CONTENS MESSAGE FROM THE BOARD OF DIRECTOR AUDIT COMMITTEE S REPORT REPORT OF THE BOARD OF DIRECTORS RESPONSIBILITY FOR FINANCIAL REPORTS GENERAL INFORMATION NATURE OF BUSINESS RISKS INVESTMENT FINANCIAL STATEMENT SUMMARY AND ANALYSIS STRUCTURE OF INCOME MANAGEMENT DISCUSSION AND ANALYSIS: MD&A SHAREHOLDERS AND MANAGEMENT MANAGEMENT PROFILE GOOD CORPORATE GOVERNANCE RELATED TRANSACTION AUDIT FEE CORPORATE SOCIAL RESPONSIBILITIES (CSR) INTERNAL CONTROL AND RISK MANAGEMENT INDEPENDENT AUDITOR S REPORT STATEMENTS OF FINANCIAL POSITION STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO FINANCIAL STATEMENTS Page 1 2 3 4 4 5 6 7 8 9 13 19 23 29 29 30 31 32 33 35 36 38 40
MESSAGE FROM THE BOARD OF DIRECTOR There are two main external factors that affected the operation in garment business in 2013. First is the slow of the world economics recovery. This was due to concern over the reduction of quantitative easing (QE), the debt ceiling problems and the government shutdown in USA in 2013. Secondly, the THA USD currency fluctuation ranged from 28.45 Baht/USD to 32.82 Baht/USD had a major effect toward the company. However, throughout the year 2013, the company itself improved in many aspects such as processes in factories and employees. In real estate business, although there has been the political instability in late 2013, there was no significant impact on the sales in 2013. Total sales in 2013 grew more than those of 2012 because houses are cheap, good standard of building and great locations. Finally, I believe that the willingness to work hard of directors, executives, employees and supports from external parties such as government, financial institutions and others will lead the company to be competitive in the market and can operate successfully in the long run. Mr.Boonchoo Pongchaloem Chairman of the Board of Director CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 1
AUDIT COMMITTEE S REPORT The Audit Committee was appointed by the Board of Directors of Castle Peak Holdings Public Company Limited. The Audit Committee consists of 3 Independent Directors, namely Ms. Piyada Sooksai as the Chairperson, with Mr. Songsak Wongsunkakorn and Ms. Thipawan Kramsri as members. Ms. Porntip Sripitaksakul, Head of the Internal Audit Division acts as the Committee s secretary. All members of the Audit Committee possess complete qualifications of Independent Directors and Audit Committee members as comply with the regulations of Securities and Exchange Commission Thailand and The Stock Exchange of Thailand. During the year 2013, the Audit Committee performed its duties and responsibilities independently as assigned by the Board of Directors, and defined in the Audit Committee Charter. The Audit Committee conducted 4 official meetings, which all three members attended in the Meeting No. 1, 3 and 4/2013. Ms Piyada Sooksai was absent at the 2/2013 meeting. The Audit Committee meetings involved the management representatives of the Company and its subsidiaries, the external auditor, and the internal auditor to present information and exchange views on recommendations for performance improvement. There was also one meeting between the Audit Committee and the external auditor without the presence of the management team. The Audit Committee s main accomplishments in 2013 were as follows: 1. Review of the financial report. The Audit Committee reviewed significant information in the quarterly and annual financial statements for 2013 of Castle Peak Holdings Public Company Limited and its subsidiaries. The Audit Committee reviewed the accuracy, completeness, and reliability, including the sufficient disclosure of the financial statements by questioning and listening to the explanations of the management and recommendations from the external auditor. The Audit Committee has agreed to the external auditor s opinion that the Company financial statements were prepared correctly in accordance with generally accepted accounting principles including the new accounting and financial report standards implemented in 2013. The Audit Committee also reviewed the strategy adjustment plans of the management team to address the negative external pressures. 2. Review of the internal control system and internal audit report. The Audit Committee has reviewed the internal audit reports quarterly, and considered that the Company has installed adequate and appropriate internal control systems for the Company s operations, and has not found any significant deficiency impacting the Company s financial statements. The Internal Audit Division has performed its duty independently and effectively. 3. Review of the related transactions or the transactions that might cause conflicts of interest. The Audit Committee has reviewed those transactions from management s quarterly report and considered that all related transactions were normal business transactions, and were conducted properly in compliance with relevant rules and regulations. There was correct and adequate disclosure of such information. 4. Review of the Company s compliance with the SEC law and other related laws and regulations. The Audit Committee has not found any significant issue involving violation of laws and regulations. 5. Consideration and selection of the auditors. The Audit Committee has selected and proposed to the Board of Directors to seek approval from the Annual General Shareholders Meeting to appoint Ms. Wimolsiri Jongudomsombut (CPA Registration No. 3899) or Ms. Kannika Wipanurat (CPA Registration No. 7305) or Mr. Jirote Sirirorote (CPA Registration No. 5113) or Ms. Nonglak Pattanabandith (CPA Registration No. 4713) of Karin Audit Co., Ltd. as the company s auditors for 2014. On behalf of the Audit Committee Ms. Piyada Sooksai Chairman of the Audit Committee 2 ANNUAL REPORT 2013
REPORT OF THE BOARD OF DIRECTORS RESPONSIBILITY FOR FINANCIAL REPORTS The company financial statement of Castle Peak Holdings Public Co., Ltd., and subsidiaries have been prepared in conformity with the requirements of the Public CompanyAct B.E.2535, the Securities and Exchange Act B.E.2535, the Announcement of The Department of Commercial Registration dated September 14, 2001 issued in accordance with Section II, Paragraph 3 of the Accounting Act B.E.2543, and the accounting statement presented by the Federation of Accounting Professions. The Board of Directors is responsible for the financial statements including financial information in the Annual Report. The Financial Statements have been prepared in accordance with generally accepted accounting principles, with appropriate accounting policies applied on a conservative and consistent basis. Where judgment and estimates were required, these were made with careful and reasonable consideration, and adequate disclosures have been made in the notes to the financial statements, as well as being transparent and useful to all shareholders and investors. The Board has also adopted and maintained an appropriate and effective risk management, internal control, so that the company can be reasonably assured that the financial records are accurate, complete and adequate to protect the company assets. These controls also serve as preventive measures against any significant operational risk. The Board of Directors has appointed an Audit Committee entirely comprising independent directors responsible for the quality of company financial reporting and internal control system. The opinion of the Audit Committee with regard to these matters appears in the Report of the Audit Committee in this Annual Report. The Board is confident that the company has maintained an effective internal control system at an adequate and appropriate level of protection, which can assure the credibility of company and Consolidated Financial Statements as of December 31, 2013. (Mr.Boonchoo Pongchaloem) Chairman CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 3
GENERAL INFORMATION Castle Peak Holdings Public Co., Ltd. Public Company Registration No.0107537001056 Head Office: 899 CPH Tower, Petchkasam Road, Bangkae Subdistrict, Bangkae District, Bangkok 10160. Telephone: 024550300 Fax: 0245503589 Email Address: cph@castlepeak.co.th www.castlepeak.co.th Nature of business: Garment Manufacturing and Property Development Issued shares: 40,000,000 ordinary shares, Baht 10.00 Per share Registrar: Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110 Tel: 022292867 Fax: 026545642 Auditor: Ms.Nonglak Pattanabandith Karin Audit Company Limited. 6 Fl., Room B1, Boonmitr Building, 138 Silom Road, Bangrak, Bangkok 10500 Tel: 0263424846 Fax: 026342668 Consultant of law: Mr.Atiskit Jedsadayanmeta Head Office: 899 CPH Tower Fl.,14, Petchkasam Road, Bangkae Subdistrict, Bangkae District, Bangkok 10160. Telephone: 024550300 Ext.233 Fax: 024550339 Nature of business Castle Peak Holding Limited Co. initially set up as a Castle Peak partnership, operated in September 1976. The purpose of the business is to produce garments for export overseas. Later on, the company grew bigger and established C.P.G. garment Limited. The main products of the company are jackets, coats, trousers and sportswear using textile fabrics as the raw materials. Products are manufactured under the customers brand names and the major export markets are United States and the European Union. Afterward in 1992, the company diversified the core business into the real estate development business. Products are twin houses, detached houses and commercial buildings. Up until now, seven projects have been completed with the value of 3,940 million Baht and two projects are now under construction with the value of 1,010 million Baht 4 ANNUAL REPORT 2013
RISKS Garment business Order cancellation by customers. Since the company manufactures products such as jacket, coat, pants and sportswear under the customers trademarks and designs with the agreement to deliver products on time. If the company fails to meet those requirements, there is a chance of order cancellation. In case that case, goods cannot be sold to the other buyers because they are copyrighted products. In case of missing the confirmed shipment date, it is better to transport by air than the whole order cancellation. Exchange rate fluctuation: 90 % of the company s finished goods is exported in US dollar currency and 75 % of imported materials is also in US dollar. Export to import ratio is 100 per 55. So the exchange rate fluctuation between the U.S. dollar and Baht is necessarily to mange since the appreciation of the baht has a significant impact on the profits of the company. Natural disaster: the company has set up plan to monitor natural risks such as flood, fire and earthquake. In case of fire, there are evacuation training and ensure all safety equipments are visually inspected. Moreover, business insurance is purchased to protect the company s assets Real Estate Development Business Political instability: In general, there is a relationship between political uncertainty and sales of house because it drops the consumer confidence. In late 2013, there has been a political instability which would drop the consumer confidence and postpone the decision to buy houses. Flood: The real estate sector is affected directly and indirectly from the flood. Houses in flooded areas have to reconstruct and the consumers buying decisions become reluctant. Moreover, consumers may change their minds to buy projects located in no flood areas. However, the government sector has set up teams to prevent flood. More strict credit requirements of financial institutions: Most of buyers need to loan from banks to buy houses. Therefore, if there are more strict credit requirements of financial institutions to house buyers, they might be able to loan money. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 5
Castle Peak Holdings Public Co., Ltd. invested in Companies at 10 percent or more of the issued shares as of December 31, 2013. Companies Registered office INVESTMENT Registered Capital % Shareholding Nature of Business C.P.G.Garment Co., Ltd. Castle Peak Real Estate Co., Ltd. Castle Peak Pulp & Paper Co., Ltd. Thaneewatana Co., Ltd. * * Pending operation Head Office: Castle Peak Holdings Public Co., Ltd. Head Office: Castle Peak Holdings Public Co., Ltd. Head Office: Castle Peak Holdings Public Co., Ltd. 1174/4 Phahon Yothin Rd., Chatuchak, Bangkok Tel: 029129455 Fax: 025869189 Baht Baht Baht Baht 21,200,000.00 200,000,000.00 100,000,000.00 3,750,000.00 99.86 99.99 41.00 49.00 Garment Manufacturing Real Estate Development Pulp and Paper Real Estate Development Castle Peak Real Estate Co., Ltd.(subsidiary) invested in Companies as of December 31, 2013. Companies Registered office Registered Capital % Shareholding Nature of Business Aek Thana Property Co., Ltd. Sun Property Co., Ltd. Sermkit Property Co., Ltd. Head Office: Castle Peak Holdings Public Co., Ltd. Head Office: Castle Peak Holdings Public Co., Ltd. Head Office: Castle Peak Holdings Public Co., Ltd. Baht Baht Baht 30,000,000.00 3,750,000.00 15,000,000.00 99.99 99.99 99.99 Real Estate Development Real Estate Development Real Estate Development 6 ANNUAL REPORT 2013
Total Revenues Sales Revenue Gross Profit Gross Profit Margin Profit from operation Operation Profit Margin Net Profit Net Profit Margin Return on Equity Rate Retrun on Assets Rate Return of Fixed Assets Rate Net Profit per share Current Assets Total Assets Current Liabilities Total Liabilities Shareholders equity Book value per share Liguidity Ratio Trade Account Receivable Turnover Ratio Inventory Turnover Ratio Trade Account Payable Turnover Ratio Debt Equity Ratio FINANCIAL STATEMENT SUMMARY AND ANALYSIS Consolidated 2013 2012 2011 2013 (Revised) (Revised) 1,250,289,459.17 1,196,146,718.22 76,024,457.42 6.36% (33,558,492.50) (2.81%) (64,129,432.69) (5.13%) (7.66%) (4.80%) (15.87%) (1.60) 868,821,001.13 1,419,805,761.46 547,198,395.73 603,314,051.20 816,491,710.26 20.41 1.59 6.24 17.12 15.19 0.74 1,245,306,455.14 1,209,260,872.65 154,213,725.58 12.75% (27,983,589.21) (2.31%) (38,388,697.71) (3.08%) (4.37%) (3.04%) (6.40%) (0.96) 761,667,350.49 1,252,758,031.22 348,966,210.43 393,784,728.03 858,973,303.19 21.47 2.18 8.42 5.49 19.89 0.46 941,696,991.21 907,170,345.22 136,487,049.25 15.05% 18,446,628.16 2.03% (22,437,061.73) (2.38%) (2.47%) (1.94%) (1.86%) (0.56) 733,157,462.72 1,275,553,062.44 320,785,052.97 376,458,899.61 899,094,162.83 22.48 2.29 5.75 25.66 21.03 0.42 699,025,928.10 648,212,891.09 27,107,829.79 4.18% (26,472,159.70) (4.08%) (52,226,000.66) (7.47%) (6.73%) (4.34%) (24.15%) (1.31) 617,424,369.61 1,266,349,444.21 488,102,717.36 516,835,370.24 749,514,073.97 18.74 1.26 4.38 20.40 12.52 0.69 Parent Company 2012 (Revised) 765,592,464.22 730,425,459.05 99,859,905.17 13.67% 58,268,578.76 7.98% 41,861,761.84 5.74% 5.36% 3.81% 35.44% 1.05 531,343,720.57 1,141,531,599.35 322,024,710.29 339,791,524.72 801,740,074.63 20.04 1.65 8.04 6.58 15.19 0.42 2011 (Revised) 655,136,480.62 620,927,861.23 79,182,980.51 12.75% 41,103,364.82 6.62% 31,140,065.59 4.75% (4.20%) 3.15% 32.48% 0.78 491,939,241.16 1,057,449,081.80 287,829,566.48 297,570,769.01 759,878,312.79 19.00 1.71 5.19 14.18 16.76 0.39 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 7
STRUCTURE OF INCOME Garment Manufactured by: % Shareholding Million Baht 2013 2012 2011 % Million Baht % Million Baht % Castle Peak Holdings Public Co.,Ltd. C.P.G.Garment Co., Ltd. SubTotal 100.00 99.86 545.35 455.42 1,000.77 45.59 38.07 83.66 620.85 461.24 1,082.09 51.34 38.14 89.48 597.85 292.51 890.36 65.91 32.24 98.15 Property Development Operated by % Shareholding Million Baht 2013 2012 2011 % Million Baht % Million Baht % Castle Peak Holdings Public Co.,Ltd. Castle Peak Real Estate Co., Ltd. Aek Thana Property Co., Ltd. * (Indirect) SubTotal Total 100.00 99.99 99.98 56.81 72.80 65.77 195.38 1,196.15 4.75 6.09 5.50 16.34 100.00 74.75 26.74 25.68 127.17 1,209.26 6.18 2.21 2.13 10.52 100.00 7.78 1.48 7.55 16.81 907.17 0.86 0.16 0.83 1.85 100.00 * Held by Castle Peak Real Estate Co., Ltd. 8 ANNUAL REPORT 2013
