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 the 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
1999 Baht 1998
Cash 100,000.00 104,410.00
Current accounts 5,731,818.63 2,770,885.76
Savings deposit 5,303,920.34 11,658,835.43
Total 11,135,738.97 14,534,131.19
5. SHORT - TERM INVESTMENTS
Short term investments consist of the following :
1999 Baht 1998
Cash at banks 3,280,192.97 44,280,192.97
Deposits with financial institutions 52,000,000.00 51,000,000.00
Investments in listed securities and unit trust 12,591,171.91 1,146,640.00
Total 67,871,364.88 96,426,832.97
Investments in listed securities and unit trust consist of the following :
1999 Baht 1998
Listed securities and unit trust - cost 20,542,079.83 17,589,005.95
Less Allowance for diminution in value of securities (7,950,907.92) (16,442,365.95)
Total 12,591,171.91 1,146,640.00
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6. ACCOUNTS AND NOTES RECEIVABLE
The company's delinquent accounts receivable amount of 98 and 108 receivables in 1999 and 1998, respectively, classified
by aging are as follows :
1999 Baht 1998
Over 3 months - 6 months 45,407,151.90 68,543,918.19
Over 6 months - 12 months 6,749,124.92 9,378,482.75
Over 12 months 22,807,815.26 12,235,663.48
Total 74,964,092.08 90,158,064.42
The company provides the allowance for doubtful accounts amount of Baht 28,131,933.79 in 1999 (In 1998, the amount was
Baht 20,978,619.10)
7. INVENTORIES
1999 Baht 1998
Finished goods 228,029,726.19 289,711,144.60
Work in process 22,381,115.50 25,006,931.40
Raw materials 69,769,889.86 92,512,885.66
Supply used 41,324,493.15 39,334,738.72
Goods in transit 11,536,246.60 5,819,115.10
Total 373,041,471.30 452,384,815.48
8. INVESTMENTS IN RELATED COMPANIES
Investments in common shares consist of : 1999
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 15,990,856.47
Co., Ltd.
Total investments in associated companies 67,567,100.00 16,183,456.47
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1999
TYPE OF PAID-UP HOLDING COST
BUSINESS CAPITAL % METHOD
BAHT BAHT
Other companies
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 26,433,456.47
1998
TYPE OF PAID-UP HOLDING COST EQUITY
BUSINESS CAPITAL % METHOD METHOD
BAHT BAHT BAHT
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 1,224,500.00 568,423.82
soil
UMI Property Co., Ltd Real estate 150,000,000.00 37.57 56,350,000.00 17,559,693.71
Ruampat Ceramic Ceramic Agent 20,000,000.00 49.00 9,800,000.00 14,077,593.96
Co., Ltd.
Total investments in associated companies 67,567,100.00 32,398,311.49
Other companies Cost Method
UMI-Laufen Sanitaryware Producer of 430,000,000.00 11.04 33,065,650.21
Ltd. Sanitaryware
Less Provision for diminution in value of investments (16,532,825.11) 16,532,825.10
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 26,782,825.10
Total investments in related companies 59,181,136.59
- 5 -
8.1 Investments 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 and six months ended June 30, 1999 and 1998, brought into the
computation of investment under equity method, were taken from unaudited financial statements by other auditor.
8.2 Investments in other companies
Investment in UMI-Laufen Sanitaryware Ltd. had net aggregate book value lower than cost approximately of Baht 251.70
million as at December 31, 1998, according to the latest audited financial statements. As at June 30,1999, the company
provided the allowance for diminution in value of investments of Baht 33,065,650.21 (in 1998, Baht 16,532,825.11). The
company believed that the diminution 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 June 30, 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 for electricity usage.
10. PROPERTY, PLANT AND EQUIPMENT - NET
1999 Baht 1998
Land 154,135,301.52 154,135,301.52
Appraisal surplus of land 266,102,532.00 266,102,532.00
Building 617,199,532.43 617,069,532.43
Machinery 1,860,914,925.02 1,860,644,532.43
Tools 85,734,298.68 82,650,152.23
Furniture and office equipment 49,687,523.55 48,214,971.22
Vehicles 24,760,825.67 24,860,825.67
Office improvement and fixture 28,953,086.96 28,953,086.96
3,087,488,025.83 3,082,630,925.01
Less Accumulated depreciation (2,001,938,481.93) (1,812,326,669.18)
Total 1,085,549,543.90 1,270,304,255.83
Project under construction - expansion part at 7th plant
Building under construction 190,075,577.39 188,621,031.95
Machinery, furniture and fixture and equipment under installation
and in transit 178,146,492.79 172,558,643.34
Total project under construction - expansion part 368,222,070.18 361,179,675.29
Property, plant and equipment - net 1,453,771,614.08 1,631,483,931.12
Depreciation for the fiscal period 87,493,748.99 117,818,899.50
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1999 Baht 1998
Property, plant and equipment at book value, beginning of the period 3,084,718,870.50 3,081,074,680.99
Add Increased during the period 2,856,943.92 3,086,244.02
Less Decreased during the period (87,788.59) (1,530,000.00)
Property, plant and equipment at book value, ending of the period 3,087,488,025.83 3,082,630,925.01
Land including its building and part of machinery are mortgaged as collateral for bank overdrafts, loans from banks and
long-term loans as mentioned in notes 13 and 14.
In 1996, the company appraised the land by the independent appraiser. The appraisal surplus of land amount of Baht
266,102,532.00 was 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 project under construction of expansion part of
the seventh plant causing from the volatility of economy as mentioned in note 1 and the slowdown in growth of real
estate business. However, the company expects to take benefit from such construction project in the future when the economic
is recovered.
