AIRA Factoring Public Company Limited Review report and interim financial information For the three-month period ended 31 March 2014

Transcription

1 AIRA Factoring Public Company Limited Review report and interim financial information For the three-month period ended

2 Independent Auditor's Report on Review of Interim Financial Information To the Shareholders of AIRA Factoring Public Company Limited I have reviewed the accompanying statement of financial position of AIRA Factoring Public Company Limited as at, the related statements of comprehensive income, changes in shareholders equity, and cash flows for the three-month period then ended, as well as the condensed notes to the financial statements. 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 of interim financial information 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.

3 Conclusion Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34 Interim Financial Reporting. Rungnapa Lertsuwankul Certified Public Accountant (Thailand) No EY Office Limited Bangkok: 6 May 2

4 AIRA Factoring Public Company Limited Statement of financial position As at As at As at Note (Unaudited (Audited) but reviewed) Assets Current assets Cash and cash equivalents 78,688 87,426 Factoring receivables 3 1,640,131 2,662,276 Current portion of loans receivable 4 55,826 34,567 Other receivables Other current assets 799 1,452 Total current assets 1,775,587 2,785,838 Non-current assets Loans receivable 4 74,837 73,547 Equipment 15,987 13,743 Deposits and guarantees 1,193 1,193 Deferred tax assets 5,851 5,725 Total non-current assets 97,868 94,208 Total assets 1,873,455 2,880,046 The accompanying notes are an integral part of the financial statements.

5 AIRA Factoring Public Company Limited Statement of financial position (continued) As at As at As at Note (Unaudited (Audited) but reviewed) Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions 2, 5 1,350,000 2,356,673 Retentions from factoring 51,953 52,840 Other payables 3,811 6,401 Income tax payable 9,326 7,276 Other current liabilities 6 83,782 87,408 Total current liabilities 1,498,872 2,510,598 Non-current liabilities Provision for long-term employee benefits 15,450 14,883 Other non-current liabilities Total non-current liabilities 15,667 15,041 Total liabilities 1,514,539 2,525,639 Shareholders' equity Share capital Registered 40,000,000 ordinary shares of Baht 5 each 200, ,000 Issued and fully paid-up 40,000,000 ordinary shares of Baht 5 each 200, ,000 Share premium 35,845 35,845 Capital contribution from parent company Retained earnings Appropriated - statutory reserve 18,200 18,200 Unappropriated 104, ,259 Total shareholders' equity 358, ,407 Total liabilities and shareholders' equity 1,873,455 2,880, The accompanying notes are an integral part of the financial statements. Directors

6 AIRA Factoring Public Company Limited Statement of comprehensive income For the three-month period ended Note Profit or loss: Revenues Interest income from factoring 35,844 39,461 Fees and services income 6,192 8,008 Other income 1,907 2,301 Total revenues 43,943 49,770 Expenses Administrative expenses 23,733 15,029 Total expenses 23,733 15,029 Profit before finance cost and income tax expenses 20,210 34,741 Finance cost 2 (13,585) (14,132) Profit before income tax expenses 6,625 20,609 Income tax expenses 7 (2,160) (3,536) Profit for the period 4,465 17,073 Other comprehensive income: Other comprehensive income for the period - - Total comprehensive income for the period 4,465 17,073 Earnings per share Basic earnings per share Weighted average number of ordinary shares (Thousand shares) 40,000 40,000 The accompanying notes are an integral part of the financial statements.