MANAGEMENT DISCUSSION AND ANALYSIS: MD&A 1. Overview There were a few challenges in garment business in 2013. First, from the Ministry of Commerce, the total export value of Thai garment to Europe countries dropped 11.32 %, compared to the export value of 2012. This was because the economy in those countries has not fully recovered. The second challenge was the severe THAUSD currency fluctuation in 2013. Moreover, internally, the company is getting more and more nonthai sewers, which sewing skills need some improvement. Therefore, serious training program was set up to improve all sewers productivity. Finally, in order to be competitive in the world market, the company decided to invest more in hightechnology in machinery in 2013. In real estate business, the company continues the policy to sell houses in cheap, good standard of building and great locations. There are two ongoing projects which are Sirawat 9 and Sirawat 10. 2. Results of the operations The company s ability to make profits in 2013 was lower than in 2012. The gross profit margin ratio of 2013 was 6.36 % in the consolidated financial statement, compared to 12.75 % in 2012. Also the gross profit margin ratio of 2013 was 4.18 % in the separate financial statement, compared to 13.67 % in 2012. The explanations are below. Garment business: Total sales in garment business in year 2013 was 1,000,764,718.22 Baht, dropped from those of year 2012 81,326,154.43 Baht or 7 percents. The main reason is the currency fluctuation. In the beginning of the year, Thai baht had been appreciating against US dollar. It was 28.66 Baht/ dollars on April 2013. This causes the income of the company in Thai baht decreased, even the total sales in US dollars had no significant different between year 2013 and 2012. Then, forward rate method was done to lessen losses due to currency fluctuation. However, Thai baht was depreciated against US dollar. It was 32.82 Baht/ dollars on December 2013, resulting from unexpected situations to reduce quantitative erasing (QE) from Federal Reserve (FED). Therefore, the company did not benefit from the depreciating of Thai Baht. The increase of total costs was mainly due to the change of minimum wage in Thailand from 215 Baht per day to 300 Baht per day, effective on April 1, 2012. This caused the direct labour cost in the factories increased and gross profit dropped. Real estate business: Total sales in property development business in year 2013 was 195,382,000 Baht, raised from those of year 2012 68,212,000 Baht or 53 percents. This resulted from more houses were sold in Sivarat 9 and Sivarat 10. Other income is from the gain on the transfer of property, Castle Peak Garment Factory (Laos) Co., Ltd., in a profit of 24,945,090.90 Baht CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 9
MANAGEMENT DISCUSSION AND ANALYSIS: MD&A (CONT.) Castle Peak Holdings Ltd. holds 41 percent direct and indirect investment in Castle Peak Pulp and Paper Industries Co. Ltd and Yueyang Fengli Pulp and Paper Industry Co., Ltd. These companies are in pulp and paper industry, located in the Republic of China. The consolidated financial statements of the Company recorded a gain of 10,808,933.43 Baht as a result of the better management in the factory to save costs. 3. Assets Management The consolidated financial statements as of 31 December 2013 revealed important changes in assets, debts and shareholders from those of 2012 as follow. The consolidated financial statements as of 31 December 2013 revealed total assets of the company increased from 2012 in the amount of 167,047,730.24 Baht or 13 percents, some details are below. The investment in machines and equipments increased 8,853,124.18 Baht in 2013 Unpaid account receivable at December 31, 2013 increased 48,130,707.34 Baht due to the company sells goods in credit term and they have not reached due dates Garment inventories in term of raw materials and work in process at December 31, 2013 13,615,882.79 Baht due to shipment dates on 2014 Real estate inventories increased 32,912,433.06 Baht due to houses under construction. According to the consolidated financial statements as at 31 December 2013, total liabilities were 603,314,051.20 Baht, raising from those in 2012 in the amount of 209,529,323.17 baht. In detail, overdue and short term loans from banks increased 151,673,588.73 Baht Shareholders equity as at 31 December 2013, was 816,491,710.26 Baht, compared to 858,973,588.73 Baht in 2012. As a result, book value per shares was 20.41 in 2013 and 21.47 in 2012 Efficiency ratio was 0.94 in 2013 and 0.99 in 2012 in the consolidated financial statements and 0.58 in 2013 and 0.7 in 2012 in separate financial statements. There was slightly drop due to the investment in new machines in the late 2013, replacing old machines. However, management team foresee benefits of this investment to make the company become competitive in long run. 10 ANNUAL REPORT 2013
MANAGEMENT DISCUSSION AND ANALYSIS: MD&A (CONT.) 4. Liquidity Ratios There was no change in the sources and uses of funds in operations. The company has strong relationships with customers and suppliers. Net loss of cash from operating activities resulted from the loss of the operations 64,129,432.69 Baht (more explanations in results of operation section), accounts receivable 44,692,354.46 Baht and inventories in garment and real estate businesses 45,724,280.66 Baht (more explanations in asset management section) Liquidity ratio was 1.59 in 2013 and 2.18 in 2012 in the consolidated financial statements and 1.26 in 2013 and 1.65 in 2012 in separate financial statements. These show the company had sufficient liquidity to operate. For more details in real estate business, only 0.1 percents of money unpaid in Sivarat 9 and 0.15 % in Sivarat 10 show the company had sufficient liquidity to operate. The below table shows further details of payments. Name of project Siwarat 9 Siwarat 10 Total sales 260.3 209.6 Total amount due Million Baht 185.9 133.8 %of total amount due 71.41 63.85 Received payment Million Baht 185.7 133.6 %of total amount due 99.9 99.75 Overdue payment Million Baht 0.19 0.2 %of total amount due 0.1 0.15 Payment not due Million Baht 74.4 75.8 %of total amount due 28.58 36.16 Name of projects Overdue payment No. of buyers Baht 13 months overdue No. of buyers Baht 36 months overdue No. of buyers Baht 69 month overdue No. of buyers Baht Siwarat 9 Siwarat 10 17 27 190,500 196,700 11 22 90,000 157,000 2 1 15,000 12,000 4 4 85,500 270,000 5. Contractual Obligations The detail in this section shows in note 17 in the company s financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 11
MANAGEMENT DISCUSSION AND ANALYSIS: MD&A (CONT.) Forward looking Garment business Management team expects the continuous recovery of economy in the company s main export markets such as United States, Europe and Japan in 2014. The U.S. economy has improved continuously from the increased employment rate. European countries will recover from the economic slowdown. Japan will boost from government policy to stimulate economic. Moreover, the trend of depreciation of the baht against the U.S. dollar in 2014 will benefit to all Thai exporters. Real estate business Management team expects some effects from political instability in Thailand in the early of 2014. New home buyers may delay buying decision since their confidences drop. However, currents buyers who wait for transferring ownership of Sivarat 9, Nonthaburi and Sivarat 10, Nakhonpathom are not changed. In late of 2014, management team expects large amount of sales because more houses are really to sell and political situation is more stable. 12 ANNUAL REPORT 2013
Shareholders The first 10 major shareholders of Castle Peak Holdings Public Co., Ltd., as of April 12, 2013. Mr.Boonchoo Pongchaloem Ms.Vanee Tempitayakom Ms.Kankorn Jirayucharoensook Ms.Srijan Saelee Success Real Estate Co., Ltd Ms.Vinida Kulsomphob Mr.Udomsak Chotivichit Mr.Pusak Pongchaloem Mr.Kiat Srichomkwan Ms.Sirincha Sittiwisat SHAREHOLDERS AND MANAGEMENT No.of shares 11,880,048 3,400,000 1,994,900 1,900,000 1,848,000 1,659,900 1,453,400 1,259,600 1,200,000 1,190,000 % of shareholding 29.70 8.50 4.99 4.75 4.62 4.15 3.63 3.15 3.00 2.98 Mr.Boonchoo Pongchaloem and family hold the total 20,082,202 shares, to be 50.21 % of total issued shares. The shareholders of C.P.G. Garment Co., Ltd. The registered capital is 21,200,000 Baht and fullypaid registered capital is 21,200,000 Baht. The issued shares are 4,240 ordinary shares, 5,000 Baht Per share. Castle Peak Holdings Public Co., Ltd. Mr.Boonchoo Pongchaloem Mr.Puthep Pongchaloem No.of shares 4,234 3 3 % of shareholding 99.80 0.10 0.10 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 13
MANAGEMENT SHAREHOLDERS AND MANAGEMENT (CONT.) Management Structure Corporate management consists of three committees, namely the Board of Directors, the Audit Committee, and the Executive Committee. The Board of Directors, by name: Name Position No.of meeting Attendent Mr.Boonchoo Pongchaloem Mr.Pumit Pongchaloem Ms.Aree Tempitayakom Mr.Liu Chor Ting Mr.Wu Man Fun Ms.Pailin Janyaniwat Ms.Piyada Sooksai Mr.Songsak Wongsunkakorn Ms.Tipwan Kramsir Chairman ViceChairman Director Director Director Director Independent Director Independent Director Independent Director 12 12 12 12 12 12 12 12 12 12 7 11 12 11 12 11 11 12 The Audit Committee, by name: 1. Ms.Piyada Sooksai Chairman of the Audit Committee 2. Mr.Songsak Wongsunkakorn Auditing Director 3. Ms.Tipwan Kramsir Auditing Director Ms.Tipwan Kramsir who is adequate expertise and experience to audit creditability of the financial reports. The Board of Directors of C.P.G. Garment Co., Ltd, the subsidiaries which operate in the same business sector as Castle Peak Holding Public Co. Name Position No.of meeting Attendent Mr.Boonchoo Pongchaloem Ms.Wanee Tempitayakom Ms.Aree Tempitayakom Mr.Puthep Pongchaloem Chairman ViceChairman Director Director 4 4 4 4 4 4 4 4 14 ANNUAL REPORT 2013
SHAREHOLDERS AND MANAGEMENT (CONT.) Executive Committee 1. Mr.Boonchoo Pongchaloem Chairman of the Executive Committee 2. Mr. Pumit Pongchaloem ViceChairman of the Executive Committee 3. Ms.Aree Tempitayakom ViceChairman of the Executive Committee 4. Mr.Liu Chor Ting ViceChairman of the Executive Committee 5. Mr.Wu Man Fan Director of the Production Division 6. Ms.Vinida Kulsompub Financial and Accounting Director 7. Ms.Pailin Janyaniwat Plant Manager 8. Ms.Porntip Sripitucksakul Internal Audit Manager 9. Ms.Natpaphat Chuthepthip Accounting Manager The Executive Committee of C.P.G.Garment Co., Ltd., by name: 1. Mr.Boonchoo Pongchaloem Chairman of the Executive Committee 2. Ms.Aree Tempitayakom ViceChairman of the Executive Committee 3. Ms.Vinida Kulsompub The Finance and Accounting Division 4. Ms.Pailin Janyaniwat Plant Manager 5. Ms.Porntip Sripitucksakul Internal Audit Manager 6. Ms.Natpaphat Chuthepthip Accounting Manager CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 15
SHAREHOLDERS AND MANAGEMENT (CONT.) Organizational charts of Castle Peak Holding Public Co., Ltd. and C.P.G. Garment Co., Ltd. Board of Directors Audit Committee 5 Financial and Accounting Director Chairman of the Executive 1 Internal audit 8 ViceChairman of the Executive Committee 2 ViceChairman Garment ViceChairman 4 Real Estate 3 Director of the Production Division 6 Construction Director General Director General Director Marketing Director Marketing Director Plant Manager 7 16 ANNUAL REPORT 2013
SHAREHOLDERS AND MANAGEMENT (CONT.) Secretary of the Company: Ms.Onticha Pongchaloem Monetary Remuneration (a) Remuneration received by Company directors in January to December 2013 Mr.Boonchoo Pongchaloem Mr.Liu Chor Ting Mr.Wu Man Fun Ms.Aree Tempitayakom Ms.Pailin Janyaniwat Ms.Piyada Sooksai Mr.Songsak Wongsunkakorn Ms.Tipwan Kramsi Board of Directors Meeting Fees (in baht) 0 0 0 0 0 120,000.00 120,000.00 120,000.00 360,000.00 Audit Committee s Meeting Fees (in baht) 40,000.00 20,000.00 20,000.00 80,000.00 รวม (บาท) 0 0 0 0 0 160,000.00 140,000.00 140,000.00 440,000.00 Remuneration for directors of subsidiaries: None (b) Remuneration for executive directors and executives in 2013: The 9 persons of the Garments Business Group received, as salaries and bonuses 12,739,399 Baht. (c) ther forms of remuneration: None CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 17
Employees 1. Number of Employees Garment Real Estate Development Total SHAREHOLDERS AND MANAGEMENT (CONT.) Year 2013 2512 44 2,556 Year 2012 Year 2011 2380 58 2,438 2236 59 2,295 2. Remunerations and types of remunerations to employees in 2013 Garment 391,453,026 Baht Real Estate Development 17,287,127 Baht Types of remuneration to employees are salary, wages, bonuses, prizes and food. 3. Employee development s policy Garment Business Garment industry is a labor incentive industry. As a result, the company provides regular trainings to employees in the factories. Moreover, management team is also trained in management skills by experts who are highly experienced in the manufacture of garments. Real Estate Development Company sent employees to various training programs in order to learn market trends. 18 ANNUAL REPORT 2013
MANAGEMENT PROFILE Mr.Boonchoo Pongchaloem Age: 78 Authorized Director Education: Bachelor Degree Mathematics Jinan University of China Position Chairman/Chairman of the Executive Committee Castle Peak Holdings Public Co., Ltd. Chairman/Chairman of the Executive Committee CPG Garment Co., Ltd. Chairman/Chairman of the Executive Committee Castle Peak Real Estate Co., Ltd. Director Castle Peak Pulp & Paper Co., Ltd. Executive Committee Aek Thana Property Co., Ltd. Executive Committee Sermkit Property Co., Ltd. Executive Committee Sun Property Co., Ltd. Director Thaneewatana Co., Ltd. Shareholdings: as of December 31, 2013 hold 11,880,048 shares 29.70% Change number of shares in year 2013 No Ms.Aree Tempitayakom Age: 53 Authorized Director Relation: Mr.Boonchoo s daughter Education: Mini MBA NIDA DAP IOD Position: Director / Vice Chairman Castle Peak Holdings Public Co., Ltd. Director / Executive Committee CPG Garment Co., Ltd. Director / Executive Committee Castle Peak Real Estate Co., Ltd. Chairman / Executive Committee Sermkit Property Co., Ltd. Chairman / Executive Committee Aek Thana Property Co., Ltd. Executive Committee Sun Property Co., Ltd. Director Castle Peak Pulp & Paper Co., Ltd. Shareholdings: as of December 31, 2013 hold 130,100 shares 0.33% Change number of shares in year 2013 No CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 19
MANAGEMENT PROFILE (CONT.) Mr.Pumit Pongchaloem Age: 38 Authorized Director Relation: Mr.Boonchoo s son Education: Bachelor Degree Science Construction Leeds Metropolitan University Position: Director / Vice Chairman Castle Peak Holdings Public Co., Ltd. Shareholdings: As of December 31, 2013 hold 103,998 shares 0.26% Change number of shares in year 2013 No Mr.Henry Liu Chor Ting Age: 56 Authorized Director Education: Bachelor Degree Social Science Chu Hoi College, DAP IOD Position: Director / Vice Chairman Castle Peak Holdings Public Co., Ltd. Vice Chairman CPG Garment Co., Ltd. Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No Mr.Wu Man Fun Age: 61 Education: High School Macau, DAP IOD Position: Director / Production Director Castle Peak Holdings Public Co., Ltd. Executive Committee CPG Garment Co., Ltd. Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No Ms.Pailin Janyaniwat Age: 51 Education: High School, DAP IOD Position: Director / Executive Committee Castle Peak Holdings Public Co., Ltd. Factory Manager CPG Garment Co., Ltd. Shareholdings: as of December 31, 2013 hold 66 shares 0.00% 20 ANNUAL REPORT 2013
MANAGEMENT PROFILE (CONT.) Ms.Piyada Sooksai Age: 58 Education: Master Degree Business Administration Chulalongkorn University, DCP IOD Position: Independent Director/Chairman Audit Committee Castle Peak Holdings Public Co., Ltd. Consultant TMTG (Thailand) Co., Ltd. Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No Mr.Songsak Wongsunkakorn Age: 78 Education: Advance Diploma Hong Kong Position: Independent Director Castle Peak Holdings Public Co., Ltd. Management Committee Srima Jewelry Co., Ltd. Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No Ms.Thipawan Kramsri Age: 34 Education: Bachelor s Degree Accountancy Southeast Asia University Position: Independent Director Castle Peak Holdings Public Co., Ltd. Consultant Wang Rimpaya Group Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No Ms.Vinida Kulsomphob Age: 38 Education: Bachelor s Degree Statistical Accounting Chulalongkorn University Position: Financial and Accounting Director Castle Peak Holdings Public Co., Ltd. Financial and Accounting Director C.P.G. Garment Co., Ltd. Financial and Accounting Director Castle Peak Real Estate Co., Ltd. Financial and Accounting Director Aek Thana Property Co., Ltd. Shareholdings: as of December 31, 2013 hold 1,659,900 shares 4.15 % Change number of shares in year 2013 No CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 21
