessed machinery, tools and equipment and found that some of
machinery, tools and equipment were not appropriate for its current operations and needed replacement. The subsidiary
therefore recorded impairment loss of machinery, tools and equipment amounting to USD 0.1 million (2012: USD 0.7
million) as expense in profit or loss.
During the year 2013, borrowing costs totaling approximately Baht 5 million were capitalised as cost of the vessel (2012:
Baht 16 million). The weighted average rate used to determine the amount of borrowing costs eligible for capitalisation
was 3% (2012: 5%).
As at 31 December 2013, certain building and equipment items had been fully depreciated but were still in use. The
original cost of those assets amounted to approximately Baht 1,426 million (2012: Baht 1,436 million) (The Company
Only: Baht 961 million, 2012: Baht 898 million).
14. Leasehold rights
The Company and subsidiaries entered into agreements to lease buildings and land. The lease agreements can be
summarised below.
Leasee
Country the leased
asset located in
Lease period
Lease agreement
ending year
Prepaid lease amount at inception
of the lease
2031
2029
2050
2055
2055
1.4 million renminbi
(year)
1. The Company
China
30
2. A subsidiary in China
China
China
China
30
50
45
Malaysia
50
5. A subsidiary in Malaysia
19.8 million ringgit
The book value of the leasehold rights as at 31 December 2013 and 2012 can be summarised below.
Consolidated
2013
Cost
Less Accumulated amortisation
Translation adjustment
Net book value
Separate
2012
2013
2012
254,299
254,299
6,837
6,837
(44,859)
(39,122)
(2,963)
(2,735)
8,373
(7,305)
-
-
217,813
207,872
3,874
4,102
A reconciliation of the net book value of leasehold rights for the years 2013 and 2012 is presented below.
Consolidated
2013
2012
207,872
Amortisation
Translation adjustments
Net book value at end of year
Net book value at beginning of year
112
Separate
ANNUAL REPORT 2013
2013
2012
220,175
4,102
4,330
(5,737)
(5,697)
(228)
(228)
15,678
(6,606)
-
-
217,813
207,872
3,874
4,102
15. Short-term loans from financial institutions
Consolidated
2013
Trust receipts
Separate
2012
2013
2012
9,164,536
8,158,510
9,164,536
8,158,510
Loans in renminbi
140,626
29,498
-
-
Loans in US Dollars
111,298
48,825
-
-
9,416,460
8,236,833
9,164,536
8,158,510
Total
As at 31 December 2013, the Company had short-term loans from local banks, which carry interest at the rates of 0.85
percent per annum (2012: 0.9 to 1.2 percent per annum).
In addition, overseas subsidiaries had short-term loans from overseas financial institutions, which carry interest at the
rates ranging from 2.1 to 7.2 percent per annum (2012: 5.2 to 7.9 percent per annum).
16. Trade and other payables
Consolidated
2013
Separate
2013
2012
4,735
11,165
444,577
339,036
1,233,559
1,894,277
1,031,012
1,748,531
Amounts due to related parties (Note 7)
40,463
36,108
43,080
34,936
Accounts payable from price hedging contracts
60,952
-
60,952
-
214,271
191,548
92,299
73,849
57,835
69,739
10,404
15,665
1,611,815
2,202,837
1,682,324
2,212,017
Trade payables - related parties (Note 7)
Trade payables - unrelated parties
Accrued expenses
Other payables
Total trade and other payables
2012
ANNUAL REPORT 2013
113
114
ANNUAL REPORT 2013
Borrower
Fixed rate for the first three years and
for the fourth to the fifth years at a rate
referenced to BIBOR
Fixed rate for the first three years and for
the fourth to the eighth years at a rate
referenced to BIBOR
Rate referenced to THBFIX
(2012: Rate referenced to USD LIBOR)
(5) Alpha Maritime Company Limited
(6) Tasco Shipping Company Limited
(7) Tasco Shipping Company Limited
Rate referenced to Lender’s Cost of
Funds
(10) Kemaman Bitumen Company Sdn Bhd
Long-term loans from financial institutions - net of current portion
Less: Current portion
Total
Rate referenced to Lender’s Cost of
Funds
(9) Kemaman Bitumen Company Sdn Bhd
Long-term loans in USD from bank in Malaysia
(8) Alpha Maritime Company Limited
Rate referenced to LIBOR
(4) Bitumen Marine Company Limited
Long-term loans in USD from bank in Thailand
Quarterly installments, as stipulated in
the agreement, commencing June 2012
Fixed rate for the first two years and
for the third to the eighth years at a
rate referenced to THBFIX
(3) The Company
Quarterly installments of USD 1.10
million each, commencing November
2012 to August 2017
Quarterly installments of USD 0.83
million each, commencing November
2011 to August 2016
Quarterly installments as stipulated in
the agreements, commencing July 2015
the agreements, commencing October
2012
the agreement, commencing May 2012
the agreement, commencing April 2012
Quarterly installments of Baht 9.2 million
each, commencing December 2010 to
September 2013
Quarterly installment, totalling Baht 200
million for 2011 and Baht 240 million for
2012 to 2015
(2) The Company
Monthly installments of Baht 0.3 million
each, commencing April 2009 to March
2014
Repayment schedule
Fixed rate
Interest rate
(1) The Company
Long-term loans in Baht from Bank in Thailand
Loan
17. Long-term loans from financial institutions
-
2,960,896
(596,304)
2,364,592
(688,821)
2,179,870
389,545
381,363
-
503,777
185,400
47,550
27,470
701,250
720,000
4,541
2012
2,868,691
613,615
299,588
199,673
424,615
168,400
37,800
-
645,000
480,000
2013
-
772,500
(352,500)
1,125,000
-
-
-
-
-
-
-
645,000
480,000
2013
1,103,408
(322,383)
1,425,791
-
-
-
-
-
-
-
701,250
720,000
4,541
2012
Loan No. (7) of Tasco Shipping Company Limited : In April 2013, Tasco Shipping Company Limited has amended longterm loan agreement from a local bank to change currency from United States Dollar to Thai Baht and the interest rate
of long-term loan from interest rate with referenced to LIBOR to interest rate with referenced to THBFIX.
