Independent Auditor's Report To the Shareholders of Thai Film Industries Public Company Limited

Transcription

1 Independent Auditor's Report To the Shareholders of Thai Film Industries Public Company Limited Opinion I have audited the financial statements of Thai Film Industries Public Company Limited and its subsidiaries, which comprise the consolidated and separate statements of financial position and as at 31 December, and the related consolidated and separate statements of comprehensive income, changes in shareholders equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In my opinion, the consolidated and separate financial statements referred to above present fairly, in all material respects, the financial position of Thai Film Industries Public Company Limited and its subsidiaries as at 31 December, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. Basis for Opinion I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Group in accordance with the Code of Ethics for Professional Accountants as issued by the Federation of Accounting Professions under the Royal Patronage of His Majesty the King as relevant to my audit of the consolidated financial statements, and I have fulfilled my other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

2 Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the consolidated financial statements of the current period. These matters were addressed in the context of my audit of the consolidated financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. Impairment of assets for non-operations Risk The Company recorded a loss on impairment of assets for non-operations, amounting to Baht million as discussed in Note 15. Since the Company does not use such assets in operation. The test for impairment is significant to determine the value of property, plant and equipment for non-operations net as at, amounting to Baht million, and is significant to the financial statements. Risk Responses of Auditor My audit procedures responded to the risk referred to above are as follows: - reviewed the use of estimates by discretion in analyzing the reasonableness of the projected for future earnings and includes information on expenditure. - evaluated the assumptions used in the assessment and evaluation of experts including the assessment of the ability of professional experts. - based on the estimated book value as at the date of assessment depreciation is calculated based on the remaining items evaluated and then compared to the carrying value balance at end of the period. It found that the difference outcome was not material to the financial statements. However, the Company has already considered the amount of value expected to be recovered of plant and equipment for nonoperation, based on the independent appraisal and also recorded a loss on impairment of property, plant and equipment for nonoperations as at, amounting Baht million, in the consolidated statement. 2

3 Deferred Tax Assets Risk The Company has not recorded deferred tax assets, amounting to Baht million as discussed in Note 18 to the financial statements due to the recognition of deferred tax assets are based on this opportunity by implementing that relies on the discretion of the administration. The expectation for utilization of the asset is dependent on many factors, including the appropriateness of the temporary differences of tax and the adequacy of future taxable income to support such recognition. Risk Responses of Auditor My audit procedures responded to the risk referred to above are as follows: - considered management's assessment of the adequacy of future taxable profits to support the recording of deferred tax assets,based on considering the estimated future cash flows and assumptions of the management process. - tested the reliability of the calculated and compared with the last budget approved by the Board of Directors. - asked the executives about key assumptions regarding the estimated long-term growth rate as compared to the performance in the past,economic condition, and forecasts of industry trends. The results of the above tests that cause to believe that the Company should not recognize deferred tax assets because there is no opportunity to take advantage of future tax manifest. 3

4 Emphasis of Matter Without qualifying my opinion, I draw attention in (1) Note 25.4(1) that on May 8, 2008 the Company was sued by a bank as the third defendant in the Civil Court and the court dismissed the Company but the plaintiff has filed an appeal and now the Company is in process to filling and answer to the appeal and (2) on September 30, 2009, the Company was sued by the same bank as the third defendant in the Central Intellectual Property and International Trade Court and is awaiting judgment. In both cases the company is a defendant of contractual pledge Baht 600 million for principal and interest and the Company's lawyers give opinion that the pledging of shares as collateral for a period of four years had ended, the Company is not responsible in the end. (2) As discussed in Note 2 describing the effect of the Company s change in accounting policy from January 1,. The prior period financial statements, presented as comparative information, were adjusted as explained in Note 2. Other Information Management is responsible for the other information. The other information comprise the information included in annual report of the Group, but does not include the financial statements and my auditor s report thereon. The annual report of the Group is expected to be made available to me after the date of this auditor s report. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. When I read the annual report of the Group, if I conclude that there is a material misstatement therein, I am required to communicate the matter to those charged with governance for correction of the misstatement. 4