MANAGEMENT PROFILE (CONT.) Ms.Porntip Sirpitucksakul Age: 53 Education: Master Degree Accountancy Chulalongkorn University Position: Internal Audit Manager Castle Peak Holdings Public Co., Ltd. Shareholdings: as of December 31, 2013 hold 100 shares 0.00% Change number of shares in year 2013 No Ms.Natpaphat Chuthepthip Age: 49 Education: Bachelor s Degree Accountancy Prince of Songkla University Position: Accounting Manager Castle Peak Holdings Public Co., Ltd. Accounting Manager C.P.G. Garment Co., Ltd. Shareholdings: as of December 31, 2013 No Change number of shares in year 2013 No 22 ANNUAL REPORT 2013
GOOD CORPORATE GOVERNANCE 1. Good Corporate Governance The Board of Directors recognizes the importance of good corporate governance as a major factor in enhancing the efficiency of the organization. The company therefore conducts its business in line with the principle of good corporate governance, to generate trust in investors and stakeholders, which form a basis for sustainable growth. The Board of Directors adapts of the Stock Exchange of Thailand s principles of good corporate governance for listed company in so far as they are sufficient, prudent, and suitable or fit to the business environment. 1. Shareholder rights The company held its Annual Ordinary Shareholders Meeting on 29th April 2013. The Company prepares a notice to call the shareholders meeting complete with an agenda with each item complemented by an opinion of the Board of Directors. The notice and agenda are distributed together with the annual report and proxy form with relevant details, at least 7 days in advance of the meeting. The Company publicizes the notice to call shareholders meeting in Thai daily newspapers for three consecutive days prior to the meeting. 2013 Annual General Meeting was attended by 39 shareholders and proxies holding 28,698,360 shares or 71.75%. At the shareholder s meeting, Board of Directors was present and acted as chairman. Other directors participating in the meeting included Managing Director, Members of Executive Committee, the Chairman of the Audit Committee as well as other Board members, who were present to jointly answer shareholders inquiries and provided further clarifications. The external auditor and management also attended the shareholders meeting. The board of directors reported the previous performance and satisfactorily answered all inquires from shareholders and also considered the shareholder s suggestion and comment. Before commencing the meeting Corporate Secretary explained the method of vote. The resolution of the meeting was recorded in the minutes. 2. Equitable Treatment of Shareholders Following the Board of Directors resolution to call each shareholder s meeting, the Company announces the meeting schedule along with the agenda through the SET s communication channels. The Company prepares a notice to call the shareholders meeting complete with an agenda with each item complemented by an opinion of the Board of Directors. The notice and agenda are distributed together with the annual report and proxy form with relevant details, at least 7 days in advance of the meeting. The Company provided the names and relevant personal records of directors to be retired by rotation and who are proposed to be reappointed for another term in the annual report which is submitted to the shareholders prior to the meeting. The Company publicizes the notice to call shareholders meeting in Thai daily newspapers for three consecutive days prior to the meeting. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 23
GOOD CORPORATE GOVERNANCE (CONT.) In The Meeting, The Company facilitated shareholders who attend the meeting in person, or those are proxy holders. The Meeting proceeded in accordance with the scheduled agenda without adding further agenda items. Voting ballots were used at the meeting, and the results of the voting on each agenda item were announced at the meeting. The Board of Directors recognizes the importance of conflicts of interest, connected transactions, or related party transactions and has proceeded in accordance with the principle of good corporate governance In the event that company has to scrutinize matters where there exists or potentially exists conflicts of interest, connected transactions, or related party transactions, directors who are related persons must not participate in the scrutiny and approval of such transaction. 3. Rights of Stakeholders Much consideration is given to the interests of each of various groups of stakeholders in the Company. As it is understood that the participation of stakeholders can have a positive effect on the Company on an ongoing basis, considerable effort is made to safeguard the interests of each group. Shareholders: The Company aims to represent the best interests of shareholders by concentrating on longterm growth and value. The Company undertakes to provide decent and continuous returns to shareholders while being transparent and accurate in its disclosure of information. Customers: The Company shall strive to achieve high customer satisfaction and promote relations based on mutual interest by developing valueadded products and service. The Company also put in every effort in both technology and R&D to differentiate our product and service from our competitors, providing all customers need and punctuality. Employees: The employees are the main important core of the company in propelling the future of the company. The Company provides equitable employment conditions and maintains a safe and conducive working environment. The Ministry of Labor, The department of Labor Protection and Welfare has recognized the company s effort and has awarded the highest TLS 80012003 Labor and Welfare certificate on the 20th December 2006. Competitors: The Company advocates and supports free trade and conducts its business within the rules of competition on the basis of fairness, ethics, and conformity with legal and regulatory requirements. 24 ANNUAL REPORT 2013
GOOD CORPORATE GOVERNANCE (CONT.) Communities and Environment: The Company places a high priority on its social responsibilities especially to the environment and local communities. It meets these responsibilities by thoroughly implementing effective environmental protection and safety systems helping to reduce air pollution around the communities. 4. Disclosure and Transparency As endorsed by the Board of Directors, disclosing information adequately to stakeholders and maintaining transparency and integrity in the company s operation are integral to the Company s corporate governance policy. In compliance with the SET s regulations, the Company discloses its corporate governance report in the annual report and the annual statement (Form 561) through SET channels. The Board of Directors responsibility of correctness and completeness of financial report by issuing The Report of The Board of Directors responsibilities for financial statements and Audit Committee s Report have disclosed in annual report. In addition, the Company has disclosed the duties of the Board of Directors and committees, including the number of meetings attended by each director, and have also disclosed the remuneration policy, type and details with respect to directors and management. In 2012, the shareholders approved remuneration for the Board of Directors and the Audit Committee in the shareholders meeting. Approval of remuneration to audit committees were a monthly allowance 10,000 per person and another the Chairman of the Audit Committee 10,000 Baht 5,000 Baht for each meeting The total remuneration for high level management and executives of the company in the form of salary and agreed benefits are listed in the annual report and the annual statement (Form 561). Institution and individual investors, analysts and concerned government agencies can communicate directly with the company at EMail Address: onticha@castlepeak.co.th or the company s website www.castlepeak.co.th 5. Responsibilities of the Board Board structure In 2012, the Board of Directors comprises 9 directors. 6 Management directors, 3 independent directors (Among them, all are appointed as Audit Committee Members). The Board of Directors appoints members of the Audit Committee whose qualifications comply with the SET rules which defines that the Audit Committee shall consist of at least 3 independent directors, and at least one of them must have knowledge and experience in accounting and finance. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 25
GOOD CORPORATE GOVERNANCE (CONT.) The Company s directors may hold the position for 3 years accordance to company regulations and may be voted back when the term expires. The Board of Directors has set up committees to strengthen good corporate governance and support its administration and any legal issues involved within the company. 2. Subcommittees Corporate management consists of three committees, namely the Board of Directors, the Audit Committee, and the Executive Committee. 2.1 The Board of Directors scope of authority and duties comprises: Performance of its duties according to law, the objectives and regulations of the company, and resolutions of shareholders meetings. Compliance with the directives and rules of supervisory and controlling bodies. Protection of the interests of shareholders. Every shareholder is to be treated equally in receiving accurate information and news about the Company. Determining policies and operational plans, and supervising and controlling all managers to ensure their efficient implementation of the said policies and plans. Approval of transactions to buy or sell an asset, to incur a debt, or undertake an obligation valued at 50 million baht or more. 2.2 The Audit Committee s scope of authority and duties comprises: Ensuring that the Company s financial reports are accurate, complete, and credible. Ensuring that the company implements and appropriate and efficient internal monitoring system. Considering and proposing an independent auditor for the Company. Ensuring the Company s compliance with all relevant laws and regulations. Ensuring that conflicts of interest do not occur. Producing a management report from the Audit Committee, to be published in the Company s annual report. Performance of any other duties assigned to it by the Board of Directors. 2.3 The Executive Committee s scope of authority and duties comprises: Acceptance of the policies and operational plans of the Board of Directors. Ensuring that the Company s operations are implemented efficiently in order to achieve corporate objectives. Submitting reports, plans, and operational results to the Board of Directors. 26 ANNUAL REPORT 2013
GOOD CORPORATE GOVERNANCE (CONT.) Approval of transactions to buy or sell an asset, to incur a debt, or undertake an obligation valued at no more than 50 million baht. Performance of any other duties assigned to it by the Board of Directors. 3. Selection of directors and executives 3.1 Independent directors Principles in the selection of independent directors which are proposed by the Board of Directors, and should be: (1) Knowledgeable, competent, and experience. (2) Capable of devoting time to the Company, attending meetings of the Board of Directors or Audit Committee, performing the duties assigned to him/her, and offering advice. (3) Free of courtordered liens, bankruptcy proceedings, or any real or apparent incapacity. (4) Not subject to government prosecution, sentencing, or any criminal proceedings related to fraud or malfeasance. (5) Clear of all attributes, as set down by the Securities Exchange Commission and the Stock Exchange of Thailand, that would disqualify him/her from being an independent director. 3.2 Methods of Selecting Directors and Executives (1) Method of Selecting Directors Directors are selected according to the Public Company Act, except for article 70. Corporate regulations provide for the appointment of directors in a meeting of shareholders. Each shareholder has as many votes as he/she has shares. One shareholder must use all his/her votes for one or more nominees, and may not divide his/her votes in any way. (2) Method of Selecting Executives Executives are considered on the basis of their knowledge, capabilities, and experience, together with the suitability of these for the duties and responsibilities in question. The number of directors from major shareholders each group: not specified. The rights of minor shareholders to appoint directors: Every shareholder has one vote per share. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 27
GOOD CORPORATE GOVERNANCE (CONT.) 4. Supervision of operations of subsidiaries and associated companies. 4.1 Representatives are assigned to be directors and executives in subsidiaries and associates in accordance. 4.2 Defining the scope and authority of directors and executives to participate in important business decisions. 4.3 The financial statements, performance and related person are fully opened. 4.4 Internal controls are defined with the same standard for all companies. 5. Monitoring the use of internal information The Board of Directors, audit committees and management team, together with directors of the company and its subsidiary companies, must acknowledge and abide by the right of equal access principle to be informed about the company s news and information. They must strictly adhere to the regulations of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission and must not disclose the company s internal information for personal interest or gain, whether directly or indirectly. Penalties include both those prescribed by the Office of the Securities and Exchange Commission and those stipulated by The Company s Board of Directors. 28 ANNUAL REPORT 2013
RELATED TRANSACTION Castle Peak Pulp and Paper Industries Co., Ltd., (CPPP), registered capital THB 100,000 to be held by Success Real Estate Co., Ltd 59% and Castle Peak Holdings Public Co., Ltd 41% of the shares. CPPP is the wholly own of investment in Yueyang Fengli Pulp and Paper Industry Co., Ltd., that manufacture pulp and paper in Republic of China. Success Real Estate Co., Ltd and Castle Peak Holdings Public Co., Ltd are the financial supporters to Castle Peak Pulp and paper Industries Co., Ltd and also Yueyang Fengli Pulp and Paper Industry Co., Ltd in the ratio of investment, interest charge would be the same rate as the other subsidiary. Audit Fee Ms.Nonglak Pattanabandith of Karin Audit Company Limited was appointed to be the companies auditor. The Total fee for quarterly review and auditing in year 2013 was Baht 1,623,000 details are as follows: Company Q1,2,3 quarterly review fee Audit fee Total Castle Peak Holdings Public Co., Ltd. Castle Peak Holdings Public Co., Ltd. (conso) CPG Garment Co., Ltd. Castle Peak Real Estate Co., Ltd. Aek Thana Property Co., Ltd. Sun Property Co., Ltd. Sermkit Property Co., Ltd. Total Audit Fee 255,000 210,000 186,000 48,000 48,000 30,000 30,000 390,000 80,000 230,000 48,000 48,000 10,000 10,000 645,000 290,000 416,000 96,000 96,000 40,000 40,000 1,623,000 Non Audit Fee Other Expenses in audit process limit THB 15,000 for quarterly review and THB 40,000 for year ended auditing, this expenses are all inclusive for the parent company and subsidiaries. In year 2013, these nonaudit fee was THB 85,000. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 29
