Haad Thip Public Company Limited and its subsidiaryhtc.listedcompany.com/misc/fs/20181114-htc-fs-3q2018-en.pdf · 2018-11-14 · Haad Thip Public Company Limited and its subsidiary

Haad Thip Public Company Limited

and its subsidiary

Interim financial statements

for the three-month and nine-month periods ended

30 September 2018

and

Independent auditor’s report on review

of interim financial information

Independent Auditor’s Report on Review of Interim Financial Information

To the Board of Directors of Haad Thip Public Company Limited

I have reviewed the accompanying consolidated and separate statements of financial position of Haad Thip

Public Company Limited and its subsidiary, and of Haad Thip Public Company Limited, respectively, as at

30 September 2018; the consolidated and separate statements of comprehensive income for the three-month

and nine-month periods ended 30 September 2018, the consolidated and separate statements of changes in

equity and cash flows for the nine-month period ended 30 September 2018; and condensed notes (“interim

financial information”). Management is responsible for the preparation and presentation of this interim

financial information in accordance with Thai Accounting Standard 34, “Interim Financial Reporting”.

My responsibility is to express a conclusion on this interim financial information based on my review.

Scope of Review

I conducted my review in accordance with Thai Standard on Review Engagements 2410, “Review of Interim

Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial

information consists of making inquiries, primarily of persons responsible for financial and accounting

matters, and applying analytical and other review procedures. A review is substantially less in scope than an

audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to

obtain assurance that I would become aware of all significant matters that might be identified in an audit.

Accordingly, I do not express an audit opinion.

Conclusion

Based on my review, nothing has come to my attention that causes me to believe that the accompanying

interim financial information is not prepared, in all material respects, in accordance with Thai Accounting

Standard 34, “Interim Financial Reporting”.

(Thanit Osathalert)

Certified Public Accountant

Registration No. 5155

KPMG Phoomchai Audit Ltd.

Bangkok

8 November 2018

Haad Thip Public Company Limited and its subsidiaryStatement of financial position

30 September 31 December 30 September 31 December

Assets Note 2018 2017 2018 2017

(Unaudited) (Unaudited)

Current assets

Cash and cash equivalents 30,302 61,594 16,586 56,075

Current investments 5 10,841 16,996 194 4,461

Trade accounts receivable 6 523,759 536,034 523,759 536,034

Other receivables 4 32,957 31,774 35,094 33,239

Inventories 302,966 252,620 287,316 223,506

Current tax assets - 2,552 - 2,552

Other current assets 11,198 17,656 11,198 17,656

Total current assets 912,023 919,226 874,147 873,523

Non-current assets

Investment in subsidiary 7 - - 59,497 59,497

Investment properties 206,388 206,388 207,347 207,347

Property, plant and equipment 8, 9 3,483,536 3,448,322 3,188,442 3,201,850

Intangible assets 65,686 18,084 65,669 18,063

Deferred tax assets 345 335 - -

Other non-current assets 9,744 16,889 9,743 16,793

Total non-current assets 3,765,699 3,690,018 3,530,698 3,503,550

Total assets 4,677,722 4,609,244 4,404,845 4,377,073

(in thousand Baht)

Consolidated Separatefinancial statements financial statements

The accompanying notes are an integral part of these financial statements.

2



Liabilities and equity Note 2018 2017 2018 2017


Current liabilities

Short-term loans from financial

institutions 9, 11 160,000 - 160,000 -

Trade accounts payable 4, 10 280,821 231,504 356,943 288,358

Other payables 471,548 453,528 468,342 449,541

Current portion of long-term loans 9, 11 86,960 100,290 83,310 69,840

Current portion of debenture 9, 17 - 150,000 - 150,000

Current portion of finance lease liabilities 11 51,901 52,340 51,650 52,095

Income tax payable 4,997 2,518 4,997 2,518

Total current liabilities 1,056,227 990,180 1,125,242 1,012,352

Non-current liabilities

Long-term loans 9, 11 380,650 379,500 313,650 379,500

Finance lease liabilities 11 108,606 108,367 108,233 107,805

Customers' deposits on bottles and cases 20,903 21,932 20,903 21,932

Deferred tax liabilities 281,463 283,826 281,442 283,805

Non-current provisions for employee benefits 165,932 160,187 165,326 159,631

Total non-current liabilities 957,554 953,812 889,554 952,673

Total liabilities 2,013,781 1,943,992 2,014,796 1,965,025

(in thousand Baht)



3



Liabilities and equity Note 2018 2017 2018 2017


Equity

Share capital Authorised share capital 199,218 199,218 199,218 199,218

Issued and paid-up share capital 199,218 199,218 199,218 199,218

Share premium

Share premium on ordinary shares 353,946 353,946 353,946 353,946

Retained earnings

Appropriated

Legal reserve 25,000 25,000 25,000 25,000

General reserve 35,000 35,000 35,000 35,000

Unappropriated 762,756 764,068 488,967 510,966

Other component of equity 8 1,288,004 1,288,004 1,287,918 1,287,918

Equity attributable to owners of the parent 2,663,924 2,665,236 2,390,049 2,412,048 Non-controlling interests 17 16 - -

Total equity 2,663,941 2,665,252 2,390,049 2,412,048

Total liabilities and equity 4,677,722 4,609,244 4,404,845 4,377,073

(in thousand Baht)



4

Haad Thip Public Company Limited and its subsidiaryStatement of comprehensive income (Unaudited)

Note 2018 2017 2018 2017

RevenueRevenue from sale of goods 1,404,392 1,449,239 1,404,392 1,449,239 Net foreign exchange gain 369 27 345 29 Dividend income 4, 7 - - 49,977 - Other income 4 3,440 7,899 3,650 8,259 Total income 1,408,201 1,457,165 1,458,364 1,457,527