11. DEPOSIT 1999 Baht 1998
Deposit for purchasing machinery 45,500,488.66 45,769,957.50
Other deposits 773,400.00 697,800.00
Total 46,273,888.66 46,467,757.50
Deposit for purchasing machinery from overseas have value at LIT 32,000 million or Baht 672 million. The company has
already paid the deposit at 15% of machinery value or amount of Baht 45,782,250.00 (LIT 4,800 million) recorded such amount
in deposit for machinery. Due to the economic volatility as stated in note 1, therefore the company has suspended to purchase
the machinery and the overseas supplier agreed to return the deposit to the company by deducting returned amount from
repayments of machinery' spare parts at 25% of each repayment. The spare parts repayments were paid to the supplier company
though its branch in Thailand. The company did not provide the allowance for doubtful accounts of such deposit. The management
believed that when the economic is recovered the company will able to purchase machinery.
12. OTHER ASSETS 1999 Baht 1998
Advance payment - share investment 1,251,900.00 1,251,900.00
Concession fee - net 659,161.84 803,527.36
Deferred expenses 10,952,268.11 7,402,949.83
Total 12,863,329.95 9,458,377.19
13. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS
1999 Baht 1998
Bank overdrafts 32,911,907.34 60,609,559.23
Loans from banks 361,198,858.24 369,063,950.00
Loans from financial institutions 0.00 770,838.88
Total 394,110,765.58 430,444,348.11
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As at June 30, 1999 and 1998, the company had overdraft lines of Baht 122 million and Baht 108 million, respectively, at
the interest of 9.25-11.25% and 16.25-18.25% per annum and the interest rate of loans from banks are applied of 8.46-13.3125%
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 part of machinery as collateral, as described in note 10.
14. LONG-TERM LIABILITIES 1999 Baht 1998
Long-term loans of Baht 1,000 million 280,000,000.00 280,000,000.00
Long-term loans of US$ 20 million 740,018,000.00 851,794,000.00
Less Current portion of long - term debt (615,212,240.00) (345,609,960.00)
Total 404,805,760.00 786,184,040.00
On September 1997, the company had 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 of loans to
Baht 280 million which equal to the gradually withdrawn with the average interest rate of bank's standard plus 3% and 4% per annum.
The repayment of principal was made on semi-annually through 10 instalments of Baht 28 million each, beginning on 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 on semi-annually through 6 instalments of US$ 3.4 million
each, beginning on 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 since the company is in pending for the negotiation to reduce interest
rate and to extend the grant period.
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:
- 8 -
1999 Baht 1998
Accounts receivable 143,218,983.50 138,139,967.63
Accounts payable 19,750,253.92 22,473,156.24
Purchases - net 24,333,534.67 30,123,004.62
Sales - net 112,838,586.50 96,056,286.40
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 (5 year for export) and has also obtained a permission to deduct 5% of the
increased income over the previous year, derived from export for 10 years, commencing from the date of income earning.
The income from export of that year must not be less than revenues from the averaged of export sales over the previous three years
period except for the first two years.
Moreover, the promoted products in the fifth plant from the date of income earning, will be exempted on business tax 90%
of normal rate for the period of 5 years, and exempted on corporate income tax for 5 years (for export sales only) and 6 years of
each type of product.
After the promotion is expired, the company will be granted corporate income tax reduction at 50% of normal rate for 5 years.
The shareholders will gain benefit from tax-exempted on dividend received from the company (from the stated exemptions).
The dividend will not be levied over the period of the company's income tax exemption.
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19. SEGMENT FINANCIAL INFORMATION
The company engages in manufacturing of floor and wall tile. The details relating to the company's operations are segmented
according to business for the three months and six months ended June 30, 1999 and 1998, as follow :
Baht Baht
April - June April - June
1999 1998
Floor and wall tile Sanitary product Total Floor and wall tile Sanitary product Total
Business Business Business Business
Sales - net 305,869,891.18 2,215,556.53 308,085,447.71 308,475,105.58 2,369,597.13 310,844,702.71
Less Cost of sales (290,867,184.40) (1,670,451.29) (292,537,635.69) (299,930,891.60) (2,050,428.90) (301,981,320.50)
Gross profit 15,002,706.78 545,105.24 15,547,812.02 8,544,213.98 319,168.23 8,863,382.21
Profit (loss) from operation (308,302.27) (153,259,559.07)
Equity gain (loss) on investments - net 1,112,613.84 (13,775,864.99)
Interest expenses (35,529,504.38) (34,384,717.66)
Net profits (loss) (34,725,192.81) (201,420,141.72)
January - June January - June
1999 1998
Floor and wall tile Sanitary product Total Floor and wall tile Sanitary product Total
Business Business Business Business
Sales - net 568,553,576.92 3,687,359.73 572,240,936.65 758,814,853.69 7,342,954.54 766,157,808.23
Less Cost of sales (565,092,496.00) (3,091,901.23) (568,184,397.23) (684,700,522.82) (6,536,967.99) (691,237,490.81)
Gross profit 3,461,080.92 595,458.50 4,056,539.42 74,114,330.87 805,986.55 74,920,317.42
Profit (loss) from operation (67,281,008.71) 80,723,872.47
Equity gain (loss) on investments - net 875,269.83 (20,366,734.29)
Interest expenses (74,094,935.43) (70,721,278.14)
Net profits (loss) (140,500,674.31) (10,364,139.96)
- 10 -
20. CONTINGENT LIABILITIES
As at June 30, 1999 and 1998, the company has contingent liabilities for bank's letter of guarantee approximately Baht 9.7
million and Baht 10.29 million, 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 control, there are 12 computers creating Y2K issue which the company has the
estimated expense approximately Baht 600,000.00 for purchasing computers to replace the existing computers.
Although the company expects to solve its computer system within the year 1999, 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 of which cannot be presently determined.