As at 31 December 2013, the long-term credit facilities of a subsidiary which has not yet been drawn down amounted
to USD 6.1 million.
Loan covenants
The loan agreements of the Company and its subsidiaries contain certain restrictive covenants pertaining to, among
others things, the maintenance of financial ratios, the prohibition from creating lien over assets, the loan to related
parties, the maintenance of trade accounts receivable and inventory balance, restriction on dividend payment, the
maintenance of shareholders and the limitation on creation of additional long-term debt.
Interest rate swap agreements
In May 2009, the Company entered into an interest rate swap agreement to swap a floating interest rate on a longterm loan from a local bank to a fixed rate interest at 4.365 percent per annum. As at 31 December 2013, the notional
amount of Baht 480 million (2012: Baht 720 million) was outstanding. The notional amount reduces on a quarterly basis
in accordance with the long-term loan repayment schedule of the Company in (2), starting from May 2009 and matures
in November 2015.
In May 2012, the Company entered into an interest rate swap agreement to swap a floating interest rate on a long-term
loan from a local bank to a fixed interest rate at 5.21 percent per annum. As at 31 December 2013, the notional amount
of Baht 645 million (2012: Baht 701 million), was outstanding, and this will reduce every quarter in accordance with the
related long-term loan repayment schedule of the Company in (3), starting from June 2012 and ending when the loan
mature in March 2018.
In December 2013, Kemaman Bitumen Company Sdn Bhd entered into an interest rate swap agreement to swap
a floating interest rate on a long-term loan from a bank in Malaysia to a fixed interest rate at 0.2416 percent per annum.
As at 31 December 2013, the notional amount of USD 29 million was outstanding, and this will mature in January 2014.
18 Credit facilities
The credit facilities of the Company and its subsidiaries granted by financial institutions are secured by the following
collaterals:
a)
The guarantees by the Company, its subsidiaries and a shareholder of a subsidiary.
b)
The pledges/mortgages by the assets of subsidiaries of which the net book value as at 31 December 2013 and
2012 of the assets are summarised below.
Leasehold rights - net
Property, plant and equipment - net
Computer software - net
2013
2012
201
151
3,524
2,880
-
1
ANNUAL REPORT 2013
115
c)
The prohibition from creating lien over assets of the Company and its subsidiaries.
d)
Financial support letters provided by the Company and its subsidiaries to banks.
e)
The Company allows its subsidiaries to use its facilities obtained from banks, with the Company responsible to the
banks for the amounts drawn down by the subsidiaries.
19. Provision for long-term employee benefits
Provision for long-term employee benefits, which is compensations on employees’ retirement, was as follows:
Consolidated
Balance at beginning of year
Defined benefit plans:
Current service cost
Interest cost
Benefits paid during the year
Long service awards:
Balance at end of year
Separate
2013
2012
2013
2012
69,231
65,129
56,822
52,778
6,604
(8,135)
7,641
2,324
(4,234)
5,148
2,004
(8,135)
(372)
(1,629)
(294)
69,822
69,231
55,545
6,023
1,889
(2,580)
(1,288)
56,822
2,494
Long-term employee benefit expenses included in the profit or loss was as follows:
Consolidated
Separate
2013
2012
2013
2012
Current service cost
6,826
7,857
5,303
6,175
Interest cost
2,571
2,412
2,058
1,950
Total expense recognised in profit or loss
9,397
10,269
7,361
8,125
Line items under which such expenses are included in profit or loss
Cost of sales
Selling and administrative expenses
944
1,232
331
628
8,453
9,037
7,030
7,497
Principal actuarial assumptions at the valuation date were as follows:
Consolidated/Separate
Discount rate
116
2013
2012
(% per annum)
(% per annum)
3.9
3.9
Future salary increase rate (depending on age of employee)
3.0 - 8.0
3.0 - 8.0
Staff turnover rate (depending on age of employee)
0.0 - 14.0
0.0 - 14.0
ANNUAL REPORT 2013
20. Share capital
The Annual General Meeting of the shareholders held on 5 April 2013 approved the following resolutions.
Decrease of share capital
Decrease the Company’s registered capital by Baht 1,838,000 from Baht 1,700,437,290 (170,043,729 ordinary shares
of Baht 10 each) to Baht 1,698,599,290 (169,859,929 ordinary shares of Baht 10 each), by decreasing the ordinary
shares reserved for the exercise of ESOP-W1 and ESOP-W2 of 183,800 shares at the par value of Baht 10 each.
The Company registered the capital decrease on 18 April 2013.
Increase of share capital
1. Increase the Company’s registered capital by Baht 12,000,000 from Baht 1,698,599,290 (169,859,929 ordinary
shares of Baht 10 each) to Baht 1,710,599,290 (171,059,929 ordinary shares of Baht 10 each), through the issue of
1,200,000 new ordinary shares of Baht 10 each.
2. Allocate and reserve the 1,200,000 new ordinary shares to support the exercise of the ESOP-W3 warrants (Note 22).
The Company registered the capital increase on 19 April 2013.
Below is the summarisation of the exercise of ESOP-W1 warrants in 2013.