5 Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group s financial reporting process. Auditor s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Thai Standards on Auditing, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Group s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 5

6 Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor s report is Mr.Jirote Sirirorote Mr.Jirote Sirirorote Certified Public Accountant (Thailand) No Karin Audit Company Limited February 20,

7 THAI FILM INDUSTRIES PUBLIC COMPANY LIMITED AND SUBSIDIARIES FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, AND AUDITOR S REPORT

8 STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, January 1, January 1, "AUDITED" "AUDITED" "AUDITED" "AUDITED" Notes "RESTATED" "RESTATED" "RESTATED" "RESTATED" ASSETS CURRENT ASSETS Cash and cash equivalents 72,689,997 5,554,358 7,321,457 71,604,107 4,314,384 5,916,570 Trade accounts receivable and other receivable - net 6 252,845, ,861, ,813, ,845, ,861, ,813,805 Other receivable - related companies , ,738 Inventories - net 7 224,145, ,315, ,394, ,145, ,315, ,394,252 Spare parts and supplies - net 60,180,705 57,593,346 57,442,704 60,180,705 57,593,346 57,442,704 Advance for Investment - net Other current assets 23,125,897 29,858,927 30,576,861 23,125,897 29,858,927 30,576,861 TOTAL CURRENT ASSETS 632,987, ,183, ,549, ,901, ,771, ,322,930 NON-CURRENT ASSETS Restricted bank deposits 9 1,029,274 1,017,665 2,003,244 1,029,274 1,017,665 2,003,244 Investments in subsidiary and associated companies - net 10, ,999,600 3,999,600 Other long-term investments Related companies - net Other company 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Loans receivable, advance payments - subsidiary, associated and related companies - net ,267,288 8,267,288 Land used in operation - at appraised value ,877, ,877, ,057, ,877, ,877, ,057,000 Plant and equipment used in operation - net ,259,009 1,073,450,460 1,162,973, ,259,009 1,073,450,460 1,162,973,652 Property, plant and equipment not used in operation - net 15 60,692,908 62,070,375 61,215,759 60,692,908 62,070,375 61,215,759 Other non-current assets 4,482,760 2,032,137 2,021,357 4,482,760 2,032,001 2,021,357 TOTAL NON-CURRENT ASSETS 1,532,340,951 1,615,447,637 1,686,271,012 1,532,340,951 1,627,714,389 1,698,537,900 TOTAL ASSETS 2,165,328,558 2,283,631,387 2,470,820,171 2,164,242,668 2,295,485,573 2,481,860,830 The accompanying notes are an integral part of these financial statements. 1

