banpu public company limited · management’s discussion and analysis of the consolidated...
TRANSCRIPT
Annual Report 2007
BANPU PUBLIC CO MPANY LIMITED
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Banpu deals with the problem of depleting assets through the careful and strategic timing of
new investments, cost rationalization schemes – and by focusing on good corporate governance
and management training. Through these efforts we also sharpen our acquisition skills and
ensure efficient access to finance when we need it. Finally we diversify our risks geographically
and through investment in the power business. Going forward we have also made a commitment
to invest in renewable energy, an intrinsically more sustainable form of energy supply.
F o c u s o n S u s t a i n a b l e G r o w t h
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Financial Highlights
Board of Directors’ Review
Chief Executive Officer Review
Key Financial Results
Vision & Mission
Focus on Sustainable Growth
Banpu Corporate Social Responsibility During 2007
Industrial & Marketing Outlook
Risk Factors
Operations During the Previous Year
Revenue Structure
Summary of Major Changes and Developments in 2007
and Major Current Events
Major Shareholders
Organization Chart
Management Structure
Board of Directors and Management
Shareholdings of the Board of Directors and Management
Remuneration of the Board of Directors and Management
Corporate Governance and Supervision on the Use of
Internal Information
Internal Control
Connected Persons and Transactions
Report of the Board of Directors’ Responsibility
in the Financial Statements
Report of the Audit Committee to Shareholders
Management’s Discussion and Analysis of
the Consolidated Financial Statements
Auditor’s Report
Financial Statements
Other References
Banpu Group Structure
Details of the Company and Its Subsidiary
and Associated Companies
003
004
006
010
012
014
018
023
031
037
039
041
043
044
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051
059
060
062
073
076
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084
086
091
092
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C o n t e n t sAnnual Report 2007 • Banpu Public Company Limited
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Financial Position Total Assets (THB million) 65,051 49,386 45,088
Total Liabilities (THB million) 26,554 27,043 23,288
Total Shareholders’ Equity (THB million) 38,497 22,344 21,801
Issued and Paid-up Share Capital (THB million) 2,717 2,717 2,717
Operational Results Sales Revenues (THB million) 32,442 33,378 25,209
Cost of Sales (THB million) 20,964 20,838 13,933
Gross Profit (THB million) 11,478 12,541 11,275
Selling and Administration Expenses (THB million) 5,114 4,447 3,136
Export Tax (THB million) - 706 196
Royalty Fee (THB million) 3,247 3,238 2,547
Other Revenues (THB million) 2,491 1,755 3,646
Other Expenses (THB million) 390 659 232
Profit from Operation (THB million) 5,217 5,246 8,811
Share of Gain/(Loss) of Joint Ventures and Asso. (THB million) 4,504 801 (119)
Interest Expenses (THB million) 1,160 953 509
Corporate Income Tax (THB million) 1,492 1,122 2,217
Net Profit (THB million) 6,654 3,610 5,559
Financial Ratios Gross Profit Margin (%) 35.38 37.57 44.73
Net Profit Margin (%) 19.05 10.28 19.26
Returns on Assets (%) 11.63 7.64 13.14
Returns on Equity (%) 21.87 16.36 24.75
Interest Coverage Ratio (times) 5.60 7.24 8.94
Net Debt to Equity (times) 0.14 0.66 0.34
Data per Share Earnings per Share (THB) 24.49 13.29 20.46
Book Value per Share (THB) 141.67 82.22 80.22
Dividend per Share (THB) 8.50 7.50 12.50
200520062007
003F i n a n c i a l H i g h l i g h t sAnnual Report 2007 • Banpu Public Company Limited
For the year ending
*The Company announced dividend payments of THB 8.50 per share, of which an interim dividend worth THB 3.75 per share was paid on 28 September 2007.
The remaining dividend of THB 4.75 per share, which will be paid out of the Company’s retained earnings and operational results during the period between
1 July 2007 and 31 December 2007, is scheduled on 24 April 2008.
Remark: Financial figures are based on the consolidated financial statement.
0 4B o a r d o f D i r e c t o r s ’ R e v i e wAnnual Report 2007 • Banpu Public Company Limited
In 2007, Banpu Public Company Limited achieved our stated objectives in terms of operational results and
corporate growth, even in the face of major economic changes both domestic and international. Many factors affected
the Company’s volume of coal production, including the rising oil price in the global market and significant weather
events, including some of the heaviest rainfall in memory in the Republic of Indonesia. A higher average price for coal,
conforming to a world-wide upward trend in coal prices, was able to offset the Company’s lower output, and contributed
positively to earnings in 2007.
2007 was thus another year during which Banpu made major advances in our commercial operations,
our evolving systems of business and personnel management, and activities that demonstrated our commitments
to society. In all these ways, Banpu was able to build a greater, more sustainable future. Among our most notable
activities in 2007 were the following:
ë Banpu successfully registered our subsidiary, PT. Indo Tambangraya Megah Tbk, or ITM, in the Indonesian
Stock Exchange on 18 December 2007. This move has contributed to a strengthening and acceleration of Banpu’s
sustainable growth in Indonesia.
ë Another subsidiary, Banpu Power Ltd., signed a joint development agreement (JDA) with Ratchaburi
Electricity Generating Holding Public Co., Ltd. (RATCH) to study and develop Hongsa Project, located in Hongsa
Subdistrict, Xayaburi District, Lao People’s Democratic Republic. The Lao government has permitted Banpu Power
to conduct a feasibility study and build a coal-fired power plant with a capacity of 1,878 megawatts.
ë A business stream devoted to developing new energy sources has been established. This new department
named New Energy Development Project will explore opportunities in renewable & alternative energy and environment-
friendly energy sources that minimize carbon dioxide output. Our aim is to dedicate 2 per cent of corporate assets to
investments in this field.
ë The official closure of the Lampang mine (LP-2) at Lampang, after over 16 years of operation, was considered
a model closure for the industry. The Lampang mine was one of Thailand’s largest coal mines. Even after its closure,
the mine is still regarded as an example of professional mine management for other Banpu coal mines, both in the
Republic of Indonesia and the People’s Republic of China.
ë Banpu received the world’s first TPM3 Excellence Award from CTPM (Australasia) in Sydney, Australia – clear
acknowledgement of the Company’s adherence to the highest standards of total productive maintenance recognized by
CTPM (Australasia).
The Board of Directors regards the sustainable growth of the Company’s business to be among its most important
concerns. “Sustainable Development Policy” was announced last year by way of emphasizing the Company’s
obligation to act as a good member of society, to conduct all our business ethically, and to adhere to the rules of whatever
community or country in which we operate. Our publication of this policy is intended to enhance the confidence reposed
in Banpu as the builder and maintainer of a balance among the economy, society, and the environment.
Our Corporate Social Responsibility (CSR) activities, both in corporate & local level, have thus been constant
expressions of Banpu’s policy. In 2007, the Company made special efforts to encourage personnel to take part in aiding
society through our “Employee Volunteering Program”. Every staff member, of every level and in every line of work,
004
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including executives, had a part to play in building society and making sacrifices for the sake of the community’s
welfare. This dedication was complemented by regular CSR programs of Banpu, such as the ICT Development
for Education Program, the Power Green Camp, and the YIM Program, all of which are slated for continuation in
years to come.
High-quality personnel are among the best guarantors of the Company’s ongoing, sustainable growth.
One of Banpu’s main commitments, therefore, has been training that develops the excellence of individuals and teams
within the organization so that they work together effectively and are able to deal with continuous change in our field of
business. Among the types of training we offer are those which deal with leadership performance and career skills.
We also continually emphasize the “Banpu Spirit” through numerous activities that bring our personnel, who belong to
various countries and ethnic groups, into one corporate culture, mould them to work together in pursuit of similar goals,
and help them live together in harmony.
In search of more efficient management and corporate governance at Banpu, the Board of Directors continues to
find ways to add sustainable value to the organization. The principles of good corporate governance are applied strictly to
Banpu as a whole, and more specifically to the Company’s Indonesia- and China- based subsidiaries, which must also
strictly observe the laws of the countries in which they operate. During 2007, the Board of Directors has had a major role
to play in improving management in Banpu and Banpu’s subsidiaries, as follows:
ë The structure and process of management at PT. Indo Tambangraya Megah Tbk (ITM) were adjusted so as to
make the Company a leader in the Indonesian Stock Exchange. This restructuring included a new organization chart,
redelegation of duties to facilitate better work performance, appointing a board of commissioners and board of directors
at ITM and specifying the scope of authority and responsibilities of each, and preparing for the establishment of Audit
Committee, as well as Corporate Governance, Nomination, and Compensation Committee, to ensure good governance of
the Company.
ë The Board of Directors supports the development of Banpu as a learning organization and a centre of expertise
in the field of coal mining. Annual technical meetings and internal knowledge-sharing programs are arranged to facilitate
the sharing of information, knowledge, experience, and innovative ideas among Banpu staff in Thailand, Indonesia,
China, and India. The effectiveness of our communication technologies and their applications represent another area in
which much more needs to be done.
ë The Board of Directors and the Audit Committee have joined forces to improve the structure and system of
internal audits as they relate to operations, auditing, performance management, and risk management.
Finally, the Board of Directors would like to thank our shareholders, our stakeholders, and our supporters for their
sustained and generous contributions. The Board of Directors is determined to continue conducting our business with
fairness, transparency, good corporate governance, and good citizenship in every country where Banpu operates. We
shall continue to place particular emphasis on the development of communities, society, and the environment, along with
successful business practice. We believe, in other words, that “an industry will be strong only when it is developed in
tandem with social and environmental responsibility.”
005
Mr. Soonthorn Vongkusolkit
Chairman of the Board of Directors
0 6C h i e f E x e c u t i v e O f f i c e r R e v i e wAnnual Report 2007 • Banpu Public Company Limited
006
Banpu achieved strong earnings growth in 2007 based on a first full year of income from BLCP and BPIC. The result
is the reward of many years of hard work and patience in developing a new coal-fired power business at Banpu. While the
relative proportion of our power sector earnings could fall in the years ahead, we are committed to further investment in this
area, particularly where coal-power synergies are possible. In this regard, I am pleased to report good progress in the early
stages of development of Hongsa in Laos – and our intention to get to financial close on this project by the end of 2008.
Our coal business underwent a second year of careful restructuring, investment and rationalization in 2007, including
a stock market listing for our Indonesian coal interests under PT. Indo Tambangraya Megah Tbk (“ITM”) in December.
Going forward, while the coal price environment is a cause for some optimism, costs are rising – and coal industry asset price
expectations will make acquisition growth more challenging.
O u r f i n a n c i a l p e r f o r m a n c e i n 2 0 0 7
Earnings increased 84 per cent from THB 13.3 per share in 2006 to THB 24.5 per share in 2007 – or in absolute
terms from THB 3,610 million to THB 6,654 million. This strong bottom line performance was primarily the result of
a nearly three-fold increase in earnings before interest and tax (“EBIT”) from our power interests as well as some exceptional
income from share sales (minor stakes in ITM and Lanna Resources). On the basis of this earnings strength, Banpu
announced dividends for the year of THB 8.5 per share, up from THB 7.5 in 2006.
The rapid growth in power business earnings was due to a first full year of associate income from our 50 per cent
stake in the BLCP coal-fired power operation as well as a first full year of revenue from our power assets in China
(“BPIC”). While our coal business EBIT fell 18 per cent year-on-year to THB 3,903 million, our power business EBIT
increased 293 per cent to THB 5,073 million. Overall Banpu’s EBIT increased by nearly 50 per cent in 2007.
The fall in coal business earnings, despite higher prices, was a consequence of an 11 per cent fall in coal sales volume,
Thai Baht appreciation and higher costs. Total coal sales from Banpu’s Indonesian and Thai mines fell in 2007 due to the
impact of a force majeure incident at Bontang and heavy rains – as well as the winding-down of our Thai coal operations.
At the consolidated revenue level, Banpu’s coal sales revenues were down 7 per cent year-on-year at THB
28,429 million, dragging down the top-line revenue figure by 3 per cent to THB 32,442 million (including BPIC revenues).
Cost pressures during the year were mainly the result of an increasing fuel price and higher stripping ratios at Banpu’s coal
operations.
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Mr. Chanin Vongkusolkit
Chief Executive Officer
007
C o a l s a l e s i n 2 0 0 7 a n d t h e o u t l o o k
Banpu’s total consolidated coal sales volume in 2007 was around 19.3 million tonnes, down about 11 per cent
from 2006. The adverse weather conditions and technical problems at Bontang impacted sales to the premium East Asian
markets as well as to Indonesia and Thailand. Thai sales were also affected by reduced output at LP-2 and CMMC.
Over 40 per cent of Banpu’s coal sales continued to be exported to the premium markets of Japan, Taiwan and
South Korea, although in absolute terms coal tonnage to these markets fell in 2007. Sales in and to Indonesia and Thailand
fell to 1.2 million tonnes and 3.3 million tonnes respectively in 2007. By contrast, our sales to China increased more than
three times to 2.5 million tonnes.
Banpu’s weighted average selling price in 2007 increased 17 per cent on the previous year thanks to rising coal
prices globally. Looking forward to 2008 and with over 70 per cent of sales contracted and priced, we can expect an average
selling price increase of around 50 per cent or perhaps more compared with last year.
The Barlow Jonker spot index is at USD 128 per tonne1 at the time of writing2, more than double the levels seen since
2004. This unprecedented increase is the result of strong demand growth, supply constraints in the main coal exporting
countries, diversions to metallurgical coal markets – and the continued rise in oil prices. Looking ahead, while a US
economic slowdown may impact growth in Asia and possibly coal prices, we expect many of the key supply-demand
dynamics at work to keep coal prices at relatively high levels in 2008 and 2009.
I n d o n e s i a n c o a l b u s i n e s s : r e s t r u c t u r i n g a n d l i s t i n g
Banpu decided to restructure its Indonesian coal business under one holding company, PT. Indo Tambangraya Megah
Tbk (“ITM”) in 2007 and to float the company on the Indonesian stock exchange. Enhancing accountability and facilitating
further growth were the main reasons behind this decision. These themes are discussed further in this annual report in
the “Focus on sustainable growth”.
ITM raised IDR 3.2 trillion (approximately USD 338 million) in the initial public offering (“IPO”) by issuing new
shares representing around 20 per cent of the post-offer capital. ITM shares (under the ticker code “ITMG”) commenced
trading on the Indonesian Stock Exchange on 18 December 2007 and the share price has since performed very well relative
to the local index. Through the restructuring and IPO, Banpu’s effective “equity” interest in the Indonesian coal assets has
now been reduced to approximately 74 per cent.
Notes: 1 Based on CV 6,700 kcal/kg GAD coal exports from Australia to Japan
2 28 February 2008
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I n d o n e s i a n c o a l b u s i n e s s : i n v e s t m e n t a n d r a t i o n a l i s a t i o n
Although Indominco-Bontang’s output in 2007 rose to 11.5 million tonnes (from 10.3 million tonnes in 2006),
overall ITM’s coal production fell 8 per cent year-on-year due to lower output at Trubaindo and Jorong – and cessation of
operations at Kitadin-Embalut. In 2008 we are targeting production slightly above 2007 levels, including 5 million tonnes
at Trubaindo.
Looking further ahead, ITM is seeking to sustain output levels through exploration drilling at Jorong and through
the development of the East Block open-pit at Indominco-Bontang (subject to final approvals by Ministry of Mines
and Energy), the West Block underground mine also at Indominco-Bontang (under feasibility and trials) – and the new
Bharinto mine, scheduled to commence production by the end of 2009. ITM will also continue to evaluate new acquisition
opportunities as in previous years – and seize any which are likely to create value for the company. Additionally, ITM plans
to update parameters so as to review coal reserves within this year by the third party consultant to issue new Competent
Person Report.
Last year saw the launch of a major expansion of the Bontang coal terminal designed to increase throughput capacity
and efficiency at many levels, including an expansion of the ship-loading capacity from 12.5 million tonnes to 18.5 million
tonnes per annum. The objectives are to improve the service to customers (blending, reliability...), to reduce costs and to
enable Trubaindo coal to be handled through Bontang. The expansion project should be complete by early 2009.
In parallel with the expansion we are also investing in other schemes designed to reduce costs and enhance value to
customers. These include addressing contractor and equipment capacity constraints, construction of a 14 megawatt captive
coal-fired power plant at Bontang to reduce petroleum dependence, flexible loading schedules to reduce demurrage charges,
better barge fleet management – and a washing plant at Trubaindo.
O u r o t h e r c o a l b u s i n e s s e s
In Thailand, LP-2 and CMMC are now coming to the end of their commercial lives. This year will see the last
production from these mines at around 0.5 million tonnes and then full closure and land reclamation.
In China, Banpu holds minority but strategic interests in two companies: Hebi Zhong Tai Mining (“HZTM”) in
Henan Province (40 per cent) and Asian American Coal Inc. (21 per cent) which owns a 56 per cent shareholding in the
Daning underground operation in Shanxi Province and a 45 per cent stake in a new project called Gaohe, also in Shanxi
Province.
In 2007, HZTM completed an expansion to a capacity of 1.5 million tonnes per annum and achieved an average
coal price of RMB 423 per tonne versus RMB 372 in 2006. At Daning, output grew to 3.1 million tonnes with an average
selling price of RMB 381 per tonne, up from RMB 281 in the previous year. In 2008, a 15 kilometer rail spur to connect to
the provincial railway is scheduled for completion and output is targeted at 4 million tonnes. The new project at Gaohe plans
to produce up to 6 million tonnes per annum of semi-anthracite coal by 2013, selling to domestic utilities and steel mills.
The project is now under construction and is applying for licenses. The production profile and economics of the project
should become clearer by mid-year after some critical degas trials. Banpu’s position in AACI is currently under
review – either for expansion to a meaningful level of control, or divestment.
008
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B a n p u ’ s p o w e r b u s i n e s s
Through holding company BPIC, Banpu owns three combined heat and power (“CHP”) plants in China: two in
Hebei Province (Luannan and Zhengding) and one in Shandong Province (Zouping). All plants are being upgraded.
The total power capacity of BPIC is now approximately 250 megawatts with around 800 tonnes per hour of steam
capacity. BPIC performed well in 2007 and total EBITDA3 from the three operations in 2007 was USD 36.34 million.
Going forward the higher coal price environment will put increasing pressure on margins.
In Thailand, BLCP, the 1,434 megawatt coal-fired power plant which came on stream in 2006, achieved a smooth
first full year of operation. Total revenues in 2007 were recorded at THB 20,307 million. EBITDA in 2007 was THB 11,243
million and Banpu was able to register equity associate income of THB 4,076 million from its 50 per cent shareholding.
Banpu’s next major power project involves the development of a lignite-fired 1,800 megawatt power plant project
in Laos. In 2007, the project achieved some key milestones with signature of an EPC contract with CMEC and Harbin,
approval of a long term electricity tariff of THB 2.05 per kilowatt hour – and agreement of a basic shareholder structure
including RATCH and Lao interests. In 2008 we will aim for financial close on the project. Commissioning is targeted
for 2013.
I n t e g r a t i o n , t r a i n i n g a n d c o r p o r a t e g o v e r n a n c e
Banpu now has a total staff of over 3,000 employees. Just over 60 per cent are located in Indonesia, nearly
25 per cent in China – and the rest in Thailand. We have a mix of several nationalities working at Banpu including
Indonesian, Chinese, Thai, Australian, British, Indian and Philippino. Our main HR objective is integration and instilling
a common philosophy of continuous improvement and the Banpu Spirit (innovation, integrity, care and synergy). As part
of this strategy, our training program in 2007 has included leadership courses, the Technical Knowledge Portal and
Innovation Promotion.
With the listing of ITM, we are also now working to ensure that corporate governance, management systems and
investor relations at the new company meet the standards which have been set at Banpu in recent years.
A f e w c l o s i n g w o r d s o n t h e f u t u r e
While coal price strength is good for our core business, it also tends to be associated with higher mining costs
(high oil prices and higher stripping ratios). Higher coal prices also mean higher costs for our power business. They also
mean higher coal asset price expectations. So, while I am cautiously optimistic about the future, it will be no less challenging
than the past.
We will maintain our primary focus on shareholder and stakeholder value – and will continue to combine both
pro-active strategies and opportunism in our quest for further value-creating investments. With more hard work and
patience – plus perhaps a bit more strategic innovation and flexibility than in the past, we should continue to generate
the returns that our shareholders and stakeholders have come to expect from us.
Note: 3 Earnings before interest, tax, depreciation and amortization
009
010K e y F i n a n c i a l R e s u l t sAnnual Report 2007 • Banpu Public Company Limited
T o t a l A s s e t s
ë The Company’s total assets as of 31 December 2007
reported at THB 65,051 million – increased by
32 per cent or THB 15,664 million compared to
the same period last year. The increase was mainly
from cash received from the listing of Indonesian
subsidiary in the Indonesian Stock Exchange,
and accrued dividends from related parties.
T o t a l S h a r e h o l d e r s’ E q u i t y
ë Shareholders’ equity as of 31 December 2007
reported at THB 38,497 million – an increase of THB
16,153 million or 72 per cent compared to last year.
The increase was mainly due to a net profit of
THB 6,654 million and a premium on share capital
from the listing of a subsidiary in the Indonesian
Stock Exchange.
N e t D e b t t o E q u i t y
ë The Company’s net debt as of 31 December 2007
reported at THB 5,217 million – a decrease of
THB 9,540 million. This was due to a decrease
in loan repayment and an increasing cash-flow
from the listing of subsidiary in the Indonesian
Stock Exchange.
ë Net debt to equity stood at 0.14 times, decreasing
from 0.66 times in 2006.
T o t a l R e v e n u e s
ë As of 31 December 2007, the Company reported
the total revenues of THB 32,442 million, a 3-per cent
decrease or THB 936 million compared to the
previous year. This was mainly due to the decrease
in coal sales volume and the appreciation of Thai Baht.
2007 average coal selling price rose 17 per cent
compared to last year.
(THB Million)
65,051
05 06 07
49,386
45,088
(THB Million)
38,497
06 07
21,801
22,344
05(Year) (Year)
(Times)
0.14
05 06 07
0.66
0.34
(THB Million)
32,442
06 07
33,378
05
25,209
(Year) (Year)
011
G r o s s P r o f i t & G r o s s P r o f i t M a r g i n
ë The Company’s gross profit as of 31 December 2007
recorded at THB 11,478 million – decreased by THB
1,063 million. This was due to a decrease in coal sales
volume, a higher unit cost associated with higher
portion of good-quality coal sales, a rising diesel price,
and increasing stripping ratio. Gross profit margin
decreased to 35 per cent from 38 per cent of
the previous year.
E B I T D A
ë The Company’s 2007 EBITDA reported at THB
12,017 million – increased by THB 3,109 million
or 35 per cent compared to last year. The increase
was due to gains on investment in domestic power
business.
N e t P r o f i t
ë The Company’s 2007 net profit was THB 6,654
million – increased by THB 3,044 million or
84 per cent compared to the same period last year.
The net profit in 2007 included gain from minor
divestment of the Indonesian subsidiary and gain
form divestment of held-for-sale securities.
E a r n i n g s p e r S h a r e
ë The Company’s earnings per share (EPS) as of
31 December 2007 was THB 24.49 per share,
a 84 per cent increase from the previous year of
THB 13.29 per share.
(THB Million)
11,478
05 06 07
12,541
11,275
(THB Million)
(THB Million)
6,654
05 07
5,559
(THB/Share)
24.49
0705
20.46
06
13.29
06
3,610
12,017
8,908
8,455
06 0705(Year) (Year)
(Year) (Year)
012V i s i o n & M i s s i o nAnnual Report 2007 • Banpu Public Company Limited
013
To become a leading energy company in Asia
and to be acknowledged as an active developer
and investor, a fair partner, a truly professional and
a provider of excellent energy products & services.
Mission
To serve our customers
in Asia with value priced
and high quality of
products and services.
Vision
To develop businesses
in the fields of energy in
pursuit of a leadership
position in Asia.
To diversify and invest
in strategic businesses,
which will support and
enhance our businesses
positions.
To promote and contribute
to the development of
society by acting as
a good citizen, committing
to safety practices
and preserving nature
and environment.
014F o c u s o n S u s t a i n a b l e G r o w t hAnnual Report 2007 • Banpu Public Company Limited
015
With a core business in coal-mining, Banpu is
constantly faced with the problem of depleting assets.
Achieving value growth which is sustainable over the
long term is therefore challenging. Banpu deals with this
problem through the careful and strategic timing of
new investments, cost rationalization schemes – and
by focusing on good corporate governance and
management training. Through these efforts we also
sharpen our acquisition skills and ensure efficient
access to finance when we need it. Finally we diversify
our risks geographically and through investment in
the power business. Going forward we have also
made a commitment to invest in renewable energy,
an intrinsically more sustainable form of energy supply.
T h e d e p l e t i o n c h a l l e n g e
Coal mines deplete. If Banpu just owned one
coal mine with fixed prices and fixed costs the value
equation would be very simple. The mine would
generate cashflow and pay it out as dividends each year.
Each year shareholders would get a total shareholder
return (“TSR”) exactly equal to their opportunity cost
of capital. And each year the value of the company,
reflecting the present value of future free cash flows
would fall. When the mine came to the end of its reserve
life, the company would have zero value.
Given the depletion challenge, how does
Banpu – as a listed company – create sustainable growth
in value for its shareholders and stakeholders?
D y n a m i c p r i c e a n d c o s t e n v i r o n m e n t
The first point, of course, is that in real life prices
and costs are dynamic. Banpu has made a deliberate
strategic decision since 2001 to invest heavily in the
coal industry, partly in anticipation of a significant
rise in coal prices. The Indocoal assets were acquired in
20021 and 20032 for approximately THB 3 billion with
an additional THB 7 billion spent in developing and
expanding them between 2003 and 2005. Output was
increased by a multiple of four between 2001 and 2006
and the results in financial terms speak for themselves.
Banpu also changes its mine planning tactics from
year to year as coal prices and coal price expectations
change. For example, if coal prices are stronger,
Banpu will tend to increase its stripping ratios to mine
out blocks which might not be economic in a lower
coal price environment. The objective is long term value
maximization.
In addition Banpu works to achieve sustainable
reductions in costs – and related increases in productiv-
ity. This has been a particular focus since 2006 at our
Indonesian coal business. Obtaining “economies of scale”
i.e. simply mining bigger coal deposits with bigger
equipment is one way of achieving this. But there are
other ways as well. For example we are making efforts
to enhance logistics and infrastructural efficiencies – and
to reduce and manage our exposure to the oil price.
We have fuel saving schemes and are investing in
coal-fired power at Bontang.
Notes: 1 65 per cent of Indominco-Bontang, 90 per cent of Trubaindo and 100 per cent of Kitadin-Embalut
2 35 per cent of Indominco-Bontang
016
A c q u i s i t i o n s k i l l s a n d a c c e s s t o f i n a n c i a lm a r k e t s
Now that high coal prices have “arrived”,
creating value simply by buying coal assets is much more
difficult. Competition for coal assets is considerably
tougher and price expectations are very challenging.
Going forward, Banpu’s acquisition skills and efficient
access to financial markets will be critical to being
able to secure new coal assets at prices which leave
room for material value creation. Having the network,
experience and patience to identify and originate good
opportunities is the first necessary skill. Banpu has
taken a pro-active approach to business development
throughout the Asia-Pacific region for many years
now – and is supported by the Company’s coal sales and
marketing efforts in Asia. We hope that this will provide
a good foundation for further growth in future years.
After origination comes evaluation. Banpu works
with its advisors to ensure that its valuation techniques
and evaluation methods are best practice. We will only
go forward with an opportunity if it is clearly value-
creating for us. Next is structuring and negotiation -
and finally, financing. The ability to raise finance on
favorable terms and at short notice depends very much
on developing a relationship of trust and confidence with
banks, fund managers and analysts. This takes time and
requires transparency and consistency in communication
from Banpu. Through a concerted effort to improve our
investor relations (“IR”) program since 2002, Banpu is
now recognized as one of the top listed companies for
IR in Asia.
C o r p o r a t e g o v e r n a n c e a n d h u m a n r e s o u r c ed e v e l o p m e n t
At Banpu, developing best practice IR is related
to a more general commitment to good corporate
governance. Banpu has been honored to receive several
corporate governance and management related awards
in recent years including the “Best Managed Large
Cap Company in Thailand” award from Asiamoney
Magazine in 2007.
By paying attention to corporate governance
systems, employee motivation, stakeholder relations and
socio-environmental issues, we believe that Banpu should
be more able to develop a constructive and innovative
corporate culture while reducing the likelihood of
stakeholder conflicts and liabilities over the long run.
Needless to say, our most important “stakeholders”
are our management and employees. By investing in our
people through training we facilitate better management
skills and better decision-making. This in turn leads
to fewer problems, smoother operations, greater
innovation – and better relationships with other
stakeholders. By emphasizing the “Banpu Spirit”
cultural code, we foster both motivation and loyalty.
Our code sets high standards and encourages a principle
of continuous improvement in all areas.
017
I T M l i s t i n g : c o m b i n e d g r o w t ha n d g o v e r n a n c e o b j e c t i v e s
The decision to list ITM on the Indonesian Stock
Exchange last year is a good example of an innovative
mix of both corporate governance and growth related
objectives:
1. Corporate governance: imposing reporting
and corporate governance disciplines on the management
of ITM
2. Corporate citizenship: introducing local
Indonesian investors to the capital of ITM and
becoming more accountable to local Indonesian
regulation.
3. Value transparency: enhancing the visibility
of the value of Banpu’s Indonesian coal assets by
obtaining a publicly traded share price for ITM.
4. Capital: providing opportunities for indepen-
dent equity and debt capital funding – and releasing some
equity capital back to Banpu.
5. Growth: establishing an acquisition currency
and local competitive advantage for further growth in
Indonesia.
We hope that the ITM listing will be an important
building block towards sustainable growth for our
business in Indonesia.
D i v e r s i f i c a t i o n
Finally, to achieve sustainable growth, Banpu
has developed a policy of asset and geographic
diversification. While Banpu is focused on “coal-based
energy in Asia-Pacific” this leaves ample room still for
diversification. From a “horizontal” perspective, Banpu
has developed new skills in underground mining as well
as in anthracite and semi-metallurgical coals in recent
years. BLCP, BPIC and Hongsa all represent different
forms of “vertical” diversification: coal-fired IPP,
coal-fired CHP assets – and a vertically integrated
lignite-fired power project.
Geographically, Banpu first invested in
a substantial way in Indonesia in 2002 and has since
made significant investments in China. Going forward
we are likely to see substantial investment by Banpu
in Laos and other countries in the Asia-Pacific region.
This approach supports long term visibility and
sustainability by diversifying our risks and by securing
more stable cashflows which are less dependent (or
not at all dependent) on limited and depleting coal
reserves.
A last word on sustainability. The most
sustainable forms of energy resource are renewable
resources. Banpu recognizes this and in line with our
emphasis on innovation and sustainability, we have
recently initiated a policy to begin evaluating renewable
energy investment opportunities, alternative energy
technologies and carbon credits. We hope that this
new policy will provide the seed for a new area of
diversification and sustainable growth at Banpu.
018B a n p u C o r p o r a t e S o c i a l R e s p o n s i b i l i t y D u r i n g 2 0 0 7Annual Report 2007 • Banpu Public Company Limited
In 2007, Banpu initiated and continued social
projects both at a corporate level and a local level
in Thailand, Republic of Indonesia and People’s
Republic of China where we have operations. The
following are our highlighted social projects during
the past year.
S o c i a l R e s p o n s i b i l i t y P r o g r a m sa t t h e C o r p o r a t e L e v e l
Educational Support ProgramsFourth consecutive year of ICT Development
for EducationBanpu donated THB 1.7 million to 5 schools
under its ICT Development for Education project in
Lamphun, Lampang and Phayao to upgrade their learning
facilities especially ICT equipment and ICT skills of
their teachers and students. Banpu’s support has con-
tinued for the fourth consecutive year.
The ICT Development for Education project
supported by Banpu is intended to improve school
facilities and enhance potentiality of teachers and
students as well as upgrade teaching quality so as to
turn these schools into a center of the community for
sustainable learning.
In 2007, Banpu in collaboration with the
Organization Development Consulting Institute
organized a training course entitled “Team Learning
Development” to 150 teachers and instructors
in Banpu’s sponsored schools in the 3 northern
provinces. The course aimed to improve teachers’
capability in working in team, to increase learning
skills as well as to introduce teachers to new
knowledge to build a stronger team of teachers in these
schools.
Financial support to Faculty of Science,Chulalongkorn UniversityBanpu presented THB 1 million to HRH
Princess Maha Chakri Sirindhorn in order to support
Chula Dusadee Pipat Project, which was a part of the
celebration of the 90th Anniversary of Chulalongkorn
University’s Faculty of Science to fund researches of
both science professors and PhD students that will
benefit the country’s development.
The Enviromental Support ProgramsThe Power Green Camp 2 : Envi-ScienceLearning Through Actions“Applying Science Following His Majestythe King’s Footsteps for SustainableEnvironment”Banpu joined hands with the Faculty of Envi-
ronmental and Resources Studies, Mahidol Univer-
sity, in organizing the “Power Green Camp 2” between
15-21 October 2007. The camp, held on the occasion
of HM the King’s 80th Birthday Anniversary, was
attended by 67 high-school students of Matayom 5
(Grade 11) from all over the country. Students not
only learned how HM the King conserved the
environment through the use of environmental
science, but they also learned and practiced with leading
scientists at Mahidol University’s sophisticated
environmental science laboratory. The camp was
intended to expose Thai children to an environmental
conservation concept based on HM the King’s
initiatives of Sufficiency Economy and to introduce
them to an idea of sustainable development. Aside
from activities in the camp, students also exhibited
their projects under the title of “Applying Science
Following His Majesty the King’s Footsteps for
Sustainable Environment,” at Santi Chaiprakarn Park,
Phra Arthit Road.
019
GLOBE Project: “Learning about ClimateChange to inspire the Next Generation ofScientists”Banpu sponsored the Institute for the Promo-
tion of Teaching Science and Technology (IPST) to
organize the conference entitled the “Asia-Pacific Globe
Learning Expedition Thailand 2007: Learning about
Climate Change to Inspire the Next Generation of
Scientists,” held in Prachuab Khiri Khan Province
during 13-18 November 2007 at Navy Phirom 1
Hotel, Hua Hin, Prachuab Khiri Khan. Co-organized
by IPST’s GLOBE Thailand and GLOBE Program
Office, USA, the conference allowed students in
Asia-Pacific to research about the Earth System
Science with teachers, scientists and communities.
It was a forum for students and GLOBE scientists to
present research papers and exchange information
in order to understand more about interconnected
and interdependent of the Earth systems. Banpu has
supported the GLOBE program for 2 consecutive years.
Support for the Asian DendrochronologyConference and WorkshopBanpu also supported Faculty of Environmen-
tal and Resources Studies, Mahidol University
to organize “The First Asian Dendrochronology
Conference and Workshop: Environmental Change and
Human Activity.” The conference, which was held at
Riverside Hotel, Bangkok, during 9-15 September 2007,
was to create a new generation of researchers and nurture
a research network of those interested in tree ring while
acting as a forum for those interested in forestry con-
servation to present papers relating to the growth of
trees and their growth factors.
Youth Support ProgramYIM 3 together with youth leaders fromChiang Mai to visit Wat Pra Baht Nam PhuThe “Youth Innovation Marketplace 3” or
“YIM 3”, co-sponsored by Banpu and Thai Health
Promotion Foundation took more than 30 youth lead-
ers from Chiang Mai’s “Boys Love Boys: AIDS and
Sex Education for Youth” project to visit Thammarak
Niwet project of Wat Pra Baht Nam Phu, Lopburi Prov-
ince. By learning more about the AIDS hospice and
how to take care of AIDS patients, they could go back
to raise awareness of AIDS among their peers in Chiang
Mai Province.
The visit was part of the “Boys Love Boys:
AIDS and Sex Education for Youth” project, one
of the eight social projects selected by YIM 3.
Other ActivitiesBanpu also launched the “Employee Volun-
teering Program” which allows Banpu staff from all
levels to do social work in a response to the Thai
government’s policy that announced 2007 as the
“Year of Giving and Volunteering the Society.”
The first project involved a construction of clean and
sanitary toilets to students of Ban Yubtanaeng School,
a small primary school at Wang Chan District of
Rayong Province. Not only did Banpu staff come to
build toilets, their families and other civil society
networks also took part in this fun project to give
something back to the society.
Banpu Charity Club (Bangkok) donated 1,250
used books it got from Banpu’s executives and staff
to Maruey Knowledge & Resource Center who
would donate it to more than 300 libraries in need
of books nationwide under the “Book Drive for
Needy Libraries” project held to celebrate the 32nd
Anniversary of the Stock Exchange of Thailand
(SET).
020
Banpu Charity Club (Bangkok) held a
reforestation activity where 40 staff and family members
went to the Gulf of Thailand at Khok Kham Sub-
District of Samut Sakhon Province, to plant mangrove
trees there.
S o c i a l R e s p o n s i b i l i t y P r o g r a m sa t t h e L o c a l L e v e l
ThailandPublic HealthLampang Mine held a campaign to raise
awareness of dengue fever for Moo 7 and Moo 9
residents of the Mae Than Village. On this occasion,
public health officials from Pa Tan-Na Krua Tambon
Municipality was invited to provide information
about the dengue fever including how to spot those
infected from the disease, prevention and destruction
of stagnant water which caused mosquito-borne
diseases. Pamphlets of dengue fever prevention were
distributed to 297 households.
EducationChiang Muan Mine donated THB 50,000
to Ban Sra School to build school fence.
Occupational EnhancementChiang Muan Mine organized “Local Food
Cooking Course” to groups of homemakers in Ban
Sra Sub-district.
EnvironmentLampang Mine joined hands with communi-
ties in Mae Gua, Sandonkaew and Samai Sub-districts
to plant 80,000 saplings for HM the King on an
80-rai concession area of Banpu. In addition, Banpu
and the communities also planted trees in 220 rai of
land, of which 80 rai were in Mae Gua Sub-district of
Sopprab District, 100 rai were in Samai Sub-district
of Sopprab District and the remaining 40 rai were in
Sandonkaew Sub-district of Mae Tha District.
Lampang Mine and residents of Sopprab
District participated with “Beautiful Roads with
Your Hands” project by planting 6,000 seedlings of
perennial yellow flower trees such as Golden Tree,
Cassia (Rajapruk) and Scramble Egg Tree (Tsong-
Badan) along a 10-km distance at km. 553 - km. 563
of Phaholyothin Highway in Sopprab District,
Lampang Province. Banpu and residents of Mae Gua
Sub-district of Sopprab District also planted trees to
celebrate HM the King’s 80th Birthday Anniversary
at the Ban Mae Gua’s reservoir.
Chiang Muan Mine and staff together
with Ban Sra residents planted 15,000 seedlings of
Vetiver Grass to celebrate HM the Queen’s Birthday
Anniversary around the reservoir, at Moo 10, around
Ban Sra School, at Moo 12 and around the commu-
nity health center in Moo 3.
Religion and CustomsLampang Mine and Chiang Muan Mine con-
tinued to sponsor various annual religious events.
Lampang Mine joined a merit-making ceremony on
the Visakha Bucha Day with the community. Together
with Sandonkaew Tambon Administration Organiza-
tion (TAO), Lampang Mine also organized a merit-
making ceremony to mobilize funds to build a fence
for Wat Mae Than at Sandonkaew Sub-district of
Mae Tha District, Lampang Province. Chiang Muan
Mine joined its community in a traditional northern
merit-making ceremony called Than Salak at Wat Sra
Tai, Chiang Muan Sub-district of Phayao Province.
Republic of IndonesiaBanpu Indonesia follows what Banpu’s
various mines in Thailand do in their community
development projects while adapting to local needs.
To strengthen its efficiency when working with
community development agencies in Republic of
Indonesia, Banpu Indonesia implemented a commu-
nity development policy for relevant units to use as a
guideline in late January 2007 so that all activities
were conducted on the same standard.
021
Banpu Indonesia designs its community
development direction based on the four corporate
shared values of “Banpu Spirit” which closely
covers four factors of mission, manpower, funding
and senior executives. The policy direction, designed
to ensure that management and operational staff
undersold the same thing, not only strengthens the
work of community development staff but also acts
as a community development blueprint to bring
sustainable growth to mining communities that can
also be adapted to meet community’s expectation.
