POSCO-THAINOX PUBLIC COMPANY LIMITED INTERIM FINANCIAL INFORMATION (UNAUDITED) 30 JUNE 2014

Transcription

1 POSCO-THAINOX PUBLIC COMPANY LIMITED INTERIM FINANCIAL INFORMATION (UNAUDITED) 30 JUNE 2014

2 AUDITOR S REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Shareholders and the Board of Directors of POSCO-Thainox Public Company Limited I have reviewed the accompanying statements of financial position in which the equity method is applied and the Company only as at 30 June 2014, the related statements of comprehensive income in which the equity method is applied and the Company only for the three-month period and six-month period then ended, the related statements of changes in shareholders equity and cash flows in which the equity method is applied and the Company only for the six-month period then ended and condensed notes to the interim financial information of POSCO-Thainox Public Company Limited. Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34, Interim Financial Reporting. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of review I conducted my review in accordance with Thai Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34, Interim Financial Reporting. Varaporn Vorathitikul Certified Public Accountant (Thailand) No PricewaterhouseCoopers ABAS Ltd. Bangkok 13 August 2014

3 Statement of Financial Position As at 30 June 2014 Assets Equity Method Company (Restated) (Restated) Unaudited Audited Unaudited Audited 30 June 31 December 30 June 31 December Notes Current assets Cash and cash equivalents 457,630, ,943, ,630, ,943,379 Short-term investments 5 1,181,032,462 1,037,847,950 1,181,032,462 1,037,847,950 Trade and other receivables, net 3.3, 6 2,578,059,826 1,806,519,745 2,578,059,826 1,806,519,745 Inventories, net 7 3,554,304,182 3,588,708,268 3,554,304,182 3,588,708,268 Other current assets ,490, ,589, ,490, ,589,821 Total current assets 7,890,517,070 7,132,609,163 7,890,517,070 7,132,609,163 Non-current assets Investment in an associate 8 14,185,188 6,571,199 4,900,000 4,900,000 Long-term investments 9 60, ,184,227 60, ,184,227 Property, plant and equipment, net 10 4,547,190,777 4,636,811,072 4,547,190,777 4,636,811,072 Intangible assets, net 11 39,774,755 42,247,961 39,774,755 42,247,961 Other non-current assets 11,130,434 10,972,373 11,130,434 10,972,373 Total non-current assets 4,612,341,154 4,867,786,832 4,603,055,966 4,866,115,633 Total assets 12,502,858,224 12,000,395,995 12,493,573,036 11,998,724,796 The accompanying notes on page 10 to 26 form part of the interim financial statements. 2

4 Statement of Financial Position As at 30 June 2014 Liabilities and shareholders equity Equity Method Company (Restated) (Restated) Unaudited Audited Unaudited Audited 30 June 31 December 30 June 31 December Notes Current liabilities Short-term borrowings from financial institutions ,171, ,459, ,171, ,459,154 Trade and other payables 3.3, 12 3,633,898,324 3,097,967,781 3,633,898,324 3,097,967,781 Current portion of long-term borrowings from financial institutions ,545,739 80,122,590 51,545,739 80,122,590 Other current liabilities 2,201, ,072 2,201, ,072 Total current liabilities 3,822,816,231 3,425,433,597 3,822,816,231 3,425,433,597 Non-current liabilities Long-term borrowings from financial institutions ,142,611 38,991,823 26,142,611 38,991,823 Deferred tax liabilities 94,657, ,953,837 94,657, ,953,837 Employee benefit obligations 14 89,400,616 85,687,705 89,400,616 85,687,705 Total non-current liabilities 210,200, ,633, ,200, ,633,365 Total liabilities 4,033,016,694 3,662,066,962 4,033,016,694 3,662,066,962 Shareholders equity Share capital Authorised share capital 7,795,709,100 ordinary shares at par value of 1 each 7,795,709,100 7,795,709,100 7,795,709,100 7,795,709,100 Issued and paid-up share capital 7,795,709,100 ordinary shares at par value of 1 each 7,795,709,100 7,795,709,100 7,795,709,100 7,795,709,100 Premium on ordinary shares 332,131, ,131, ,131, ,131,264 Retained earnings (Deficits) Appropriated - legal reserve 585,000, ,000, ,000, ,000,000 Deficits (238,564,311) (402,942,383) (247,849,499) (404,613,582) Other components of equity (4,434,523) 28,431,052 (4,434,523) 28,431,052 Total shareholders equity 8,469,841,530 8,338,329,033 8,460,556,342 8,336,657,834 Total liabilities and shareholders equity 12,502,858,224 12,000,395,995 12,493,573,036 11,998,724,796 The accompanying notes on page 10 to 26 form part of the interim financial statements. 3

