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Annual ReportTRANSCRIPT
Annual Report 2011รายงานประจา ปี 2554
Company BackgroundVision / MissionSummary Financial Information .....................................................................................1Message from the Chairman ........................................................................................2Board of Director .............................................................................................................4Corporate Social Responsibility ...................................................................................8General Information....................................................................................................... 11Nature of Business ......................................................................................................... 14Risk Factors ...................................................................................................................... 16Shareholders and Management ................................................................................ 20Related Party Transactions ........................................................................................... 31Corporate Governance ................................................................................................ 34Control of Internal Information .................................................................................... 42Corporate Governance Report on Audit Committee ............................................ 44Nomination and Remuneration Committee’s Report ............................................. 46Board of Director’s Responsibility for Financial Report ........................................ 47Management’s Discussion and Analysis .................................................................. 48Auditor’s Report .............................................................................................................. 51Financial Statement ........................................................................................................ 52
Contents
Thai Rung Union Car Plc. has long been established in the business of motor vehicle
assembly Originally founded as a limited partnership under the name Thai Engineering in
1967 by Mr. Vichien Phaoenchoke, its business success eventually led to its become a listed
company on the Stock Exchange of Thailand in 1994 under the current name, Thai Rung
Union Car Public Company Limited.
For the last forty years, until the present, Thai Rung Union Car Plc., a Thai-owned
company, ranging from product design and development through the production of dies and
jigs and the manufacture of automotive metal and plastic parts, automotive seats to Contract
vehicle painting and assembly, vehicle modification into multi-purpose vehicles and special
purpose vehicle using its expertise in the design, development and assembly of motor vehicles
based on the skills and capabilities of its Thai personnel.
In the present, the Company’s having adapted its strategy to focus on OEM parts
making and contract assembly and painting, which together now account for some 80% of
total revenue, plus the Company’s success in expanding its customer base to other industries
in order to reduce the risk of over-reliance on the automotive industry. These new customer
segments include manufacturers of industrial and agricultural machinery and construction
equipment, and also premium motorcycles, a high added value niche market that looks set
to continue growing. The Company also invested in expanding the throughput capacity of
its machinery and equipment in order to cater to increase volumes of customer orders. We
are thus confident that the Company’s results for 2012 and beyond will rapid growth along
with the Thai automotive industry.
Company Background
Vision To be at the pinnacle of the Thai auto industry, devloping, designing
and producing a comprehensive rang of products; with our own brand,
to build optimum customer satisfaction through world-class quality and service.
Mission 1. To be a leader in the design, development and production of innovative automotive products:
multi-purpose and specialty vehicles, parts, dies, jigs and accessories.
2. To maximise customer satisfaction by providing world-class quality, price, delivery and service.
3. To focus on continuous improvement in product and service quality through the efficient use of fl
exible, speedy production and management processes and up-to-date engineering technology.
4. To build own brand image and loyalty.
5. To establish and expand marketing and sales networks at home and abroad.
6. To pay close attention to the development and welfare of our human resources, so as to
enable them to compete at world level and to be happy and proud to work for the organisation.
7. Continuously to enhance the stability of the organisation by making profits and providing fair
remuneration for shareholders, business partners and employees.
8. To ensure that products, production and work processes all take due account of our
responsibilities towards environment, community and society through principles of good
corporate governance.
Vision / Mission
1Annual Report 2011 Thai Rung Union Car Public Company Limited
Summary Financial Information
(Unit : Million Baht)
Consolidated, as at 31st December 2011 2010 2009
Operating Performance
Sales and Service Income 2,054.78 1,970.21 1,353.07
Total Revenues 2,263.10 2,091.30 1,428.37
Total Expenses 1,996.30 1,925.29 1,554.99
Earnings (loss) before financing cost 266.80 223.74 (113.90)
and income tax
Net Earnings (loss) attributable to 186.22 186.37 (111.70)
equity holders of the Company
Financial Position
Current Assets 1,083.10 1,285.69 1,025.49
Total Assets 3,004.26 2,987.51 2,581.42
Total Liabilities 362.18 384.50 243.32
Shareholders’ Equity 2,642.08 2,603.02 2,338.10
Per Share Data (Unit: Baht)
Earnings (loss) per Share (EPS) 0.38 0.37 (0.21)
Dividend per Share 0.25 0.25 -
Book Value per Share 5.37 5.29 4.66
Financial Ratios (Unit : %)
Net Earnings margin 8.23 8.67 (7.75)
Return on Equity (ROE) 7.32 7.78 (4.81)
Return on Asset (ROA) 8.91 7.49 (4.25)
1Annual Report 2011 Thai Rung Union Car Public Company Limited
Message from the Chairman
In 2011 the Thai automotive industry set a production target of 1.8 vehicles, and in the first quarter
performance looked to be on track, with several new model launches, particularly “eco cars” which are gaining
popularity with consumers, but an unexpected event in the form of the earthquake and tsunami in Japan in
the second quarter caused production and sales figures to dip somewhat, although they recovered in the third
quarter until the widespread flooding in Thailand in the fourth quarter, which led to overall vehicle production
falling to 1,457,795 units, 11% down on the previous year. Vehicle sales in the domestic market totalled 795,250
units (1% down on previous year), while 735,627 units were exported, representing a decrease of 18% on
the previous year. This situation affected the results of nearly all companies in the Thai automotive and parts
industries. However parts and vehicle plants are expected to return to normal in the early part of 2012.
Turning to the Thai Rung Group’s results for 2011, total consolidated revenues were up by 5% on
the previous year and net income of Bt.186 million was unchanged from 2010. The fact that the Company
performed better than the automotive industry as a whole is due to its having adapted its strategy to focus
on OEM parts making and contract assembly and painting, which together now account for some 80% of total
revenue, plus the Company’s success in expanding its customer base to other industries in order to reduce
the risk of over-reliance on the automotive industry. These new customer segments include manufacturers of
industrial and agricultural machinery and construction equipment, and also premium motorcycles, a high added
value niche market that looks set to continue growing.
The Federation of Thai Industries has estimated that the Thai automotive industry will produce between
2,000,000 and 2,100,000 vehicles in 2012, representing an increase of between 38% and 44% on 2011. This
growth is expected to come as a result of several auto makers such as Mitsubishi, Suzuki and Ford moving
production bases to Thailand, and of various other manufacturers increasing their production capacity in order
to supply both domestic and export markets with new models. Much of this increase will be for the ‘eco car’,
2Annual Report 2011 Thai Rung Union Car Public Company Limited
3Annual Report 2011 Thai Rung Union Car Public Company Limited
which looks set to become Thailand’s new champion product. A further significant factor is the recovery of the
automotive industry following the flooding that affected much of the country, and this is further helped by the
government’s economic stimulus policy of refunding excise tax to first-time car buyers. In view of all these fac-
tors it is possible that in 2012 the Thai automotive industry will achieve an all-time record output of between
2 million and 2.1 million units in 2012.
These trends present significant opportunities for Thai auto parts makers, including the Company, to win
additional orders for both metal and plastic parts, contract painting and assembly work, which together account
for the Company’s core revenue. The Company has invested in expanding its parts production capacity by
building a new factory in Rayong province, the machinery will be installed up to full capacity during 2012. The
Company also invested in expanding the throughput capacity of its paint shop and in various other additions to
machinery and equipment in order to cater to increase volumes of customer orders. We are thus confident that
the Company’s results for 2012 and beyond will show rapid growth along with the Thai automotive industry.
The Company continues to seek alliances with a view to joint investment and expanding into other areas
that are related to its current business in order to develop additional future sources of revenue for the Company,
as well as boosting production efficiency and determinedly reducing costs to improve the Company’s results
in accordance with principles of good corporate governance, and to attach importance to its responsibilities
towards society community and the environment and to all stakeholder groups in accordance with principles of
social responsibility, conducting its business in an ethical manner so as to ensure the Company’s sustainable
success. In this regard the Company was assessed as “very good” for the third year in a row by the Thai
Institute of Directors in its Corporate Governance Report of Thai Listed Companies 2011. The Company’s policy
is to continue improving the standard of corporate governance.
On behalf of the Company’s Board of Directors I should like to thank our customers, our shareholders,
the various organisations and departments both governmental and private, and all our stakeholders for their
constant support, which is a driving force. I should also like to thank all our executives and employees for
their fine cooperation in implementing the Company’s policies. All the Directors and I will strive wholeheartedly
to lead the Company constantly forward and develop and expand its business in a sustainable manner.
Dr. Pranee Phaoenchoke
Chairman
Board of Directors
Dr. Pranee Phaoenchoke
Chairman of the Board of Directors & President Age : 73
Academic qualifications:
• Honorary doctorate in Business Administration,
American Coastline University, U.S.A.
• Honorary doctorate in Industrial Engineering,
Ramkhamhaeng University
• Honorary Master’s Degree in Commerce and Accountancy
Thammasart University
Present Position :
• Chairman of the Board of Directors & Chairman of the
Executive Committee of
Thai Rung Union Car Plc.
• Director & Chairman of
Thai Rung Tools and Dies Co. Ltd.
Thai V.P. Auto Service Co. Ltd.
Thai Auto Pressparts Co. Ltd.
Thai Ultimate Car Co. Ltd.
Isuzu Chaicharoenkij Motors Co. Ltd.
Thai V.P. Corporation Co. Ltd.
Chaicharoenkij Motors Co. Ltd.
Lexus Auto City Co. Ltd.
Isuzu V. Motor Co. Ltd.
V.P. Auto Enterprise Co. Ltd.
V.P.K. Auto Co., Ltd.
First Part Co. Ltd.
Sinthoranee Property Co. Ltd.
• Director of
Delta Thairung Co.,Ltd.
Shareholding as of 16 March 2012:
246,387,500 shares (49.12%)
Mr. Sompong Phaoenchoke
Director & Managing Director Age : 51
Academic qualifications:
• Master’s degree in Industrial Engineering,
Keio University, Japan
• National Defence College Class of 2006
• Capital Market Academy No.8
• National Defence College
Course in high level security management and
administration (class of 2010)
Present Position :
• Director & Managing Director, Chairman of Risk
Management Committee of
Thai Rung Union Car Plc.
• Director & Vice President of
Thai Ultimate Car Co. Ltd.
Delta Thairung Co. Ltd.
Isuzu Chaicharoenkij Motors Co. Ltd.
Thai V.P. Corporation Co. Ltd.
First Part Co. Ltd.
V.P. Auto Enterprise Co. Ltd.
Isuzu V. Motor Co. Ltd.
Lexus Auto City Co. Ltd.
• Director & Managing Director of
Thai Rung Tools and Dies Co. Ltd.
Thai V.P. Auto Service Co. Ltd.
Thai Auto Pressparts Co. Ltd.
• Director of
Thai Auto Conversion Co. Ltd.
Chaicharoenkij Motors Co. Ltd.
Sinthoranee Property Co. Ltd.
Director Certification Program 26/2003: IOD
Shareholding as of 16 March 2012: 35,386,100 shares (7.05%)
(including shareholdings of related persons as per Section 258
of the SEC Act)
4Annual Report 2011 Thai Rung Union Car Public Company Limited
Ms. Kaewjai Phaoenchoke
Director Age : 47
Academic qualifications:
• Bachelor Degree in Financial Administration
University of New England Australia
Present Position :
• Director & Executive Board of
Thai Rung Union Car Plc.
• Director & Chief Executive Officer of
Thai V.P. Corporation Co. Ltd.
Thai Ultimate Car Co. Ltd.
Isuzu Chaicharoenkij Motors Co. Ltd.
First Part Co. Ltd.
Isuzu V. Motor Co. Ltd.
V.P. Auto Enterprise Co. Ltd.
V.P.K. Auto Co., Ltd.
• Director of
Thai V.P. Auto Service Co. Ltd.
Thai Rung Tools and Dies Co. Ltd.
Thai Auto Pressparts Co. Ltd.
Chaicharoenkij Motors Co. Ltd.
Sinthoranee Property Co. Ltd.
Director Certification Program 29/2003: IOD
Shareholding as of 16 March 2012: 32,639,450 shares (6.51%)
Mr. Wuttichai Phaoenchoke
DirectorAge : 41
Academic qualifications:
• Master’s degree in Automotive Engineering,
Coventry University, U.K.
Present Position :
• Director and Executive Board of
Thai Rung Union Car Plc.
• Director & Managing Director of
Isuzu Chaicharoenkij Motors Co. Ltd.
Chaicharoenkij Motors Co. Ltd.
Isuzu V. Motor Co. Ltd.
Sinthoranee Property Co. Ltd.
• Director & Deputy Managing Director of
Thai V.P. Auto Service Co. Ltd.
• Director of
Thai Rung Tools and Dies Co. Ltd.
Thai Auto Pressparts Co. Ltd.
Thai Ultimate Car Co. Ltd.
V.P. Auto Enterprise Co. Ltd.
Thai V.P. Corporation Co. Ltd.
Shareholding as of 16 March 2012: 31,201,500 shares (6.22%)
5Annual Report 2011 Thai Rung Union Car Public Company Limited
Mr. Somkiat Nimrawee
Independent DirectorAge : 60
Academic qualifications:
• Bachelor’s degree in Finance & Accounting,
Thammasart University
Present Position :
• Independent Director, Member of
Risk Management Committee, Executive Board
and Nomination & Remuneration Committee of
Thai Rung Union Car Plc.
• Managing Director of
Dan-Thai Equipment Co. Ltd.
Dan-Thai Handing System Co. Ltd.
Dan-Thai Engineering Co. Ltd.
Director Accreditation Program 10/2004: IOD
Shareholding as of 16 March 16 2012: 80,000 shares (0.02%)
Mr Pricha Attavipach
Independent Director & Chairman, Audit CommitteeAge : 74 Academic qualifications: • Bachelor’s Degree in industrial engineering Chulalongkorn University • Master’s Degree (MS) in engineering (Industrial Engineering & Management) Oklahoma State University, U.S.A. • National Defence College of Thailand, Class of 1989 Present Position : • Independent Director & Chairman, Audit Committee and Nomination & Remuneration Committee of Thai Rung Union Car Plc. • Director and Member of the Audit Committee of Siam Cement Plc. • Chairman of Thai Sugar Terminal Plc Ruamkijaungthong Warehouse Co Ltd Pan-Paper 1992 Co Ltd Ekaratpattana Co Ltd T.S.G. Assets Co Ltd T.S. Flour Mill Plc T.S. Oil Industry Co Ltd T.S. Transport & Logistics Co Ltd Kaset Thai Sugar Co Ltd Thai Identity Sugar Factory Co Ltd Ruamphol Enterprise Nakorn Sawan Co Ltd • Director of H.C. Starck (Thailand) Co Ltd Siam P.P. International Co Ltd • Specialist Senior Engineering (Industrial Engineer), Council of Engineers • Law Councillor, Ministry of Labour • Academic Director of the Safety and Health Vocational Management System, The Engineering Institute of Thailand • Chairman of the Council, Chao Phraya University • Chairman, Khunying Phancheun Reunsiri Foundation • Chairman, Ajarn Lai-arj Phamarapa Foundation • Chairman, Industrial Development Foundation Director Certification Program 39/2004: IOD Finance for Non-Finance Directors 8/2004: IOD
Shareholding as of 16 March 2012: 280,000 shares (0.06%)
6Annual Report 2011 Thai Rung Union Car Public Company Limited
Mr. Kavee Vasuvat
Independent Director &
Member, Audit CommitteeAge : 76
Academic qualifications:
• Bachelor’s degree in Electrical
Engineering
Royal Melbourne Institute of
Technology, Australia
Present Position :
• Independent Director & Member,
Audit Committee and Nomination &
Remuneration Committee of
Thai Rung Union Car Plc.
• Independent Director & Chairman
Audit Committee and Member
Remuneration Committee of
Thai Steel Cable Plc.
• Chairman of
Q.E.D. Creation Co. Ltd.
Director Forum Program 1/2000 : IOD
Director Accreditation Program
23/2004 : IOD
Director Certification Program
58/2005 : IOD
Finance for Non-Finance Directors
18/2005 : IOD
Audit Committee Program 10/2005 : IOD
Shareholding as of 16 March 2012: None
Mr. Suvait Theeravachirakul
Independent Director &
Member, Audit Committee
Age : 53
Academic qualifications:
• Bachelor’s degree in Business
Administration, Accounting,
Ramkhamhaeng University
• Master’s degree in MBA, Wagner
College, New York NY, U.S.A.
• Capital Market Academy No.10
Present Position :
• Independent Director & Member,
Audit Committee and Risk
Management Committee of
Thai Rung Union Car Plc.
• Director & President of
MBK Plc.
• Director of
Royal Orchid Hotel (Thailand) Plc.
• Director of
IFS Capital (Thailand) Plc.
• Executive Director of
Patum Rice Mill and Granary Plc.
• Executive Director of
Siam Piwat Co. Ltd.
• Director of
Vachirachart Consultant Co.,Ltd.
Director Certification Program
9/2001 : IOD
Audit Committee Program
15/2006 : IOD
Shareholding as of 16 March 2012:
15,012 shares (0.003%)
Mr. Damri Tunshevavong
Independent Director
Age : 58
Academic qualifications:
• Becheor’s degree in electrical
engineering, Chulalongkorn University
• Advanced Management Program
Harvard University, USA.
• Capital Market Academy (class of 2009)
Director Certification Program
106/2008 : IOD
Audit Committee Program
24/2008 : IOD
Role of the Chairman Program
22/2009 : IOD
Role of Compensation Committee
10/2010 : IOD
Present Position :
• Independent Director of
Thai Rung Union Car Plc.
• Advisor to the President & CEO of
Siam Cement Group Plc
• Vice Chairman of
Aira Capital Plc
• Director of
Thai Cane Paper Plc
• Director of
Yamato Kogyo Plc (Japan)
• Director of
Iron and Steel Institute of Thailand
Shareholding as of 16 March 2012: None
7Annual Report 2011 Thai Rung Union Car Public Company Limited
8Annual Report 2011 Thai Rung Union Car Public Company Limited
Corporate Social Responsibility
Youth and Educational Activities The Company supports youth and educational activities on an ongo-ing basis, with a view to instilling healthy attitudes in today’s younger gen-eration and helping them grow develop the qualities they will need to lead the country’s future development. Here are some of the activities of the past year.1. Dr.Pranee Phaoenchoke Chairman, Mr Sompong Phaoenchoke Manag-
ing Director of Thai Rung Union Car Plc together with other senior executives presented scholarship grants to children and descendants of employees on the occasion of Thai Rung Day, the anniversary of the death of Mr Vichien Phaoenchoke, the founder of Thai Rung. Since 1985 until now the Company has awarded 1,355 scholarships to children of employees, worth more than Bt.3.85 million.
2. The Company attaches great importance to children, who will grow up to be the future of the nation, and accordingly supports and encourages employees wishing to volunteer by establishing the Thai Rung Group Development Volunteers Association which cooperates with government and private sector organisations for the upkeep and repair of school buildings, free school lunches and making financial grants and supply-ing essential educational materials and equipment to pupils of Ban Ko Sadeung School, Sangkhlaburi District, Kanchanaburi Province, the Ban Huay Phark Infants Development Centre and Ban Nong Tadang Infants Development Centre, Suan Pheung District, Ratchaburi Province. This project is carried out every year in an effort to supply basic essentials to underprivileged schoolchildren in remote areas.
3. Dr. Pranee Phaoenchoke Chairman of Thai Rung Union Car Plc together with Miracle of Life Foundation and the Nong Khame Association pre-sented 300 scholarships to diligent but impoverished students of three schools in Amphoe Photharam, Ratchaburi Province.
4. Dr. Pranee Phaoenchoke, Chairman, together with other senior executives of Thai Rung Union Car Plc presented warm clothing, sports equipment and study materials and hosted a lunch for hill tribe children at Ban
Puykham School in Tambol Pa O Don Chai and Maemonwittaya School in Tambol Huay Chompoo, both in Amphoe Meuang, Chiang Rai Province.
The Company attaches great importance to conducting its business in accordance with ethical principles and prin-ciples of good corporate governance, and in a socially and environmentally responsible manner, which accords with the Company’s philosophy “Think right, do right, talk right”. It promotes and supports educational, religious, social and environmental activities for the benefit of society both within and beyond the organisation and among all stakeholders aimed at achieving sustainable development. The following were some of the main activities organised by the Company during the year under review.
9Annual Report 2011 Thai Rung Union Car Public Company Limited
Social and Environmental Activities
The Company supported various charitable organisations and asso-ciations in aid of people with problems and socially underprivileged people. Examples included:
5. Dr. Pranee Phaoenchoke, Chairman and Ms Kaewjai Phaoenchoke, Direc-tor of Thai Rung Union Car Plc took part in the opening ceremony of the Miracle of Life building graciously presided over by its Patron Princess Ubolratana Rajakanya at Suan Rot Fai, Chatuchak District, Bangkok, and donated a TR Adventure vehicle for use in the Foundation’s various charitable activities.
6. Dr. Pranee Phaoenchoke, Chairman, together with Directors and other senior executives of Thai Rung Union Car Plc and the Miracle of Life Foundation and other partners solidarity actions and donation of supplies to flood victims though government agencies in various provinces, chari-ties, hospitals and temples, communities, neighbours and employees. Items donated and produced by the Company itself included 600 boats, 97 floating toilets and 9,000 toilet chairs. The Company also arranged for large trucks to run on five routes transporting employees and neigh-bours during the floods when the surrounding roads were impassable to smaller vehicles.
7. Mr Sompong Phaoenchoke, Managing Director of the Thai Rung Group of companies, presented a MUV4 to the Governor of Ang Thong Prov-ince for use in helping food victims, and Mrs Kaewkao Phaoenchoke, Assistant Managing Director of the Thai Rung Group of companies, together with the Miracle of Life Foundation and the Channel 3 Kaow 3 Miti news programme organised a rubbish clearing project involving exchange for bags of emergency supplies and making a transportable foam raft for collecting rubbish from various communities at the time of the floods.
10Annual Report 2011 Thai Rung Union Car Public Company Limited
Religious Activities The Company is convinced that a liveable and sustainably develop-ing Thai society needs to be firmly underpinned by religion. The following are examples of the religious activities which it organised over the course of the year to promote goodness and virtue.
8. Senior executives and employees make merit together by giving food to monks and listen to a sermon at the beginning of each New Year, so that they start the year’s work with a positive attitude. Employees are also given the opportunity to make merit together on a regular basis by feeding monks who come to the Company every Tuesday.
9. On Friday evenings the “Mens Sana in Corpore Sano” project, started by Assistant Managing Director Ms Kaewkao Phaoenchoke, brings to-gether senior executives, employees and members of the public for a session of meditation and to hear a sermon by a monk on a different theme each week.
(Activities)
10. Senior executives of the Thai Rung Union Car Plc received a special honour for having won the Outstanding Workplace 2011 Award in the category Labour Relations and Welfare for five successive years (2007-2011) and Thai Rung Tools and Dies Co Ltd also won the Outstanding Workplace 2011 Award in the category Labour Relations and Welfare for the fourth successive year, from the Department of Labour Protection and Welfare at the Santimaitree Building, Government House.
11. Thai Rung Union Car Plc received the “Excellent Delivery Reward, Excel-lent Quality Reward and Excellent Good-Cooperation Reward 2011” from Kawasaki Motors Enterprise (Thailand) Co Ltd on 3 February 2012.
12. Mrs Kaewkao Phaoenchoke, Assistant Managing Director of Thai V.P Auto Service Co Ltd (a subsidiary) received the “Outstanding Insurance Repair Centre 2010” award from Prime Minister Yingluck Shinawatra at the Santimaitree Building, Government House on 1 September 2011
11Annual Report 2011 Thai Rung Union Car Public Company Limited
General Information
Listed Company Thai Rung Union Car Public Company Limited Companies Register Number 0107536001435
Registered share capital Bt.524,996,497 divided into 524,996,497 ordinary shares of Bt.1 each.
Paid-up share capital Bt.501,589,497
Business Activities - Product design, research and development - Manufacture of dies and jigs - Manufacture of automotive parts and seats - Contract vehicle painting and assembly, vehicle modification
Address 28/6 Moo 1, Phetkasem Road Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2812-0844, 0-2814-5030, 0-2420-3664
Website http://www.thairung.co.th
Securities Registration Thailand Securities Depository Company Limited 62, Stock Exchange of Thailand Building, Rachadaphisek Road, Klong Toey, Bangkok 10110 Tel: 0-2229-2800, 0-2654-5599 Fax: 0-2359-1259
Auditors Mr Atipong Atipongsakul CPA No. 3500 and/or Mr Prawit Viwanthananut CPA No. 4917 and/or Mr Bunjong Pichayaprasat CPA No. 7147 and/or Mr Vichai Ruchitanont CPA No. 4054 and/or Mr Sathien Vongsnan CPA No. 3495 ANS Audit Co Ltd 100/72, 22nd Floor, 100/2 Vongvanij Building B, Rama 9 Road, Huaykwang Bangkok 10310 Tel: 0-2645-0109 Fax: 0-2645-0110
12Annual Report 2011 Thai Rung Union Car Public Company Limited
Group Structure of Thai Rung Union Car Public Company Limited
and subsidiaries as at 8 March 2012
General Information on Subsidiaries and Joint Venture Companies
Subsidiary Companies• Thai Rung Tools and Dies Co Ltd Registered share capital Bt.27,000,000 issued and fully paid up, divided into 270,000 ordinary shares of Bt.100 each Business Activities Manufacture of dies and jigs. Address 28/22 Moo 1, Phetkasem Rd. Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2814-5030, 0-2420-3664
• Thai Auto Pressparts Co Ltd Registered share capital Bt.400,000,000 issued and fully paid up, divided into 4,000,000 ordinary shares of Bt.100 each Business Activities Manufacture of automotive body parts Address Amata City Industrial Estate 7/122 Moo 4, National Highway 331, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong 21140 Tel: (038) 956-156, 956-239-42 Fax: (038) 956-169
Thai Rung Union Car Plc.(TRU)
Thai Ultimate Car Co., Ltd.
