mission - tipco.co.th · improvement projects were implemented throughout the year to improve...
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MISSION A well-recognized leading asphalt focused company in Asia Pacific
VISION To distribute 2 million tons of asphalt products by 2015 and be the key contributor to the success of all stakeholders while maintaining the highest Corporate Social Responsibility standards at all times
INTRODUCTION TO TIPCO ASPHALT PUBLIC COMPANY LIMITED
Tipco Asphalt Public Company Limited was established in 1979. The Company, its subsidiaries and associated companies (“Tipco Asphalt Group”) are the leading manufacturers and distributors of asphalt products in Thailand and Asia-Pacific region.
Tipco Asphalt products are used for building and maintaining roads, highways and airport runways. The Group also sells non-asphalt products, such as Naphtha, Gas Oil and Fuel Oil from crude refining processes to traders, road contractor and manufacturing companies in Thailand and countries in Southeast Asia.
With the cooperation of one of its major shareholders, Colas S.A. of France (the world’s leading road construction company), Tipco Asphalt Group is able to deliver the highest quality and innovative products to its customers.
Despite the challenges in the world of commodity market, the Group shall continue to focus its long term strategies in order to drive the Group forward in achieving its Vision of two million tons of asphalt sales in 2015.
MOVING TOWARDS TO BE A WELL-RECOGNIZED LEADING ASPHALT FOCUSED COMPANY IN ASIA PACIFIC
4Financial Highlights
6Message from the Chairman
8Board of Directors
20Organization Structure
CONTENT
24Major Shareholders
25Revenue Structure
30Business Performance
36Risk Management and Risk Factors
54Corporate Governance Report
62Social Responsibility Policy
67Internal Controls and Internal Audit
73Related Transactions
74Management Discussion and Analysis
79Report and consolidated financial statements
80Statement of financial position
133Company Information
2013 2012 2011 2010 2009
Financial Highlights
Total Revenue 34,140.37 38,414.29 23,053.76 26,303.34 14,186.43
Gross Profit 1,739.97 1,101.45 1,214.40 1,615.34 1,385.59
EBITDA 1,789.49 1,503.80 1,394.91 1,837.12 776.68
Net Profit 831.45 642.27 735.57 1,007.67 493.82
Financial Overview
Balance Sheet
Assets 20,273.52 18,669.76 15,520.51 10,748.61 12,513.83
Liabilities 14,382.58 13,627.06 11,077.57 7,120.60 9,660.63
Shareholders' Equity 5,241.71 4,424.67 3,849.95 3,046.15 2,224.48
Financial Ratio
Total number of shares issued (shares) 152,580,868 152,548,068 152,548,068 152,547,663 152,547,663
Book value per share (Baht) 34.35 29.01 25.24 19.97 14.58
Earnings per share (Baht) 5.45 4.21 4.82 6.61 3.24
Dividends per share (Baht) 1.00 1.25 - - -
Net profit margin (%) 2.44 1.67 3.19 3.83 3.48
Return on equity (%) 17.20 15.52 21.33 38.24 25.03
Return on assets (%) 4.27 3.76 5.60 8.66 4.61
Debt to Equity Ratio 2.44 2.70 2.49 1.96 3.39
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
(Unit : Million Baht)
ANNUAL REPORT 20134
TOTAL REVENUE(MILLION BAHT)
EBITDA(MILLION BAHT)
GROSS PROFIT(MILLION BAHT)
NET PROFIT(MILLION BAHT)
34,140MILLION BAHT
1,789MILLION BAHT
1,739MILLION BAHT
831MILLION BAHT
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
14,18
6
26,3
03
23,0
53
38,4
14
34,14
0
2009
2010
2011
2012
2013
777
1,837
1,395
1,504
1,789
1,386
1,615
1,214
1,101
1,739
494
1,008
736
642
831
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 5
MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CHAIRMAN
It is my great pleasure to report that Tipco Asphalt Group has recorded yet another impressive achievement with the second highest ever revenue of Baht 34 billion (or exceeding USD 1 billion) in 2013. More importantly, the Group has achieved an impressive operating net profit attributable to equity shareholders of Baht 831 million or 29.4% increment, compared to Baht 642 million in the corresponding period 2012. The return on equity has also improved to 17.2% from 15.5% in 2013.
ANNUAL REPORT 20136
The Group shall continue to focus on its long term strategies on human capital investment and
Enterprise Risk Management, in order to drive the Group forward in achieving its Vision of two million
tons of asphalt sales in 2015
Thailand GDP’s growth was strong in the early part of 2013, but the economy lost its growth momentum rapidly to a very slow pace at 1.3% and 0.6 % during Quarter 3 and Quarter 4 respectively, comparing to a 6.5% growth in 2012. As a result, sales volume in domestic market was slightly lower than 2012. The consensus GDP forecast for 2014 is 2.8% due to the prolonged political uncertainties and falling Agriculture prices. We believe the impact to the Group’s domestic sale should not be material as the lagging demand will catch up after the political uncertainties subsided. At the international level, we expect the competition becoming more intense with demand remain stable but driven by more supply. Being an asphalt focused company, our Group is well equipped and keen to defend its market presence.
In 2013, the refinery processed 6.6 million barrels of crude oil, representing 73% of the total refining capacity. Many improvement projects were implemented throughout the year to improve efficiency and increase production capacity of the refinery. One of the projects was the conversion from fuel oil to natural gas heating which resulting in significant cost saving and better efficient use of clean energy in line with the Group’s CSR strategy. We will continue to invest in our refinery to improve its operation efficiency and quality of the products.
Another challenging task of the Group is the crude and inventory working capital management. Rapid fluctuation in crude oil prices during the first half of 2013 was one of the challenges, attributable to the geopolitical tension caused by US sanction against Iran and Syria. The world crude market responded with Brent crude price went up to USD 118 per barrel in early February 2013 and then touched a low USD 97 per barrel in April 2013 attributable
to weak economy outlook for US and China. The Group is now well experienced in managing this risk and I am pleased to highlight that our hedging strategy has contributed a significant turnaround with a positive impact of Baht 85 million to this year result as compared to a cost of Baht 806 million in the corresponding year 2012. The Group is confident that the currently employed hedging strategy protects it’s crude oil procurement in the highly volatile commodity market.
Similarly, the Group shall continue to focus on its long term strategies on Human Capital Investment, and Enterprise Risk Management, in order to drive the Group forward in achieving its Vision of two million tons of asphalt sales in 2015.
In conclusion, on behalf of the Board of Directors, I would like to thank our shareholders, customers and suppliers for their continuing support. The year 2013 was a challenging but successful year and the “Prudence” is the third core value of the Group that has been enshrined in the desired behavior of our business and social relationship. I would like to express my sincere appreciation to the management and staff for their high team spirit and integrity in performing their duties and responsibilities.
Laksana Supsakorn
Chairman
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 7
BOARD OF DIRECTORS
MS. LAKSANA SUPSAKORNCHAIRMAN, AUTHORIZED DIRECTOR
MR. JACQUES PASTORVICE CHAIRMAN, MEMBER OF THE NOMINATION AND REMUNERATION COMMITTEE, AUTHORIZED DIRECTOR
BOARD OF DIRECTORS
MR. SOMCHIT SERTTHINCHIEF EXECUTIVE OFFICER, EXECUTIVE DIRECTOR, AUTHORIZED DIRECTOR
ANNUAL REPORT 20138
MS. LAKSANA SUPSAKORNCHAIRMAN
Age 61
Education
• M.B.A. Wharton Business School, University of Pennsylvania, USA • Bachelor Degree in Accounting (Honor), Chulalongkorn
University
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• Director Accreditation Program (DAP)• General Member of Thai Institute of Directors
Shareholding in Company
• 1,478,000 shares (0.969%)
Family Relationship with Management
Sister of Mr. Sitilarb Supsakorn and sister-in-law of Mr. Somchit Sertthin
Related Experience
2013 - Present Chairman of the Board, Tipco Asphalt PLC. 2013 - Present Chairman of the Board, Tipco Foods PLC. 2013 - Present Chairman of the Board, Tipco F&B Co., Ltd.2012 - Present Director, Siam Container Terminal Co., Ltd. 2012 - Present Director, Peyanarongwit Co., Ltd. 2011 - Present Director, Vanichapark Co., Ltd.2003 - Present Director, Thanomwongse Service Co., Ltd.
MR. JACQUES PASTORVICE CHAIRMAN
Age 59
Education
• Advanced Management Program (AMP), Harvard Business School, MA, USA
• Ecole Nationale Superieure d’ Arts et Metiers
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2013 Director Accreditation Program (DCP)• 2013 Director Certification Program (DAP)
Shareholding in Company -Family Relationships with Management in Company -
Related Experience
2013 - Present Vice Chairman, Tipco Asphalt PLC2004 - Present Director, Thai Slurry Seal Co., Ltd.2000 - 2013 Executive Director, Tipco Asphalt PLC1993 - Present Asia Area Manager, COLAS S.A.
MR. SOMCHIT SERTTHINCHIEF EXECUTIVE OFFICER
Age 61
Education
• B.S. Business Administration Babson College, MA, USA
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2013 Director Certification Program (DCP)• 2003 Director Accreditation Program (DAP)
Shareholding in Company
2,530,016 shares (1.658%)
Family Relationships with Management
Brother-in-law of Ms. Laksana Supsakorn and Mr. Sitilarb Supsakorn
Related Experience
2001 - Present CEO, Tipco Asphalt PLC2005 - Present Director, Tipco Foods PLC1986 - Present Executive Director, Tipco Asphalt PLC1980 - 1986 Vice President and Country Corporate Manager, Chase Manhattan Bank, Taipei Branch
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 9
MR. CHAIWAT SRIVALWATMANAGING DIRECTOR, MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE AUTHORIZED DIRECTOR
MR. HERVÉ LE BOUCDIRECTOR, AUTHORIZED DIRECTOR
MR. JACQUES LEOSTDIRECTOR, AUTHORIZED DIRECTOR
BOARD OF DIRECTORS
ANNUAL REPORT 201310
MR. CHAIWAT SRIVALWATMANAGING DIRECTOR
Age 54
Education
• B.Eng. (Engineering), Liverpool University, England
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2003 Director Certification Program (DCP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2002 - Present Managing Director, Tipco Asphalt PLC1996 - 2002 Marketing Director, Tipco Asphalt PLC1990 - 1996 Senior Operations Manager , Tipco Asphalt PLC
MR. HERVÉ LE BOUCDIRECTOR
Age 62
Education
• Ecole Superieure des Travaux Publics
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -
Related Experience
2008 - Present Director, Tipco Asphalt PLC2007 - Present Chairman and Chief Executive Officer, COLAS Group2002 - 2007 Chairman and Chief Executive Officer, SAUR Group 2001 - 2002 Chief Operating Officer, BOUYGUES CONSTRUCTION1998 - 2002 Chairman and Chief Executive Officer, BOUYGUES OFFSHORE
MR. JACQUES LEOSTDIRECTOR
Age 62
Education
• Engineering Degree from Ecole Centrale Lille
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors - Shareholding in Company -Family Relationships with Management -
Related Experience
2011 - Present Director, Tipco Asphalt PLC2010 - Present International Managing Director, COLAS Group2002 - 2010 Chairman and CEO, SAIPEM SA2001 CEO, Bouygues Offshore1996 - 2000 COO, Bouygues Offshore1994 - 1995 Vice President (Africa, North Sea and Mexico), Petromar1989 - 1993 Vice President (Africa), Petromar
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 11
MR. NIPHON SUTHIMAIINDEPENDENT DIRECTOR, CHAIRMAN OF THE AUDIT COMMITTEE
MRS. ANNE-MARIE MACHETINDEPENDENT DIRECTOR, MEMBER OF THE NOMINATION AND REMUNERATION COMMITTEE, MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE
MR. KOH BAN HENGINDEPENDENT DIRECTOR
BOARD OF DIRECTORS
ANNUAL REPORT 201312
MR. NIPHON SUTHIMAIINDEPENDENT DIRECTOR
Age 56
Education
• Master Degree in Operational Research, London School of Economics, UK
• Licence de Droit (Law), Universite de Droit, Lyon, France
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2006 Audit Committee Program (ACP)• 2006 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2006 - Present Independent Director, Tipco Asphalt PLC2012 - Present Vice President - People, Nok Airlines PLC2005 - Present Consultant, Thai Air Cargo Co., Ltd.1999 - Present Associate Director, Geodis Overseas Co., Ltd.2007 - 2013 Managing Partner, CLY International Limited
MRS. ANNE-MARIE MACHETINDEPENDENT DIRECTOR
Age 58
Education
• MBA Finance, ESCP-EAP• Bachelor Degree in Math and Science• International Coaching Academy - Accredited Coach in 2008
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2010 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2010 - Present Independent Director, Tipco Asphalt PLC2009 - Present Vice President of Franco, Thai Chamber of Commerce - in charge of HR Committee2008 - 2009 President of French International School of Bangkok2007 - 2008 Executive Advisor and Team Motivator, FP Coaching to Lead (Thailand)
MR. KOH BAN HENGINDEPENDENT DIRECTOR
Age 65
Education
• Post-Graduate Diploma in Business Administration, University of Singapore
• Bachelor’s Degree in Applied Chemistry
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -
Related Experience
2011 - Present Independent Director, Tipco Asphalt PLC2013 - Present Director, Linc Energy Limited2013 - Present Director, Keppel Infrastructure Holdings Pte. Ltd. 2011 - Present Senior Advisor, Singapore Petroleum Company (SPC)2000 - Present Director, Singapore Refining Company Private Limited2003 - Present Chairman, Singapore Petroleum Venture Private Limited 2009 - 2013 Director, Keppel Energy Pte. Ltd 2003 - 2011 Chief Executive Officer, Singapore Petroleum Company (SPC)
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 13
MR. PARNCHALERM SUTATAMINDEPENDENT DIRECTOR, MEMBER OF THE AUDIT COMMITTEE, MEMBER OF THE NOMINATION AND REMUNERATION COMMITTEE
MR. NOPPORN THEPSITHARINDEPENDENT DIRECTOR, MEMBER OF THE AUDIT COMMITTEE, CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE
BOARD OF DIRECTORS
MR. PHIRASILP SUBHAPHOLSIRIINDEPENDENT DIRECTOR, MEMBER OF THE AUDIT COMMITTEE, CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE
ANNUAL REPORT 201314
MR. NOPPORN THEPSITHARINDEPENDENT DIRECTOR
Age 60
Education
• Bachelor Degree in Electrical Engineering, Chulalongkorn University
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2012 Audit Committee Effectiveness Seminar• 2005 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2012 - Present Independent Director, Tipco Asphalt PLC 2009 - 2013 Chairman of Global Logistics Committee, Thai National Shippers’ Council (TNSC)2004 - 2011 Member of Executive Committee and Senior, Vice President - Logistics, Siam City Cement PLC 2000 - 2001 Executive Director, TCC Holding Co., Ltd.
MR. PHIRASILP SUBHAPHOLSIRIINDEPENDENT DIRECTOR
Age 61
Education
• B.A., Business Administration, Yokohama National University, Japan
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2005 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2013 - Present Independent Director, Tipco Asphalt PLC2009 - Present Chairman, Food and Drinks PLC1998 - 2008 President, BankThai PLC1993 - 1998 President, Krungthai Thanakit PLC (KTT)
MR. PARNCHALERM SUTATAMINDEPENDENT DIRECTOR
Age 60
Education
• M.B.A., University of Bridgeport, CT, USA• Bachelor Degree, Accounting, Babson College, MA, USA
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2006 Audit Committee Program (ACP)• 2005 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2004 - Present Independent Director, Tipco Asphalt PLC1987 - Present Director, Boonmitra Building Co., Ltd.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 15
MR. JACQUES MARECHALEXECUTIVE DIRECTOR, MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE, AUTHORIZED DIRECTOR
MR. SITILARB SUPSAKORNEXECUTIVE DIRECTOR, AUTHORIZED DIRECTOR
MR. HUGUES DE CHAMPSCHIEF OPERATING OFFICER - INTERNATIONAL, EXECUTIVE DIRECTOR, AUTHORIZED DIRECTOR
BOARD OF DIRECTORS
ANNUAL REPORT 201316
MR. JACQUES MARECHALEXECUTIVE DIRECTOR
Age 48
Education
• Corporate Finance Dauphine University
Seminars on Director Roles and Responsibilities / Thai Institute of Directors
• 2013 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2012 - Present Executive Director, Tipco Asphalt PLC2000 - 2011 International Finance Manager, COLAS SA, Paris, France1996 - 2000 Deputy International Finance Manager, COLAS SA, Paris, France
MR. SITILARB SUPSAKORNEXECUTIVE DIRECTOR
Age 63
Education
• B.S. Business Administration, Babson College, MA, USA
Seminars on Director Roles and Responsibilities / Thai Institute of Directors
• 2012 Director Accreditation Program (DAP)
Shareholding in Company
1,000,000 shares (0.66%)
Family Relationships with Management
Brother of Ms. Laksana Supsakorn and elder brother-in-law of Mr. Somchit Sertthin
Related Experience
2001 - Present Executive Director, Tipco Asphalt PLC2012 - Present Director, Tipco Foods PLC1997 - Present Director, Siam Container Terminal Co., Ltd. 1996 - Present Director, Thanomwongse Service Co.,Ltd.
MR. HUGUES DE CHAMPSEXECUTIVE DIRECTOR
Age 45
Education
• Master degree in Public and Maritime Works• Civil Engineering Option, University of Technology Degree
Seminars on Director Roles and Responsibilities / Thai Institute of Directors
• 2013 Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -
Related Experience
2014 - Present Chief Operating Officer - International, Tipco Asphalt PLC2011 - 2013 Director - Joint Ventures, Tipco Asphalt PLC2011 - Present Operations Manager, COLAS Asia area2004 - 2011 Managing Director, COLAS South Africa (Pty) Ltd.1995 - 2004 Operations Manager, COLAS Asia area1993 - 1994 Project Manager, COLAS India1992 - 1993 Project Manager, COLAS Morocco, GTR Company
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 17
EXECUTIVE OFFICERS
MR. KOH LAI HUATCHIEF FINANCIAL OFFICER
Age 54
Education
• Chartered Association of Certified Accountant (UK)• M.B.A. International Marketing
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2014 - Present Chief Financial Officer, Tipco Asphalt PLC2010 - 2013 Director - Accounting and Budgeting,
Tipco Asphalt PLC2009 - Present Chief Financial Officer,
Kemaman Oil Corporation Sdn. Bhd.2004 - 2008 Chief Financial Officer, Seloga Holdings Bhd.
MR. CHAYONGSAK PISITPONG (RETIRED)CHIEF DIRECTOR-FINANCE
Age 56
Education
• M.B.A. North West Missouri State University, USA• M.A. Economics, University of Kansas, USA• B.A. Business Administration, Benedictine College, KA, USA
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• 2003 : Director Accreditation Program (DAP)
Shareholding in Company -Family Relationships with Management -Related Experience
2009 - 2013 Chief Director - Finance, Tipco Asphalt PLC1995 - 2009 Chief Financial Officer, Tipco Asphalt PLC1981 - 1995 Vice President, Chase Manhattan Bank, Bangkok
Branch
MS. AUCHCHA RATTRAKULTIPDIRECTOR - FINANCE, CREDIT AND LEGAL
Age 67
Education
• Mini M.B.A. Economics, Business Administration• Mini M.B.A. Commerce and Accounting, Business
Administration Kasetsart University
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2002 - Present Director - Finance, Credit and Legal, Tipco Asphalt PLC
2001 - 2002 Senior Manager, Tipco Asphalt PLC
MR. KASIDIS CHAREANCHOLWANICHCHIEF OPERATING OFFICER - THAILAND
Age 53
Education
• M.B.A. Finance and Marketing, George-August University, Gottingen, Germany
• B.A. Business Administration, Marketing, Assumption University
• Bachelor Degree of Law, Ramkhamhaeng University
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2014 - Present Chief Operating Officer - Thailand, Tipco Asphalt PLC2008 - 2013 Director - Business and Support, Tipco Asphalt PLC2006 - 2007 Director - Domestic Marketing and Sales,
Tipco Asphalt PLC2000 - 2005 Sales Director, ICI Paints (Thailand) Co., Ltd.
MR. PRAVEEN PENMANEEDIRECTOR - OPERATIONS
Age 56
Education
• M.B.A., National Institute of Development Administration (NIDA)
• Electrical Engineering, King Mongkut Institute of Technology - Ladkrabang Campus
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2010 - Present Director - Operations, Tipco Asphalt PLC2002 - 2009 Production Division Manager, Guardian
Industries Rayong Co., Ltd.
EXECUTIVE OFFICERS
ANNUAL REPORT 201318
MR. LOUIS - FREDERIC SACHSDIRECTOR – MARINE GROUP
Age 39
Education
• Master’s Degree in Nautical Science, Antwerp Maritime Academy, Antwerp, Belgium
• Bachelor in Business Administration, NEOMA B.S., Reims, France
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2013 - Present Director - Marine Group, Tipco Asphalt PLC2008 - 2013 Regional Marine Risk Manager - Asia,
AXA Corporate Solutions2005 - 2008 Chief Officer LNG Tankers, Gazocean GDF SUEZ1996 - 2005 Deck Officer, EXMAR
MRS. UDOMPORN PUNPATCHDIRECTOR - HUMAN RESOURCES
Age 53
Education
• Master Degree in Human Resources Management, College of Management, Mahidol University, Bangkok.
• Mini-Master of Business Administration, Thammasat University, Bangkok.
• Bachelor of Industrial Psychology, Chaingmai University, Chiangmai
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company
921 shares (0.006%)
Family Relationships with Management -Related Experience
2011 - Present Director - Human Resources, Tipco Asphalt PLC2007 - 2010 Senior Manager - Human Resources,
Tipco Asphalt PLC2000 - 2006 Group Manager - Human Resources,
Tipco Asphalt PLC
MR. ISMAIL BIN ABDUL HAMIDDIRECTOR - INTERNATIONAL SALES AND MARKETING
Age 51
Education
• Masters Degree (MSc), Highway Management & Engineering, University of Birmingham, UK
• Civil Engineering Degree (BSc), Western Kentucky University, USA
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors -Shareholding in Company -Family Relationships with Management -Related Experience
2011 - Present Director - International Sales and Marketing, Tipco Asphalt PLC
2006 - 2011 General Manager, Sales & Marketing, Kemaman Bitumen Company Sdn Bhd,
1990 - 2006 Sales, Marketing, Product Development and Technical Services, Shell Company
MR. PORNSATIAN SAOWAPAKSOONTORNCOMPANY SECRETARY
Age 42
Education
• Certified Public Accountant (Thailand)• MS. (Accounting), Thammasat University
Seminars on Director Roles and Responsibilities/ Thai Institute of Directors
• Company Secretary Program (CSP)
Shareholding in Company -Family Relationships with Management -Related Experience
2011 - Present Company Secretary and Group Manager - Accounting & Budgeting, Tipco Asphalt PLC
2008 - 2011 Senior manager of Finance and Accounting, Mermaid Maritime PLC
2007 - 2008 Corporate Accounting Assistant Director, Bangkok Dusit Medical Services PLC
2006 - 2007 System Project Director, Minor Corporation PLC
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 19
ORGANIZATION STRUCTURE
ORGANIZATION STRUCTURE
At 31st December 2013
Nomination andRemuneration Committee
Board of Directors
Executive Committee Audit Committee
Director -Finance Credit Control and Legal
Director -Accounting and Budgeting
Director -Joint Venturesand Subsidiaries
Director -Marine Group
Director -Operations
Director -International Sales and Marketing
Director -Business andSupport
Director - Finance and International Legal Affairs
Director -Human Resources
Chief Executive Officer
Managing Director
Chief Director - Finance
Corporate Governance Committee
Senior Manager - Internal Audit
Nomination and Remuneration Committee
Board of Directors
Executive Committee
Director - Domestic & Marketing
Director - International Sales and Marketing
Director - Finance and International Legal Affairs
Director - Finance Credit Control and Legal
Director - Human Resources
Director - Operations
Director - Marine Group
Chief Executive Officer
Managing DirectorChief Financial Officer
Chief Operating Officer - Thailand
Chief Operating Officer - International
Corporate Governance Committee
Audit Committee
Senior Manager - Internal Audit
At 1st January 2014
ANNUAL REPORT 201320
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 21
AE and PMA Production FacilityOil and Asphalt Terminal
Baroda
Vashi
Jhansi
Haldia
Phitsanulok
Xin Hui (Guangdong province)
Zhen Jiang (Jiangsu province)
Lang Fang (Hebei province)
Nakhonratchasima
Poipet (Cambodia)Rayong
Suratthani
Kemaman Bitumen Company Sdn. Bhd.
Phrapradaeng
Keo Phos (Cambodia)
Visakh
ChennaiMangalore
Bahadurgarh
PRODUCTION FACILITIES, OIL AND ASPHALT TERMINALS
PRODUCTION FACILITIES, OIL AND ASPHALT TERMINALS
ANNUAL REPORT 201322
SHAREHOLDING STRUCTURE OF THE GROUP
TIPCO ASPHALT GROUP
Asphalt Business
Tipco Asphalt PLC
Thai Bitumen Co., Ltd (99.99%)
Raycol Asphalt Co., Ltd. (41.44%)
Vessel Business
TASCO Shipping Co., Ltd (99.99%)
Alpha Maritime Co., Ltd (99.99%)
Delta Shipping Co., Ltd. (99.99%)
Bitumen Marine Co., Ltd. (99.99%)
Tipco Maritime Co., Ltd. (99.97%)
Asphalt Group in China
TASCO Int’l (Hong Kong) Ltd. (100%) Langfang Tongtai Road Material Co.,Ltd. (51%)
Zhenjiang Tipco Asphalt Co.,Ltd. (51%) Tipco Asphalt (Xinhui) Co., Ltd. (100%)
RELATIONSHIP BETWEEN THE MAJOR SHAREHOLDER’S BUSINESS GROUPSThere are 2 major shareholder groups in the Company. The first is the Tipco Foods Pcl and the Supsakorn family, the founding shareholders. The other group is Colas S.A. of France, a world leading road and highway construction and maintenance company. Colas became a 22.7 strategic shareholder in the Company in 2000. The shareholding currently stands at 32.13%. Through a Technical Assistance Agreement, the Company receives unlimited assistance on asphalt technology from Colas which include access to the latter’s central asphalt research and development center in France as well as all specialty asphalt products formulations and application techniques.
SHAREHOLDING STRUCTURE OF THE GROUP
Asphalt Refinery
Kemaman Oil Corporation Sdn. Bhd. (63.12%) (44.80%) (54.50%)
KBC Energy Pte. Ltd. Kemaman Bitumen Company Sdn Bhd(100%)
Asphalt Group in Cambodia
Tipco Asphalt (Cambodia) Co., Ltd. (100%)
Colasie Co., Ltd.(40%)
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 23
MAJOR SHAREHOLDERS as at 27th December 2013
NO. SHAREHOLDERS SHARES NO. OF ORDINARY SHARES %
1. BNP PARIBAS SECURITIES (ASIA) PTE LTD-FOR COLAS 49,024,804 32.130
2. Tipco Foods PLC. 37,113,166 24.324
3. Supsakorn Family 11,532,828 7.559
4. Thai NVDR Co., Ltd. 10,928,251 7.162
5. AIA Company Limited-APEX 3,000,000 1.966
6. Dr. Pichit Lerttamrapth 1,800,000 1.180
7. Mr. Kittipong Patrachaikul 1,520,000 0.996
8. AIA Company Limited-TIGER 1,500,016 0.983
9. Mr. Viwat Kowitsophon 1,417,800 0.929
10. Mr. Thanathip Pichedvanichok 1,173,700 0.769
11. Others 33,570,303 22.002
Total 152,580,868 100.000
DIVIDEND POLICYThe Company has a policy to pay dividends of not less than 60% of its Company alone net profit of each fiscal year. However, the actual dividend payment depends on cash flow, investment plans of the Company and its subsidiaries, terms and conditions of agreements entered into by the Company.
MAJOR SHAREHOLDERS
ANNUAL REPORT 201324
REVENUE STRUCTUREDuring 2013, 76% of total revenue derived from the sale of asphalt products. Domestic and international sales contributed approximately 27% and 73% of total sales, respectively.
Based on the Company’s consolidated financial statements for the years 2011, 2012 and 2013, revenues categorized by business units are as follows:
PRODUCT LINE/ BUSINESS CATEGORY SHAREHOLDING(%)
2013 2012 2011
REVENUE % REVENUE % REVENUE %
1. Asphalt Business
Tipco Asphalt PLC 26,257.39 77.01 30,687.44 79.96 6,183.23 26.86
Surat Bitumen Co., Ltd. 99.99 - - - - 262.05 1.14
Thai Bitumen Co., Ltd. 99.99 1,303.78 3.82 1,584.37 4.13 12,088.12 52.51
Raycol Asphalt Co., Ltd. 41.44 992.84 2.91 1,259.65 3.28 734.19 3.19
Tipco Asphalt (Cambodia) Co., Ltd. 100.00 524.84 1.54 599.74 1.56 428.83 1.86
Kemaman Oil Corp. Sdn. Bhd. 63.12 2,977.78 8.73 2,606.52 6.79 868.45 3.77
Total 32,056.63 94.02 36,737.72 95.72 20,564.87 89.34
2. Vessel Business
Tipco Maritime Co., Ltd. 99.97 31.80 0.09 31.48 0.08 4.46 0.02
Delta Shipping Co., Ltd. 99.99 66.49 0.20 121.10 0.32 104.82 0.46
Alpha Maritime Co., Ltd. 99.99 68.39 0.20 66.78 0.17 64.78 0.28
Bitumen Marine Co., Ltd. 99.99 302.36 0.89 301.59 0.79 264.23 1.15
Tasco Shipping Co., Ltd. 99.99 352.06 1.03 217.28 0.57 98.96 0.43
Elimination (746.25) (2.19) (727.61) (1.90) (476.34) (2.07)
Total 74.85 0.22 10.62 0.03 60.90 0.26
3. Holding Companies
Tasco International (Hong Kong) Ltd. 100.00 1,803.43 5.29 914.80 2.38 1,678.04 7.29
Total 1,803.43 5.29 914.80 2.38 1,678.04 7.29
Total Sales and Services 33,934.91 99.53 37,663.14 98.13 22,303.81 96.89
Other Revenue 159.25 0.47 715.81 1.87 715.99 3.11
Total Revenue 34,094.16 100.00 38,378.95 100.00 23,019.80 100.00
(UNIT: MILLION BAHT)
REVENUE STRUCTURE
Note: Excluded of share of profit (loss) from investment in associate.
