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Halcyon Technology Public Company Limited
Annual Report of 2011 - page 1
CCoonntteennttss
PPaaggee
General Information 2
Financial Highlights 4
Message form the Board of Directors 6
Board of Directors 7
History 10
Nature of Business Operations 12
Marketing and Competetion Condition 18
Risk Factors 22
Shareholders’ Structure 24
Management 25
Internal Control 41
Relateded Transactions 42
Financial Status and Operating Results 43
The Board of Directors’ Responsibilities for Financial Statement 51
Audit Committee’s Report 52
Report of Certified Public Account 53
Financial Statements 54
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 2
GGeenneerraall IInnffoorrmmaattiioonn Company Detail
Company Name HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED Type of Business Manufacturing, customised production and distribution of polycrystalline diamond (PCD),
natural diamond, polycrystalline carbon boron (PCBN) and special carbide cutting tools for
high-precision parts to serve the manufacturers of electronic parts, auto parts, and other
mechanical related industries Company Location 41 Mu.14 Bangchan Industrial Estate Soi 6, Serithai Road, Minburi, Bangkok 10510
Registration No. 0107551000096
Home Page www.halcyon.co.th Telephone 02-906-3259-60
Fax 02-906-3261 Paid-up Share Capital As of December 31, 2010
Baht 240,000,000 (240,000,000 common shares at par value of Baht 1 per share) Registrar Thailand Securities Depository Co., Ltd.
The Stock Exchange of Thailand Building, 62 Rachadapisek Road, Klongtoey,
Bangkok 10110 Telephone: 02-359-1201 Fax: 02-359-1271 Auditor Mr. Pradit Rodloytuk, CPA Registration no. 218
AST Master Co., Ltd.
790/12 Thong Lor Tower Soi Thong Lor 18, Sukhumvit 55 Rd., Wattana, Bangkok 10110
Telephone: 02-714-8842-3 Fax: 02-185-0225
Investor Relation Coordinator
Mr. Pete Rimchala
Telephone 02-906-3559-60Fax 02-906-3261
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 3
Company’s Subsidiary Detail Company Name HALCYON METAL COMPANY LIMITED
Type of Business Manufacturing, customised production and distribution of tooling and metal fabricated
product to serve the manufacturers of electronic parts, auto parts, and other mechanical
related industries. Company Location 41 Mu.14 Bangchan Industrial Estate Soi 6, Serithai Road, Minburi, Bangkok 10510
Registration No. 0107551000096
Home Page www.halcyon.co.th Telephone 02-906-3242-50
Fax 02-906-3251
Company Name HALTEK COMPANY LIMITED Type of Business To sell and distribute the standard carbide cutting tool and metal fabrication in Thailand Company Location 41 Mu.14 Bangchan Industrial Estate Soi 6, Serithai Road, Minburi, Bangkok 10510 Telephone 02-906-3093-6
Fax 02-906-3097
Company Name HALCYON TECHNOLOGY (PHILIPPINES) INC. Type of Business Manufacturing and sale of cutting tools made of PCD, CBN, Carbide, and Natural diamond
including Jigs & Fixtures and metal fabrication to customers only in Philippines. Company Location Orient Goldcrest Building 6, Unit 1, Lot 3281-J, Phase 6, Laguna Technopark, Binan, Laguna,
Philippines Telephone +63 49 5022295
Fax +63 49 5022296
Company Name ATEK PRECISION TOOLS INC. Type of Business To sell and distribute the standard carbide cutting tool and metal fabrication in Philippines Company Location CJRS Parkview Bldg., Level 2 Rodeo Drive Laguna Bel-Air 2, Santa Rosa, Laguna, Philippines Telephone +63 49 5440520
Fax +63 49 5440520
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 4
FFiinnaanncciiaall HHiigghhlliigghhttss
Items (Unit: Thounsand Baht)
Consolidated Financial Statement 2011 2010 2009
Total Assets 674,999 562,248 452,099 Total Liabilities 201,339 141,762 134,602 Equity attributable to parent company 455,594 405,550 317,497 Revenues from Sales and Services 412,470 360,483 236,795 Total Revenues 420,504 368,823 245,331 Gross Profit 180,315 146,801 93,883 Earning before Interest and tax 103,276 95,584 69,673 Interest and tax 14,773 9,484 4,640 Net Profit attributable to owner of the company 86,853 87,405 65,031
FFiinnaanncciiaall RRaattiiooss
Items Consolidated Financial Statement 2011 2010 2009
Gross Profit Margin 43.72% 40.72% 39.65% Net Profit Margin 20.65% 23.70% 26.51% Return on Equity 20.17% 24.18% 22.86% Return on Total Assets 14.04% 17.23% 15.79% Current Ratio 1.55 1.63 1.32 Debt to Equity Ratio 0.44 0.35 0.42
SShhaarree VVaalluuee
Items Consolidated Financial Statement 2011 2010 2009
Paid-up Share Capital (Shares) 240,000,000 240,000,000 220,000,000 Earning Per Share (Baht)* 0.36 0.37 0.31 Book Value Per Share (Baht)** 1.90 1.69 1.44 Dividend Per share (Baht) 0.16 ***** 0.14 **** 0.11*** Divedend Payout Ratio 43.39%***** 38.80%**** 41.70% *** Market Price as of December 31 2.80 3.66 2.76
Notes:
* The calculation based on weighted average number of shares as of 2009, 2010, and 2011 of 210,845,969 shares, 238,465,753
shares, and 240,000,000 shares, respectively, at par value of Baht 1 per share.
** The calculation based on number of shares at the end of 2009, 2010, and 2011 of 220,000,000 shares, 240,000,000
shares, and 240,000,000, respectively, at par value of Baht 1 per share.
*** The Company dividend payment in 2009 was Baht 27.12 million (paid on September 11, 2009 amounting to Baht 7.9 million for
220 million shares and to pay on April 29, 2010 of 19.20 million for 240 million shares). The calculation based on number of shares
after the Private Placement of 240 million shares.
**** The Company dividend payment in 2010 was Baht 33.60 million (paid on September 1, 2010 amounting to Baht 21.60 million
and to pay on April 29, 2011 of 12.00 million for 240 million shares).
***** The Company dividend payment in 2011 was Baht 38.40 million (paid on September 9, 2011 amounting to Baht 21.60 million
and to pay on May 2, 2012 of 16.80 million for 240 million shares).
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 5
GGrraapphhss pprreesseennttiinngg tthhee CCoommppaannyy’’ss PPeerrffoorrmmaannccee
Total Revenue
245
369
421
0
100
200
300
400
500
2009 2010 2011
THB Million+ 14.01%
Profitability
93.88
146.80
180.31
65.03
87.41 86.59
40%41% 44%
27%24%
21%
0
30
60
90
120
150
180
210
2009 2010 2011
THB Million
0%
10%
20%
30%
40%
50%
Gross Profit Net Profit Gross Profit Margin Net Profit Margin
Debt to Equity Ratio
28
49
114
0.420.35
0.44
0
20
40
60
80
100
120
2009 2010 2011
THB
Mill
ion
0
0.2
0.4
0.6
Tim
es
Interest Bearing Debt Debt to Equity Ratio
1.30
1.631.55
0.00
0.40
0.80
1.20
1.60
2.00
2009 2010 2011
Lquidity Ratio (Times)
Capital Structure
452.1
562.3
675.0
134.6 141.8201.3
317.5405.6
455.6
0
150
300
450
600
750
2009 2010 2011
THB
Mill
ion
Assets Liabilities Equity attributable to parent company
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 6
MMeessssaaggee ffrroomm tthhee BBooaarrdd ooff DDiirreeccttoorrss
To the Shareholders,
The Board of Direcotrs is pleased to inform all shareholders of the group business achievement in 2011, notwithstanding
major environment changes overseas and in the country, the disasters which adversary affected the operations of various
industries, especially those of the electronic and auto part manufacturers. The Company’s consolidated performance
shows a sustained profitability, compared to that of the previous year as a result of thoughtful management in preparation
for uncertainty through diversification of production and market base as well as looking for new business opportunity.
The country major inundation at the end of 3rd to 4th quarter last year caused significant impact to the supply chain of hard-
disk drive industry in Thailand, one of the world major manufacturing hubs, to temporaliry discontinued the operation,
forcing to relocate production facility or to order new machinery for replacement of the damaged ones. However, such
crisis turned to be business opportunity to the Company to service those major hard-disk drive manufacturers as the
Company had defended its factory from incoming flood and was able to continue production. In addition, the new product
facility in the Philippines, a company’s subsidiary under Halcyon Technology (Philippines) Inc., increased utilized capacity
to cope with the overflowed demand from Thailand to handle the relocated orders from customer. Therefore, last year 4th
quarter performance had not been materially affected by the flood. It is proper to say that Company’s business plan of
expanding production base overseas maded in 3rd quarter of 2010 yielded certain return to the Company and its
shareholders.
That been said, the Company continued to expand its business. In the 1st quarter of 2011, the Company set up a new
wholly-owned subsidiary in the Philippines under Atek Precision Tools Inc. to distribute standard carbine cutting tools
under the brands “ZCC.CT” and “Vargus” to expand customer base in the Philippines to persist a target of market
expansion and diversification to potential market overseas.
The aforementioned operation and management confirm the operating stability of the Company, having had been through
major natural crisis. The Company still aim to seek new customer base both domestically and overseas, any development
of which the Board of Directors would be please to update the shareholders in due course.
The Board of Directors would like to to assure to all shareholders that the Company, its management and staff dedicate to
develop the Company’s business for long-term sustainability, with good corporate governace and responsibility to all
stakeholders, and would like to express a sincere thank to all shareholders, investors, customers, management, staffs, and
any person who have provided kind support to the Company and its Directors.
(Lieutenant General Preecha Wanarat) (Mr. Pete Rimchala)
Chairman Managing Director
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 7
BBooaarrdd ooff DDiirreeccttoorrss NNaammee Lieutenant General Preecha Wanarat
PPoossiittiioonn Chairman
SShhaarreehhoollddiinngg - EEdduuccaattiioonn BBaacckkggrroouunndd::
- Master of Arts ( Military Science ),
ROYALTHAI ARMY COMMAND AND GENERAL STAFF COLLEGE
- Bachelor of Science , Chulachomklao Royal Military Academy
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2012 – Present Audit Committee IRPC Plc.
2008 – Present Chairman Halcyon Technology Plc.
2006 – Present President Aiyapura Resort & Spa
World Residence Natural Beach Resort Co., Ltd.
2001 – 2006 Deputy Secretary – General to the Prime
Minister for Political Affairs
NNaammee Ms. Chollada Fuvatanasilp
PPoossiittiioonn Director
SShhaarreehhoollddiinngg - EEdduuccaattiioonn BBaacckkggrroouunndd::
- MPA , NIDA
- LL.B , SukhothaiThammatirat University
- BBA (Accounting) , Ramkhamhaeng University
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2008 – Present Director Halcyon Technology Pcl.
2007 – Present VP. –Tax Department PTT Plc.
2005 – 2006 Partner&Director of Finance Department
Dherakupt International Law Office Ltd.
รูปภาพ
รูปภาพ
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 8
NNaammee Narong Rattana
PPoossiittiioonn Director SShhaarriinngghhoollddiinngg - EEdduuccaattiioonn BBaacckkggrroouunndd::
- The Master’s Degree of Engineering, Urban Transportation Planning,
Villanova University, USA
- The Bachaler’s Degree of Engineering, Chulalongkorn University
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2009 – Present Director and Audit Committee Thai Nondestructive Testing Plc.
2008 – Present Director Halcyon Technology Plc.
2004 – Present Director High Quality Semens Co., Ltd.
2004 – Present Consultant Thai – German Institute
2004 – Present Consultant Mittraphap Product Pcl.
2004 – 2010 Director and Consultant Mittraphap Product Pcl.
NNaammee Mr. Pete Rimchala
PPoossiittiioonn Managing Director
SShhaarreehhoollddiinngg 45,000,000 shares EEdduuccaattiioonn BBaacckkggrroouunndd::
- Faculty of Technical Education and Science in Mechanical Engineering,
King Mongkut’s Institute of Technology North Bangkok
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2011 – Present Director Atek Precision Tools Inc.
2010 – Present Director Halcyon Technology (Philippines) Inc.
2010 – Present Director Haltek Co., Ltd.
2002 – Present Managing Director Halcyon Technology Plc.
1993 – Present Managing Director Halcyon Metal Co., Ltd.
รูปภาพ
รูปภาพ
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 9
NNaammee Mr. Chua Cheng Khuan
PPoossiittiioonn Director
SShhaarreehhoollddiinngg 14,000,000 shares EEdduuccaattiioonn BBaacckkggrroouunndd::
- Precision Machining Singapore Technical Institute
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2011 – Present Director Atek Precision Tools Inc.
2010 – Present Director Halcyon Technology (Philippines) Inc.
2010 – Present Director Haltek Co., Ltd.
2008 – Present Senior Deputy Managing Director Halcyon Technology Plc.
2002 – 2008 General Manager Halcyon Technology Plc. NNaammee Mr. Norawee Changlum
PPoossiittiioonn Director
SShhaarrhhoollddiinngg 5,666,700 shares EEdduuccaattiioonn BBaacckkggrroouunndd::
- Master of Business Management, Bangkok University
WWoorrkk EExxppeerriieennccee ((wwiitthhiinn tthhee llaasstt 55 yyeeaarrss)):: 2010 – Present Director Halcyon Metal Co., Ltd.
2010 – Present Director Halcyon Technology Plc.
2008 – Present Deputy Managing Director Halcyon Technology Plc.
2002 – 2008 Operation Manager Halcyon Technology Plc.
รูปภาพ
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 10
HHiissttoorryy
Halcyon Technology Public Company Limited (“the Company” or “HTECH”) was established on September 11,
2002 with registered capital of Baht 3.00 million through joint venture between Halcyon Metal Company Limited (“HM”) with
a group of Thai investors, holding in total of 78%, and Singapore investors, holding of 22%. The Company is engaged in
manufacturing, customised production, and distribution of PCD cutting tools to serve the manufacturers of electronic parts
and auto parts industries. In 2007, the Company restructured the organization by increasing paid-up capital to Baht 179.25
million to exchange its shares with HM’s shares from HM’s existing shareholders in order to hold 100% in HM (paid-up
capital of 50.00 million). The Company was converted into a public company limited on May 14, 2008.
Halcyon Metal Company Limited (“HM”) was established on November 25, 1993 with registered capital of Baht
2.00 million by the major shareholders consisting Mr. Pete Rimchala and Mr. Viboon Rujiraksathorn with the proportion of
shareholding of 35% and 20%, respectively. HM is engaged in manufacturing, customised production, and distribution of
tooling and metal fabricated products such as jigs & fixtures, Toolholders, jewelry box hinge and Trolley, etc. to serve the
demand of computer part business, auto parts and mechanical related industries. Later on, the management has a vision
on potential growth of special diamond cutter which was the new business in Thailand so that HM expanded its business
by joint venture with the Singapore investors to run cutting tool business in Thailand under the name of “Halcyon
Technology Company Limited”.
In 2010, the Company and Atek Precision Tooling Pte Ltd., registered and located in Sigapore, joinly set up
Haltek Company Limited (“HC”) with registered capital of Baht 10 million (paid-up capital of Baht 7 million) with the
ownership of 70% and 30%, respectively, in order to distribute standard carbide cutting tool and metal fabrication in
Thailand. In addition, the Company, Mr. Tok Chee Chuan, (Singaporean citizen) and Mr. Hamilcar Azarias (Philippino
citizen) established Halcyon Technology (Philippines) Co., Ltd. (“HP”) with registered capital of Peso 145 million (paid-up
of Peso 58 million) in order to manufacture and distribute cutting tools made of PCD, CBN, Carbide, and Natural diamond
including Jigs & Fixtures and metal fabrication to customers only in Philippines, China, and Taiwan.
In 2011, Atek Precision Tools Inc. was established, 100% owned by HP, with the registered and paid-up capital
of Peso 10 million in order to distribute standard carbide cutting tools and metal fabrication mainly in Philippines.
BBuussiinneessss TTaarrggeettss
The Company’s business objectives are to develop new ranges of products in order to serve the various
industries which need the cutting tools. The Company always gives the priority for quality, precision, and accuracy of the
products. The Company’s business taegets are as following:
- Expand product ranges of PCD, Carbide, and PCBN cutting tools for the manufacturer of hard-disk drive,
auto parts industry and other businesses.
- Reduce cost of production in order to increase competive potential by upgrading the machine from manual
system to semi-automatic and automatic system, respectively.
- Maintain the net profit margin to be not less than 25% with the BOI priviledges.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 11
- Continue to develop new ranges of products in order to serve the requirements of customers in various
industries.
- Continue to provide training to Company’s staff and to develop new generations with knowledge and ability
to keep up with the change of production technology.
MMaajjoorr CCoorrppoorraattee DDeevveellooppmmeenntt September 11, 2002 The Compnay was established with registered capital of Baht 3.00 million, paid-up of Baht 1.50
million, divided to 30,000 shares at par value of Baht 100.00 per share. The Company’ head
office is at 41 Mu.14 Bangchan Industrial Estate Soi 6, Serithai Road, Minburi, Bangkok.
December 21, 2002 Registered capital was fully paid from the remaining of Bath 1.5 million.
January 27, 2004 Paid-up capital was increased to Baht 10.00 million to use for capital expenditure (purchase
new machines) and working capital
April 27, 2004 Paid-up capital was increased to Baht 12.00 million to use for capital expenditure (purchase
new machines) and working capital
September 5, 2005 Paid-up capital was increased to Baht 17.00 million to use for capital expenditure (purchase
new machines) and working capital
December 3, 2007 Paid-up capital was increased of Baht 162.25 million to Baht 179.25 million in order for the
purpose of the Company respective shareholders restructing as following detail:
1. HTECH increased the paid-up capital for another Baht 50.00 million (5000,000 shares) to
exchange with the shares held by HM’s existing shareholders with ratio of 1:1 as book value
of HTECH and HM were almost equivalent.
2. HTECH increased another paid-up capital of Baht 112.2534 million (1,122,534 shares) for a
right offering to HTECH’s existing shareholders as a part of the restructuring plan in which
HM declined to participate in this capital increase.
March 20, 2008 In order to eliminate cross shareholding between HM and HTECH, HM sold HTECH’s shares to
HTECH’s shareholders at the price of Baht 101.00 per share, equivalent to HTECH’s book value
May 14, 2008 The Company was converted into a public company limited and changed par value of shares
from Baht 100 per share to Baht 1 per share. Registered capital was increased from Baht
179.25 million to Baht 240.00 million for initial public offering (IPO) of 60.75 million shares at par
value of Baht 1 per share
March 9, 2009
March 27, 2009
December 4, 2009
Board of Director No. 1/2009 has resolution to change number of IPO shares from 60.75 million
shares to 40.75 million shares, reducing the paid-up capital after IPO to Baht 220.00 million (par
value at 1 baht per share) and the IPO’s offering period was March 19 – 20, 2008
Commencing the trading of the Company’s securities in MAI.
The EGM No.1/2009 had a resolution to sell the unpaid capital of 20,000,000 shares thorugh
Private Placement. The Executive Board of Directors’ Meeting No.1/2010 on January 11, 2010
and No. 3/2010 on January 19, 2010 determined the offering price at Baht 2.50 per share
allocated through Private Placement of 27 shareholders and determined the offering period on
January 21-26, 2010.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 12
January 28, 2010
February 2, 2010
March 3, 2010
August 3, 2010
Increased paid-up capital to Baht 240,000,000 with number of shares of 240,000,000 shares
Commencing the trading of the Company’s securiries (Private Placement Portion) in MAI.
Joint-venture with Atek Precision Tooling Pte Ltd. to establish Haltek Co., Ltd. with registered
capital of Baht 10.00 million (paid-up capital of Baht 7.00 million). HTECH’s shareholding is 70%
of paid-up capital or equivalent to Baht 4.90 million.
Joint-venture with Mr. Tok chee Chuan (Singaporean citizen) and Mr. Hamilcar Azarias
(Philippino citizen) to establish Halcyon Technology (Philippines) Co., Ltd. with registered
capital of Peso 145 million (paid-up of Peso 58 million). HTECH’s shareholding is 65% of paid-
up capital or equivalent to Baht 26.26 million.
March 31, 2011 Halcyon Technology (Philippines) Inc. established Atek Precision Tools Inc. located in
Philippines, with 100% ownership. Halcyon Technology (Philippines) Inc. is the Company’s
subsidiary with 65% shareholding.
May 13, 2011 Haltek Company Limited increased its paid-up capital from Baht 7.00 million to Baht 10.00
million.
June 6, 2011 Halcyon Technology Plc. and Halcyon Metal Co., Ltd. were granted the certificate of ISO 9001:
2008
NNaattuurree ooff BBuussiinneessss OOppeerraattiioonnss
Structure of Company and its Subsidiaries (As of December 31, 2011)
Halcyon Technology Public Company Limited Registered and paid-up capital of Baht 240 million
Halcyon Metal Company Limited Registered and paid-up capital of
Baht 240 million
100%
Haltek Company Limited Registered and paid-up capital of
Baht 10 million
Halcyon Technology (Philippines) Inc. Registered capital of Peso 145 million
(Paid-up capital of Peso 58 million)
70% 65%
Atek Precision Tools Inc. Registered and paid-up capital of Peso 10 million
100%
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 13
HHaallccyyoonn TTeecchhnnoollooggyy PPuubblliicc CCoommppaannyy LLiimmiitteedd ((““HHTTEECCHH””)) The Company is engaged in manufacturing, customised production and distribution of polycrystalline diamond
(PCD), natural diamond, Carbide, and Polycrystalline Cubic Boron Nitride (PCBN) cutting tools for high-precision parts.