In 2007, Banpu Indonesia was hosting the
13th Corporate Forum for Community Development
(CFCD) meeting at Crown Plaza Hotel, Jakarta,
under the concept of “CSR as gold rating proper
and strengthened by CFCD.” Project leaders from
member groups of more than 50 companies nation-
wide attended the Meeting.
Also in 2007, Banpu Indonesia was behind
the following social projects at the local level:
Public UtilitiesBanpu Indonesia, Jakarta Office, paid a visit
to those suffering from diarrhea and dengue fever
from major floods that hit Jakarta in February 2007
at Tarakan General Hospital and Koja Hospital.
Banpu donated money and necessary items such as
beverages, vitamin, milk, baby food and diapers to
the patients.
Public HealthIndominco-Bontang Mine officially opened
Public Health Service Building in Tihi-tihi Village
in Bontang. The building was built in a 45-square
meter area and is under the care of Banpu’s Commu-
nity Development Department. As a center for
healthcare services, the building provides vaccination,
mother and child care, diarrhea prevention and
nutrition promotion services. The project has received
significant support from public health officials and
local officers.
Trubaindo Mine organized a health check-
up service to two primary schools; namely, SDN 004
(Sekolah Dasar Nasional or State Elementary School)
and SDN 006 at Muara Lawa, Kuta Barat Town. Children
were not only checked by doctors but they were also
taught how to brush teeth and trim nails.
EducationIndominco-Bontang Mine and Kaltim Prima
Coal (KPC) donated money to an education fund of
East Kutai District to allow needy students a chance
to further their study from primary to university
levels. Banpu commits to donate IDR 4 million each
year until the project completes.
Kitadin-Embalut Mine organized a computer
course for beginners to provide computer skills to
more than 50 residents in Ring 1 Area. This referred
to those from Separi Mahakam Village, Embalut
Village, Bangun Rejo Village and Kerta Buana
Village. Residents were taught on how to use Microsoft
Word, Microsoft Excel, Microsoft PowerPoint and
how to surf the internet.
Occupational EnhancementIndominco-Bontang Mine launched the
Farming Club project for residents of Suka Rahmat
Village, East Kutai District. The Club was to develop
farming skills and provide related assistance to
farmers. It was initiated in a response to the government’s
policy to increase competitiveness to Indonesian
farmers under the “Gerdabangagri Project,” that aims
to turn East Kutai into the region’s farming district
by 2010.
Kitadin-Embalut Mine in conjunction with
the Vocational Education Development Center for
Agriculture (VEDCA) of Cianjur City launched a
voluntary retrenchment program to train staff on how
to farm, raise animals and fish. The program, held
for the second time, provided an opportunity for staff
to create supplementary incomes from farming activities.
About 194 staff attended the program.
022
Trubaindo Mine also launched a project
to plant rubber trees to generate incomes to the com-
munity in the long run. 25,000 seedlings were
distributed to residents in the two villages of Dilang
Puti and Swakong. This project will continue into 2008
as the target is to distribute up to 100,000 seedlings.
EnvironmentIndominco-Bontang Mine, Kitadin-Embalut
Mine and Trubaindo Mine planted trees as a part of
the Indonesian Government’s campaign to plant 79
million trees to fight against climate change, which
is a part of the UN Environmental Program’s “Plant
for the Planet: Billion Tree Campaign,” following the
UN Climate Change Conference in Bali, December
2007.
P e o p l e ’ s R e p u b l i c o f C h i n a
Public UtilityLuannan Power Plant donated RMB 40,000
to representatives from the two villages of Gujiaying
and Lisi to upgrade their infrastructure.
EducationLuannan Power Plant donated stationeries
and sports equipment to students of a disabled school
on the occasion of the National Aiding Disabled
Day.
EnvironmentZhengzhou Representative Office, Coal
Business, together with the Zhengzhou local
government planted trees every year in an annual
tree-planting activity held every March.
SportsBanpu officially opened the “Banpu Table
Tennis Club” at Zhengding National Table Tennis
Training Center, Hebei Province, China. The Banpu
Table Tennis Club was born out of collaboration
between the Zhengding National Table Tennis
Training Center (one of the centers chosen to train
national Chinese table tennis athletes before their
big matches) and Shijiazhuang Chengfeng Cogen
Co., Ltd., which oversees the Zhengding Power
Plant. Founded in 2003, the Club was originally named
“Chengfeng Cogen Table Tennis Club” but changed
to the current name after Banpu took over Shijiazhuang
Chengfeng Cogen Co., Ltd. in 2006. The Club intends
to promote table tennis to the public. It also
strengthens a relationship between Banpu and local
communities. The support not only reflects the four
values of Banpu Spirit but also responds to the
Chinese government’s policy to create unity in the
society. At present, the Banpu Table Tennis Club
boasts 130 athletes and 15 trainers.
023
Source: Barlow Jonker Pty. Ltd.
Other CountriesVenezuelaVietnamUS & CanadaEuropeColombiaRussiaSouth AfricaChinaIndonesiaAustralia
2000
2001
2002
2003
2004
2005
2006
2007
Historical of World Thermal Coal Exportsby Countries
million tonnes
600.00
500.00
400.00
300.00
200.00
100.00
0
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep
-07
Nov
-07
Jan-
08
120.00
100.00
80.00
60.00
40.00
20.00
0
Aus
tral
ia
Ind
ones
ia
Chi
na
Sout
h A
fric
a
Russ
ia
Col
omb
ia
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Oth
er C
ount
ry
Key Exporters ofWorld Thermal Coal in 2007
million tonnes
100.00
80.00
60.00
40.00
20.00
0
Thermal Coal Export PriceFOB Newcastle
USD/tonne
I n d u s t r i a l & M a r k e t i n g O u t l o o kAnnual Report 2007 • Banpu Public Company Limited
I n d u s t r i a l O u t l o o k
1. Steam Coal Trade in the World Market(Source: Barlow Jonker Pty. Ltd.)
In 2007, sales of steam coal/thermal coal in the
world’s market continued to expand. The total sales were
580 million tonnes or an increase of 21 million tonnes
from the previous year due to increasing demands
from Asia, especially China and India, and increasing
imports by South Korea, Japan and Malaysia.
Australia still suffered a lack of transportation
infrastructure, resulting in delayed and inefficient coal
transportation. Australia exported approximately 121
million tonnes of coal. Indonesia suffered from heavy
rains earlier in the year. The country also had a problem
of coal transportation due to inadequate facilities. It ended
up exporting roughly the same amount of coal it did the
previous year at 115 million tonnes or a mere increase
of 2 per cent. Yet, Republic of Indonesia remains the
world’s number two coal exporter after Australia.
The thermal coal export price at FOB Newcastle,
Australia, continued to increase from early last year
at USD 55 per tonne in the first quarter to USD 70
a tonne in the second quarter before weakening by
USD 2 a tonne and surging again to over USD 80 a tonne
during the last quarter of the year. The highest price was
on 13 December 2007 at USD 90.46 a tonne. An average
price for the entire year was at USD 65.83 a tonne.
It was clear that this year’s price was far better than last
year, which was at USD 49 a tonne.
The market and the export price for coal in 2008
may ease a little as the world’s economy is weakening.
However, as an oil price in the world market tends to
stay higher than USD 80 a barrel, this will continue to
sustain the coal price and demands for coal in the world’s
market.
024
2. Steam Coal Trade in Thailand(Source: Coal Market Research, Banpu)
In 2007, Thailand consumed a total of 31 million
tonnes of steam coal/thermal coal from local and
overseas mines, which was closed to what the country
did the previous year. Of this, 18 million tonnes were
local lignite, which was down 1 million tonnes from
a year ago; while the other 13 million tonnes were
imported coal, an increase of 1 million tonnes from last
year. In terms of heat, heating values were higher
than last year because imported coal had a higher
gross calorific value than local lignite. Of all the local
lignite consumed, 16 million tonnes were used by the
Electricity Generating Authority of Thailand (EGAT) to
generate power. The remaining 2 millions were used by
other industrial sectors; namely, cement, pulp & paper,
food and others. Local lignite consumption during the
previous year drastically fell because the Lampang Mine,
which was Banpu’s main mine, was in its last phase of
mining life. Its coal reserves and production capacity
were depleted, which required the country to import
thermal coal as a substitution. Thailand, as a result, saw
its import of thermal coal increase to 13 million tonnes
or an 8-per cent rise. Of this, 8.5 million tonnes
were used in industrial sectors while the remaining
4.5 million tonnes were used by both Independent Power
Producers (IPP) and Small Power Producers (SPP) to
generate power.
In 2008, Thailand expects to see its demands for
steam coal and thermal coal to rise by only 3 per cent as
the economy just starts to recover. In addition, there is
no large coal-fired power plant or factory scheduled to
open in 2008.
3. Power Generation Business in Thailand(Source: The Energy Policy and Planning Office:
EPPO)
Thai economy was growing by 4.5 per cent in
2007, while an inflation rate was around 1.6 per cent
with a current account surplus. Exports, which remained
the country’s main driving force of growth, were
slowing down due to the global economic downturn. The
state of the Thai economy caused its total electricity
demands to be at 133,102 GWH. The highest demand
for electricity was recorded in April 2007, at 22,586
megawatts, which was 1,522 megawatts higher than
the previous year. An average load factor was 75
per cent while the reserved margin was at 20.4 per cent.
Electricity consumption in Bangkok metropolitan area
was 42,393 GWH or an increase by 2.2 per cent while
the provinces consumed 88,020 GWH of electricity, or
a rise by 5.7 per cent. Consumption by EGAT’s direct
customers totaled 2,690 GWH or an increase by 8.1
per cent.
The industrial sector consumed the highest
electricity totaling 45 per cent of the total electricity
consumed in this country, or a rise by 4.6 per cent
from the previous year. The business sector’s power
consumption rose 4.0 per cent. The household sector’s
consumption rate increased 5.0 per cent. The agricultural
sector and other sectors saw their consumption rise by
5.5 per cent.
In terms of production, total electricity production
in 2007 was 28,230 megawatts. Power generated and
bought by EGAT totaled 148,463 GWH, or
a 4.6-per cent increase from a year before. Of all the
generated power, 67 per cent was produced by natural
gas, 21 per cent from lignite/thermal coal, 2 per cent
from fuel oil, 5 per cent from hydropower and 5 per cent
from imported energy. It is expected that in 2008,
electricity generated by natural gas will be higher since
PTT Public Company Limited (PTT) is able to supply
more natural gas to EGAT; BLCP Power Ltd. will be
able to reach its full production capacity. However, power
and electricity generated from hydropower, bunker oil
and imported sources will fall.
025
M a r k e t i n g O u t l o o k s
1. Coal Production and Distribution Business1.1 Overseas coal market
Competition strategiesCompetition in 2007 was light due to
increasing demands for coal around the world especially
in China, India and South Korea while major coal pro-
ducers suffered from natural disasters and other prob-
lems. Australia suffered heavy flood in Newcastle, which
is where the world’s largest coal terminal is situated.
Indonesia and South Africa also had to deal with heavy
rain situations. In Russia, it did not have enough train
bogeys to transport coal. Also in Russia and Poland,
there were labor strikes while China restricted its coal
exports. As a result, the amount of coals exported by
several countries was far lower than expected. The coal
business remained tight almost the entire year in 2007
due to production and transportation problems. This
prompted the world’s price of coal to surge 74.8 per cent.
In 2007, Banpu increased its sales in markets that
offered better prices such as in Japan and China. The
Company also did a lot of spot sales to achieve a better
price while modernizing its marketing database to be able
to react quickly to market changes. Banpu’s competition
strategies for the highest profit and a sustainable growth
were as follows.
Creating customer’s satisfactionIn 2007, Banpu conducted a survey of
customer’s satisfaction over Banpu’s products and
services. Results of the survey were used in improving
our work process by making it leaner to increase
customer’s satisfaction.
Improving coal terminal
At present, Banpu’s Bontang coal
terminal in Republic of Indonesia, is able to handle
12.5 million tonnes of coal a year. The Company also
improves facilities at Bontang to handle a 95,000-tonne
barge to meet international standards. This has
lowered customer’s freight costs and also increased
our competitiveness.
The Company is currently upgrading
the Bontang coal terminal to handle 18.5 million
tonnes of coal a year so that we can respond more to
customer’s demands.
Speeding up our service
Banpu has introduced a computerized
system to its documentation process. Invoice, price
calculation and information of coal quality are now
linked with the logistics system to reduce document
errors and to respond more quickly to customers. This
helps reducing costs of communications and loss of
time when dealing with customers.
Providing technical assistance to
customers
Banpu has set up a technical support
unit equipped with technical experts to advise and
recommend customers on how to use Banpu’s coal more
effectively to help customers reducing their costs when
using our coal.
Sophisticated quality control system
Banpu has asked its technical experts
to produce a manual on how to analyze the quality of
coal. In addition, a central laboratory has been established
at the Bontang coal terminal to test the quality of coal
before being delivered to our customers. Banpu’s Coal
Technology Unit has also hired quality staff to monitor
the quality of our coal at each production process until it
reaches customers. In the end, our customers show they
have more confidence in our coal.
Continued promoting the “Banpu”BrandWe strengthen the “Banpu” Brand by
continuing to sponsor the world’s coal conferences at
various venues. In addition, our senior executives are
guest speakers at various coal conferences in Asia and
Europe. The Company is increasingly recognized by coal
manufacturers, distributors and consumers around the
world. The firm is known as a manufacturer of good
quality of coal. We are also known as being reliable and
professional when it comes to delivery. The “Banpu”
Brand is now recognized as the world’s leading coal
producing firm.
026
Customer Relationship ManagementBanpu communicates with its customers
via salespersons and senior marketing executives who
pay regular visits to our customers. We have developed
the following to enable our sales personnel to respond
more accurately to demands from our customers:
Customer database
Information of each customer is kept in
a database. This includes customer’s demands for
coal, sales agreement, delivery of coal to customers
in each agreement and quality of coal being delivered.
Salespersons can access this information from the
database very quickly and this helps them respond
to customer’s need in no times. Besides, customer’s
information in our database also enables us to answer
to their needs more accurately.
World coal database
Banpu continues to develop its database
of the world’s coal. At the moment, it has updated infor-
mation of price movements and market situations. Sales-
persons can access to the information and update cus-
tomers constantly. This not only strengthens the relation-
ship between Banpu and customers but also adds more
value to the Company from a customer’s perspective.
Customer’s visit to Banpu’s mines
Banpu invites senior executives of
its major customers to visit our mines so that they
understand our production process, transportation and
quality control. The visit also updates the latest situation
of Banpu to our customers. This way, the Company can
win a lot of confidence from them while strengthening
a personal relationship with them.
Creating added valueBanpu has used its coal terminal to mix
medium-quality coal with premium-graded coal produced
by its new mine, Trubaindo, to achieve high-quality coal
that it can sell in markets at a high price.
Product varietySince Banpu produces coal from various
mines, it offers coal of various qualities that can meet
customers’ demands in various markets. This prevents
us from competing head-on in a particular market. Last
year, the Company was able to launch a new product,
which was coal that had a heating value of 6,350/6,250
kcal/kg with low rate of ash (at around 5 per cent). The
product has been well-received by customers since it
helps them reduce their cost of production as they
now have a choice not to buy high-quality coal from
Australia or China.
Creating and using a marketingdatabaseAs Banpu continues to develop its market-
ing database to the point that it can timely monitor
movements of coal price and conditions of the world’s
coal markets, this information can be used to enhance its
marketing decisions. This helps speeding up Banpu’s
quotations and by helping the Company to negotiate
with its customers. In addition, the information also
boosts its operation efficiency and reduces its costs
of sales and administration by reducing unnecessary
corporate activities.
Focus on long-term customersThe Company focuses on building a long-
term relationship with its customers. This is one reason
why the firm has a list of long-time customers in its hands
to whom it sells most coal. Although some customers
might not sign a long-term agreement with Banpu, they
continue to buy it from us again and again. Banpu goes
on strengthening this relationship through various
activities such as exchanging information about market
prospects, organizing a company’s visit, and providing
customers with technical assistance.
027
Expanding customer baseBanpu continues to expand a customer to
markets offering higher prices. Last year, we managed
to penetrate into People’s Republic of China, a rapidly
growing market. This helps expanding our customer base
and increasing our incomes while reducing our risk in
having to depend on a particular market.
Pricing policyThe Company’s pricing policy is based on
an average year-long coal price reflecting through
an index of short-term coal market. The idea is to create
a balance between its short-, medium- and long-term sales
to suit market conditions at the time. During the past year,
Banpu increased its short-term sales to gain from a rapid
increase of coal price in the world’s markets. Medium
and long-term sales transactions however accounted for
50 per cent of the total coal it expected to sell each year.
The Company has been discussing with its clients
annually to guarantee its incomes and to reduce impacts
from pricing volatility.
Due to its solid marketing information, Banpu
can choose to negotiate with its customers at a right time.
It can also adjust a price it has proposed each time so
that it is well in line with the market condition at the
moment.
Distribution and distribution channelsBanpu increasingly does direct sales and
agent sales with its customers. Still, it needs to sell
through agents in various countries to facilitate our
customers. Agents not only help with documents but
also find information about energy situations, coal,
customers and competitors in a host country for us to
use in our planning.
The Company also sells coal through trading
companies, which are used to reach target customers and
to reduce our marketing expenses.
Banpu’s customersMost of Banpu’s customers are power-
generating companies which have a lot of demands for
coal to generate power. They are in Japan, South Korea,
Taiwan, China, Malaysia, the Philippines, Indonesia and
some countries in the continental Europe. In addition,
Banpu also sells coal to cement, paper, plastic and
chemical industries. Still, Banpu’s focus remains at the
power-generating firms since they have a high growth
rate. However, Banpu still sells part of the coal to other
industries to expand its customer base and to maintain
a good relationship.
Major competitorsBanpu’s main competitors are large manufac-
turers in Australia, China, Indonesia and South Africa.
1.2 Coal markets in ThailandIn 2007, competitions in the local coal
market were fierce as the market saw a lot of new
suppliers entering the market for the first time. Due
to the decline of local coal production, users had to
import coal. This led several new coal suppliers to
import coal locally. At the same time, local demands
for coal in 2007 were closed to the level of the previous
year. While demands for coal in the cement industry
fell sharply 13 per cent from the previous year due to
an economic downturn, demands in other industries
were much higher due to a higher cost of fuel, which led
several fuel-based factories to switch to coal instead.
Besides, BLCP Power Plant, which was an IPP
(Independent Power Producer) was running at its full
production capacity rate and therefore used more coal
than it did in the previous year. One reason demands
for coal in the end hardly increased was due to a fall
of local coal production as coal reserves in the country
were depleted. Users instead turned to import coals,
which reported a much higher heating value, this in turn
reduced the amount of coal being consumed.
028
Competition strategyLocally-produced coalBanpu is a major coal producer in Thai-
land, producing 75 per cent of coal being produced by
Thailand’s private sector. Most coal is sold under
long-term contracts Banpu has signed with major
customers. The Company feels it is very important to be
able to deliver coal as agreed with customers. It focuses
at post-delivery service, quality control to ensure that its
coal is having a quality agreed earlier, on-time delivery
and environmental-friendly operation.
Imported coalBanpu has a closed relationship with its
customers for a long time. It has shown to customers
that it is responsible for all the obligations it has by
providing coal that answers to their demands in terms of
quantity and quality and by delivering it on time. So far,
it has won customer’s confidence as they continue to
place orders for imported coal.
The fact that Banpu has its coal reserves
in Indonesia and at the moment produces coal from
3 mines means the firm is able to offer coal with
a variety of quality to respond to customer’s needs.
At the same time, it is ready to strike both short- and
long-term deals to sell coal.
The Company has invited customers
to visit our mines in Indonesia to win their confidence
that we have enough coal to meet customer’s demands
in terms of quantity, quality and constant delivery in
the long run.
Banpu has restructured its internal
organization where a special unit is set up to manage
a comprehensive logistics process to reduce a cost of
transportation and to increase product distribution
efficiency. The bottom line is to handle increasing
demands of imported coal.
Coal Distribution Center
Banpu has set up a coal distribution
center where coal is piled up before being distributed
to customers at a designated destination to reduce the
burden of stock management and customer’s inventory
expenses. Besides, the center is used as a place to
separate coal based on its sizes and heating values to
suit each customer’s need. As mentioned earlier, the
Company focuses at a timely delivery and quality
control so that it delivers the right product to the right
customer. It also ensures that its operation at the
facilities meets environmental requirements and
minimizes effects to surrounding communities to
increase customer’s confidence in the long run.
Pricing policyLocally-produced coalCoal produced locally is limited, most of
which are under long-term sales agreements signed with
major customers. That’s why sales price of Banpu’s
locally-made coal is binding such long-term contract.
This allows customers to calculate their operation
costs more accurately. For retail customers, prices are
adjustable according to the world’s market prices, which
are usually quoted on a yearly basis.
Imported coalSales prices of imported coal are based on
the world’s market mechanisms, depending on when
a price is quoted to customers. A contract is made with
customers for delivery on a case-by-case basis or for
a period of one year or more than one year, depending
on customer’s needs. When importing coal, Banpu
usually transports coal to customers. That’s why it
includes a cost of freight in its quotation. Banpu also
signs an agreement with container ships so that it can
provide shipping service to transport the amount of coal
within a period stated in the contract to its customers.
029
Banpu’s customersMost Banpu customers are in the industrial
sector, which can be further divided as follows:
1. Cement industry where coal is used in
cement burning process – this is the largest group of
coal users in the country’s private sector. There are very
few of them but each of them consumes a lot of coal.
2. Coal-fired power and steam generation
industry where coal is used to produce heat in
a large steam boiler – this consists of pulp and paper,
petrochemical and textile industries.
3. Other industries where coal is used to
produce heat in a smaller steam boiler or as a fuel to fire,
boil or cure in a production process – most of them are
small factories such as small pulp & paper factories,
a chemical industry, a food factory or a kaolin factory.
Users in this group are mostly retail and the amount
of coal per person is not high but there are a large
number of customers and they need coal with more
specific characteristics than the previous two groups.
Major competitors1. Local coal – major competitors are Siam
Cement Industry Co., Ltd. (who produces coal for other
companies within the Siam Cement Group).
2. Imported coal – during the past year, there
were newcomers who imported coal into the country.
There are approximately 9 major suppliers. Most of
newcomers are trading companies, who buy and sell
coal without their own production sources. They
therefore are facing with delivery uncertainty and
quality fluctuation. Last year, since the world demanded
a lot of coal, small suppliers could not find coal with
a right price and therefore was forced to pull out of the
market. Yet, demands for coal in Thailand sharply
increased. This led to an increasing interest in the
Thai markets by major world-class suppliers, which
therefore made competitions fiercer.
2. Power Generation and Distribution Business2.1 Power Business in China
Power industry in ChinaChina’s power industry continued to grow in
2007 as follows.
Growth rate of total consumption % 14.00 14.42
Growth rate of industrial sector consumption % 14.30 15.66
Growth rate of production capacity % 20.30 14.67
Total production capacity Megawatt 622,000 713,290
Unit 2006 2007
030
In general, demands and supply in the power
market in China in 2007 remained in balance since
demands, which were higher than expected, were duly
met by power generated from new production capacity.
However, some regions also experienced a black-out
but less severely than what happened during 2004-2005.
In 2007, Banpu increased its sales of power
generated from the three power plants at an average
growth rate of 21.48 per cent from the previous year due
to higher demands in the markets.
However, coal supply for power plants
during the past year was very volatile due to high
demands for coal in the world’s market; transportation
costs, which were more expensive than before; and higher
taxes charged for coal use. As a result, coal price rose 22
per cent from the previous year. Banpu still implemented
the same policy by reserving coal for use during winter
when demands and prices were high while closely
monitoring the situation.
Customer Relationship ManagementBanpu continues to focus at customer
relationship management for both public and private
sector customers. This includes the local power
authority, which remains the only buyer of its power,
and other steam customers. Meetings are regularly held
to set up goals, monitor customer’s satisfaction and
maintain a good relationship with local governments.
Through its cooperation and supports to the local
authorities, the Company is recognized as a model
company there.
2.2 Power Business in Laos PDRBanpu is conducting a feasibility study to
develop a coal-fired 1,800-MW power plant in the
northern part of Laos PDR where part of the power will
be sold to Thailand’s EGAT while the rest will be
consumed in the country by 2013. At present, the project
is negotiating the power purchase agreement.
2.3 Power Business in ThailandBanpu has invested 50 per cent in the BLCP
power plant, which accounts for 717 megawatts of
power; and 14.99 per cent in the natural gas-based power
plant of Ratchaburi Electricity Generating Holding Plc.,
which accounts for 590 megawatts of power.
All power generated from the two are sold to EGAT
under long-term IPP (Independent Power Producer)
power purchase agreements.
Competition strategiesCoal-fired power plant in ThailandBanpu’s priorities are at environment
and community recognition. In recent years, as there has
been an increasing awareness in an environmental issue
among Thais that leads to amendments of laws and
regulations and upgrades of standards, this also means
more investments in environmental activities and more
protests against power plant. Lack of clear policy
directions and assurance from the government makes
an investment in a project riskier.
Major competitorsMajor power producers in Thailand are
Electricity Generating Public Company Limited,
Ratchaburi Electricity Generating Holding Plc. and Glow
Energy Plc.
Overseas power producers and investors
031R i s k F a c t o r sAnnual Report 2007 • Banpu Public Company Limited
Banpu and companies within its group
manage internal and external risks to meet changes
through the Risk Management Committee, which
convenes on a quarterly basis. In addition, it moni-
tors, analyzes and manages risks at a business
unit level where meeting is held every month.
The Company also analyzes and supervises risk
management activities at the operation level and uses
application software to handle risk management
tasks that keep changing according to its investments.
1. Financial Risk1.1 Exchange Risk
Banpu manages foreign currencies to
prevent exchange risk both at the Company level
and at a group level through a natural hedging policy
where it strives to create a balance between its assets
and liabilities in foreign currencies in Thailand,
Indonesia and China. Other financial instruments
are also implemented from time to time based on
circumstances.
As of 31 December 2007, 71 per cent of
the Company’s loans were in Thai Baht currency; 25
per cent in US dollars and 4 per cent in Chinese RMB.
Banpu also adjusted its forwarding contracts to suit
the proportion of its foreign-currency assets and
liabilities. At the same time, it re-invested parts of
foreign exchange incomes earned from its overseas
operations abroad. By doing so, Banpu managed
to make its risk management more flexible while
reducing foreign exchange impacts.
Banpu’s subsidiaries in Indonesia which
earn incomes in US dollars continue to use financial
instruments to buy US dollars in advance based on
their estimated monthly incomes and expenses to
reduce the risk from an exchange rate between US
dollars and Indonesian Rupiah. Part of the dollars is
also deposited overseas to reduce a country risk.
1.2 Interest RiskBanpu manages an interest risk by making
sure that the level of its risk is proper and by closely
monitoring current and future interest rates in the
world’s markets and in Thailand. In addition, its loan
portfolio is a mix of short- and long-term loans with
fixed and floating interest rates that correspond to
different types of Banpu’s investments. Financial
instruments are also used to reduce the interest risk,
as the case may be. As of 31 December 2007, the
Company’s fixed- and floating-rate loans were 51 per
cent and 49 per cent of all loans, respectively.
1.3 Risk from Coal and Oil PricesThe Banpu group has managed risk from
coal prices that affect its incomes and risk from fuel
price that affect its operating costs by partly using
coal swaps and gas oil swaps. A Commodity Risk
Management Committee has been set up to manage
risk from volatile coal and gas prices to ensure
Banpu’s maximum benefits. Training of commodity
risk and risk management was given to Banpu group’s
executives and staff to enhance their understanding
about the issue for better and more effective perfor-
mances.
2. Risk in Coal Business2.1 Risk from Coal Price Volatility
Prices of coal in the world’s market are very
volatile and not only driven by supply and demand
but also by coal futures trading in derivatives
markets. This has become one of the major risks that
greatly affect incomes of coal producers. Banpu
manages its risk by expanding its customer base,
choosing a right time to settle a price with customers
who have signed a contract with us for as much as
50 per cent of the amount of coal expected to be sold
in that year to guarantee Banpu’s steady income while
the rest will be settled throughout the year. These deals
are made on the basis of market conditions and a proper
allocation of short- and long-term purchase agreements
for the most efficient sales planning. Banpu also uses
coal swaps to minimize its exposure to the income
volatility.
032
2.2 Delivery RiskDelivery risk frequently refers to force
majeure, something that beyond our control; such as
heavy rain that prevents a mine from operating and
a huge accident that prevents a machine from
working, which, in the end, means there is no coal to
deliver. A possible risk is a fine that Banpu has to pay
for demurrage. Yet, this is a risk that can be limited.
Most of the time, Banpu will ask its clients to have
the barge pick up coal at other coal terminals first
and postpone a delivery schedule until its production
resumes.
2.3 Risk from an Expansion of the CoalTerminal in IndonesiaBanpu has taken out a risk insurance
against a suspension of coal transportation at the Bontang
coal terminal due to accidents. In other words, Banpu
will be compensated if the terminal suffers from
accident that prevents it from functioning. Banpu also
formulates a maintenance plan by emphasizing at
a preventive maintenance, giving regular skill trainings
for the maintenance unit and stocking enough critical
spare parts to minimize repair time and impact to its
operations.
At the moment, Banpu is expanding its
Bontang coal terminal to handle up to 18.5 million
tonnes of coal annually to enhance its delivery
capability. The Bontang coal terminal is also used as
a place to mix coal destined to Banpu’s customers to
improve and maintain its quality. But to expand Bontang,
its existing terminal must be temporarily shut down
so that construction can continue there, which means
during the period, Banpu will not be able to transport
and deliver coal to customers. However, Banpu solves
this problem by loading coal onto small barges to be
re-loaded into larger shipping barges or by loading
coal at other terminals instead to minimize effect on
its customers. The Company has also coordinated with
customers to set proper demurrage schedules to pick
up the coal. But the impact is short-term only since
the Bontang construction will complete as soon as
possible.
2.4 Risk from Volatility in Costof ProductionDiesel is Banpu’s major cost of coal
production since it fuels important mining and
stripping equipment. That’s why volatile oil price in
the world’s markets has affected Banpu’s cost of
production. To manage this risk, Banpu closely monitors
and analyzes movements of oil prices in the world’s
market so that it can effectively plan its purchase of
fuel and its production activities to reduce its oil
dependency and to increase an efficiency of its oil
use. In the long run, Banpu plans to study on how to
cut down its dependence of oil-based machines.
2.5 Risk from Changes of Coal ReservesCoal reserves depend on exploration
information. Additional exploration and information
could mean that the Company’s coal reserves either
increase or decline. But Banpu is exploring new coal
reserves all the time to ensure that it can serve its
customers in the long run.
2.6 Risk from Contractor’s OperationBanpu hires contractors to strip off soil
surface and to haul coal. If contractors cannot do their
jobs due to various problems such as machines do
not arrive on time, substandard maintenance, an
ineffective operation or a labor problem, this will
affect Banpu’s operation. To prevent this, Banpu
selects only reliable contractors with a good history
of work experiences with whom it signs medium
and long-term agreements so that contractors feel it
is worthy enough to invest in brand-new machines.
Banpu also helps contractors maintain their machines
to enable them to perform effectively.
033
3. Risk in the Power BusinessBanpu’s investment risk in the local power
business is considered low as long as Banpu con-
tinues to manage its contract well since a rate of
return is stable as there is no risk in marketing and
sales prices because everything is clearly stated in
the long-term Power Purchase Agreement (PPA)
with the Electricity Generating Authority of Thailand
(EGAT). An amount of power to be purchased is also
fixed (based on the existing production capacity) while
electricity price can also be adjusted based on a cost
of fuel and an exchange rate of Baht at a certain
period.
Risk in the power business in China however
is higher than the same risk in Thailand. Banpu’s
co-generation power plant will receive an investment
promotion from the Chinese government and will be
more efficient than other power plants in general.
It enjoys priviledge to sell heat and steam to
designated areas and is guaranteed to sell electricity
to local authorities.
Other risks in the power business are business
risks in general such as a requirement to maintain tools
and equipment to maximize the plant’s efficiency,
cost management of the coal, power plant’s efficiency,
security of its steam customers and relationship with
local communities and local authorities. In addition,
the Chinese government’s policy to increase the
energy use efficiency may lead to changes of rules
and regulations and this can affect Banpu’s power
business in China.
4. Risk from Political Changes in IndonesiaBanpu has taken out an insurance worth USD
166.1 million against its investments in Indonesia.
This will protect Banpu’s investments, loans and
interests in its subsidiaries in Indonesia. Assets
covered by the insurance are investments in the
following companies:
1. PT. Centralink Wisesa International
(Holding company)
2. PT. Indo Tambangraya Megah Tbk
(Holding company and coal distribution
company)
3. PT. Jorong Barutama Greston
(Produce and sell coal for the Jorong Mine)
4. PT. Trubaindo Coal Mining
(Produce and sell coal for the
Trubaindo Mine)
5. PT. Kitadin (Produce and sell coal
for the Kitadin-Embalut Mine)
6. PT. Indominco Mandiri (Produce and
sell coal for the Indominco Mine)
7. PT. Bharinto Ekatama (Produce and
sell coal for the Bharinto Mine)
5. Risk from Regulatory Changes in Countries whereBanpu Has Investments
As most of Banpu’s operations are overseas;
namely, in Indonesia and China, Banpu has to
confront with regulatory change risk in these
countries. The changes may affect Banpu’s operation.
During the past year, rules and regulations in these
countries were changed. Some of the examples are:
IndonesiaIf a law on mining, environment, forestry
and land use or even a renewal of licenses is amended,
this will definitely affect Banpu as it could mean that
Banpu will not be able to operate all or part of its
mines there. Yet, this will not affect Banpu alone.
On the contrary, it will affect every company in
the same business. That’s why the government
must be careful when changing rules and regulations
since it will affect a lot of employment. Coal
business is a major business that generates incomes
to Indonesia.
034
ChinaChina is constantly updating its rules and
regulations to respond to its rapid economic growth.
That’s why there have been a lot of changes. The Chinese
government has formulated the following policies
for the energy business where coal is China’s main
energy resource:
Safety policy against coal mines and
environment measures: measures that have been
put in place are closing of inefficient and unsafe
small- and medium-sized coal mines whose produc-
tion capacity is less than 30,000 tonnes a year and
determining new safety standards to prevent death
and reduce accidents. The Chinese government also
increases a reserves requirement for a mine’s safety
fund and charges an environmental tax.
Maximizing use of natural resources: a
coal mine must improve its production capacity and
efficiency. The government refuses to approve a new
mine of which production capacity is lower than the
pre-determined level. New mines in Shanxi, Shaanxi
and Inner Mongolia must produce no less than 1.2
million tonnes of coal a year. The government also
encourages small mines to be merged into its bigger
counterparts. Fees charged for the use of resources in
strategic provinces are also raised.
Creating a balance between supply and
demand of coal: aside from closing small mines, the
Chinese government also stops auctioning a rights
for coal exploration until the end of 2008.
Reducing international trade conflicts
and promoting energy conservation by removing coal
import tax and by increasing coking coal export tax
to 5 per cent.
Aside from the energy policy and measures
mentioned above which increase the production
cost of every coal mine, the Chinese government
also terminates a tax privilege previously granted
to foreign joint venture companies. Starting on 1 January
2008, foreign joint venture firms are to pay the same
25 per cent income tax local business does. But they
will continue to enjoy other privileges granted by the
authorities. Based on the risks described above, Banpu
has entrusted responsible persons in each country to
monitor regulatory changes both at the federal and
local levels. It has also hired local legal advisors to
help interpret and advise legal compliance.
6. Environmental and Safety Risk from CoalOperation
Environmental RiskRealizing an immediate need to protect and
restore nature, Banpu has formulated a sustainable
development policy. The policy clearly states its
commitment to reduce and minimize environmental
impacts resulted from its operations. The Management
by the Quality, Safety and Environment Committee
has closely monitored Banpu’s environmental
activities. The Quality Safety And Environmental
Development Center is designated to coordinate and
assist units to comply with environmental standards
to ensure maximum efficiency. Banpu not only pays
a strict attention to environmental compliance but
it aims to utilize resources effectively to preserve natural
resources and reduce impacts to climate change and
biodiversity.
Environmental compliance
Banpu complies with legal environmental
standards and conditions stated in its environmental
impact assessment and management plan. In 2007,
Banpu’s environmental compliance standards remained
high and continued to expand. However, to further
control its impacts to the environment, Banpu focuses
on managing major risks as follows.
035
Quality of water released from Banpu’s
mine to public waterways – this is determined by PH/
alkaline value and quality of sludge. For mines that
boast acid soil and minerals such as Indominco-Bontang,
Trubaindo and Jorong in Indonesia and projects
currently being developed such as Bharinto in
Indonesia and Hongsa project in Laos PDR, Banpu
implements measures to prevent and resolve water
that becomes acid due to its mining activity. This starts
at a production planning stage to managing land and
to the stage where the area is restored after the
production ends. For every open-pit mine, a settling
pond is built so that sludge from soil erosion can be
effectively settled. In addition, Banpu’s prevention
method is to make sure that as much as soil is filled
back into a mine. If it is necessary to remove soil out
of a mine pit, a measure to restore the soil will be
implemented. In this regard, reforestation will start
as soon as the soil dumping ends.
Dust from mining activities such as pit
opening and coal mining, improving coal quality and
transporting coal – due to vast mining areas and changing
weather conditions, it is impossible to perfectly
control dust particles. But Banpu has implemented
several measures that are suitable to each operation
area. For example, a wind-blocking dike is built in
a high-risk area to avoid dusting; speed is limited in
the mining areas and dirt roads are regularly sprayed.
Resource utilization
Although resource utilization is not a direct
risk to Banpu’s business, ineffective utilization of
resources could unnecessarily cause environmental
impacts from either waste or pollution. It also increases
production costs due to a conflict for limited natural
resources. Banpu focuses at the following two points
in managing the resources:
Land use – although Banpu has got a lot
of concession to mine vast areas of land, it carefully
plans its mining activity to minimize geographic and
ecological impacts based on its environmental
master plan and a mine-closing plan. In 2007, Banpu
has 65,560 hectares of land in its control but only 8,754
hectares or 13.35 per cent of the total land was used.
The Company restored 4,171 hectares (or 47.65 per
cent of the total land being used). The remaining
lands have been kept in its pre-mining conditions. In
addition, Banpu has developed a geographic information
system and remote sensing (GIS-RS) database to support
a collaborative management between production,
transportation and environmental management.
The system is now completely installed and running
at Indominco-Bontang Mine and will be later expanded
to cover Trubaindo Mine in 2008.
Energy use – Energy is one of Banpu’s
major costs of production. Reducing energy use such
as reducing a greenhouse effect will benefit Banpu.
Having realized its role in mitigating the problem,
Banpu has put this in its Sustainable Development
Policy Re: Establish and maintain greenhouse gas
inventory data and publicly report our emissions.
Banpu also focuses at reducing the use of its energy,
which in turn will reduce air pollution resulted from
energy consumption such as sulfur dioxide and oxide
of nitrogen.
Occupational health and safety risk
As mining activity is associated with a lot
of vehicles and machines, the occupational risk re-
mains high. Although it is normal to have an accident
in an open-pit mining, Banpu strives to minimize
injuries and death from work. This also covers work
by its contractors. In 2007, Banpu implemented the
contractor management system for environmental, health
and safety issues at Indominco-Bontang Mine, Trubaindo
Mine and Jorong Mine in Indonesia.
036
7. Risk from Social and Community ImpactsBanpu has been aware of its impacts to com-
munities, whether they are impacts to the environ-
ment, safety and/or to the economy or the society.
It has formulated a risk management plan to handle
these impacts as follows.
Setting up the Community Consultative
Committee (CCC) consisting of representatives from
the local government, local communities and the
Company.
Initiating community development projects
that help solve community problems based on
a collaboration process on the concept of “Go Together,
Grow Together, Sustainability for Life.”
Communicating between communities
and Banpu’s mines with community development
officers acting as a direct point of contact at every
mine.
Conducting a community perception
survey and formulating a social mapping to provide
a database to each CCC so that they can effectively
plan and monitor developments in the communities.