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ANNUAL REPORT 2013 25
PRODUCTS AND THAILAND DOMESTIC MARKET
PRODUCTS AND THAILAND DOMESTIC MARKET
TYPES OF PRODUCTS PRODUCED BY THE GROUP INCLUDE: • Asphalt Cement (AC) accounted for more than 80% of
asphalt sales in 2013. The Group refines its own AC from heavy crude oil in addition to AC purchased from other local and international suppliers.
• Asphalt Emulsion (AE) is a mixture of Asphalt Cement, water and chemicals.
• Cutback Asphalt is a mixture of Asphalt Cement and petroleum solvents. It is used mainly for prime coating. Today it has become less popular because it is costly and unfriendly to the environment.
• Polymer Modified Asphalt (PMA) is a mixture of polymer and Asphalt Cement. It is a durable binder with elastic characteristic to ensure higher rutting resistance on highways. This special property extends the useful life of highways and airport runways.
• Premix is a ready-mix product that is sold in bags. This product is made from readily mixed Asphalt Emulsion and selected aggregates with proper gradation. It is best for small road surface repairs.
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PRODUCTS FOR WHICH THE GROUP IS A DISTRIBUTOR ARE: • AC purchased from local and international suppliers.
• Diesel and bunker oil purchased from oil refineries and brokers.
TYPES AND SOURCES OF PRODUCTS AND RAW MATERIALS AC is a product from refining of crude oil and processing of base lubricating oil. AC is used as the raw material for manufacturing Asphalt Emulsion, Polymer Modified Asphalt and Cutback Asphalt. Currently, the Group produces AC from its own asphalt refinery in Malaysia as well as from other ref ineries, both local ly and internationally, to reduce the risk of relying on a single source and to control the cost of raw materials for manufacturing.
OTHER RAW MATERIALS The Group imports approximately 35% of the raw materials it requires for use in the Asphalt Emulsion and Polymer Modified Asphalt manufacturing process. The remaining 65% of raw materials is sourced through local suppliers.
THE TWO TYPES OF RAW MATERIAL REQUIRED ARE AS FOLLOWS: • Solvents: The price of solvents varied depending on oil
price. It is purchased from local suppliers and there is no shortage of this raw material in the market.
• Emulsifiers: There are several kinds of emulsifiers, which can be purchased locally or from international suppliers through their sales agents. The price of emulsifiers is quite stable.
• Tipco Joint Sealer and Tipco Joint Primer are Asphalt Cement mixed with additives, which is durable for extreme hot and cold weather conditions. It is highly flexible and adheres to joint components. It is used for sealing joints between concrete slabs.
• Atmospheric Gas Oil (AGO), Vacuum Gas Oil (VGO), Kerosene and Naphtha are byproducts from Tipco Asphalt refinery. The Group sells these products to local and regional customers.
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The Company remains the market leader for asphalt products in Thailand by achieving strong customer loyalty; which, in turn, is built through exceptional product quality, superior customer services and on-time deliveries.
DOMESTIC MARKET Domestic market asphalt consumption in Thailand during 2013 was 704,000 tons, which consisted of 598,000 tons of Asphalt Cement and 106,000 tons of Asphalt Emulsion and other products (such as Polymer Modified Asphalt and Cutback Asphalt). The consumption of 704,000 tons was 11% less than 2012. However, 2012 was an exceptional year, as there was additional government funding for the repair and reconstruction of roads damaged from widespread flooding across Thailand in late 2011.
The Company remains the market leader for asphalt products in Thailand with strong customer loyalty; which, in turn, is built through exceptional product quality, superior customer services and on-time deliveries. During 2013, we further reinforced our market leadership position through the supply of a new type of Polymer Modified Asphalt for runway repairs at the Suvarnabhumi Airport.
Additionally, the Company had also supplied the following new techniques to some key projects;
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In 2013, international asphalt sales for the Group exceeded
900,000 tons and represented another year of good
performance
MICRO SURFACING TECHNIQUE • Don Muang Tollway
• Buraphawithi Expressway (Bangna - Chonburi)
• Kanjanapisek Expressway (Bang Plee - Suksawad)
COLORED ASPHALT TECHNIQUE • Department of Rural Road
# 3176 Bangtaboon Laemsing District, Petchaburi
# 3201 Ban Bangjak Patill District, Chumporn
PREMIUM GRADE ASPHALT TECHNIQUE• Ultra-thin Friction Course (UTFC) technique on the
Chaloem-maha-nakorn Expressway (Dindaeng - Bangna)
• Porous Asphalt on the Srinagarindra Road
• Special Designed Method of track pavement for test driving, Nissan Motor Asia Pacific (Thailand)
The Company has manufacturing facilities and asphalt terminals located in the center of every region of the country, such as Nakhonratchasima, Phitsanulok, Rayong and Suratthani. With these four domestic manufacturing facilities strategically covering all regions, the Group can promptly deliver asphalt products to domestic customers, as well as to neighboring countries via our own fleet of 300 road tanker trucks. This unique logistic capability is key to Tipco Asphalt’s dominance in the domestic market. The Company also owns and operates 7 ocean-going asphalt vessels which significantly expand our presence in the export market. These vessels also import asphalt into Thailand when there is a shortage in domestic supply.
Our domestic marketing and sales teams served more than 550 contractors and customers across Thailand. With a track record of more than 30 years of solid service, our committed sales teams are well-trained to provide quality services and technical advice to customers. Furthermore, our sales teams are also backed by dedicated technical support teams who have extensive experience and knowledge of new techniques in road maintenance and are ready to provide on-site support to our customers. The Group also has a Customer Relationship Management (CRM) team to study the complex requirements of each group of customers in order to devise effective sales and service plans.
INTERNATIONAL MARKETIn 2013, international asphalt sales exceeded 900,000 tons and represented another good year of performance for the Group. The main reasons for the high sales were the combined effect of higher demand in the region, including China, Australia, Malaysia and Indonesia - the key markets for our international sales, and tighter asphalt availability following reduction of production in both Thailand and Singapore. Tipco Asphalt refinery in Kemaman, Malaysia continued to produce and supply significant volume of the Group’s asphalt requirement. The Group also secured the balance of the asphalt supplies from other regional refineries, in supporting our international sales by providing wider product grades and utilization of our bitumen vessels.
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Indonesia is still one of our largest export destination, with sales volume representing about 30% of total international sales. The Indonesian market continued its strong demand supported by increase in public spending, and lower volume of asphalt production at the local refinery, resulting in an increase in the requirement of asphalt imports. Indonesia is likely to remain a strong contributor to our international business over the next few years.
Vietnam is another key market for the Group. Our presence in this market is still significant with support from our regular and new customers in that country. We have managed to take away some of the competitors’ volume and customers with better supply and efficient delivery logistics. However, the number of new players, supply alternatives and traders in the Vietnamese market had increased during 2013, causing higher competition and tension in the market. With the continued support from associate companies of Colas, better supply coordination and focusing on our loyal customers, the Group will continue to be a major player in Vietnam .
Sales to China showed significant growth of 16% compared with 2012 and reached its highest ever historical level for the Group. This was achieved under fierce competition while the market was kept under margin pressure from the 2nd quarter until the end of the year. Meanwhile, the total import asphalt market in China remained steady at about 3 million tons per annum. Most of this growth occurred in North China where the Group’s market share is not significant due to competitiveness of Korean origin supplies.
Our subsidiaries in China performed significantly better in 2013, thanks to increased business and better cost controls. In a highly competitive environment, sales volume surged by 50% driven mainly by our subsidiary in Jiangsu province.
Similar to China, the Australian market were amongst those markets where 2013 sales increased compared to the previous year. The Group remained a key partner of Colas’ subsidiary in Australia and remained as the 4th largest destination for our international trade. The Group faced new import players in our sales to Australia, where
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ANNUAL REPORT 201332
the downstream business changed hands in several parts of Australia. Oil traders took over several import terminals previously owned by the oil majors. This situation represents both opportunity and threat to our marketing effort to this market. Being one of the big import markets, Australia remains a key market to grow our international sales in the years to come.
Sales to Laos and our Cambodian subsidiary Tipco Asphalt Cambodia (TAC) remained steady throughout the year, and then slowed down during the rainy season. This was amplified by the completion of major contracts, slow payment process to contractors and lesser new investment by the Government. Within the above difficult environment, TAC still managed to remain as the leader in its market with above 80% market share.
Sales by our Malaysian subsidiary, Kemaman Bitumen Company Sdn. Bhd. (KBC), recorded another record high which represented an increase of 18% compared to 2012. The increase was due to more consistent supply from our refinery in Kemaman, customer focus and the growth in local demand, including the paving of a few major sections of the new East Coast Expressway, paving of the new airport runway for KLIA2, and new Penang Bridge 2. The KBC sales team supported by the head office technical team also managed to convince Malaysian project owners and contractors to utilize polymer - modified asphalt and high quality emulsion sourced from Thailand.
Other than the above mentioned markets, the international sales group sells to 10 other countries which include the Philippines, South Africa, New Zealand, Bangladesh, Reunion Island, Mauritius, Fiji and Tahiti.
CONTINUOUS UPGRADING OF PRODUCTION PROCESSES IN LINE WITH CORPORATE SOCIAL RESPONSIBILITY INITIATIVESThere has been researches and studies to improve the quality of asphalt with new techniques by using natural rubber (Para Asphalt Cement or Natural Rubber Modified Asphalt Cement). Natural rubber is an agricultural product and has been thoroughly tested before gaining acceptance as the standard requirements of the Department of Highways. This has contributed to an increase in demand for domestic natural rubber; which particularly benefits local farmers during periods of low demand for natural rubber in the global market. Put simply, this results in the use of an organic, renewable substance to serve as a substitute raw material to improve the quality of traditional asphalt (Polymer Modified Asphalt, or “PMA”). Such quality improvement process requires less petroleum polymers obtained from refining of fossil crude oil and thereby reducing emissions of greenhouse gases and effect of global warming. In addition, the Company had launched a new prime coat emulsion in 2013 which uses less than half the amount of oil which is needed to produce cutback asphalt. This product has reduced the release / evaporation of oil vapor into the atmosphere.
In addition, we have converted from using fuel oil to liquefied petroleum gas (LPG) at our manufacturing plants. The latter is a clean fuel and provides complete combustion with limited emissions to the atmosphere, especially sulfur oxides.
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Fuel savings have also been achieved through repairs and change of insulation material and removing carbon scales on the surface of the heat transferring pipes at our asphalt storage terminal. These initiatives contribute towards fuel savings through more efficient heat exchanges.
The Group is also replacing the use of firewood with liquefied petroleum gas (LPG) as the fuel for heating asphalt transported in our road tankers. LPG is a superior fuel produces no smoke. The use of LPG greatly reduced the environmental effects caused by the use of firewood.
The Company makes use of a Safety Index as a key corporate KPI. This is intended to reduce accidents, increase safety standards and prioritize the safety of employees (particularly for those involved in production processes). CCTV cameras are being installed in all our road tankers in Thailand. The CCTV surveillance cameras, in conjunction with the real-time GPS tracking system (which is already installed in all our trucks) acts to provide addition safeguard for safety of our truck drivers and the general public.
THE MARINE GROUP The Marine Group is a key component of our supply chain for the transportation of our products across the Asia Pacific/ Indian Ocean region. It consists of two major activities:
• A full in-house vessel management function responsible for the operation of our 7 Asphalt/ Bitumen Tankers of 22,450 tons carrying capacity, and
• A chartering department responsible for commercial fleet activities.
Our vessels are operated by an in-house vessel management team under strict tanker quality management systems. The vessel management team follows leading industry practices and strives to achieve KPIs as per the TMSA (Tanker Management Self-Assessment) guidelines. The Chartering activities achieved a high utilization of vessels in 2013 which greatly supported the sales growth in Asia Pacific.
During 2013, the Group ordered a new built vessel from Japan with a delivery date of July 2014. The addition of this new asphalt tanker of 3,900 tons of cargo carrying capacity will strengthen the Company’s presence on long ton-mile destinations in the Asia Pacific region.
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ASPHALT REFINERY IN MALAYSIATipco Asphalt operates a refinery in Kemaman, Malaysia through its subsidiary, Kemaman Bitumen Company Sdn. Bhd. (Tipco Asphalt refinery). The refinery is located on 40 hectares (250 rais) of land in the Telok Kalong Industrial Estate. It has a nameplate refining capacity of 25,000 barrels of heavy crude oil per day or the equivalent of 9 million barrels or 1.4 million tons of crude oil per year. This translates into production of about one million tons of asphalt per year. The refinery processed 6.65 million barrels of crude in 2013. The amount of asphalt produced in 2013 was 719,000 metric tons.
During 2013, the refinery undertook several capital expenditure projects to improve efficiency and safety of its operations. The main projects were;
1. CONVERSION OF STEAM BOILER AND PROCESS HEATER FROM SINGLE FUEL FIRING BURNER (FO) TO DUAL FUEL (FO AND NG)
KBC successfully converted the Boilers and Process Heaters in the Refinery to dual-fuel configuration - the equipment can now use Fuel Oil as well as Natural Gas depending upon the requirement and availability. Use of Natural Gas as the primary fuel is highly environmentally friendly as it is expected to reduce by as much as 26% the emission of CO2 and CO. In addition, this would help the refinery to have significant reduction in the heating cost.
2. MARINE LOADING ARMS (MLA)
KBC has been proactively upgrading the marine oil transfer facilities to meet the world class refinery requirements for safe marine operations at all times. It had initiated the Marine Loading Arms installation project in 2012, with a view to ensure that our group business activities are carried out in the safest possible manner. The installation
of Marine Loading Arms was completed in October 2013 and has immediately resulted in major benefit by reducing the loading/unloading time. More importantly, the Marine Loading Arms significantly reduce the risk of oil spills, making our operation extremely environment friendly and supporting our efforts to progressively improve our sustainability.
3. SCRUBBER
In yet another initiative to improve our environmental friendliness, KBC installed 2 Scrubbers at the bitumen tank and waste water holding basin areas. These advanced units, with a design duly approved by the Department of Environment, will help reduce volatile organic compounds (VOC) emissions into the atmosphere.
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ANNUAL REPORT 2013 35
RISK MANAGEMENT AND RISK FACTORS
RISK MANAGEMENT
The Group has remained focused in strengthening the framework of enterprise risk management (ERM) amidst significant strides made in terms of growth in 2013. The aligning of objectives within the various business units of the Group has assisted in formulating a 2 tier risk management system. In line with the Group’s strategy, Risk Management Committee remains proactive by focusing on continuous improvements in managing risk in all areas of business and creating risk awareness culture within the organization.
DUTIES AND RESPONSIBILITIES 1. To implement the scope or f ramework of r isk
management;
2. To monitor development of the scope of r i sk management, the risk indication process and risk assessment;
3. To assess and approve the risk management plan; and
4. To report to the Board of Directors concerning potential risks, as well as, on their management and also to communicate with the Audit Committee about these issues as appropriate.
The challenges of enterprise risk management amidst diverse nature of the Group business from oil refining and shipping to the sale of oil products and asphalt in the infrastructure industry are being countered by implementing comprehensive risk management programs covering specific areas of business operations. The Risk Management Committee has been functioning in compliance with the Principles of Good Corporate Governance. The risk management policy is formulated to ensure that all stakeholders follow prudent risk management practices and are fully prepared for all possible scenarios.
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In managing risks, the Risk Management Committee has created risk management team of managers headed by a Risk Officer to carry out day-to-day operations on behalf of the committee. Such team will adhere to risk management policies, scope or framework and process and render support, advice or guidance on risk management to all units.
Such team will also report to the Risk Management Committee on a monthly basis about foreseeable risks in their respective departments, along with remedies and opportunities. Follow-up meetings with the Risk Management Committee will be planned monthly to review corporate risks, receive feedback and work towards continuous improvement.
RISK FACTORS
RISKS RELATED TO FINANCEThe Group’s business activities are exposed to various financial risks, including those related to credit, liquidity, foreign currency, interest rate and oil prices. The Group utilizes various financial instruments to manage the identified financial risks. The Group does not use financial instruments for trading or speculative purposes.
The Gro up’s Finance D epar tme nt operates as a service center providing treasury advice, funding, risk management assistance, coordinates access to financial markets and manages financial risks relating to the Group’s overall operations to ensure that Tipco Asphalt’s strategic objectives are met. The use of financial instrument is strictly controlled by policies approved by the Group’s Board of Directors. The policies provide specific direction in relation to financial risk management including commodity hedging, foreign currency, interest rate, credit and liquidity risk.
CREDIT RISKCredit policy is regularly reviewed and the exposure to credit risk is monitored on an ongoing basis. Credit review and evaluations are performed on all customers while credit approvals are based on delegated limits of authority. There was no significant exposure to any customer group in 2013. Credit risk related to financial instruments is minimized by using reputable local and international banks and other counterparty.
LIQUIDITY RISKThe Group operates under unsecured short term trade and working capital facilities arrangement with reputable local and international banks that have combined limits of over USD 1.2 billion. Financing associated to crude purchase is self-liquidating and short term in nature with short asset to cash conversion cycle.
CURRENCY RISKThe Group is exposed to foreign currency risk. This occurs as the result of purchases of raw materials and export revenue. This risk is adequately mitigated with financing and exporting revenue in the same currency. There are also forward contracts booked for known foreign currency expenses which all have maturities of less than six months.
The Group has ample unsecured short term trade and working
capital financing facilities with reputable local and international banks that have combined limits
of over USD 1.2 billion
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INTEREST RATE RISKThe Group entered into interest swap to achieve fixed interest rate borrowing on the long-term loans. There are more opportunities for the subsidiaries to enter into interest swap in the future.
RISKS RELATED TO OIL PRICE FLUCTUATIONPetroleum product markets have been extremely volatile during the year due to the US’ sanction against Iran and blockage supply of Libya crude production. The Group’s hedging policy is effective in managing these market risks. In order to address and mitigate price fluctuation risks for both crude oil and finished products at all times, the Group evaluates carefully its hedging strategy for each crude cargo.
RISKS RELATED TO SOURCING HEAVY CRUDE OILThe Company’s refinery has been designed to process heavy crude oils as it is the best suited for the company’s business model. Due to the geographical distribution of heavy crude oil in terms of commercially viable sources of supply, the crude oil availability is crucial to keep the refinery operative and for the company to meet its asphalt supply obligations.
The company continues to make efforts on three important fronts to address the crude oil availability related risk,
1. To diversify its crude oil supply sources by evaluating crude oil assays from different sources to ascertain their suitability for the refinery
2. To work on a firm mid-to-long term agreement with one of the key suppliers that would ensure continuous and timely supplies to the refinery and allow for better operational planning
3. To make continuous upgradation in the refinery infrastructure to improve its ability to store and process different types of crude oils and produce commercially acceptable products to meet the market demand.
RISK RELATED TO REFINERY OPERATIONSThe Group has continued its focus on managing the overall Business Risk relating to the operations of its Refinery. The recommendations of the technical integrity study are being implemented in a phased manner, depending in line with the local statutory approvals and the operating schedule. The Refinery is also taking up a detailed fire-fighting infrastructure study and a waste water treatment/handling study in order to develop a robust philosophy and design for both these important activities. The refinery team also continues to engage with the local authorities like the Department of Health and Safety, the Fire Department and the Department of Environment to ensure their advice and recommendations are taken into account while designing and implementing any key equipment and/or technology. The refinery continues to upgrade the skills and competency of its personnel and to ensure all key positions are manned by well qualified and experienced professionals.
RISK MANAGEMENT AND RISK FACTORS
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RISKS RELATED TO ASPHALT CEMENT SUPPLYFluctuations in raw material prices posed a major risk to the Group. The Group continuously seeks to mitigate supply risk by maintaining good long-term relationships with all refineries in Asia, which is accomplished through regular supply contracts and enquiries. As of now, supply risk is mitigated by the ability to source Asphalt Cement from the Group’s own subsidiary asphalt refinery in Malaysia. Expanding collaborative networks with key partners helps the Group to identify new sources of supply at competitive prices.
RISKS RELATED TO DOMESTIC MARKETThe domestic market still relies mainly on government budgets. The instability of the political situation then affected total demand in the domestic market. As the result, fierce price competition tremendously took place, which caused by the over-supply situation of asphalt in the market.
RISKS RELATED TO INTERNATIONAL MARKETIn 2013, TIPCO Asphalt product sales to the international market contracted by 4% year-on-year basis, although remaining close to its historical high. Difficult market conditions in some specific countries, along with more competition, did not create conditions in favor of another year of growth.
Markets such as China, Indonesia, Malaysia, Australia and Vietnam were heavily relied upon in 2013 and will continue to be the pillars of our international sales for the Group.
Within this market conditions, the risk of credit with some customers was identified in some areas and were addressed accordingly. Meanwhile, the emergence of new supply sources from far distances, and new competitors entering the game, the market became more aggressive, customers having more choices and indeed the risk of losing customers was identified. The Company addressed the risk by increasing focus on customer relationship, term sales contracts or multiple cargoes between 3-6 months and strengthening internal communication to optimize supply, logistics, deliveries, and sales operations support.
RISKS RELATED TO SHIPPINGThe Group owns 7 Asphalt/Bitumen tankers. The Group is focused to maintain a quality tonnage which is managed by prudent sale and purchase activities. In 2014, new Japanese built Asphalt/Bitumen tanker Tasco Nirand will join the fleet to bring the average age of the fleet to 12 years which is well below the industry average. The young quality tonnage maintained by the Group suitably supports increased sales activities in the Asia Pacific-Australia range.
All ship owning companies in the Group operate with the mission of zero accidents, zero injuries and zero oil spills. The Group ensures that all subsidiary-owned asphalt tankers are insured by first class risk coverage to protect assets against damages and also protect from third-party claims.
The biggest challenge facing the industry is shortage of well-trained personnel. Group has made serious efforts to train and prepare shipping personnel to face industry challenges.
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RESPONSIBILITIES OF THE BOARD
RESPONSIBILITIES OF THE BOARD
QUALIFICATIONS FOR DIRECTORSTo serve as members of the Board of Directors, individuals must meet the following qualifications:
1. Possess an unblemished record.2. Apply both vision and a broad business perspective.3. Exhibit good interpersonal skills, a sense of justice and
an amenable personality.4. Apply effective communication skills.5. Demonstrate systematic business thinking and decision
making.6. Understand financial matters, commerce or industry,
and show business management experience.7. Have prior experience as a director of a company or
state enterprise.
GUIDELINES FOR SELECTION OF DIRECTORS1. Individual candidates must possess the qualifications as
specified above.
2. Overall, the Board of Directors should be comprised of persons with a variety of skills that are of benefit to the determination of corporate direction and guidance.
TERM OF OFFICE FOR DIRECTORS AND EXECUTIVE DIRECTORS OF THE BOARD OF DIRECTORS1. The term of office for Directors of the Board of Directors
1.1 Retirement age is 75.
1.2 A member will be allowed to retain his/her directorship after his/her 75th birthday and remain as Director until his/her three-year term expires.
2. The term of office for Executive Directors
2.1 Retirement age is 55.
2.2 After the age of 55, the term of service can be extended (by the Board of Directors) to the age of 70 with the first extension running for four years maximum; subsequent extensions are for a period of two years each.
BOARD OF DIRECTORSThe members of the Board of Directors of Tipco Asphalt PLC are as follows:
1. Ms. Laksana Supsakorn Chairman
2. Mr. Jacques Pastor Vice Chairman
3. Mr. Nopporn Thepsithar Independent Director
4. Mr. Phirasilp Subhapholsiri Independent Director
5. Mr. Parnchalerm Sutatam Independent Director
6. Mr. Niphon Suthimai Independent Director
7. Mrs. Anne-Marie Machet Independent Director
8. Mr. Koh Ban Heng Independent Director
9. Mr. Hervé Le Bouc Director
10. Mr. Jacques Leost Director
11. Mr. Hugues de Champs Executive Director
12. Mr. Jacques Marechal Executive Director
13. Mr. Sitilarb Supsakorn Executive Director
14. Mr. Somchit Sertthin Chief Executive Officer
15. Mr. Chaiwat Srivalwat Managing Director
DIRECTORS WITH AUTHORITY TO SIGN ON BEHALF OF THE COMPANYThe authorized Directors who can bind the Company consist of two groups of Directors. To bind the Company requires one Director from Group A and another Director from Group B to jointly sign and affix the Company’s seal. The Directors in Group A are Mr. Jacques Pastor, Mr. Hugues de Champs, Mr. Hervé Le Bouc and Mr. Jacques Marechal. The Directors in Group B are Ms. Laksana Supsakorn, Mr. Somchit Sertthin, Mr. Sitilarb Supsakorn and Mr. Chaiwat Srivalwat.
ANNUAL REPORT 201342
RESPONSIBILITIES OF THE BOARDThe Company has determined the roles, duties and responsibilities of the Board of Directors. The Board defines the Company’s vision and strategies clearly, covering marketing, production, management, human resources, finance and budgeting in order to measure their performance against the Key Performance Indicators (KPI) and budget.
Furthermore, operations are periodically audited by the internal audit team, whose report of significant findings is scrutinized, and any corrective measures determined, under the close supervision of the Audit Committee and Board of Directors.
SCOPE OF AUTHORITY OF THE BOARD OF DIRECTORS1. The Board of Directors must conduct the business
according to the Company’s bylaws, objectives, regulations and shareholders’ resolutions with honesty and in accordance with the Company’s best interest.
2. Each Director has to inform the Company promptly if there is any conflict of interest with the Company, or if he or she holds, acquires or divests shares or debentures in the Company or its subsidiaries.
3. The Board of Directors has authority to set policies and to scrutinize investment plans of the Company. The Chief Executive Officer is authorized to control the operations of all departments to conform to the Company’s policies in order to maximize efficiency in the business and for the shareholders.
REQUIREMENT FOR APPOINTMENT TO THE BOARD OF DIRECTORSIn selecting persons to be appointed as the Company’s Directors, the Nomination and Remuneration Committee is empowered to select and screen qualified persons. However, the persons who wi l l be appointed as the Company ’s Directors must have the necessary qualifications under Section 68 of the Public Companies Act B.E. 2535 (including its amendments) and the Company’s Articles of Association. The requirements, nomination, appointment and dismissal of the Company’s Directors are summarized as follows:
1. The number of Directors is fixed by a shareholders’ meeting resolution. The total number of Directors must not be less than 10 persons but not more than 15 persons. One half of the number of Directors must reside in Thailand. The Board of Directors may authorize one or more persons to perform any act on behalf of the Board of Directors but cannot authorize any other person to perform any act as a Director. Any act carried out by such authorized person will be deemed to have been performed by the Board of Directors and the Company will be bound by such an act. In performing their duties, the Board of Directors is entitled to remuneration which will be paid in the form of salary, meeting fees, bonus and allowance.
2. A shareholders’ meeting resolution, having not less than three-fourths of the total attending and eligible shareholders’ votes for the Board of Directors’ meeting resolution, has the power to determine the names of the authorized Directors. The authorized Directors who can bind the Company comprises of two groups of Directors and to bind the Company requires one Director from the first group and another Director from the second group to jointly sign and affix the Company’s seal.
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3. The shareholders’ meeting must elect the Directors in accordance with the following procedures and rules:
3.1 The shareholders’ meeting must vote to elect Directors one person at a time
3.2 In exercising the voting rights for election of each Director, each shareholder will have voting rights according to the number of shares held with one share equal to one vote.
3.3 In exercising the voting rights for the election of each Director, the person who obtains the highest votes and received not less than three-fourth of the total votes of attending and eligible shareholders will be elected as a Director.
4. At every Annual General Meeting of the Shareholders, one-third of the Directors, or if it is not, a multiple of three, then the number nearest to one-third must retire from office. There must be a drawing by lots to determine the Directors who will retire in the first and second years following the registration of the Company. In each subsequent year, the Directors who occupy the position for the longest period must retire. A retiring Director is eligible for re-election.
5. Any Director wishing to resign must submit a resignation letter to the Company which will become effective on the date the Company receives the letter. A Director who resigns as described above may notify the Public Companies Registrar of his/her resignation.
6. If there is any vacancy among Directors other than retirement by rotation, the Board of Directors may at its next meeting elect a person who is qualified and is not subject to any restriction imposed under Section 68 of the Public Companies Act B.E. 2535 to fill the vacancy except where the remaining term of the vacant directorship is less than two months. The term of a new Director replacing a vacant directorship will be equal to the remaining term of that vacant directorship. The resolution of the Board of Directors as specified above must be passed by three-fourths or more of the votes cast by the remaining Directors.
7. A shareholders’ meeting may remove any Director before the expiration of his/her term by passing a resolution having the approval of not less than three-fourths or more of the total attending and eligible number of shareholders and such shareholders must hold in aggregate 75% or more of the total number of shares held by attending and eligible shareholders.
BALANCE OF NON-EXECUTIVE DIRECTORSThe Board of Directors has 15 members, consisting of:
Executive Directors 6Non-executive Directors 3Independent Directors 6
SEPARATION OF POSITIONThe positions of Chairman of the Board of Directors and Chief Executive Officer are not held by the same individual.
BOARD MEETINGSBoard meetings are scheduled to be held a minimum of four times per year. Invitation letters were sent with complete agenda details and related documents for consideration prior to the meetings. The minutes of each Board of Directors meeting is recorded in writing and arranged for the safe keeping of such certified minutes at 25th Floor, Tipco Tower, 118/1 Rama 6 Rd., Samsen Nai, Phayathai, Bangkok 10400. Directors approved these minutes and they are made available for review.
Attendance of Board of Directors Meetings, Audit Committee Meetings and Nomination and Remuneration Committee Meetings for 2013 by the Directors is summarized as follows:
RESPONSIBILITIES OF THE BOARD
ANNUAL REPORT 201344
NAME TITLE
NUMBER OF MEETINGS ATTENDED (TIMES)
BOARD OF DIRECTORS
AUDIT COMMITTEE
NOMINATION AND
REMUNERATION
CORPORATE GOVERNANCE COMMITTEE
Ms. Laksana Supsakorn 1 Chairman 1/1 - - -
Mr. Jacques Pastor 1,4 Vice Chairman 5/5 - 4/5 -
Mr. Niphon Suthimai Independent Director (Chairman of the Audit Committee)
5/5 8/9 - -
Mr. Parnchalerm Sutatam 3 Independent Director 5/5 9/9 - -
Mr. Nopporn Thepsithar Independent Director (Chairman of Nomination and Remuneration Committee)
5/5 8/9 5/5 -
Mr. Phirasilp Subhapholsiri 2 Independent Director (Chairman of Corporate Governance Committee)
2/2 6/6 - 1/1
Mrs. Anne-Marie Machet Independent Director 4/5 - 5/5 1/1
Mr. Koh Ban Hang Independent Director 5/5 - - -
Mr. Hervé Le Bouc Director 0/5 - - -
Mr. Jacques Leost 4 Director 2/5 - - -
Mr. Hugues de Champs Executive Director 5/5 - - -
Mr. Sitilarb Supsakorn Director 5/5 - - -
Mr. Somchit Sertthin Chief Executive Officer 5/5 - 5/5 -
Mr. Chaiwat Srivalwat Managing Director 5/5 - - 1/1
Mr. Jacques Marechal 5 Executive Director 5/5 - - 1/1
Remarks:
1. The Board of Directors meeting No. 4/2013 held on 14th August 2013 passed the resolution to appoint Ms. Laksana Supsakorn as the Company’s Director replacing Mrs. Anurat Tiamtan who resigned from the position, effective on 15th August 2013. And Ms. Laksana Supsakorn was also appointed as a Chairman and Mr. Jacques Pastor was appointed as Vice -Chairman at a Board of Directors’ Meeting No.5/2013 held on 15th November 2013.