5 Statement of Comprehensive Income For the three-month period ended 30 June 2014 Equity Method Company (Restated) (Restated) Unaudited Unaudited Unaudited Unaudited Notes Revenue from sales of goods 15 3,707,287,948 2,178,648,568 3,707,287,948 2,178,648,568 Cost of sales of goods 15 (3,535,441,585) (2,196,908,033) (3,535,441,585) (2,196,908,033) Gross profit (loss) 171,846,363 (18,259,465) 171,846,363 (18,259,465) Other income (expenses) 16 34,369,366 (115,029,966) 34,369,366 (115,029,966) Selling expenses (51,961,702) (35,854,093) (51,961,702) (35,854,093) Administrative expenses 15 (101,906,674) (66,303,796) (101,906,674) (66,303,796) Finance costs (1,278,956) (16,897,269) (1,278,956) (16,897,269) Share of profit (loss) of an associate 4,216,172 (2,311,816) - - Profit (loss) before income tax expense 55,284,569 (254,656,405) 51,068,397 (252,344,589) Income tax expense ,504 (7,646,556) 445,504 (7,646,556) Profit (loss) for the period 55,730,073 (262,302,961) 51,513,901 (259,991,145) Other comprehensive incomes: Loss on remeasuring available-for-sale investments - (20,084,510) - (20,084,510) Income tax relating to components of other comprehensive income for the period - 4,016,902-4,016,902 Other comprehensive expense for the period, net of tax - (16,067,608) - (16,067,608) Total comprehensive income (expense) for the period 55,730,073 (278,370,569) 51,513,901 (276,058,753) Earnings (loss) per share Basic earnings (loss) per share (0.03) 0.01 (0.03) The accompanying notes on page 10 to 26 form part of the interim financial statements. 4

6 Statement of Comprehensive Income For the six-month period ended 30 June 2014 Equity Method Company (Restated) (Restated) Unaudited Unaudited Unaudited Unaudited Notes Revenue from sales of goods 15 7,277,789,735 4,635,860,131 7,277,789,735 4,635,860,131 Cost of sales of goods 15 (6,973,182,586) (4,585,806,597) (6,973,182,586) (4,585,806,597) Gross profit 304,607,149 50,053, ,607,149 50,053,534 Other income ,443,105 51,312, ,443,105 51,312,225 Selling expenses (97,814,992) (73,484,234) (97,814,992) (73,484,234) Administrative expenses 15 (180,707,011) (127,013,883) (180,707,011) (127,013,883) Finance costs (4,060,769) (6,219,129) (4,060,769) (6,219,129) Share of profit (loss) of an associate 7,613,989 (6,616,539) - - Profit (loss) before income tax expense 147,081,471 (111,968,026) 139,467,482 (105,351,487) Income tax expense 17 17,296,601 (11,452,933) 17,296,601 (11,452,933) Profit (loss) for the period 164,378,072 (123,420,959) 156,764,083 (116,804,420) Other comprehensive incomes: Profit on remeasuring available-for-sale investments - 18,258,660-18,258,660 Disposal of available-for-sale investments (39,973,339) - (39,973,339) - Income tax relating to components of other comprehensive income for the period 7,107,764 (3,651,732) 7,107,764 (3,651,732) Other comprehensive income (expense) for the period, net of tax (32,865,575) 14,606,928 (32,865,575) 14,606,928 Total comprehensive income (expense) for the period 131,512,497 (108,814,031) 123,898,508 (102,197,492) Earnings (loss) per share Basic earnings (loss) per share (0.02) 0.02 (0.01) The accompanying notes on page 10 to 26 form part of the interim financial statements. 5

7 Statement of Changes in Shareholders Equity For the six-month period ended 30 June 2014 Equity Method (Unaudited) Other components of equity Retained earnings (Deficits) Other comprehensive income (expense) Total Issued and other Total paid-up Share Legal Available-for-sale Gain on asset component shareholders share capital premium reserve Deficits investment revaluation of equity equity Notes Opening balance as at 1 January ,795,709, ,131, ,000,000 (67,786,787) 29,213,844 1,342,032,054 1,371,245,898 10,016,299,475 Retrospective adjustments from changes in accounting policy (1,342,032,054) (1,342,032,054) (1,342,032,054) Retrospective adjustments from errors (9,430,746) (9,430,746) Balance after adjustment 7,795,709, ,131, ,000,000 (77,217,533) 29,213,844-29,213,844 8,664,836,675 Changes in shareholders equity for the period Total comprehensive income (expense) for the period (restated) (123,420,959) 14,606,928-14,606,928 (108,814,031) Closing balance as at 30 June ,795,709, ,131, ,000,000 (200,638,492) 43,820,772-43,820,772 8,556,022,644 Opening balance as at 1 January ,795,709, ,131, ,000,000 (392,093,280) 28,431,052-28,431,052 8,349,178,136 Retrospective adjustments from errors (10,849,103) (10,849,103) Balance after adjustment 7,795,709, ,131, ,000,000 (402,942,383) 28,431,052-28,431,052 8,338,329,033 Changes in shareholders equity for the period Total comprehensive income (expense) for the period ,378,072 (32,865,575) - (32,865,575) 131,512,497 Closing balance as at 30 June ,795,709, ,131, ,000,000 (238,564,311) (4,434,523) - (4,434,523) 8,469,841,530 The accompanying notes on page 10 to 26 form part of the interim financial statements. 6