CORPORATE SOCIAL RESPONSIBILITIES (CSR) 1. Overall policy Castle Peak Holdings Public has transparency as a main policy to conduct its business. The company emphasizes on operations with fairness, respect for human rights, fair treat workers, responsibility to consumers and responsibility to the environment as ethics in operating businesses. 2. Implementation and report preparation. Castle Peak Holdings Public s practices meet standards both locally and internationally as follows 2.1 ISO 9001:2008. ISO 9001:2008 quality system focuses on the operation of a fair and responsibility to consumers (Principle 1 and 5 of the SEC.), Good s from the company have to meet customers standard and satisfaction. Moreover, the company focuses on continuous improvement of processes in manufacturing, and business management. 2.2 Labor standards, Thailand. (TLS 80012553) Thailand s labor standards (TLS 80012553) focuses on the respect for human rights ( principles of Article 3 of the SEC.) The company complies with labor rules in term of employment and working conditions such as wages, working hours, holidays and safety at work. This brings to the fairness at work and happy work place 2.3 Green industry level 1 Green industry level 1 of the Ministry of Industry proves that company operates with concern on the environment, community and social development (Principles 6 and 7 of the SEC.) The company operates morally by setting the policy to prevent environmental pollution and annoying to surrounding communities Furthermore, Anticorruption is one of the company s policy. The company does not support the success from cheating methods. Also the company has a good internal control system and strict internal audit team, who will inspect to prevent any anticorruption activities in the company. 3. CSR After process 3.1 Activities on Buddhist Lent Day On 20 July 2013, the company s employees gave food offerings to a Buddhist monks in the morning. Also they donated some money to buy bulbs for temples. And on July 27, 2013 the representatives brought those bulbs to five temples 3.2 Market for charity On 8 October 2013, the company asked employees to donate the unused clothes, appliances and others to sell in the market. Money from selling those things was given to the disabled people association. 30 ANNUAL REPORT 2013
INTERNAL CONTROL AND RISK MANAGEMENT 1. Summary of the Board of Directors opinions toward the company s internal control system. In the 12th Board meeting held on December 27, 2556, the committees assess five components of internal control by using the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework. It includes internal control system, risk assessment, the operational control system, the information systems and evaluation system. In conclusion, the committees all agree that the company has a good internal control. 2. The Audit Committees express their opinions that there is no any important problem found in the operation. There are four audit committee s meetings in 2013. 1 st meeting on February 28, 2013. 2 nd meeting on May 14, 2013. 3 rd meeting on August 13, 2013. 4 th meeting on November 14, 2013. 3. Head of Internal Audit Ms.Porntip Sripitaksakul, the head of internal audit is a qualified internal auditor. She works effectively and strictly. Any appointment, transfer or dismissal of this position needs the approval by the Audit Committee. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 31
INDEPENDENT AUDITOR S REPORT To the Shareholders of Castle Peak Holdings Public Company Limited I have audited the accompanying consolidated and separate financial statements of Castle Peak Holdings Public Company Limited and its subsidiaries, and of Castle Peak Holdings Public Company Limited, respectively, which comprise the consolidated and separate statements of financial position as at December 31, 2013, the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Consolidated and Separate Financial Statements Management is responsible for the preparation and fair presentation of these consolidated and separate 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 and separate financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility My responsibility is to express an opinion on these consolidated and separate financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Basis of Qualified Opinion As discussed in Note 12 to the financial statements, investments in associates are recorded by using the equity method in the consolidated financial statements. The share of comprehensive income of said associates in the consolidated statement of comprehensive income amounted to Baht 29.49 million for the year ended December 31, 2013, was computed from the financial statements which have been audited by other auditors. Opinion In my opinion, except for the effect of adjustments, if any, as might have been affected to the consolidated financial statements for year 2013 from the recording of the investment in associates by equity method based on the financial statements which have been audited by other auditors as described in the basis of qualified opinion paragraph, the consolidated and separate financial statements referred to above present fairly, in all material respects, the financial position as at December 31, 2013 and the financial performance and cash flows for the year then ended of Castle Peak Holdings Public Company Limited and its subsidiaries, and of Castle Peak Holdings Public Company Limited, respectively, in accordance with Thai Financial Reporting Standards. Emphasis of Matter Without qualifying my opinion, I draw attention to notes 3 and 4 to the financial statements describing the effect of the Company and its subsidiaries adoption from January 1, 2013 of certain new accounting policies. The corresponding figures presented are based on the audited financial statements as at and for the year ended December 31, 2012 after making the adjustments described in note 4. Other Matter The financial statements of Castle Peak Holdings Public Company Limited and its subsidiaries, and of Castle Peak Holdings Public Company Limited for the year ended December 31, 2012 (before restatement), were audited by another auditor who expressed an qualified opinion regarding the record of investment in an associate by using the equity method in the consolidated financial statements which was computed from the financial statements which have been audited by other auditors, thereon in her report dated February 27, 2013. (Ms. Nonglak Pattanabandith) Certified Public Accountant Registration No. 4713 Karin Audit Company Limited Bangkok February 26, 2014 32 ANNUAL REPORT 2013
STATEMENTS OF FINANCIAL POSITION CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2013 Note Consolidated financial statements December 31, 2013 December 31, 2012 Restated January 1, 2012 Restated Separate financial statements December 31, 2013 December 31, 2012 Restated January 1, 2012 Restated Assets Currrent assets Cash and cash equivalents 7 35,641,837.01 23,511,528.54 7,556,513.63 9,900,976.14 13,277,274.97 1,591,801.78 Trade and other accounts receivable 6.3, 8 191,802,614.20 143,671,906.86 157,887,064.11 148,154,903.05 90,824,514.28 119,646,141.80 Inventories Garment business 9 209,188,618.12 195,572,735.33 238,628,081.21 139,091,919.42 127,164,400.85 164,747,171.06 Real estate business 10 221,939,373.97 189,026,940.91 195,562,623.08 113,478,620.30 64,428,332.65 61,786,588.44 Shortterm loans and advances to related parties 6.3 168,545,190.00 141,427,586.00 107,211,050.00 170,545,190.00 172,347,586.00 118,097,192.29 Assets held for sale 14 21,436,132.72 21,436,132.72 Other current assets 6.3, 11 41,703,367.83 47,020,520.13 26,312,130.69 36,252,760.70 41,865,479.10 26,070,345.79 Total current assets 868,821,001.13 761,667,350.49 733,157,462.72 617,424,369.61 531,343,720.57 491,939,241.16 Noncurrrent assets Longterm loans and interest receivable to related party 6.3 111,112,431.51 67,728,039.29 111,112,431.51 67,728,039.29 Investments in subsidiaries and associates 12 39,779,872.05 10,294,652.86 86,124,463.99 264,007,380.00 264,007,380.00 264,007,380.00 Other longterm investments 1,011,875.00 1,365,315.00 1,078,660.00 855,700.00 1,161,750.00 919,450.00 Property, plant and equipment 13 263,404,441.16 271,209,569.01 272,377,318.29 154,591,071.98 157,849,614.22 160,149,355.40 Investment properties 14 119,067,531.80 120,000,078.32 143,217,902.12 113,021,911.80 113,954,458.32 114,672,282.12 Deposits with commitment 327,345.58 324,956.16 322,550.19 Deferred tax assets 4, 18 3,528,584.75 7,485,676.02 6,803,726.01 Other non current assets 12,752,678.48 12,682,394.07 32,470,979.12 5,336,579.31 5,486,636.95 25,761,373.12 Total non current assets 550,984,760.33 491,090,680.73 542,395,599.72 648,925,074.60 610,187,878.78 565,509,840.64 Total assets 1,419,805,761.46 1,252,758,031.22 1,275,553,062.44 1,266,349,444.21 1,141,531,599.35 1,057,449,081.80 The accompanying notes are an integral part of these financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 33
STATEMENTS OF FINANCIAL POSITION (CONT) CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2013 Note Consolidated financial statements December 31, 2013 December 31, 2012 Restated January 1, 2012 Restated Separate financial statements December 31, 2013 December 31, 2012 Restated January 1, 2012 Restated Liabilities and equity Current liabilities Overdrafts and short term loans from financial institutions 15 391,787,492.92 240,113,904.19 233,391,660.16 290,240,369.06 186,572,189.37 151,385,226.21 Trade and other accounts payable 6.3 85,624,475.81 61,820,110.82 44,279,920.43 56,479,149.89 42,744,719.74 40,299,263.38 Shortterm loans from related parties 6.3 104,147,000.00 65,647,000.00 71,497,000.00 Current portion of longterm loans form financial institutions 17 11,000,203.44 4,668,000.00 273,003.44 Advances received under contract to buy and to sell 6,306,600.00 3,201,000.00 3,623,500.00 3,646,600.00 966,500.00 1,450,000.00 Other current liabilities 6.3, 16 52,479,623.56 39,163,195.42 39,489,972.38 33,316,594.97 26,094,301.18 23,198,076.89 Total current liabilities 547,198,395.73 348,966,210.43 320,785,052.97 488,102,717.36 322,024,710.29 287,829,566.48 Noncurrent liabilities Longterm loans from financial institutions 17 508,449.69 15,175,600.00 508,449.69 Deferred tax liabilities 4, 18 29,174,909.47 23,227,899.91 29,667,403.64 14,266,740.88 7,533,433.74 5,760,136.53 Employee benefit obligations 19 26,940,746.00 21,082,168.00 10,830,843.00 14,465,912.00 9,724,931.00 3,981,066.00 Total non current liabilities 56,115,655.47 44,818,517.60 55,673,846.64 28,732,652.88 17,766,814.43 9,741,202.53 Total liabilities 603,314,051.20 393,784,728.03 376,458,899.61 516,835,370.24 339,791,524.72 297,570,769.01 Equity Share capital Authorized share capital 40,000,000 common shares, Baht 10 par value 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 Issued and paid up share capital 40,000,000 common shares, Baht 10 par value 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 Premium on ordinary shares 164,000,000.00 164,000,000.00 164,000,000.00 164,000,000.00 164,000,000.00 164,000,000.00 Retained earnings Appropriated legal reserve 30,539,616.42 30,539,616.42 28,357,863.47 30,539,616.42 30,539,616.42 28,357,863.47 Unappropriated 29,933,046.43 82,692,743.51 114,905,260.87 76,820,486.45 123,374,458.15 78,022,420.30 Other components of equity 191,918,474.58 181,593,058.68 191,676,090.47 78,153,971.10 83,826,000.06 89,498,029.02 Equity attributable to owners of the Company 816,391,137.43 858,825,418.61 898,939,214.81 749,514,073.97 801,740,074.63 759,878,312.79 Noncontrolling interests 100,572.83 147,884.58 154,948.02 Total equity 816,491,710.26 858,973,303.19 899,094,162.83 749,514,073.97 801,740,074.63 759,878,312.79 Total liabilities and equity 1,419,805,761.46 1,252,553,062.44 1,275,553,062.44 1,266,349,444.21 1,141,531,599.35 1,057,449,081.80 The accompanying notes are an integral part of these financial statements. 34 ANNUAL REPORT 2013
STATEMENTS OF COMPREHENSIVE INCOME CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2013 Revenue from sales Cost of sales Gross profit Note 6.2 6.2 Consolidated financial statements 2013 1,196,146,718.22 1,120,122,260.80 76,024,457.42 2012 Restated 1,209,260,872.65 1,055,047,147.07 154,213,725.58 Separate financial statements 2013 648,212,891.09 621,105,061.30 27,107,829.79 2012 Restated 730,425,459.05 630,565,553.88 99,859,905.17 Interest income Gain on exchange rate Gain on disposal/ assignment of assets Other income Profit before expenses 6.2 14 6.2 18,154,328.27 25,579,440.26 10,408,972.42 130,167,198.37 11,252,789.64 12,214,542.01 12,578,250.84 190,259,308.07 18,640,351.56 25,194,687.54 6,977,997.91 77,920,866.80 14,105,157.60 7,366,311.13 13,695,536.44 135,026,910.34 Selling expenses Administrative expenses Total expenses 54,997,566.58 119,537,027.72 174,534,594.30 46,674,380.67 97,988,266.43 144,662,647.10 34,269,992.36 70,123,034.14 104,393,026.50 26,793,507.73 49,964,823.85 76,758,331.58 Equity gain (loss) from investment in associates Profit (loss) before financial costs and income tax Financial costs Profit (loss) before income tax 6.2 (10,808,933.43) (33,558,462.50) 20,600,900.11 (54,159,362.61) 73,580,250.18 (27,983,589.21) 16,894,715.15 (44,878,304.36) (26,472,159.70) 19,020,533.82 (45,492,693.52) 58,268,578.76 14,633,519.71 43,635,059.05 Income tax expense (income) Profit (loss) for the year 4, 21 9,970,070.08 (64,129,432.69) (6,489,606.65) (38,388,697.71) 6,733,307.14 (52,226,000.66) 1,773,297.21 41,861,761.84 Other comprehensive income Currency translation change in an associate Defined benefit plan actuarial gains Income tax expense (income) for other comprehensive income Other comprehensive income (loss) for the year net of income tax expense (income) 19 18,676,285.76 2,971,554.00 21,647,839.76 (2,249,560.95) (517,399.02) (1,732,161.93) Total comprehensive income for the year (42,481,592.93) (40,120,859.64) (52,226,000.66) 41,861,761.84 Profit (loss) attributable to : Owners of the Company Noncontrolling interests Profit (loss) for the year (64,078,786.30) (50,646.39) (64,129,432.69) (38,381,634.27) (7,063.44) (38,388,697.71) (52,226,000.66) (52,226,000.66) 41,861,761.84 41,861,761.84 Total comprehensive income attributable to: Owners of the Company Noncontrolling interests Total comprehensive income for the year (42,434,281.18) (47,311.75) (42,481,592.93) (40,113,796.20) (7,063.44) (40,120,859.64) (52,226,000.66) (52,226,000.66) 41,861,761.84 41,861,761.84 Basic earnings (loss) per share Weighted average number of oridinary shares (shares) (1.60) 40,000,000 (0.96) 40,000,000 (1.31) 40,000,000 1.05 40,000,000 The accompanying notes are an integral part of these financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 35
STATEMENTS OF CHANGES IN EQUITY CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2013 Balance as of January 1, 2012 as previously reported Impact of changes in accounting policies Balance as of January 1, 2012 as restated Comprehensive income for the year : Profit (loss) for the year Other comprehensive income Total comprehensive income for the year Transfer to legal reserve Transfer to retained earnings Balance at December 31, 2012 Comprehensive income for the year : Profit (loss) for the year Other comprehensive income Total comprehensive income for the year Transfer to retained earnings Balance at December 31, 2013 Note 4 Issued and paidup share capital 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 Premium on ordinary shares 164,000,000.00 164,000,000.00 164,000,000.00 164,000,000.00 Retained earings Legal reserve 28,357,863.47 28,357,863.47 2,181,752.95 30,539,616.42 30,539,616.42 Unappropriated 89,744,717.45 25,160,543.42 114,905,260.87 (38,381,634.27) (38,381,634.27) (2,181,752.95) 8,350,869.86 82,692,743.51 (64,078,786.30) 2,968,219.36 (61,110,566.94) 8,350,869.86 29,933,046.43 Consolidated financial statements Other components of equity Revaluation increment in land and building 204,467,392.22 (40,893,468.00) 163,573,924.22 (8,350,869.86) 155,223,054.36 (8,350,869.86) 146,872,184.50 Currency translation changes in indirect associate 35,212,066.35 (7,109,900.10) 28,102,166.25 (1,732,161.93) (1,732,161.93) 26,370,004.32 18,676,285.76 18,676,285.76 45,046,290.08 Total other components of equity 239,679,458.57 (48,003,368.10) 191,676,090.47 (1,732,161.93) (1,732,161.93) (8,350,869.86) 181,593,058.68 18,676,285.76 18,676,285.76 (8,350,869.86) 191,918,474.58 The accompanying notes are an integral part of these financial statements. Equity attributable to owners of the Company 921,782,039.49 (22,842,824.68) 898,939,214.81 (38,381,634.27) (1,732,161.93) (40,113,796.20) 858,825,418.61 (64,078,786.30) 21,644,505.12 (42,434,281.18) 816,391,137.43 Noncontrolling interests 175,800.97 (20,852.95) 154,948.02 (7,063.44) Total equity (7,063.44) 147,884.58 (50,646.39) 3,334.64 (47,311.75) 100,572.83 921,957,840.46 (22,863,677.63) 899,094,162.83 (38,388,697.71) (1,732,161.93) (40,120,859.64) 858,973,303.19 (64,129,432.69) 21,647,839.76 (42,481,592.93) 816,491,710.26 36 ANNUAL REPORT 2013
