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10. PROPERTY, PLANT AND EQUIPMENT - NET Baht
1998 1997
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 1,860,644,522.98 1,863,114,522.98
Tools 83,794,079.98 79,762,720.21
Office furniture and fixture 49,128,988.96 47,240,839.22
Vehicles 24,760,825.67 25,244,425.67
Office improvement and fixture 28,953,086.96 28,953,086.96
3,084,718,870.50 3,081,074,680.99
Less Accumulated depreciation (1,914,518,209.78) (1,698,805,482.18)
Total 1,170,200,660.72 1,382,269,198.81
Project under construction - expansion part at 7th factory
Construction project under construction 188,984,668.31 186,335,869.20
Machinery, furniture and fixture and equipment under installation
and in transit 177,983,874.83 146,578,284.17
Total project under construction - expansion part 366,968,543.14 332,914,153.37
Property, plant and equipment - net 1,537,169,203.86 1,715,183,352.18
Depreciation for the fiscal year 220,247,807.51 240,968,241.00
Land including its building and part of machinery are mortgaged as collateral for bank overdrafts, loans
from banks and long-term loans (see notes 12 and 13).
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 25,536,404.10 for the year ended December 31,1998 (In 1997, Baht
30,841,061.00).
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.
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11. OTHER ASSETS Baht
1998 1997
Advance payment - share investment 1,251,900.00 1,251,900.00
Concession fee - net 731,344.60 875,710.12
Deferred charges 6,978,169.36 7,362,510.18
Total 8,961,413.96 9,490,120.30
12. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS Baht
1998 1997
Bank overdrafts 70,705,074.48 58,773,248.82
Loans from banks 370,810,708.24 386,446,000.00
Loans from financial institutions - 826,554.81
Total 441,515,782.72 446,045,803.63
As at December 31, 1998 and 1997, the company had overdraft lines of Baht 122 million at the interest of
MOR+2% and 13.50-17.50% per annum and the interest rate of loans from banks are applied of 8.65-30.00% and
9.91-17.75% per annum respectively.
Bank overdrafts and loans from banks are guaranteed by fixed deposits as stated in note 9, and by
mortgaging land, building and machinery as described in note 10.
13. LONG-TERM LIABILITIES Baht
1998 1997
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 737,800,000.00 951,120,000.00
Less Current portion of long - term debt (460,278,000.00) (351,380,800.00)
Total 557,522,000.00 879,739,200.00
In September 1997, the company has long-term loans from banks and financial institutions amounting
to Baht 1,000 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 receive 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.
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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 company proposed to extend the principal 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.
14. 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.
15. LOSS ON THE APPLICATION OF THE MANAGED FLOAT EXCHANGE SYSTEM
For the year ended December 31, 1997, loss on the application of the Managed Float exchange system which
was calculated by converting the assets and liabilities denominated in foreign currencies into Baht as described in
note 3.5 to the financial statements is presented as an extraordinary items in the profit and loss statement amounted
to Baht 530,312,404.25.
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
1998 1997
Accounts receivable 98,023,956.22 116,500,817.97
Accounts payable 9,506,608.61 35,072,681.61
Purchases - net 98,689,078.77 203,143,281.20
Sales - net 364,738,277.52 410,812,044.94
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.
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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 production.
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 exeptions). The dividend
will not be levied during the company's income tax exemption.
19. SEGMENT FINANCIAL INFORMATIONS
The company operates and manufactures wall tile and floor tile. Segment financial informations of the
company as follows:
Bath
1998 1997
Sales-net 1,280 1,652
Cost of sales (1,186) (1,372)
Gross profit 94 280
Profit(loss) from operation 175 144
Unappropriated gain(loss) of associated companies-net (37) (26)
Interest expenses (160) (109)
Unrealized gain(loss) of investments (32) (5)
Net profits(loss) (54) 4
20. CONTINGENT LIABILITIES
The company has contingent liabilities for bank's letter of guarantee of Baht 9.7 million and Baht 10.2
million as at December 31,1998 and 1997 respectively.
21. RECLASSIFICATION ACCOUNTS
The accounts included in the financial statements for the year 1997 have been reclassified for a comparison
purpose with those for the year 1998.
22. Y2K ISSUE ON THE COMPANY'S OPERATION
The company purchased software used for management and report preparation from the vendors which has
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.
