3.6 Investment Valuation
Investments in listed securities and unit trust are stated at the lower of aggregate cost or aggregate market value. Market
value is the closing prices prevailing by the Stock Exchange of Thailand at the end of period. Market value of mutual fund are
stated at their book value as at the end of the period.
Investments in associated companies are stated under equity method
Investments in other companies are stated at cost, except for investment in company which has the capital deficiency. The
company has provision for doubtful accounts in accordance with he criteria of committees.
3.7 Capitalization of Interest
Borrowing costs are capitalized to be cost of assets that the Company has incurred borrowing cost on assets that required a
period of time to get them ready for sale. Capitalization of Borrowing Cost will stop when such assets are ready for their
intended use.
3.8 Earnings (Loss) per share
Earnings (Loss) per share are determined by dividing net profit (loss) by the number of shares outstanding at the end of the
period.
4. CASH IN HAND AND AT BANKS Baht
1999 1998
Cash 100,086.75 100,000.00
Current accounts 677,865.48 796,356.81
Savings deposit 4,583,867.39 1,981,500.74
Total 5,361,819.62 2,877,857.55
5. SHORT - TERM INVESTMENTS
Short term investments consist of the following :
Baht
1999 1998
Cash at banks 3,280,192.97 8,280,192.97
Deposits at financial institutions 52,330,002.08 51,000,000.00
Investments in listed securities and unit trust 1,916,800.00 2,745,750.00
Total 57,526,995.05 62,025,942.97
Investments in listed securities and unit trust consist of the following :
Baht
1999 1998
Listed securities and unit trust - cost 13,859,438.44 17,573,005.95
Less Allowance for diminution in value of securities (11,942,638.44) (14,827,255.95)
Total 1,916,800.00 2,745,750.00
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6. ACCOUNTS AND NOTES RECEIVABLE
The company's delinquent accounts receivable amount of 105 and 138 receivables in 1999 and 1998, respectively, classified
by aging are as follows : Baht
1999 1998
Over 3 months - 6 months 29,018,159.12 10,341,372.45
Over 6 months - 12 months 14,033,115.85 9,736,443.49
Over 12 months 16,815,040.08 36,722,305.62
Total 59,866,315.05 56,800,121.56
The company provides the allowance for doublful accounts amount of Baht 28,131,933.79 in 1999 (In 1998, the amount was
Baht 5,592,129.79)
7. INVENTORIES Baht
1999 1998
Finished goods 236,957,658.89 265,706,037.25
Work in process 17,867,997.45 25,927,062.16
Raw materials 72,309,720.35 99,340,475.25
Supply used 37,947,561.79 39,461,957.50
Goods in transit 2,485,887.97 6,832,936.63
Total Total 367,568,826.45 437,268,468.79
8. INVESTMENTS IN RELATED COMPANIES
Investments in common shares consist of : 1999
Baht
TYPE OF PAID-UP HOLDING COST EQUITY
BUSINESS CAPITAL % METHOD METHOD
BAHT BAHT BAHT
Associated companies
TEKNO CER S.R.L Supplier 428,000.00 45.00 192,600.00 192,600.00
Co., Ltd.
Cermas Co., Ltd. Sale of feldspar and soil 8,000,000.00 21.55 1,224,500.00 0.00
UMI Property Co., Ltd. Real estate 150,000,000.00 37.57 56,350,000.00 0.00
Ruampat Ceramic Ceramic Agent 20,000,000.00 49.00 9,800,000.00 14,878,242.63
Co., Ltd.
Total investments in associated companies 67,567,100.00 15,070,842.63
- 4 -
1999
Baht
TYPE OF PAID-UP HOLDING COST EQUITY
BUSINESS CAPITAL % METHOD METHOD
BAHT BAHT BAHT
Other companies Cost Method
UMI-Laufen Producer of Sanitaryware 430,000,000.00 11.04 33,065,650.21
Sanitaryware Ltd.