8 Statement of Changes in Shareholders Equity For the six-month period ended 30 June 2014 Company (Unaudited) Other components of equity Retained earnings (Deficits) Other comprehensive income (expense) Total Issued and other Total paid-up Share Legal Available-for-sale Gain on asset component shareholders share capital premium reserve Deficits investment revaluation of equity equity Notes Opening balance as at 1 January ,795,709, ,131, ,000,000 (72,899,996) 29,213,844 1,342,032,054 1,371,245,898 10,011,186,266 Retrospective adjustment from change in accounting policy (1,342,032,054) (1,342,032,054) (1,342,032,054) Retrospective adjustment from errors (9,430,746) (9,430,746) Balance after adjustment 7,795,709, ,131, ,000,000 (82,330,742) 29,213,844-29,213,844 8,659,723,466 Changes in shareholders equity for the period Total comprehensive income (expense) for the period (restated) (116,804,420) 14,606,928-14,606,928 (102,197,492) Closing balance as at 30 June ,795,709, ,131, ,000,000 (199,135,162) 43,820,772-43,820,772 8,557,525,974 Opening balance as at 1 January ,795,709, ,131, ,000,000 (393,764,479) 28,431,052-28,431,052 8,347,506,937 Retrospective adjustments from errors (10,849,103) (10,849,103) Balance after adjustment 7,795,709, ,131, ,000,000 (404,613,582) 28,431,052-28,431,052 8,336,657,834 Changes in shareholders equity for the period Total comprehensive income (expense) for the period ,764,083 (32,865,575) - (32,865,575) 123,898,508 Closing balance as at 30 June ,795,709, ,131, ,000,000 (247,849,499) (4,434,523) - (4,434,523) 8,460,556,342 The accompanying notes on page 10 to 26 form part of the interim financial statements. 7

9 Statement of Cash Flows For the six-month period ended 30 June 2014 Equity method Company (Restated) (Restated) Unaudited Unaudited Unaudited Unaudited 30 June 30 June 30 June 30 June Notes Cash flows from operating activities Profit (loss) before income tax expense 147,081,471 (111,968,026) 139,467,482 (105,351,487) Adjustments for Depreciation and amortisation 10, ,567, ,388, ,567, ,388,646 Impairment loss (Reversal) 10 7,027,532 (73,920,835) 7,027,532 (73,920,835) Allowance for doubtful accounts (Reversal) 6 30,512,688 (60,000) 30,512,688 (60,000) Allowance for net realisable value of inventories 7 38,859, ,255 38,859, ,255 Amortisation of transaction cost ,439,215 1,439,215 1,439,215 1,439,215 Unrealised (gain) loss on exchange rate (1,170,251) 127,890,643 (1,170,251) 127,890,643 Employee benefit obligations 14 3,712,911 1,892,524 3,712,911 1,892,524 Gain on disposal of long-term investments 16 (28,967,423) - (28,967,423) - Gain on disposal of short-term investments 16 (4,450,750) - (4,450,750) - Fair value gain on short-term investments (462,153) - (462,153) - Gain on disposal of investment properties - (3,750,342) - (3,750,342) Gain on disposal of property, plant and equipment - (65,461) - (65,461) Interest income 16 (17,060,802) (20,026,772) (17,060,802) (20,026,772) Finance costs 6,239,281 6,287,916 6,239,281 6,287,916 Share of profit (loss) of investment in an associate 8 (7,613,989) 6,616, ,714, ,936, ,714, ,936,302 Changes in operating assets and liabilities Trade and other receivables (786,962,983) 162,725,017 (786,962,983) 162,725,017 Inventories (4,455,183) (323,578,135) (4,455,183) (323,578,135) Other current assets 53,127,225 (1,692,431) 53,127,225 (1,692,431) Other non-current assets (158,061) (126,761) (158,061) (126,761) Trade and other payables 535,677,490 (1,489,091,116) 535,677,490 (1,489,091,116) Other current liabilities 1,317, ,823 1,317, ,823 Cash flows from operations (201,454,476) (1,650,811,603) (201,454,476) (1,650,811,603) Net cash generated from (used in) operating activities 222,260,323 (1,454,875,301) 222,260,323 (1,454,875,301) The accompanying notes on page 10 to 26 form part of the interim financial statements. 8