2. The Board of Directors meeting No. 3/2013 held on 13th May 2013 passed the resolution to appoint Mr.Phirasilp Subhapholsiri as Director, Independent Director and Member of the Audit Committee replacing Mr. Chainoi Puankosoom who resigned from the position.
3. The Board of Directors meeting No. 5/2013 held on 15th November 2013 passed the resolution to appoint Mr. Parnchalerm Sutatam as Nomination and Remuneration Committee replacing Mr. Somchit Sertthin.
4. Mr. Jacques Leost and Mr. Jacques Pastor joined a Board of Directors meeting No. 3/2013 via video conference on 13th May 2013.
5. Mr. Jacques Marechal joined a Board of Directors meeting No. 4/2013 video conference on 2013 held on 14th August 2013.
The Board of Directors has recorded the minutes of each meeting in writing and arranged for the safe keeping of such certified minutes at 25th Floor, Tipco Tower, 118/1 Rama 6 Rd., Samsen Nai, Phayathai, Bangkok 10400.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 45
POSITIONS IN SUBSIDIARIES AND ASSOCIATED COMPANIESCompany officers holding management and authorized positions in subsidiaries, associated companies or other companies are as follows:
NAME
TIPC
O A
SPHA
LT P
UBLI
C CO
MPA
NY
LIM
ITED
SUBSIDIARIES
ASSO
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ED
OTHERS
TIPC
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TD.
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A SH
IPPI
NG C
O., L
TD.
ALPH
A MA
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TD.
THAI
BITU
MEN
CO.,
LTD.
BITUM
EN M
ARIN
E CO
., LT
D.
RAYC
OL A
SPHA
LT C
O., L
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TASC
O SH
IPPI
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O., L
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TASC
O IN
TERN
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NAL
(HON
G KO
NG) L
TD.
TIPC
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PHAL
T (C
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CO.
, LTD
.
KEMA
MAN
OIL
CORP
ORAT
ION
SDN
BHD
KEMA
MAN
BITUM
EN C
OMPA
NY S
DN B
HD
COLA
SIE
CO.,
LTD.
THE
TIPC
O FO
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PCL.
THAN
OMW
ONGS
E SE
RVIC
E CO
., LT
D.
SIAM
CON
TAIN
ER T
ERMI
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CO.,
LTD.
TIPC
O F
& B
CO.,
LTD
THAI
SLU
RRY
SEAL
CO.
, LTD
.
Ms. Laksana Supsakorn X X / / X
Mr. Nopporn Thepsithar /
Mr. Phirasilp Subhapholsiri /
Mr. Panchalerm Sutatam /
Mr. Niphon Suthimai /
Mrs. Anne-Marie Machet /
Mr. Koh Ban Heng /
Mr. Hervé Le Bouc /
Mr. Jacques Leost /
Mr. Jacques Pastor // / / / / / X / / / / /
Mr. Sitilarb Supsakorn // / / / / / / /
Mr. Somchit Sertthin // / / / / / / / / / /
Mr. Chaiwat Srivalwat // / / / / / / / / / /
Mr. Hugues de Champs // / / / / / / / / /
Mr. Jacques Marechal // / / /
Mr. Chayongsak Pisitpong / / / / / / / /
Ms. Auchcha Rattrakultip / / / / / / /
Mr. Koh Lai Huat / /
Note: X = Chairman / = Director // = Executive Director
RESPONSIBILITIES OF THE BOARD
ANNUAL REPORT 201346
INDEPENDENT DIRECTORSThe Board of Directors has six Independent Directors as follows:
1. Mr. Nopporn Thepsithar2. Mr. Phirasilp Subhapholsiri 3. Mr. Parnchalerm Sutatam4. Mr. Niphon Suthimai5. Mrs. Anne-Marie Machet6. Mr. Koh Ban Heng
GUIDELINES FOR SELECTION OF INDEPENDENT DIRECTORSAll Independent Directors have been appointed according to the Guidelines of SEC.
1. Candidates must possess the requisite qualifications as stated by the Company. A Director should perform his or her duties and express opinions using independent judgment and integrity by taking into consideration the benef it of the Company as a pr ior i ty. The individual should not consider the interests of majority shareholders, individual shareholders or himself or herself.
2. A candidate must possess the complete set of characteristics specified by the Stock Exchange of Thailand and Tipco Asphalt’s Code of Good Conduct, as follows:
2.1 Does not have shareholding in excess of 1% of the total number of shares with voting rights in the Company, businesses in the Group, associated companies or with persons with possible conflict of interest (including connected persons as per Measure 258 of the Securities Act);
2.2 Does not have any involvement in Company management, is not an employee or consultant receiving a regular monthly salar y, nor an individual with controlling authority in the Company, nor have businesses within the Group or associated companies. This extends to persons who may have possible conflict of interest, and candidates must have had no interest or stake as aforementioned for a period of not less than two years;
2.3 The nominee may not have any business relation; have no interest or stake-whether direct or indirect-in financial or management matters of the Company, businesses within the Group, associated companies or persons with a possible conflict of interest of a nature that may compromise independence;
2.4 The nominee must not be a close relative of management members, majority shareholders in the Company, those doing business within the Group, associated companies or persons with possible conflict of interest, nor may the individual be an appointee to maintain the interest of Directors or major shareholders;
2.5 The individual is obliged to disclose any relations to the Board of Directors which may compromise independence.
TIPCO ASPHALT’S DEFINITION OF INDEPENDENT DIRECTORThe Company adopts the above guidelines recommended by the SEC.
The Company has 6 I ndependent Di rec tors . An Independent Director is a Director holding not more than 1 percent of paid - up capital of the Company; does not take part in the management of the Company; is not an employee, staff member or advisor who receives a regular salary from the Company or controlling persons or conflict persons; who have no business related to the Company such as customer, supplier, creditor, debtor; who has no direct or indirect benefit or interest in finance and management of the Company; who is not appointed as a representative to safeguard the interests of a Company director, majority shareholders or shareholders who are related to the Company’s majority shareholders.
THE COMPANY SECRETARYThe Board of Directors appointed Mr. Pornsatian Saowapaksoontorn, Group Manager - Corporate Affairs and Planning, on 24th November 2011 as Company Secretary to take responsibility as set forth by law.
The Company Secretary reports functionally to the Chaiman of the Board of Directors and perationally to the Managing Director. The curriculum vitae of the company secretary has been included the curriculum vitae of the directors and management.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 47
ROLES AND DUTIES OF COMPANY SECRETARYCorporate Secretary has the important roles as follows:
• Act as a Consultant and Secretary of board of directors and other committees.
• Act as a Corporate Governance and Compliance Officer.• Act as a Corporate Communication Officer by being
the center of communication among the Company’s directors, management and stakeholders.
• Act as a Controller of Management Functions in following up on all the resolutions of board of director into practice.
• Act as a Co-ordinator with Thailand Security Depository Co., Ltd. the Company’s registrar.
DUTIES OF CORPORATE SECRETARY:• To adhere to good corporate governance.• To plan meetings and propose relevant agenda• To manage the Board of Directors’ meeting and
coordinate with the minutes recorder in conducting the meeting in a proper manner and in line with the Company’s regulations
• To administer the Shareholders’ meeting in line within the legal framework
• To give advises on legal matters, Public Companies Act and all other rules and regulations of listed companies, the Company’s affidavits aiming at full compliance with relevant laws
• To make sure that the resolutions of Board of Directors are adhered to
• Become a contact point providing information to Directors and third parties
• All matters concerning the Company’s registrar and related document in safe keeping
THE BOARD OF DIRECTORS’ SUB-COMMITTEESThe Board has appointed Board committees to study and review specific matters. At present, Tipco Asphalt has four committees appointed by the Board of Directors: the Executive Committee; the Audit Committee; the Nomination and Remuneration Committee and the Risk Management Committee.
1. EXECUTIVE COMMITTEEThe Company established an Executive Committee to assume full executive responsibilities on behalf of the Board of Directors in order to have flexibility in management and operations. Members of the Executive Committee are as follows:
1. Mr. Somchit Sertthin Chairman2. Mr. Jacques Pastor Member3. Mr. Chayongsak Pisitpong Member (Retired) 4. Mr. Chaiwat Srivalwat Member5. Mr. Koh Lai Huat Member6. Mr. Hugues de Champs Member7. Mr. Jacques Marechal Secretary
The Executive Committee has responsibi l i t ies as established by the Board of Directors. The Chairman of the Executive Committee has the highest authority to set operational policies related to the Company, while the Chief Executive Officer has the highest authority for implementation
SCOPE OF AUTHORITY OF THE EXECUTIVE COMMITTEE
The Executive Committee, pursuant to the resolutions of the Board of Directors of the Company, is responsible for the following:
1. Proposing agenda for meetings of the Board of Directors and counseling the Board of Directors on major decisions.
2. Establishing the policies and operating procedures of the Company.
3. Managing, making decisions and directing the business and affairs of the Company.
2. AUDIT COMMITTEEThe Company has a process that inspects and controls the business by appointing four Independent Directors to the Audit Committee.
1. Mr. Niphon Suthimai Chairman2. Mr. Parnchalerm Sutatam Member3. Mr. Nopporn Thepsithar Member4. Mr. Phirasilp Subhapholsiri Member Mr. Joseph Soosay Secretary
All members of the Audit Committee have adequate expertise and experience to review creditability of the financial reports.
RESPONSIBILITIES OF THE BOARD
ANNUAL REPORT 201348
TERMS OF OFFICE OF THE AUDIT COMMITTEE
The Audit Committee directly reports to the Board of Directors. The Audit Committee has a three-year term and new members will be appointed by the Board of Directors at the end of the term.
SCOPE OF AUTHORITY OF THE AUDIT COMMITTEE
The role of the Audit Committee, as assigned by the Company Board of Directors, is as follows:
1. Review the reporting of the Company’s financial statements for their accuracy and adequacy.
2. Review the suitability and effectiveness of the Company’s internal control system, internal audit function and the independence of the Internal Audit Department, while providing concurrence to the appointments, transfers, and terminations of the Head of the Internal Audit Department or any other department responsible for performing internal audit responsibilities.
3. Review the Company’s compliance to any regulations on securities, the regulations of the SET and any other regulations relevant to the Company’s business.
4. Consider, propose and select the independent external auditor to the Company Board of Directors with recommendation on his remuneration. In addition, the Audit Committee participates in the meeting with the external auditor at least once a year without presence of the Company Management.
5. Consider the Company’s business transactions with related parties or any transaction that may lead to potential conflicts of interest in compliance with the relevant rules and regulations of the SET to ensure their rationality and maximum benefit to the Company.
6. Issue a report of the Audit Committee, to be signed by the Chairman of the Audit Committee and disclosed in the Company’s Annual Report, and shall at least contain comments in the following areas:
6.1 Accurac y, adequac y and credibi l ity of the Company’s financial statements.
6.2. Adequacy of the Company’s internal control system.
6.3. Compliance to any regulations on securities, the regulations of the SET and other regulations relevant to the Company’s business.
6.4. Appropriateness of the external auditor.6.5. Transactions of possible conflicts of interests.6.6. M eet ings of the Audit Committee and
contributions of members.6.7. Overall comments from performing in accordance
to this Charter.6.8. Other transactions that shareholders or other
investors should be aware of in accordance to the role and responsibility assigned by the Company Board of Directors.
7. Perform any other task as assigned by the Company’s Board of Directors with the approval of the Audit Committee.
8. Per for m dut ies in ensur ing the success and effectiveness of the Company’s operations, as well as overseeing the management of enterprise risks of the Company (which will include advising the Board of Directors, management, and the Risk Management Committee on matters related to enterprise risk management).
REQUIREMENTS FOR APPOINTMENT OF THE AUDIT COMMITTEE
1. The Board of Directors may appoint at least three Independent Directors as the Audit Committee, provided that one of the members of the Audit Committee must have accounting knowledge. The Audit Committee must elect one of the members to be the Chairman.
2. The term of an Audit Committee member is three years.
3. The Audit Committee must be independent in carrying out the work and will be directly responsible to the Board of Directors.
4. The status of the Audit Committee member will cease upon any member’s death, resignation, dismissal or retirement by rotation.
5. The Audit Committee’s remuneration will be decided by the Board of Directors.
6. There must be at least four Audit Committee meetings each year, with results reported to the Board of Directors.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 49
3. THE NOMINATION AND REMUNERATION COMMITTEEThe Nomination and Remuneration Committee consists of four directors of whom one director is an Executive Director and three directors are Independent Directors. One of the Independent Director is appointed as Chairman of the Nomination and Remuneration Committee. Members of Nomination and Remuneration Committee are as follows;
1. Mr. Nopporn Thepsithar Chairman2. Mrs. Anne-Marie Machet Member3. Mr. Parnchalerm Sutatam Member 4. Mr. Jacques Pastor Member
The Board of Directors meeting No. 5/2013 held on 15th November 2013 passed the resolution to appoint Mr. Parnchalerm Sutatam as Nomination and Remuneration Committee replacing Mr. Somchit Sertthin.
SCOPE OF AUTHORITY OF THE NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee’s functions are:
1. To screen and select the appropriate persons as members of the Board of Directors and to present the selected individuals to the Board of Directors, who then submit names to the shareholders’ meeting for approval.
2. To screen and select appropriate qualified persons to be nominated as the Chief Executive Officer, Managing Director and Executive Director and then propose their names to the Board of Directors for approval.
3. To screen the remuneration of the Company’s Directors to the Board of Directors and to further propose same to the shareholders’ meeting for approval.
4. To propose the remuneration packages for the Chief Executive Officer, Managing Director and Executive Directors and then make proposals to the Board of Directors for approval.
4. CORPORATE GOVERNANCE COMMITTEE The Committee appointed the Corporate Governance Committee to improve corporate governance practices of the Company in order to comply with the Principles
of Good Corporate Governance for listed companies, consisting of four directors (of which two are independent directors and the other two are executive directors) as follows:
1. Mr. Phirasilp Subhapholsiri Chairman2. Mrs. Anne-Marie Machet Member3. Mr. Jacques Marechal Member4. Mr. Chaiwat Srivalwat Member
ROLES AND RESPONSIBILITIES OF THE CORPORATE GOVERNANCE COMMITTEE
1. Propose corporate governance (CG) guidelines to the Board.
2. Advise the Board on CG matters.
3. Ensure that the duties and responsibilities of directors and the management conform to CG principles.
4. Revise guidelines for Tipco Asphalt ’s CG against those of international organizations and present its recommendations to the Board.
5. Delegate corporate governance policies to the management to promote and implement
GOOD CORPORATE GOVERNANCE SELF ASSESSMENT
The Company has undertaken the Corporate Governance Self Assessment Based on the Principles of Good Corporate Governance, relying on the Stock Exchange of Thailand (SET ), as a vital tool for reviewing and improving the Company’s performance and providing reference data for corporate governance rating.
The exercise also helps to increase the operational effectiveness of the Company when the assessment results are analyzed and evaluated to indicate the level of achievement of objectives and opportunities for improvement.
BOARD SELF ASSESSMENT
The Board Self Assessment form provided by the SET is for consideration by the boards of listed companies. The main objective of the self assessment form is to evaluate the performance of the board, as a team, and of Directors, as
RESPONSIBILITIES OF THE BOARD
ANNUAL REPORT 201350
a collective body, in light of recognized best practices and principles of good corporate governance.
The six categories covered by the Board Self Assessment Form are as follows:
1. Structure and characteristics of the board2. Roles and responsibilities of the board3. Conduct of board meetings4. The board’s performance of duties5. Relationship with management6. Sel f - development of Direc tors and execut ive
development
The company scored 2.5 out of 4 rating on the Board Self Assessment evaluation.
DIRECTOR’S ORIENTATION
For new Directors, the Company arranges orientation program to inform him/her of its business policies, capital structure, shareholding structure, business performance, information systems and related laws and regulations. Moreover, each Director receives a Director’s Handbook and other information. The new Director will also receive briefing from the CEO and/or Managing Director on the Company policies, relevant information (including the capital structure, shareholders, performance, and processes in use at the Company), laws, regulations, a marketing/operational overview, and update on performance.
SUCCESSION PLAN
The Nomination and Remuneration Committee has been assigned by the Board to be responsible for a succession plan, especially to ensure that the Company has an appropriate succession plan in place for the positions of the CEO, MD and other senior executives, and to make recommendations to the Board for approval. Nomination for appropriate leaders has been recognized as a priority by the Board in order to strengthen the Company’s management and ensure continued progress.
EXECUTIVE OFFICERS
The Company’s executive officers are as follows:
1. Mr. Somchit Sertthin Chief Executive Officer2. Mr. Jacques Pastor Vice Chairman3. Mr. Chaiwat Srivalwat Managing Director4. Mr. Kasidis Chareancholwanich Chief Operating Officer - Thailand5. Mr. Hugues de Champs Chief Operating Officer - International6. Mr. Koh Lai Huat Chief Financial Office 7. Mr. Chayongsak Pisitpong Chief Director (Retired) Finance8. Mr. Sitilarb Supsakorn Executive Director9. Mr. Jacques Marechal Director - Finance and International Legal Affairs10. Ms. Auchcha Rattrakultip Director - Finance,
Credit Control and Legal
11. Mr. Praveen Penmanee Director - Operations12. Mr. Louis - Frederic SACHS Director - Marine Group13. Mr. Ismail Bin Abdul Hamid Director - International Sales and Marketing14. Mrs. Udomporn Punpatch Director - Human Resources
PERFORMANCE ASSESSMENT OF TOP EXECUTIVES
The Nomination and Remuneration Committee assesses the performance of the CEO based on the Company’s operating results, implementation of the Board’s policies, BSC (Balanced Scorecard) performance and the overall socio-economic circumstances. The Nomination and Remuneration Committee will then consider the appropriate remuneration for the Executive Directors and propose such amount to the Board for approval.
POLICY ON DIRECTORSHIPS AT OTHER LISTED COMPANIES
The Board of Directors has established guidelines that none of the Company’s Directors and Executives Directors may hold directorships at more than 5 listed companies in addition to serving on the Board of Tipco Asphalt PLC.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 51
REMUNERATION FOR THE BOARD AND EXECUTIVES1. Total cash remuneration in 2013 for the Board of Directors, Audit Committee and the Nomination and Remuneration
Committee was Baht 4,556,000
NAME POSITION2013 (BAHT) 2012 (BAHT)
FIXED VARIABLE FIXED VARIABLE
1. Ms. Laksana Supsakorn Chairman 50,000 50,000 - -2. Mr. Niphon Suthimai Independent Director Chairman of
the Audit Committee590,000 200,000 530,000 200,000
3. Mr. Nopporn Thepsithar Independent Director Audit Committee Member Chairman of the Nomination and Remuneration Committee
532,000 200,000 318,000 150,000
4. Mr. Parnchalerm Sutatam Independent Director Audit Committee Member
512,000 200,000 488,000 200,000
5. Mr. Phirasilp Subhapholsiri Independent Director Audit Committee Member
260,000 100,000 - -
6. Mrs. Anne-Marie Machet Independent Director 220,000 200,000 200,000 200,0007. Mr. Koh Ban Heng Independent Director 200,000 200,000 200,000 200,0008. Mr. Hervé Le Bouc Director 200,000 200,000 200,000 200,0009. Mr. Jacques Pastor Executive Director
Nomination and Remuneration Committee Member
220,000 200,000 220,000 200,000
10. Mr. Jacques Leost Director 200,000 200,000 200,000 200,00011. Mr. Hugues de Champs Executive Director 200,000 200,000 200,000 200,00012. Mr. Sitilarb Supsakorn Executive Director 200,000 200,000 200,000 200,00013. Mr. Jacques Marechal Executive Director 200,000 200,000 150,000 150,00014. Mr. Somchit Sertthin Executive Director Nomination
and Remuneration Committee Member
220,000 200,000 220,000 200,000
15. Mr. Chaiwat Srivalwat Executive Director 200,000 200,000 200,000 200,000
RETIRED DIRECTORS 2013
16. Mrs. Anurat Tiamtan Chairman 300,000 - 400,000 400,00017. Mr. Chainoi Puankosoom Independent Director
Audit Committee Member252,000 - 318,000 150,000
Total 4,556,000 2,750,000 4,504,000 3,050,000
REMUNERATION FOR THE BOARD AND EXECUTIVES
ANNUAL REPORT 201352
Note :
• Ms. Laksana Supsakorn was appointed as Director on 15th August 2013, replacing Mrs. Anurat Tiamtan and appointed as Chairman on 15th November 2013.
• Mr. Phirasilp Subhapholsiri was appointed as Director on 14th May 2013, replacing Mr. Chainoi Puankosoom.
• The remuneration of total Baht 552,000 was paid to 2 Directors prior to their retirements.
• Variable Remuneration payments not exceeding one time of the total annual fixed remuneration to all the Board of Director members shall be considered and paid by the Company on condition that the Company is profitable. As the Company was profitable in 2012, the variable remuneration of Baht 2,750,000 was paid in 2013.
2. There was no non-financial remuneration for Directors in 2013.
3. Other remuneration-None
4. Total remuneration in 2012 and 2013 for 14 Executive Directors and Executive Offices, which included salary, bonus, retirement fund and provident fund was Baht 96 Million and Baht 96 Million respectively.
LITIGATION AGAINST THE BOARD OF DIRECTORSThere is no record of litigation against the Board of Directors during the past 14 years.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 53
CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE POLICYThe Board of Directors of the Tipco Asphalt Group (“Group”) continuously strives for regulating good corporate governance practices in order to maintain sustainable development of the Group with respect to the interests of all stakeholders and to observe ethical business practices with transparency and traceability. The Group has established the following corporate governance policy for the Board of Directors, the directors, and the employees to abide by:
CORPORATE GOVERNANCE REPORT
The Board of Directors recognizes the critical importance of corporate governance in supporting the Company’s sustainable growth, creating shareholder value, and securing trust from all stakeholders, including shareholders, customers, employees, and the general public. Thus, they have determined to adhere to good corporate governance practices, for which the Company has been awarded a “very good” corporate governance rating by the Thai Institute of Directors. Such rating was based on OECD Principles of Corporate Governance and was awarded for 5 years consecutively (2009 to 2013).
1. The Board of Directors shall take the lead in the matter of business ethics by setting the code of conduct to manage and monitor the Group’s operations to ensure all business activities are conducted in accordance with the applicable laws and ethical standards.
2. The Board of Directors shall play an important role to develop and govern strategies, policies and action plans, taking into consideration the involved risk factors in order to set the appropriate management guidelines for the best interests of the Group.
ANNUAL REPORT 201354
Good Corporate Governance is essential to establish relationships between
a company’s board of directors, its management, and shareholders in order
to have a common vision and goal.
3. The Board of Directors shall strive to add value to the business in the long run as well as manage the business with prudent practices in order to maximize shareholders’ returns, while maintaining the highest standards of social responsibility at all times.
4. The Board of Directors shall encourage shareholders to be aware of their rights as the owners of the Group and exercise their rights through the process of appointing the Company’s Board of Directors to act as their representatives. Shareholders are also eligible to make decisions on any significant changes of the Group.
5. The Board of Directors shall treat all shareholders, including minority shareholders, fairly and equally.
6. The Board of Directors shall create the optimal balance between the existing needs and future expectations of the Company and all stakeholders respectively based upon the sustainable mutual benefits.
7. The Board of Directors shall disclose the information, both financial and non-financial, correctly, adequately, transparently and traceably through the proper two-way communication channels for the benefit of stakeholders’ decision making.
RIGHTS OF SHAREHOLDERSTipco Asphalt ensures that shareholders, both as investors and as owners of the Company, are entitled to all basic rights at acceptable and trusted standards, which include the right to freely trade or transfer their own shares, the right to receive dividends from the Company, the right to attend the shareholders’ meeting, the right to propose the agenda of the meeting, the right to nominate a person to be a director, the right to express opinions independently, the right to make decisions on important affairs of the
Company e.g. the election of directors, approval of significant transactions influencing the direction of the Company, amendment of Articles of Association and regulations of the Company, etc. Shareholders have the right to vote at meetings according to the number of shares owned by each shareholder, whereby one share is for one vote and no particular share allows them privilege to limit the rights of other shareholders.
Apar t f rom the above ment ioned r ights of the shareholders, Tipco Asphalt has carried out additional tasks to encourage and facilitate shareholders in the exercising of their rights.
• Providing essential, clear and up-to-date information for shareholders regarding the Company’s business. Even though some information is not required to be disclosed by law, if Tipco Asphalt considers that it is of significance to the shareholders, the Company will notify shareholders of the information through Tipco Asphalt’s website and SET.
• All shareholders will receive significant and sufficient detailed information concerning the date and the agenda prior to the date of the shareholders’ meeting. Such information will be posted on Tipco Asphalt’s website around two months before the related documents are submitted to shareholders at least than 14 days prior to the meeting. The shareholders’ right to attend the meetings and the right to vote on resolutions will be clearly stated in the notice of the meeting submitted by the Company.
• In a case where shareholders are unable to attend a meeting, they are entitled to appoint a representative e.g. an independent director or a person to act as their proxy, using any proxy form attached to the notice of
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 55
CORPORATE GOVERNANCE REPORT
the meeting. The Company has prepared the proxy forms in compliance with the specifications defined by the Ministry of Commerce in which the shareholders can exercise their voting rights as wished. These forms can also be downloaded from Tipco Asphalt’s website. In addition, Tipco Asphalt provides shareholders with the duty stamp to be sealed on the proxy form for their convenience. Shareholders who arrive after the meeting has commenced are able to vote on the agenda item being considered provided that a resolution is not yet made. They will constitute part of the quorum starting from the agenda item that they are in attendance and may exercise their voting rights unless the meeting states otherwise.
• Prior to the Annual General Meeting No. 1/2014, shareholders of the Company have the right to suggest issues to be included in the agenda of the ordinary general meeting of shareholders for the year 2013. Shareholders have been allowed to exercise such right from 1st November 2013 to 20th January 2014 for the consideration of the Board of Directors. Should the proposed issue be included on the meeting agenda, the Company will specify in the notice of the meeting that such agenda was proposed by a shareholder. However, in case the proposed issue is rejected, the Company will inform shareholders of the reasons at the ordinary general meeting of shareholders. Moreover, any shareholder is entitled to nominate any qualified candidates for the election as a Board member in advance. The Nomination and Remuneration Committee will consider the proposed nominees together with other nominated persons according to the Company’s criteria for the nomination of directors. The committee then presents the nominees to the Board for consideration before proposing them to the shareholders’ meeting for approval.
• On the date of the meeting, the Company uses the barcode system for registration to ensure convenience of shareholders as each reference number is already included in the registration form and proxy form. In
addition, for each agenda, the Company will collect the ballot paper from the shareholders who vote “disapprove” or “abstain” in order to deduct the votes from the total entitled voting rights. The Company also applies the barcode system to perform the calculation in order to ensure immediate voting results promptly for announcement right after the end of each agenda. Shareholders are entitled to verify each voting result after the meeting.
• One-third of the directors must retire from office on a rotation basis in each ordinary general meeting of shareholders and the election of directors to replace the retired directors takes place during the meeting. However, if the numbers of candidates exceed the number of directors required, each candidate is then elected individually. During the meeting, shareholders are entitled to freely propose the name of an individual for directorship of the Company.
• At the meetings, shareholders are allowed to freely express their opinions, give suggestions, and raise questions on any agenda item before casting votes to ensure that shareholders have sufficient detailed information on the matter. Should shareholders have questions or inquiries, specialists in specific fields are available to answer queries under the responsibility of the Board.
• An agenda on the Board’s remuneration is included to inform the shareholders of the amount and type of remuneration received by each director including meeting allowance and the Board’s bonus.
EQUITABLE TREATMENT OF SHAREHOLDERSThe Company provides equitable treatment to every individual shareholder, major or minor, as well as institutional or foreign investors. To that effect, Tipco Asphalt strives to find means to ensure equality especially for minor shareholders. These means are:
ANNUAL REPORT 201356
INTERNAL INFORMATION CONTROLThe Board of Directors has established measures to control the usage and prevent the misuse of internal information (insider trading) for the personal benefit of the concerned person, namely the Board of Directors, Tipco Asphalt top executives and employees working in related departments (including their spouses and children who are minors). All concerned persons are recommended to refrain from trading the Company shares for a one-month period prior to the release of the Company’s quarterly and annual financial statements (blackout period). In addition, the Board of Directors will monitor all required actions in accordance with the related standards. Any changes in shareholding of directors must be reported in the Board of Directors’ meetings.
In this regard, it will be included in the agenda of the Board of Directors meeting on a quarterly basis.
CONFLICT OF INTEREST PREVENTIONThe Board has established policies and measures as follows:
1. Tipco Asphalt has a clear and transparent shareholder struc ture. There is no cross-holding of major shareholders, thereby, preventing any conflict of interests or transfer of benefits to one party or another. The shareholder structure of Tipco Asphalt and its subsidiaries is published in the Company’s annual report, also the Board member’s ordinary shares.
2. There is a clear separation of duties and responsibilities of the Board, the management, and shareholders, thereby, ensuring no overlapping of their duties and responsibilities. The directors or executives who may have interests in any agenda under consideration must not attend the meeting nor vote on such an agenda. This is to ensure that the Board and executives make decisions in a fair manner for the utmost benefit of shareholders.
3. The Company has an established policy governing the use of internal information and has incorporated it into employee regulations with penalties for the executives or employees in the event the internal information is disclosed to the public or used for personal benefit.
4. Tipco Asphalt Code of Conduct includes the additional guidelines that prohibit employees from using the Company’s assets or spending working hours to search, contact or conduct share-trading activities on a regular basis for personal gain or for others without justifiable reasons and not for Tipco Asphalt’s interests.
The Company will treat all shareholders equally and in a proper manner. By law, shareholders are provided with adequate information at least seven days before the meeting date with accurate, detailed information on the various agenda items along with a proxy form. The Company provides shareholders with proxy form to appoint another individual or one of the Company’s Independent Directors to attend and vote on their behalf. Any opinions and questions relevant to the agenda from minority shareholders can be made directly to the Chairman of the Audit Committee via email to [email protected].