7 AIRA Factoring Public Company Limited Cash flow statement For the three-month period ended Cash flows from operating activities Profit before tax 6,625 20,609 Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation 1, Allowance for doubtful accounts (Reverse) 3,982 (3,009) Provision for long-term employee benefits Share-based payment transactions 44 - Interest expenses 13,585 14,132 Profit from operating activities before changes in operating assets and liabilities 25,950 32,846 Operating assets (increase) decrease Factoring receivables 1,018, ,893 Loans receivable (22,680) 7,309 Other receivables (26) 327 Other current assets 653 (1,390) Deposits and guarantees Operating liabilities increase (decrease) Retentions from factoring (887) (1,854) Other payables (242) 508 Other current liabilities (3,626) (36,976) Other non-current liabilities 59 - Cash flows from operating activities 1,017, ,423 Cash paid for corporate income tax (235) (248) Net cash flows from operating activities 1,017, ,175 The accompanying notes are an integral part of the financial statements.

8 AIRA Factoring Public Company Limited Cash flow statement (continued) For the three-month period ended Cash flows from investing activities Acquisition of equipment (3,171) (2,670) Net cash flows used in investing activities (3,171) (2,670) Cash flows from financing activities Decrease in short-term loans from financial institutions (1,007,000) (456,000) Interest paid (15,827) (13,268) Net cash flows used in financing activities (1,022,827) (469,268) Net decrease in cash and cash equivalents (8,738) (13,763) Cash and cash equivalents at beginning of period 87,426 61,752 Cash and cash equivalents at end of period 78,688 47,989 Supplemental cash flows information: Non-cash transactions Purchase of equipment recorded as liabilities The accompanying notes are an integral part of the financial statements.

9 AIRA Factoring Public Company Limited Notes to interim financial statements For the three-month period ended 1. General information 1.1 Corporate information AIRA Factoring Public Company Limited ( the Company ) is a public company incorporated and domiciled in Thailand. The Company was listed on the Market for Alternative Investment (MAI) on 25 August Its parent company is AIRA Capital Public Company Limitedwhich was incorporated in Thailand. The Company is principally engaged in receivable factoring. The registered office of the Company is at 319 Chamchuri Square, 20thfloor, Phayathai Road, Pathumwan Sub-District, Pathumwan District, Bangkok. 1.2 Basis of the preparation of interim financial statements These interim financial statements are prepared in accordance with Accounting Standard No. 34 (revised 2012) "Interim Financial Reporting", with the Company choosing to present condensed interim financial statements. However, the Company has presented the statements of financial position, comprehensive income, changes in shareholders' equity, and cash flows in the same format as that used for the annual financial statements. The interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. The interim financial statements in Thai language are the official statutory financial statements of the Company. The interim financial statements in English language have been translated from the Thai language financial statements. 1.3 New accounting standards (a) Accounting standards that became effective in the current accounting year The Company disclosedthe accounting standards, financial reporting standard, accounting standard interpretations and financial reporting standard interpretations thatare effective for fiscal years beginning on or after 1 January, in the notes to financial statements for the year ended. 1

10 The Company s management has assessed the effects of the aboveaccounting standards, financial reporting standard, accounting standard interpretations and financial reporting standard interpretations, and believes that they are not relevant to the business of the Company or do not have a significant impact. (b) Accounting standards that will become effective in the future The Company has disclosedthe financial reporting standardthatwill be effectivein the future in the notes to financial statements for the year ended. The Company s management has assessed the effect of this financial reporting standard and believes that it is not relevant to the business of the Company. 1.4 Significant accounting policies The interim financial statements are prepared using the same accounting policies and methods of computation as were used for the financial statements for the year ended. 2. Related party transactions During the period, the Company 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 those related parties. For the three-month periods ended Transfer Pricing Policy Transactions with a related company Interest expenses 327 5,905 Money market rate As at and, the balances of the accounts between the Company and a related company are as follows: (Unit:Thousand Baht) Short-term loans from financial institutions - related party Related company - 619,673 2