ExpensesCost of sale of goods 4 927,297 973,034 946,047 1,018,608 Distribution costs 301,607 288,639 301,607 288,639 Administrative expenses 119,935 112,945 118,160 111,849 Finance costs 7,843 9,933 7,318 8,526 Total expenses 1,356,682 1,384,551 1,373,132 1,427,622

Profit before income tax expense 51,519 72,614 85,232 29,905 Tax income (expense) (4,729) 768 (4,732) 766 Profit for the period 46,790 73,382 80,500 30,671

Total comprehensive income for the period 46,790 73,382 80,500 30,671

Profit attributable to: Owners of the parent 46,789 73,380 80,500 30,671 Non-controlling interests 1 2 - - Profit for the period 46,790 73,382 80,500 30,671

Total comprehensive income attributable to: Owners of the parent 46,789 73,380 80,500 30,671 Non-controlling interests 1 2 - - Total comprehensive income for the period 46,790 73,382 80,500 30,671

Basic earnings per share (in Baht) 15 0.23 0.37 0.40 0.15

Consolidated

30 September

financial statements

(in thousand Baht)

Three - month period ended

financial statementsSeparate

Three - month period ended30 September


5

Haad Thip Public Company Limited and its subsidiaryStatement of comprehensive income (Unaudited)

Note 2018 2017 2018 2017

RevenueRevenue from sale of goods 4,324,973 4,287,308 4,324,973 4,287,308 Net foreign exchange gain - 168 - 140 Dividend income 4, 7 - - 49,977 40,458 Other income 4 13,362 15,978 14,415 17,027 Total income 4,338,335 4,303,454 4,389,365 4,344,933

ExpensesCost of sale of goods 4 2,870,119 2,899,657 2,947,439 3,026,733 Distribution costs 891,851 839,732 891,851 839,732 Administrative expenses 333,635 291,454 329,116 288,368 Net foreign exchange loss 89 - 116 - Finance costs 24,133 29,780 23,016 24,578 Total expenses 4,119,827 4,060,623 4,191,538 4,179,411

Profit before income tax expense 218,508 242,831 197,827 165,522 Tax expense (20,598) (15,800) (20,608) (15,807) Profit for the period 197,910 227,031 177,219 149,715

Total comprehensive income for the period 197,910 227,031 177,219 149,715

Profit attributable to: Owners of the parent 197,906 227,025 177,219 149,715 Non-controlling interests 4 6 - - Profit for the period 197,910 227,031 177,219 149,715

Total comprehensive income attributable to: Owners of the parent 197,906 227,025 177,219 149,715 Non-controlling interests 4 6 - - Total comprehensive income for the period 197,910 227,031 177,219 149,715

Basic earnings per share (in Baht) 15 0.99 1.14 0.89 0.75

Consolidated

Nine - month period ended

(in thousand Baht)

financial statementsNine - month period ended


30 September 30 September

Separate


6

Haad Thip Public Company Limited and its subsidiaryStatement of changes in equity (Unaudited)

Other component of equity

EquityIssued and Share premium attributable to Non-

paid-up on ordinary Legal General Revaluation owners of controlling Total Note share capital shares reserve reserve Unappropriated surplus the parent interests equity

Nine - month period ended 30 September 2017Balance at 1 January 2017 199,218 353,946 25,000 35,000 637,071 1,222,975 2,473,210 10 2,473,220

Transactions with owners, recorded directly in equity Distributions to owners of the Company Dividends to owners of the Company 16 - - - - (145,429) - (145,429) - (145,429) Total distributions to owners of the Company - - - - (145,429) - (145,429) - (145,429)

Change in ownership interests in subsidiary Dividends to non-controlling interests - - - - - - - (2) (2) Total change in ownership interests in subsidiary - - - - - - - (2) (2)

Total transactions with owners, recorded directly in equity - - - - (145,429) - (145,429) (2) (145,431)

Comprehensive income for the period Profit - - - - 227,025 - 227,025 6 227,031 Other comprehensive income - - - - - - - - - Total comprehensive income for the period - - - - 227,025 - 227,025 6 227,031

Balance at 30 September 2017 199,218 353,946 25,000 35,000 718,667 1,222,975 2,554,806 14 2,554,820

Consolidated financial statements

Retained earnings

(in thousand Baht)


7



EquityIssued and Share premium attributable to Non-

paid-up on ordinary Legal General Revaluation owners of controlling Total Note share capital shares reserve reserve Unappropriated surplus the parent interests equity

Nine - month period ended 30 September 2018Balance at 1 January 2018 199,218 353,946 25,000 35,000 764,068 1,288,004 2,665,236 16 2,665,252

Transactions with owners, recorded directly in equity Distributions to owners of the Company Dividends to owners of the Company 16 - - - - (199,218) - (199,218) - (199,218) Total distributions to owners of the Company - - - - (199,218) - (199,218) - (199,218)

Change in ownership interests in subsidiary Dividends to non-controlling interests - - - - - - - (3) (3) Total change in ownership interests in subsidiary - - - - - - - (3) (3)

Total transactions with owners, recorded directly in equity - - - - (199,218) - (199,218) (3) (199,221)

Comprehensive income for the period Profit - - - - 197,906 - 197,906 4 197,910 Other comprehensive income - - - - - - - - - Total comprehensive income for the period - - - - 197,906 - 197,906 4 197,910

Balance at 30 September 2018 199,218 353,946 25,000 35,000 762,756 1,288,004 2,663,924 17 2,663,941


Retained earnings

(in thousand Baht)


8



Issued and Share premiumpaid-up on ordinary Legal General Revaluation Total

Note share capital shares reserve reserve Unappropriated surplus equity

Nine - month period ended 30 September 2017Balance at 1 January 2017 199,218 353,946 25,000 35,000 500,806 1,222,890 2,336,860