THE ROLE OF STAKEHOLDERS IN CORPORATE GOVERNANCECompany Directors place great emphasis on appreciating the contributions of all stakeholders: shareholders, employees, customers, suppliers, creditors, business partners and even competitors. All stakeholders are invited to work with the Company toward shared goals and mutual benefits, while making Tipco Asphalt a competitive and successful business.
We therefore adhere to the principle of fulfilling corporate social responsibilities as well as contractual obligations that the Company is a party to, as they pertain to our stakeholder relationships.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 57
CORPORATE GOVERNANCE REPORT
SHAREHOLDERSShareholders have basic rights stipulated by law and by Company regulations, such as the right to expect a fair return, to request a determination of the number of shares, to receive share certificates, and to attend, vote and freely express their opinions at shareholders’ meetings.
Tipco Asphalt also believes that shareholders, as owners of the Company, have the right to make suggestions and comments on the affairs of the Company. It is a responsibility of the Independent Directors to receive such an input. Each comment and suggestion is carefully considered and presented to the Board of Directors.
EMPLOYEESThe Company truly believes that employees are Tipco Asphalt’s most valuable asset and is determined to ensure that every employee is proud of and confident in the organization. During 2012, Company activities promoted a collaborative working environment to drive innovation and enhance competence by preparing employees to work globally and cope with volatile economic situations.
At the same time, the Company focuses on promoting a beneficial workplace with attention to employees’ health, safety, working conditions and competitive remuneration. To encourage long-term savings by employees, the Company joined the Provident Fund Scheme of CIMB - Principal Assets management Co., Ltd.
CUSTOMERSTo develop and maintain sustainable relationships, the Company is determined that customers should enjoy the maximum benefits in terms of service, quality, and price. A new Customer Support Office opened in 2012 and continue doing in 2013 to provide product information, solve problems, and receive any complaints in a way that can improve quality and ensure total satisfaction.
BUSINESS PARTNERSOperating within a competitive business context requires building and maintaining trust. Tipco Asphalt strictly adheres to its Company Code of Conduct, honors its promises and upholds its commitments to trading partners in all ways, including quality products and on time delivery
COMPETITORSThe Company also operates within a competitive business context by being fair and strictly following both laws and its own Code of Conduct in its dealings in the industry and market. The Company has never been in any disputes with its competitors.
CREDITORSThe Company practices business under the terms of its loans and obligations to creditors and depositors.
The Company, moreover, initiates various measures to maintain good relations with creditors.
ANNUAL REPORT 201358
DISCLOSURE AND TRANSPARENCYDisclosure of the Company’s general and financial infor mat ion i s done accurate ly, complete ly and transparently in a timely manner. Disclosed information in the Annual Report and SEC Form 56-1 is reviewed by the Company’s Directors, executives and members of the Audit Committee, annotated by the Board of Directors and the external auditor, and posted on the Company’s website (www.tipcoasphalt.com). Reports are also made on major shareholders, shareholding interests of Directors and Executives, remuneration of Directors and details of board meetings. The Company prohibits any Directors, executives or employees from using internal information for personal gain or benefit.
Realizing the importance of transparent information disclosure, the Company has set and supervises clear policies, approved by the Board of Directors, concerning communication with external parties. For disclosures on important information, the Company uses various communication channels and disseminates regularly through the public media. Other means by which shareholders and stakeholders are apprised or given access to Company information include:
• Disclosures filed with the Stock Exchange of Thailand (SET) such as financial statements, resignations of Directors, etc.
• Information is posted on the Company’s website at www.tipcoasphalt.com, in the Investor Relations section.
• Information is disseminated elec tronical ly to employees via e-mail and the Company’s intranet.
• Company visits from shareholders, investors, analysts, and fund managers are welcomed.
• Information requests, comments and inquiries related to investor relation should be made by contacting
Mr. Chaiwat Srivalwat (Managing Director) at tel. +66 2273 6646, fax. +66 2271 3417, or by email at [email protected]
We have been selected from 1 of 20 listed companies by Stock Exchange of Thailand (“SET”) to participate in the project aiming to develop Good Corporate Governance for listed companies in 2013. The project has been arranged by SET through TRIS Corporation Limited (“TRIS”) in order to improve good corporate governance of the listed companies and provide the recommendations in the following areas:
1. Good Corporate Governance and Board Practices; 2. Risk Management;3. Internal Control.
We received constructive recommendation by both SET and TRIS and we are pleased to report that our Company is recognized as one of the very few well-established listed companies with the best internal control system.
Good Corporate Governance is essential to establish relationships between a company’s board of directors, its management, and shareholders in order to have a common vision and goal.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 59
EMPLOYEE DEVELOPMENT POLICY
Indeed, our Core Values forms an integral part of all employee development activities. Examples include:
• Reinforcement training of our Core Values using ex per i ent i a l -based approach - We Are T IPCO (“Teamwork”, “Integrity”, “Prudence”, “Commitment” and “Open-mind”). In a two-day experience at the Baan Jamroong Village, Rayong, groups of staff from Plants and the Head Office learned and reflected upon the TIPCO Core Values. This was done through observation of, and interaction with the village’s self-sufficient community business practices and concepts. At the end of 2013, 254 of our staff had joined this training, which will continue in 2014.
• Workshops and training courses were delivered to promote “Prudence” in the way of work for inter-departmental / corporate-wide understanding, such as Business Concept for Supervisors as well as Product Knowledge and Plant Visit. At the same time, specific workshops are held to integrate behaviors embodied by “Prudence” into technical skills such as Advanced Defensive Driving for sales functions, Effective Business Presentation, and Essential Negotiation for various functions.
The Tipco Asphalt Group’s Core Values continue to serve as the foundation for employee development to support our 2015 Vision. Our core value of “Prudence” served as the focus area for 2013. This facilitates the building of trust with our stakeholders through openness and transparency of our business conduct; and builds upon our other Core Values of “Teamwork” and “Integrity” which were the focus areas in prior years (since 2011).
HUMAN RESOURCES
ANNUAL REPORT 201360
• Coaching for executive staffs, groups of management successors, and high potential employees were conducted to promote leadership competency.
Furthermore, we conducted workshops such as the “CSR Day” coaching as well as the “Carbon Footprint of the Organization” to further reinforce our corporate social responsibility concepts and tools for all employees.
As a further example of our commitment towards employee development, the Tipco Asphalt Group has engaged an external consultant for a two-year (2013 and 2014) employee development project. This project, entitled the “Immersion of Leadership, Management and Human Capital Development for the Future”, addresses key processes such as hiring, development, and succession planning in order to encourage leadership development at all levels of the organization from staff to management level. A wide range of methods is applied for this objective, such as off-site external training and workshops, on-site work, as well as special assignments.
Additionally, the Tipco Asphalt Group also continues to promote language skills and operational excellence as part of our employee development. The language competency development scheme was extended in 2013 to cover other relevant languages in addition to English. Such initiative will better equip our employees’ competency to meet the increasing internationalization of our business; especially in light of the regional economic integration goals of the ASEAN Economic Community, or “AEC”.
In the area of operational excellence:
• We have continued our Quality Control Circle (“QCC”) program for operational excellence;
• We have also rolled-out the 5S method as the basis of our efficiency improvement program in all five manufacturing plants in Thailand as well as our Head Office; and finally
• We have continued the Driver Excellence program by reinforcing development of safety and service standards for our 200 truck drivers nation-wide. This program also provides an incentive package for drivers who can uphold our safety and service targets.
Collectively, the programs above have had a significant positive impact to the efficiency and effectiveness of the operations of the Tipco Asphalt Group.
2014 DIRECTION IN HUMAN RESOURCES DEVELOPMENTIn 2014, the focus of our employee development policies will continue to support the business growth. This will provide positive career advancement opportunities for our employees. We will also promote a positive work environment and improved work processes in preparation for further evolutions of the Tipco Asphalt Group.
Fundamentally, a three-pronged approach shall be taken towards the goal of developing our human resources:
1. We will revolutionize our candidate screening and hiring strategy with the use of the “Right Hire; Right Match” program. The objective is to screen high caliber candidates with superb attitudes who fit well with our corporate culture and business growth objectives.
2. The development of high potential employees in the “High Potential Development” and “Next Generation” programs will continue; with the focus of grooming potential successors for middle and top management positions. This includes “Talent Calibration” sessions involved by executives, and various development tools such as workshops, seminars and e-coaching.
3. The continuing development of leadership and general management skills of supervisors and managers.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 61
SOCIAL RESPONSIBILITY POLICY
The Tipco Asphalt Group continuously strives to promote good corporate governance practices to be the key contributor to the success of all stakeholders while maintaining high standards of social responsibility at all times. The Group has adopted a social responsibility policy that aligns to leading international standards to serve as the operating guidelines for the Board of Directors, the directors and employees in the matters of economy, society and environment:
1. The Group shall manage business under good corporate governance practices and the code of business conduct.
2. The Group shall respect and support the human rights of employees and all stakeholders in the value-chain of the Group’s business, and refuse to support any activities that violate such human rights.
3. The Group shall continuously improve the human resources operations, particularly in matters concerning health, security, safety, and the environment.
4. The Group shall strategically and continually improve the capability of environmental operations in order to minimize the environmental impact of our operations in a sustainable manner.
5. The Group shall treat all stakeholders fair ly by observing a good code of business conduct.
6. The Group shall treat both current and prospective customers fairly.
7. Everyone in the Group is encouraged to participate in community development initiatives and contribute their talents to facilitate the sustainable environmental practices advocated by the Group.
8. The Group shall strategically integrate the social responsibility guidelines into the decision-making process of the business in order to better define the value-chain of the Group’s business.
9. The Group shall regularly review and manage its business impact in line with the expectations of all stakeholders; and also in accordance with the changes of environmental conditions.
10. The Group shall communicate its social responsibility guidelines to employees and all stakeholders clearly and in a timely manner in order to raise the awareness and voluntary spirit of social responsibility among them to better support the value-chain of the Group’s business.
SOCIAL RESPONSIBILITY POLICY
ANNUAL REPORT 201362
Our Group has participated in the Corporate Social Responsibility promotion program which has been run by the Department of Industrial Works (“CSR-DIW”) continuously since 2008. In late 2012, our Group was the first asphalt company in Thailand to be assessed against the international standard of ISO 26000 (Guidance on Social Responsibility) or TIS 26000-2553 by Management System Certification Institute (Thailand). This reflects our commitment towards integrating social responsibility into our standard work processes and the local communities for the purpose of achieving a strategic sustainable development. In 2011, our Phitsanulok Plant had been selected as one of the outstanding workplaces in Thailand with regards to health, safety and environmental matters. We are pleased to mention that we have received this award for 13 consecutive years.
In 2012, our Group has launched a new asphalt product, namely, CSS-1P asphalt emulsion (Penetrated Prime Coat), which is beneficial for the society and the environment as it helps reducing global warming. It can replace Cutback asphalt which has substantial toxic mixture of oil or fossil fuel that causes pollution and harmful to the environment.
In year 2013, we received Merit Award for “Economics Contribution” from National Innovation Agency, for the product called Para Asphalt Emulsion or CSS-1h (EMA). The award was won based on the fact that it benefits the economy, society and environmental.
ANTI CORRUPTIONIn 2013, the Board of Directors of the Company had adopted the anti-corruption policy in order to prevent corruption in every activity of the value supply chain and to have vigilant operations. For instance, the Board of Directors, executives and staff of the Group are prohibited from participating in or agreeing to or encouraging corruption of all forms, either directly or indirectly. Meanwhile, good internal control system is applied in our working process to promote anti-corruption measures in addition to participating in the Listed Companies Development Project of the Stock Exchange of Thailand regarding corporate governance of 2013, which was organized by Trist Corporation Co., Ltd. The purpose is to apply the survey results and recommendations regarding internal control according to international standards of COSO (the Committee of Sponsoring Organization of the Treadway Commission) in the Group’s development and improvement of internal control on a continual basis.
RESPONSIBILITY TO THE STAKEHOLDERSThe Group has established action guidelines for our staff to interact and respond to each group of stakeholders by prioritizing for discussion, communicating and assessing the benefits and desired impact to the local communities. For example, our plants have been using CSR-DIW’s processes to review our status, set up dialogues with communities, plan CSR projects, and follow-up and review the CSR plans with local communities in surrounding areas. We also conduct regular surveys of our supplier and customer satisfaction as a way to improve our response to the various Stakeholders’ expectations.
In late 2012, our Group was the first asphalt company in Thailand to be assessed against the international
standard of ISO 26000:2010
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 63
ENVIRONMENT PRESERVATION AND NATURAL RESOURCE MANAGEMENTWe recognize the impor tance of preser v ing the environment, managing natural resources, preventing pollution, as well as issues pertaining to climate change. On our part, we have worked relentlessly to improve the environment, quality of life of our key stakeholders (including employees, subcontractors and communities around our plants) in compliance with ISO 26000, such as to reduce the use of fossil fuel for heating in the production of asphalt products. In addition, our Group also organizes trainings and workshops to raise awareness in maintaining sustainable clean and healthy environment.
We have also embarked on projects to increase the energy efficiency of our operations. This includes:
• Reducing solvent content in our products without impacting the end-product quality;
• Reducing fuel usage by employing the use of larger road asphalt tanker and trucks to reduce delivery trips. The asphalt tankers are also installed with high-efficiency insulation to minimize heat loss during delivery ;
• Reducing fuel consumption by using GPS technology in our trucks to optimize transport routes and time;
• Reducing CO2 emissions by replacing fuel oil with LPG in heating asphalt products;
• Reducing energy consumption through better preventive maintenance of production equipment ;
• Increasing the use of clean energy by using LPG in place of fire woods to provide heat for products in road asphalt tankers.
SOCIAL RESPONSIBILITY POLICY
ANNUAL REPORT 201364
Though our production process is still unable to achieve zero discharge pollutant, we are committed towards further improvement in this area with the waste reduction hierarchy, as reflected in the following examples:
• Recycling of treated waste water in producing asphalt emulsion;
• Recycling of lubricants and engine oil from asphalt trucks for use as additives in the asphalt production process;
• Regular monitoring of the air quality released from our plants’ chimneys; and last but not least
• Reducing nitrogen oxide (NOx) emissions through the procurement of engines that meet “ Tier I I” specifications for new build ocean going asphalt tanker.
FUTURE PLANS AND EFFORTS TO REDUCE GLOBAL WARMINGOur Group has set out the goal for all plants to participate in a project that promote social responsibility under the Department of Industrial Works (“CSR-DIW”) and set targets to reduce the emission of CO2 in our production process with respect to global warming as well as upgrading the standard of occupational health and safety of TISI 18001-2554 to the international standard of OHSAS 18001-2007. We aim to integrate these practices into working process for further sustainable development in line with social responsibility guideline of TISI 26000-2553 (ISO 26000:2010).
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 65
MANAGEMENT SYSTEM ISO STANDARD THAILAND STANDARD CERTIFIED PLANT
Quality ISO 9001:2008 TIS 9001 - 2552 All plants in Thailand
Environmental ISO 14001:2004 TIS 14001 - 2548 All plants in Thailand
Health and Safety TIS 18001 - 2554 All plants in Thailand
Energy PROMOTION OF ENERGY CONSERVATION ACT, B.E. 2535 (1992)
All plants in Thailand
Laboratory ISO/IEC 17025:2005 TIS 17025 - 2548 Nakhonratchasima Plant Only
Corporate Social Responsibility, the Department of Industrial Works
CSR-DIW2555 All plants in Thailand
CONSISTENT COMMUNITY INVOLVEMENT AND DEVELOPMENTIn 2013, our employees both at the Head Office and all the production plants participated in various strategic CSR activities involving activities in education, sports, environment protection, cultural and community services as well as economic development. Some of these CSR projects are as follows:
• Engaging schools, institutions and local communities, including inviting them to visit our Plants. We also invite local teachers, students and the local communities to participate in our “Safety Week” on a regular basis;
• Conducting joint research projection conducting academic research in the development of asphalt products with the faculty of engineering of Naresuan University in order to obtain academic excellence, technology, and innovation which will bring benefits to the future engineers, universities as well as the country;
• Having recognized the value of education and maintaining of Thai arts and cultures, our Group has provided support to Ban Rien Lakorn Moradokmai, the New Heritage Drama Art School by providing public relations and organizing plays to generate income. Besides that, our Group has collaborated with other parties to construct a dormitory for the school;
• R e duci ng acc idents at wor k for agr icu l tura l communities and promoting occupational health through constructing and controlling the quality of water for consumption at Baan Nayai School and Jomthong Buddhist Monastery of Surat Thani Province,
construction of barriers are also constructed to prevent danger from the rotary tillers (Klub) at Baan Pongmorhao in Pitsanulok Province;
• Suppor ting sustainable reforestation with the communities by planting trees in integrated manner of economic plants and perennial trees as well as making commitment to continually care for such trees for 5 years until they are perennial in Banna Community in Surat Thani Province and Wat Bangkrasob Community in Samut Prakan Province;
• Contributing to the community in cleaning the beach at Monica Bay, Malaysia and the river shore at Lu Hu Ping scenic, China;
• Joining with school teachers in building Surau at Sekolah Kebangsaan Bukit Mentok, Malaysia;
• Participating with community on Sports day at Sekolah Kebangsaan Teluk Kalong, Malasia and Pitsanulok Plant.
HOURS OF COMMUNITY SERVICESFinally, in order to embed volunteering spirit into our corporate culture, our Group has (since 2011) set a target for individual staff to achieve at least 16 hours of community service annually. This target provides an opportunity for our staff to participate in community activities and also to foster an improved awareness of CSR.
In 2013, our staffs have recorded a remarkable 17,238 man hours for community activities, which have far surpassed our target of 9,742 man hours.
SOCIAL RESPONSIBILITY POLICY
CERTIFIED MANAGEMENT SYSTEM
ANNUAL REPORT 201366
INTERNAL CONTROLS AND RISK MANAGEMENT
INTERNAL CONTROLSThe Company places great importance on internal control and audit both at the managerial and the operational levels; supported by good corporate governance and systematic risk management.
The Company defines and develops an efficient and effective internal controls system in terms of setting an appropriate control environment, performing risk assessments, implementing control practices, making use of appropriate information technology, communication systems, and continuous monitoring and assessments. This control system generally conforms with the internal control model as advocated by the Committee of Sponsoring Organisations of the Treadway Commission (or, “COSO”).
The organizational structure is designed to suit a business plan, with clear responsibility outlines, with the availability of Procedure Manuals and Approval Authority limits for each level of operations to enable proper control. Moreover, the company encourages all employees to constantly follow the internal controls. These are to be regularly updated to keep up with the changing business environment.
INTERNAL AUDITThe Company’s Internal Audit Department is committed to the International Standards for the Professional Practice of Internal Auditing (‘Standards’) as issued by the Institute of Internal Auditors. This has been embraced in the Company’s new Internal Audit Charter (as approved in 2012).
The Company’s Internal Audit Department examines internal controls, operations, security of assets and adherence to policies and procedures including those of subsidiaries. The Internal Audit Department establishes plans consistent with the profile of previous audit observations as well as the risk profile of the Company.
Internal Audit results are regularly reported (not less than once a quarter) to the Audit Committee.
INTERNAL CONTROLS AND INTERNAL AUDIT Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 67
REPORT OF THE AUDIT COMMITTEE
The Audit Committee consists of four independent directors who are knowledgeable and experienced in law, business administration, accounting, management and engineering. The Committee is chaired by Mr. Niphon Suthimai, with Mr. Parnchalerm Sutatam, Mr. Nopporn Thepsithar and Mr. Phirasilp Subhapholsiri making up the remaining three members. Mr. Phirasilp Subhapholsiri was appointed into the Audit Committee during 2013, following the resignation of Mr. Chainoi Puankosoomfrom the Committee).
This year, the Committee had performed its duties as assigned by the Board of Directors, while adhering to the Company’s Audit Committee Charter which is aligned to the regulations of the Stock Exchange of Thailand (SET). Given the Company’s strong growth (especially in international markets), the Committee focused on conformance to good corporate governance as well as good internal controls by:
• Focusing on preventive controls as well as the promotion of leading business practices in audit reviews to foster improved work performance (and especially in minimizing errors);
• Promoting a risk-based approach for internal audit activity at the Company.
During 2013, the Committee held nine meetings, for which attendance by executives, the external auditor and the Internal Audit Department can be summarized as follows:
Attendance By
Executives External Auditor Internal Audit Department
Monthly Meetings 2 - 5
Quarterly Meetings 3 3 3
Quarterly Meetings (without the presence of Management) - 1 1
REVIEW OF FINANCIAL REPORTSThe Committee rev iewed quar ter l y, annual and consolidated financial statements with Management and the external auditors. Among other activities, the Committee held discussions with the external auditor to ascertain the completeness of accuracy of the presentation of the Company’s financial statements, key accounting adjustments, adequacy of accounting methods, scope of the audit, accuracy and adequacy of disclosures, as well as the external auditor’s independence. The outcome of these discussions contributed to the Committee’s satisfaction that the Company’s financial statements had complied with all relevant accounting standards and regulations. Consequently, the Committee was satisfied that the accounting procedures and financial statements were both accurate and reliable, and that adequate and timely information had been disclosed in the financial statements for the benefit of investors and other users of the statements.
RISK MANAGEMENTThe current enterprise risk management (“ERM”) process as employed in the Company was implemented in 2013. This process includes a formal ERM framework which consists of an ERM policy as well as related procedures. The Corporate-level risks as identified and assessed during this process are a key input into the development of the Annual Internal Audit Plan for 2014 as reviewed and approved by the Audit Committee.
REPORT OF THE AUDIT COMMITTEE
ANNUAL REPORT 201370
REVIEW OF INTERNAL CONTROL EFFECTIVENESSThe Audit Committee has reviewed the adequacy, appropriateness and effectiveness of the internal control system from the 2013 audit results of the Internal Audit Department on the Company and its subsidiaries. The Audit Committee is satisfied that the internal control system of the Company and its subsidiaries is adequate and effective for its business. The Audit Committee also evaluated the adequacy of the internal control system in accordance to The Securities and Exchange Commission and noted that an adequate, appropriate and effective system of internal control has been implemented.
REVIEW OF GOOD CORPORATE GOVERNANCEThe Committee has been satisfied that the Company has complied to the relevant laws, regulations (including regulations of the SET) and agreements with external parties (as necessary). The Committee was also satisfied that the significant related party business transactions have been disclosed in the financial statements and the notes thereon in accordance to the requirements of the SET and the Securities Exchange Commission. The Audit Committee agreed with the external auditor that such transactions conformed to the agreed criteria of normal business conduct.
OVERSIGHT OF INTERNAL AUDITThe Audit Committee reviewed the reports of the Internal Audit Department as well as the completion of planned projects against the annual internal audit plan. The Committee was satisfied that the internal audit projects were generally completed as planned; and where this was not the case, such projects were duly included into the audit plan for the subsequent year. The Committee also focused on the timely and satisfactory completion of action plans as committed to by management to address the underlying risks.
APPOINTMENT OF THE EXTERNAL AUDITOR FOR 2014The Audit Committee has considered the appointment of Ernst & Young as the Company’s external auditor for another year and also reviewed their proposed fees for 2014. Consequently, the Audit Committee proposed these to the Board for approval by the shareholders at the Annual General Meeting of 2014.
In conclusion, the Audit Committee has comprehensively performed in accordance to the Audit Committee Charter approved by the Board of Directors. The Audit Committee also commented that the Company and its subsidiaries have properly presented their financial statements, performed in good business conduct, implemented an appropriate and effective internal control system and internal auditing process. The Company and its subsidiaries have complied with relevant laws, regulations and agreements while properly disclosing related party transactions under good governance practices of transparency and trustworthiness. The Company and its subsidiaries have also continually improved the internal system in terms of quality and suitability to its business environment.
(Niphon Suthimai)
Chairman of the Audit Committee
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 71
AUDIT COMMITTEE’S OPINION OF THE SENIOR MANAGER - INTERNAL AUDIT DEPARTMENTSenior Management of Tipco Asphalt Group, with the concurrence of the Audit Committee, appointed Mr. Joseph Soosay as a Senior Manager - Internal Audit Department with effect from 16th July 2012.
We hereby express our opinion that the Senior Manager - Internal Audit Department of the Company is adequately experienced to manage the Internal Audit Department. As
a Certified Internal Auditor, the Senior Manager - Internal Audit Department is suitably qualified to fulfil his duties in accordance to the Standards of the Institute of Internal Auditors. The professional credentials of the Senior Manager - Internal Audit Department is as included in the table below;
FULL NAME EDUCATION / PROFESSIONAL CERTIFICATIONS
EXPERIENCE IN 5 YEARS AGO
PERIOD POSITION - COMPANY
Joseph Mugilen Soosay Manickam Certified Internal Auditor (CIA) 2012 - Present Senior Manager - Internal Audit Department; Tipco Asphalt Public Co., Ltd.
Senior Manager - Internal Audit Department
Chartered Management Accountant (ACMA)
2008 - 2012 Associate Director - Advisory Services, PricewaterhouseCoopers FAS Ltd.
The appointment, removal and transfer of The Senior Manager - Internal Audit Department is subject to approval from Senior Management and the Audit Committee.
Niphon Suthimai
Audit Committee Chairman
AUDIT COMMITTEE’S OPINION OF THE SENIOR MANAGER - INTERNAL AUDIT DEPARTMENT
ANNUAL REPORT 201372
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Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 73
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATIONAL ANALYSISThe Company and its subsidiaries, “the Group” reported a 2013 consolidated net profit of Baht 831 million compared to a net profit of Baht 642 million in 2012. It was the second best operational performance records in Tipco’s history.
Sales and services stood at Baht 33.9 billion reflecting a decrease of 9.9% from the same period last year. Despite the higher sales in the 4th Quarter, the annual export sales revenue was lower than 2012 mainly attributable to the weaker demand in export markets during the first half year and also lower asphalt price. Domestic sales reported lower sales revenue due to the extraordinary sales in 2012 attributable to the lagging demand effect from the major Thailand flooding in 2011. Overall, the Company still maintains its market shares both in export and domestic market.
The Group’s consolidated gross profit margin in 2013 was 4.90% compared to 5.07% in 2012, before the allowance for diminution in value of inventories and hedging gain/loss. The reduction of its Gross Profit margin was due to the sales products mix and the sudden increase of crude cost in the 3rd Quarter of 2013, attributable to the potential US strike against Syria. We would like to mention that this GP margin cannot be viewed in isolation but to include with the FX, hedging and net realisable value (“NRV”) provision as all these three items of reporting are concerning with the same crude sales and stock inventory. The International Financial Reporting Standards (IFRS) requires these risk management activities of crude inventory to be reported in separate lines.
The hedging strategy has contributed a significant turnaround with a positive impact of Baht 85 million gain to this year result as compared to a cost of Baht 806 million in the corresponding year 2012. The Company is confident that its current hedging strategy provide adequate protections to the crude procurement process under the highly volatile commodity market conditions. In additions, the company has marked to market (MTM) and provided a NRV provision of Baht 8 million on its crude inventory.
For the year 2013, the Group recorded only FX gain of Baht 35 million attributable to the weakening of Baht in the 4th Quarter and reversing almost all the FX gain in the first half year. Most of this MTM FX gain/loss is merely an accounting profit/loss in Thai Baht due to timing difference in the “stock to cash conversion” cycle of the working capital. From cash flow prospective, the Group enjoys natural hedge of "buying and selling in the same currency".
In 2013, selling and administrative expenses stood at Baht 126.9 million and Baht 658.4 million, representing 0.37% and 1.94% of sales, respectively. Comparatively, these expenses in 2012 stood at Baht 108.8 million and Baht 594.1 or 0.29% and 1.58% of sales. These expenses increased in the normal course of business and were tightly controlled.
Financial expense in 2013 was Baht 195 million, a decrease from Baht 282 million in 2012 due to a reduction in interest rate and a repayment/decrease in long-term loans.
The Net Profit attributable to Equity holders of the Company (excluding minority interest) for the year 2013 was Baht 831 million compared to Baht 642 million in 2012, representing a ROE of 17.2% and 15.5% in 2013 and 2012 respectively.
The earning per share for the full year is Baht 5.45 and Baht 4.21 in 2013 and 2012 respectively.
FINANCIAL ANALYSISFinancial status of the Group at the end of 2013 can be summarized as follows;
The management of the Company fully recognizes the high investment CAPEX and working capital in the Group’s new refinery business. Effective working capital management has been one of the key challenges in 2013. With the higher volume of heavy crude intake in 2013, efforts were made to shorten “asset to cash conversion”
MANAGEMENT DISCUSSION AND ANALYSIS
ANNUAL REPORT 201374
cycle to reduce trade debt associated with each crude cargo purchased. As a result, cash flow in 2013 was strong and the Company continues to manage cash and trade collection closely in order to minimize external borrowings and interest expenses. The Group continues to receive full support from commercial banks in both inventory and other working capital financing. In order to reduce interest cost and FX exposure, the Group has switched to USD loan funding that matching its USD assets and hence, resulting a lower WACC for the Group.
Despite the increase of crude financing for the higher crude inventory level at year end, the Group’s consolidated debt to equity ratio (D/E ratio) has decreased from 2.70 to 2.44. The real D/E ratio (Total Liability/Equity) excluding crude inventory financing has improved from 1.07 to 0.84 due to the strong EBITDA generated during the year.
FINANCIAL POSITIONA change in financial position of the Group at the end of 2013 compared to 2012 can be summarized as follows :
• Decrease in trade and other receivables due to the improvement in collection days;
• Increase in inventories due to an increase in crude in transit at end of the year;
• Increase in property, plant, and equipment due to an expansion of our refinery;
• Increase in short-term loans from financial institutions due to an increase in crude financing for the higher crude inventory level at the end of year;
• Decrease in trade and other payables due to the timing of crude payment;
• Decrease in long-term loans from financial institutions due to loan instalment repayment.
KEY FINANCIAL RATIOKey financial ratio of the Group at the end of 2013 can be summarized as follows;
• Net profit margin improved from 2012 at 1.67% to 2.44% in 2013;
• Return on equity improved from 2012 at 15.52% to 17.20% in 2013;
• Return on assets improved from 2012 at 3.76% to 4.27% in 2013;
• Consolidated debt-equity ratio improved from 2.70 to 2.44 in 2013.
