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Annual Report 2009
G J STEEL PUBLIC COMPANY LIMITED
Environmental Friendly Technology
Message From The Chairman 2
Audit Committee Report 4
Financial Highlights 5
General Information of Company 6
Nature of Business 7
Risk Factors 11
Shareholding Structure and Management 13
Board of Directors and Management Team 24
Related Transactions 30
Analysis and Explanation of Management 35
Auditor Report of Certificated Public Accountant 37
Financial Statements 40
Contents Quality Steel
by Quality People
Annual Report 2009 G J Steel Public Company Limited 2
Message From The Chairman
Dear Shareholders,
It is undeniable that 2009 was our most challenging
year since becoming a subsidiary of G Steel Public
Company Limited. It was, however, also the most difficult
year for almost all steel producers in the global steel
industry. The global financial crisis damaged the steel
industry more than we could have imagined. Even worse,
Thailand was aggravated by its internal political tensions,
resulting in disproportionate challenges for steel producers
in Thailand relative to the rest of the world. As such, our
2009 financial performance reflects these difficulties.
The most fundamental impact of the global financial
crisis was that the sharp and sudden decline in both the
price of and demand for steel products. Furthermore, as
steel industry participants rushed to stock up on raw
material inventory in the wake of shortage conditions prior
to the global financial crisis, producers found themselves
with large stocks of inventory which precipitously declined
in value within a matter of weeks following the onset of the
crisis. The resulting global inventory destocking and rapid
decline in pricing is evidenced in our performance. In
2009, our production levels fell 40.19%, our sales volumes
dropped 29.23% and our revenue was slashed 52.8% when
compared to 2008.
Notwithstanding all of the bad news in 2009, I am
pleased to report that as I write this letter, the worst of the
crisis has undoubtedly passed, and we now look to a
brighter future. We are now plotting our course for recovery
and laying the basis for our long-term business planning.
Flat-rolled steel pricing has stabilized, and our customers
are showing renewed, albeit slow, return to their pre-crisis
purchasing patterns. With our strong alliance with G Steel
Public Company Limited, we are confident that our 2010
business performance will show significant improvements
when compared to 2009 and demonstrate a more stable
future for our investors. Furthermore, we firmly believe G
Steel’s recent management changes and commitment to
repositioning its balance sheet will further support our
business.
As we close the chapter on 2009, there is one
matter that is getting a significant level of attention as this
report goes to print. On January 25, 2010 Thailand’s
Securities and Exchange Commission and the Stock
Exchange of Thailand announced that our company,
together with our partner, G Steel Public Company Limited,
is required to perform a special audit with respect to the
transactions that led to our auditor’s inability to issue an
accounting opinion in regards to our 3rd quarter 2009
financial statements. The Board authorized management to
Annual Report 2009 G J Steel Public Company Limited 3
recycled scrap in the process of steel production, thereby
making us one of the largest recycling operations in
Thailand. This combination of mini-mill technologies permits
us to emit significantly less carbon dioxide into the
environment.
Finally, I would like to express my sincere gratitude
and appreciation to our shareholders, stakeholders and, of
course, all of our employees who have persevered with us
as we were subjected to the most difficult period in the
history of the industry. It is this loyalty which will allow us to
be successful. Please continue to join me as we take steps
in order to position G J Steel Pubic Company Limited as
one of the profitable steel manufacturers in Thailand and a
proud example to the world’s steel industry.
(MR. NIBHAT BHUKKANASUT)
CHAIRMAN
work with KPMG for the special audit. KPMG’s special
audit report is scheduled to be completed on April 7, 2010.
While the special audit is a regulatory mandate, we do see
a silver lining as a result of the exercise. We are hopeful
that following execution of the special audit KPMG’s
confidence in our financial statements will be restored and
the financial community will have greater comfort in the
information presented.
As we focus on improving our business
performance and rebuilding for the future, we will never
overlook our commitment to the environment. We pride
ourselves on our utilization of the world’s most
environmentally-friendly technologies for steel production.
Specifically, our facility is equipped with Consteel®
Technology and Thin Slab Continuous Casting Technology
which allows us to engage in steel production with greater
energy efficiency. Our Electric Arc Furnace allows us to use
Annual Report 2009 G J Steel Public Company Limited 4
problem of which is required to be submitted to the
Company’s Board of Directors to jointly consider in solving
the problem in accordance with the observations of
the independent auditor in order to find the ways for the
improvement and proper correction or mitigate or eliminate
the damage. Moreover verification on the result of internal
audit and the adoption of the observations of the independent
auditor for improvements and corrections will finally be
brought back into the frame of correctness and transparency
in the corporate governance.
With reference from the observations of the
independent auditor, the Securities and Exchange
Commission (“SEC”) has ordered the Company to perform
a Special Audit in order to clarify the doubtful issue.
Additionally the Audit Committee will review and ensure
the operation transparently and resolve the occurred
problems for the benefit of our shareholders.
Audit Committee Report Year 2009
G J Steel Public Company Limited’s Board of
Directors Meeting has appointed the Audit Committee on 23
March 2009. The Committee consists of the independent
members as follows:
1. Assoc. Prof. Niputh Jitprasonk
Chairman of the Audit Committee
2. Asst. Prof. Dr. Tanawat Ceevaromaya
Audit Committee Member
3. Mrs. Arthidtaya Sutatam
Audit Committee Member
After being appointed by the Board of Directors, the
Audit Committee has performed the assigned duties with full
capability, therefore I, Assoc. Prof. Niputh Jitprasonk, on
behalf of the Audit Committee would like to present the Audit
Committee Report year 2009.
In The fiscal year ended 31 December 2009, the
fundamental impact of the global financial crisis was that the
sharp and sudden rise and drop in both the price and
demand of steel continuing from year 2008. Besides, the
Audit Committee has perceived various observations from the
independent auditor and apparently the independent auditor
has not expressed the opinions on Financial Statements the
Assoc. Prof. Niputh Jitprasonk
Chairman of the Audit Committee
Annual Report 2009 G J Steel Public Company Limited 5
Financial Highlights
2009 2008 2007 Operating Result (in thousand THB)
Total Sale 12,314,216 26,115,051 23,593,313
Total Revenue 14,249,062 26,889,934 23,938,192
Cost of Good Sold 16,234,699 25,066,143 22,268,120
Net Profit / (Loss) (4,593,529) (3,597,984) (176,519)
Net Profit /( Loss) per Share (in THB) (0.12) (0.10) (0.01)
Financial Status (in thousand THB)
Total Assets 26,624,038 30,165,220 31,101,432
Total Liabilities 7,811,074 6,751,997 9,932,964
Shareholder’s Equity 18,812,964 23,413,223 21,168,468
Book Value per Share (in THB) 0.47 0.59 0.82
Financial Policy Ratios
Debt Equity Raito (time) 0.42 0.29 0.47
Interest Coverage Ratio (time) 14.31 2.95 (0.14)
Dividend Ratio (%) 0 0 0
Profitability Ratios
Gross Profit / (loss) (%) (31.84) 4.02 5.62
Net Profit / (loss) (%) (37.30) (13.78) (0.74)
Return on Equity (%) (21.76) (16.14) (0.87)
Efficiency Ratio
Return on Asset (%) (16.18) (11.75) (0.57)
Fixed Assets Turnover (%) (16.11) (10.17) 2.05
Assets Turnover (time) 0.50 0.88 0.77
Annual Report 2009 G J Steel Public Company Limited 6
General Information of Company
G J Steel Public Company Limited : Public Company Registration No. 0107538000401 (Originally Bor Mor Jor No. 563)
Business Type : Manufacture of Hot Rolled Coil
Symbol : GJS
Head Office : 88 PASO Tower, 24th Floor, Silom Road, Suriyawong, Bangrak, Bangkok 10500 Tel. (66) 0-2267-8222 Fax (66) 0-2267-9048
Factory : Hemaraj Chonburi Industrial Estate, 358 Moo 6 Highway No. 331 Bowin, Sriracha, Chonburi 20230 Tel. (66) 038-345-950 Fax (66) 038-345-693
Established : January 5, 1994
Registered to be a Public Company Limited : August 9, 1995
Trading Date : July 2, 1996
Authorized Capital : Baht 40,478,051,204.94
Paid Up Capital : Baht 27,394,674,312.60
Common Share : 39,702,426,540 Shares
Par Value : Baht 0.69
Warrant : GJS-W1 3,233,879,388 Units
Share Registrar : Thailand Securities Depository Company Limited 4, 6-7th Floor, The Stock Exchange of Thailand Building, 62 Ratchadapisek Road, Klongtoey, Bangkok 10110 Tel. (66) 0-2229-2800 Fax (66) 0-2654-5427
Auditor : Mrs. Wilai Buranakittisopon Certified Public Accountant Registration No. 3920 KPMG Phoomchai Audit Limited. 48th Floor, Empire Tower, 195 South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66) 0-2677-2000 Fax (66) 0-2677-2222
Legal Adviser : FBLP Legal Co., Ltd. 14th Floor, Silom Complex Building, 191 Silom Road, Bangrak, Bangkok 10500 Tel. (66) 0-2266-5234 Fax (66) 0-2266-5586, 266-5587
Annual Report 2009 G J Steel Public Company Limited 7
Nature of Business
Corporate History The Company was first registered in 1994 under the
name Nakornthai Strip Mill Co., Ltd. with funds substantially
provided by a syndicate of Thai banks. Construction of the
mill commenced in 1995 and the Company was listed on
the SET in 1996 with an IPO price of THB 16 per share with
the par value of THB 10 per share.
Construction and start-up of the Hot Mill was
completed in 1997 and the Company commenced
commissioning in October the same year. During
commissioning, NSM produced 207,129 tonnes of hot-
rolled steel. However, because of the financial crisis that hit
Thailand in 1997, the Company was unable to raise further
funds in the domestic market as planned, to finish the DRI
and finishing facilities.
With a lack of domestic financing, NSM looked to
complete the mini-mill by raising funds through the US debt
and equity markets. In March 1998 the Company
successfully raised USD 505.63 million US Notes issue. As
a condition to the issue, NSM was required to bring in
management expertise through Steel Dynamics Inc (“SDI”),
a leading mini-mill operator in the United States.
However, due to the fall in the international price of
hot-rolled steel from USD 340 to USD 200 per tonne in
1998, SDI cancelled its management contract. As such, the
Company’s access to its remaining funds had been
severely restricted under the terms of its long-term debt
agreement, that were scheduled to be provided to the
Company, and completion of the construction of the
facilities was forced to be discontinued. The mill was
mothballed from 1999.
Cessation of production impacted the Company
cash flow worse than expected. Lack of liquidity since
December 1998 caused the company to be unable to settle
any debts.
The Company entered into debt restructuring under
the supervision of CDRAC in 1999. It entered into the
Business Reorganization pursuant to the Bankruptcy Act in
April 2000. On October 27-29, 2003, the Company
was able to raise funds, essential for the reorganizing
process, by offering new shares in the Public Offering
of 1,800,000,000 shares with a par value of THB 8.25 per
share. The Public Offering price was at THB 2.20 per share.
Including conversion under the Reorganization Plan that led
to THB 74,137,788,788.25 paid-up capital and a total of
8,986,398,641 common shares.
In 2004, the Company started production for
commercial market and achieved net profit from the 3rd
quarter operation and also achieved net profit from
cumulative operation for the year ended 2004.
In May, 2005, The Stock Exchange of Thailand (SET)
has transferred the securities of NSM from the REHABCO
sector to Construction Materials sector, Property and
Construction group and two Creditors had conversion of
the principal amount under the Master Restructuring
Agreement (“MRA”). And in December, The Company’s
quality for the entire production process has been assured
by achievement of ISO 9001 : 2000
In June 2006, the Business Reorganization Plan of
the Company was amended with the main issue of
converting the restructured term loan into ordinary share
of the Company, the Business Reorganization Plan
stipulates that there shall be an increase and decrease
of the registered capital of the Company in order to support
the debt-to-equity conversion which resulted in the
registered capital of the Company increased to THB
171,478,835,962.50. In September, there was a change
of directors of the Company and in November, the
Company moved the Company’s headquarter. Moreover, in
December, the Company decreased its registered capital
by decreasing the par value from THB 8.25 to THB 1.12.
Annual Report 2009 G J Steel Public Company Limited 8
In January 2007, the Company has registered paid up
capital in amount of THB 4,360,784,730.40. In April, the
Company has registered paid up capital in amount of THB
1,115,350,468.96. In December, the Meeting considered
and resolved to approve the petition for amendment of the
business Reorganization Plan of the Company with a vote of
99.99 % of the creditors who attended the meeting and cast
their vote. The Meeting resolved to extend the time period
for implementation of the Business Reorganization Plan for
one year from the period December 11, 2007 and the
Central Bankruptcy Court considered and approved the
Petition on March 3, 2008.
In February 2008, the Creditor’s Meeting considered
and approved the petition for amendment of the Business
Reorganization Plan of the Company in order to allow the
Company to issue the convertible debentures for the
amount of USD 250 Million for sale to investors. In
the present, the Company has not managed for sale
because of the world financial crisis. The Company
registered the paid-up capital into total amount of THB
15,711,031,461.44 in order to support the debt-to-equity
conversion to the creditor. In April the Company has
informed the change in the major shareholding structure
of the company whereby G Steel Public Company
Limited holding 49.67%. Consequently, the change derives
from conversion debt-into-equity restructuring debt into
ordinary shares of the Company determined in Business
Reorganization Plan, the Company registered the change
of the Company’s name from Nakornthai Strip Mill
Public Company Limited to G J Steel Public Company
Limited with Department of Business Development, Ministry
of Commerce on June 5, 2008. On June 12, 2008, the
Company reduced registered capital by decreasing the par
value of the share from THB 1.12 to THB 0.78 in order to set
off against the share discount of THB 13,286,677,768.15.
The Company has reduced the registered capital of
the Company by decreasing the par value from THB 0.78 to
THB 0.69 in order to cover the deficit THB 3,304.86 million
on November 4, 2008. The Company has reduced the
registered capital of the Company for the ordinary shares
which have not been issued for the amount of 864,877,421
shares on November 5, 2008. The Company has increased
the registered capital in the amount of THB 502,000,114.62
in order to support the issuance of Employee Stock Option
Program on November 6, 2008. On November 28, 2008, the
Company filed the petition to terminate of the Business
Reorganization Plan with the Central Bankruptcy Court
since the Company has successfully completed its
Business Reorganization Plan. The Company was
authorized to issue and offer ESOP warrants by the
Securities and Exchange Commission in the amount of
727,536,398 shares or equivalent to 1.83% of total paid-up
capital of the Company on December 11, 2008
Major Events and Developments in 2009 March On March 2, 2009, the Central Bankruptcy Court
order on termination of Business Reorganization
of the Company and on March 23, 2009, the
Board of Directors Meeting No.1/2009 has
passed a resolution to appoint three groups of
the Board of Directors compose of Executive
Committee, Audit Committee, and Nomination
and Remuneration Committee and resolved to
set the date of 2009 Annual General Meeting as
of 23 April 2009
April The 2009 Annual General Meeting has passed a
resolution to appointed the directors and to
approved the Remuneration of the Directors for
the year 2009 and also to appointed the
Company’s auditor and to approved the audit
fees for the year 2009.
December The Extraordinary General Meeting No.1/2552
has passed a resolution to approved the
issuance of the Second Warrant in the amount
of 5,000 million units for sale to all exiting
shareholders base on shareholding proportion
with the offering price of THB 0.03 per unit
and approved the increase of the registered
capital of the Company in the amount THB
10,350 million by issuing the ordinary shares in
the amount of 15,000 million shares in order to
support the issuance of the Second Warrant.
Annual Report 2009 G J Steel Public Company Limited 9
Major Events and Developments in 2010 January On January 22, 2010, the Board of Directors
Meeting has passed a resolution to fix the
record date to determine the shareholder who
shall be entitled to subscribe to the warrant
as of February 9, 2010 and the date to close the
share registration book on February 10, 2010
and fix the period of subscription during
3-5 March 2010 and 8-9 March 2010 (Total 5
Business day of the Company). Furthermore,
the Board of Directors passed a resolution not
to prepare consolidated financial statements of
the Company and its subsidiaries for the year
ended 31 December 2009 because both NSM
Steel Public Company Limited, a subsidiary of
the Company, and NSM Steel (Delaware) Inc.,
and indirect subsidiary of the Company, have
been struck off under the laws of the Cayman
Islands.
February On February 24, 2010, the Board of Directors
Meeting has resolved to postpone the
subscription period of GJS-W2 after the
completion of the special audit.
March The Company has moved the head office from
“No.52 Thaniya Plaza Building, 24th floor, Silom
Road, Suriyawongse, Bangrak, Bangkok” to
“No.88 PASO Tower, 24th floor, Silom Road,
Suriyawong, Bangrak, Bangkok”
Business Operation Overview of Business Operation Structure as at
December 31, 2009
G J Steel Public Company Limited
NSM Steel Company Limited (Not Existing)
NSM Steel (Delaware) Inc. (Not Existing)
100%
100%
The Company is primarily engaged in the
manufacture of hot rolled steel and other related products.
NSM Steel Company Limited (“NSM Cayman”) is a wholly-
owned subsidiary of the Company, whilst NSM Steel
(Delaware) Inc (“NSM Delaware”) is a wholly-owned
subsidiary of NSM Cayman and both were established
outside Thailand.
NSM Cayman has been organized solely for the
purpose of issuing Senior Mortgage Notes Due 2006,
Senior Subordinated Mortgage Notes Due 2008, and
Subordinated Second Mortgage Debentures Due in 2009.
NSM Delaware issued Notes solely as an agent of NSM
Cayman. The Notes were irrevocably and unconditionally
guaranteed by the Company. These two subsidiaries have
no income, because they have no operations and have not
engaged in any business.
The Company intends to complete the liquidation
of NSM Cayman after completion of the Business
Reorganization. Presently, NSM Delaware is no longer in
existence, and has been so proclaimed in accordance with
provisions of general corporation laws of the Cayman
Islands.
Revenue Structure In 2009, the global economic crisis had affected
significantly the Company in the third and the fourth quarter
of 2008 and the selling price decreased dramatically.
However in the fourth quarter, the situation of the market
improved since the selling price increased as well as the
demand and the selling volume increased subsequently.
Anyway, total sell of 2009 dropped 53% when compared
to 2008.
Annual Report 2009 G J Steel Public Company Limited 10
Business Objectives Subsequent to the Public Offering in the late of
2003, the Company has restarted its operation and
consequentially running its production 24 hours since the
third quarter whereby the Company could eventually
produced more than 86,000 tonnes of Hot Rolled Coil in
December 2004. To this extent, the Company has
continuously improved its production quality and in 2006
the Company initiated the construction of finishing facilities
to expand the Company’s products from Hot Rolled Coil or
HRC to Tempered Hot Rolled Coil. In 2007 the Company
extended its production line to cover Pickled and Oiled
Product and in the second quarter of 2008, the Company
reached its full capacity whereby the average monthly
production volumes reached up to 100,000 tonnes. In the
future, the Company is planning its expansion to cover the
project on Galvanizing Line, Cold Rolled and Vacuum
Oxygen Degasser which can remove gas from the steel to
improve the quality of the products and to use them as raw
materials for producing Cold Rolled Coil and high cost
products.
Nonetheless, the Company’s business objective is
to become one of the world best quality steel manufacturers
together with the best efficiency and the lowest fund.
Moreover, the Company will extend its Hot Rolled Coil Line
to higher cost product line such as Galvanizing Line
together with other product line such as Special Quality
Steel. Besides, the Company focuses in development of
product quality in order to reduce its production of
fundamental products whose prices are highly fluctuated
and on the other hand concentrate in enhancing the
product quality to allow the Company to generate more
project.
The Company is persisting in its principle of “Quality
Steel by Quality People” whereby the main objective of the
Company is the sustainable growth of products quality,
services and human resources as the Company was
qualified in the international standard as follows:
ISO 9001 : 2000 qualified on 19 November 2005
CE Mark qualified on 31 July 2006
OHSAS 18001 : 1999 qualified on 28 November 2007
ISO/IEC 17025 : 2005 qualified on 30 November 2009
The Company can enhance its competitiveness
which will result in its operation become more profitable.
2009 2008 2007 THB Million % THB Million % THB Million %
Sales
Hot Roll Coil (HRC)
Recoil Temper Mill (RTM)
Slab
Cut Sheet
Raw material & iron unit
10,985.03
982.16
0.99
36.02
310
77.09
6.89
0.01
0.25
2.18
21,423.78
2,947.67
220.18
57.37
1,467.05
78.59
10.96
0.82
0.21
5.46
21,800.66
1,374.40
107.98
-
310.27
91.07
5.75
0.45
-
1.30
Interest Income 2.98 0.02 2.86 0.01 5.28 0.00
Other Income
Gain on reversal of impairment of fixed assets
Gain on foreign exchange
Reversal of devaluation of inventories
Reversal of liabilities under the Business
Rehabilitation Plan
Other income
-
59.76
1,736.81
-
135.30
-
0.42
12.19
-
0.95
-
-
-
663.25
108.78
-
-
-
2.47
0.04
-
152.82
39.18
50.03
97.57
-
0.64
0.17
0.21
0.41
Annual Report 2009 G J Steel Public Company Limited 11
1. Risks associated with fluctuation of demand of raw materials Scrap and Pig Iron are the major raw materials for
the Company’s production whereby any increase of their
prices will highly affect the profitability of the Company
unless the Company can effectively adjust the price of its
products accordingly. On the other hand, if the price of
such raw materials decreases dramatically until they
become lower than the costs of the Company. To such
extent, it will also affect the profitability of the Company
because the sale price may become higher than the market
price which will result in the Company has to record its
reserve for its inventories at the end of financial period.