STATEMENTS OF CHANGES IN EQUITY (CONT) CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2013 Balance as of January 1, 2012 as previously reported Impact of changes in accounting policies Balance as of January 1, 2012 as restated Comprehensive income for the year : Profit (loss) for the year Other comprehensive income Total comprehensive income for the year Transfer to legal reserve Transfer to retained earnings Balance as of December 31, 2012 Comprehensive income for the year : Profit (loss) for the year Other comprehensive income Total comprehensive income for the year Transfer to retained earnings Balance as of December 31, 2013 Note 4 Issued and paidup share capital 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00 Separate financial statements Other components of equity Retained earings Revaluation Total Premium on ordinary shares Legal reserve Unappropriated increment in land and building other components of equity Total 164,000,000.00 164,000,000.00 164,000,000.00 164,000,000.00 28,357,863.47 28,357,863.47 2,181,752.95 30,539,616.42 30,539,616.42 111,872,536.28 (22,374,507.26) 89,498,029.02 (5,672,028.96) 83,826,000.06 (5,672,028.96) 78,153,971.10 61,408,049.57 16,614,370.73 78,022,420.30 41,861,761.84 41,861,761.84 (2,181,752.95) 5,672,028.96 123,374,458.15 (52,226,000.66) (52,226,000.66) 5,672,028.96 76,820,486.45 111,872,536.28 (22,374,507.26) 89,498,029.02 (5,672,028.96) 83,826,000.06 (5,672,028.96) 78,153,971.10 765,638,449.32 (5,760,136.53) 759,878,312.79 41,861,761.84 41,861,761.84 801,740,074.63 (52,226,000.66) (52,226,000.66) 749,514,073.97 The accompanying notes are an integral part of these financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 37
STATEMENTS OF CASH FLOWS CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2013 Consolidated financial statements Separate financial statements 2013 2012 Restated 2013 2012 Restated CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) for the year Adjustments to reconcile profit (loss) to cash provided by (used in) operating activities : Depreciation and amortization Unrealized loss (gain) on exchange rate Equity loss (gain) from investment in associates Reversal of allowance for doubtful account Allowance for (reversal of) allowance for declining value of inventories garment business Allowance for (reversal of) impairment loss on other longterm investments Gain on assignment of assets Loss (gain) on disposal of assets Loss on assets writenoff Interest expense Interest income Dividend income Employee benefit obligations Income tax expense (income) Profit (loss) from operating activities before changes in operating assets and liabilities (Increase) decrease in operating assets: Trade and other accounts receivable Inventories Garment business Real estate business Other current assets Other non current assets Increase (decrease) in operating liabilities: Trade and other accounts payable Advances received under contract to buy and to sell Other current liabilities Employee benefit obligations paid Income tax received Income tax paid Net cash provided by (used in) operating activities (64,129,432.69) 22,027,861.61 16,238,995.79 (10,808,933.43) (600,104.88) 353,440.00 (24,945,090.90) (634,349.36) 58.94 17,102,852.55 (18,154,328.27) (266,500.00) 9,032,132.00 9,970,070.08 (44,813,328.56) (44,692,354.46) (13,015,777.91) (32,708,502.75) 17,300,865.88 (92,128.50) 23,405,263.09 3,105,600.00 (2,099,165.20) (202,000.00) 732,336.14 (2,048,454.12) (95,127,646.39) (38,388,697.71) 21,346,812.67 (11,091,109.44) 73,580,250.18 (418,000.31) (286,655.00) (93,458.18) 831,630.21 13,825,272.96 (11,252,789.64) (98,000.00) 10,814,325.00 (6,489,606.65) 52,279,974.09 10,504,306.11 43,473,346.19 7,142,889.06 (15,120,488.14) (167,381.43) 18,655,013.32 (422,500.00) 7,826,944.42 (563,000.00) 2,445,834.48 (2,206,990.04) 123,847,948.06 (52,226,000.66) 14,728,126.65 10,444,308.70 (600,104.88) 306,050.00 (24,945,090.90) (249,596.64) 30.94 17,721,217.38 (18,640,351.56) (230,000.00) 4,740,981.00 6,733,307.14 (42,217,122.83) (55,519,999.18) (11,327,413.69) (49,020,752.16) 15,208,553.77 (79,703.00) 13,379,217.54 2,680,100.00 (3,595,944.64) 195,110.68 (325,587.63) (130,623,541.14) 41,861,761.84 14,816,802.36 (7,209,540.98) (3,384,355.17) (242,300.00) (93,458.18) 81.00 13,518,345.65 (14,105,157.60) (85,000.00) 5,833,865.00 1,773,297.21 52,684,341.13 25,937,133.19 37,582,770.21 (2,641,744.21) (13,459,123.15) (7,129.93) 3,531,336.31 (483,500.00) 8,300,581.74 (90,000.00) 2,107,687.59 (1,230,699.23) 112,231,653.65 The accompanying notes are an integral part of these financial statements. 38 ANNUAL REPORT 2013
CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2013 CASH FLOWS FROM INVESTING ACTIVITIES Interest received Proceeds from dividend income Loans and advances to related parties Proceeds from loans and advances to ralated parties Proceeds from assignment of asset held for sale Cash paid for purchases of property, plants and equipment Proceeds from disposal of property, plants and equipment Cash paid for purchases of investment properties Cash paid for purchases of intangible assets Decrease in deposits with commitment Net cash provided by (used in) investing activities STATEMENTS OF CASH FLOWS (CONT) Consolidated financial statements 1,829,776.70 266,500.00 (62,820,000.00) 46,381,223.62 (12,958,694.19) 634,981.46 (11,340.00) (299,000.00) (2,389.42) (26,978,941.83) 1,924,803.79 98,000.00 (101,790,487.71) 21,700,487.71 (17,891,943.83) 93,458.18 (205,636.00) (344,000.00) (2,405.97) (96,417,723.83) 3,584,827.82 230,000.00 (83,305,430.25) 49,405,430.25 46,381,223.62 (10,296,306.25) 249,934.70 (11,340.00) 6,238,339.89 Separate financial statements 2013 2012 Restated 2013 2012 Restated 8,394,093.61 85,000.00 (182,485,433.58) 85,745,931.04 (10,246,949.00) 93,458.18 (22,705,636.00) (1,000.00) (121,120,535.75) CASH FLOWS FROM FINANCING ACTIVITIES Cash paid for interest expense Increase in overdrafts and short term loans from financial institutions 143,751,721.06 Repayment of loans and advances from related parties Proceeds from loans and advances from related parties Repayment of long term loans Proceeds from long term loans Net cash provided by (used in) financing activities (15,338,578.12) (73,532,817.31) 79,356,571.06 134,236,896.69 (14,381,313.50) 12,905,254.49 (28,671,550.31) 18,672,400.00 (11,475,209.32) (15,781,038.95) 98,525,387.62 (3,515,053.34) 42,015,053.34 (29,139,217.31) 28,903,771.06 121,008,902.42 (13,150,329.37) 39,066,234.97 (50,572,639.12) 44,722,639.12 (21,550.31) 530,000.00 20,574,355.29 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 12,130,308.47 23,511,528.54 35,641,837.01 15,955,014.91 7,556,513.63 23,511,528.54 (3,376,298.83) 13,277,274.97 9,900,976.14 11,685,473.19 1,591,801.78 13,277,274.97 Supplemental disclosures of cash flow information: Noncash transactions for the year 2013 Subsidiaries capitalized interest expense as a part of inventories real estate bussiness totaling Baht 0.20 million in consolidated financial statements. Noncash transactions for the year 2012 The Company transferred advance for common share incremental to shortterm loan to related party of Baht 20.00 million in consolidated and separate financial statements. The Company transferred investment properties to assets held for sale of Baht 21.44 million in consolidated and separate financial statements. Subsidiaries capitalized interest expense as a part of inventories real estate bussiness totaling Baht 0.61 million in consolidated financial statements. The accompanying notes are an integral part of these financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 39
1. General information Castle Peak Holdings Public Company Limited ( the Company ) was registered on April 1, 1994, with registration number 0107537001056. The registered office is located at 899 Petchkasam Road, Bangkae Subdistrict, Bangkae District, Bangkok. The principal business activities of the Company and subsidiaries ( the Group ) are garment manufacturing to export and property development. 2. Basis for preparation of the consolidated financial statements The consolidated financial statements comprise the financial statements of the Company and subsidiaries ( the Group ). Subsidiaries, whose financial and operating policies are substantially direct or indirect controlled by the Company as follows: Subsidiaries Direct : C.P.G. Garment Co., Ltd. Castle Peak Real Estate Co., Ltd. NOTES TO FINANCIAL STATEMENTS CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED AND SUBSIDIARIES DECEMBER 31, 2013 Nature of business Export garment Real estate Country of incorporation Thailand Thailand Percentage of holding 2013 2012 99.86 99.99 99.86 99.99 Indirect : Sun Property Co., Ltd. Sermkit Property Co., Ltd. Aek Thana Property Co., Ltd. Real estate Real estate Real estate Thailand Thailand Thailand 99.98 99.98 99.98 99.98 99.98 99.98 Investment in other companies in which the Company significant influence is shown as Investments in associates under equity method in the consolidated financial statements, and record under cost method for the separate financial statements. 3. Basis of preparation of the financial statements 3.1 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 FAP has issued the following new and revised TFRS relevant and effective for accounting periods beginning on or after January 1, 2013: 40 ANNUAL REPORT 2013
TAS 12 TAS 20 (Revised 2009) TAS 21 (Revised 2009) TFRS 8 TSIC 10 TSIC 21 TSIC 25 FAP Announcement 34/2012 NOTES TO FINANCIAL STATEMENTS (CONT) Income Taxes Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Operating Segments Government Assistance No Specific Relation to Operating Activities Income Taxes Recovery of Revalued NonDepreciable Assets Income Taxes Changes in the Tax Status of an Entity or its Shareholders Accounting guidance for Transfers of Financial Assets The adoption of these new and revised TFRS has resulted in changes in the Group s accounting policies. The effects of these changes are disclosed in note 4. In addition to the above new and revised TFRS, as at December 31, 2013 the FAP had issued a number of other new and revised TFRS which are effective for financial statements beginning on or after January 1, 2014 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that are applicable, which become effective for annual financial periods beginning on or after January 1, in the year indicated in the following table, are as follows: 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 Topic Year effective Presentation of financial statements Statement of Cash Flows Income Taxes Leases Revenue Recognition Employee Benefits The Effects of Changes in Foreign Exchange Rates Related Party Disclosures Investments in Associates Interests in Joint Ventures Interim Financial Reports Impairment of Assets Intangible Assets Sharebased Payment Business Combinations 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 41
TFRS 4 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 TIC 15 TIC 27 TIC 29 TIC 32 NOTES TO FINANCIAL STATEMENTS (CONT) TFRS Topic Year effective Insurance Contracts Noncurrent 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 Noncash Assets to Owners Transfers of Assets from Customers Operating LeasesIncentives Evaluating the Substance of Transactions Involving the Legal Form of a Lease Service Concession Arrangements Disclosure Intangible AssetsWeb Site Costs Management expects to adopt and apply these new and revised TFRS in accordance with the FAP s announcement and has made a preliminary assessment of the potential initial impact on the consolidated and separate s and Company s financial statements of these new and revised TFRS and expects that there will be no material impact on the financial statements in the period of initial application. 3.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies. 3.3 Presentation currency The financial statements are prepared and presented in Thai Baht. 2016 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 42 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 3.4 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 policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources. Accordingly, actual results may differ from estimates. The 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 amounts recognised in the financial statements is included in the following notes: Note 14 Disclosure of fair value of investment properties Note 18 Deferred tax Note 19 Measurement of defined benefit obligations Note 21 Income tax expense (income) 4. Changes in accounting policies 4.1 Overview From January 1, 2013, consequent to the adoption of new and revised TFRS and FAP Announcements as set out in Note 2, the Group has changed its accounting policies in the following areas: Accounting for income tax Accounting for the effects of changes in foreign exchange rates Presentation of information on operating segments Details of the new accounting policies adopted by the Group are included in notes 4.2 to 4.4 below. Other new and revised TFRS did not have any impact on the accounting policies, financial position or performance of the Group. 4.2 Accounting for income tax The principal change introduced by TAS 12 is the requirement to account for deferred tax assets and liabilities in the financial statements. Deferred tax assets and liabilities are the amounts of income taxes recoverable and payable, respectively, in future periods in respect of temporary differences between the carrying amount of the assets and liabilities in the statement of financial position and the amount attributed to that assets and liabilities for tax purposes; and the carry forward of unused tax losses. The accounting policy for deferred tax is described in note 5.3 The Group adopted TAS 12 with effect from January 1, 2013. The effects of the change are recognised retrospectively in the financial statements. The impact of the change on the financial statements is as follows: CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 43