9 STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, January 1, January 1, "AUDITED" "AUDITED" "AUDITED" "AUDITED" Notes "RESTATED" "RESTATED" "RESTATED" "RESTATED" LIABILITIES AND EQUITY CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions ,626, ,164, ,932, ,626, ,164, ,932,471 Trade accounts payable and other payable - other 219,423, ,261, ,962, ,273, ,111, ,812,204 Long-term loans due for payment ,591, ,960, ,960, ,591, ,960, ,960,862 Other current liabilities 639, ,211 1,129, , ,211 1,127,565 TOTAL CURRENT LIABILITIES 1,334,282,261 1,326,245,879 1,357,985,101 1,334,130,262 1,326,093,879 1,357,833,102 NON-CURRENT LIABILITIES Long-term loans - net ,960, ,960,893 Deferred tax liabilities ,763, ,457, ,448, ,763, ,457, ,448,126 Employee benefit obligations 19 35,184,448 39,617,699 35,305,226 35,184,448 39,617,699 35,305,226 TOTAL NON-CURRENT LIABILITIES 182,947, ,075, ,714, ,947, ,075, ,714,245 TOTAL LIABILITIES 1,517,229,985 1,512,321,217 1,734,699,346 1,517,077,986 1,512,169,217 1,734,547,347 EQUITY SHARE CAPITAL Authorized share capital 2,661,750,000 ordinary shares as at and : Baht 1 per share and 2,847,500,000 ordinary shares as at January 1, : Baht 1 per share 2,661,750,000 2,661,750,000 2,847,500,000 2,661,750,000 2,661,750,000 2,847,500,000 Issued and paid-up share capital 2,047,500,000 ordinary shares : Baht 1 per share 2,047,500,000 2,047,500,000 2,047,500,000 2,047,500,000 2,047,500,000 2,047,500,000 Discount on common shares (88,750,000) (88,750,000) (88,750,000) (88,750,000) (88,750,000) (88,750,000) Retained earnings (Deficits) -Unappropriated (1,500,483,304) (1,377,271,707) (1,397,405,052) (1,501,417,195) (1,365,265,521) (1,386,212,394) Other components of equity 189,831, ,831, ,775, ,831, ,831, ,775,877 TOTAL EQUITY 648,098, ,310, ,120, ,164, ,316, ,313,483 TOTAL LIABILITIES AND EQUITY 2,165,328,558 2,283,631,387 2,470,820,171 2,164,242,668 2,295,485,573 2,481,860,830 The accompanying notes are an integral part of these financial statements. 2

10 STATEMENTS OF COMPREHENSIVE INCOME Notes "RESTATED" "RESTATED" Sales 23 1,921,127,338 2,868,236,092 1,921,127,338 2,868,236,092 Costs of sales 5.2 (1,710,209,563) (2,598,470,854) (1,710,209,563) (2,598,470,854) Gross profit margin 210,917, ,765, ,917, ,765,238 Other income 5.2, 20 19,175,743 16,315,383 19,530,624 16,958,561 Profit before expenses 230,093, ,080, ,448, ,723,799 Selling expenses 5.2 (58,939,673) (81,393,640) (58,939,673) (81,393,640) Administrative expenses 5.2 (180,474,150) (105,507,987) (193,769,848) (105,338,437) Total expenses (239,413,823) (186,901,627) (252,709,521) (186,732,077) Profit (loss) before finance costs (9,320,305) 99,178,994 (22,261,122) 99,991,722 Finance costs (121,413,317) (79,800,136) (121,412,577) (79,799,336) Profit (loss) before income tax (130,733,622) 19,378,858 (143,673,699) 20,192,386 Revenue income tax (expense) 21 (1,305,637) 754,487 (1,305,637) 754,487 Profit (loss) for the years (132,039,259) 20,133,345 (144,979,336) 20,946,873 Other comprehensive income Defined employee benefit plan actuarial gains (losses) 8,827,662-8,827,662 - Other comprehensive income for the year 8,827,662-8,827,662 - Total profit (loss) and comprehensive income for the year (123,211,597) 20,133,345 (136,151,674) 20,946,873 Profit (loss) attributable to: Owners of the Company (132,039,259) 20,133,345 (144,979,336) 20,946,873 Non-controlling interests Profit (loss) for the year (132,039,259) 20,133,345 (144,979,336) 20,946,873 Total profit (loss) and comprehensive income attributable to: Owner of the Company (123,211,597) 20,133,345 (136,151,674) 20,946,873 Non-controlling interests Total profit (loss) and comprehensive income for the years (123,211,597) 20,133,345 (136,151,674) 20,946,873 Earnings (loss) per Share 22 Basic earnings (loss) per share (0.064) (0.071) The number of ordinary shares weighted average (Unit : Shares) 2,047,500,000 2,047,500,000 2,047,500,000 2,047,500,000 The accompanying notes are an integral part of these financial statements. 3