However, in order to reduce such risk, the Company
is following up closely on any changes to the price of such
raw materials, whereby this will assist the Company to
suitably forecast and determine its purchasing plan and its
production plan. In general, the price of Scrap and Pig Iron
will changed in accordance with the price of Hot Rolled
Coil, therefore, if demand of the Hot Rolled Coil changed,
the price of Scrap and Pig Iron will also changed
accordingly, to such extent, the differences between the
price of Hot Rolled Coil and the price of its raw materials
will fluctuated in according way.
2. Risks associated with world economic crisis Due to the financial cricis which originated in United
Stated of America on the third quarter of the year 2008 is
affected especially to export market because steel demand
of each country has dramatically reduced whereas the
bank carefully released on credits whereby such situations
resulted in the Company’s export volume were substantially
decreased. The company had exportation 29% and 25% of
total sale in year 2007 and 2008 respectively, but it
decreased to only 12% in year 2009. In addition, the
decreasing of exportation also affected to the domestic
buyer because when the export decreases, money inflow to
the country will be decreased too as result of the
decreasing of purchasing power. However, the Company
forecasts that the world economic will start to get better by
the first quarter of the year 2010 which effected to the
increasing price of export products.
3. Risk associated with internal politics conflict The internal politic conflict affected significantly the
deceleration of selling of the customer. This factor caused
the demand directly and the sale hardly increased.
4. Risks associated with fluctuation of currency exchange Due to the Company is heavily depending on the
importation of raw materials together with the Company is
also exporting its products to its foreign customers whereby
the Company has to deal with many transactions in various
currency at all time. As a result, the fluctuation of the
currency exchange has become one of the risks factors of
the Company. In 2009, the Company imported the raw
materials equivalent to 74% of the total cost of production
and exported its products equivalent to 12% of the total
sales. Therefore, if considering such percentage, the risks
associated with the fluctuation of currency exchange will be
deemed as one of the most significant factors to the
Company’s operation as can be clearly seen in the
Statement of Incomes whereby the Company has recorded
both realized and unrealized gain and loss on exchange
rate. To this extent, in order to reduce such risks, the
Company has used its foreign income to pay its foreign
debt under the same currency.
Risk Factors
Annual Report 2009 G J Steel Public Company Limited 12
5. Risks associated with Anti-Dumping policy After the government by Ministry of Commerce
decided to continue the preventive tax policy to oppose the
Anti-Dumping of Hot Rolled Coil originated from 14
countries for next 5 years effective on May 2009 onward, it
presents that the government has the policy to prevent the
unfair trade completition between the local producer and
the foreign trader. This policy has the positive effect with
the Hot Rolled Steel Industry by reducing the price
fluctuation of the dumping from those 14 countries.
However, the dumping may exists from other counties that
the tax measure doesn’t apply such as China, 50%
capacity of Word steel producer, may release the exceed
products to the un-protected measured country, or
Malaysia that trends to export more to Thailand under
the ASEAN FTA. Therefore, the Company can be at risk of
losing its market share and losing its pricing competitiveness.
Nevertheless, the Company together with other steel
producers as the local producer group is monitoring the
dumping closely. If there are any dumping signals
emerging, the local producer group will ask the government
to apply the tax policy to oppose the Anti-Dumping of Hot
Rolled Coil with those countries immediately. In addition,
the local producer group is also requesting the government
to apply an industrial standard to import products in the
same way as domestic products because such importing
products are considered as sub-standard which can be
sold at substantial lower price. In order to reduce the
aforementioned risks, the Company is continuously
developing modern production technology and improving
other system to decrease other cost. Moreover, as a result
of investment by G Steel Public Company Limited, the
Company will be able to reduce its production cost and
enhance its competitiveness.
6. Risk associated with Free Trade Agreement Thailand has entered into the Agreement on the
Common Effective Preferential Tariff (CEPT) Scheme for
ASEAN Free Trade Area (AFTA) whereby an import tax on
any steel listed under the Normal Track will be reduced to 0
percent within 2010. Presently, Thailand is levying the
import tax on the importation form ASEAN’s countries at the
rate of 2-5 percent depending on the type and size of the
steel. Furthermore, as Thailand has also entered into Japan
Thai Economic Partnership Agreement (JTEPA) which
provided that, within 10 years, Thailand must reduced its
import tax on steel and iron from Japan to 0 percent while,
during such 10 years, Thailand must determine its import
quota which is tax exemption until such period is lapsed.
Therefore, in the future, the Company will be
affected by the importation of Hot Rolled Coil from both
ASEAN and Japan. And if the government still continues
to negotiate such Free Trade Agreement with other
nation such as ASEAN-EU FTA, and ASEAN-China FTA and
Thailand-India FTA, and etc. whereby Hot Rolled Coil is
involved, then the Company will be unavoidably affected.
Nonetheless, due to high production capacity and
efficient cost saving policy of the Company together with
the investment by G Steel Public Company Limited, the
Company will be able to strengthen its competitiveness.
Annual Report 2009 G J Steel Public Company Limited 13
Shareholding Structure and Management
1. Shareholders As of 25 November 2009, the top ten of major shareholders of the Company are as follows:
Name of Shareholders/Shareholders Group Number of shares Percentage (%)
1. Group of G Steel Public Company Limited
1.1 Oriental Access Company Limited 10,806,434,586 27.22
1.2 G Steel Public Company Limited 8,911,266,071 22.45
2. Nomura Singapore Limited - Customer Segregated Account 4,072,224,150 10.26
3. Thai Asset Management Corporation 1,550,314,798 3.90
4. Quam Securities Company Limited A/C Client 1,535,799,666 3.87
5. Thai NVDR Company Limited 772,142,425 1.94
6. Mr. Teerasak Tangpoonpholwiwat 537,498,099 1.35
7. Mr. Sittathat Sittisaman 507,180,000 1.28
8. Mr. Suneth Burakasikorn 388,642,300 0.98
9. Mrs. Sunee Triyangkoonsri 306,420,800 0.77
10. Bangkok Commercial Asset Management Company Limited 268,395,666 0.68
Total 29,656,318,561 74.70
Other Shareholders 10,046,107,979 25.30
Grand Total 39,702,426,540 100.00
Annual Report 2009 G J Steel Public Company Limited 14
Executive Vice
President: Accounting,
Financial & MIS
Executive Vice
President:
Commercial
Executive Vice
President:
HR & Admin,
Procurement &
Logistics
Executive Vice
President:
Expansion
Executive Vice
President:
Operation
Executive Committee
Board of Directors
Nomination & Remuneration Committee
Risk Management Committee Audit Committee
President
2. Management Management Structure
1. Board of Directors
The Board of Directors has 9 members comprises of 5 Executive Committees and 4 Independent Directors as
follows :
No. Name/Representatives Position
1. Mr. Nibhat Bhukkanasut Chairman & Independent Director
2. Dr. Somsak Leeswadtrakul Vice Chairman
3. Assoc. Prof. Niputh Jitprasonk Independent Director
4. Mrs. Arthidtaya Sutatam Independent Director
5. Assoc. Prof. Sukunya Tantanawat*1 Independent Director
6. Mr. Chanathip Trivuth Director
7. Mr. Sittichai Leeswadtrakul Director
8. Mr. Isra Akrapitak Director
9. Mr. Ariel Seth Levy*2 Director
Remarks: *1. Assoc. Prof. Sukunya Tantanawat has appointed to be Director instead of Asst. Prof. Dr. Tanawat Ceevaromaya as the
resolutions of Board of Directors Meeting No. 3/2010 on February 16, 2010.
*2. Mr. Ari Set Levy has appointed to be Director instead of Khunying Patama Leeswadtrakul as the resolutions of Board of
Directors Meeting No. 3/2010 on February 16, 2010.
The Company’s management structure comprises: Board of Directors, Executive Committee, Audit Committee, Nomination
and Remuneration Committee and Risk Management Committee.
The respective roles and responsibilities are summed up as follows :
Annual Report 2009 G J Steel Public Company Limited 15
Authorised director : Mr. Chanathip Trivuth or Mr.
Sittichai Leeswadtrakul or Mr. Isra Akrapitak or Mr. Ariel
Seth Levy two of these four directors can together sign a
document with the Company’s seal affixed
Secretary Company : Ms. Pannee Tanaprateepkul
Scope of Duties and Authority of the Board of
Directors
The Board of Directors have the power and authority
to manage the company’s business in compliance with the
objectives, Articles of Association and resolutions of the
shareholders’ meeting. The Board of Directors is not
entitled to approve or consider making any decision in the
following matters without the approval of at least 50 percent
of the directors at a Board meeting:
1. Any enquiry investment in any other enquiry or
many purchases of assets of any other entity other than
those specified in (2) (b) of Article 40,
2. Entry into any joint venture, partnership or other
transactions with any person with an aim to share profit and
loss;
3. Any acquisition, disposition, assignment,
transfer, licensing or sublicensing of any know-how,
trademarks, trade names, trade secrets or similar
intellectual property rights of any person other than in the
ordinary course of business;
4. Approval of annual budget and expense;
5. Approval of construction of any new steel mill;
6. Borrowing money for purposes other than as
working capital in amount not exceeding one hundred
million dollars (USD 100,000,000) (or the THB equivalent
thereof);
7. Execution of any contract other than those
contracts of less than one year’s duration or arising in the
normal course of business: and
8. Enforcement of right against the concerned
persons under the Management Agreement and the
Management Advisory and Technical Assistance
Agreement.
The Board of Directors also has the authority to
delegate to the Executive Committee or the President the
power and authority to perform various activities under the
established budgets, provided that such delegation does
not involve the approval of any transaction in which there is
a conflict of interest between the Company and the
Company subsidiaries (as per those specified under the
Company’s Articles of Association and the SEC), except
where such transactions are approved in accordance with
the policies and criteria as specified by the Board of
Directors in the ordinary course of company business, such
as purchase of raw materials and connected transactions
with related companies.
2. The Executive Committee
No. Name/Representatives Position
1. Mr. Chanathip Trivuth Chairman of Executive Committee
2. Dr. Somsak Leeswadtrakul Member of Executive Committee
3. Mr. Sittichai Leeswadtrakul Member of Executive Committee
4. Mr. Isra Akrapitak Member of Executive Committee
5. Mr. Ariel Seth Levy* Member of Executive Committee Remark: *Mr. Ari Set Levy has appointed to be Director as the resolutions of Board of Directors Meeting No. 3/2010 on February 16, 2010.
There is no Executive Committee but the scope and duties
will be as follows:
Scope of Duties and Authority of the Executive Committee
1. To review policies, business plan, investment plan and
annual budget plan to present to the Board of Directors
for approval.
2. To monitor, Supervise and control the execution of
plans to achieve the preset goals earlier approved by
the Board of Directors or as assigned. The committee
is also responsible for reporting the Company’s
performance to the Board of Directors meeting for
acknowledgement.
3. To approve any execution or payment which is exceed
an authority or authorized amount or the executive in
accordance with the Company’s authorization
regulations or annual budget previously approved by
the Board of Directors.
4. To consider the organizational structure, management
authority, remuneration policy, and salary structure.
Annual Report 2009 G J Steel Public Company Limited 16
5. To consider the authorization of managerial and
operational levels which covers finance, accounting,
procurement, investment, borrowing, mortgage,
collateral, assets transfer, and entering into any
contract or agreement as well as other operations as
deemed appropriate.
6. To assign any person or persons to act on behalf of the
Executive Committee as deemed appropriate. The
authorization can be revoked, changed or mended.
7. To consider and approve to open different
bank accounts with commercial bank as deemed
appropriate and assign persons to authorize
withdrawal or payment from such bank accounts.
8. To undertake other tasks as assigned by the Board of
Directors.
The authorization of the Executive Committee
mentioned above does not include authorizations that
enable the Executive Committee to approve any
transactional items that any executive director has conflict
of interest as per the announcement of SEC or with the
Company or its affiliates. The Executive Committee shall
propose such matters to the Board of Directors and/or the
shareholders’ meeting for consideration and approval
under related regulations, announcements or laws.
3. The Audit Committee
No. Name/Representatives Position
1. Assoc. Prof. Niputh Jitprasonk*1 Chairman of Audit Committee
2. Mrs. Arthidtaya Sutatam Member of Audit Committee
3. Assoc. Prof. Sukunya Tantanawat*2 Member of Audit Committee Remark: *1. Assoc. Prof. Niputh Jitprasonk is skill and experience in verify financial statement. *2. Assoc. Prof. Sukunya Tantanawat has appointed to be Audit Committee instead of Asst. Prof. Dr. Tanawat Ceevaromaya as the
resolutions of Board of Directors Meeting No. 3/2010 on February 16, 2010.
Scope of Duties and Authority of the Audit Committee 1. To review and ensure the Company has accurate and
sufficient financial report. 2. To review and ensure the Company has appropriate
and effective internal control and internal audit system, also, consider the independence of internal control and internal audit unit, give consent on appointing, rotating, and discharge of the chief of such unit or others responsible for internal audit.
3. To review and ensure the Company’s operation complies with the laws on securities and stock exchange, regulations of the SET or laws related to the Company’s business.
4. To consider, select and propose the nomination of independent persons to perform as the Company’s external auditors and their remuneration, and to attend the meeting with the external auditors without the Management at least once a year.
5. To consider any related transaction with possible conflict of interest to be compliance to the law and SET regulations, in order to ensure that such transactions are reasonable and for the best benefit of the Company.
6. To prepare the report of the Audit Committee to be published in the Company’s annual report. The Audit
Committee’s report shall be signed by the committee’s chairman and consist of at lest the following information: (a) Notes on the preparation procedures and
information discloser in the Company’s financial report in relations to accuracy, sufficiency and reliability.
(b) Notes on the sufficiency of internal control system. (c) Opinion on compliance with law related to
securities and the stock exchange, the SET regulations or other laws related to the Company’s business.
(d) Opinion on the suitability of external auditors. (e) Opinion on transaction with possible conflict of
interest. (f) The number of audit committee meetings and the
attendance of each member. (g) Overall opinion and notes that the Audit
Committee receives from performing complying with the laws.
(h) Any other reports that shareholders and investors should be informed under the scope of responsibilities assigned by the Board of Directors.
Annual Report 2009 G J Steel Public Company Limited 17
7. To Carry out any other tasks assigned by the Board of
Directors and has resolution of the Audit Committee.
8. The Audit Committee has responsibilities to the Board
of Directors by their duty and shall report to it the
performance, including recommendations and findings
at least twice a year.
In any case where any Audit Committee member of parties
with possible conflict of interest wit the company or its
affiliates, the acquisition or sale of assets of listed
4. The Nomination and Remuneration Committee
No. Name/Representatives Position
1. Assoc. Prof. Sukunya Tantanawat*1 Chairman of Nomination and Remuneration Committee
2. Mrs. Arthidtaya Sutatam Member of Nomination and Remuneration Committee
3. Mr. Chanathip Trivuth*2 Member of Nomination and Remuneration Committee
Remark : *1 Assoc. Prof. Sukunya Tantanawat has appointed for Chairman of Nomination and Remuneration Committee instead of Asst. Prof. Dr. Tanawat Ceevaromaya as the resolutions of Board of Directors Meeting No. 4/2553 on February 24, 2010.
*2. Mr. Chanathip Trivuth has appointed to be Director instead of Khunying Patama Leeswadtrakul as the resolutions of Board of Directors Meeting No. 4/2010 on February 24, 2010.
companies and connected transactions (if any), as per
announcements of the Securities and Exchange
Commission (SEC) and/or the Stock Exchange of Thailand,
The Audi Committee shall report the matter or the Board
of Directors and/or the shareholders’ meeting for
consideration and approval in compliance with related law
and regulations.
Scope of Duties and Authority of the Nomination Committee
1. To formulate criteria and policy in nominating directors,
members of different committees and the Chief
Executive Officer.
2. To consider and nominate appropriate persons to be
appointed as directors, and members of different
committees as well as the Chief Executive Officer for
approval by the Board of Directors and/or
Shareholders’ Meeting.
3. To report to the Board of Directors the results of the
Nomination Committee meetings or other matters that
the Board of Directors should be informed.
4. To perform any tasks assigned by the Board of
Directors.
Scope of Duties and Authority of the Remuneration
Committee
1. To stipulate all the rules and policies on remunerations
for the Board of Directors, Committee, and Chief
Executive Officer for the approval by the Board of
Directors and/or, as the case may be, the shareholders’
meeting.
2. To set necessary and appropriate annual remunerations for
the Board of Directors, Committee, and Chief Executive
Officer.
3. To report to the Board of Directors the Remuneration
Committee’s meeting results or other matters the Board
of Directors should be informed.
4. To perform any tasks assigned by the Board of
Directors. 1.5 Risk Management Committee
No. Name/Representatives Position 1. Assoc. Prof. Sukunya Tantanawat* Chairman of Risk Management Committee 2. Mr. Sittichai Leeswadtrakul Member of Risk Management Committee 3. Mr. Chanathip Trivuth Member of Risk Management Committee 4. Ms. Pannee Tanaprateepkul Member of Risk Management Committee 5. Mr. Chaimongkol Boonchanaphun Member of Risk Management Committee 6. Mr. Wasan Chitsuk Member of Risk Management Committee 7. Mr. Tanaongsak Bhumina Member of Risk Management Committee 8. Mr. Sathaporn Varongchaiyakul Member of Risk Management Committee 9. Mr. Yongchai Hounvongkotvichien Member of Risk Management Committee
10. Mr. Surapong Tanapongpitaya Member of Risk Management Committee 11. Ms. Jurai Chailertdilokkul Member of Risk Management Committee
Remark: * Assoc. Prof. Sukunya Tantanawat has appointed for Chairman of Risk Management Committee instead of Asst. Prof. Dr. Tanawat Ceevaromaya as the resolutions of Board of Directors Meeting No. 4/2553 on February 24, 2010.
Annual Report 2009 G J Steel Public Company Limited 18
Scope of Duties and Authority of Risk Management
Committee
1. To set risk management policy that can be applied to
all operations.
2. To follow up and control the operation to achieve the
aim of the risk plan management.
3. To review the moderation of policy and the management
system include the system performance and follow the
defining policy.
4. To report to the Internal Audit Committee constantly the
progress of risk in order to correspond with the policy
and the procedure risk management.
6. Management Team
No Name Position
1. Mr. Chanathip Trivuth* Acting President & Executive Vice President: Commercial 2. Mr. Chanathip Trivuth Executive Vice President : Accounting, Financial & MIS 3. Ms. Pannee Tanaprateepkul Executive Vice President : HR & Admin, Procurement & Logistics 4. Mr. Santi Kittikote Executive Vice President : Expansion & Acting Executive Vice President:
Operation
Remark: * The Company appointed Mr. Chanathip Trivuth Acting President & Executive Vice President: Commercial instead of Mr. Sirichai Sae-Ku who resigned from this position effective as November 20, 2009.
Scope of Duties and Authority of the Management Team
1. To formulate business plan, investment plan, and
annual budget plan for approval by the Executive
Committee and/or the Board of Directors.
2. To be responsible for the overall management and to
deliberate all the Company’s policies to achieve the
present objective and within the policy, business plan
and budget plan approved by the Board of Director.
3. To approve an execution or payment according to the
Company’s authorization regulations of annual budget
approved by the Board of Directors.
4. To recruit, hire, transfer, reshuffle, suspend of terminate
employment of any executives or employees and to
stipulate scope of roles and responsibilities and
appropriate remuneration. An execution of position
equivalent to Senior Vice President of higher shall be
reported to the Board of Directors, while an execution
of positions equivalent to the Internal Audit Department
executive shall be made with the Audit Committee’s
consideration.
5. To appoint respective authorized persons to sign the
Company’s document in the areas of accounting,
finance, purchase, production, sale and general
management, as well as other important document.
6. To set, change, revise or cancel any rules, regulations,
order, announcement, punishment measures and
internal control systems for use as guideline for all
employees and to enable the internal management is
executed as per the Company’s policies.
7. To appoint advisors in various respects significant to
the operations for the best benefits of the Company.
The CEO is empowered to appoint attorney(s) to file
lawsuit or defend case related to the Company.
8. To assign person(s) to perform task on his/her behalf
as deemed appropriate. Such authorization can be
terminated, changed or modified.
9. To report the Company’s performance, progress of any
projects and financial status to the Executive
Committee and the Board of Directors.
10. To perform other works assigned by the Executive
Committee or the Board of Directors.
In case that the CEO or other persons with
possible conflict of interest may have conflict of
interest, the CEO shall have no right to approve such
matter.
2. Selection of Director and Management
(1) The selection of the Directors and Chief
Executive Office
When the positions of Company’s directors
of Chief Executive Officer are vacant, the Nomination
Committee are responsible for selecting and nominating the
persons to take these positions. The Nomination Committee
shall consider person with knowledge, capability,
experience and required specialization that are crucial to
the Company’s operation.
(2) The nomination of directors (at the end of
terms as required by law)
Annual Report 2009 G J Steel Public Company Limited 19
The selection of a Board of Directors
member to replace director who must retire at the end of
his/her term shall be approved by the Annual General
Shareholders’ Meeting. Criteria and selection method are
as follows:
1. A shareholder shall have one vote per one
share.
2. Each shareholder shall exercise all his/her
voting right as mentioned above in selecting one or many
persons as directors but cannot separate votes for any
person(s) according to Clause 70, Section 1 of the Public
Limited Company Act.
3. The persons receiving the highest votes
will be selected as directors. The number of persons
selected shall be equal to the number of directors to be
selected. In case there are persons with the highest votes
more than the number of directors required, the meeting
chairman shall have the right to make decision.