99.53%
Delta Thairung Co., Ltd.
30%
Thai V.P. Auto Service Co., Ltd.
94%
Thai Auto Pressparts Co., Ltd.
91%
Thai Rung Tools and Dies Co., Ltd.
94%
Thai Auto Conversion Co., Ltd.
20%
13Annual Report 2011 Thai Rung Union Car Public Company Limited
• Thai V.P. Auto Service Co Ltd Registered share capital Bt.25,000,000 issued and fully paid up, divided into 250,000 ordinary shares of Bt.100 each Business Activities Sale of spare parts and accessories, after-sales service centre, installation of LPG and CNG vehicle conversion units. Address 151 Macharoen Rd., Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2420-6708, 0-2420-4823, 0-2812-1445-6 Fax: 0-2420-1601 Website www.trservice.in.th
• Thai Ultimate Car Co Ltd Registered share capital Bt.25,000,000 issued and fully paid up, divided into 25,000 ordinary shares of Bt.1,000 each Business Activities Providing automotive, consulting and general administrative and organisational services Address 28/22 Moo 1, Phetkasem Rd. Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2812-1992 Joint Venture Companies
• Thai Auto Conversion Co Ltd Registered share capital Bt.74,500,000 issued and fully paid up, divided into 74,500 ordinary shares of Bt.1,000 each Business Activities Product development and fitting of special accessories for special purpose vehicles. Address 159, Moo 16, Thaeparak Road, Tambol Bang Sao Thong, Amphoe Bang Sao Thong, Samut Prakarn Province 10540 Tel. 0-2313-1371-8 Fax 0-2313-1380• Delta Thairung Co Ltd Registered share capital Bt.300,000,000 issued and fully paid up, divided into 3,000,000 ordinary shares of Bt.100 each Business Activities Manufacture of auto seats and parts and other equipment for vehicles Address Amata City Industrial Estate 7/150 Moo 4, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong 21140 Tel: (038) 650-398-400 Fax (038) 650-400
Note: Delta-TR Co Ltd, a joint venture, filed for dissolution with the Department of Business Development of the Ministry of Commerce on 6 March 2012.
14Annual Report 2011 Thai Rung Union Car Public Company Limited
Nature of Business
General Business Overview of the Company, its Subsidiaries and Joint Ventures
Thai Rung Union Car Public Co Ltd is in the motor vehicle industry. Its main business activities are
product design, research and development, manufacture of tools, dies and jigs, manufacture of metal and plastic
parts, contract vehicle painting and assembly and modification of vehicles, including multi-purpose vehicles and
special purpose vehicles such as TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4) and rapid response
rescue vehicles.
The Company has six subsidiary and joint venture companies, which are engaged in related or sup-
porting businesses and which enable the group to provide a full range of services as well as spreading the
business risks. Details are as follows.
• Thai Rung Union Car Plc. has three business units as follows;
o Product design, research and development and contract research, design and modification of various
types of vehicles for domestic and overseas customers.
o Pressed metal and plastic parts and seats for car, truck and motorcycle manufactures, parts for con-
struction tools, industrial and agricultural machinery, or other businesses beyond the auto industry such
as electronic components, as well as for use in its own internal production processes.
o Contract assembly and modification of vehicles, including multi-purpose vehicles and special purpose
vehicles such as TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4) and rapid response rescue
vehicles.
• Thai Rung Tools and Dies Co Ltd (TRT) makes dies and jigs. It has received BOI promotional privileges
for investments.
• Thai Auto Pressparts Co Ltd (TAP) started business in June 2002 at its factory at Amata City Industrial
Estate, Amphoe Pluak Daeng, Rayong Province, thus considerably expanding the group’s parts production
capacity. Thai Auto Pressparts, which has been granted BOI promotional privileges for its investments, sup-
plies automotive parts to the customer group formed by auto and motorcycle manufacturers in the Eastern
Seaboard and surrounding areas, and also caters to the export market. Towards the end of 2010 it started
to invest in expanding its production capacity by building a new factory and acquiring additional machinery
in order to cater to the increased volume of orders from customers, a process which should be completed
in 2012.
• Thai V.P. Auto Service Co Ltd (TVS) provides after-sales service for Thai Rung’s multi-purpose vehicles. In
2005 it expanded its activities to include plastic accessories under the name “Parto”. In 2008 it extended
its range of services to include the installation of LPG and CNG vehicle conversion units
• Thai Ultimate Car Co Ltd (TUC) a subsidiary of TVS which it acquired in 2001. Its current activity consists
of providing automotive consulting and general administrative and organisational services.
• Thai Auto Conversion Co Ltd (TAC) is a joint venture with the Toyota Motor Group for product develop-
ment and fitting of accessories for special purpose vehicles.
15Annual Report 2011 Thai Rung Union Car Public Company Limited
• Delta Thairung Co Ltd (DTC) is a joint venture with Delta Kogyo of Japan, newly established in 2007 to
manufacture auto seats and parts and other equipment for vehicles. Its factory is at Amata City Industrial
Estate, Amphoe Pluak Daeng, Rayong Province.
The Company’s group policy is for each subsidiary to strive to operate profitably in its own right and
to be self-sufficient in its particular activities within the overall policy of the parent.
• Breakdown of Total Revenues, Thai Rung Union Car Plc and Subsidiaries, 2009-2011
Unit: million baht
Product/ServicePerformed
by
% of
shares
held
2009 2010 2011
Million
baht%
Million
baht%
Million
baht%
Sale of vehicles, including cost of as-
sembly and equipment and accessories
fitted
TRU,TVS,
TUC
94, 99.53* 375.16 26.03 168.63 7.85 116.30 5.14
Sale of parts, contract parts assembly
and other contract service
TRU,TAP 91 786.09 54.55 1,455.04 67.71 1,689.60 74.66
Contract production of dies and jigs TRT,TAP 94, 91 81.86 5.68 253.04 11.77 190.92 8.44
Sale of spare parts and accessories and
After sale service
TVS, TUC 94, 99.53* 109.96 7.63 93.50 4.35 57.96 2.56
Other revenue 75.30 5.23 121.09 5.63 150.57 6.65
Share of profit from investment in associated companies 12.75 0.88 57.73 2.69 57.75 2.55
Total Revenues 1,441.12 100.00 2,149.03 100.00 2,263.10 100.00
* TRU holds 94% of the shares in TVS, which in turn holds 99.53% of the shares in TUC.
• Industry trends and future competitive situation
The Federation of Thai Industries has estimated that the Thai automotive industry will produce between
2,000,000 and 2,100,000 vehicles in 2012, representing an increase of between 38% and 44% on 2011. This
growth is expected to come as a result of several auto makers such as Mitsubishi, Suzuki and Ford moving
production bases to Thailand, and of various other manufacturers increasing their production capacity in order
to supply both domestic and export markets. Much of this increase will be for the ‘eco car’, which looks set
to become Thailand’s new champion product as it gains popularity with consumers and encounters positive
market response. A further significant factor is the recovery of the automotive industry following the flooding
that affected much of the country, as a result of which the demand that was pent up in the latter part of 2011
is now once more finding expression. This is further helped by the government’s economic stimulus policy of
refunding excise tax to first-time car buyers up to a limit of Bt.100,000 per vehicle until 31 December 2012,
with a target of 500,000 units under the Bt.30 billion facility, encouraging consumers to bring forward their
purchasing decisions, while other factors such as interest rates and fuel prices are likely to incline consumers
towards smaller, more fuel-efficient and/or hybrid vehicles. In view of all these factors, the growth of the Thai
automotive industry in 2012 presents significant opportunities for Thai auto parts makers, including the Company,
to win additional orders for both metal and plastic parts, contract painting and assembly work.
At present some 80% of the Company’s revenues comes from OEM parts making and contract as-
sembly and painting work for auto makers and manufacturers of industrial and agricultural machinery. We are
confident therefore that the Company will grow steadily in step with the Thai automotive industry through 2012
and into the future.
16Annual Report 2011 Thai Rung Union Car Public Company Limited
Risk Factors
The Company attaches importance to applying the principles of risk management as a tool in managing
the organisation to world standards. A Risk Management Committee is responsible for overseeing and control-
ling compliance with risk management policies and rules, monitoring any significant risks that arise and taking
steps to ensure that the organisation has in place risk management systems that are adequate and appropriate
to its business and enable it to meet its objectives. The Company has established a risk management plan
which is continuously aligned with its strategic and business plans, examples being the revision of practical
manuals to keep them up to date and thus able to support improvement drives throughout the organisation, the
establishment and review of clear roles, duties and responsibilities of executives and employees and continuous
performance evaluation aimed at incentivising employees and boosting efficiency.
In 2011 the Company stood up well against the dual problems of the economy and the floods that
struck Thailand. This was partly due to the fact that its management and planning took account of risk man-
agement and prevention. This was particularly so in the case of risk management to mitigate the effect of the
floods. The Company took protective measures one month in advance, setting up a structure and a special team
and assigning clear responsibilities to executives and employees. The perimeter walls were inspected, repaired
and reinforced, additional defences were constructed, the drainage system was improved and, when the floods
actually arrived, there was good understanding and cooperation between top management and personnel aimed
at safeguarding the Company’s assets Throughout the whole month for which the Company was surrounded
by water, this spirit of solidarity and understanding at all levels enabled us to prevent the water from flooding
the factory and so to be able to continue operating at full capacity, supplying our customers and producing
faster than our competitors.
1. Business Risks
- Multi-purpose vehicles
- Brand owners who already produce multi-purpose vehicles, and new entrants attracted into the market
by the high value of the station wagon type segment.
- the implementation of free trade under AFTA coming into effect from 1 January 2010 brings import duty
down to zero, increasing opportunities for foreign brands to establish themselves in the Thai market,
which would increase competition.
- higher oil prices have increasingly focused the market’s attention on small cars that use alternative
energy sources and/or are fuel efficient, which could have an impact on the pick-up truck market and
the Company’s multi-purpose vehicle business.
In order to spread the risk and mitigate any effect that might arise from the various risk factors in the
multi-purpose vehicle business the Company has established guidelines as follows:
17Annual Report 2011 Thai Rung Union Car Public Company Limited
- The Company focuses on the area of multi-purpose vehicle research and development, striving for
modern features and quality in line with its target customer groups’ needs. The Company has also
conducted studies on developing a business for various kinds of special purpose vehicles such as
TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4), rapid emergency vehicles in order to expand
its market and its target customer groups, taking advantage of its flexibility in terms of adapting its
production processes.
- The Company further developed its Phetkasem Road ‘Thairung Centre’ product presentation outlet in
order to maximise end-user awareness, and held events and road shows in various provinces to boost
sales opportunities. Apart from this emphasis was also given to sales to the various government de-
partments and bodies.
- The Company put additional measures in place throughout the organisation to reduce costs and save
on expenses, both in the factory and in sales and support areas, so as to streamline costs so as to
be able to compete and survive the economic crisis.
- Auto Parts and Contract Assembly
the implementation of free trade under AFTA coming into effect from 1 January 2010 brings
import duty down to zero and thus increases manufacturers’ options in terms of importing parts instead
of having them made in Thailand. Thai auto parts makers are faced with tougher competition on price
and quality, from both domestic and foreign producers.
In order to spread the risk and mitigate any effect that might arise from the various risk fac-
tors in the parts making and contact assembly business the Company has established guidelines as
follows:
- The Company continues to foster its relationships with its long-standing major customers, whilst at the
same time seeking new customers from other sectors such as premium level motorcycles, which is a
niche market with high added value, parts for construction tools, industrial and agricultural machinery,
or other businesses beyond the auto industry such as electronic components, and also to broaden the
customer base to other countries such as China, India and Australia so as to spread the risks in terms
of sources of work. It also arranges programmes of marketing activities aimed at enhancing customer
relations in general throughout the year, as well as establishing new target customer groups every year.
- We provide a one stop service for plastic parts, painting, contract assembly and modification work from
research and design through to finished parts.
- The Company is always on the lookout for possible foreign business alliances with a view to increasing
its know-how in the areas of production technology and more efficient machinery so as to prepare for
the future, and to joint investment and expanding into additional related businesses, its policy being to
seek work with high added value.
- Due to the fast grew up of automotive industry, automaker had inadequate capacity then we have the
opportunity to propose service for painting and contract assembly.
- Dies and Jigs
the implementation of free trade under AFTA coming into effect from 1 January 2010 brings
import duty down to zero and thus increases manufacturers’ options in terms of importing dies and
assembly equipment instead of having them made in Thailand.
18Annual Report 2011 Thai Rung Union Car Public Company Limited
Several automakers will launch new models in 2012, so they had the necessary tooling and
jigs and fixtures made in 2011. Consequently the volume of work will be less in 2012, with very few
new models planned for next year: this means we must find work from overseas, or from automakers
moving their production bases to Thailand, or from makers of construction, industrial or agricultural
machinery and other non-automotive customers.
In order to spread the risk and mitigate any effect that might arise from the various risk fac-
tors in the die and jig making business the Company has established guidelines as follows:
- The Company has carried out investments to improve the efficiency of the production process so as
to meet the many and varied customer requirements and at the same time to improve chances of
winning the big size of die that have the high value added and less competitor.
- The Company has a project to increase automation of the production process so as to lessen the
impact of shortages of skilled labour, and has also arranged training courses aimed at enhancing per-
sonnel capability.
- To build dies and jigs on a tier-two basis for tier-one suppliers overseas, e.g. Europe, America, who
need to outsource work to countries with lower production costs.
- To provide a one stop service for research, design, modification, right through to dies, jigs and other
production equipment.
- Boost level of die and jig design and production for turn-key projects through alliance with foreign
partner so as to be able to enter more overseas tenders
- Build up a network of business allies in Thailand so as to cater to the volume of new projects coming
on stream, increase production capacity and be able to take on turn-key projects overseas
Nevertheless in order to spread the risks in all three business units, the Company also strives to diver-
sify its business, both to reduce the risk of business concentration and to broaden the revenue base. Examples
are:
o Expanding the business to include the production and sale of blow mould and vacuum mould
plastic parts including plastic accessories under the name “Parto”, a proprietary brand owned by
the Company, including growing sales on an OEM basis, so as to respond comprehensively to
customers’ needs.
o The Company is a leader in the design and development of flat deck cargo boxes for pick-up trucks,
which it sells to a number of truck makers for distribution in the domestic market ad overseas.
2. Financial Risks
2.1 Credit risk
The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts re-
ceivable, loans, and other receivables. The Company and subsidiaries manage the risk by adopting appropriate
credit control policies and procedures and therefore does not expect to incur material financial losses. In ad-
dition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large
customer base.
19Annual Report 2011 Thai Rung Union Car Public Company Limited
2.2 Interest rate risk
The Company’ and subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks,
current investments and short-term loans. However, since most of the Company’s and subsidiaries’ financial
assets and liabilities have been repaid within one year, the interest rate risk is expected to be minimal.
Please refer to details in Note 28 to the Financial Statements for the year ended 31 December 2011.
3. Legal risk
This concerns the risk of being sued by consumers on grounds of product quality and possibly having
to pay damages under product liability legislation as result of auto parts made by the Company being used
to assemble vehicles for sale domestically or abroad. A customer could sue a distributor for damages caused
by a faulty vehicle, and if it could be shown that the problem was caused by a defective part made by the
Company, we could in turn be sued for damages, and depending on the court’s decision might suffer loss as
a result.
The Company takes this risk seriously and consequently trains senior executives and personnel on
points of law and enforces strict compliance with the ISO/TS 16946 quality standard so as to ensure that
production processes are efficient, traceable and auditable, right up to pre-delivery inspection so as to guarantee
that customers receive quality product. The target claim rate is zero.
4. Safety, environmental and community risks
The Company attaches importance to its human resources and stakeholders, striving to manage its
business in such a way as to reduce all kinds of risks that affect people’s quality of life, as well as fulfilling
its responsibilities towards society and building good relations with its neighbouring community, through the
following measures:
- Annual review of safety and environmental policies and quarterly activity meetings to inform supervisors
of monitoring results
- Stress on employee awareness of and attention to safety and environmental issues, all employees be-
ing obliged to follow the CCCF (Completely Check, Completely Find Out) procedure and the ISO14001
environmental management standard, as well as other activities such as “White Factory” “Drive Safely”,
“Don’t Drink and Drive” and “Give up Alcohol for Lent”.
- Responsibility towards society, such as solidarity actions and donation of supplies to flood victims though
government agencies in various provinces, charities, hospitals and temples, communities, neighbours and
employees. Items donated included 600 boats, 97 floating toilets and 9,000 toilet chairs. The Company
also arranged for large trucks to run on five routes transporting employees and neighbours during the
floods when the surrounding roads were impassable to smaller vehicles.
- Annual scholarship awards to children of employees who achieve a certain standard, and study and
ethical training scholarships for young people in Ban Karuna, Ban Mudhita and Ban Ubekkha youth
training centres, for example.
- Good community relations, with annual joint activities such as relaxed gatherings where a prominent
monk is invited to address employees and neighbour who are interested on a range of ethical and
religious topics.
20Annual Report 2011 Thai Rung Union Car Public Company Limited
Shareholders and Management
• Shareholders
Major Shareholders as at 16 March 2011, last date on which the share register was closed.
No. Name Shares % of total shares1. Dr Pranee Phaoenchoke 246,387,500 49.12%2. Mr Sompong Phaoenchoke* 35,386,100 7.05%3. Ms Kaewjai Phaoenchoke 32,639,450 6.51%4. Mr Wuttichai Phaoenchoke 31,201,500 6.22%5. Citibank Nominees Singapore Pte Ltd.-S.A. PBG Clients SG 24,691,925 4.92%6. Mr Arnan Tantijarascheb 12,000,000 2.39%7. Mr Pattanasorn Phaoenchoke 10,000,000 1.99%8. Thai Rung Union Car Plc 9,216,700 1.84%9. Tisco Securities Co Ltd 9,000,000 1.79%10. Mr Wongwaris Phaoenchoke 9,000,000 1.79%
TOTAL 419,523,175 83.64%
Note * Mr Sompong Phaoenchoke holds 27,136,100 shares, his wife Mrs Kaewkao Phaoenchoke holds 2,250,000
shares and his minor child Mr Korrawut Phaoenchoke holds 6,000,000 shares.
• Management
1. Management Structure
1.1 Structure of Company’s Board of Directors
The Company has the following five boards and committees: Board of Directors, Audit Committee,
Executive Committee, Risk Management Committee and Nomination and Remuneration Committee, each com-
mittee having the powers and duties as follows:
1) Powers and Duties of the Board of Directors
1. To carry out its duties in accordance with the Company’s’ laws, objectives and regulations, including
resolutions of shareholders’ meetings, in accordance with the law, with integrity, ethically, prudently and
with due regard to the Company’s best interests.
2. To arrange for a shareholders’ meeting to be held at least once a year, to report to shareholders on
the Company’s performance and to seek shareholders’ approval for matters which exceed the authority
or duties of the board of directors.
3. To hold a meeting of the Board of Directors at least once every three months.
4. To take all necessary steps to ensure that financial and other information provided to shareholders is
at all times correct, complete and transparent.
5. To ensure that the Company has efficient internal control and audit systems in place.
6. To consider and make decisions on important matters such as policies, business plans, administrative
21Annual Report 2011 Thai Rung Union Car Public Company Limited
powers, large investment projects, related party transactions, acquisitions or disposals of assets of the
listed company as covered by the regulations of the Stock Exchange of Thailand, and any other mat-
ters stipulated by law.
7. To ensure that the Company’s business dealings are carried out in an ethical manner.
8. The Board of Directors may delegate its powers and duties to one of more Directors or to other
individual(s) as it sees fit, authorizing such person or persons to act on its behalf with whatever pow-
ers and duties it may chose to assign.
9. The Board of Directors has the power to appoint and to change authorised signatories empowered
legally to bind the Company on its behalf.
10. To consider the payment of interim dividends to shareholders.
11. To establish the Company’s policies and working guidelines and to monitor administrative departments’
efficient and effective implementation of such policies with a view to maximizing growth and economic
value for shareholders.
12. To give advice to the Managing Director on administration and on decisions likely to have important
consequences for the Company.
13. To avoid conflicts of interest amongst Company stakeholders.
The scope of the powers and duties mentioned shall not extend to:
1. Matters subject by law to a resolution of a shareholders’ meeting, such as capital decrease or increase
or amendments to the Company’s Memorandum or Articles of Association.
2. The authorisation of any related party transaction or acquisition or disposal of listed Company’s assets,
which require approval by a meeting of shareholders in accordance with the regulations of the Stock
Exchange of Thailand.
3. The authorisation of any transaction in which a Director is an interested party or has a conflict of
interest, which requires approval by a meeting of shareholders.
2) Powers and duties of the Audit Committee
1. To ensure that the Company’s financial reporting is accurate and adequate.
2. To ensure that the Company’s internal control and internal audit systems are appropriate and effective,
to consider the independence of the Internal Audit department and to give its opinion on the appoint-
ment, transfer or dismissal of the Head of the Internal Audit Department or such other department as
has responsibility for internal audit.
3. To ensure that the Company operates in accordance with the law relating to securities and the stock
exchange and with regulations of the Stock Exchange and laws relating to the Company’s business.
4. To consider the selection and nomination of independent individuals to perform duties as the Company’s
auditors, and to propose their remuneration; to attend meetings with the auditors, without management
departments being present, at least once a year.
5. To consider related party transactions and transactions likely to give rise to a conflict of interest so
as to ensure that they are conducted in accordance with the law and with regulations of the Stock
Exchange of Thailand so as to provide confidence that such transactions are fitting and proper and in
the Company’s best interests.
6. To deliver a report on the Audit Committee’s activities for publication in the Company’s Annual
Report, such report to be signed by the Chairman of the Audit Committee and must contain at least
the following information:
22Annual Report 2011 Thai Rung Union Car Public Company Limited
(a) Its opinion on the accuracy, completeness and reliability of the Company’s financial statements
(b) Its opinion on the adequacy of the Company’s internal control systems
(c) Its opinion on the Company’s compliance with the law relating to securities and the stock exchange
and with regulations of the Stock Exchange and laws relating to the Company’s business
(d) Its opinion on the suitability of the auditors
(e) Its opinion on likely to give rise to a conflict of interest
(f) The number of times the Audit Committee has met, together with individual attendance details
(g) Its opinion or general observations based on the performance of its duties as per its charter
(h) Any other matters that it considers shareholders and investors generally should know within the
scope of action, duties and responsibilities assigned to it by the Company’s Board of Directors.
7. To carry out any other duties assigned to it by the Company’s Board of Directors with the agreement
of the Audit Committee
3) Powers and Duties of the Executive Committee
1. To control and take care of the general conduct of the Company’s business and perform duties
assigned to it by the Company’s Board of Directors in order to achieve the Company’s objectives.
2. To direct and monitor the successful implementation of policies and working plans assigned by the
Company’s Board of Directors to the various administrative departments.
3. To examine, consider and authorise important and urgent business within the scope of its powers and
duties and monetary limitation determined by the Company’s Board of Directors but in any case not
exceeding Bt.400m.
4. To establish financial policies and supervise and monitor the administration of all financial work,
including all business conducted with financial institutions, with a view to optimising efficiency.
5. To consider and authorise transactions within the Company’s scope of business.
6. To perform such other duties as may be assigned by the Company’s Board of Directors.
The scope of the powers and duties mentioned shall not extend to the authorisation of any transaction
in which the executive board or an individual is an interested party or involving a conflict of interest on the
part of the executive board or an individual, nor any related party transaction nor the acquisition or disposal
of listed Company’s assets, in accordance with the regulations of the Stock Exchange of Thailand
4) Powers and duties of the Risk Management Committee
1. To establish a policy and framework for managing the Company’s overall risk situation, covering the
various risks that might affect the Company’s results and reputation.
2. To establish strategies which are in accordance with the Company’s overall risk management policy
and which enable risks to be gauged, monitored, taken care of and kept at appropriate levels, including
the setting up of advance warning systems.
3. To review the adequacy and effectiveness of risk management policies and systems and monitor
adherence to those policies on an ongoing basis so as to enhance the prudence, security and efficiency
of the Company’s overall risk management.