Transactions with owners, recorded directly in equity Distributions to owners of the Company Dividends to owners of the Company 16 - - - - (145,429) - (145,429) Total distributions to owners of the Company - - - - (145,429) - (145,429)

Total transactions with owners, recorded directly in equity - - - - (145,429) - (145,429)

Comprehensive income for the period Profit - - - - 149,715 - 149,715 Other comprehensive income - - - - - - - Total comprehensive income for the period - - - - 149,715 - 149,715

Balance at 30 September 2017 199,218 353,946 25,000 35,000 505,092 1,222,890 2,341,146

Separate financial statements

Retained earnings

(in thousand Baht)

The accompanying notes are an integral part of these financial statements.9



Issued and Share premiumpaid-up on ordinary Legal General Revaluation Total

Note share capital shares reserve reserve Unappropriated surplus equity

Nine - month period ended 30 September 2018Balance at 1 January 2018 199,218 353,946 25,000 35,000 510,966 1,287,918 2,412,048

Transactions with owners, recorded directly in equity Distributions to owners of the Company Dividends to owners of the Company 16 - - - - (199,218) - (199,218) Total distributions to owners of the Company - - - - (199,218) - (199,218)

Total transactions with owners, recorded directly in equity - - - - (199,218) - (199,218)

Comprehensive income for the period Profit - - - - 177,219 - 177,219 Other comprehensive income - - - - - - - Total comprehensive income for the period - - - - 177,219 - 177,219

Balance at 30 September 2018 199,218 353,946 25,000 35,000 488,967 1,287,918 2,390,049

Retained earnings

(in thousand Baht)


The accompanying notes are an integral part of these financial statements.10

Haad Thip Public Company Limited and its subsidiaryStatement of cash flows (Unaudited)

2018 2017 2018 2017

Cash flows from operating activities

Profit for the period 197,910 227,031 177,219 149,715 Adjustments to reconcile profit to cash receipts (payments)Tax expense 20,598 15,800 20,608 15,807 Finance costs 24,133 29,780 23,016 24,578 Depreciation 203,087 195,384 181,576 171,999 Amortisation 9,871 4,383 9,867 4,380 Unrealised (gain) loss on foreign exchange (109) (33) (109) 22 Reversal of bad and doubtful debt expenses for trade and other receivables (292) (814) (292) (814) Allowance for obsolete inventories 846 4,260 846 4,260 Gain on disposal of property, plant and equipment (3,762) (3,323) (3,762) (3,323) Loss on property, plant and equipment written-off 77 315 77 315 Loss on containers written-off 223 796 223 796 Gain on sale of investment units (868) (810) (737) (756) (Gain) loss on fair value adjustment of investment units 23 (234) 4 (95) Dividend income - - (49,977) (40,458) Interest income (239) (301) (232) (293)

451,498 472,234 358,327 326,133 Changes in operating assets and liabilitiesTrade accounts receivable 12,415 (45,792) 12,415 (45,792) Other receivables (1,031) 16,224 (1,703) 16,297 Inventories (51,192) (8,302) (64,656) (7,159) Other current assets 6,458 7,938 6,458 7,938 Other non-current assets 7,145 (7,784) 7,050 (7,757) Trade accounts payable 49,456 17,089 68,722 19,206 Other payables (835) 51,050 (60) 47,980 Customers' deposits on bottles and cases (1,029) 667 (1,029) 667 Provisions for employee benefits 5,745 9,162 5,695 9,130 Net cash generated from operating 478,630 512,486 391,219 366,643 Taxes paid (17,940) (17,181) (17,940) (17,181)

Net cash provided by operating activities 460,690 495,305 373,279 349,462

Consolidated Separatefinancial statements

Nine - month period ended30 September

(in thousand Baht)

30 SeptemberNine - month period ended



11

Haad Thip Public Company Limited and its subsidiaryStatement of cash flows (Unaudited)

2018 2017 2018 2017

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 3,845 3,324 3,845 3,324 Acquisition of property, plant and equipment (176,972) (115,523) (106,839) (113,989) Acquisition of intangible assets (57,473) (2,863) (57,473) (2,863) Proceeds from sale of investment units 1,199,000 1,001,000 1,135,000 881,000 Acquisition of investment units (1,192,000) (1,065,000) (1,130,000) (935,000) Dividends received - - 49,977 40,458 Interest received 239 301 232 293 Net cash used in investing activities (223,361) (178,761) (105,258) (126,777)

Cash flows from financing activitiesProceeds from short-term loans 160,000 517,000 160,000 517,000 Repayment of short-term loans - (707,000) - (707,000) Proceeds from long-term loans 70,350 88,800 - 88,800 Repayment of long-term loans (82,530) (86,800) (52,380) - Payment by a lessee for reduction of (150,000) - (150,000) - the outstanding liability relating to a finance lease (42,979) (41,273) (42,796) (41,098) Dividends paid to owners of the Company (199,218) (145,429) (199,218) (145,429) Dividends paid to non-controlling interests (3) (2) - - Interest paid (24,241) (29,852) (23,116) (24,628) Net cash used in financing activities (268,621) (404,556) (307,510) (312,355)

Net decrease in cash and cash equivalents (31,292) (88,012) (39,489) (89,670) Cash and cash equivalents at beginning of period 61,594 136,195 56,075 130,884 Cash and cash equivalents at ending of period 30,302 48,183 16,586 41,214

Supplemental disclosure of cash flows information

Non-cash transactions:

Property, plant and equipment purchased during the period are detailed as follows:

Property, plant and equipment purchased during the period 238,684 162,044 168,551 160,565 Less: assets acquired by way of finance lease (42,779) (47,696) (42,779) (47,696)