Initiating the CSR Master Plan to meet the
ISO 26000 assurance system in the near future, which
helps creating a criteria to promote community
development work in Indonesia.
8. Environmental and safety risk in Banpu’s powergeneration
Environmental riskThe main environmental issue of a power
plant is air quality resulted from emission of sulfur
dioxide, oxide of nitrogen and dust particles of
a turbine generator. Banpu emphasizes at controlling
and reducing impacts by (a) preventing – this can be
done by choosing a right fuel; for example, high-quality
coal with low sulfur; and (b) eradicating – an electro-
static precipitator and a flue gas desulphurization
have been installed as a standard of practice at every
Banpu’s power plant starting in 2008 in Thailand,
China and in the Hongsa project in Laos PDR.
The BLCP power plant also installs a continuous
emission monitoring stations (CEMS) and four
real-time monitoring system around the plant. Banpu
also formulates a plan for its Chinese power plants to
be certified by ISO 14001 environmental management
assurance standard by 2008 and equipped with the
Total Productive Maintenance tools.
Occupational health and safety riskAs every power plant has to deal with heat
and pressure, each has to comply with strict safety
standards. The BLCP power plant has been certified
of meeting the OHSAS 18001 occupational health
and safety standard since last year. Power plants in
China also strictly comply with safety regulations
issued by the state. In 2007, there were no serious
accidents or death reports among those working at
Banpu’s power plants.
037O p e r a t i o n s D u r i n g t h e P r e v i o u s Y e a rAnnual Report 2007 • Banpu Public Company Limited
Last year, various industrial sectors witnessed
strong growth, which constantly led to high demands for
energy. This in turn sustained coal prices, which remained
fairly high throughout the year. As one of coal exporters
to various regions, Banpu’s operation results remained
strong as in 2007. The total sales revenues were THB
32.442 billion, which was down 3 per cent or THB 936
million from the same period a year ago, due largely to
a decline of Banpu’s production and sales of coal in
Thailand and a suspension of coal production in one of
its subsidiaries in Indonesia. Banpu’s net profit was THB
6.654 billion, or an 84-per cent increase totaling THB
3.044 billion from the same period last year as a result
of recognition of profits from affiliated companies and
its disposal of investment in a subsidiary in Indonesia.
C o a l B u s i n e s s
The regional market for coal in 2007 was tight
due to high demands for coal while production remained
limited. What was clearly seen was that demands for coal
in China rose as a result of its strong economic growth
while domestic transportations of coal was disrupted
and delayed. Not only regional demands for coal were
higher, exporters of 2 major producers; namely,
Australia and Indonesia, were having trouble trying to
export their coal. While Australia’s Newcastle coal
terminal was reaching its capacity, Indonesia had to
confront with the worst heavy rains in its history, which
caused its production to be lower than expected.
Banpu sold a total of 19.29 million tonnes of coal
in 2007, which was 11 per cent lower than the year before.
Most of the declining sales volume was a result of
Trubaindo’s falling production. Trubaindo Mine was
having trouble with its contractors and had to deal with
unusually-heavy rains in the rainy season. Yet, the
declining sales volume was compensated by an increasing
average sales price, which rose to USD 41.06 a tonne or
17 per cent from the year before.
F o r t h e y e a r e n d i n g
Coal Sales Volume (Million Tonnes) 19.29 21.69 17.00
Indominco-Bontang 11.55 10.37 7.36
Trubaindo 3.73 4.11 1.45
Jorong 2.70 3.21 2.92
Kitadin-Embalut 0.12 1.58 1.62
Thailand 1.16 2.42 3.65
Other sources 0.03 - -
2 0 0 62 0 0 7 2 0 0 5
038
F o r t h e y e a r e n d i n g
Total Revenues (THB Million) 32,442 33,378 25,209
Coal business:
Indominco-Bontang 18,758 16,638 14,013
Trubaindo 6,126 6,971 3,162
Jorong 2,616 3,035 3,016
Kitadin-Embalut 175 2,123 2,429
Thailand 717 1,667 2,426
Other sources 38 - -
Total incomes from coal business 28,429 30,434 25,047
Power business 3,865 2,808 -
Other businesses 148 136 162
Gross Profit Margin (%) 35 38 45
Indominco-Bontang 39 39 46
Trubaindo 38 41 42
Jorong 30 36 43
Kitadin-Embalut 32 33 40
Thailand 10 37 48
Other sources (30) - -
Coal business 37 38 45
Power business 25 29 -
Other business 28 35 41
2 0 0 62 0 0 7 2 0 0 5
P o w e r B u s i n e s s
Banpu’s performance in its power business was
strong and helped strengthening its cash flow. The two
units of the BLCP power plant which it has 50 per cent
stake therein have started their commercial production
since February 2007 and reported a profit sharing of THB
4.076 billion (the amount also includes THB 591
million gain from foreign exchange). Another local power
plant in which Banpu holds 14.99 per cent also paid THB
457 million dividend. Banpu Power Investment Co., Ltd.,
which is Banpu’s subsidiary that operates 3 co-genera-
tion power plants in China, reported a net profit of THB
593 million.
039R e v e n u e S t r u c t u r eF o r t h e p r e v i o u s 3 y e a r s e n d e d 3 1 D e c e m b e r
(Unit: THB Million)B a n p u P u b l i c C o m p a n y L i m i t e d
2007
Products/Services
Sales Revenues
1. Domestic Coal BP 100 575 32.51 1,443 76.36 2,150 83.58
2. Imported Coal BP 100 1,066 60.29 369 19.54 370 14.38
3. Other Revenues BP 100 127 7.20 78 4.10 52 2.04
Total Sales Revenues 1,768 100.00 1,890 100.00 2,572 100.00
Participating Profit (Loss)
from Investment in Associated
Companies (Equity Method) 4,504 801 (119)
Total Revenues 6,272 2,691 2,453
Conduct
by
% of
Share-
holding Revenue %
2006
Revenue %
2005
Revenue %
(Unit: THB Million)B a n p u P u b l i c C o m p a n y L i m i t e d and Its Subsidiaries
Sales Revenues - Thailand
1. Domestic Coal BP 100 476 1.47 900 2.70 1,541 6.11
BPI 100 77 0.24 555 1.66 652 2.58
BMC 100 - - - - 4 0.02
CMMC 94, 98 163 0.50 213 0.64 229 0.91
2. Imported Coal BP 100 937 2.89 200 0.60 334 1.33
BMC 100 7 0.02 350 1.05 215 0.85
BPS 100 1,353 4.17 1,245 3.73 905 3.59
BPI 100 977 3.01 1,081 3.24 1,349 5.35
SLM 100 - - 659 1.97 105 0.42
3. Other Revenues 148 0.46 136 0.41 91 0.36
Total Sales Revenues - Thailand 4,139 12.76 5,339 16.00 5,425 21.52
2007
Products/ServicesConduct
by
% of
Share-
holding Revenue %
2006
Revenue %
2005
Revenue %
040
Sales Revenues - Overseas
1. Coal - International Trade Indominco 100 18,271 56.32 16,045 48.08 13,805 54.76
Kitadin 100 110 0.34 1,707 5.11 1,983 7.87
Trubaindo 90 5,107 15.74 6,380 19.11 2,750 10.91
Jorong 95 912 2.81 1,099 3.29 1,175 4.66
2. Power BPIC 100 3,865 11.91 2,808 8.41 - -
3. Industrial Minerals 38 0.12 - - 71 0.28
Total Sales Revenues - Overseas 28,303 87.24 28,039 84.00 19,784 78.48
Total Sales Revenuesvenues 32,442 100.00 33,378 100.00 25,209 100.00
Participating Profit (Loss)
from Investment in Associated
Companies (Equity Method) 4,504 801 (119)
Total Revenues 36,946 34,179 25,090
Notes: 1. Other incomes consisting of other services
2. The Company did not recognize sales incomes derived from the power business since its shareholding ratio is less than 50 per cent therein.
Division of Responsibility Policy among Companies with in Banpu Group
This policy applies to operations of companies engaging in the production and sales of coal where the
Company and its subsidiaries in Thailand will produce and distribute coal to markets in Thailand only. On the other
hand, foreign subsidiaries will produce and sell coal overseas whereby part of their production might be sold to
Thailand as well through the Company and/or other subsidiaries through a sales price set according to the market rates
normally transacted among customers in general.
2007
Products/ServicesConduct
by
% of
Share-
holding Revenue %
2006
Revenue %
2005
Revenue %
(Unit: Million Baht)B a n p u P u b l i c C o m p a n y L i m i t e d a n d I t s S u b s i d i a r i e s ( c o n t i n u e d )
041S u m m a r y o f M a j o r C h a n g e s a n d D e v e l o p m e n t si n 2 0 0 7 a n d M a j o r C u r r e n t E v e n t sAnnual Report 2007 • Banpu Public Company Limited
C o a l B u s i n e s s
On 2 May 2007, Banpu filed a report,
saying that it planned to register its Indonesian coal
business in the Indonesian Stock Exchange through
an Initial Public Offering of PT. Indo Tambangraya
Megah Tbk (ITM)’s shares in which it held 95 per
cent.
On 7 December 2007, ITM received an
approval letter from Badan Pengawas Pasar Modal
dan Lembaga Keuangan, an equivalent to Thailand’s
Securities and Exchange Commission (SEC). ITM went
on to offer a total of its 225,985,000 IPO shares for
the first time during 12-14 December 2007 at a par
value of IDR 500 a share (equivalent to 20 per cent
of its paid-up capital following an issuance and offer
of a total of 1,129,925,000 shares) for IDR 14,000
a share or approximately THB 54.45 a share (at an
exchange rate of THB 3.8893 per IDR 1,000.)
The IPO shares were listed in the
Indonesian Stock Exchange on 18 December 2007
and PT. Indo Tambangraya Megah Tbk or Ticker
“ITMG” received a net amount after expenses of
approximately THB 11.934 billion from the IPO.
On 4 May 2007, PT. Indo Tambangraya
Megah (ITM) and PT. Centralink Wisesa International
(CTL), two subsidiaries in which Banpu holds
99.99 per cent and 95.00 per cent of their shares,
respectively, disposed of 3,500 shares in PT. Barasentosa
Lestari, which was allowed to operate the Barasentosa
coal mine at Sumatra, Republic of Indonesia, at a par
value of IDR 1,000,000 a share to PT. Duta Sarana
Internusa and Buntardjo Hartadi Sutanto, for a total
of USD 800,261, or an equivalent to a sales price of
USD 228.65 a share.
P o w e r B u s i n e s s
On 28 November 2007, Banpu Power Ltd.
(BPP), a subsidiary in which Banpu holds 99.99
per cent of its shares, was approved by its Board to
sign a Joint Development Agreement (JDA) with
Ratchaburi Electricity Generating Holding Public
Company Limited (RATCH) with the purpose of
collaborating the study and the development of the
Hongsa Project. RATCH’s rights and duties under the
JDA however will be effective upon the Lao
government’s approval only.
O t h e r s
On 30 May 2007, Banpu’s Board of
Directors resolved to approve a dividend payment
where Banpu would pay approximately 50 per cent
of its net profit of a consolidated financial statement
after deducting all statutory reserves required by the
laws and as determined by the Company. However,
the payment would depend on its cash flow and
investment situations of the Company itself and its
subsidiaries including legal restrictions and other
requirements.
042
On 29 August 2007, Banpu’s Board of
Directors resolved to pay an interim dividend from
its retained earnings and its 6-month operation results
as at 30 June 2007 to 271,747,855 shares at THB 3.75
per share, totaling THB 1,019,054,456.25. Of this,
THB 1.55 a share was paid out of net profit of
businesses required to pay a 30-per cent corporate
income tax of their net profit while the other THB
2.20 per share was paid out of profits exempted
from being included in the calculation of a corporate
income tax. The payment was made on 28 September
2007.
On 5 October 2007, Universal Exploration
Co., Ltd. (a subsidiary in which the Company holds
99.99 per cent of its shares) was registered to be
dissolved with the Company and Partnership Regis-
trar, Department of Business Development, Ministry
of Commerce. The firm is being liquidated.
On 27 February 2008, Banpu’s Board of
Directors resolved to allow the Company to pay
an annual dividend for 2008 at THB 8.50 a share. Since
an interim dividend at of THB 3.75 a share had been
paid on 28 September 2007, only THB 4.25 per share
remained to be paid. The Company was asked to pay
the dividend out of its retained earnings and its
operation results from 1 July 2007 to 31 December
2007 to shareholders whose names were in the
Shareholder Register Book as of 17 March 2008 at
THB 4.75 per share. Payment was made out of
profits being exempted not to be included in
corporate income tax calculation. Those receiving
the dividend however were not entitled to a tax
credit. Payment would be made on 24 April 2008.
043M a j o r S h a r e h o l d e r sAnnual Report 2007 • Banpu Public Company Limited
1. Thai NVDR Co., Ltd. 57,833,795 21.28
2. The Vongkusolkit Family and related companies * 44,868,867 16.51
3. State Street Bank and Trust Company for London 15,262,900 5.62
4. HSBC (Singapore) Nominees Pte. Ltd. 10,860,149 4.00
5. Littledown Nominees Limited 9 9,719,200 3.58
6. Littledown Nominees Limited 5,363,500 1.97
7. State Street Bank and Trust Company 5,106,279 1.88
8. Chase Nomineees Limited 4,672,200 1.72
9. J.P. Morgan Bank Luxembours S.A. Lend 4,228,300 1.56
10. Somers (U.K.) Limited 3,805,104 1.40
Major Shareholders Number of Shares Hold Percentage
Notes : * The Vongkusolkit Family and related companies comprise of No. of Shares Percentage
1) The Vongkusolkit Family 22,039,133 8.11
2) Mitr Phol Sugar Corp., Ltd. 8,053,808 2.96
Mitr Siam Sugar Corp., Ltd. holds 99.99 per cent of its paid-up capital.
3) TME Capital Co., Ltd. 7,839,000 2.88
The Vongkusolkit Family holds 54.23 per cent of its paid-up capital.
4) MP Particle Board Co., Ltd. 2,080,965 0.77
United Farmer and Industry Co., Ltd. holds 99.99 per cent of its paid-up capital.
5) United Farmer and Industry Co., Ltd. 1,779,445 0.65
Mitr Phol Sugar Corp., Ltd. holds 87.56 per cent of its paid-up capital.
6) Ufinves Co., Ltd. 1,070,611 0.39
TME Capital Co., Ltd. holds 100.00 per cent of its paid-up capital.
7) Pacific Sugar Corporation Ltd. 681,905 0.25
The Vongkusolkit Family holds 45.12 per cent of its paid-up capital.
Mitr Phol Sugar Corp., Ltd. holds 25.00 pe rcent of its paid-up capital.
8) Mitr Phu Viang Sugar Co., Ltd. 615,200 0.23
United Farmer and Industry Co., Ltd. holds 99.99 per cent of its paid-up capital.
9) Mitr Kalasin Sugar Co., Ltd. 480,000 0.18
The Vongkusolkit Family holds 99.99 per cent of its paid-up capital.
10) City Holding Co., Ltd. 228,800 0.08
The Vongkusolkit Family holds 92.00 per cent of its paid-up capital.
T h e L i m i t a t i o n o f F o r e i g n S h a r e h o l d e r s
The foreign shareholders can be able to hold not more than 40 per cent of its paid-up capital as of 31 December 2007, which
now have been holding 40.00 per cent of its paid-up capital.
T e n M a j o r S h a r e h o l d e r s a s o f 3 1 D e c e m b e r 2 0 0 7
044O r g a n i z a t i o n C h a r tBanpu Public Company Limited • As of 31 December 2007
B o a r d o f D i r e c t o r s
C h i e f E x e c u t i v e O f f i c e r
. . . . . . . . . . . . . . . . . . . .
Audit CommitteeCompensation Committee
Corporate Governance
and Nomination Committee
Internal Audit Department
Human Resources
Department
QSE
Development Center
Information Technology
Department
Legal Department
Corporate System
Department
General Affairs Division
Corporate Communications
& Public Affairs Department
Corporate Strategic
Planning Department
Finance Department
China Coal Business
New Energy Development
Project
Business Development
Department
Office of
Chief Executive Officer
China Power Business
Engineering
& Project Development
Strategic Planning
& Asset Management
Hongsa Project
Coal Operations -
Thailand
Coal Operations -
Indonesia
Marketing & Logistics
Technical Development
& Services
Coal Business Office
(Thailand & Indonesia)
Banpu Power
Corporate Services Chief Operating Officer
Company Secretary
Division
045
The Company’s management structure as of 31
December 2007 consisted of the Board of Directors and
the management. The Board of Directors consisted of
sub-committees, which included the Audit Committee,
the Corporate Governance and Nomination Committee,
the Compensation Committee, Directors and Indepen-
dent Directors.
1. The Board of Directors consists of the following:
1. Mr. Soonthorn Vongkusolkit
Chairman of the Board of Directors
2. Mr. Rutt Phanijphand
Independent Director
3. Mr. Montri Mongkolswat
Independent Director
4. Mr. Kopr Kritayakirana
Independent Director
5. Mr. Somkiat Chareonkul
Independent Director
6. Mr. Anothai Techamontrikul
Independent Director
7. Mr. Vitoon Vongkusolkit
Director
8. Mr. Sawatdiparp Kantatham
Director
9. Mr. Chanin Vongkusolkit
Director
10. Mr. Metee Auapinyakul
Director
11. Mr. Ongart Auapinyakul
Director
Directors with Authority to Sign on Behalfof the CompanyTwo of the following six; namely, Mr. Soonthorn
Vongkusolkit or Mr. Vitoon Vongkusolkit or Mr. Chanin
Vongkusolkit, Mr. Sawatdiparp Kantatham or Mr. Metee
Auapinyakul or Mr. Ongart Auapinyakul, shall jointly
sign a document together with the Company’s seal.
M a n a g e m e n t S t r u c t u r eAnnual Report 2007 • Banpu Public Company Limited
Duties and Responsibilities of the Board ofDirectorsThe Board is accountable to shareholders
through the overseeing and supervision of Banpu’s
operations to ensure that that the business is managed
in a way that will achieve the goals previously set and
to the best interests of its shareholders within an ethical
framework and by taking into consideration the interests
of all stakeholders.
The Board has a duty to strictly comply with
the laws, the Company’s objectives, the Articles of
Association and resolutions of shareholders’ meetings
by acting in good faith, taking care of both short-term
and long-term interests of shareholders and complying
with rules and regulations of the Stock Exchange of
Thailand (SET) and the Office of the Securities and
Exchange Commission (SEC).
To perform its duties, the Board of Directors
has appointed a Chief Executive Officer (CEO) to be
responsible for the Company’s businesses and to
supervise its management. The Board of Directors has
duties and responsibilities to consider and approve the
following:
1. The Company’s policy, business strategy,
business plan and annual budget.
2. Monthly and quarterly performance report
in comparison to the Company’s plan, budget and
business outlook in the following period of the year.
3. Investment in a project worth more than
THB 600 million.
4. Investment, which exceeds 10 per cent of
the total investment budget of an approved project and
10 per cent of the total non-project investment budget.
5. Purchase and disposal of assets and an
acquisition and participation in a joint venture project,
which is not conflicting with the SET’s rules, for
an amount that exceeds CEO’s authority.
6. Transaction with material effect to the
Company’s financial status, liabilities, business strategy
and reputations.
7. Entering into a contract not related to
a normal course of business and a contract related to
an important normal business.
046
8. Parts of a related transaction between the
Company, its subsidiaries or affiliates and related
individuals that do not require resolution of the
shareholders’ meeting.
9. Any transaction which may cause the
Company’s Debt-to-Equity Ratio to exceed 2.5 : 1.
10. Payment of an interim dividend.
11. Net borrowing which exceeds a maximum
amount stated in a budget or an annual estimate that
exceeds THB 1 billion.
12. Changes in policy and practices with
material implication to accounting, risk management
and reserves.
13. Significant changes in financial and manage-
ment control.
14. Determination and review of authorization
granted to CEO, Executive Officers (EO) and Chief
Operating Officer (COO).
15. Recruitment of CEO, approval to recruit and
employ EO and COO as proposed by the CEO, approval
of budget, salary, bonus or bonus formula and formula
to adjust annual remuneration packages of senior
executives and employees.
16. Appointment and termination of directors
and the Company Secretary or Secretary of the Board of
Directors.
17. Authorization given to Chairman of the Board
of Directors, CEO or any director, and amendment to
such authorization.
18. Appointment and determination of duties of
committees.
19. Establishing and supervising the management
on the basis of the corporate governance policy and
practices.
20. Appointment of directors or executive officers
as directors of subsidiary and affiliated companies.
21. Registration of a new company and company
dissolution.
22. Amendment of the Board of Directors’ scope
of approving power as described in Clause 1-21.
The Board of Directors requires new directors
to attend an orientation session so that they know what
the Company expects from their roles, duties and respon-
sibilities and what its corporate governance policy
and practices are. The orientation will also help them
understand the Company’s business better as well as
provide a chance to visit Banpu’s operations to prepare
new directors for their tasks.
The Board of Directors has a policy to educate all
directors about corporate governance, industrial outlook,
business prospects and new innovations where it urges
directors to attend a seminar or a coursework organized
by the Thai Institute of Directors Association (IOD)
and other reputable institutes to promote effective
performances of the directors.
The Board of Directors also sets to have its Board
Retreat outing every year so that all directors have a
chance to make recommendations and express their views
extensively and in a non-formal environment, which
should benefit the Board itself and the management.
The Board of Directors requires that its
performance and the independence of its independent
directors be evaluated by the Corporate Governance and
Nomination Committee on an annual basis.
2. The Audit Committee consisted of the following:
1. Mr. Somkiat Chareonkul
Chairman of the Audit Committee
2. Mr. Montri Mongkolswat
Member of the Audit Committee
3. Mr. Anothai Techamontrikul
Member of the Audit Committee
The Audit Committee’s term of office is 3 years
each term starting from April 2007 to April 2010.
Duties and Responsibilities of the AuditCommitteeThe Audit Committee’s responsibilities are
to review the Company’s financial statements, assess
whether the Company’s internal control and risk
management system is adequate, see if the Company
047
has duly complied with relevant laws, rules and
regulations, prepare reports or provide opinions to the
Board of Directors for approval or submission to the
shareholders’ meeting, as the case may be. Details are
as follows:
1. To review the Company’s financial statements
for accuracy and adequacy purpose.
2. To ensure that the Company has an efficient
and appropriate internal control system and an internal
audit system.
3. To ensure that the Company has duly com-
plied with the laws on securities and exchange, the Stock
Exchange of Thailand’s (SET) requirements and other
laws relating to the Company’s business.
4. To review and select the Company’s auditor
and to determine auditor’s fee.
5. To review the disclosure of the Company’s
information in case there is any connected transaction
or any transaction with possible conflict of interest to
ensure that the transaction is accurate, complete and
transparent.
6. To write a corporate governance report which
will be published in the Company’s annual report and
signed by the Chairman of the Audit Committee.
7. To continue monitoring major risk manage-
ment procedures after Risk Management Committee did;
to review financial derivatives transactions, commodity
hedging with contractual parties for linkages with the
internal control.
8. To express opinions regarding appointment
and termination of employment, the operation plan
and operation results, budgeting and personnel of the
Internal Audit Department.
9. To review and propose recommendations to
amend scopes of work, duties and responsibilities of the
Audit Committee to respond to changing circumstances.
10. To submit an operation report to the Board of
Directors at least once a year.
11. To do any other tasks as designated by the
Board of Directors upon the Audit Committee’s approval.
To ensure that the Audit Committee effectively
performs its tasks, the Committee must do the follow-
ing:
1. Within the scopes of its authority, inviting
executive officers or supervisors to attend its meeting
for clarification purpose or to submit relevant documents.
2. Hiring consultants or spend money in any
other ways relating to its job which the Company will be
responsible for the expenses.
3. The Corporate Governance and NominationCommittee consisted of the following:
1. Mr. Kopr Kritayakirana
Chairman of the Corporate Governance
and Nomination Committee
2. Mr. Sawatdiparp Kantatham
Member of the Corporate Governance
and Nomination Committee
3. Mr. Anothai Techamontrikul
Member of the Corporate Governance
and Nomination Committee
Note: On 4 April 2007, Mr. Somkiat Chareonkul resigned from
the Corporate Governance and Nomination Committee
when he was Chairman of the Audit Committee.
The Board appointed Mr. Anothai Techamontrikul as a
member of the Corporate Governance and Nomination
Committee.
The Corporate Governance and Nomination
Committee’s term of office is 3 years each term from
April 2007, to April 2010.
Duties and Responsibilities of the CorporateGovernance and Nomination CommitteeAs its name suggests, the Corporate Governance
and Nomination Committee’s duties can be divided
into 2 major tasks; namely, to review the corporate
governance policy and the Code of Conduct as well as
monitor compliance of such policy and practices so that
it remains within an ethical framework and, secondly,
to nominate directors, Chief Executive Officer and
Executive Officers, review a succession plan in order
to nominate appropriate person to fill management
positions (from Department Vice Presidents and over),
and report to the Board of Directors for approval or
for submission to the shareholders’ meeting, as the case
may be.
048
Duties and Responsibilities of the Corporate
Governance and Nomination Committee are as follow:
1. To consider and review whether Banpu’s
corporate governance policy and its Code of Conduct
are appropriate and considered adequate and to regularly
update the CG policy.
2. To monitor and supervise directors and staff’s
compliance with the corporate governance policy and
the Code of Conduct so that it is in line with those
determined by the Board of Directors and to arrange
a system where Banpu can receive grievance with
regard to the corporate governance and Code of
Conduct from stakeholders.
3. To review the structure and components of
the Board of Directors, monitor the term of office of
its directors, CEO and Executive Officers (EO), and
prepare a succession plan of senior executives (starting
from Department Vice President and over).
4. To recruit and nominate persons as Directors,
Chief Executive Officers and Executive Officers when
the term is due or whenever there is a vacancy.
5. To recommend ways and means to evaluate
performances of directors and the Board of Directors
for the Board of Directors; to participate in such
evaluation and monitor improvement based on results
of such evaluation.
6. To review and give recommendations to amend
scopes of work, duties and responsibilities of the Corpo-
rate Governance and Nomination Committee to respond
to changing circumstances.
7. To submit an operation report to the Board of
Directors at least once a year.
8. To do any other tasks as designated by the
Board of Directors.
To ensure that the Corporate Governance and
Nomination Committee effectively perform its tasks, the
Committee must do the following:
1. Within the scopes of its authority, inviting
executive officer or supervisor to attend its meeting for
clarification purpose or to submit relevant documents.
2. Hiring consultants or spend money in any
other ways relating to its job which the Company will be
responsible for the expenses.
4. The Compensation Committee consisted of
the following:
1. Mr. Rutt Phanijphand
Chairman of the Compensation Committee
2. Mr. Vitoon Vongkusolkit
Member of the Compensation Committee
3. Mr. Montri Mongkolswat
Member of the Compensation Committee
The Compensation Committee’s term of office is
three years each term from April 2007 to April 2010.
Duties and Responsibilities ofthe Compensation CommitteeThe Compensation Committee’s duty is to pro-
vide suggestions regarding compensation management
to the Board of Directors either for its approval or for
submission to the shareholders’ meeting, as the case may
be, as follows.
1. To recommend guidelines on compensation
payment and how to pay compensations and other
benefits to the Board of Directors and other committees
appointed thereby.
2. To consider and recommend amount of
payment of compensations and other benefits by taking
duties and responsibilities of the CEO and Executive
Officers into consideration and by reviewing evaluation
criteria to determine the right annual remunerations.
3. To review a compensation structure, compen-
sation rules and regulations as stated in Clause 1 and 2
to suit the person’s duties and responsibilities, Banpu’s
operation results and market conditions.
4. To review the overall budgets for salary
increase, annual bonus payment and provision of other
staff’s fringe benefits.
5. To review and propose recommendations to
amend scopes of work, duties and responsibilities of
the Compensation Committee to respond to changing
circumstances.
6. To submit an operation report to the Board of
Directors at least once a year.
7. To do any other tasks as designated by the
Board of Directors.
049
To ensure that the Compensation Committee
effectively performs its tasks, the Committee must do
the following:
1. Within the scopes of its authority, inviting the
management or supervisor to attend its meeting for
clarification purpose or to submit relevant documents.
2. Hiring consultants or spend money in any other
ways relating to its job which the Company will be
responsible for the expenses.
5. The Management consisted of the following:
1. Mr. Chanin Vongkusolkit
Chief Executive Officer
2. Mr. Rawi Corsiri
Chief Operating Officer
3. Mr. Chanchai Jivacate*
President – Power Business
4. Ms. Somruedee Chaimongkol
Group Senior Vice President – Finance
5. Mr. Sathidpong Wattananuchit
Group Senior Vice President –
Corporate Services
Note: Mr. Chanchai Jivacate, President – Power Business,
retired on 31 December 2007. He has become Banpu
Plc’s advisor since 1 January 2008.
Duties and Authority of Chief ExecutiveOfficer1. To review an annual operation plan not
exceeding 5 per cent of the total operation budgets
already approved.
2. To approve an investment which altogether
does not exceed 10 per cent of the total investment
budget approved; and to approve the use of other
investment budgets which however do not exceed 10
per cent of the total non-project investment budget.
3. To approve new investment items where no
budget has been set aside for no more than THB 100
million a transaction.
4. Approval of increasing operating budget as
a result of changes of stripping ratio (S/R) is limited to
no more than THB 500 million.
5. To invest in projects of which the total value
does not exceeding THB 600 million.
6. To review and submit budgets for annual
salary increase, staff bonus payment and provision of
major staff welfare.
7. To consider and approve the signing of a
purchase agreement, a lease agreement or a service
agreement as follows.
7.1 Service agreement to remove overbur-
den and transport coal for no more than 5 years and not
exceeding THB 2 billion.
7.2 Land transport agreement of coal for no
more than 5 years and not exceeding THB 1 billion
7.3 Transport agreement for no more than
5 years and not exceeding THB 1 billion.
7.4 Purchase agreement, hiring agreement,
service agreement and lease/hire-purchase agreement
for no more than 5 years and not exceeding THB
1 billion.
8. To approve the sales of permanent assets (land
and the upgrade thereof) which, at the market price as of
the sales date, do not exceed THB 300 million.
9. To approve the sales of permanent assets
(building and construction) which, at the market price as
of the sales date, do not exceed THB 300 million.
10. To borrow a net loan, which exceeds the
maximum amount stated in an annual budget or an
annual budget estimate already approved, but it must
not exceed THB 1 billion.
11. To sign major contract (based on contract
value) for mining equipment and power of which the
value is not exceeding THB 300 million.
12. To approve acquisitions of lands and proper-
ties for the Company’s businesses under an unplanned
budget of which the value does not exceed THB 300
million.
13. To determine and review approval authority
granted to department heads and lower.
050
The Board of Directors sets a target/goal for
the CEO and EO and that their performances will be
subject to a review every year. The CEO will evaluate
performances of senior executive officers using goals
and evaluation rules linked closely with Banpu’s
strategic plan and annual operation plan to come up with
appropriate and attractive pay packages and incentives.
6. Independent Directors account for 45 per cent
in the Company’s Board of Directors; the Committee
consisted of the following:
1. Mr. Montri Mongkolswat
Independent Director
2. Mr. Kopr Kritayakirana
Independent Director
3. Mr. Somkiat Chareonkul
Independent Director
4. Mr. Rutt Phanijphand
Independent Director
5. Mr. Anothai Techamontrikul
Independent Director
“Independent Director” is defined as follows:1. A person holding no more than 5 per cent
of paid-up capital of the Company, its subsidiaries,
affiliates or relevant companies; this shall include shares
held by relating persons.
2. A non-executive director in the management
of the Company, its subsidiaries, affiliates, relevant
companies or major shareholders; a person who is not
an employee or consultant regularly receiving monthly
salary from the Company, its subsidiaries, affiliates,
relevant companies or major shareholders.
3. A director with no direct or indirect benefit or
interest in financial or in management aspects of the
Company, its subsidiaries, affiliates, relevant companies
or major shareholders including the person not having
benefit or interest in such a manner one year prior to
his appointment unless the Board of Directors has
thoroughly considered that such interest or benefit in the
past will not affect his performance and opinion as an
independent director.
4. A director who is neither related to nor be
a closed relative of the Company’s executives or major
shareholders.
5. A director not appointed as a representative to
maintain the interests of the Company’s directors or major
shareholders or shareholders relating to the Company’s
major shareholders.
6. A person who is able to perform duties,
express opinions or report results of performances
based on his duties entrusted by the Board of Directors
independently without subject to any control of the
Company’s executives or its major shareholders includ-
ing those relating thereto or closed relatives thereof.
Nomination of Directors and ExecutivesThe Corporate Governance and Nomination
Committee will nominate new directors who shall
replace those retiring on rotation or otherwise based
on the following procedures:
1. The Committee will review the Board of
Directors’ entire structure and components with
a purpose to strengthen its position.
2. The Committee will review general and
specific qualifications of independent directors and
add new qualifications deemed suitable for circumstances
at the time, the Company’s requirements and to the SET’s
terms and conditions. The Corporate Governance and
Nomination Committee will then submit its nomination
to the Board of Directors, who will submit it to the
Annual General Shareholders’ Meeting for approval and
appointment.
To nominate an executive officer, the Corporate
Governance and Nomination Committee will draft
a succession plan covering CEO, COO and senior
executive officers to ensure that Banpu will have
competent executives with proper expertise and
experiences to succeed in its important positions in the
future.
051B o a r d o f D i r e c t o r s a n d M a n a g e m e n tAnnual Report 2007 • Banpu Public Company Limited
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
1. Mr. Soonthorn
Vongkusolkit
Chairman
* An older brother of persons
number 9 and 11
2. Mr. Rutt Phanijphand
Independent Director
Chairman of the
Compensation Committee
69
60
Honorary Ph.D. in Business
Administration, University
of the Thai Chamber of Commerce
Chairman 2000 Program #7/2002,
Thai Institute of Directors
Association (IOD)
Directors Accreditation Program
(DAP) #19/2004, Thai Institute
of Directors Association (IOD)
Modern Managers Program (MMP),
Chulalongkorn University
Mattayomsuksa
M.S. in Business Ad., Fort Hays
Kansas State University,
Hays, Kansas, U.S.A.
B.S., Kasetsart University
Directors Accreditation
Program: (DAP) # 4/2003,
Thai Institute of Directors
Association (IOD)
Directors Certification
Program (DCP) # 61/2005,
Thai Institute of Directors
Association (IOD)
National Defence College
(Class 388)
0.72
-
2006-Present
2004-2006
1983-2006
2002-2007
1983-Present
1981-Present
1974-Present
2005-Present
2006-Present
2001-Present
2007-Present
2003-2004
2004-2005
2002-Present
2006-Present
Chairman
Member of the Corporate
Governance and
Nomination Committee
Vice Chairman
Chairman
Director
Director
Chairman
Independent Director
Chairman of
the Compensation
Committee
Chairman of Executive
Directors
Director
Director
Member of the Audit
Committee
President / Chief
Executive Officer
Director
Chairman of the
Nomination and
Compensation
Committee
Member of the Audit
Committee
Executive Director
Chairman of the Activities
Promotion Committee
Member, Council of
Kasetsart University
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
United Standard Terminal
Public Company Limited
TME Capital Co., Ltd.
City Holding Co., Ltd.
Mitr Phol Sugar Corp., Ltd.
and its affiliates
Banpu Public Company Limited
Banpu Public Company Limited
Land and Houses Retail Bank Public
Company Limited
Land and Houses Retail Bank Public
Company Limited
IRPC Public Company Limited
IRPC Public Company Limited
Quality Houses Public Company
Limited
Home Product Centre Public Company
Limited
Home Product Centre Public Company
Limited
Krung Thai Bank Public Company
Limited
Krung Thai Bank Public Company
Limited
Kasetsart University
Kasetsart University
052
3. Mr. Montri Mongkolswat
Independent Director
Member of the Audit
Committee
Member of the
Compensation Committee
4. Mr. Kopr Kritayakirana
Independent Director
Chairman of the Corporate
Governance and
Nomination Committee
64
68
B.A. (Commerce), Thammasat
University
B.A. (Accountancy), Thammasat
University
National Defence College
(Class 355)
Chairman 2000 Program #3/2001,
Thai Institute of Directors
Association (IOD)
B.Sc. (Physics), Chulalongkorn
University
Ph.D. (Physics), Harvard University
Directors Certification Program
(DCP) #11/2001, Thai Institute
of Directors Association (IOD)
-
-
1999-Present
2002-Present
2004-2005
2003-2004
Present
2003-Present
2004-Present
2003-Present
Present
Independent Director /
Member of Audit
Committee
Member of the
Compensation
Committee
Member of the Corporate
Governance and
Nomination Committee
Chairman of the
Compensation
Committee
Director / Member of
the Nomination
Committee and
Compensation
Committee / Advisor
to the Executive
Committee
Independent Director
Chairman of
the Corporate
Governance and
Nomination Committee
Directors
Director
Director
Director
Member, Council of
Chulalongkorn
University
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
The Deves Insurance Public Company
Limited
Banpu Public Company Limited
Banpu Public Company Limited
Thai Institute of Directors Association
(IOD)
Thai Reinsurance Public Company
Limited
Siam Panich Leasing Public Company
Limited
Sicco Securities Public Company
Limited
Chulalongkorn University
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
053
5. Mr. Somkiat Chareonkul
Independent Director
Chairman of the Audit
Committee
66 Bachelor of Commerce,
Thammasat University
Bachelor of Law, Sukhothai
Thammathirat University
Certificate in “Strategic Alliance
Seminar”, The Wharton School,
University of Pennsylvania, U.S.A.
Certificate in “Selected Problems
of Tax Auditing and Investigation”,
Germany and Singapore
Certificate in “Seminar on
Taxation (Indirect Tax Course)”,
JICA (Japan International
Cooperation Agency), Japan
Certificate of Training
“The Management Program”
Sasin Graduate Institute of
Business Administration,
Chulalongkorn University
Certificate of Training
“Senior Executive, Class 30”
Civil Service Training Institute,
Civil Service Commission
Directors Certification Program
(DCP) #79/2006, Thai Institute
of Directors Association (IOD)
Audit Committee Program,
Class 1/2004, The Institute
of Director Association (IOD)
- 2005-Present
2005-2007
Present
2003-Present
2004-Present
Independent Director,
Chairman of the Audit
Committee
Member of the Corporate
Governance and
Nomination
Committee
Director
Director
Director
Banpu Public Company Limited
Banpu Public Company Limited
Oishi Group Public Company Limited
Mueng Kit Co., Ltd.
Chantaburi Resort and Spa Co., Ltd.
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
054
6. Mr. Anothai
Techamontrikul
Independent Director
Member of the Audit
Committee
Member of the Corporate
Governance and
Nomination Committee
7. Mr. Sawatdiparp
Kantatham
Director
Member of the Corporate
Governance and the
Nomination Committee
64
68
B.A. (Accounting),
Chulalongkorn University
Diploma in Advanced Vocational
Training, Germany
Directors Accreditation Program
(DAP) #5/2003, Thai Institute
of Directors Association (IOD)
Directors Certification Program
(DCP) #89/2007, Thai Institute
of Directors Association (IOD)
B.A. (Economics), Hanover
College, Indiana, U.S.A.
Program on Investment Appraisal
and Management, Harvard
University Graduate School of
Business Administration,
Massachusetts, U.S.A.
National Defence College
(Class 35)
Directors Certification Program
(DCP) #31/2003, Thai Institute
of Directors Association (IOD)
-
0.24
2006-Present
2007-Present
Present
1998-2004
1983-Present
2001-Present
2001-2004
1998-2003
1995-Present
2005-Present
1988-Present
2000-2006
Independent Director /
Member of the Audit
Committee
Member of the Corporate
Governance and
Nomination
Committee
Chairman (Executive
Board)
Vice Chairman
Vice Chairman
Director
Director and General
Manager
Director
Member of the Corporate
Governance and
Nomination
Committee
Member of the
Compensation
Committee
Member of the ESOP
Allocation Committee
Director
President
Vice President
Senator
Banpu Public Company Limited
Banpu Public Company Limited
D.T.C. Industries Public Company
Limited
Alcan Packaging Strongpack Public
Company Limited
United Auditing PKF Limited
Safety Steel Industry Company Limited
The Industrial Finance Corporation of
Thailand
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
TME Capital Co., Ltd.