11 THAI FILM INDUSTRIES PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN EQUITY Share capital Discount Deficit Capital surplus Capital surplus Total other attributable to issued and on share from land from machinery components Equity of owner Non - Controlling Note paid-up capital Appropriated Unappropriated revaluation revaluation of equity the Company interests Total Balance as at January 1, 2,047,500,000 (88,750,000) - (1,397,405,052) 174,775, ,456, ,231, ,576, ,576,919 Equity Adjustment (243,456,094) (243,456,094) (243,456,094) - (243,456,094) Balance as at January 1, (as adjusted) 2,047,500,000 (88,750,000) - (1,397,405,052) 174,775, ,775, ,120, ,120,825 Net Profit (loss) for the periods ,133, ,133,345-20,133,345 Capital surplus from land revaluation ,820,000-18,820,000 18,820,000-18,820,000 Income tax on other components of equity from revaluation (3,764,000) - (3,764,000) (3,764,000) - (3,764,000) Ending balance as at 2,047,500,000 (88,750,000) - (1,377,271,707) 189,831, ,831, ,310, ,310,170 Net Profit (loss) for the periods (132,039,259) (132,039,259) - (132,039,259) Other comprehensive income for the year ,827, ,827,662-8,827,662 Ending balance as at 2,047,500,000 (88,750,000) - (1,500,483,304) 189,831, ,831, ,098, ,098,573 Other components of equity The accompanying notes are an integral part of these financial statement. 4

12 THAI FILM INDUSTRIES PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN EQUITY Share capital Discount Deficit Capital surplus Capital surplus Total other issued and on share from land from machinery components Note paid-up capital Appropriated Unappropriated revaluation revaluation of equity Total Balance as at January 1, 2,047,500,000 (88,750,000) - (1,386,212,394) 174,775, ,456, ,231, ,769,577 Adjustment (243,456,094) (243,456,094) (243,456,094) Balance as at January 1, (as adjusted) 2,047,500,000 (88,750,000) - (1,386,212,394) 174,775, ,775, ,313,483 Net Profit (loss) for the periods ,946, ,946,873 Capital surplus from land revaluation and machinery revaluation ,820,000-18,820,000 18,820,000 Income tax on other components of equity from revaluation (3,764,000) - (3,764,000) (3,764,000) Ending balance as at 2,047,500,000 (88,750,000) - (1,365,265,521) 189,831, ,831, ,316,356 Net Profit (loss) for the periods (144,979,336) (144,979,336) Other comprehensive income for the year ,827, ,827,662 Ending balance as at 2,047,500,000 (88,750,000) - (1,501,417,195) 189,831, ,831, ,164,682 Other components of equity The accompanying notes are an integral part of these financial statement. 5