11 During the period, movements of short-term loans from a related company are as follows: Balance as at Balance as at Short-term loans Related by Increase Decrease AIRA Securities Public Company Limited Related by common shareholders Face value of bill of exchange 620,000 - (620,000) - Prepaid interest expenses (327) Bill of exchange - net 619,673 - (619,673) - Short-term loans from a related company are bills of exchange with face values of Baht 320 million and Baht 300 million, which carry interest at market interest rates and mature on 3 January and 10 January, respectively. On 3 January and 10 January, the Company repaid the balance of the bill of exchange with face value of Baht 320 million and Baht 300 million, respectively. Directors and management s benefits During three-month periods ended and, the Company had employee benefit expenses payable to their directors and management as below. (Unit: Million Baht) For the three-month periods ended Short-term employee benefits 6 5 3

12 3. Factoring receivables Factoring receivables 2,041,255 3,155,049 Accrued interest income from factoring 5,696 7,115 Total 2,046,951 3,162,164 Less: Factoring payables (353,569) (447,613) Unearned interest income (11,570) (14,445) Total 1,681,812 2,700,106 Less: Allowance for doubtful accounts (41,681) (37,830) Factoring receivables - net 1,640,131 2,662,276 The balances of factoring receivablesas at and, aged on the basis of due dates, are summarised below. Age of factoring receivables Not yet due 1,863,843 3,016,121 Past due Up to 3 months 81,425 62, months 26,823 25,272 Over 6 months 69,164 51,113 Total factoring receivables 2,041,255 3,155,049 As at, factoring receivables which were overdue for over 6 months amounting to Baht 69million ( : Baht 51 million) before setting off the amount repayable to the transferor upon settlement of the factored debts amounting to Baht 16million ( : Baht 14 million). The Company has provided a full amount of allowance for doubtful accounts for such net receivables. 4

13 4. Loans receivable Current portion of loans receivable Loans receivable Total Loans receivable 55,826 34,567 74,968 73, , ,114 Less : Allowance for doubtful accounts - - (131) - (131) - Loans receivable - net 55,826 34,567 74,837 73, , ,114 The Company has restructured factoring receivables by means of modification of terms. The balance before restructuring amounted to Baht 73 million and the repayment period was about 7 years. However, this restructuring by modification of terms does not result in any loss. During the three-month period ended, the Company received principal and interest payments totaling Baht 1 million and 1 million, respectively (: the Company received principal and interest payments totaling Baht 2 million and 1 million, respectively). As at, the loan receivable balance amounted to Baht 63 million ( : Baht 64 million) 5. Short-term loans from financial institutions As at and, the Company had credit facilities for bank overdrafts and short-term loans from financial institutions. Under these credit facilities, the Company has to comply with certain terms and conditions prescribed in the agreements such as not to mortgage, pledge or create of commitment over any fixed assets (Negative pledge) or maintain the financial ratio, etc. As at, the credit facilities of the Company which have not yet been drawn down amounted to Baht 1,205 million ( : Baht 768 million). 6. Other current liabilities Deposits and cheque in transit awaiting to transfer 79,557 85,396 Other current liabilities 4,225 2,012 5

14 Total 83,782 87, Income tax Interim corporate income tax was calculated on profit before income tax for the period, using the estimated effective tax rate for the year. Income tax expenses for the three-month periods ended and are made up as follows: Current income tax: Interim corporate income tax charge 2,285 3,643 Deferred tax: Relating to origination and reversal of temporary differences (125) (107) Income tax expense reported in the statements of comprehensive income 2,160 3, Segment information The Company is principally engaged in the factoring business. Its operations are carried on only in Thailand.Segment performance is measured based on operating profit or loss, on a basis consistent with that used to measure operating profit or loss in the financial statements. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain exclusively to the aforementioned reportable operating segment and geographical area. 9. Commitments and contingent liabilities 9.1 Operating lease commitments The Company has entered into several lease agreements in respect of the lease ofoffice building space. The terms of the agreements are generally 9 years.future minimum lease payments required under these non-cancellable operating leases contracts were as follows. (Unit: Million Baht) Payable: In up to 1 year 4 4 In over 1 and up to 5 years In over 5 years