No. of warrants exercised (warrants)
32,800
No. of ordinary shares issued (shares)
32,800
Amount of cash received (Baht)
Share registration date
Issued and paid-up share capital after share
registration
2,039,832
9 July 2013
Baht 1,525,808,680
(152,580,868 ordinary shares of Baht 10 each)
21. Warrants to purchase new ordinary shares of the Company issued to the Company’s shareholders
The Annual General Meeting of the shareholders held on 5 April 2011 approved the issuance of the warrants to purchase
new ordinary shares of the Company (TASCO-W3) without charge to the Company’s shareholders, at a rate of 10 existing
ordinary shares for 1 TASCO-W3 warrant. Each TASCO-W3 can be exercised to purchase 1 new ordinary share at the
following exercise prices:
Exercise month (from date of issuance)
Exercise price (Baht per share)
Months 1 to 12
62.19
Months 13 to 18
63.74
Months 19 to 24
65.30
Months 25 to 30
66.85
Months 31 to 36
68.41
The exercise prices are subject to change according to the conditions of any rights adjustment.
The holders of TASCO-W3 are able to exercise their rights to purchase the Company’s ordinary shares from the last
ANNUAL REPORT 2013
117
business day of the month in which such warrants are issued (18 April 2011). TASCO-W3 warrants have a term of 3
years.
The Stock Exchange of Thailand approved the listing of TASCO-W3 warrants, and the warrants began trading on 6 May
2011.
As at 31 December 2013, the remained unexercised of TASCO-W3 was 15,253,916 units (2012: 15,253,916 units).
22. Warrants to purchase new ordinary shares of the Company issued to the executive directors
and/or employees of the Company and subsidiaries (ESOP)
The Annual General Meetings of the shareholders each approved the issuance of 1,200,000 warrants each time to
purchase new ordinary shares of the Company to the executive directors and/or employees of the Company and its
subsidiaries, without charge. Details of these issues of ESOP warrants are summarised below.
ESOP-W1
ESOP-W2
ESOP-W3
5 April 2011
27 April 2012
5 April 2013
62.19 Baht per share
18 April 2011
18 May 2012
30 April 2013
1,088,100 warrants
1,128,700 warrants
1,182,600 warrants
111,900 warrants
71,300 warrants
17,400 warrants
Annual General Meeting of
the shareholders date
Exercise price
Issue date
Number of warrants subscribed
Number of warrants unsubscribed
Each ESOP warrant can be exercised to purchase 1 new ordinary share at the exercise prices specified above. However,
these exercise prices are subject to change in accordance with the conditions of any subsequent rights adjustment.
The holders of ESOP-W1 and ESOP-W2 warrants can exercise their rights to purchase the Company’s ordinary shares
after the second year and the holders of ESOP-W3 can exercise their rights to purchase the Company’s ordinary shares
after the third year counting from the warrant issuance date. Moreover, they must still be executive directors and/or
employees of the Company or its subsidiaries on the date the warrants are exercised. The warrants have terms of 5
years.
The Company plans to cancel the unallocated ESOP warrant specified above later.
The expenses recognised for employee services received during 2013 of the Company and its subsidiaries were totaled
Baht 10 million (2012: Baht 8 million) (Separate financial statements Baht 9 million (2012: Baht 6 million)).
The fair value of option granted and the inputs of the model used are summarised below.
ESOP-W1
ESOP-W2
ESOP-W3
Baht 12.10 per share
Baht 5.41 per share
Baht 27.63 per share
Dividend yield
3.75%
2.58%
1.79%
Expected stock volatility*
40.0%
45.4%
43.3%
Risk-free interest rate
2.82%
3.30%
3.03%
Expected life of share options
2 years
2 years
3 years
Black-Scholes
Black-Scholes
Black-Scholes
Fair value of options granted
Model used
118
ANNUAL REPORT 2013
*The expected volatility of the share options is based on historical data of the Company’s stock price.
As at 31 December 2013, the remain unexercised of ESOP are summarized below.
2013
2012
ESOP-W1
932,300 units
1,077,200 units
ESOP-W2
1,009,800 units
1,128,700 units
ESOP-W3
1,128,600 units
-
23. Statutory reserve
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a
statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until
the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.
24. Compensation received from claims for damages
In 2011, the tribunal for arbitration between Thai Bitumen Company Limited (Thai Bitumen) and an overseas company
awarded in favor of Thai Bitumen over a sales contract, where the counterparty had failed to make contracted delivery of
goods to Thai Bitumen. The award was approximately USD 20.2 million plus interest of approximately USD 1.7 million.
In late 2011, Thai Bitumen received the awarded amount and recorded the cash receipt, which net of expenses relating
to this matter amounted to Baht 74 million, as income in profit or loss for 2011.
In 2012, Thai Bitumen received a sum of USD 1.6 million being the claim for reimbursement expenses incurred from the
same case. Thai Bitumen recorded the cash receipt as income in the consolidated profit or loss for 2012 and the case
has been fully settled accordingly.