The Phrae People Association
The American University Alumni
Association
The Senate
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
055
8. Mr. Metee Auapinyakul
Director
Executive Officer
Director with Authority
to Sign on Behalf of
the Company
* An older brother of person
number 10
54 B.SC. (Management), St. Louis
University, Missouri, U.S.A.
Infrastructure for the Market
Economy, Harvard University
John F. Kennedy School of
Government, Boston, U.S.A.
National Defence College
(Class 377)#7
National Defence College,
College of Management,
Mahidol University
(Mini MMM Class 1)
Directors Certification Program
(DCP) #61/2005, Thai Institute
of Directors Association (IOD)
0.08 2007-Present
1983-Present
2005-2006
2004-Present
2001-Present
2001-2006
2003-2006
2004-2005
2003-2005
2003-2004
2002-2004
1984-2005
Director
Director / Executive
Officer
Sub-Committee of Board
of Investment
Advisor
Sub-Committee for
Public Relations
Specialist
National Science and
Technology
Development Board
Committee
Committee for Project
Consideration
Advisor
Chairman, Customer
Services Quality
Assurance Committee
Member of the Customer
Services Quality
Assurance Committee
Advisor
Director
Thai Agro Energy Public Company
Limited
Banpu Public Company Limited
The Board of Investment
GENCO Public Co., Ltd.
National Safety of Thailand
Energy Committee, House of
Representatives
Ministry of Science and Technology
The Board of Investment
The Board of Investment
Thai Airways International
Public Company Limited
Thai Airways International
Public Company Limited
Academic Committee, National
Defence College
Royal and Sun Alliance Insurance
(Thailand) Limited
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
056
9. Mr. Chanin Vongkusolkit
Director
Chief Executive Officer
Director with Authority
to Sign on Behalf of
the Company
* A younger brother of persons
number 1 and 11
10. Mr. Ongart Auapinyakul
Director
Executive Officer
Director with Authority
to Sign on Behalf of the
Company
* An younger brother of person
number 8
55
51
Honorary Ph.D. in Economics,
Chiang Mai University
M.B.A. (Finance), St. Louis
University, Missouri, U.S.A.
B. Economics, Thammasat
University
Directors Certification Program
(DCP) #20/2002, Thai Institute
of Directors Association (IOD)
DCP Refresher Course # 3/2006,
Thai Institute of Directors
Association (IOD)
B.S. (Mechanical Engineering),
University of Missouri,
Columbia, U.S.A.
Senior Executive Program 3,
Sasin Graduate Institute of
Business Administration of
Chulalongkorn University
National Defence College
(Class 4414)
Directors Certification Program
(DCP) #23/2002, Thai Institute
of Directors Association (IOD)
0.58
0.26
1983-Present
2004-Present
2003-Present
1983-Present
2005-Present
2004-Present
1983-Present
2007-Present
Director / Chief
Executive Officer
Director
Director
Director
Vice Chairman
Director
Director / Executive
Officer
Chairman, Phrae
Community College
Trustees
Banpu Public Company Limited
The Erawan Group Public Company
Limited
Ratchaburi Electricity Generating
Holding Public Company Limited
Mitr Phol Sugar Corp., Ltd.
Thai Listed Companies Association
Federation of Thai Capital Market
Organizations
Banpu Public Company Limited
Phrae Community College
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
057
11. Mr. Vitoon Vongkusolkit
Director
Member of the
Compensation Committee
Director with Authority to
Sign on Behalf of
the Company
* A younger brother of person
number 1
* An older brother of person
number 9
12. Mr. Rawi Corsiri
Chief Operating Officer
66
57
B.Sc. (Pharmacology),
Chulalongkorn University
Directors Certification Program
(DCP) #17/2002, Thai Institute
of Directors Association (IOD)
Senior Executive Program #6,
Sasin Graduate Institute of
Business Administration of
Chulalongkorn University
Chairman 2000 Program #11/2005,
Thai Institute of Directors
Association (IOD)
M.B.A., Sasin Graduate Institute
of Business Administration of
Chulalongkorn University
B.Sc., Chulalongkorn University
Directors Certification Program
(DCP) #32/2003, Thai Institute
of Directors Association (IOD)
Capital Market Academy Leader
Program (CMA) # 2/2006, Capital
Market Academy
Executive Leadership Program
NIDA-Wharton, Co-program
between National Institute of
Development Administration
(NIDA) and The Wharton School,
University of Pennsylvania, U.S.A.
1.32
-
1983-Present
2001-Present
2004-Present
1989-2007
1987- Present
1983-Present
1977- Present
1998-2006
2001-2004
1987-2004
2001-Present
Director
Member of the
Compensation
Committee
Chairman of the Financial
and Risk Management
Committee
Director
Director
Director
Chairman
Director
Chairman
Member of the Corporate
Governance and
Nomination
Committee
Managing Director
Chief Operating Officer
Director
Director
Director
Director / President
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Banpu Public Company Limited
Banpu Public Company Limited
The Erawan Group
Erawan Ploenchit Co., Ltd.
Mitr Phol Sugar Corp., Ltd.
and its affiliates
Erawan Hotel Public Company Limited
IAG Insurance (Thailand) Co., Ltd.
United Standard Terminal Public
Company Limited
United Securities Public Company
Limited
Banpu Public Company Limited
Amarin Plaza Public Company Limited
Banpu Public Company Limited
Banpu Minerals Company Limited
Banpu Singapore Pte. Ltd.
Banpu International Limited
Banpu Power Limited
Banpu Coal Power Limited
Banpu China Pte. Ltd.
Banpu Power International Limited
BLCP Power Limited
Power Generation Services Co., Ltd.
Banpu Power Investment Co., Ltd.
Peak Pacific Investment (L) BHD
Edifice Engineering Company Limited
Silamani Corp. Ltd.
Silamani Marble Company Limited
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
058
Note: * Mr. Chanchai Jivacate, President of Banpu Plc’s Power Business, retired on 31 December 2007 and has been appointed as advisor of
Banpu Public Company Limited starting from 1 January 2008.
13. Mr. Chanchai Jivacate
Advisor, Banpu Public
Company Limited
(starting from 1 January
2008)
14. Ms. Somruedee
Chaimongkol
Group Senior Vice
President – Finance
15. Mr. Sathidpong
Wattananuchit
Group Senior Vice
President – Corporate
Services
61
46
49
Master Degree in Engineering
Mechanical, Lamar
University, Texas, U.S.A.
B. Engineering (Mechanical),
Chulalongkorn University
Directors Certification Program
(DCP) #22/2002, Thai Institute of
Directors Association (IOD)
B.Sc. (Accounting), Bangkok
University
Program for Global Leadership,
Harvard University Graduate
School of Business Administration,
Boston, U.S.A.
Directors Certification Program
(DCP) #78/2006, Thai Institute
of Directors Association (IOD)
Doctor of Philosophy in Strategic
Management, University of
Northern Washington
M.B.A. Strategic Management
Leadership, IOU of Netherlands
B.A. (Administration), Sukhothai
Thammathirat University
B.A. (English), Nakhon Ratchasima
Rajaphat University
Philosophy Training,
Saint Gabriel’s Institution, India
Directors Certification Program
(DCP) #74/2006, Thai Institute
of Directors Association (IOD)
0.03
0.08
-
Present
2001-2007
Present
2002-Present
2006-Present
2001-2006
Present
2006-Present
2004-2005
1998-2003
Advisor
President
Director
Director
Director
Director
Director
Director
Group Senior Vice
President - Finance
Senior Vice President -
Finance
Director
Director
Director
Director
Director
Director
Director
Director
Group Senior Vice
President - Corporate
Services
Senior Vice President -
Internal Audit
Senior Vice President -
Human Resources
Banpu Public Company Limited
Banpu Power Limited
Banpu Power Limited
Banpu Coal Power Limited
BLCP Power Limited
Banpu China Pte. Ltd.
Banpu Power International Ltd.
The Aromatics (Thailand) Public
Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Singapore Pte. Ltd.
Banpu Minerals Company Limited
Banpu International Limited
Edifice Engineering Company Limited
Silamani Corp., Ltd.
Silamani Marble Company Limited
Banpu China Pte. Ltd.
BP Overseas Development Co., Ltd.
Banpu Public Company Limited
Banpu Public Company Limited
Banpu Public Company Limited
Organization
Work experience in the last five yearsName/Position EducationAge
%Shareheld Period Position
059S h a r e h o l d i n g s o f t h e B o a r d o f D i r e c t o r s a n d M a n a g e m e n tAnnual Report 2007 • Banpu Public Company Limited
O r d i n a r y S h a r e ( U n i t s )
N a m e
1. Mr. Soonthorn Vongkusolkit 1,948,296 1,973,296 (25,000)
2. Mr. Montri Mongkolswat - - -
3. Mr. Sawatdiparp Kantatham 662,745 920,255 (257,510)
4. Mr. Vitoon Vongkusolkit 3,590,911 4,360,911 (770,000)
5. Mr. Kopr Kritayakirana - - -
6. Mr. Somkiat Chareonkul - - -
7. Mr. Rutt Phanijphand - - -
8. Mr. Anothai Techamontrikul - - -
9. Mr. Chanin Vongkusolkiit 1,688,071 2,000,371 (312,300)
10. Mr. Metee Auapinyakul 221,599 369,799 (148,200)
11. Mr. Ongart Auapinyakul 710,500 810,000 (99,500)
12. Mr. Rawi Corsiri - 414,669 (414,669)
13. Mr. Chanchai Jivacate 45,000 70,000 (25,000)
14. Ms. Somruedee Chaimongkol 212,628 212,628 -
15. Mr. Sathidpong Wattananuchit - - -
31 December 200631 December 2007 + / (-)
+ / (-)
A s o f 3 1 D e c e m b e r 2 0 0 7
Notes: From report of securities held by the Company’s directors as of 28 December 2007.
060
1. Mr. Soonthorn Vongkusolkit 800,000.00 - - - 1,977,457.00 2,777,457.00Chairman / Member of theCorporate Governance andNomination Committee
2. Mr. Montri Mongkolswat 620,000.00 210,000.00 - 115,000.00 1,738,842.00 2,683,842.00Independent Director /Member of the AuditCommittee / Member of theCompensation Committee
3. Mr. Sawatdiparp Kantatham 620,000.00 - 120,000.00 - 1,738,842.00 2,478,842.00Director / Member of theCorporate Governance andNomination Committee
4. Mr. Vitoon Vongkusolkit 620,000.00 - - 115,000.00 1,738,842.00 2,473,842.00Director / Member of theCompensation Committee
5. Mr. Kopr Kritayakirana 595,000.00 - 155,000.00 - 1,738,842.00 2,488,842.00Independent Director /Chairman of the CorporateGovernance and NominationCommittee
6. Mr. Somkiat Chareonkul 620,000.00 270,000.00 20,000.00 - 1,738,842.00 2,648,842.00Independent Director /Member of the AuditCommittee / Member of theCorporate Governance andNomination Committee
7. Mr. Rutt Phanijphand 620,000.00 - - 147,500.00 1,738,842.00 2,506,342.00Independent Director /Chairman of theCompensation Committee
8. Mr. Anothai Techamontrikul 620,000.00 210,000.00 100,000.00 - 1,313,741.00 2,243,741.00Independent Director /Member of the AuditCommittee
R e m u n e r a t i o n o f t h e B o a r d o f D i r e c t o r s a n d M a n a g e m e n tAnnual Report 2007 • Banpu Public Company Limited
1. R u m e n e r a t i o n i n C a s h f o r t h e Y e a r E n d i n g 3 1 D e c e m b e r 2 0 0 7
1.1 Remuneration in cash for Board members in the forms of meeting allowance and gratuity was THB
29,337,502 of which details are as follows.
Meeting Allowance (THB/year)
Name/Position
DirectorCompensation
Committee
Audit
Committee
CorporateGovernance and
NominationCommittee
Total
Remuneration
(THB/year)
Gratuity
(THB/year)
061
Notes: * Mr. Krirk-Krai Jirapaet resigned from his position as Chairman of the Board of Directors in October 2006.
Mr. Manas Leeviraphan retired on 31 March 2006.
2. Other remunerations
2.1 Contributions to the Provident Fund
In 2007, the Company paid the following contributions to its executives.
Unit : THB
Total salaries 5 35,005,020.00 5 32,241,568.00
Total bonuses 5 16,351,480.00 5 11,166,246.00
Total (THB) 51,356,500.00 43,407,814.00
Number of executives 2007 Number of executives 2006
Unit (THB)
Contributions to the Provident Fund 4 1,757,901.60 4 1,241,306.00
Number of executives 2007 Number of executives 2006
Notes: In 2006 and 2007, there were 4 executives namely, Mr. Chanin Vongkusolkit, Mr. Rawi Corsiri, Ms. Somruedee Chaimongkol
and Mr. Sathidpong Wattananuchit
Notes: In 2006 and 2007, There were 5 executives namely, Mr. Chanin Vongkusolkit, Mr. Rawi Corsiri, Mr. Chanchai Jivacate, Ms. Somruedee Chaimongkol
and Mr. Sathidpong Wattananuchit.
Meeting Allowance (THB/year)
Name/Position
DirectorCompensation
Committee
Audit
Committee
CorporateGovernance and
NominationCommittee
Total
Remuneration
(THB/year)
Gratuity
(THB/year)
1.2 Remuneration in cash for the Company’s executives in the forms of salary and bonus
9. Mr. Chanin Vongkusolkit 595,000.00 - - - 1,738,842.00 2,333,842.00Director
10. Mr. Metee Auapinyakul 620,000.00 - - - 1,738,842.00 2,358,842.00Director
11. Mr. Ongart Auapinyakul 545,000.00 - - - 1,738,842.00 2,283,842.00Director
12. Mr. Krirk-Krai Jirapaet* - - - - 1,634,125.00 1,634,125.00
13. Mr. Manas Leeviraphan* - - - - 425,101.00 425,101.00
Total 29,337,502.00
062
C o r p o r a t e G o v e r n a n c e
1. Corporate Governance PolicyThe Board of Directors believes that Corporate
Governance is an important factor that will bring
success and maximum benefit to its shareholders. Banpu
has announced its Corporate Governance policy and
Code of Conduct since 2002. The corporate governance
policy and code of conduct booklets have been provided
since then. The current Corporate Governance policy and
Code of Conduct is the second edition revised in 2005
and implemented in 2006. Published in Thai, English
and Bahasa Indonesia, the updated version of Corporate
Governance and Code of Conduct are well-responded
to evolving times and circumstances and covered
international practices. The Corporate Governance and
Code of Conduct have been distributed to directors,
executives, and staff to use as a reference and a practice
guideline. They are also disclosed to public in Banpu’s
website under “Corporate Governance” topic.
In 2007, Banpu translated its Corporate Gover-
nance policy and Code of Conduct into Chinese for
implementation in 2008. In this regard, Banpu has set
a principle of Corporate Governance implementation
in companies which it has major shareholders or
management authority. This principle will be applied as
standard of business ethic in the countries Banpu plan to
operate its business in the future. To implement the
Corporate Governance, Banpu also takes legal, economic
and social conditions as well as corporate culture of
related companies into consideration.
Banpu also evaluates an effectiveness of its
Corporate Governance implementation by using Key
Performance Indicator (KPI) in the part of Behavioral
Factor under “integrity” value. The result, classified by
staff levels and operation sites, revealed a satisfactory
outcome.
In 2007, Banpu was one of 14 companies
receiving Board of the Year for Distinctive Practices
Awards 2006/2007. Held by the Institute of Directors,
the Stock Exchange of Thailand (SET), the Board of
Trade of Thailand, the Federation of Thai Industries, the
C o r p o r a t e G o v e r n a n c e a n dS u p e r v i s i o n o n t h e U s e o f I n t e r n a l I n f o r m a t i o nAnnual Report 2007 • Banpu Public Company Limited
Thai Bankers’ Association, the Thai Listed Companies
Association and Federation of Thai Capital Market
Organizations, the award was given to Boards of
Directors that distinguish themselves in performing in
accordance with good corporate governance principles.
Banpu duly complied with the principles of good
corporate governance for listed companies 2006 in these
following five principles:
Rights of shareholdersBanpu fully complied with the best practices
on shareholders’ rights, especially in 2007, when it
allowed minor shareholders to propose agendas of
the 2008 Annual General Meeting of Shareholders
(AGM) in advance between December 2007 and January
2008. Shareholders were notified via the SET posted
at www.banpu.co.th/th/investor for transparent
procedure and criteria.
Equitable treatment of shareholdersBanpu fully complied with the best practices
in regard to shareholder’s rights especially when it
allowed minor shareholders to propose the agendas
of the 2008 AGM, a practice considered an equal
treatment to all shareholders. Banpu is in the process
of studying a procedure for the nomination of
candidates by minority shareholders.
Roles of StakeholdersBanpu has formulated a policy indicating
the way it treats all groups of stakeholders in its
Corporate Governance policy. In addition, customers
can file a complaint through the Marketing & Logis-
tics Department while investors can file the same through
the Investor Relations Division. Staff, too, may file a
grievance through the Corporate Governance and Nomi-
nation Committee’s secretary. All complaint reports
will be submitted to the Corporate Governance and
Nomination Committee on a quarterly basis while
summary is also submitted to the Board. As of the
end of 2007, there was no single grievance. Banpu
also commits to the best practices on environment and
social activities through its Sustainable Development
Policy.
063
Disclosure and TransparencyBanpu discloses its information and policies
which are regularly updated in both Thai and English
through the SET and the Company’s website, through
its financial statements and an auditor’s report, an
annual report and a report of the Board of Directors’
responsibilities. In addition, remunerations paid to its
directors and senior executives are disclosed. No
remuneration is paid to directors who also sit as
directors of its subsidiaries. Investors can reach
Banpu’s Investor Relations Department at 02-694-6744
or by e-mail at: [email protected]. In
2007, it held an analyst’s meeting every quarter, plus
4 overseas road shows and 1 local road show. Banpu
also provides information for investors under the
“Investor News” topic, which is regularly updated in
its website.
Responsibilities of the Board of DirectorsThe Company has complied with the best
practices in regard to Board of Directors, which in-
clude the board’s roles and responsibilities, meetings,
self-assessment, remunerations and development of
directors and senior executives. Of Banpu’s 11-member
Board, 5 are independent directors. At the moment,
Banpu is studying how it can determine a number of
companies each director could sit on. So far, there is
no limited number of term a director can stay in his
office but has set a retirement age for director at 72
years old. Banpu is also preparing to appoint its com-
pany secretary.
2. Shareholders: Rights and Equality TreatmentThe Board of Directors gives a priority to
the rights and equality of shareholders. This has been
clearly stated in Banpu’s corporate governance
policy under the topic of “policy to shareholders:
rights and equality of shareholders and shareholders’
meeting,” where it states that Banpu’s shareholders
are equally entitled to basic rights to receive share
certificates, transfer their shares and access adequate
information in a timely, appropriate and adequate
manner for them to make a decision. In addition, the
Board of Directors also insists that shareholders have
rights to attend and vote at a shareholders’ meeting,
to amend the Company’s major policies, to elect and
remove directors, approve appointment of auditors and
right to share in profits. The Board of Directors also
facilitates shareholders attending the shareholders’
meeting by sending adequate information in time for
the meeting, urging shareholders to exercise their rights
at the meeting or appointing a person or an indepen-
dent director as a proxy to vote on his behalf. In addi-
tion, shareholders are equally allowed to express their
views, request an explanation or ask a question.
In 2007, Banpu held the 2007 AGM on 28 March
2007. All directors (11) attended the meeting. Banpu
designated Thailand Securities Depository Co., Ltd.,
which was its share registrar, to submit an invitation
letter to shareholders 12 days in advance. Banpu posted
the letter at http://www.banpu.co.th/th/investor 21 days
prior to the meeting date. The Minutes of the 2007
AGM were posted at the website 12 days after the
meeting. Shareholders failing to attend the meeting
could appoint independent directors as their proxy.
At the 2007 AGM, 13.64 per cent of shareholders
exercised these rights. To allow shareholders to
propose meeting agendas, Banpu announced in
November 2007 via the SET that it would allow
shareholders to propose the agendas from December
2007 - January 2008. This was also posted in its website
at www.banpu.co.th/th/investor with clear procedures
and transparent criteria.
3. Rights of All StakeholdersBanpu is eager to treat all stakeholders on a
fairly basis. Banpu’s policy to stakeholders has been
part of its Corporate Governance policy where it pro-
motes collaboration between itself, stakeholders
and other related parties such as staff, customers,
suppliers, creditors, government agencies, communities
where Banpu operates and the society at large. Banpu’s
Code of Conduct also describes best practices for
064
directors, executives and staff to perform to ensure
fair and balance dealing with stakeholders. These prac-
tices cover major topics such as conflicts of interest,
responsibility to shareholders and policy and treat-
ment of staff, customers, suppliers, creditors, busi-
ness competitors and the society. Directors, execu-
tives and staff are to learn, understand and strictly
comply with these guidelines so that all stakeholders
are fairly protected and treated.
In addition, Banpu reports its operations and
performances to stakeholders and those entitled to
know in its annual report and the Company’s website.
A two-way communication channel has been set up
for stakeholders and parties to voice their opinions
and file grievance in case they are unfairly treated by
Banpu. So far, the Company has set up a grievance
system to receive complaints from 3 groups of people;
namely, shareholders, investors and Banpu’s own staff.
There was no grievance in 2007.
Regarding Banpu’s staff, as staff is an impor-
tant factor for its success, a policy about Banpu’s staff
and staff treatment has been written in Banpu’s Code
of Conduct. It’s our policy to treat our staff fairly in
regard to job opportunity, remunerations, appointments,
transfer and skill development. We make sure our work
environment is safe. With a concern over staff’s
wellbeing, Banpu strictly complies with appropriate
safety and occupational health measures to prevent
accidents, injuries and job-related diseases. We
respect human rights where everyone must not be
discriminated against their races, nationalities,
religions and culture.
Banpu commits to pay a fair salary and
provide fair welfare and other returns which are closely
linked with added long-term value for our sharehold-
ers. Banpu promotes a fair human resource manage-
ment system and will fully offer opportunities to all
staff to develop themselves.
In terms of customers, Banpu realizes that
customer’s satisfaction is crucial to its success and
intends to effectively respond to customer’s needs.
The Code of Conduct includes a policy and practices
on how Banpu should treat its customers. Banpu will
honor a promise it makes to customers by delivering
quality products and services at a fair price, giving
accurate and appropriate information to customers in
a timely fashion, strictly complying with customer’s
requirements, providing customers a grievance
system to complain about quality, volume and safety
of Banpu’s products and services, speedily respond-
ing to customers and doing everything to make sure
that customers will be promptly responded, advising
customers on how to effectively use Banpu’s
products and services for their benefit and keeping
customer’s secrets without exploiting them.
For suppliers and/or creditors, Banpu has written
a policy announcing that it will equally and fairly treat
them by taking into consideration Banpu’s maximum
benefits and by making sure that suppliers and
creditors are enjoying a fair return. Banpu will do
everything to avoid a situation that may lead to a conflict
of interest and will honor any commitment it has
committed.
Regarding business competitors, in its Code
of Conduct, Banpu commits to treat competitors
according to international principles and within a
legal framework of a fair trade competition without
violating their secrets or acquiring their secrets in a
fraudulent way. Banpu has strictly complied with what
has been stated in its Code of Conduct. During the
past year, it had no dispute with competitors.
Regarding communities and the society, Banpu
has a policy to do a business that benefits the economy
and the society, safeguard local customs in areas where
it operates, be a good corporate citizen by complying
with all rules and regulations and improve people’s
quality of life either by itself or by collaborating with
government agencies, communities or non-governmental
organizations. Banpu has announced its Sustainable
Development Policy which will work as criteria in an
issue such as greenhouse effect in power plant or mine.
It also believes that a strong corporate citizen must
065
have Corporate Social Responsibility (CSR), a term
that refers to a commitment to social development,
playing by rules and treating everyone fairly. So far,
Banpu has formulated an effective safety, occupational
health, environment practices based on its Sustain-
able Development Policy to identify operation risks
that may incur to staff, suppliers, the environment and
the communities.
To support the Sustainable Development Policy,
one of Banpu’s CSR practices is to regularly return
something back to the society. Budget has been
allocated for CSR activities while an awareness
campaign is regularly carried out to urge staff at all
levels to feel responsible for the society they are members.
In 2007, it initiated “Employee Volunteering Program”,
where Banpu’s staff built toilets to Ban Yubtanaeng
School in Rayong Province.
In 2007, Banpu continued to pursue social
projects in local and international levels, including
in countries it operates especially in Republic of
Indonesia. Several new projects were initiated. For
example, in education, Banpu has provided ICT De-
velopment support to rural schools in Lamphun, Lampang
and Phayao Provinces for the fourth consecutive year.
The sponsorship given is aimed at improving school’s
ICT system & developing their teachers & student
capabilities so as to help enhance the school’s learn-
ing and teaching quality. Banpu also organized train-
ing entitled “Team Learning Development” to teach-
ers to promote their teamwork and how to teach new
knowledge to students to create a stronger instructor’
s team for the schools.
Banpu provides scholarships to two PhD
programs; one of which is the PhD program in
Economics of the Faculty of Economics, Chiang Mai
University, which is now in its third year (2005-2007).
The purpose is to produce PhD professors in economics
for universities nationwide. The other is a THB
1-million fund given to Chulalongkorn University’s
Chula Dusadee Pipat Project to produce PhD
scientists. Chulalongkorn University plans to use
the money to fund researches by science lecturers
and PhD students and to allow grantees to experience
research activities at elite schools overseas.
Regarding environmental activities, aside from
conducting activities for sustainable environment in
communities around Banpu’s operation, in 2007, Banpu
joined hands with the Faculty of Environment and
Resources Studies, Mahidol University, to organize
the “Power Green Camp 2” aimed to promote
environmental science to Thai youths. The camp
included both classroom and practice activities to
increase children’s awareness of environmental
situations and to resolve environmental problems in
a more systematic way. Banpu also sponsored the
Institute for the Promotion of Teaching Science and
Technology (IPST)’s GLOBE activity by sponsoring
a meeting entitled the “Asia-Pacific Globe Learning
Expedition Thailand 2007: Learning about Climate
Change to Inspire the Next Generation of Scientists.”
Held in Prachuab Khiri Khan during 13-18 Novem-
ber 2007, the meeting saw students and teachers,
scientists and academics from Asia-Pacific countries
exchanging information about the Earth System
Science to understand more about interconnected and
interdependent of the Earth Systems to come up with
sustainable solutions to the environmental problems.
In 2007, Banpu helped Faculty of Environment
and Resources Studies, Mahidol University organize
the 1st Asian Dendrochronology Conference and
Workshop: Environmental Change and Human Activity.
The meeting, which was held at Riverside Hotel,
Bangkok, and attended by 100 academics from all over
the world, aimed to create a new generation of
researchers and nurture a research network of those
interested in tree ring while acting as a forum for those
interested in forestry conservation to present papers
relating to the growth of trees and their growth
factors as well as the issue of climate change in
Thailand and the region.
066
Banpu believes that children are a force
behind the country’s sustainable development in the
future. That’s why it focuses a lot of activities at
tomorrow’s adult. In early 2007, Banpu continued to
support the “Youth Innovation Marketplace” (YIM)
project to nurture a new generation of business
entrepreneurs in the Thai society and to provide them
a platform to initiate their social development
projects based on their interests.
In Indonesia, Banpu commits to social and en-
vironmental responsibilities where all coal mines; namely,
Indominco Bontang, Kitadin-Embalut, Jorong and
Trubaindo, and Jakarta office have conducted social
and environmental projects which focus at commu-
nity development and local participation. Banpu also
supports community activities related to basic infra-
structure, education, religion, sanitation, economy and
culture. Details are as follows.
Occupation Enhancement - this refers
to a project that supports a household industry at
Indominco-Bontang Mine which involves food
processing of agricultural products; for example, ginger
powder, processed banana and pineapple jam. These
products are also certified as Halal food and are
now available at local supermarkets. In addition,
local people have been trained for weed cultivation
in an area closed to the Bontang coal terminal as
another source of their income. Banpu also urges those
living around Trubaindo to plant rubber trees while
communities around Kitadin-Embalut are encouraged
to raise freshwater fish.
Education – Banpu regularly organizes
training to both teachers and students, especially with
regard to IT development, auto repair and sewing.
Scholarships are given to university students who are
also given an opportunity to be a trainee at Banpu.
Environment – Banpu encourages the
Community Consultative Committee (CCC) at each
mine to take a good care of natural resources through
various activities ranging from rehabilitation of land
to maintaining canals and waterways, repairing bridges,
and reforestation.
Public health – each mine usually dispatches
a mobile doctor’s unit together with the local authorities
to provide free healthcare to residents in the commu-
nity. In addition, nutritional supplements are given
to children lower than 5 years old while pregnant
women are advised on how to take care of their
pregnancy.
Knowledge enhancement to community
leaders – training is held to train community leaders
in the CCC so that they know the process how to
design a project plan for their communities and keep
all of the community’s database for future planning.
CSR Master Plan and Community Develop-
ment MIS (CD MIS) – Banpu starts formulating a
CSR Master Plan and initiates a project to develop
the community development MIS. The idea is to make
its community development activities and evaluation
procedures more effective. In addition, Banpu wants
to make sure that its CSR is transparent and meet the
ISO 26000 standards that it aims to achieve and
implement by 2008.
4. Shareholders’ MeetingIn 2007, the Company held one Annual
General Meeting (AGM) at Radisson Hotel’s Grand
Ballroom, of 92, Soi Saengcham, Rim Klong Bangkapi
Road, Bangkapi, Huay Khwang, Bangkok. The Board
urges shareholders to participate in a decision-
making process and makes sure that shareholders
receive complete and adequate information in a
timely fashion to make decision. In this regard, Banpu
sent out invitation letters and supporting information
to shareholders 12 days prior to the meeting date.
Each agenda contained Board of Directors’ opinions.
Eleven directors including Chairman of the Audit
Committee, Chairman of the Corporate Governance
and Nomination Committee and Chairman of the
Compensation Committee attended the meeting.
067
Chairman of the Meeting allowed sharehold-
ers to equally inquire about the Banpu’s operations
and give advice. Banpu facilitated the voting and the
proxy appointment. Banpu also asked shareholders
to express their opinions and ask about Banpu’s
operations. In addition, the Board posted its Minute
of Meeting at the Company’s website 12 days after
the meeting date for shareholders to check without
having to wait until the next meeting.
5. Leadership and VisionBanpu has a clear vision to become a leading
energy company in Asia and to be acknowledged as
an active developer and investor, a fair partner, a truly
professional and a provider of excellent energy
products & services. The mission is to to develop
businesses in the fields of energy in pursuit of a
leadership position in Asia; diversify and invest in
strategic businesses, which will support and enhance
our businesses positions; to promote and contribute
to the development of society by acting as a good citizen,
committing to safety practices and preserving nature
and environment as well as to serve our customers in
Asia with value priced and high quality of products
and services.
To ensure that Banpu’s operations will benefit
shareholders, the Board of Directors has formulated
Banpu’s vision, missions, goals, policy, operation
directions, long-term strategic plan, operation plan and
annual budget where the Management is designated
to propose them. The Board is allowed to express its
ideas with the Management to reach a mutual approval
before granting permission. The Board of Directors
also appoints Chief Executive Officer (CEO) to
develop and implement strategies. It also clearly
differentiates roles, duties and responsibilities
between the Board of Directors, the Committees and
Banpu’s executives.
During the past year, Banpu’s Management
led by its CEO submitted a five-year strategic plan
after the current plan ended in 2008. The strategy
was to provide future business directions, assess risks,
prepare the Company to a variety of conditions in the
future and make sure that Banpu’s vision and
mission statements would be in line with its business,
corporate status and current market conditions.
6. Conflicts of InterestOne of Banpu’s very important policies is
its directors, executives and staff must not use their
status to gain personal benefit. The Code of Conduct
clearly states that directors, executives and staff must
refrain from conducting a connected transaction that
may lead to a conflict of interest with the Company.
If it is necessary to do so for Banpu’s benefit, the Board
must comply with the SET’s rules and regulations,
where a transaction be made at a price and under
a condition as if it is done with the third party and
a director or staff with an interest must not be involved
in an approval process. If it is indeed a connected
transaction under the SET’s rules, one must strictly
comply with the rules, procedures and information
disclosure methods of connected transactions by listed
companies.
In addition, the Board of Directors also
prohibits directors, executives or staff from using an
opportunity or information acquired in the work to
seek personal interest or to conduct a competing
business with or related to Banpu’s business. This
includes a ban from using insider’s information to buy
or sell the Company’s shares for staff’s personal
interest or from giving insider’s information to the
third party to buy or sell Banpu’s shares. If an execu-
tive or a staff is involved in a special operation
of which information has not yet been released to
the public and a negotiation is ongoing where the
information must be kept confidential to prevent an
effect to the Company’s share price, such executive
or staff must sign a confidentiality agreement with
the Company until the information is disclosed to the
SET and the SEC.
068
7. Code of ConductTo maximize shareholders’ benefits, the Board
of Directors equally treats success and a modus
operandi that leads to such achievement. That’s why
the Board sets both the corporate goals and how
to reach these goals in Banpu’s vision, missions,
values, corporate governance principles and policy.
In addition, it clearly states in the Code of Conduct
that Banpu expects its directors, executives and
staff to use it as a practice guideline. This includes
equal treatments of fellow staff, shareholders,
customers, suppliers, business competitors and the
society.
Banpu requires its directors, executives and
staff to understand and strictly comply with policies
and practices stated in the Code of Conduct.
Executives of all levels must make sure that their
subordinates know, understand and comply with the
Code of Conduct, and that regular meetings are held
and PR materials are distributed to inform staff in Thai-
land and aboard. In this regard, supervisors of all levels
must be a good role model and urge their staff to comply
with the practices.
As Banpu embarks on its Corporate Shared
Values project to promote good corporate culture
among staff that everyone can share aside from the
standard of practices stated in its Code of Conduct,
during the past year, Banpu constantly organized
PR activities to promote the values to enhance staff
understandings in Thailand and abroad. The impor-
tance of Banpu’s 4 shared values is as follows:
1. Innovation – this refers to initiatives, being
creative and dare to express for ongoing development.
2. Integrity – this refers to being ethical,
sincere and transparent.
3. Care – this refers to being sincere, open,
courteous and welcome colleagues and the society.
4. Synergy – this refers to collaboration,
helping each other, an ability to share, teamwork
and mutual goals.
Staff is advised what they should do and
otherwise and this is in line with the policy stated
in the Code of Conduct to ensure constructive
practices.
8. Balancing of Power by Non-Executive DirectorsThe Board of Directors ensures that the
number of its existing directors is proportional to
Banpu’s size. At present, Banpu’s Board of Directors
consists of 11 members, three of whom are executive
directors and the other eight are non-executive direc-
tors. Of all the members, five are independent direc-
tors.
During the past year, the Corporate Governance
and Nomination Committee reviewed the number
of non-executive directors and independent directors
of the Board and found the existing ratio of non-
executive directors appropriate.
9. Consolidation or Separation of OfficeThe Board of Directors requires its Chairman
not to also be Chief Executive Officer (CEO).
Role and responsibility, power and duty are clearly
separated for a healthy balance between management
and corporate governance.
10. Remunerations of Directors and ExecutivesThe Board of Director has assigned the
Compensation Committee to review a compensation
structure as well as remunerations of Banpu’s
executives. The policy is that remunerations must be
competitive with offers made by a similar business
of a similar size in the same industry after taking into
consideration duties and responsibilities of each
director and executive. This however is subject to
approval of the Shareholders’ Meeting.
Details of the remunerations Banpu paid to its
directors and executives in 2007 are in the topic of
Remunerations.
069
11. Board of Directors’ MeetingsThe Board of Directors convenes at least once
a month on the last Wednesday of the month. An
additional meeting may be held if necessary. At
each meeting, there are clear meeting agendas, both
for acknowledgement and for consideration. In
addition, there are a complete set of supporting
documents sent to the Board of Directors at least
7 days in advance so that the Board has enough time
to study before attending the meeting. Each
meeting lasts approximately 3.5 hours. At the
meeting, all directors can openly voice their opinions
while Chairman of the Meeting summarizes comments
and opinions from the meeting. If a director has a material
interest in an issue discussed by the Board at the
moment, he must leave the room when the matter is
considered.
A minute of meeting is subsequently made
in writing and after seconded by the meeting will be
certified true and correct by Chairman of the Board
of Directors and Secretary of the Board. Documents
to be kept include minutes of meeting, of which the
original copy is kept in the form of a document file,
a scanned original file for directors and other parties
to use as reference and an electronic file, supporting
documents.
In 2007, the Board of Directors convened 14
times. Each director attended the meeting as follows:
Meeting Attendance
Name
1. Mr. Soonthorn Vongkusolkit Chairman Apr. 2006 - Apr. 2009 12 2 14/14
2. Mr. Montri Mongkolswat Independent Director Apr. 2005 - Apr. 2008 12 2 14/14
3. Mr. Sawatdiparp Kantatham Director Apr. 2007 - Apr. 2010 12 2 14/14
4. Mr. Vitoon Vongkusolkit Director Apr. 2006 - Apr. 2009 12 2 14/14
5. Mr. Kopr Kritayakirana Independent Director Apr. 2007 - Apr. 2010 11 2 13/14
6. Mr. Somkiat Chareonkul Independent Director Apr. 2007 - Apr. 2010 12 2 14/14
7. Mr. Rutt Phanijphand Independent Director Apr. 2005 - Apr. 2008 12 2 14/14
8. Mr. Anothai Techamontrikul Independent Director Apr. 2006 - Apr. 2009 12 2 14/14
9. Mr. Metee Auapinyakul Director Apr. 2005 - Apr. 2008 11 2 13/14
10. Mr. Chanin Vongkusolkit Director Apr. 2005 - Apr. 2008 12 2 14/14
11. Mr. Ongart Auapinyakul Director Apr. 2006 - Apr. 2009 10 1 11/14
Title Term of OfficeSpecial
MeetingOrdinaryMeeting
Total
070
12. Sub-CommitteesThe Audit CommitteeThe Audit Committee consists of 3
independent directors responsible for reviewing
the Company’s financial statements; checking if
the internal control system, the risk management
system and Banpu’s legal compliance are adequate;
reviewing derivatives & commodity hedging, select-
ing and appointing the Company’s auditors and
proposing an auditing fee; reviewing Banpu’s
disclosure of information to ensure accuracy and
transparency in case of connected transaction or
transaction with possible conflicts of interest; reviewing
significant risk management measures and, if
appropriate, asking executives to review measures
and providing opinions regarding an operation plan,
budget, appointments, termination and manpower
of the Internal Audit Department.
In 2007, the Audit Committee met 7 times.
All members attended the seven meetings. The Audi-
tor Committee’s opinions as stated in meeting agen-
das were followed up to ensure implementation.
The Corporate Governance and NominationCommitteeIn 2007, the Corporate Governance and
Nomination Committee consists of 3 members chaired
by an independent director. All members of the Com-
mittee were non-executive directors. The Corporate
Governance and Nomination Committee had two major
responsibilities: to review Banpu’s corporate gover-
nance policy and its Code of Conduct and monitor its
compliance based on its policy; and to recruit and
nominate candidates as director, CEO and senior
executives, to recruit senior executives starting from
director and over as part of a succession plan, to seek
the Board of Directors’ approval or to submit the matter
to the Shareholders’ Meeting, as the case may be.
In 2007, the Corporate Governance and
Nomination Committee convened 5 times, all of which
were attended by all members.
The Compensation CommitteeThe Compensation Committee consists of
three members chaired by an independent director
while all its members are non-executive directors.
The Committee’s duty is to submit a compensation
policy and details how Banpu would pay remunera-
tions and fringe benefits to the Board of Directors,
members of the subcommittees, CEO and executives.
The Compensation Committee is also responsible
for setting up criteria to evaluate performances of
Banpu’s CEO and executives and to review a
compensation system and a payment structure to
directors and remuneration rates to directors and
executives.
In 2007, the Compensation Committee
convened 5 times, all of which were attended by all
members.