CASH FLOWCash flow of the Group during year 2013 can be summarized as follows :
• Net cash used in operating activities of Baht 78 million was mainly due the higher inventories level despite the better effort in receivable collections;
• Net cash used in investing activities of Baht 789 million was mainly due to the increase in acquisition of equipment in our refinery;
• Net cash from financing activities of Baht 622 million was mainly due to the increase of short-term loans from financial institutions.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 75
NO. COMPANY NAME OF AUDITOR AUDIT FEE (BAHT)
1 Tipco Asphalt Public Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
1,970,000
2 Raycol Asphalt Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
520,000
3 Thai Bitumen Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
1,050,000
4 Bitumen Marine Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
310,000
5 Tipco Maritime Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
250,000
6 Alpha Maritime Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
230,000
7 Delta Shipping Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
250,000
8 Tasco Shipping Company Limited Ernst & Young Office Limited (by Mr. Supachai Phanyawattano)
250,000
Total audit fee 4,830,000
AUDIT FEE
THE CONFIRMATION FOR THE COMPLETE CORRECTNESS OF THE PAYMENT TO AUDITOR for the year ended 31th December 2013
THE CONFIRMATION FOR THE COMPLETE CORRECTNESS OF THE PAYMENT TO AUDITOR
ANNUAL REPORT 201376
NO. COMPANY NON-AUDIT SERVICE NAME OF COMPANY SERVICE
NON-AUDIT FEE
PAID FOR PERIOD
FOR PAYMENT IN THE THE FUTURE
9 Bitumen Marine Company Limited
Agreed-upon procedures-Compliance with conditions stipulated in the investment promotion certificate
Ernst & Young Office Limited (By Mr. Supachai Phanyawattano)
- 40,000
10 Alpha Marine Company Limited
Consultant for conversion to International Financial Reporting Standards
Ernst & Young Office Limited (By Mr. Supachai Phanyawattano)
- 40,000
11 Tasco Shipping Company Limited
Agreed-upon procedures-Compliance with conditions stipulated in the investment promotion certificate
Ernst & Young Office Limited (By Mr. Supachai Phanyawattano)
- 80,000
12 Tipco Asphalt Public Company Limited
Tax consult Ernst & Young Corporate Service Limited
140,000 -
13 Tipco Asphalt Public Company Limited
Consultant for conversion to International Financial Reporting Standards
Ernst & Young Corporate Service Limited
585,000 -
Total non-audit fee 725,000 160,000
NON-AUDIT FEE
ABOVE INFORMATION:
(x) Correct and complete. I hereby confirmed that there was no other service performed to the Company and Subsidiaries which generated any fee income to the auditing company which I am a partner of and/or from other related individuals and/or other related parties that I am aware of and is not disclosed in the above information.
( ) Incorrect and incomplete:
in amending the above information (if any), I hereby confirm that all the information in this report herewith shows the compensation for auditing work and other services that the Company and Subsidiaries paid to the undersigned, the auditing firm which I am
(Mr. Supachai Phanyawattano) Ernst & Young Auditing Office Limited The auditor of TIPCO ASPHALT PUBLIC COMPANY LIMITED
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 77
REPORT OF THE BOARD OF DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the consolidated and separate financial statements of Tipco Asphalt Public Company Limited and other financial information appears in the Annual Report pertaining to the Company and its subsidiaries. The financial statements are prepared in accordance with Thai Financial Reporting Standards and free from material misstatement, whether due to fraud or error, while the Accounting Policies are selected for their appropriateness and consistently implemented. The f inancia l s tatements are a lso prepared with careful considerations and best possible estimates while significant information is sufficiently and transparently disclosed in the notes for the benefits of shareholders and other investors.
The Board of Direc tors had appointed the Audit Committee, comprised of independent directors whose qualifications are in accordance with requirements of the Stock Exchange of Thailand, to review the accuracy and sufficiency of the Company’s financial reports and the disclosures of related transactions and the adequacy and efficiency of internal control system. Opinion of the Audit Committee is reported in the Audit Committee’s report published in this Annual Report.
The Board of Directors is of opinion that the consolidated and separate financial statements of the Company ended 31st December 2013, of which audited by the external auditor and jointly reviewed by the Audit Committee and, Management had presented fairly, in all material respects, the financial position and financial performance in accordance with Thai Financial Reporting Standards.
(Ms. Laksana Supsakorn) (Mr. Chaiwat Srivalwat) Chairman Managing Director
REPORT OF THE BOARD OF DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL STATEMENTS
ANNUAL REPORT 201378
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
REPORT AND CONSOLIDATED FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORTTo the Shareholders of Tipco Asphalt Public Company Limited
I have audited the accompanying consolidated financial statements of Tipco Asphalt Public Company Limited and its subsidiaries, which comprise the consolidated statement of financial position as at 31st December 2013, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and have also audited the separate financial statements of Tipco Asphalt Public Company Limited for the same period.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTSManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIBILITYMy responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
OPINIONIn my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tipco Asphalt Public Company Limited and its subsidiaries and of Tipco Asphalt Public Company Limited as at 31st December 2013, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.
OTHER MATTERThe financial statements of Tipco Asphalt Public Company Limited and its subsidiaries for the year ended 31st December 2012 were audited by another auditor of our office who, under her report dated 11th February 2013, expressed an unqualified opinion on those financial statements and drew attention to the change in accounting policy.
Supachai PhanyawattanoCertified Public Accountant (Thailand) No. 3930Ernst & Young Office LimitedBangkok: 12th February 2014
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 79
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of financial positionAs at 31 December 2013
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Assets
Current assets
Cash and cash equivalents 495,434,890 739,597,042 89,695,844 44,140,952
Trade and other receivables 6, 7 3,966,572,674 5,347,921,360 3,663,366,890 5,442,063,490
Short-term loans to related parties 7 - - 40,620,582 40,243,540
Inventories 8 9,349,415,454 7,048,482,865 8,651,623,150 6,443,284,016
Price hedging contracts 34 134,593,745 27,359,301 134,593,745 27,359,301
Forward exchange contracts 34 1,625,030 7,801,110 1,562,772 6,650,434
Other current assets 270,943,416 104,971,269 40,638,530 35,455,728
Total current assets 14,218,585,209 13,276,132,947 12,622,101,513 12,039,197,461
Assets held for sales - Vessel 9 - 45,423,693 - -
Non-current assets
Investments in subsidiaries 10 - - 3,829,060,794 3,827,571,247
Investment in associate 11 110,520,585 60,648,740 18,403,580 18,403,580
Investment properties 12 199,432,500 199,432,500 100,651,528 101,197,924
Property, plant and equipment 13 5,246,623,305 4,595,800,707 455,783,574 490,569,772
Goodwill 10 146,293,504 146,293,504 - -
Other intangible assets - Computer software 21,790,227 19,972,993 21,223,020 17,981,683
Leasehold rights 14 217,812,961 207,872,195 3,874,337 4,102,239
Deferred tax assets - net 26 102,407,897 106,845,698 45,871,803 44,776,746
Other non-current assets 10,052,516 11,331,624 4,931,288 5,380,932
Total non-current assets 6,054,933,495 5,348,197,961 4,479,799,924 4,509,984,123
Total assets 20,273,518,704 18,669,754,601 17,101,901,437 16,549,181,584
ANNUAL REPORT 201380
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of financial position (continued)As at 31 December 2013
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Assets
Current assets
Cash and cash equivalents 495,434,890 739,597,042 89,695,844 44,140,952
Trade and other receivables 6, 7 3,966,572,674 5,347,921,360 3,663,366,890 5,442,063,490
Short-term loans to related parties 7 - - 40,620,582 40,243,540
Inventories 8 9,349,415,454 7,048,482,865 8,651,623,150 6,443,284,016
Price hedging contracts 34 134,593,745 27,359,301 134,593,745 27,359,301
Forward exchange contracts 34 1,625,030 7,801,110 1,562,772 6,650,434
Other current assets 270,943,416 104,971,269 40,638,530 35,455,728
Total current assets 14,218,585,209 13,276,132,947 12,622,101,513 12,039,197,461
Assets held for sales - Vessel 9 - 45,423,693 - -
Non-current assets
Investments in subsidiaries 10 - - 3,829,060,794 3,827,571,247
Investment in associate 11 110,520,585 60,648,740 18,403,580 18,403,580
Investment properties 12 199,432,500 199,432,500 100,651,528 101,197,924
Property, plant and equipment 13 5,246,623,305 4,595,800,707 455,783,574 490,569,772
Goodwill 10 146,293,504 146,293,504 - -
Other intangible assets - Computer software 21,790,227 19,972,993 21,223,020 17,981,683
Leasehold rights 14 217,812,961 207,872,195 3,874,337 4,102,239
Deferred tax assets - net 26 102,407,897 106,845,698 45,871,803 44,776,746
Other non-current assets 10,052,516 11,331,624 4,931,288 5,380,932
Total non-current assets 6,054,933,495 5,348,197,961 4,479,799,924 4,509,984,123
Total assets 20,273,518,704 18,669,754,601 17,101,901,437 16,549,181,584
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Liabilities and shareholders' equity
Current liabilities
Short-term loans from financial institutions 15 9,416,459,737 8,236,833,408 9,164,536,336 8,158,509,798
Trade and other payables 7, 16 1,611,815,321 2,202,837,490 1,682,324,035 2,212,017,359
Current portion of liabilities under
finance lease agreements 7,009,538 8,595,644 5,238,513 4,618,291
Current portion of long-term loans
from financial institutions 17 688,820,992 596,304,373 352,500,000 322,383,480
Income tax payable 13,735,830 69,328,878 1,457,547 38,501,527
Price hedging contracts 34 119,813,680 12,708,499 119,813,680 12,708,499
Forward exchange contracts 34 7,812,219 502,902 6,586,252 492,279
Other current liabilities 228,942,475 26,039,584 28,568,012 16,776,473
Total current liabilities 12,094,409,792 11,153,150,778 11,361,024,375 10,766,007,706
Non-current liabilities
Liabilities under finance lease agreements -
net of current portion 8,279,000 13,415,586 7,337,095 9,938,202
Long-term loans from financial institutions -
net of current portion 17 2,179,870,256 2,364,592,294 772,500,000 1,103,408,346
Long-term loan from related party 7 7,950,789 7,227,108 - -
Interest rate swap contracts 17 22,250,378 19,445,155 21,111,486 19,445,155
Provision for long-term employee benefits 19 69,821,799 69,231,320 55,544,867 56,821,784
Total non-current liabilities 2,288,172,222 2,473,911,463 856,493,448 1,189,613,487
Total liabilities 14,382,582,014 13,627,062,241 12,217,517,823 11,955,621,193
(Unit: Baht)
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 81
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of financial position (continued)As at 31 December 2013
(Unit: Baht)
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Shareholders' equity
Share capital 20
Registered
171,059,929 ordinary shares
(2012: 170,043,729 ordinary shares) of Baht 10 each 1,710,599,290 1,700,437,290 1,710,599,290 1,700,437,290
Issued and fully paid
152,580,868 ordinary shares
(2012: 152,548,068 ordinary shares) of Baht 10 each 1,525,808,680 1,525,480,680 1,525,808,680 1,525,480,680
Premium on share capital 887,824,106 886,112,274 887,824,106 886,112,274
Non-controlling interests of subsidiary acquired
by the Company at price lower than book value 6,237,755 6,237,755 - -
Change in the Company's interest in subsidiary
which did not result in a loss of control 10 12,904,468 12,904,468 - -
Capital reserve for share-based payment transactions 22 23,254,939 13,140,737 23,254,939 13,140,737
Retained earnings
Appropriated - statutory reserve 23 162,053,000 140,503,000 162,053,000 140,503,000
Unappropriated 2,682,128,935 2,024,808,519 2,289,092,238 2,032,966,638
Other components of shareholders' equity (58,505,345) (184,521,435) (3,649,349) (4,642,938)
Equity attributable to owners of the Company 5,241,706,538 4,424,665,998 4,884,383,614 4,593,560,391
Non-controlling interests of the subsidiaries 649,230,152 618,026,362 - -
Total shareholders' equity 5,890,936,690 5,042,692,360 4,884,383,614 4,593,560,391
Total liabilities and shareholders' equity
20,273,518,704 18,669,754,601
17,101,901,437
16,549,181,584
The accompanying notes are an integral part of the financial statements.
ANNUAL REPORT 201382
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of comprehensive incomeFor the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Revenues
Sales and service income 33,934,919,398 37,663,155,183 31,860,052,018 35,898,367,645
Other income
Dividend income from subsidiaries 10 - - 16,100,000 204,947,351
Dividend income from associate 11 - - - 16,789,105
Income from liquidation of subsidiary - - - 26,659,535
Gain on exchange 34 35,305,530 567,189,427 5,353,351 517,221,811
Compensation received from claims for damages 24 - 50,308,840 - -
Others 123,941,836 98,310,237 127,106,669 72,772,845
Total revenues 34,094,166,764 38,378,963,687 32,008,612,038 36,736,758,292
Expenses
Cost of sales and services 32,271,716,606 35,754,713,865 30,975,116,488 34,773,472,639
(Gain) loss from price hedging contracts 34 (84,606,270) 805,913,511 (84,606,270) 804,611,289
Reduce cost of inventory to net realisable value 8 7,831,398 1,081,594 1,196,947 560,977
32,194,941,734 36,561,708,970 30,891,707,165 35,578,644,905
Selling expenses 126,902,787 108,782,788 65,392,144 60,759,321
Administrative expenses 658,427,546 594,138,146 419,021,660 386,061,700
Other expenses
Allowance for doubtful accounts (reversal) (19,669,545) 31,475,421 (4,991,993) (7,227,555)
Impairment loss of assets held for sales 9 - 4,800,298 - -
Impairment loss of investment properties 12 - 4,767,500 - -
Impairment loss of equipment 13 1,756,500 20,834,537 - -
Total expenses 32,962,359,022 37,326,507,660 31,371,128,976 36,018,238,371
Profit before share of profit from investment in
associate, finance cost and income tax expenses 1,131,807,742 1,052,456,027 637,483,062 718,519,921
Share of profit from investment in associate 11 46,207,339 35,323,425 - -
Profit before finance cost and income tax expenses 1,178,015,081 1,087,779,452 637,483,062 718,519,921
Finance cost (194,704,205) (282,340,477) (131,703,116) (225,094,917)
Profit before income tax expenses 983,310,876 805,438,975 505,779,946 493,425,004
Income tax expenses 26 (121,703,983) (129,589,957) (75,525,378) (39,518,542)
Profit for the year 861,606,893 675,849,018 430,254,568 453,906,462
Other comprehensive income:
Exchange differences on translation of
financial statements in foreign currencies 148,818,782 (60,204,158) - -
Change in fair value of interest rate swap contract 1,241,986 1,610,686 1,241,986 1,610,686
Income tax effect 26 (248,397) (544,569) (248,397) (544,569)
Other comprehensive income for the year 149,812,371 (59,138,041) 993,589 1,066,117
Total comprehensive income for the year 1,011,419,264 616,710,977 431,248,157 454,972,579
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 83
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
(Unit: Baht)
Consolidated financial statements Separate financial statements
Note 2013 2012 2013 2012
Profit attributable to:
Equity holders of the Company 831,449,384 642,273,946 430,254,568 453,906,462
Non-controlling interests of the subsidiaries 30,157,509 33,575,072
861,606,893 675,849,018
Total comprehensive income attributable to:
Equity holders of the Company 957,465,474 593,042,917 431,248,157 454,972,579
Non-controlling interests of the subsidiaries 53,953,790 23,668,060
1,011,419,264 616,710,977
Earnings per share 29
Basic earnings per share
Profit attributable to equity holders of the Company 5.45 4.21 2.82 2.98
Diluted earnings per share
Profit attributable to equity holders of the Company 5.44 4.21 2.81 2.98
Tipco Asphalt Public Company Limited and its subsidiaries
Statement of comprehensive incomeFor the year ended 31 December 2013
ANNUAL REPORT 201384
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e fin
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l sta
tem
ents
.
Tipc
o As
phal
t Pub
lic C
ompa
ny L
imite
d an
d its
sub
sidi
arie
s
Stat
emen
t of ch
ange
s in
sha
reho
lder
s’ eq
uity
For th
e ye
ar e
nded
31
Dec
embe
r 201
3
(Uni
t: Ba
ht)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Equi
ty a
ttrib
utab
le to
own
ers
of th
e Co
mpa
ny
Non
-con
trollin
g O
ther
com
pone
nts
of e
quity
inte
rest
s of
Chan
ge in
Oth
er c
ompr
ehen
sive
inco
me
su
bsid
iary
the
Com
pany
'sEx
chan
ge
acqu
ired
byin
tere
st in
diffe
renc
es o
nEq
uity
the
Com
pany
subs
idia
ryCa
pita
l res
erve
trans
latio
n of
Tota
l oth
erTo
tal e
quity
attri
buta
ble
to
Issue
d an
dat
pric
ewh
ich
did
not
for
shar
e-ba
seRe
tain
ed e
arni
ngs
Fair
valu
e of
finan
cial
com
pone
nts
ofat
tribu
tabl
e to
no
n-co
ntro
lling
Tota
l
paid
-up
Prem
ium
on
lowe
r th
anre
sult
inpa
ymen
tAp
prop
riate
d -
inte
rest
rat
est
atem
ents
insh
areh
olde
rs'
shar
ehol
ders
of
inte
rest
s of
th
e sh
areh
olde
rs'
shar
e ca
pita
lsh
are
capi
tal
book
val
uea
loss
of co
ntro
l tr
ansa
ctio
nsst
atut
ory
rese
rve
Unap
prop
riate
dsw
ap c
ontra
ct
fore
ign
curr
enci
eseq
uity
the
Com
pany
the
subs
idia
ries
equi
ty
Bala
nce
as a
t 1 Ja
nuar
y 20
121,
525,
480,
680
886
,112
,274
6
,237
,755
1
2,90
4,46
8 4
,644
,652
1
15,5
03,0
00
1,5
98,2
18,7
83
(5,7
09,0
55)
(129
,581
,351
) (1
35,2
90,4
06)
4,0
13,8
11,2
06
594
,364
,522
4
,608
,175
,728
Shar
e-ba
sed
paym
ent t
rans
actio
ns (N
ote
22)
- -
- -
8,4
96,0
85
- -
- -
- 8
,496
,085
-
8,4
96,0
85
Div
iden
d pa
id (N
ote
32)
- -
- -
- -
(190
,684
,210
) -
- -
(190
,684
,210
) -
(190
,684
,210
)
Div
iden
d pa
id to
non
-con
trol
ling
inte
rest
s
of
sub
sidi
arie
s -
- -
- -
- -
- -
- -
(6,2
20)
(6,2
20)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- -
- 6
42,2
73,9
46
1,0
66,1
17
(50,
297,
146)
(49,
231,
029)
593
,042
,917
2
3,66
8,06
0 6
16,7
10,9
77
App
ropr
iatio
n of
sta
tuto
ry re
serv
e (N
ote
23)
- -
- -
- 2
5,00
0,00
0 (2
5,00
0,00
0) -
- -
- -
-
Bala
nce
as a
t 31
Dec
embe
r 201
21,
525,
480,
680
886
,112
,274
6
,237
,755
1
2,90
4,46
8 1
3,14
0,73
7 1
40,5
03,0
00
2,0
24,8
08,5
19
(4,6
42,9
38)
(179
,878
,497
) (1
84,5
21,4
35)
4,4
24,6
65,9
98
618
,026
,362
5
,042
,692
,360
Bala
nce
as a
t 1 Ja
nuar
y 20
13 1
,525
,480
,680
8
86,1
12,2
74
6,2
37,7
55
12,
904,
468
13,
140,
737
140
,503
,000
2
,024
,808
,519
(4
,642
,938
) (1
79,8
78,4
97)
(184
,521
,435
) 4
,424
,665
,998
6
18,0
26,3
62
5,0
42,6
92,3
60
Incr
ease
in s
hare
cap
ital (
Not
e 20
) 3
28,0
00
1,7
11,8
32
- -
- -
- -
- -
2,0
39,8
32
- 2
,039
,832
Shar
e-ba
sed
paym
ent t
rans
actio
ns (N
ote
22)
- -
- -
10,
114,
202
- -
- -
- 1
0,11
4,20
2 -
10,
114,
202
Div
iden
d pa
id (N
ote
32)
- -
- -
- -
(152
,578
,968
) -
- -
(152
,578
,968
) -
(152
,578
,968
)
Div
iden
d pa
id to
non
-con
trol
ling
inte
rest
s
of
sub
sidi
arie
s -
- -
- -
- -
- -
- -
(22,
750,
000)
(22,
750,
000)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- -
- 8
31,4
49,3
84
993
,589
1
25,0
22,5
01
126
,016
,090
9
57,4
65,4
74
53,
953,
790
1,0
11,4
19,2
64
App
ropr
iatio
n of
sta
tuto
ry re
serv
e (N
ote
23)
- -
- -
- 2
1,55
0,00
0 (2
1,55
0,00
0) -
- -
- -
-
Bala
nce
as a
t 31
Dec
embe
r 201
3 1
,525
,808
,680
8
87,8
24,1
06
6,2
37,7
55
12,
904,
468
23,
254,
939
162
,053
,000
2
,682
,128
,935
(3
,649
,349
) (5
4,85
5,99
6) (5
8,50
5,34
5) 5
,241
,706
,538
6
49,2
30,1
52
5,8
90,9
36,6
90
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 85
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The
acco
mpa
nying
note
s ar
e an
inte
gral
part
of th
e fin
ancia
l sta
tem
ents
.
(Uni
t: Ba
ht)
Sepa
rate
fina
ncia
l sta
tem
ents
Oth
er c
ompo
nent
of eq
uity
Oth
er
com
preh
ensiv
e
Capi
tal r
eser
ve in
com
e T
otal
oth
er
for
shar
e-ba
seRe
tain
ed e
arni
ngs
Fair
valu
e of
com
pone
nt o
f T
otal
Issue
d an
d pa
id-u
p Pr
emiu
m o
n pa
ymen
tAp
prop
riate
d -
inte
rest
rat
e sw
ap s
hare
hold
ers'
sha
reho
lder
s'
shar
e ca
pita
lsh
are
capi
tal
tran
sact
ions
stat
utor
y re
serv
eUn
appr
opria
ted
cont
ract
s e
quity
e
quity
Bala
nce
as a
t 1 Ja
nuar
y 20
12 1
,525
,480
,680
8
86,1
12,2
74
4,6
44,6
52
115
,503
,000
1
,794
,744
,386
(5
,709
,055
) (5
,709
,055
) 4
,320
,775
,937
Shar
e-ba
sed
paym
ent t
rans
actio
ns (N
ote
22)
- -
8,4
96,0
85
- -
- -
8,4
96,0
85
Div
iden
d pa
id (N
ote
32)
(190
,684
,210
) -
- (1
90,6
84,2
10)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- 4
53,9
06,4
62
1,0
66,1
17
1,0
66,1
17
454
,972
,579
App
ropr
iatio
n of
sta
tuto
ry re
serv
e (N
ote
23)
- -
- 2
5,00
0,00
0 (2
5,00
0,00
0) -
- -
Bala
nce
as a
t 31
Dec
embe
r 201
2 1
,525
,480
,680
8
86,1
12,2
74
13,
140,
737
140
,503
,000
2
,032
,966
,638
(4
,642
,938
) (4
,642
,938
) 4
,593
,560
,391
Bala
nce
as a
t 1 Ja
nuar
y 20
13 1
,525
,480
,680
8
86,1
12,2
74
13,
140,
737
140
,503
,000
2
,032
,966
,638
(4
,642
,938
) (4
,642
,938
) 4
,593
,560
,391
Incr
ese
in s
hare
cap
ital (
Not
e 20
) 3
28,0
00
1,7
11,8
32
- -
- -
- 2
,039
,832
Shar
e-ba
sed
paym
ent t
rans
actio
ns (N
ote
22)
- -
10,
114,
202
- -
- -
10,
114,
202
Div
iden
d pa
id (N
ote
32)
- -
- -
(152
,578
,968
) -
- (1
52,5
78,9
68)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- 4
30,2
54,5
68
993
,589
9
93,5
89
431
,248
,157
App
ropr
iatio
n of
sta
tuto
ry re
serv
e (N
ote
23)
- -
- 2
1,55
0,00
0 (2
1,55
0,00
0) -
- -
Bala
nce
as a
t 31
Dec
embe
r 201
3 1
,525
,808
,680
8
87,8
24,1
06
23,
254,
939
162
,053
,000
2
,289
,092
,238
(3
,649
,349
) (3
,649
,349
)4,
884,
383,
614
Tipc
o As
phal
t Pub
lic C
ompa
ny L
imite
d an
d its
sub
sidi
arie
s
Stat
emen
t of ch
ange
s in
sha
reho
lder
s’ eq
uity
For t
he y
ear e
nded
31
Dec
embe
r 201
3
ANNUAL REPORT 201386
Tipco Asphalt Public Company Limited and its subsidiaries
Cash flow statementFor the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Consolidated financial statements Separate financial statements
2013 2012 2013 2012
Cash flows from operating activities:
Profit before tax 983,310,876 805,438,975 505,779,946 493,425,004
Adjustments to reconcile profit before tax to
net cash provided by (paid from) operating activities:
Depreciation and amortisation 434,352,337 418,850,240 74,454,840 80,230,131
Write-off withholding tax 10,751 1,177,404 - -
Allowance for doubtful accounts (reversal) (19,669,545) 31,475,421 (4,991,993) (7,227,555)
Reduce cost of inventory to net realisable value 7,831,398 1,081,594 1,196,947 560,977
Dividend income from subsidiaries - - (16,100,000) (204,947,351)
Dividend income from associate - - - (16,789,105)
Income from liquidation of subsidiary - - - (26,659,535)
Unrealised (gain) loss on exchange rate 249,370,473 (46,386,441) 188,480,393 (22,931,806)
Realised gain on exchange from amendment of
long-term loan agreement (28,988,684) - - -
Gain on sales of equipment (8,318,007) (2,761,185) (7,773,877) (3,054,992)
Impairment loss of assets held for sales - 4,800,298 - -
Impairment loss of investment properties - 4,767,500 - -
Impairment loss of equipment 1,756,500 20,834,537 - -
Share of profit from investment in associate (46,207,339) (35,323,425) - -
Share-based payment transactions 10,114,202 8,496,085 8,624,655 6,065,341
Provision for long-term employee benefits 9,397,208 10,269,170 7,361,043 8,125,296
Change in fair value of forward exchange contracts 13,485,397 (17,216,444) 11,181,635 (11,044,004)
Change in fair value of price hedging contracts (129,263) 25,143,876 (129,263) 25,143,876
Change in fair value of interest rate swap contract
recognised in profit or loss 3,550,518 22,637,827 2,411,626 11,664,947
Interest expenses 179,624,390 250,515,438 122,287,638 204,792,744
Profit from operating activities before changes in
operating assets and liabilities 1,789,491,212 1,503,800,870 892,783,590 537,353,968
(Increase) decrease in operating assets
Trade and other receivables 1,415,991,486 (1,737,761,316) 1,834,292,316 (3,815,246,272)
Inventories (2,308,969,227) (1,293,721,153) (2,214,733,747) (1,651,200,783)
Other current assets (210,018,640) (73,572,920) (17,507,250) (23,104,662)
Other non-current assets 28,338 (93,104,560) (8,423,075) 9,568,118
Increase (decrease) in operating liabilities
Trade and other payables (631,176,805) (1,280,789,497) (555,965,601) (621,566,429)
Other current liabilities 194,592,853 (78,364,177) 3,650,270 (35,730,661)
Cash flows from (used in) operating activities 249,939,217 (3,053,512,753) (65,903,497) (5,599,926,721)
Cash paid for interest expenses (165,736,319) (260,374,184) (105,604,706) (210,800,565)
Cash paid for corporate income tax (162,329,515) (38,476,765) (113,912,812) (20,239,149)
Net cash used in operating activities (78,126,617) (3,352,363,702) (285,421,015) (5,830,966,435)
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 87
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
Tipco Asphalt Public Company Limited and its subsidiaries
Cash flow statement (continued)For the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
(Unit: Baht)
Consolidated financial statements Separate financial statements
2013 2012 2013 2012
Cash flows from investing activities:
Decrease in restricted bank deposits - 66,065,220 - -
Cash receipt from business transfer to subsidiary - - 61,067,790 -
Cash paid for investment in subsidiary - - - (98,000,000)
Cash receipt from liquidation of subsidiary - - - 968,450
Cash receipt from share capital reduction of subsidiary - - - 800,000,000
Dividend received from subsidiaries - - 16,100,000 204,947,351
Dividend received from associate - 16,789,105 - 16,789,105
Increase in short-term loans to related parties - - - (15,000,000)
Acquisition of equipment (842,195,847) (725,051,764) (63,131,935) (38,721,697)
Acquisition of computer software (4,369,546) (17,212,991) (4,198,500) (16,688,664)
Proceeds from sales of equipment and vessel 57,957,383 6,612,691 4,849,510 3,329,9 80
Net cash from (used in) investing activities (788,608,010) (652,797,739) 14,686,865 857,624,525
Cash flows from financing activities:
Increase in short-term loans from banks 937,729,804 4,483,942,513 771,972,889 5,824,946,986
Cash paid under finance lease agreements (8,674,693) (9,452,812) (4,465,792) (4,950,336)
Cash drawdown from long-term loans 488,288,300 700,128,119 - -
Repayment of long-term loans (622,410,446) (1,244,331,016) (300,791,827) (1,042,383,480)
Cash receipt from increase share capital 2,039,832 - 2,039,832 -
Dividend paid to shareholders (152,466,060) (190,644,272) (152,466,060) (190,644,272)
Dividend paid to non-controlling interests of subsidiaries (22,750,000) (6,220) - -
Net cash from financing activities 621,756,737 3,739,636,312 316,289,042 4,586,968,898
Exchange differences on translation of
financial statements in foreign currencies 815,738 3,303,437 - -
Net increase (decrease) in cash and cash equivalents (244,162,152) (262,221,692) 45,554,892 (386,373,012)
Cash and cash equivalents at beginning of year 739,597,042 1,001,818,734 44,140,952 430,513,964
Cash and cash equivalents at end of year 495,434,890 739,597,042 89,695,844 44,140,952
Supplemental cash flows information
Non-cash transactions
Acquistion of assets through finance lease 3,231,432 6,811,771 2,628,700 5,927,191
Accounts payable from purchase of equipment 17,953,938 15,079,974 - -
Settlement of proceed from liquidation of subsidiary
with account payable - - - 125,690,385
ANNUAL REPORT 201388
Tipco Asphalt Public Company Limited and its subsidiaries
Notes to consolidated financial statementsFor the year ended 31 December 2013
1. General information
Tipco Asphalt Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The major shareholders of the Company are Supsakorn family and Colas Group, a company incorporated in French Republic. The Company is principally engaged in the manufacture and distribution of asphalt and petroleum products and its registered address is 118/1 Rama 6 Road, Samsen-nai Sub district, Phayathai District, Bangkok.
On 10 August 2012, the Meeting of the Company’s Board of Directors passed a resolution to transfer vessel operation to its subsidiary. This business transfer was completed on 30 April 2013. The Company transferred assets amounting to Baht 63.2 million and transferred liabilities amounting to Baht 2.1 million. The Company received cash payment for the net assets value amounting to Baht 61.1 million, on 30 April 2013 and 17 May 2013.