25. Expenses by nature
Significant expenses by nature are as follows:
Consolidated
Separate
2013
2012
2013
2012
Salary and wages and other employee benefits
725
613
326
290
Depreciation and maintenance expenses
514
507
103
108
31,857
35,070
30,854
34,289
Costs related to production of goods and services (excluding of staff cost, depreciation
and maintenance expenses)
ANNUAL REPORT 2013
119
26. Income tax
Income tax expenses for the years ended 31 December 2013 and 2012 are made up as follows:
Consolidated
Separate
2013
2012
2013
2012
117,514
77,989
76,868
40,012
3,425
(11,267)
(1,343)
(5,452)
765
50,061
-
-
-
12,807
-
4,959
121,704
129,590
75,525
39,519
Current income tax:
Current income tax charge
Deferred tax:
Relating to origination and reversal of temporary
differences
Utilisation of tax loss carried forward
during the year
Effects of changes in the applicable tax rates
Income tax expense reported in the statement of comprehensive income
The amounts of income tax relating to each component of other comprehensive income for the years ended 31 December
2013 and 2012 are as follows:
Consolidated
Deferred tax relating to change in fair value of
interest rate swap contract
120
ANNUAL REPORT 2013
Separate
2013
2012
2013
2012
248
371
248
371
-
174
-
174
248
545
248
545
Reconciliation between income tax expenses and the product of accounting profit multiplied by the applicable tax rates
for the years ended 31 December 2013 and 2012 are as follows:
Accounting profit before tax
Consolidated
Separate
2013
2012
2013
2012
983,311
805,439
505,780
493,425
196,662
185,251
101,156
113,488
68
60
-
-
(27,782)
(50,065)
-
-
-
12,807
-
4,959
(62,770)
(47,143)
(25,016)
(31,217)
15,823
30,174
2,902
3,904
(297)
(616)
(297)
(616)
-
(878)
(3,220)
(50,999)
15,526
28,680
(615)
(47,711)
121,704
129,590
75,525
39,519
Income tax at Thai corporate income tax rate of
20% (2012: 23%)
Adjustment in respect of current income tax of
previous year
Utilisation of previously unrecognised tax losses
Difference in tax rate in group companies
Effects of:
Non-deductible expenses
Additional expense deductions allowed
Exemption of income
Total
Income tax expenses reported in the statement
of comprehensive income
The tax rates enacted at the end of the reporting period of the Company and its subsidiaries is 0% to 25% (2012: 0%
to 25%).
ANNUAL REPORT 2013
121
The components of deferred tax assets and deferred tax liabilities are as follows:
Separate financial statement
2013
2012
2013
2012
13,964
13,846
11,109
11,364
Allowance for doubtful accounts
21,278
25,559
13,967
15,031
1,887
521
656
417
Allowance for asset impairment
63,018
63,018
19,414
19,414
Fair value of price hedging contracts
23,963
2,542
23,963
2,542
8,880
10,723
6,789
4,795
132,990
116,209
75,898
53,563
(26,919)
(5,472)
(26,919)
(5,472)
Difference depreciation for tax purpose
(3,338)
(2,331)
(2,795)
(1,984)
Fair value of forward exchange contracts
(325)
(1,560)
(312)
(1,330)
Total
(30,582)
(9,363)
(30,026)
(8,786)
Deferred tax assets - net
102,408
106,846
45,872
44,777
Deferred tax assets
Reduce cost of inventories to net realisable value
Others
Total
Deferred tax liabilities
Fair value of price hedging contracts
The Company and its subsidiaries in Thailand calculated deferred tax assets and liabilities based on a reduction in
the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent in 2013 and 2014, in
compliance with Royal Decree dated December 2011 governing corporate income tax reduction.
As at 31 December 2013 the two subsidiaries have deductible temporary differences and unused tax losses totaling
Baht USD 74 million and 5 million ringgit (2012: USD 80 million and 5 million ringgit), on which deferred tax assets have
not been recognised as these subsidiaries believe that future taxable profits may not be sufficient to allow utilisation of
the temporary differences and unused tax losses.
122
ANNUAL REPORT 2013
27. Promotional privileges
The Company and its subsidiaries were granted investment promotional privileges by the Board of Investment. Important
tax privileges granted to the companies are summarised below.
Manufacture of asphalt
Raycol Asphalt Company Limited
Manufacture of asphalt
Bitumen Marine Company Limited
Exemption from corporate income tax for
8 years commencing from
50% reduction of corporate income tax
rate for 5 years commencing from
1 December 2000
2 December 2008
2 May 2001
3 May 2009
9 February 2006*
-
24 May 2011*
19 December 2012*
-
28 June 2011*
-
Tasco Shipping Company Limited
Alpha Maritime Company Limited
*Exemption of corporate income tax not exceeding of the stipulated amount.
In addition, Kemaman Bitumen Company Sdn Bhd received tax privilege in reduction of corporate income tax in Malaysia
from the stipulated investment amount.
28. Tax privileges for maritime commerce
The Company and two subsidiaries, Delta Shipping Company Limited and Bitumen Marine Company Limited, are
entitled to withholding income tax privileges under Revenue Department Instruction No. Por 110/2545 since they are
international marine transportation business operators, whereby income from vessel rental is subject to withholding tax
at a rate of 1%. Moreover, the Company and the subsidiaries are exempted from corporate income tax on their income
from international marine transportation under Announcement of the Director-General of the Revenue Department No. 72.
29. Earnings per share
Basic earnings per share is calculated by dividing profit for the period attributable to equity holders of the Company
(excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated by dividing profit for the period attributable to equity holders of the Company
(excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year
plus the weighted average number of ordinary shares which would need to be issued to convert all potential ordinary
shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year
or on the date the potential ordinary shares were issued. However, TASCO-W3 was not included in calculation of diluted
earnings per share for the year ended 31 December 2013 and there is no calculation of diluted earnings per share for
the year ended 31 December 2012 since the exercise prices to purchase ordinary shares of the Company were higher
than the average market price of the Company’s shares for the years.
The following tables set forth the computation of basic and diluted earnings per share:
ANNUAL REPORT 2013
123
.