Interest capitalised (22) (24) (22) (24) (Increase) decrease in payables on purchases of

property and equipment (18,911) 1,199 (18,911) 1,144 Net purchase of property, plant and equipment

paid by cash 176,972 115,523 106,839 113,989

Consolidated

30 September 30 September

Separate

(in thousand Baht)

financial statements financial statementsNine - month period ended Nine - month period ended


12

Haad Thip Public Company Limited and its subsidiary Notes to the interim financial statements

For the three-month and nine-month periods ended 30 September 2018 (Unaudited)

13

Note Contents

1 General information

2 Basis of preparation of the interim financial statements

3 Seasonal operations

4 Related parties

5 Current investments

6 Trade accounts receivable

7 Investment in subsidiary

8 Property, plant and equipment

9 Interest-bearing liabilities

10 Trade accounts payable

11 Changes in liabilities arising from financing activities

12 Segment information

13 Income tax expense

14 Promotional privileges

15 Basic earnings per share

16 Dividends

17 Financial instruments

18 Agreements

19 Commitments with non - related parties

20 Contingent liability

21 Reclassification of accounts



14

These notes form an integral part of the interim financial statements.

The interim financial statements issued for Thai regulatory reporting purposes are prepared in the Thai

language. These English language financial statements have been prepared from the Thai language

financial statements, and were approved and authorised for issue by the Board of Directors on

8 November 2018.

1 General information

Haad Thip Public Company Limited, the “Company”, is incorporated in Thailand and has its registered

office at 87/1, Kanchanavanich Road, Thambol Banphru, Amphur Hadyai, Songkhla, Thailand.

The Company was listed on the Stock Exchange of Thailand in December 1988.

The Company’s major shareholders during the financial period were Rattakul family (35.57% shareholding),

and Gutsche Family Investments (Proprietary) Limited (24.11% shareholding) which was incorporated in

South Africa.

The principal businesses of the Company are manufacturing and distribution of soft drinks. Detail of

the Company’s subsidiary as at 30 September 2018 and 31 December 2017 is given in note 7.

2 Basis of preparation of the interim financial statements

(a) Statement of compliance

The interim financial statements are prepared on a condensed basis in accordance with Thai Accounting

Standard (TAS) No. 34 (revised 2017) Interim Financial Reporting; guidelines promulgated by the

Federation of Accounting Professions (FAP); and applicable rules and regulations of the Thai Securities

and Exchange Commission.

The interim financial statements are prepared to provide an update on the financial statements for the

year ended 31 December 2017. They do not include all of the financial information required for full

annual financial statements but focus on new activities, events and circumstances to avoid repetition of

information previously reported. Accordingly, these interim financial statements should be read in

conjunction with the financial statements of the Company and its subsidiary for the year ended

31 December 2017.

The accounting policies and methods of computation applied in these interim financial statements are

consistent with those applied in the financial statements for the year ended 31 December 2017 except

that the Group has adopted all the new and revised TFRS that are effective for annual periods

beginning on or after 1 January 2018. The adoption of these new and revised TFRS did not have any

material effect on the accounting policies, methods of computation, financial performance or position

of the Group.

In addition to the above new and revised TFRS, The FAP has issued TFRS 15 Revenue from Contracts

with Customers which is effective for annual periods beginning on or after 1 January 2019. The Group

has not early adopted this standard in preparing these interim financial statements.

TFRS 15 establishes a comprehensive framework for determining whether, how much and when

revenue is recognised. Revenue should be recognised when (or as) an entity transfers control over

goods or services to a customer, measured at the amount to which the entity expects to be entitled. It

replaces existing revenue recognition standards as follows:



15

- TAS 11 (revised 2017) Construction Contracts,

- TAS 18 (revised 2017) Revenue,

- TSIC 31 (revised 2017) Revenue-Barter Transactions Involving Advertising Services,

- TFRIC 13 (revised 2017) Customer Loyalty Programmes,

- TFRIC 15 (revised 2017) Agreements for the Construction of Real Estate, and

- TFRIC 18 (revised 2017) Transfers of Assets from Customers.

The Group has made a preliminary assessment of the potential impact of adopting and initially

applying TFRS 15 on the consolidated and separate financial statements and expects that there will be

no material impact on the consolidated and separate financial statements in the period of initial

application.

In addition the FAP has issued TFRS - Financial instruments standards which is effective for annual

periods beginning on or after 1 January 2020. The Group has not early adopted this standard in preparing

these interim financial statements. Those TFRS - Financial instruments standards are as following.

- TFRS 7 Financial Instruments: Disclosures

- TFRS 9 Financial Instruments

- TAS 32 Financial Instruments: Presentation

- TFRIC 16 Hedges of a Net Investment in a Foreign Operation

- TFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

These TFRS establish requirements related to definition, recognition, measurement, impairment and

derecognition of financial assets and financial liabilities, including accounting for derivatives and

hedge accounting.

Management is presently considering the potential impact of adopting and initially applying TFRS -

Financial instruments standards on the consolidated and separate financial statements.

(b) Functional and presentation currency

The interim financial statements are prepared and presented in Thai Baht, which is the Company’s

functional currency. All financial information presented in Thai Baht has been rounded to the nearest

thousand unless otherwise stated.

(c) Use of judgements and estimates

The preparation of interim financial statements in conformity with TFRS requires management to make

judgements, estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these interim financial statements, the significant judgements made by management in

applying the Group’s accounting policies and the key sources of estimation uncertainty were the same

as those that applied to the financial statements for the year ended 31 December 2017.

Measurement of fair values

The Group has an established control framework with respect to the measurement of fair values. This

includes a valuation team that has overall responsibility for overseeing all significant fair value

measurements, including Level 3 fair values, and reports directly to the chief financial officer.