10 Statement of Cash Flows For the six-month period ended 30 June 2014 Equity method Company (Restated) (Restated) Unaudited Unaudited Unaudited Unaudited 30 June 30 June 30 June 30 June Notes Cash flows from investing activities Interest received 15,032,935 21,660,653 15,032,935 21,660,653 Purchase of property, plant and equipment (162,744,046) (219,003,275) (162,744,046) (219,003,275) Proceeds from disposal of property, plant and equipment - 187, ,883 Proceeds from disposal of investment properties - 62,023,880-62,023,880 Proceeds from disposal of held to maturity of deposits at financial institutions 120,000, ,000,000 - Proceeds from disposal of long-term investments 47,226,075-47,226,075 - Proceeds from disposal of short-term investments 1,936,186,118-1,936,186,118 - Purchase of short-term investments (2,089,547,513) 486,662,130 (2,089,547,513) 486,662,130 Net cash generated from (used in) investing activities (133,846,431) 351,531,271 (133,846,431) 351,531,271 Cash flows from financing activities Interest paid (6,744,013) (6,266,476) (6,744,013) (6,266,476) Proceeds from short-term borrowings from financial institutions ,459, ,459,388 - Repayment of short-term borrowings from financial institutions 13.1 (682,921,811) - (682,921,811) - Repayment of long-term borrowings from financial institutions 13.2 (41,512,437) (37,187,128) (41,512,437) (37,187,128) Net cash used in financing activities (158,718,873) (43,453,604) (158,718,873) (43,453,604) Net decrease in cash and cash equivalents (70,304,981) (1,146,797,634) (70,304,981) (1,146,797,634) Cash and cash equivalents at the beginning of the period 528,943,379 1,292,964, ,943,379 1,292,964,817 Exchange (gain) loss on cash and cash equivalents (1,008,261) 621,570 (1,008,261) 621,570 Cash and cash equivalents at the end of the period 457,630, ,788, ,630, ,788,753 Ending balance of cash and cash equivalents Cash and cash equivalents 457,630, ,788, ,630, ,788,753 Non-cash transactions Significant non-cash transactions for the six-month period ended 30 June: Outstanding other receivables from disposal of short-term investments 15,089,786-15,089,786 - Outstanding other payable from purchase of property, plant and equipment 757,785 5,294, ,785 5,294,588 The accompanying notes on page 10 to 26 form part of the interim financial statements. 9

11 1 General information POSCO-Thainox Public Company Limited, (the Company ), is a public limited company which is domiciled in Thailand and listed on the Stock Exchange of Thailand in December The address of the Company s registered office and branch offices are as follows; Head office : 31st floor Unit , CRC Tower, All Seasons Place, 87/2 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand. Branch office 1 : 324 Moo 8, Highway 3191 Road, Tambol Mabkha, Nikom Pattana, Rayong 21180, Thailand. Branch office 2 : 700/453 Amata Nakorn Industrial Estate, Moo 7, Tambol Donhuaror, Amphur Muang, Chonburi 20000, Thailand. The parent company is POSCO, incorporated in South Korea. The principal activities of the Company are production and sales of cold-rolled stainless steel for use as raw material in the production of household appliances, such as kitchenette, sinks, washing machines etc., and other industries. For reporting purposes, the Company and its associate are referred to as the Group. This interim financial information was authorized for issue by the Board of Directors on 13 August This interim financial information has been reviewed, not audited. 2 Accounting policies 2.1 Basis of preparation This interim financial information is prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Professions Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission. The primary financial information (i.e. statement of financial position, statements of comprehensive income, changes in shareholders equity and cash flows) is prepared in the full format as required by the Securities and Exchange Commission. The notes to the interim financial information are prepared in a condensed format according to Thai Accounting Standard no. 34 (revised 2012), Interim Financial Reporting and additional notes are presented as required by the Securities and Exchange Commission under the Securities and Exchange Act. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December An English version of the interim financial information has been prepared from the interim financial information that is in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language interim financial information shall prevail. Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. 10