4. The Risk Management Committee has the power to establish and define the roles of sub-committees
and working committees for managing the various kinds of risk as it sees fit, and all such committees
shall report directly to the Risk Management Committee.
23Annual Report 2011 Thai Rung Union Car Public Company Limited
5. The Committee is empowered to call for documents and information and to require individuals to
provide facts for consideration so as to be able to achieve its objectives.
6. To communicate with the Audit Committee in order to ensure that risk management systems are in
line with internal controls and in accordance with policies and strategies that have been established.
7. To report to the Board on risks and risk management.
5) Powers and duties of the Nomination and Remuneration Committee
1. To select persons with characteristics appropriate to the position of Company Director using transpar-
ent criteria and considering any names put forward by shareholders for nomination to the Board of
Directors.
2. To select persons with characteristics appropriate to the position of Chairman of the Executive Com-
mittee and Managing Director in the event of their being a vacancy, for nomination to the Board of
Directors for their consideration, and to prepare a succession plan for senior executive positions.
3. To set policies, methodology and criteria for establishing Directors’ remuneration fairly and in consonance
with the Company’s results and with each individual’s performance.
4. To consider, review and present proposals for establishing Directors’ remuneration.
5. To present reports and proposals of the Nomination and Remuneration Committee to meetings of the
Company’s Board of Directors for their consideration.
6. To perform such other duties as the Company’s Board of Directors may from time to time assign to
it.
1.2 List of names of Company Directors
1) Board of Directors
As at 28 February 2012 all nine positions on the Board of Directors were occupied as follows.
Name Position
Dr Pranee Phaoenchoke Chairman of the Board
Mr Sompong Phaoenchoke Director
Ms Kaewjai Phaoenchoke Director
Mr Wuttichai Phaoenchoke Director
Mr Pricha Attavipach Independent Director
Mr Kavee Vasuvat Independent Director
Mr Suvait Theeravachirakul Independent Director
Mr Somkiat Nimrawee Independent Director
Mr Damri Tunshevavong* Independent Director
Mr Sakchai Komgris Company Secretary and Secretary to the Board of Directors
* Note: Mr Damri Tunshevavong was appointed a Director to replace Mr Anthony Farquhar McDonald who
resigned from his position as Director effective 28 February 2012.
Quorum for Board Meetings
1. A quorum for a meeting of the Board of Directors is constituted by not less than half the total number of
Board of Directors.
2. Resolutions are passed by a simple majority of votes by Directors present, each Director having one vote.
3. At each Annual General Meeting of the Company at least one third of the Directors, or if the number of
24Annual Report 2011 Thai Rung Union Car Public Company Limited
Directors is not divisible by three then the nearest number to one third, must retire, the longest serving
Directors retiring first. Directors retiring by rotation may be re-appointed for a further term of office.
2) Audit Committee
As at 31 December 2011 the Company’s Audit Committee was composed of three independent direc-
tors as follows.
Name Position
Mr Pricha Attavipach Chairman of the Audit Committee
Mr Kavee Vasuvat Member of the Audit Committee
Mr Suvait Theeravachirakul* Member of the Audit Committee
Mr Phakkawat Suwanmajo Secretary to the Audit Committee
Note: * Mr Suvait Theeravachirakul is a member of the Audit Committee with knowledge and experience in
examining companies’ financial statements
Members of the Audit Committee serve for a term of two years. A quorum for a meeting of the Audit
Committee is constituted by not less than half the total number of Committee Members. Resolutions are carried
by the affirmative votes of not less than half the total number of Members present.
3) Executive Committee
As at 31 December 2011 the Company’s Executive Committee consisted of five Directors, as follows:
Name Position
Dr Pranee Phaoenchoke Chairman of Executive Committee
Mr Sompong Phaoenchoke Managing Director
Ms Kaewjai Phaoenchoke Member of Executive Committee
Mr Wuttichai Phaoenchoke Member of Executive Committee
Mr Somkiat Nimrawee Member of Executive Committee
Mr Sakchai Komgris Secretary to the Executive Committee
Directors on the Executive Committee serve for a term of three years. A quorum for a meeting of the
Executive Committees is constituted by not less than half the total number of Directors. Resolutions are carried
by the affirmative votes of not less than half the total number of Directors present.
4) Risk Management Committee
As at 28 February 2012 the Company’s Risk Management Committee was composed of six members,
as follows:
Name Position
Mr Sompong Phaoenchoke Chairman of the Risk Management Committee
Mr Somkiat Nimrawee Member of the Risk Management Committee
Mr Suvait Theeravachirakul Member of the Risk Management Committee
Mr Sakchai Komgris Member of the Risk Management Committee
Mrs Kaewkao Phaoenchoke Member of the Risk Management Committee
Mr Phakkawat Suwanmajo Member of and Secretary to the Risk Management Committee
25Annual Report 2011 Thai Rung Union Car Public Company Limited
Members of the Risk Management Committee serve terms of two years. A quorum for a meeting of
the Risk Management Committee is constituted by not less than half the total number of Members. Resolutions
are carried by the affirmative votes of not less than half the total number of Members present.
5) Nomination and Remuneration Committee
As at 31 December 2011 the Company’s Nomination and Remuneration Committee was composed of
three independent directors as follows:
Name Position
Mr Pricha Attavipach Chairman of the Nomination and Remuneration Committee
Mr Kavee Vasuvat Member of the Nomination and Remuneration Committee
Mr Somkiat Nimrawee Member of the Nomination and Remuneration Committee
Mr Sakchai Komgris Secretary to the Nomination and Remuneration Committee
Members of the Nomination and Remuneration Committee serve terms of two years. A quorum for a
meeting of the Remuneration Management Committee is constituted by not less than half the total number of
Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members
present.
Directors’ signing powers
Directors’ signatory powers to bind the Company as recorded in the Company’s registry. At present
such powers are as follows:
Any one of the following Directors, acting alone, may bind the Company with his or her signature and
the Company seal:
Dr Pranee Phaoenchoke
Mr Sompong Phaoenchoke
Ms Kaewjai Phaoenchoke
Mr Wuttichai Phaoenchoke
(Memorandum of Association amended 16 March 2012)
1.3 Criteria for Appointment of Independent Directors
The selection process for Independent Directors can be seen in the heading concerning criteria for
selection of Directors and Administrators. Independent Directors must have qualities in accordance with the
Company’s definition of Independent Director which in turn is in accordance with that of the SEC, as follows.
Characteristics and definition of independent director of Thai Rung Union Car Plc
1. Does not hold more than 1% of the total number of voting shares in the parent Company, or of any
of its subsidiaries or joint venture companies or in any entity likely to give rise to a conflict of inter-
est, shares held by related persons to be included in the calculation in accordance with directive 258
of the Securities Act.
2. Does not take part in administering the work, is not a contractor or an employee or consultant in receipt
of a regular salary and is not in a position to exert control over the Company, its subsidiaries, joint
ventures or fellow-subsidiaries or on any entity likely to give rise to a conflict of interest (at present,
and in the two years prior to his appointment.)
26Annual Report 2011 Thai Rung Union Car Public Company Limited
3. Does not have business dealings with the Company:
3.1 Is not an auditor of the Company.
3.2 Does not provide other professional services to the Company such as legal or financial consultancy
or appraisal worth more than Bt.2m per year.
3.3 Does not have habitual related party transactions by way of rent or lease, whether as lessor or
lessee, of real estate, or concerning assets/services or the receipt or provision of financial assis-
tance with a value exceeding Bt.20m or 3% of NTA, whichever is the lower, including transactions
carried out in the one year prior to the carrying out of any given transaction.
He must not have business relations as defined in 3.1 to 3.3 above at present, nor in the two
years prior to his appointment except where there is necessary and proper reason and in any case
not continuously or constantly. An Independent Director or Audit Committee Member may have
relations that go beyond those stipulated while performing his office, but only after obtaining the
unanimous prior approval of the Company’s Board of Directors and subject to the relationship being
disclosed per Form 56-1, in the Annual Report and in the letter of invitation to the Shareholders’’
Meeting in the event that the Shareholders’ Meeting is to be asked to renew the term of office of
the Independent Director or Audit Committee Member concerned.
4. Is not related by blood or marriage to (i.e. is not the father, mother, spouse, sibling or child of or the
spouse of a child of an Administrator, major shareholder or other person in a position of authority or
candidate as Administrator or person in a position of authority of the Company or any of its subsidiaries.
5. Has not been appointed to represent a Director or major shareholder or other shareholder that is a
related party to a major shareholder.
6. Does not have any other characteristic limiting his independence.
7. An Independent Director having the characteristics set out in points 1 to 6 above may be given pow-
ers by the Board of Directors to decide on matters involving the Company, its subsidiaries, its joint
ventures or fellow-subsidiaries or entities likely to have a conflict of interest on a collective decision
basis
1.4 Number of Board Meetings held and individual Directors’ attendance record
The following table shows a summary of the number of meetings held in 2011 – Board meetings,
meetings of Board Committees and Meetings of Shareholders - and individual Directors’ attendance record.
27Annual Report 2011 Thai Rung Union Car Public Company Limited
Meetings attended / Meetings held
Name
Company
Board of
Directors
Executive
Committee
Audit
Committee
Nomination
and
Remuneration
Committee
Risk
Management
Committee
Attendance at
Shareholders’
Meetings
1. Dr Pranee Phaoenchoke 4/4 3/3 - - - 1/1 2. Mr Sompong Phaoenchoke 4/4 3/3 - - 4/4 1/1 3. Ms Kaewjai Phaoenchoke 2/4 3/3 - - - 1/1 4. Mr Wuttichai Phaoenchoke 2/4 3/3 - - - 1/1 5. Mr Anthony Farquhar McDonald 2/4 - - - - 0/1 6. Mr Somkiat Nimrawee 4/4 3/3 - 2/2 4/4 1/1 7. Mr Pricha Attavipach 4/4 - 4/4 2/2 - 1/1 8. Mr Kavee Vasuvat 4/4 - 4/4 2/2 - 1/1 9. Mr Suvait Theeravachirakul 3/4 - 3/4 - 3/4 1/110. Mrs Kaewkao Phaoenchoke - - - - 2/4 -11. Mr Sakchai Komgris (Secretary) 4/4 3/3 - 2/2 4/4 1/112. Mr Likhit Laobawornseadthee - - - - 3/4 -13. Mr Phakkawat Suwanmajo - - - - 4/4 -
1.5 Company Administrators
As at 31 December 2011 The Company’s Administrators as per the SEC definition were as follows:
Name Position
1. Dr Pranee Phaoenchoke President
2. Mr Sompong Phaoenchoke Managing Director
3. Mr Somchai Kirtitilaka Deputy Managing Director
4. Mr Wuttichai Phaoenchoke Assistant Managing Director, Research & Development line
5. Mrs Kaewkao Phaoenchoke Assistant Managing Director, Business line
6. Mr Sakchai Komgris Assistant Managing Director, Administration line and Company Secretary
Managing Director’s Powers and Duties
1. To control and oversee the pursuance of the Company’s business in general and to perform duties
assigned by the Company’s Board of Directors or Executive Committee, ensuring that objectives are
met.
2. To follow up and monitor the implementation of policies and working plans, ensuring that the adminis-
trative departments concerned duly perform the various tasks assigned them by the Company’s Board
of Directors or Executive Committee, with the desired results.
3. To consider and, if appropriate, approve important and urgent transactions within the scope of his
powers and duties and such monetary limits as the Company’s Board of Directors may establish, up
to a maximum of Bt.200 million.
4. To control and oversee financial administration, including dealings with financial institutions, ensuring that
it is in accordance with financial policies and as efficient as possible in accordance with assignments
from the Company’s Board of Directors or Executive Committee.
5. To consider and, if appropriate, approve business transactions within the Company’s authorised areas
of business.
6. To perform such other duties as may be assigned by the Company’s Board of Directors or Executive
Committee.
28Annual Report 2011 Thai Rung Union Car Public Company Limited
The scope of the powers and duties mentioned shall not extend to the authorisation of any transaction
in which the Managing Director or an individual with a possible conflict of interest is an interested party or
where there is a conflict of interest regarding the benefits of a related party transaction, or the acquisition or
disposal of the listed Company’s assets, in accordance with the regulations of the Stock Exchange of Thailand.
1.6 Business dealings or professional services between Independent Directors and the Company
During the year 2011 no Independent Director had any business relations with or provided professional
services to the Company, its subsidiaries or joint ventures or juristic persons with possible conflicts of interest
for a value exceeding that stipulated in the SEC’s recent announcement regarding application for and granting
of authorisation to offer new shares for sale.
2. Nomination of Directors and Administrators
The Company appointed a Nomination and Remuneration Committee on 13 August 2009, assigning
additional powers and duties relating to nomination to the members of the existing Remuneration Committee
(details of scope of powers and duties of the Committee can be seen under the heading Structure of Company
Boards and Committees.)
In the process for selecting individuals to be appointed as Directors includes, Independent Director and
Company Administrators consideration of a number of characteristics including skills, experience and capability,
especially in areas that are of the greatest benefit to the Company, and integrity. In fairness to shareholders
Independent Directors must have qualities in accordance with the Company’s definition of Independent Director
which in turn is in accordance with that of the SEC (details of the Company’s definition of Independent Direc-
tor can be seen under the heading concerning criteria for selection of Independent Directors) each individual
should be able to dedicate the necessary time to attending board meetings on a regular basis, and thus no
individual should hold directorships of several listed companies at same time. Finally the individual must not
possess any of the qualities or characteristics prohibited by the Listed Companies Act.
The Company has extended the opportunity to shareholders to put forward suitable names to be con-
sidered for nomination as Directors of the Company in advance, in accordance with criteria laid down by the
Company and published through the SET and the Company’s website, for the Nomination and Remuneration
Committee to first consider the qualities of those put forward as possible Directors or Independent Directors
of the Company, prior to submitting selected names to the Company’s Board of Directors, which in turn pro-
poses appointments to the General Meeting of Shareholders. Approval is by simple majority of votes of those
shareholders present or duly represented at the meeting and in possession of voting rights, as follows:
1. Each share confers the right to one vote.
2. Each shareholder who votes must use all his votes as per (1) above for a single individual or for a
number of individuals together, but may not allocate votes individually.
3. The individuals receiving the highest number of votes will be selected in descending order for appoint-
ment as Directors of the Company depending on the number of Directors to be appointed on each
occasion. In the event that two candidates receive the same number of votes and that appointing them
both would lead to exceeding the required number of Directors, the Chairman of the meeting shall
exercise a casting vote.
29Annual Report 2011 Thai Rung Union Car Public Company Limited
3. Directors’ and Administrators’ Remuneration
3.1 Monetary remuneration
(a) Board of Directors
Total remuneration received by all nine Directors from the Company in their capacity as Directors by
way of Directors’ stipends and meeting fees in 2011 a total of Bt.4,470,000 Details are as follows:
Director’s Name 2011 (Baht) 2010 (Baht)1. Dr Pranee Phaoenchoke 720,000 590,0002. Mr Sompong Phaoenchoke 560,000 430,0003. Ms Kaewjai Phaoenchoke 490,000 360,0004. Mr Wuttichai Phaoenchoke 440,000 350,0005. Mr Anthony Farquhar McDonald 340,000 280,0006. Mr Pricha Attavipach 710,000 610,0007. Mr Kavee Vasuvat 390,000 340,0008. Mr Suvait Theeravachirakul 400,000 330,0009. Mr Somkiat Nimrawee 420,000 360,000
Total 4,470,000 3,650,000
(b) Administrators (excluding Directors)
2011 2010Number
of
persons
Total
Amount
(Baht)
Number
of
persons
Total
Amount
(Baht)Salaries* 7 14,805,860 7 14,555,680Annual remuneration* 7 3,389,395 7 2,825,772Living Allowances 7 602,460 7 490,662Company Secretary’s position
allowance
1 84,000 1 84,000
Total 18,881,715 17,965,114
Notes The monthly and annual remuneration of the President and the Managing Director have
been considered by the Nomination and Remuneration Committee and approved by the
Company’s Board of Directors.
3.2 Non-monetary remuneration
(a) Directors
None
(b) Administrators
Company car
• Dividend Policy of Company and Subsidiaries
(a) Payment of dividends by the Company to Shareholders
TRU’s dividend policy is to pay a dividend each year of approximately 40% of its consolidated net
earnings of the previous year, subject to TRU and its affiliates’ cash flow and investment plans, and other future
considerations as to necessity and appropriateness.
30Annual Report 2011 Thai Rung Union Car Public Company Limited
(b) Payment of dividends by Subsidiaries to the Company
Subsidiary companies Thai Rung Tools and Dies Co. Ltd., Thai V.P. Auto Service Co. Ltd., Thai Auto
Pressparts Co. Ltd., and Thai Ultimate Car Co. Ltd. consider their policy year by year in light of their investment
requirements and other circumstances as appropriate.
• Auditors’ Remuneration
a) Audit fees
Audit fees paid to ANS Audit Co Ltd by the Company and its subsidiaries in 2011 were as follows,
with comparative figures for 2010.
BahtCompany 2011 2010
Thai Rung Union Car Plc. 570,000 570,000Thai V.P. Auto Service Co Ltd 230,000 230,000Thai Rung Tools and Dies Co Ltd 200,000 200,000Thai Auto Pressparts Co Ltd 250,000 250,000Thai Ultimate Car Co Ltd 350,000 350,000
Total 1,600,000 1,600,000
b) Non-audit fees
Non-audit fees paid to ANS Audit Co Ltd by the Company and its subsidiaries in 2011 were as
follows, with comparative figures for 2010.
BahtItem Payer 2011 2010
Other service charges* Company 67,560 51,590Other service charges* Subsidiaries 61,710 68,540Special service fees in
accordance with BOI
instructions
Thai Auto
Pressparts
Co Ltd
40,000 40,000
Total 169,270 160,130
Notes Other service charges such as travelling, accommodation, telephone and photocopying
expenses, cost of binding for Financial Statements, files, etc., invoiced as incurred.
31Annual Report 2011 Thai Rung Union Car Public Company Limited
Related Party Transactions
(1) Related Party Transaction with entities having a possible conflict of interest
Transactions during the past year with parties having possible conflicts of interest
NoteThai Rung Tools and Dies Co. Ltd. TRT Thai V.P. Auto Service Co. Ltd. TVS Thai Auto Pressparts Co. Ltd. TAP Thai Ultimate Car Co. Ltd. TUCNature of relationships
1. TRT, TVS and TAP are subsidiaries of TRU, in which the Phaoenchoke group hold directorships and are the major shareholders.
2. TUC is a subsidiary of TVS, which holds 99.53% of the shares, the Phaoenchoke group holding the remaining 0.47%.
3. The above listed companies having possible conflicts of interest are related companies in which
members of the Phaoenchoke group are both directors and major shareholders as follows
Related company Main type of Busi-
ness
Thai Rung Group
Counterparty
Related Party Transactions 2011
(Baht millions)
Balance sheet item
(Baht millions)
Isuzu Chaicharoenkij Isuzu dealer TRU, TUC Sale of accessories 0.00 Trade debtors 0.05
Motor Co Ltd Sale of spare parts TVS Purchase of spares, vehicle repairs 0.14 Trade creditors 0.02
After-sales service TVS Sale of spare parts 0.60 Other creditors 0.13
TRU Interest received 0.93
Chaicharoenkij Motors Co.,Ltd - TUC Cost of leasing land 0.84 Other creditors 0.12
Isuzu V. Motor Co Ltd Isuzu dealer TVS Sale of spare parts 0.02 Trade debtors 0.00
Sale of spare parts TVS Purchase of spares and payment for service 0.02
After sales service
Firstpart Co Ltd Sale of spare parts &
accessories
TUC, TVS Sale of spares 0.29 -
Auto repair &
maintenance
V.P. Auto Enterprise Co Ltd Ford dealer TVS Purchase of spares and payment for service 1.23 Trade debtors 0.59
Sale of spare parts TUC, TVS Sale of spare parts 0.01 Trade creditors 0.14
After sales service TUC Income from rental of land and showroom 1.32
Income from utility charges and
administartion fees
0.11
VPK Auto Co Ltd Ford dealer TRU Cost of leasing land 0.60 Trade creditors 0.01
Sale of spare parts
After sales service
Thai V.P. Corporation Co Ltd Vehicle rental TRU, TAP, TUC, TVS,
TRT
Vehicle rental 2.56 Trade debtors 0.32
TVS, TUC Sale of spare parts 0.40 Other debtors 0.30
TUC Income from rental of land and showroom 1.68 Trade creditors 0.16
TRU, TRT, TVS Income from utility charges and administar-
tion fees
0.52 Other creditors 0.78
TAP Cost of leasing land 0.19
Phothiphoom Co Ltd Real estate TUC Cost of leasing land 1.20 -
V.P. Capital Assets Co Ltd Real estate - Other creditors 0.05
Sinthoranee Land and
Construction Co ltd
Real estate TVS Purchase of spares and payment for service 0.02 Trade creditors 0.01
Lexus Auto City Co Ltd Lexus dealer TUC Income from lease of land and showroom 1.89 Trade debtors 0.16
Other creditors 0.08
32Annual Report 2011 Thai Rung Union Car Public Company Limited
Note
1. “Phaoenchoke group” consist of Dr. Pranee Phaoenchoke, Mr. Sompong Phaoenchoke, Ms.Kaewjai
Phaoenchoke and Mr. Wuttichai Phaoenchoke
2. ICCK = Izusu Chaicharoenkij Motor Co., Ltd., TVP = Thai V.P. Corporation Ltd.
3. C = Chairman of the Board D = Director MD = Managing Director or CEO
(2) Necessity and Propriety of Related Party Transactions
1. Buying and selling accessories and spare parts and providing and receiving vehicle repair services are
all normal business transactions of the Company, performed at cost plus a profit margin.
2. The leasing of land and office and showroom space together with utilities is at prices stipulated in
mutual contracts, which are in line with actual or estimated market prices.
3. Vehicles rented from a related company are for use in the business. Rates and terms are similar to
those applied to unrelated parties.
4. Loans to related companies are for use in sales support for the Group’s vehicles. Interest is charged
at the average of the five major commercial banks’ one-year fixed deposit rates plus 1%.
The above Related Party Transactions were considered with regard to their necessity, appropriateness
and overall benefit to the Company and its shareholders. Most of them were normal business transactions or
were in support of such normal business transactions, and they were conducted on normal commercial terms,
without giving rise to any profit diversion, and were conducted at arm’s-length prices and on similar terms to
those applied to non-related parties. The non-executive Directors’ opinion does not differ in any respect from
the relevant resolutions of the Board of Directors.
(3) Policy and approach with regard to future Related Party Transactions
As regards any future Related Party Transactions the Company will act in accordance with all relevant
laws, and with all relevant orders, proclamations and regulations of the Stock Exchange of Thailand, includ-
ing regulations regarding the disclosure of information on Related Party Transactions and on the acquisition
or disposal of significant assets by the Company or its subsidiaries. The Company’s Board of Directors has
Related Companies Shares held by Directorship held in Related Companies
Phaoenchoke
group
ICCK TVP Others Dr.
Pranee
Mr.
Sompong
Ms.
Kaewjai
Mr.
Wuttichai
Isuzu Chaicharoenkij Motors Co., Ltd. 100.00% - - - C D D D,MD
Chaicharoenkij Motors Co., Ltd. 100.00% - - - C D D D,MD
Isuzu V. Motor Co., Ltd. 0.001% 99.999% - - C D D D,MD
Firstpart Co., Ltd. 100.00% - - - C D D,MD -
V.P. Auto Enterprise Co., Ltd. 0.20% - 99.80% - C D D,MD D
VPK Auto Co., Ltd. 0.00% - 82.00% 18.00% C - D,MD -
Thai V.P. Corporation Ltd 100.00% - - - C D D,MD D
Phothiphoom Co., Ltd. 100.00% - - - C D D D,MD
V.P. Capital Assets Co., Ltd. 100.00% - - - C D D D,MD
Sinthoranee Land and Construction Co., Ltd. 100.00% - - - C D D D,MD
Lexus Auto City Co., Ltd. 90.00% - - 10.00% C D - -
33Annual Report 2011 Thai Rung Union Car Public Company Limited
established guidelines for the consideration of related party transactions and of acquisitions and disposals of
Company assets as follows.
- In the event that, the size of the transaction having been calculated in accordance with Stock Ex-
change of Thailand criteria it transpires that the transaction requires approval by the Company’s Board
of Directors, then the transaction must be submitted to the Board of Directors for their consideration.
In the event that the Audit Committee disagrees, the proposal can nevertheless be placed before the
Board and an appropriate record made in the minutes.
- In the event that, the size of the transaction having been calculated in accordance with Stock Exchange
of Thailand criteria, it transpires that the transaction requires approval by a meeting of shareholders,
then the transaction must first be submitted to the Audit Committee for consideration and, if approved,
onward submission to the Board of Directors who in turn will, if approved, propose it to a meeting of
shareholders.