16

The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

If third party information, such as broker quotes or pricing services, is used to measure fair values,

then the valuation team assesses the evidence obtained from the third parties to support the

conclusion that these valuations meet the requirements of TFRS, including the level in the fair value

hierarchy in which the valuations should be classified.

Significant valuation issues are reported to the Group’s Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far

as possible. Fair values are categorised into different levels in a fair value hierarchy based on the

inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or

liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

If the inputs used to measure the fair value of an asset or liability might be categorised in different

levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the

same level of the fair value hierarchy as the lowest level input that is significant to the entire

measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting

period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following

notes:

• Note 8 Property, plant and equipment; and

• Note 17 Financial instruments

3 Seasonal operations

The Group is subject to seasonal sales revenue from soft drink products. The majority of sales revenue

and expenditure are normally derived during the summer season.

4 Related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the

Group has the ability, directly or indirectly, to control or joint control the party or exercise significant

influence over the party in making financial and operating decisions, or vice versa, or where the Group

and the party are subject to common control or common significant influence. Related parties may be

individuals or other entities.

Relationships with subsidiary, key management personnel and other related parties were as follows:



17

Country of

incorporation/

Name of entities nationality Nature of relationships

Subsidiary

Southern Rocks Co., Ltd.

Thailand

Subsidiary, 99.99% shareholding

Other related parties

Gutsche Family Investments

(Proprietary) Limited

South Africa

Major shareholder, 24.11% shareholding

Key management personnel


Thai

Persons having authority and responsibility

for planning, directing and controlling

the activities of the entity, directly or

indirectly, including any director (whether

executive or otherwise) of the Group

The pricing policies for particular types of transactions are explained further below:

Transactions Pricing policies

Purchases of containers Cost plus margin

Blowing plastic bottles service Contractually agreed price

Service fee for area utilisation Contractually agreed price

Rental income from land Contractually agreed price

Dividend income Declared rate

Key management personnel compensation As defined by the Group’s policy

Significant transactions for the three-month and nine-month periods ended 30 September 2018 and

2017 with related parties were as follows:

Consolidated Separate

financial statements financial statements

Three-month period ended

30 September

2018

2017

2018

2017

(in thousand Baht)

Subsidiary

Purchases of containers - - 110,881 120,179

Blowing plastic bottles service - - 4,017 2,218

Service fee for area utilisation - - 660 660

Rental income from land - - 53 53

Dividend income - - 49,977 -



compensation

Short-term benefits 18,128 16,470 18,128 16,470

Post-employment benefits 1,065 979 1,065 979

Total key management personnel

compensation 19,193 17,449 19,193 17,449



18



Nine-month period ended

30 September

2018

2017

2018

2017

(in thousand Baht)

Subsidiary

Purchases of containers - - 343,347 345,332

Blowing plastic bottles service - - 9,705 10,299

Service fee for area utilisation - - 1,980 1,980

Rental income from land - - 158 158

Dividend income - - 49,977 40,458



compensation

Short-term benefits 55,053 50,563 55,053 50,563

Post-employment benefits 3,195 2,937 3,195 2,937

Total key management personnel

compensation 58,248 53,500 58,248 53,500

Balances as at 30 September 2018 and 31 December 2017 with related parties were as follows:

Other receivable - related party Consolidated Separate



2018 2017 2018 2017

(in thousand Baht)

Subsidiary

Southern Rocks Co., Ltd. - - 2,351 1,804

Trade account payable Consolidated Separate

- related party financial statements financial statements


2018 2017 2018 2017

(in thousand Baht)

Subsidiary

Southern Rocks Co., Ltd. - - 87,075 75,502



19

Significant agreements with related parties

Service agreements for area utilisation

The Company has entered into service agreements for area utilisation with a subsidiary for Hadyai

factory and Phoonpin factory of which the agreements have terms of 7 years expired in December 2019

and 8 years expired in February 2021, respectively. The subsidiary has agreed to pay service fees at the

amounts as stipulated in the agreements.

Lease agreement for land

On 1 November 2014, the Company entered into a lease agreement for land with a subsidiary for the

purpose of building construction. The lease term was for a period of 20 years commencing from

1 November 2014 to 31 October 2034. The subsidiary has the first priority to renew the lease agreement,

which can be extendable for successive periods of 10 years each. The subsidiary can renew the lease by

informing the Company at least 30 days before the expiry date. The subsidiary agreed to pay the rental

fee in the amount as stipulated in the agreement and rental rates will be adjusted every 5 years. Under the

term of the agreement, the building including other constructions thereon will be transferred to the

Company when the agreement is terminated.

Service agreement for blowing plastic bottles

In February 2015, the Company has entered into service agreement for blowing plastic bottles with

a subsidiary. The Company has agreed to pay service fee at the amount as stipulated in the agreement.

The subsidiary is able to change the price as appropriate without prior notice to the Company.

The Company may terminate the agreement at any time.

5 Current investments

Consolidated


Separate


Note

30 September

2018

31 December

2017

30 September

2018

31 December

2017

(in thousand Baht)

Investment units 17 10,841 16,996 194 4,461

Total 10,841 16,996 194 4,461

Movements during the nine-month periods ended 30 September 2018 and 2017 of investment units

were as follows:

Consolidated


Separate



30 September 2018 2017 2018 2017

(in thousand Baht)

Current investments in

investment units

At 1 January 16,996 19,063 4,461 6,788

Purchases during the period 1,192,000 1,065,000 1,130,000 935,000

Sales during the period (1,199,000) (1,001,000) (1,135,000) (881,000)

Gain on sales during the period 868 810 737 756

Valuation adjustment (23) 234 (4) 95

At 30 September 10,841 84,107 194 61,639



20

6 Trade accounts receivable




2018 2017 2018 2017

(in thousand Baht)