Statement of financial position Increase in deferred tax assets Increase in deferred tax liabilities Decrease in revaluation surplus on land and buildings Decrease in currency translation Increase in unappropriated retained earnings Decrease in noncontrolling interests NOTES TO FINANCIAL STATEMENTS (CONT) Consolidated financial statements December 31, 2013 December 31, 2012 January 1, 2012 3,528,584.75 29,174,909.47 (36,718,046.13) 11,092,255.71 (20,534.30) 7,485,676.02 23,227,899.91 (38,805,750.52) (6,592,501.08) 29,677,610.53 (21,582.82) 6,803,726.01 29,667,403.64 (40,893,468.00) (7,109,900.10) 25,160,543.42 (20,852.95) Statement of financial position Increase in deferred tax liabilities Decrease in revaluation surplus on land and buildings Increase in unappropriated retained earnings Separate financial statements December 31, 2013 December 31, 2012 January 1, 2012 14,266,740.88 (19,538,492.78) 5,271,751.90 7,533,433.74 (20,956,500.02) 13,423,066.28 5,760,136.53 (22,374,507.26) 16,614,370.73 Statement of comprehensive income for the year ended December 31, Increase (decrease) in income tax expense Increase (decrease) in profit for the year Decrease in income tax expense recognized in other comprehensive income Increase in other comprehensive income (loss) Increase (decrease) in basic earnings per share Consolidated financial statements 2013 2012 9,904,100.83 (6,604,054.72) (9,904,100.83) 6,604,054.72 (517,399.02) 517,399.02 (0.25) 0.17 Separate financial statements 2013 2012 6,733,307.14 1,773,297.21 (6,733,307.14) (1,773,297.21) (0.17) (0.04) 44 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 4.3 Accounting for the effects of changes in foreign exchange rates From January 1, 2013, the Group has adopted TAS 21 Accounting for the effects of changes in foreign exchange rates. The principal change introduced by TAS 21 is the introduction of the concept of functional currency, which is defined as the currency of the primary economic environment in which the entity operates. TAS 21 requires the entity to determine its functional currency and translate foreign currency items into its functional currency, reporting the effects of such translation in accordance with the provisions of TAS 21. Foreign currencies are defined by TAS 21 as all currencies other than the entity s functional currency. Management has determined that the functional currency of the Group is Thai Baht and that the adoption of TAS 21 from January 1, 2013 has not had a significant impact on the Group s reported assets, liabilities or retained earnings. 4.4 Presentation of information on operating segments From January 1, 2013, the Group has adopted TFRS 8 Operating Segments. The new policy for presentation of information on operating segments, together with information on the previous policy, is given below. The change in policy only impacts presentational aspects and has no impact on the Group s reported assets, liabilities, results or earnings per share. TFRS 8 introduces the management approach to segment reporting. The change in basis of presentation and disclosure of segment information has no significant effect on the segment information reported in the Group s financial statements. Segment information based on the internal reports is regularly reviewed by the Group s Chief Operating Decision Maker in order to assess each segment s performance and to allocate resources to those segments. Previously the Group presented segment information in respect of its business and geographical segments in accordance with TAS 14 Segment Reporting. 5. Significant accounting policies 5.1 Income 5.1.1 Revenues from the sales of goods are recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer. 5.1.2 Revenues from the sales of real estate development projects are recognized when the construction works are completed and the ownerships have been transferred to buyers. 5.1.3 Revenue from services is recognized when the services have been rendered. 5.1.4 Interest income is recognised on an accrual basis based on the effective interest rate. 5.1.5 Rental income is recognised as revenue over the period of the lease term. 5.2 Expenses 5.2.1 Expenses are recognized on an accrual basis. 5.2.2 Payments made under operating leases are recognised on a straightline basis over the term of the lease 5.2.3 Finance costs comprise interest expense and unwinding of the discount on provisions and contingent consideration. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 45
NOTES TO FINANCIAL STATEMENTS (CONT) 5.3 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 jointlycontrolled entities to the extent that it is probable that they will not reverse in the foreseeable future. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 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. 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. 5.4 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, saving deposits, call and highly liquid shortterm investments. Deposits restricted in use are shown as other noncurrent assets. 5.5 Trade and other accounts receivable Trade and other accounts receivable are carried at anticipated realizable value after allowance for doubtful receivables. An allowance is estimated on the basis of management s assessment of long overdue debts which may not be collectible. Bad debts are written off during the year in which they are identified. 5.6 Inventories Garment business The Group values its inventories at the lower of cost or net realizable value. Inventories are valued as follows: Finished goods and work in process at specific batch costing Raw materials and supplies at moving average. Real estate business Real estate development projects are presented at lower of cost or net realizable value. Cost comprises expenditure that is directly attributable to the acquisition of land, land improvement, construction cost, utilities, project management cost, borrowing costs and other direct relevance costs to the project. 46 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 5.7 Investments in subsidiaries and associates Investments in subsidiary companies and associates are recorded at cost method in the separate financial statements and investments in associated companies are recorded at equity method in the consolidated financial statements. 5.8 Longterm investment Investments in securities available for sales are stated at fair value. The diminution of carrying value is represented as unrealized gain or loss in equity. The Group will consider the impairment of investment whether there is any indication that investment may be impaired. The impairment loss will be recognized as expenses in profit or loss. 5.9 Property, plant and equipment Equipment are presented at cost less accumulated depreciation and impairment losses. Land and buildings are stated at their revalued amounts. The revalued amount is the fair value determined on the basis of the property s existing use at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed 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. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings. Depreciation is charged to profit or loss on a straightline basis over the estimated useful lives of each component of an item as follows : Land improvement 20 40 years Buildings and revaluation surplus 20 years Machinery and equipment 5 10 years Other constructions 20 years Furniture, fixture and office equipment 5 10 years Vehicles 5 10 years Depreciation methods, useful lives and residual values are reviewed at each financial yearend and adjusted if appropriate. 5.10 Investment properties Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of selfconstructed investment property includes the cost of materials and direct labour, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalised borrowing costs. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 47
NOTES TO FINANCIAL STATEMENTS (CONT) Depreciation is charged to profit or loss on a straightline basis over the estimated useful lives of each component of an item as follows: Building and other constructions 20 years Depreciation methods, useful lives and residual values are reviewed at each financial yearend and adjusted if appropriate. 5.11 Impairment of assets The carrying amounts of the Group s assets are reviewed at each report date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimate. Impairment with cost, if assets exceed its recoverable amount, the Group will recognize an impairment loss in profit or loss. Calculation of recoverable amount The recoverable amount is the greater of the asset s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax 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 cashgenerating unit to which the asset belongs. Reversal of impairment 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 amortization, if no impairment loss had been recognized. All reversals of impairment losses are recognized in profit or loss. 5.12 Trade and other payables Trade and other payables are stated at cost. 5.13 Employee benefit obligations The Group s employee benefit obligation in respect of post employment benefits under defined benefit plans recognized in the financial statements based on calculations by the independent actuary using the projected unit credit method estimating 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 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. Shortterm employee benefits Shortterm employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. 5.14 Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. 48 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 5.15 Foreign currencies Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Nonmonetary assets and liabilities measured at cost in foreign currencies are translated to Thai Baht using the foreign exchange rates ruling at the dates of the transactions. The revenues and expenses of foreign entities are translated to Thai Baht at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on translation are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity until disposal of the investment. 5.16 Financial instrument Financial assets were shown in statements of financial position composed of cash and cash equivalents, loans, investments, trade accounts receivable. Financial liabilities were shown in statements of financial position composed of bank overdrafts, trade accounts payable and borrowings. The accounting policy of each item would be disclosed in separated items. The Group made a foreign exchange forward contract in order to prevent any risks from unstable of exchange rate. A forward contract will determine a fixed exchange rate in the future of assets and liabilities which will be received or paid. Outstanding forward foreign exchange contracts are marked to market by comparing contract rate to forward market rates with similar maturities. At each reporting date, the unrealized gain or losses on outstanding forward foreign exchange contracts are reflected in profit or loss. 5.17 Basic earnings (loss) per share Basic earnings (loss) per share are calculated by dividing profit (loss) for the year attributable to equity holders of the Company by weighted average number of ordinary shares outstanding during the year. The Company does not have any other equivalent ordinary share for diluted earnings per share calculation. 5.18 Segment reporting Segment results that are reported to the Group s executive committee (the chief operating decision maker) include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 6. Related Party transactions 6.1 The related parties and relationship Parties C.P.G. Garment Co., Ltd. Castle Peak International Co., Ltd. Castle Peak Real Estate Co., Ltd. Aek Thana Property Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Yueyang Fengli Pulp & Paper Industry Co., Ltd. Relationship Subsidiary Subsidiary Subsidiary Subsidiary (indirect owned throughout Castle Peak Real Estate Co., Ltd.) Associate by direct owned Associate (indirect owned throughout Castle Peak Pulp & Paper Co., Ltd.) CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 49
6.2 Significant transactions for the years ended December 31, 2013 and 2012, with related parties, were as follows: Sales raw materials and wages C.P.G. Garment Co., Ltd. NOTES TO FINANCIAL STATEMENTS (CONT) Pricing policy (1) Consolidated financial statements Separate financial statements 2013 2012 2013 2012 46,058,261.36 34,828,096.03 Interest income (2) Castle Peak International Co., Ltd. C.P.G. Garment Co., Ltd. Yueyang Fengli Pulp & Paper Industry Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Total 1,818,083.42 16,308,790.00 18,126,873.42 1,865,858.84 9,376,209.45 11,242,068.29 508,638.92 1,818,083.42 16,308,790.00 18,635,512.34 710,864.98 2,148,810.92 1,865,858.84 9,376,209.45 14,101,744.19 Fee income for loan guarantee (2) Castle Peak Pulp & Paper Industries Co., Ltd. 4,374,999.98 4,386,986.28 4,374,999.98 4,386,986.28 Purchases inventories and wages C.P.G. Garment Co., Ltd. (1) 13,070,613.64 18,716,937.56 Interest expense Castle Peak Real Estate Co., Ltd. (2) 5,795,655.03 4,624,198.90 Management remuneration 12,739,399.01 12,368,773.00 10,586,116.01 10,357,285.00 Purchase investment properties Castle Peak International Co., Ltd. 22,500,000.00 Pricing policy are as follows: (1) Cost plus margin (2) Interest rate at MLR/ MLR+0.25 of a local bank or actual incurred rate 50 ANNUAL REPORT 2013
6.3 Significant assets and liabilities at December 31, 2013 and 2012, with related parties, were as follows: Trade account receivable Subsidiary C.P.G. Garment Co., Ltd. NOTES TO FINANCIAL STATEMENTS (CONT) Consolidated financial statements Separate financial statements 2013 2012 2013 2012 46,971,280.85 14,432,951.01 Other account receivable Associate Castle Peak Pulp & Paper Industries Co., Ltd. 26,435,821.81 22,060,821.83 26,435,821.81 22,060,821.83 Shortterm loans Subsidiary C.P.G. Garment Co., Ltd. Associates Yueyang Fengli Pulp & Paper Industry Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Total 26,715,190.00 141,830,000.00 168,545,190.00 24,917,586.00 116,510,000.00 141,427,586.00 2,000,000.00 26,715,190.00 141,830,000.00 170,545,190.00 30,920,000.00 24,917,586.00 116,510,000.00 172,347,586.00 Interest receivables (presented under other current assets) Subsidiary C.P.G. Garment Co., Ltd. Associates Yueyang Fengli Pulp & Paper Industry Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Total 687,092.86 27,843,040.23 28,530,133.09 648,454.65 17,418,642.45 18,067,097.10 508,638.92 687,092.86 27,843,040.23 29,038,772.01 1,777,666.75 648,454.65 17,418,642.45 19,844,763.85 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 51
NOTES TO FINANCIAL STATEMENTS (CONT) Consolidated financial statements Separate financial statements 2013 2012 2013 2012 Longterm loans and interest receivable Longterm loans Associate Castle Peak Pulp & Paper Industries Co., Ltd. Interest receivable Associate Castle Peak Pulp & Paper Industries Co., Ltd. Total 102,500,000.00 8,612,431.51 111,112,431.51 65,000,000.00 2,728,039.29 67,728,039.29 102,500,000.00 8,612,431.51 111,112,431.51 65,000,000.00 2,728,039.29 67,728,039.29 Trade account payable Subsidiary C.P.G. Garment Co., Ltd. 1,206,675.55 939,220.93 Shortterm loans Subsidiary Castle Peak Real Estate Co., Ltd. 104,147,000.00 65,647,000.00 Interest payable (presented under other current liabilities) Subsidiary Castle Peak Real Estate Co., Ltd. 593,773.22 385,682.17 52 ANNUAL REPORT 2013
Associates: Loans to : Yueyang Fengli Pulp& Paper Industry Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Total NOTES TO FINANCIAL STATEMENTS (CONT) 6.4 Movement of shortterm loans and advances to related parties during the year ended December 31, 2013 were as follows: Consolidated financial statements December 31, 2012 24,917,586.00 116,510,000.00 141,427,586.00 Increase 25,320,000.00 25,320,000.00 (Decrease) Gain (loss) on exchange rate 1,797,604.00 1,797,604.00 December 31, 2013 26,715,190.00 141,830,000.00 168,545,190.00 Interest rate (%) 7.1257.250 7.1257.250 Loans to : Subsidiary C.P.G. Garment Co., Ltd. Associates: Loans to : Yueyang Fengli Pulp& Paper Industry Co., Ltd. Castle Peak Pulp & Paper Industries Co., Ltd. Advances to : Subsidiary C.P.G. Garment Co., Ltd. Total (1) December 31, 2012 30,920,000.00 24,917,586.00 116,510,000.00 172,347,586.00 Separate financial statements Gain (loss) on exchange December Increase (Decrease) rate 31, 2013 19,700,000.00 25,320,000.00 785,430.25 45,805,430.25 (48,620,000.00) (785,430.25) (49,405,430.25) 1,797,604.00 1,797,604.00 2,000,000.00 26,715,190.00 141,830,000.00 170,545,190.00 Interest rate (%) 6.8757.000 7.1257.250 7.1257.250 ไม ค ด CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 53