13 STATEMENTS OF CASH FLOWS "RESTATED" "RESTATED" CASH FLOWS FROM OPERATING ACTIVITIES Net profit (loss) (132,039,259) 20,133,345 (144,979,336) 20,946,873 Adjustments to reconcile net profit(loss) to cash received (used ) operating activities Increase (Decrease) in allowance for obsoleted stock 2,293,122 (438,333) 2,293,122 (438,333) Depreciation 102,719, ,478, ,719, ,478,942 Profit from sales assets (1,444,691) (3,286,119) (1,444,691) (3,286,119) Reversal impairment of asset - (2,337,000) - (2,337,000) Loss on impairment of assets - 378, ,926 Amortization expenses 20,653,049 28,621,104 20,653,049 28,621,104 Provision for employee benefits 6,972,211 7,502,773 6,972,211 7,502,773 Unclaimed withholding tax 1,890, ,899 1,890, ,899 Unrealized (gain) loss on exchange rate 221,487 5,002, ,487 5,002,168 Loss on written off assets and supplies 20,186 57,968 20,186 57,968 Revenue from adjust non-movement (147,722) (59,803) (147,722) (59,803) Impairment - investment in subsidiaries - - 3,999,600 - Allowance for loan receivable and accrued interest receivable to subsidiaries - - 9,454,080 - Interest expenses 115,207,448 65,025, ,207,448 65,025,113 Interest incomes (179,896) (25,561) (534,778) (668,740) Revenue income tax (expense) 1,305,637 (754,487) 1,305,637 (754,487) Profit from operating activities before changes in operating assets and liabilities 117,471, ,603, ,630, ,774,284 (Increase) Decrease in Trade accounts receivable and other receivable 52,207, ,799,818 52,207, ,799,738 (Increase) Decrease in Inventories 50,182,099 5,516,676 50,182,099 5,516,676 (Increase) Decrease in Spare parts and supplies (4,217,132) (150,642) (4,217,132) (150,642) (Increase) Decrease in Other current assets (13,924,111) (27,903,170) (13,924,111) (27,903,170) (Increase) Decrease in Other non-current assets (4,341,504) (315,680) (4,341,459) (315,544) Increase (Decrease) in Trade accounts payable and other payable (147,408,272) (213,290,812) (147,408,272) (213,290,812) Increase (Decrease) in Other current liabilities (219,629) (270,354) (219,629) (270,354) Cash paid for employee benefits (2,577,800) (3,190,300) (2,577,800) (3,190,300) NET CASH RECEIVED (USED) FROM OPERATING ACTIVITIES 47,172, ,799,471 47,331, ,969,876 The accompanying notes are an integral part of these financial statements. 6

14 STATEMENTS OF CASH FLOWS "RESTATED" "RESTATED" CASH FLOWS FROM INVESTING ACTIVITIES (Increase) Decrease in restricted bank deposit (11,610) 985,580 (11,610) 985,580 Cash received from interest incomes 180,071 29, ,571 23,687 Cash received from sales assets 1,487,103 3,736,130 1,487,103 3,736,130 Purchase of property, plant and equipment (21,887,609) (21,360,270) (21,887,609) (21,360,270) NET CASH RECEIVED (USED) FROM INVESTING ACTIVITIES (20,232,045) (16,609,381) (20,236,545) (16,614,873) CASH FLOWS FROM FINANCING ACTIVITIES Increase (Decrease) in bank overdrafts and short-term loans from financial Institutions 150,462, ,629, ,462, ,629,378 Repayment of long - term loans (67,369,097) (177,960,862) (67,369,097) (177,960,862) Cash paid for interest expenses (42,898,258) (64,625,705) (42,898,258) (64,625,705) NET CASH RECEIVED (USED) FROM FINANCING ACTIVITIES 40,195,078 (86,957,189) 40,195,078 (86,957,189) CASH AND CASH EQUIVALENTS INCREASE(DECREASE) - NET 67,135,639 (1,767,099) 67,289,723 (1,602,186) CASH AND CASH EQUIVALENTS AS AT THE BEGINNING OF YEAR 5,554,358 7,321,457 4,314,384 5,916,570 CASH AND CASH EQUIVALENTS AS AT THE END OF YEAR 72,689,997 5,554,358 71,604,107 4,314,384 Cash and cash equivalents Consist of: Cash on hand 94, ,305 81, ,241 Cash at banks - current accounts 4,664,095 3,879,962 4,659,095 3,874,962 Cash at banks - savings accounts 67,931,684 1,544,091 66,863, ,181 72,689,997 5,554,358 71,604,107 4,314,384 Supplemental Disclosure of Cash Flow Information: During the year, the Company transferred certain machineries to be machineries not used in operation which carrying net book value amount of Baht 1.85 million. The accompanying notes are an integral part of these financial statements. 7