Profit for the year
Weighted average number
of ordinary shares
Earnings per share
2013
2012
2013
2012
2013
2012
(Thousand Baht)
(Thousand Baht)
(Thousand shares)
(Thousand shares)
(Baht)
(Baht)
831,449
642,274
152,565
152,548
5.45
4.21
ESOP-W1
-
-
18
-
ESOP-W2
-
-
246
-
ESOP-W3
-
-
129
-
-
-
393
-
831,449
642,274
152,958
152,548
Profit attributable to equity
holders of the Company
Effect of potential ordinary shares
Profit of ordinary shareholders
assuming the conversion of warrants to ordinary shares
5.44
4.21
Weighted average number
of ordinary shares
Profit for the year
Earnings per share
2013
2012
2013
2012
2013
2012
(Thousand Baht)
(Thousand Baht)
(Thousand shares)
(Thousand shares)
(Baht)
(Baht)
430,255
453,906
152,565
152,548
2.82
2.98
ESOP-W1
-
-
18
-
ESOP-W2
-
-
246
-
ESOP-W3
-
-
129
-
-
-
393
-
430,255
453,906
152,958
152,548
2.81
2.98
Profit attributable to equity
holders of the Company
Effect of potential ordinary
shares
Profit of ordinary shareholders
assuming the conversion
of warrants to ordinary shares
30. Segment information
The Company and its subsidiaries are engaged in single operating segment which is manufacturing and trading of
asphalt and petroleum oil products. Whereas, the marine logistic business complements the manufacturing and trading
of asphalt and petroleum oil products. The Board of Directors of the group is the chief operating decision makers of the
Company and its subsidiaries. As a result, all of the revenues, operating profits and assets as reflected in these financial
statements pertain to the aforementioned reportable operating segment. Therefore, financial information by segment
has been presented only by geographical based on locations of each company, as follows:
124
ANNUAL REPORT 2013
Geographic segment located Geographic segment located
in Thailand
in overseas
Eliminated transactions
2013
2012
2013
2012
Revenue from external
customers
28,629
33,542
5,306
4,121
-
Inter segment revenues
4,567
4,057
766
1,118
33,196
37,599
6,072
693
547
130
Total revenue
Segment operating income
2013
2012
Total
2013
2012
-
33,935
37,663
(5,333)
(5,175)
-
-
5,239
(5,333)
(5,175)
33,935
37,663
124
8
(29)
831
642
Non-current assets (other than deferred tax assets-net)
Geographic segment located Geographic segment located
in Thailand
in overseas
Non-current assets
Eliminated transactions
Total
2013
2012
2013
2012
2013
2012
2013
2012
2,708
2,550
3,245
2,691
-
-
5,953
5,241
Transfer prices between the segments are as set out in Note 7 to the financial statements.
31. Provident fund
The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with the
Provident Fund Act B.E. 2530. Both employees and the Company and its subsidiaries contribute to the fund on a
monthly basis. The fund, which is managed by CIMB-Principal Asset Management Co., Ltd., will be paid to employees
upon termination in accordance with the fund rules. During 2013, the Company and its subsidiaries contributed Baht 9
million (2012: Baht 8 million) to the fund (Separate financial statements: Baht 8 million, 2012: Baht 7 million).
32.Dividend
Dividends
Final dividends for 2011
Approved by
Total dividends
Dividend per share
Annual General Meeting of the
shareholders on 27 April 2012
191
1.25
191
1.25
153
1.00
153
1.00
Total for 2012
Interim dividends for 2013
Total for 2013
Board of Directors’ meeting on 14 August
2013
ANNUAL REPORT 2013
125
33. Commitments and contingent liabilities
33.1 Capital commitment
As at 31 December 2013 and 2012, the Company and its subsidiaries had outstanding capital commitments
relating to the purchase of land, machinery, equipment, computer software and vessel, as follows:
Foreign currency
2013
2012
2013
2012
(Million)
(Million)
(Million)
(Million)
6
6
1
5
87
18
-
-
6
12
-
-
Baht
Ringgit
US Dollar
33.2 Operating lease commitments
The Company and its subsidiaries have entered into several agreements in respect of the lease of buildings,
warehouses and motor vehicles, and other service agreements. The terms of the agreements are generally
between 1 and 4 years.
Future minimum rental and service fees payable under these agreements were as follows:
Separate
Million Baht
Million ringgit
Million Baht
2013
2012
2013
2012
2013
2012
Payable within:
1 year
32
2 to 5 years
28
31
45
1
-
1
-
34
26
32
39
33.3 Long-term service commitments
Service agreements with Colas S.A. to receive management and marketing services and advice on methods and
systems of management and technical assistance in the manufacture of Asphalt Emulsion and Modified Asphalt:
Counterparty
Agreement term
Expiry date
Fee
The Company
5 years
31 December 2017
Annual lump sum administrative fee of Euro
145,000 plus a technical assistance fee equivalent
to 0.75 percent of the consolidated revenues of the
Company generated from the stipulated products
A subsidiary
5 years
30 September 2017
Annual fee of at least Baht 8 million
33.4 Crude oil purchase commitments
As at 31 December 2013, the Company had outstanding commitment in respect of the purchase of crude oil approximately
0.8 million barrels (2012: 0.8 million barrels).
126
ANNUAL REPORT 2013
33.5 Bank guarantees
As at 31 December 2013 and 2012, there were outstanding bank guarantees issued by the banks on behalf of
the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of
business which are summarised below.
Foreign currency
2013
2012
2013
2012
(Million)
(Million)
(Million)
(Million)
Baht
3
3
2
2
Ringgit
5
5
-
-
Renminbi
5
5
5
5
34. Financial instruments
34.1 Financial risk management
The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107
“Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade and
other receivables, trade and other payables, liabilities under finance lease agreements and loans. The financial
risks associated with these financial instruments and how they are managed are described below.
Credit risk
The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable
and loans. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies
and procedures and therefore does not expect to incur material financial losses. In addition, the Company and
its subsidia ries do not have high concentrations of credit risk since it has a large customer base. The maximum
exposure to credit risk is limited to the carrying amounts of receivables and loans, as stated in statements of
financial position.