12 2 Accounting policies (Cont d) 2.2 Revised accounting standards, revised financial reporting standards, and related interpretations The following amendments and related interpretations are effective for the periods beginning on or after 1 January TAS 1 (revised 2012) TAS 7 (revised 2012) TAS 12 (revised 2012) TAS 17 (revised 2012) TAS 18 (revised 2012) TAS 19 (revised 2012) TAS 21 (revised 2012) TAS 24 (revised 2012) TAS 28 (revised 2012) TAS 31 (revised 2012) TAS 34 (revised 2012) TAS 36 (revised 2012) TAS 38 (revised 2012) TFRS 2 (revised 2012) TFRS 3 (revised 2012) TFRS 5 (revised 2012) TFRS 8 (revised 2012) TFRIC 1 TFRIC 4 TFRIC 5 TFRIC 7 TFRIC 10 TFRIC 12 TFRIC 13 TFRIC 17 TFRIC 18 TSIC 15 TSIC 27 TSIC 29 TSIC 32 Presentation of financial statements Statement of cash flows Income taxes Leases Revenue Employee benefits The effects of changes in foreign exchange rates Related party disclosures Investments in associates Interest in joint ventures Interim financial reporting Impairment of assets Intangible assets Share-based payment Business combinations Non-current assets held for sale and discontinued operations Operating segments Changes in existing decommissioning, restoration and similar liabilities Determining whether an arrangement contains a lease Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds Applying the restatement approach under TAS 29 financial reporting in hyperinflationary economies Interim financial reporting and impairment Service concession arrangements Customer loyalty programmes Distributions of non-cash assets to owners Transfers of assets from customers Operating leases - incentives Evaluating the substance of transactions in the legal form of a lease Service concession arrangements: Disclosure Intangible assets - Web site costs The Group s management has determined that the revised accounting standards, revised financial reporting standards, and related interpretation have no impact to the Group. 11

13 3 Change in accounting policies, errors, and reclassifications 3.1 Change in accounting policies In the fourth quarter of 2013, the Company decided to change its accounting policies for recognition of costs of property, plant and equipment from the revaluation method to the cost method. The reason for this change is to achieve consistency with the accounting policies of the parent company as well as improved comparability with other financial statements. As a result, the Company has made adjustments retrospectively to the statements of comprehensive income in which the equity method is applied and the Company only for the three-month and six-month periods ended 30 June 2013, presented for comparative purposes. The effects from the correction are as follows: Financial information in which the equity method is applied 000 Financial information for the Company only 000 Statements of comprehensive income for the three-month period ended 30 June 2013 Other comprehensive income - Revaluation of property, plant and equipment decreased 51,533 51,533 - Income tax relating to components of other comprehensive income for the period decreased (13,618) (13,618) Total comprehensive income for the period increased 37,915 37,915 Basic earnings per share increased () - - Statements of comprehensive income for the six-month period ended 30 June 2013 Other comprehensive income - Revaluation of property, plant and equipment decreased 102, ,500 - Income tax relating to components of other comprehensive income for the period decreased (20,500) (20,500) Total comprehensive income for the period increased 82,000 82,000 Basic earnings per share increased ()

14 3 Change in accounting policies, errors, and reclassifications (Cont d) 3.2 Correction of errors During the first quarter of 2014, the Company found errors of brought forward balance of cash and cash equivalent, inventories, other current assets, other non-current assets, trade and other payables and employee benefit obligations as at 1 January The impacts of the changes on the statements of financial position in which the equity method is applied and the Company only as at 31 December 2013 and the statements of comprehensive income in which the equity method is applied and the Company only for the three-month and six-month periods ended 30 June 2013 are as follows: Financial information in which the equity method is applied 000 Increase/ (Decrease) Financial information for the Company only 000 Increase/ (Decrease) Statements of financial position as at 31 December 2013 Cash and cash equivalents 17,809 17,809 Inventories, net (6,769) (6,769) Other current assets 3,409 3,409 Other non-current assets 2,802 2,802 Trade and other payables 30,740 30,740 Employee benefit obligations (2,639) (2,639) Retained earnings as at 1 January 2013 (9,431) (9,431) Retained earnings as at 31 December 2013 (10,849) (10,849) Statements of comprehensive income for the three-month period ended 30 June 2013 Cost of sales of goods 4,058 4,058 Profit for the period (4,058) (4,058) Basic earnings per share () - - Statements of comprehensive income for the six-month period ended 30 June 2013 Cost of sales of goods 4,058 4,058 Administrative expenses (1,650) (1,650) Profit for the period (2,408) (2,408) Basic earnings per share ()

15 3 Change in accounting policies, errors, and reclassifications (Cont d) 3.3 Reclassifications The comparative figures in the financial statements for the year ended 31 December 2013 have been reclassified to conform to changes in presentation in the current year, which the management believed that it is more appropriate, as follows: 31 December 2013 Trade and other receivables, net As previously reported: Trade receivables, net 1,791,632,612 Prepaid expenses 14,887,133 Aggregately reclassified to: Trade and other receivables, net 1,806,519,745 Other current assets As previously reported: Input VAT 131,627,266 Other current assets (restated) 38,962,555 Aggregately reclassified to: Other current assets 170,589,821 Trade and other payables As previously reported : Trade payables (restated) 3,016,792,271 Accrued expenses 26,325,471 Deposit from customers 42,015,825 Retention payables 804,957 Other current liabilities 12,029,257 Aggregately reclassified to : Trade and other payables 3,097,967,781 Financial information in which the equity method is applied 000 Financial information for the Company only 000 Statements of comprehensive income for the three-month period ended 30 June 2013 As previously reported: Other income - Unrealised loss on exchange rate of long-term loans 13,678 13,678 Reclassified to: Finance costs - Unrealised loss on exchange rate of long-term loans 13,678 13,678 Statements of comprehensive income for the six-month period ended 30 June 2013 As previously reported: Other income - Unrealised loss on exchange rate of long-term loans Reclassified to: Finance costs - Unrealised loss on exchange rate of long-term loans Estimates The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. 14