15 1. GENERAL Thai Film Industries Public Company Limited was registered in Thailand on March 3, 1983 with the registration number 882/2526. It was later registered a conversion to a public company limited on February 1, 1994 with the registration number The major shareholders are Mahagitsiri family. The Company is engaged in manufacturing of packaging film. Presently, the Company has offices located at the following addresses: a) Head Office and Factory : 73/3 Moo 4, Bangna - Trad Road, Bangchalong, Bangplee, Sumutprakarn. b) Factory : 327 Moo 8, Mabkha, Nikhompattana District, Rayong. 2. BASIS OF FINANCIAL STATEMENT PREPARATION 2.1 Statement of compliance The financial statements are prepared in accordance with Thai Financial Reporting Standards ( TFRS ) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (FAP); applicable rules and regulations of the Thai Securities and Exchange Commission. The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. 2.2 Financial reporting standard a) Financial reporting standards that became effective in the current year During the year, the Group have adopted the revised (revised ) and new financial reporting standards and accounting treatment guidance issued by the Federation of Accounting Professions which become effective for fiscal years beginning on or after 1 January. These financial reporting standards were aimed at alignment with the corresponding International Financial Reporting Standards, with most of the changes directed towards revision of wording and terminology, and provision of interpretations and accounting guidance to users of standards. The adoption of these financial reporting standards does not have any significant impact on the Group s financial statements. b) Financial reporting standards that will become effective in the future During the current year, the Federation of Accounting Professions issued a number of the revised financial reporting standards and interpretations (revised ) which is effective for fiscal years beginning on or after 1 January These financial reporting standards were aimed at alignment with the corresponding International Financial Reporting Standards with most of the changes directed towards revision of wording and terminology, and provision of interpretations and accounting guidance to users of standards. 8

16 The management of the Group believe that the revised and new financial reporting standards and interpretations will not have any significant impact on the financial statements when they are initially applied. However, one standard involves changes to key principles, which are summarised below. TAS 27 (revised ) Financial Statements This revised standard stipulates an additional option to account for investments in subsidiaries, joint ventures and associates in separate financial statements under the equity method, as described in TAS 28 (revised ) Investments in Associates and Joint Ventures. However, the entity is to apply the same accounting treatment for each category of investment. If an entity elects to account for such investments using the equity method in the separate financial statements, it has to adjust the transaction retrospectively. This standard will not have any significant impact on the Group s financial statements because the management has decided to continue accounting for such investments under the cost method in the separate financial statements. c) Changes in accounting policies According to the board of directors meeting No. 6/ held on December 24,, the board of directors passed a resolution to change an accounting policy regarding method of recording fixed assets, machinery, from the revaluation basis to cost basis, effective since January 1,. Based on the Company s opinion, the cost basis is more appropriate since it represents the Company s actual operating results than revaluation basis. Accordance with the announcement of the Federation of Accounting Professions No. 18/2554 dated April 12, 2011 which allows the Company to use the former accounting for assets revaluation as per the announcement No. 25/2549 that transfer depreciation for capital surplus from asset revaluation shall be treated as already occurred to the retained earning directly without passing through the statement of comprehensive income until the accounting period beginning before January 1,. The change in accounting policy will have an impact on the statement of financial position as at January 1, as follows: / (Unit : Million Baht) As at January 1, As at January 1, Statements of financial position Fixed asset revaluation decrease Deferred tax liabilities decrease Capital surplus from machinery revaluation decrease

17 2.3 Basis of measurement The financial statements have been prepared on the historical cost basis except for the following material items in the statements of financial position: - Investment properties are measured at fair value; - Land is measured at appraisal value 2.4 Presentation currency The financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded to the nearest thousand or million unless otherwise stated. 2.5 Use of estimates and judgements The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following note: Note 18 Note 19 Fair value estimation Income Taxes and Deferred Income Tax Measurement of defined benefit obligations The company estimates fair value for land and machineries, investment property and long-term borrowings from financial institutions. The different levels of fair value estimation have been defined as follows: Level 1 Level 2 Level 3 Quoted prices in active markets for identical assets or liabilities Using other quoted prices that are observable for the asset or liability, either directly or indirectly Inputs for the asset or liability that are not based on observable market data such as estimated future cash flow form the company. The company discloses the fair value measurement of above items in related notes to financial statement. 10