HHaallccyyoonn MMeettaall CCoommppaannyy LLiimmiitteedd ((““HHMM””)) The Company’s subsidiary is engaged in manufacturing, customised production and distribution of assembly jigs
& fixtures according to client requirements to apply in the production processes in varios industries such as hard-disk
drive parts, auto parts and mechanical related industries, and other metal fabrication industry . The productrs can be
categorized into the following 2 groups
1. Tooling
2. Metal Fabrication
HHaalltteekk CCoommppaannyy LLiimmiitteedd ((““HHCC””))
HC was established on March 3, 2010 with registered capital of Baht 10.00 million (paid-up capital of Baht 7.00
million) by joint-venture between Halcyon Technology Public Company Limited (“HTECH”) and Atek Precision Tooling Pte
Ltd. (“ATEK SG”) with shareholding of 70% and 30% of paid-up capital, respectively. HC increases its paid-up share
capital to Baht 10.00 million on May 13, 2011 which the shareholding proportion remains the same.
ATEK SG, registered and located in Singapore, is the authorized distributor for cutting tools from China and
distribute to many countries in South-East Asia such as Singapore, Malaysia, Philippines, and Thailand. ATEK SG shall
transfer all customers in Thailand to HC to continue marketing. ATEK SG shall provide the back up stock and technical
support including the training for salesperson to HC. In addition, ATEK SG shall not and will not directly supply its products
to Thailand market under the MOU stating that HTECH will pay goodwill and franchise fee for 3 years to ATEK SG.
HC is the distributor for standard carbide cutting tool under the trademark of “ZCC.CT” such as Endmills, Drill,
Inserts, and Toolholding Systems etc. including metal fabrication to apply in the production processes in varios industries
by sourcing such products from domestic and oversea such as Singapore and China. The target customers are mainly in
the automobile industry as its demand of standard carbide cutting tools in the production, mostly for cutting through steel.
HHaallccyyoonn TTeecchhnnoollooggyy ((PPhhiilliippppiinneess)) IInncc.. ((““HHPP””))
HP was established on August 3, 2010 in Philippines with registered capital of Peso 145 million or approximately
Baht 100 million (paid-up capital of Peso 58 million) as the joint-venture between Halcyon Technology Public Company
Limited (“HTECH”), Mr. Tok Chee Chuan (Singaporean citizen), and Mr. Hamilcar Azarias (Philippino citizen) with
shareholding of 65%, 24%, and 30% of paid-up capital, respectively.
HP is engaged in manufacturing and distribution of cutting tools made of PCD, CBN, Carbide, and Natural
diamond including Jigs & Fixtures and metal fabrication in order to distribute to customers only in Philippines, China, and
Taiwan. The target customers are in hard-disk drive and automobile industries as the propotion of 70% and 30%,
respectively. HTECH shall provide technical support and research & development by sending personel who experts in
production to train HP’s staffs in Philippines. HTECH shall also provide back up stock for the complicated producing
products and for the case of insufficience of HP’s production to serve the demand. HP has a plan to operate in the first
quarter of 2011.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 14
Mr. Tok Chee Chuan has the control power over Atek Precision Tools Co. (in Philippines) (“AP”) which is the
distributor of carbide cutting tools from China in Philippines. Mr. Hamilcar Azarias is the Management of FDM Tools Supply
(in Philippines) (“FDM”) which is the distributor of PCD cutting tool from HTECH in Philippines. AP and FDM shall transfer
all their customers in Philippines to HP. AP and FDM ended their businesses on January 31, 2011.
AATTEEKK PPRREECCIISSIIOONN TTOOOOLLSS IINNCC.. ((““AATTEEKK””))
ATEK, 100% owned by HP, was established on March 31, 2011 in Philippines with registered and paid-up capital
of Peso 10 million. ATEK is the trading company for standard carbide cutting tools under the trademark of “ZCC.CT” and
“Vargus” such as Endmills, Drill, Inserts, and Toolholding Systems etc. including metal fabrication to apply in the
production processes in varios industries by sourcing such products from domestic and oversea such as Singapore. The
target customers are in the electronic component, automobile, and machinery industries. The customer base is mainly in
Philippines.
RReevveennuuee SSttrruuccttuurree ooff HHaallccyyoonn GGrroouupp
Revenue Structure Company 2009 2010 2011
Million % Million % Million % Company in Thailand Revenue from manufacturing and distribution: 1. Cutting Tools HTECH 178.74 72.86 263.03 71.32 230.00 54.70 2. Tooling HM 36.31 14.80 60.08 16.29 62.37 14.83 3. Metal Fabrication HM 20.10 8.19 28.53 7.74 17.43 4.15 4. Other sales1 1.64 0.67 2.30 0.62 3.31 0.79 Revenue from trading HC - - 6.54 1.77 16.24 3.86
Total 236.80 96.52 360.48 97.74 329.35 78.32 Company in Philippines Revenue from manufacturing and distribution: 1. Cutting Tools HP - - - - 62.30 14.82 2. Other sales1 HP - - - - 5.05 1.20 Revenue from trading Atek - - - - 15.77 3.75
Total - - - - 83.12 19.77 Total revenues from sales 236.80 96.52 360.48 97.74 412.47 98.09 Other revenues 2 8.54 3.48 8.34 2.26 8.03 1.91
Total Revenues 245.33 100.00 368.82 100.00 420.50 100.00
Notes: 1 Other sales consist of revenue from sales of saw jaw, revenue from servicees of welding, and turning works
2 Other revenues consist of proceeds from disposal equipment, gain from exchange rate, interest income, revenue from sales of scrap, and
the write-off of a duplicated account payable.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 15
CChhaarraacctteerriissttiicc ooff PPrroodduuccttss aanndd SSeerrvviicceess
The Company divides its products and service into 4 categories as follows:
((11)) PPrroodduucctt LLiinnee ooff CCuuttttiinngg TToooollss
The Company is engaged in manufacturing, customised production and distribution of polycrystalline diamond (PCD)
cutting tools for high-precision parts. The products are ideal for high-precision parts with good quality and size to searve
customers’ needs. The products can also be used for grinding purposes. The high degree of hardness and a high level of
abrasive resistance enable PCD tools to have a longer usage life compared to that of carbide tools. Core products are
PCD boring tool, PCD endmill tool, PCD insert, PCD brazed tool, PCD reamer, PCD hollow tool, PDC Drills, and Special
Carbide Cutting. The new products in 2011 are Polycrystalline Cubic Boron Nitride (PCBN) Cutting Tools and PCD Insert
with Chipbreaker
The Company‘s products are proper cutting tools for the manufacturing of parts which require high precision and
delication. Therefore, the Company has focused on the manufacturers of electronic parts such as hard-disk drive.
Moreover, the Company expands target customers to the manufacturers of auto parts with concentration to the
manufacturers of engine parts, air condition, and other car’s components. The Company’s products can also be used for
other industries such as the plastic molds, medical components, airplan parts, camera, clock components, wood related
business, and other industries which need the cutting process.
PCD Boring Tool PCD Endmill Tool PCD Insert PCD Brazed Tool PCD Reamer PCD Hollow Tool PCD Drill Carbide Cutting Tool
PCBN Cutting Tools PCD Insert with Chipbreaker
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 16
Samples of Applications
((22)) PPrroodduucctt LLiinnee ooff TToooolliinngg
Tooling can be categorized into the following two main lines
• Jigs & Fixtures: The Company’s sunsidiary designs and manufactures, and assemble jigs and fixtures
according to client requirements to firmly put parts into right position of hard-disk drive parts, auto parts and mechanical
related parts. The well design of jigs and fixtures can reduce production waste and make standardized products of each
production batch.
• Toolholders: The Company’s subsidiary is engaged in manufacturing, customised production and
distribution of toolholders in order to facilitate working process such as PCD insert holders. The Company’s toolholders are
made of Carbide. Toolholders can be used in the various industries. Toolholders of each manufacturer have different
specifications
Sample of Electronic Parts
Sample of Auto Parts Sample of Wood Furniture
Sample of Toolholders
Sample of Jigs & Fixtures
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 17
((33)) PPrroodduucctt LLiinnee ooff MMeettaall FFaabbrriiccaattiioonn
The Compnay’s subsidiary is a manufacturer of customized metal fabrication for specific client requirements. The
products can be categorized into the following two main lines;
• Mass Product: Mass products are the group of products with a steady flow of orders including jewelry box
hinge as well as strain gauge, a main component of a gauging tool to measure pressure and compressive yield stress of
plastic injection molding machine or small scales up to large 38-ton scales, and hot runner, a supplementary tool for
plastic injection molds which control temperature and plastic flows before putting into mold & cavity.
• Batch Product: such as tool spare parts, machine spare parts and other metal equipment
The Company has track record in manufacturing of a variety of metal fabricated products including machine
spare parts, toggle, washing basket, indicator stand, gear carrier, trolley and Surgical Knife.
((44)) TTrraaddiinngg ffoorr SSttaannddaarrdd CCaarrbbiiddee CCuuttttiinngg TToooollss
HC is the distributor for standard carbide cutting tool under the trademark of “ZCC.CT” such as Endmills, Drill,
Inserts and Toolholding Systems. including metal fabrication to apply in the production processes in varios industries by
sourcing such products from domestic and oversea such as Singapore and China.
Jewelry Box Hinge Presure Element
Machine Part Toggle Washing Basket Indicator Stand Gear Carrier Surgical Knife
Sample of Standard Carbide Cutting Tools
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 18
MMaarrkkeettiinngg aanndd CCoommppeettiittiivvee CCoonnddiittiioonn MMaarrkkeettiinngg SSttrraatteeggyy
1. Maintain existing customers
2. Maintain product quality
3. Provide fully integrated services
4. Expand product ranges to meet customer’s requirement
5. Enpand customer base to cover other industries
TTaarrggeett CCuussttoommeerrss
The Company’s target customers can be categorized into 2 following groups
1. Electronics computer sector aiming at manufacturers of electronics computer components such as hard-
disk drive or HDD. The key customers of the Company are the manufacturers of hard-disk drive who are
brand owners including the First Tier and Second Tier suppliers. The Company‘s production process still
concentrate on product accurate and qualify in order to maintain the customers’ confidence and reliance of
the Compnay’s products so that the product orders are repeated with higher level of product complication.
2. Auto parts industry and metal fabrication parts focusing on manufacturers of alloy wheels and engine parts
who are the First Tier and Second Tier suppliers in automobile business. DDiissttrriibbuuttiioonn CChhaannnneellss
The Company’s distribution channels can be categorized into 2 following routes
1. Direct sale to customers: the Company has sale and marketing team to contact and provide services to local
key customers primarily as manufacturers
2. Through distribution agent: the Company appoints agent with strong marketing penetration capability as its
distribution agents in both domestic and oversesa to distribute products and to open up new markets. IInndduussttrriiaall OOuuttllooookk aanndd ccoommppeettiittiivvee EEnnvviirroonnmmeenntt TThhee HHaarrdd--DDiisskk DDrriivvee IInndduussttrryy The industry concerning the production of hard-disk drive is competitive in price and technology. The
manufacturers had prepared for such situation by relocating the production bases to the countries which offer relatively
lower cost, especially to those in Asia. Thailand has set the policy to support foreign direct investment, whereby the
industry of hard-disk drive production is ranked in top priority under which certain privileges are provided by the Board of
Investment (BOI) such as tax exemption for the imported machine and corporate income, etc.
The overall production of electronic industry in 2011 was pretty fluctuated, especially hard-disk drive, due to the
World’s demand slowing down as the impact of Tsunami incident to Japanese’s economic, etc, together with the impact of
flood problem in Thailand causing the cease of electronic component production such as hard-disk drive which was the
major component. The growth of electronic production in 2011 was expected to decrease approximately by 8%-9%
comparing to that of previous year. The trend of electronic industry in 2012 was expected to increase by 10%-12% as the
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 19
growth of electronic and IT products would still be the key driver to increase the production of the electronic component
and parts. However, there would be some risk factors as the recovery of the European and United Stated’s economic.
The export values of electronic products in 2011 were approximately USD 30,072.04 million, equivalent to 9%
decreased from that of 2010 due to the impact of flood problem to the major electronic plants located in 7 industrial
estates. The export values of electronic in the first quarter of 2012 would expect to decreased continueously from that of
the fourth quarter in 2010 approximately 5%-10% and would recover in the second quarter in 2012 onward. (Source: The
Office of Industrial Economics)
TThhee AAuuttoo PPaarrttss IInndduussttrryy Thai auto parts also posts a bright potential in the Southeast Asia region due to its strong production base and
Thailand is geographical superior as the ASEAN hub with good infrastructure to attract the world’s car manufacturers to set
up production plants. The Government has expressed its policy to support the local auto industry to be Detriot of Asia, thus
its supporting industries such as the parts manufacturing also moves along such growth path.
The markets of the auto parts manufacturer are divided into 2 main segments as the followings:
1. The Original Equipment Market (OEM), which is the segment of supporting the car and motorcycle
manufacturers based in Thailand for the orders to produce car and motorcycle for domestic distribution and export.
2. The Replacement Equipment Market (REM) to be the spare parts to replace the originals as a result of required
usage conditions.
Although the automobile and parts industry was impacted directly and indirectly by the major flood problem in
the end of 2011 which cuased the cease or decrease of production for a period of time, the export values of auto parts in
2011 were USD 9,721.06 million, equivalent to 13.39% increased from that of 2010. Department of Export Promotion
estimated that the export values of auto parts in 2012 would be approximately USD 10,693.17 million, equivalent to 10.00%
increased from that of 2011. Department of Export Promotion considered that the export values would be able to continue
the growth due to the unability to support the orders during the flood period which caused the industry to speed up the
production in order to support such orders.
TThhee CCoommppeettiittiioonn The manufacturers of cutting tools consist of both the producers and/or the distributors. For the manufacturers,
the product segments are differentiated to those of the Company in both product types and raw materials due to the
different proposes of usage or different industries of the customers. In addition, a few manufacturers of cutting tools
produce other products such as PCD saw, plating wheel, and carbide drill, etc. Therefore, it is unlikely to estimate the
market value of the cutting tools. Those manufacturers of cutting tools, however, are considered indirect competitors of the
Company as they produce or are able to product cutting tools.
The markets of PCD cutting tools in Thailand are divided into local produced market and the imported products.
The Company’s management estimated that in 2011, the Company’s market share was 40% of the total volume of the PCD
cutting tools consumed in Thailand. Whereas, the combine market shares of the Company’s major competitors and other
local PCD cutting tools manufacturers, was approxiamately 20%. The rest of the market share of 40% was from import.
PCD cutting tools, in general, are used in various industries such as the auto parts and hard-disk drives. Therefore, the
demand for PCD cutting tools in Thailand was expected to be at a high level. The imported products of PCD cutting tools,
normally, are quoted at higher price and take longer delivery period than those of locally produced. Therefore, the
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 20
Company focuses an opportunity to expand products for import substitution. The Company’s management estimated that
in 2011, the Company’s market share for PCD cutting tools was 80% of the total volume consumed in the hard-disk drive
market whereas the rest of 20% was from the import with partial sourcing from other local PCD cutting tool manufacturers.
The Competitive advantage of the cutting tools manufacturer lies on the capability to produce variety of products
to cover customer needs. The Company’s management believes that the Company has the following competitive
advantages:
• Being the market leader of PCD cutting tool for the segment of hard-disk drive manufacturing.
• With fully integrated services.
• Has strong customer base, especially those of major customers are in the high quality standard segment.
• Possesses advance machine and technology
• Receives BOI privileges in 2008 (HTECH) and 2011 (HM).
• Receives the certificate of ISO 9001:2008
PPrroodduucctt PPrrooccuurreemmeenntt aanndd SSeerrvviiccee PPrroodduuccttiioonn
The production capacity of the cutting tool, the tooling and metal fabricated products in total, is measured by the
working hour of 572 hours per month in 2011 (22 hours per day / 6 days per week). However, the working hour in October
– November 2011 decreased to 416 hours (16 hours per day / 6 days per week) due to the flood problem.In 2011, the
Company and its subsidiary puchased new machines which increased the cutting tool’s capacity by approximately 22%
from 2010 to support the increase of purchase orders from production and customer base expansion. The key machines
consisted of Wire Cut Machines, PCD Grinding Machine, and Carbide Grinding Machine with total value of approximately
Baht 152.49 million. In addition, the Company and its subsidiary planned to invest in new machines in total of
approximately Baht 100 million in 2012.
RRaaww MMaatteerriiaall // PPrroodduucctt ffoorr SSaallee SSoouurrcciinngg The Company sources out raw materials form both the domestic and import. The Company always set the
production plan to be able to determine the procurement schedule of raw materials available and ready for the production.
The order of raw materials is normally made 1 month in advance, depending on the demand and customer order of each
of the production batch. The purchasing policy of the Company is not to depend on single supplier, rather sourcing from
quotation of at least 2 suppliers for bargaining purpose. Raw material sourcing does not depend only on the pricing. The
Company also considers other factors all together such as quality and service, as well as payment term to ensure the
standard of products and cost saving. An appropriate production plan is determined to allocate raw materials, labor and
machine for the production of products according to the batch size and time requirement on an efficient basis. The
Company’s raw materials and products are classified as the followings: 1. Raw material for special cutting tools Raw materials for the cutting tools are consisting of carbide, PCD, blank Insert, ect. In 2011, raw materials were
purchased as follows:
- HTECH purchased raw materials locally and imported, equivalent to 59% and 41%, respectively. Such raw
materials are imported from Singapore, China, Japan, and United State, ect.
- HP purchased all raw materials from overseas such as Singapore, Japan, and Thailand, ect.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 21
2. Raw material for tooling and other metal fabricated Raw materials for tooling and other metal fabricated are steel, aluminium, stainless, and plastic which 95% are
sourced locally. 3. Products for sale
Products for sale such as Drill, Endmill, Toolholders, and Insert etc. are purchased as follows:
- HC purchased the products for sale locally and imported, proportionating 40% and 60%, respectively. Such
products are imported from China and Singapore, ect.
- Atek purchased the products for sale locally and imported, proportionating 13% and 87%, respectively. Such
products are imported from Singapore, ect.
PPrriivviilleeggeess ffrroomm tthhee BBOOII The Company’s business activity is granted the BOI privileges under Type 4.2 concerning the manufacturer of
machinery and equipment under the benefits stated in the Investment Promotion Act for the period of 8 years. The date of
the BOI approve is July 8, 2008 and the date at which the Company commenced the use of the BOI benefits is August 5,
2008.
In addition, the Company’s subsidiary (HM) business activity is granted the BOI privileges under Type 4.2
concerning the manufacturer of machinery, equipment, and parts and Type 4.3 concerning the manufacturer of metal and
metal fabrication under the benefits stated in the Investment Promotion Act for the period of 8 years. The date of the BOI
approve is March 21, 2011 and the date at which the Company commenced the use of the BOI benefits is April 22, 2011.
Halcyon Technology (Philippines) Inc., the Company’s subsidiary, is granted the tax exemption for the import and
export from Phillipine Economic Zone Authority (PEZA). HP would commence such benefit during September 2, 2010 –
September 2, 2014 and able to extend such benefit when it is due.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 22
RRiisskk FFaaccttoorrss ((11)) RRiisskk AAssssoocciiaatteedd wwiitthh tthhee DDeeppeennddeennccee oonn HHaarrdd--DDiisskk DDrriivvee IInndduussttrryy
The Company’s total revenue was attributable to the key clients in the manufacturing of hard-disk drive products.
Although such industry had shown continuously export growth in the past, electronic industry slowdown would adversely
affect to the Company’s key client base in the hard-disk drive industry resulting to the reduced order from the Company’s
clients. The Company would be negatively affected by such impact as the Tsunami incedent in Japan and the major flood
in Thailand. However, the trend of such industry would recover (as the detail in industry outlook) and expected the
Company’s revenues in 2011 to follow the trend of that of the hard-disk drive industry.
In addition, the competition of the hard-disk drive market from the development of new information storage of the
Flash memory, which is recognizable and becomes cheaper, may adversely affect the manufacturing of hard-disk drive.
The Company would therefore have a risk of relying on the hard-disk drive industry.
However, the Company plans to reduce such risk through the development plan to expand the customer base to
increase the services to other industries such as auto parts, mechanical related industry, medical parts and other metal
fabrication manufacturing by developing new types of cutting tools such as PCD Drill and Carbide Cutting Tools (as detail
in product lines of cutting tools), through the utilization of new machines. In 2011, the percentage of sales from clients in
the manufacturing of hard-disk drive and non-hard-disk drive were 72% and 28%of total sales, respectively, comparing to
those of 79% and 21% of total sales in 2010, respectively.
((22)) RRiisskk AAssssoocciiaatteedd wwiitthh SSmmaallll CCuussttoommeerr BBaassee As the products of the Company are specifically made to order, its customer base is limited. The Company’s
revenues concentrated on 4 major customers to whom total sales in 2011 represented 40.40% of revenue from sales
decreasing to those of 2010 represented 60.83% of revenue from sales as following the policy to increase the revenues
from new customers. The Company may have a risk of having revenue concentration to a limited customer base and,
therefore, its future revenue may adversely affect if such major clients change orders not to purchase from the Company.
However, those 4 customers have continued business with the Company for more than 5 years. The Company has
maintained constant liaison to be able to indicate any changes of the customers’ orders. In addition, the Company has a
policy to reduce such risk by making effort to increase the customer base in both hard-disk drive segment, the auto parts,
the mechanical related industry, the medical products and other metal fabrication manufacturing, through utilizing its
research and development capability and launching new products.