34Annual Report 2011 Thai Rung Union Car Public Company Limited
Corporate Governance
Principles of corporate governance are guidelines for doing business and administering organisations,
which are becoming more and more widely known and accepted. In accordance with these principles the
Board of Directors has a very important role to play in running the organisation, by focusing on responsibilities
towards all parties with which it has dealings, both inside and outside the organisation, and by emphasizing
the importance of ethical dealings, transparency, efficiency, adequate disclosure of information that can be ex-
amined, the protection of shareholders’ rights and attention to their remuneration, and responsibilities towards
society and the nation. The Company is very well aware of the importance of these guidelines and adheres to
them strictly, so as to inspire confidence in shareholders and everyone with whom it has dealings and to form
a solid base for the growth of the business.
The Company is committed to applying the principles of corporate governance on an ongoing basis
to the running of the Company’s business. Thanks to which the Company was assessed as ‘Excellent’ for the
fourth year running in the joint SEC-TIA (Thai Investors Association) ‘AGM check-list’ and as ‘Very Good’ for the
third year in a row by the Thai Institute of Directors’ ‘Corporate Governance Report of Thai Listed Companies
2011.’ The Company’s policy is to continue improving the standard of corporate governance.
1. Shareholders’ Rights
The policy laid down by the Company’s Board of Directors is to look after shareholders’ basic rights.
The Board considers the equitable safeguarding of the interests of all groups of shareholders to be an important
duty and responsibility, in order to ensure that shareholders are treated fairly and that they have confidence in
how business is conducted by the Company and its Directors.
1. The Company’s Board of Directors has established a corporate governance policy in writing, which must
be strictly adhered to, as follows.
1. Rights and equitable treatment of Shareholders and other Stakeholders
• The Company deals fairly and impartially with shareholders and other stakeholders such as em-
ployees and contractors, trading partners, the public, competitors, and creditors.
• The Company endeavours to arrange shareholders’ meetings at the most convenient times pos-
sible for shareholders and to give shareholders equal opportunities to voice their opinions and ask
questions.
2. Board of Directors - structure, role, duties and responsibilities, independence
• The Board of Directors should play a leading role, have vision, and be independent in its decision
making, for the overall maximum benefit of the Company and its shareholders.
• The Board of Directors, management and shareholders should consider prudently how best to
solve problems arising through any conflict of interest, with sincerity and integrity, rationally and
independently within the framework of best ethical practice.
• At least one third of the total number of Directors, but in any case not less than three, shall be
Independent Directors.
35Annual Report 2011 Thai Rung Union Car Public Company Limited
• The Board of Directors and the management team have agreed a system for the clear sharing of
function, duties and responsibilities, and the Board has established a number of committees to
help it study and scrutinise work in light of policies and to provide clear monitoring and follow-up.
Committees currently include the Executive Committee, the Audit Committee, the Risk Management
Committee and the Nomination and Remuneration Committee. The Board may consider setting up
further committees as and when appropriate.
• Directors are expected to attend all Board meetings. Each year the Company fixes such meeting
in advance, at least one every three months, with additional, special meetings being called as and
when necessary. The Company discloses the number of meetings attended by each Director in its
Annual Report.
3. Disclosure and Transparency
• The Board shall perform its duties with transparency, such that its actions can be examined, and
shall disclose of correct and complete information, in a timely manner, to all interested parties.
The Company has appointed the persons to be responsible for communicating with shareholders,
institutional investors, stock analysts, and relevant government departments.
• The Company has established a Nomination and Remuneration Committee whose duty is to seek
out people with appropriate qualities to occupy the position of Director, Chairman of the Executive
Committee and Managing Director in the event of a vacancy and to establish Directors’ remunera-
tion fairly and reasonably. The establishment of Directors’ remuneration is subject to approval by
a general meeting of shareholders, and is published in the Company’s Annual Report.
4. Control and Management of Risk
• The Company attaches importance to the implementation of internal controls and audits, and has
accordingly established an internal audit department to ensure that basic working practices and
important financial transactions are conducted in accordance with established guidelines and in an
efficient manner, reporting direct to the Audit Committee.
5. Business Ethics
• The Company has issued to all Directors, administrators, managers and employees a written code
of ethics to which they must adhere in performing their duties.
2. The Company’s Board of Directors has determined that an Annual General Meeting of Shareholders be held
each year within four months of the close of business of the previous accounting year, and that the Com-
pany inform time, place and agenda of the meeting and provide relevant information and give Directors’
opinion as regards each agenda item in the letter of invitation to the shareholders’ meeting, which shall be
in both Thai and English, and attach a form of proxy together with explanations as to registration for the
meeting and granting of proxy are sent to shareholders at least fourteen days in advance and posted on
the Company’s website beforehand, so as to give shareholders sufficient opportunity to study the informa-
tion in advance of the meeting.
3. The Company’s Board of Directors has established criteria and procedures for extending the opportunity
to minority shareholders to put forward names of suitable individuals to be considered for nomination as
Directors of the Company and to propose agenda items for ordinary general meetings of shareholders in
advance, in the period from October to December each year, in accordance with the criteria laid down by
the Company and published through the SET Community Portal (SCP) and the Company’s website. In ad-
dition to this, the Company gives shareholders the opportunity of querying information relating to agenda
items or of submitting questions to the Company in advance of the meeting by e-mail or fax, to promote
shareholders’ opportunities to express their opinions to the Company.
36Annual Report 2011 Thai Rung Union Car Public Company Limited
4. The Company’s Board of Directors treats all its shareholders impartially, endeavours to arrange shareholders’
meetings at convenient and appropriate venues and opens for registration well before the meeting starts,
while shareholders who are unable to attend in person can appoint another person as proxy and can also
choose to appoint one of the Company’s independent directors to act as proxy.
Before the meeting starts, all rules and procedures governing the meeting are announced and clearly
explained, including the method used to count shareholders’ votes on each agenda item. The Company
hands out voting registration cards for each agenda item, while for any proposed appointment of Directors
there is a card for each individual candidate, allowing shareholders to vote on each individual separately if
they so wish.
Throughout the meeting shareholders are welcome to express their opinions and to ask questions, all
of which are answered. Complete and accurate minutes are taken of each meeting, which is also recorded
on video, and are made available for shareholders’ inspection.
5. The Company’s Board of Directors attaches great importance to shareholders’ meetings, and all Directors
endeavour to attend every such meeting, particularly the President of the Board of Directors and the Chair-
men of the various committees, so as to facilitate questions and answers on matters relating to each one.
2. Equitable Treatment of Shareholders
The policy of the Company’s Board of Directors is to treat all shareholders equally and fairly so as to
safeguard their basic rights.
1. The Company’s Board of Directors accommodates shareholders who are unable to attend meetings in person,
enabling them to vote by proxy. The Company also makes available the name of at least one independent
Director whom shareholders have the option of appointing as their proxy, and provides as part of the let-
ter of invitation to the meeting, information on each one, comprising name, age, address, positions held,
academic record, work experience, shareholding in the Company and whether the Director is an interested
party with regard to any particular agenda items. The Company makes available a form of proxy which
enables shareholders to give instructions on how votes are to be cast on each item; however shareholders
are free to use any form that complies with the criteria published by the Department of Business Develop-
ment of the Ministry of Commerce.
2. The Company’s Board of Directors arranges for voting registration cards to be handed out for each agenda
item, while for any proposed appointment of Directors there is a card for each individual candidate, allowing
shareholders to vote on each individual separately if they so wish, and facilitating transparency and ease
of examination in the event of any subsequent dispute. Information on individuals to be proposed for ap-
pointment as Directors is disclosed in the letter of invitation to the shareholders’ meeting, the information
comprising name, photograph, age, academic record and Directors’ training courses, work experience and
shareholding in the Company, for shareholders to study before reaching a decision.
3. In meetings of the Board of Directors or of shareholders, any Director, Administrator or shareholder who is
an interested party in any agenda item must disclose to the meeting information on his or her own interest
and those of related parties, and will not be entitled to vote on that particular agenda item, so that the
meeting can consider transactions that might involve conflicts of interest and reach decisions in the overall
best interests of the Company.
4. A shareholder who is also an Administrator may not raise any additional agenda item at a meeting of
shareholders unless such item has been communicated in advance, even if the item is not so important
as to require shareholders to spend time studying it before reaching a decision.
37Annual Report 2011 Thai Rung Union Car Public Company Limited
5. The Company’s Board of Directors attaches great importance to the safekeeping and protection of confi-
dential internal information and has therefore established written guidelines for guarding against the use of
internal information for personal benefit. For details please refer to Control of Internal Information.
6. The Board of Directors has resolved that Directors and Administrators who are obliged by law to report
their shareholdings must submit these reports to the Company’s Board of Directors each time. The Board
of Directors has further determined that shareholdings of Directors and Administrators be reported every
quarter to the Board.
3. Stakeholders
The Company attaches importance to dealing with all its stakeholders, including shareholders, custom-
ers, trading partners and creditors, competitors, employees, the environment, the community and society with
sincerity, honesty and impartiality.
1. The Company’s Board of Directors has produced and issued to all Directors, Administrators and employees
a written Code of Ethics or Statement of Business Conduct to which they must adhere in performing their
duties in accordance with the Company’s mission, as follows.
• Shareholders
The Company attaches great importance to its shareholders and other stakeholders, and carries on its
business with sincerity, integrity and fairness, treating all parties concerned equitably, for the greater
benefit of all concerned.
• Employees
The Company is confident that its employees constitute the organisation’s most valuable resource, and
is therefore determined to recruit and look after good people with know-how, capability and integrity,
and also focuses on developing individuals’ potential to help employees advance, while providing them
with appropriate and fair remuneration and various welfare benefits aimed at promoting a cooperative
work atmosphere in which initiative and creativity can thrive to the benefit of the organisation.
• Customers
The Company is devoted to and responsible to its customers, supplying them with quality standard
goods, and respecting their confidentiality.
• Trading Partners
The Company can demonstrate that its procurement practices are in accordance with commercial con-
ditions and that its financial borrowings, repayments and guarantee transactions are all in accordance
with terms and conditions agreed with creditors.
• Competitors
The Company operates within a framework of fair competition, adhering to best practice principles and
avoiding any unethical practices aimed at harming competitors.
• Community and Society
The Company cares about the environment, and takes steps to reduce and avoid creating pollution
in its production processes that could affect the environment or the community, promotes community
relations activities, helps society consistently to the best of its ability, and is always ready to listen to
warnings or suggestions from the community so as to be more environmentally friendly, to improve the
state of the environment and make it more liveable.
38Annual Report 2011 Thai Rung Union Car Public Company Limited
2 The Company attaches importance to playing a useful role as regards the community, society and religion,
for example through financial or material donations in support of various charitable organisations, granting
scholarships every year to children of the Company’s employees and pupils of schools located near the
Company, supporting the Buddhist religious clubs in the Company, arranging important religious activities
in the Company on an ongoing basis throughout the year.
3 The Company pays close attention to the health and safety of all its employees concerning its policies on
safety and health at work and the work environment, for all employees to cooperate in strict observance.
4 The Company attaches great importance to its employees, who constitute one of its most important resources.
It has a policy of looking after its employees consistently, and has arranged to provide various appropriate
welfare benefits such as buses to transport workers to and from the factory, a canteen, uniforms, accident
insurance, annual health checks, a clinic and a library.
5 The Company has made arrangements for channels of communication to enable it to receive opinions and
suggestions from all stakeholder groups, with a view to improving and developing its products, services and
organisation, making it stable, able to compete successfully in the on term. One example is the employee
suggestion scheme, in which each employee has a target of six suggestions per year, and suggestions go
straight from the suggestion box to the Managing Director. Another is the facility for customers, sharehold-
ers, or the general public to submit suggestions and recommendations through the Company’s website.
4. Disclosure and Transparency
The Company’s policy as established by the Board of Directors is one of transparency and of complete
and timely disclosure to all interested parties of correct, readily accessible, consistent, reliable and checkable
information, whether financial or non-financial.
1. The Company has set up a ‘Share Register and Investor Relations Department’ within the Office of the
Managing Director, whose duty it is to disclose correct, complete, transparent information, whether finan-
cial or of a general nature, as well as being responsible for communicating with outside parties such as
shareholders, institutional and other investors, analysts and relevant government departments in a fair and
equitable manner. Investors can request further information about the Company by contacting:
Share Register & Investor Relations Department,
Office of the Managing Director
Tel: 0-2420-0076 ext. 321 or 359,
Fax: 0-2812-0844
e-mail: [email protected] or [email protected]
or by visiting the Company’s website: http://www.thairung.co.th
2. The Company has disclosed information in accordance with the criteria established using the Stock
Exchange of Thailand’s SET Community Portal (SCP) system by way of Form 56-1 for the disclosure of
annual information, as well as submitting its Annual Report and disclosing important information in both
Thai and English on the Company’s website.
3. The Board of Directors has disclosed the roles and duties of the Board and of the various Committees and
the number of times each board and committee met during the year and individual attendance records in
Form 56-1 for annual information and in the Company’s Annual Report. (For details please refer to Structure
of Company’s Board of Directors and Number of Board Meetings held and individual Directors’ attendance
record)
39Annual Report 2011 Thai Rung Union Car Public Company Limited
4. In accordance with Section 89/14 of the Securities and Exchange Act and SEC Announcement Thor Jor
2/2009 which came into force on 1 July 2009, the Company requires its Directors and senior executives to
report to the Company any interests of their own or of related persons that relate to their administration
or management of the business of the Company or its subsidiaries, so that the Company shall have the
necessary information for proceeding in accordance with rules regarding related party transactions where
conflicts of interest might arise to the detriment of the Company and its subsidiaries.
5. Responsibilities of the Board of Directors
The Company’s Board of Directors is well aware of the important role it plays in controlling and moni-
toring business for the greatest possible good of the Company, and of its answerability to shareholders for the
consequences of its actions in carrying out its duties. It operates independently from management. Details are
as follows.
1. Structure of Company’s Board of Directors
1.1 The Board of Directors of the Company consists of nine persons, at least one third of whom must be
independent directors. At present the Company has five independent directors. The characteristics of
independent directors are as defined by the Company. (details as per heading re criteria for appoint-
ment of Independent Directors)
1.2 The Chairman is not the same person as the Managing Director, and the Board of Directors of the
Company has clearly defined the Managing Director’s powers and duties so that no single person has
unlimited power. (For details please see re Company Administrators) This arrangement makes for better
checks and balances and control.
1.3 The Company’s Board of Directors appointed a Company Secretary on 15 May 2008 to perform the
duties of setting up and maintaining a register of Directors, arranging letters calling Board meetings,
minutes of Board meetings, letters of invitation to and minutes of shareholders’ meetings and to keep
records of Directors’/Administrators’ interests and perform such other duties as may be established by
securities legislation.
1.4 The Board of Directors of the Company has not so far established on how many company boards
each director can sit, nor has it established clear policies or guidelines on the question of seats on
boards of other companies being occupied by the Managing Director and senior Administrators of the
Company. The Company’s Board of Directors will consider these matters in due course.
2. Other Boards and Committees
2.1 The Board of Directors has established four other boards and committees: the Audit Committee, the
Executive Committee, the Risk Management Committee and the Nomination and Remuneration Com-
mittee in order to help study details and scrutinise work as necessary according to the situation, to
lighten the workload of the Board of Directors, to provide clear arrangements for the consideration of
each particular type of subject, and to accord with good corporate governance practices. (For names
of members, powers and duties and other information on each board and committee please refer to
headings re structure of the Company’s Board of Directors and list of names of Company Directors)
The Company does not have a nomination committee but it does have a process for the selection of
directors and administrators in accordance with established methods and criteria. (For details please
see Nomination of Directors and Administrators.)
2.2 The Chairman of the Board of Directors of the Company cannot be a chairman or member of any
other board or committee. The majority of members of other boards and committees are independent
directors, including the chairmen of the Audit Committee and of the Nomination and Remuneration
40Annual Report 2011 Thai Rung Union Car Public Company Limited
Committee, so as to ensure transparency and independence in carrying out their duties.
3. Role, Duties and Responsibilities of the Board of Directors
3.1 The Board of Directors plays a part in establishing the Company’s vision, mission and business strate-
gies and also in ensuring independently that administrative departments proceed in accordance with
work plans efficiently and effectively for the overall benefit of the Company and its shareholders. In
addition the Board establishes internal control systems and an effective internal audit, and constantly
monitors them though meetings of the Audit Committee.
3.2 The Board of Directors has established written corporate governance policies and a Code of Ethics or
Statement of Business Conduct (see details as per the section headed Corporate Governance, paragraph
1, shareholders’ rights), and it reviews these policies and monitors compliance with them consistently.
3.3 The Company’s Board of Directors has established guidelines for the careful consideration of transactions
involving possible conflicts of interest for the Company and its shareholders, whereby anyone having an
interest in any agenda item must disclose such interest to the meeting, and foregoes the right to take
part in taking a decision on that item. The Company’s Board of Directors has established guidelines for
the consideration of related party transactions and of acquisitions and disposals of Company assets,
details as per the Policy and approach with regard to future related party transactions.
3.4 The Company’s Board of Directors attaches considerable importance to risk control and management
systems, and has accordingly established a Risk Management Committee to establish duties and poli-
cies and a framework for managing the Company’s overall risk situation, covering the various risks that
might affect the Company’s results and reputation, as well as establishing an internal audit department
to ensure that basic working practices and important financial transactions are conducted in accordance
with established guidelines and in an efficient manner. In order to make sure that the internal audit
department can perform properly and independently, the Board has instructed it to report direct to the
Audit Committee. (For details please refer to Internal Controls.)
4. Board Meetings
4.1 The Company’s Board of Directors establishes a schedule of Board meetings in advance for each year.
Meetings take place at least once a quarter, with additional special meetings being held as and when
necessary. The Company informs all Directors in advance of the schedule of meetings referred to above
so as to enable them to plan their time and make themselves available for the meetings. Directors at-
tach great importance to Board meetings and endeavour always to attend. Letters of invitation are sent
at least seven days in advance clearly setting out the agenda. Each Director is free to suggest topics
for the agenda, and to request additional information from the Managing Director or the Secretary to
the Board of Directors.
4.2 At meetings of the Company’s Board of Directors, the President of the Board ensures that sufficient
time is made available for Directors to discuss important problems thoroughly together, and the Man-
aging Director always invites senior Administrators to attend Board meetings in order to provide ad-
ditional detailed information to the extent that it is directly relevant to problems. One of the items on
the agenda at all regular quarterly meetings of the Board is the following up of outstanding issues.
Directors can express their opinions openly and freely. A written record is made of each meeting and,
once the minutes have been approved by the Board, they are kept available for Directors and other
concerned parties to examine.
5 Board Self-Assessment
In 2008 the Company’s Board made a start with assessing its own overall performance, using the form
provided by the Listed Companies Supervision Development Centre of the Stock Exchange of Thailand, to
41Annual Report 2011 Thai Rung Union Car Public Company Limited
allow all members of the board to consider the board’s performance and solve any problems they may
have, and arranged for the self-assessment to take place on a regular annual basis.
6 Remuneration
The Company has established a Nomination and Remuneration Committee, which is chaired by an
independent director and is charged with setting policies, methodology and criteria for establishing the
remuneration of Directors, the President and the Managing Director fairly, transparently, in consonance
with the Company’s results and each individual’s performance, in line with industry norms, and sufficient
to reward directors having the desired characteristics. Directors’ remuneration is subject to approval by a
meeting of shareholders of the Company and to disclosure in the Company’s Annual Report and in Form
56-1 as required by the SEC. (For details please refer to Directors’ and Administrators’ Remuneration.)
7 Development of Directors and Administrators
7.1 The Company’s Board of Directors facilitates and supports training and study for Directors and mem-
bers of the Audit Committee by way of regular attendance of various courses run by the Institute of
Directors (IOD). At present 78% of Directors have attended these courses. Details are as follows.
Name Course
1. Mr Sompong Phaoenchoke Director Certification Programme 26/2003
2. Ms Kaewjai Phaoenchoke Director Certification Programme 29/2003
3. Mr Somkiat Nimrawee Director Accreditation Programme 10/2004
4. Mr Pricha Attavipach Director Certification Programme 39/2004
Finance for Non-Finance Directors 8/2004
5. Mr Suvait Theeravachirakul Director Certification Programme 9/2001
Audit Committee Programme 15/2006
6. Mr Kavee Vasuvat Director Forum Programme 1/2000
Director Accreditation Programme 23/2004
Director Certification Programme 58/2005
Finance for Non-Finance Directors 18/2005
Audit Committee Programme 10/2005
7. Mr Damri Tunshevavong Director Certification Program 106/2008
Audit Committee Program 24/2008
Role of the Chairman Program 22/2009
Role of Compensation Committee 10/2010
7.2 The Company introduced new Directors to the nature of its business and guidelines for conducting its
affairs.
7.3 With regard to the preparation of a plan for developing and testing the work of the Managing Director
and top level Administrators, no action has yet been taken, however the Nomination and Remuneration
Committee will consider this matter on due course.
42Annual Report 2011 Thai Rung Union Car Public Company Limited
The Company is acutely aware of the importance of safeguarding the confidentiality of internal informa-
tion and therefore has strict policies guarding against the use by Directors and employees of internal information
for their personal benefit. Important internal information is revealed only to individuals directly concerned, such
as auditors or legal counsel. The Company releases information to shareholders only as and when appropriate.
The Board of Directors has resolved that Directors and Administrators of the Company and the Manager
of Accounting & Finance Department, together with their spouses, parents, children and siblings, must refrain
from buying or selling securities from at least five working days before the Company discloses its financial
statements to the stock exchange. The Company has also informed them of their obligation to report their
shareholdings in the Company and those of their spouses and of any children who are still minors, including
the reporting of any changes in their shareholdings to the SEC and the SET in accordance with article 59,
subject to penalties for non-compliance as per article 275 of the Securities and Stock Exchange Act 1992, and
has assigned the Share Register and Investor Relations Department to inform them in advance of the periods
during which they should refrain from trading in securities each quarter. The Company has set out the basic
principles of control of internal information in the form of an article in the Company’s code of business ethics,
to ensure that all employees adhere to them.
The Board of Directors has resolved that Directors and Administrators who are obliged by law to report
their shareholdings must submit these reports to the Company’s Board of Directors each time. The Board of
Directors has further determined that shareholdings of Directors and Administrators be reported every quarter to
the Board. Additionally, the Company’s Board of Directors requires Directors and senior executives to submit a
Form for Reporting Interests of Directors and Executives, reporting to the company any interests of their own
or of related persons that relate to their administration or management of the business of the Company or its
subsidiaries, pursuant to Section 89/14 of the Securities and Exchange Act of 2008 and SEC Announcement
Thor Jor 2/2009. The report must be submitted whenever there is a change in circumstances and in any case
annually as at 1 July to provide assurance that Directors and senior executives are performing their duties with
due care and integrity (fiduciary duties) and taking decisions without being interested parties, whether directly
or indirectly and discharging their duties in the best interests of the Company and its shareholders.
Internal Controls
From Board Meetings during 2011 which were attended by all members of the Audit Committee, the
Company’s Board of Directors and the Audit Committee are of the opinion that the Company’s internal control
systems are adequate and appropriate. The following is a summary.
Organizational Control and Environmental Measure
The Company has clear business objectives with ongoing assessment of results, and has adapted its
organisational structure to make it appropriate to current business conditions so as to support the administra-
tion department and enable it to work efficiently.
Control of internal information
43Annual Report 2011 Thai Rung Union Car Public Company Limited
Additionally, the Company has established a policy and working plan focused on product quality and
price and fair service to customers. It has written procedures that serve as guidelines aimed at producing or-
dered work according to standards, and there are mechanisms for inspecting and monitoring working practices
in the fields of finance and purchasing, administration generally, production and marketing in order to provide
assurance that working practices are in accordance with established policies and that there are no practices
likely to damage the Company’s reputation or interests.
Risk Management Measure
The Company attaches importance to managing risks that can affect its business, and has a Risk Com-
mittee to oversee and assess risk factors and possible sources of risk as well as analysing the consequences
of such risks and alerting Administrators or operatives and together establishing measures and guidelines to
protect against such risks, monitoring compliance with such measures so as to keep risks at acceptable levels.
Management Control Activities
The Company has established the scope and powers and duties and monetary limits in writing for each
level of the administrative departments. There is clear division and separation of duties, approvals, recording of
transactions and safeguarding of assets.
Business dealings with major shareholders, Directors, Administrators or related parties are duly authorised,
being considered by Independent Directors who are not interested parties, and monitored for compliance with
terms and conditions. Investments in subsidiaries or joint ventures are monitored and overseen on an ongoing
basis.
With regard to the operation of the various departments, audits by the internal audit department have
found that operations in general are in accordance with the rules and working systems established, with no
instances of illegal or irregular conduct being detected.
Information and Communication Measure
For each regular Board meeting the Company prepares documentary information of various kinds to
support the agenda items so as to enable the Directors to have sufficient information on which to base their
decisions. Resolutions are summarised and adequately recorded in minutes which are available for inspection
at all times.