3. Remuneration for the Directors, Management
Team and Other expenses
No. Name Position Monthly
Remuneration Remuneration of Board of Directors
Remuneration of Audit
Committee Total
1. Mr. Nibhat Bhukkanasut Chairman & Independent Director
450,000 35,000 - 485,000
2. Dr. Somsak Leeswadtrakul Vice Chairman - - - -
3. Assoc. Prof. Niputh Jitprasonk Independent Director & Chairman of Audit Committee
360,000 35,000 35,000 430,000
4. Mrs. Arthidtaya Sutatam Independent Director & Member of Audit Committee
- 25,000 30,000 55,000
5. Assist. Prof. Dr. Tanawat Ceewaromaya
Independent Director & Member of Audit Committee
- 30,000 25,000 55,000
6. Khunying Patama Leeswadtrakul Director - - - -
7. Mr. Chanathip Trivuth Director - - - -
8. Mr. Sittichai Leeswadtrakul Director - 35,000 - 35,500
9. Mr. Isra Akrapitak Director - 20,000 - 20,000 Total 810,000 180,000 90,000 1,080,000
2. Remuneration for the Management team for the year 2009 were amounting to THB 35.30 million.
Others Remuneration
On 11 December 2008, the Company was authorized to issue and offer ESOP warrants amount of 727,536,398 units
to the Company’s directors and employees in recognition of the directors and employees’ contribution to the Company as
well as motivation to work for the Company in the long run. The details are as follows:
Nature Warrants to purchase ordinary share of G J Steel Public Company Limited (“Warrants” or
“GJS-ESOP)
Type of Warrants Specified and Non-Transferrable Warrants to purchase ordinary share of the Company,
except transfer by intermediary person, or as otherwise specified by the Board of Directors
or the Allocation Committee (Intermediary Person is the person who holds the said
securities for distributing to all future directors and employees)
Number of Warrants 727,536,398 units
- Remuneration for the Directors and Management Team
Remuneration
1. Remuneration for Director or the year 2009
Annual Report 2009 G J Steel Public Company Limited 20
Number of Shares
Issued to Support
Warrants
727,536,398 shares
Offering Method Offering to directors and employees of the Company and the intermediary person (Intermediary Person shall mean Chief Financial Officer or Vice President-Finance, Vice President-Accounting
Offering Price THB 0 (Zero) per unit
Terms of Warrants 5 year
Issuing Date December 11, 2008
Exercise Ratio 1 warrant : 1 ordinary share (amendable subsequent to any adjustment of the right under warrants)
Exercise Price Par Value at exercise date (as of October 20, 2008, Par Value is THB 0.69 per share)
Exercise Date Last business day of December of each year throughout the terms if warrants whereby the first exercise date shall be December 30, 2011 and the last exercise date will fall on December 10, 2013. In case of the exercise date shall fall on the Company’s annual holiday, the exercise date shall be moved up to the earlier business day of the Company. The last exercise notice shall be lodged by the warrant holders at least 15 days prior to such exercise date.
Exercise Period and
Ratio (percentage of
total distribution)
Directors and employees of the Company can exercise their warrants in accordance with the following details:
First 20% shall be exercisable on the first exercise date which fall on the last business day of December 2011
Second 30% shall be exercisable on the second exercise date which fall on the last business day of December 2012
Third 50% shall be exercisable on the last exercise date which falls on December 10, 2013. In case of the exercise date shall fall on the Company’s annual holiday, the exercise date shall be moved up to the earlier business day of the Company. The last exercise notice shall be lodged by the warrant holders at least 15 days prior to such exercise date.
In case of the warrant holders does not exercise or partly exercise their right on each exercise date, such warrant holders can exercise their remaining warrant on the next exercise date throughout the terms of the warrants.
Registrar G J Steel Public Company Limited
4. Corporate Governance After the termination of the business reorganization
on March 2, 2009, the company intends to operate the
business under the Good Corporate Governance by
implementing the Principle of Good Corporate Governance
and SET’s regulation as the guideline of the company’s
business operation in order to enhance the efficient
management system that can be categorized as follow;
Part 1: Shareholder’s Right
The Company’s Board of Directors arranges for an
annual general meeting of shareholders within four months
following the end of the fiscal year. In case there are any
special issues affecting or involving with shareholder’s
privilege or any regulations and transactions required
shareholder’s approval, the company will arrange the
extraordinary general meeting.
For year 2009, the Annual General Meeting of the
Shareholders and the Extraordinary General Meeting of the
Shareholders were held on April 23, 2009 and December
18, 2009 respectively at Arnoma Grand, Arnoma Hotel,
Pathumwan, Bangkok that all members of the Board of
Directors attended both of meetings. In each Shareholder
Annual Report 2009 G J Steel Public Company Limited 21
Meeting, the outside Auditor and the legal counsel will be
invited for observation the transparency of the meeting and
the vote. The chairman of the Board of Directors was the
moderator proceeds with the meeting’s agendas that the
resolution and the voting result were reported for each
agenda. For every Shareholders Meeting, the publication of
the meeting notice is made in a daily Thai newspaper for
three consecutive days prior to the meeting not less than 3
days. And the meeting invitation and the meeting
documents were delivered to the shareholders prior to the
meeting not less than 7 days in order to provided sufficient
time for the shareholders to study the adequate information
related to the matters for consideration in the meeting. The
Board of Directors has preparation to give the information
and clarify the shareholders’ questions without any
negligence. After the Shareholders Meeting, the minutes
will be sent to SET within 14 days which is in compliance
with the regulations of SEC and SET.
Part 2 : Equitable Treatment of Shareholders
The Board of Director respected the equitable treatment of
shareholders. All shareholders will be invited to attend the
Shareholder Meeting. Thailand Securities Depository Co.,
Ltd. , the company’s registrar, has responsibility to send the
meeting invitation and the meeting document to the
shareholders prior to the meeting not less than 7 days. The
additional issue in the agenda or change any significant
information without advance notice did not be considered
to the Board of Director. In case the shareholders did not
available to attend the meeting, the company encouraged
the shareholders to use the power of attorney by providing
the Power of Attorney Form A (general), Form B and Form C
(only for custodian) and Shareholders are able to assign
proxy to 2 independent directors to attend the meeting and
vote on behalf of the shareholders. The company also
encouraged the shareholders to use their voting rights by
providing and distributing voting ballots while registration
before meeting. Voting ballots were provided for each issue
of the agenda. In addition, the shareholders who assign
proxy are able to use their voting right directly by voting in
the Power of Attorney Form B and Form C.
Part 3 : Role of Stakeholders
The company recognized and respected to all
stakeholders’ rights that might consist of major and minor
shareholders, employees, customers, creditors and also
including the community around factory by processing
through the company’s policy such as the Shareholders
Meeting arrangement, the adequate employee welfare
determination, willing to receive the complaint from
customer and community around factory, give the
knowledge for environmental treatment to the community
around factory, signed the agreement or contract for
trading with customers or vendors and suppliers and
continuously make the relationship with all stakeholders.
Part 4 : Information Disclosure and Transparency
The company recognizes a responsibility of information
disclosure with accuracy adequacy transparency and audit
ability to ensure that the information given out is meaningful to
decision making of investors. The company’s information will be
provided both in Thai and English version disseminated through
the online system of the Stock Exchange of Thailand. The
information disclosure will be strictly follows the regulations
required by the Office of the Securities and Exchange
Commission (“SEC”), the Stock Exchange of Thailand, and other
concerned authorities. The company always updates any
regulations change to ensure the correct acting with those
regulations and to create the confidence among the investors.
Part 5 : The Responsibilities of the Board of
Directors
1. Structure of the Board of Directors
The Board of Directors has 9 member and
comprises 5 Directors and 4 Independent Directors as
described in the Company’s management structure.
2. Independent Directors have specifications as
follows
2.1 Hold not exceeding 1.0% of the total
voting shares of the Company, its subsidiaries, affiliates, or
juristic person with possible conflict of interest, including
the shares held by their related persons.
2.2 Neither involving in management, nor
controlling nor being authorized signatory person, nor
being the Company’s executives/employees, salaried
consultant, competent authorized person to control the
Company, its subsidiaries, affiliates or other juristic person
with possible conflict of interest and nor having such
interests or stakes for at least 24 months.
2.3 Not having lineage, marriage, or legally
registered relationship such as father, mother, spouse,
sibling, and child, including spouse of the child, to
executives, major shareholders, controlling person, or
persons to be nominated as executive or controlling person
of the Company or its subsidiary, and be independent from
major shareholders, executives and controlling.
Annual Report 2009 G J Steel Public Company Limited 22
2.4 Neither having a business relationship with
the Company, its subsidiaries, affiliates, or juristic person
with possible conflict of interest which make him/her
incapable in expressing independent opinions nor being
appointed as a representative of major shareholders, the
Company’s directors or executives of the person who has
the business relation with the Company, its subsidiaries,
affiliates, or juristic person with possible conflict of interest
and nor having such interests or stakes for at least 24
months.
2.5 Not being the auditor of the Company,
parent company, subsidiaries, associates or juristic
persons which may have conflict of interest, including being
major shareholder, non-executive director, executive or
partner of the audit firm of the auditor of the Company,
parent company, subsidiaries, associates or juristic
persons which may have conflict of interest, and not having
such relationship for at least 24 months before an
appointment.
2.6 Not being professional advisors, including
legal advisor or financial advisor which receives
remuneration in excess of THB 2 million per year from the
Company, parent company, subsidiary, associate or juristic
person which may have conflict of interest.
In the case that the professional advisor is
a juristic person, the prohibition shall include the major
shareholder, non-executive director, executive or partner of
such advisor, and not having been in such relationship for
at least 24 months before an appointment.
2.7 Not being representative of director, major
shareholder or shareholder which relates to the major
shareholder of the Company.
2.8 Neither running the business which is
similar to or compete with the Company, its subsidiaries or
shareholders nor being executives, employees, salaried
consultant and nor holding over 1% of the total voting
shares of any other company which run such same
business with the Company and its subsidiaries.
2.9 Shall have the qualifications and not
having prohibited characteristics as stipulated in the
Articles of Association of the Company, the Public Limited
Companies Act and the rules of the Office of the Securities
and Exchange Commission.
3. Committee
The Company set up the Committee comprises
of Executive Committee, Audit Committee, Nomination and
Remuneration Committee as described in the Company’s
management structure.
4. The Roles and Responsibilities of the Boards of
Directors
1. Shall perform their duty honestly and
carefully to achieve the Company’s goal for the best
benefits of the shareholders.
2. Shall provide sufficient time to perform
their assigned duty.
3. Shall be consistently accountable to
shareholders and support shareholders to exercise their
rights in various areas.
4. Shall treat the stakeholders equally and
fairly.
5. The Boards of Directors shall convene
once every 3 months, In 2009, the Board of Directors has
the total Meetings of 7 times. Details of the attendance in
each meetings are as follows:
No Name Position Attendance/No. of meeting
1. Mr. Nibhat Bhukkanasut Chairman and Director 7/7 2. Dr. Somsak Leeswadtrakul Vice President 7/7 3. Assoc. Prof. Niputh Jitprasonk Independent Director 7/7 4. Mr. Chanathip Trivuth Director 7/7 5. Mrs. Arthidtaya Sutatam Independent Director 5/7 6. Mr. Sittichai Leeswadtrakul Director 7/7 7. Mr. Seiji Inoue*1 Director 2/2 8. Mr. Isra Akrapitak*2 Director 4/4 9. Khunying Patama Leeswadtrakul*3 Director 7/7 10. Asst. Prof. Dr. Tanawat Ceevaromaya*4 Independent Director 6/7
Remark : *1. Mr. Seiji Inoue resigned from the Director on 13 July 2009 *2. Mr. Isra Akrapitak was appointed as Director in the replacement of Mr. Seiji Inoue approved by the Board of Directors’ Meeting
on 11 August 2009 *3. Khunying Patama Leeswadtrakul resigned from the Directors on 16 February 2010 *4. Asst. Prof. Dr. Tanawat Ceevaromaya resigned from the Directors on 16 February 2010.
Annual Report 2009 G J Steel Public Company Limited 23
5. Supervision of Internal Information Control The Company adopt a policy and measures to
supervise the management on the use of internal
information for their own benefits and trading securities. In
particular, during the one month before the Company’s
financial statements will be disseminated to the public, the
information will be limited only to those who have the need
to know.
The Company’s executives and the Plan
Administrator are fully responsible for preparing and
submitting to the SEC and the SET the report on their
shareholding in the Company including those of their
spouses and minor children and any change thereof in
accordance with section 59 of the Securities and Exchange
Act B E 2535 within the following specified period:
- An initial shareholding report (Form 59-1) must be
submitted within 30 days after the end of subscription
period of any public offering of the Company or after the
date of appointment to be the management of the
Company.
- The report of change in shareholding (Form 59-2)
must be submitted within 3 business days after the
purchase, sale or transfer.
Those who fail to comply with the policy or measures will be
penalized pursuant to the Company’s regulations.
6. Internal Control The organizational structure of the Company and the
surroundings can help with promoting operational
efficiency, sufficient supervision, apparent organizational
administration, organizational reformation consistent with
business strategy, employee sourcing, uninterrupted
employee development appropriate for business
fluctuation, reduction of overlapping operation, identical
standard of operation and apparent determination of
business operational target by considering various factors
such as economic status, market situation and competing
strategy.
The Company has determined risk factor, risk
opportunity, risk effect, administrative strategy and risk
pursuit to minimize organizational effect or risk
management to transform crisis into opportunity together
with determining alert signal in order to prevent or decrease
risk that may occur to the business operation.
The Company has determined the suitable
controlling activity in order to operate the Company
business efficiency such as defining the apparent scope of
authority and function of each executive, regular following
up with the Company operation together with having
internal controlling system with respect to transactions with
major shareholder, director, executive and other related
person.
However in 1st quarter of 2009, the Company had
terminated the rehabilitation proceeding, Board of Directors
has set up The Audit Committee to consider appropriate
reason of related transactions, sufficient internal control
system, meeting with independent auditor for financial
statement and data disclosure revision, and also to
consider annual audit plan and follow up internal audit
report. In order to maintain the Internal Audit Department’s
independence and balance of power, the Board of
Directors therefore assigned the department to report
directly to The Audit Committee. Moreover the Company
has set up the Risk Management Committee to review and
appraise the efficient of risk management.
The Company has regularly recorded minute of the
Company meeting and also complying with rules and
regulations in storing important documents and accounting
documents together with having storage system and
communicating system which efficiency, up-to-date and
easy to use.
The Company has regularly convened the meeting
of the Company executive in order to compare the
operational performance with the prescribed target which
will be regularly and continuously analyzed and improved
all the time.
Board of Directors and Management Team
Name-Surname/Position Age (Year) Education % of
shareholding Relation Work Experience for the Past 5 Years
Time Position / Organization
1. Mr. Nibhat Bhukkanasut
Chairman & Independent
Director
67 - Master of Arts (Political Science),
University of Hawaii
- Bachelor of Arts (Economics),
University of Hawaii
- Diploma of the Joint State-Private
Sectors Course, The National Defence
College of Thailand
- The Role of Chairman Program (RCP)
13/2006
- Director Arrcreditation Program (DAP)
66/2007
- Audit Committee Program (ACP)
24/2008
Thai Institute of Directors (IOD)
None None May. 2008 - Present
Nov. 2005 - Present
Present
Present
Present
Present
Chairman & Independent Director,
G J Steel Plc.
Chairman, T C J Asia Plc
Chairman, Capital Market
Development Foundation
Director, The Stock Exchange of
Thailand
Chairman, Securities Investor
Protection Fund Committee, SET
Consultant, Unithai Group Co., ltd.
Annual Report 2009 G
J Steel Public Com
pany Limited
24
Name-Surname/Position Age (Year) Education % of
shareholding Relation Work Experience for the Past 5 Years
Time Position / Organization
2. Dr. Somsak Leeswadtrakul
Vice Chairman
58 - Wharton-Nida Executive Leadership
Program Certificate,
University of Pennsylvania, USA
- The Program of Capital Market
Academy
- The Program of Senior Executive in
Criminal Justice Administration
- Honorary of Doctorate in Administration,
Kasetsart University
- MBA, Ramkhamhaeng University
- B. Econ., Ramkhamhaeng University
- Director Arrcreditation Program (DAP)
- Director Certification Program (DCP)
- The Role of Chairman Program (RCP)
13/2006
- Financial Statement for Directors (FSD)
Thai Institute of Directors (IOD)
None Uncle of
Mr. Sittichai Leeswadtrakul
Present
Present
1988 - Present
Present
Present
Present
Present
Vice Chairman, G J Steel Plc.
Vice Chairman, G Steel Plc.
Director, Thailand Iron Works Plc.
Council, Members, Nation Institute of
Development Administration (NIDA)
Distinguished Member of Ramkhamhaeng
Council, Ramkhamhaeng University
Council Members, Saint Louis College
Board of Member, Iron Steel Institute of
Thailand
Annual Report 2009 G
J Steel Public Com
pany Limited
25
Name-Surname/Position Age (Year) Education % of
shareholding Relation Work Experience for the Past 5 Years
Time Position / Organization
3. Assoc.Prof. Niputh
Jitprasonk
Independent Director &
Chairman of Audit
Committee
67 - M.B.A. (International Trade & Finance),
Gothenburg School
of Economics and Business
Administration, Sweden
- Bachelor of Arts (Hon., First Class)
Faculty of Commerce
and Accountancy, Thammasat
University
- Certificate, Capital Market Academy
Leadership Program, Class 2
- Director Arrcreditation Program (DAP)
85/2007
Thai Institute of Directors (IOD)
None None 2009 - Present
Present
Present
Nov. 2008 - Present
1995 - 31 Oct. 2008
Independent Director & Chairman of
Audit Committee, G J Steel Plc.
Director and Audit Committee,
The Stock Exchange of Thailand
Director and Audit Committee,
Siam City Bank
Consultant, Real Estate Business
Program, Thammasat University
Director, Real Estate Business Program
Thammasat University
4. Mrs. Arthidtaya Sutatam
Independent Director &
Audit Committee
52 - MBA, Morehead State University, U.S.A.
- Master of Information Technology
King Mongkut’s Institute of Technology
Ladkrabang
- Director Arrcreditation Program (DAP)
30/2005
Thai Institute of Directors (IOD)
None None Nov. 2006 - Present
Dec. 2006 - Present
Jul. 2004 - Present
Jul. 2004 - Dec. 2005
Oct. 1997 - Jun. 2004
Independent Director & Audit Committee,
G J Steel Plc.
Computer Technician 8, The Office of the
Permanent Secretary of Information
and Communication Technology
Independent Director and Auditor,
Thailand Iron Works Plc.
Manager, Supat & Friend Office
Computer Technician 8,
The Excise Department of Thailand
Annual Report 2009 G
J Steel Public Com
pany Limited
26
Name-Surname/Position Age
(Year) Education
% of shareholding
Relation Work Experience for the Past 5 Years
Time Position / Organization
5. Assoc. Prof. Sukanya Tantanawat Independent Director & Audit Committee
67 - Master of Development Economics Nation Institute of Development
Administration (NIDA) - Bachelor of Arts in Economics,
Chulalongkorn University
None None Present Present Present Present Present Present Present Present
Independent Director & Audit Committee, G J Steel Plc. Vice President of Regional Campuses, Ramkhamhaeng University Director of Graduate Studies, Ramkhamhaeng University Assistance Professor Business Administration Chairman of Economy of Master Degree Project, Nakhonratchasima Province Chairman of Economy of Master Degree Project, (Co operation between Organization and Thai Employers Project) Internal Academic Quality Audit Quality Management Audit ISO 9001:2008
6. Mr. Chanathip Trivuth Director, Acting, President, Acting Executive Vice President : Commercial and Executive Vice President: Accounting, Finance & MIS
46 - Master of Business Administration, National Institute of
Develpoment Administration (NIDA) - Bachelor of Arts (Economics),
Thammasat University - Director Arrcreditation Program (DAP) Thai Institute of Directors (IOD)
None None Present 2006 - Present 2004 - Present 2004 - 2006 2001 - Present 1999 - Present 1991 - Present
Director, Acting President, Acting Executive Vice President: Commercial and Executive Vice President: Accounting, Financial & MIS , G J Steel Plc. Director, Asia Metal Plc. Director, Felix River Kwae Resort (Kanchanaburi) Co., Ltd. Lay Judge Central Labor Court Managing Director, SSP Place Co., Ltd. Managing Director, Great Eastern International Co., Ltd. Managing Director, Intelligent Systems Network Co., Ltd.
Annual Report 2009 G
J Steel Public Com
pany Limited
27
Name-Surname/Position Age
(Year) Education
% of shareholding
Relation Work Experience for the Past 5 Years
Time Position / Organization
7. Mr. Sittichai Leeswadtrakul Director
32 - Master of Law, Department of Economics Regulation, Chulalongkorn University
- Master of Science in Engineering Management, Warwick University
- Business Course University of California of Berkeley
- Bachelor of Business Administration, Mahidol University
- Director Arrcreditation Program (DAP) 41/2005
Thai Institute of Directors (IOD)
None Nephew of Dr. Somsak
Leeswadtrakul
2009 - Present 2009 - Present 2008 - Present 2004 - Present 2004 - Present
Director, G J Steel Plc. Director, G Steel Plc. Chairman of Executive Committee, B R P Steel Co., Ltd. Director and Managing Director, Millcon Steel Industries Plc. Director, Siam Rubber Indutries Co., Ltd.
8. Mr. Isra Akrapitak Director
40 - Master of Management, Thames Business School, Amsterdam, Netherlands
- B.B.A., Business Administration, Assumption University
- Certificate: Leadership & Management Skills, University van Amsterdam & SITA, Amsterdam, Netherlands
- Director Arrcreditation Program (DAP) 81/2009
Thai Institute of Directors (IOD)
None None 2009 - Present 2009 - Present 2005 - 2008
Director, G J Steel Plc. Director, Agro Industrial Machinery Plc. Managing Director , KPN Music Co., Ltd.