Less Provision for diminution in value of investments (33,065,650.21) 0.00
Siam Art Ceramic Seller of Ceramic 110,000,000.00 7.50 8,250,000.00
Co., Ltd.
Surf Dynamics Co., Ltd. Water Sports Equipment 14,000,000.00 14.28 2,000,000.00
Total investments in other companies 10,250,000.00
Total investments in related companies 25,320,842.63
1998
Baht
TYPE OF PAID-UP HOLDING COST EQUITY
BUSINESS CAPITAL % METHOD METHOD
BAHT BAHT BAHT
Associated companies
TEKNO CER S.R.L Supplier 428,000.00 45.00 192,600.00 192,600.00
Co., Ltd
Cermas Co., Ltd Sale of feldspar and 8,000,000.00 21.55 1,224,500.00 650,962.88
soil
UMI Property Co., Ltd Real estate 150,000,000.00 37.57 56,350,000.00 31,584,911.69
Ruampat Ceramic Ceramic Agent 20,000,000.00 49.00 9,800,000.00 13,745,701.91
Co., Ltd.
Total investments in associated companies 67,567,100.00 46,174,176.48
Other companies Cost Method
UMI-Laufen Sanitaryware Producer of 430,000,000.00 11.04 33,065,650.21
Ltd. Sanitaryware
Siam Art Ceramic Co., Ltd. Seller of Ceramic 110,000,000.00 7.50 8,250,000.00
Surf Dynamics Co., Ltd. Water Sports 14,000,000.00 14.28 2,000,000.00
Equipment
Total investments in other companies 43,315,650.21
Total investments in related companies 89,489,826.69
- 5 -
8.1 Investment in associated companies
Investment in TEKNO CER S.R.L. Co.,Ltd. is valued at cost method, because of insufficient information to state under
equity method. Such investment has no material to the position and the results of company's operation.
For the three associated companies for the three months ended March 31, 1999 and 1998, brought into the computation of
investment under equity method, were taken from unaudited financial statements.
8.2 Investment in other companies
Investment in UMI-Laufen Sanitaryware Ltd. had book value lower than cost as at December 31, 1997 of Baht 97.50 million.
As at March 31, 1999, the company provided the allowance for declining in value of investments of Baht 33,065,650.21. The
company believed that the declining in value of investment is impermanent and its operation will be recovered in the near future.
In addition, the major shareholder agrees to provide additional fund in the future and plans to expand the operations.
9. DEPOSITS WITH COMMITMENT
Fixed deposit of Baht 30,011,000.00 as at March 31, 1999 (in 1998, Baht 25 million) is used as collateral for bank overdraft
and loans from financial institutions as mentioned in note no.13 and for bank's issuance of letter of guarantee to the Metropolitan
Power Authority by bank for electricity usage.
10. PROPERTY, PLANT AND EQUIPMENT - NET Baht
1999 1998
Land 154,135,301.52 154,135,301.52
Appraisal surplus of land 266,102,532.00 266,102,532.00
Building 617,199,532.43 616,521,252.43
Machinery 1,860,914,925.02 1,862,174,522.98
Tools 84,286,419.54 82,004,419.53
Furniture and office equipment 49,336,627.14 47,577,449.22
Vehicles 24,760,825.67 24,860,825.67
Office improvement and fixture 28,953,086.96 28,953,086.96
3,085,689,250.28 3,082,329,390.31
Less Accumulated depreciation (1,958,093,519.38) (1,754,369,668.87)
Total 1,127,595,730.90 1,327,959,721.44
Project under construction - expansion part at 7th factory
Building under construction 190,075,577.39 186,335,869.20
Machinery, furniture and fixture and equipment under installation
and in transit 178,146,492.79 160,119,911.09
Total project under construction - expansion part 368,222,070.18 346,455,780.29
Property, plant and equipment - net 1,495,817,801.08 1,674,415,501.73
Depreciation for the fiscal period 43,575,309.60 58,726,706.23
Land including its building and part of machinery are mortgaged as collateral for bank overdrafts, loans from banks and
long-term loans (see notes 13 and 14).