18 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these financial statements. The Company and its ex-subsidiary company have significant accounting policies as follows:- 3.1 Cash and cash equivalents Cash and cash equivalents include cash on hand, demand deposits, and highly liquid short-term investments that are readily convertible to known amount or that are subject to an insignificant risk of change in value, but not include time deposits with maturity exceed three-month period (fixed deposits). 3.2 Trade account receivables Trade account receivables are presented at realizable value. The Company provides allowance for doubtful accounts equal to the amount of expected uncollectible receivable which are based on management evaluation of ability to pay of each receivable 3.3 Inventories Inventories are presented at the lower of cost or net realizable value (NRV.). Cost of inventories is recorded under the basis as follows: Finished goods and work-in-process - at standard cost which approximates to actual average cost Raw materials and factory supplies - at cost (first-in, first-out method) The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventories. The Company estimates net realizable value from the estimated selling price in the ordinary course of business, less the estimated expenses necessary to make the sale. 3.4 Investments in subsidiary and associated companies Investments in subsidiary and associated companies are recorded by using the equity method within the consolidated financial statement. Investment in subsidiary and associated companies under the Company only financial statements are recorded using cost method adjusted by the allowance for impairment when the value of the investment permanently decreased. Investment in other companies is investment in non-marketable equity fund, which the Company regards as general investment. This is shown at cost adjusted by the allowance for impairment when the value of the investment is permanently decreased. 11

19 3.5 Property, plant and equipment At the beginning date of transaction, land was recorded at costs while plant and equipment were recorded at cost net of accumulated depreciation and allowance for impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. However the Company chose to show value of land in appraised value (revaluation) which were appraised by independent appraiser. The revalued amount is the fair value determined on the basis of the property s existing use at the date of revaluation less impairment losses. Revaluations are performed by independent appraiser with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at the statements of financial position date. The Company has a policy to appraise assets every three (3) to five (5) years or whenever the fair value of the appraised assets materially change from the book value. Any increase in value due to appraisal, such increase shall be recorded as capital surplus from asset revaluation by netting from the value that was decreased by appraisal and was already recognised in the statements of comprehensive income and if it is the case that the asset s value decreases due to appraisal, it will be recorded in the statements of comprehensive income for the value only the part that decrease more than capital surplus from asset revaluation that was previously appraised. In case of any sale of asset that was revalued, the capital surplus from the selling asset revaluation that considered realized shall be transferred directly to retained earnings and shall not recognised as profit or loss from sales assets.. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-today servicing of property, plant and equipment are recognised in profit or loss as incurred. 12

20 Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment as follows: Buildings and improvements years Machinery, equipment and tools 5-20 years Furniture, fixtures and office equipment 5-10 years Vehicle 5 years Other assets 5 years 3.6 Land, building and machinery not used in operations Land, building and machinery not used in operations are stated at cost net of accumulated depreciation and allowance for loss from impairment of asset. 3.7 Impairment of assets. The carrying amounts of the Company s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. For intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same times. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. Calculation of recoverable amount The recoverable amount of a non-financial asset is the greater of the asset s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. 13

21 Reversals of impairment Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 3.8 Trade and other accounts payable Trade and other accounts payable are stated at cost. 3.9 Employee benefits. Provision for post benefits and long term benefits employees The Group s net obligation in respect of long-term employee benefits (Legal Severance Payment and other longterm benefits) is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on government bonds. The calculation is performed by the independent actuarial using the projected unit credit method. The Company recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. 14

22 3.10 Revenue and Cost of Sales Recognition Revenue Recognition Revenue excludes value added taxes and is shown at after deduction of trade discounts. Revenue from the sale of goods is recognised in the statement of comprehensive income when the significant risks and rewards of ownerships have been transferred to the buyer. No revenue is recognised if there are significant uncertainties in advantage receiving from accounting transaction which it can t measure reliable in value of revenue and occurred cost, the probable return of goods or the continuing management involvement with the goods. Other income and other expenses is recognised as it accrues Income tax Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. In determining the amount of current and deferred tax, the Group/Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group/Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. 15