Recording of accounting entries is in accordance with generally accepted principles and supporting
documentation is gathered together in categories and properly stored for the legally established periods. There
is also a procedure for fully following up on improvements recommended by the Company’s duly authorised
auditors in their reports.
Monitoring System
The Company arranges regular quarterly Board Meetings, with special ad hoc meetings of senior execu-
tives on an ongoing basis to consider and follow up on the work of the administration departments to ensure
that it is in line with objectives or, if it is not, to establish corrective guidelines.
As for internal control, a plan is established for the examination of working practices to ensure that
they are consistently in accordance with the Company’s rules and regulations and a report on any significant
deficiencies is submitted to the Audit Committee and the Board of Directors at a meeting which is arranged to
coincide with the quarterly Board meeting, for them to decide on any corrective and follow-up measures. Any
event of misconduct or illegal act is reported immediately to the Board of Directors.
44Annual Report 2011 Thai Rung Union Car Public Company Limited
In 2011, The Audit Committee which is composed of three non-executive Independent Directors carried
out their duties in accordance with the Audit Committee Regulations and the guidelines of the SET in examining
the efficiency and adequacy of the Company’s internal control systems, and made various recommendations
to administrative departments with a view to maximising working efficiency and effectiveness. It also monitored
compliance with principles of good corporate governance and risk management, so as to enhance the value of
the organisation to its shareholders and other stakeholders. The main items can be summarised as follows:
1. Examination of the Company’s quarterly and annual financial statements for 2011 by seeking explana-
tions from administrators concerning their accuracy and completeness and adequacy of information
disclosed. The Audit Committee is of the opinion that the said financial statements are accurate in all
material respects in accordance with generally accepted accounting principles.
2. Examination of the Company’s internal control systems in accordance with guidelines laid down by the
SEC. The Audit Committee is of the opinion that the Company has adequate, appropriate and efficient
mechanisms for supervising and controlling its work processes.
3. Monitoring compliance with securities legislation, stock exchange regulations and other legislation rel-
evant to the Company’s business. The Audit Committee is of the opinion that the Company correctly
and appropriately complies with the aforementioned laws and regulations.
4. Considering the organisational structure and manpower of the Internal Audit Department, which reports
directly to the Audit Committee, giving its opinion on the mission, scope of duties, responsibilities, in-
dependence and reporting of the Internal Audit Department to the Audit Committee and approving the
annual audit plan.
5. Meeting with the Company’s auditors, ANS Audit Co Ltd without the presence of company officers, to
confer on major points relating to financial statements and ensure that the auditors’ accounting and
financial reports are comprehensive and detailed.
6. Selection and establishment of Company’s external auditors for 2011. We proposed to the Board of
Directors that ANS Audit Co Ltd be appointed as the Company’s auditors. The Audit Committee con-
sidered their work and independence, and the appropriateness of their remuneration, and found it ap-
propriate that Mr Atipong Atipongsakul, CPA No. 3500 and/or Mr Prawit Viwanthananut, CPA No. 4917
and/or Mr Bunjong Pichayaprasat, CPA No. 7147 and/or Mr Vichai Ruchitanont, CPA No. 4054, and/or
Mr Satien Wongsanan, CPA No. 3495 all from ANS Audit Co Ltd be appointed and their remuneration
established at Bt.0.57m for the year. (unchanged from last year)
Corporate Governance Report on Audit Committee
45Annual Report 2011 Thai Rung Union Car Public Company Limited
7. During 2011 the Audit Committee met four times. On the first three occasions all members of the Audit
Committee were present. At the fourth meeting two of the three were present, one being excused due
to a business engagement.
8. In the course of the past year the Company carried out related party transactions or transactions likely
to involve a conflict of interest as per the stipulations of the SET and the SEC. The Audit Committee
is of the opinion that the aforementioned transactions were proper and appropriate and fully and ac-
curately disclosed.
In conclusion the Audit Committee generally carried out its duties in accordance with the Audit Com-
mittee’s charter as approved by the Company’s Board of Directors. The Audit Committee is of the opinion that
the Company reports financial and business information accurately, that it has internal control systems and that
it complies fully with the law concerning the disclosure of related party transactions and with rules for good
corporate governance in a transparent and reliable manner.
Pricha Attavipach
Chairman of the Audit Committee
46Annual Report 2011 Thai Rung Union Car Public Company Limited
The Nomination and Remuneration Committee, composed of three non-executive independent Directors,
is charged with selecting individuals with appropriate qualities for occupying the position of Company Director
in a proper and transparent manner, including from among any names proposed by shareholders, for onward
submission to the Company’s Board of Directors and in turn to the shareholders for their approval, and with
selecting persons with characteristics appropriate to the position of President and Managing Director in the
event of their being a vacancy, for nomination to the Board of Directors for their consideration, and to prepare
a succession plan for senior executive positions. It is also responsible for the setting policies, methodology and
criteria for establishing, and for considering and reviewing the establishment of remuneration of Directors, the
President and the Managing Director fairly, transparently and in consonance with the Company’s results and each
individual’s performance. It reports independently to the Board of Directors so as to ensure that remuneration
is established in a way that is appropriate and fair to all interested parties whilst safeguarding shareholders’
interests, in accordance with the Company’s principles of good corporate governance.
In 2011 the Nomination and Remuneration Committee met to consider the following matters
1. Establishment of remuneration for the year 2011 and monthly remuneration for 2012 for the President
and the Managing Director
2. Establishment of remuneration for the year 2011 for individual Company Directors based on the perfor-
mance of the Company and the duties and responsibilities and performance of each individual Director
within an overall monetary limit to be approved by the shareholders.
3. Directors’ remuneration for 2012 for proposal to the Company’s Board of Directors and subsequently to
the General Meeting of Shareholders for their approval, the Nomination and Remuneration Committee
considering that the proposed remuneration was in line with the scope of duties and responsibilities of
the Directors and with remuneration paid in comparable industries.
4. The appointment of a new Director to replace a Director resigning from his position and the appoint-
ment of Directors to replace those retiring by rotation, for submission to the Board of Directors and in
turn to the general meeting of shareholders.
In summary, the Nomination and Remuneration Committee fully discharged its duties as assigned by
the Company’s Board of Directors. Shareholders may this rest assured that the nomination of Directors and
the establishment of their remuneration was carried out in a proper, appropriate and transparent manner and
in accordance with the Company’s principles of good corporate governance.
Pricha Attavipach
Chairman of the Nomination and Remuneration Committee
Nomination and Remuneration Committee’s Report
47Annual Report 2011 Thai Rung Union Car Public Company Limited
The Company’s Board of Directors is responsible for the consolidated financial statements of Thai Rung
Union Car Public Co. Ltd. and its subsidiaries and for the financial information which appears in the Annual
Report. The financial statements were prepared in accordance with generally accepted accounting standards,
applying appropriate and consistent accounting policies and with careful, prudent consideration and best pos-
sible estimates, making adequate disclosure of information by way of notes to the financial statements.
The Board of Directors has put in place and maintains effective internal control systems which provide
reasonable assurance that the recording of transactions in the Company’s books is correct and complete, as
well as adequately protecting the Company’s assets and ensuring that any weak points can be detected and
any misconduct or significant abnormal occurrence thus prevented.
The Company’s Board of Directors has appointed an Audit Committee consisting of non-executive
directors, which is responsible for monitoring the quality of financial reports and internal control systems. The
Audit Committee’s opinion on these matters appears in the Report of the Audit Committee.
The Board considers that the Company’s internal control systems are at an appropriate level and provide
sufficient assurance in terms of the reliability of the financial statements of the Company and its subsidiaries
as at 31 December 2011.
Dr. Pranee Phaoenchoke Mr. Sompong Phaoenchoke
Chairman of the Board Managing Director
Board of Directors’ Responsibility for Financial Reports
48Annual Report 2011 Thai Rung Union Car Public Company Limited
Management’s Discussion and Analysis
(Based on Consolidated Financial Statements as at 31 December 2011)
In 2011 Thailand’s total vehicle production amounted to 1,457,795 units, representing a decrease of
11% on the previous year. Total domestic vehicle sales 795,250 units (1% down on previous year), whilst
735,627 units were exported, representing a decrease of 18% on the previous year as a result of two major
events: the earthquake and tsunami in Japan in the second quarter, and the widespread flooding in Thailand
in the fourth quarter which slowed vehicle production as several parts factories were flooded. However parts
and vehicle plants are expected to return to normal in the early part of 2012 and pent-up demand will return
at the same time thanks to the government’s ‘first car’ economic stimulus policy together with the favourable
market response to the introduction of new models, particularly ecocars.
As for the Thai Rung group of companies, total consolidated revenues in 2011 amounted to Bt.2,263.10m,
up 5% from the previous year, basically due to the Company’s adjusting its strategy to put more stress on
revenues from the sale of parts and contract assembly and painting work for both existing and new custom-
ers and to extend its customer base to take in industrial and agricultural machinery manufacturers, as a result
of which the Company was not much affected when compared with the auto industry as a whole. Details of
Company’s performance and financial situation are as follows.
Results
Consolidated Revenues
Total consolidated revenues for 2011 were Bt.2,263.10m representing an increase of Bt. 114.07 m. or
5% compared with 2010, details as follows.
Type of Revenue
2011 2010 Change
Bt.
Millions%
Bt.
Millions%
Bt.
Millions%
Sale of vehicles, including cost of assembly and equipment
and accessories fitted
116.30 5% 168.63 8% (52.33) -31%
Sale of parts, contract parts assembly and other contract service 1,689.60 75% 1,455.04 68% 234.56 16%
Contract production of dies and jigs 190.92 8% 253.04 12% (62.12) -25%
Sale of spare parts, accessories and after sale service 57.96 3% 93.50 4% (35.54) -38%
Total Revenue from Sales and Service 2,054.78 91% 1,970.21 92% 84.57 4%
Other Revenue 150.57 7% 121.09 6% 29.48 24%
Share of profit from investment in associated companies 57.75 3% 57.73 3% 0.02 0%
Total Consolidated Revenue 2,263.10 100% 2,149.03 100% 114.07 5%
Management’s Discussion and Analysis
49Annual Report 2011 Thai Rung Union Car Public Company Limited
The overall increase in sales and service revenues is mainly due to higher volumes of customer orders
for parts and contract assembly, and also for dies and jigs, revenues from which are recognised on a per-
centage completed basis. These orders came both from existing customers, reflecting the Company’s constant
endeavours to enhance its production capabilities so as to ensure consistently high quality products.
Other Income was up by Bt.29.48m or 24.35% on the previous year due to increased revenues from
sales of scrap, with higher volumes in line with production, and share of profit from investments in three as-
sociates, together at a similar level to that of the previous year.
Expenses
Cost of sales and service
Cost of sales and service for the year, at Bt.1,760.79m, was up by Bt.106.39m or 6.43% compared with
the previous year, in line with higher sales volumes, particularly of parts and contract assembly. As a proportion
of sales for the year 2011 it was 85.69%, up by 1.72% on the previous year as a result of the effects of the
flooding on production and the adoption of new and amended financial reporting standards.
Selling and administrative expenses
Selling and administrative expenses for the year 2011 amounted to Bt.235.51m, down by Bt.35.38m or
13.06% on the previous year, due to lower selling expenses as a result of there being no new model launches,
a successful strategy of cost control in the various areas and the adoption of new and amended financial
reporting standards such as those on depreciation of buildings and installations.
Net income (loss)
The Company posted a net profit attributable to equity holders of the company of Bt.186.22m for the
year 2011, representing 8.23% of total revenue and a decrease of Bt.0.15m or 0.08% on the previous year’s
result.
Balance Sheet
Assets
As a result of the adoption of newly issued and amended financial reporting standards which are ap-
plicable to financial statements for accounting periods starting on or after 1 January 2011, as well as IAS 12
Income Tax, the Company’s deferred tax assets (non-current assets) increased by Bt.34.70m as at 31 December
2011 and Bt.91.97m as at 31 December 2010, the reduction being due to changes in temporary differences
and tax losses that are tax deductible in the statement of comprehensive income, which together amounted to
Bt.70.32m and Bt.32.93m respectively.
Total consolidated assets as at 31 December 2011 and 31 December 2010 stood at Bt.3,004.26m and
Bt.2,987.51m respectively, representing an increase of Bt.16.75m or 0.56%, due to increases in accrued income
on work completed but not yet due for payment and capital expenditure on plant and equipment aimed at
boosting production capacity.
Trade Receivables
Net trade receivables as at 31 December 2011 and 31 December 2010 amounted to Bt.342.34m and
Bt.410.25m respectively, representing a decrease of Bt.67.91m or 16.55%, in line with the decline in sales and
service revenues in the fourth quarter as a result of the floods. There were no significant overdue items. Net
balances of trade receivables as at 31 December 2011 and 31 December 2010 reflect average collection periods
of 62.59 and 59.28 days respectively.
50Annual Report 2011 Thai Rung Union Car Public Company Limited
Accrued Income
Accrued Income as at 31 December 2011 and 31 December 2010 amounted to Bt.343.69m and Bt.216.64m
respectively, representing an increase of Bt.127.05m or 58.65%.
Investments
Investments as at 31 December 2011 and 31 December 2010 amounted to Bt.220.45m and Bt.217.01m
respectively, representing an increase of Bt.3.44m or 1.59% as a result of the Company’s recognising its share
in the profits of joint venture companies.
Property, plant and equipment
Property, plant and equipment as at 31 December and 31 December 2010 stood at Bt.1,311.21m and
Bt.1,060.43m respectively, representing an increase of Bt.250.78m or 23.65% as a result of the construction of
a new factory building and the acquisition of plant and equipment to expand the production base to cater to
increased volume of contract painting work and other new projects .
Liabilities
In the first quarter of 2011 the Group estimated liabilities associated with post employment benefits as at 1
January 2011 in accordance with IAS 19 Employee Benefits, opting for the method whereby in the period in
which the change in method of recognition of liabilities associated with employee benefits takes place, the
resulting amount, calculated using the actuarial method, is debited to retained earnings as at the date the ac-
counting standard is first applied (1 January 2011). As at 31 December 2011 the Group’s liabilities associated
with employee benefits totalled Bt.49.26m.
Total consolidated liabilities as at 31 December 2011 and 31 December 2010 stood at Bt.362.18m
and Bt.384.49m respectively, representing a decrease of Bt.22.31m or 5.8%, due mainly to a decrease in trade
payables
Shareholders’ Equity
Shareholders’ Equity as at 31 December 2011 and 31 December 2010 stood at Bt.2,642.08m and
Bt.2,603.02m respectively, representing an increase of Bt.39.06m or 1.5% as a result of the net effect of profits
recognised during the year less the dividend paid in the second quarter.
As at 31 December 2011 the Company thus had consolidated liabilities of Bt.362.18m and shareholders’ eq-
uity of Bt.2,642.08m, giving a net debt to equity ratio or gearing of about 0.14:1, compared with 31 December
2010 when gearing stood at 0.15:1, the difference being 0.01 times.
Cash flow statement
The consolidated cash flow statement for the year ended 31 December 2011 shows that net cash
from operating activities was Bt.117.48m, net cash used in investing activities was Bt.221.57m reflecting capital
expenditure on the construction of a new factory and plant and equipment for it, while at the same time the
Company received cash in the form of dividends from joint venture companies, and net cash used in financing
activities amounted to Bt.127.20m relating to the payment of dividends.
51Annual Report 2011 Thai Rung Union Car Public Company Limited
To the Shareholders and the Board of Directors of Thai Rung Union Car Public Company Limited
I have audited the accompanying consolidated statement of financial position of Thai Rung Union Car Public Company Limited and its subsidiaries as at December 31, 2011, the related consolidated statement of comprehensive income, the consolidated statement of changes in shareholders’ equity and the consolidated statement of cash flows for the year then ended, and the separate financial statements of Thai Rung Union Car Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Thai Rung Union Car Public Company Limited and its subsidiaries and the separate financial statements of Thai Rung Union Car Public Company Limited for the year ended December 31, 2010 (before restatement), as presented herein for comparative purposes, were audited by another auditor of our firm, whose report dated February 23, 2011, expressed a qualified opinion on those statements regarding the Company’s consolidated financial statements as included investments in three associated companies ac-counted for under the equity method. These were recorded based on financial statements prepared by the management of such associated companies, which were not audited by their auditors. Except as discussed in the next paragraph, I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence support-ing the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a reasonable basis for my opinion. The Company’s consolidated financial statements as at December 31, 2011, and for the year then ended, included investments in three associated companies accounted for under the equity method amounting to Baht 220.45 million and shares of profit from these companies amounting to Baht 57.75 million (as discussed in Note 7 to the finan-cial statement). These were recorded based on financial statements prepared by the management of such associated companies, which were not audited by their auditors. In my opinion, except for the effect of any adjustments that may result from the matter as described in the preceding paragraph, the financial statement referred to above present fairly, in all material respects, the financial posi-tion of Thai Rung Union Car Public Company Limited and its subsidiaries and of Thai Rung Union Car Public Company Limited as at December 31, 2011, and the result of their operations and cash flows for the year then ended, in ac-cordance with generally accepted accounting principles. As explained in the Note 2 to the financial statements, the Company and its subsidiaries have adopted new accounting policy “Income tax” for the preparation of the accompanying financial statements. As a result, the consolidated and separate financial statements for the year ended December 31, 2010 as presented herein for comparative propose, have been restated for the effects of the change in the accounting policy which I have audited such adjustments and in my opinion these adjustments are appropriate and properly applied. Moreover, during the year ended December 31, 2011, the Company and its subsidiaries have adopted new and revised Thai Financial Reporting Standards which are issued by the Federation of Accounting Professions and effective for the financial statements for the period beginning on or after January 1, 2011 for the preparation and presentation of these financial statements. The financial statements for the year ended December 31, 2010 which have been presented herewith for comparative proposes are newly presented in accordance with the financial statements for the year ended December 31, 2011. The Company and its subsidiaries have adjusted employee benefits obligations according to the application of TAS 19 by reflecting to the retained earn-ings as at January 1, 2011.