6.5 Movement of longterm loans to a related party during the year ended December 31, 2013 were as follows: Consolidated / Separate financial statements Loans to : Associate Castle Peak Pulp & Paper Industries Co., Ltd. Total December 31, 2012 Increase (Decrease) 65,000,000.00 65,000,000.00 37,500,000.00 37,500,000.00 December 31, 2013 102,500,000.00 102,500,000.00 Interest rate (%) 7.1257.250 6.6 Movement of shortterm loans and advances from related parties during the year ended December 31, 2013 were as follows: Separate financial statements Subsidiaries Loans from : Castle Peak Real Estate Co., Ltd. Advances from : C.P.G. Garment Co., Ltd. Total 7. Cash and cash equivalents Cash Current accounts Saving deposits Total NOTES TO FINANCIAL STATEMENTS (CONT) (2) December 31, 2012 Increase (Decrease) 65,647,000.00 65,647,000.00 42,000,000.00 15,053.34 42,015,053.34 105,000.00 32,285,795.81 3,251,041.20 35,641,837.01 (3,500,000.00) (15,053.34) (3,515,053.34) 105,000.00 20,174,945.19 3,231,583.35 23,511,528.54 104,147,000.00 104,147,000.00 45,000.00 9,772,333.27 83,642.87 9,900,976.14 6.8757.000 (1) Loan of USD 820,000 bears interest rates at MLR+0.25% p.a.. The principal and accrued interest expense will be repaid within August 24, 2014. (2) In 2012 and 2013, the Company has entered into longterm agreements. These loans bear interest rates at MLR, but not over 15% p.a.. The principals and accrued interest expenses will be repaid by 2015 and 2016, respectively. Except for the above mentioned, as of December 31, 2013 and December 31, 2012, loans to and loans from related parties are in term of promissory notes, which are due on call, bear interest rate at MLR or MLR+ 0.25% p.a. of a local bank. These loans to and from related parties have no collateral. Consolidated financial statements December 31, 2013 Interest rate (%) ไม ค ด Separate financial statements 2013 2012 2013 2012 45,000.00 13,148,950.42 83,324.55 13,277,274.97 54 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 8. Trade and other accounts receivable Trade accounts receivable Related party Other parties Total trade accounts receivables Other accounts receivable Related party Other parties Total other accounts receivable Total Note 6.3 6.3 Consolidated financial statements 2013 158,845,859.99 158,845,859.99 26,435,821.81 6,520,932.40 32,956,754.21 191,802,614.20 2012 121,560,031.27 121,560,031.27 22,060,821.83 51,053.76 22,111,875.59 143,671,906.86 46,971,280.85 68,493,548.05 115,464,828.90 26,435,821.81 6,254,252.34 32,690,074.15 148,154,903.05 Separate financial statements 2013 2012 14,432,951.01 54,308,998.36 68,741,949.37 22,060,821.83 21,743.08 22,082,564.91 90,824,514.28 Consolidated financial statements 2013 2012 Separate financial statements 2013 2012 Related party Within credit term Over due Not over 3 months Over 3 months but not over 6 months Over 6 months but not over 12 months Total Other parties Within credit term Over due Not over 3 months Over 3 months but not over 6 months Total 145,954,135.10 12,851,691.20 40,033.69 158,845,859.99 115,468,298.36 6,091,732.91 121,560,031.27 7,249,492.18 5,756,028.69 15,827,334.70 18,138,425.28 46,971,280.85 55,641,856.85 12,851,691.20 68,493,548.05 3,124,356.81 7,173,655.77 1,512,487.34 2,622,451.09 14,432,951.01 48,217,265.45 6,091,732.91 54,308,998.36 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 55
NOTES TO FINANCIAL STATEMENTS (CONT) 9. Inventories garment business Consolidated financial statements 2013 2012 Separate financial statements 2013 2012 Finished goods Work in process Raw materials and supplies Raw materials in transit Total Less allowance for declining in value of inventories Net 2,929,366.65 90,316,545.6 97,837,331.38 18,105,374.49 209,188,618.12 209,188,618.12 5,119,357.50 99,271,769.56 84,656,510.56 7,125,202.59 196,172,840.21 (600,104.88) 195,572,735.33 1,416,026.57 62,267,232.12 61,984,055.38 13,424,605.35 139,091,919.42 139,091,919.42 1,849,366.05 72,157,041.68 48,833,530.43 4,324,462.69 127,164,400.85 127,164,400.85 The cost of inventories which is recognised as an expense and included in cost of sale of goods for the year ended December 31, 2013 amounted to Baht 977.62 million (2012: Baht 970.20 million) in the consolidated statements of comprehensive income and Baht 578.19 million (2012: Baht 582.93 million) in the separate statements of comprehensive income. In 2013, the Group recognised a recovery of allowance for decline in value of inventories of Baht 0.60 million (2012: Baht 0.42 million). 10. Inventories real estate business Consolidated financial statements 2013 2012 Separate financial statements 2013 2012 Land Land development Construction in progress Infrastructure Construction development costs Total Less cumulative costs transferred to cost of sales Net 132,108,126.00 27,518,043.39 317,239,478.76 67,820,767.37 13,753,946.47 558,440,361.99 (336,500,988.02) 221,939,373.97 132,597,323.73 27,564,410.83 162,763,666.11 48,301,464.84 9,544,176.65 380,771,042.16 (191,744,101.25) 189,026,940.91 57,532,215.00 2,062,252.50 119,018,329.62 22,077,211.76 1,736,390.63 202,426,399.51 (88,947,779.21) 113,478,620.30 58,021,412.73 2,108,619.94 37,015,757.22 13,253,421.15 1,661,183.51 112,060,394.55 (47,632,061.90) 64,428,332.65 As at December 31, 2013, inventories real estate business of the Company and subsidiaries totaling Baht 206.83 million (2012 : Baht 168.89 million) in consolidated financial statements and Baht 106.05 million (2012 : Baht 57.17 million) in separate financial statements, are mortgaged as collateral for longterm loans (Note 17) and letters of guarantee for construction and maintenance of infrastructures (Note 26.3). 56 ANNUAL REPORT 2013
11. Other current assets Advances for constructions Interest receivables 6.3 Advances for purchase of raw materials Income tax deducted at source Other current assets Total 2,401,937.34 28,530,133.09 2,551,998.39 4,241,493.89 3,977,805.12 41,703,367.83 18,565,311.00 18,067,097.10 3,249,698.71 2,997,150.64 4,141,262.68 47,020,520.13 2,392,958.94 29,038,772.01 1,813,939.90 1,556,286.86 1,450,802.99 36,252,760.70 15,903,189.00 19,844,763.85 2,224,102.63 1,425,809.91 2,467,613.71 41,865,479.10 12. Investments in subsidiaries and associates Paidin Consolidated financial statements capital Ownership Type of (Thousand interest Investment at equity method Name business Baht) (%) 2013 2012 Investment in associates : Castle Peak Pulp & Paper Co., Ltd. Thanee Watana Co., Ltd. (1) Total investment in associates ผล ตเย อกระดาษ อส งหาร มทร พย 100,000 3,750 41.00 49.00 36,738,311.49 3,041,560.56 39,779,872.05 7,226,775.73 3,067,877.13 10,294,652.86 The share of comprehensive income (loss) of two associates in the consolidated statements of comprehensive income for the year ended December 31, 2013 amounted to Baht 29.49 million (2012 : Baht (75.31) million), were computed from the financial statements which audited by other auditors. Paidin Separate financial statements capital Ownership Type of (Thousand interest Investment at cost method Dividend income Name business Baht) (%) 2013 2012 2013 2012 Investments in subsidiaries : C.P.G. Garment Co., Ltd. Castle Peak Real Estate Co., Ltd. Investment in associates : Castle Peak Pulp & Paper Co., Ltd. Thanee Watana Co., Ltd. (1) Total (1) Not started its core business. NOTES TO FINANCIAL STATEMENTS (CONT) Note Export garment Real estate Pulp & paper Real estate Consolidated financial statements 21,200 200,000 100,000 3,750 99.86 99.99 41.00 49.00 21,170,000.00 199,999,880.00 41,000,000.00 1,837,500.00 264,007,380.00 21,170,000.00 199,999,880.00 41,000,000.00 1,837,500.00 264,007,380.00 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 57 Separate financial statements 2013 2012 2013 2012
13. Property, plant and equipment Cost plus revaluation surplus : Land and improvement Land revaluation surplus Buildings Buildings revaluation surplus Cost : Machinery and equipment Furniture and office equipment Leasehold building improvement Other constructions Vehicles Assets under construction and installation Total cost NOTES TO FINANCIAL STATEMENTS (CONT) As at December 31, 2012 46,304,335.50 102,815,263.20 112,238,872.78 236,034,831.56 343,092,159.87 117,760,741.95 3,899,086.28 355,562.61 36,764,775.26 999,265,629.01 Consolidated financial statements Increase 275,000.00 8,853,121.18 1,442,131.01 2,388,442.00 12,958,694.19 Decrease (17,764,699.40) (340,157.48) (576,000.00) (18,680,856.88) Transfer in (out) 238,442.00 (238,442.00) As at December 31, 2013 46,304,335.50 102,815,263.20 112,513,872.78 236,034,831.56 334,180,581.65 119,101,157.48 3,899,086.28 355,562.61 36,188,775.26 2,150,000.00 993,543,466.32 Accumulated depreciation : Land improvement Building Building revaluation surplus Machinery and equipment Furniture and office equipment Leasehold building improvement Other constructions Vehicles Total accumulated depreciation Net (10,298,398.70) (97,415,276.14) (144,696,156.78) (322,646,893.78) (112,590,350.58) (3,899,085.28) (167,559.35) (36,342,339.39) (728,056,060.00) 271,209,569.01 (1,472,200.21) (10,443,281.88) (7,046,046.86) (1,663,865.93) (17,778.12) (119,958.00) (20,763,131.00) (7,804,436.81) 17,764,221.36 339,945.48 575,999.00 18,680,165.84 (691.04) (10,298,398.70) (98,887,476.35) (155,139,438.66) (311,928,719.28) (113,914,271.03) (3,899,085.28) (185,337.47) (35,886,298.39) (730,139,025.16) 263,404,441.16 58 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) Separate financial statements As at December 31, 2012 Increase Decrease Transfer in (out) As at December 31, 2013 Cost plus revaluation surplus : Land and land improvement Land revaluation surplus Buildings Buildings revaluation surplus Cost : Machinery and equipment Furniture and office equipment Vehicles Assets under construction and installation Total cost 40,104,335.50 50,596,263.20 90,343,339.19 157,458,448.61 218,163,453.36 71,754,128.36 3,972,680.66 632,392,648.88 6,747,331.46 1,160,532.79 2,388,442.00 10,296,306.25 (13,915,019.08) (164,719.35) (14,079,738.43) 238,442.00 (238,442.00) 40,104,335.50 50,596,263.20 90,343,339.19 157,458,448.61 210,995,765.74 72,988,383.80 3,972,680.66 2,150,000.00 628,609,216.70 Accumulated depreciation : Land improvement Building Building revaluation surplus Machinery and equipment Furniture and office equipment Vehicles Total accumulated depreciation Net (10,298,398.70) (82,459,058.45) (103,272,211.73) (206,105,848.26) (68,448,253.56) (3,959,263.96) (474,543,034.66) 157,849,614.22 (842,395.08) (7,090,036.20) (4,553,953.95) (1,059,713.22) (8,381.04) (13,554,479.49) (3,258,173.24) 13,914,834.08 164,535.35 14,079,369.43 (369.00) (10,298,398.70) (83,301,453.53) (110,362,247.93) (196,744,968.13) (69,343,431.43) (3,967,645.00) (474,018,144.72) 154,591,071.98 As at December 31, 2013, substantial parcels of land and construction thereon of the Group, with net carrying value of Baht 231.01 million (2012 : Baht 242.65 million) in the consolidated financial statements, and Baht 132.21 million (2012 : Baht 140.14 million) in the separate financial statements, were mortgaged as collateral for overdrafts and shortterm loans from financial institutions of the Group (Note 15) and loans from financial institutions of an associate (Note 26.5). As at December 31, 2013, the Group had fully depreciated fixed assets which were still in active use at gross carrying value totaling Baht 444.14 million (2012 : Baht 461.25 million) in the consolidated financial statements and Baht 256.39 million (2012 : Baht 269.25 million) in the separate financial statements. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 59
14. Investment properties/ Assets held for sale Cost : Land and land improvement Buildings and other constructions Total cost Accumulated depreciation : Land improvement Buildings and other constructions Total accumulated depreciation Allowance for impairment of assets Land Buildings and other constructions Total allowance for impairment of assets Net NOTES TO FINANCIAL STATEMENTS (CONT) As at December 31, 2012 107,569,099.00 37,755,071.56 145,324,170.56 (80,552.01) (20,759,079.33) (20,839,631.34) (2,148,458.00) (2,336,002.90) (4,484,460.90) 120,000,078.32 Consolidated financial statements Increase 11,340.00 11,340.00 (943,886.52) (943,886.52) (932,546.52) Decrease Transfer in (out) As at December 31, 2013 107,580,439.00 37,755,071.56 145,335,510.56 (80,552.01) (21,702,965.85) (21,783,517.86) (2,148,458.00) (2,336,002.90) (4,484,460.90) 119,067,531.80 Separate financial statements As at December 31, 2012 Increase Decrease Transfer in (out) As at December 31, 2013 Cost : Land and land improvement Buildings Total cost Accumulated depreciation : Land improvement Buildings Total accumulated depreciation Net 99,375,021.00 33,861,732.66 133,236,753.66 (80,552.01) (19,201,743.33) (19,282,295.34) 113,954,458.32 11,340.00 11,340.00 (943,886.52) (943,886.52) (932,546.52) 99,386,361.00 33,861,732.66 133,248,093.66 (80,552.01) (20,145,629.85) (20,226,181.86) 113,021,911.80 On July 17, 2012, The Company had entered into an agreement for compensation of leasehold termination. The Company, who owns leasehold right, will get compensation of Baht 46.40 million. As a result, the Company had reclassified leasehold land and building, with net carrying value at December 31, 2555, of Baht 21.44 million, which was recorded under investment properties to presented as assets held for sale. In January 2013, the Company has transferred its ownership and received the rest compensation in full amount. This resulted gain on assignment of Baht 24.95 million for the year 2013. 60 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) Fair value of investment properties as at December 31, 2013 is as follows: Consolidated financial statements Separate financial statements At cost Fair value At cost Fair value Land Land and buildings Total 78,102,868.00 40,964,663.80 119,067,531.80 104,315,350.00 81,980,000.00 72,057,248.00 40,964,663.80 113,021,911.80 84,691,250.00 81,980,000.00 Fair values are appraised values, performed by independence appraisers, Siam Appraisal and Service Co., Ltd. and UK. Valuations and Agency Co., Ltd., using market values on an existing use basis, and open market of the land located nearby. As at December 31, 2013, investment properties of the Company, with net carrying value of Baht 77.13 million (2012: Baht 77.68 million) in the consolidated and separate financial statements, were mortgaged as collateral for overdrafts and shortterm loans from financial institutions of the Company (Note 15) and loans from financial institutions of an associate (Note 26.5). 15. Overdrafts and shortterm loans from financial institutions Consolidated financial statements Separate financial statements 2013 2012 2013 2012 Bank overdrafts Short term loans from banks Packing credits Liability under trust receipts Promissory notes Total 9,164,927.40 222,100,000.00 154,522,565.52 6,000,000.00 391,787,492.92 11,382,240.00 126,800,000.00 101,931,664.19 240,113,904.19 996,943.07 180,000,000.00 103,243,425.99 6,000,000.00 290,240,369.06 7,058,785.28 115,500,000.00 64,013,404.09 186,572,189.37 As at December 31, 2013, the Group has credit facilities with several banks totaling Baht 621.92 million (2012: Baht 621.92 million) in the consolidated financial statements and Baht 421.50 million (2012:Baht 421.50 million) in the separate financial statements. All loans are guaranteed by mortgaging land and construction thereon (Note 13), investment properties (Note 14), and personally guaranteed by certain the Company directors. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 61
NOTES TO FINANCIAL STATEMENTS (CONT) 16. Other current liabilities Consolidated financial statements Separate financial statements Note 2013 2012 2013 2012 Accrued salary, wages and bonuses Interest payable Other current liabilities Total 6.3 26,205,297.00 3,653,963.50 22,620,363.06 52,479,623.56 25,122,841.00 1,685,758.76 12,354,595.66 39,163,195.42 14,468,817.00 3,459,546.82 15,388,231.15 33,316,594.97 14,081,027.00 1,857,849.18 10,155,425.00 26,094,301.18 17. Long term loans Consolidated financial statements Separate financial statements 2013 2012 2013 2012 Current portion of longterm loans Longterm loans Total 11,000,203.44 11,000,203.44 4,668,000.00 508,449.69 5,176,449.69 273,003.44 273,003.44 508,449.69 508,449.69 On May 17, 2012, the Company has entered into a financial support agreement with a commercial bank in order to lend for its real estate project. The credit line of this agreement is Baht 140.35 million, which consists of 1) loan of Baht 105.35 million and 2) letter of guarantee of Baht 35.00 million. This loan carries interest rate at MLR+1.0% p.a. and guaranteed by mortgaging the substantive portion of inventories real estate business of the Company (Note 10), and personally guaranteed by a director. The repayment amount to free / withdraw the collateral of each unit will not less than the summation of land value of such unit and 115% of construction value, and the Company agrees to repay principle together with interest as follows Repayment period from agreement date Within 12 months Within 13 to 36 months Within 37 to 60 months Within 72 months Repayment amount (principle together with interest) (Baht) 80,000 27,920,000 70,000,000 Repayment all remaining principle and interest Two subsidiaries ( borrowers ) have credit lines with a commercial bank totaling Baht 144.00 million (Baht 72.00 million each), carried interest rate of MLR0.50% p.a.. Such credit lines are guaranteed by mortgaging substantial portion of inventories real estate business of the said subsidiaries (Note 10), and personally guaranteed by a director. The entire loans will be repaid within 40 months since the first principle is withdrawn (June 27, 2011 and August 16, 2011). When the mortgage asset is free and/ or withdraw mortgaged land of these loans in order to transfer the ownership to buyer, lenders agree to repay 60% of selling price. As of December 31, 2013 and 2012, the amount of 60% of identified in to sell and to buy agreements of each borrower is higher than its remaining loan, therefore, two subsidiaries has presented entire loans as current portion of longterm loans. 62 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 18. Deferred tax Deferred tax assets and liabilities as at December 31, 2013 and 2012 were as follows: Consolidated financial statements Assets Liabilities 2013 2012 2013 2012 Deferred tax assets Deferred tax liabilities Total Set off of tax Net deferred tax assets (liabilities) 15,710,489.10 15,710,489.10 (12,181,904.35) 3,528,584.75 27,862,856.68 27,862,856.68 (20,377,180.66) 7,485,676.02 (41,356,813.82) (41,356,813.82) 12,181,904.35 (29,174,909.47) (43,605,080.57) (43,605,080.57) 20,377,180.66 (23,227,899.91) Separate financial statements 2013 2012 Deferred tax assets Deferred tax liabilities Net deferred tax assets (liabilities) 9,685,057.19 (23,951,798.07) (14,266,740.88) 18,038,787.65 (25,572,221.39) (7,533,433.74) CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 63