Other parties 532,422 544,838 532,422 544,838

Less allowance for doubtful accounts (8,663) (8,804) (8,663) (8,804)

Net 523,759 536,034 523,759 536,034



2018 2017 2018 2017

(in thousand Baht)

Bad and doubtful debts expenses

(reversal) for

the three-month period ended

30 September 30 (35) 30 (35)

the nine-month period ended

30 September (141) (649) (141) (649)

Aging analyses for trade accounts receivable were as follows:




2018 2017 2018 2017

(in thousand Baht)

Other parties

Within credit terms 520,022 518,493 520,022 518,493

Overdue:

Less than 3 months 2,978 17,189 2,978 17,189

3 - 6 months 259 618 259 618

6 - 12 months 500 193 500 193

Over 12 months 8,663 8,345 8,663 8,345

532,422 544,838 532,422 544,838

Less allowance for doubtful accounts (8,663) (8,804) (8,663) (8,804)

Net 523,759 536,034 523,759 536,034

The normal credit term granted by the Group ranges from 7 days to 90 days.

7 Investment in subsidiary

In June 2013, Southern Rocks Co., Ltd., registered with the Ministry of Commerce, an increase in

registered share capital of Baht 50 million from Baht 47 million to Baht 97 million by increasing the

number of shares from 470,000 shares to 970,000 shares with par value of Baht 100 per share, 25%

shares subscription was called up in June 2013.

As at 30 September 2018, the Company had commitments for the share subscription of investments to

such subsidiary, which have not yet been called up, amounting to Baht 37.5 million (31 December

2017: Baht 37.5 million).



21

Investment in subsidiary as at 30 September 2018 and 31 December 2017, and dividend income from the investment for the nine-month periods ended 30 September

2018 and 2017, were as follows:


Dividend income

Ownership for the nine-month

interest Paid-up capital Cost Impairment At cost- net periods ended

30 31 30 31 30 31 30 31 30 31 30 30

Type of September December September December September December September December September December September September

business 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

(%) (in thousand Baht)

Subsidiary

Southern Rocks

Co., Ltd.

Manufacture

and distribute

plastic bottles

and semi-

finished

plastic bottles

and blowing

plastic bottles

service 99.99

99.99

59,500 59,500 59,497 59,497 - - 59,497 59,497

49,977 40,458

Total 59,497 59,497 - - 59,497 59,497 49,977 40,458

The subsidiary was incorporated in Thailand.



22

8 Property, plant and equipment

Acquisitions, disposals and transfers of property, plant and equipment during the nine-month periods ended

30 September 2018 and 2017 were as follows:

Consolidated financial statements Nine-month period ended 30 September

2018

2017 Acquisitions

and transfers in

- at cost

Disposals and transfers out - net book

value

Acquisitions and

transfers in - at cost


value (in thousand Baht) Land - - 3,532 - Land improvements 10,710 - 2,395 - Buildings and structures and leasehold improvements 71,163 - 23,244 - Machinery and equipment 1,759 - 1,258 - Furniture and office equipment 27,771 65 31,067 134

Vehicles 66,812 84 52,580 169 Containers 3,623 223 1,354 796 Promotional equipment 17,962 12 8,948 13 Assets under construction and installation 193,285 154,401 105,034 67,368

Total 393,085 154,785 229,412 68,480

Separate financial statements Nine-month period ended 30 September

2018

2017 Acquisitions

and transfers in

- at cost


value

Acquisitions and

transfers in - at cost


value (in thousand Baht) Land - - 3,532 - Land improvements 10,710 - 2,395 - Buildings and structures and leasehold improvements 70,793 - 22,949 - Machinery and equipment 1,759 - 1,258 - Furniture and office equipment 27,609 65 29,883 133 Vehicles 66,812 84 52,580 169 Containers 3,623 223 1,354 796 Promotional equipment 17,962 12 8,948 13 Assets under construction and installation 123,375 154,091 105,034 67,368

Total 322,643 154,475 227,933 68,479

As at 30 September 2018, the revaluation surplus net of income tax for the Group and the Company

which was presented under other component of equity under “Equity” in the statement of financial

position amounted to Baht 1,288.0 million and Baht 1,287.9 million, respectively (31 December 2017:

for the Group and the Company amounted to Baht 1,288.0 million and Baht 1,287.9 million,

respectively).



23

Measurement of fair value

Fair value hierarchy

The fair value of land was determined by external, independent property valuer, having appropriate

recognised professional qualifications and recent experience of the property being valued.

The fair value measurement for land has been categorised as a Level 3 fair value based on the inputs to

the valuation technique used.

Valuation technique and significant unobservable inputs

The external independent valuer applied the Market Comparison Approach to measure fair value of

land.

The significant unobservable inputs used in measuring the fair value of land are the quoted price and

the purchasing and selling price of comparable land adjusted with other different factors.

9 Interest-bearing liabilities

As at 30 September 2018, the Group and the Company had unutilised credit facilities totaling Baht

1,045.0 million and Baht 879.3 million, respectively (31 December 2017: Baht 1,005.4 million and

Baht 882.7 million, respectively).

During the nine-month period ended 30 September 2018, the Group and the Company additionally

drewdown long-term loans from a local financial institution from existing credit lines as follows:

Credit

facility lines

Drewdown

amount

(in million Baht) Subsidiary 350.0 70.4

On 23 February 2018, the subsidiary entered into loan agreements with a financial institution for loan

facilities of Baht 110 million. The interest rate is 3.5% per annum. As at 30 September 2018, the

Company had unutilised credit facilities totaling Baht 43.0 million, respectively.

Under the terms of the long-term loan agreements, the Group has to comply with certain conditions,

such as maintaining the debt to equity ratio, the debt covenant ratio, etc. The Group also assigned the

benefits of an insurance policy covering the assets as collateral for secured interest-bearing liabilities.