13. Internal Control and AuditingThe Board of Directors sets up an internal
control system that covers every aspect of Banpu’s
operation, ranging from finance to operation and
legal compliance in compliance with relevant rules
and regulations. The Board also makes sure that
there is enough and effective check-and-balance
mechanisms to protect shareholders’ equities and
Banpu’s assets. Banpu has also set up the Internal
Audit Department to inspect operations of all
business and supporting units. The Department
gives advice on how to set up a standard internal
control system, formulate an internal control plan
that focuses at Banpu’s major risks and assess the
efficiency and adequacy of the internal control. The
Department also closely monitors the internal
control for the Management and will perform its
tasks based on the COSO Internal Control Integrated
Framework. The Board of Directors makes sure that
the Internal Audit Office remains independent, can
fully perform its check-and balance job and is able to
directly report to the Audit Committee so that the in-
ternal control system can be an important mechanism
to drive Banpu to a sustainable growth.
071
14. Board of Directors’ ReportThe Board of Directors is responsible for
Banpu’s consolidated financial statements and
financial information appeared in Banpu’s annual
report. The financial statements are prepared under
the Generally-Accept Accounting Principles (GAAP)
in Thailand where an appropriate accounting policy
has been selected and implemented on a regular
basis. The Audit Committee and auditors meanwhile
jointly review the accounting policy to see if it
remains practical. While preparing the financial
statements, the Board of Directors insists that the
working team carefully exercise its discretion and
that important information is adequately disclosed in
notes to the financial statements, if any.
In addition, the Board of Directors entrusts
the Audit Committee to monitor quality of Banpu’s
financial statements and its internal control system.
The Audit Committee’s opinion in the matter has been
stated in the Report of the Audit Committee to Share-
holders published in this Annual Report.
The Board of Directors is of the opinion that
the financial statements of both Banpu and its
subsidiaries as of 31 December 2007 are complete,
accurate and reliable.
15. Investor RelationsThe Board of Directors makes sure that both
financial and non-financial information relating to the
Company’s business and performance is revealed in
a complete, adequate and regular manner. In addition,
the information must reflect the Company’s actual
performance and its true financial status as well as
its business future while strictly complying with the
laws, rules and regulations relating to information
disclosure of both the Securities and Exchange Com-
mission (SEC) and the SET.
Aside from disclosing information as required
by the SET and the SEC, Banpu also communicates
with shareholders and investors through other
channels, ranging from the Investor Relations
Division, which directly communicates with share-
holders, investors and securities analysts here and
abroad, to the Corporate Communications & Public
Affairs Department, whose duty is to disseminate
corporate information to shareholders, investors and
the public through local and international press and
media.
In 2007, Banpu organized 4 international
road shows, 4 analyst meetings to report its
quarterly and annual performances, 74 company
visits for analysts and investors wishing to learn
more about Banpu’s operation results, 1 overseas site
visit for securities analysts, 2 press conferences to
inform Banpu’s operation results and one internatio-
nal press tour. Banpu regularly released its press
releases every time there was an important investment
or business event.
Banpu discloses its information through its
website at www.banpu.com so that other groups of
stakeholders can equally access the information.
Those interested in Banpu’s information can contact
the Investor Relations Division at Tel. 0 2694 6744,
or Fax 0 2207 0557 or send e-mails to investor@
banpu.co.th.
S u p e r v i s i o n o n t h e U s e o f I n t e r n a lI n f o r m a t i o n
Information disclosure and transparency are
important for Banpu. A policy on information
disclosure, transparency and financial statements
has been stated in its corporate governance policy to
ensure that financial and other business information
as well as Banpu’s performance results are accurately
and adequately disclosed in a reliable and timely fashion
to its shareholders, investors, securities analysts
and the public. Banpu’s Board of Directors commits
to comply with all the rules and regulations with
regard to information disclosure and transparency.
Sales or purchase of shares by any director or
executive have been reported to a supervision
agency according to the Securities and Exchange
Commission’s requirements. In addition, status of
director’s securties holder is also reported each
month at the Board of Directors’ Meeting.
072
To take care of its internal information, Banpu
has stipulated preventive measures in its Code of
Conduct under the topic of “Conflicts of Interests
and Use of Company Information” especially if it is
related to the use of Company information. Banpu
considers that it is a responsibility of directors,
executives and staff to keep Company information
strictly confidential especially if its insider informa-
tion not yet released to the public or if it may affect
Banpu’s operation or share price. The following are
practices in regard to Company information:
1. Director, executive or staff must not take
advantage of the fact that he is an executive or staff
of Banpu or must not use the information he receives
as an executive or staff of Banpu for his personal
benefit and for doing a business that competes with
the Company or a related business.
2. No inside information shall be used for
personal benefit to sell or buy Banpu’s shares or no
insider information shall be given to others for the
purpose of trading Banpu’s shares.
3. Confidential information must not be
disclosed to the third party especially to competitors
even after the person no longer becomes the Company’s
director, executive or staff.
Banpu has introduced an information system
to control the use of its internal information. For
example, it has a system that blocks outsiders from
accessing its information while allowing staff of
different levels to have different levels of access to
the information based on their responsibilities. If
an executive or staff is involved in a special task of
which the information has not yet been released to
the public and is currently discussed where the
release of such information may affect Banpu’s
securities prices, the executive and staff must sign
a Confidentiality Agreement with Banpu until the
information is released to the SET and the SEC.
Banpu has stipulated in its Work Regulations
under the topic of “disciplinary action” that anyone
not complying with or violating such regulation
will be subject to disciplinary action and liable to
punishment based on the nature of offence as
follows: anyone “disclosing the Company’s secret with
an intention to destroy its reputation, credibility or
its products, resulting in Banpu losing or suffering
from a loss of business opportunity” can be dismissed.
073
The Board of Directors held its Meeting No.
1/2008 on 25 January 2008 to which the Audit Commit-
tee reported a view about Banpu’s internal control
system whether or not it was adequate and sound. The
Audit Committee informed its auditing activities in 2007
to the Board of Directors as follows.
The Audit Committee had reviewed Banpu’s
risk assessment plan and an internal audit report while
constantly provided recommendations to the Board. The
internal control focused at assessing Banpu’s financial
control, operations and legal compliance to ensure
efficiency and to meet international standards. The
process also monitored and resolved important risk
issues that may affect Banpu’s management or that
were connected transactions and thus could lead to
possible conflicts of interest. It also monitored actual
transactions considered a normal course of business to
maximize the Company’s interest. The Audit Committee
found that the review outcome was what it had expected
and that everything was in compliance with rules,
regulations and Banpu’s corporate governance policy.
Regarding its discussion with an external auditor with
a purpose to assess Banpu’s internal control system,
the Audit Committee found the system sound and
corresponding to the accounting principles, adequate
and had no serious defect.
The Board of Directors’ opinions towards Banpu’s
internal control system were similar to the Audit
Committee’s, which can be summarized as follows.
1. Organization and EnvironmentBanpu has so far updated its organizational
structure to increase flexibility and a better response
to meet changes in business conditions and to accom-
modate its long-term plans and overseas expansion as
follows:
I n t e r n a l C o n t r o lAnnual Report 2007 • Banpu Public Company Limited
1.1 The Corporate Business Development
Department has been re-structured to directly report
to the Business Development Department, Coal
Operation - Indonesia.
1.2 The Information Technology Department
has been divided into 5 divisions; namely, Enterprise
Mission Solution, Enterprise Support Solution, Informa-
tion Management, Infrastructure Supports and Office
Automation.
1.3 The External Relations Department has
been restructured by being combined with the Corporate
Communications Department, becoming the Corporate
Communications & Public Affairs Department, which
consists of Corporate Communications, Community
Relations and Government Relations.
1.4 The New Energy Development Project is
re-divided into 3 divisions of Coal To Liquids,
Renewable Energy and Administration Support.
1.5 The Quality Safety And Environmental
Development Center has been divided into Quality
Development, Safety Development and Environmental
Development.
1.6 The Hongsa Project is further divided into
6 divisions under a new structure; namely, Support
Function, Coal Mining, Power Plant, Environmental
Impact Assessment (EIA) and Resettlement Action Plan,
Infrastructures and Liaison Office.
1.7 The India Project Development Manage-
ment is directly reported to the Business Development
Department.
1.8 Banpu Power is restructured itself into
4 departments; namely, China Power Business,
Engineering & Project Development, Strategic Planning
and Asset Management and the Hongsa Project.
074
2. OperationsBanpu’s Board of Directors has had a clear policy
to promote “Banpu Spirit” to benefit the Company and
the society. A corporate shared value, “Banpu Spirit” aims
to continue harmonizing staff performance by encour-
aging them to be innovative, to have integrity, care and
synergy. In 2007, Banpu organized the Quality Resources,
Quality Returns (QR) activity, believing that quality re-
sources reflected a quality company. The activity was to
stimulate staff to drive Banpu to a sustainable success in
the future while promoting corporate governance and
business ethics, transparency, fairness to staff, custom-
ers and suppliers and responsibility to stakeholders, the
society and the environment. Banpu is and continues to
commit to Corporate Social Responsibility (CSR). It is
also updating its practices and policies to respond to the
growth and changes. So far, it has had a clear monitoring
and control system. Its Internal Audit Department, whose
tasks are to assess major business risks that cover major
operations of Banpu itself and its subsidiaries, remains
independent and directly reports to the Audit Commit-
tee. The Department also monitors important adminis-
tration activities after the Risk Management Committee
finishes its tasks, reviews financial derivative transac-
tions and commodity hedging, and re-assesses Banpu’s
compliance with relevant rules and regulations so that
its operation and the internal control is closely linked
and assessable while meeting the Company’s policy and
planning to ensure effective management and supervi-
sion. At the same time, stakeholders can be confident
that their interests are well taken care of while long-term
values and benefit are created for them.
3. Risk ManagementBanpu has placed a priority to its risk manage-
ment policy. It has actively monitored risk management
activities and plans of various departments. The Com-
pany has also made sure that a risk-reporting and moni-
toring system remains sound and fast enough to handle
current business conditions. The Management has
continued to review and submit Banpu’s risk policy and
plan to the Risk Management Committee. Staff and
executives are told of an importance of risk and risk
management to reach a corporate goal. Employees are
told that risk management is everyone’s responsibility.
A system of risk management has been created where
plans and measures are formulated. Risk factors that
may affect Banpu’s operation and goals are constantly
assessed. Risk management by internal departments have
been closely monitored and reported to the Risk Man-
agement Committee so that it could later report to the
Board of Directors. In 2007, Banpu organized a risk
management training to enhance staff’s understanding
about the subject. The Company also introduced an online
risk management system; Key Risk Indicator (KRI)
information and a risk quantification study so that
various departments can implement them. Banpu also
provided and drilled its staff on how to formulate the
Business Continuity Plan (BCP) to ensure stable and
secured business operation.
4. Control of the Management’s OperationsThe Board of Directors has appointed 3
sub-committees; namely, the Audit Committee, the
Corporate Governance and Nomination Committee and
the Compensation Committee. The 3 committees have
075
strictly performed their duties based on their scopes of
work, authorities and responsibilities. Banpu has also
determined scopes of work, authorities and responsibili-
ties of executives and staff at each level and continued
to update approval authority granted to their executives
at different levels. Banpu has also published an opera-
tion manual, constantly monitored operations of its
subsidiaries and affiliates and produced a manual on
legal compliance and Banpu’s practices in relation
to juristic acts and related agreements. The Audit
Committee has reviewed and approved an annual risk
assessment plan by making sure that the audit plan
covers high-risk operations and meets stakeholders’
expectations. The bottom line is all departments have
effective internal control mechanisms that cover issues
raised by both internal and external auditors. Auditing
results are closely monitored and reported to the
Management and executives of relevant departments to
improve Banpu’s operations.
5. Information Technology and CommunicationsThe Company has so far introduced Mincom
Cooperation’s IT system to manage its coal production
and sales of all its mines under the Business Process
Standardization (BPS) Project to have an effective
supply chain management database that helps facilitat-
ing the management’s decision-making process and that
increases effective communications among departments.
Banpu has continued to provide important information
to the Board; by recording and summarizing of opinions
expressed at every meeting of the Board of Directors.
Banpu has set up an IT system to communicate with
staff at all levels internally and externally. It has kept
supporting documents for its books & accounts as
required by the laws. Banpu also has a data back-up.
The Audit Committee also holds regular meetings
with Certified Public Accountants and the Accounting
Department to review Banpu’s accounting policy on the
basis of the Generally-Accepted Accounting Principles
(GAAP) and to review key information based on the
Auditor’s report. Banpu also updates its accounting
system to meet the international IFRS standards to
ensure accuracy and credibility of its financial statements
and to facilitate the Management’s decisions. It has so
far introduced the Cognos system to do the budgeting
and to also improve communications between itself and
overseas subsidiaries and affiliates to ensure effective
supervision.
6. Monitoring SystemIn 2007, Banpu held 14 Board of Directors’
meetings plus a monthly Executive Board of Directors’
meeting to monitor the Management’s performances. At
these meetings, if a result was different from a goal, the
meeting would request the Management to remedy it
before reporting back to the Board of Directors. Banpu
has introduced the KPI (Key Performance Indicator) to
monitor staff’s operations at all levels.
The Audit Committee convened 7 times in 2007
to evaluate Banpu’s operation results and financial sta-
tus and to give advise to the Management from time to
time. A monitoring system has been in place to oversee
Banpu’s operations. An internal control system has been
constantly reviewed and changes are immediately made
to respond to the latest development. The Board of
Directors has been duly reported of Banpu’s financial
statements and the review of its internal control while
its risk management is reported every 6 months. The
Chairman is also reported of meeting results of the Audit
Committee in other matters if considered important.
076C o n n e c t e d P e r s o n s a n d T r a n s a c t i o n sAnnual Report 2007 • Banpu Public Company Limited
C o n n e c t e d P e r s o n s
1. Mitr Phol Sugar Corp., Ltd.
(Production and
distribution of sugar
and molasses)
2. TME Capital Co., Ltd.
(Investment Company)
3 United Farmer and Industry
Co., Ltd.
(Production and distribution
of sugar and molasses)
4 Ufinves Co., Ltd.
(Holding Company)
1) Being one of the major shareholders
of Banpu Plc., holding 2.96 per cent
of its paid-up capital.
2) The major shareholder is the
Vongkusolkit Family, which is also
one of major shareholders of Banpu Plc.
3) There are 3 joint directors as follows:
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Chanin Vongkusolkit
1) Being one of the major shareholders
of Banpu Plc., holding 2.88 per cent
of its paid-up capital.
2) The major shareholder is the
Vongkusolkit family, which is also
one of major shareholders of Banpu Plc.
3) There are 6 joint directors as follows:
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Chanin Vongkusolkit
4. Mr. Metee Auapinyakul
5. Mr. Ongart Auapinyakul
6. Mr. Sawatdiparp Kantatham
1) Being one of the shareholders of
Banpu Plc., holding 0.65 per cent of
its paid-up capital.
2) The major shareholder is Mitr Phol
Sugar Corp., Ltd.
3) There are 2 joint directors as follows:
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
1) Being one of the shareholders of
Banpu Plc., holding 0.39 per cent of
its paid-up capital.
2) The major shareholder is the
Vongkusolkit Family, which is also
one of major shareholders of Banpu Plc.
3) There are 2 joint directors as follows:
1. Mr. Vitoon Vongkusolkit
2. Mr. Chanin Vongkusolkit
As of 31 December 2007
Mitr Siam Sugar Co., Ltd. 99.99%
As of 31 December 2007
1. The Vongkusolkit Family 54.23%
2. The Auapinyakul Family 20.52%
3. Ufinves Co., Ltd. 10.50%
4. Mrs. Panhatai Serirak 3.64%
5. The Kantatham Family 3.17%
6. The Karnchanakamnerd 2.58%
Family
7. The Putpongsiriporn 0.63%
Family
As of 31 December 2007
Mitr Phol Sugar Corp., Ltd. 87.56%
As of 31 December 2007
TME Capital Co., Ltd. 100.00%
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Isara Vongkusolkit
4. Mr. Chanin Vongkusolkit
5. Mr. Banthoeng Vongkusolkit
6. Mr. Choosak Vongkusolkit
7. Mr. Phadung Dechasarin
8. Mr. Taweewat Thaweepiyamaporn
9. Wg. Cmr. Laksami Putpongsiriporn
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Chanin Vongkusolkit
4. Mr. Metee Auapinyakul
5. Mr. Ongart Auapinyakul
6. Mr. Sawatdiparp Kantatham
7. Mr. Prachuab Trinikorn
8. Mr. Werajet Vongkusolkit
9. Ms. Jintana Karnchanakamnerd
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Isara Vongkusolkit
4. Mr. Banthoeng Vongkusolkit
5. Ms. Chayawadee Chaianan
6. Mr. Taweewat Thaweepiyamaporn
7. Ms. Jintana Karnchanakamnerd
8. Mr. Sukkan Wattanawekin
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Chanin Vongkusolkit
4. Mr. Werajet Vongkusolkit
5. Ms. Jintana Karnchanakamnerd
Connected Persons /Type of Business Description of Relationship Major Shareholders List of Board of Directors
077
5. Pacific Sugar
Corporation Ltd.
(Export Distributor)
6. Mitr Phu Viang Sugar
Co., Ltd.
(Production and distribution
of sugar and molasses)
7. Mitr Kalasin Sugar Co., Ltd.
(Production and distribution
of sugar and molasses)
8. City Holding Co., Ltd.
(Holding Company)
1) Being one of the shareholders
of Banpu Plc., holding 0.25 per cent
of its paid-up capital.
2) The major shareholder is
Mitr Phol Sugar Corp., Ltd.
3) There is one joint director,
Mr. Soonthorn Vongkusolkit
1) Being one of the shareholders of
Banpu Plc., holding 0.23 per cent
of its paid-up capital.
2) The major shareholder is United
Farmer and Industry Co., Ltd.
3) There is one joint director,
Mr. Soonthorn Vongkusolkit
1) Being one of the shareholders of
Banpu Plc., holding 0.18 per cent
of its paid-up capital.
2) The major shareholder is United
Farmer and Industry Co., Ltd.
3) There are 2 joint directors as follows:
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
1) Being one of the shareholders of
Banpu Plc., holding 0.08 per cent
of its paid-up.
2) The major shareholder is the
Vongkusolkit Family, which is also
one of the major shareholders of
Banpu Plc.
3) There are 3 joint directors as follows:
1. Mr. Soonthorn Vongkusolkit
2. Mr. Vitoon Vongkusolkit
3. Mr. Chanin Vongkusolkit
As of 31 December 2007
1. Mitr Phol Sugar Corp., Ltd. 25.00%
2. Mr. Kamol Vongkusolkit 17.59%
3. Mr. Soonthorn Vongkusolkit 15.04%
4. Mr. Vitoon Vongkusolkit 12.49%
As of 31 December 2007
United Farmer and Industry
Co., Ltd. 99.99%
As of 31 December 2007
United Farmers and Industry
Co., Ltd. 99.99%
As of 31 December 2007
1. The Vongkusolkit Family 92.00%
2. The Putpongsiriporn Family 2.00%
3. The Karnchanakamnerd Family 6.00%
1. Mr. Soonthorn Vongkusolkit
2. Mr. Isara Vongkusolkit
3. Mr. Banthoeng Vongkusolkit
4. Mr. Kritsada Monthienvichienchay
5. Mr. Tasana Wanakornkul
6. Mr. Jeerasak Vongkusolkit
1. Mr. Soonthorn Vongkusolkit
2. Mr. Isara Vongkusolkit
3. Mr. Banthoeng Vongkusolkit
4. Mr. Kachorn Theppatipath
1. Mr. Kamol Vongkusolkit
2. Mr. Soonthorn Vongkusolkit
3. Mr. Vitoon Vongkusolkit
4. Mr. Isara Vongkusolkit
5. Mr. Banthoeng Vongkusolkit
1. Mr. Kamol Vongkusolkit
2. Mr. Soonthorn Vongkusolkit
3. Mr. Vitoon Vongkusolkit
4. Mr. Isara Vongkusolkit
5. Mr. Chanin Vongkusolkit
6. Ms. Jintana Karnchanakamnerd
7. Mr. Werajet Vongkusolkit
8. Mr. Banjerd Vongkusolkit
9. Ms. Arada Vongkusolkit
Connected Persons /Type of Business Description of Relationship Major Shareholders List of Board of Directors
078
Other Connected transactions between the Company, subsidiaries, affiliated companies and other related
companies, including a price-setting policy and applicable interest rates. Details of Banpu’s connected
transactions with subsidiaries, affiliates and related companies are in Clause 8 of Notes to Financial Statements
Connected transactions between businesses with the following relationships were executed:
Connected Transactions Related Companies Transaction Value
Banpu Public Company Limited
1. The Company executed the following connected transactions with Chiang Muan Mining Co., Ltd. THB 31.84 million
Chiang Muan Mining Co., Ltd.:
• In 2007, incomes of THB 15.34 million were generated from coal sale
to Chiang Muan Mining Co., Ltd.
• Accounts receivable of related businesses worth THB16.42 million
• Related advance worth THB 0.08 million
2. The Company executed the following connected transactions with Banpu International Ltd. THB 125.88 million
Banpu International Ltd.:
• In 2007, incomes of THB 95.84 million were generated from coal sale
to Banpu International Ltd.
• Related advance worth THB 0.04 million
• Accrued management fee worth THB 30 million
3. Connected transactions with Banpu Minerals Co., Ltd.: Banpu Minerals Co., Ltd. THB 2,020.77 million
The Company extended a loan in a form of P/N to Banpu Minerals Co., Ltd.
at an interest rate calculated from an average cost of lending plus
0.5 per cent per annum.
The Company had connected transactions with Banpu Minerals Co., Ltd.
as follows:
• As of 31 December 2007, the outstanding loan was THB 1,929.37 million.
• In 2007, interest incomes were THB 91.40 million.
4. Connected transactions with BP Overseas Development Co., Ltd.: BP Overseas Development Co., Ltd. USD 32.80 million
The Company extended a loan in a form of P/N to BP Overseas and THB 150.40
Development Co., Ltd. at an interest rate calculated from an average million
cost of lending plus 2 per cent per annum.
The Company had connected transactions with BP Overseas Development
Co., Ltd. as follows:
• As of 31 December 2007, the outstanding loan was USD 32.80 million.
• In 2007, interest incomes were THB 68.64 million.
• As of 31 December 2007, the outstanding advance was THB 81.76 million.
079
Connected Transactions Related Companies Transaction Value
5. Connected transactions with Banpu Singapore Pte. Ltd.: Banpu Singapore Pte. Ltd. USD 3.00 million
The Company extended a loan in a form of P/N to Banpu Singapore Pte. Ltd.
at an interest rate calculated from an average cost of lending plus
2 per cent per annum.
The Company had connected transactions with Banpu Singapore Pte. Ltd.
as follows:
• As of 31 December 2007, the outstanding loan was USD 1.88 million.
• In 2007, interest incomes were USD 0.12 million.
• Accrued management fee was USD 1 million.
6. Connected transactions with PT. Jorong Barutama Greston: PT. Jorong Barutama Greston USD 3.96 million and
The Company extended a loan in a form of P/N to PT. Jorong Barutama THB 110.75 million
Greston at an interest rate calculated from an average cost of lending plus
2 per cent per annum.
The Company had the following connected transactions with
PT. Jorong Barutama Greston:
• As of 31 December 2007, the outstanding loan was USD 3.96 million.
• In 2007, interest incomes were THB 82.95 million.
• As of 31 December 2007, the outstanding advance was THB 27.80 million.
7. Connected transactions with PT. Nusantara Thai Mining Services: PT. Nusantara Thai Mining Services USD 0.28 million
The Company extended a loan in a form of P/N to PT. Nusantara
Thai Mining Services at an interest rate calculated from an average
cost of lending plus 2 per cent per annum.
The Company had connected transactions with PT. Nusantara
Thai Mining Services as follows:
• As of 31 December 2007, the outstanding loan was USD 0.24 million.
• In 2007, interest incomes were USD 0.04 million.
8. A connected transaction with PT. Centralink Wisesa International as follows: PT. Centralink Wisesa International THB 92.73 million
The Company received a loan it had extended back from PT. Centralink
Wisesa International in 2007. As a result, the only connected transaction
it had with the firm was interest incomes totaling THB 92.73 million in 2007.
9. A connected transaction with PT. Kitadin as follows: PT. Kitadin THB 101.43 million
The Company received a loan it had extended back from PT. Kitadin in 2007.
As a result, the only connected transaction it had with the firm was interest
incomes totaling THB 101.43 million in 2007.
080
Connected Transactions Related Companies Transaction Value
10. Connected transactions with PT. Trubaindo Coal Mining as follows: PT. Trubaindo Coal Mining USD 21 million
The Company extended a loan in a form of P/N to PT. Trubaindo Coal and THB 120.21
Mining at an interest rate calculated from an average cost of lending million
plus 2 per cent per annum.
The Company had the following connected transactions with
PT. Trubaindo Coal Mining:
• As of 31 December 2007, the outstanding loan was USD 21 million.
• In 2007, interest incomes were THB 120.16 million.
• As of 31 December 2007, the outstanding advance was THB 0.05 million.
11. Connected transactions with PT. Indominco Mandiri: PT. Indominco Mandiri THB 83.43 million
The Company had the following connected transactions with
PT. Indominco Mandiri:
• In 2007, interest incomes were THB 38.54 million.
• Management fee was THB 31.80 million.
• As of 31 December 2007, the outstanding advance was THB 13.09 million.
12. A connected transaction with PT. Bharinto Ekatama as follows: PT. Bharinto Ekatama THB 7.18 million
The Company received a loan it had extended back from
PT. Bharinto Ekatama in 2007. As a result, the only connected transaction
it had with the firm was interest incomes totaling THB 7.18 million in 2007.
13. Connected transactions with Banpu Power International Ltd.: Banpu Power International Ltd. THB 233.74 million
The Company extended a loan in a form of P/N to Banpu Power
International Ltd. at an interest rate calculated from an average
cost of lending plus 0.5 per cent per annum.
Banpu Plc. had the following connected transactions with Banpu Power
International Ltd.:
• As of 31 December 2007, the outstanding loan was THB 228.43 million.
• In 2007, interest expenses were THB 5.31 million.
14. Connected transactions with Banpu China Pte. Ltd.: Banpu China Pte. Ltd. USD 32.8 million and
The Company extended a loan in a form of P/N to Banpu China Pte. Ltd. THB 38.65 million
at an interest rate calculated from an average cost of lending plus
0.5 per cent per annum.
The Company had the following connected transactions with
Banpu China Pte. Ltd.:
• As of 31 December 2007, the outstanding loan was USD 32.8 million.
• In 2007, interest incomes were THB 38.65 million.
081
Connected Transactions Related Companies Transaction Value
Banpu Minerals Co., Ltd.
1. Connected transactions with Silamani Corp., Ltd.: Silamani Corp., Ltd. THB 313.48 million
Banpu Minerals Co., Ltd. extended a loan in a form of P/N to
Silamani Corp., Ltd. at an interest rate calculated from an average
cost of lending plus 0.5 per cent per annum.
Banpu Minerals Co., Ltd. had the following loans and interest expenses
with Silamani Corp., Ltd.:
• As of 31 December 2007, the outstanding loan was THB 304 million.
• In 2007, interest expenses were THB 9.48 million.
2. Connected transactions with Chiang Muan Mining Co., Ltd.: Chiang Muan Mining Co., Ltd. THB 79.11 million
Banpu Minerals Co., Ltd. extended a loan in a form of P/N to
Chiang Muan Mining Co., Ltd. at an interest rate calculated from
an average cost of lending plus 0.5 per cent per annum.
Banpu Minerals Co., Ltd. had the following loans and interest expenses
with Chiang Muan Mining Co., Ltd.:
• As of 31 December 2007, the outstanding loan was THB 76 million.
• In 2007, interest incomes were THB 3.11 million.
3. Connected transactions with Banpu International Ltd.: Banpu International Ltd. THB 18.45 million
Banpu Minerals Co., Ltd. extended a loan in a form of P/N to
Banpu International Ltd. at an interest rate calculated from an average cost
of lending plus 0.5 per cent per annum.
Banpu Minerals Co., Ltd. had the following transactions with
Banpu International Ltd.:
• As of 31 December 2007, the outstanding loan was THB 18 million.
• In 2007, interest expenses were THB 0.45 million.
4. A connected transaction with Banpu Minerals (Singapore) Pte. Ltd. as follows: Banpu Minerals (Singapore) Pte. Ltd. THB 20.82 million
Banpu Minerals Co., Ltd. received a loan it had extended back from
Banpu Minerals (Singapore) Pte. Ltd. in 2007. As a result, the only
connected transaction it had with the firm was interest incomes totaling
THB 20.82 million in 2007.
5. Connected transactions with Silamani Marble Co., Ltd.: Silamani Marble Co., Ltd. THB 176.45 million
Banpu Minerals Co., Ltd. extended a loan in a form of P/N to
Silamani Marble Co., Ltd. at an interest rate calculated from
an average cost of lending plus 0.5 per cent per annum.
Banpu Minerals Co., Ltd. had the following loans and interest expenses
with Silamani Marble Co., Ltd.:
• As of 31 December 2007, the outstanding loan was THB 171 million.
• In 2007, interest expenses were THB 5.45 million.
082
Connected Transactions Related Companies Transaction Value
Banpu Power Ltd.
1. A connected transaction with Banpu Coal Power Ltd. as follows: Banpu Coal Power Ltd. THB 5.77 million
Banpu Power Ltd. received a loan it had extended back from
Banpu Coal Power Ltd. in 2007. As a result, the only connected transaction
it had with the firm was interest incomes totaling THB 5.77 million in 2007.
N e c e s s i t y a n d S o u n d n e s s o f C o n n e c t e d T r a n s a c t i o n s
In case the Company enters into an agreement or if there is any connected transaction between the Company
and its subsidiary companies, affiliated companies, related companies and/or the third party, the Company will
consider the necessity and soundness of such connected transaction before executing a contract based mainly on the
Company’s interests.
A p p r o v a l M e a s u r e s o r P r o c e d u r e s o f C o n n e c t e d T r a n s a c t i o n s
When the Company executes a contract or whenever there is a connected transaction between itself and its
subsidiary companies, affiliated companies, related companies, the third party and/or anyone with possible conflicts of
interest, the Board of Directors requires the Company, for the purpose of its benefits, to comply with the rules stated in
the Stock Exchange of Thailand’s (SET) Announcement Re: Information disclosure and practices of listed companies
in connected transactions. Meanwhile, prices and other conditions shall be as if the transaction is made with the third
party where directors or staff with an interest in such transaction must not participate in the approval process.
P o l i c y o r O u t l o o k f o r F u t u r e C o n n e c t e d T r a n s a c t i o n s
None
R e p o r t o f t h e A u d i t C o m m i t t e e R e g a r d i n g t h e C o n n e c t e d T r a n s a c t i o n s
None
083
The Board of Directors’ priority is to supervise the Company’s operations that they are in line with the good
corporate governance policies and that financial statements and financial data appeared in the Company’s annual
report contain accurate, complete and adequate information. Its duty is also to make sure that the financial statements
are in line with the generally-accepted accounting principles practiced in Thailand where an appropriate accounting
policy is being chosen and carefully pursued on a regular basis. In addition, the Board of Directors must also ensure
that the Company has an effective internal control system to guarantee the credibility of its financial statements, that
a protection system is in place to prevent unusual transactions, that a connected transaction that might lead to possible
conflicts of interest is in fact an actual transaction reasonably carried out during a normal course of business for the
Company’s maximum benefits and that relevant laws and regulations are complied. The Audit Committee has already
reported the result of its action to the Board of Directors and has also reported its opinions in the Audit Committee’s
Report as seen in the annual report.
In this regard, the Board of Directors is of the opinion that the Company’s internal control system is proven
satisfactory and contributes to the Company’s credibility as of 31 December 2007. The Company’s auditor has already
audited it according to the generally-accepted accounting standards and has an opinion that the financial statements
show an accurate financial status and operation result in its essence as per the generally-accepted accounting
principles.
R e p o r t o f t h e B o a r d o f D i r e c t o r s ’R e s p o n s i b i l i t y i n t h e F i n a n c i a l S t a t e m e n t sAnnual Report 2007 • Banpu Public Company Limited
(Mr. Soonthorn Vongkusolkit)
Chairman of the Board
(Mr. Chanin Vongkusolkit)
Chief Executive Officer
084R e p o r t o f t h e A u d i t C o m m i t t e e t o S h a r e h o l d e r sAnnual Report 2007 • Banpu Public Company Limited
Dear Shareholders of Banpu Public Company Limited,
The Audit Committee of Banpu Public Company Limited consists of Mr. Somkiat Chareonkul, Chairman of the
Audit Committee, and Mr. Montri Mongkolswat and Mr. Anothai Techamontrikul, members of the Audit Committee.
The Audit Committee performed its duty based on its scopes of responsibility entrusted by the Board of
Directors. In 2007, the Audit Committee meetings were held seven times. Senior executives, Head of the Internal
Audit Department and auditors also attended the meeting if there were relevant agendas. The results of the Audit
Committee’s performance can be summarized as follows.
• Preparation of Financial Statement – The Audit Committee reviewed a quarterly financial statement
and the 2007 financial statement with executives and auditors to ensure that financial statements of both the Company
and its subsidiaries were in accordance with generally accepted accounting principles and that information was
adequately and completely disclosed in a reliable manner. In addition, the Audit Committee also acknowledged
solution guidelines for the Company’s benefit. Disclosure of related party transactions between the Company, its
subsidiary and affiliated companies was scrutinized to ensure that the Company complied with business criteria
required by the Stock Exchange of Thailand.
• Internal Control System – The Audit Committee reviewed the 2007 risk-based audit plan and
recommended the Internal Audit Department to assess an internal control system that would cover subsidiary and
affiliated companies overseas based on COSO international standards. This was to ensure adequate monitoring and
solving issues of material essences as shown in an auditing report. In the end, all units must have an adequate internal
control system to drive the business to a sustainable growth.
• Risk Management – The Board of Directors and its executives gave a priority to risk management
and operations under a risk management policy. Risk factors were assessed while risk prevention systems were
implemented to reduce impact to the Company’s operation. The Audit Committee reviewed the risk management
policy and guidelines and monitored the development of risk management policy, work plans, coordination with
related units and awareness of the risk management concept by the Risk Management Committee to ensure
a linkage between an internal control and the Company’s business plan.
• Related Party Transactions – The Audit Committee reviewed related party transactions that may
cause a conflict of interest to the Company and found that they were real and carried out during a normal course of
business and the Company carried them out according to a good corporate governance policy.
• Law and Regulations Compliance – The Audit Committee reviewed the Company’s compliance
according to the laws governing securities and exchange, regulations of the Stock Exchange of Thailand and other
legislations relating to its business and found that they were fully complied.
085
• Corporate Governance – The Company’s priority was to manage its business according to the principles
of good corporate governance for transparency, ethics so that shareholders, investors and all stakeholders are
confident.
The Audit Committee, having reviewed the operation, is of the opinion that the Company diligently pursued the
good corporate governance policy, resulting in an adequate internal control system with no significant weaknesses.
The risk management was efficiently carried out. Related party transactions which may lead to conflict of interest
were actual transactions found during a normal course of business carried out for the Company’s maximum benefit.
No unusual item with material essence was found. The Company also fully complied with all the rules and regulations.
For the financial statements during the accounting period that ended 31 December 2007, there was no incident that
depicted items with financial impacts. The financial statements were properly done. Information was adequately
disclosed and in line with the accounting standards.
The Audit Committee also selected the following auditors who will be nominated to the Board of Directors,
which will subsequently seek approval from the Shareholders’ Meeting. They are: Ms. Nangnoi Charoenthaveesub,
C.P.A. (Thailand) No. 3044; and/or Mr. Prasit Yuengsrikul, C.P.A. (Thailand) No. 4174; and/or; Mr. Vichien Khingmontri,
C.P.A. (Thailand) No. 3977 of PricewaterhouseCoopers ABAS Limited, as the Company’s auditor in 2008 for a total
auditing fee of THB 1,968,100.
12 February 2008
On behalf of the Audit Committee
(Mr. Somkiat Chareonkul)
Chairman of the Audit Committee
Banpu Public Company Limited
086
The Company’s management would like to explain its fiscal year financial statement ending 31 December
2007 in comparison with the fiscal year financial statements ending 31 December 2006. Details of financial
statements have been made in the attached note stated in the consolidated financial statement as of 31 December 2007.
1. The Consolidated Profit and Loss for the fiscal year ending 31 December 2007 in comparison withthe Consolidated Profit and Loss for the fiscal year ending 31 December 2006
1.1 Sales revenue reported at THB 32,442 million, a decrease of THB 936 million or 3 per cent compared to
the same period last year. The decrease was mainly due to lower coal sale volume and strengthening of Thai Baht
while coal selling prices rose 17 per cent. Details of the Company’s sales revenue are as follow:
Revenue from coal sales of THB 28,429 million accounted for 88 per cent of total sales revenue. This
represents a decrease of THB 2,005 million or 7 per cent. The revenue from coal sales includes:
Sales revenue from Indonesian coal mines of THB 27,712 million;
Sales revenue from domestic coal mines of THB 717 million.
Sales of power and steam (from BPIC) of THB 3,865 million accounted for 12 per cent of total sales
revenue and increasing 38 per cent compared to the previous year.
Sales from others THB 148 million.
Coal sale volume totaled 19.286 million tonnes, decreasing 11 per cent due to decreased production
and sales volume of Thai mine and production suspension at an Indonesian mine.
Average coal selling price was USD 41.06 per tonne, increasing 17 per cent due to increased coal
market price and a higher portion of sales volume from high quality coal.
1.2 Cost of sales THB 20,964 million, increasing THB 126 million or 1 per cent due to the higher unit cost
associated with higher portion of good-quality coal sale, increases in diesel price, and increases in mining ratio.
1.3 Gross profit reported at THB 11,478 million, a decrease of THB 1,063 million or 8 per cent. Gross profit
margin is calculated at 35 per cent in this period. The gross profit margin from coal is 37 per cent and from power is
25 per cent.
1.4 Selling and administrative expenses reported at THB 5,114 million, an increase of THB 667 million or
15 per cent. due to an increase in general expenses, employee compensation, port rental, demurrage charges and
provision for mine closure of domestic mines.
1.5 Export tax expenses was nil while reported at THB 706 million in last year.
1.6 Royalty fees reported at THB 3,247 million, an increase of THB 9 million due to the higher selling price
of coal.
1.7 Gain on investment held for sale THB 452 million, from partial divestment of a listed coal company
while in last year reported a gain from divestment of a listed petrochemical company of THB 902 million.
1.8 Gain on investment in subsidiaries THB 1,167 million, from selling of 2.4 per cent share capital of
subsidiary which realized THB 1,146 million and divestment of a non-operating company in Indonesia of THB
21 million.
M a n a g e m e n t ’ s D i s c u s s i o n a n d A n a l y s i s o ft h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t sAnnual Report 2007 • Banpu Public Company Limited
087
1.9 Loss on foreign exchange of THB 361 million, compared to a loss of THB 186 million reported in the
same period of last year.
1.10 Dividend income of THB 479 million received from a listed power company.
1.11 Gain from financial derivatives of THB 68 million from coal Swap and oil hedging contract of subsidiary
in Indonesia while in last year reported a loss of THB 438 million.
1.12 Equity income from subsidiaries and affiliates reported at THB 4,504 million, derived from equity income
from BLCP of THB 4,076 million, and equity income from China coal business of THB 428 million.
1.13 Interest expenses of THB 1,160 million increased THB 207 million, mainly from new borrowings to
fund capital increase of a power business in Thailand, power business in China, and investment projects in Indonesia.
1.14 Corporate income tax amounted to THB 1,492 million, increasing THB 369 million from the increased
profit of Indonesian subsidiaries including tax expenses related to dividend received from overseas subsidiaries.
1.15 Net profit for the fiscal year of 2007 reported at THB 6,654 million, an increase of THB 3,044 million
or 84 per cent.
Compared to the same period last year, Thai Baht appreciated 9 per cent against US Dollar. Since the
company’s revenues and cost of sales are mostly denominated in US Dollar, the appreciation of Thai Baht thus
impacted the accounting translation of revenues and cost of sales when preparing for consolidated financial
statement. Had the exchange rate of last year been used in preparing consolidated financial statement, the revenues,
cost of sales, and net profit in Thai Baht in this quarter would have been higher by THB 2,998 million, THB 1,888
million, and THB 373 million respectively (based on average THB/USD exchange rate of 37.93 and 34.57 in 2006
and 2007 respectively).
