rate to LIBOR/SIBOR+4.50% per annum. The repayment of loans was made on semi-annually through 6 installments of US$
3.40 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 installment due in September 1999. As at July 11,
2000, the company received the letter regarding termination of agreement and request for full debt settlement from authorized
attorney of lending bank.
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14. UNREALIZED GAIN (LOSS) FROM CHANGING FAIR VALUE OF INVESTMENTS
Parent Company
June 30, 2000 December 31, 1999
Beginning of the period 1,173,000.00 0.00
Changes during the period (1,125,375.00) 1,173,000.00
End of the period 47,625.00 1,173,000.00
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 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:
June 30, 2000 June 30, 1999 December 31, 1999
Accounts receivable 178,943,311.32 138,173,497.97
Accounts payable 19,467,627.60 25,773,715.99
Purchases - net 32,720,858.79 24,333,534.67
Sales - net 140,064,528.82 112,238,586.50
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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 (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 average 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.
19. SEGMENT FINANCIAL INFORMATION
The company engages in manufacturing of floor, wall tile, kitchen equipment and supplementary food. The details
relating to the company's operations are segmented according to business for the three and six months ended June 30,
2000 and 1999, as follow :
Baht
Parent financial statements for the period of April - June 2000
Floor and wall tile Sanitary product Other Total
Business Business
Sales - net 382,736,396.70 12,047,289.08 2,371,029.68 397,154,715.46
Less Cost of sales (314,115,594.25) (8,707,422.20) (479,879.84) (323,302,896.29)
Gross profit 68,620,802.45 3,339,866.88 1,891,149.84 73,851,819.17
Profit (Loss) from operation (6,090,796.69)
Equity gain (loss) on investments - net (2,970,508.82)
Interest expenses (53,468,265.02)
Net profits (loss) (62,529,570.53)
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Baht
Parent financial statements for the period of April - June 1999
Floor and wall tile Sanitary product Other Total
Business Business
Sales - net 305,869,891.18 2,215,556.53 0.00 308,085,447.71
Less Cost of sales (290,867,184.40) (1,670,451.29) 0.00 (292,537,635.69)
Gross profit 15,002,706.78 545,105.24 0.00 15,547,812.02
Profit (Loss) from operation (3,001,107.87)
Equity gain (loss) on investments - net (9,093,800.64)
Interest expenses (35,529,504.38)
Net profits (loss) (47,624,412.89)
Baht
Parent financial statements for the period of January - June 2000
Floor and wall tile Sanitary product Other Total
Business Business
Sales - net 746,737,716.65 27,351,155.10 3,574,661.10 777,663,532.85
Less Cost of sales (655,638,410.88) (20,275,827.45) (1,034,765.49) (676,949,003.82)
Gross profit 91,099,305.77 7,075,327.65 2,539,895.61 100,714,529.03
Profit (Loss) from operation (32,680,899.77)
Equity gain (loss) on investments - net (2,670,511.71)
Interest expenses (90,554,636.12)
Net profits (loss) (125,906,047.60)
Baht
Parent financial statements for the period of January - June 1999
Floor and wall tile Sanitary product Other Total
Business Business
Sales - net 568,553,576.92 3,687,359.73 0.00 572,240,936.65
Less Cost of sales (565,092,496.00) (3,091,901.23) 0.00 (568,184,397.23)
Gross profit 3,461,080.92 595,458.50 0.00 4,056,539.42
Profit (Loss) from operation (70,745,034.11)
Equity gain (loss) on investments - net (18,187,601.00)
Interest expenses (74,094,935.43)
Net profits (loss) (163,027,570.54)
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20. CONTINGENT LIABILITIES
20.1 As at June 30, 2000 and December 31, 1999, the company has contingent liabilities for bank's letter of guarantee
approximately Baht 11.70 million. In 1999, the company has unused letter of credit of Baht 4.40 million.
20.2 As at July 11, 2000, the company received informing latter tocease and make principal repayment, totalling approximately
of Baht 743.79 million and total accrued interest expense approximately of Baht 21.87 million from authorized lawyer by
lender as a result of default on debt repayment.
21. RECLASSIFICATION ACCOUNTS
Certain accounts included in the financial statements for the year 1999 have been reclassified for a comparison purpose
with the financial statements as at June 30, 2000.
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. 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.
23. EFFECTS OF CHANGE IN ACCOUNTING METHOD
23.1 In 1999, The company has changed the accounting method of recording of factory maintenance expenses from deferred
expenses to operating expenses in their occurring period to conform with the new accounting standards of the
Framework and interpretation of Impairment of assets-expenses of undeveloped and developing businesses have been
recorded as assets. The company has retroactively adjusted the financial statements for the three and six months ended
June 30, 1999 that have been taken for comparative purpose.
From the aforementioned change in accounting policy, consequently net assets would decrease by Baht
4,049,139.62 as of December 31, 1999 and net loss would increase by Baht 2,692,805.60 and Baht 3,464,025.40 for the
three and six months ended June 30, 1999, respectively.
23.2 The cumulative change in accounting policy of consolidated financial statements and Accounting for investments in
subsidiaries is applied in the second quarter of 2000. The company has changed accounting for investments in
subsidiaries in accordance with Accounting Standard No. 44 Consolidated Financial Statements and Accounting for
Investment in Subsidiaries by taking financial statements of all companies into consolidated financial statement. Such
companies are under control by the parent company, though, the parent company has voting right less than half. Before,
the parent company prepared consolidated financial statements by including the company that the parent company has
shareholding more than 50 per cent of registered capital of those companies. The company, therefore, made retroactive
adjustment in the financial statements of second quarter for the year 1999 by representing cumulative change in those
financial statements.
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Consequence of the aforementioned change in accounting policy are as follow:
The financial statements of parent company as of June 30, 2000, represented a decrease in assets by Baht 0.43
million, an increase in deficit by Baht 1.05 million as of December 31, 1999, and decreases in net loss for the three and
six months by Baht 0.33 million and Baht 0.62 million, respectively.
The consolidated financial statements of the company as of June 30, 2000, represented increases in assets by
Baht 652.78 million, liabilities by Baht 445.11 million, minority interest by Baht 208.10 million and decrease in net
loss by Baht 0.62 million.
24. OTHER
24.1 The company was registered as Public Company Limited.
24.2 The company's head office is located at 65 Chamnan Phenjati Business Center, 29th Fl., Rama 9 Rd., Huaykwang
Bangkok 10320. The location of two branches are as follow:
Branch : 1st site at 54/1 Suwannasorn Road, Tumbol Kokeyae, Nongkhae District, Saraburi.
: 2nd site at 54 Moo1, Tumbol Phaitum, Nongkhae District, Saraburi.
24.3 The company engages in Producing and Distributing of floor, wall tile, kitchen equipment and supplementary food.
24.4 The company has staff in the amount of 1,600 as at June 30, 2000 and December 31, 1999.
