February 28, 2008
Subject: Clarification of Operating Results of the Company and Subsidiaries
for the year 2007 and the effect from changing accounting policy
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 year ended as at December
31, 2007 which were audited by certified auditor. The results of operating of
2007 compared to those in 2006 are as followings:
(Unit : million baht) For the year Change Increase / (Decrease)
2007 2006 Million baht percent
Sales Revenues 2,243 2,308 (65) (3%)
Total Revenues 2,267 2,352 (85) (4%)
Net profit (Loss) (139) (151) 12 8%
The significant changes of operating result are as follows:
1. Net loss for the year 2007 was baht 139.13 million which was
lower than net loss of baht 150.93 million of the previous
year or decreased by 8 percent. Even though, the revenue from
sales was decreased, the company effort to reduce production
cost and expenses has resulted in lower loss.
2. Revenue from sales for the year 2007 was decreased by 3 percent
from that of 2006, due to a slowing-down market and a higher
competition. However, the company policy in research and
development to increase product value is continuing, together
with an expansion in distribution channel and customer group,
in order to increase our sales in the future.
3. Cost of goods sold for the year 2007 was slightly decreased from
2006. Although the company has experienced higher price of raw
material and energy, a slight change in cost of goods sold came
from the improvement in our production process. Cost of goods
sold is expected to decrease continuously due to our cost
reduction policy.
4. Selling and administrative expenses for the year 2007 were baht
331.85 million which a decrease of baht 63.11 million or 16
percent compared to those in 2006, which was due to the company's
policy to reduce sales and marketing expenses, improve internal
process, and also lower delivery cost.
5. Interest expense for the year 2007 was baht 70.53 million,
decreased by baht 16.86 million or 19 percent from that 2006,
due to lower interest rate and repayment of long-term debt.
As of December 31, 2007, the company's outstanding balance of
long-term debt was baht 654 million, which was decreased by baht
152 million compared to that as of December 31, 2006.
In 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 2007, the consolidated statement reported a net loss of baht
139.13 million, while separate financial statements showed a net loss of baht
134.54 million. As at December 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 adjusted 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 2007 increased by baht 3.27 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.