NOTES TO FINANCIAL STATEMENTS (CONT) Movements in deferred tax assets and liabilities during the years 2013 and 2012 were as follows: At January 1, 2013 Consolidated financial statements (Charged) / Credited to: Profit or loss Other comprehensive income At December 31, 2013 Deferred tax assets : Investment properties Loss carry forward Others Total deferred tax assets Deferred tax liabilities : Inventories Investment in associates Land and buildings Investment properties Loss carry forward Others Total deferred tax liabilities Total credited (charged) 311,467.03 6,793,091.81 381,117.18 7,485,676.02 120,020.98 (246,075.43) (40,044,715.06) (3,314,290.08) 19,968,901.68 288,258.00 (23,227,899.91) (48,666.66) (4,002,889.63) 94,465.02 (3,957,091.27) (120,020.98) 5,263.31 2,156,773.52 86,229.92 (8,777,863.86) 702,608.53 (5,947,009.56) (9,904,100.83) 262,800.37 2,790,202.18 475,582.20 3,528,584.75 (240,812.12) (37,887,941.54) (3,228,060.16) 11,191,037.82 990,866.53 (29,174,909.47) 64 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) Deferred tax assets : Investment properties Loss carry forward Others Total deferred tax assets Deferred tax liabilities : Inventories Investment in subsidiary Investment in associates Land and buildings Investment properties Loss carry forward Others Total deferred tax liabilities Total credited (charged) At January 1, 2012 356,240.43 6,007,085.58 440,400.00 6,803,726.01 216,161.04 12,195,191.43 (8,930,215.24) (42,587,719.97) (3,237,370.61) 12,170,904.26 505,645.45 (29,667,403.64) Consolidated financial statements (Charged) / Credited to: Profit or loss (44,773.40) 786,006.23 (59,282.82) 681,950.01 (96,140.06) (12,195,191.43) 8,166,740.79 2,543,004.91 (76,919.47) 7,797,997.42 (217,387.45) 5,922,104.71 6,604,054.72 Other comprehensive income 517,399.02 517,399.02 517,399.02 At December 31, 2012 311,467.03 6,793,091.81 381,117.18 7,485,676.02 120,020.98 (246,075.43) (40,044,715.06) (3,314,290.08) 19,968,901.68 288,258.00 (23,227,899.91) CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 65
Deferred tax assets (liabilities) Land and buildings Investment properties Loss carry forward Others Net NOTES TO FINANCIAL STATEMENTS (CONT) At January 1, 2013 (22,257,931.31) (3,314,290.08) 17,772,342.90 266,444.75 (7,533,433.74) Separate financial statements (Charged) / Credited to: Profit or loss 1,534,193.40 86,229.92 (8,931,441.35) 577,710.89 (6,733,307.14) Other comprehensive income At December 31, 2013 (20,723,737.91) (3,228,060.16) 8,840,901.55 844,155.64 (14,266,740.88) Separate financial statements (Charged) / Credited to: At January 1, 2012 Profit or loss Other comprehensive income At December 31, 2012 Deferred tax assets (liabilities) Investment in subsidiary Land and buildings Investment properties Loss carry forward Others Net 12,195,191.43 (24,022,092.31) (3,237,370.61) 9,020,724.62 283,410.34 (5,760,136.53) (12,195,191.43) 1,764,161.00 (76,919.47) 8,751,618.28 (16,965.59) (1,773,297.21) (22,257,931.31) (3,314,290.08) 17,772,342.90 266,444.75 (7,533,433.74) As at December 31, 2013, deferred tax assets arising from temporary differences and unused tax losses of Baht 44.01 million (2012 : Baht 38.25 million) in the consolidated financial statements and Baht 27.37 million (2012 : Baht 16.43 million) in the separate financial statements that have not been recognised because it is not probable that they will be able to utilise the tax benefit in the foreseeable future. 66 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 19. Employee benefit obligations Movements of the provision for the unrecognized transitional obligations were as follows : Consolidated financial statements Separate financial statements Unrecognised defined benefit obligations as at January 1, 2013 Recognised through profit or loss for the year Defined benefit plan actuarial gains Unrecognised defined benefit obligations as at December 31, 2013 15,422,508.00 (4,295,967.00) (3,747,597.00) 7,378,944.00 7,086,363.00 (2,765,257.00) 4,321,106.00 Movements in the present value of the defined benefit obligations were as follows : Consolidated financial statements Separate financial statements Defined benefit obligations as at January 1, 2013 Recognised transitional obligation Current service costs and interest Benefit paid by projects Defined benefit plan actuarial gains Defined benefit obligations as at December 31, 2013 21,082,168.00 4,295,967.00 4,736,165.00 (202,000.00) (2,971,554.00) 26,940,746.00 9,724,931.00 2,765,257.00 1,975,724.00 14,465,912.00 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 67
20. Expenses by nature Significant expenses by nature for the years ended December 31, 2013 and 2012, were as follows: Raw materials and supplies used Changes in finished goods and work in process Increase in land, construction in progress and utilities during the year Changes in real estate under development projects Salary, wages and other employee benefits Depreciation Transportation expenses Rental and services Utility expenses NOTES TO FINANCIAL STATEMENTS (CONT) Consolidated financial statements 2013 582,902,004.53 11,145,214.81 173,459,550.01 (32,912,433.06) 408,740,153.00 21,707,017.56 16,491,374.31 23,095,511.08 24,304,668.74 2012 588,201,158.25 32,846,516.86 76,505,929.59 6,535,682.17 369,003,944.00 20,994,718.28 13,121,902.63 23,040,276.84 22,955,671.96 Separate financial statements 2013 347,946,868.83 10,323,149.04 90,290,797.84 (49,050,287.65) 235,994,434.00 14,498,366.01 12,908,407.03 10,210,013.96 13,489,477.01 2012 354,026,028.43 25,533,744.54 49,270,388.52 (2,641,744.21) 210,228,162.00 14,481,808.35 7,403,047.25 10,193,677.72 13,219,025.34 21. Income tax expense (income) Income tax recognised in profit or loss Current tax expense : Current year Deferred tax expense : Movements in temporary differences Benefit of tax losses recognised Net Consolidated financial statements 2013 65,969.25 (2,876,652.66) 12,780,753.49 9,904,100.83 9,970,070.08 2012 114,448.07 1,979,948.93 (8,584,003.65) (6,604,054.72) (6,489,606.65) Separate financial statements 2013 (2,198,134.21) 8,931,441.35 6,733,307.14 6,733,307.14 2012 10,524,915.49 (8,751,618.28) 1,773,297.21 1,773,297.21 68 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) Income tax recognised in other comprehensive income Consolidated financial statements Separate financial statements 2013 2012 2013 2012 Currency translation (517,399.02) 22. Segment information The Group has two reportable segments, as described below, which are the Group s strategic divisions. The strategic divisions offer different manufacturing and products, and are managed separately because they require different technology and marketing strategies. For each of the strategic divisions, the chief operating decision maker (CODM) reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group s reportable segments. Segment 1 Garment manufacturing Segment 2 Development of real estate for sale Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax and finance costs, as included in the internal management reports that are reviewed by the Group s CODM. Segment profit before tax and finance costs is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 69
NOTES TO FINANCIAL STATEMENTS (CONT) Information relating to business segments for the years ended December 31, 2013 and 2012 as follows: External revenue Intersegment revenue Total revenue 1,001 59 1,060 Real estate 195 195 Consolidated financial statements 2013 2012 1,196 59 1,255 Add (less) inter transactions (59) (59) 1,196 1,196 1,082 54 1,136 127 127 1,209 54 1,263 Unit : Million Baht Garment Others Total Net Garment Others Total Net Real estate Add (less) inter transactions (54) (54) 1,209 1,209 Segment results Unallocated income (expenses) Gain on disposal / assignment of assets Share of profit (loss) from investment in associate Financial costs Income tax (expense)/ income Profit (loss) for the year (85) 19 1 (65) (5) (70) 26 11 (21) (10) (64) 41 19 2 62 (16) 46 (74) (17) 7 (38) Segment assets 1,414 433 19 1,866 (446) 1,420 1,284 372 18 1,674 (421) 1,253 70 ANNUAL REPORT 2013
Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. However, the Company has no assets located in foreign countries. Geographical information Unit : Million Baht Foreign countries Domestic Total revenue NOTES TO FINANCIAL STATEMENTS (CONT) 2013 2012 990 206 1,196 1,046 163 1,209 Major customer Revenues from four major customers of the Group s garment manufacturing segment represent approximately Baht 719 million for the year 2013 (2012: Baht 831 million) of the consolidated revenues. 23. Promotional privileges By virtue of the provisions of the Industrial Investment Promotion Act B.E. 2520, the Company has been granted certain promotional privileges by the Board of Investment relating to lowincome or middleincome housing business. The privileges granted include: (a) Exemption from payment of corporate income tax for certain operations for a period of 5 years from the date on which the income is first derived from such operation (January 23, 2013). (b) Accumulated loss during the exemption period be deducted from net income after the exemption period for 5 years. CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 71
Summary of revenues from promoted and nonpromoted businesses: Promoted business Promoted business NOTES TO FINANCIAL STATEMENTS (CONT) 2013 Nonpromoted business 2013 Nonpromoted business Consolidated financial statements Total Promoted business Consolidated financial statements Total Promoted business 2012 Nonpromoted business 2012 Nonpromoted business Unit : Million Baht Revenues 51 1,145 1,196 1,209 1,209 Total Unit : Million Baht Revenues 51 597 648 730 730 24. Commitments from real estate developing projects Consolidated financial statements Total Unit : Million Baht Separate financial statements 2013 2012 2013 2012 Value of sales already contracted during the year Cumulative value of sales already contracted As percentage of total sales of projects on hand (%) 253.16 601.58 52.09 172.31 348.42 29.29 111.66 209.61 44.26 97.95 97.95 20.65 Number of projects: Number of projects on hand at beginning of the year Number of new opened projects Number of closed projects Number of projects on hand at end of the year 4 4 4 1 (1) 4 1 1 1 1 (1) 1 72 ANNUAL REPORT 2013
NOTES TO FINANCIAL STATEMENTS (CONT) 25. Financial instruments 25.1 Financial risk management policies The Group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from nonperformance of contractual obligations by counterparties. The Group does not hold or issue derivative financial instruments for speculative or trading purposes. 25.2 Capital management The objectives of the Group s capital management are to safeguard the Group s ability to continue as a going concern in order to provide returns to the Group s shareholders and benefits to other stakeholders. The management sets strategies to support the Group s operations for more efficiency, and better performances and stronger financial status, and capital management policies to maintain the optimal capital structure and cost of capital. 25.3 Interest rate risk Interest rate risk derives from changes in interest rate. The Group has interest rate risk because their loans bear interest at the floating interest rate. If the interest rate significantly changes, it will be impact to the Group. The information of interest rate and maturity of longterm loans are disclosed in Note 17. 25.4 Foreign currency exchange rate risk The Group has the foreign currency exchange rate risk related to assets and liabilities denominated in foreign currencies which have not made foreign currency exchange rate risk hedging. As at December 31, 2013 and 2012, assets and liabilities denominated in foreign currencies which have not been hedged against foreign exchange rate risk, are summarized as follows: Assets Consolidated financial statements 2013 Liabilities Assets Unit : Million Baht 2012 Liabilities US Dollar Hong Kong Dollar 36 145 29 88 2 95 14 Assets Unit : Million Baht Separate financial statements 2013 2012 Liabilities Assets Liabilities US Dollar Hong Kong Dollar 35 92 26 37 2 55 13 CASTLE PEAK HOLDINGS PUBLIC COMPANY LIMITED 73
NOTES TO FINANCIAL STATEMENTS (CONT) 25.5 Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group as and when they fall due. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the report date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the report. 25.6 Liquidity risk Liquidity risk, or funding risk, is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell financial assets quickly at close to its fair value. The Group s financial assets comprise cash and cash equivalents, trade accounts receivable and inventories which are liquid and able to sell at close to this fair value when the Group wishes to raise fund. 25.7 Fair value The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. In determining the fair value of its financial assets and liabilities, the Company takes into account its current circumstances and the costs that would be incurred to exchange or settle the underlying financial instrument. Management believes the fair value of the Company s financial assets and liabilities do not material differ from their carrying values since the majority of the financial assets and liabilities are classified as shortterm and the loans and borrowings are bearing interest at rates close to current market rate. 26. Commitments and contingent liabilities As at December 31, 2013 : 26.1 The Company and a subsidiary had contingent liabilities from bank s issuance the letter of guarantee to Custom Department and Government agencies totaling Baht 7.79 million, 26.2 The Company and a subsidiary had commitment on letter of credit for purchasing goods from overseas totaling Baht 15.16 million, 26.3 The Company and two subsidiaries had contingent liabilities from bank s issuance of letter of guarantee to the Land Department to guarantee the construction and maintenance of utilities totaling Baht 98.64 million. 26.4 The Company and a subsidiary had commitments on the agreements of development and construction of real estate projects with several contractors totaling Baht 82.06 million. 26.5 The Company had contingent liabilities from being a guarantor for loans of an associate amounting to Baht 250.00 million. A portion of land and constructions and investment properties are mortgaged as collateral for loans of said associate amounting to Baht 80.00 million and Baht 90.00 million (Notes 13 and 14), respectively. 26.6 The Company and a subsidiary had commitment on forward contacts sold with certain local banks totaling USD 6.52 million against Baht 200.84 million. 27. Financial statements approval Board of Directors of Castle Peak Holdings Public Company Limited has approved these financial statements on February 26, 2014 74 ANNUAL REPORT 2013