Sathien Vongsnan Certified Public Accountant (Thailand) Registration No. 3495 ANS Audit Co., Ltd. Bangkok, February 28, 2012
Auditor’s Report
52Annual Report 2011 Thai Rung Union Car Public Company Limited
Statements of Financial Position
Assets
Current assets
Cash and cash equivalents 195,695,091 426,988,087 108,473,151 234,758,753
Trade and other receivables - net 4, 5 342,344,083 410,249,033 234,936,180 297,911,912
Unbill receivable 343,686,259 216,636,149 - -
Short-term loans to related parties 4 - 46,500,000 355,500,000 88,500,000
Inventories - net 6 201,370,700 185,321,528 99,490,168 86,032,158
Total current assets 1,083,096,133 1,285,694,797 798,399,499 707,202,823
Non-current assets
Investments in associated companies 7 220,453,009 217,006,948 121,550,000 121,550,000
Investments in subsidiaries 8 - - 412,880,000 412,880,000
Other long-term investment - net 9 - - - -
Investment property - net 2, 10 247,065,157 249,109,753 - -
Property, plant and equipment - net 2, 11 1,311,215,621 1,060,426,051 719,538,591 713,577,205
Deferred tax assets 2, 12 34,702,940 91,972,456 13,011,253 41,259,194
Other non-current assets - net 13 107,727,149 83,304,475 90,907,036 77,867,552
Total non-current assets 1,921,163,876 1,701,819,683 1,357,886,880 1,367,133,951
Total assets 3,004,260,009 2,987,514,480 2,156,286,379 2,074,336,774
Thai Rung Union Car Public Company Limited and Its Subsidiaries
As at December 31, 2011 and 2010 (Unit : Baht)
Consolidated financial statements Separate financial statements
Note 2011 2010 2011 2010 (Restated) (Restated)
53Annual Report 2011 Thai Rung Union Car Public Company Limited
Statements of Financial Position (Continue)
Thai Rung Union Car Public Company Limited and Its Subsidiaries
As at December 31, 2011 and 2010 (Unit : Baht)
Consolidated financial statements Separate financial statements
Note 2011 2010 2011 2010 (Restated) (Restated)
Liabilities and shareholder’s equity Current liabilities Trade and other payables 4, 15 305,390,253 383,949,551 246,831,595 175,223,060 Current portion of liabilities under finance leases 2,402,250 - - - Short-term loans from related parties 4 - - - 46,000,000 Current income tax payable - 546,015 - - Total current liabilities 307,792,503 384,495,566 246,831,595 221,223,060Non-current Liabilities Long-term liabilities under finance leases 3,352,592 - - - Deferred tax liabilities 2, 12 1,774,914 - 591,260 - Employee benefit obligations 2, 16 49,260,074 - 28,867,504 - Total non-current Liabilities 54,387,580 - 29,458,764 - Total Liabilities 362,180,083 384,495,566 276,290,359 221,223,060 Shareholder’s equity Share capital Authorized 524,996,497 ordinary shares, Baht 1 par value 524,996,497 524,996,497 524,996,497 524,996,497 Issued and paid up 501,589,497 ordinary shares, Baht 1 per share 501,589,497 501,589,497 501,589,497 501,589,497 Treasury shares 17 (47,950,454) (47,950,454) (47,950,454) (47,950,454)Additional paid-in capital - - - - Premium on ordinary shares 727,144,000 727,144,000 727,144,000 727,144,000Retained earnings - - - - Appropriated - - - - Legal reserve - the Company 18 52,499,649 52,499,649 52,499,649 52,499,649 - Subsidiaries 16,793,902 16,793,902 - - Treasury share reserve 18 47,950,454 47,950,454 47,950,454 47,950,454 Unappropriated 2 1,263,840,816 1,226,139,502 598,762,874 571,880,568 Total shareholders’ equity of the Company 2,561,867,864 2,524,166,550 1,879,996,020 1,853,113,714 Non-controlling interests 2 80,212,062 78,852,364 - - Total shareholder’s equity 2,642,079,926 2,603,018,914 1,879,996,020 1,853,113,714
Total liabilities and shareholder’s equity 3,004,260,009 2,987,514,480 2,156,286,379 2,074,336,774
54Annual Report 2011 Thai Rung Union Car Public Company Limited
Statements of Comprehensive Income
Thai Rung Union Car Public Company Limited and Its Subsidiaries
For Each of the Years Ended December 31, 2011 and 2010 (Unit : Baht)
Consolidated financial statements Separate financial statements
Note 2011 2010 2011 2010 (Restated) (Restated)
Revenues 4, 22 Sales of goods 1,496,253,530 1,558,031,920 875,921,492 922,506,205 Rendering of services 558,522,955 412,176,287 346,051,823 140,504,456Total revenues 2,054,776,485 1,970,208,207 1,221,973,315 1,063,010,661 Cost 2, 4, 16, 20 Cost of sales (1,211,770,284) (1,374,912,128) (737,725,764) (759,966,086) Cost of rendering of services (549,016,711) (279,483,520) (230,716,720) (107,124,020)Total cost (1,760,786,995) (1,654,395,648) (968,442,484) (867,090,106)Gross profit 293,989,490 315,812,559 253,530,831 195,920,555 Dividend income 4, 7, 8 - - 91,907,062 35,443,044 Other income 4, 19 150,571,825 121,094,360 115,038,741 82,500,824 Selling expenses 2, 4, 16, 20 (35,020,933) (51,307,882) (65,006,840) (48,592,114)Adminstrative expenses 2, 4, 16, 20 (200,490,778) (219,584,305) (196,009,648) (120,307,512)Financing cost (238,211) (21,487) (153,408) (449,151)Share of profit from investments in associated companies 7 57,753,123 57,727,854 - - Profit before income tax expenses 266,564,516 223,721,099 199,306,738 144,515,646 Income tax expenses 2, 12, 21 (75,693,598) (33,638,620) (34,987,036) (30,943,438)Profit for the year 190,870,918 190,082,479 164,319,702 113,572,208Other comprehensive income for the year - - - - Total comprehensive income for the year 190,870,918 190,082,479 164,319,702 113,572,208
Profit attributable to Equity holders of the Company 2 186,218,794 186,374,382 164,319,702 113,572,208 Non-controlling interests 4,652,124 3,708,097 190,870,918 190,082,479 Earnings per share Basic earnings per share Profit attributable to equity holders of the Company (Baht) 2 0.38 0.37 0.33 0.23 Weighted average number of ordinary shares (shares) 492,372,797 499,699,972 492,372,797 499,699,972
55Annual Report 2011 Thai Rung Union Car Public Company Limited
Statem
ents
of C
hang
esin
Shar
ehold
er’s
Equit
yTh
ai R
ung
Union
Car P
ublic
Com
pany
Lim
ited
and
Its S
ubsidiaries
For Ea
ch o
f the
Years
Ende
d Dec
embe
r 31
, 20
11 a
nd 2
010
(Unit:
Baht)
Con
solid
ated
fina
ncial statem
ents
E
quity
attributab
le to
equity h
olde
rs o
f the
Com
pany
Retaine
d ea
rnings
App
ropriated
Issue
d an
d
paid-up
sha
re c
apita
l
Treas
ury
shares
Premium
on
ordina
ry
sha
res
Statutory res
erve
Treas
ury
share
rese
rve
Una
ppropriat
ed
Total
Non
-
controllin
g
interes
ts
Total
sha
reho
lder’s
equ
ity
Note
The
Com
pany
Sub
sidiaries
The
Com
pany
Restated
Balanc
e as
at D
ecem
ber 31
, 200
950
1,58
9,49
7-
727,14
4,00
052
,499
,649
1
6,79
3,90
2 -
966
,163
,404
2
,264
,190
,452
7
3,91
0,34
7 2
,338
,100
,799
Effe
cts
of d
efer
red
tax
acco
untin
g 2
-
- -
--
- 1
21,552
,170
1
21,552
,170
3
,348
,920
1
24,901
,090
Rest
ated
balan
ce 5
01,589
,497
-
727
,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 -
1,087
,715
,574
2
,385
,742
,622
7
7,25
9,26
7 2
,463
,001
,889
Cha
nges
in e
quity
for th
e ye
ar 2
010
:
Di
vide
nd p
aid
by s
ubsidi
aries
- -
-
-
-
-
-
-
(2,11
5,00
0) (2,11
5,00
0)
Tr
easu
ry s
hare
s 1
7 -
(47
,950
,454
) -
-
-
-
-
(47
,950
,454
) -
(47
,950
,454
)
Tr
easu
ry s
hare
s re
serv
e 1
8 -
-
-
-
-
47,95
0,45
4 (47
,950
,454
) -
-
-
To
tal c
ompr
ehen
sive
inco
me
for th
e ye
ar 2
010
-
-
-
-
-
-
186
,374
,382
1
86,374
,382
3
,708
,097
1
90,082
,479
Balanc
e as
at D
ecem
ber 31
, 201
0 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 4
7,95
0,45
4 1
,226
,139
,502
2
,524
,166
,550
7
8,85
2,36
4 2
,603
,018
,914
Balanc
e as
at D
ecem
ber 31
, 201
0 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 4
7,95
0,45
4 1
,137
,515
,966
2
,435
,543
,014
7
5,50
3,44
4 2
,511
,046
,458
Effe
cts
of d
efer
red
tax
acco
untin
g 2
-
-
-
-
-
-
88,62
3,53
6 8
8,62
3,53
6 3
,348
,920
9
1,97
2,45
6
Balanc
e af
ter re
stat
ed a
s at
Dec
embe
r 31
, 201
0 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 4
7,95
0,45
4 1
,226
,139
,502
2
,524
,166
,550
7
8,85
2,36
4 2
,603
,018
,914
Effe
cts
of c
hang
es in
acc
ount
ing
polic
ies
2
-
-
-
-
-
-
(25
,425
,031
) (25
,425
,031
) (89
2,42
6) (26
,317
,457
)
Balanc
e as
at J
anua
ry 1
, 201
1 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 4
7,95
0,45
4 1
,200
,714
,471
2
,498
,741
,519
7
7,95
9,93
8 2
,576
,701
,457
Cha
nges
in e
quity
for th
e ye
ar 2
011
:
Di
vide
nd p
aid
by s
ubsidi
aries
-
-
-
-
-
-
-
-
(2,40
0,00
0) (2,40
0,00
0)
Di
vide
nd p
aid
26
-
-
-
-
-
-
(12
3,09
2,44
9) (12
3,09
2,44
9) -
(12
3,09
2,44
9)
To
tal c
ompr
ehen
sive
inco
me
for th
e ye
ar 2
011
-
-
-
-
-
-
186
,218
,794
1
86,218
,794
4
,652
,124
1
90,870
,918
Balanc
e as
at D
ecem
ber 31
, 201
1 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 1
6,79
3,90
2 4
7,95
0,45
4 1
,263
,840
,816
2
,561
,867
,864
8
0,21
2,06
2 2
,642
,079
,926
56Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit:
Baht)
Sep
arate
finan
cial statemen
ts Retaine
d ea
rnings
Issue
d an
d
paid-up
sha
re c
apita
l T
reas
ury sh
ares
Premium
on
ordina
ry
sha
res
App
ropriated
Una
ppropriated
Total
sha
reho
lder’s
equ
ity
Note
statutory res
erve
Trea
sury
share
rese
rve
Balanc
e as
at De
cembe
r 31
, 20
09 5
01,589
,497
-
727
,144
,000
5
2,49
9,64
9 -
434
,056
,182
1
,715
,289
,328
Effects of d
eferred
tax
acco
untin
g 2
-
-
-
-
-
72,20
2,63
2 7
2,20
2,63
2
Restated
balan
ce 5
01,589
,497
-
727
,144
,000
5
2,49
9,64
9 -
506
,258
,814
1
,787
,491
,960
Cha
nges
in
equity for the
yea
r 20
10 :
Trea
sury sha
res
17
-
(47
,950
,454
) -
-
-
-
(47
,950
,454
)
Trea
sury sha
res rese
rve
18
-
-
-
-
47,95
0,45
4 (47
,950
,454
) -
T
otal c
ompreh
ensive
inc
ome
for the
year 2
010
-
-
-
-
-
113
,572
,208
1
13,572
,208
Balanc
e as
at De
cembe
r 31
, 20
10 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 4
7,95
0,45
4 5
71,880
,568
1,853
,113
,714
Balanc
e as
at De
cembe
r 31
, 20
10 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 4
7,95
0,45
4 5
30,621
,374
1
,811
,854
,520
Effects of d
eferred
tax
acco
untin
g 2
-
-
-
-
-
41,25
9,19
4 4
1,25
9,19
4
Balanc
e after restated
as at D
ecem
ber 31
, 20
10 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 4
7,95
0,45
4 5
71,880
,568
1
,853
,113
,714
Effects of c
hang
es in
acco
untin
g po
licies
2
-
-
-
-
-
(14
,344
,947
) (14
,344
,947
)
Balanc
e as
at Ja
nuary 1, 2
011
501
,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 4
7,95
0,45
4 5
57,535
,621
1
,838
,768
,767
Cha
nges
in
equity for the
yea
r 20
11 :
Divide
nd p
aid
26
-
-
-
-
-(123
,092
,449
) (12
3,09
2,44
9)
Total co
mpreh
ensive
inc
ome
for the
year 2
011
-
-
-
-
-
164
,319
,702
1
64,319
,702
Balanc
e as
at De
cembe
r 31
, 20
11 5
01,589
,497
(47
,950
,454
) 7
27,144
,000
5
2,49
9,64
9 4
7,95
0,45
4 5
98,762
,874
1
,879
,996
,020
Thai R
ung
Union
Car P
ublic
Com
pany
Lim
ited
and
Its S
ubsidiaries
For Ea
ch o
f the
Years
Ende
d Dec
embe
r 31
, 20
11 a
nd 2
010
Statem
ents
of C
hang
esin
Shar
ehold
er’s
Equit
y (C
ontin
ue)
57Annual Report 2011 Thai Rung Union Car Public Company Limited
Cash flows from operating activities
Net profit before income tax expenses 266,564,516 223,721,099 199,306,738 144,515,646
Adjustments to reconcile net income before tax to
Net cash provided by (paid from) operating activities:
(Reversal) allowance for diminution in value of inventories 12,944,678 (11,699,269) 3,120,000 (10,060,691)
Write-off inventories - 14,026,362 - 12,896,364
Share of profit from investments in associates (57,753,123) (57,727,854) - -
Allowance for devaluation of dies and deferred cost of dies 7,696,822 2,818,857 4,140,000 -
Depreciation 82,803,028 96,087,376 42,410,439 46,016,459
Write-off fixed assets 55,410 6,136,353 55,410 -
Amortisation of leasehold rights 523,304 523,304 - -
Employee benefit expense 12,804,497 - 8,374,723 -
Gain on sales of fixed assets (1,321,312) (1,391,160) (5,390,521) (1,040,875)
Dividend income - - (91,907,062) (35,443,044)
Interest income (5,719,834) (6,220,465) (7,663,847) (5,033,792)
Interest expense 238,211 21,487 153,408 449,151
Profit from operating activities before
changes in operating assets and liabilities 318,836,197 266,296,090 152,599,288 152,299,218
Operating assets (increase) decrease
Trade and other receivable -net 67,297,448 (102,148,167) 64,603,897 (117,892,837)
Inventories (28,993,850) (15,425,679) (16,578,010) 19,414,557
Unbilled receivables (127,050,112) (202,841,357) - -
Other non-current assets (30,772,498) (13,293,630) (14,888,787) (7,413,642)
Operating liabilities increase (decrease)
Trade and other payables (76,730,350) 138,882,103 73,526,241 47,679,137
Employee benefit obligations (1,140,791) - - -
Cash Flow Statements
Thai Rung Union Car Public Company Limited and Its Subsidiaries
For Each of the Years Ended December 31, 2011 and 2010 (Unit : Baht)
Consolidated financial statements Separate financial statements
2011 2010 2011 2010 (Restated) (Restated)
58Annual Report 2011 Thai Rung Union Car Public Company Limited
Cash Flow Statements
Thai Rung Union Car Public Company Limited and Its Subsidiaries
For Each of the Years Ended December 31, 2011 and 2010 (Unit : Baht)
Consolidated financial statements Separate financial statements
2011 2010 2011 2010 (Restated) (Restated)
Cash flows from operating activities 121,446,044 71,469,360 259,262,629 94,086,433
Cash paid for interest expense - (21,487) (371,345) (505,041)
Cash received from income tax refund 15,852,408 2,928,494 12,615,256 -
Cash paid for corporate income tax (19,815,346) (11,296,105) (10,765,954) (4,624,246)
Net cash flows from operating activities 117,483,106 63,080,262 260,740,586 88,957,146
Cash flows from investing activities
Increase in short-term loans to related parties (10,000,000) (58,000,000) (344,500,000) (107,500,000)
Proceeds from short-term loans to related parties 56,500,000 60,906,875 77,500,000 68,406,875
Proceeds from sales of fixed assets 1,466,139 3,645,837 5,540,678 3,114,572
Interest received 6,508,658 6,171,513 5,900,638 5,048,676
Dividend from subsidiaries and associated company 54,307,062 2,308,044 91,907,062 35,443,044
Acquisition of fixed assets (330,355,992) (88,408,446) (54,147,082) (61,957,880)
Net cash flows used in investing activities (221,574,133) (73,376,177) (217,798,704) (57,444,713)
Cash flows from financing activities
Increase in short-term loans from related parties - - 7,000,000 20,000,000
Payment on short-term loans from related parties - - (53,000,000) (61,000,000)
Finance lease liabilities payment (1,709,520) (156,437) (135,035) (156,437)
Paid for treasury shares - (47,950,454) - (47,950,454)
Dividend paid (123,092,449) - (123,092,449) -
Dividend paid by subsidiaries to non-controlling interests (2,400,000) (2,115,000) - -
Net cash flows used in financing activities (127,201,969) (50,221,891) (169,227,484) (89,106,891)
Net decrease in cash and cash equivalents (231,292,996) (60,517,806) (126,285,602) (57,594,458)
Cash and cash equivalents at beginning of year 426,988,087 487,505,893 234,758,753 292,353,211
Cash and cash equivalents at end of year 195,695,091 426,988,087 108,473,151 234,758,753
59Annual Report 2011 Thai Rung Union Car Public Company Limited
Notes to Consolidated Financial Statements
Thai Rung Union Car Public Company Limited and Its SubsidiariesFor Each of the Years Ended December 31, 2011 and 2010
1. GENERAL INFORMATION
Thai Rung Union Car Public Company Limited (“The Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in car assembly and modification, and the manufacture and distribution of parts and mold. Its registered address is located at 28/6 Moo 1, Petchakasem Road, Khwaeng Nongkangploo, Khet Nongkaem, Bangkok.
2. BASIS OF PREPARATION
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”) in accordance with generally accepted accounting principles in Thailand.
The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated September 28, 2011, issued under the Accounting Act B.E. 2543.
The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language.
The preparation of the financial statements in conformity with Thai Financial Reporting Standards requires management to make judgments, 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 judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Subsequent actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, and in the period of the revision and future periods, if the revision affects both current and future periods.
Basis of consolidation
The consolidated financial statements include the financial statements of Thai Rung Union Car Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”):
60Annual Report 2011 Thai Rung Union Car Public Company Limited
Company’s name Nature of business Incorporation of shareholding
2011 2010Percent Percent
Subsidiaries directly held by the CompanyThai V.P. Auto Service Co., Ltd. Sales of cars, spare parts
and car service centersThailand 94 94
Thai Rung Tools and Dies Co., Ltd. Mold making service Thailand 94 94Thai Auto Pressparts Co., Ltd. Manufacture of vehicle’s
body partsThailand 91 91
Subsidiaries held by Thai V.P. Auto Service Co., Ltd.Thai Ultimate Car Co. Ltd. Sales of cars, spare parts
and accessories and car service centers
Thailand 99.53 99.53
On February 15, 2011, Thai Ultimate Car Co., Ltd. (Subsidiary held by Thai V.P. Auto Service Co., Ltd.) had registered to engage more services operation which are the services in legal, accounting, commercial, industrial, and such services and others related to business and tax administration of large organization.
All significant intercompany transactions and accounts were eliminated in preparing the consolidated financial statements.
Subsidiary is an entity controlled by the Company. Control exists when the Company has the power, directly or indirectly through other subsidiaries, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The preparations of the consolidated financial statements have been based on the same accounting poli-cies for the same or similar accounting transactions or accounting events.
Transition to new and revised TFRS
During 2010 and 2011, the Federation of Accounting Professions (“FAP”) has issued Notifications, mandat-ing the use of new and revised Thai Accounting Standards (“TAS”), Thai Financial Reporting Standards (“TFRS”), Thai Financial Reporting Interpretation (“TFRI”), Thai Interpretation (“TI”) and guidelines which are effective for the financial statements for the period beginning on or after January 1, 2011 as follows:
TAS/TFRS/TFRI/TI/FAP’s Topic Announcements TAS 1 (revised 2009) Presentation of Financial Statements TAS 2 (revised 2009) Inventories TAS 7 (revised 2009) Statement of Cash Flows TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2009) Events After the Reporting Period TAS 11 (revised 2009) Construction Contracts TAS 16 (revised 2009) Property, Plant and Equipment TAS 17 (revised 2009) Leases TAS 18 (revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (revised 2009) Borrowing Costs TAS 24 (revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2009) Consolidated and Separate Financial Statements
61Annual Report 2011 Thai Rung Union Car Public Company Limited
TAS/TFRS/TFRI/TI/FAP’s Topic Announcements TAS 28 (revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (revised 2009) Interests in Joint Ventures TAS 33 (revised 2009) Earnings per Share TAS 34 (revised 2009) Interim Financial Reporting TAS 36 (revised 2009) Impairment of Assets TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2009) Intangible Assets TAS 40 (revised 2009) Investment Property TFRS 2 Share – Based Payments TFRS 3 (revised 2009) Business Combinations TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRI 15 Agreements for the Construction of Real Estate TI 31 Revenue - Barter Transactions Involving Advertising Services No. 16/2554 Disclosure Guidance on Related Party Transactions with Government No. 17/2554 Transitional Procedures for Other Long-term Employee Benefits No. 18/2554 Accounting Guidance on Revaluation of Assets No. 19/2554 Accounting Guidance for Condominiums
During 2011, the Company and its subsidiaries have adopted new and revised TFRS which are effective for the financial statements for the period beginning on or after January 1, 2011. Such transition affected the presentation of the consolidated and separate financial statements for the year ended December 31, 2010 which have been presented herewith for comparative purposes in conformity with the presentation of the financial statements for the year ended December 31, 2011 and the Group’s overall financial posi-tion and financial performance as follows:
(Unit: Baht)Consolidated
financial statementsSeparate financial
statements2011 2010 2011 2010
The Statements of Comprehensive IncomeDecrease in depreciation expenses 8,874,568 - 2,956,301 -Increase in employee expenses 11,663,706 - 8,374,723 -Increase in income tax expenses 70,323,340 32,928,634 34,987,036 30,943,438Decrease in profit attributable to non-controlling interests 2,091,388 - - -Decrease in profit attributable to Equity
holders of the Company 71,021,090 32,928,634 40,405,458 30,943,438Decrease in basic earnings per share
(Baht per share) 0.14 0.07 0.08 0.06The Statements of financial positionIncrease in investment property 247,065,157 249,109,753 - -Decrease in property, plant and equipment-net 247,065,157 (249,109,753) - -Increase in deferred tax assets 34,702,940 91,972,456 13,011,253 41,259,194Increase in deferred tax liabilities 1,774,914 - 591,260 -Increase in employee benefit obligations 49,260,074 - 28,867,504 -Increase in non-controlling interests 365,105 3,348,920 - -Increase (decrease) in retained earnings -
Unappropriated
(7,822,585) 88,623,536 (13,491,210) 41,259,194
62Annual Report 2011 Thai Rung Union Car Public Company Limited
The details of the effect regarding the above transactions are as follows:
TAS 1 (revised 2009) - Presentation of Financial Statements
Under the revised standard, a set of financial statements comprises:
• Statement of financial position;• Statement of comprehensive income;• Statement of changes in shareholders’ equity• Statement of cash flows; and• Notes to the financial statements
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on reported profit or earnings per share.
TAS 12 - Income taxes
The Company and its subsidiaries have adopt Thai Accounting Standards - Income Taxes, impact to the beginning balance of retained earnings as at December 31, 2010 and 2009 and statement of comprehen-sive income for the year ended December 31, 2010 as follows:
(Unit: Baht)Consolidated
financial statements
Separate financial
statementsStatement of financial positionBeginning balance of retained earnings as at December 31, 2009 Balance as reported before restated 1,040,073,751 434,056,182 Adjustment to deferred tax assets as at December 31, 2009 124,901,090 72,202,632 Restated balance 1,164,974,841 506,258,814
(Unit: Baht)Consolidated financial statements
. Equity holders of the Company
Non-controllinginterests Total
Statement of financial positionBeginning balance of retained earnings as at December 31, 2009 Balance as reported before restated 966,163,404 73,910,347 1,040,073,751 Adjustment to deferred tax assets as at December 31, 2009
121,552,170 3,348,920 124,901,090
Restated balance 1,087,715,574 77,259,267 1,164,974,841
63Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit: Baht)Consolidated
financial statements
Separate financial
statementsBeginning balance of retained earnings as at December 31, 2010 Balance as reported before restated 1,213,019,410 530,621,374 Adjustment to deferred tax assets as at December 31, 2010 91,972,456 41,259,194 Restated balance as at December 31, 2010 1,304,991,866 571,880,568Adjustment to employee benefit net by deferred tax assets as at (26,317,457) (14,344,947)January 1, 2011Beginning balance of retained earnings as at January 1, 2011 1,278,674,409 557,535,621 Balance as reported before restated
(Unit: Baht)Consolidated financial statements
. Equity holders of the Company
Non-controllinginterests Total
Beginning balance of retained earnings as at December 31, 2010 Balance as reported before restated 1,137,515,966 75,503,444 1,213,019,410 Adjustment to deferred tax assets as at December 31, 2010 88,623,536 3,348,920 91,972,456 Restated balance as at December 31, 2010 1,226,139,502 78,852,364 1,304,991,866Adjustment to employee benefit and deferred tax assets as at January 1, 2011
(25,425,031) (892,426) (26,317,457)
Beginning balance of retained earnings as at January 1, 2011 Balance as reported before restated 1,200,714,471 77,959,938 1,278,674,409
(Unit: Baht)Consolidated
financial statements
Separate financial
statementsStatement of comprehensive income for the year ended December 31, 2010
Comprehensive income for the year
Balance as reported before restated 223,011,113 144,515,646
Adjustment to deferred tax (32,928,634) (30,943,438)
Restated balance 190,082,479 113,572,208
Earnings per share
Decrease in basic earnings per share (Baht per share) 0.07 0.06
TAS 16 (revised 2009) - Property, Plant and Equipment
The main changes of TAS 16 (revised 2009) and affecting the Company and its subsidiaries as follows:
The Company and its subsidiaries reviewed the estimated useful life and residual value of the assets because of the change in capacity of such assets. Therefore, the Company and its subsidiaries changed the estimated useful life of assets from 20 years to 30 years for office building and improvement since January 1, 2011. The effect of such changes in useful life resulted to decrease in depreciation expense for the year ended December 31, 2011 Baht 8.87 million in the consolidated financial statements and Baht 2.96 million in the separate financial statements, respectively.
64Annual Report 2011 Thai Rung Union Car Public Company Limited
TAS 19 (revised 2009) - Employee Benefits
The management of the Company and its subsidiaries have determined that the liability incurred from the employee benefits as at January 1, 2011 for post-employment benefits is the amount of Baht 37.60 million in the consolidated financial statements and Baht 20.49 million in the separate financial statements which applied a transitional provision that such liability is recognized and accounted for immediately in retained earnings at the transition date. The change will have the effect of decreasing in the retained earnings as at January 1, 2011 in the amount of Baht 26.32 million in the consolidated financial statements and Baht 14.34 million in the separate financial statements and increasing in the deferred tax assets as at January 1, 2011 in the amount of Baht 11.28 million in the consolidated financial statements and Baht 6.15 mil-lion in the separate financial statements and increasing in the employee benefit liability as at January 1, 2011 in the amount of Baht 37.60 million in the consolidated financial statements and Baht 20.49 million in the separate financial statements.
TAS 40 (revised 2009) - Investment Properties
The Company and its subsidiaries have selected the cost model for accounting for its investment properties under the TAS 40 (revised 2009). The change in accounting policy has been applied retrospectively. The Company and its subsidiaries have reclassified carrying amount of investment properties from “property, plant and equipment” in the amount of Baht 249.11 million in the consolidated financial statements to a separate account “investment properties” in the statement of financial position as at December 31, 2010. The change in accounting policy has no material impact on the statement of comprehensive income.
Adoption of new and revised Thai Financial Reporting Standards
During 2010 and 2011, the Federation of Accounting Professions (“FAP”) has issued new and revised Thai Accounting Standards (“TAS”), Thai Interpretations (“TI”) which are effective for the financial statements for the period beginning on or after January 1, 2013 as follows:
TAS/TI Topic TAS 20 (revised 2009) Accounting for Government Grants and Disclosures of Government
Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rate TI 10 Government Assistance - No Specific Relation to Operating Activities TI 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets TI 25 Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders
The management of the Company is assessing the impacts of these standards and interpretations on the financial statements for the year in which they are initially applied.
3. SIGNIFICANT ACOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments with an original maturity of three months or less and not subject to withdrawal restrictions. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
Trade and other accounts receivable
Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.
65Annual Report 2011 Thai Rung Union Car Public Company Limited
The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.
Inventories
Inventories are measured at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost principle, and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity and is calculated using standard cost adjusted to approximate average cost.
Finished goods and work in process are valued at the lower of standard cost (which approximates actual cost) and net realisable value. Standard cost includes all production costs and attributable factory overheads.
Raw materials and parts are valued at the lower of standard cost (which approximates actual cost) and net realisable value and are charged to production costs and cost of services whenever consumed.
Spare parts of car service centers are valued at the lower of cost (moving average method) and net realisable value.
Cars purchased for sales are valued at the lower of cost (specific identification method) and net realisable value.
Allowance for diminution in value of inventories is recorded by considering old, slow-moving and obsolete inventories.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.
Investments
Investments in subsidiaries and associates
Investments in subsidiaries and associates in the separate financial statements of the Company are accounted for using the cost method net of allowance for loss on diminution in value (if any). Invest-ments in associates in the consolidated financial statements are accounted for using the equity method.
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 less allowance for impairment loss (if any).
Depreciation
Depreciation is computed by the straight–line method based on the useful lives of assets of 20 and 30 years
Depreciation is included in determining operating result and no depreciation is provided on land and property in progress.
66Annual Report 2011 Thai Rung Union Car Public Company Limited
Repairs and maintenance are charged to the statement of income during the financial years in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.
Reclassification to property, plant and equipment
When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.
Property, plant and equipment
Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses of assets (if any).
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
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 recog-nised 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.
Leased assets
Leases in terms of which the Company and its subsidiaries substantially assume all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its subsidiaries, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
Depreciation
Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.
67Annual Report 2011 Thai Rung Union Car Public Company Limited
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows:
Depreciation method Useful life (years)
Land improvement Straight-line method 20Buildings and building improvement Straight-line method 20Office buildings and building improvement Straight-line method 30Machinery, factory equipment and tools Straight-line method 10, 15 (excluded molds and jigs)Machinery, factory equipment and tools Declining method 5 acquired before 1999 and molds and jigs (Double declining method)Office equipment acquired before July 2007 Declining method 5
(Double declining method)Office equipment Straight-line method 5Motor vehicles acquired before July 2007 Declining method 5
(Double declining method)Motor vehicles Straight-line method 5
No depreciation is provided on land or assets under construction.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and ad-justed if appropriate.
Land and building leasehold rights
Land and building leasehold rights are stated at cost less accumulated amortisation. Amortisation of land and building leasehold rights is calculated by reference to their costs on a straight-line basis over the periods of lease agreements.