2. Basis of preparation
2.1 The financial statements have been prepared in accordancewith Thai Financial Reporting Standards enunciated under theAccounting ProfessionAct B.E. 2547 and their presentation has beenmade in compliancewiththestipulationsoftheNotificationoftheDepartmentofBusinessDevelopmentdated28 September2011,issuedundertheAccountingActB.E.2543.
The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements.
The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 89
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
2.2
Basisofcon
solidation
a)
The
cons
olid
ated
fina
ncia
l sta
tem
ents
incl
ude
the
finan
cial
sta
tem
ents
of t
he C
ompa
ny a
nd th
e fo
llow
ing
subs
idia
ries:
Com
pany
’s na
me
Nat
ure
of b
usin
ess
Paid
-up
capi
tal
Perc
enta
ge o
f sha
reho
lding
2013
(Milli
on B
aht)
2012
(Milli
on B
aht)
2013
(%)
2012
(%)
(Exc
ept f
or o
ther
spe
cifie
d cu
rren
cy)
Subs
idia
ries
inco
rpor
ated
in T
haila
nd
Rayc
ol A
spha
lt Co
., Lt
d.M
anuf
actu
re a
nd d
istr
ibut
ion
of a
spha
lt pr
oduc
ts11
111
141
.44
41.4
4
Thai
Bitu
men
Co.
, Ltd
. H
oldi
ng c
ompa
ny a
nd m
anuf
actu
re a
nd
dist
ribut
ion
of a
spha
lt pr
oduc
ts1,
500
1,50
099
.99
99.9
9
Tipc
o M
ariti
me
Co., L
td.
Ship
ping
man
agem
ent a
nd a
genc
y2
299
.97
99.9
7
Alph
a M
ariti
me
Co., L
td.
Mar
ine
tran
spor
tatio
n18
1899
.99
99.9
9
Bitu
men
Mar
ine
Co., L
td.
Mar
ine
tran
spor
tatio
n15
015
099
.99
99.9
9
Del
ta S
hipp
ing
Co., L
td.
Mar
ine
tran
spor
tatio
n80
8099
.99
99.9
9
Tasc
o Sh
ippi
ng C
o., L
td.
Mar
ine
tran
spor
tatio
n29
029
099
.99
99.9
9
Subs
idia
ries
inco
rpor
ated
in M
alay
sia
Kem
aman
Oil
Corp
orat
ion
Sdn
Bhd
(KO
C) (1
1.30
% o
wne
d by
the
Com
pany
and
51.
82%
ow
ned
by T
hai B
itum
en C
o., L
td.)
Hol
ding
com
pany
15
1.96
Mill
ion
ringg
it15
1.96
Mill
ion
ringg
it63
.12
63.1
2
Kem
aman
Bitu
men
Com
pany
Sdn
Bhd
(KBC
) (4
1.98
% o
wne
d by
the
Com
pany
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ANNUAL REPORT 201390
b) Subsidiaries are fully consolidated as from the date on which the Company obtains control and continue to be consolidated until the date when such control ceases.
c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as those of the Company.
d) The assets and liabilities in the financial statements of overseas subsidiary companies are translated to Baht using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of “Exchange differences on translation of financial statements in foreign currencies” in the statement of changes in shareholders’ equity.
e) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements.
f) Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position.
g) The financial statements of Raycol Asphalt Co., Ltd. are included in the consolidated financial statements even though the Company’s shareholding is 41.44 percent. This is due to the fact that the Company has control over that company through its board of directors, and it is therefore regarded as a subsidiary.
2.3 Theseparatefinancialstatements,whichpresentinvestmentsinsubsidiariesandassociateunderthe costmethod,havebeenpreparedsolelyforthebenefitofthepublic.
3. New accounting standards
Below is a summary of accounting standards that became effective in the current accounting year and those that will become effective in the future.
(a) Accountingstandardsthatbecameeffectiveinthecurrentaccountingyear
Accounting standards:TAS 12 Income TaxesTAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government
Assistance
TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates
Financial Reporting Standard:
TFRS 8 Operating Segments
Accounting Standard Interpretations:
TSIC 10 Government Assistance - No Specific Relation to Operating Activities
TSIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets
TSIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders
Accounting Treatment Guidance for Transfers of Financial Assets
These accounting standards, financial reporting standard, accounting standard interpretations and accounting treatment guidance do not have any significant impact on the financial statements. However, the Company and its subsidiaries have early adopted TAS 12 “Income Taxes” before the effective date.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 91
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
(b) Accountingstandardsthatwillbecomeeffectiveinthefuture
Effectivedate
Accounting Standards:
TAS 1 (revised 2012) Presentation of Financial Statements 1 January 2014
TAS 7 (revised 2012) Statement of Cash Flows 1 January 2014
TAS 12 (revised 2012) Income Taxes 1 January 2014
TAS 17 (revised 2012) Leases 1 January 2014
TAS 18 (revised 2012) Revenue 1 January 2014
TAS 19 (revised 2012) Employee Benefits 1 January 2014
TAS 21 (revised 2012) The Effects of Changes in Foreign Exchange Rates 1 January 2014
TAS 24 (revised 2012) Related Party Disclosures 1 January 2014
TAS 28 (revised 2012) Investments in Associates 1 January 2014
TAS 31 (revised 2012) Interests in Joint Ventures 1 January 2014
TAS 34 (revised 2012) Interim Financial Reporting 1 January 2014
TAS 38 (revised 2012) Intangible Assets 1 January 2014
Financial Reporting Standards:
TFRS 2 (revised 2012) Share-based Payment 1 January 2014
TFRS 3 (revised 2012) Business Combinations 1 January 2014
TFRS 4 Insurance Contracts 1 January 2016
TFRS 5 (revised 2012) Non-current Assets Held for Sale and Discontinued Operations 1 January 2014
TFRS 8 (revised 2012) Operating Segments 1 January 2014
Accounting Standard Interpretations:
TSIC 15 Operating Leases - Incentives 1 January 2014
TSIC 27 Evaluating the Substance of Transactions Involving the Legal
Form of a Lease
1 January 2014
TSIC 29 Service Concession Arrangements: Disclosures 1 January 2014
TSIC 32 Intangible Assets - Web Site Costs 1 January 2014
Financial Reporting Standard Interpretations:
TFRIC 1 Changes in Existing Decommissioning, Restoration and
Similar Liabilities
1 January 2014
TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014
TFRIC 5 Rights to Interests arising from Decommissioning, Restoration
and Environmental Rehabilitation Funds
1 January 2014
TFRIC 7 Applying the Restatement Approach under TAS 29 Financial
Reporting in Hyperinflationary Economies
1 January 2014
TFRIC 10 Interim Financial Reporting and Impairment 1 January 2014
TFRIC 12 Service Concession Arrangements 1 January 2014
TFRIC 13 Customer Loyalty Programmes 1 January 2014
TFRIC 17 Distributions of Non-cash Assets to Owners 1 January 2014
TFRIC 18 Transfers of Assets from Customers 1 January 2014
The management of the Company and its subsidiaries believe that these accounting standards, financial reporting standard, accounting standard interpretations and financial reporting standards interpretations will not have any significant impact on the financial statements for the year when they are initially applied.
ANNUAL REPORT 201392
4. Significant accounting policies
4.1 Revenuerecognition
Sales of goods
Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax of goods supplied after deducting discounts and allowances.
Rendering of services
Service revenue is recognised when services have been rendered taking into account the stage of completion.
Vessel operating income consists of time charters and voyage charters. Income from time charters is recognised when the right to use a vessel is transferred to a lessee for an agreed period of time, while income from voyage charters is recognised by reference to the stage of completion.
Interest income
Interest income is recognised on an accrual basis based on the effective interest rate.
Dividends
Dividends are recognised when the right to receive the dividends is established.
4.2 Cashandcashequivalents
Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.
4.3 Tradeandotherreceivables
Trade and other receivables are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experience and analysis of debt aging.
4.4 Inventories
Finished goods are valued at the lower of cost determined under the weighted average cost method and net realisable value. Cost of finished goods includes all production costs and attributable factory overheads.
Raw materials, packaging materials, spare parts and factory supplies are valued at the lower of cost determined under at the weighted average cost method and net realisable value. Raw materials, packaging materials, spare parts and factory supplies are charged to production costs whenever consumed.
4.5 Assetsheldforsales-Vessel
Assets held for sales are assets whose carrying amounts will be recovered through a sales transaction rather than through continuing use. The assets are measured at the lower of carrying amount and fair value less costs to sell, and they are not depreciated.
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ANNUAL REPORT 2013 93
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
4.6 Investments
a) Investment in associate is accounted for in the consolidated financial statements using the equity method.
b) Investments in subsidiaries and associate are accounted for in the separate financial statements using the cost method less allowance for loss on impairment.
4.7 Investmentproperties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and allowance for loss on impairment.
Depreciation of investment properties is calculated by reference to their costs on the straight-line basis over estimated useful lives of 5 and 20 years. Depreciation is included in profit or loss. No depreciation is provided on land.
On disposal of investm ent properties, the difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period when the asset is derecognised.
4.8 Property,plantandequipment/Depreciation
Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and less allowance for loss on impairment of assets.
Depreciation of plant and equipment is calculated by reference to their costs less residual value on the straight-line basis over the following estimated useful lives:
Land improvement 20 years
Buildings and complements 20 to 47 years
Building improvements 20 to 30 years
Machinery, tools and equipment 5 to 20 years
Furniture and office equipment 3 to 5 years
Vehicles 5 to 10 years
Vessels 10 to 30 years
Depreciation is included in profit or loss.
No depreciation is provided on land, construction in progress and equipment under installation.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in profit or loss when the asset is derecognised.
4.9 Borrowingcosts
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended use are capitalised as part of the cost of the respective asset.
All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds.
ANNUAL REPORT 201394
4.10 Intangibleassets-computersoftware
Computer software is measured at cost. Following initial recognition, computer software is carried at cost less any
accumulated amortisation and allowance for impairment loss (if any).
Computer software with finite life is amortised on a straight line basis over the economic useful life of 5 years and
tested for impairment whenever there is an indication that the software may be impaired. The amortisation period
and the amortisation method of such software are reviewed at least at each financial year end. The amortisation
expense is charged to profit or loss.
4.11 Goodwill
Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the excess is immediately recognised as gain in profit or loss.
Goodwill is carried at cost less allowance for impairment loss (if any). Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company’s group of cash-generating unit that are expected to benefit from the synergies of the combination. The Company estimates the recoverable amount of each group of cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss and will not be reversed in future periods.
4.12 Leaseholdrights
Leasehold rights are stated at cost less accumulated amortisation and less allowance for impairment loss of leasehold rights (if any). Amortisation is calculated by reference to cost on a straight-line basis over the lease period.
The amortisation is included in profit or loss.
4.13 Relatedpartytransactions
Related parties comprise enterprises and individuals that control, or are controlled by, the Company and its subsidiaries, whether directly or indirectly, or which are under common control with the Company and its subsidiaries.
They also include associated companies and individuals which directly or indirectly own a voting interest in the Company and its subsidiaries that gives them significant influence over the Company and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of operations of the Company and its subsidiaries.
4.14 Long-termleases
Leases of equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in long- term payables, while the interest element is charged to profit or loss over the lease period. The assets acquired
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 95
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
under finance leases are depreciated over the shorter of the useful life of the assets and the lease period, if the Company and its subsidiaries expect not to purchase such assets at the end of the lease period.
Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.
4.15 Foreigncurrencies
The consolidated and separate financial statements are presented in Baht, which is also the Company’s functional
currency. Items of each entity included in the consolidated financial statements of each entity are measured using
the functional currency of that entity.
Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of the reporting period.
Gains and losses on exchange are included in profit or loss.
4.16 Impairmentofassets
At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment, investment properties and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. The Company and its subsidiaries also carry out annual impairment reviews in respect of goodwill. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount.
An impairment loss is recognised in profit or loss.
In the assessment of asset impairment if there is any indication that previously recognised impairment losses may no longer exist or may have decreased, such reversal except for that of goodwill, is recognised in profit or loss.
4.17 Employeebenefits
Short-term employee benefits
Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred.
Post-employment benefits and other long-term employee benefits
Definedcontributionplans
The Company, its subsidiaries, and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company and its subsidiaries. The fund’s assets are held in a separate trust fund and contributions of the Company and its subsidiaries are recognised as expenses when incurred.
Definedbenefitplansandotherlong-termemployeebenefits
The Company and its local subsidiaries have obligations in respect of the severance payments they must make to employees upon retirement under labor law and other employee benefit plans. The Company and the local subsidiaries treat these severance payment obligations as a defined benefit plan. In addition, the Company and its
ANNUAL REPORT 201396
local subsidiaries provide other long-term employee benefit plan, namely long service awards.
The obligation under the defined benefit plans and other long-term employee benefit plans is determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method.
4.18 Equity-settledshare-basedpaymenttransactions
The Company and its subsidiaries recognise the share-based payment transactions at the date on which the options are granted, based on the fair value of the share options. They are recorded as expenses over the expected life of the share options, and a capital reserve for share-based payment transactions is presented in shareholders’ equity.
4.19 Provisions
Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
4.20 IncomeTax
Income tax expense represents the sum of corporate income tax currently payable and deferred tax.
Currenttax
Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.
Deferredtax
Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period.
The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised.
At each reporting date, the Company and its subsidiaries review and reduce the carrying amount of deferred tax
assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred tax asset to be utilised.
The Company and its subsidiaries record deferred tax directly to shareholders’ equity if the tax relates to items
those are recorded directly to shareholders’ equity.
4.21 Derivatives
Forwardexchangecontracts
Forward exchange contracts are presented in the financial statements at fair value. Unrealised gain or loss from
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 97
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
the forward contracts is recorded in profit or loss.
Pricehedgingcontracts
Forward price hedging contracts and option contracts with banks are presented in the financial statements at fair value. Unrealised gain or loss from the price hedging contracts is recorded in profit or loss.
Interestrateswapcontracts
Interest rate swap contracts are the contracts under which the counter-parties agreed to exchange the amounts of interest, which are determined based on the pre-determined notional amount and the interest rates over the periods specified in the contracts. The Company and its subsidiaries recognised, on an accrual basis, the net amount of interest to be received or paid for each period under the interest rate swap contracts as income/expense in profit or loss. The interest rate swap contracts are presented in the financial statements at fair value. Unrealised gain or loss on interest rate swap contract of the Company and its subsidiaries deferred in shareholders’ equity of the Company and its subsidiaries until realised or recorded in profit or loss.
5. Significant accounting judgments and estimates
The preparation of financial statements in conformity with financial reporting standards accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures, and actual results could differ from these estimates. Significant judgments and estimates are as follows:
Recognitionandderecognitionofassetsandliabilities
In considering whether to recognise or to derecognise assets or liabilities, the management is required to make judgment on whether significant risk and rewards of those assets or liabilities have been transferred, based on their best knowledge of the current events and arrangements.
Leases
In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement.
Allowancefordoubtfulaccounts
In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.
Netrealisablevalueofinventories
The management uses judgment to estimate the net realisable value of inventories taking into consideration the
fluctuation of price or cost directly relating to events occurring after the reporting period.
Fairvalueoffinancialinstruments
In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are
ANNUAL REPORT 201398
not readily available, the management exercises judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets and includes consideration of liquidity, correlation and longer-term volatility of financial instruments.
Impairmentofinvestments
The Company and its subsidiaries treats investments as impaired when the management judges that there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment of the management.
Investmentproperties
The investment properties are measured at cost less allowance for impairment loss. The carrying value of the assets is determined based on fair value appraised by an independent valuer. Such valuation is based on certain assumptions and estimates.
Propertyplantandequipment/Depreciation
In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and residual values of the plant and equipment of the Company and subsidiaries and to review estimate useful lives and residual values when there are changes.
In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying cost. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.
Goodwill
The initial recognition and measurement of goodwill, and subsequent impairment testing, require management to make estimates of cash flows to be generated by the asset and to choose a suitable discount rate in order to calculate the present value of those cash flows.
Deferredtaxassets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the temporary differences and losses differences can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimate future taxable profits.
Post-employmentbenefitsunderdefinedbenefitplansandotherlong-termemployeebenefits
The obligation under the defined benefit plan and other long-term employee benefit plans is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate.
Costofshare-basedpaymenttransactions
Estimating the cost of share-based payment transactions requires the determination of the fair value of the options granted under the transactions which involves appropriate assumptions, including but not limited to the expected life of the share options, share price volatility and dividend yield.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 99
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
6. Trade and other receivables
(Unit: Thousand Baht)
Consolidated financial statements Separate financial statements
2013 2012 2013 2012
Trade receivables - related parties (Note 7)
Aged on the basis of due dates
Not yet due 490,525 453,024 1,269,351 1,139,533
Past due
Up to 3 months 21,051 448,143 279,848 1,019,038
3 - 6 months - - 56,375 83,755
6 - 9 months 58 176 - -
9 - 12 months 61 - 3,272 -
Over 12 months 176 - - -
Total trade receivables - related parties 511,871 901,343 1,608,846 2,242,326
Trade receivables - unrelated parties
Aged on the basis of due dates
Not yet due 2,749,017 3,521,307 1,827,445 2,646,853
Past due
Up to 3 months 454,089 731,293 152,994 460,384
3 - 6 months 120,295 51,350 22,959 14,881
6 - 9 months 39,668 22,591 669 2,537
9 - 12 months 6,878 70,262 1,824 5,514
Over 12 months 115,022 114,826 82,325 92,791
Total 3,484,969 4,511,629 2,088,216 3,222,960
Less: Allowance for doubtful accounts (115,833) (132,390) (76,033) (81,025)
Total trade receivables - unrelated parties, net 3,369,136 4,379,239 2,012,183 3,141,935
Total trade receivables - net 3,881,007 5,280,582 3,621,029 5,384,261
Other receivables
Amounts due from related parties (Note 7) 12,224 7,809 26,409 16,497
Accounts receivable from price hedging contracts 5,866 39,410 5,866 39,410
Other receivables 67,476 20,120 10,063 1,895
Total other receivables 85,566 67,339 42,338 57,802
Trade and other receivables - net 3,966,573 5,347,921 3,663,367 5,442,063
ANNUAL REPORT 2013100
7. Related party transactions
During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and its subsidiaries and those related parties.
(Unit: Million Baht)
Consolidated financial statements
Separate financial statements
Transfer Pricing Policy
2013 2012 2013 2012
Transactions with subsidiaries(eliminated from the consolidated financial statements)
Sales and service income - - 5,602 5,211 Cost plus certain margin
Rental and service income - - 34 20 Contract price
Technical assistance fee income - - 12 12 Contract price
Interest income - - 1 - 2.8 percent per annum
Dividend income - - 16 205
Purchases of goods - - 8 535 Cost plus certain margin
Rental and service expenses - - 1,438 1,766 Contract price
Transactions with associateDividend income - 17 - 17
Transactions with related companiesSales and service income 3,703 4,840 3,531 4,633 Market price / contract price
Rental and service income 4 5 4 2 Contract price
Rental and service expenses 45 41 32 35 Contract price
Technical assistance fee expenses 51 42 32 25 Contract price
The balances of the accounts between the Company and its subsidiaries and those related companies as at 31 December 2013 and 2012 are as follows:
(Unit: Thousand Baht)
Consolidated financial statements Separate financial statements
2013 2012 2013 2012
Trade and other receivables- related parties (Note 6)Subsidiaries - - 1,154,376 1,364,109
Related companies (common shareholders and directors) 524,095 909,152 480,879 894,714
Total trade and other receivables - related parties 524,095 909,152 1,635,255 2,258,823
Short-term loans to related partiesSubsidiaries - - 40,621 40,244Total short-term loans to related parties - - 40,621 40,244
Trade and other payables - related parties (Note 16)Subsidiaries - - 449,778 338,560
Related companies (common shareholders and directors) 45,198 47,273 37,879 35,412
Total trade and other payables - related parties 45,198 47,273 487,657 373,972
Long-term loan from related partyRelated company (shareholder of subsidiary) 7,951 7,227 - -Total long-term loan from related party 7,951 7,227 - -
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 101
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
Loanstorelatedpartiesandloanfromrelatedparties
As at 31 December 2013 and 2012, the balances of loans between the Company and those related companies and the movement are as follows:
(Unit: Thousand Baht)
Separate financial statements
Balance as at Unrealise gain on Balance as at
Loans to related parties Related by 31 December 2012 exchange rate 31 December 2013
Alpha Maritime Co., Ltd. Subsidiary 35,000 - 35,000
Kemaman Oil Corporation Sdn Bhd Subsidiary 5,244 377 5,621
Total 40,244 377 40,621
(Unit: Thousand Baht)
Consolidated financial statements
Balance as at Translation Balance as at
Loans from related parties Related by 31 December 2012 adjustment 31 December 2013
Zhenjiang Highway Materials Company
Shareholder of subsidiary 7,227 724 7,951
Total 7,227 724 7,951
Directorsandmanagement’sbenefits
During 2013 and 2012, the Company and its subsidiaries had employee benefit expenses of their directors and management as below.
(Unit: Million Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Short-term employee benefits 102 104 86 89
Post-employment benefits 4 4 4 4
Share-based payment transactions (Note 22) 6 4 6 3
Total 112 112 96 96
Guaranteeobligationswithrelatedparties
The Company and its subsidiaries have outstanding guarantee obligations with its related parties, as described in Note 18 to the financial statements.
ANNUAL REPORT 2013102
8. Inventories
(Unit: Thousand Baht)
Consolidated financial statements
CostReduce cost to net
realisable value Inventories - net
2013 2012 2013 2012 2013 2012
Finished goods 1,419,466 1,487,167 - (157) 1,419,466 1,487,010
Raw materials 2,406,331 2,338,736 (7,759) (730) 2,398,572 2,338,006
Packaging materials, spare parts and factory supplies 101,443 110,403 (3,726) (2,529) 97,717 107,874
Goods in transit 5,433,660 3,115,593 - - 5,433,660 3,115,593
Total 9,360,900 7,051,899 (11,485) (3,416) 9,349,415 7,048,483
(Unit: Thousand Baht)
Separate financial statements
CostReduce cost to net
realisable value Inventories - net
2013 2012 2013 2012 2013 2012
Finished goods 1,287,299 1,353,790 - - 1,287,299 1,353,790
Raw materials 1,919,566 1,964,899 - - 1,919,566 1,964,899
Packaging materials, spare parts and factory supplies 15,035 20,926 (3,282) (2,085) 11,753 18,841
Goods in transit 5,433,005 3,105,754 - - 5,433,005 3,105,754
Total 8,654,905 6,445,369 (3,282) (2,085) 8,651,623 6,443,284
9. Assets held for sales - Vessel
The vessel held for sales was an asset of Delta Shipping Company Limited. In December 2012, this subsidiary entered into a contract to sell the vessel, together with tools and instruments on the vessel, to an overseas company for approximately USD 1.5 million. As a result, the subsidiary reclassified these assets from property, plant and equipment to vessel held for sale and recorded impairment loss on the assets of approximately Baht 4.8 million as an expense in profit or loss for 2012.
In January 2013, the subsidiary received payment and transferred the vessel to the buyer.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 103
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
10. Investments in subsidiaries
Details of investments in subsidiaries as presented in the separate financial statements are as follows:
(Unit: Thousand Baht)
Company’s name Investment cost of the CompanyDividend received during the year by the Company
2013 2012 2013 2012
Domestic subsidiaries
Raycol Asphalt Co., Ltd. 193,200 193,200 16,100 -
Thai Bitumen Co., Ltd. 1,499,917 1,499,917 - 187,450
Less: Provision for impairment loss of investment (60,775) (60,775)
Tipco Maritime Co., Ltd. 1,999 1,999 - 17,497
Alpha Maritime Co., Ltd. 17,999 17,999 - -
Bitumen Marine Co., Ltd. 149,999 149,999 - -
Delta Shipping Co., Ltd. 79,999 79,999 - -
Tasco Shipping Co., Ltd. 289,999 289,999 - -
Overseas subsidiaries
Tasco International (Hong Kong) Ltd. 130,008 130,008 - -
Add: Additional investment cost from the
acquisition of subsidiary under common control115,849 115,849
Kemaman Oil Corporation Sdn Bhd (KOC) 173,677 173,677 - -
(11.30% owned by the Company and 51.82%
owned by Thai Bitumen Co., Ltd.)
Kemaman Bitumen Company Sdn Bhd (KBC) 1,231,719 1,231,719 - -
(41.98% owned by the Company, 12.52% owned
by Thai Bitumen Co., Ltd. and 44.80% owned by
KOC)
Tipco Asphalt (Cambodia) Co., Ltd. 165 165 - -
Investments in subsidiaries 3,823,755 3,823,755 16,100 204,947
Cost of share-based payment transactions, under
warrants to purchase new ordinary shares of the
Company issued to the subsidiaries’ employees
(Note 22) 5,306 3,816
Total investments in subsidiaries 3,829,061 3,827,571
The paid-up capital and percentage of shareholding were presented in Note 2.2 to the financial statements.
ANNUAL REPORT 2013104
WarrantstopurchasenewordinarysharesoftheCompanyissuedtothesubsidiaries’employees
During 2013, the Company recorded cost of share-based payment transactions, under warrants to purchase new ordinary shares of the Company issued to the subsidiaries’ employees (Note 22) amounted to Baht 1.5 million (2012: Baht 2.4 million), as a cost of investments in subsidiaries.
KemamanOilCorporationSdnBhd(“KOC”)andKemamanBitumenCompanySdnBhd(“KBC”)
After the Company and Thai Bitumen signed the KOC’s shareholder agreement with Seloga Holdings Berhad (“SHB”) and Aras Jalinan Sdn Bhd (“Aras”) offered to exercise the rights under such agreement on behalf of SHB, the Company and Thai Bitumen have had disputes with Aras since 2008. In May 2011, the International Chamber of Commerce Arbitral Tribunal made the final arbitration award relating to the dispute between the Company and Thai Bitumen, and Aras, which the Company and Thai Bitumen brought to arbitration. The arbitration award denied all the disputed claims by ARAS, except that KOC shall accept the share acquisition payment amounting to MYR 5 million which was made by Aras to KOC on 3 March 2008. KOC registered additional capital amounting to MYR 5 million belonging to Aras in July 2011. As a result, the shareholdings of the Company and its subsidiaries in KOC and KBC decreased by 2.14 percent and 0.96 percent, respectively. The Company recorded the change in the subsidiaries’ interest under the caption of “Change in the Company’s interest in subsidiary which did not result in a loss of control” over the consolidated shareholders’ equity.
Currently, the Federal Court of Malaysia is considering the appeal against the judgment of the Court of First Instance filed by Aras regarding the extraordinary general meeting of KOC’s shareholders because the said judgment was in favor of the Company and Thai Bitumen. The management of the Company and Thai Bitumen believed that the outcome of the appeal, which has not been reached, would not affect the value of the investments and the equity interests of the Company and Thai Bitumen in KOC and KBC.
As at 31 December 2013, the value of the Company’s investment costs in KOC and KBC accounted for under the cost method in the separate financial statements were higher than the Company’s attributable equity interests in these subsidiaries by Baht 477 million (2012: Baht 553 million). The Company believed that the recoverable benefits from these investments would exceed their costs. Therefore, no allowance for impairment was made in the account.
11. Investment in associate
11.1 Detailsofassociate:
(Unit: Thousand Baht)
Consolidated financial statements
Company’s name Shareholding percentage CostCarrying amounts based on equity
method
2013 2012 2013 2012 2013 2012
(%) (%)
Colasie Co., Ltd. 40 40 18,404 18,404 110,521 60,649
(Registered under the law of France) (Holding company)
Total investment in associate 18,404 18,404 110,521 60,649
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 105
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
(Unit: Thousand Baht)
Separate financial statements
Company’s name Shareholding percentage Cost Carrying amounts based on cost method
2013 2012 2013 2012 2013 2012
(%) (%)
Colasie Co., Ltd. 40 40 18,404 18,404 18,404 18,404
Total investment in associate 18,404 18,404 18,404 18,404
11.2 Shareofprofitanddividendreceived
During the years, the Company has recognised its share of profit from investment in associate in the consolidated financial statements and dividend income in the separate financial statements as follows:
(Unit: Thousand Baht)
Consolidated financial statements Separate financial statements
Company’s nameShare of profit from investment
in associate during the yearDi vidend received
during the year by the Company
2013 2012 2013 2012
Colasie Co., Ltd. 46,207 35,323 - 16,789
Total 46,207 35,323 - 16,789
11.3 Summarisedfinancialinformationofassociate
Financial information of the associate is summarised below.
(Unit: Million Euro)
Company’s namePaid-up capital
as at31 December
Total assetsas at
31 December
Total liabilitiesas at
31 December
Total revenuesfor the year ended
31 DecemberProfit for the year ended
31 December
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Colasie Co., Ltd. 1.04 1.04 3.04 2.61 0.01 0.01 2.87 2.26 2.83 2.20
ANNUAL REPORT 2013106
12. Investment properties
The net book value of investment properties as at 31 December 2013 and 2012 are presented below.
(Unit: Thousand Baht)Consolidated financial statements
The Company’s land, buildings and equipment located at
Petchburi Plant
Land ofThai Bitumen
Total
As at 31 December 2013:Cost 268,377 383,608 651,985Less Accumulated depreciation (138,692) - (138,692)Less Allowance for diminution in value (95,885) (217,975) (313,860)Net book value 33,800 165,633 199,433
As at 31 December 2012:Cost 268,377 383,608 651,985Less Accumulated depreciation (138,692) - (138,692)Less Allowance for diminution in value (95,885) (217,975) (313,860)Net book value 33,800 165,633 199,433
(Unit: Thousand Baht)Separate financial statements
The Company’s land, buildings and equipment located at
Petchburi Plant
The Company’s land for rent located at Suratthani Province
Total
As at 31 December 2013:Cost 268,377 76,960 345,337Less Accumulated depreciation (138,692) (10,108) (148,800)Less Allowance for diminution in value (95,885) - (95,885)Net book value 33,800 66,852 100,652
As at 31 December 2012:Cost 268,377 76,960 345,337Less Accumulated depreciation (138,692) (9,562) (148,254)Less Allowance for diminution in value (95,885) - (95,885)Net book value 33,800 67,398 101,198
A reconciliation of the net book value of investment properties for 2013 and 2012 is presented below.
(Unit: Thousand Baht)
Consolidatedfinancial statements
Separate financial statements
2013 2012 2013 2012
Net book value at beginning of year 199,433 204,200 101,198 101,745
Depreciation charged during the year - - (546) (547)
Impairment loss recorded during the year - (4,767) - -
Net book value at end of year 199,433 199,433 100,652 101,198
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 107
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The fair values of the investment properties, appraised by an independent professional valuer using the Sales Comparison Approach, as at 31 December 2013 and 2012 are stated below:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
The Company’s land for rent located at Suratthani Province - - 141,000 141,000
The Company’s land, buildings and equipment located at Petchburi Plant
33,800 33,800 33,800 33,800
Land of Thai Bitumen 165,633 165,633 - -
During the year 2012, Thai Bitumen received a letter from Land Office relating to investigation of revocation of some title deeds that had been issued illegally. The case currently has not been concluded. However, Thai Bitumen recorded impairment loss on the land of approximately Baht 4.8 million as an expense in profit or loss for 2012.