- 6 -
In 1996, the company appraised the land by the independent appraiser. The revaluation increment in land of Baht
266,102,532 is recorded in the shareholders' equity.
The company recorded interest expense incurred from loans to purchase new machinery as a part of cost of machinery
amounting to Baht 12,725,821.92 for three months ended March 31, 1998.
In the third quarter of the year 1998, the company has suspended the construction project of the seventh factory
expansion causing from the volatility of economy as mentioned in note 1 and the slowdown in growth of real estate business.
However, the company has expected to take benefit from such construction project in the future when the economy starts to
recover.
11. DEPOSIT Baht
1999 1998
Deposit for purchasing machineries 45,637,993.69 45,782,250.00
Other deposits 773,400.00 1,046,862.28
Total 46,411,393.69 46,829,112.28
Deposit for purchasing machineries from oversea has value at LIT 32,000 million or Baht 672 million. The company has
already paid the deposit at 15% of machineries value or Baht 45,782,250.00 (LIT 48,000 million) and recorded such amount in
deposit for machineries. Due to the economic volatility as stated in note 1, therefore the company has suspended to purchase the
machineries and the oversea supplier agreed to return the deposit to the company by deducting the returned amount from the
repayments of machineries' spare patrs at 25% of each repayment. The spare parts repayments were paid to the supplier company
througn its branch in Thailand.
12. OTHER ASSETS Baht
1999 1998
Advance payment - share investment 1,251,900.00 1,251,900.00
Concession fee - net 695,253.22 839,618.74
Deferred expenses 7,441,055.82 7,705,872.53
Total 9,388,209.04 9,797,391.27
13. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS Baht
1999 1998
Bank overdrafts 30,398,161.09 45,879,164.84
Loans from banks 373,965,958.24 356,782,450.00
Loans from financial institutions 0.00 770,743.39
Total 404,364,119.33 403,432,358.23
As at March 31, 1999 and 1998, the company had overdraft lines of Baht 122 million at the interest of 10.25-12.00% and
16.25-18.25% per annum and the interest rate of loans from banks are applied of 8.6905-13.3125% and 8.65-30.00% per annum,
respectively.
Bank overdrafts and loans from financial institutions are guaranteed by fixed deposits as stated in note 9, and by
mortgaging land, building and machinery as described in note 10.
- 7 -
14. LONG-TERM LIABILITIES Baht
1999 1998
Long-term loans availment of Baht 1,000 million 280,000,000.00 280,000,000.00
Long-term loans availment of US$ 20 million 755,830,000.00 781,614,000.00
Less Current portion of long - term debt (625,964,400.00) (321,748,760.00)
Total 409,865,600.00 739,865,240.00
On September 1997, the company has long-term loans from banks and financial institutions amounting to Baht 1,000 million
at the interest rate of 11.00-13.75% and MLR+0.5% per annum and US$ 20 million at the interest rate of SIBOR+1.75% and
LIBOR+2.5% per annum. Such long-term loans are guaranteed by mortgaging land, building and part of machinery (in note 10)
and assigned the benefits received from insurance policy to lenders which has certain limitation specified in the agreements.
On December 24, 1997, the company entered into the amendment of loans agreement by reducing the amount loans to
Baht 280 million which equal to the gradually withdraw and the interest rate of bank's standard plus 3% and 4% per annum. The
repayment of principal was made semi-annually through 10 instalments of Baht 28 million each, beginning September 30, 1998.
On March 6, 1998, the company entered into the amendment of loans agreement of US$ 20 million by changing interest rate
to LIBOR/SIBOR+4.5% per annum. The repayment of loans was made semi-annually throught 6 instalment of US$ 3.4 million
each, beginning September 2, 1998.
On September 8, 1998, the bank proposed to extend term of principal repayment granted for one year by calculating interest
of LIBOR/SIBOR+ 6% per annum. These extension resulted the first instalment due in September 1999. However, until the date of
this report the company has not yet made such payments pending for the negotiation to reduce interest rate and to extend the
repayment schedule.