Intangible assets
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company and its subsidiaries intend to and have sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred.
Impairment
The carrying amounts of the Company’s and its subsidiaries’ assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ re-coverable amounts are estimated.
An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.
68Annual Report 2011 Thai Rung Union Car Public Company Limited
Trade and other accounts payable
Trade and other accounts payable are stated at cost.
Employee benefits
Short-term benefits
The Company and its subsidiaries recognize salaries, wages, bonus and social security contribution as expenses on an accrual basis.
Post-employment benefits - defined contribution plan
The Company and its subsidiaries have established a provident fund that is a defined contribution plan. The assets of which are held in a separate trust fund. The provident fund is funded by the contribution from employees and the Group. Contributions to the provident fund are charged to the statement of income in the period to which they relate.
Post-employment benefits - defined benefit plan
The employee benefits liabilities in relation to the severance payment under the labor law and is recognised as a charge to results of operations over the employee’s service period. It is calculated by the estimation of the amount of future benefit to be earned by the employee in return for the service provided to the Group through the service period up to the retirement age and the amount is discounted to determine the present value. The reference discount rate is the yield rate of government bonds as at the reporting date. The calculation is based on the actuarial technique using the Projected Unit Credit Method.
When the employee benefits are improved, the portion of the increased benefit relating to past service rendered by employee is recognized in the statement of income on a straight-line basis over the average period until the benefits become vested.
When the actuarial assumptions are changed, the Company and its subsidiaries recognize actuarial gains or losses in the profit or loss in the period in which they arise.
Provisions
A provision is recognised if, as a result of a past event, the Company and its subsidiaries have a pres-ent 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 pre-tax 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.
Treasury shares
When share capital recognised as equity is repurchased, the amount of consideration paid, including directly attributable costs, is classified as treasury shares and recognised as a deduction from equity. An equal amount is appropriated from retained earnings and taken to a reserve for treasury shares within equity. When treasury shares are sold, the amount received is recognised as an increase in equity by crediting the cost of the treasury shares sold, calculated using the weighted average method, to the treasury shares account and transferring the equivalent amount back from reserve for treasury shares to retained earnings. Surpluses on the sale of treasury shares are taken directly to a separate category within equity, ‘Surplus on treasury shares’. Net deficits on sale or cancellation of treasury shares are debited to retained earnings after setting off against any remaining balance of surplus on treasury shares.
69Annual Report 2011 Thai Rung Union Car Public Company Limited
Revenue
Revenue excludes value added taxes and is arrived at after deduction of trade discounts and volume rebates.
Sale of goods and services rendered
Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods.
Service revenue is recognised when services have been rendered taking into account the stage of comple-tion.
Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of lease. Contingent rentals are recognised as income in the accounting period in which they are earned.
Dividend income
Dividend income is recognised in the statement of income on the date the Company and its subsidiaries’ right to receive payments is established.
Interest income
Interest income is recognised in the statement of income as it accrues.
Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss.
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.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax, the Company and its subsidiaries take into ac-count the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company and its subsidiaries believe that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company and its subsidiaries to change their judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
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 tax-able entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net
70Annual Report 2011 Thai Rung Union Car Public Company Limited
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.
Earnings per share
The Company and its subsidiaries presents basic and diluted earnings per share (EPS) data for its ordi-nary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company and its subsidiaries by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held.
Foreign currencies
Foreign currency transactions
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.
Non-monetary 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.
4. RELATED PARTY TRANSACTIONS
Related parties are those parties linked to the Company and its subsidiaries as shareholders or by com-mon shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.
71Annual Report 2011 Thai Rung Union Car Public Company Limited
4.1 Significant transactions for each of the years ended December 31, 2011 and 2010 with related
parties were as follows:
(Unit: Million Baht)Consolidated financial
statementsSeparate financial
statements Transfer pricing policy2011 2010 2011 2010
Transactions with subsidiariesPurchases of goods and services - - 19 11 Cost plus marginPurchases of assets - - - 6 Cost plus marginPurchases of fixed assets - - 3 1 Carrying value plus marginElectricity expense - - 17 17 Cost plus gross profit margin not
more than 5%Transportation expense - - 22 - As agreement without contractManagement fee - - 72 - As agreement without contractCommission and promotion expenses - - 5 3 Contract priceSales of goods - - 84 149 Cost plus margin Sales of oil - - 7 - Cost plus margin Land and office rental income - - 4 3 Contract priceManagement service income - - 19 12 As agreement without contract
(2010 : contract price)Rendering of services - - - 1 Cost plus marginUtilities, transportation income and sales of supplies - - 5 3 Cost plus marginDividend income - - 38 33 As declaredInterest income - - 3 - 1.00% - 2.25% p.a.Transactions with associated companiesPurchases of goods and services 3 6 3 6 Cost plus marginSales of goods 35 46 27 35 Cost plus margin Rendering of services 7 - - - Cost plus marginConsulting service income 2 5 2 5 As agreement without contract
(2010 : contract price)Land and showroom rental income 3 3 3 3 Contract priceManagement service income 6 16 6 16 As agreement without contract
(2010 : contract price)Utilities, transportation income and sales of supplies
3 4 3 3 Cost plus margin
Dividend income - - 54 2 As declaredTransactions with related companiesPurchases of goods and services 2 2 1 - Cost plus marginLand rental expense and amortisation of leasehold rights
3 2 1 - Contract price
Car rental expense 3 2 2 1 Contract priceCommission and promotion expenses - 8 - 8 Contract priceSales of goods 2 62 - 42 Cost plus margin Land and showroom rental income 5 7 - - Contract priceUtilities, transportation income and sales of supplies
1 - - - Cost plus margin
Interest income 1 2 1 2 3.70% - 4.00% p.a. (2010: 1.00% - 3.75% p.a.)
Transactions with directorPurchases of fixed assets - 3 - 3 As agreement
72Annual Report 2011 Thai Rung Union Car Public Company Limited
4.2 Key management personnel compensation
Key management personnel compensation for each of the years ended December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010
Short-term benefits 43,020,725 38,375,500 23,123,146 17,819,112
Post-employment benefits 6,641,916 - 6,333,890 -
Total key management personnel compensation 49,662,641 38,375,500 29,457,036 17,819,112
4.3 As at December 31, 2011 and 2010, the balances of the accounts between the Company and related companies are as follows:
(Unit: Baht)Consolidated
financial statementsSeparate
financial statements2011 2010 2011 2010
Trade accounts receivable - related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - 288,558 101,603 Thai V.P. Auto Service Co., Ltd. - - 545,911 1,899,039 Thai Ultimate Car Co., Ltd. - - 10,211,356 59,038,785
- - 11,045,825 61,039,427Associated companies Delta-TR Co., Ltd. 8,011,344 7,077,476 865,884 7,068,011 Delta-Thairung Co.,Ltd. 699,267 692,642 - 98,975 Thai Auto Conversion Co., Ltd. 35,471 356,365 35,470 56,859
8,746,082 8,126,483 901,354 7,223,845
Related companies Isuzu Chaicharoenkij Motor Co., Ltd. 49,681 159,616 - - Isuzu V Motor Co., Ltd. 285 8,672 - - Thai V.P. Corporation Co., Ltd. 323,540 170,160 93,883 5,457 Firstpart Co., Ltd. - 13,106,295 - - V.P.K. Auto Co., Ltd. - 17,768 - - Center Car Rent Co., Ltd. 315,100 - 315,100 - V.P. Auto Enterprise Co., Ltd. 586,725 - - - Lexus Auto City Co., Ltd. 157,500 - - -
1,432,831 13,462,511 408,983 5,457Total trade accounts receivable - related parties 10,178,913 21,588,994 12,356,162 68,268,729
Amounts due from related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - 27,863,117 18,806,217 Thai V.P. Auto Service Co., Ltd. - - - 245,000 Thai Auto Pressparts Co., Ltd. - - 25,092,108 9,600,000 Thai Ultimate Car Co., Ltd. - - 738,128 -
- - 53,693,353 28,651,217
73Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit: Baht)Consolidated
financial statementsSeparate
financial statements2011 2010 2011 2010
Associated company Delta - TR Co., Ltd. 5,871,186 4,783,304 5,848,546 4,744,959 Delta-Thairung Co.,Ltd. 180,456 7,190,400 180,456 7,190,400
6,051,642 11,973,704 6,029,002 11,935,359Related companies Isuzu Chaicharoenkij Motor Co., Ltd. - 518,912 - 518,912 V.P. Auto Enterprise Co., Ltd. - 129,206 - - Lexus Auto City Co., Ltd. - 456,750 - - Firstpart Co., Ltd. - 1,667,604 - - Thai V.P. Corporation Co., Ltd. 303,784 577,663 - - Center Car Rent Co., Ltd. 342,228 142,438 - -
646,012 3,492,573 - 518,912 Total amounts due from related parties 6,697,654 15,466,277 59,722,355 41,105,488
Short-term loans to related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - 133,000,000 42,000,000 Thai Auto Pressparts Co., Ltd. - - 222,500,000 -
- - 355,500,000 42,000,000Related companies Isuzu Chaicharoenkij Motor Co., Ltd. - 46,500,000 - 46,500,000Total short-term loans to related parties - 46,500,000 355,500.000 88,500,000
Trade accounts payable - related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - - 1,558,910 Thai Ultimate Car Co., Ltd. - - - 76,953
- - - 1,635,863Associated company Delta - TR Co., Ltd. 463,802 1,580,510 455,372 1,579,537Related companies Isuzu Chaicharoenkij Motor Co., Ltd. 17,820 102,976 - - Thai V.P. Corporation Co., Ltd. 163,963 23,112 - - Chaicharoenkij Motor Co., Ltd. 2,009 - - - V.P. Auto Enterprise Co., Ltd. 142,936 34,433 - - V.P.K. Auto Co., Ltd. 5,350 5,350 - - Sinthoranee Property Co., Ltd. 6,291 - - - Firstpart Co., Ltd. - 155,683 - -
338,369 321,554 - -Total trade accounts payable - related parties 802,171 1,902,064 455,372 3,215,400
Amounts due to related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - 3,591,750 1,644,829 Thai Ultimate Car Co., Ltd. - - 75,755,469 4,106,018 Thai V.P. Auto Service Co., Ltd. - - 1,078,211 2,296,667 Thai Auto Pressparts Co., Ltd. - - - 169,890
- - 80,425,430 8,217,404
74Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit: Baht)Consolidated
financial statementsSeparate
financial statements2011 2010 2011 2010
Related companies Isuzu Chaicharoenkij Motor Co., Ltd. 131,965 277,832 131,965 277,832 Thai V.P. Corporation Co., Ltd. 783,065 549,913 534,877 138,230 Chaicharoenkij Motor Co., Ltd. 120,000 240,000 - - V.P. Auto Enterprise Co., Ltd. - 5,056 - 5,056 Firstpart Co., Ltd. - 7,665 - 7,665 Phothiphumi Co. Ltd. - 95,000 - - V.P. Capital Asset Co.,Ltd 54,603 38,578 54,603 38,578 Lexus Auto City Co., Ltd. 84,284 - 84,284 -
1,173,917 1,214,044 805,729 467,361Total amounts due to related parties 1,173,917 1,214,044 81,231,159 8,684,765
Short- term loan from related partiesSubsidiaries Thai Rung Tools and Dies Co., Ltd. - - - - Thai Auto Pressparts Co., Ltd. - - - 26,000,000 Thai V.P. Auto Service Co., Ltd. - - - 20,000,000Total short-term loan from related parties - - - 46,000,000
4.4 During the year of 2011, movements of short-term loans to and loans from related parties were as
follows:
(Unit: Million Baht)
January
1, 2011During the year December
31, 2011Increase Decrease Interest rateShort-term loans to related parties
Consolidated financial statements
Related company
Isuzu Chaicharoenkij Motor Co., Ltd. 47 10 (57) - 3.7%-4.0% p.a., at callSeparate financial statementsSubsidiaries Thai Rung Tools and Dies Co., Ltd. 42 112 (21) 133 1.0%-2.25% p.a., at call Thai Auto Pressparts Co., Ltd. - 222.5 - 222.5 2.0%-2.25% p.a., at callRelated company Isuzu Chaicharoenkij Motor Co., Ltd. 47 10 (57) - 3.7%-4.0% p.a., at callShort-term loans from related partiesSeparate financial statementsSubsidiaries Thai Auto Pressparts Co., Ltd. 26 - (26) - 0.75% p.a., at call Thai V.P. Auto Service Co., Ltd. 20 7 (27) - 0.75%-2.20% p.a., at call
75Annual Report 2011 Thai Rung Union Car Public Company Limited
4.5 Guarantee Obligations with related parties
As at December 31, 2011 and 2010 the Company has outstanding guarantee obligations with sub-
sidiaries as follows:
a) The Company has obligations of Baht 45 million and 110 million, respectively, in respect of its
guarantee of credit facilities provided by two local banks to Thai V.P. Auto Service Co., Ltd. (a
subsidiary).
b) The Company has obligations of Baht 195 million in respect of its guarantee of credit facilities
provided by three local banks to Thai Rung Tools and Dies Co., Ltd. (a subsidiary).
c) The Company has obligations of Baht 110 million and 70 million, respectively, in respect of its
guarantee of credit facilities provided by two local banks to Thai Auto Pressparts Co., Ltd. (a sub-
sidiary).
d) The Company has obligations of Baht 75 million, in respect of its guarantee of credit facilities
provide by a local bank to Delta Thairung Co., Ltd. (an associated).
The Company has not charged a guarantee fee to its subsidiaries and associates.
5. TRADE AND OTHER RECEIVABLES - NET
Trade and other receivables as at December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010
Trade accounts receivable – unrelated parties 286,584,082 352,418,581 158,642,498 183,195,767
Trade accounts receivable – related parties 10,178,913 21,588,994 12,356,162 68,268,729
Less: Allowance for doubtful accounts (859,885) (1,902,085) - -
Total trade accounts receivable - net 295,903,110 372,105,490 170,998,660 251,464,496
Other receivables
Amounts due to related parties 6,697,654 15,466,277 59,722,355 41,105,488
Input tax refundable 30,368,775 12,878,519 78 4,331
Input tax suspense 2,432,329 1,117,001 369,841 236,057
Prepayment 4,719,288 4,905,685 2,903,448 2,441,884
Accrued interest income 15,780 - 14,692 183,780
Others 2,207,147 3,776,061 927,106 2,475,876
Total other receivables 46,440,973 38,143,543 63,937,520 46,447,416
Trade and other receivables - net 342,344,083 410,249,033 234,936,180 297,911,912
76Annual Report 2011 Thai Rung Union Car Public Company Limited
The balances of trade accounts receivable as at December 31, 2011 and 2010, aged on the basis of due dates, are summarised below.
(Unit: Baht)Consolidated
financial statementsSeparate
financial statements2011 2010 2011 2010
Trade accounts receivable - unrelated parties
Age of receivables
Not yet due 210,483,922 250,637,085 133,723,441 154,995,206
Past due
Up to 3 months 72,400,536 99,742,957 24,875,869 28,093,406
3 - 6 months 1,725,242 96,721 20,034 -
6 - 12 months 978,293 5,209 - -
Over 12 months 996,089 1,936,609 23,154 107,155
Total 286,584,082 352,418,581 158,642,498 183,195,767
Less: Allowance for doubtful accounts (859,885) (1,902,085) - -
Total trade accounts receivable - unrelated parties, net 285,724,197 350,516,496 158,642,498 183,195,767
Trade accounts receivable - related parties
Age of receivables
Trade accounts receivable - subsidiaries
Not yet due - - 834,469 22,190,402
Past due
Up to 3 months - - 1,216 24,050,855
3 - 6 months - - 941,600 14,478,170
6 - 12 months - - 7,486,990 -
Over 12 months - - 1,781,550 320,000
Total trade accounts receivable - subsidiaries - - 11,045,825 61,039,427
Trade accounts receivable - associates
Not yet due 8,431,796 7,008,894 587,081 6,114,794
Past due
Up to 3 months 314,286 1,117,589 314,273 1,109,051
Total trade accounts receivable - associates 8,746,082 8,126,483 901,354 7,223,845
Trade accounts receivable - related companies
Not yet due 759,968 852,145 408,983 -
Past due
Up to 3 months 447,933 27,033 - 5,457
3 - 6 months - 2,027,502 - -
6 - 12 months 107,443 10,555,831 - -
Over 12 months 117,487 - - -
Total trade accounts receivable - related companies 1,432,831 13,462,511 408,983 5,457
Total trade accounts receivable - related parties 10,178,913 21,588,994 12,356,162 68,268,729
77Annual Report 2011 Thai Rung Union Car Public Company Limited
6. INVENTORIES - NET
Inventories as at December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidated financial statements
Cost Stock obsolescence Inventory-net
2011 2010 2011 2010 2011 2010
Finished goods 93,302,753 103,253,124 (40,664,393) (31,789,497) 52,638,360 71,463,627
Work in process 43,559,314 42,661,783 (2,358,198) (3,427,767) 41,201,116 39,234,016
Raw materials 127,376,246 89,284,556 (19,845,022) (14,660,671) 107,531,224 74,623,885
Total 264,238,313 235,199,463 (62,867,613) (49,877,935) 201,370,700 185,321,528
(Unit: Baht)
Separate financial statements
Cost Stock obsolescence Inventory-net
2011 2010 2011 2010 2011 2010
Finished goods 14,777,151 9,759,509 (1,385,596) (2,380,125) 13,391,555 7,379,384
Work in process 25,294,324 24,150,482 (679,073) (1,748,894) 24,615,251 22,401,588
Raw materials 78,139,625 67,723,099 (16,656,263) (11,471,913) 61,483,362 56,251,186
Total 118,211,100 101,633,090 (18,720,932) (15,600,932) 99,490,168 86,032,158
7. INVESTMENTS IN ASSOCIATED COMPANIES
Details of associates consisted of:
(Unit: Baht)
Nature ofbusiness
Consolidated financial statements
Separate financial statements
Country ofincorporation
Shareholdingpercentage
Carrying amounts basedon equity method CostCompany
2011 2010 2011 2010 2011 2010
% %
Delta-TR Co., Ltd.
Manufacture of vehicle parts
Thailand 46 46 23,712,273 55,542,964 9,200,000 9,200,000
Thai Auto Conversion Co., Ltd.
Manufacture of vehicle parts
Thailand 30 30 58,133,789 52,306,138 22,350,000 22,350,000
Delta Thai Rung Co., Ltd.
Manufacture of auto seats and parts and other equipment for vehicles
Thailand 30 30 138,606,947 109,157,846 90,000,000 90,000,000
Total investments in associated companies 220,453,009 217,006,948 121,550,000 121,550,000
78Annual Report 2011 Thai Rung Union Car Public Company Limited
During the year, the Company has recognised its share of net profit from investments in associated com-panies in the consolidated financial statements and dividend income in the separate financial statements as follows:
(Unit: Baht)
Consolidated financial statements
Separate financial statements
Company
Share of profit (loss) from investments in associates
during the yearDividend received during
the year2011 2010 2011 2010
Delta-TR Co., Ltd. (4,230,691) 3,330,749 27,600,000 -
Thai Auto Conversion Co., Ltd. 17,534,714 19,259,890 11,707,062 2,308,044
Delta ThaiRung Co., Ltd. 44,449,100 35,137,215 15,000,000 -
Total 57,753,123 57,727,854 54,307,062 2,308,044
Financial information of the associated companies is summarised below.
(Unit: Million Baht)
Company
Paid-up capital as at
December 31,Total assets as at
December 31,
Total liabilities as at
December 31,
Total revenues for the years ended December 31,
Net profit for the years ended December 31,
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Delta-TR Co., Ltd. 20 20 77 166 25 46 231 336 (9) 7
Thai Auto Conversion 75 75 341 253 148 66 815 517 58 64
Co., Ltd.
Delta ThaiRung Co., Ltd. 300 300 525 472 86 108 839 820 135 117
Shares of profit from investments in three associated companies, included in the consolidated statements of comprehensive income for the year 2011 and 2010, amounting to Baht 57.75 million and Baht 57.73 million, respectively, were calculated based on financial statements prepared by the management of those companies and not audited by their auditors.
After the reporting date, the Company sells 7,450 ordinary shares in Thai Auto Conversion Co.,Ltd. rep-resenting 10% of the registered shares at a price of Baht 3,094 per share, giving a total of Baht 23.05 million. This price was calculated using the discounted cash flow method as agreed between the two parties which after selling the shares referred to the Company will still hold 20% of the registered share capital of Thai Auto Conversion Co.,Ltd.
79Annual Report 2011 Thai Rung Union Car Public Company Limited
8. INVESTMENTS IN SUBSIDIARIES
Details of investments in subsidiaries as presented in separate financial statements are as follows:
(Unit: Baht)
Company’s name Paid up capitalShareholdingpercentage Cost
Dividend receivedduring the year
2011 2010 2011 2010 2011 2010 2011 2010MillionBaht
MillionBaht
% %
Thai V.P. Auto Service Co., Ltd. and its subsidiaries 25 25 94 94 23,500,000 23,500,000 37,600,000 14,100,000Thai Rung Tools and Dies Co., Ltd. 27 27 94 94 25,380,000 25,380,000 - 19,035,000Thai Auto Pressparts Co., Ltd. 400 400 91 91 364,000,000 364,000,000 - -Total investments in subsidiaries 412,880,000 412,880,000 37,600,000 33,135,000
9. OTHER LONG-TERM INVESTMENT - NET
Other long-term investment as at December 31, 2011 and 2010 consisted of:
(Unit: Baht)2011 2010
Investment in LP Land and Housing Development Co., Ltd. 24,000 24,000Less: Allowance for impairment (24,000) (24,000)Other long-term investment - net - -
10. INVESTMENT PROPERTIES - NET
Investment properties as at December 31, 2011 consisted of:
(Unit: Baht)Consolidated financial statements
Land BuildingBuilding
improvement TotalCostAs at December 31, 2010 214,995,500 86,493,852 49,721,226 351,210,578Increase - - - -As at December 31, 2011 214,995,500 86,493,852 49,721,226 351,210,578Accumulated depreciationAs at December 31, 2010 - 66,897,456 35,203,369 102,100,825Depreciation for the year - 1,217,234 827,362 2,044,596As at December 31, 2011 - 68,114,690 36,030,731 104,145,421Net book valueAs at December 31, 2010 214,995,500 19,596,396 14,517,857 249,109,753As at December 31, 2011 214,995,500 18,379,162 13,690,495 247,065,157Depreciation for the years2010 7,385,8032011 2,044,596
80Annual Report 2011 Thai Rung Union Car Public Company Limited
Investment property comprises a number of commercial land and building that are leased to third par-ties. Each of the leases contains an initial non-cancellable period of 1-10 years. Subsequent renewals are negotiated with the lessee.
The subsidiaries transferred building from property, plant and equipment to investment properties because the building were no longer used by the subsidiaries and as such it was decided that the building would be leased to the third party.
As at December 31, 2011, subsidiaries’ company certain investment properties of items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 0.2 million (2010: Baht 0.2 million).
As at December 31, 2011, a subsidiary’s (Thai Ultimate Car Co., Ltd.) land and building constructed thereon at net book value of Baht 56.64 million has been mortgaged with a bank to secure the subsidiary’s credit facilities of Baht 80 million as granted by the bank.
As at the reporting date, the Company’s management is in process to provide its fair value.