Interest rate risk
The Company and its subsidiaries’ exposure to interest rate risk relates primarily to its cash at banks, short-term
loans from banks, liabilities under finance lease agreements and long-term borrowings. However, since most of
the Company and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates
which are close to the market rate, the interest rate risk is expected to be minimal.
Significant financial assets and liabilities classified by type of interest rate are summarised in the table below, with
those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or
the repricing date if this occurs before the maturity date.
ANNUAL REPORT 2013
127
Fixed interest rates
Within
1 year
1-5 years
Floating
interest rate
Noninterest
bearing
Total
Interest rate
(% p.a.)
Financial Assets
-
-
62
433
495
0.3 - 2.4
-
-
-
3,967
3,967
-
Financial liabilities
9,416
-
-
-
9,416
0.9 - 7.2
-
-
-
1,612
1,612
-
Liabilities under finance lease agreements
7
-
8
-
2,869
-
15
2,869
2.7 - 75.9
2.1 - 4.1
-
-
-
8
8
Long-term loans from financial institutions
Long-term loans from related party
-
Within
1 year
1-5 years
Floating
Non-
interest rate
interest
bearing
Total
Interest rate
(% p.a.)
Financial Assets
-
-
59
681
740
0.2 - 2.4
-
-
-
5,348
5,348
-
8,237
-
-
-
8,237
0.9 - 7.9
-
-
-
2,203
2,203
-
128
9
13
-
-
22
2.7 - 75.9
4
1
2,956
-
2,961
2.2 - 4.6
Long-term loans from related party
-
-
-
7
7
ANNUAL REPORT 2013
-
Within
1 year
1-5 years
Floating
Non-
interest rate
interest
bearing
Total
Interest rate
(% p.a.)
Financial Assets
35
-
6
-
84
3,663
6
90
3,663
41
0.6
2.8
9,165
5
-
8
-
1,125
1,682
-
9,165
1,682
13
1,125
0.9
4.8 - 75.9
3.5 - 4.1
Within
1 year
1-5 years
Floating
Non-
interest rate
interest
bearing
Total
Interest rate
(% p.a.)
Financial Assets
Liabilities under finance lease
agreements
Long-term loans from financial
institutions
40
-
7
-
37
5,442
-
44
5,442
40
0.7 - 0.8
2.8
8,159
-
-
-
2,212
8,159
2,212
0.9 - 1.2
-
5
10
-
-
15
4.8 - 75.9
4
1
1,421
-
1,426
3.7 - 4.6
Foreign currency risk
The Company and its subsidiaries’ exposure to foreign currency risk arises mainly from trading transactions and
borrowings that are denominated in foreign currencies. The Company and its subsidiaries seek to reduce risk by entering
into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.
The balances of financial assets and liabilities of the Company and its subsidiaries denominated in foreign currencies
are summarised below.
ANNUAL REPORT 2013
129
Foreign currency
Financial assets
as at 31 December
as at 31 December
Average exchange rate
as at 31 December
2013
2012
2013
2012
(Million)
(Million)
(Million)
(Million)
45
-
87
1
309
-
306
-
32.8
5.4
30.6
4.9
Yen
-
-
7
7
0.3
0.4
Ringgit
-
26
-
7
10.0
10.0
Vietnam Dong
7
-
-
-
0.0016
0.0015
Indonesia Rupiah
3
-
-
-
0.0027
0.0032
US Dollar
Renminbi
2013
2012
(Baht per 1 foreign currency unit)
Foreign currency
as at 31 December
Average exchange rate
as at 31 December
2013
2012
2013
2012
(Million)
(Million)
(Million)
(Million)
US Dollar
77
118
303
288
32.8
30.6
Renminbi
-
1
-
-
5.4
4.9
HK Dollar
-
1
-
-
4.2
4.0
1
10.0
10.0
Ringgit
130
Financial assets
as at 31 December
ANNUAL REPORT 2013
-
-
2
2013
2012
(Baht per 1 foreign currency unit)
The Company and its subsidiaries outstanding foreign exchange contracts which maturity date within one year are
summarised below.
Consolidated
Foreign currency
US Dollar
Separate
Sold
Bought
Sold
Bought
amount
amount
amount
amount
(Million)
(Million)
(Million)
(Million)
14
6
12
6
Contractual exchange rate
Sold
31.4 - 32.9 Baht
per 1
US Dollar
Bought
31.7 - 32.8 Baht
per 1
US Dollar
Consolidated
Foreign currency
US Dollar
Separate
Sold
Bought
Sold
Bought
amount
amount
amount
amount
(Million)
(Million)
(Million)
(Million)
30.6
18.6
29.1
18.6
Contractual exchange rate
Sold
30.6 - 32.1 Baht
per 1
US Dollar
Bought
30.6 - 30.9 Baht
per 1
US Dollar
In addition, the Company and its subsidiaries are exposed to foreign exchange risk on their investments in overseas
subsidiaries and associate. These investments are currently not hedged by derivative financial instruments.
Risk from fluctuation in raw materials and finished goods prices
The Company is exposed to risk from fluctuations in the price of raw materials and finished goods. To manage these
risks, the Company has entered into price hedging contracts with banks to hedge the risk from fluctuation in such prices.
As at 31 December 2013 and 2012, the outstanding price hedging contracts which maturity date within one year are
summarised below.
Consolidated/Separate
financial statement
Contracts presented as assets
Contracts to sell finished goods
Four-ways collar options to purchase raw materials
Total price hedging contracts presented as assets
2013
2012
-
13
135
14
135
27
Contracts presented as liabilities
Contracts to sell raw materials
Contracts to sell finished goods
Total price hedging contracts presented as liabilities
9
-
111
13
120
13
ANNUAL REPORT 2013
131
34.2 Fair value of financial instruments
Since the majority of the Company and its subsidiaries’ financial instruments are short-term in nature or bear
floating interest rates, their fair value is not expected to be materially different from the amounts presented in
statement of financial position. For derivatives, fair value is generally derived from quoted market prices, or based
on generally accepted pricing models when no market price is available.