As at 30 September 2018, a portion of the Group’s and the Company’s land, buildings, machinery and

equipment with carrying value totaling approximately Baht 1,513.1 million and Baht 1,357.1 million,

respectively (31 December 2017: Baht 1,571.3 million and Baht 1,400.3 million, respectively) were

mortgaged and pledged as collateral for the credit facilities obtained from a local bank. The Group also

assigned the benefits of an insurance policy covering a portion of the Group’s property and equipment

to a local bank as collateral for credit facilities obtained from the same bank.



24

10 Trade accounts payable

Consolidated


Separate



Note 2018 2017 2018 2017

(in thousand Baht)

Related party 4 - - 87,075 75,502

Other parties 280,821 231,504 269,868 212,856

Total 280,821 231,504 356,943 288,358

11 Changes in liabilities arising from financing activities


Short-term

loans

Long-term

loans

Finance lease

liabilities Total

(in thousand Baht)

Balance at 1 January 2018 - 479,790 160,707 640,497

Changes from financing cash flows 160,000 (12,180) (42,979) 104,841

Other changes - finance leases - - 42,779 42,779

Balance at 30 September 2018 160,000 467,610 160,507 788,117


Short-term

loans

Long-term

loans

Finance lease

liabilities Total

(in thousand Baht)

Balance at 1 January 2018 - 449,340 159,900 609,240

Changes from financing cash flows 160,000 (52,380) (42,796) 64,824

Other changes - finance leases - - - 42,779 42,779

Balance at 30 September 2018 160,000 396,960 159,883 716,843

12 Segment information

The Group operates in a single line of business as manufacturing and distribution of soft drinks,

therefore, management considers that the Group has only one major business segment. In addition, the

Group solely distributes in 14 provinces in Southern Thailand, therefore, management considers that

the Group has only one major geographic segment.

13 Income tax expense

According to the Royal Decree No. 492 B.E. 2553 dated 16 January 2010, No. 566 B.E. 2556 dated

10 July 2013, No. 584 B.E. 2558 dated 1 May 2015 and No. 624 B.E. 2560 dated 6 January 2017, the Group has been granted reduction in the corporate income tax rate to 3% of taxable profit, to

juristic companies or partnerships whose place of business is located in the exclusive development

zone and whose revenue derived from manufacturing, selling of goods or rendering services occur

within the exclusive development zone, starting from the accounting period of 2010 which begins on

or after 1 January 2010 until the accounting period of 2020 ending on or after 31 December 2020.



25

14 Promotional privileges

By virtue of the provisions of the Industrial Investment Promotion Act of B.E. 2520, the subsidiary

has been granted privileges by the Board of Investment relating to semi-plastic bottle (Preform) and

plastic bottles (PET) businesses. The privileges granted include:

(a) exemption from payment of import duty on machinery approved by the Board;

(b) exemption from payment of income tax for certain operations for a period of eight years from

the date on which the income is first derived from such operations.

As a promoted company, the subsidiary must comply with certain terms and conditions prescribed in

the promotional certificates.

15 Basic earnings per share

The calculations of basic earnings per share for the three-month and nine-month periods ended

30 September 2018 and 2017 were based on the profit for the periods attributable to ordinary

shareholders of the Company and the number of ordinary shares outstanding during the periods as

follows:



Three-month period ended

30 September

2018

2017

2018

2017

(in thousand Baht / thousand shares)

Profit attributable to ordinary

shareholders of the Company (basic) 46,789 73,380 80,500 30,671

Number of ordinary shares

outstanding 199,218 199,218 199,218 199,218

Earnings per share (basic)

(in Baht) 0.23 0.37 0.40 0.15




30 September

2018

2017

2018

2017

(in thousand Baht / thousand shares)

Profit attributable to ordinary

shareholders of the Company (basic) 197,906 227,025 177,219 149,715

Number of ordinary shares

outstanding 199,218 199,218 199,218 199,218

Earnings per share (basic)

(in Baht) 0.99 1.14 0.89 0.75



26

16 Dividends

At the meeting of the Board of Directors of the Company held on 23 August 2018, the Board of

Directors approved the payment of interim dividend of Baht 0.38 per share, amounting to Baht 75.7

million. The dividend was paid to the shareholders in September 2018.

At the annual general meeting of the shareholders of the Company held on 26 April 201 8,

the shareholders approved the appropriation of dividend of Baht 0.62 per share, amounting to Baht

123.5 million. The dividend was paid to the shareholders in May 2018.

At the meeting of the Board of Directors of the Company held on 16 August 2017, the Board of

Directors approved the payment of interim dividend of Baht 0.38 per share, amounting to Baht 75.7

million. The dividend was paid to the shareholders in September 2017.

At the annual general meeting of the shareholders of the Company held on 26 April 2017,

the shareholders approved the appropriation of dividend of Baht 0.35 per share, amounting to Baht

69.7 million. The dividend was paid to the shareholders in May 2017.

17 Financial instruments

Carrying amount and fair values

The following table shows the carrying amounts and fair values of financial assets and financial

liabilities, including their levels in the fair value hierarchy. It does not include fair value information

for financial assets and financial liabilities not measured at fair value if the carrying amount is a

reasonable approximation of fair value.


Carrying

amount

Fair value

Level 1 Level 2 Level 3 Total

(in thousand Baht)

30 September 2018

Financial assets measured

at fair value

Investment units 10,841 - 10,841 - 10,841

31 December 2017

Financial assets/Financial

liabilities measured

at fair value


Debenture 150,000 - 150,392 - 150,392



27


Carrying

amount

Fair value

Level 1 Level 2 Level 3 Total

(in thousand Baht)

30 September 2018

Financial assets measured

at fair value

Investment units 194 - 194 - 194

31 December 2017

Financial assets/Financial

liabilities measured

at fair value


Debenture 150,000 - 150,392 - 150,392

The Group determines Level 2 fair value for investment units by reference to the value from Asset

Management Company at the reporting date.