11. PROPERTY, PLANT AND EQUIPMENT - NET
Property, plant and equipment as at December 31, 2011 consisted of:
(Unit: Baht)
Consolidated financial statements
Land andland
improvement
Buildings and
buildingimprovement
Machinery, factory
equipmentand tools
Officeequipment
Motorvehicles
Work inprogress Total
Cost
December 31, 2010 547,607,328 507,517,787 1,725,353,995 215,136,288 92,177,016 45,190,146 3,132,982,560
Acquisitions - 5,935,277 38,056,854 6,510,349 12,136,555 277,258,827 339,897,862
Transfer in (transfer out) - 808,000 18,416,941 - 292,325 (21,916,814) (2,399,548)
Disposals - - (25,313,405) (157,413) (18,212,012) (123,438) (43,806,268)
December 31, 2011 547,607,328 514,261,064 1,756,514,385 221,489,224 86,393,884 300,408,721 3,426,674,606
Accumulated depreciation
December 31, 2010 10,185,259 291,625,327 1,489,175,962 199,865,983 73,604,947 - 2,064,457,478
Depreciation for theyear 449,461 16,379,208 50,266,061 5,791,836 7,871,866 - 80,758,432
Depreciation on disposals - - (25,219,200) (108,687) (16,668,069) - (41,995,956)
December 31, 2011 10,634,720 308,004,535 1,514,222,823 205,549,132 64,808,744 - 2,103,219,954
Allowance for impairment
December 31, 2010 - - 7,623,031 - - 476,000 8,099,031
Increase - - 4,140,000 - - - 4,140,000
December 31, 2011 - - 11,763,031 - - 476,000 12,239,031
Net book value
December 31, 2010 537,422,069 215,892,460 228,555,002 15,270,305 18,572,069 44,714,146 1,060,426,051
December 31, 2011 536,972,608 206,256,529 230,528,531 15,940,092 21,585,140 299,932,721 1,311,215,621
Depreciation for the years
2010 (Baht 67 million included in manufacturing cost, and the balance in administrative expenses) 88,701,573
2011 (Baht 62 million included in manufacturing cost, and the balance in administrative expenses) 80,758,432
81Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit: Baht)
Separate financial statements
Land andland
improvement
Buildings and
buildingimprovement
Machinery, factory
equipmentand tools
Officeequipment
Motorvehicles
Work inprogress Total
CostDecember 31, 2010 469,814,801 332,517,129 1,449,028,683 116,423,838 84,740,426 23,603,116 2,476,127,993Acquisitions - 5,935,276 34,378,557 4,383,599 3,200,697 8,820,428 56,718,557Transfer in (transfer out) - 17,553,099 - 292,325 (20,244,972) (2,399,548)Disposals - - (25,294,761) (129,140) (18,212,011) (123,438) (43,759,350)December 31, 2011 469,814,801 338,452,405 1,475,665,578 120,678,297 70,021,437 12,055,134 2,486,687,652Accumulated depreciationDecember 31, 2010 10,185,259 210,285,557 1,359,845,445 107,855,103 66,280,393 - 1,754,451,757Depreciation for theyear
449,461 9,439,559 22,759,845 3,806,448 5,955,126 - 42,410,439
Depreciation on disposals
- - (25,203,676) (80,421) (16,668,069) - (41,952,166)
December 31, 2011 10,634,720 219,725,116 1,357,401,614 111,581,130 55,567,450 - 1,754,910,030Allowance for impairmentDecember 31, 2010 - - 7,623,031 - - 476,000 8,099,031Increase - - 4,140,000 - - - 4,140,000December 31, 2011 - - 11,763,031 - - 476,000 12,239,031Net book valueDecember 31, 2010 459,629,542 122,231,572 81,560,207 8,568,735 18,460,033 23,127,116 713,577,205December 31, 2011 459,180,081 118,727,289 106,500,933 9,097,167 14,453,987 11,579,134 719,538,591Depreciation for the years2010 (Baht 31 million included in manufacturing cost, and the balance in administrative expenses) 46,016,4592011 (Baht 27 million included in manufacturing cost, and the balance in administrative expenses) 42,410,439
As at December 31, 2011, certain plant and equipment items have been fully depreciated but are still in
use. The original cost of those assets amounted to approximately Baht 1,762 million (2010: Baht 1,650
million) (Separate financial statements: Baht 1,503 million, (2010: Baht 1,481 million)).
12. DEFERRED TAX
Deferred tax as at December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010
(Restated่) (Restated่)
Deferred tax assets 34,702,940 91,972,456 13,011,253 41,259,194
Deferred tax liabilities (1,774,914) - (591,260) -
Total 32,928,026 91,972,456 12,419,993 41,259,194
82Annual Report 2011 Thai Rung Union Car Public Company Limited
Movements in deferred tax assets and deferred tax liabilities during the year were as follows:
(Unit: Baht)
Consolidated financial statements Separate financial statements
January 1, 2011
Profit (loss)
December 31, 2011
January 1, 2011
Profit (loss)
December 31, 2011
(restated) (restated)
Deferred tax assets
Allowance for decline in value of inventory
14,586,216 (2,012,694) 12,573,522 4,680,279 (936,092) 3,744,187
Allowance for impairment of investment 7,200 (2,400) 4,800 7,200 (2,400) 4,800
Allowance for bad debt - 75,433 75,433 - - -
Provision for employee benefit liabilities 11,278,910 (1,426,895) 9,852,015 6,147,835 (374,335) 5,773,500
Loss carry forward 77,379,040 (65,181,870) 12,197,170 36,571,715 (33,082,949) 3,488,766
Total 103,251,366 (68,548,426) 34,702,940 47,407,029 (34,395,776) 13,011,253
Deferred tax liabilities
Depreciation - (1,774,914) (1,774,914) - (591,260) (591,260)
Total - (1,774,914) (1,774,914) - (591,260) (591,260)
(Unit: Baht)
Consolidated financial statements Separate financial statements
January 1, 2010
Profit (loss)
December 31, 2010
January 1, 2010
Profit (loss)
December 31, 2010
Deferred tax assets
Allowance for decline in value of inventory
18,220,585 (3,634,369) 14,586,216 7,698,487 (3,018,208) 4,680,279
Allowance for impairment of investment
7,200 - 7,200 7,200 - 7,200
Loss carry forward 106,673,305 (29,294,265) 77,379,040 64,496,945 (27,925,230) 36,571,715
Total 124,901,090 (32,928,634) 91,972,456 72,202,632 (30,943,438) 41,259,194
13. OTHER NON-CURRENT ASSETS
(Unit: Baht)
Consolidatedfinancial statements
Separatefinancial statements
2011 2010 2011 2010
Land and building leasehold rights - net 2,354,718 2,878,022 - -
Withholding tax deducted at source 21,908,555 24,177,750 15,390,149 17,239,452
Deferred cost of dies - net 70,959,106 41,367,577 64,022,126 45,939,776
Other non-current assets 12,504,770 14,881,126 11,494,761 14,688,324
Total 107,727,149 83,304,475 90,907,036 77,867,552
83Annual Report 2011 Thai Rung Union Car Public Company Limited
14. BANK FACILITIES
As at December 31, 2011, the Company and its subsidiaries have bank overdraft facilities and other short-term loan facilities amounting to Baht 98 million and Baht 1,218 million, respectively (Separate financial statements: Baht 28 million and Baht 505 million, respectively) which are guaranteed by the Company and its directors, and secured by the mortgage of land with structures thereon of the subsidiary.
15. TRADE AND OTHER PAYABLES
Trade and other payables as at December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidatedfinancial statements
Separatefinancial statements
2011 2010 2011 2010
Trade accounts payable – unrelated parties 205,054,780 294,633,134 131,452,620 137,025,743
Trade accounts payable – related parties 802,171 1,902,064 455,372 3,215,400
Total trade accounts payable 205,856,951 296,535,198 131,907,992 140,241,143
Other payables – related parties 1,173,917 1,214,044 81,231,159 8,684,765
Accrued expenses 13,924,207 15,503,705 10,031,231 9,157,606
Accounts payable - Revenue Department 2,980,000 2,637,017 2,828,344 2,021,317
Advance from customers 3,149,615 493,502 - -
Output tax suspense 4,013,069 3,198,695 3,254,418 3,090,299
Accrued project costs 15,932,196 41,060,049 - -
Other payables – unrelated parties 40,919,271 11,524,506 13,717,295 6,320,835
Others 17,441,027 11,782,835 3,861,156 5,707,095
Total other payables 99,533,302 87,414,353 114,923,603 34,981,917
Total trade and other payables 305,390,253 383,949,551 246,831,595 175,223,060
16. EMPLOYEE BENEFITS OBLIGATION
Employee benefits obligation in the statements of financial position as at December 31, 2011 consisted of:
(Unit: Baht)
Post-employment benefit plan
Consolidatedfinancial
statements
Separatefinancial
statements
Present value of obligation 49,260,074 28,867,504
The Company and its subsidiaries made defined benefit plan in accordance with severance payment as the labor law which entitled retired employee within work service period in various rates, such as more than 10 years to receive severance payment not less than 300 days or 10 months of the last month salary.
84Annual Report 2011 Thai Rung Union Car Public Company Limited
Movement of the present value of employee benefits obligation for the year ended December 31, 2011 as follows:
(Unit: Baht)
Post-employment benefit plan
Consolidated financial
statements
Separate financial
statements
Employee benefits obligation as at January 1, 2011 37,596,368 20,492,781
Benefit paid (1,140,791) -
Current service cost 10,605,423 7,118,508
Interest cost 2,199,074 1,256,215
Employee benefits obligation as at December 31, 2011 49,260,074 28,867,504
Employee benefit expenses in the statements of comprehensive income for the year ended December 31, 2011 consisted of:
(Unit: Baht)
Post-employment benefit plan
Consolidated financial
statements
Separate financial
statements
Current service cost 10,605,423 7,118,508
Interest from obligation 2,199,074 1,256,215
Total employee benefits expenses 12,804,497 8,374,723
Employee benefit expenses for the year ended December 31, 2011 as shown in the statements of com-prehensive income are as follows:
(Unit: Baht)
Post-employment benefit plan
Consolidated financial
statements
Separate financial
statements
Cost of sales 792,876 1,918,028
Selling expenses (19,249) (70,876)
Administrative expenses 12,030,870 6,527,571
Total employee benefit expenses 12,804,497 8,374,723
Principal actuarial assumptions as at December 31, 2011 (expressed as weighted averages) as follows:
Consolidated and separate financial statements
2011Discount rate at December 31 5%Future salary increases 4%Mortality rate Mortality table year 2008
85Annual Report 2011 Thai Rung Union Car Public Company Limited
The actuarial assumption of discount rate is estimated from weighted average of yield rate of government bonds as at the end of reporting date that reflects the estimated timing of benefit payments.
The actuarial assumption of mortality rate for reasonable estimation of probability of retirement in the future is estimated from mortality table.
17. TREASURY SHARES
According to the board of directors’ meeting of the Company No.2/2010 held on May 4, 2010, the Com-pany’s directors resolved to approve the share repurchase program for financial management purpose in accordance with the Section 66/1(2) of the Public Limited Company Act (No. 2) B.E. 2544 in the amount not exceeding Baht 150 million. The number of ordinary shares to be repurchased is not exceeding 50.16 million shares (par value of Baht 1 per share); equal to 10% of the total number of paid-up share capi-tal of the Company. The Company shall repurchase its ordinary shares through the main board of the Stock Exchange of Thailand during the period from May 27, 2010 to November 26, 2010, the Company determine the share resale procedures through the Stock Exchange of Thailand, or by public offering and the period for share resale within 3 years and 6 months after the date of completion of repurchase.
The Company repurchased a total of 9,216,700 ordinary shares during the period from May 27, 2010 to November 26, 2010, for a total consideration of Baht 47.95 million and during the same period the Company appropriated Baht 47.95 million from its retained earnings as a treasury shares reserve for the repurchased shares.
18. RESERVES
Reserves comprise:
Appropriations of profit and/or retained earnings
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 Section 116 requires that a public company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a re-serve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
Treasury shares reserve
The treasury shares reserve represents the amount appropriated from retained earnings equal to the cost of the Company’s own shares held by the Company. The treasury shares reserve is not available for dividend distribution.
86Annual Report 2011 Thai Rung Union Car Public Company Limited
19. OTHER INCOME
Other income for each of the years ended December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidatedfinancial statements
Separatefinancial statements
2011 2010 2011 2010
Scrap sales 103,974,215 63,681,403 43,125,430 21,519,804
Interest income 5,719,834 6,220,465 7,663,847 5,033,792
Utilities, transportation service
and sales of supplies 3,457,329 5,870,024 7,064,476 6,295,169
Consulting fee 1,818,000 5,118,000 1,818,000 5,118,000
Others 35,602,447 40,204,468 55,366,988 44,534,059
Total 150,571,825 121,094,360 115,038,741 82,500,824
20. EXPENSE BY NATURE
Significant expenses by nature are as follows:
(Unit: Baht)
Consolidatedfinancial statements
Separatefinancial statements
2011 2010 2011 2010
Salary and wages and other
employee benefits 413,618,517 308,685,437 240,412,782 191,006,180Depreciation and amortization 83,326,332 96,610,680 42,410,439 46,016,459Raw materials and consumables used 1,220,641,829 1,167,402,209 678,202,731 582,714,584Changes in inventories of finished
goods and work in process 27,326,881 24,445,624 (6,161,484) 50,397,814
21. INCOME TAX EXPENSES
Income tax expenses for each of the years ended December 31, 2011 and 2010 consisted of:
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010
Current tax expense
Current period (5,370,258) (709,986) - -
Deferred tax expense
Movements in temporary differences 6,111,416 (3,634,369) 2,857,157 (3,018,208)
Benefit of tax losses recognised (59,765,871) (29,294,265) (32,021,151) (27,925,230)
Income tax reduction (16,668,885) - (5,823,042) -
(70,323,340) (32,928,634) (34,987,036) (30,943,438)
Total (75,693,598) (33,638,620) (34,987,036) (30,943,438)
87Annual Report 2011 Thai Rung Union Car Public Company Limited
Reconciliation of effective tax rate
Consolidated financial statements
2011 2010
Rate(%)
(Unit: Baht) Rate(%)
(Unit: Baht)
Profit before total income tax expense 266,564,516 223,721,099
Income tax using the corporate tax rate Various rate 93,527,215 Various rate 39,616,850
Income tax reduction - current - 503,035
Income tax reduction - deferred 15,745,787 -
Income not subject to tax (27,572,119) (8,860,761)
Expenses not deductible for tax purposes (756,845) 4,606,351
Recognition of previously unrecognised tax losses
(5,250,440) (2,226,855)
Total 23.91% 75,693,598 18.18% 33,638,620
Consolidated financial statements
2011 2010
Rate(%)
(Unit: Baht) Rate(%)
(Unit: Baht)
Profit before total income tax expense 199,306,738 144,515,646
Income tax using the corporate tax rate 30% 59,792,022 25% 36,128,911
Income tax reduction - current - 503,035
Income tax reduction - deferred 5,823,042 -
Income not subject to tax (27,572,119) (8,860,761)
Expenses not deductible for tax purposes 944,069 3,172,253
Recognition of previously unrecognised tax losses
(3,999,978) -
Total 17.55% 34,987,036 21.41% 30,943,438
Income tax reduction - current
Royal Decree No. 475 B.E. 2551 dated 6 August 2008 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the three consecutive accounting periods beginning on or after January 1, 2008.
Income tax reduction - deferred
Royal Decree No. 530 B.E. 2554 dated December 14, 2011 grants a reduction in the corporate income tax rate from 30% to 23% on net profit for the accounting period 2012 ending on or after December 31, 2012, and will be reduced to 20% on net profit for the two consecutive accounting periods beginning on or after January 1, 2013 onwards. The effect of the said change will reduce deferred tax assets in the consolidated and separate statements of financial position as at December 31, 2011 by net approxi-mately Baht 15.75 million and Baht 5.82 million, respectively and an increase in income tax expense on the related consolidated and separate statements of comprehensive income by approximately Baht 15.75 million and Baht 5.82 million, respectively.
88Annual Report 2011 Thai Rung Union Car Public Company Limited
The current tax expense in the statement of comprehensive income is less than the amount determined by applying the corporate tax rate to the accounting profit for the period principally because:
(a) a significant portion of the Company and its subsidiaries’ profit was derived from promoted activities for which concessionary tax rates apply.
(b) The Company and its subsidiaries have unutilised tax losses brought forward from the previous year which have been utilised during the period to set-off against the current year’s tax charge.
The Company is not liable to corporate income tax for the years 2011 and 2010 because the Company has dividend income, which is tax-exempted income, and tax loss brought forward.
Corporate income tax of the subsidiaries, in the consolidated financial statements for the years 2011 and 2010 has been calculated at rate of 15% and 30% on the net income from non-promoted activities, after adding back certain provisions and expenses which are disallowable for tax computation purposes.
A subsidiary has been granted the promotional privileges discussed in Note 22, including exemption from corporate income tax on net income from promoted activities.
22. PROMOTIONAL PRIVILEGES
A subsidiary was granted investment promotional privileges by the Board of Investment (BOI). Important tax privileges company are summarised below.
Exemption fromcorporate incometax for 8 years
commencing from
Exemption from 50%
reduction of corporate
income tax rate for 5 years
commencing fromThai Auto Pressparts Co., Ltd.Manufacture of metal vehicle body parts, plastic and fiber glass vehicle parts, and the manufacture and maintenance of molds and jigs
June 3, 2002 June 3, 2010
During the year 2011, Thai Auto Presspart Co., Ltd. was granted a new investment promotional privileges by Board of Investment (BOI) on the business unit of body parts and mold which effective from March 22, 2011.
23. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net profit for the year by the weighted average number of ordinary shares in issue during the year.
(Unit: Baht)
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010
(restated) (restated)
Profit for the years attributable to equity
holders of the Company 186,218,794 186,374,382 164,319,702 113,572,208
89Annual Report 2011 Thai Rung Union Car Public Company Limited
Weighted average number of shares outstanding during the years ended December 31, 2011 and 2010 calculated as follows
(Unit : Thousand shares)
Consolidatedfinancial statements
Separatefinancial statements
2011 2010 2011 2010
At January 1, 499,700 501,589 499,700 501,589
Weighted average number of treasury shares
outstanding during the years (7,328) (1,889) (7,328) (1,889)
Weighted average number of ordinary shares outstanding during the years 492,372 499,700 492,372 499,700
24. SEGMENT INFORMATION
The Company’s and its subsidiaries’ business operations involve three principal segments: (1) car as-sembly and other related car services (2) manufacture of equipment for production of car accessories (comprising the manufacture of molds and jigs and manufacture and sales of car accessories and spare parts) and (3) sales of cars and car service centre business. These operations are mainly carried on in Thailand. Below is the consolidated financial information for each of the years ended December 31, 2011 and 2010 of the Company and its subsidiaries by segment.
(Unit : Million Baht)
Car assembly and other related car services
Manufacture of equipment for
production of car accessories
Sales of cars and car service
centre
Elimination of inter-segment
revenues Consolidation
2011 2010(re
stated)
2011 2010(re
stated)
2011 2010(re
stated)
2011 2010(re
stated)
2011 2010(re
stated)
Revenue from external customers
753 632 1,131 1,125 171 213 - - 2,055 1,970
Intersegment revenues 83 149 127 152 146 8 (356) (309) - -
Total revenues 836 781 1,258 1,277 317 221 (356) (309) 2,055 1,970
Segment income 201 129 100 113 128 32 (136) 42 293 316
Unallocated income and expenses:
Other income 151 121
Selling expenses (35) (51)
Administrative expenses (200) (220)
Share of profit from investments in associated companies
58 58
Corporate income tax (76) (34)
Net profit 191 190
Investment property - - - - 247 249 - - 247 249
Property, plant and equipment 469 499 780 511 68 56 (6) (5) 1,311 1,061
Unallocated assets 1,446 1,678
Total assets 3,004 2,988
90Annual Report 2011 Thai Rung Union Car Public Company Limited
The Company’s and its subsidiaries’ transfer prices between business segments are as set out in Note 4.
According to the minute of the board of directors meetings of Thai Ultimate Car Co., Ltd. (a subsidiary)
No. 4/2009 held on November 12, 2009, a resolution unanimously approve to terminate its land rover
dealership and after-sales service centre agreement with City Automobiles Co., Ltd with effective from
March 1, 2010.
On February 15, 2011, Thai Ultimate Car Co., Ltd. (Subsidiary held by Thai V.P. Auto Service Co., Ltd.)
had registered to engage more services operation which are the services in legal, accounting, commercial,
industrial, and such services and others related to business and tax administration of large organization.
25. PROVIDENT FUND
The Company and its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. The funds are monthly contributed to by employees at the rates of 3-5 percent of their salaries, and by the Company and its subsidiaries at the rates of 0-100 percent of the employees’ contribution. The fund is managed by CIMB Thai Bank Public Company Limited, except that of a subsidiary (Thai Ultimate Car Co., Ltd.) is managed by Kasikorn Asset Manage-ment Co., Ltd. The funds will be paid to the employees upon termination in accordance with the rules of the funds. During the year 2011, the Company and its subsidiaries contributed Baht 8 million (2010: Baht 6 million) to the funds.
26. DIVIDENDS PAID
According to the annual general meeting of the shareholders of the Company for the year 2011 held on April 26, 2011, the shareholders approved the appropriation of dividend for the year 2010 of Baht 0.25 per share, amounting to Baht 123.09 million. The dividend was paid to shareholders within May 25, 2011.
27. COMMITMENTS AND CONTINGENT LIABILITIES
27.1 Operating lease commitments
The Company and its subsidiaries have entered into several lease agreements in respect of the lease of land, office building space, motor vehicles and equipment. As at December 31, 2011, future minimum lease payments required under these operating lease contracts were as follows.
(Unit: million Baht)Consolidated
financial statementsSeparate
financial statementsPayable Within 1 year 2 - 1 to 5 years 4 -
27.2 Bank guarantees
As at December 31, 2011, the Company and its subsidiaries have outstanding bank guarantees issued by banks as follows:
91Annual Report 2011 Thai Rung Union Car Public Company Limited
Consolidated financial statements
Separate financial statements
(Unit: million Dollars) (Unit: million Baht) (Unit: million Baht)
Purchase of goods - 1 -
Electricity use, among others - 10 3
28. FINANCIAL INSTRUMENTS
28.1 Financial risk management
The Company’s and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 32 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equiva-lents, trade accounts receivable, other receivables, loans, investments, trade accounts payable and other payables. The financial risks associated with these financial instruments and how they are managed is described below.
Credit risk
The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts receiv-able, loans, and other receivables. The Company and subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, and other receivables as stated in the Statement of financial position.
Interest rate risk
The Company’ and subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks, cur-rent investments and short-term loans. However, since most of the Company’s and subsidiaries’ financial assets and liabilities have been repaid within one year, the interest rate risk is expected to be minimal.
Foreign currency risk
A subsidiary’s exposures to foreign currency risk arise mainly from trading transactions that are denomi-nated in foreign currencies. The subsidiary seeks to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.
28.2 Fair values of financial instruments
Since the majority of the Company’s and subsidiaries’ financial instruments are short-term in nature, and current investments and loans bear interest at rates close to market rate, their fair value is not expected to be materially different from the amounts presented in the Statement of financial position.
A fair value is the amount for which an asset can be exchanged or a liability settled between knowl-edgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.
92Annual Report 2011 Thai Rung Union Car Public Company Limited
29. CAPITAL MANAGEMENT
The primary objectives of the Company’s capital management is to ensure that it has an appropriate financing structure and preserves the ability to continue its business as a going concern.
According to the Statement of financial position as at December 31, 2011, the Company’s and its subsidiaries’ debt-to-equity ratio was 0.14:1 (2010: 0.16:1) and the Company’s was 0.15:1 (2010: 0.12:1).
30. RECLASSIFICATION OF ACCOUNTS
Certain accounts in the statement of financial position as at December 31, 2010 and the statement of comprehensive income for the year ended December 31, 2010, which are included in the 2011 financial statements for comparative purposes, have been reclassified to conform to the presentation in the 2011 financial statements. These reclassifications have principally been made following changes in accounting policies consequent to the adoption of new and revised TFRS as disclosed in note 2. Other significant reclassifications were as follows:
(Unit: Baht)
Consolidated financial statements
Before reclassify
Reclassify After reclassify
Statements of financial position
Trade accounts receivable – unrelated par-ties - net
350,516,496 (350,516,496) -
Trade accounts receivable – related parties 21,588,994 (21,588,994) -
Amounts due from related parties 15,466,277 (15,466,277) -
Accrued income 217,204,320 (217,204,320) -
Other current assets 22,109,095 (22,109,095) -
Trade and other receivable - net - 410,249,033 410,249,033
Unbilled receivables - 216,636,149 216,636,149
Investment property - net - 249,109,753 249,109,753
Land not held for operations 15,906,400 (15,906,400) -
Property, plant and equipment- net 1,293,629,404 (233,203,353) 1,060,426,051
Trade accounts payable - unrelated parties 294,633,133 (294,633,133) -
Trade accounts payable - related parties 1,902,064 (1,902,064) -
Amounts due to related parties 1,214,045 (1,214,045) -
Accrued project costs 41,060,049 (41,060,049) -
Other current liabilities 45,686,275 (45,686,275) -
Trade and other payables - 383,949,551 383,949,551
Current income tax payable - 546,015 546,015
-
Statement of comprehensive income
Administrative expenses 198,584,187 38,375,500 236,959,687
Management remuneration 38,375,500 (38,375,500) -
-
93Annual Report 2011 Thai Rung Union Car Public Company Limited
(Unit: Baht)
Separate financial statements
Before reclassify
Reclassify After reclassify
Statements of financial position
Trade accounts receivable - unrelated - net 183,195,767 (183,195,767) -
Trade accounts receivable - related parties 68,268,729 (68,268,729) -
Amounts due from related parties 41,105,488 (41,105,488) -
Accrued income 183,780 (183,780) -
Other current assets 5,158,148 (5,158,148) -
Trade and other receivables - net - 297,911,912 297,911,912
Trade accounts payable - unrelated parties 137,025,744 (137,025,744) -
Trade accounts payable - related parties 3,215,400 (3,215,400) -
Amounts due to related parties 8,684,765 (8,684,765) -
Other current liabilities 26,297,151 (26,297,151) -
Trade and other payables - 175,223,060 175,223,060
-
Statement of comprehensive income
Cost of sales 755,084,598 2,835,673 757,920,271
Administrative expenses 107,369,888 14,983,439 122,353,327
Management remuneration 17,819,112 (17,819,112) -
31. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were authorised for issue by the Company’s Board of Directors on February 28, 2012.