15 10. Event after the reporting period On 28 April, the Annual General Meeting of the shareholders passed the following resolutions: 1) Approve of the dividend payment for the year of Baht 0.70 per share. The dividend is allocated from the net income totalling Baht 28 million. 2) Approved the connected transaction regarding the receipt of financial assistance from AIRA Securities Public Company Limited by issue the bills of exchange in the limit of Baht 1,200 million with a term of not more than 5 years,for use as working capital. Bills of exchange are carrying interest at rates not exceeding the money market rate of a bank. 11. Approval of interim financial statements These interim financial statements were authorised for issue by the Company s authorised directors on 6 May. 7

16 AIRA Factoring Public Company Limited Notes to interim financial statements For the three-month period ended 1. General information 1.1 Corporate information AIRA Factoring Public Company Limited ( the Company ) is a public company incorporated and domiciled in Thailand. The Company was listed on the Market for Alternative Investment (MAI) on 25 August Its parent company is AIRA Capital Public Company Limitedwhich was incorporated in Thailand. The Company is principally engaged in receivable factoring. The registered office of the Company is at 319 Chamchuri Square, 20thfloor, Phayathai Road, Pathumwan Sub-District, Pathumwan District, Bangkok. 1.2 Basis of the preparation of interim financial statements These interim financial statements are prepared in accordance with Accounting Standard No. 34 (revised 2012) "Interim Financial Reporting", with the Company choosing to present condensed interim financial statements. However, the Company has presented the statements of financial position, comprehensive income, changes in shareholders' equity, and cash flows in the same format as that used for the annual financial statements. The interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. The interim financial statements in Thai language are the official statutory financial statements of the Company. The interim financial statements in English language have been translated from the Thai language financial statements. 1.3 New accounting standards (a) Accounting standards that became effective in the current accounting year The Company disclosedthe accounting standards, financial reporting standard, accounting standard interpretations and financial reporting standard interpretations thatare effective for fiscal years beginning on or after 1 January, in the notes to financial statements for the year ended. 1

17 The Company s management has assessed the effects of the aboveaccounting standards, financial reporting standard, accounting standard interpretations and financial reporting standard interpretations, and believes that they are not relevant to the business of the Company or do not have a significant impact. (b) Accounting standards that will become effective in the future The Company has disclosedthe financial reporting standardthatwill be effectivein the future in the notes to financial statements for the year ended. The Company s management has assessed the effect of this financial reporting standard and believes that it is not relevant to the business of the Company. 1.4 Significant accounting policies The interim financial statements are prepared using the same accounting policies and methods of computation as were used for the financial statements for the year ended. 2. Related party transactions During the period, the Company 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 those related parties. For the three-month periods ended Transfer Pricing Policy Transactions with a related company Interest expenses 327 5,905 Money market rate As at and, the balances of the accounts between the Company and a related company are as follows: (Unit:Thousand Baht) Short-term loans from financial institutions - related party Related company - 619,673 2

18 During the period, movements of short-term loans from a related company are as follows: Balance as at Balance as at Short-term loans Related by Increase Decrease AIRA Securities Public Company Limited Related by common shareholders Face value of bill of exchange 620,000 - (620,000) - Prepaid interest expenses (327) Bill of exchange - net 619,673 - (619,673) - Short-term loans from a related company are bills of exchange with face values of Baht 320 million and Baht 300 million, which carry interest at market interest rates and mature on 3 January and 10 January, respectively. On 3 January and 10 January, the Company repaid the balance of the bill of exchange with face value of Baht 320 million and Baht 300 million, respectively. Directors and management s benefits During three-month periods ended and, the Company had employee benefit expenses payable to their directors and management as below. (Unit: Million Baht) For the three-month periods ended Short-term employee benefits 6 5 3

