May 15, 2007
Subject : Clarification of Operating Results of the Company and
Subsidiaries for the 1st quarter of the year 2007
To : Secretary-General
The Office of Securities and Exchange Commission, Thailand
The Union Mosaic Industry Public Company Limited has submitted
the company's consolidated Financial Statements for the three months ended
March 31, 2007 which were reviewed by certified auditor. The company had
a net loss of baht 55.13 million compared to a net loss of baht 13.65 million
for the first quarter of the year 2006 due to the following reasons:
1. Revenues from sales decreased 11.28 percent from baht 649.12
million in Q1/2006 to baht 575.91 million in Q1/2007. This was
mainly from a decrease in sales volume, affected from slowing-down
market.
2. The percentage of cost of goods sold to sales revenue rose to 90.75
percent in Q1/2007 compared to 87.16 percent in Q1/2006. The result
was from that the company reduced the production volume and then
resulted in higher production cost.
3. Interest expense was baht 19.82 million in Q1/2007, decreased from
baht 20.45 million in Q1/2006, due to repayment of long-term loan.
In Q1/2007, the company has changed accounting policy for its
investments in subsidiaries and associated from equity method to cost method
in separate financial statements, to comply with the announcement of the
Federation of Accounting Professions No.26/2006 on the subject of accounting
procedures to follow accounting standard No.44 on "Consolidated Financial
Statements and Accounting for Investment in the Subsidiary Company" dated
October 11, 2006.
The change resulted in difference in net loss on the separate financial
statement and from that reported in the consolidated financial statement. In
Q1/2007, the consolidated statement reported a net loss of baht 55.13 million,
while separate financial statements showed a net loss of baht 53.75 million.
As March 31, 2007, investment in subsidiaries and associated, recorded at the
historical cost adjusted by allowance for impairment of investments, was shown
a book value of baht 69.38 million.
The company has retrospectively the financial statements as at December
31, 2006 for comparison purpose, by reversing the participating of loss in
subsidiary and associated companies. This resulted in an increase of baht 7.15
million in retained earnings as at December 31, 2006 and net loss of Q1/2006
decreased by baht 1.7 million.
However, the change affected only by a change in accounting policy not
business fundamentals of the company. The company's dividend policy remained
the same as to pay dividend not less than 50 percent of net profit in separate
financial statement.
Please be informed accordingly.
Yours sincerely,
(Miss Paweena Laowiwatwong)
The Chairman of Executive Board of Directors
The Union Mosaic Industry Public Company Ltd.