23 Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised Basic earnings per share Earnings (Loss) per share is determined by dividing the net profit (loss) by the weighted average number of shares outstanding during the year Foreign currencies The Foreign Currency transactions in foreign currencies are translated at the rates of the foreign exchange ruling at the date of transaction. The remaining balance of assets and liabilities in foreign currency at the year end date are translated to Baht at the foreign exchange rates ruling at the date. The profit or loss incurred from the translation is regard as revenue or expense in the statements of comprehensive income Use of estimates and judgements For accounting estimates required for preparation of financial statements to conform with generally accepted accounting principles, the management has to use various estimates and assumptions which would affect amounts relating to incomes, expenses, assets, liabilities and disclosure of data relating to contingent assets and liabilities. The actual result may differ from amounts already estimated. 4. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements comprise the financial statements of the Company and its subsidiaries, in which the Company has authority to control or holds more than 50% of the subsidiaries shares. Subsidiaries Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The preparation of the consolidated financial statements has been based on the same accounting policies for the same or similar accounting transactions or account events. The intercompany transactions and balances between the Company and the subsidiaries have been eliminated. 16

24 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as follows: Rate of Shareholding Company Name Nature of Business (%) (%) Operating subsidiaries 1. TFI Trading Co., Ltd. Involving in renewable energy (Formerly: TFI Power Co., Ltd.). 2. TFI Power (Korat 1) Co., Ltd. Involving in renewable energy TFI Power (Korat 2) Co., Ltd. Involving in renewable energy TFI Power (Korat 3) Co., Ltd. Involving in renewable energy TFI Power (Korat 4) Co., Ltd. Involving in renewable energy The significant intercompany transactions and balances between the Company and the subsidiaries were eliminated from the consolidated financial statements. 5. TRANSACTIONS WITH RELATED PARTIES Related parties are those parties linked to the Group and the Company as shareholders or by common shareholders or directors. Significant related parties transactions can be summarized as follows. Related parties Type of relation TFI Trading Co., Ltd. Subsidiary company (Formerly: TFI Power Co., Ltd.) TFI Power (Korat 1) Co., Ltd. Subsidiary company TFI Power (Korat 2) Co., Ltd. Subsidiary company TFI Power (Korat 3) Co., Ltd. Subsidiary company TFI Power (Korat 4) Co., Ltd. Subsidiary company Thai Film Bangladesh Co., Ltd. Related company Key management personnel Persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Group Company 17

25 5.1 Inter-Assets and Liabilities (Unit : Thousand Baht) Loan receivable and advance to subsidiary companies TFI Power (Korat 1) Co., Ltd ,067 2,067 TFI Power (Korat 2) Co., Ltd ,067 2,067 TFI Power (Korat 3) Co., Ltd ,067 2,067 TFI Power (Korat 4) Co., Ltd ,067 2,067 Total - - 8,268 8,268 Less allowance for doubtful accounts - - (8,268) - Net ,268 Loan to related company Thai Film Bangladesh Co., Ltd. 37,965 37,965 37,965 37,965 Less allowance for doubtful debt (37,965) (37,965) (37,965) (37,965) Net Total ,268 Accrued interest receivable TFI Power (Korat 1) Co., Ltd TFI Power (Korat 2) Co., Ltd TFI Power (Korat 3) Co., Ltd TFI Power (Korat 4) Co., Ltd Total - - 1, Less allowance for doubtful accounts - - (1,188) - Net Movement of Loan receivable and advance payment Beginning - - 8,268 8,268 Increase during in the years Paid during in the years Ending - - 8,268 8,268 As at and, the Company has loan to its subsidiaries as promissory notes which call on demand at interest rate MOR+1.50% per annum and MOR+0.50% per annum, respectively. 18