9. Mr. Ariel Seth Levy Director
35 - Bachelor Degree Major Business Administration, University of Michigan
None None Present 2003 - Present
Director, G J Steel Plc. Principal and Managing Director, Global Principal Partners LLC, USA
Annual Report 2009 G
J Steel Public Com
pany Limited
28
Name-Surname/Position Age
(Year) Education
% of shareholding
Relation Work Experience for the Past 5 Years
Time Position / Organization
10. Ms. Pannee Tanaprateepkul Executive Vice President: HR & Admin, Procurement and Logistics
48 - MBA, Ramkhamhaeng University - Bachelor of Business Administration
(General Management), Sukhothai Thammathirat Open University
- Bachelor of Economics, Ramkhamhaeng University
None None Present 2005 - 2006 2003 - 2005
Executive Vice President : HR&Admin, Procurement and Logistics, G J Steel Plc. Vice President : General Administration, G Steel Plc. Senior Manager HR & Admin, G Steel Plc.
11. Mr. Santi Kittikote Executive Vice President: Expansion and Acting Executive Vice President : Operation
66 - Bachelor of Engineering, Chulalongkorn University
None None Present 2005 - Jul. 2008 2002 - 2005 1996 - 2002
Executive Vice President : Expansion and Acting Executive Vice President : Operation, G J Steel Plc. Senior Manager, G J Steel Plc. Director, Milenium Steel Plc. Director and Senior Vice President, NTS Steel Group Plc.
Annual Report 2009 G
J Steel Public Com
pany Limited
29
Annual Report 2009 G J Steel Public Company Limited 30
The Company has entered into transactions with related persons which
may give raise to the conflict of interest issue whereby such transactions can be
summarized as follows:
Related Persons Description
G Steel Public Company Limited 1. G Steel Public Company Limited is holding 22.45 percent of the Company’s
shares (as of 25 November 2009)
2. Dr. Somsak Leeswadtrakul is the Vice Chairman of G J Steel Public Company
Limited and Vice Chairman of G Steel Public Company Limited.
3. Khunying Patama Leeswadtrakul, wife of Dr. Somsak Leeswadtrakul is the
Director and is holding 10.42% of the shares of G Steel Pubic Company
Limited (as of 7 April 2009).
4. Mr. Sittichai Leeswadtrakul is the Director of G J Steel Public Company Limited
and Director 2.55% of G Steel Public Company Limited, who holds 2.55% of
the shares (as of 7 April 2009).
Oriental Access Company Limited 1. Oriental Access Company Limited is holding 27.22 percent of the Company’s
shares (as of 25 November 2009)
2. G Steel Public Company Limited is indirectly holding 99.92% of the shares of
Oriental Access Company Limited (as of 30 April 2009)
Asia Metal Public Company
Limited
1. Mr. Chanathip Trivuth, the Company’s Director and the Acting President in the
shares of Asia Metal Public Company Limited (as of 7 April 2009)
2. Khunying Patama Leeswadtrakul, wife of Dr. Somsak Leeswadtrakul is holding
16.67 percent in the shares of Asia Metal Public Company Limited (as of 7
April 2009)
Mill Con Steel Industries Public
Company Limited
1. Mr. Sittichai Leeswadtrakul is the Company’s Director and the Chairman of
Executive Committee and shareholder of Mill Con Steel Industries Public
Company Limited and is holding 27.80% of the shares of Mill Con Steel
Industries Public Company Limited (as of 7 April 2009).
2. Khunying Patama Leeswadtrakul, wife of Dr. Somsak Leeswadtrakul is holding
1.25% of shares of Mill Con Steel Industries Public Company Limited
(as of 7 April 2009).
SSP Place Company Limited 1. Mr. Chanathip Trivuth, the Company’s director and Acting President , is a
director, a managing director and a major shareholder of SSP Place Company
Limited and is holding 99.99% (as of 30 April 2009)
BRP Steel Company Limited 1. Mr. Sittichai Leeswadtrakul is the Company’s Director and Chairman of
Executive Committee of BRP Steel Company Limited
Related Transactions
Annual Report 2009 G J Steel Public Company Limited 31
Related Persons Description
Arnoma Bangkok Company Limited 1. Khunying Patama Leeswadtrakul, wife of Dr. Somsak Leeswadtrakul is the
Director of Arnoma Bangkok Company Limited.
Related Transactions in 2009 and 2008 are as follows:
1. Transactions with G Steel Public Company Limited:
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness
of Transactions As of 31 December 2009
As of 31 December 2008
- Purchase of Raw Materials &
Finished Goods
- Production Service Charge
- Revenue from sale
- Advances to suppliers
- Accounts payable
- Payable to related party from
offsetting of machinery purchase
- Account Receivable
- Other income
395.72
49.55
37.59
0.77
376.91
992.24
-
0.75
783.73
-
1,143.54
-
187.63
-
0.66
0.62
The management’s opinion: These
transactions are in ordinary course
of the Company’s business.
2. Transactions with Oriental Access Company Limited:
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Interest expenses
- Accrued interest expenses
- Liabilities under Business
Reorganization Plan
-
-
-
2.83
-
-
The management’s opinion: These
transactions related to MRA and
are equally treated with other
creditors.
- Sale and Administration
expenses
- Other accounts receivable
- Other accrued expenses
- Advanced expenses
452.95
-
288.90
-
675.13
-
-
111.04
The management’s opinion:
These transactions are in ordinary
course of the Company’s business
and moreover have been approved
by the Creditors’ Committee
whereby such expenses are in
accordance with the Operation
Service Agreement.
Annual Report 2009 G J Steel Public Company Limited 32
3. Transactions with Asia Metal Public Company Limited:
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Revenue from sale of finished
goods
- Advanced from customer
75.19
41.12
379.25
0.06
The management’s opinion: These
transactions are in ordinary course of
the Company’s business
4. Transactions with Mill Con Steel Industries Public Company Limited:
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Revenue from sale of finished
goods
- Purchase of raw materials &
finished goods
- Accounts payable
- Accounts receivable
- Advanced from customer
277.63
-
-
-
142.99
126.31
416.38
149.76
30.26
0.06
The management’s opinion: These
transactions are in ordinary course of
the Company’s business
5. Transactions with SSP Place Company Limited:
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Rental of office space and other
services
- Accrued Expenses
0.04
0.04
0.29
-
The management’s opinion: The
space is rented to support business
operation and is charged at the
same rate as other tenants.
6. Transaction with BRP Steel Company Limited
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Revenue from sale of
finished goods
- Purchase of raw materials &
finished goods
- Accounts Payable
5.42
32.86
29.36
-
-
-
The management’s opinion: These
transactions are in ordinary course of
the Company’s business
Annual Report 2009 G J Steel Public Company Limited 33
7. Transaction with Arnoma Bangkok Company Limited
Description
Transaction Value/Outstanding (THB Million) Necessity and Reasonableness of
Transactions As of 31 December 2009
As of 31 December 2008
- Rental of office space and
other services
- Accrued Expenses
0.13
0.01
-
-
The management’s opinion: The
space is rented to support business
operation and is charged at the
same rate as other tenants.
Measures and procedures in approving related transactions The related transactions must comply with the
laws on securities and exchange and regulations,
announcements, orders or terms and conditions of the
Securities and Exchange Commission (SEC) and the Stock
Exchange of Thailand (SET). The person who may have any
conflict of interest with the related transactions will not have
the right of approve casting vote. The Board of Directors
and the Audit Committee have to review and control those
transactions. The management or director who has no any
conflict of interest for those transactions will perform the
decision making but exclude the transaction in the normal
course of business.
However, the procedures in approving related
transactions will be performed in accordance with the
Company’s guideline on dealing with related transactions
and will be, further, opinioned by the Audit Committee for
the reasonableness. The Company will also comply with
relevant regulations of the Stock Exchange of Thailand and
the Securities and Exchange Commission whereby such
related transactions shall be either approved by the Board
of Directors or the Shareholders’ Meeting. Furthermore, the
Company also determines its policy in handling the related
transaction as follows:
1. Transactions in normal course of Company’s
business with standard terms of trade
In the Future, the Company is expecting to
continue entering into the transactions with related persons
in the normal course of the Company’s Business which may
create the conflict of interest issue in the future such as
product selling or office rental whereby the terms and
conditions of such transactions will be the standard terms
of trade. The term and condition of the related transaction
must be the same as the term and condition of the normal
trade in the fair value.
2. Transactions in normal course of Company’s
business without standard terms of trade and other related
transactions
In the Future, the Company is expecting to
continue entering into the transactions with related persons
in the normal course of the Company’s Business whereby
the terms and conditions of such transactions will not be the
standard terms of trade and also entering into other related
transactions which may create the conflict of interest issue
in the future such as entering into the transactions with the
Strategic Advisory Alliance. The company will strictly follow
the terms and conditions of the agreement.. In case there
shall be any additional related transactions in the future, the
Company will strictly comply with the measures and
procedures in approving the related transactions that the
director who may have any conflict of interests will not have
the right to approve the transactions in accordance with the
scope of authority.
3. Loans
The Company has no policy in granting any
loans to any related companies and to the Strategic
Advisory Alliance, however, in case of unavoidable, the
Company will strictly follow the relevant measures and
procedures in approving such related transactions that the
director who may have any conflict of interests will not have
the right to approve the transactions in accordance with the
scope of authority.
Besides, the Company’s products are similar to the
G Steel’s product. In order to prevent the further conflict of
interest, the Company’s management determined the
measures as follows:
1. To reduction of business competition between
the Company and G Steel
The Company’s management and G Steel will
plan the guideline of each business expansion in the future.
The objective is to support the skill, production and target
Annual Report 2009 G J Steel Public Company Limited 34
customers of each company in accordance with the
demand of any group of customer, to avoid the duplicate
investment and to create Economy of Scale in the
production and the purchase of raw materials.
2. The independence of the Director and
Management
Both the company and G Steel have their own
independent Director and Audit Committee in order to
maintain the benefit of each other’s minor shareholders. The
management has policy in operating the business
independently.
3. Transaction between the Company and G Steel
The Company has a policy in maintain
Commercial Arm’s Length Basis in transaction between the
Company and G Steel. If there is any related transaction,
the transparent audit of the outside auditor of the both
company is required in order to review and give opinion to
such transaction and subsequently disclose in the financial
statement sufficiently.
Annual Report 2009 G J Steel Public Company Limited 35
Operational Results The Company’s gross profit (loss) for the year
2009 and 2008 were amounted to THB (3,920) million and
THB 1,049 million, respectively, and EBITDA for the year
2009 and 2008 were amounted to THB (3,490) million and
THB (1,896) million, respectively, whereby in 2009, the
Company’s incomes were included gain from the reversal
of devaluation of inventories in the amount of THB 1,737
million and gain from foreign currency exchange in the
amount of THB 60 million and the Company’s expenses
were included estimate loss on the confirmed purchase
orders of undelivered raw materials in the amount of THB
115 million, bad debt and doubtful debt in the amount of
THB 302 million and loss on asset impairment in the amount
of THB 272 million.
The operational result which varied for more than
20% can be explained as follows:
Revenue from sales and cost of goods sold :
Revenue from sales for the year 2009 and 2008
were amounted to THB 12,314 million and THB 26,115
million, respectively, and gross profit (loss) for the year
2009 and 2008 were amounted to THB (3,920) million and
THB 1,049 million, respectively. The major issue was that
during the first 6 months of the year 2008, the volume of
sales and prices was irregularly raised whereby during the
last 6 months of the year 2008, the global financial crisis hit
and the volume of sales and prices was dramatically
dropped. Moreover, during August 2009, the Company’s
plant incurred an accident which interrupted our production
for 1 month whereby the Company took this opportunity to
concurrently perform it annual check on its machineries. For
other income of the year 2009 and 2008 which were
amounted to THB 138 million and THB 112 million,
respectively, this increase due to the sale of nonconforming
products resulted from the production.
Analysis and Explanation of Management
Selling expenses :
Selling expenses for the year 2009 and 2008 were
amounted to THB 159 million and THB 531 million,
respectively. This is mainly due to decrease in sale volume.
Administrative expenses :
Administrative expenses for the year 2009 and 2008
were amounted to THB 1,469 million and THB 1,831 million,
respectively, decreasing from 2008 in the amount of
THB 362 million. This is mainly due to the decrease in
depreciation, operation consultancy fee and loss from the
asset disposal.
Bad debt and doubtful debt :
For the year 2009, the Company recorded its
provisional loss on doubtful debt in the amount of 1,223
million which included the provisional loss on account
receivable in the amount of THB 1,079 million and the
provisional loss on advance for the goods in the amount of
THB 144 million and the reversal of doubtful debt of
account receivable recorded since 2008, in the amount of
THB 82 million and the counterbalance with foreign account
receivable in the amount of 839 million.
Loss on asset impairment :
For the year 2009, the Company recorded loss on
asset impairment for its DRI project in the amount of THB
250 million and recorded impairment for the construction in
progress in the amount of THB 22 million using the
information provided by an independent appraiser.
Financial status Assets
As of December 31, 2009 and 2008, the total assets
were THB 26,624 million and THB 30,165 million
respectively which reduced by THB 3,541 million or 11.74%
which mainly resulted from the reduction of cash and cash
equivalents, trade accounts receivable, inventories and
advances to suppliers which can be explained as follows:
Annual Report 2009 G J Steel Public Company Limited 36
1) Cash and cash equivalents As of December 31, 2009 and 2008, the Company had its cash and cash equivalents in the amount of THB 43 million and THB 84 million respectively which decreased by THB 41 million or 48.81% due to the cash was used for the investing and financing activities for the amount of THB 238 million and THB 1,496 million respectively and was received by the operating activities for the amount of THB 1,696 million (details as per the Statement of Cash Flow). 2) Trade accounts receivable As of December 31, 2009 and 2008, the Company had its trade accounts receivable in the amount of THB 93 million and THB 1,864 million respectively which decreased by THB 1,771 million. The decreased amount resulted from the agreement with the major customer to purchase machinery and to offset the cost of this machinery against the amount of trade accounts receivable. 3) Inventories As of December 31, 2009 and 2008, the Company had its inventories in the amount of THB 1,058 million and THB 3,762 million respectively which reduced by THB 2,704 million due to the company reduced the production by operating in off-peak period only and consume the existing raw material with slow down the purchasing. 4) Advances to suppliers As of December 31, 2009 and 2008, the Company had its cash advance to suppliers in the amount of THB 133 million and THB 820 million respectively which decreased by THB 687 million because of the raw material purchase decreasing. Liabilities As of December 31, 2009 and 2008, the Company its total liabilities in the amount of THB 7,811 million and THB 6,752 million respectively which increased by THB 1,059 million or 15.68% which mainly result from the reduction of short term loans from financial institute and trade accounts payable and the increasing of payable to related party from offsetting of machinery purchase, other current liabilities and provision for loss on confirmed purchase orders for undelivered raw material which can be explained as follows : 1) Short-term loans from financial institutions As of December 31, 2009, the company didn’t
have short-term loans due to the company had repayment the short-term loans from financial institutions in the amount of THB 1,305 million during 2009. 2) Trade accounts payable As of December 31, 2009 and 2008, the Company had its trade accounts payable in the amount of THB 2,676 million and THB 2,804 million respectively which reduced by THB 128 million due to the repayment. 3) Payable to related party from offsetting of machinery purchase During 2009, the company purchased the machinery from one vendor who is the trade accounts receivable of the parent company. Therefore, the company had offset the cost of this machinery against the amount of receivable of the parent company vendor that the company had recorded the parent company as a payable to related party from offecting of machinery purchase. 4) Provision for loss on confirmed purchase orders for undelivered raw material Refer to Thai Accounting Standard, the company has to estimate the provision for loss in respect of outstanding purchase orders for raw materials that have not been delivered based on comparison with the economic benefits expected to be received in the form of estimated sales pirces and the conversion costs of finished producted at the end of year. Because of the comparison result, the company has to record this loss in the financial statement. 5) Other current liabilities As of December 31, 2009 and 2008, the Company had other current liabilities in the amount of THB 644 million and THB 37 million respectively which increased by THB 607 million due to the recording of payable of machinery purchase and increasing of the Revenue Department payable. Shareholder’s equity As of December 31, 2009 and 2008, the total shareholder’s equity is equal to THB 18,813 million and THB 23,413 million which decreased by THB 4,600 million or 19.65% due to the net loss of the year 2009 and the change of fair value of the available for sale marketable securities. Liquidity The financial statements as of December 31, 2009 and 2008, the liquidity of the Company represented by financial ratios is as follows:
As December 31 2009 2008 Current Ratio 0.22 1.07 Quick Ratio 0.02 0.31 Debt to Equity Ratio 0.42 0.29
Annual Report 2009 G J Steel Public Company Limited 37
Audit report of Certified Public Accountant To the Shareholders of G J Steel Public Company Limited I have audited the accompanying balance sheet of G J Steel Public Company Limited as at 31 December 2009, and the related statements of income, changes in equity and cash flows for the year then ended. The Company’s management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to issue a report on these financial statements based on my audit. The consolidated and separate financial statements for the year ended 31 December 2008 of G J Steel Public Company Limited and its subsidiaries, and of G J Steel Public Company Limited, respectively, were audited by another auditor who expressed an unqualified opinion on those financial statements in his report dated 24 February 2009 with an emphasis paragraph on matters relating to the Company’s ability to continue as a going concern and to comply with the debt restructuring plan. Except for the matters described in the following paragraphs (1) to (5), 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 supporting 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 provides a reasonable basis for my report. (1) As described in note 7 to the financial statements, as at 31 December 2009 the Company had a trade
receivable from an overseas counterparty of Baht 1,871 million (USD 55.9 million) of which Baht 1,737 million (USD 51.9 million) is overdue. The Company has entered into an agreement with this counterparty to purchase machinery for Baht 1,525 million (USD 45.5 million) and to offset the cost of this machinery against the amount receivable from the counterparty. The net receivable after the offset was Baht 346 million (USD 10.4 million), for which the Company has made full allowance for doubtful accounts. In addition, as at 31 December 2009 the Company had trade receivables of Baht 450 million from two customers of which Baht 427 million is overdue and for which the Company has set up a Baht 375 million allowance for doubtful accounts.
Audit report of Certified Public Accountant
Annual Report 2009 G J Steel Public Company Limited 38
2
I was unable from my audit of the above transactions to establish that the Company had exercised appropriate internal controls over these transactions, particularly with respect to credit control procedures such as approval of credit facilities; monitoring of collection and follow up of outstanding debts. In addition, up to the date of this report, I have not received letters from such counterparty confirming the amounts owed by them to the Company and I was unable to satisfy myself in this regard by other audit procedures. I was, therefore, unable to satisfy myself that these transactions had been properly entered into and recorded by the Company. Furthermore the financial crisis in the steel industry, which has resulted in steel prices dropping significantly since 2008, may adversely affect the Company’s ability to collect the amounts owed in respect of trade receivables and consequently may impact on the adequacy of the allowance made for doubtful trade accounts.
(2) As described in paragraph (1) above and in note 7 to the financial statements, the Company has entered into an agreement with an overseas counterparty to purchase machinery for Baht 1,525 million (USD 45.5 million) to offset against the outstanding debt owed by the counterparty to the Company. In addition, as described in note 13 to the financial statements, the Company has entered into an agreement with another counterparty (‘Counterparty A’), which is also a debtor of the Company’s parent company in respect of scrap sales made by the parent company to the counterparty, to purchase machinery from Counterparty A for Baht 1,017 million (USD 29.8 million). The Company, the parent company and Counterparty A have agreed to settle the outstanding debt owed by Counterparty A to the parent company by offsetting its debt to the parent company against the amount receivable from the Company for the machinery purchase. As described in note 13 to the financial statements, the Company has entered into an agreement with a supplier to purchase machinery for Baht 608 million (USD 18.2 million) and has paid the first installment of Baht 221 million (USD 6.3 million). Subsequently, the Company entered into an agreement with the supplier and Counterparty A to transfer all rights, benefits and liabilities under the purchase agreement, including the first installment payment, to Counterparty A. I was unable from my audit of the above transactions to establish that the Company had exercised appropriate internal controls over the purchase and tendering process, including selection of the supplier and cost of the machinery, and over the offset and transfer arrangements generally. In addition, up to the date of this report, I have not received a letter from Counterparty A confirming the amounts owed by the Company and I was unable to satisfy myself in this regard by other audit procedures. I was therefore, unable to satisfy myself that these transactions had been properly entered into and recorded by the Company.
(3) As described in note 13 to the financial statements, as at 31 December 2009 the Company’s property, plant and equipment were appraised by an independent appraiser during 2008 and the results of this appraisal did not indicate any impairment in the carrying value of these assets. In January 2010 an independent appraiser was engaged to appraise the value of the Company’s property, plant and equipment, however the appraisal report has not yet been issued. In view of the significant uncertainties over the Company’s operations arising in part from the current global economic climate and the severe impact on the steel industry there are indicators of potential impairment that require a more current appraisal of the value of the Company’s property, plant and equipment to be made. I was, accordingly, unable to satisfy myself as to whether and to what extent the carrying value of the Company’s property, plant and equipment, which as at 31 December 2009 amounted to Baht 24,530 million, had been impaired.
Annual Report 2009 G J Steel Public Company Limited 39
3
(4) Up to the date of this report, I have not received letters from a bank; a major supplier; and a former
related party confirming the amounts owed by them to the Company and I was unable to satisfy myself in this regard by other audit procedures. I was therefore, unable to satisfy myself on the accuracy and existence of the balance as at 31 December 2009 of cash and cash equivalents; trade accounts payable; and long-term loans to and receivables from former related parties that had been recorded by the Company.