A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing
parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial
instrument or by using an appropriate valuation technique, depending on the nature of the instrument.
35. Capital management
The primary objective of the capital management of the Company and its subsidiaries is to ensure that they have an
appropriate financial structure and preserves the ability to continue their business as a going concern.
The Group manages its capital position with reference to its debt-to-equity ratio. As at 31 December 2013, the Group’s
debt-to-equity ratio was 2.44:1 (2012: 2.70:1) and the Company’s was 2.50:1 (2012: 2.60:1).
36. Approval of financial statements
132
These financial statements were authorised for issue by the Company’s authorised directors on 12 February 2014.
ANNUAL REPORT 2013
COMPANY INFORMATION
HEAD OFFICE
Tipco Tower, 118/1 Rama 6 Road, Samsen Nai, Phayathai District, Bangkok 10400, Thailand.
Tel. +66 2273 6000
Fax. +66 2278 0043
Email : info@tipcoasphalt.com
PRODUCTION FACILITIES
Domestic production facilities of the Tipco Asphalt Group are located as follows:
NAKHON RATCHASIMA
259 Soi Ror Por Chor 12032, Mittapap Road, Naklang, Soongnoen,
Nakhon Ratchasima 30380
Tel. +66 4433 5495-9, +66 2273 6000 Ext. 3
Fax. +66 4433 5495-9 Ext. 14, +66 4433 5050
PHITSANULOK
271 Moo 15 Baan Wang Koom, Bangrakam, Phitsanulok 65140
Tel. +66 5537 1581-3, +66 2273 6000 Ext. 5
Fax. +66 5537 1461-2 Ext. 6360
PHUNPHIN
(subsidiary)
139/5 Moo 3, Suratthani-Takuapa Road, Tharongchang, Phunphin District,
Suratthani 84130
Tel. +66 7735 7214-6, +66 7735 7218, +66 2273 6000 Ext. 4
Fax. +66 7735 7217, +66 2273 6749 Ext. 4
THATHONG
(subsidiary)
123 Moo 3, Suratthani-Kanchanadit Road, Bangkung, Muang District,
Suratthani 84000
Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7
Fax. +66 2273 6000 Ext. 5340
RAYONG
(subsidiary)
93 Moo 5 Makumkoo, Nikompattana District, Rayong 21180
Tel. +66 3889 3641-5
Fax. +66 3889 3640
ANNUAL REPORT 2013
133
COMPANY INFORMATION
OIL AND ASPHALT TERMINALS
The Company operates domestic asphalt terminals and oil depots at the following locations:
PHRAPRADAENG
61 Moo 5, Suksawat Road, Bangjak, Phrapradaeng, Samut Prakan 10130
Tel. +66 2463 0169-70, +66 2817 5111-5, +66 2273 6000 Ext. 6
Fax. +66 2817 5117
THATHONG
(subsidiary)
123 Moo 3, Suratthani-Kanchanadit Road, Bangkung, Muang District, Suratthani 84000
Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7
Fax. +66 7792 2575, +66 2273 6749 Ext. 7
SUBSIDIARIES AND ASSOCIATED COMPANIES
Juristic entities in which the Company has equity in excess of 10%.
SUBSIDIARIES IN THAILAND
THAI BITUMEN CO., LTD.
Nature of business
Head Office Phunphin Thathong Plant Ordinary shares
Registered capital Percentage holding
Producer and distributor of asphalt product It is also a holding company for Kemaman Oil
Corporation Sdn. Bhd. (KOC) and Kemaman Bitumen Company Sdn. Bhd. (KBC), Malaysia.
118/1 Rama VI Rd., Samsen Nai, Phayathai,Bangkok 10400
Tel. +66 2273 6000
Fax. +66 2273 6030
139/5 Moo 3, Suratthani-Takuapa Road, Tharongchang, Phunphin District,
Suratthani 84130
Tel. +66 7735 7214-6, +66 7735 7218, +66 2273 6000 Ext. 4
Fax. +66 7735 7217, +66 2273 6749 Ext. 4
123 Moo 3, Suratthani - Kanchanadit Road, Bangkung, Muang District,
Suratthani 84000
Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7
Fax. +66 7792 2575, +66 2273 6749 Ext. 7
15,000,000
Baht 1,500 million
99.99%
BITUMEN MARINE CO., LTD.
Nature of business
Head Office
Ordinary shares
Registered capital Percentage holding 134
ANNUAL REPORT 2013
118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400
Tel. +66 2273 6000 Ext. 6774
Fax. +66 2271 3370
1,500,000
Baht 150 million
99.99%
DELTA SHIPPING CO., LTD.
Nature of business
Head Office
Ordinary shares
Registered capital
Percentage holding
Tel. +66 2273 6000 Ext. 6774
Fax. +66 2271 3370
800,000
Baht 80 million
99.99%
ALPHA MARITIME CO., LTD.
Nature of business
Head Office
Ordinary shares
Registered capital
Percentage holding
Tel. +66 2273 6000 Ext. 6774
Fax. +66 2271 3370
180,000
Baht 18 million
99.99%
TIPCO MARITIME CO., LTD.
Nature of business Head Office Ordinary shares
Registered capital
Percentage holding
Ship management and agency
Tel. +66 2273 6000 Ext. 6774
Fax. +66 2271 3370
20,000
Baht 2 million
99.97%
TASCO SHIPPING CO., LTD.