((33)) RRiisskk AAssssoocciiaatteedd wwiitthh tthhee DDeeppeennddeennccee oonn PPeerrssoonnnneell The businesses of the Company and its subsidiaries require knowledge, skill and experience of the personnel to
make products with high standard and precision per various requirements of the customers. Therefore, the Company relies
on key men both in the production line, which utilizing high and complicated technology and in the marketing area to
market and distribute products locally and overseas.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 23
Therefore, one of the Company’s policies is to develop its staff through training and learning the transfer of
production technology from machine suppliers. In addition, the Company has arranged for job rotation to allow the staff to
work with various types of machines to be able to work in substitution to reduce the risk of relying on single person. The
Company also supports the qualified staffs to be the management and shareholders to create the ownership participation
and increase the morale to keep their royalty.
((44)) RRiisskk AAssssoocciiaatteedd wwiitthh tthhee OOvveerrdduuee RReecceeiivvaabbllee One of the Company’s major foreign customers, who is an overseas distribution agent with trading transaction
over 5 years, is an overdue receivable. If such receivable failed to repay the whole outstanding amount, the Company
would set a provision for bad debt, from which the Company’s net profit will be adversely affected. In the first quarter of
2011, the Company stopped trading with such receivable due to its business closing down. However, the Company was
able to collect all payment.
((55)) RRiisskk AAssssoocciiaatteedd wwiitthh tthhee FFlluuccttuuaattiioonn ooff FFoorreeiiggnn EExxcchhaannggee RRaatteess
The Company shares the risk associated with the fluctuation of foreign exchange rates from both import and
export in foreign currencies. In 2011, the proportions of sale transactions which were dominated in foreign currency were
accounted for 26.77% of total sale. If Thai baht is appreciated, revenue would be adjusted down. While those of foreign-
currency purchase transactions were accounted for 50.33% of total cost of sale. If Thai baht is depreciated, cost would be
adjusted up. In addition, the Company also imported machine and equipment from overseas so that the fluctuation of
foreign exchange rates would have an effect to the Company’s financial status and performance.
The Company did not buy the Forward Contract to against such risk, consequently, the Company may confront
with risk of the fluctuation of foreign exchange rates. However, partial import of raw materials and partial export of products
is offset through Natural Hedge. In the past, the foreign exchange rate did not have a significant effect to the Company’s
overall performance.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 24
SShhaarreehhoollddeerrss’’ SSttrruuccttuurree
The Company has the registered and paid-up capital of Baht 240.00 million, divided into 240.00 million shares
with par value at Baht 1 per share.
SShhaarreehhoollddeerrss ooff tthhee CCoommppaannyy aarree aass ffoolllloowwiinngg
Shareholders’ name As of 9 March 2012 Amount (shares) Percentage
1. Mr. Pete Rimchala 45,000,000 18.75 2. Mr. Sorat Wanitwarakit 26,934,700 11.22 3. Mr. Viboon Rujiraksathorn 21,600,000 9.00 4. Mr. Chua Cheng Khuan 14,000,000 5.83 5. Ms. Petara Rimchala 11,355,300 4.73 6. Thai NVDR Company Limited 8,256,400 3.44 7. Mr. Thanit Lappanitpoonpon 7,980,800 3.33 8. Mr. Punya Chutpunya 6,992,000 2.91 9. Mr. Sontaya Changlum 5,700,000 2.38 10. Mr. Norawee Changlum 5,666,700 2.36 11. Others 86,514,100 36.05
Total 240,000,000 100.00 DDiivviiddeenndd PPoolliiccyy The Company and its subsidiary (HM) have a policy to pay dividends to shareholders at least twice a year. The
Company’s subsidiary (HM) has a policy to pay out dividends to Company at the rate of 100% of net profit after deduction
of corporate income tax and reserves according to the law. The Company has a policy to declare dividends at the rate of
not less than 40% of net profit after deduction of corporate income tax and reserves according to the law. However, the
Company may pay out dividend at the rate lower than mentioned above if it is necessary for the Company requires to use
such net profit for expansion. In addition, HC and HP have a policy to declare dividends to Company at the rate of 40% of
net profit after deduction of corporate income tax and reserves according to the law.
บริษัท แฮลเซี่ยน เทคโนโลยี่ จํากัด (มหาชน)
Annual Report of 2011 - page 25
MMaannaaggeemmeenntt
OOrrggaanniizzaattiioonn CChhaarrtt ooff HHaallccyyoonn TTeecchhnnoollooggyy PPuubblliicc CCoommppaannyy LLiimmiitteedd
Executive of Directors
Board of Directors
Managing Director Mr. Pete Rimchala
Audit Committee
Accounting Manager
Ms. Usar Chansukchareonjinda
Finance Manager
Internal Audit *
Senior Executive Vice President Mr. Chua Cheng Khuan
Production Manager
Quality Assurance Manager
Marketing Manager
Purchasing Manager
Executive Vice President Mr. Norawee Changlum
Management of the Subsidiary
Halcyon Metal Co., Ltd.
Executive Vice President Mr. Soraj Sutanadhan
Executive Vice President Ms. Sasipimol Wasuwat
Management of the Subsidiary
Haltek Co., Ltd.
Management of the Subsidiary
Halcyon Technology (Philippines)
Co., Ltd.
* In 2011, the Company hires MMN Syndicate Co.,Ltd as an internal audit. In the future, the Company plans to train its internal staff for the job.
Nomination and Remuneration Committee
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 26
MMaannaaggeemmeenntt SSttrruuccttuurree Management structure comprises three groups, Board of Directors, Executive Committee (Board of Executive
Directors), and Audit Committee, with details as following:
((11)) BBooaarrdd ooff DDiirreeccttoorrss
The Company’s Board of Directors consists of 6 persons as following:
Name Position 1. Lieutenant General. Preecha Wanarat
Chairman of the Board / Chairman of the Audit Committee / Independent Director
2. Mr. Pete Rimchala Director / Chairman of the Executive Committee / Managing Director 3. Mr. Chua Cheng Khuan Director / Executive Director 4. Mr. Norawee Changlum Director / Executive Director / Company’s Secretary /
Audit Committee’s Secretary 5. Mrs. Chollada Fuvatanaslip Director / Audit Committee / Independent Director 6. Mr. Narong Rattana Director / Audit Committee / Independent Director
Note: Mr. Viboon Rujiraksathorn resigned from Board of Director on September 1, 2011
AAuutthhoorriizzeedd SSiiggnnaattoorryy DDiirreeccttoorrss Directors who have the authority to sign on behalf of the Company are Mr. Pete Rimchala or Mr. Chua Cheng
Khuan or Mr. Norawee Changlum, two of the three sign together with Company’s stamp.
Note: Mr. Norawee Changlum was approved to be an authorized director as the resolution of Board of Director’s Meeting
No. 1/2011 dated February 21, 2011
SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee BBooaarrdd ooff DDiirreeccttoorrss The Board of Directors has authority and duties and responsibilities in management of the Company according to
the laws, purposes, and articles of the Company. In summary, essential authorities and responsibilities are as follows:
1. To hold the annual shareholders meeting within 4 months from the end of accounting period of the
Company.
2. To hold the Board of Directors’ meeting at least once every three months.
3. To prepare balance sheet and income statements of the Company at the end of accounting period of the
Company for which the auditor audited and present to shareholders assembly to consider and approve.
4. The Board may delegate its power to one or more directors or any other person to act on behalf of the Board
under the Board’s control; or delegates its power to such person for other things that the Board regards as
appropriate and within a certain period. The Board may revoke or alter or change the delegate when it sees
proper.
In addition, the Board may delegate its power to the Executive Board to have power to conduct any
thing which has details according to the scope of power and duties of the Executive Board. Nevertheless,
such delegation must not have a feature that allow the Executive Board to consider or approve anything that
the Executive Board or other persons may have conflict, interest, or any conflict of interest with the Company
or its subsidiary, except for approvals of normal trade practice in accordance with policies and rules that the
Board of Directors or Shareholders has considered and approved as prescribed by laws.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 27
5. To set up targets, directions, policies, plans, and budgets of the Company, oversee management of the
Executive Board to conform with the assigned policy except for these following matters, which the Board
must obtain an approval from the shareholders meeting in advance, i.e. a matter that an approval from the
shareholders meeting is required by laws such as increasing or decreasing of capital, debenture issuing,
whole or partial selling or transfer of the business of the Company to other persons, acquiring or receiving of
other company’s business, revision of Memorandum or Articles of Association, etc.
In addition, The Board of Directors has duty to oversee the Company to conform with laws regarding
securities and securities exchange, regulations of the stock exchange such as related transactions,
acquisition or disposal of assets according to the rules of the Stock Exchange of Thailand, or laws relating to
the Company’s business.
6. To consider management structure, appoint the Executive Board, Managing Director, or other committees as
appropriate.
7. To continuously follow up the operation to be in accordance with plans and budgets.
8. the Board neither operates any business that has similar nature and competes with the Company’s business,
nor be a partner in any ordinary partnership, a general partner in any limited liability partnership, a director
of a private company, nor other companies that involved in the business of similar nature and compete with
business of the Company, whether for themselves or for other persons, except the shareholders’ meetings
has been informed of that fact prior to the appointment.
9. The director has to inform the Company immediately when he or she has an interest, whether direct or
indirect, in a contract that the Company has concluded, or has more or less shares or other forms of
securities of the Company or associated company.
((22)) AAuuddiitt CCoommmmiitttteeee
The Company’s Audit Committee consists of 3 persons as following:
1. Lieutenant General Preecha Wanarat Chairman of the Audit Committee
2. Mrs. Chollada Fuvatanaslip Audit Committee
3. Mr. Narong Rattana Audit Committee
Mrs. Chollada Fuvatanaslip has knowledge and adequate experiences to verify the credibility of financial
statements. Mr. Norawee Changlum acts as the Audit Committee’s Secretary.
QQuuaalliiffiiccaattiioonnss ooff tthhee AAuuddiitt CCoommmmiitttteeee 1. Holds no more than 1% of the total voting shares of the Company, its parent company, its subsidiaries, its
associated companies or a juristic person who may have conflicts of interest, including shares held by any
related person.
2. Not be and have not been a director participating in management role, employee, staff, advisor who
receives regular salary, or controlling person of the Company, its parent company, its subsidiaries, its
associated companies, same-level subsidiaries or a juristic person who may have conflicts of interest, unless
the foregoing status has ended for more than 2 years.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 28
3. Not being a person related by blood or legal registration, such as father, mother, spouse, sibling, and child,
including spouse of the children, management, major shareholders, controlling persons, or persons to be
nominated as management or controlling person of the Company or its subsidiaries.
4. Not having a business relationship with the Company, its parent company, its subsidiaries, its associated
companies or a juristic person who may have conflicts of interest, in the manner that may interfere with
his/her independent judgment, or not being a major shareholder, non-independent director or management
of any person having business relationship with the Company, its parent company, its subsidiaries, its
associated companies or a juristic person who may have conflicts of interest.
5. Not being an auditor of the Company, its parent company, its subsidiaries, its associated companies or a
juristic person who may have conflicts of interest, in the manner that may interfere with his/her independent
judgment, or not being a major shareholder, non-independent director or management of any person having
business relationship with the Company, its parent company, its subsidiaries, its associated companies or a
juristic person who may have conflicts of interest.
6. Not being an professional advisor including legal or financial advisor who receives an annual service fee of
exceeding Baht 2 million from the Company, its parent company, its subsidiaries, its associated companies
or a juristic person who may have conflicts of interest, or not being a major shareholder, non-independent
director, management or partner of the professional advisor.
7. Not being appointed to represent the Company’s Director, its major shareholders or shareholders who are
related to the Company’s major shareholders.
8. Not having any characteristics by which him/her independent opinion may be affected.
9. Not being a director assigned by the Company’s Board of Directors to take part in the business decisions of
the Company, its parent company, its subsidiaries, its associated companies, same-level subsidiaries or a
juristic person who may have conflicts of interest, and not being a director of the Company, its parent
company, its subsidiaries, its associated companies, same-level subsidiaries.
10. Having duties according to the Stock Exchange of Thailand’s regulations regarding the qualifications and
scope of work of the Audit Committee.
In the case that the independent director being appointed as the independent director of the parent company, its
subsidiaries, its associated companies, same-level subsidiaries, the Company has to disclose such information, including
the remuneration received by the independent director in the Filing, Form 56-1 and Form 56-2.
SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee AAuuddiitt CCoommmmiitttteeee 1. To verify that the Company has an accurate and adequate disclosure on financial statements by
coordinating with the external auditor and the management responsible for the disclosure of quarterly and
yearly financial statements. The Audit Committee may propose to the auditor to review or audit any
transaction deemed necessary or importance during financial statement auditing.
2. To verify that the Company has proper and effective internal control and internal audit system.
3. To verify that the Company conforms with laws regarding securities and stock exchange, regulations of the
stock exchange, or laws regarding businesses of the Company.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 29
4. To consider, select, propose an appointment, and propose remuneration to auditors of the Company to be
approved by the shareholders’ meeting.
5. To disclose the Company’s information when there is a related transaction or transaction that may have
conflict of interest correctly and completely, including approval of such transaction in order to proposed to
the Board of Directors and/or the shareholders’ meeting.
6. To review the financial management and risk management policies assigned by the Board of Director with
consent from the Audit Committee.
7. To prepare corporate governance report of the Audit Committee for disclosure in the annual report of the
Company which such report must be signed by the Audit Committee Chairman.
8. To conduct any other works as assigned by the Board of Directors with consent from the Audit Committee. ((33)) EExxeeccuuttiivvee BBooaarrdd
The Executive Board consists of 4 persons as following:
1. Mr. Pete Rimchala Chairman of the Executive Board
2. Mr. Chua Cheng Khuan Executive Director
3. Mr. Norawee Changlum Executive Director
Note: Mr. Viboon Rujiraksathorn resigned from Executive Board on September 1, 2011
SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee EExxeeccuuttiivvee BBooaarrdd
The Executive Board have the authority, duties and responsibilities in the normal operation and administration of
the Company, establishing policies, business plan, budget, administrative structure and any the Company’s administrative
authority and direction in operating business of the Company in line with the prevailing economic situations for proposing
to the Board of Directors’ meeting for consideration and approval and/or ratification as well as verifying and monitoring the
operation of the Company according to the specified policies. The key authority, duties and responsibilities can be
summarized as following:
1. Operating and administering the Company according to the objectives, regulations, policies, rules,
limitations, directions and resolutions of the Board of Directors and/or resolutions of the shareholders’
meetings according to the rules and regulations of the Executive Board’s meeting.
2. Considering the establishment of the policy, direction and strategy of operating the business of the
Company, financial budgeting plan, human resource management, investment, expansion of the business,
public relations according to the scope that the Board of Directors’ pre-approved, and monitoring the
process of the operation of the appointed working group.
3. Considering the allocation of annual budget as proposed by the management before proposing the Board of
Directors to consider and approve, including considering and approving the change and addition of the
annual budget when there is no Board of Directors’ meeting to propose to the next Board of Directors’
meeting.
4. Approving the expenditure on the purchasing of raw materials, according to the Company’s normal
operation, of no more than Baht 30 million (Baht Thirty Million) per transaction.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 30
5. Approving the expenditure on the purchasing of the equipment or fixed assets, according to the Company’s
normal operation, of no more than Baht 50 million (Baht Fifty Million) per transaction.
6. Approving of selling, according to the Company’s normal operation, such as selling of goods, made to order
contracts, etc, of no more than Baht 50 million (Baht Fifty Million) per transaction.
7. Approving the opening and closing of any bank or financial institution accounts, including the terms and
conditions on the withdrawal or any juristic acts related to such accounts.
8. Approving the lending, procuring credit line, issuing of debentures, overdraft contracts or any loans from
bank or financial institution or general persons according to normal business conditions, of no more than
Baht 60 million (Baht Sixty Million) per transaction, including approving of bank guarantee for beneficial of
the Company’s business of no more than Baht 50 million (Baht Fifty Million) per transaction.
9. Approving of the pledging and mortgage of the Company’s assets to warrantee the Company’s debts,
whether existing debts or debts to be incurred in the future, of no more than Baht 60 million (Baht Sixty
Million) per transaction.
10. Approving of the significant expenditure, this is already set in the annual budget assigned or approved in
principle by the Board of Directors.
11. Acting as the advisory body on policies concerning finance, marketing, personnel management and other
operations.
12. Specifying the organization structure, administrative authority of the organization as well as appointing,
hiring, removing, determining the wages, payment, bonus of the executives and layoff.
13. Authorizing mandate of one or more directors or any person to perform any act under the supervision of the
Executive Board or to authorize such person to perform acts as deemed appropriate by the Executive Board
within a certain period. The Executive Board may repeal, withdraw, change or amend the authorized person
or the authority as it deems appropriate. However, such authorization shall not be given to persons who may
have conflicts of interest.
14. Performing any act authorized by the Board of Directors from time to time.
The Executive Board shall not approve any conflicting transaction or any transaction the Executive Board has
interests in or any other benefits which is contrary to the interests of the Company and its subsidiary, except such
transactions that the Company’s Board of Directors or shareholders’ meeting has considered and pre-approved and in
accordance with the law. The Board of Directors authorizes to repeal, withdraw, change or amend the Executive Board’s
authorization.
SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee MMaannaaggiinngg DDiirreeccttoorr
1. Managing and supervising daily operations and/or administration of the Company.
2. Managing and operating in accordance with the policy, plan and budget approved by the Board of Directors
and/or Executive Board of the Company.
3. Acting as the authorized person of the Company in operating the Company’s business in compliance with
the objectives, regulations, policies, rules, limitations, directions and resolutions of the shareholders’
meetings and/or resolutions of the Board of Directors’ meetings and/or the Executive Board.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 31
4. Being authorized to sub-authorize and/or mandate other person to perform certain acts. The aforesaid sub-
authorization or mandatory shall be under the scope of the authorization as specified herein and/or in
accordance with the regulation, limitation or order which the Board of Directors and/or the Company has
specified, whereas the sub-authorization shall not be given to persons who may have conflicts of interest.
5. Monitoring and evaluating the operation of the Company at all time in order to minimize the risk arising from
internal or external factors.
6. Considering the entry into agreements regarding Company’s business and any agreement which is in the
interest of the Company including specifying the procedures and process of such agreement for proposing
to the Executive Board and/or the Board of Directors.
7. Approving of the expenditure on normal business operation such as purchasing of raw materials, equipment
or fix assets, excluding machines, of no more than Baht 5 million (Baht Five Million) per transaction.
8. Approving of the purchasing of operating machines of no more than Baht 10 million (Baht Ten Million) per
transaction.
9. Approving of selling, according to the Company’s normal operation, such as selling of goods, made to order
contracts, etc, of no more than Baht 15 million (Baht Fifteen Million) per transaction.
10. Considering the allocation on pension, bonus or any remuneration as approved by the Board of Directors to
the employees or workers of the Company or any person performed any act for the Company.
11. Considering the employment and appointment as well as removal, relocation between the
field/department/division or layoff, determining wage rate, remuneration, bonus including welfare regarding
all employee of the Company except those employees at the management level.
12. Specifying the orders, regulations, notifications, memorandum in order to operate the business according to
the policy and in the interests of the Company and to maintain the internal discipline of the organization.
13. Performing other functions authorized by the Board of Directors from time to time.
The Managing Director shall not approve any conflicting transaction or any transaction the Managing Director
has interests in or any other benefits which is contrary to the interests of the Company and its subsidiary, except such
transactions that the Company’s Board of Directors or shareholders’ meeting has considered and pre-approved and in
accordance with the law. The Board of Directors authorizes to repeal, withdraw, change or amend the Managing Director’s
authorization. ((44)) NNoommiinnaattiioonn aanndd RReemmuunneerraattiioonn CCoommmmiitttteeee
The Nomination and Remuneration Committee consist of 3 persons as follows:
1. Lieutenant General Preecha Wanarat Chairman of the Nomination and Remuneration Committee
2. Mrs. Chollada Fuvatanaslip Nomination and Remuneration Committee
3. Mr. Pete Rimchala Nomination and Remuneration Committee
Note: Nomination and Remuneration Committee, with the term of 2 years, was appointed on February 21, 2011 as the
resolution of Board of Director’s Meeting No. 1/2012
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 32
SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee NNoorrmmiinnaattiioonn aanndd RReemmuunneerraattiioonn CCoommmmiitttteeee 1. To express opinion to the Board of Directors with respect to the rate of remuneration of Chairman of the
Board of Directors, Directors, Chairman of the Audit Committee, Audit Committee and any Sub-Committee (if
any) (Such matter shall be proposed to the Shareholders’ meeting for consideration and approval afterward).
2. To nominate and propose the name list of person, who has the suitable qualifications to be a director at the
first time and to monitor the performance and suitability of the director who will be retired by rotation and re-
elected, to the Board of Directors for consideration and approval and propose to the Shareholders’ meeting
for appointment to be the director.
3. To consider and give an opinion to the Board of Directors and to follow up the operation regarding vision
and strategy of human resource including management development plan.
4. To assess the Company’s overall performance in order to determine the bonus and salary increase by using
a suitable industrial standard for consideration.
5. To propose the salary structure and other benefits.
AAppppooiinnttmmeenntt ooff DDiirreeccttoorrss aanndd MMaannaaggeemmeenntt
The Company has a particular committee for recruiting directors and the management. However, election of
directors is based on qualification, competency, experience, and the ability to attend the Board of Directors’ meetings
consistently. The directors shall be appointed by a majority vote of the shareholders’ meeting in accordance with the
following conditions and procedures:
1. Each shareholder shall be entitled to the number of votes equivalent to the number of share held by him.
One share shall have one vote.
2. Each Shareholder may exercise all the votes to elect one or several persons, as the shareholders’ meeting
may deem fit, as directors, but may not allot his votes to any person at any number.