(5) As described in note 1.2 to the financial statements, since the second half of 2008 the operations of the Company have been significantly affected by the global economic recession. As a result, the Company made an operating loss for the year ended 31 December 2009 of Baht 4,594 million and as at 31 December 2009 the Company had net current liabilities exceeding net current assets by Baht 5,014 million. The Company needs to generate sufficient operating cash flows to meet both its working capital requirements and its operating obligations, including obligations under the rehabilitation plan. These circumstances raise substantial uncertainties over the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result should the Company be unable to generate sufficient cash flows and/or raise additional finance from other sources to enable it to continue as a going concern.
Because of the significance of the matters described in the preceding paragraphs (1) to (5), I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, I do not express an opinion on the financial statements of G J Steel Public Company Limited for the year ended 31 December 2009. I draw your attention to Note 30, the consolidated and separate financial statements for the year ended 31 December 2008 have been restated for the effects of the change in accounting policy in respect of the method used for calculating the value of raw materials and spare parts and supplies from the first-in, first-out method to the moving average cost method. I have audited the adjustments that were applied to the restatement of the 2008 financial statements and in my opinion these adjustments are appropriate and have been properly applied. As described in note 37 to the financial statements, on 25 January 2010, the Security and Exchange Commission has ordered the Company and the parent company to provide special audit reports by the auditors on the following issues: sales under credit term and the acquisition of machineries; the recognition of allowance for deterioration of raw material; construction in process with no progress; and advance payment for the purchase of machineries. Up to the date of this report, these special audits have not been completed. The result of these special audits may necessitate adjustments to the Company’s financial statements for the year ended 31 December 2009. (Wilai Buranakittisopon) Certified Public Accountant Registration No. 3920 KPMG Phoomchai Audit Ltd. Bangkok 24 February 2010
Annual Report 2009 G J Steel Public Company Limited 40
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
As at 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Balance Sheets
Annual Report 2009 G J Steel Public Company Limited 41
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Liabilities and equity Note 2009 2008 2008 (restated) (restated)
Current liabilitiesShort-term loans from financial institutions 16 - 1,304,609,430 1,304,609,430Short-term loan from other parties 16 74,340,176 80,880,305 80,880,305Trade accounts payable 4, 17 2,675,891,663 2,804,299,269 2,804,299,269Advance received from customers 4 1,582,887,860 1,611,456,106 1,611,456,106Other payables and accrued expenses 4 1,254,830,443 505,742,930 505,742,930Accrued interest expenses 4 82,173,643 12,632,550 12,632,550Provision for loss on confirmed purchase orders for undelivered raw material 32.3 115,299,495 - -Other current liabilities 18 644,158,266 37,498,894 37,498,894Total current liabilities 6,429,581,546 6,357,119,484 6,357,119,484
Non-current liabilitiesPayable to related party from offsetting of machinery purchase 4, 16 992,236,875 - -Liabilities under rehabilitation plan 19 389,255,758 394,877,813 394,877,813Total non-current liabilities 1,381,492,633 394,877,813 394,877,813
Total liabilities 7,811,074,179 6,751,997,297 6,751,997,297
EquityShare capital 20 Authorised share capital 40,478,051,205 30,128,051,205 30,128,051,205
Issued and paid-up share capital 20 27,394,674,313 27,394,674,313 27,394,674,313Warrants 21 161,693,969 161,693,969 161,693,969Premium on shares Premium on ordinary shares 20, 22 480,508,859 480,508,859 480,508,859Unrealised surpluses Fair value changes on investments 12 - 6,729,687 6,729,687Retained earnings (deficit) Appropriated Legal reserve 22 18,507,422 18,507,422 18,507,422 Unappropriated/(deficit) (9,242,420,274) (4,648,891,520) (4,648,891,520)Total equity 18,812,964,289 23,413,222,730 23,413,222,730
Total liabilities and equity 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
5
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
As at 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Balance Sheets
Annual Report 2009 G J Steel Public Company Limited 42
G J Steel Public Company Limited and its SubsidiariesStatements of incomeFor the years ended 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statementsNote 2009 2008 2008
(restated) (restated)
RevenuesRevenue from sale of goods 4, 23 12,314,215,853 26,115,051,115 26,115,051,115Net foreign exchange gain 59,757,897 - -Reversal of devaluation of inventories 8 1,736,809,891 - -Reversal of liabilities under the Business Rehabilitation Plan 27 - 663,248,378 663,248,378Other income 4 138,278,713 111,634,543 111,634,543Total revenues 14,249,062,354 26,889,934,036 26,889,934,036
ExpensesCost of sale of goods 4, 30 16,234,699,002 25,066,143,423 25,066,143,423 Selling expenses 4, 24 158,747,782 530,815,721 530,815,721 Administrative expenses 4, 25 1,468,743,631 1,830,733,262 1,830,733,262 Management benefit expenses 26 35,298,804 35,675,011 35,675,011 Net foreign exchange loss - 141,269,889 141,269,889 Loss on devaluation of inventories 8 - 1,813,556,060 1,813,556,060 Loss on confirmed purchase orders for undelivered raw material 32.3 115,299,495 - -Bad and doubtful debts expense 7, 9, 15 302,461,092 800,701,148 800,701,148 Loss on impairment of assets 13, 15 271,852,357 - -Total expenses 18,587,102,163 30,218,894,514 30,218,894,514
Loss before finance costs (4,338,039,809) (3,328,960,478) (3,328,960,478)Finance costs 255,488,945 269,023,518 269,023,518
Loss for the year (4,593,528,754) (3,597,983,996) (3,597,983,996)
Loss per share 29 (0.12) (0.10) (0.10)
(in Baht)
The accompanying notes are an integral part of these financial statements.
6
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Statements of income
G J Steel Public Company Limited and its SubsidiariesStatements of changes in equity For the years ended 31 December 2009 and 2008
Unrealised
surpluses
Issued and Fair value
paid-up Share premium changes Legal
Note share capital Warrants (discount) on investment reserve Deficit Total equity
Balance at 1 January 2008 28,755,686,263 161,693,969 (3,467,283,090) 15,766,695 18,507,422 (4,315,902,896) 21,168,468,363
Effects of changes in accounting policies 30 - - - - - (39,861,412) (39,861,412)
Restated balance 28,755,686,263 161,693,969 (3,467,283,090) 15,766,695 18,507,422 (4,355,764,308) 21,128,606,951
Available for sale investments
Net change in fair value recognised in equity - - - (9,037,008) - - (9,037,008)
Net expense recognised directly in equity - - - (9,037,008) - - (9,037,008)
Loss for the year - - - - - (3,597,983,996) (3,597,983,996)
Total recognised expense - - - (9,037,008) - (3,597,983,996) (3,607,021,004)
Conversion of debt to equity 19, 20 15,711,031,462 - - - - - 15,711,031,462
Increase in discount on share capital 20 - - (9,819,394,679) - - - (9,819,394,679)
Reduction of par value 20 (17,072,043,412) - 13,767,186,628 - - 3,304,856,784 -
Balance at 31 December 2008 27,394,674,313 161,693,969 480,508,859 6,729,687 18,507,422 (4,648,891,520) 23,413,222,730
Balance at 1 January 2009 27,394,674,313 161,693,969 480,508,859 6,729,687 18,507,422 (4,650,571,220) 23,411,543,030
Effects of changes in accounting policies 30 - - - - - 1,679,700 1,679,700
Restated balance 27,394,674,313 161,693,969 480,508,859 6,729,687 18,507,422 (4,648,891,520) 23,413,222,730
Available for sale investments
Net change in fair value transferred to profit - - - (6,729,687) - - (6,729,687)
Loss for the year - - - - - (4,593,528,754) (4,593,528,754) Balance at 31 December 2009 27,394,674,313 161,693,969 480,508,859 - 18,507,422 (9,242,420,274) 18,812,964,289
(in thousand Baht)
Retained earnings / (deficit)
Consolidated and Separate financial statements (restated)
The accompanying notes are an integral part of these financial statements.7
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Statements of changes in equityAnnual Report 2009 G
J Steel Public Com
pany Limited
43
Annual Report 2009 G J Steel Public Company Limited 44
G J Steel Public Company Limited and its SubsidiariesStatements of cash flowsFor the years ended 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statementsNote 2009 2008 2008
(restated) (restated)
Cash flows from operating activitiesLoss for the year (4,593,528,754) (3,597,983,996) (3,597,983,996)Adjustments forDepreciation and amortisation 976,134,602 1,834,055,128 1,834,055,128 Dividend income - (1,461,303) (1,461,303)Interest income (2,980,959) (2,855,779) (2,855,779)Finance costs 255,488,945 269,023,518 269,023,518 Unrealised (gain) loss on exchange rate (70,255,040) 64,323,228 64,323,228 Bad and doubtful debts expense 302,461,092 800,701,148 800,701,148 (Reversal of) loss on devaluation of inventories (1,736,809,891) 1,813,556,060 1,813,556,060 Provision for loss on confirmed purchase orders for undelivered raw material 115,299,495 - -Reversal of liabilities under the Rehabilitation Plan - (663,248,378) (663,248,378)Gain on sale of other long-term investment (2,680,540) - -Loss on impairment of assets 271,852,357 - -Loss on write-off of assets 5,147,369 194,283,264 194,283,264 Gain on disposal of equipment - (30,000) (30,000)
(4,479,871,324) 710,362,890 710,362,890 Changes in operating assets and liabilitiesTrade accounts receivable 91,926,474 (1,080,485,855) (1,080,485,855)Inventories 4,441,099,814 (2,089,359,196) (2,089,359,196)Advances to suppliers 672,265,625 (549,026,267) (549,026,267)Other current assets 155,373,232 211,250,148 211,250,148 Other non-current assets (26,086,808) (333,802,940) (333,802,940)Trade accounts payable (78,803,522) 1,793,969,332 1,793,969,332 Advances received from customers (28,568,246) 1,415,854,482 1,415,854,482 Other payables and accrued expenses 761,875,461 161,166,367 161,166,367 Other current liabilities 186,668,957 (10,557,735) (10,557,735)Income tax paid (41,089) (76,468) (76,468)Net cash provided by operating activities 1,695,838,574 229,294,758 229,294,758
(in Baht)
The accompanying notes are an integral part of these financial statements.
8
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Statements of cash flows
Annual Report 2009 G J Steel Public Company Limited 45
G J Steel Public Company Limited and its SubsidiariesStatements of cash flowsFor the years ended 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statementsNote 2009 2008 2008
(restated) (restated)
Cash flows from investing activitiesDividend received - 1,461,303 1,461,303 Interest received 3,731,727 2,850,507 2,850,507 (Increase) decrease in current investment (2,568,886) 155,812,363 155,812,363 Proceeds from sale of available-for-sale marketable securities 21,908,215 - -Increase in restricted deposits at financial institutions (60,000,000) (62,000,000) (62,000,000)Purchase of property, plant and equipment (75,341,247) (100,505,992) (100,505,992)Purchase of intangible assets (1,382,866) (748,800) (748,800)Proceeds from sale of equipment - 30,000 30,000 Advance for purchase of property, plant and equipment (124,482,652) (247,567,289) (247,567,289)Net cash used in investing activities (238,135,709) (250,667,908) (250,667,908) Cash flows from financing activitiesInterest paid (185,947,852) (761,756,333) (761,756,333)Proceeds from short-term loans from financial institutions 877,646,132 2,259,539,102 2,259,539,102 Repayment of short-term loans from financial institutions (2,182,255,562) (1,823,943,718) (1,823,943,718)Proceeds from short-term loans from others 635,446,456 515,230,306 515,230,306 Repayment of short-term loans from others (641,050,490) (434,350,000) (434,350,000)Proceeds from short-term loan from director 20,000,000 - -Repayment of short-term loan from director (20,000,000) - -Repayment of liabilities under rehabilitation plan - (10,498,500) (10,498,500)Net cash used in financing activities (1,496,161,316) (255,779,143) (255,779,143)
Net decrease in cash and cash equivalents (38,458,451) (277,152,293) (277,152,293)Cash and cash equivalents at beginning of year 84,213,993 360,943,052 360,943,052 Effect of exchange rate changes on balances held in foreign currencies (2,916,385) 423,234 423,234 Cash and cash equivalents at end of year 42,839,157 84,213,993 84,213,993
(in Baht)
The accompanying notes are an integral part of these financial statements.
9
G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Statements of cash flows
Annual Report 2009 G J Steel Public Company Limited 46
G J Steel Public Company Limited and its SubsidiariesStatements of cash flowsFor the years ended 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Note 2009 2008 2008 (restated) (restated)
Non-cash transactions (in thousand Baht)Conversion of debt to equity under the Business Rehabilitation Plan 19 - 5,891,637 5,891,637
Offset of accounts payable under the Business Rehabilitation Plan with trade accounts receivable 19 - 127,870 127,870 Purchase of machineries by offsetting with trade accounts receivable 4, 7, 13 1,524,977 - -Purchase of machinery not yet paid (including payable to related party from offsetting of machinery purchase) 13 1,448,572 19,052 19,052
(in Baht)
The accompanying notes are an integral part of these financial statements.
10
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Statements of cash flows G J Steel Public Company Limited and its SubsidiariesBalance sheetsAs at 31 December 2009 and 2008
Separate Consolidated Separatefinancial
statementsfinancial
statementsfinancial
statements
Assets Note 2009 2008 2008 (restated) (restated)
Current assetsCash and cash equivalents 6, 35 42,839,157 84,213,993 84,213,993Current investment 35 3,404,626 835,740 835,740Trade accounts receivable 4, 7 93,148,059 1,864,489,067 1,864,489,067Inventories 8, 16, 30 1,058,475,872 3,762,765,795 3,762,765,795Advances to suppliers 4 133,135,354 820,995,020 820,995,020Other current assets 4, 9 84,311,857 240,193,585 240,193,585Total current assets 1,415,314,925 6,773,493,200 6,773,493,200
Non-current assetsRestricted deposits at financial institutions 10 168,700,000 108,700,000 108,700,000Investments in subsidiaires 11 - - 420,004Other long-term investments 12 - 25,957,362 25,957,362Long-term loans to and receivables from former related parties 5 69,740,943 69,740,943 69,867,629Property, plant and equipment 13 24,530,090,371 22,073,053,046 22,073,053,046Intangible assets 14 61,933,031 67,996,158 67,449,468Other non-current assets 15 378,259,198 1,046,279,318 1,046,279,318Total non-current assets 25,208,723,543 23,391,726,827 23,391,726,827
Total assets 26,624,038,468 30,165,220,027 30,165,220,027
(in Baht)
The accompanying notes are an integral part of these financial statements.
4
Annual Report 2009 G J Steel Public Company Limited 47
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
11
Note Contents
1 General information and going concern 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Related party transactions and balances 5 Balances with former related parties 6 Cash and cash equivalents 7 Trade accounts receivable 8 Inventories 9 Other current assets 10 Restricted deposits at financial institutions 11 Investments in subsidiaries 12 Other long-term investments 13 Property, plant and equipment 14 Intangible assets 15 Other non-current assets 16 Interest-bearing liabilities 17 Trade accounts payable 18 Other current liabilities 19 Liabilities under rehabilitation plan 20 Share capital 21 Warrants 22 Share premium and reserve 23 Segment information 24 Selling expenses 25 Administrative expenses 26 Employee benefit expenses 27 Reversal of liabilities under the Business Rehabilitation Plan 28 Promotional privileges 29 Loss per share 30 Changes in accounting policy 31 Financial instruments 32 Commitments with non-related parties 33 Litigation 34 Event after the reporting period 35 Thai Accounting Standard (TAS) not yet adopted 36 Reclassification of accounts 37 Others
For the years ended 31 December 2009 and 2008G J Steel Public Company Limited and its Subsidiaries
Notes to the financial statements
Annual Report 2009 G J Steel Public Company Limited 48
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
12
These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 24 February 2010.
1 General information and going concern
1.1 General information
G J Steel Public Company Limited G J Steel Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office as follows: Head office : 52 Thaniya Plaza Building, 24th Floor, Silom Road, Suriyawongse, Bangrak, Bangkok. Factory : 358 Moo 6, Chonburi Industrial Estate (Bowin) Highway 331, Tambol
Bowin, Amphur Sriracha, Chonburi.
The Company was listed on the Stock Exchange of Thailand on 2 July 1996. The Company’s major shareholders during the financial year were Oriental Access Company Limited (27.22% shareholding) and G Steel Public Company Limited (22.45% shareholding). Both companies were incorporated in Thailand. The principal business of the Company is the manufacturing of various flat-rolled steel products.
In February 2000, the Company entered into the debt restructuring process as instructed by the Corporate Debt Restructuring Advisory Committee (CDRAC). In April 2000, the Company entered into the business rehabilitation process administered by the Central Bankruptcy Court. In 2002, the Central Bankruptcy Court approved the Business Rehabilitation Plan and appointed Maharaj Planner Co., Ltd. as the Plan Administrator. On 28 November 2008, the Company filed the petition to terminate the business rehabilitation with the Central Bankruptcy Court and on 2 March 2009, the Central Bankruptcy Court issued an order to terminate the rehabilitation proceeding of the Company since the Company had successfully completed its business rehabilitation plan. Details of the Company’s subsidiaries as at 31 December 2008 were as follows: Type of
businessCountry of
incorporation Ownership interest (%)
Direct subsidiary NSM Steel Company Limited Dormant Cayman Islands, 100 Cayman Indirect subsidiary NSM Steel (Delaware) Inc. Dormant State of Delaware, 100 The United States of America
Annual Report 2009 G J Steel Public Company Limited 49
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
13
At a board of directors’ meeting of the Company held on 22 January 2010, the board of directors passed a resolution not to prepare consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2009 because both NSM Steel Company Limited, a subsidiary of the Company, and NSM Steel (Delaware) Inc., an indirect subsidiary of the Company, have been struck off under the laws of the Cayman Islands.
1.2 Going concern
Since the second half of 2008, the operations of the Company have been significantly affected by the global economic recession. As a result, the Company made an operating loss for the years ended 31 December 2009 of Baht 4,594 million (2008: Baht 3,598 million) and as at 31 December 2009, the Company had net current liabilities exceeding net current assets by Baht 5,014 million. The Company needs to generate sufficient operating cash flows to meet both its working capital requirements and its operating obligations, including obligations under the rehabilitation plan. These circumstances raise substantial uncertainties over the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result should the Company be unable to generate sufficient cash flows and/or raise additional finance from other sources to enable it to continue as a going concern. The Company is, accordingly, seeking additional credit facilities to fund its working capital requirements. The financial statements of the Company have been prepared on the going concern basis, which assumes that the Company will be successful in raising additional credit facilities and, therefore, to realize its assets and repay its liabilities in the ordinary course of business. Should the outcome of the uncertainties mentioned above not be favorable to the Company continuing as a going concern, it would likely be necessary to present the financial statements on a net realizable value basis, rather than on a going concern basis. The financial statements as presented do not include any adjustments which would be required if the Company is unable to continue as a going concern.
2 Basis of preparation of the financial statements 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 financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) and Thai Financial Reporting Standards (“TFRS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand. On 15 May 2009, the FAP announced (Announcement No. 12/2009) the re-numbering of TAS to the same numbers as the International Accounting Standards ("IAS") on which the TAS/TFRS are based. The Company has adopted the following revised TAS/TFRS and accounting guidance which were issued by the FAP during 2008 and 2009 and effective for annual accounting periods beginning on or after 1 January 2009: TAS 36 (revised 2007) Impairment of Assets
Annual Report 2009 G J Steel Public Company Limited 50
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
14
TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations (formerly TAS 54)
Framework for the Preparation and Presentation of Financial Statements (revised 2007) (effective on 26 June 2009)
The adoption of these revised TAS/TFRS and accounting guidance does not have any material impact on the Company’s financial statements. The FAP has issued during 2009 a number of new and revised TAS which are not currently effective and have not been adopted in the preparation of these financial statements. These new and revised TAS are disclosed in note 35. The financial statements are presented in Thai Baht, rounded in the notes to financial statements to the nearest thousand (unless otherwise stated). They are prepared on the historical cost basis except as stated in the accounting policies.
The preparation of financial statements in conformity with TAS and TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes: Note 7 Allowance for doubtful accounts Note 8 Allowance for devaluation of inventories Note 13 Appraisal valuations of property, plant and equipment Note 15 Appraisal valuations of suspense construction in progress Note 31 Valuation of financial instruments Note 32.3 Provision for loss on confirmed purchase orders for undelivered raw material
3 Significant accounting policies (a) Basis of consolidation
The consolidated financial statements for the year ended 31 December 2008 related to the Company and its subsidiaries (together referred to as the “Group”). Significant intra-group transactions between the Company and its subsidiaries are eliminated on consolidation.
Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting
Annual Report 2009 G J Steel Public Company Limited 51
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
15
policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Company.
(b) 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 transaction are recognised in the statement of income. 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.
(c) Cash and cash equivalents Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and high liquidity short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
(d) Trade and other accounts receivable
Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts. 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.
(e) Inventories
Raw materials and finished goods
Inventories are stated at the lower of cost and net realisable value. Cost of finished goods is calculated using the specific cost method, while cost of raw materials is calculated using moving average cost principle. Cost of inventories 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. 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. An allowance is made for all deteriorated, damaged, obsolete and slow-moving inventories.
Annual Report 2009 G J Steel Public Company Limited 52
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
16
(f) Investments Investments in subsidiaries Investments in subsidiaries in the separate financial statements of the Company are accounted for using the cost method. Investments in other equity securities Marketable equity securities are classified as being available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available-for-sale monetary items, are recognised directly in equity. Impairment losses and foreign exchange differences are recognised in the statement of income. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the statement of income. The fair value of financial instruments classified as available-for-sale is determined as the quoted bid price at the reporting date. Other investments Other long-term investments represent time deposits with banks which have been pledged as collateral for credit facilities obtained from the banks and stated at cost.
Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in the statement of income.
(g) Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment except depreciation of machineries are depreciated on a production unit basis. The estimated useful lives are as follows: Land improvements 20 years Buildings 20 years Machinery and equipment Production unit basis and straight line
basis over 10 and 25 years Furniture and fixtures 5 years Office equipment 5 years Vehicles 5 years No depreciation is provided on freehold land or assets under construction.
Annual Report 2009 G J Steel Public Company Limited 53
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
17
(h) Intangible assets
Intangible assets represent cost of computer software and cost of a production licence (licence). Intangible assets that are acquired by the Company, which have finite useful lives, are stated at cost less accumulated amortisation and impairment losses. Other intangible assets are amortised in the statement of income on a straight-line basis over their estimated useful lives from the date that they are available for use. The estimated useful lives are as follows: Cost of computer software licence 10 years Cost of licence for production 25 years
(i) Deferred costs of rolls
Deferred costs of rolls are stated at cost less accumulated amortization. Amortisation is based on consumption.
(j) Impairment The carrying amounts of the Company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statement of income even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the statement of income is the difference between the acquisition cost and current fair value, less any impairment loss on the financial asset previously recognised in the statement of income. Calculation of recoverable amount The recoverable amount of available-for-sale financial assets is calculated by reference to the fair value. The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.
Annual Report 2009 G J Steel Public Company Limited 54
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
18
Impairment losses recognised in priors periods in respect of other non-financial assets is assessed at each reporting date for any indications that the loss has decreased or no longer exits. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(k) Interest-bearing liabilities
Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of income over the period of the borrowings on an effective interest basis.
(l) Trade and other accounts payable
Trade and other accounts payable are stated at cost.
(m) Employee benefits Provident fund
Obligations for contributions to the provident fund are recognised as an expense in the statement of income as incurred.
(n) Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, 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, where appropriate, the risks specific to the liability.
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting the Company’s obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
(o) Revenue Revenue excludes value added taxes and is arrived at after deduction of trade discounts. Sale of goods and services rendered Revenue is recognised in the statement of income 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
Annual Report 2009 G J Steel Public Company Limited 55
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
19
consideration due, associated costs or the probable return of goods. Service income is recognised as services are provided. Interest and dividend income Interest income is recognised in the statement of income as it accrues. Dividend income is recognised in the statement of income on the date the Company’s right to receive payment is established.
(p) Expenses
Operating leases Payments made under operating leases are recognised in the statement of income on a straight line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income for the accounting period in which they are incurred. Finance costs Interest expense and similar costs are charged to the statement of income in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.
(q) Income tax
Income tax on the profit or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
4 Related party transactions and balances
Related parties are those parties linked to the Group and the Company as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market prices exist, at contractually agreed prices. Relationships with related parties that control or jointly control the Company or are being controlled or jointly controlled by the Company or have transactions with the Company were as follows.
Country of incorporation/
Name of entities nationality Type of business Nature of relationships
G Steel Public Co., Ltd. Thailand Manufacture and sale Parent company (administrative of steel control since 2 June 2008) Oriental Access Co., Ltd. Thailand Business consulting Subsidiary of G Steel Public service Co., Ltd. and shareholding SSP Place Co., Ltd. Thailand Office rental Common director Mill Con Steel Industries Thailand Manufacture and sale Common director Public Co., Ltd. of steel Asia Metal Public Co., Thailand Manufacture and sale Common director Ltd. of steel
Annual Report 2009 G J Steel Public Company Limited 56
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
20
Country of incorporation/
Name of entities nationality Type of business Nature of relationships BRP Steel Co., Ltd. Thailand Manufacture and sale
of steel bar Common director
Arnoma Hotel Bangkok Co., Ltd.
Thailand Hotel, food and beverage
Common director
The pricing policies for particular types of transactions are explained further below:
Transactions Pricing policies Sale of raw materials Cost plus margin Sale of finished goods Agreed prices with reference to market prices Purchase of raw materials Cost plus margin Purchase of finished goods Agreed prices with reference to market prices Production service charge 5,100 Baht per ton based on finished goods producedOperating service expense Fixed rate as stipulated in agreement Interest expense Contractual prices Significant transactions for the years ended 31 December 2009 and 2008 with related parties were as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Parent (G Steel Public Co., Ltd.) Sale of raw materials and finished goods 37,593 1,143,536 Purchase of raw materials and finished goods 395,721 783,731 Other income 751 620 Production service charge 49,545 - Other related parties Sale of raw materials and finished goods 358,247 505,565 Purchase of raw materials and finished goods 32,859 416,376 Operating service expense 452,953 675,135 Other expense 167 289 Interest expense 16 2,832 The Company has expenses in relation to directors’ meeting allowance for the year ended 31 December 2009 amounting to Baht 0.89 million. For the year ended 31 December 2008, the Company was managed by the Plan Administrator appointed under the Rehabilitation Plan and the Company had expenses in relation to directors’ meeting allowance amounting to Baht 0.34 million.
Annual Report 2009 G J Steel Public Company Limited 57
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
21
Balances as at 31 December 2009 and 2008 with related parties were as follows:
Separate Consolidated
and Separate
financial
statements financial
statements 2009 2008
(in thousand Baht) Trade accounts receivable from related parties Parent G Steel Public Co., Ltd. - 664 Other related parties Mill Con Steel Industries Public Co., Ltd. - 30,259 - 30,923 Advances to suppliers Parent G Steel Public Co., Ltd. 766 - Prepaid expense (Part of other current assets) Other related parties Oriental Access Co., Ltd. - 111,039 Advances from customers Other related parties Mill Con Steel Industries Public Co., Ltd. 142,990 64 Asia Metal Public Co., Ltd. 41,124 63 184,114 127 Trade accounts payable to related parties Parent G Steel Public Co., Ltd. 376,914 187,626 Other related parties Mill Con Steel Industries Public Co., Ltd. - 149,761 BRP Steel Co., Ltd. 29,358 - 406,272 337,387 Short-term loan from related parties Other related parties Director - - Other payables and accrued expenses Other related parties Oriental Access Co., Ltd. 288,901 - SSP Place Co., Ltd. 38 - Arnoma Hotel Bangkok Co., Ltd. 9 - 288,948 -
Annual Report 2009 G J Steel Public Company Limited 58
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
22
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Payable to related party from offsetting of machinery purchase (see note 13) Parent G Steel Public Co., Ltd. 992,237 - Movements during the years ended 31 December 2009 and 2008 of loans from related parties were as follows:
Separate Consolidated
and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht) Short-term loan from related parties Other related parties At 1 January - - Increase 20,000 - Decrease (20,000) - At 31 December - - Significant agreement with related parties a) According to an agreement on 11 September 2006, Maharaj Planner Co., Ltd. (“the Plan
Administrator”) entered an operation service agreement with Oriental Access Co., Ltd. and On City Holding Limited (“the Operator”) to arrange working capital credit lines for the operation of the Company and to act as its strategic advisor to provide services in relation to the operation of the Plan during the term, including the procurement of raw materials, production of products, sales, marketing, promotion and distribution of products both domestic and export markets. Fees are as follows:
• Operating fee of USD 400,000 per month • Maintenance management fee of USD 375,000 per quarter • Technical assistance fee of USD 500,000 per quarter • Minimum revenue sharing of USD 400,000 per month The agreement period is 5 years with options to renew and commenced on 12 September 2006.
On 21 December 2006, Maharaj Planner Co., Ltd. (“the Plan Administrator”) and Oriental Access Co., Ltd. agree that the maximum fee payable under the operation service agreement shall not exceed USD 13,100,000 per annum and the fees in relation to arrangement fee and revenue sharing in excess of the said minimum revenue sharing will be irrevocably waived.
Nonetheless, if the Company wishes to terminate the operation service agreement prior to the expiration of the term of the operation service agreement, the Company would be required to pay
Annual Report 2009 G J Steel Public Company Limited 59
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
23
the termination fees as specified in the agreement to Oriental Access Co., Ltd. when the Company terminates the operation service agreement.
b) At a board of directors’ meeting of the Company held on 6 November 2009, the board of directors
passed a resolution concerning the terms of payment of the amount payable to the parent company (G Steel Public Company Limited) under the offset arrangement described in note 13. The repayment period is 3 years from 1 November 2009 to 31 October 2012. Interest is payable on the outstanding amount at MLR+1%, with a grace period of 90 days. Payments made by the Company shall be deducted first from outstanding interest payable with any remaining balance deducted from outstanding principal. Payable to the parent company was classified under non-current liabilities as at 31 December 2009.
Significant matter with related parties The Company has been informed by the parent company that Oriental Access Company Limited (‘OAC’), a subsidiary of the parent company which is also a major shareholder of the Company, has been informed by a loan creditor that, following default of the loan covenants by OAC, the loan creditor has reserved its rights to sell OAC’s 27.22% shareholding in the Company which has been pledged to the loan creditor as collateral for the loan. OAC has filed a petition with the court to seek a temporary injunction to prevent such enforcement. On 29 October 2009, the court granted a temporary injunction preventing the creditor from enforcing its rights over the pledged shares until the injunction is lifted.
5 Balances with former related parties
Balances as at 31 December 2009 and 2008 with former related parties were as follows:
Separate
Consolidated
Separate financial
statements financial
statements financial
statements 2009 2008 2008 (in thousand Baht) Long-term loans to and accrued interest receivables (interest rate per annum) Metal Star Co., Ltd. (16.0%) 437,565 437,565 437,565 Nakornthai Integrated Steels Co., Ltd. (16.0%) 87,825 87,825 87,825 Tak-Ka-Pon Co., Ltd. (16.0%) 75,278 75,278 75,278 Nakornthai Steel Work Co., Ltd. (16.0%) 3,710 3,710 3,710 Sathorn North Pattana Co., Ltd. (16.0%) 576 576 576 Total 604,954 604,954 604,954 Less allowance for doubtful accounts (604,954) (604,954) (604,954)Net - - -
Annual Report 2009 G J Steel Public Company Limited 60
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
24
Separate
Consolidated
Separate
financial statements
financial statements
financial statements
2009 2008 2008 (in thousand Baht) Receivables from former related parties N.T.S. Steel Group Public Co., Ltd. (See note 33.3) 72,117 72,117 72,117 Steel Top Co., Ltd. 272 272 272 NSM Steel Co., Ltd. 126 - 126 Total 72,515 72,389 72,515 Less allowance for doubtful accounts (2,774) (2,648) (2,648)Net 69,741 69,741 69,867 Long-term loans to and receivables from, net 69,741 69,741 69,867 These companies ceased to be related parties of the Company since 30 September 2006. Long-term loans to and accrued interest receivable Long-term loans to and accrued interest receivable represent long-term loans to former related parties for working capital in the form of promissory notes which bear interest at 16% per annum and are unsecured. The Company has made full allowance for doubtful accounts for these long-term loans and accrued interest receivable. Since 1999, the Company has ceased the recognition of interest income on these long-term loans. Receivables from former related parties Receivables from former related parties – N.T.S. Steel Group Public Co., Ltd. (“NTS”) represent advance payments of Baht 12.2 million and refundable deposits for water usage of Baht 60.0 million. Refundable deposits for water usage of Baht 60.0 million were made to a former related party under a 19 year agreement executed on 1 February 1997. On 15 November 2001 the Central Bankruptcy Court granted an order in favour of the Company to receive an amount of Baht 58.0 million against the said amount. This is payable by the related party within 10 years, commencing on the 5th year, pursuant to the effective date of the rehabilitation plan of the related company, dated 29 November 2002. The related party has also terminated the water usage agreement effective from 13 September 2002 in accordance with the rehabilitation plan. As at 31 December 2009, the Company had receivables from former related parties - NTS in total amount of Baht 72.2 million for which the Company has made an allowance of Baht 2.7 million for doubtful accounts. However, NTS is also the Company’s creditor which has a payable under the rehabilitation plan and other payable according to the prosecution in total amount of Baht 58.6 million (see note 33.4).
Annual Report 2009 G J Steel Public Company Limited 61
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
25
6 Cash and cash equivalents
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Cash and deposits at financial institutions 41,135 82,848 Fixed deposits due within three months 1,704 1,366 Total 42,839 84,214
The currency denomination of cash and cash equivalents as at 31 December was as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Thai Baht (THB) 31,592 72,814 United States Dollars (USD) 11,247 11,400 Total 42,839 84,214
7 Trade accounts receivable
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 (in thousand Baht) Related parties 4 - 30,923 Other parties 813,701 2,396,403 813,701 2,427,326 Less allowance for doubtful accounts (720,553) (562,837)Total 93,148 1,864,489
Bad and doubtful debts expense for the year 157,716 562,587
Annual Report 2009 G J Steel Public Company Limited 62
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
26
Aging analyses for trade accounts receivable were as follows:
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Related parties Within credit terms - - Overdue less than 3 months - 30,923 - 30,923 Other parties Within credit terms 157,126 629,155 Overdue :
Less than 3 months 63,598 1,265,693 3-6 months 137,068 409,103 6-12 months 160,926 92,202 Over 12 months 294,983 250
Total 813,701 2,396,403 Less allowance for doubtful accounts (720,553) (562,837)Net 93,148 1,833,566 Total 93,148 1,864,489
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Balance before offset transactions of machinery purchase 2,338,678 2,427,326 Offset transactions of machinery purchase (1,524,977) - Net after offset transactions of machinery purchase 813,701 2,427,326 The normal credit terms granted by the Company for domestic sales ranges from cash sale to 120 days and for export sales covered by letters of credit at sight but since 2007, the Company has given a credit term of 90-120 days without letters of credit to a customer. As at 31 December 2009, the Company had a trade receivable from an overseas counterparty of Baht 1,871 million (USD 55.9 million) of which Baht 1,737 million (USD 51.9 million) is overdue. The Company has entered into an agreement with this counterparty to purchase machinery for Baht 1,525 million (USD 45.5 million) and to offset the cost of this machinery against the amount receivable from the counterparty. The net receivable after the offset was Baht 346 million (USD 10.4 million), for which the Company has made full allowance for doubtful accounts.
In addition, as at 31 December 2009, the Company had trade receivables of Baht 450 million from two domestic customers of which Baht 427 million is overdue and for which the Company has set up a Baht 375 million allowance for doubtful accounts.
Annual Report 2009 G J Steel Public Company Limited 63
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
27
The currency denomination of trade accounts receivable, gross amount as at 31 December was as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Thai Baht (THB) 452,960 538,579 United States Dollars (USD) 360,741 1,888,747 Total 813,701 2,427,326
8 Inventories
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Finished goods 343,821 1,662,800 Raw materials 399,882 3,140,429 Spare parts and supplies 383,150 559,643 Goods in transit 32,086 237,167 Total 1,158,939 5,600,039 Less allowance for decline in value (100,463) (1,837,273)Net 1,058,476 3,762,766 The cost of inventories which is recognised as an expense and included in ‘cost of sale of goods’ for the years ended 31 December included:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Changes in inventories of finished goods 1,318,979 (566,128)Raw materials and consumables used 12,606,087 20,496,261
As at 31 December 2009, finished goods of the Company amounting to Baht 271 million were pledged as security for trading and loan facilities (2008: Baht 1,169 million).
As at 31 December 2008, raw materials were pledged as collateral for short-term loans from financial institutions amounting to USD 52 million, equivalent to Baht 1,817 million (see note 16).
The Company recognised reversal of allowance for devaluation of inventories amounting to Baht 1,737 million for the year ended 31 December 2009. The reversal of devaluation of inventories was recognised due to the decrease in the inventory balance and the increase in the selling price of finished goods.
Annual Report 2009 G J Steel Public Company Limited 64
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
28
The Company recognised provision for the devaluation of certain inventories to net realisable value amounting to Baht 1,814 million for the year ended 31 December 2008. The provision was recognised due to decrease in market prices of inventories.
9 Other current assets
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 (in thousand Baht) Suspense input tax 54,675 46,076 Prepaid expense to third parties 13,688 57,532 Refundable value added tax 140 9,767 Prepaid expense to related party 4 - 111,039 68,503 224,414 Others 69,288 69,259 Less allowance for doubtful account (53,479) (53,479)Net 15,809 15,780 Total 84,312 240,194 Bad and doubtful debts expense for the year - 36,256
10 Restricted deposits at financial institutions
As at 31 December 2009 and 2008, the Company had pledged its deposits at financial institutions as collateral for supplies and services receivable from the government and other entities as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Guarantee for utility supplies and services 168,700 108,700 Total 168,700 108,700
Annual Report 2009 G J Steel Public Company Limited 65
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
29
11 Investments in subsidiaries Investments in subsidiaries as at 31 December 2008 were as follows:
Separate financial statements Ownership
interest
Cost Method Offshore subsidiaries Business (%) (in thousand Baht) NSM Steel Co., Ltd. Dormant 100 420 Less allowance for impairment loss (see note 1.1) - At cost – net 420 NSM Steel Co., Ltd is no longer in existence, and has been struck off under the laws of the Cayman Islands. The Company has recorded the loss on impairment of investment in subsidiaries amounting to Baht 0.42 million in 2009.
12 Other long-term investments
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Promissory notes 143,144 143,144 Less allowance for doubtful accounts (143,144) (143,144)Net - - Available-for-sale marketable securities - Tata Steel (Thailand) Public Company Limited - 19,228 Revaluation of fair value - 6,729 Total - 25,957 Net - 25,957
As at 31 December 2009 and 2008, long-term investments included promissory notes issued by closed finance companies amounting to Baht 143 million, including interest receivable, that are used as collateral for loans of certain related parties from those closed finance companies. The Company has fully provided allowance for these promissory notes due to concerns about the financial position of the related parties. The Company received dividends from available-for-sale securities for the year ended 31 December 2008 amounting to Baht 1 million.
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
30
13 Property, plant and equipment Consolidated and Separate financial statements
Land and land Plant, equipment Furniture Office Construction improvements Building and machinery and fixtures equipment Vehicles in progress Total (in thousand Baht) Cost At 1 January 2008 817,277 5,045,927 15,210,557 43,824 177,243 3,614 7,741,131 29,039,573 Additions - - - - 10,113 - 109,444 119,557 Disposals - - - - (103) (365) (194,232) (194,700) Transfers 37,587 195,051 1,165,089 - 489 - (1,572,828) (174,612) At 31 December 2008 and 1 January 2009 854,864 5,240,978 16,375,646 43,824 187,742 3,249 6,083,515 28,789,818 Additions - - - - 1,399 - 3,267,251 3,268,650 Disposals - - - - (1,343) - (4,819) (6,162) Transfers 2,080 1,004,043 1,496,449 - 23,808 - (2,526,693) (313) At 31 December 2009 856,944 6,245,021 17,872,095 43,824 211,606 3,249 6,819,254 32,051,993 Accumulated depreciation At 1 January 2008 1,807 2,401,646 2,171,888 33,194 133,435 3,306 - 4,745,276 Depreciation charge for the year 1,992 338,577 769,790 2,864 16,587 165 - 1,129,975 Disposals - - - - (52) (365) - (417) At 31 December 2008 and 1 January 2009 3,799 2,740,223 2,941,678 36,058 149,970 3,106 - 5,874,834 Depreciation charge for the year 3,645 417,641 342,443 2,452 18,732 123 - 785,036 Disposals - - - - (1,015) - - (1,015) At 31 December 2009 7,444 3,157,864 3,284,121 38,510 167,687 3,229 - 6,658,855 Allowance for loss on impairment At 31 December 2008 194,351 42,926 81,564 - - - 523,090 841,931 Impairment losses - - - - - - 21,117 21,117 At 31 December 2009 194,351 42,926 81,564 - - - 544,207 863,048
Net book value At 31 December 2008 656,714 2,457,829 13,352,404 7,766 37,772 143 5,560,425 22,073,053 At 31 December 2009 655,149 3,044,231 14,506,410 5,314 43,919 20 6,275,047 24,530,090
Annual Report 2009 G
J Steel Public Com
pany Limited
66
Annual Report 2009 G J Steel Public Company Limited 67
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
31
Details of Construction in progress as at 31 December were as follows:
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Galvanizing line 5,083,216 3,863,412 Push Pull Pickling Line - 1,184,744 Reversing Mill line 1,524,977 - Others 211,061 1,035,359 Total 6,819,254 6,083,515
The gross amount of the Company’s fully depreciated property, plant and equipment that was still in use amounted to Baht 151 million as at 31 December 2009 (2008: Baht 137 million). The Company’s property, plant and equipment were appraised by an independent appraiser during the quarter ended 31 March 2008 and the results of this appraisal did not indicate any impairment in the carrying value of these assets. As at 31 December 2009, the Company’s property, plant and equipment and construction in progress, with a net book value of Baht 15,703 million, were pledged as collateral for liabilities under the rehabilitation plan. (2008: Baht 16,466 million) In 2009, the Company entered into three agreements to purchase certain machineries for Baht 3,150 million (USD 93.5 million) as follows: The Company has entered into an agreement with a counterparty (‘Counterparty A’), which is also a debtor of the Company’s parent company in respect of sale of scrap made by the parent company to the counterparty, to purchase machinery from Counterparty A for Baht 1,017 million (USD 29.8 million). The Company, the parent company and Counterparty A have agreed to settle the outstanding debt owed by Counterparty A to the parent company by offsetting its debt to the parent company against the amount receivable from the Company for the machinery purchase. Subsequently, the parties agreed to fix the USD/Baht exchange rate for the machinery purchase. As a result, the USD 29.8 million purchase price was converted to Baht 992 million. The Company has entered into an agreement with a supplier to purchase machinery for Baht 608 million (USD 18.2 million) and has paid the first installment of Baht 221 million (USD 6.3 million). Subsequently, the Company entered into an agreement with the supplier and Counterparty A to transfer all rights, benefits and liabilities under the purchase agreement, including the first installment payment, to Counterparty A. The Company has entered into an agreement with an overseas counterparty to purchase machinery for Baht 1,525 million (USD 45.5 million) and to offset the cost of this machinery against the outstanding amount receivable from the counterparty (see note 7). The machinery purchased under the above agreements was delivered to the Company’s factory during August and November 2009.