Nature of business
Head Office
Ordinary shares
Registered capital Percentage holding
Tel. +66 2273 6000 Ext. 6774
Fax. +66 2271 3370
2,900,000
Baht 290 million
99.99 %
ANNUAL REPORT 2013
135
COMPANY INFORMATION
RAYCOL ASPHALT CO., LTD.
Nature of business
Head Office Rayong
Ordinary shares
Registered capital
Percentage holding
Producer and distributor of asphalt products
Tel. +66 2273 6000
Fax. +66 2273 6030
93 Moo 5 Makumkoo, Nikompattana District, Rayong 21180
Tel. +66 3889 3641-5
Fax. +66 3889 3640
11,100,000
Baht 111 million
41.44%
FOREIGN SUBSIDIARIES
TASCO INTERNATIONAL (HONG KONG) LTD.
Nature of business
Address
Registered capital
Percentage holding
Holding company for investments in China
Room 1A, 1st Floor, O.T.B. Building,
259-265 Des Voeux Road. Central, Hong Kong.
Hong Kong Dollars 30.97 million
100%
KEMAMAN OIL CORPORATION SDN. BHD.
Nature of business
Address Registered capital
Percentage holding
Holding company for investment in an asphalt refinery in Malaysia
A-06-3A, Empire Tower, Empire Subang Jalan SS16/1, SS16
47500 Subang Jaya Selangor, Malaysia
Tel. +603 5635 0998
Fax. +603 5635 0993
Malaysian Ringgit 250.7 million
63.12% (11.30% owned by the Company and 51.82% owned by Thai Bitumen Co., Ltd)
KEMAMAN BITUMEN COMPANY SDN. BHD.
Nature of business
Asphalt refinery in Malaysia
Address
A-06-3A, Empire Tower, Empire Suban Jalan SS16/1, SS16 47500 Subang Jaya Selangor,
Malaysia
Tel. +603 5635 0998
Fax. +603 5635 0993
Email: info@kbc.com.my
Website: www.kbc.com.my
Refinery address
Plot PT 7195, Telok Kalong Industrial Area 24000 Kemaman Terenqqanu, Malaysia
Registered capital
Malaysian Ringgit 500 million
Percentage holding
82.77% (44.81% held by Kemaman Oil Corporation Sdn. Bhd., 12.52% held by the Company and 11.82% held by Thai Bitumen Co., Ltd.)
136
ANNUAL REPORT 2013
COMPANY INFORMATION
TIPCO ASPHALT (CAMBODIA) CO., LTD.
Nature of business
Address
Registered capital
Percentage holding
Producer and distributor of asphalt products in Cambodia
No. 67, St. 322, Sangkat Boeung Keng Kang I, Khan Chamkamon, Phnom Penh, Cambodia
Mobile: +855 1273 9988
Tel: +855 2399 7991
Fax: +855 2399 7992
Email : tac@tipcoasphalt.com
Riel 20 million
100%
ASSOCIATED COMPANIES
COLASIE CO., LTD.
Nature of business
Address
Registered capital Percentage holding Holding company for investment in Asphalt Emulsion and Polymer Modified Asphalt plants in India
7, Place Rene Clair F-92653 Boulogne - Billancourt France Cedex
Euro 1 million
40%
OTHER IMPORTANT INFORMATION
Stock Code
Registration No
No. of Shares Issued
Registered Capital
Paid Up Capital
Website
TASCO (Listed on the Stock Exchange of Thailand - SET)
0107535000044
152,580,868 Shares
1,710,599,290 Baht
1,525,808,680 Baht
www.tipcoasphalt.com
Registrar of Shares Thailand Securities Depository Co., Ltd.
7th Floor, The Stock Exchange of Thailand Building
62 Ratchadaphisek Road, Klongtoey, Bangkok 10110
Tel. +66 2229 2878
Fax. +66 2654 5642, +66 2654 5645
Auditor Mr. Supachai Phanyawattano, Certified Public Accountant Registration No. 3930
and/or Mr.Termphong Opanaphan Certified Public Accountant Registration No. 4501
and/or Mr. Khitsada Lerd wana Certified Public Accountant Registration No. 4958
33rd Floor, Lake Rajada Office Complex
193/136-137 Rajadapisek Road Klongtoey, Bangkok 10110
Tel. +66 2264 0777, +66 2661 9190
Fax. +66 2264 0789-90, +66 2661 9192
ANNUAL REPORT 2013
137
COMPANY INFORMATION
Legal Consultants Mr. Parama Saovabha
Hunton & Williams (Thailand) LLP.
34Th Floor Q.House Lumpine Building 1 South Sathorn Road
Thungmahamek, Sathorn Bangkok 10120
Tel. +66 2645 8866
Fax. +66 2645 8800
Mr. Tawatchai Jaranakaran
Chor. Chanasongkram Advocates & Solicitors
52/3 Phrasumeru Rd., Bangkok
Tel. +66 2282 2995
Financial Advisor Phatra Securities Public Company Limited
6,8-11 Muang Thai-Phatra Office Tower 1
252/6 Ratchadapisek Road, Huaykwang, Bangkok 10310
Tel. +66 2275 0888
Fax. +66 2693 2355
Advisory Plus Co., Ltd.
1550 Thanapoom Tower 10th Floor
New Phetchaburi Road, Khwang Makkasan, Khet Ratcha Thewi, Bangkok 10400
Tel. +66 2652 7858-65
Fax. +66 2652 7867
Consultant or Contract None
Manager
Investors can learn more information of the Company from the Company’s annual registration statement
(form 56-1) displaying at www.sec.or.th or the Company’s
website: www.tipcoasphalt.com
138
ANNUAL REPORT 2013

TASCO: Tipco Asphalt Public Company Limited | Annual Report 2013

Transcription

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