1.16 Earnings per share (EPS) for the fiscal year 2007 reported at THB 24.49 per share compared to THB
13.29 per share last year.
2. Consolidated Balance Sheet as of 31 December 2007 in comparison with Consolidated Balance Sheetas of 31 December 2006
2.1 Total assets of THB 65,051 million reported an increase of THB 15,664 million or 32 per cent with details
described below:
Cash and cash equivalents of THB 13,304 million increased THB 8,500 million or 177 per cent due to
cash received from the listing of Indonesian subsidiary in the Indonesian Stock Exchange, and cash paid for investment
in BLCP and investment in machine and equipment.
Accounts and note receivable of THB 3,656 million decreased THB 349 million due to early payment
by customers.
Accrued dividends from related parties of THB 2,075 million from accrued dividend of BLCP.
Investment in subsidiaries, joint venture and associates of THB 11,303 million increased THB 4,470
million or 65 per cent due to capital increase and profit sharing of BLCP.
Other investment of THB 10,442 million increased THB 285 million or 3 per cent from mark-to-market
adjustment.
088
Property plant and equipment of THB 14,786 million increased of THB 1,341 million due to machinery
investment in subsidiaries in Indonesia and China. However, the accounting values of these assets were lowered by
the appreciation of Thai Baht.
2.2 Total liabilities of THB 26,554 million increased THB 489 million or 2 per cent with details described
below:
Bank loans and overdrafts of THB 2,278 million decreased THB 982 million or 30 per cent from
repayment of loans that matured and carried high interest rate, while domestic bills of exchange with lower interest
rate were issued.
Current portion of long-term loans and current portion of Baht debenture of THB 1,808 million
decreased THB 534 million from loans repayment.
Accrued overburden and transportation expenses of THB 2,067 million, increased THB 53 million
mainly from the Indonesian operations.
Long-term loans of THB 5,854 million increased THB 1,869 million due to borrowing to fund the
capital increase in BLCP of THB 2,250 million and issuing bill of exchange of THB 1,400 million.
Baht debenture of THB 8,581 million decreased THB 1,393 million from partial transfer to current
portion.
2.3 Shareholders’ equity of THB 38,497 million increased THB 16,153 million or 72 per cent mainly from
Net profit for the fiscal year of 2007 at THB 6,654 million.
Premium on share capital of THB 7,887 million from the listing of subsidiary in the Indonesian Stock
Exchange.
Dividend payment to shareholders of THB 2,154 million.
An increase of THB 418 million from a higher mark-to-market value of investment in listed
companies.
The decrease from affiliates’ foreign exchange translations of THB 427 million.
2.4 Net debt-to-equity as of 31 December 2007 reported at 0.14 times for the consolidated balance sheet
and 1.34 times for the parent company. As of 31 December 2006, the ratio were 0.66 times for the consolidated
balance sheet and 1.91 times for the parent company.
3. Statement of Cash Flow for the fiscal year ending 31 December 2007 in comparison with the previous yearending 31 December 2006
Banpu’s statement of cash flow for the fiscal year ending 31 December 2007 recorded an increased in net cash
flow of THB 8,616 million compared to last year. The Company’s net cash flow is divided into:
3.1 Cash flow from operation of THB 3,371 million; net from corporate income tax of THB 2,166 million.
3.2 Cash flow from investment recorded a deficit of THB 4,526 million;
Cash payment for investment in machinery and mining equipment of THB 2,984 million, project in
progress and overburden removals in advance of THB 2,237 million, and capital increase in BLCP of THB 3,258
million.
089
Cash received from the listing of subsidiary and divestment of a non-operating subsidiary of THB
1,593 million, partial divestment of a listed coal company of THB 596 million, and dividend income of THB 1,702
million.
3.3 Cash flow from financing recorded of THB 9,772 million, from cash received from the listing of
subsidiary of THB 12,305 million and drawdown of bank loan and long-term loan of THB 12,382 million. Cash
outflows were for repaying bank loan, long-term loan and debenture of THB 12,775 million and dividend payment
of THB 2,154 million.
4. Impacts from application of new accounting standardAccording to the notification of Federation of Accounting Professions which requires that accounting for
investment in subsidiaries and associates under non-consolidated financial statements be changed from equity
method to cost method, the Company has applied these accounting methods which is mandatory from 1 January
2007. The impacts from application of such methods are as follow.
The non-consolidated financial statement for fiscal year of 2007 records a net profit of THB 3,540 million
whereas the consolidated financial statement records a net profit of THB 6,654 million.
The non-consolidated financial statement for fiscal year of 2006 records a net profit of THB 742 million
whereas the consolidated financial statement records a net profit of THB 3,610 million.
On the balance sheets, the non-consolidated financial statement as of 31 December 2006 records a decline
in “Investments in subsidiaries and associates and interests in joint ventures” by THB 12,855 million, a decline in
retained earnings by THB 8,601 million, and a decline in shareholders’ equity by THB 12,855 million.
Note that the new accounting method affects the accounts in subsidiaries, associates, and joint ventures
under the non-consolidated financial statements only but does not affect the consolidated financial statements or
fundamental business of the Company.
5. Management Discussion and AnalysisThe thermal coal market during year 2007 indicates further tightening of regional market on the back of rising
demand and limited supply. Market balance changed remarkably in China, whose robust economy coupled with
in-land logistic difficulty almost turned the country from a major coal exporter into a net importer for the first
time. Against the higher regional demand was limited supply growth from the two main exporters, Australia and
Indonesia. Australia’s export was held back by persistent bottleneck at Newcastle ports, while Indonesia’s wettest
monsoon in many years cut short coal production from the archipelago. The spot coal price, based on the Barlow
Jonder Index, responded by soaring 75 per cent from USD 51 per tonne at the beginning of the year to USD 89
per tonne at year end, or an all-year average of USD 61 per tonne (USD 49 per tonne in 2006).
090
Banpu’s coal operation reports sales volume of 19.286 million tonnes in 2007, decreasing 11 per cent from
its previous year and missing the initial target by 8 per cent. The output was mainly dragged by weak production
at Trubaindo mine where unreadiness of mining contractor was exacerbated by the unusually severe rainfall.
Production improvement is expected in the following year after a new contractor with bigger capacity was put in place
since October. Nevertheless, the lower volume was compensated by a stronger average coal selling price of USD
41.06 per tonne which increased 17 per cent year-on-year and exceeded the Company’s original estimate by
11 per cent. In China, the two coal mining associates together provided an equity income of THB 428 million.
The Power Business performed well and helped diversify cash flows for the Company. The 50 per cent-owned
BLCP power plant, which has been fully commenced since February 2007, generated an equity income of THB
4,076 million (including a foreign exchange gain of THB 591 million). The 14.99 per cent holding in a listed power
company provided a dividend income of THB 457 million. In addition, the Chinese subsidiary BPIC delivered
a steady net profit of THB 593 million from its three Combined Heat and Power (CHP) plants.
The EBITDA for 2007 totaled THB 12,916 million, increasing 36 per cent from previous year. Coal Business
contributed THB 7,398 million (57 per cent of total) while Power Business generating THB 5,518 million.
On 18 December, the Company completed the IPO of PT Indo Tambangraya Megah Tbk. (ITM) in the
Indonesian Stock Exchange. A total 20 per cent of enlarged shares were issued through IPO. In a separate transaction,
the Company sold 2.4 per cent stake in ITM to the existing partner. As a result, Banpu’s effective holding in ITM
was diluted to 73.72 per cent (from pre-IPO level of 95 per cent) and non-recurring income of THB 1,146 million
incurred in the Company’s financial statement. In late 2007, the Company began divesting its 10 per cent stake in
a listed coal company and booked an after-tax gain from divestment of THB 316 million.
In sum, for the year 2007 the Company realized a consolidated net profit of THB 6,654 million, an increase
of 84 per cent from the previous year. By excluding non-recurring items, the core businesses generated a net profit
of THB 5,920 million, or an increase of 61 per cent from the previous year.
091
To the Shareholders of Banpu Public Company Limited
I have audited the accompanying consolidated and company balance sheets as at 31 December 2007 and
the related consolidated and company statements of income, changes in shareholders’ equity and cash flows for the
year then ended of Banpu Public Company Limited and its subsidiaries and of Banpu Public Company Limited,
respectively. The Company’s management is responsible for the correctness and completeness of information in
these financial statements. My responsibility is to express an opinion on these financial statements based on my audit.
The consolidated and company financial statements for the year ended 31 December 2006 of Banpu Public Company
Limited and its subsidiaries and of Banpu Public Company, presented herewith for comparative purposes, were
audited by another auditor from the same firm as myself and the other auditor expressed an unqualified opinion on
those statements on her report dated 21 February 2007.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require that
I plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the consolidated and company financial statements referred to above present fairly, in all
material respects, the consolidated and company financial position as at 31 December 2007 and the consolidated
and company results of operations and cash flows for the year then ended of Banpu Public Company Limited and
its subsidiaries and of Banpu Public Company Limited in accordance with generally accepted accounting principles.
Bangkok
27 February 2008
A u d i t o r ’ s R e p o r tAnnual Report 2007 • Banpu Public Company Limited
(Nangnoi Charoenthaveesub)
Certified Public Accountant (Thailand) No. 3044
PricewaterhouseCoopers ABAS Limited
092B a l a n c e S h e e t sBanpu Public Company Limited • As at 31 December 2007 and 2006
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
ASSETS
Current Assets
Cash and cash equivalents 3 13,304,348 4,804,200 3,222,320 1,884,959
Trade accounts receivable, net 4 3,655,600 4,004,123 381,132 148,920
Trade accounts receivable from subsidiaries 28.2 - - 16,417 49,435
Amounts due from related parties 28.2 9,004 11,358 626,868 921,065
Dividend receivables from related parties 28.2 2,074,500 - 3,124,201 -
Advances to related parties 28.3 122 21 110,117 522,315
Inventories, net 5 1,850,900 1,645,847 504,762 326,101
Spare parts and machinery supplies 318,226 334,361 22,363 22,538
Other current assets 6 1,799,223 1,601,140 584,083 293,263
Total Current Assets 23,011,923 12,401,050 8,592,263 4,168,596
Non-Current Assets
Loans to employees 15,063 17,608 3 38
Long-term loans to subsidiaries 28.3 - - 5,331,183 13,730,051
Long-term loans to other companies 7 341,774 342,119 341,774 336,726
Investments in subsidiaries and associates
and interests in joint ventures 8 11,302,562 6,832,666 7,966,674 3,767,031
Other investments, net 9 10,442,019 10,156,783 5,375,556 5,387,680
Property, plant and equipment, net 10 14,786,069 13,444,755 321,445 395,821
Other non-current assets
Deferred exploration and development
expenditures and deferred overburden expenses, net 11 2,746,461 3,645,833 41,231 456,171
Mining property rights and negative goodwill, net 12 303,549 425,518 - -
Projects under development 13 897,012 554,420 252,881 172,561
Other non-current assets 14 1,204,373 1,565,725 235,821 360,365
Total Non-Current Assets 42,038,882 36,985,427 19,866,568 24,606,444
Total Assets 65,050,805 49,386,477 28,458,831 28,775,040
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2006
THB Thousand(Restated)
2007THB Thousand
2007THB Thousand
093
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Bank overdrafts and loans from banks
and financial institutions 15 2,278,143 3,260,001 993,546 2,470,283
Trade accounts payable 939,743 363,135 - -
Advances from subsidiaries 28.4 - - 10,873 4,396
Short-term loan from a subsidiary 28.4 - - 862,373 1,429,305
Current portion of long-term loans, net 17 408,016 741,873 - 100,000
Current portion of debentures, net 18 1,400,000 1,600,000 1,400,000 1,600,000
Other current liabilities
Accrued overburden and coal transportation costs 2,066,614 2,013,792 16,313 27,145
Accrued interest expenses 111,057 154,069 122,179 168,435
Accrued royalty expenses 985,571 999,693 5,501 7,641
Accrued income tax expenses 503,111 1,177,803 - -
Others Current Liabilities 16 3,096,280 2,400,872 283,065 229,831
Total Current Liabilities 11,788,535 12,711,238 3,693,850 6,037,036
Non-Current Liabilities
Long-term loans from subsidiaries 28.4 - - 1,218,019 1,698,430
Long-term loans, net 17 5,854,409 3,985,200 4,363,094 1,909,991
Debentures, net 18 8,580,547 9,973,946 8,580,547 9,973,946
Employee retirement benefits obligation 19 268,155 333,967 14,134 79,174
Other liabilities 61,863 38,208 497 497
Total Non-Current Liabilities 14,764,974 14,331,321 14,176,291 13,662,038
Total Liabilities 26,553,509 27,042,559 17,870,141 19,699,074
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
B a l a n c e S h e e t s ( c o n t i n u e d )
Banpu Public Company Limited • As at 31 December 2007 and 2006
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand2006
THB Thousand(Restated)
094B a l a n c e S h e e t s ( c o n t i n u e d )
Banpu Public Company Limited • As at 31 December 2007 and 2006
LIABILITIES AND SHAREHOLDERS’ EQUITY
(continued)
Shareholders’ Equity
Share capital
Registered share capital
354,050,479 ordinary shares of THB 10 each 3,540,505 3,540,505 3,540,505 3,540,505
Issued and paid-up share capital 20 2,717,479 2,717,479 2,717,479 2,717,479
Premium on share capital 20 5,058,329 5,058,329 5,058,329 5,058,329
Surplus on dilution of investments in a subsidiary 7,886,746 - - -
Fair value reserve of available-for-sale securities 6,909,652 6,491,683 1,109,364 983,047
Translation adjustment (1,742,428) (1,315,039) - -
Retained earnings
Appropriated
Legal Reserve 26 744,376 414,514 354,051 354,051
Unappropriated 12,734,861 8,564,169 1,349,467 (36,940)
Total parent’s shareholders’ equity 34,309,015 21,931,135 10,588,690 9,075,966
Minority interests 4,188,281 412,783 - -
Total Shareholders’ Equity 38,497,296 22,343,918 10,588,690 9,075,966
Total Liabilities and Shareholders’ Equity 65,050,805 49,386,477 28,458,831 28,775,040
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand2006
THB Thousand(Restated)
095
Sales 32,441,789 33,378,263 1,767,837 1,889,751
Cost of sales (20,963,896) (20,837,590) (1,606,743) (1,236,625)
Gross profit 11,477,893 12,540,673 161,094 653,126
Selling and administrative expenses (5,114,262) (4,446,971) (1,072,937) (771,940)
Royalty fee (3,246,604) (3,237,779) (16,014) (42,040)
Export tax 27 - (705,500) - -
Profit (loss) from sales 3,117,027 4,150,423 (927,857) (160,854)
Gain on disposal of investments in
available-for-sale securities 451,520 902,003 451,520 850,361
Gain on disposal of investments in subsidiaries 1,167,240 - - -
Dividends income from subsidiaries 28.1 - - 4,352,136 287,031
Dividends income from others 478,877 554,015 252,565 305,156
Interest income 123,377 141,302 865,996 1,002,299
Net gain (loss) from financial instruments 68,391 (437,981) (1,295) 51,035
Net loss on exchange rate (360,995) (185,685) (424,851) (669,123)
Directors’ remuneration 25 (29,364) (35,801) (29,364) (35,801)
Others 201,157 157,661 226,381 141,896
Operating profit 21 5,217,230 5,245,937 4,765,231 1,772,000
Share of profit of associates and interests in
joint ventures 8 4,504,372 800,793 - -
Profit before interest and income tax 9,721,602 6,046,730 4,765,231 1,772,000
Interest expenses (1,160,392) (953,243) (971,919) (825,758)
Financial expenses (146,383) (227,384) (116,740) (203,906)
Income taxes 29 (1,491,668) (1,122,339) (136,296) -
Profit before minorities 6,923,159 3,743,764 3,540,276 742,336
Less Profit attributable to minorities (268,736) (133,583) - -
Net profit for the year 6,654,423 3,610,181 3,540,276 742,336
Basic earnings per share (THB) 22 24.49 13.29 13.03 2.73
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
S t a t e m e n t s o f I n c o m eBanpu Public Company Limited • For the years ended 31 December 2007 and 2006
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand2006
THB Thousand(Restated)
096S t a t e m e n t s o f C h a n g e s i n S h a r e h o l d e r s ’ E q u i t yBanpu Public Company Limited • For the years ended 31 December 2007 and 2006
Opening balance of 2007 2,717,479 5,058,329 - 6,491,683 (1,315,039) 414,514 8,564,169 412,783 22,343,918
Fair value adjustment 9 - - - 417,969 - - - - 417,969
Translation adjustment - - - - (427,389) - - 3,506,762 3,079,373
Legal reserve 26 - - - - - 329,862 (329,862) - -
Dividend paid 24 - - - - - - (2,153,869) - (2,153,869)
Surplus on dilution of investment in a subsidiary - - 7,886,746 - - - - - 7,886,746
Net profit for the year - - - - - - 6,654,423 268,736 6,923,159
Closing balance of 2007 2,717,479 5,058,329 7,886,746 6,909,652 (1,742,428) 744,376 12,734,861 4,188,281 38,497,296
C o n s o l i d a t e d 2 0 0 7
NotesTotal
THB Thousand
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
Minority
interestTHB Thousand
Unappro-
priated
retained
earningsTHB Thousand
Legal
reserveTHB Thousand
Translation
adjustmentTHB Thousand
Fair value
reserve of
available-
for-sale
securitiesTHB Thousand
Surplus on
dilution of
investment
in a
subsidiaryTHB Thousand
Premium
on share
capitalTHB Thousand
Issued and
paid-up
share capitalTHB Thousand
Opening balance of 2007 2,717,479 5,058,329 6,491,683 (1,315,039) 414,514 8,564,169 21,931,135
Adjustment 2.3 - - (5,508,636) 1,315,039 (60,463) (8,601,109) (12,855,169)
Opening balance after restropective adjustment 2,717,479 5,058,329 983,047 - 354,051 (36,940) 9,075,966
Fair value adjustment 9 - - 126,317 - - - 126,317
Dividend paid 24 - - - - - (2,153,869) (2,153,869)
Net profit for the year - - - - - 3,540,276 3,540,276
Closing balance of 2007 2,717,479 5,058,329 1,109,364 - 354,051 1,349,467 10,588,690
C o m p a n y 2 0 0 7
NotesTotal
THB Thousand
Unappro-
priated
retained
earningsTHB Thousand
Legal
reserveTHB Thousand
Translation
adjustmentTHB Thousand
Fair value
reserve of
available-
for-sale
securitiesTHB Thousand
Premium
on share
capitalTHB Thousand
Issued and
paid-up
share capitalTHB Thousand
097S t a t e m e n t s o f C h a n g e s i n S h a r e h o l d e r s ’ E q u i t y ( c o n t i n u e d )
Banpu Public Company Limited • For the years ended 31 December 2007 and 2006
Opening balance of 2006 2,717,479 5,058,329 6,914,095 (452,180) 397,515 6,941,115 224,210 21,800,563
Fair value adjustment - - (422,412) - - - - (422,412)
Translation adjustment - - - (970,327) - - (179,619) (1,149,946)
Legal reserve 26 - - - - 16,999 (16,999) - -
Dividend paid 24 - - - - - (1,970,128) - (1,970,128)
Net profit for the year - - - - - 3,610,181 133,583 3,743,764
Additional investment in a subsidiary - - - 107,468 - - 234,609 342,077
Closing balance of 2006 2,717,479 5,058,329 6,491,683 (1,315,039) 414,514 8,564,169 412,783 22,343,918
C o n s o l i d a t e d 2 0 0 6
NotesTotal
THB Thousand
Minority
interestsTHB Thousand
Unappro-
priated
retained
earningsTHB Thousand
Legal
reserveTHB Thousand
Translation
adjustmentTHB Thousand
Fair value
reserve of
available-
for-sale
securitiesTHB Thousand
Premium
on share
capitalTHB Thousand
Issued and
paid-up
share
capitalTHB Thousand
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
Opening balance of 2006 2,717,479 5,058,329 6,914,095 (452,180) 397,515 7,026,895 21,662,133
Adjustment - - (5,350,675) 452,180 (43,464) (5,836,043) (10,778,002)
Opening balance after restropective adjustment 2,717,479 5,058,329 1,563,420 - 354,051 1,190,852 10,884,131
Fair value adjustment - - (580,373) - - - (580,373)
Dividend paid 24 - - - - - (1,970,128) (1,970,128)
Net profit for the year - - - - - 742,336 742,336
Closing balance of 2006 2,717,479 5,058,329 983,047 - 354,051 (36,940) 9,075,966
C o m p a n y 2 0 0 6
NotesTotal
THB Thousand
Unappro-
priated
retained
earningsTHB Thousand
Legal
reserveTHB Thousand
Translation
adjustmentTHB Thousand
Fair value
reserve of
available-
for-sale
securitiesTHB Thousand
Premium
on share
capitalTHB Thousand
Issued and
paid-up
share capitalTHB Thousand
098S t a t e m e n t s o f C a s h F l o w sBanpu Public Company Limited • For the years ended 31 December 2007 and 2006
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
Cash flows from operating activities
Net profit for the year 6,654,423 3,610,181 3,540,276 742,336
Adjustment to reconcile net profit to net cash provided
by operations
Depreciation 21 1,455,859 1,511,200 108,189 86,236
Amortisation of deferred expenditures 21 2,483,566 1,980,971 200,378 394,810
Write-off spare parts and machinery supplies 11,987 - - -
Write-off property, plant and equipment 52,880 - 512 -
Impairment losses of assets - 14,484 - -
Impairment losses of deferred overburden 11 101,152 - 87,204 -
Allowance for doubtful accounts 4 (20,609) 63,584 (20,609) (20,609)
Allowance for net realisable value of inventories 5 228,203 - 224,185 -
Share of net profit of associates and interests
in joint ventures 8 (4,504,372) (800,793) - -
Dividends received from subsidiaries 28.1 - - (4,352,136) (287,031)
Dividends received from joint ventures (1,222,938) - - -
Dividends received from other investments (478,877) (554,015) (252,565) (305,156)
Write-off projects under development 13 - 8,020 - -
(Gain) loss on disposal of property, plant
and equipment (24,856) 1,827 (22,550) (5,311)
Gain on disposal of investments in subsidiaries (1,281,899) - - -
Gain on disposal of other investments (451,520) (902,003) (451,520) (856,375)
Unrealised (gains) loss on exchange rate (95,584) 317,290 369,304 1,217,986
Net share of profit to minority shareholders’ interests 268,736 133,583 - -
Cash flow before changes in working capital 3,176,151 5,384,329 (569,332) 966,886
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand
2006THB Thousand
(Restated)
099
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
S t a t e m e n t s o f C a s h F l o w s ( c o n t i n u e d )
Banpu Public Company Limited • For the years ended 31 December 2007 and 2006
Changes in working capital (exclude effect from
acquistion and disposal of subsidiaries)
Trade accounts receivable 369,132 (1,667,339) (178,585) 324,175
Amounts due to related parties 2,354 40,980 294,197 (141,392)
Inventories (433,256) 14,786 (153,381) 94,660
Spare parts and machinery supplies 4,148 73,260 175 3,513
Other current assets (198,083) (38,053) (290,820) (69,989)
Trade accounts payable 576,608 (341,996) - -
Accrued overburden and coal transportation costs 52,822 499,649 (10,832) (13,188)
Accrued interest expenses (43,012) 4,965 (46,256) (29,779)
Accrued royalty fee (14,122) 131,418 (2,140) 2,120
Accrued income tax (674,692) (485,581) - (243,674)
Employee retirement benefits obligation (142,810) 27,944 (65,040) 363
Other current liabilities 695,579 660,791 53,234 (86,885)
Net cash receipts (payments) from operating activities 3,370,819 4,305,153 (968,780) 806,810
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand
2006THB Thousand
(Restated)
0100S t a t e m e n t s o f C a s h F l o w s ( c o n t i n u e d )
Banpu Public Company Limited • For the years ended 31 December 2007 and 2006
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
Cash flows from investing activities
Cash receipts (payments) for advances to related parties (101) - 6,477 (205,738)
Cash receipts (payments) for advances from related parties - - 412,198 (1,644)
Cash receipts from loans to related parties 28.3 54,504 - 11,718,333 2,028,148
Cash payments for loans to related parties 28.3 (55,047) - (3,856,033) (8,277,824)
Cash receipts from long-term loans to other companies - 9,000 - -
Cash receipts from loans to employees, net 2,545 4,989 35 102
Cash receipts from disposal of investments in
subsidiaries 1,593,297 - - -
Cash payments for purchase of investments in
subsidiaries, associates and interests in joint ventures (3,329,657) (6,751,886) (4,199,643) -
Cash receipts from disposal of other investments 596,426 1,160,308 596,426 1,009,097
Cash payments for purchase of other investments 9 (13,431) (93,635) (6,465) (87,155)
Cash payments for projects under development (402,110) (206,110) (78,549) (124,799)
Cash payments for deferred overburdened expenses 11 (1,934,408) (3,997,444) (111,106) (311,970)
Cash payments for purchase of property,
plant and equipment 10 (2,983,853) (639,797) (37,096) (37,682)
Cash receipts from disposal of property, plant
and equipment 73,050 79,664 24,062 12,060
Other non-current assets 170,495 (40,148) 124,032 (105,170)
Cash receipts from dividends from other investments 478,877 554,015 252,565 305,156
Cash receipts from dividends from investments in
subsidiaries, joint venture and associates 1,222,938 - 1,227,935 287,031
Net cash receipts (payments) from investing activities (4,526,475) (9,921,044) 6,073,171 (5,510,388)
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand
100
2006THB Thousand
(Restated)
0101
The notes to the consolidated and company financial statements on pages 102 to 146 are an integral part of these financial statements.
S t a t e m e n t s o f C a s h F l o w s ( c o n t i n u e d )
Banpu Public Company Limited • For the years ended 31 December 2007 and 2006
Cash flows from financing activities
Cash receipts from loans from banks 9,484,161 4,722,985 4,001,536 2,860,167
Repayment of loans from banks (10,371,882) (2,970,828) (5,470,283) (1,415,726)
Repayment of short-term loan from related parties - - (507,231) 1,429,305
Cash receipts from loans from related parties 28.4 - - 709,440 441,151
Repayment of loans from related parties 28.4 - - (1,194,502) (2,475,548)
Cash receipts from long-term loans 17 2,898,288 3,701,221 2,600,270 1,946,690
Repayments of long-term loans 17 (803,166) (1,175,770) (100,000) (300,000)
Cash payments for deferred financing
service fee for long-term loans 17 (10,031) (11,893) (3,015) (11,893)
Repayments of debentures 18 (1,600,000) (1,254,126) (1,600,000) (1,254,126)
Other liabilities 23,655 162,265 - 1
Cash receipts from additional share capital
of a subsidiary 12,304,928 - - -
Dividends paid 24 (2,153,869) (1,970,128) (2,153,869) (1,970,128)
Net cash receipts (payments) from financing activities 9,772,084 1,203,726 (3,717,654) (750,107)
Net increase (decrease) in cash and cash equivalents 8,616,428 (4,412,165) 1,386,737 (5,453,685)
Increase from purchase of investments - 493,577 - -
Reclassification - (50,048) - (50,048)
Adjustment from foreign exchange translation (107,949) (363,272) (41,386) (234,809)
Cash and cash equivalents at beginning of the year 4,795,869 9,127,777 1,876,969 7,615,511
Cash and cash equivalents at end of the year 13,304,348 4,795,869 3,222,320 1,876,969
Cash and cash equivalents comprise:
Cash and cash equivalents - as presented in
the balance sheets 3 13,304,348 4,804,200 3,222,320 1,884,959
Less Bank overdrafts 15 - (8,331) - (7,990)
Cash and cash equivalents at end of the year 13,304,348 4,795,869 3,222,320 1,876,969
Supplementary information for cash flows:
Cash paid during the year
Interest paid 1,203,404 948,278 1,018,175 989,200
Corporate income tax 2,166,360 1,607,920 136,296 243,674
C o m p a n yC o n s o l i d a t e d
Notes2006
THB Thousand2007
THB Thousand2007
THB Thousand
101
2006THB Thousand
(Restated)
102N o t e s t o t h e C o n s o l i d a t e d a n d C o m p a n y F i n a n c i a l S t a t e m e n t sBanpu Public Company Limited • For the years ended 31 December 2007 and 2006
1. General information
Banpu Public Company Limited (“the Company”) is a public limited company incorporated and resident in Thailand. The address of
the Company’s registered office is 1550 New Petchburi Road, Makkasan, Ratchathewi, Bangkok.
The Company is listed on the Stock Exchange of Thailand. For reporting purpose, the Company and its subsidiaries, associates and
joint ventures are referred to as the Group.
The Group is engaged in coal mining and power businesses.
The Group has operations in Thailand and overseas which are mainly in Indonesia and Republic of China.
As at 31 December 2007, the Company employed 225 people (2006: 271 people) and the Group employed approximately 3,209 people
(2006: 4,146 people).
These consolidated and company financial statements were authorised for issue by Board of Directors on 27 February 2008.
2. Accounting policies
The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below:
2.1 Basis of preparation
The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting
principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Account Profession Act B.E. 2547,
and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535.
The consolidated and company financial statements have been prepared under the historical cost convention except certain
accounts as disclosed in the accounting policies below.
The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on
management’s best knowledge of current events and actions, actual results may differ from those estimates.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
An English version of the consolidated and company financial statements has been prepared from the consolidated and company
financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai
language consolidated and company financial statements shall prevail.
2.2 Amendments to accounting standards and new accounting standard effective in 2007 and 2008
During the year 2007, the Federation of Accounting Professions announced the amendments to Thai Accounting Standards (TAS)
and a new standard as details below.
Amendments to accounting standards effective in 2007
The effective date for the following revised accounting standards is for accounting periods beginning on or after 1 January 2007.
TAS 44 “Consolidated Financial Statements and Separate Financial Statements”
TAS 45 “Investments in Associates”
TAS 46 “Interests in Joint Ventures”
The Group has adopted the aforementioned standards for which applies the cost method of accounting in the company financial
statements, commencing 1 January 2007. The Group has applied retrospective adjustments. The effects of the change to the company financial
statements are discussed in Note 2.3.
103
Amendments to accounting standards and new accounting standard effective in 2008
The effective date for the following revised and new accounting standards is for accounting periods beginning on or after 1 January
2008.
The revised accounting standards
TAS 25 “Cash Flow Statements”
TAS 29 “Leases”
TAS 31 “Inventories”
TAS 33 “Borrowing Costs”
TAS 35 “Presentation of Financial Statements”
TAS 39 “Accounting Policies, Changes in Accounting Estimates and Errors”
TAS 41 “Interim Financial Reporting”
TAS 43 “Business Combinations”
TAS 49 “Construction Contracts”
The new accounting standard
TAS 51 “Intangible Assets”
The Group will apply these standards from 1 January 2008. The Group’s management assessed and determined that there are no
significant impacts to financial statements being presented except the revised TAS 35 “Presentation of Financial Statements”, the revised TAS 43
“Business Combinations” and TAS 51 “Intangible Assets” as details below.
TAS 35 (revised) requires the additional disclosures on critical judgement and estimates made by the management.
The significant estimates which the management accounted in the financial statement of the Group are saleable reserve and resource of the project
and provision for environment rehabilitation.
TAS 43 (revised) requires an entity which is the acquirer to reassess the identification and measurement of the acquiree’s
identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the combination if, at the acquisition date,
the acquirer’s interest in the net fair value of those items exceeds the cost of the combination. Any excess remaining after that reassessment
must be recognised by the acquirer immediately in the income statement. As at 31 December 2007, the balances of negative goodwill
and annual charges of amortisation were THB 1,112.14 million and THB 35.25 million, respectively. The Group will apply the retrospective
adjustment for this change in accounting policy. The effects of change in accounting policy to the consolidated financial statements for
the years ended 31 December 2007 are as next page:
2007THB Thousand
Consolidated balance sheet at 31 December
Decrease in negative goodwill, net (1,112,143)
Increase in retained earnings 1,112,143
TAS 51 requires certain criteria to be met in order to capitalise as intangible assets. The management needs to review its
existing accounting policy to be in line with the new accounting standards. However, as at 31 December 2007, the Group does
not have any intangible assets that do not qualify.
104
2.3 Change in an accounting policy in relation to accounting standard effective since 1 January 2007
During 2007, the Federation of Accounting Professions amended TAS 44 “Consolidated financial statements and separate financial
statements”, TAS 45 “Investments in associates” and TAS 46 “Interests in joint ventures” which require the change from equity method of
accounting to cost method of accounting for investments in subsidiaries and associates and interests in joint ventures presented in the separate
financial statements and income from investment will be recognised when dividends are declared. The notification is mandatory from 1 January
2007. The change in the accounting policy has an impact to the separate financial statements only and does not have an impact to the consolidated
financial statements.
The Company has adopted the cost method for the investments in subsidiaries and associates and interests in joint ventures since 1
January 2007 by applying retrospective adjustments. The effects of the change to the company financial statements for year ended 31 December
2006 are as follows:
2006THB Thousand
Balance sheet as at 31 December
Decrease in investments in subsidiaries and associates and interests in joint ventures 12,855,169
Decrease in fair value reserve of available-for-sale securities 5,508,636
Increase in translation adjustment 1,254,576
Decrease in retained earnings - opening balance as at 1 January 2006 5,836,043
Decrease in retained earnings - closing balance as at 31 December 2006 8,601,109
Statement of income for the year ended 31 December
Decrease in net profit 2,867,845
Decrease in basic earnings per share (THB) 10.56
2.4 Group accounting - Investment in subsidiaries and associates and interests in joint ventures
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financing and
operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the date
on which its control is transferred to the Group and are no longer consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition
is measured as the fair value of the assets given, equity instrument issued or liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets and liabilities assumed in an acquisition are measured initially at their fair value at the
acquisition date. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of net assets of subsidiary acquired, the difference is recognised as negative goodwill. (See Note 2.10
the accounting policy on goodwill and negative goodwill). Intercompany transactions, balances and unrealised gains or losses on transactions
between group companies are eliminated, except unrealised losses which the Group considers when there is the factor of indicating that an
asset might be impaired. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted
by the Group.
105
In case that a subsidiary in which the Group hold an investment increase its share capital and the Group does not participate, either
fully or partially, in the increase of share capital. Non participation, either fully or in part, in the share capital increase of a subsidiary reduces the
Group’s shareholding in that subsidiary and is considered to be a deemed disposal of interest on dilution. A deemed disposal on dilution changes
the Group’s interest in the net assets of the subsidiary and therefore a difference arises between the pre and post dilution share of net assets of the
subsidiary. Dilution gains or losses that arise on share issued by the subsidiary to other investors are not recognised in the income statement. The
change in net assets of the investment in subsidiary is taken to the shareholders’ equity. On disposal of this investment to third party, such changes
are transferred to retained earnings.
In the company financial statements the cost method is applied to account for investments in subsidiaries. Under the cost method,
income from investments in subsidiaries are recognised when dividends are declared.
A list of the Group’s principal subsidiaries is shown in Note 8.
Associates and joint ventures
Associates and joint ventures are entities over which the Group has significant influence or joint control, but which it does not
control. Investments in associates and interests in joint ventures are accounted for by the equity method of accounting in the consolidated financial
statements. Under this method the Group’s share of the post-acquisition profits and losses of associates and joint ventures is recognised in the
income statement and its share of post-acquisition movements in fair value reserve is recognised in fair value reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment.
Unrealised gains or losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the
Group’s interests in the associates and joint ventures, except unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. The Group’s investments in associates and interests in joint ventures include goodwill (net of accumulated
amortisation) on acquisition. When the Group’s share of losses in an associate or a joint venture exceeds its interest in the associate or joint
venture, the Group does not recognise further losses unless the Group has incurred obligations or made payment on behalf of the associates and
joint ventures.
In the company financial statements the cost method is applied to account for investments in associates and interests in joint
ventures. Under the cost method, income from investments in associates and interests in joint ventures are recorded when dividends are declared.
A list of the Group’s principal associates and joint ventures are shown in Note 8.
2.5 Foreign currency translation
Items included in the financial statements of each entity in the Group are measured using the reporting currency of that entity. The
consolidated financial statements are presented in Thai Baht.
Foreign currency transactions are translated into the reporting currency using the exchange rates prevailing at the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the reporting currency at the exchange rates
prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income.
Statements of income and cash flows of foreign entities are translated into Thai Baht at the weighted average exchange rates for
each month and balance sheets are translated at the exchange rates ruling on the balance sheet date. Currency translation differences arising from
the retranslation of the net investment in foreign entities are taken to shareholders’ equity. On disposal of such foreign entity, accumulated
currency translation differences are recognised in the consolidated statement of income as part of the gain or loss on disposal.
2.6 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts. Bank overdrafts are included in current liabilities on the balance sheet.
106
2.7 Trade accounts receivable
Trade accounts receivable are carried at original invoice amount and subsequently measured at the remaining amount less allow-
ance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between
the carrying amount of the receivable and the amount expected to be collectible. Bad debts are recognised in the statement of income within
selling and administrative expenses.
2.8 Inventories, spare parts and machinery supplies
Coal inventories are valued at the lower of cost or net realisable value. Cost is determined by the weighted average method. The
cost of coal comprised direct labour, other direct costs and related production overhead to mine activities.
Spare parts and machinery supplies are valued at the lower of cost or net realisable value. Cost is determined by the weighted
average method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the spare parts and
machinery, such as import duties and transportation charge, less all attributable discounts, allowances or rebates.
Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling
expenses. Allowance is made, where necessary, for obsolete, slow-moving and defective inventories, spare parts and machinery supplies.
2.9 Other investments
Investments other than investments in subsidiaries and associates and interests in joint ventures are classified into the following
three categories: 1) held-to-maturity, 2) available-for-sale and 3) general investments. The classification is dependent on the purpose for which the
investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates
such designation on a regular basis.
Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-
maturity and are included in non-current assets, except for maturities within twelve months from the balance sheet date which are classified as
current assets.
Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in
interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding
the investment for less than twelve months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case
they are included in current assets.
Investments in non-marketable equity securities are classified as general investments.
Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the
investments. Cost of investment includes transaction costs.
Available-for-sale investments are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair
value of investments classified as available-for-sale are recognised in equity.
Held-to-maturity investments are carried at amortised cost using the effective yield method.
The fair value of investments are based on quoted bid price by reference to the Stock Exchange of Thailand. When investments
classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of income as gains and
losses from investment in securities.
General investments are carried at cost less impairment.
A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of
the investment is higher than its recoverable amount, impairment loss is charged to the statement of income.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is recognised to the
statement of income. When disposing of part of the Group’s holding of a particular investment in debt or equity securities, the carrying amount of
the disposed part is determined by the weighted average carrying amount of the total holding of the investment.
107
2.10 Other non-current assets
Goodwill and negative goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired
subsidiary, joint venture or associated undertaking at the date of acquisition. Goodwill on acquisitions of subsidiaries is reported in the consoli-
dated balance sheet as an intangible assets. Goodwill on acquisitions of interest in joint ventures or associates are included in investments in
associates and joint ventures. Goodwill is amortised using the straight-line method over the useful life. Management determines the estimated
useful life of goodwill based on its evaluation of the respective companies at the time of the acquisition, considering factors such as existing
market share, potential growth and other factors inherent in the acquired subsidiaries, joint ventures and associates. Goodwill arising on acquisi-
tions of the Group is amortised on the straight-line basis over 5-10 years.
At each balance sheet date, the Group assesses whether there are any indications of impairment. If such indications exist, an
analysis is performed to assess whether the carrying amount of goodwill is fully recoverable. A write down is made if the carrying amount exceeds
the recoverable amount.
Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition.
Negative goodwill is presented in the same balance sheet classifications as goodwill. The Group recognises in the statement of income over the
remaining weighted average useful life of those assets.
Mining property right
Mining property right represent the excess of the cost of an acquisition over the fair value of net assets, which in managements’
view represents future economic benefits attributable to the mining rights held by subsidiaries. Mining property rights are amortised using the
units of coal produced in relation to the total expected reserves (saleable reserves and resources) of the project, based on the estimated reserves
reviewed by an independent geologist appraiser.