Annual Report 2009 G J Steel Public Company Limited 68
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
32
The Company hired an independent appraiser to appraise the machineries purchased as mentioned above. The appraisal was made on the Depreciated Replacement Cost method for the value of its machineries. The appraised values of the machineries were greater than the purchase prices.
During August 2009, the Company had an accident at a factory, which was consequently closed for repairs for about one month. The loss on damage of machinery and an equipment will be claimed from the insurance company. Consequently, the Company entered into a service agreement with the parent company, G Steel Public Company Limited, to produce finished goods during September 2009. However, regular production recommenced in October 2009.
14 Intangible assets Consolidated financial statements Software Licence Other Total (in thousand Baht) Cost At 1 January 2008 72,060 40,684 547 113,291 Additions 749 - - 749 Transfers 174,612 - - 174,612 At 31 December 2008 247,421 40,684 547 288,652 Accumulated amortisation At 1 January 2008 62,679 16,273 - 78,952 Amortisation charge for the year 140,076 1,628 - 141,704 At 31 December 2008 202,755 17,901 - 220,656 Net book value At 31 December 2008 44,666 22,783 547 67,996
Separate financial statements Software Licence Total (in thousand Baht) Cost At 1 January 2008 72,060 40,684 112,744 Additions 749 - 749 Transfers 174,612 - 174,612 At 31 December 2008 and 1 January 2009 247,421 40,684 288,105 Additions 1,070 - 1,070 Transfers 313 - 313 At 31 December 2009 248,804 40,684 289,488 Accumulated amortisation At 1 January 2008 62,679 16,273 78,952 Amortisation charge for the year 140,076 1,628 141,704 At 31 December 2008 and 1 January 2009 202,755 17,901 220,656 Amortisation charge for the year 5,272 1,627 6,899 At 31 December 2009 208,027 19,528 227,555 Net book value As at 31 December 2008 44,666 22,783 67,449 As at 31 December 2009 40,777 21,156 61,933
Annual Report 2009 G J Steel Public Company Limited 69
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
33
15 Other non-current assets
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Suspended construction in progress 2,086,474 2,086,474 Less allowance for impairment (2,041,990) (1,791,674) 44,484 294,800 Advances to suppliers 201,578 201,578 Less allowance for doubtful accounts (201,578) (201,578) - - Advances for purchase of property, plant and equipment 246,023 376,591 Less allowance for doubtful accounts (129,024) - 116,999 376,591 Deferred cost of roll 185,964 256,242 Refundable deposits 17,778 51,734 Others 13,034 66,912 Net 378,259 1,046,279 Loss on impairment of assets for the year 250,316 -
Bad and doubtful debts expense for the year 129,024 201,858 Suspended construction in progress represented the “Direct Reduced Iron” plant (DRI). The management of the Company decided to suspend this project since 1999. In 2006, a feasibility study from an independent expert recommended that the Company should not proceed with the completion of the Direct Reduced Iron (“DRI”). In response to this recommendation the Company instructed an independent valuer to conduct a valuation of the DRI plant on both a continuing basis and forced sale value basis. The DRI plant has been impaired to its forced sale value of Baht 295 million as at 31 December 2008. In 2009, The Company has made an allowance for loss on impairment of suspended construction in progress of Baht 250 million by reference to a valuation by an independent appraiser in 2008, which was prepared on the forced sale value basis.
Annual Report 2009 G J Steel Public Company Limited 70
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
34
16 Interest-bearing liabilities
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 (in thousand Baht) Current Short-term loans from financial institutions - Liabilities under trust receipts secured - 1,304,609 Short-term loans from other parties secured - 80,880 unsecured 74,340 - 74,340 1,385,489 Non-current 4 Payable to related party from offsetting of machinery purchase unsecured 992,237 - 992,237 - Total 1,066,577 1,385,489
The periods to maturity of interest-bearing liabilities as at 31 December were as follows:
Separate Consolidated
and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht) Within one year 74,340 1,385,489 After one year but within five years 992,237 - Total 1,066,577 1,385,489 The currency denomination of interest-bearing liabilities as at 31 December was as follows:
Separate Consolidated
and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht) Thai Baht (THB) 1,046,537 187,492 United States Dollars (USD) 20,040 1,197,997 Total 1,066,577 1,385,489
Annual Report 2009 G J Steel Public Company Limited 71
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
35
Short-term loans from financial institutions Liabilities under trust receipts bear interest at 18% per annum (default rate) in 2009 (2008: 4.10% to 9.23% per annum). As at 31 December 2008, total short-term trade financing facilities from the financial institution amounted to USD 44 million (equivalent to Baht 1,544 million). The facilities bear interest at the rates specified in the agreements. Loans under the facility and to finance the purchase of raw materials are secured by specific raw materials as described in Note 8. The benefits of the insurance of such raw materials have been assigned to the lenders. Short-term loans from other parties Short-term loan from other party bear interest at 2% to 13% per annum in 2009 (2008: 11% to 13% per annum). In 2008, the Company entered into a loan agreement with a third party, “the lender”, for loan facilities not exceeding Baht 240 million. The loan is repayable 60 days from draw-down of the loan and, in addition, the lender charges a holding finished goods service fee, not exceeding Baht 1,300,000. The Company has pledged finished goods to the lender as security for its obligation (see note 8). As at 31 December 2008, the Company had unused short-term credit facilities equivalent to Baht 159 million.
17 Trade accounts payable
Separate Consolidated
and Separate financial
statements financial
statements Note 2009 2008 (in thousand Baht) Related parties 4 406,272 337,387 Other parties 2,269,620 2,466,912 Total 2,675,892 2,804,299 The currency denomination of trade accounts payable as at 31 December was as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Thai Baht (THB) 727,794 780,225 United States Dollars (USD) 1,946,444 1,982,754 Euro Dollars (EUR) 1,654 41,198 Singapore Dollars (SGD) - 122 Total 2,675,892 2,804,299
Annual Report 2009 G J Steel Public Company Limited 72
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
36
The Company had agreements to purchase raw materials with various overseas suppliers. The Company has released raw materials but still not paid for the material under consignment agreements in the amount of Baht 1,555 million as at 31 December 2009. The Company has to pay interest at 2% to 6% and MLR per annum on the released raw materials and on the payables balance from the boarding date on ship until full payment is made (2008: Baht 1,405 million, interest rate at 4.10% to 9.23% and MLR per annum).
18 Other current liabilities
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Machinery purchase payable (see note 13) 400,176 - The Revenue Department payable 213,041 12,904 Construction payables 30,941 24,595 Total 644,158 37,499
The currency denomination of other current liabilities as at 31 December was as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Thai Baht (THB) 225,945 18,297 United States Dollars (USD) 411,681 11,978 Euro Dollars (EUR) 6,532 7,224 Total 644,158 37,499
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
37
19 Liabilities under rehabilitation plan
Separate financial statements At 31 Conversion Adjust At 31 Adjust At 31 December of debt to exchange rate Reversal of December exchange rate December
2007 equity and others liabilities 2008 and others 2009 (see note 20) (see note 27) (in thousand Baht) Loans: Syndicated loans from Thai financial
institutions
2,461,286 (2,461,286) - - - - - Holder from related party - Oriental Access
Co., Ltd.
2,074,216 (2,074,216) - - - - - Holders (mortgage notes) 274,459 (274,459) - - - - - 4,809,961 (4,809,961) - - - - - Other liabilities: Past accrued interest and deferred interest
from
- Related party - Oriental Access Co., Ltd 1,081,674 (1,081,674) - - - - - - Other parties 363,250 - - (363,250) - - - Others 877,487 - (182,611) (299,998) 394,878 (5,622) 389,256 2,322,411 (1,081,674) (182,611) (663,248) 394,878 (5,622) 389,256 Total 7,132,372 (5,891,635) (182,611) (663,248) 394,878 (5,622) 389,256
Annual Report 2009 G
J Steel Public Com
pany Limited
73
Annual Report 2009 G J Steel Public Company Limited 74
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
38
The classification of creditors and payment as at 31 December were as follows:
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht)
Creditors Due date Class 5 Equipment Claims Repayable in October 2011 37,448 38,285 Class 11 Operating Fund
Creditors Provided in the Form of Overdraft
Repayable in October 2003
15,795
15,795 Class 13 Other Creditors Repayable in October 2011 336,013 340,798 Total 389,256 394,878 The currency denomination of liabilities under rehabilitation plan as at 31 December was as follows:
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Thai Baht (THB) 259,568 259,568 United States Dollars (USD) 105,147 110,058 Euro Dollars (EUR) 20,821 21,480 Singapore Dollars 3,360 3,427 Pound Sterling 360 345 Total 389,256 394,878
The repayment schedule of each creditor under Class 5 and Class 13 is not on the same date, as it depends on the date of the final conclusion of the debt. However, the first due date of creditors under Class 5 and Class 13 is 31 October 2011.
Although repayment of creditors under Class 11 was due in October 2003, the repayment schedule of these creditors was conditional upon those creditors continuing to provide overdraft facilities to the Company equal to the total debt under Class 11. However, the Company has not received any such overdraft facility from the creditors under Class 11 and, therefore, the repayment condition has not been satisfied.
In February 2000, the Company entered into the debt restructuring process as instructed by the Corporate Debt Restructuring Advisory Committee (CDRAC). In April 2000, the Company entered into the business rehabilitation process administered by the Central Bankruptcy Court. In 2002, the Central Bankruptcy Court approved the Business Rehabilitation Plan and appointed Maharaj Planner Co., Ltd. as the Plan Administrator. On 28 November 2008, the Company filed the petition to terminate the business rehabilitation with the Central Bankruptcy Court and on 2 March 2009, the Central Bankruptcy Court issued an order to terminate the rehabilitation proceeding of the Company since the Company had successfully completed its business rehabilitation plan.
Annual Report 2009 G J Steel Public Company Limited 75
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
39
20 Share Capital The movements of share capital for the years ended 31 December 2009 and 2008 were as follows:
Par value 2009 2008 per share Number Amount Number Amount
(in Baht) (thousand shares / in thousand Baht) Authorised At 1 January ordinary shares 0.69 43,663,842 30,128,051 - - ordinary shares 1.12 - - 43,801,183 49,057,325Reduction in par value from Baht 1.12 to
Baht 0.78 0.78 - - - (14,892,402)Reduction in par value from Baht 0.78 to Baht 0.69 0.69 - - - (3,942,106)Reduction of shares 0.69 - - (864,877) (596,765)Increase of new shares 0.69 15,000,000 10,350,000 727,536 501,999At 31 December
ordinary shares 0.69 58,663,842 40,478,051 43,663,842 30,128,051
Issued and paid up At 1 January ordinary shares 0.69 39,702,427 27,394,675 - - ordinary shares 1.12 - - 25,674,720 28,755,686Converted debt to Equity on 18 March 2008 1.12 - - 7,517,453 8,419,548 on 25 March 2008 1.12 - - 6,510,254 7,291,484Reduction of par value from Baht 1.12 to Baht 0.78 0.78 - - - (13,498,825)Reduction of par value from Baht 0.78 to
Baht 0.69 0.69 - - - (3,573,218)At 31 December ordinary shares 0.69 39,702,427 27,394,675 39,702,427 27,394,675
Annual Report 2009 G J Steel Public Company Limited 76
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
40
Reserve Share premium (discount)
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Share premium (discount) At 1 January 480,509 (3,467,283)Conversion of debt to equity - (9,819,395)Reduction in par value from Baht 1.12 to Baht 0.78 - 13,498,825 Reduction in par value from Baht 0.78 to Baht 0.69 - 268,362 At 31 December 480,509 480,509 Movement in conversion of debt to equity Debt Share capital Share discount Debit/(Credit)/(in thousand Baht) At 18 March 2008 (Converted price of Baht 0.42 per share) • Principal amount under the Master Restructuring Agreement 2,075,655 (5,535,081) 3,459,426 • Past accrued interest and deferred interest requests by creditors 1,081,675 (2,884,467) 1,802,792 3,157,330 (8,419,548) 5,262,218 At 25 March 2008 (Converted price of Baht 0.42 per share) • Principal amount under the Master Restructuring Agreement 2,734,307 (7,291,484) 4,557,177 Total 5,891,637 (15,711,032) 9,819,395 On 18 March and 25 March 2008, the Plan Administrator registered the increase in the Company’s paid up capital with the Business Development Department, Ministry of Commerce by Baht 15,711,031,462, comprising 14,027,706,662 shares with par value of Baht 1.12 per share, resulting from the final conversion of the remainder of restructured debt, deferred interest and past accrued interest of the two creditors requesting for debt to equity conversion. After the paid up capital increase, the Company had registered capital of Baht 49,057,325,350, comprising 43,801,183,349 ordinary shares with par value of Baht 1.12 per share and issued and paid up share capital of Baht 44,466,717,725, comprising 39,702,426,540 ordinary shares with par value of Baht 1.12 per share. All shares that were converted from debt to equity by the creditors are subject to a 6 months lock-up period after listing on the SET. On 22 April 2008, the Central Bankruptcy Court approved the petition for amendment of the Business Reorganisation Plan of the Company. Under the amended Plan, the Company shall reduce its authorised share capital by decreasing the par value of its shares by set off against all existing share discount of the Company. The Plan Administrator reduced the authorised share capital of the Company by decreasing the par value of the Company’s shares from Baht 1.12 per share to Baht 0.78
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41
per share in order to set off against the share discount of Baht 13,286,677,768. As a result, the Company has authorised share capital of Baht 34,164,923,012, comprising 43,801,183,349 ordinary shares with par value of Baht 0.78 per share and issued and paid up share capital of Baht 30,967,892,701, comprising 39,702,425,540 ordinary shares with par value of Baht 0.78 per share. The Company registered the capital reduction with the Business Development Department, Ministry of Commerce on 12 June 2008. As a result, the Company recorded a share premium from reduction in par value of the shares of approximately Baht 212 million. On 20 October 2008, the Central Bankruptcy Court approved the Business Reorganisation Plan as follows: - The reduction of the authorised share capital by decreasing the par value of the Company’s shares
from Baht 0.78 per share to Baht 0.69 per share in order to off set against the Company’s deficit of Baht 3,304,856,784 (balance as at 30 June 2008). As a result, the Company had authorised share capital of Baht 30,222,816,510, comprising 43,801,183,349 ordinary shares with par value of Baht 0.69 per share and issued and paid-up share capital of Baht 27,394,674,313, comprising 39,702,426,540 ordinary shares with par value of Baht 0.69 per share. The Company registered the capital reduction with the Business Development Department, Ministry of Commerce on 4 November 2008. Furthermore, the Company recorded share premium from the reduction in par value of the shares of approximately Baht 268 million.
- The reduction of the authorised share capital by decreasing the number of ordinary shares which
have not been issued by 864,877,421 shares. As a result, the Company had authorised share capital of Baht 29,626,051,090, comprising 42,936,305,928 ordinary shares with par value of Baht 0.69 per share, and issued and paid-up share capital of Baht 27,394,674,313, comprising 39,702,426,540 ordinary shares with par value of Baht 0.69 per share. The Company registered the capital reduction with the Business Development Department, Ministry of Commerce on 5 November 2008.
- The increase of the authorised share capital in order to provide for the issuance of Employee Stock
Option Program of 727,536,398 units, which was approved by the Securities and Exchange Commission on 11 December 2008 for the amount of Baht 502,000,115. As a result, the Company had authorised share capital of Baht 30,128,051,205, comprising 43,663,842,326 ordinary shares with par value of Baht 0.69 per share, and issued and paid-up share capital of Baht 27,394,674,313, comprising 39,702,426,540 ordinary shares with par value of Baht 0.69 per share. The Company registered the capital increase with the Business Development Department, Ministry of Commerce on 6 November 2008.
At the extraordinary shareholders’ meeting held on 18 December 2009, the board of directors passed resolutions as follows: - To issue warrants (the second warrant) in the amount of 5,000,000,000 units for sale to all existing
shareholders based on shareholding proportion with the offering price of Baht 0.03 per unit. - To increase the authorised share capital from Baht 30,128,051,204.94 (43,663,842,326 ordinary
shares at Baht 0.69 par value) to Baht 40,478,051,204.94 (58,663,842,326 ordinary shares at Baht 0.69 par value).
- To approve the allocation of ordinary shares in support of the conversion of the second warrant
which will be offered for sale to all existing shareholders based on shareholding proportion. On 30 December 2009, the Company registered the increase in the Company’s authorised capital with the Business Development Department, Ministry of Commerce by Baht 10,350,000,000 comprising 15,000,000,000 shares with par value of Baht 0.69 per share, in order to provide for the issuance of
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42
second warrants to the existing shareholders of 5,000,000,000 units. As a result, the Company had authorised share capital of Baht 40,478,051,205 comprising 58,663,842,326 ordinary shares with par value of Baht 0.69 per share, and issued and paid-up share capital of Baht 27,394,674,313, comprising 39,702,426,540 ordinary shares with par value of Baht 0.69 per share.
21 Warrants Warrants The followings are terms and conditions of the warrants: First Warrants - The Company has allotted 3,233,879,388 units of warrants to the existing shareholders whose
names appeared in the Company’s share register as owners of existing shares on the closure of the share register on 11 April 2000 at the ratio of 1 existing share for 4.5 units of warrants.
- Offering price of a warrant is Baht 0.05 per unit. - One warrant is exercisable for one new ordinary share at the initial price of Baht 3.162 per share
subject to further adjustments on the occurrence of adjustable events. - The warrants have an eight years maturity from the issuing date, whereby the Company shall
issue the warrants within 14 days from the end of the subscription period. The last Exercise Date will be at the expiration of the term of the warrants.
- The Exercise Date is the last business day of March, June, September, and December, during the
term of the warrants, except the last Exercise Date. The first Exercise Date shall be after the expiration of three years after issuing the warrants. Accordingly, the first Exercise Date falls on 29 December 2006, and the last Exercise Date is on the expiry date of the term of the warrants (on 31 October 2011).
Second Warrants - The Company has allotted 5,000,000,000 units of warrants to the existing shareholders whose
names appeared in the Company’s share register as owners of existing shares on the closure of the share register on 9 February 2010 at the ratio of 7.9405 existing share for 1 units of warrants.
- Offering price of a warrant is Baht 0.03 per unit. - One warrant will be exercisable for three new ordinary shares at the initial price of Baht 0.25 per
share subject to further adjustments on the occurrence of adjustable events. - The warrants shall have a seven years maturity from the issuing date. - The Exercise Date is the last business day of June and December of each year, during the term of
the warrants, except the last Exercise Date. The first Exercise Date shall be 30 December 2010 and the last exercise date will fall on 14 March 2017. The last exercise notice shall be lodged by the warrant holder at least 15 days prior to such exercise date.
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Employee Stock Option Program Warrants (ESOP Warrants)
- On 11 December 2008, the Company was authorised by the Securities and Exchange Commission to issue and offer ESOP warrants, amounting to 727,536,398 units of warrants or equivalent to 1.83% of total paid-up share capital of the Company (as of 20 October 2008). The warrants are issued to the specified holders and are non-transferable, except transfer by intermediary person, or as otherwise specified by the Board of Directors or the Allocation Committee (Intermediary Person is the person who holds the said securities for distributing to all future directors and employees). Details are as follows:
- Offering price of a warrant is Baht 0 per unit.
- One warrant will be exercisable for one new ordinary share (amendable subsequent to any
adjustment of the right under warrants) at the par value at exercise date (as of 20 October 2008, par value is Baht 0.69 per share).
- The warrants shall have a five years maturity from the date of issuing and offering (Warrants
shall expire on 10 December 2013).
- The Exercise Date is the last business day of December of each year throughout the terms whereby the first exercise date shall be December 30, 2011 and the last exercise date will fall on 10 December 2013. In case the exercise date shall fall on the Company’s annual holiday, the exercise date shall be moved up to the earlier business day of the Company. The last exercise notice shall be lodged by the warrants holders at least 15 days prior to such exercise date.
- Exercise Period and Ratio (percentage of total distribution) are Directors and employees of the
Company can exercise their warrants in accordance with the following details : First 20% shall be exercisable on the first exercise dates which fall on the last business day
of December 2011. Second 30% shall be exercisable on the second exercise date which fall on the last business day of December 2012. Third 50% shall be exercisable on the last exercise date which falls on December 10, 2013.
In case shall fall on the Company's annual holiday, the exercise date shall be moved up to the earlier business day of the Company. The last exercise notice shall be lodged by the warrant holders at least 15 days prior to such exercise date.
If warrant holders do not exercise or partly exercise their rights on each exercise date, such warrant holders can exercise their remaining warrants on the next exercise date throughout the terms of the warrants.
22 Share premium and reserve
Share premium Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.
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Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocated not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount net less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
23 Segment information
Segment information is presented in respect of the Company’s geographical segments based on the Company’s management and internal reporting structure.
In presenting information on the basis of geographical segments, segment revenue is based on the geographic location of customers.
Revenue and gross profit/loss, based on geographical segment, in the financial statements for the years ended 31 December 2009 and 2008 were as follows:
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Segment revenue Domestic 10,804,566 19,601,063Export 1,509,650 6,513,988Total 12,314,216 26,115,051 Segment gross profit/(loss) Domestic (3,281,860) 679,292Export (638,623) 369,616Total (3,920,483) 1,048,908 Business segments Management considers that the Company operates in a single line of business, namely manufacturing of flat-rolled steel products, and has, therefore, only one major business segment.