3. The directors shall be appointed in accordance with the majority vote. In the event of equal votes among the
persons elected in order of respective high numbers of votes, the Chairman of that meeting shall have a
casting vote.
MMaannaaggeemmeenntt TTeeaamm The Company’s management team consists of 5 persons as follows:
1. Mr. Pete Rimchala Managing Director
2. Mr. Chua Cheng Khuan Senior Executive Vice President
3. Mr. Norawee Changlum Executive Vice President
4. Mr. Soraj Sutanadhan * Executive Vice President
5. Ms. Sasipimol Wasuwat * Executive Vice President
Note: * being appointed on February 21, 2011 as the resolution of Board of Director’s Meeting No. 1/2011
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 33
RReemmuunneerraattiioonnss ooff tthhee MMaannaaggeemmeenntt
((11)) CCaasshh RReemmuunneerraattiioonnss
TToottaall rreemmuunneerraattiioonnss ooff tthhee ddiirreeccttoorrss
Position Meeting Allowance The Board of Director’s meetings Chairman of the Board of Directors Baht 12,500 per one meeting Directors Baht 10,000 per one meeting The Audit Committee’s meetings Chairman of the Audit Committee Baht 12,500 per one meeting Audit Committee Baht 10,000 per one meeting The Nomination and Remuneration Committee’s meetings* Chairman of the Nomination and Remuneration Baht 10,000 per one meeting Nomination and Remuneration Committee Baht 10,000 per one meeting
Note: * being appointed on February 21, 2012 as the resolution of Board of Director’s Meeting No. 1/2012
In 2011, the Directors and the Audit Committee received remunerations as follows:
Name – Surname The Board of Directors’ Meetings The Audit Committee’s Meeting The Shareholders’ Meeting Attendance (meeting)
Total Remuneration (Baht)
Attendance (meeting)
Total Remuneration (Baht)
Attendance (meeting)
Total Remuneration (Baht) ***
1. LT.Gen.Preecha Wanarat * 4/4 50,000 4/4 50,000 1/1 152,500 2. Mrs.Chollada Fuvatanaslip * 3/4 30,000 3/4 30,000 1/1 115,000 3. Mr.Narong Rattana * 4/4 40,000 4/4 40,000 1/1 115,000 4. Mr.Pete Rimchala 4/4 40,000 - - 1/1 40,000 5. Mr.Chua Cheng Khuan 4/4 40,000 - - 1/1 40,000 6. Mr.Viboon Rujiraksathorn** 3/4 30,000 - - 1/1 40,000 7. Mr.Norawee Changlum 3/4 30,000 - - 1/1 40,000
Notes: * Audit Committee
** Rsigned as of September 1, 2011
*** Including the meeting allowance and yearly remuneration
RReemmuunneerraattiioonnss ffoorr tthhee mmaannaaggeemmeenntt
2011 Number of Management 5 persons * Total Remuneration (Baht) 13,294,932 Form of Remuneration salary and bonus
Notes: * Two of the Company’s managements receive the remuneration from Halcyon Metal Co.,Ltd, the Company’s subsidiary,
whereas two of the Company’s management receives the remuneration from the Company as well as its subsidiary.
((22)) OOtthheerr RReemmuunneerraattiioonnss
The Company established its provident funds for its employees since September 2008 onwards, employees must
contribute 2% of their basic salary and the Company will contribute at the same rate.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 34
CCoorrppoorraattee GGoovveerrnnaannccee The Company is aware of the significance of good governance principles. Therefore, the Board of Directors has
established the Code of Conduct for the Company’s directors which corresponds to the Code of Best Practices for
Directors of Listed Company under the guideline of Stock Exchange of Thailand. All rules and provisions are stipulated
based on actual practice. Furthermore, the Company applies the Good Corporate Governance for guideline on
development of the policy of right and equality of all shareholders and stakeholders, structure, duties, responsibilities and
independency of the directors, information disclosure and transparency, risk control and management, and business code
of conduct for the purpose of efficiency and transparency of the Company’s operation and management. The Board of
Directors’ Meeting No. 1/2011 held on February 21, 2011 approved the Company’s Good Corporate Governance
consisted of 5 categories as follows.
CCaatteeggoorryy 11 RRiigghhttss ooff SShhaarreehhoollddeerrss
The Company is aware and pays attention to rights of shareholders. It shall avoid any actions that violate those
rights and shall encourage shareholders to exercise their basic rights, which are buying, selling, or transferring shares,
sharing in the profit of the company, obtaining relevant and adequate information on the Company in a timely manner and
on a regular basis and participating and voting in the shareholder meetings to elect or remove members of the board,
appoint the external auditor, and make decisions on any transactions that affect the Company such as dividends payment,
amendments to the Company’s articles or memorandum of association, capital increases or decreases, and the approval
of extraordinary transactions, etc.
The Company shall perform things that encourage and facilitate the exercise of shareholders’ rights as follows:
• The Company will mandate the directors to prepare notice of the shareholders’ meeting in writing with
sufficient information, to send to shareholders for at least 7 days before the actual meeting or for the certain
period according to the rules and regulations of the Securities Exchange Commission or those of the Stock
Exchange of Thailand.
• During each meeting, the Chairman will inform shareholders of the criteria and procedures governing the
Company’s shareholders meetings, including the voting procedure and allocate appropriate time for the
meeting.
• Shareholders are able to send their questions and suggestions prior to the meeting date, and are able to
comment or query during the meeting, whereas directors and managements will attend the meeting to
answer.
• In case that the shareholders are not able to attend the shareholders’ meeting, the Company will enable
shareholders to appoint an independent director or any person as their proxy.
• The Company will record important queries and comments on the shareholders’ meeting report, which is
auditable by shareholders.
CCaatteeggoorryy 22 EEqquuiittaabbllee TTrreeaattmmeenntt ooff SShhaarreehhoollddeerrss
The Company shall treat all shareholders, including those with management positions, non-executive
shareholders, foreign shareholders and minority shareholders in an equal way as follows:
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 35
• Facilitate minority shareholders to nominate, in advance of the meeting dates, a candidate for director
position.
• The Board of Directors will not add any agenda items without notifying other shareholders in advance,
especially if it is an issue that will require shareholders to spend a good deal of time to study relevant
information before making their decisions.
• The Company established procedures concerning the protection of inside information that prohibit its
employees to disclose the inside information to irrelevant persons. In case that its employees or
management use or disclose the information for their or their related persons’ behalf, the action will be
considered misdeed and will be subject to take disciplinary action. In addition, the Company established the
policy to audit its directors and managements of disclosure of inside information on their benefits of stock
trading, which is disclosed in the section of Policy and Guidance Relating to Insider Information.
• In the shareholders’ meeting, the directors and managements will disclose whether they and their related
parties have any interest in any issue, in order for the Board of Directors to consider such issue entirely for
the Company’s benefits. Directors and managements who have such interests should not participate in the
decision making process on such issues.
CCaatteeggoorryy 33 RRoollee ooff SSttaakkeehhoollddeerrss
The Company pays attention to rights of each stakeholder group and has established a policy for each group as
follows:
Shareholders: The Company aims to conduct the business using its best knowledge and
management skills, with honesty and fairness to majority and minority shareholders in
the best interests of all shareholders and disclose the information completely and
accurately.
Staff: The Company will pay reasonable remunerations to all staff, provide safe working
environment for life and property, seriously and continuously develop the staff’s
potentials, strictly comply with all laws and regulations in conjunction with the staff,
avoid unfair practice which could affect staff’s career, and treat all staff with respect to
honor them humanity.
Customers: The Company aims to produce goods and provide services in good quality and
standard with reasonable price, always and strictly maintain customer’s confidence
and search for more opportunity to continuously increase customer’s benefits and
strictly follows the terms and conditions that the Company provides to the customers.
Suppliers and Creditors: The Company will not conduct its business with suppliers and creditors in bad faith. The
Company will strictly perform all agreements between the Company and creditors
whether the repayment, reimbursement, care of warrantee assets and any other
agreements given to the creditors for mutual benefit.
Trade Competitors: The Company will follow the best practices of competition, avoid using dishonest and
improper methods for acquisition of the competitor’s secret and avoid making baseless
claims to destroy the competitor’s reputation.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 36
Public: The Company will do nothing which will have adverse affect on the public, natural
resources and the environment. The Company will seek an opportunity to support
social creative activity, simultaneously and seriously educate staff on social
responsibility including strictly follow and monitor staff practice as required by laws or
regulations issued by the relevant authority.
CCaatteeggoorryy 44 DDiisscclloossuurree aanndd TTrraannssppaarreennccyy
The Company intends to disclose information accurately, transparently, timely and in compliance with the
standards and criteria set by the Stock Exchange of Thailand to ensure that each person receives information equally. The
afore-mentioned includes financial and general information and other information which affect the share price and the
decision making process of the investors and stakeholders. The Company posts the information on the Stock Exchange of
Thailand’s website and www.halcyon.co.th.
The Board of Directors is aware of the responsibility to have accurate, actual, complete and reasonable financial
statements. The consolidated financial statements of the Company were made in compliance with the generally accepted
accounting principles. The appropriate accounting policies have been consistently adopted. The accountancy information
recording is complete in order to maintain the integrity and aware of weaknesses so that the Company can consistently
prevent corruption or material crisis conducts including adequate disclosure of important information in the notes to the
financial statements. Moreover, the Board of Directors has appointed Audit Committee to examine financial reports, related
transactions and internal control system and the result of Audit Committee audits must be reported to each Board of
Directors’ meeting. The reports of the Board of Director, the Audit Committee and the Company’s external auditor are
disclosed in the Company’s Annual Report. Currently, the Company does not intend to establish the investment relation
department, but assigns Mr. Pete Rimchala, the Managing Director, to coordinate with shareholders, analyst and others. CCaatteeggoorryy 55 RReessppoonnssiibbiilliittiieess ooff tthhee BBooaarrdd
((11)) SSttrruuccttuurree ooff tthhee BBooaarrdd ooff DDiirreeccttoorrss
The Company’s Board of Directors comprises of ones who have knowledge, ability and experiences in business
operations beneficial to the Company. The Board of Directors, appointed by the shareholders’ meeting, consists of 6
directors which include 3 independent directors; of which 1 of them was appointed as the Chairman of the Board of
Directors and the Chairman of the Audit Committee whereas the other 2 were appointed as the Audit Committee. One of
the Audit Committee has accounting background and is able to verify the credibility of the financial statements. In addition,
one-third of the Board of Directors, or at least 3 directors, will be independent directors, who act as representatives of the
minority shareholders in examining and balancing the Company's operation for correct and fair operation and for the best
interest of shareholders.
The Chairman of the Board of Directors will not be the same person as the Chairman of the Executive Board and
the Managing Director in order to create a balanced and reviewed management. In addition, the Company has clearly
established the scope of authorities, duties and responsibilities of the directors, Executive Board and the Managing
Director, so that the Executive Board and the managing director will not have unlimited authorities regarding management
and credit line approval.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 37
((22)) SSuubbccoommmmiitttteeeess The subcommittees appointed by The Board of Directors to assist in monitoring the business of the Company
are:
• The Executive Board, consisting of 3 persons, which facilitates the Company’s operation and authorizes according to the scope of duties given by the Board of Directors.
• The Audit Committee, consisting of at least 3 persons, which examine and monitor the business of the Company authorizes according to the scope of duties given by the Board of Directors. All Audit Committee Member have qualifications as stated by the law of securities and securities exchange or the regulations, notifications or rules of the Securities and Exchange Commission or Stock Exchange of Thailand.
• The Nomination and Remuneration Committee, consisting of 3 persons, which help the Company to nominate and consider remuneration and to comply with the good corporate governamce according to the scope of duties given by the Board of Directors.
However, in the future, the Company may establish subcommittees to assist the Board of Directors on the assigned business of the Company.
((33)) SSccooppee ooff DDuuttiieess aanndd RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss The Board of Directors is responsible for establishing policies, visions, strategies, missions, business plans and
the Company’s budget including monitoring the management for effective and successful performance of the policies
provided under the law, objectives, Articles of Association and resolutions of the shareholders’ meeting. The Board of
Directors has established:
Corporate Governance Policy
The Board of Directors has established, in written, the policy of corporate governance and reviewed the policy
and its implementation at least annually
Code of Conduct
The Company has established the Code of Conduct as a guideline to the Board of Directors, Audit Committee
and every staff, which mainly compresses the principles of non-disclosure of the Company’s secret, honesty and
compliance with the laws, respect for the right of each other and protection of the Company's internal resources and the
environment. Focusing on the Code of Conduct will encourage all levels to work with honesty and support efficient internal
control which will create confidence in the capital market and among the investors.
Conflicts of Interest Policy
The Company has established the policy of conflicts of interest based on the principles that all staff must work in
the best interest of the Company. All acts and decisions must be made without influences of personal interest, in the
interest of family, kins or other person with whom the employees have personal relationship. This policy includes 2 matters
as follows:
• Related Transactions: The Company carefully considers the appropriateness of every related transaction
prior to enter into such transaction, including pricing and establishing of the conditions on the related
transactions on an arm’s length basis. The Audit Committee will consider the necessity and reasonability of
every transaction. In case the transactions are related transactions as stipulated in “Notification of Securities
and Exchange Commission of Thailand on Information Disclosure and Operation of the Listed Company in
the Related Transaction B.E. 2546”, the Company will comply with the rules, conditions, and procedures of
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 38
the Notification including disclosure of such transactions in the annual report and annual information
disclosure form (Form 56-1) for transparency of the related transactions and avoidance of the conflict of
interest and other circumstances under which a conflict of interest may develop.
• Other circumstances which may give rise to conflict of interest, which are:
1. General Investment. The Company does not allow the Company’s staffs who are involved in or receive
any benefits from the Company’s competitors, to participate in any decisions making for any matters in
conjunction with the relationship between the Company and such competitor. Unless the approval of
the Company’s Board of Directors or shareholders has been obtains under the requirements of Stock
Exchange of Thailand.
2. Gift. Every staff of all levels should not accept any gift, journey ticket, sport ticket, offer of vacation,
accommodations or any offer of personal benefits, etc. if such acceptance entails obligations to the
Company or loss to the Company's benefits.
3. Academic work, public service work, lecturer or taking any position. Every staff of all levels may
request for the approval of the director of their work line in order to engage in any academic work,
public service work, and lecturer or taking any position, e.g. Company's director and consultant, which
will create more visions and experience, provided that such staff must not involve the Company or his
position in the Company without approval.
Internal Control
The Company has set up an internal control system in order to operate the Company’s business effectively and
increase the credibility of its financial statements. The Company has not had the internal audit department; therefore, the
Compnay hired MMN Syndicate Office Co., Ltd. operated by Mr.Marnit Aongphisud, Certified Public Accountant, who is
competent in accounting and internal control, as a consultant of the Company to improve the internal control system and
eliminate risks and unusual transactions. The Company annually reviews its internal control system and assesses risk
management. Upon the expiration of the hiring contract, the Company plans to continue the contract and at the same time
training its staffs for the job.
In addition, the Company has appointed Mr. Norawee Changlum as the Audit Committee’s secretary,
coordinating with MMN Syndicate Office Co., Ltd. and proposing the result of internal audit to the Audit Committee at least
once every 3 months.
((44)) MMeeeettiinngg ooff tthhee BBooaarrdd ooff DDiirreeccttoorrss The Board of Directors will arrange a meeting at least once every 3 months and may have special additional
meetings, if necessary. The written notice of the meeting will be sent to directors for its consideration in advance at least 7
days before the meeting date except in case of an emergency or preserve the right or benefit of the Company. The
directors can request any related disclosure from the Company’s secretary.
The Chairman of the Board of Directors and Managing Director will set the board meeting agenda together and
each director is free to propose issues for a meeting agenda. The executive managements may attend some agendas
during the meeting to provide information in details.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 39
((55)) RReemmuunneerraattiioonnss The Company has established a policy to set remunerations of the directors and Audit Committee as an incentive
to keep quality directors who meet the Company’s standard. The remuneration shall be at the same rate as paid by a
similar industry and which is based on the result of operation of the Company. The remuneration has to be proposed for
approval in the shareholders’ meeting.
Remuneration of the Managing Director and top executives should be in accordance with the scope of authorities
and the policy of the board. For the best interest of the company, executives’ salaries, bonuses, and other long-term
compensation will correspond to the company’s performance and that of each executive.
((66)) DDiirreeccttoorr aanndd MMaannaaggeemmeenntt TTrraaiinniinngg The Board of Director will encourage and facilitate training for all internal parties related to corporate governance
such as directors, Audit Committee, managements, etc. Training will enable them to continuously improve their
performances. It can be either internal or external training.
The Company’s secretary will provide each new director with all documents and information useful to perform
their duties, including introduction of the nature of the business and the operations. PPoolliiccyy aanndd GGuuiiddaannccee RReellaattiinngg ttoo IInnssiiddeerr IInnffoorrmmaattiioonn
The Company has a policy and ways to examine directors and executives concerning use of insider information
not yet disclosed to the public for personal gains as follows:
1. The Company will educate directors and executives on the duty to report their shareholdings, shareholdings
of their spouses and minor children to the Office of the Securities and Exchange Commission and the Stock
Exchange of Thailand according to Section 59 and penalties in Section 275 of the Securities and Exchange
Act, B.E. 2535.
2. The Company requires that the executives have to report any change in their shareholdings to the Office of
the Securities and Exchange Commission according to Section 59 of the Securities and Exchange Act, B.E.
2535 in order that the Company can monitor stock trading of each executive.
3. The Company will send circular notices to executives to advise them of the important information that could
affect stock prices in order to restrain trading their shares for the 1-month period before financial statements
or such information are disclosed to the public and not to disclose such important information to other
people. In case the non-disclosed information was used in a way that the Company or shareholders will
suffer lost or damaged and the person responsible is executive-level person, the Board of Directors will
consider the punishment and if the misconduct was carried out by lower-level managers, the managing
director will be responsible for meting out the punishment.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 40
SSttaaffffss ((11)) CCoommppaannyy’’ss SSttaaffff aanndd RReemmuunneerraattiioonn
The numbers of the Company’s staffs of each department are as follows:
No. Department Number of Staffs
as at December 31, 2011
1. Production 92 2. Quality Assurance 18 3. Marketing 4 4. Purchasing 1 5. Finance and Accounting 5 6. Administration 4 Total 124
In 2011, the Company paid remunerations to all staff (excluding management) in form of salary, bonus and etc.
such as overtime, allowance, provident fund as follows:
2011 Number of Staff (persons) 124 Total Remuneration (Baht) 32,340,976
((22)) HHuummaann RReessoouurrccee DDeevveellooppmmeenntt
The Management is aware of the importance of human resources which is the key factor for a business.
Therefore, the Company has set out a policy of staff training on the utilization of new machine imported by the Company in
order to understand the operating system as a whole and to be professionally trained. In addition, the staff will directly gain
experiences from technology transferred by international machine suppliers. Furthermore, the Company arranges for job
rotation to allow the staffs to work with various type of machine to be able to work in substitution.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 41
IInntteerrnnaall CCoonnttrrooll
((11)) AAddeeqquuaaccyy ooff IInntteerrnnaall CCoonnttrrooll SSyysstteemm AAsssseessssmmeenntt bbyy BBooaarrdd ooff DDiirreeccttoorrss At the meeting of Board of Directors No. 1/2011 dated February 21, 2011 with participation of Audit Committee.
The Board of Directors had assessed internal control system by inquiring information from management on the adequacy
of internal control system of the Company in 5 areas consisting of organization and environment, risk management,
management control, information system and data communications, and monitoring system. After the assessment, the
Board of Directors believed that the Company has the adequate internal control system for transactions with major
shareholders, directors, executives or related persons and the Company had sufficient internal control in all 5 areas which
are appropriate and sufficient to protect its assets from misuse or unauthorized use by the management. Also, the
Company has an independent internal control system, which can be tracked and assessed including the storage system
of important documents for examination as in appropriate by directors, auditors and person in authority.
((22)) IInntteerrnnaall AAuuddiitt PPoolliiccyy
In 2010, the Company hired MMN Syndicate Co., Ltd. led by Mr.Marnit Aongphisud, the certify auditor who has
knowledge and experience in accounting system and internal control as well, to be the consultant of ithe Companay’s
internal control system including with assesses risks and directly report about the irregular transactions to Audit
Committee. The Company’s internal control department has responsibilities for cooperating and being the Audit
Committee’s secretary including with learning with the expert in order to apply in the future. The internal auditor assesses
risks, makes annual internal audit program, audits, follows up with the system improvement and directly report to the Audit
Committee at least every quarter.
((33)) AAuuddiittoorr OObbsseerrvvaattiioonnss oonn tthhee CCoommppaannyy''ss SSyysstteemmss ooff IInntteerrnnaall CCoonnttrrooll
From review of the Company’s internal control system for the year 2011, the auditor reported to Audit
Committee’ s Meeting No.1/2012 dated February 21, 2012 that there was no significant issue of internal control system so
that there was no report of auditor observations on the Company's systems of internal control in 2011.
((44)) OObbsseerrvvaattiioonn ooff IInntteerrnnaall AAuuddiittoorr oonn tthhee IInntteerrnnaall CCoonnttrrooll SSyysstteemmss In 2011, MMN Syndacate Co., Ltd. was the Company’s internal auditor and assigned to audit the Company
internal control systems. The internal auditor had audited the internal control system and provided recommendation for the
improvement. The management had corrected and improved the internal control as recommended by internal auditor. As
such, there is no significant issue of internal control system.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 42
The Related Transactions
((11)) TThhee RReellaatteedd TTrraannssaaccttiioonn iinn 22001111
Detail as describe in the Notes to Financial Statements, Subject: Transactions with related parties.