19 3. Factoring receivables Factoring receivables 2,041,255 3,155,049 Accrued interest income from factoring 5,696 7,115 Total 2,046,951 3,162,164 Less: Factoring payables (353,569) (447,613) Unearned interest income (11,570) (14,445) Total 1,681,812 2,700,106 Less: Allowance for doubtful accounts (41,681) (37,830) Factoring receivables - net 1,640,131 2,662,276 The balances of factoring receivablesas at and, aged on the basis of due dates, are summarised below. Age of factoring receivables Not yet due 1,863,843 3,016,121 Past due Up to 3 months 81,425 62, months 26,823 25,272 Over 6 months 69,164 51,113 Total factoring receivables 2,041,255 3,155,049 As at, factoring receivables which were overdue for over 6 months amounting to Baht 69million ( : Baht 51 million) before setting off the amount repayable to the transferor upon settlement of the factored debts amounting to Baht 16million ( : Baht 14 million). The Company has provided a full amount of allowance for doubtful accounts for such net receivables. 4

20 4. Loans receivable Current portion of loans receivable Loans receivable Total Loans receivable 55,826 34,567 74,968 73, , ,114 Less : Allowance for doubtful accounts - - (131) - (131) - Loans receivable - net 55,826 34,567 74,837 73, , ,114 The Company has restructured factoring receivables by means of modification of terms. The balance before restructuring amounted to Baht 73 million and the repayment period was about 7 years. However, this restructuring by modification of terms does not result in any loss. During the three-month period ended, the Company received principal and interest payments totaling Baht 1 million and 1 million, respectively (: the Company received principal and interest payments totaling Baht 2 million and 1 million, respectively). As at, the loan receivable balance amounted to Baht 63 million ( : Baht 64 million) 5. Short-term loans from financial institutions As at and, the Company had credit facilities for bank overdrafts and short-term loans from financial institutions. Under these credit facilities, the Company has to comply with certain terms and conditions prescribed in the agreements such as not to mortgage, pledge or create of commitment over any fixed assets (Negative pledge) or maintain the financial ratio, etc. As at, the credit facilities of the Company which have not yet been drawn down amounted to Baht 1,205 million ( : Baht 768 million). 6. Other current liabilities Deposits and cheque in transit awaiting to transfer 79,557 85,396 Other current liabilities 4,225 2,012 5

21 Total 83,782 87, Income tax Interim corporate income tax was calculated on profit before income tax for the period, using the estimated effective tax rate for the year. Income tax expenses for the three-month periods ended and are made up as follows: Current income tax: Interim corporate income tax charge 2,285 3,643 Deferred tax: Relating to origination and reversal of temporary differences (125) (107) Income tax expense reported in the statements of comprehensive income 2,160 3, Segment information The Company is principally engaged in the factoring business. Its operations are carried on only in Thailand.Segment performance is measured based on operating profit or loss, on a basis consistent with that used to measure operating profit or loss in the financial statements. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain exclusively to the aforementioned reportable operating segment and geographical area. 9. Commitments and contingent liabilities 9.1 Operating lease commitments The Company has entered into several lease agreements in respect of the lease ofoffice building space. The terms of the agreements are generally 9 years.future minimum lease payments required under these non-cancellable operating leases contracts were as follows. (Unit: Million Baht) Payable: In up to 1 year 4 4 In over 1 and up to 5 years In over 5 years

22 10. Event after the reporting period On 28 April, the Annual General Meeting of the shareholders passed the following resolutions: 1) Approve of the dividend payment for the year of Baht 0.70 per share. The dividend is allocated from the net income totalling Baht 28 million. 2) Approved the connected transaction regarding the receipt of financial assistance from AIRA Securities Public Company Limited by issue the bills of exchange in the limit of Baht 1,200 million with a term of not more than 5 years,for use as working capital. Bills of exchange are carrying interest at rates not exceeding the money market rate of a bank. 11. Approval of interim financial statements These interim financial statements were authorised for issue by the Company s authorised directors on 6 May. 7