Project under development
For new project
The Group has searched the new reserve to replace the old one and invested in new project so as to extend the future business. The
development expenditures are recognised as expenses as incurred. Costs incurred on development projects are recognised as intangible assets
when the projects have been approved by the Sounding Committee to perform the feasibility study and it is probable that the project will be
success considering its commercial and technological feasibility and only if the cost can be measured reliably.
For mining
Projects under development for mining are primarily exploration and development before production which are accumulated sepa-
rately for each mine and recognised as projects under development, presented in balance sheet. When the exploration and development has been
completed, such projects under development are classified as deferred exploration and development expenses and amortised to be cost of produc-
tion since commence the production. Projects under development are written-off to be expenses in statement of income when the benefit of project
has been changed and the economic benefit is not recoverable for mining.
Deferred exploration and development expenditures
Exploration and development expenditures are capitalised on an area of interest basis. Such expenditures comprise net direct costs
such as license, geology and geophysics expenditures and do not include general overheads or administrative expenditures not directly attributable
to a particular area of interest. Exploration and development expenditures incurred prior to the commencement of the commercial operations are
capitalised as deferred exploration and development expenditures when it is probable that the project will be a success considering its commercial
and technical feasibility and only if the cost can be measured reliably.
108
Deferred exploration and development expenditure is amortised using the units of coal production in relation to the total expected
reserves (saleable reserves and resources) of each area of interest starting from the commencement of the commercial operations. The saleable
reserves and resources are reviewed by an independent geologist appraiser. Exploration and development expenditures in respect of an area of
interest, which has been abandoned or for which a decision has been made by the Group against the commercial viability of the area of interest, are
written-off in the period the decision is made.
Deferred overburdened expenses
Expenses incurred on mine overburden (if any) are deferred and amortised using the units of coal production in relation to the total
expected reserves (saleable reserves and resources) of the project, based on the estimated reserves reviewed by an independent geologist appraiser.
2.11 Property, plant and equipment
Property, plant and equipment are initially recorded at cost. All plant and equipment are stated at historical cost less accumulated
depreciation.
Depreciation is calculated on the straight-line method to write off the cost of each asset, except for land as it is deemed to have an
indefinite life, to their residual values over their estimated useful life as follows:
Land improvement, buildings, construction and building improvement 5 and 20 years
Machinery and equipment period of the mine right and 10 years
Furniture 5 years
Office equipment and tools 5 years
Motor vehicles 5 years
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its
recoverable amount.
Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred. The cost of
major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally
assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of
the related asset.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in statement of
income.
Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of cost of the asset
during the period of time required to complete and prepare the property for its intended use. Borrowing costs include:
interest on bank overdrafts and short-term and long-term borrowings, and related taxes;
amortisation of discounts or premiums relating to borrowings;
amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
finance lease charges.
All other borrowing costs except for the listed above are expensed in statement for income.
2.12 Impairment of assets
Property, plant and equipment and other non-financial assets, including goodwill and intangible assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s net selling price and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows.
109
2.13 Leases
Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the
minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance
balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of
the finance cost is charged to the statement of income over the lease period. Property, plant or equipment acquired under finance leases is
depreciated over the shorter of the useful life of the asset or the lease term.
Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases.
Payments made under operating leases are charged to the statement of income on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of
penalty is recognised as an expense in the period in which termination takes place.
2.14 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subse-
quently stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption
value is recognised in the statement of income over the period of the borrowings.
2.15 Employee benefits
The Group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund. The
provident fund is funded by payments from employees and by the relevant Group companies. Contributions to the provident fund are charged to
the statement of income in the year to which they relate.
Employees are entitled to receive benefits on reaching normal retirement age under the labour law applicable in Thailand and
countries, which the Group has the operation, or such other dates of entitlement as may be agreed between the Group and employees. The defined
benefit obligation on the Group is measured, using the projected unit credit method in accordance with actuarial as the present value of the
estimated future cash outflows, based on employee wages, turnover rate, retirement ages, mortality, length of service and others, and using the
interest rates of government securities, which have terms to maturity approximating the term of the related obligations. Actuarial gains or losses
arising from changes in actuarial assumptions, when exceeding 10% of the present value of defined benefit, are recognised as income or expenses
over the average remaining service lives of the related employees. The costs associated with providing these benefits are charged to the statement
of income so as to spread the cost over the period of employment during which the entitlement to benefits is earned.
2.16 Provisions
Provisions, which excluded employee benefits, are recognised when the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can
be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimburse-
ment is virtually certain.
Provision for environmental rehabilitation (if any) is recognised by units of sale at the rate determined by the Company’s geologist.
The provisioning rate is based on the estimated cost for mine rehabilitation through to the end of the mine. The Group reviews and revises the rate
to reflect the actual expenses incurred on a regular basis.
110
2.17 Share capital
Ordinary shares with discretionary dividends are classified as equity.
Incremental external costs directly attributable to the issue of new shares, other than in connection with a business combination, are
shown in equity as a deduction, net of tax, from the proceeds. Share issue costs incurred directly in connection with a business combination are
included in the cost of acquisition.
2.18 Revenue recognition
Revenue comprises the invoiced value for the sale of goods and services net of value-added tax, rebates, discounts and transporta-
tion. Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer.
Sales of coal are quantified by weight at the front mine. The increment or reduction of coal values as a result of quality and weight
noticed by customers will be recorded in the month of goods delivery.
Sales of electricity and steam are shown net of output tax and discount. Sales will be recognised upon transmission of electricity
and steam at delivery points stipulated in Power Purchase Agreement (“PPA”) and Steam Purchase Agreement (“SPA”).
Service income is recognised when services are rendered.
Other revenues earned by the Group are recognised on the following bases:
interest income - accrual basis.
dividend income - when the Group’s right to receive payment is established.
2.19 Dividends
Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the Board
of Directors or shareholders.
2.20 Related parties
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under
common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company.
Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over
the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals
and companies associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the
legal form.
2.21 Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates,
interest rates, coal price and oil price. The Group’s overall risk management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as
forward foreign exchange contracts, currency swaps contracts, interest rate swap contracts, coal swap contracts and oil swap contract to hedge
certain exposure.
Risk management is carried out by a central treasury department under policies approved by the Board of Directors. Group
Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
111
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to US Dollars. The Group uses forward foreign exchange contracts and currency swaps contracts to hedge their exposure to foreign
currency risk in connection with their measurement currency. Group Treasury is responsible for hedging the net position in each currency and
external forward foreign exchange contracts or currency swap contracts.
Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates. All interest rate
derivative transactions are subject to approval by the Financial Management Committee before execution. The Group’s policy is to maintain
borrowings in both fixed and floating rate instruments.
Coal price fluctuation risk
The Group is exposed to coal price risk from substantial fluctuations in coal price. The Group uses coal swap contracts to minimise
its exposure to fluctuations in coal price in it business operations, both in Thailand and overseas, and maintains on emphasis on a balance of overall
coal price in the Group by entering into both short-term and long-term sales agreements.
Oil price fluctuation risk
The Group is exposed to oil price risk from substantial fluctuations in oil price. The Group uses oil swap contracts to minimise its
exposure to fluctuation in oil price in its business operations of the Group.
Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of goods and services
are made to customers with an appropriate credit history. Derivative counter parties and cash transactions are limited to high credit quality
financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through
an adequate amount of credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying business, Group
Treasury aims at maintaining flexibility in funding by keeping credit lines available.
Accounting for derivative financial instruments and hedging activities
The Group is party to derivative financial instruments, which mainly comprise forward foreign currency contracts and foreign
currency swap contracts are recognised in the financial statements on inception. Interest rate swap contracts, coal swap contracts and oil swap
contracts are not recognised on the inception date of each contract.
Forward foreign currency contracts and foreign currency swap contracts protect the Group from movements in exchange rates by
establishing the rate at which a foreign currency asset will be realised or a foreign currency liability settled. Any increase or decrease in the amount
required to realise the asset or settle the liability is offset by a corresponding movement in the value of the related contracts. The gains and losses
on the derivative instruments and the underlying financial asset or liability are therefore offset for financial reporting purposes and are recognised
in the financial statements. The fee incurred in establishing each agreement is amortised over the contract period, if any.
Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on interest
rate swap contracts is recognised as a component of interest expenses in the statement of income.
Coal swap contracts protect the Group from movements in coal price by establishing the agreed price, which is not recognised at
inception. The difference between the price at contract settlement date and agreed price will be recognised as realised gains and losses in the
statement of income at settlement date.
112
Oil swap contracts protect the Group from movements in oil price by establishing the agreed price, which is not recognised at
inception. The difference between the price at contract settlement date and agreed price will be recognised as realised gains and losses in the
statement of income at settlement date.
Disclosures about derivative finance instruments to which the Group is a party are provided in Note 31.
3. Cash and cash equivalents
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
Cash on hand 790 1,545 155 258
Deposit held at call with banks 9,374,905 3,354,839 487,901 466,257
Fixed deposit 712,132 1,447,816 584,264 1,418,444
Bills of exchange 3,216,521 - 2,150,000 -
Total cash and cash equivalents 13,304,348 4,804,200 3,222,320 1,884,959
The weighted average of interest rate on deposit held at call with banks was 0.50% - 3.25% per annum (2006: 0.50% - 1.00%
per annum).
The weighted average of interest rate on fixed deposit with banks was 4.80% - 5.12% per annum (2006: 2.25% - 3.25% per annum).
Bills of exchange represent original maturities less than three months and the weighted average of interest rate was 3.20% - 8.00%
per annum (2006: Nil).
4. Trade accounts receivable, net
Trade accounts receivable consist of:
Trade accounts receivable
Subsidiaries (Note 28.2) - - 16,417 49,435
Third parties 3,783,331 4,152,463 474,879 263,276
3,783,331 4,152,463 491,296 312,711
Less Allowance for doubtful accounts (127,731) (148,340) (93,747) (114,356)
Trade accounts receivable, net 3,655,600 4,004,123 397,549 198,355
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
113
Trade accounts receivable balance are aged as follows:
Trade accounts receivable under credit term 3,426,124 2,387,684 267,136 181,786
Trade accounts receivable due for payment
Less than 3 months 223,757 1,603,881 124,834 10,965
Over 3 months but less than 6 months 142 6,980 1 27
Over 6 months but less than 12 months - 1,003 - 1,003
Over 12 months 18,889 17,887 6,583 5,579
Trade debtor under the Central Bankruptcy Court 114,419 135,028 92,742 113,351
Total trade accounts receivable 3,783,331 4,152,463 491,296 312,711
Less Allowance for doubtful accounts (127,731) (148,340) (93,747) (114,356)
Trade accounts receivable, net 3,655,600 4,004,123 397,549 198,355
As at 31 December 2007, trade accounts receivable of an overseas subsidiary amounting to THB 168.81 million (2006: THB 127.86
million) have been used as collateral for long-term loans in accordance with a project financing loan agreement (Note 17).
5. Inventories, net
Coal inventories 2,082,338 1,649,082 728,947 326,101
Less Allowance for net realisable value (231,438) (3,235) (224,185) -
Inventories, net 1,850,900 1,645,847 504,762 326,101
As at 31 December 2007, inventories of an overseas subsidiary amounting to THB 405.91 million (2006: THB 444.06 million)
have been used as collateral for long-term loans in accordance with a project financing loan agreement (Note 17).
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
114
6. Other current assets
Prepayments 150,485 176,708 125,437 30,439
Advances for business 369,737 103,433 14,490 12,018
Value added tax 66,973 33,835 2,545 2,475
Withholding tax 411,991 749,055 203,508 46,890
Other accounts receivable 715,845 475,221 165,057 143,105
Accrued income 84,192 62,888 73,046 58,336
Total other current assets 1,799,223 1,601,140 584,083 293,263
7. Long-term loans to other companies
Long-term loans to other companies represent loans to two companies in US Dollar of USD 0.15 million (2006: USD 0.15 million) and
in Thai Baht of THB 336.73 million (2006: THB 336.73 million) bearing interest at the rates of 4.88% - 7.21% per annum (2006: 4.88% - 7.88%
per annum).
8. Investments in subsidiaries and associates and interests in joint ventures
a) Investments in subsidiaries and associates and interests in joint ventures are as follow:
Subsidiaries
Banpu Minerals Co., Ltd. - - 39,994 39,994
Universal Exploration Co., Ltd. - - 778,931 778,931
Banpu Power Ltd. - - 6,197,890 2,000,000
BP Overseas Development Co., Ltd. - - 606,566 606,566
Banpu China Pte. Ltd. - - 341,540 341,540
Banpu Power International Ltd. - - 1,753 -
Joint ventures
BLCP Power Ltd. 5,997,864 2,740,064 - -
Power Generation Services Co., Ltd. 4,000 4,000 - -
Hebi Zhong Tai Mining Co., Ltd. 1,631,649 1,631,649 - -
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
Restated
2007THB Thousand
2007THB Thousand
115
Associates
Asian American Coal Inc. 1,820,214 1,817,632 - -
Asian American Gas Inc. 194,421 191,841 - -
Investments in subsidiaries and associates and
interests in joint ventures - cost method 9,648,148 6,385,186 7,966,674 3,767,031
Add Cumulative share of profit of associates
and interests in joint ventures 1,654,414 447,480 - -
Investments in subsidiaries and associates and
interests in joint ventures - equity method 11,302,562 6,832,666 7,966,674 3,767,031
As at 31 December 2007, under the condition of loan for project finance of subsidiaries and a joint venture, the Group uses its investments
in two subsidiaries and a joint venture with a cost of THB 12,630 million (2006: THB 5,656.59 million), as collateral for a long-term loans from
financial institutions of such subsidiaries and a joint venture.
Movement of investments in subsidiaries and associates and interests in joint ventures for the years ended 31 December are as follows:
Opening balance 6,832,666 2,173,964 16,622,200 3,767,031
Adjustment (Note 2.3) - - (12,855,169) -
Opening balance after retrospective adjustment 6,832,666 2,173,964 3,767,031 3,767,031
Addition of investments in subsidiaries - - 4,199,643 -
Addition of interests in joint ventures and
investments in associates 3,262,962 3,551,732 - -
Reclassification - 306,177 - -
Dividends received from joint ventures (3,297,438) - - -
Add Share of profit of associates and
interests in joint ventures 4,504,372 800,793 - -
Ending balance 11,302,562 6,832,666 7,966,674 3,767,031
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2007THB Thousand
2007THB Thousand
2006THB Thousand
Restated
2006THB Thousand
Restated
116
Changes in investments in subsidiaries and associates and interests in joints ventures are as follows:
Addition of investments in subsidiaries
During the year ended 31 December 2007, the Company invested in the additional of share capital in subsidiaries totaling THB 4,199.64
million as follows:
In March 2007, Banpu Power International Ltd. issued additional 49,900 ordinary shares at USD 1 per share, totaling USD
49,900. The Company purchased all new shares issued at par value, totaling USD 49,900 or equivalent to THB 1.75
million instead of Banpu Power Ltd. (a subsidiary) who is existing shareholder. As at 31 December 2007, the Group invested in
100% shareholding of Banpu International Ltd. (2006: 100% of shareholding).
During the year ended 31 December 2007, Banpu Power Ltd. (a subsidiary) issued additional 381,113,890 ordinary shares
at THB 10 per share, totaling 3,811.14 million. All additional shares were called fully and paid-up shares. Banpu Power Ltd.
registered the additional shares with Ministry of Commerce on 26 June 2007. The Company purchased all new shares issued at
par value, totaling THB 3,811.14 million. In addition, the Company purchased the investment in Banpu Power Ltd. held by
Universal Exploration Co., Ltd. (a subsidiary) in the net book value of THB 386.75 million. As a result, the Company had 100%
shareholding in Banpu Power Ltd. (2006: 90.46% of shareholding).
Addition of interest in a joint venture
BLCP Power Ltd. (a joint venture) called for additional paid-up shares at THB 60 per share from 100 million shares and the additional
share capital of 5.16 million shares of THB 100 per share. The Group paid for the addition paid-up shares in the same proportion (50%) as it
original investment, totaling THB 3,258 million.
Dividends received from joint ventures
Dividends received from joint ventures are consisted of dividends from BLCP Power Ltd. of THB 3,000 million, Power Generation
Services Co., Ltd. of THB 43 million and Hebi Zhong Tai Mining Co., Ltd. of THB 254 million.
Share of profit of associates and interests in joint ventures
During the year ended 31 December 2007, share of profit of associates and interests in joint ventures is primarily from BLCP Power Ltd.
which has operated since October 2006.
Others
In February 2007, the extraordinary meeting of shareholders of Peak Pacific Investment Co., Ltd. (an indirect subsidiary) passed a
resolution to approve the change of the company’s name to be Banpu Power Investment Co., Ltd.
In March 2007, the Group disposed investment in PT. Barasentosa Lestari (an indirect subsidiary) to a third parties in the amount of
USD 3.3 million. The Group recognised a gain from the disposal of THB 21 million in the consolidated statement of income.
At the Board of Directors meeting, the board approved the plan to list the Indonesian coalmining interests via an initial public offering
(“IPO”) of PT. Indo Tambangraya Megah (an indirect subsidiary, on the Indonesia Stock Exchange (“ISX”). The process of initial public offering
(“IPO”) was finished in December 2007. On 7 December 2007, an indirect subsidiary placed and priced its IPO on the ISX amounting to 225,985,000
new ordinary shares, at a par value of Rupiah (IDR) 500 per share, with an offering price of IDR 14,000 per share totaling IDR 3,163,750 million.
On 18 December 2007, the new ordinary shares were traded on the main board of ISX. The Group did not make any additional investment in these
increased share capital. Therefore, the increase in share capital of a such subsidiary decreased the Group’s shareholding percentage from 99.99%
to 77.60% of issued and paid-up shares. The Group has gain on dilution amounting to THB 7,887 million which is presented as surplus on dilution
of investment in a subsidiary in shareholders’ equity.
117
At the extraordinary meeting of shareholders of Universal Exploration Co., Ltd. (a subsidiary) on 10 September 2007 which was
confirmed by the extraordinary meeting of shareholders on 30 September 2007, its shareholders passed a resolution to liquidate the Company.
The subsidiary registered the liquidation with the Ministry of Commerce on 5 October 2007. As at 31 December 2007, a such subsidiary was under
the process of liquidation.
List of financial position and operation result of associates and joint ventures consist of:
As at 31 December 2007
Associates
Asian American Coal Inc. British Virgin Islands 5,371,935 518,345 - 647,645 21.73
Asian American Gas Inc. British Virgin Islands 1,233,958 609,399 - (193,887) 17.03
6,605,893 1,127,744 - 453,758
Joint ventures
BLCP Power Ltd. Thailand 57,202,283 42,501,567 20,104,336 8,116,995 50
Power Generation Services Co., Ltd. Thailand 214,966 152,610 599,928 127,090 40
Hebi Zhong Tai Mining Co., Ltd. Republic of China 4,878,389 666,646 2,772,721 716,985 40
62,295,638 43,320,823 23,476,985 8,961,070
As at 31 December 2006
Associates
Asian American Coal Inc. British Virgin Islands 4,539,264 86,540 - (542,598) 22.21
Asian American Gas Inc. British Virgin Islands 1,339,885 864,752 - (130,242) 21.29
5,879,149 951,292 - (672,840)
Joint ventures
BLCP Power Ltd. Thailand 42,111,380 36,043,259 2,677,583 1,133,185 50
Power Generation Services Co., Ltd. Thailand 117,654 74,622 352,586 47,518 40
Hebi Zhong Tai Mining Co., Ltd. Republic of China 4,591,603 422,566 2,266,781 552,912 40
46,820,637 36,540,447 5,296,950 1,733,615
À¡“¬‡Àµÿ
RevenueTHB Thousand
Percentage ofshareholding
(%)Total liabilities
THB Thousand
Net profit(loss)
THB Thousand
Total assetsTHB ThousandName of company Country
118
b) List of subsidiaries, associates and interest in joint ventures are as follows:
Direct shareholding
Banpu Minerals Co., Ltd. Thailand Coal mining and trading 99.99 99.99
Universal Exploration Co., Ltd. Thailand Drilling & exploration 99.99 99.99
Banpu Power Ltd. Thailand Investment in power 100.00 90.46
BP Overseas Development Co., Ltd. British Virgin Islands Investment in
coal mining and trading 100.00 100.00
Banpu China Pte. Ltd. Singapore Investment in power 100.00 100.00
Banpu Power International Ltd. Mauritius Islands Investment in power 100.00 -
Indirect shareholding
Banpu Minerals Co., Ltd.
Subsidiary companies are as follows:
1. Ban-Sa Mining Co., Ltd. and subsidiary Thailand Investment in 98.87 98.87
coal mining and trading
1.1 Chiang Muan Mining Co., Ltd. Thailand Coal mining and trading 51.00 51.00
2. Banpu International Ltd. Thailand Coal trading 99.99 99.99
3. Silamani Corp., Ltd. Thailand Coal trading 99.99 99.99
4. Chiang Muan Mining Co., Ltd. Thailand Coal mining and trading 49.00 49.00
5. Silamani Marble Co., Ltd. Thailand Coal trading 99.96 99.96
6. Banpu Singapore Pte. Ltd. Singapore Coal trading 100.00 100.00
7. Banpu Minerals (Singapore) Pte. Ltd. and Singapore Coal trading 100.00 100.00
subsidiaries
7.1 PT. Jorong Barutama Greston Indonesia Coal mining and trading - 95.00
7.2 PT. Nusantara Thai Mining Services Indonesia Mining services 95.00 95.00
7.3 PT. Centralink Wisesa International Indonesia Investment in coal 95.00 95.00
and subsidiaries
7.3.1 PT. Indo Tambangraya Megah Indonesia Investment in coal 77.60 99.99
and subsidiaries
7.3.1.1 PT. Trubaindo Coal Mining Indonesia Coal mining and trading 100.00 90.00
7.3.1.2 PT. Barasentosa Lestari Indonesia Coal mining and trading - 100.00
7.3.1.3 PT. Indominco Mandiri Indonesia Coal mining and trading 100.00 99.99
7.3.1.4 PT. Kitadin Indonesia Coal mining and trading 99.99 99.99
7.3.1.5 PT. Bharinto Ekatama Indonesia Coal mining and trading 99.00 99.00
7.3.1.6 PT. Jorong Barutama Greston Indonesia Coal mining and trading 100.00 -
8. Hebi Zhong Tai Mining Co., Ltd. Republic of China Coal trading 40.00 -
Percentage of direct shareholding
2006%
2007%
Name of company Country Business
119
Universal Exploration Co., Ltd.
Subsidiary company is as follow:
1. Banpu Power Ltd. Thailand Investment in power - 9.54
BP Overseas Development Co., Ltd.
Associated companies are as follows:
1. Asian American Coal Inc. British Virgin Islands Investment in coal 21.73 22.21
and power
2. Asian American Gas Inc. British Virgin Islands Investment in power 17.03 21.29
Banpu China Pte. Ltd.
Joint venture company is as follow:
1. Hebi Zhong Tai Mining Co., Ltd. Republic of China Coal trading - 40.00
Banpu Power Ltd.
Subsidiary and joint venture companies are as follows:
1. Banpu Coal Power Ltd. and a joint venture Thailand Investment in power 100.00 100.00
1.1 BLCP Power Ltd. Thailand Power production 50.00 50.00
and trading
2. Banpu Power International Ltd. and subsidiaries Mauritius Islands Investment in power 0.20 100.00
2.1 Synergy Power Co., Ltd. and subsidiaries Mauntiue Islands Investment in power - 99.99
2.1.1 Banpu Power Investment Co., Ltd. Singapore Investment in power - 100.00
and subsidiaries
2.1.1.1 Shijiazhuang Chengfeng Republic of China Power production - 100.00
Cogen Co., Ltd. and trading
2.1.1.2 Luannan Peak Co., Ltd. Singapore Investment in power - 100.00
and subsidiaries
Pan-western Energy Cayman Investment in power - 100.00
Corp. and a subsidiary Island
Tangshan Peak Republic of China Power production - 87.90
Heat & Power and trading
Co., Ltd.
Percentage of direct shareholding
2006%
2007%
Name of company Country Business
120
2.1.1.3 Peak Pacific (China) Investment Republic of Investment in power - 100.00
Co., Ltd. and a subsidiary China
Tangshan Peak Republic of Power production - 12.10
Heat & Power Co., Ltd. China and trading
2.1.1.4 Zouping Peak Pte. Ltd. Singapore Investment in power - 100.00
and a subsidiary
Zouping Peak Republic of Power production - 70.00
Heat & Power Co., Ltd. China and trading
2.1.1.5 Peak Pacific Investment Labuan Investment in power - 100.00
Co., Ltd.
3. Power Generation Services Co., Ltd. Thailand Operating power 40.00 40.00
plant service
Banpu Power International Ltd.
Subsidiary companies are as follows:
1. Synergy Power Co., Ltd. and subsidiaries Mauritius Islands Investment in power 99.99 -
1.1 Banpu Power Investments Co., Ltd. . Singapore Investment in power 100.00 -
and subsidiaries
1.1.1 Shijiazhuang Chengfeng Cogen Co., Ltd. Republic of Power production 100.00 -
China and trading
1.1.2 Luannan Peak Pte. Ltd. and subsidiaries Singapore Investment in power 100.00 -
1.1.2.1 Pan - Western Energy Corp. Cayman Islands Investment in power 100.00 -
and a subsidiary
Tangshan Peak Heat & Republic of Power production 87.90 -
Power Co., Ltd. China and trading
1.1.3 Peak Pacific (China) Investment Co., Ltd. Republic of Investment in power 100.00 -
and a subsidiary China
1.1.3.1 Tangshan Peak Heat & Republic of Power production 12.10 -
Power Co., Ltd. China and trading
1.1.4 Zouping Peak Pte. Ltd. and a subsidiary Singapore Investment in power 100.00 -
1.1.4.1 Zouping Peak Heat & Power Republic of Power production 70.00 -
Co., Ltd. China and trading
1.1.5 Peak Pacific Investment Co., Ltd. Labuan Investment in power 100.00 -
Percentage of direct shareholding
2006%
2007%
Name of company Country Business
121
9. Other investments, net
Investments in available-for-sale securities 3,392,633 3,473,697 4,174,786 4,261,515
General investments 332,442 384,110 120,412 172,125
Total other investments 3,725,075 3,857,807 4,295,198 4,433,640
Add Adjustment to fair value
for investments in available-for sale securities 6,909,651 6,491,683 1,109,365 983,047
Less Allowance for impairment of general investments (192,707) (192,707) (29,007) (29,007)
Other investments, net 10,442,019 10,156,783 5,375,556 5,387,680
Movements of other investments for the years ended 31 December are as follows:
Opening net book value 10,156,783 10,871,862 5,387,680 5,990,326
Acquisitions 13,431 280,533 6,465 93,169
Disposals (146,164) (316,331) (144,906) (164,750)
Transfer - (306,177) - -
Reclassification - 50,048 - 50,048
Changes in fair value of investments 417,969 (423,152) 126,317 (581,113)
Closing net book value 10,442,019 10,156,783 5,375,556 5,387,680
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
122
10. Property, plant and equipment, net
As at 31 December 2006
Cost 123,092 2,370,068 2,994,580 13,354,085 566,766 315,386 128,772 856,862 20,709,611
Less Accumulated depreciation - (511,234) (1,247,557) (4,900,604) (379,671) (142,244) (69,063) - (7,250,373)
Allowance for impairment (11,147) - (2,200) (1,136) - - - - (14,483)
Net book amount 111,945 1,858,834 1,744,823 8,452,345 187,095 173,142 59,709 856,862 13,444,755
Year ended 31 December 2007
Opening net book amount 111,945 1,858,834 1,744,823 8,452,345 187,095 173,142 59,709 856,862 13,444,755
Additions - 270 70,301 395,949 44,898 36,210 25,751 2,410,474 2,983,853
Disposals - Net book value - (18) (2,264) (7,277) (494) (1,601) (2,594) (86,826) (101,074)
Increase from investment in subsidiary - - 154,824 2,958 13 - - - 157,795
Reclassification - 524,962 1,032,538 (649,407) 18,175 15,644 2,137 (753,192) 190,857
Translation adjustment - (116,133) (38,329) (233,812) (7,988) (8,063) (2,463) (23,745) (430,533)
Depreciation charge - (220,160) (253,840) (843,754) (69,518) (55,351) (16,961) - (1,459,584)
Closing net book amount 111,945 2,047,755 2,708,053 7,117,002 172,181 159,981 65,579 2,403,573 14,786,069
As at 31 December 2007
Cost 123,092 2,750,011 4,498,948 11,733,952 600,053 392,963 133,655 2,403,573 22,636,247
Less Accumulated depreciation - (702,256) (1,788,695) (4,615,814) (427,872) (232,982) (68,076) - (7,835,695)
Allowance for impairment (11,147) - (2,200) (1,136) - - - - (14,483)
Net book amount 111,945 2,047,755 2,708,053 7,117,002 172,181 159,981 65,579 2,403,573 14,786,069
As at 31 December 2007, the gross carrying amount of fully depreciated plant and equipment that are still in use totalled THB 2,213.98
million (2006: THB 1,999.42 million).
Consolidated
À¡“¬‡Àµÿ
TotalTHB Thousand
Constructionin progress
THB Thousand
VehicleTHB Thousand
ToolsTHB Thousand
Furniture &office
equipmentTHB Thousand
Machinery &equipment
THB Thousand
BuildingTHB Thousand
LandimprovementTHB Thousand
LandTHB Thousand
123
As at 31 December 2006
Cost 64,383 99,728 252,064 746,048 215,451 43,829 44,815 13,482 1,479,800
Less Accumulated depreciation - (73,342) (135,188) (643,357) (166,310) (41,781) (24,001) - (1,083,979)
Net book amount 64,383 26,386 116,876 102,691 49,141 2,048 20,814 13,482 395,821
Year ended 31 December 2007
Opening net book amount 64,383 26,386 116,876 102,691 49,141 2,048 20,814 13,482 395,821
Additions - - 466 - 4,577 52 6,840 25,181 37,096
Disposals - Net book value - - (404) (129) (2) - (262) (715) (1,512)
Reclassification - 31 - - - - - (31) -
Depreciation charge - (8,051) (19,499) (58,922) (16,690) (761) (6,037) - (109,960)
Closing net book amount 64,383 18,366 97,439 43,640 37,006 1,339 21,355 37,917 321,445
As at 31 December 2007
Cost 64,383 99,759 251,870 725,586 219,056 41,401 45,596 37,917 1,485,568
Less Accumulated depreciation - (81,393) (154,431) (681,946) (182,050) (40,062) (24,241) - (1,164,123)
Net book amount 64,383 18,366 97,439 43,640 37,006 1,339 21,335 37,917 321,445
As at 31 December 2007, the gross carrying amount of fully depreciated plant and equipment that are still in use totaled THB 500.96
million (2006: THB 446.12 million).
As at 31 December 2007, property, plant and equipment in the consolidated financial statements amounting to THB 5,306.15 (2006: THB
1,502.04 million) have been used as collateral for a long-term loans (Note 17).
During 2007, borrowing cost of THB 103.56 million (2006: THB 98.88 million) arising from financing specifically of an overseas
subsidiary is included in “Additions” of construction in progress.
Company
À¡“¬‡Àµÿ
TotalTHB Thousand
Constructionin progress
THB Thousand
VehicleTHB Thousand
ToolsTHB Thousand
Furniture &office
equipmentTHB Thousand
Machinery &equipment
THB Thousand
BuildingTHB Thousand
LandimprovementTHB Thousand
LandTHB Thousand
124
11. Deferred exploration and development expenditures and deferred overburden expenses, net
Company
THB Thousand
ConsolidatedTHB Thousand
À¡“¬‡ÀµÿAs at 31 December 2006
Cost 13,762,956 4,672,338
Less Accumulated amortisation (10,117,123) (4,216,167)
Net book amount 3,645,833 456,171
For the year ended 31 December 2007
Opening net book amount 3,645,833 456,171
Additions 1,934,408 111,106
Amortisation (2,394,616) (438,842)
Decrease from divestment of an indirect subsidiary (71,068) -
Allowance for impairment (101,152) (87,204)
Translation adjustment (266,944) -
Closing net book amount 2,746,461 41,231
As at 31 December 2007
Cost 15,359,352 4,783,444
Less Accumulated amortisation (12,511,739) (4,655,009)
Allowance for impairment (101,152) (87,204)
Net book amount 2,746,461 41,231
12. Mining property rights and negative goodwill, net
Consolidated
À¡“¬‡Àµÿ 2006THB Thousand
2007THB Thousand
Mining property rights, net 1,415,692 1,632,081
Negative goodwill, net (1,112,143) (1,206,563)
Net balance 303,549 425,518
125
Mining property rights, net
Movement of mining property rights for the year ended 31 December 2007 are as follows:
Opening net book amount 1,632,081 1,962,701
Amortisation (42,454) (64,095)
Decrease from divestment of an indirect subsidiary (58,372) -
Translation adjustment (115,563) (266,525)
Closing net book amount 1,415,692 1,632,081
Negative goodwill, net
Movement of negative goodwill for the year ended 31 December 2007 are as follows:
Opening net book amount 1,206,563 1,349,933
Amortisation (35,253) (67,279)
Translation adjustment (59,167) (76,091)
Closing net book amount 1,112,143 1,206,563
A subsidiary in Republic of China, power production, has the negative goodwill which incurred from its acquisition since 1999. This
negative goodwill has been amortised on a straight-line basis over the remaining useful life of its power plant (See Note 2.2, relating to the effects
of the change in accounting policy effective from 2008).
Consolidated
À¡“¬‡Àµÿ 2006THB Thousand
2007THB Thousand
Consolidated
À¡“¬‡Àµÿ 2006THB Thousand
2007THB Thousand
126
13. Projects under development
Movement of projects under development for the years ended 31 December are as follows:
Opening balance 554,420 1,052,407 172,561 204,691
Additions 405,664 208,523 80,320 125,761
Reclassification - (696,718) - (157,891)
Write-off - (8,020) - -
Decrease from divestment of an indirect subsidiary (22,472) - - -
Translation adjustment (40,600) (1,772) - -
Closing balance 897,012 554,420 252,881 172,561
14. Other non-current assets
Advance for business - land
compensation for development of coal mine 373,548 399,146 - -
Machinery and spare parts pending for disposal 223,381 240,532 223,381 240,532
Other receivable from unwind forward
and currency swap contracts - 107,874 - 107,874
Others 607,444 818,173 12,440 11,959
Total other non-current assets 1,204,373 1,565,725 235,821 360,365
Machinery and spare parts at the net book value of THB 223.38 million (2006: THB 240.53 million) have not been in use and pending for
disposal. However, the Company’s management has already considered the adequacy of its allowance for impairment.
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
127
15. Bank overdrafts and loans from banks and financial institutions
Bank overdrafts and unsecured loans from banks and financial institutions consist of:
Bank overdrafts - 8,331 - 7,990
Loans from banks and financial institutions 2,278,143 3,251,670 993,546 2,462,293
Total Bank overdrafts and Loans from
banks and financial institutions 2,278,143 3,260,001 993,546 2,470,283
As of 31 December 2007, loans from banks and financial institution of the Company are Baht loans from several commercial banks
amounting to THB 993.55 million (2006: USD 23.80 million and THB 1,600 million). The loans bear interest at the average rates of 3.38% -
3.39% per annum (2006: 5.18% - 6.63% per annum).
As of 31 December 2007, loans from banks and financial institutions of subsidiaries are US Dollar loans amounting to USD 37.91 million
(2006: USD 21.79 million) The loans bear interest at the average rates of 3.38% - 9.48% per annum (2006: 5.18% - 7.32% per annum).
16. Other
Accrued expenses 551,214 529,445 144,396 119,670
Other accounts payable 1,848,695 1,482,434 76,791 69,825
Withholding tax payable 472,366 260,588 11,555 8,197
Value added tax payable 96,442 72,167 18,189 5,553
Retention payable 89,249 25,007 291 45
Unearned income 16,798 4,967 298 387
Forward and currency swap contracts payable - 1,142 - 1,142
Others 21,516 25,122 31,545 25,012
Total other current liabilities 3,096,280 2,400,872 283,065 229,831
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
128
17. Long-term loans, net
Baht loans 2,000,180 100,180 2,000,000 100,000
Foreign currency loans 4,277,875 4,637,134 2,371,950 1,920,232
Less Deferred financing service fee (15,630) (10,241) (8,856) (10,241)
6,262,425 4,727,073 4,363,094 2,009,991
Less Current portion of long-term loans (408,016) (741,873) - (100,000)
Long-term loans, net 5,854,409 3,985,200 4,363,094 1,909,991
Long-term loan from bank of the Company amounting to USD 70 million is unsecured liabilities (2006: USD 53 million), bears the
interest at the rate of LIBOR plus applicable fixed margin 0.425% per annum (2006: LIBOR plus applicable fixed margin 0.425% per annum).
The principle of loan is repayable within 2009.
Long-term loan amounting of the Company to THB 2,000 million is unsecured liabilities, bears the interest at the rate of THBFIX 3
months plus applicable fixed margin. The principle of loan is repayable every 6 months starting from 31 May 2010.
Long-term loans from banks of two overseas subsidiaries amounting to USD 17.20 million and USD 38.88 million are secured liabilities
(2006: USD 27.78 million and USD 47.21 million). Detail of loans are shown as follows:
Loan from bank, which is secured liabilities, amounting to USD 17.20 million bears the interest at the rate of LIBOR plus applicable
fixed margin 4% per annum (2006: LIBOR plus applicable fixed margin 4% per annum). The principle of loan is repayable 7 installments, every
6 months starting from 30 December 2005.
Loan from bank, which is secured liabilities, amounting to USD 38.88 million bears the interest at the rate LIBOR plus applicable
fixed margin (2006: LIBOR plus applicable fixed margin). The principle of loan is repayable within 2013.
The long-term loans are secured over the assets of such two overseas subsidiaries according to project financing loan agreements
(Note 4, 5 and 10).
After taking account of interest rate swap, the weighted average effective interest rate of long-term loans of the Group are as follows:
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
2006(%)
2007(%)
Foreign currency loans 7.14 5.22
Baht loans 8.16 3.61
129
Interest rate risk of long-term loans of the Group after recognised the effect from interest swap contracts are as follows:
at fixed rates 180 1,106,491 - 100,000
at floating rates 6,277,875 3,630,823 4,371,950 1,920,232
Total long-term loans 6,278,055 4,737,314 4,371,950 2,020,232
Movement in long-term loans of the Group for the years ended 31 December are as follows:
Opening net balance 4,727,073 2,199,235 2,009,991 399,500
Additional loans 2,898,288 3,701,221 2,600,270 1,946,690
Increase in investment in a subsidiary - 267,036 - -
Repayment of loans (803,166) (1,175,769) (100,000) (300,000)
Payment for deferred financing service fee (10,031) (11,893) (3,105) (11,893)
Amortisation of deferred financing service fee 4,642 2,152 4,400 2,152
Unrealised gain from exchange rate (554,381) (254,909) (148,552) (26,458)
Closing net balance 6,262,425 4,727,073 4,363,094 2,009,991
Maturity of long-term loans are as follows:
Within 1 year 408,016 741,873 - 100,000
Between 2 years and 5 years 4,053,561 3,995,441 3,621,950 1,920,232
Over 5 years 1,816,478 - 750,000 -
Total long-term loans 6,278,055 4,737,314 4,371,950 2,020,232
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
130
The Group is required to comply with certain procedure and conditions; for example, maintain net value of shareholders’ equity, maintain
debt to equity ratio, maintain ratio of debt coverage and trading debt with security guarantee not exceeding a limited amount, etc.