((22)) MMeeaassuurreess oorr PPrroocceedduurreess ffoorr RReellaatteedd TTrraannssaaccttiioonn AApppprroovvaall
The enter of any related transaction with the person who may have a conflict of interest must be submitted to the
Audit Committee to consider and approve in the best interest of the Company and to protect investors and persons related
to the Company. Such related transactions shall be in accordance with the rules regarding securities and the stock
exchange and regulations, notifications, orders or rules of the Stock Exchange of Thailand. A person who may have any
conflict of interest in the related transactions shall not be allowed to participate in an approval of such transactions.
For the regular traded transactions such as purchases or sales of products from a related company, the
Company has the policy to comply such transactions with the normal trade practice with appropriate prices and
conditions. However, the price shall not be higher than the price that the Company can purchase from other distributors.
Such transactions will be examined by the Audit Committee every quarter and the reasonable of the transactions will be
considered through market price, condition, and the necessity of the effect on Company businesses such as delivery
period or qualification of product. This is for the best interest of the Company.
((33)) TTrreenndd ooff RReellaatteedd TTrraannssaaccttiioonnss iinn tthhee FFuuttuurree
Related transactions that may occur in the future will have similar conditions with the normal trade practice with
reference to appropriate prices and market conditions. However, the Company and/or the Company group shall invite the
Audit Committee and/or independent directors to comment on the price including the necessity and appropriateness of
such transaction. If there is any transaction related to any person who might has a conflict of interest with the Company in
the future, the Company shall perform in accordance with regulations, notifications, and/or rules of the Office of the
Securities and Exchange Commission and/or the Stock Exchange of Thailand. The Company may invite an independent
specialist or an auditor of the Company to make a comment on such transaction to supplement the Board of Directors or
shareholders determination, depending on the circumstance. At all events, the Company group will disclose related
transactions in the supplementary notes to the financial statement which is audited by the auditor of the Company.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 43
FFiinnaanncciiaall SSttaattuuss aanndd OOppeerraattiinngg RReessuullttss
HHaallccyyoonn TTeecchhnnoollooggyy PPuubblliicc CCoommppaannyy LLiimmiitteedd aanndd SSuubbssiiddiiaarryy BBaallaanncceedd SShheeeett
AAss aatt DDeecceemmbbeerr 3311,, 22000099 -- 22001111 UUnniitt:: BBaahhtt
Balance Sheet Consolidated Financial Statement
2009 2010 2011 Amount % Amount % Amount %
Assets Current Assets Cash and cash equivalents 67,481,127 14.93 70,486,807 12.54 73,400,919 10.87 Trade account receivable - net 82,643,591 18.28 104,419,231 18.57 97,477,192 14.44 Inventory 20,925,817 4.63 40,842,368 7.26 70,752,144 10.48 Other current assets 2,253,948 0.50 2,296,650 0.41 9,444,283 1.40
Total current assets 173,304,483 38.33 218,045,056 38.78 251,074,538 37.20 Non-Current Assets Property, plant and equipment 276,899,322 61.25 323,945,347 57.62 419,670,311 62.17 Intangible assets – net - - 5,697,766 1.01 2,871,182 0.43 Advance for acquisition of machineries - - 10,864,407 1.93 1,189,002 0.18 Other non-current assets 1,895,116 0.42 3,695,360 0.66 194,300 0.03
Total non-current assets 278,794,438 61.67 344,202,880 61.22 423,924,795 62.80 Total Assets 452,098,921 100.00 562,247,936 100.00 674,999,333 100.00
Labilities and shareholders’ equity Current Liabilities Overdrafts and short-term loans from financial institution 20,000,000 4.42 41,960,570 7.46 66,048,381 9.78 Trade account payable 31,183,880 6.90 27,832,678 4.95 30,889,977 4.58 Payable from fixed asset acquisition 64,195,283 14.20 35,255,310 6.27 31,472,802 4.66 Current portion of long-term loan from financial institution 4,333,000 0.96 5,000,000 0.89 15,671,399 2.32 Current portion of liabilities under financial lease agreements 750,504 0.17 1,199,069 0.21 711,328 0.11 Other current liabilities Accured corporate income tax 436,721 0.10 2,845,505 0.51 2,296,571 0.34 Accured expenses 10,086,435 2.23 17,692,308 3.15 12,335,135 1.83 Others 690,277 0.15 2,268,962 0.40 2,902,806 0.43
Total current liabilities 131,676,100 29.13 134,054,402 23.84 162,328,399 24.05 Non-Current Liabilities Long-term loan from financial institution - net 1,800,000 0.40 - - 31,342,794 4.64 Retirement benefit obligations - - 6,381,710 1.14 7,482,598 1.11 Liabilities under financial lease agreements - net 1,125,756 0.25 1,326,200 0.24 185,514 0.03
Total Non-Current Liabilities 2,925,756 0.65 7,707,910 1.37 39,010,906 5.78 Total Liabilities 134,601,856 29.77 141,762,312 25.21 201,339,305 29.83
Shareholders’ Equity Authorised share capital 240,000,000 53.09 240,000,000 42.69 240,000,000 35.56 Issued and paid up share capital 220,000,000 48.66 240,000,000 42.69 240,000,000 35.56 Premium on share capital 17,084,971 3.78 45,538,579 8.10 45,538,579 6.75 Retained Earning: Appropriated for legal reserve 8,122,606 1.80 11,962,606 2.13 15,362,606 2.28 Unappropriated 70,980,774 15.70 107,851,579 19.18 157,704,528 23.36 Adjustment from the combination of entity under common controls 1,308,714 0.29 1,308,714 0.23 1,308,714 0.19 Adjustment for foreign exchange transaction - - (1,110,613) (0.20) (4,320,369) (0.64)Total equity attributable to parent company 317,497,065 70.23 405,550,331 72.13 455,594,058 67.50 Non-controlling interests - - 14,935,293 2.66 18,065,970 2.68 Total Shareholders’ Equity 317,497,065 70.23 420,485,624 74.79 473,660,028 70.17 Total Liabilities and Shareholders’s Equity 452,098,921 100.00 562,247,936 100.00 674,999,333 100.00
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 44
SSttaatteemmeennttss ooff IInnccoommee FFoorr tthhee YYeeaarrss EEnnddeedd DDeecceemmbbeerr 3311,, 22000099 -- 22001111
UUnniitt:: BBaahhtt
Statements of Income Consolidated Financial Statement
2009 2010 2011 Amount % Amount % Amount %
Revenues
Revenue from sales and services 236,795,128 96.52 360,483,431 97.74 412,470,690 98.09
Other income 8,536,196 3.48 8,340,136 2.26 8,033,422 1.91
Total Revenues 245,331,324 100.00 368,823,567 100.00 420,504,112 100.00
Expenses
Cost of sales and services 142,911,969 58.25 213,682,473 57.94 232,156,074 55.21
Selling and administrative expenses 32,746,825 13.35 59,556,413 16.15 85,071,794 20.23
Total Expenses 175,658,794 71.60 273,238,886 74.08 317,227,868 75.44
Profit before interest and tax 69,672,530 28.40 95,584,681 25.92 103,276,244 24.56
Interest expenses (3,393,762) (1.38) (3,087,280) (0.84) (8,607,611) (2.05)
Income tax (1,247,097) (0.51) (6,396,733) (1.73) (6,165,187) (1.47)
Net Profit 65,031,671 26.51 86,100,668 23.34 88,503,446 21.05
Net profit (loss) attributable to: Owner of the Company 26.51 87,405,375 23.70 86,853,483 20.65 Non-controlling interests - - (1,304,707) (0.35) 1,649,963 0.39 Net profit 26.51 86,100,668 23.34 88,503,446 21.05
Basic Earning per share Net profit attributable to owner of the Company 0.31 0.37 0.36 Weighted average number of share (shares) 210,845,969 237,941,176 240,000,000
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 45
SSttaatteemmeenntt ooff CCoommpprreehheennssiivvee IInnccoommee
FFoorr tthhee YYeeaarrss EEnnddeedd DDeecceemmbbeerr 3311,, 22000099 -- 22001111 UUnniitt:: BBaahhtt
Statements of Comprehensive Income
Consolidated Financial Statement 2009 2010 2011
Amount % to total
sales Amount
% to total sales
Amount % to total
sales Net profit for the year 65,031,671 26.51 86,100,668 23.34 88,503,446 21.05
Foreign currency transaction difference - - (1,110,613) (0.30) (3,209,756) (0.76)
for foreign operations
Total comprehensive income for the year 65,031,671 26.51 84,990,055 23.04 85,293,690 20.28
Net profit (loss) attributable to: Owner of the Company 65,031,671 26.51 85,304,501 23.13 83,643,727 19.89 Non-controlling interests - - (314,446) (0.09) 1,649,963 0.39 Total comprehensive income for the year 65,031,671 26.51 84,990,055 23.04 85,293,690 20.28
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 46
SSttaatteemmeenntt ooff CCaasshh FFlloowwss
FFoorr tthhee YYeeaarrss EEnnddeedd DDeecceemmbbeerr 3311,, 22000099 -- 22001100 UUnniitt:: BBaahhtt
Statements of Cash Flows Consolidated Financial Statement 2009 2010 2011
Cash Flows from Operating Activities Net Profit before income tax 66,278,768 92,984,007 94,668,633 Adjustments to reconcile net profit to net cash provided by operating Unrealized (gain) loss on foreign exchange rate (474,001) (1,715,218) (1,379,242) Depreciation 30,765,434 43,702,926 55,887,265 Doubtful accounts (reversal) 17,912 255,513 267,310 (Gain) loss on disposal of equipment (179,333) (280,092) (230,101) Unrealized loss from inventory obsolescence - 3,544,986 1,341,783 (Gain) on disposal of investments - - (3,209,756) Retirement benefit obligations - 486,606 1,100,888 Interest expense 3,369,394 1,973,886 8,617,635 Profit from operating activities before change in operational assets 99,778,174 140,466,008 157,064,415 and liabilities: Decrease (Increase) in operational assets: Trade account receivable – Other companies (18,447,506) (21,892,329) 7,879,365 Inventories (2,661,845) (23,461,537) (31,251,559) Other current assets 2,698,622 (1,845,090) (7,147,633) Other non-current assets (58,444) 2,144 3,501,060 Increase (Decrease) in operational liabilities: Trade account payable – Other companies 13,419,680 (3,313,479) 3,072,493 Other current liabilities (441,857) 4,184,558 (4,723,329) Cash provided by operations activities 94,286,824 94,140,275 128,394,812 Interest paid (3,291,257) (1,973,886) (8,617,635) Income taxes paid (6,533,893) (3,987,949) (6,714,121)Net cash provided by operating activities 84,461,674 88,178,440 113,063,056Cash Flow from Investing activities Cash paid for purchase of property, plant and equipment (60,711,684) (128,903,076) (148,067,748)Cash paid for intangible asset acquisition - (2,000,000) - Proceeds from disposal of equipment 2,773,248 1,009,138 3,936,086Net Cash Used in Investing Activities (57,938,436) (129,893,938) (144,131,662)Cash Flow from Financing Activities Increase (Decrease) in bank overdrafts and short-term loans from (21,049,394) 21,960,570 24,087,811 Proceeds from long-term loan from financial institutetion - 9,000,000 47,014,193 Payments for long-term loan from financial institutetion (16,408,000) (10,133,000) (5,000,000) Dividend paid (56,807,940) (40,800,000) (33,600,000) Proceeds from share subscription from minority interest - 16,240,000 1,480,714 Preceeds from issue of share capital 61,119,900 50,000,000 -Cash paid for cost of share subscription (3,288,329) (1,546,392) - Net Cash Provided by (Used in) financial activities (36,433,763) 44,721,178 33,982,718 Net Increase (Decrease) in Cash and Cash Equivalents (9,910,525) 3,005,680 2,914,112 Cash and Cash Equivalents, Beginning of the year 77,391,652 67,481,127 70,486,807 Cash and Cash Equivalents, End of the year 67,481,127 70,486,807 73,400,919
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 47
FFiinnaanncciiaall RRaattiiooss
FFoorr tthhee YYeeaarrss EEnnddeedd DDeeccoommbbeerr 3311,, 22000099 –– 22001111
Finanaial Ratios Consolidated Financial Statement 2009 2010 2011
Liquidity Ratios Current Ratio (Times) 1.32 1.63 1.55 Quick Ratio (Times) 1.14 1.30 1.05 Operating Cash Flow to Current Liabilities Ratios (Times) 0.68 0.66 0.76 Accounts Receivable Turnover (Times) 3.22 3.88 4.08 Average Collection Period (Days) 112 93 90 Inventory Turnover (Times) 7.29 6.92 4.16 Average Day’s Sales in Inventory (Days) 49 52 88 Accounts Payable Turnover (Times) 5.84 7.24 7.91 Average Payment Period (Days) 62 50 46 Cash Cycle (Days) 99 96 131 Profitability Ratios Gross Profit Margin (%) 39.65% 40.72% 1.55 Operation Profit Margin (%) 29.42% 26.59% 1.05 Operating Cash Flow to Operating Profit Ratio (%) 121.23% 92.01% 0.76 Net Profit Margin (%) 26.51% 23.48% 4.08 Return on Equity (%) 22.86% 23.26% 90 Efficiency Ratios Return on Total Assets (%) 15.79% 17.07% 14.04% Return on Fixed Assets (%) 39.60% 28.82% 38.39% Total Asset Turnover (Times) 0.60 0.73 0.68 Financial Policy Ratios Debt to Equity Ratio (Times) 0.42 0.32 0.44 Interest Coverage Ratio (Times) 26.25 34.10 14.90 Fixed Charged Coverage Ratio (cash basis) (Times) 0.54 0.48 0.61 Dividend Payout Ratio (%) 41.70% ** 38.80% *** 43.39% **** Earning Per Share * (Baht) 0.27 0.36 0.36
Notes:
* The calculation based on paid up capital of baht 240 million and adjust the par value to baht 1 per share.
** The Company announced to pay dividend for 2009 of Baht 27.12 million (paid on September 11, 2009 amounting of Baht 7.9 million for
220 million shares and to be paid on April 29, 2010 amounting of 19.20 million for 240 million shares) from net profit of 2009.
*** The Company announced to pay dividend for 2010 of Baht 33.60 million (paid on September 1, 2010 amounting of Baht 21.60 million
and to be paid on April 29, 2010 amounting of 12.00 million for 240 million shares) from net profit of 2010.
**** The Company announced to pay dividend for 2011 of Baht 38.40 million (paid on September 9, 2011 amounting of Baht 21.60 million
and to be paid on May 2, 2012 amounting of 16.80 million for 240 million shares) from net profit of 2011.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 48
EExxppllaannaattiioonn aanndd AAnnaallyyssiiss ooff FFiinnaanncciiaall SSttaattuuss aanndd OOppeerraattiinngg RReessuullttss
AAnnaallyyssiiss ooff OOppeerraattiinngg RReessuullttss ffoorr tthhee YYeeaarr ooff 22001111
RReevvuunnuuee The total revenues of the Company and its subsidiary in 2011 were Baht 420.50 million; equivalent to 14.01%
increased from that of previous year. The revenue from sales and services of the Company and its subsidiary were Baht
412.47 million, equivalent to 14.42% increased from that of previous year. The domestic orders were decreased due to
Tsunami in Japan and flood problem in Thailand. However, in 2011, the Company began to recognize the revenues from
its subsidiaries in Philippines, which resulted to the increase of total revenues. Other revenues in 2011 were Baht 8.03
million, representing 1.91 of total revenues, consisted of proceeds from disposal equipment, gain from exchange rate,
interest income, revenue from sales of scrap, and the write-off of a duplicated account payable.
CCoosstt aanndd GGrroossss PPrrooffiitt MMaarrggiinn The Company’s important costs are product and raw material cost, labor cost, depreciation, representing
30.30%, 24.16%, and 20.87%, respectively. Total cost of good sold in 2011 was Baht 232.16 million, equivalent to 8.65%
increased from that of 2010 mainly due to cost from the purchase of product for distribution and the depreciation as the
increase of new machines. However, the percentage of cost of good sold to revenue from sales and services decreased
from 59.28% in 2010 to 56.28% in 2011, which resulted to the gross profit of Baht 180.31 million, equivalent to 22.83%
increased from that of 2010, representing the gross profit margin of 43.72% which increased from that of 40.72% in 2010. SSeelllliinngg aanndd AAddmmiinniissttaattiivvee EExxppeennsseess Selling and administrative expenses in 2011 were Baht 85.07 million, equivalent to 42.84% increased from those
of 2010 mainly due to the increase of employee expenses from the investment expansion of setting up subsidiaries, which
resulted to the percentage of selling and administrative expenses to toal revenues increased from 16.15% in 2010 to
20.23% in 2011. NNeett PPrrooffiitt
Net profit of the Company in 2011 was Baht 88.50 million and net profit attributable to owner of the Company in
2011 was Baht 86.85 million, representing the net profit margin of 21.05 and 20.65, respectively. Net profits attribute to
owner of the Company in 2011 decreased by 0.63% from that of 2010 due to the increase of selling and administrative
expenses and interest expenses.
In 2011, there was foreign currency transaction difference for foreign operations of Baht 3.21 million, which
resulted to the comprehensive income of Baht 85.29 million and the comprehensive income attributable to owner of the
Company of Baht 83.64 million, representing the net profit margin of 20.28% and 19.89%, respectively.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 49
AAnnaallyyssiiss ooff FFiinnaanncciiaall SSttaattuuss ffoorr tthhee yyeeaarr ooff 22001111
AAsssseettss Total assets at the end of 2011 were Baht 675.00 million consisting of the current assets of Baht 251.07 million
which increased of Baht 33.03 million or equivalent to 15.15% increased from those of 2010. Non current assets were Baht
423.92 million which increased of Baht 79.72 million or equivalent to 23.16% increased from those of 2010. The key assets
were as following:
(1) Cash and equivalent at the end of 2011 were Baht 73.40 million, equivalent to 4.13% increased from those of
2010 due to the increase of cash from operating activity.
(2) Trade account receivables at the end of 2011 were Baht 97.48 million which decreased of Baht 6.94 million
or equivalent to 6.65% decreased from those of 2010 due to the improvement of account receivable collectability, which
resulted the decrease of average collection period. The average collection period in 2011 was 90 days complying to the
Company credit policy for account receivables of approximately 60 – 90 days. The Company’s 6-12 months and more than
12 months over due receivables were Baht 0.04 million and Baht 1.32 million, respectively, representing 0.48% and 1.43%
of total receivables.
(3) Inventory at the end of 2011 was Baht 70.75 million, which increased of Baht 29.91 million or equivalent to
73.23% increased from that of 2010 due to the stock of raw materials to support the order in 2012, together with the
recognition of subsudiary’s raw materials. The inventories consisted of raw materials, work in process, and finished goods
which represented 53.57%, 10.23%, and 36.20%, respectively. An allowance for inventory obsolescence will be set 100%
for product aging more than 1 year. In 2010, the Company’s allowance for inventory obsolescence was Baht 4.87 million.
(4) Other current assets at the end of 2011 was Baht 9.44 million, which increased of Baht 7.15 million from the
end of 2010 due to the advance for acquisition of machineries of Baht 4.60 million.
(5) Property, plant and equipment (net) at the end of 2011 were Baht 419.67 million which increased of Baht
95.72 million or equivalent to 29.55% increased due to the purchase of new machines for capacity expansion, mostly the
new machines belong to the Company’s subsidiary in Philippines, financing by loan from financial institution and operating
cash.
(6) Intangible assets at the end of 2011 were Baht 2.87 million which were the right to acquire the product name
and trademark of the franchisor (Franchise rights). Such assets are amortized on the straight line method over their useful
life of 3 years.
(7) Advance for acquisition of machineries at the end of 2011 was Baht 1.19 million, which decreased of Baht
9.68 million or equivalent to 89.06% decreased from the end of 2010 due to the partial payment and the transferring of
advance for acquisition of machineries of Baht 4.60 million to other current assets.
TToottaall LLiiaabbiilliittiieess Total liabilities at the end of 2011 were Baht 201.34 million, mostly are current liabilities, which increased Baht
59.58 million or equivalent to 42.03% increased from 2010 due to (1) the increase of overdrafts and short term loan from
financial institution of Baht 24.09 million (2) the increase of long term loan from financial institution of Baht 42.01 million.
Such loan increased in order to purchase raw materials and invest in new machines, mostly of the Company’s subsidiary.
From January 1, 2011, the Group has adopted the Thai Accounting Standard (TAS) No.19 “Employee Benefits”,
which resulted to the Company to have the retirement benefit obligation at the end of 2011 of Baht 7.48 million
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 50
SShhaarreehhoollddeerrss’’ EEqquuiittiieess At the end of 2011, the Company’s shareholders’ equities were Baht 455.59 million which increased Baht 50.04
million due to (1) net profit of Baht 86.85 million and (2) divedend payment of Baht 33.60 million. In 2011, the non
controlling interest was Baht 18.07 million from the investment in Haltek Co., Ltd. and Halcyon Technology (Philippines)
Inc., which the Company owns 70% and 65% shares in such subsidiaries. The adjustment for foreign exchange
transaction was Baht 3.21 million.
Debt to equity ratio at the end of 2011 was 0.44 times which increased from the end of 2010 due to the increase
of liability from loan from financial institution. However, such ratio was related low.
LLiiqquuiiddiittyy ((11)) CCaasshh FFlloowwss Cash flow form operating activities in 2011 was Baht 113.06 million mainly due to the increase of net profit and
the decrease of account receivable. Cash flow from investing activities in 2011 was Baht (144.13) million which mainly
used to invest in property plant and equipment in amounting of Baht 148.07 million. Cash flow from financing activities in
2011 was Baht 33.98 million as result of the increase of overdraft and short-term loan of Baht 24.09 million and cash
received from long-term from financial institution of Baht 47.01 million. The dividend payment was Baht (33.60) million.