16 5 Short-term investments As of 30 June 2014, information relating to short-term investments is as follows: Unaudited Audited 30 June December 2013 Cost Fair Value Cost Fair Value Fixed deposits at financial institutions 250,000, ,000, Available-for-sale securities - Debt securities 930,012, ,032,462 1,037,290,369 1,037,847,950 Total short-term investments 1,180,012,728 1,181,032,462 1,037,290,369 1,037,847,950 6 Trade and other receivables, net Unaudited Audited 30 June 31 December Trade receivables - Other parties 2,264,389,022 1,522,794,116 - Related parties (Note 15) 325,856, ,590,023 2,590,245,044 1,795,384,139 Less Allowance for doubtful accounts (34,264,215) (3,751,527) Trade receivables, net 2,555,980,829 1,791,632,612 Other receivables from disposal of short-term investments 15,089,786 - Prepaid expenses 6,989,211 14,887,133 Outstanding trade receivables can be analysed as follows: 2,578,059,826 1,806,519,745 Unaudited Audited 30 June 31 December Not yet due 2,186,673,503 1,372,419,460 Overdue up to 3 months 124,655, ,052, months 131,310,897 35,514, months 143,913, ,724 over 12 months 3,691,527 3,751,527 2,590,245,044 1,795,384,139 Less Allowance for doubtful accounts (34,264,215) (3,751,527) 2,555,980,829 1,791,632,612 15

17 7 Inventories, net Inventories comprise the following: Unaudited Audited 30 June 31 December Raw materials 391,871, ,904,304 Spare parts and supplies 78,486,790 91,300,739 Semi-finished goods 1,047,003,976 1,256,441,535 Finished goods 1,245,573,246 1,322,125,438 2,762,935,236 3,043,772,016 Less Allowance for net realisable value of inventories - raw materials (22,460,555) (880,601) - semi-finished goods (12,405,194) (790,513) - finished goods (12,287,579) (6,622,945) 2,715,781,908 3,035,477,957 Good in transit 838,522, ,230,311 3,554,304,182 3,588,708,268 8 Investment in an associate The investment in an associate as at 30 June 2014 is as follows: Unaudited 30 June 2014 %Voting power (if different Country of % Ownership from ownership incorporation interest interest) Associate NS-Thainox Auto Company Limited Thailand Audited 31 December 2013 %Voting power (if different Country of % Ownership from ownership incorporation interest interest) Associate NS-Thainox Auto Company Limited Thailand Movements of investment in an associate can be analysed as follows: Equity Method Company For the six-month period ended 30 June 2014 Opening net book amount 6,571,199 4,900,000 Share of profit of investment in an associate 7,613,989 - Closing net book amount 14,185,188 4,900,000 16

18 9 Long-term investments As of 30 June 2014, information relating to other long-term investments is as follows: Unaudited Audited 30 June December 2013 Cost Fair Value Cost Fair Value Deposits at financial institutions ,000, ,000,000 Available-for-sale securities - Equity securities 60,000 60,000 18,318,653 51,184,227 Total long-term investments 60,000 60, ,318, ,184,227 During the six-month period ended 30 June 2014, the movement of other long-term investments is as follows: Deposits at financial institutions Available-forsale securities For the six-month period ended 30 June 2014 Book value-beginning balance 120,000,000 51,184,227 Disposal (120,000,000) (51,124,227) Book value-ending balance - 60, Property, plant and equipment, net For the six-month period ended 30 June 2014 Unaudited Opening net book amount 4,636,811,072 Additions 163,501,831 Depreciation charge (246,094,594) Impairment loss (7,027,532) Closing net book amount 4,547,190, Intangible assets, net For the six-month period ended 30 June 2014 Unaudited Opening net book amount 42,247,961 Amortisation (2,473,206) Closing net book amount 39,774,755 17