18. Debentures, net
Local debentures 10,000,000 11,600,000 10,000,000 11,600,000
Less Deferred financing service fee (19,453) (26,054) (19,453) (26,054)
9,980,547 11,573,946 9,980,547 11,573,946
Less Current portion of debentures (1,400,000) (1,600,000) (1,400,000) (1,600,000)
Debentures, net 8,580,547 9,973,946 8,580,547 9,973,946
The effective interest rate of debentures of the Group after recognised effect from interest rate swap contracts is 5.43% per annum (2006:
5.29% per annum)
The interest rate on the debentures of the Group are as follows:
at fixed rates 8,750,000 10,250,000 8,750,000 10,250,000
at floating rates (MLR plus applicable fixed margin) 1,250,000 1,350,000 1,250,000 1,350,000
Total debentures 10,000,000 11,600,000 10,000,000 11,600,000
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
131
Movement in debentures for the years ended 31 December are as follows:
Opening net balance 11,573,946 12,819,947 11,573,946 12,819,947
Repayment of debentures (1,600,000) (1,254,126) (1,600,000) (1,254,126)
Amortisation of deferred financing service fee 6,601 8,125 6,601 8,125
Closing net balance 9,980,547 11,573,946 9,980,547 11,573,946
Maturity of debentures are as follows:
Within 1 year 1,400,000 1,600,000 1,400,000 1,600,000
Between 2 years and 5 years 6,100,000 7,500,000 6,100,000 7,500,000
Over 5 years 2,500,000 2,500,000 2,500,000 2,500,000
Total debentures 10,000,000 11,600,000 10,000,000 11,600,000
Debentures are unsecured liabilities. However, the Company is required to comply with certain procedure and conditions; for example,
maintain net value of shareholders’ equity, maintain debt to equity ratio, maintain ratio of debt coverage and trading debt with security guarantee
not exceeding a limited amount, etc.
19. Provision for employee retirement benefits
Opening balance 333,967 473,325 79,174 78,811
Expenses 89,101 265,119 4,812 13,141
Payment during the year (142,810) (439,202) (69,852) (12,778)
Unrealised (gain) loss from exchange rate (12,103) 34,725 - -
Closing balance 268,155 333,967 14,134 79,174
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
132
Principal actuarial assumptions are as follows:
Discount rate 5% - 10%
Salary increases 4% - 10%
Withdrawal rate 2% - 12%
Normal retirement age 55 years - 60 years
20. Share capital
Issued and paid-up share capital
À¡“¬‡Àµÿ
Ordinary sharesTHB Thousand
TotalTHB Thousand
Number ofshares
PremiumTHB Thousand
As at 31 December 2005 271,747,855 2,717,479 5,058,329 7,775,808
Issued shares - - - -
As at 31 December 2006 271,747,855 2,717,479 5,058,329 7,775,808
Issued shares - - - -
As at 31 December 2007 271,147,855 2,717,479 5,058,329 7,775,808
As at 31 December 2007, there are 271,747,855 issued and paid up ordinary shares (2006: 271,747,855 shares) at par value of THB 10
per share (2006: THB 10 per share). All issued shares are fully paid-up.
21. Operating profit
The following expenditure items, classified by nature, have been charged in arriving at operating profit:
Staff costs 1,915,736 2,645,253 397,857 480,963
Net (gain) on exchange rate (360,995) (185,685) (424,815) (669,123)
Depreciation on property, plant and equipment 1,455,859 1,511,200 108,189 86,236
Amortisation 1,932,860 1,936,062 200,378 394,810
Operating leases 635,478 924,379 38,051 37,620
Allowance for impairment of assets 329,355 14,484 311,389 -
Demurrage expense 564,343 317,080 6,710 818
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
133
22. Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary
shares in issue during the year.
Net profit attributable to ordinary shareholders (THB Thousand)
Before adjustment 6,654,423 3,610,181 3,540,276 3,610,181
Adjustment - - - (2,867,845)
After adjustment 6,654,423 3,610,181 3,540,276 742,336
Weighted average ordinary shares (shares) 271,747,855 271,747,855 271,747,855 271,747,855
Earnings per share (THB) 24.49 13.29 13.03 2.73
There are no potential dilutive shares in issue for the years ended 31 December 2007 and 2006.
23. Segments information
Net sales 4,403,877 26,862,558 - - 3,865,116 (2,689,762) 32,441,789
Profit (loss) from sales (583,749) 4,116,266 - - 711,371 (1,126,861) 3,117,027
Unallocated income 842,438
Gain on disposal of investments 1,618,760
Net loss from exchange rate (360,995)
Interest expenses and other financial expenses (1,306,775)
Corporate income tax (1,491,668)
Net profit from operation 2,418,787
Share of profit of associates and
interests in joint ventures - - 427,527 4,076,845 - - 4,504,372
Net profit of minority interests (268,736)
Net profit for the year 6,654,423
Total segmented assets 702,235 29,545,415 4,007,578 7,457,889 8,207,998 (78,847) 49,842,268
Total unallocated assets 15,208,537
Total assets 65,050,805
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
For the year ended 31 December 2007
TotalTHB Thousand
Eliminationentries
THB Thousand
Republic ofChina
THB Thousand
ThailandTHB Thousand
Republic ofChina
THB Thousand
IndonesiaTHB Thousand
ThailandTHB Thousand
Coal and Minerals Power
134
Net sales 6,489,966 27,932,215 - - 2,803,319 (3,852,237) 33,378,263
Profit from sales 11,165 3,934,695 - - 627,610 (32,459) 4,150,423
Unallocated income 379,196
Gain on disposal of investments 902,003
Net loss from exchange rate (185,685)
Interest expenses and (1,180,627)
other financial expenses
Corporate income tax (1,122,339)
Net profit from operation 2,942,971
Share of profit of associates and
interests in joint ventures - - 187,807 612,986 - - 800,793
Net profit of minority interests (133,583)
Net profit for the year 3,610,181
Total segmented assets 1,106,371 22,016,215 3,828,928 3,012,475 7,073,570 (78,576) 36,958,983
Total unallocated assets 12,429,494
Total assets 49,386,477
24. Dividends
At the Annual General Shareholders’ Meeting on 28 March 2007, the shareholders approved a payment of remaining interim dividend of
2006 of THB 4.25 per share and at the Board of Directors’ meeting on 29 August 2007, the board approved a payment of interim dividend of 2007
of THB 3.75 per share of 271,747,855 shares, totaling of THB 2,153.87 million which was paid on 18 April 2007 and 28 September 2007,
respectively.
At the Annual General Shareholders’ Meeting on 30 March 2006, the shareholders approved a payment of remaining interim dividend of
2005 of THB 4.00 per share and at the Board of Directors’ Meeting on 30 August 2006, the board approved a payment of interim dividend of 2006
of THB 3.25 per share of 271,747,855 shares, totaling of THB 1,970.13 million which was paid on 11 April 2006 and 28 September 2006,
respectively.
25. Directors’ remuneration
At the Annual General Shareholders’ Meeting on 28 March 2007, the shareholders approved the payment of director’s remuneration of
2006 amounting to THB 20,363,681 which was paid during year 2007 (2006: THB 35,800,728).
For the year ended 31 December 2006
TotalTHB Thousand
Eliminationentries
THB Thousand
Republic ofChina
THB Thousand
ThailandTHB Thousand
Republic ofChina
THB Thousand
IndonesiaTHB Thousand
ThailandTHB Thousand
Coal and Minerals Power
135
26. Legal reserve
As at 31 December, legal reserve consist of:
Legal reserve
Company 354,051 - 354,051
Subsidiaries 60,463 329,682 390,325
414,514 329,682 744,376
Consolidated 2007
À¡“¬‡Àµÿ Beginning balanceTHB Thousand
Ending balanceTHB Thousand
AppropriationTHB Thousand
Legal reserve
Company 354,051 - 354,051
Subsidiaries 43,464 16,999 60,463
397,515 16,999 414,514
Under the Public Company Act, the Company is required to set aside as a statutory reserve of at least 5% of its net profit after accumulated
deficit brought forward (if any) until the reserve reaches not less than 10% of the registered capital. The legal reserve is non-distributable.
At present, the Company set aside legal reserve at 10% of registered capital.
27. Export tax
In 2006, the subsidiaries in Indonesia had paid export tax for exported coal which was effective from 2005 amounting to
THB 705.50 million. However, the exported tax was cancelled on 13 September 2006.
Consolidated 2006
À¡“¬‡Àµÿ Beginning balanceTHB Thousand
Ending balanceTHB Thousand
AppropriationTHB Thousand
136
28. Related party transactions
The following significant transactions were carried out with related parties:
28.1 Transactions during the years ended 31 December are as follows:
Sales of goods and services to subsidiaries - - 111,186 712,450
Purchases of goods and cost of services from subsidiaries - - 677,817 154,078
Dividends received from subsidiaries - - 4,352,136 287,031
Management fee
Subsidiaries - - 145,447 116,231
Joint ventures 28,437 28,603 - -
Total 28,437 28,603 145,447 116,231
Sales of fixed assets to subsidiaries - - 4,962 842
Interest income from subsidiaries - - 815,788 912,627
Interest expenses to subsidiaries - - 54,833 70,244
The pricing policies for transactions between subsidiaries, joint ventures, associates and related parties are set out below:
The prices of sales and services charged between the Company and subsidiaries approximate to those charged to third parties.
Management income represents fee charged to subsidiaries, joint ventures and associates for rendering the management
services in the normal course of business. The fees are based on the service provided and agreed rate in accordance with
the condition in agreement.
For loans, borrowings, interest income and interest expenses, the Group charges interest by considering to average cost of
borrowings plus 0.5% per annum for local subsidiaries and plus 2% per annum for overseas subsidiaries.
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
137
28.2 Amounts due from related parties as at 31 December consist of:
Trade accounts receivable subsidiaries (Note 4) - - 16,417 49,435
Interest receivable
Subsidiaries - - 461,116 664,160
Joint venture 6,248 6,248 1 -
6,248 6,248 461,117 664,160
Other receivable
Subsidiaries - - 165,751 256,905
Joint ventures 2,756 5,110 - -
2,756 5,110 165,751 256,905
Total amounts due from related parties 9,004 11,358 626,868 921,065
Dividend receivable from related parties
Subsidiaries - - 3,124,201 -
Joint ventures 2,074,500 - - -
Total dividend receivable from related parties 2,074,500 - 3,124,201 -
28.3 Advances and long-term loans to related parties as at 31 December consist of:
Advances to related parties
Subsidiaries - - 109,995 522,294
Joint venture 21 21 21 21
Associates 101 - 101 -
Total advances to related parties 122 21 110,117 522,315
Long-term loans to subsidiaries - - 5,331,183 13,730,051
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
138
As at 31 December 2007, long-term loans to subsidiaries represent US Dollars loan amounting to USD 59.88 million and Thai Baht
loan amounting to THB 3,316.37 million (2006: USD 266 million and THB 4,167 million) bearing interest at rates of 1.49% - 7.50% per annum
(2006: 1.49% - 7.50% per annum). The repayment term is at call. However, the Company will not request for repayment until these subsidiaries
have ability to pay.
Movement of long-term loans to subsidiaries for the years ended 31 December are as follows:
Opening balance - 336,726 13,730,051 8,876,627
Increase for the year - - 3,856,033 8,277,824
Repayment for the year - - (11,718,333) (2,028,148)
Reclassification - (336,726) - (336,726)
Unrealised loss from exchange rate - - (536,568) (1,059,526)
Ending balance - - 5,331,183 13,730,051
In 2006, long-term loan to other related parties amounting to THB 336.73 million bearing interest at rates 4.50% - 5.75% per annum
was reclassified to long-term loan to other company because the Company has fully disposed the investment in such company during 2006.
28.4 Advances and loans from subsidiaries
Advances from subsidiaries - - 10,873 4,396
Short-term loan from a subsidiary - - 862,373 1,429,305
Long-term loans from subsidiaries - - 1,218,019 1,698,430
Short-term loan from a subsidiary represents US Dollar loan amounting to USD 25.45 million (2006: USD 39.45 million) bearing
interest at the rate of 2.5% per annum (2006: 2.5% per annum). The repayment term is in 2008.
Long-term loans from subsidiaries represent US Dollar loan amounting to USD 8 million and Thai Baht loan amounting to THB
938 million (2006: THB 1,698 million) bearing interest at the rates of 1.49% - 2.50% per annum (2006: 2.50% per annum). The repayment term
is at call. However, the subsidiaries will not request for repayment within 12 months.
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
139
Movement of long-term loans from subsidiaries for the years ended 31 December are as follows:
Opening balance - - 1,698,430 3,732,827
Increase for the year - - 714,488 441,151
Repayment for the year - - (1,194,502) (2,475,548)
Unrealised gain on exchange rate - - (397) -
Closing balance - - 1,218,019 1,698,430
29. Income tax expense
The Group does not recognise corporate income tax payable or receivable in future periods in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Corporate income tax for the year ended 31
December 2007 are calculated based on the net profit (tax base) which excluded the share of net profit of associates and interests in joint ventures.
The rates are as follows:
Thailand 30%
Indonesia 30%
Republic of China 9%
30. Commitment, contingent liabilities and significant contracts
30.1 As at 31 December, the Group had obligations with banks as follows:
CompanyConsolidated
À¡“¬‡Àµÿ 2006Million
(Original currency)
2006Million
(Original currency)
2007Million
(Original currency)
2007Million
(Original currency)
Letters of Guarantee
US Dollar 14.16 153.93 - 145.39
Thai Baht 105.58 79.02 53.86 27.31
Indonesian Rupiah 3.77 - - -
Letters of Credit
US Dollar 5.90 5.87 - -
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
140
30.2 Significant contracts
a) Subsidiaries have entered into the significant contracts as follows:
Contract regarding the service of coal ash removal from the area under the silo in the area of the power plant of Glow SPP3
Co., Ltd. for which the subsidiary is responsible for any damage possibly incurred from the service. Payment is determined in accordance with the
removed quantity. The contract duration lasts for 15 years commencing from date of operation, 17 March 1999.
Contract for mining and disposal of lignite coal at Ban-sa Mine, Amphur Chiang Muan, Phayao Province, with the Energy
Development and Promotion Department for which a subsidiary is granted subrogation right for 22 years commencing on 10 January 1996.
Moreover, such subsidiary has to comply with various requirements specified in the contract.
Contract for mining services with an Indonesian company, the agreement will be expired on 22 October 2010 or at the end
of open pit production of West Block area, whichever is the earlier. In addition, a subsidiary has entered into another agreement with that company
for coal mining services at East Block area. The agreement is valid for three years as of the commencement date and may be extended for
additional minimum two years.
Contract for production sharing with the Government of Indonesia to share 13.5% of coal produced to the Government.
b) The overseas subsidiaries have entered into the Power Purchase Agreement (“PPA”) and Steam Purchase Agreement (“SPA”)
with its local bureau at the agreed quantity and price according to such agreements. The agreement term is annually.
c) On 18 December 2006, the Government of Lao PDR (“GOL”) and a subsidiary entered into Head of Agreement in order to
develop and construct a mine-mouth power plant in Hongsa District, Xayabury Province, Lao PDR. The agreement shall be effective for a period
of 24 months from the agreement date. The power plant project shall comprise a mining operation of approximately 13 million tonnes per year
and 1800 MW coal-fired power plant to be supplied to Electricity Authority of Thailand (EGAT) and Electricite du Laos. Under the agreement,
the subsidiary has to obtain and maintain a bank guarantee in the amount of USD 500,000 from the agreement date through the date of signing of
the Concession Agreements. The guarantee has been provided to GOL as a guarantee against the subsidiary’s unreasonable termination of
the project according to the terms and conditions hereof during the development period.
A concession agreement to operate the Hongsa Lignite-Fired Power Plant has been proposed to the GOL and has been expected
to be finalised within 2008.
d) On 11 December 2007, the Group entered into the Joint Development Agreement (“JDA”) and Supplementary Agreement with
Ratchaburi Electricity Generating Holding Public Company Limited (“RATCH”) with the objective to study and develop the Lignite Mining
Project and the Lignite-Fired Power Project which located in Hongsa District, Xayabury Province, Lao People’s Democratic Republic.
According to the Joint Development Agreement, the Group, and RATCH and Lao Holding State Enterprise (“LHSE”) agree to
establish two companies, one is to have a holding in the Lignite Mining concession and another is an operator of Lignite-Fired Power plant. Three
joint developers will have interests in the Lignite Mining Project for 37.5%, 37.54% and 25%, respectively, and in the Lignite-Fired Power Project
for 40%, 40% and 20%, respectively. In addition, if the new comer, Chinese investor, agrees to join these projects, the interests of the Group and
RATCH will be reduced to 28.125% and 30.00% for the interests in Lignite Mining Project and Lignite-Fired Power Plant, respectively.
141
However, JDA will be effective after RATCH receives an approval from the Government of the Lao People’s Democratic
Republic (“GOL”) to join this project.
Additionally, RATCH agrees to pay the Joint Development Right Fee to the Group on the participation of the project at
a maximum amount not exceeding USD 16 million and a minimum amount of no less than USD 10 million in accordance with the JDA.
The amounts depend on the specified formula having a Levelised Tariff as agreed by the Electricity Generating Authority of Thailand as a key
factor. The instalment payments shall be made when RATCH receives approval from GOL to join the project with the last payment occurring upon
the Financial Close.
30.3 Litigation
a) A subsidiary has provided land, property, factory, machineries and diverse equipment under lease to another company. The
lessee company has been overdue in respect of its payments for a long period. Such subsidiary has, therefore, ceased to recognise rental revenue
from May 1998 and has raised allowance for doubtful lease receivables in the whole amount of THB 6.63 million. The subsidiary has cancelled
the contract and exercised its contractual right to occupy the leased asset and prosecuted a claim for overdue lease payment plus fines in an amount
of THB 70.76 million. Apart from this, the lessee has also breached the granite coal contract with another subsidiary in amount of THB 24.78
million. Because they are the litigants in the lawsuit, the lessee company has prosecuted the Company and its subsidiary which occupied the
leased asset for breach of the lease contract and infringement, claiming an indemnity in the amount of THB 204 million. The cases are currently
under the judgment of the court. The final judgment may not be known for the time being. The management is of the view that the Company has
no responsibility for the damage as claimed by the plaintiff. As a result, the Company and its subsidiaries have not yet provided for any losses from
such litigation.
b) Three overseas subsidiaries have been sued and asked for the compensation of land amounting to IDR 197,970 million.
The Company’s management is of the view that the subsidiaries have no responsibility for such compensation. As a result, the three subsidiaries
have not provided any losses from such litigation.
c) During year 2007, a person and related group of companies, the plaintiff, who were a previously joint partner with the Company
and subsidiaries in developing the coal mining and power plant project in Laos (“Hongsa project”), have filed a Civil Court case against the
Company and the two subsidiaries which transgressed them in the development of the Hongsa project. They have a claim against the Company and
subsidiaries for damages totalling THB 63,500 million plus interest.
The Company has defended the case and lodged a counterclaim against the plaintiff in the amount of THB 4,488 million plus
interest.
The management and the Company’s legal counsellor are of the view that the Company have no responsibility for the damages
as claimed by the plaintiff. As a result, the Group has not provided any losses from such litigation.
30.4 Capital commitments
As at 31 December 2007, the Group had capital commitments in relation to mine development of three overseas subsidiaries but not
recognised in the consolidated financial statements in the amount of USD 66.66 million (2006: USD 5.06 million).
30.5 Coal Supply Agreement commitments
As at 31 December 2007, the Group had coal supply commitments in accordance with Coal Supply Agreement in the amount of
16.61 million tonnes at the market price (2006: 19.24 million tonnes), such coals will be delivered within 2014.
142
31. Financial instruments
The principal financial risks faced by the Group are interest rate risk, foreign exchange rate risk, coal price fluctuations risk, oil price
fluctuations and credit risk. The Group borrows both fixed and floating rates of interest to finance its operations.
The Group manages these risks as follows:
a) Interest rate risk
The Group manages its exposure to interest rate risk through a variety of measures, including the use of both fixed and variable
instruments with different activities and entering into interest rate swap on a specific basis where management consider it appropriate to do so.
The Group has established a Financial Management Committee which holds monthly meetings for consideration and discussion of
how to protect or reduce financial risks which might be incurred.
Interest rate swap contract
Interest rate swap contract is entered into to manage exposure to fluctuations in interest rate.
As at 31 December 2007, the interest rate for outstanding debentures of THB 1,250 million has been converted from the rate of
average MLR at 2 days before maturity date of 4 commercial banks minus 0.375% per annum to a multiple of the 1.25 fixed bank deposit (THB
FIX) for 6 months plus 2.58% per annum.
As at 31 December 2006, an overseas subsidiary entered into a interest rate swap contract with an overseas bank to manage exposure
to fluctuations in interest rates by converting floating rate based on LIBOR plus certain margin 4% per annum to fixed interest rate 8.08% per
annum on the US Dollar notional amount. The effective date of the contract was 30 June 2005 and will be expired on 31 December 2008.
However, the subsidiary has terminated this contract during 2007 with the loss of THB 3.4 million is recognised in the consolidated financial
statements for the year ended 31 December 2007.
Net fair value
The net fair value of interest rate swap contract at the balance sheet date was:
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
(Unfavourable) interest rate swap contract (1,772) (7,929) (1,772) (7,929)
Fair values of interest rate swap contract has been calculated using rate quoted by the Group’s bankers as if the contract was termi-
nated at the balance sheet date.
143
Selling
2007: Nil - 219,842 - 219,842
(2006: USD 6 million at
the average rate of THB 36.35 : USD 1)
- 219,842 - 219,842
Buying
2007: USD 41.48 million at
the average rate of THB 33.92 : USD 1 1,407,117 - 1,407,117 -
(2006: Nil)
1,407,117 - 1,407,117 -
b) Foreign exchange risk
In order to reduce exposure to fluctuations in currency exchange rates, the Group uses natural hedges of its business operations, both
in Thailand and overseas, through emphasis on a balance of foreign currencies in the Group and sometime through the use of financial instruments.
The Group has both foreign currency denominated assets and liabilities and uses natural hedges between these assets and liabilities
to manage certain its exposures. The Group will also enter into forward foreign exchange contracts in specific circumstances.
The objectives in using financial instruments are to reduce uncertainty over future cash flows arising from movements in exchange
rate. The following strategies are employed to achieve these objectives.
Forward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currency exchange rate on general
transactions.
Forward foreign exchange contracts
As at 31 December, the settlement dates on open forward foreign exchange contracts were within 1 year. The local currency amounts
to be received and contractual exchange rates of the outstanding contracts were:
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
144
Net fair values
The net fair values of the derivative financial instruments at the balance sheet date were:
Favourable forward foreign exchange contracts - selling - 1,830 - 1,830
(Unfavourable) forward foreign exchange contracts - buying (9,891) - (9,891) -
Fair values of forward foreign exchange contracts have been calculated using rates quoted by the Group’s bankers as if the contracts
were terminated at the balance sheet date.
c) Coal price fluctuations risk
The Group manages its exposure to coal price fluctuations risk from its business operations, both in Thailand and overseas, and to
achieve a balance of overall coal price in the Group by entering into both short-term and long-term sales agreements and sometimes through the
use of financial instruments.
The objective in using financial instruments is to reduce uncertainty over future cash flows arising from movements in coal price.
The following strategy is employed to achieve these objectives.
Coal swap contracts
Coal swap contracts are entered into to manage exposure to fluctuations in coal price on general transactions.
As at 31 December 2007, the Group has entered coal swap contracts with no physical delivery of selling side amounting to 1,512,000
tonnes at the average rate of USD 52.35 per tonne (2006: 7,353,000 tonnes at the average rate of USD 50.01 per tonne) and buying side amounting
to 1,512,000 tonnes at the average rate of USD 65.92 per tonne (2006: 3,834,000 tonnes at the average rate of USD 52.31 per tonne). Such
contracts are due within 1 years. Differences between coal swap contracts price and market price specified by API 4 Index.
Net fair values
The net fair values of average coal swap contracts at the balance sheet date were:
(Unfavourable) coal swap contracts - Selling (1,940,162) (208,863) (1,940,162) (208,863)
(Unfavourable) coal swap contracts - Buying 1,244,603 (16,152) 1,244,603 (16,152)
Fair values of coal swap contracts have been calculated using rates quoted by the Group’s bankers as if the contracts were terminated
at the balance sheet date.
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
CompanyConsolidated
À¡“¬‡Àµÿ 2006THB Thousand
2006THB Thousand
2007THB Thousand
2007THB Thousand
145
d) Oil price fluctuations risk
The Group manages its exposure to oil price fluctuations risk from its business operations in overseas and to achieve a balance of
overall oil price in the Group by sometimes through the use of financial instruments.
The objective in using financial instruments is to reduce uncertainty over future cash flows arising from movements in oil price. The
following strategy is employed to achieve these objectives.
Oil hedging contract
Oil hedging contract is entered into to manage exposure to fluctuations in oil price on general transactions.
As at 31 December 2007 and 2006, the Group has no remaining oil hedging contract.
e) Credit risk
The Group has no significant concentrations of credit risks. Derivative counter parties and cash transactions are limited to high credit
quality financial institutions.
f) Fair values
The carrying amounts of the following financial assets and financial liabilities approximate to their fair values: cash and cash at
banks, investments, trade receivables and payables, other receivables and payables, loans to and from related parties, short-term loans and long-
term loans with the floating rate.
The Group has the fair values information of debentures as follows:
Debentures 10,000 10,429 11,600 12,098
The fair values of derivative are disclosed above in (b) and (c).
g) Other risks - Indonesian economic conditions
Indonesia has been experiencing a prolonged period of economic difficulty which has been compounded by a downturn in the global
economy and its domestic political situation. Indonesia’s return to economic stability is dependent to a large extent on the effectiveness of
measures taken by the government and decisions of international lending organizations. However, the Group has entered into insurance policies
with overseas insurance companies to protect its investment risk which may occur through law and order or administrative actions of Indonesian
government.
20062007
À¡“¬‡Àµÿ Fair valuesTHB Million
Fair valuesTHB Million
Contract amountTHB Million
Contract amountTHB Million
146
32. Promotional privileges
The Company has received promotional privileges from the Board of Investment for mining business under five promotion certificates.
Under these privileges, the Company receives exemption from certain taxes and duties as detailed in the certificates, as well as exemption from
corporate income tax of net profit from granted business for a period of six to eight years commencing from the date operating income is earned.
As a promoted industry, the Company is required to comply with the terms and conditions as specified in the promotional certificates.
Company
Revenues shown in the Company financial statements classified by BOI granted and Non-BOI granted are as follows:
As at 31 December 2007, all promotion certificates had been expired.
Sales 886,169 1,003,582 1,889,751
Other income - 2,637,778 2,637,778
Total revenues 886,169 3,641,360 4,527,529
Total expenses (518,792) (3,266,401) (3,785,193)
Net operating profit 367,377 374,959 742,336
Income taxes - - -
Net profit for the year 367,377 374,959 742,336
33. Subsequent Events
On 10 January 2008, the Group received the confirmation notice from The Government of the Lao People’s Democratic Republic in
granting the rights to Ratchaburi Electricity Generating Holding Public Company Limited to be a joint developer of the Lignite-Fired Power
Project.
As at February 2008, the Group disposed an investment in Asian American Gas Inc. (an associate) in the amount of USD 13.60 million or
equivalent to THB 447.09 million. The Group recognised a gain from the disposal of USD 8.4 million or equivalent to THB 278 million.
According to the announcement of the Government of Indonesia on 4 February 2008, all companies which have the activities in produc-
tion and protected forest area but not related to forestry activity will have obligation to pay a forestry fee ranging from IDR 1,200,000 to IDR
3,000,000 per hectare.
For the year ended 31 December 2006 (restated)
À¡“¬‡Àµÿ
BOI grantedTHB Thousand
TotalTHB Thousand
Non-BOIgranted
THB Thousand
147
1) Ordinary Share RegistrarThailand Securities Depository
Company Limited for Depositors
62 The Securities Exchange of
Thailand Building, Ratchadaphisek Road,
Khlong Toei, Bangkok 10110
Tel. 0 2229 2800
2) Debenture RegistrarThai Military Bank Public Company Limited
3000 Phaholyothin Road, Jatujak,
Bangkok 10900
Tel. 0 2299 1111
3) AuditorMs. Nangnoi Charoenthaveesub
Authorised Auditor No. 3044
PricewaterhouseCoopers ABAS Ltd.
15th Floor, Bangkok City Tower,
No. 179/74-80 South Sathorn Road,
Bangkok 10120
Tel. 0 2286 9999, 0 2344 1000
O t h e r R e f e r e n c e sAnnual Report 2007 • Banpu Public Company Limited
4) Financial Advisor-None-
5) Advisor or Manager under ManagementAgreement
The Company hired neither advisor
nor manager under any permanent
management agreement. Rather, advisors
(such as financial advisor) were hired on
a case-by-case basis a necessary to help
with its operation from time to time.
The Company’s daily management is mainly
supervised by the Board of Directors.
6) Financial Institutions Frequently ContactedAround 20 local and international commercial
banks and financial institutions.
148B a n p u G r o u p S t r u c t u r eAnnual Report 2007 • Banpu Public Company Limited
(Entities with 10 per cent or more shares held by BANPU)
BANPU PUBLIC COMPANY LIMITED
Banpu Power Ltd.
99.99%
BP Overseas
Development Co., Ltd.
100.00%
7.61% 99.80%
12.10%
RatchaburiElectricityGenerating
Holding Plc.
7.38%
Banpu PowerInternational
Ltd.
0.20%
BanpuCoal Power
Ltd.
99.99%
PowerGeneration
ServicesCo., Ltd.
40.00%
AsianAmericanGas Inc.
17.03%
AsianAmericanCoal Inc.
21.67%
BLCPPower Ltd.
50.00%
SynergyPower
Co., Ltd.
99.99%
BanpuPower
InvestmentCo., Ltd.
100.00%
Peak Pacific(China)
InvestmentCo., Ltd.*
100.00%
Pan-WesternEnergy
CorporationLLC
100.00%
Peak PacificInvestment
Company (L)BHD
100.00%
Zouping PeakPte. Ltd.
100.00%
ShijiazhuangChengfeng
CogenCo., Ltd.
100.00%
Luannan PeakPte. Ltd.
100.00%
Zouping PeakCHP Co., Ltd.
70.00%
Tangshan PeakHeat and Power
Co., Ltd.
87.90%
Note: * The Company name has been changed to Banpu Power Investment (China) Ltd.since 15 February 2008.
149
Banpu China Pte. Ltd.
100.00%
Banpu Minerals Co., Ltd.
99.99%
51.00%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
....
....
..
HebiZhong Tai
MiningCo., Ltd.
40.00%
ChiangMuan
MiningCo., Ltd.
49.00%
Ban-SaMining
Co., Ltd.
98.87%
SilamaniMarble
Co., Ltd.
99.96%
SilamaniCorp. Ltd.
99.99%
BanpuInternational
Ltd.
99.99%
BanpuMinerals
(Singapore)Pte. Ltd.
100.00%
BanpuSingaporePte. Ltd.
100.00%
PT. CentralinkWisesa
International
95.00%
PT. NusantaraThai
MiningServices
95.00%
PT. BharintoEkatama
99.00%
PT. JorongBarutamaGreston
100.00%
PT. Kitadin
99.99%
PT. TrubaindoCoal Mining
100.00%
PT. IndomincoMandiri
100.00%
PT. IndoTambangrayaMegah Tbk
77.60%
150D e t a i l s o f t h e C o m p a n y a n dI t s S u b s i d i a r y a n d A s s o c i a t e d C o m p a n i e sAnnual Report 2007 • Banpu Public Company Limited
Type of
businessName Authorized
capital
Paid up capitalNo. of paid-
up capital
(shares)
%
of
holding
Head Office TelephonePar value
per share
Remark: * under Singaporean Corporate Law
1 Banpu Plc. Energy 3,540,504,790 2,717,478,550 271,747,855 10 - 26-28th Floor, Thanapoom Tower, 0 2694 6600
THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
Subsidiary companies
2 Banpu Minerals Coal mining 40,000,000 40,000,000 40,000 1,000 99.99% 58/1 Moo 1, Soi Thungkwao 1, 0 2694 6600
Co., Ltd. and trading THB THB Yontrakijkosol Road, Tambon
Thungkwao, Amphoe Mueang Phrae,
Phrae Province
3 Banpu Singapore Coal trading No authorized 1,500,000 1,500,000 No par 100.00% One Marina Boulevard, 65 6890 7188
Pte. Ltd. shares* SGD value* #28-00 Singapore 018989
4 Banpu Minerals Investment in No authorized 17,670,002 17,670,002 No par 100.00% One Marina Boulevard, 65 6890 7188
(Singapore) Pte. Ltd. coal mining shares* SGD value* #28-00 Singapore 018989
5 PT. Jorong Coal mining 4,500,000,000 4,500,000,000 300 15,000,000 100.00% 3rd Floor, Ventura Building, 6221 750 4390
Barutama Greston in Indonesia IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
6 PT. Nusantara Thai Mining 541,750,000 541,750,000 250,000 2,167 95.00% 3rd Floor, Ventura Building, 6221 750 4390
Mining Services services IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
7 PT. Centralink Wisesa Services & 110,000,000,000 109,473,000,000 109,473 1,000,000 95.00% 3rd Floor, Ventura Building, 6221 750 4390
International trading in IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Indonesia Jakarta 12430, Indonesia
8 PT. Indo Mining, 1,500,000,000,000 564,962,500,000 1,129,925,000 500 77.60% 3rd Floor, Ventura Building, 6221 750 4390
Tambangraya Megah construction, IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
transportation, Jakarta 12430, Indonesia
workshop,
plantation,
general
trading,
industry,
services in
Indonesia
9 PT. Indominco Coal mining 20,000,000,000 12,500,000,000 12,500 1,000,000 100.00% 3rd Floor, Ventura Building, 6221 750 4390
Mandiri in Indonesia IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
10 PT. Kitadin Coal mining 1,000,000,000,000 377,890,000,000 188,945 2,000,000 99.99%, 3rd Floor, Ventura Building, 6221 750 4390
in Indonesia IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
151
Remark: * under Singaporean Corporate Law
11 PT. Trubaindo Coal mining 100,000,000,000 63,500,000,000 63,500 1,000,000 100.00% 3rd Floor, Ventura Building, 6221 750 4390
Coal Mining in Indonesia IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
12 PT. Bharinto Ekatama Coal mining 68,000,000,000 17,000,000,000 17,000 1,000,000 99.00% 3rd Floor, Ventura Building, 6221 750 4390
in Indonesia IDR IDR Jalan R.A. Kartini No. 26, Cilandak,
Jakarta 12430, Indonesia
13 Banpu International Investment 250,000,000 250,000,000 25,000,000 10 99.99% 26-28th Floor, Thanapoom Tower, 0 2694 6600
Ltd. in coal mining THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
14 Silamani Corp., Ltd. Coal trading 300,000,000 300,000,000 30,000,000 10 99.99% 26-28th Floor, Thanapoom Tower, 0 2694 6600
THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
15 Silamani Marble Coal trading 200,000,000 200,000,000 2,000,000 100 99.99% 26-28th Floor, Thanapoom Tower, 0 2694 6600
Co., Ltd. THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
16 Ban-Sa Mining Investment 60,000,000 60,000,000 600,000 100 98.87% 26-28th Floor, Thanapoom Tower, 0 2694 6600
Co., Ltd. in coal mining THB THB 1550 New Petchburi Road, Makkasan,
and trading Ratchathewi, Bangkok 10400
17 Chiang Muan Mining Coal mining 100,000,000 100,000,000 10,000,000 10 99.42% 26-28th Floor, Thanapoom Tower, 0 2694 6600
Co., Ltd. and trading THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
18 BP Overseas Investment 15,533,002 15,533,002 15,533,002 1 100.00% Level 11, One Cathedral Square, 230 210 4000
Development in coal USD USD Port Louis, Mauritius
Co., Ltd. mining
19 Banpu Power Ltd. Investment 6,021,995,000 6,021,995,000 602,199,500 10 99.99% 26-28th Floor, Thanapoom Tower, 0 2694 6600
in power THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
20 Banpu China Investment No authorized 14,272,642 14,272,642 No par value* 100.00% 1 Temasek Avenue #27-01, 65 6338 1888
Pte. Ltd. in power shares* SGD Millenia Tower, Singapore 039192
21 Banpu Power Investment No authorized 84,177,391 77,132,663 No par value* 100.00% 1 Temasek Avenue #27-01, 65 6338 1888
Investment Co., Ltd. in electrical shares* USD Millenia Tower, Singapore 039192
power business
22 Zouping Peak Investment No authorized 2 2 No par value* 100.00% 1 Temasek Avenue #27-01, 65 6338 1888
Pte. Ltd. in electrical shares* SGD Millenia Tower, Singapore 039192
power business
23 Luannan Peak Pte. Ltd. Investment No authorized 2 2 No par value* 100.00% 1 Temasek Avenue #27-01, 65 6338 1888
in electrical shares* SGD Millenia Tower, Singapore 039192
power business
Type of
businessName Authorized
capital
Paid up capitalNo. of paid-
up capital
(shares)
%
of
holding
Head Office TelephonePar value
per share
152
Remark: * under Singaporean Corporate Law
** the company name has been changed to Banpu Power Investment (China) Ltd. since 15 February 2008.
24 Peak Pacific (China) Investment 30,000,000 30,000,000 0 NA 100.00% 2nd Floor, Sunflower Tower, No. 37 8610 85275162
Investment Co., Ltd.** in electrical USD USD Maizidian Street, Chaoyang Dist,
power business Beijing 100026, PRC
25 Zouping Peak CHP Power and heat 261,800,000 261,800,000 0 NA 70.00% Xiwang Industrial Region, 86543 4615655
Co., Ltd. production RMB RMB Handian Town, Zouping County,
and sales Binzhou City 256209,
Shandong Province, PRC
26 Shijiazhuang Power 15,125,000 14,000,000 1,125,000 NA 100.00% North Beiguan, Zhengding County, 86311 85176918
Chengfeng Cogen and heat USD USD Shijiazhuang City 050800,
Co., Ltd. production Hebei Province, PRC
and sales
27 Tangshan Peak Heat Power 47,504,000 47,504,000 0 NA 100.00% West of Gujiaying Villiage, 86315 4168274
and Power Co., Ltd. and heat USD USD Bensi Road, Luannan County,
production Tangshan City 063500,
and sales Hebei Province, PRC
28 Pan-Western Energy Investment 100,000 100,000 1,000,000 0.01 100.00% Maples and Calder, Ugland House, 1 345 949 8066
Corporation LLC in power USD USD South Church Street, P.O. Box 309,
George Town, Grand Cayman,
Cayman Islands
29 Peak Pacific Investment 1,000 1,000 1,000 1 100.00% Level 9F, Main Office Tower, 60 87 443 118
Investment in power USD USD Financial Park, 87000 Labuan FT,
Company (L) BHD Malaysia
30 Banpu Power Investment 50,000 50,000 50,000 1 100.00% Level 11, One Cathedral Square, 230 210 4000
International Ltd. in power USD USD Port Louis, Mauritius
31 Synergy Power Investment 11,000,000 11,000,000 11,000,000 1 99.99% Level 11, One Cathedral Square, 230 210 4000
Co., Ltd. in power USD USD Port Louis, Mauritius
32 Banpu Coal Investment 5,921,587,160 5,921,587,160 592,158,716 10 99.99% 26-28th Floor, Thanapoom Tower, 0 2694 6600
Power Ltd. in power THB THB 1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400
Associated companies
33 BLCP Power Ltd. Power 12,000,000,000 12,000,000,000 120,000,000 100 50.00% 9 i-8 Road, Map Ta Phut Industrial 0 3892 5100
production THB THB Estate, Amphoe Mueang Rayong,
and sales Rayong Province
34 Power Generation Operate 10,000,000 10,000,000 100,000 100 40.00% 9 i-8 Road, Map Ta Phut Industrial 0 3892 5140
Services Co., Ltd. and THB THB Estate, Amphoe Mueang Rayong,
maintenance Rayong Province
for power
plant
35 Hebi Zhong Tai Investment 783,330,000 783,330,000 NA NA 40.00% No. 98, Hongqi Street, Hebi, (86)
Mining Co., Ltd. in coal mining RMB RMB Henan Province, the PRC 392 291 7401-2
Type of
businessName Authorized
capital
Paid up capitalNo. of paid-
up capital
(shares)
%
of
holding
Head Office TelephonePar value
per share
De
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ne
d B
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Cover printed on recycled & FSC paper
BANPU PUBLIC COMPANY LIMITED
26th-28th Floor, Thanapoom Tower,
1550 New Petchburi Road, Makkasan,
Ratchathewi, Bangkok 10400, Thailand
Tel. +66 (0) 2694 6600
Fax +66 (0) 2207 0695-8
www.banpu.com