((22)) CCuurrrreenntt RRaattiioo aanndd CCaasshh CCyyccllee Current Ratio in 2011 was 1.55 times which decreased from 1.63 in 2010 due to the increase of current liabilities
from overdraft and short-term loan from financial institution. Cash cycle increased from 97 days in 2010 to 131 days in
2011 due to the increase of average day’s sale in inventory. AAuuddiitt FFeeee The financial statements were reviewed and audited by Mr. Pradit Rodloytuk, the certify auditor no. 218, from
AST Master Co., Ltd. and the audit fee for the Company and subsidiaries (HM and HC) in 2011 amounting Baht 950,000
(Audit fee for all).
TThhee SSiiggnniiffiiccaannttllyy FFiinnaanncciiaall CChhaannggee aafftteerr DDeecceemmbbeerr 3311,, 22001111
The Company will identify the rightful shareholders who may receive dividend on April 18, 2012 (Record Date)
and will close share registration book on April 19, 2012 to determine the rightful shareholders to receive dividend Baht 0.07
per share on May 2, 2012 as amount of Baht 16.80 million. The effect on retained earning, shareholders’ equity, and book
value of the Company after dividend payment will be as following:
December 31, 2011 After dividend payment
in May 2012 Retained Earning (Million Baht) 157.70 Approximately 140.90 Shareholders’ equity (Million Baht) 455.59 Approximately 438.79 Book value per share (Baht) 1.90 Approximately 1.83
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 51
RReeppoorrtt ffrroomm tthhee BBooaarrdd ooff DDiirreeccttoorrss ffoorr tthhee rreessppoonnssiibbiittiittiieess oonn FFiinnaanncciiaall SSttaatteemmeennttss
The Board of Directors is responsible for the financial statements of Halcyon Technology (Public) Company Limited and
consolidated financial statemenst of the Company and its subsidiary as well as the information shown in the annual report.
The financial statements have been prepared in accordance with the generally accepted accounting principles in Thailand
using the appropriate accounting policies on the consistent basis. Crucial information was sufficiently disclosed in Notes to
Financial Statements for the advantages of the shareholders and general investors.
The Board of Directors has appointed the Audit Committee to oversee the accounting policies and the accurancy of
financial reports, including the review of the internal control system. The opinion of the Audit Committee is presented in the
Audit Committee’s Report, included in this annual report. Moreover, the Company’s external auditor also gives opinion
towards financial statements of the Company and subsidiary presented in Report of Certified Public Accountant which is
also included in this annual report.
The Board of Directors has the opinion that the Company’s overall internal control system is adequacy and be assured that
the financial reports of the Company for the year ended December 31, 2011 are accurate and fairly stated, as well as in
the compliance with the relevant laws and regulations.
(Lieutenant General Preecha Wanarat) (Mr. Pete Rimchala)
Chairman Managing Director
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 52
AAuuddiitt CCoommmmiitttteeee’’ss RReeppoorrtt The Company’s Audit Committee consists of the 3 independent directors in accordance with the qualification and rules stipulated by
The Stock Exchange of Thailand are as following:
1. Lieutenant General Preecha Wanarat Chairman of the Audit Committee
2. Mr. Narong Rattana Audit Committee
3. Ms. Chollada Fuvatanaslip Audit Committee
Ms. Chollada Fuvatanaslip, member of the Committee who possesses knowledge and experience in the accounting field. All of the
Audit Committee members do not have any vested interest in the Company. Neither are they shareholders, management, staffs, and
employees of the Company.
The Audit Committee has performed its duties within scope of work authorized by the Company’s Board of Directors. Its primary
responsibilities have been to conduct a review in order that the Company has a financial report that is correct and transparent, to
review that the Company has good corporate governance in line with the corporate governance priciples. In this regard, the Audit
Committee conducted 4 meetings in 2011, the content of which can be summarized as follow:
1. The Accurancy of Financial Statement: The Audit Committee reviewed and provided independent opinions in respect
of the quarterly and yearly financial statements prior to submission to the Company’s Board of Directors for approval.
A meeting with the Company’s authorized financial auditor was set in order to propose clarification, observations, and
recommendation. The Audit Committee had an opinion that the Company’s financial statements are accurate,
complete and reliable.
2. The Adequacy of Internal Control System: The Audit Committee evaluated the adequacy of the Company’s internal
control system including the review of the intrernal audit report and had an opinion that the Company’s internal control
system is adequate and appropriate.
3. Corporate Governance: The Audit Committee had an opinion that the Company complies with the principles of good
corporate governance adequately and appropriately. The Audit Committee intends to perform its duty under the good
corporate governance conducts and be responsible to monitor that the Company’s operations and activities follow
the policy of the Board of Directors on the efficient transparent and legitimate manner, and to protect the interest of all
shareholders with good care and fair treatment.
4. Transaction that may have Potential Conflict of Interest: The Audit Committee considered the related transactions or
transaction which may have potential conflict of interest every quarter and had opinion that the related transactions
for the year of 2009 were in the ordinary business condition, reasonable and most beneficial to the Compnay.
5. The Appropriateness of Auditor: The Audit Committee made the selection of auditor by considering the
independence and appropriateness of auditor and their remuneration. A resolution was made and proposed to the
Company’s Board of Directors for approval and to be certified by the annual general meeting of shareholders.
(Lieutenant General Preecha Wanarat)
Chairman of the Audit Committee
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 53
REPORT OF CERTIFIED PUBLIC ACCOUNTANT To The Board of Directors and Shareholders of Halcyon Technology Public Company Limited
and Subsidiaries
I have audited the consolidated statements of financial position of Halcyon Technology Public
Company Limited and Subsidiaries as at December 31, 2011 and 2010, the consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended. I have also audited the separate financial statements of Halcyon Technology Public Company Limited. These financial statements are the responsibility of the Company’s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform an 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 audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Halcyon Technology Public Company Limited and Subsidiaries and of Halcyon Technology Public Company Limited as at December 31, 2011 and 2010, the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles.
As discussed in Note 4.2 in notes to the financial statements, from January 1, 2011, the Group has changed its accounting policies by adopting TAS 19 “Employee benefits.” As a consequence, the financial statements for the year ended December 31, 2010, presented herein for comparative purpose, have been restated accordingly in compliance with such changes in accounting policies. I have audited the adjustments that were applied to restate the comparative financial statements. In my opinion, such adjustments are appropriate and have been reasonably applied to the financial statements.
(PRADIT RODLOYTUK) Certified Public Accountant Registration No. 218
Ast Master Co.,Ltd. February 21, 2012
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 54
Notes 2011 2010 2011 2010(Restated) (Restated)
CURRENT ASSETSCash and cash equivalents 73,400,919 70,486,807 37,853,868 15,525,551 Trade accounts receivable Related companies 6 , 20 6,760,197 - 36,092,566 1,504,297 Others, net 6 90,716,995 104,419,231 40,713,603 79,597,291 Short-term loan to and interest receivable
from related party 20 - - 15,639,949 30,920,096 Inventories, net 7 70,752,144 40,842,368 46,364,604 30,904,547 Other current assets 9,444,283 2,296,650 740,490 1,726,367
Total current assets 251,074,538 218,045,056 177,405,080 160,178,149
NON - CURRENT ASSETSInvestments in subsidiaries 8 - - 83,260,000 81,160,000 Property, plant and equipment, net 9 419,670,311 323,945,347 244,212,176 238,313,306 Intangible assets - net 10 2,871,182 5,697,766 - - Advance for acquisition of machineries 1,189,002 10,864,407 - - Other non - current assets 194,300 3,695,360 194,300 235,700
Total non - current assets 423,924,795 344,202,880 327,666,476 319,709,006
TOTAL ASSETS 674,999,333 562,247,936 505,071,556 479,887,155
The accompanying notes are an integral part of these financial statements.
ASSETS
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2011 AND 2010
In BahtConsolidated Separate
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 55
Notes 2011 2010 2011 2010LIABILITIES AND EQUITY (Restated) (Restated)
CURRENT LIABILITIESBank overdrafts and short-term loans
from financial institutions 11 66,048,381 41,960,570 29,500,000 21,860,570 Trade accounts payable Related companies 20 6,351,240 - 13,465,982 4,484,783 Others 24,538,737 27,832,678 10,414,240 18,555,706 Payable from fixed asset acquisition 31,472,802 35,255,310 21,189,055 32,443,695 Current portion of liabilities under
hire-purchase agreements 12 711,328 1,199,069 501,578 518,331 Current portion of long-term loans
from financial institutions 14 15,671,399 5,000,000 - 5,000,000 Other current liabilities
Accrued corporate income tax 2,296,571 2,845,505 338,601 164,419 Accrued expenses 12,335,135 17,692,308 7,400,268 8,174,194 Other current liabilities 2,902,806 2,268,962 440,536 1,016,420
Total current liabilities 162,328,399 134,054,402 83,250,260 92,218,118
NON - CURRENT LIABILITIESLiabilities under hire-purchase agreements, net 12 185,514 1,326,200 63,163 923,240 Retirement benefit obligations 13 7,482,598 6,381,710 4,233,086 3,492,150 Long-term loans from financial institutions, net 14 31,342,794 - - -
Total non - current liabilities 39,010,906 7,707,910 4,296,249 4,415,390
TOTAL LIABILITIES 201,339,305 141,762,312 87,546,509 96,633,508
The accompanying notes are an integral part of these financial statements.
In BahtConsolidated Separate
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF FINANCIAL POSITION (CON'T)
AS AT DECEMBER 31, 2011 AND 2010
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 56
Notes 2011 2010 2011 2010LIABILITIES AND EQUITY (CON'T) (Restated) (Restated)
EQUITYShare capital 15
Authorised share capital240,000,000 ordinary shares of Baht 1 each 240,000,000 240,000,000 240,000,000 240,000,000
Issued and paid up share capital240,000,000 ordinary shares of Baht 1 each 240,000,000 240,000,000 240,000,000 240,000,000
Premium on share capital 15 45,538,579 45,538,579 45,538,579 45,538,579 Retained earnings
Appropriated for legal reserve 16 15,362,606 11,962,606 15,362,606 11,962,606 Unappropriated 157,704,528 107,851,045 116,623,862 85,752,462
Adjustment from the combination of entity
under common controls 1,308,714 1,308,714 - -
Adjustment for foreign exchange transaction (4,320,369) (1,110,613) - -
Total equity attributable to parent company 455,594,058 405,550,331 417,525,047 383,253,647 Non-controlling interests 18,065,970 14,935,293 - -
TOTAL EQUITY 473,660,028 420,485,624 417,525,047 383,253,647
TOTAL LIABILITIES AND EQUITY 674,999,333 562,247,936 505,071,556 479,887,155
- - - - The accompanying notes are an integral part of these financial statements.
financial statements financial statements
STATEMENTS OF FINANCIAL POSITION (CON'T)HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
In BahtConsolidated Separate
AS AT DECEMBER 31, 2011 AND 2010
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 57
Note 2011 2010 2011 2010"Restated" "Restated"
Sales and service revenue 412,470,690 360,483,431 271,495,870 267,536,326
Cost of sales and services (232,156,074) (213,682,473) (166,550,474) (155,495,860)
Gross profit 180,314,616 146,800,958 104,945,396 112,040,466
Other income 8,033,422 8,340,136 6,520,838 5,254,282
Profit before expenses 188,348,038 155,141,094 111,466,234 117,294,748
Selling expenses (12,104,373) (7,089,399) (8,853,703) (4,336,309)
Administrative expenses (54,986,470) (40,248,474) (22,312,290) (26,355,593)
Managements’ remuneration (17,980,951) (12,218,540) (8,534,386) (8,627,255)
Total expenses (85,071,794) (59,556,413) (39,700,379) (39,319,157)
Profit before financial costs
and income tax 103,276,244 95,584,681 71,765,855 77,975,591
Financial costs (8,607,611) (3,087,280) (2,351,193) (1,561,967)
Profit before income tax 94,668,633 92,497,401 69,414,662 76,413,624
Income tax (6,165,187) (6,396,733) (1,543,262) (356,939)
Net profit 88,503,446 86,100,668 67,871,400 76,056,685
Net profit (loss) attributable to:
Owners of the Company 86,853,483 87,405,375 67,871,400 76,056,685
Non-controlling interests 1,649,963 (1,304,707) - -
Net profit 88,503,446 86,100,668 67,871,400 76,056,685
BASIC EARNINGS PER SHARE 18
Net profit attributable to
owners of the Company 0.36 0.37 0.28 0.32
Weighted average number of share (shares) 240,000,000 237,941,176 240,000,000 237,941,176
-
The accompanying notes are an integral part of these financial statements.
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In BahtConsolidated Separate
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 58
2011 2010 2011 2010"Restated" "Restated"
Net profit for the year 88,503,446 86,100,668 67,871,400 76,056,685
Other Comprehensive income (loss)
Foreign currency transaction differences
for foreign operations (3,209,756) (1,110,613) - -
Total comprehensive income for the year 85,293,690 84,990,055 67,871,400 76,056,685
Net profit (loss) attributable to:
Owners of the Company 83,643,727 85,304,501 67,871,400 76,056,685
Non-controlling interests 1,649,963 (314,446) - -
Net profit 85,293,690 84,990,055 67,871,400 76,056,685
The accompanying notes are an integral part of these financial statements.
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In BahtConsolidated Separate
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 59
NotesAppropriated for
legal reserve Unappropriated Total equityBalance as at January 1, 2010as previously reported 220,000,000 17,084,971 8,122,606 70,980,774 1,308,714 - 317,497,065 - 317,497,065
Impact from adoption of TAS No.19 "Employee benefits" 4.2 - - - (5,895,104) - - (5,895,104) - (5,895,104)
Balance as at January 1, 2010 (restated) 220,000,000 17,084,971 8,122,606 65,085,670 1,308,714 - 311,601,961 - 311,601,961 Increase in share capital 15 20,000,000 28,453,608 - - - - 48,453,608 - 48,453,608 Legal reserve 16 - - 3,840,000 (3,840,000) - - - - - Investing in subsidiary - - - - - - - 16,240,000 16,240,000 Adjustment for foreign exchange transaction - - - - - (1,110,613) (1,110,613) - (1,110,613) Dividends paid 17 - - - (40,800,000) - - (40,800,000) - (40,800,000) Net profit (loss) (restated) - - - 87,405,375 - - 87,405,375 (1,304,707) 86,100,668
Balance as at December 31, 2010 240,000,000 45,538,579 11,962,606 107,851,045 1,308,714 (1,110,613) 405,550,331 14,935,293 420,485,624
Balance as at January 1, 2011 as previously reported 240,000,000 45,538,579 11,962,606 114,232,755 1,308,714 (1,110,613) 411,932,041 14,935,293 426,867,334
Impact from adoption of TAS No.19 "Employee benefits" 4.2 - - - (6,381,710) - - (6,381,710) - (6,381,710)
Balance as at January 1, 2011 (restated) 240,000,000 45,538,579 11,962,606 107,851,045 1,308,714 (1,110,613) 405,550,331 14,935,293 420,485,624 Legal reserve 16 - - 3,400,000 (3,400,000) - - - - - Investing in subsidiary - - - - - - - 1,480,714 1,480,714 Adjustment for foreign exchange transaction - - - - - (3,209,756) (3,209,756) - (3,209,756) Dividends paid 17 - - - (33,600,000) - - (33,600,000) - (33,600,000) Net profit - - - 86,853,483 - - 86,853,483 1,649,963 88,503,446
Balance as at December 31, 2011 240,000,000 45,538,579 15,362,606 157,704,528 1,308,714 (4,320,369) 455,594,058 18,065,970 473,660,028
The accompanying notes are an integral part of these financial statements.
Retained earnings Adjustment from
the combination of entity under
common controls
Adjustment for foreign exchange
transaction
In Baht
Total equity attributable to
the parent company
Equity attributable to the parent company
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Issued and paid-up share capital
Premium on share capital
Non-controlling interests
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 60
Notes Appropriated for legal reserve Unappropriated Total
Balance as at January 1, 2010 (as previously reported) 220,000,000 17,084,971 8,122,606 57,138,791 302,346,368 Impact from adoption of TAS No.19 "Employee benefits" 4.2 - - - (2,803,014) (2,803,014)
Balance as at January 1, 2010 (restated) 220,000,000 17,084,971 8,122,606 54,335,777 299,543,354 Increase in share capital 15 20,000,000 28,453,608 - - 48,453,608 Legal reserve 16 - - 3,840,000 (3,840,000) - Dividends paid 17 - - - (40,800,000) (40,800,000) Net profit (restated) - - - 76,056,685 76,056,685
Balance as at December 31, 2010 240,000,000 45,538,579 11,962,606 85,752,462 383,253,647
Balance as at January 1, 2011 (as previously reported) 240,000,000 45,538,579 11,962,606 89,244,612 386,745,797 Impact from adoption of TAS No.19 "Employee benefits" 4.2 - - - (3,492,150) (3,492,150)
Balance as at January 1, 2011 (restated) 240,000,000 45,538,579 11,962,606 85,752,462 383,253,647 Legal reserve 16 - - 3,400,000 (3,400,000) - Dividends paid 17 - - - (33,600,000) (33,600,000) Net profit - - - 67,871,400 67,871,400
Balance as at December 31, 2011 240,000,000 45,538,579 15,362,606 116,623,862 417,525,047
The accompanying notes are an integral part of these financial statements.
Issued and paid-up share capital
Retained earnings
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITEDSEPARATE STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In Baht
Premium on share capital
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 61
2011 2010 2011 2010(Restated) (Restated)
Cashflows from operating activities Profit before income tax 94,668,633 92,497,401 69,414,662 76,413,624
Adjustments to reconcile net profit to net cash
provided by operating activities
Unrealized gain on foreign exchange rate (1,379,242) (1,715,218) (1,243,278) (565,761)
Depreciation and amortization 55,887,265 43,702,926 36,075,643 33,913,934
Doubtful accounts 267,310 255,513 189,930 5,594
Gain from disposal of equipment (230,101) (280,092) (294,078) (130,092)
Unrealized loss from inventory obsolescence 1,341,783 3,544,986 1,341,783 3,544,986
Interest received on short-term loans to related company - - (949,709) (665,976)
Adjustment for foreign exchange transaction (3,209,756) - - -
Retirement benefit obligations 1,100,888 486,606 740,936 689,136
Interest expenses 8,617,635 1,973,886 1,710,535 564,074
Profit from operating activities before
change in operational assets and liabilities 157,064,415 140,466,008 106,986,424 113,769,519
Decrease (Increase) in operational assets
Trade accounts receivable - Related companies (6,686,128) - (34,514,583) (1,172,335) Trade accounts receivable - Others 14,565,493 (21,892,329) 39,712,010 (13,389,346) Inventories (31,251,559) (23,461,537) (16,801,840) (18,500,479) Other current assets (7,147,633) (1,845,090) 985,877 (1,405,559) Other non - current assets 3,501,060 2,144 41,400 2,144
Increase (Decrease) in operational liabilities
Trade accounts payable - Related companies 6,391,010 - 8,981,199 841,401
Trade accounts payable - Others (3,318,517) (3,313,479) (8,149,538) (6,679,387)
Accrured expenses (5,357,173) 2,605,873 (773,926) 1,970,488
Other current liabilities 633,844 1,578,685 (575,884) 669,592
Cash receipt from operations activities 128,394,812 94,140,275 95,891,139 76,106,038
Interest paid (8,617,635) (1,973,886) (1,710,535) (564,074)
Income tax paid (6,714,121) (3,987,949) (1,369,080) (629,241)
Net cash provided by operating activities 113,063,056 88,178,440 92,811,524 74,912,723
The accompanying notes are an integral part of these financial statements.
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In Baht
Consolidated Separate
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 62
2011 2010 2011 2010(Restated) (Restated)
Cash flows from investing activities
Proceeds from short-term loan and interest receivable
to related company - - 19,229,856 -
Cash paid for short-term loan to related company - - (3,000,000) -
Cash paid for purchase of property, plant and
equipment (supplement cash flows information) (148,067,748) (128,903,076) (56,492,008) (112,034,383)
Cash paid for intangible asset acquisition - (2,000,000) - -
Proceeds from disposal of equipment 3,936,086 1,009,138 2,839,515 164,486
Cash paid for the investment in subsidiaries - - (2,100,000) (31,160,000)
Net cash used in investing activities (144,131,662) (129,893,938) (39,522,637) (143,029,897)
Cash flows from financing activities
Increase in bank overdrafts and
short-term loans from financial institutions 24,087,811 21,960,570 7,639,430 21,860,570
Proceeds of long-term loans from financial institutions 47,014,193 9,000,000 - 9,000,000
Payments of long-term loans from financial institutions (5,000,000) (10,133,000) (5,000,000) (10,133,000)
Proceeds from issue of ordinary shares - 50,000,000 - 50,000,000
Cash paid for cost of share subscription - (1,546,392) - (1,546,392)
Proceeds from minority interest in
share capital of subsidiaries 1,480,714 16,240,000 - -
Dividend paid (33,600,000) (40,800,000) (33,600,000) (40,800,000)
Net cash provided by (used in) financing activities 33,982,718 44,721,178 (30,960,570) 28,381,178
Net decrease in cash and cash equivalents 2,914,112 3,005,680 22,328,317 (39,735,996)
Cash and cash equivalents, Beginning of the periods 70,486,807 67,481,127 15,525,551 55,261,547
Cash and cash equivalents, End of the periods 73,400,919 70,486,807 37,853,868 15,525,551 - - - -
SUPPLEMENT DISCLOSURE OF -CASH FLOWS INFORMATION
1. Cash and cash equivalents
Cash 193,527 123,274 55,000 55,000
Savings accounts 59,155,989 64,005,364 33,341,458 11,321,961
Current accounts 14,051,403 6,358,169 4,457,410 4,148,590
Total cash and cash equivalents 73,400,919 70,486,807 37,853,868 15,525,551
The accompanying notes are an integral part of these financial statements.