19 12 Trade and other payables Unaudited Audited 30 June 31 December Trade payables - Related parties (Note 15) 3,292,057,164 2,860,644,039 - Other 204,153, ,148,232 Others payables - Related parties (Note 15) 3,879,657 2,051,265 - Other 63,293,469 52,798,774 Accrued expenses - Related parties (Note 15) 200, ,490 - Other 70,313,335 26,155,981 3,633,898,324 3,097,967, Borrowings 13.1 Short-term borrowings from financial institutions The movement of short-term borrowings from financial institutions for the six-month period ended 30 June 2014 are as follows: Unaudited 30 June 2014 Beginning balance 246,459,154 Borrowings during the period 572,459,388 Repayment of borrowings during the period (682,921,811) Unrealised gain on exchange rate (825,671) Ending balance 135,171, Long-term borrowings from financial institutions Unaudited Audited 30 June 31 December Mature within 1 year 51,545,739 80,122,590 Mature between 2 to 5 years 26,142,611 38,991,823 Closing balance 77,688, ,114,413 The long-term borrowings from foreign financial institutions are in EURO. The borrowings bear interest at the fixed rate of 4.12% per annum. The principal and interests are due for repayment every 6 months. The last installment is payable in June The Company has to comply with certain covenants such as to maintain financial ratio. 18

20 13 Borrowings (Cont d) 13.2 Long-term borrowings from financial institutions The movement of long-term borrowings from financial institutions for the six-month period ended 30 June 2014 are as follows: Unaudited Beginning balance 119,114,413 Repayment of borrowing during the period (41,512,437) Unrealised gain on exchange rate (1,352,841) Transaction cost 1,439,215 Ending balance 77,688, Borrowing facilities The Company have the following undrawn committed borrowing facilities: Unaudited Audited 30 June 31 December Floating rate - expiring within one year 2,816,461,431 2,595,276,264 2,816,461,431 2,595,276, Employee benefit obligations The movement of employee benefit obligations for the six-month period ended 30 June 2014 are as follows: Unaudited Opening balance for the period 85,687,705 Employee benefit expenses 3,712,911 Closing balance for the period 89,400,616 19

21 15 Related party transactions The Company is controlled by POSCO, incorporated in South Korea, and owns 84.93% of the Company s shares. The Company also had significant transactions with a group of individual shareholders who are members of the Company s management. POSCO Group comprises POSCO and related companies. The remaining 15.07% of the shares are widely held. The significant investment in an associate is set out in Note 8. Relationships with key management and other related parties were as follows: Country of incorporation/ Name of entities nationalities Nature of relationships POSCO South Korea Parent company, 84.93% shareholding NS - Thainox Auto Co., Ltd. Thailand Associate, 49.00% shareholding, and common management POSCO Thailand Co., Ltd. Thailand Related company with the parent company Daewoo Corporation South Korea Related company with the parent company International Co., Ltd. POSCO Asia Co., Ltd. Hong Kong Related company with the parent company POSCO ICT Co., Ltd. South Korea Related company with the parent company POSCO America Corporation United stated of Related company with the parent company America POSCO Group University South Korea Related company with the parent company POSCO Research Institute South Korea Related company with the parent company POSCO Vietnam Co., Ltd. Vietnam Related company with the parent company POSCO VST Co., Ltd. Vietnam Related company with the parent company POSCO P&S Co., Ltd. South Korea Related company with the parent company Nippon Steel & Sumikin Bussan Japan Direct minority shareholders and direct Corporation shareholders of the associated company Nippon Steel & Sumikin Bussan Thailand Related company with the parent company (Thailand) Sumitomo Corporation (Japan) Japan Related company with the parent company Sumitomo Corporation Thailand Thailand Related company with the parent company Company Limited POSCO LED Co., Ltd. South Korea Related company with the parent company Key management personnel Thailand Persons having authority and responsibility for planning directing and controlling the activities of the entity, directly or indirectly, including and director (whether executive or otherwise) of the Company. 20

22 15 Related party transactions (Cont d) The following significant transactions were carried out with related parties: 15.1 Revenues Unaudited Unaudited For the three-month period ended 30 June Sales of goods: POSCO 104,148,624 84,268,359 Associate 80,370, ,369,691 POSCO group companies 769,116, ,105, ,635, ,743,901 For the six-month period ended 30 June Sales of goods: POSCO 161,995, ,193,507 Associate 170,629, ,411,101 POSCO group companies 1,432,780, ,157,365 1,765,405,627 1,007,761, Expenses Unaudited Unaudited For the three-month period ended 30 June Purchases of goods and service POSCO 1,390,103, ,765,616 POSCO group companies 1,973,061,705 1,427,064,209 3,363,164,915 1,672,829,825 Technical assistance expense A related company 200, ,822 Communication fee POSCO Group companies 3,556,018 8,183,301 Other expenses POSCO Group companies 12,611 64,078 Directors and management s remunerations Director s remuneration 1,460,000 1,340,000 Short-term benefits 19,465,413 16,759,213 Post-employment benefits 67,743 - Other long-term benefits ,993,615 18,099,213 21