ANNUAL REPORT 2013108
13.
Prop
erty
, pla
nt a
nd e
quip
men
t
(Uni
t: Th
ousa
nd B
aht)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Land
an
d la
nd im
prov
emen
t
Build
ings
, bui
ldin
g im
prov
emen
ts an
dco
mpl
emen
ts
Mac
hine
ry, t
ools
and
equi
pmen
t
Furn
iture
, offi
ceeq
uipm
ent
and
vehi
cles
Ve
ssel
s
Cons
truct
ion
in p
rogr
ess
and
equi
pmen
t und
er
inst
alla
tion
Tota
l
Cost
As
at 1
Janu
ary
2012
627,
369
618,
960
3,77
7,54
573
7,44
21,
185,
053
383,
988
7,33
0,35
7Ad
ditio
ns1,
608
-66
,693
22,9
5512
,266
762,
743
866,
265
Dis
posa
ls/w
rite-
off(3
32)
-(6
,113
)(3
3,39
5)-
-(3
9,84
0)Tr
ansf
er in
(tra
nsfe
r out
)5,
075
6,50
03,
923
49,5
9271
6,67
7(7
81,7
67)
-Tr
ansf
er to
ass
ets
held
for s
ales
(Not
e 9)
--
(2,9
34)
(955
)(1
48,8
64)
-(1
52,7
53)
Inte
rest
cap
italiz
ed-
--
--
15,9
2015
,920
As
at 3
1 D
ecem
ber 2
012
633,
720
625,
460
3,83
9,11
477
5,63
91,
765,
132
380,
884
8,01
9,94
9Ad
ditio
ns-
-33
,569
11,8
7754
,282
748,
825
848,
553
Dis
posa
ls/w
rite-
off-
(1,2
86)
(8,0
91)
(57,
282)
--
(66,
659)
Tran
sfer
in (t
rans
fer o
ut)
6,02
14,
275
315,
868
40,0
74-
(366
,238
)-
Inte
rest
cap
italiz
ed-
--
--
4,89
24,
892
As
at 3
1 D
ecem
ber 2
013
639,
741
628,
449
4,18
0,46
077
0,30
81,
819,
414
768,
363
8,80
6,73
5
(Uni
t: Th
ousa
nd B
aht)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Land
an
d la
nd im
prov
emen
t
Build
ings
, bui
ldin
g im
prov
emen
ts an
dco
mpl
emen
ts
Mac
hine
ry, t
ools
and
equi
pmen
t
Furn
iture
, offi
ceeq
uipm
ent
and
vehi
cles
Ve
ssel
s
Cons
truct
ion
in p
rogr
ess
and
equi
pmen
t und
er
inst
alla
tion
Tota
l
Acc
umul
ated
dep
reci
atio
nA
s at
1 Ja
nuar
y 20
1226
4,89
834
8,49
11,
481,
570
601,
192
324,
121
-3,
020,
272
Dep
reci
atio
n fo
r the
yea
r17
,466
24,9
7321
7,17
939
,161
77,5
56-
376,
335
Accu
mul
ated
dep
reci
atio
n on
dis
posa
l/writ
e-off
(251
)-
(5,9
16)
(30,
097)
--
(36,
264)
Tran
sfer
to a
sset
s he
ld fo
r sal
es (N
ote
9)-
-(2
,234
)(9
46)
(99,
349)
-(1
02,5
29)
As
at 3
1 D
ecem
ber 2
012
282,
113
373,
464
1,69
0,59
960
9,31
030
2,32
8-
3,25
7,81
4D
epre
ciat
ion
for t
he y
ear
17,2
6122
,823
211,
721
41,9
7591
,358
-38
5,13
8Ac
cum
ulat
ed d
epre
ciat
ion
on d
ispo
sal/w
rite-
off-
(993
)(5
,805
)(5
5,63
7)-
-(6
2,43
5)
As
at 3
1 D
ecem
ber 2
013
299,
374
395,
294
1,89
6,51
559
5,64
839
3,68
6-
3,58
0,51
7
Allo
wan
ce fo
r im
pair
men
t los
sA
s at
1 Ja
nuar
y 20
121,
183
--
--
-1,
183
Incr
ease
dur
ing
the
year
--
20,8
35-
--
20,8
35
As
at 3
1 D
ecem
ber 2
012
1,18
3-
20,8
35-
--
22,0
18In
crea
se d
urin
g th
e ye
ar-
-1,
756
--
-1,
756
As
at 3
1 D
ecem
ber 2
013
1,18
3-
22,5
91-
--
23,7
74
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 109
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS(U
nit:
Thou
sand
Bah
t)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Land
an
d la
nd im
prov
emen
t
Build
ings
, bui
ldin
g im
prov
emen
ts an
dco
mpl
emen
ts
Mac
hine
ry, t
ools
and
equi
pmen
t
Furn
iture
, offi
ceeq
uipm
ent
and
vehi
cles
Ve
ssel
s
Cons
truct
ion
in p
rogr
ess
and
equi
pmen
t und
er
inst
alla
tion
Tota
l
Tran
slat
ion
adju
stm
ents
As
at 1
Janu
ary
2012
-8,
916
(23,
591)
(163
)-
(46,
397)
(61,
235)
Tran
slat
ion
adju
stm
ents
dur
ing
the
year
-(5
,771
)(7
7,07
7)(2
33)
--
(83,
081)
As
at 3
1 D
ecem
ber 2
012
-3,
145
(100
,668
)(3
96)
-(4
6,39
7)(1
44,3
16)
Tran
slat
ion
adju
stm
ents
dur
ing
the
year
-16
,599
128,
137
2,32
7-
41,4
3218
8,49
5A
s at
31
Dec
embe
r 201
3-
19,7
4427
,469
1,93
1-
(4,9
65)
44,1
79N
et b
ook
valu
e
As
at 3
1 D
ecem
ber 2
012
350,
424
255,
141
2,02
7,01
216
5,93
31,
462,
804
334,
487
4,59
5,80
1A
s at
31
Dec
embe
r 201
333
9,18
425
2,89
92,
288,
823
176,
591
1,42
5,72
876
3,39
85,
246,
623
Dep
reci
atio
n fo
r the
yea
r
2012
(Bah
t 281
mill
ion
incl
uded
in m
anuf
actu
ring
cost
, and
the
bala
nce
in s
ellin
g ex
pens
es a
nd a
dmin
istr
ativ
e ex
pens
es)
376,
335
2013
(Bah
t 306
mill
ion
incl
uded
in m
anuf
actu
ring
cost
, and
the
bala
nce
in s
ellin
g ex
pens
es a
nd a
dmin
istr
ativ
e ex
pens
es)
385,
138
(Uni
t: Th
ousa
nd B
aht)
Sepa
rate
fina
ncia
l sta
tem
ents
Land
an
d la
nd im
prov
emen
t
Build
ings
, bui
ldin
g im
prov
emen
ts an
dco
mpl
emen
ts
Mac
hine
ry, t
ools
and
equi
pmen
t
Furn
iture
, offi
ceeq
uipm
ent
and
vehi
cles
Vess
els
Cons
truct
ion
in p
rogr
ess
and
equi
pmen
t un
der
inst
alla
tion
Tota
l
Cost
As
at 1
Janu
ary
2012
435,
912
208,
353
494,
529
550,
367
96,3
0618
,752
1,80
4,21
9
Addi
tions
3,09
05,
732
7,16
521
,395
-6,
821
44,2
03
Dis
posa
ls/w
rite-
off(3
32)
-(2
,881
)(2
2,01
7)-
-(2
5,23
0)
Tran
sfer
in (t
rans
fer o
ut)
6364
41,
249
16,7
96-
(18,
752)
-
As
at 3
1 D
ecem
ber 2
012
438,
733
214,
729
500,
062
566,
541
96,3
066,
821
1,82
3,19
2
Addi
tions
--
2,61
46,
348
-60
,458
69,4
20
Dis
posa
ls/w
rite-
off
-(1
,281
)(1
,844
)(3
1,38
9)-
-(3
4,51
4)
Tran
sfer
in (t
rans
fer o
ut)
5,06
63,
177
8,95
430
,901
-(4
8,09
8)-
Busi
ness
tran
sfer
to s
ubsi
diar
y (N
ote
1)-
-(1
,546
)(3
22)
(96,
306)
-(9
8,17
4)
As
at 3
1 D
ecem
ber 2
013
443,
799
216,
625
508,
240
572,
079
-19
,181
1,75
9,92
4
ANNUAL REPORT 2013110
(Uni
t: Th
ousa
nd B
aht)
Sepa
rate
fina
ncia
l sta
tem
ents
Land
an
d la
nd im
prov
emen
t
Build
ings
, bui
ldin
g im
prov
emen
ts an
dco
mpl
emen
ts
Mac
hine
ry, t
ools
and
equi
pmen
t
Furn
iture
, offi
ceeq
uipm
ent
and
vehi
cles
Vess
els
Cons
truct
ion
in p
rogr
ess
and
equi
pmen
t un
der
inst
alla
tion
Tota
l
Acc
umul
ated
dep
reci
atio
n
As
at 1
Janu
ary
2012
174,
325
153,
851
473,
401
454,
744
40,8
58-
1,29
7,17
9
Dep
reci
atio
n fo
r the
yea
r12
,792
8,86
77,
594
25,3
004,
563
-59
,116
Accu
mul
ated
dep
reci
atio
n on
dis
posa
l/ w
rite-
off(2
51)
-(2
,874
)(2
1,73
1)-
-(2
4,85
6)
As
at 3
1 D
ecem
ber 2
012
186,
866
162,
718
478,
121
458,
313
45,4
21-
1,33
1,43
9
Dep
reci
atio
n fo
r the
yea
r12
,140
8,32
87,
113
25,2
231,
333
-54
,137
Accu
mul
ated
dep
reci
atio
n on
dis
posa
l/ w
rite-
off-
(990
)(1
,844
)(3
1,28
0)-
-(3
4,11
4)
Tran
sfer
in (t
rans
fer o
ut)
(548
)-
534
14-
--
Busi
ness
tran
sfer
to s
ubsi
diar
y (N
ote
1)-
-(1
,429
)(3
22)
(46,
754)
-(4
8,50
5)
As
at 3
1 D
ecem
ber 2
013
198,
458
170,
056
482,
495
451,
948
--
1,30
2,95
7
Allo
wan
ce fo
r im
pair
men
t los
s
As
at 1
Janu
ary
2012
1,18
3-
--
--
1,18
3
As
at 3
1 D
ecem
ber 2
012
1,18
3-
--
--
1,18
3
As
at 3
1 D
ecem
ber 2
013
1,18
3-
--
--
1,18
3
Net
boo
k va
lue
As
at 3
1 D
ecem
ber 2
012
250,
684
52,0
1121
,941
108,
228
50,8
856,
821
490,
570
As
at 3
1 D
ecem
ber 2
013
244,
158
46,5
6925
,745
120,
131
-19
,181
455,
784
Dep
reci
atio
n fo
r the
yea
r
2012
(Bah
t 26
mill
ion
incl
uded
in m
anuf
actu
ring
cost
, and
the
bala
nce
in s
ellin
g ex
pens
es a
nd a
dmin
istr
ativ
e ex
pens
es)
59,1
16
2013
(Bah
t 25
mill
ion
incl
uded
in m
anuf
actu
ring
cost
, and
the
bala
nce
in s
ellin
g ex
pens
es a
nd a
dmin
istr
ativ
e ex
pens
es)
54,1
37
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 111
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
During the year 2013, an overseas subsidiary assessed machinery, tools and equipment and found that some of machinery, tools and equipment were not appropriate for its current operations and needed replacement. The subsidiary therefore recorded impairment loss of machinery, tools and equipment amounting to USD 0.1 million (2012: USD 0.7 million) as expense in profit or loss.
During the year 2013, borrowing costs totaling approximately Baht 5 million were capitalised as cost of the vessel (2012: Baht 16 million). The weighted average rate used to determine the amount of borrowing costs eligible for capitalisation was 3% (2012: 5%).
As at 31 December 2013, certain building and equipment items had been fully depreciated but were still in use. The original cost of those assets amounted to approximately Baht 1,426 million (2012: Baht 1,436 million) (The Company Only: Baht 961 million, 2012: Baht 898 million).
14. Leasehold rights
The Company and subsidiaries entered into agreements to lease buildings and land. The lease agreements can be summarised below.
Leasee Country the leased asset located in Lease period Lease agreement
ending yearPrepaid lease amount at inception
of the lease
(year)
1. The Company China 30 2031 1.4 million renminbi
2. A subsidiary in China China 30 2029 5.7 million renminbi
3. A subsidiary in China China 50 2050 6.9 million renminbi
4. A subsidiary in China China 45 2055 2.5 million renminbi
5. A subsidiary in Malaysia Malaysia 50 2055 19.8 million ringgit
The book value of the leasehold rights as at 31 December 2013 and 2012 can be summarised below.
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Cost 254,299 254,299 6,837 6,837Less Accumulated amortisation (44,859) (39,122) (2,963) (2,735)
Translation adjustment 8,373 (7,305) - -
Net book value 217,813 207,872 3,874 4,102
A reconciliation of the net book value of leasehold rights for the years 2013 and 2012 is presented below.
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Net book value at beginning of year 207,872 220,175 4,102 4,330
Amortisation (5,737) (5,697) (228) (228)
Translation adjustments 15,678 (6,606) - -
Net book value at end of year 217,813 207,872 3,874 4,102
ANNUAL REPORT 2013112
15. Short-term loans from financial institutions
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Trust receipts 9,164,536 8,158,510 9,164,536 8,158,510
Loans in renminbi 140,626 29,498 - -
Loans in US Dollars 111,298 48,825 - -
Total 9,416,460 8,236,833 9,164,536 8,158,510
As at 31 December 2013, the Company had short-term loans from local banks, which carry interest at the rates of 0.85 percent per annum (2012: 0.9 to 1.2 percent per annum).
In addition, overseas subsidiaries had short-term loans from overseas financial institutions, which carry interest at the rates ranging from 2.1 to 7.2 percent per annum (2012: 5.2 to 7.9 percent per annum).
16. Trade and other payables
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Trade payables - related parties (Note 7) 4,735 11,165 444,577 339,036
Trade payables - unrelated parties 1,233,559 1,894,277 1,031,012 1,748,531
Amounts due to related parties (Note 7) 40,463 36,108 43,080 34,936
Accounts payable from price hedging contracts 60,952 - 60,952 -
Accrued expenses 214,271 191,548 92,299 73,849
Other payables 57,835 69,739 10,404 15,665
Total trade and other payables 1,611,815 2,202,837 1,682,324 2,212,017
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 113
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS17
. Lo
ng-t
erm
loan
s from
fina
ncia
l ins
titut
ions
(Uni
t: Th
ousa
nd B
aht)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Sepa
rate
fina
ncia
l sta
tem
ents
Loan
Borr
ower
Inte
rest
rat
e Re
paym
ent s
ched
ule
2013
2012
2013
2012
Lon
g-te
rm lo
ans
in B
aht f
rom
Ban
k in
Tha
iland
(1)
The
Com
pany
Fixe
d ra
teM
onth
ly in
stal
lmen
ts o
f Bah
t 0.3
mill
ion
each
, com
men
cing
Apr
il 20
09 to
Mar
ch
2014
-4,
541
-4,
541
(2)
The
Com
pany
Rate
refe
renc
ed to
TH
BFIX
Qua
rter
ly in
stal
lmen
t, to
talli
ng B
aht 2
00
mill
ion
for 2
011
and
Baht
240
mill
ion
for
2012
to 2
015
480,
000
720,
000
480,
000
720,
000
(3)
The
Com
pany
Fixe
d ra
te fo
r the
firs
t tw
o ye
ars
and
for t
he th
ird to
the
eigh
th y
ears
at a
ra
te re
fere
nced
to T
HB
FIX
Qua
rter
ly in
stal
lmen
ts, a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng Ju
ne 2
012
645,
000
701,
250
645,
000
701,
250
(4)
Bitu
men
Mar
ine
Com
pany
Lim
ited
Rate
refe
renc
ed to
TH
BFIX
Qua
rter
ly in
stal
lmen
ts o
f Bah
t 9.2
mill
ion
each
, com
men
cing
Dec
embe
r 201
0 to
Se
ptem
ber 2
013
-
27,4
70-
-
(5)
Alp
ha M
ariti
me
Com
pany
Lim
ited
Fixe
d ra
te fo
r the
firs
t thr
ee y
ears
and
fo
r the
four
th to
the
fifth
yea
rs a
t a ra
te
refe
renc
ed to
BIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng A
pril
2012
37,8
0047
,550
--
(6)
Tasc
o Sh
ippi
ng C
ompa
ny L
imite
dFi
xed
rate
for t
he fi
rst t
hree
yea
rs a
nd fo
r th
e fo
urth
to th
e ei
ghth
yea
rs a
t a ra
te
refe
renc
ed to
BIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng M
ay 2
012
168,
400
185,
400
--
(7)
Tasc
o Sh
ippi
ng C
ompa
ny L
imite
dRa
te re
fere
nced
to T
HBF
IX(2
012:
Rat
e re
fere
nced
to U
SD L
IBO
R)Q
uart
erly
inst
allm
ents
as
stip
ulat
ed in
th
e ag
reem
ents
, com
men
cing
Oct
ober
20
12
424,
615
503,
777
--
Long
-ter
m lo
ans
in U
SD fr
om b
ank
in T
haila
nd
(8)
Alp
ha M
ariti
me
Com
pany
Lim
ited
Rate
refe
renc
ed to
LIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
ts, c
omm
enci
ng Ju
ly 2
015
199,
673
--
-
Long
-ter
m lo
ans
in U
SD fr
om b
ank
in M
alay
sia
(9)
Kem
aman
Bitu
men
Com
pany
Sdn
Bhd
Rate
refe
renc
ed to
Len
der’s
Cos
t of
Fund
sQ
uart
erly
inst
allm
ents
of U
SD 0
.83
mill
ion
each
, com
men
cing
Nov
embe
r 20
11 to
Aug
ust 2
016
299,
588
381,
363
--
(10)
Kem
aman
Bitu
men
Com
pany
Sdn
Bhd
Rate
refe
renc
ed to
Len
der’s
Cos
t of
Fund
sQ
uart
erly
inst
allm
ents
of U
SD 1
.10
mill
ion
each
, com
men
cing
Nov
embe
r 20
12 to
Aug
ust 2
017
613,
615
389,
545
--
Tota
l2,
868,
691
2,96
0,89
61,
125,
000
1,42
5,79
1Le
ss: C
urre
nt p
ortio
n(6
88,8
21)
(596
,304
)(3
52,5
00)
(322
,383
)Lo
ng-t
erm
loan
s fr
om fi
nanc
ial i
nstit
utio
ns -
net o
f cur
rent
por
tion
2,17
9,87
02,
364,
592
772,
500
1,10
3,40
8
ANNUAL REPORT 2013114
17.
Long
-ter
m lo
ans
from
fina
ncia
l ins
titut
ions
(Uni
t: Th
ousa
nd B
aht)
Cons
olid
ated
fina
ncia
l sta
tem
ents
Sepa
rate
fina
ncia
l sta
tem
ents
Loan
Borr
ower
Inte
rest
rat
e Re
paym
ent s
ched
ule
2013
2012
2013
2012
Lon
g-te
rm lo
ans
in B
aht f
rom
Ban
k in
Tha
iland
(1)
The
Com
pany
Fixe
d ra
teM
onth
ly in
stal
lmen
ts o
f Bah
t 0.3
mill
ion
each
, com
men
cing
Apr
il 20
09 to
Mar
ch
2014
-4,
541
-4,
541
(2)
The
Com
pany
Rate
refe
renc
ed to
TH
BFIX
Qua
rter
ly in
stal
lmen
t, to
talli
ng B
aht 2
00
mill
ion
for 2
011
and
Baht
240
mill
ion
for
2012
to 2
015
480,
000
720,
000
480,
000
720,
000
(3)
The
Com
pany
Fixe
d ra
te fo
r the
firs
t tw
o ye
ars
and
for t
he th
ird to
the
eigh
th y
ears
at a
ra
te re
fere
nced
to T
HB
FIX
Qua
rter
ly in
stal
lmen
ts, a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng Ju
ne 2
012
645,
000
701,
250
645,
000
701,
250
(4)
Bitu
men
Mar
ine
Com
pany
Lim
ited
Rate
refe
renc
ed to
TH
BFIX
Qua
rter
ly in
stal
lmen
ts o
f Bah
t 9.2
mill
ion
each
, com
men
cing
Dec
embe
r 201
0 to
Se
ptem
ber 2
013
-
27,4
70-
-
(5)
Alp
ha M
ariti
me
Com
pany
Lim
ited
Fixe
d ra
te fo
r the
firs
t thr
ee y
ears
and
fo
r the
four
th to
the
fifth
yea
rs a
t a ra
te
refe
renc
ed to
BIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng A
pril
2012
37,8
0047
,550
--
(6)
Tasc
o Sh
ippi
ng C
ompa
ny L
imite
dFi
xed
rate
for t
he fi
rst t
hree
yea
rs a
nd fo
r th
e fo
urth
to th
e ei
ghth
yea
rs a
t a ra
te
refe
renc
ed to
BIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
t, co
mm
enci
ng M
ay 2
012
168,
400
185,
400
--
(7)
Tasc
o Sh
ippi
ng C
ompa
ny L
imite
dRa
te re
fere
nced
to T
HBF
IX(2
012:
Rat
e re
fere
nced
to U
SD L
IBO
R)Q
uart
erly
inst
allm
ents
as
stip
ulat
ed in
th
e ag
reem
ents
, com
men
cing
Oct
ober
20
12
424,
615
503,
777
--
Long
-ter
m lo
ans
in U
SD fr
om b
ank
in T
haila
nd
(8)
Alp
ha M
ariti
me
Com
pany
Lim
ited
Rate
refe
renc
ed to
LIB
OR
Qua
rter
ly in
stal
lmen
ts a
s st
ipul
ated
in
the
agre
emen
ts, c
omm
enci
ng Ju
ly 2
015
199,
673
--
-
Long
-ter
m lo
ans
in U
SD fr
om b
ank
in M
alay
sia
(9)
Kem
aman
Bitu
men
Com
pany
Sdn
Bhd
Rate
refe
renc
ed to
Len
der’s
Cos
t of
Fund
sQ
uart
erly
inst
allm
ents
of U
SD 0
.83
mill
ion
each
, com
men
cing
Nov
embe
r 20
11 to
Aug
ust 2
016
299,
588
381,
363
--
(10)
Kem
aman
Bitu
men
Com
pany
Sdn
Bhd
Rate
refe
renc
ed to
Len
der’s
Cos
t of
Fund
sQ
uart
erly
inst
allm
ents
of U
SD 1
.10
mill
ion
each
, com
men
cing
Nov
embe
r 20
12 to
Aug
ust 2
017
613,
615
389,
545
--
Tota
l2,
868,
691
2,96
0,89
61,
125,
000
1,42
5,79
1Le
ss: C
urre
nt p
ortio
n(6
88,8
21)
(596
,304
)(3
52,5
00)
(322
,383
)Lo
ng-t
erm
loan
s fr
om fi
nanc
ial i
nstit
utio
ns -
net o
f cur
rent
por
tion
2,17
9,87
02,
364,
592
772,
500
1,10
3,40
8
Loan No. (7) of Tasco Shipping Company Limited : In April 2013, Tasco Shipping Company Limited has amended long-term loan agreement from a local bank to change currency from United States Dollar to Thai Baht and the interest rate of long-term loan from interest rate with referenced to LIBOR to interest rate with referenced to THBFIX.
As at 31 December 2013, the long-term credit facilities of a subsidiary which has not yet been drawn down amounted to USD 6.1 million.
Loancovenants
The loan agreements of the Company and its subsidiaries contain certain restrictive covenants pertaining to, among others things, the maintenance of financial ratios, the prohibition from creating lien over assets, the loan to related parties, the maintenance of trade accounts receivable and inventory balance, restriction on dividend payment, the maintenance of shareholders and the limitation on creation of additional long-term debt.
Interestrateswapagreements
In May 2009, the Company entered into an interest rate swap agreement to swap a floating interest rate on a long-term loan from a local bank to a fixed rate interest at 4.365 percent per annum. As at 31 December 2013, the notional amount of Baht 480 million (2012: Baht 720 million) was outstanding. The notional amount reduces on a quarterly basis in accordance with the long-term loan repayment schedule of the Company in (2), starting from May 2009 and matures in November 2015.
In May 2012, the Company entered into an interest rate swap agreement to swap a floating interest rate on a long-term loan from a local bank to a fixed interest rate at 5.21 percent per annum. As at 31 December 2013, the notional amount of Baht 645 million (2012: Baht 701 million), was outstanding, and this will reduce every quarter in accordance with the related long-term loan repayment schedule of the Company in (3), starting from June 2012 and ending when the loan mature in March 2018.
In December 2013, Kemaman Bitumen Company Sdn Bhd entered into an interest rate swap agreement to swap a floating interest rate on a long-term loan from a bank in Malaysia to a fixed interest rate at 0.2416 percent per annum. As at 31 December 2013, the notional amount of USD 29 million was outstanding, and this will mature in January 2014.
18 Credit facilities
The credit facilities of the Company and its subsidiaries granted by financial institutions are secured by the following collaterals:
a) The guarantees by the Company, its subsidiaries and a shareholder of a subsidiary.
b) The pledges/mortgages by the assets of subsidiaries of which the net book value as at 31 December 2013 and 2012 of the assets are summarised below.
(Unit: Million Baht)
Consolidated financial statements
2013 2012
Leasehold rights - net 201 151
Property, plant and equipment - net 3,524 2,880
Computer software - net - 1
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 115
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
c) The prohibition from creating lien over assets of the Company and its subsidiaries.
d) Financial support letters provided by the Company and its subsidiaries to banks.
e) The Company allows its subsidiaries to use its facilities obtained from banks, with the Company responsible to the banks for the amounts drawn down by the subsidiaries.
19. Provision for long-term employee benefits
Provision for long-term employee benefits, which is compensations on employees’ retirement, was as follows:
(Unit: Thousand Baht)Consolidated
financial statementsSeparate
financial statements
2013 2012 2013 2012
Balance at beginning of year 69,231 65,129 56,822 52,778Defined benefit plans: Current service cost 6,604 7,641 5,148 6,023 Interest cost 2,494 2,324 2,004 1,889 Benefits paid during the year (8,135) (4,234) (8,135) (2,580)Long service awards: (372) (1,629) (294) (1,288)Balance at end of year 69,822 69,231 55,545 56,822
Long-term employee benefit expenses included in the profit or loss was as follows:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Current service cost 6,826 7,857 5,303 6,175
Interest cost 2,571 2,412 2,058 1,950
Total expense recognised in profit or loss 9,397 10,269 7,361 8,125
Line items under which such expenses are included in profit or loss
Cost of sales 944 1,232 331 628
Selling and administrative expenses 8,453 9,037 7,030 7,497
Principal actuarial assumptions at the valuation date were as follows:
Consolidated/Separate financial statements
2013 2012
(% per annum) (% per annum)
Discount rate 3.9 3.9
Future salary increase rate (depending on age of employee) 3.0 - 8.0 3.0 - 8.0
Staff turnover rate (depending on age of employee) 0.0 - 14.0 0.0 - 14.0
ANNUAL REPORT 2013116
20. Share capital
The Annual General Meeting of the shareholders held on 5 April 2013 approved the following resolutions.
Decreaseofsharecapital
Decrease the Company’s registered capital by Baht 1,838,000 from Baht 1,700,437,290 (170,043,729 ordinary shares of Baht 10 each) to Baht 1,698,599,290 (169,859,929 ordinary shares of Baht 10 each), by decreasing the ordinary shares reserved for the exercise of ESOP-W1 and ESOP-W2 of 183,800 shares at the par value of Baht 10 each.
The Company registered the capital decrease on 18 April 2013.
Increaseofsharecapital
1. Increase the Company’s registered capital by Baht 12,000,000 from Baht 1,698,599,290 (169,859,929 ordinary shares of Baht 10 each) to Baht 1,710,599,290 (171,059,929 ordinary shares of Baht 10 each), through the issue of 1,200,000 new ordinary shares of Baht 10 each.
2. Allocate and reserve the 1,200,000 new ordinary shares to support the exercise of the ESOP-W3 warrants (Note 22).
The Company registered the capital increase on 19 April 2013.
Below is the summarisation of the exercise of ESOP-W1 warrants in 2013.
No. of warrants exercised (warrants) 32,800
No. of ordinary shares issued (shares) 32,800
Amount of cash received (Baht) 2,039,832
Share registration date 9 July 2013
Issued and paid-up share capital after share
registration
Baht 1,525,808,680
(152,580,868 ordinary shares of Baht 10 each)
21. Warrants to purchase new ordinary shares of the Company issued to the Company’s shareholders
The Annual General Meeting of the shareholders held on 5 April 2011 approved the issuance of the warrants to purchase new ordinary shares of the Company (TASCO-W3) without charge to the Company’s shareholders, at a rate of 10 existing ordinary shares for 1 TASCO-W3 warrant. Each TASCO-W3 can be exercised to purchase 1 new ordinary share at the following exercise prices:
Exercise month (from date of issuance) Exercise price (Baht per share) Months 1 to 12 62.19
Months 13 to 18 63.74
Months 19 to 24 65.30
Months 25 to 30 66.85
Months 31 to 36 68.41
The exercise prices are subject to change according to the conditions of any rights adjustment.
The holders of TASCO-W3 are able to exercise their rights to purchase the Company’s ordinary shares from the last
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 117
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
business day of the month in which such warrants are issued (18 April 2011). TASCO-W3 warrants have a term of 3 years.
The Stock Exchange of Thailand approved the listing of TASCO-W3 warrants, and the warrants began trading on 6 May 2011.
As at 31 December 2013, the remained unexercised of TASCO-W3 was 15,253,916 units (2012: 15,253,916 units).
22. Warrants to purchase new ordinary shares of the Company issued to the executive directors and/or employees of the Company and subsidiaries (ESOP)
The Annual General Meetings of the shareholders each approved the issuance of 1,200,000 warrants each time to purchase new ordinary shares of the Company to the executive directors and/or employees of the Company and its subsidiaries, without charge. Details of these issues of ESOP warrants are summarised below.