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS (CON'T)
Consolidated Separate
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In Baht
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 63
2011 2010 2011 2010
SUPPLEMENT DISCLOSURE OF (Restated) (Restated)CASH FLOWS INFORMATION (CON'T)
2. Property, plant and equipment
The detail of "cash paid for purchase of property,
plant and equipment" is as follow;
Property, plant and equipment acquired
during the year (152,491,630) (90,175,763) (44,519,950) (80,276,164)
Adjust Decrease (Increase) on advance for acquisition
of machineries 9,675,405 (10,864,407) - -
Increase (decrease) on payable under
hire-purchase agreements (1,628,427) 649,009 (876,830) (434,689)
Decrease on payable from
acquisition of fixed assets (3,623,096) (28,511,915) (11,095,228) (31,323,530)
Cash paid for purchase of property, plant and equipment (148,067,748) (128,903,076) (56,492,008) (112,034,383)
The accompanying notes are an integral part of these financial statements.
financial statements financial statements
HALCYON TECHNOLOGY PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS (CON'T)
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
In Baht
Consolidated Separate
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 64
1. GENERAL INFORMATION
Halcyon Technology Public Company Limited has the address of its registered office located at 41 Moo 14 Bangchan Industrial Estate, Soi 6, Serithai Rd., Minburi, Bangkok.
The principal business operation of the Company is to produce and sell of cutting tools, jig & fixtures and custom metallic devices. The Company was listed on the Stock Exchange of Thailand on March 27, 2009 and the Company’s stock were trade on the MAI (on Market for Alternative Investment). “The Company” represents “Halcyon Technology Public Company Limited,” while “The Group” represents “Halcyon Technology Public Company Limited” and its subsidiaries which are “Halcyon Metal Company Limited,” “Haltek Company Limited,” “Halcyon Technology (Philippines) Inc.” and “Atek Precision Tools Inc”
2. BASIS OF FINANCIAL STATEMENT PREPARATION
The consolidated and separate financial statements are prepared in accordance with Thai Generally Accepted Accounting Principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E.2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The preparation of financial statements in conformity with Thai Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. The accompanying consolidated financial statements include the financial statements of Halcyon Technology Public Company Limited and the subsidiaries over which the Company has control. The details of subsidiaries are as follows;
Country of incorporation
The date of Percentage of shareholding
Name of subsidiaries Nature of business commencing
control
2011
2010 Direct shareholding
1. Halcyon Metal Co.,Ltd. Thailand Production of metallic device
Before the year 2006 100 100
2. Haltek Co.,Ltd. Thailand Sale of carbide cutting tools
The first quarter of 2010 70 70
3. Halcyon Technology (Philippines) Inc.
Philippines Production of cutting tools to supply for foreign markets
The third quarter of 2010 65 65
Indirect shareholding through Halcyon Technology (Philippines) Inc. 4. Atek Precision Tools Inc * Philippines Production of cutting
tools to supply for foreign markets
The second quarter of 2011
65
-
* During the second quarter of 2011, Halcyon Technology (Philippines) Inc., the subsidiary of which the company has 65% of holding interest, has invested in share capital of Atek Precision Tools Inc with the holding interest of 100%. Such company, as a result, change its status to the subsidiary.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 65
2. BASIS OF FINANCIAL STATEMENT PREPARATION (CON’T) The consolidated and separate financial statements have been prepared under the historical cost, except for those stated otherwise in accounting policies. For the convenience of the user, an English translation of the financial statements has been prepared from the statutory financial statements that are issued in the Thai language.
3. ADOPTION OF NEW ACCOUNTING STANDARDS .
The Federation of Accounting Professions has issued Notification which publishes in Royal Gazette, mandating the use of new accounting standards and financial reporting standard as follows:-
New accounting standards, new financial reporting standards, amendments to accounting standards and accounting framework
a) Accounting framework
The amendment of the accounting framework was announced by the Federation of Accounting Professions on 26 May 2010 with effect on 26 May 2010.
b) New accounting standards, new financial reporting standards and amendments to accounting standards
The following new accounting standards, new financial reporting standards and amendments to accounting standards were announced by the Federation of Accounting Professions and are mandatory for the accounting periods beginning on or after 1 January 2011 and 1 January 2013. The group has elected not to early adopt these standards.
Effective for the period beginning on or after 1 January 2011 TAS 1 (Revised 2009) Presentation of Financial Statements TAS 2 (Revised 2009) Inventories TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 11 (Revised 2009) Construction Contracts TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related Party Disclosures TAS 26 Account and Reporting by Retirement Benefit Plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (Revised 2009) Interests in Joint Ventures TAS 33 (Revised 2009) Earnings per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TFRS 3 (Revised 2009) Business Combinations
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 66
3. ADOPTION OF NEW ACCOUNTING STANDARDS (CON’T)
The adoption of these new and revised TFRS has resulted in changes in the Group’s accounting policies. The effects of these changes are disclosed in note 4. Except for these changes, accounting policies and methods of computation applied in these financial statements are consistent with those applied in the financial statements for the year ended December 31, 2010. In addition to the above new and revised TFRS, the FAP has issued during 2010 a number of other TFRS which are expected to be effective for financial statements beginning on or after January 1, 2013 and have not been adopted in the preparation of these financial statements. These new and revised TFRS are disclosed are as follow;
TAS 12 Income taxes
TAS 20 (Revised 2009) Accounting for Government Grants and Disclosure of Government Assistance
TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates 4. CHANGES IN ACCOUNTING POLICIES
From January 1, 2011, consequent to the adoption of new and revised TFRS as set out in note 3, the Group has changed its accounting policies in the following areas ; 4.1 Presentation of financial statements
From January 1, 2011, the Group has applied TAS 1 Presentation of Financial statements (Revised 2009). Under the revised standards, a set of financial statements comprises;
• Statement of financial position • Statement of income • Statement of comprehensive income • Statement of changes in shareholders’ equity • Statement of cash flows and • Note to financial statements
As a result, the Group presents all owner changes in shareholders’ equity in the statement of change in shareholders’ equity and all non-owner changes in shareholders’ equity in the statement of comprehensive income. Previously, all such changes were included in the statement of changes in shareholders’equity. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on reported profit or earnings per share.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 67
4. CHANGES IN ACCOUNTING POLICIES (CON’T)
4.2 Accounting for employee benefits
Effective on January 1, 2011, the Group has adopted the Thai Accounting Standard (TAS) No.19 “Employee Benefits”. The Changes are made in accordance with the requirement of Thai Accounting Standard No.8 (Revised 2009) “Accounting Policies, Change in Accounting Estimates and Errors” by applying retrospectively to adjust the comparative prior-year financial statement presented as if the new accounting standards had always been applied. Under the TAS No.19 “Employee Benefits”, provident funds are accounted for as defined contribution plans and contributions to provident funds are charged to the statements of income when incurred. Obligations relating to post-retirement benefits are accounted for by using the projected unit credit method. The benefit obligation is discounted using interest rates of government bonds should have terms to maturity approximately equal to the terms of the related provident fund payments. Previously, the Group recorded the obligations for post-retirement benefits as incurred. Commencing on January 1, 2011, the benefit obligation liabilities are accounted based on the above mentioned method. The 2010 financial statements have been restated accordingly in compliance with the accounting standard. The impacts to the consolidated and separate financial statements relating to the adoption of the new accounting policy are as follows: In Baht Consolidated
financial statements Separate
financial statements Balance sheet as at December 31, 2009 Increase in retirement benefit obligations 5,895,104 2,803,014 Decrease in unappropriated retained earnings (5,895,104) (2,803,014) Balance sheet as at December 31, 2010 Increase in retirement benefit obligations 6,381,710 3,492,150 Decrease in unappropriated retained earnings (6,381,710) (3,492,150) Statement of income for the year ended December 31, 2010 Increase in administrative expenses - retirement benefits 256,181 574,212 Increase in financial costs 230,425 114,924 Decrease in basic earnings per share 0.002 0.003
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 68
5. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below; 5.1 Adjustment from the combination of entity under common controls
The Company recognized the excess of the book value of acquired net assets over the cost of acquisition as “Adjustment from the combination of entity under common controls”.The adjustment is presented in the shareholders’equity portion of balance sheet and will be transferred to retained earnings, when the parent company disposes the investment
5.2 Investments in subsidiaries
Investments in subsidiaries, which are those entities in which the group has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operation policies are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made for minority interests in the consolidated balance sheet and consolidated statement of income.
The investments in subsidiaries presented in the separate financial statements are carried at cost, net of allowance for impairment (if any.)
5.3 Foreign currency translation
Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Baht at the exchange rates ruling at that date. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income.
Statements of income and cash flows of foreign entities are translated into the Group’s reporting currency at the weighted average exchange rates for the year and balance sheets are translated at the exchange rates ruling on the balance sheet date. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholders’ equity.
5.4 Financial instruments
Financial assets carried on the balance sheet include cash and cash equivalents, trade accounts receivable, other receivable and loan. Financial liabilities carried on the balance sheet include trade creditors, other payable, liabilities under hire-purchase agreements and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.
The Group did not adopt any derivative strategies to manage the fluctuation of foreign currency and interest rates.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 69
5. SIGNIFICANT ACCOUNTING POLICIES (CON’T)
5.5 Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.
5.6 Trade accounts receivable
Trade accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. The Group’s management estimates the allowance for doubtful accounts from the ending balance of accounts receivable. The estimate encompasses consideration of past collection experiences and other factors, such as changes in the composition and volume of the receivable, the relationship of the allowance for doubtful accounts to the receivable and the local economic conditions.
5.7 Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in first out method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charges, less all attributable discounts, allowances or rebates. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads, the latter being allocated on the basis of normal operating activities. Net realizable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Allowance is made, where necessary, for obsolete, slow moving and defective inventories.
5.8 Property, plant and equipment Property, plant and equipment are shown at historical cost less accumulated depreciation. Depreciation is calculated on the straight line method to write off the cost or the revalued amount of each asset, except for land which is considered to have an indefinite life, to its residual value over the estimated useful life as follows; Building and construction 20 Years Building improvement 5 Years Machineries and equipment 5 - 10 Years Motor vehicles 5 Years Furniture, fixtures and office equipment 3 and 5 Years Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in operating profit.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 70
5. SIGNIFICANT ACCOUNTING POLICIES (CON’T)
5.9 Intangible assets – Franchise rights
Franchise rights represent the premiums paid to the franchisor in order to acquire its product name, trademark and in exchange for the franchisor to provide technical and marketing supports necessary for the introduction of new line of product in Thailand and Philippines. Such assets are amortized on the straight line method over their useful life of 3 years.
5.10 Employee benefits
The Group operates a provident fund that is a defined contribution plan. The assets of which are held in a separate trust fund. The provident fund is funded by payments from employees and by the Company. Contributions to the provident fund are charged to the statement of income in the year to which they relate. The Group provides for post employment benefits, payable to employees under the Thai Labor Law. The present value of employee benefit liabilities recognised in the financial position is estimated on an actuarial basis using Projected Unit Credit Method. The calculation was made by utilizing various assumptions about future events. The Group is responsible for the selection of appropriate assumptions. The assumptions used in determining the net period cost for employee benefits include the discount rate, the rate of salary increment, and employee turnover. Any changes in these assumptions will impact the net periodic cost recorded for employee benefits. On an annual basis, the Group determines the appropriate discount rate, which represents the interest rate that should be used to determine the present value of future cash flows currently expected to be required to settle the employee benefits. In determining the appropriate discount rate, the Group considers the market yield at the balance sheet date based on Thai government bonds with currency and term similar to the estimated term of benefit obligation. The principal actuarial assumptions used were as follows;
Consolidated and Separate financial statements 2011 2010
Discount rate 4.1 per annum 4.1 per annum Future salary increases
Scale related to age and type of employment ranging from 3-13
Scale related to age and type of employment ranging from 3-13
Employee turnover Scale related to age and type of
employment ranging from 0-30 Scale related to age and type of employment ranging from 0-30
Mortality According to Thailand TMO97
male and female tables According to Thailand TMO97
male and female tables
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 71
5. SIGNIFICANT ACCOUNTING POLICIES (CON’T)
5.11 Accounting for long – term lease
Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or equipment acquired under finance leases is depreciated over the useful life of the asset.
5.12 Revenue recognition
Sales and service revenues are recognised on the delivery of goods or on customer acceptance or on the performance of services. Sales are shown net of sales taxes and discounts, and after eliminating sales within the Group. Interest income is recognized on an accrual basis.
5.13 Related parties
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
5.14 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
5.15 Segment reporting
Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those of components operating in other economic environments.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 72
6. TRADE ACCOUNTS RECEIVABLE
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010
Related companies
Trade accounts receivable 6,760,197 - 36,092,566 1,504,297 Other companies Trade accounts receivable 91,915,375 102,488,556 41,750,065 78,929,018Accrued income 97,557 272,960 97,557 97,557Posted date cheques received 258,643 2,944,985 93,262 1,608,067
Total 92,271,575 105,706,501 41,940,884 80,634,642Less :Allowance for doubtful accounts (1,554,580) (1,287,270) (1,227,281) (1,037,351)
Net 90,716,995 104,419,231 40,713,603 79,597,291 Outstanding trade accounts receivable can be analyzed as follows;
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Related companies Not yet due 6,760,197 - 12,539,471 1,504,297Over due
Less than 3 months - - 8,726,005 -3 - 6 months - - 1,011,838 -6 - 12 months - - 13,815,252 -
Total 6,760,197 - 36,092,566 1,504,297 Other companies Not yet due 77,673,331 67,474,776 34,204,320 53,456,819Over due
Less than 3 months 12,243,065 23,021,287 5,994,015 13,705,8363 - 6 months 590,424 13,896,609 350,009 12,426,6266 - 12 months 442,121 54,914 330,518 16,019Over 12 months 1,322,634 1,258,915 1,062,022 1,029,342
Total 92,271,575 105,706,501 41,940,884 80,634,642Less: Allowance for doubtful accounts (1,554,580) (1,287,270) (1,227,281) (1,037,351)
Net 90,716,995 104,419,231 40,713,603 79,597,291
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 73
7. INVENTORIES In Baht
Consolidated financial statements
Separate financial statements
2011 2010 2011 2010 Finished goods 27,382,995 23,820,583 13,255,187 17,640,893Work in process 7,738,387 1,582,372 6,838,372 1,433,729Raw materials 40,517,530 18,984,399 31,157,813 15,374,911 Total 75,638,912 44,387,354 51,251,372 34,449,533Less Allowance for inventory obsolescence (4,886,768) (3,544,986) (4,886,768) (3,544,986) Net 70,752,144 40,842,368 46,364,604 30,904,547
8. INVESTMENTS IN SUBSIDIARIES
The details of investments presented in the separate financial statements are as follows; Issue and Paid up Capital
(In Baht)
% of Holding Cost method
(In Baht) 2011 2010 2011 2010 2011 2010
Halcyon Metal Co.,Ltd. 50,000,000 50,000,000 100.00 100.00 50,000,000 50,000,000Haltek Co.,Ltd. 10,000,000 7,000,000 70.00 70.00 7,000,000 4,900,000Halcyon Technology (Philippines) Inc. 40,400,000 40,400,000 65.00 65.00 26,260,000 26,260,000 Total 83,260,000 81,160,000
Halcyon Metal Co., Ltd, is manufacturer of fixture and metallic devices. Haltek Co., Ltd, is trader and exporter of carbide cutting tools.
Halcyon Technology (Philippines) Inc, is manufacturer of cutting tools for Philippines markets
In the second quarter of 2011, Haltek Co.,Ltd increased its issued and paid up share capital from Baht 7 million to Baht 10 million. The company increased its investment portion of such subsidiary by acquiring 210,000 of its additional shares of Baht 10 each, amounting to Baht 2,100,000. The company’s holding percentage in the subsidiary remains unchanged. On August 3, 2010, the directors at the Board of directors’ meeting passed a resolution to approve investment in new subsidiary in Philippines, Halcyon Technology (Philippines) Inc. The principal business operation of such company is to produce cutting tool for Philippines market. The authorized share capital of a new company is PHP (Philippines Peso) 145 million, divided into 145,000 share of PHP 1,000 each. The subsidiary had issued and paid-up share capital of PHP 58 million, divided into 58,000 shares of PHP 1,000 each. The Company recognized the investments in such subsidiary amounting to PHP 37.7 million (equivalent to Baht 26.26 million), divided into 37,700 shares with the issued and paid up capital of PHP 1,000 each, representing 65% of its registered and paid up capital, while the remaining 35% is held by two foreign joint partners. The subsidiary on registered as corporate since August 31, 2010.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 74
9. PROPERTY, PLANT AND EQUIPMENT Consolidated financial statements (In Baht)
Building and Building Machineries Motor Office fixture Construction
Land construction improvement and equipment vehicles and equipment in progress Total As at December 31, 2010 Cost 25,920,000 64,964,145 9,537,720 410,720,412 11,612,368 12,329,256 1,995,147 537,079,048 Less : Accumulated depreciation - (25,499,815) (4,132,954) (169,310,562) (6,511,516) (7,678,854) - (213,133,701) Net book value 25,920,000 39,464,330 5,404,766 241,409,850 5,100,852 4,650,402 1,995,147 323,945,347 Transactions during the year ended December 31, 2011 Opening net book value 25,920,000 39,464,330 5,404,766 241,409,850 5,100,852 4,650,402 1,995,147 323,945,347 Additions - 969,534 3,044,078 116,225,761 1,579,853 3,435,632 27,236,772 152,491,630 Transfer in (out) - - - 25,593,292 - - (25,593,292) - Disposals - - - (3,705,985) - - - (3,705,985) Depreciation - (3,283,719) (425,411) (44,968,037) (1,802,860) (2,580,654) - (53,060,681) Closing net book value 25,920,000 37,150,145 8,023,433 334,554,881 4,877,845 5,505,380 3,638,627 419,670,311 As at December 31, 2011 Cost 25,920,000 65,933,680 12,581,798 546,597,387 13,192,221 15,765,361 3,638,627 683,629,074 Less: Accumulated depreciation - (28,783,535) (4,558,365) (212,042,506) (8,314,376) (10,259,981) - (263,958,763) Net book value 25,920,000 37,150,145 8,023,433 334,554,881 4,877,845 5,505,380 3,638,627 419,670,311
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 75
9. PROPERTY, PLANT AND EQUIPMENT (CON’T)
Separate financial statement (In Baht)
Building Machineries Motor Office fixture Construction Improvement and equipment vehicles and equipment in progress Total As at December 31, 2010 Cost 4,498,173 304,090,413 5,261,956 7,063,242 1,995,147 322,908,931 Less: Accumulated depreciation (146,463) (78,506,437) (2,043,819) (3,898,906) - (84,595,625) Net book value 4,351,710 225,583,976 3,218,137 3,164,336 1,995,147 238,313,306 Transactions during the year ended December 31, 2011
Opening net book value 4,351,710 225,583,976 3,218,137 3,164,336 1,995,147 238,313,306 Additions 325,172 16,585,624 - 372,382 27,236,772 44,519,950 Transfer in (out) - 25,593,292 - - (25,593,292) -
Disposals - (2,545,437) - - - (2,545,437) Depreciation (231,324) (33,573,124) (1,011,080) (1,260,115) - (36,075,643)
Closing net book value 4,445,558 231,644,331 2,207,057 2,276,603 3,638,627 244,212,176 As at December 31, 2011 Cost 4,823,345 342,189,329 5,261,956 7,435,624 3,638,627 363,348,881 Less: Accumulated depreciation (377,787) (110,544,998) (3,054,899) (5,159,021) - (119,136,705) Net book value 4,445,558 231,644,331 2,207,057 2,276,603 3,638,627 244,212,176
Property, plant and equipment in the consolidated and separate financial statements amounting to Baht 129.62 million and Baht 68.63 million respectively are mortgaged as collateral for credit facilities of short-term and long-term loans from financial institution (Note 11 and 14).
As at December 31, 2011, there are equipment which have been fully depreciated according to their useful lives, but are still in use with the original cost before deducting accumulated depreciation amounting to Baht 90.12 million in the consolidated financial statements and amounting to Baht 32.27 million in the separate financial statements (December 31, 2010: Baht 110.98 million in the consolidated financial statements and Baht 12.44 million in the separate financial statements.) The measurement base used for determining valuation of the Group’s land is the cost method; however, during the year 2010, the Group hired the independent appraiser to appraise the value of the land using market comparison approach. According the valuation report, the fair value of such land is Baht 64.8 million which is Baht 38.88 million higher than the value under the cost method.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 76
10. INTANGIBLE ASSETS : FRANCHISE RIGHTS
In Baht
Consolidated financial
statements
Separate financial
statements
As at December 31, 2010
Cost 7,000,000 -
Less: Accumulated Amortization (1,302,234) -
Net book value 5,697,766 -
Transactions during the year ended December 31, 2011
Opening net book value 5,697,766 -
Amortization during measurement period (528,973) - Amortization (2,297,611) - Closing net book value 2,871,182 - As at December 31, 2011 Cost 5,921,530 - Less: Accumulated Amortization (3,050,348) - Net book value 2,871,182 -
11. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Promissory notes 66,048,381 41,960,570 29,500,000 21,860,570 As at December 31, 2011, the Group has short-term trade financing facilities from financial institutions according to the loan agreements in both Thai Baht and foreign currency comprising Thai Baht 106.67 million, Swiss Franc 748,845, Euro 246,112, USD 1.6 million and Philippines Peso 14 million in the consolidated financial statements and Baht 60.04 million , Swiss Franc 748,845, Euro 246,112 and USD 1.5 million in the separate financial statements.The trade financing facilities include bank overdrafts, promissory notes, letters of credit, trust receipts and banks’ letters of guarantee. The overdraft facilities charged interest at the rate of MOR per annum. The other facilities charged interest at the rates of MLR-1.5 per annum. Such short–term trade financing facilities are secured over a part of the land, building & structures and machineries of the Group (Note 9.)