The Group determines Level 2 fair value of debenture as at 31 December 2017, which have been

determined based on quoted selling prices from the Thai Bond Market Association at the close of the

business at the reporting date.

Fair values of current financial assets and liabilities are taken to approximate the carrying amounts

because the relatively short-term maturity of these financial instruments.

Fair value of long-term loans which bear interest at floating market rate is taken to approximate the

carrying amounts.

18 Agreements

Exclusive distribution license agreement

On 1 January 2014, the Company and two suppliers (altogether “Licensees”) and a customer

(“Licensor”) entered into the memorandum of agreement, whereby the licensor permits the licensees to

sell exclusively fountain products in the stores of the licensor. The memorandum of agreement affects

all parties from 1 January 2014. In consideration thereof, the Company, as a licensee, has an obligation

to pay the marketing support fee at rates based on the purchase quantity of the licensor, as stipulated in

the memorandum of agreement.

Service agreement

On 19 December 2013, The Company entered into an agreement with a local company, whereby such

company will provide services and support as necessary to assist the Company’s production,

distribution, marketing, promotion, and sales activities pertaining to the beverages, including

maintaining the image of the Company's trademark. In consideration thereof, the Company agreed to

pay the service fee in the amount as indicated in the agreement. The agreement period is five years

commencing from 1 January 2014 and ending on 31 December 2018. Unless there is notification to

terminate the agreement within three months before the expiry date, the agreement will be

automatically renewed for successive periods of one year.



28

19 Commitments with non - related parties




2018 2017 2018 2017

(in thousand Baht)

Future minimum lease payments

under non-cancellable

operating leases

Within one year 18,181 16,731 18,181 16,731

After one year but within five years 10,852 19,149 10,852 19,149

Total 29,033 35,880 29,033 35,880

Commitment for machinery

purchased 14,858

-

1,509

-

Commitment under land

improvement agreements 856

1,177

856

1,177

Commitment for accounting

system improvement - 28,495 - 28,495

Commitment for building

improvement

12,186

32,874

7,842

32,874

Forward contracts 12,002 - - -

Operating lease commitments

• Lease agreements for advertising billboards, expiring in various periods up to June 2022.

• Lease agreements for restaurant business for a period of one year expiring in June 2019.

• Lease agreement for land and office building for a period of three years expiring in September 2020.

• Lease agreement for service of internet for periods from one to three years expiring in May 2020.

• Lease agreements covering vehicles for periods from four to five years expiring in various periods

up to December 2020.

• Lease agreements covering office equipment for a period of three years expiring in June 2020.



29

Forward contracts

As at 30 September 2018, the Group had outstanding balance of forward contracts for a period not

exceeding one year as follows:

Consolidated


Separate


Foreign

amount

Equivalent

to Baht

Foreign

amount

Equivalent

to Baht

(in thousand)

United States Dollars (USD) 369 12,002 - -

Total 12,002 -

Other commitments

Syrup supply agreement

On 22 December 2015, the Company entered into a syrup supply agreement with a company. Under

the term of the agreement, the Company agrees to purchase for syrup supply during 2016 – 2020 at the

quantities required by the Company and at the prices specified in the agreement. The agreement may

be terminated by mutual agreement or by either party by giving to the other advance written notice not

less than 30 days.

Sugar supply agreements

The Company has sugar supply agreements with many companies. Under the terms of the agreements,

the Company agrees to purchase sugar at the quantities required by the Company and at the prices

specified in the agreements. These agreements are effective for a period of 1 year from the

commencement date and is renewable when expire as agreed by both parties.

20 Contingent liability

As at 30 September 2018, the Group was contingently liable for letters of guarantee issued by a local

bank in favor of certain government agencies, state enterprises and companies totaling approximately

Baht 28.3 million (31 December 2017: Baht 25.0 million), mainly in respect of the use of electricity.

These letters of guarantee are collateralised by the mortgage and pledge of a portion of the Group’s

land, buildings, machinery and equipment as discussed in note 9.

21 Reclassification of accounts

Certain accounts in the statement of comprehensive income for the three-month and nine-month

periods ended 30 September 2017, which are included in the 2018 interim financial statements for

comparative purposes, have been reclassified to conform to the presentation in the 2018 interim

financial statements.



30

2017 Consolidated


Separate


Before

reclass.

Reclass.

After

reclass.

Before

reclass.

Reclass.

After

reclass.

(in thousand Baht)

Statement of

comprehensive

income

- Three-month period

ended 30 September

2018

Cost of sale of goods 980,788 (7,754) 973,034 1,026,362 (7,754) 1,018,608

Distribution costs 254,079 34,560 288,639 254,079 34,560 288,639

Administrative expenses 139,751 (26,806) 112,945 138,655 (26,806) 111,849

- -

Statement of

comprehensive

income

- Nine-month period

ended 30 September

2018

Cost of sale of goods 2,921,975 (22,318) 2,899,657 3,049,051 (22,318) 3,026,733

Distribution costs 738,038 101,694 839,732 738,038 101,694 839,732

Administrative expenses 370,830 (79,376) 291,454 367,744 (79,376) 288,368

- -

The reclassifications have been made because, in the opinion of management, the new classification is

more appropriate to the Group’s business.

Documents

Haad Thip Public Company Limited and its subsidiaryhtc.listedcompany.com/misc/fs/20181114-htc-fs-3q2018-en.pdf · 2018-11-14 · Haad Thip Public Company Limited and its subsidiary