ESOP-W1 ESOP-W2 ESOP-W3Annual General Meeting of
the shareholders date 5 April 2011 27 April 2012 5 April 2013
Exercise price 62.19 Baht per share 49.13 Baht per share 53.06 Baht per share
Issue date 18 April 2011 18 May 2012 30 April 2013
Number of warrants subscribed 1,088,100 warrants 1,128,700 warrants 1,182,600 warrants
Number of warrants unsubscribed 111,900 warrants 71,300 warrants 17,400 warrants
Each ESOP warrant can be exercised to purchase 1 new ordinary share at the exercise prices specified above. However, these exercise prices are subject to change in accordance with the conditions of any subsequent rights adjustment.
The holders of ESOP-W1 and ESOP-W2 warrants can exercise their rights to purchase the Company’s ordinary shares after the second year and the holders of ESOP-W3 can exercise their rights to purchase the Company’s ordinary shares after the third year counting from the warrant issuance date. Moreover, they must still be executive directors and/or employees of the Company or its subsidiaries on the date the warrants are exercised. The warrants have terms of 5 years.
The Company plans to cancel the unallocated ESOP warrant specified above later.
The expenses recognised for employee services received during 2013 of the Company and its subsidiaries were totaled Baht 10 million (2012: Baht 8 million) (Separate financial statements Baht 9 million (2012: Baht 6 million)).
The fair value of option granted and the inputs of the model used are summarised below.
ESOP-W1 ESOP-W2 ESOP-W3Fair value of options granted Baht 12.10 per share Baht 5.41 per share Baht 27.63 per shareDividend yield 3.75% 2.58% 1.79%
Expected stock volatility* 40.0% 45.4% 43.3%
Risk-free interest rate 2.82% 3.30% 3.03%
Expected life of share options 2 years 2 years 3 years
Model used Black-Scholes Black-Scholes Black-Scholes
ANNUAL REPORT 2013118
*The expected volatility of the share options is based on historical data of the Company’s stock price.
As at 31 December 2013, the remain unexercised of ESOP are summarized below.
2013 2012
ESOP-W1 932,300 units 1,077,200 units
ESOP-W2 1,009,800 units 1,128,700 units
ESOP-W3 1,128,600 units -
23. Statutory reserve
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.
24. Compensation received from claims for damages
In 2011, the tribunal for arbitration between Thai Bitumen Company Limited (Thai Bitumen) and an overseas company awarded in favor of Thai Bitumen over a sales contract, where the counterparty had failed to make contracted delivery of goods to Thai Bitumen. The award was approximately USD 20.2 million plus interest of approximately USD 1.7 million. In late 2011, Thai Bitumen received the awarded amount and recorded the cash receipt, which net of expenses relating to this matter amounted to Baht 74 million, as income in profit or loss for 2011.
In 2012, Thai Bitumen received a sum of USD 1.6 million being the claim for reimbursement expenses incurred from the same case. Thai Bitumen recorded the cash receipt as income in the consolidated profit or loss for 2012 and the case has been fully settled accordingly.
25. Expenses by nature
Significant expenses by nature are as follows:
(Unit: Million Baht)
Consolidated
financial statements
Separate
financial statements
2013 2012 2013 2012
Salary and wages and other employee benefits 725 613 326 290
Depreciation and maintenance expenses 514 507 103 108
Costs related to production of goods and
services (excluding of staff cost, depreciation
and maintenance expenses)
31,857 35,070 30,854 34,289
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 119
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
26. Income tax
Income tax expenses for the years ended 31 December 2013 and 2012 are made up as follows:
(Unit: Thousand Baht)Consolidated
financial statements
Separate
financial statements
2013 2012 2013 2012
Current income tax:
Current income tax charge 117,514 77,989 76,868 40,012
Deferred tax:Relating to origination and reversal of temporary
differences 3,425 (11,267) (1,343) (5,452)
Utilisation of tax loss carried forward
during the year 765 50,061 - -
Effects of changes in the applicable tax rates - 12,807 - 4,959
Income tax expense reported in the statement of
comprehensive income 121,704 129,590 75,525 39,519
The amounts of income tax relating to each component of other comprehensive income for the years ended 31 December 2013 and 2012 are as follows:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Deferred tax relating to change in fair value of
interest rate swap contract248 371 248 371
Effects of changes in the applicable tax rates - 174 - 174
248 545 248 545
ANNUAL REPORT 2013120
Reconciliation between income tax expenses and the product of accounting profit multiplied by the applicable tax rates for the years ended 31 December 2013 and 2012 are as follows:
(Unit: Thousand Baht)
Consolidated
financial statements
Separate
financial statements
2013 2012 2013 2012
Accounting profit before tax 983,311 805,439 505,780 493,425
Income tax at Thai corporate income tax rate of
20% (2012: 23%) 196,662 185,251 101,156 113,488
Adjustment in respect of current income tax of
previous year 68 60 - -
Utilisation of previously unrecognised tax losses (27,782) (50,065) - -
Effects of changes in the applicable tax rates - 12,807 - 4,959
Difference in tax rate in group companies (62,770) (47,143) (25,016) (31,217)
Effects of:
Non-deductible expenses 15,823 30,174 2,902 3,904
Additional expense deductions allowed (297) (616) (297) (616)
Exemption of income - (878) (3,220) (50,999)
Total 15,526 28,680 (615) (47,711)
Income tax expenses reported in the statement
of comprehensive income 121,704 129,590 75,525 39,519
The tax rates enacted at the end of the reporting period of the Company and its subsidiaries is 0% to 25% (2012: 0% to 25%).
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 121
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The components of deferred tax assets and deferred tax liabilities are as follows:
(Unit: Thousand Baht)
Consolidated financial statements Separate financial statement
2013 2012 2013 2012
Deferred tax assets
Provision for long-term employee benefits 13,964 13,846 11,109 11,364
Allowance for doubtful accounts 21,278 25,559 13,967 15,031
Reduce cost of inventories to net realisable value 1,887 521 656 417
Allowance for asset impairment 63,018 63,018 19,414 19,414
Fair value of price hedging contracts 23,963 2,542 23,963 2,542
Others 8,880 10,723 6,789 4,795
Total 132,990 116,209 75,898 53,563
Deferred tax liabilities
Fair value of price hedging contracts (26,919) (5,472) (26,919) (5,472)
Difference depreciation for tax purpose (3,338) (2,331) (2,795) (1,984)
Fair value of forward exchange contracts (325) (1,560) (312) (1,330)
Total (30,582) (9,363) (30,026) (8,786)
Deferred tax assets - net 102,408 106,846 45,872 44,777
The Company and its subsidiaries in Thailand calculated deferred tax assets and liabilities based on a reduction in the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent in 2013 and 2014, in compliance with Royal Decree dated December 2011 governing corporate income tax reduction.
As at 31 December 2013 the two subsidiaries have deductible temporary differences and unused tax losses totaling Baht USD 74 million and 5 million ringgit (2012: USD 80 million and 5 million ringgit), on which deferred tax assets have not been recognised as these subsidiaries believe that future taxable profits may not be sufficient to allow utilisation of the temporary differences and unused tax losses.
ANNUAL REPORT 2013122
27. Promotional privileges
The Company and its subsidiaries were granted investment promotional privileges by the Board of Investment. Important tax privileges granted to the companies are summarised below.
Exemption from corporate income tax for 8 years commencing from
50% reduction of corporate income tax rate for 5 years commencing from
Tipco Asphalt Public Company LimitedManufacture of asphalt 1 December 2000 2 December 2008
Raycol Asphalt Company LimitedManufacture of asphalt 2 May 2001 3 May 2009
Bitumen Marine Company LimitedMarine transportation 9 February 2006* -
Tasco Shipping Company Limited
Marine transportation24 May 2011*
19 December 2012*--
Alpha Maritime Company LimitedMarine transportation 28 June 2011* -
*Exemption of corporate income tax not exceeding of the stipulated amount.
In addition, Kemaman Bitumen Company Sdn Bhd received tax privilege in reduction of corporate income tax in Malaysia from the stipulated investment amount.
28. Tax privileges for maritime commerce
The Company and two subsidiaries, Delta Shipping Company Limited and Bitumen Marine Company Limited, are entitled to withholding income tax privileges under Revenue Department Instruction No. Por 110/2545 since they are international marine transportation business operators, whereby income from vessel rental is subject to withholding tax at a rate of 1%. Moreover, the Company and the subsidiaries are exempted from corporate income tax on their income from international marine transportation under Announcement of the Director-General of the Revenue Department No. 72.
29. Earnings per share
Basic earnings per share is calculated by dividing profit for the period attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated by dividing profit for the period attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares which would need to be issued to convert all potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. However, TASCO-W3 was not included in calculation of diluted earnings per share for the year ended 31 December 2013 and there is no calculation of diluted earnings per share for the year ended 31 December 2012 since the exercise prices to purchase ordinary shares of the Company were higher than the average market price of the Company’s shares for the years.
The following tables set forth the computation of basic and diluted earnings per share:
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 123
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
. Consolidated financial statements
Profit for the yearWeighted average number
of ordinary sharesEarnings per share
2013 2012 2013 2012 2013 2012
(Thousand Baht) (Thousand Baht) (Thousand shares) (Thousand shares) (Baht) (Baht)
Basic earnings per shareProfit attributable to equity
holders of the Company 831,449 642,274 152,565 152,548 5.45 4.21
Effect of potential ordinary
shares
ESOP-W1 - - 18 -
ESOP-W2 - - 246 -
ESOP-W3 - - 129 -
- - 393 -
Diluted earnings per share
Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 831,449 642,274 152,958 152,548 5.44 4.21
Separate financial statements
Profit for the yearWeighted average number
of ordinary sharesEarnings per share
2013 2012 2013 2012 2013 2012
(Thousand Baht) (Thousand Baht) (Thousand shares) (Thousand shares) (Baht) (Baht)
Basic earnings per shareProfit attributable to equity holders of the Company 430,255 453,906 152,565 152,548 2.82 2.98
Effect of potential ordinary
shares
ESOP-W1 - - 18 -
ESOP-W2 - - 246 -
ESOP-W3 - - 129 -
- - 393 -
Diluted earnings per share
Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 430,255 453,906 152,958 152,548 2.81 2.98
30. Segment information
The Company and its subsidiaries are engaged in single operating segment which is manufacturing and trading of asphalt and petroleum oil products. Whereas, the marine logistic business complements the manufacturing and trading of asphalt and petroleum oil products. The Board of Directors of the group is the chief operating decision makers of the Company and its subsidiaries. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned reportable operating segment. Therefore, financial information by segment has been presented only by geographical based on locations of each company, as follows:
ANNUAL REPORT 2013124
(Unit: Million Baht)
Geographic segment located in Thailand
Geographic segment located in overseas Eliminated transactions Total
2013 2012 2013 2012 2013 2012 2013 2012
Revenue from external customers 28,629 33,542 5,306 4,121 - - 33,935 37,663
Inter segment revenues 4,567 4,057 766 1,118 (5,333) (5,175) - -
Total revenue 33,196 37,599 6,072 5,239 (5,333) (5,175) 33,935 37,663
Segment operating income 693 547 130 124 8 (29) 831 642
Non-current assets (other than deferred tax assets-net)
(Unit: Million Baht)
Geographic segment located in Thailand
Geographic segment located in overseas
Eliminated transactions Total
2013 2012 2013 2012 2013 2012 2013 2012
Non-current assets 2,708 2,550 3,245 2,691 - - 5,953 5,241
Transfer prices between the segments are as set out in Note 7 to the financial statements.
31. Provident fund
The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company and its subsidiaries contribute to the fund on a monthly basis. The fund, which is managed by CIMB-Principal Asset Management Co., Ltd., will be paid to employees upon termination in accordance with the fund rules. During 2013, the Company and its subsidiaries contributed Baht 9 million (2012: Baht 8 million) to the fund (Separate financial statements: Baht 8 million, 2012: Baht 7 million).
32. Dividend
(Unit: Million Baht)Dividends Approved by Total dividends Dividend per share
Final dividends for 2011Annual General Meeting of the shareholders on 27 April 2012 191 1.25
Total for 2012 191 1.25
Interim dividends for 2013Board of Directors’ meeting on 14 August
2013 153 1.00
Total for 2013 153 1.00
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 125
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
33. Commitments and contingent liabilities
33.1 Capitalcommitment
As at 31 December 2013 and 2012, the Company and its subsidiaries had outstanding capital commitments relating to the purchase of land, machinery, equipment, computer software and vessel, as follows:
Foreign currency Consolidated financial statements Separate financial statements
2013 2012 2013 2012
(Million) (Million) (Million) (Million)
Baht 6 6 1 5
Ringgit 87 18 - -
US Dollar 6 12 - -
33.2 Operatingleasecommitments
The Company and its subsidiaries have entered into several agreements in respect of the lease of buildings, warehouses and motor vehicles, and other service agreements. The terms of the agreements are generally between 1 and 4 years.
Future minimum rental and service fees payable under these agreements were as follows:
Consolidated financial statementsSeparate
financial statements
Million Baht Million ringgit Million Baht
2013 2012 2013 2012 2013 2012
Payable within:1 year 32 31 1 1 34 322 to 5 years 28 45 - - 26 39
33.3 Long-termservicecommitments
Service agreements with Colas S.A. to receive management and marketing services and advice on methods and systems of management and technical assistance in the manufacture of Asphalt Emulsion and Modified Asphalt:
Counterparty Agreement term Expiry date Fee
The Company 5 years 31 December 2017 Annual lump sum administrative fee of Euro 145,000 plus a technical assistance fee equivalent to 0.75 percent of the consolidated revenues of the Company generated from the stipulated products
A subsidiary 5 years 30 September 2017 Annual fee of at least Baht 8 million
33.4 Crudeoilpurchasecommitments
As at 31 December 2013, the Company had outstanding commitment in respect of the purchase of crude oil approximately 0.8 million barrels (2012: 0.8 million barrels).
ANNUAL REPORT 2013126
33.5 Bankguarantees
As at 31 December 2013 and 2012, there were outstanding bank guarantees issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business which are summarised below.
Foreign currency Consolidated financial statements Separate financial statements
2013 2012 2013 2012
(Million) (Million) (Million) (Million)
Baht 3 3 2 2
Ringgit 5 5 - -
Renminbi 5 5 5 5
34. Financial instruments
34.1 Financialriskmanagement
The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade and other receivables, trade and other payables, liabilities under finance lease agreements and loans. The financial risks associated with these financial instruments and how they are managed are described below.
Credit risk
The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable and loans. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidia ries do not have high concentrations of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables and loans, as stated in statements of financial position.
Interest rate risk
The Company and its subsidiaries’ exposure to interest rate risk relates primarily to its cash at banks, short-term
loans from banks, liabilities under finance lease agreements and long-term borrowings. However, since most of
the Company and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates
which are close to the market rate, the interest rate risk is expected to be minimal.
Significant financial assets and liabilities classified by type of interest rate are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 127
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
(Unit: Million Baht)
Consolidated financial statements
As at 31 December 2013
Fixed interest rates
Within1 year 1-5 years
Floating interest rate
Non-interestbearing Total Interest rate
(% p.a.)
Financial Assets
Cash and cash equivalents - - 62 433 495 0.3 - 2.4Trade and other receivables - - - 3,967 3,967 -Financial liabilities
Short-term loans from financial institutions 9,416 - - - 9,416 0.9 - 7.2Trade and other payables - - - 1,612 1,612 -Liabilities under finance lease agreements 7 8 - - 15 2.7 - 75.9
Long-term loans from financial institutions - - 2,869 - 2,869 2.1 - 4.1
Long-term loans from related party - - - 8 8 -
(Unit: Million Baht)Consolidated financial statements
As at 31 December 2012
Fixed interest rates Floating Non-
Within1 year
1-5 years interest rate interestbearing
Total Interest rate
(% p.a.)
Financial Assets
Cash and cash equivalents - - 59 681 740 0.2 - 2.4
Trade and other receivables - - - 5,348 5,348 -
Financial liabilities
Short-term loans from financial institutions 8,237 - - - 8,237 0.9 - 7.9
Trade and other payables - - - 2,203 2,203 -
Liabilities under finance lease agreements 9 13 - - 22 2.7 - 75.9
Long-term loans from financial institutions 4 1 2,956 - 2,961 2.2 - 4.6
Long-term loans from related party - - - 7 7 -
ANNUAL REPORT 2013128
(Unit: Million Baht)
Separate financial statements
As at 31 December 2013
Fixed interest rates Floating Non-
Within1 year
1-5 years interest rate interestbearing
Total Interest rate
(% p.a.)
Financial AssetsCash and cash equivalents - - 6 84 90 0.6Trade and other receivables - - - 3,663 3,663 -Short-term loans to related parties 35 - - 6 41 2.8Financial liabilitiesShort-term loans from financial institutions 9,165 - - - 9,165 0.9Trade and other payables - - - 1,682 1,682 -Liabilities under finance lease agreements 5 8 - - 13 4.8 - 75.9Long-term loans from financial institutions - - 1,125 - 1,125 3.5 - 4.1
(Unit: Million Baht)Separate financial statements
As at 31 December 2012
Fixed interest rates Floating Non-
Within1 year
1-5 years interest rate interestbearing
Total Interest rate
(% p.a.)
Financial AssetsCash and cash equivalents - - 7 37 44 0.7 - 0.8Trade and other receivables - - - 5,442 5,442 -Short-term loans to related parties 40 - - - 40 2.8Financial liabilitiesShort-term loans from financial institutions 8,159 - - - 8,159 0.9 - 1.2Trade and other payables - - - 2,212 2,212 -Liabilities under finance lease agreements 5 10 - - 15 4.8 - 75.9Long-term loans from financial institutions 4 1 1,421 - 1,426 3.7 - 4.6
Foreign currency risk
The Company and its subsidiaries’ exposure to foreign currency risk arises mainly from trading transactions and borrowings that are denominated in foreign currencies. The Company and its subsidiaries seek to reduce risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.
The balances of financial assets and liabilities of the Company and its subsidiaries denominated in foreign currencies are summarised below.
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 129
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financial statements
Foreign currencyFinancial assets
as at 31 December Financial liabilities as at 31 December
Average exchange rate as at 31 December
2013 2012 2013 2012 2013 2012
(Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit)
US Dollar 45 87 309 306 32.8 30.6Renminbi - 1 - - 5.4 4.9
Yen - - 7 7 0.3 0.4
Ringgit - 26 - 7 10.0 10.0
Vietnam Dong 7 - - - 0.0016 0.0015
Indonesia Rupiah 3 - - - 0.0027 0.0032
Separate financial statements
Foreign currencyFinancial assets
as at 31 DecemberFinancial liabilitiesas at 31 December
Average exchange rate as at 31 December
2013 2012 2013 2012 2013 2012
(Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit)
US Dollar 77 118 303 288 32.8 30.6
Renminbi - 1 - - 5.4 4.9
HK Dollar - 1 - - 4.2 4.0
Ringgit - - 2 1 10.0 10.0
ANNUAL REPORT 2013130
The Company and its subsidiaries outstanding foreign exchange contracts which maturity date within one year are summarised below.
As at 31 December 2013
Consolidated
financial statements
Separate
financial statements
Sold Bought Sold Bought Contractual exchange rate
Foreign currency amount amount amount amount Sold Bought
(Million) (Million) (Million) (Million)
US Dollar 14 6 12 6 31.4 - 32.9 Baht per 1 US Dollar
31.7 - 32.8 Baht per 1 US Dollar
As at 31 December 2012
Consolidated financial statements
Separate financial statements
Sold Bought Sold Bought Contractual exchange rate
Foreign currency amount amount amount amount Sold Bought
(Million) (Million) (Million) (Million)
US Dollar 30.6 18.6 29.1 18.6 30.6 - 32.1 Baht per 1 US Dollar
30.6 - 30.9 Baht per 1 US Dollar
In addition, the Company and its subsidiaries are exposed to foreign exchange risk on their investments in overseas subsidiaries and associate. These investments are currently not hedged by derivative financial instruments.
Risk from fluctuation in raw materials and finished goods prices
The Company is exposed to risk from fluctuations in the price of raw materials and finished goods. To manage these risks, the Company has entered into price hedging contracts with banks to hedge the risk from fluctuation in such prices.
As at 31 December 2013 and 2012, the outstanding price hedging contracts which maturity date within one year are summarised below.
(Unit: Million Baht)Consolidated/Separate
financial statement
2013 2012
Contracts presented as assetsContracts to sell finished goods - 13
Four-ways collar options to purchase raw materials 135 14
Total price hedging contracts presented as assets 135 27Contracts presented as liabilitiesContracts to sell raw materials 9 -
Contracts to sell finished goods 111 13
Total price hedging contracts presented as liabilities 120 13
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 131
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
34.2 Fairvalueoffinancialinstruments
Since the majority of the Company and its subsidiaries’ financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in statement of financial position. For derivatives, fair value is generally derived from quoted market prices, or based on generally accepted pricing models when no market price is available.
A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.
35. Capital management
The primary objective of the capital management of the Company and its subsidiaries is to ensure that they have an appropriate financial structure and preserves the ability to continue their business as a going concern.
The Group manages its capital position with reference to its debt-to-equity ratio. As at 31 December 2013, the Group’s debt-to-equity ratio was 2.44:1 (2012: 2.70:1) and the Company’s was 2.50:1 (2012: 2.60:1).
36. Approval of financial statements
These financial statements were authorised for issue by the Company’s authorised directors on 12 February 2014.
ANNUAL REPORT 2013132
COMPANY INFORMATION
HEAD OFFICE Tipco Tower, 118/1 Rama 6 Road, Samsen Nai, Phayathai District, Bangkok 10400, Thailand. Tel. +66 2273 6000 Fax. +66 2278 0043 Email : [email protected]
PRODUCTION FACILITIESDomestic production facilities of the Tipco Asphalt Group are located as follows:
NAKHON RATCHASIMA 259 Soi Ror Por Chor 12032, Mittapap Road, Naklang, Soongnoen, Nakhon Ratchasima 30380 Tel. +66 4433 5495-9, +66 2273 6000 Ext. 3 Fax. +66 4433 5495-9 Ext. 14, +66 4433 5050
PHITSANULOK 271 Moo 15 Baan Wang Koom, Bangrakam, Phitsanulok 65140 Tel. +66 5537 1581-3, +66 2273 6000 Ext. 5 Fax. +66 5537 1461-2 Ext. 6360
PHUNPHIN (subsidiary) 139/5 Moo 3, Suratthani-Takuapa Road, Tharongchang, Phunphin District, Suratthani 84130 Tel. +66 7735 7214-6, +66 7735 7218, +66 2273 6000 Ext. 4 Fax. +66 7735 7217, +66 2273 6749 Ext. 4
THATHONG(subsidiary) 123 Moo 3, Suratthani-Kanchanadit Road, Bangkung, Muang District, Suratthani 84000 Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7 Fax. +66 2273 6000 Ext. 5340
RAYONG (subsidiary) 93 Moo 5 Makumkoo, Nikompattana District, Rayong 21180 Tel. +66 3889 3641-5 Fax. +66 3889 3640
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 133
COMPANY INFORMATION
OIL AND ASPHALT TERMINALSThe Company operates domestic asphalt terminals and oil depots at the following locations:
PHRAPRADAENG 61 Moo 5, Suksawat Road, Bangjak, Phrapradaeng, Samut Prakan 10130 Tel. +66 2463 0169-70, +66 2817 5111-5, +66 2273 6000 Ext. 6 Fax. +66 2817 5117
THATHONG(subsidiary) 123 Moo 3, Suratthani-Kanchanadit Road, Bangkung, Muang District, Suratthani 84000 Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7 Fax. +66 7792 2575, +66 2273 6749 Ext. 7
SUBSIDIARIES AND ASSOCIATED COMPANIESJuristic entities in which the Company has equity in excess of 10%.
SUBSIDIARIES IN THAILAND
THAI BITUMEN CO., LTD.Nature of business Producer and distributor of asphalt product It is also a holding company for Kemaman Oil Corporation Sdn. Bhd. (KOC) and Kemaman Bitumen Company Sdn. Bhd. (KBC), Malaysia.Head Office 118/1 Rama VI Rd., Samsen Nai, Phayathai,Bangkok 10400 Tel. +66 2273 6000 Fax. +66 2273 6030Phunphin 139/5 Moo 3, Suratthani-Takuapa Road, Tharongchang, Phunphin District, Suratthani 84130 Tel. +66 7735 7214-6, +66 7735 7218, +66 2273 6000 Ext. 4 Fax. +66 7735 7217, +66 2273 6749 Ext. 4Thathong Plant 123 Moo 3, Suratthani - Kanchanadit Road, Bangkung, Muang District, Suratthani 84000 Tel. +66 7722 4683-5, +66 2273 6000 Ext. 7 Fax. +66 7792 2575, +66 2273 6749 Ext. 7Ordinary shares 15,000,000Registered capital Baht 1,500 millionPercentage holding 99.99%
BITUMEN MARINE CO., LTD.Nature of business Marine transportationHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Ext. 6774 Fax. +66 2271 3370Ordinary shares 1,500,000Registered capital Baht 150 millionPercentage holding 99.99%
ANNUAL REPORT 2013134
DELTA SHIPPING CO., LTD.Nature of business Marine transportationHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Ext. 6774 Fax. +66 2271 3370Ordinary shares 800,000Registered capital Baht 80 millionPercentage holding 99.99%
ALPHA MARITIME CO., LTD.Nature of business Marine transportationHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Ext. 6774 Fax. +66 2271 3370Ordinary shares 180,000Registered capital Baht 18 millionPercentage holding 99.99%
TIPCO MARITIME CO., LTD.Nature of business Ship management and agencyHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Ext. 6774 Fax. +66 2271 3370Ordinary shares 20,000Registered capital Baht 2 millionPercentage holding 99.97%
TASCO SHIPPING CO., LTD.Nature of business Marine transportationHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Ext. 6774 Fax. +66 2271 3370Ordinary shares 2,900,000Registered capital Baht 290 millionPercentage holding 99.99 %
Tipco Asphalt Public Company Limited
ANNUAL REPORT 2013 135
COMPANY INFORMATION
RAYCOL ASPHALT CO., LTD.Nature of business Producer and distributor of asphalt productsHead Office 118/1 Rama VI Rd., Samsen Nai, Phayathai, Bangkok 10400 Tel. +66 2273 6000 Fax. +66 2273 6030Rayong 93 Moo 5 Makumkoo, Nikompattana District, Rayong 21180 Tel. +66 3889 3641-5 Fax. +66 3889 3640Ordinary shares 11,100,000Registered capital Baht 111 millionPercentage holding 41.44%
FOREIGN SUBSIDIARIES
TASCO INTERNATIONAL (HONG KONG) LTD.Nature of business Holding company for investments in ChinaAddress Room 1A, 1st Floor, O.T.B. Building, 259-265 Des Voeux Road. Central, Hong Kong.Registered capital Hong Kong Dollars 30.97 millionPercentage holding 100%
KEMAMAN OIL CORPORATION SDN. BHD.Nature of business Holding company for investment in an asphalt refinery in MalaysiaAddress A-06-3A, Empire Tower, Empire Subang Jalan SS16/1, SS16 47500 Subang Jaya Selangor, Malaysia Tel. +603 5635 0998 Fax. +603 5635 0993Registered capital Malaysian Ringgit 250.7 millionPercentage holding 63.12% (11.30% owned by the Company and 51.82% owned by Thai Bitumen Co., Ltd)
KEMAMAN BITUMEN COMPANY SDN. BHD.Nature of business Asphalt refinery in MalaysiaAddress A-06-3A, Empire Tower, Empire Suban Jalan SS16/1, SS16 47500 Subang Jaya Selangor, Malaysia Tel. +603 5635 0998 Fax. +603 5635 0993 Email: [email protected] Website: www.kbc.com.myRefinery address Plot PT 7195, Telok Kalong Industrial Area 24000 Kemaman Terenqqanu, MalaysiaRegistered capital Malaysian Ringgit 500 millionPercentage holding 82.77% (44.81% held by Kemaman Oil Corporation Sdn. Bhd., 12.52% held by the Company and 11.82% held by Thai Bitumen Co., Ltd.)
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TIPCO ASPHALT (CAMBODIA) CO., LTD.Nature of business Producer and distributor of asphalt products in CambodiaAddress No. 67, St. 322, Sangkat Boeung Keng Kang I, Khan Chamkamon, Phnom Penh, Cambodia Mobile: +855 1273 9988 Tel: +855 2399 7991 Fax: +855 2399 7992 Email : [email protected] capital Riel 20 millionPercentage holding 100%
ASSOCIATED COMPANIES
COLASIE CO., LTD.Nature of business Holding company for investment in Asphalt Emulsion and Polymer Modified Asphalt plants in IndiaAddress 7, Place Rene Clair F-92653 Boulogne - Billancourt France CedexRegistered capital Euro 1 millionPercentage holding 40%
OTHER IMPORTANT INFORMATIONStock Code TASCO (Listed on the Stock Exchange of Thailand - SET)Registration No 0107535000044No. of Shares Issued 152,580,868 SharesRegistered Capital 1,710,599,290 BahtPaid Up Capital 1,525,808,680 Baht Website www.tipcoasphalt.com
Registrar of Shares Thailand Securities Depository Co., Ltd. 7th Floor, The Stock Exchange of Thailand Building 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110 Tel. +66 2229 2878 Fax. +66 2654 5642, +66 2654 5645
Auditor Mr. Supachai Phanyawattano, Certified Public Accountant Registration No. 3930 and/or Mr.Termphong Opanaphan Certified Public Accountant Registration No. 4501 and/or Mr. Khitsada Lerd wana Certified Public Accountant Registration No. 4958 Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex 193/136-137 Rajadapisek Road Klongtoey, Bangkok 10110 Tel. +66 2264 0777, +66 2661 9190 Fax. +66 2264 0789-90, +66 2661 9192
COMPANY INFORMATION Tipco Asphalt Public Company Limited
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COMPANY INFORMATION
Legal Consultants Mr. Parama Saovabha Hunton & Williams (Thailand) LLP. 34Th Floor Q.House Lumpine Building 1 South Sathorn Road Thungmahamek, Sathorn Bangkok 10120 Tel. +66 2645 8866 Fax. +66 2645 8800 Mr. Tawatchai Jaranakaran Chor. Chanasongkram Advocates & Solicitors 52/3 Phrasumeru Rd., Bangkok Tel. +66 2282 2995
Financial Advisor Phatra Securities Public Company Limited 6,8-11 Muang Thai-Phatra Office Tower 1 252/6 Ratchadapisek Road, Huaykwang, Bangkok 10310 Tel. +66 2275 0888 Fax. +66 2693 2355
Advisory Plus Co., Ltd. 1550 Thanapoom Tower 10th Floor New Phetchaburi Road, Khwang Makkasan, Khet Ratcha Thewi, Bangkok 10400 Tel. +66 2652 7858-65 Fax. +66 2652 7867
Consultant or Contract NoneManager
Investors can learn more information of the Company from the Company’s annual registration statement
(form 56-1) displaying at www.sec.or.th or the Company’s website: www.tipcoasphalt.com
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