23 15 Related party transactions (Cont d) The following significant transactions were carried out with related parties: (Cont d) 15.2 Expenses (Cont d) Unaudited Unaudited For the six-month period ended 30 June Purchases of goods and service POSCO 3,035,928, ,643,734 POSCO group companies 3,450,985,984 3,603,324,690 6,486,914,869 3,893,968,424 Technical assistance expense A related company 426, ,926 Communication fee POSCO Group companies 7,520,143 11,333,289 Other expenses POSCO Group companies 3,236,469 64,078 Directors and management s remunerations Director s remuneration 1,820,000 1,640,000 Short-term benefits 42,529,514 34,333,062 Post-employment benefits 135, ,570 Other long-term benefits 918 1,732 44,485,917 36,228, Outstanding balances arising from purchases and sales of goods and service Unaudited Audited 30 June 31 December Trade receivables Associate 85,996,561 88,272,093 POSCO group companies 239,859, ,317, ,856, ,590,023 Trade payables POSCO 1,390,745,174 1,116,621,085 POSCO group companies 1,901,311,990 1,744,022,954 3,292,057,164 2,860,644,039 Other accounts payable POSCO group companies 3,879,657 2,051,265 Accrued expenses A related company 200, ,490 22

24 16 Other income (expenses) Unaudited Unaudited For the three-month period ended 30 June Net foreign exchange gain (loss) 23,556,087 (126,524,556) Gain on disposal of assets - 8,654 Interest income 10,702,755 8,888,202 Gain on disposal of short-term investments 4,450,750 - Other income (expenses) (4,340,226) 2,597,734 34,369,366 (115,029,966) For the six-month period ended 30 June Net foreign exchange gain 65,014,742 21,998,564 Gain on disposal of assets - 3,815,803 Interest income 17,060,802 20,026,772 Gain on disposal of short-term investments 4,450,750 - Gain on disposal of long-term investments 28,967,423 - Other income 1,949,388 5,471, ,443,105 51,312, Income tax expense Unaudited Unaudited For the three-month period ended 30 June Current tax - - Deferred tax 445,504 (7,646,556) Total income tax 445,504 (7,646,556) For the six-month period ended 30 June Current tax - - Deferred tax 17,296,601 (11,452,933) Total income tax 17,296,601 (11,452,933) 23

25 18 Earnings (loss) per share Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the period. Unaudited Unaudited Equity Method Company For the three-month period ended 30 June Profit (loss) attributable to shareholders () 55,730,073 (262,302,961) 51,513,901 (259,991,145) Weighted average number of ordinary shares in issue during the period (shares) 7,795,709,100 7,795,709,100 7,795,709,100 7,795,709,100 Basic earnings (loss) per share () 0.01 (0.03) 0.01 (0.03) For the six-month period ended 30 June Profit (loss) attributable to shareholders () 164,378,072 (123,420,959) 156,764,083 (116,804,420) Weighted average number of ordinary shares in issue during the period (shares) 7,795,709,100 7,795,709,100 7,795,709,100 7,795,709,100 Basic earnings (loss) per share () 0.02 (0.02) 0.02 (0.01) 19 Commitments a) Bank guarantees At 30 June 2014, the Company had commitments with banks in respect of letters of guarantee for custom duty and electricity usage amounting to 1,000,000 and 670,000, respectively (31 December 2013 : 1,000,000 and 670,000, respectively). b) Purchase of goods commitments Unaudited Audited 30 June 31 December Purchase orders for goods and supplies - Thai 207,529, ,830,837 - US Dollar 1,398,257,060 1,759,401,723 - EURO 56,510, ,103,161 1,662,297,503 2,113,335,721 24

26 19 Commitments (Cont d) c) Operating lease commitments - where the Company is a lessee The future aggregate minimum lease payments under non-cancellable operating leases of office premises including facilities and vehicles are as follows: Unaudited Audited 30 June 31 December Not later than 1 year 16,881,140 8,072,230 Later than 1 year but not later than 5 years 8,782,999 10,963,336 Total 25,664,139 19,035, Segment information The Company s management considers that the Company operates in a single line of business which is production and sale of cold-rolled stainless steel in both local and export markets, and has, therefore, only one major business segment. The following revenue and profit regarding the Company s operating segments for the three-month and six-month periods ended 30 June 2014 and 2013 are as follows: Unaudited Unaudited For the three-month period ended 30 June Segment Revenue Local 2,476,942,295 1,517,785,443 Export 1,230,345, ,863,125 Total 3,707,287,948 2,178,648,568 Segment profit (loss) Local 172,127,737 (234,171,409) Export (116,397,664) (28,131,552) Total 55,730,073 (262,302,961) For the six-month period ended 30 June Segment Revenue Local 4,863,706,659 3,428,028,393 Export 2,414,083,076 1,207,831,738 Total 7,277,789,735 4,635,860,131 Segment profit (loss) Local 420,409,752 (57,343,470) Export (256,031,680) (66,077,489) Total 164,378,072 (123,420,959) The Company had loss from export sales due to competitive pressure in the international market. 25