24 Selling expenses
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Packing expenses 3,715 17,084 Domestic shipping expenses 96,155 189,724 Export shipping expenses 58,878 324,007 Total 158,748 530,815
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25 Administrative expenses
Separate
Consolidated and Separate
Note
financial statements
financial statements
2009 2008 (in thousand Baht) Operating service expense 4 452,953 675,135 Idle cost 280,184 138,779 Penalty charge 207,914 17,327 Depreciation and amortisation expenses and loss on write-off assets 181,775 460,338 Personnel expenses 133,111 181,364 Demurrage charges 103,690 100,267 Professional and consulting fees 34,491 77,944 Donation 1,609 38,757 Debts restructuring fees 864 31,220 Others 72,153 109,602 Total 1,468,744 1,830,733
26 Employee benefit expenses
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 (in thousand Baht) Management Wages and salaries 32,354 33,434 Welfare 2,474 1,820 Contribution to defined benefit plan 471 421 35,299 35,675 Other employees Wages and salaries 244,162 293,698 Welfare 72,961 117,403 Contribution to defined benefit plan 13,041 16,295 330,164 427,396 Total 365,463 463,071 The defined contribution plan comprises a provident fund established by the Company for its employees. Membership to the fund is on a voluntary basis. Contributions are made monthly by the employees at rates ranging from 2% to 10% of their basic salaries and by the Company at rates ranging from 3% to 10% of the employees’ basic salaries. The provident fund is registered with the Ministry of Finance as a juristic entity and is managed by a licensed Fund Manager.
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27 Reversal of liabilities under the Business Rehabilitation Plan The Company reversed the remaining balance of past accrued interest and deferred interest of certain creditors which had not opted for conversion of their debt to equity, amounting to Baht 363 million, to income during the year ended 31 December 2008. During 2008, the Company received two notices of agreement made by and between the creditors (“the creditors”) under the Business Reorganisation Plan and Nuelife South Asia Private Limited (“Nuelife”) to inform that the creditors assigned all their rights and interests in relation to the claims under the Plan to Nuelife. The outstanding balance of the creditors at the notice dates amounted to Baht 230 million, however, under the Plan the creditors received debt amounting to Baht 128 million. As a result, the Company transferred the amount of Baht 128 million to Nuelife as a creditor and reversed a net amount of Baht 102 million of liabilities to income during the year ended 31 December 2008. Furthermore, the Company also received a letter dated 25 September 2008 from Nuelife to inform the setoff of the amount of Baht 128 million (equivalent to US$ 3.7 million) as a creditor against the payable by Nuelife to the Company. As a result, the Company offset the balance of this creditor and the account receivable amounting to Baht 128 million as at 31 December 2008. During 2008, the Company received a letter from a creditor under the plan to inform that the creditor forgave debt of Baht 24.5 million to the Company. The Company reversed the liability for this forgiveness to income during the year ended 31 December 2008. Furthermore, the Company recalculated its liabilities under the plan in respect of certain creditors which had ordered by the courts to discount the amount to be paid by the Company. As a result, the Company reversed its liabilities under the plan from the Court orders totaling Baht 173.2 million to income during the year ended 31 December 2008.
28 Promotional privileges The Board of Investment has approved the granting of promotional privileges to the Company by issuing certificates for the manufacturing of Hot Rolled Coils (BOI privilege for "CSP" project), Direct Reduced Iron (BOI privilege for "DRI" project) and Cold Rolled/Coated products Pickle and Oiled Products and Re-Coil Temper Mill Products (BOI privilege for "PGL" Project). The privileges granted include: (a) exemption from payment of import duty on machinery approved by the Board; (b) exemption from payment of income tax for certain operations for a period of eight years from
the date on which the income is first derived from such operations; (c) a 100% reduction in the normal income tax rate on the net profit derived from certain
operations for a period of five years, commencing from the expiry date in (b) above; and (d) a deduction for a period of ten years of an amount equal to 5% of the increase in income of
certain promoted operations over the income from those operations for the previous year.
As a promoted company, the Company must comply with certain terms and conditions specified in the promotional certificate.
Annual Report 2009 G J Steel Public Company Limited 83
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47
Summary of revenue from promoted and non-promoted businesses: Consolidated and Separate Separate financial statements financial statements 2009 2008 Non- Non-
Promoted Promoted Promoted Promoted businesses businesses Total businesses businesses Total (in thousand Baht)
Export Sale 1,509,649 - 1,509,649 6,158,494 355,494 6,513,988Domestic Sale 10,549,589 254,978 10,804,567 17,679,070 1,921,993 19,601,063Total Revenue 12,059,238 254,978 12,314,216 23,837,564 2,277,487 26,115,051
29 Loss per share
Basic loss per share The calculations of basic loss per share for the years ended 31 December 2009 and 2008 were based on the loss for the years attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the years as follows:
Separate Consolidated and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht/in thousand shares)
Loss attributable to equity holders of the Company 4,593,529 3,597,984 Number of ordinary shares outstanding at 1 January 39,702,407 25,674,720 Effect of conversion of debt to equity - 10,925,747 Weighted average number of ordinary shares outstanding 39,702,427 36,600,467 Loss per share (in Baht) 0.12 0.10 The Company did not present diluted loss per share for the years ended 31 December 2009 and 2008 because the exercise price of the Company’s warrants was higher than the fair value of the Company’s ordinary shares.
30 Changes in accounting policy
During the second quarter of 2009, the Company changed its accounting policy in respect of the method used for calculating the value of raw materials and spare parts and supplies from the first-in, first-out method to the weighted average method as management considers it is more appropriate to the nature of the Company’s business and in compliance with the parent company’s accounting policy. On 14 May 2009, the Company received approval for this change from The Revenue Department. With effect from 1 January 2009, the Company has, accordingly, changed its accounting policy to present financial statements in which the value of raw materials and spare parts and supplies is calculated using the weighted average method. The change in accounting policy has been applied
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48
retrospectively for 2008, and the Company’s 2008 financial statements which are included in the Company’s 2009 financial statements for comparative purposes, have been restated accordingly. The effects of the change in accounting policy on the financial statements as at 31 December 2009 and 2008 were as follows:
Separate Consolidated and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht) Inventories Balance at 1 January before change in accounting policy 3,761,086 3,749,914 Increase (decrease) in retained earnings 1,680 (39,861)Balance at 1 January after change in accounting policy 3,762,766 3,710,053 Deficit Balance at 1 January before change in accounting policy (4,650,571) (4,315,903)Effects of changes in calculating the value of raw materials and spare parts and supplies 1,680 (39,861)Balance at 1 January after change in accounting policy (4,648,891) (4,355,764) The effects of the change on the statements of income for the years ended 31 December 2009 and 2008 were as follows:
Separate Consolidated and Separate
financial
statements financial
statements 2009 2008 (in thousand Baht) Net loss Loss for the year before change in accounting policy 4,597,190 3,639,525 Increase (decrease) in cost of sales (79,219) 35,445 Increase (decrease) in reversal of loss for devaluation of
inventories (75,407) 76,986 Increase in loss on confirmed purchase orders for undelivered raw material 151 - Net decrease 3,661 41,541 Loss for the year after change in accounting policy 4,593,529 3,597,984 Decrease in loss per share (Baht) 0.0001 0.001
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31 Financial instruments As at 31 December 2009, the Company had not entered into any derivative contracts to hedge its exposure to foreign currency exchange risk. Significant risks of financial instruments are summarised as follows: Financial risk management policies The Company is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Company does not hold or issue derivative financial instruments for speculative or trading purposes. Risk management is integral to the whole business of the Company. The Company has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Company’s risk management process to ensure that an appropriate balance between risk and control is achieved.
Interest rate risk Interest rate risk is the uncertainty in value of financial assets and liabilities or net interest income as a result of the fluctuation of the market interest rate. Most of the interest rates of financial assets and liabilities of the Company are floating rates, which are based on market rates. The effective interest rates of financial assets and financial liabilities as at 31 December and the periods to maturity or re-pricing were as follows:
Separate financial statements 2009
Effective interest
rate
Within 1
year
After 1 year but within 5
years After 5 years Total
(% per annum) (in thousand Baht) Financial assets : Cash and cash equivalents 0.25% 42,839 - - 42,839Current investment 1.00% 3,405 - - 3,405Other long term investments 1.18% - 168,700 - 168,700 46,244 168,700 - 214,944 Financial liabilities : Short-term loan from other companies 8.89% 74,340 - - 74,340Trade accounts payable 4.65% 1,555,227 - - 1,555,227Payable to related party from offsetting of machinery purchase MLR+1% - 992,237 - 992,237 1,629,567 992,237 - 2,621,804
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Liquidity risk Liquidity risk arises from the difficulty in mobilizing funds for timely and adequately meeting commitments under financial instruments. Liquidity risk may arise from failure to sell financial assets at a price close to the fair value. The Company has liquidity risk that the Company needs to generate sufficient operating cash flows to meet both its working capital requirements and its operating obligations, including obligations under the rehabilitation plan. The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows (see note 1.2). Foreign currency risk The Company is exposed to foreign currency risk relating to purchases and sales which are denominated in foreign currencies.
Consolidated and Separate financial statements 2008
Effective interest
rate
Within 1
year
After 1 year but within 5
years After 5 years Total
(% per annum) (in thousand Baht) Financial assets : Cash and cash equivalents 0.50% 84,213 - - 84,213Current investment 1.50% 836 - - 836Other long term investments 2.37% - 108,700 - 108,700 85,049 108,700 - 193,749 Financial liabilities : Short-term loan from financial institution 7.25% 1,304,609 - - 1,304,609Short-term loan from other company 13.00% 80,880 - - 80,880Trade accounts payable 4.04% 1,404,801 - - 1,404,801 2,790,290 - - 2,790,290
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At 31 December, the Company was exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 United States Dollars (in thousand Baht) Cash and cash equivalents 6 11,247 11,400 Trade accounts receivable 7 360,741 1,888,747 Interest-bearing liabilities 16 (20,040) (1,197,997) Trade accounts payable 17 (1,946,444) (1,982,754) Other payables and accrued expenses (323,711) (26,421) Accrued interest expenses (77,806) - Other current liabilities 18 (411,681) (11,978) Liabilities under rehabilitation plan 19 (105,147) (110,058) Gross balance sheet exposure (2,512,841) (1,429,061) Estimated forecast sales 262,093 1,679,105 Estimated forecast purchases (2,702,966) (9,300,917) Gross exposure (4,953,714) (9,050,873)
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 Euro (in thousand Baht) Trade accounts payable 17 (1,654) (41,198) Other payables and accrued expenses (14,169) (12,194) Other current liabilities 18 (6,532) (7,224) Liabilities under rehabilitation plan 19 (20,821) (21,480) Gross balance sheet exposure (43,176) (82,096) Estimated forecast purchases (36,604) (298,505) Gross exposure (79,780) (380,601)
Separate
Consolidated and Separate
financial statements
financial statements
Note 2009 2008 Others (in thousand Baht) Trade accounts payable 17 - (122) Other payables and accrued expenses (210) (201) Liabilities under rehabilitation plan 19 (3,720) (3,772) Gross balance sheet exposure (3,930) (4,095) Estimated forecast purchases (219) (122) Gross exposure (4,149) (4,217)
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Determination of fair values A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. The fair value of trade and other short-term receivables is taken to approximate the carrying value. Maturities of financial assets and liabilities Details of the maturities of financial assets and liabilities have been provided in the relevant notes to the financial statements. Estimated fair value of financial instruments The fair values of financial instruments have been estimated by the Company using available market information and appropriate valuation methodologies. The fair value of financial assets and liabilities is close to the carrying value in the balance sheets as at 31 December 2009 and 2008. Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board is presently seeking additional capital investment in order to secure the ongoing viability of the Company.
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32 Commitments with non-related parties 32.1 Commitments
32.2 Long-term agreements
- On 1 December 2003, the Company entered into a ten-year agreement to purchase natural gas
with monthly charges based on consumption.
- On 1 May 2008, the Company entered into a three-year agreement to receive consultation for the most suitable refractory design and for delivery of any refractory consumables. The pricing of the agreement is based on the cost per ton of refractory consumed in each month.
- On 1 November 2004, the Company entered into a twenty-year take-or-pay agreement to
purchase oxygen, argon and nitrogen. Minimum payments under the agreement amount to approximately Baht 6 million per month.
Separate Consolidated
and Separate financial
statements financial
statements 2009 2008 (in thousand Baht) Long-term agreement commitments Within one year 70,648 76,248 After one year but within five years 282,593 282,593 After five years 694,707 765,356 Total 1,047,948 1,124,197
Separate
Consolidated and Separate
financial statements
financial statements
2009 2008 Capital Commitments (in thousand Baht) Contracted but not provided for Land 105,000 166,500 Buildings and other constructions 5,440 5,440 Machinery and equipment 82,116 1,488,990 Furniture, fixtures and office equipment 243 243 Total 192,799 1,661,173 Lease and service agreement commitments Within one year 2,263 3,640 After one year but within five years 180 920 Total 2,443 4,560 Other commitments Bank guarantees 168,700 108,700
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32.3 Raw material purchase orders
As at 31 December 2009, the Company had outstanding purchase orders for raw materials that have not been delivered to the Company totaling Baht 2,455 million (2008: Baht 9,021 million). Some of these orders were placed since the third quarter of 2008 when prices were significantly higher than current market prices. Since the first quarter of 2009, new purchase orders have been placed in order to reduce the average cost when the Company releases the raw material to production. The Company has estimated the provision for loss in respect of outstanding purchase orders for raw materials that have not been delivered at approximately Baht 115 million based on comparison with the economic benefits expected to be received in the form of estimated sales prices and the conversion costs of finished products and has recorded the provision for this loss in the financial statements for the year ended 31 December 2009. The Company had agreements to purchase raw materials with various overseas suppliers for purchase of raw materials under a consignment agreement, under which the ownership of unreleased raw material belongs to the sellers. The Company has to pay interest at 2% to 6% and MLR per annum on the unreleased raw materials from the boarding date on ship until the material have been fully paid for. (2008: 4.10% to 9.23% and MLR per annum)
33 Litigation As at 31 December 2009, the Company had the following pending litigation: 33.1 Central Bankruptcy Court
The Company’s creditors were required to submit claims to the Official Receiver for outstanding debts on 8 May 2000. As of 31 December 2003, total claims filed by the creditors against the Company amounted to Baht 435 million. The Company believes that these claims exceed the amounts rightly payable by the Company. The Company has, therefore, brought the dispute to the Court for adjudication. The Company has, however, recorded liabilities totaling Baht 363 million for such claims equal to the amounts claimed by the creditors adjusted for the proportional rate approved in the rehabilitation plan. As a result, the recorded liability is Baht 72 million less than the amount claimed by the creditors to the Court. However, such difference of liabilities will be subjected to the limitation provided under treatment of each creditor class in accordance with the approved rehabilitation plan. Therefore, liabilities under rehabilitation plan in the balance sheet are the amount of liabilities which have been adjusted to reflect such conclusion.
33.2 Central Intellectual Property and International Trade Court
According to the Black Case No. Kor. Kaw. 5/2548 dated 21 January 2005, Maharaj Planner Company Limited, in the capacity of the Plan Administrator of the Company, is the plaintiff who has sued a domestic financial institution and a foreign financial institution (collectively called "Defendant"), in the Central Intellectual Property and International Trade Court, in respect of a letter of credit. The Defendant has committed an act of breach of conditions under the letter of credit, which caused damage to the Company. The Defendant had made payment to a foreign seller by a letter of credit covering the cost of goods amounting to USD 5 million (equivalent to Baht 202 million) without delaying payment, until the fulfillment of conditions under the letter of credit, as instructed by the Company. The Defendant had deducted the said amount from the Company’s account. The Company did not receive the said goods. Therefore, the Company has sued the Defendant for damages, including interest cost and other estimated damages, amounting to Baht 8,594 million.
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G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
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The Central Intellectual Property and International Trade Court have dismissed the claim of the Company but the Company could not agree with such decision. Therefore, on 24 April 2009, the Company filed an appeal against the Central Intellectual Property and International Trade Court’s decision to the Supreme Court. The Company accounted for the amount deducted from the Company’s account of Baht 202 million by the Defendant as a part of “Advance to Suppliers” and recorded a provision for loss of the whole amount in 2008.
33.3 According to the Black Case No.7181/2550 of the South Bangkok Civil Court, between N.T.S. Steel Group PCL, the plaintiff, and G J Steel Public Company Limited (formerly Nakornthai Strip Mill PCL), the defendant. The plaintiff had submitted the prosecution to the court on 1 August 2007, for the case worth Baht 31 million. The prosecution was described as follows: 1) The defendant had made an evidence for renting the accommodation in Building 1 and Building 6 with the plaintiff and made use of the movable property there-in; but the defendant had failed to pay the plaintiff for using the said property. 2) The defendant had contacted the plaintiff for the use of the long-distance telephone calls both locally and internationally, but had failed to pay for such services. 3) The defendant had an outstanding debt arising from buying the water from the plaintiff; therefore, the plaintiff requested that the defendant admitted the fault by paying the total amount of Baht 31 million, together with the interest payable at 7.5% per annum, in the principal of Baht 23 million, as from the date of prosecution until completion of payment. As at 31 December 2008, the case was under consideration by the Court and the defendant had counter-sued the plaintiff by demanding the plaintiff to refund the deposit of the lease of Building 1 and Building 6, including the refund of the cost of water stated in the water purchase agreement, totaling Baht 73 million, with 7.5% interest per annum and classified as non-current assets in the balance sheets. On 28 January 2009, N.T.S. Steel Group PCL filed a petition to withdraw the claim against the Company and the Company also filed a petition to withdraw the claim against N.T.S. Steel Group PCL. The Civil Court has allowed such withdrawal and dismissed all the claims.
33.4 According to the Black Case No.280/2552, on 27 February 2009 in the South Bangkok Civil Court, N.T.S. Steel Group PCL filed a complaint against the Company for breach of a water purchase agreement and demanded damages in the amount of Baht 8 million together with interest at the rate of 7.5 % per annum on the principal amount of Baht 6 million from the date of filing the complaint until the date of full repayment.
On 30 November 2009, the South Bangkok Civil Court rendered its judgment on this complaint in favour of N.T.S. Steel Group PCL under which the Company has been ordered to pay the sum of Baht 8 million together with interest at the rate of 7.5% per annum from the date of filing the complaint on the principal sum of Baht 6 million until the Company shall fully pay to N.T.S. Steel Group PCL. On 29 January 2010, the Company filed an appeal against the judgment of the South Bangkok Civil Court. Presently, this case is pending at the court.
33.5 Five suppliers filed a complaint against the Company for the breach of sale and purchase agreement, hire of work agreement and demanded damages in the amount of Baht 15 million together with interest at the rate of 7.5% and 15 % per annum on the principal amount of Baht 14 million from the date of filing the complaint until the date of full repayment. Presently, these cases have been settled between the Company and five suppliers and the Company has no further complaint pending at the court.
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G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
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34 Event after the reporting period The Board of Directors’ meeting of the Company held on 24 February 2010, has resolved to postpone the subscription period of second warrants from 3-5 March 2010 and 8-9 March 2010 to “after the completion of the special audit”. This is to ensure that all existing shareholders and investors have enough information before subscribing for the second warrants. The Company will inform the new subscription period further.
35 Thai Accounting Standard (TAS) not yet adopted The Company has not adopted the following revised TAS that has been issued as of the reporting date but is not yet effective. The revised TAS is anticipated to become effective for annual financial periods beginning on or after 1 January 2011.
TAS Topic
TAS 24 (revised 2009) Related Party Disclosures (formerly TAS 47) Management is presently considering the potential impact of adopting and initial application of this revised TAS on the financial statements.
36 Reclassification of accounts Certain accounts in the 2008 financial statements have been reclassified to conform to the presentation in the 2009 financial statements as follows:
2008 Before After reclass Reclass reclass (restate)
(in thousand Baht) Balance Sheet Consolidated financial statements Long-term loans to and receivables from former related parties 11,598 58,143 69,741 Other non-current assets 1,104,422 (58,143) 1,046,279 - Separate financial statements Cash and cash equivalents 83,260 954 84,214 Current investment 1,790 (954) 836 Long-term loans to and receivables from former related parties 11,724 58,143 69,867 Other non-current assets 1,104,422 (58,143) 1,046,279 Trade accounts payable 2,781,016 23,283 2,804,299 Other payables and accrued expenses 529,026 (23,283) 505,743 -
Annual Report 2009 G J Steel Public Company Limited 93
G J Steel Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2009 and 2008
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2008 Before After reclass Reclass reclass (restate) (in thousand Baht) Statement of income Consolidated and Separate financial statements Selling and administrative expenses 3,349,199 (3,349,199) - Selling expenses - 530,816 530,816 Administrative expenses - 1,830,733 1,830,733 Management benefit expenses - 35,675 35,675 Bad and doubtful debts expense - 800,701 800,701 Finance costs 117,750 151,274 269,024 - The reclassifications have been made to comply with the classification set out in the Pronouncement of the Department of Business Development Re: Determination of items in the financial statements B.E. 2552 dated 30 January 2009 and are considered to be more appropriate to the Company’s business.
37 Others
On 25 January 2010, the Securities and Exchange Commission has ordered the Company and the parent company to provide special audit reports by the auditors on the following issues: sales under credit term and the acquisition of machineries; the recognition of allowance for deterioration of raw materials; construction in process with no progress; and advance payment for the purchase of machineries. Both companies are required to submit the special audit reports to the Securities and Exchange Commission by 1 March 2010 and to disseminate these reports through the SET’s electronic system. The Company and the parent company have requested the SEC for an extension of the special audit deadline to 7 April 2010.
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