15. LEGAL RESERVE
According to the Public Companies Act, the company has appropriated its reserve as a legal reserve not less than 5% of the
annual net profit deducted by the total accumulated deficit brought forward (if any) until of the reserve reaches an amount not less
than 10% of the authorized share capital.
16. PROVIDENT FUND
The company established contributory registered provident fund in accordance with the Provident Fund Act B.E. 2530 (1987).
17. TRANSACTIONS WITH RELATED COMPANIES
The financial statements include transactions incurred with related companies. These transactions are recorded based on a
mutually determined basis in the ordinary commercial transaction. The intercompany significant transactions with related companies
during the period are as follows:
Baht
1999 1998
Accounts receivable 118,233,034.50 154,302,361.12
Accounts payable 12,120,094.08 24,063,270.33
Purchases - net 15,454,305.62 35,407,741.50
Sales - net 83,103,077.93 124,041,209.06
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18. PROMOTIONAL PRIVILEGES
For the Company's production expansion, the company was granted certain rights and privileges on production of the fifth
plant as a promoted industry under the Investment Promotion Act. B.E. 2520 including exemption from customs duty and
business tax on imported raw materials and supplies for a period of five years and has also obtained a permission to deduct 5% of
the increased income over the previous year, derived from exports for 10 years in the calculation of company income tax,
provided that such income from export is not less than revenues from export sales over the previous three year period except for the
first two year.
Moreover, the promoted products in the fifth plant from the date of income earning, will be exempted on business tax 90%
of distribution products for the period of 5 years, and exempted on corporate income tax for 5 years (for export sales only) and 6
years of each product.
After the promotion is expired, the company will be granted 50% corporate income tax reduction for the period 5 years.
The shareholders will gain benefit from tax-exempted dividend (from the stated exemptions). The dividend will not be levied
during the company's income tax exemption.
19. SEGMENT FINANCIAL INFORMATIONS
Financial informations of the company as follows :
1999
Floor and wall tile Sanitary product Total
Business Business
Sales - net 262,683,685.74 1,471,803.20 264,155,488.94
Less Cost of sales (274,225,311.60) (1,421,449.94) (275,646,761.54)
Gross profit (11,541,625.86) 50,353.26 (11,491,272.60)
Profit (loss) from operation (66,972,706.44)
Unappropriated gain (loss) of associated companies - net (237,344.01)
Interest expenses (38,565,431.05)
Net profits (loss) (105,775,481.50)
1998
Floor and wall tile Sanitary product Total
Business Business
Sales - net 450,339,748.11 4,973,357.41 455,313,105.52
Less Cost of sales (384,769,631.22) (4,486,539.09) (389,256,170.31)
Gross profit 65,570,116.89 486,818.32 66,056,935.21
Profit (loss) from operation 233,983,431.54
Unappropriated gain (loss) of associated companies - net (6,590,869.30)
Interest expenses (36,336,560.48)
Net profits (loss) 191,056,001.76
- 9 -
20. CONTINGENT LIABILITIES
The company has contingent liabilities for bank's letter of guarantee of Baht 9.7 million and Baht 10.18 million as at March
31, 1999 and 1998 respectively.
21. RECLASSIFICATION ACCOUNTS
The accounts included in the financial statements for the year 1998 have been reclassified for a comparison purpose with those
for the year 1999.
22. Y2K ISSUE ON THE COMPANY'S OPERATION (UNAUDITED)
The company purchased software used for management and report preparation from the vendors which have long experience
in develop and install computer program. The company is testing the aforementioned program which the vendor confirmed that the
issue will not create Y2K problem. The estimates of these aforementioned program is approximately Baht 24 million. From the
survey and test of machinery and equipment controlling that there are 12 computers is create Y2K issue which the company has the
estimated expense for purchasing computers instead of the existing approximately Baht 600,000.00.
The company expects to solve its computer system before the year 2000. The company is concerned that its trading company
could not solve the issues in time. However, the company expects that there is no materiality on the company's operation.