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 77
12. LIABILITIES UNDER HIRE PURCHASE AGREEMENTS In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Liabilities under hire purchase agreements 896,842 2,525,269 564,741 1,441,571Less : Current portion (711,328) (1,199,069) (501,578) (518,331)
Net 185,514 1,326,200 63,163 923,240 13. RETIREMENT BENEFIT OBLIGATIONS In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Present value of obligation ; – wholly unfunded 7,482,598 6,381,710 4,233,086 3,492,150– wholly or partly unfunded - - - -
The reconciliation of retirement benefit obligation for the year ended December 31 is as follow;
In Baht Consolidated financial statements Separate financial statements 2011 2010 2011 2010 Obligation at the beginning of the year 6,381,710 5,895,104 3,492,150 2,803,014Recognized as expenses in statement of income ;
- Current service cost 839,236 806,181 597,756 574,212 - Interest cost 261,652 230,425 143,180 114,924
Total 1,100,888 1,036,606 740,936 689,136 Benefit paid during the year - (550,000) - - Obligation at the end of the year 7,482,598 6,381,710 4,233,086 3,492,150
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 78
14. LONG-TERM LOANS FROM FINANCIAL INSTITUTIONS
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Loans from financial institutions 47,014,193 5,000,000 - 5,000,000Less : Current portion (15,671,399) (5,000,000) - (5,000,000)
Net 31,342,794 - - -
The movement of long-term loans from financial institutions for the year ended December 31, 2011 is as follow; In Baht Consolidated
financial statements Separate
financial statements The beginning balances 5,000,000 5,000,000Borrowing 47,014,193 -Principal repayment (5,000,000) (5,000,000)The ending balances 47,014,193 -
As at December 31, 2011 and 2010, the major loans from financial institution in the consolidated financial statements were summarized as follows; The first agreement: The initial loan principal was Baht 9 million. The payments of principal are made on monthly installment of Baht 1 million each, starting on September 2010. The loan charged interests at the rate of MLR - 1 per annum. During the year 2011, such loan agreement has been fully repaid. The second agreement: The initial loan principal was USD 2.23 million. As at December 31, 2011, the outstanding balance was USD 1.48 million (Equivalent to Baht 47.01 million) (December 31, 2010 : None). The payments of principal are made on monthly installment of USD 123,162 each, starting on March 2012. The loan charged interests at the rate range 3.87% - 4.10% per annum. The long-term loans facility is secured over a part of the land, buildings and machineries of the Group (Note 9), together with the guarantee by directors. The loan agreement contains normal covenants pertaining to matters such as the maintenance of a certain debt-to-equity ratio and restriction in dividend payment.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 79
15. SHARE CAPITAL
At the extraordinary shareholders’ meeting held on December 14, 2009, the meeting passed the resolutions to approve the issue and allocation of the uncalled portion of authorized share capital with the numbers of share sold not more than 20 million shares at the par value of Baht 1 each. The share allocation will be made through Private Placement. The selling price of such shares was approved by the directors’ meeting held on January 11, 2010 at the price of Baht 2.50 per shares. Such shares have been fully sold with the net amount received from share subscription of Baht 48,453,608 (less the subscription expenses.) The Company registered such changes in share capital with the Ministry of Commerce on January 28, 2010. Such portion of share capital has been approved as listed securities in the Market for Alternative Investment (MAI) since February 2, 2010.
16. LEGAL RESERVE The legal reserve of the Company was established in accordance with the provisions of the Thai
Public Company Limited Act B.E. 2535, which requires the appropriation as legal reserve of at least 5% of net income for the year until the reserve reaches 10% of the authorized share capital. This reserve is not available for dividend distribution.
17. DIVIDENDS PAID
At the ordinary shareholders’ meeting held on April 1, 2011, the meeting passed the resolutions to approve the payment of dividends amounting of Baht 12 million from the operating result of 2010 under BOI promotional privileges to the shareholders who hold 240 million units of ordinary shares of Baht 0.05 per share. The dividends were paid to the shareholders whose names were in the share registration books as at April 19, 2011. The dividends were paid on April 29, 2011. At the Board of directors’ meeting held on August 10, 2011, the meeting passed the resolutions to approve the payment of interim dividends from the operational performance under BOI promotion privileges for the six-month period ended June 30, 2011 amounting of Baht 21.60 million to the shareholders who hold 240 million units of ordinary shares of Baht 0.09 per share. The dividends were paid to the shareholders whose names were in the share registration books as at August 26, 2011. The dividends were paid on September 9, 2011
At the ordinary shareholders’ meeting held on April 1, 2010, the meeting passed the resolutions to approve the payment of dividends amounting of Baht 19.20 million from the operating result of 2009 under BOI promotional privileges to the shareholders who hold 240 million units of ordinary shares of Baht 0.08 per share. The dividends were paid to the shareholders whose names were in the share registration books as at April 16, 2010. The dividends were paid on April 29, 2010.
At the Board of directors’ meeting held on August 2, 2010, the meeting passed the resolutions to approve the payment of interim dividends from the operational performance under BOI promotion privileges for the six-month period ended June 30, 2010 amounting of Baht 21.60 million to the shareholders who hold 240 million units of ordinary shares of Baht 0.09 per share. The dividends were paid to the shareholders whose names were in the share registration books as at August 17, 2010. The dividends were paid on September 1, 2010
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 80
18. BASIC EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares during the year.
19. EXPENSES BY NATURE
Some transactions included in calculated operating income for the year ended December 31, can classify by nature as follows;
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Changes in finished goods
and work in progress (9,718,427) (15,398,193) (1,018,938) (11,834,204)Purchase of finished goods 36,843,238 16,762,573 9,154,099 5,933,022Raw materials and consumable used 127,972,804 105,819,310 79,604,413 79,809,122Outsourcing production cost 15,975,124 17,607,263 8,756,704 6,564,198Depreciation and amortization - Owned assets 55,887,265 43,702,926 36,075,643 33,913,934Doubtful accounts 267,310 255,513 189,930 5,594Staff costs 88,627,897 79,307,602 40,911,206 44,031,442Unrealised loss from inventory obsolescence 1,341,783 3,544,986 1,341,783 3,544,986
20. TRANSACTIONS WITH RELATED PARTIES
A) Relationship and pricing policy
The relationship among the Companies, subsidiaries and related companies is as follows;
Relationship 2011 2010 Subsidiaries Halcyon Metal Company Limited 100% shareholding 100% shareholding Haltek Company Limited 70% shareholding and
directorship 70% shareholding and
directorship Halcyon Technology (Philippines) Inc 65% shareholding and
directorship 65% shareholding and
directorship Atek Precision Tools Inc. 65% indirect shareholding and
directorship None
Related Companies Atek Precision Tools PTE LTD Shareholder of subsidiary None FDM Asia Pacific PTE LTD Shareholder of subsidiary None
The pricing policies among the Company, subsidiaries and related companies are as follows;
• The goods and services sold to the subsidiaries were carried out on commercial terms and
conditions.
• The sell of property, plant and equipment among the Group were quoted at the price which approximate to the market value of assets at the transaction date.
• The interest rate charged among the Group approximates to the lender’s cost of finance.
The loan is non-collateral and will be repaid on demand.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 81
20. TRANSACTIONS WITH RELATED PARTIES (CON’T)
A) Balances among related parties
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010 Trade accounts receivable Halcyon Metal Company Limited - - 360,081 533,218 Haltek Company Limited - - 2,663,112 971,079 Halcyon Technology (Philippines) Inc - - 26,710,342 - Atek Precision Tools PTE LTD 6,760,197 - 6,359,031 -
Total 6,760,197 - 36,092,566 1,504,297 Trade accounts payable Halcyon Metal Company Limited - - 5,042,658 3,622,763 Haltek Company Limited - - 8,423,324 862,020 Atek Precision Tools PTE LTD 6,351,240 - - - Total 6,351,240 - 13,465,982 4,484,783 Accrued expenses Halcyon Metal Company Limited - - 944,370 892,149
The ending balances and the movement of short-term loans and interest receivable from subsidiary in the separate financial statements for year ended December 31, 2011 can be analyzed as follows;
In Baht Lending/ Repayment of Beginning
balance Interest
receivable principal /
interest Ending
balance Halcyon Metal Company Limited Principal 29,926,000 3,000,000 (17,926,000) 15,000,000 Interest receivable 994,096 949,709 (1,303,856) 639,949 Total 30,920,096 3,949,709 (19,229,856) 15,639,949
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 82
20. TRANSACTIONS WITH RELATED PARTIES (CON’T) C) Related party transactions
The related-party transactions for the year ended December 31, 2011 and 2010 are as follows;
In Baht Consolidated
financial statements Separate
financial statements 2011 2010 2011 2010
Sales of products Halcyon Metal Company Limited - - 1,308,033 2,383,625Haltek Company Limited - - 5,963,373 1,171,884Halcyon Technology (Philippines) Inc - - 31,837,978 -Atek Precision Tools PTE LTD 11,507,788 - 10,791,238 -FDM Asia Pacific PTE LTD 5,468,474 - 5,172,533 - Total 16,976,262 - 55,073,155 3,555,509Other income and Interest received Halcyon Metal Company Limited - - 949,709 1,315,083Halcyon Technology (Philippines) Inc - - 1,820,189 - Total - - 2,769,898 1,315,083Disposal of fixed assets Halcyon Technology (Philippines) Inc - - 2,839,516 -Purchase of goods and service Halcyon Metal Company Limited - - 16,112,157 11,404,835Haltek Company Limited - - 13,979,054 2,561,776Atek Precision Tools PTE LTD 9,526,396 - - -
Total 9,526,396 - 30,091,211 13,966,611
Purchase of fixed assets Halcyon Metal Company Limited - - 250,000 150,000
Rental and other expenses
Halcyon Metal Company Limited - - 11,364,507 12,909,745
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 83
21. PROMOTIONAL PRIVILEGES The Company was granted certain promotional privilege under the Investment Promotion Act. B.E 2520 in accordance with certificate No. 1784(2)/2551 dated on 5th August, 2008 on its business segment of cutting tool. The privileges are for instance to reduce import duty rate of raw material and supplies required for production for a period of one year and exempt from corporate income tax for a period of eight years starting from the date of operation. The commencing date of promoting operation according to the promotional privilege is as follow;
Certificate No. Commencing date 1784(2)/2551 August 5, 2008
As promoted companies, the Company must comply with certain conditions and restrictions provided for in the promotional certificates.
Based on the Announcement of the Board of the Investment No. Por 14/2541 dated December 30, 1998, regarding revenues reporting of a promoted industry, the Company is required to report the revenues from domestic sales and export sales separately and to report separately between the promoted and non-promoted sectors.
For the year ended December 31, 2011, the required information was as follows: In Baht Promoted Non-promoted sector sector total
Revenues Income from domestic sales 197,353,910 4,102,887 201,456,797Income from export sales 50,075,045 19,964,028 70,039,073
Total income from sales 247,428,955 24,066,915 271,495,870Other income 4,766,959 1,753,879 6,520,838
Total revenue 252,195,914 25,820,794 278,016,708
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 84
22. FINANCIAL INFORMATION BY SEGMENT
A) Financial information by business segments The Group operates in three business segments as follows;
• Produce and sell of specific designed PCD and carbide cutting tools. [Halcyon Technology Public Company Limited ,Halcyon Technology (Philippines) Inc and Atek Precision Tools Inc]
• Import and sell of standard PCD and carbide cutting tools. [Haltek Company Limited.]
• Produce and sell of jig & fixtures and metal fabrication. [Halcyon Metal Company Limited.]
Segment information by business segments for the year ended December 31, 2011 was as follows:
In Baht Specific designed Standard Metal Cutting tools Cutting tools fabrication Elimination Total Sale and service revenue 322,773,867 31,705,384 110,861,985 (52,870,546) 412,470,690 Cost of sales and services (186,856,870) (23,548,786) (73,358,564) 51,608,146 (232,156,074) Gross profit 135,916,997 8,156,598 37,503,421 (1,262,400) 180,314,616 Selling and administrative expenses (66,342,143) (5,426,888) (16,385,352) 3,082,589 (85,071,794)
Other income 8,929,243 48,744 1,825,333 (2,769,898) 8,033,422
Profit before financial cost and tax 78,504,097 2,778,454 22,943,402 (949,709) 103,276,244 Financial cost (7,131,819) (186,130) (2,239,371) 949,709 (8,607,611)
Income tax (1,543,262) (891,278) (3,730,647) - (6,165,187) Net profit 69,829,016 1,701,046 16,973,384 - 88,503,446 As at December 31, 2011 Property, plant and equipment 328,274,317 955,146 90,440,848 - 419,670,311 Other assets 268,140,333 21,850,474 57,356,964 (92,018,749) 255,329,022 Total assets 596,414,650 22,805,620 147,797,812 (92,018,749) 674,999,333
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 85
22. FINANCIAL INFORMATION BY SEGMENT (CON’T)
A) Financial information by business segments (Con’t) Segment information by business segments for the year ended December 31, 2010 was as follows:
In Baht Specific designed Standard Metal Cutting tools Cutting tools fabrication Elimination Total Sale and service revenue 267,536,326 10,901,721 114,768,018 (32,722,634) 360,483,431 Cost of sales and services (155,495,860) (8,983,559) (80,738,888) 31,535,834 (213,682,473) Gross profit 112,040,466 1,918,162 34,029,130 (1,186,800) 146,800,958 Selling and administrative expenses (41,496,782) (3,763,023) (15,483,408) 1,186,800 (59,556,413) Other income 5,570,740 116,723 3,967,756 (1,315,083) 8,340,136 Profit (Loss) before financial cost and tax 76,114,424 (1,728,138) 22,513,478 (1,315,083) 95,584,681 Financial cost (1,930,599) (19,451) (2,452,313) 1,315,083 (3,087,280) Income tax (356,939) - (6,039,794) - (6,396,733) Net profit (loss) 73,826,886 (1,747,589) 14,021,371 - 86,100,668 As at December 31, 2010 Property, plant and equipment 240,319,496 1,231,410 82,394,441 - 323,945,347 Other assets 281,119,819 11,015,848 65,613,315 (119,446,393) 238,302,589 Total assets 521,439,315 12,247,258 148,007,756 (119,446,393) 562,247,936
B) Financial information by geographical segments
The Group operates in 2 main geographical areas as follows;
A. Domestic: This is the home country of the parent company which is also the main operating company. The business segments include in this geographical area is to produce and sell of specific designed and standard PCD and carbide cutting tools, jig & fixtures and metal fabrication.
B. Foreign (Republic of Philippines) : The business segments include in this geographical
area is to produce and sell of specific designed PCD and carbide cutting tools.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 86
22. FINANCIAL INFORMATION BY SEGMENT (CON’T)
B) Financial information by geographical segments (Con’t) Segment information by geographical segments for the year ended December 31, 2011 was as
follows:
In Baht Republic of Thailand Philippines Elimination Total Sale and service revenue 362,903,122 83,115,975 (33,548,407) 412,470,690 Cost of sales and services (213,560,107) (52,144,374) 33,548,407 (232,156,074) Gross profit 149,343,015 30,971,601 - 180,314,616 Selling and administrative expenses (61,548,742) (25,343,241) 1,820,189 (85,071,794) Other income 7,445,206 2,408,405 (1,820,189) 8,033,422 Profit before financial cost and tax 95,239,479 8,036,765 - 103,276,244 Financial cost (3,826,985) (4,780,626) - (8,607,611) Income tax (6,165,187) - - (6,165,187) Net profit 85,247,307 3,256,139 - 88,503,446 As at December 31, 2011 Property, plant and equipment 335,608,170 84,062,141 - 419,670,311 Other assets 246,564,499 64,679,961 (55,915,438) 255,329,022 Total assets 582,172,669 148,742,102 (55,915,438) 674,999,333
Segment information by geographical segments for the year ended December 31, 2010 was as
follows:
In Baht Republic of Thailand Philippines Elimination Total Sale and service revenue 360,483,431 - - 360,483,431 Cost of sales and services (213,682,473) - - (213,682,473) Gross profit 146,800,958 - - 146,800,958 Selling and administrative expenses (57,817,914) (1,738,499) - (59,556,413) Other income 8,023,678 316,458 - 8,340,136 Profit (Loss) before financial cost and tax 97,006,722 (1,422,041) - 95,584,681 Financial cost (2,718,648) (368,632) - (3,087,280) Income tax (6,396,733) - - (6,396,733) Net profit (loss) 87,891,341 (1,790,673) - 86,100,668 As at December 31, 2010 Property, plant and equipment 321,939,157 2,006,190 - 323,945,347 Other assets 202,207,092 36,095,497 - 238,302,589 Total assets 524,146,249 38,101,687 - 562,247,936
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 87
23. FINANCIAL INSTRUMENTS
A) Financial risk management and policies
The principal financial risks faced by the Group are interest rate risk, foreign currency risk and credit risk. The Group did not adopt any derivative strategies to manage such exposures.
The Group did not intend to engage in trading derivative instruments for speculative purposes.
B) Foreign currency risk
A portion of the Company’s sale and purchase are made in foreign currency. The proceeds from export sale are made in US dollar ,Singapore dollar and Euro while the payment for importing of goods are made in US dollar ,Singapore dollar, Yen, Euro, British Pound and Swiss Franc. These structures of transactions provide, to some degree, a natural hedge against foreign currency risk. For the year ended December 31, 2011, the proportions of sale transactions which were dominated in foreign currency, were accounted for 26.77% of total sale, while those of foreign-currency purchase transactions were accounted for 50.33% of total cost of sale. Moreover, the subsidiary has short-term and long-term loans dominated in US dollar. The Group did not adopt any other derivative strategies to manage such foreign currency risks.
As at December 31, 2011, foreign currency-dominated assets and liabilities, which were unhedged, were as follows;
Consolidated financial statements
Separate financial statements
Foreign currency-dominated assets
US Dollar 1,245,301 1,029,231 Singapore Dollar 288,355 203,911 Euro 2,344 2,344 Foreign currency-dominated liabilities
Euro 373,983 373,983 US Dollar 2,043,000 242,259 Singapore Dollar 33,819 32,067 Japanese Yen 172,160 - British Pound 553 553 Swiss Franc 1,840 1,840
C) Interest rate risk
The interest rate risk is the risk that future movements in market interest rates will affect the results of the Group operations and its cash flows. The Group exposure to interest rate risk relates primarily to its deposits with financial institutions and short-term and long-term loans. The long-term loans carry interest at rate close of market rates, and the Group believed that the future fluctuation on market interest rate would not provided significant effect to its operation and cash flow; therefore, no financial derivative was adopted to manage interest rate risk.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 88
23. FINANCIAL INSTRUMENTS (CON’T)
D) Credit risk
The Group were exposed to credit risk. However, due to the fact that its major customers are large firms with strong financial position. The Group do not anticipate material losses from its debt collection. The Group estimated the allowance for doubtful accounts from the ending balance of accounts receivable. The estimate was made by considering the customer’s past collection experiences.
E) Fair value
The financial assets and liabilities include cash and cash equivalents, trade accounts receivable and payable, and loan to and loans from counterparties. Their carried values approximate to their fair values.
24. COMMITMENTS
A) Bank guarantee issued by banks
As at December 31, 2011, the Group had letters of guarantee issued by banks for the payment of electricity and utility fee amounting to Baht 1,668,000
B) Letter of credit issued by banks
As at December 31, 2011, the Group had letters of credit issued by banks for acquisition of imported machineries amounting of Euro 454,800.
C) Guarantee to subsidiary As at December 31, 2011, Halcyon Technology Public Company Limited provided guarantees amounting to USD 3,233,000 against the liabilities of its subsidiary, Halcyon Technology (Philippines) Inc.
D) Investment commitments
As at December 31, 2011, the Company had the commitment related to the payment for the unpaid share capital of investments in Halcyon Technology (Philippines) Inc amounting to Bath 38.74 million.
Halcyon Technology Public Company Limited
Annual Report of 2011 - page 89
24. COMMITMENTS (CON’T)
E) Commitment according to the partnership agreement
The subsidiary has outstanding franchise fee commitment to be paid to joint partner according to the partnership agreement as follow ;
In million Baht 2011 2010 Payable within
1 year 1.00 2.00 2 years 1.00 1.00 3 years 0.50 0.50 Total 2.50 3.50
25. CAPITAL MANAGEMENT
The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern.
As at December 31, 2011 the consolidate financial statements debt-to-equity ratios was 0.43:1 (the separate financial statements : 0.21:1)
26. SUBSEQUENT EVENTS
At the Board of directors’ meeting held on February 21, 2012, the meeting passed the resolutions to approve the payment of dividends amounting of Baht 38.40 million to the shareholders who hold 240 million units of ordinary shares of Baht 0.16 per share. The first portion was paid as interim dividends on September 9, 2011 to the shareholder who hold 240 million units of ordinary shares of Baht 0.09 per share with total amount of Baht 21.6 million. The remaining portion of dividend of Baht 16.8 million is scheduled to be paid on May 2, 2012 to the shareholders who hold 240 million units of ordinary shares according to the share registration books as at April 18, 2012 at the rate of Baht 0.07 per share. This resolution will be proposed to the shareholders’ meeting for further approval.
27. APPROVAL OF THE FINANCIAL STATEMENTS
These financial statements were authorized for issue by the Company’s Board of directors on February 21, 2012.